Petty graft, such as tax evasion or demands for bribes, aren’t so petty when the cumulative effect can shake an entire country, a region, and the global economy.
The Arab Spring was driven by popular resentment over corruption of a ruling elite. In America, the 2008 financial crisis originated in widespread dishonesty about the real worth of home mortgages. In Europe, a debt crisis started with Greeks evading taxes and their government lying about the depth of the country’s red ink.
Last year, fortunately, a global fight against corruption picked up steam. Leaders of the world’s 20 top economies committed to improving each country’s level of official transparency, accountability, and integrity.
On Thursday, the G20 leaders meet in Cannes, France, for a summit that will include progress reports on each country’s anti-corruption efforts, such as protection of whistleblowers. On paper, many countries have passed laws or joined international pacts aimed at curbing dishonesty in both government and business. Russia and China, for example, recently toughened laws on bribery.
One reality check on this grand campaign is a “bribery index” from the watchdog group Transparency International. The index ranks 28 leading export countries on the likelihood that their firms pay bribes overseas, based on a survey of 3,000 business executives. The latest report found no improvement overall since the last one in 2008. Russia and China rank as the worst offenders.
Bribery and other forms of corruption aren’t just a moral issue. Globally, corruption adds up to 10 percent to the cost of doing business. It diverts resources from basic government services and undercuts a society’s need to base decisions on merit rather than underhanded dealing. It leads to revolutions.
Given all that, the G20 promises to “lead by example” in implementing a “Anti-Corruption Action Plan.” Peer pressure helps, as does each country keeping track of each other's efforts. But the G20 needs more concrete deadlines and precise details in their respective actions. The group’s first monitoring report will be issued Thursday at the Cannes summit.
This year, India especially awakened to the anti-corruption campaign with a grassroots campaign that resulted in tougher legislation against official graft. Brazil and Pakistan, too, are being shaken up with public outrage at corruption. And Greeks are finally confronting their own widespread dishonesty in paying taxes, government hiring, and past deceit over the official deficit.
“The lesson of this year is that people are waking up to corruption,” said Transparency International chairperson Huguette Labelle last month. “The values of transparency, accountability, and integrity are as relevant as ever in 2011.”