Three years after the exhilarating collapse of centralized Communism, Russia still has a long way to go before it will be a free and democratic country. Even optimists claim the country borders on the ungovernable. Democratic reformers are paralyzed by division into competing factions in the parliament. The old nomenklatura still have a chokehold on the country; they have new business cards, but they are still in power.
While there has been enormous liberalization in elections, religious freedom, and privatization, there is still no rule of law, no clear definition of property rights, and in much of the country no real democracy. Bureaucratization is actually worse than it was under the Communists.
MAFIA IN THE "WILD EAST"
Russian society has largely disintegrated to a Hobbesian rule. Organized crime touches at least half of all economic transactions. Criminals are in collusion with the old KGB and Communist Party structures, comprising a multilevel network known as the mafia. Some segments specialize in forging documents, reconnaissance, executions, or illegal currency transactions; others traffic in drugs and weapons. Competing gangs battle each other in shootouts, giving today's Russia its "Wild East" character. Those who refuse to do business with the mafia may discover their kiosk burned down the next day, a car bomb waiting for them, or an assassin's bullet.
Confiscatory tax rates have not only stunted entrepreneurial impulses, they serve as a serious inducement to tax evasion and collusion with the mafia. Businesses pay at least 55 percent of net income, and can incur rates as high as 120 percent. Members of law enforcement and tax collection agencies are paid off to collaborate, making an extremely effective net for coercing cooperation. A contract for mafia protection is cheaper and more reliable than counting on the corrupt police or the choked courts for justice. Mafia fees have become a normal price of doing business. But, "once you are in, the only way to end the relationship is to die," as one Russian put it baldly.
Faced with chaos bordering on anarchy, a quarter of Russia's voters chose ultra-nationalist Vladimir Zhirinovsky's party in the last election. He appealed to their frustration at the economic disintegration following Communism's collapse, as well as their yearning for respected status abroad. Alexander Solzhenitsyn has called Zhirinovsky "an evil caricature of a Russian patriot." His fisticuffs in parliament, bullyboy blustering, and threats to nuke enemies amuse Russians used to grey politicians.
But Zhirinovsky is not to be dismissed as merely a buffoon. Diplomatic sources and analysts from Russia, Germany and America have confirmed that Zhirinovsky did not simply appear like a comet on Russia's political horizon. In the last days of the Gorbachev era, substantial sums of money were reportedly funneled to establish his party as a new political home in the event that the communist structure would collapse. Indeed it did, and the allegations since of KGB funding refuse to go away. "Zhirinovsky was a KGB creature from the very outset," claims an official from Russia's Ministry of the Interior. Collaborating with the KGB are the old military-industrial complex, the core of directors of state-owned companies, and segments of the army, who have thrown their support behind Zhirinovsky to regain their old power.
Even if, as observers predict, Zhirinovsky's personal popularity drops sharply, his fascist ideology has deep roots in the Russian population. Fascism's appeal, however, may diminish in the light of promising signs on Russia's economic horizon. Inflation, which threatened to escalate into hyperinflation, has been tamed to a monthly rate below 10 percent this July and August, down from last year's monthly high of 35 percent, defusing some of the more dangerous political volatility. Voucher privatization has put 60 percent of industry into private hands over the past two years. …