Home Economics & Policy Decentralization – the best way to tackle corruption?

Decentralization – the best way to tackle corruption?

Giving local government more power to help prevent Lebanon’s vice

by Domhnall O'Sullivan
Local governments would have more power to deal with issues such as Syrian refugees

Decentralization is a hot topic right now. In Ukraine, it has been proposed as a means of giving greater autonomy to the Russian-speaking regions in the East of the country – a gentle concession to Moscow’s current belligerent posturing. Iraq continues to debate the merits of moving towards a federal system as a way to counter the corrosive sectarian violence which has crippled the country for the past decade. And in Lebanon the idea is firmly back on the table after President Sleiman last week unveiled a bill which would devolve greater financial and decision-making authority to regional councils.

Decentralization is designed with various goals in mind. Among these are increased efficiency as resources are allocated by those with a better understanding of local needs and upping social mobilization as citizens play more of a direct role. Moreover, in deeply divided societies, decentralization – or its big brother, federalism – can give homogenous communities the autonomy they need in order to maintain overall state cohesion.

But one of the most important functions – particularly of administrative decentralization as proposed by the current draft bill in Lebanon – is its tackling of corruption. In theory, more decentralization means more transparency. President Sleiman noticeably promised that the bill would ensure “transparency, accountability and monitoring, bringing the citizen closer to holding accountable those he has elected.” For Lebanon, which slid to 127th place last year in the Corruption Perceptions Index compiled by watchdog Transparency International, this would be a welcome development.

In theory yes

Various studies back up the received wisdom. A 2006 World Bank paper found that by bringing government closer to the people, decentralization can help reduce corruption as well as improve service delivery. Citizens become more involved in monitoring government performance and demand corrective action if something is amiss. As the Lebanese-American essayist Nassim Nicholas Taleb notes, “in a decentralized system – say, municipalities – [policymakers] are checked by a feeling of shame upon harming others with their mistakes”. This is not the case in the vast bureaucracies of a large centralized system.

Similarly, a 2001 International Monetary Fund (IMF) report found not only a positive effect of decentralization on corruption, but an exponential influence. It concluded that “the higher the level of subnational spending in total government expenditures, the stronger the positive association between decentralization and governance.” Accordingly, states with strongly federal or cantonal structures rank highly on the good governance scale: the 2013 Corruption Perceptions Index put Sweden in third place, Switzerland in seventh, and Canada and Australia in joint ninth.

The hope is that the same thing can be reproduced in Lebanon. Sami Atallah, executive director of the Lebanese Center for Policy Studies, was part of the advisory committee responsible for drafting the current bill. He says that in the current “convoluted” centralized system, “you don’t know who to hold accountable.” “This bill will provide for closer proximity between elected officials and the people”. If the bill goes through unamended, three levels of governance will allow for more accountability: regional councils with transparent budgetary affairs, central watchdogs to oversee these regions, and civil society holding it all accountable.

New location, same old habits?

But decentralization is not a risk-free endeavor. In a society like Lebanon’s with entrenched traditions of patronage, the danger is that decentralization simply shifts rather than eradicates the locus of corruption. Worse, the creation of new levels of government and the overloading of incapable local institutions could even exacerbate the problem. The same 2006 World Bank paper which extolled the long-term virtues of decentralization cautioned against the short-term risk of “capture” by local elites; if not done properly, “localization may increase the opportunities for corruption,” it warned.

Yahya Hakim, Secretary-General of the Lebanese Transparency Association, agrees that the bill as it stands could cause more problems than it would solve. “The municipalities simply don’t have the professional capacities to cope with the increased workload and responsibilities,” he said. Similarly, with transparency issues afflicting not just the central level but the “public service as a whole,” decentralizing to such an extent right now would hardly be a panacea. An overhaul of the entire system is first necessary; “minor remedies cannot save the moribund. Administrative and financial reforms are essential to relieve the patient.”

Atallah also admits that the current legislation is not enough to completely eliminate corruption. But in terms of reducing it, if done properly this might be possible. “The qada’as (districts) will have the administrative capacities,” he says. With the decentralization law “part of a larger basket of reforms,” it would be ensured that the regions have the requisite abilities to manage their increased prerogatives.

Don’t run before you can walk

The obvious conclusion is that in order to reap the longer-term benefits of decentralization, seeds must be sown with care and vigilance. The process takes time. According to the IMF, in the short-term subnational administrative capacities need to be bolstered and made watertight, while the shift should also be accompanied by other reforms such as electoral rules to encourage voter participation and involvement of civil society in the political process. Indeed, President Sleiman situated the current draft bill squarely alongside the other current projects aimed at shoring up Lebanese society: the draft electoral and budget laws.

For Atallah, achieving more transparency will ultimately be one of the means to securing of the primary developmental objectives of the bill. And in order to achieve these, various other foundational shifts are necessary. As he wrote here, not only should the the borders of the proposed regional councils be carefully redrawn to as to best serve developmental needs, but it is imperative these regional councils are directly elected in order to ensure political accountability. And at the lower level again, that of Lebanon’s 985 municipalities, the identification of their responsibilities must be clearly delineated. Overall, rationally delineated regions based on developmental criteria and needs – rather than an “overemphasis on municipalities” – should be the focus.

Of course, the elephant in the room when it comes to decentralization is sectarianism. Religious concerns have always surrounded issues of federalism in Lebanon. And for Atallah, care must be taken that any process of boundary redrawing would not make things more sectarian. “I would worry that the process would get hijacked by political concerns”, he warns. In this case, none of the objectives – efficiency, subsidiarity, transparency – would be served.

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Domhnall O'Sullivan

Domhnall O'Sullivan is a journalist and political analyst based in Beirut

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