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« From Latin America: The art of the intermediary | Main | Greece indicts 64 for Siemens bribes »
Tuesday
Mar102015

Belarus: Europe's last dictatorship, or a great investment opportunity?

Image courtesy of the Belarus governmentI’ve read the back-and-forth posts on the FCPA Blog about Colombia with great interest. In addition to teaching me something new, the discussion inspired me to promote another country that rarely makes it to the top of the foreign direct investment list -- Belarus.

On the Corruption Perceptions Index, Belarus is ranked 119. Not a good start for my argument. But considering that the CPI is based on perceptions, I feel justified inserting my opinions.

First, I’m biased. I’m an American but I was born in Belarus. I still have family and close friends there. It’s also my personal (and professional) goal to help stimulate investment in Belarus over the next decade.

Toward that end, I offer some personal experiences . . .

In 2012, I participated in the legal clinic at the Russian Customs Academy in St. Petersburg. After I told the clinic director that I was originally from Belarus, she floored me with her response: “That’s a harsh country, Belarus. Really harsh country. I mean, they don’t even take bribes there!”

Russians believe that Belarusian authorities don’t take bribes, and they consider it (jokingly, perhaps) a bad thing! But should we believe that?

When my friend -- who I'll call “Bilya” -- was nineteen and celebrating New Year’s in Minsk, the celebration went too far. Bilya found himself face-to-face with a “militiaman” at 5 in the morning. Militiamen are essentially national police.

Despite having disturbed the peace in a few embarrassing ways, Bilya wasn't arrested. The militiaman decided to let him go. Grateful for the outcome, Bilya turned to the militiaman and asked, “Is there a fine?”

“What?” the militiaman responded.

“Is there a fine that I have to pay?”

The militiaman stared at Bilya for a couple of moments and just commanded, “Go home!”

In the sober light of the next day, Bilya appreciated what the militiaman had done for him. Being arrested in a foreign country is never a good thing. And though Bilya certainly wasn’t trying to pay a bribe, a corrupt law enforcement official could have easily spun it that way.

And this anecdote brings us to a more objective analysis. Shouldn’t any evaluation of a country’s corruption begin at street level -- with its law enforcement officials?

The policy in Belarus is that by compensating militiamen handily (and punishing militiamen who break the laws), the government will strongly discourage the taking of bribes.

Yes, Belarus has plenty of room to improve its investment climate. But perhaps there’s a better foundation for FDI than would meet the eye.

In coming posts, I'll talk further about why Belarus should be regarded as more than just “the last dictatorship of Europe.”

________

Ilya Zlatkin is a Chicago attorney focusing on business planning, intellectual property, and international entrepreneurship. He's also a Certified Fraud Examiner. He can be contacted here.

Reader Comments (2)

Ilya,

That was an interesting post. Thanks for sharing. Yes, I do concede that my 'perception' of Belarus is that its corrupt due to its proximity to Russia and the perceived oligarchy that runs that country. But that leads to me to my question, who's 'perception' contributes to the Corruption Perception Index? Your Belarusian background and ground experience suggests that the perceptions of those of us that have never been to that nation (like me) should be labeled as just that, perceptions, and nothing more. Now I am going to the Corruptions Perceptions Index to read about its methodology....

Thanks,
Art
March 11, 2015 | Unregistered CommenterAM2015
Thank you for the comment, Art!

To be clear, I am not trying to discredit the CPI completely. I can't defend a position that Belarus is more transparent than Western countries. It certainly is not. I have found, however, that those living in the former Soviet Union (Belarusians included) assume that corruption is rampant in their country. When probed further, Russians typically cite paying off the traffic police. I would say that's an area that sees far less bribery in Belarus (though, of course, I'm sure it still exists, as it does in every country). And yet, Belarusians think that they live in a corrupt country, which surely impacts the CPI rank. In the coming couple of weeks, In future posts, I hope to have some more anecdotes from people who live and work there currently, addressing compliance concerns in white collar industries. I want to paint an objective picture from subjective experiences.

Ultimately, somebody had to end up ranked 119 on the CPI. I just hope that potential investors won't view this ranking as an insurmountable obstacle.

Thanks again,
Ilya
March 12, 2015 | Unregistered CommenterIlya Zlatkin
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