FEATURE STORY

Tackling Corruption in Fragile States

December 15, 2015

Image

Children in Gaza.

Natalia Cieslik/World Bank

STORY HIGHLIGHTS
  • The World Bank Group and others are seeking new ways to confront a frequent problem for fragile states – corruption.
  • A panel of experts explored the close ties between insecurity and corruption and offered solutions.
  • Bribes, fraud, cronyism, the misappropriation of natural resources, and other forms of corruption are core barriers to development and can even foment political violence.

Some 1.5 billion people live with conflict and violence every day.

An estimated 19.5 million refugees are trying to escape these conditions, as are 38 million people who are displaced within their own countries.

Facing these statistics, the World Bank Group and others are seeking new ways to confront a frequent factor in “fragile” states – corruption.

A panel of experts explored the close ties between insecurity and corruption and offered solutions at a special event at the World Bank, “Corruption in Fragile States: The Development Challenge.”

Bribes, fraud, cronyism, the misappropriation of natural resources, and other forms of corruption are core barriers to development and can even foment political violence, they said.

Corruption also poses big costs – countries lose an estimated $3.1 trillion (5.1% of the world’s GDP) because of tax evasion. Illegal logging amounts to some $30 billion to $100 billion. About 10 to 30% of the value of publicly funded infrastructure is lost to corruption. One in seven transactions involves a bribe, according to a recent survey of businesses in 127 countries.

Shanta Devarajan, chief economist of the World Bank’s Middle East and North Africa region, said not all corruption involves bribes and fraud, and economic indicators may not reveal it.

Quiet corruption” in Tunisia prior to the Arab Spring favored allies of then-leader Ben Ali. The result was the protection of industries and monopolies. “No jobs were created for 20 years,” said Devarajan.

He said the spread of ISIS has occurred partly because governments lost their legitimacy in the eyes of young people.

“We must be very vigilant in tracking all corruption even when money doesn’t change hands,” he said.

R. David Harden, USAID’s mission director for the West Bank and Gaza, said fragility is historically a driver of conflict and “de-development” and added that “Our fundamental goal should be to open up markets for the benefit of all.”

“If the country won’t open up opportunity, donors can go elsewhere,” said Harden. “We must be willing to walk away,” with the exception of responding to humanitarian crises, he said.

Jan Walliser, the World Bank Group’s vice president of Equitable Growth, Finance, and Institutions, said with such a large number of people living in fragile areas, poverty will persist “unless we address their problems.”

“We need to find strategic ways to combat corruption in fragile states,” said Walliser.


" We must be very vigilant in tracking all corruption even when money doesn’t change hands. "
Shanta Devarajan, Chief Economist, Middle East and North Africa

Shanta Devarajan

Chief Economist, Middle East and North Africa

One option is working directly with non-government organizations or civil societies, said Daniel Kaufmann, president of the Natural Resource Governance Institute. “We can be more selective about who we engage with.”

Bangladesh successfully turned to NGOs and donors to deliver public services when it emerged from conflict in 1971, said Devarajan.

Citizens have played a key role in anti-corruption success stories in places such as Afghanistan, Bangladesh, and Guatemala. But the real test is whether progress is sustainable, said Melissa Thomas, a political economist and author.

She raised the question of whether development institutions should look at corruption differently.

“By condemning corruption, are we making it impossible for the poorest governments to govern?” she asked.

Some governments that do not have enough money to provide services and goods have turned to patronage and other strategies to cope, including allowing the civil service to charge for services, said Thomas. “If that’s the case, let’s see it regulated rather than lumped in with criminology.”

Galina Mikhlin-Oliver, the director of Strategy and Core Services for the Bank Group’s Integrity Vice Presidency, said the event was an opportunity to explore new approaches and learn from failure.

“We need to find out what we can do differently to be more successful in these environments, because the money is very scarce and the situation is pretty dire,” she said.

One option is working directly with non-government organizations or civil societies, said Daniel Kaufmann, president of the Natural Resource Governance Institute. “We can be more selective about who we engage with.”

Bangladesh successfully turned to NGOs and donors to deliver public services when it emerged from conflict in 1971, said Devarajan.

Citizens have played a key role in anti-corruption success stories in places such as Afghanistan, Bangladesh, and Guatemala. But the real test is whether progress is sustainable, said Melissa Thomas, a political economist and author.

She raised the question of whether development institutions should look at corruption differently.

“By condemning corruption, are we making it impossible for the poorest governments to govern?” she asked.

Some governments that do not have enough money to provide services and goods have turned to patronage and other strategies to cope, including allowing the civil service to charge for services, said Thomas. “If that’s the case, let’s see it regulated rather than lumped in with criminology.”

Galina Mikhlin-Oliver, the director of Strategy and Core Services for the Bank Group’s Integrity Vice Presidency, said the event was an opportunity to explore new approaches and learn from failure.

“We need to find out what we can do differently to be more successful in these environments, because the money is very scarce and the situation is pretty dire,” she said.

One option is working directly with non-government organizations or civil societies, said Daniel Kaufmann, president of the Natural Resource Governance Institute. “We can be more selective about who we engage with.”

Bangladesh successfully turned to NGOs and donors to deliver public services when it emerged from conflict in 1971, said Devarajan.

Citizens have played a key role in anti-corruption success stories in places such as Afghanistan, Bangladesh, and Guatemala. But the real test is whether progress is sustainable, said Melissa Thomas, a political economist and author.

She raised the question of whether development institutions should look at corruption differently.

“By condemning corruption, are we making it impossible for the poorest governments to govern?” she asked.

Some governments that do not have enough money to provide services and goods have turned to patronage and other strategies to cope, including allowing the civil service to charge for services, said Thomas. “If that’s the case, let’s see it regulated rather than lumped in with criminology.”

Galina Mikhlin-Oliver, the director of Strategy and Core Services for the Bank Group’s Integrity Vice Presidency, said the event was an opportunity to explore new approaches and learn from failure.

“We need to find out what we can do differently to be more successful in these environments, because the money is very scarce and the situation is pretty dire,” she said.

One option is working directly with non-government organizations or civil societies, said Daniel Kaufmann, president of the Natural Resource Governance Institute. “We can be more selective about who we engage with.”

Bangladesh successfully turned to NGOs and donors to deliver public services when it emerged from conflict in 1971, said Devarajan.

Citizens have played a key role in anti-corruption success stories in places such as Afghanistan, Bangladesh, and Guatemala. But the real test is whether progress is sustainable, said Melissa Thomas, a political economist and author.

She raised the question of whether development institutions should look at corruption differently.

“By condemning corruption, are we making it impossible for the poorest governments to govern?” she asked.

Some governments that do not have enough money to provide services and goods have turned to patronage and other strategies to cope, including allowing the civil service to charge for services, said Thomas. “If that’s the case, let’s see it regulated rather than lumped in with criminology.”

Galina Mikhlin-Oliver, the director of Strategy and Core Services for the Bank Group’s Integrity Vice Presidency, said the event was an opportunity to explore new approaches and learn from failure.

“We need to find out what we can do differently to be more successful in these environments, because the money is very scarce and the situation is pretty dire,” she said.

One option is working directly with non-government organizations or civil societies, said Daniel Kaufmann, president of the Natural Resource Governance Institute. “We can be more selective about who we engage with.”

Bangladesh successfully turned to NGOs and donors to deliver public services when it emerged from conflict in 1971, said Devarajan.

Citizens have played a key role in anti-corruption success stories in places such as Afghanistan, Bangladesh, and Guatemala. But the real test is whether progress is sustainable, said Melissa Thomas, a political economist and author.

She raised the question of whether development institutions should look at corruption differently.

“By condemning corruption, are we making it impossible for the poorest governments to govern?” she asked.

Some governments that do not have enough money to provide services and goods have turned to patronage and other strategies to cope, including allowing the civil service to charge for services, said Thomas. “If that’s the case, let’s see it regulated rather than lumped in with criminology.”

Galina Mikhlin-Oliver, the director of Strategy and Core Services for the Bank Group’s Integrity Vice Presidency, said the event was an opportunity to explore new approaches and learn from failure.

“We need to find out what we can do differently to be more successful in these environments, because the money is very scarce and the situation is pretty dire,” she said.