Corruption and state failure
Monday, 03 November 2008 10:16
Narayan Manandhar
In the website opinion survey, hosted by Fund for Peace, that publishes global index of state failure (www.fundforpeace.org), lists down nine factors and asks the respondents to tick one that s/he thinks it to be the most critical cause of state failure. The list included: (1) Corruption, (2) Lack of basic education, (3) Group hatred, (4) Poverty, (5) Lack of social equality, (6) External actors, (7) Natural disasters, (8) Malnutrition and disease, and (9) Environmental damage. As on 22 May 2008, 7053 people ticked their responses. The results, in percentage terms, were as follows: (1) Corruption 42%, (2) Lack of basic education 14%, (3) Group hatred 12%, (4) Poverty 11%, (5) Lack of social equality 10%, (6) External actors 5%, (7) Natural disasters 2%, (8) Malnutrition and disease 2%, and (9) Environmental damage 2 %. What is interesting in the response pattern is that corruption is single out not just as the top most critical factor; compared to it other listed factors trail far behind in the list. The second top most critical factor, i.e., the lack of basic education has a mere response rate of 14% compared to 42% for the corruption factor. The normal factors that we often like to assume for state failure, namely, external interventions, natural disasters, environmental damages and malnutrition and diseases do not feature prominently. The next interesting feature is that ever since the question was posted in the website last year, as this scribe has been closely observing the response pattern, there has been hardly a significant change in the proportion of responses even when the number of respondents doubled over a period of time. Using global data on state failure published by the Fund for Peace and corruption data published by Transparency International, in this small write up, an attempt is made to dissect the relationships between corruption and state failure. Transparency International has recently released its annual Corruption Perception Index (CPI) for 2008 ( www.transparency.org ). CPI is a measure, scaled from 0 to 10 implying higher score to measure better performance in global corruption perception ranking by the country. As for example, with CPI score of 9.3, currently, Denmark is at the top of the list, meaning it to be cleanest country in the world. With CPI score of 1, Somalia is perceived to be the most corrupt country and is at the bottom of the ranking scale. The list is available for 180 countries of the world. Nepal with a score of 2.7 is ranked at 121st position. Last year Nepal’s score was 2.5. There is a slight improvement in Nepal's score and ranking. As a rule of thumb, TI ranks countries with less than CPI score of 3 to be “corruption rampant” countries. The Failed States Index (FSI) for 2008 is available for 177 countries of the world (www.fundforpeace.org). The index ranges from 0 to 120. Lower the score better is the performance and vice versa. As for example, with FSI of 114.2, Somalia is at the top of the list implying the country to be at the verge of collapse. With FSI of 16.8 Norway is at the bottom of the list. It is the most sustainable country in the world. With FSI 94.2, Nepal is ranked at 23rd position among the list of 177 countries. Last year Nepal’s score was 93.6 and was ranked at 21st position. Compared to last year, there is a slight dis-improvement in FSI score for Nepal. The failed states indices are color coded: countries scoring 90-120 are colored red implying them to be highly critical zone requiring total alertness. Nepal clearly falls in this group. A total of 35 countries fall in this group. Many of the Asian and African countries fall in this group. Countries scoring 60-89.9 are colored orange implying them to be in a danger zone. Countries in the band of 30-59.9 are coded yellow. These are borderline countries requiring careful monitoring. Finally, countries scoring less than 30 are coded green color. These are highly stable and sustainable countries. There are 15 green countries in the list.. For 2008, paired CPI and FSI data are available only for 170 countries. The regression plot for these two indices is given below: 
A couple of interesting points emerge from the plot. First, the relationship between corruption (as measured by CPI score) and state failure (as measured by FSI score) is negative (r = -0.838) implying that countries with high degree of perceived corruption (low CPI scores) also have high chances of state failure (high FSI scores). It may look redundant to compute correlation value as 12 factors used to measure FSI also contain corruption variable. In FSI, corruption is measured in a broad term to mean “criminalization and de-legitimization of the state”. In CPI, corruption is measured as the extent of corruption within the public sector. Since data sources and uses are different, it may be worthwhile to look into their relationships. As for example, the relationship is reverse for Nepal. There is a slight improvement in corruption standing while, at a same time, there is dis-improvement in failed sates index. Does this mean to say that with the arrival of Maoist-led government, there is some gain in corruption rating and loss in failed states ranking? It will be too early to pass a judgement at this point of time. May be we have to keep a watch on next year's publication.
Second, though there are some outliers, top-right corner and bottom-left corners of the graph are, literally, left blank or without dots, indicating there are no countries in the world which are highly clean and highly unstable or which are highly corrupt and highly stable/sustainable. Argentina is one country with a high degree of corruption (CPI 2.9) and a good score on failed sates index (FSI 41.4). Bhutan and Italy stand at the opposite direction having good score on corruption and bad score on failed states index. The paired CPI and FSI scores for Bhutan and Italy are respectively (5.2, 85.4) and (6.0, 83.6). Third, the co-efficiency of correlation only measures that two variables – corruption and state failure - are highly related. It does not say anything about their causality, meaning which is a cause and which is an effect. Could it be true that the country is highly corrupt because it is a failing state or the other way round? We are basically into a chicken-egg situation here. Though there are now robust statistical techniques to measure the running of the causality, it could run both ways. First a high degree of corruption may invite a country to be unstable and, consequently the situation of instability and un-certainty might invite further corruption thereby completing a vicious circle of corruption-instability-corruption.
Last Updated on Monday, 03 November 2008 15:48
Global Corruption Report 2008 - A Review
Monday, 30 June 2008 02:18
Narayan Manandhar
Narayan Manandhar reviews the Global Corruption Report 2008 which focused on corruption in water sector.
Last Updated on Monday, 30 June 2008 02:23
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Bribe Vs Gift
Friday, 21 December 2007 05:55
Narayan Manandhar
First, an anecdote:
Last Updated on Friday, 21 December 2007 06:10
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International Anti-corruption day
Sunday, 09 December 2007 02:57
administrator
Marking 4th International Anti-Corruption Day
Crowing Corruption in Nepal
NARAYAN MANANDHAR
"If you have to put so much effort just to stay in the same place; imagine how hard you have to work to swim upward." This dialogue comes from Alice in the Wonderland. It fits the comments recently made by a friend who, after four years of stint in an anti-corruption agency, left for another department within the civil service. He commented that working in the field of anti-corruption is like going against the trend. Yes, working in the field of anti-corruption is like swimming against the current. When whole society is in pursuit of money and fame, or when "how to get rich or rather quick rich?" is the mantra of living, invariably anti-corruption becomes an unpopular business in itself. Corruption may be a global problem; it could be a national problem but when you translate or operationalise anti-corruption efforts; it is turned into a local or even a personal problem. Anti-corruption business brings in, not friends, but enemies and spoilers. For anti-corruption business echoes the voices of the opponents. It is working and going against the establishment. Therefore, it is no wonder to have one out of every four journalists killed in the world happened to be reporters (un)covering corruption stories. In a world where the business of corruption is a low-risk and high-return, it is normal to have anti-corruption turning into a high-risk low-return business. An increasing number of anti-corruption workers or corruption fighters are now demanding some kind of security in their profession. The story of Mr. John Githongo from Kenya is only a recent example. Converting anti-corruption business, from a high-risk low-return business to a high-return low-risk business has come as a major challenge.
Having spent nearly three years in anti-corruption business, unlike my friend from the government, I did not have to earn foes than friends. My work was basically confined to policy advices and advocacy works. But during my tenure, definitely, I did face unique challenges, sometime amusing, some time confusing. The first one is obviously a personal attack. "You are into anti-corruption business simply because you did not have an opportunity to be corrupt." The extension of this logic is that, given the opportunity, every one is corrupt. The accusations do have a profound impact on anti-corruption business. Temptation to be corrupt seems to be equally, if not normally, distributed among the populace and what matters is controlling the opportunity for corruption. However, what is frustrating here is that the accusation has come more as a defense against corruption rather a policy prescriptions for anti-corruption activities.
Having written numerous articles on corruption and participated in innumerable formal and informal presentations on corruption and anti-corruption, made to a wide variety of audiences over the last three years, I am literally shocked when one of the participants, coming from a remote districts of Nepal, spoke to me that my work could led to more, not less corruption. His reasoning goes like this: By opening up the intricacies of corruption business I have, howsoever, inadvertently made public aware that there is a short-cut route to doing business in and with the government. I am not sure whether anti-corruption messages are, in fact, spreading the messages of corruption. This hypothesis needs testing. The problem with us is: Can we talk of anti-corruption business without talking corruption first?
Most frustrations reside when anti-corruption businesses, agencies, organisations and individual themselves are corrupted in one way or other. What is the moral ground of talking anti-corruption stand when the foundation itself is infested with corruption? In such instances, anti-corruption becomes nothing more than a moral preaching exercise in futility. "I am holier than thou" seems to be the norm when it comes to anti-corruption exercises. It is shameful to listen to anti-corruption lectures from the Finance Minister who master-minded the Voluntary Income Disclosure Scheme (VIDS). In almost all CIAA initiated corruption cases on holding of disproportionate property, the accused have sought to defend their case behind the veil of VIDS. As per this scheme if you pay certain portion of your income as a tax to the state, you are not obliged to disclose your income source. This is a cute strategy designed to turn all black money into white one, all in the name of mobilizing state revenues. I honestly hope this idea did not originate from the World Bank.
Let me also share with you here a real life joke on corruption. In November last year, along with a foreign consultant, studying obstacles to doing business in Nepal, I was interviewing a number of business people in Eastern Nepal. Here is what went on between us and the jute manufacturer.
"Is corruption a major problem in your line of business?"
"No."
"Are you sure?"
"Yes, I am. Corruption is not a problem in my business."
"May we ask why it is not a problem in your business?"
"Because we all are habituated by corruption!"
So corruption is a habitual problem with the business community. During my work, I have found private sector business to be the most reluctant body to talk about corruption in Nepal. You can talk about corruption with a civil servant or with his political master, but when it comes to business people, it is simply a taboo. If one reads the genesis and evolution of anti-corruption works, invariably, one will find the role and contributions of the private sector in the Western world. Even to date, the largest funding of Transparency International, a Berlin based international anti-corruption organization, comes from private sector contributions. It is amazing, if not shameless, to find in Nepal, the business leadership to be occupied by a black-listed entrepreneur. It is totally misdirected effort to tackle corruption merely by pointing accusing finger on the bureaucrats and the political masters. The private sector constitutes the supply-side of corruption. Without tackling the supply-side, merely attacking the demand-side is going against the laws of economics.
Over the last decade, we have overemphasized on demand-side. Invariably, the civil society movement against corruption has created demands for good governance, transparency and accountability. In the name of empowerment, to some extent, we have pampered them. Often the demands, expected to create a "voice mechanism", are lost in high decibel noises giving an impression of the early morning crowing of a crow. A part from constant crowing, "Corruption has increased! Corruption has increased!" have we ever given a serious thought on the manner and venue of increased corruption in Nepal? In Nepali there is a saying: Kag karaudai chha, pina suk dai chha. For a non-Nepali reader, an explanation is required here. The crowing of a crow (kag karaudai chha) has no relations, whatsoever, with the drying of mustard cakes (pina suk dai chha), yet gives an impression that both activities are related. Could it be true that similar thing is happening with corruption and anti-corruption activities?
A way back in 1968, Prof. Gunnar Myrdal has quoted Santhanam Committee Report, "Merely shouting from the house-tops that everybody is corrupt creates an atmosphere of corruption. People feel they live in a climate of corruption and they get corrupted themselves. The man in the street says to himself, if everybody seems to be corrupt why shouldn't I be corrupt?" It is not just corruption that is bad, improperly designed anti-corruption efforts too can turn bad. It is like prescribing wrong medicine to right a disease.
How do you tackle corruption when at the one end of the spectrum you have citizens who are deeply ingrained with the belief that without bribing some one you cannot get anything from the government than, at the other end, you have civil servants (actually, Churchill has called them evil masters) who are preoccupied with self-fulfilling prophesies like these - "if I do not take bribe, some one will", or "even if I remain honest, no one is going to believe me".
Anti-corruption business is as simple as cleaning of your house. We just make things complicated. If your house is dirty, if it is smelly, where do you start your cleaning campaign? Definitely, you look for the rot. Is it coming from the kitchen or from the toilet? If you have to clean-up your stairs, you start from the top rung. There are definite ways of cleaning a house. Every anti-corruption effort should have a starting point, a logical method to begin with. And this is what is missing in Nepal. It is time now to start thinking on the starting point in our anti-corruption campaign. It is unbelievable why our politicians are deceptively keeping quiet on anti-corruption agenda. Why are they shying away from anti-corruption commitments? If this had not been the case why would CIAA be deliberately made defunct? Why the culprits pointed out by Rayamajhi Commission have not been booked to date? And what kept an all-powerful Interim-Parliament from ratifying UN Convention against Corruption (UNCAC)? There must be a reason. Is this to do with pending elections to CA? Or could it just be another power-sharing arrangement – you scratch my back and I will scratch yours? Or are we propagating a perverted inclusive theory of sharing the spoils: Since you stole my money, I too have the right to steal yours?
Last Updated on Friday, 21 December 2007 05:49
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