Russia’s New Anti-Corruption Law

Russia is preparing to “nationalize the elites” by forbidding bureaucrats (and their spouses and children) from owning property or bank accounts abroad.

(1) This need hardly be said at this point but this does demonstrate that Russia is not the “kleptocracy” it is frequently described as. Why would kleptocrats purposefully make life any harder for themselves?

(2) It is also unprecedentedly harsh and rigid. I know of no similarly harsh law in any other country, be it clean or corrupt.

(3) The law was pushed for in its current form by UR deputy Valery Trapeznikov, who used to be an industrial worker from the Urals. The same type of person whom democratic journalist Julia Ioffe calls sovoks, and the same organization that is called the “party of crooks and thieves” by Navalny and chums.

(4) There is some opposition to the law, but it does not come from the quarters a consumer of Western media might expect. By and large, they are liberals.

(5) President of Londongrad Prokhorov argues that this “automatically closes the gates to power for those, who have succeeded in life – young, entrepreneurial, independent people. For those, who have earned enough so as to not steal, who have reasons for going into politics other than to fatten their bank accounts.” Despite the obvious self-interest and poorly disguised class chauvinism this reeks of, there is some measure of truth to this.

(6) But voices like Prokhorov’s are in the minority. While a majority of Russians are fine with people holding foreign bank accounts, they’re not okay with bureaucrats doing the same. 66% support this law, while only 10% are again.

(7) One common but rather unconvincing argument is that it will have no effect anyway because bureaucrats would just re-register their houses to their parents’ or other relatives’ names; or transfer ownership to an anonymous account with an offshore firm; or use the law’s exceptions, e.g. undergoing (fictitious) medical treatment or education abroad. This is besides the point. Of course all this will happen to some extent, but the whole point is that it will make things much harder for them, and will tilt the incentives against owning property abroad. Gorbachev’s anti-alcohol campaign didn’t end Russia’s alcoholism problem either, but it did diminish it to a great enough extent to add 2 years in life expectancy in the space of a couple of years.

(8) Many of the critics say that it is also a substitute for a “real” war against a corruption, one of many. As I pointed out before, that is because liberals can never be truly appeased. They seem to think that corruption is a problem that can be solved at the drop of a hat should the thieving authorities really desire it, when in fact it is a product of deeply-seated and only barely corrigible institutional and even biopolitical factors.

(9) One truly problematic feature that the critics are correct about is that this law doesn’t distinguish between magnitudes. A $50,000 two bedroom apartment in a Bulgarian seaside town is honestly affordable even for a relatively middling Russian bureaucrat, so why should he be denied it? There is clearly a difference between that, and a multi-million dollar villa in the French Riviera.

(10) I also think a major and understated reason for this law’s appearance is security concerns now that the US may be enacting the Magnitsky Act and some of its close allies are considering similar sanctions. The broad texting of the law, encompassing anyone who the US decides to name as a “human rights abuser”, as well as its proposed extension to cover other countries like China, clearly indicate that it probably has little to do with human rights and a lot more to do with subversion; i.e., a Russian official, clean or otherwise, who happens to have a residence or bank account in the US, can be blackmailed into spying or influencing the country in certain ways by a threat to freeze or seize his US assets. So ironically, I guess this infringement on Russian sovereignty has actually – arguably – had a positive effect on it.

I guess “nationalizing” elites is one way to reduce the risks of hostile takeover bids on them.

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