Russia's New Head Cop Aims His Broom at Graft Among Elite

At the heart of Alexander Lebed's brief political career is the fight against official corruption - which many economists, entrepreneurs, and investors see as the most hobbling impediment to progress in the Russian economy.

In one campaign commercial, the can-do soldier with a clean-cut reputation confronts a corrupt hand stuffing cash in a pocket: "Hey, Mr. Bureaucrat, I strongly advise against that," he says as a jail door slams. Mr. Lebed's campaign, "Truth and Order," puts a priority on reducing opportunities for corruption by removing the state further from the economy.

Lebed was given a broad national security portfolio in President Boris Yeltsin's administration last week in order to help Mr. Yeltsin win Lebed voters in the presidential runoff July 3. Lebed took third place in the first round of balloting.

But if Yeltsin wins, can Lebed clear away any of Russia's smothering corruption? Bribes, kickbacks, special privileges and franchises, and large-scale pilfering of the federal budget pervade Russia. The shades of gray are so vast in the Russian economy between the black market and the legitimate, the government and the private, that it is difficult to define corruption, much less quantify its costs.

One Moscow businessman says extralegal payments to officials for the many licenses and permits involved in construction projects add 50 percent to the cost, dramatically altering the economics of investment here.

In a recent ranking of 54 countries by Transparency International, a German think tank, for their freedom from corruption, Russia ranked 47th among the most corrupt countries of Africa, Latin America, and Asia.

Lebed carries a political mandate to this tricky task. He also has the advantage of being an outsider. "It would be very difficult for Boris Yeltsin to do himself," with his web of loyalties and connections, says Sergei Kolmakov, a political scientist now working with the Yeltsin campaign.

To tackle corruption in modern Russia is politically dangerous, since it risks making enemies of the Russian establishment itself, which runs seamlessly between state bureaucrats, fabulously rich new businesspeople, and the directors of the country's vast half-state, half-private enterprises.

Corruption can be small-scale here, such as the few hundred dollars extra it costs to register a car with "expedited" service. Otherwise, the line lasts for days and never quite ends, and the documents are never quite acceptably notarized.

And then it can be very large-scale. Russia's rich oil and gas deposits keep domestic oil prices at a fraction of the world market level. But Viktor Ilyukhin, chairman of the security committee in the lower house of the Russian parliament, estimates that 20 percent of Russia's annual output is purchased at minuscule domestic prices and illegally sold abroad at world prices for huge profits.

MORE damaging to Russia's social fabric are the government funds for salaries, pensions, or reconstruction in Chechnya that - somewhere between the Finance Ministry and the intended recipient - are rerouted and sit for weeks or months in private bank accounts earning stratospheric interest while strapped and threadbare citizens get their checks months late.

Yuri Boldyrev, deputy chairman of the state Accounting Chamber, a post set up to investigate and oversee government spending, compares Russia today to the Klondike gold rush in 19th century Alaska, "only instead of grabbing from the earth, they're grabbing from state property."

"There's no precedent for such a huge privatization followed by such a barbaric grab," he says.

Mr. Boldyrev, who was Yeltsin's anticorruption chief until he was fired, blames Yeltsin for sheltering corruption among his political allies.

The only problem in fighting corruption, he says, "is lack of political will by the head of the state."

The problem is that the Yeltsin administration made a strategic decision that corrupt privatization was better than no privatization. Only if those who controlled the Soviet state economy were allowed to benefit from reform and privatization, the theory goes, would they allow it to happen.

The result, says Marshall Goldman, an expert on the Russian economy and professor at Wellesley College, is "a grotesque kind of reform" where 61 percent of Russian enterprises are owned by former Soviet apparatchiks.

Corruption is more extreme in Russia than in the formerly Communist countries of Eastern Europe, he says, because of the country's tremendous oil and gas wealth. The temptation these resources represented became "a curse, in a way."

Lebed's platform holds that many of the proper functions of government - contract enforcement, protection of property rights - are now performed by criminal organizations. But before government can take over, bureaucrats need clear rules and standards to reduce their arbitrary decisions.

"Potential corruption is the greater the larger the amount of money that passes through the hands of the state," says Vitaly Naishal, the economist who drafted Lebed's program. "So, wherever possible we should rely on the market and leave the state to perform those functions that are inherent to it."