Far and Away: Reporting from the Brink of Change

Putin has been photographed repeatedly with the Night Wolves, an Orthodox biker gang. Ivan Ostrakovsky, the group’s leader, said, “The enemies of Holy Russia are everywhere. We must protect holy places from liberals and their satanic ideology. The police can’t cope with the attacks. When I came back from serving in the Chechen War, I found my country full of dirt. Prostitution, drugs, satanists. But now, religion is on the rise.” Another skinhead Orthodox gang severely injured a protester who was marching in opposition to the stiff sentence meted out to Pussy Riot, the radical band arrested for performing an anti-Putin prayer in Moscow’s cathedral. “He insulted our sacred, holy things,” they said.

Georgi Mitrofanov, the sole Russian cleric who has demanded that the church acknowledge its historic relationship with the Soviet authorities, has said, “We lost so many honest people in the twentieth century that we have created a society where imitation and role play are the norm. Before we had people shouting they were building Communism, but they were just using slogans that gave them opportunities. Now a new lot, and indeed some of the old one, shout about ‘Holy Russia.’ The words mean nothing.”

Russia’s criminal gangs are involved around the world in extortion, human trafficking, drug smuggling, prostitution, arms trading, kidnapping, and cybercrime. Both the English prosecutor leading the inquiry into the murder of whistleblowing FSB officer Alexander Litvinenko in London and Spanish money-laundering investigators have concluded that much Russian organized crime is coordinated from within the Kremlin. The Spanish inquiry alleged that Alexander Bastrykin, head of Russia’s Investigative Committee, which oversees major criminal inquiries, and Viktor Ivanov, head of Russia’s Federal Narcotics Service, associate with criminals. WikiLeaks cables identify Russia as a “virtual mafia state” that sustains an assortment of criminal organizations: larger ones such as Solntsevskaya Bratva (estimated annual income: $8.5 billion), Bratskii Krug, Tambovskaya Prestupnaya Grupirovka, and the Chechen mafia, as well as innumerable smaller ones. Many are run by college graduates who game the system at the most sophisticated level.

Corruption costs the Russian economy as much as $500 billion each year. Freedom House gave the country a 6.75 rating on a corruption scale on which 7 is the maximum score. Putin has invited criminals who have assets abroad to bring them back; in 2015, he signed a law guaranteeing amnesty for such people, who will be protected from criminal, tax, or civil prosecution. Even so, an estimated $150 billion left the country that year. “We all understand that the assets were earned or acquired in various ways,” said Andrey Makarov, chair of the State Duma’s budget committee. “However, I am confident that we should finally turn the ‘offshore page’ in the history of our economy and country. It is very important and necessary to do this.”

Symbolic shows of legal rectitude are staged for the population. Moscow banned imports of European cheese and other foods in retaliation for sanctions. This boycott has had much less effect on its foreign targets than on the Russian people. To show that Russia follows through, state television featured huge machinery destroying over six hundred tons of contraband food. Such theater is patriotic, perhaps, but in a country where people are starving to death, many Russians found it ostentatiously cruel.

The economy has become one of the most unequal in the world, with just 110 people holding more than a third of the country’s wealth. The poverty rate increased by a third between 2011 and 2015. In the same period, a half million people fled to seek economic opportunity abroad. The Russian economy is afflicted by lack of diversification, over-reliance on oil markets, international sanctions, minimal worker productivity, corruption, and the lack of incentive to change. Moscow has sponsored large companies under government control, but not small and medium-size independent enterprises (SMEs). In the EU, SMEs produce 40 percent of GDP; in Russia, about 15 percent. This shift out of private enterprise is not economically promising. Oil and gas account for more than two-thirds of exports, which means that every time oil prices drop by a dollar per barrel, Russia loses $2 billion. Ongoing sanctions will reduce the country’s economy by nearly 10 percent. Russian workers remain singularly inefficient. Ian Bremmer wrote in Time that while an American worker contributes $67.40 for each hour worked, a Russian worker contributes only $25.90. However, financial training starts early; at VDNKh, a “young investor school” teaches financial literacy to children as young as eight.