The world is a corrupt place — this seems to be the takeaway presented in Transparency International’s newly-released Corruption Perception Index 2013. According to the 13th edition of the index, more than two-thirds of the 177 nations profiled received an index score below 50 on a scale of zero (explicitly corrupt) to 100 (free of all corruption). Based on expert and collected public opinions on the perceptions of public sector corruption in a nation — obtained from vetted sources such as the African Development Bank, the Bertelsmann Foundation, the World Bank and the World Economic Forum — the index offers a composite assessment on perceived corruption worldwide. “The Corruption Perceptions Index 2013 demonstrates that all countries still face the threat of corruption at all levels of government, from the issuing of local permits to the enforcement of laws and regulations,” said Huguette Labelle, chair of Transparency International. Top-finisher Denmark improved its score — 91— from last year by one point, tied with New Zealand. Finland, Sweden, Norway, Singapore, Switzerland, the Netherlands, Australia and Canada finished the top ten. These countries, as denoted by Transparency International as having strong anti-corruption laws and a high level of transparency in the political process, represent a conscience effort to address corruption in the political process. “The top performers clearly reveal how transparency supports accountability and can stop corruption,” said Labelle. “Still, the better performers face issues like state capture, campaign finance and the oversight of big public contracts which remain major corruption risks.” Afghanistan, North Korea and Somalia came in last with eight points. In considering the bottom ten, which also include Sudan, South Sudan, Libya, Iraq, Uzbekistan, Turkmenistan and Syria, war, famine and/or severe government turmoil appear to be the common themes. With almost 70 nations currently at a state of war, the perception of corruption is serving to perpetuate a constant state of global unrest and violent conflicts. “[It’s] clear that corruption is a major threat facing humanity,” Transparency International reported. ”Corruption destroys lives and communities, and undermines countries and institutions. It generates popular anger that threatens to further destabilise societies and exacerbate violent conflicts.” The report went on to say that corruption leads to human suffering, with poor families being extorted for bribes to see doctors or to get access to clean drinking water.
“Corruption amounts to a dirty tax, and the poor and most vulnerable are its primary victims,” the report stated.
Challenging corruption
Two countries of interest in this year’s index are Greece and Spain. In 2012, Greece came in as the 94th most corrupt country, scoring a 36 on the index. While Greece’s 2013 tied it with China and is the lowest score in the European Union, the nation moved up the index 14 places with a score of 40. While the international community is calling for a greater rate of reform implementation, Greece, in the last 12 months, has made significant movement in reversing the nation’s accelerating fall.
In 2009, the Organization for Economic Cooperation and Development estimated that the Greek black market constituted 65 billion euros, roughly 25 percent of the country’s gross domestic product. This resulted in 20 billion euros lost in tax revenue per year. Attempts to reform this generally failed due to the fact that tax evasion has been a cherished right among the Greeks since the mismanagement of the Ottoman Empire. By 2005, 49 percent of the population did not pay their taxes. Reports estimated that roughly 20 billion euros in Swiss bank accounts were held by Greeks, that there are more than 10,000 Greek-owned off-shore companies, and that approximately 15,000 individuals and companies owe the Greek government 37 billion euros. In addition, bribery of public officials was rampant. It was a common business custom to slip a “little envelope” to officials to help facilitate and expedite government filings. This corruption came to a head during the Eurozone Crisis, in which the Greek government was unable to make payment on its government debt in light to an economic slowdown, and eventually the Great Recession, which undermined Greece’s two primary industries, shipping and tourism. With the nation unable to stay afloat with financial buoying from other nations, an international demand to rid Greece of it’s “national sport” of tax evasion emerged. While Greece has made significant strides this year, its unemployment rate remains unreasonably high at 28 percent, with the rate reaching 65 percent for young workers, and with the general rate estimated to reach 34 percent by 2016. With public confidence among citizens hitting an all-time low due to repeatedly unpopular rounds of austerity cuts and a virtual freezing of bank lending, many feel that nothing short of full intervention — of the sort the United States engaged in in Western Europe after World War II — will save Greece from collapse. “This is not just about economy in Greece, it is about democracy in Europe,” remarked Harris Ikonomopoulos, president of the British Hellenic Chamber of Commerce at The Euro, Greece & the Southern Periphery conference. “Without an attractive and stable business-friendly investment environment, Greece risks becoming a failed state due to the continuous elimination of confidence from Greek society and international investors in the Greek state. The good thing is that Greece can turn around both fast and easy. “Greece needs a new Marshall plan and a plan for debt repayment linked to growth.”
The slow road to healing
Spain, on the other hand, has dropped 10 places on the index from its position in 2012, scoring a 59, six points below its previous mark. Spain is facing deep recession. The GDP has been in decline for nine straight quarters; unemployment is over 25 percent, and the nation’s banking industry has, for the most part, shuttered itself. Corporate bankruptcies are at 10 times pre-collapse levels and short-term bond yields have bottomed out.
Despite this, Spain seems best poised to escape this crisis. Its current government ranks highly in public confidence and is likely to survive until the next elections. It has drawn from the European bailout fund, accepting the terms that went with the loan, and the country has made structural improvements in the way it conducts business. Spain’s unit labor costs have dropped below France’s and Italy’s, and the country has more cash-in-hand per percentage of its GDP than the other two countries. Even considering this, the road forward for Spain will be a hard one. “With public spending, consumption and investment constrained, the government is relying on rising exports,” explained the Economist of one of Spain’s most significant hurdles. “Yet total exports are less than a third of GDP and almost two-thirds go to the recession-hit eurozone. It is hard to see how even strong exports can make up for weak domestic demand. And if GDP growth does not revive, the problems of Spanish banks and the credit crunch will quickly return.” In reality, corruption, bribery, incompetence or political malpractice cannot be remedied overnight. Reform is a process that can take years or even centuries. But in recognizing the problem and addressing them appropriately, the key component of humanity — hope — is preserved. Justice exists in the struggle to do good. “It is time to stop those who get away with acts of corruption. The legal loopholes and lack of political will in government facilitate both domestic and cross-border corruption, and call for our intensified efforts to combat the impunity of the corrupt,” Labelle said.