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In Go-Go Russia, the Fix Is In

Money has long greased the inefficient bureaucracy. But now back-channel payments are accepted as a cost of doing business. New firms even help citizens get phones pronto or skirt high customs duties.


In some cases, the fees for jump-starting the bureaucracy are reinvested in the federal ministry or city department to improve the provision of services over the long run.

"I consider this a completely correct way of operating. I think we were the first ministry to try to generate income by meeting a consumer need," says Yevgeny Vtyurin, head of consular affairs for the Foreign Ministry, explaining why a visa can be had free at a foreign consulate if the traveler can wait a few weeks but costs upward of $100 to be issued on the day of application.

"A significant amount of the money comes back to the central budget, but some stays at the consulate for local improvements," he says, citing new furniture, work area repairs and better phone networks as examples of investments.

But in many manifestations of express service, Stolyar says, the money simply is split up among those conspiring to make it difficult for the consumer to get satisfaction any other way--thereby rewarding and encouraging the inefficiency. "In the case of the [traffic police], I can say with 100% certainty that any money collected for special services goes directly into their pockets," says Stolyar, who reserves his strongest criticism for the federal customs and municipal police forces.

Tsvetkov, the sometime car importer, likewise labels the federal customs service as the industry leader in abuse of office--and government statistics tend to back him up. Of 400,000 cars imported into Russia last year, duties were levied on only 400, Economics Minister Yevgeny G. Yasin recently complained.

"The official duties have been set so unrealistically high that it creates incentive for people to get around the system," says Tsvetkov, who has switched to buying used Russian-made cars after three years as a foreign-make importer.

Conversely, pay for the federal agents is so low that few feel any inhibition about using their posts for personal gain at the expense of the public coffers.

Import duties of 120% of the car's value are so prohibitive that services have sprung up to put buyers in contact with Russians living abroad; they have the right to bring a car back with them duty-free after six months of foreign work or government service.

Moscow's poorly paid diplomats have been drawn into networks in which cars are shipped to Russia as their property, then sold to real buyers--at a markup, but one still far below the import duty. There are also tax breaks for those working in hardship areas, such as Siberia and the far north, allowing residents with such status to provide cover for others at a price.

Aside from offering a means to avoid taxes, the private intermediaries provide important assurances that cars and other imported goods are cleared through customs immediately after they enter the country.

"Customs deliberately and artificially creates enormous lines so that it is impossible for someone to clear his goods within the five-day limit these same bureaucrats managed to get imposed," says Nadezhda Golovkova, president of the Moscow Consumer Council. If the importer fails to get the paperwork done within that period, the government can seize the property as unclaimed.

The consumer council describes express customs services as shameless and often amounting to illegal extortion, since the expedited efforts usually involve collaboration between federal employees and friends or relatives who can circumvent bureaucratic obstacles only because of family ties. "What you tend to see are the wives or adult children of customs officials running these private services," says Golovkova.

But little can be done to discourage such exploitative practices, she says, because most government investigative services are equally corrupt.

A spokeswoman for the federal Customs Service, Yelena Guskova, confirmed that cooperative agreements exist with private express services, which she described as "quasi-customs structures." But she denied that they were tariff-dodging services or that inefficiencies within the government service forced customers to use private firms.

Travel agencies have worked out a system of higher payments for air and rail tickets to certain destinations for which demand still far outstrips supply because of federal subsidies for remote transport. For almost twice the usual price, passage can be purchased on the spot, whereas those wanting the subsidized tickets must apply days, weeks, even months in advance.

A chronic shortage of telephone lines also persists throughout much of Russia, giving local branches of the federal Ministry of Communications much leeway in parceling out the few new connections to the highest bidders, while those who cannot afford the express surcharge wait for years.

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