DASVIDANIYA!: A Brief History of Russian Organized Crime

Note: This was a paper for a history class and in no way covers the entire history of Russian organized crime. For further reading, see the bibliography section at the bottom of the page.


Fate had it that when I found myself at the head of the state it was already clear that all was not well in the country. Those are the words spoken by Russian President Mikhael S. Gorbachev as he announced his resignation from the USSR. It would be the advent of the free market which would give rise to organized crime in not only Russia, but in all of the republics which formerly comprised the Soviet Union.

Of course, organized crime existed in Russia before the fall of the Soviet Union. Unlike the various organized crime groups in the United States, ethnicity did not play a major factor in membership. Serving time in Russian prisons, Stalin’s brutal gulags, replaced the binding role of ethnicity. A professional criminal class began to develop within the gulags. This criminal elite adopted certain rules, behaviors, values, and sanctions that bounded them to the “vory v zakone” or “thieves law”. While the vory were considered by their peers to be the top criminals, the true people that sat on top of the hierarchy of organized crime in Soviet Russia were either Communist Party members or state officials that abused their power and authority. These corrupt Soviet officials developed a symbiotic relationship with the criminal class. The bribes that funneled up from the criminals to officials caused the state not only to allow organized crime to exist, but encouraged and protected it because the state itself benefited from organized crime.  A clear criminal organization, composed of three levels, really only began to take shape at the end of the 1960s, during the corrupt Brezhnev era. The top level of the structure was occupied by Soviet leaders and corrupt officials. The second level was composed of normal people that worked for the state, but produced goods outside state mandated quotas and sold them on the black market for profit. The third level was made up of the professional criminals who ran various criminal enterprises. All of these levels existed before the 1960s, but it was only when gangsters became more involved in white collar crimes did they absorb into one organization.

            
During the 1970s, after the Dymshits–Kuznetsov hijacking, the Soviet Union temporarily loosened immigration restrictions for Jewish immigrants, allowing hundreds of thousands of people to immigrate to America. It is widely believed that the KGB used this opportunity to rid the gulags of its most vicious criminals, who continued their life of crime in the United States.  One of the earliest identified Russian gangs in the United States was the Potato Bag Gang.  Operating out of Brighton Beach, the gang members would pose as sailors who would offer to sell people a bag full of gold rubles for a thousand dollars. The victim would be shown a sample coin, which was real, and was given a large bag that ended up being filled with potatoes instead of coins. Russian gangs would become more and more involved in more serious criminal enterprises like prostitution, extortion, and theft. As Russian gangs became deeper involved in the criminal underworld, they would develop business relationships with the American Mafia. Russian organized groups would eventually spread across the country into California. 

            
It was a certain set of circumstances at the end of the Soviet Union that lead to the criminal underworld thriving upon the introduction of the free market. President Gorbachev was the first Soviet leader that reintroduced the notion of private business ownership back into Russia after sixty years of strict state control. Gorbachev’s Law of Commons allowed private Russian entrepreneurs to open up businesses, but with the ability for anyone to open up a business came competition. Business rivals would employ hired thugs to muscle in on the competition. The Russian police didn’t have the financial backing to compete with the onslaught of violence that was unleashed by the introduction of private ownership. This caused the street gangs to become privatized law enforcement agencies. According to McMafia, by Misha Glenny, “Instead of paying taxes to the state (which had no idea how to tax new small-scale private enterprise, businessmen willingly handed over between 10 and 30 percent to local thugs that would ensure in exchange that they could continue trading, free from the violence of the gruppirovki, or street gang, working on behalf of the competitors.”

           
Law enforcement agencies, both in America and Russia, began to notice that many Russian criminals connected to organized crime had scores of tattoos decorating their bodies. Same with the Japanese Yakuza, tattoos are an important part of Russian crime. “The tattoos present a picture of the inmate's criminal history. Tattoos are like a passport, a biography, a uniform with medals. They reflect the convict's interests, his outlook on life, his world view. A prisoner with an incorrect or unauthorized tattoo could be punished or killed by fellow inmates.” The importance of the relationship between tattoos and the Russian criminal culture can be seen in the movie Eastern Promises. Directed by David Cronenberg, the film stars Viggo Mortensen as a Russian gangster who works for a powerful vor in contemporary London. There is a scene where Mortensen’s character is being accepted into the criminal organization he is working for, but must go through a rigorous interview with the vor leadership. Mortensen is completely nude during this ceremony, so that the vor may see the tattoos housed on his body. 

Though it looked as if criminal gangs were taking over Russia, “...it was indeed tamed stuff. The mob was largely a collection of inchoate street gangs who still had to watch their backs for the cops or the KGB.”  It wasn’t until Boris Yeltsin came into power, after a failed coup against Gorbachev, that organized criminals would be able to evolve into the global power that it is today. Yeltsin announced in 1992 that the Russian government would free all prices. Price liberalization would be to Russian criminals what prohibition was to criminals in America. While the prices of goods on which the everyday Russian were concerned about, like food, was liberalized; the prices on goods such as: oils, gas, diamonds, and metals stayed at their Soviet-subsidized prices. Prices on theses natural resources can be as much as forty times cheaper than the world market price. Conveniently, at the same time the government decided to privatize the monopoly that the Soviet Union had imposed on the import/export of all goods and commodities.  It was this set of circumstances that lead to a super wealthy upper class of Russians, referred to as the oligarchs. But while a few private citizens were reaping the riches of the introduction of capitalism into Russia, most of the population fell further into poverty, with only a weak middle class that stood in between. Another problem with the emergence of the free market was that “the police and even the KGB were clueless as to how one might enforce contract law. The protection rackets and Mafiosi were not; their central role in the new Russian economy was to ensure that contracts entered into were honored.” This meant that the oligarchs of Russia and organized criminals again entered into a seemingly beneficial relationship. Even though the new capitalist society in Russia was built on blood, organized criminal gangs enforced a degree of stability during this economic transition.

With this new influx of money and power into the hands of criminals, the title of vor was able to be purchased. The ability to simply purchase the title, instead of earning it by serving several years in prison, led to the debasement of the authority and respect that came with the title, and eventually to the destruction of the highly organized hierarchy of thieves that existed in the Soviet prisons. The destruction of the “thief’s law” crumbled into street gangs and other simple criminal networks.  A factor that set apart Russian organized crime from organized crime in other countries is that “there were about twenty major gangs in Moscow, and dozens of minor gangs, some of them Slav and some Caucasian. Although there were tensions between the so-called ethnic groups, both sides were wary of each other’s influence and power.” This meant that organized crime was so prevalent after the introduction of capitalism that dozens of groups co-existed (or tried) in one city. If that many gangs existed in Moscow at one time, that would only mean that thousands of criminal organizations existed across Russia during this time. It was during this Darwin-esque period in the Russian underworld that some of these organized gangs evolved from the private enforcement arm of the oligarchs into highly organized criminal organizations. One of the best examples of this was Chechen organized crime. Chechen gangsters were notorious for their violence and ruthlessness. But according to Mark Galeotti, a fifteen year veteran of studying organized crime in Russia, “The Chechen mafia became a brand name, a franchise, a McMafia if you like. They would sell the moniker “Chechen” to protection rackets in other towns provided they paid, of course, and provided they always carried out their word. If a group claimed a Chechen connection but didn’t carry out its threats to the letter, it was devaluing the brand. The original Chechens would come after them.” This meant that as Russian organized crime developed, it was not guided by strict “family loyalties”, like the American Mafia, but rather by transactions.

Another example of the blurred line between the state and organized crime can be seen under the presidency of Slobodan Milošević. Milošević, while he served as President of Serbia, developed a profitable relationship with Serbian gangsters. Serbian organized crime groups were allowed to reap the profits of smuggling oil and cigarettes during the sanctions that were enforced during the Yugoslav Wars. In return, Milošević would get part of the cut and the gangsters would carry out assassinations at his request. The war in former Yugoslavia wasn’t the only war being fought. The bloody “cigarette wars” broke out in Serbia. The scramble for the monopoly over the cigarette trade even involved Milošević’s own son, Marko Milošević. The violence would only crescendo when Milošević’s lost power in the Bulldozer Revolution of October 2000. This power vacuum resulted in several daylight assassinations of high ranking Serbian gangsters.

The organized crime bosses who survived the turmoil of the 90s in Russia welcomed the election of President Vladimir Putin. President Putin, an ex-KGB agent, restored the former power of the KGB under the name of the FSB. Putin also became the scorn of the oligarchs, who claimed that he was the reincarnation of Stalin. Putin was able to fashion a new system of government that brought the aspects of capitalism and market authoritarianism together. This caused the easy money days of the oligarchs to come to an end. The threat of money becoming scarce caused the oligarchs to continue their investment in the protection rackets of organized crime. But the gangsters employed by the oligarchs seemed to be facing a new competition, ex-KGB agents. Since the fall of the Soviet Union hundreds of ex-KGB agents found themselves without a job. Instead of joining Russia’s newly formed police service, several went into the business of organized crime. Almost all of the major oligarchs had at least one former KGB man on their payroll to advise them on security. Former Director of the CIA, John M. Deutch, said “I do agree that in Russian organized crime there is a presence of ex-security service members, KGB members, and ex-military members. That is certainly the case.” But, according to Dr. Walter Zarycky, professor of political science at New York University, “The Russian mafia and the KGB are allies, not enemies, and in many cases they are one and the same." Dr. Zarycky’s claim that Russian organized crime and ex-intelligence officers are working together makes sense. Ever since the turn of the century, Russian criminals have become involved in crimes over the internet. Several ex-KGB agents organized the Russian Business Network (RBN), which has become a notorious cybercrime organization. Using their technical skills for crime, rather than for the state, the internet service provided by the RBN creates a safe place for the sharing of child pornography, phishing/spamming scams, credit card fraud, corporate espionage, and the ability for criminals to target a victim individually. “The Russians have everyone nailed cold in terms of technical ability," said Greg Hoglund, CEO of cyber security company HBGary. "The Russian crime guys have a ridiculous toolkit. They're targeting end users in many cases, so they have to be sophisticated."

Cyberspace was not the only place where Russian organized criminals were spreading to. “Law enforcement personnel in many countries — including Spain, Greece, Hungary, Italy, France, Israel, Britain, and even the United States — have been surprised by how “confidently” criminal groups consisting of people from the former Soviet Union now dominate their national criminal worlds.”  Part of the reason that criminals are able to spread abroad so successfully is because Interpol, the international police agency, does not maintain the kind of files that allow for an even approximate assessment of the number of Russian criminals operating abroad. Though Interpol hasn’t taken an interest in the spread of Russian organized crime, the National Prosecutor of Italy has claimed that here are “up to 300,000” Russian criminals operating in foreign countries. .” Europe and the United States are not the only areas that Russian gangsters have their eyes on. The longstanding institutional weaknesses of several countries in the Caribbean and Latin America have given Russian criminals the chance they need to establish themselves. The absence of transparency and effective state monitoring of the banking systems in Latin America have left them vulnerable to penetration by Russian money launderers. But just because Russian organized crime has spread across the world, doesn’t mean their hierarchy structure has. “Russian organized crime is neither monolithic nor necessarily hierarchical, especially abroad. Indeed, much of the heavy lifting in international illegal commerce, from heroin trafficking to the smuggling of radioactive material and counterfeit money, is done by ad hoc criminal coalitions with few apparent resources, little formal structure, and uncertain connections with the political or official upperworld. Such groups commonly coalesce for one or two deals, divide up the proceeds and then disband.” This could be the reason that the spread of Russian organized crime has been so difficult to stop by authorities. The ability to host small criminal groups overseas rather than expanding an entire criminal organization may be hard to catch. To quote the film The Usual Suspects, “One cannot be betrayed if one has no people.”

Despite being involved in: human smuggling, the international drug trade, murder for hire, extortion, money laundering, prostitution, and various types of cybercrime, the most alarming crime committed by Russian gangsters, both overseas and at home, are their alleged links with terrorist. In the mid-1970s, the company Inslaw, INC. developed a program called PROMIS (Prosecutor's Management Information System) to be used by the Justice Department. The program was a database designed to handle papers and documents generated by law enforcement agencies and courts. PROMIS was also a tool used by law enforcement to track people through credit card purchases, entry and exits visas, and telephone usage. Robert Hanasen, the former FBI agent who was convicted of spying, secured a copy of the PROMIS software and then sold it to Russian gangsters. Allegedly it was from there that Russian organized crime figures sold a copy of PROMIS to Osama Bin Laden for $2 million dollars. Using this program, Bin Laden would be able to penetrate U.S. databases and banking systems without being detected. He would also be able to counter the ability of various intelligence agencies to track him. On June 15, 2001, a story by Washington Times reporter Jerry Serper said “The software delivered to the Russian handlers and later sent to Bin Laden, according to sources, is believed to be an upgraded version of a program known as PROMIS.” Though the United States government continued to deny that Bin Laden had any type of program, the United States announced that they discontinued using PROMIS a year after 9/11. Britain and Germany discontinued their use of the PROMIS program shortly after the United States made their announcement.  Besides stolen government programs, there is also fear that Russian criminal syndicates may smuggle a nuclear weapon or the material to build a nuclear weapon into the hands of terrorist. A study of a number of Russia’s “closed cities”, named that because of the because of the increased security and limited access that apply to them because of its housing of nuclear weapons and material, found that Russian administrators haven’t focused enough on the possible linkage of criminals and terrorist activity. The study claims that a large number of convicts return to these “closed cities” after they serve their prison sentences. The study also claims that there is a large drug trade in the closed city of Ozersk, suggesting the presence of criminals within the closed city. This criminal presence leads to the smuggling of people into the closed city, a crime for which the penalty is not severe. Also, there is a large population of reported Islamic propagandists that in live in the towns that surround Ozersk.  It is important to note that Russian organized crime syndicates have never stolen a nuclear bomb and have put it on the black market, but according to this study the motive, means, and opportunity are there. Another link that could possibly exists between Russian gangsters and terrorist could be the drug trade. Thanks to an almost a worldwide prohibition on narcotics, terrorist organizations like the Taliban or al Qaeda fund their activities through the drug trade. The cultivation of the opium poppy has gone up more than 1000 percent since the first year of the United States invading Afghanistan. More than likely, the Taliban was rearming itself by taking control of this opium harvest and enforcing high taxes on its distribution. While profitable, most of the cash that the terrorist receive from the narcotics trade goes to paying off the network that smuggles it. It is somewhere along this distribution line that it is believed that Russian gangsters help push the drugs that help fund terrorism, either knowingly or unknowingly. 

Though its origins come from the repressive gulags that Stalin ruled over, Russian organized crime syndicates became a global power only years after the Soviet Union fell. Though at first these gangs acted as the safeguards of capitalism in Russia, they would eventually evolve not only to pose a threat to Russia, but to most of the world.

Bibliography

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Glenny, Misha. McMafia: A Journey through the Global Criminal Underworld. New York: Knopf, 2008. Print.

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-Goldman, David. "The Cyber Mafia Has Already Hacked You." CNNMoney. Cable News Network, 27 July 2011. Web. 19 Apr. 2012. .

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-Orttung, Robert, and Louise Shelley. Linkages Between Terrorist and Organized Crime Groups in Nuclear Smuggling. PONARS Policy Memo No. 392. Dec. 2005. Print.

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