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Corruption in the Customs: Two stages and the turning point in Serbia

Corruption in the Customs: Two stages and the turning point in Serbia. by Boris Begovic Center for Liberal-Democratic Studies 11 th IACC 28 th May 2003, Seoul. Stage One: Black Knight ’s Motives. Rational dictators Motive I: wealth maximization Motive II: survival

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Corruption in the Customs: Two stages and the turning point in Serbia

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  1. Corruption in the Customs: Two stages and the turning point in Serbia by Boris Begovic Center for Liberal-Democratic Studies 11th IACC 28th May 2003, Seoul Center for Liberal-Democratic Studies

  2. Stage One: Black Knight’s Motives • Rational dictators • Motive I: wealth maximization • Motive II: survival • Controllable cash-flow • Cronies – hostages • Preventing palace coup Center for Liberal-Democratic Studies

  3. The Environment • International embargo • “Non-cooperative” international community • Protectionism • High and complicated tariff rates • Non-tariff barriers • Complicated procedures Center for Liberal-Democratic Studies

  4. The Turning Point • Political Change • No criminal cases • No mass labour shedding • Human capital reshuffling • No organized and state-sponsored corruption/crime • New, different signals Center for Liberal-Democratic Studies

  5. The Change Center for Liberal-Democratic Studies

  6. The MechanismBefore • Avoiding customs procedure altogether • Avoiding customs levies altogether • “Predatory” pricing and/or rent appropriation • Police escort of the lorry • Lower customs official blackmailed • Vertical organisation Center for Liberal-Democratic Studies

  7. The Mechanism After • False invoices • forged document • false firm • Decreasing value of the merchandise • Data bank is under construction • Decreasing customs duties • Earning some rent • Traces (documents) Center for Liberal-Democratic Studies

  8. straightforward high profile low skills needed young lions no traces no risk no change sophisticated low profile high skills needed experienced old hands hard traces high risk constant change Before and After Center for Liberal-Democratic Studies

  9. The Necessary Conditions • Foreign trade liberalization • Foreign trade deregulation • Good side effect • Breaking with the past • Reversing the flow • Creating the new reputation Center for Liberal-Democratic Studies

  10. The Perquisites • Government fights the corruption • Political will • Forward looking breaking with the past • The meaning of (ultimate) justice • There is no free lunch • Some price must be paid Center for Liberal-Democratic Studies

  11. The Reports • Fighting Corruption in the Customs Administration: download pdf file from www.CLDS.org.yu • CLDS stands for Center for Liberal-Democratic Studies, Belgrade, Serbia • Project was funded by the US based CIPE and NED Center for Liberal-Democratic Studies

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