Friday, July 28, 2006

corruption from this week's Economist

Finance & Economics
Corruption in ex-communist countries
Judge or be judged
Jul 27th 2006From The Economist print edition
In the ex-communist world corruption seems to be declining. Mostly
TURNING an aquarium into fish soup is simple. Turning the fish soup back into an aquarium is not. For the ex-communist countries, stabilising economies and introducing market mechanisms has proved the easy bit. Remaking public institutions, and making them clean and efficient, is much harder to do and to measure.
A new study published this week by the World Bank* casts an optimistic light. It asked almost 10,000 firms in 26 ex-communist countries (Turkmenistan was excluded) and Turkey about the cost and frequency of bribe-giving, and their views about the nature and nuisance-level of corruption. This time, for comparison, it included five other European countries.
Compared with the previous surveys, in 1999 and 2002, it suggests corruption in the region is becoming a bit less frequent, costly and damaging. Although some countries are doing better than others (Georgia is a strong performer, Russia a weak one) nowhere is it getting comprehensively worse. In many countries corruption is falling on every count.

The trend is favourable—but, the authors note, still reversible. The Czech Republic, for example, scored well in 2002 and seems to have gone backwards since. But there's a twist. That firms complain more about corruption may be a good sign if it means they are becoming less tolerant of it. The most depressing feature of the report is the high incidence of firms in Russia—fully a fifth—that say they pay bribes often but do not regard it as a problem. That figure is four times higher than in the eight nations now in the European Union.
Most progress has been made in customs administration, which used to be slow and predatory but is now quick and clean. That reflects the changes in the countries that have joined the EU and those in the Balkans that are eager to join. The average “bribe tax”—the share of turnover paid by those firms that pay bribes—has declined from 3.6% to 2.9%, though booming economic growth means that the total of bribes paid is probably rising.
The report says corruption hurts private firms more than state-owned ones, small more than large, new more than old, locally owned more than foreign. In short, the weak suffer more than the strong.
One big remaining problem, especially in the poorer ex-communist countries, is the justice system. In the early post-communist years, the trend was to give judges great independence but low salaries. That was a recipe for corruption. The new approach is to pay them more and police their activities more strictly. That is working—particularly in Romania—but it is a slow slog elsewhere.
Other kinds of corruption are harder to deal with. Public procurement is notably dirty—though not noticeably worse than in some countries of “old Europe”. High-level political corruption, or “state capture” in the jargon, is also a lingering curse. That is when bribery affects not just the implementation of policy, but its conception. As the Russian proverb says, a fish tends to rot from the head.
* “Anticorruption in Transition 3: Who is succeeding and why?”:


Lucia said...

I'm glad I found your blog. Interesting and provoking articles!

I invite you to visit my blog with focus on Moldovan policies.

Georg Dolivo said...

Hi. Reading your blog, is like watching some old, cold war era James Bond movie, filled with false and biased information, disgusting anti-Russian propaganda and antagonistic stereotypes about Russians. But thanks anyway: Being quite well informed about situation in Russia, reading you blog gives actually a lots of laughs for me :)

oulematu said...

In response to george dolivo, I find the coverage of Eastern Europe in The Economist not very detailed but more or less objective.

On my recent visit to Russia I was appalled by how foreign visitors are treated by the Russian police (apparently, the Moscow police in in the habit of extorting bribes from foreign visitors by threatening to arrest them for no reason on the basis of obscure regulations).

Georg Dolivo said...

I don´t deny the fact that there are many problems with corruption in Russia. I have visited Russia about 120 times and I have counted that there have been about four cases, where I confronted corruption personally. On the other hand I have been in Brazil for less than ten times and confronted corruption there every time. The difference might be, that in Brazil I am total “outsider”, but Russia I know traditions and I know how to handle different situations. Whenever the writer of this blog is accusing Russia and Russians in all kind of different issues, he usually doesn’t bother to explain, that what are the reasons for the “negative” issues he is writing about. That’s may be because of ignorance or because lack of willing to do that. Also he doesn’t seems to remember, that all of these problems have arised during the “liberal” Yeltsins regime.

Georg Dolivo said...

I would like to recommend for all of you the following article:,,1833849,00.html

La Russophobe said...

GEORG: You are about as uninformed on Russia as it's possible to be, and blindly nationalistic. This post is clearly making positive comments about the reform of corruption in Russia, and like a classic Russophile maniac you bite the hand that feeds you.

I'd say that the author is not hearly hard enough on Russia, as he omits mention of crucial facts that discredit Russia. For your information, and his, you ignorant moron, a recent study on Russian corruption found it was tied for ninth-most-corrupt nation in the world. To read the report CLICK HERE

You claim to be knowledgable about Russia, yet your comment does not contain a single shred of factual information about the country, much less links to published material. In other words, it's propaganda and virtually spam, the hysterical childish rantings of Russophile thug and just the sort of thing that is causing Russia to become extinct.

Georg Dolivo said...

To La Russophobe: Instead of crying like a baby and calling people an “ignorant morons”, you could at least TRY to accept the fact, that some people might have a slightly different opinions and points of view on this matter. Calling people a nationalists or Russophiles is one of the easiest and most common ways to discredit people who have positive image on Russia. So c’mon – try a little bit harder…

Edward Lucas said...

please refrain from personal attacks. Using words like moron doesn't help anyone and I will delete any such posting in future.

I did read that Guardian article and Paton Walsh makes some good points. It is easy to underestimate how much, and how many, Russians like stability, having not had it in the Yeltsin years. What I find is missing from Georg Dolivo's remarks is any appreciation of how scary Russia seems to its neighbours--which is odd, because I think he is a Finn, and they should understand this better than most!


Georg Dolivo said...

To: Edward Lucas. Thank you for calming down the discussion and thank you for a good comment. It´s true that Russians are afraid of them neighbours, but I think that this is dates back to the Cold War era, when U.S. was adapting it’s geopolitical strategy called “Anaconda”. Anacondas main aim was to isolate Soviet Union from the rest of the world by taking under control it´s neighbours. Despite the fact that Cold War has ended (or is it?) Russians consider that U.S is still adapting this Anaconda strategy towards Russia.

Here in Finland, despite all the historical confrontations with our neighbour, we have managed to adapt a policy towards Russia, that have brought for us and for the Russia lots of benefit. Nowadays Russia is Finland’s biggest trading partner and flood of tourists coming from Russia to Finland is increasing rapidly.

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