CSR: The Missed Opportunities of Choosing Cosmetics over Impact

When it comes to integrating corporate social responsibility (CSR) into business models, cosmetics still seem to matter more than actual impact. Even as consumers grow increasingly sensitive to CSR, claims are more important than real performance. By doing so, many companies are missing out on business opportunities.  If businesses were to take more seriously the concept of creating shared value (CSV), they could create measurable social impact as well as business impact at the same time. Successful CSV creates healthy value chains, safe products, happy employees and local communities, and above all profits.

Doing Good Sells…

Corporate perspectives on CSR have changed from a necessary evil to a marketing opportunity. At the turn of the millennium, much in line with Friedman´s critique on corporate citizenship in the 1970s, commentators argued that business should focus on making profits and sticking to the law. CSR departments existed, but often only as reactions to appease activists; companies could not afford not to have them.

In 2015 companies still cannot afford not to do CSR, but rather than a necessary cost, businesses see CSR as a brand building opportunity. In a world where people define themselves through consumption, doing good is the ultimate brand strategy, whether it concerns being green, going fair trade, or supporting charity. Corporate citizenship, by many regarded as a synonym of CSR,  has a future too; consumers from generation Y (21-34) are much more conscious as consumers than baby-boomers (46-65), and consumers in growing markets in the global south are substantially more sensitive to CSR and sustainability than their peers in the US and Europe.

… But doing better does not sell more

Unfortunately, it does not seem to matter much whether companies actually do good or whether they just claim to do so. Studies tend to measure consumers´ perceptions of CSR claims; not their actual impact. An increasing amount of businesses publishes annual reports on CSR performance, but there is no comprehensive framework that allows for true comparison. The notion that the creation of social value and the creation of corporate value can go hand in hand is one that has not received sufficient attention.

Experts on CSR recognise that one of the main obstacles  for executives is the lack of data to prove the return on investment on activities.  The prevailing approaches to CSR are too fragmented and disconnected from business and strategy to reach any real conclusions. As a result, giving to random (but well-known) charities is still a much favored strategy; it´s easy for consumers to identify with such causes. As long as consumers cannot objectively compare impact, the relation between CSR performance and sales-records is likely to stay inelastic.

Creating Shared Value – Having Your Cake and Eating it Too

Those that can truly deliver on CSR still have a lot of unconquered ground to win though; a 2013 report  by the Reputation Institute showed that 73% percent of consumers across the 15 largest markets in the world are willing to recommend companies that are perceived to be delivering on Corporate Social Responsibility. The problem is that only 5% of companies are seen as actually delivering on their promises.

It is therefore strange that still relatively few businesses have integrated the concept of creating shared value. Introduced in 2006 by Michael Porter and Mark Kramer, the concept explains that if “corporations were to analyse their prospects for social responsibility using the same frameworks that guide their core business choices, they would discover that CSR can be much more than a cost, a constraint, or a charitable deed—it can be a source of opportunity, innovation, and competitive advantage.”

The essence of CSV lies in creating business value through the creation of social value. It means understanding the core needs and interests of not only consumers, but also those of employees, retailers, local communities, and society in general. Companies that understand their relationship with all of these actors truly understand the market, rather than just the consumer at the end of the chain. Motivated employees, capable retailers, and happy local communities make business more productive, more committed, and safer to shocks.

Unfortunately, many businesses continue to view value creation narrowly, optimising short-term financial performance in a bubble, while missing the most important customer needs and ignoring the broader influences that determine their longer-term success. The banking sector, for example, has long lost its boring but reputable status in society as an institution that caters the needs of households and businesses needing credit. The disconnection from society has hurt society as well as the banks themselves. Meanwhile, those banks that incorporate concepts such as impact investing are thriving. In the long run, those businesses that are able to create business value through creating social value survive. Those who make profits at the expense of society can do so temporarily, but in the end they are shooting themselves in the foot.

Examples show that CSV has  many advantages; companies can create business value, marketing value, and social value all at the same time.  For example, Coca-Cola´s Colectivo initiative in Brazil, in an ingenious attempt to improve the business performance of Coca-Cola retailers, connected retailers with unemployed business graduates who served as consultants. In doing so, the program increased the performance of its retailers, helped unemployed Brazilian graduates in getting their first job and work experience, and boosted brand connection all at the same time. CSV strategies have also helped companies like Intel, Nestlé, and Novo Nordisk in improving business performance and social performance at the same time. The results are seen in terms of higher quality products, more satisfied and better educated employees in developing countries, better safety standards, and happier customers.

Not unimportantly, the rate of return can often be predicted and monitored too. For a long time the traditional ´triple bottom line´, conjured up by CSR consultancies to promote a mix of economic, environmental, and social activities, did not convince executives very much. At the end of the day, shareholders and investors only look at one bottom line. Integrated CSV strategies actually help businesses turn their corporate citizenship into real business plans, including projections for cost-reduction, product quality, productivity, and more stable supply chains. Projects that proove to investors they have their cake, eat it too, and then still give a slice to society are by all means possible.

Development and the Knowledge Problem: Towards an Open-Source Development Sector?

Knowledge about development is temporary, diffuse, and not locally owned. Apart from a few large International organisations, the almost infinite amount of data gathered by (International) non-governmental organisations (NGO) is completely inaccessible. This configuration, in which the interests of individuals and organisations are not aligned with the sector´s general purpose, is detrimental for effective development. In a world where knowledge means employment, such a configuration is hard to break through. But if the sector started sharing development knowledge openly, would it make itself redundant?

Over the past decades, mountains of valuable information have been gathered about pretty much every development issue imaginable. From crop yields per acre to training manuals for civil society groups, and from exploratory research on seasonal migration to impact studies of literacy campaigns; there exists a whole universe of baseline studies, impact studies, manuals, databases, and evaluations.

Some of this information is freely accessible at the online platforms of large international organisations such as the World Bank, the United Nations Food and Agricultural Organisation, and Transparency International. Access to such data is great for comparative research. However, the bulk of the existing data about development is gathered by INGOs and small-scale NGOs that work from international to local scales and that keep their research to themselves. The number of INGOs can still be counted (around 40.000 worldwide), while the number of NGOs can only be guessed. India was estimated to be home to 2 million NGOs in 2009, one for every 600 citizens. Considering that each of these organisations collects a variety of data each and every year, the combined knowledge is almost infinite.

So data published by big international organisations is just the tip of the iceberg. The specific and local knowledge is completely intransparent and inaccessible. Many people in the sector seem to acknowledge this problem, but only few point out or do something about it.

Knowledge about development is temporary, diffuse, and not locally owned

Knowledge is temporary because the people that own it come and go. Very few foreigners are committed to one issue in one region for a lifetime. Most world-changers come for a few years, make a contribution, up their street credit, and move on. After all, that is what is best for one´s career and that´s what counts. The interests of the sector as a whole and those who depend on it thus fail to align. In the meantime, the beneficiaries who should benefit from the knowledge accumulated in the sector stay empty handed.

The temporary nature of knowledge has been exemplified during the past months by the ebola crisis in West Africa. Besides the obvious and horrendous public health disaster, the food shortages, the security threats, and the virtual economic standstill, Guineans, Sierra Leoneans, and Liberians have also been forced to say goodbye to most of their NGO workers. Contrary to a few brave health workers and volunteers that poured into the region, most traditional NGO workers have gone the other direction, waiting for the storm to blow over. As months go by, it becomes clear that many of those who intended to leave temporarily feel compelled (or are forced) to look for other career options, taking with them lots of built up experience and expertise. From the individual´s perspective this makes complete sense, but it is disastrous for those who stay behind.

Knowledge is diffuse because it is either stored with temporary experts or with the internal documents of NGOs and International organisations. The true origin of the knowledge problem lies here. The competitive nature of the sector, in which access to donor money seems to be a zero-sum game, causes organisations to keep knowledge internally rather than sharing it freely. On top of that, organisations are also afraid to publish on failed projects. After all, those NGOs that fail to deliver might miss out at the next round of proposals.

Data from ´competitors´ cannot be accessed, meaning that newbies have to invent the wheel over and over again. Consultants that monitor and evaluate projects suffer from – and contribute to – the same problem. The lack of centralised information leads them to – unknowingly – replicate studies that were already done by ´competitors´. On top of that, the quality of their work cannot be controlled because there is no possibility of peer review. So it´s not only about good knowledge being inaccessible, but also about bad knowledge being undetected! Nobody seems to really care though, because on an individual level everyone on the donors’ side seems to benefit. Newbies get more time to settle in, consultants keep on creating work for themselves, and everybody lives to work another day.

Finally, knowledge is not locally owned. One would perhaps expect local populations to know all about their development; they should by now be experts about methodologies, interventions, and the impacts of the NGO projects in their region. After all, for many aid recipients, development is their daily bread. They are the only ones who will be around in the long term and they have an obvious interest in what´s going on.

In reality, local populations are largely outside of the information flow. They don´t have a subscription to the newsletter. NGO´s and International organisations study them, and consultants ask them thousands of questions about the impacts or projects, but the results are mostly taken home and the only ones that really learn anything are those who do the studies.

The uncomfortable truth is that a world in which locals lead their own development knowledge is a world in which many expats, experts, and consultant become redundant. In the information age, information is power. For many people in the development sector, this means that information is employment. Giving that away for free is shooting oneself in the foot.

The development sector is thus not much different from normal business sectors, where information is sensitive and where owning information gives one a competitive advantage. And yet, the sector claims to be different, to work for the greater good. Its members tend to work for not-for-profit or public actors, and as such cannot solely focus on profit margins or competitive advantage. For them to be effective and outcome focused, considering sharing their knowledge with other sector members should be on the table: sharing knowledge among peers in order to mutually strengthen the sectors outcomes would distinguish it from other sectors, and be consistent with claims about their charitable nature.

Towards open source development

Data about development is plentiful in virtually every imaginable region and sector. If it were available as open source data, the accumulated knowledge would probably be bigger than that stored at academic storages. One can only begin to imagine the research possibilities, ranging from big data to local anthropological studies.

If knowledge were permanent, centralised, and locally owned, the development sector would benefit greatly. Donors and NGO´s would not have to waste thousands of dollars on duplications of studies. Independent consultants would truly be independent. Failing NGOs would be easier to identify, and knowledge would be owned by those who it´s all for: local populations.

For the moment, development as an open source is only day dreaming. Data is not widely available and is stored with self-interested individual experts and competitive organisations. As long as knowledge about development is not locally owned and publicly shared and stored, it cannot be used optimally to deal with urgent issues in the sector. Donors will lack comprehensive insight, projects and evaluators will be unaccountable, and locals will stay in the dark. For knowledge to be permanent and widely accessible, those who own it will need to share it.

Money for Nothing: What the Development Sector Could Learn from Cash Transfer Programmes

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This article was earlier published on ReSeT - Research on Security and Transnational Governance
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Earlier this year Balder Hageraats published an article titled “International Development: Please drop the Charity Act”, criticizing the schizophrenic relationship between donors, NGO´s, and local beneficiaries of development help, and arguing for a more efficient development sector in which needs on the ground take centre-stage. If the sector were to follow such an approach, it could learn a lot from the global South, where various government programmes transfer money directly to the poor, no strings attached. They have led the way in showing that poor individuals already KNOW how to escape poverty: they simply lack the cash.

In Kenya, Having worked as a day labourer for years on end, mr. Omondi one day woke up to receive an sms-text saying he had been given $500 US, no strings attached! He had been one of the recipients selected in a programme where poor families in poor rural villages were given free cash-transfers to help them out of poverty. No conditions, no pay-backs, just free money. Local villagers suspected that the government was somehow behind it, trying to buy votes. People in the development industry were mostly afraid that recipients wouldn’t be able to handle the money wisely, spending it on alcohol and cigarettes. However, none of this happened. Many people in the programme used the money to replace their thatched roofs with metal roofs, which costs a few hundred dollars, but saves money in the long term. The results? People also invested in livestock and small businesses, showing a 48% increase in revenues from animal husbandry, for example. Mr. Omondi bought a motor-cycle to drive people from town to town, making $6 to $9 a day, more than doubling his daily salary, and enabling him to buy a second bike to expand his business.

Most cash-transfers programmes are not one-time lottery tickets however. More and more developing countries, most notably Brazil, Mexico, South-Africa, but also Indonesia, Namibia, Bolivia, Armenia and many others, are setting up long-term programmes that target a substantial but selected portion of the population and gives them a monthly cash transfer between 3$ and 100$ a month. Cash-transfer programmes differ greatly from each other, but are similar in the sense that (1) they benefit a selected group of poor families, (2) that the transfers are monthly and on a long-term basis, and (3) that there are no or few conditions as to how the money is spent. The basic results: It pushes the poorest families out of absolute poverty; it leads to more capital investments, local economic growth, better health, more children going to school, and lower birth rates; all without outside interference. For example, children that benefit from the Oportunidades programme in Mexico (which gives an average of 38$ a month to poor households) are 23% more likely to finish grade 9 than those outside of the programme. The same programme also meant that people eat 8% more calories and a more balanced diet of fruit, vegetables, and meat, leading to fewer illnesses among children and fewer sick-days for adults. In Brazil, the Bolsa Familia (family grant) and Bolsa Escola (school grant) programmes helped in bringing down poverty from 28% in 2001 to 17% in 2008.

Why cash-transfer programmes make sense and are affordable

Just as in developed western societies, various countries in the global South have recognized that everyone in society deserves a minimum amount of economic security. The cash-transfers are a right, not charity. Obviously, the transfers are only for selected groups of people in need, and they don´t serve as a substitute for salary through labour. Depending on the country and the programme, the transfers vary between USD $3 and USD $100 per month per individual or per family.

There are two important counter arguments to the idea behind cash-transfers in developing countries. One, can states afford such kinds of projects? And two, doesn´t handing out free money kill initiative and entrepreneurship, making people lazy and dependent? The answer is that pessimistic expectations with regard to the latter lead people to over-estimate the importance of the former. In other words; cash-transfers lead to local economic growth in the longer term, helping people out of the poverty trap and making the cash-transfer programmes not just relatively cheap, but actually profitable.

Let´s start with the argument that “charity” takes away initiative and entrepreneurship, a theory that micro-credit guru Muhammad Yunus has been fond of pointing out. Cash-transfer programmes in Mexico, South Africa, and Brazil have however shown that the money transferred to poor families is almost never spoilt. Admittedly, the money is not always invested, but rather spent on keeping children in school, or buying more nutritious food. This might not harvest direct financial profits, but certainly helps in long term development; Children in the Mexican Oportunidades programme, for example, are more likely to finish 9th grade, are healthier, and score higher grades. But cash-transfer programmes, just like micro-credits, can also have a multiplier effect for local businesses, because the extra cash allows people to invest in tools or skills and setting up a small enterprise. Poor people tend to invest and consume locally, creating a double benefit for the local economy. Also, cash-transfers don´t necessarily replace micro-credits. As a matter of fact, they can serve to make micro-credits safer and more attractive. Indeed, studies have shown that beneficiaries of cash-transfer programmes are more receptive to taking financial risks.

The fact that cash-transfer programmes are cost-effective in the long term takes away a big obstacle for governments as to who is going to pay. There are however other comprehensible concerns. Firstly, cash-transfer programmes are not a silver bullet to solving poverty; they can help people out of absolute poverty and intergenerational poverty, and they contribute to strengthening local economies and promoting social mobility, but only few make it to middle class. Also, the bigger the amount of cash per family, the less families you can select, and vice versa. In order to be able to afford a substantial programme, a government needs a solid tax-base or windfalls from resource-exports.

Why the development sector should jump on the bandwagon

But the money could also come directly from the international development sector. If governments in the global South can demonstrate that there is no need for paternalistic nudges, conditionality, or moral guidance, why couldn´t the development sector follow suit? There are many reasons to suggest that it should.

Firstly, cash-transfer programmes simply have a pretty convincing track-record when it comes to helping people out of poverty. In other words, it simply works. Cash-transfers are right-based rather than charity based, they are pragmatic in the sense that by nature they empower beneficiaries, and they are cheaper because each invested dollar has the potential of turning into two dollars. Many countries that currently benefit from ´traditional´ forms of cooperation could hugely benefit from switching to a more direct approach.

The development sector could jump on the bandwagon in two ways. The simplest way is by pitching in directly where governments lack public money to pay for cash-transfer programmes. But the development sector has an at least equally important role to play when it comes to actively stimulating development through the provision training, research, expertise and other services. ONLY giving money helps people in climbing out of the poverty trap, but they do still need a hand to pull themselves up. The development sector has all the necessary qualities to be this hand stretching out. Sadly, the hand that the development sector is currently stretching out is that of NGOs stretching their hands upwards to donors.

If the development sector were to learn from the logic behind cash-transfer programmes, they would fund locally identified needs directly. Donors could allow funds to flow more easily and directly to local communities (through local connectors), empowering those on the ground and connecting local needs to global resources.

This article is part of the Polis Project, a ReSeT programme focused on connecting local needs to global resources.

UN Sanctions on Guinea Bissau: Waiting for a Coup to Happen

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This article was recently published on ReSeT - Research on Security and Transnational Governance

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In April 2012, eleven military leaders involved in the coup d´état in Guinea-Bissau were subjected to a UN travel ban. Although neatly in line with United Nations (UN) sanctions policy regarding sovereignty, in reality the sanctions were a painstakingly late reaction to the uprising of Guinea-Bissau as Africa´s first “narco-state”, which had been corroding politics and society for almost a decade. While institutions kept the Sanctions Committee hostage, the kingpins in Guinea-Bissau had plenty of time to ruin its governance structures. This analysis suggests that Guinea-Bissau only became a target of UN sanctions when it had made its way on the map as the first African “narco-state”. Unfortunately, the coup that justified UN agency to do something about it came almost a decade too late.

On the first of April 2012, just a few days before the second round of a presidential election, a military coup led by Admiral Bubo Na Chuto and Deputy Chief of Staff or the army Antonio Indjai triggered the United Nations Security Council (UNSC) to impose travel sanctions on 11 military leaders involved in the coup.

If reversing the coup were the most important objective, the sanctions could probably be called a success. In May 2014, albeit after several delays, a new president (Jose Mario Vaz) was indeed elected in Guinea-Bissau. Also the committee recognised only one violation of the travel ban (the army chief of staff travelled to Cote d´Ivoire and Senegal on one occasion). For the moment the country enjoys relative political stability, although it still suffers from a range of structural threats such as extreme poverty and high corruption levels.

In any way, the coup d´état is largely irrelevant to the story, as the case of sanctions on Guinea-Bissau can hardly be explained as a genuine reaction to it. Guinea-Bissau has been the stage of many coups over the past decades (as have several other African states), and no one ever really bothered.

The coups of Bissau and the Rise of Africa´s first “Narco-State”

Since its Independence from Portugal in 1974, Guinea-Bissau has been the stage of four coup d´état´s and at least 6 other attempts. However, being an insignificant West African country home to less than 2 million inhabitants and with no strategic interest to the rest of the world, it was never important enough to make international headlines.

In 1980 Joao Bernardo Vieira staged the first coup, ousting the country´s first president Luis Cabral and allowing him to rule for the next 19 years. In 1998 another coup attempt split the government forces (supported by neighbouring countries) and coup leaders, who controlled large parts of the army. After 11 months of civil conflict and thousands of deaths, president Vieira was toppled and replaced. The next president, Kumba Yala, lasted for three years before he too was overthrown in 2003 in a military coup. After some tumultuous years, ex-president Vieira made a comeback from being exiled in Portugal and manages to win the 2005 elections. In 2009 he was assassinated by renegade soldiers. None of these events however ignited the urge to install a sanctions regime.

So for the last decades the coups in Guinea-Bissau went largely unnoticed, just as in many other countries that have lived through coup d´états without being targeted by UN sanctions. As long as coup d´états do not turn into bloody civil wars those who stage them tend to stay out of trouble.

So what made the international community change its mind? Since the mid-2000s media coverage on Guinea-Bissau, although still meagre, has become dominated by the issue of drug trafficking. As a small state with weak political infrastructure, high levels of poverty and corruption, and a favourable geography, Guinea-Bissau has turned out to be a perfect place for trafficking drugs from Latin America destined for the European market. The country´s Atlantic coastline is dotted with two dozen little islands that have proven comfortable smuggling havens for Colombian, Ecuadorian, Peruvian, Brazilian and Venezuelan drug cartels that smuggle cocaine into Europe.

In 2008 a report by the United Nations Office on Drugs and Crime (UNODC) recognised Guinea-Bissau as a new hub for cocaine trafficking in West Africa. Between 2005 and 2007 a total of 33 tons of cocaine were intercepted in West Africa on route to Europe, compared to a mere 1 ton prior to 2005. With the drug trafficking increasingly penetrating into Guinean society and politics, the peace building and democratisation efforts of the UN peace-building mission in Guinea-Bissau (UNIOGBIS) were largely undermined. The trafficking business negatively affected public security, respect for the rule of law, and public health (because of increased local consumption). Politics became increasingly corrupted, with politicians and military leaders being involved.

As the situation worsened in 2010 and 2011, donors retrieved and the European Union (EU) decided to stop training Guinean security forces and suspends part of its aid. The United States froze the assets of two drug-traffickers, and the UNODC and Interpol helped Guinea-Bissau set up a Transnational Crimes Unit. In the meantime the two alleged drug kingpins subjected to US asset freezes were promoted to Army Chief (Antonio Indjai) and head of the Navy (Jose Americo Bubo Na Tchuto). Tchuto was arrested by the American Drug Enforcement Agency (DEA) in international waters on 4 April 2012 (8 days before the coup) and is currently on trial. Indjai has also been indicted by the United States but still walks free in Bissau. On 12 April 2012, when the military toppled the interim government, Indjai was placed on the UN travel ban list along with 10 other military officials.

How institutions strangle effective sanctions policy

Guinea-Bissau´s timeline shows a variety of coup d´états and attempted coups, none of which seemed important enough to arouse real attention. When the country increasingly turned into a cocaine transfer-port and a weak state, it became clear something had to be done in order to protect the interests of those suffering from this trade. However, imposing UN sanctions on a sovereign state in reaction to smuggling activities was not a policy option. So the only option was to wait for a ´legitimate´ excuse, such as a civil war, a terrorist attack, or indeed a military coup.

Coup d´états have been an accepted imperative for UN sanctions since the early 1990s and the sanctions regime on Haiti to reinstall President Aristide, who was ousted in a military coup in 1991. In the late 1990s the UN Sanctions Committee also increased the technical and legal capacity to impose targeted sanctions on individuals. Since 1999 the UN has imposed and implemented asset freezes and travel sanctions on individuals and groups in over a dozen conflicts, with mixed success. However, when it comes to reversing coup d´états, the case of Guinea-Bissau is the first one since that of Haiti in the early 1990s.

During the coups of 1999 and 2003 and the assassination of Vieira in 2009, the UN Security Council and the Sanctions Committee had all the technical capacity and institutional consensus to interfere with the internal politics of Guinea-Bissau. However, apparently the coup d´états in an insignificant country such as Guinea-Bissau were not important enough to arouse sufficient attention in the UNSC. With the 2012 coup the UNSC finally had a legal excuse to impose sanctions on the individuals implicated in the drug trafficking. However, by then Guinea-Bissau had already become fully integrated in the drug-cartel; the damage had already been done.

The case of Guinea-Bissau shows that the reality of UN sanctions as an institution is one of restrictions and obstacles rather than one about values and norms. The sanctions were clearly a reaction to the drug trafficking that had been undermining Bissau-Guinean politics and society since 2005 or longer. However, in order to impose sanctions they first needed a coup d´état to take place. Unfortunately that coup didn´t come until 2012, when Guinea-Bissau´s transformation to “narco-state” had already been completed and had thoroughly disrupted and corrupted governance.

Would things have turned out different if the UN had imposed sanctions earlier? Perhaps not; UN travel bans are not almighty tools of political coercion. However, the case of Guinea-Bissau does show how institutionalised rules regarding sanctions policy can delay and distort effective decision-making. If those actors interested in pursuing drug-kingpins (US, EU) just transparently put forward their interests and security concerns, rather than waiting for a coup d´état to take place to justify their actions, it would be much easier for analysts to keep oversight and for actors to take timely action.

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This article was recently published on ReSeT - Research on Security and Transnational Governance

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Dissecting the Corruption Perceptions Index

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This article was published earlier on ReSeT, a think-tank that does research on security and transnational governance. 

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Earlier this year, when I was in Liberia collecting data for a research project, a national radio station announced that Liberia had made some big steps towards becoming a less corrupt country. According to the Transparency International Transparency Perceptions Index (CPI) of 2012, Liberia had climbed from 22 to 41 points over the past seven years, which measures the perceptions of corruption in public sectors of 174 countries. With this score, Liberia outperformed countries such as Greece, Panama, and China. They were almost on equal footing with Italy, which scored 42 points. In Africa, Liberia now ranks 11th on the list of least corrupt countries, beating substantially more developed countries on the list such as Tanzania and Morocco. For those people that have never been to Liberia, these results might simply be surprising. Perhaps Liberia is one of those exceptional countries that do well out of war and that adopt sensible policies in order to further economic and social development. To me, it rather led me to question the index itself.

Liberia is not the only country that stood surprisingly high on the list (75th). Rwanda even made it to the 50th position, just before Georgia, which ranked 51st. In contrast, some countries that scored surprisingly badly considering their economic situation were Thailand (88th), Indonesia (118th), and Argentina (102nd).

Transparency International defines corruption as “the abuse of entrusted power for private gain”. Measuring corruption in a quantitative or absolute manner is not possible, warns Transparency International. “Corruption generally comprises illegal activities, which are deliberately hidden and only come to light through scandals, investigations or prosecutions. There is no meaningful way to assess absolute levels of corruption in countries or territories on the basis of hard empirical data.” The reports that do exist on court cases and uncovered scandals rather reflect the effectiveness of prosecutors and the media to expose corruption practices. The CPI therefore looks only at the perceptions of corruption in countries´ public sectors. The index measures administrative and political corruption.

Living and working in a country, or even just travelling through it, is a great way of perceiving administrative and political corruption. In Liberia, police officers at road-blocks asking for “cold water”, the local euphemism for a bribe, are a way of life. A 20 dollar handshake to get a visa renewed is simply seen as the way it works. These are just small forms administrative corruption, but they form the tentacles of a much bigger creature. The national ministry of finance only collects a fraction of the taxes they should. This is partly due to a lack of administrative capacity, resulting in a situation in which the government basically has no idea who pays their taxes and who doesn´t. However, when it comes to big multinational investors, politicians know precisely how to stash millions of dollars on private bank accounts. Embezzlement and patronage seem to be almost structural phenomena.

Admittedly, Liberia also has a lot going for it. President Ellen Johnson Sirleaf, the first female African head of state, has been tough on corruption since she was elected in 2006. Several officials have been fired after corruption scandals, and police officers are unarmed, which is primarily a security issue, but also makes it more difficult to push for bribes. The last two democratic elections were internationally regarded as generally free and fair. Liberia was also the first country to be compliant with the Extraction Industries Transparency Initiative (EITI), and is part of the Kimberly Process Scheme for the legal exportation of diamonds. These are noteworthy achievements, although they are also known for being more successful on paper than on the ground.

Leaving aside the case of Liberia, Transparency International’s claim that countries such as Rwanda, Georgia, and Liberia are perceived less corrupt or equally corrupt as Italy, Greece, and Argentina seems counter-intuitive to say the least. Perhaps this feeling is caused by the misleading sense that corruption is negatively correlated with wealth. As the Guardian warned with regard to the CPI: “Wealth seems no easy antidote to corruption: some relatively rich countries, including Russia, fall at the bottom of the global league table. Meanwhile, some of the world’s poorer states do comparatively well: Botswana, Bhutan, Cape Verde, and Rwanda all appear among the 50 ‘cleanest’ countries.” The newspaper also noted that “Arab Spring countries, and many Eurozone countries – particularly those affected by the financial crisis – are doing worse and worse”. There is anecdotal evidence of Greek politicians stashing away money on Swiss bank accounts in order to evade taxes, and of families that receive state-pensions for their long-dead parents and child support for children that were never born. Surely, the role of the Mafia also plays a role in ranking the Italy’s perception of corruption. But one wouldn’t dare to bribe a local customs-officer at a Milanese airport. Also, the fractions of public money that might be siphoned off by Greek officials might amount to the fractions of public money that actually make it to the treasury in a country such as Liberia.

Analyzing the Corruption Perceptions Index

So how do some countries end up so high on the Corruptions Perception Index, while others are placed confusingly low? Which indicators does the CPI use in order to give countries a place on the 100-point scale, on which Denmark, Finland and New Zealand scored 90 points, and on which Afghanistan, Korea, and Somalia scored no more than 8 points?

The index is based on thirteen indicators that intend or claim to measure corruption perception from different angles. All the indicators are other indexes constructed by expert organizations, consultancy bureaus, and international institutions, such as the African Development Bank, the Bertelsmann Foundation, the World Bank, the World Justice Project, Freedom House and the Economist Intelligence Unit, among others. The indicators normally measure corruption, but as part of wider indexes that focus on sustainable governance, political risk, and the rule of law, but also on economic competitiveness and economic risk for investors in countries. One indicator, Transparency International’s own “bribes payers survey”, solely focuses on the act of bribery.

There seem to be two basic problems with the sources used for creating the index. Firstly, the scores given for ‘corruption perception’ in some surveys about country risk or competitiveness of countries judge the problem of corruption in relation to other problems that affect that same country. Secondly, some of the indexes used in the CPI only use data on corruption from African countries, while others only use data from developed or industrialized countries. However, the scores that countries get in the CPI index count as if they came from the same league.

To sketch an example that illuminates the first problem, in the World Economic Forum Executive Opinion Index, one of the indicators, experts were asked about the “most problematic factors for doing business” . In Argentina, corruption is in the top three, with 11.5% considering corruption as a major problem. In Greece and Italy the sentiment against corruption is equally critical, with 11.6% and 7.1%. Contrarily, in Rwanda corruption was recognized as an obstacle by only 0.4% of those asked. The three top problems were Access to Financing (20.2%), inadequately educated workforce (19.6%), and Tax Rates (17.5%). But does this mean that corruption almost doesn’t exist in Rwanda, or rather that it doesn´t form a real obstacle for those doing business in Rwanda?

Interestingly, the CPI does not always lie in line with other research on corruption by Transparency International. For example, Transparency International also has facilitated research that found that corruption is at times positively correlated with economic growth. According to Transparency International´s Corruption Barometer, an insightful global poll that tries to measure public opinion on corruption, Rwandans are indeed surprisingly optimistic about corruption. Despite this optimism, still 11% of Rwandans admitted to having paid a bribe to the judiciary during the past twelve months, and 23% admitted to having paid a bribe to the police. In Argentina, Greece, and Italy these figures were substantially lower (6% and 16% for Argentina, 12% and 4% for Italy, and 6% and 4% in Greece ), but this apparently doesn´t withhold Argentineans, Italians, and Greeks from being extremely critical of their government and judiciary when it comes to corruption. It could very well be that complaints about corruption are also related to economical downturns, although I have not checked this. In Liberia a staggering 77% percent admitted to paying bribes to the judiciary and the police, but according to the World Economic Forum only 9.6% considered corruption to be among the most problematic factors for doing business. Lacking basic infrastructure and access to credit, many underdeveloped countries simply have bigger problems on their minds.

We could pull two careful conclusions from these observations. Firstly, some indicators in the index measure corruption relative to other problems in the same society. On the ranking, this ‘benefits’ underdeveloped countries that have much bigger problems to worry about than corruption, even if they suffer from systematic administrative and political corruption. Meanwhile, several countries that have their basic political needs covered perceive corruption as a terrible societal monster, even though they might be doing ‘better’ than several countries with a higher rank. The second conclusion is that there might be a lot of people that perceive their society, or the societies they do business in, as corrupt, while they don’t necessarily see corruption as an obstacle.

This last observation leads us to ask whether corruption should by definition be regarded as bad for social and economic stability and equality. As a matter of fact, researchers have written about the ambiguous relationship between corruption and various economic and political factors since the 1960′s. For example, in 1964 Nathanial Leff explained how corruption can “grease the wheels of an economy”, and that corruption can introduce an element of competition in what is otherwise a “comfortably monopolistic industry”. More contemporary authors have made arguments following the same logic, claiming that corruption can benefit economic growth and entrepreneurship in poor but highly bureaucratized states with little institutional capacity. Mironov (2005) and Heckelman & Powel (2008) argue that under conditions of institutional weakness, corruption is positively correlated with capital accumulation and economic growth in developing countries. In weakly insitutionalized states, corruption can also function as a social mechanism to decrease income-inequalities, as it benefits lower class workers in the informal sector getting jobs they wouldn’t get in a more formalized system (Dobson and Rodriguez Andés, 2010) . The other side of the equation is that a reduction of corruption is favorable for growth only when political and, more importantly, economic institutions are strong. These findings might help us in explaining why businessmen in Greece and Italy consider corruption a burden to bureaucracy, while those doing business in Rwanda and Liberia rather see it as an alternative to bureaucracy. Fighting corruption is thus only worth the trouble if there is sufficient institutional capacity to take away the incentives for corruption.

The second methodological problem with the Corruption Perception Index is that several of the thirteen indicators only measure corruption in developed countries, while others only measure corruption in Africa or Asia. For example, the African Development Bank Governance indicator only applies to African states. According to the CPI, the ADB rewarded Liberia with a generous 55 points on a scale of 100, which put them on par with South Africa and Ghana, admittedly worth a compliment. But this high score on governance was only possible because of the other players in the League. Liberia didn’t have to compete with European countries in order to get this score. On the other side of the equation, the IMD competitiveness index, also part of the CPI, only uses a populations of fifty-nine industrialized economies, ranging from Denmark and Finland at the top (95 points) to the Ukraine and Venezuela at the bottom (25 points). Italy and Greece respectively scored a mere 39 and 35 points on the indicators that measured corruption in the IMD´s competitiveness ranking, which leaves out developing countries. Similarly, the Bertelsmann Sustainable Governance index only compares 31 OECD countries. Not surprisingly, Greece and Italy again scored low in this ‘champions league’.

Luckily for many developing countries, they were left out of these competitions. For example, no African states except for South Africa were part of the Bribe Payers Survey. Where many developed countries were indexed through the Bertelsmann Sustainable Governance survey, many developing countries were indexed through the Bartelsmann Transformation Index. This division boosted the ranking for countries such as Bulgaria and Romania, thereby beating, again, Greece and Italy, who remained at the bottom of the other Bertelsmann index.

There are thus two reasons that explain why some countries rank suspiciously high on Transparency International’s Corruption Perceptions Index, while others rank deceptively low. The first reason is that several of the most corrupt countries in the Index simply have bigger problems to worry about, making the issue of corruption relatively less important to people doing business. In countries such as Liberia, corruption is perceived as a secondary problem after more fundamental problems that keep a state from functioning. At the same time, countries that have the basics covered have more time and money to dedicate to ‘secondary problems’. I do not say this to downplay the importance of fighting corruption, but merely to point out that there are other factors that are much more crucial to welfare and stability in a state. It could even be the case that people doing business in developing countries with weak institutions are benefiting from the option to pay bribes, because without this grease on the wheels it would be impossible to get through the bureaucratic jungles that these states often times house. In strongly institutionalized states the opposite happens. Rather than an alternative to bureaucracy, corruption represents a burden. On a side note, it seems that especially those societies suffering from social revolt and financial crises put the blame on corrupt politicians and institutions, even though objectively they might be relatively clean. The fact that people are critical or careless however doesn´t make these countries more or less corrupted. Transparency International also makes this point regarding public opinion, but misses the point when it regards the World Economic Forum executive opinions.

The second reason is that the CPI uses a several sources that only compare competitors within a certain category. The CPI then combines these indicators as if they came from the same league, creating a distortion. To put it in simple terms, the reason that Liberia scored a lot of points on some indicators is because it was regarded among the best in Africa. Bulgaria and Romania ranked high because they were regarded among the best on the Transformation Index. At the same time, Italy and Greece scored badly on other indicators in which they were only compared to other rich countries, but not to Liberia, Rwanda, or Bulgaria.

The question remains what it means to receive a higher or a lower ranking on the Corruption Perceptions Index. Does the index measure to what extent states are perceived as corrupted? And if so, perceived by whom? Or does it measure to what extent corruption is perceived a problem in these states? And if so, a problem for what? If the answer is that the CPI measures the former (perceptions of corruption levels) my answer would be that the ranking is flawed because of its methodology. If the answer is that it measures that latter (corruption as a perceived problem), the counter-intuitive rankings of some developing countries with weak institutions could be justified. However, fighting corruption in these countries might not be the solution as long as there is no institutional capacity to take away the incentives for corruption. 

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This article was published earlier on ReSeT, a think-tank that does research on security and transnational governance. 

CIEA8 Congress + My Conference on the Liberian Timber Embargo

On the 14^th, 15^th, and 16^th of June 2012 I visited the bi-annual Iberian Congress on African studies (CIEA), this year hosted by the Autonomous University of Madrid, and directed by my thesis supervisor Itziar Ruiz Giménez.

The conference consisted of 43 different panels and 360 communications on different topics, all in some way related to Africa. Besides my own presentation in a panel called “Natural Resources: Social Movements and Organizations in Africa”, I saw several interesting communications in different panels. The panels I remember most vividly were those on “Western Aid and African Development”, “The BRIC States: Images and Prospects in Africa”, “African Political Systems”, and “The International Liberal Peace Building Agenda for Africa”.

In my own panel there were communications by Tom Kucharz (Ecologistas en Acción), Nuria del Viso Pabón (CIP-Ecosocial-FUHEM), María Molina Martín (Centro de Investigación RESET), Paulo Inglés (Centro de Estudios Africanos Lisboa), and myself. The panel was coordinated by Jesus García-Luengos (GEA-UAM) and Alicia Campos Serrano (GEA-UAM).

My communication regarded the post-conflict UN timber embargo imposed on Liberia between 2003 and 2006. Being the first time the UN ever imposed a sanction after a conflict, it made for an interesting case to discuss. I explained what the objective of the sanction was, which conditions the UN established for the lifting of the sanction, and the actions taken by the Liberian government towards building a more transparent timber sector that would lead to more revenues for the development of the country. For the full paper, open the pdf file at the end of this post.

The main criticisms were: (1) How can you be sure that the measures taken towards the lifting of sanctions were a result of the sanction itself? It could also be the case that the new president Ellen Johnson Sirleaf would have worked towards better governance anyway. (2) I explained the effects with regard to the institutionalization of the timber sector, but we don´t know anything about the side-effects the embargo might have had on the ground, either among loggers or the local population. Both of these criticisms will be taken into consideration, and hopefully I will be able to answer these questions after my fieldwork in Liberia.  

PDF Version of Paper: UN Commodity Sanctions in Peace Building Operations: The Role of the Post-Conflict Timber Embargo on Liberia

Paper presented at seminar UAM april 2012

Time for a bit of a summary about what I have been doing the past 6 months. On the 20th of April 2012 I presented a first version of my theoretical framework in the Seminar for PhD Students (Seminario de Investigadores en Formación) at the Autonomous University of Madrid. Besides being an opportunity to get some feedback on my work, it was a great way to get to know some of the other PhD students at the department. 

The paper I presented was a summary of the first two (preliminary) chapters of my dissertation. The first chapter is called "International Relations, the Role of UN Peace Operations, and UN sanctions", and is a history of the role of UN sanctions throughout history and their connection to International Relations. The second chapter focuses more on the different theories on sanctions and the effects of commodity sanctions. 

Chapter 1: The first chapter regards the role of the UN throughout its history. In the chapter, I divide this role in three parts: traditional peacekeeper, liberal peacekeeper, and liberal peace builder. From its establishment to the end of the cold war, the UN can be described as a traditional peacekeeper, concerned with Westphalian interstate conflict, but hesitant when it comes to internal conflict. Similarly, traditional comprehensive economic sanctions would be applied on countries as a whole, rather than on sub-state groups or individuals.

The 1990´s brought along a more liberalist world view, in which states would still be the central actors, but in which international institutions, sub-state groups, and transnational capital flows also played an important role. The ideas of liberal democracy and liberal peace became an important issue, also within the UN, intervening in internal issues such as coup d’états in Togo and civil conflicts in Rwanda and Angola, among others.  Sanctions, too, changed in this era, imposing sanctions on sub-state groups such as rebel movements or government officials. The idea of respecting sovereignty had lost to that of liberal peace.

The liberal peace ideal however also brought along of post-conflict peace building. It was not only about UN intervention to deal with the breach of peace. The UN also took on the responsibility to create the right institutions to prevent renewed warfare and to ensure development and stability according to liberal democratic guidelines.

However unexpected, sanctions can also be part of post-conflict peace building. Although sanctions normally have the objective of ending conflicts, the post-conflict sanctions regime on Liberia had objectives that went much further. Looking at the conditions stated for the lifting of the timber embargo that was imposed on Liberia between 2003 and 2006, we can clearly identify liberal peace building objectives. For example, some of the conditions regard the creation of institutions to safeguard the transparent and fair governance of the timber sector, and the implementation of a legal framework to ensure good governance.

Feedback: The main criticism of the audience regarded the simplification of these three roles of the UN as a peacekeeper and peace builder throughout its history. On the one hand, people argued that in order to understand and explain the roles of the UN, much more detail would be needed. On the other hand, other people seemed to find a division of three distinct roles a dangerous exercise, as it tries to simplify a complex institution which in reality has no clear objectives that can be put into boxes. The agency of the UN as an organization is merely a result of many political factors in ever changing countries that vote along their own political and economical interests.

So what are we to make of this? How do I use this feedback to improve my theoretical framework? It is obviously true that simplifying the historical roles of the UN leads to a simplification of reality. But isn´t that the whole point? My thesis is not about the history of the UN; it´s about the role of sanctions in post-conflict situations. The first theoretical chapter is merely an introduction to the real topic of my dissertation. So what am I going to do with this feedback? I will use it in my dissertation as a sort of disclaimer. In a few paragraphs, I will explain that the chapter is obviously a simplification of a much more complicated reality, but that that doesn´t make it an incorrect generalization. It is difficult and perhaps even dangerous to distill objectives from UN reports, but that doesn´t make it impossible. The changes in UN agency that I describe are real, even if they are the result of many external factors.  

Chapter 2: The second chapter goes deeper into the theory of sanctions. Again I divided the chapter in sub-chapters, each of them representing an important theoretical issue regarding sanctions, namely targets, objectives, strategies, effects, external variables, and unintended consequences. 

The idea is that these six issues are not stable over time. As the role of UN peace operations changes, so do sanctions. For example, the objective of traditional comprehensive economic sanctions are very different from the objectives of targeted sanctions in a post-conflict peace building operation. Similarly, the effects and consequences of sanctions are very different. Since nobody has ever done research on the post-conflict timber embargo on Liberia, it seems relevant that someone does so. 

For a more detailed explanation of the theoretical issues on sanctions discussed in chapter 2, have a look at the paper, which counts about 35 pages. 

Feedback: Again, the main feedback I received concerned the dangers of simplification, or rather categorization. I realized that it will be important to be very precise on specifying what the objective of a sanctions regime is, and on who the exact target is. Again, I think that taking in mind this feedback and being cautious when pulling my conclusions, I will be able to avoid the pitfalls and deliver good results.

*For those who took part in the seminar, thanks very much for listening to the presentation and for sharing your thoughts. For those that are going to read the paper, I would very much appreciate more feedback, as I know that there is plenty of space for improvement. 

*PDF version of the paper