Covenants with broken swords / by Francisco Blaha

As said many times, the readership of this blog is always surprising. Hence thanks! Already a few people have sent me interesting stuff to blog about, which is quite cool. I got recently, a collaboration of Aksel Sundström, from the department of Political Sciences of the University of Gothenburg in Sweden that I like to share.

He tackles corruption at enforcement level in fisheries, which is a complex and controversial issue. I grow up in a very corrupt country, and my job takes me top countries that do not rank high in corruptions indexes like Transparency International but then, I have spent the last 21 years of my life in a country is one of the less corrupt ones. So I can see the issue from different angles.

I like the fact that he is tackling the issue from a political sciences background and his research was done in South Africa, a country at cultural crossroads.

An important issue I always bring up when the issue of corruption is discussed, it is like tango, it takes two for corruption. The one accepting it and the one offering it… and it is in my opinion, a mix of cultural issues as well as power imbalances and risk management.  

What I mean with risk? If the enforcer earns 100 and the issue at hand has a value of 1000, someone offers him 100 to look aside and if he gets caught no much happens… the incentive is clear. Now if the enforcer earns 1000 and if he gets caught he looses his job and gets publicly exposed… he is not going to accept 100 to risk 1000

If you expand this principle to other areas, is the same… I know people that are responsible for administering 5 million USD worth of catch access but earn lest that 40000 in a year… in no other area of management, you’ll see people earning less than 1% of the value of assets they manage… that is just not right and too much of a bait.

In any case here are some of the passages that I find more interesting of this article, and as my usual advice, read the original here.

Insights into how corruption hampers law enforcement in the governance of common-pool resources are currently limited. This article develops our understanding of this process through confidential interviews with enforcement officials in South African fisheries. First, it outlines how inspectors become ‘‘blind and corrupt’’: They receive bribes from fishermen in the form of finance, food, or friendship, which they pay back through inadequate enforcement, information sharing, or involvement. Second, it shows that widespread bribery increases the costs of remaining honest: Inspectors face corruption in the judiciary, which makes the writing of fines useless because these disappear from bribery among clerks and judges in the enforcement chain. Moreover, they face corruption in their organization, where substation managers and actors in top management are engaged in bribery, sending signals that corruption has small consequences. The article concludes by discussing how corruption distorts regulations and the implications for governing the commons.

How to achieve cooperation that entails welfare for the collective, yet requires restrictions on the behavior of individuals, is a puzzle that continues to engage political theorists. Hobbes posited that covenants – promises to follow agreements of engaging in certain behavior – require an external agent to enforce such pledges with the threat of force ([1651]). Yet, research on governance of the commons has found numerous examples of when individuals manage to limit their use of resources without relying on enforcement by an outside agent (e.g. Ostrom, 1990). An illustration of self-organized institutions enforcing rules on common-pool resources (CPRs) – resources that are under rivalry and where exclusion is difficult, such as irrigation schemes or fisheries – are for instance herders on pasture lands who monitor each other’s behavior and successfully impose sanctions on those who break their pledges. The literature has therefore described the two situations of externally governed or self-governed enforcement of commitments as ‘‘covenants with or without swords’’.

When corruption is present in CPR regimes with government-imposed regulations, bribery may distort management. However, current literature lacks knowledge on how the presence of corruption affects public officials’ choice to enforce or not enforce regulations. The aim here is to contribute theoretically and empirically by exploring the mechanisms in which this process takes place.

In order to do so, the article poses two questions for research: First, in what way does corruption corrode enforcement of state-imposed CPR regulations? Second, in what way does corruption pose a further enforcement dilemma for inspectors in government authorities responsible for imposing CPR regulations?

Guided by these questions this study reports a qualitative exploration of these enforcement agents’ perceptions. The focus is on the enforcement of CPR regulations in a corrupt context, the fisheries law enforcement in South Africa. Confidential interviews where performed with public inspectors at the Compliance Directorate, of the Department of Agriculture, Forestry and Fisheries (DAFF). Also former inspectors – no longer facing risks for speaking openly – are interviewed, as well as former senior managers of this directorate and key stakeholders. The study offers a contrasting perspective to the literature on corruption and environmental outcomes where most studies use countries as the unit of study. Such a focus risks simplifying this relationship since single indicators hardly capture variation in levels of corruption and environmental health within countries and across sectors. This study follows the research vein of existing but scarce interest on the role of bribery in the governance of natural resources on the local level.

This investigation provides theoretical nuances related to the first research question—in what way does corruption corrode enforcement. As fleshed out in these accounts, there are analytical categories that can improve our understanding of this process. Bribery involving resource users in this context seems to come in three distinct forms: finance, food, or friendship.

While these forms of bribes differ between each other – the first being monetary, the second being nonmonetary, and the third being an even more vaguely defined transaction – the three categories share that they all target inspectors to be blind to violations. These different forms of bribes illustrate that ‘‘corrupt behavior’’ – and more precisely, small-scale collusive corruption – may take varying shapes, ranging from material aspects to social practices. Moreover, the accounts suggest that the mechanisms in this process can be further nuanced analytically.

Enforcement agents seem to become blind in three different ways: Inspectors may engage in inadequate enforcement, practices that could include no monitoring at all, the intended misreporting of landings, or the systematic writing of faulty fines. They may also start to engage in information sharing, revealing details of secret operations. Finally, blindness to violations among such agents may take the shape of involvement, where enforcement officials take part in illegal actions through transporting goods, stealing catches, lending freezers for storage, or even poaching themselves.

Having found these mechanisms in the empirical accounts, it is also interesting to explore how they can be used to improve our theoretical understanding of this process. First, it can be noted that blindness could be understood through the work of Kahn et al. (2001). They make the conceptual distinction between temptations affecting a public official into two categories: shirking (the avoidance of duties) and corruption (the extraction of a bribe from an evader). The process of becoming blind and corrupt can therefore be seen as the process linking these phenomena. When an enforcement officer has received a bribe, this agent will shirk selectively to benefit certain resource users. Second, this more nuanced understanding of blindness to violations is important as it points to the fact that ‘‘not enforce’’ – one of the two choices of the state actor used in the game-like situations outlined by Gibson (1999) and Sjostedt (2014) – is a simplified understanding of defection in such interactions. It seems that blindness, rather than only a choice of not enforcing, consists of different strategies. This is illustrated in Fig. 3.

Here, I depict the three distinctive strategies that counter the choice to enforce regulations. Moreover, they differ from each other in their impact on other inspectors’ decisions, as there is possibly a rank order in how these different options affect management. Inadequate enforcement is the moderate obstacle for enforcement, affecting mostly the individual relationship between the inspector and a resource user. Information sharing on the other hand is understood as a larger impediment, potentially ruining other inspectors’ possibilities of enforcing regulations. Finally, the involvement of inspectors in poaching is perhaps the worst type of hurdle as it fundamentally turns the inspector into a complicit agent in the activities they should prevent. Moreover, the interviews inform us theoretically about the second question—how corruption becomes an obstacle in the inspectors’ enforcement work. First, inspectors face a context dilemma, making the writing of fines useless as these disappear from bribery among clerks and judges in the enforcement chain. Second, they face an organizational dilemma where substation managers and actors in top management of their own organization are known to be involved in corrupt behavior, thus further demotivating the inspectors. Signals from above indicate that it is accepted to enrich yourself and that there are few consequences if you get caught. This indicates that there are linkages from large-scale corruption that are important in order to understand the presence of small-scale practices of bribery.

Moreover, corruption in higher ranks of this organization renders whistle-blowing inefficient as inspectors risk telling someone involved in corruption. Also, becoming blind and corrupt gives advantages to individual inspectors as they become known among colleagues as people who can be included in shady transactions, sanctioned by substation managers. In tandem, the two dilemmas create disincentives to individual inspectors for honest behavior. Put differently, the choice of remaining honest and enforcing laws becomes much more costly for individuals when the presence of bribery has spread in the enforcement chain and in their own organization. In such settings it is more likely that enforcing agents will choose one of the defecting strategies discussed above. In relation to the findings of Akpalu et al. (2009) and de la Torre- Castro (2006) – showing that inspectors face social costs when enforcing regulations in a local community – this investigation helps us better understand bribery’s role in this relationship.

Much of the behavior that is analyzed in this article is taking place in a context with locally specific features. Yet, the key insights from this investigation are not necessarily limited to resources with the particular characteristics of the South African marine fisheries. The different forms of bribes discussed in this case – monetary as well as nonmonetary – may also be obstacles for enforcement in other settings where corruption is widespread. Moreover, the improved analytical depiction of the relationship between government inspectors and resource users may be used to better understand state-governed resource regimes with other characteristics, such as tropical forest reserves, where corruption may be a problem for management.

The insight that officers that enforce natural resource regulations are affected by corruption in the judiciary system as well as corruption within their own organization is also general enough to inform policy in a range of contexts and across various types of resource regimes. So what are the implications of these findings for our understanding of the governance of commons? On a more general level, the argument in this article was presented at the backdrop of the debate where scholars have depicted the choice of enforcement in CPR governance as one between covenants ‘‘with or without swords.’’ As a contrasting view this article has proposed that when bribery is prevalent in the agency imposing regulations on a CPR, this can be depicted as covenants ‘‘with broken swords.’’

As Table 1 illustrates, the situation of widespread corruption in law enforcement can be contrasted to the situation with a government enforcer with no corruption present. Importantly, the process outlined in this article clearly shows that in situations with corruption, the likelihood of achieving sustainable outcomes for management of CPRs is severely decreased. When regulations – the policy tools that are meant to steer behavior of resource appropriators – are not enforced due to widespread bribery, this will increase the probability of a ‘‘tragedy’’ where resources are overharvested.

Then how can the path in such situations be reversed? The results from the empirical investigation speaks to a general understanding among studies on corruption where government agents find it difficult to act honestly when bribery is endemic within and outside of the organization. The literature suggests that bureaucrats’ incentives for corrupt behavior is affected by perceptions of other bureaucrats’ behavior in the organization. This echoes previous findings where individual refusals to engage in bribery in a highly corrupt context are perceived as futile It is also compatible with an understanding that corruption can be described as a social dilemma, where it is rational for actors to partake in corrupt behavior if ‘‘everybody else’’ is perceived as doing it.

This is most likely an important point as it is imperative to keep such considerations in mind when discussing ways to reform corrupt authorities. For instance, as accounts indicated, corruption at the top of this department may influence the behavior of street-level employees. Reform programs targeting bribery among local enforcement officers on the ground may need to consider strategies where corruption in top management is also dealt with.

This article focuses on a problem that has been somewhat overlooked when political theorists and empirically oriented scholars have analyzed the challenge of monitoring in the governance of CPRs. While research holds that corruption produces suboptimal law enforcement, studies seldom investigate the way this takes place, and the government agents enforcing regulations are rarely at the center of analysis. It is here argued that corruption in enforcing authorities risks leading to a situation of covenants with broken swords. In such a condition, bribery corrodes the effectiveness of sanctions for noncompliance.

Using original data this article outlines some of the mechanisms of this process and develops our understanding of how widespread bribery becomes an enforcement obstacle. It also points to improvements in the analytical depiction of the relationship between government inspectors and resource users under widespread bribery. Illustrating the destructive effects from corruption on governance of the commons, these findings resonate a big challenge for scholars and policy-makers. How to tackle the fact that CPRs around the world – for instance, the tropical forest reserves that are key in global efforts to store carbon and protect biodiversity – are monitored by institutions that are infested with corruption?

Future research therefore has several tasks on its agenda.

First, to get a better diagnosis of this problem, it would be worthwhile to analyze if this case is comparable to other contexts. The research on corruption in local governance of CPRs still relies on a scarce number of in-depth studies and may benefit from a comparative approach across CPR regimes with external enforcing authorities. A pertinent issue for comparative research would be to disentangle the institutional circumstances under which we may find a situation of covenants with broken swords.

Second, to get an improved understanding of cures for such situations, it is essential to explore if there are institutional remedies that are successful in reducing corruption. There is also a need to study existing or future alternatives for monitoring when corruption in enforcement authorities is widespread. It has been said that ‘‘when state agencies are involved in corruption and rent-seeking, bottom-up initiatives may improve monitoring’’.

A future discussion on governance of CPRs would profit from investigating alternatives or complements to strategies of state-run enforcement of the commons.