It occurs at all levels of society, from local and national governments, civil society, judiciary functions, large and small businesses, military and other services and so on. Corruption affects the poorest the most, whether in rich or poor nations.
The issue of corruption is very much inter-related with other issues. At a global level, the “international” (Washington Consensus-influenced) economic system that has shaped the current form of globalization in the past decades requires further scrutiny for it has also created conditions whereby corruption can flourish and exacerbate the conditions of people around the world who already have little say about their own destiny.
A difficult thing to measure or compare, however, is the impact of corruption on poverty versus the effects of inequalities that are structured into law, such as unequal trade agreements, structural adjustment policies, so-called “free” trade agreements and so on. It is easier to see corruption. It is harder to see these other more formal, even legal forms of “corruption.” It is easy to assume that these are not even issues because they are part of the laws and institutions that govern national and international communities and many of us will be accustomed to it—it is how it works, so to speak. Those deeper aspects are discussed in other parts of this web site’s section on trade, economy, & related issues.
That is not to belittle the issue of corruption, however, for its impacts are enormous too.
Rich Countries involved in corruption abroad-
When asking why poor countries are poor, it is quite common to hear, especially in wealthier countries that are perceived to have minimal corruption (at least domestically) that other countries are poor because of corruption. Yet, corruption is not something limited to third world despots. Rich countries too have been involved in corrupt practices around the world.
As Professor Robert Neild from Trinity College, Cambridge University writes in Public Corruption; The Dark Side of Social Evolution (London: Anthem Press, 2002), “Rich countries and their agencies … commonly have been and are accomplices in corruption abroad, encouraging it by their actions rather than impeding it….” (p.209). Specific problems he highlights include:
- The impact of Cold War corruption (supporting dictatorships, destabilizing democracies, funding opposition, etc);
- Firms from rich countries bribing rulers and officials from developing countries to gain export contracts, particularly in the arms trade and in construction (even justifying it by suggesting bribery is “customary” in those countries, so they need to do it to, in order to compete);
- The “corruption-inducing effects of the purchase, by the rich countries and their international corporations, of concessions in Third World countries to exploit natural deposits of oil, copper, gold, diamonds and the like.” Payments made to rulers often violate local (and Western) rules, keeping corrupt rulers in power, who also embezzle a lot of money away.
- The drug trade. Neild suggests that international law and national laws in rich countries that prohibit drugs may serve to “produce a scarcity value irresistible to producers, smugglers and dealers.” Governments and civil society in the third world are often “undermined, sometimes destroyed” by the violence and corruption that goes with the drug trade. “This is probably the most important way in which the policies of rich countries foster corruption and violence. Yet the effect on the Third World seems scarcely to enter discussion of alternative drug policies in the rich countries.” Legalizing drugs, a system of taxation and regulation, comparable to that applied to tobacco and alcohol might do more to reduce corruption in the world than any other measure rich countries could take, he suggests. (See this site’s section on illicit drugs for more on that aspect.)
Globalization, Multinational Corporations, and Corruption
Corruption scandals that sometimes make headline news in Western media can often be worse in developing countries. This is especially the case (as the previous link argues) when it is multinational companies going into poorer countries to do business. The international business environment, encouraged by a form of globalization that is heavily influenced by the wealthier and more powerful countries in the world makes it easier for multinationals to make profit and even for a few countries to benefit. However, some policies behind globalization appear to encourage and exacerbate corruption as accountability of governments and companies have been reduced along the way.
IMF and World Bank Policies that Encourage Corruption
At a deeper level are the policies that form the backbone to globalization. These policies are often prescribed by international institutions such as the World Bank and IMF. For years, they have received sharp criticism for exacerbating poverty through policies such as Structural Adjustment, rapid deregulation and opening barriers to trade before poorer countries are economic ready to do so. This has also created situations ripe for corruption to flourish:
Corruption everywhere; rich and poor countries, international institutions:
It goes without saying, almost, that corruption is everywhere. Corruption in poor countries is well commented on (sometimes used dismissively to explain away problems caused by other issues, too). It would be futile to provide examples here (see also the sources of information at the end of this document for more on this).
Rich countries, also suffer from corruption. Examples are also numerous and beyond the scope of this page to list them here. However, a few recent examples are worth mentioning because they are varied on the type of corruption involved, and are very recent, implying this is a massive problem in rich countries as well as poor.
The first example is the US government, accused of outsourcing many contracts without an open bid process. Jim Hightower notes that “An analysis by the Times found that more than half of their outsourcing contracts are not open to competition. In essence, the Bushites choose the company and award the money without getting other bids. Prior to Bush, only 21% of federal contracts were awarded on a no-bid basis.”
Another example is Italy, where former Italian Prime Minister Silvio Berlusconi and some of his close associates were held on trial for various crimes and corruption cases (though Berlusconi himself has not, to date, been found guilty of any charges). Many key teams in the massive Italian soccer league, Serie A were also found to be involved in a massive corruption ring.
In the United Kingdom, the arms manufacturer, BAE was being investigated for bribing Saudi officials to buy fighter planes, but the government intervened in the investigation citing national interests. The Guardian also reported that BAE gave a Saudi prince a £75 airliner ($150m approx) as part of a British arms deal, with the arms firm paying the expenses of flying it. This seemingly large figure is small compared to the overall deal, but very enticing for the deal makers, and it is easy to see how corruption is so possible when large sums are involved.
International institutions, such as the United Nations and World Bank have also recently come under criticism for corruption, ironically while presenting themselves in the forefront fighting against corruption.
The recent example with the UN has been the oil for food scandal, where the headlines were about the corruption in the UN. In reality, the figures of $21 billion or so of illicit funds blamed on the UN were exaggerations; it was $2 billion; it was the UN Security Council (primarily US and UK) responsible for much of the monitoring; US kickbacks for corrupt oil sales were higher, for example. (This is discussed in more detail on this site’s Iraq sanctions, oil for food scandal section.)
At the World Bank, headlines were made when its recent president, Paul Wolfowitz, was forced to resign after it was revealed he had moved his girlfriend to a new government post with an extremely high salary without review by its ethics committee.
Paul Wolfowitz’s appointment was also controversial, due to his influential role in architecting the US invasion of Iraq. A former member of staff at the World Bank also noted concerns of cronyism related to Wolfowitz’s appointment way before the scandal that forced him to resign.
The US nominee for the next president is the former US Trade Representative and currently an executive at Goldman Sachs, Robert Zoellick. His nomination is also coming under criticism. Bush supports it, saying Zoellick “is the right man to succeed Paul in this vital work.” Former World Bank chief economist, and Nobel Prize winner for economics, Joseph Stiglitz feels that instead of a political appointee, it would be better to get an economist who understands development.
As also reported by the BBC, Paul Zeitz, executive director of the Global AIDS Alliance, said that he thought Mr Zoellick was a terrible choice because “Zoellick has no significant experience in economic development in poor countries,” and that “he has been a close friend to the brand-name pharmaceutical industry, and the bilateral trade agreements he has negotiated [for the US] effectively block access to generic medication for millions of people.”
While the US typically gets its preferred nomination to head the World Bank, Europe has typically got its preferred person to head the IMF. Critics have long argued that this lacks transparency and is not democratic. While not illegal as such, it does feel like a form of corruption.
Tackling corruption-
What can be done to tackle this problem?
Campaigners from around the world, but particularly the South, have called for a more just, independent, accountable and transparent process for managing relations between sovereign debtors and their public and private creditors.
An independent process would have five goals:
- to restore some justice to a system in which international creditors play the role of plaintiff, judge and jury, in their own court of international finance.
- to introduce discipline into sovereign lending and borrowing arrangements—and thereby prevent future crises.
- to counter corruption in borrowing and lending, by introducing accountability through a free press and greater transparency to civil society in both the creditor and debtor nations.
- to strengthen local democratic institutions, by empowering them to challenge and influence elites.
- to encourage greater understanding and economic literacy among citizens, and thereby empower them to question, challenge and hold their elites to account.
Of the 94 countries assessed, they had the following findings:
- The overall state of budget transparency is poor. Only a modest minority of countries can be considered to have open budgets while a large number of countries provide grossly insufficient budget information.
- The general trend toward open budgets is nonetheless favorable. Budget transparency is improving substantially, especially among countries that provided little information in the past.
- Budget engagement by the audit institutions and the legislature is typically weak and is strongly correlated to the lack of budget information made available to these institutions and the public.
- There are many simple steps to opening up budgets that governments are failing to undertake. Such steps can be taken by the executive branch, the legislature, and the supreme audit institutions alike.
In many cases, where budget documents were made public, essential information was often absent, or some of the documents remained internal. Those that performed poorly on their index were also low income, low democracy, and/or dependent on aid or oil revenues. On the plus side, the IBP found that some countries that fared very poorly in their earlier analysis fared much better this time, sometimes through the simple and cheap step of simply making their budget documents available on their web sites.
It is hard to see how the international economic agencies and their member governments can introduce incentives that would cause corrupt rulers to [attack corruption]… Not only are the rich countries and their agencies in this respect impotent, they commonly have been and are accomplices in corruption abroad, encouraging it by their action rather than impeding it.
… It is hard to see any solution other than transparency and criticism. It would take an unprecedented degree of united dedication to the checking of corruption for the international community to agree that the oil and mining companies of the world should boycott corrupt regimes, somehow defined, let alone manage to enforce an agreement.
----------------------------------------------------------------------------------------------
No comments:
Post a Comment