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TI Highlights Kremlin Failures Against Corruption

MOSCOW (Reuters) -- Kremlin chief Dmitry Medvedev's much-vaunted anticorruption drive has so far failed to halt bribery costing Russia $300 billion a year, watchdog Transparency International said.

Medvedev has repeatedly vowed to stop Russia's bribe-taking culture since taking office in 2008, saying corruption threatens national security and passing legislation to tackle it.

"With the current level and volume of corruption...we cannot move forward," Berlin-based Transparency said in a statement, citing research that estimated bribe-taking was worth almost one-fifth of the country's economy.

"If corruption stays as it is now, it will continue to eat up the resources we could invest in our future."

Transparency noted Medvedev's attempts to update laws but said most Russians believed corruption was actually rising and warned that crooked bureaucrats had ignored Medvedev's words.

It rated Russia, a G8 country, joint 146th out of 180 nations in its Corruption Perception Index, along with Zimbabwe, Sierra Leone, and five other developing nations. Last year Russia was ranked 147th.

"Fighting corruption is not just some simple reform where you come along, sign some papers and have it go through and work immediately," said Yelena Panfilova, head of the Russian unit of Transparency International.

"Russia has created the legal basis for the struggle against corruption but now we need to move to the tough implementation of the legislation," she told Reuters. "Implementation is key."

Corruption is a way of life for millions of Russians, from small bribes paid to traffic policemen to multimillion-dollar kickbacks paid to senior officials who hold sway over the country's enormous reserves of oil, gas and metals.

Kremlin leaders have repeatedly started anti-corruption drives in the past with little impact and foreign investors say privately that bribe-taking has soared in recent years.

$300 Billion A Year Of Corruption

Transparency said corruption in Russia was estimated to total about $300 billion a year, or about 18 percent of 2008 gross domestic product of $1.7 trillion.

"A whole section of these bureaucrats believe these billions are their legitimate income," Panfilova said, adding that some officials were trying to sabotage anti-graft initiatives.

Transparency said Russia was perceived to be far more corrupt than its emerging market peers such as India, China and Brazil, which were ranked, respectively, 84th, 79th, and 75th.

Transparency put part of the blame for the endemic corruption on Russia's privatizations of the 1990s, when a small group of businessmen bought some of the most valuable assets of a former superpower at steep discounts.

It said moves under former President Vladimir Putin -- now prime minister -- to assert greater state control in the oil and gas sector had failed to avoid many of the pitfalls of the original privatizations.

"Some re-nationalization has subsequently taken place in the incredibly lucrative Russian gas and oil sectors," Transparency said. "This process appears to have been just as unfair as the original privatizations."