Tackling the crisis of democracy, promoting rule of law and fighting corruption

By Coralie Pring and Jon Vrushi

Transparency International was founded in 1993 at a time of exciting global change, which saw an accelerated wave of democratisation where countries transitioned away from authoritarian systems to democratic forms of governance. As Transparency International celebrates its 25^th anniversary, we are witnessing a worrying situation where democratic progression has slowed to a near halt. Indeed, even some countries which were demonstrating robust and open governance systems, are now starting to backslide with democratic norms, while their institutions are under threat.

With the release of the Corruption Perceptions Index 2018, we looked at how corruption has contributed to the current threat to democracy. While the reasons for this crisis are complex, our analysis highlights that:

• when corruption seeps into the democratic system, corrupt leaders may seek to prevent democratic checks and balances so that they can continue to remain in power unpunished
• countries which recently transitioned to democratic governance often did not develop effective anti-corruption and integrity mechanisms, and now find themselves stuck in a cycle of high corruption and low performing democratic institutions
• some populist leaders who have come to power by capitalising on public disgust with corruption, ironically, now seek to undermine anti-corruption mechanisms and democratic institutions.

Our findings suggest that strengthening institutions that provide democratic checks and balances, bridging the gap between laws and their implementation, and supporting public accountability and press freedoms, are interventions that can contribute to not only fighting corruption but also to the preservation and consolidation of democratic institutions and norms.

Over the past two decades we have witnessed democratic backsliding across the world, including in what were promising new democracies such as Turkey, Hungary and Poland, and indeed in countries which were considered to be fully functioning democracies like the US.

Both the Economist Intelligence Unit’s Democracy Index and Freedom House’s Freedom in the World indices register substantial net declines in the health of democracies worldwide. Freedom House finds that since 2006, 113 countries have seen a net decline in their aggregate Freedom in the World score, whilst only 62 have experienced a net improvement. The Economist Intelligence Unit Democracy Index shows democracy stagnating in 2018 after three consecutive years of deterioration.

Of the more than 60 countries which transitioned from authoritarian rule to some form of democracy in the last quarter of the 20^th century, half of them have seen their levels of democracy stagnate or even falter. Twenty one of them have not made significant progress in their quality of democracy, five have declined from a classification of “free” to “partly free” according to Freedom House, while a further five have slid-back to authoritarian rule and are now rated as “not free”.

The graph below shows countries around the world grouped by their level of democracy into four categories: full democracies, flawed democracies, hybrid regimes (which show elements of autocratic tendencies) and finally authoritarian states. The vertical axis of the graph shows the level of perceived public sector corruption based on the Corruption Perceptions Index, where zero is “highly corrupt” and 100 is “very clean”.

No full democracies score below the CPI average, and fewer than ten countries classified as hybrid regimes or authoritarian regimes score above the CPI average. To account for the effect that development and economic growth have on the relationship between corruption and democracy, we have computed the effects of corruption on the level of democracy, controlling for GDP per capita as well as human development, which includes economic growth, the quality of education and healthcare. Both models show a strong and statistically significant effect of corruption on democracy.

The statistical models predict that a decline of one point in the CPI is associated with a decline of circa 0.6 points in the level of democracy, as measured by the Freedom House aggregate political and civil rights score. Similarly, using the Economist Intelligence Unit Democracy Index, which ranges on a scale of one to 10, one being extremely authoritarian and 10 being a perfectly full democracy, we observe that a 10-point decline in the CPI is associated with a decline of approximately 0.5-points in the Democracy Index score. These models are very simple and not sufficient to explain whether corruption leads to democratic decline or whether democratic decline leads to more corruption, however they are indicative of the very strong association between the two variables.*

If we look at the newly democratised countries which have declined or faltered in their quality of democracy (31 in total), we see that practically all of them have high levels of public sector corruption. With the exception of Georgia, all the other 30 countries score below the average in this edition of the CPI. While not attempting to solve the dilemma on whether democratic consolidation requires control of corruption first or whether control of corruption requires democratic consolidation, past and present examples clearly show how corrupt leaders have undermined democratic institutions in order to protect themselves from prosecution and to keep stealing state resources.

When looking at the opposite direction of this relationship, namely the question on whether democracy is a necessary condition in the fight against corruption, the academic literature is entirely split (here and here). CPI 2018 data also shows that some authoritarian regimes are performing well in terms of control of corruption. However, many of the autocracies which are able to control corruption to a satisfactory degree share high levels of human development and efficient state control. Perhaps more importantly, in the long term this high performance of authoritarian regimes on the CPI may be unstable as top-down and non-democratic anti-corruption policies rely on the continued political will of the regime to combat corruption. If and when there is a regime change, these countries can be left without the necessary institutions and mechanisms required to continue enforcing control of corruption.

In weak democracies, where corruption is rife, top politicians who have enriched themselves illicitly have strong incentives to cling to power by any means, avoid prosecution and thereby continue to enrich themselves. In order to stay in power, corrupt leaders may seek to weaken democratic checks on their power, for example by constraining political competition through electoral fraud as well as purging the civil service and weakening regulatory agencies. They often bypass formal institutions which are meant to enable transparency in government spending and other decisions, while oversight agencies and the judiciary may be politicised or left weak. In some cases, state institutions are used as repressive mechanisms to ensure the continuation of the incumbent rule – going from the rule of law to the “rule by law” (here and here). These actions undermine democratic consolidation processes, preventing further democratisation.

Take the case of the Guatemalan comedian-turned-president, Jimmy Morales, who in 2018 revoked an agreement with the UN underpinning the ability of the International Commission against Impunity in Guatemala (CICIG) to operate. The CICIG is collecting evidence of corruption relating to Morales, his political party, his son and his brother. The Guatemalan Constitutional Court blocked Morales’s decision, which then led to attempts to strip three constitutional court judges of their immunity from prosecution. Such attacks against the courts and judiciary enable corruption and impunity, and damage a fundamental pillar of democratic governance. Guatemala scores a mere 27 in this edition of the CPI and has been a “partly free” country for 24 consecutive years, in the Freedom House classification.

In Turkey, increased levels of corruption have also gone hand in hand with a decline in political and civil rights as well as attempts to weaken accountability institutions. Turkey’s CPI score dropped sharply from 50 to 41 in the period since 2013. In that same period, Turkey’s Freedom in the World score declined by almost half from a score of 61 to 32. This year, Turkey’s Freedom House rating fell from “partly free” to “not free”.

In the case of the newly democratised countries at the end of the 20^th century, unfortunately few introduced mechanisms aimed at preventing corruption after they transitioned from autocracies. In these newly democratised countries, however, intense partisan competition often leads to higher rates of corruption as new political parties promise state jobs, contracts and other resources to their potential supporters (here and here). This may have contributed to how little progress has been made in these countries to improve the quality of their democracies.

Even in full democracies, with robust oversight institutions and observance of the rule of law, when corruption seeps into the higher levels of the political system, corrupt leaders often try to subvert those democratic institutions. We saw this when a new president of the United States was elected with the intervention of a foreign power and by violating federal campaign finance laws, and who continues to stack up multiple instances of conflicts of interest. As these issues surfaced, President Trump moved quickly to undermine the independence and effectiveness of checks and balances, from firing the head of the Federal Bureau of Investigations (FBI), to allegedly pushing the attorney general to resign, and attempting to undermine the free press.

A similar sequence of events can be seen in Italy, where former Prime Minister Berlusconi changed the laws several times to either shorten the statute of limitations or reduce sentences for the elderly. At least twice, his reforms were declared unconstitutional. He was charged with corruption and other crimes many times, but was acquitted in most cases because the statute of limitations ran out by the time the appeal reached court.

Hungary’s Prime Minister Viktor Orbán, has taken a number of steps to undermine accountability institutions. In 2010, he appointed a former member of his party as chief prosecutor and stacked the Constitutional Court with supporters. More recently, he created a high court for public administration to oversee cases related to taxation, electoral law, corruption and the right to protest, with the government controlling the hiring and promotion of its judges. Hungary’s CPI score has dropped from 55 to 46 between 2012 and 2018. Whilst Hungary remains a free country under the Freedom House classification, the country has seen its political rights score drop from a perfect 1 to a 3, the lowest score since 1989 when it was transitioning to democracy.

Last year saw the election of a number of populist leaders or political parties in Italy, Mexico and Brazil. The year before, another populist leader was sworn in, that time in the US.

While there are many factors at play when it comes to the success of populist leaders, such as inequality, migration and fear of external security threats, often we see that they use popular discontent with political corruption to mobilise public support. Two years ago, when we launched CPI 2016, we argued that corruption and social exclusion lead to popular disenchantment with traditional institutions. Citizens feel the system is rigged and do not think the state is able to address their main socio-economic concerns. In turn, populist candidates appeal to citizens because they promise to break the vicious cycle of a corrupt elite enriching itself.

According to leading populism scholar, Jan-Werner Mueller, populist governance contains three main features:

1. attempts to hijack established institutions
2. corruption and “mass clientelism”
3. efforts to systematically suppress civil society

By claiming to derive authority directly from the people, they attempt to subvert democratic institutions that limit their power. Populists often taint their political competitors as part of an immoral corrupt elite however, once in power they often turn out to be more corrupt than the “elites” that they displaced. Examples range from Austria’s Freedom Party, the Italian Lega Nord, Turkey’s Erdogan, Hungary’s Orban, Venezuela’s Chavez, Guatemala’s Morales and not least the United States’ Trump. We should also closely watch the new populist governments in Italy, Brazil and Mexico.

Read more on the link between corruption and populism.

As identified in this analysis, both anti-corruption activists and democracy defenders share the same goals. We have identified a number of key areas which are important for the fight against corruption and reversing the worrying trend of the global crisis of democracy:

1. Preserve and strengthen checks and balances.
   • Political actors and institutions, and if necessary international actors, should have the right degree of independence, funding and resources to hold governments to account for their actions. Once compromised, well-functioning checks and balances are extremely difficult to rebuild.
   • Example of our work: Making Anti-Corruption Agencies Accountable and Independent.
2. Close the implementation gap between existing legal commitments and enforcement before making new commitments and drafting new laws
   • The last two decades have seen a proliferation of anti-corruption legislation at the national and international level. The United Nations Convention Against Corruption has been signed by 140 countries, and we have the OECD Anti-Bribery Convention, as well as other regional conventions, including in Africa and Latin America. Those conventions have largely been harmonised into national legislations. Laws though are only as useful as the norms which facilitate their implementation. Transparency International has called for no more empty promises, but instead the implementation of existing laws and commitments.
   • Examples of our work: We have reiterated this message at the G20 Summit, Open Government Partnership Summit, OECD Integrity Forum, International Anti-Corruption Conference etc.
3. Promote citizen engagement for sustainable accountability and decision-making
   • Civil society organisations should channel the momentum of increased political participation into initiatives aimed at empowering citizens to demand government accountability. In countries where the rule of law is weak or non-existent, any legal and technical fixes need to be preceded by a broad societal census in favour of integrity and clean institutions (here and here). Engagement of citizens in oversight of government decisions and spending, particularly at the local level, not only crowd-sources accountability but promises to re-invigorate the democratic process.
   • Governments must create an enabling environment for civil society organisations to operate freely. Shrinking civic space is often subtler than physical violence against activists, such as excessive bureaucratic burden for NGOs or blocking funding streams.
   • Examples of our work: Engaging citizens in monitoring public works, participatory video-making and citizen journalism to counter land corruption in Africa.
4. Support freedom of the press
   • Governments, NGOs, private investors and international donors should ensure that media have the freedom and resources to perform their watchdog function. The Corruption Perceptions Index 2017 analysis made clear that promoting press freedoms and civil society space are directly linked to better anti-corruption and good governance results. A free and competent press is also one of the foundational pillars of well-functioning democracies.
   • Examples of our work: We have partnered with investigative journalists in a global anti-corruption consortium to turn their stories into campaigns, from Azerbaijan to Guatemala.

*Countries classified as authoritarian on the EIU Democracy Index have been excluded from the below regression models. CPI2018 coefficients are similar and statistically significant when authoritarian countries are kept in, however the measures of development are not statistically significant when including authoritarian regimes.