CAPITALISM'S ACHILLES HEEL Dirty Money and How to

ment that is built on the premise that people will pursue their interests at the
cost of . . . property and lives of others, is it really worth it?” 207
Systematic corruption, regime decay, high growth, and massive capital
flight will not long coexist within the same borders. How China resolves
these dilemmas will be felt across the entire globe. Western countries must
ask themselves a basic question: Facilitating and accommodating hundreds
of billions of illegal dollars pouring out of China—is it worth it?
Russia
Dirty Money at Work 151
Russia has suffered what appears to be the greatest theft of resources that has
ever occurred in a relatively short period of time, estimated at $200 billion
to $500 billion during the 15 years from 1989 to 2004. Most analysts put
the annual outflow of dirty money into western accounts at $20 billion to
$30 billion a year. Only China rivals this level of larceny.
One of the best studies of the magnitude of illegal capital flight out of
Russia is “The Diagnostic Assessment of Russian Corruption: The Sociological
Analysis,” undertaken by the Institute for Information and Democratization
based in Moscow. It summarizes as follows:
[L]oss resulting from illegal—corruption-elicited—capital flight, with
1988 as a starting point, averages some $20 billion per annum; other estimates
place it at $24 to $25 billion per annum, therefore accumulating
to $300 to $350 billion in 12 years. If one were to include the loss
resulting from customs corruption—another $20 to $25 billion annually—as
well as that due to the Central Bank, the tax system and export
currency control, then the grand total for the same period would effortlessly
climb to $400–$500 billion. Of this amount, probably some $300
billion rests in western and offshore accounts. 208
The biggest component of such sums arises from underpricing of resource
exports out of Russia by the business sector. The next major component
arises from the activities of Russian criminal gangs (to the extent
that they can be distinguished from the business community) in shifting
profits earned in drug and human trafficking, extortion, and arms trading.
Finally, elements of the Russian government have likewise been involved