Is Corruption Always Bad?

Corrupt Money

Corruption is generally vilified as an unmitigated evil. It disenfranchises the poor, weakens public services, reduces investment, and holds back whole societies. And yet, in some instances, corruption can actually be very useful, lubricating business in a way that promotes growth, creates jobs, helps smooth the introduction of needed reforms, and reduces poverty.

What explains this paradox? Continue reading

“He Doesn’t Steal, But Money Sticks to Him”

Mexico, like many places around the world, has numerous immensely imaginative one-liners to characterize corruption. Here is a sample:

  • “El que no transa, no avanza” (“Whoever doesn’t trick or cheat, gets nowhere”)
  • “No roba, pero se le pega el dinero” (“He doesn’t steal, but money sticks to him”
  • “Fulano de tal es honesto, pero honesto, honesto, honesto, ¿quién sabe?” (“So-and-so is honest; but honest, honest, honest, who knows?”
  • “Político pobre, pobre político” (“A politician in poverty is a poor politician”)
  • “No les pido que me den, sólo que me pongan donde hay” (“I am not asking for money, just to be appointed where I can get some”)
  • “Vivir fuera del presupuesto es vivir en el error” (“To live outside the federal budget is to live in error”)
  • “Amistad que no se refleja en la nómina no es amistad” (“A friendship that is not reflected in the payroll is no friendship at all”)
  • “Con dinero baila el perro, si está amaestrado” (“Properly paid and trained, a dog will dance”)
  • “No les cambies las ideas, cambiales los ingresos” (Don’t bother to change their ideas, just change their incomes”)

Source: Manana Forever?: Mexico and the Mexicans

Gloom and doom at the Security Council

Syria is slipping further into chaos.  It’s sad to think that the Security Council has been debating the situation there for almost half a year to no effect.  Or, to be more accurate, the only effect has been to make lots of diplomats very unhappy, as I explain in the new edition of Pragati:

It’s hard to find a happy diplomat at the United Nations Security Council these days. Western officials grumble about the difficulty of negotiating with India, Brazil and South Africa (the IBSA countries) over the Syrian crisis, to say nothing of China and Russia. The non-Western powers, they suspect, are all plotting to frustrate the U.S. and Europe.

Piffle, reply the supposed plotters. The bleak mood in the Council is a result of the West’s distortion of the UN mandate to protect civilians in Libya. If NATO hadn’t used that as a basis for regime change, there might be real cooperation over Syria. Even the unhappiest European officials accept that other powers’ anger over Libya is genuine.

Does anyone gain anything from the stalemate? Russia arguably does. Earlier in the year it failed to halt Western interventions in not only Libya but also Côte d’Ivoire. As Russia’s main claim to leverage at the UN is its willingness to act as a spoiler, these set-backs made it look a shadow of itself. On Syria, its blocking power returned as it resisted – and in October vetoed – EU and US efforts to pass a resolution sanctioning Syria.

For China, the benefits have been less clear, as it prefers to look pragmatic on the Security Council. Nonetheless it felt obliged to side with Russia over Syria. But the real losers have been the IBSA countries, which have often looked trapped between the West and the Russo-Chinese axis as they have tried to respond to events in the Middle East.

But at least IBSA has emerged as a semi-credible diplomatic force in UN affairs, right?  I’m not so sure:

The fact that IBSA voted as a bloc can be interpreted as a success – it is generally recognised that the trio of powers have been significant swing voters in the Security Council this year. But this may only be a temporary phenomenon. Brazil is approaching the end of its two-year term on the Council, and South Africa continues to have a greater stake in acting as the leader of the African bloc than in aligning with India. IBSA’s brief moment of importance in the Council could soon be forgotten, and India’s leverage duly reduced.

Why inequality matters

 

Whatever else the Occupy protests (over 900 at the last count), have done, they have propelled the issue of inequality on to the front pages and into the political mainstream.  The idea of the ‘99%’ is brilliantly simple, pulling together every group and every person who has a nagging sense that they are losing out in the global economic race while others pull ahead out of sight.  

The case the protestors are putting basically an ethical one.  A world where the majority of the benefits of growth go to the few while the costs of failure, whether in the form of bank bailouts, of redundancies, or of cuts to public services are borne by the many is not, it seems, one that an increasing number of people want to live in any more. 

 If that fails to convince, there are other more prosaic reasons to care about inequality too. Inequality, at least at high levels, does matter to growth, to poverty, and to stability.  Here are five good reasons, drawing from recent economic research, for politicians to care about – and act on – inequality.

 One, inequality contributed to the financial crisisDebate rages about how much.  But it does seem clear that when real wages for the middle and working classes aren’t rising, as they weren’t in America for much of the 1980s and 1990s, and when aspirations are rising rapidly, partly because of the impact of the lifestyles of the super-rich whose incomes are heading North at a rapid rate, and when credit is cheap (thanks to the mega-profits being made in China due partly to low wages and growing inequality there), then an unsustainable credit bubble is only the click of a Wall Street button away. 

Two, (some) inequality is bad for economic growth.  This is one that economists have been arguing about for years.  But it’s clear that some inequalities – in access to education, to credit, to land in agricultural societies – are bad for growth, since they mean that the skills, energy and ideas of a large part of the population are being underused.  As growth becomes more about human capital and less about land and machines, this will only become truer. Inequality can also make growth less sustainable (in an economic sense), and make episodes of growth shorter than in more equal societies. Continue reading

Syria: the Security Council in flux

It now looks like the Security Council will vote on a (still too weak) resolution demanding the end of the Syrian crackdown today or tomorrow.  Russia is still bad-mouthing the proposal, drafted by the Council’s European members, but other powers are lining up to back it.  Brazil – previously numbered among opponents of a resolution along with China, India and South Africa – looks like it’s on board:

In a joint statement issued the same day European nations were to seek a vote on a UN Security Council resolution condemning Syria’s crackdown on protests, EU leaders and visiting Brazilian President Dilma Roussef said the two sides “expressed grave concern” at the current situation in Syria.

“They agreed on the need to continue urging the Syrian authorities to put an end to the violence and to initiate a peaceful transition to democracy.”

The well-informed David Bosco predicts that India and South Africa will also vote for the resolution, although the Indians were fighting a rearguard action against it last week.  He thinks that China and, in the end, Russia will abstain.  Meanwhile, Turkey is giving the resolution full support from outside the Council:

Turkish Prime Minister Recep Tayyip Erdogan voiced support for the proposed UN resolution and said he would soon announce sanctions on the neighbouring country.

“The draft resolution before the council today is in the nature of sending a warning. We hope there will a positive outcome of this vote and that there will then be further discussions about whatever further steps need to be taken,” Erdogan told a news conference during a visit to South Africa.

The political picture could change again before the vote, and it can’t be repeated too often that the EU’s resolution has been watered down a lot , with a threat of sanctions reduced to near-invisibility.  But I think that this episode underlines the point Franziska Brantner and I made in our recent update on human rights and the UN for ECFR: many non-Western powers, especially rising powers like Brazil, want to distance themselves from Russia’s obstructionism in UN debates.  Even China is ready to step away from the Russians, as it did over Côte d’Ivoire.   As we noted in our paper, and I repeated here last week, this opens up the EU’s options for coalition-building in New York.  It looks like the EU is finally finding ways to use those options…

Aid 2.0: What does aid look like with drastically fewer poor countries?

There’s a new paper out from the Washington-based Centre for Global Development, on the ever declining number of poor countries.

Moss and Leo estimate that more than half of the 68 countries currently eligible for concessional World Bank lending (under the IDA -the International Development Association) will ‘graduate’ by 2025.

Most (80%) of the remaining countries eligible for concessional World Bank lending will be sub-Saharan African countries (25 of 31). The only non-African countries will be Afghanistan, Bangladesh, Myanmar, Nepal, Haiti, and Timor-Leste. Countries currently defined as fragile will account for sixty percent (18 of 31 countries) of the countries.

In a recent post one of the authors, Todd Moss suggests that aid agencies as currently orientated are not ready for the world of non-aid tools and global public goods that flow from the decline in poor countries, new donors and weak public support for large increases in aid budgets (UK aside maybe).

I couldn’t agree more – and as they note the implications for the aid system are enormous.

Continue reading

Are you ready for MDGs 2.0?

The UN this week announced a June MDG review meeting in Tokyo. This is the conference that Japanese Prime Minister Naoto Kan at the MDGs Summit proposed that Japan convene in 2011 (see page 4, paragraph 1 of his speech).

One thing it may or may not discuss (depending on who you speak to) is what might replace the MDGs in 2015 which is likely to be one of the big global development policy debate of the next few years.

At the MDG summit last September the outcome document requested the President of the UN general assembly to organise a ‘special event’ in 2013 ‘to follow up on efforts made’. However, it is not yet clear exactly what this will mean. The outcome document also mandated the UN Secretary General to initiate a consultation process of what would come after 2015, and to recommend in his annual reports ‘further steps to advance the United Nations development agenda beyond 2015’.

It is possible though that there will be neither an agreement on any post-2015 framework nor an extension of the current MDGs.

Not surprisingly, the subject of what a new global framework might look like in detail is really starting to bubble up in debates.

The NGOs via GCAP are already discussing MDGs 2.0 and there was a workshop at the World Social Forum recently and blog convened by the UK NGOs. UNDP’s Helen Clark has it on her radar in a recent interview as does UNDP assistant SG, Olav Kjorven at UNDP in comments on a Guardian blog.

There’s also a global group convened by the International Red Cross and the Centre for International Governance Innovation (CIGI), a recent Lancet Commission report and one by International Alert and papers by MDG architects such as the former chair of the OECD DAC, Richard Manning and former UN official, Jan Vandemoortele (and a set of papers from a Brussels Forum on the ‘MDGs and Beyond’) as well as work at the Center for Global Development (for example, here in Global Policy, and here), a symposium at Harvard and – launching soon – CAFOD’s work on Voices of the South on the MDGs and post-MDGs.

Continue reading