EIGHT YEARS after the collapse of communism, Russian capitalism is on the ropes. Unscrupulous criminals, in cahoots with corrupt government officials, have looted the country, stealing state property, artistic patrimony, natural resources and even foreign aid. Everything is for sale, with proceeds spirited out of the country to safe havens in overseas banks.
A staggering $136 billion -- nearly one half of the annual gross domestic product -- left Russia just between 1993 and 1998, according to Fitch IBCA, the international rating agency. Capital flight continues unabated at a rate of about $20 billion a year because of financial instability.
The Bank of New York, under investigation for laundering billions of dollars for Moscow mobsters, is just one of dozens of banks around the world that have received huge transfers from Russia without asking too many questions.
If they have violated U.S. laws against money laundering, those banks should be prosecuted. But truly meaningful enforcement is impossible as long as Russia's banking industry is poorly regulated and intertwined with millionaire crooks and mercenary government officials who are milking the country dry.
This collusion makes it virtually impossible to distinguish legitimate transactions from illicit ones. Yet U.S. investigators will have to be able to determine the difference. That will be tough.
Shady opportunists and mobsters have gained disproportionate influence in the Russian economy. But the mere fact that capital is fleeing to overseas accounts does not automatically make it mob money.
Well-grounded distrust in financial institutions is so widespread every one tries to find a safe haven. Those who cannot stash away money overseas, hoard dollars. As a result, more U.S. dollars are hidden in Russian mattresses -- up to an estimated $30 billion -- than in any other country outside the United States.
The bleeding of Russia's wealth is a matter of grave concern. Even if foreign aid is not being stolen -- a big if -- wholesale money flight undermines international efforts to stabilize the country's economy.
Outsiders can spotlight this plight. But as long as President Boris N. Yeltsin and his inner circle tolerate this exodus of badly needed capital, the problem cannot be resolved in foreign capitals.