Corruption in the Russian Federation was always endemic. It grew so much worse that the state seized territory elsewhere. Now even conquest won’t pay the bills:
During “peacetime,” Russias state capitalism was built on the principle of competition for access to administrative resources. Those who were “closest to the center” won that struggle and used their positions to halt further competition for these resources. That alone created a huge cost to the economy. In “wartime,” that closeness to the Kremlin has made them subject to Western sanctions.
And now, when resources are scarce, those sanctions have prompted political leaders to come to the aid of their close associates. Interestingly, the fact that Kremlin cronies already controlled everything in Russia and sought additional assets in neighboring states contributed to Moscows aggressive foreign-policy stance — the results of which largely triggered the current sanctions.
This vicious cycle might lead to consequences that would make todays confiscation of pension funds look innocuous by comparison. The time for reaping profits from privatization has ended: Now the government is only generating losses and forcing taxpayers to foot the bill.