SIM Report: Southern Europe, Issue 3

WESTERN BALKANS: High corruption levels remains key impediment for progress towards EU membership
The publication of the latest version of Transparency International’s (TI) Corruption Perception Index (CPI) in January indicates that despite some progress, countries in the Western Balkans are continuing to experience high levels of corruption. Albania, Kosovo, Montenegro and Serbia performed especially poorly in the annual survey, which ranks jurisdictions ‘by their perceived levels of public sector corruption’. Scores close to 100 are considered positive, while a 0 indicates a country is ‘highly corrupt’.
TI
said that despite EU requirements for potential members on tackling corruption
and preventing political interference in institutions, governments across the
region have not taken enough measures, including implementing reforms, to
address the issue. This come amid region-wide social unrest in recent months
over a series of grievances, including corruption. In Serbia, a series of
protests took place in Belgrade over allegations of government corruption as
well as claims that President Aleksandar Vučić and the ruling SNS party have
consistently undermined media freedoms. Similarly, in Albania occasionally
violent protests targeting perceived corruption in the government prompted the
main opposition party to boycott local elections in June 2019. The ensuing
political deadlock in the country stalled a series of planned anti-corruption
reforms.
Widespread
and systemic corruption also means that newly elected governments that promised
to address the issue face structural constraints in limiting the influence of
corruption on politics when assuming power. In Bosnia, reforms have been almost
at a standstill in part due to governance issues arising from the county’s
complex political system. In Kosovo, the formation of a new government can
provide a strong enough impetus to intensify anti-corruption measures. Indeed, TI
said that Kosovo could improve its ranking by ending the practice of political appointments
to state-owned companies. However, the new government’s agenda will likely
prioritise normalising relations with neighbouring Serbia, in light of growing US
and EU political pressure, over domestic issues.
Government efforts are also stymied
due to the strong level of influence private interests have on elected
officials. This partly explains the strong public mistrust towards elected
representatives, which in turn undermines their credibility and the normal
functioning of political institutions. Indeed, fragile political institutions
will also be put to the test as opposition parties have threatened to boycott
parliamentary elections planned in Montenegro and Serbia later this year.
High
corruption levels can have multiple implications on a country. Beyond an
adverse impact on the countries’ EU membership bids, reputable international
indicators such as CPI can also deter foreign investment across several
sectors. Entrenched local interests can mean that foreign market entrants are
at a strong disadvantage, particularly if projects require the support of local
or national governments.
High
levels of corruption in the region are also indicated in the World Bank’s
Worldwide Governance Indicators, a project that includes both aggregate and
individual indicators of governance for more than 200 countries between 1996
and 2018. For instance, in its ‘Control of Corruption’ indicator, Albania had a
score of 41 per cent in 2016, compared to a Europe & Central Asia average
of 64 per cent. Similarly, in the ‘Rule of Law’ indicator, Albania achieved a
39 per cent rating compared to a Europe and Central Asia average ranking of 66
per cent in the same year.
For
emerging countries in the Western Balkans, corruption remains a key impediment
towards attracting foreign investment and growth. For potential investors, the
risks – both regulatory and reputational – from any adverse exposure to
corruption, this current state of play is highly discouraging, and damages the
region’s overall competitiveness. While the election of a new government could
change this dynamic, incoming administrations inherit both systemic challenges
and established perceptions that can impede any meaningful anti-corruption achievements.
The EU can play a key role in providing incentives for countries to address
structural corruption, however repeated delays in the process considering
applications for aspiring members could diminish the bloc’s influence in the
region and present yet another obstacle towards meaningful progress.
WANT TO READ MORE ANALYSIS IN THIS LATEST SIM EDITION...
SLOVENIA: Far-right party benefits from coalition’s collapse
ITALY: Far-right suffers setback in key election, offering brief respite to fragile ruling coalition