HOW RUSSIAN LOBBYING WORKS

Author: Taisiya Bekbulatova

Technically speaking, lobbying doesn’t exist in Russia. The concept, at least, isn’t established anywhere in the country’s laws, and the activity itself isn’t formally regulated in any way. There are, nevertheless, many people in Russia who earn a living by mediating between the country’s state and businesses, defending the interests of entrepreneurs and campaigning for the legislation they consider necessary. Some of these people use legal methods, while others- the so-called “fixers”- resort to money, connections, and even threats. 

In Russia, the terms “lobbying” and “GR” (government relations) are typically treated like synonyms. In both cases, the words refer to people who act as intermediaries between businesses and the state, representing the interests of the former. Lobbyists are usually hired for single jobs, not regular, ongoing work. But with government relations people, it’s the opposite. Their function is more communications-based than legal. Companies usually employ GR specialists as full-time staff, but it’s not profitable for businesses to keep lobbyists as permanent personnel, so they’re typically outsourced. Internal GR specialists often recruit outside lobbyists to help them with their work.

The clients for government relations work are usually large businesses and industry associations. Demand is especially high among foreign companies that need a guide in unfamiliar waters.

Under current conditions, the communication channels are nearly monopolized. The authorities reach decisions based on inadequate expertise and one-sided perspectives.

In legal terms, lobbyists in Russia are invisible. The decision-making process is informal and largely happens behind closed doors. This arrangement is due in part to the peculiarities of the contemporary Russian state.  Working in this field is mostly “behind the scenes". All the serious stuff happens behind closed doors.

Russian lobbyists face many challenges, not least of which is the country’s repressive approach to drafting new legislative norms. Lawmakers in recent years have tended to resort to outright prohibitions whenever designing new regulations. As a result, lobbyists spend most of their time trying to prevent the next ban, often battling against exclusively political arguments for legislation that disrupts whole industries.

New laws are usually adopted as instantaneous reactions to something that arouses the public’s indignation, and the political system is incapable of recognizing when its decisions are flawed. As a result, one bad legislative initiative is often followed by another, and so on, ad infinitum.  What happens in Russia is that something is passed, but nothing from the previous series of regulations is repealed.

It’s sometimes assumed that Russian lobbyists work with all branches of the state, focusing their efforts on the parliament. In fact, lobbyists spend more time talking to the executive branch and various federal agencies (especially the Anti-Monopoly Service and the ministries that oversee the real sector of the economy, such as the Industry and Trade Ministry and the Construction Ministry).

Over the past several years, the parliament’s role has unfortunately disintegrated. Most of the laws adopted by the State Duma articulate only a general framework, and the real substance is written by the government in the form of statutes and regulations. Sometimes they adopt a law and everyone’s watching, but it’s toothless. The main thing lobbyists try to do is influence the regulatory instruments and enforcement agencies prescribed in legislation.

In countries with a strong legislature, the political players are deputies, congressmen, and specific parties, to whom you can appeal and persuade, one by one, proposing this or that law. In Russia, deputies are invisible and unknown. [Russia’s] parliament, for instance, was one of the first to implement the concept of open data. It has an open API [application programming interface], containing the data from all speeches, sessions, and votes. The whole thing is wonderful, but the problem is that nobody needs it. And herein lies the bane of all government relations: When faced with this strict political monopoly, the only way really to pass a bill rigorously is to introduce it through the office of the president. While most of Russia’s lobbying work goes on behind the scenes, the visible battles occur when the State Duma adopts direct regulatory acts.

“Civilized” lobbyists focus their work on the statutes and regulations drafted by the government. The key task is to engineer changes in regulyatoriki (regulatory documents).  The greater the state’s regulations, the more that industry needs lobbyists.

Seventy percent of lobbying is understanding how this or that decision-making institution functions and knowing its internal rules and understanding how its interdependencies are structured. And these internal mechanisms are changing constantly. The other 30 percent is a mix of your relationships, your creativity, and so on.

The government is constantly rewriting its regulatory statutes, which offer considerably more wiggle room than you find in most legislation adopted by lawmakers. If they adopt a law that’s unfavorable to some business, then this is where lobbyists step in and try to make changes - right away, too, ecause we’re talking about losing money. The cost of hiring lobbyists is negligible compared to what a business stands to lose.

Lobbyists’ main instrument for influencing the decision-making process is providing state officials with information. The problem is that government officials responsible for drafting these decisions are under-informed.

The main way to get information to state officials is by providing expertise that’s necessary for their regulatory work. In order to reach decisions, officials need to base their conclusions on something. It’s not enough to get the “necessary” provisions added to new statutes and regulations, as everything also needs to win the support of the Finance Ministry and pass an anti-corruption review (“not a single ordinance enters force until the Justice Ministry approves it”). The Finance Ministry automatically rejects any regulatory statute that would raise government spending or reduce the state’s revenue. It’s just automatic. In industries where lobbyists are the strongest, regulatory statutes change only rarely: Sometimes it’s months and sometimes it’s years.

Industry groups and business associations are instruments that lobbyists use constantly. State officials are more inclined to consider the opinions of public coalitions than listen to specific companies. They act like public servants, but they get by on money from businesses.  A few players share the market of government relations. The heaviest hitters are the Russian Union of Industrialists and Entrepreneurs (RSPP), the Chamber of Commerce and Industry (TPP), “Opora Rossii” (Russia’s Support), “Delovaya Rossiya” (Business Russia), and a few other specialized associations like the particularly effective All-Russian Insurance Association. But it’s not enough just to be a member of any of these groups. If you want actual solutions to your problems, you need to snag a role in one of their governing bodies or you need to create your own committee within an association.

Lobbying through business associations and expert councils is “soft lobbyism,” when compared with  “hard lobbying” that relies on government “insiders. On many public councils,  there are representatives from different businesses posing as scholars and spokespeople for nonprofits. Lobbyists and government relations specialists do everything they can to embed themselves in expert councils.

The primary means of promoting interests is participation in different advisory groups. The second approach is meeting with stakeholders  at their offices

Expert councils aren’t enormously effective, though they do make it easier for business representatives to be in contact with government agencies. Nonprofit lobbyists and various charitable organizations also use membership in these councils to advance their interests.

Good relations with state officials are necessary . It’s important because an official might talk to you informally, if he knows you’re a qualified, decent, and friendly person. But connections aren’t everything. It’s also vital to understand the regulations that guide and limit the work of officials. Knowing the decision-making procedures and being able to work within these parameters is essential.

Coincidentally, there’s also noticeably high turnover at Russian state agencies, and former officials who already know the government’s internal practices often become lobbyists themselves.

Because Russia has no laws on lobbying, it’s impossible to estimate the industry’s size. Customers can’t even designate lobbyist services in contracts, and this work is usually recorded as “consulting. Between $10,000 and $15,000 a month is generally considered the average norm for the process.

The Russia’s lobbying industry would be worth upwards of 20 billion rubles ($351.4 million) a year, if it were regulated openly.

Russia has a long and complicated history when it comes to the regulation of lobbyists, but the short version of this story is that the government has yet to adopt any special laws. Officially there is no lobbying in Russia (which is bad, strictly speaking), but it’s always flourished brilliantly behind the scenes. Efforts to develop special legislation date back to the early 1990s, but they’ve always failed. Industry insiders say the reason is simple: the absence of regulations has its drawbacks, but the adoption of a “crooked” law could be even worse. So far, no one has managed to propose regulations that satisfy the lobbyists themselves. They’re only suggesting licensing and accreditation. This doesn’t add anything to the industry, but it would immediately create certain beneficiaries. Most of the lobbyists agree that legalizing their profession (through legislation or regulations) should help minimize the risks they face in their industry. Sensible legislation would be better than none at all. It could make it easier for companies to find and hire lobbyists. The main effects would be an expansion of the market, higher confidence in the work of lobbyists, and the market would gain significantly in financial capacity. If they could pass the right kind of legislation on lobbying, it would be good for everyone.

Professional lobbyists acknowledge that their line of work is commonly associated with corruption, but anyone in the industry will tell you with equally strong conviction that they never resort to illegal methods in their business. Bribes are bribes and lobbying is lobbying. They’re two different forms of life support. It’s just that we’re accustomed to thinking of lobbying in clichés, assuming it’s all bag drops. Actually lobbying is about formulating your own agenda, presenting it coherently to partners, searching for allies, and interacting wisely with opponents. It’s complex, and probably the costs in the end might be comparable to delivering bags of cash. However, lobbying has two advantages [over bribes]: First, you won’t end up in prison. And second this kind of activity is far more effective and the results are more stable.

A large black market for “fixers” still coexists alongside Russia’s unregulated, legal lobbying. Some segments of the lobbying world are involved in negotiating certain sources of state funding- various procurement deals and so on. There are special people who deal with this, and they are much closer to what you might call "fixers". In any case, when the state makes a purchase, there’s supposed to be a bidding process, and in order to circumvent this process you’ve got to devise something. You’ve got to fix it so you get the desired result. “A fixer” is a bribe giver. The value of this approach in government relations is minimal. Fixers operate where there’s government money, not regulatory work. It’s a purely corrupt thing. They usually offer access to resources or contracts, often to state purchases. Some government relations specialists also work on state procurements, dealing with quotas and subsidies, but their methods are limited. They just file all the paperwork correctly and see the procedure through correctly. For example, if someone files a complaint against a company because it won a procurement contract, one of these specialists would go to FAS [Russia’s Federal Antimonopoly Service] with the necessary information and answer any questions. FAS generally knows and trusts these people. Most fixers work with municipalities. Lobbyists for major companies, on the other hand, rarely interact with local officials at this level. A large percentage of the people in this profession call themselves lobbyists but are closer to fixers in reality especially wherever there’s some gray zone, where there aren’t clearly established procedures or regulations. It’s more likely when working with law-enforcement agencies, which have historically thought of themselves as more closed-off institutions, and it’s less common with civil, civilized officials.