CORRUPTION Syndromes of Corruption

From analysis to reform 209
Bureaucratic improvements could be backed by amnesties with respect
to back taxes, repatriated wealth, and the proceeds of privatization. Such
moves, particularly if coupled with simplified and more predictable taxation,
will eventually bring capital back into the legitimate economy, help
finance higher and more regularly paid bureaucratic salaries, reduce
incentives to administrative harassment, and help bring black markets
in from the cold. Simple and credible property titling for ordinary citizens –
for many, an amnesty of their own – would reduce vulnerability to
exploitation and, over the longer term, stimulate the growth of legitimate
economic competitors who could enter markets without needing personal
clans for protection. Similar opportunities – to confess to corrupt deals
and still keep a portion of the gains – could also be offered, with a time
limit, to officials; those giving particularly sensitive evidence would need
protection afterwards. Some public-sector improvements should be
aimed at reducing risks within markets – simplified and credible regulatory
and customs functions are examples – and can be matched by private
institutional development: independent and efficient stock and bond
markets, for example, subject private-sector deals to continuing scrutiny,
reduce economic uncertainties, and can develop sources of capital less
connected to political manipulation and violence. Improving the flow of
information within and between state and economy will make legitimate
economic initiative more beneficial and official harassment more
difficult.
These recommendations too include familiar institutional reforms, but
the key is that instead of confronting corruption directly in a crimeprevention
mode in a setting of weak state and political foundations,
these proposals aim first at reducing its most threatening forms indirectly
by easing insecurity. Then the recommendation is to build a framework of
institutions by political means, perhaps by tolerating elite cartels for a
time; next, to work over time on strengthening state and social institutions;
and only then to resume aggressive political and economic liberalization.
Such a strategy must be sustained: more than the other
syndromes, the dynamics of Oligarch and Clan corruption are rooted in
history, as the role of longstanding family networks in the Philippines and
the continuing influence of Soviet-era trends and developments in Russia
make clear. Further, any ‘‘secure oligarchs’’ approach is a second-best
option even by an optimistic reading; the latter phases of the strategy will
by no means fall into place automatically. Still it is a more promising
strategy than liberalization without institutional and political foundation,
or attacking corruption in a crime-prevention mode when official powers
are feeble and fundamentally compromised. It is a scenario consistent
with some of the interests of the oligarchs – not one that begins by