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. Last Updated: 07/27/2016

The New Democratic Bribe

I ran into my friend the oil dealer the other day. Now the oil dealer, should you have forgotten, is the man who announced to me a while back that bribery was no longer part of the business picture in Russia. Bribery was right out the window, he said. Consultancies had taken over. "Everything's above board now," he crowed, "just like in the West. Especially in the oil business."


At the time, I'm afraid to say, I rather pooh-poohed this idea of his -- pointing out that consultancy in Russia was just a bookkeeper's term for influence-buying and bribery-by-contract. But he would have none of it. All he would allow was that the oil trade did still have certain inherent problems -- in the areas of transport, unloading, lading, shipping, that sort of thing. But that was only because the business was not yet up to speed with the new thinking on consultancies.


The next time our paths crossed, he was uncharacteristically depressed. He'd just succeeded in doing a major deal, he said. He'd gotten everyone in as consultants: transporters, unloaders, harbormasters, the lot. He'd hired ships from the West. It was all set to go. The problem was -- and he sighed unhappily -- that no actual oil had ever appeared. The producers had simply welched on the contract. The consultants had all been consulted for nothing.


At our next meeting, he was also somewhat glum, though this time for a different reason. Local oil prices, he said, had now risen to the point where there was not much difference between Russian oil and oil elsewhere. And yet the cost of what he still insisted on calling consultancies remained ridiculously high. It was hardly worth doing business in Russia any more, he said. He was also pretty gloomy about the future. The bureaucracy was getting bigger and bigger as Yeltsin's boys bought off potential opposition. And yet the money to keep them happy -- at least in as much as the oil business was concerned -- was drying up (because of declining margins, because of all the consultants on the payroll). He predicted that falling income would meet ever-increasing expectations of gain -- and then, he said, there would be a palace revolution.


Given his earlier analyses and prognostications, I was delighted when he called up the other day and asked to come by. He seemed extremely cheerful when he arrived. And I soon asked him why. "Well," he said expansively, "business is good again. Not at the major level it used to be, perhaps. All the big deals organized at the center are being creamed off by major Western companies and banks. But there's still enough round the edges for people like me.


"And there's a new realism in the air these days. The big boys doing business in Moscow aren't taking any of the old nonsense from the guys in government lining up with their hands out. And this message has filtered out into the provinces and republics, where I'm mostly operating. Out there ... well, it's just like the old days, Jo. There's only a handful of guys you have to deal with. They run the whole show, not to make more and better communism, but to make more and better money."


"So they're prime for individual consultancies," I said with some irony.


"Yes," he said, not noticing. "And there aren't too many of them, that's the point. Their pecking order is established, which means that their prices are too. Though what they have to offer isn't in world-shaking amounts -- the sort of deal every hustler from the West used to dream of -- it's a real pleasure doing business with them."


"With local tin-pot dictators," I said. "With old communists reborn as capitalists, without having to go through the inconvenience of any road to Damascus."


"Jo," he said. "I'm disappointed in you." And then he laughed. "Well, maybe you're right," he said. "But then the oil business has always preferred dealing with autocrats, totalitarians. Revolutions and new democracies are bad news, to be avoided. You don't know whom to bribe."


"Or to offer consultancies to," I said. Again he laughed. Then he said: "You know, the weird thing is that in Moscow business people are taking over the government, whereas away from it, government is taking over business. And both ways -- for the oil trade -- it's good news." He mused for a moment, and then said: "I can't help thinking sometimes that the idea of capitalism has taken on two forms in Russia, mutant-Western and mutant-Eastern. And these two forms, both encouraged by international business, are at odds with each other and will ultimately pull the country apart." "Consultancies," I said. "Dependency on oil," he answered. Merry Christmas!