A brief description about business practices in Russia. Called Blat Business.

1. Блат
Business in Russia
Miguel Sanchez
William Parra

2. Summary
! Definition of Blat
! Origin of Blat
! Types of needs
! Imposed Reciprocity versus Voluntary Reciprocity
! Ethical Principles
! Post- Socialism : Implications for Informal Practices
! Change and Continuity in Blat Practices
! Conclusions

3. Definition of BLAT
Blat is the use of personal networks and informal contacts
to obtain:
Goods and services to skirt formal procedures.
What is informal practices in the Russian context?
Regular strategies to manipulate or exploit formal rules.

4. Origin of BLAT: the
Blatmeisters
Socialism System
Blatmeisters in the Russian context are people naturally endowed with
certain talents to be successful blat transactors.
They solve problems and arrange things for others, and are thus called
“useful people”.
In the socialism system: They were often employed in professions which
delivered personal services or which gave them special access to goods:
! Doctors.
! Sauna workers.
! Shop assistants.
! Storage employees.

5. Types of needs
Blat was used in Soviet Russia for four different types of
needs:
1. Foodstuffs.
2. Clothes.
3. Household goods.
4. Housework and hobby materials.
EXAMPLES: health resort stays, and travel tickets; life cycle
needs such as birth clinics, kindergartens, schools, escape from
compulsory military service, high schools, jobs, flats,
hospitals, and funerals; and the needs of others.

6. Reciprocity or Voluntary
Although one knows one has to repay favors, reciprocity is
often disguised by time delays (sometimes very long-term)
and mediation by a third party.
To maintain a positive self-image, participants have to
perceive a blat favor as “help” given altruistically, out of
friendship rather than in expectation of a return, even if
the “help” is given at the expense of public resources.

7. Ethical Principles
! The obligation to help—help your friends unselfishly and
they will come to your aid
! Do not expect gratitude but be grateful
! Look to the future—long-term reciprocity
! Keep within limits—ask within limits
! Know the contexts in which the informal friendship code has
priority over formal legal codes
! Socially ostracize those who follow the letter of law

8. Post- Socialism : Implications
for Informal Practices
! Once the Soviet formal political and economic framework
collapsed, informal practices spiraled out of control.
Policies of Liberalization
Privatization
Financial deregulation
Collapse of the local
systems of socialist
guarantees

9. Change and Continuity in Blat
Practices
! Monetization
! Means of Exchange
! Change for personal consumption
! $ 2.8 billion a year in bribes
! Export licenses, quotas, custom duties, tax transfer

10. Conclusion
! Social networks are a universal characteristic of human
societies, and the questions of why social networks play such
a central role in state centralized economies and serve as
channels for exploitative practices should be answered with
reference to the uniform features of these economies.

11. Thanks for your
attention