This article is based on research that he conducted in Georgia (1998-99) and Armenia (2003). While this article can only briefly summarize the results of this research, further findings are published in his book “Understanding Post-Soviet Transitions. Corruption, Collusion and Clientelism”, New York: Palgrave Macmillan (2006). The author thanks Jana Everett, Julie George, and Michael Cummings for valuable feedback.