Is there anything new about good connections, 'blat' and corruption?
The experiences of small female entrepreneurs

Dorte Bjerregaard Jensen

Paper presented at the Fourth Nordic Conference on the Anthropology of Post-Socialism, April 2002
By Dorte Bjerregaard Jensen, MA student, Institute of Anthropology, University of Copenhagen

Table of contents

Introduction
The case
Demand and supply
A concluding example
Notes

Introduction

When preparing for this workshop I was told that anthropologist have made only few analyses on corruption in Central and Eastern Europe. Phenomena described as 'blat'⁽¹⁾, the importance of good connections or "the second economy" (also referred to as "the black market") have had greater attention.

According to Alena Ledeneva in her book "Russia's Economy of Favours - Blat, Networking and Informal Exchange" (1998), the term 'corruption' usually designates abuse of high public positions and involves private wealth on a substantial scale. 'Blat', on the other side, is restricted to the domain of everyday life unlike that of corruption, which has

"to do with politics and bureaucratic organisations. Blat is more legitimate, since it is oriented to satisfying everyday needs and basic necessities". (Ledeneva 1998:46-47).

This definition of corruption offers an explanation for the low number of anthropologists doing research on the subject, because if corruption is something that takes place among high-ranking officials and politicians, then it is no wonder that fieldworkers only have access to corruption's less profitable 'cousins' - blat, bribery and the black market. The paper at hand does not deal with big scale corruption. In stead it explores three phenomena, "good connections", "blat" and "bribery", as types of exchange relations. I shall point to duration and the character of the exchanged objects as variables that differentiate these relations. Furthermore it is my point, that people perceive these types of relations differently depending on how closely involved they are themselves. The three types of relations are of course in reality overlapping.

The case

The paper draws on interviews with female entrepreneurs living in St Petersburg. The fieldwork was conducted in 2001.

The following passage is from an interview with Natasha⁽²⁾, a 35-year-old female entrepreneur and former schoolteacher, who is starting up production and sale of a food item together with her father. The discussion takes its point of departure in her case, and therefore I will quote at some length:

We need a permission to sell our products. It costs us around 1000 dollars on the black market…to bribe somebody

OK, so you have this little envelope?

(Laughs) No, it is not that easy. I need to find a person who has connections to the administration and give him this money. Then he will start organising a solution to my problem. He is not a person from the outside. He knows about my problem and cooperates with the administration. But he himself cannot decide anything. He is a link in the chain. No person in the administration can accept money in an envelope. No, I give the money to this person and then he… I don't know exactly how. I think he gives the money to the person in the administration who decides about my application. He is a kind of middleman. Usually there are one, maybe two such middlemen.

How does a person get in contact with a middleman?

This is something very specific about business in Russia. I have a lot of friends and relatives and I can ask them: "do you know anybody who can help me with my problem". I'll ask a person and this person will ask another person. I think people in Russia are very communicative… how shall I put it…? Anyway, I'll find a person who can help me. For example I need a place for production. I'll go to the city's administration with my application, but they will claim that there are no vacant premises. Then I'll go to the local administrator of a building where I know that there are vacant places. I'll pay the administrator and he'll let me in. Some of my friends who have their own business have done it like that.

But it is the exact same public building [as the city administration denied you access to]?

Well, yes. It is a state building, but the person who is the director of the building, he can give me access to the place. The reason why the city's administration refuses me is that they want money from me. But in stead I'll pay this money directly to the director of the building.

And afterwards you'll get an official permission to carry out your production in that building?

Yes, I have an official permission. I pay rent every month. (Laughs) I cannot imagine how foreigners can make business in Russia.

You mentioned the word "Bandit" earlier. Is that the black…?

Yes these are people at the black market.

And a middleman is actually…

Yes… yes you are right. He is a kind of bandit. A kind of. Some years ago bandits could come to your business and demand money. You could ask 'why?' but would not get an answer. "We are your Krysha" [Russian: cover or roof]. I don't know how it is today, but we are ready to pay if somebody comes and offers protection, because it is very dangerous to turn down people from a "krysha". We would have to pay.

Natasha is dependent on the networks of friends and relatives (blat) to get to a subsequent stage of contacting a middleman. This middleman is not from within her personal circles. But neither is he the one who directly takes the bribe. He is a person who gets income from mediating a bribe. The interviewer suggests he be called a bandit. Only reluctantly does Natasha accept this label and she modifies the term by stating that he is only "a kind of bandit". He is not a bandit in Natasha's true sense of the word.

That, however, should not lead us to believe that terms as bandits, blat and corruption are unsuitable to describe elements of Natasha's way to hiring premises for production and obtaining permission to sell her products. Instead her reluctance suggests that she prefers to think of the middleman as a friend of a friend rather than as bandit. But when challenged she agrees to apply the term 'bandit' to her own particular connection, and thereby he is put in the same category as "Krysha" bandits that demand money from businesspeople.

Demand and supply

Ledeneva's distinctions between different types of relations inform the discussion of Natasha's case. Among other things Ledeneva compares blat practices with corruption, bribery and 'the second economy'.

"Blat is the use of personal networks and informal contacts to obtain goods and services in short supply and to find a way around formal procedures" (Ledeneva 1998:1).

It is characteristic of blat relations that people refer to the favours they have done others in terms of unselfishness. Blat connections would in Soviet times frequently be used to introduce people to others who have access to things or services. These things or services were in fact legal to possess (consumer goods, medical care, a place at the university, an apartment etc.) but in short supply (ibid.:42). By practicing blat people felt that they stood side by side with friends and family in order to fight the hassles of the Soviet shortage economy, where a personal network was of greater importance than money. A blat favour would usually, but not necessarily, be returned with another favour. Never the less, a return favour was unlikely to occur immediately. The reciprocity in blat favours was, and still is, characterised by being blurred and delayed.

Thus Ledeneva describes blat as resting on long-lasting relations between two subjects. Bribery, on the other hand, constitutes a short-term relationship that only lasts long enough to exchange money and goods/services. The duration of the relationship is a key factor in distinguishing between a blat and a bribery relation.

Bribery is morally more reprehensible since the recipient acts on his or her own behalf with the purpose of direct personal gain (ibid.:42), even though blat according to Ledeneva also is referred to in dubious terms. Ledeneva calls attention to the fact that people usually call the practises of others 'blat', whereas their own networking activities have to do with friendship and unselfishness (Ledeneva 1998:41). Ledeneva calls this the "misrecognition game" (ibid.:6).The misrecognition game is also a topic in the part of the quoted interview dealing with bandits.

Natasha has not yet experienced being approached by a "Krysha" offering to 'protect' her business, but does not hesitate to call 'Krysha' people 'bandits'. It seems as if the explicitly negative term 'bandit', and is used in a general way about phenomena that she is (yet) not a part of herself. Natasha has a moral preference of talking about good connections. And the fact that the middleman in some sense is turning into her personal connection makes it difficult to name exactly who should be called a bandit and who should not.

Natasha described two cases where bribing was called for, but her strategies were different in the two cases. Regarding permission to sell, she would need a middleman. It is reasonable to assume that this permission is granted through one particular public office, and therefore she has no choice but to approach this organisation. She is dealing with a monopoly and has to be extra careful with her bribe because there is no competing organisation to turn to.

To find premises for production, on the other hand, was a case she could handle on her own. She could take her bribe either to the city's administration or to a director of a public building. These two actors are competing with each other about the bribe. There is so to say a market of people with access to public buildings, and Natasha thus gains a costumer's basis for negotiation. She can avoid bribing the city's administration because as a costumer she has other ways to get what she wants.

Even 'Krysha' activity, is subject to the market. One woman describes how 'Krysha'-people would come to her former workplace:

When I worked at a drycleaner's, young groups of young men would appear about once a year. They insisted on getting to talk to the owner, and then they demanded in some hidden phrases that the profit be shared with them. Then the owner explained, with equally subtle manner of speaking, who his 'Krysha' was. And then they disappeared; because they knew that somebody already was protecting the business.

Clearly the laundry owner cannot choose not to have a 'Krysha', just as Natasha cannot avoid bribing one or another person in order to get to rent a place for her production. Nevertheless, if there is a wide supply of services such as protection and housing, then the demanding part can be more selective.

A concluding example

Good connections, blat and bribery were and are three interconnected types of relations. As we have seen in Natasha's case, blat and good connections are sometimes necessary to get to the point where a bribe can come into question.

However, some features differentiate blat and bribery. Blat rests on yearlong relations, whereas bribery tends to work within a shorter time frame. If you give a bribe, you don't owe the recipient a return favour. It is already paid for with money. But if someone from your own network has introduced you, then you are indebted to that person.

This leads to the character of the exchanged objects. The supply of many services - on the official as well as on the black market - is growing and it creates a situation where only strongly monopolised items or services (such as Natasha's permission to sell) are still wrapped in the full packet of indirect bribery with connections, blat and middlemen. 'Krysha' and the hiring of premises for production are less monopolised spheres and thus direct bribery is a possibility. It indicates that it is no longer so easy to say whether a personal network is of greater importance than money.

The importance of a strong and wide network of connections seems to be decreasing. A young woman from a consulting firm expresses thus changes her mind about the importance of connections during the interview:

I have been told that it is necessary to have connections to make business in Russia

Yes, off cource. Connections are important because… maybe it is a part of the old system, because connections constitute the main road in life, so if you know this person…

The main road in life?

It is not the right word. I mean if you for example know somebody who can help you and be useful for you, then you meet this person and he gives you advice or he can recommend you to somebody. If we, in our business, have a costumer then he can recommend us to someone else

His friends and…

His friends can come and we can also make him an offer. But it is not only in this sphere, because without good connections you cannot do the things you want to do.

What could for example be inhibited? You say that sometimes you cannot do the things you want to do.

Maybe not… no I am not right. Nowadays you just need a good education, a strong will, good managing skills and a certain financial support and a business plan. And if you have that, then you can start.

Notes

¹ 'Blat' is a Russian word that gained its present meaning during Soviet times even though it was banned from public discourse. Ledeneva, who makes an in-depth analysis of the phenomenon, quotes Berliner: "if we were totally reliant upon the written sources of Soviet society, we might hardly have guessed at the importance of 'blat'" (Berliner 1957 in Ledeneva 1998:12)

² Natasha is a pseudonym and her business is due to matters of protection only described in general terms.