Russia

WHITE-COLLAR, corporate, and organized crime in Russia literally exploded in the years following the disintegration of the Soviet state in the late 1980s and early 1990s. By 2003, the statistics were staggering: In addition to controlling conventional illegal practices such as drug trafficking, prostitution, and money laundering, it is estimated that the Russian Mafia controls as many as half the banks in the country as well as key economic sectors such as petroleum distribution, pharmaceuticals, and consumer products distribution.

Their influence reaches into the highest levels of government and industry. It is widely acknowledged that the Mafia has close links with ranking members of the Russian government. The arrest and forced exile of leading business figures such as Boris Berezovsky, Vladimir Gusinsky and, most notably, the arrest in 2003 of Mikhail Khodorkovsky, Russia's richest man and the dominant figure in Russia's petroleum industry, signals less a crackdown on organized crime than a power play between rival power factions at the top of society. The dominance of organized crime in Russia reflects the deep crisis in the Russian economy.

Some commentators see the rise of organized crime as part of a semi-feudal system inherited from Soviet totalitarianism. Others contend that it is somehow rooted in the Russian character itself, flowing from the “backwardness” and “underdevelopment” of primitive “Eastern” economies. While these interpretations go some way in capturing the shocking extent of corruption, violence, and inequality linked to organized crime, they resolutely miss the mark in understanding the origins and development of the Russian Mafia. It is necessary to firmly place organized crime within the context of late-20th century capitalism as a whole, as well as within the specific trajectory of the Russian economy and society from the Soviet regime to the 21st century. As Boris Kagarlitsky persuasively argues, “In the 1990s, post-communist capitalism was not being ‘civilized,’ but Western capitalism was turning savage. It was simply that the scale and consequences of the reforms on the periphery were far more striking than in the center.”

The crisis is certainly rooted in the nature of the Soviet system. Yet the rise of the Mafia should also be situated in the shock therapy program of privatizations, structural adjustment programs, and gutting of social welfare urged on by Western politicians and corporations. Indeed, Vadim Volkov argues convincingly that organized crime “rests on the division between the legitimate world and the underworld.” To understand organized crime in the former Soviet Union, thus requires looking at the connection between and overlapping of both traditional areas of criminal activity and so-called legitimate economic activities.