Rule of Law | Council on Foreign Relations

South Africa

Court Decision Shines Light on Race Relations in South Africa

On March 29, the New York Times reported that for the first time, a white woman was convicted, sentenced, and jailed for the use of racial slurs. The woman’s rant, which occurred in February 2016, lasted some minutes and was directed at black and white police officers who responded after her car had been burglarized. The episode was captured on video and went viral on social media, producing outrage in the majority black country. The court sentenced the woman, Vicki Momberg, to three years in jail with one suspended for her words. The judge refused to grant her bail while she appeals, observing that she had shown no remorse. The rant included the woman’s use of “kaffir” some forty times. The word is all but unknown in the United States, but its origin, apparently, is Arabic and refers to “unbelievers.” In South Africa, the word is a slur against black people and is regarded as even more demeaning than the “n-word” in the United States. In the media, the word is rarely written or said out-loud, but instead referred to as the “k-word.” Like the “n-word,” kaffir is redolent of white supremacy and apartheid. With its use, the woman was being as personally insulting as possible in South Africa. So much so that a white policeman who joined the episode, while trying to calm her, is reported to have said, “I am not going to allow you to insult my colleagues like that.” There has been backlash among white South Africans. Some have argued that she was upset after having just been robbed (this was part of her defense in court as well), while others have complained that black insults and threats to whites—especially by political figures—have gone unpunished. The episode shines a light on an enduring South African reality: the persistence of racism, especially among some whites. I have written previously about an episode in 2016 in which a white woman in seaside Durban characterized black beach goers as “monkeys,” though she later apologized. The recent court decision illustrates once again the complexities of managing racial issues in a democratic country with a predominately black population and black government but in which most of the wealth and privilege is in white hands.

Blog Post by John Campbell April 3, 2018 Africa in Transition
South Africa

In a Display of Judicial Independence, South African Court Denies Zuma, Again

South Africa President Jacob Zuma faces more than seven hundred charges of corruption in connection to an arms deal that occurred in the late 1990s, long before he became president. Those charges had been set aside by a lower court while he was president. However, in October the Supreme Court of Appeal upheld the decision of a lower court that the charges could be reinstated now. The decision whether to prosecute rests with the National Prosecuting Authority (NPA), an independent, non-political body. However, after the October ruling, Zuma appointed Shaun Abrahams as chief prosecutor, who is seen as a Zuma ally. The High Court has now ruled that Zuma’s appointment is invalid: Judge Mlambo said, ‘”in our view, President Zuma would be clearly conflicted in having to appoint a national director of public prosecutions, given the background…and particularly the ever present spectre of the many criminal charges against him that have not gone away.” The court ordered the deputy president, Cyril Ramaphosa, to appoint a new chief prosecutor. The Zuma administration will probably appeal the high court ruling to the Constitutional Court. However, according to British media, the African National Congress (ANC) is saying that the parties involved should “reflect” on the opinion before deciding whether to appeal. Next week, the ruling ANC will hold its national convention where it will choose a new person to succeed Zuma as party leader. The leading candidates are Nkosanza Dlamini-Zuma, Jacob Zuma’s choice candidate and his former wife, and Cyril Ramaphosa, Mr. Zuma’s current vice president. The race is close, and the court’s ruling will probably give Ramaphosa a boost. The way the court ruling against Zuma and Abrahams unfolded is illustrative of the rule of law in South Africa. Three civil society organizations sued in the courts, arguing that Zuma’s removal of the previous prosecutor so that he could appoint Abrahams was invalid. That suit brought the issue into the court system. As has happened many times in the past, South Africa’s strong and vigilant civil society groups sued against the government, and an independent judiciary found in their favor. The rule of law is more advanced in South Africa than elsewhere because of the independence of the judiciary combined with the strength of civil society and a free press which regularly highlights issues (such as the ties between Zuma and Abrahams) that the administration would prefer to remain in the dark.

Blog Post by John Campbell December 14, 2017 Africa in Transition
Poland

What’s Next for Poland’s Democratic Decline?

Once a role model for democracy, Poland has rapidly witnessed a series of illiberal moves that threaten the rule of law and its future within the European Union, says Agata Fijalkowski.

Interview with Jakub Lewandowski and Agata Fijalkowski December 11, 2017

Kenya

Victory for the Rule of Law in Kenya

The Kenyan Supreme Court ruled on Friday to annul the presidential elections that took place on August 8, arguing that the Independent Electoral and Boundaries commission, the agency charged with conducting the election, did not follow the requirements of the constitution. The move astonished Kenyans and most other observers. The court’s action, at least in the short term, was popular; for at least some Kenyans, the manifestation of judicial independence was more important than who was elected president. The new independence of the Supreme Court appears to be tied to Kenya’s new and progressive constitution, adopted in 2010 following deadly post-election violence in 2007. The Court’s vote to annul was four to two, with one judge absent because of illness, and three of the four who voted to annul having been called to the bench under the new constitution. Kenyan presidential election politics and elections have been deformed by ethnic appeals, and Kenyans traditionally have had a low opinion of the judiciary, which they saw as in the pocket of any incumbent president. With this decision, law, process, and an independent judiciary appears to have trumped ethnicity. Can it last? New elections are scheduled for October 17, with no new candidates permitted. That means President Uhuru Kenyatta and Raila Odinga will face off again. Estimates are that on a vote per capita basis, the annulled elections were among the most expensive in the world. Certainly, the October elections will again be a fiscal drain, although there are thus far few details about how the new polling will actually unfold. There are also complaints that the new elections have increased economic uncertainty and will negatively affect the business climate. There is also the fear of resurgent ethnic conflict and violence between Kenyatta and his Kikuyu, in alliance with his deputy president William Ruto’s Kalingen, and Odinga’s Luo and their allies. The recent rhetoric of Kenyatta and Odinga has not been reassuring. Kenyatta has attacked the judges, saying (among other things) that the judges were bought off by “white people and other trash.” (There are an estimated twenty thousand white people in Kenya out of a total population of more than 48 million). Kenyatta has also, in effect, threatened the independence of the judiciary. For his part, Odinga has said that he will not participate in the October 17 elections absent certain guarantees, including the arrest of certain members of the Independent National Electoral and Boundaries Commission, whom he characterized as “hyenas.” Neither “big man” is calling unambiguously for the scrupulous observance of the rule of law, though both have accepted the Supreme Court’s ruling. It is striking that the annulled elections were generally praised by foreign election observers, but their observation was primarily of the polling itself. In Africa, now, elections are often stolen at the points where voting tallies are consolidated, rather than at the ballot box. This process is hard for foreigners to observe, and, in any case can take place some days after the polling itself. Too often, foreign observers leave as soon as the polling is over and preliminary results have been announced. It remains to be seen what the foreign observer presence will be on October 17. Certain Kenyan non-governmental organizations also endorsed the elections. The bottom line is that election observers appear to have made the wrong call about the August 8 Kenyan elections. That is bound to raise questions about the efficacy of foreign observers of future elections. Kenya is entering unchartered territory. What happens after the October 17 elections? Will the losing candidate again appeal to the Supreme Court? Or will his supporters take to the streets? Kenyatta and Odinga have a heavy responsibility for leading their followers away from violence.

Blog Post by John Campbell September 5, 2017 Africa in Transition
Corruption

What Latin America Can Learn From Past Anticorruption Success

As Latin America reflects on its current wave of anticorruption successes—including the arrest of former Guatemalan president, Odebrecht prosecutions in Peru, and the ongoing Lava Jato cleanup in Brazil—it may be both sobering and heartening to consider the history of past anticorruption successes around the world. First, the sobering lesson. Even when things go well, other countries’ experiences suggest that an overall shift in the degree of corruption can take decades. Perhaps the best known example is the United States, where a series of disconnected local and national accountability efforts during the Progressive Era took place—including regulation of the trusts, elimination of patronage hiring in the civil service, and restrictions on corporate campaign contributions.[i] But although many of the reforms took place in the late nineteenth century, they only coalesced into a significant shift in the overall level of corruption in the U.S. between the 1920s and the New Deal. Summarizing a complex history, Glaeser and Goldin use press coverage of corruption to demonstrate an arc-like pattern: corruption rose steadily from 1815 to 1850, but began falling after 1870, reaching a stable lower-corruption equilibrium by the 1930s, where it remained until the 1970s (when the authors ceased data collection). Similarly, Bo Rothstein’s work on Sweden suggests that the process of significantly lessening the degree of corruption in that country was decades-long.[ii] While the slow pace of these changes may be discouraging for Latin American publics frustrated by the damage and unfairness inflicted by persistent political graft and crony capitalism, it may be somewhat heartening to think that even small victories in the short term can trigger enormous development gains, by changing norms, removing dirty players from the political game, and most importantly, by consolidating public support for the continuation of the reform process. As Brazil’s outgoing prosecutor general Rodrigo Janot noted in Washington this week, there is no putting the genie back in the bottle: no matter where Brazil’s Lava Jato investigation goes, the public has shown that it will no longer tolerate the old cronyism between oligopolies and politicians. Furthermore, the pace at which anticorruption gains accumulate may be faster in the twenty-first century than it could be in the nineteenth and twentieth. Countries as diverse as Georgia and Rwanda have made remarkable gains on most measures of corruption in the space of the past two decades. They have done so by drawing on a large set of international best practices, simultaneously improving transparency, oversight, institutional effectiveness and the likelihood of sanction. Latin American democracies that are already implementing such anticorruption strategies may also be able to benefit from vibrant political competition, which lessens oligarchic politics and increases the practical autonomy of courts and prosecutors, and a vibrant press, which has proven essential to uncovering wrongdoing and mobilizing civil society. Finally, the international anticorruption framework is much stronger than ever before—the record-breaking Odebrecht settlement with Swiss, Brazilian, and U.S. officials being only the latest example—which enhances global support for reformers while increasing the likely international penalties against potential bribe-takers. So although the path to improvement will be a long one, it may be possible for Latin American reformers to move more quickly than was possible in the not-so-distant past. That alone is grounds for optimism, although a healthy dose of realism is also needed in the face of widespread pushback from the guardians of the status quo. [i] Glaeser, Edward L., and Claudia D. Goldin. Corruption and Reform: Lessons from America's Economic History. Chicago: University of Chicago Press, 2006. Hofstadter, Richard. The Age of Reform: From Bryan to F.D.R. 1966 ed. New York: Alfred A. Knopf, 1955, p.3. [ii] Rothstein, Bo. "Anti-Corruption: The Indirect 'Big Bang' Approach." Review of International Political Economy 18, no. 2 (2011): 228-50

Blog Post by Matthew M. Taylor July 25, 2017 Development Channel
Corruption

Corruption Brief Series: Lessons from Guatemala

I am pleased to share the latest report in the Corruption Brief series from the Civil Society, Markets, and Democracy program at the Council on Foreign Relations. In this report, I focus on the case of the International Commission Against Impunity in Guatemala (better known by its Spanish acronym CICIG). In partnership with its Guatemalan counterparts, CICIG has successfully prosecuted senior government officials and achieved important reforms of the legal system. CICIG can be a model for other countries facing the challenge of deep-seated corruption and impunity, but donors must pay attention to ensuring that future CICIG-like bodies are politically independent, adequately funded, and assigned top priority within donors’ broader foreign policy and aid objectives. You can read the report here.

Blog Post by Matthew M. Taylor June 20, 2017 Development Channel

United States

Reviewing Congressional Authorizations on Use of Force

John Bellinger testified before the U.S. Senate Committee on Foreign Relations on June 20, 2017, regarding the intent and statutory limitations of the 2001 Authorization for Use of Military Force (AUMF), the principle legal basis for current U.S. operations in Iraq and Syria.

Testimony by John B. Bellinger III June 20, 2017 U.S. Foreign Policy Program
Guatemala

Lessons From Guatemala’s Commission Against Impunity

What other countries can learn from CICIG’s first decade.

Report by Matthew M. Taylor June 19, 2017 Civil Society, Markets, and Democracy Program
China

Podcast: A New Deal for China’s Workers?

After three labor activists in China were detained last week following their investigation into conditions at a factory that manufactures Ivanka Trump-branded shoes, Chinese labor disputes have once again made international waves. But labor unrest in China is far from new. Over the past decade, workers have mobilized to demand more rights and better protections, organizing an estimated 2,663 protests and strikes in 2016 alone. On this week’s Asia Unbound podcast, Cynthia Estlund, Catherine A. Rein professor of law at New York University School of Law and author of A New Deal for China’s Workers?, discusses the causes of unrest and offers a comparative look at China’s changing labor landscape. She argues that the prospect of an independent, organized labor movement in China poses a unique threat to the Chinese Communist Party—an organization that since its inception has considered itself the sole legitimate representative of workers. As a result, the government has adopted a “whack-a-mole” strategy that attempts to quash individual disputes and reform specific labor standards without creating an alternative system for worker representation. Is the strategy sustainable in the long term? Listen above to hear Estlund’s take on where labor reform in China is headed and what lessons American workers and policymakers can learn from China’s experience. Listen to the podcast on Soundcloud >>

Podcast with Elizabeth C. Economy June 7, 2017 Asia Unbound
Defense and Security

Will FBI Sacking Affect National Security?

The dismissal of FBI Director James Comey raises concerns about the government’s ability to investigate Russian meddling in U.S. elections, and the broader national security role of the agency.

Interview with Jonathan Masters and Matthew C. Waxman May 15, 2017 U.S. Foreign Policy Program
Brazil

What U.S. Policymakers Can Learn From Brazil’s Anticorruption Gains

Introduction Corruption costs Brazil an estimated 3 to 5 percent of gross domestic product (GDP) annually. Yet, Brazil today is lauded internationally for its efforts to combat graft. An important shift has taken place since the country’s return to democracy in 1985. Brazil has seen a steady increase in bureaucratic audits, civil servants removed from office and fined, and politicians barred from elections for wrongdoing. Over the past five years, trials in two major scandals—the mensalão scheme of payments by the government to legislative allies and the Lava Jato [PDF] scheme of kickbacks from state-owned companies to corrupt executives and politicians—have altered the public’s perceptions about the costs of corruption, as well as the possibility of holding powerful actors to account. These improvements give reason for cautious optimism. Brazil’s progress—though tenuous—largely reflects homegrown efforts. Still, the nation’s path holds important lessons for how U.S. policymakers might assist other countries in their fight against corruption. By enhancing international cooperation capacity, providing targeted technical training, and encouraging the adoption of international norms, the United States can advance the efforts of local reformers in other middle-income democracies. Background Brazil’s successes against corruption have progressed together with its young democracy. Its new democratic 1988 constitution [PDF] guaranteed equality before the law and enhanced the public’s right to information. While often flouted in practice, these constitutional provisions gave citizens a claim against state abuses and tools to demand better public services. The constitution also provided a useful foundation for anticorruption reforms by allowing citizen-led petitions onto the legislative agenda, leading to prohibitions against vote-buying and against convicted politicians standing for office. Democracy gave voters electoral leverage over politicians, forcing them to address graft concerns. The need for fiscal transparency, especially during the fight against hyperinflation, led to better public oversight [PDF] of government budgets through enhanced public access and stronger rules curbing government spending. Second, responding to the human rights abuses and policy failures of the authoritarian period, both civil servants and politicians sought to improve the effectiveness of the public sector and build its institutional capacity. Courts, prosecutors, police, and oversight agencies grew in autonomy, size, and strength, enabling them to undertake real efforts against graft. Brazil began slowly shifting away from patronage, adopting rigorous merit-based examinations and reducing the number of appointees. More budgetary resources permitted anticorruption agencies to move investigations forward. Accountability agencies gained tools for building successful investigations, including new anti–money laundering [PDF], plea bargaining, and racketeering laws, along with improved fiscal oversight and banking regulations. Bureaucrats also began working with allies in other countries, leading to the adoption of bilateral and multilateral frameworks that enhance anticorruption efforts. Brazil joined the Organization of Economic Cooperation and Development (OECD) Anti-Bribery Convention in 2000 and updated anticorruption legislation to correct shortcomings in enforcement of that convention, including by passing a major corporate anticorruption bill in 2013. Third, civil society groups have kept anticorruption efforts in the spotlight, highlighting problems, proposing solutions, and driving reforms. A free press has pressured elected officials through broad media coverage of malfeasance and has educated citizens about the costs of corruption and potential solutions. Most recently, in March 2016, two million citizens joined a petition for congress to consider a ten-point proposal drafted by prosecutors to strengthen anticorruption laws. The combination of media attention and public mobilization has sustained the anticorruption agenda, supporting and promoting legislative change, and defending anti-graft campaigners against pushback. Challenges Significant challenges remain. Despite democracy’s generally positive effect on anticorruption efforts, Brazil’s electoral system encourages corruption. Open-list proportional representation voting and weak party labels fragment the party system and increase the costs of electoral campaigns, which are among the most expensive in the world. The expense and high degree of intraparty competition also creates incentives for politicians to rely on illicit finance for a competitive edge. To govern effectively, the president has to build a coalition from more than two dozen legislative parties, often relying on perks such as appointments to plum spots in the public bureaucracy, state-owned enterprises, and semiautonomous public agencies. Bargaining chips like these have been used both to build political support, and—as the Lava Jato investigation has shown—to illegally fill campaign coffers and offshore bank accounts. The courts, even though they are independent and well funded [PDF], move too slowly to effectively punish corrupt actors. Strong rights protections, delay-ridden processes, and endless appeals all conspire against efficient resolution of even the most egregious cases. The Supreme Federal Tribunal, which adjudicates cases against many federal officials, is poorly equipped to serve as a criminal court, in part because it is congested with more than one hundred thousand cases a year. The first conviction of a sitting federal politician occurred in 2010, twenty-five years after the return to democracy; he remained free on appeal until 2013. Opponents of anticorruption efforts remain powerful. Politicians who benefit from the status quo have tried to slow or undermine reforms, proposing bills to permit politicians’ families to repatriate undeclared foreign assets, give amnesty to defendants at firms that reach leniency deals with the government, and restrict prosecutorial independence. Most recently, the lower house amended to insignificance the ten-point anticorruption petition proposed by prosecutors. Meanwhile, perceived excesses, such as leaked wiretaps and the extensive use of pretrial detention, undermine the goals of anticorruption agencies. Recommendations Despite these ongoing challenges, Brazil’s anticorruption gains provide guidance for steps the United States can take to effectively support anticorruption efforts in a wide range of middle-income democracies around the world, including South Korea, India, and South Africa. Expand U.S. cooperation with other countries’ law enforcement and prosecutors. The U.S. Department of Justice (DOJ) has cooperated with Brazilian authorities to share information on potential targets and investigations, and advance shared enforcement actions against Brazilian firms such as Embraer, Odebrecht, and Braskem. The DOJ’s efforts brought legitimacy and greater effectiveness to Brazilian prosecutorial efforts. Yet the DOJ’s Office of International Affairs (OIA)—often the starting point for such cooperation—has been unable to address mounting inbound requests from foreign partners, leading to significant delays in information sharing. Although OIA resources were recently increased, OIA still needs to make a concerted effort to improve the response time for international requests. Create a new professional exchange program for anticorruption authorities. The DOJ should create a program similar to the U.S. State Department’s International Visitor Leadership Program (IVLP) to provide foreign anticorruption authorities with a network of U.S. counterparts and access to targeted legal expertise about international best practices, innovative uses of similar statutes, and successful reform efforts. The Brazilian judge at the center of the Lava Jato investigation, Sergio Moro, participated in the State Department IVLP program a decade ago and has noted the useful ties it provided to U.S. authorities. With congressional funding, the DOJ should expand existing exchange programs to provide deeper training beyond today’s frequently ad hoc and boilerplate introductions, which are seldom tailored to the specific training needs of foreign authorities. Even at their most basic, such programs help anticorruption campaigners fight the isolation that often besets them at home. Advocate for the adoption of stronger anticorruption prosecutorial tools and efficient judicial procedures in partner countries. In Brazil, the adoption of plea bargaining, the strengthening of antiracketeering statutes, and the enhancement of anti–money laundering laws over the past decade were vital to building cases against private and public sector officials alike. A fledgling law on corporate leniency agreements, modeled on U.S. non-prosecution and deferred prosecution agreements, has been used to significant effect in the Lava Jato investigation. The DOJ and U.S. Agency for International Development should encourage the adoption of similar tools and procedures, tailored to local institutions, while sharing lessons learned from international efforts to increase the effectiveness of anticorruption prosecutions. Direct U.S. programming and funding to support middle-income countries’ efforts to build and train a professional civil service. In Brazil, merit-based hiring, higher salaries, and better budgets have increased the quality of police, prosecutors, tax collectors, and other agencies’ work in the fight against corruption. Homegrown efforts to increase professionalization should be complemented with training on international best practices on anticorruption, which could be developed by the State Department’s Bureau of International Narcotics and Law Enforcement Affairs, in consultation with the DOJ’s International Criminal Investigative Training Assistance Program and the Office of Overseas Prosecutorial Development Assistance and Training. Encourage middle-income democracies to join multilateral anticorruption bodies. Committing to the standards of international anticorruption bodies—including the OECD Anti-Bribery Convention—helps lock in periodic reviews of anticorruption enforcement, provides access to best practices, and drives reform. Multilateral frameworks such as the Financial Action Task Force and the Anti-Bribery Convention have the benefit of demonstrating that anticorruption is a multilateral effort, rather than an imposition by a single country. By taking these steps, the United States can enhance middle-income countries’ ability to stem corrupt practices that threaten economic development, institutional stability, and the integrity of global business transactions. Absent such efforts, the path toward effective anticorruption efforts in middle-income nations such as Brazil may be unnecessarily difficult and subject to reversal.

Report by Matthew M. Taylor March 24, 2017 Civil Society, Markets, and Democracy Program
Mexico

Mexico Plummets in Annual Corruption Rankings

Transparency International yesterday released its annual Corruption Perceptions Index (CPI) that ranks 176 countries on a scale from zero (highly corrupt) to one-hundred (very clean), based on the opinions of citizens and experts. As in years’ past, Nordic countries fared best. Denmark topped the list (tied with New Zealand), followed by Finland, Sweden, and Switzerland. Ranked worst were Yemen, Syria, North Korea, South Sudan, and Somalia. Regionally, Europe stagnated compared to last year, sub-Saharan Africa progressed unevenly, and Middle Eastern and North African countries saw sharp declines. Most Asia Pacific nations continued to post failing grades (scoring forty points or less). Latin America’s fight against corruption, witnessed in the region’s ongoing headlines and rising number of domestic cases, generally hurt perceptions. Mexico took the biggest hit. Continued revelations of flagrant wrongdoing by numerous governors and other public officials—followed by few investigations or prosecutions—led the nation to plummet twenty-eight places to 123, alongside Honduras and Sierra Leone. After two years of declines, Brazil’s score stabilized, even as the Lava Jato investigations expanded and deepened. This year’s further arrests, prosecutions, and convictions seemed to give some confidence that law enforcement might change things. Argentina’s score improved to its highest in five years, reflecting widespread sentiments that Macri’s government will be cleaner than that of his predecessor, Cristina Fernández de Kirchner. Scores for Honduras and Guatemala, both suffering from their own corruption scandals, remained roughly even, though their rankings fell relative to others. Though many criticize the index for measuring perceptions rather than realities, the survey remains one of the best indicators of global and regional corruption trends. And as my colleague Matthew Taylor points out, it draws the attention of policymakers, law enforcement and the public—those that will need to come up with actions and solutions if their countries are to change.

Blog Post by Shannon K. O'Neil January 26, 2017 Development Channel
Development

SDG 16 and the Corruption Measurement Challenge

Emerging Voices highlights new research, thinking, and approaches to development challenges from contributing scholars and practitioners. This post is from Niklas Kossow, communications officer for the European Union FP7 ANTICORRP project and the European Research Centre for Anti-Corruption and State-Building. In this post, he considers the challenge of designing evidence-based reforms and measuring success in global development, and describes a new approach to objective measurement in the field of anticorruption and good governance: the Index of Public Integrity. In September 2015, the United Nations General Assembly passed the sustainable development goals (SDGs) that will define the direction of global development for years to come. Among the seventeen goals that aim to end poverty, reduce inequality, and ensure quality education and healthcare, is Goal 16—a commitment to encouraging good governance. To achieve this, Goal 16 sets twelve specific targets, including promoting the rule of law, ensuring inclusive decision-making, and fighting corruption and bribery. Good governance as a UN goal would have been a surprise just a few years ago, but its addition to the development agenda reflects the increasing recognition that it affects economic growth, a functioning civil service, and development outcomes, such as better healthcare. In a corrupt system, development aid rarely ends up with those who need it the most. But measuring good governance—and especially corruption—is difficult, for the SDGs and more broadly. Existing indices, such as Transparency International’s Corruption Perception Index (CPI) and the World Bank’s Control of Corruption indicator (CoC), are perceptions-based surveys that ask experts and citizens to estimate how much corruption exists in a specific country. Though they have successfully raised awareness of corruption as a global problem and informed the policy debate, they are deeply flawed as corruption measures. As indices that aggregate expert opinions into a single country score, the individual factors experts use to make their judgements about corruption levels are hard to identify. And because these factors are unclear, policymakers are given little guidance as to how to better control corruption and ultimately, improve governance. Additionally, these types of assessments are highly subjective and influenced by recent events. Countries can end up with worse CPI scores after a major corruption scandal is uncovered, or the government begins fighting graft, even though these likely signal a country is getting better at controlling corruption, not worse. With these shortcomings in mind, the European Research Centre for Anti-Corruption and State-Building (ERCAS) developed a new way to measure corruption: the Index of Public Integrity (IPI). Developed as part of a five-year anticorruption research project funded by the European Commission, and focused on building objective and actionable data, the IPI uses the following six indicators that have proven crucial in fighting corruption: Administrative burden: measures the time and number of procedures it takes to start a business and the time and effort it takes to pay taxes; Trade openness: measures the number of documents and the time required to complete import and export procedures; Budget transparency: assesses the transparency of an executive’s budget proposal and how easily available it is to citizens; e-citizenship: looks at the number of internet users, broadband subscriptions, and Facebook users in each country; Freedom of the press: measures press freedom based on country scores in Freedom House’s annual Freedom of the Press report. Empirical research, led by Prof. Alina Mungiu-Pippidi of the Hertie School of Governance, has shown that these six institutional features can either enable or constrain corruption. High administrative burdens, trade barriers, and a lack of budget transparency reflect the “supply side,” giving public officials the opportunity to tap state budgets and extort money from citizens. Judicial independence, freedom of the press, and e-citizenship can affect the “demand side”—constraining corruption by empowering oversight of independent institutions and citizens, and bringing corrupt officials to account. This new set of indicators also helps policymakers identify areas where countries are performing badly, and where specific reform efforts are needed. For example, the IPI shows that Chile is doing fairly well overall—ranked 26 out of 105 countries globally, and second among its Latin America and Caribbean neighbors. Yet it lags on budget transparency, coming in at 83 out of 105. And Slovakia, ranked 33 out of 105, falls down on judicial independence—coming in at 92 out of 105. The IPI’s nuance gives governments willing to tackle corruption a roadmap to do so. It can more accurately show what progress countries have made, and whether certain policies helped or failed. For development professionals, these more actionable, objective metrics can help the international community design better policies to meet the SDGs’ targets and goals.

Blog Post by Guest Blogger for Shannon K. O'Neil November 29, 2016 Development Channel
Americas

This Week in Markets and Democracy: Duterte Targets Critic, China’s Trade Ambitions, FCPA Uncertainty

Philippines’ Duterte Tries to Take Down Critic Philippine President Rodrigo Duterte brooks no dissent. His latest backlash is against one of his most outspoken critics, Senator Leila de Lima. After she opened an inquiry into Duterte’s role in killings while he was a mayor, and urged the international community to investigate the over 1,500 alleged extrajudicial killings during his first four months in office, the president’s Senate allies ejected her as chair of the Justice Committee. The government is now accusing her of drug trafficking, bribery, and graft. If the case moves forward, De Lima could face up to thirty years in prison—effectively silencing Duterte’s opposition. Can Mercantilist China Lead on Global Trade? With the Trans-Pacific Partnership (TPP) dead, the Regional Comprehensive Economic Partnership will lead the agenda at the Asia Pacific Economic Cooperation (APEC) summit in Peru this weekend. The China-led alternative includes ten Southeast Asian countries as well as Japan, India, South Korea, Australia, and New Zealand, roughly 28 percent of world gross domestic product. As trade deals go it is limited—focusing mainly on lowering tariffs. And one of the countries with the highest barriers is China itself, which levies taxes on everything from imported toys to computers, alongside strong “buy-national” policies, and favored financing for its own companies. Those looking for strong leadership against rising protectionism will likely be disappointed. Future of the FCPA in Question In 2016 the United States used the Foreign Corrupt Practices Act (FCPA) to bring civil or criminal penalties against a record twenty-three companies, slapping them with fines totaling over $1 billion. The latest came this week as J.P. Morgan Chase agreed to pay U.S. authorities $264 million for a “systematic bribing scheme” involving hiring the children of China’s elite to win business. These ramped-up U.S. anticorruption efforts of the past decade are now in question, and anticorruption scholars differ on the future. Harvard’s Matthew Stephenson expects the end of FCPA and the fledgling Kleptocracy Asset Recovery Initiative as we know them. Others are cautiously optimistic, assuming companies’ self-reported cases, which make up half of FCPA actions, to continue. U.S. multilateral leadership, through the OECD, the United Nations, the G20, and other international anticorruption forums, is also at stake.

Blog Post by Shannon K. O'Neil November 18, 2016 Development Channel
Emerging Markets

This Week in Markets and Democracy: New French Anticorruption Law, More Panama Papers Fallout, India’s Big Currency Ban

France’s Anticorruption Reforms After years of criticism for failing to prosecute foreign bribery, France adopted a new anticorruption law that will force companies doing business on its soil to take more aggressive preventative measures, and also gives the government stronger tools to fight corruption. The Sapin II law—named for French Finance Minister Michel Sapin—makes compliance programs mandatory for companies with over 500 employees and €100 million in revenue, and creates a new anticorruption agency that can impose fines up to €200,000 for individuals and €1 million for companies that fail to comply. Sapin II also expands whistleblower protections (though some say they do not go far enough), and introduces deferred prosecution agreements similar to those used by the U.S. Department of Justice—allowing prosecutors to fine companies for wrongdoing without a criminal conviction. These changes should help France make good on its OECD Anti-Bribery Convention commitments. Until now, only U.S. courts—not France’s—have sanctioned French multinationals for bribery abroad. Panama Papers Fallout Continues in Pakistan and UK Seven months after the Panama Papers revealed a vast network of often-stolen wealth hidden in shell companies, government-led investigations continue. In Pakistan—where the leaks revealed that Prime Minister Nawaz Sharif’s family (long dogged by corruption scandals) used offshore companies to buy real estate near London’s upscale Hyde Park—the Supreme Court is setting up a commission to look into opposition claims that the money came from graft. And this week the United Kingdom announced it is investigating over thirty people and companies for potential tax fraud and financial crimes based on the papers’ revelations. The government also placed dozens of wealthy individuals under “special review” and is looking into the activities of twenty-six no longer anonymous offshore companies. The UK’s message: it wants to shed its reputation as an offshore tax haven and hub for illicit finance. India Strikes “Black Money” Research shows that removing large denomination bills from circulation can help cut back on corruption, tax evasion, and terrorist financing. Cash makes illicit payments hard to trace, and high-value notes especially allow people to discreetly move large sums of money around the world—a million dollars weighs fifty pounds in twenty dollar bills, but just 2.2 pounds in 500 euro notes. This week India put this theory into practice, abolishing its highest currency notes—500 and 1,000 rupee bills (worth about $8 and $15, respectively). The immediate aftermath was chaotic, as ATMs were overrun with citizens looking to deposit or exchange their bills. But Prime Minister Narendra Modi hopes the move will cut back on crime and replenish government coffers. Its moves follow those of the European Union, which discontinued €500 notes earlier this year.

Blog Post by Shannon K. O'Neil November 11, 2016 Development Channel