The nature of political corruption in the Baltics

The similarities between the Baltic states are numerous and wide-ranging, but a closer look at recent events in the three countries reveals that the transformation of their markets to the capitalist model has resulted in a large degree of political, social and economic differentiation.

Latvia and Lithuania have successfully transformed various elements of their economies since the collapse of the Soviet Union, but it is Estonia that has become the most economically successful of the three. The slower pace of Latvian and Lithuanian reforms has already had enormous political and economic implications for Latvia and Lithuania, which have been placed on the 'slow track' to membership in the European Union. In contrast, Estonia was placed on the 'fast track,' and is expected to join between 2003 and 2005.

Throughout the late 1990s, politicians in Riga and Vilnius were not surprised at Brussels' decision to delay their entry into the EU. Officials received numerous intimations from Brussels that accession would take place only after more ambitious political and economic reforms were implemented, including efforts to quell the proliferation of political corruption in Latvia and Lithuania.

In sharp contrast, Brussels routinely praised Estonia for initiating domestic efforts to curtail corruption, and implementing important international agreements to inhibit the growth of political corruption.

Other Western agencies have also reported a disparity in political corruption rates in the Baltics. For instance, in its most recent annual report the non-governmental organization Transparency International, which ranks countries based on the level of corruption in the public sector, placed Estonia 27th out of 90 nations in the survey. In the same survey, Latvia is ranked 43rd and Lithuania is ranked 57th.

The growth of political corruption in Latvia and Lithuania since the onset of the transition to a market economy has hindered the democratization process, increased social inequality, undermined entrepreneurial spirit, decreased investment in agriculture, industry and high technical areas, and limited foreign direct investment.

Over the past year, I conducted several months of research, including 70 interviews with business and government leaders, members of consulting and law firms, journalists, law enforcement personnel, academics, and representatives of international organizations in the three Baltics states to ascertain why corruption has enveloped large segments of the Latvian and Lithuanian economic and political communities.

The research allowed me to identify a number of factors that collectively produce high rates of political corruption in Latvia and Lithuania:

- a systemic pattern of bribery, which originated during the Soviet era, remains an integral part of the political and economic process;

- the small population sizes of both states allow for cronyism between individuals who were Ôbench mates' at school from an early age, and later attended one of the few institutions of higher learning in each country. This results in a clan-like atmosphere at the highest levels of business and government;

- a decade after the onset of the transition to a market economy, the government remains overly involved in resource allocation, which results in a lack of market competition, and distortion of market activities;

- both states possess a limited free press, which rarely reveals the owners and shareholders of newspapers to the public;

- overlapping bureaucratic portfolios and an immense civil servant class (a remnant of the Soviet era) make governmental processes obscure and contribute to a chronic lack of transparency at local, regional and national levels of government;

¥ inadequate salaries for civil servants provide fertile ground for bribery by domestic and international businessmen to obtain contracts and preferential treatment;

¥ both countries lack a robust and independent judiciary;

- legislatures in Latvia and Lithuania lack adequate resources to permit the careful review and amendment of legislation. This work is often completed by the executive branch or civil servants;

- the frequent replacement of executive branch officials, including Cabinet members, inhibits efforts to implement programs to reduce political corruption in Latvia and Lithuania; the low salaries of government officials facilitate a 'brain drain' of highly skilled individuals to the private sector and a loss of qualified individuals who travel abroad for higher salaries in Western Europe and the United States;

- while their efforts are diverted toward entrance into NATO and the European Union, both states lack a long-term strategy to combat political corruption.

Any attempt to reduce the level of political corruption in Latvia and Lithuania will require a concerted effort by Latvian and Lithuanian politicians - and the assistance of the international community. This will be a difficult, but not impossible task.

Recent domestic and international initiatives indicate that important changes are being put into place. For instance, the Sunrise and Sunset Commission in Lithuania began an important reform effort, which resulted in discussions at the highest levels of government on the vital need to reduce the enormous Lithuanian bureaucracy and improve the transparency of political processes.

International efforts are also ensuring that Latvia and Lithuania will receive prolonged assistance in their efforts to eradicate political corruption. For example, in preparation for entrance to the EU, Denmark has assisted in the training of Baltic civil servants. The United States has participated in numerous training programs with Latvian and Lithuanian law enforcement agencies.

Anti-corruption efforts have also been aided by the valuable contributions of a number of NGOs. For example, the Latvian chapter of Transparency International has produced invaluable reports on political corruption, and a newly-established Lithuanian chapter has a dedicated board of directors who are determined to diminish the high level of political corruption throughout Lithuania.

But it is the promise of eventual membership in NATO and the EU that provides the greatest incentive for political and economic reform throughout the Baltics.

The recent efforts initiated by domestic and international agencies will not only help integrate the Baltic states into the Western economic and political sphere, but, more importantly, they will provide future generations with the necessary tools to combat the insidious effects of political corruption.