Vodka Politics (21 page)

The modern drinking house effectively loosened the community’s hold on a would-be alcoholic, drawing him away from the oversight of village elders and into the solitary recesses of the tavern, where he could better serve the financial interests of the state. At this time, even the issue of drunkenness was recast from a moral conflict between the individual and his religious community into a social and political conflict over state finances. In addition to new social conflicts, the arrival of vodka also created early industry in the form of distillation
(as distinct from the traditional trades and handicrafts); it sharpened feudal class conflicts between the gentry and the peasantry; it established new political institutions, such as the highly corrupt tax farm; and firmly entrenched the tavern as the primary interface between Russian society and the state.

From its first introduction, then, vodka fundamentally transformed both Russia’s society and politics. Its potency ensured a steady demand; its advanced manufacturing and laws outlawing distillation except by the nobility meant that the uneducated peasants had to pay cash for this new commercial product; and its monopolization transformed vodka into the primary mechanism by which the government—in concert with feudal lords—simultaneously dominated and exploited the lower classes. Once vodka became entrenched as a key mechanism of autocratic statecraft, the subsequent history of vodka politics in Russia revolved entirely around the inherent contradiction of minimizing the social harms caused by this powerful drug, of which the state was the sole dealer and most eager pusher.
⁵³

The conclusions, then, are unavoidable: if one is looking to explain why Russians drink what they do and how they do it, the answer isn’t culture; it’s politics. The financial needs of the early Russian state dictated pushing the more potent and more profitable distilled vodka over less lucrative beers and meads. To maximize revenues, the state actively encouraged its subjects to become alcoholics. Consequently, Russia’s long-standing addiction to vodka is not some eternal, immutable cultural trait, but the result of political decisions intended to enrich the state.

Finally, the introduction of vodka fundamentally altered cultural drinking patterns—augmenting the episodic drunkenness of community celebrations with an even more damaging culture of individual alcoholism. While this perversion of the noble, medicinal ends of the “water of life” would have surely appalled earlier generations of medieval doctors, mystics, priests, and ambassadors who helped introduce distilled spirits into Russia, even those medieval alchemists—to quote historian David Christian—“would have envied a process that transmuted grain so readily into gold.”
⁵⁴

8

Vodka and the Origins of Corruption in Russia

“You can’t change this system from within. Its founding principles are corruption, hypocrisy, and cynicism,” claimed Russia’s prominent anti-corruption blogger, Alexei Navalny. If you join this system, your main instruments become corruption, hypocrisy, and cynicism, and it’s impossible to build anything with such instruments.”
¹

Fed up with Russia’s systemic bribery and corruption—which undermine the ideal of a state bureaucracy, staffed by professionals implementing rules evenly and impersonally, and whose salary is their means of income rather than money culled from their station—this tenacious Moscow lawyer began tracing countless cases of embezzlement, kickbacks, and graft often leading to the highest levels of power. In the frigid winter of 2011–12, massive protests erupted in Moscow against allegations of widespread fraud in the series of elections that heralded Vladimir Putin’s return for a third term as Russia’s president. Before gradually retreating unfulfilled, this predominantly young, predominantly urban, predominantly middle-class protest movement shook Russia’s stagnant political scene and rallied against Putin’s corrupt United Russia party, which Navalny forever branded as “the party of crooks and thieves.”

According to Transparency International, in 2012 Russia was far and away the most corrupt of the world’s twenty largest economies, ranking 133rd of 176 countries—placing it squarely behind such paragons of clean and effective governance as Sierra Leone, Vietnam, and Ethiopia. As a percentage of overall economic activity, the shadow economy in Russia is larger than in Chad or Senegal. And as cost projections for the 2014 Winter Olympic games in Sochi ballooned over 400 percent to $50 billion—eclipsing even China’s world-record $40 billion tab for the 2008 Beijing Summer Olympics—many cited pervasive corruption, with businesses paying kickbacks in excess of fifty percent. The Russian edition of
Esquire
even estimated the construction cost of one notorious stretch of Sochi roadway as the equivalent of paving its entire length in Louis Vuitton handbags.
²

Russians are well aware of corruption, regularly ranking it just behind alcoholism as one of the country’s most pressing problems. Patients pay off doctors for their “free” healthcare, students grease teachers for better grades, families bribe draft boards to keep their sons out of the army, and police officers spend more time on shakedowns than stakeouts. According to the government’s own statistics, Russians shell out more than $300
billion
in bribes every year. While the economic costs are staggering, so too are the political impacts: Russia is saddled with an enormous, outmoded, and notoriously corrupt
sistema
, throughout which bureaucrats exploit their public positions for private gain.
³

Yet while Navalny and throngs of shivering protesters were quick to blame Vladimir Putin and his United Russia party for this state of affairs, systemic corruption in Russia predates both Putin and the oft-cited weak post-Soviet institutions he inherited from his predecessor, Boris Yeltsin.
⁴
Its roots go far deeper.

Even in the 1970s, Soviet leader Leonid Brezhnev championed a “decisive struggle against greed, bribe-taking, parasitism, and drunkenness”—those vestiges of Russia’s capitalist past—words that parroted his predecessor, Nikita Khrushchev a decade earlier.
⁵
Yet bribes and favors were often the only way to get scarce goods necessary to fulfill the state’s economic plans. “Corruption may be as integral to Soviet life as vodka and kasha,” concluded one Cold War study—it was the secret oil that lubricated the communist system. Not surprisingly,
every
Soviet leader waged a half-hearted war on corruption, and they lost every single time.
⁶

Corruption likewise plagued the tsars’ feudal economy. In the 1850s, Nicholas I commissioned an anti-corruption investigation, which exposed graft and bribery even among the tsar’s highest officials. When asked how many of Russia’s forty-five governors would not take bribes, the commission could only find
two
honest men—no more. “To live in the middle of such conscious corruption was horrible,” explained Nicholas’s biographer, “yet to remove it was impossible. In despair, the czar threw the report of the commission into the fire.” Privately Nicholas lamented that he was the only honest man in Russia.
⁷

Corruption and alcoholism are the twin systemic afflictions that have “debilitated Russia as long as anyone can remember.”
⁸
These diseases are symbiotic: each is perpetuated by the other. Like so many of Russia’s social ills, one major source of corruption in Russia can be found at the bottom of the bottle.

Blat
, Bribery, And Corruption

Any discussion of corruption begins with
blat
—a word so quintessentially Russian that it defies literal translation. Unlike “bribery”—so cold and impersonal—
blat
embodies the warmth and friendship of mutual assistance as friends
struggle to cope with both hardship and red tape through favors and connections. Bribery demands cash for action.
Blat
can be a favor that needn’t be repaid immediately or in cash. Even incorruptibles who would never take a bribe would happily use their connections to help family and friends.
⁹

Bribery is an exchange—corruption is an attribute. The socio-political system becomes corrupted when bribery, nepotism, and the use of public office for private advantage are widespread.
¹⁰
Corruption blurs the line not only between public station and private interest—between formal duties and informal obligations—but more fundamentally between the legal and the illegal. So it makes sense that the roots of corruption extend back to when public and private were indistinguishable and law itself was imprecise.

Rooted in peasant hospitality and traditions of provincial officials living off the land they administered, petty bribery was a sporadic feature of early Russian society. Only with the harnessing of vodka’s extreme revenue-generating potential did a pervasive system of obligatory corruption come into full bloom.

While autocrats back to Ivan the Terrible knew of the great potential of vodka, the Muscovite state had no way to administer the nationwide liquor trade. Even Ivan’s system of state-run taverns, or
kabak
s, was crude: tavern keepers, or
tselovalniki
, swore to protect the tsar’s revenue, which led to pushing the more lucrative vodka over beer and mead. “As the Emperours Territories are great, so is his Revenue,” the tsar’s English physician Samuel Collins noted in 1671. “The
Cabacks
(or places where in are sold
Aqua-vitae
and strong Beer) are his Royalty, and farms out some for 10000 Rubbles
per annum
, and some again for 20000 Rubbles.”
¹¹

To further maximize revenues, by the seventeenth century the state leased out individual taverns to entrepreneurs eager to tap into the lucrative trade. Without an effective state bureaucracy it was only a matter of time before the entire administration of the vodka trade would be outsourced to private entrepreneurs, in what was known as the vodka tax farm.

Like a traditional tenant farmer harvesting crops in the field, a tax farmer harvests tax revenue. And just as a tenant farmer pays the landlord to cultivate a parcel of land, the tax farmer pays the state to cultivate the vodka trade over a particular territory. Every four years the state auctioned off the exclusive right to collect liquor taxes, licenses, and fees for a given district. For the winning bidder, any income beyond his administrative costs and what he owed to the state was pure profit, and the tax farmer had every incentive to maximize that profit by any means possible.

Dating back to the sprawling Roman Empire, tax farms were the earliest form of outsourcing. Given the expansive, sparsely populated terrain and the shortage of qualified administrators and bookkeepers, the tax farm system was well-suited to the early Russian empire too. Passing both the administrative burdens and
commercial risks onto the private tax farmer, it guaranteed the government a reliable, consistently growing source of revenues that was immune from market peaks and troughs, since the annual rent had already been set at auction. “No other major source of revenue enters the Treasury so regularly, punctually, and easily as the revenue from the liquor tax farm,” the finance ministry reported in 1816: “indeed its regular receipt on a fixed date each month greatly eases the task of finding case for other expenditures.”
¹²
The primary expenditure of the empire was its growing military, which—thanks to the tax farm—could be effectively financed even without a large government tax-collection bureaucracy.

Tax farm systems were common across renaissance Europe, but as the extractive capacity of states increased, they were increasingly replaced with direct taxes overseen by a professional bureaucracy. Compared to such modern institutions, the tax farm seems downright medieval: a hallmark of weak central government, it gives free license to unscrupulous individuals to exploit the peasantry for their own gain. Since the system fused together public tax revenues and private commercial profits—and since the essence of corruption is the confusion between public and private—it makes sense that the origins of systemic Russian corruption can be traced precisely here.
¹³

Even before vodka, tax farming shaped early imperial history: the rising power of Moscow over rival principalities like Tver resulted in part from it being a more loyal and efficient tax farmer for the fourteenth-century Mongolian overlords. Tax farming outlasted the Mongolian yoke through the system of
kormlenie
(literally “feeding”) whereby officials were expected to support themselves from their administrative territory, so long as they collected taxes for the state. And although
kormlenie
was outlawed in 1555, tax farming endured for customs duties, salt taxes, and, most importantly, vodka.
¹⁴

The vodka trade became the bread and butter of the Russian autocracy. In 1680, income from the tax farms on salt and vodka accounted for 53 percent of all state revenues. By the 1830s, the “indirect” vodka taxes outpaced even direct taxes.
¹⁵
In an investigation of the tax farm in his
Provincial Sketches
, famed writer and onetime deputy governor Mikhail Saltykov-Shchedrin lamented that up to two-thirds of government revenue came from the vodka farm.
¹⁶

To maximize their take from the vodka trade, the state imposed ever stricter regulations on the tax farmer. So as not to flood the market, the treasury allocated each
otkupshchik
(tax farmer) only a set quota of vodka from the government’s warehouses and stipulated that it be sold at a fixed price, leaving the farmer only a razor-thin margin for
legitimate
profit.
¹⁷
Since the vodka farmers were still reaping outlandish profits through various abusive practices, the treasury squeezed them even more, demanding that even the paltry amounts that the tax farmers were to gain legitimately would also go to the state—implicitly acknowledging and sanctioning the
otkupshchik
’s corrupt practices.