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. Last Updated: 07/27/2016

Big Cleanup or Old Refrain?

Is the Russian government at last ready to take on, in earnest, the problem of corruption?


According to press reports, President Yeltsin will focus on the problem during his scheduled March 6 speech to parliament. A source within the head of state's inner circle told Interfax that Yeltsin will outline steps aimed at "decriminalizing" the economy and "liquidating the fundamental conditions feeding corruption."


The focus is not new: Crime and corruption were the major themes of Yeltsin's 1994 "State of the Nation" address. As a result, his forthcoming speech is unlikely to elicit from the public anything more than "universal skepticism," as the daily Segodnya put it this week.


Unlike two years ago, however, the Kremlin and the government are outlining a series of specific steps. Segodnya, for example, reported this week that Yeltsin will call for an end to the government's practice of placing budget funds in "authorized" private banks.


This practice has created a major breeding ground for corruption. Last year, for example, the parliament's watchdog Audit Chamber found that several authorized banks had used budget money to win controlling packets of blue-chip state enterprises during 1995's loans-for-shares privatization scheme. It is also widely believed that funds earmarked for Chechen reconstruction and deposited in authorized banks were not used for their intended purpose.


The president's promise on authorized banks, if fulfilled, will close at least one avenue for the massive misuse of taxpayer money.


Yeltsin, according to Segodnya, will also crack down on officials who delay using budget funds for their intended purposes in order to play the markets, or who withhold all or part of them. It is unclear precisely how this will be done, but Interior Minister Anatoly Kulikov, who was recently made point-man in the fight against economic crime, suggested this week that he would push for the passage of a law requiring state bureaucrats to declare their incomes.


While this proposal is perfectly reasonable, Kulikov this week also defended his infamous demarche of last year -- his call for the government to make up its revenue shortfalls by nationalizing private companies. But Russia's top cop also pledged to eschew "emergency" measures in his fight against economic crime, which suggests that cooler heads at the top are keeping him on a short leash.


Meanwhile, the fact that government revenues remain catastrophically low has apparently forced the government to declare war on tax breaks, another key link in Russia's corrupt state-business symbiosis.


According to Segodnya, tax breaks granted by presidential decree or governmental order have already been canceled. The remaining privileges -- worth 163 trillion rubles ($29 billion!) -- were handed out by the parliament and local legislatures. This means that the government, if it really intends to halt this gravy train, will face fierce resistance from an army of special interests and their parliamentary sponsors.


While any of the above-mentioned measures would be a step in the right direction, the single most useful action the government could take would be a genuine overhaul of Russia's tax system. The new tax code the government plans to submit to parliament would make paying taxes a more reasonable proposition, thereby reducing evasion and, concomitantly, the criminalization of the economy. Something more radical -- like a flat tax -- would be even better, but the significant reduction in the overall number of taxes envisioned in the legislation is a start.


While the apparent determination of the powers-that-be to take on corruption is a positive development, it remains, thus far, more declarative than real. Skepticism is more than warranted, if the past is any guide.


But the Kremlin and the government are finally, at least, getting the mood music right. And not a moment too soon: Izvestia reported Thursday that hundreds of elderly and children in the Ivanova region are literally facing starvation because of delays in pensions and other social payments.


With the social situation in some regions is becoming catastrophic, with Alexander Lebed riding high in the polls and the president's health a continued question mark, those at the top may have simply decided that cleaning house has now become a matter of political necessity -- or even survival.