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A World of Cronyism and Corruption

Russia’s invasion of Ukraine has highlighted the widespread corruption that characterizes Vladimir Putin’s regime. But it has also underscored the fact that in today’s interconnected world, the consequences of cronyism often extend beyond national borders.

NEW YORK – Imagine the following scenario. A political outsider wins a critical election by promising to root out corruption. Even if that is a sincere intention, upon assuming office, they will quickly realize that it is best to focus on the critics of the government and opposition political parties, since going after one’s own allies will erode one’s political base. Hence, an unintended consequence of this original plan is to plant the seeds of cronyism. Even while targeting corruption, by protecting friends and doling out favors to allies, the leader strengthens their hold on power, and the country slides toward authoritarianism. In the end, corruption, too, could end up rising rather than falling.

This story has been repeated numerous times in countries across the developed and developing world. Naturally, such a transition can have huge negative effects on political leaders’ own countries. But in today’s globalized world, the consequences of cronyism often extend beyond national borders.

Russia is a case in point. In his 20-plus years in power, as either president or prime minister, President Vladimir Putin has built a plutocratic regime characterized by a particularly pernicious form of crony capitalism. While his friends and close allies have captured the bulk of Russia’s wealth creation over the past two decades, ordinary Russians are increasingly finding themselves in a stagnant, sclerotic economy.