Krysha

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Krysha
Informal practice commonly found in Post-Soviet States
FSU map.png
Map of Post-Soviet States, where Krysha commonly takes place.
Entry written by Yuliya Zabyelina and Anna Buzhor.
Yuliya Zabyelina and Anna Buzhor is affiliated to John Jay College of Criminal Justice and City University of New York (CUNY).

Original text by Yuliya Zabyellina and Anna Buzhor

Originating from criminal and law enforcement jargon, the term krysha (from the Russian крышa / krysha), literally meaning ‘roof,’ is now broadly used to refer to individuals or organisations that provide a range of services, predominantly illicit and informal, ranging from protection and patronage, to the enforcement of contracts and settlement of disputes. The term has become popular in Russian, Ukrainian, and Belorussian languages. In Russian, it has a number of different forms; крышевание / kryshevaniye (noun) meaning protection racket, крышевать / kryshevat’ (verb) meaning to provide protection or patronage, and крышующий / kryshuyushchiy (participle) meaning an individual or a group that provides protection or patronage. In Ukrainian and Belorussian, the terms кришування / kryshuvannya and крышаваньне / kryšavańnie correspond to the Russian kryshevaniye and relates to the same phenomenon. No single English word can fully incorporate the multiple meanings and forms of krysha, but the term ‘protection racket’, roughly conveys the general meaning.

The term krysha became widely used in post-Soviet republics after the disintegration of the Soviet Union when a series of sweeping political and socio-economic reforms, mainly concerned with the privatisation of state property, created a conducive environment for the empowerment of criminal organisations. Therefore, the earliest and most common usage of krysha relates to extortion by criminal organisations and gangs through the threat of violence or of actual violence. ‘In many cases, the business will have to pay from 10 to 60 percent of its pre-tax income for protection regardless of who provides it. … If the criminals find a business particularly attractive, they will demand an ownership share of it’ (CSIS 1997, p. 29[1]).

Although extortion rackets are often indistinguishable in practice from protection rackets since, for the former, there will always be an implied threat that the racketeers themselves may attack the business if it fails or refuses to pay, krysha may turn into a mutually beneficial arrangement between organised crime and business owners. In such a case, a criminal organisation will not only promise not to attack the business, but would also defend it from other racketeers, corrupt law enforcement, debt collection, and will assist with customs clearance and help it to compete with actual or potential enemies and competitors. A threat of violence or actual violence as a means of collecting money or property from businesses is therefore not an inherent feature of krysha (Siegel 2012[2]). Galeotti (2005[3]) writes that ‘[a] ‘good’ krysha provided by the more entrepreneurial gangs will not only protect you from other criminals, it will also provide a range of other services, from debt recovery (handled far more quickly and efficiently than Russia’s corrupt and inefficient courts) to an inside track on whom to bribe within the local authorities to get things done. This explains why an estimated 70-80 per cent of firms pay an average of 10-20 per cent of their profits for this ‘roof’’ (p. 57).

Although Russian organised crime groups have been known to run krysha, public officials have also sought to offer such protective services and extract the same kind of informal payments as criminal organisations. Law enforcement agencies have been reported to operate a de facto protection racket for criminal organisations (Volkov 2002a[4]). Dishonest public servants would need neither violence nor threat of violence to establish krysha but will manipulate the law and bureaucratic procedures. Such abuses of public office undermine the competitive market system, especially in the case of small and medium-size businesses, making them dependent on informal arrangements between state officials and criminal organisations. McCarthy (2011, p. 64[5]) argues that the involvement of public servants in protection rackets makes krysha in Russia strikingly different from analogous informal practices in other national contexts, such as pizzo (extortion money) levied by mafia organisations in Italy. Therefore, the effectiveness of a criminal krysha often depends on the power it has, relative to other protective ‘roofs’, including those provided by state institutions (Volkov 2002a[6]). ‘Less powerful criminal groups would seek to align themselves with more powerful criminal groups, who in turn … obtain their own krysha from corrupt government officials’ (von Lampe 2015, p. 275[7]).

Private security companies are another major player in the market of private protection. They are often run by criminal organisations that partially or fully legalise protection services (Volkov 2002b[8]; Taylor 2011[9]). Russian private security companies may thus engage in extralegal activities, such as ‘sophisticated intelligence-gathering ... and the informal use of blackmail files (kompromat), including copies of bank statements, currency transfers, business and real estate transactions and other official documents as well as general correspondence, personal information and unofficial transcripts of telephone conversations of a compromising nature’ (Ledeneva 2004, p. 138[10]). These informal practices go far beyond the services that security companies are licensed to perform and clearly reflect the risks and uncertainties of doing business in Russia.

Moreover, since the police and the military personnel were largely underfunded after the collapse of the Soviet Union, they actively sought a share of the legal market in private protection (Cox 2001[11]). While in some cases, criminal organisations would run private security firms, Taylor (2011[12]) notes that the police may often control the legal market in private security: ‘for example, the head of the municipal militia in St. Petersburg in the early 2000s reportedly oversaw roofing operations in the city, partially by controlling licenses for private security companies’ (p.164).

Summing up, the types of krysha distinguished in post-Soviet societies are: criminal krysha provided by organised crime, semi-legal (or ‘combined’) krysha provided by criminal organisations and public officials working hand in hand, and government krysha, involving public officials of various state institutions. Having emerged more than two decades ago, krysha practices remain a characteristic feature of the business culture in post-Soviet countries. Despite the efforts of post-Soviet governments to tackle these informal practices, foreign investors have continuously raised concerns about the troublesome reputation these states have when it comes to anti-competitive behaviour, extortion, and bribery.

Notes

  1. CSIS 1997. Russian Organized Crime. Global Organized Crime Project, Center for International and Strategic Studies, Washington, DC.
  2. Siegel, D. 2012. ‘Vory v Zakone: Russian Organized Crime’, in: D. Siegel and H. van der Bunt (eds.), Traditional Organized Crime in the Modern World: Responses to Socioeconomic Change, New York and London: Springer: 27-49.
  3. Galeotti, M. 2005. ‘The Russian ‘Mafiya’: Consolidation and Globalisation’, in: M. Galeotti (ed.), Global Crime Today: The Changing Face of Organised Crime New York and London: Routledge : 54-70.
  4. Vokov, V. 2002.a Violent Entrepreneurs: The Use of Force in the Making of Russian Capitalism. Ithaca: Cornell University Press.
  5. McCarthy, D.M.P. 2011. An Economic History of Organized Crime: A National and Transnational Approach. London and New York: Routledge.
  6. Vokov, V. 2002.a Violent Entrepreneurs: The Use of Force in the Making of Russian Capitalism. Ithaca: Cornell University Press.
  7. von Lampe, K. 2015. Organized Crime: Analyzing Illegal Activities, Criminal Structures, and Extra-Legal Governance. Thousand Oaks, CA: Sage
  8. Volkov, V. 2002.b Silovoye predprinimatel’stvo (Силовое предпринимательство: экономико-социологический анализ). St. Petersburg: Letniy Sad.
  9. Taylor, B. 2011. State Building in Putin’s Russia: Policing and Coercion after Communism. Cambridge: Cambridge University Press.
  10. Ledeneva, A. 2004. ‘Blat Lessons: Networks, Institutions, Unwritten Rules’, in: W. Slater and A. Wilson (eds.), The Legacy of the Soviet Union. London and New York: Palgrave Macmillan: 122-144.
  11. Cox, D. 2001. Close Protection: The Politics of Guarding Russia’s Rulers. Westport, CT: Praeger.
  12. Taylor, B. 2011. State Building in Putin’s Russia: Policing and Coercion after Communism. Cambridge: Cambridge University Press.