World Bank to Take On Corruption in Fragile Nation States

According to the World Bank, about 1.5 billion people currently live in conflict zones, 19.5 million people live as refugees from these areas, and 38 million people have been displaced within their own countries because of these disputes. Unfortunately, going hand-in-hand with so many people in desperate situations, corruption has become an enormous concern in these “fragile” conflict-zone countries.

According to the World Bank, about 1.5 billion people currently live in conflict zones, 19.5 million people live as refugees from these areas, and 38 million people have been displaced within their own countries because of these disputes. Unfortunately, going hand-in-hand with so many people in desperate situations, corruption has become an enormous concern in these “fragile” conflict-zone countries.

The World Bank recently hosted an expert panel that explored the correlation between national insecurity and corruption. A common point of agreement among the panelists was that corruption follows conflict, and it can further destabilize a country, create a barrier to economic development, and discourage foreign investment and intervention. In fact, according to the World Bank, corruption leads to a loss of approximately $3.1 trillion (the equivalent of 5.1 percent of the world’s GDP) each year. 

According to some estimates, so-called fragile states experience a loss of value ranging between 10 and 30 percent of publicly funded infrastructure due to corruption. In fact, according to a survey of businesses in 127 countries, approximately one in seven transactions in both fragile nations and those that are more stable involve a bribe.

The World Bank’s Chief Economist for the Middle East and North Africa, Shanta Devarajan, points out that not all corruption is easily detectable. So-called “quiet corruption” usually takes the form of favoritism, protectionism, and the allowance of monopolies. He used pre-Arab Spring Tunisia, as an example of a state that experienced such “quiet corruption,” pointing out that the nation experienced zero job growth for 20 years as a result. This slowly destabilized the social situation on the ground and made an event like the Arab Spring possible.

Unfortunately, this same kind of corruption has also led to the spread of dangerous groups like ISIS. This is, in part, because these corrupt governments lose their legitimacy in the eyes of young people. Unhappy with “business as usual,” youth rebel against the established authority, sometimes with radical consequences (as in the example of ISIS).

The World Bank has announced its intention to combat corruption. In the World Bank’s opinion, this could help to create more international social stability. That, in turn, should generate more opportunities for global economic cooperation and growth. 

“We need to find strategic ways to combat corruption in fragile states,” said Jan Walliser, World Bank Group Vice President of Equitable Growth, Finance, and Institutions. “We must be very vigilant in tracking all corruption even when money doesn’t change hands.”