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World: Is Raising State Salaries Enough To Combat Corruption?

  • Jeremy Bransten --> In a bid to stem corruption, Russian President Vladimir Putin has issued a decree raising the salaries of government ministers, as well as thousands of lower-level state employees. Is the wage boost likely to have the desired effect, and what are the most effective strategies for keeping a nation's civil servants honest?

Prague, 20 April 2004 (RFE/RL) -- Russian media report that President Vladimir Putin has signed a decree ordering a major boost to the wages of government ministers as well as 35,000 mid-level federal "bureaucrats."

Putin doubled his own salary to some $5,000 a month while more than quadrupling the salary of his prime minister to the equivalent of $4,000 per month. Ministers also received a hefty raise to $3,000 per month while 35,000 federal employees are set to receive pay hikes of $100 to $500 per month.

Deputy Prime Minister Aleksandr Zhukov said the funds to pay the salary increases will come from money saved by overall staff cutbacks. He said the wage boosts will help diminish corruption in the civil service while encouraging talented employees not to leave government service for opportunities in the private sector.

The more government officials have the leeway to create rules and regulations as they go along, the easier it is for them to use their discretionary powers for personal gain and the harder it is for the media to act as an effective check against corruption.
Most analysts welcomed the Putin decree, saying it could indeed serve as a disincentive to corruption, by bringing the salaries of mid-level and senior government employees closer to European levels and the private sector. Al Breach, chief economist at the Brunswick UBS investment bank in Moscow, told RFE/RL: "I think it's a good step. It's making the official salary respectable and on a par with those in other countries and in some areas of private business in Russia and Moscow. And it's certainly sufficient and a decent income to live on. It's not on its own going to solve [a problem] or change a culture, but it's part of a change that I think is going on and hence very welcome."

In fact, the Putin decree is not a novel approach in the world. At the start of this year, China also raised the pay of its civil servants -- including police officers, significantly -- to combat corruption. Asia's most successful and cleanest economies, such as Japan and Singapore, have long paid their public officials high wages to discourage graft. Singapore's prime minister draws an annual salary of $600,000 per year, a world record, while the Japanese prime minister makes over $300,000 per year. His finance minister makes even more, at over $400,000 per year.

By contrast, in some of the world's most graft-prone countries, according to surveys by the corruption-tracking agency Transparency International, the official salaries of state officials are so low that they barely represent a living wage.

In Tajikistan, for example, government ministers earn the equivalent of $20 per month. That is four times the average wage, but a pittance compared to the money that can be collected from crooked business deals.

In oil-rich Kazakhstan, an average civil servant does better, earning about $800 per month, about twice the average salary in the private sphere. But with newly built apartments costing over $1,000 per square meter in the commercial capital Almaty, a civil servant subsisting only on his salary would never be able to afford one. And Kazakhs have yet to see a homeless government official.

So does that mean that raising state salaries is all it takes to root out corruption? Actually, no -- far from it. Corruption in the state sector sometimes forms a chain, from the lowest bureaucrat to the most senior ministers, and in this case breaking the cycle is more difficult.

Laurence Cockroft, chairman of Transparency International's British chapter, told RFE/RL: "It's also sometimes part of an organized racket, so that the policeman on the beat may be taking a bribe from the public at the behest of his senior, who may be trying to organize quite a large taking from those more junior policemen whom he controls. So one has to accept the fact that although petty corruption for the most part is a means of survival, that's not always the case and it's not the whole picture."

At the most senior level, Cockroft said, ministers have access to information and decision-making powers that have the potential to earn them millions of dollars, so doubling or tripling their salaries can have little effect. "If we move up the scale to the level of ministers, then certainly in terms of the developing world, whether we're looking at India or Cameroon or Colombia, the fact of the matter is that ministers are paid a small sum and do find it difficult to survive on those salaries," he said. "On the other hand, the fact of the matter is that in those cases, the means of sustaining or increasing their take-home pay is really to become involved in very large contracts where the distortion of public finances is rather serious and the implications for society as a whole are likewise very serious."

What ultimately makes more of a difference in combating corruption are factors such as the transparency of business rules, laws, freedom of the press, and cultural pressure. The more government officials have the leeway to create rules and regulations as they go along, the easier it is for them to use their discretionary powers for personal gain and the harder it is for the media to act as an effective check against corruption.

"Ultimately, it's cultural, and it's a lack of acceptance of it. Other things are changes in the rules to reduce the instances where the subjective opinions of ministers and bureaucrats can afford opportunities for corruption," Breach said.

Cockroft agreed and he pointed to the case of Kenya as an example. Fifteen months ago, a new government swept into power after widely hailed democratic elections. People gave the country's new leaders a mandate to combat corruption but the state had little money to raise the salaries of civil servants.

Instead, the government instituted a series of steps designed to make public officials more accountable. An independent anticorruption commission was created, and the judiciary was restructured, with scores of corrupt judges and lawyers dismissed from the jobs. Government ministers were also forced to make a public declaration of their assets.

Although Kenya continues to face many problems, surveys conducted by Transparency International note a significant decrease in people's perception of corruption. The International Monetary Fund and the World Bank, which had left the country in 2001 due to an inability to deal with government graft under the previous regime, have now returned to the country, praising the new climate.

Kenya, Cockroft said, proves that the proper control mechanisms can do more than just raise salaries to reduce corruption levels in the civil service. "Control mechanisms and not salaries [are important], because it hasn't been possible for the Kenyan government to raise salaries as part of its anticorruption program," he said. "So I think this is an interesting case where, although there's no doubt that officials find it difficult to survive financially, they are in a situation where they have been challenged by the new government to behave in a different way and appear to be doing so, at least as opinion polls measure that response."

In the international context, Cockburn said, the globalization of business and adoption of universal antigraft rules may also help tame corruption in many countries. "I think you have to take on board the huge, or at least very significant changes in the international regulatory environment that have taken place in the last five years," he said. "For instance, many of these international deals, whether it's investment or simple sales, are underwritten by the export-credit agencies of exporting countries. Now these agencies are in the process of very much tightening up the conditions under which they will supply export finance. And in the context of the U.K., the export-credit guarantee department has now introduced very tough guidelines which in fact will make it really quite difficult for U.K.-based companies to pay a bribe in relation to a contract that they may be trying to execute or secure."

That can only be good news for countries in the midst of privatization campaigns that too often in the past have proven fertile ground for corruption.

(RFE/RL's Tajik, Kazakh, and Kyrgyz services contributed to this report.)