Corruption: The Root of All Problems

Article: “Global Corruption: An Untamed Hydra” – World Policy Journal, Laurence Cockroft, Spring 2010

Synopsis:  Corruption is and extremely prevalent issue in the global political economy.  There are several different manifestations of corruption including bribery – both small scale and large scale – and organized crime interactions. Some examples include rogue heads of state that have accumulated large fortunes such as, Abache of Nigeria ($4 billion), Suharto of Indonesia ($15 billion), Mobuto of Zaire ($4billion), and Nazarbyer of Kazakhstan ($1 billion).  The methods range from money being funneled to an account to money being pilfered from national oil revenues.

The main objective of corruption in political finance is the retention of power. On a scale of corruption, 70 countries made it to the medium scale list (including the US, Britain, Canada and France) and 21 countries made it to the high-level problem list.

Corruption not only occurs in the upper echelons but also in the day-to-day lives of the people.   For instance, a Transparency International survey found that in Pakistan parents paid an average of $90 to have their children make it to the higher grades or in Uganda basic health services (even AIDS relief) cost between $20 and $60.  In India, some 40% of supplies were diverted through corrupt channels.

While the motivation for political finance corruption is power retention, the driver for individual corruption is due to some of the following reasons: survival, greed, compulsion from superiors or quanxi (Chinese for “connections”).  Once these small bribes have been established, it quickly becomes the case that the people receiving the bribes begin relying on them.  Once this occurs it is virtually impossible to weed out corruption.

Whatever the cause of corruption it acts as a cancer on the society, economy and country itself, preventing them from progressing.

There have been efforts to reform the corruption worldwide by increasing accountability through conventions such as the Organization for Economic Cooperation and Development (OECD) Convention Against Illicit Payments in 1997.  But there lies another issue which is the World Bank and the BRIC countries (Brazil, Russia, India, and China) in that despite their “Bribe Payers Index” the World Bank continues to give loans to the BRICs in order to support development.  Another attack method is industry-level which is preventing corporations from doing business if they do so corruptly.

In contrast, a problem that exists is the social and cultural level at which corruption lies that prevents changes in accepted behaviors.  There must be a global anti-corruption effort attacking all aspects of corruption including political, financial, social, civil, industry and accountability.

Criticism: It is surprising the extent to which corruption  exists and occurs on a daily basis.  It is interesting how certain cultures did not have corruption for the political and financial interactions in the upper echelons trickled down to the general population.  This appears to be a major problem to fix once it has started.  The agenda lain out by the article to fight corruption was very thorough but at the same time, the biggest threat to the execution of the agenda is the inability to enforce international law and policy.  A sense of helplessness is not uncommon upon reading about these issues since the problem seems so integrated and prevalent that it seems an impossible task to eradicate.

However if larger economies, such as the US, were to prevent corrupt countries from working with them then the negative reinforcement might force countries to reevaluate.  In conjunction to the Libyan article, corruption would be literally impossible to fix without entirely eliminating Mr. Qaddfi.

There must be a concerted united global recognition, examination and discussion of corruption in order for any headway to be made.

Sticky Libya

Article: “Libya: Why it is Still Stuck” – The Economist, Libya

Synopsis: The political reasons behind Libya’s inability to achieve greater economic success is pointed to as being the huge potential of its natural oil supply and its attraction to investors and the poor manner in which the government is run by Muammar Qaddfi who stops all business in its tracks.

The discussion begins with Libya’s recent interactions with Switzerland and the exchange of travel bans and trade boycotts. The beginning of the dispute is thought to be the alleged abuse of two staff members of Qaddfi’s son in a Geneva hotel the result of which being that the Swiss police were called.  Libya responded by detaining two Swiss businessmen.  Switzerland retaliated by preventing 188 senior Libyan official from entering the country.  This had ramifications much larger than Switzerland because it is within the Schengen zone of the EU which extended the ban to the entire Schengen zone (including Germany, France, Spain).  Libya then started a trade boycott on Switzerland and closed its borders to Schengen citizens.

There are other smaller scale reasons for Libya’s economic difficulties.  It is a struggling economy because the infrastructure is not very stable and while most Libyans are not in abject poverty, due to free public services and low salaries, only a few are rich.

Libyan government has been know to say they would promote tourism and investment but the travel ban prevents their largest resource, Europe, to become unavailable.  Additionally, although Libya has all the correct channels that appear easy enough to start or invest in a business, there are hidden stopping points.  For instance, an Egyptian grocer spent years building his business, but upon returning home for a trip his visa was essentially revoked leaving him unable to return.  A hotel manager sits in prison after firing staff and switching suppliers.  A Canadian oil firm was left to settle for selling their company for $3oo million after the Libyan government blocked a $450 million sale to a Chinese company.  Evan Qaddfi’s son started two mildly critical newspapers and a TV station that have all been shut down.

The main reason for all these failures are due to the self- interest of Qaddfi and his senior officials, their unpredictability, and their ability to not be held accountable to such actions.

Criticism: The Libyan government, AKA Mr. Qaddfi, is irresponsibly wasting the huge potential to succeed economically.  The sea of oil that the country is sitting on is extremely attractive to investors which creates and ideal situation for any country to expand.  It is actually quite boggling as to how Libya can have all the right mechanisms for business but the machine keeps breaking.  It appears as though the entire reason Libya is struggling both with other countries and with companies and individuals is rooted in Qaddfi’s insecurity with his own position of power despite the fact that he has maintained his position for 40 years.

The actions of the government and the handling of the foreign affairs seem very much like a single person attempting to control everything and no consensual discussion has occurred.  It is difficult to determine what is the real root of Qaddfi’s insecurity but if he were to be satisfied with 40 years or being evidence to his power then he could let some investments and businesses go through to allow economic development.  The only was Libya will progress is with a changed approach of Qaddfi or without him altogether.

Pictures from Planet War

Article: Photos from “Planet War” of “The War Issue” – Foreign Policy – March/April 2010

Synopsis: 5 selections from the piece that included 33 images from nations experiencing ongoing conflict.

Eastern Congo: Since the Rwandan Hutu and Tutsi took their war into the neighboring jungles of the Congo, Congo has been particularly volatile.  The precipice on which Congo teeters is not only due to the violence but is also due to the displacement of Congolese who have had to become refugees.  Congolese have even gotten involved, forming the National Congress  for the Defense of the People militia.

Kashmir: Despite being the site of conflict since 1947 and three wars, unrest and border fights are not infrequent.  Recently two teenage Muslims were killed which caused tensions to flare.

China: An autonomous region in northwestern Chine has been demanding independence since the 1990s.  However, ethnic tensions between the 45% Uighurs and the 14 other ethnic groups that include religious repression and economic disparities have caused issues to become further exasperated.

Iran: In the wake of President Ahmadinejad’s election victory, a large sector of people believed he cheated his way into office and thus conducted protests.  These protests, called the “Green Revolution” marked the most significant even in Iranian politics since the 1979 Islamic Revolution.  However, the governmental guard in support of Ahmadinejad was not afraid to show force in smashing the protests.

Chad: Entering into its 5th year of nearly continuous civil war, Chad is serving as a safe haven for Darfuri and Central African Republic refugees.  Rebel group are constantly attempting to overthrow the government.

Criticism: It is striking how many countries are at legitimate ware and basically unable to function to the same capacity economically and politically that other countries who are at relative peace are able to enjoy.  The list of photographs contains 33 countries out of 186 countries in the world and is a stunning portion.  It is no wonder that population explosion, mass starvation and genocide occur in light of the constant conflict in the world today.  In America the media often only portrays Afghanistan and Iraq and a few African countries as being in such conflict but ignore the other nations.  It is not unusual to feel ignorant about not knowing the extent to which political unrest and economic instability exists (including economic nonexistence).

Out of 5 mentioned here, 3 were due to ethnic differences and only 2 due to government opinions.  If it took the US so long to integrate and be relatively accepting of ethnicities, it appears hopeless in even one lifetime to achieve resolution in the ethnic quarrels.

The debate as to whether or not Chad should maintain its government is intriguing in that it is the opposite of the issue Somalia is experiencing with the country’s lack of government.  The way in which the Iranians protested the elections was impressionable in that the US experienced the same debate in the Bush/Gore elections of 2000.  The American population appeared somewhat flustered but no where near to the level of protest that the Iranians demonstrated.

Overall, the sheer amount of constant and ongoing  conflict are extremely striking as being a core issue in the global political economy that in the least should be discussed more in depth and more often as the resolution will be essential in the development of the world economy.