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For US, sponsoring good government in Eastern Europe is all about Russia

By promoting anticorruption efforts in countries like Hungary and the Czech Republic, the US hopes to prevent Russia or others from 'hollowing out' young democracies by gaining undue influence.

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    May 2015: US Ambassador Andrew Schapiro greets a crowd in Plzen, Czech Republic, celebrating the city’s liberation by US forces in World War II.
    Pavel Nemecek/CTK/AP
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Jiri Skuhrovec, a programmer and economist in Prague, Czech Republic, seems to be an unlikely protagonist in the power struggle between the United States and Russia.

The 30-something was ensconced in his doctorate, mapping exchange rates between real-world currency and the video-game currency of World of Warcraft, when a colleague asked if he could build similar software to track public tenders. It took him two weeks, and ultimately set him on a new course.

Today he serves as the statistical backbone of the Czech Republic’s leading anticorruption fight, Reconstruction of the State, which aims to upend the cronyism and corruption that has permeated post-Communist Czech society. With public data, he runs analyses for his nongovernmental organization, Econlab, that help him detect sources of party financing – including whether it’s Russian or not – and how municipalities and ministries are spending public money.

That puts him, unwittingly but not unwillingly, on the front lines of American strategic goals in the region. As Russia and the West have come into increasing conflict over international affairs, the US has turned its gaze particularly toward the vulnerability of post-Soviet states to financial pressures – both licit and illicit – wielded by Moscow.

American embassies across this part of Europe have worked on democracy-building and good governance since the fall of the Berlin Wall. They’ve trained judges and prosecutors, and awarded grants to everyone from investigative journalists to techies to number crunchers.

Particularly since Russia annexed Ukraine’s Crimea, anticorruption efforts have been on the “shortlist” of every US ambassador in Europe.

“Some have described corruption as the wormhole through which malign forces can work their way into countries and hollow them out,” says US Ambassador to the Czech Republic Andrew Schapiro. “There is a greater recognition that these issues of good governance, transparency, and rule of law are not just issues about fairness. They are not just issues of economics. They are also issues of security.”

From Estonia to the Czech Republic and Hungary to Romania, the status of the fight varies.

Estonia leads the way

Estonia is held up as a leader in democratic transformation, widely embracing e-governance, which has essentially eliminated bureaucratic middlemen – and opportunities to extort bribes. Romania, on the other hand, is the lowest-ranked European Union country on watchdog Transparency International’s Corruption Perceptions Index. Though even there, the country’s National Anticorruption Directorate has made great strides, with its chief prosecutor, Laura Codruta Kovesi, rooting out scandals at the highest levels, including in the prime minister’s office, on an almost daily basis.

Such efforts reverberate across the Atlantic, especially since Victoria Nuland, assistant secretary of State for European and Eurasian Affairs at the US State Department, assumed her post in the fall of 2013 and pushed the issue to the forefront.

US Vice President Joe Biden, during a visit to Romania in May 2014, called corruption “a clear and present danger, not only to a nation’s economy, but to its very national security. There are nations, and we’ve seen it recently, that exploit corruption to exercise malign influence and undermine the very sovereignty and independence of their neighbors.”

The US diplomatic corps doesn’t name names, but Russia is its clear focus, especially since the crisis in Ukraine. George Kent, the senior adviser on anticorruption for the Bureau of European and Eurasian Affairs at the US State Department, says that corruption exposed Ukrainian vulnerabilities in the country’s political upheaval in early 2014. When Viktor Yanukovych fled the country in February 2014 and security services temporarily collapsed, Ukraine was left “more vulnerable to Russian aggression,” he says.

“We see corruption as something that not only affects democratic governance and limits economic prosperity, but poses a threat to regional stability,” Mr. Kent says. “We do have concerns that corruption does make countries vulnerable. It hollows out institutions and corrupts key decisionmakers, leaving a country less capable to assert sovereignty and control over its territory.”

Support for anticorruption projects

In most cases, these American priorities align with domestic efforts long under way, like those in the Czech Republic. In addition to other programs, this year the US embassy announced a special grant competition for projects focused specifically on anticorruption, including an award of $28,000 to the NGO Czech Open Society, which aims to develop tools to detect corruption via the country’s free-access-to-information law.

Reconstruction of the State, however, is the biggest initiative it supports. The program is an unprecedented collaborative that launched with the specific aim of passing nine concrete anticorruption laws. At the time 165 lawmakers signed onto it. Two laws have since been passed: One abolishes “anonymous shares” that hide the identity of recipients of public funds, and another prohibits interest groups from adding last-minute supplements to pending legislation.

Two more that would put all state contracts online and give more powers to the national auditing office are on their way to becoming law.

When Reconstruction of the State launched in 2013, then-Ambassador Norman Eisen – an anticorruption fighter himself who garnered the nickname “Mr. No” in Washington – attended, sending a powerful political message. Today, support from the US embassy to projects like Reconstruction of the State ranges from providing space for meetings or small grants to the group.

The new ambassador, who perhaps fittingly is from Chicago, which is known for its own battles against corruption, has started hosting anticorruption-themed lunches and dinners for ministers or industry leaders – as well as other embassies. He says the purpose is to create a critical mass of like-minded diplomats to keep good governance on the agenda – and show this is not just an American foreign-policy tool.

Hungary’s slide toward authoritarianism

“I don’t want people to incorrectly view this as something that is just in the interest of the US,” Ambassador Schapiro says.

Sometimes, however, American goals do collide with governments in power.

Hungarian Prime Minister Viktor Orbán has in his term increasingly butted heads with the West as he’s consolidated power that critics call a slide toward authoritarianism, sparking a wave of domestic protest and international criticism.

After he said last summer that he wanted to create an “illiberal democracy” in Hungary, holding up Russia as an example, Ms. Nuland appeared to take him to task. In a speech in Washington in October, she asked an open-ended question to some leaders in Central Europe: “How can you sleep under your NATO Article 5 blanket at night while pushing ‘illiberal democracy’ by day; whipping up nationalism; restricting free press; or demonizing civil society?”

Last fall, the US embassy itself became ground zero for conflict, when the US removed six Hungarians from its approved visa list, barring them from entering the US on suspicion of corruption. The embassy itself did not make the names public in line with its policy regarding all visa matters. But forced to respond to the questions after the story was leaked by one of the banned individuals, officials organized a roundtable and issued a statement confirming the move “as the result of credible information that those individuals are either engaging in or benefiting from corruption.”

Embassy officials say they believe the attention the case has generated, while not intentional, has served a purpose. One American official says that countries in the region have viewed it as an example of the consequences of turning a blind eye to their own corruption allegations.

Hungary’s government defends its record

While many look warily at Hungary, Mr. Orbán’s government defends its record on transparency. Zoltán Kovács, the government spokesman, says that the current government is Hungary’s most transparent in the past 25 years. In fact, he says it is the nature of decisionmaking and determination to push through goals laid out that lead to false accusations from abroad.

“What others think is deficiency we believe is efficiency,” he says.

But Orbán’s critics are not convinced. Ilona Móricz, director at the Center for Independent Journalism in Budapest, Hungary, says that she is encouraged by the civil society groups – many of them supported by the US embassy – that are increasingly active. But she says she worries about not just Russian influence in the government but the way that the government is trying to emulate the Russian model.

“I’m a bit skeptical that rule of law can be reestablished so easily,” she says.

One person who is trying to do so is Sandor Lederer, founder of the anticorruption watchdog K-Monitor. His group has developed a database to log all corruption cases, which has earned him two lawsuits against himself as well as 25 threats of legal action. He was recently awarded a grant by the US embassy to develop an application that allows users to see the corruption allegations of the public works around them via their phones.

Mr. Lederer says the nature of corruption has changed in Hungary, from the enrichment of individuals to the destruction of checks and balances to maintain power at the top.

“Corruption has gotten much more centralized,” he says. “Now it feels more dangerous.”

He’s looked to the Czech Republic for inspiration – and has started a version of Reconstruction of the State at the municipal level in Hungary.

Czech efforts face setbacks

But even the Czech program has faced setbacks, foreshadowing the long-term challenges ahead in the fight against corruption.

One recent day in Prague’s Parliament, lawmaker Jan Farsky steals constant glances at the television screen in his office showing the session under way. He is awaiting debate about the law to require all contracts to be available online, which he has long pushed for.

Mr. Farsky has fully supported Reconstruction of the State, but he says that in these halls it’s lost favor among lawmakers.

One of the main hurdles is the identity of one of the project’s key supporters: Finance Minister Andrej Babis.

Mr. Babis ran for office on an anticorruption platform, practically adopting Reconstruction of the State as his own, Farsky says. But he is himself an oligarch and media magnate-turned-politician, and has proved as polarizing as Silvio Berlusconi, the Italian politician and mogul to whom Babis is often compared. Babis’s support for Reconstruction has given lawmakers an excuse to distance themselves from the project today.

“The US may be supporting [Reconstruction of the State] to save us from the East, but Babis is taking us back to the East,” Farsky says, noting the irony.

‘Obsessed’ with data

Mr. Skuhrovec, the programmer, remains undeterred by the hurdles facing Reconstruction of the State. Instead, he says, he is simply “obsessed with getting lots of data sets.”

That data analysis has uncovered some alarming trends, such as that nearly 30 percent of all awardees of Czech procurement contracts directly donate money to political parties. Some of his methods for analyzing public procurement, through his Econlab, are getting replicated at the EU level.

Where he sees the most direct link with his day job and the overall strategy to contain influence from Russia is in the area of party financing. While foreign countries are prohibited from donating to election campaigns in the Czech Republic, they can get around it by buying companies that then contribute funding. He wants to bring those loopholes to light.

“Since the 1990s everyone talks about the convergence to Western Europe,” he says, “but somehow we fear this convergence might not be happening.”

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