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Putin’s Trap

When I began working as a foreign correspondent in Moscow in 1995, the chaos of the place was, from a narrow professional point of view, one of its more attractive features. Nobody was absolutely sure of anything, which meant that your guesses about what was happening were as good as anybody else’s. Of the many theories hatched about the way the Russian state functioned (I use the verb loosely) in those days I can think of only one, by Thomas Graham and Lilia Shev-tsova, which proved to have any predictive value. It held that the members of Russia’s political and business elites had formed themselves into four or five warring “clans,” and that whenever one clan got too strong the others would unite to bring it down. This analysis both explained and predicted constant turmoil, and for that we commentators were grateful.1

It turned out that there were stabilizing processes at work deeper within the Russian state which would gradually make themselves visible. The most important was the advance from middle- to higher-ranking jobs of a younger generation of Soviet-educated officials, who were in their thirties when communism collapsed and in their forties when Yeltsinism collapsed and they inherited power. They had stayed with the bureaucracy or the secret services because they were too dull or too high-minded to defect into business or crime along the way. Their best-known representative is now President Vladimir Putin. He and other members of his age group are reconstructing the secretive, centralized, militarized political culture of their youth, reversing much that was good, and much that was bad, about the Yeltsin years.


If I could go back in time and visit the Moscow of 1995, one of the books I would want to take with me would be Vadim Volkov’s Violent Entrepreneurs: The Use of Force in the Making of Russian Capitalism. I see in it a hundred things I wish I had known in the mid-1990s as I tried to understand how business could survive at all in so lawless and corrupt an environment. Volkov supplies the missing link between almost everything else you may read about business in post-Communist Russia and almost everything else you can read about organized crime there. He treats the two activities, business and crime, with equal respect as fields of sociological inquiry, and so arrives at the first satisfying account of how they affect each other. If only he, or a similarly gifted analyst, were able to explain the interplay between politics and business in post-Communist Russia in a second volume, and between politics and crime in a third, we would come close to understanding how the new Russian state has been formed.

Violent Entrepreneurs is based on interviews with some professional criminals—Russians would call them “bandits”—as well as businessmen, policemen, and people who provide private security. Volkov describes how he won their confidence:

I had to learn speed writing because a tape recorder was out. I explained that, as a sociologist, I was interested in general patterns, schemes, and examples and that I had no interest in who killed whom and sought no information that would put him or myself at risk. During the interviews, I could ask any question, but my respondent answered only those he wished. It was agreed that he would simply ignore the questions he considered inappropriate.

Reassured, the bandits prove to be talkative. From “Roman,” a mid-ranking member of a Petersburg crime gang, Volkov extracted the following curriculum vitae:

At the age of seventeen he received the highest title in boxing, master of sports. After completing his schooling, he was drafted into the army and sent to fight in Afghanistan. On his return in 1989, Roman began to cooperate with various groups of swindlers and shadow businessmen, providing them physical protection and participating in violent disputes. At the same time, he never missed an opportunity to take part in local wars as a mercenary and fought in Abkhasia, the Transdniester Republic, and even Bosnia. His current major business is managing the illegal production of vodka from cheap ethyl alcohol imported from Belorussia.

A good man to know.

The bandits come from all sorts of backgrounds in which group loyalties are formed and can be depended on: criminal networks in Soviet prisons, sports teams, organizations of Afghan war veterans, Cossack unions, even the state security services. The professional criminals carry out the same basic activities. They intimidate, protect, gather information, settle disputes, give guarantees, enforce contracts, and impose taxes. They have the same resource at their disposal, organized violence. The better they manage its use, the stronger they become. Hence Volkov’s name for them, “violent entrepreneurs.”2

He distinguishes these bandits of the 1990s, whose techniques he traces back to the street markets and small-scale protection rackets of the late 1980s, from the more traditional type of Russian thief.3 The thief produces nothing, and does not claim to do so. The bandit, by contrast, claims to offer services based on the use or threat of force, and wants to advertise this fact. Hence, says Volkov, you could, in any known city during the 1990s, identify the bandits by their gold jewelry, crew-cut hair, leather jackets, big black cars, and assertive behavior. The thief aims to pass unnoticed in public places; the bandit wants to be recognized.

Economists may assume that Volkov is heading for a familiar explanation showing how, when the state is weak, businessmen depend on private groups, including criminals, to provide physical protection and to enforce bargains. But Volkov goes well beyond this, arguing that it is not nearly enough to treat these competing providers of security as “merely passive providers of a commodity.” The criminal organizations very often have the upper hand in their relations with the companies with which they are involved. Theirs is the offer you cannot refuse. Volkov wants to establish exactly who they are, what they do, and how they do it. By and large, thanks to his courageous firsthand research, he succeeds.

He finds that something close to a relationship of mutual dependence evolves quickly between bandits and businessmen. “We are enforcement partners of sorts,” one gangster tells him, and Volkov uses this phrase4 to describe the more intimate relationship between gangsters and businessmen that superceded simple racketeering in the early 1990s. By then the gangs had established their turf in a city or industry by violence and, in doing so, they gained general power over the particular businessmen who paid them tribute. The bandits see the businessmen as weaklings, too irresponsible and lacking in character to be trusted. Exploiting them is “often experienced by bandits almost as a moral obligation,” Volkov writes.

A businessman who pays tribute even once to a gang is considered the property of that gang and he is taxed forever after.5 But still, since the businessmen become, in effect, the property of a gang and a source of income, they need to be protected against other gangs, and even assisted in making more money. The bandits are drawn into providing the businessmen with information on competitors, collecting debts, and helping with other practical problems including relations with officials. In the terminology of the economist Mancur Olson, they become “stationary bandits,” with an interest in the continuing welfare of their victims, and not “roving” ones, who take everything. Crucially, the gangs, because they understand and in some sense respect one another, evolve into guarantors of the transactions into which “their” businessmen enter. This practice becomes the rule, Volkov finds, to the point that, throughout the Russian economy,

the majority of high-value business agreements could only be concluded on the condition that enforcement partners, be they criminal groups or legal security services, participate and provide mutual guarantees. The mere absence of a recognized enforcement partner on one side could spoil the prospective deal.

Volkov is reminded of the question with which Nietzsche opens the second essay in his Genealogy of Morals: “The breeding of an animal which is entitled to make promises—is this not the paradoxical task which nature has set itself with respect to man?” Three or four years of capitalism in Russia was enough to breed a version of this animal suited to local conditions, if one unattractive in most other respects.

But violence backing up the promises had to be real, and used from time to time. After a while, a principle of mutual deterrence gradually prevailed, and the peak of business-related killings in Russia was passed in 1995. By this time, too, new players were entering the market for protection, particularly the thousands of officers driven out of Russia’s security services and elite army units by the collapse in morale and lack of pay. They were joining or creating private security agencies offering more sophisticated services to businesses, and they maintained strong if informal links to the government. For a price, they could drive away the bandits infesting a company and substitute their own, more legitimate, protection. Such activities, called sniatie kryshi (“taking away the roof”), led to a significant decriminalizing of Russian business in the late 1990s.

As the criminal groups lost ground to the newer and less threatening private security companies, they adapted. Some tried to imitate the private security companies by reorganizing their operations and keeping them under tighter control. Others, such as the Tambov criminal group in St. Petersburg, diversified or changed course entirely, making investments and running businesses of their own.6

Volkov credits the “violent entrepreneurs” with having done “much of the dirty work” needed to prepare the way for the consolidation of state power which has been taking place under President Vladimir Putin. The Russian state is trying now to reclaim the monopoly over violence, the administration of justice, and tax collection, a monopoly it lost so humiliatingly in the late-Gorbachev and the Yeltsin years. The open question is whether this can be done without relying on the authoritarian and totalitarian methods that have prevailed throughout Russian history: Putin shows more and more signs of wanting to keep the authoritarian methods, at least, available for use.


My work as a foreign correspondent in Moscow ended, probably for good, in October last year, when I encountered two violent entrepreneurs in a pedestrian walkway under Kutuzovsky Prospect, a main road in the west of Moscow where I had an office. A prolonged transaction ensued. I spent the following week in a neurological institute and much of the winter as an outpatient at hospitals and clinics. By Christmas I could open my mouth normally. By March I could write again. I left Russia and moved to Latvia, a country once annexed by the Soviet Union and now about to join the European Union.

The change of scene has served to remind me that the behavior of Russia matters directly to almost nobody in the United States or Western Europe so long as it does not involve explosions of nuclear missiles or nuclear power stations. But to Latvia and to other countries on Russia’s borders, Russian behavior and Russian intentions matter more than almost anything else in the wider world. In the Baltic nations, there is still the sense that each moment of independence might be merely a moment of remission in centuries of foreign dominance, mainly Russian. We may feel sure that Russia poses no conceivable threat to Latvia, or to any other country this year, and very probably not for the next ten years. But who can say what will happen in twenty-five or fifty years? It depends on how Russia evolves. To countries nearby, it is a matter of intense practical interest whether Russia has indeed ceased to be an intrinsically threatening form of government, a dictatorial empire, and is becoming instead an intrinsically peaceful form, a democratic state. Most international experts hold that such a change is taking place, or has taken place. We can only hope they are right.

  1. 1

    Thomas Graham, “The New Russian Regime,” translated in Nezavisimaya Gazeta, November 23, 1995. Graham was a US diplomat in Moscow, and is now with the National Security Council in Washington, D.C. Lilia Shevtsova is a senior associate with the Carnegie Endowment, which published her admirable study of recent Russian politics, Putin’s Russia, in May this year.

  2. 2

    Volkov notes that the term is not his own invention, but has been used in discussions of the Sicilian Mafia, such as Anton Blok, The Mafia of a Sicilian Village: A Study of Violent Peasant Entrepreneurs (Blackwell, 1974).

  3. 3

    I say “Russian thief” here as shorthand for what Russians would call a vor v zakone, or a “thief professing the code,” a professional thief honored by his peers and steeped in prison traditions.

  4. 4

    At this point in the interview, Volkov writes, “In an attempt to settle the intellectual property issue I thanked the respondent for what I considered a precious analytical insight…and said that I intended to use the term as an analytical category. He did not object.”

  5. 5

    Volkov estimates that criminal gangs would typically take 20 to 30 percent of the revenues from a business under their protection.

  6. 6

    Volkov links the Tambov group to a fuel company called PTK, which grew between 1994 and 1999 to become the dominant fuel company in the Petersburg region. According to Newsweek (September 3, 2001), a contract giving PTK “a virtual monopoly” over retail gasoline sales in St. Petersburg was signed by the city’s deputy mayor from 1994 to 1996, Vladimir Putin. This does not imply any connivance on Mr. Putin’s part. It does, however, show how tightly the worlds of business, politics, and alleged crime overlapped in the Russia of the 1990s.

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