Tag Archives: Corruption

Latin America – Odebrecht Scandal Expands across the Region

In my last post, I discussed the fallout from the Lavo Jato corruption scandal, which was partly responsible for forcing Dilma Rousseff, the former president of Brazil, out of office last year. Parts of this scandal involved allegations of kickbacks from the Brazilian construction giant, Odebrecht, to former worker party president, Luiz Inácio Lula da Silva (2003-2011). The scandal spread to Peru, where former president, Alejandro Toledo (2001-2006), has been accused of receiving US$20 million in bribes from Odebrecht in return for granting them the contract to build a large road and infrastructure project. This led to the Peruvian government offering a 100,000 soles award (approximately US$30,000) for information leading to Toledo’s arrest.

Well, the scandal rumbles on. And rumbles across the region, dragging into its orbit current and former presidents across Latin America.

In Panama, prosecutors are now seeking to detain the sons of former president, Ricardo Martinelli (2009-2014). Ricardo Alberto and Luis Enrique Martinelli are accused of depositing part of a US$22 million bribe that Odebrecht paid in return for lucrative state contracts in Panama. And current Panamanian president, Juan Carlos Varela, has been accused by a former advisor of receiving political donations from Odebrecht. In Colombia, a former senator who admitted receiving bribes from Odebrecht has accused current Colombian president, Juan Manuel Santos, of receiving illegal campaign donations from the Brazilian firm.

In Argentina, members of Mauricio Macri’s centre-right organization have been accused of ties with Odebrecht, and in the case of Gustavo Arribas, of accepting a direct bribe from the firm. All of this comes amid a controversy over a government plan to settle a fifteen year debt incurred by Macri’s father when he owned the Argentine postal service. In the Dominican Republic, the Brazilian firm admitted that it payed US$92 million in bribes to Dominican government officials to secure large and lucrative infrastructure projects. And on Wednesday, prosecutors in Chile raided the Santiago offices of Odebrecht as part of a larger 10 country investigation into the political links and acitivies of the construction company.

So is there an explanation for such an encompassing and massive scandal? Part of the problem clearly lies with norms and regulations governing campaign financing across Latin America. There are few public subsidies to political parties and most campaigns are paid for by corporate donors, while repeated attempts to regulate donations have fallen short, given the lack of an incentive structure for doing so among the political classes.[1] The lack of strict regulations governing campaign financing is surely compounded by the rise of populist outsiders who appeal to “the masses” via television. Kurt Weyland has argued that “over the past 15 years, such personalistic leaders have sought to bypass established political parties and interest groups in order to reach “the people” through direct, most often televised, appeals aimed at building up a loyal following from scratch. Because its methods are costly, the new media-based politics has given ambitious politicians much higher incentives to resort to corruption.”[2]

Political donation kick-back schemes therefore like the one operated by Odebrecht are simply too difficult for many Latin American politicians to turn down, given the spiraling cost of electoral campaigns across the region. Expect more revelations to emerge.

Notes

[1] See the recent Economist article on campaign financing across the region: http://www.economist.com/news/americas/21717985-unavoidable-trade-offs-paying-democracy-how-latin-america-deals-campaign-finance.

[2] Kurt Weyland. 1998. The Politics of Corruption in Latin America. Journal of Democracy 9 (2): 108-121.

Ukraine – New Political Party, Corruption, and Calls for Parliamentary Election

On 28 November 2016, Mikheil Saakashvili, a former President of Georgia and a former Governor of Odessa region in Ukraine, held a rally in support of his new political party – Movement of New Forces. During the rally, Saakashvili told around 1,000 people who turned up to support him in the centre of Kyiv that he knew “how to make Ukraine great…and we will do it together.”

Educated in Ukraine and later in the U.S., Saakashvili first came to power after the 2003 Rose Revolution. He served two terms as President of Georgia. Barred from running for a third term, Saakashvili left Georgia shortly after the expiration of his term in 2013. Today, he is wanted in Georgia on the charges of abuse of power and use of excessive force against the demonstrators in 2007.

Saakashvili renounced his Georgian citizenship in 2015 and accepted Ukrainian citizenship to become a Governor of Odessa region in Ukraine. On 7 November 2016, however, he resigned his governorship and accused President Poroshenko and his allies of supporting corrupt officials and undermining his reform efforts in the region. His resignation came just a week after the online declarations detailing the assets of around 50,000 top Ukrainian public official have been released. To the surprise of both Ukrainians and the West, the declaration revealed that Ukraine’s top officials owned millions in cash, luxury items, and properties raising questions about country’s commitment to curtail corruption.

In a recent interview with Kyiv Post, a famous Ukrainian newspaper, Saakashvili insisted that Ukraine needed to hold an early parliamentary election to get rid of its entire ruling political class. Next parliamentary election in Ukraine is scheduled for 2019. If Ukraine holds another election now, it will be its third election in the past two years. Nonetheless, Saakashvili insisted on “a real, clear threat of violence” if elections were not held, warning of a possibility of a military coup.

Some argue that Saakashvili came to Ukraine to start his second political career and was deeply dissatisfied to be only a Governor after holding a presidential post in his native Georgia. Although his motivations for coming to Ukraine remain unclear, his career offers an interesting perspective on term limits, presidents, and their future careers. In his recent book, Alexander Baturo examines why some executives willingly step down from power whereas others attempt to circumvent term limits. [1] Baturo argues that this variation can be explained by the cost and benefits of leaving office. Simply put, the executives will try to extend their tenure if the stakes of losing office are too high. These high stakes could include lucrative opportunities while in office as well probabaility of persecution once out of office. This theory would suggest that Saakashvili should have stayed in power in Georgia in 2013 given that he faced persecution after leaving office and little possibility of continuing his political career or extending his wealth once out of office. However, Saakashvili’s example shows that another possiblity for a former president who faces few benefits and relatively high costs of leaving office is to leave office and start over in another country.

[1]. Baturo, Alexander. 2014. Democracy, Dictatorship, and Term Limits. Ann Arbor: University of Michigan Press.

Guatemala – President Morales under Pressure from Corruption Scandal

Once again, a corruption scandal has affected the executive office in Guatemala. Although the president, former comedian and political outsider, Jimmy Morales, is not directly implicated, his brother, Samuel (Sammy) Everardo Morales and his son, José Manuel Morales Marroquín, have both been placed under investigation by the UN-supported International Commission on Corruption in Guatemala (Comisión Internacional Contra la Impunidad en Guatemala, CICIG) and the Attorney General’s Office. Last week, a Guatemalan judge barred both Sammy Morales and José Manuel from leaving the country.

The alleged offence involves the fabrication of invoices and contracts for goods and services that were never actually supplied and centres upon Fulanos y Menganos, a restaurant in Guatemala city, owned by Congressman Gilmar Othmar Sánchez, who is a representative for Frente de Convergencia Nacional (FCN), Morales’ party. Apparently, Guatemala’s National Property Registry contracted Fulanos y Menganos, together with José Manuel and Sammy Morales, to provide 564 Christmas breakfasts in 2013. A bill was submitted to the Property Registry for 90,000 quetzals for the breakfast (about US$12,000), together with another 90,000 quetzal bill for seating. The breakfast is reported to have never happened. What is more, under public procurement law, three companies must submit formal bids for any contracts below a certain value. To cover his tracks, the President’s son, José Manuel supposedly asked his uncle to provide falsified bids from two other companies, in a competition that Fulanos y Menganos than won. Falsifying documents in this manner is also a crime.

What makes this case particularly noteworthy is the fact that Morales’ election campaign last year railed against the corruption allegations that dogged, and ultimately prematurely ended, the presidency of his predecessor, Otto Pérez Molina. Molina had been accused of involvement in a scheme, know as La Linea, that allowed businesses to evade paying custom charges in return for generous kickbacks.

Morales’ election was symptomatic of the rise of political outsiders and the ‘politics of anti-politics’, which has become something of a recurring feature of the Latin American political landscape. Jimmy Morales, a self-descried ‘common man’ with no prior political experience, spent the last fourteen years starring in a popular TV comedy series with his brother and his election manifesto was only six pages long. In fact, the major and central plank of his entire campaign was opposition to the graft and corruption that was endemic among Guatemalan political elites. His campaign slogan was ‘neither corrupt nor a thief’, so this current episode is particularly embarrassing for the President.

This incident is indicative of corruption scandals that continue to plague executive offices all over the region. For example, aside from the scandal involving Molina, another Guatemalan ex-President, Alfonso Portillo was recently sentenced to five years in prison in the US for taking bribes from Taiwan. In El Salvador, it was announced that evidence had emerging linking former president Francisco Flores to illegal and hidden bank accounts. Argentine Vice-President, Amado Boudou, appeared in court last year to respond to allegations that he illegally halted bankruptcy proceedings against a company that he supposedly had an interest in.

I have written before about the relationship between corruption and the executive office in Latin America. Explanations range from the historical development of the state and Guillermo O’Donnell’s infamous ‘brown areas’, to the lack of transparency during the economic reform process of the 1980s and 1990s, to the combination of presidentialism and the PR electoral system, a variant of which most Latin American countries employ.[1]

More significantly, Kurt Weyland has suggested that a contributing factor to the persistence of populism has been the rise of politicians who appeal to “the masses” via television. Weyland argues: “Over the past 15 years, such personalistic leaders have sought to bypass established political parties and interest groups in order to reach “the people” through direct, most often televised, appeals aimed at building up a loyal following from scratch. Because its methods are costly, the new media-based politics has given ambitious politicians much higher incentives to resort to corruption.”[2]

Jimmy Morales is the proto-typical outsider politician. His campaign, and that of his vice-president, Jafeth Cabrera, was subjected to claims that it benefitted from a donation of half a million dollars from a known drug trafficker.  With this barrage of corruption scandals and with his party, the FCN, holding only 11 of 158 seats in the house, the incentives for the kind of behaviour Weyland described must surely rise. Either way, the Guatemalan President will do well to celebrate a one-year anniversary in office.

[1] See For example, some of the chapters in Walter Little and Eduardo Posada-Carbó (eds.) 1996. Political Corruption in Europe and Latin America. Palgrave Macmillan or Jana Kunicová and Susan Rose-Ackerman. 2005. Electoral Rules and Constitutional Structures as Constraints on Corruption. British Journal of Political Science, 35: 573-606.

[2] Kurt Weyland. 1998. The Politics of Corruption in Latin America. Journal of Democracy 9 (2): 108-121.

Ukraine – Key Minister Resigns

Two weeks ago, Aivaras Abromavičius, Minister of Economic Development and Trade of Ukraine, tended his resignation. Once deemed to be the “man who would save Ukraine’s economy, ” and characterised as “one of the greatest champions of reform“ by the US ambassador to Ukraine, Abromavičius accused senior law makers in Ukraine of corruption and slow pace of reform. His resignation threw Ukraine into yet another political crisis endangering much needed foreign aid and support.

Ukraine struggled with corruption well before the current cabinet was appointed. Corruption was one of the reasons for the 2014 Maidan protests that ousted the former president Viktor Yanukovych. As a part of efforts to combat corruption and to make a break from old political ways, the party of the President, Bloc Petro Poroshenko, decided to nominate Abromavičius, as one of the three foreign born ministers, to the cabinet in December 2014. Yet, more than a year later, Ukraine remains to be one of the most corrupt countries in the world and the most corrupt in Europe.

Last week, Abromavičius published an op-ed in Ukrainska Pravda, an online newspaper, calling for a completely technocratic government. He argued that it was the only way to ensure much needed economic reforms in Ukraine.

If his advice is followed, Ukraine will not be the first country to turn to a technocratic government during an economic crisis. Both Italy and Greece appointed technocratic cabinets during the recent debt crisis. Some scholars have been uneasy about the idea of non-partisan cabinets, especially in the case of new presidential democracies, arguing that they were an indicator that the presidents would be more likely to rule by decree [1]. Others, however, argued that there is nothing inherently undemocratic in having a technocratic cabinet. In fact, a cabinet of technocrats might be exactly what is needed to deal with highly technical tasks that frequently face new democracies, especially when they wrestle with economic problems at the same time [2].

If Ukraine were to appoint a technocratic cabinet, it would need to address a number of issues. First, how can the cabinet be insulated from the influence of political parties? Just because it is technocratic, it does not mean that it is automatically immune to political influence. Second, what would be the term limit for such cabinet, if any? And last but not least, getting an agreement for such cabinet from all coalition partners will be crucial. In Ukraine, like in many multiparty democracies, allocation of cabinet portfolios is one of the most important tools that presidents can use to form and maintain their coalitions. [3] The more proportionally distributed the cabinet positions are among the coalition partners, the higher is the discipline of their legislators on roll calls. [4] If this tool is taken away, Ukraine will need to think of other ways to keep the ruling coalition together.

[1] Amorim Neto, Octavio 2006. “The Presidential Calculus: Executive Policy Making and Cabinet Formation in the Americas,” Comparative Political Studies 39 (4): 415-440.

[2] Bermeo, Nancy. 2002. “Ministerial Elites in Southern Europe: Continuities and Comparisons,” Southern European Society and Politics 7 (2): 205-227.

[3] Chaisty, Paul and Svitlana Chernykh. 2015. “Coalitional presidentialism and legislative control in post-Soviet Ukraine,” Post-Soviet Affairs 31 (3): 177-200.

[4] Amorim Neto, Octavio. 2002. “Presidential Cabinets, Electoral Cycle, and Coalition Discipline in Brazil,” in Morgenstern, Scott and Benito Nacif (eds.) Legislative Politics in Latin America. New York: Cambridge University Press; Chaisty, Paul and Svitlana Chernykh. 2015. “How do presidents manage multiparty coalitions? The coalitional effects of presidential toolbox in Ukraine,” Working paper.

Albanian presidents and an incriminated political elite

Recent reports on a parliamentary speech of Deputy Blushi (member of the ruling Socialist Party) describing the incrimination of other deputies, or claims of an unlawful surveillance of President Bujar Nishani paint a picture of a very problematic political development in Albania. These reports match earlier accusations made in 2009 by then President Topi from the conservative Democratic Party. In the following post I will briefly portray the president’s role in the political system and embed this in a description of the difficulties arising from the politicized state security forces and judiciary with a strong clientilism trying to make the president the “henchman of the prime minister” (Osterberg-Kaufmann forthcoming).

Presidential power in Albania

With a pre-emptive transition process accompanying independence and the personal continuity during the constitution-making process in the early 1990s, Albania was predestined to design a strong presidential institution. This process of democratization initially perpetuated the totalitarian and personalized cult around Hoxcha, who was the leader of communist Albania for over 42 years (Osterberg-Kaufmann 2012, 221). The premise for the establishment of a de facto delegative democracy in the 1990s was the close relation between a paternal figure and the non-scrutinized nature of presidential leadership (O’Donnell 1994, 59). The socialist constitution was replaced in April 1991 with an interim constitution. This interim constitution reproduced the old leadership pattern, offering President Sali Berisha the opportunity to bypass and marginalize parliament. From today’s perspective, the presidential power of Berisha up until 1998 can be considered relatively strong. This is partly to blame for the fact that in 1996 “Albania had degenerated into an illusion of democracy with an isolated authoritarian president, facing no effective parliamentary opposition, supported by an overly large highly politicized security apparatus” (Fischer 2010, 428).

Following the crisis of a failed draft constitution, but even more so the economic and political crisis of 1997 and 1998, the constitution-making process was dominated by the landmark establishment of a parliamentary system with an indirectly elected president, supported by a referendum. Nowadays Albania has one of the constitutionally weaker presidents in South-East Europe. According to Art. 85, the president has suspensive legislative veto powers, which can be overruled by an absolute majority, and according to Art. 134 the president (along with other institutions) can initiate a judicial review. Following the logic of a parliamentary system, the president nominates the prime minister (Art. 96 Sec. 1-4), which has to be confirmed by a majority in parliament. Overall, the presidential role remains reactive. This observation is also confirmed by the absence of a presidential legislative initiative. His competences are limited and, in addition, not even concentrated on standard competences expected also for a parliamentary system, which is different from for example Macedonia, and which entails a systematically weak position for the president.

Lustration Law 2009

With the competence of a legislative veto, the Albanian President would have the opportunity to at least establish some moments of power and thus influence both the policy agenda and the expectations of rivaling political institutions, as well as the public. Yet, in case the opportunity structure arises (for example in terms of public support for a veto), presidents choose to avoid the political confrontation. In the following, I will illustrate this for a highly controversial legislative project: a lustration law. This law also gave a brief glimpse (thanks to the reports in wikileaks) about the informal pressure behind political decision-making in Albania.

With the possibility of “the firing of anyone without proving he or she committed a crime” (Koci 2014), the 2009 lustration law became a confrontational issue between Prime Minister Sali Berisha and President Bamir Topi (both at that time important figures in the conservative Democratic Party[1]). The political positions in this difficult case were clear: President Topi was against this legislative project based on its far-reaching consequences. Prime Minister Berisha was pushing for the implementation of this internationally criticized law. It certainly carries a sad irony that Topi, who had not been politically active in communist times, thought of returning the lustration law to parliament. After all, this law had the function of banning former secret police officers, or employees in the judicial system, from public employment. Some authors consider the draft of the law in 2008 to have “[…] coincided with the prosecution of one of the biggest corruption charges, the so called Gerdec affair, which exposed several current ministers” (Elbasani and Lipinski 2011, 10). In a confidential interview between a US-diplomat with the then-President Topi, the president claims “[…] that in the event he vetoes the Lustration Law the DP [Democratic Party, author] would launch a “frontal assault” against him, including a smear campaign to paint him as protecting former communists” (Wikileaks 2009a).

Nevertheless, Topi confirmed in another confidential conversation “that representatives of former victims of the Albanian communist regime – a key political constituency for Topi – unanimously urged (him) [Topi] not to reject outright the Lustration Law, claiming that to do so would be politically devastating for him” (Wikileaks 2009b). Although the constitutional court later abolished the law, Topi’s obvious fear limited his radius of action. Although it should be clear that Wikileaks as the source of information chosen here has to be handled with care, considering that the statements given in private to a United States official might have different motivational backgrounds. However, despite the obvious opportunity structure, President Topi did not use his legislative veto. The Albanian Constitutional Court declared the lustration law as unconstitutional in 2010. The decision of the constitutional court was no surprise, as the lustration law from 2009 would have allowed for the prosecution of half the constitutional court (Likmeta 2012).

Discussion

Presidents in Albania obviously face high informal pressures to align with the government. Due to the sensitivity of informal influence we are hardly ever able to consistently trace this problem. However, the two reports of the two presidents show how informal pressure on president in Albania might work. And although the accusations of Bujar Nishani from 2015 were – at least what it looks like at the moment – a political move and not followed by any legal action, they show a similar pattern as the accusations of Bamir Topi in 2009. Both claims are nearly impossible to verify and go in hand with legislative initiatives concerning reforms of the legal system. A series of political corruption scandals, the grave distrust of the public towards the political elite and a political culture characterized by a specific form of personalization and clientilism is thus seriously damaging Albania’s democratic development.

References:

Elbasani, Arolda, and Artur Lipinski. 2011. “Public contestation and politics of transitional justice: Poland and Albania compared.” EUI Working Paper Series 11. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1956796

Fischer, Bernd J. 2010. “Albania since 1989: the Hoxhaist legacy.” In Central and Southeast European Politics since 1989, edited by Sabrina P. Ramet, 421–44. Cambridge: Cambridge Univ Press.

Fruhstorfer, Anna and Michael Hein. forthcoming. Constitutional Politics in Central and Eastern Europe: From Post-Socialist Transition to the Reform of Political Systems.  Wiesbaden. VS Springer.

Koci, Jonilda. “Albanian lustration law criticised.” SETimes.com. Unpublished manuscript, last modified May 09, 2014. http://www.setimes.com/cocoon/setimes/xhtml/en_GB/features/setimes/features/2009/02/05/feature-02.

Likmeta, Besar. 2012.”Albania President Savages Berisha’s Communist Past.” Balkan Insights. March 7. Accessed January 20, 2015. http://www.balkaninsight.com/en/article/albania-president-pans-berisha-for-his-communist-past

O’Donnell, Guillermo A. 1994. “Delegative democracy.” Journal of Democracy 5 (1): 55–69.

Osterberg-Kaufmann, Norma. 2012. Erfolg und Scheitern von Demokratisierungsprozessen: VS Verlag für Sozialwissenschaften.

Osterberg-Kaufmann, Norma. forthcoming. „Constitutional Politics in Albania.“ In: Constitutional Politics in Central and Eastern Europe: From Post-Socialist Transition to the Reform of Political Systems. edited by Anna Fruhstorfer and Michael Hein. Wiesbaden. VS Springer.

Ramet, Sabrina P., ed. 2010. Central and Southeast European Politics since 1989. Cambridge: Cambridge Univ Press.

Wikileaks. 2009a. “PRESIDENT TOPI; IT’S LONELY AT THE TOP.” Accessed May 09, 2014. https://www.wikileaks.org/plusd/cables/09TIRANA9_a.html.

———. 2009b. “PRESIDENT TOPI LEANING AGAINST VETO OF LUSTRATION LAW.” Accessed May 09, 2014. https://www.wikileaks.org/plusd/cables/09TIRANA18_a.html.

[1] Partia Demokratike e Shqipërisë (PD)

Romania – Censure motion fails to remove PM indicted on corruption charges

On 29 September, Romania’s Social-Democratic government survived a no-confidence vote in parliament. This was the fourth censure motion submitted by the National Liberals (PNL), the main opposition party, in the last 18 months. Unlike previous motions, though, the most recent one did not target the government’s collective performance, but was filed in response to the prime minister’s formal indictment on corruption charges on 17 September. The initiators hardly mentioned any government activities and exclusively focused on the need to remove the compromised head of government.

The criminal investigation against the prime minister was launched by the National Anti-corruption Directorate (DNA) on 5 June on grounds of forgery, tax evasion, money-laundering, and conflicts of interest. Perhaps not coincidentally, the National Liberals filed a censure motion against the government on the same day. However, on that occasion the text of the motion criticised the government’s failure to introduce postal voting for Romanians living abroad. The comfortable majority social democrats and their allies enjoy in both parliamentary chambers allowed PM Ponta to survive not only the no-confidence motion, but also a separate parliamentary vote to have his immunity lifted.

Anti-corruption prosecutors formally charged the prime minister and seized his personal assets on 13 July. Shortly thereafter, Victor Ponta stepped down as leader of the ruling Social Democrats but remained in office as head of government. He was temporarily replaced as party leader by Liviu Dragnea, a former deputy prime minister, minister of development, and executive president of the social-democrats, who himself had been forced to leave PM Ponta’s government in May 2015 upon receiving a one-year suspended jail sentence for electoral fraud in the 2012 presidential impeachment referendum.

President Iohannis has repeatedly called on the prime minister to step down since 5 June, when the criminal investigation was launched by anti-corruption prosecutors. He urged the prime minister to resign again after his case was formally brought to the High Court for Cassation and Justice on 17 September and expressed support for the censure motion put forward by his National Liberal Party. However, Romania’s Constitution specifically denies the head of state the power to dismiss the prime minister (article 107). The president does have the power to suspend cabinet members from office when a criminal investigation is launched against them – but only when the accusations concern acts committed while in office (article 109). As the prime minister stands accused of criminal activities dating back to past activities as a lawyer, his continuation in government office can only be decided by the parliamentary majority and/or his party.

Romania’s Constitution features several requirements for a non-confidence vote: a censure motion must be initiated by at least one quarter of all deputies and senators, who are not allowed to endorse another motion of this type during each of the two ordinary parliamentary sessions each year, unless the government invokes a confidence vote (articles 113-114). Under these circumstances, the government is unlikely to face more than one censure motion per legislative session.  As the opposition has just availed of this opportunity at the beginning of the autumn session, the government can rest assured that it will not be confronted with another no-confidence vote until at least February 2016.

Thus, the only threat to PM Ponta’s office can come from his own party. Social Democrats have scheduled elections for the new party leader on 11 October, followed by an extraordinary congress on 18 October. Liviu Dragnea, PSD’s current interim president, has announced his candidacy for the party leadership, while Victor Ponta said he would not run anymore. With both local and general elections scheduled for 2016, it remains to be seen whether or how long the new party leadership will continue to grant unconditional support to a prime minister facing a corruption trial while in office.

The Philippines – Presidential Election 2016: Is the Vice-Presidency a Venue?

Presidential and legislative elections are scheduled for the Philippines on May 9, 2016. The President and Vice-President are elected separately, so that the elected candidates may come from different parties. Such is the case with current President Benigno Aquino III, from the Liberal Party (LP), and Vice-President Jejomar Binay, formerly of the Demokratikong Pilipino-Lakas ng Bayan (PDP-Laban). President Aquino III is constitutionally prohibited from seeking a second term, but there are no limitations on the Vice President for seeking the presidency. While it may seem that a vice-presidential term is strong endorsement for a candidate to seek the presidency, recent developments in the Philippines provide an interesting take on the whether the vice-presidency is a tenable venue to the presidency.

Although the President and the Vice-President may be from different parties, relations are not necessarily strained. After all, VP Binay was a 30-year member of the PDP-Laban, i.e., when it was headed by the late-Senator Benigno Aquino. VP Binay was also considered a strong supporter of the President’s mother, former President Corazon Aquino. Indeed, as recently as 2013, President Aquino III’s LP and Vice-President Binay’s PDP-Laban engaged in a period of team- and coalition-building to launch Team PNoy – comprising a coalition of the LP, the PDP-Laban, the Nacionalista Party, the Nationalist People’s Coalition, the National Unity Party, and the Akbayan Citizens’ Action Party – that partnered with the United Nationalist Alliance (UNA) to field 12 candidates for senatorial elections that year.

Notwithstanding that history as well as ongoing work-relations between the President and Vice-President, ties failed to concretize to the point where the President endorsed the VP for the presidency. Instead, the President endorsed LP Manuel Roxas II, the original candidate-elect for the LP in 2010 who stepped aside for Aquino III to run as presidential nominee for the party. This is notwithstanding polls showing Mar Roxas as the least favoured presidential candidate; the President’s endorsement of Mar Roxas also came after the Vice President made clear that he was after the endorsement.

In part, the competition-versus-cooperation relations may be stoked by the horse-race mentality from approval polls that appear to regularly pit President against the Vice-President. In part, it may be VP Binay’s ongoing struggle against corruption raps. In part, it may also be due to the VP’s clear and unequivocal pursuit of the presidency: in early 2014, VP Binay resigned from his party of 30 years to launch the UNA party in preparation for his 2016 presidential bid. The president of the PDP-Laban, Senator Aquilino Pimentel III, has signaled clearly that the party will not be endorsing VP Binay for the presidency; of course, he and VP Binay had a major falling out just prior to the VP’s resignation from the PDP-Laban.

With President Aquino III’s endorsement of Mar Roxas, Vice-President Binay’s retort was to resign from the cabinet, charging mistreatment as well as incompetence in the current administration. That, in turn, elicited the Presidential Palace’s rejoinder: too late to be complaining about the administration after five years in it? The back-and-forth, if not the events prior to that, certainly underline that the vice presidency is not a shoo-in for the presidency;

Guatemala – Results of Presidential Election

On Sunday, Guatemala held the first round of presidential elections. With nearly all ballots counted one result is clear: Jimmy Morales of the Frente de Convergencia Nacional (FCN-Nación) will contest the second-round run-off election. Morales, a television comedian with no prior political experience, currently has 23.87 per cent of the national vote.

However, it is still not clear who Morales will face in the second round. Manuel Baldizón, a right-leaning businessman of the Libertad Democrática Renovada (LIDER), has 19.63 per cent of the vote, while Sandra Torres, the left-leaning former first lady of the Unidad Nacional de la Esperanza (UNE), has 19.73 per cent. Given only a few thousand votes separate the two contenders for second place, the electoral tribunal has ordered an official count of each district. The results are not expected until this Friday.

Morales’ victory comes in the wake of the resignation of current incumbent, Otto Pérez Molina, over allegations of corruption. Molina has been accused of involvement in a scheme, know as La Linea, that allowed businesses to evade paying custom charges in return for generous kickbacks. Molina is now housed in Matamoros prison awaiting trial. His resignation follows months of protests, which slowly eroded Molina’s support. Indeed, on this blog, my posts on Latin America have a few recurring themes and two of the most prominent must surely be related to corruption in the executive office and public protests calling for the president’s impeachment or resignation. Molina’s resignation comes amid protests in Honduras and Brazil (and Venezuela) that are also calling for their presidents to resign in the wake of corruption scandals. In fact, only last year, Guatemalan ex-President Alfonso Portillo was sentenced to five years in prison in the US for taking bribes from Taiwan.

Morales’ victory is clearly related to these events. His campaign had all the hallmarks of the prototypical outsider. He railed against the existing political elites and widespread political corruption and his campaign slogan was ‘neither corrupt nor a thief’. This clearly appealed to a jaded public, tired of constant scandal. In fact, Morales, as a crusading outsider highly critical of the political establishment, clearly resembles the rise of other populist leaders across the region.[1]

The second round election has been scheduled for October 25th.

[1] See for example, Roberts, Kenneth M., 2007. “Latin America’s Populist Revival,” SAIS Review, Vol. XXVII (1), pp. 3-15.

Guillermo Rosas and Luigi Manzetti – Misery, corruption, and presidential approval

This is a guest post by Guillermo Rosas and Luigi Manzetti. It summarizes their recent paper, ‘Reassessing the trade-off hypothesis: How misery drives the corruption effect on presidential approval’ that was published in Electoral Studies, Volume 39, September 2015, pp. 26–38.

In “Reassessing the trade-off hypothesis: How misery drives the corruption effect on presidential approval”, we scrutinize a belief common among observers of Latin American politics according to which citizens in the region support corrupt governments as long as these are able to keep the good times rolling. Presidents that have arguably condoned corruption yet managed to win reelection include, among others, Carlos Menem in Argentina and Dilma Rousseff in Brazil. Observers often employ the lema “rouba, mas faz” (he steals, but he delivers) that characterized Ademar de Barros, an early 20th-century governor of the state of Sao Paolo, to celebrate the political longevity of these leaders.

Though a limited version of the trade-off hypothesis focuses on citizens that receive some direct benefit in exchange for supporting a government that otherwise condones corruption,[1] a more general claim suggests that voters might be willing to tolerate corruption as long as governments oversee high economic growth and low rates of inflation and unemployment. To test this more general flavor of the “trade-off hypothesis”, we analyzed information from over 141,000 respondents in 83 nationally representative surveys fielded by Americas Barometer[2] between 2004 and 2012. Rather than focusing on the declared vote intention of respondents, we concentrated on their levels of “presidential approval”, that is, on their assessment of their country’s president on a 5-point scale. We also avoided the use of elicited perceptions of corruption, because this indicator typically produces a large endogeneity bias as individuals tend to declare high perceptions of corruption whenever they disapprove of their government.[3] We show in our study that using an indicator of corruption victimization produces more reasonable estimates of the effect of corruption on presidential approval.[4]

Figure 1 displays partially-pooled estimates of the “corruption effect”—that is, the estimated impact of being a victim of bureaucratic corruption on an individual’s proclivity to approve of the president—in the 83 surveys that we inspect (in arriving at these estimates, we control for several individual- and survey-level confounders). For comparison, we also display as a grey horizontal bar the 95% credible interval corresponding to our estimate of a negative corruption effect pooled across all surveys. With the single exception of Bolivia in 2010, where our estimate of the corruption effect is positive but substantively small, we either uncover no effect or a negative effect across surveys. In Brazil 2008, for example, the estimated corruption effect is clearly negative, but we cannot detect a similar effect in Brazil 2010.

Figure1

What explains these varying corruption effects? We focus on understanding whether a country’s economic performance deepens or assuages the effect of corruption victimization on approval.[5] Based on the logic behind Arthur Okun’s celebrated misery index (misery = inflation rate + unemployment rate), we expected inflation and unemployment to have a greater impact on the size of the corruption effect than economic growth. The rationale is that misery has a higher impact on the purchasing power of an average citizen. Inflation, in particular, is a tax that affects all citizens; more specifically, situations of high inflation are extremely disruptive, and ordinary citizens have little capacity to protect themselves from its worst effects. Similarly, high unemployment reveals that labor markets may be extremely tight, so that even those lucky enough to be employed cannot easily search for better-paid jobs. The primacy of inflation and unemployment as potential drivers of the corruption effect is also well documented in clarity of responsibility thesis according to which citizens perceive both factors to be under the control of the incumbent government.[6]

We find that inflation and unemployment have a discernible impact on the “corruption effect” in the Latin American surveys that we analyzed; in contrast, we do not find evidence that economic growth matters either way. Figure 2 shows how estimates of the corruption effect tend to become larger (i.e., more negative) as the rates of inflation and unemployment increase, while controlling for obvious survey-level covariates. We acknowledge in our study that observations from Venezuela, which suffered extraordinary high rates of inflation between 2006 and 2010, may affect our inferences inordinately, but we also believe that Latin American citizens would react similarly in the face of hyperinflation. Consequently, we suggest that information provided by the Venezuelan observations should be, at worst, only mildly discounted.
Figure2a
Figure2b
Based on presidential approval series, we conclude that Latin American voters are not easily duped. Those who experience corruption assess the country’s president negatively, and inflation and unemployment tend to lower a president’s average rates of approval. But along the lines of the more general “trade-off” hypothesis, we also find that the worse marks on presidential approval come from those that suffer corruption in economic environments characterized by inflation and unemployment.

Electoral accountability may yet foster good governance in Latin America. Naturally, there is a long causal chain going from presidential approval to vote choice to removal of governments that condone bureaucratic corruption, and even when voters disapprove of a president they might lack better alternatives among the opposition. At the very least, however, we should eliminate stereotypes about voters that prefer “corrupt but effective” leaders” over “clean but inept” politicians. Latin American voters do not forget the slights of corruption victimization as soon as they are in a macroeconomically stable environment; if there is something akin to a trade-off hypothesis, it is only because they return a harsher verdict on the executive when misery is added to the indignities of bureaucratic corruption.

[1]See Matthew S. Winters and Rebecca Weitz-Shapiro. 2013. “Lacking Information or CondoningCorruption? Voter Attitudes Toward Corruption in Brazil.” Journal of Comparative Politics 45(4):418–436.

[2]The Latin American Public Opinion Project (LAPOP) produces the AmericasBarometer, which can be found at www.LapopSurveys.org.

[3]See, among others, Mitchell A Selligson. 2006. “The Measurement and Impact of Corruption Victimisation: Survey Evidence from Latin America.” World Development 34(2):381–404.

[4]We employ an indicator that is coded 1 when the respondent reports a bribe solicitation from a public employee at any point during the twelve months that precede the interview.

[5]Elizabeth Zechmeister and Daniel Zizumbo-Colunga analyze within-country variance to address this same question. Zechmeister and Zizumbo-Colunga. 2013. “The Varying Political Toll of Concerns about Corruption in Good versus Bad Economic Times.” Comparative Political Studies 46(10):1190–1218.

[6]G. Bingham Powell Jr. and Guy D. Whitten. 1993. “A Cross-National Analysis of Economic Voting: Taking Account of the Political Context.” American Journal of Political Science 37:391–414.

Guillermo RosasGuillermo Rosas is Associate Professor of Political Science at Washington University in St. Louis. His research focuses on the economic consequences of political regimes and on the effects of political institutions on political behavior in Latin America.

 

 

Luigi ManzettiLuigi Manzetti is a research associate at the Tower Center and at the Center for Civil Society Studies of the Copenhagen Business School. He specializes in issues that include governance, corruption, and market reforms in Latin America.

 

Ukraine – Fight Against Corruption Year 1

On 13th July 2015, Ukrainian Prime Minister Arseniy Yatsenyuk attended the first US-Ukraine Business Forum in Washington D.C. Many of the comments by the Vice-President Biden revolved around the issue of corruption in Ukraine.

Ukraine’s struggle with corruption is not unique. Just in the past two weeks on the pages of this blog alone, we already covered protests to remove the president amid corruption claims in Honduras as well as President Kenyatta’s anti-corruption drive in Kenya.

The Corruption Perception Index (CPI) ranks countries on how corrupt their public sectors are seen to be, from the least corrupt to most corrupt. In 2014, Ukraine was ranked 142 out of 175 countries, taking the ‘coveted’ spot between Russia and Kenya and tying the ranking with Uganda and Comoros. Unfortunately, this ranking has not changed much in the past couple of years. According to the CPI, Ukraine has steadily remained in the bottom 40 most corrupt countries in the world and the most corrupt in Europe.

Since independence in 1991, almost every president was accused of corruption. The presidency of Leonid Kravchuk (1991-1994) was marred by corruption accusations related to the controversies surrounding the break up of the Black Sea Steamship Company. Similarly, the presidencies of Leonid Kuchma (1994-2004) and Viktor Yanukovych (2010-2014) were plagued by numerous corruption scandals. The latter was ousted in 2014 in mass protests after his decision to abandon the partnership with the EU and instead sign an agreement with Russia.

After fleeing the country, Yanukovych left behind his estate in the north of Kiev. An estimated $1 billion worth palace equipped with golf course, personal zoo, helicopter pad, gold embroiled bathrooms and a rare cars collection became a Museum of Corruption in Ukraine. It also placed an extra pressure on the new President to end the vicious cycle of bribes and mismanagement in the country on the brink of economic collapse as soon as possible.

In October 2014, the Ukrainian Parliament adopted a law “On Principles of State Anti-Corruption Policy in Ukraine (the Anti-Corruption Strategy) for 2014-2017.” The law declared that solving corruption was one of the priorities for the Ukrainian society and announced large-scale institutional changes. It took effect in January 2015.

One of the main features of Poroshenko’s anti-corruption strategy was the creation of the National Anti-Corruption Bureau. On 16th April, Poroshenko appointed Artem Sytnyk as the first Head of the Bureau, which has exclusive jurisdiction over corruption cases against government officials. However, even before the Bureau became fully operational, a number of concerns were raised. The most important one is about the independence of the body. The Director of the Bureau is appointed by the President, but can easily be removed by the majority of the Parliament, which may make it difficult to protect the Bureau from political interference.

According to the OECD, as of February 2015, Ukraine has finally alighted its criminal law on corruption with international standards. And although the changes have been made on paper, the major challenges still remain when it comes to practical enforcement of the new legislation.

The creation of the National Anti-Corruption Bureau was one of the main conditions for Ukraine to receive financial aid from the IMF. Eradication of corruption is also among the key conditions to enter closer relations and even possibly join the EU. In sum, the international community structured both economic and political incentives for the country to act on its promises to finally put a stop to the endemic illegal practices. Next year will be crucial to determine how our theories of conditionality hold up against the problems faced by new democracies.