substantial improvements can be emasculated by adverse political devel- opments. These latter two chapters provide the best evidence to support proposition 1) above, that anti-corruption reform at an institutional and meso-level can produce positive results, and that the perverse effects of the anti-corruption campaign, in 2) above, are sited instead predomin- antly in the implementation of development policy, and more widely within the discursive and ideological framing of political change within global development discourse.
References
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28
Introduction
This chapter begins by tracing the origins of the global anti-corruption agenda, which emerged in the mid-1990s from the US government’s perception of foreign corruption as a commercial and security threat.
The World Bank and the IMF repackaged their policy advice, prescribing deregulation to reduce opportunities for officials to collect bribes.
Founded by a former World Bank official in 1993, Transparency International began to publish a corruption perception index to raise awareness about the problem. Economists seized on such quantifi- cations of corruption (despite their problematic methodology), to pro- duce econometric studies in support of the largely neoliberal global agenda.
The global agenda diverges from local understandings of corruption in developing and post-communist countries. Although the global agenda aims to be ‘multipronged’ and tailored to local circumstances, it still prescribes similar policies from Nigeria to Bulgaria. Also, the inter- national anti-corruption industry focuses on institutional reform to prevent future corruption, whereas popular sentiment is based on egali- tarian norms and on demands for the punishment of wealthy officials.
The vague and emotive term ‘corruption’ has masked the gap between global and local discourses, a gap that Western-funded NGOs have struggled to bridge. The global anti-corruption agenda succeeded in drawing attention to a previously neglected problem. Yet, it did so in ways that have proven counterproductive, especially in post-communist and developing countries. This chapter raises doubts about the fea- sibility of a global fight against corruption, divorced from the local context.
2
The Limits of a Global Campaign against Corruption
Kalin S. Ivanov
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Kalin S. Ivanov 29
Origins of the global anti-corruption agenda
The global anti-corruption agenda tends to represent itself as a grass- roots movement, giving a voice to ordinary people around the world who are victims of corruption. Transparency International, self-consciously styled after the international human rights movement, long featured on its website images of protesters carrying banners against corruption.
Likewise, US ambassadors often speak in the name of the host country’s population when they denounce corruption. In his groundbreaking
‘cancer of corruption’ speech, World Bank president James Wolfensohn (1996) declared, ‘In country after country, it is the people who are demanding action on this issue.’
Anti-corruption does enjoy popular appeal, which explains why it is a tempting topic for both serious and ‘muckraking’ journalists and polit- icians. The global anti-corruption agenda did strike a chord with the masses in many parts of the world, partly because of the semantic elasticity and affective load of ‘corruption’. Yet, the emergence of a global anti-corruption agenda was not the work of banner-waving protesters. The global agenda’s origins lie in the interests of the US government, multinational compa- nies, and multilateral donors. Over time, the universally negative con- notation of the term ‘corruption’ helped to enlist a wider constituency with seemingly shared goals.
The second half of the 1990s witnessed the ‘globalization of American- style anti-corruption standards’ (Boeckmann, 2004: 630). US companies had long complained that the US Foreign Corruption Practices Act (1977), prohibiting the bribery of foreign officials, offered an unfair advantage to competitors from OECD countries without such laws. Some OECD countries even allowed bribes paid to foreign officials to be counted as a tax-deductible expense. According to intelligence estimates, US busi- nesses lost contracts worth billions of dollars to competitors who paid bribes (Lewis, 1996). Sympathetic to such concerns, the trade-mined Clinton administration endeavoured to ‘level the playing field’ (Glynn et al., 1997: 20).
In addition, Washington came to view foreign corruption as a threat to US security, emanating especially from weak states overwhelmed by wealthy criminals (Smale, 2001). Latin American corruption was demon- strably linked to drug violence in the US; the bribery of post-Soviet offi- cials could lead to nuclear proliferation, and in NATO’s new member states, corruption threatened to cause intelligence leaks (Wallander, 2002:
6). Generally, corruption and organised crime appeared to imperil US interests by destabilizing the status quo. In recognition of such concerns, 9780230_525504_03_cha02.qxp 8/22/2007 5:52 PM Page 29
Vice-President Al Gore convened a global forum on fighting corruption among justice and security officials.
Both commercial and security considerations led the US to champion the adoption of the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (1998). During the negotiations, the US used public pressure to embarrass European gov- ernments into accepting anti-bribery rules. Previously, Europeans had resisted such rules as illegitimate claims of extraterritoriality, or as an example of ‘America’s Puritanism and penchant for international moral- izing’ (Glynn et al., 1997: 20–2). Now, moral pressure was instrumental in the rise of the global anti-corruption agenda, as nobody wished to be seen as a proponent of corruption. The OECD convention approximated the legal framework of signatory countries to the US model. It was further extended in a UN Convention against Corruption (2003) which included new commitments to transparency in public works procurement. The UN convention’s standards apply not only to OECD countries but also to so-called ‘demand’ countries – countries whose officials extort bribes from multinational companies.1
Multinationals themselves supported the anti-corruption drive, as, concerned about ‘reputational risk’, branded corporations sought to level the playing field with firms that had no reputation to lose. In Eastern Europe, multinationals found corruption to be a hidden form of protec- tionism. Local companies had superior information and access to informal networks, allowing them to offer the right bribe to the right official at the right time (Krastev, 2000: 30). Corporate complaints of corruption as a non-tariff barrier increased international awareness of corruption. This trend was reinforced by globalisation, which ‘brought individuals from countries with little corruption into frequent contact with those from countries where corruption is endemic’ (Tanzi, 1998: 561).
The global agenda insists on ‘zero tolerance’ for corruption, departing from prior lenience. For instance, it is no longer acceptable for a prime minister to say, as the Greek one did in 1985, that a public enterprise exec- utive is entitled to make himself a small ‘gift’ (Koutsoukis, 1995: 140). In a similar vein, the dictator of then-Zaire Mobutu Sese Seko is reputed to have told civil servants in the mid-1970s to steal, but steal a little (Wrong, 2001). Such lenience was openly shared by Western businesses and gov- ernments, which turned a blind eye in order to secure lucrative deals.
When it was revealed that a Canadian crown company had bribed South Korean and Argentinean officials, Jean Chrétien, then still trade minister, remarked publicly that ‘commercial practices in other countries some- times are different from ours . . . It would be very presumptuous for 30 Corruption and Development
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Canadians to tell other people how to conduct their morals’ (Adams, 1991: 141). That such a reaction would be unthinkable today (at least in public) is a testament to the growing dominance of anti-corruption discourse.
The global agenda against corruption became conceivable only after the end of the Cold War, when the West no longer needed to support corrupt dictators in an effort to contain communism. During the Cold War, Western financiers knowingly tolerated irregularities in the public projects that they funded throughout the ‘Third World’, as it was then known. Western lenders were well aware that President Marcos of the Philippines was diverting development funds to his cronies. The Asian Development Bank allowed its monies to be lent to Bangladeshi busi- nessmen who had no serious intention of pursuing the projects they proposed. As Adams (1991: 142) summarises, ‘Corruption in the Third World required complicity from those in the West who, one way or another, benefited from the Third World’s status quo.’
Politely silent about corruption during the Cold War, the World Bank and the IMF came to include it in their conditionalities. The two Bretton Woods institutions repackaged their policy advice, prescribing deregula- tion to reduce opportunities for officials to collect bribes. Such a shift required the depoliticisation of corruption into a technocratic problem, rather than the stuff of partisan scandal. ‘I visited a number of countries,’
recalls World Bank president James Wolfensohn, ‘and I decided that I would redefine the [previously unspeakable] “C” word not as a political issue but as something social and economic’ (Wolfensohn, 1999).
Reinvented in this way, anti-corruption could be reconciled with World Bank and IMF statutes that prohibited entanglement in the domestic politics of recipient countries.2
Inaugurated at the 1996 annual meeting of the IMF and World Bank, the new focus on corruption was part of a broader campaign for ‘good governance’, which emerged in reaction to criticism of the Washington Consensus. Corruption, as part of a ‘weak institutional environment’, pro- vided an explanation for the disappointing results of market reforms advocated by the IMF and World Bank. Anti-corruption also fortified the Bank’s mission statement at a time when its raison d’êtrewas being ques- tioned. New IMF guidelines singled out corruption in state regulation of foreign direct investment, as such corruption ran ‘counter to the IMF’s general policy advice aimed at providing a level playing field to foster private sector activity’. To promote transparency, the Fund set out to remove ‘unnecessary regulations and opportunities for rent seeking’
(International Monetary Fund, 1997).
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The IMF and the World Bank could now withdraw from countries where corruption was feared to be so rampant as to jeopardise economic recovery. In August 1997, the IMF suspended a $220 million loan to Kenya because the government had not done enough to curtail bribery. The World Bank also delayed loans to Nairobi for the same reason. Following the IMF’s decision, Kenya’s currency lost 20 per cent of its value (Bonzom, 1997). President Daniel Arap Moi challenged the loan suspension as ‘purely political’ (Bonzom, 1997).
The Kenyan response echoed the concerns of other developing coun- try governments about interference in their domestic affairs. Malaysian central banker Dato’ Seri Anwar bin Ibrahim insisted that the IMF and the World Bank should not pressure recipients to acquiesce to demands on ‘noneconomic’ matters. His Pakistani counterpart V. A. Jafarey (1996:
174) warned:
Given their apolitical mandate, the Fund and the Bank need to proceed with extreme caution, being drawn into an area which defies easy quantification, entails subjective evaluation, and requires symmetry of treatment between debtor and creditor governments, especially in the two-sided area of corruption.
Civil society and the quantification of corruption
If the governments of some developing and transition countries had doubts about external pressure regarding corruption, their populations often welcomed such pressure (Miller et al., 2001: 32). ‘Civil society’, embodied primarily in NGOs, has played a central role in the global anti- corruption agenda. The World Bank (2000, xxiii) sees civil society as ‘essential in constraining corruption’. The OECD (2003) published a 27-page report on the role of civil society in fighting corruption, while the Anti-Corruption Toolkitissued by the UN Office on Drugs and Crime (2004) mentions ‘civil society’ 151 times.
The archetypal anti-corruption NGO is Transparency International, founded by former World Bank official Peter Eigen. In 1995, TI began to publish its corruption perception index, a ‘poll of polls’ ranking coun- tries on the basis of how corrupt they were perceived to be by interna- tional businesspeople. Updated annually and cited widely, the index left an indelible mark. It was instrumental in the construction of corruption as a global problem requiring global solutions. Journalists sometimes ignored the caveats contained in the index, and interpreted it as measuring actual, rather than perceived corruption.
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