Moscow’s Mafia Culture in a Snapshot

Casino Moscow
Author: Matthew Brzezinski
Publisher: Touchstone
Paperback: June 2002, $12.60 at Barnes and Noble

In Casino Moscow, Matthew Brzezinski gives a colorful, although superficial, snapshot of Russiaís corrupt business environment in which a handful of oligarchs and thugs stole much of the countryís wealth during the post-Soviet high rolling years, pre-1998 market crash. Brzezinski was serving as a Wall Street Journal reporter in Moscow during 1997-8, and was fortunate to witness the most crucial years in Russia by which limitless corruption, banditry, contract killings, graft, political favor and personal greed came to define the workings of Russiaís new economy.

Through manifold details and anecdotes, Brzezinski’s story succeeds in showing that ‘capitalism,’ as it is known in the west, does not and never did exist in Russia. Those western investors who were all too eager to assume Russia supported the basic tenets of a free market economy (binding contracts, rule of law, shareholder rights) learned the hard way that the Russians live by their own rules, and bodyguards provide protection instead of the country’s government.

But for years before Russiaís 1998 market crash, many western investors actually reaped the benefits of high rolling speculation and shared in the siphoning of billions from the Russian economy. Moscow was booming with expats indulging in the luxuries that very few Russians could afford, and very few would buy in the US (e.g. fur coats, provincial prostitutes). Interestingly, the word ìbusinessmanî in Russia today connotes one who has gained wealth by unspoken means of corruption.

For a post-Soviet scholar, however, Brzezinskiís book offers very little new insight into Russiaís mafia culture. His depictions are based on the type of superficial observations that most expats have after being in Moscow for a month and rubbing shoulders with ring leaders. As a journalist he does conduct interviews with some of the most influential, and dangerous Russians, but as they are so good at painting the picture to foreigners that they want to paint (just ask the IMF), I got the feeling that Brzezinski did little digging under the surface, as he was all too impressed by the gangster style words and wealth exuded by his interviewees. His anecdotes are engaging at times, but so wrought with wordy exaggerations that his message often loses its punch. I find myself wanting to know more about the real workings of the system, not just the exchanges that occur during meetings with a western reporter.

In a review of Casino Moscow for Foreign Affairs, Robert Legvold wrote that the book ìcould not be funnier or the writing more skilled.î I donít know how he could have come to this inclusion, unless he is an avid reader of the New York Times bestseller list and does not look for depth beyond quick clichÈs and flowery descriptions. As a Professor of Political Science at Columbia University, and prolific writer on post-Soviet Russian affairs, perhaps Legvold is so informed about the workings of Russia that to read a superficial account brings humor and entertainment after a long day of research. Yet, I found Brezinskiís writing quite predictable after the first twenty pages.

Incidentally, in a 2001 article in Foreign Affairs, Robert Legvold wrote that Russians were suffering from an identity crisis. This to me seems like a very western view of Russiaís transition. The problem is not that Russians donít know who they are. Rather, they know exactly who they are, and the problem is, the western world just doesnít get them or know how they operate. That is why investors continue to get burned in an environment that does not make sense for anyone who is not Russian or has not spent years living in Russia speaking Russian. Put simply, Russia is still a world power because Russia has declared itself a world power. How much of the world GDP Russia produces does not matter; Russian arrogance will continue to make the western world fall at its feet. To better understand the Russian psyche, I would suggest the serious reader to read up on Durkheimís theory of social anomy and Janos Kornaiís seminal work on soft budget constraints. Pondering Weberís ideas on the necessary relationship between law and the economy in capitalism would also be helpful. An excellent book describing the role of money in Russia (i.e. tax evasion, barter, inflation, forced savings) is Money Unmade: Barter and the Fate of Russian Capitalism by David Woodruff. To not understand the role of money in Russia is to egregiously assume that westernized exchanges of money govern Russiaís business sector.

But sometimes, humorous writing is a respite from more serious academic works, and Brzezinskiís book does have some great details that shed light on the culture of crony capitalist Russia. He quickly describes how in Moscow most cars seen on the streets are brand spanking new BMS, SUVs, Mercedes, you name it. What is even more interesting is that a banking loan system has yet to be developed in Russia. This means that all cars you see are bought with hard cash, and most likely at prices double or triple than what we see in the US. This drives home the massive power of the mafia in the countryís capital.

Another interesting detail Brzezinski brings out is the control that the Chechen mafia has over a large chunk of Moscowís business sector. And, an extremely important point for any western investor, Brzezinski explains how each business must be protected by a krisha, or ‘roof’. The ëroofí is the mafia gang that protects your business and informs all other mafia gangs that your business is under their supervision. The level of sophistication that has developed in business practices within and between mafia gangs is not to be underestimated. Without a krisha, you will most likely end up bankrupt or floating in the river.

Brzezinski also points out that the 1998 crash hurt very few Russians. Rather, it was the western investors that suffered because they bought into rapidly produced Russian government T-bills. Russians knew better than to trust in their government; they hadnít been able to trust in their government for over 70 years, and inflation schemes during communism further showed how the government could wipe out peopleís investments. The years of Russian nobility were not much kinder to the masses. If Russians did buy the T-bills it was for speculation schemes that did not keep them in their pockets by the time signs of decline appeared in the market. What Russians did by up, however, were the company vouchers given to individuals. These vouchers served as ësharesí of the companies, and by buying up the majority of the vouchers for a company Russian oligarchs claimed hold of that company.

Brzezinski outright confesses that he envied the wealth gathered by other expats in Russia pre 1998 crisis, and that he dreamed of obtaining a Yacht for himself. He derides his maid for asking to keep many of his and his fiancÈ’s goods (a TV, a mink coat) when they leave Russia, and yet she is much more of a sympathetic character, struggling to survive in an environment that has done little, if nothing, to improve the conditions of the common people. Brzezinskiís latent disdain and suspicion for Russia does not come from disapproval of the moral hazard rampant in business dealings, but rather, his Polish roots. His grandparents were subjected to Soviet brutality. I guess the indifferent journalist no longer exists. Brzezinski was living next to one of the most expensive streets in Moscow, Tverskaya Street, and leaving behind his exotic fish tank is what he seems to regret most.