The United States should stop pouring money into Russia’s huge money pit. Russian organized crime controls approximately 60 percent of all businesses, and has its finger in every branch of the government, including the police force. The more money we give to Russia, the stronger organized crime gets. Rather than strengthening these destructive forces, the United States should force Russia to solve its problems, and only provide humanitarian aid to Russian citizens.
The incredible dominance of organized crime was born in the fall of the Soviet Union. Corrupt government officials sold off state-owned industries to friends for pennies on the dollars. These owners became the leaders of the new organized crime. At the same time, bank owners started to keep tabs on which businesses were prospering. Once they met a certain threshold, organized crime representatives would offer them protection — i.e., “We’ll destroy you if you don’t do what we say” — in exchange for a percentage of the profits.
Since then, organized crime has only grown stronger. The December elections in St. Petersburg were openly bought, as organized crime representatives blatantly paid voters for their support.
In addition, the Russian mindset has not yet evolved from communism to capitalism. The tax laws in Russia truly discourage profit, and the legal system is incredibly convoluted and confusing. The general populace of Russia has no incentive to try to succeed economically.
The final problem with which Russia must contend is its massive debt. In 1998, Russia allocated 30 percent of its budget to interest payments. Almost all money Russia has received has been in the form of loans, which simply make problems worse. While any money given to Russia is wasted, loans are particularly damaging because ever-increasing loan payments impede Russia’s ability to spend money where it is needed most. Russia needs humanitarian aid, not more loans and interest payments.
Unfortunately, the United States, through our 20 percent interest in the International Monetary Fund, has only perpetuated the problems. Rather than trying to help Russia adapt its system slowly, we have insisted that it attempt rapid transitions which have repeatedly failed, and we have given huge loans with the associated huge interest payments.
Any money given to Russia accomplishes nothing. It simply reinforces organized crime’s dominance over all aspects of the Russian economy. Until organized crime is eliminated, a portion of all profits goes to corrupt leaders who use the money to further their control.
The United States must take a new approach. We need to send a message to Russia that until they are able to control the dominance of corruption, they will not receive any more money from us. This does not mean the United States should turn its back on Russia, though. If Russia is truly willing to attempt to eliminate the corruption, it will have a very difficult struggle, which is likely initially to cause more economic troubles. If this happens, the United States should give generous donations of humanitarian aid. We should be willing to provide food, medical supplies and other necessities. While halting financial assistance may seem harsh, it is ultimately the best way to help Russia.