Russia’s Economy: Putin and the KGB State


Paul Gregory
econlib.org
February 21, 2012

Editor’s note: A re-post just in time for the Russian elections, which are just as much a farce as American elections.

After more than a decade of Vladimir Putin’s rule, Russia has become a “KGB state.”1 Although the KGB was abolished in 1991 after its chairman, Vladimir Kryuchhov, participated in the failed coup d’etat against USSR president Mikhail Gorbachev, the KGB mentality still thrives. Russian is run by former KGB officials and Kremlin-friendly oligarchs. They control industry, commerce, media, and banking, conduct covert operations at home and abroad, and operate their own prisons. They order telephone justice (tell judges their verdicts) and gather compromising material to intimidate opponents. If they do not directly order assassinations, they make sure that those who do are not caught. Outsiders do not know how the KGB state works. Insiders may be confused as well.

The KGB state does not tolerate political opposition. It disenfranchises opposition parties, except for the shop-worn communists, who make for a convenient and hapless opposition. They beat and jail prominent opposition figures in violation of constitutional assembly rights. Russia ranks regularly among the most dangerous countries for journalists.2

Conflicts of interest are ignored in the KGB state. Up until mid-2011 when President Medvedev outlawed the practice, ministers and regulators could manage, sit on boards of, or be paid by the very companies they controlled. Although some freedom of the print media remains, state or Kremlin-friendly oligarchs own and control television. The TV nightly news features a resolute Putin (or Medvedev) attending patriotic events, congratulating award winners, and seeming to look after the health, safety and welfare of ordinary Russians.

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