| by Christopher Rutty.|

   In Russia, in the year 2001, after ten years of a free-market economy, the nation’s Capital has become a ‘brown paper bag economy’. Moscow, for all its breadth and width, it’s architectural monsters –the seven Stalin Skyscrapers- and fourteen lane ring road. It has been brought too heal by a leviathan that has no bricks ‘n’ mortar. An intangible beast. The Western economic imperative: Capitalism!

My partner works as a consultant to a world renowned Russian arts organization. She has seen first hand the ‘cowboy days’, or more succinctly, a renaissance of the 1920’s American Gangster era. The similarities are probably lost on the 147 million Russians who live in poverty. Their comparisons are with far greater terrors. The wholesale corruption and cronyism shines in the eyes of those who alight from their Mercedes Benz, or BMW, after parking on the sidewalk. The ‘Bandit’ who emerges walks confidently, cell phone to the ear, cigarette in hand, black leather pants, black leather coat, black shirt, black sweater and tie, and black ‘shapka’, -fur hat-; for in his arrogant demeanor, can be seen the latest leviathan to trample the Russian people.

Your senses say this is a sophisticated, highly professional business person, (with no taste) proudly strutting: until you hear that sickening sound… then, as he walks toward you, he spits in a vulgar, grand and plentiful manner: head held high as if marking his territory. To this day, I have not determined whether this behavior is a cultural practice, whereby it should be respected, as a Hindu with his turban, or a cowboy and his hat. Either way, the profusion of this practice cannot be exaggerated as one does the pavement-sidestep on any busy footpath. This crude, selfish behavior, is a metaphor for how business is conducted by the vast majority of Russians. Arrogance and contempt, married with unprofessional behavior is the method of operation. The unique brand of corruption and how it is accepted in this country follows an illogical pattern, woven in Soviet times.

About two years ago the administrative director for this arts organization decided to cancel all credit card sales. There is a simple reason for this; cash is easier to steal! Upon discovering how the marketing person was defrauding the company, she informed him, as per her consultancy. The Russian Executive Director said that she, "Just didn’t understand the Russian way". Apparently, the Russian way is to have two sets of books. He would advertise one price, and record a lower price, pocketing the difference. In addition, the printing cost is so low that two sets of tickets can be produced. The ticket stub for the lower is kept to balance the books.

To further excuse this behavior, she was told that he is paid so little that the administration always budgets for his theft. This business logic is totally absurd to a Western mind, in fact, the butt of jokes. However, Russians say nothing. The marketing person is a sleazy ‘bandit’ who wears designer suits, on a wage of $100 per/month. So brazen is his scam that he will quote a price to an employee in the development department and upon payment, ask a higher price.

Russia is going through its 1920’s gangster era. This Arts organization charges $25 000 to be the name sponsor for a single evening’s event. A famous and very prestigious Swiss company, known the world over as the pinnacle of sophistication, would pay in cash. The Swiss company’s secretary telephoned to ask if the money should be delivered in one envelope or two. This becomes more humorous when you understand this is normal! The brown paper bag economy is not a one off corrupt action; it is how business is conducted. Russians are masters at avoiding responsibility or shifting blame or emphasis. This cunning behavior was a product of Soviet culture. It is what you do to avoid paying tax. The bookkeeping regime is so bizarre that not one business pays tax according to the law, and this is the accepted way.

Part of the Russian psyche for survival, and a common management ploy, is to set worker against worker. Almost all workers in service industries, and government, have a ‘scam’ going. From the powerful oligarchs to the local babushka at the post office. The general idea is to create a ‘scam’ with the help or knowledge of others. No one will go to the authorities if they steal as well. Only large-scale theft makes the news outside Russia; like officials caught siphoning funds, or money laundering, which is a cruel synonym for Russian Capitalism. -In the year 2000, $24.6 billion left the country.

The economic transplant and the following privatization created enormous wealth, through illegal or unethical means. At the time, Yeltsin gave free reign to those bureaucrats and oligarchs; Berezovski, Gusinsky, Boradin, -to name those currently in the news-who are now falling-fowl of Mephistopheles, in the guise of Putin. The President now sees how freedom of the press, and enormous personal wealth, challenges his supreme command.

Microeconomics in Russia are a minefield; In particular banking. Opening an account is a trial and very invasive, consequently, most people avoid private banking. Many foreign workers have no bank account and work without a permit. Banks are not bastions of financial security. They are feared due to the crash of 1998, when millions of workers lost their savings. Several banks took hundreds of millions in government aid, and then mysteriously went bankrupt, reopening within a year, under another name.

Unlike Western banking, using a foreign credit card at your bank can be dangerous. Every six months or so a scandal will erupt where credit cards have been wiped clean, never to be recovered. The theft is usually from within the bank. In fact, several American banks have now put a halt on any transaction that comes out of Russia. By default, passing the transaction to their fraud department. This happened to me when my Internet provider tried to take out their monthly charge. Consequently, my email account was terminated due to the bank denying the transaction.

Russians Far Eastern regions are literally freezing to death. Unified Energy Systems withheld heating from Siberian regions, which are experiencing the coldest winter in 50 years, apparently for unpaid debts. Corruption at every level and the new profit motive ideology are forcing millions to endure minus 43-degrees and lower temperatures daily. The energy crisis in California is almost identical. The problem is deregulation. How can you deregulate an essential service that is run by men who are obsessed with ideology based economics, and maintain a civil society? This is the greatest crime in the modern era.

This institutionalized greed, in the face of social chaos, is supported by the Bush administration, so how are Russians expected to behave when the world’s self-proclaimed leader, is prostrate in the face of their energy crisis? Both Russia and the U.S.A. are driven by ‘Irish famine’ economics. They maintain the free-market right to ignore social consequences, and to worship the God of Mammon.

The rulebook for corruption and the undermining of Russia’s unique culture was written by American corporate economics, although the method is purely Russia.

Counterfeit products are everywhere, not so much the Rolex watches or Gucci clothes. The new Russians like to buy the original. The common things like teabags, film, vodka -which can be lethal- cleaning products, and of course, music compact disks. Fake computer software is ubiquitous. For $3, you can purchase almost any Microsoft product.

The sad irony is that many Russians want a regulated society, based on the Soviet model where the individual is surrounded by familiar controls. After all this is how they collectively grew up. This can be a great evil however, and they are now seeing the need for more government control in the areas of privatization and government officials. Sadly, however, the loss of the old familiar culture that the vast majority grew up with has been destroyed by what many see as ‘Western Democracy’. This is another irony to add to Winton Churchill’s observation about Russia. "It [Russia] is a riddle wrapped in a mystery inside an enigma".
   Alternatively, as the expatriate writer Andrei Makine says in his book ‘Dreams of my Russian Summers’.

"Russia knows no limits, neither in goodness, nor evil... Living very mundanely on the edge of the abyss. Yes, that is what Russia is."