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July 4, 2006 - Russia Profile - By Dmitry Babich - Three high-level regional officials recently ended up behind bars following a new Kremlin-led anti-corruption campaign. In Tver and Oryol, dozens of lower-ranked officials were also arrested on corruption charges, leaving the local governors' offices almost empty. Most of these arrests were carried out by former Prosecutor General Vladimir Ustinov but his replacement, Yury Chaika, seems inclined to continue the investigations. The Russian government's problems with corruption are nothing new, prompting many observers to question the timing of the Kremlin's anti-corruption drive. "The authorities need a slogan for the upcoming election cycle, beginning with the Duma elections in 2007 and the presidential elections in 2008," said Sergei Markov, director of the Kremlin-friendly Institute of Political Research. "In 1996 the slogan was ‘Stop Communism!' In 2000 and 2004 the campaigns were led by anti-terrorist slogans. Now the likeliest slogan is ‘Eradicate corruption!'" In Markov's view, the drive is strengthened by the popular perception of corruption as the cause of many of the country's woes, including the rash of terrorist attacks in 2004. While police are rumored to have taken bribes from those responsible for the Beslan school siege in order to let their trucks through checkpoints, former airline employees admitted to accepting payment from the suicide bombers who blew up two planes that summer – trading public safety for private gain. Also contributing to the discussion is the fact that most experts agree that corruption payments have increased during President Vladimir Putin's tenure. But the anti-corruption theme does not have to be a losing one for pro-Putin United Russia in the 2007 Duma elections. "The economy grew and so did problems with corruption, which is a natural development," argues Georgy Satarov, president of the Moscow-based InDem Foundation and one of Russia's leading experts on corruption. "Secondly," he continued, "the bribes paid by ordinary Russian citizens did not increase during these years. The increase in corruption falls mostly on businessmen, so an average Russian may not even notice how bad things have gotten." Satarov added, however, that businesses pass the costs of corruption onto their consumers, making Russian products less competitive on the world market and discouraging foreign investment. As part of a study on corruption, InDem conducted polls in 2001 and 2005 that asked questions regarding the number of bribes paid, and the amount. The responses showed that over time people paid fewer, but more expensive, bribes. "There was one case," Satarov said, "when a minor official received $500,000 for opening a sealed storage unit. Just five or six years ago a similar kind of ‘service' would have cost a tenth of that amount." InDem's polls led Satarov to the conclusion that the size of "corruption market" in Russia grew from $33.5 billion in 2001 to $316 billion in 2005. A lot of experts, however, think that Satarov exaggerates the scope of the problem. "Satarov just took the amounts of bribes which ‘his' businessmen paid, and multiplied them by the number of businesses in the country," said Sergei Guryev, director of the Center for Economic and Financial Research in Moscow. "The corruption rates in various branches of the economy are different, so the right approach is to multiply the amount of an ‘average' bribe in, say, the restaurant business, by the number of restaurants." Satarov argues, however, that the size of the Russian economy is bigger than officially reported and, therefore, so is the scope of the corruption. "Of course, the Russian economy is bigger than Goskomstat (The State Statistics Committee) says," Satarov said. "In our figures, we included all kinds of corruption, including hostile takeovers of businesses and preferential treatment for state-owned companies." In Satarov's opinion, the period of transition that from 1991 to the present provides an ample environment for corruption – circumstances not exclusive to Russia. China, whose economy is officially 4 times bigger than Russia's, is believed to have a bigger corruption market, too. "Corruption in Russia is a childish game compared with China's problems," said Vilya Gelbras, a professor of the Institute of the Countries of Asia and Africa at Moscow State University (MGU), and a leading expert on the Chinese economy. "The recent permission to accept businessmen as members of the Chinese Communist party was necessary because the highest party officials also happen to be China's richest businessmen." In Russia, the close relationship between big business and government is no secret to anyone and few believe that all corrupt officials will be brought to justice, but the resumption of anti-corruption arrests after a long period of passivity on the issue inspires hope for greater justice, albeit perhaps selectively applied. "It is very important that people don't get the feeling that the recent arrests of [Nenetsk governor Alexey] Barinov or [Volgograd's mayor Yevgeny] Ishchenko on corruption charges are just a result of squabbles between various interest groups in their regions," said Dmitry Orlov, head of the Agency of Political and Economic Communications. "That is why it is significant that the investigations are conducted by the prosecutor general's office." "In the beginning of his term, Putin hoped that corruption could be curbed by administrative and judicial reforms," added Sergei Markov, "That is why the repressive measures were laid aside for a while. Now that the officials have proved extremely resilient to the reforms, punishments are back in fashion."