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Corruption Perceptions Index

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So apparently an Ambassadorship costs $1.8 million per post in the US.

In virtually any other country, even where the situation with corruption is quite dismal, such arrangements would be seen as unquestionably corrupt. And yet the US scores an entirely respectable 73/100 in Transparency International’s Corruption Perceptions Index (CPI), leagues above say Italy which gets 42/100.

The reason I mention Italy is that I was once discussing the question of corruption in different countries with an Italian. He said that what in the US is known as “political lobbying” would be treated as a criminal activity in Italy, and indeed in most of the rest of Europe. Hence why in the Med countries you get far more cases of corruption in the form of cash in envelopes. In the US that’s against the law, but that’s not such a big deal, because the law – or rather the absence of it – allows for the same thing, just in indirect formats (expensive dinners, contributions, astronomic speaking fees, stock performances superior to those of corporate insiders, etc). But that kind of corruption is “deniable” and hence respectable, whereas the direct kind is crude and distasteful, a defining feature of disorganized Third World countries.

In Italy, regulations against corruption and weaselly dealings in general are stringent. Now because Italians tend to corruption in general, either by nature or nurture, this means that the high incidence of such endlessly knocks against their corruption ratings. In the US, however, the factual “legalization” of much of what passes for corruption in Europe allows it to remain relatively unscathed in such international assessments.

There are many other such examples. Saudi Arabia, for instance, is insanely corrupt if you think rulers siphoning off billions of dollars off the oil budget is fundamentally illegitimate (as is alleged but never evidenced for Russia’s “mafia state” and Putin’s Swiss bank accounts). But it’s all quite legal there, which is why – hard as it is to believe – Saudi Arabia scores higher than not only Russia, but even Italy in the CPI.

So the solution is simple. Just legalize your corruption, and move up to the top in both the World Bank’s Doing Business ratings and soon enough in the Corruption Perceptions Index. Don’t forget to be slavishly pro-American in your foreign policy. Investors will love you for it. Well, maybe not, at least once said investors get to know you a bit better, but at least you’ll get glowing reviews from the Wall Street Journal and Transparency International. That’s how you become a made country in Davos World.

(Republished from AKarlin.com by permission of author or representative)
 
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http://www.youtube.com/watch?v=08cD7-MYaJo

We all suspected this would come sooner or later. As it happens, Chavez struggled heroically against his cancer, confounding the intensive Schadenfreude and concerted death wishes of his loathsome detractors month after arduous month.

But this is what you can expect to get when you look out for your own countrymen and stand up to imperialism. Probably no other modern national leader apart from Putin has been quite as consistently and caustically vilified by the Western media.

They say that he managed to squander Venezuela’s oil wealth. I suppose he is guilty as charged, if by “squander” you mean spending it on ordinary Venezuelans as opposed to funneling it away to foreign bankster rats. During his rule, real GDP increased by 50%, poverty has halved, inequality was reduced to a very low level at least by Latin American oligarchic standards, infant mortality was greatly reduced, and virtually the whole array of other socio-economic indicators that states care to track, from access to clean drinking water to enrollment in higher education (which increased by a stunning 138%), saw great improvements. At the same time, contrary to the claims of the neoliberal propagandists, debt hasn’t increased; it was a modest 45% of GDP as of 2011 (IMF), which reduces to 25% if only central government debt is accounted for. The national accounts have on average been balanced.

venezuela-gdp

This was all achieved despite the real negative impacts of the 2002-2003 oil industry strikes, which occurred in tandem with an abortive CIA-backed coup, and the global Great Recession; not to mention Venezuela’s own legacy of corruption and backwardness inherited from previous regimes.

The traitorous cockroaches, including on my very blog, claimed Chavez “oppressed” them and stole the elections. They said he was a dictator for refusing to extend the license of their opposition RCTV channel. The irony is that in any actually democratic country it would have been instantly shut down and they’d have been locked away for decades for treason, if not lined up against the wall like the rabid scum they are. They materially supported a foreign backed coup against a legitimately elected national leader and then had the gall, the temerity, the sheer chutzpah to complain that one of their talking shops was taken away from them! Even though much of the media in Venezuela remains in oligarch pockets and continues to tell lies about pro-Chavez electoral fraud, when all the polls indicate that that is indeed the will of the people. Of course there’s nothing contradictory about that. The seditious vermin despise the Venezuelan people and would much rather dissolve them and elect another (as opposed to emigrating and parasiting off some other country).

The incorrigibly thievish liberals, no doubt full of projection, claim that Venezuela under Chavez has become one of the most corrupt countries in the world. They cite the loathsome Corruption Perceptions Index in support of this view – i.e. the perceptions of the same internationalist banksters and “experts” who have such a withering hatred for those countries that dare to stand up against Western imperialism. Asking ordinary people reveals quite a different picture: Fewer ordinary Venezuelans (some 20% of them) said that had to pay a bribe in the past year than in Colombia (24%), the Western puppet state next door.

latin-america-homicide-rates

Perhaps the only real failing of the Chavez administration is its inability to control violent crime. Venezuela now has one of the highest homicide rates in the world. But this was part of a general Latin American trend, and what’s more, could just as easily be attributable to a regrettable if admirable surfeit of humaneness in the Venezuelan criminal justice system (it has not had the death penalty since 1863).

Hugo Rafael Chávez Frías brought hope and a credible promise of a better tomorrow to a benighted country, and was the bane of the rootless cosmopolitans and comprador elites that hypocritically shrilled about his supposed corruption and selling out to Cuba even as they frantically shuffled their ill-gotten billions into Swiss vaults and dialed their CIA handlers for advice. Yes, he was loathed by the Latin American offshore aristocracy, the neocons, and the Guardianista-type, “humanitarian bomber” Pro War Left and Western chauvinists in liberal clothing. But he was also beloved of the millions of Venezuelans, who resisted oligarch media pressure and mafia-like “international community” and continued to give El Comandante – in some of the world’s cleanest and most transparent elections – term after term to implement his vision of a just and sovereign Latin America.

If it is true that one gets to know a man by his friends and enemies, then he qualifies as one of the very greatest national leaders of modern history. He now shuffles off this mortal coil, leaving behind his struggles and haters, and ascending to the realm of God, where he can contemplate the crystalline tranquility of the cosmos; but the light of the Bolivarian Revolution that he ignited on this lower plane of existence will endure – and continue shining hope into the hearts of men all over the world unto the ages of ages.

PS. For more statistics and objective assessments of Chavez’ achievements, consult Mark Weisbrot’s classic, “The Chávez Administration at 10 Years: The Economy and Social Indicators.

(Republished from AKarlin.com by permission of author or representative)
 
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The most famous corruption indicator is Transparency International’s Corruption Perceptions Index. Its only problem is that the perceptions of their self-appointed experts have nothing to do with reality!

As I explained in previous posts on this blog, it suffers from numerous flaws. Part of it has to do with its questionable methodology: using changing mixes of different surveys to gauge a fluid, opaque-by-definition social phenomenon. Another is its reliance on its appeal to authority, the theory being that “experts” in business and think-tanks know more about corruption relative to anyone else. Countries with more regulations are systematically prejudged, as are those facing hostile media environments such as Russia or Venezuela. Above all, the CPI doesn’t pass the face validity test – in other words, many of its results are frankly ludicrous. Is it truly plausible that Russia (2.1) is as corrupt as failed states like Zimbabwe (2.4) or D.R. Congo (2.0), or that Italy (3.9) is more corrupt than Saudi Arabia (4.7) which is a feudalistic monarchy!?

This suggests that we urgently need another, more objective index. Thus I present the Corruption Realities Index (CRI)!

Unlike my previous attempt at this, the Karlin Corruption Index – which was rightly critiqued for being no less subjective than the CPI (though I do believe it was more accurate) – this time round I am drawing on real world data. In particular, there are three corruption indices that aren’t as well known as the CPI, but far more useful.

One of them is Transparency International’s less well-known Global Corruption Barometer. Every year, they poll respondents on the following question: “In the past 12 months have you or anyone living in your household paid a bribe?” The answers hint at the prevalence of corruption in everyday life, as experienced by a sample of normal people, and as such they almost certainly offer a better picture than the perceptions of experts who are prone to the narrative fallacy and are unduly influenced by the ideological biases of the international business media (e.g. op-eds in The Economist or the WSJ). A good example is the reputational fallout Russia experienced in the wake of the prosecution of Mikhail Khodorkovsky, which saw its CPI retreat despite the lack of any noticeable increase in corruption on the ground.

Another key resource is the Global Integrity Report, which evaluates countries on their “actually existing” Legal Frameworks and Actual Implementation on issues such as “the transparency of the public procurement process, media freedom, asset disclosure requirements, and conflicts of interest regulations.” This involves line by line examination of the laws in question, and the “de facto realities of practical implementation.” Crucially, the assessments are blindly reviewed by a panel of peer reviewers and outside experts, which is an important antidote to bias.

Finally, there is the International Budget Partnership, which – believe it or not – assesses budget transparency and accountability. It compiles an Open Budget Index on the basis of factors such as budget documents availability, and the effectiveness of oversight by legislatures and supreme audit institutions. People who think of Eastern Europe as a black hole of government corruption will be surprised to learn that it is the best performing region after the developed world, while the Middle East, China, and sub-Saharan Africa are distinguished by their opacity.

Data from all three sources – to the extent that it is available – is amalgamated and fed through a formula to produce the Corruption Realities Index.

GCB is the percentage of people saying they or their households paid a bribe in the past 12 months from 2010 data. GILF is the Global Integrity Legal Framework score. GIAI is the Global Integrity Actual Implementation score. Most Global Integrity data is from 2007-2010. OBI is the Open Budget Index score from 2010 data. The CRI is the Corruption Realities Index. More details are given at the bottom of the table.

Country GCB /% GILF /100 GIAI /100 OBI /100 CRI
1 Denmark 0 10.0
2 UK 1 87 9.1
3 Norway 1 83 9.0
4 Korea, South 2 96 82 71 8.7
5 Finland 2 8.6
6 Netherlands 2 8.6
7 Switzerland 2 8.6
8 Germany*† 2 83 83 67 8.4
9 Portugal*† 3 86 86 58 8.3
10 Iceland 3 8.3
11 Australia*† 2 78 78 8.2
12 Israel*† 4 83 83 8.2
13 USA 5 90 78 82 8.1
14 Slovenia 4 68 8.1
15 New Zealand 4 90 8.0
16 Ireland 4 8.0
17 Brazil 4 85 66 71 7.9
18 Spain 5 84 74 63 7.8
19 Canada 4 90 61 7.8
20 Hong Kong 5 7.8
21 Georgia 3 86 58 55 7.8
22 Bulgaria 8 97 73 56 7.7
23 Croatia 5 57 7.7
24 France 7 87 68 87 7.7
25 Japan 9 91 76 7.7
26 Argentina 12 97 77 56 7.5
27 Taiwan 7 7.4
28 Latvia 15 93 76 7.3
29 Italy 13 84 71 58 7.1
30 Poland 15 86 71 64 7.0
31 Singapore 9 7.0
32 Austria 9 7.0
33 Czech Republic 14 84 64 62 6.9
34 Peru 22 93 70 65 6.7
35 Chile 21 87 66 72 6.6
36 Indonesia 18 92 56 51 6.6
37 FYR Macedonia 21 90 65 49 6.5
38 Vanuatu 16 84 55 6.5
39 Fiji 12 64 64 6.5
40 Kosovo 16 78 60 6.5
41 Romania 28 95 64 59 6.3
42 Armenia* 22 72 72 6.3
43 China 9 76 43 13 6.2
44 Hungary 24 83 62 6.2
45 Serbia 17 80 44 54 6.2
46 Russia 26 90 54 60 6.1
47 Colombia 24 89 49 61 6.1
48 Philippines 16 84 31 55 6.0
49 Malaysia 9 57 37 39 6.0
50 Luxembourg 16 6.0
51 Papua New Guinea* 26 69 69 57 6.0
52 Bosnia & Herzegovina 23 90 39 44 5.8
53 Thailand 23 79 50 42 5.8
54 Venezuela 20 84 39 34 5.8
55 Lithuania 34 85 63 5.8
56 Mexico 31 83 59 52 5.8
57 Greece 18 5.8
58 Moldova 37 89 59 5.7
59 Solomon Islands 20 63 52 5.6
60 Belarus 27 81 48 5.6
61 Turkey 33 75 57 57 5.5
62 Bolivia 30 78 56 13 5.3
63 Ghana 37 78 51 54 5.3
64 Ukraine 34 77 39 62 5.2
65 India 54 86 55 67 5.0
66 Pakistan 49 91 47 38 4.9
67 El Salvador 31 37 4.8
68 Azerbaijan 47 88 40 43 4.8
69 Lebanon 34 65 39 32 4.7
70 Mongolia 48 70 43 60 4.6
71 Kenya 45 62 45 49 4.5
72 Palestine 51 73 41 4.3
73 Sierra Leone 71 79 58 4.2
74 Zambia 42 36 4.1
75 Senegal* 56 65 65 3 4.0
76 Uganda 86 99 45 55 4.0
77 Nigeria 63 73 44 18 3.8
78 Vietnam 44 56 28 14 3.7
79 Cameroon 54 69 39 2 3.6
80 Iraq 56 75 32 0 3.4
81 Liberia 89 64 43 40 3.1
82 Afghanistan 61 21 2.8
83 Cambodia 84 58 30 15 2.6

* The Global Integrity scores for Legal Framework and Actual Implementation were given as one averaged figure, so bear in mind that
† Global Integrity scores were collected for 2006 or earlier, so may no longer be up to date.
The CRI for countries in italics was generated on the basis of only one piece of data, the percentage of people saying they or someone in their household paid a bribe in the last year. As such, their CRI has a high margin of error.

Formulas

  1. For countries with all four data points. (10-sqrt(GCB))*5 + (GILF + GIAI)/5 + sqrt(OBI) = CRI, with the GCB/GILF/GIAI/OBI weighted 50-20-20-10.
  2. For countries with no OBI. (10-sqrt(GCB))*5 + (GILF + GIAI)/4 = CRI, with the GCB/GILF/GIAI weighted 50-25-25.
  3. For countries with no Global Integrity data. (10-sqrt(GCB))*7.5 + sqrt(OBI)*2.5 = CRI, with the GCB/OBI weighted 75-25.
  4. For countries with only GCB. (10-sqrt(GCB))*10, with the GCB being the only weight by definition.

Needless to say, the accuracy of any CRI score increases with the amount of data it is based on.

I did not bother including any country that doesn’t have polling data on the prevalence of bribery over the past year, as it is an indispensable indicator. One can only hope that the Global Corruption Barometer will expand its coverage in the coming years, as the CRI depends so much on its data.

One major group of countries that isn’t assessed here, because of a lack of data, are the Gulf monarchies. If we make the (rather generous?) assumption than only 5% of their households pay a bribe in any given year, then based on the UAE’s and Kuwait’s Global Integrity scores and Saudi Arabia’s OBI, these countries will have the following CRI: Kuwait (6.2), UAE (6.7), Saudi Arabia (4.0).

This is but the beginning. I hope to search out more sources of data like the GCB, and keep expanding the Corruption Realities Index in the years ahead.

EDIT 05/26/2011: Note that there are going to be substantial internal variations for corruption within a country, as different regions will have varyingly corrupt bureaucracies and police forces. To take the example of Russia, for instance, a recent FOM poll indicates that the frequency of requests for bribes ranged from, say, 7% in Omsk oblast, to 31% in St.-Petersburg. This would translate into CRI scores of 7.3 and 5.9, respectively.

(Republished from Sublime Oblivion by permission of author or representative)
 
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Following on the ground-breaking and globally acknowledged Karlin Freedom Index (which is of course by far the most objective, accurate, comprehensive and plain awesome democracy measuring tool available to political scientists today), I’m now revealing the Karlin Corruption Index (KCI) which rates transparency based on my own readings, personal impressions and bigoted prejudices. As with the “democracy indices” (Freedom House et al.), the current corruption indices – the most prominent of which is Transparency International’s Corruption Perceptions Index (CPI) – just don’t do all that of a great job. Let me explain why.

First, let’s have a look at the very language of corruption. Contrary to what one might expect, almost all linguistic terms for bribery are either neutral or even positive and are related to some of (1) “gift”, (2) small “tip” or tip, or (3) “greasing” i.e. a way of making things flow smoother, (4) “understanding”. I suspect the reason is that corruption, as long as it’s systematized, cannot unravel a state by itself, and in some cases even creates positive effects. Arguing to absurdity, a “gift economy” society of the type seen in hunter-gathering societies, kibbutzim or hippie coops would probably be given a 0/10 for transparency by the CPI’s methodology. But does that really mean anything?

Similar critiques can, in part, be extended to states. In highly regulated countries, giving kickbacks may be the optimal way of running businesses, employing people and generating growth (e.g. Russia, Italy). In highly stratified societies, increasing public spending to improve social mobility – even if part of that spending is siphoned off and contributes to more corruption – may be the socially just decision (e.g. Venezuela). In economically backwards nations, purposefully turning a blind eye to copyrights and IP violations may lead to faster development (e.g. 19th C Germany, China)*.

Second, I must stress that corruption isn’t a concrete number, it’s a vague, fluid and opaque-by-definition social phenomenon that can mean any number of different things in different cultures. Relying on the subjective perceptions of “experts” and businesspeople, as in the Corruption Perceptions Index, is suspect, since they come with their own sets of biases and tropes: lack of attention to statistics and opinion polls; very optimistic assumptions about free markets; disregard for cultural context and popular stereotypes; non-appreciation of the fact that “legalized corruption” is still corruption (e.g. what passes for lobbying in the US would be regarded as corruption in many European countries); etc. Check out this comment thread at A Good Treaty’s interview on this blog for a good discussion of the failings of the CPI.

Now I could go on with the caveats, but as they’re all rather boring and self-evident, it’s time for the succulent part: the actual Karlin Corruption Index country rankings themselves. As with the CPI, 10 is best, 0 is worst. The ↑ and ↓ arrows indicate the trend.

10

Only a few countries like Sweden make it here, though so do many small communities strong in Asabiya.

9

Clean countries with relatively little corruption such as Germany (↓), Canada and Australia, as well as US states such as Massachusetts.

8

These are countries where corruption begins to acquire big dimensions amongst the elites, but remains small at the lower rungs. The United States (↓) is here because privileged corporations enjoy extensive government largess, often at the expense of ordinary citizens (especially in the defense, oil, and financial services sectors). For the skeptics, The Quiet Coup by Simon Johnson is required reading.

The trends are negative. Corporate influence (disguised under Tea Party populism) is growing under the “socialist” (LOL) Obama administration: the overturning of corporate funding limits on political campaigns, BP’s requisitioning of Louisiana police to suppress freedom of speech, and the uncontrolled growth of the privatized anti-terrorism sector are just three examples that come to mind. Though these might not make it into the considerations of the experts and businesspeople gauging US “transparency”, I don’t think that makes it any less corrupt for all that.

Though the elites feed off the public trough, corruption is much less prevalent at lower levels. In countries like Russia or Mexico, corruption in institutions like the traffic police is the rule; in the US it isn’t even an exception – it’s practically unheard of. That’s because in rich, socially cohesive nations, corruption is simply too expensive for simple people. For this reason, I think the US is still above a 6 at the very least, and probably above a 7. But as the popular saying goes, the fish rots from the head. If the economy stagnates and corrupt elites continue misleading the public with “spontaneous” Astroturf organizations, then who knows, by 2020 you could be driving down Route 101 when a policeman pulls you ever and asks if you want to “reach an understanding”.

Other countries in this category include the UK (↓), France (↓), Japan and Israel (↓), where things are ostensibly all prim and proper but the elites live by different rules from the rest in the darker corners. US states like Texas, New York, California and Ohio are probably in this category.

7

In this category corruption becomes more brazen amongst the elites and discernible (but far from prevalent) in the lower levels. Examples would include Brazil (↑), Poland (↑) and Korea. Credit where it’s due: Saakashvili might be a semi-authoritarian warmonger, but he’s cut corruption in Georgia from near failed state levels to almost respectable. Most of the Visegrad region, the East Asian tigers, and the American Deep South would be in this category.

6

Corruption amongst the elites is brazen, most government contracts go to the well-connected, and the elites live by laws very *visibly* different from those of the commoners. At everyday levels, corruption becomes hard to miss: traffic policemen can be bribed; grades can be bought. That said, society functions and there certainly remains substantial room for success based on purely meritocratic achievement.

Even a year ago, I’d have put Russia (↑) into the 4-5 range below. However, the (never-ending) “war on corruption” is no long just talk (as it was under Putin). It is fast producing real results. Regional governors, especially the most entrenched (and corrupt) ones are being fired and replaced by younger technocrats associated with Medvedev’s “civiliki” group, with Luzhkov being just the latest example. There are plans to cut 20% of bureaucrats, replacing them with government e-services. The fast growth in the average bribe size is a positive sign: it indicates that the risk premium for giving and taking bribes is growing.

But wait a second… the situation might be improving, but wasn’t it Zimbabwe-like to begin with, according to the CPI? I really doubt it. Corruption just isn’t that common in everyday life (in 2010 only 15% of Russians paid a bribe, which is roughly comparable to countries like Bulgaria, Turkey and the Czech Republic, but certainly not to sub-Saharan African nations where it’s typically more than 50%). As for the elites, corruption in that world is certainly pervasive and fairly damaging: e.g. about 50% to 2/3 of allocated funds are lost in the road construction sector. But that said, there’s a fair bit of exaggeration towards the apocalyptic side, as with the $8bn Sochi “road of beluga caviar” – which was actually also a railway with dozens of bridges and mountain tunnels. Despite Stanislav Belkovsky’s unsupported assertions, there’s no evidence or reason to believe Putin has amassed a $50bn fortune. Though I’m of the 1988 cohort, I still remember the time when Yeltsin’s “Family” were more or less openly stealing from the state budget. Back then Russia would have scored a 3-4 on this Index. My impression is that the current guys at the very top are relatively clean and that fiscal transparency has come a long way.

This category also includes Italy, though it could be one level higher and there are of course wide regional variations (Sicily: 4-5, the North: 6-8). AFAIK, its one serious attempt to root out structural corruption in the early 1990′s fizzled out, and Silvio Berlusconi – who unlike Putin we actually *know* to be a corrupt billionaire – isn’t exactly the best poster boy for transparency.

My inclusion of China (↑) here will also be controversial, since there are any number of anecdotal tales about the unholy alliances springing up between regional Communist Party heads and ruthless businessmen to dispossess peasants of land, erect shoddy infrastructure, etc. But on the other hand the country still functions well, large-scale corruption is punishable with the death penalty (there’s a little disincentive!) and the central Party is composed of relatively clean technocrats.

Other countries in this category include Turkey, South Africa, Romania and Cuba. Historically, the post-thaw Soviet Union was in this category until its dissolution. I think most of Latin America would be in the 4-6 range.

5

At this level corruption is very brazen amongst the elites and prevalent in everyday life. Social mobility is becoming severely constrained amongst those without good family connections or a particular talent for palms-greasing.

Russia has been in this category since the early 2000′s and has (arguably) only exited it recently. If this article is halfway accurate, Greece belongs here. I think that in the past two years Mexico (↓) has deteriorated from 5-6 to this level because of the subversion of its police force and parts of the political and judicial structure by its narco gangs. As they haven’t seen Russia’s recent high profile anti-corruption campaign, Ukraine and Belarus probably remain at this level. Venezuela (↓) does provide middle-income country type social services and has greatly expanded them in the last ten years (i.e. the majority of money is not stolen as claimed by anti-Chavez critics and neocons). However, there’s been little progress on corruption and the problem appears to be getting worse.

Other countries in this category include India, Iran (↓), India and Kazakhstan.

4

As we move down to this level a kind of neo-feudal world is beginning to emerge, in which doors begin to get fully close to the unconnected. The elites cannot be held accountable by the courts; wealth, power and political connections determine everything . I think Azerbaijan and Egypt belong here, as does 1990′s Russia.

3

The stealing becomes ever more systemic, the elites ever more unaccountable: examples include Saudi Arabia, where corruption is institutionalized in the flow of huge oil rents to privileged members of the House of Saud (even the country is named after them!), and Nigeria, where most of the revenues from the oil boom of the last decade appear to have been diverted to politicians’ bank accounts. Other countries in this category include Iraq (↑), Uzbekistan and Kyrgyzstan.

2

These are the countries run like personal fiefdoms, neo-feudal monarchies in all but name. The best example here is Equatorial Guinea, which is almost the definition of oil kleptocracy – the President and his buddies rake in all the petrodollars to their Swiss bank accounts, normal people live in a squalor undifferentiated from their Cameroonian neighbors. Other countries in this category include Zimbabwe, Turkmenistan and North Korea.

But keep things in perspective. Living in societies with a KCI of 0-3 has been the lot of the vast majority of humans in history.

1

When there’s anarchy, the concept of corruption becomes rather meaningless. This is what it looks like: “In eastern Congo, $1 billion in gold is being extracted and exported annually, yet because the government lacks control over the territory the revenues for the national Treasury last year were a mere $37,000.”

Everything becomes a matter of connections and “understandings” between people, and such is life in Congo, Somalia and Afghanistan.

0

* I recommend the book Kicking Away the Ladder by Ha-Joon Chang on copyrights and IP issue in developing nations.

EDIT: This article has been translated into Russian at Inosmi.Ru (Представляю Индекс коррупции Карлина).

(Republished from Sublime Oblivion by permission of author or representative)
 
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Russia is commonly represented as one of the most corrupt countries in the world in the Western media, ruled over by Kremlin clans who sugarcoat their kleptocracy with bombastic nationalism. The most oft-cited evidence comes from Transparency International. This is an organization which aggregates surveys of foreign businesspeople and regional analysts to compile a Corruption Perceptions Index (CPI). Its verdict on Russia is decidedly unflattering; apparently, as of 2008 it was the 147th most corrupt nation on Earth. This morass of bribery and corruption will inevitably stymie its leadership’s economic development and Great Power ambitions.

I’ve criticized such views for being far too simplistic here, here and here. The crux of my argument is that the CPI measures the subjective perceptions of a narrow class of people; it does not accurately portray the extent of corruption in the wider society. For instance, according to Transparency International itself, ordinary Russians do not pay more bribes in a typical year than the Czechs, despite that the latter have a much higher CPI. Businesses and citizens do not pay more exorbitant amounts to “get things done” than is typical for the former socialist world, or middle-income nations in general. And there is compelling evidence that the extent of corruption declined under Putin from the 1990′s, though not by much. Finally, as I pointed out in Education as the Elixir of Growth, though corruption slows growth it is not a crucial factor; a well-educated workforce is far more important for long-term convergence to developed status.

Now I present a summary of an article by Dietwald Claus, Missing the Forest for the Trees, a counter-intuitive analysis of the causes of corruption, its consequences, and how to reduce it. He works from his experiences in Russia to reach global conclusions, which can be summed up by: “Corruption is the consequence of regulation and poverty: regulation creates the incentives for corruption, while poverty determines its price”. Applied to Russia, its metastasized bureaucracy and reams of red tape provide ample scope for corrupt, rent-seeking activities, especially at the higher echelons where foreign observers are concentrated. (Their impressions are reflected in the CPI and the Western media). It also explains INDEM’s findings, which I covered here, that since the late 1990′s, the incidence of corruption fell, even as the average bribe size soared.

Missing the Forest for the Trees

Dietwald Claus

Summary

After hearing all the talk of Russia’s apocalyptic-like corruption, Claus was surprised to find that in the two years he spent there not once was he approached by a bureaucrat seeking a bribe. He decided to investigate the discrepancy between media hyperbole and reality on the ground. He starts off by discussing corruption, emphasizing that it is not always bad and indeed sometimes correct and necessary, for instance to circumvent bad laws. He mentions a study on Soviet Georgia, which concluded that the inefficiencies of the planned economy actually made corruption and black markets there productivity enhancing! Another caveat is that corruption is only counted as such if it’s illegal; for instance, in many European nations American-style institutionalized special-interests lobbying and soft-money political contributions would be considered deeply unethical. (I would also note that the sleazy relations between the Wall Street oligarchy and the US government exposed by the economic crisis – e.g. see The Quiet Coup by Simon Johnson – provides further food for thought about the nature of corruption in nations with different levels of development).

He then turns to Russia, which has a very high CPI, but whose people paradoxically do not pay much to bureaucrats (less than Czechs or Ukrainians, for instance). He does a series of statistical analyses, trying to tease out the linkages between the CPI, the GCB (the Global Corruption Barometer – what percentage of the population said they paid a bribe in the past year?), the World Bank’s Ease of Business metric, and GDP per capita. One conclusion was that nations with a high CPI paid few bribes, but those with lower CPIs had a more variable experience:

No country with a score of five or more in the CPI (indicating a lower level of perceived corruption) has more than 7 percent of respondents who report paying a bribe in the past year; for most countries this figure is substantially less. For those countries whose results are weaker in the CPI 2006, there is far more differentiation in the experience of bribery.

To the contrary, GDP per capita is a much better predictor of CPI scores than prevalence of bribery! For rich nations, there is a strong correlation between the GCB (self-reported corruption) and the CPI; but the linkage becomes weaker in middle-income countries, and disappears entirely amongst low-income nations. The GCB depends more on the level of bureaucracy and regulation in a country as measured by Ease of Business, especially in less-developed nations:

Bureaucracy and regulation seem to have a much more direct effect on the willingness of ordinary people to pay bribes than they influence the perception of corruption by foreign experts and business people.

Furthermore:

…when ease of doing business is controlled for, the correlation between GCB and CPI becomes insignificant. This is a strong indicator that regulation and bureaucracy are the most important factor influencing both corruption experience and perception.

If corruption is defined as “getting things done”, then the relationship between CPI and GDP growth should be negligible, but positively correlated with Ease of Business. This is indeed the case:

The results show that the relationship between CPI and GDP growth is weakly significant, but is opposite of what is predicted by theory: the more corruption is perceived (low CPI score), the higher is GDP growth… What makes these findings even more curious is that the relationship becomes much stronger for countries with high GDP/capita (above $10,600)… For countries with low GDP/capita (below $5,000), there is no significant correlation between GDP growth over 10 years and CPI:

This is basically the same conclusion I reached in my Education as the Elixir of Growth articles. Even the Economist agrees that a link between the rule of law and growth is hard to establish.

Conclusion: Gathering the Strands (quoted, my emphasis)

I began this research because I was interested why my experience of living in Russia was so much different from the picture presented by Transparency International’s research: how is it possible that I never paid a bribe over the course of two years, even though Russia is supposedly one of the most corrupt countries in the world? And how is it possible that Russians admit to far less corrupt behaviour than Czechs or Ukrainians, even though Russia is ranked as by far more corrupt than the Czech Republic?

Based on my research and analysis, I believe that I have found at least partial answers to this question. The first is that the CPI seems to depend on the level of a countries economic development far more than on the level of every day corruption experienced by locals: the poorer a country is, the more likely it is perceived by outsiders to be corrupt – regardless of how corrupt locals are. Or to put it differently: a countries GDP per capita is a far better predictor of Perceived Corruption than the level of actual corruption experienced by locals. Only in relatively wealthy countries does the experience of foreigners align with that of locals.

This should not be surprising: foreign business people and experts in poor countries are very likely citizens of wealthy countries, or representatives of companies and organizations based in wealthy countries. Their much greater wealth relative to locals puts them in a much better position to engage in corrupt behaviour. They are also more likely to interact with people of their own socio-economic background, and will therefore encounter corrupt(ing) individuals more frequently than if they were to interact mostly with locals. Since during my time in Russia I lived mostly among Russians and had a Russian lifestyle, rather than among wealthy expats, my chances to engage in corrupt behaviour were very low. Rather than being a measure of corruption in a particular country, the CPI is better understood as a measure of a country’s relative poverty. One implication of this is that foreigners in poor countries are not only victims of corruption, but also perpetrators of corruption. In the words of Bernard Donners, CEO of Phillips in Russia: “50 percent of the corruption is imported.”

The second answer to my riddle is that the most significant cause of corruption is regulation: the more difficult it is to do business in a country, the higher the level of corruption. “Less government equals less corruption,” writes Francois Melese: “the fewer rules, regulations, contracts, etc., government officials have the discretion to write, modify, or enforce, the less opportunity for corruption.” This may appear to be the same argument made by Transparency International and others involved in the fight against corruption that see inefficiency of government and the lack of good governance as the main cause of corruption. But this is misleading: it is not the quality of regulation enforcement that makes the difference between corruption and no corruption, but the existence of the regulations themselves. Highly regulated wealthy countries with low corruption are not less corrupt because of better governance, but because it is more expensive to corrupt their officials. It is almost equally difficult to do business in France and South Korea, but South Korea is perceived to be far more corrupt: while citizens of both countries report the same level of corrupt behaviour, France’s GDP/capita is twice that of South Korea. Even in high income country, this relationship holds to some degree: Germany and the Netherlands have an identical GCB, but the Netherlands are perceived to be slightly less corrupt – the Dutch also have a slightly higher GDP/Capita.

Before this background, it is curious to note that Transparency International never advocates the reduction of regulation, but instead argues for the introduction of even more regulation, such as the development of anti-corruption policies on the national and international level: “TI believes that keeping corruption in check is only feasible if representatives from government, business and civil society work together and agree on a set of standards and procedures they all support. … It is TI’s goal to define and introduce strategies and mechanisms that make corrupt practices if not impossible, at least unlikely and punishable, both on the national as well as on the international level.”

As already mentioned, it explicitly denies that reducing regulation is an approach that should be considered since it would create other problems, such as environmental degradation. At the same time, there is evidence that increasing monitoring and other anti-corruption measures has ambiguous impacts on the prevalence of corruption: Transparency, for example, “may have potential perverse effects unless accompanied by reforms of the incentives facing the bureaucrats,” such as in some cases “the incentives to invest in quality [of governance performance] are reduced when information is revealed.” Another study found that “monitoring and thus possible detection obviously reduces honesty.”

My research leads me to conclude that Transparency International’s approach to the fight against corruption may be fundamentally misguided, fighting the wrong enemy with the wrong weapons. Corruption is a symptom of a sick polity, just as heavy coughing is the symptom of a sick body. But just as tuberculosis is not cured by the administration of highly effective cough repression drugs, the dysfunction of a society is not addressed by more effective ways of detecting and punishing corrupt behaviour. Corruption is the consequence of regulation and poverty: regulation creates the incentives for corruption, while poverty determines its price.

Transparency International’s insistence on regulations and active policies as tools for fighting corruption is paradoxical: the highest rates of corruption are in poor countries, which have neither the resources nor the institutions to effectively fight corruption – a fact recognized by Transparency International. These countries have difficulties implementing their already existing regulations, and Transparency International, as well as other international organizations, recommends even more regulation to solve the problem caused be regulation in the first place.

Corruption does not depend on the ‘culture’ of a country, or the ‘quality’ of its civil servants, but on regulation and economic wealth. The wealthier and less regulated a country, the less corruption it has – both real and perceived. Only relatively wealthy countries seem to be able to combine high regulation with relatively low incidents of corruption.

Since there can be no corruption without regulation, the simplest way to fight corruption is to reduce or eliminate regulation in those areas of bureaucracy where corruption is rampant, at least in poor countries. Since corruption often negates the effectiveness of regulation, resulting in outcomes the regulation was supposed to prevent, the existence of the regulation is a double hazard: not only does it not have the positive effect it was meant to have (such as environmental protection), but it also creates an additional negative event: corruption. A circumvented regulation is worse than no regulation at all. The original problem remains unaddressed, and is now compounded by a new problem. The logical solution would therefore be to accept the continuation of the original problem, and at the very least eliminate the damage done by the ineffective regulation that rewards corrupt behaviour and punishes honesty. The more widespread dishonest behaviour is perceived to be, the more likely are people to engage in dishonest behaviour, thereby creating a climate of dishonesty which further decreases the effectiveness of regulation in general. In fact, other than the reduction of regulation, there is little evidence that any other means to fight corruption are effective: according to Svenson, “to date, little evidence exists that devoting additional resources to the existing legal and financial government monitoring institutions will reduce corruption.”

Instead of continuing to pursue tried and failed policies that do little to fight corruption, and may even make the problem worse through increasing the opportunities for corruption (what better opportunity for corruption could there be than being a Corruption Cop in a highly corrupt society?), Transparency International should consider refocusing its efforts to remove the prime cause of corruption: government regulation.

Should a government have the political will and energy to take on the problem of corruption – and those who benefit from it – it might be wiser to focus these efforts on at least temporarily eliminating all those regulations that give rise to the most corrupt behaviour. This would have two benefits: first, it would free up valuable resources – both in terms of reducing the financial burden of corruption from companies and in terms of not having to pay for as many bureaucrats involved in (not) enforcing regulations. Secondly, it would reduce the level of dishonesty in the relationship between government, business, and the general public, decreasing the likelihood of corruption undermining the implementation of the remaining rules and regulations.

(Republished from Sublime Oblivion by permission of author or representative)
 
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At the recent Summit of the Americas in Trinidad, two great leaders, Obama and Chavez, shook hands in what could be the symbolic first gesture of reconciliation. Treasonous neocons will no doubt rush to condemn this as yet another limp-wristed and unilateral concession to “America’s enemies”, reminding their listeners that Chavez closed down opposition media, nationalized American assets and welcomed Russian warships and strategic bombers to his realm.

Yet their stubborn animosity is worse than just imperialist arrogance – it is stupid. They fail to realize that in the past decade Latin America in general, and Venezuela in particular, has become too politically mature to be easily manipulated into serving US (corporate) interests by economic hitmen, CIA operatives and their local surrogates. It is to Obama’s credit that he is willing to move from willful denial to cautious acceptance of the decline of overt American power in Venezuela and elsewhere.

For that is the new reality. The Venezuelan opposition is increasingly discredited for its unconstructive hostility to the government and extra-legal attempts to overthrow Chavez, one of which nearly succeeded in 2002. This resulted in blowback against the US for its covert involvement The government’s refusal to renew the licenses of opposition media outlets that seditiously backed the abortive coup is thus completely understandable, as is Chavez’ personal animosity towards Bush and outreach to other states in similar straits. Furthermore, it should be noted that the owners of newly nationalized companies, including American ones, were fairly compensated.

Meanwhile, within five years of taking real power in Venezuela, a corrupt, disorganized and class-ridden country, Chavez managed to a) double the GDP, b) halve the number of people living in poverty and c) drastically improve practically every indicator of social wellbeing from child mortality rates to inequality to tertiary education enrollment rates (I already covered these successes in prior posts). This does not mean that Venezuela is no longer a corrupt, disorganized and class-ridden country – it still is, to an extent – but the improvements are undeniable and Chavez enjoys high approval ratings. It is thus unseemly and dishonest of the Western MSM to excoriate Chavez as a thuggish populist strongman and economic illiterate.

Let us hope they take a clue from Obama. Or from Mark Weisbrot and his fellow authors, who in their latest paper, The Chávez Administration at 10 Years: The Economy and Social Indicators, give a glowing verdict on the achievements of the Bolivarian revolution.

Economic Growth: As you can see from the graph below, Chavez inherited an ailing, stagnating economy. From 1978-1998, Venezuela’s per capita GDP declined by 21.5%. Chavez was initially politically weak, with the state-owned oil company (PDVSA), the linchpin of the Venezuelan economy, controlled by forces intensely hostile to Chavez. Furthermore, they began to actively sabotage the economy from December 2001, when the Venezuelan Chamber of Commerce organized a general business strike against the government. This culminated in a two day military coup in April 2002 that temporarily unseated Chavez. Adding to the political instability and capital flight, the PDVSA oil strikes of Jan-Feb 2003 led to a short but severe recession.

After the oil strike and Chavez's consolidation of power, Venezuela racked up one of the highest growth rates in the world.

After the oil strike and Chavez’s consolidation of power, Venezuela racked up one of the highest growth rates in the world.

However, once the opposition were neutralized Venezuela managed to rack up very rapid growth. Even canceling out the post-recession recovery, GDP grew at an annual pace of 8.8% from the end of the shaded part in the graph above to Q2 of 2008, or at 6.9% in per capita terms. This is not an unimpressive achievement. The (mean) average Venezuelan increased his output as fast as the average Argentine, Indian and Russian during those years; from the major countries, only the Chinese did significantly better.

Furthermore, growth was broad-based and primarily private – contrary to media myths, the oil sector actually experienced negative growth from 2005-2007 after its quick initial recovery from the PDVSA strikes. Manufacturing grew at a respectable annual rate of 13.2% from 2004-2007. For all the ruckus over incipient statism with all its negative connotations, the public share of GDP declined.

Social Progress: The economy not only grew at an impressive tempo, but the benefits accruing to it were more equitably distributed than at any time in Venezuelan history. Despite the opposition-instigated economic reversals of his mid-Presidency, from 1999-2008, poverty more than halved from 43% to 26% and extreme poverty plummeted from 17% to just 7%. Its Gini index, a standard measure of inequality, dropped from 47 to 41 – though still high, it is extraordinarily egalitarian by Latin American standards and all the more impressive considering it came at a time of rising oil prices.

Infant mortality dropped from 19.0 / 1000 in 1999 to 14.2 / 1000 in 2008; post-neonatal mortality was cut by more than half. Food security improved through the Programa Alimenticio Escolar school-feeding program and the heavily subsidized Mercal network of government food stores. Despite fairly rapid population growth, from 1999-2007 access to clean drinking water increased from 80% to 92% of the population and access to sanitation increased from 62% to 82% of the population. These achievements were facilitated by impressive improvements in medical care – the numbers of physicians, hospitals and other medical facilities increased by almost an order of magnitude.

From 1999-2008 Venezuela finally achieved near universal primary school enrollment and near universal secondary enrollment. Participation in higher education increased by an astounding 138%. Since the extra human capital embedded in education is a vital prerequisite for longterm economic growth, Chavez laid very important foundations here.

Labor: Unemployment dropped, and naysaying propagandists to the contrary, not just because the state hired all the new people. Though employment in the public sector increased by around 50% since 1999 and its share of the total workforce increased from 13.1% to 16.6%, it was commensurate with the large expansion of the state undertaken under Chavez in the second half of his Presidency. However, it remains quite low by developed-country standards.

Government Finance, Current Account. Although the dramatic rise in oil prices helped, non-oil revenue also increased from 11.7% of GDP in 1998 to 14.2% of GDP in 2007 due to improved tax collection. Revenue and spending both increased, the government maintained a stable budget surplus. However, the state oil company PDVSA also had 6.1% of GDP in public expenditures – this, along with peak oil, is probably what caused Venezuelan oil extraction to fall. That said, I think leaving more resources in the ground for a time when they’ll become worth much more is in itself not a bad investment. Similarly, the current account stayed firmly in the black throughout.

For a more detailed discussion of Venezuela’s prospects during this world depression, please see Victimized Venezuela II: Beware of Schadenfreude. Suffice to say the situation is unlikely to turn critical and Chavez will remain politically secure, the wishes of some in the US foreign policy establishment regardless.

That said, there do exist serious problems in Venezuela – inflation, an overvalued bolivar, corruption, obstacles to small and medium business (SME) growth and crime… just to prove I’m not a chavista fanatic.

Problem – Exchange Rates, Inflation. After subsiding from a peak at around the time of the PDVSA strikes, inflation crept back up to around 30% since 2006, supercharged by soaring global food prices. However, since its exchange rate is fixed at 2,150 bolivars to one US dollar, the inflation contributed to massive over-valuation of its currency, estimated at more than 50%. This needs to be fixed if Venezuelan manufacturing is to become competitive and to dilute the economy’s dependence on oil rents – growth in this sector mostly ceased by 2008, and as of December 2008 was down by 25.4% from December 2007. Devaluation is also needed to narrow an awning budget deficit some expect to exceed 20% of GDP in 2009, a disturbing figure even by recent spendthrift standards.

Now that Chavez won the referendum on the abolition of term limits in February 2009 and given that the next Presidential election is in 2012, there are already signs of a stealth devaluation. Because subsidizing dollars is much harder with oil prices at 50$ instead of 100$ per barrel, the government is limiting the amounts of dollars Venezuelans can buy for foreign travel and are considering doing the same with luxury imports. Though Finance Minister Ali Rodriguez says a devaluation will not happen in 2009, a “multitiered exchange rate” is possible – that is, continuing the current peg only for vital imports such as medicine, food staples, and industrial machinery.

This will keep social discontent to a minimum (for a year or two, Venezuelans will have to live with fewer imported cars and cakes, but they’ll have bread). The boost in inflation will be counteracted by shrinking demand and general global deflation. Furthermore, Venezuela has low foreign debt, considerable reserves and China is keeping a floor under commodity prices by buying them up on the cheap across the world. Coupled with what already looks like an incipient recovery in emerging Asia, Venezuela, like Russia, should come out of the crisis relatively unscathed, leaner and ready to enjoy a second round of soaring oil prices. Meanwhile, Chavez is continuing to invest in long-term development by pouring money into infrastructure projects like building an extensive railway system – an excellent idea for the post-peak oil world.

Problem – Corruption, Obstacles to SME Growth. Venezuela is ostensibly the 158th most corrupt nation in the world, according to Transparency International. Yet as I noted in one of my very first articles for Da Russophile, Reading Russia Right:

While there’s no denying Russia is plagued by corruption, to suggest it is endemic like in a failed state is ludicrous – and would frankly be obvious to anyone who has visited the countries on that list. The problem with the CPI is that it’s a survey of outsider businesspeople and their subjective perception of the situation. While improving perceptions is an important goal, it does not necessarily correlate perfectly with reality. TI’s Global Corruption Barometer asks ordinary people how affected they are by corruption, for instance, have you paid a bribe to obtain a service this year? In 2007, 17% of Russians did – putting them into the same quintile as Bulgaria, Turkey and the Czech Republic. In other words, slap bang in the middle of world corruption, rather than at the end.

Pretty much the same argument can be made with Venezuela. In 2007, only 12% of Venezuelans paid a bribe to obtain services, basically the same proportion as the supposedly much cleaner Czechs.

The root cause of this is the sheer amount of restrictions on business in Venezuela – it comes 171st in Ease of Doing Business rankings. In this atmosphere, doing business in full compliance with all the laws and regulations is nigh impossible and forces enterprises into a constant search for shortcuts by reaching understandings with regional bureaucrats. This distorts the economy, dissuades investors and reduces the potential rate of economic convergence with the developed world. And lowers its position on the Corruption Perceptions Index

Yet ultimately, the important thing is to get stuff built – parasites skimming 10% off a project is regrettable, but not catastrophic. As long as a developing country has basic market mechanisms, a semblance of macroeconomic stability, an open economy and most importantly, high human capital, its economy will converge to developed country levels. Many deeply corrupt and bureaucratized countries (Italy immediately springs to mind) managed the transition and fell into economic stasis only after they got rich.

The current preference for short-term social gratification in place of faster diversification through manufacturing is lamentable, but perhaps unavoidable. Chavez operates under the same political constraints that conditioned the classical Latin American caudillo. Maintaining the acquiescence of the statist bourgeoisie, if not their active support, is key to retaining power, given their control over the traditionally tightly intertwined business-bureaucratic-military complex. It appears to me that this structure is being rapidly dismantled in Venezuela since 2003. (Paradoxically, by constructing a new elite drawn from the younger, educated proletariat, Chavez may well end up ushering in the conditions for a leaner, more effective capitalist economy).

Sociological speculations aside, it is however indisputable that Chavez is building the future more actively than any previous Venezuelan leader – despite the cancerous growth of bureaucracy, socialist tendencies and failure to reform the economy on his watch.

Problem – Crime. I am always skeptical about attributing crime trends, positive or adverse, to governments. They can influence them but can’t control them, for they depend on a great many variables inter-connected in ways little understood even by modern criminologists. That said, I thought it would be instructive to actually plot out Venezuela’s notoriously high homicide rates against other Latin American nations.

First, even by the time Chavez was inaugurated President in February 1999, Venezuelan homicide rates had a long, secular trend towards growth, much like Brazil and Jamaica.

Second, they peaked in 2003, at the end of a turbulent period of opposition-instigated anarchy. Since then homicide rates fell slightly, but it seems from the graph of Colombia that once entrenched, high homicide rates are very hard to reverse.

Third, there are allegations that the Venezuelan state contributes to the high homicide rates with its supposedly lax policies towards the “war on drugs”. Right-wing commentators lambast Chavez, left-wing commentators lambast the CIA, and in general the situation seems shady and unclear. I will not comment on these angry accusations and conspiracy theories (which might be true, who knows?) except to state the obvious and recommend global drug legalization.

Fourth, many of the big cities where crime is concentrated are actually run by opposition mayors.

Along with the likes of Colombia, South Africa and Iraq, the chances of violent death in Venezuela today are typical of a medieval society. By my rough calculations, at current rates every thirtieth Venezuelan can expect to be murdered during his or her lifetime. You really don’t want to be a young man living in a seedy Caracas slum nowadays…

Crime is no doubt a huge problem in Venezuela requiring the utmost attention and possibly draconian measures. Which will not happen, as Chavez is far too humanistic for that, and tradition-bound; Venezuela abolished the death penalty way back in 1863…

Problem? – Authoritarianism. Even Freedom House, a notoriously compromised organization, refrains from labeling Venezuela as Not Free. According the Economist Democracy Index, it is a hybrid regime much like that of Russia, Turkey or Georgia – neither a traditional liberal democracy nor an authoritarian state. The Polity IV Project, an academic database tracking democracy trends since the end of the Second World War, gives Venezuela 5 on a scale ranging from -10 (full autocracy) to 10 (full democracy). I suggest reading their 2007 Venezuela Report to anyone genuinely interested in its political status – their main complaint is on weak executive constraints.

Furthermore, democracy is no panacea. Chavez may have increased his personal power and perhaps this trend will intensify, yet he empowered communities by expanding local democracy, education and healthcare. Much of Latin America is enmeshed into backward, class-ridden systems wherein minuscule middle classes exploit the state to serve their own ends, while keeping the masses suppressed by neglect, ignorance, poverty and religion. Chavez is breaking Venezuelans free of this unholy matrix.

I once talked on a plane with a Venezuelan who lamented on the idleness and lack of curiosity of the people, and about how the equivalent of a small town is murdered there every year. Sounds to me like they need a good dose of revolutionary fervor directed towards building up the country. Hopefully the Bolivarian Revolution will sweep away the oligarchic degenerates into political irrelevance and Chavez will use the opportunity to build a modern industrial economy and reinstall liberal democracy once the heavy lifting is finished.

Yet in any case the US should not concern itself over his democratic or human rights credentials, be they fair or foul. Venezuela has Latin America’s biggest reserves of oil and its Orinoco tar sands could potentially hold as much oil equivalent as Saudi Arabia (though being hard to exploit they are worth much less). Although it exports much of its oil to the US, the Chinese have recently been getting in on the action in a big way, as part of their global strategy of locking up diminishing natural resources to fuel industrialization for a few more decades. Cutting off a major part of America’s economic lifeblood at a time of peaking global oil extraction in the service of abstract concepts like democracy is strategic folly.

Overthrowing Chavez and installing a pliant satrap is no longer realistic – the Venezuelan state is now stronger, Chavez is popular and the opposition is viewed as venal and discredited in the eyes of voters. Even from a military perspective, intervention is politically unacceptable and in any case becoming riskier year by year as the Bolivarian republic plows part of its oil windfalls into acquiring modern diesel submarines, air defense systems and Sukhoi fighter jets from Russia – a relatively cheap and effective way of negating American CVBG diplomacy.

Finally, in any case Venezuela has, interesting enough, the most positive outlook on the US of any major Latin American country – Chavez’s tirades to the contrary. This should provide further incentives for cooperation rather than conflict.

(Republished from Sublime Oblivion by permission of author or representative)
 
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Anatoly Karlin
About Anatoly Karlin

I am a blogger, thinker, and businessman in the SF Bay Area. I’m originally from Russia, spent many years in Britain, and studied at U.C. Berkeley.

One of my tenets is that ideologies tend to suck. As such, I hesitate about attaching labels to myself. That said, if it’s really necessary, I suppose “liberal-conservative neoreactionary” would be close enough.

Though I consider myself part of the Orthodox Church, my philosophy and spiritual views are more influenced by digital physics, Gnosticism, and Russian cosmism than anything specifically Judeo-Christian.