Thesis (4) - On measuring corruption

As I have argued, corruption plays a notoriously insidious role in the functioning of the economy and wider society in Guyana. Indeed this observation has been emphasised repeatedly during the course of my presentation. It has blocked the development of country, led to the widespread misuse and wastage of resources, impoverished households, and developed a system and logic of economic growth centered on organized crime that is, despite its flattering appeal to some, unsustainable. This has also happened in other countries thereby encouraging the production of global statistical measures of indexes of corruption by organisations concerned with the negative outcomes of globalisation. As reported in my articles about eight such indexes are produced internationally, with perhaps the best known being the Transparency International Corruption Index. Some of these reports include information on Guyana, which indicate its overall poor showing in relation to the rest of the CARICOM region.

Thesis (5) - On backward capitalism

My argument had stressed that the backward capitalist environment of Guyana was the economic basis from which the criminalized state emerged. This environment is reflected in a number of features. One of these is the outdated pre-globalisation structure of the economy and the manner of its insertion into the world system. Here we saw evidence of 1) its continued dependence on natural- resource intensive primary products, and the limited diversification and industrialization of these, 2) the stranglehold exerted by the international financial institutions (IFIs) over domestic policy- making, 3) the backward features of major private markets in Guyana, and 4) the underdeveloped structures and operations of private enterprises.

In the course of the presentation a number of important observations were made, some of which are repeated here for emphasis. Thus in private markets abuses of buyers’ rights in commodity markets are the norm. The same occurs for seller rights in labour markets. In general private markets were deemed to be “thin, weak, segmented, isolated, unregulated, easily cornered and/or monopolized.” As such, they were categorised as being intrinsically inefficient, hence their classification as backward.

As regards private enterprises in Guyana, low standards, poor quality and poor service are all too often the norm. The violation of work practices and codes is routine, as far too many employers exploit the job scarcity in labour markets. Perhaps above all, far too many firms are now fronts operating in the shadow economy as money-laundering/smuggling outfits.

The conclusion, which I had advanced was that in this “morass business operates without the fostering of trust.” If therefore, a strong development-oriented state and powerful regulatory bodies do not exist to contain abuses and chart a way forward, the progressive criminalisation of the state becomes more and more the likely outcome.

Thesis (6) - The ‘interface’: economic governance

The sixth thesis is that the governance of the economic affairs of Guyana contributes a great deal to the phenomenon we are examining. This follows from the argument put forward that in the present global environment the interface between the shadow economy, trans-nationalised crime, backward capitalism and the insidious criminalisation of the state lies principally (although not exclusively) in 1) the governance of the country and 2) the standards of governance practised by the international community in their dealings with Guyana. By governance I had alluded to all the features, aspects, and dimensions of the way in which the country is governed. In particular this concept encompasses not only the familiar political aspects of governance, but also its economic dimensions. Poor governance was therefore portrayed in the series as systematically fostering corruption and blocking development of the country.

Evidence in support of this observation was cited from a number of World Bank/IMF/IADB and other assessments of governance in Guyana. As I had pointed out these studies flowed from the obvious contradictions between the substantial flow of aid resources from the international community to Guyana, and the poor economic growth that we have had, along with the worsening social and political situation accompanying it. Thus, I cited a World Bank survey, which found that as many as 93 per cent of all officials who responded to it believed that corruption is significant in the public sector. Moreover, only nine (9) percent of the officials that responded reported having known of another official being disciplined for embezzlement. Particular incidents of misprocurement were also cited in the articles, including the cases of two intended operations (health and the upgrading of secondary towns) that had to be withdrawn. Indeed, it was pointed out that the Infrastructure Rehabilitation Project was closed in 1999 and the Government also committed to the refund of ineligible expenditures carried out under the projects where the misprocurement occurred.

In this regard in one of the articles in the series, I spent some time examining the scope of the Procurement legislation that had been passed and which was in force at the time of writing (May 11, 2003). I referred in that article to the strong objections the World Bank and the international community had taken to the legislation then in force. Since then new legislation has been recently passed in the face of strenuous objection by the parliamentary and other opposition. This was not surprising as in the context of governance as practised in Guyana a close study of the legislation showed that it offered inadequate protection against the perpetuation of abuses. However, in what must be one of the classic examples of 21st century boorishness and insensitivity to the Guyanese public, one World Bank functionary expressed wonder as to why there was opposition to the bill when that institution was satisfied with it!

As we shall see next week the double standards of the IFIs has been and continues to be a major factor in the degeneration of the state. Loud in proclaiming the evils of corruption, in practice they preside over some of the most corrupt and corrosive features of governance in Guyana.

Vital ingredients: IFI double standards, moral ambiguity and circular causation

In my summary so far I have identified six theses on the criminalised state. Last week’s article referred to three of these, namely, on measuring corruption (thesis 4), backward capitalism (thesis 5), and economic governance (thesis 6). I described thesis 6 as the “interface” between the shadow economy, trans-nationalised crime, backward capitalism and the insidious criminalisation of the state. This role of an ‘interface’ is a product of the new globalised environment and it is expressed principally in 1) the system and practices of domestic governance of the country’s economic affairs and 2) the standard of governance practised by the international community in their dealings with Guyana.

Earlier in the series I had pursued the role of the international community, particularly the international financial institutions (IFIs), in some depth. I had indicated then (June 1) that I had encountered a two-fold response to those articles. On the one hand, several readers volunteered the view that they were happy that I had taken “the international community to task in regard to their roles in contributing to poor governance in Guyana.” On the other hand, persons I knew working in these institutions held out the opinion “they did not have the authority to do more than they were doing at present.” I was convinced then, and moreso now, that there is no validity to this latter claim. I took this strong position because it is the international community that has proclaimed the standard, which says, “Good governance is a necessary condition for sustained economic growth.” The World Bank in particular has been uncompromising in its denunciation and now famous edict, which states: “corruption is the single greatest obstacle to economic development.”

Thesis (7) the best-kept secret

Following this my seventh thesis was designed to illustrate that the behaviour of the international community, particularly the IFIs, contrary to their public declarations is “tantamount to giving private behind-the-scenes encouragement for corrupt behaviour.”

This thesis, I believe, offers an important gateway to our understanding of the situation in Guyana and the attendant prolongation of the most recent phase of the economic, social and political crisis, since 1998. The explicit aim I had in highlighting this thesis was to bring to the public’s attention (and for that matter the wider community overseas that follows this series) the double standards practised by the IFIs. Regrettably, these institutions are, in truth, operating no better than the corrupt regimes they deal with, despite their public facade to the contrary.

In the articles of that time I had raised the hope that drawing the public’s attention to this might encourage some modification or change in the behaviour of these institutions. I do not, however, want to convey the impression that I actually hold out much hope of this happening. It is clear to me that, unless the IFIs adopt an uncompromising stance on these matters, the sheer logic of career advancement, personal ambition, and moral ambiguity among the officials who work for these institutions, will continue to prevent them from rocking-the-boat and putting their prospects for promotion and being thought well-of in jeopardy.

I had labelled this situation as one of the best-kept secrets about Guyana. I used the opportunity to remind readers of the fact that with its small population, on a per person basis, Guyana has had more foreign diplomatic staff and personnel of international agencies involved in irregular practices, public scandals, or corrupt activities, than perhaps anywhere else in the world. Guyanese, however, have short memories. I had cited several examples of highly-placed missions being affected and some of these were edited out of the article, presumably I imagine because these incidents were not recalled although they were widely publicised at the time of their occurrence.

Thesis (7) - virtuous and vicious circles
The seventh thesis is that there is no particular pattern or direction of causation, whether linear or cyclical in the relationship between governance, growth and development in the criminalized state. As I had claimed (June 1), over the previous year-and-a-half Guyana had witnessed such a rapid rate of deterioration of law and order as to give the appearance that the matters under discussion in this series are of recent origin. I was at pains, however, to indicate that this was not the case, and that clearly from the analysis presented so far, the roots of the crisis go deeper and further back in time.

Drawing on the evidence of cross-country studies I had argued then in favour of a circular causality and the development of vicious and virtuous circles. A virtuous circle would be one in which “good governance enhances political and social stability, reduces organized crime and lawlessness, and thereby improves the environment for economic activities.” A vicious circle has the opposite effect. Poor governance impedes economic growth, stagnates income and wealth creation, and fosters the breakdown of law and order.

Because of the cumulative causality of these circles, when a country such as Guyana is caught in a vicious one, it is difficult for the country on its own to disentangle its people and institutions from this situation. If therefore, the IFIs, which normally exert considerable influence on public policy remain passive and indulgent of the growing connection between government and trans-nationalised organised crime, then the crisis can only worsen and the criminalisation of the state become more embedded.

Thesis (8) - empirical measure of governance
The eighth thesis had to do with the measurement of governance. Although governance is a complex concept, advances have been made in its empirical measurement. I drew attention to the five indicators frequently used to measure it: 1) voice and participation, 2) the ‘rule of law,’ 3) political instability and violence, 4) government effectiveness and 5) graft. What is of note is that some of these empirical studies have been conducted for the Caribbean region. However, in the case of Guyana, I singled out for emphasis the first ever national survey of political attitudes, which was undertaken in August-September 2000, just prior to the 2001 national elections. That survey produced some striking responses about the public’s attitude to the security forces, judiciary and corruption, which reinforced the argument of the text.