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As in Ukraine, corruption and national decline go hand in hand

In the Tunisian uprising, the opening shot of the Arab Spring revolutions, Tunisians took great joy in looting the palace of ousted dictator Zine el-Abidine Ben Ali. They found masses of gems and gold. False library doors were pried open to reveal enormous stashes of banknotes. A man with a forklift scooped up the dictator's yellow Ferrari and trundled off. "It's our money," the looters said.

And it was. In Ukraine, would-be looters were replaced by awe-struck spectators who politely toured the country retreat of president Viktor Yanukovych, now in exile in Russia. According to The Times of London, they were careful not to tread on the grass and left the riches alone. The luxury collection included gold taps, a garage stuffed with more than 70 cars and motorcycles, aviaries housing rare birds, a zoo and a faux Spanish galleon, 45 metres long, moored in a creek and apparently used as a dining and gaming barge.

Mr. Yanukovych was not born rich. He did it the old-fashioned way – he apparently stole his way to obscene wealth. Suspected of theft and money laundering on an epic scale and wanted on suspicion of murder in last week's violent clashes that left at least 80 dead, the prosecutor-general's office in Kiev is seeking his extradition and several countries, among them Switzerland, are freezing his assets and bank accounts.

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I have never been to Ukraine and can't pretend to understand its geopolitical and ethnic tensions. But I suspect some of the explanations for the protests are somewhere between partly right and incidental. Are the protesters freedom fighters who despise Russian President Vladimir Putin (whose military forces may be on the verge of taking control of Russian-speaking Crimea, home to their Black Sea naval fleet)? Or are they pro-European and pro-American zealots bent on prying Ukraine from Russia's orbit? In a press conference from Rostov-on-Don, Russia, on Friday, Mr. Yanukovych blamed "pro-fascist" forces for his country's woes.

As much as anything, I suspect Ukrainians are just fed up with their declining living standards as they watch the ruling elite and their oligarch buddies shop for gold bathroom fittings. Ukraine shares more than a few traits with other countries that have seen revolutions, uprisings or mass protests. Many, perhaps most, are poor countries with a lot of very rich people. Their corruption readings (or perceptions of corruptions) are generally grim. Transparency International ranks Ukraine a lowly 144th out of 175 for corruption.

No revolution or mass revolt is the same, of course, but rising wealth among the few and declining or static living standards among the many seem to light the fuses connected to the powder kegs. The "People Power" movement in the mid-1980s in the Philippines drove one of history's great kleptocrats, Ferdinand Marcos, into exile. His reign will be forever associated with wealth so vast and vulgar that it was laughable. Some 2,700 pairs of shoes owned by Imelda Marcos were found when the presidential palace was seized.

The palaces of Libyan strongman Moammar Gadhafi, who was killed in October, 2011, and his sons were also sacked, revealed another mind-boggling kleptocracy. In Egypt, the regime of Hosni Mubarak was routinely ranked as one of the most corrupt in the world. Various reports said Mr. Mubarak and his family had amassed as much as $70-billion (U.S.) in wealth from military kickbacks and the like. Romanian dictator Nicolae Ceausescu, executed in 1989 on charges of genocide and shameless theft, had built 15 palaces, including the 1,100-room Palace of the Parliament in Bucharest. His official salary was the equivalent of $3,000 a year.

The lesson: If you're going to make yourself as rich as Croesus, don't do it while you push your people into poverty.

The political elite of countries such as Greece and Italy are lucky they have not been flattened by popular rage. Italy ranks 69th on Transparency International's corruption index, below Montenegro, Ghana and Saudi Arabia (the Scandinavian countries and New Zealand are considered the least corrupt).

Italians are notorious tax evaders, which does not necessarily imply rampant dishonesty; just as likely, it means they're weary of subsidizing a government and bureaucracy that is bloated, inefficient, hidebound, rabidly protective of their jobs and lavishly paid. If Italian middle-class living standards continue to decline, the uprising will come. It's just a matter of time, all the more so since no recent government – there have been five since the 2008 crisis year – has made any headway in combating corruption, from petty kickbacks in exchange for business permits to the Mafia's infiltration of entire industries.

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Widespread corruption and national decline go hand in hand. How to stop it? There is no easy answer, but it can be no coincidence that the countries with open economies and a strong rule of law rank low on the corruption scale and high on standards of living, like the Scandinavian countries. In Italy, about 60 permits are required to open a simple, street-level business. If bribes were not paid and favours not awarded, launching a business would be next to impossible. A reduction in the bureaucratic red tape would reduce the opportunity for bribery demands.

The Ukrainian people may end up with a divided country. If they're lucky, they'll end up with one that isn't a shakedown racket designed to keep enriching those with political and economic power.

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About the Author
European Columnist

Eric Reguly is the European columnist for The Globe and Mail and is based in Rome. Since 2007, when he moved to Europe, he has primarily covered economic and financial stories, ranging from the euro zone crisis and the bank bailouts to the rise and fall of Russia's oligarchs and the merger of Fiat and Chrysler. More

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