Complex Made Simple

Staring at the root causes of corruption in the MENA region

It's going to take more than street protests to root out corruption

Corruption does not concern itself with national boundaries – it can be unearthed anywhere Corruption, bribery, theft and tax evasion, and other illicit financial flows cost developing countries $1.26 trillion per year 90% in Algeria, 87% in Iraq, and 81% in Lebanon do not trust their government

A wave of protests is sweeping the MENA region, and the reasons are vocally stated out loud: corruption, bad governance and pillage of state funds. It is no wonder few if any of the MENA countries are able to engage competitively and efficiently in the global economic landscape. 

We start with a World Economic Forum report. 

Corruption costs developing countries $1.26 trillion every year, yet half of EMEA think it’s acceptable, started a WEF report.

Corruption takes many forms. It is often thought of as a problem that mostly affects developing countries. But while the harm it does is magnified in poorer nations, corruption does not concern itself with national boundaries – it can be unearthed anywhere.

At the 50th World Economic Forum Annual Meeting in Davos next month, Founder and Executive Chairman Klaus Schwab will launch the Forum’s Davos Manifesto. At its heart is a call to fight corruption.   To mark International Anti-Corruption Day 2019, here are a few examples of corruption around the world, as identified by Transparency International.

Read: Lebanon economy: The true face of corruption in infographics and numbers

1. Across the EMEA region (Europe, the Middle East, and Africa) and India, almost half of all workers think bribery and corruption are acceptable if there is an economic downturn.

2. Corruption, bribery, theft and tax evasion, and other illicit financial flows cost developing countries $1.26 trillion per year. That’s roughly the combined size of the economies of Switzerland, South Africa and Belgium, and enough money to lift the 1.4 billion people who get by on less than $1.25 a day above the poverty threshold and keep them there for at least six years.

3. The Transparency International Corruption Perceptions Index scores 178 countries on their degree of corruption – 10 is the cleanest possible, and 0 indicates endemic corruption. In 2010, around ¾ of all 178 scored lower than five. 

A New Arab Spring? 

A new wave of Arab uprisings suggests that the authoritarian bargain of the past may be collapsing.

Algerians, Iraqis and Lebanese citizens have continued to protest for weeks, demanding an accountable government and an end to corruption, turning the streets into places of mass protests and ongoing confrontations between angry citizens and their governments.

According to the Arab Barometer,  90% in Algeria, 87% in Iraq, and 81% in Lebanon do not trust their government. 

Read: 15 months post Saudi corruption crackdown, campaign moves to penalty phase  

The 2018 Corruption Perceptions Index shows most countries in the region failing to make inroads against corruption.

“The current wave of protests against government corruption cannot be separated from suppressive state control and a broken social contract between states and their citizens,” says Kinda Hattar, Regional Advisor for the MENA region at Transparency International

Bloomberg: Corruption not the issue

Corruption is not the root of the Arab world’s problems, writes Bloomberg.

It said the real sin of ruling elites is not the capture of state resources, but failing to create enough.

There is little doubt that corruption is a principal motive behind the wave of protests sweeping through the Middle East and North Africa.  

“MENA countries have problems in producing economic value for distribution to start with. Most have rentier economic structures, with little ability to develop productive sectors that can compete globally while creating high-quality jobs and hence achieve inclusive growth,” said Bloomberg.

“This rentierism is one of the causes rather than effects of corruption and patronage in natural resource-rich countries like Iraq and Algeria and secondary rentier economies such as Lebanon,” Amr Adly, assistant professor at the American University in Cairo, wrote for Bloomberg.

Given the heavy dependence of these economies and states on rents, incumbents enjoy considerable autonomy from their citizens. They also have the resources to establish narrow coalitions of cronies and clients in order to keep them in office, either through some facade of ethno-sectarian democracy, as in Lebanon and Iraq, or on much more explicitly authoritarian terms, as with the rest of MENA.

Adly also blames IMF and World bank policies for region’s corruption 

“The implementation of rounds of austerity under the auspices of the International Monetary Fund and the World Bank have cut public investment without replacing it with private ones. In fact, much of the deplored corruption was the result of World Bank-sponsored privatization of state-owned assets.”