The Security Organs of the Russian Federation a brief History 1991-2005

Krysha

The specificity of Russian “organized crime” is linked to the origins of Soviet, and then Russian capitalism. Before Gorbachev’s law on cooperatives, in 1987, any form of private business was considered, from a legal and normative point of view, “organized crime,” and fell under the purview of the GUBKhSS: it is thus not entirely surprising that organized crime, in turn, came to play a central role in the building of Russian capitalism. When small businesses were finally allowed to emerge, they were obliged to function within a legal system that lacked the most elementary framework for capitalist activity. It was at this point that groups of young thugs, usually either veterans of Afghanistan or sportsmen based around a given club, stepped in to offer “protection.” While the initial approach was essentially predatory – the groups milked the businesses for everything they were worth and moved on – it was rapidly made to evolve. Some groups, as the Soviet Union declined and then collapsed, understood that far more money could be made if the businesses they “protected” were allowed to thrive, grow, and continue paying a regular cut; as the system grew more sophisticated, these groups placed their own people on the boards or in various departments of businesses, or simply set up their own firms, thus fully “legalizing” their activities. In fact, the “violence-managing agencies” in the space of a very few years came to fill a crucial niche in the developing capitalist economy, a niche that does not exist in the West but was created here by the legal vacuum. They provided services absolutely vital for business’s ability to operate. The most important of these were contract enforcement and debt recovery: in the absence of a functioning court system able to render and enforce judgment, businesses had to rely on a “violence-managing agency” to back up their business deals and ensure their partners would respect them. Krysha thus fast came to mean much more than simply “protection.” The groups that insisted on maintaining a predatory approach soon withered away or were eliminated; as the services provided by the kryshy proved both crucial and highly lucrative, competition surged, and only those “organized crime groups” that could move on to the next level survived beyond the very short term.

Already in the very early years who protected a business became a crucial component in the ability to do business; businessmen would not conclude deals with each other before knowing – and verifying – who their respective kryshy were; often the kryshy would meet before the deal was concluded to trade guaranties. Yet in spite of their dynamic approach organized crime groups proved unable to maintain a monopoly on the provision of protection for more than a very short period. After the March 1992 law legalized security agencies, these immediately became major players on the protection market. The law of supply and demand soon improved the position of business, now able to shop around for a krysha rather than be forced to accept the offer of the first group that walked through the door. The ChOPs created by former siloviki had definite advantages over organized crime groups, or even over the ChOPs set up by organized crime groups to provide a legal framework for their activities: ex-KGB or MVD officials, by maintaining contacts and good relations with former colleagues still in official positions, were able to offer a broader range of services to their clients than the unofficial groups. Businesses now expected their krysha to do a great many different things for them: solve problems with the tax authorities or the fire inspection, provide information on competitors, secure loans, and so forth.

Several different types of “violence-managing” agencies thus came to compete on the protection market. Broadly speaking, by the second half of the 1990s, they fell into five categories:

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  Organized crime groups, often operating through one or several ChOPs.
  
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  ChOPs created by former siloviki from the KGB, GRU, MVD, or another agency.
  
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  The ChSBs of major corporations, often built up by a former high-level silovik with good contacts within the security bureaucracies.
  
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  Branches of the security bureaucracy legally mandated to provide protection services. The most important is the MVD’s OVO, the Department for Extradepartmental Protection, set up in August 1992 on the basis of a pre-existing Soviet structure, which employs 367,000 guards, of which 147,000 are policemen. OVO’s capability not just to guard offices, factories or sites but to provide a broad range of administrative “services” make it a major player on the krysha market.
  
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  Branches of the security bureaucracy that provide krysha on an extra-legal, privatized basis. Korzhakov’s SBP is the most famous example. The main player after his fall, whose influence peaked in 1998-2000, was the Moscow RUBOP. The FSB’s DEB (4. Department for Economic Security) has also been an important actor, as well as FAPSI.
  

All the security organs of the Russian Federation are now, to some extent, involved in the krysha market, whether officially or not. The FSB, we will see further, has set up a body to coordinate its relationship to the major ChOPs born out of the organs. Though the “Wild West” climate of the early 1990s is over, the notion of krysha, and of the correlative economic interests of the security structures, must still consistently be taken into account when attempting to analyze their actions.