12 Nov 2012

The challenges of fighting corruption

By Alina Mungiu-Pippidi   (published on European Voice on 18.10.2012)

 

Questioning whether the EU should look for a greater role in efforts to reduce corruption.

 

If you think the European Union is involved in too much business already, wait until its ambitious plans for oversight in the field of European justice, procurement and corruption unfold in full. The most spectacular idea is a proposal by Viviane Reding, the European commissioner for justice, to re-write the EU treaty in order to allow a powerful European public prosecutor to track down and jail suspects who embezzle EU funds. But that is far from being the only over-ambitious EU project in this area.

There are facts that argue for such plans. There is, for starters, the loss to the EU’s budget: Reding argues that the “real figure” for fraud is “much higher” than the €600 million reported last year. That, however, depends on how we define fraud. Researchers know that European countries with higher rates of corruption are significantly more likely to create fiscal deficits. This would make the fiscal pact justifiable as an ‘anti-corruption’ step, though few people would dare phrase it like that.

Secondly, there is the fact that in many parts of southern and eastern Europe EU funds are distributed to businesses favoured by particular parties. This is nothing new and not every national parliament would consider such behaviour to be illegal, but it is the case that such government favouritism means that companies that do not enjoy political connections lose out.

Also, there is public opinion: European citizens complained a great deal about corruption in a recent Eurobarometer survey, with those living in countries where corruption is widespread being also very critical of their national government’s policies. This would indeed call for EU action.

However, it is not clear that the EU has the understanding needed to deal with the complex, often political, realities of corruption in member states. The EU has already had the right to promote the rule of law – in the new member countries from central and eastern Europe, courtesy of the Copenhagen criteria for membership of the EU. But what has happened since enlargement?

Regression

In central Europe, most new member states have regressed on control of corruption measurements since joining the EU in 2004. There has been some positive evolution in the Balkans, but the record is mixed at best. The EU’s latest reports on Romania have praised the country’s anti-corruption institutions; that has not, however, prevented widespread fraud in the handling of EU funds, leading almost to their discontinuation and the national head of the tax office being indicted this summer for favouring tax evasion in his years in office.

In some places, then, systemic corruption and successful anti-corruption seem to co-exist. Even in situations that seem to beg for some international referee, such as Romania’s, it is not clear that EU has enough understanding of the realities of corruption to be able to adjudicate.

There is but one example of shining progress in new member countries – Estonia – but it has progressed mostly thanks to the adoption of neo-liberal and Scandinavian policies, not thanks to the EU. And even old member countries are not the bastion they used to be: the latest World Bank rankings show a regression in Austria, Greece, Portugal and the UK.

The risks that face the EU if it takes action are as large as the opportunities, especially if those risks are not well understood. To start with, action by the EU might lack credibility in countries that have successfully built up good systems of governance on their own. It takes just two clicks on the website of any Scandinavian government to learn (in English) what funds have been commissioned for anti-corruption efforts and how contractors were selected. It is far more difficult to figure this out in the case of European institutions; indeed, even some directorates-general are not aware of what others departments do.

A second risk is that of ‘institutional mono-cropping’ – in other words, due to a lack of country-specific knowledge, of recommending similar institutions to countries that might have very different problems (or none at all). Should Sweden create some special body to manage EU money when its procurement functions very well as it is? The anti-corruption industry has been rendered particularly inefficient by institutional mono-cropping, with the United Nations’ Convention against Corruption recommending everyone to create special anti-corruption agencies, despite statistical evidence that countries that have adopted them have not progressed significantly better than the rest. Governance reform is made effective by contextualised, not standardised, responses to problems.

The third risk is that the effort to curb corruption might be engulfed by the fast-growing anti-corruption industry, an industry whose revenues have risen faster and faster over the past 15 years, despite having little significant impact.

Money making

Parts of the industry are spurious. Some global anti-corruption meetings have become mere fund-raising events with more than 1,500 guests and many corrupt presidents rushing to join the group picture, a cheque in their hands. A pervasive internet advert these days sells a European master’s programme in anti-corruption, claiming that it is “accredited under the Bologna criteria”, but there is no such thing as Bologna accreditation in Europe; accreditation was and remains national. There is money to be made – and those of us who study corruption know that fresh money into a system with weak institutions risks, in the short run, creating more opportunities for corruption.

The fourth risk is to imagine that corruption on a large scale can be successfully fought by prosecutors alone. Hence the arrest in Romania of hundreds of poorly paid custom officers, who are then not charged, as the cost of the trial would far exceed the value of the bribes they collected.

Countries that have progressed globally have managed to do so by cutting red tape, by increasing transparency, and by reducing discretionary spending. Legal constraints alone are not enough to reduce corruption if the conditions for it still exist.

Finally, there is a risk of treating a patient for corruption when he suffers from other policy failures. Corruption is the cause of a great many bad things, but systemic corruption is also itself a result of bad policies. New member and accession countries have severely underfinanced health systems: gifts to doctors who are paid less than €500 a month are not so much ‘bribes’ as a perverse way for governments to make their citizens pay for public health without raising taxes. Politicians are, in effect, transferring the extra costs and unpopularity to doctors and nurses (who have started to emigrate in large numbers). Sending prosecutors in would solve little, if anything.

The lack of understanding of such situations risks making promoters of anti-corruption measures rather like the inspectors in an old Soviet joke, scrupulously checking a man who leaves the factory every day with an empty wheelbarrow and asking themselves where he is hiding the stolen goods – only to discover later on that what he was stealing were wheelbarrows.

 

Alina Mungiu-Pippidi chairs the European Research Centre for Anti-Corruption and State-Building at the Hertie School of Governance in Berlin and is one of the leaders of EU’s research project ANTICORRP. She is the author of “Contextual choices in fighting corruption: lessons learned” (2011) for Norad, the Norwegian agency for development co-operation.