Anti-Corruption in Transition

by Nathan Hamm on 7/26/2006 · 2 comments

The World Bank has released a report on corruption in the former Soviet Union and Eastern Europe. As RFE/RL summarizes,

The World Bank released a report today saying that corruption has declined overall since 2000 in the “transitional” countries of Eastern Europe and the former Soviet Union.

The study looks at firm-level survey data to track trends in corruption, examining the reasons behind the progress in some countries.

The full report is available from the World Bank. While the report says that there has been an overall decline in corruption since 2000, the decline is not even.

Findings are also mixed in the southern Commonwealth of Independent States (CIS). Firms in Georgia, and to a lesser extent Moldova, reported corruption to be much less of a problem, albeit from very high levels three years earlier, while firms in Azerbaijan and the Kyrgyz Republic reported a worsening of the problem. The findings for Armenia, Tajikistan, and Uzbekistan,which did not differ much between 2002 and 2005, indicate that firms in those countries do not view corruption as a problem to the same extent as elsewhere in the CIS.

Kyrgyzstan found itself near the bottom of the barrel on many indicators.

In 2005 it rated first among all countries surveyed by the BEEPS in the frequency of bribes, second (to Azerbaijan) in the level of the bribe tax, and second (to Albania) in the extent to which corruption is a problem for business. Moreover, two of the three indicators—the frequency of bribes and the extent to which firms see corruption as a problem for business—increased from 2002 to 2005,in contrast to the trends in most of the countries in the region.

The report points to too heavy a focus on legislative reforms and too little attention to implementation and enforcement. And while these findings reflect more on Akaev’s government than Bakiev’s news over the last year has not exactly indicated too much headway having been made on stamping out corruption. To succeed, the report says that Kyrgyzstan need a regulatory environment that will promote economic competition and improve the business environment, a meritocratic bureaucracy, transparent government, and more widely distributed power and accountability. That, the authors say, requires “strong and consistent leadership, outreach, and results.”

And it is because of strong and dedicated leadership (as detailed here), the report says, that Georgia has seen so much improvement.

The leadership has taken bold actions to fight corruption, reduce the burden of the state in the economy,and develop a fiscally sustainable social safety net. As a result they have, in a very short period of time, reformed corrupt institutions and changed public perceptions along many fronts.The executive branch has been reorganized and streamlined and has introduced a cabinet style of government. The government has greatly simplified the regulatory framework for the business sector,implemented a major tax reform,improved management of public finances through adoption of a medium-term expenditure framework (MTEF) and single treasury account for central government, and strengthened oversight institutions.The Chamber of Control of Georgia reopened and resumed its auditing functions in 2005, and in 2006 the government submitted a law to parliament to empower the Chamber of Control as supreme auditing institution. In addition to these institutional reforms, a substantial share of the police force (including the entire traffic police) and a large number of tax and customs officials have been dismissed. Furthermore, higher salaries and stricter rules for hiring and firing in these agencies have created an incentive system that reinforces professional behavior and discourages corruption.These and many other actions of the new government have reduced opportunities for bribery and are changing the public’s expectations about the extent to which corruption will be tolerated.

The report is quick to point out though that Georgia must now institutionalize its reforms to sustain improvements over the long term.

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– author of 2991 posts on 17_PersonNotFound.

Nathan is the founder and Principal Analyst for Registan, which he launched in 2003. He was a Peace Corps Volunteer in Uzbekistan 2000-2001 and received his MA in Central Asian Studies from the University of Washington in 2007. Since 2007, he has worked full-time as an analyst, consulting with private and government clients on Central Asian affairs, specializing in how socio-cultural and political factors shape risks and opportunities and how organizations can adjust their strategic and operational plans to account for these variables. More information on Registan's services can be found here, and Nathan can be contacted via Twitter or email.

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