Author Archives: Peako Jenkins

Citizens Work Together to Fight Corruption in Lebanon

lalac

A lab technician went to the office of a public official to renew her work contract with a municipal laboratory in northern Lebanon. Several days after submitting her request, the official’s secretary invited her to come to his office. Hoping to finally receive his signature on her contract renewal, the young woman arrived at the office only to find that he wanted to get her alone behind closed doors, where he allegedly proceeded to make verbal and physical sexual advances on her.

She fled the scene and tried to see if she could get her contract renewed through another government department, which only referred her back to the same official. Having no other alternative, the young woman went back to the official’s office in January 2014, but this time she was prepared with a hidden camera to capture his behavior on video.

In the mountains of Chouf, residents of Brih and neighboring villages were displaced during the 1975-1990 Lebanese civil war. Their lands were subsequently occupied by other families and, rather than evacuating the lands and returning them to their original owners, the Ministry of Displaced Persons in Lebanon ran a program to offer compensation to the displaced.

But in 2014, although other villages had been paid, the former people of Brih still had not received their compensation. When they submitted a complaint to the Ministry, it claimed that the payment had been issued. But with residents presenting evidence that they had never received compensation, the question arose: where had the funds gone?

These are the types of cases that Lebanese citizens report to the Lebanese Advocacy and Legal Advice Center (LALAC), an initiative launched by the Lebanese Transparency Association (LTA) as part of its program with CIPE to combat corruption in Lebanon. Through LALAC, citizens can report corruption by calling the LALAC hotline, writing a letter or e-mail, or visiting one of three centers in person. LALAC provides clients with legal advice on the process of vindicating their rights (short of providing representation in court) and tracks the progress of their cases.

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Enriching the Future: Creating Opportunities for Youth in the Middle East

Doha Forum Picture

Through high-level discussions of democracy, development, and free trade, the 2014 Doha Forum held from May 12 to 14 sought to find solutions to key economic challenges facing the Middle East through international collaboration and entrepreneurship. Among those key challenges is job creation.

Co-hosted by Qatar and UCLA’s Center for Middle East Development, the theme of this year’s forum was “Enriching the Middle East’s Economic Future.” CIPE’s Regional Director for the Middle East and North Africa (MENA) Abdulwahab Alkebsi and a group of CIPE’s partners participated in the forum.

With 30 percent of the Middle East’s population between the ages of 15 and 29, creating employment opportunities for young people remains a top economic priority for the region. CIPE and its partner organizations highlighted the many ways in which the private sector can address this challenge and enrich the Middle East’s economic future.

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The Power of Chocolate

Watch an interview with Lina Hundaileh (video in Arabic, summary in English).

Watch an interview with Lina Hundaileh (video in Arabic, summary in English).

Jordan ranks among the lowest countries in the world on the World Economic Forum’s measurement of women’s economic empowerment. This lack of economic empowerment tends to correspond to decreased political empowerment, with reduced levels of activities such as voting.

Although women represent over half of university graduates in Jordan, they constitute a paltry 16 percent of the workforce. More than 26 percent of Jordanian women with bachelor’s degrees remain unemployed, compared to just 9.1 percent of male graduates. However, women are finding ways to overcome barriers to their economic participation by starting their own businesses. The Jordan Times reported in February that 38% of all Jordanian entrepreneurs are women, exceeding the international average of women’s participation in the field.

Lina Hundaileh epitomizes this entrepreneurial spirit. After the German company where she worked closed down their Jordan office, Lina decided to create her own job by opening a chocolate factory. She was not deterred by her lack of experience in running a business or making chocolate. It did not faze her when others laughed at her plan. She was determined to succeed and did not view failure as an option. And she loved chocolate.

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New Banditry, New Solutions

Kennan Institute event

Faced with a corrupt judicial system, what strategies do Russian businesses employ to resolve business disputes?  Lately, less murder and more litigation.

Faced with multinational firms who are liable under U.S. and U.K. laws for their Russian partners’ corrupt practices, how do Russian businesses gain access to international partners? Start putting in place anti-corruption compliance programs.

Those were some of the answers that came from experts from Russia and the U.S. had some answers at a recent panel discussion co-hosted by CIPE and the Kennan Institute, “Corruption and Business in Russian: National Problem, Regional Solutions.” Jordan Gans-Morse, an assistant professor of political science at Northwestern University, presented the results of his innovative research on how non-oligarchic firms are surviving in an atmosphere of endemic corruption. Against this backdrop, CIPE Moscow Program Officer Natalya L. Titova, joined by CIPE partners from St. Petersburg, Chelyabinsk, and Kaliningrad, spoke about a CIPE program in Russia that is helping regional businesses to meet international anti-corruption standards in order to join global value chains.

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The Need for Constitutional Protection of Private Enterprise

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Constitutions can play an important role in protecting economic liberties, in addition to political liberties. As the state’s foundational legal document, the constitution can provide the essential framework for establishing commercial freedom and promoting the development of the private sector. For example, CIPE partner the Syrian Economic Forum (SEF) is developing proposals for the constitutional protection of private enterprise during a future transition period in Syria.

Different countries have taken a variety of approaches in tailoring their constitutions accordingly, which should be examined in determining how Syria’s next constitution will promote and protect private enterprise.

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Beyond Cronyism, Beyond Violence: Reconstructing the Syrian Economy

This image from Aleppo Media Center, authenticated by the Associated Press, shows damaged buildings in Syria's former economic heartland.

This image from Aleppo Media Center, authenticated by the Associated Press, shows damaged buildings in Syria’s former economic heartland.

The stories coming out of Syria nowadays paint a picture of an economy taken over by violence, in which legitimate private-sector business activity has nearly ground to a halt. Rival groups raid a textile factory, promising protection in return for money; the factory is burned down when the two groups start fighting. The owner of a brake-lining plant does not know what happened to his machinery after it was looted—he only knows that his “entire wealth and life” have been dismantled. No longer able to rely on legal remedies, some businesspeople flee with their capital to countries such as Egypt, where they may remain even after the war has ended.

The statistics reported by the Syrian Center for Policy Research confirm this grim picture. Economic loss totals $103.1 billion. Almost half the population is unemployed, with 2.33 million job opportunities lost since the beginning of the conflict. The price of consumer goods has tripled. Energy prices continue to rise while private consumption and investment continue to fall. Sanctions have chopped oil exports in half, and the decreasing value of the Syrian pound has not led to an increase in non-oil exports. Manufacturing and mining barely contribute to GDP (just 4 percent), and textile factories—located largely in areas that have witnessed the most fighting—have closed by the hundreds, or possibly even thousands. A Byblos bank report estimates that 75 percent of production facilities in Aleppo are no longer operable.

It can be easy to lose sight of the importance of economic recovery amidst the urgent need to stop the fighting. But rebuilding the Syrian economy will be crucial to any long-term peace and reconstruction efforts, as will the manner in which it is rebuilt.

Before 2011, economic benefits mainly accrued to a small group of well-connected elites. Smaller enterprises could hardly expand, thwarted by contradictory laws, a weak financial system, corruption, and limited export capacity. Future reconstruction efforts should focus on rebuilding Syria’s economy in a way that replaces crony capitalism with a private sector in which all citizens have the opportunity to participate and thrive. Reforms that increase competition and bolster small- and medium-sized enterprises will stimulate economic growth and give more citizens a stake in the country’s economy and future.

The private sector should play an active role in reforming the Syrian economy once the conflict ends. To this end, the Syrian Economic Forum (SEF), a CIPE partner, has already begun taking steps to organize the private sector to advocate for necessary economic reforms.

In its First Annual Conference in Gaziantep, Turkey, SEF gathered Syrian businesspeople from inside the country and abroad to discuss recommendations for rehabilitating factories, amending investment laws, and improving educational opportunities for Syria’s youth. While it will certainly take a long time before the dire economic situation in Syria can even begin to improve, efforts such as SEF’s will help to ensure a future democratic Syria with an economy that offers all Syrian citizens the opportunity to achieve welfare and prosperity.

Peako Jenkins is a Public Service Initiative Fellow for the Middle East & North Africa at CIPE.

Cash for Corn

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“When we entered the room where the President received us, he put the briefcase by the wall and left it there. After the meeting we collected the briefcase from where we had left it. On the departing journey I looked in the briefcase and saw that the money had been replaced with fresh corn.”

Nasir Ibraham Ali, the chief executive officer of World Duty Free, told the International Centre for the Settlement of Investment Disputes (ICSID) how, in 1989, a representative of former Kenyan President Daniel arap Moi explained to him that protocol in Kenya required that he make a “personal donation” to the president in order to establish duty free shops at the Nairobi and Mombasa airports. Ali understood “that this was payment for doing business with the Government of Kenya.” The price of this contract: $2 million.

Three years later, after spending $27 million to construct and equip his shops, Ali found himself in the middle of the infamous Goldenberg scandal. President Moi’s emissaries fabricated documents purporting to export gold and diamonds to World Duty Free. Moi’s emissaries then illicitly funneled the money they received in export compensation to Moi’s re-election campaign. The price of this fraud: estimated at a minimum of $438 million.

After World Duty Free claimed it was unwittingly part of the fraud, the government took over the shares and assets of the company to stop Ali from cooperating with the prosecution. When he responded by making statements to the press, he was arrested and then deported to the United Arab Emirates. Ali never recovered his assets, and Kenya never held any officials accountable in connection with the Goldenberg scandal.

Although these events occurred more than two decades ago, Kenya continues to fare poorly on Transparency International’s Corruption Index: 139 out of 176. It ranks in the 19th percentile for control of corruption, despite initiatives such as the restoration of the Ethics and Anti-Corruption Commission (EACC). However, some new initiatives are seeking to reinvigorate the fight against corruption. The private sector, led by the Kenya Private Sector Alliance and the Kenya Association of Manufacturers, established the UN Global Compact Network in 2005, which now has 83 companies that voluntarily adhere to the principles, including a commitment not to engage in corruption.

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