Tag Archives: state-owned enterprises

How the EBRD Can Help Fight Structural Corruption in the Western Balkans

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The European Bank for Reconstruction and Development (EBRD), created in 1991 to help former Eastern bloc countries undergoing economic transitions, is a multilateral bank that uses investment as a way to build market economies and integrate them into regional and global systems. The EBRD started out primarily investing in private enterprises with commercial partners, but its focus has since expanded to the public sector, which now accounts for over 50% of its portfolio in about a third of its countries of operation. The EBRD, like other international financial institutions, recognizes the risks that corruption and other forms of misconduct pose to the effectiveness of its projects and to its own credibility, and has taken extensive precautions to prevent misconduct by project clients and the EBRD’s own staff.

While the EBRD has worked hard to guard against corruption in the bank’s investment projects, the EBRD can and should do more to explicitly promote anticorruption reform—particularly in regions like the Western Balkans, where corruption is widespread and reforms have stalled. The EBRD, by virtue of being one of the region’s biggest lenders, and one with a good reputation, has considerable leverage and legitimacy. Of course, sustainable reform ultimately needs to come from domestic agents, and EBRD officials are understandably cautious about what they can realistically accomplish (a point that Sergei Guriev, the EBRD’s former chief economist, noted in a KickBack podcast last fall). All that said, the EBRD can and should do more to shape domestic anticorruption agendas in the countries it assists, beyond simply insisting on integrity and regulatory compliance for EBRD grants and loans.

To its credit, the EBRD has explicitly recognized and emphasized the importance of good governance to economic development, and has started to look at ways to promote lasting governance-related reforms and structural change. In pursuing this agenda in the Western Balkans, the EBRD should apply lessons learned from its more aggressive anticorruption efforts in Ukraine, and in particular should push for reforms in three main areas: Continue reading →

How Corruption Politics Facilitated Hungary’s Response to the Refugee Crisis

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Politicians using xenophobia as a tool for their political benefit is unfortunately common; the past few years have seen populist, far-right parties across Europe take stances that involve stirring nationalist sentiments by portraying their countries as figuratively—and, in their eyes, sometimes literally—under attack by foreigners who have come to reside there. Still, even as those parties’ popularity increases, they have largely not yet succeeded in taking full control of government. Not so in Hungary, where Prime Minister Victor Orbán’s centralist, ultra-nationalist variant on the theme holds sway, and where the country’s escalating efforts to “keep Europe Christian” by excluding Syrian refugees (as well as many other predominantly Muslim migrants and refugees) are extreme even compared to its neighbors.

The reasons for Orbán’s rise to and maintain power are numerous and complex. What has largely gone overlooked in media reports so far, however, is the important role that corruption has played, first in helping Orbán to the premiership, and then in influencing his anti-refugee/migrant policy.

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