Freeman

ARTICLE

Blat: Corruption in Eastern Europe

MARCH 01, 1988 by MICHAEL BREWER

Michael Brewer is studying Russian and Slavic studies and English at the University of Arizona.

When I first arrived in Yugoslavia as an exchange student, I knew three things: It was socialist, it was in Eastern Europe, and I would spend a year there. I also knew three words: hvala, dovidjenja, and pivo—“thank you,” “good,bye,” and “beer.” I remember proudly pronouncing my first word in the language, PECTOPAH, only to find that it was in the Cyrillic alphabet and actually read “restoran,” meaning “restaurant.” Though I now blush at the thought of my naivete, during my year-long stay in Yugoslavia I came to know the workings of a system misunderstood by most foreigners.

Ironically, one needs to know little Marxist-Leninist dogma to understand Eastern European economies. By contrast, most any capitalist is probably better suited to understand them . . . with the addition of two words—blat and nalevo.

The most sought-after commodity in Eastern Europe is blat. And blat is not Russian for caviar, nor Latvian for sable. Blat is Russian slang, and loosely means “influence or connection.” The blat market is an underground where those with “connections” barter with others ty mnye, ya tebye, “you scratch my back and I’ll scratch yours.” It involves no money, only goods and favors.

Working nalevo, on the contrary, is often a substantial source of income for Soviet families. Soviets call it “creeping capitalism,” and it literally means “on the left,” but it translates more like, “on the side” or “under the table.” In the Soviet Union, an additional income is vital to everyday existence. In Odessa, dubiously known as the “Chicago” of the USSR, there is a saying, “If you want revenge on a man, let him live on his salary.” It’s a terrible fate. No one can imagine it.[1]

The magnitude of blat and nalevo is not easily understood. They constitute much more than just a “black market,” where denim-clad Soviet youth accost foreigners with offers of rubles for Levi’s or thin western ties. “Blat is an essential lubricant of life.”[2] Communism seeks utopia, and blat serves as the cushion between reality and ideology.

My host-father, a burly Slav with more than a hint of Gypsy blood and Gypsy guile, had an unusually ambiguous job title by Western standards.

“He is a Direktor,” my host-brother would tell me. Nothing could have been more vague. In Yugoslavia, Direktor is a title held by nearly everyone given a desk and a telephone.

He often took me to “work” with him. But we wouldn’t go to his office. Instead, we frequented working-class taverns owned by friends of his. We would then sit at a smokey table with Gypsies—men with converging eye brows and missing teeth—or those with briefcases and peppered gray hair, drink beer or shlivovitz, and listen to the loud folk music the band played. Through the din, my host-father would talk, argue, and smoke a lot of ciga rettes. This always went on late into the night as we moved from restaurant to restaurant, and often became more like an unruly drinking bout as the night wore on.

These same restaurant owners, accordion players, circus owners, and other such folk often visited our house when my host-father failed to make his rounds. These visits were almost exclusively nocturnal, but because my host-brother and I slept in the nearest room, the conversations were always too loud to disregard.

One night an old salt with a wooden leg Stopped in. He had a nasty habit of fiercely rapping his rings on the table when making a point. My host-mother was a strong woman, in mind as well as muscle, and any other man would have been quickly ushered out, but she did nothing. He brought with him a large sack filled with coffee and chocolate, both unattainable in Yugoslavia at that time, as well as several bottles of my host-father’s favorite drink. The two ended up talking late into the night, sharing alternate drinks from a communal bottle, and seemed to come to some sort of agreement only hours before dawn.

The next day I began questioning my brother, and paying closer attention to my father’s actions. I learned that my host-mother had once been a folk singer, and my father played the drums in the band. At this time, he had learned all the ins and outs of the music business. Then, when my host-mother gave up singing, he had landed a job with the government as an entertainment promoter.

The circus owners and musicians came asking for contracts to perform at certain locales, and the restaurant owners came asking for certain performers. My host-father was the middle man. He had influence, and he used it well. On several occasions when it was impossible to get coffee in the country, we were never without it. When most people had to wait five years for a telephone, ours took six weeks. My host-brother, who had passing grades only in English and physical education, was miraculously accepted into the best school in Bel grade. And, the last time I visited, my host father had somehow acquired (as gifts, of course) a new remote- control Sony television, two VCRs, and a video camera.

This is the blat market in Yugoslavia, a non-allied socialist country with equal billing in East and West.

Midway through my year in Yugoslavia, two Americans, a West German, and I planned to go to the Soviet Union with a Yugoslav tour group. Going with Yugoslavs, the Soviets would be more friendly toward us as “brothers in communism,” and, most important, it was very cheap. I was very poor at the time and had just enough money for the tour price. So, upon reaching the border, I decided to sell my jeans.

Soon after we boarded a train to Kiev, on the Soviet-Hungarian border, a group of black-marketeers knocked on our compartment door. My friends and I bartered with them for a while, and I sold my jeans. We then asked them about themselves, and they ardently told us about their hometown near the Black Sea. I was surprised at how friendly and warm they were. I later encountered another type when I

ran out of money in Leningrad and had to sell a swimming suit, some shorts, and a T-shirt that said “The Roiling Stones.”

A young marketeer and I had come to an agreement on the sale. He counted out 2 twenty-five ruble notes, 5 fives, and 25 ones into his hand. 100 rubles—the arranged price. He then stopped. ‘Wait,” he said, “I give you five more.” And with the dexterity of a Gypsy card shark, he slid the big bills from the bottom of the stack with his other hand. He then reached into his pocket, deposited the big bills, took out a crisp five ruble note, and slapped it on top of the remaining 25 ones. Total—30 rubles. He grabbed the merchandise and disappeared. Unaware of what had taken place, I was left 70 rubles short (a little over 80 dollars), smiling like a man who had just beaten a pool hustler for five bucks, soon to lose his shirt.

Had I been on a train (as during my first sale) I could have tracked the thief down, since trains in the Soviet Union seldom stop between major cities. A city marketeer’s disappearance, however, is faster than the Russian he speaks. A red fox in a green meadow must be cunning. And likewise, the “capitalist” under communism.

A Drop in the Ocean?

This is the extent of corruption seen by any foreigner visiting the Soviet Union: getting taken. I thought I had found a massive underground, but in reality, the black market is only a fraction of the whole.

Dr. Delbert Phillips, a professor of Russian at the University of Arizona who has been taking yearly excursions to the Soviet Union for over 20 years, agrees. In an interview (February 17, 1987) concerning corruption in the USSR, he told me, “the black market is only kapya v morye,” a drop in the ocean. It is an ocean that accounts for up to 40 per cent of the turnover of the entire economy.[3] Blat is half that ocean.

Blat ranges from finding two tickets to the sold-out hockey final, getting the freshest fruit, or buying a car in less than five years. Contrary to Western ways, however, menial jobs often have the most blat. Phillips, who knows the Soviet poet Yevgeny Yevtushenko, said that “even the famous poet has to bow to the butcher for the best cuts of meat.” Plumbers, auto mechanics, store clerks, and doormen, all have as much, if not more, blat than teachers, doctors, or engineers.

For example, Sasha, a book vendor and member of what Phillips calls his “Russian family,” acquired a car in a little over six months by accumulating favors from the right people. When a sought-after book reached the shelves, he would take it off and save it for “friends” who wanted it. Six months and many books later it paid off.

Blat is an unspoken agreement, but “like Sicilian godfathers, Russians remember their obligations and know when it is appropriate to pay them.”[4] For this reason, the system works.

The other half of the ocean is working nalevo.

An American student, who recently studied in the Soviet Union, told me about one of his experiences that typifies Soviet services.

In the communal bathroom in a dormitory, he noticed that one of the sinks had pulled out of the wall and was being supported by the pipes alone. He reported it to the dorm manager. Eager to please the American, the manager immediately sent for a repairman. In a week the repairman arrived and set the sink back in place with a few bolts drilled into the cinder block wall. The sink was heavy, however, and the cinder blocks crumbling. Two days later, the sink broke away a second time. The repairman returned, days later, and repaired it as he had before with the same result. It broke again. The embarrassed dorm manager then decided to call a Maistor, master of the trade. A week later the master came. He mixed up some quick-dry concrete and plastered the sink to the wall. The dorm manager was satisfied. Now, however, the sink weighed twice as much and soon pulled out from the wall even further. When the student left Moscow a month later, the sink was still broken.

Repair work of this caliber is scarce in the Soviet Union. It is usually worse. The demand for quick, quality service has opened up an enormous underground of working “on the side.”

In a typical apartment service call, a repairman is first sent simply to diagnose the problem, be it the refrigerator, plumbing, heating, or whatnot. This diagnosis can take a number of weeks. Then a second person is dispatched to repair it—another few weeks. A month to repair a single problem. Often, however, the first worker to arrive will repair the problem on the spot for cash. This kind of work can more than double a repairman’s monthly salary. It is exponentially more profitable to work privately. This goes for other professions as well.

For example, on a good day off, an auto mechanic can make half of his monthly salary doing private repairs. Construction workers often intentionally do bad work, and later come back privately to fix the job. Health care in the USSR is poor enough that doctors and dentists can make monumental sums on the side. And it is not uncommon for professors, who make less than bus drivers, to make six times their salaries tutoring the failing children of wealthy families.

In a speech to party members in Leningrad, Mikhail Gorbachev said, “Try to get your apartment repaired, you will definitely have to find a moonlighter . . . He will steal the materials he needs from a construction site.” The theft of state-owned materials is not unusual. Most citizens don’t see it as theft at all.

Michael Binyon, in his book, Life in Russia, provides a blatant, humorous example of theft from the State for personal gain.


In August 1979 responsibility for the [railway] line from Kishinyov, the Moldavian capital, to the nearby port of Odessa in the Ukraine was divided [between the two republics]. On the first day of the new agreement, a [Moldavian] train set out from Ki-shinyov, crossed the border into the newly independent Odessa administrative zone and disappeared . . . . It turned out that the train had not just disappeared. It had been captured. The moment it crossed into the Odessa railway zone, the [Ukrainian] railway workers had seen their chance. They com mandeered the engine and set it to work on their line. Now they could not only fulfill their plan, but overfulfill it and win a handsome bonus. It was not the only train that disappeared.[5]

The wild west still exists. It has only moved to the Ukraine and donned socialist clothing.

In October 1974, a commentary in Komsomolskaya Pravda dared to imply that the Soviet system is at fault for not meeting the basic needs of consumers. The government seems to understand that nalevo is necessary corruption. The importance of legalized private work illustrates this well.

The government allows every collective or state farmer a small plot of land to cultivate in his free time. It is interesting to compare data on this minimal, part-time, private farming to that of the kalhozi, or collective farms.

Although private plots make up only one per cent of farmed land, their produce makes up 26 per cent of the total value of the nation’s farm output. They are roughly 40 times more efficient than collectives. According to the 1973 Soviet economic yearbook, in terms of value, private plots produced 62 per cent of the nation’s potatoes, 32 per cent of other fruits and vegetables, 47 per cent of the eggs, and 34 per cent of the meat and milk.[6]

Obviously, the USSR would be unable to feed its people without the private sector. The Soviets need it, yet it is out of line with strict Soviet dogma. Blat and nalevo are the bastard children of the Soviet economy. They are publicly denied, but have flourished in the underground ever since their prohibition soon after the Revolution. And though still ideologically sidestepped, their economic benefits are becoming harder to ignore.

In June 1984, Komsomolskaya Pravda stated, “Our country values and supports personal farming for the general welfare, however, we cannot close our eyes to negative phenomena in the use of private plots—to the fact that this sector is sometimes transformed into a person’s basic source of income, which leads to petty bourgeois mentality.”

That was under Konstantin Chernenko, last in the line of Brezhnevian conservatives. Now, however, Gorbachev, a younger and more liberal leader, seems to see the necessity of limited private enterprises.

Recently, a report on McDonald’s shown on Soviet television dared to suggest, “Maybe there is something we can learn from this.” Several Pizza Hut restaurants are being constructed in Moscow and Leningrad. The Supreme Soviet, the USSR’s national legislature, is currently experimenting on a small scale with a law that, much like China’s new economic plan, would allow for “individual labor activity.”[7] Individuals would be allowed to sell their services legally and also could band together in joint ventures such as small cafes or shops. Private hiring of subordinate employees would remain illegal, and excessive profits probably would be highly taxed, but, for the first time since Lenin’s New Economic Policy ended in 1928, private industry would return to Russia.

Lenin’s excuse was, “One step back to take two steps forward.” Gorbachev seems to see that the “Revolution” has long since run out of steam, and, noting the Chinese communists’ successes, looks to give it new life by adding capitalist incentives to socialist planning. But this is by no means the end of blat. As long as shortages of consumer goods exist, blat will continue to grease the economic machinery of Soviet and Eastern European society.

When my friends and I left the Soviet Union at a small border crossing near Hungary, I still had about 35 rubles (about 40 dollars) in my pocket. Our guide had told us that Soviet policy forbade the transfer of rubles out of the country. But I just couldn’t bear giving them up. I stuffed them into a dirty sock and planted it in the middle of my duffel bag. If they wanted them that badly, they could have them. They didn’t even stop our bus, and we drove past the rain-soaked sentries, on into Hungary. In retrospect, I’m not sure why I kept the rubles, risking a long and uncomfortable interrogation in a cold, wet room. They were basically worthless outside of the USSR and, as I had found, within as well. They were just paper. I guess I wanted to remember that. []


1.   Hedrick Smith, The Russians (New York: Quadrangle/The New York Times Book Co., 1976). p. 89.

2.   Ibid., p. 88.

3.   Jeff Trimble, “Earning a fast ruble; Pizza Hut’s on the way as Soviets try free enterprise,” U.S. News and World Report. November 24, 1986, p. 37.

4.   Michael Binyon, Life in Russia (London: Hamish Hamilton. 1983). p. 255.

5.   Ibid., pp. 17-18.

6.   Smith, p. 201.

7.   Trimble, p. 36,

ASSOCIATED ISSUE

March 1988

comments powered by Disqus

EMAIL UPDATES

* indicates required

CURRENT ISSUE

October 2014

Heavily-armed police and their supporters will tell you they need all those armored trucks and heavy guns. It's a dangerous job, not least because Americans have so many guns. But the numbers just don't support these claims: Policing is safer than ever--and it's safer than a lot of common jobs by comparison. Daniel Bier has the analysis. Plus, Iain Murray and Wendy McElroy look at how the Feds are recruiting more and more Americans to do their policework for them.
Download Free PDF

PAST ISSUES

SUBSCRIBE

RENEW YOUR SUBSCRIPTION