Corruption and its effects on Romania and the EU

1.1.What is corruption?

Corruption is derived from the Latin verb rumpere, to break. According to this approach, corruption is where the law is clearly broken. This requires that all laws must be precisely stated, leaving no doubts about their meaning and no discretion to the public officials. That is the ideal approach. The one closer to reality is:

,,Corruption is the misuse of   entrusted   power (by heritage, education, marriage, election, appointment or whatever else) for private gain.’’

A scientific definition of this term, is given by dr. Petrus Van Duyne:

,, Corruption is an improbity or decay in the decision-making process in which a

decision-maker consents to deviate or demands deviation from the criterion which should

rule his or her decision-making, in exchange for a reward or for the promise or

expectation of a reward, while these motives influencing his or her decision-making cannot

be part of the justification of the decision.”

1.2.What are the types of corruption?Giving that corruption is a very complex action, it comes in various forms, on a wide

range of fields. Corruption can be:

a) Systemic corruption

b) Sporadic   (individual)   corruption

c) Political (Grand) corruption

d) Petty corruption

a) Systemic Corruption

Systemic corruption is when corruption is an integrated and essential aspect of the

economic, social and political system, when it is embedded in a wider situation that helps

sustain it. Systemic corruption is not a special category of corrupt practice, but rather a

situation in which the major institutions and processes of the state are routinely dominated

and used by corrupt individuals and groups, and in which most people have no alternatives to

dealing with corrupt officials. 

b) Sporadic (individual) corruption

Sporadic corruption is the opposite of systemtic corruption. Sporadic corruption occurs

irregularly and therefore it does not threaten the mechanisms of control nor the economy as

such. It is not crippling, but it can seriously undermine morale and sap the economy of

resources.

c) Political (Grand) Corruption

Political corruption is any transaction between private and public sector actors through

which collective goods are illegitimately converted into private-regarding payoffs. Political

or grand corruption takes place at the high levels of the political system, when politicians and

state agents entitled to make and enforce the laws in the name of the people, are using this

authority to sustain their power, status and wealth.

d) Petty Corruption

Small scale, bureaucratic or petty corruption is the everyday corruption that takes place at

the implementation end of politics, where the public officials meet the public. Petty

corruption refers to the modest sums of money usually involved, and has also been called

“low level” and “street level” to name the kind of corruption that people can experience more

or less daily, in their encounter with public administration and services like hospitals,

schools, local licensing authorities, police, taxing authorities and so on.

1.3. How does corruption affect a country?For many years Macro level studies, using country-level data to explore cross-country

variations in both governance and economic indicators, have consistently found that

corruption significantly decreases economic growth and development.

They also showed that corruption discourages investment and acts as an additional cost

of doing business, reducing the profitability of investment projects.

1.4. Corruption in the EU.

For many years corruption was seen in Europe as a problem only for second-tier

countries (developing ones), while the EU was actually ,,the temple of integrity both moral

and legal’’. Of course that this impression was given by the countries that still are among the

best governed in the world, but there are several examples (Greece, Italy, Portugal, Spain

etc.) that have all regressed since they joined. That raised a big question mark over the

transformative effect of the top EU countries on their newly joined members.

Although, on average, more than 90% of Europeans in the 27 (recently 28) EU member

countries declare that they were not asked for a bribe last year, 79% fully or partially agree

that corruption exists in their national institutions. Also, almost half of the Europeans (47%)

think that the level of corruption has risen in the past 3 years. That is, least to say,

questionable.

In the East European member countries, exception making Estonia and Slovenia, more

than 10% of the people part of the survey, had directly encountered some form of bribery last

year. The gap between the widespread of corruption and the actual tangency of the population

with bribery, means that they are aware that other types of behaviour as peddling of political

influence, favouritism or clientelism, as well as bribery, are corrupted.

But how do we measure corruption? Well, we do that by: gathering the informed views

of relevant stakeholders, conducting surveys in countries, audits of specific sectors or projects

with the goal of understating if the allocation of public resources is fair and universal.

1.4. Corruption in Romania

Romania is a member of the EU since the first of January 2007. That gave the country a

huge boost from both economical and perspective. But only for a short period of time.

Romania enjoyed a prosper year under the EU’s tutelage until the economical crisis of 2008

severely damaged the way investors saw us, the economy and most importantly, as the

citizens were to see, the level of trust in the state.

Since 2008, Romania went on a downslope from any point of view, losing investors,

credibility and becoming a in debt country. There’s where the IMF comes in scene. Romania

made several loans from the IMF that solicitated drastic rulings as salary cuts, pension cuts,

that damaged the image of both Government and Parliament, and along with that, it “opened

the eyes” of the citizens when it comes to corruption.

The Romanian GDP is evaluated at 150 billion euros. From that, Romania spent in

2010 approximately 33.56 billions on works, goods and services, meaning that it spent about

25% of their GDP just for this. Unfortunately, the shadow economy (black market) represents

28% of Romania’s GDP (2013 estimate). In the World Bank Doing Business Rank 2013 we

are on the 72nd place from 185, with the EU worst on the 102nd spot, so Romania most

certainly does not excel. On a more depressing survey, Romania’s Government Effectiveness

and Corruption Control are placed last among EU Members, which is least to say alarming.

A recent survey shows that 93% of the Romanian population believes that corruption is

a widespread, 27% believes that the efforts to combat corruption are effective. Also 64% of

the Romanians find nepotism and patronage to be a “very serious or quite serious issue”.

Another shocking survey shows that 65% of the investors find corruption to be a very serious

problem when doing business in Romania, meaning that investors run from the country.

Starting from 2013, the DNA and NAFA conducted a series of investigations on known

to be corrupted high officials, and after the end of Train Basescu’s mandate, lots of them

were convicted and several more are to come, and also the economical rulings apply more

strictly now, maybe even exaggerated as some see it