In a public lecture, Sachs endorsed German chancellor Angela Merkel’s plan to deal with climate change and proclaimed his support for nuclear energy. He thoughtfully insisted that the problems of most poor countries are embedded in the lack of sustainable development. While concerns about corruption seem minimal in relation to his concerns about issues of poverty he insists that the two are intertwined. The man who wants to be practical thinks that corruption tends to get lost in a discussion that seldom leads to real solutions. Transparency Watch interviewed Jeffrey Sachs for his take on the current anti-corruption state of affairs.

Transparency Watch (TW):How does your work on sustainable development and environmental change at the Earth Institute relate to corruption? Can you put a number on how much corruption affects the environment?

Jeffrey Sachs (JS): Corruption certainly threatens reasonable governance on many fronts. Some governments are so corrupt that they think only about the short-term gains they can make from whatever kind of resource exploitation or bribery that comes their way. They are not thinking long term. In the extremely corrupt cases, almost nothing works right: natural resources are not properly managed and there is no protection of the physical environment. A corrupt atmosphere often leads to a lot of poaching, over-hunting and over-fishing.

My work was supported by the Open Society Institute – a big promoter of the Extractive Industries Transparency Initiative, and together with the government we designed some legislative and administrative approaches that could be helpful. The irony is that they still haven’t found oil, so I don’t know whether this work will be useful or not. But regardless, taking that kind of preparation is important, particularly in areas rich in natural resources.

TW: How, in your view, does corruption affect a country’s economic competitiveness?

JS: There is little doubt that corruption is harmful for economic development. I don’t believe that it’s the only thing that hurts development, and I often argue against the idea that it’s even the main thing in many of the countries where I’m working. I work a lot in Africa and the first thing that comes to mind for many people is that African countries are poor because they’re corrupt. But when I look at countries like Senegal or Mali or Ghana or Tanzania which are very poor, the level of corruption does not seem out of line with the levels of corruption of much richer countries or growing economies. Although corruption is harmful, we shouldn’t attribute all suffering and misery or economic failures to corruption. Some places are suffering because of malaria or an AIDS pandemic, others because of a water crisis or because of they are landlocked. This is not a license for them to be corrupt, but it is to say that their main problem may not be corruption. We need to look at things from the perspective of particular countries and ask the question: For this country, is corruption the number one issue? Or is it the number three issue? How does it relate to other areas? There must be some perspective. For some countries it’s just presumed that if you’re poor, you’re led by a very corrupt government, and that relationship simply is not true.

TW:What are your views on recent aid programmes, particularly the US Millennium Challenge Account and a number of World Bank programmes, which make aid money conditional to good governance and anti-corruption?

JS: In general, aid should only go where it can be effectively used and monitored; but there is also a lot of discretion as to how one would judge it. I am not convinced that the right way to handle this question is to declare a certain group of countries corrupt and another group of countries not corrupt and give aid to the second group but not the first. That’s too simplistic. What I’d like to do is to think about a specific aid project. Take the example of getting bed nets to people in a malaria region. Here I would ask: 'How can this be done in a non-corrupt way? How can we monitor the process? How can the local community take responsibility?' Corruption can typically (but not always) be controlled by creating well-designed systems of delivery. Now, this begs a question: What if you’re just giving money to governments? I’m not in favour of that kind of aid, where it’s just a cheque written to a national budget on the basis of trust. I am more in favour of aid that is targeted to specific projects.

TW:This sounds very much like something done on a case-by-case basis and not like something that would affect the sustainability of aid. Beyond auditing, isn’t the question how to help these governments set up basic governance structures and systems so that everything done, even aside from the aid – tax money as well -is properly handled?

JS: First of all, I think that every country needs a strong Transparency International chapter and a strong and independent civil society. Donors should begin to use aid in a way that leads to a flow of commodities that can be monitored and audited. There are certain countries where the situation is so abusive that what I am saying really doesn’t make much sense.

The ideal approach would be to work with the government on building roads, building clinics, handling immunisation within specific time limits and, in each of those things, help to build institutional delivery systems. Ideally, these would have computerisation, monitoring, reports, audits and local engagement to increase local enforcement by having more eyes on the process.

TW:You have said that “we don’t need long studies from the World Bank for trying to perfect the imperfectible” and “we don’t need workshops on corruption”. What is your reasoning behind this?

JS: What I mean by that is that we don’t need them as preconditions for delivering help right now. We spend most of our time in places where we never get down to making a change. The World Bank will study the problem for two-to-three years before something gets started. On corruption, my view is not to have a general process of anti-corruption seminars, but rather have a process for scaling up the health sector, or improving management in the education sector or the transportation sector. Within that context the focus should be on transparency, bribery, corruption, delivery of services, monitoring and evaluation, and so on. Instead, I feel like countries are being put into black and white categories like 'corrupt' and 'clean'.

How do you clean up? Well, that’s going to be a long conceptual process of re-education. I don’t buy it, and I don’t find it very practical. We’ve got corruption scandals all through the rich world right now involving the poor countries, which is very disconcerting. We ought to be focusing on our own misbehaviour as well. So the main thing is we have lost a huge amount of time when we could be doing practical and deliverable things, and since I’m against the idea of an 'Axis of Evil', I’m also against categorising countries as good or bad.

TW: In that context, do you feel that the World Bank’s anti-corruption policy is an extension of American foreign policy?

JS: Well, I think that it’s a little bit naïve. I would not have done it as an anti-corruption policy. I would have done it as part of an agriculture policy, a health policy, or some other policy. By having announced it as an anti-corruption policy, the World Bank has spent a year on it, and I don’t see a direction on the actual implementation of anti-poverty programmes. So, what happens is what I had predicted. Everybody got into a fight, everyone has discussed theory, and concepts, and accusation and counter-accusations. In the meantime, real things that are urgently needed and absolutely possible, people are not getting done.

TW:Do you see a connection between democratisation or its failure, and corruption?

JS: It’s very complicated. Some democracies are highly corrupt. Sometimes democratisation opens the space for corruption, but authoritarian rule can also be hugely corrupt. I’m not sure I would say those kinds of systems per se determine corruption levels. I do believe that democracy can control corruption better than authoritarian rule because there is more space for the involvement of civil society, which is absolutely critical to controlling corruption. In the Russian case, the Soviet system was incredibly corrupt, but it was a little harder to steal assets. In the post-Communist/post-Soviet system there was a lot of corruption, and you could more easily steal assets. So they changed the nature of this a bit, but neither of these are intrinsically related to democracy.

TW: Is Russia still paying the price for what you termed a “corrupt privatisation” in the 1990s? What role did the Washington Consensus play in this context?

JS: What happened was (I left advising Russia in early 1994 and the big corrupt privatisations came in mid-1995), the so-called 'share of the oil fields'. The idea was a give-away of the biggest natural resource assets in the oil and gas sector to private hands. Those became the oligarchs by and large. The process was very illegitimate as well as destructive; giving away tens of billions of dollars in improper ways hurt the state’s finances and de-legitimised the market economy. I was very perturbed.

This wasn’t part of the Washington Consensus, but it was definitely done with Washington watching. They thought it would be helpful for Yeltsin’s government, but I think it was a big mistake. I think we should have given more warning. I’m not sure it could have been stopped but there was complacency in Western governments about it that was completely inappropriate. At the end of the 1990s I advocated re-nationalising a lot of the oil and gas sector because of the way it was given away. I am not involved in any of the details. I would not have recommended the oil and gas privatisation to begin with. This would have been the foundation of fiscal policy in the government.