Financial Transparency Coalition

World Economic Forum/Flickr*

Since his election in 2008 Russian President Dmitry Medvedev has been talking about corruption.  In September of 2009 he announced a major reform program aiming to tackle rampant corruption in his country, although he didn’t actually detail what the reform program would include. Medvedev has also repeatedly vowed to tackle corruption in the court systems, stating that Russia should do its best to “make the courts become as much as possible independent from the authorities and at the same time to absolutely depend on society.”  For all this vowing and announcing, you’d think we’d have actually seen some progress in this area.  We haven’t.

Maybe we should be surprised.  Well, not if you listen to Medvedev.  As he said in 2011 (and 2010) he has “no illusions that this will happen in one or two years.” Just a year earlier Medvedev admitted he knew “of no significant successes in this direction,” despite two years of effort.

But all of this talk is pretty suspect anyway.  As internal State Department memos–which were made public by WikiLeaks–reveal, the top levels of Russia’s government are engaged in a much deeper and more pervasive type of corruption than most of the world has realized.  One cable notes that extortion is so widespread that it has “become the business of the Interior Ministry and the federal intelligence service.”  The government has transformed into an organization more closely resembling “the mafia” and the line separating government from business is so blurred it is nearly non-existent.

But this week Medvedev took a step forward by signing a bill which would outlaw foreign bribery and gives prosecutors the authority to seek massive fines for graft—up to 100 times the amount of the bribe. The OECD has welcomed this bill as a “significant step,” although I would categorize the entire response’s tone as cautiously optimistic.  Or perhaps that’s just my own cynicism talking.  It is pretty clear that this type of legislation will only work if it is properly enforced and given the court’s continued rampant graft of its own, that seems rather unlikely.

Foreign bribery in Russia is a huge problem for the country’s economy.  Investors are threatening to flee in droves in the face of ever increasing official depravity and the tightening of domestic laws on bribery abroad. Transparency International estimates that the total annual amount paid in bribes in Russia is worth $300 billion—equivalent to the GDP of Denmark.  Global Financial Integrity estimates that the country lost an average $47 billion in illicit financial flows per year, a number which money transferred abroad stemming from tax evasion, corruption, and trade mispricing.

I’m not sure how to take Medvedev’s anti-corruption agenda.  Of course many of his critics see his speeches as shallow or hollow, characterizing his administration by “talk of radical change, but only skin deep reform.” Others believe he is downright deceptive.  The truth is corruption in Russia is so pervasive that even if Medvedev’s intentions are completely pure, his task may still be insurmountable without serious assistance from other power brokers around him.  And that is just not something we are likely to see as even the head of the Kremlin administration has publicly called corruption widespread, but not out of control, downplaying the role it plays in Russia’s politics and economy and questioning international groups which have highlighted the problem.

The simple truth is Medvedev is swimming against a strong current…and no one is really sure if he’s truly swimming or just announcing it to the news cameras as he floats merrily downstream.

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