To Short-Circuit Populism, Start by Fighting Corruption

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Tuesday, August 8th, 2017

By Jeremy D. Rosner

This article appeared on HuffPost August 7th, 2017. See it here

Around the world, concerned citizens and leaders are looking for ways to push back on the populist wave that threatens to wash away progressive priorities, such as compassionate treatment of migrants, rights for ethnic and religious minorities, and more integrated global responses to trade, climate change, and other transnational challenges. The Brexit vote, the Trump victory, the rise of illiberal regimes in Hungary, Poland and Turkey, the strong results for far-right nationalists in France, the Netherlands, and elsewhere – all these raise the question of what can be done to ease the anger and distrust that voters appear to be feeling worldwide.

Given that imperative, one major solution oddly continues to get short shrift: a stronger global fight against corruption. It is one of the most important things world leaders could do today to improve living conditions, reduce growing wealth and income inequalities, and restore trust in public institutions.

Voters are plenty focused on the problem. According to Pew and Gallup, corruption is a top concern worldwide. And recent country-specific studies – from the US, to the EU, to Mexico, to Russia, to China, to India, and many other countries – all show high public outrage over national corruption.

Voters’ outrage makes total sense. The Panama Papers revealed how aggressively the world’s ultra-wealthy and ultra-criminal elements use secret accounts to hide and shield their riches. The Odebrecht scandal, which has touched a dozen different Latin American countries and contributed to an impeachment in Brazil, involved hundreds of millions of dollars in bribes in the region, in order to help the company get billions in construction projects. All told, the World Economic Forum estimates that the cost of corruption could equal 5% of global GDP; today, that would mean as much as 3.7 trillion dollars stolen from average citizens around the world each year.

This isn’t only a moral offense. Global corruption is a major factor dragging down living conditions – and therefore driving up public outrage and susceptibility to populist rants. According to the World Bank, government corruption drives up tax evasion, undermines efforts to reduce poverty while increasing income inequality, distorts decision-making in public projects, encourages inefficiency in the private sector, wastes human resources, scares away investors, delegitimizes government institutions, and fuels other kinds of crimes.

The policy solutions for corruption depend on the individual structures and problems in each country; to paraphrase Tolstoy, all corrupt countries are corrupt in their own ways. But our work in global elections suggests there are overarching tactical and communication strategies that leaders around the world can successfully adopt in the fight against corruption. Up to this point, populist leaders have often been the quickest to use these. But there is no reason mainstream parties and leaders should cede this ground to the anti-systemic; if progressive leaders truly want to bring economic prosperity to more of their people, they need to tackle corruption head on. A few points of advice on doing so:

Start where citizens are; sequencing and coordination matter. There is no silver bullet when it comes to the fight against corruption. For example, some analysts call for increasing wages for public sector employees to fight corruption. Sometimes that is the right step; but it may not automatically lower the flow of bribes if other powerful interests are present. In Pakistan, for instance, the Swiss Agency for Development and Cooperation found that wage raises had no effect in the country’s problematic forestry sector. Rather, despite their higher salaries, officials were still able to extract extra fees on the promise of preferential service to well-funded elites.

In addition, leaders must prioritize which actions should come first, depending on the country’s specific problems. Governments that are too large may lower their rates of corruption by shrinking in size and eliminating bureaucracies. If the problem is high-level corruption, where certain functionaries are building vast wealth, the aim should be to lower gains from corruption. In the case of Odebrecht, this could mean applying oversight to bidding on projects that exceed a certain cost.

Sequencing is also a communications issue. Donald Trump, for all his faults, knew this. Before he promised to Make American Great Again, he told voters he understood how the system works. The early days of the Trump campaign focused on his background as a businessman, suggesting he did not need to enrich himself through politics or public office. He regularly bragged about his own campaign contributions to both sides (including to Hillary). Trump knew that corruption and dirty money can be an entry point to dissatisfied voters. Few moderate candidates start here, but leading with a harsh critique of a corrupt or compromised system may help to reach disaffected voters and take some of the wind out of the populists’ sails.

Bold moves to make progress and signal seriousness. Some problems require a more absolute approach. Where corruption is endemic, variations on shock therapy may not only be needed, but welcomed by weary publics.

In India, with a large informal economy, Narendra Modi won the 2014 election with a promise of anti-corruption efforts to promote economic growth and development. He took dramatic steps with the process of demonetization, promising to remove “dark money” from the Indian economy and push out corrupt dealings. This required all Indians to deposit their 500 and 1,000 rupee notes into bank accounts or exchange for smaller bills. It may still be too soon to tell how effective the measure was, and there is much about Modi’s policies and politics that is worrisome, but early polls suggest Indians, despite the massive inconvenience and in many cases lost savings, may reward Modi for his bold actions. Eliminating bank notes may have been costly or time consuming for many of Modi’s constituents, but in doing so, he declared to voters that he takes anti-corruption seriously.

Another example is the Republic of Georgia’s former president Mikheil Saakashvili. In 2005, Saakashvili fired the entire traffic police force (and then pursued selectively rehiring) as a precondition to breaking the back of corruption. The move not only showed he was serious about fighting corruption, but it ensured that a post-Soviet era culture of extortion and bribe-taking was not passed down to new recruits, who would now be receiving training from US agencies. The action, as well as its symbolism, was key in restoring public trust in one of the most influential sectors of Georgian society.

Institutional strengthening. In many cases, increasing transparency and reinforcing the judicial system is crucial to combat the sense of impunity that invites rent-seeking and outrages average voters.

In Nigeria, PM Muhammadu Buhari observed how lawyers managed to undermine the judicial process, due to weak criminal procedures and poor communication between institutions. Buhari limited the use of appeals in criminal trials, increased coordination among judicial institutions, and allowed for a faster start to substantive trials. This was a move in the right direction, but despite increased coordination, a lack of protocols for competing institutions specializing in prosecuting corruption has slowed down implementation.

A free and transparent media also plays a large role in ensuring those elected to office are held responsible; by increasing reputational penalties, the cost of corruption for public officials significantly increases. Social media and other new communications technologies can make this easier than before. This week, audio of a former Odebrecht executive was leaked, suggesting that Ecuador’s Vice President Jorge Glas requested bribes from contracting companies on numerous occasions. Despite an unbalanced media environment in Ecuador, the scandal rapidly spread online. President Moreno’s campaign promise to perform “surgery” on corruption was put to the test, and he stripped Glas of all authority as VP.

The remedies will be different in each place. But mainstream leaders who want to get ahead of the populist surge, and show concern for the well-being of their publics, would do well to make anti-corruption a higher priority.

(Greenberg Quinlan Rosner VP Jessica Reis and Assistant Analyst Martin Molina contributed to this article.)