The Balkans in Europe Policy Advisory Group
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BiEPAG BLOG

Corruption in the Balkans and EU Membership

(Photo: Alan Levine)

As indicated by regular reports and rankings published by Transparency Intenational, most countries are confronted with significant levels of corruption. The costs of corruption are manifold: it weakens democracy, contributes to social inequalities, and impacts negatively on investments and economic growth. The case of the Balkans is most interesting because it shows that EU membership is not a cure against corruption; it also underlines that the rationale for delaying talks on EU accession must go beyond corruption and eventually consider its linkages with international crime and the capacity of candidate countries to comply with EU rules.

Table 1: Corruption Perception Index / CPI – 2018

Countries Index Rank Standard error No. of sources Upper limit Lower limit
EU members
Denmark 88 1 2.63 8 92 84
Bulgaria 42 77 2.41 10 46 38
Romania 47 61 3.25 10 52 42
Greece 45 67 2.51 8 49 41
Non-EU members
Albania 36 99 1.65 8 39 33
North Macedonia 37 93 3.38 7 43 31
Note: the higher CPI, the lower corruption.
Source: Transparency International (TI).

 

THE MEANING OF CORRUPTION

Corruption corresponds to various dishonest and illegal practices by those who have power in public administration and political spheres. Very often it corresponds to bribery, extorsion, nepotism and clientelism. It can be associated with the restriction of competition by limiting the number of suppliers in specific sectors, with the use of regulations or high trade barriers. Corruption may lead to the so-called capture of the state by a few and well-connected families, relying sometimes on very repressive and powerful entities such as intelligence services, the police or the armed forces – this corresponds to high level corruption; petty corruption is observed at the lower levels of public administration. In countries where corruption prevails, there can be pressures on the media and killing of investigative jounalists.

THE HIGH COSTS OF CORRUPTION

Studies show that corruption may hinder both foreign and domestic investments in productive sectors and, as a result, it affects negatively growth; corruption restricts trade and may not support the diversification of the economic base in many countries, often dominated by energy sectors and primary commodities; it promotes the underground economy, reduces taxes and affects state expenditures. Moreover, limiting competition increases and distorts prices. Most importantly, there is a connection between corruption, the extent of poverty and income inequality. Corruption also weakens democratic rules and strengthens authoritarian regimes. In some cases, corruption may have implications in terms of international security.

COUNTRY CASES

EU members. The cases of Romania and Bulgaria are interesting because of their EU membership and regular information published by the media, reporting corruption at different levels of the administration and political spheres. Considering Romania, the cost of corruption could represent more than 15% GDP. According to Eurobarometer, 68% of the Romanian citizens indicate that they are affected by corrupted practices on a regular basis, in their daily life. This represents the highest level in the EU. In fact, Romanian EU membership was delayed because of poor governance, including corruption. When the country joined the EU in 2007, together with Bulgaria, it was assumed that it would strengthen the rule of law, the anti-corruption legal framework and judicial independence – little was done indeed. In Bulgaria, pervasive corruption creates an atmosphere of impunity, it even weakens property rights and deters investors. In other words, poor practices seem to be self-reinforcing and allow the corrupted elites – the judicial system, the police, public services, the land administration, taxation bodies, customs, public procurements agencies – to capture a significant share of incomes and wealth. Here also, EU membership does not represent a strong anchor in terms of good governance. In that context, it is worth reporting conditions in neighboring Greece, where corruption is slowing down or impeding the recovery process and the fight against unemployment and poverty. Thus, corruption and bureaucratic inefficiency amount to a tax on all firms that operate in Greece’s formal sector. The tax is especially onerous for start-ups and foreign firms that would like to invest there.

Non-EU members. Recently, France opposed the start of accession talks between the EU and two Balkan countries – Albania and North Macedonia. The French position was supported by Denmark and the Netherlands. Considering the French stance denouncing the lack of significant progress with key-reforms, it is worth reviewing corruption in both Albania and North Macedonia.

Albanian mafias dominate drugs trafficking in some EU countries. Despite offical claims, such a prominent role seems to be facilitated by the extent of corruption in the home country. Thus, customs administration is most crucial in the fight against transborder criminal actvitites and, in the case of Albania, corruption is a very high risk for businesses dealing with Albania’s customs administration. Bribes and irregular payments are frequently exchanged when importing and exporting, and transparency at the borders is poor. Similar governance conditions prevail in North Macedonia, where abuses of official positions have been reported and led to recent actions – last June, the former Minister of Transport and Communications was finally arrested for embezzlement with state property.

A culture of corruption. Despite its high costs and the opposition of civil society, pervasive and long lasting corruption may eventually contribute to the making of a deeply rooted culture of corruption characterized by general submission to poor governance – seemingly powerless citizens may just surrender and be ready to comply with, for instance, bribing practices because they do not recognize other ways to deal with the administration when they need access to public services (e.g. for health, education or construction permits). As indicated by studies on specifc cases, a culture of corruption implies that future intentions and actions are highly positively correlated with past ones. As a result, decisive actions against corruption require adequate means and strong support from places where good governance is the rule.

Final remarks: Addressing corruption

National versus international levels. Corruption can be addressed at national levels; however, given the important role of the judiciary and the police in the fight against criminal practices, in some countries, not much should be expected from state bodies that are themselves perceived as very corrupted. Subsequently, much importance must be given to the international level, especially in the EU, where some members are seen as reference models in the fight against poor practices – as indicated by TI rankings, the Nordic members of the EU (Denmark, Finland and Sweden) are leading the fight against corruption and it is essential to understand the key-roots of their success in terms of good governance, and benefit from their experience and advice. Such an approach is favoured by leading experts in the field of governance, not rejecting also the principle of ‘subsidiarity’ that was promoted by EC President Jacques Delors.

The complex interface between international crime and corruption in some places must be studied further. The existence of tax havens must be questioned, and the role of international banks and private banking must also be evaluated. Money laundering is another issue which could perhaps be connected with the acquisition of real estate and contamination risks in good governance countries.

EU support as priority. Moving toward the EU can be combined with specific projects, including technical assistance to strengthen governance. Such projects do exist. However, more can be done. In that respect, the ‘Nordic models’ should be studied carefully to draw valuable lessons that may matter for both EU members (Romania and Bulgaria, and others also) and countries like Albania and North Macedonia. EU institutions should also be strengthened and be allowed to put more pressures on member states. Following the experience of OLAF (The European Anti-Fraud Office), new bodies could even be created, within the framework of a clear vision about what must be achieved. Other international institutions must be fully mobilized, in particular the Council of Europe Anti-Corruption Group (GRECO), with its peer reviews and recommendations. The OSCE is important with its Anti-Corruption Platform for Southeastern Europe, Ukraine and Moldova, and a valuable Handbook on Combatting Corruption. The OECD, the IMF and the World Bank are also key-actors in the field of governance.
The role of citizens. Above all, civil society and the electorate must be supported directly and fully mobilized to denounce evil practices in the administration and force politicians to change their values and actions. E-governance must be developed further to improve transparency with information on incomes and assets owned by civil servants and politicians, and multiply direct contacts between the people and anti-corruption offices, at national and EU levels. Digital resistance must gain strength also.

Following the example of ‘direct democracy’ in Switzerland, the citizens must be allowed to initiate referendums and adopt new legislation against what is perceived as wrong doing in administrations and political spheres. Curriculum and education programmes in schools and universities must be used to promote a culture of participation in public affairs, democratic control and good governance.

Assessing the French hard stance. Considering the figures provided in Table 1 on perceived corruption, the distance between EU members and non-EU members is not that big. Such a view is supported by factual evidence. In other words, findings would not support the French position. Nevertheless, to be more conclusive, as already mentioned, there should be further investigation on possible linkages between international crime and corruption. In addition, beyond the fight against corruption and crime, strong capacities and good governance must be developed to meet the obligations created by EU membership – which requires adequate means and technical assistance.

Daniel Linotte

Daniel Linotte holds a PhD in economics from Oxford University. He worked as adviser with international organizations and governments, and held teaching positions at Boston University, the Catholic University Leuven and the European Institute of Public Administration (Maastricht). Since 2008, he is a Senior Member of St. Antony’s College (Oxford). He is presently leading an EU project in the Balkans. He is the author of “The Eurasian Economic Union – Implications for Governance, Democracy and Human Rights”, The Central Asia Caucasus Analyst, publication of the Central Asia-Caucasus Institute & Silk Road Studies Program, a Joint Transatlantic Research and Policy Center affiliated with Johns Hopkins University's Nitze School of Advanced International Studies, Washington DC., and the Institute for Security and Development Policy, Stockholm.
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