FREE ESSAY ON RUSSIAN MAFIA

RUSSIAN MAFIA

The Russian Mafia: Protectionism in the New Capitalist Russia
The Russian Mafia has always exercised an important role in the Russian economy. The
contemporary mafiosi are descendents of the seventeenth Century highwaymen and Cossack
robbers. These men occasionally murdered families prior to raids preventing them from
being captured. The Russia mafiosi made a point to remain aloof from the state. Mob men
were actually spurned when returning home from fighting in the Great Patriotic War. The
gangs begin to dominate markets such as car sales, spare parts, cigarettes, food
distribution, and other markets that the Communist Party failed to provide under the
Bolsheviks (Remnick196). 
Since the collapse of Communism and the dawn of Capitalism, the Russian people have been
troubled with innumerable obstacles. There are more than 3,000 gangs known generally as
the Russian Mafia. They have proven to be a significant force in delaying the reform
process (Goldman 58). The new Russian Mafia has involved themselves in every imaginable
kind of criminal activity from drug trafficking and money laundering to protectionism,
which penetrates into every area of society. Under the laws of the Soviet Union, the
regulations were strong and external. Now the external regulators have disappeared
allowing the Russian Mafia to exceedingly enlarge its strength and influence especially
with the accelerated speed of privatization without legal safeguards. The Russian Mafia's
effect on the Russian economy through protectionism can be viewed through the different
scopes of academia, the United States Press, and the Russian Press. 
Protectionism is a preferred activity of the Russian Mafia. When a new private business
opens, the mafia ensures that it will get a share of the profits. The mob offers the new
operation protection. If the business refuses to purchase protection, the mafia uses
violence against them or their property (Gustatson 105). Most entrepreneurs purchase the
protection. Then the new company pays unofficial taxes to crime groups. This guarantees
that nearly all new businesses will have an affiliation with the mafia. Gustatson
estimates that payments can are approximately twenty percent of the profit (105). This is
a major form of taxation on top of what the government already commands leading many
companies to tax evasion or concealing their exact value. These acts forfeit what little
protection the authorities might be able to render.
The mafia demands a cut of the earnings but in turn furnish more than adequate security.
The mafiosi provides protection from unaffiliated criminals and rival gangs. They ensure
that property is not damaged or stolen. If entrepreneurs are visited by another
organization, they must only summon their own mafia group. The two gangs will settle the
matter themselves (Gustatson 105). This security is an asset that the State seemingly
fails to provide. The Russian Mafia has more men and weapons than the Russian law
enforcement. The police force is an intently corrupt place as is much of the Russian
government. Both army officers and law enforcers are frantic for cash and willing to sell
weapons such as guns, grenades, and rocket launchers (Remnick 109). The Russian Mafia is
able to easily locate weaponry to carry out its duties as protectorate; while, the
authorities lack money and personnel.
A few days before the union dissolved the biggest Russian Mafia leaders held a summit
meeting at a dacha just outside Moscow with the three main Italian crime organizations
from Sicily, Naples, and Calabria. They understood that it would bring turmoil and
uncertainty; yet, the Vori v Zakonye or thieves in the law saw possibility in the
disintegration of the Soviet Union. The organizational leaders assembled to discuss the
selling of nuclear materials, and drug-money laundering (108). The mafiosi would use
their influence to access bureaucratic power. They began anticipating the collapse by
becoming private businessmen: consultants and rainmakers (197). As Consultants and
Rainmakers, they would assert their authority through protection.
Academia states that protectionism is having a trenchant effect on the Russian economy.
It helps create massive inflation to the already weak economy. The twenty percent of the
gross earnings extorted from the business as protection raises the price of the goods and
services tremendously for the Russian people monthly. The Russian consumer ultimately
pays the protection bill (Goldman 58). It is estimated that in 1996 about eighty percent
of all private businesses made regular payments to a mafia organization for protection
and a substantial amount of that money ends up in other countries. (Gustatsun 104). Thus
the underworld is taking a vast amount of wealth out of Russia. With the Russian Mafia
handling so much money, it is little wonder that they were able to buy so many
governmental officials. 
Scholars tend to take an objective approach. The Russian Mafia demands a cut of the
profits, but does render a service that the authorities can not provide. This is having
plundering effect on the economy as a whole. It is causing massive inflation and sinking
the already weak economy. This has lead to a trend towards nationalism and separatism in
Russia. 
The United States press understands that the Russian mafia had a definite place in
society at one time. It grew because of the buying and selling of smuggled or stolen
goods. It satisfied the Soviet consumer with products that the State failed to provide.
These items were both consumer and illegal goods. It filled this role for decades under
Soviet rule. The mafia was established and equipped to amplify its business during market
reforms. It was more in touch with consumer demand (Tanner C2). Russia suffers the most
due to mafiosi activities. It seems that gangs are threatening to take over the nation's
economy. Bombings contract killings, and robberies are a common occurrence. Russia is a
very different place from the early developing economy of the United States. The robber
barons of the United States can be described as vicious. They made their fortunes by
building and preventing others from doing just that. Yet, Russian wealth is achieved and
held through violence, theft, and manipulation. Many Russians came to believe that this
distorted form of mafia control is the normal free- enterprise system. This sentiment is
reinforced when they see Western businesspeople and investors fail to complain and then
comply with paying protection money (Washington Post C2). 
The Puget Sound Business Journal reported "the Russian mafia is the most Western-like
negotiating experience you'll have in Russia...unlike the slow-moving and fractured
government the Russian mafia is businesslike and helpful" (18). The Russian syndicates
seem far more organized than the legitimate government. The gangsters have a systematic
method of retrieving "taxes" from their businesses under their protection. They use
force. This is how they sustain control. The Atlanta Journal and Constitution reported an
antidote about protectionism. There was a small store in Moscow selling groceries and
other items, Vso Dlyah Vas or everything for you. It was one of the many new stores
springing up in the new Russia. The store's front windows were smashed; yet, nothing was
stolen. A few days later the store was closed; the owners left town (1B). They had failed
to pay the appropriate people. This is just one example of mobsters smashing private
businesses for failure to comply with their protectionism mandates. 
Democracy in Russian has turned out to be a free-for-all of profiteering. For many, it
brought increased poverty and despair. Krisha, in Russian, means protection money. It is
surmised that seventy-five percent of the businesses in Moscow pay a percentage of its
profits to its organized crime associations. Actually, the mafia has a higher collection
rate than the Russian government (Washington Post C2).
This infiltration of the economy has had dire consequences. There is no way to determine
how much money is involved. However, it is estimated that anywhere from 50-100 billion of
state and communist currency and gold have been privately appropriated and transferred
out of the country (C2). That is on top of the tremendous inflation due in part to
protectionism. In 1992, the prices rose twenty-six percent. The inflation rate was
eighteen percent a month in 1995. Needless to say, any adjustment to salaries tarried far
behind the constant escalation of prices. 
Things are beginning to change in Russia. Companies are building up their own security
forces. They are obtaining security from the mob and their protection schemes for
themselves. They are employing armed guards, which is reasonably inexpensive in Russia.
Many companies are also introducing closed-circuit television and scrutinizing visitors
even photocopying identification papers for future reference (Economist 60). This is
begining to put most creditable businesses beyond the grasp of the most primary variety
of Russian gangster. Protectionism might be slowly coming to an end. 
The Russian press reports that fifty-two percent of the country believe that the mafia is
running the country. The Majority also believed that Russia's rich got wealthy through
stealing, plundering, bribery, or some other form of corruption (Fifty-two Percent
Believe 11). Yet the Russian Internal Affairs minister, Sergei Stepashin, stated that the
Russian Mafia is but a myth during an address reporting on the Russian criminal world at
a European Union meeting. He said, "Fear of the Russian Mafia stems from a lack of
understanding the processes that are occurring today in Russia" (Sukhova 20). He also
reported that there is a myth of a Russian mafia that should be dispelled. Protectionism
is not really occurring..
The Russian mafia controls almost every aspect of the Russian market. They determine who
can open a business, stay in business, and who must close their business. The mafia makes
these determinations, often times, on who is compensating them for their security
services. Most Russians report that they are directly or indirectly intimidated or
extorted by at least one of the organizations within the Russian mafia. The syndicates
seem to arrange an organization for business that is not yet available from the
government or professional arena. If one business has a problem with labor or another
business, the business owner merely contacts his mafia link. The matter is immediately,
quietly, and efficiently resolved. (Crime in Russia14). The Russian mafia is involved in
every aspect of Russian life. They provide a code of conduct for business not yet
provided by the professional elite or the government. 
The mafia has a detrimental effect on the Russian economy. It not only creates massive
inflation, it deters companies from other countries from investing in the Russian
economy. Foreign investors operating at the retail level where hard cash is a fundamental
part of business are particularly susceptible. They are not excluded from the gangster's
tactics of "offering" protectionism (Fifty-two Percent Believe 11). In some cases, the
mafia has succeeded in expelling the foreign owner. Specifically this has happened to a
Canadian-owned wholesale electronic good franchise, and Italian merchant of leather
goods, and an Estee Lauder shop (Washington Post C2). Russia has taken several steps to
stop crime such as protectionism and the Russian mafia. Yeltsin has granted the police
various powers to confront these dilemmas. The decree Yeltsin issued permits police to
detain organized crime suspects for thirty days without cause, search offices and homes
without a warrant, and inspect the finances of suspects. Uncorroborated testimony is now
permissible in court, and witnesses that decline to testify can be punished (Fifty-two
Percent 11). Yet, these measures seem to have done little to stop organized crime's
growth. 
Unfortunately, Russian organized crime has prospered in the new economic system, and has
migrated well beyond the Russian boundaries. Much of the private business activity lies
in a gray region somewhere between legality and illegality. The law has yet to fully
catch up with privatization. Academia, the United States Press, and the Russian press all
paint a devastatingly bleak picture of the Russian economy; yet, there is hope for
change. Many small companies do not have the luxury of making drastic changes; yet,
efforts are being made to stop the mafia or at least cease the growth of it on the side
of the government and larger businesses. Enterprise are creating their own company
security and stopping protection payments. Things will not change overnight, but Russia
can and slowly is moving toward normalcy. 
Bibliography
Works Cited
"Biz in Russia." Puget Sound Business Journal. 7 March 1995: 18.
"Comrade Godfather; In Russia, the Mafia Seizes the Commanding 
Heights of the Economy." The Washington Post 12 Feb. 1995:
C2.
"Crime in Russia." Current Digest of the Post-Soviet Press 15 Feb. 1995: 14.
"Fifty-two Percent Believe Mafia is Running the Country." Current Digest 
of the Post-Soviet Press 8 Oct. 1997: 11
Goldman, Minton. Russia, The Eurasian Republics, and Central/Eastern
Europe. Connecticut: McGraw-Hill, 1999. 58-60.
Gustatfson, Thane, and Daniel Yergin. Russia 2010: And What It Means 
For the World. New York: Random House, 1993. 105-106.
Holmes, Charles. "In Russia, Repression Gives Way to Corruption." 
The Atlanta Journal and Constitution 7 Sept. 1997: B1. 
Lloyd, John. "The Russian Devolution." New York Times 15 Aug 1999: A8. 
Remnick, David. Resurrection. New York: Random House, 1998. 108-
110, 196-199.
Sukhova, Suctlana. "Head of Russian Internal Affairs Ministry Believes 
The Russian Mafia is a Myth." Current Digest of the Post-Soviet 
Press 9 Dec. 1998: 20. 
Tanner, Adam. "Russia's Notorious Mafia Spreads Tentacles of Crime 
Around the World." Christian Science Monitor 11 Jan. 1995: C2.
"The Russian Mafia Means Business." Economist 4 July1998: 60.