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posted on 12 June 2015

Corruption in Eastern Europe

Written by , GEI Associate

Romania's incumbent Prime Minister, Victor Ponta, is under pressure to resign. Ponta has been charged with forgery of private documents (17 offenses), complicity in tax evasion, and money laundering - in short because of corruption.

Every society is plagued with corruption: crimes committed by utilizing one's position for gains. Bohdan Vitvitsky, a Ukrainian-born corruption expert and former US federal prosecutor and assistant attorney stated that:

"the distinction, therefore, is between those with systemic corruption and those with episodic corruption."

Romania's extended globalization in the European Union (EU) in 2007 was "a driving force for reform and modernization." But Europeanization proved to be unsuccessful for anti-corruption. Romania's Corruption Perception Index (CPI) is on a par with that of Greece—43 (Figure 1.) Why?

Figure 1. Extract from the 2014 CPI by Transparency International

Rank

Country (-tries)

2014 score

1

Denmark

92

17

Barbados/ Hong King/ Ireland/ United States

74

69

Brazil/Bulgaria/Greece/Italy/Romania/Senegal/Swaziland

43

174

Korea (North)/ Somalia

8

Not many moons ago, Romania was a communist state. Its political networks are being recycled in today's government, whose corrupt personality hinders Romania's democratization. Andreea FLINTOACA - COJOCEA, a graduate student at the Institute of European Studies, found that:

"it was not the people who conducted the violent removal of the dynastic couple [Ceausescu] in 1989, but the inferior echelon of the Communist Party who never had access to the same advantages as the "nomenklatura" did." Flintoaca-Cojocea added: "The outcome was an "original democracy based on old, communist structures and means of coercion."

Romania's Hosftede's index of individualism (this index attests of a positive relationship between long-run growth and individualistic cultures) circa 30 (Figure 2,) which is relatively low within the EU (e.g. Germany's index is circa 65,) confirms the fact that Romania is still weaning off collectivism. Collectivism promotes conformity. Nina Mazar and Pankaj Aggarwal, two professors at the University of Toronto, suggested that:

"collectivism promotes bribery through lower perceived responsibility for one's actions."

Figure 2: Individualism vs. GDP/worker

Description: http://voxeu.org/sites/default/files/image/FromAug2010/RolandFig1.gif

The health sector is one of the most affected by corruption. In central and eastern Europe, for instance, patients offer bribes and low-paid doctors accept them. This type of corruption generates the loss of key services for those unable to offer bribes—the poor. As specified by the World Bank and Management Systems International (MSI,)

"corruption exacerbates poverty, either directly (though a decline in the standard of living) or indirectly (through worsening income inequality)."

Albeit Moses's 10 commandments (Bible, Exodus: 20) do not explicitly prohibit corruption, all religions, deriving from the Bible (or not,) do so. There are contradictory analyses on the relationship between corruption and religion . Patheos, an informative website regarding religions, reported a study by Hamid Yeganeh & Daniel Sauers of Winona State University pointing out that:

"religious societies [like those practicing Islam or Christianity] are hierarchical," where elites' power is being "unchallenged." Patheos added also that "by discriminating between the faithful and unfaithful, [religion] thereby encourages cronyism and nepotism."

The project DIGWHIST started in March 2015 (to run until 2018) by the University of Cambridge will provide more data on state capture and contributions to forming efficient reforms against corruption. As a transitional economy, Romania is challenged by state capture, a feature of weak governance. Firms influence policies; politicians receive monetary support. The regulatory burden on firms must be lighter because a climate of excessive or poorly implemented regulation opens the door for corruption among the public officials called to implement and verify the regulations. Moreover, there are little incentives for firms to report bribery. And if firms are reluctant to bite the hands that feed them, fiddling politicians and administrators can only reinforce debilitating effects of corruption, whose tentacles cause harm.

Corruption generates social inequalities. MSI outlined concerns about

"the important societal consequences of corruption: a decline in the standard of living and worsening of the distribution of income."

An equitable administration of laws is thus jeopardized. Because the incorrect application of social justice causes situations where one obtains favors as a function of one's wealth or entourage. At the end of the journey, inequality is reinforced.

The more free a country is from corruption, the higher its chances of prosperity (Figure 3.) This background of weak control of corruption concurs with the data from indexes of freedom. In 2014, Romania's score was of 37.7% while Germany's score was of 86.1%.

Figure 3: Rule of Law and Control of Corruption in Romania and Germany relevant to explain Romania's income in comparison with others

The election of President Klaus Iohannis against Victor Ponta captures the zeitgeist of Romanian public opinion opposing corruption. They want greater transparency and accountability for the political life and the public administration (MSI). Indeed, one of the most trusted institution Romanians have is the National Anti-corruption Directorate (DNA.) In 2014, the DNA secured convictions of 1,138 people, including 24 mayors, five members of parliament, two ex-ministers and a former prime minister, Adrian Nastase. Most of them led to convictions. Pres. Iohannis won on an anti-corruption campaign. Romanians were bolstered in a similar way by Traian Basescu, Iohannis's precursor, elected on a similar anti-corruption campaign, pledging to root out corruption.

A president anxious to stop corruption, a prime minister hot under the collar due to accusations of corruption, and a DNA in hot pursuit of corruption lets no doubt: newspapers are to be poised for more action of corruption in Romania.

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