Financial Transparency Coalition

In 2004 while in a Comparative Politics class, I had a conversation with a friend, who was relatively well-versed in things political, about Freedom House’s Freedom in the World rankings.  I remember referring the fact that Russia was considered a “transitional democracy” and he corrected me.

“No,” he replied, “Russia is a democracy.”

My friend was wrong, of course, but in retrospect that seems much more obvious than it did at the time.  In 2004 Russia, with the ranking “Partly Free,” had only just begun its descent into authoritarianism under the direction of Vladamir Putin.  It was that year that Russia witnessed a deterioration of fundamental rights and consolidation of the government over broadcast media.  The country had already fallen from its 1999 Duma election, which was widely considered free and fair.

At the time the fall was still fresh.  And so my friend’s confusion was understandable.  If we had the same conversation today, his comment would not be so defensible.

In the last six years, Russia has passed a law giving bureaucrats discretion to shut down NGOs that are critical of the government.  An assassin murdered Anna Politkovskaya, an investigative journalist who was critical of the Kremlin, in cold blood. The government heavily manipulated the parliamentary elections to give a majority to pro-government parties.  And Vladamir Putin consolidated his power as Prime Minister under President Medvedev, widely considered a puppet for the PM.

But in the last few weeks the release of the Department of State’s Secrets, known as WikiLeaks, has revealed another perspective on the inner workings of corruption and government and corporate secrecy in Russia.

[As a side note, I have several problems with the violations of WikiLeaks and I personally believe there are ethical dilemmas posed by the release and use of these documents.  However, I do not believe that these secrets constitute a “crisis” for American foreign policy and so I do not have a problem quoting them.  As Defense Secretary Robert Gates recently said: “Is this embarrassing? Yes. Is it awkward? Yes. Consequences for U.S. foreign policy? I think fairly modest.”]

As the internal State Department memos reveal, Russia is engaged in a much deeper and more pervasive type of corruption than most of the world 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.

Among the many other problems created by corruption, corruption’s creation of market inefficiencies poses massive burdens on emerging markets.  This problem is clearly shown in Russia and made clear by the recent WikiLeaks.  As one memo states, inefficiencies “are so huge that an [oil] well that would take ten days to drill in Canada would take 20 in Russia.  Multiply that by hundreds or thousands and you can start to imagine the costs to the economy.”

The implications of these documents and Russia’s degradation into corrupt authoritarianism have broad implications not only for the nation and its citizens, but also for the world at-large and Eastern Europe, in particular.  Those of us concerned with corruption and its devastating effect on development must continue to keep a vigilant eye on Kremlin, though we simultaneously acknowledge that we have limited power in the situation. We can only hope the nation has not passed a point of no return.