Corruption Report: Turning to Populist Leaders May Make Things Worse

An anti-corruption watchdog is highlighting a link between inequality and government corruption with the release of its annual global index, saying people are increasingly looking to populist leaders who promise to tackle corruption, but are likely to make the situation worse.

“In countries with populist or autocratic leaders, we often see democracies in decline and a disturbing pattern of attempts to crack down on civil society, limit press freedom, and weaken the independence of the judiciary,” said Jose Ugaz, chair of Transparency International, as the group released its report Wednesday. “Instead of tackling crony capitalism, those leaders usually install even worse forms of corrupt systems.”

The report says countries need “deep-rooted systemic reforms” to address growing imbalances of power and wealth. It recommends those changes include public disclosure of who owns companies and imposing sanctions against those who help move corrupt money across borders.

“In too many countries, people are deprived of their most basic needs and go to bed hungry every night because of corruption, while the powerful and corrupt enjoy lavish lifestyles with impunity,” Ugaz said.

Index based on surveys

The Corruption Perceptions Index is based on surveys and reports of how business leaders and country experts perceive corruption in the public sector. It rates countries on a scale of 0-100, with 0 being a country that is highly corrupt and 100 being very clean.

In 2016, the report said more countries declined than improved when it came to corruption.

The highest ranked countries were Denmark and New Zealand, which each scored 90, Finland with 89 and Sweden with 88. The report said each of those countries has an open government, free press and independent judicial systems. It added that highly ranked countries in general also allow citizens to access information about how public money is spent.

Bottom of index

On the bottom of the index, Somalia ranked as the country with the most perceived corruption for the 10th consecutive year. It scored a 10, with the report noting concerns about corruption in its parliamentary elections and a presidential vote that was postponed three times.

South Sudan (11), North Korea (12) and Syria (13) were also at the bottom of the index. 

Transparency International said low-ranked countries feature untrustworthy public institutions like the police and court system, basic services that are lacking because funding is misappropriated, anti-corruption laws that are ignored if they exist and people frequently faced with extortion.

The five countries that serve as the permanent members of the United Nations Security Council represent varying stages of the index, with Britain (81) among the least corrupt, followed by the United States (74) and France (69), while China (40) and Russia (29) scored as more corrupt.

Five of the 10 lowest scoring nations came from the Middle East and North Africa: Syria (13), Yemen (14), Sudan (14), Libya (14) and Iraq (17).

“These countries are also inflicted with political instability, war, internal conflicts and terrorism, stressing the fact that war and conflict fuel corruption and in particular political corruption,” the report says.

Protests and change

Transparency International also noted the wave of protests and in some cases changes in government that spread across the region in 2011, saying “the majority of Arab countries have failed to fulfill the will of the people to build democratic systems allowing for greater transparency and accountability.”

The report cited improvements in Tunisia (41), saying it adopted a national anti-corruption strategy and a law governing access to information.

For the Asia-Pacific region, the report listed 19 of 30 countries in the bottom half of the index, blaming the low scores on unaccountable governments, a lack of oversight and corruption scandals that have called into question trust in government. It noted improvements in Afghanistan, which still ranks very low with a 15, but has nearly doubled its score since 2013.

Transparency International said the main stories for the Asia-Pacific have yet to fully play out, with the new president of the Philippines Rodrigo Duterte relying extensively on anti-corruption rhetoric during his campaign, but also attacking media and using intimidation that could affect democratic institutions. The group noted concerns linked to graft allegations against Malaysia’s prime minister and the impeachment for corruption of South Korean President Park Geun-hye.

In sub-Saharan Africa, the report highlights the improvements of Cape Verde (59) and Sao Tome and Principe (46), with each country holding clean elections in 2016, and Sao Tome and Principe carrying out a smooth transition of power. The report also cited Ghana (43) among a group of six countries in the region that significantly declined from 2015 to 2016, saying corruption there led to citizens voting out an incumbent president for the first time in the country’s history.

 

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Asia Looking to Alternative Trade Pacts After US Quits TPP

Governments and business in Asia are preparing to place greater focus on regional trade and economic prospects, following the U.S. decision to withdraw from the 12 nation Trans Pacific Partnership agreement or TPP.

Analysts say alternative multilateral trade pacts including the Regional Comprehensive Economic Partnership (RCEP), which includes China, may fill the ‘vacuum’ left by the absence of TPP.

The decision, which President Donald Trump called a “great thing for the American worker” – had been anticipated by the region as it had been a key pledge by Trump during his election campaign last year.

The trade deal, covering nearly 40 percent of the global economy and about a third of global trade, was initiated by countries within Asia before the U.S. joined in the talks that began in 2009.

The TPP was a hallmark of former President Barack Obama’s tenure as part of a policy pledge to pivot the U.S. towards Asia to counter China’s growing regional influence.

Bilateral agreements

Trump says he is looking to bilateral trade agreements, charging U.S. multinational trade deals had cost American workers their jobs, as employers moved operations abroad to seek out lower labor costs.

But Carl Thayer, a political scientist at Australia’s University of New South Wales, said the U.S. withdrawal from the TPP will undermine U.S. influence in Asia.

“The political ramifications is that one arm of the U.S. rebalance (to Asia) has been taken off and President Trump has stated when he signed it – he’s only going to bilateral (agreements). At this moment he’s given away multilateral (pacts) so the U.S. no longer has a leadership role using the economic lever in Southeast Asia,” Thayer said.

Global trade has been a key source of economic expansion in Asia over the past six decades, built around multilateral trade agreements.

Alternatives

Analysts say in the TPP’s absence, regional countries will seek alternative trade pacts, including the RCEP, and the Association of South East Asian Nations (ASEAN) initiative that includes China and India.

Malaysia’s International Trade and Industry Deputy Minister, Datuk Ahmad Maslan, said Malaysia was looking to alternatives, including the RCEP, expected to be finalized by the end of 2017.

“So if we focus on the RCEP, we will not face any major loss in the face of the TPP’s collapse,” Ahmad Maslan told local media.

But there were also key additions made to the TPP agreement by the Obama team that separated it from other standard trade agreements.   “The TPP had included strengthening intellectual property protections, promoting competitive and transparent business laws as well as enforcing labor and environmental standards” according to a statement from the U.S. Council on Foreign Relations.

Pavida Pananond, a professor of international business studies at Thammasat University, said uncertainties over the U.S. market would naturally lead to a greater focus on Asia regional trade and business.

“The regional focus would be strengthened because of the uncertainty in the U.S. market. If you look at East and Southeast Asia, there is already the tendency to look to the RCEP as the kind of alternative multi-plural agreement that people would pay attention to,” Pavida said.

She added that in the event of increased tariffs in the U.S., it may lead to greater foreign direct investment in the U.S. by Asian firms seeking access to the U.S. market.

Thayer said the TPP and RCEP agreements stand in contrast.

“The RCEP was an ASEAN initiative – to take its web of bilateral relationships and create a multilateral arrangement. But it would have been of a lower standard – sort of silver standard – rather than the gold standard of TPP,” Thayer said.

Analysts say the U.S. policy of “America First” to favor U.S. business at home, marks a trend of growing trade protectionism and isolation of the U.S. in relations with Southeast Asia.

Will US reconsider ?

Australia and Japan, key TPP member states,  say they are still hoping the U.S. may reconsider its stance in the months ahead.

Australian Prime Minister Malcolm Turnbull said the Republican Party in the U.S. Congress had been “strong supporters of the TPP.” He said incoming secretary of State, Rex Tillerson, had been a long-time advocate for the pact.

“It is possible the U.S. policy could change over time on this as it has done on other trade deals. There is also the opportunity for the TPP to proceed without the United States,” Turnbull told Australian media.

A Japanese official told the press that the TPP pact is “meaningless” without U.S. participation. He added that Prime Minister Abe will keep trying to convince President Trump of the merits of the trade deal.

Analysts say in late November during the meeting of Asia Pacific Economic Community (APEC) states in Lima, Peru, soon after the U.S. elections, leaders met to map out a strategy in the event of the U.S. withdrawing from the TPP.

Thayer says there may still be a chance for renegotiation – a TPP Mark 2 – that may include the U.S before the final deadline in January 2018.

“The details – find out what details are in the TPP that (the President) doesn’t like and they can be renegotiated. So there’s hope, there’s a dim light at the end of the tunnel; it’s getting dimmer but it’s not dead yet. And January 2018 would mark the period,” Thayer said.

But other analysts say the TPP will be far weaker without American involvement, saying the U.S. withdrawal was a missed opportunity for free trade in the region.

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