The Good, the Bad and the Ugly:

Controlling Corruption in the EU

Alina Mungiu-Pippidi

Hertie School of Governance

www.againstcorruption.eu

Outline of this talk

Is corruption a problem in Europe?

Is the process of Europeanization capable to change the

governance regime of a country if this is different from

the European norm of integrity?

Consequences of corruption

What makes countries vulnerable to corruption?

Can we build anticorruption policies with demonstrable

impact?

What is corruption?

Abuse of PUBLIC authority resulting in undue PRIVATE

profit

- United Nations Convention against Corruption

Any favoritism from the part of a public authority is

corrupt as it infringes the norm of equal treatment and

entails discrimination

Includes clientelism, bribing, nepotism, profit from conflict

of interest, and so on

But not every fraud, tax evasion are corruption as no

complicity of public authority exists

Our instruments Source and

description

Correlation with

the others

Comparison

across countries

Comparison

across time

Aggregate of expert

scores- World Bank TI-

CPI

Very high with

independent sources

Yes

Possible with

limitations

Yes

No

Expert and business

survey World Economic

Forum -GCR

High Yes Yes

Public opinion surveys-

Gallup CB

Eurobarometer

High on national,

regional, local

estimates

Yes Limited

Quality of government

expert scores- ICRG,

QOG survey

High Yes Limited

0

1

2

3

4

5

6

7

Sw

eden

De

nm

ark

Ne

the

rla

nd

s

Fin

land

Luxe

mb

ou

rg

Ge

rma

ny

Un

ite

d K

ingd

om

Au

str

ia

Be

lgiu

m

Esto

nia

Fra

nce

Cyp

rus

Ire

land

EU

27

Ma

lta

Po

land

Lith

ua

nia

Spain

Po

rtu

ga

l

Slo

ve

nia

Bu

lgaria

Czech

Re

pu

blic

Gre

ece

Hun

ga

ry

Latv

ia

Ita

ly

Ro

ma

nia

Slo

va

kia

Favo

riti

sm

in

dec

isio

ns

of

go

ve

rnm

en

t o

ffic

ials

(!

= a

lwa

ys b

iased

; 7

= a

lwa

ys n

eu

tra

l)

To what extent do government officials in your

country show favoritism to well-connected firms

and individuals when deciding upon policies and

contracts? [1 = always show favoritism; 7 = never

show favoritism]

Government favoritism

(World Economic Forum)

Diversion of Public Funds Due to Corruption

(World Economic Forum)

0

1

2

3

4

5

6

7

Sw

ede

n

De

nm

ark

Fin

land

Lu

xe

mbo

urg

Ne

therl

and

s

Un

ite

d K

ing

dom

Germ

any

Austr

ia

Irela

nd

Fra

nce

Belg

ium

Cypru

s

Esto

nia

Ma

lta

EU

27

Pola

nd

Port

ug

al

Spain

Slo

ven

ia

Lithu

ania

Ita

ly

La

tvia

Ro

man

ia

Gre

ece

Hu

nga

ry

Bulg

aria

Czech R

epu

blic

Slo

vakia

Div

ers

ion

of

pu

blic f

un

ds

(1=

very

com

mon; 7=

never

occurs

)

02

04

06

08

0

Pe

rce

nta

ge

of

ag

ree

an

d m

ostly

ag

ree

(su

m)

(1-4

wh

ere

1=

tota

l a

gre

e a

nd

2 m

ost

ly a

gre

e)

Rom

an

iaG

ree

ce

Cyp

rus

Slo

va

kia

Lith

ua

nia

Po

rtu

ga

lIt

aly

Bu

lga

ria

Sp

ain

Ma

lta

Ire

lan

dC

ze

ch R

ep

ub

licP

ola

nd

La

tvia

Hun

ga

ryS

love

nia

Me

an

20

10

Est

on

iaU

nite

d K

ing

do

mA

ust

ria

Fin

lan

dB

elg

ium

Ge

rma

ny

Fra

nce

Sw

ed

en

Neth

erl

an

ds

Lu

xe

mb

ou

rgD

en

ma

rkC

roa

tia

eb_corr_daily

You are personally affected by corruption in your daily life

Q 1.8: each of the following statements, could you

please tell me whether you totally agree, tend to agree,

tend to disagree or totally disagree with it: You are

personally affected by corruption in your daily

life 1= Totally agree 2= Tend to agree 3 =Tend to

disagree 4 =Totally Disagree 5 =DK

Does Europeanization change governance?

Not at first generation

Current….

0 10 20 30 40 50 60 70 80 90 100

Serbia

Bulgaria

Macedonia FYR

Croatia

Latvia

Estonia

Significant changes in Control of Corruption in Eastern Europe (1996-2011)

2011 1996

Second generation: jury still out Central Europe and the Balkans: changes 1996-2011

If EU member states would all manage to control corruption at the

Danish level, tax collection in Europe would bring in yearly about

323 billion more, so the double of current EU budget for 2013.

AUT

BEL

BGR

CYPCZE

DNK

EST

FIN

FRA

DEU

GRC

HUN

IRL

ITA

LVA

LTU

LUX

MLT

NLD

POL

PRT

ROM

SVK

SVN

ESP

SWE

GBR

25

30

35

40

45

50

Tax

reve

nue

(%

of G

DP

)

0 2 4 6 8 10

Control of Corruption (recoded 1-10 best)

Tax collection and Control of Corruption

Big discretionary spending…

AUT

BEL

BGR

CYP

CZE

DNK

EST

FIN

GRC

HUN

IRL

ITA

LVA

LTU

MLT

POL

PRT

ROM

SVK

ESP

SWE

GBR

12

34

56

Go

v. in

vestm

ent in

cap

ita

l fo

rmation

(%

of G

DP

)

0 2 4 6 8 10

Control of Corruption (1-10 best)

Gov. investment in capital formation (% of GDP) and Control of Corruption

So low social investment (health

spending)…

AUTBEL

BGR

CYP

CZE

DNK

EST

FINFRA

DEU

GRC

HUN

IRL

ITA

LVA

LTU

LUX

MLT

NLD

POL

PRT

ROM

SVK

SVN

ESP

SWE

GBR

24

68

Tota

l gov. expe

nd

iture

on h

ealth (

% o

f G

DP

)

0 2 4 6 8 10

Control of Corruption (recoded 1-10 best)

Gov. expenditure on health (% of GDP) and Control of Corruption

= the recipe for deficit

AUT

BEL

BGR

CYPCZE

DNK

EST

FIN

FRA

DEU

GRC

HUN

IRL

ITA

LVALTU

LUX

MLT

NLD

POL

PRTROM

SVK SVN

ESP

SWE

GBR

-15

-10

-50

Go

vern

men

t bu

dg

et b

ala

nce

(%

of G

DP

)

0 2 4 6 8 10

Control of Corruption (recoded 1-10 best)

Gov. budget balance and Control of Corruption

Other negative consequences :

vulnerable employment

AUTBEL

BGR

CYPCZE

DNKEST

FIN

FRA DEU

GRC

HUN

IRL

ITA

LVALTU

LUX

MLTNLD

POLPRT

ROM

SVK

SVN

ESP

SWE

GBR

010

20

30

40

Vuln

era

ble

em

plo

ym

ent (%

of to

tal e

mp

loym

en

t)

0 2 4 6 8 10

Control of Corruption (recoded 1-10 best)

Vulnerable employment and Control of Corruption

AUT

BEL

BGR

CYP

CZE

DNK

EST

FIN

FRA

DEU

GRC HUN

IRL

ITA LVALTU

LUX

MLT

NLD

POL

PRT

ROM

SVK

SVNESP

SWE

GBR

23

45

6

Bra

in-d

rain

(1

-7 b

est

)

0 2 4 6 8 10

Control of Corruption estimate (recoded 1-10 best)

Brain-drain and Control of Corruption

Other negative consequences: brain

drain

EU funds abortion and corruption

AUT

BEL

BGR

CYP

CZE

DNK

ESTFIN

FRA

DEU

GRC

HUN

IRL

ITA

LVA

LTU

LUX

MLT

NLD

POL

PRT

ROM

SVK

SVNESP

SWE

GBR

20

30

40

50

60

% o

f E

U fun

ds a

bso

rbe

d

0 2 4 6 8 10

Control of Corruption estimate (recoded 1-10 best)

EU funds absorbed and control of corruption

AUT

BEL

BGR

CYPCZE

DNK

EST

FIN

FRA

DEU

GRC

HUN

IRL

ITALVA

LTU

LUX

MLT

NLD

POL

PRT

ROM

SVK

SVN

ESP

SWE

10

20

30

40

50

Wom

en

in p

arlia

men

t (%

)

0 2 4 6 8 10

Control of Corruption estimate (recoded 1-10 best)

Women in parliament and Control of Corruption

Other negative consequences : gender

inequality

What explains variation across EU

countries? Our model

Corruption Control

of corruption

Control of corruption= capacity of a society to keep corruption the exception

=

–

OPPORTUNITIES

Administrative

discretion

+

Material

resources

CONSTRAINTS

Legal

+

Normative

Our model

Corruption Control of

corruption

OPPORTUNITIES Red tape

Lack of transparency

Large pool of public

jobs

Large amounts of

discretionary funds

= govt investment,

natural resources

CONSTRAINTS

Well-performing

judiciary

Good audit

Independent media

Active civil society

Demanding voters

Opportunities - Red tape

Ease of doing business

AUT

BEL

BGR

CYP

CZE

DNK

EST

FIN

FRA

DEU

GRC

HUN

IRL

ITA

LVA LTU

LUX NLD

POL

PRT

SVK

SVN

ESP

SWE

GBR

0

2

4

6

8

10

0 20 40 60 80 100

WG

I C

ontr

ol o

f C

orr

uptio

n

Ease of doing business rank (1-183 worst)

Ease of doing business and control of corruption

Opportunities - transparency:

Online availability of 20 basic public services

AUT

BEL

BGR

CYP

CZE

DNK

EST

FIN

FRA

DEU

GRC

HUN

IRL

ITA

LVA

LTU

LUX

MLT

NLD

POL

PRT

ROM

SVK

SVN

ESP

SWE

GBR

0

2

4

6

8

10

30 40 50 60 70 80 90 100

WG

I C

ontr

ol o

f C

orr

uptio

n

% of basic public services for citizens fully available online

Online availability of public services for citizens and control of corruption

Constraints: Freedom of the press

AUT

BEL

BGR

CYP

CZE

DNK

EST

FIN

FRA

DEU

GRC

HUN

IRL

ITA

LVA

LTU

LUX

MLT

NLD

POL

PRT

ROM

SVK

SVN

ESP

SWE

GBR

0

2

4

6

8

10

5 10 15 20 25 30 35 40 45

WG

I C

ontr

ol o

f C

orr

uptio

n

Press freedom (1-100 worst)

Press freedom and control of corruption

Constraints: critical citizens

AUT

BEL

BGR

CYP

CZE

DNK

EST

FIN

FRA

DEU

GRC

HUN

IRL

ITA

LVA LTU

LUX

MLT

NLD

POL

PRT

ROM

SVK

SVN

ESP

SWE

GBR

0

2

4

6

8

10

30 40 50 60 70 80 90 100

WG

I C

ontr

ol o

f C

orr

uptio

n

Internet users (% of population)

Internet users and control of corruption

Constraints: Civil society

AUT

BEL

BGR

CYP

CZE

DNK

EST

FIN

FRA

DEU

GRC

HUN

IRL

ITA

LVA

LTU

LUX

MLT

NLD

POL

PRT

ROM

SVK

SVN

ESP

SWE

GBR

0

2

4

6

8

10

0 10 20 30 40 50 60

WG

I contr

ol of corr

uption

% of respondents doing voluntary work for at least one organization

Voluntary work and control of corruption

What does not work and should not be

expected to in the medium term

Uniformity: Control of corruption in Europe is achieved in a variety of ways and we should not aim for institutional uniformity

Silver bullets: Countries which have adopted Judicial Councils, anticorruption agencies, restrictive party financing have not progressed more as yet

Judicial anticorruption where rule of law is weak

Unenforced legislation; current huge implementation gap (between legislation and practice) has gone through the roof in Bulgaria, Romania, Macedonia, Serbia and Kosovo – Global Integrity Report (30-60%) – enforcement rather than new legislation is needed, monitoring, etc.

Corruption risk in the EU

C

on

stra

ints

Opportunities

Low High

High

Austria Ireland Cyprus

Belgium Luxembourg Estonia

Denmark Malta Hungary

Finland Netherlands Lithuania

France Sweden

Germany UK

Low

Italy Bulgaria

Portugal Czech R

Slovakia Greece

Slovenia Latvia

Spain Poland

Romania

What to do: reduce resources and

opportunities Cyprus

Estonia

Hungary

Lithuania

Bulgaria

Czech

Republic

Greece

Latvia

Poland

Italy

Romania

- Cut red tape to reduce administrative discretion

(time to import, export, pay taxes and so on)

- Streamline regulation to reduce informality

- Increase electronic access to all public services

and foster more Internet access, usage

- Increase transparency, especially fiscal

transparency (online expense tracking systems

become fast best practice)

- Far more transparency needed for EU funds

- Publish all affiliations, relations (lobby registers)

accounts of officials to prevent conflict of

interest, fiscal evasion and corruption

What to do: Increase constraints, but not

just legal constraints

Italy

Portugal

Slovakia

Slovenia

Spain

Bulgaria

Czech Republic

Greece

Latvia

Poland

Romania

- Protect media from capture

(transparency of ownership, govt

advertising)

- Protect and encourage civil society and

Internet media watchdogs

- Adopt social accountability designs to

protect EU funds (involve local

stakeholders and consumers in the

planning and monitoring of EU funds)

- Develop judicial capacity

- Develop further audit and monitoring

capacity