Built by Peter the Great, run by the terrible

British and Russian officials are preparing for a series of events in the New Year to mark the 300th anniversary of Peter the Great's celebrated mission to England, when the 6ft 7in tsar arrived in search of Western ideas pretending, ludicrously, to be incognito.

It ought to be a joyous occasion, marking the first peaceful trip abroad by a Russian tsar, but for one troubling fact. The window on Europe that the 25-year-old Peter so spectacularly opened in the age of Sir Isaac Newton is, three centuries on, clouded anew by bureaucracy and corruption. As they raise a glass to history, British diplomats will surely heartily wish that the present was in better shape.

At the core of the problem lies the city that Peter built, St Petersburg, and particularly its port. It is a gateway which, given its strategic location linking Russia to the Baltic and western Europe, ought to be thriving. It isn't. This month saw further evidence of the red tape and corruption that has earned it a reputation for being as one of the most expensive and unreliable transhipment points to and from Europe.

Out of the blue, the city's police and customs confiscated more than 3,000 tons of frozen chicken from America Meridional de Commercio International, a Brazilian firm, claiming that it was smuggled. The company, which was dipping its toe into Russian importing for the first time, was horrified. It claimed to have been robbed, and launched a publicity campaign to prove it. It also alleged that the police beat up two of its officials. The city's transport prosecutor's office launched an investigation, which broadly came down on the company's side, and the outraged Brazilians made sure the message got out.

"We shall inform everybody, our suppliers, other people, what is going on in your country, which we consider absolutely a shame," the company's lawyer, Alain Bionda, told the St Petersburg Times. "How can something this incomprehensible happen in a country as big and respectable as Russia? Up to this moment we do not really understand what has happened. The only thing I know is that the authorities - we don't know exactly who - have organised a simple kidnapping of the cargo by force ... Until we understand what really are the reasons, we shall send nothing more to St Petersburg or to Russia."

The incident may have been a shock to Mr Bionda's clients, but it caused little surprise in Russia. The city that ought to be, but palpably isn't, the Venice of the North has seen this kind of skulduggery too many times before. One businessman, who asked not to be named, told the Independent on Sunday that Russian customs officials are "directly linked" with organised crime. "The criminals have their own infrastructure, like refrigeration, transport, storage. After confiscating goods, they sell them through illegal commercial companies."

Stories abound of trade being lost to the neighbouring Baltic republics or Finland because of widespread general pilfering, bribe-taking, inefficient customs and poor loading equipment. As one Russian put it, "Peter the Great opened the window, but the police and customs men have shut it tight again."

There is, however, a glimmer of light spreading across the freezing waters of the Baltic. The Sea Port of St Petersburg, a company which handles more than half of the port's cargo, has signed a contract with Dutch interests to modernise the port and overhaul the way it is managed. Whether this will produce results remains to be seen, although it is hard to be optimistic. Recent efforts to clean up St Petersburg have foundered; only two top officials have been prosecuted for corruption in the past two years. Any doubt about how deep crime runs in the city was dispelled this year when the deputy governor, Mikhail Manevich, was shot dead in the street. A reputed reformer, he was a friend of Anatoly Chubais, Russia's first deputy prime minister, also from St Petersburg.

One can, however, say one thing with confidence: were Peter the Great alive today to witness the chaos in the imperial capital he created, he would not merely restrict himself to cutting off his minions' beards.