Soviet Organized Crime

Contemporary Russian organized crime grew out of the Soviet “nomenklatura” system (the government’s organizational structure and high-level officials) in which some individual “apparatchiks” (government bureaucrats) developed mutually beneficial personal relationships with the thieves’ world. The top of the pyramid of organized crime during the Soviet period was made up of the Communist Party and state officials who abused their positions of power and authority.

The use of bribery, black markets, and other schemes to survive in Soviet society is well documented. This connive-to-survive attitude was borne out of the shared Soviet heritage, including the state-run, centrally planned Soviet command economy, which resulted in shortages and, therefore, widespread bribery and thievery.

For instance, theft of state property or use of it for personal profit was not viewed as wrong. This belief stemmed from the centuries old distinction between stealing from a peasant, which would be considered wrong, and stealing from the czar and nobility, which was not regarded as wrong. This belief carried over into the Soviet period, with the state taking the role occupied by aristocrats.

Organized crime is deeply rooted in the 400-year history of Russia’s peculiar administrative bureaucracy, but it was especially shaped into its current form during the seven decades of Soviet hegemony that ended in 1991. This ancestry helps to explain the pervasiveness of organized crime in today’s Russia and its close merger with the political system. Organized crime in Russia is an institutionalized part of the political and economic environment. It cannot, therefore, be fully understood without understanding its place in the context of the Russian political and economic system.

Organized crime in the Soviet era consisted of illegal enterprises with both legal and black-market connections that were based on the misuse of state property and funds. It is most important to recognize that the blurring of the distinction between the licit and the illicit is also a trademark of post-Soviet organized crime that shows its ancestry with the old Soviet state and its command-economy system. This, in turn, had direct political implications. The historical symbiosis with the state makes Russian organized crime virtually an inalienable part of the state. As this has continued into the present, some would say it has become an engine of the state that works at all levels of the Russian government.

Economic activities ranged across a spectrum of markets — white, gray, black, and criminal. These markets were roughly defined by whether the goods and services being provided were legal, legal but regulated, or illegal, and by whether the system for providing them was likewise legal, legal but regulated, or illegal. The criminals operated on the illegal end of this spectrum. Tribute gained from black markets and criminal activities was passed up a three-tiered pyramid to the nomenklatura, and the nomenklatura itself (some 1.5 million people) had a vast internal system of rewards and punishments. The giant state apparatus thus not only allowed criminal activity, but encouraged, facilitated, and protected it, because the apparatus itself benefited from crime.

These sorts of relationships provided the original nexus between organized crime and the government. From these beginnings, organized crime in Russia evolved to an ambiguous position of being both in direct collaboration with the state and, at the same time, in conflict with it.

The first organized criminal groups in the former Soviet Union emerged at the end of the 1960s. It was then that the three-tiered edifice known collectively as the Russian Mafia began to take shape. Cooperation between white-collar operatives in the shadow economy, those who operated in the black market (dealing in goods that were either illegal or in short supply), and ordinary criminals dates back to the 1960s. Before the 1960s, the three levels of organized crime existed separately, and their paths rarely crossed. This changed when the traditional criminal world began to become intertwined with the economic or white-collar criminals of the shadow economy and with the party bureaucracy. According to Stephen Handelman’s account of the rise of the “comrade criminals” in Russia, “the black marketeers of the 1960s and 1970s crossed the line dividing the underworld and the state. They operated in easy and mutually profitable cooperation with Soviet bureaucrats.”

This intertwining reflected the pervasive nature of corruption during the “period of stagnation” under Soviet leader Leonid Brezhnev (1964–82). Government and party officials left no stones unturned in seeking opportunities to line their pockets. One such opportunity was extorting money from the criminal world and the shadow economy in exchange for protecting their illegal operations. This complicated chain of organized crime worked its way from the bottom to the top of Soviet society. It ultimately included state finances, industry, trade, and the system of public services.

The top level of this structure was occupied by high-level government and party bureaucrats. The second level consisted of underground or shadow economy participants who exploited their jobs or connections with the enterprises of the state-command economy for illicit gain. The shadow economy produced goods and services “off the books,” that is, outside the state-mandated production quotas, and the payment for these goods and services went into the pockets of these occupants of the second tier. On the bottom level were the professional criminals who ran the various illegal activities such as drugs, gambling, prostitution, extortion, and so on.

These tiers were, in part, the result of an economy where the government could not provide people with the basic necessities, and the elite and loyal Communist Party members were lavishly rewarded. Many moral compromises were made and distinctions between right and wrong were blurred so average Soviet citizens could feed and clothe their families.

During the presidency of Mikhail Gorbachev (1985–91), private enterprise, in the form of cooperatives, was encouraged in the USSR. This was a dramatic shift from what had been the prevailing Soviet socialist model of the economy, in which most private enterprise was outlawed. Unfortunately, the people best positioned to take advantage of this new opportunity were the criminals, the underground producers, and the bureaucrats who collaborated with them. These collaborators knew how to make money and had all the necessary connections to conduct business successfully, and the new policy enabled them to start to operate more openly.

Toward the end of the Gorbachev period, when there were unmistakable signs that the Soviet Union was about to implode, the insiders—high-level officials in the central and regional headquarters of the Communist Party—began quietly to siphon off Party funds into banks, trading companies, and export-import firms, to position themselves to take advantage of what was expected to be a new economic era. This was a classic case of trading political advantage for economic advantage.

By the late 1980s, corruption had reached such high levels that it was, for example, possible for any criminal to bribe his way out of any lawbreaking problem. The result of this combination of the “theft of the state” and the corruption was a massive increase in lawlessness and the rise of a new type of organized crime that later permeated nearly every level of society in the former Soviet Union.

The history and nature of crime in the Urals is very much linked to the history of industrial development in the former Soviet Union. It was in this region that major industrial sites were built in the beginning of the USSR’s economic boom of the 1930s. The early work force that manned this boom was made up not only of ordinary workers but also of large numbers of political prisoners and common criminals who were confined in the prison camps—nerve endings in Stalin’s vast GULAG — that dotted the area.

There are families in Sverdlovsk / Yekaterinburg today in which almost all the family members going back for three or four generations have been prisoners. Their communities often treat residents who have never been imprisoned as outsiders because they are not “normal.” As a result, crime in Yekaterinburg is family based and intergenerational to an extent unprecedented in any other region of the country.

Generations of young persons, especially those without formal education, have been practically limited to joining criminal organizations as their means of livelihood. Yet even for others, working in state-run enterprises during the Soviet era was never particularly attractive to the youth of the region. Crime and its practitioners, on the other hand, were seen as less hypocritical, and in many ways more honest, than working with corrupt bureaucrats and officials. On top of that, there was the additional (and universal) attraction of the romantic aura surrounding crime.

By the late 1980s, two of the forerunners of today’s organized crime were actively operating in the Urals region. The first we will call “white collar” criminals. Its practitioners were made up of a group of shadowy operatives known as “tsekhoviks,” many of them clandestine millionaires, who had long been plundering state-owned enterprises and property. Founders of an underground economy known as the shadow economy, they were more akin to businessmen (albeit shady businessmen) than to professional crooks. As a consequence, they did not possess the traditions or employ the methods of professional criminals, and in particular, they did not use violence in their criminal pursuits. The criminal opportunities to be exploited were so great that the tsekhoviks did not need to compete with one another but simply focused their efforts on maximizing their gains from underground and illegal production.

The vory v zakone ["thieves-in-law"] began to expand their reach and power in the in the 1980s. Throughout the former Soviet Union, the vory had long been regarded as the elite of the criminal world. They were hard-core professional criminals spawned by the gulag prison camps. To contrast them with the white-collar shadow businessmen, these professional criminals became known in criminal slang as the “blues,” a name that some believe derived from the blue color of the tattoos that were associated with the vory v zakone. The vory were adherents of the traditional criminal mores developed in the camps and followed a strict thieves’ code.

As active penetration of the legal economy by aspiring criminal entrepreneurs began in earnest in the latter 1980s, the white-collar entrepreneurs, who were made up of persons who had left the shadow economy and in some cases gained respectable public images, began to employ some of the methods of the criminal world, including the use of violence to eliminate competitors and business associates.