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Corruption still endemic in Russia

Russia's Prime Minister and President-elect Vladimir Putin chairs a Cabinet meeting at the government headquarters in Moscow on March 15, 2012. Just because Putin was re-elected to the presidency doesn't mean he can relax. Many former protesters were entrepreneurs who are still battling corruption and red tape.

Bob Moon: Opposition protests may have died down in Russia, but that doesn't mean Vladimir Putin can relax now that voters have returned him to the presidency. Many of those protesters were entrepreneurs and the bureaucratic red tape and corruption that brought them to the streets have not gone away.

Peter van Dyk reports from Moscow.


Peter van Dyk: Russia has been plagued with corruption for as long as anyone can remember. Vladimir Putin's campaign chief said the president-elect's achievement during his first stint in the Kremlin was to bring corruption down to civilized levels. It's something that small business owners like Daniel Rolett can never ignore.

Daniel Rolett: My policy is basically avoid anything that is going to be putting me in a situation where an official can ask money from me.

Rolett owns a couple of budget hotels. He says vague or undefined laws are a big problem, and some regulations are almost impossible to follow.

Californian Alex Canovas runs a small food-processing business.

Alex Canovas: Most of the problems that we've dealt with are the intractability of government bureaucrats -- not always looking for some kind of remuneration, sometimes it's just simple inflexibility, not having the right dots on the right "i"s, that kind of thing, and sometimes you just can't change their minds.

That's a polite way of saying bribes. Dmitry Medvedev became president four years ago vowing to fight corruption, but had little effect. Now, it's Vladimir Putin's turn again. But businesses know there will be no magic wand.

Canovas: Without getting into very many specifics, there are always ways of appeasing those people who are putting pressure on you.

Canovas says if he budgeted an extra 10 or 15 percent for any project in the U.S., in Russia he gives himself a 30 or 40 percent cushion. Still, he's not discouraged.

Canovas: There's a lot of difficulties, but difficulties provide opportunities. It's a good place to be.

That's because many markets are still open for new entrants to make big profits. And that is the beauty of business in Russia.

In Moscow, I'm Peter van Dyk for Marketplace.

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