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«FIGHTING CORRUPTION IN COUNTRIES REBUILDING AFTER CONFLICT A DEMOCRACY AND GOVERNANCE PROGRAM BRIEF NOVEMBER 2008 Revised This publication was ...»

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FIGHTING CORRUPTION IN

COUNTRIES REBUILDING AFTER

CONFLICT

A DEMOCRACY AND GOVERNANCE PROGRAM BRIEF

NOVEMBER 2008

Revised

This publication was produced for review by the United States Agency for International Development. It was prepared by

Bertram I. Spector, with assistance from Michael Lund, Ketevan Nozadze and Tara Thwing, of Management Systems

International.

FIGHTING CORRUPTION IN

COUNTRIES REBUILDING AFTER

CONFLICT

A DEMOCRACY AND GOVERNANCE

PROGRAM BRIEF

NOVEMBER 2008 Revised DISCLAIMER The author’s views expressed in this publication do not necessarily reflect the views of the United States Agency for International Development or the United States Government.

CONTENTS

1. INTRODUCTION

2. CORRUPTION RISKS IN REBUILDING SETTINGS

3. COUNTRY READINESS FOR ANTICORRUPTION PROGRAMS

4. LESSONS LEARNED

5. PLANNING AND OPERATIONAL CONSIDERATIONS

BIBLIOGRAPHY

Corruption can undermine effective statebuilding in post-conflict settings. The legitimacy and effectiveness of the state can be severely impeded by corrupt practices, thereby reducing public trust and diminishing the capacity of the state to function effectively. As a result, assessments of serious corruption risks and a readiness to fight corruption ought to point development assistance toward mainstreaming anticorruption initiatives in all aspects of statebuilding activities.

Experience demonstrates that a comprehensive, multisector and sequenced anticorruption strategy, even under challenging post-conflict conditions, can be relatively effective in reducing corruption levels over the period of several years, enabling the rebuilding state to strengthen its governance and economic capacity. To reassert state legitimacy and effectiveness after violence has ceased, priorities in

anticorruption programming should be given to:

• Reestablishing basic public services and reasonably trained civil servants,

• Ensuring that adequate legal frameworks are in place to facilitate the rule of law,

• Creating accountability mechanisms both within and outside government to place limits on state power,

• Initiating reliable public finance systems for budgeting, procurement, and tax administration,, and

• Simplifying regulations for business to facilitate economic growth.

1. INTRODUCTION This program brief examines how anticorruption initiatives can be implemented as effective components of statebuilding programs. The impact of corruption on post-conflict settings can be significant for both future political and economic development and peace prospects. Likewise, the fragility of the rebuilding context after conflict can seriously influence the growth of corruption, exacerbating the vulnerabilities of the state and completing a vicious circle.1 Corruption -- the abuse of entrusted authority for private gain – is an obstacle for political, economic and social growth in all international development settings, but it is particularly nefarious in post-conflict rebuilding settings. Corruption can stand in the way of strengthening state legitimacy and effectiveness. It can destabilize a new and fragile peace in countries emerging from conflict and beginning to rebuild their political, economic and social institutions and processes. If governing structures, procedures and the rule of law remain fragile and corruption runs rampant, development gains may be hampered, divisiveness within society may continue, spoiler factions may be emboldened, and conflict can reignite, resulting in renewed chaos and human suffering.

On the other hand, experience demonstrates that if effective anticorruption practices and institutions are promoted and implemented, post-conflict countries have a greater opportunity to pursue a trajectory toward stable peace and positive economic and social development. The transparency and accountability features of anticorruption programs facilitate a new compact of dialogue and negotiation between the state and local and

FIGHTING CORRUPTION IN COUNTRIES REBUILDING AFTER CONFLICT 1

external stakeholders that makes the statebuilding process progress faster. In some cases, anticorruption initiatives have been mainstreamed into peace agreements, but it almost always falls upon donor organizations to stimulate appropriate anticorruption mechanisms through special funding and technical assistance – usually under challenging conditions.

This program brief emphasizes the following propositions:

1. Corruption can be a significant contributor to deficits in state legitimacy and effectiveness that characterize fragile post-conflict societies and aggravate the grievances that generate civil violence.

2. As post-conflict statebuilding focuses on countering these deficits by building legitimacy and effectiveness, anticorruption programs will be an important component of that agenda in those instances where corruption is seen to be undermining effectiveness and legitimacy.





3. When anticorruption programming emerges as a priority, it should proceed in levels of engagement, from basic foundational activities to more targeted ones as conditions and domestic support warrant.

While there is still much to be learned and the literature on the subject is quite recent, there is enough evidence to begin developing generalizable findings about what does and does not work in fighting corruption in developing countries, and, in particular, in postconflict rebuilding countries. This program brief synthesizes what is known to date from case studies, assessments, evaluations, and targeted analyses. To supplement these findings, a special detailed comparative analysis of six recent rebuilding cases was conducted and its conclusions are integrated into the broader results.

Overall, the program brief provides practical guidance to USAID field officers on how to assess the situation to detect particular conditions of corruption risk and what programming priorities – based on experience – are most appropriate to the rebuilding situation. A cautionary note: what is presented here may not be valid equally to all situations and the recommendations ought not to be applied unquestioningly.

2. CORRUPTION RISKS IN REBUILDING SETTINGS

The weak and fragile condition of societal structures, governmental institutions, and economic systems in the aftermath of conflict, multiplied by the vulnerability of a newly established peace and the ever-present threat of renewed violence, make rebuilding countries particularly susceptible and defenseless to all major types of corrupt behaviors.

• Petty or administrative corruption is often widespread, affecting all citizens when, for example, unofficial fees are charged for public services, items are sold on the black market and government payrolls are padded by ghost workers. These practices can generate an overall public cynicism and mistrust of the authorities, and a culture of lawlessness that can cause a relapse to earlier conflicts and violence.

• Grand corruption typically involves high-level officials and the exchange of large sums of money and resources or other competitive advantages. It is often manifested as outright theft of public funds, steering government contracts to family or friends, and various forms of patronage (cronyism, nepotism, and political favoritism). It can divert critical funds dearly needed to rebuild all aspects of a state recently ravaged by war.

FIGHTING CORRUPTION IN COUNTRIES REBUILDING AFTER CONFLICT 2

• State capture by economic interests highlights the influence of private business on state power and collusion with public officials to extract advantage. This can be the most insidious form of corruption for rebuilding states because it diverts needed assets to an elite few and it limits economic growth from diversifying across many stakeholders.

Rebuilding Settings

Post-conflict rebuilding states pose a unique set of problems concerning corruption in comparison to typical developing countries. Some even say it is unrealistic to deal with corruption issues under most post-conflict conditions because these states generally lack the minimum requirements for effective remedies. They often face weak security situations, factionalized societal relationships, a breakdown in the rule of law, minimal administrative infrastructure to delivery services, and a lack of mechanisms to generate and assert legitimate authority (Carvalho 2006).

While an unintended consequence, corruption is sometimes institutionalized into peacebuilding and reconstruction initiatives. The rapid influx of large sums of relief and development funds can be difficult to monitor and control, and a target for corruption and abuse.2 In the initial shift from coercive to more open political systems in the postconflict era, corrupt activities may be energized. Clientelism, vote buying, misappropriation of public funds and abuse of state resources can thrive because the rules and institutions that ensure accountability and guard against impunity are too immature.

As well, the transition to a liberal market economy after conflict and insufficiently regulated privatization can create new opportunities for grand corruption and the unlawful grabbing of state assets by well-placed political elite.

Some analysts view the potential development of such a corrupt state as a welcome stabilizing occurrence in the statebuilding process. The mutual incentives of corrupt exchange can bring together formerly opposing groups into durable multiethnic coalitions that reduce the possibility of violence.3 As well, the political and economic elite who seek to protect their kleptocracy can impose strict controls on society to support their new order, thus suppressing spoilers that pose a risk to the peace and threaten a renewal of violence and chaos. If this occurs, the stability and order that such a corrupt state brings can put democratic goals on the backburner.

However, the difficult job of rebuilding firm foundations for democracy along with designing and implementing accountable governance can occur simultaneously (O’Donnell 2008). In fact, some are convinced that ignoring the corruption problem in early postconflict phases can be dangerous; in Bosnia, Nicaragua and Mozambique, for example, such a policy facilitated the entrenchment of corrupt elite making reforms more difficult to achieve later (Mathisen 2007). If anticorruption programs are pursued vigorously in the post-conflict setting, democratic, human rights and good governance values and reforms can be promoted that yield stability and effective statebuilding results.

Statebuilding Dimensions Recent literature on post-conflict statebuilding highlights at least two important findings that can help put corruption phenomena into proper perspective.

FIGHTING CORRUPTION IN COUNTRIES REBUILDING AFTER CONFLICT 3

1. There is donor consensus on the need to strengthen state-societal relations in terms of effectiveness and legitimacy.4 Pervasive corruption poses a serious challenge to the effectiveness of the fragile post-conflict state. It hinders meaningful capacity building that can help the state rebound and it prevents effective functioning to deliver services and benefits to citizens. Corruption also puts at jeopardy the legitimacy of the post-conflict state. Ready acceptance of the state’s authority as legitimate can be reduced because corrupt practices prevent effective service delivery, and stand in the way of accountable leadership and socially accepted beliefs of rightful authority. However, if political processes can be built or strengthened that facilitate open negotiation between the state and societal groups, then issues of transparency, accountability and integrity can be addressed, expectations can be moderated, corrupt practices can be controlled, and positive statebuilding processes can be promoted.

2. Effective statebuilding in post-conflict societies requires parallel consensus building efforts.5 A consensus must be built on the strategy going forward concerning state goals and functioning between (a) country leadership and the international community and (b) the state and its citizens. This double compact can promote state legitimacy and stability by ensuring that all stakeholders are basically seeking the same objectives and outcomes. However, pervasive corruption can stand in the way of developing such compacts by perverting the necessary relationships among stakeholders. Anticorruption programs that target the human interface within these internal and external compacts can help to resolve priorities and refocus post-conflict states toward effective statebuilding processes.

Thus, fighting corruption is an essential element of the statebuilding enterprise. Effective anticorruption strategies will bring parties together that need to communicate with each other and work in unison to develop functioning governance and it will remove the veil of opacity and lack of accountability to promote greater popular acceptance and legitimacy of the post-conflict state.

Corruption Risks

Certain conditions of post-conflict rebuilding environments increase the risk of corruption. These include, in particular, weak institutions, a fragile consensus, limited human capital, the possibility of a return to violence, an insecure environment, the challenge of working with leaders of questionable backgrounds, and unreformed security forces, among others. These factors need to be detected and assessed because they require special attention by host governments and donors. In particular, corruption risks can be categorized as crises of legitimacy and effectiveness.6

Legitimacy Problems

Countries rebuilding after conflict typically need to gain or regain broad popular acceptance for their laws and authority to govern and exercise power. With low levels of legitimacy, government is subject to many problems and weaknesses that can promote corrupt behaviors. The rule of law may be lacking, citizen participation and inclusiveness



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