Tag Archives: Corruption

Angola and Portugal, a common struggle?

We are often confronted about the huge amounts of money some Angolan citizens spend in Portugal. We often read about their investments as well. We often tend to think it is a good thing.

As you may know, the Portuguese economy is frozen. We don’t have much money to neither invest nor to consume so any extra help will do.

There’s also the fact that Angola is a sovereign country. If there is money leaving the country against the best interest of the people, it is in first place their problem.

Now imagine there’s this guy who steals gold for living. He robs people on the streets, he robs from houses, whatever. He’s a total thieve. Let’s say he even took a necklace from my grandmother on her way to the supermarket, hurting her knees along the way.

The fact is that there are plenty of places buying gold without any consideration regarding the origin. So this inglorious thieve has the incentive to keep on robbing as he knows there will always be a buyer.

And what do you expect the owner of the place to do? Do you really expect him to say something about it and end up ruinning his beautiful business? With this economy? No way, a man’s gotta eat. I’m sorry for the old lady though, she should start carrying a gun or something.

My point is that laxity is dangerous: when you decide to take the dirty money you are actively incentivating corruption and deviant behaviour. There will always be excuses for doing it though, that’s why it is so dangerous to accept it the first time.

But back to our topic: all this investment from Angola, where does the money come from? Are those personal investments or is the money coming from the government budget? Is there even a difference?

Is it thievery? Or is it good business?

It is common knowledge that bags and bags full of money arrive ‘undercover’ from Luanda to the Lisbon airport. However, nobody (at least nobody with power to do anything) seems to find it weird.

Isabel dos Santos, the daugther of the President Eduardo dos Santos, is according to the Forbes magazine the most powerful woman in Africa. Her first business was Unitel, the biggest mobile operator in Angola, in partnership with Portugal Telecom and the state-owned Sonangol.

With Sonae, Isabel dos Santos took Continente retail stores to Angola.

In Portugal, Isabel dos Santos owns relevant shares on companies such as banks BPI and BIC, Galp Energia and Zon Multimedia, who is expected to acquire Optimus from Sonae.

There are rumours connecting such prodigious daughter to everything from traffic of diamonds to political bias, inside trading and lobbying. Without surprise, it looks like Portuguese elites are all over these schemes.

As companies and economic agents in Portugal try to make a profit out of the situation, they are enduring a regime of oppression in one of the poorest countries in the world, ranking 148th on 2013 HDI rankings, behind countries like Pakistan or Bangladesh.

So there is a common struggle after all: responsability.

Transparency International CPI2012 shows Portugal must target corruption

Transparency International has just released its Corruption Perceptions Index 2012 and Portugal scores 63/100, ranking 33rd this year, one place below last year’s position and 3 points above the Cape Verde islands.

As austerity strengthens there’s no similar counterpart in anti-corruption measures to be issued by the political and governmental power in order to provide greater accountability of its actions and that of its employees.

It’s sad to verify such reality as prevalent corruption constitutes a “dirty tax”, leading to the appropriation of resources by public officials and to undesirable allocations of public investment from a development perspective.

Austerity combined with corruption leads to increasingly higher taxes with increasingly lower returns, a familiar cenario to most southern Europeans. On the other side, less corruption means better public investment with lower costs.

Said that, it’s frustrating to see Portugal ranking a barely positive grade as government officials demand so much from its citizens. Not only corruption takes away scarce resources from the economy but it also deteriorates competitiveness, budget consolidation and social stability, three major vectors of the structural adjustment programme itself.

Public distrust undermine political institutions,  triggering widespread trickle-down corruption and the construction of rent-seeking societies as a whole. In other words, if the wealthy and the powerful are corrupt and their corruption is tolerated by the guardians of the law, then there’s no real incentives for any other citizen to comply other than their ability to sleep at night.

Quality public investment is one of the most important channels of development and poverty alleviation. Low quality public investment often hurts the more vulnerable households who need it most, enhancing inequality and perpetuating poverty cycles. That playing along with the lack of information and accountability of the government officials creates the potential for greater social arrest and, consequently, further corruption, as can be seen in the case of Greece.

The above constitutes argument for the implementation of a strong anti-corruption policies, enhancing transparency and accountability towards closing the ever increasing gap between formal political institutions and the civil society.

Governance is an issue for a 38 years old Portuguese democracy approaching its midlife crisis at a fast pace. Portugal CPI (63/100) is below EU15 average CPI (72/100) and in line with EU27 average CPI (64/100). However, Portugal CPI is above PIGS (Portugal, Italy, Greece and Spain) average CPI (51,5/100), mostly because of the aberrant CPIs presented by both Italy (42/100) and Greece (36/100).

The 16 point difference between the Portugese score and the EU15 – PIGS average CPI (79/100) sugests that Portugal can learn something from the experience of its neighbours, although there’s no applicable recipe for erradicating corruption.

It is clear that anti-corruption measures must play a significant role in shaping the future of the structural ajustment plans applied in southern Europe as Italy and Greece, especially, are perceived to be among the 3 most corrupt EU nations (the other is Bulgaria). In case these national governments don’t deal directly with such problems it is likely that further pressions for deviant behaviour emerge along with strengthened austerity.

The PALOP (African countries with Portuguese as official language) average CPI is 36/100. Mozambique (31/100 CPI), Guinea-Bissau (25/100 CPI) and Angola (22/100 CPI) rank among the most corrupt countries in the world. Botswana (65/100 CPI) and Cape Verde (60/100 CPI) are among the examples to emulate in Africa.

Two directions for Occupy Economics

After Ingrid Robeyns’ post on the subject, much has been blogged this last days about the viability (or the need, depending on the blogger) of an Occupy Economics approach following the sensation and very interesting Occupy Philosophy blog.

Such demand seems reasonable so I’ll try to come up with two generaly accepted ideas to start with. As I see things there are two distinct ways for Open Economics to build around, none of them exclusive to economists:

1. The profession’s code: many economists fail to provide relevant research because of the prevalent conflict of interest between their individual goals and desires (€€€, reputation and ultimately in some cases their jobs) and the profession’s objective or public interests. We’re not simply talking about corrupt economists here, we’re talking about a whole system built around private money (the same applies for public Univs or Institutes) and international institutions that dictate the rules of the game (what is acceptable and what is not; paradigms, academic trends), promoting their own agenda and blocking or marginalizing the most of the potentialy disruptive economic thought. This is probably one of the biggest motives for the stagnation of the economic theory in the last decades (since the 80s, I mean). Pretty much anyone thoughtful, adventurous and curious enough to challenge the establishment is able to expose and attack such conflict of interests without limitations; in my opinion, we should expect the greatest analysis to be from the ones who never entered such system – in this case, distance should pay;

2. The professions’ production: the dominant paradigm (neo-neo-liberalism) must be finally deconstructed in order to be reformulated and expanded. On the analytic side we have the maths vs. social sciences debate; here I vote for the use of the both as I think such debate provides no added value for the science. Despite the merits of the microeconomic atomistic and rational choice based math supported approach characteristic from the neo-liberal fellows, economy must be seen as an open system leaving economics as an open subject, capable of contributing and receiving contributions from all other social sciences on its demand for a better understandment of social problems and dynamics. We have to bring politics, history, sociology, antropology, geography and all such old friends back in the game. Don’t worry, physicians will still being pretty useful economists and nobel prize candidates but they sure need some support from people who actualy study the real world. Moreover, one-size-fits-all approaches must be left out and be replaced by more sensitive, bottom-up conceptions that contemplate the real needs of the people and the effective and sustainable development of the communities, nations and ultimately of the whole globalized word as an complex integrated system. The study of the bottom of all social systems – of institutions in the broader sense as commonly seen – is desirable and can provide common ground for prolific future cooperation among social scientists.

Inspired? Anyone?