Global corruption survey claims improved governance in Armenia

Emil Danielyan 10/20/03

Transparency International, an international non-governmental organization, has ranked Yerevan among the least corrupt former Soviet republics. Azerbaijan and Georgia, along with Central Asian states, lagged near the bottom of the NGO's annual corruption survey.

Armenia came in 78th place in Transparency International's 2003 survey of 133 countries, formally known as the Corruption Perceptions Index. Among Caucasus countries, Armenia ranked far ahead of Azerbaijan and Georgia, which shared 124th place together with three other states. Corruption in Baku and Tbilisi is "pervasive," according to the annual survey.

Bangladesh rated as the world's most corrupt country, while Finland ranked as the cleanest. Russia ranked 86th. Among Central Asian states, Kazakhstan and Uzbekistan tied in 100th. Kyrgyzstan was 118th and Tajikistan was 124th. Turkmenistan was not rated.

The ranking was determined by the extent of their corrupt practices as perceived by business leaders, academics and risk analysts. All countries were evaluated on a 10-point scale, in which a score of 10 represented an absence of graft. Armenia scored 3.0 in Transparency's Corruption Perception Index, up from 2.5 points it received in 2000. The score, though low in absolute terms, puts the country just below the NGO's threshold for a "high level" of corruption.

Representatives of the International Monetary Fund (IMF) have endorsed Transparency International's findings, based on separate studies conducted by international lending institutions.

"A number of other studies ... have basically confirmed the observation that if one looks at the CIS as a whole, Armenia is among the better performers," said James McHugh, the IMF resident representative in Yerevan.

McHugh cautions at the same time that the Armenian authorities still have "a long way to go" in promoting the rule of law. This is also the point stressed by independent Armenian experts. "In my opinion, going up from 2.5 to 3.0 in three years is a modest achievement," says Arevik Saribekian of Transparency International's Armenian branch. "Corruption may indeed be down but we shouldn't consider it a high score."

Corrupt practices, which date back to the Soviet era, have long been as a serious hindrance to Armenia's economic development, which is also hampered by the unresolved conflict over Nagorno-Karabakh. [For background see the Eurasia Insight archive]. Improper conduct, including bribery and nepotism – remains relatively common among government bureaucrats. Bribes are often offered to get officials to turn a blind eye on tax evasion, cover up a criminal case, speed up bureaucratic paperwork or even enroll a student in a state university.

The impact of graft has been particularly negative on the country's investment climate. Some forms of lucrative economic activity (e.g., imports of fuel and basic foodstuffs) still require government patronage. Also, many businesses have long complained about harassment from corrupt tax and customs officials.

Authorities in Yerevan have been under growing pressure from the IMF and other Western donors to tackle the problem. In recent years, they have simplified Armenia's business legislation and enacted a set of laws aimed at complicating abuses committed by government officials. However, virtually no senior government officials have been sacked or prosecuted on corruption charges.

In late 2001, the government received a $340,000 grant from the World Bank to work out a comprehensive anti-corruption strategy. Publication of the document has since been repeatedly delayed and is now expected by the end of this year.

Armenian opposition leaders have expressed skepticism over whether President Robert Kocharian's administration has the political will to implement an anti-corruption plan. Kocharian critics maintain that corruption serves as a key pillar of Armenia's oligarchic political order. To support their claims, opposition point to Armenia's presidential and parliamentary elections earlier this year, which were both marred by widespread allegations of fraud. [For background see the Eurasia Insight archive].

McHugh, however, noted the Armenian government has registered significant anti-corruption results in recent years, singling out Armenia's banking and energy sectors as the areas where progress has been particularly evident. "There is a perception out there that Armenia is a very corrupt country," McHugh explains. "But what we see from these indicators is that perhaps that impression is too negative and that the situation is improving."

In the words of another member of Transparency International's Armenian affiliate, Varuzhan Hoktanian, a lot will depend on public scrutiny over the implementation of anti-graft measures. "World experience shows that countries with strong civil societies are less corrupt because their citizens hold their rulers in check," he says. "Government programs alone don't solve problems."

Editor's Note: Emil Danielyan is a Yerevan-based journalist and political analyst.

Posted October 20, 2003 © Eurasianet