The Scary Business of Russia

"President Bush's recent visit to Russia will no doubt inspire renewed interest among Western businessmen in this captivating economy. But go in with your eyes open. This remains a corrupt and sometimes savage place to do business. The monumental impediment to Russia's prosperity is something that the Putin government inherited from the wild, gangster-ridden days of Boris Yeltsin, when rampant bribery took hold. Imagine a U.S. customs officer privatizing 2 feet of the U.S. border and forcing people to pay him tolls. The equivalent of that is standard practice in Russia. My estimate, drawn from countless conversations with owners of small and medium-size companies, is that they must spend a fifth of their net income on bribes. Skimming that from the economy sends an estimated annual $30 billion into the pockets of Russia's officials. As a result, the corruption budget of Russia is bigger than revenues from the income tax, which Putin has limited to a flat 13%."

[Forbes]