A new book by Alena Ledeneva explains "sistema" — Russia's complex web of informal practices, unwritten rules and personal relationships.

President Vladimir Putin, left front, Moscow Mayor Sergei Sobyanin, center, and Moscow subway chief Ivan Besedin, right, examine the area at a new Moscow subway station. Source: AP / RIA Novosti

In June, Stanislav Belkovsky wrote that Putin “never created a power vertical.” Instead, the Putinist system is a “rhizome” state, a horizontal network “composed of innumerable multiplicities of power centers.”

Putin stands at the core but is isolated. He is the last to know or is simply left in the dark. In the network, each node, which is a merger of money and administrative resources, is really where the Russian state “is born, lives, and from time to time dies.” The implication that Russia as a rhizome state is clear: We must abandon the vertical for the horizontal if we really want to know how Russia is ruled.

I was reminded of Belkovsky’s provocative revision as I read Alena Ledeneva’s excellent and informative Can Russia Modernize? Sistema, Power Networks, and Informal Governance. This book is a sequel to her Russia’s Economy of Favors: Blat, Networking and Informal Exchange (1998) and her exploration of post-Soviet informal practices in How Russia Really Works: The Informal Practices that Shaped Post-Soviet Politics and Business (2006).

Can Russia Modernize? is not so much a sequel as it is the outer crust to these previous subterranean explorations. While the first two texts focused on the societal workings of informal networks, the new book illuminates their presence in the innards of the Russian state.

Like Belkovsky, Ledeneva also sees Russia as a network state, a vast web of money and power linked through informal practices, clans, personal relations governed by unwritten rules and codes. This complex circuitry forms the sistema, or system, of Russia that Putin lords over – and of which he is just as much a prisoner.

What is sistema?

But as Ledeneva argues, it would be shortsighted to view Russia’s sistema as simply a vehicle for corruption. Ambivalence and paradox characterize sistema. It is both a positive and negative force. It is a hindrance on Russia’s long-term evolution into a modern, law bound state at the same time its informal networks facilitate short-term modernization. Sistema allows things to get done, albeit with exorbitant financial overhead.

Also, while the sistema breeds endemic corruption — in fact, is held together by graft — its informal rules and codes also constrain elites. It is the glue that holds Russian society together. Thus, sistema is a paradox: “It enables Russian society to cope with its problems while at the same time undermining it.” Russia can’t live with sistema and it can’t live without it.

What is sistema? Translated as “the system,” it is a diffuse and opaque yet omnipresent form of governance in Russia consisting of formal and informal rules. Ledeneva defines Putin’s sistema as “a co-dependence of parasitic power elites and parasitic masses.”

Whereas Soviet sistema was a system of blat—the use of personal connections to acquire resources in short supply— in Putin’s Russia, money is the item in short supply. Blat networks have been monetized. Access to power has a price, and sistema’s rules require businesses to pay bribes to skirt the law, regulations, taxes, and red tape.

Sistema is also a “social contract” between elites fattening themselves on kickbacks from public coffers, bribes from private businesses, or seizing private enterprises and the “compliant masses” who benefit from the trickle down of wealth from Russia’s petrodollars. Sistema envelopes the entire population in a system of corruption, but mostly, it benefits the power elite that rules according to its own informal rules and power networks.

Sistema is everywhere and nowhere in Russia. Sistema’s presence and non-presence is reflected in Ledeneva’s adjectives to describe it: elusive, diffuse, blurred, hidden, non-transparent, unwritten, obscured, secret, and abstract. Because of its absence on the surface, sistema cannot be captured by macrological means—its structure is too fragmented to comprise its totality, too radial to locate its exact source.

Thus Ledeneva’s narrative focuses on micrological examples that form sistema’s structural skeleton. The flesh enveloping sistema’s vertebrae is only visible in patches. Thus, Ledeneva is more sketch artist than a painter of landscapes. Her method to solve the sistema puzzle is akin to deconstruction and discourse analysis than the hard empirical stuff of social science.

The Kremlin’s behind-the-scene network

Building a system of unwritten rules and personal relations. Photo: AP

One such example of Ledeneva’s deconstruction of the micrological is her exploration of the importance of vertushka, or kremlyovka, the slang term for the Kremlin’s telephone network, as an expression of sistema’s material culture. The transformation of vertushka from a purely bureaucratic artifact to one that also includes private businessmen is indicative of the monetization of blat.

Developed in the Soviet period, vertushka was a closed telephone network controlled by the security services that linked the leader with key subordinates. For example, if Brezhnev wanted to contact a party boss in the Far East, he just had to dial a number attached to a particular phone. If the party boss’ vertushka phone rang, he knew it was Brezhnev and only Brezhnev. Think of it as a Kremlin Bat Phone. Having or not having a vertushka phone situated a bureaucrat in the hierarchy of governance.

Under Putin, vertushka gave way to VERTUshka, named after Vertu, the cell phone service favored by Europe’s rich and powerful. Not only is the privilege associated with a Vertu line flaunted with diamond-encrusted mobiles, but also in the access to power it symbolizes. A person with a Vertu phone is immediately assumed a member of the Russian elite. Like vertushka before it, VERTUshka signifies who is and who isn’t privy to the privileges of the sistema.

The elements of Putin’s sistema are revealed in other material forms. One of the most characteristic is the shift in illegal raiding (reiderstvo) between the 1990s and the 2000s. While private capital’s capture of the state was indicative of the Yeltsin period, the state’s capture of private capital is emblematic of Putin’s Russia.

Ledeneva stresses that this new form of raiding is sistema reiderstvo, or illegal corporate raiding by state officials, particularly from the security services, the so-called “werewolves in epaulets,” that seize private businesses by force, forgery, or fraud. It’s a lucrative and low risk practice in Putin’s Russia.

Sistema raiding also brings the full weight of sistema into view: the interlocking of police organs, the courts, and bureaucrats into informal power networks. No entrepreneur can withstand such an assault, and his or her only recourse is to engage in sistema to survive: either play ball with the raiders or make a direct appeal to the President, that is, utilize informal networks as a defense. In all of Ledeneva’s examples, from telephone justice to kickbacks and bribes, the vast informal networks of power reaffirm and reproduce sistema’s omnipresence.

But what about Putin and his networks and his informal method of governance? Where does Putin stand within sistema?

Putin is the dominant node in the vast network state. He rules through two mechanisms: loyalty and manual control. This first is the foundation of his networks. Orbiting around Putin are powerful figures connected to his person: former colleagues in the KGB/FSB, civic colleagues from St. Petersburg, relatives, friends and their children, and his close buddies from the Ozero dacha collective. All of these people are bound to Putin as svoi — people in his personal circle.

As Putin rose to the Presidency, his svoi also skyrocketed into prominent state, security, and economic positions. Putin relies on these people to run the vastness that is Russia. Putin rules Russia through “manual control” or personal and micro-managed governance. He utilizes his personal informal network because Russia’s dual state structure, the Presidential Administration and Prime Minister’s government, have overlapping, crisscrossing, and contradictory jurisdictions.

Putin's system: “Manual control” or personal and micro-managed governance? Photo: Kommersant

Written directives are often mismanaged, stalled or simply ignored in the state machinery. Putin’s informal networks allow him to personally mobilize key individuals to address problems. Hence, photo-ops portraying Putin as personally in control are not mere propaganda. Manual control signifies that the administrative structure, i.e. the power vertical, doesn’t work and Putin’s personal network is in play.

Yet Putin is also a prisoner of his network. Not only are his svoi his main political constituency, his reliance on them foils any attempt to modernize the administrative system into an anonymous and rules bound structure. In this sense, Putin grapples with the same problems of Russian leaders from the past: the inability to make the Russian state a smooth self-governing machine inhabited by honest duty bound civil servants.

Peter the Great tried to systematize it. Nicholas I tried to regularize it. Stalin tried to simply chop off its head and begin anew. Each failed because sistema looms too large. Ledeneva asserts that no one leader can reform sistema. They are too entrapped by it. “The more leaders try to change sistema, the more they have to rely on the informal means of execution of power and decision-making outside of formal procedures.

The more they rely on them, the more they get entangled and eventually tied up with sistema’s power networks. The more reliant on institutions, and thus less interventionist, leaders are, the less credit they receive for their leadership. It is almost as if informal leadership is a key characteristic of leadership in Russia, unachievable without instruments of informal governance,” she concludes.

Can Russia's system be modernized?

Can Russia be reformed? Or is yet another revolution required to purge it of its tenacious pre-modern practices? Or is it simply doomed to a hybrid modernity where formal and informal governance continue to intertwine?

Reading Ledeneva, you get the impression that only another societal apocalypse is required. Sistema is just too powerful and too entrenched. Even the most honest reformer is drawn into its malignancy. But that is not Ledeneva’s position.

As the above quote suggests, she believes that Russia can’t do without sistema so it must find a way to live with it. And the only way to do that is to modernize informal networks through the self-awareness and gradual reduction of their use. Only this can “change sistema from within.”

This is an optimistic end to a dark tale. But it comes across as forced. Changing Russia from within is too idealist and too dependent on the very personalized governance that fuels sistema. Russia has had its share of charismatic, well intentioned reformers. All have tried in their own way. All have failed. They come and go, but sistema rolls on.