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The Relationship between Systemic Corruption and Wars in a Country

Shortly after the fall of the Soviet Union (1991), a new word entered our vocabulary: Oligarch.

Of course, this word traditionally refers to one of the three ways of governing that developed in Ancient Athens – oligarchy, monarchy, democracy.

In this case, however, the word describes a person who, with the dissolution of the Soviet Union and because of his power relations, first with Yeltsin and later with Putin, was able to buy state enterprises at fire sale prices, usually in the mineral wealth sector – i.e. oil, iron, coal, etc. – which, both because of their size and their monopoly status, made them multi-billionaires overnight.

Each of us surmises that this was not done at the expense of the Russian political leadership. We suspect that the politicians themselves could not, rightly or wrongly, have failed to benefit from the sales, for such a low price, of the property of the Russian people.

And, of course, no politician’s assets have attracted more interest in the world than Vladimir Putin’s.

The question of how much wealth Putin has gained in the more than 20 years of almost dictatorial rule in Russia is on the lips of many.

So, answers to this big question are being offered by many, including the New York Times this week in a front-page article – the second thus far.

Only the article does not actually answer this question. The only piece of “evidence” it presents is a sentence, regarding a lawsuit filed by a shipping company in London, and refers to a conversation between two businessmen in a restaurant in Geneva where someone spoke about “a yacht which had been presented to Mr. Putin.”

The Times notes that, “the yacht, called the Olympia, was managed by a company in Cyprus, where corporation filings show that the true owner was not Mr. Putin – it was the Russian government.”

The paper also refers to another $700 million 459-foot (140-meter) yacht, a $700 billion Black Sea palace – ‘Putin’s Palace’, $700,000 in watches, and several companies, many of which are based in Cyprus. (The article does state that Cyprus has become more demanding in terms of transparency in ownership of property in recent years.)
But all these, as reported by the NYT, are said to be registered in the name of the Russian government.

Putin’s official salary is $140,000. He lives, it is said, in a small apartment he owns in Moscow.

Of course, that is hard to believe.

In addition to the puerile interest in this issue, an even deeper one is raised: What is the relationship between deep-rooted systemic corruption in a country, with the country ‘failing’, and its leaders tendency to pursue extreme situations, i.e. wars, as a Deus ex machina to lift their popularity? That is, does this explain what is happening in Russia and should we be afraid that Erdogan will do the same?

It has been demonstrated by a number of studies that there is a direct link between corruption and underdevelopment or even the ‘failure’ of countries, as is clear in Latin America. (See, for example, the book ‘Why Nations Fail’ by Daron Acemoglu, James Robinson.)

Corruption is rampant in Russia today. It became part of everyday life – completely shameless. We talk about ‘oligarchs’ in the most casual way, as if it were something normal.

But while they ‘enjoy’ their hundred-million-dollar boats, it is likely that we will all pay the price.


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