Final Report

 

I divided my Final Report in four parts which correspond to the three successive phases of my work in carrying out the project.

 

1. During the first phase I undertook all the preparatory activities necessary to complete my research. I devoted the first two months to putting in order  my basic concept of “state capture” and to formulating the dimensions of the problem and the hypothesis  as guidelines for the research. To achieve these initial goals I reviewed literature on corruption in the region and elsewhere, concentrating on uncontrolled political power as the  cause of  systemic corruption. I also studied measures which have been taken in other transitional countries to fight corruptive connections between political (party) elites, state institutions (government, parliament, courts) and the business sector.  My second and parallel step was to organize and hold widespread consultations about  the initial hypothesis, the main issues and the indicators  of state capture with about 20 people who are experts. They include professors, NGO’s activists,  former- government functionaries, media and party leaders. They supported my hypothesis “that all that is public (that is not private) is under party ownership”, including government administration, the Parliament, public enterprises, services and utilities on both the national and local levels. Political parties are able to rule  these bodies directly  via established mechanisms of  ‘state capture’.   My third step was to connect and  start collaboration with organizations which closely deal with corruption, such as Transparency Serbia, the Anticorruption Council of the Government of Serbia, the only independent and official institution in this area, and some other organizations (for example: Fridrich  Ebert Shtiftung and CESID)  which investigated the Serbian party system and the overwhelming influence of the political elites (party top leaderships) on appointments throughout the public sector, on the one hand, and their connections with the tycoons via the non-transparent Law on Financing Political Parties, on the other. While communicating with them and while participating in public discussions  I narrowed the focus of my project  to the idea that  Serbia faces a new phenomenon of “party  monopoly over the state” as a factor  responsible for large scale – systemic corruption in Serbia.  This new phenomenon is not a remnant of the former one-party state under communism, but is a product  of political misgovernance in the Serbian transition.

 

Based on these initial investigations  I wrote my issue paper  and submitted it in June, 2006, within the allotted time-frame.

 

          

2. In the second phase of the project  (July, August, September) I defined the mechanisms of state capture, selected  the relevant empirical indicators that should be measured and carried out my research on: (1)  the structural and legal mechanisms used by political parties to capture functional distribution and occupy positions in the public institutions (namely favorable positions for political cronies in public enterprises, utilities, local and city government and joint party and state functions); (2) the specific  laws such as the Law on Financing  Political Parties, the Law on Conflict of Interests, the Law on Preventing Monopolies, the Law on State Administration etc. that enable the accumulation of functions, that connect parties with business in a non-transparent way, and that sabotage regulatory and controlling institutions. I also included the analysis of the new Constitution that bluntly gave support to my hypothesis about “partocracy” in Serbia by converting independent MPs into the property of  the political parties; (3) public opinion about corruption and attitudes about public office recruitment practices  etc. by carrying out a survey  using a representative sample of the Serbian population.

 

Data that was collected fulfilled the following research goals:

 

·        Investigating the City of Novi Sad as  a case study of a state capture  at the local level. I  identified several journalists and members of  the City Assembly that would collaborate as sources of information about the structure of the local parliament and the authority given by party affiliation, and that would provide party-membership breakdowns in public companies  and institutions among the ruling parties for the last two election periods: 2000  when the coalition of democratic parties held the authority in the city and 2004  (the last local elections) when elections were won by the nationalistic Serbian Radical Party.

·        Research  on  National Government  functionary appointments  in  public enterprises, funds and agencies; investigation of their function-accumulation and concentration of power. Among sources of information was the Official Gazette of the Republic of Serbia.

·     Research of 250 MPs of the National Parliament for accumulation of functions, by number, content, and party;

·        Investigation of how parties’ cadres are distributed in the governmental ministries and institutions within the same activity  area, on both horizontal and vertical  levels. The case studies of two ministries were investigated: the Ministry of Finance and the Ministry of Education and Sport;

·        Developing and testing 15 questions for the survey on public opinion about corruption, criteria about appointments for state positions, attitudes about the accumulation of functions, and public confidence in the institutions. The survey was carried out  with the assistance of Strategic Marketing, the best-known public opinion research firm.

 

In order to prepare my advocacy tasks I obtained cooperation with the following organizations and media:

 

·        Transparency Serbia (NGO)

·        Center for Liberal-Democratic Studies (NGO)

·        CESID,  an NGO for Free and Democratic Elections that holds conferences on party financing 

·        Strategic Marketing – Research Agency

·        The Anticorruption Council of the Government of Serbia which invited me to a conference  - “Anti-Corruption Days”, June, 2006:

·        The Democratic Party’s Committee for Public Services. It offered to cooperate and invited me to a debate  about policy issues as a preparation for the forthcoming elections;

·         NALED'S  Working Group Forum on Business-Government ( I became a member of the National Alliance for Local Economic Development, founded by USAID);

·        Media such as the daily newspaper in Novi Sad “Dnevnik”, the daily newspaper “Danas”, the weekly magazine “Vreme” and the monthly journal “Republika”.

 

During this period, not waiting to finish my policy paper, I started to raise the question of state capture (“party state”) in the public, by writing articles for daily papers (four articles, two of them are translated into English and posted on the  Policy  Document Center, pdc.ceu.hu). I participated in talk shows on the radio and TV (the popular radio shows - “Pescanik” and “Kaziprst”, and the TV shows on the B 92, Studio B, and local TV stations.

      

3. In the third phase I was devoted to writing my policy paper and assuring its widespread distribution. At the end of October, 2006,  I sent the first draft to my advisor Michael  Emerson. I got a positive evaluation of my first version  and valuable suggestions for improvements. I posted the draft policy paper on my site, and started to work on the second version.  First, I participated in a useful seminar on how to write a policy paper which was organized by IPF and held in Istanbul at the beginning of November.  Second,   I distributed  the first version of my paper to Serbian experts, such as the President of Transparency Serbia (Dr. Vladimir Goati),  the Executive Director of the TS (Nemanja Nenadic), Aleksandra Drecun, ex-deputy minister of Finance (in the Zoran Djindjic government),  Srdja Popovic, lawyer,  and Julie Mostov, professor of political science.  Third, I continued collecting materials and data about state capture and did so until almost the last day before submitting the final version. 

 

Based on the valuable comments I received on how to improve the paper, and my own  further work on the problem,  I worked out my  final version which was edited by CEPS and published in March 2007 (www.ceps.be).  By May 21, CEPSSHOP reported that there were 400 downloads of my paper. I also published the Serbian version of the paper in the monthly journal Republika  (April 1, 2007), and on the internet address: www.republika.co.yu. Republika  distributed 5.000 copies of my paper.  I also posted my final version on the  IPF site: www.policy.hu/vpesic

 

        

4. The forth phase of the project realization was my very active and extensive advocacy about eliminating ‘state capture’ in its most  corruptive aspect: each party from the ruling coalition gets ministries and entire sectors (like health, culture, finance etc) at its disposal to employ its own party cronies horizontally (on the national level) and vertically (from the national to the local level). This ‘feudal’ division of power among parties together with public opinion which is fully against such corruptive invention in Serbia were presented and proven in my paper. The aforementioned advocacy has greatly contributed to the problem of capture state and the feudal division of power among parties  becoming the most important and widely-discussed current public topic in Serbia.

 

To promote my policy ideas about how to fight ‘state capture’ and eliminate corruptive party influence in all the government institutions (including the judiciary) , I accepted an offer of  the Liberal Democratic Party to be one of their candidates for the  Serbian parliamentary elections in January 2007. The LDP succeeded in entering the Parliament and I became an MP with a verified mandate on February 15.  I used the election campaign (December and January) to  speak in public about state capture and corruption and how to create responsible and transparent government. I participated in numerous rallies and radio and TV shows, speaking out against “party monopoly in the public sector”;  advocating for Serbia to join the EU;  promoting the creation of transparent, democratic  and accountable government at national and local level by avoiding vertical division of power; calling for changes in the Law on Financing Political  Parties; seeking the professionalize of the public administration;  advocating reform of the police and military and the implementation of the law on lustration,  and  calling for the engagement of citizens and the media in the fight against systemic corruption.  

 

When both the Serbian and English versions of my policy paper were published, I organized a one-day Conference about State Capture and Corruption, together with the Institute of Social Sciences and the Fridrich Ebert Shtiftung (in Belgrade). It was held on April 20.  About 40 experts, academic people, representatives of  NGOs and journalists attended the conference. The main theses of the  introductory speeches were presented on all national TV channels and some of the principal daily papers also published reviews about the  event.  It was also an opportunity to distribute my policy paper to a wider audience, including the heads of other political parties.

 

During the process of electing  the new Serbian government on May 15. I used my opportunities to speak in Parliament to denounce the corruptive mechanism of “state capture’ . The speeches were given in front of the future ministers, the prime minister, all MPs, and millions of citizens  who watched  the Parliament session on TV (see the speech on  www.ldp.org.yu).

 

 

What is the result of my widely-heard presentations about state capture and the measures that are required for its elimination, including being heard  by the top decision-makers in the Parliament, National government officials, the academic community, NGOs and  citizens?

 

My policy paper was  highly-evaluated in public. Awareness was very broad.  But it so-far has not had much effect in practice. The ruling parties  which make up the new coalition  government have not eliminated  the “feudal” division of  public sector into pieces, which  are, as whole (“prey”) distributed to each party in the coalition. Before the election the Democratic Party promised not to use ‘vertical, feudal division’ of the ministries and public sector,  but it did not keep to its promise. The other two parties in the coalition  were more blunt in insisting that each party have a monopoly over its “prey”.  There has yet to be an increase in professionalization in public administration. Cronyism is reinforced.  Parties began trading positions for their party cronies from the first day the government was elected. Their manipulation reaches into details, like the heads of hospitals,  theaters, schools, etc.  not to mention the more-profitable positions.  No, improvement has yet been made in achieving a more-transparent financing of the election campaigns, because all the donors remain secret from the public.  The most generous and richest tycoons are getting favors (the “kick back pattern” is visible). No comments in public have so far appeared about that. I commented about the maneuverings of one tycoon, and was immediately attacked in the tabloid papers; this demonstrates that the tycoons continue to be part of the system via the secret financing of the parties, and the huge personal ties that have been made between politics and business.

 

There are some steps forward.  Some controlling institutions, like the State Revision Institution and the Ombudsman are to be elected in June 2007.  Norms about conflict of interests have begun to be applied more strictly, so that  MPs  and members of government can no-longer hold other functions, although it is still not clear whether  they are allowed to be presidents and members of the Executive Boards in public enterprises.

 

In conclusion, the undisputable result of the project is that the public is now highly-aware of the problem of state capture - “party state” - as it is called in Serbia.  A huge majority of the citizens now know about it; every media reports about the “party state”, and there is no newspapers that does not have daily articles about the phenomenon of state capture.