Saturday, October 17, 2009

Corruption perceptions shake more than corruption, economics just political confidence

From: WBJ
Corruption and nepotism, which had thrived throughout communist Central and Eastern Europe for decades, continues to this day.

Though attempts to unmask high-level corruption have improved, as demonstrated by the recent resignation of Sports Minister Miroslaw Drzewiecki due to evidence presented by the Central Anti-Corruption Bureau (CBA), the majority of graft takes place at the local and municipal levels. This has long permeated Poland’s local justice system, tax authority, contract procurement, and university entrance and grading practices.

However, unlike their Warsaw counterparts, local officials lack the required resources and personnel to address these challenges head on.

According to Transparency International’s 2008 Corruption Perceptions Index, Poland ranks 58th out of 180 countries surveyed. Among Central Europe’s EU members, it outranks only Romania and Bulgaria, two countries that have been openly criticized, even financially reprimanded by the EU for their inability to adequately tackle corruption, fraud and organized crime.

Recent events in Poland not only highlight the severity of the problem, but demonstrate that repercussions go beyond politics. Specifically, high levels of corruption negatively affect a country’s economic progress and development. For one, perceptions of corruption serve as disincentives for investors considering opening or sustaining business operations in Poland.

At a time when financial institutions and multinational firms are increasingly risk averse, higher corruption perceptions in Poland may make it increasingly expensive (and more competitive) to tap global capital markets or attract foreign direct investment.

Both the Polish government and the EU need to take a more active role working with local and high-level officials in setting clear metrics for success. Poland must require greater transparency and follow through with legal enforcement, otherwise it risks not only its political, but also its economic legacy.