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Advisory Committee on Voluntary Foreign Aid (ACVFA) Public Meeting
February 16, 2005

Anti-Corruption Strategy Policy

Comments by Kenneth Wollack
President, National Democratic Institute


At the outset I want to commend USAID's thoughtful and wholistic strategy on anti-corruption. In the past, I believe, the international community's efforts on anti-corruption have largely focused on promoting regulatory frameworks or codes; and while public integrity requires a set of explicit rules, complex regulations alone do not reduce corrupt practices.

Political actors-within government, parliament and parties-need motivation to believe that adhering to those rules is not only necessary, but also in their interest. In short, it means establishing a political environment that creates incentives for those political elites. It is gratifying, therefore, to see a large donor aid agency like USAID recognizing that corruption can not be disaggregated from this broader political environment. This is both an accurate and realistic assessment of the anti-corruption problem but it also creates a challenge. By rightfully defining the problem broadly, it should demand significant resources to address it.

For the next few minutes, I want to simply amplify a few points raised in USAID's strategy paper and, perhaps, address a few issues from a slightly different perspective-that perspective coming from an institute dedicated to political development by working often, but not exclusively, through and with political parties.

First, I would argue that corruption does not simply weaken a democracy. In fact, I would reverse the order by asserting that the state of democracy in any country will determine its capacity to successfully address grand corruption.

If one compares Transparency International's Corruption Perceptions Index in 2004 with Freedom House's ranking for the same year, we find that all but one of the top 25 least corrupt countries are ranked the most "free", or democratic. And that none of the 25 most corrupt countries in Transparency International's listing are considered "free" or democratic.

This is not to say that democracy is a perfect insulator against corruption. It is not. One only has to look at Costa Rica, Latin America's beacon of democracy, where two former presidents are being charged with large-scale corruption. Nor can it be said that a regime with autocratic tendencies can not successfully address corruption. Singapore is an example of this. But we must be careful to address trends rather than the snapshot of today. The problem with even an enlightened authoritarian ruler is that eventually greed takes over along with hubris: his or her rule is perpetuated and corruption grows. This was the tragedy of Indonesia under Suharto.

Democracies are generally more successful in developing the political will to combat corruption by creating three conditions: inter-party competition (free and fair elections), legitimacy, and diffusion of political power.

First is inter-party competition—in other words, democratic elections. When political parties compete for public support, they become more likely to watch each other's behavior so that they can report corrupt practices to the public. In the presence of a free media that can cover incidents of corruption by any political actor, party competition creates tangible negative consequences for political corruption. In Mexico, Kenya, Ukraine, and Georgia, voter frustration with public corruption contributed to the electoral defeat of powerful incumbents. Similarly, incumbent parties in Bolivia are sustaining tremendous losses at local levels for the same reason.

The impact of these events is that political elites in competitive environments are beginning to realize that: 1) their party rivals are watching their behavior and willing to expose corrupt practices to the public in a bid to un-seat them; and 2) the public responds to information about corruption by withdrawing its public support. Much of NDI's anti-corruption efforts with parties are about strengthening this trend.

The second condition is the legitimacy of institutions that naturally emerge from democratically elected leaders. It is these leaders and their parties acting through the legislative process that citizens must ultimately rely on to design anti-corruption measures and oversee their enforcement. Regrettably, parties have largely been left out of the growing discourse within the international community on anti-corruption initiatives.

The third condition is the diffusion of power that comes with democratic governance. The creation of centers of power separate from the executive allows for advocacy and civic education by civil society, laws passed by parliaments, exposure of corrupt practices by independent media and enforcement by the judiciary.

All these points may be obvious but if they are accepted, they come with policy implications, particularly when resources are limited. It means that, in some places democratic reform must precede anti-corruption efforts. In political environments that are either authoritarian or semi-authoritarian—meaning a lack of democratic elections (or genuine inter-party competition), legitimacy of elected leaders and separate centers of power—our anti-corruption strategy should instead be a democratization strategy, that being the creation of pre-conditions or incentives to combat corruption. Put simply, if a regime is willing to steal or subvert an election, there is very little to be done that will prevent that regime from stealing money.

I would like to make one final point about political parties. If parties' internal practices and procedures are undemocratic and marred by corruption, then national efforts to eradicate corruption and promote good governance will be difficult to achieve.

Efforts by political parties to reform, modernize and renew themselves are underway but that will be a long and arduous process. It deserves greater international attention and support. In the past, the donor community often bypassed or marginalized parties by focusing its attention on state institutions and civil society. That strategy has weakened representative institutions and intermediary organizations, and has unintentionally helped give rise to populist leaders.

Efforts by parties to modernize have included external reforms (public funding, declaration and disclosures of finance, and limits of donations). Internal reforms have included team limits, direct party election as well primaries, decentralization, and independent disciplining bodies.