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a CANADIAN SECURITY INTELLIGENCE SERVICE publication
September 1994
Unclassified
Editors Note:
The political and economic uncertainty that prevails today in all the republics of the former Soviet Union has provided auspicious conditions for crime proliferation. It is not surprising, therefore, that organized crime has become an increasingly severe and pervasive problem, particularly in the Russian Federation, the largest of the successor republics. Some of this activity is now spilling into Western Europe and North America, where Canada is not immune.
We are pleased to present a detailed discussion of Russian organized crime in this month's COMMENTARY, co-authored by Dr. Leonid Maximenkov, a former Russian academic now resident in Canada, and Mr. C. Namiesniowski, a Strategic Analyst in the Analysis and Production Branch of CSIS.
Disclaimer: Publication of an article in the COMMENTARY series does not imply CSIS authentication of the information nor CSIS endorsement of the author's views.
In the Soviet Union, the trend of a mafia-like brotherhood between the Party nomenklatura and the underground mafia tycoons has been obvious to many citizens for years. In 1969, Veli Akhundov, First Secretary of the Central Committee of the Communist Party of Azerbaijan, was replaced by the republican KGB Chairman Gaidar Aliev. In 1972, Vasilii Mzhavanadze, the Party boss in Georgia, was removed from office and replaced by the local Minister of the Interior, Eduard Shevardnadze. In each case the reason for the leadership change was the illegal, multi- billion ruble underground economy that had developed in these Transcaucasian republics, aided and abetted by the Party bosses who personally benefited from the arrangement, but deprived the Soviet Union of income.
The emergence of a new, rich criminal class, with links to governing authorities, created a state within a state which Moscow perceived as a threat to its political power and central control. The Kremlin decided to intervene and took the unprecedented step of naming two law-enforcement officials to key Party positions in the republics. This decision contravened a Stalinist tenet: never put a KGB official in charge of the Party. The KGB was an instrument of law enforcement; placing them in charge challenged central authority. The departure from this principle underlined the seriousness with which the issue was viewed at the time.
Local "parallel governments" and omnipotent élites that operated a second economy also persisted and flourished in Armenia and the five Central Asian Republics. The most notorious example was Uzbekistan, the major cotton-producing republic in the former Soviet Union.
During 23 years of unchallenged rule by Sharaf Rashidov, the local élite through the Mafia maintained absolute control of state subsidies, diverting a portion to the black market. At the same time, Rashidov was able to maintain a loyal relationship with the Kremlin by means of an internal unwritten code of behaviour, based on feudal concepts of loyalty and punishment which, de facto, replaced the Soviet law within Uzbekistan. Under this arrangement for example, one of the farming tycoons, Mr Adylov, was able to build and control a prison for his enemies. Similar conditions existed in Kazakhstan, ruled for 25 years by Dinmukhamed Kunaev.
The double economies which for years persisted in the Transcaucasus and the Central Asian Republics, with the blessing and participation of key civil servants, had an important secondary effect which the Kremlin probably did not anticipate. Over time, the twin economies laid the foundation for a national identity and independence that matured with the opportunity provided by Mikhail Gorbachev's perestroika. It is not by accident that today, both Rashidov and Kunaev are posthumously treated as national heroes in their respective, now sovereign, native lands.
In 1983, following Leonid Brezhnev's death, an anti-corruption campaign was launched by Yuri Andropov. Due to Andropov's short tenure, the campaign produced few specific results, but was important as an example and for the emotional precedent it set. Interior Minister, General Shchelokov, was fired and later "committed suicide." General Lurii Churbanov and his first deputy (Brezhnev's son-in-law), also of the Internal Defence Forces, were stripped of their privileges and benefits. The Uzbekistan Party leader Rashidov suddenly died of a "heart attack", and the "Uzbek mafia" affair was publicized.
Andropov's attempt to deal with illegal activities is important for some of the principles it underlined. Andropov, as a former Chairman of the KGB, viewed the alternative economy and the corruption it spawned as inherently hostile and a threat to communism. He therefore tried to eliminate it by cracking down with the whole might of the KGB. He mistrusted the Interior Ministry (MVD) and avoided using it in his efforts to cope with rising crime. The rivalry between the KGB and the MVD has been endemic throughout the entire history of the Soviet régime, and continues in Russia today, having survived the fall of communism.
Andropov chose to start his anti-corruption drive well clear of Moscow, in the Muslim republics, where he launched an all-out campaign against the Uzbeck mafia. Why did Andropov chose to victimize an entire national republic and its leader? Why not attack the mafia operations in Leningrad and Moscow which were also flourishing? Andropov died too soon to provide answers, but the trend he set was followed by the interim Chairman Konstantin Chernenko, and his successor Gorbachev. Translated into policy decisions, these trends later contributed to the breakup of the USSR by underlining the ethnic differences between the privileged Russians and the other, less privileged nationalities. President Yeltsin's anti-crime policies have also tended to focus, in the first instance, on crime committed by non-Russian nationalities.
The methods Andropov used in his anti-corruption struggle stunned the nomenklatura and the general public. Nonetheless, the second economy was not destroyed, and moreover, local nationalism was given a tremendous boost. When Andropov died after 15 months in office, he left behind the suspicion of a conspiracy theory about his death.
Between 1985 and 1987, during the first stages of perestroika, the last President of the USSR, Mikhail Gorbachev, tried to continue Andropov's policies by getting tough with those republics possessing the most notorious black market economies that were controlled by organized crime. In late 1985 and early 1986, Gorbachev replaced up to 80% of Central Committee members in the Central Asian republics. Such measures were disruptive and considered draconian by local élites that were affected, many of whom had ruled these republics for up to 30 years. The dismissals fuelled independence movements by the local élites in an effort to protect their turf and life-styles. Unrest followed with student riots in Alma-Ata (Kazakhstan) and demonstrations in Yerevan (Armenia) and Stepanakert (capital of the self-declared republic of Nagorno-Karabakh in Azerbaijan).
1987 to 1989 marked the first years of liberalization of the Soviet command economy. The second economy, prevalent in all the republics, was now able to legalize its capital, and a "free market" was inaugurated. At first, black-market capital that had been hoarded over the years enabled business to flourish. Over time, however, legitimate businesses, operating in the now legal "free market", had increasingly to depend on mafia protection to avoid the remaining government controls and expand their capital. The lifting of restrictions on migration policies increased opportunities for organized crime in the former Soviet Union to foster international links with global crime syndicates. Such links were necessary to launder ill-gotten gains and usually to reinvest them to obtain more lucrative illegal business opportunities. The first steps were to re-establish links with former partners who had emigrated from the USSR during the 1970s.
Aside from increasing signs during 1990 and 1991 that the collapse of the Communist Party and the command economy was imminent, it was also obvious that the command economy was unable to compete with the second, so-called "shadow economy". During this time the Communist Party's multi-billion ruble empire was hastily transferred into hard cash and privatized by and for Party officials. This action reinforced the second economy and delivered a debilitating blow to the command economy. Legal businesses and the established KGB routes were used to channel cash to the West.
Some of these cash transfer operations also took place in Russia under Boris Yeltsin's tenure. An important side effect of such transfers, often ignored, was the internationalization of Russian organized crime.
The KGB was involved in the second economy from the start as a major player and facilitator, having monitored the start-up of all joint Soviet-Western ventures. It also had an enormous pool of information on former Soviet citizens who had emigrated and on foreigners doing business in the USSR. The KGB information data-bank facilitated a choice of options on how to proceed and where business initiatives were likely to succeed.
A typical case that exemplifies the process is that of a Soviet émigre who came to Canada in the late 1970s. He settled in Toronto and started a resource company, part of a Swiss-leased trading empire which in turn had commercial links to a Soviet trading company. The émigre, reportedly financed by Communist Party funds, activated his business contacts with the Soviet trading company in the late 1980s. In the summer of 1993, the émigre reportedly became an unwilling actor in a Kremlin corruption scandal, although charges remain unproven. He was allegedly implicated in the mismanagement of hundreds of kilograms of gold deposits belonging to the newly formed Kyrgyzstan republic. The incident brought down the government of this Central Asian country. As the gold had reportedly gone to Switzerland, the émigre's involvement cannot be excluded.
Following the 1991 coup, a "criminal revolution" began under the cover of democratic change and market reforms, and it continues practically unchallenged. It is criminal in the sense that it does not recognize the authority vested in elected officials, the state or its law-enforcement instruments. It is a revolution because it is bringing about a new economic order—a Russian post-communist order which is neither the old command economy nor a real free market. Russian organized crime, which is evolving from the "criminal revolution", unlike its Western counterpart, is mainly engaged in trade and resale of stolen or imported goods and in fraud. The July 1994 crash of the MMM investment company in Russia, that offered pyramid investment opportunities, begs the question whether it was involved in illegal activities. It was a risk to unsuspecting investors, but was it linked to organized crime? If it was, it would signal a maturing in Russian criminal operations. The thwarting of the communist August coup facilitated a period of government property privatization on an unprecedented scale. The Soviet black market millionaires had the first pick of public property. The command economy started to disappear almost overnight.
During the first year following the coup, organized crime in Russia attempted an all-out economic takeover. One of its first targets was the "Savings and Loans" fund organized by the Russian government which was supposed to provide loans to boost new businesses. Instead, billions of rubles were lost from banks through fraudulent loans. These were negotiated by the criminal element, converted into dollars and immediately smuggled out of the country. The exact amount of public money that left Russia in this way is unknown. In March 1994, Russian TV announced that up to $1.3 billion (US) had been transferred to Germany alone.
Influenced by the media, public opinion in Russia blamed the "Chechen mafia" for the crime— hardly credible, as the Chechens, of the many small ethnic nationalities in Russia, numbering not quite a million people, cannot be responsible for all crime in Russia. The portrayal of the Chechens as the mafia reflects the ethnic overtones now prevalent in Russian media crime coverage and the growing tension and struggle for power between the Russian and other ethnic mafias.
Not surprisingly, media reports fail to mention that in order to transfer such large amounts of money, more than one accomplice is required in Moscow. A memo from the President's Analytical Centre, however, suggests that co-operation in illegal transactions by bank managers provides no guarantee of protection. Such individuals are frequently murdered because they know the secrets behind the accounts. At present, Russian bankers have the highest mortality rate among the Russian business community.
Tax-evasion is another major problem, about which Russian law is very vague. The first national survey showed that in 1992, up to 40% of businesses did not pay taxes at all. By very modest estimates, and bearing in mind that all figures are approximate, this amounted to a loss of at least $2 billion (US) in government income. This figure does not include spectacular profits made by various "entrepreneurs" from the sale of western humanitarian aid delivered to Russia during the winter of 1991-92. According to reports, up to 60% was resold at free market prices. Again, the money was laundered through the banks, loans were issued and, by conservative estimates, an estimated $15 billion (US) was transferred abroad in 1991-92.
In 1993 organized crime in Russia moved to a potentially more dangerous stage by engaging in a concentrated fight for political power, challenging those in the Kremlin who were vocal against crime. Early in 1993 the Interdepartmental Commission on Crime and Corruption (MVK), chaired by former Vice-President Rutskoy, became the most outspoken and still unsurpassed critic of organized crime in Russia. Unfortunately, Rutskoy's well informed interventions and denunciations (based on data provided from KGB files), while well received and supported by the deputies of the Supreme Soviet, were naive and couched in communist evangelism. His reports failed to take account of the new realities in Russia. Soon Rutskoy was accused of being a neo- communist and was denounced in both the national and international media. Not surprisingly in April 1993, Rutskoy was removed from the MVK, following a speech to the Supreme Soviet on corruption, in which, inter alia, he had urged the adoption of the following measures:
"(2)... To carry out an audit of the sources and legitimacy of primary capital of non- governmental economic structures that have been created with the help of governmental property.
(3) To take joint measures aimed at the prevention, discovery and termination of crimes in the credit and banking system. To apply similar measures in order to prevent the stealing of gold and precious stones, raw materials, components of nuclear arms, oil products and their illegal export outside Russia.
(4) To anticipate and stop money-laundering by foreign mafia through Russian commercial organizations and banks. Also to uncover and forestall the activities of international organizations that are engaged in counterfeit money and contraband."
Rutskoy's well intentioned measures failed to provide effective solutions and did not identify the political agenda of the "criminal revolution"; he focused on personalities instead of addressing issues and proposing solutions. It is highly questionable whether his proposals would have worked, even if all had been implemented. Moreover, implementing them would have required a retrograde step to the police state of the Stalinist régime. By 1993, that would have been impossible, for there was neither the material base nor political will to take up a struggle against crime at such an all-embracing level. In the end, the interests of the criminal revolutionaries were still not seriously threatened, even though in July Rutskoy still claimed that a "state mafia machine" was being created. In August, a month before Yeltsin dissolved parliament, Rutskoy criticised the new composition of the MVK, calling it illegitimate.
The dramatic events that led to the storming of the Moscow White House by troops loyal to President Yeltsin and the arrest of former Vice-President Rutskoy, an air force general and Afghanistan hero, cannot be regarded in isolation. It was not only the confrontation between democrats and communists that fuelled the attack; the debate on organized crime in Russia also played a part.
Organized crime in Russia is becoming more sophisticated. The newly emerged Russian and other ethnic crime syndicates combine illegal and legal activities. Their structures and numbers vary considerably and are related to the type and location of activity in which they are engaged. The legal aspect is often provided through links with commercial businesses, joint ventures, banks, associations or foundations.
More importantly, links to legitimate business activities and the bureaucracy provide opportunities for organized crime to create off-shore companies, transfer funds across borders and even to travel on diplomatic passports. Their main aim is to achieve political legitimacy and be able to lobby government for legislation favourable to the interests of organized crime.
In March of this year, the Russian military industrial complex scored a victory of sorts. A new export company—Rosvooruzhenie (Russian Arms)—was set up. Given the previous record of Russian military firms' poor auditing practices (as divulged by General Kobets' Information Agency with respect to Russian troops in Germany, where a one-time Canadian landed immigrant, Dmitry Yakoubovskiy, worked) the potential for misuse of this monopoly by organized crime should not be discounted. In addition to arms sales, the company apparently will deal in investments, conduct training and run information centres outside Russia.
Clearly the "revolutionaries" of the criminal revolution are now attempting to claim political power, especially at local and regional levels. In their bid for political power they also want to influence ideology, culture and moral values of modern Russia. To a degree they are already doing this. A visible sign of the criminal revolution is the growing recognition of the influential role which organized crime plays in the electronic media and the recording and entertainment industries.
A random sample of the Russian TV Hit Parade "50 x 50", aired on 22 March 1994, showed that three out of four consecutive songs directly and openly glorified the criminal world. The Nashe delo (Cosa Nostra) rock group sang a hit song about Krestnyi otets (God Father); and the Diuna group praised a corrupt policeman called Zhen'ka (listed as no. 3 on the March hit parade).
The cult of the criminal world is booming in the Russian movie industry, which has become the major conduit for laundering illegal money. A recent hit feature film is Prison Romance which depicts a romance between a prison inmate and a female police investigator, and features a prison escape arranged by the female investigator who flees with the inmate. The subliminal message here is a happy marriage between organized crime and law-enforcement.
The general image that the Russian movie industry is trying to depict is that of a thug who alone fought communism. In part this is correct. The underworld was the only real economic challenge to the communist dictatorship, something the régime never fully understood. It is no accident that prison songs and ballads about criminals composed by Vladimir Vysotskii (1938-1980), a popular but state-approved singer, were intermingled with his political protest songs. Vysotskii's traditions are now continued by Alexander Novikov, whose CDs and tapes have sold in the millions.
The attitude of subtle sympathy for crime and its possible forgiveness is not foreign in Russian culture, and may reflect the Russian people's subconscious sympathy for the common criminal. In the concentration and labour camps, well documented by Solzhenitsyn's Gulag Archipelago, common criminals were used in privileged positions as overseers of political (deemed "fascist") prisoners.
Nevertheless, in describing this dichotomy of social attitudes that prevails in Russia to this day, many dissident writers fail to appreciate that the common criminal world, politically and economically, contributed as much if not more to the collapse of communism in the USSR than the dissidents themselves. Hypothetically, and viewed from the perspective of the dichotomy of social attitudes in Russia, the current bid of organized crime for a share of political power is probably considered to be legitimate in the minds of at least some of the population.
The statistics of the crime revolution are stunning. A report on the Russian national security (reported in Moscow Obozoevvatel-Observer special supplement 14 December 1993 pp. 3-173) claims: "Crime in Russia reached an unprecedented scale in 1992. About 2.8 million crimes were committed...but the number of recorded crimes hardly reflects the true picture. According to some experts' estimates, recently there have been some 10-12 million crimes committed in Russia each year....Some 352,000 persons have been killed or maimed by criminals during the last four years....These figures are comparable only with war casualties."
Figures for combatting crime are not impressive. In 1992 only 4 cases dealing with organized criminal gangsterism went to the courts out of 50 that were uncovered (see below, p. 9).
Protection rackets affect 70-80% of privatized businesses and banks. The protection fee or "tax" they are charged comprises 10%-20% of their financial balance. Often this means 50% of the net profit. The protection rackets account for 20%-30% price increases which further add to hyper- inflation. Even the banks charge 10%-20% commission for the illegal distribution of government subsidies.
The Russians have always asked two classical questions: "Who is to blame?" and "What is to be done?" In early 1994, following Zhirinovsky's strong showing in the 1993 December parliamentary elections, the Analytical Center for Social and Economic Policies, which is controlled by the President's Administration, produced a report on criminal activity which was leaked to the press. There is some confusion, in an otherwise well written document, on the true state of criminal affairs and the implementation of remedial measures. The report links Zhirinovsky's success to the criminal revolution and suggests that the Nationalist Socialists could come to power in 1996. As Rutskoy had done before them a year ago, the authors advocate extraordinary measures and powers for the president. "Only the formation of specialized units, well equipped and responsive directly to the President, will provide the means to effectively combat organized crime. The units should be stationed outside the cities and should have access to criminal information kept by the Interior Ministry."
The major flaw in this recommendation is that it equates organized crime with political opposition. Moreover, the proposed anti-crime "death squads" (potentially that is what they may be) will not be answerable for their actions to any democratically elected institutions or officials. They will be controlled by one man, President Yeltsin. This recommendation raises the possibility of a clandestine force designed to fight an as yet undefined "National Socialism" that could be employed as an armed instrument against any political opposition, on the orders of one man.
Significantly, Mr. Yeltsin uses every meeting devoted to organized crime to condemn his political enemies. Government TV video-clips of such meetings leave the viewers with the impression that political opposition and organized crime are synonymous. By democratic standards such measures and the selective ethnic victimization of the mafia (e.g. persecuting the Chechens and sparing the Russians) are unacceptable. Continuation of such policy runs the risk of a violent social backlash.
The law-enforcement agencies in Russia lag behind social changes occurring in the federation. The present Russian legal system—police, procurators and courts—is incapable of efficiently fighting organized crime. In this context the dismantling of the KGB in December 1993 had very serious implications. The KGB and its successors have been the only law-enforcement bodies able at least to monitor the situation. The substitute arrangements that have been put in place are ineffective and will probably be short-lived. Government funds appear to be missing. Commenting on a government blueprint, the "Federal Program on Intensified Struggle Against Crime for 1994-95", Izvestia sarcastically observed: "We still don't have any money for catching the criminals".
The apparent lack of cohesion within the government often results in ambiguous situations. For example, the Minister of Atomic Energy publicly criticized the Minister of the Interior for his comments regarding the alleged theft of radioactive materials from nuclear power stations.
The Prosecutor General's office also appears to be plagued by conflicts of interests. Aleksei Kazannik resigned from his office in February 1994 and was replaced by the controversial Acting Prosecutor General, Aleksei Il'iushenko, the former head of the Control Directorate of the President's Administration. Before that, in August 1993, Il'iushenko was a key figure in a commission that accused Rutskoy of corruption. In January 1994, the Prosecutor's Office in Moscow absolved Rutskoy and opened a case against his "anonymous" accusers, one of whom was Il'iushenko. Once in office, Il'iushenko annulled his predecessor's decision and reopened the case against Rutskoy. This type of "Russian roulette" goes on unchecked in other departments as well.
The Russian courts are similarly disorganized. In 1988 the Communist Party refrained from using the words "organized crime". Today the concept of organized crime is still outside the responsibility of the Supreme Court of Russia. With the Party gone, the courts are still reluctant to take any initiative to define new legal concepts. The courts hope the new Federal Assembly or the President's Administration will put forward and approve a new Criminal Code. However, most civil servants are not keen to advance proposals in this area, knowing all too well that an innovative and aggressive policy towards organized crime can entail threats to careers, if not to their lives.
The December 1993 session of the Supreme Court finally addressed the issue of "gangsterism" ("banditism" in Russian). Very few persons are prosecuted under this ambiguous charge, which is still open to wide interpretation. The single most significant loophole of the article is the individual approach to crime. According to Judge Meshcheriakov, the Deputy Chair of the Supreme Court, the article, in addition to condemning activities such as kidnapping, torture and conspiracy, also condones "a liberal attitude towards similar acts".
In 1992, approximately 50 cases of gangsterism were discovered but only 4 were sent to the courts. The reason can be traced to the matter of interpretation and a ruling on a case in 1960 concerning the Court and the Voronkov gang. The Court concluded that four gangsters armed with guns did not represent an armed gang. Because the Regional Party Committee objected to the very idea of the possibility of a gang in the region, the accused were tried individually, not as a group.
The case set a precedent for the next 33 years and was an example of soviet political interference in the justice system. Moreover, it allowed gangsters to form paramilitary death-squads of the mafia. Now, with no adequate law-enforcement structures in place, it is much harder to deal with the avalanche of gangsterism. The amnesty proclaimed by the State Duma, which pardoned those who were involved in serious economic crimes, has not been helpful either.
The conflict between the legislative and the executive branches of the Russian government continues to hinder the co-ordination efforts designed to fight organized crime. The secretive para-legal presidential structures, loyal to the president, often justify their actions by claiming to confront crime; in reality they are simply promoting a political agenda. For example, the government Legal Directorate (GPU) is responsible for dealing with government corruption. The Directorate's 1993 report does not, however, include any reference to activity in this field. The GPU spent most of 1993 on organizing the president's political campaigns.
The Security Council function is also ambiguous. In March of this year President Yeltsin chaired a meeting on organized crime. He stressed that Russian criminal activity now encompasses domestic and international fora and has penetrated the Commonwealth of Independent States (CIS) as well as other foreign states. No mention was made of criminal links to political power, and the meeting received only limited press coverage.
Increasingly, most Russians view the criminal revolution as a fight for power over the present and future well-being of Russia. The majority believe the government is losing ground in this unusual "civil war". Internationalization, including expansion abroad, is seen as logical extensions of this phenomenon.
The Deputy Secretary of the Security Council of the Russian Parliament has given some information on how the funds provided by the federal anti-crime program will be spent. The reported budget will be approximately between $2.5 billion and $3 billion (US), an increase over an earlier figure of $1 billion. One-third of this will be spent on hiring additional personnel. An unspecified amount will be used to purchase information equipment. The remainder will be spent on arms purchases, special technology and construction.
It remains to be seen whether the right calibre of recruits will be attracted to law-enforcement. After all, organized crime is using some of the top young brains in Russia. Clearly, salaries, job security and personal safety of enforcement personnel must be improved if they are to maintain or attract personnel with the necessary competence. Salaries will have to be at least on a par with those being paid in the private sector, and the budget will have to be sufficiently large to challenge effectively the operational capital available to organized crime.
On 15 June 1994, President Yeltsin signed a decree that grants law-enforcement agencies sweeping powers of search and detention (up to 30 days). The reaction to the decree in the parliament has been largely negative, with only the Centrist Democratic Party of Russia and the ultra-nationalist party of Zhirinovky supporting it. The president's previous efforts against organized crime have had little follow-up and few tangible results. Unless action is taken this time against corrupt government officials, only low-level crime (gangs can now be two individuals acting together) and non-Russian ethnic criminals will be targeted. The more sophisticated crime organizations with links to influential government individuals or structures will not be affected.
Three principal federal institutions are charged with fighting organized crime in Russia: the Ministry of Internal Affairs (MVD); the Federal Counter-Intelligence Service (FSK)—the former KGB—whose responsibilities include fighting crime, corruption and terrorism; and the Ministry of Defence.
The MVD is the largest institution tasked to fight organized crime. General Victor Yerin, the minister responsible, has identified the major problems facing his agency: lack of legislation that defines new types of crimes; the tendency towards forming an "all-state, all-nation front to fight crime"; lack of standard legal norms applicable to all agencies and particularly for the MVD at all levels—as investigator, and during prosecution of cases in court; budget; and technical support problems. It is not yet clear to what degree President Yeltsin's crime decree will solve these problems.
General Yerin knows that according to opinion polls, crime is the number-one public worry in Russia. He is also aware that fighting crime might easily become what he terms a "revolutionary legality". What he means is the imposition of a "war measures act" where the MVD lacks the political legitimacy to fulfil its vaguely defined tasks without a clear mandate and federally approved legal standards. In the last 10 years, lack of such standards may have contributed to the suicides of two of Yerin's predecessors, and imprisonment of another, as well as the imprisonment of two deputy ministers, one on corruption charges and the other for plotting against the president. Earlier this year Yerin himself appeared before the parliament where he was supposed to talk about his anti-crime measures; instead he was cross-examined about his role in the 1993 September-October events that culminated in the attack against the White House in Moscow.
Lacking sound political legislative norms of application and conduct, the MVD is unlikely to be able to carry out effective operations against organized crime in the short term. An MVD- sponsored video recently shown on Russian television shows two males, obviously from Central Asia or the Caucasus, being arrested for an unspecified crime. If the choice of subjects and the narrative, which echoes Zhirinovsky's clichés, is any indication, it will be some time before the MVD becomes an effective force that does not stereotype criminals a priori.
Confirmation that the MVD's primary target is non-Russians is illustrated in "Operation El'brus", carried out on 16 March 1994, when 10,000 people were detained and arrested in Moscow. Eighty per cent of those arrested were from the Caucasus (El'brus is a Caucasian mountain). Sadly, only a week earlier, Russia commemorated the 50th anniversary of Caucasian deportations ordered by Stalin and Beria. The official government news release stated in part, "The leaders of ethnic criminal groups buy in Moscow not only apartments and cars, but also...civil servants and power". It seems the lessons of the "Uzbekistan Mafia Affair" were not sufficiently well learnt. No one is calculating the attendant risks that could be caused by a backlash to these actions in the multi-ethnic Russian Federation.
The FSK is almost entirely staffed by former members of the USSR Committee for State Security (KGB) which was dismembered after the collapse of the Soviet Union. Initially, a Security Ministry (MB) was formed from the internal security departments of the KGB and was placed under parliamentary scrutiny. Although the MB supported President Yeltsin against the parliamentary opposition in October 1993, in December 1993 it was abolished and the FSK was created, bringing the service even more directly under the president's control.
During the MB's tenure, at least three directorates (economic counter-intelligence, anti- smuggling, anti-corruption) and one department were dedicated to fighting organized crime. This allocation of resources supports Moscow newspaper reports that 90% of all cases recently dealt with by state security have been concerned with corruption and organized crime. Under the present security arrangements, these directorates have been dispersed among separate agencies directly responsible to the president, thus bypassing any control from parliament, government or political parties. According to Alexander Anin in Nezavisimaia Gazeta: "Thus, counter- intelligence has again become a structure totally sealed off and under absolute control of a Government Party".
The transfiguration of the KGB has removed the last centralized bastion against organized crime in Russia without a shot of protest being fired. The commitment of the new director of the FSK, General Sergei Stepashin, that his service will fight corruption within the highest echelons of power, is more a declaration of intentions than a real pledge. The former KGB, whose personnel have been cut by 50%, and which is undergoing a virtual purge of its rank and file, is unable to carry out such a sensitive and potentially dangerous task. In order to fulfil it, one needs at least job security and the assurances of personal safety. Neither of these criteria is evident. FSK operatives in danger of being purged will tend to protect targeted corrupt officials because Russian organized crime is renowned for its effective protection of loyal soldiers.
Another important factor is wage disparity. For example, when the KGB's Black Beret unit, "Vympel", was abolished, only 10% of its officers decided to continue to serve in the MVD where they were assigned. Around 30% decided to work in private security agencies for a starting minimal wage of $1,500 a month. The commander of the elite Vympel unit was paid $250 a month. As the pro-president Izvestia nervously observed, organized crime might now have access to dozens of first-class specialists who can "go through 90% of existing alarm systems and who know how to disappear without any trace, in any society, under any conditions". The example of the Vympel unit's response to disbanding is not unique and illustrates the practical difficulties facing Russian law enforcers.
The Russian Army's role in fighting organized crime is not well advertised. Nevertheless, in addition to its peacekeeping roles, for example in Tajikistan, the Russian Army is fully engaged in fighting organized crime, particularly in helping the border forces deter cross-border drug traffic. Moreover, the published presidential timetable for anti-crime legislation suggests that a considerable amount of military technical equipment will be transferred to the MVD. It is possible the MVD will acquire wider responsibility for fighting crime in the future.
In early February 1994, CBC Prime Time News aired a four-minute report on organized crime affecting the Russian-Canadian community. It included references to murder, shootings, criminal rackets, extortion and intimidation. The Russians appearing in the report refused to talk to the journalists or to show their faces, except for one, a Toronto dealer in art objects who had emigrated from the former USSR. He had been threatened by the mob and his house and art has been damaged. A month later this segment was shown on the "Ostankino" Russian TV First Channel, also on Prime Time News. It was the same footage, except that the only person left out was the art dealer. Why? In Russia art dealers are automatically suspect because this occupation is deemed to be in the exclusive domain of the mafia (dealing in the illegal sale of artifacts). An average Russian would think: "If you are harassed by the mafia then you are guilty by definition". This makes violence look almost rational.
The collapse of the USSR and the removal of the strict central control of society, with no instrument to replace it, has resulted in lack of accountability in Russian emigration, security, consular and customs departments. Anyone with sufficient funds can obtain any travel or personal document including birth certificates, university diplomas, patent titles and job history records. Thus, former members of the USSR can adopt identities of those social and ethnic groups that are favoured under the current immigration laws of a given country, and stay there "legally" as refugees.
The lack of control and accountability coupled with economic chaos and social privation for many segments of the population makes Russia a breeding ground for organized crime. The formation of sometimes covert, at other times overt, joint-ventures enables the Russian mafia's money to be laundered. It also attracts global organized crime capital into Russia and other successor states of the USSR. The surreptitious involvement of Russian organized crime elements in otherwise legal foreign joint-ventures could predispose normally honest foreign businessmen to engage in activities considered illegal in their own countries, such as tax evasion.
Joint-ventures have a potential for violent disputes over the legal export of profit capital to the West. The issue is one of business understanding. There is no concept of personalized capital even in post-communist Russia. Organized crime "thinks" the money is owned by the syndicates and not by particular individuals. Those who bring it for investment in the West are seen as simple managers of "communal" group capital and are merely acting as ambassadors at large. Any move by an associate once he is in the West to evade the mob's control might bring violent punishment and is viewed as a settlement of accounts.
The liberalization of travel restrictions during perestroika was welcomed in the West as being in the spirit of the Helsinki Final Act. One of the disturbing side-effects of this policy, however, was the export of the criminal revolution and the emergence of conflict among the different mafia groups that have moved outside Russia. The sources of conflict concern spheres of influence, profits and previous debts. Some former Soviet émigré businessmen have never cut their ties with Russia and continued to trade with the USSR. Their frequent business trips to Eastern Europe inevitably put them in contact with illegal activities. Such individuals now find themselves targets of the Russian mafia extortion and blackmail.
An obvious example of Russian mafia expansion to the West is found in unified Germany. The former East Germany had a wide KGB network that worked closely with the East German security police (Stasi) and maintained a logistical power-base, monitoring the half-million Soviet soldiers stationed on its territory. The slow removal of troops and the sale of all sorts of property has made it an open bazaar for the complete spectrum of criminal activity, including not only arms but illegal emigration and drug trafficking. Retired KGB officials can now continue running their foreign operators and agents but on organized crime agendas. They can also use their practical knowledge to recruit businessmen, sports and cultural figures and use espionage techniques in areas of work that potentially can become the mafia's domain.
The speed of change in Russian political life and the dynamic development of Russian organized crime have been very fast. The security services of Western democracies have been slow to respond to the new criminal threat. Some of this is due to a lack of understanding of the ethnic ethos. Historically there has been a general Russian mistrust of any form of government. Thus the expansion of organized crime from the newly formed states of the former Soviet Union into immigrant communities abroad might find there a fertile soil. Some immigrants have insufficient knowledge of civic responsibilities in the countries of their adoption and are ignorant of their rights. Moreover, the KGB's information on past immigrants, the circumstances of their departure and data on their relatives back home make some vulnerable to blackmail.
It is unlikely that the latest passage of laws on anti-corruption and organized crime will be any more effective than previous attempts to curb the spread of criminal activity in Russia and the former Soviet republics. The criminal revolution is too advanced in Russia, and has its own history, dynamics and trends which are likely to last for some time. The mafia groups are not yet able to undermine the central government. Organized crime, however, is at the core of the current Russian economic, social, cultural and regional political structures. As such it is an obstacle to the development of a properly functioning market economy because organized crime has acquired extensive power in both private and state sectors.
Different mafia groups in the successor states of the former Soviet Union are now engaged in turf wars. They are also seeking legitimate connections for laundering money. Much of this activity results in contract killings. The international dimension is also expanding both outwards and inwards. Russian criminals have penetrated into east and central Europe and are inserting tentacles into Western Europe and North America. Non-Russian groups such as Chinese and the Afghans, involved in the drug trade, are making inroads into Eurasia.
Russian organized crime is no longer only an internal Russian affair. The Western response should be that of active resistance to the export of the criminal revolution and the internationalization of Russian organized crime. To be effective, Western law agencies will have to co-operate with the Russian law-enforcement agencies once reform is carried out, and when Russian law-enforcement agencies have proven themselves effective in dealing with organized crime.
The views expressed herein are those of the author, who may be contacted by writing to :
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Catalogue JS73-1/48
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