Beyond perception. Has Romania's governance improved after 2004?

• Author: Ionita, Sorin
• Position: POLSCI FOCUS - Report

Post-communist countries embarked on their EU accession path with Transparency international scores below the lowest level in Western Europe and their culture was frequently described as entirely corrupt (1). Surveys on bribing cannot fully capture the systemic nature of East European corruption, which can be defined best as governance by particularism (2), the systematic discretionary use of authority to the benefit of particular groups or indicator from the survey of governance by World Economic Forum. The 2009 edition did not find great differences across the postcommunist region, suggesting that they may be in size rather than in kind. Czech Republic is 110 in the top of government favoritism, Hungary 112, and Romania 113, worse than Kyrgyz Republic or Kazakhstan. in other words, neither the transition, nor the EU accession has managed to restrain the capacity of the government to distribute benefits in a particularistic manner. Political parties, even in the most advanced countries in the region, seem to develop capacity and mobilization primarily through clientelism and state exploitation (3). Spoils include four basic categories:

1. public jobs, as the public sector is extremely politicized and each winning party fills with his own people not only the political jobs but many civil servant offices as well;

2. public spending, for instance procurement, but also preferential bailouts, subsidies, government transfers to regional and local branches, loans from state banks;

3. preferential concessions and privatizations from former state property; and

4. market advantages in the form of preferential regulation.

   Unfortunately we have very little systematic data collection on any of these areas, except for press reports and some occasional and sector and time limited studies by think-tanks. The only indicator allowing a comparison of 2004 with 2010 is the Control of Corruption (CC) from the World Bank, which aggregates perception scores from different expert sources (subjective sources), so a score comparable with Transparency International's Corruption Perception Index. Which does the same. Unlike CPI, however, CC is based on a methodology which has two advantages. it allows comparison from one year to another (which cannot be done with CPI) and it allows calculating a standard error, which is actually a measurement of the distance between different aggregated sources on a country (which might disagree on progress from one year to another).

   According to this indicator (Fig. 1), Romania has progressed from below 50% to above this value (orange to yellow) but the change falls within the confidence interval (at 10%), in other words this is not significant progress unless we increase the confidence interval and we accept greater disagreement among sources (Georgia is the only country to in the region to have evolved significantly in the 1998-2009 interval). Bulgaria progressed even less, but it started from a better position. The two countries are now aligned on the bottom of new EU entrants, their score in absolute figures being slightly below Turkey and Croatia, two candidate countries, (Fig. 2). The differences, however, are small across new member countries on this indicator, with the notable exception of Estonia and Slovenia, which are doing significantly better than the rest.

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   These results are inconclusive, showing that experts cannot agree on Romania's progress. Disintegrated scores, for instance Freedom House Nations in Transit, show progress in 2005 and 2006, then regress and stagnation. Finding objective indicators is difficult not only due to the elusive and discreet nature of the phenomenon. On top of these, the social, economic and institutional environment has changed importantly in the process of EU accession. The nature and channels of the illicit trade of favors have changed too, which makes it difficult to compare the level of corruption at different moments of time.

   To match this challenge, we need to understand that corruption is an equilibrium between resources and constraints. A lot of investment was made in raising legal constraints, but those only provide a part of the picture. A balanced anticorruption formula needs to address both resources and costs of corruption.

   Corruption = Resources (Power discretion + Material Resources--Constraints (Legal + Normative))

   In the formula above under resources we consider power discretion (due not only to monopoly of power, but also privileged access to influence and decision under different arrangements than monopoly, for instance cartels of parties) and material resources (public budget, foreign aid / EU funds, natural resources, state assets, public jobs). The constraints are legal (an autonomous and effective judiciary able to enforce legislation), but also normative (existing societal norms that endorse ethical universalism and sanction effectively the deviance from this norm through public opinion, media, civil society, voters). We will discuss systematically the difference between 2004 and 2009 selecting an indicator illustrative for each category.

   1. Resources for corruption

      The first category, power discretion, does not present much change. In 2004, Romania was ruled by Social Democrats who had doubled their number of mayors by recruiting opposition ones through local transfers manipulation. in 2009, the government party managed to form a majority by convincing a significant number of MPs elected on the opposition ticket to transfer their loyalties to the government. The same limited number of parties (3) dominate the political scene, with the same smaller radicals (1), minorities (1) and free rider parties (the Conservatives, who always enter Parliament running on the ticket of either left or right, as it could not pass the threshold by themselves).

      An electoral reform in 2008 has not changed anything of significance at the national level: rather, due to passage from closed lists to single unit constituencies the practice to offer pork instead of parliamentary support increased importantly with public bargains going on even in toughest austerity times. While the system is competitive, competition is nevertheless severely limited by a very high entrance threshold for new parties Romania has the highest obstacles for the entrance of new political parties (the highest in Europe): 200 000 signatures are needed to register a new party and 100 000 an independent candidate, so despite public exasperation with such behavior the current parties had managed a quite successful cartel.

      The direct election of the County Council Presidents starting with 2008 visibly strengthened their role, both within their parties and in the formal and informal processes of allocating resources. As a result, both the clean part and the corrupt part of the Romanian administration were substantially decentralized, together with the political decision-making inside each major political party, for good and for bad.

      Power discretion has also not evolved due to lack of enforcement of legal accountability mechanisms in the period under study. Although Romanian authorities are compelled by law 544/2001 to produce a yearly accountability report, the government does not enforce this legal provision. The General Secretariate of the government (SGG), which is supposed to be the government's chief implementing body, was unable to offer any statistics on how many such reports were filled in 2010. An independent assessment by the Alliance for Clean Government (www.romaniacurata.ro) evaluated that not even half such mandatory reports are compiled and that they are never verified or used as control instrument by the higher authorities. Out of 15 ministries, by midFebruary 2011 only four had managed to fulfil the legal requirements of publishing their 2010 report on their website. This leaves great latitude to all authorities, as there is no other mandatory reporting on accomplishing goals.

      Romania's Audit Court controls only accounting, and has no prosecutorial powers. Despite the existence in quite a few laws of provisions for administrative sanctions for civil servants or sanctions for political executives there are no records of such sanctions. lonel Blanculescu, former controller in the Nastase government (2000-2004) argued recently that custom officers charged with corruption in February 2011 had been fired before for lack of integrity, but were reintegrated in service after winning in Court due to the over-protective law of civil servants (188/1999).

      Romania also has a ministerial responsibility law, but no minister was ever sentenced on its basis, despite quite a few being charged. in a notorious case, the Supreme Court of Justice acquitted the head of the State Forrest agency (also a MP) who was proved to have caused damage of millions by acquisitions with blown prices (he bought Versace tiepins for all foresters in Romania at a value of 20 000 more than their shop price). Administrative accountability also does not work.

      The government produced during summer 2010 an emergency ordinance imposing social taxes payments to copyright contracts: it was full of errors and contradicted openly its own implementation norms, yet nobody was sanctioned for passing and approving it, despite thousands of people being induced to queue at tax offices over it (the minister alone was reshuffled) The civil servants law has detailed mechanisms on their accountability, but in a system where dismissals are generally political and arbitrary such mechanisms are ineffective and controversial. As long as nobody pays for anything and only political allegiance--or lack of--is sanctioned, governance is bound to remain poor.

      The second category, material resources, in other words the rents for private individuals and companies, have undergone important changes due to Romania's EU accession. The processes of privatization and post-communist property restitution have more or less...