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Will corruption undermine Egypt's transition?

by Anna Nadgrodkiewicz | Thomson Reuters Foundation
Wednesday, 9 May 2012 11:38 GMT

* Any views expressed in this opinion piece are those of the author and not of Thomson Reuters Foundation.

Unless meaningful institutional reforms are implemented, corruption in Egypt will continue apace

By Anna Nadgrodkiewicz

"It turned out that ousting Mubarak was easy but removing his corruption is mission impossible." This view is common among Egyptians like Tarek Mahmoud who had been waiting long months for a license to set up a snack stall in Cairo. In fact, seemingly innocuous phrases such as "I wish you a trouble-free day" or "offer me a cup of tea" remain common euphemisms for a bribe in interactions with public officials.

Protesters who rose against Hosni Mubarak last year had many grievances against the regime, from political oppression to the lack of economic opportunity. Corruption, both grand and petty, had been at the core of that regime and as such bore the brunt of the protesters’ ire. However, even though Mubarak’s rule is over, the problem of corruption persists and raises serious questions about the future of Egypt’s transition.

While Mubarak himself and several top-level officials have been put on trial for pillaging the state’s coffers, such high-profile cases rarely have a systemic impact if they are not accompanied by meaningful institutional reforms. As long as the modus operandi of the state remains based on secretive decision-making and weak checks and balances, corruption at the highest levels will thrive. 

Will the interim government led by the military relinquish its overbearing control over the country’s institutions and the economy to allow for more transparent and accountable governance? The tribulations of Egypt’s transition process do not exactly inspire optimism. As the political bickering continues ahead of the presidential election, the debate has focused largely on procedural disputes, controversial disqualifications of candidates, and ideological stripes of the leading contenders. That trend, regrettably, put key policy issues such as combating corruption on the back burner.

The problem of corruption in Egypt goes beyond state-sponsored graft among government ministries and agencies. Fueled by the decades of macroeconomic mismanagement and poor service delivery, corruption became deeply ingrained into the fabric of the Egyptian society. In a broken system, it became a way of life. That is not a surprise, considering that applying for official documents can take hours, days, or weeks and is subject to the whims of civil servants keen on supplementing their meager salaries with extra payments to speed things up.

When bribes amount to more than a typical public official’s salary and the risk of punishment remains low, the demand for corruption is clearly established.  When paying a bribe becomes the only feasible way to obtain public services or run a business, the supply of bribes will match the demand and corrupt practices will flourish. Some believe that in fact small-scale corruption has been on the rise since the revolution, given the atmosphere of weak law enforcement combined with economic hardships.

The pervasiveness of small-scale bribery in daily interactions with public officials or the police is also easily explained by the size of Egypt’s informal sector. According to the ILO, it comprises more than half of non-agricultural employment. What is more, as the Institute for Liberty and Democracy’s work in Egypt demonstrated, 92 percent of the urban population holds its real estate assets without a formal title and 82 percent of entrepreneurs operate in the informal sector. Informality leaves them exposed to harassment by the authorities with a bribe as the only available defense given the lack of legal protection for their assets and businesses.

The Arab Spring in Egypt and other countries in the region is a clear indication that the explosive mix of demographic pressures, an inefficient public sector, and constraints placed on the private sector has reached its boiling point. Going forward, meaningful reforms necessitate moving away from entrenched state monopolies on political and economic power.  The transition currently underway in Egypt is the first, however flawed, step along that path.

Next steps must involve reforms that alter the entrenched incentives for corruption through strengthening the institutions of democratic governance, amending poorly written laws, increasing accountability of public officials, and improving access to information. Crucially, reforms must also focus on creating an environment where corruption and red tape no longer stifle private enterprise so that those who stood up for change in Tahrir Square – including youth, women, and informal entrepreneurs – can now become full economic stakeholders in their society.  

Mubarak’s departure restored hope of ordinary Egyptians for better future but corruption continues to rob them of personal dignity and economic opportunity on a daily basis. Momentous as it was, ousting Mubarak was not the hardest part of the Egyptian revolution. Building institutions at both the national and grassroots level to effectively curb the supply and demand for corruption is the hard part that the success of Egypt’s transformation ultimately hinges on.