Research Proposal

My intention is to analyze corruption in Serbia from a theoretical, historical, and practical perspective that will enable us to understand and respond to the mechanisms by which elites have “seized”[1] the state, exercising excessive influence and amassing considerable wealth. The project aims to study the particular phenomenon of the ‘captured state’ and its link to large-scale corruption in Serbia in the post-communist transition period.[2]  I see three major reasons for framing a discussion of corruption in terms of the notion of state capture. First, an understanding of the phenomenon of state capture as a process in which elites  gain control of public utilities, enterprises, and resources through a mingling of state, political party, and economic power is essential to a meaningful response to corruption and related challenges to rule of law and the effective delivery of public goods. The corrosive consequences of state seizure on the capacity for good governance are enormous, beyond the destructive siphoning of wealth and resources. Second, this approach provides the critical content for public debate with a view toward real legislative reform; and, third, getting at the roots of corruptive practices in governance is essential to Serbia’s ability to break the grip of rigid institutional structures constructed to protect vested interests and proceed successfully in the European Union enlargement process.

 

It is essential to understand the structural causes and agents of corruption because they are interwoven in the very functioning of the social system. For this reason, some authors call the ‘“state capture” approach a study of the “political economy of misgovernance and corruption.”[3]  Thus, rather than studying the activities of petty bureaucrats who are taking 200-500 Euros under the table for services, we need to take a broader theoretical and historical approach that will allow us to trace the profoundly destructive mechanisms of elite seizure of state functions and their fatal impact on public goods, ethical conduct, and economic and democratic development of the country. At the same time, this “grand” approach must be situated in the particular circumstances of Serbia.

 

It is necessary to expose the processes by which elites in Serbia have gained skewed influence over public utilities, companies, and resources and seized the functions of the state as their own “property” and in their own interest. We need to demonstrate the links between this capture of the state and corruption which is manifest at every level of public life. Without this analysis and its elaboration in public forums, externally mandated institutional reforms demanding transparency and accountability are unlikely to take root and be anything more than cosmetic changes. As an experienced social scientist and known public figure with access to the media and strong links to the NGO sector, I am well-placed to undertake this study and initiate public dialogue about state capture in Serbia and to mobilize public pressure for legislative reform and civic institutions to check this phenomenon.

 

Specificities of ‘state capture’ in Serbia

 

The main mechanisms of the ‘captured state’ and the most influential   capturing agents are not the same in all the countries suffering from this phenomenon. In the case of Serbia, the main capturing agents are political parties. On the one hand, they dominate the state, its institutions, public goods, services, enterprises and resources. Governing parties control about half of the Serbian economy - the half which has not yet been privatized. In order to retain control over the state enterprises, the government (or better to say the parties) prevents their privatization unless it is able to sell the state property under untransparent conditions open to rampant corruption.  Political party influence is so decisive that it has blocked Serbia’s constitution as a state; that is, it has curtailed the adoption of a new constitution which would establish the legal framework, social order and identity of the country. In Serbia today, multiparty authority dominates public life without a clear legal framework. This has created a new multi-party variant of the “party state.” The “right” of parties to capture public goods, enterprises, public service and to manage them in their political or material interests or, as is often the case, in favor of their relatives, family and friends has become an expected entitlement. Important decisions – such as transferring recourses from central to local budgets – have become a matter of personal discretion in favor of “political cronies”. Thus, one of the most lucrative business transactions has become arranging favorable positions for “political cronies” when buying state property at auction and through tenders or in facilitating tax relief.[4]  

 

On the other hand, the parties are a crucial link between business tycoons and the government. The tycoons probably finance all the major parties. After elections, when the parties take over government, the tycoons dictate to the government (and consequently to the parliament) which laws are not to be passed because they are not in their interests (such as the law on investment funds, antimonopoly regulations, the law on bankruptcy, the law on the restitution of nationalized property etc.), or where to leave “holes” in already passed laws for the same reason – to protect their private interests. Under the same influence the government manipulates the supposedly independent institutions (commercial courts, enterprise registries, the stock market, the media, agencies that control the free access to information etc.), compromising their ability to control corruption. The most-recent such case was the undermining of the credibility of the National Bank of Serbia and its ability to control the eligibility of banks and criticize the government.

 

The consequences of state capture are seriously damaging. Neither the government nor the parties or enterprises (state and private) are able to perform their social roles: leadership positions are not accountable to the public; there is no real judicial independence; and officials/parties use public offices for private interests rather than the representation of constituents’ interests and pursuit of public good.  

 

This powerful “unequal” influence throughout the social system is based on a very peculiar structure: state authority and all other public goods, services and enterprises are divided up into pieces which are distributed among the different parties of the ruling coalition. At the national level, the strongest party in the coalition governs the ministries for internal affairs (police, security forces, and intelligence) and justice exclusively and independently. The second largest party rules in the same manner over financial branches, controlling money circulation, the National bank, taxes, etc. Other ministries are divided among other smaller parties in the coalition. State functions, public services and utilities are also divided up in the same way at sub-national levels, in the cities and municipalities, according to party results in the last local elections. The principle is always the same: each party governs its “piece” of power without interfering in the other’s “business.”  

 

 

Project Objective

 

The main aim of the project is twofold: to reveal the mechanisms and consequences of ‘state capture’ responsible for the systemic corruption in Serbia and to develop a policy response. The project will investigate the causes and the nature of state capture in Serbia and propose legislative reform, and civic action to check this phenomenon and its negative consequences through policy papers and public debate. Public discussion of my analysis of the processes of state capture and their manifestation in specific forms of politically influenced corruption should encourage public pressure for change on the highest political and governmental positions.

 

 

 

In order to achieve this aim, I set up the following objectives:

 

(1) to  reveal the structural mechanisms used by political parties to ‘capture’ the distribution and occupation of positions in public bodies, especially favorable positions for ‘political cronies’ in public enterprises, utilities, local and city governments and to accumulate and mingle party and state functions;

(2) to survey public  opinion reactions and attitudes about desirable public office recruitment and their perception of practices in reality, and investigate public opinion of the role of parties in state corruption, the level of intolerance to such practice and the concerns about it;

 (3) to investigate progress on the economic governance reform as a condition to curb oligarchic structures and the condition for the EU integrations;

(4) to write a 20 page policy paper on how to combat the ‘capture state’ and improve government transparency and accountability, in coordination with the group advisor, for the presidents of the five biggest political parties, the President of Serbia, the President of the  Serbian People’s Assembly (National Parliament), mayors of Serbia’s biggest cities, the Standing Conference of Cities and Municipalities (it is a non-governmental organization), the Center for the Development of the Non-Profit Sector (the NGO distributing information to all NGOs) and bigger local and national non-governmental organizations. 

 

 

The Research Plan

 

In order to apply the theoretical framework of state capture to the Serbian case and investigate the specificities of this phenomenon through political party domination in Serbia, I have developed the following research plan:

 

1.  For the first objective, the following research activities are selected:

 

1.1 Chart the link between party gains in the last elections (2003) at the national level by cross checking with the pieces of “the state cake” distributed to parties such as ministries, public enterprises, membership in the Executive boards, public services, and regulatory institutions, and to discover the formula (its quantitative and qualitative elements) for public “treasure” partitioning based on the “coalition agreement”. This part of the research will show how party cronies are distributed and connected throughout ministries, regulatory bodies, government branches, and public enterprises and services.

 

1.2 Chart the link between party gains and the turnover of executive and financial positions in public utilities, enterprises and services. This aspect of the project will use the case study of the city of Novi Sad and measure the scope of turnover in all public bodies, including the management of public companies and utilities. It will examine the degree to which appointments were based on professional qualifications of the appointed officials and executives (by education, previous occupation, and experience) or on cronyism and nepotism. Novi Sad was selected because it is a clear case of party shift after local elections in 2004 (the Democratic Party and its coalition dominated this city before the last elections, and now the city is in the “hands” of the Serbian Radical Party.

 

1. 3 Map the accumulation of functions – or the simultaneous performance of party, government, business, other public roles: This part of the study will map the accumulation of functions by officials in the central government of Serbia and among representatives (MPs) of the four ruling parties in the Serbian National Parliament; the MPs will be checked for involvement in executive boards in the enterprises, executive roles and other public functions. Special attention will be given to the mapping the parties functionaries in the public enterprises’ executive boards and director positions for suspected financing of parties and their campaigns. These maps will provide an empirical reference to the accumulation of power, conflict of interest and the eradication of borders between subsystems of politics, economy, services etc.  

 

1.4 To investigate available materials and data on parties financing and election campaign spending with special attention given to the possibilities of looping.

 

 

2. The second objective - survey public opinion reactions and attitudes about desirable public office recruitment and their perception of practices in reality, and investigate public perception of the spread of corruption among various occupation groups, state institutions and political parties, including ranking of public concern about political (and other) sources of corruption as well as the level of public intolerance to corruption.

 

It will include preparation of 10-13 questions to be included in a survey conducted using a national representative sample by the well known opinion pool agency Strategic Marketing and data analyses, interpretation and recommendations.

 

 

3. For the third objective, the following activities are chosen:

 

Based on the interviews with experts, it will be assessed the situation in Serbia related to the EU- compliant legislation in the area of economic governance, including reform of the public sector, regulatory polices in the customs service, competition policy, disconnection of the financial system both from government and domestic monopolistic power, and other regulatory authorities in the public services and other executive branches of the government.

 

 

Policy making

 

Based on the above research, the project will produce a research and policy paper that will propose legislative reform to block the accumulation of functions and other mechanisms of state capture and introduce external checks by ethics boards and other civic institutions. These policy recommendations will aim at reducing the unchecked influence of party elites over state functions and increasing the watch dog functions of the NGO sector and the presence of public debate.

 

For  writing the policy paper and recommendations, the project will  analyze some laws such as the Law on Financing Political Parties, the Law on Public Administration, the Law on Immunity of MP’s and  the Law on Conflict of Interest, and to analyze opposition to the “missing laws”, and suggest new needed laws and regulations to combat capture state and corruption. Recommendations will be presented to the leaders of the biggest parties, to the President of Serbia, and to other above-mentioned instances that can help build a more transparent and accountable public sector in Serbia.

 

 

Expected results in practice:

 

The project hopes to increase awareness of the phenomenon of state capture, its damaging impact on the production and delivery of public goods and services and the corrosive effects on the ethical conduct of political life and public affairs. This increased awareness, coupled with concrete policy recommendations, should produce public pressure for legislative reform and increased civic responsibility for good governance.