The cycle of corruption and inequality is churning out a new problem: populism.
Transparency International warned that nationalist leaders who succeed in anti-establishment campaigns do little to fight corruption once in office, despite their rhetoric, and, in fact, make it worse.
“In countries with populist or autocratic leaders, we often see democracies in decline and a disturbing pattern of attempts to crack down on civil society, limit press freedom and weaken the independence of the judiciary,” Transparency International Chairman José Ugaz said in a statement. “Instead of tackling crony capitalism, those leaders usually install even worse forms of corrupt systems.”
Globally, corruption levels are not improving, according to the latest Corruption Perceptions Index. Transparency’s annual report scores countries on a scale of 0 (highly corrupt) to 100 (clean). Nearly two-thirds of the 176 countries score below 50 – roughly the same number as the 2012 index. European countries dominate the top; Middle Eastern and African countries are at the bottom.
Last year witnessed major corruption scandals. The release of the Panama Papers exposed the global network of tax havens. Brazilian construction giant Odebrecht admitted that it paid hundreds of millions in bribes to win contracts across Latin America. And the Petrobras scandal in Brazil brought down President Dilma Rousseff and embroiled former head of state Luis Inácio Lula da Silva.
This year’s report is driven by the effect of the “vicious circle between corruption, unequal distribution of power in society and unequal distribution of wealth” on global politics. Transparency names Donald Trump, former Prime Minister Jarosław Kaczyński in Poland and French presidential candidate Marine le Pen as examples of the recent populist reaction to corruption and inequality. It is a troubling trend for a group dedicated to fighting corruption because populist leaders can harm the democratic institutions meant to prevent corruption.
The Transparency report comes on the heels of the Economist Intelligence Unit’s annual report on the state of democracies around the world. The United States saw its ranking fall to the ‘flawed democracy’ category. The U.S. was headed in that direction before the election, and the change in rank was not tied to Trump’s win, but explains Trump’s win.
Officials at Transparency said that wealth inequality and power must be solved in order to address corruption. And they think it’s possible if governments open up and citizens hold them accountable.
“Extreme economic inequality and political capture are too often interdependent. Left unchecked, political institutions become undermined and governments overwhelmingly serve the interests of economic elites to the detriment of ordinary people,” according to an Oxfam report cited by Transparency. “Extreme inequality is not inevitable, and it can and must be reversed quickly.”
Promises by politicians to fight corruption are not enough. Recent cases from India and Hungary show that anti-establishment candidates running on platforms to clean up the system struggle to enact change. Argentina, on the other hand, improved its standing in the index following the exit of populist leader Cristina Fernández de Kirchner.
The report advocates for solutions like placing more controls on businesses to prevent money laundering and outlawing secret companies that hide money and payments.
“We do not have the luxury of time. Corruption needs to be fought with urgency, so that the lives of people across the world improve,” Ugaz said.