All posts by author

UN Sanctions on Guinea-Bissau: Waiting For a Coup to Happen

Posted by / 3rd September 2014 / Categories: Analysis / Tags: , , , , / -

Article Thomas

In April 2012, eleven military leaders involved in the coup d´état in Guinea-Bissau were subjected to a UN travel ban. Although neatly in line with United Nations (UN) sanctions policy regarding sovereignty, in reality the sanctions were a painstakingly late reaction to the uprising of Guinea-Bissau as Africa´s first “narco-state”, which had been corroding politics and society for almost a decade. While institutions kept the Sanctions Committee hostage, the kingpins in Guinea-Bissau had plenty of time to ruin its governance structures. This analysis suggests that Guinea-Bissau only became a target of UN sanctions when it had made its way on the map as the first African “narco-state”. Unfortunately, the coup that justified UN agency to do something about it came almost a decade too late.

On the first of April 2012, just a few days before the second round of a presidential election, a military coup led by Admiral Bubo Na Chuto and Deputy Chief of Staff or the army Antonio Indjai triggered the United Nations Security Council (UNSC) to impose travel sanctions on 11 military leaders involved in the coup.

If reversing the coup were the most important objective, the sanctions could probably be called a success. In May 2014, albeit after several delays, a new president (Jose Mario Vaz) was indeed elected in Guinea-Bissau. Also the committee recognised only one violation of the travel ban (the army chief of staff travelled to Cote d´Ivoire and Senegal on one occasion). For the moment the country enjoys relative political stability, although it still suffers from a range of structural threats such as extreme poverty and high corruption levels.

In any way, the coup d´état is largely irrelevant to the story, as the case of sanctions on Guinea-Bissau can hardly be explained as a genuine reaction to it. Guinea-Bissau has been the stage of many coups over the past decades (as have several other African states), and no one ever really bothered.

The coups of Bissau and the Rise of Africa´s first “Narco-State”

Since its Independence from Portugal in 1974, Guinea-Bissau has been the stage of four coup d´état´s and at least 6 other attempts. However, being an insignificant West African country home to less than 2 million inhabitants and with no strategic interest to the rest of the world, it was never important enough to make international headlines.

In 1980 Joao Bernardo Vieira staged the first coup, ousting the country´s first president Luis Cabral and allowing him to rule for the next 19 years. In 1998 another coup attempt split the government forces (supported by neighbouring countries) and coup leaders, who controlled large parts of the army. After 11 months of civil conflict and thousands of deaths, president Vieira was toppled and replaced. The next president, Kumba Yala, lasted for three years before he too was overthrown in 2003 in a military coup. After some tumultuous years, ex-president Vieira made a comeback from being exiled in Portugal and manages to win the 2005 elections. In 2009 he was assassinated by renegade soldiers. None of these events however ignited the urge to install a sanctions regime.

So for the last decades the coups in Guinea-Bissau went largely unnoticed, just as in many other countries that have lived through coup d´états without being targeted by UN sanctions. As long as coup d´états do not turn into bloody civil wars those who stage them tend to stay out of trouble.

So what made the international community change its mind? Since the mid-2000s media coverage on Guinea-Bissau, although still meagre, has become dominated by the issue of drug trafficking. As a small state with weak political infrastructure, high levels of poverty and corruption, and a favourable geography, Guinea-Bissau has turned out to be a perfect place for trafficking drugs from Latin America destined for the European market. The country´s Atlantic coastline is dotted with two dozen little islands that have proven comfortable smuggling havens for Colombian, Ecuadorian, Peruvian, Brazilian and Venezuelan drug cartels that smuggle cocaine into Europe.

In 2008 a report by the United Nations Office on Drugs and Crime (UNODC) recognised Guinea-Bissau as a new hub for cocaine trafficking in West Africa. Between 2005 and 2007 a total of 33 tons of cocaine were intercepted in West Africa on route to Europe, compared to a mere 1 ton prior to 2005. With the drug trafficking increasingly penetrating into Guinean society and politics, the peace building and democratisation efforts of the UN peace-building mission in Guinea-Bissau (UNIOGBIS) were largely undermined. The trafficking business negatively affected public security, respect for the rule of law, and public health (because of increased local consumption). Politics became increasingly corrupted, with politicians and military leaders being involved.

As the situation worsened in 2010 and 2011, donors retrieved and the European Union (EU) decided to stop training Guinean security forces and suspends part of its aid. The United States froze the assets of two drug-traffickers, and the UNODC and Interpol helped Guinea-Bissau set up a Transnational Crimes Unit. In the meantime the two alleged drug kingpins subjected to US asset freezes were promoted to Army Chief (Antonio Indjai) and head of the Navy (Jose Americo Bubo Na Tchuto). Tchuto was arrested by the American Drug Enforcement Agency (DEA) in international waters on 4 April 2012 (8 days before the coup) and is currently on trial. Indjai has also been indicted by the United States but still walks free in Bissau. On 12 April 2012, when the military toppled the interim government, Indjai was placed on the UN travel ban list along with 10 other military officials.

How institutions strangle effective sanctions policy

Guinea-Bissau´s timeline shows a variety of coup d´états and attempted coups, none of which seemed important enough to arouse real attention. When the country increasingly turned into a cocaine transfer-port and a weak state, it became clear something had to be done in order to protect the interests of those suffering from this trade. However, imposing UN sanctions on a sovereign state in reaction to smuggling activities was not a policy option. So the only option was to wait for a ´legitimate´ excuse, such as a civil war, a terrorist attack, or indeed a military coup.

Coup d´états have been an accepted imperative for UN sanctions since the early 1990s and the sanctions regime on Haiti to reinstall President Aristide, who was ousted in a military coup in 1991. In the late 1990s the UN Sanctions Committee also increased the technical and legal capacity to impose targeted sanctions on individuals. Since 1999 the UN has imposed and implemented asset freezes and travel sanctions on individuals and groups in over a dozen conflicts, with mixed success. However, when it comes to reversing coup d´états, the case of Guinea-Bissau is the first one since that of Haiti in the early 1990s.

During the coups of 1999 and 2003 and the assassination of Vieira in 2009, the UN Security Council and the Sanctions Committee had all the technical capacity and institutional consensus to interfere with the internal politics of Guinea-Bissau. However, apparently the coup d´états in an insignificant country such as Guinea-Bissau were not important enough to arouse sufficient attention in the UNSC. With the 2012 coup the UNSC finally had a legal excuse to impose sanctions on the individuals implicated in the drug trafficking. However, by then Guinea-Bissau had already become fully integrated in the drug-cartel; the damage had already been done.

The case of Guinea-Bissau shows that the reality of UN sanctions as an institution is one of restrictions and obstacles rather than one about values and norms. The sanctions were clearly a reaction to the drug trafficking that had been undermining Bissau-Guinean politics and society since 2005 or longer. However, in order to impose sanctions they first needed a coup d´état to take place. Unfortunately that coup didn´t come until 2012, when Guinea-Bissau´s transformation to “narco-state” had already been completed and had thoroughly disrupted and corrupted governance.

Would things have turned out different if the UN had imposed sanctions earlier? Perhaps not; UN travel bans are not almighty tools of political coercion. However, the case of Guinea-Bissau does show how institutionalised rules regarding sanctions policy can delay and distort effective decision-making. If those actors interested in pursuing drug-kingpins (US, EU) just transparently put forward their interests and security concerns, rather than waiting for a coup d´état to take place to justify their actions, it would be much easier for analysts to keep oversight and for actors to take timely action.



Money for Nothing: What the Development Sector Could Learn from Cash-Transfer Programmes

Posted by / 20th May 2014 / Categories: Analysis, Polis / Tags: , , / -

Earlier this year Balder Hageraats published an article titled “International Development: Please drop the Charity Act”, criticizing the schizophrenic relationship between donors, NGO´s, and local beneficiaries of development help, and arguing for a more efficient development sector in which needs on the ground take centre-stage. If the sector were to follow such an approach, it could learn a lot from the global South, where various government programmes transfer money directly to the poor, no strings attached. They have led the way in showing that poor individuals already KNOW how to escape poverty: they simply lack the cash.

In Kenya, Having worked as a day labourer for years on end, mr. Omondi one day woke up to receive an sms-text saying he had been given $500 US, no strings attached! He had been one of the recipients selected in a programme where poor families in poor rural villages were given free cash-transfers to help them out of poverty. No conditions, no pay-backs, just free money. Local villagers suspected that the government was somehow behind it, trying to buy votes. People in the development industry were mostly afraid that recipients wouldn’t be able to handle the money wisely, spending it on alcohol and cigarettes. However, none of this happened. Many people in the programme used the money to replace their thatched roofs with metal roofs, which costs a few hundred dollars, but saves money in the long term. The results? People also invested in livestock and small businesses, showing a 48% increase in revenues from animal husbandry, for example. Mr. Omondi bought a motor-cycle to drive people from town to town, making $6 to $9 a day, more than doubling his daily salary, and enabling him to buy a second bike to expand his business.

Most cash-transfers programmes are not one-time lottery tickets however. More and more developing countries, most notably Brazil, Mexico, South-Africa, but also Indonesia, Namibia, Bolivia, Armenia and many others, are setting up long-term programmes that target a substantial but selected portion of the population and gives them a monthly cash transfer between 3$ and 100$ a month. Cash-transfer programmes differ greatly from each other, but are similar in the sense that (1) they benefit a selected group of poor families, (2) that the transfers are monthly and on a long-term basis, and (3) that there are no or few conditions as to how the money is spent. The basic results: It pushes the poorest families out of absolute poverty; it leads to more capital investments, local economic growth, better health, more children going to school, and lower birth rates; all without outside interference. For example, children that benefit from the Oportunidades programme in Mexico (which gives an average of 38$ a month to poor households) are 23% more likely to finish grade 9 than those outside of the programme. The same programme also meant that people eat 8% more calories and a more balanced diet of fruit, vegetables, and meat, leading to fewer illnesses among children and fewer sick-days for adults. In Brazil, the Bolsa Familia (family grant) and Bolsa Escola (school grant) programmes helped in bringing down poverty from 28% in 2001 to 17% in 2008.

Why cash-transfer programmes make sense and are affordable

Just as in developed western societies, various countries in the global South have recognized that everyone in society deserves a minimum amount of economic security. The cash-transfers are a right, not charity. Obviously, the transfers are only for selected groups of people in need, and they don´t serve as a substitute for salary through labour. Depending on the country and the programme, the transfers vary between USD $3 and USD $100 per month per individual or per family.

There are two important counter arguments to the idea behind cash-transfers in developing countries. One, can states afford such kinds of projects? And two, doesn´t handing out free money kill initiative and entrepreneurship, making people lazy and dependent? The answer is that pessimistic expectations with regard to the latter lead people to over-estimate the importance of the former. In other words; cash-transfers lead to local economic growth in the longer term, helping people out of the poverty trap and making the cash-transfer programmes not just relatively cheap, but actually profitable.

Let´s start with the argument that “charity” takes away initiative and entrepreneurship, a theory that micro-credit guru Muhammad Yunus has been fond of pointing out. Cash-transfer programmes in Mexico, South Africa, and Brazil have however shown that the money transferred to poor families is almost never spoilt. Admittedly, the money is not always invested, but rather spent on keeping children in school, or buying more nutritious food. This might not harvest direct financial profits, but certainly helps in long term development; Children in the Mexican Oportunidades programme, for example, are more likely to finish 9th grade, are healthier, and score higher grades. But cash-transfer programmes, just like micro-credits, can also have a multiplier effect for local businesses, because the extra cash allows people to invest in tools or skills and setting up a small enterprise. Poor people tend to invest and consume locally, creating a double benefit for the local economy. Also, cash-transfers don´t necessarily replace micro-credits. As a matter of fact, they can serve to make micro-credits safer and more attractive. Indeed, studies have shown that beneficiaries of cash-transfer programmes are more receptive to taking financial risks.

The fact that cash-transfer programmes are cost-effective in the long term takes away a big obstacle for governments as to who is going to pay. There are however other comprehensible concerns. Firstly, cash-transfer programmes are not a silver bullet to solving poverty; they can help people out of absolute poverty and intergenerational poverty, and they contribute to strengthening local economies and promoting social mobility, but only few make it to middle class. Also, the bigger the amount of cash per family, the less families you can select, and vice versa. In order to be able to afford a substantial programme, a government needs a solid tax-base or windfalls from resource-exports.

Why the development sector should jump on the bandwagon

But the money could also come directly from the international development sector. If governments in the global South can demonstrate that there is no need for paternalistic nudges, conditionality, or moral guidance, why couldn´t the development sector follow suit? There are many reasons to suggest that it should.

Firstly, cash-transfer programmes simply have a pretty convincing track-record when it comes to helping people out of poverty. In other words, it simply works. Cash-transfers are right-based rather than charity based, they are pragmatic in the sense that by nature they empower beneficiaries, and they are cheaper because each invested dollar has the potential of turning into two dollars. Many countries that currently benefit from ´traditional´ forms of cooperation could hugely benefit from switching to a more direct approach.

The development sector could jump on the bandwagon in two ways. The simplest way is by pitching in directly where governments lack public money to pay for cash-transfer programmes. But the development sector has an at least equally important role to play when it comes to actively stimulating development through the provision training, research, expertise and other services. ONLY giving money helps people in climbing out of the poverty trap, but they do still need a hand to pull themselves up. The development sector has all the necessary qualities to be this hand stretching out. Sadly, the hand that the development sector is currently stretching out is that of NGOs stretching their hands upwards to donors.

If the development sector were to learn from the logic behind cash-transfer programmes, they would fund locally identified needs directly. Donors could allow funds to flow more easily and directly to local communities (through local connectors), empowering those on the ground and connecting local needs to global resources.

This article is part of the Polis Project, a ReSeT programme focused on connecting local needs to global resources.



ReSeT Working Paper: Power and UN Sanctions Policy

Posted by / 24th March 2014 / Categories: Reports / Tags: , , / -

Many students of international sanctions recognize some sort of progress of sanctions as coercive tools. In this essay I attempt to look beyond the issue of economic effectiveness, and into the origins of sanctions; the sources of power that decide under which circumstances UN sanctions should be imposed and that decide which should be the objectives of UN sanctions policy. This leads us to ask another set of questions: How can UN sanctions create international security? Which threats to security should be sanctioned? Who are the usual suspects? And who is deemed fit to play the role of sheriff? In this essay I look at the history of UN sanctions policy in order to answer two questions. (1) How have sanctions changed? And (2) Why did sanctions change?

In the first part of the essay I will show that sanctions have not only become better at undermining targets economically, but that the norms and values that surround sanctions policy have also changed substantially. The power of institutions and ideas has been especially strong in determining when sanctions may be imposed. Throughout history, UN sanctions have been imposed for increasingly ambitious goals with regard to ideas such as racial equality, human security, and liberal democracy. As tools of an ever more precise machine, UN sanctions help to terminate conflicts and to protect human rights, and even to construct a sustainable liberal peace.

In the second part I will explain that the ideas behind UN sanctions policy have become so institutionalized in global governance that one would almost consider them as mere bureaucratic functions, free of power. However, the ideas that are embedded in UN sanctions policy were forwarded by someone and for something. Why did these ideas about sanctions, and not other ideas, become institutionalized? I will show that the norms and values surrounding UN sanctions are not only projections of power, but also reflections of constitutive power. The ideas that dominate contemporary UN sanctions policy were not god-sent or the product of exact science; they were created by people with histories, needs, and beliefs.

To read the whole text in pdf format, please click here.


Sanctions against Russia: How far will they go?

Posted by / 24th March 2014 / Categories: Analysis / Tags: , , , / -

Talk about sanctions on Russia has been tough this week. Both the United States and the European Union have been tightening screws on Russia in an attempt to reverse Russia´s annexation of Crimea. EU sanctions now include 33 highly placed individuals with close relations to Vladimir Putin and that were involved in the takeover of the Crimean peninsula after the ousting of the Ukrainian ex-president Yanukovych. The list now largely overlaps with the American list, which also includes three very close figures from Putin´s inner circle, something which the EU had not been willing to do so far. Both the EU and US have also opened doors to allow for economic sanctions against core parts of the Russian economy, such as the oil and gas industry. This would hurt Russian exports, but will surely also affect gas supplies to Europe, and potentially the global economy in general.

The efforts to bring Crimea back to the Ukraine are almost certainly in vain, but at least the sanctions send out a strong message of disapproval, and they hit Putin and the Russian political and economical elite where it hurts…or do they? What are the EU and US trying to achieve? Which sanctions have been imposed so far? And will they put their money where their mouth is?

Choose your objectives wisely

Sanctions have been imposed in the past for various reasons. They have been imposed to reverse the policies of targeted countries, be they acts of territorial aggression, coup d´état´s, or human rights abuses. But they can also be imposed simply to signal disapproval and outrage, or to deter other potential wrongdoers from breaking the law, and to deter the target at hand from going further down the road. Russia unlikely to be compelled to give up Crimea, but the US and EU sanctions can at least put the bear back in its cage.

When sanctions were instituted in the League of Nations, Woodrow Wilson proclaimed that comprehensive economic sanctions would bring ´a type of pressure upon targets that no modern nation would be able to resist´. Territorial aggression would be reversed without the use of a single soldier. Of course reality turned out to be much different; sometimes they were poorly implemented and hopelessly ineffective. In cases such as Iraq and Haiti on the other hand, they were disproportionally harsh on innocent civilians, who starved to death as results of food shortages. Since the late 1990s the strategy thus shifted towards targeting individuals and banks, in order to disturb only the interests of those in power.

Reversing the policies of targeted countries through the sole means of individual sanctions is difficult, especially when the target is a superpower like Russia. Putin is unlikely to be sufficiently impressed by asset freezes and travel sanctions to suddenly give up Crimea, even if the sanctions target people in his inner circle like deputy prime minister Dimitry Rogozin and presidential advisors. The Ukraine has lost the peninsula and they will most likely not get it back. It seems like a shut and closed case. But can the sanctions at least serve other purposes?

In the past, sanctions have also been used simply to express disapproval or outrage about certain practices. Sanctions stand between statements and soldiers. The first two sanctions regimes imposed by the United Nations on white minority regimes in Southern Rhodesia and South Africa were hardly impressive economically, but at least they signalled a strong message of disapproval. White Africans certainly felt this pariah-status heavily on their shoulders. The European and American sanctions on Russia are likely to have a similar effect. They also stand between words and wars, to use a different alliteration. They might not change the status of Crimea, but at least Russia will feel that a large part of the (western) world disapproves of their actions.

A third and arguably the most important reason to impose sanctions is to warn other countries that certain actions don´t go unpunished. Punishing one target can deter others from behaving outside of international law or outside of international public opinion. For example, the sanctions on Iran and North Korea might not talk them out of continuing their nuclear programmes, but at least it can scare off other states. In a similar vein, generals plotting a coup d´état might think twice before taking action. In the Crimea crisis, the sanctions also signal that Russia should not try to further destabilize the Ukraine or to embark on other geopolitical adventures. NATO officials are concerned that Putin has also put his eye on Transnistria, a Russian speaking secessionist region of Moldova that borders the south-west of Ukraine.

Will the EU and US put their money where their mouth is?

So far, the European and American lists include highly placed government officials, army-sector figures, and the owners of Russia´s biggest industries. Sanctioned politicians include Russian deputy prime minister Rogozin, presidential advisors Glazyev and Surkov, Duma-chairman Slutsky, Crimean ´prime-minister´ Aksyonov, and Ukrainian ex-president Yanukovych. The asset freezes have also hit Bank Rossiya, assumed to be Putin´s bank, and Arkadi Rotenberg and Gennady Timchenko, two of Russia´s most powerful businessmen.

The screws can be drawn even tighter on Russia if it doesn´t back down. So far the measures have included exclusion from the G8 talks that were supposed to be organized in Sochi this summer and a failed resolution at the UN Security Council. A next step would be to isolate Russia economically through the imposition of sanctions on oil and gas from Russia. However, Europe would certainly feel the measures of this double edged sword. Putin is already looking to the East for alternative trading partners, and China seems eager to sign a deal to buy more natural gas from Russia. The warming relationship between Russia and its eastern neighbours could also facilitate military contracts.

In the short run, a gas-embargo would definitely hurt the Russian economy though. Almost all of Russia´s natural gas go to Europe (89%), most notably Eastern Europe (24%) and Germany (24%). A sudden stop would most certainly disrupt the Russian economy, but it would also threaten global economic stability, primarily in Europe itself. Europe is equally dependent on Russia. Denmark, Norway, the UK, and the Netherlands produce some small amounts of natural gas, and they import LNG from countries such as Algeria, Quatar, and Nigeria, but the biggest supplier of gas remains Russia, especially in Eastern Europe and Germany. Would Europe be willing to go that far? It´s not likely. The Spanish have already complained that a Russian travel embargo would hurt the tourism sector. Other ´dove countries´ (Italy, Cyprus) even had trouble with the targeted sanctions on some individuals close to Putin, favouring a diplomatic solution. Hawk countries in the European such as the UK, Poland, and the Baltic states favour a tougher stand, but even they are likely to back down when it comes to economic sanctions.

For now, both the US and the EU can keep on tightening the screws on Russia by freezing the assets of more individuals and by prohibiting European and American citizens from doing business with Russian oligarchs. As long as such actions prove sufficient to keep Russia from further destabilizing the Ukraine, the western sanctions should be regarded a success. Russia chooses its battles carefully, and so should the EU and the US.

You may also be interested in reading the ReSeT Working Paper: Power and UN Sanctions by the same author.


Dissecting the Corruption Perceptions Index

Posted by / 4th November 2013 / Categories: Analysis / Tags: , , / -

Earlier this year, when I was in Liberia collecting data for a research project, a national radio station announced that Liberia had made some big steps towards becoming a less corrupt country. According to the Transparency International Transparency Perceptions Index (CPI) of 2012, Liberia had climbed from 22 to 41 points over the past seven years, which measures the perceptions of corruption in public sectors of 174 countries. With this score, Liberia outperformed countries such as Greece, Panama, and China. They were almost on equal footing with Italy, which scored 42 points. In Africa, Liberia now ranks 11th on the list of least corrupt countries, beating substantially more developed countries on the list such as Tanzania and Morocco. For those people that have never been to Liberia, these results might simply be surprising. Perhaps Liberia is one of those exceptional countries that do well out of war and that adopt sensible policies in order to further economic and social development. To me, it rather led me to question the index itself.

Liberia is not the only country that stood surprisingly high on the list (75th). Rwanda even made it to the 50th position, just before Georgia, which ranked 51st. In contrast, some countries that scored surprisingly badly considering their economic situation were Thailand (88th), Indonesia (118th), and Argentina (102nd).

Transparency International defines corruption as “the abuse of entrusted power for private gain”. Measuring corruption in a quantitative or absolute manner is not possible, warns Transparency International. “Corruption generally comprises illegal activities, which are deliberately hidden and only come to light through scandals, investigations or prosecutions. There is no meaningful way to assess absolute levels of corruption in countries or territories on the basis of hard empirical data.” The reports that do exist on court cases and uncovered scandals rather reflect the effectiveness of prosecutors and the media to expose corruption practices. The CPI therefore looks only at the perceptions of corruption in countries´ public sectors. The index measures administrative and political corruption.

Living and working in a country, or even just travelling through it, is a great way of perceiving administrative and political corruption. In Liberia, police officers at road-blocks asking for “cold water”, the local euphemism for a bribe, are a way of life. A 20 dollar handshake to get a visa renewed is simply seen as the way it works. These are just small forms administrative corruption, but they form the tentacles of a much bigger creature. The national ministry of finance only collects a fraction of the taxes they should. This is partly due to a lack of administrative capacity, resulting in a situation in which the government basically has no idea who pays their taxes and who doesn´t. However, when it comes to big multinational investors, politicians know precisely how to stash millions of dollars on private bank accounts. Embezzlement and patronage seem to be almost structural phenomena.

Admittedly, Liberia also has a lot going for it. President Ellen Johnson Sirleaf, the first female African head of state, has been tough on corruption since she was elected in 2006. Several officials have been fired after corruption scandals, and police officers are unarmed, which is primarily a security issue, but also makes it more difficult to push for bribes. The last two democratic elections were internationally regarded as generally free and fair. Liberia was also the first country to be compliant with the Extraction Industries Transparency Initiative (EITI), and is part of the Kimberly Process Scheme for the legal exportation of diamonds. These are noteworthy achievements, although they are also known for being more successful on paper than on the ground.

Leaving aside the case of Liberia, Transparency International’s claim that countries such as Rwanda, Georgia, and Liberia are perceived less corrupt or equally corrupt as Italy, Greece, and Argentina seems counter-intuitive to say the least. Perhaps this feeling is caused by the misleading sense that corruption is negatively correlated with wealth. As the Guardian warned with regard to the CPI: “Wealth seems no easy antidote to corruption: some relatively rich countries, including Russia, fall at the bottom of the global league table. Meanwhile, some of the world’s poorer states do comparatively well: Botswana, Bhutan, Cape Verde, and Rwanda all appear among the 50 ‘cleanest’ countries.” The newspaper also noted that “Arab Spring countries, and many Eurozone countries – particularly those affected by the financial crisis – are doing worse and worse”. There is anecdotal evidence of Greek politicians stashing away money on Swiss bank accounts in order to evade taxes, and of families that receive state-pensions for their long-dead parents and child support for children that were never born. Surely, the role of the Mafia also plays a role in ranking the Italy’s perception of corruption. But one wouldn’t dare to bribe a local customs-officer at a Milanese airport. Also, the fractions of public money that might be siphoned off by Greek officials might amount to the fractions of public money that actually make it to the treasury in a country such as Liberia.

Analyzing the Corruption Perceptions Index

So how do some countries end up so high on the Corruptions Perception Index, while others are placed confusingly low? Which indicators does the CPI use in order to give countries a place on the 100-point scale, on which Denmark, Finland and New Zealand scored 90 points, and on which Afghanistan, Korea, and Somalia scored no more than 8 points?

The index is based on thirteen indicators that intend or claim to measure corruption perception from different angles. All the indicators are other indexes constructed by expert organizations, consultancy bureaus, and international institutions, such as the African Development Bank, the Bertelsmann Foundation, the World Bank, the World Justice Project, Freedom House and the Economist Intelligence Unit, among others. The indicators normally measure corruption, but as part of wider indexes that focus on sustainable governance, political risk, and the rule of law, but also on economic competitiveness and economic risk for investors in countries. One indicator, Transparency International’s own “bribes payers survey”, solely focuses on the act of bribery.

There seem to be two basic problems with the sources used for creating the index. Firstly, the scores given for ‘corruption perception’ in some surveys about country risk or competitiveness of countries judge the problem of corruption in relation to other problems that affect that same country. Secondly, some of the indexes used in the CPI only use data on corruption from African countries, while others only use data from developed or industrialized countries. However, the scores that countries get in the CPI index count as if they came from the same league.

To sketch an example that illuminates the first problem, in the World Economic Forum Executive Opinion Index, one of the indicators, experts were asked about the “most problematic factors for doing business” . In Argentina, corruption is in the top three, with 11.5% considering corruption as a major problem. In Greece and Italy the sentiment against corruption is equally critical, with 11.6% and 7.1%. Contrarily, in Rwanda corruption was recognized as an obstacle by only 0.4% of those asked. The three top problems were Access to Financing (20.2%), inadequately educated workforce (19.6%), and Tax Rates (17.5%). But does this mean that corruption almost doesn’t exist in Rwanda, or rather that it doesn´t form a real obstacle for those doing business in Rwanda?

Interestingly, the CPI does not always lie in line with other research on corruption by Transparency International. For example, Transparency International also has facilitated research that found that corruption is at times positively correlated with economic growth. According to Transparency International´s Corruption Barometer, an insightful global poll that tries to measure public opinion on corruption, Rwandans are indeed surprisingly optimistic about corruption. Despite this optimism, still 11% of Rwandans admitted to having paid a bribe to the judiciary during the past twelve months, and 23% admitted to having paid a bribe to the police. In Argentina, Greece, and Italy these figures were substantially lower (6% and 16% for Argentina, 12% and 4% for Italy, and 6% and 4% in Greece ), but this apparently doesn´t withhold Argentineans, Italians, and Greeks from being extremely critical of their government and judiciary when it comes to corruption. It could very well be that complaints about corruption are also related to economical downturns, although I have not checked this. In Liberia a staggering 77% percent admitted to paying bribes to the judiciary and the police, but according to the World Economic Forum only 9.6% considered corruption to be among the most problematic factors for doing business. Lacking basic infrastructure and access to credit, many underdeveloped countries simply have bigger problems on their minds.

We could pull two careful conclusions from these observations. Firstly, some indicators in the index measure corruption relative to other problems in the same society. On the ranking, this ‘benefits’ underdeveloped countries that have much bigger problems to worry about than corruption, even if they suffer from systematic administrative and political corruption. Meanwhile, several countries that have their basic political needs covered perceive corruption as a terrible societal monster, even though they might be doing ‘better’ than several countries with a higher rank. The second conclusion is that there might be a lot of people that perceive their society, or the societies they do business in, as corrupt, while they don’t necessarily see corruption as an obstacle.

This last observation leads us to ask whether corruption should by definition be regarded as bad for social and economic stability and equality. As a matter of fact, researchers have written about the ambiguous relationship between corruption and various economic and political factors since the 1960′s. For example, in 1964 Nathanial Leff explained how corruption can “grease the wheels of an economy”, and that corruption can introduce an element of competition in what is otherwise a “comfortably monopolistic industry”. More contemporary authors have made arguments following the same logic, claiming that corruption can benefit economic growth and entrepreneurship in poor but highly bureaucratized states with little institutional capacity. Mironov (2005) and Heckelman & Powel (2008) argue that under conditions of institutional weakness, corruption is positively correlated with capital accumulation and economic growth in developing countries. In weakly insitutionalized states, corruption can also function as a social mechanism to decrease income-inequalities, as it benefits lower class workers in the informal sector getting jobs they wouldn’t get in a more formalized system (Dobson and Rodriguez Andés, 2010) . The other side of the equation is that a reduction of corruption is favorable for growth only when political and, more importantly, economic institutions are strong. These findings might help us in explaining why businessmen in Greece and Italy consider corruption a burden to bureaucracy, while those doing business in Rwanda and Liberia rather see it as an alternative to bureaucracy. Fighting corruption is thus only worth the trouble if there is sufficient institutional capacity to take away the incentives for corruption.

The second methodological problem with the Corruption Perception Index is that several of the thirteen indicators only measure corruption in developed countries, while others only measure corruption in Africa or Asia. For example, the African Development Bank Governance indicator only applies to African states. According to the CPI, the ADB rewarded Liberia with a generous 55 points on a scale of 100, which put them on par with South Africa and Ghana, admittedly worth a compliment. But this high score on governance was only possible because of the other players in the League. Liberia didn’t have to compete with European countries in order to get this score. On the other side of the equation, the IMD competitiveness index, also part of the CPI, only uses a populations of fifty-nine industrialized economies, ranging from Denmark and Finland at the top (95 points) to the Ukraine and Venezuela at the bottom (25 points). Italy and Greece respectively scored a mere 39 and 35 points on the indicators that measured corruption in the IMD´s competitiveness ranking, which leaves out developing countries. Similarly, the Bertelsmann Sustainable Governance index only compares 31 OECD countries. Not surprisingly, Greece and Italy again scored low in this ‘champions league’.

Luckily for many developing countries, they were left out of these competitions. For example, no African states except for South Africa were part of the Bribe Payers Survey. Where many developed countries were indexed through the Bertelsmann Sustainable Governance survey, many developing countries were indexed through the Bartelsmann Transformation Index. This division boosted the ranking for countries such as Bulgaria and Romania, thereby beating, again, Greece and Italy, who remained at the bottom of the other Bertelsmann index.

There are thus two reasons that explain why some countries rank suspiciously high on Transparency International’s Corruption Perceptions Index, while others rank deceptively low. The first reason is that several of the most corrupt countries in the Index simply have bigger problems to worry about, making the issue of corruption relatively less important to people doing business. In countries such as Liberia, corruption is perceived as a secondary problem after more fundamental problems that keep a state from functioning. At the same time, countries that have the basics covered have more time and money to dedicate to ‘secondary problems’. I do not say this to downplay the importance of fighting corruption, but merely to point out that there are other factors that are much more crucial to welfare and stability in a state. It could even be the case that people doing business in developing countries with weak institutions are benefiting from the option to pay bribes, because without this grease on the wheels it would be impossible to get through the bureaucratic jungles that these states often times house. In strongly institutionalized states the opposite happens. Rather than an alternative to bureaucracy, corruption represents a burden. On a side note, it seems that especially those societies suffering from social revolt and financial crises put the blame on corrupt politicians and institutions, even though objectively they might be relatively clean. The fact that people are critical or careless however doesn´t make these countries more or less corrupted. Transparency International also makes this point regarding public opinion, but misses the point when it regards the World Economic Forum executive opinions.

The second reason is that the CPI uses a several sources that only compare competitors within a certain category. The CPI then combines these indicators as if they came from the same league, creating a distortion. To put it in simple terms, the reason that Liberia scored a lot of points on some indicators is because it was regarded among the best in Africa. Bulgaria and Romania ranked high because they were regarded among the best on the Transformation Index. At the same time, Italy and Greece scored badly on other indicators in which they were only compared to other rich countries, but not to Liberia, Rwanda, or Bulgaria.

The question remains what it means to receive a higher or a lower ranking on the Corruption Perceptions Index. Does the index measure to what extent states are perceived as corrupted? And if so, perceived by whom? Or does it measure to what extent corruption is perceived a problem in these states? And if so, a problem for what? If the answer is that the CPI measures the former (perceptions of corruption levels) my answer would be that the ranking is flawed because of its methodology. If the answer is that it measures that latter (corruption as a perceived problem), the counter-intuitive rankings of some developing countries with weak institutions could be justified. However, fighting corruption in these countries might not be the solution as long as there is no institutional capacity to take away the incentives for corruption.  facebooktwittergoogle_plusredditpinterestlinkedinmail