Bureaucracy or corruption? Two sides of the same coin

When I ask members of the Russo-British Chamber of Commerce what the biggest problem is doing business in Russia, the most frequent answer is “bureaucracy”. You have to have forms for this, forms for that, stamped and signed by the right authority, often in triplicate

Russians seem to have thought up rules and regulations just for the sake of it. Two years ago, I thought I had hit on a sensible economy measure. The Chamber runs two major events in the year: the Business Forum in London in June, and RussiaTALK in Moscow in October. Why, I suggested did we not produce double the number of delegate bags for the Forum, bearing the Chamber’s logo, then send the second half to Moscow for RussiaTALK?

Staff agreed this was a good idea; but when we went to ship the bags to Moscow, we were told there is a special tax slapped on imported goods which are made of cloth and bear a logo. If anyone can see the sense in this, I should be delighted to have it explained to me.

The problem with such nonsensical rules is that they inevitably lead to corrupt practices. We were lucky; we had another event in the UK where we could use our bags, albeit a year later. But a commercial company under time pressure may have been tempted to try to come to “an agreement” with the Russian authorities, avoiding the tax but reaching a compromise figure which may have gone into an individual’s pocket instead.

This is the real danger of petty bureaucratic rules. Rather than going through an exhaustive and possibly costly legal process to ensure that all the rules have been followed to the letter, there will often be the temptation to bypass them by placing money in a brown envelope which benefits only the recipient. So, although our members may put “bureaucracy” rather than “corruption” at the top of their list of problems doing business in Russia, these things are really two sides of the same coin.

There has been much hand-wringing over the years about the problem of corruption in Russia. Read Russian literature from the 19th century and you’ll see that it is deeply ingrained in the Russian way of doing things. Sadly, the Soviet system did nothing to improve this. The centrally planned economy produced what the Politburo dictated, not what the country needed. One word which you quickly learned if you visited the USSR in the Seventies and Eighties was defitsit (shortage). And where you have “defitsit” you have a breeding ground for a black market – and corruption.

The Russian president, Dmitry Medvedev, has openly recognised the problem of corruption in today’s Russia. Modern Russia is a consumer society without the problems of defitsity. But the country is still plagued by nonsensical pieces of bureaucracy.

There’s a wonderful line in the classic Monty Python comedy film, Life of Brian. When Brian asks his mother why women aren’t allowed to go to watch stonings, she replies: “Because it’s written, that’s why!” Unfortunately, much of Russian bureaucracy can be summed up in the same way. And until it’s sorted out, any battle with corruption will be an uphill struggle.

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