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Toni Schönfelder
A lifetime of innovation

EU candidates face corruption issues [says OSI Report]

The International Herald Tribune 08 Nov 2002

Report urges Union to toughen its own laws before expanding

PRAGUE Corruption is rampant in the Central and East European countries expecting to join the wealthy European Union, and is likely to persist after the union expands eastward in 2004 unless the EU significantly strengthens its own anti-corruption measures, according to a new report.

The report, based on a yearlong study by the Open Society Institute, a leading nonprofit organization active in the region, said that three-fourths of citizens in the candidate states believed that most or all of their public officials were corrupt. But more than a decade after the fall of communism, governments have yet to enact adequate measures to tackle corruption, and have not been enforcing the few that are on the books.

"Unfortunately, that kind of public awareness doesnt create pressure for the governments to introduce good anti-corruption policies," Quentin Reed, the reports author, said in an interview. "All it does is make corruption a campaign theme and then governments do nothing about it."

Corruption in the legislative process is probably the biggest problem facing the post-Communist countries, the report said, along with kickbacks and payoffs in public procurement contracts.

The founder of the Open Society Institute, the American financier and philanthropist George Soros, went on trial in a French court Thursday on decade-old insider-trading charges. Soros and three other men are accused of having used inside knowledge to make more than $11 million by speculating on stocks during a failed 1988 takeover bid for the French bank Societe Generale.

Insider trading is one of the many problems afflicting post-Communist Europe, and the reports list of corrupt practices reads like a menu for white-collar criminals.

In Bulgaria, the report says, customs, the police and medical care function only when properly greased with extra payments. But the report notes that "vested interests are too powerful for effective reform to succeed."

Another problem is that there is little oversight of regional and city governments, which are expected to receive huge amounts of development aid from the EU after enlargement.

In Estonia, for instance, the report says, "corruption is likely to be a significant if not serious problem at local government level." Contributing to the situation is that the national police were recently stripped of the power to investigate local government corruption, the Supreme Audit Office does not audit local governments books and the Public Procurement Office lacks the manpower to supervise how local governments spend their money.

The biggest problem seems to be the pernicious influence of business and financial groups on the political process. Hardly any country in the region, and few in Western Europe, have adequate laws to dampen the influence of money on political campaigns, the report said.

"In Latvia, powerful business interests appear to dominate the political system," the report said.

In the Czech Republic, Reed said, "uncontrolled lobbying" is undermining the countrys democracy.

"The major political parties have colluded to keep quiet about corruption in each others ranks, rather than acting as watchdogs of each others performance," he wrote.

One of the few bright spots was Lithuania, which adopted a national anti-corruption strategy in January and which, the report says, could serve as a model for other countries.

Unfortunately, Reed said, joining the European Union is unlikely to prove a panacea for corruption in the East, if only because some member states are themselves rotten with corruption.

Transparency International, a nongovernmental organization that encourages government and industry to fight corruption, ranks two EU members, Italy and Greece, as more corrupt than the EU applicants Slovenia and Estonia in its current corruption perception index.

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