Corruption and Politics in Latin America: National and Regional Dynamics 9781685855345

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Corruption and Politics in Latin America

Corruption & Politics in Latin America National and Regional Dynamics EDITED BY

Stephen D. Morris Charles H. Blake

LYN NE RIENNER PUBLISHERS

B O U L D E R L O N D O N

Published in the United States of America in 2010 by Lynne Rienner Publishers, Inc. 1800 30th Street, Boulder, Colorado 80301 www.rienner.com and in the United Kingdom by Lynne Rienner Publishers, Inc. 3 Henrietta Street, Covent Garden, London WC2E 8LU © 2010 by Lynne Rienner Publishers, Inc. All rights reserved

Library of Congress Cataloging-in-Publication Data Corruption and politics in Latin America : national and regional dynamics / edited by Stephen D. Morris and Charles H. Blake, p. cm. Includes bibliographical references and index. ISBN 978-1-58826-718-4 (hardcover : alk. paper) — ISBN 978-1-58826-743-6 (pbk. : alk. paper) 1. Political corruption—Latin America. 2. Democracy—Latin America. 3. Latin America—Social conditions. 4. Latin America—Economic conditions. 5. Latin America—Politics and government—21st century. I. Morris, Stephen D„ 1957- II. Blake, Charles H„ 1962JL959.5.C6C674 2010 320.98—dc22 2010018931 British Cataloguing in Publication Data A Cataloguing in Publication record for this book is available from the British Library.

Printed and bound in the United States of America

®

The paper used in this publication meets the requirements of the American National Standard for Permanence of Paper for Printed Library Materials Z39.48-1992. 5 4 3 2 1

Contents

Preface

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1 Corruption and Politics in Latin America Stephen D. Morris and Charles H. Blake 2 Argentina: The Dawn of a New Era or Business as Usual? Charles H. Blake and Sara Lunsford Kohen

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3 Bolivia: Traditional Parties, the State, and the Toll of Corruption Daniel W. Gingerich

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4 Brazil: Corruption as Harmless Jeitinho or Threat to Democracy? Matthew M. Taylor

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5 Cuba: Corruption at a Crossroads Sergio Diaz-Briquets and Jorge Pérez-López

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6 Mexico: Corruption and Change Stephen D. Morris

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7 Venezuela: Corruption in a Petrostate Leslie C. Gates

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8 The Anticorruption Agenda in Latin America: National and International Developments Florencia Guerzovich and Roberto de Michele

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9 Are the Politics of Corruption Changing? Charles H. Blake and Stephen D. Morris

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List of Acronyms References The Contributors Index About the Book

233 237 273 277 287

Preface

The scope and significance of corruption in Latin America (and beyond) have long transcended our attention to it. Though most acknowledge the persistence of corruption, political analyses rarely address it or incorporate it into the broader analysis. This neglect clearly handicaps our understanding of the politics of the region. But beginning around the mid-1990s, things began to change. Accompanying the transformative political and economic changes sweeping the world, interest in corruption increased. Yardsticks measuring and comparing corruption across countries proliferated. Since then, scholars from various disciplines, analysts from major international financial institutions, nongovernmental organizations (NGOs), national governments, and throngs of activists have produced a growing body of work that seeks to gauge the level and nature of corruption, assess the nuanced views of the public on the subject, detail the weaknesses of institutions of accountability, pinpoint the pernicious impact of corruption on the economy and the political system, and offer an assortment of tools and approaches to battle corruption. This volume seeks to complement this global shift by addressing these and other issues through the lens of the Latin American experience. The project sprang from our work with a group of scholars conducting research on corruption in Latin America. Though national case studies exist, there are relatively few truly comparative texts on the topic. We strive to fill that gap by having each contributor address a similar set of questions and adopt a common framework. Moreover, we seek to provide students and scholars unfamiliar with the study of corruption with the basic tools needed to understand this emerging subfield and to incorporate a basic knowledge of corruption into a broader understanding of Latin American politics. As such, the effort here aims to broaden and complement a basic knowledge of Latin American politics. At vii

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the same time, we seek to offer a dynamic picture, incorporating corruption into the democratic and economic changes marking the countries of the region. We are thankful to a number of individuals for contributing to this volume. Above all, we appreciate Lynne Rienner's initial comments and suggestions that gave rise to this particular project. We would also like to thank the anonymous reviewers for their comments, those who offered insightful feedback at the Latin American Studies Association conferences where many of these chapters were developed, the hard work and patience of the contributors, and our wives, Celina and Yolanda, for their loving support and encouragement. —Stephen D. Morris and Charles H. Blake

1 Corruption and Politics in Latin America Stephen D. Morris and Charles H. Blake

In a word association game, mention "Latin American politics" and the response is often "corruption." It does not take much of a cynic to see the parallels. News from the region frequently spotlights scandals involving sitting or former presidents; the unexplained wealth of politicians and high-level bureaucrats; elaborate, multimillion-dollar schemes of graft and kickback; illegal campaign funds intricately siphoned through labor unions, phantom companies, or the bureaucracy; under-the-table bribes by multinationals to acquire lucrative government contracts or concessions; electoral fraud and vote buying; huge payments by drug traffickers framed by violent threats (plomo o plata [bullets or money]) to police, military officials, or prosecutors; and illegal arms sales by top military officials—to mention just a few of the real cases spanning the past decade.1 Petty bribes to police and bureaucrats are less newsworthy only because they are considered routine. This book examines the nature of political corruption in contemporary Latin America. We address questions relating to the types of corruption found in the region, the factors shaping corruption—particularly the impact of recent political and economic changes, the consequences of corruption, and the nature and effectiveness of recent reforms. Does corruption grease the wheels of Latin American politics, facilitating its operation as some contend, or does it undermine democratic rule and worsen the region's perennial problems of poverty and inequality? Do citizens condemn, condone, or simply acquiesce to the corrupt behavior of their politicians and others? To what extent is corruption ingrained in the Latin American culture? Are the new democracies effectively addressing the problem? This introductory chapter sets the stage for an exploration of these and related questions in Argentina, Bolivia, Brazil, Cuba, Mexico, and Venezuela, as well as at the regional level. In this chapter, we discuss the concept of corruption, 1

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the different forms corruption can take, and the various analytical approaches used in the study of this rather exotic political phenomenon. We present data gauging the levels of corruption and its impact among Latin American countries, briefly reflect on corruption's historical and cultural roots, and examine the more recent studies of corruption, which tend to concentrate on political institutions and corruption's link to democracy, the economy, and public opinion. We also explore the new nomenclature related to corruption and anticorruption efforts as well as the policy relevance of recent studies. The chapter concludes by highlighting the challenges that remain and the questions addressed in the subsequent chapters.

Conceptualizing Political Corruption: Types and Patterns Political corruption is broadly defined as the abuse of public power for personal gain (Nye 1967). Long-time corruption scholar Michael Johnston (2005, 11) defines it more precisely as the "abuse of a trust, generally one involving public power, for private benefits which often, but by no means always, come in the form of money." The contingencies in Johnston's definition point to the broad array of forms and patterns that corruption can take and hint at some of the historic difficulties scholars have faced in coming up with a precise, workable definition of the term. 2 Most people equate corruption with bribery, where an illegal payment is made to a government worker in return for some type of official, state-sanctioned, authoritative act that has a selective and tangible impact and that in the absence of the secret payment would not otherwise have been made. Kickbacks and extortions operate much like bribes. A kickback is simply paid after the service is rendered, usually from a portion of the governmental award itself, whereas in extortion the public official threatens to use state power (whether used rightfully or not) to induce the payment of the bribe. Corruption also includes graft and embezzlement, where public officials appropriate public funds for alternative uses. In such cases, there may be no exchange between citizens and public officials as occurs with a bribe. Fraud is closely related to graft, but refers normally to the various, often complex and imaginative schemes orchestrated by public officials to appropriate public funds, frequently with civilian accomplices. This may include setting up fake companies, listing ghost workers to pad payrolls, overcharging the government on contracts, or fixing the books to hide the disappearance of public funds. Corruption also encompasses such diverse activities as nepotism, favoritism, and conflict of interest where public-sector jobs or benefits go to family, friends, or others of the decisionmakers' choosing. An important form of corruption entails state capture whereby special interests literally take control of state institutions through a range of mechanisms. In such cases, the state institution pursues the interests of the private group rather than the public's. This is particularly problematic when organized crime controls the police or public prosecution agencies through

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bribes and intimidation. Finally, within the partisan and electoral arenas, corruption encompasses illegal campaign contributions and expenditures, electoral fraud, and vote buying. Beyond taking different forms, corruption can also occur at virtually any level or site within government or society. Distinctions are often drawn between upper- and lower-level corruption, with the former involving presidents, ministers, members of Congress, governors, and other high-ranking officials, and lower-level corruption involving civil servants or the police. Upper-level corruption is often referred to as "grand corruption," in contrast to "petty corruption" that occurs at the lower levels. This distinction among levels generally overlaps with a related difference based more on policy phase than hierarchical location (J. Scott 1972a). Here, the term political corruption tends to refer to corruption occurring at the policymaking stage, which usually entails the violation of second-order norms (the often unwritten guidelines determining how politicians should make decisions that are just, fair, and impartial), whereas bureaucratic corruption involves the implementation of policy and relates to the violation of first-order norms (the written rules and laws that are the product of politicians' decisionmaking) (Bardhan 2006; Warren 2004). Even within these two broad spheres, it is still possible and useful to classify corruption by simple reference to its institutional location within the political system (e.g., judicial, executive, legislative, partisan elections, police, etc.). Additional distinctions disentangle state and societal forms of corruption. Societal corruption refers to practices of bribery, extortion, fraud, nepotism, favoritism, and so on, which occur within societal organizations and are largely independent of the government. The private sector is certainly not immune from the type of behavior found in the public sector, but such practices are rarely included under the umbrella of political corruption. The state versus society formula can also be used to tease out the direction of corrupt influence captured in the distinction between bribery and extortion. Societal interests often use illegal payments (bribes) to capture or colonize the state—"state capture," as noted previously— illegitimately influencing state policies and thereby turning that segment of the state into a tool serving particular or specialized interests rather than those of the broader society. The direction of influence involved in state capturing, however, contrasts situations where a powerful state, or sectors of the state, use (and abuse) state power to demand and capture rents from private actors: a form of corruption commonly denoted as extortion. When drug traffickers, for instance, have half the police on their payroll doing their bidding (something akin to the privatization of the police), this is quite different from when the police shake down petty thieves and extort from citizens for real and imagined offenses. In sum, corruption is a complex concept encompassing an array of conduct that can occur at different locations within the state and society. What the multiple actors and forms of actions share, however, is the distortion or violation of widely accepted rules or norms that ostensibly guide the behavior of both state officials and private citizens. Defining these norms with precision—

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whether they can be clearly delineated by the law, public interest, or public opinion—remains problematic (as noted previously). Nonetheless, corruption finds politicians still making decisions, but not decisions based on their concerns for the common interest or from a sense of justice, as expected—the trust embodied in the public office. Likewise, bureaucrats still implement policy, but not in accordance with the laws or bureaucratic regulations they are expected to follow. Instead, these public officials make decisions, implement laws and regulations, and administer programs based on some alternative criteria, such as helping friends, family, or self, strengthening the political party, promoting an election campaign, passing legislation, and so on. Corruption, in short, may not involve solely private gain—as many definitions specify—but it does involve a violation of the norms defining public office. In a similar fashion, through bribery, citizens still interact with the state, but not in accordance with the basic universal principles governing citizenship. Citizens may use bribes to exert illegitimate influence over the government, usually at the implementation stage of policy (J. Scott 1972a), interacting with state officials to gain a privileged and special advantage, making it so that the law does not apply to them, or, conversely, simply to avoid abuse at the hands of corrupt public officials. At its heart, then, political corruption denotes a lack of congruence between the legitimate use of public power (as spelled out in the normative order) and self-interested behavior that violates the public trust. Where the private-regarding behavior of public officials and citizens (also known as rational behavior) conforms to what is normatively defined within society as appropriate avenues for self-interested conduct (for example, doing a good job in order to receive personal recognition, a promotion, or a raise—all acceptable motives based on personal gain for the public official), no corruption is present. As the gap widens between personal gain and public responsibility, however, the level of corruption increases as well. One consequence of the amorphous nature of the concept of corruption— its distinct forms, locations, and motives—is that it may not be enough simply to say that a country suffers extensive or systemic corruption. Unfortunately, this may be all that standardized measures of corruption can tell us and all that we can learn from a global perspective. There is a clear need, then, to disaggregate the term in order to identify and specify the particular patterns of corruption found within a country. Such an approach is critical to understanding the specific underlying causes and consequences of corruption and to formulate appropriate strategies to fight corruption.

The Study of Corruption The field of corruption studies is broad and reaches beyond any one discipline. It encompasses the analysis of all government institutions, from specific bureaucratic agencies to the broad operations of political systems. It sheds light on the

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essence of the state-society relationship, including the boundaries and intersections separating and linking wealth and power, the economy, and the polity. The study explores the meaning of citizenship, the quest for justice (see M. Johnston 2005), and even delves into fundamental aspects of culture, ethics, and morality, seen by some as essential to understanding the roots of corruption. Yet despite this amazing scope, few scholars have ever ventured into this vast yet ill-defined field. Many saw it as a Pandora's box and were turned off by the lack of systematic evidence and hard data. This scholarly neglect matched a similar inattention at the global political level, where during the Cold War era, international agencies, such as the International Monetary Fund (IMF) and the World Bank, considered the topic of corruption virtually taboo and politically off limits. The United States similarly tended to avoid the topic, particularly among its allies, since the priority was maintaining friends in its struggle against communism regardless of their governance practices. Yet since the mid1990s, a confluence of changes has turned this neglect into intense political and scholarly interest. The end of the Cold War, the transition to liberal capitalist systems and democratization, all coupled with donor fatigue, prompted the United States and the international financial institutions to do an about-face and to stress issues of governance and corruption (see Chapter 8). This growing political interest also drove a renewed focus by scholars. One important development feeding this growing attention was the development of cross-national measures of corruption that starkly revealed the depths of the problem for the first time.

Gauging Corruption and Its Impact in Latin America Since corruption is contrary to legitimate behavior, a violation of norms, and usually illegal, it is often hidden. This obscurity makes it difficult to collect systematic evidence, assess the true levels of corruption within a country, differentiate the many types of corruption, or compare corruption among countries or across time. It was largely this dilemma that hampered the comparative study of corruption for so long. But since the mid-1990s, public opinion surveys have been used to overcome this problem. 3 The most cited comparative data set, Transparency International's (TI) annual Corruption Perceptions Index (CPI), constitutes "a poll of polls, reflecting the perceptions of business people and country analysts, both resident and non-resident" (Transparency International 2002,3). The results covering most countries of the world have been published annually since 1995. Figure 1.1 presents data for Latin America from the 2008 Corruption Perceptions Index. This widely used index scores countries on a somewhat counterintuitive scale from zero (most corrupt) to ten (least corrupt). In this index, Latin America exhibits relatively high levels of corruption compared to other regions of the world, certainly more than expected based on its level of economic

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Figure 1.1 Comparison of Latin American Countries in 2008 by Transparency International's Corruption Perception Index

10 T 9--

Source: Transparency International (http://www.transparency.org).

development. In 2008, only three countries in the region ranked among the top fifty nations as least corrupt (out of 179), with many located below the top 100. Within the region, corruption levels vary widely. Chile consistently exhibits the lowest levels of corruption based on the annual CPI. In 2008, it ranked twentythird globally, placing it in the company of such developed nations as France and near the United States (at 7.3). For the first time, Uruguay achieved the same score as Chile. The scores for the other countries in the region fall at or below the mid-point, ranging from a low of 1.9 for Venezuela to Costa Rica's 5.1. Mexico ranked seventy-second globally in the company of such countries as China and Bulgaria; Brazil placed eightieth, alongside such nations as Burkina Faso and Saudi Arabia; while Argentina occupied the one-hundred-andninth spot together with Armenia and Moldova. Whereas the CPI depicts the perceptions of experts and country analysts, TI's Global Corruption Barometer (GCB) provides further measures of the extent of corruption based on public opinion, including information on everyday direct experience with corruption through bribery. According to the 2006 Global Corruption Barometer, approximately one in three respondents in the ten Latin American countries surveyed that year who had contact with the police paid a bribe. Overall, 17 percent of respondents paid a bribe within the past year, ranging from a high of 28 percent in Bolivia and Mexico to a low of 6 percent in Argentina. The GCB also shows that on average 29 percent of respondents felt the government had not been effective at fighting corruption, while another 23 percent embraced the rather extreme view that the government not only does not

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fight corruption but actually encourages it. Indeed, a sense of pessimism seemed to prevail in the societies studied, with 43 percent believing that there would be more corruption during the next generation compared to only 21 percent of respondents who expected less. The annual Latinobarômetro polls also offer more detailed data based on the public's perceptions and experiences with corruption.4 For the region as a whole, the 2007 series (Latinobarômetro 2007) found that 19 percent of respondents or members of their family had paid at least one bribe during the previous twelve months. This was down from a high of 26 percent in 2001. And yet 58 percent of respondents in 2007 felt that little or no progress had been made over the prior two years in reducing corruption. Table 1.1 presents data from recent Latinobarômetro polls. It shows, first, the perceived "probabilities" according to the public of Table 1.1 Likelihood and Direct Experience with Paying Bribes in Eighteen Latin American Countries Probability in 2004 of Paying a Bribe to . . . a Country Argentina Bolivia Brazil Chile Colombia Costa Rica Dominican Republic Ecuador El Salvador Guatemala Honduras Mexico Nicaragua Panama Paraguay Peru Uruguay Venezuela

Police 57 45 52 22 30 39 49 52 20 45 41 65 33 33 58 38 37 46

Judge 46 34 36 20 24 23 38 47 22 37 38 58 33 27 55 36 25 40

Direct Experience b 2002 25 20 61 13 19 24 no data 21 16 31 23 59 41 23 22 25 13 27

2007 23 16 66 9 13 23 12 12 12 10 9 33 10 6 21 23 17 22

Sources: Informe-Resumen Latinobarómetro 2004: La Década de Mediciones; Informe Latinobarómetro 2007, Banco de Datos en Línea, http://www.latinobarometro.org. Notes: a. Question: Imagine a friend who is a foreigner and does not know your country asks you what the probabilities are here [in your country] of bribing police (a judge) to avoid detention (get a favorable sentence). The figure shows respondents selecting "tiene muchas probabilidades" (highly probable) and "tiene bastantes probabilidades" (fairly probable), b. Paid a bribe within the past twelve months.

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being able to bribe the police or a judge, and secondly, the percentage of respondents stating that they or somebody in their family had paid a bribe during the previous twelve months. Once again, the data confirm the perception among the public that corruption is widespread. It also highlights how direct experience in paying bribes is not the same as general perceptions about the level of corruption as measured by the CPI and other polls (see also Seligson 2006). Despite the perception of extensive corruption in countries like Honduras and Panama, actual experience with bribes is less in these cases than in Chile, while at the other end of the scale, Mexico and Brazil, which rank at medium levels according to the CPI, exhibit the highest levels of direct experience with corruption in the region. The data presented here even provide some indication of changes over a five-year period. It suggests that while countries like Guatemala, Honduras, Nicaragua, and even Mexico lowered the level of corruption based on direct experience, countries like Brazil and Argentina made little headway. Numerous, exclusively national polls on corruption have also been conducted in recent years, offering even more complex and detailed measures of corruption and gauging popular concerns. The local chapter of TI in Mexico, Transparencia Mexicana, for instance, has conducted a series of national surveys since 2001 detailing the frequency of corruption in the provision of over thirty different types of public services, specifying the amount paid in bribes, as well as a host of opinions related to peoples' trust in institutions and reasons for obeying the law (Encuesta Nacional de Corrupción y Buen Gobierno 2001, 2003, 2005, 2007). A similar 2003 poll in Peru calculated the average bribe at 64 soles (about US$18): US$6 to slip merchandise past customs agents or speed up the installation of water services, US$15 to obtain a building permit or driver's license or work as a street vendor, and 50 cents to visit a hospital patient outside regular visiting hours ("Peru: Minor Corruption Just Part of Life" 2003). But despite the proliferation and use in both research and policymaking of survey-based measures of corruption, they are not without their problems. These methodological tools often risk equating individual perceptions with corruption itself, rely heavily on the opinions of businesspeople, fail to differentiate the many different kinds of corruption (privileging bribery over other forms), potentially suffer from a degree of endogeneity, and tend to lack precision (see del Castillo 2003; M. Johnston 2000a, 2005; Soreide 2006). Perceptions of corruption, for instance, may be influenced as much by democratization and the higher profile of scandals nationally or globally as by the actual level of corruption. The CPI has also been criticized for failing to detect change over time because it "cannot tell us whether year-on-year differences reflect changes in 'real' levels of corruption, the addition of new data that improve the scale, or other methodological difficulties that weaken it" (M. Johnston 2000a, 13). But despite such problems, the polls' reliability remains relatively high, meaning that repeated observations tend to produce similar results (Lambsdorff 2000, 2003) and cross-correlations among the various measures are normally quite high.

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Overall, then, despite the shortcomings, such measures provide at least a sense of the dimensions of the problem and set the stage for comparative empirical studies that statistically test correlates and relationships at various levels of analysis. Gauging corruption's impact may be even more difficult to calculate with precision than the levels of corruption. Even so, a clear consensus has emerged in recent years grounded in theory and empirical research showing that corruption has a deleterious effect on the economy and the political system, thereby putting to rest many of the functionalist contentions of the 1960s and 1970s (Huntington 1968; Nye 1967). Economically, cross-national studies confirm that corruption inhibits investment (public, national, and foreign), distorts government spending, and compounds social injustice and inequality by favoring the rich and the connected (Ali and Isse 2003; Kaufmann and Wei 1999; Lambsdorff 1999; Mauro 1995). Estimates of the cost of corruption in Mexico, for instance, range from 9.5 percent to 12 percent of gross domestic product (Morales 2001), the equivalent, according to Pricewaterhouse Coopers, of a 15 percent tax on investors and companies ("Indice para Medir la Corrupción" 2004, 2). Politically, a growing collection of studies shows that both the public's perceptions of corruption and experience with paying bribes (victimization) reduce social capital, regime legitimacy, political and generalized trust, respect for politicians, and satisfaction with democracy (Anderson and Tverdova 2003; Caiden 2001,230; Delia Porta 2000; Pharr 2000; Seligson 2002a, 2002b, 2006; Seligson et al. 2004). According to Doig and Theobald (2000, 6), corruption, moreover, negatively affects the people's "commitment to collective projects, civic behavior, levels of crime and public order," while Canache and Allison (2005) find that individuals' perception of corruption lowers their opinion of incumbent officials and political institutions. Another study states rather categorically that "corruption, along with citizen survey concerns, has the most detrimental impact on citizens' confidence in democracy and democratic institutions" (Kite and Sarles 2006, 350). As Gerald Caiden (2001, 230) notes, "Every incident of corruption that comes to light, and the seeming inability or indifference of public leaders and institutions to correct it, disillusions people and serves to undermine their leaders' credibility." Other studies find the impact only somewhat less pronounced. Despite the relationship to unfavorable opinions about incumbents and existing institutions, Canache and Allison (2005) fail to detect any clear evidence linking citizens' views on corruption to their support for democracy as a form of government. Anderson and Tverdova's (2003) analysis of individual opinion in sixteen countries also finds that the tendency for people's perceptions of corruption in government to lead to a more negative opinion of the government largely disappears after controlling for votes for the party in power. As a result of these findings, many tout corruption as a threat to the survival and maturation of democracy in the region. While this conclusion hinges at least in part on the link between such corruption-induced feelings of despair

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and political participation, the nature of this crucial link is not entirely clear. C. Davis et al. (2004) and McCann and Dominguez (1998), for example, reveal that in the case of Mexico, individuals who considered the government corrupt or elections to be fraudulent were more likely to simply abstain from voting rather than support the opposition or engage in other, nonsystemic forms of participation, though this was largely prior to Mexico's democratic breakthrough in 2000. Many others, however, go much further by linking high levels of corruption to an outright rejection of traditional political parties and incumbents, and feeding a popular tendency to search for solutions outside the political mainstream. This can be seen quite clearly in the cases of Bolivia and Venezuela, as described at length in the chapters by Gingerich and Gates. In both cases, frustration stemming from deep-seated corruption led to a rejection of the traditional parties and support for outside candidates. And yet, almost paradoxically, the growing public concern over corruption and its impact on support for incumbents and legitimacy can also be seen as a necessary ingredient nurturing demands for reform. High-profile corruption scandals in Latin America, particularly in Brazil and Venezuela, leading to presidential impeachments, highlight the critical role the public plays in demanding political and criminal investigations of their officials (Coronel 1996; Fleischer 2002; Souza Martins 1996). Given that public attitudes and involvement are critical in creating and strengthening vertical mechanisms of accountability (O'Donnell 2003)—and given a history in which social movements against corruption have been a major ingredient in setting the stage for real reform—such impacts can perhaps be viewed as a necessary ingredient in promoting these reforms.

A Brief History of Corruption in Latin America While measuring corruption dates back only to the mid-1990s, this does not mean that corruption in Latin America is a recent development. In fact, ample evidence suggests that corruption has deep and firm roots within the region. Though few historians have studied corruption directly, and systematic evidence is lacking—thus complicating careful comparisons across time—historical analyses throughout the region are chock-full of references to corruption (see for instance Burkholder and Johnson 1994; Ewell 1977; C. Gibson 1966; Hopkins 1969,1974; McFarlane 1996; R. Miller 1996; Nef 2001; Phelan 1960, 1967; Posada-Carbo 2000; Whitehead 2000a, 2000b). Burkholder and Johnson (1994, 164), for instance, called "the use of government revenues for personal gain" under colonial rule "common." Indeed, "from the earliest years of royal administration in Spanish America, officials at every level tended to use their powers for the purpose of personal enrichment and aggrandizement" (McFarlane 1996,49). Apparently, breaking the bonds of colonialism did little to alter this pattern (R. Miller 1996). Classic historical writings by Chevalier (1992) and

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Wolf and Hansen (1992) on caudillismo, for instance, stress how Latin American caudillos routinely pillaged the state, employing corruption and personal rewards to maintain their grip on power. Fraud and corruption similarly characterized the historic role of elections throughout the nineteenth and twentieth centuries (Posada-Carbó 2000; L. Taylor 2000). Corruption was seemingly as rampant in oligarchic and populist democracies as it was within dictatorships and military regimes (see Smallman 1997; Yarrington 2003). References to corruption stretching back to the colonial period tend to refer to corruption in the context of a dualistic framework composed of a formal, legal order on the one hand, and an informal political reality on the other. The formal order is commonly characterized by its organicist, Thomistic roots; its traditions of divine, natural, and human law; and its patrimonial nature. But most importantly, according to many historians, this formal, legalistic order was largely ignored or at least proved ineffective in practice. Underneath this formal, legalistic order, then, there existed an informal, Machiavellian order guided by a distinct morality and built on personal-style politics and patron-clientelism (Morse 1954,1992). It was within this informal system that public employment provided opportunities for personal gain and state officials distorted and adapted state policy to local and personal conditions (Ebenstein 1945). State officials appropriated government resources for their own benefit, dispensed personal favors to supporters, and punished opponents through the selective enforcement of the law. Internal ethics within the public administration revolved around loyalty to one's patron rather than to abstract principles, while societal norms (kinship and partisan considerations) took precedence over organizational norms based on abstract notions of merit and seniority (see Hopkins 1969, 1974). Clientelism characterized not just the colonial era and nineteenth-century caudillos, but also the many military and civilian regimes since that time (Smallman 1997,42; Wolf and Hansen 1992). In that clientelism assumes patrons have discretionary access to state resources that they can use to reward friends and punish enemies, corruption constitutes a critical ingredient in such a system. Roniger (2004), in fact, goes so far as to refer to clientelism as a form of patrimonial corruption. References to this dualistic system composed of a formal and informal order are quite common in the historical literature. Noting the widespread corruption under the colonial system in New Spain, C. Lomnitz (1995, 32), for example, refers to the dualism as a style of politics involving "pragmatic accommodation while formally adhering to discursive orthodoxy." Many, he adds, trace this pattern all the way back to Hernán Cortés's dictum to King Charles: "I obey but I do not comply" [Obedezco pero no cumplo]. Whitehead (2000b, 3) describes this historic dualism as one involving "legal formalism plus practical discretionality"—a discretional approach that meant the formal rules were "ignored, cut short or circumvented" (Henry 1958, cited in Hopkins 1974, 112). Robert Scott (1966) similarly contends that "formality and papelaria" served as a mere

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façade behind which political middlemen operated, while Charles Gibson (1966, 110) refers to "the straight-faced repetition of legal rules in conjunction with the persistent, and expected, violation of them" of colonial Spanish America, going so far as to call this "one of the more intriguing paradoxes of Spanish American history." Using a functionalist approach, some blame the failures of the formal order for this dualism, arguing that personalistic politics essentially filled the vacuum. Reasons for this failure, however, vary. Some associate Spain's inability to enforce its rules simply to the great geographic distances. Others, however, point to the lack of revenues and resources needed to control and administer the colonies effectively, thus forcing Spain to accept local autonomy and the accompanying corruption (Chevalier 1992). According to Andrien (1985), for instance, it was the lack of revenues in the seventeenth century that initially prompted Spain to sell judicial and administrative appointments, thereby opening the gates to extensive corruption. Still others point to the contradictory nature or inappropriateness of the rules themselves. Pietschmann (1982), for instance, attributes dualism to the contradictions produced by the combination of a Hapsburg rational legal state with a mentality tied to the medieval patrimonial state: in short, an unworkable mix resulting in obedezco pero no cumplo. Phelan (1960, 63-64), in a similar context, blames the multiple and contradictory laws emanating from Spain for the failures of the formal order. He posits that since all the laws could not possibly be carried out, this strengthened the discretionary authority of local officials, thereby giving them an informal voice in decisionmaking without undermining the overall authority of their superiors. Others, however, tend to locate the root causes of personalistic politics and particularly clientelism—in Latin America and beyond—in the structural conditions of poverty, inequality, and underdevelopment rather than in culture or in history. According to this perspective, poverty leads people to exchange their votes (in a democracy) or political loyalty (in any system) for personal favors and material rewards (Eisenstadt and Lemarchand 1981; Estévez et al. 2002; Kitschelt et al. 1999; Lazar 2004; Mattar Villela and Marques 2006; Schmidt et al. 1977; J. Scott 1972b). That the middle class is less susceptible to relying on such personal favors further suggests that the appeal of clientelism is linked to insecurity and impoverishment. And yet, research also suggests that once established, clientelism—and arguably the corruption that accompanies it—tends to feed on itself. According to this path-dependency perspective, the political elite that emerge through clientelism use their resources to prevent clients from defecting and thus effectively discourage the rise of credible competitors (Medina and Stokes 2002). Patrons, in short, find few benefits in reforming the system that nurtures them. Or as Kitschelt (2000; cited in Manzetti and Wilson 2007, 952) puts it, clientelism "perpetuates the lock on power of resourceful political leaders." Stokes (2005) goes so far as to suggest that clientelistic politicians want to keep the system cumbersome, corrupt, and ineffective since this situation enhances their legitimacy. Though such arguments do not explain the

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emergence of clientelism, they are nonetheless important in describing the persistence of clientelism, the corruption that accompanies it, and the difficulty of pursuing real reform. Using this dualistic framework, historic accounts often portray corruption in Latin America as providing the glue that holds power together or the grease that oils the machinery for dictators and civilian authorities alike. Yarrington (2003), for example, highlights the role corruption played in cementing the Gomez dictatorship in Venezuela, especially in easing relations with business and the military. Smallman (1997) similarly highlights the role corruption has played historically in helping civilian leaders maintain the allegiance of the military. In the case of Mexico, Morris (1991) links extensive corruption to the Institutional Revolutionary Party's (PRI) ability to maintain power for over half a century. And yet, corruption has historically been associated with political instability, military coups, and popular uprisings. Military intervention in Brazil, according to Smallman (1997), was usually justified by the uncontrolled corruption of the prior civilian regime. The notion that corruption provides the rationale for political opposition indeed has a long history in the region. Morse (1954, 78), for instance, quotes Daniel Valcarcel's statement on Tupac Amaru during the colonial period: "When the decision to fight is made, the cacique already has in his spirit a clear purpose to achieve: he must eliminate the evil functionaries who with their venality and greed for riches corrupt the wise laws of the monarchy, run against the precepts of religion and ruin the life of the Indians, cholos, and mestizos." Thus the conditions under which corruption contributes to stability or instability remain unclear. Echoes of these historical views can be heard in today's debates and analyses of corruption: the dualism, the formalism, the persistence of personalistic politics, the resilience of clientelism, and even questions over whether corruption inspires stability or instability. Leaders frequently come to power assailing the corruption of their predecessors, only to face accusations of wrongdoing a few years later. But blaming history alone for corruption is not a sound explanation. Instead, the region's long history of corruption merely reinforces and broadens the central questions regarding the underlying causes and consequences of corruption in the region. At the same time, the region's history of corruption raises fundamental questions about possible historical differences among the countries and the role this legacy has had in shaping current patterns of corruption.

The Cultural Approach to Understanding Corruption Perhaps owing to this history, many link corruption in Latin America to cultural factors. The dualism, the sense of obedezco pero no cumplo, the primacy of

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family and personal relationships, clientelism, and the lack of respect for the law just described, for instance, have all been linked to the region's Catholic and Iberic heritage—its ethos. In Glenn Dealy's cultural model, for example, the region, bypassed by the Reformation, inherited a Catholic, two-morality philosophy that separated the values of private life from a Machiavellian public life. Family and personal relationships consequently became all important, eclipsing the role of impersonal institutions and abstract universal principles. Friends, in short, became the currency to ascendant power: "Friends make the impossible probable, from renewing a suspended driver's license to obtaining an import license for the prohibited car" (Dealy 1992, 69). Hence, rather than governments based on law, the region has produced governments based on friendships. And by its very nature, corruption facilitates such magic. Many observers, of course, tend to see this emphasis on personal relationships and weak institutions as alive and well today and thus emphasize culture to explain corruption. Nef (2001), for example, points to Latin America's cultural affinity to particularism (within the inner circle), formalism (the double standard), and role expectation of dispensing favors, all structured through the institutions of corporatism, authoritarianism, and centralism, to account for the high levels of corruption. Others link corruption to the people's collectivist identity, their keen sense of hierarchy, their views regarding authority, and even the intense desire to get ahead within a society offering few real opportunities (Gonzalez-Fabre 1996; Hooper 1995; Husted 1999, 2002; Lipset and Lenz 2000; Zanartu 1996). Lipset and Lenz (2000), for instance, emphasize how feelings of solidarity with the extended family and hostility toward outsiders foster a self-interested culture. Still others emphasize the existence of a culture of illegality or a certain social tolerance toward corruption (Catterberg and Moreno 2006,2007; Garcia Rojas Castillo 2004,4; Santoro 2004,6). In explaining corruption in South America, Telma Luzzani, writing in Transparency International's Global Corruption Report 2001 (p. 173), refers to the lack of respect for the law and public institutions, the sense that anything goes, and the view that those with power utilize that power for their personal interests: "The theory that bribery makes public administration work more smoothly is astonishingly quite prevalent in South America." Some see this tolerance as growing from a lack of civic consciousness or virtue, which in turn prevents society from demanding accountability and limiting the power of public officials (Guerrero 2004). Argentine psychologist Roberto Lerner, for example, associates corruption with cultural patterns in which people feel responsible for themselves and those close to them, but not for the community at large. "There's no concept of a common good—our country is made up of 'me' and 'you,'" he said. "Until there's an 'us,' a true sense of common welfare, the coima [bribe] will continue to be accepted" ("Peru: Minor Corruption Just Part of Life" 2003). Interpretations of a culture of illegality and of social tolerance, however, vary, raising some rather difficult theoretical questions. Dealy (1992, 130), for

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example, sees illegality not just as a lack of respect for the law, but as the application of inappropriate criteria: "The 'law of reciprocal favors' guiding most facets of Latin American public and private life operates as a parallel system of explicit partiality. To term the structure of universal interchange 'corruption' necessitates the stance of an outsider with another agenda and ethos." Such a culture, in other words, comes across as a culture of illegality only if judged by a particular standard, but can be seen from a different perspective as a culture that simply abides by more powerful moral codes than those embodied by the written law (LaPalombara 1994,332). This is especially pertinent if the law itself is seen not as sacrosanct but as corrupt, the product of corruption itself, or as reflecting the interests of the few, as is often the case in Latin America. In similar fashion, different interpretations can be offered of the notion of social tolerance of corruption. Smith (1992), for example, suggests that Latin Americans adhere to a different strain of political legitimacy than any of the three ideal types identified by Max Weber, and that Latin Americans tend to support politicians who are capable of getting things done, regardless of the rules, institutions, or even the formal law—what Smith refers to as an achievement-expertise form of political legitimacy. This often translates into the lack of daily checks and balances on leaders and even the acceptance of a certain level of corruption as a trade-off in exchange for material protection or wellbeing. Such views parallel the earlier discussion on corruption as the violation of means to achieve certain goals that may go beyond simple private g a i n such as getting legislation through Congress, helping a particular candidate get elected, or landing Tío José a job in the government. At the other extreme, social tolerance can also be seen as a form of political alienation. Nieto (2004) holds that when corruption is deemed to be uncontrollable or irresistible, it nurtures a fatalistic form of tolerance. For Nieto, this means that battling corruption requires convincing people that it can be fought effectively. Indeed, those emphasizing cultural factors often stress the need to change those values and attitudes in order to fight corruption (Nef 2001, 171). Coronel (1996, 160) is straightforward about it: "The key to a better Venezuelan society is a change in attitudes." Empirical studies on corruption within the region and cross-nationally lend some support to such culture-based theories. Correa (1985) and Lipset and Lenz (2000), for example, show that corruption is indeed higher in cultures where amoral familism is strong, as in Latin America. Husted (1999, 2002) similarly provides evidence showing higher levels of corruption in countries that have a collectivist orientation, higher levels of power distance (defined as "the extent to which the less powerful members of institutions and organizations within a country expect and accept that power is distributed unequally"), and more pronounced feelings of masculinity, again as found in Latin America. Cleary and Stokes (2006) also link clientelism and vote buying in Argentina and Mexico to a political culture based on personal trust in politicians and a concomitant lack of

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trust in institutions. Cross-national empirical studies also pinpoint the statistical significance of a range of cultural factors influencing the level of corruption. These include low levels of interpersonal trust (La Porta et al. 1999; Seligson 2002a), the absence of British legal and colonial traditions (Blake and Martin 2006; La Porta et al. 1999; Lederman et al. 2005; Sandholtz and Koetzle 2000; Swamy et al. 2001; Triesman 2000,2007), low proportions of Protestants (Blake and Martin 2006; Sandholtz and Koetzle 2000; Triesman 2000, 2007), ethnolinguistic factionalism (Mauro 1995), and a generalized tolerance toward corruption (Catterberg and Moreno 2006, 2007). Micro-level studies of individual attitudes and opinions further add to our understanding of the cultural determinants of corruption and particularly popular perceptions of corruption. Such studies also point to the role of interpersonal trust, tolerance, and permissiveness in shaping popular perceptions of corruption. In addition, studies by Gatti (2003), W. Miller (2006), and Mocan (2004), along with formal models by Andvig and Moene (1990), Mishra (2006), and Tirole (1996), highlight the role of societal factors in influencing citizens' perceptions of corruption and their participation in corrupt acts. These studies all point to the existence of what some refer to as a "culture of corruption." To what extent then does Latin American culture serve to explain the region's corruption, past and present? Still further, could cultural differences within Latin America explain differences in the levels or patterns of corruption found across regions? When dealing with the issue of culture, serious interpretive problems arise regarding the direction of causality—that is, differentiating cause and effect. A culture of social tolerance, for example, could arguably feed corruption, as some contend; but it is also equally likely that years of corruption can foster a broad acceptance and tolerance toward corruption. Is culture then the cause or the effect of corruption? Likewise, a culture that emphasizes personal relationships can lead to a weak respect for the rule of law, thus feeding corruption; but living in a system where laws are seldom enforced and institutions rarely respected can also prompt rational individuals to rely on those they can trust—family and friends— to protect their own interests. Problems arise of course when, in almost tautological fashion, culture (i.e., the weakness of society, tolerance, lack of trust) is deemed by analysts as both cause and consequence of corruption. Many scholars have wrestled with this dilemma over the years, though most seem to fall on one side of the issue or the other.5 Some tend to treat culture, for instance, as a residual variable, blaming it for all that cannot be explained by institutional or structural factors, or blaming it for the failure of institutional change to alter corrupt behavior as predicted. In his analysis of the restructuring of the police in El Salvador following the civil war, for instance, Call (2003, 861) argues that despite the transformational reforms, political culture and informal clientelism "made it difficult to define new relations between police and society and that favoured persistent corruption." The question of the direction of the causal linkage between culture and corruption is certainly important. If culture is considered a crucial ingredient

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determining corruption, then reforms must either target such attitudes, values, and ethics, as noted, or at least be designed in ways that are consistent with society's values. Husted (1999,2002), for example, contends that the numerous reforms contained in the regional 1996 Organization of American States (OAS) anticorruption treaty are destined to fail precisely because they do not take the region's values and culture into account. Some, of course, reject the culturalist position outright and instead see corruption as really the cause behind the spread of such "cultural" manifestations as lack of trust, lack of respect for the rule of law, or limited legitimacy in the government or political leaders. But even for those who consider the tolerance of corruption a product of corruption, attention to culture remains important for at least two reasons. First, focusing on political culture helps uncover the negative, long-term social costs or consequences of corruption. As noted earlier, substantial research underlines the pernicious impact of corruption on popular political attitudes and behavior such as voting. It is in this realm where corruption is seen as a threat to democratic stability and consolidation. Second, culture is important in influencing the type and involvement of social organizations or the relative strength of civil society in the anticorruption struggle. Even nonculturalists would agree that empowering society so it can check the power of the state is crucial in altering the equation whereby corruption, like a prisoner's dilemma, tends to feed upon itself, benefiting those with power and influence. In other words, regardless of whether tolerance or lack of trust actually causes corruption or stems from it, ending the public's tolerance can be critical in fighting it and has become a major focus of recent reforms.

The Institutional Approach to Corruption Despite the long history of corruption and a history of tying deep-seated corruption to Latin American culture, the current boom in research dating to the mid-1990s largely downplays these factors, stressing instead institutional determinants.6 This new research also focuses much of its attention on questions related to democracy and neoliberalism and, for methodological and theoretical reasons, on public opinion. A review of the recent literature spotlights the major concepts, the key findings, and many of the major research questions examined in the chapters that follow. The prevailing institutional approach to the study of corruption focuses attention squarely on the structures of government, the bureaucracy, and society. It rests largely on the assumption that laws and institutions channel individual behavior and that, if built properly, these institutions can direct such behavior into acceptable avenues, thereby limiting the overall levels of corruption. Grounded in rational-choice theory, the institutional approach thus envisions corruption as a behavioral response to the opportunities and risks that individuals (officials, bureaucrats, and citizens) face at any given moment. As rational

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actors, officeholders will seek to maximize their self-interest by extracting illegal rents or violating campaign finance laws if possible—if, that is, the chance of getting away with it outweighs the likelihood of getting caught and punished. Fashioned in the famous dictum by Robert Klitgaard (1988), this perspective holds that corruption (C) equals the degree of monopoly power (M) plus the discretionary authority of public officials (D) minus the levels of accountability (A): C = M + D -A. Attention thus centers on the institutional and structural factors shaping those variables, such as the size of government, the power of the government over society, the scope of authority of individual bureaucratic offices, the nature and degree of oversight and audit mechanisms, and the strength and effectiveness of the system to uncover and expose wrongdoing and to punish those who violate the norms. Institutional theories enjoy support from empirical studies showing corruption to be higher in countries with greater regulatory burden, more red tape and excessive entry regulations for business, low salaries among bureaucrats, high discretion levels, opaque bureaucracies, and limited rule of law. Research looking at the overall size of government, however, shows no firm correlation linking government spending to corruption (Bardhan 2006; Brunetti and Weder 2003; Djankov et al. 2002; Kaufmann and Wei 1999; Kraay and Van Rijckeghem 1995; Rauch and Evans 2000; Van Rijckeghem and Weder 2001). Analysts are quick to point out that many of the least corrupt governments in the world, like Finland and Sweden, have large budgets and extensive social welfare programs, suggesting that it is not how much the state spends, but, simply put, how that money is spent. Corruption and

Democracy

The institutional approach to the study of corruption is also rather firmly grounded in democratic theory and adopts a democratic narrative. As such, the bulk of the guiding research questions in the field tend to emphasize the theoretical incompatibility of democracy and corruption. Democratic theory stresses that elections, liberties, and checks and balances work to hold public officials accountable and to make government responsive to the demands of the people. Democratic politicians, in short, are thought to be more likely than authoritarian leaders to pass anticorruption policies and ensure their enforcement (Rasmusen and Ramseyer 1994). Democracy thus provides the meta-procedural formula for limiting the gap separating the ideal and the real, producing a government that effectively puts the interests of the many above the interests of the few. Corruption, by definition then, represents a failure of democracy, thus making eliminating corruption a key ingredient in strengthening, deepening, or purifying democracy. But despite extensive theoretical arguments to that effect, research shows a rather ambiguous empirical relationship linking democracy and corruption (see Rose-Ackerman 1999). Cross-nationally, contemporary democracy and the

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levels of political freedom seem only weakly related to the levels of corruption (Goldsmith 1999; Sandholtz and Koetzle 2000). More importantly, studies suggest that it takes time for democracy to lower the level of corruption (see Blake and Martin 2006; Gerring and Thacker 2004; Lambsdorff 1999; Triesman 2000). Montinola and Jackman (2002) find that, in fact, corruption initially increases with some weak political competition, but that once past a certain threshold, higher levels of political competition lower the levels of corruption. Research on Latin America similarly suggests that during the contemporary wave of democracy, corruption actually increased rather than declined as had been expected (and hoped) (Little and Posada-Carbo 1996; Weyland 1998, 2006). At minimum, such findings confirm that the role of democracy as a check on corruption is not automatic, but centers instead on its ability to foster a network of governmental and nongovernmental accountability mechanisms that, it seems, based on the experience of others, takes some time to develop. Most agree that effective anticorruption programming depends on the crafting and implementation of a complex institutional architecture that can only succeed if all its various components work together. Throughout Latin America and beyond, the emergence of these mechanisms—including an independent judiciary, a well-paid civil service, a media sector able and willing to conduct investigative journalism on corruption, and a set of interest groups dedicated to the reduction of corruption—remains a work in process. Given the nature of the political systems and the cultural traditions in Latin America, it may take decades to properly design and establish the necessary institutional structures and bring about supportive behavioral changes. This fundamental issue—why democracy has not brought about a reduction of corruption—has shaped many of the major research questions. In Latin America, Geddes (1994), Geddes and Neto (1992,1999), Gingerich (2006a), Weyland (2006), and Whitehead (2002), among others, locate the root causes of contemporary corruption in the specifics of the newly forged democratic institutions, including the enhancement of presidential powers in the face of economic crisis, the decentralization of state power, the institutional constraints faced by presidents to create governing coalitions, and the rise of neopopulist leaders (see Willis, Garman, and Haggard [1999] on the impact of decentralization on corruption). Democracy has also enhanced the role, importance, and costs of elections and campaigns, thereby expanding the opportunities, the need, and the guise of corruption in this arena (Skidmore 1998; Zovatto 2000). Indeed a close look at the structure of electoral institutions shows how their mechanics often drive corruption. The open-list, proportional representation (PR) system and deeply fragmented party system in Brazil, for example, tend to create strong incentives for legislators to amass a personal following by distributing pork and private goods to supporters back home via, in part, corruption (Ames 1995; Fleischer 1997, 2002; Flynn 1993; Geddes and Neto 1992, 1999; Rosenn and Downes 1999; Samuels 2006). But while the open-list PR system in Brazil feeds

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individual schemes of corruption to pay for expensive personal election campaigns, the closed-list PR systems found in Argentina and Bolivia foster a different pattern of corruption, where the power of the party elite, coupled with a more politicized bureaucracy, pushes party leaders to strike deals with bureaucrats and use public resources to help the party (Gingerich 2006a). Indeed throughout Latin America, patronage seems to have become the dominant ingredient in party and electoral affairs (see Rehren [1997] on the role of patronage in local parties in Chile). In these scenarios, the long-running pattern of patron-clientelist relations has adapted to changing conditions over time, retaining a visible place on the contemporary democratic landscape. Corruption and Neoliberalism

A similar sort of paradox also relates to the role of economic factors in shaping corruption. Just as democracy is viewed as largely antithetical to corruption, the current literature takes as a primary point of departure the notion that market economies by their very nature check corruption. The stylized view holds that economic liberalization and an open economy limit corruption by reducing the size and power of the state, lowering government regulations, cutting taxes, enhancing competition, empowering business, and eliminating rent-seeking opportunities (Rose-Ackerman 1999; Shleifer and Vishny 1993). Such claims are boosted, in turn, by cross-sectional studies showing corruption inversely related to economic and human development (Ades and Di Telia 1999; Goldsmith 1999; M. Johnston 2000b; Mauro 1995, 1997; Montinola and Jackman 2002; Xin and Rudel 2004), open economies (Paldam 2002; Sandholtz and Koetzle 2000; Gerring and Thacker 2005), economic competitiveness and freedoms (Ades and Di Telia 1994,1997a, 1997b, 1999; Goldsmith 1999; Graeff and Mehlkop 2003; Sachs and Warner 1995; Triesman 2000,2007), neoliberal economic policies (Gerring and Thacker 2005), income equality (Paldam 2002), and the absence of large resource endowments (Ades and Di Telia 1999; Leite and Weidmann 1999; Montinola and Jackman 2002). These studies also demonstrate the negative economic consequences of corruption, noted earlier: that corruption discourages productive investment, distorts trade and government-spending priorities, worsens inequality, and reduces economic growth (Ali and Isse 2003; Kaufmann and Wei 1999; Lambsdorff 1999; Mauro 1995, 1997, 2002). This essentially closes the circle, bolstering the argument that free-market reforms help reduce corruption, which in turn facilitates economic development. Regional studies, however, offer only limited evidence to support many of these findings (Morris 2004). In fact, some have turned the argument on its head, showing how neoliberalism and the dismantling of state intervention in the economy in Latin America has actually increased corruption rather than reduced it (Brown and Cloke 2004, 2005; Manzetti 1994, 2000b; Manzetti and Blake 1996; Weyland 1998). Manzetti (1994, 2000b) and Manzetti and Blake

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(1996), for instance, found that economic crisis and the reform imperative actually strengthened the discretionary powers of the executive, thereby opening opportunities for massive corruption. In carrying out such critical economic reforms as the privatization of state-owned enterprises or managing exchangerate controls to stem inflation, this concentration of power allowed high-level officials to demand kickbacks or extralegal payments for valuable information, as occurred in the cases of Menem in Argentina and Collor de Mello in Brazil. One report states that during privatization, Argentine officials routinely asked businessmen for 10 percent of the amount of the contract or el diego (Santoro 2004). Others point to the impact of market-oriented economic reforms in expanding opportunities in the areas of money laundering, drug-related corruption (Grosse 2001; Whitehead 2002), or reduction in regulatory controls (Weyland 1998). Brown and Cloke (2005,604), for instance, highlight the contradictions between programs designed to decrease state regulation and size of the state while expecting the diminished state mechanisms to strengthen their control over state expenditures. Part of this may include declining wages to public officials, which Van Rijckeghem and Weder (2001) link to corruption.7 Accountability,

Transparency, and the Rule of Law

The institutional approach to corruption, embedded in the democratic narrative, has produced a relatively new nomenclature. Three key concepts in our analysis of corruption and anticorruption in Latin America include accountability, transparency, and the rule of law. Accountability—often described as a new concept within Latin America, usually translated as rendición de cuentas— refers to the various mechanisms that seek to make public officials responsible for their actions (Mainwaring 2003, 7; see also Main waring and Welna 2003; Przeworski, Stokes, and Manin 1999; Schedler, Diamond, and Plattner 1999). Accountability entails the dual obligation to provide information regarding the public officials' actions or answerability and the power to sanction officials for transgressions. The growing literature on accountability also identifies different forms of accountability. O'Donnell (1994,2003) draws an important distinction between horizontal accountability and vertical accountability. Horizontal accountability refers generally to mechanisms of control that exist within the government itself. This includes checks and balances and shared powers across institutions and branches as well as specialized state agencies charged with overseeing, auditing, and sanctioning public officials. Mainwaring (2003, 8) prefers the term intrastate accountability to refer to this form of checks and balances since the term horizontal implies a degree of equality among the institutions. Vertical accountability, by contrast, refers generally to the role of societal organizations and citizens in holding their public officials accountable through both nonelectoral and electoral means. Smulovitz and Peruzzotti (2000) coined the term societal accountability to refer more specifically to nonelectoral

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yet vertical mechanisms of control that employ both institutional (activation of legal actions before oversight agencies) and noninstitutional tools (social mobilization and exposure) to battle corruption. The concept of transparency has garnered substantial attention throughout the region and the world in recent years. It is a relatively straightforward concept that nestles nicely within the broader framework of accountability. Holding officials accountable requires information. Thus, opening up the operations of government, publicizing what officials do and who they are, making information available to the press, and hence the public, provides the basic raw materials needed to question their actions, to force them to justify and explain their conduct, and if necessary to detect and punish wrongdoing through legal sanctions, by shaming them into resigning, or by turning them out of office at the ballot box. The underlying idea is that transparency and effective mechanisms of accountability enhance the risk of detection facing officials for wrongdoing and will thus alter their behavior. For Latin America, transparency—like accountability generally—has until recently been considered a foreign concept. Though progress has been made in recent years, information and data on government are often still lacking, the press still lacks the level of independence needed to pry open the government, and citizens often fail to scrutinize what governments do. A final concept that has become part of the nomenclature in the study of corruption is rule of law. This term refers generally to the degree to which laws are respected, observed, and enforced (Foweraker and Krznaric 2002; Schor 2006; Ungar 2002). Without carefully nuanced phrasing, it can be tautological or true by definition to say that countries with high levels of corruption suffer a weak rule of law since corruption is routinely considered a violation of the law. Even so, analysis of rule of law tends to emphasize the failure of the political system (particularly the judicial system) to uncover and punish those suspected of wrongdoing, including corruption, and corruption's links to crime. Many such studies highlight the inefficiencies, politicization, and other problems facing the judiciary in Latin America and the ongoing struggles for judicial reform (see Domingo 2004; Mendez et al. 1999; Prillman 2000; Staats 2003; Ungar 2002). Other rule-of-law studies view corruption within the context of the region's exceedingly high crime rates and the corrupting influence of drug trafficking and other criminal organizations on corruption (Bailey and Godson 2001; Call 2003; Clutterbuck 1995; Davis 2006; Horowitz 2005; Manrique 2006; Shelley 2001; Transnational Institute and Accion Andina 1997). From either angle, weak rule of law usually means widespread impunity—where public officials (and others) can get away with almost anything. Despite some rather glamorous cases resulting in a few impeachments or prison terms, officials tainted by corruption are rarely held responsible for their actions. Few public officials serve time in prison. Even in the intensely investigated Collor case in Brazil, only two of his men were ever convicted, and one, his private pilot, for tax evasion (Fleischer 2002, 7).

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Equipped with such conceptual tools and frameworks, the institutionalbased study of corruption tends to approach corruption from two broad directions. One is to examine how existing institutions facilitate corruption; the other is to focus more on the lack of, or the weaknesses of, institutions that could potentially curb corruption. Examples of the first approach include studies showing how specific institutions of the Brazilian political system (Fleischer 1997, 2002; Geddes 1994; Geddes and Neto 1992,1999), the specifics of the electoral institutions (Gingerich 2006a), or the power of the presidency (Lopez Presa 1998; Morris 1991; Weyland 2006) facilitate corruption as alluded to earlier. The second approach, by contrast, associates corruption with the absence of laws defining corruption or creating transparency, the weakness of independent prosecutors or administrative oversight mechanisms (Colazingari and Rose-Ackerman 1998; Santoro 2004), a politicized bureaucracy, or limits on the press (Rodrfgues 2004). In one analysis of corruption in Argentina, for example, Santoro (2004, 10) notes the absence of laws to combat corruption, including a law regulating lobbying activities and freedom of information. Argentina only passed a law against money laundering in 2000. Public Opinion

Another important focus of the new literature and the policy recommendations is on public opinion. The reasons for this are both methodological and theoretical. As noted earlier, public opinion polls have become the major tool to measure corruption, to rank countries cross-nationally, and, implicitly at least, to gauge progress in the fight against corruption. Though many remain critical of this approach and efforts to refine the measures continue, substantial research relies on data produced by polls. In fact, most of the findings outlined earlier rely on surveys to gauge corruption at the national level. But survey-based research also focuses on public opinion at the individual level to understand the attitudinal and cultural correlates of corruption and the importance of corruption to everyday citizens, and to detail the impact of corruption on popular and particularly political attitudes. One approach explores the underlying causal determinants of individual perceptions of corruption and people's participation in corruption through petty bribery. These studies show that women, older respondents, individuals with lower levels of interpersonal trust, higher levels of political interest, and poor evaluations of the economy tend to perceive higher levels of corruption than others (Canache and Allison 2005; Davis et al. 2004). Partisanship per se played no role in influencing perceptions, although Davis et al. (2004) find in their three-country study that the wider the ideological distance between opposition and incumbent parties, the more likely opposition partisans are to perceive more corruption and, moreover, that the greater the competitiveness the greater the ability of parties to gain support among those concerned about corruption. A

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somewhat similar pattern emerges when focusing more specifically on the views of legislators. Members of the opposition are more likely to support anticorruption reforms, while members of the governing party are more likely to believe that the media makes corruption appear worse than it really is and that corruption has always existed (Brinegar 2003). Whereas these studies have concentrated on perceptions of corruption, studies by Seligson (2005, 2006) focus on individual involvement in corruption, or what he calls "victimization." These studies find that high-income, middle-aged, urban-dwelling men are more likely to participate in corruption. Seligson (2006, 398) concludes by arguing that "those who use the public sector more frequently are more likely to be victimized by it." Opinion polls have also been used to explore the impact of perceived corruption and experience on an individual's level of social capital, confidence in the government and specific institutions, legitimacy, satisfaction, and support for democracy, as well as voting patterns. As described earlier in discussing the impact of corruption, such studies point to the tendency for corruption to weaken regime legitimacy and set the stage for a rejection of traditional parties. Policy Relevance

These concerns over corruption's link to and impact on democracy and economic development have greatly enhanced the policy relevance of the study of corruption (Tulchin and Espach 2000). In contrast, earlier studies on corruption tended to be largely esoteric and marginalized. Today, attention to the institutional components and formulas feeding corruption inform multiple programs and recommendations by countless domestic and international reformers, including the US government, the World Bank, the IMF, Transparency International, the many government agencies established to fight corruption, and nongovernmental organizations (NGOs). These programs encompass formulas to strengthen oversight institutions, develop legislative inquiries, train government auditors, draft laws to protect whistleblowers and prohibit conflict of interest, craft freedom of information regimes, engage in judicial reforms, buttress the protection of private property, promote an independent and more investigative style of journalism, enlist the support of NGOs to raise consciousness within society, develop ways to use international agents to monitor government, engage in neoliberal economic reforms, and so on (see Chapter 8 in this volume by Guerzovich and de Michele). The US governments' Americas' Accountability/Anti-Corruption Project, for example, sought to foster transparency and accountability in Latin America by identifying, compiling, and disseminating best practices through a series of technical assistance modules (TAMs) focusing on specific reforms, and by providing technical assistance and training to government officials across the region (Maldonado and Berthin 2004; see also Hendrix 2005; USAID 2005a,

Corruption and Politics in Latin America

25

2005b). This program was successful in prompting members of the international donor community to promote anticorruption initiatives. The World Bank and the IMF, for their part, notorious for promoting neoliberal reforms designed to enhance economic development and growth, now advocate specific programs to curb the corruption that undermines the effectiveness of market-oriented policies. Transparency International promotes not only governmental reforms but also a wide range of programs in which local NGOs monitor government actions using integrity pacts and the like.8 Beyond the efforts of international organizations and foreign governments, Latin American governments have recently made a number of reforms, signed a handful of international treaties, and mobilized domestic NGOs to fight corruption. Nearly every recent presidential candidate has placed rhetorical emphasis on the problem of corruption and promised to implement serious reforms (even if several winning candidates, including Fernando Collor, Carlos Menem, and Alberto Fujimori, later became the targets of accusations of wrongdoing). Almost every government in the region has created a high-profile, anticorruption agency within the past decade. These agencies are equipped with newfound powers to audit government offices, process the disclosure of officials' assets, publicize government operations, teach ethics, and mobilize public support. The cascade of scandals, the newly produced numbers measuring corruption, the research, and the funding all provide dramatic impetus to these reforms.

Contemporary Questions About Corruption in Latin America and Beyond Clearly, current interest has placed the issue of corruption high atop political agendas both inside the region and beyond. Moreover, the boom has facilitated much-needed research that provides answers to some long-held questions. We now have a much better idea of some of the underlying causes, and particularly the effects, of political corruption. Old ideas have been tested rigorously using more systematic methods and interpretations, and some, like the functionalist view that corruption contributes to development (see Huntington 1968; Nye 1967), have been largely discredited. The political and scholarly attention to corruption has also pushed formerly acquiescent aid agencies, governments, and citizens to acknowledge the scope and the pernicious effects of corruption and to mobilize resources to combat it. These are all positive developments and represent a transformation of sorts; few are willing to gainsay the strides that have been made in recent years. Even so, many questions linger. Much remains to be done to understand how specific institutions broaden or limit opportunities for corruption, what really works in fighting corruption, the impact of corruption on society, the conditions that

26

Corruption and Politics in Latin America

prompt citizens to react by working together to demand an end to corruption, and better ways to measure corruption. Many of these questions reflect the state of this field of study; but many stem from the biases and limitations of the prevailing institutionalist approach. Three particular shortcomings provide some guidance for the chapters that follow. Perhaps the greatest shortcoming of the current literature (and one that fashions all sorts of research questions) is corruption's stubborn persistence amid this pervasive anticorruption climate and thus our limited understanding of the complexities involved in implementing effective anticorruption measures. Arguably, the interest, quantity, and quality of research on corruption today are surpassed only by the continuing high levels of corruption in the region. Why have current reforms to date—not just democratization, but specific anticorruption reforms across sectors—seemingly failed (at least as gauged by public opinion)? What factors seem to undermine the implementation of anticorruption reforms? If political will is the key, then what determines this highly amorphous concept? Even recognizing that reforms in various areas take considerable time and investment to develop, and perhaps decades to bear results, it remains unclear whether governments are even on the right track. Is it possible that we are just failing to document the initial successes of anticorruption measures, or is it just too early to tell? A second shortcoming has been the lack of attention to history and culture. The strong focus on the current period, on institutions, democracy, neoliberalism, and even public opinion often fails to capture the deeper historical and cultural factors that shape not only corruption but also the nature and character of democratic and economic development in the region. Such a deeper approach might help us understand the constraints or limits on current reformist efforts and why recent reforms have failed to produce the promised results. A more historical and culturally nuanced approach can also facilitate a better understanding of how recent political and economic changes have altered the patterns, the prevalence, and the perceptions of corruption. What impact, for example, has Latin America's shift from state-led development models, corporatist formulas, and authoritarian regimes in recent years had on the nature and patterns of corruption? Can we differentiate old and new patterns of corruption and tie these to a common thread? A final shortcoming centers on the lack of regional comparative studies. The booming study of corruption tends to feature a growing amount of quantitative cross-national studies and qualitative case studies, but little in between (M. Johnston 2005,4). A regional focus provides an opportunity to incorporate historical and cultural dimensions, to compare the patterns of corruption, to tease out and compare the many distinct institutional patterns, and to explore the successes and failures of recent anticorruption efforts. In sum, it allows a greater focus on "the forces and interests that actually are at w o r k . . . and that drive the abuses those societies experience" (M. Johnston 2005, 2).

Corruption and Politics in Latin America

27

The chapters that follow seek to respond to these challenges. The country chapters examine the specifics of corruption within Argentina, Bolivia, Brazil, Cuba, Mexico, and Venezuela—not just corruption generically—prompting a more careful consideration of the precise institutional causes of corruption, from the impact of party structure and electoral institutions to the role of drug trafficking and cultural norms. They consider current patterns from a historical perspective, often comparing corruption today to that of the past, reflecting on the changing patterns of corruption that mimic the changing patterns of political power. They examine questions about the impact of corruption on politics as well as on public perceptions of politicians and of the political system within struggling democratic regimes. As such, they assess the impact of corruption on regime legitimacy, stability, and continuity. These chapters also focus on the politics of anticorruption: the reforms and the rhetoric; the mechanisms of accountability, transparency, and the quest for rule of law; the role of state and nonstate actors; and the real and potential effectiveness of the reforms. What has been tried? And why have seemingly serious and concerted efforts failed to control what often seems a deeply rooted component of Latin American politics? The penultimate chapter by Guerzovich and de Michele complements the country chapters. It explores the international context and examines regional initiatives to address corruption. The fact that the 1996 anticorruption convention by the OAS constitutes the first treaty of its kind and has been in force for more than a decade raises important questions about the role and impact of collective initiatives.

Notes 1. We do not have enough space to map all the cases of corruption within the past decade in the region. Reference is made here to the multiple accusations and investigations into the corruption of presidents Carlos Menem and Fernando de la Rúa in Argentina; Hugo Banzer in Bolivia; Fernando Collor de Mello and Luiz Inácio "Lula" da Silva in Brazil; Miguel Angel Rodríguez and Rafael Angel Calderón in Costa Rica; Leonel Fernández in the Dominican Republic; Lucio Gutiérrez in Ecuador; Rafael Callejas in Honduras; Amoldo Alemán in Nicaragua; Mireya Moscoso in Panama; Luis González and Juan Carlos Wasmosy in Paraguay; Alberto Fujimori in Peru; and Jaime Lusinchi, Carlos Andrés Pérez, and Hugo Chávez in Venezuela. Cases range from the bribing of members of Congress in Argentina, Brazil, and Panama to obtain legislative support for massive fraud and graft, some involving foreign companies. Reference is also made to the numerous cases involving high-ranking officials, including governors, ministers, and military officials. In Argentina, for example, the former defense minister and minister of the economy under Menem were both arrested for illegal arms transfers ("Argentina: Scandal Related to Arms Sales Damages Administration of President Carlos Menem" 1998; "Argentina: President Fernando de la Rua Tackles Economy and Corruption" 2000; The Corruption Notebooks [hereafter TCN] 2004), while the minister of the environment was jailed in 2003 for embezzlement and mismanagement of government funds (TCN 2004). In Mexico, even the head

28

Corruption and Politics in Latin America

of the antidrug agency was found in 1997 to be working on behalf of drug traffickers, using the state to attack rival drug organizations. The details and the cases could proceed ad infinitum. News services, like NotiSur and NotiCen, SourceMex, and others, provide journalistic information on specific cases and scandals. See also TCN and the individual country chapters in Transparency International's annual Global Corruption Report. On corruption in Venezuela under Pérez, see Manzetti and Blake (1996), and under Chávez see Beroes (2002). In Brazil under Collor; see Flynn (1993); Geddes and Neto (1992); Rodrigues (2004); Fleischer (2002); Souza Martins (1996); Pedone (1995), Rosenn and Downes (1998); and Sives (1993). Under da Silva in Brazil, see Flynn (2005). On fraud in hospitals in Latin America, see Di Telia and Savedoff (2001). On the impact of wages coupled with oversight, see Di Telia and Schargrodsky (2003). On the role of US multinationals in Latin American corruption and money laundering, see Grosse (2001) and Oppenheimer (2001). 2. Definitional controversy centers largely on what criteria to use to demarcate the norms that define what is considered corrupt. Three commonly discussed criteria include public opinion, public interest, and the law. For a taste of the definitional quandary, see Nye (1967); Heidenheimer (1970); M. Johnston (1996); J. Scott (1972a); and Philip (1997, 2002). 3. Intuitively, there is perhaps no better way to determine whether corruption exists in a country than to ask the people. Such measures, of course, are subjective. Some attempts have been made to develop more objective measures of corruption using press reports (Morris 1991; Rehren 1997), judicial records (Delia Porta and Vannucci 1997), or information from anticorruption agencies (De Speville 1997; López Presa 1998). But most recognize that the validity of these approaches hinges on the credibility and capabilities of the institutions providing the information. 4. Another rich source of data on corruption in the region comes from the Latin American Public Opinion Project (LAPOP) at Vanderbilt University. LAPOP polls, under the direction of Mitchell Seligson, span the entire region. 5. See Seligson (2002b) for a glimpse at his ongoing dispute with Ronald Inglehart over the role of culture in shaping democracy. 6. A database of over four thousand books and scholarly articles on corruption published in the 1990s and drawn from twelve specialized social science archives confirmed this tendency. By discipline, 74 percent of the writings fell within the field of public administration, 10 percent in history, 9 percent in law and judicial studies, 4 percent in economics, 2 percent in ethnographic and cultural studies, and 1 percent in business ethics (see "Reviewing the Literature on Corruption 1990-1999," 77 Global Corruption Report 2000-2001, pp. 229-230). 7. The role of wages in influencing corruption is unclear. Rauch and Evans (2000) and Triesman (2000) find no cross-national link between wages in a country and corruption. A qualitative study by Di Telia and Schargrodsky (2003) in public hospitals in Buenos Aires found that higher wages played no role in reducing corruption when audit intensity was high (as occurred during the first phase of the public campaign), but had a negative impact when audit intensity became weaker. 8. See Transparency International (2003) and the organization's website, http:// www.transparency.org.

2 Argentina: The Dawn of a New Era or Business as Usual? Charles H. Blake and Sara Lunsford Kohen

In his successful 1999 presidential campaign, Fernando de la Rúa promised to promote economic prosperity while fighting corruption. The campaign emphasized his low-key style and scandal-free political career as a stark contrast to the freewheeling demeanor and corruption-ridden administration associated with the presidency of Carlos Menem from 1989 to 1999 (Aureano and Ducatenzeiler 2002, 68). In 1990, Emilio Cárdenas, the president of the Association of Foreign Banks, had called Argentina a "kleptocracy," a government run by thieves (Aureano and Ducatenzeiler 2002, 68). The remarks of people associated with the Menem government reinforced Cárdenas's allegation. One of Menem's main political operatives at the start of his first term, the Peronist leader in the Chamber of Deputies, José Luis Manzano, was quoted in 1990 as saying, "I steal for the crown" (Verbitsky 1996, 113).' During the first four years of the Menem administration, a series of major corruption scandals culminated in the resignations of twenty-four ministers and senior presidential advisers. Alfredo Yabrán, a business executive (with ties to the Menem government), bluntly asserted that "power is having impunity" (Aureano and Ducatenzeiler 2002).2 Hopes ran high in several circles that the De la Rúa presidency would enhance the rule of law and promote governmental accountability. However, in his first two years in office, Fernando de la Rúa presided over neither an observable reduction in corruption nor rising prosperity. The recession that De la Rúa inherited deepened substantially. In turn, a bribery scandal implicated De la Rúa in the purchase of legislative votes regarding a labor-law reform bill in April 2000. When Vice President Carlos "Chacho" Alvarez asked for a full investigation into these allegations, he expressed disappointment that Fernando de la Rúa was unwilling to pursue the matter with vigor and speed. In protest, Alvarez resigned in October 2000 and the cloud hanging over the De la Rúa administration darkened. As the economy soured further in the months 29

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Corruption and Politics in Latin America

that followed, De la Rúa's coalition suffered a massive defeat in the October 2001 legislative elections. The Senate bribery scandal stimulated rumors and speculation that De la Rúa and his cabinet might have taken payoffs from foreign and domestic corporations to protect their interests over and above those of the general populace. By late 2001, Argentina had gone three years without economic growth—the longest recession in Argentine history. A run on the banking system in November marked the beginning of the end: new restrictions on bank withdrawals angered citizens with bank accounts while it deepened the recession. When the government declared a state of siege in response to looting and demonstrations on December 19, 2001, citizens mobilized (largely spontaneously) to call for Economic Minister Domingo Cavallo's removal. Cavallo's subsequent resignation did not calm the waters. Citizens then asked the president himself to stand down; De la Rúa announced his resignation on December 20. This political crisis went far beyond anger toward Fernando de la Rúa and his cabinet. Many demonstrators were calling for the resignation of all elected officials. The chant"¡Que se vayan todos!" [They should all leave!] became the centerpiece of public demonstrations that attracted low-, middle-, and upperincome participants alike. By the end of December 2001, Interim President Adolfo Rodríguez Saá resigned amid continuing street demonstrations (and a lack of support within the Peronist movement that had chosen him to serve as president). The selection of a new president, veteran Peronist politician Eduardo Duhalde, did not appease public demands for political change. In early 2002, as the country experienced an economic freefall, demonstrators called for sweeping political reform and a change in leadership at all levels. Many national leaders joined the chorus of voices that identified corruption as an important cause of the political and economic crises that plagued the country during the years 2001-2002.3 In this chapter, we will explore the dynamics of corruption in Argentina. What are the major contemporary patterns of corrupt activity? Why did corruption become a visible factor in major political mobilizations? Why has corruption persisted? How did governmental and nongovernmental organizations respond to calls for reduced corruption? At the close of the chapter, we consider the results of contemporary anticorruption efforts and the future of political corruption in Argentina.

Patterns of Corruption Corruption affects Argentine governance at the national, provincial, and municipal levels. Transparency International's Global Corruption Barometer for 2006 surveyed a nationwide sample of Argentines regarding the frequency of corruption in different governmental and nongovernmental institutions. Table 2.1 shows that the five institutions viewed as most corrupt in Argentina mirror the trends

Argentina

31

Table 2.1 Perceived Level of Corruption in Different Institutions, 2006

Institution Political parties Parliament/legislature Police Legal system/judiciary Business/private sector Media Military Registry and permit services (civil registry for birth, marriage, licenses, permits) Tax revenue Utilities (telephone, electricity, water) Religious bodies NGOs Medical services Education system

Argentina

Latin American Countries 3

World Sample

4.4 4.3 4.2 4.2 3.7 3.4 3.4

4.2 4.1 4.2 4.1 3.5 3.3 3.5

4.0 3.7 3.5 3.5 3.6 3.3 3.0

3.3 3.2

3.5 3.5

2.9 3.3

3.1 3.1 2.9 2.8 2.7

3.3 2.8 3.1 3.1 3.0

3.0 2.8 2.9 3.1 3.0

Source: Global Corruption Barometer dataset (Transparency International 2006b). Notes: Question: "To what extent do you perceive the following categories to be affected by corruption in this country?" The scores reflect the average across all respondents. Scores calculated on a five-point scale with 1 as the lowest, or least corrupt, and 5 as the highest, or most corrupt. a. The ten Latin American countries examined are Argentina, Bolivia, Chile, Colombia, Dominican Republic, Mexico, Panama, Paraguay, Peru, and Venezuela.

observed across nine other Latin American countries and in the rest of the world. Argentines judged political parties, the legislature, the police, and the judiciary to be particularly corrupt while also finding businesspeople to behave more corruptly than any other nongovernmental actor. The difference between Argentina and the rest of the world is that Argentines perceive more corruption in these five institutions than do most citizens around the world. Practices of political corruption can be pursued both for individual gain and for the collective benefit of government agencies, businesses, and political parties. This section will discuss the modalities of corruption in electoral politics, the oligarchic control of provincial politics (and its impact upon national politics), the interplay between government and the economy, and the law enforcement and judicial communities. As we shall see, since the return to democracy in 1983, there has been considerable stability in most corruption patterns with the exception of the nature of interaction between government and business. Clientelism

in Electoral Politics and

Corruption

Political clientelism in this chapter refers to a political party's providing goods or services in exchange for political action of some sort by the recipient. This

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Corruption and Politics in Latin America

action is most often a vote for the party's candidates but can also include activities such as attending party rallies. Political parties in Argentina have distributed processed food more than any other item, although they also have given voters items as diverse as clothing, mattresses, and home appliances. In the contemporary era, the presidency and the executive branch at the subnational level (regardless of the party in power in a particular year or the unit of government) have frequently faced allegations that access to poverty relief cash transfers is tied to voting and political affiliation (Lodola 2005). Argentina's adoption of the secret ballot in the early twentieth century did not prevent the continuation of clientelist practices on into the early twentyfirst century. Political parties have found other ways to monitor and influence voter behavior. They provide premarked ballots and transportation to the polls to prevent people from changing their vote at the last minute. Party activists also observe rally attendance and public statements that the voter makes about the party to determine how that person voted. Part of the reason that vote buying can work in Argentina is that people feel that voting is not anonymous, and that future gifts from the party depend on voting the party ticket (Brusco, Nazareno, and Stokes 2004, 71). In a survey of four provinces in 2003, 37 percent of respondents believed that political parties were able to find out how a person voted; 51 percent thought that the parties could not find out; and 12 percent were not sure whether the parties could discover the way a person votes (Stokes 2005, 318). Apart from clients' desire for the party to continue to give them gifts, other research suggests that people who receive favors from a party often vote for that party or attend party rallies out of a sense of gratitude and duty (Brusco, Nazareno, and Stokes 2004,69) and as a distraction from the difficulties of living in poor neighborhoods (Auyero 2001,41). After the military left power in 1983, the two major political parties of the twentieth century, the Radicals (Unión Cívica Radical [UCR]) and the Peronists (Partido Justicialista [PJ]), quickly reestablished the clientelist networks that they maintained prior to the military dictatorship. The Peronists in particular still possessed a strong base in 1983 because of the powerful and enduring historical ties between that party and the working class (Panizza 2000, 748). Studies indicate that Peronist handouts are more likely to result in the desired vote than favors distributed by the Radicals (Calvo and Murillo 2004; Brusco, Nazareno, and Stokes 2004). The bottom-heavy structure of the PJ relies primarily upon local operatives, providing closer contact with and better monitoring of voters. A survey of three provinces about the October 2001 national legislative elections revealed that parties distributed goods to people in 44 percent of respondents' neighborhoods and that 35 percent of respondents could name the exact items given and the party that gave them (Brusco, Nazareno, and Stokes 2004, 67). The parties target those voters for whom a favor will have the greatest impact. People to whom a favor is very important will tend to go to greater lengths

Argentina

33

to continue receiving that favor. They will also probably feel more obligated to reciprocate the favor than would a person to whom the favor was not as important. The vast majority of party handouts go to low-income voters because a small gift to them will cost the party little but will have a greater impact on their lives than it would on the lifestyle of wealthier voters (Brusco, Nazareno, and Stokes 2004, 68). People in small, close communities also receive more handouts because a voter often grew up in the same locality where she now lives, making it easier for party precinct captains (punteros in Argentine political slang) to know a voter's background, to determine if she will sell her vote, and to monitor her behavior to ensure compliance (Stokes 2005, 317).4 Provincial Politicians and Their Role in National Legislative Politics

Provincial political parties constitute the central organizational unit for national legislative politics. These provincial parties are often controlled by one person, and never more than a small group (Jones and Hwang 2005, 121). These party leaders stay in power using three primary tactics: clientelism, patronage, and pork-barrel spending. As discussed above, political parties often try to buy support in both primary and general elections. Lower-level party members help mobilize voters and support the leadership in exchange for career advancement in government jobs. The major provincial leaders try to retain the loyalty of their operatives by controlling access to government jobs. In turn, the pursuit of pork-barrel spending at the national level brings money to the provincial party. This money can be used to create jobs for patronage, to generate funds for voter mobilization, and to try to improve the party's status among constituents more generally. Provincial party leaders play a key role in national politics via the selection and ordering of candidates on the ballot for the Chamber of Deputies, the lower house of the Argentine legislature. The Chamber of Deputies is elected using closed-list, multimember districts in which voters vote for a party's preselected slate of candidates. Voters cannot choose which candidates within a party they prefer, and only the top-ranked candidates on the list win an office. This makes deputies more accountable to the party leadership than to the voters. Party leaders often rotate the candidates for the Chamber of Deputies: sometimes they move them so far down the list that they cannot win office, but more frequently incumbent deputies are taken off the list entirely. As a result, few incumbents are reelected: over the years 1985-2003, only 19.4 percent of Argentine deputies were reelected (Spiller and Tommasi 2007, 71). This provincial practice of rotating legislative candidates enhances the power of the political machine as incumbent deputies compete to retain their positions—either by remaining high on the party's list of legislative candidates or by attaining some important appointed office in the executive branch. Nevertheless, over time this tactic places additional stress on pleasing the party leadership, because former deputies usually

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Corruption and Politics in Latin America

remain professional politicians who then ask party leaders to supply them with political appointments after their terms end (Jones and Hwang 2005, 126). To meet the demands associated with this dynamic, provincial governments pursue an ongoing expansion of their financial resources with which to increase public employment. Over three-fifths of all government jobs in Argentina reside at the provincial level. From 1980 through 2001, provincial government spending (as a share of gross domestic product) grew by 62 percent (Calvo and Murillo 2004, 748). 5 Beyond provincial leaders' influence over national legislative politics and public spending, the barons of subnational politics are also alleged to maintain impunity by wielding their influence over police officers and judges. 6 Thus, the concentration of political power at the subnational level in Argentina is associated with corrupt practices in various arenas of public life—vote buying, embezzlement, the provision of jobs and contracts to supporters, and the corruption of potential agents of horizontal accountability elsewhere in the government. The main consequence of this system of centralized party control at the provincial level is that the structure places a premium on satisfying the demands of the party leadership, which in turn centers on staying in power. The concentration of power among a few people in a party further encourages clientelist electoral practices and the awarding of key constituents with government contracts and jobs in backroom deals. The provincial leadership's thirst for spending influences government spending more generally. 7

The Changing Interplay Between Business and

Government

Throughout the twentieth century, Argentine business was seen as maintaining a frequently cozy relationship with civilian and military governments alike. 8 In the 1930s, the major corruption scandal involved the purchase of access to beef export quotas. From 1946 to 1955, the expansion of government's economic role under Juan Peron dramatically increased the resources managed by government both directly and indirectly. The advent of state capitalism during the Peron presidency ushered in a new era of larger government contracts that provided opportunities for kickbacks. In turn, considerable government regulation inspired the use of bribery to avoid undesired regulations. In this sense, the dynamics of political corruption involving business proved similar in Argentina during the period from the 1950s through the 1990s to trends observed elsewhere among late-industrializing countries in Latin America and beyond. Carlos Menem executed a turnaround in economic policy during his first term as president from 1989 to 1995. He changed the long-standing protectionist policies to a program of neoliberal reform that mandated lower tariff barriers, the privatization of state enterprises, and the deregulation of the economy. Supporters of economic opening in Latin America claimed that privatization and deregulation would promote more rapid growth. In addition, some analysts claimed

Argentina

35

that market-oriented reform would diminish the number of opportunities for corrupt practices by decreasing government involvement in the economy. In Argentina, however, neoliberal reforms lacked impartial oversight. This shortfall of horizontal accountability mechanisms created new opportunities for corruption. During the early privatizations, Congress had almost no supervisory capabilities. Although a committee was eventually created to monitor privatization, it could only ask the executive branch to justify a sale, but could not actually stop any sales. This improved transparency somewhat, but still invested a disproportionately large amount of power in the bloated executive branch. Privatization created opportunities for government agents to use their privileged access to information and their political influence for personal financial gain. In exchange for preferential treatment in the sale of state enterprises, government officials are reported to have solicited bribes from potential bidders (Manzetti and Blake 1996, 677). This preferential treatment ranged from the sale of information to the outright awarding of enterprises to certain bidders, despite the presence of other prospective buyers. Many government enterprises were given to the old economic elite because Menem needed the political support of the provincial party bosses (Panizza 2000,757). The sale of the national airline, Aerolíneas Argentinas, to the Spanish airline Iberia, was widely believed to be the product of corruption. Iberia's acquisition sheet listed US$80 million in "costs associated with the sale," money that some identify as a bribe. Allegations of bureaucratic misconduct also haunted deregulation. After Menem's government began to deregulate and lower tariffs, several US-owned multinational corporations with operations in Argentina complained to the US ambassador that government officials asked for bribes in exchange for approval of capital investments (Manzetti and Blake 1996, 678). Through maneuvering that greatly diminished the capabilities of Congress and the courts, Menem was able to gain wide discretionary powers that hampered horizontal accountability still further. These powers resembled those enjoyed by the military presidents during the 1976-1983 military dictatorship. Menem claimed that he required these powers to escape the economic crisis of the late 1980s (during which Argentina suffered from hyperinflation, a growing deficit, rising unemployment, capital flight, and low investment). Menem's actions to increase his own discretionary power led to a situation in which there was very little impartial oversight of the processes of deregulation and privatization, an atmosphere in which it was difficult to discover corrupt actions by the government. An era of "grand corruption" emerged in which millions of dollars were said to change hands.9 Corruption in economic reform had the effect of making personal gain (and not public welfare) the priority in economic policy. In privatization, less money went into the government's coffers because government officials sometimes did not accept the highest bid for the purchase of a state enterprise, preferring instead to line their own pockets. Problems occurred in deregulation as well,

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Corruption and Politics in Latin America

with government employees demanding bribes from the multinational corporations that were entering the country for the first time. Police and Judicial Corruption Endangers the Rule of Law

The federal police of Argentina (Policia Federal Argentina [PFA]) constitute the main police force in the capital city of Buenos Aires and operate in Argentina's twenty-three provinces when federal offenses are involved. Although the city of Buenos Aires (also known as the Federal District) has an autonomous government, the PFA's jurisdiction there is a result of the city's federalized status prior to the 1994 constitutional reforms. In turn, each province maintains its own police force for day-to-day operations involving local and provincial crimes. As the data in Table 1.1 (see Chapter 1) indicate, most Argentines consider the police force to be highly corrupt. The provincial police generally have an even worse reputation than the PFA. Both provincial police officers and federal officers are widely believed to be willing to take a bribe in exchange for covering up an offense. Many also allege that some officers will shake down businesspeople in order to extort protection money. Provincial and federal officers have been implicated in taking protection money from kidnappers and other forms of organized crime.10 At times, police officers have been caught framing citizens of high-profile crimes. This practice has been used sometimes to cover up police involvement in crimes and also to generate favorable publicity by solving crimes. The victim framed as the guilty party is a person who is unlikely to be able to show his innocence, such as a homeless person, an illiterate person, or a drug addict.11 Beyond concerns about the police, many Argentines also doubt the judiciary's ability to work expeditiously yet carefully and impartially. Like other Latin American judiciaries, the Argentine judicial system historically has relied heavily on written judicial procedures. Reforms beginning in the early 1990s paved the way to more oral trials, but many cases are not processed in that fashion. This reliance on written procedures—in a context of minimal staff and uneven computerization—makes the judiciary move notoriously slowly. Often, over half of the prison population consists of accused criminals awaiting trial; many wait for three or more years. Corruption watchdogs note that the slow nature of the judicial process provides multiple opportunities for interested parties to try to influence judicial decisions. Many assert that judges are either corrupt or corruptible, that is, subject to influence from government leaders and the wealthy. In a 2006 public opinion poll conducted in ten Latin American countries, 47 percent of Argentine respondents asserted that it was necessary to bribe a judge or a prosecutor in order to secure a "fair" verdict in a court case (Transparency International 2006b). Nothing is more indicative of the declining confidence in the Argentine judiciary than

Argentina

37

the tattered reputation of the Supreme Court. Carlos Menem worried in the early 1990s that the five justices then on the bench might rule against several of his economic reforms. He persuaded one justice to resign and then "packed" the court by adding four other seats. At that time presidential nominations for justices required only a simple majority in the Senate; Menem used Peronist control of the Senate to name five new justices he felt would be loyal to his agenda. His confidence was rewarded in several controversial decisions upholding his initiatives via what critics called his "automatic majority."12 The 2001-2002 crisis inflamed controversy between the judiciary and the other two branches of government. It also generated unprecedented anger among middle- and upper-income Argentines who wanted the courts to protect both their access to their bank accounts and the value of those accounts. Banking withdrawals faced strict limitations beginning in December 2001, following the aforementioned run on the banks, as citizens feared a forthcoming devaluation. In turn, when the Duhalde government converted accounts valued in US dollars to Argentine pesos at an unfavorable exchange rate, in January 2002, citizen outrage spilled out into the streets. Depositors held frequent rallies in front of the Supreme Court. At times they gathered at the homes of federal judges and Supreme Court justices to shout chants of repudiation in so-called escrache protests (Di Mauro 2003,239-246). Citizen mistrust of judges reached unprecedented levels in the twenty-first century.

Political Impact of Corruption These corruption patterns in Argentina have had a harmful effect on Argentine politics and economics in several ways. First, clientelist practices diminish elected officials' accountability to their constituencies because votes are based on a party's favors to individuals instead of on a politician's performance in office and fulfillment of campaign promises. This can culminate in "policy switches" in which a politician promises certain policies during the campaign, but does otherwise once in office (Smulovitz and Peruzzotti 2000, 148). During Carlos Menem's first campaign for the presidency, he stressed the traditional Peronist themes of social justice, helping the poor, and nationalism, but once elected, he abandoned these promises and implemented market-oriented policies. In contrast, some researchers have suggested that clientelist electoral policies provide a form of social welfare that the state does not (Auyero 2001, 2002). Auyero found that some low-income Argentines describe party intermediaries as beneficent people who make personal sacrifices for the good of the community. Another poll from December 2001 and January 2002 reports that one in five low-income respondents had asked a political party for help in the past year (Brusco, Nazareno, and Stokes 2004, 67).

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Despite the possible small-scale social good that clientelist practices produce for marginalized citizens, they channel money away from social assistance and education programs that might reduce poverty more effectively. Instead of giving aid to the neediest Argentines, political parties operating on a clientelist basis distribute favors to those who are perceived as most likely to provide votes in critical races. Clientelism focuses politicians' energy on vote buying instead of on accountability to constituents and formulating effective policy. Over time, these practices decrease people's belief that politicians have earned and wield power legitimately. Public opinion polls note that confidence in political parties and major governing institutions has declined steadily from the return of democracy in 1983 forward (Jamison 2005,97). With little faith in the procedural fairness of governing institutions, regime stability is dependent largely upon the continued ability of the parties to satisfy voters through favorable economic results and, at times, via individualized vote buying. The concentration of power in the provincial party leadership lessens regime legitimacy and stability still further. Deputies are much more accountable to party bosses than to their constituents. Voters find it difficult to break out of this cycle for several reasons. The use of closed-list proportional representation elections prevents voters from choosing individual candidates for deputy. In turn, voters in several provinces fear the possibility that voting for a new political movement could lead only to two negative outcomes: either the new movement will fail to take power or it might win the elections but be unable to govern because of a lack of connections and power at the national level. The entrenchment of party leadership contributes to structural stability within the party, but it endangers the stability of the political system by eroding the public's sense of legitimate governance. The linkages among economic policymakers, business interests, and corruption produce several negative consequences for Argentina. The power configuration discussed above involves the diversion of economic resources via electoral clientelism and calls for the awarding of contracts to reward wealthy or well-connected supporters. In turn, both domestic and foreign investors often complain that governments led by Peronists and Radicals alike play favorites in the conduct of economic policy. Complaints about the impact of corruption on judicial decisions involving business activities and property rights echo the concerns raised about partisan treatment of economic matters. These factors constrain investment in Argentina and also help to reinforce the boom-bust dynamics in the economy because domestic and foreign investors are even more prone to focus on short-term gains than they are in other contexts. Beyond their impact on economic dynamics, concerns regarding the rule of law and corruption have mobilized citizens at times to demand improved performance by police, judges, and elected officials. Public concern about police misconduct rose after several prominent newspapers exposed the federal police officers involved in the practice of inventing crimes. Increased awareness

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of these methods of framing innocent people resulted in human rights organizations and criminologists trying to limit the police's ability to arrest people based only upon suspicion (Stanley 2005,80). Police corruption serves to deepen public distrust of the government, and the apparent inability of the courts and the Internal Affairs division to reduce police corruption decreases legitimacy. Lowered legitimacy of the police leads to lessened stability because the public has less trust in the police's ability to maintain order. These concerns multiplied when police were implicated in the high-profile kidnapping (and subsequent murder) of Axel Blumberg in March 2004. His father, Juan Carlos Blumberg, organized a rally of over one hundred thousand people to demand more consistently honest and effective police protection.13 Confidence in the judiciary has also deteriorated in the wake of a series of visible scandals. As discussed earlier, citizens in Buenos Aires mobilized to denounce corrupt activity and what they perceived as favoritism in judicial decisionmaking. In early 2002, many legislators joined this chorus of complaints and proposed impeachment procedures against several Menem appointees on the Supreme Court. Some justices allegedly responded by threatening to rule against the interests of an executive branch then led by President Eduardo Duhalde (Menem's rival from the mid-1990s forward) on some pending cases regarding economic policy. When the court struck down restrictions on bank withdrawals, this sparked an impeachment trial of all justices. After much debate, enough Peronist legislators voted against impeachment in October 2002 to prevent the two-thirds majority needed for removal of the justices. All of this high-tension judicial politics led officials in the International Monetary Fund and in the US government to cite a lack of judicial security as a major obstacle to Argentina's much-sought-after economic recovery.14 The corruption scandals during the Menem administration also eroded legitimacy and stability. When evidence of corruption is revealed in the context of economic reform, the public is more likely to ascribe the reforms to selfinterest, rather than to politicians' expressed desire to improve economic health. The people become less likely to view the regime as legitimate, which negatively affects stability. Polls in other Latin American countries show that when corruption is associated with economic reforms, support for a coup grows among the general public (Manzetti and Blake 1996, 688). The cumulative product of corruption's impact on electoral politics, economic policymaking, police protection, and the rule of law was an arc of outrage, mobilization, and disappointment that culminated in the public demonstrations that brought down two presidencies in December 2001. The return to democracy in 1983 had encouraged some citizens to dream of progress on these fronts. Human rights groups that had formed during the previous military regime, such as the Mothers of the May Plaza and the Grandmothers of the May Plaza, attempted to promote police reform.15 In turn, a new organization, Poder Ciudadano (Citizen Power), formed in 1989 to promote transparency, probity, and accountability in

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government. The press as a whole—and, in particular, a new center-left newspaper launched in 1987 (Pagina/12)—pursued many corruption allegations more vigorously than ever before. The emergence of these forms of societal accountability converged with the upswing of "grand corruption" during the Menem presidency to place corruption high on the public agenda once the hyperinflationary crisis of 1989-1990 had passed. Public concern about corruption and demands for transparency steadily grew into an important political issue. Gallup polls showed Argentines consistently citing corruption among the top three issues named as Argentina's major problem from December 1990 through the end of Menem's presidency in 1999 (Manzetti 2000a, 22). The Latinobarometro annual polls that began in the mid-1990s confirm the pattern visible in the Gallup surveys. These developments formed the backdrop of the 1999 election of Fernando de la Rua, discussed at the start of this chapter. Although few citizens expected his government to wave a magic wand and eliminate corruption nationwide, many assumed that his election would produce a downturn in the frequency and the magnitude of corruption. The Senate bribery scandal in 2000—and especially De la Rua's unwillingness to investigate the matter thoroughly—punctured expectations of progress and deepened preexisting disillusionment with elected officials. When the economic crisis worsened in late 2001, there was no wellspring of faith in the democratic process to dampen citizens' anger. Widespread street protests forced two presidents out of office and reignited demands for major political reform. The series of disappointments suffered by Argentine citizens regarding ongoing corruption and cascading economic crises produced a society that has largely rejected the entire political class. The degree of partisan dealignment in Argentina is startling. In 1983, at the return of democratic rule, 73 percent of the population was either affiliated with (26 percent) or identified with (47 percent) a political party. Independent voters constituted 22 percent of the population. By 2007, those numbers had been turned completely upside down. The sum total of party affiliates and identifiers comprised 22 percent while a whopping 77 percent professed no affinity for any political party whatsoever (Mora y Araujo 2007). At the close of this chapter, we will consider the implications of a volatile, unattached electorate for the politics of corruption in twenty-first-century Argentina.

Influences on Corruption The relative affluence of Argentina in comparison with most other Latin American countries suggests that one might expect to observe a somewhat lower level of corruption than we have discussed thus far in this chapter. Throughout the twentieth century, Argentina was an upper-middle-income country with poverty rates below those observed in most of the region. In the most recent

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study by the United Nations Development Programme, Argentina's score of 0.869 on the Human Development Index (on a scale from 0.000 to 1.000) remained the highest in Latin America (UNDP 2007). Although Brazil, Chile, and Mexico have all gotten much closer economically to Argentina over the past two generations, Argentina remains the most affluent country in the region. In addition, Argentina has reinstated a democracy that became two decades old in this century. Freedom House ratings consistently have characterized the Argentine political system as democratic year after year since the return to electoral politics in 1983. In its 2008 report, Argentina received a two on a sevenpoint scale on which one means "most free" and seven means "least free" (Freedom House 2008). These scores indicate that political rights and civil liberties are generally protected in Argentina. Yet, despite a democracy resilient enough to survive some severe economic crises and an economy that is relatively prosperous, efforts to measure corruption indicate consistently high levels. What explains the persistence of corruption in contemporary Argentina? In a nutshell, several dynamics to date have limited vertical and horizontal accountability mechanisms (Alvarez 2007). In this section, we examine the roles of clientelism, federalism, a fragile rule of law, and an unstable economic environment in perpetuating corruption. The widespread use of clientelist politics promotes corruption by limiting vertical accountability. If voters respond frequently to material incentives (or see themselves with no viable alternatives among the various parties fielding candidates), then electoral politics is less likely to provide a feedback loop that threatens the discretionary power wielded by major political leaders. Indeed, Manzetti and Wilson (2006, 2007) have found in Argentina and beyond that corrupt leaders who are associated with good economic outcomes can retain the support of voters—particularly the low-income voters central to clientelist dynamics. The use of clientelism not only enables corruption, it also provides an enduring motivation for corrupt practices: the need for politicians to find ways to generate material resources deemed central to winning elections. Escudé calls Argentina a "parasite state," and he describes the linkage between clientelism and corruption in no uncertain terms: "Because the common citizen's loyalty is obtained through these mechanisms, the inefficiency and corruption of the state bureaucracy is politically functional" (2002, 475). In turn, the dynamics of federalism in Argentina have a ripple effect on the prospects for horizontal accountability at both the provincial and the national levels of government. The potential for the decentralization of authority to create microclimates of impunity is well known inside and outside of Argentina. In the Argentine case, ten of its twenty-three provinces were governed by the same political party from the return to democracy in 1983 through 2003; eight of those long-standing political machines were Peronist (Calvo and Murillo 2005,212). The most emblematic modern example of the long-standing provincial caudillo was Carlos Juárez. Juárez served as the leader of the PJ in the

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northern province of Santiago del Estero from 1949 until 2004 (E. Gibson 2005, 121-127). In 2004, a federal investigation into the unsolved, brutal murder of two women in 2003 uncovered a web of complicity that indicated the scope of control that Juárez exercised over the provincial police, the judiciary, political opponents, and his allies from the Peronist movement itself in Santiago del Estero (Página/12 2007). Juárez was said to have spied on over forty thousand residents and was charged with illicit enrichment and complicity in torture. President Néstor Kirchner then removed Juárez's wife from the governor's office and called new elections. Juárez's long-serving provincial police chief was eventually found guilty of being the intellectual author of the crime and its cover-up in June 2008. In August 2008, the ninety-two-year-old Juárez was deemed too physically and mentally frail to testify in human rights cases in which he stands accused (Página/12 2008). The importance of impunity and centralized power at the provincial level in Argentina exceeds its relevance for understanding political corruption at the subnational level. Because of the strong ties between provincial political machines and legislative blocs at the national level, the web of murky and outright illegal practices that maintain provincial dominance prevent legislators at the national level from realizing their potential as a horizontal check on abuses by the executive branch. Typically, provincial governments try to reach an understanding with the president in order to increase the financial resources directed from the national level down to the provincial governments. In some periods, the dominant player in that relationship has been the president while at other times subnational leaders have been dominant. In general, presidents have been more successful leaders when economic conditions generate fiscal resources that can be used as carrots in exchange for provincial-level support, while presidents have tended to struggle when economic times are bad (Spiller and Tommasi 2007). In both cases, a marriage of convenience ties these governmental actors together: Even a financially and politically strong president needs some support from the legislature, while provincial machine leaders need to keep financial resources streaming in from Buenos Aires. The fluidity and importance of partisanship also help to keep the daily dynamics of the Argentine bureaucracy from conforming to the civil service system formally in place; in practice, many civil service rules and norms are frequently ignored (Scialpi 2002). In good times and bad, neither national leaders nor subnational leaders are predisposed to investigate the other's alleged wrongdoing unless public outrage is unusually high and sustained—as it became eventually in reaction to the aforementioned, grisly murders in Santiago del Estero. Economic policies that take place without sufficient transparency provide additional obstacles to detecting and deterring corruption. Frequent economic crises from the 1970s forward have often served as rationales to declare a state of economic emergency in which congressional involvement in economic policymaking

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is more limited. We made reference to this particular dynamic earlier in our discussion of the Menem administration in the 1990s. He succeeded in convincing Congress to pass the Law of Economic Emergency, which allowed the president to enact economic reforms through executive order and the State Reform Law, which required the sale of all state-owned enterprises.16 Menem also manipulated the judiciary. He increased the number of justices of the Supreme Court from five to nine and appointed his supporters to the new posts. He also replaced the leadership of the two major oversight organs of the executive branch in 1990 and 1991. However, make no mistake: Menem's approach to economic policy is an extreme example of a broader trend. Presidents from both the PJ and the UCR have used the rhetoric of crisis to try to accumulate power while limiting the ability of Congress to check their authority. Despite five years of sustained, rapid economic growth from 2003 to 2007, during which many Argentine economic indicators returned to or exceeded their precrisis levels, in each year President Néstor Kirchner successfully lobbied Congress to extend the president's "emergency" powers in economic policy for another year. The assessment of cultural influences on corruption in Argentina requires a nuanced discussion. From a values-based perspective, Argentine participants in the World Values Survey (WVS) have consistently rejected corrupt behavior as unjustifiable in above-average numbers. In the 1990-1993 WVS, 95 percent of Argentine respondents claimed that bribe taking was never justified, while the average figure for all WVS countries was visibly lower (75 percent). In turn, in the 1995-1997 WVS, 88 percent of Argentine respondents declared that bribe taking was never justified, while respondents in the average country across the entire WVS population of nearly fifty countries did so 75 percent of the time. Then, in the 1999-2002 survey, 92 percent of Argentine respondents asserted that bribe taking was never justified, while the average figure for all WVS countries was 77 percent. Thus, from an attitudinal perspective, more Argentines express zero tolerance toward bribe taking than citizens elsewhere in the world. Nonetheless, many analysts and ordinary citizens refer to an embedded culture of corruption in Argentina. What explains the gap between expressed rejection of corrupt values and the entrenchment of corruption-enabling attitudes? Most analyses emphasize considerable pessimism among Argentines regarding the resilience—or even the inevitability—of corruption as a fact of life. Sturzenegger writes concisely about the impact of Argentine pessimism regarding the prevalence of corruption: Parecería que muchos argentinos, resignados a que el sistema sea corrupto, hubiesen decidido aprovecharse de él en la medida de lo possible, en una sociedad que de repente se ha transformado en un salvése quien pueda. [It would seem that many Argentines, resigned to the idea that the system is corrupt, have decided to take advantage of the system whenever possible in what has

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America

abruptly transformed itself into an every-man-for-himself society.] (Sturzenegger 2003, 230) 17

Anticorruption Efforts in Argentina Despite this widespread belief in the resilience of corruption, the return to democracy in the 1980s nevertheless gave rise to several citizens' groups interested in preventing corruption. As noted earlier in this chapter, Poder Ciudadano, human rights groups, and a reinvigorated press corps all worked to draw more attention to the importance of fighting corruption in Argentina. These new forms of societal accountability—combined with the return of free elections and protection for civil liberties—provided a new source of pressure for governments to pursue public policies designed to fight corruption.18 The presidency of Raúl Alfonsín (1983-1989) brought no major innovations designed to expand horizontal accountability but did reinvigorate slightly the institutions that already existed. He appointed new members to a federal judiciary that had been under siege during the previous era of military rule. He named Ricardo Molinas, a lawyer with a well-earned reputation for speaking his mind, as the prosecutor in charge of the Fiscalía Nacional de Investigaciones (the National Investigative Prosecutor's Office [FNI]), which is charged with examining allegations of the misuse or abuse of federal property. Alfonsín appointed new judges to the Tribunal de Cuentas (Accounting Tribunal) to energize a body that had a reputation historically of avoiding the prosecution of alleged violators. Alfonsín also nominated a series of distinguished judges to the Supreme Court. These changes alone were insufficient to reverse the patterns of corruption associated with clientelism and provincial political machines, but they did raise expectations that major corruption cases at the federal level might be pursued more vigorously than they had in prior decades. In turn, the Menem administration short-circuited these and other institutions of horizontal accountability. In 1990, as mentioned earlier, Menem packed the Supreme Court and generated an "automatic majority" of five loyalists among the now nine justices. That same year, the members of the Tribunal de Cuentas were fired and replaced by presidential loyalists via a decree that bypassed a Senate impeachment proceeding called for under existing law. In 1991, Molinas was replaced as the head of the FNI via a similarly questionable procedure. When Menem's own appointees to head the offices of Sindicatura General de Empresas Públicas (the General Accounting Agency for Public Enterprises) and the Inspector General de Justicia (Inspector General of Justice) criticized a lack of transparency in the privatization of public enterprises, they were replaced as well. Faced with rising criticism at home and abroad for various corruption scandals, the Menem administration backed the passage of Law 24.156 (the Law of

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Financial Administration and National Public Sector Control) in October 1992. This reform created two new auditing agencies that were launched in late 1993 (after most of the major privatizations under way had been completed). The Auditoría General de la Nación (General Auditing Office of the Nation [AGN]) is controlled by a seven-member governing board with three members named by each of the two chambers of Congress and a president that, from 1994 forward, is named by the second largest political party in Congress. Members serve for renewable eight-year terms. Although the AGN was endowed with broad investigative and subpoena powers, its independence can be limited when events implicate the supporters or members of the major political parties who control AGN appointments as well the organization's budget and annual mission statements. The 1992 law also created the Sindicatura General de la Nación (General Accounting Agency of the Nation [SIGEN]) with broad responsibility to oversee all activities carried out by the executive branch of government. However, the head of SIGEN is appointed by the president of Argentina and serves at the pleasure of the president, thereby limiting SIGEN's independence considerably. The ability of Congress and the presidency to influence these two new watchdog agencies limited their willingness and ability to pursue high-profile cases during the remainder of Menem's presidency. In 1996, following his reelection in 1995, Menem launched the Oficina de Ética Pública (Office of Public Ethics [OEP]) as an executive-branch vehicle for gathering personal financial statements that might identify conflicts of interest and illicit enrichment. However, the office had a small staff and did not coordinate its activities with those of other investigative bodies. The leaders of Poder Ciudadano (PC) responded to the limited transparency of the Menem era via an innovative strategy. The group focused on several steps toward invigorating the electoral process as a potential mechanism for vertical accountability. Staff for PC created a political database regarding presidential candidates and candidates for public office in the Federal District of Buenos Aires. This database used a common questionnaire to elicit candidate's biographies, campaign platforms, and personal financial statements. By the end of the 1990s, the database had the voluntary cooperation of over 60 percent of the candidates in the races it covered. In 1997, PC expanded this approach by asking candidates for mayor of the Federal District to sign an integrity pact in which they would agree to report publicly their campaign finance statements. In the years to come, this approach was used in presidential and legislative campaigns. In turn, Transparency International used it as a model for its other affiliates in Latin America. Poder Ciudadano also mobilized a political coalition in the Federal District that eventually drafted and passed a freedom-of-information law for the municipal government of Buenos Aires. On the heels of a successful presidential campaign that had emphasized corruption reduction as a major goal, Fernando de la Rúa began his presidency by replacing the OEP in December 1999 with a new Oficina Anti-Corrupción

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(Anticorruption Office [OA]) housed within the Justice Ministry. As with the OEP, the head of the new OA is appointed by and serves at the pleasure of the president of Argentina. Unlike its predecessor, the OA was given the function of receiving denunciations of corruption along with the power to investigate those allegations. The new office was also charged with developing new legislative and administrative strategies for reducing corruption (Raigorodsky et al. 2003). Although De la Rúa's handling of the Senate bribery scandal tarnished his cabinet's (and his own) image, the OA did work to achieve 99.9 percent compliance in the presentation of financial statements by public employees in the executive branch by replacing the previous paper-driven system with an electronic process. This mechanism for identifying potential conflicts of interest also dramatically improved record keeping and access to those statements. In turn, in its new role as an investigative body, the OA helped to produce a 14 percent increase in the judicial investigation of corruption allegations by 2001 (Meagher 2005, 84). Despite the progress associated with the efforts of Poder Ciudadano and the Oficina Anti-Corrupción in promoting greater transparency of candidates' and bureaucrats' financial statements, corruption remained a central theme of the political explosion of 2001-2002 in Argentina. In early 2002, a wide variety of sweeping reform proposals circulated on the Internet and in neighborhood assemblies. Citizens called for everything from the immediate resignation of all elected officials to a shift from closed-list, proportional representation (PR) elections to a single-member-district-plurality electoral system in which all legislative candidates would face the voters individually. Similarly, calls rang out for internal primary elections to select major candidates for office. Regarding the rule of law, many citizens clamored for a thorough housecleaning of the federal judiciary, the federal police, and their provincial counterparts. All options seemed potentially feasible in some circles amid the economic freefall of early 2002. Ultimately, only one of these proposals was written into law: Law 25.611 in 2002 called for a system of open primaries for the selection of executive branch and legislative candidates at the national level. As economic conditions improved from late 2002 forward (and the PJ found itself bitterly divided over the conduct of its presidential primary), the Duhalde government did not force political parties to implement Law 25.611 in the 2003 presidential elections! The only party that chose to hold a presidential primary, the UCR, found itself similarly bitterly divided over the transparency of the process. The chorus of demands for political reform in early 2002 had produced no major changes when Argentines returned to the polls in April 2003 to elect a new president. The 2003 presidential elections produced an unusual outcome given the logic of Argentina's ballotage electoral system. Five candidates received between 14 and 24 percent of the vote—thus triggering a runoff election between leading vote getter Carlos Menem and the second-most-voted candidate, Néstor

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Kirchner, who had received 22 percent of the vote. Menem, however, refused to participate in the runoff elections. He claimed that President Duhalde's backing of Kirchner had created an unfair political process, while Menem's critics cited public opinion polls indicating that Kirchner would have won a runoff election handily.19 As a result of Menem's withdrawal prior to the runoff, Kirchner won the presidency with the smallest electoral mandate in Argentine history and with a political power base at the national level that was largely tied to his predecessor, Eduardo Duhalde. Faced with this uphill battle to develop his own political base, Kirchner initially adopted the issues of corruption reduction and political reform as a path to building popular support. He issued a new procedure for the appointment of Supreme Court justices that called for considerable consultation with the legal community and set new benchmarks for the professional criteria necessary to be actively considered for the high court. Kirchner pressured federal authorities to crack down on police complicity in auto-theft rings operating in the province of Buenos Aires. He renewed the call for the impeachment of Supreme Court justices appointed by Carlos Menem and asked both Congress and the Supreme Court to reverse the laws that had put an end to human rights trials regarding violations during the last military regime. A languishing corruption investigation into the activities of María Julia Alsogaray (perhaps the flashiest member of Menem's cabinet) was reinvigorated and ultimately produced a guilty verdict of illicit enrichment. Kirchner also issued Decree 1172 in December 2003, which created a freedom-of-information process to request any documents issued by the executive branch. He appointed one of the founding leaders of Poder Ciudadano, Marta Oyhanarte, as the new subsecretary in charge of the implementation of the freedom-of-information process. For all of these actions initiated during his first months in office, Néstor Kirchner raised hopes in several circles that his leadership might begin the process of expanding processes of horizontal accountability. Nevertheless, as his presidential term (and a vigorous economic recovery) continued, subsequent actions have raised doubts about Kirchner's potential as a vehicle for greater institutionalization of horizontal accountability in Argentine politics. Like his predecessors, Kirchner faced accusations that he built nationwide political support in the legislature by using pork-barrel spending to curry favor with provincial political machines. Similarly, like his predecessors, Kirchner faced accusations that he used public revenues to fund clientelist campaigning in the 2005 legislative elections and in several provincial elections. Optimism regarding Kirchner's image and potential as a corruption fighter would diminish still further during the years 2006-2007. On the heels of three years in office, with high economic growth and high public approval ratings, in 2006 Néstor Kirchner expanded presidential authority and discretion beyond the levels enjoyed by Carlos Menem via a series of new

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laws. A February 2006 reform to Law 25.669 reshaped the Council of the Magistrature that supervises and appoints judges. The reform reduced the council's membership from twenty to thirteen without eliminating any of the five seats appointed directly or indirectly by the president. This reform gave appointees loyal to the president the power to block the appointment of judges and their removal, thus changing the balance of power in the highest governing body for the judiciary. In July 2006, Congress passed Law 26.122. This law limited the ability of Congress to review presidential use of decree powers while enhancing decrees' usefulness in setting the legislative agenda for the presidency. An August 2006 reform to the Law of Financial Administration (Law 24.156) took the unprecedented step of delegating virtually all budgetary authority into the hands of the executive branch by granting the presidential chief of staff the power to reallocate budgetary funds at will. Previous presidents had often secured more limited versions of this discretion via temporary delegation of budgetary authority. Kirchner, in contrast, has entrenched and expanded presidential prerogatives in the budgetary sphere. In November 2006, Kirchner successfully pushed for new legislation that reduced immediately the membership of the Supreme Court from nine to seven members. Eventually, the court will be reduced to five members as justices retire. This reform extended the influence of Kirchner's four appointments to the Supreme Court because the two oldest justices most likely to retire first were appointed by Alfonsin in 1983. Although the continuation of clientelist spending and the expansion of presidential discretion and dominance during the first three years of the Kirchner presidency provided a potentially wide berth for corruption, no major corruption scandals implicated senior cabinet members during the years 2003-2006. All of this changed during 2007. From January to July, three major cases emerged. First, a Swedish audit of the firm Skanska determined that its Argentine subsidiary had paid nearly US$1 million in phony invoices issued by "ghost companies"; company executives eventually admitted that these funds had been used to bribe Argentine government officials active in the expansion of the natural gas distribution grid. The two principal leaders of the state-owned agencies working with Skanska were fired by Néstor Kirchner in May 2007 (Abiad 2007). Then, in June 2007, a bomb squad found a satchel with over US$130,000 in cash in the private bathroom of the economic minister, Susana Miceli. The funds included a thermo-sealed "brick" of Argentine currency that should not have been in circulation without being opened first by the financial institution that had received the money from the Central Bank; this banking entity, in turn, had links to Miceli's siblings. Miceli gave an unconvincing explanation of the source of the money and later resigned under pressure on July 16, 2007. One week earlier, the secretary of the environment, Romina Picolotti, faced a long exposé in Argentina's highest-circulation newspaper regarding nepotism and questionable spending practices during her first year in office (Clarín 2007).

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In early December 2008, Kirchner's successor, President Cristina Fernández de Kirchner, asked Picolotti to resign as these and other allegations had culminated in a judicial investigation. As of late 2009, this formal investigation was ongoing. From the 1990s forward through 2007, Argentine governments adopted a series of new public policies aimed at the reduction of corruption. What impact have these policies had on the frequency and nature of corrupt activity? The available data indicate that corruption has not decreased noticeably. If anything, corruption appears to have become more prevalent in the decade following 1996. In 1996, Argentina received a 3.4 on Transparency International's Corruption Perceptions Index (CPI)—a level that TI considers to indicate the perception of substantial corruption (Transparency International 2007a). From 1996 through 2007 (when it received a 2.9), Argentina consistently scored between 2.5 and 3.5 on the CPI: the downward shift in the CPI score indicates an increase in the level of corruption perceived in Argentina. Among the 179 countries examined in the CPI during 2007, Argentina ranked as the 105th least corrupt country. Similarly, among the twenty Latin American countries, Argentina found itself in the middle of the pack as the twelfth least corrupt country on this indicator. The World Bank's governance indicator regarding control of corruption similarly showed Argentina exhibiting consistently high levels of corruption with a slightly greater upswing in the frequency of corruption over time (Kaufmann, Kraay, and Mastruzzi 2009). In 1996, on the World Bank's fivepoint scale (with - 2 . 5 equaling most corrupt and 2.5 indicating least corrupt), Argentina scored a - 0 . 1 2 . Control over corruption declined steadily over the next few years to - 0 . 8 1 by 2002. During the years 2003 through 2007 the score has consistently been between - 0 . 5 0 and - 0 . 4 4 . Among the 208 societies evaluated by the World Bank in 2007, Argentina was the 118th least corrupt with a corruption score of - 0 . 4 5 . While Argentina's Anticorruption Office's (OA) investigative work has increased dramatically the number of indictments levied against government officials, as of December 2009 no judicial charges generated by OA investigations had yet resulted in the conviction of a major government official. This prosecutorial record is emblematic of the limited impact, thus far, of anticorruption reforms in Argentina. Although corruption's prevalence appears resilient and impunity remains considerable, it is important to note that the push for greater accountability has produced an increase in governmental transparency in some respects. In particular, 2007 marked the first year in Argentine history that national legislators and federal judges joined executive-branch officials in making their financial disclosure statements available to the media. While domestic and foreign observers used access to these financial reports to raise questions about their accuracy, there can be no doubt that the move toward the public disclosure of personal finances of government officials marks a watershed in Argentina. In

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decades past, there would simply have been no data whatsoever regarding the finances of governmental officials. The debate over the accuracy of these new disclosures initiates a new phase in the pursuit of greater transparency in Argentine governance.

The Future of Corruption in Argentina Although anticorruption policy reforms have yet to produce an observable decline in corruption, the politics of corruption has reached a new crossroads in Argentina. On the one hand, issues of corruption receive more public attention than ever before. The media and various citizens' groups work to keep major corruption scandals in the public eye. The echo of the slogan "¡Que se vayan todos!" still reverberates in the eyes of many Argentines who are frustrated by the persistence of political corruption. This sentiment made itself felt again (albeit with far fewer mass protests than in late 2001 and early 2002) in the vocal repudiation of the corruption scandals involving upper-level Kirchner administration officials in 2007. Disenchantment with political corruption (along with two serious economic crises in 1989-1990 and in 2001-2002) contributed to the massive decline in people's identification with political parties during the years 1983-2003, as discussed earlier in this chapter. Is partisan dealignment an asset or a liability in the fight against corruption? On the one hand, widespread antipathy toward political parties can occasionally give rise to heartfelt mobilization against the elected figures of the day. On the other hand, citizens' mistrust of the process limits the citizenry's willingness and ability to reform existing political parties or to form new parties that might become standard-bearers for greater transparency in public affairs. The atomization of party politics in Argentina continued in the October 2007 presidential and legislative elections. While small left-wing political parties continued to run under their traditional party labels, candidates from the center-left across the remainder of the ideological spectrum tended to run for office in diverse coalitions that tried to attract the support of independent voters by avoiding the use of party symbols. Néstor Kirchner's wife, Cristina Fernández de Kirchner, won the presidency (gaining 45 percent of the vote) with a UCR politician as her vice-presidential candidate in a campaign that reduced notably its use of Peronist symbols. Runner-up candidate Elisa Carrió reached out to candidates of varied partisan backgrounds in forming a new Civic Coalition (Coalición Cívica) of legislative candidates in support of her presidential candidacy. The third-most-voted presidential ticket combined former Peronist economic minister Roberto Lavagna with the leader of the UCR, Gerardo Morales, as his running mate. One has to look to the fourth-place candidate, Alberto Rodriguez Saá, to find a campaign firmly anchored in a single political party; this

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member of a Peronist family dynasty in the small province of San Luis garnered less than 8 percent of the presidential vote in 2007. For most of the second half of the twentieth century, the Peronist (PJ) and Radical parties garnered a visible majority of the votes and enjoyed considerable loyalty among voters. When a new Congress took office in December 2007, the Radical party had very few loyal voters and controlled barely 10 percent of the legislature. The Peronist movement controlled a diverse majority within each chamber of the legislature but, perhaps tellingly, no candidates in the October 2007 election formally ran under the Peronist symbol, whose usage rights were tied up amid a dispute for control over the party organization. Some analysts spoke of a potential rupture in a Peronist party that has become increasingly divided over the course of the twenty-first century. Néstor Kirchner, upon finishing his presidency in December 2007, quickly became the national head of the Peronist party in an effort to reunify its national structure and membership. Meanwhile, the major figures of the center-left (Elisa Carrió) and the center-right (Mauricio Maori, the mayor of Buenos Aires elected in mid-2007) each pledged to lead the construction of an opposition that could bring about a new era in governmental transparency. After the June 2009 midterm elections, the Peronist delegation in the national legislature was more divided than it had been during Kirchner's presidency. Cristina Fernández de Kirchner lost a working legislative majority when the new Congress took office in December 2009. Meanwhile neither Carrió nor Macri appeared to have made much progress toward constructing a clearly united constellation of forces for the upcoming 2011 presidential elections. Without consistently contestable elections, without viable political parties willing and able to check each other's actions over time, and without meaningful agencies of horizontal accountability, it is difficult to see how the reinvigorated organs of societal accountability in Argentina will gain partners in the fight against corruption. Can opposition political leaders fulfill this role without building a political party capable of inspiring the loyalty (and electoral support) of more than 10 percent of the population? Or, alternatively, will a new major party emerge that will take on the mantle of government transparency? The answer to this crucial question will unfold in Argentina in the years to come.

Notes 1. Translated from the Spanish: "Robo para la Corona." 2. Translated from the Spanish: "El poder es tener impunidad." 3. For further discussion of the political crisis, see Di Mauro (2003); Mocca (2004); Pousadela (2004); Pousadela and Cheresky (2004); Quiroga (2004); and Torre (2005). For more on the economic crisis, see Bruno and Chudnovsky (2003) and Sturzenegger (2003).

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4. For further discussion of clientelism in Argentina, see Calvo and Murillo (2004) and Rodríguez Blanco et al. (2004). 5. Spending as a share of gross domestic product rose from 8 to 13 percent. 6. For more on concerns regarding reciprocal impunity among government officials and police, see Sain (2008,125-129). For a discussion of concerns raised about the independence of subnational judges in several provinces, see La Nación (2005). 7. For more on the interplay between provincial politics and the national system, see Calvo and Murillo (2005); Cherny and Vommaro (2004); Eaton (2005); Gibson and Faletti (2004); Jones and Hwang (2005). 8. For a treatment of corrupt relationships between businesses and governments from the colonial era through the early twenty-first century, see Vitelli (2006). For more on the decade of the 2000s, see Abiad (2007); Azpiazu and Schorr (2003); Melé, Debeljuh, and Arruda (2006). 9. See Manzetti (2003) for additional discussion of the interplay between marketoriented reform and corruption in Argentina and beyond. 10. For further discussion, see Behrend (2005); Hinton (2005); Klipphan (2004); Sain (2003, 2008); Ungar (2002). 11. Some investigations into police misconduct involving invented crimes have occurred, beginning in the 1990s. The Office of the Attorney General created an investigative commission that exposed cases of invented crimes and began prosecutions of police officers. Some senior officers were removed and the commission presented their findings to the Chamber of Deputies, but the commission's report produced few results. Only two police officers were convicted by the courts, and the Policía Federal Argentina's own Division of Internal Affairs issued only 23 administrative sanctions out of 123 investigations. For more analysis of police involvement in invented crimes, see Stanley (2005). 12. For discussion of how packing the Supreme Court produced a controversially pro-Menem court, see Verbitsky (1993). For an analysis of how that automatic majority unraveled late in Menem's presidency in ways reflective of broader Argentine dynamics, see Helmke (2005a, 2005b). 13. Over the years 2005-2006, Juan Carlos Blumberg became a more controversial figure as he became associated with the right wing of Argentine politics and faced accusations that he had used his son's death to launch a political career. 14. When Néstor Kirchner assumed the presidency in May 2003, he asked the Argentine Congress to initiate a new impeachment of the Menem appointee most closely associated with the former president, Chief Justice Julio Nazareno. Nazareno denied all charges, but he resigned in June once it became clear that he would lose an impeachment vote. Impeachment charges were later filed against four other Menem appointees; two resigned while the other two were impeached. Another justice resigned for personal reasons in late 2005. By this time, Kirchner had appointed four new justices and had two more pending vacancies to fill. Rather than fill those two posts, Kirchner pushed for new legislation in late 2006 that reduced immediately the membership of the Supreme Court from nine to seven members. Eventually, the court will be reduced to five members as justices retire. This reform enabled Kirchner to avoid appointing six justices within a nine-member court. At the same time, it extended the influence of Kirchner's four appointments to the Supreme Court because the two oldest justices most likely to retire first were appointed by Alfonsin in 1983. 15. For further discussion, see Guzmán Bouvard (1994). 16. For further discussion of the links between these changes in Congress and corruption, see Manzetti and Blake (1996) and Vidal (1995). 17. Translation by the author.

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18. For more on the new dynamics of societal accountability in the contemporary Argentine democracy, see Manzetti (2000a); Risley (2006); Sautu et al. (2005); Smulovitz (2005); Smulovitz and Peruzzotti (2000); Waisbord (2004). 19. The nationwide public opinion polls in La Nacion released one week prior to the runoff showed Kirchner with a massive projected margin of victory over Menem of between 36 and 44 percentage points (La Nacion 2003).

3

Bolivia: Traditional Parties, the State, and the Toll of Corruption Daniel W. Gingerich

This is a chapter about corruption in Bolivia—its scope, form, causes, and consequences. The Bolivian case enlightens our understanding of the political dynamics of corruption in Latin America in several important ways. Firstly, the Bolivian case provides us with a good example of the long-term consequences of "entrenched corruption" for the viability of representative democracy (M. Johnston 1997). In contrast to once-fashionable theories of political development that argued that corruption was a necessary and passing phase in the institutionalization of party systems (Huntington 1968; J. Scott 1969), Bolivia's experience provides a vivid example of how corruption can—over the long run—enfeeble party systems and bring them to the brink of collapse. As such, it serves as a cautionary tale of how clientelistic networks that provide shortterm electoral gain can set in motion political dynamics that end up endangering all the major players on the democratic chessboard. Secondly, the Bolivian case offers us some general lessons about how certain configurations of formal and informal institutions can sustain particular forms of corrupt practice. Although the concern herein rests with elucidating how aspects of the Bolivian institutional environment, such as electoral rules and bureaucratic politicization, helped entrench this country's virulent brand of party-directed corruption, the characteristics of these institutions in Bolivia are similar to those found in a variety of countries in the Americas. For this reason, the Bolivian case may be directly relevant to the experience of other countries considered in this volume (perhaps especially Argentina).

Corruption and Bolivia's Crisis of Representative Democracy Throughout much of the 1980s and 1990s, Bolivia was viewed as a model of political stability in a region notorious for its absence. During a period of time 55

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in which its Andean neighbors were facing bloody conflagrations with terrorist groups and guerrillas (Peru, Colombia), massive social protests and coup attempts (Venezuela), or acute crises of governability characterized by rapid turnover (Ecuador), Bolivia boasted a relatively stable "consensus democracy." Among other notable achievements, the country's political elite was the first in the Americas capable of setting aside ideological divisions to implement widespread economic liberalization under democratic auspices. Authors at the time spoke of Bolivia's "silent revolution," the emergence of a policymaking style based on elite compromise in a country whose own political history—as well as that of its neighbors—was characterized by zero-sum politics and chronic instability (Mayorga 1997). Given the initial conditions with which Bolivia's emerging democracy was endowed—extreme ethnic heterogeneity, rampant hyperinflation, grinding poverty and inequality, and a recent past characterized by a nearly endless litany of military coups—the establishment of consensus democracy was nothing short of remarkable. In retrospect, it now appears clear that Bolivia's consensus democracy was also quite fragile. Beginning with the so-called Water War in April 2000, the new millennium brought with it a steady stream of popular mobilizations that eventually sounded the death knell for this form of governance. These culminated in the forced resignation of then-president Gonzalo Sánchez de Lozada on October 17, 2003, in the face of massive protests and debilitating blockades, which left the country's capital in a virtual state of siege. Similar protests led to the resignation of Carlos Mesa Gisbert, Sánchez de Lozada's vice president and successor, less than two years later. A modicum of stability would return to Bolivia only after new general elections were held by the caretaker government of jurist Eduardo Rodríguez in December 2005. The 2005 elections marked the definitive passing of consensus democracy and ushered in a new phase of intense political polarization. Evo Morales Aima, an architect of the street protests that removed Sánchez de Lozada and Mesa Gisbert, and head of the Movimiento al Socialismo (MAS) Party, won a resounding majority of the popular vote. Meanwhile, Bolivia's so-called traditional parties—the backbone of the party system since the mid-1980s—found themselves in shambles. Bolivia's oldest and historically most important party, the Movimiento Nacionalista Revolucionario (MNR), fielded a dismal 6.5 percent of the valid votes cast in the contest. Other, once central parties like the Movimiento de la Izquierda Revolucionaria (MIR) and the Acción Democrática Nacionalista (ADN) simply ceased to exist, devastated by factional disputes and the abandonment of their bases. In order to understand the fate of Bolivia's once apparently vibrant consensus democracy, it is essential to understand the central role that patronage and corruption played in it. Although these two phenomena are conceptually distinct, they were mutually reinforcing components of political parties' relationship to the state, on the one hand, and to civil society, on the other.

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Bolivia's version of the spoils system—dubbed the cuoteo politico (political quota)—was the central means by which political parties cemented alliances among themselves, as well as one of the principal means by which they maintained the allegiance of their bases. It was also a crucial means of party finance, procured through activities that ran the gamut from large-scale forced employee donations to embezzlement to kickbacks on state contracts. Under the cuoteo, large swaths of the public administration were subjected to intense levels of politicization, and in many institutions the trajectory of one's administrative career (and certainly, one's political career, if one had ambitions of that stripe) depended to a greater degree on the preferences of party leaders and political operators than on job performance. In this way, the spoils system came to serve two interrelated objectives: It allowed party elites to reward the rankand-file with government jobs for service to the party and, once on the public payroll, it made it possible for elites to pressure these same individuals to use the machinery of the state for political advantage. Although this state of affairs allowed Bolivia's three main parties (the MNR, MIR, and ADN) to maintain a degree of electoral hegemony for a time (co-opting the occasional "outsider party" when the need arose), it proved to be an ineffective long-term governance strategy. In the end, the cuoteo exhibited a number of features that made it an unstable framework for governing the country. Firstly, it imposed significant efficiency costs on the state. By definition, the spoils system meant that the best-trained or best-qualified individuals would not necessarily be those who received government posts. The system thus contributed to a misallocation of human capital and ensured that public goods and services would not be provided as quickly or at as low a cost as they otherwise might be. Perhaps even more detrimental was the fact that the cuoteo created a context in which political corruption was unlikely to be punished and thus contributed to the dismal reputation of parties and the public service in the country. Taken together, these two factors contributed to a progressive loss of faith in the ability of reigning political elites to solve pressing policy problems and disinterestedly manage the national patrimony. The economic crisis that emerged at the end of the millennium (average GDP growth between 1999 and 2002 was a dismal 1.75 percent per annum) and the debate over the destiny of Bolivia's massive natural gas reserves helped push the crisis of confidence to its logical conclusion. Finally, the cuoteo was an unviable means of maintaining political support over the long term because it represented a regressive form of redistribution that failed to benefit Bolivia's indigenous majority. Whereas in other developing countries patronage networks have tended to be progressive in nature—favoring the inclusion of marginalized ethnicities and the poor over the well-heeled—in Bolivia the cuoteo was principally oriented toward a small Spanish-descendent and mestizo elite. Moreover, the adoption of comprehensive structural reform in response to severe economic crisis considerably reduced the number of jobs that

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parties could distribute among their partisans, and thus made the cuoteo's bias toward the rich and middle class progressively more marked over time. Although all Bolivians paid the efficiency costs of the cuoteo and the corruption it entailed, its beneficiaries constituted a relatively small and privileged group. Excluded from the (relatively feeble) support networks of Bolivia's traditional parties, many Bolivians of modest means and indigenous descent began searching for interlocutors outside of the realm of the traditional party system. These they found in the form of social movements-cum-parties such as the MAS and the Movimiento Indígena Pachakuti (MIP), parties whose popular following exhibited an exponential rise after the turn of the millennium (Van Cott 2005). Contemporaneous with a shift in sympathies toward indigenous parties, considerable numbers of Bolivians also chose to forgo reliance on the customary channels of demand-making in representative democracies (consultation with elected representatives, voting at regularly scheduled intervals, lobbying, etc.). Instead, they began to make demands on the state in a much more direct fashion: through blockades, marches, and occasionally, the destruction of public property. In short, the neopatrimonial dynamics inherent in Bolivia's consensus democracy bequeathed a legacy of disaffection and deep-seated suspicion of elected representatives, one that encouraged participation through direct (even violent) action rather than through institutionalized channels of democratic representation. The situation does not augur well for the prospect of democratic stability in Bolivia today. Given the association in the popular mind between coalition politics, corruption, and the division of administrative spoils among Bolivia's traditional parties, consensus itself has become a bad word in the contemporary Bolivian lexicon. Not surprisingly, policymaking under the Morales administration has taken on the form of a series of all-or-nothing pitched battles between the government and opposition. The degree of political polarization has reached a level unseen in that country for at least two decades. Sadly, the story of how Bolivia's consensus democracy fell apart is at its heart the chronicle of a death foretold. Time and again, independent academicians and researchers from the United Nations and the World Bank warned that disaffection with rampant corruption might induce a scenario of outright party system collapse, as had occurred in Venezuela only several years prior to the tumultuous events of the Water War (PNUD 2002; World Bank 2000; Whitehead 2001). Repeatedly, Bolivia's traditional politicians seemed to recognize that the party system was edging dangerously close to the precipice. Yet, as we shall see, the tepid reforms from within that did occur came too little, too late. Although an exploration of the topic of corruption in Bolivia will not provide us with a complete understanding of the reemergence of zero-sum politics in this country, it does provide us with a good sense of why the consensus model lost its luster. A better understanding of the scope, sources, and consequences of corruption in Bolivia thus gives us a window into the roots of Bolivia's current

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instability, as well as similar governability crises that have affected the Andean region in recent years (see Arnson 2001; Drake and Hershberg 2006; Mainwaring et al. 2006).

Patterns of Corruption in Bolivia Bolivia is commonly thought to be one of the countries in Latin America that most suffers from corruption. A sense of the magnitude that external observers attach to the problem in Bolivia is evident by its placement on two widely used indices of perceptions of corruption: the Transparency International Corruption Perceptions Index and the World Bank Institute's corruption control index. According to the former, in 2006, Bolivia was perceived to be the seventh most corrupt country in Latin America and fifty-fourth in the world out of 163 (see Table 1.1 in the introductory chapter by Morris and Blake). According to the latter, Bolivia's placement in 2005 was fourth most corrupt in Latin America and forty-ninth out of 204 in the world. Even more important than external perceptions is the gravity that Bolivian citizens themselves attach to the problem. A sense of this can be obtained by examining recent survey research. According to a 2004 citizen survey conducted as part of the Latin American Public Opinion Project (spearheaded by Mitchell Seligson of Vanderbilt University), 74 percent of Bolivian citizens feel that corruption among public functionaries is either "very generalized" or "generalized." An earlier survey that prompted citizens to estimate the percentage of public functionaries that were corrupt showed that the median Bolivian respondent believes that a remarkable 80 percent of public employees fit this description (Latinobarometro 2001). That corruption in all its forms is a serious problem in Bolivia is clearly not a matter of contention. Nevertheless, much insight about the root causes of corruption and its social consequences in Bolivia can be gained by exploring the location of corruption. The location of corruption refers to the sites of citizenstate interaction in which corrupt exchanges most commonly take place. These include but are not limited to interactions with the police, courts, and the myriad institutions that compose the public bureaucracy. I begin my examination of the location of corruption by considering who the most common perpetrators of corruption are. In this respect, Tables 3.1 and 3.2 juxtapose citizen responses about the types of state agents most likely to accept bribes with reported personal experiences with corruption, based on the 2004 Latinobarometro and LAPOP surveys, respectively. Police are seen as being the state agents most amenable to accepting bribes in Bolivia. When queried about the likelihood that bribery could be successfully utilized to avoid arrest, approximately 54 percent of Bolivian respondents declared that there would be a "significant" or "great" chance of this happening. Consistent with

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Table 3.1 Level of Corruption Based on Perception Likelihood of Bribery (in percentage) Response No chance Little chance Depends on the case Significant chance Great chance

Police®

Judgeb

Ministry Official0

14 13 19 27 27

14 18 25 21 21

18 18 23 20 21

Source: Latinobar6metro 2004. Notes: a. Question: Imagine that a foreign friend of yours, who does not know your country, asked you about the chances of bribing the police in order to avoid arrest. What would you say to him? b. Question: If he asked you about the chances of bribing a judge in order to obtain a favorable sentence? c. Question: If he„asked you about the chances of bribing someone in a government ministry in order to obtain a contract or concession?

Table 3.2 Level of Corruption Based on Personal Experience in Bolivia

Question During the past year, has a police officer asked you to pay a bribe? Have you had to pay a bribe in the courts during the last year? Has a public employee solicited a bribe from you during the past year? In order to complete a bureaucratic procedure (to obtain a license, for example) in the municipality over the last year, have you had to pay some amount greater than that required by the law? In your workplace, has anyone solicited an inappropriate payment during the last year? To be attended to in a public hospital or a health clinic during the last year, did you have to pay a bribe? In the primary or secondary school that your children attend, have you had to pay a bribe during the last year?

Percentage Responding "Yes" 21 4 15 8 8 7 6

Source: Seligson et al. 2004.

this perception, the solicitation of bribes by the police appears to be the most common form of corruption victimization in citizen-state interaction in Bolivia, 21 percent of citizens having been asked to pay a bribe by the police in the year preceding the survey. Magistrates are also considered highly corrupt in Bolivia— 42 percent of respondents felt that bribing a judge would produce a "significant"

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or "great" probability of obtaining a favorable sentence—although personal experience with bribery in the judicial system seems to be more limited (only 4 percent of citizens reported having to pay a bribe in dealings with the courts in the year prior to the survey). Bureaucrats are seen as amenable to accepting bribes, and they apparently solicit bribes with considerable frequency. In one survey, 41 percent of Bolivian survey respondents declared that the chances of bribing an employee of a government ministry to acquire a state contract were "significant" or "great," while in the other survey, 15 percent declared that a public employee had solicited a bribe from them in the previous year. Smaller but noteworthy proportions of Bolivian citizens also experience corruption at the hands of municipal officials, educational authorities, and medical personnel. All told, 35 percent of Bolivian citizens reported having been solicited to pay a bribe in one or more aspect of citizen-state interaction in the year prior to the LAPOP survey. A second way to think about the locational patterns of corruption is to assess variation across the different institutions that comprise the public bureaucracy. Although citizen surveys in Bolivia consistently show that the lion's share of bureaucrats are popularly believed to engage in corruption, these beliefs mask a remarkable degree of variation in the institutional environments encountered across bureaucratic agencies. Certain institutions—such as Bolivia's regulatory agencies (superintendencias) and its Central Bank—have achieved degrees of administrative professionalism and probity that would rival the best performing public institutions in the region. Other institutions—such as the Ministries of Sustainable Development, Agriculture (renamed Peasant Affairs), Economic Development, and the Productive and Social Investment Fund—have been deeply mired in patronage networks in recent years, exhibiting levels of political penetration and spoils politics that are truly noteworthy even by regional standards. Finally, one finds agencies such as the Customs Service, the National Road Service (renamed the Bolivian Road Administration), and the National Tax Service, once absolutely notorious for being cash cows for Bolivia's traditional parties, which appear to have made important strides in institutional reform since the turn of the millennium. A visual sense of the heterogeneity in corruption encountered within the Bolivian public sector is provided by Figure 3.1, which displays the proportions of public servants in a variety of bureaucratic agencies that reported they had used the resources of their institution—at some point in their service in the institution—for the benefit of a political party (political corruption) or for their own benefit or that of their family (personal corruption). The data come from a large-scale survey of public employees that I conducted in Bolivia, Brazil, and in Chile between June 2003 and November 2005 (2,859 civil servants in thirty different institutions participated in the project).1 The figure suggests that while corruption in its various manifestations can be readily encountered in the Bolivian bureaucracy, its distribution is far from uniform. Understanding how different aspects of the institutional environment produce greater or lesser

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degrees of corruption in bureaucratic agencies is thus crucial for getting a better handle on the causes of corruption in Bolivia. This issue is explored in greater detail later in the chapter as we examine how levels of bureaucratic politicization, the stability of bureaucratic career paths, and institutional mechanisms of corruption control contribute to variation in levels of political corruption, as well as how variation in political corruption affects institutional efficiency.

Institutional Determinants of Corruption in Bolivia In this section, two factors that contribute to contemporary Bolivia's difficulties with corruption are examined: (1) Bolivia's electoral institutions, especially the manner in which they undermine horizontal and vertical accountability; and (2) the weak institutionalization of the civil service. Party Bosses, Not Citizens: Electoral Rules and Ineffective Democratic Accountability A distinguishing feature of Bolivian party politics is the centrality of party bosses in myriad aspects of political life. For better or worse, Bolivian party bosses are the gatekeepers of political careers and the negotiators of employment in the public bureaucracy. Moreover, within Bolivia's main political parties, power has traditionally been concentrated in the hands of a very small number of elite actors. These aspects of the political environment—the centrality of party bosses and their remarkable power over their party organizations— have produced a distinct party-centric tint to the manner in which political corruption manifests itself in Bolivia, and they have greatly facilitated state capture by political parties. In general, party bossism and the electoral institutions from which it springs have contributed to corruption in Bolivia in two important ways: (1) bossism weakens the ability of the Congress to hold the executive to account—horizontal accountability emanating from the Congress is a dead letter because many legislators' future political careers are totally dependent on the party bosses who have organized the governing coalition; (2) electoral rules that encourage party bossism—such as closed-list proportional representation and the use of a fused ballot for presidential and Congressional elections—weaken the ability of voters (vertical accountability) to hold elected representatives to account through retrospective voting (since punishment votes are diffused across entire party lists and multiple offices). Weak horizontal accountability: Broken checks and no balance. One of the purported virtues of presidential government is that the separation of powers

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between the executive and legislative branches endows each side with the capacity to sanction transgressions committed by the other. As the former branch—with its control of the vast bureaucratic apparatus—tends to reign supreme in most Latin American democracies, emphasis by scholars in the region is usually placed on the capacity of the Congress to check the usurpation of power and corrupt action by the executive. Such capacity is a key component of horizontal accountability—the ability and willingness of legally empowered state agencies to check the contravention of laws by other agencies—which, in turn, is widely accepted to be a necessary condition for long-term good governance (see O'Donnell 2003). Horizontal accountability emanating from the Congress is sorely lacking in Bolivia, and an examination of some of the country's more fine-grained democratic institutions helps explain why. If the system of checks and balances is to work, there must be some incentive for members of the legislature to bring the transgressions of the president, his cabinet, or the bureaucratic agents that serve at the president's pleasure out into the light. Moreover, once such transgressions become public, it must be the case that members of the governing coalition—not just members of the opposition—are willing to act to punish the offending individuals. For instance, initiating criminal proceedings against a sitting president, vice president, minister of state, or prefect in Bolivia requires a two-thirds vote of approval in the Congress, a feat only possible if at least some members of the governing coalition are willing to condemn superiors within their own party or coalition. The nature of electoral rules in Bolivia makes it unlikely that rankand-file legislators would undertake such risky action against the wishes of top political operators in their parties. Moreover, Bolivia's electoral rules have long made it extremely difficult for independent-minded legislators to profit electorally from exposing corruption within the upper echelons of their own coalition. In short, the rules of the democratic political game in Bolivia neuter even the potential threat of congressional sanction against a wayward executive. Why is the threat of congressional sanction in Bolivia an incredible one? The answer rests with the manner in which legislative careers are made and broken. The Bolivian electoral system introduced in 1956 dictated that closedlist proportional representation (CLPR) along with a fused ballot would be the modality by which postulants for legislative office would compete for seats. Until fairly recently, voters cast a single party-list vote for the office of the president, vice president, the Chamber of Deputies, and the Senate. Because party lists in legislative contests were closed, voters could not indicate a preference for any particular postulant for legislative office. Instead, seats were allocated to candidates within party lists as a function of the ranking of candidates established by party leaders. Since party leaders determined the rankings, they in effect determined who was an "electable" candidate and who was not. In this sense, party leaders were (and remain) the gatekeepers of political careers in Bolivia, a state of affairs that cements their control over political aspirants and imposes

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discipline on the electoral and legislative behavior of the rank and file (see Coppedge 1994 for a discussion along similar lines of the Venezuelan case, and Jones 2002 for a discussion of the Argentine case). Beginning with the general elections of 1997, the system underwent some modification, and the country now utilizes a mixed-member PR system in which 68 of its 130 deputies are elected in single-member districts (SMDs) and the rest in nine multimember CLPR districts. Instead of being presented with a single fused ballot, Bolivian voters are now allotted two votes during general elections: a fused vote for the party of their preference for the presidency, vice presidency, the Senate, and half the Chamber of Deputies, and another vote for the deputy of their choice in the single-member district to which they belong. In theory, the introduction of SMDs should have weakened the power of Bolivia's party bosses. However, since party leaders retain control over who gets to run in the single-member districts (i.e., nomination control), they still enjoy the power to make or break the careers of even these individuals.2 The combination of CLPR and the fused ballot in Bolivia has structured the political game in such a way that attempts to break ranks and push for the prosecution of members of the executive branch in cases of offenses against the public patrimony would be tantamount to political suicide. Historically, this has been so for three reasons. Firstly, during the heyday of the traditional party system (1982-2003), governing coalitions were very carefully and publicly orchestrated by top party leaders in Bolivia. Thus, any legislator in the governing coalition contemplating denouncing wrongdoing on the part of the executive branch was well aware that he could not do so without undermining the position of his own party leadership—even if his own party was not directly implicated in the wrongdoing. Under the Morales administration, a single party—the MAS—heads the government, not a coalition. In this case, it is even clearer that a MAS legislator cannot denounce corruption in the executive without implicating his own party leadership to some degree. Since one's party leadership controls access to the ballot for all legislative posts, as well as the ranking of one's candidacy on party lists for most posts, whistle-blowing on one's party or coalition is especially threatening to a political career in Bolivia. Add to this the fact that party leaders have traditionally also been responsible for allocating posts in the public administration, and it becomes clear that whistle-blowing can spell the end of a career in public service. Secondly, even in the off chance that a contrarian might somehow regain access to the ballot for a given legislative contest, until 1997—when the SMDs came into effect—there was no way for voters to reward such noble behavior. Since all voting was via closed-party lists, a vote for the contrarian would have been at the same time a vote for the corrupt party leadership the contrarian opposed. Thus, claiming credit for uncovering or attempting to punish corruption within one's party or coalition was simply not a viable strategy for legislators.3

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Finally, Bolivia's electoral rules ensure that the electoral incentives of legislators align remarkably closely with those of their party leaders. Any action that might sully the reputation of one's party leader is likely to diminish one's own electoral prospects as well. The central reason for this rests with the automatic presidential coattails entailed by the fused ballot. Since voters cast a single vote for the executive and more than half of the National Congress, a strong electoral showing by a presidential candidate directly translates into electoral success for a wide swath of his party's legislative candidates. Because presidential candidates in Bolivia have traditionally also been the national-level bosses of their respective political parties, the fused ballot means that what is good electorally for the bosses is necessarily also good for incumbents in the legislature. Thus, not only do legislators in the ruling coalition have no incentive to expose the dirty dealings of the top party leadership, they stand to benefit directly from those dealings. To the extent that the resources from corruption are funneled into presidential election campaigns, for instance, the fused ballot means that they automatically also bolster the electoral prospects of more than half of a party's legislative candidates. In this way, the electoral benefits of political corruption are widely shared. Taken together, the impact of CLPR and the fused ballot in Bolivia has been such that the party bosses have historically had little reason to fear the sting of an assertive Congress. Weak vertical accountability:

Information

deficits and the

circumscribed

choices of voters. In theory, Bolivia's difficulties with horizontal accountability could be counterbalanced to some degree were the institutional and societal conditions in this country sufficiently favorable to vertical accountability. Vertical accountability exists when citizens are able to identify transgressions by their elected leaders and use the vote to punish these transgressions. In order for vertical accountability to emerge, three conditions must exist: (1) a wide swath of the citizenry must have access to sources of political information, (2) the information citizens have about politics must include timely and reliable news about misdeeds committed by officeholders, and (3) the institutional rules that govern the process of voting must allow citizens to effectively separate the wheat from the chaff—that is, punish politicians who have transgressed and reward those who have not. The baseline requirement for vertical accountability is that citizens have access to a regular flow of political information. In this respect, Bolivia does better than one might expect given its overall level of development. In the 2004 LAPOP survey, for instance, 77 percent of respondents declared they customarily listened to a news program on the radio, 87 percent said they customarily watched a news program on television, and 61 percent said they followed the news in print. All together, 96 percent of respondents declared they customarily

Bolivia

67

followed news in at least one of the three media. Thus, lack of access to political information is not a major hindrance to vertical accountability in Bolivia. A second requirement for vertical accountability is that the political news available to citizens must be sufficiently informative; that is, political news must provide an accurate depiction of actual elite political behavior, including any instances of malfeasance. Here the Bolivian experience is decidedly more mixed. On the positive side, repression of the media has traditionally not been a problem in democratic Bolivia. From the early 1980s (when a wave of military dictatorships came to an end) until very recently, overt attempts by government officials and nonstate actors to muzzle the press via physical intimidation have been quite rare. Nor has government censorship been an obstacle to the coverage of elite political behavior. As a result, Bolivia has often ranked favorably compared to other countries in Latin America on international indices of press freedom. On the negative side, a case could be made that the relative safety of journalistic careers in Bolivia (until recently) was to some degree an artifact of selfcensorship. During the hegemony of the traditional party system, Bolivian media outlets largely refrained from engaging in the type of "watchdog journalism" that characterizes the reporting of counterparts in neighboring countries such as Argentina and Brazil (Waisbord 2000). One of the contributing factors to the timidity of the Bolivian press was the enormous concentration of ownership of the means of communication in the hands of a small number of media barons, a considerable number of whom were important figures in the traditional party system themselves (Bolano et al. 2006).4 The relative scarcity of detailed investigative reporting by no means led Bolivian citizens to think that corruption was not a problem—their own personal experiences informed them that the opposite was true—but it prevented them from having a clear sense of which sets of politicians belonging to the traditional party system were active players in corruption networks. This, in turn, probably helped contribute to the antisystemic reaction of citizens toward corruption, as documented in a later section of this chapter on the toll of corruption on Bolivia. It should be mentioned that in the several years prior to the publication of this chapter, the frequency of investigative reporting in Bolivia has increased (evinced by the coverage of the La Prensa newspaper of the avales [performance bonds] scandal in the Morales government, discussed later in this chapter). Yet because of the somewhat meek role of the press in investigating corruption during much of Bolivia's earlier democratic history, contemporary efforts at investigative journalism are often dismissed by government sympathizers as politically motivated attack jobs. Disenchantment with the media among social groups allied with the MAS has even been manifested in a spate of recent physical attacks on the press.5 All things considered, the capacity of major media outlets to serve as credible conduits of information about corruption appears to be somewhat limited, at least in the eyes of many Bolivian citizens.

68

Corruption and Politics in Latin America

Even if all of the informational preconditions for vertical accountability were present, its realization would still require that citizens be able to use the vote to punish corruption. Yet the capacity of citizens to use the vote to punish corruption is not a constant in democracies—it may vary in important ways across countries as a function of the electoral system in force. As it turns out, the same institutional rules that undermine horizontal checks and balances in Bolivia also undermine the capacity of citizens to hold their elected leaders to account. CLPR or mixed-CLPR systems, such as Bolivia's, are generally recognized as inhibiting vertical accountability because of the obstacles they present to effective retrospective voting on the part of the citizenry (Kunicova and RoseAckerman 2005; Persson, Tabellini, and Trebbi 2003). Suppose, for example, that voters have detailed information about corruption and they would like to single out a particular legislator for electoral punishment due to a past transgression. Electoral systems such as open-list PR and the single nontransferable vote, among others, provide voters with a means of doing this without having to compromise one's partisan loyalties. This is because such systems allow voters to cast a vote for one or more of various legislative candidates running under a given party label. CLPR systems, on the other hand, present voters with a much blunter instrument for effecting accountability. If the transgression of a particular legislator is severe enough, voters can bolt the party entirely and cast their lot with another party list. They cannot, however, maintain their partisan allegiances and vote against the offending legislator. If only a small set of legislators within a party is implicated in a particular scandal, this means that voters who choose to switch their party-list vote must also punish the majority of legislators on the list who have committed no offense. The coarseness of legislative elections under CLPR in Bolivia as an instrument of vertical accountability is compounded by the presence of the fused ballot. With a fused ballot, a punishment vote is not only diffused across an entire party list, but it is also diffused across the party list at a variety of different levels of electoral contestation. Unless a voter feels more strongly about casting a punishment vote against a particular legislator in his favored party in the Chamber of Deputies, for instance, than he does about casting a vote of confidence in favor of all of the other members of the same party also running in the PR seats for the Chamber in the department, plus all of the members of the party running for the Senate in the department, plus the party's presidential and vicepresidential candidates, then the punishment vote will not be cast. The upshot is that, in normal circumstances, punishment votes were not cast much in Bolivia, and incentives for good behavior on the part of legislators were weak. During crises such as those that faced the country after the turn of the millennium, however, punishment votes suddenly came in a flood, undermining not only the careers of particular politicians but the entire party system.

Bolivia

Bolivia's Weakly Institutionalized

69

Bureaucracy

Political corruption in Bolivia has been greatly encouraged by another feature of the institutional environment—a weakly institutionalized public bureaucracy characterized by massive amounts of patronage. Distributing bureaucratic posts to the party faithful in Bolivia has traditionally served two interrelated objectives. First, it allows parties to reward militants who have invested time and energy in campaigning on behalf of the party in past elections, thus ensuring that party militants understand there are concrete material benefits ("selective incentives") to be had for engaging in party work. Second, it allows party leaders to place loyal party militants in strategic positions in the bureaucracy, thus facilitating the (illicit) use of the state as a source of electoral resources. These two objectives are more readily served if civil service protections are weak and party elites can implant or dismiss militants at will. Such conditions have traditionally been present in many bureaucratic agencies in Bolivia. Table 3.3 captures a sense of the fluidity of bureaucratic careers and the weight of political pressures within bureaucratic agencies in the country. Based on responses from the public-employees survey, the table displays information on the longevity of bureaucratic careers, perceptions of job stability, and the degree of political intromission in the bureaucracy across a variety of Bolivian agencies. The table shows that in specific sectors of the Bolivian state—especially the government ministries—one finds a combination of massive staffing by party militants, large segments of the employee base who have served less than a single year, large numbers of employees who believe their employment will be terminated in the near future, as well as large numbers of employees who appear to live in constant fear of the actions of party leaders. Bolivia's weak bureaucracy has interacted with its electoral system to facilitate the use of state resources by political parties. The weakness of the civil service has made it relatively easy for party leaders to install and remove their militants from the public bureaucracy at their leisure. The centralization of control over political careers produced by Bolivia's electoral system has meant that those party militants installed in bureaucratic posts are highly receptive to the overtures of party elites, and especially so if they are interested in pursuing a political career after leaving the bureaucracy. This is so because bureaucrats with political ambition know that any future advancement in the electoral arena will depend on the stock of personal capital they have built with party leaders. In this way, the political penetration of the bureaucracy in Bolivia has essentially allowed party leaders to transport the power they command in the legislative and electoral arenas to the bureaucratic arena, with fairly predictable consequences for administrative probity and political corruption. Low-level bureaucrats who refuse to tow the party line can be easily dismissed from their jobs. Higher-level bureaucrats with political ambition, in turn, are keenly aware that their prospects

70

Corruption and Politics in Latin America

Table 3.3 Fluidity of Bureaucratic Careers a n d Partisan Control of the Bureaucracy in Bolivia, 2003

Percentage of Employees Having Worked for Less Than 1 Year in Their Institution

Percentage of Employees Who Believe It Is "Highly Probable" They Will Lose Their Job in the Near Future

Percentage of Employees Who "Strongly Agree" That "Party Leaders Can Easily Punish Functionaries Who Do Not Obey the Orders of the Governing Parties"

Agency

N

Percentage of Employees Who Are Members of a Political Party

Sustainable Development

89

62

49

39

44

Economic Development

67

39

34

30

37

Peasant Affairs

73

24

35

32

31

Productive Social Fund

43

13

13

12

46

Agrarian Reform

53

10

40

55

57

General Superintendency Central Bank Agrarian Superintendency National Road Service Pensions, Securities, and Insurance

23

13

9

22

13

183

8

6

6

43

16

7

31

38

44

109

7

19

11

46

50

6

17

14

49

Customs

107

6

10

16

49

Tax

138

5

34

14

33

Hydrocarbons

27

4

8

15

52

Superintendency of Banks

60

3

2

2

47

Source: Survey of public employees conducted by the author (Gingerich 2006b).

for career advancement will depend on maintaining the good graces of the party leadership. The towering control of party elites over rank-and-file militants in the bureaucracy in Bolivia has meant that the latter can be easily pressured to engage in risky or illicit activity for the benefit of their party. An indicator of this is presented in Figure 3.2. The figure displays the proportion of party militants in the bureaucracy in Bolivia that was estimated to have used the resources of their institution for the benefit of a party (using the randomized-response survey technique), along with the proportions estimated for Brazil and Chile. The proportion of militants having used resources for partisan benefit in Bolivia was very

Bolivia

71

Figure 3.2 Proportion of Party Militants Having Used Institutional Resources for Partisan Benefit in Bolivia, Brazil, and Chile 0.6-,

0.5-

e o '5

o a, o

0.4-

0.3-

CO

B

cfl

w

0.2-

0.1-

0.0-

Bolivia

Brazil

Chile

N = 137

N = 77

N = 50

Source: Data is from a survey of public employees conducted from July to October 2003 (Gingerich 2006b). Note: 90 percent confidence intervals denoted by vertical bars.

large—nearly half—and it was substantially larger than those proportions estimated for Brazil and Chile (countries where electoral institutions place more power in the hands of candidates than party bosses), thereby providing preliminary evidence for the claim that the pressures associated with party bossism in Bolivia have contributed to political corruption within the state in that country.

The Toll of Corruption in Bolivia: Consequences for State Capacity and the Health of Representative Democracy The consequences of the forms and levels of corruption found in present-day Bolivia for state capacity and the well-being of representative democracy have

72

Corruption and Politics in Latin America

been profoundly negative. With respect to state capacity, the high degree of politicization encountered in certain segments of the Bolivian state apparatus has fostered an environment in which political corruption flourishes; political corruption, in turn, has greatly reduced the efficiency with which administrative agencies perform their basic functions. The perception of many Bolivians that the public sector is corrupted to the core has increased the inclination of many citizens to make demands upon the state through direct action in the streets, thus circumventing institutionalized channels of representation such as political parties and the Congress. Rather than encouraging greater democratic deliberation and ensuring that enacted policy maps more closely onto citizen preferences, this dynamic, if left unchecked, holds the potential to degenerate into a form of "praetorianism"—a state of affairs in which policymaking is reduced to a naked struggle of who can get the most bodies on the pavement or otherwise introduce insurmountable disruptions into the business of everyday life (Huntington 1968). Much like the situation of Weimar Germany described by Berman (1997), the delegitimation of political parties in Bolivia has fueled a massive growth in the number and political power of civic associations, many of which now constantly bombard state authorities with a cacophony of particularistic demands (Mayorga 2005). As shown by the events of February and October 2003 in La Paz and the January 2007 conflict in Cochabamba, demand-making by these organizations has all too often taken the form of physical aggression, the sacking and burning of public buildings, and the closure of public roadways. It would seem that the ultimate cost of corruption in Bolivia is that the political cohesion of the republic itself has been placed in question. Corruption and State Capacity

What do the data say about the consequences corruption has imposed on the performance of the bureaucracy in Bolivia? Drawing upon the survey of public employees discussed in the previous section, I estimated a structural equation model that allowed me to simultaneously evaluate—at the level of the bureaucratic agency—the impact of politicization, the stability of bureaucratic career paths, and mechanisms of corruption control on the level of political corruption, on the one hand, and the impact of political corruption on the level of bureaucratic inefficiency, on the other. The central idea of the estimation is to identify the broad features of bureaucratic agencies that are most important in contributing to political corruption as well as to examine the impact of political corruption on institutional performance. Given the relatively small number of institutions surveyed in each country, the statistical analysis utilizes the results from all the institutions surveyed in Bolivia, Brazil, and Chile. In the language of structural equation modeling, institutional politicization, the stability of bureaucratic career paths, and corruption control are conceptualized

Bolivia

73

as latent variables, that is, unobservable factors that exert a linear influence on a set of directly observable manifest variables. The manifest variables are thought to be indicators of the latent factors. The structural equation framework essentially collapses all of the information from the directly observed indicators into the three dimensions represented by the latent factors, thus permitting the study to gauge the impact of each on political corruption. 6 Political corruption was initially measured as the proportion of individuals in a given institution who indicated that the resources of their institution are frequently used for the benefit of political parties (the question was asked in randomized-response format). In order to control for country-specific notions of what "frequent" resource use might be, the variable utilized in the analysis was the difference between an institution's level of political corruption and the average level of political corruption for all of the institutions surveyed in the corresponding country. Institutional inefficiency was initially measured as the percentage of respondents in an institution that categorized their institution as "inefficient" or "highly inefficient" in performing its duties. Again—in order to control for differences across countries in perceptions of what constitutes bureaucratic inefficiency—the variable utilized in the analysis was the difference between this percentage for a given institution and the average for all of the institutions surveyed in the corresponding country. With the key variables measured in the manner described above, the structural equation model calculated the effect of the three latent variables on political corruption and the effect of political corruption on institutional inefficiency. 7 The bottom line of the estimation was this: politicizing bureaucratic agencies seems to be the surest way of increasing political corruption within them and, as a result, of reducing bureaucratic efficiency. Of the three latent variables, only politicization was estimated to have a significant impact on variation in political corruption. The effect was in the expected direction (more politicization, more political corruption) and substantively large. Political corruption, in turn, was estimated to have a statistically significant impact on institutional inefficiency. This finding is particularly troubling for Bolivia since, as discussed in the previous section, this country suffers from particularly severe levels of politicization in a number of bureaucratic agencies. Corruption and the Health of Representative

Democracy

How does corruption affect the prospects for democratic consolidation? Is there empirical evidence to support the claim that citizens' perceptions of and experience with corruption are important contributors to dispositions and behavior hostile to the institutions of representative democracy in Bolivia? In order to examine the impact of perceptions of corruption on dispositions hostile to the institutions of representative democracy in Bolivia, I conducted a statistical analysis of answers to a question contained in the 2001 Latinobarometro

74

Corruption and Politics in Latin America

survey that queried respondents about the degree to which they would approve or disapprove of closing Congress and abolishing political parties. As the possible responses to the question consisted of ordered categories, ordered probit regression was the statistical method adopted to analyze the data. An attractive feature of the survey was that it asked respondents a hypothetical question that provides a straightforward, continuous measure of an individual's belief about the prevalence of corruption within the state. Respondents were told to imagine that the total number of public functionaries in the country was equal to 100. They were then asked, of these 100, how many functionaries they thought would be corrupt. A respondent's answer to this question was the primary explanatory variable of interest in the two regressions conducted. Potentially confounding variables included in the analyses consisted of questions tapping into ethnic self-identification, an individual's perceived wealth (relative to that of his community), the ability of one's income to cover basic costs, a variable measuring an individual's consumption of news, as well as variables for age and sex.8 Figure 3.3 shows the results of a simulation analysis calculating the estimated effect of varying the "average" Bolivian's belief about the prevalence of corruption from its minimum to maximum on approval for shutting down Congress and political parties, holding the potentially confounding variables constant at their sample means (the corresponding table of regression coefficients is available upon request). The impact of a change in beliefs is quite consequential for the likelihood that an individual denotes either approval of the closing of Congress and political parties or disapproval of such an action. In the former case, varying the perception of corruption from its minimum to maximum value leads to an increase in the probability of approval of. 113 (from .179 to .292). In the latter case, varying the perception of corruption from its minimum to maximum value leads to a decrease in the probability of disapproval of .126 (from .349 to .223). It would thus appear that beliefs about corruption are an important predictor of dispositions hostile to representative democracy. Moreover, the data are consistent with the notion that the more Bolivians have come to view the state as a site of rampant corruption, the more they have turned away from traditional parties and the Congress as outlets to express grievances and vehicles for demand-making. Perceptions of corruption can be generated in myriad ways, not all of which stem from an individual's direct exposure to or knowledge of actual acts of corruption. Davis et al. (2004), for instance, find that ideological polarization contributes to perceptions of corruption, with sympathizers of parties ideologically distant from the ruling coalition more likely to perceive extensive corruption in government than do sympathizers of parties ideologically close to it. So if factors such as partisan bias can drive perceptions of corruption, it is possible—at least in theory—that citizens' own experiences with corruption might not be an

Bolivia

75

Figure 3.3 Perceptions of Corruption and Dispositions Hostile to the Institutions of Representative Democracy in Bolivia Approve

Somewhat Approve

0.6-

!> 0.41£Ì S. 0.2-

o.o60

Perception of corruption within the state

Somewhat Disapprove

Disapprove 0.6

0.4 -

g 0.4£cfl — ê

100

Perception of corruption within the state

0.6-

Xi

80

0.2-

£

o.o- T 0

1 20

1- n 40 60

r80 100

Perception of corruption within the state

0.2 0.0

l 60

1 80

100

Perception of corruption within the state

Source: Latinobarometro 2001. Note: Survey participants were asked whether they would approve, somewhat approve, somewhat disapprove, or disapprove of closing down the Congress and abolishing political parties. In each graph, 90 percent confidence intervals are denoted by dotted lines.

important factor behind hostility to the institutions of representative democracy in Bolivia, even though their perceptions of corruption are such a factor. In order to gauge the impact of actual exposure to corruption, I utilized data from the 2004 Bolivia Democracy Audit (BDA), directed by Mitchell Seligson of Vanderbilt University. The 2004 BDA survey presented respondents with a series of seven questions asking if a bribe was required or solicited in the previous year during the course of dealings with the police, public employees, municipal authorities, authorities in one's workplace, the judiciary, medical personnel, or educational authorities. Following Seligson (2002a), I utilized the

76

Corruption and Politics in Latin America

responses to these questions to produce a corruption victimization index. The index consisted of the sum of seven dummy variables indicating that an individual had been exposed to a particular form of corruption in the previous year. The victimization index varied from zero to seven, with a mean value of .709. Conceptually, the corruption victimization index provides a summary measure of an individual's direct exposure to acts of corruption imposed upon her in the year prior to the survey. In two different probit regression analyses, I examined the impact of exposure to corruption on self-reported participation in antigovernment protest activity. As the 2004 BDA survey was conducted shortly after the tumultuous events of October 2003 and 2004, it is a particularly useful instrument for measuring such outcomes. In this regard, respondents were queried as to whether or not they participated in the October 2003 protests that overthrew the Sánchez de Lozada government and whether or not they participated in protests against the Mesa Gisbert government. Included as confounding variables in the regression analysis are responses to a set of three cultural self-identification questions (respondents were asked to denote the degree to which they identify themselves as belonging to the Aymara, Quechua, or "Camba"—Santa Cruz—cultures, respectively); controls for family income, ideological self-placement on a left-right scale, the size of the municipality in which the respondent lives, the respondent's formal educational level, sex, age, a question that asked respondents about the degree to which they approved of the export of natural gas to Chile (preventing the export of gas to Chile was one of the major stated objectives of the protest movements that overthrew the Sánchez de Lozada government); and a set of indicator variables denoting whether or not the respondent participated frequently in neighborhood associations (juntas vecinales), professional organizations, or territorial base organizations, respectively.9 The probit regression analyses of the impact of corruption victimization on participation in the protests against the Sánchez de Lozada and Mesa Gisbert governments revealed that corruption victimization not only influences hypothetical approval for aggressive political action, but also has a major impact on actual participation in such action. The substantive effect of corruption victimization on protest behavior suggested by the probit analyses is quite large. For the "average" Bolivian citizen, an increase in the corruption victimization index from zero to seven (varying experienced corruption in the year prior to the survey from zero to positive levels in seven distinct aspects of citizen-state interaction) leads to an increase in the expected probability of having participated in the protests against the Sánchez de Lozada government of .25 (from .10 to .35)—an increase of 250 percent. A similar change in the corruption victimization index leads to an increase in the expected probability of having participated in the protests against the Mesa Gisbert government of .15 (from .03 to .18)—an increase of 500 percent.

Bolivia

77

Having established that exposure to corruption was an important determinant of protest behavior in Bolivia, the question remains as to why citizens' ire at being subjected to demands for illicit payments was so strongly directed against the traditional parties and national party leaders and not restricted to the particular state agents requesting bribes. It is in this regard that I would suggest that the cuoteo played an important role. The existence of the cuoteo led Bolivians to view corruption as an organized system controlled by those at the very top, rather than a collection of random and unrelated incidents governed principally by the moral bearings of particular state employees. Thus, when Bolivian citizens were confronted with requests for illicit payments during the course of various state-citizen interactions, they held the country's party bosses, the architects of the cuoteo, to be ultimately responsible for the corruption they were subjected to (see Gingerich 2009 for more detailed discussion and analysis along these lines). Taken together, the analyses conducted in this section strongly support the conclusion that corruption was a precipitating factor for the rash of political instability experienced by Bolivia in recent years. At the institutional level, political corruption generated high levels of inefficiency and reduced the quality of public-good provision. At the individual level, both perceived and experienced corruption created disaffection with the institutions of representative democracy and drove many citizens toward direct, and often quite aggressive, forms of political participation.

Anticorruption Initiatives in Bolivia The sorry state of Bolivian public administration is not due to a lack of legal reforms aimed at cleaning up the public sector. In fact, if the volume of legislative initiatives dealing with transparency had any real relationship with transparency as such, Bolivia would find itself among the region's most stellar performers in terms of probity in the public sector. That this is not the case is due to a number of factors. First, most of the anticorruption legislation produced has been dedicated to creating mechanisms to monitor and sanction acts of corruption committed by individuals for personal gain, not for rooting out systematic forms of corruption linked to party funding. As will be shown below, the one law that does address this topic (the Political Parties Law), creates a set of incentives that, at best, does not significantly decrease the attractiveness of using public institutions and employees as a source of funds and, at worst, may even increase the attractiveness of using these sources. Second, Bolivia's political leadership in many instances has failed to respect the laws and institutions that they themselves helped to create and almost invariably has failed to respect the anticorruption initiatives of past governments. In this respect, anticorruption and civil-service reform in Bolivia tend to be highly transient.

78

Corruption and Politics in Latin America

Reform Efforts in the Pre-Morales Period

(1989-2004)

It is useful to organize Bolivia's recent anticorruption efforts in chronological order. The country's legal reforms occurred in two phases. The first phase, begun in the early nineties under the Paz Zamora administration (1989-1993), focused on modernizing the management of public resources writ large. The defining moment of this phase was the creation of the System of Financial Management and Control (Ley SAFCO), signed into law in July 1990. In the years that followed, the SAFCO Law was complemented by supporting legislation that provided the rules necessary to make the system functional. Taken together, the SAFCO Law and the regulations that followed it established Bolivia's current system of financial control and personnel management. In general terms, the SAFCO system was conceived of as an institutional framework that would generate greater accountability in the public sector. SAFCO requires the drafting of annual operating plans in each institution in order to establish program goals and to assist the Ministry of Finance in its decisions on budgetary allocations. The law outlines the duties and powers of internal auditing units, required in each institution, as well as the role of the external control organism (Comptroller General of the Republic [CGR]). In this regard, one of the main innovations of the SAFCO system was the elimination of the "precontrol" function on the part of the CGR. That is, SAFCO did away with Bolivia's old system of prior review and authorization of contracts and payments by functionaries of the CGR. Under the new system, the CGR exercises control exclusively through ex-post audits. Much of the day-to-day review of institutional activities is conducted by the internal auditing units, which are solely dependent on the head of the institution they audit. Although the SAFCO was a step in the right direction, the system's dependence on internal auditors—who can be removed at will by their agency head—leads one to believe that it was developed primarily to clamp down on petty personal enrichment by low-level functionaries and most certainly was not a mechanism for monitoring and sanctioning politically connected bureaucrats. In essence, the SAFCO system is only as good as the appointees who head their institutions. If these individuals are involved in party corruption networks—all too often the case—the SAFCO system does not provide an effective means of sanctioning wrongdoing. The second phase of reform began in the late nineties under the first Sánchez de Lozada administration (1993-1997) and reached its apex during the Banzer administration (1997-2002). This phase, exemplified by the National Integrity Plan (PNI), was characterized by an explicit focus on reducing corruption in the public sector. As part of the PNI, the Bolivian Congress passed the Statute of the Public Functionary (October 1999) and the Law of Political Parties (June 1999), designed to professionalize the civil service and clean up party financing, respectively. A key component of the PNI included measures to reform three

Bolivia

79

public services that had become notorious as cash cows for political parties: the Customs Service, Tax Service, and the National Road Service. Because of the high profile of these institutions in the PNI, and due to the conditional and phased nature of the funding (the project was largely financed by international donors), the three agencies were largely placed on the shelf by Bolivia's political parties in the years immediately following the inauguration of the PNI. The value of this accomplishment should not be minimized. In a survey of public employees conducted by the World Bank from May to August 1999 (prePNI), these three institutions were found to be among the worst performers in terms of perceived levels of corruption and political hiring (World Bank 2000, 56-59). In the survey of public employees that I conducted four years afterward (post-PNI), the relative position of these institutions had changed substantially for the better. Figure 3.4 gives a sense of this improvement. The figure maps out the placement of institutions in Bolivia with respect to institutional politicization, the existence of stable bureaucratic career paths, and mechanisms to control corruption (using factor scores produced by the structural equation model estimated in the previous section of this chapter), as well as the proportion of employees who indicated the resources of their institution were frequently used for the benefit of parties (this question used the randomized-response format). The level of politicization in these institutions was found to be quite low relative to the other institutions surveyed in Bolivia. In terms of the stability of bureaucratic careers, mechanisms for corruption control, and perceptions of the frequency of partisan resource use, these institutions were placed in about the middle of the distribution. Thus, Bolivia's experience with the customs, tax, and road services suggests that effective institutional reform is possible—even in contexts that would appear highly unfavorable to reform. The second phase of reform also included the creation of a set of new institutions designed to serve as watchdogs for various offenses committed in the public sector. The Unit of Financial Investigations was created in March 1997 in order to detect money laundering operations related to corruption, drug trafficking, or organized crime. The Statute of the Public Functionary brought into existence the Superintendency of the Civil Service, an institution charged with guaranteeing that Bolivia's newly created civil-service laws were respected. The Secretariat of the Fight Against Corruption (SLCC) was created in August 2002 to fulfill Sánchez de Lozada's campaign pledge to give then vice-presidential candidate Carlos Mesa Gisbert "irrevocable power" to combat corruption. Although lacking in formal legal power, this institution's mandate included the organization of workshops designed to raise public consciousness about corruption, the support of legislative projects designed to reduce corruption, and the coordination of anticorruption efforts by other public institutions. During the brief government of Mesa Gisbert, the institution became a presidential delegation that responded directly to the president, and it has since been transformed into the Vice-Ministry of Transparency and Anticorruption.

80

Corruption and Politics in Latin America

Figure 3.4 Relative Position of Postreform Customs, Tax, and Road Services in Bolivia as Measures of Patronage and Political Corruption Politicization Index

Index of Bureaucratic Career Paths

Ministry of Sustain. Develop.

Institute of Agrarian Reform Ministry of Sustain. Develop.

Ministry of Econ. Develop.

|

Ministry of Peasant Affairs

|

Ministry of Peasant Affairs

Productive Social Fund

|

Ministry of Econ. Develop.

Institute of Agrarian Reform

|

Tax Service

Road Service

^^^H

Customs

Tax Service

^ ^ H

Road Service

Central Bank

|

S u p e r i n t e n d e d ies

|

Superintendencies

|

Productive Social Fund

[

Central Bank

Customs I

1

1

I

1

1

• • • I

1

1

1

1

1

0.0 0.2 0.4 0.6 0.8 1.0

0.0 0.2 0.4 0.6 0.8 1.0

Index score

Index score

Corruption Control Index

Partisan Resource Use

Productive Social Fund

Ministry of Peasant Affairs

Superintendencies

Ministry of Sustain. Develop.

Road Service

Productive Social Fund

Central Bank

Road Service

Tax Service

Institute of Agrarian Reform

Customs

Ministry of Econ. Develop.

Ministry of Econ. Develop.

Tax Service

Ministry of Sustain. Develop.

Customs

Institute of Agrarian Reform

Central Bank

Ministry of Peasant Affairs

Superintendencies "J

0.0 0.2

1

1

0.4 0.6 0.8

Index score

•• I — I — I — I — I

0.0 0.1 0.2 0.3 0.4 Frequency

Source: Data is from a survey of public employees conducted from July to October 2003 (Gingerich 2006b).

Unfortunately, there are a number of reasons why the aforementioned reforms do not permit one to claim that recent anticorruption efforts in Bolivia have been on the whole successful, even if the overall trend is somewhat encouraging. Firstly, with respect to institutional reform in the customs, roads, and tax services, although it is clear that these agencies were delinked to some extent from the political quota after the introduction of the PNI, it would seem that Bolivia's parties simply shifted their patronage distribution and party financing activities away from these services and toward other institutions where the gaze of foreign donors was less intense (such as the three ministries included

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in the survey, among others). In this way, the overall dependence of political parties on the state as a source of spoils and other electoral resources did not seem to have changed very much, even if the identity of those institutions targeted did. At a more general level, attempts to establish meritocratic patterns of personnel administration in the public sector in Bolivia rarely last much longer than the administration that introduces them. This was as true for the second Sánchez de Lozada administration—which talked up the transparency agenda during the campaign only to give itself over to spoils politics once in power— as it is for the Morales administration, which now appears to be following a similar course. Finally, the proliferation of watchdog bodies seems to have overly fractionalized responsibility for combating corruption, thus making coordination a challenge. As it stands now, at least four different institutions—the Comptroller General, the Ministerio Público, the Vice-Ministry of Transparency and Anticorruption, and the Unit of Financial Investigations—all share responsibility for investigating corruption. One of the reasons Bolivia's parties have had such difficulty in weaning themselves off of spoils politics is because the proceeds of corruption are a central source of political finance. In this regard, a major failing of anticorruption reform in Bolivia has been precisely its inability to address the systematic dependence of Bolivia's parties on illicit sources of campaign finance. An important effort to overcome this problem was the creation of a system of (legal) public funding introduced through the Political Parties Law (1999). In addition to providing public funding for political parties, the Parties Law also outlined punishments for parties caught using institutional resources during electoral campaigns, accepting monies that originate in illegal activities, and forcing nonparty members to contribute to campaign funds. The basic idea was that political parties would each receive a carrot (public funding in varying amounts), some proportion of which they would lose if caught engaging in prohibited activities. The expressed intention of the law was that public funding would make accepting funds from illicit sources appear less necessary and that the potential financial loss associated with doing so would make it less attractive. Yet as we have seen in the preceding sections of this chapter, Bolivian parties' reliance on the public administration as a source of resources for political competition does not seem to have waned much in recent years. Why might this be the case? Firstly, the sums allocated to parties through the public financing scheme are low relative to the spending of parties in general elections (approximately US$10 million is distributed in licit public financing during a general election year; one study estimated that parties spent approximately US$20 million on television advertisements alone in the 2002 general election campaign).10 Since the available public funds are small relative to real overall spending (still an unknown quantity in Bolivia), the potential costs associated with being caught dipping into the till of illicit funds are not particularly great. However, even if

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the amount of public funds available were larger, this would not necessarily solve the problem—the Parties Law creates peculiar incentives that, in certain circumstances, might even strengthen parties' inclination to draw upon illegal funds. These curious incentives derive from two components of the public-financing scheme: the allocation rule and the monitoring capacity of the institution responsible for ensuring compliance. As in most public-financing schemes in Latin America, under Bolivia's Parties Law the amount of funding received by a party is an increasing function of its vote share in the previous general election. This means that if a party were to accept illicit campaign funds in a given period and not get caught, its access to public funds (and ipso facto its vote share) would be greater in the subsequent period (and every subsequent period after that). Similarly, if a party were to accept illicit campaign funds in a given period and get caught doing so, its public funding would be cut that period, immediately reducing its vote share that period as well as its access to public funds (and ipso facto its vote share) in the subsequent period (and every subsequent period after that). Thus, given an allocation rule that ties future public funding to past vote shares, the relative attractiveness of using illicit campaign funds depends on the ability of the relevant monitoring institution to detect instances of illicit campaign financing. Thus, if monitoring is dysfunctional, public campaign finance in the mold of the Parties Law may actually incentivize greater use of illicit funds than if no public campaign finance were available at all. In Bolivia, the institution charged with the monumental task of monitoring party finances is the National Electoral Court (CNE). The CNE had undergone a serious professionalization effort in the early 1990s but later succumbed to internal divisions and severe political pressures shortly after the Parties Law was passed (Lazarte 2005,277-308). With the CNE in crisis in the post-Parties Law period, strict monitoring was a dead letter, and it is little wonder that the Parties Law was unsuccessful in attaining the ostensible goal of greater transparency and probity in party finance. Corruption and Reform During Morales Administration

the

(2005-present)

Immediately upon coming to power, the Morales administration stated that anticorruption would be one of its central goals. The centerpiece of the administration's current anticorruption efforts is the Marcelo Quiroga Santa Cruz Anticorruption Law, which outlines a set of exacting punishments for a variety of corrupt behaviors, raises the status of the Vice-Ministry of Transparency and Anticorruption to that of a ministry (under a slightly different name), and establishes a national anticorruption council (composed of representatives of social movements). After an extensive period of discussion, the law passed the Senate in February 2008.

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In theory, the law represents movement in the right direction. Yet the record of the Morales administration thus far leaves room for concern about the future. Noting that the language of the law would give investigators broad leeway to trace the origins of fortunes, various critics have suggested that the law might lend itself to politically motivated prosecutions that target enemies from previous governments. It does, in fact, seem that certain corruption investigations under the MAS administration have occasionally taken the form of political vendettas. The public indictment and shaming of Juan Antonio Morales Anaya, former head of the Bolivian Central Bank and a well-respected economist, on charges of influence peddling and "anti-economic conduct," would seem to fit this mold, as does the leveling of corruption charges (on flimsy evidence) and preemptive jailing of José María Bakovic (head of the National Road Service during the second Sánchez de Lozada administration). Even more of a concern has been the failure of the MAS to live up to its anticorruption rhetoric in its own relationship with the state bureaucracy. One of the practices that came to symbolize the patrimonial relationship of Bolivia's traditional political parties to the public administration was the imposition of the diezmo, a forced tithe on the salaries of public employees, and which was collected by the political party that had "obtained" a particular state agency during the process of coalition negotiations. Although the diezmo was repeatedly criticized by Morales and the MAS leadership prior to coming to power, recent evidence suggests that the MAS has also engaged in the practice.11 Moreover, the problem appears to go much deeper than just the diezmo. The resurrection of the diezmo occurred simultaneously with a gradual but firm incursion of MAS militants into the spaces of bureaucratic power. There was a massive dismissal of public employees associated with the traditional parties in late December 2006, at which time a special commission of the MAS party leadership was convened to oversee the process of hiring MAS militants in the public sector. 12 Affiliation with the MAS became so important in obtaining bureaucratic posts that a market in avales (formal certificates of participation in the MAS's 2005 electoral campaign) emerged, with high-ranking party officials charging job seekers anywhere from US$200 to US$1,000 for these documents (depending on the post sought). To make matters worse, the misappropriation of public resources for use by social movements allied to the MAS seems to be a growing trend.13 The party's patrimonial relationship to the state has, not surprisingly, already produced corruption scandals of considerable importance. Without question, the most damaging of these has been the recent, much-publicized fall from grace of Santos Ramirez Valverde, former head of the Bolivian state petroleum company, Yacimientos Petrolíferos Fiscales Bolivianos (Bolivian Oil Company [YPFB]), and the man many believed was being groomed to be Morales's eventual successor. Investigations into the murder and robbery of Bolivian businessman Jorge O'Connor on January 27, 2009, have implicated Ramirez in a web

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of bribery during his tenure as head of YPFB (O'Connor was supposedly in the midst of delivering a US$450,000 bribe to Ramirez when he was killed). As a former president of the Senate and the individual charged with directing the party's incursion into the public sector, Ramirez was one of the most important political operators in the MAS party hierarchy.14 As of the time of writing, he sits in jail awaiting trail on corruption charges. In sum, the evidence available thus far suggests that the MAS has reproduced many of the patrimonial practices it routinely criticized in the past, bringing to mind parallels with the first administration of the Workers' Party in Brazil (see Chapter 4 by Taylor). Only if and when the Morales administration is able to implement legislation that hinders its own party's ability to feed off the state, will a real dent in corruption be produced. Otherwise, Bolivia will likely be condemned to repeat the myriad electoral corruption cycles that have characterized its politics in years past.

Conclusion Scholars once argued that political corruption was a necessary, albeit unsavory, ingredient in the process of political development (Huntington 1968; J. Scott 1969). This belief was predicated on the assumption that after a "clientelistic stage" of unspecified duration, machine parties would eventually come to represent citizens on an ideological and programmatic basis, and that public-good appeals would in the end win out over clientelistic ones. The Bolivian case illustrates the dangers associated with a delayed or aborted transition from machine politics to programmatic politics. As machines live or die based on their ability to provide material incentives to voters, they are extremely brittle. Prolonged economic downturns make the efficiency costs they generate seem intolerable to voters, in which case the door may be swung open to antisystem movements willing to overturn the government by any means necessary. Although the Bolivian experience does show that prebendal political organizations with a certain degree of ideological flexibility can purchase political stability for a short while, it also demonstrates how quickly and profoundly the party system may come tumbling down when prebends are in short supply. The collapse of Bolivia's traditional party system has ushered in an epoch of more fragmented, ideological, and conflict-ridden politics. I believe recent trends in Bolivia portend poorly for the quality of democracy in the country in the near future. However, I recognize that some readers will interpret these trends—the intense mobilization of civil society and widespread protest behavior being foremost among these—quite differently than I have. Some may even read these developments as evidence of the blossoming of participatory democracy, a position that could be justified by making appeals to an influential literature on social capital

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that celebrates the high levels of civic engagement and social mobilization that characterize contemporary Bolivia (see Putnam 1993). Nevertheless, I believe that the concern of this chapter regarding the plebiscitary turn in Bolivian politics is warranted for three reasons. Firstly, the process of demand-making by many civic groups in Bolivia has become quite coercive in form, with the threat of violence and the destruction of private property routinely utilized to obtain concessions from the state or intimidate contending nonstate actors. Although loss of life in such actions is rare, it is not an exaggeration to say that the proliferation of coercively inclined civic groups is beginning to undermine the fundamental authority of the Bolivian state. Ultimately, without a monopoly on the means of coercion, it is a foregone conclusion that Bolivian government officials will be unable to effectively provide public goods to citizens (most surely not physical and juridical security), irrespective of what their true intentions are. Secondly, the effectiveness of demandmaking by force has hollowed out the space for mature, carefully considered, democratic deliberation. High-quality democracies are characterized by serious debate about the distributive and efficiency consequences of public policies. In ideal circumstances, democratic deliberation may even produce a degree of learning and compromise among actors on opposing sides of a given policy debate. In Bolivia's hypermobilized political environment, the give and take of democratic deliberation has taken a backseat to attempts to unilaterally impose one's will on political opponents: political learning and compromise have evaporated. Finally, many of the civic groups in Bolivia—both those affiliated with the MAS and those opposed to it—appear to be principally concerned with carving out their particular slice of the economic pie and less interested in the overall performance of the government on matters such as public-good provision or economic growth. In this respect, it is worthwhile to note that much of the impetus toward the patronage-based management of the public bureaucracy under the MAS came from the rank and file of the party, especially individuals belonging to the social movements and unions that played an instrumental role in overthrowing the governments of Sánchez de Lozada and Mesa Gisbert. When civic groups use their organizational might to feed upon the state, it is difficult to argue that the mobilization of civil society has furthered the cause of good government.

Notes 1. In Bolivia, the survey took place from July to October 2003. Confidentiality as to the aforementioned questions was guaranteed through the use of the randomizedresponse survey technique (Warner Model), described in detail in Gingerich (2006b). All of the institutions selected for inclusion were national-level institutions (municipal or other subnational-level institutions were excluded). Moreover, only employees that worked in the central office of a given institution were included in the survey (regional

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offices were excluded). Fifty percent of the employees who fit the eligibility criteria in each institution were chosen at random to participate in the survey (up to a maximum of 250). The surveys were self-administered and anonymous. In figure 3.1, the results for the four superintendencies included in the survey (the Superintendency of Banks, the General Superintendency, the Agrarian Superintendency, and the Superintendency of Pensions, Securities, and Insurance) were pooled due to the small number of employees in these institutions. 2. Moreover, electoral rules for municipal elections also reinforce party leaders' powers of career control. Mayoral candidates and municipal council members run together on closed-party lists, the former being the individuals party leaders have chosen to rank first on their closed lists of candidates to the municipal assembly. Thus, in elections at all levels, the preferences of party leaders are a determining factor of who attains elected office and who does not. 3. The emergence of the SMDs has not improved matters much. Since party leaders in practice control nominations for these seats, the existence of the SMDs has not increased the independence of elected legislators as much as had been anticipated (Mayorga 2001; Ames et al. 2004). 4. More recently, the high level of concentration also appears to have negatively affected balance in the coverage of political news. In the presidential elections of 2005, for instance, a team of outside academic observers documented a clear bias in coverage against the candidacy of Evo Morales (Asociación Latinoamericana para la Comunicación Social 2005). 5. Some observers have argued that these incidents were indirectly encouraged by certain acts of the Morales government, including the declaration that the privately held media groups are the government's "number one enemies" and the dissemination of a list of journalists deemed to be antagonistic to the government (Lauria 2007). 6. To tap into institutional politicization, the observable indicators utilized in the analysis were the percentage of employees in an agency who (1) belonged to a political party; (2) strongly agreed with the statement that "political connections are important in determining who obtains a post in my institution"; (3) ranked "political considerations" as being the most important factor in dismissals in their agency; and (4) ranked "political connections" as being the most important factor in promotions in their agency. To tap into the stability of bureaucratic career paths, the observable indicators were the percentage of employees in an agency who (1) had worked for less than one year in their institution; (2) indicated that it was "highly probable" that they would lose their j o b in the near future; (3) indicated that their previous j o b was in the same institution; and (4) ranked "good performance" as being the most important factor in promotions in their agency. Finally, the observable indicators of corruption control utilized were the percentage of employees in an agency who (1) indicated that it was "highly probable" that "an internal audit or external audit or another type of investigation would occur as a result" of a misappropriation of resources from the institution; (2) stated that they believed the majority of employees in the institution would file a report (denuncia) if they knew of someone who had misappropriated the resources of the institution; and (3) agreed with the statement that "internal evaluations of spending guarantee the accountability of both low-level and high-level functionaries" in their institution. 7. The path diagram of the structural equation model, as well as all parameter estimates and their standard errors, are available from the author upon request. Goodnessof-fit indicators suggest that the model overall does a good j o b of explaining variation in the data. All of the factor loadings on the latent variables were correctly signed and all save one were statistically significant at conventional standards. 8. The relative wealth question asked the respondent to rank her wealth (on a scale of one to ten) relative to that of her community, with one denoting a personal wealth far

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below that of the community and ten far above. The political-news variable is equal to the greatest of the following: the number of days in the previous week that the respondent had watched news on television, the number of days in the previous week that the respondent had read news in the newspaper, and the number of days in the previous week that the respondent had listened to news on the radio. 9. The logic for including the latter three variables is that participation in such groups likely reduces barriers to collective action and thus makes participation in protest activity more likely. 10. See "Los partidos gastaron $US20 milliones sólo en TV," La Razón, June 29, 2002. 11. Proof of this was provided in a letter (reproduced in the April 12 edition of the La Razón newspaper) dated March 27,2006, and signed by the vice president of the National Directorate of the MAS, which instructed all "Ministers, Vice-Ministers, general directors, and public functionaries" that they should deposit 5 percent of their salary into an account belonging to the MAS. Once the race for the Constituent Assembly began to heat up in late April, a MAS party assembly decided to raise the mandatory contribution level to 30 percent. See "El MAS pide 30% de sus salarios a sus autoridades," La Razón, April 26, 2006; "El MAS asegura su campaña y frena dinero para otros," La Razón, April 27, 2006. 12. "Despido de empleados públicos llega al millar," Los Tiempos, January 7, 2007. 13. See "Desvían alimentos para los cocaleros," La Razón, January 13, 2007. 14. "Ramírez, la caída de un poderoso," La Razón, February 9, 2009.

4

Brazil: Corruption as Harmless Jeitinho or Threat to Democracy? Matthew M. Taylor

Corruption is a significant problem in Brazil, ranking alongside public security and income inequality as one of the most potentially destabilizing challenges facing Latin America's largest democracy in the new millennium. Most indices of corruption perceptions place Brazil above the regional and world average— that is, neither among the cleanest but certainly not in the lowest tier of corrupt nations (see Figure 1.1 of Chapter 1). The country's comparative performance on these indices, however, understates the significant costs corruption has imposed on Brazilian democracy, both in economic terms and in terms of public trust in both the democratic process and its outcomes. Even though the country performs better than many of its regional peers, corruption is an increasingly salient topic in public debate, with impacts that are greatly magnified in Brazil's active press. Since the return to democracy, examples of corruption at all levels of government have been widespread. In the past decade alone, a Central Bank president was forced to resign under a cloud related to the alleged sale of confidential information; a Brazilian Air Force plane was found trafficking drugs to Europe; a leading Sao Paulo judge was convicted for wholesale embezzlement in the construction of a labor court; many of the leading officers of all three branches of government in the state of Roraima were arrested on charges of systematically looting the state treasury; a whistle-blowing judge in the state of Mato Grosso was murdered; and large-scale stings uncovered rampant payoffs in the Rio de Janeiro and Sao Paulo police forces. This list could go on. Such corruption, and its broad public airing, breeds citizen cynicism, undermines the rule of law, corrodes the integrity of the private sector, and distorts markets (Heineman and Heiman 2006, 115). Yet, as the editors note in the introduction to this volume, analyzing corruption dynamics as if they formed one, unified entity would contribute very little to understanding the problem. It is 89

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essential to disaggregate the prevalent practices of corruption if we are to address them effectively. The first section of this chapter therefore looks at the various modalities of corruption in Brazil, before turning in the second section to its impact. The third section discusses influences on corruption, before concluding with a look at recent efforts to improve the state of affairs.

Patterns of Corruption Corruption in Brazil ranges across several possible modalities, from the public to the private sector, from grand corruption to petty corruption, and from embezzlement and extortion to nepotism. One often seeps into the other, and accurately discerning and measuring the extent of the problem is a challenge. But in light of the prevalence of the problem, it is not difficult to find examples of each variant. The most widely cited example of political corruption and accountability in Brazil has long been President Fernando Collor's impeachment in the early 1990s. Although the involvement of the president himself was shocking, the modalities of Collor's corruption were not terribly distinctive or novel. An operative close to Collor, Paulo Cesar Farias, administered a ring of kickbacks, which may have siphoned off between US$2 billion and US$5 billion from public accounts (Flynn 1993, 363). What was unique to Collor was that he actually was punished in some way: The impeachment was a rare event that became possible because the president was supported by a weak coalition, and his platform of "reform by imposition" had generated such strong antipathy (Weyland 2000) that the tide of public opinion turned decisively against him. In this sense, the impeachment was an anomaly and totally uncharacteristic of the usual sequence of events in most Brazilian political scandals.1 A more iconic example of political corruption in Brazil is the mensalao scandal that enveloped President Luiz Inacio ("Lula") da Silva late in his first term. Despite Lula's enormous popularity, which would be the envy of politicians anywhere, his government felt the need to use alternative methods to extend its fractious legislative coalition. In a ruinous initiative aimed at boosting support, the government provided congressional representatives from allied parties with payments (a so-called big allowance, or mensalao) for their backing (Transparency International 2006c, 135). This is the more fitting metaphor for grand corruption because it ended in a much more typical Brazilian fashion than Collor's impeachment. Congressional hearings full of fiery and sensational revelations implicated a large proportion of congressional representatives. A few were expelled by their peers in response to the temporary public furor, and some of the most prominent members of Lula's own Workers' Party (Partido dos Trabalhadores [PT]) were forced to resign their jobs. But then the heat died down, Lula was reelected, and life

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went on. Nobody is in jail; despite ongoing trials, few if any politicians are likely to be convicted; no money was returned to the public coffers; and the amiable rake at the center of the scandal, Roberto Jefferson, is more of a celebrity today than he ever was as a member of Congress. He receives a congressional pension, blogs about politics, and soon after his removal from Congress published a book about his experiences, entitled Nerves of Steel. In light of the PT's long efforts to claim the ethical high ground in Brazilian politics, Lula's first-term commitment to anticorruption measures, and polling prior to the 2002 elections that indicated the PT was perceived as the country's most honest party, it was surprising to many that these scandals took place on Lula's watch (Goldfrank and Wampler 2006, 5). But the systematic nature of the corruption, undertaken in a sophisticated but fairly brazen manner, is quite typical of the many political scandals that have plagued Brazil since the return to democracy. Further, the weak accountability process that followed the scandal is all too indicative of the norm. In terms of vertical accountability, of twenty members of Congress who were named in the congressional investigations into events associated with the mensalao or indicted in the high court on related charges, thirteen ran for reelection, eight successfully. Further, one of the three representatives who had been voted out of office by his peers (cassado) in response to the scandal was—under the rules governing expulsion— prevented from running, but his daughter was elected in his stead. Horizontal accountability is unlikely to be any more effective: For reasons that will be discussed later, it is a safe bet that none of those implicated will ever see the inside of a jail cell. Of course, despite corruption researchers' intense interest in high-profile political scandals and "grand" corruption, "petty" corruption—at the federal, state, and municipal levels—has also been exposed routinely in Brazil's otherwise highly advanced bureaucratic apparatus.2 Indeed, petty corruption has reached proportions that would be shocking if the cases were not so common.3 During the early 1990s, a group of bureaucrats apparently siphoned off over US$3 billion from the social security system. Recently, roughly US$1 million seized in police operations disappeared from the Rio de Janeiro headquarters of the Federal Police, in what the police themselves believe was an inside job. The mensalao scandal was kicked off because Roberto Jefferson was accused of being the mastermind behind systematic fraud within the postal service; his response was to blow open a score of other corrupt transactions. This brazen milking of public bureaucracies is a recurring storyline in the local press. Corruption at the level of individual bureaucrats is also easily documented, ranging from side payments to speed up clerical processes to the systematic circumvention of bureaucratic regulations. Despite being smaller scale, the implications are no less dangerous. The infiltration and co-optation of public bureaucracies by organized crime is a serious concern, as illustrated in 2007 when a leading Chinese-Brazilian businessman, Law Kin Chong, was arrested for

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running a multimillion-dollar smuggling operation that supplied electronics to six hundred stores in Sao Paulo's downtown. Chong is believed to have built an extensive network of police and customs inspectors to advance his business, and was only arrested when his associates attempted to bribe a member of Congress, who then set up the sting. Similarly, after a lawyer for the slot-machine industry crashed his car in the wake of an attempted robbery, the press had a field day: Inside, police found envelopes with what appeared to be the weekly payoff to an overwhelming majority of Sao Paulo's civil police stations. Patterns of corruption are not constant, and as elsewhere, some bureaucracies may be more susceptible than others. Bureaucracies with intense and numerous public transactions (such as police forces, the pension system, transportation ministries, or motor bureaus) may be more susceptible than bureaucratic organizations with infrequent interactions with exploitable publics, such as the foreign ministry or education secretariats. A 2002 survey of businesspeople provides some evidence of this dynamic: Corruption was perceived to be highest in frontline functions such as licensing and policing (corruption in both was perceived by more than 90 percent of respondents as "high frequency"), followed by public contracting and the judiciary (over 80 percent; Abramo 2002).4 Table 1.1 in the introduction illustrates that Brazil is plagued by daily corruption, with Brazilians showing the highest levels of direct experience with corruption among their Latin American peers. Extortion is generally less visible, but it is discussed in business circles. A survey by Claudio Abramo (2002) showed that over 87 percent of businesspeople who admitted paying bribes attributed the initiative for the bribe to the public servant. One may well doubt these findings, of course, given that most respondents would understandably be loathe to implicate themselves. But perhaps the more pernicious finding is a subtler form of extortion: Nearly 70 percent of business respondents claimed to have felt compelled to contribute to political campaigns. Nepotism is also a major problem, and one that is not always recognized as corruption. Repeatedly over the past decade, elected representatives have been found to use staff funds to hire close family members, and nepotism is seen within the political system as a "normal, usual, and customary" practice (L. Santos et al. 2002, 148). Tighter rules imposed against nepotism over the past two decades have been insufficient. To get around the rules, several members of Congress have allegedly engaged in cross-hiring, whereby one employs his colleague's daughter, while the other employs her colleague's brother, and so forth.5 Tellingly, one consequence of a recent initiative to tighten regulation of nepotism in the judiciary has been a wave of lawsuits filed by judges to challenge the new rules. While most of these suits were eventually overturned, the fact that the plaintiffs were precisely the group expected to uphold the rule of law suggests that when it comes to nepotism, norms that favor private uses of the state may be deeply embedded.

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While much public revulsion has been focused on politicians and publicsector recipients of bribes, the private sector is itself hardly a bastion of integrity. Private-sector executives have long been surreptitious financiers of political campaigns, making contributions under the rug (debaixo do pano) to Brazilian politicians' second set of campaign finance books (the so-called caixa dois, or off-the-books register), where money flows outside the oversight of electoral and tax authorities. Many of Brazil's emerging multinationals, especially in the fields of transportation and construction, have developed a reputation for corruption that extends beyond Brazilian borders. Finally, corrupt behavior is not limited to the nexus between the private sector and public officials: Talk to any businessperson operating in Brazil, and one will soon hear stories of employees who receive side payments for transferring business to a particular resale office or selling their company's consumer lists to competitors, of businesses that cook their books or are set up under fake names to throw off tax auditors, or of equally egregious abuses of trust, such as wholesale theft or embezzlement. Under the weak prevailing structure of accountability in Brazil, these many variants of corruption are readily apparent and often coexist uneasily side-byside with licit activities. Corruption is often presented as a rational (if still unethical) response to local conditions. For example, the level of taxation is so high (comprising roughly 37 percent of gross domestic product, as compared to 19 percent in Chile, and 25 percent in Argentina), that tax evasion has become a survival strategy for some businesses. Further, in a corrupt environment, businesses may find it difficult to compete against bribe-paying competitors, thus increasing the likelihood of engaging in bribery themselves. But perhaps the clearest pattern across all these various modalities of corruption, as exemplified in the mensalao scandal, is that the expected costs of corruption are relatively low in comparison to the potential gains. This is especially so because the chances that corrupt activity will be detected at all are in fact quite low, while the chances that detection will then lead to effective punishment are infinitesimally small. Before I discuss some causes of this weak accountability, I first consider corruption's effects.

The Impact of Corruption Corruption has both economic and political effects. In economic terms, it is of course impossible to gauge with any certainty what the true costs of corruption are, but conventional estimates range from 1 percent to 5 percent annually (Power and Taylor, forthcoming). Indirectly, too, corruption has enormous economic costs, complicating and distorting efforts to effectively address other public policy concerns such as crime, education, and social inequality. Equally pernicious are the political costs in terms of citizen perceptions of the political process and the democratic regime. It is widely recognized that

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corruption undermines democracy by attacking two of its core principles: the equality of citizens before institutions, and the openness of decisionmaking (e.g., Delia Porta and Vannucci 1997, 537; Heywood 1997, 421). Corruption may thus breed a strain of cynicism that is particularly pernicious to democracies, which rely heavily on public engagement and legitimacy if they are to flourish. When combined with its economic costs, endemic and unchecked corruption may thus be the single greatest threat to Brazilian democracy today. Cynicism is indeed well ensconced in popular culture, with three commonly used popular adages suggesting how deeply corrupt behavior is believed to reach into daily Brazilian life. Three are especially prevalent: • the apocryphal saying attributed to dictator Getulio Vargas—"Aos inimigos a lei; aos amigos, tudo!" [For my enemies, the law; for my friends, everything!]. The notion that the law applies in different ways to different people, and may be selectively imposed (or not), according to the whims of those in power, finds some resonance to this day; • the concept of the jeito, which Rosenn (1971,1984) describes as the "practice of bending legal rules to expediency" (1984, 2-3). The jeito, some claim, is widely used to bypass the formal legal rules and legal system: A particularly tough bureaucratic problem might lead a citizen to ask a public official, "Nao da para dar urn jeitinho?" [Couldn't we give it a little jeito?]. The idea is not necessarily corrupt in its essence—in fact, the jeito may even enable citizens to overcome bureaucratic hurdles that might otherwise require corruption—but it does suggest an informality that belies the extensive formality of legal codes and bureaucratic procedure; • "Gerson's law," that since everyone else is trying to get ahead, you might as well do so yourself, ethics be damned. The "law" is named for a famous soccer player, whose leading role in cigarette commercials in the 1970s included the famous line, "Take advantage of every situation to get ahead" (Global Integrity 2007, 2), and it is frequently invoked to justify selfserving actions. Everybody else does it, so why shouldn't I? All three adages are common in public discourse. The cynicism they reflect carries over to contemporary politics. When asked their views of politicians in the wake of recent scandals, four of five respondents claim that regular Brazilians are hardworking, but only one in five thinks the same of Brazilian politicians. While more than three in five think their peers are honest, only about one in ten are willing to say the same about politicians (IBOPE 2006). In the wake of the mensalao scandal, efforts to investigate and punish those involved in the scandal were viewed skeptically, and fewer than a third of those polled thought the country would become more honest as a result (IBOPE 2006). Most disturbing is the effect of the past two decades' scandals on confidence in politicians and political parties, which fell almost continuously from 31.5 percent

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and 26.3 percent, respectively, in the run-up to Collor's impeachment in 1991, to 8 percent and 9.5 percent by late 2005 (Opiniáo Pública 2006). Democracy does, however, show signs of resilience. At least one poll shows that Brazilians consider corruption the single most serious hindrance to economic development (World Wildlife Federation and IBOPE 2006). Nearly 85 percent believe that corruption can be fought successfully (Freitas 2007). In nationwide polls, voters overwhelmingly claim they will not vote for corrupt politicians (IBOPE 2006). And perhaps more important, despite scandals and fears about corruption, the number of Brazilians who believe democracy is preferable to other regime types not only has not fallen, but in fact rose from 39 percent in 1991 to 69 percent in 2002 (Opiniao Pública 2006). In light of this clear repudiation of corruption, then, why is it apparently so pervasive? And what can be done to address corruption while confidence in democracy is still robust and resilient? Influences on

Corruption

Corruption emerges from a mix of long-term structural conditions and institutional factors that constitute the environment in which corrupt activity takes place. Cultural factors may also play a role, but as noted above, the evidence of causality is far more mixed. I explore the effects of structural conditions and institutional arrangements below. Structural conditions. At the structural level, both political and economic trends have played an important role in the emergence of corruption on the public agenda. Brazil made the transition from military rule to democracy during the 1980s. This transition was more gradual than that of many of Brazil's peers in the region, and even at the most change-inducing junctures, such as the writing of the 1988 Constitution, the overall tendency was toward the preservation of strong state regulation of (and state participation in) economic affairs. State control over large swathes of economic activity provided ongoing opportunities for political corruption. By way of illustration, telephone services remained state-owned until the late 1990s, with low rates of public investment and lackluster service leading to the inadequate provision of new lines and a proliferation of waiting lists. In the computer industry, although most companies were privately owned, the industry was heavily protected from foreign competition under a military regime policy of nascent industry protection. These practices were not all that unusual up until the early 1990s, and they drove and even encouraged otherwise honest consumers to circumvent the resulting shortages through illicit and corruptionprone transactions, whether it was by participating in the black market in telephone lines, or purchasing smuggled computer equipment. Such examples contributed to the common assertion that opening the economy would reduce

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corruption; by transferring both resources and control over supply bottlenecks out of the hands of the public sector, it was widely believed that it would be possible to reduce the possibility of side payments, while boosting overall efficiency (e.g., Heywood 1997). The evidence for this proposition in the Brazilian case, as we will see below, is mixed. A second major economic legacy of the military regime was inflation. There is not room to do justice here to the enormous difficulty Brazil's new democracy faced in bringing inflation under control during the decade preceding the success of the 1994 Real Plan.6 Suffice it to say that hyperinflation, and the associated problems of continuous readjustment and recalculation of the value of everything from salaries to contracts and budgets, posed an enormous challenge to transparent accounting and auditing. As a result, the oversight of complex public and private accounts was generally weak, and prosecution of suspected malfeasance extraordinarily difficult. The end of inflation, and many of the fiscal structures put in place to combat it, such as the budgetary spending limits embodied in recent fiscal reforms (such as the Lei de Responsabilidade Fiscal [LRF]), have helped to constrain some of the worst practices of profligacy and unaccountable spending.7 A final economic factor may be the level of socioeconomic development. As Hunter and Power (2007, 12-13) note in a study of the 2006 election, both education and socioeconomic status are important influences on how much Brazilian voters know, care about, and tolerate or punish corruption. Survey research shows much greater tolerance for corrupt behaviors among the less educated; self-reported tolerance declines with years of schooling (Almeida 2007). Given generally anemic rates of economic growth and poor educational performance over the past quarter century, this suggests that corruption may remain a second-order priority for some citizens, especially in the least-developed regions of the country. On the political front, democratization may have helped weaken some aspects of "traditional" politics and, by expanding the number of potential citizen watchdogs and their commitment to the political system, made the exposure of corrupt acts more likely than under centralized military rule. Yet it may have also contributed in several countervailing ways to worsening perceptions of the corruption problem in the political sphere. One of the most important tenets of the new constitution is the decentralization of power and revenue to regional governments, which provided a multiplicity of new actors with access to the public treasury. Second, democratization may make the exposure of corruption more likely, but it has also made it much more expensive to gain power, thus increasing at least the potential demand for alternative, and possibly illicit, sources of funding. This is particularly the case under the prevailing electoral rules in Brazil, as the next section notes. Transitional moments of structural upheaval, furthermore, may actually lead to deteriorating perceptions of corruption before they lead to improvement.

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Economic stabilization, the lifting of statist regulations, and increasing control over public spending may reveal previously unobserved corrupt acts, providing a backlog of problems to work through. Indeed, the end of hyperinflation in Brazil pulled back a curtain of accounting opacity and revealed a series of previously occult and difficult-to-track illicit transactions. Several key prosecutions of corrupt officials began soon after the Real Plan's success—perhaps most notably in the case of Sao Paulo politician Paulo Maluf, who was long thought to have engaged in large-scale grand corruption. Despite more than thirty years of accusations, it was only after stabilization that Maluf was brought up on more serious and well-documented charges by both Brazilian and foreign prosecutors. On the political front, likewise, a new democracy may have encouraged the exposure of corrupt officials or corrupt acts, but the new regime lacked the capacity and often the know-how to address all of the accusations generated by increased public participation and vigilance. A second problem lies in the transition itself, which provided a new set of actors with a window of opportunity to engage in corruption. As O'Donnell (1994, 59) notes, in the absence of well-functioning institutions, "nonformalized but strongly operative practices" such as corruption may find ground to flourish. To a certain extent, this obviates the common nostrum about how democratization and the opening of the economy can serve as a panacea for corruption.8 As Rose-Ackerman (2000) has observed, unless institutional and legal reforms accompany state reforms, the resulting government may be no cleaner than the previous regime; indeed, in much of Latin America, the dual economic and political transitions did not generally bring less corruption (Tulchin and Espach 2000). In the Brazilian case specifically, there was a substantial lag between the economic and political transitions and the still incipient legal reforms needed to increase accountability. In sum, the dual transition of the past two decades uncovered many previously camouflaged problems, while generating its own. Perhaps most important, the institutional changes that accompanied the transition pushed an immature "web" of accountability institutions (Mainwaring 2003) into the thick of things, before these institutions were fully prepared to assume their crucial new role. Institutional factors. Several institutional factors are worth noting in regard to their impact on the rise of corruption within the political system, and in relation to the ability of the accountability process to constrain corrupt practices more broadly. Following O'Donnell (1994), it is common to argue that accountability has two dimensions: horizontal and vertical. I first discuss two dimensions of vertical accountability—electoral accountability and societal accountability—before turning to the judiciary's role in providing "horizontal accountability," or what Mainwaring (2003, 30) has more precisely labeled "intrastate accountability."

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Electoral and political factors. As noted above, the Brazilian political system provides incentives toward some forms of corruption, both in the pursuit of power and the preservation of it. This problem plays out in three stages. First, the current electoral rules tend to make for extremely expensive elections, increasing the pursuit of both licit and illicit forms of campaign financing. Second, the rules governing the party system make it difficult for a single party to control the legislature; accordingly, the creation of a multiparty coalition in support of the president is deemed essential to guaranteeing govemability—even though coalition formation may encourage side payments like the mensalao and a blind eye turned to alleged shenanigans. Third, in light of the prevailing institutional arrangements, monitoring wrongdoing and imposing electoral and political accountability is difficult at all three levels of the federation. I focus primarily on the federal level here, but these issues play out with similar implications at both the state and municipal levels (although the latter have been the focus of far less research, but see Macaulay, forthcoming). At the level of electoral rules, three closely interrelated factors are significant: (1) the use of open-list proportional representation to elect legislative representatives in large multicandidate districts; (2) the organizational weakness of political parties, and particularly, incentives toward a personal vote; and, as a result, (3) the great expense of Brazilian elections. The open-list proportional-representation electoral system employed to elect the members of the National Congress may well be one of the most expensive and resource-intensive of possible electoral systems.9 An open list offers fewer opportunities for party leaders to exercise control over candidate choice and the direction of campaign spending. When combined with large districts and multiple candidates, open-list proportional representation generates strong incentives for individualistic campaign tactics (e.g., Samuels 2001; Ames 1995). Under these conditions, candidates "must differentiate themselves individually from other candidates, including their copartisans. One way to do so is to raise and spend money, building up a 'personal vote' base by providing favors, gifts, or other particularistic goods" (Samuels 2001,30; see also Ames 2001,61). This is particularly the case in Brazil's federal legislative elections, where the state is the legislative district. Because parties can nominate up to one and a half candidates per district, and cross-party alliances can nominate two candidates per seat, the number of candidates is high (Samuels 2001, 30). In the 2006 elections, for example, there were more than eleven hundred candidates for Congress in the state of Sao Paulo alone, roughly sixteen candidates per seat (Tribunal Superior Electorial 2007). As a result, it is not surprising that the cost of Brazilian elections is one of the highest in the world. The cost of successfully electing a congressional deputy is disputed, but is estimated between a low of US$132,000 by Samuels (2001), who looks solely at the official spending figures in the late 1990s, to as much as US$6 million (Bohn et al. 2002). More recently, a study of official

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spending declarations found that on average, successful congressional races registered US$250,000 in official spending (Costa et al. 2006). Considering that, by law, candidates have access to free airtime during the so-called electoral hour in the run-up to elections, these figures are relatively high by international standards. But unofficial spending may be even higher. Limits on campaign contributions are quite loose, and in any case, opportunities for off-the-books financing abound, in a system where keeping a caixa dois, or second register, is routine.10 While Lula's campaign registered R$40 million in official campaign spending with the Electoral Court during the 2002 presidential campaign, it is estimated that he collected but did not register another R$200 million (Goldfrank and Wampler 2006, citing Attuch 2006, 16). It is impossible, of course, to know with any exactness what caixa dois spending levels are, but anecdotal evidence suggests the practice is widespread and may account for a majority of all campaign spending. The electoral system also has serious policy implications. It may lead to a perniciously direct link between campaign contributions and government decisionmaking, or what Samuels (2001,42) describes as "service-induced" rather than "policy-induced" campaign finance. In other words, campaign contributors give money not to advance particular policy preferences, but to buy personal, or "particularized," access to government services and government decisionmakers. Further, the high costs of campaigning may lead politicians to seek out opportunities to recoup their investment and prepare for the next campaign. And such a system of course leads to a troubling lack of transparency, with the official books available to the voting public showing only one side of the potential influences on a particular legislator's choices. Once elections are over, multiparty presidentialism remains a system fraught with potential dangers, not least because of the potential for deadlock between the executive and legislative branches (e.g., Mainwaring 1993; Linz and Valenzuela 1994). Post-authoritarian Brazil has managed to overcome this threat, in part because of the executive's strong legislative powers and agenda control (Figueiredo and Limongi 1999; Amorim Neto et al. 2003), but also through strong coalition management (Raile et al. 2006). While Brazil's success in this regard may put to rest some of the worst fears about the instability of multiparty presidential democracy, from the perspective of corruption, the president's need to create and preserve a governing coalition in the face of fractious and tentative party allegiances may be a significant downside. With more than fifteen parties typically represented in Congress, it has always been the case that the president's party has lacked a majority.11 As a result, coalition building has become a particularly well-evolved art form, with campaign alliances, cabinet ministries, policy positions, pork, and corrupt transfers all on the table when it comes time to pull together congressional support. Party switching is the most obvious result: In the 2003-2006 Congress, for example,

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193 out of 513 deputies changed parties, as did 15 out of 81 senators (Sardinha 2006). Although court decisions have attempted to alter the practice, a vast majority of these representatives end up on the government side of the aisle, which facilitates governance but has the clear downside of associating that support not with clear principles or policy positions but with pork and bargaining tactics that can involve corrupt practices. The mensalao scandal that beset the Lula administration, for example, is largely seen as a reflection of the problems associated with maintaining coalition unity under conditions of uncertain party membership and shifting party loyalties. The PT had long been in the wilderness of opposition, and thus it was perhaps not surprising that Lula filled his cabinet primarily with party members when he was finally elected to office after three previous defeats. Even though Lula nearly doubled the cabinet, from twenty-one to thirty-six seats, the large number of PT nominees left little room for other coalition parties. As Raile et al. (2006, 8) note, "coalitions that are larger, with greater ideological heterogeneity, and/or with a higher concentration of power (at the expense of other coalition members) are more difficult to manage." Lula's coalition closely fits this third category—of high concentration—and as a result, in the absence of cabinet spots, compensatory side payments were used to enforce coalition discipline.12 The issue of legislative side payments has a longer history than the recent mensalao scandal, however. There were allegations of vote buying to approve the reelection amendment during Fernando Henrique Cardoso's first term, and operatives working for Collor are claimed to have offered side payments in an effort to block his impeachment. It can be devilishly tricky to impose electoral accountability in large-scale, open-list proportional representation districts, as a candidate can win with a highly concentrated vote in only a few strongholds or target new voters or neighborhoods with each election. Between elections, imposing accountability is no easier. Under existing rules, politicians can be barred from seeking elective office if they have been definitely convicted of a crime. But since the rules require a definitive conviction (with no possibility of further appeal), these rules mean little in practice, especially in light of the slow pace of the Brazilian courts. A politician accused and condemned for corrupt acts by the Tribunal de Contas audit court (which, despite its name, is not a part of the judiciary) can usually remain in office just by filing legal suit, thus keeping his or her conviction in question. As a result, it can sometimes be virtually impossible to remove corrupt officeholders expeditiously, even when the evidence against them seems clear-cut. The political system also has enormous difficulty in detecting and punishing campaign malfeasance, in light of the rather weak process of electoral oversight (e.g., Sadek 1995). The electoral court system is quite good at what it does from a purely technical perspective: The courts supervise large-scale elections that accurately and efficiently count votes cast across a geographically large nation, register a large number of candidates (380,000 in the 2004 elections), and

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have effectively incorporated a rapidly growing electorate on the voting rolls. Monitoring and punishment, however, are weak. At the level of municipal elections, Speck (2003) finds that one in seven voters was offered money to vote for a particular candidate in the 2000 elections. Few prosecutions are likely in such cases. Equally damaging is the fact that because the electoral courts have few resources for monitoring campaign spending—in the top electoral court, for example, there were only five employees to oversee and monitor all campaign spending claims in 2005 (M. M. Taylor 2006, 151)—campaign accounts are a "piece of fiction" (Bohn et al. 2002,351). But there is also little successful prosecution of electoral crimes, either to ban political malfeasants or to punish them in the criminal justice system. In addition to the problems posed by the electoral and party systems, advocates of reform frequently suggest revising three aspects of the relationship between the legislative and executive branches. Congressional oversight is complicated, first, by the strong legislative powers afforded the executive branch. The executive's dominance of the legislative agenda and political influence over auditing bodies enable it to obstruct efforts at imposing legislative accountability (Abrucio and Loureiro 2005,100). Second, the executive branch's control over spending disbursements provides little opportunity for oversight. Once the budget is approved by Congress, the executive branch has considerable flexibility in deciding how and whether to disburse funds. This provides it with leverage over problematic coalition members in policy debates (e.g., Figueiredo and Limongi 1999, 2002), but may also complicate the practical business of tracking spending allocation. Finally, the relatively large number of political appointees (roughly twenty thousand posts in the federal executive branch alone) has at least two salient effects in terms of corruption: It increases the winner-take-all nature of electoral contests, and it provides political patronage networks with greater access to the machinery of government. Society and the media. A powerful force that remains inadequately analyzed in Brazil is the public, and in particular its role in providing what Smulovitz and Peruzzotti (2006) term "societal accountability." In addition to the increasing role of individual voters, new civil society organizations devoted to issues of crime, corruption, voting rights, and public-sector oversight have emerged since the return to democracy.13 Together, these groups have a potent influence as watchdogs in exposing corruption, imposing "symbolic" or "reputational" sanctions against potential wrongdoers, activating governmental institutions with "teeth" that can impose legal penalties, and using the media as a vector for transmitting their dissatisfaction to political bodies. But as Smulovitz and Peruzzotti (2003, 327) note, the process of societal accountability tends to work best at imposing sanctions when it combines social mobilization with both media coverage and legal measures. In the absence of such a combination, the results of social mobilization can be fairly blunt,

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weak, or inaccurate. In addition to the problems with the judicial process described in the next subsection, the media's weakness undermines the possibilities for effective societal accountability. The print media reports corruption actively, with an average of three and a half new cases reported by the Brazilian press nationwide every day (Abramo 2007, 96). But as Abramo also notes, perhaps because of the low rates of functional literacy in Brazil,14 newspaper circulation is generally low, with the largest newspaper in Brazil selling only about three hundred thousand copies a day in a country of over 188 million inhabitants. Further, this circulation is regionally quite disparate, with residents in the northeast receiving considerably less information about corruption than their peers in the south. More damaging still is the fact that newspaper ownership in many regions of the country is economically unviable, except in the context of the broader political game: "The newspapers that do exist in the poorer states either exist precariously or are bound to serve other purposes than generating profits for their owners.... Such objectives are invariably political" (Abramo 2007, 105). This is a self-perpetuating problem, since politically motivated journalism that does not respond to market forces may force profit-driven operators out of smaller media markets. Other important sources of news may be even more biased than newspapers. Radio and TV ownership remains tightly tied to political elites, who may impose hurdles on the transmission of societal grievances or the reporting of transgressions. Despite a constitutional prohibition on sitting congressional representatives holding public concessions such as media licenses (Article 54 of the 1988 Constitution) a large number of politicians hold broadcast rights, with political control of TV and radio media following a similar regional pattern to that of print media. Broadcast licenses in the state of Roraima, for example, are all owned by politicians, and in all of the states of the northeast, this proportion exceeds 50 percent; in Sao Paulo, the figure is lower, but one in five licenses are nonetheless held by current or former politicians (S. Santos and Capparelli 2005, in Barros Filho and Pra?a 2006). According to Abramo (2007), eighty members of the 2007-2010 Congress hold interests in radio and/or TV stations exceeding R$ 100,000. A recent complaint lodged by a public interest group at the Ministério Público accused forty-nine deputies and twenty-eight senators of media ownership. While the Internet offers a potential corrective to bias in the print and broadcast media, it is not as yet a major source of news for most citizens, and in any case, much Internet content is derived from the large central media markets. Such close relations between media and politics do not happen by accident. Control over media outlets permits political groups to filter coverage, thus limiting public access to information and potentially controlling social mobilization. The effects are potentially grave. A recent study showed that when audits by the Controladoria Geral da Uniáo (CGU) revealed corruption in randomly selected municipalities, the existence of competitive media coverage made a big

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difference in ensuring electoral accountability. In municipalities with higher corruption but more competitive media, release of the audits decreased the probability that corrupt politicians would be reelected by nearly a third (Ferraz and Finan 2005, 5). Courts and intrastate accountability. The possibilities of intrastate accountability are highly influenced by the judicial system. A major issue facing Brazil as a whole is the glacial pace of the judicial process, which slows down business transactions, weakens public security, and complicates efforts against corruption. A significant judicial reform was approved in 2004, and small-claims courts were created in the 1990s, which have led to significant improvements in the congestion levels of lower courts. Yet neither reform is likely to improve significantly the efficiency or effectiveness of prosecutions of corruption. As elsewhere in Latin America, the Brazilian judiciary is plagued by excessive formalism, which can often serve as a cover for corrupt activity (Hammergren 2006, 20). Further, the courts have been burdened by an explosion in demand, scarce human resources, weak administration, a highly bureaucratic process, and a dated criminal code (e.g., Sadek 1999; Speck 2002; M. M. Taylor 2008). The malfunctioning of the court system contributes to the adoption of informal alternatives of dispute resolution: As Sadek (1999) notes, only 55 percent of those involved in legal conflicts actually take them to the judiciary. One reason may be the prevailing sentiment that, as in criminal justice more broadly, "the police arrest and the courts release" [a policia prende e a justiga solta] (Sadek 1999,11). Three facets of the criminal code complicate accountability. First, in many cases, it is possible for accused politicians to claim a right to judicial secrecy, which obscures public understanding of the evidence against public officials. Second, the glacially slow pace of the courts and a plethora of possible instruments of appeal often allow lawyers to run out the statute of limitations before a conviction can be attained. Finally, top politicians at the federal level—congressional representatives, cabinet ministers, and top judges (about seven hundred leading figures in all)—have the right to special standing in the courts (the so-called foro especial), which allows their cases to be heard directly at the top national court, the Supreme Federal Tribunal (STF).15 While logically it might seem that this right to a direct hearing would expedite conviction (or absolution) by leapfrogging the congestion-ridden lower courts, in fact the STF has historically been quite timid about convicting leading political figures. Within the judiciary itself, furthermore, the combination of collegiality and rules originally designed to protect judicial independence means that corrupt judges are difficult to remove from the bench. Few judges found guilty of corruption face punishments harsher than mandatory retirement. Not that few judges are charged: Police stings over the past decade, such as the highly publicized Operagao Anaconda, have netted major judges from all of the courts—

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from the Superior Tribunal de Justi?a (the second court after the STF in the judicial hierarchy) on down—for alleged corruption.16 Although the number of stings is encouraging, and suggests a newfound willingness to take on powerful figures in the political-criminal nexus, the depressing reality is that several implicated judges who were fingered in multiple scandals remain on the bench. Together, corrupt judges' virtual immunity from prosecution and the weakness (and particularly, the sluggishness) of the judiciary as a site for accountability have helped to create a blanket of protection for the elected and unelected members of all three branches of government, whose impunity saps public confidence in the political system.

Anticorruption Efforts and Their Impact Perceptions of corruption may well continue to worsen before they get better. There is a backlog of open investigations, existing accountability institutions are only now fully adapting to the new institutional environment, and consensus on how to improve the accountability system remains elusive. But corruption is clearly now a central public priority. Recent discoveries of corruption networks in both the judicial and the legislative branches—and more importantly, efforts to combat them—have stimulated general consensus about the importance of tackling corruption. The greatest hurdle in this regard is how to overcome the institutional bias toward impunity, especially for the wealthy and well-connected. Few corrupt politicians have spent meaningful time in jail, and not a single politician has been convicted on criminal grounds in the country's highest court, the STF, since approval of the democratic constitution in 1988 (Brandt 2007; Associagao dos Magistrados Brasileiros 2007). Moreover, there is a large backlog of judicial inquiries (inqueritos) pending against politicians in the STF. Together, timidity and inefficiency thus mean that the special grant of privileged standing to politicians has translated into a practical grant of immunity from effective prosecution. Other ways of removing corrupt officials from office through nonelectoral instruments include forced expulsion by a vote of one's peers, or investigation by legislative committees. Cassagao, the forced expulsion of a politician from legislative office by a vote of his peers, can only be used against legislators, who are otherwise protected while in office by parliamentary immunity. Cassagao has typically required significant public pressure before legislators would upset their cozy apple cart. During the 2003-2007 Congress, 105 members of both houses of Congress were reported to the ethics committee for unbecoming conduct, and 180 were accused of criminal activity. Of these, only four were cassados. This was actually an historically high proportion that reflected the visibility of the mensalao scandal (Congresso em Foco 2006). Furthermore,

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although cassagao makes federal politicians ineligible to ran for office for eight years, it does nothing to impose a criminal penalty, such as a fine, community service, or prison time. Parliamentary committees of inquiry (CPIs) are ubiquitous but not much more effective. The CPI has been an important instrument for investigating political corruption, but it is an inherently political body. As a result, it is rare for a CPI to move forward very far without either initial majority support or strong public pressure, especially if the executive branch is opposed to the investigation. Further, given the sixty-day term of each CPI, which cannot be extended without majority support, they often fail to conclude their investigations; only one in five actually produce a final report (Figueiredo 2001). More importantly, CPIs are criticized for producing a lot of smoke but little pay dirt. Their investigations rarely lead to successful subsequent prosecution of wrongdoing, even though they often lead to "reputational" sanctions that (rightly or wrongly) tarnish the public image of those investigated. Perhaps the most crucial aspect of the accountability system, however, relates to the complex relations between the various institutions of horizontal accountability that exist within the Brazilian federation. The term "institutions of intrastate accountability" more accurately encompasses all formal state institutions that seek to monitor, investigate, prosecute, and/or punish illegal acts including, especially but not exclusively, corruption. The number of such institutions in Brazil is truly phenomenal, due in large part to the fact that in practice there are four branches of government (executive, legislative, judicial, and the Ministério Público, of which more in a moment), three levels of the federation, and several different police forces and different justice systems at each level of the federation, as well as numerous ad hoc committees and cross-institutional working groups within both the executive and legislative branches empowered to investigate corruption or malfeasance.17 Coordinating the efforts of this large number of institutions across a broad range of jurisdictions is a herculean task, further complicated by the need to maintain investigational secrecy without sacrificing effectiveness. The most important of these institutions is the Ministério Público, which is widely considered a "fourth" branch of government because of its considerable autonomy from the three traditional branches of government (Mazzilli 1993; Sadek and Cavalcanti 2003). The Ministério Público is a significant accountability institution that has emerged as a powerful force in the past two decades, with responsibility for investigating and prosecuting malefactors. It is, as Arantes (1997, 108) notes, the institution most responsible for activating the courts, in corruption cases as well as other matters, and has an important role in bringing serious malfeasance to light. Alongside the Ministério Público, there are a number of highly capable, permanent bureaucratic institutions that work to improve accountability within the Brazilian political system. These include the accounting tribunals (Tribunais

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de Contas), which audit public accounts at the federal, state, and municipal level; the Federal Comptroller's Office (Controladoria Geral da Uniao) created in 2001, which has been particularly active in monitoring the spending of federal funds at the state and municipal levels; the Federal Police, which has been increasingly involved in investigating political corruption; and several special prosecutorial squads at the state level that fight organized crime and corruption.18 And yet, despite the importance of these bureaucratic agencies and coordinating mechanisms, the combined effect of the "web" of these institutions is less than might be desirable.19 A first problem lies in the internal conditions of each bureaucracy: the Federal Police have long been laced with a reputation for corruption, for example. Conventional wisdom suggests the Tribunals de Contas are subservient to executive interests because of the longstanding practice of naming retiring politicians to their top positions. Perhaps more importantly, they are frequently ignored—at the federal level, the Tribunal de Contas da Uniao (Brazilian Court of Audit [TCU]) often finds signs of wrongdoing, which go unheeded. This was the case in the highly corrupt construction of the Sao Paulo federal labor court in the late 1990s, for instance, as well as in a more recent scandal that led Senate president Renan Calheiros to step down. In this latter scandal, the TCU as early as 2001 questioned the role of a construction firm alleged to have bilked the government with help from top politicians; more than sixty subsequent TCU cases named the same firm as a suspect. But nothing was done before the scandal began to attract media attention in 2007, largely because of the slow pace at which the TCU's charges made their way through the court system. The Ministério Público also suffers from the slow pace of the courts, compounded by the extreme independence of its members. The Ministério Público's autonomy from the executive and legislative branches was obtained in part by granting individual prosecutors extreme hierarchical independence from their superiors. As a result, the aggregate effectiveness of the Ministério Público depends to a great extent on the personal willingness of each prosecutor to carry forward investigations and prosecutions on her own initiative, an institutional design that can complicate overall prosecutorial coordination (e.g., Kerche 2003, 120; Arantes 2002).20 Meanwhile, none of the institutions listed above claims a budget large enough to do its job to the utmost. All are hampered to some extent by the rigid civil-service laws that govern Brazilian bureaucracy, and especially by the tenure protections offered to civil servants (protections that often remain in place even when civil servants are under investigation, which can make it extraordinarily difficult to extract nests of corruption once these find their way into the bureaucracy). A second issue relates to the rivalries between the institutions, and especially between prosecutors in the federal and state Ministérios Públicos and their counterparts in the police forces. Such rivalries often hamper broad-scale investigations and prosecutions, unless there is clear political pressure in favor

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of cooperation. Perhaps most damaging is the weak coordination between all of these accountability institutions, which leads to what I have elsewhere labeled the "imperfect orthodontia" of the accountability process: To use a dental analogy, the problem is not always the toothlessness of individual institutions but the orthodontia of the various institutional teeth; the performance of the full system of accountability may be plagued by the gaps and overlaps between institutions. Overlapping areas of responsibility, or, conversely, gaps between areas of responsibility, and the extreme independence of various institutions can combine to create a system marked by remarkable institutional performance at some levels but overall inefficiency. (M. M. Taylor and Buranelli 2007) 21

The tendency of all of Brazil's accountability institutions to emphasize the task of investigation over the tasks of ongoing oversight and effective sanction is also a significant downside of the institutional framework, on two fronts. 22 First, it marginalizes these equally important tasks. But second, it tends to lead to a lot of stepping on toes. Although overlapping bureaucratic responsibilities are not a bad thing in their own right, and may even help preserve the integrity and improve the effectiveness of investigations, in this case, the rivalries created in the field of investigation may well be prejudicial to the equally important work of oversight and effective prosecution. In sum, the existence of myriad institutions of accountability, the strong rivalries between several of them, and the tendency of most of them to cohere around the task of investigation rather than the somewhat less glamorous and often unproductive tasks of monitoring and prosecution, all contribute to considerable difficulty in effectively imposing constraints on corruption and its perpetrators. Not only does such an institutional setup tend to complicate the task of punishing corruption effectively but, paradoxically, it may lead to a greater awareness of corruption among the public, as each corruption institution rushes in to show off its contribution by providing the most salacious details of its investigations of the latest scandal. The result may be greater public awareness of corruption without any compensating increase in public awareness of what is in fact being done to punish past transgressors or prevent future transgressions. Add to this the aforementioned problem of slow courts (which remove most incentives to effective prosecution) and the spectral lines of electoral accountability between politicians and voters (which limit the responsiveness of many politicians to public opprobrium). The stage is thus set for considerable frustration regarding the accountability process.

Future Prospects That said, there have been important, if gradual, institutional advances made from the mid-1990s into the first decade of the twenty-first century. Some steps

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deal with much more than corruption itself, such as the Fiscal Responsibility Law, which limits state debt and spending and which requires the provision of transparent fiscal information to the public. A similar institutional advance has been the dramatic increase in the power of the Receita Federal, or federal revenue service, in light of the high priority given to fiscal balance since the implementation of the Real Plan. With pressure from the Receita, new taxes such as the CPMF (Contribuigao Provisória sobre a Movimenta$ao ou Transmissáo de Valores e de Créditos e Direitos de Natureza Financeira) tax on financial transactions have been created that not only tax all financial transactions in the banking system, but also enable the Receita to evaluate individuals' tax declarations against the size of their financial flows. As of 2007, banks are required to make their client lists available to the Central Bank, which will facilitate judicial investigations by centralizing the information-gathering process. Other advances directly target corruption, as in the CGU's randomly chosen annual audits of selected municipalities and states, which have exposed shockingly pervasive local-level corruption. The 2004 creation of a National Judicial Council and a National Council of the Ministério Público, while still relatively new, may help to curb some of the worst abuses within these institutions. Already these councils have begun to tackle thorny issues such as nepotism, abusively high salaries, and individual instances of corruption. Similarly, recent corruption scandals helped to generate pressure for a number of important legislative changes that together may contribute to strengthening anticorruption measures. In the wake of the congressional budget scandal of the early 1990s, for example, changes in the legislative process were introduced that circumscribed the discretionary powers of the congressional budget committee (Praga 2007, 15). Also in response to these scandals, Amendment 35 of the 1988 Constitution allows the STF to open hearings against congressional representatives without first seeking the authorization of both houses of Congress. Responding to widespread complaints about the unethical nature of party switching by politicians, both the electoral courts and the STF have ruled to ban the practice, which may have important effects on coalition management in coming years. Other important changes over the past decade include a significant increase in the penalties against vote buying;23 a new law against money laundering; a tightening of laws on tax evasion; and a series of measures aimed at improving investigation and prosecution, including easier access to fiscal data, bank, and telephone records, a new phone tapping law, and the introduction of criminal plea bargaining and witness protection. A final source of change comes from abroad. Not only are foreign companies and governments increasingly paying lip service to anticorruption efforts, but Brazil is increasingly involved in international efforts that are highlighted in Chapter 8. Brazil signed on to the United Nations Convention against Corruption in 2005, which commits it to adopting a number of preventive measures and cooperating with other nations on law enforcement and the recovery of

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corruption proceeds. Although not all forms of foreign intervention will always be welcomed, another form of influence from abroad is the increasing role foreign law enforcement is playing in Brazilian domestic corruption investigations. In the case presented against former governor and mayor Paulo Maluf, for example, European banking officials cooperated in a halting but nonetheless significant search for his financial transactions. More recently, Maluf was indicted by the New York District Attorney's office for corruption in the building of a major thoroughfare during his time as mayor of Sao Paulo. There is a long way to go, of course. The judicial reform of 2004 did little to improve the likelihood that corrupt acts will be more effectively or rapidly prosecuted, and did nothing to eliminate the privileges that complicate the effective prosecution of corrupt senior officials. Sadly, the 2004 reform's approval also seems to have exhausted much of the political momentum in favor of comprehensive court reform. 24 The mensalao scandal has generated some support for political reform, but the devil will be in the details. Few incumbent politicians are interested in adopting the most discussed electoral reform proposal, a shift to a hybrid, German-type electoral system; legislative opposition is high because such a reform would end the use of open-list proportional representation and thus might "kill o f f ' some deputies elected on the basis of buying off local electorates with pork and "walking around money" (Ames 2001, 61). For all the pessimism that justifiably surrounds debate about corruption in Brazil, though, it is important to recognize that the glass is half full. Corruption is still an exception, rather than the norm, which is an important cross-national comparative benchmark. Many countries around the world exhibit less horizontal and vertical accountability and suffer more widespread corruption. In Brazil, in contrast, power is contested, even if somewhat unequally; public goods are generally disbursed in a fashion that at least pays lip service to equality; corruption is not recognized as acceptable by society at large; and a clear distinction exists between private and public spheres of activity. 25 Although there is plenty of leeway for particularistic decisions in Brazil, such decisions are not widely perceived as legitimate or democratically justifiable. That in itself is an important step in the right direction, but it remains insufficient, and time is short. Although belief in democracy has increased markedly over the past fifteen years, so too has cynicism about politicians. The race between these trends remains too close to call, but the implications for Latin America's largest democracy will be enormous.

Notes I thank Lourdes Sola, Tim Power, Sérgio Praça, Matt Ingram, Alessandra Fontana, Manuel Balân, and the editors of this volume for their helpful contributions. All errors are mine alone.

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1. It should be noted, however, that Collor was subsequently cleared of criminal charges in the Supreme Federal Tribunal. 2. Brazil's federal bureaucracy is the most advanced in the region, according to Stein et al. (2006, 68-71). 3. It must be emphasized that "petty" corruption can be anything but petty in terms of the sums involved: "Petty" refers only to the fact that it takes place at the implementation end of the policy process rather than at the "grand," political decisionmaking end of the process. These definitions are derived from the U4 Anti-Corruption Resource Centre: Corruption Glossary. Available online at http://www.u4.no. 4. It is worth noting, however, that although it does not necessarily negate the correctness of these perceptions, the 150 businesspeople surveyed claimed a far different pattern of actual experience. Just over 45 percent had experience with bribery in public contracting (licitagdes), an equal share had actual experience with bribery in taxation, and just over 30 percent had experience of bribery in licensing. 5. For an overview of cross-hiring in Congress, see Vaz (2005,101-110,121-126). 6. For a comprehensive approach to the problems posed by inflation in both the economic and political realms, see Sola and Whitehead (2006). 7. Abrucio and Loureiro (2005) suggest that intertemporal rules like the LRF, other limits on spending, debt limits, and inflation targets, are a form of maintaining long-term accountability, on a par with horizontal and vertical accountability. This is an extremely attractive conceptualization, although I do not explore it further here given the largely tangential relationship with corruption per se. A similar argument on the accountabilityenhancing effects of the LRF can be found in Abramo and Capobianco (2004, 81). 8. Skepticism about democratization's effect on corruption can be found in Davis et al. (2004), Geddes and Ribeiro Neto (1992), and Weyland (1998), among others. 9. On the difficulties posed by open-list proportional representation in regard to corruption, see, for example, Chang (2005). As Triesman (2007, 23) notes, however, the effect of electoral systems is not yet conclusively established: "Although the effects might exist, the evidence for them is fragile." 10. Rules on contributions are quite generous: Individuals can donate 10 percent of gross yearly income, and a corporation can donate 2 percent of gross yearly income (Samuels 2001). 11. Sixteen different parties won seats in the lower house in the 2002 elections, and twenty in the 2006 elections. 12. It should be noted that poor wages are not the cause of corruption among Brazilian federal congressional representatives, who are extremely well-financed, receiving roughly R$287,000 a year in salary and perks (or roughly US$354,000 in purchasingpower parity-adjusted US dollars). In addition to an annual salary of R$192,000, representatives receive R$50,000 a month to hire staff, R$3,000 in housing allowances (or official housing), R$4,200 for mail, R$ 15,000 for reimbursements (usually paid without respect to actual expenditures), R$15,000 to keep up a home-state electoral office, and R$8,000 for air travel. Figures are from Moraes 2006; purchasing-power parity adjustment by author, using data from IMF World Economic Outlook database 2007. 13. Some of the most interesting examples from the perspective of corruption are Observat6rio da Imprensa (Projor), Forum Brasileiro de Orgamento, Transparencia Brasil, and Foco no Congresso. 14. Only 26 percent of the population is considered fully literate (Institute Paulo Montenegro, in Abramo 2007). 15. Article 102 of the 1988 Constitution explicitly gives the STF jurisdiction over cases involving the president, vice president, members of Congress, ministers, the prosecutor general, superior court judges, and ministers of the Tribunal de Contas da Uniao.

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16. For an intriguing account of recent cases of judicial corruption, see Vasconcelos (2005). 17. For example, the Commission for Public Transparency and Combating Corruption, an eighteen-member advisory council created in the CGU in 2003. 18. Perhaps most prominent are the GAECO squads (Grupo de Atua?áo Especial de Repressao ao Crime Organizado), which exist in several states and are generally composed of prosecutors, sometimes with the investigative assistance of seconded or retired police officers. 19. For an extended discussion of the interactions between institutions in the Brazilian web of accountability, see Power and Taylor (forthcoming). 20. A broader discussion of the individual institutions, their functions and shortcomings, can be found in Speck (2002); a summary of the relation between CPIs, Ministério Público, the Federal Police, and the Tribunals de Contas can be found in M. M. Taylor and Buranelli (2007). 21. See also similar arguments in Bailey and Dammert (2006, 255) and Speck (2002,481). 22. Oversight is the process of monitoring institutions for the probity or effectiveness of their actions. Oversight may be conducted through ongoing, regularly scheduled audits, through the threat of random audits, or by providing a channel for whistle-blowers. Regardless of the form, oversight ideally provides an institutional venue through which citizens or other government institutions can obtain a report of a given bureaucracy's actions at a particular point in time. 23. Interestingly, the law against vote buying was pushed through by public initiative, rather than through direct introduction of legislation by either Congress or the executive. 24. Much of the time since approval of the constitutional amendment on judicial reform has been spent working toward approval of twenty-six very important pieces of enabling legislation. Although these bills represent a major step forward, they are largely not new initiatives, but instead, necessary to the successful conclusion of the 2004 reform. 25. These four diagnostic measures are drawn from Mungiu-Pippidi ( 2 0 0 6 , 9 1 - 9 4 ) .

5 Cuba: Corruption at a Crossroads Sergio Diaz-Briquets and Jorge Perez-Lopez

Contemporary Cuba's administrative corruption is rooted in Spanish colonial rule and is similar in many respects to that of the rest of Latin America. However, nearly five decades of socialism, one-party rule, a controlled press, extremely weak civil-society institutions, central planning, and rationing, have superimposed forms of corruption that differ from the rest of the region. The opening of the economy to foreign investment and the dollarization process of the 1990s created new opportunities for corruption to thrive. There is also some evidence that the bases have been set for grand corruption when the longawaited transition to a capitalist democracy gets underway. There is very little systematic information on the level or spread of corruption in socialist Cuba. Cuba presents a particularly challenging case. Major methodological obstacles include the inability to conduct independent research in Cuba due to frequent restrictions on freedom of movement for foreign-based researchers visiting the island as well as severe restrictions on freedom of expression for Cuban residents. The government's near-absolute monopoly over the island's media for nearly fifty years has given it the power to shape public opinion at home. In addition, contrary to the situation in most other countries where the press has at least some freedom to report on corruption, Cuba lacks an independent press capable of reporting actual or alleged cases of corruption. Although the official Cuban press does report on corruption, it does so at the direction of the government or the Communist Party of Cuba (Partido Comunista de Cuba [PCC]) and generally in fulfillment of some predefined political objective. In recent years, some of the information gap has been closed by the emergence of dissenting independent journalists who often manage to publish their own corruption accounts abroad. Cuba has been often excluded from international quantitative studies dealing with many social and economic issues, including governance and corruption, partly because of the notorious restrictions by the Cuban government on 113

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carrying out surveys on the island and concerns from the international community about the reliability of official Cuban statistics. However, some of the available international measures of corruption and governance do include Cuba. Although these measures have to be interpreted with caution, they still provide a useful yardstick to examine the nature and extent of corruption in socialist Cuba. They suggest that the country's highly restrictive political and economic system, while constraining certain types of corruption, allow many others to flourish. The introduction to this volume evaluated these measures and placed Cuba's situation within a broader hemispheric and international context. This chapter maps the landscape of corruption in contemporary Cuba and presents ways and means through which corruption is being addressed. It draws heavily on previous work by the authors (Diaz-Briquets and Perez-Lopez 2006), updated to reflect more recent developments. The first part discusses patterns of corruption in Cuba, with emphasis on the complex interplay of governmental and economic institutions, ideologies, and political cultures in Cuba's socialist system that makes it particularly prone to corruption. The second part describes the impact of corruption in contemporary Cuba, while the third discusses the major causal influences on corruption. The fourth and final part focuses on anticorruption efforts and on why current approaches are not likely to be effective given the country's political and economic systems.

Patterns of Corruption It stands to reason that corruption on the island would follow closely the patterns in other socialist, centrally planned economies whose ideology and political and economic systems Cuba has emulated for more than four decades. Socialist economies claim ultimate ownership and control over all (or nearly all) property; as a result, the scope of economic resources and economically valuable decisions controlled by government officials is vast. Within the centrally planned (or command) economy, officials named by the Cuban Communist Party control all aspects of economic activity—the naming and firing of the managers of major firms, the production targets, the legal destinations of the goods and services produced, and the prices at which those goods and services can be sold. In turn, in the few sectors of the economy that the Cuban government opened up for foreign investment over the course of the 1990s, the Cuban government still controls the terms under which foreign firms can operate and even oversees the access of ordinary Cubans to jobs with foreign firms via a government employment agency. In turn, government power is a monopoly held by the PCC and retained by means of uncompetitive elections, formal restrictions on civil liberties, and varied mechanisms to repress dissenters who challenge the Communist Party's control over all levers of economic and political power. Corrupt activities for which some concrete evidence is available from the national or international media include (1) misappropriation of state resources;

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(2) misuse of office; and (3) special perquisites extracted by the Cuban nomenklatura, the Cuban version of the small elite of Communist Party members in the former Soviet Union who held key administrative positions in government, industry, education, agriculture, and so on. In the 1990s, when Cuba reduced government control over the economy in order to stop an economic freefall, a new class of Cuban "entrepreneurs" emerged who have appropriated state assets by virtue of their government connections. These socialist entrepreneurs are currently major players in the Cuban economy and are likely to be so when a transition away from socialism gets underway. Misappropriation of State Resources The Cuban state's overwhelming control over the island's resources and the shortage economy that prevails generate many potential arenas for corrupt behavior. Because the socialist model of organization is unable to generate sufficient volume of goods to meet the demands of consumers and producers, this translates into ubiquitous black markets for food and consumer goods (including items under the rationing system), construction materials for home repairs, spare parts for appliances and motor vehicles, and so on. Although these transactions are illegal, black-market activity involving goods and services formally controlled by the government is widely practiced, and there is no stigma attached to it in most circles. As an interviewee reported to sociologist Juan Clark (1990, 296), "the majority of the people believe that stealing from one's employer, the state, is not a crime." Periodically, the state orchestrates large-scale police raids to catch black-market operators and employees who are misappropriating state property, but the practices are so generalized that enforcement activities have a very limited impact on its overall magnitude. Misappropriation of government resources takes different forms, theft being its crudest manifestation. Since it is so widespread and condoned by most citizens, Ted Henken (2003, 354) has argued that "by and large, Cubans do not go to work in state jobs out of a sense of revolutionary obligation or loyalty (conciencia) or moral incentives, and much less for any material incentives. They work in state jobs because such a job provides them with access to state goods that can be 'liberated' and resold on black markets." Misuse of Public Office The extremely high concentration of resources in the state sector, the centralized nature of the decisionmaking system, the very general nature of laws, and the lack of means to contest arbitrary enforcement actions place a great deal of power in the hands of government officials and hence create ample opportunities for corruption. There is a generalized form of misuse of government office associated with favoring family and friends generally referred to as sociolismo (in English, this means "partner-ism" or "friend-ism" but in Spanish this is also

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a play on words with the Spanish term for socialism—socialismo). Corruption in socialist Cuba thus sometimes takes the form of a generalized "I'll scratch your back if you'll scratch mine" system that rewards friends and family. General Prosecutor of the Republic Ramón de la Cruz Ochoa told a journalist in 1991 (Carrasco 1991, 27) that Cuba's corruption problem was "sociolismo organizado, sometimes used to solve enterprise problems and other times to solve personal problems. These corrupt practices tend to build on each other and bring about a lack of respect for rules and laws." When kinship and friendship networks do not produce a favorable decision, paying bribes as a way to influence a government official is commonplace. Bribes are also common as a means to persuade government officials to turn a blind eye toward illegal behavior. Finally, the rapid growth of the segments of the economy that operate with hard currencies (particularly US dollars) has given rise to extensive misuse of office and bribe taking by officials regulating them. While examples most often cited refer to the international tourism industry, corruption extends beyond this sector. There are numerous reports of government officials "selling" jobs that provide jobholders with access to hard currencies. For example, independent journalists reported that, in 2001, officials of the Ministry of Tourism were demanding US$500 to US$800 from individuals seeking jobs as taxi drivers, hotel bellhops, front-desk employees, or hotel security officers ("Empleos" 2001). Two military officers in Trinidad subjected tourism taxi drivers to rigorous inspections and evaluations with the intent of firing them and selling their slots, in dollars, to other prospective drivers ("Two Military" 1997). Officials of several government entities involved in joint ventures with foreign investors that operate in the dollar economy have been implicated in corrupt activities and either fired or arrested. Among the most notorious incidents was the US$20 million corruption scandal at tourism enterprise Cubanacán in 1995 that led to the dismissal of its president (Tamayo 1999; Amuchástegui 2000). A new scandal at Cubanacán in 2003 led to the dismissal and jailing of the then-president of the enterprise and of the heads of two non-hotel divisions ("Top Cuban" 2003; "Nota Informativa" 2003). In February 2004, the tourism minister was dismissed from his post and replaced by a military officer who had formerly managed the tourism arm of the armed forces (San Martin 2004; "Toma control" 2004). Reports of high-profile corruption in other foreign currency-related sectors of the economy include the TRD Caribe chain of hardcurrency retail stores, the fisheries ministry, and a hospital catering to foreign tourists who pay for services in hard currency, among others. Privileges and Abuses of Power by the Ruling Elite

As in the former Soviet Union and other socialist countries, Cuba has a system of special privileges for members of the nomenklatura, referred to on the island

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as pinchos, pinchos grandes, or mayimbes. These perquisites include total or partial exemption from the rationing system, ability to obtain imported food and other consumer goods at preferential prices, favorable housing (including vacation homes), use of government vehicles, access to special hospitals and imported medications, admission to special schools for their children (the socalled hijos de papá), and the ability to travel abroad, to name a few. In an economic setting in which most Cubans are struggling to survive amid ration books, dilapidated housing, bicycles, and severe travel restrictions, the privileges accorded to the communist elite constitute a considerable and notably preferential diversion of public resources for private gain. A special form of abuse of power by the ruling elite relates to the privileges of "socialist entrepreneurs." The Cuban leadership has stated unequivocally that it will not stray from the path of socialism and privatization is out of the question.1 However, the latter already has occurred to some extent through a process similar to the "spontaneous privatization" that preceded the transitions in Central and Eastern Europe and the former Soviet Union. The Cuban leadership has spawned a new class of socialist entrepreneurs—composed of PCC officials; current or past members of the armed forces; and sons, daughters, and relatives of Cuban nomenklatura members. They have already appropriated state assets through the paper reorganization of state-owned enterprises into "private" corporations of which they have declared themselves owners or directors. The corporations are organized under the legal figure of sociedades anónimas, or S.A., similar to limited liability corporations under other legal systems. At the end of 1992, reportedly sixty-three S.A. were operating in Cuba (Gunn 1993, 13). There is no precise information on how many S.A. may be in operation currently, but the number is probably in the hundreds. The S.A. tend to operate in the more dynamic segments of the economy, generally referred to by Cuban economists as mercado de frontera (or "border" or "frontier" market), market niches where they can carry out transactions in hard currency, attain high profit margins, and attract foreign investment (Peters 2001). S.A. tend to have a significant presence in tourism, transportation, commercial real estate, and financial services. Although in theory S.A. are owned by the state, many managers reportedly act as if they were privately owned. The "owners" and managers of the S.A. are predominantly high-level Cuban Communist Party and military officers (Alfonso 1999). Smaller Scale Forms of Corrupt Activity Although relied upon by the political elite to enjoy privileges contingent on rank, corruption in its many variants is also one of the main vehicles at the disposal of the average Cuban to assure economic survival. The discussion that follows provides the basis for this conclusion by illustrating manifestations of corruption in Cuba and how widespread they are.

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Shortchanging customers. Workers in the state distribution sector often skim a portion of the goods they sell to consumers for their own use or to sell in the black market. For example, restaurant employees might decrease the size of portions they serve, bartenders might change the recipe for mixed drinks to include less of an alcoholic beverage, or a butcher might snip an ounce or two of meat from each customer to sell on the black market. So ubiquitous and accepted is this practice that it is known on the island as imposing a fine (multa) on consumers.2 The obvious result is mistrust in essential market transactions and the development of nearly universal incentives for state employees to take advantage of their positions. Diversion of state resources. Another form of misappropriation of state resources common in Cuba is diversion (desvio). The objective of the diversion might be personal gain for the government official or enhancement of his or her position in the state or party bureaucracy to the detriment of the purpose for which the resource was originally allocated. For example, the manager of an acopio center (which collects the various forms of output that private farmers are required to sell to the state at fixed prices) might understate the amount of a certain item that is procured and divert the difference for personal use or for sale in black markets; or the manager of a store might report a higher percentage of goods damaged in transit or spoiled and divert the difference for personal use; or the manager of an enterprise might divert construction materials from his workplace to build or repair his own home or that of family and friends. The obvious consequence within the context of a command economy is that the constant deviation of resources perennially impedes the attainment of economic targets as inputs are either not available or there is a mismatch between the availability of some and shortages of others. Another common form of diversion of government resources is the use of government vehicles or equipment for purposes other than the ones intended. Although somewhat dated, the classic example of diversion of state resources for personal use was given by an unimpeachable source, President Castro himself, in a speech in 1987: We know about the problems caused by desviaciones (diversions of state property). Not too long ago, I was visiting a certain zone of the country, taking a look at some problems related to the economy. I found a crane in the area. A person was putting a cement roof on a house, and had gathered a 16-ton Kato crane, made in Japan, a Japanese concrete mixer, a truck to carry the cement mixer, and a tank truck, all property of the state. He had bought a pig, beer, etc., for those who were helping him. The three trucks came from different enterprises As I was telling this story to the head of the Central Planning Board he tells me: "On Sunday I found a crane doing the same thing, but it was a 40ton crane." (F. Castro 1987,4)

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Yet another common form of corruption is for government officials to take bribes in return for conferring benefits to individuals paying the bribes. Particularly well documented are "gifts" to government-employed physicians to get medical care or access to scarce medications or to gain admission to a state hospital. A recent, nationally representative telephone survey of Cuba found that 20 percent of respondents reported making gifts or "under-the-table payments" to receive health care services, with a whopping 50 percent claiming that they knew of someone who had to do likewise in exchange for services (DiazBriquets and Perez-Lopez 2007, 20-21). Fidel Castro, in an address at the end of 2002 to foreign students enrolled in the Latin American Medical Sciences School, acknowledged corruption problems in general, and in the health care sector in particular: We know a lot of things. Don't believe for a minute that we do not know about some of the things that have been going on. The special period brought upon us shortages of many products.... One person would say to another: "I will get this item for you if you take care of this other problem that I have, if you bring me a gift." We hope that the consciousness of our workers, and particularly of our physicians, will make them reject from the bottom of their soul the entreaties of mercenaries who seek to corrupt our physicians, our health care workers, and those who will want to get under-the-table payments for providing a dental or eye consultation or some other service. (F. Castro 2002)

Another sector where extensive bribing is reported is the self-employed sector. An analyst who conducted field research on the island found that "all manner of illegalities, low-level corruption, and bribery are commonplace within the private, self-employed sector" (Henken 2003, 350). Thus, because the law is often unclear, inspectors have broad power to interpret and apply it arbitrarily. Interviews with private renters [of rooms in private homes to international tourists] indicate that the threat of fines and even closure is often used by inspectors to elicit bribes. Field studies among private entrepreneurs in Havana have found that very few feel that they have any input in the decisions that affect their livelihoods and that the appeal process for contesting an unjust fine is a sham. . . . These perceptions are likely to increase a homeowner's propensity to pay bribes, since one may conclude that there is no other effective recourse. (Henken 2002, 11)

Operators of home-based private restaurants, known as paladares, tend to be egregious violators of rules, not only violating the norm setting a limit (twelve) on the number of diners at a given time, but also the one banning employment of nonfamily members. Successful paladar owners state that "their success derives from their ability to corrupt low-level police officers and inspectors" (Henken 2003, 354).

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Political Impact of Corruption In Cuba's peculiar and in many respects anachronistic economic system, corruption exacts a heavy toll because it interferes with the performance of a command economy already burdened by intrinsic inefficiencies. The misappropriation of state resources not only diverts resources from critically needed areas but introduces perverse incentives for workers that further cripple efficiency. Abuses of power and perquisites by the ruling elite can be traced back to the early years of the revolution. In the mid-1960s, Fidel Castro led a drive against privileges and extravagant lifestyles he dismissively referred to as "la dolce vita."3 Surveys of émigrés conducted by Clark (1990), in 1971 and 1986, revealed a high degree of awareness of the special privileges enjoyed by the elite. In the 1971 survey, nearly 90 percent of respondents indicated that the ruling elite enjoyed privileges. When questioned about the group or groups that received such privileges, and the degree of privilege, the respondents overwhelmingly (86 percent) indicated that the comandantes and the top leaders of the PCC and of the government received the highest degree of privileges, followed by top leaders of the armed forces (Clark 1990,439). In the 1986 survey, 97 percent of the respondents indicated that there were privileged groups; 80 percent of the respondents identified top government officials and PCC leaders as the main recipients of such special treatment, followed by top leaders of the armed forces (Clark 1990,439^40). Although the sort of corruption inherent in a command economy has been present since the early days of the revolution, the severe economic scarcities triggered by disruptions in commercial relations with the socialist community in the early 1990s resulted in the mushrooming of corruption. These disruptions manifested themselves in delays and shortfalls in imports of oil, food, raw materials, and machinery from the former Soviet Union and the former Eastern European socialist nations combined with the loss of financial assistance (subsidies) from these countries as well as markets for Cuban exports. Over the period 1989-1993, Cuba's gross domestic product (GDP) contracted by 35 percent, merchandise exports fell by 79 percent and imports by 76 percent, the budget deficit mushroomed to about a third of GDP, and the external debt grew by 42 percent. The austerity measures adopted by the government as a self-preservation strategy (under the euphemism of Special Period in Time of Peace) brought down already-low levels of personal consumption and eroded the quantity and quality of public services. Special Period economic scarcities weakened "socialist" morality, fed popular disenchantment with the socialist ideology, and buttressed a survival mentality in which corruption flourished. There is strong evidence of discontent with and rejection of ideological appeals by the Cuban population, particularly the youth, yearning for improved living standards and economic reforms. At the depth of the crisis in 1993-1994, Cuba experienced a dramatic increase in rafters (balseros) willing to risk their lives on open water to flee to the United States

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and an unprecedented incident in which more than ten Cubans publicly shouted complaints and protests at Fidel Castro himself. The impact of these developments on the system's political legitimacy is difficult to gauge systematically because restrictions on freedom of expression make public opinion polls difficult to conduct. Nonetheless, the economic collapse's impact on corruption and the ensuing corruption's influence on the citizenry can be inferred to have been dramatic. Unrealized economic expectations and the inability of the system over nearly five decades to fulfill even some basic consumer needs account for corruption and its explosive appearance since the early 1990s. Thus, corruption has become an integral part of the system. In today's Cuba, only those without the opportunity to engage in some sort of corrupt behavior do not do so (with limited exceptions). It is also worth noting that many behaviors labeled as "corrupt" in Cuba would not be so categorized in political and economic systems where simple and frequent market transactions are the legal norm rather than considered economic crimes. Subsequent interviews of émigrés (Clark 1999, 222) identified a new privileged group: those who interact with foreign investors and have access to hard currency. The first member of the Cuban nomenklatura to be publicly accused of abuse of power and corruption, dismissed from his official duties, and sent to prison, was Luis Orlando Domínguez. At the time his case was made public (June 1987), Domínguez was president of the Cuban Institute of Civil Aeronautics (Instituto de Aeronáutica Civil de Cuba; prior to this, he had been first secretary of the Union of Communist Youth (Unión de Jóvenes Comunistas [UJC]) and a member of Fidel Castro's personal staff. President Castro himself appeared on national television to present the bill of particulars indicting Domínguez: Renovations made at the home of Dominguez's relatives were made with work crews from the Ministry of Construction; government resources were used in renovating Dominguez's home (Castro referred to it as a "Garden of Eden," occupying an entire city block in a Havana suburb); Domínguez failed to follow rules to obtain permits to perform home repairs and purchased imported goods for his own use using hard currency to which he had access through his official position. A more in-depth investigation carried out after Dominguez's dismissal revealed that the source of his wealth was UJC's funds set aside for a program to encourage youth camping. The 1989 trial of General Arnaldo Ochoa and several high-level accomplices for drug trafficking and other offenses brought into the open the privileges enjoyed by the ruling elite and how this group used its power for private benefit. The Cuban government's official version of the case (Causa 1/89 1989) is peppered with references to black-market activities, misappropriation of funds, purchases of imported items for personal use, and "gifts" given and received. Other high-level government officials subsequently prosecuted for corruption in the 1990s include Carlos Aldana, the PCC's chief of ideology and foreign affairs, at the time reportedly the third person in the Cuban hierarchy after Fidel

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and Raúl Castro, and Roberto Robaina González, a former president of the Federation of University Students and First Secretary of the UJC, who was serving as foreign minister in 1999 at the time of his dismissal ("Cuba's Communist" 1999). The corruption charges against Ochoa, Aldana, Robaina, and other members of the elite were pursued, at least partially, because of political reasons. It was the real or perceived lack of political loyalty that prompted their dismissals from the key posts they held and the leveling of corruption charges. This suggests that there are countless other cases of unreported abuse of power and privileges by government officials who remain loyal to the regime. Nepotism is a factor in attaining leadership positions and becoming a member of the Cuban nomenklatura. Raúl Castro, brother of the Maximum Leader, was elected president in February 2008 as the elder Castro stood aside because of illness. Prior to rising to the presidency, Raúl held the second highest military ranking and was also minister of the armed forces, first vice secretary of the PCC, and first vice president of the Council of Ministers and of the Council of State, so that the two Castro brothers held interlocking membership in top party, state, military, and administrative roles. The late Vilma Espín, Raúl Castro's wife, was head of the Federation of Cuban Women (Federación de Mujeres Cubanas) since 1959 and a member of the Political Bureau of the PCC. While they are related to President Castro, the claim can be made that these two individuals had important personal roles in the revolutionary struggle and thus their prominent leadership positions cannot be necessarily attributed to family relationships. This is not the case with Fidel Castro's son, Fidel Castro Diaz-Balart, who was appointed executive secretary of the Cuban Nuclear Energy Commission until 1992, when he was dismissed. Another brother of Fidel Castro, Ramón—who had no role in the revolutionary process—has been the manager of important agricultural projects and a major force behind the country's agricultural policy. Marcos Portal León, former minister of basic industry, member of the Council of State, and member of the Political Bureau of the PCC, is married to one of Fidel Castro's nieces. Luis Alberto Rodríguez López-Calleja, married to another niece (Raúl Castro's daughter Deborah), is the director general of a very large business enterprise controlled by the armed forces (Alfonso 2002; Fogel 2003). There are numerous documented examples of nepotism practiced by the nomenklatura, including a new variant whereby nomenklatura members secure business or schooling opportunities abroad for their children in anticipation of regime change. One analyst writes These government officials capitalize on their contacts with foreign visitors and their access to the national patrimony. One of the highest-ranking revolutionary leaders sent paintings valued at more than one-half million dollars out of the island, and used the money to set up a restaurant for a son in Europe. Others find scholarships for their children or jobs in companies that have commercial relations with the island. Plain influence peddling. The children leave

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the island with valuable books or art works in their suitcases that they later sell to foreigners. Sometimes, since they have access to dollars, they "buy" a foreign destination for their children. For eight or ten thousand dollars they are able to get an Italian or a Spanish citizen with the right connections to provide their son or daughter with a job or the opportunity to enroll to pursue a mysterious "Masters" degree in a foreign university. In some instances, in a clear case of corruption, the foreign lover and future life-line for the family, is rewarded with a consultancy paid in dollars by the Cuban state. (Montaner 2002, 210)

Some of the entrepreneurial activities by children of the nomenklatura and their associates have not been without controversy. Mexican authorities discovered in December 2003 a network based in Cancun headed by the son of a Cuban comandante that sold real and counterfeit Cuban passports and Mexican visas to Cuban women and men intending to travel to Mexico to practice prostitution; other children of members of the nomenklatura were supposedly also involved in the network (Montaner 2003). And a former girlfriend of Fidel Castro's son Antonio told foreign reporters that she and the younger Castro were involved in selling exit visas to Cubans who wanted to emigrate to Spain; she further stated Cuban authorities dropped the case against her when they learned about her accomplice ("Piden a Espana" 2002).

Influences on Corruption The roots of administrative corruption in Cuba can be traced back to political, institutional, administrative, and rule-of-law practices during four centuries of Spanish colonial rule. Governance practices instituted by colonial administrators placed a premium on rent seeking, permitted the sale of official positions and nepotism, and relied on low compensation for public officials. Within this context, contraband and other fraudulent practices emerged, as the residents of Cuba attempted to circumvent a highly constricted economic environment imposed by the metropolis, which favored Spanish colonizers over criollos (the Creoles who were the Cuban-born descendants of earlier generations of colonists). Cuba's struggle for independence from Spain was long, bitter, and costly to the island in terms of human resources and economic development. By the time Spain withdrew in 1898, and the United States intervened temporarily, institutions on the island were extremely weak and the economy was in shambles. Foreign capital, primarily from the United States, flowed into the island to take advantage of the distressed economic situation and came to control important sectors of the economy. With the coming of the republic in 1902, and with opportunities for social and economic advancement limited by excessive domination of the national economy by foreign interests, Cubans with ambition turned to politics and the opportunities it created for wealth accumulation. Quite a few of the major participants

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in the wars for independence had lost their fortunes in the process and came to see government as a path toward restoring the material comforts that they had previously enjoyed. In turn, many less fortunate or less skilled Cubans became dependent on political patronage to earn a living. The frequent crises that rocked the sugar industry created an environment of uncertainty within which many organized social groups—businesses, labor, the professions—turned to the state for economic security. One response was to regulate the economy, initially the sugar sector but eventually others as well, creating a web of rules that expanded the discretion of regulators to make economic decisions and facilitated the collection of bribes. During the republican era, the Cuban state employed a large number of poorly paid civil servants, many of them susceptible to corruption or enjoying sinecures secured through patronage. Others protected their labor, professional, or business interests through political lobbying, a process that often involved paying bribes. An excessively regulated economy not only stemmed economic growth, but also paved the way for many forms of corruption, particularly petty or low-level corruption. This dependency of citizens on the state would be carried out to its ultimate expression by the Castro revolution of 1959, which made the Cuban socialist state the final arbiter of the fate of every Cuban, regardless of social and economic status. The government ultimately controlled the jobs Cubans would fill, where they would reside, and even the goods and services they would consume. The size and structure of the Cuban state, the high degree of discretion of government officials over resource allocation, and the lack of vertical and horizontal accountability explain the very high level of administrative corruption that plagues socialist Cuba. Size and Structure of the State: Opportunities

for

Corruption

Since the early 1960s, the Cuban state has controlled an overwhelming share of the nation's productive resources. In 1968, less than a decade after the revolutionary takeover of January 1,1959, the state controlled 100 percent of Cuba's industry, construction, wholesale and retail trade, banking, and education; only with respect to agriculture (70 percent under state control) and transportation (98 percent under state control) was there measurable private-sector presence. By 1988, the state's share of agriculture had risen to 97 percent and that of transportation to 99 percent (Mesa-Lago 2000, 347). Thus, by the end of the 1990s, with the exception of private farmers and owners of taxis and other means of transportation, the Cuban state had complete control over the nation's resources. Another indicator of the overwhelming control of the state over the Cuban economy—and hence the opportunities for rent-seeking behavior-—is the share of the total civilian labor force it employs. The Cuban state employed more than 85 percent of civilian workers in 1970; this share rose to nearly 92 percent

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by 1981, and remained at this level throughout most of the 1980s. The approximately 8 percent of the labor force that was employed by the nonstate sector in the 1980s consisted mostly of private farmers, agricultural cooperative members, self-employed workers, and a small number of salaried private workers. In the early 1990s, at a time when Cuba's economy was reeling from the sudden loss of trade and aid from the former Soviet bloc allies, the Cuban government took initiatives to stimulate economic activity that reduced somewhat the role of the state in the national economy. These measures included decriminalizing the use of foreign currencies (dollars) as a means to attract migrant remittances from overseas (1993); expanding legal self-employment (1993); restructuring the agricultural sector by breaking up state farms into quasi-cooperatives (1993); establishing farmers' and artisans' free markets (1994); and passing a new mining law (1994), a foreign investment law (1995), and legislation authorizing the creation of foreign trade zones (1996). These reforms opened up some space for Cuban citizens to operate independently of the state as entrepreneurs, consumers, producers, or traders. It was a short-lived opening, however. Since 1996, the Cuban state has systematically closed spaces for independent economic activity, reclaiming some of the ground ceded to the private sector and disenfranchising independent economic actors that could have agglomerated into an emerging civil society. Moreover, as will be discussed below, the Cuban regime has not undertaken political reforms that would move in the direction of permitting personal freedoms and the establishment of independent organizations. Discretion as a Corruption Driver

Socialist Cuba's all-encompassing public sector has been subject to Soviet-style central planning since 1961. In that year, the Cuban government created a Central Planning Board (Junta Central de Planificación) and charged it with formulating annual and long-range economic plans. A network of central ministries and agencies was created to take charge of various sectors of the economy, giving rise to monopolies dealing with foreign trade, finance, labor, and banking. State enterprises that produced like goods were merged into trusts (consolidados), each controlled by a central entity or ministry. Centralization took a quantum leap in 1962. The government imposed strict controls on prices, set mandatory quotas on the output that private farmers were required to sell to the state at fixed prices (the acopio system), and instituted a national commodity rationing system that established monthly physical allocations for a broad range of consumer goods—food, clothing, personal hygiene products—for each citizen. Although initially considered as a temporary measure to deal with the transition to a socialist economy, the commodity rationing system is still in place forty-five years later. The acopio system, the rationing system, and the system of governmentoperated retail stores provide numerous opportunities for discretionary behavior

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by government officials and for bribes, bribe seeking, and other forms of corrupt behavior. For instance, government employees are responsible for making decisions on the level of production of specific agricultural commodities that farmers must turn over to the state to meet their acopio quota. Needless to say, farmers prefer to have as low an acopio quota as possible, thus increasing the amount of production that they would have available for self-consumption or to dispose of through more lucrative means, and are willing to bribe the acopio official to go along with low quotas. Similarly, government employees responsible for distributing rationed goods to the population routinely divert some of the goods for their own use or distribute the best-quality products or the largest amounts to friends and family or to those willing to pay a bribe (in the form of cash or in exchange for another desired product that is in short supply). Lack of Accountability

and

Corruption

Critical to guaranteeing government accountability and thereby stemming corruption are the rule of law, freedom for independent civil society organizations to exist and to perform their functions freely, and a press independent of government influence. Socialist Cuba scores very low on all three of these counts. The formal institution that is probably most critical for promoting horizontal accountability is the rule of law. There is a vast literature on the Cuban legal system and its shortcomings in providing a rule of law for the nation. According to one expert, law practice in Cuba is constrained by the inadequate number of legal professionals, the judiciary's lack of independence, the prohibition against the private practice of law, and the generally poor training of the practitioners. . . . The situation is not much better with respect to the laws. By and large, the laws in effect in Cuba today are obsolete (in that they do not represent currently accepted legal and business practices throughout the world) and . . . infused with Socialist dogma. (Travieso-Díaz 1996,49-50)

Cuba's record is among the worst in the world today with respect to individual property rights and the enforcement of contracts to guarantee such rights.4 Citizens typically come together to form civil society organizations (CSOs) in order to express the interests and values of their members based on ethical, cultural, economic, political, scientific, religious, or philanthropic considerations. Independence from the state is essential for the existence and operation of CSOs as potential engines of vertical or societal accountability. While the Associations Law (Ley de Asociaciones) purportedly guarantees Cuban citizens the right to associate freely and to form independent associations, in practice, the law effectively bars the legalization of genuinely independent organizations. The law requires organizations to "coordinate" and "collaborate" with

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a state counterpart entity. Fulfilling these conditions necessitates the group's subjugation to the government organization, by allowing a representative of the state entity to attend and speak at any planned or unplanned meetings; requiring the group to notify the government entity in advance of any publications; coordinating with the government entity regarding participation in any national or international event; regularly reporting to the government entity on its activities; and providing prior notice of the date and hour of any meetings or any other activities. (Human Rights Watch 1999, 159-160)

Thus, the Cuban state uses the registration process to thwart the creation of independent organizations. Only organizations that are authorized by the state can operate legally. All mass media organizations in Cuba are owned and operated by the Cuban government, the Cuban Communist Party, or government-affiliated organizations (J. Nichols 1982, 75). The Cuban revolutionary government took over most newspapers and broadcast stations in 1959. After a transition period that saw the shutdown of several newspapers, in 1963, Granma, the organ of the Central Committee of the PCC (modeled after the Soviet Union's Pravda), became the only newspaper in the country. Other government-run newspapers were created in the 1970s and 1980s to address the needs of regions or special groups (youth, farmers, workers, military personnel). The government also owns and operates all broadcast stations (radio and television) on the island and controls access to the Internet. In the 1990s, independent journalists on the island began to challenge the government's monopoly over information. Although they were unable to disseminate their dispatches on the island since the official media outlets are all owned and controlled by the government, these independent journalists filed their reports with the foreign press, mostly through telephone communication with collaborators in other countries (Ackerman 1997). In March 2003, the Cuban government arrested seventy-five peaceful dissidents and subjected them to summary trials, among them twenty-six independent journalists, including nine who were the editors of news agencies. While the government's action did not silence altogether the independent press movement, the jail terms coupled with the intimidation factor dealt it a severe blow (Reporters Without Borders 2003).

Anticorruption Efforts and Their Impact Although the anticorruption theme occasionally surfaced in Cuba during the last five decades, it was generally addressed with measures dictated by the circumstance of the moment and mostly with reference to political objectives or repercussions. The best-known incident, as noted earlier, revolved around General Arnaldo Ochoa who was executed after being charged with engagement in corruption. During the mid-1990s, as in so many other countries, the corruption

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problem began to garner more consistent attention. In Cuba this can be largely attributed to the grave economic difficulties produced by the end of Soviet subsidies and the survival strategies embraced by many citizens that entailed the appropriation of state resources, as well as by the opening of Cuba to the international economy with its temptations and opportunities. Corruption has been used systematically by the Cuban regime as a justification for the poor performance of the economy and the scarcity of consumer goods that has plagued the island. Anticorruption campaigns have been used to distract the citizenry from the underlying ills that affect the economy, namely the inefficiencies of the socialist economic system. Consistent with the above and for public consumption purposes, since the mid-1990s the Cuban leadership has decided to confront more systematically what they regard as an endemic and ubiquitous national problem that is adversely affecting the country's economy. As Fidel Castro himself has remarked, corruption even threatens the governing party's political legitimacy or its survival. Significant anticorruption measures implemented since the mid-1990s have included the enactment of anticorruption legislation, the issuance of a code of ethics for state employees, improved accounting practices and control procedures, the creation of a Ministry for Audit and Control (Ministerio de Auditoria y Control Interno), and the launching of several anticorruption campaigns (Diaz-Briquets and Pérez-López 2006, 164-171). In the past, the fight against corruption has also been used as a convenient strategy to pursue selected policy goals or to punish officials who fall from grace. For example, in the mid-1980s, when President Castro was waging an ideological campaign (the so-called Rectification Process) to eliminate vestiges of market-oriented behavior and root out entrepreneurship and consumerism, he criticized corrupt government officials who were enriching themselves. At that time, the Cuban press carried numerous articles exposing petty corruption that had allowed some individuals to gain access to government resources. The intent of the reporting was to lend support to Castro's rhetoric and actions.5 A replay of politically motivated, anticorruption campaigns occurred in late 2005, spearheaded by the "battle" against immoral conduct, misuse of government resources, and theft that Castro himself launched. Particularly since 2003, the Cuban government had been actively working to reverse the 1993— 1996 policy reforms. It recentralized economic decisionmaking by banning state enterprises from conducting transactions among each other in hard currency. The government wrested from decentralized enterprises the ability to engage directly in foreign trade and returned that power to the Ministry of Foreign Trade. It began to force joint ventures to deposit all receipts with the Cuban Central Bank. New rules extended direct government control over theretofore quasiindependent tourism enterprises and tightened requirements on tourism personnel. Finally, the government reversed some of the most visible reforms of the 1990s by canceling permits for certain forms of self-employment, banning the

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circulation of the US dollar, and imposing a tax on the exchange of US dollars for convertible pesos (Mesa-Lago 2005). In a speech at a gathering of university students in mid-November 2005, Fidel Castro (2005; see also Mayoral and Núñez Betancourt 2005) aggressively led the charge to dismantle what was left of market-oriented reforms. With language chock-full of military allusions, he proclaimed the start of a campaign against corruption, which he claimed proliferated during the Special Period. He admitted that the leadership had committed errors, deluded by the notion that it knew how to build socialism. He criticized "those who thought they could build socialism through capitalist methods," clearly a slap at those within his government who had favored the 1993-1996 reforms, and stated that those reforms had to be wiped out because they had sharpened "old problems"— inequality, corruption, the creation of a rich class—that Cuban socialism had already overcome. Cuba was bound to succeed in returning to its socialist roots, Castro asserted, because its nuclear weapon-strength morality is invincible. Returning to a familiar slogan, Castro proclaimed that "the battle against... [economic] deviations is a life or death struggle, a Fatherland or Death struggle." Under the guise of combating theft, corruption, and illegal economic behavior, in the second half of 2005 the Cuban government • suspended all employees of gas stations and replaced them with about fifteen thousand young social workers, loyal to the regime and without ties to the communities to which they were assigned (according to Castro, corrupt gas station attendants skimmed up to half of the gasoline supply and sold it in the black market); • designated an army general as director of the port of La Habana, the port that receives over 45 percent of Cuba's imports (conventional wisdom has it that port workers regularly "milked" shipping containers and stole merchandise for their own use and for sale in the black market); • brought under military control warehouses for imported goods operated by enterprises Cimex and Cubalse, located in the Berroa free-trade zone, and by the enterprise Platino, to root out theft by workers; • raided agricultural markets, confiscated produce being sold in contravention of state procurement rules, and fined those involved in illegal sales (also impounding vehicles used to transport illegal merchandise destined for agricultural markets); and • launched a police offensive (Operation Spider) in La Habana against owners of parabolic antennas, who received TV signals from Miami and sold them in their neighborhoods.6 A focus on the eradication of corruption is also evident on the public discourse of Raúl Castro, the nation's leader since his brother Fidel took a leave of absence from his formal government leadership roles in late July 2006 following

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a dramatic deterioration in his health. In December 2006, Raúl Castro called for greater discipline and transparency in government, particularly with respect to the transportation, food, and housing sectors (Agence France Press 2006b). With this optic, controlling corruption is a crucial component of ongoing initiatives to reactivate the economy and ensure the survival of the Revolution. The current leadership's view is that corruption is "in essence a national security issue" ("El gobierno señala" 2007). In his address to the Cuban people on July 26,2007—a very important address since he delivered it as the country's leader—Raúl Castro recognized "our problems, our inefficiencies, our errors and our bureaucratic and/or slack attitudes, some of which gained ground in the circumstances deriving from the Special Period Efficiency largely depends on perseverance and good organization, especially of systematic controls and discipline, and in particular on where we have succeeded in incorporating the masses to the struggle for efficiency" (R. Castro 2007). Accordingly, in 2007, the Cuban press reported results of several investigations of petty corruption involving the shortchanging of consumers and other irregularities (Cosano Alén 2007; EFE 2007). As noted in this chapter, most official references to corruption focus on petty or low-level corruption, with the bulk of policy interventions being designed to address its wide prevalence. Examples of current efforts along these lines include the implementation since April 1, 2007, of Resolutions 187 and 188 of the Ministry of Labor and Social Security (Ministerio de Trabajo y Seguridad Social [MTSS]). Their purpose is enforcing discipline in the workplace to increase productivity and minimize the incidence of corruption. The resolutions are intended to enforce compliance of state employees with work schedules, ensure their arrival at workplaces on time and remaining there for the duration of the workday; ensure protection of work-site patrimonies by applying necessary controls; and prevent acceptance of illegal payments in exchange for information or provision of services. Furthermore, state employees are henceforth required to report misappropriations of state resources; those failing to do so are liable to face penalties ranging from private or public reprimands, demotions, job suspensions lasting from six months to a year, or being fired (Associated Press 2006; Rodriguez 2007; "El gobierno señala" 2007). Further, on occasion, the contemporary Cuban press has also reported on corruption cases involving members of the nomenklatura who have fallen into political disgrace. Among the latest examples are the firing, in March 2007, of the justice minister, allegedly due to his failure to take action when alerted that one of his deputies was engaged in corrupt acts (Arco 2007), and the sentencing to twelve years in prison of Juan Carlos Robinson, former member of the Political Bureau and Central Committee of the Cuban Communist Party, following his conviction for systematically using his political influence for private gain (Redacción EER 2006). However, the Cuban press is silent on the many perquisites and special treatment enjoyed by the government elite or nomenklatura.

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Nonetheless, the extent of corruption is such that the government appears to be taking a more realistic view of the matter, no longer largely focusing on petty corruption or highlighting the occasional malfeasance of a disgraced former apparatchik. During the Fourth International Meeting About Society and the Challenges of Corruption held in Havana on April 7, 2007, Cuban government officials noted that the "reappearance" of corruption is "principally found in the business sector and middle ranks of state management" ("El gobierno señala" 2007). This gathering came on the heels of a major corruption scandal in Havana involving several foreign firms vying for control of the lucrative "duty free" tourist trade and officials from several government entities. Those involved included Corporación Cimex, the operator of dollar stores in the country, as well as the ministries of foreign trade (Ministerio de Comercio Exterior) and interior (Ministerio del Interior). Charges included collusion, undue use of influence, and under-the-table payments to the tune of hundreds of thousands of dollars. These reports, together with the approval of MTSS Resolutions 187 and 188, suggest that corruption is widespread at all levels of the government, although, as noted, reference is less frequently made to the privileges enjoyed by the top leadership in what is presumably a classless society. Such is the political sensitivity of this issue—even as it threatens the legitimacy of the political system—that on a television appearance lasting more than four hours, in May 2006, Fidel Castro, accompanied by several high-level public officials, publicly challenged the Forbes magazine allegation that he had amassed a personal fortune of US$900 million ("Castro critica" 2006). While the authorities are obviously concerned about the deleterious effects of ubiquitous corruption on the economy and the political legitimacy of the socialist system, past experience suggests that the current approach to combat corruption will have the same meager results as similar initiatives in the past. Evidence of the difficulties being faced was the dismissal in May 2006 of the minister for Audit and Control just as the government was launching its latest campaign to rein in corruption (Agence France Press 2006a). The reasoning behind this conclusion is based on international experiences and features of Cuba's economic and political system that support, if not encourage, corruption. Political will is essential for anticorruption initiatives to succeed. In its absence, reform efforts—no matter how radical they may seem—are condemned to failure. Furthermore, in the presence of a political leadership willing to tolerate corrupt practices among a privileged few, or unable to confront low-level corruption permeating society as a whole, anticorruption measures are likely to fail, particularly if what is going on is known to or involves the average citizen. Modern mechanisms of transparency and accountability are unknown to most Cubans, who have only had access to the official media and have been taught that the paternalistic state is not to be questioned. To most Cubans, the concept that public servants are accountable to the citizenry is foreign, as is the very notion of transparency—the right of citizens to know how government

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decisions are made. The nature of the state and the policies followed for nearly five decades have also blurred the definition of private property, many citizens not feeling any moral qualm about appropriating for personal use governmentowned resources. Of particular relevance to preventing many forms of corrupt acts are actions that promote openness of the state's decisionmaking processes and the disclosure of interactions that could influence such decisions. Among specific initiatives to enhance transparency of relevance to anticorruption goals are (1) sunshine laws that require government officials to hold certain meetings in public, promoting accountability and transparency in government decisionmaking; (2) freedom of access to information that guarantees citizens the right to know how they are governed and reduces opportunity for mischief; (3) public financial disclosure rules requiring government officials with certain degrees of decisionmaking power to periodically reveal the extent and nature of their assets, not only to prevent illicit enrichment while holding such positions, but also to identify potential conflict of interest in decisionmaking; (4) whistle-blower legislation that affords employees the right "to challenge workplace corruption and mismanagement"; and (5) ombudsman offices that allow citizens to raise concerns about governance issues and require government entities to respond to those concerns. Few of these instruments are available in Cuba; those that do exist are poorly developed, mistrusted, ineffective, or vulnerable to political interference given the centralized nature of decisionmaking and the one-party nature of the state. They are also vulnerable to collusive behavior by private parties intent on taking advantage of the collective patrimony for individual use in an economy of scarcity. Also conspiring against the implementation of effective anticorruption efforts is the judicial infrastructure created under socialism, which lacks judicial independence and often has political criteria preordaining outcomes. Another essential pillar of an anticorruption strategy is a well-trained, professional civil service capable of efficiently discharging its obligations to the nation and the public, while safeguarding the national patrimony. The upper echelons of socialist Cuba's civil service are thoroughly politicized: Communist party apparatchiks and their families and friends control all of the top government positions. Furthermore, Cuba's civil service is bloated, notorious for its inefficiency, barely attuned to modern managerial concepts, enmeshed in a tradition of secrecy and lack of transparency, oblivious to the notion of customer service, and poorly paid. Codes of ethics for public officials, when properly enforced, may also have a positive impact on the control of corruption, but for them to be effective, they must be implemented in national settings characterized by political openness and transparency, two ingredients lacking in Cuba today. Involving civil society in the fight against corruption—to help create or sustain political will for anticorruption reforms, monitor implementation of anticorruption initiatives, and provide oversight for public budgets and procurement—is at the center of most anticorruption efforts around the world. While

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citizen oversight initiatives are integral to the right of association citizens enjoy in a democratic society, in Cuba's current circumstance, where corruption is so widespread, they are not likely to produce the results intended. After more than four decades of government-inspired and government-controlled mass organizations, government-promoted citizen initiatives to control corruption are likely to be viewed either as ineffective or with suspicion, as they will remind Cubans of other citizen oversight schemes, such as the Committees for the Defense of the Revolution, that were established as instruments for social and political control. Our conclusion is that without dramatic political and economic systemic reforms, current attempts to address the corruption problem are destined to fail. The characteristics of political systems akin to that in Cuba today, and characteristics of the former Soviet bloc countries, breed the conditions that allow corruption to flourish. This is even more so when the economic situation is such that many citizens view corruption merely as part of an overall survival strategy that simply entails the "creative" trading of public goods and services not belonging to anyone in particular. The Cuban experience simply replicates what was invariably observed in the countries of the former socialist world.

Future Prospects Cuba's transition from a totalitarian state to a more politically open form of government with a market-oriented economy will entail a vast transformation of its institutions. A serious concern in thinking about a transition path should be to avoid the eruption of corruption that followed the transitions in the former Soviet Union and Eastern Europe and the electoral defeat of the Sandinista government in Nicaragua. If a government committed to good governance were to lead the transition in Cuba, corruption could be mitigated through short-term measures to deter administrative corruption and influencing of the rules of the game by apparatchiks with roots in the PCC. How the Cuban economy evolves during the transition may have a substantial bearing on certain types of corruption. Sluggish economic growth in an environment shaped by economic distortions inherited from socialism would accentuate the petty administrative corruption associated with complex and unnecessary regulations. The lack of opportunities for employment in the private sector would encourage public officials to cling to poorly paid positions that could be supplemented with bribes. In contrast, rapid economic growth, fostered by macroeconomic reforms that eliminate market distortions, would stimulate demand for workers by the private sector, inducing a shift away from employment in the state sector. Furthermore, economic growth would likely result in the movement away from government service of the most able civil servants, whose skills would be more marketable to private-sector firms, as was

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found to be the case in the Eastern European countries following their transitions (W. Miller et al. 2002,560). As a consequence, the management capacity of the state will be eroded, thus potentially opening wider the corruption door. On the positive side, petty administrative corruption should be reduced as the number of unnecessary rules and regulations is curtailed. Fortunately for Cuba, the tolerant international environment of the 1990s that condoned wholesale corruption in the former Soviet bloc and other transition countries has evolved for the better. Acknowledging the harm to economic and political development caused by corruption, and prodded by growing global trade pressures, the international community (as noted in Chapter 8) has endorsed several conventions to curb corruption at home and abroad (e.g., the 1997 Organization for Economic Cooperation and Development [OECD] Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, the OECD Guidelines for Multinational Enterprises, the Organization of American States' Inter-American Convention Against Corruption, and the United Nations Convention Against Corruption). The international financial institutions (IFIs) and the bilateral development agencies could potentially play a very important role in averting corruption in a post-transition Cuba.7 The World Bank, for example, has revamped its internal operations to explicitly take into account corruption, treating its eradication as a critical element of governance. Once Cuba embarks on a trajectory seeking democratic rule and a market economy, the difficult task of building a firm economic, institutional, political, and legal foundation to promote good governance and prevent corruption should get underway. This is a rather complex and time-consuming process. The reforms needed include the gradual establishment and enforcement of marketoriented legal systems and institutions, the development of a viable banking system, labor market regulations, and institutions related to public employment and retirement systems. Furthermore, these economic and management dimensions are complementary to the governance transformations that must be achieved for corruption to be controlled while a national integrity system is developed. Several interconnected and mutually supporting elements are necessary for such an integrity system to come into fruition. These embrace the standard separation of powers (executive, legislative, and judicial) that checks the power of rulers in democratic systems, complemented by active citizen involvement and institutions specifically charged with providing oversight and preventing corruption. Although the specific components of an integrity system, and how they function together, may vary from country to country—according to form of government, legal tradition, and so on—the ultimate goal is to have them operate as part of a coherent whole that, through its combined actions, interferes with the ability of dishonest individuals to exploit corruption opportunities. Rather than focusing on isolated anticorruption instruments, the goal of an integrity system is to center attention on mutually supportive relationships. "As

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with the pillars of a physical building," the United Nations (2004, 74) notes, "the pillars of integrity are interdependent. A weakening of one pillar will result in an increased load being shifted to the others. The success or failure of the overall structure will thus depend on the ability of each element to support the loads expected of it. If several pillars weaken collectively, or if any one pillar weakens to an extent that cannot be compensated for by the others, the entire structure will fail." The corruption problem that could be anticipated in a Cuba in transition will be a very complex one. Since the early 1960s, Cuba's socialist government has actively worked to eliminate the market-oriented economic institutions that existed in republican Cuba. The most basic anticorruption pillars—rule of law, vigilant civil society organizations, an independent media—have been eroded. Administrative corruption is rampant in socialist Cuba and there is evidence that the nomenklatura has begun to set the stage for grand corruption through the appropriation of public property. We cannot predict the future, but we are confident that Cuba will evolve toward a democracy with a market-oriented economy, probably with a significant role for the state in selected social sectors such as health and education. We can also predict with a high degree of confidence that unless forceful actions are taken, Cuba will confront an eruption of certain types of corruption as political and economic institutions are transformed. While it may never be possible to eradicate corruption completely in Cuba—or anywhere else for that matter—the anticorruption toolbox is growing exponentially. Transparency, accountability, vigilance, and preparing for the worst may be the best deterrents to prevent the scourge of corruption from derailing the long-awaited Cuban transition.

Notes 1. Vice President Carlos Lage (1990) stated in June 1990: "All of the policy changes that have occurred and will occur in the future are framed within our socialist system. They are aimed at relating more closely our economy to the world economy, while maintaining the dominant role of state ownership. Even though we are seeking foreign capital and are willing to accept a higher participation by foreign capital in our economy, in Cuba there isn't now, and there will not be, a policy of privatization." 2. A series of articles in the daily Juventud Rebelde in October 2006 illustrated the shortchanging of customers by state employees at beer gardens, restaurants, shoe repair shops, and taxis. 3. Glimpses of the excesses of some members of the ruling elite during this period—control over several residences, access to imported automobiles, high living on government expense accounts, purchases of foods and other imported luxury goods, heavy drinking and partying—are documented in the work of eyewitness Llovio Menendez (1988). 4. For example, the Heritage Foundation and the Wall Street Journal (2006), in their 2006 Index of Economic Freedom, assign Cuba the lowest possible rating in the category of level of protection of individual property rights.

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5. On the Rectification Process see, for example, Mesa-Lago (1989) and PerezLopez (1990). 6. See Batista (2005); Cancio Isla (2005a and 2005b); "El gobierno arrecia" (2005); Rodriguez (2005). 7. The IFIs are the World Bank, the International Monetary Fund, the European Bank for Reconstruction and Development, the Inter-American Development Bank, and other regional development banks. The most relevant bilateral development agencies for Cuba would be the US Agency for International Development and the Canadian International Development Agency.

6

Mexico: Corruption and Change Stephen D. Morris

Substantial evidence—from legends and press reports to official investigations and surveys—points to widespread corruption in Mexico. On Transparency International's Corruption Perceptions Index, Mexico's score has hovered around 3.4 since 1995, ranging from a low of 2.66 (1997) to a high of 3.7 (2001). On the campaign trail in 1999, Vicente Fox, the first president elected from the ranks of an opposition party in over seven decades, and arguably the nation's first democratically elected president during the period, spelled out the scope of the problem: "Corruption is of such magnitude that in public debates and academic discussions . . . it is pointed to as an intrinsic component of the Mexican political culture . . . an endemic phenomenon with deep historical and cultural roots" (speech before the National Federation of Lawyers, September 29,1999). Indeed, when a 2001 poll asked citizens what word comes to mind upon hearing the term "politics," "corruption" was given more often than any other (the first response by 21 percent of those surveyed and the second response by another 13 percent) (Secretaría de Gobernación 2002). Prior analyses attributed widespread and systemic corruption in Mexico to the country's unique, one-party authoritarian regime that dominated much of the twentieth century (see Morris 1987, 1991). The regime not only offered few if any effective mechanisms of horizontal and vertical accountability, but also seemed to utilize corruption to help solidify elite control and even employ an anticorruption rhetoric to bolster its legitimacy. Yet Mexico has undergone fundamental economic and political changes since the early 1980s.1 Economic crises, the dismantling of import substitution policies, neoliberal restructuring, the rise of electoral competition, the expansion of social pluralism, and the defeat of the long-ruling PRI (Partido Revolucionario Institucional [Institutional Revolutionary Party]) in 2000 all effectively undermined the pillars of the former regime. And yet, evidence suggests that the high levels of corruption persist: a 137

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finding largely consistent with the broader regional pattern (see Blake and Morris 2009). Certainly, democratic Mexico has inherited a legacy of corruption from the former PRI-led regime, and multiple authoritarian and corrupt enclaves remain intact, particularly within law enforcement, state-run enterprises, and labor unions; yet a closer examination also reveals some important changes in the nature of political corruption in the country. Whereas corruption once contributed to regime stability, it seems to have played a role in recent years in undermining support for the PRI and thus hastening political change. At the same time, the immense political changes have altered the underlying factors feeding corruption and anticorruption efforts, curbing some forms of corruption and paving the way for important reforms, while at the same time opening fresh opportunities for other types of corruption. These political changes have also greatly politicized the issue of corruption, raising it high atop the political and public agenda. Fundamentally, the Mexican case raises important questions about the impact of democratization on corruption and vice versa.2

The Patterns of Corruption in Mexico Twentieth-century Mexican history abounds with references to the illicit (and unexplained) enrichment of Mexican presidents, high-ranking government and party officials, labor and peasant leaders (charro leaders), and local strongmen {caciques). Operating along a path separate from the nation's economic elite, many officials have taken the public route to acquire vast fortunes. 3 The Mexican bureaucracy, the judicial system, and particularly the police have also long been characterized as inefficient, politicized, and corrupt. The rule of law has a history of being seen as weak or nonexistent with bribes often touted as the rule rather than the exception. In the 1950s, for example, Frank Tannenbaum (1950, 79) called the Mexican mordida (small-scale bribe, literally "bite") the "principal impediment" to good government and economic progress. Two decades later, Lola Romanucci-Ross (1973, 117) declared that "corruption exists at all levels and affects all formalized positions." Presidents repeatedly and routinely have lashed out at the entrenched corruption affecting their nation. President Luis Echeverria (1970-1976), for instance, once called corruption a cancer on the Revolution {El Nacional, June 7, 1972). Numerous polls and studies provide further evidence that corruption has been and continues to be widespread in Mexico despite (or perhaps because of) the growing attention at the national and international levels. One of the earliest opinion polls on the subject conducted in the mid-1980s, for instance, found over 70 percent of respondents agreeing that the payment of a bribe was necessary when dealing with the government (Morris 1991). Years later, Vanderbilt's 2004 LAPOP (Latin American Public Opinion Project) poll found 39 percent of respondents considering corruption "very generalized," and another 44 percent as

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"somewhat generalized," with only 17 percent claiming there was "little" corruption or "not widespread." Much of what could be called lower-level administrative corruption relates to the mordida, noted earlier: the almost routine, quotidian transactions paid by citizens to bureaucrats or police. Polling data show the mordida's prevalence. The 2005 National Survey of Corruption and Good Government [Encuesta Nacional de Corrupción y Buen Gobierno (ENCBG)], for instance, conducted by Transparencia Mexicana (Mexico's chapter of Transparency International), identified 115 million acts of corruption in the use of public services during the prior twelve months, with bribes costing on average 177.40 pesos per household for a total of 19 billion pesos for the nation overall (Transparencia Mexicana 2005). Using information on the number of times a bribe was paid to obtain from thirty-five to thirty-eight (depending on the year of the poll) different types of public services as a proportion of those obtaining the service within specified periods of time, the rate of corruption ranged from 10.6 percent in 2001 to 10.0 percent in 2007. Surveys find this petty form of corruption most pronounced in dealing with police, judicial authorities, and local authorities. In fact, the top three areas where bribes were paid in 2005 included "to avoid a traffic cop impounding your car" (60.2 percent), "parking your car in public areas controlled by private individuals" (53.1 percent), and "to avoid a traffic ticket or being detained by a traffic cop" (50 percent). By contrast, the lowest incidence of bribes related to "receiving mail" (2.2 percent), "requesting a scholarship for a student" (1.5 percent), and "paying property tax" (0.3 percent). In one poll in Mexico City, 90 percent of respondents claimed that corruption by the police occurs daily (Parametria 2004). Similar sorts of bribes have long been considered routine in the world of business. The Survey of Governability and Business Development [Encuesta de Gobernabilidad y Desarrollo Empresarial (EGDE)] conducted by the Center of Strategic Studies [Centro de Estudios Estratégicos] in 2002, for instance, found 62 percent of business respondents acknowledging extra legal payments by businesses to lower level bureaucrats. Business leaders estimated spending over 5 percent of total revenues on such bribes with the major purpose being to "speed up" applications for permits and other bureaucratic procedures (Centro de Estudios Estratégicos 2002). Another survey of 1,376 small and mediumsized businesses found that they spent US$43 billion annually on bribes to obtain services and to cut through red tape (see SourceMex August 17, 2005). Behind these routine forms of lower-level corruption resides a sort of trickle-up corruption where supervisors, police chiefs, and local bosses skim a portion of the proceeds obtained by lower-level bureaucrats. These range, for instance, from the sale of jobs by labor union leaders to the quotas paid by police to their supervisors in return for key (lucrative) assignments. Indeed, labor union leaders have long been associated over the years with unexplained wealth. Beyond lower-level forms of corruption, however, Mexican popular perception envisions corruption as far more widespread and infecting all levels of

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the government, particularly the top echelons. In 2001, 2003, and 2005, over 78 percent of respondents agreed that "all politicians are corrupt," leaving few who disagreed with the statement. Based on a one-to-ten scale (with ten the most corrupt), in 2005, "politicians" received an average score of 8.96, just slightly above the 8.75 score given to "police" (see Table 6.1). Even the EGDE survey (Centro de Estudios Estratégicos 2002) business survey noted earlier found 39 percent of respondents stating that bribes are paid by businesses to higher-level officials in return for favorable laws or policies (a form of upper-level corruption). In addition to the mordida and these general perceptions of corrupt politicians, assessments of the criminal justice system also point to a pervasive pattern of widespread impunity, inefficiency, and corruption. As noted, the police rank just below politicians in public opinion polls as being the most corrupt public institution in the nation. According to Carbonell (2004, 8), the criminal justice system is a network of "ineffectiveness and corruption." A UN Human Rights Commission report in April 2002 suggested that "more than half' of the Mexican justice system, attorneys, and judges were corrupt and that civil matters cannot be processed in some states without the payment of a bribe. The report concluded that "the transformation process since 1994 has been slow, and impunity and corruption appear to have continued unabated." In one survey of businesses, bribes to high judicial authorities ranked as the most frequent form of corruption, receiving a grade of five on a scale of one to seven (CEESP 2007). Indeed, despite the high levels of perceived corruption within the courts and the public ministries, one report claimed that there have been no indictments against officials in the judiciary, despite numerous complaints (see "100 jueces bajo investigación" 2006). Such corruption colludes in a sense with basic

Table 6.1 Level of Perceived Corruption by Institution and Actor in Mexico, 2005 Institution Prisons Government Justice system Unions B i g business Citizens Media Religious

Average Score 8.87 8.65 8.13 8.06 7.59 6.86 6.58 5.20

Actor

Average Score

Police

8.75 8.74 8.47 8.13 7.75 7.59 6.37 5.62 4.83

Diputados Judges Union leaders Bureaucrats Business Journalists Teachers Priests

Source: Transparencia Mexicana 2005. Note: Scores calculated on a ten-point scale with 1 as the lowest, or least corrupt, and 10 as the highest, or most corrupt.

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inefficiency to render the entire justice system highly ineffective. According to Zepeda Lecuona's (2004) influential study, only 3 percent of crimes ever result in prosecution: a 97 percent rate of impunity for regular crime. Few report crime to begin with. Coupled with corruption, this all feeds the widespread perception in Mexico that "laws and regulations are not enforced" (López-Ayllón and FixFierro 2003, 301). One of the most dominant and pernicious forms of corruption plaguing Mexico involves the corrupting influence of the nation's massive illegal drug trade. Drug traffickers and organized crime rely on the corruption of the police, the military, customs officials, and others to run their illicit operations. Numerous reports by the Bureau of International Narcotics and Law Enforcement Affairs and the Bureau of Human Rights, Democracy, and Labor in the US State Department describe in detail the extensive levels of corruption plaguing the ranks of the various police departments, the military, and the justice system. The 2005 report from the Bureau of International Narcotics and Law Enforcement Affairs similarly describes the extensive ties linking the military and drug traffickers, and extensive money laundering operations. The US government, in fact, touts "pervasive corruption in Mexican law enforcement institutions" as the "greatest challenge facing the [Mexican government] in its efforts to fight drug trafficking and organized crime" (Bureau of International Narcotics and Law Enforcement Affairs 2002).4 A growing concern is that the corrupting influence of drug trafficking has begun to reach beyond the criminal justice system, influencing electoral politics and public administration. Changing Patterns of Corruption

Though corruption has a long history in Mexico, there is some evidence suggesting that the patterns of corruption have altered in recent years due to the underlying political and economic changes. The economic crises and the subsequent adoption of neoliberal reforms beginning in the 1980s, for example, seem to have triggered the spread of some rather new (and arguably more pernicious) forms of corruption. The privatization of state-owned firms in the 1980s and 1990s, for instance—as occurred in the cases of Argentina and Brazil (see Manzetti 1994,2000b; Manzetti and Blake 1996)—created unique opportunities for government-business collusion, back-room deals, and the rise of conflict of interest. Many, for instance, attribute the unexplained wealth of the brother of former president Salinas, Raúl Salinas—caught with over US$300 million in US and Swiss bank accounts—either to the privatization schemes concocted during his brother's tenure or to drugs. The liberalization of financial institutions in the 1990s similarly opened up vast opportunities for money-laundering operations, while the bank rescue operation following the 1995 crisis was chock-full of irregularities, self-loans, cover-ups, and fraudulent activities. The bourgeoning of the informal economy due to the economic dislocation of the period also

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facilitated the flow of corrupt payments to police and others who allow such operations to flourish. Meanwhile, the dramatic tenfold increase in trade with the United States in as many years facilitated the boom in corruption related to customs and drug trafficking.5 Indeed, perhaps the most striking change in the pattern of corruption found in Mexico in recent decades relates to the dramatic and stunning rise of drug trafficking and organized crime that has accompanied the economic transition (Bailey and Godson 2001; Lupsha 1994; Oppenheimer 2001; Patemostro 1995; Shelley 2001; Velasco 2005). Even the cutting of state subsidies to rural areas, according to Velasco (2005,99), due to economic change helped increase the incentives for peasant farmers to produce illegal drugs.

The Political Impact of Corruption in Mexico Calculating the precise impact of corruption is no easy task and, in fact, no clear methodology exists to do so. Nonetheless, it seems clear that corruption has had a major impact on Mexico over the years. Under the PRI-led government, corruption seemed to be consistent with regime stability, contributing in some notable ways to that stability. At one level, corruption provided a tangible source of rewards for politicians and bureaucrats who abided by the informal rules of the political game, what Alan Knight (1996, 223) once referred to as "chequebook peacekeeping." Corruption also contributed to stability by granting the seemingly "rigid" legalistic system a certain degree of individual-based flexibility with respect to the actual implementation of policies that were made largely for "public consumption" (see also Riding 1984). Even the disillusionment and illegitimacy bred by widespread corruption usually failed to detract much from the regime's stability since those disillusioned reacted either with apathy (McCann and Domínguez 1998) or could be co-opted by the secretive yet tangible mechanisms provided by corruption itself. A major component in the corruption equation under the PRI was the anticorruption campaign (Morris 1991). Orchestrated most loudly during the initial years of a president's six-year term, the anticorruption campaign involved intense rhetorical campaigns critical of corruption and the need to combat it, institutional and legal changes ostensibly designed to strengthen political oversight and horizontal accountability within the executive branch, and public prosecutions of officials from the prior government. Though hindsight shows that such efforts failed to curb the incidence of corruption, they arguably contributed to the PRI's remarkable record of stability and longevity. Among other functions, the ritualistic campaigns helped establish the new administration's reformist credentials and distance the new government from the prior one. This helped the government—despite being of the same partisan stripes as its predecessor— rejuvenate popular faith in the ideals of the Mexican Revolution (the PRI's legitimizing ideology), mobilize public involvement in the straggle to improve society, and even, perhaps, steal some of its critics' thunder. The campaign also

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enabled the government to cast the problem of corruption as one related to individual, ethical shortcomings—a few "bad apples"—rather than deeper systemic causes. This, in turn, helped channel the public's anger or frustrations toward individual, corrupt officials ("scapegoating") and away from the PRI, the government, or their policies. Finally, and perhaps even more importantly, the anticorruption campaign enabled the new president to assert some control over the vast bureaucracy itself, punishing his political enemies and outsiders, and delineating the limits of acceptable behavior. This, indeed, may have been the only way the president was able to, in a sense, "control" the corruption the system nurtured: by using (or abusing) the law to punish those who overstepped the bounds of acceptable political or legal behavior. This constituted a critical component of the informal system. As Knight (1996, 225) notes, there was "no shortage of revelations, denunciations and occasional housecleanings, the latter selectively applied to head off criticism, [and] punish egregious grafters." But despite corruption's contributions to stability in the past under the PRI regime, there is evidence to suggest that its political impact has undergone significant changes in recent decades. Whereas under the PRI corruption seemed to serve the interests of the PRI and contribute to regime stability, the perceptions of massive corruption, particularly amidst a period of economic sacrifice beginning in the 1980s, clearly fed a growing frustration with the PRI-led government that contributed to the growing appeal of the opposition parties and the eventual electoral defeat of the PRI by 2000 (see Domínguez and Lawson [2004] on the 2000 election). The new patterns of corruption that have emerged since the 1980s also seem more pernicious than the corruption of the past, dividing the political elite rather than uniting it. Instead of facilitating presidential authority and a working together for the interests of the party, as occurred with the more traditional forms of corruption, drug-related corruption finds state officials working at cross-purposes or, simply put, for the benefit of drug traffickers rather than the president or the regime. Similar patterns of state capture, bribery within the legislature, infiltration of local governments, campaignrelated corruption, conflict of interest, and so on also seem to have similar consequences, dividing rather than uniting the nation's elite as occurred in the past. Finally, perhaps the biggest change in recent years has been the politicization of corruption (Davis, Camp, and Coleman 2004). With divided government at state and national levels and more competitive elections, mutual accusations among the parties and politicians and allegations of corruption have increased dramatically, capturing the headlines, and giving the appearance of ever-greater levels of corruption than in the past. Politicians increasingly compete against one another to champion reforms to curb the abuse of power and to transform the bureaucracy into a more efficient provider of government services. At the same time, the increase of pluralism within society has freed the press and opened political space for organizations like Transparencia Mexicana to expose previously hidden practices of corruption, raise the public's consciousness about the pernicious effects of corruption, and mobilize efforts to alter the factors

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shaping corruption. The growing prominence of the corruption issue has added to and furthered the declining public tolerance toward corruption, creating a public far more receptive to accusations of wrongdoing. The nation's political culture is one area where the impact of corruption remains relatively clear and consistent, particularly popular attitudes toward politicians, state institutions, the regime, and satisfaction with democracy. According to Covarrubias González (2005), the functions and institutionalization of corruption in the old regime became deeply ingrained in the culture, crafting what I have characterized previously as a "culture of corruption" (Morris 1991). Accordingly, Mexicans routinely view politicians as corrupt, distrust the government, and lack confidence in the operation of government institutions. Such sentiments nurture the view that the law serves the interests of the powerful few rather than society as a whole: a pattern that prevailed during the PRI's reign and afterward. When asked the function of the law in Mexico, based on one's own experience, the 2005 National Survey of Political Culture (ENCUP), conducted by the secretary of government, revealed 33 percent of respondents expressing the view that the law serves the interests of the powerful and another 26 percent believing that the law is used simply to commit arbitrary acts (Secretaría de Gobernación 2005). Only 19 percent and 16 percent, by contrast, felt that the law served justice or the good of society. Such views, on the one hand, set the stage for participation in corrupt acts, creating a vicious cycle wherein the expectation of corruption feeds corrupt behavior. As shown by Guerrero and del Castillo (2003), citizens who perceive an institution to be corrupt are more likely to expect to pay a bribe or to offer a bribe. More broadly, such views set the stage for the adoption of any means (besides or in addition to the law) to achieve political ends. The lack of confidence bred by deep-seated corruption, moreover, weakens any sense of solidarity within society and the society's base of social capital. Corruption thus encourages individual-based solutions to problems rather than cooperative-based approaches. On the other hand, the lack of trust in the government and in politicians makes it difficult to craft any sort of state-society cooperation to fight corruption, widely considered a key ingredient in creating effective mechanisms of accountability. Finally, corruption contributes to popular dissatisfaction with democracy. In the 2004 Latinobarómetro poll, only 17 percent of respondents felt satisfied or very satisfied with the way democracy works in Mexico. Of course reports of widespread corruption and the tendency for the public to consider all politicians corrupt says little about the relative importance of corruption as a national problem. Yet polls suggest that corruption ranks relatively high as a national problem, though normally behind economic issues. When asked about the most severe problem facing the country, the 2004 LAPOP (Latin American Public Opinion Project) poll found corruption cited by 16 percent of respondents, finishing third behind unemployment (25 percent) and poverty (17 percent). Coupled with "bad government," cited by another 5 percent of respondents, however,

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concern over corruption outpaced in that year such issues as delinquency, crime, and narco-trafficking. Such views reflect the growing politicization of corruption in recent years. Though the public routinely blames corrupt politicians for a wide assortment of societal ills, it is difficult to assess the real impact of corruption on the economy or business. Some rough estimates do exist. One—which seems to have originated from within the World Bank in the late 1990s—calculates the cost of corruption at somewhere between 9 and 12 percent of GDP (Morales 2001). In 2001, Pricewaterhouse Coopers's cross-national Opacity Index put the cost as the equivalent of a 15 percent tax on business ("Indice para Medir la Corrupción" 2004, 2). Some of the economic effects of corruption can also be gleaned from specialized surveys within the private sector. In the 2002 EGDE business survey, for instance, 84 percent of respondents agreed that corruption constitutes an obstacle to doing business in Mexico, ranking it as the fourth greatest obstacle behind security, contraband, and pirating (Centro de Estudios Estratégicos 2002).6 Another survey of business revealed a lack of confidence in the nation's public institutions and the influence of organized crime and drug traffickers via corruption as particularly pronounced (CEESP 2007). Underlying such figures is a clear message that corruption distorts government spending and contributes to the nation's already huge disparities in income and wealth.

Influences on Corruption in Mexico As noted at the outset, prior analyses of corruption in Mexico tied the deepseated and systemic corruption of the twentieth century to the structural and institutional nature of Mexico's political system (Blanco Moheno 1979; Morris 1987,1991,1999; Riding 1984). As viewed from within a structuralist theory of corruption that envisions corruption as the product of the incongruence between the power of the state and the power of society, the PRI-led political system tightly concentrated power within the state, the presidency, and the political party. Such a concentration of political power effectively undermined formal horizontal and vertical mechanisms of accountability, creating a clear top-down system of control. Corruption, particularly in the form of extortion by state and bureaucratic officials' taking advantage of their monopolistic positions, extensive discretionary authority, and the absence of accountability, became a tool used to guarantee that the political elite would abide by the rules of the informal political game set by the PRI and the president. Rather than focusing blindly on administering justice or promoting the good of society, the formal institutions thus operated to protect the power of the regime, rewarding supporters and punishing opponents (Davis 2006; Lozano Gracia 2001; Magaloni 2003). In addition, occupying a dominant position vis-à-vis society, the state made it necessary for everyone to deal with some sort of trámite (bureaucratic procedure or "red tape")

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or to garner official approval to get anything done. This pattern, in turn, left small businesses, civic organizations, and the average citizen with few institutional means to prevent the bureaucrat from abusing his or her discretionary authority when granting permits or engaging in other forms of rent-seeking behavior. Consequently, the mordida became standard practice when dealing with the state, whether to obtain a license or permit, to open or conduct business, to speed up the processing of a procedure, or resolve a traffic violation. Where possible, citizens utilized contacts and friends to get things done, often treating routine procedures as special favors. By rendering ineffective formal horizontal and vertical mechanisms of accountability, such top-down controls ensured official impunity and even helped keep the lid on allegations of wrongdoing (see Knight 1996; C. Lomnitz 1995; Lozano Gracia 2001). Subtle controls over the press in particular kept revelations of corruption to a minimum (Lawson 2002), while controls over government information made it difficult to expose wrongdoing. Yet, that was then. Indeed, the economic and political changes taking place in recent years in Mexico have fundamentally altered many of the underlying factors that contributed to corruption within the old regime. The economic changes, for instance, eliminated many of the state controls and state programs that were once used (or abused) to solicit bribes, or that provided ample opportunities for rent-seeking behavior, or that funded patron-clientelist relations. The political changes too altered popular sensitivities to corruption while greatly strengthening the levels of both horizontal and vertical accountability.7 Within the state itself, structural changes eliminated much of the centralized control that once prevented the exposure of corruption and thus made it almost impossible to hold officials accountable. Alternation in power (or the transition from PRI rule to opposition control) has prompted investigations and revelations of corruption by former officials. Within weeks of taking office in January 1998, for example, the new PRD-led (Partido de la Revolución Democrática [Party of the Democratic Revolution]) administration in Mexico City released extensive details of corruption under the prior PRI administration, including the existence of ghost workers, the rechanneling of construction materials to private persons, the double payment of public works contracts, the granting of city concessions without following appropriate procedures, the under use of budgetary resources, and the illegal use of ecological reserves by individuals or groups. Further investigations found irregularities amounting to some five billion pesos (about US$625 million).8 A similar pattern emerged following Fox's assumption of power at the national level, with numerous revelations and the launching of investigations of corruption by former officials from the PRI regime. At the same time, the end of the PRI's dominance in Congress, in state and local governments and, by 2000, the presidency itself, set the stage for a truer separation of institutions, the dispersion of political power, and thus the emergence of institutional checks. As a result, the Mexican Congress has begun to exercise some oversight over the executive, particularly through the strengthening

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of the main governmental auditing body, the Auditoría Superior de la Federación, in 1999 (Aguilar Zinser 2000; Guerrero Gutiérrez 2002; Hofbauer 2006; Nacif 2004,2005; Rivera Sánchez 2004; Ugalde 2001, 2002). A host of congressional committees on budgeting and public accounts have exposed the practices of selfloans, loans to ghost companies and clients, and illegal contracts (Acosta Cordova 1998). Congress has eliminated the secret accounts once used by PRI presidents to reward supporters (Ugalde 2002) and has even created special investigative committees to explore alleged corruption within the administration.9 State and local governments, now controlled by opposition parties and thus free of the centralized controls exercised by the PRI, have similarly begun to question presidential authority, even to the point of ignoring presidential desires—a far cry from the days when state governors did the bidding of the president (see Beer 2003). Even the judiciary, once a docile and politically weak branch of government, has begun to assert greater autonomy, acquiring constitutional review powers in the 1990s and using those to overturn key presidential decisions and pillars of the presidential system, including official corporatism.10 According to Cossio (2005, 123), the court has become "recognized for its significant role in ultimately defining the rules of the game as they apply to the law as well as to society."11 Closely related to this growing pattern of checks and balances, politicians have sought to enhance internal controls over the bureaucracy. Indeed, both Ernesto Zedillo and Vicente Fox mounted major campaigns to modernize, depoliticize, and simplify Mexico's unruly public administration, engaging in extensive administrative and institutional reforms. One illustration of the growing separation of institutional powers and the strengthening of horizontal accountability is the emergence of a truly independent electoral institution, the IFE (Instituto Federal Electoral), or Federal Electoral Institute. The product of a series of piecemeal reforms in the 1990s, culminating in two separate political reforms in 1996, the IFE is run entirely by independent citizen counselors and is in charge of every aspect of the electoral process, from registering voters to counting the votes, from financing the parties and campaigns to auditing spending and enforcing the nation's electoral/ campaign laws. Since its emergence, the IFE has played an important role in not only creating the conditions leading to what most see as a dramatic decline in the level of electoral fraud, but also in investigating corruption in this critical and corrupt-prone area.12 Though subsequently tainted somewhat by its performance in the 2006 presidential election, the IFE was able to garner substantial credibility beginning in the late 1990s, ranking among the most trusted public institutions in the country (a position it continues to enjoy). Moreover, two of the most dramatic corruption scandals during this period, Pemexgate and Amigos de Fox, were both extensively investigated and exposed by the IFE's oversight committee. In the Pemexgate case, the Labastida campaign of the PRI was found to have received illegal and unreported campaign funds from the state-owned oil monopoly PEMEX, channeled through its labor union. In the Amigos de Fox

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case, the Fox campaign was found to have laundered over US$30 million through a network of special interest political action committees and related organizations, including illegal contributions from outside the country and from local businesses. While no criminal prosecutions were ever made—part of the continuing weakness of the legal system—the investigations did result in substantial fines being levied against both the PRI and the Partido Acción Nacional (PAN) (and its ally in the 2000 election, the Partido Verde Ecologista de México [PVEM]).13 Suffering a major setback (and on the heels of its historic defeat in 2000), the PRI was fined US$100 million (for a thorough review of the two cases see Cordova and Murayama 2006). Problems in this area remain to be sure. The IFE lacks sufficient powers to police the parties and campaigns, for example, sparking additional reforms in 2007. Even so, much progress has been made over the period (see T. Eisenstadt and Poire 2005; Ramírez Cuevas 2005). In addition to the strengthening of horizontal accountability, recent political and economic changes have also greatly bolstered the levels of vertical accountability. Once serving merely to legitimate PRI rule and distribute the spoils of power, elections have become far more competitive and more decisive in terms of selecting political leaders. This has provided voters with some power to register their frustrations, reward officials or parties for pursuing effective policies, and punish those behaving contrary to the public's interest. This competition, moreover, has prompted politicians and state officials to compete publicly for support by attacking corruption and promising to deliver better public services to voters. According to Guerrero Gutiérrez (2002), politicians increasingly have come to recognize that to win votes they must get the bureaucracy to carry out their orders. In a similar way, the press—freer now from government controls— has also begun to focus more of its attention on the issue of corruption, igniting and following scandal (Acosta Silva 2004). The "video scandals" in 2004 involving officials within the PRD-controlled Mexico City government and the leader of the smaller Green Party (PVEM), for instance, created major public spectacles revealing the bribery of key government officials. The press also lobbied effectively for the passage of the much-heralded access-to-information law (see Michener 2005) (described below). Finally, civil society organizations—a key player in vertical or societal accountability—have also added significantly to the public clamor over corruption (López de Nava et al. 2004). Often funded by and in alliance with international organizations, foreign governmental institutions, or the state itself, an array of NGOs has begun to expose and publicize corruption, helping to crystallize the issue in the public's eyes, while tightening the screws on government officials.14 Transparencia Mexicana, for instance, monitors government contracts, conducts massive surveys to document public opinion on corruption, and lobbies government for change. They also work with businesses to fight corruption, organize seminars, and evaluate Mexico's compliance with its international anticorruption conventions. Universities, with government funding, have also begun to offer courses and seminars on ethics and corruption not only

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to students, but to bureaucrats and public officials as well. Combined, such efforts—part and parcel of the politicization of corruption—clearly work to erode some of the structural factors that once contributed to corruption. Of course, not everything has changed, nor have all the political and economic changes worked to reduce the opportunities or the occurrences of corruption. In some areas, key characteristics of the authoritarian, one-party system remain intact, continuing to nurture high levels of systemic corruption. The informal, personalistic, patron-client systems, and related political outlooks and tactics developed during the PRI-led system, continue to influence the thinking and the behavior of many politicians and citizens alike. Moreover, there remain important authoritarian enclaves that have continued largely untouched by the emergence of accountability mechanisms or structural reforms. Practices within the criminal justice system, within labor unions, within certain large bureaucratic organizations like the state-owned enterprises, in particular, all seem to be holdovers from the past. It is because of these structures, where limited accountability continues to prevail, that what could be depicted as "old corruption" continues to thrive. Nor have all the changes worked to reduce the opportunities for corruption. In fact, while political and economic changes have clearly curtailed some of the factors that once accounted for high levels of corruption, and important changes are clearly underway, these same changes have also opened up new opportunities for corruption: opportunities that outpace the ability of the government or society to design or perfect new mechanisms of control. Just as economic changes fed the rise of new forms of corruption, such as the drug-related corruption noted earlier, structural political changes have also opened up new opportunities for corruption within the political system. With the growing emphasis on elections and the heightened political stakes attached to them, for instance, politicians must now compete more intensely for resources and for support. This has fostered new clientelist ties cemented through corrupt agreements and the targeting of official decisions to the benefit of clients. This is particularly true for opposition parties taking over the reins of power. Velasco (2005, 80), for example, stresses the continuation of authoritarian practices to gain votes despite the rise of electoral competition: "The acceptance of authoritarian forms of political control among the lower sectors creates a unique opportunity for 'rent-seeking' politicians who, instead of becoming 'representatives' of those sectors, become their patrons in clientelist or patrimonialistic relations." The new emphasis on elections, moreover, has created strong pressures toward the use of illegal campaign funds and spending. Though IFE's management of elections has curtailed much of the old-style electoral fraud, campaign-related scandals have arguably climbed as the stakes of winning elections have increased. This is illustrated in part by the Pemexgate and Amigos de Fox cases as well as the "video scandals" noted earlier. Many new opportunities for corruption—part of the new patterns of corruption—also stem from the weakening of the traditional controls and limits. The

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loss of centralized, presidential control—the end of Mexican presidentialism (Nacif 2005, 8)—has greatly fragmented these former controls and frayed the traditional clientelist relations (Guerrero 2004). While in the past presidents were able to use their extensive meta-constitutional powers to place some limits on the use of corruption by state governors or union leaders, these controls have waned. Effective decentralization of power has therefore shifted responsibilities and resources to more autonomous state and local governments. Not only have such powers not come with strengthened oversight and controls— anticorruption mechanisms often lag behind—but decentralization itself creates more and new access points for groups to influence policy through illicit means. This means that state governors are now able to develop their own corrupt networks, utilize and misuse state resources, distort the rule of law, and operate in a virtually unaccountable fashion. It also means that drug traffickers, organized crime, and others have easier access to influence local authorities. As Valverde Loya (2002) warns, decentralization may be resulting in simply the "decentralization of corruption." In addition to creating new opportunities for corruption, the changing political situation also limits the effectiveness of government and societal efforts to curb corruption. The increased political competition and divided government, for example, while perhaps creating greater pressures through horizontal accountability, have also made it difficult for the president and Congress to work together to pass much-needed reforms. Although Congress passed some of Fox's key initiatives (including reforms to the anticorruption law, the law on transparency and access to government information, the civil service reform, and so on), divided government, gridlock, and intense polarization among the parties have also prevented reforms in other key areas including much-needed electoral reforms (T. Eisenstadt and Poire 2005) and reforms to the police and the judiciary (Davis 2006). Fox's weak political base within Congress, moreover, also undermined the scope of anticorruption initiatives. Because he operated from a weak political position, wherein compromise with the large PRI bloc in Congress was crucial to getting things done, it made it difficult for Fox to go after officials from the former PRI regime or dismantle corrupt PRI strongholds like labor unions. Indeed, Alejandro Poire (T. Eisenstadt and Poire 2005) attributes what he describes as the failure of Fox's anticorruption program to the fact that the PRI was still strong and hence untouchable. Felipe Calderón, Fox's successor, faces a similar dilemma. Other such political situations have similarly limited the strength and scope of anticorruption measures. The ability of Congress to hold the executive accountable and to be more accountable themselves is limited, for instance, by the prohibition on reelection (Moreno et al. 2003). As occurred in the past, pressure from constituents still pales in comparison to the need to satisfy powerful party leaders. This further weakens accountability within the political parties. Despite the emergence of a more autonomous civil society, with many civil organizations

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incorporating accountability and anticorruption themes into their agendas, civil society has also remained somewhat weak and, due in part to a legacy of mistrust, unwilling to work with the state to combat corruption. According to Davis (2006, 80), "the real obstacle is the inability of state and citizens to join together in the struggle to restore trustworthiness and accountability to the system of policing."

Anticorruption Efforts and Their Effectiveness

Arising from the confluence of political and economic changes and the growing pressures within the government and society to address corruption, both the Zedillo and the Fox governments pursued extensive administrative reforms all designed to strengthen the mechanisms of accountability within the bureaucracy, improve efficiency, depoliticize the public administration, and curtail corruption. Embracing ideas associated with new public management theory, Zedillo launched the Public Administration Modernization Program 1995-2000 to transform the public administration into a more effective and efficient organization. He sought to curb corruption specifically by simplifying procedures, reducing discretionary authority, improving the culture of service, adopting performance evaluations, and enhancing the role of citizens in decisionmaking.15 In transforming the government's main comptroller agency, the Secretaría de Contraloría y Desarrollo Administrativo (SECODAM), Zedillo created an elaborate electronic system known as Compranet to handle public procurement bids, instituted a simulated user program (usuario simulado) to detect corruption using undercover methods, and created a program of contralorías sociales (social comptrollers), using citizens to monitor public works projects. In addition, he passed a series of legal reforms criminalizing organized crime and money laundering, stiffened the penalties for corruption, and strengthened the government's ability to confiscate property. Zedillo also fathered the judicial reform alluded to earlier. "Designed to set the tone for a presidency that intended to take law and order, corruption and impunity seriously" (Domingo 2000, 730), the reforms—Zedillo's first major act as president—not only altered the role of the judiciary, but established a separate entity, the Judicatura, to administer and monitor the courts and create a judicial civil-service system (Fix-Fierro 2003). Through his "National Program for Public Safety 1995-2000," Zedillo also battled entrenched corruption within law enforcement by raising the salaries of law enforcement officials, improving law enforcement training, restructuring agencies to attend to the growing problems of drug trafficking and money laundering, and firing hundreds of drug agents for accepting bribes (Global Integrity [Center for Public Integrity] n.d.; Ugalde 2002).16 In addition, Zedillo organized perhaps the first conference on corruption in Mexico—Transparencia y Corrupción: Tendencias en México (in

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Washington, D.C., November 1999) (Sánchez González 2004,278). He helped negotiate and subsequently signed the Convención Interamericana contra la Corrupción in March 1996; negotiated the Declaration on the Follow-Up Mechanisms for the treaty's implementation (signed on June 4,2001), and negotiated and signed the OECD (Organization for Economic Cooperation and Development) agreement against bribery in December 1997, all indicating his desire to work both domestically and internationally to limit corruption (for a good overview of the reforms under Zedillo see López Presa 1998). Recognizing both the PRI's vulnerability and the failures of the Zedillo reforms to successfully curb corruption, Vicente Fox (2000-2006) made corruption a central theme of his presidential campaign. At virtually every stop on the trail, candidate Fox assailed the entrenched corruption infecting the government and the deep cynicism it had bred, and stressed his commitment to fighting it. Upon taking office, Fox promptly established an intersecretarial commission to fight corruption—the CITCC (Comisión Intersecretarial para la Transparencia y Combate a la Corrupción [Intersecretarial Commission against Corruption]). The commission was composed of the eighteen secretaries of state, the attorney general, the directors of the various decentralized and parastatal agencies, and a handful of officials from within the presidency and SECODAM, and was directed by the secretary of SECODAM. The CITCC was charged with elaborating and coordinating policies and actions to combat corruption, strengthening transparency in the federal administration, and conducting annual follow-ups on the programs instituted within the various agencies within the federal government. The mere creation of the interinstitutional commission reflected a broad approach whereby all agencies of the government, not just SECODAM (as of April 2003, SECODAM became the Secretary of Public Function [Secretaría de la Función Pública (SFP)], would take on the responsibility of battling corruption. Over the course of the six-year presidential term, the CITCC would meet in twelve ordinary sessions and two special sessions, sign thirty-nine crossinstitutional agreements covering a wide range of programs and initiatives, issue a variety of reports on the advances of the programs within each government entity, develop and broadly apply a measure of transparency, and promote a series of publicity campaigns against corruption. The cross-institutional accords ranged from the development of programs throughout the government to recognize and reward public servants for integrity, to the improvement of internal regulations and drafting of codes of conduct, to an assortment of initiatives to develop e-procedures and e-services within the government, evaluate users' opinions on agency honesty, and create integrity systems linking the public and private sectors. Fox's anticorruption program, the National Program to Combat Corruption and Strengthen Transparency and Administrative Development, 2000-2006 (herein referred to as the National Program), was presented at the CITCC's initial meeting in January 2001. Its mission was clear: to reduce the levels of

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corruption in the country and provide absolute transparency to the management and delivery of services of the institutions and public servants of the federal public administration. The National Program laid out four objectives, six strategic lines of action, and over thirty initial strategic projects to combat corruption (see López de Nava et al. 2004; SFP and CITCC websites). The four objectives were to (1) prevent and eliminate practices of corruption and impunity; (2) control and detect corrupt practices; (3) sanction corrupt practices and impunity; and (4) obtain the participation of society. Among the strategic projects, it called for administrative modernization and simplification, electronic government, improved professional and ethical training of public officials, the establishment of a civil service career system, the strengthening of measures and mechanisms to denounce and sanction corruption, the establishment of integrity pacts and the further development of social comptrollers, and greater transparency. The initial step in Fox's anticorruption program was to diagnose systematically the areas where corruption occurred, identify the problems, and design effective solutions. At its initial meeting, the CITCC charged the working groups created within each federal agency to conduct an exhaustive inventory of critical areas and to elaborate specific operational programs that outlined goals, methods, changes, timeline, and so on, to reduce the risk of corruption. After some delays and resistance, the massive study identified over 2,000 critical areas in 205 federal agencies, over 5,000 irregular behaviors, and outlined more than 7,000 specific improvements. The review revealed such problems as complex regulatory environments where discretionary and subjective decisionmaking with low-quality enforcement mechanisms prevailed, oversized bureaucratic structures that reduced creativity and productivity, the lack of efficient incentives for good behavior, weak technical and ethical capacities, opaque operations, control mechanisms not oriented to prevention and detection of corrupt systems and acts but rather to the simple verification of the execution of regulations, and many others (Franco-Barrios 2003, 23-24). According to Francisco Barrio, the secretary of SECODAM, the study revealed the greatest problems in two areas, procurement and contraband, making these initially the two top priority areas for the government. Clearly the two most important and perhaps most far-reaching anticorruption initiatives taken under Fox were the transparency law and civil service reforms. Forced by political circumstances to work with opponents in Congress and the civil society organization Grupo Oaxaca, the Federal Law of Transparency and Access to Governmental Information (Ley Federal de Transparencia y Acceso a la Información Pública Gubernamental [LFTAIPG]), passed in June 2002, actually went further than the president had originally intended (Michener 2005). Considered by most to be a major blow to the high levels of opacity that once characterized the Mexican government, the transparency law makes all information held by the government accessible to the public with very few exemptions—in accordance with Article 6 of the Constitution. It gives

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citizens the right to solicit information and it makes each government entity responsible for providing and updating information on structure, functions, goals, objectives, directory of personnel, monthly compensation and benefits, the services provided, the bureaucratic steps, requirements, forms, budgetary information, the results of audits, concessions, permits and authorizations granted, and reports (Title II). The law also established (Title III) a separate, autonomous authority—the Federal Institute for Access to Information (Instituto Federal de Acceso a la Información [IFAI])—composed of five commissioners named by the president with the consent of the Senate, responsible for publicizing the law, establishing and revising criteria, exercising oversight, training personnel, providing technical support, establishing policies, and resolving controversies when requests for information are denied ("Nueva Ley de Acceso a la Información pretende abrir el gobierno al escrutinio público" 2002, 10). The reform applies to all aspects of the administration, Congress, and the federal courts as well as related government agencies, the Banco de México, public universities, administrative tribunals, and any federal entity. The government can classify information as reserved, for a period of twelve years, for exceptions provided under the law, but only when it deals with personal information on individuals (SFP 2005, 141).17 The response to the new law and institution has been impressive, prompting a fundamental change in the way citizens and the press deal with the government. From just June 2003 to May 2004, the IFAI received over thirty-six thousand requests for information of which the agency responded to 87 percent; of these, 73 percent received a positive decision.18 The other major anticorruption reform undertaken by Fox was a civil service reform passed in April 2003 (see Hill Mayoral 2005; Prado and Sosa López 2004).19 The product of roughly two years of negotiations and modification within Congress, the law establishes merit as the basis for access to employment (Article 2), lays out entry requirements (Article 21), and prevents conflict of interest (Article 11) ("Firma presidencia el decreto por el que se expide la Ley del Servicio Civil de Carrera" 2003). Though taking force in October 2003, implementation has been slow and much remains to be done: a factor that arguably diminishes its impact on corruption thus far. The accompanying regulations for the law, for instance, were only published in April 2004. These set the stage for the elaboration of the objectives and strategic lines of action; the creation of selection committees in each federal entity (SFP 2005,56); a computerized system to post vacancies, receive applications, and conduct examinations; training and elaboration of employee manuals; and a report to Congress. This report revealed the vast problems in the organization of the federal public administration including extensive duplication, the lack of information, problems in defining missions and purposes, the lack of planning and evaluations, the lack of job descriptions, lengthy processes, an unwieldy and unsystematic pay structure, and the lack of publicizing vacancies (SFP 2005,50,53). In essence, the report captured

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the sheer magnitude of the task facing the SFP in creating a truly merit-based, Weberian-type bureaucracy. By December 2004, the SFP had only certified twenty-nine (of the seventy-three) entities—the first step in allowing meritbased applications—and as of August 2006, a total of only 2,354 career public servants had been integrated into the system (out of a total of close to fortyfive thousand government positions).20 In addition to the high-profile access to information and civil service reforms, the Fox government's anticorruption initiatives also included numerous efforts to streamline bureaucratic procedures (part of his "Agenda for Good Government"), enhance the use of computer technology to facilitate public management, create codes of conduct for public servants, and improve the training of bureaucrats.21 The Fox government also strengthened mechanisms of internal oversight by enhancing the training and operation of internal auditors. He also bolstered the investigative powers of the SFP (formerly SECODAM), broadened the use of the Compranet system to handle public bidding, and expanded the "simulated user" program to detect corrupt practices. At a much higher profile, the first non-PRI president also initiated an array of initiatives incorporating and even targeting civil society and the Mexican culture. These programs rested on the widely shared assumptions that "the participation of society is fundamental to prevent corruption" (SFP 2005, 284), and that attitudes play a role in facilitating corruption. In an attempt to break this vicious cycle, numerous programs encouraged the public's involvement in the government's anticorruption efforts, aided the efforts of private and social actors to improve ethics within their own internal operations, and promoted the production and dissemination of awareness-building materials. The government contracted with Transparencia Mexicana, for instance, to monitor public works contracts. For the private sector, the government put together brochures such as Transparent Enterprise: Steps for its Construction,22 Ethics Is Good Business, and Honor Codes: The Creation of a Culture of Transparency, conducted workshops and courses; crafted a certification model; and, with the business association CONCAMIN (Confederación de Cámaras Industriales de los Estados Unidos Mexicanos [Mexican Confederation of Chambers of Industry]), created an award called Ethics and Values of Industry. Such efforts, according to the government, sought to "convince [businesses] of the advantages that they can gain by operating legally and transparently" (El Mural [Guadalajara] July 2,2001; see Avances a la Sociedad 2001-2002 on the CITCC website). The 2005 project, Citizen Monitoring, similarly provided a written guide, an Internet site, and a series of workshops for civil society organizations on how to prevent corruption (SFP 2005). Efforts toward universities and schools included programs with ANUIES (Association of Institutions of Higher Education) and SEP (Secretary of Public Education), providing materials for Ethics, Social Responsibility, and Transparency, courses to teach instructors on these subjects, and even a distance-learning course on the

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role of universities in promoting the values of transparency and the rule of law. It also designed an online learning project on corruption for high school students, a website on corruption solely for children (www.adiosalastrampas.gob.mx), a children's museum, and together with the National Council for Culture and the Arts and the Federal Electoral Institute (the IFE), an art contest for children in 2002 and 2004 (receiving over fifteen thousand drawings), and a story contest in 2003. Together with a host of civic organizations it also produced a brochure promoting family values, sponsored radio spots against corruption, produced the short film When You Are Grown Up in 2002, and a video series—Cinema Minutes Against Corruption, Cinema Minutes for Transparency, and Honesty in Short: Cinema Minutes—in 2003,2004, and 2005, respectively (see Corduneanu et al. 2004). The movie about the ethical dilemmas facing a five-year-old was shown in more than one hundred theaters across the country (Notimex [Mexico City] August 28, 2002). Such a brief overview hardly does justice to the extensive administrative reforms undertaken during the Fox sexenio (six-year term of office) (for a complete overview see SFP 2005). Though the pressures and the public profile of Fox's anticorruption initiatives eased as the six-year term wore on, serious administrative reforms and efforts at bureaucratic simplification continued throughout the period. However, the Fox government never really pursued the proverbial "big fish," despite campaign promises to do so.23 Important cases and allegations of corruption by former officials, including former president Salinas, and the bank bailout known as FOBAPROA (Fondo Bancario de Protección al Ahorro [Banking Fund for the Protection of Savings]), remain unresolved, tarnishing the regime's anticorruption message. The government even failed to gain criminal prosecution for officials tied to the campaign finance scandals in 2000 and saw major cases against former officials, like the governor of Quintana Roo, collapse. In fact, by the midpoint in the six-year term, the administration's anticorruption focus seemed to have become concentrated solely on the issue of transparency. Certainly, scandals and allegations of wrongdoing within the Fox government itself undermined some of the president's credibility and the overall tenor of the anticorruption efforts.24 Two important anticorruption reforms mark the early Calderón years (20062012). One involves a major judicial reform passed in 2007 that was actually a revised version of a measure originally proposed by President Fox. This massive overhaul of the judicial system calls for the gradual introduction of a legal system more along the lines of the United States. It will eliminate the use of confessions except those given before a judge, create an independent prosecutorial system, separate the investigative function, introduce oral trials, and greatly strengthen transparency and oversight. The program, however, will take approximately fifteen years to implement. The second major initiative under Calderón centers on the president's all-out war on drug trafficking and crime. Noting that "crime cannot be understood without the cover of impunity and the corruption of the police" (Milenio [Mexico City] August 27, 2008), Calderón

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deployed 27,000 troops to engage in joint efforts with police in regions hard hit by drug-related violence. Part of this strategy involves the arrest or suspension of entire local police departments, heightened efforts to prosecute corruption in this area, and increased training of local and federal police. Assessing Change

Assessing changes in the extent of corruption over short periods is not easy for a host of reasons. In some cases, it may simply be too early to judge the effectiveness of recent reforms. The civil service reforms, for example, have only begun to have any sort of impact on corruption and are being implemented slowly. In other areas, it is possible that the exposure of corruption—its politicization—may merely create the perception that corruption has increased when in reality its incidence has fallen. Greater press freedoms, for instance, and the enhanced exposure of corruption or the greater number of allegations that stem from heightened political competition, in other words, may say nothing about the actual level of corruption in the country. Finally, in that corruption is a multidimensional phenomenon and takes on a wide variety of forms, changes can hardly be considered uniform. This means that while it is possible that certain types of corruption may be declining, other forms of corruption may in fact be increasing. But even with such caveats in mind, evidence of change to date—despite democratization—is not particularly encouraging. According to public opinion polls, participation in bribes for public services fell slightly from 2001 to 2003 from 10.6 percent to 8.5 percent, but rebounded in 2005 to 10.1 percent and remained roughly at that level in 2007.25 Even more dramatically, popular assessments of changes in the level of corruption at both the national and state levels point to very little progress, again, despite the high-profile anticorruption initiatives undertaken by Fox. As shown in Table 6.2, the somewhat more positive assessments of change in the initial years, when the anticorruption campaign was in full swing, steadily deteriorated so that by 2007, well over 80 percent of respondents saw more or the same levels of corruption compared to a year earlier. Even the TI Corruption Perceptions Index—a measure based on expert opinion rather than public opinion—points to limited, if any, change over this period. In fact, despite the substantial changes in the country's political life, Mexico's CPI was the same the year Fox was elected (2000) and the year he left office (2006) (see Table 6.3). Even the number of citizen complaints of government irregularities was higher in 2007 than in 2001 (data provided by Secretary of Public Function in response to an official request through the Sistema de Solicitudes de Información). To be sure—and to be fair—officials from the Fox administration rendered a rather different assessment. According to the government, the improved controls within the administration effectively "prevent civil servants from committing illegal acts" (see SRE 2002). A report by the Secretary of the Public Function

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Table 6.2 Perceived Change in Corruption over the Past Year in Mexico State Level

National Level

2001 2003 2005 2007

More

Same

Less

More

Same

Less

35.4 33.9 39.8 41.5

44.0 47.2 42.7 42.5

20.6 18.9 15.8 14.1

28.0 29.9 34.4

48.4 49.9 46.6

23.6 20.3 17.2

Sources: Transparencia Mexicana 2001,2003,2005,2007. Note: Question: Compared to one year ago, is there more, less, or about the same level of corruption in Mexico (or your state)?

Table 6.3 Transparency International's Corruption Perceptions Index for Mexico (1995-2008) Score 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

3.18 3.3 2.66 3.3 3.4 3.3 3.7 3.6 3.6 3.6 3.5 3.3 3.5 3.6

Rank/Number of Countries 32/41 38/54 47/52 55/85 58/99 59/90 51/91 57/102 64/133 64/145 65/158 70/163 72/179 72/180

Notes: Score: 0 = most corrupt; 10 = least corrupt. Rank: ordinal position among all countries in the index.

(SFP 2005, 309, 313) states categorically that "today, Mexico is a country very different from what it was in the year 2000. Its government is more honest and more transparent, and the society counts on new instruments to oversee government spending and actions." The government also takes credit for promoting attitudinal changes within society, pointing as evidence to the formation and work of civic organizations like Transparencia Mexicana, to polls showing that over 90 percent of respondents agree that citizens should participate in combating corruption, and the over seventy thousand requests for information through IFAI (SFP 2005). In an interview with Latin Trade (May 2006, 32-36), Fox posited,

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In terms of corruption we have achieved three profound changes—the government information access law, career civil service—I believe, [we will have] the only government in the world 100 percent certified through ISO 9000—and the public bidding system: we've closed the door on corruption, and if it does occur it's highly likely that person will be caught and taken to jail.

Again, such assessments could be seen as simply the expected, biased interpretation of politicians, or they may indicate that it takes time for such changes to resonate within public opinion. Noting the difficulties in assessing change in levels of corruption, Michael Johnston (2005, 215) suggests that we not use opinion-based indices to gauge change and that the better approach is to look at aspects of government that create incentives to corruption.

Conclusion

Overall, the Mexican case offers a laboratory to explore the impact of political and economic change on corruption; but rather than following a simple equation, democratization, as shown, has had mixed and even countervailing effects on corruption. On one level, the structural (strengthening of horizontal and vertical accountability) and institutional changes (strengthening of internal control institutions), though limited, seem to bode well for the creation and strengthening of the mechanisms needed to curb at least certain forms of corruption (increasing the likelihood of exposure and punishment, institutional changes to reduce the opportunities of corruption, greater accountability). And yet these changes have not only left certain areas untouched, but have opened new opportunities for corruption. At the same time, the new focus on corruption, the exposure of once-hidden or obscure behavior, the increasing political and public attention to the issue, the wave of public scandals, and the growing optimism that "finally" things might change, all stemming from democratic changes, seem to have contributed to the impression that corruption is widespread, growing, and out of control. It is in this sense that the bar itself may be edging upward. The perception of widespread corruption takes its toll, breeding distrust of politicians and the government, while the reality of corruption finds drug traffickers and others distorting the functioning of government. Meanwhile, corruption undermines the protection of basic rights and the administration of justice. Such patterns undermine popular satisfaction with democracy, prevent society from working with government to address the nation's problems, and may even set the stage for alternative political solutions outside the rule of law and the constitutional order. Thus while democracy strives on the one hand to create the conditions to curb corruption, the existence—both real and imagined—of deepseated corruption, threatens on the other hand to derail democracy and prevent its further deepening and consolidation. Clearly, corruption has long been and will continue to exert a powerful influence over the country, and our understanding of

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its link to the structural, institutional, and cultural facets of the country remain crucial.

Notes 1. Dating the start of the Mexican transition remains a matter of contention. Indeed Mexico's democracy did not emerge from the demise of the old system, a celebrated elite pact, or a foundational election as occurred in many Third Wave countries and the rest of Latin America; instead, it evolved gradually, over time, in a lengthy, protracted process. Nor did all the component parts "democratize" at an equal pace or, for that matter, even democratize. As M. Guerrero (2004) explains, while the forms of coming to power have certainly become far more open and democratic, the same cannot be said for the forms of exercising that power (which remain more closed and authoritarian). For general treatments on political change taking place during this period see Aguilar Camin (1990); Aguilar Rivera et al. (2006); Camp (2007); Chand (2001); T. Eisenstadt (2004); Luken Garza and Muñoz (2003); Middlebrook (2004); Morris (1995); Peschard-Sverdrup and Rioff (2005); Williams (2001). On the historic 2000 elections, see the contributions in Domínguez and Lawson (2004). 2. For a broader look at these questions, see Morris (2009). 3. Classic studies by Smith (1979) and Camp (1984) revealed a rather clear distinction between the political and the economic elites in the country during the PRI-led years. The two groups of elites attended separate universities, harbored separate viewpoints, and their career trajectories rarely overlapped. There are some indications that this political-economic elite distinction may be eroding, however, creating new patterns of corruption and of undue influence of one over the other. 4. Cases of drug-related corruption among the police and the military—the tip of the iceberg—are numerous. One of the more dramatic cases dates to 1997 when General José Gutiérrez Rebollo, the head of the government's antinarcotics agency, was arrested for being in the pay of one of the nation's major drug cartels (dramatized in the motion picture Traffic). In another example, in October 2002, the army disbanded a whole battalion that protected drug crops in Sinaloa, while at roughly the same time, two army generals were convicted in a military court for drug trafficking and sentenced to fifteen and sixteen years in prison (Bureau of International Narcotics and Law Enforcement Affairs 2003). The level of involvement by the Procuraduría General de la República (Attorney General [PGR]) in drug trafficking is considered quite high. According to one report, the PGR conducted more than 1,300 investigations into the possible malfeasance of 2,200 officers from 2001 to May 2004, resulting in 418 legal cases against 711 officers (267 prosecutors and 335 AFI agents) (Bureau of International Narcotics and Law Enforcement Affairs 2005, Part I). The influence of drug traffickers also reaches into the nation's prisons. The "escape" of Joaquín "El Chapo" Guzmán from the federal prison in the state of Jalisco, in 2000, provides perhaps the most dramatic example. Following his escape, investigations revealed that a huge number of prison officials had been receiving regular payments from the drug lord, not only allowing him to maintain his drug operation from prison, but to escape. 5. According to a congressional study, customs constitutes a major area of corruption, with 58 percent of the national clothing market supplied through illegal channels (Ochoa Leon 2005). 6. Corruption as a political problem also centers in some way on the issue of tolerance. And although data show clearly that Mexicans strongly believe that the law should

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be respected (by citizens and rulers) and that moral and ethical conduct is preferable, there is nonetheless a relatively high level of agreement with the idea that politicians "can take advantage of their position as long as they get something done." In the ENCBG 2001, for instance, 54.5 percent of respondents agreed that officials "puede sacar provecho del puesto siempre y cuando haga cosas buenas," surpassing the 39 percent of respondents who disagreed. 7. On accountability, see Etzioni-Halevy (2002); Mainwaring and Welna (2003); Moreno et al. (2003); O'Donnell (1994, 1998, 2003); Przeworski, Stokes, and Manin (1999); Schedler, Diamond, and Plattner (1999); Smulovitz and Peruzzotti (2000). 8. See La Jornada (Mexico City) January 18 and 19, 1998, cited in Mexico Update no. 156; Monge (1998). 9. Examples of congressional pressures and investigations into corruption have become common. A 2003 dictamen (report) by the committee on the environment and natural resources, for example, demanded that the internal comptroller of SEMARNAT (Secretaría Medio Ambiente, Recursos Naturales, y Pesca) make progress on the investigations into corruption in the granting of hunting licenses. The multipage document described how the agency granted ninety-three thousand permits illegally. Congress also set up a special committee to investigate allegations that Manuel, Jorge Alberto, and Fernando Bribiesca Sahagun, the president's stepchildren, used their connections to obtain 2.5 billion pesos in construction contracts. 10. On the judiciary, see Beer (2006); Carbonell (2004); Domingo (2000); Inclán Oseguera (2004); Magaloni (2003); Magaloni and Zepeda 2004); M. C. Taylor (1997); Zepeda Lecuona (2004). 11. Yet despite changes within the judiciary, the criminal justice system remains inefficient, ineffective, and distinguished by high levels of impunity and corruption. This may be a legacy of the authoritarian regime (see Zepeda Lecuona 2004). 12. As one indication of the extent of this problem, the Fiscalía Especializada para la Atención de Delitos Electorales (Special Prosecutor for Electoral Crimes), created in 1994, estimated that only 3 percent of electoral crimes are even investigated (El Universal August 1, 2002). 13. Two PEMEX officials involved in the Pemexgate scandal received rather large administrative fines and were suspended from public employment for a period of ten years. 14. Transparencia Mexicana was formed in July 1999. Chaired by Federico Reyes Heroles, the editor of the monthly magazine Este Pais, it includes academics, social activists like Sergio Aguayo of Alianza Cívica, and former government officials such as Sergio García Ramirez, the former attorney general, and Ulises Schmill, former Supreme Court judge. 15. See Arrellano Gault and Guerrero Amparan (2003,161); Franco-Barrios (2003, 5, 19); Martínez Puón (2002); Sánchez González (2004, 369). An initiative to create a civil service system was introduced and studied in the Senate during this time (Sánchez González 2004,379). On past efforts to create a civil service reform, see Arrellano Gault and Guerrero Amparán (2003). 16. Following the dramatic arrest of General Gutiérrez Rebollo, director of the Instituto Nacional para el Combate a las Drogas (National Anti-Drug Institute), in February 1997, for his ties to drug traffickers, Zedillo dissolved the agency and created a Fiscalía Especializada para la Atención de Delitos contra la Salud (Special Prosecutor for Crimes Against Health [HEADS]). Zedillo also put together the Manual Operativo para la Prevención y Detección de Transacciones Ilícitas de Levado de Dinero and created specialized groups to combat narco-trafficking and money laundering and mechanisms for citizens to report corruption (Ugalde 2002). Years later the Fox government

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dissolved FEADS following the arrest of six agents in Tijuana and the military seizure of FEADS offices in eleven states (the agents were accused of trying to extort US$2 million from a drug cartel in exchange for the release of two alleged traffickers and nearly five tons of marijuana). A change in organic law in August 2003 brought all antidrug units under SIEDO (Subprocuraduría de Investigación Especializada en Delincuencia Organizada [Undersecretary for Investigation of Organized Crime]) and strengthened the requirements for employment, standards of conduct, and the procedures for dismissal for corruption, and provided better pay (Bureau of International Narcotics and Law Enforcement Affairs 2005, Part 1). 17. The courts subsequently confirmed the power of the IFAI, declaring all of their decisions as final and unchallengeable in court ("Suprema Corte de Justicia de la Nación: Respalda la Corte Apertura" 2004). The executive, Congress, and the judiciary produced separate regulations during 2003 for the implementation of the access to information law ("Entran en vigor la Ley Federal de Transparencia y sus respectivos reglamentos" 2003). 18. The institutions issuing the most denials for information included the IPAB (Instituto para la Protección al Ahorro Bancario (the bank rescue institution), Banco Nacional de Obras y Servicios Públicos, CNBV (Comisión Nacional Bancaria y de Valores (securities and exchange commission), and Migración ("Instituto Federal de Acceso a la Información, Mexico Progresa en Transparencia" 2004). The IFAI, in turn, received 1,171 appeals (Organization of American States 2005). In a further measure institutionalizing the freedom of information, in April 2007, Congress approved a constitutional reform that forces all levels of government to homogenize their access-to-information laws according to international standards (see IFAI 2007). 19. Mexico has a rather difficult history of civil service reform dating back to the 1983 Comisión Intersecretarial del Servicio Civil de Carrera [Intersecretarial Committee for Civil Service Careers]. Similar reforms were attempted under Salinas and Zedillo, but always with some advances and many setbacks (Sánchez González 2004). 20. During the first phase in the process of recruitment and selection in 2004, the SFP received over 198,000 solicitudes with 38,507 aspirants and 16,336 contestants through public announcements, and, by the end of 2004, had appointed 1,435 posts through the system (SFP 2005, 59). 21. One example of this is the development of Cartas Compromiso al Ciudadano (CCC)—also called citizen charters—which lay out in clear language the responsibilities of the agency to the citizen, guaranteeing a certain level of performance. It provides all the information needed to carry out a bureaucratic operation or to obtain a government service, to file a complaint, understand the rights of appeal, and even includes a section entitled "What happens if we don't comply?" The SFP helped craft eleven such CCC in 2003, and eighty-four by the beginning of 2005, resulting in greater transparency, reduced operational costs, increased productivity, and development of a culture of quality (SFP 2005, 83). 22. This handsome brochure, produced in cooperation with CONCAMIN (National Confederation of Chambers of Industry) (Chamber of Industry), and released in May 2001, informs businesses on specific strategies to avoid corruption. More specifically, it (1) provides information on creating processes and operations for the enterprise, (2) offers suggestions on professional practices and ethical conduct, and (3) recommends strategies on how to work with authorities and others. The document opens with the statement, "Corruption is a social bad that is not limited to the governmental area. When there is corruption in a society, it contaminates all spheres of life: business, school, work, government, commerce, etc." (La Reforma May 18, 2001). 23. During his last campaign speech, Fox reiterated his commitment to "go after" corrupt officials from the past: "We cannot advance in our country if we do not even the

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score with those who committed abuses in the past As president elect I will propose to Congress the creation of a commission to investigate the links of narco-trafficking to the highest spheres of the government, and everything that occurred during the sexenio [six-year term of office] of Salinas, including the privatizations, the negotiations of the eighty-eight and the family finances; how the Salinas enriched themselves and the political assassinations" (La Jomada October 12, 2000). 24. The first scandal that tarnished Fox's anticorruption image involved the purchase by Los Pinos (the official residence and office of the president) of household items, including towels at a cost of 4,000 pesos each. Revealed through Compranet—demonstrating a feature of the government's commitment to make the public's business transparent—the scandal forced the president to respond by firing his personal secretary, Carlos Rojas, and prompted both SECODAM and Congress to promise to audit presidential spending. At roughly the same time, the president faced questions from the IFE regarding foreign finances during his presidential campaign as part of the Amigos de Fox scandal. In later years of the administration, scandals and allegations centered largely around the First Lady, Marta Sahagun, her children, and accusations that the Fox government was protecting them. In 2004, Marta was accused of mismanaging funds in the Vamos México charity and of using her position to promote the foundation ("Spotlight Shines on Political Corruption" 2004). Not long afterward, accusations surfaced that her sons had brokered government contacts and information into profitable growth of their businesses. Speculation that Fox was protecting his stepchildren also cut into the president's credibility. Fox also lost anticorruption credibility when in 2005 his government sought to prosecute the PRD mayor of Mexico City and early front-runner in the upcoming presidential election, Andrés Manuel López Obrador, on minor obstruction-of-justice charges. Although the president tried to tout the move as a demonstration of his determination to enforce the law, prosecution for the mayor's initial failure to abide by a lower-court injunction—which would have prevented him from running for the presidency—was widely seen as politically motivated. Though in the end the president backed down, the affair cut further into the president's credibility and the public's faith in his anticorruption credentials. 25. The fact that the panorama of thirty-five public services included in the 2005 poll differed somewhat from the list of thirty-eight services included in the 2001 and 2003 polls, however, makes this comparison somewhat problematic. In the 2005 survey, seven services previously on the 2001 and 2003 surveys were eliminated primarily because of the lack of corruption in those services, and four new services were added to the list for a total of thirty-five. The 2007 survey contained the same thirty-five services.

7 Venezuela: Corruption in a Petrostate Leslie C. Gates

Is corruption new to Venezuela? Has the type or scale of corruption changed in recent years? And what is the government doing to fight it? These questions are particularly relevant because Venezuelans initially elected President Hugo Chávez, in part, because they hoped he would address the problem of corruption (Gates 2010). During his first presidential campaign in 1998, Chávez denounced the established political parties that had governed Venezuela from 1958 to 1998 for being corrupt and for implementing a host of unpopular neoliberal (or market-oriented) economic reforms during the 1990s. Since then, despite remaining one of the most popular presidents in Latin America, President Chávez has himself been criticized for not doing enough to curb corruption. This chapter addresses these questions by placing corruption today in its historical context. This chapter first places the current patterns of corruption in the context of historical trends in both the levels and types of corruption. Doing so reveals that corruption is nothing new in Venezuela, but that the types of corruption have not always been the same. Next, the chapter describes how the political impact of corruption has varied over time and discusses how such changes may be related to the patterns of corruption in some surprising ways. For instance, the long periods during which the Venezuelan public perceived corruption as a nuisance but not a scourge, including today, challenge the assumption that widespread corruption necessarily undermines political stability. The chapter then describes some of the likely influences on corruption, which, despite historical variation in the political impact of corruption, have largely remained constant throughout the second half of the twentieth century. These have included oil wealth, the financial demands of campaigning in a competitive democracy, and a weak police and judiciary. The chapter proceeds with an overview of the myriad anticorruption efforts past and present by both the government and nongovernmental entities. 165

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Patterns of Corruption How bad is corruption today? The answer, it seems, depends on whom you ask. Experts have a dim view of corruption in Venezuela today. They rank Venezuela near the bottom of Latin America and the world in its levels of corruption and say it is getting worse. But average Venezuelans disagree. They report less direct experience with corruption than most Latin Americans. Moreover, if we put the experts' view of current corruption trends in a longer historical perspective, they do not stand out. Even experts believe the level of corruption today is not that different than it was during the 1990s. In fact, according to both experts and public opinion, the first important change in corruption occurred in the 1970s when corruption seemed to involve higher-level government officials and larger amounts of state resources than it had previously. Furthermore, corruption scandals indicate that another change in corruption patterns occurred in the 1990s: that of business actors becoming enmeshed in corrupt transactions with government agents. In other words, corruption is certainly nothing new in Venezuela. Its form, however, seems to have varied. Levels of Corruption: Experience and Expert Opinion Experts and the public disagree on the extent of corruption currently plaguing Venezuela. Polls gauging direct experience with corruption show Venezuelans currently have less direct experience than most Latin Americans. In the first two years of Transparency International's Global Corruption Barometer, Venezuela was one of the few Latin American countries in which under 10 percent of the population reported having paid a bribe for a service in the past twelve months (Transparency International 2004, 2005). In 2007, this had increased slightly to 12 percent of the population reporting such an experience. However, this was still below the cross-national average for Latin America of 13 percent. Furthermore, only one Latin American country, Argentina, had a lower proportion of respondents who said they had paid a bribe for a service in the past twelve months (Transparency International 2007b). To put this in global perspective, the rate of direct experience with extralegal payments for public service in Venezuela is in the third or the middle quintile of the world's distribution. Latinobarometro provides further support for this tendency. According to the 2007 regional poll, Venezuelans experienced about the same overall drop in reported experience with corruption in the past twelve months as did the rest of Latin America between 2001 and 2006. As shown in Figure 7.1, direct experience with corruption in Venezuela declined from 27 percent in 2001 and 2002 to its lowest level of 13 percent in 2006. Similar to the rest of Latin America, the proportion of Venezuelans reporting having been a victim of corruption in 2007 increased from 2006. While Venezuelans reported lower-than-average direct experiences with corruption during 2004-2006, their level of experience in

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Figure 7.1 Comparison of Corruption Victimization Rates for Venezuela and the Rest of Latin America, 2001-2007

• Percentage in Venezuela

H Average percentage in Latin America

Source: Latinobar6metro 2007. Note: The graph bars represent the percentage of respondents who had personally been the victims of corruption, or who knew someone who had been the victim of corruption, during the past twelve months.

2007 was greater than it was generally in Latin America (Latinobarometro 2007). And yet, experts have generally been more pessimistic about corruption's recent levels and trends in Venezuela. According to the longest running and most widely known expert-based corruption indicator, the Corruption Perceptions Index (CPI), Venezuela's corruption has been getting worse since 2002. As Table 7.1 indicates, 2007 was the first year that Venezuela's score on the CPI went down in three years. Between 2001 and 2002, Venezuela also lost ground compared to others in Latin America. It fell from the seventy-sixth percentile in 2001 to the eighty-fourth percentile in its regional rank order in 2002. Venezuela's level of transparency compared to others in the region continued to fall in 2007, attaining the ninety-seventh percentile, or next-to-last place in the region. In addition to falling to nearly the lowest level of transparency in the region, its CPI score in 2007 was the lowest in its history at 2.0. Furthermore, 2007 was only the third time in the history of Transparency International's ratings that Venezuela ranked higher than the ninetieth percentile—indicating that 90 percent of countries were perceived as having better transparency than Venezuela. Several additional indicators based largely on expert opinion offer a similarly dim view of corruption in Venezuela. The Corruption Control Index (CCI), an indicator produced by the World Bank, confirms this trend and comparatively

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