War and corruption are inseparable.
Half of the countries in the bottom quartile of the Corruption Perception Index are involved in conflict. And there are many reasons to speculate on why that is.
First, during conflict, public accountability of political figures and officials becomes harder to achieve. This creates an environment that favors corruption, as most of the country’s resources and attention are directed to the war. Because of this, politicians can promote their own interests, by however means that might be.
Another reason this can happen is during civil war. Because of internal conflict, ordinary market transactions are disrupted, which leads to some government officials to develop connections in the black market. This is the case of the Syrian civil war, where some of the rich accumulated even more wealth due to connections with the black market.
In some situations, government officials and businesses may thrive under conflict due to their control of supply chains which are needed for the war (e.g., weapons, manufacturing materials, and finance). In this case, governments may choose to exploit and perpetuate the conflict. Similarly, some governments may choose to look away from illicit economic arrangements in exchange for support against other groups. This was the case in Afghanistan, where American officials sought alliances against the Taliban.
Certainly, with the war in Ukraine, this will have heavy implications on corruption, economics, and other geopolitical matters across the globe. In this article, we will be addressing what can be expected: a potential rise in corruption in some of the affected regions and a negative impact in many of the worlds’ economies.
The War in Ukraine
The current war in Ukraine will be an event with many consequences to the entire world, among them financial implications and potential increase in corruption across Eastern Europe.
As analyzed by the IMF, not only will prices for commodities, such as food and energy, increase, inflation will likewise grow. Countries neighboring Ukraine will be the ones to suffer the most, with disruption to trade, supply chains and increase in remittances (such as facilitation payments).
Additionally, the surge of refugees will likely affect all of Europe. In fact, since February this year, over 5 million Ukrainians fled the country, according to UN data. Finally, because of the conflict and its consequences, this will cause reduced business confidence and higher investor uncertainty. This is due to the fact that companies cannot predict future earnings, and the extent of a hypothetical recession.
Concerning the war in Ukraine, there are many potential consequences in regard to corruption and its effects in the conflict area and further. First and foremost, we need to consider corruption in Russia.
Corruption in Russia
Corruption in Russia is present seemingly in many different environments. Russia was the lowest ranking European country in the Corruptions Perceptions Index 2021, at 136th place of 180. In fact, Russia has been deemed having a ‘kleptocratic’ system, meaning a ‘government by those who seek chiefly status and personal gain at the expense of the governed’.
In an article by Politico, the underwhelming attack in Ukraine by Russian troops can also be be explained by corruption. The first impact of this was in logistics – with Russian soldiers receiving inadequate equipment and supplies; undermining their effectiveness on ground. In fact, accounts link Yevgeny Prigozhin as responsible for providing food to the army – which has been reported to have E. coli bacteria and be of small portions. Notably, Prigozhin was accused by Russian opposer Alexei Navalny of forming a cartel, receiving several hundred million dollars.
Another way corruption affects the Russian military is by lack of fuel, even though Russia is rich in oil and gas. However, because of Russia’s ineffective control of fuel consumption in the army, this created opportunities for embezzlement. Additionally, many weapons and technologies that could increase the Russian military effectiveness in Ukraine have not materialized due to bribery, embezzlement, and fraud. Secrecy inside the military limits civilian oversight in companies engaged in corrupt behavior with the Ministry of Defense. And without surprise, most of Russia’s defense companies expressed a low commitment to transparency and anti-corruption agendas.
The arguments above serve to demonstrate that the parties starting a conflict may not only spread corruption, but they have high levels of corruption in their internal institutions and society. Corruption is a pervasive element with a destructive potential, which will first and foremost impact the lives of many Ukrainians. This can come in form of undue alliances against opposing parties, exploration of the black market, enrichment of the powerful, and other abuses committed during the war.
War can favor the corrupt and the ones in power – which might be one and the same.
Even though the West has responded to the invasion with a series of sanctions to Russia, these do not always affect the ones on top, who often conceal their money and influence. Therefore, sanctions will achieve little unless authorities can track down the assets purchased with dirty money. To prevent future tragedies of this kind, politicians need to implement anti-corruption policies thoroughly.
Each continent in the world will suffer consequences from the war in Ukraine. According to IMF’s Managing Director, ‘we need the strength of the collective to deal with shocks to come’. FAFPI is one of such collective initiatives; and because of the war, this may increase the risk of facilitation payments, bribery and illicit exchanges across Europe. This is why it is so important to support and implement thorough anti-corruption practices both in businesses, countries and international agreements. Corruption cannot not be tolerated, because otherwise it can survive and spread.
What do you think will be the biggest impact of the Ukraine war in your country and in the world? Share your thoughts with us below.