A Fistful of Rubles
Bernstein, Jonas
"A Fistful of Rubles" In today's freewheeling Russia, business is always personal. So is the danger—corpses are piling u on the streets, and new "security" firms have hired almost everyone in the former...
...This last measure may be the most significant...
...No one, however, pays the official duty...
...She folds the bill and tucks it in his grade report...
...We waited and waited...
...In August the Roundtable's chairman, Ivan Kivelidi, and his secretary died after suddenly lapsing into comas...
...So is the danger—corpses are piling u on the streets, and new "security" firms have hired almost everyone in the former secret police...
...We didn't find the main money—it went abroad...
...For more information call World Affairs at 1-800-667-2209...
...criminal groups, now facing competition in the "protection" business, have likewise begun recruiting ex-military and law enforcement personnel...
...Izvestia, in a kind of coda to Gaidar's comments, printed internal Soviet government documents from the end of 1.99", showing that the country was then on the verge of complete economic collapse and even famine...
...They also run protection rackets...
...These young thugs are known as otmorozhennymi —"the frostbitten" —and can reportedly be hired for a contract murder for as little as $500...
...It is already a deformation of historical, if not apocalyptic proportions...
...FISTFUL In today's freewheeling Russia, business is always personal...
...The government discovered that over a nine-month period, only $18 million of the organization's $192.8 million imports revenue had actually been transferred to the foundation's accounts—and of that $18 million, only 24.5 percent was spent to help disabled vets...
...I'm getting worried," he tells his colleague...
...Petersburg's Baltic Shipping Company was shot to death, and the head of a large Vladivostok fishing concern was blown up in his home —I spoke with Oleg Orlov, the executive secretary of the coordinating council of the Business Roundtable...
...The double hit, like most such attacks, has not been solved...
...And then he sees the bribe, his first of the day, and a smile crosses his face...
...RFIVA is one of a number of organizations exempted by a 1993 Boris Yeltsin executive order from having to pay duties on imported goods...
...Volodya got out of the car while they radioed the information to headquarters...
...Volodya, a young businessman, was telling me about his disastrous foray into the world of auto sales...
...In a recent column published in Nezavisimaya Gazeta, ex-ambassador to the U.S...
...Finally, he returned, and we drove off...
...Last March Lev Gavrilin, one of its top officials, was shot dead near his home in central Moscow...
...Though investigators have not released official conclusions, the two are generally assumed to have been poisoned...
...He yells at his wife to fix dinner, and shouts at junior to produce his report card—immediately...
...So far, however, the Western companies seem to be sticking to a when-in-Rome strategy: BMW, for instance, not long ago opened a major service center in Solntsevo, a Moscow suburb that is home to one of the capital's major mafia groups...
...Our man in Moscow hits the streets...
...The exemptions are costing the cash-strapped federal government an estimated $200 million a month, and are extremely unpopular with the IMF and other international donors to Russia...
...Everybody seems to be sitting behind the wheel of a Lada, Zhiguli, BMW, or Nissan 4x4...
...8} The rule here is: the greater the concentration of money in any industry, the higher the murder rate...
...A GAI traffic cop who has been having an unprofitable week resolves to reverse his run of bad luck...
...The Coordinating Committee's telephone number is identical to that of the NFS, and Tarpishev is Yeltsin's favorite tennis partner...
...Following the attack on Radchikov, the newspaper Sevodnya reported that the government had investigated the foundation in late 1994, after the murder of yet another of its officials...
...The frenetic, vehicular demonstration of new prosperity reminded me of a conversation I'd had several days earlier at Club Magnifique, a recently-opened venue on Petrovka Street, one block from my apartment...
...Put it between the pages of the report card, like this...
...She described his constant shooting up of drugs, financed by the $10,000 a month he earns extorting 30 market stalls—including hers...
...These, he said, should refuse to service stolen vehicles...
...I found that I could only sell them at a huge loss," he said, "because most of the foreign cars sold here—probably eighty percent of them, at least—are hot...
...The 28 January 199 6 The American Spectator of RUBLES latter died on the spot, while Radchikov was taken to a Moscow hospital with six bullets in his head...
...In one, two hit men are standing outside the apartment of a would-be victim, a businessman who is usually home by 9 p.m...
...Next he waves his baton at a BMW: this time the occupant works for the presidential administration...
...The son is terrified, and whispers to his mother, "I got all 2's"—the equivalent of D's—"He'll kill me...
...Who is the best judge of what is news...
...While the humor helps to deal with the fear, corpses keep piling up on the streets of the "free-market" Moscow...
...But no one in the business world is immune to the danger...
...Argumenty i Fakty recently ran an interview with an anonymous woman who runs a stall in a local Moscow market and was the girlfriend of one of the racketeers...
...He points to the next store over—"there they don't have any meat...
...The attack on Radchikov is evidence that he knew too much...
...and Yabloko party official Vladimir Lukin wrote of the "indubitable moral degradation" that Russia is witnessing...
...The association has also created a Council for the Security of Enterprise, which will unite the security services of various private businesses...
...The rule here is: the greater the concentration of money in any industry, the higher the murder rate...
...The roots of this disease, he maintains, are in the "dual morality" engendered under Communism: "One morality for you, for yours, for internal use...
...Another for the taciturn and the humble, for the good-natured and the agreeable, for the simpletons, for the confused —in a word, for the masses...
...Grisly accounts of hired murders are now a staple of the daily papers, detailing what has become little more than a conventional risk of doing business in post–Cold War Russia, as expected and ordinary as a bribe...
...In September Anatoly Chubais, first deputy prime minister in charge of economic policy and the only remaining member in government of Yegor Gaidar's original reform team, laid down the law: The exemptions would be revoked as of October 1. "Either the exemptions go," Chubais told the newspaper Izvestia, "or I go...
...Police authorities said the explosion, which took place in the middle of the night, was a warning: the owners had either not paid a criminal group for a krysha — a "roof," slang for protection—or had paid the wrong one...
...Gaidar predicted that if the Communists and their allies launch a successful march through Russia's political institutions, society will be plunged back into hunting-gathering...
...upo's — the period of the New Economic Policy...
...29 (For vodka, the duty is a whopping 50o percent...
...They were uninsured...
...The study estimated that half of the heads of these firms are former state security officials, a quarter are ex-Interior Ministry, and a quarter are from the GRU (military intelligence) and the armed forces...
...Peter Brimelow Iona Campangolô Linda Chavez Paul Duke Diane Francis Reuven Frank Panelists include: David Halton Christopher Hitchens Herb Klein Flora Lewis Robert MacNeil Mordecai Richler Pierre Salinger Hugh Segal Chuck Stone Andrew Sullivan R. Emmett Tyrrell Pamela Wallin Produced by World Affairs Television Watch The Editors on: WNYE Brooklyn, WETA Washington D.C., WCVE Richmond, WTVS Detroit, WLRN Miami, WCFE Plattsburgh, WNED Buffalo, KSPS Spokane, WNPE Watertown, KCTS Seattle, KCSM San Mateo, WCEU Daytona Beach, Vermont ETV, WGBU Bowling Green, and Media Watch on KMTP San Francisco, WNVC Falls Church, WLRN Miami, WYIN Merrillville, KPTS Witchita, KBTC Tacoma,WCFE Plattsburgh, KCSM San Mateo,WNYE Brooklyn & WNED Buffalo...
...Valery Velichko, former chief of staff of the KGB's ninth directorate (charged with protecting top Soviet officials) and now head of a private security firm, told me that the otmorozhennymi each control a small bit of turf and do not recognize the authority of the established clans...
...They recently lowered the import tariffs on cars from 35-75 percent (depending on the make) to 10-25 percent...
...It has fared better than the other exempted organizations, because 0 sports are popular in high places here...
...In frustration the cop then pulls over a Volvo, but once again the driver pulls rank—this time it's a Foreign Ministry official...
...A trading company that wants to import beer works out a deal with the government whereby it gets what amounts to duty-free status— it pays something on the order of 15 cents per liter into the Treasury...
...The cop's failures put him in a foul mood when he arrives home...
...The aluminum production and export business has seen a host of killings, as has the banking industry: 53 bank officials have been slain since 1992...
...An official of the tax police told Sevodnya: "Radchikov is not the highest echelon of the RFIVA's financial pyramid...
...At 9:15, he's still a no-show...
...There are also signs that the more established mafia clans have evolved from crude extortion rackets into smoother protection operations, even offering legal advice and information services...
...No," the shopkeeper replies, "here we don't have any fish...
...32 January 1996 The American Spectator...
...Orlov believes that the Roundtable's Charter, which has been publicly supported by Chubais and Prime Minister Viktor Chernomyrdin, will be effective...
...Unfortunately, it is the Communists and the "national patriots" who are likely to benefit from the inevitable backlash, not people like Lukin...
...Indeed, Sevodnya recently reported that "one of the capital's criminal groups" even receives a "stable" percentage of the government's agricultural credits...
...A year ago, he imported a half-dozen slightly used German luxury cars into Russia, and did it by the book, registering them according to the official procedure at customs and paying the whopping import duties...
...Following the investigation, the government removed RFIVA's The American Spectator • January 1996 import privileges and ordered it to pay tariffs retroactively...
...It was a typical moment in this very untypical New Russia, the kind the Russians already have quite a good joke about...
...The Russian government has taken some steps to cut into the auto-pirates' empire...
...If the media is monitoring us, who is monitoring the media...
...Among the presidential administration's myriad committees and commissions, only the Coordinating Committee for Physical Education and Sports, headed by Shamil Tarpishev, has a Kremlin address...
...Nine of the Roundtable's top thirty officials, including two members of its presidium, have been murdered within the last year...
...The cop begins to see all those 2's, and his face reddens with anger...
...Naturally, this boom industry requires the "cooperation" of customs and other officials...
...But this past summer, two presidential orders were issued allowing the RFIVA to write off 287 billion rubles (some $57 million) as aid to disabled vets, and awarding it 4o billion rubles ($8 million) as compensation for the losses incurred when its "special importer" status was revoked...
...by JONAS BERNSTEIN Moscow The epidemic of contract murders sweeping the New Russia, just like the deprivations of years past, has spawned some grimly funny jokes...
...These days, while massive corruption still reigns, Moscow's new prosperity is visible on every corner...
...The Russian Business Roundtable, an entrepreneurs' association embracing 270 business groups around Russia, has even drafted a Russian Business Charter, whose signatories pledge not to use violence, not to engage in "criminal JONAS BERNSTEIN is a business journalist in Moscow...
...Volodya said the major transshipment point between the West and Russia is Bulgaria...
...In the bad old days, of course, the hunter-gatherers were in search of sugar, meat, and other necessities...
...The British pub's grand opening this summer was postponed a few days when a bomb blew up on one of its window ledges...
...In any event, on the way to the John Bull we were pulled over at a GAI check-point...
...First he stops a Jeep Cherokee, but the driver flashes an ID from the Federal Security Service, the current incarnation of the KGB...
...The trading company must then work out another "unofficial" payment to the NFS or one of the other exempted groups like RFIVA...
...She also described how he and his band have bought off the local cops...
...In recent years the Moscow KGB has lost half its personnel,and, according to the Security Committee of the State Duma, the lower house of Russia's parliament, there are now more than 25,000 private security firms in the country, employing 800,000 people...
...They were set to expire this past July 1, but each of the exempted organizations reportedly received private documents validated by the State Customs Committee allowing them to postpone payment for several years...
...But on November 3, the State Customs Committee told the Interfax news agency that the government had extended the NFS exemptions until December 1, and sources tell me they may be extended yet again until March...
...The Roundtable will use its influence to prevent violators from receiving licenses and bank credits, and will "recommend or not recommend" Russian firms to potential Western partners...
...On October 29, Valery Radchikov, a former colonel in military intelligence and chairman of the RFIVA, a foundation for disabled vets of the Afghan war, was gunned down along with the RFIVA's legal adviser...
...they were also allowed to make payment in rubles, which are rapidly deflating...
...The official duty on beer, for example, is 30o percent, which adds up to about $1.50 per liter for some brands...
...And Moscow's GAI traffic police, whose roadblocks seem constantly togrow in number, now often run checks on the tag numbers, registrations, and engine serial numbers of the cars they stop...
...forms of business" or "unscrupulous" business practices, and not to "legalize" dirty business or launder dirty money...
...After Yeltsin's 1993 decree, the NFS signed contracts reportedly worth $5 billion to import consumer goods, particularly alcohol and cigarettes...
...Given the proliferation of mobile phones in the New Russia, I'm sure some of the callers were drivers stuck in a similar mess...
...A private trading-company executive explained to me how the system works...
...Here's a 5o,000 ruble note," says his mom...
...That is why Marlboros are cheaper here than in the United States, and why the kiosks are overflowing with imported vodka...
...The Editors is a news show for both countries, addressing issues of mutual interest...
...At home, at least," he says with delight, "vsyo v'poryadke" —"Everything is in order...
...One recent survey found that one-third of all bank heads have received death threats...
...The frequent killings go hand in hand with the remarkable degree of corruption here...
...But as the protection schemes have diversified, a new and more violent breed of criminal has arrived as well...
...Attracted by the higher salaries available in private security, officers have been leaving their jobs in droves...
...Examining the top stories, veteran reporters and editors tackle these questions every week...
...He had paid them off, of course—the computer check, Volodya thought, was just a gambit to wear down his patience and get him to cough up a bribe...
...Volodya's attempts to unload his vehicles were cut short when they disappeared from the lot where he was keeping them...
...Everywhere, all day, there are probki —traffic jams—so bad that the radio stations now play drive-time programming from morning to night...
...I hope nothing happened to him...
...The undisputed king of import privileges is the National Sports Foundation (NFS), which finances athletic competitions and Olympic hopefuls...
...The GEC's decision, based on Yabloko's violation of Russia's Byzantine regulations governing party registration, was quickly overturned by the Supreme Court, and the party was registered...
...The natural human fear of the border between the two has been lost...
...The rationale for the decree was to help cash-strapped charitable groups to raise funds...
...Now," he shrugged, "I'm in banking...
...Stuck the other day in a cab—which, like most, was equipped with a spanking-new Sony stereo—I was listening to a call-in show, on which listeners were being asked to comment on the Central Electoral Commission's disqualification of economist Grigory Yavlinsky's Yabloko party from December's parliamentary contest...
...Volodya, however, doubts there is an "administrative" solution to the problem...
...Perhaps the peak of the disease engulfing society is the new relationship toward life and death," Lukin wrote...
...Many private security entities are virtual armies: Sergei Rodinov, the head of Imperial Bank, one of Russia's largest, told the newspaper Obshaya Gazeta that 6o percent of his bank's employees work in its security service...
...Nothing could be a more certain symptom of the disease which has seized us than the feeling of indifference —which has emerged, grown and strengthened—toward the daily violent death taking place before our very eyes...
...The officer invented an irregularity on Volodya's registration, and then checked the serial number on the Volvo 850's engine...
...This payment is negotiable, but these organizations are in a strong bargaining position, since contraband operations are their only competition...
...The Russian Academy of Sciences conducted a study, excerpted in Izvestia in September, that described what might be called the de facto privatization of Russian law enforcement...
...He argues that if Western auto makers want to establish a legitimate, longterm market in Russia, they should lower prices, making up the difference in what they charge for parts and servicing at authorized automotive centers...
...In such circles the BMW is called a boyevaya mashina bratvi—a "combat machine of the brotherhood...
...According to one expert, 8o-85 percent of the Western booze and 90 percent of the Western cigarettes entering Russia do so under NFS exemptions...
...Several days after the October murders of two more prominent businessmen—the president of St...
...Nine o'clock comes and goes—no businessman...
...Despite its influence, even the NFS has not been untouched by the Russian business bloodbath...
...Reformer Yegor Gaidar, whose Russia's Democratic Choice party appears poised for disaster in the December parliamentary vote, recently said that the best analogy for the current situation is the 30 January 1996 • The American Spectator Quality Television Does Exist 411111111111101411L MP "141^41%1111111411/k/Pv The Editors Media Watch Canada and the United States share not only a continent, but pressing ideas and problems...
...This is mafia consciousness...
...Auto theft is a huge import business...
...There is an obvious tendency toward self-destruction within Russian business," he said...
...Finally, at 9:3o, one of the killers looks anxiously at his watch...
...Fifty-three bank officials have been slain since 1992...
...When we left Club Magnifique, Volodya offered me and my friends a lift to our destination—the John Bull Pub on Kutuzovsky Prospect...
...As the old Soviet joke went, a man approaches a shop and asks if there is any meat...
Vol. 29 • January 1996 • No. 1
