While corruption clearly has damaging effects, it is fundamentally important for reformers to bear in mind that corruption is a symptom of underlying institutional imbalances. These include subordinate judiciaries and audit systems, perverse incentives in the civil service, weak civic institutions, and skewed relationships between government and the private sector.

In many transition countries, corruption is "path dependent"; that is, it represents the continued mingling of state and enterprise interests and decision-making through non-transparent channels of personal influence, both of which were prevalent under the Communist system. That system also left a legacy of state dominance and feeble civic organization. Moreover, the economic, administrative, and political changes associated with the transition of the past 12 years have created additional incentives for corruption, including falling wages and morale of public servants and weak administrative taxation systems.

What is to be done? Speakers at the Sofia conference reported the strategies they have developed to address corruption, and their attempts to implement reforms.

H. E. Mikheil Saakashvili, then the Georgian minister of justice, listed three core components of the transition that facilitate corruption: the wholesale revision of legal and regulatory systems, the massive redistribution of assets, and the absence of countervailing institutions. Under these conditions, corruption tends to build and sustain the rule of oligarch groups, especially through their undue influence on state policy processes and control of the media.

This suggests that fighting corruption must be an integral part of building an accountable government. In general, corruption in industrial countries can be reduced by an effective and transparent state administration coupled with an active civil society. Georgia has made some progress on this front, with its reform of the judiciary to require qualifying exams, and establishment of an open public register of income declarations by government officials (see box).

Other speakers gave additional examples of policy changes that help combat corruption, such as improving financial audits (Hungary), abolishing compulsory foreign trade permits (Yugoslavia), and reforming customs valuation (Bulgaria). Many speakers also stressed the importance of external forces, such as ratification of the OECD convention and the run-up to EU accession—including the adoption of harmonized legislation—as providing helpful incentives for countries in the region to address corruption seriously.

Speakers from Albania and Bulgaria each referred to the financial crises in their countries during the 1990s, and stressed the linkage of those crises to corruption. They also suggested that the weakness of the media played a significant role in perpetuating systemic corruption in both countries. Boiko Todorov, coordinator, Southeast European Legal Development Initiative Coalition 2000, Bulgaria, suggested that organized crime and trafficking, key factors generating corruption in the Balkans, arise from that region’s instability and underdevelopment. A regional approach is therefore needed to address corruption effectively.

Gyorgy Satarov chairman, Indem Foundation, Russia, presented a brief analysis of data from the World Bank’s study Aggregating Governance Indicators. The data suggest a non-linear relationship between the progress of transition, on the one hand, and of state capture on the other. The two advance in linear fashion until a mid-point of instability, where, in the successful countries, state capture declines as the transition advances, but in the unsuccessful cases, state capture continues to increase while the transition’s progress is reversed. The latter trajectory seems to involve another form of capture, "business capture," in which officials gain control over private firms to extract rents.

Boris Begovic, chief economic advisor to the deputy prime minister, Federal Republic of Yugoslavia presented a survey from Serbia that found that multiple bribing of officials by respondents was prevalent, that bribers normally receive the services they have "paid for," and that both the share of turnover and of senior officials’ work time devoted to corruption are substantial. The core anticorruption strategy in Serbia should be deregulation, and therefore elaborate strategies and anticorruption commissions would be unnecessary, Boris Begovic suggested.

To sum up, corruption has clearly became a high priority item on the reform agenda of both governments and civic organizations. Understanding of the causes, mechanisms, and consequences of corruption is advancing as studies proceed across the region.