A NTI C ORRUPTION P OLICIES

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Introduction

Thanks to the work of several international organisations and NGOs in recent years, anti- corruption policy has become increasingly well-structured as a subject, providing a robust basis for inter-country comparisons. In the cases of the three countries Georgia, Moldova and Ukraine, Georgia stands out as having taken early and radical steps to largely eradicate corruption, from a starting point of being deeply corrupted similar to the situation persisting in Moldova and Ukraine: though the latter two countries have in recent years engaged in much of the legislative agenda for curbing or preventing corruption, vested interests have continued to block the full potential impact of these measures.

In Moldova, some key measures to assure the independence of key anti-corruption institutions have not yet been taken, and a single oligarch group exercises power amounting to ‘state capture’. In Ukraine considerable progressive steps have been taken, but the overall picture is still marred by a lack of clear and consistent political resolve regarding implementation. While legislative action does not automatically deliver results, legal infrastructure

supported by a real political will at the highest level is key to achieving the desired outcome.

What is corruption? A primary distinction is made between ‘petty corruption’ where individuals or small businesses have to pay small bribes for securing public services or for passing examination by inspectors in relation to various regulations; versus ‘grand corruption’ where top-level officials or politicians are involved in large financial transactions or significant policy decisions, including the role of oligarchs in what is known as ‘state capture’ (see Chapter 2). Other categories of corruption can include extortion, nepotism, exploiting conflicting interests, and the making of improper political contributions.

A comparative analysis of anti-corruption policies in Georgia, Moldova and Ukraine is of particular interest, since they have much in common due to their Soviet past, and all now follow essentially the same course for economic and political reform, set out in their Association Agreements with the European Union. Yet their experiences so far with anti-corruption policy are very different. While several sources show Moldova and Ukraine as still perceived to be the most corrupt of 40 European countries, Georgia is perceived to be one of the least corrupt of all post-communist Europe, and even ranks ahead of the EU average.1

Whereas the question of perceptions is very general and subjective, the results are broadly confirmed in sources that pose more precise and varied questions, such as in Table 4.1, based on the World Bank’s enterprise survey. For example, the percentage of firms experiencing at least one bribe request is a minimal 2% in both Georgia and the OECD’s high-income countries, while the corresponding figures for Moldova and Ukraine are 31% and 50%, respectively.2 _{A broadly similar picture emerges from several other}

questions posed in this World Bank enterprise survey.

1 _{Transparency International, 2016.}

2 _{The most recent World Bank Enterprise Survey was conducted in Georgia,} Moldova and Ukraine in 2013 (http://www.enterprisesurveys.org/).

Table 4.1 World Bank’s Enterprise Survey Bribery incidence (% of firms experiencing at least one bribe request) Bribery depth (% of public transactions where bribe requested) % of firms expected to give gifts in meetings with tax officials % of firms expected to give gifts to secure government contracts % of firms expected to give gifts to get a construction contract % of firms expected to give gifts to public officials to get things done % of firms identifying corruption as a major constraint OECD 2 1 1 11 2 8 11 Eastern & Central Europe 17 14 13 26 25 20 22 Georgia 2 1 0 1 12 2 3 Moldova 31 22 14 11 49 16 38 Ukraine 50 45 50 99 73 73 38

The Association Agreements and DCFTAs cite the fight against corruption as a general objective in the context of promoting the rule of law (Articles 3 and 22 in the Ukraine agreement, for example), but do not address the issue in any specific or operational terms. However, certain sectoral chapters are operationally relevant to the fight against corruption, notably those concerning public procurement and corporate governance.

Work on anti-corruption policies over the last few decades by international organisations and NGOs has developed a well- defined set of analytical templates. These identify key institutional arrangements and categories of normative legal measures that are the backbone of anti-corruption policy. See in particular the work of the World Bank, the OECD anti-corruption network for Eastern Europe and Central Asia, the Council of Europe’s GRECO programme, the UN Office on Drugs and Crime, and Transparency International. In what follows we make extensive use of the OECD’s recent 2013-2015 report (OECD, 2016c), and the UN Guide for Anti- Corruption Policies (UNODC, 2003).

Endemic corruption is the costliest of all factors contributing to a negative investment climate, and hence impeding economic growth. In the cases of Moldova and Ukraine, it is also undermining many of the measures being taken under the Association Agreements and DCFTAs to modernise their economies.

Strategic and overarching aspects