Rising Power of the Russian Mafia

The problems confronting modern Russia as it struggles to free itself from the shackles of totalitarianism, crime, and corruption are hard fought battles paid for in blood, but with no easy solutions. Organized crime in the Western democracies is still mainly about satisfying public demand for illegal products and services like drugs, gambling, usurious loans, and prostitution. Gangsters regulate the Russian economy, by every indication, and the long overdue triumph of free market principles remains at best an empty illusion.

With the fall of communism, ex-KGB officers, veterans of the Afghan war, and unemployed military officers formed expedient alliances with gangster thugs and black market profiteers who carried out the "heavy" work-violence, threats and intimidation.

Former bureaucrats from the communist regime working quietly and with great skill suborned politicians and decision-makers while cutting deals with the Sicilian Mafia to establish narcotics-smuggling trade routes through central Asia. By 1995, the year of the historic "summit" meeting between Russian gangsters and Sicilian mobsters in Prague, corruption had spread into the highest levels of the Kremlin, but lawmakers were largely unconcerned. Efforts to pass anti-corruption laws were consistently voted down. Bribery was always a hidden cost of doing business in the Soviet era. It is endemic to the culture, even today.

The size of the Russian Mafia ("Mafiya") has continued to grow as it power bases expanded. It is now estamated that 100,000 members owe allegiance to 8,000 crime groups who control 70-80% of all private business and 40% of the nation's wealth. Between 1992 and 1994 the Russian Mafia targeted the commercial centers of power, seizing control of the nation's fragile banking system. At first the criminal gangs were content to merely "park" their large cash holdings in legitimate institutions, but soon they realized that the next step was the easiest of all: direct ownership of the bank itself.

Airport taxi companies, which are controlled by the local Mafia, force cab drivers to charge customers double the going rate in order to pay the gangsters a "service charge." They also collect between 10 and 20 percent of the income from private shops, restaurants, and kiosks. "Few entrepreneurs can expect to remain in business for long without being asked to pay money or provide shares in their companies to gun-toting 'protectors," observed one insider. A movement to legalize prostitution inside Mother Russia failed, due to a conservative backlash and stepped up pressure from the Mafia who did not want to see this lucrative new venture taken over by government regulators.

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