INTERNATIONAL CONFERENCE
Sofia, 23-24 March 2001
Program
H. E. Ambassador Sten Ask, Embassy of
Sweden, Sofia
The Fight against Corruption in Bulgaria: A
Swedish View
I.
Introduction
First, I would like
to thank the organisers - Coalition 2000 - for this
opportunity to present some views on the fight against corruption
in Bulgaria.
I
would also like to praise Coalition 2000 for their engaged
and professional efforts to tackle deep-rooted corruption in
Bulgaria. The staunch commitment of Coalition 2000 provides
not only a stimulus but also a hope in the struggle against
corruption. Successful change cannot only be induced from above but
needs strong support from below in the form of active NGO's, civil
society and truly independent media.
II. The negative
consequences of corruption
Our
prosperity, democratic values and our capacity to combat corruption
are interdependent. When corruption contaminates the actions of
policy-makers, it brings about a waste of common resources, hinders
investment and causes disillusion among voters.
There is a strong
necessity to combat corruption in the name of democratic values.
Hardly anybody would argue against that proposition - at least in
public - even those who do not grasp the full scope of the negative
consequences of corruption. But only by portraying its full effects
- direct as well as indirect - a culture of zero tolerance can be
fostered.
Corruption is a cancer in
the body of society which not only undermines its morals but also
holds back the fundamental dynamics of economic growth and
development. It is the poorest people who bear the heaviest burden.
Without growth it is very hard to pull people out of
poverty.
Corruption
works against growth and development in at least four
ways.
First, corruption has a negative effect on allocative
efficiency. When a corrupt few monopolise the channels for
enrichment, resources are not distributed as compensation for a
contribution to public wealth, nor in a manner which secures the
highest rate of return on investment.
Second,
corruption weakens motivation and labour productivity. Illegal
activities, including the acceptance of bribes, hampers the
motivation for sound effort which reduces labour productivity. It
also shifts economic activities to the shadow economy. With corrupt
incentives human capital investment does not necessarily guarantee
higher future wages. Thus, corruption can discourage investment in
one's own skills and undermine the motivation for education and
vocational training.
Third,
corruption raises public tension and contributes to social
disintegration. The conviction or even only the suspicion that
there is an inequitable distribution of national income and a
practice of taking advantage of public jobs for private gain erodes
the credibility of government policy and may even lead to action
against the government.
Fourth, corruption betrays and destabilises
expectations. In a climate of fragile expectations, outcomes become
less predictable, so that investment decisions are hampered or
biased.
We must not be
naive. Corruption is a phenomenon that is not so easy to eliminate.
Aid transition economies like Bulgaria's are a special case because
of the vacuum of "neither plan, nor fully fledged market economy".
The features are particularly prominent within three areas:
privatisation, deregulation, and the news media.
Privatisation is
corruption-prone since denationalisation is a vast process and the
potential for illegal activities is great. People often argue that
the sooner there is nothing left to privatise and the sooner the
connection between the state bureaucracy and denationalisation is
cut, the easier it will be to curtail corruption. I think there is
much truth in this.
The second
stand-out feature of transition economies is the large number of
regulations left over from the over-regulated planning regime. It
is obvious that an overly regulated economy is corruption-prone,
since it is sometimes easier to pay or collect bribes than to
comply or force compliance with the regulations. Moreover, it takes
time to deregulate and to re-regulate. This process may be as
important as the liberalisation in itself.
Debates about
corruption take place publicly with the lively engagement of the
media. If corruption is understood as an exchange of favours for
money, then the news media may be at least as exposed to corruption
as is the government and its bureaucracy. Business circles may
influence the media for their own purposes. There is no easy way of
exposing them to the judgement of public opinion because of the
ties between the news media and interest groups.
III. The case of Bulgaria
In Bulgaria
today, corruption is perceived as one of the most severe problems -
not only by investors but also by its citizens. Bulgaria's position
of ranking in Transparency International's annual corruption
assessment is not a flattering one.
Bulgaria can do
better than this - much better. What does that mean in practice? It
means strengthening the rule of law and law enforcement. It means
that the self-interest of the few shall not be allowed to triumph
over the will and the rights of the people in a fair, democratic
market economy. Above all, it means responsibility, and responsible
politicians, businessmen and citizens.
In the near future Bulgaria and
other candidate countries will be members of the European Union and
an integral part of the internal market. To ensure an effective and
prosperous Union it is crucial that the present standards in the
candidate countries are levelled up to the countries with the
cleanest business environment. An opposite process of levelling
down the corruption standards in Europe would be disastrous. There
is an imminent risk that corrupt circles in the candidate countries
may join forces with illegal groups in the present Union.
It is imperative
that the rule of law is undisputed before the accession of new
member countries to the EU. Therefore, speeding up the reforms in
the judiciary and in the police are important tasks in the
candidate countries in order to qualify for
EU-membership.
I believe it is
of great importance that the Government and leading Bulgarian
politicians now do recognise the existence and problems of
corruption in Bulgaria. This gives me hope for the future. Only by
acknowledging the problem of corruption can fundamental change be
achieved.
The naive
expectation that market forces alone can regulate economic
activities and prevent corruption can only disappoint.
Corruption is
not a problem that can be attacked in isolation and rooted out in
one decisive effort. It is not sufficient for criminal law just to
search for "bad apples" and punish of them. Only constant vigilance
and structural reforms can solve the underlying problems of corrupt
incentives built into the operation of government and
businesses.
The public,
politicians and members of law enforcement organisations should be
aware of the sanctions that exist for transgression of rules,
procedures or laws. More importantly, the application of such
sanctions and the public visibility of measures taken against
corrupt persons in Bulgaria must be improved. People who have been
caught in dealing with organised crime should not be walking the
streets of Sofia and Varna. They should be behind bars.
I use cancer as a metaphor for
corruption in society. Getting rid of this tumour in Bulgaria will
cause some pain. I am aware of the financial strait jacket that
holds back important efforts in the Bulgarian society. But more
resources must be transferred to the judiciary, police and
prosecution to combat corruption. . Political priorities not
supported by necessary budgetary means lose credibility by default.
Less than 2 per cent of the state budget is presently allocated to
the judiciary. This is not enough and it casts some doubts of the
real political commitment. Less than 50 cases of corruption are
taken to court - less than 0,1 per cent of all court cases - this
does not reflect the high level of corruption in Bulgaria
today.
But let's make
it clear - in the long run, combating corruption is a rewarding
project. Short-sighted profit from illegal corruption acts far from
compensates for the damage done to the trust in the legal system
and in the business and investment climate.
We know, for
instance, that Swedish companies, fostered in one of the cleanest
business environments in the world, are in general more successful
in countries with a low level of corruption. To attract more
Swedish investments, Bulgaria must be able to ensure a more
predictable institutional infrastructure.
I see a very urgent need to launch
an overriding strategy for combating corruption in Bulgaria. Only
with a strong commitment from the highest levels of the state can
the problems be successfully tackled. The political forces that now
aspire for power in the upcoming elections must respond adequately
to the even greater call for strong and systematic action.
All countries
serious about fighting corruption must carry out a detailed
assessment where corruption is most harmful and where it can be
most effectively attacked. This should provide a way for setting
priorities and formulating an action plan.
A comprehensive
anti-corruption strategy should include:
Strengthening the weak legal and judiciary
system;
Making the privatisation process more
transparent when it now enters a new phase. It would also be
worthwhile to give a complete picture of the true ownership
structure of Bulgaria's industry after privatisation to this
date;
Eliminating all forms of patronage by
instituting a merit-based system for recruitment, appointment,
promotion and performance evaluation in all parts of the public
sector, in particular within the customs, police and judiciary;
Improving transparency and accountability in
ministries and agencies to ensure full budget coverage and
control;
Establishing the parliamentary ombudsman
institution. It is a hopeful sign that a draft law on the ombudsman
institution has already been discussed in the National
Assembly.
Furthermore, business has a
special responsibility to ensure that its activities promote a
sound economic environment. I do hope that the public out-cry
against corrupt companies will become as prevalent as it is on
environmental issues today.
Strong efforts should also be made
to mobilise a wider degree of private responsibility in the combat
against corruption. And I do not agree with o those who say that
power corrupts people. Rather, it is the other way round, people
without morality corrupt power.
I wish you every success with this
conference. Thank you.
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