Controlling the Global Corruption Epidemic

Author(s): Robert S. Leiken

Source: Foreign Policy , Winter, 1996-1997, No. 105 (Winter, 1996-1997), pp. 55-73
Published by: Slate Group, LLC

Stable URL: https://www.jstor.org/stable/1148973

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 Controlling the Global
Corruption Epidemic
by Robert S. Leiken

fficial corruption-the misuse of public power for

private profit or political gain-represents a hazard
to free trade and investment, a threat to democracy
and development, and, in collusion with
international crime, a danger to national security
and public health and safety. No foreign policy issue affects
Americans more, yet few have received less attention from the
foreign policy community.
But a revolution in public opinion is transforming this issue. The
hardships of global competition have exhausted voters' patience with
government excesses and misconduct. The popular outcry against cor-
ruption has activated officials and diplomats already concerned about
the harmful effects of crime and bribery on international security and
commerce. Consequently corruption is stealing into the precincts of
foreign policy. Corruption, money laundering, and drug smuggling have
become the subjects of international treaties and assistance programs
and now preoccupy international economic organizations as well as in-
telligence and law enforcement agencies. The combination of popular
protest, international pressure, and government reform may supply the
antidote to the current epidemic of corruption.
For the first time in six decades, tyranny poses no international
threat. Today's risks stem from illicit traffic in biological, chemical,
and nuclear materials; international organized crime; narcotraffick-

R 0 B E R T S. L E I K E N consults on governance for public and private

organizations and is the president of New Moment, Inc., a nonprofit group that
works on international democratic issues.

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 FOREIGN POLICY

ing; alien smuggling; and transnational b

lytically by lumping together these "u
cept that they are all aided at critical junct
As barriers to trade and communicati
has become a new frontier for foreign
temic corruption nurtures local criminal
to convert major trading partners such
sia into crime-exporting states. Today, M
tels compete and connive in the Unit
mafia, Asian "triads," and the Italian C
A senior Clinton administration offic
sia's nuclear materials as "very vulnerabl
transactions." Venal Russian officials re
Russian mafia to smuggle dual-use mate
In July 1996, Hong Kong's renowned
Against Corruption arrested a U.S. imm
mantled a major alien-smuggling operati
been conspiring with corrupt Honduran
mount a similar smuggling operation!
Finally, U.S. economic competitiveness
in markets where bribes open the doors-
tices. Since no other country is similarl
have lost to transnational bribery approxim
contracts since 1994, according to a Sep
partment report-and the annual procure
countries is approaching $1 trillion. In t
tury, Americans can no longer afford mer
ruption--or to shrug it off as a necessary c
What Carnegie Endowment senior asso
the "corruption eruption" has shaken "ever
tural background or gross national prod
stories in the last year included the indictm
cabinet and the resulting electoral decim
Party; the graft charges against Italy's mos
ministers and two powerful former Sout
mentary investigations into abuses by the
Pakistan, Spain, and Turkey; and the exp
backs to the Saudi royal family. These stor
federal bribery investigations into IBM Ar

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 ~ Z(

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ILLUSTRATION BY ROBERT LAIRD

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 FOREIGN POLICY

ridden savings and loan crisis; and colossa

of former Mexican president Carlo
Citibank's assistance in laundering the sp
Whitewater, Travelgate, accusations of ma
1996 election campaign, and other recen
As the Cold War wound down, news sto
began steadily to increase. A survey of th
Times, and international coverage in the
that articles mentioning official corrupti
bribes, or kickbacks) quadrupled between
Two closely connected developments are at
tion eruption. First, the end of the Cold Wa
eties have sparked the disclosure of corru
mer Soviet bloc but also among Western alli
and ruling-party dominance have given way
fractious politics. Second, the spread of
though central to controlling corruption
creased both the opportunities for graft an

POST-COLD WAR GLOBALIZATION BLUES

Corruption inpolicy
War," foreign thespecialist
WestMichael
is "one ofinthe
Ledeen wrote the byproducts of the Cold
Washington Times. Leaders who kept the communists at bay
were not examined too closely. As a result, they and their cronies re-
tained power "beyond any reasonable life span," engendering the sys-
tematic corruption later documented by the press and prosecutors. It
is no coincidence, Ledeen adds, that the Italian and Japanese elites,
who were once considered to be among the most "stable" members of
the Western alliance, "now vie for the title of Most Corrupt."
During the Cold War, Italian "revolving-door" politics isolated the
country's strong Communist Party. But as the Eastern bloc crumbled,
that system also collapsed. The magistrates of Milan's "operation
clean hands" filled the vacuum and shifted the national focus from
fighting communism to fighting corruption.
As investigations spread to Belgium, France, Germany, Scandi-
navia, Spain, and Switzerland; European prime ministers, cabinet of-
ficers, parliamentary members and party leaders, corporate chiefs, and
a former secretary general of NATO soon were rubbing elbows in the

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 Leiken

docks. And Cold War European corruption had bridged partisan di-
vides as well as national borders. One of the "great untold stories" of
modern Europe, as columnist Jim Hoagland wrote in the Washington
Post, was the web of corruption "woven by and for the ruling parties
of the left in France, Italy and Spain. It rivals what the conservatives
who preceded them in power did."

If transnational bribery costs Americans jobs, it

costs developing countries efficiency and

credibility-which is what they need most.

In East Asia, as in Western Europe, the receding tide of anti-

communist unity exposed shoals of bitter partisanship and lowered
the barriers against discrediting political adversaries. Since the Cold
War, corruption scandals have swallowed up successive Japanese
prime ministers and governments. And in a trial that riveted South
Korea in 1996, two formidable ex-presidents were convicted on
bribery charges, along with a dozen senior officials and nine leaders
of major conglomerates.
The post-Cold War period exhibits the disillusionment and cyn-
icism that result when transcendent events are followed by shabby
anticlimaxes or worse: after the Glorious Revolution, Walpole's rot-
ten boroughs; after Lincoln, the Gilded Age; after Wilson's Fourteen
Points, Teapot Dome; after the fall of the Berlin Wall, this. Histo-
rian Charles Maier tells us that a penchant for scandal characterizes
such "periods of moral crisis." Bribery and kickbacks, once stomached
as inevitable expenses, become intolerable signs of decay. The press
features investigations and trials, feeding the public's rising distrust
of politicians of all stripes and its appetite for "political outsiders."
Weakened political parties, splintered electorates, and divided legis-
latures have opened the doors for anticorruption prosecutors and
judges from India to Italy.
Meanwhile, the social dislocations of technological revolution and
globalization are subjecting the political and economic establishment
to mistrustful scrutiny. As barriers to investment and trade fall, tech-
nological advances and heightened competition spur cutbacks, lay-

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FOREIGN POLICY

offs, and moonlighting-along with incre

profits. A climate that provides hard times
for others has opened not only a wage but
dering intolerable the easy money extract
the corruption issue has gained a mass const
tries even as the boom places greater tem
customed to receiving "commissions."
The adversities of India's Congress Par
ruling Partido Revolucionario Institucional,
Cold War per se than to a broader democr
Korea's corruption trials and Indonesia's t
"one-party democracy" and the repudiatio
associated with statist economies. Previously
racy and markets has been measured in ge
cieties in transition are swept headlong i

CORRUPTION AND TRANSITION

eveloping societies, as the designation implies, are tran

tional, not traditional. Transitions involve institutional an
cultural contention. Conflict among competing elites, cu
tures, and institutions has characterized periods of corruption
scandal from the fourth-century Roman empire to late 19th-cent
America. A professor at Seoul National University told the Los A
geles Times recently that South Korea's systemic corruption was "
result of interaction between Korean traditional norms and mod
industrial development."
As John Noonan's magisterial 1984 study, Bribes, shows, offic
corruption has been denounced since ancient days, but its social
moral content has evolved. In early modern Europe the sale of of
was defended on grounds of efficiency by Montesquieu and Benth
While today many would call such a practice graft, it is also typ
of a patrimonial system of government-one in which the offic
considered the property of the officeholder.
In 1968, political scientist Samuel Huntington argued that beha
ior that was "acceptable and legitimate according to traditional norm
becomes unacceptable and corrupt when viewed through moder
eyes." Today in the developing world, the conventional reciprocities o

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 Leiken

patrimonial societies-the exchange of offerings, the rewarding of kins-

men, and the treatment of public office as personal property-have
entered a twilight zone as these societies lurch into modernity.
What is customary in traditional societies may be subject to pun-
ishment and scandal in modern ones. In most developed countries,
corruption remains a violation of the rules of the game; in many de-
veloping and postsocialist countries it is the game itself-corruption
is systemic. The Corruption Perception Index, which is compiled an-
nually by Transparency International, an international anticorrup-
tion organization, shows that the bottom third of the 54 countries
surveyed is occupied exclusively by developing and former socialist
countries. Nigeria brings up the rear, China is ranked 50th, Russia
47th, India 46th, Indonesia 45th, and Colombia 42nd. Italy, the low-
est ranked of the Western countries, occupies 34th place.
Statistics on reported crimes can be tabulated, but corruption-
a consensual crime-generally goes unreported. However incomplete,
data from developing and postsocialist countries confirm the wide-
spread impression that corrupt practices are increasing. According to
a forthcoming survey by economist Edgardo Buscaglia, in Argentina,
Brazil, Ecuador, and Venezuela bribes and payoffs to court officials
rose sharply as a proportion of court costs between 1986 and 1993.
Public opinion surveys published in 1995 by the U.S. Information
Agency found that majorities in Central and Eastern Europe believe
that corruption has increased since the collapse of communism. In
China, corruption arrests have risen sharply, and the scale of covert
transactions has grown markedly. In the early 1980s, bribery and em-
bezzlement typically yielded between several hundred and several
thousand yuan. In April 1996, China announced that it would pros-
ecute 18 former government officials for allegedly embezzling some
18.3 billion yuan, or $2.2 billion.

SOVIET AND OTHER PATRIMONIES

C rime and corruption usually went unreported in the Soviet

bloc press, and the lifting of censorship may have fed the wide-
spread public impression of soaring corruption. But economist
Richard Lotspeich, in Europe-Asia Studies, has shown that there has
been a spectacular rise in crime, bribery, and corruption in the tran

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FOREIGN POLICY

sition economies of the former Soviet b

Under the collective patrimonialism o
nomenklatura enjoyed opulent dachas an
the shadow economy-the economic life
viet bloc-bribes and kickbacks moved s
needed. Comrades and businessmen becam
tices and mores.
As Soviet power began to wane, leadin
dummy corporations abroad to whisk party
country. After the collapse of Soviet r
"professional hitmen, icons, gold, drugs
stead of spies," as journalist Steven Han
Criminal. Nordex, a dummy corporatio
1989 by the KGB, not only launders money
in narcotics, and smuggles nuclear mater
man intelligence report.
Post-Soviet market reforms kicked ov
and also liberating the corruption and m
With obsolete laws, a state incapable of
mate of moral and social confusion, crim
der the old regime have emerged as pow
ward of 70 per cent of all businesses clai
money to organized crime, according t
Commerce. Meanwhile, the destitute hei
resemble the Keystone Cops as they boa
thieves in BMWs and shamble into crim
doned by mobsters with cellular phone
contributed to the meteoric rise of anti
Aleksandr Lebed, who became the new ch
the dramatic sacking of Yeltsin's closest
advisers-First Deputy Minister Oleg Sosk
vice head Mikhail Barsukov, and Preside
Aleksandr Korzhakov.
Recent Chinese experience provides an
capitalist reforms boil when dumped int
As political scientists Yufan Hao and Mi
Asian Perspective, bribery has become s
ernment transactions resemble "an auctio
ficial services." Tax and price-control off

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 Leiken

public prosecutors, and economic crime court officials regularly so-

licit "fees" and kickbacks for routine services, as do booksellers, train
conductors, journalists, lawyers, teachers, and physicians. In 1995,
more than half of New York City's kidnapping suspects and victims
hailed from freewheeling Fujian province.
Mao's system had centralized ancient guanxi networks rooted in
kinship, patron-client, and political connections. Deng Xiaoping's
1978 market reforms sought to overhaul the economy without sur-
rendering political hegemony: macroeconomic decisions were de-
centralized, the market was permitted to set some prices, and many
state companies were privatized.
Officials and managers began buying at low planned prices and
selling at high market rates as well as trafficking in business licenses,
import permits, and foreign exchange. Reform generated not so much
a shadow economy as a sprawling, murky marsh in which patrimo-
nial, command, and market practices consort and the boundaries be-
tween public and private, individual and collective, and administra-
tion and politics are blurred. Not capitalism, but rather its injection
into a socialist-patrimonial institutional environment, has sent cor-
ruption soaring in China.

REINVENTING THE FREE MARKET

he conventional prescription for controlling corruption is p

litical competition and market reforms. Why then are we
periencing a global epidemic of corruption? One reason fo
is that democratic elections and constitutions are not sufficient to e
tablish effective democratic institutions. Likewise, market refo
sometimes have been mandated from above, but it took the West ha
a millennium to establish what we now call the free market.
Legal, institutional, organizational, and cultural innovations
played crucial roles in gradually expanding the orbit of trade in nor
ern Europe, as economic historian Douglass North has shown. V
lage barter was superseded by mediated exchange via trusted kin
and authorized markets or fairs and eventually evolved into "im
sonal exchange with third-party enforcement"-the free mark
That evolution was facilitated by the establishment of property rig
contract law, and the rule of law itself, as well as a state that was s

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FOREIGN POLICY

ficiently dominant but also sufficiently im

exchanges. Civic norms broadened to re
family or clan. These institutional, org
vances reinforced one another and shape
Italy, which straddles Europe's historic
opment and patrimonialism, illustrates t
inherited the economic dynamism and
sance city-states that founded public fin
publican government in Europe. But in s
dal and authoritarian past, confidenza is
and "contracts" are enforced by patrons
dable is the Mafia. Italy's Cold War patrona
from the bustling north to the clientelist
The Western Hemisphere has evolved alon
severe, north-south gradient. The Rio Gran
the divide "between two distinct version
the Anglicized north, the work ethic, en
democracy, and capitalism prevailed; in t
ritualism, centralism, orthodoxy, and patr
In 1788, Edmund Burke assailed the co
Warren Hastings in Bengal: "Bribery, fil
of a great empire receiving bribes from po
ple, this is what makes government itself
ous in the eyes of mankind." After achi
nous elites improved on Hastings's m
impoverished countrymen, usually using
local custom. The corruption epidemic is
once legitimate practices; it is also the m
and odious ones.
In postcolonial Africa, neopatrimonial
and the state emerged as an extension of
tronage, ethnic and kinship ties, and br
governance. Corruption-funded patrona
has exacerbated regional, tribal, religiou
contributed to a continual fiscal hemorr
The International Forum for Democra
in oil-rich Nigeria some $12.2 billion in g
vested to "extra-budgetary accounts" be
there are no records of how these funds

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 Leiken

selves wait in mile-long lines for gas, and Nigeria now imports nearly
70 per cent of its petroleum. Why? Unfinished pipelines, financed by
loans from multilateral development banks that have been pocketed
by government officials, tell a large part of the story. Oil earnings do
less to feed Nigerians than to enrich their corrupt rulers who instantly
transfer their pickings to foreign banks. Despite steady oil earnings
between 1985 and 1993-accounting for about 90 per cent of the
country's foreign exchange and 80 per cent of its federal revenues-
per capita annual gross national product during the period plum-
meted from $950 to $300.
In Latin America, a public official's duty to his office has been
inseparable from the patrimonial obligation to family, clan, clique, or
party. During the depression of the 1930s, the state became the
largest producer, consumer, employer, investor, and financier. While
producing economic growth until the 1970s, these regimes also si-
phoned resources to clients in the private sector and the labor bu-
reaucracy and to political parties and caudillos ("bosses").
Even today, Latin American police demand mordidas ("bites") in-
stead of issuing tickets; vendors obtain licenses by paying "speed
money" to avoid bureaucratic lags; judges encourage out-of-court "set-
tlements" slanted to the highest bidder; the national budgets contain
secret presidential slush funds; and political parties accept substantial
undisclosed donations.
Patrimonialism is also embedded in the fiscal structure of most
Latin American countries. The building inspector, the tax collector,
and the license clerk pad their minuscule salaries with bribes. Most
of the take finds its way up the chain of authority. And the bribe-pay-
ing citizen feels entitled to evade taxes: He already "gave at the of-
fice." Thus, low salaries invite graft, and graft encourages tax eva-
sion, which deprives the treasury of resources, keeps salaries low, and
discredits public office.
In the 1980s, these profligate practices helped to push Latin
American states into a debt crisis, sparking democratization and mar-
ket reform. There, perhaps more than anywhere in the developing
world, the collision of reform and embedded neopatrimonialism has
yielded not only more corruption but an antidote. Though some of-
ficeholders have succumbed to temptation, others have joined the
growing opposition to corrupt practices.

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FOREIGN POLICY

A NEW PROGRESSIVE ERA?

conomist Gunnar Myrdal wrote in Asian Drama that "when

considering the prospects of reform in countries where corrup
tion is so embedded in institutional and attitudinal remnant
of traditional society and where almost everything that happens
creases incentives and opportunities for personal gain, the public out-
cry against corruption must be regarded as a constructive force."
Anticorruption movements have emerged recently in countri
as diverse as the Dominican Republic, Pakistan, Switzerland, Taiw
and Tanzania. Transparency International, a coalition against cor
ruption founded just three years ago in Berlin, already has chapt
in more than 50 countries.
The repudiation of the corrupt clientelist state was integral to the
broad movement for market reform and democracy that sw
through Latin America. Politicians such as Fernando Collor de Me
in Brazil, Carlos Saul Menem in Argentina, Salinas de Gortar
Mexico, and Carlos Andres Perez in Venezuela sought to make p
litical use of the trend. Of those four reformers, only Menem
prospered, despite corruption scandals. Collor was impeached by
Senate for gross influence-peddling. Perez received a 28-month s
tence for misuse of government funds. Salinas opted for exile af
finishing his term, but his effigy is still sold on Mexican streets
symbol of sleaze.
In Africa, both Western-educated elites and traditional tribesm
increasingly censure "gifts" to officials-the former because they hav
adopted Western standards, the latter because they regard the pr
tice as a perversion of traditional morality. In 1968, Huntington
"modem eyes" belonged to student leaders, vanguards, and young
ficers-the makers of the revolutions and coups that marked
epoch in the Third World. Today, modernity looks out from Wes
ern-educated professionals in Africa, journalists in Latin Ameri
economists in Central Europe, and judges in Asia.
America's own "progressive movement" is a source of inspirati
for clean-government activists. That movement was built on urb
consumers and a rising white-collar class, groups that are grow
rapidly in Asia, Central Europe, and Latin America. Alienated
marginalized under the old patrimonial order, they have a vital p
to play in the construction of a transparent and accountable syste

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 Leiken

As historian Richard Hofstadter observed in Age of Reform, "The de-

velopment of regulative and humane legislation required the skills of
lawyers and economists, sociologists and political scientists, in the
writing of laws and in the staffing of administrative and regulative
bodies."
The advent of nongovernmental watchdogs offers another promis-
ing activity for would-be agents of change disillusioned with revolu-
tion. But if the new progressivism becomes one more species of van-
guardism, with prosecutors and judges egged on by a sensationalist
media, exposing corruption will have become a spurious surrogate for
civic virtue.

In advanced democracies, pressure from private interests and vol-

untary associations gradually converted governments from interested
parties seeking a share in transactions into impartial guarantors of
commerce. As James Madison explained in Federalist No. 51, the
contention of private ambitions checks government oppression as
well as the domination of a single branch of government. It follow
that strengthening civil society is complementary and not antitheti-
cal to modernizing government.

THREE LEVERS OF AN ANTICORRUPTION STRATEGY

odemrnizing government and strengthening civil society are

fundamental components of an anticorruption strategy-
though the application of international pressure can also be
crucial. If strictly enforced, laws that mandate financial disclosure
and the reporting of bribe offers, protect whistle blowers, and penal-
ize illicit enrichment can reduce incentives for corruption. The pro-
liferation of vote-buying and illicit political donations in new democ-
racies demonstrates that as elections begin to determine who holds
political power, party financing becomes a major arena of corruption.
But recent scandals in East Asia, Europe, and the United States show
that full and timely financial disclosure is needed in established
democracies almost as badly as in fledgling ones.
Stiff penalties for corrupt high officials should be accompanied by
rewards for competent, honest ones. The ability to dispense perfor-
mance-based pay hikes usually depends upon improved tax collection.
Argentina's efforts to combat widespread tax evasion have met with re-
sistance, but Uganda's experience has demonstrated that when tax col-

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FOREIGN POLICY

lection is coupled with tough measures agai

enues increase.

When the people pay government functionaries decent salaries

they are buying a layer of insulation against patronage and bribery
And the official gains the security and the self-respect of a civil ser-
vant, subverting patrimonialism.
Deregulation, decentralization, and the simplification of govern
ment procedures-fortified by transparent bidding systems, the rot
tion of offices, and modem information-management systems-guar
against corruption. Likewise, market reforms that dissolve state mo
nopolies and trim the discretionary power of officials can reduce op
portunities for corruption. Privatization subjects erstwhile state re
sources to the discipline of the market and the oversight of investors.
Exposing the public sector to internal, domestic, and internation
competition breaks up state monopolies. The freeing of exchange rates,
the reduction of import and export tariffs, and the ending of price con-
trols strip senior officials of the power to determine, for a "fee," the
market price of many commodities. These measures will reduce bribes,
shortages, black markets, and transaction costs and allow producers to
focus on improving quality and cutting costs rather than on cadgin
permits and dodging restrictions. But where corruption is systemic
market and administrative reforms do not suffice and may even becom
counterproductive. As we have seen, loosening government control
can facilitate illicit along with legal economic activity. Moreover, bu
reaucrats have been known to compensate for lost revenues by exact
ing new "fees" in other areas. And high officials have used internal au-
dits to blackmail midlevel bureaucrats. These abuses illustrate tha
reform must be sustained by accountability to bodies with independent
oversight and effective enforcement capacity.
Special government anticorruption bureaus achieved exceptional
success in Hong Kong and Singapore. Elsewhere, despite widesprea
imitation, they have not worked as well. The sweeping powers of such
supragovernmental agencies are incompatible with republican govern
ment. The secretary general of the Organization of American States
Cesar Gaviria Trujillo, a former president of Colombia, asserts that "the
separation of and the adequate balance between public powers" is es
sential for coping with corruption. Where a domineering executive
branch enjoys impunity, two things are needed: "horizontal account
ability" to a legislative body and an independent justice system capa

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 Leiken

ble of investigation and enforcement.

Even that may be inadequate. Colombia's reformed criminal jus-
tice system presented an apparently airtight case that President
Ernesto Samper knowingly financed his election campaign with drug
money. (The U.S. State Department reached the same conclusion.)
The Colombian Chamber of Representatives, knee-deep in bribes,
absolved him. A generous dispensation of drug money and govern-
ment perks, plus some ill-timed U.S. threats, even won Samper, who
denies the allegations, some public support.
To weather resistance where corruption is systemic, horizontal ac-
countability to outside auditors, ombudsmen, and independent leg-
islatures and judiciaries requires the "vertical" backing of civil soci-
ety. That is one reason why the recent emergence of anticorruption
movements is so significant. Civic monitoring groups can set up hot-
lines, support whistle blowers, develop associations of the users of
government services, and mobilize business, professional, labor, and
regional groups as well as the media.
Anticorruption reforms will remain dead letters unless officials
themselves are determined to implement them. However, public
outcry combined with diplomatic and economic pressure can instill
in officials the necessary political will. Hence, coordinated inter-
national pressure is anticorruption's third lever.

COOPERATING AGAINST CORRUPTION

n some countries, transnational bribery and graft deliver mor

dirty money to the laundry than does drug trafficking. Money
laundering has been globalized by the adaptation of emerging
technologies to criminal uses, Russia's emergence as a major theater
of crime, and the proliferation of offshore financial centers. Currently
international crime fighting frequently gets snared in questions of ju-
risdiction and sovereignty. Coordination of the financial intelligenc
units of individual countries, such as the U.S. Treasury Department
Financial Crimes Enforcement Network, is the mission of the Finan
cial Action Task Force (FATF), which was created by the Group of
Seven (G-7) in 1989. Success will rest on expanding FATF well be-
yond its current membership of 26 developed countries and strictly
enforcing its recommendations, such as enabling prosecutors to appl
money-laundering statutes to activities beyond narcotrafficking an

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FOREIGN POLICY

making obligatory the disclosure of susp

cial and nonfinancial institutions.
If a German bribes a German, he gets
a foreign official, he gets a tax deduc
nesspersons can be prosecuted at home f
companies complain that the Foreign C
caps them, especially when competin
countries that allow as tax deductions br
ment officials (as is the practice in half
Organization for Economic Cooperation
U.S. intelligence sources estimate that fi
proximately 80 per cent of foreign contrac
ital projects. The transparency of these
mine not only who builds tomorrow's in
will be built.

The corruption epidemic is n

praisal of once legitimate pra
modernization of illegitimate

If transnational bribery costs America

countries efficiency and credibility-whi
Corruption begets unsafe buildings, bridge
ligent, cynical government of inept official
ernment, breeds mutual distrust among cit
the rule of law, and perverts the work eth
road to riches, and productive enterprise a
Studies show that corrupt procurement p
ble the price developing countries pay fo
also scare off foreign investors. A recent N
Research study demonstrates that U.S. b
tries perceived as corrupt. If globalization
tization mean that business confidence is c
ruption becomes a function of self-interest
Accordingly, an intriguing affinity of
tween U.S. corporations and proponents

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 Leiken

ment. That is so because the solution to transnational bribery lies not

in a futile attempt to repeal the Foreign Corrupt Practices Act but in
universalizing it and supporting reforms in emerging countries.
In the past year, the pace of anticorruption activity quickened in a
variety of international forums. The OECD urged its member states to
stop allowing bribes as tax deductions. The World Bank has recently
tightened procurement and loan procedures, and its president has bro-
ken precedent by calling publicly for a campaign against corruption.
The World Trade Organization (wTo) began discussions on making
transparency standard in government procurement practices. The In-
ternational Chamber of Commerce issued stringent new rules pro-
hibiting bribery, kickbacks, and extortion. Western hemisphere coun-
tries signed an Inter-American Convention Against Corruption, the
world's first anticorruption treaty instrument. But how will these ef-
forts find each other in the dark?
To date, U.S. anticorruption policy has likewise consisted of sep-
arate initiatives in different arenas involving the U.S. State, Com-
merce, Treasury, and Justice Departments; the Office of the U.S.
Trade Representative; the Trade Promotion Coordinating Commit-
tee; the National Economic Council; the Agency for International
Development; the Office of Government Ethics; the White House
Task Force on Barriers to Trade; the cIA, the FBI, and the Drug En-
forcement Agency (DEA); and the U.S. Congress. The late U.S. sec-
retary of commerce, Ronald Brown, had begun to consult regularly
with U.S. firms on the problem of transnational bribery. The FBI will
nearly double its foreign presence in the next four years, with critics
complaining that the expansion will bump into cIA and DEA opera-
tions and that the FBI refuses to share its information with U.S. diplo-
mats.

Early in the next administration, the president should appo

expert panel to develop a coordinated approach to transna
bribery and to the complex connections between official corr
and international organized crime. The effort should take in
count increased U.S. vulnerabilities resulting from the explosi
trade, travel, and technology.
Opportunity as well as interest and duty suggest the need f
more outspoken, better coordinated U.S. policy. In the emergi
ternational anticorruption movement, the United States shoul
the lead as it did with human rights two decades ago. U.S. emb

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FOREIGN POLICY

should protest improper payments to hos

mindful of competing policy priorities. T
tibribery counterpart to the priority wat
erty rights is worth considering. U.S. of
president, should speak out against corru
tional community and urge timetables fo
The United States should press multila
(MDBs) to enforce their own rules on effect
equate internal controls, and timely audit
ture," preoccupied with loan volumes, must
ture. Staff members should be reminded
corruption, and borrowers should be encour
troduce anticorruption legislation and sig
Macroeconomic moderation was made a c
loans in the past decade; transparency an
now.

Some World Bank officials counter such suggestions

gument once invoked against human rights campaigns
tries manage the funds we lend them is an internal m
bankers, not missionaries." But funding embezzlement
mote development-as the African experience tragicall
Moreover, "internal" to an increasing number of the M
nations are citizens who have lost patience with corrup
shocked to learn how much foreign aid is pocketed thr
and graft.
As for private flows, the United States should continue pressing
the OECD to implement its antibribery recommendations and to se-
lect concrete "international instruments to facilitate criminalization,"
as the G-7 urged at Lyon, France, in June 1996. Moreover, the OECD
should explicitly prohibit "off-the-books" accounts as well as the use
of local "partners," whose main function is to deliver bribes. In the
WTO, the United States should encourage universal accession to the
Government Procurement Agreement, which requires transparent
bidding, published solicitations, the elimination of preferences for na-
tional bidders, and other rigorous steps to make the bidding process
open and competitive. An interim agreement on the principles of
transparency, openness, and due process in procurement may serve
as a bridge to a more rigorous regime.
International instruments have the advantage of being binding

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 Leiken

on bilateral relations. For example, they would cover notoriously in-

dulgent Japanese assistance programs. The Inter-American Conven-
tion Against Corruption is one important instrument; its reach could
be extended through the accession of states outside the region. An-
other such instrument would be an International Convention Against
Corruption. Ratification of these treaties would raise the issue locally,
lending legitimacy to anticorruption organizations and whistle blow-
ers, much as the Universal Declaration of Human Rights and the
Helsinki Accord aided human rights activists. Of course, negotiating
these universal instruments could offer a pretext for foot-dragging in
the OECD and elsewhere-all the more reason why the United States,
the de facto leader of cooperative efforts, needs to develop a strategy
promptly.
The International Chamber of Commerce warns that systemic
corruption "could undermine the most promising development of the
post Cold-War era, the spread of democratic governments and of
market economies worldwide. . .. Freer trade must be accompanied
by fair competition [or else] trading relations will be increasingly
strained to the common detriment of governments and enterprises."
Reducing bribery, smuggling, and kickbacks is part and parcel of free
trade; anticorruption is essential to democracy. Today's decisive bat-
tles for free trade, development, and democracy may well be fought
in the campaign against corrupt practices.

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