State capture is a type of systemic political corruption in which private interests significantly influence a state's decision-making processes to their own advantage.

The term was first used by the World Bank, around the year 2000, to describe the situation in certain Central Asian countries making the transition from Soviet communism. Specifically, it was applied to situations where small corrupt groups used their influence over government officials to appropriate government decision-making in order to strengthen their own economic positions; these groups' members would later become known as oligarchs.[1]

Allegations of state capture have led to protests against the government in Bulgaria in 2013–2014 and in 2020–2021 and Romania in 2017,[2] and have caused an ongoing controversy in South Africa beginning in 2016.

Defining state capture

The classical definition of state capture refers to the way formal procedures (such as laws and social norms) and government bureaucracy are manipulated by government officials, state-backed companies, private companies or private individuals, so as to influence state policies and laws in their favour.[3]

State capture seeks to influence the formation of laws, in order to protect and promote influential actors and their interests. In this way it differs from most other forms of corruption which instead seek selective enforcement of already existing laws.[3]

State capture is not necessarily illegal, depending on determination by the captured state itself,[4] and may be attempted through private lobbying and influence. The influence may be through a range of state institutions, including the legislature, executive, ministries, and the judiciary, or through a corrupt electoral process. It is similar to regulatory capture but differs in the scale and variety of influenced areas and, unlike regulatory capture, the private influence is never overt.[5]

A distinguishing factor from corruption is that, though in cases of corruption the outcome (of policy or regulatory decision) is not certain, in cases of state capture the outcome is known and is highly likely to be beneficial to the captors of the state. In 2017, a group of South African academics further developed the concept in a report on state capture in South Africa, titled "Betrayal of the Promise Report".[6] The analysis emphasised the political character of state capture, arguing that in South Africa a power elite violated the Constitution and broke the law in the service of a political project, which they believed unachievable in the existing constitutional/legal framework.

Examples by country

Bulgaria

Protests in Bulgaria in 2013–14 against the Oresharski cabinet were prompted by allegations that it came to power due to the actions of an oligarchic structure (formerly allied to Boyko Borisov) which used underhand maneuvers to discredit the GERB party.[7] Conversely, in 2020 large anti-GERB protests broke out, accusing Borisov and his party of once again allying themselves with oligarchic organizations, permitting corruption and undermining political opposition.[8] Press freedom in Bulgaria diminished to the point it was rated worst in the EU;[9] one oligarch, Delyan Peevski, controls close to 80% of the newspaper distribution market.[10] Bulgaria's exposure to oligarchic networks has had a negative impact, most significantly in the area of energy policy. The close proximity between Bulgarian and Russian elites is largely underpinned by Russia's significant economic presence in Bulgaria, with Gazprom being Bulgaria's sole natural gas provider and Rosatom having a dominant position in the country's nuclear sector. As Russia has increased influence over Bulgaria's economy, it has used dominant positions in strategic sectors to strengthen relationships and cultivate new ones with corrupt businessmen and local oligarchs. This has allowed for access to prominent politicians, over which they are able to exert considerable control.[11]

Hungary

Hungary's state capture began in 2010, when the former opposition party, Fidesz–KDNP, won the requisite two-thirds of the vote in the parliamentary election. This gave the party the power to manipulate the country's constitutional law and influence the Constitutional Court. Eventually, parliamentary election laws were changed to benefit the new governing party and keep them in power. Fidesz quickly instituted a system of clientelism: different government contracts and top positions in state institutions have almost exclusively been granted to organizations and individuals with connections and loyalty to the government. Funding for independent media has been cut,[12][13] while state-owned and pro-government press have received grants and advertising expenditures. The government is keen to give up the Norway Grants founding (~ €200 million) just to impede the government independent support to the civil society, that is ~10% of the grant.[14][15] The pro-government media organization, the Central European Press and Media Foundation (KESMA[16] in Hungarian) largely dominates the media landscape,[17] and as a result a significant number of Hungarians only consume government-controlled media.[18] This group forms the most important voting bloc for Fidesz.

Government propaganda applies classical Machiavellian cunning, regularly using war terms and touts three ostensible public enemies: "Brussels", "migrants" and "George Soros".[19] Altogether, these proceedings led to electoral victories by a two-thirds majority for Fidesz in 2014 and again in 2018, resulting in increasingly unrestricted possibilities for the administration.[20] Recently (2021) the governmental party assigned the LGBTQ society as enemy of the "nation" to its voting bloc.[21]

Finally, while a large number of central and eastern European states seek to minimize energy dependence on Russia, Hungary has moved in the opposite direction, entering into a nuclear energy deal with Rosatom in 2014. Let down in part by the European Commission, who potentially assisted Hungary in identifying loopholes to green-light construction,[22] Hungary has allowed Russian influence to grow. Russian influence-seeking activities are clearly identifiable, with the Kremlin aiming to increase Russian involvement in the Paks II project at every opportunity. One primary example involves Russian businesses who were active in pushing Hungarian businesses and/or businesspeople out of companies that were linked to the project. At the state level, Hungarian Prime Minister Viktor Orbán has been a keen advocate of Russia, taking a stance on subjects such as Ukraine that seemingly follow the Russian narrative. Meanwhile, a lack of transparency is a key concern, with contracts relating to Paks II having been won by Hungarian business elites and companies owned by their families. Furthermore, Orbán's government has made certain aspects of the Paks II contracts confidential.[23] This has led to uncertainty in terms of Russian retaliation, should Hungary decide to back away from the project. However, it is likely that the Paks II project will gain approval from the Hungarian Atomic Energy Authority in 2021, allowing for the deepening of bilateral relations and increased risk of serving Russian interests through the creation or alternation of Hungarian policy surrounding the project.

Latin America

Instances where politics have been ostensibly deformed by the power of drug barons in Colombia and Mexico are also considered as examples of state capture.[1] Both Argentina and Bolivia have been the subject of Russian strategic corruption efforts by its usage of corrosive capital. While the Kremlin has used similar strategies in Argentina and Bolivia, it has adopted strategies that suit local conditions. In Argentina, political decision-making is more dispersed, while transfers of power are more frequent, making large-scale, long-term projects more difficult to implement. Therefore, in Argentina, Putin has used trade as a bargaining chip. In 2015 Argentina the television license for RT, to which the Kremlin retaliated by threatening to ban Argentine beef exports and suspend investment projects; several weeks later, RT was officially allowed to continue operating. In Bolivia, power is concentrated, allowing Russian state-owned companies deeper traction, pushing through projets with no significant resistance. Therefore, the Kremlin strategy in Bolivia has been to maximise influence by focusing on strategic markets and long-term infrastructure deals.[24]

United States

Former President Donald Trump and his administration have faced allegations of attempting state capture and colluding with foreign powers (including Russian officials) to increase the political and financial gain of individuals in the administration.[25] Attempted state capture under Donald Trump's administration has been referred to as "thugocracy," due to his connections with organized crime. An increasing amount of evidence has linked Donald Trump, the Trump Organization and its associates to criminal enterprises; according to Nancy Ries, "these [connections] exemplify the core nature of Trump's business practices and projects and help characterize Trump's political aims".[25]

Western Balkans

State capture in the Western Balkans has been undermining the EU enlargement process, strengthening ruling parties and weakening independent institutions and political opposition.[26][27]

For instance, through clientelist networks and loyalty-based appointments, the ruling party of Serbia, the Serbian Progressive Party, has effectively captured the state, resulting in the country losing its status as a 'free' country according to the Freedom House Index.[28]

South Africa

In May 2017, a group of academics convened by Mark Swilling and including Ivor Chipkin, Lumkile Mondi, Haroon Bhorat and others, published the "Betrayal of the Promise" report, the first major study of state capture in South Africa.[6] It helped galvanise civil-society opposition to the unconstitutional developments in South African civil-society responses.[29] The analysis was further developed in the book Shadow State: The Politics of State Capture written by Chipkin and Swilling.[30]

The 2017 book How to Steal a City details state capture within the Nelson Mandela Bay Metropolitan Municipality in South Africa during the Zuma government.

Gupta family

The pattern [of state capture] is a simple one. "You remove management, and put in compliant management. You remove boards, and put in boards that are compliant. The rest is very easy. That has been the scenario at state-owned enterprises.

- Mcebisi Jonas, former Deputy Finance Minister; explaining the process of state capture.[31]

In 2016, there were allegations of an overly close and potentially corrupt relationship between the wealthy Gupta family and the South African president Jacob Zuma, his family and leading members of the African National Congress (ANC).[32][33][34][35]

South African opposition parties have made claims of "state capture" following allegations that the Guptas had inserted themselves into a position where they could offer Cabinet positions and influence the running of government.[36] These allegations were made in light of revelations by former ANC MP Vytjie Mentor and Deputy Finance Minister Mcebisi Jonas that they had been offered Cabinet positions by the Guptas at the family's home in Saxonwold, a suburb in Johannesburg.[37]

A COSATU protester in Cape Town holding a protest placard calling for the prosecution of "all people involved in the state capture activities." The protest was against government corruption and state capture in the administration of South African President Jacob Zuma.[38]

Mentor claimed that, in 2010, the Guptas had offered her the position of Minister of Public Enterprises, provided that she arranged for South African Airways to drop their India route, allowing a Gupta-linked company (Jet Airways) to take on the route.[39][40] She said that she declined the offer, which occurred at the Guptas' Saxonwold residence, while President Zuma was in another room. This came a few days before a cabinet reshuffle in which minister Barbara Hogan (then Minister of Public Enterprises) was dismissed by Zuma. The Gupta family denied that the meeting took place and also denied offering Vytjie Mentor a ministerial position,[41] while President Zuma claimed that he had no recollection of Mentor.[42]

Deputy Finance Minister Jonas said that he had been offered a ministerial position by the Guptas shortly before the dismissal of Finance Minister Nhlanhla Nene in December 2015, but had rejected the offer as "it makes a mockery of our hard-earned democracy‚ the trust of our people and no one apart from the President of the Republic appoints ministers."[43] The Gupta family denied offering Jonas the job of Finance Minister.[44] In 2016, Paul O'Sullivan's 'Forensics for Justice' published a report, which alleged that South Africa's criminal justice system had been "captured" by the underworld.[45]

Following a formal complaint submitted in March 2016 by a catholic priest, Father Stanslaus Muyebe,[46] the Guptas' alleged "state capture" was investigated by Public Protector Thuli Madonsela. President Zuma and Minister Des van Rooyen applied for a court order to prevent the publication of the report on 14 October 2016, Madonsela's last day in office.[47] Van Rooyen's application was dismissed, and the President withdrew his application, leading to the release of the report on 2 November 2016. On 25 November 2016, Zuma announced that the Presidency would be reviewing the contents of the state capture report.[48] He said it "was done in a funny way" with "no fairness at all," and argued he was not given enough time to respond to the public protector.[49]

Zuma and Van Rooyen denied any wrongdoing[50] whilst the Guptas disputed evidence in the report and also denied being involved in corrupt activities.[51][52][53][54] In an exclusive interview with ANN7 (belonging to the Gupta Family), President Zuma said that 'state capture' was a fancy word used by media houses for propaganda proliferation. He said that a real state capture would include seizure of the three arms of the constitution—Legislative, Executive, and Judiciary—which has never been the case in South Africa.[55]

The report recommended establishment of a judicial commission of inquiry into the issues identified,[56] including a full probe of Zuma's dealings with the Guptas, with findings to be published within 180 days. In May 2017, Jacob Zuma denied the allegation of blocking an attempt to set up a commission of inquiry to probe state capture.[57] The report led to the establishment of the Zondo Commission of Inquiry in 2018, set up to investigate allegations of state capture in South Africa.

Economic impact

On 11 September 2017, former Finance Minister Pravin Gordhan estimated the cost of state capture at 250 billion rand (almost $17 billion USD), in a presentation at the University of Cape Town Graduate School of Business.[58] The Daily Maverick, a South African news publication, estimated that state capture cost the country roughly R1.5 trillion (roughly US$100 billion) in the four years preceding 2019.[59] South African Reserve Bank economist David Fowkes stated that the negative impact of state capture on the country's economy was worse than expected, stating that it likely reduced GDP growth by an estimated 4% a year.[60]

Russian involvement in SA state capture

Allegations of state capture were also known to have increased as the relationship between South Africa and Russia grew, resulting in a partnership that increasingly impacted upon the decision-making process of the African state. Soon after President Zuma took office, Moscow attempted to make inroads into Africa, all the while capitalizing on a South African leader who had extensive Soviet Bloc connections. The transactional nature of the relationship began when President Zuma pushed to be included in the BRIC grouping during the financial crisis, receiving important backing from the Kremlin which ultimately led to President Zuma attending his first BRICS meeting in 2011.[61] The Kremlin also worked to establish ties between the two states’ security services, with some suggesting that President Zuma had sought to implement state surveillance capabilities with Russia's help.[62] Finally, amid countrywide debate surrounding the future electrical need of South Africa, the Russian state nuclear cooperation, Rosatom, offered to provide up to nuclear reactors, despite it making it little economic sense for the Russian company to intervene.[62]

Kenya

In May 2019, reports of state capture in Kenya started emerging. Inside Kenya's Inability to Fight Corruption,[63] which was published by Africa Centre for Open Governance (AfriCOG) highlighted the issue, outlining why President Uhuru Kenyatta's anti-corruption measures were not working. This was attributed to state capture where state institutions had been repurposed for private profiteering mainly by the first family.[63] The study concluded that public-driven prosecutions, rampant in Kenya, were likely to worsen corruption rather than reduce it.

In June 2022, UDA presidential candidate William Ruto (now the current president) stated that he would end state capture in Kenya if he took office after the August 2022 General Elections. He claimed he would form a quasi-judicial public inquiry within 30 days to establish the extent of cronyism and state capture in the nation and make recommendations.[64]

See also

References

  1. 1 2 Crabtree, John; Durand, Francisco (2017). Peru: Elite Power and Political Capture. London, United Kingdom: Zed Books Ltd. p. 1. ISBN 978-1-78360-904-8.
  2. ↑ "Romanian Democracy at Grave Danger".
  3. 1 2 Hellman, Joel S.; Jones, Geraint; Kaufmann, Daniel (September 2000). "Policy Research Working Paper 2444: "Seize the State, Seize the Day": State Capture, Corruption, and Influence in Transition" (PDF). The World Bank.
  4. ↑ Kaufmann, Daniel; Vicente, Pedro C. "Legal Corruption (October 2005)" (PDF). Retrieved 7 April 2017.
  5. ↑ World Bank (2000). Anticorruption in Transition: Contribution to the Policy Debate. World Bank Publications. ISBN 9780821348024.
  6. 1 2 State Capacity Research Group. 2017. "Betrayal of the Promise Report." Johannesburg: Public Affairs Research Institute
  7. ↑ "Политическата криза и дневният ред на промяната (pp.1–2)" (PDF) (in Bulgarian). iris.bg. 17 June 2013. Archived from the original (PDF) on 27 June 2013. Retrieved 2 March 2014.
  8. ↑ "Bulgarian PM reshuffles government in bid to quell protests". Reuters. 2020-07-23. Retrieved 2020-07-23.
  9. ↑ "They will leave me jobless.’ Why declining press freedom in Bulgaria should worry us all". Retrieved: 7 June 2021.
  10. ↑ Bulgarian independent media operating in a ‘captured state’, International Press Institute (18 February 2020). Retrieved: 7 June 2021.
  11. ↑ Conley, Heather A.; Stefanov, Ruslan; Mina, James; Vladimirov, Martin (2016). "Appendix" (PDF). The Kremlin Playbook: 36–63. JSTOR resrep23311.13.
  12. ↑ "Hungary's largest paper Nepszabadsag shuts, alleging pressure". BBC News. BBC News. October 11, 2016. Retrieved May 1, 2021.
  13. ↑ Marton, Dunai (April 10, 2018). "Major Hungarian opposition newspaper to close after Orban victory". Reuters. Retrieved May 1, 2021.
  14. ↑ "Hungary loses Norwegian funds as rule-of-law concerns intensify". politico.eu. 24 July 2021. Retrieved 24 July 2021.
  15. ↑ "No agreement reached on EEA and Norway Grants funding for Hungary". regjeringen.no. 24 July 2021. Retrieved 24 July 2021.
  16. ↑ "Közép Európai Sajtó és Média Alapítvány". Cepmf.hu. Retrieved 2022-08-01.
  17. ↑ "Things do not improve". Reporters Without Borders. 19 September 2020. Retrieved 19 September 2020.
  18. ↑ "The Art of Media War - This is how Viktor Orbán captured the free press in Hungary". 444.hu Pál Dániel Rényi. 28 February 2022. Retrieved 28 February 2022.
  19. ↑ "George Soros and his network are doing everything possible to overthrow governments that are resisting immigration". kormany.hu Cabinet Office of the Prime Minister. 10 March 2018. Retrieved 8 August 2018.
  20. ↑ "Our testimony about the state of the Hungarian media before the LIBE committee of the European Parliament". 444.hu. 7 November 2019. Retrieved 7 November 2019.
  21. ↑ "EU Begins Legal Action Against Hungary Over its Anti-LGBTQ Law". time.com. 24 July 2021. Retrieved 24 July 2021.
  22. ↑ Valero, Jorge (22 November 2017). "Commission told Hungary how to win approval for Russia-backed nuclear plant". www.euractiv.com.
  23. ↑ Istrate, Dominik. "RUSSIAN INFLUENCE IN HUNGARY: THE CASE OF PAKS 2 AND THE KREMLIN'S INFLUENCE SEEKING EFFORTS THROUGH NUCLEAR ENERGY" (PDF). EUROPEAN VALUES CENTER FOR SECURITY POLICY.
  24. ↑ Stefanov, Ruslan; Vladimirov, Martin (November 2020). "Deals in the Dark: Russian Corrosive Capital in Latin America" (PDF). National Endowment for Democracy.
  25. 1 2 Ries, Nancy (1 October 2020). "Thugocracy: bandit regimes and state capture". Safundi. 21 (4): 473–485. doi:10.1080/17533171.2020.1832804. S2CID 228963796.
  26. ↑ Lemstra, Maarten. "The Destructive Effects of State Capture in the Western Balkans" (PDF). Clingendael.
  27. ↑ Djokić, Katarina; Djordjević, Saša; Ignjatijević, Marija (2020). "State Capture in Serbia — A Conceptual and Contextual Introduction". Security Sector Capture in Serbia. Belgrade Centre for Security Policy: 11–19.
  28. ↑ "Nations in Transit 2020" (PDF). Freedom House.
  29. ↑ Chipkin, Ivor. n.d. "The end of tyranny: South Africa’s civil society fights back." OpenGlobalRights. Retrieved on 2021 March 21.
  30. ↑ Chipkin, Ivor, and Mark Swilling, et al. 2018. Shadow State: The Politics of State Capture. Johannesburg: Wits University Press.
  31. ↑ Cairns, Patrick (12 October 2017). "Jonas: All institutions in SA are under threat". Moneyweb.co.za. Retrieved 2017-10-12.
  32. ↑ "Zuma allies 'break ranks' with him over Guptas". Rand Daily Mail. 1 February 2016. Retrieved 9 February 2016.
  33. ↑ Wild, Franz (17 December 2015). "Gupta family seen as symbol of Zuma's failing rule". Sunday Times. Retrieved 9 February 2016.
  34. ↑ "Who are the Guptas?". BBC. 14 May 2013. Retrieved 7 February 2016.
  35. ↑ Munusamy, Ranjeni (1 February 2016). "Keeping Up with the Guptas: What's behind the anti-Saxonwold revolt". Daily Maverick. Retrieved 9 February 2016.
  36. ↑ "Parliament must deal with 'state capture' – DA". News24.com. 27 March 2016. Archived from the original on 12 August 2018. Retrieved 30 March 2016.
  37. ↑ "Zuma defends relationship with Guptas – report". News24.com. 23 March 2016. Archived from the original on 4 December 2019. Retrieved 30 March 2016.
  38. ↑ "Cosatu Protest: Future of the alliance on the line | Daily Maverick". www.dailymaverick.co.za. 26 September 2017. Retrieved 2017-09-27.
  39. ↑ "Vytjie Mentor: I can prove Zuma was with me in the Gupta house". Rand Daily Mail. 17 March 2016. Retrieved 10 April 2016.
  40. ↑ "'Zuma said it's OK Ntombazana,' says former ANC MP Vytjie Mentor". Times Live. 18 March 2016.
  41. ↑ Khoza, Amanda (15 March 2016). "Gupta family denies offering former ANC MP top job". news24. Retrieved 24 June 2016.
  42. ↑ Khoza, Amanda; Tandwa, Lizeka (15 March 2016). "Zuma has 'no recollection' of Mentor - Presidency". news24. Retrieved 24 June 2016.
  43. ↑ "Full statement by Deputy Finance Minister Mcebisi Jonas on Gupta job offer". The Sowetan. 16 March 2016.
  44. ↑ "Gupta family denies offering Jonas South Africa's finance minister role". Reuters. 16 March 2016. Archived from the original on August 17, 2016. Retrieved 24 June 2016.
  45. ↑ "Joining the dots: Capture of the criminal justice system". Forensics for Justice. Paul O'Sullivan. Retrieved 12 February 2019.
  46. ↑ "State Capture Report 2016". Scribd. Retrieved 7 May 2019.
  47. ↑ "Zuma halts Madonsela's state capture report". eNCA. 13 October 2016.
  48. ↑ "Zuma to take state capture report on review". CityPress. Retrieved 2016-12-08.
  49. ↑ Williams, Denise. "Zuma to launch a review on Madonsela's state capture report". The Citizen. Retrieved 2016-12-08.
  50. ↑ Parkinson, Joe; Steinhauser, Gabriele (6 November 2016). "South Africa report cites 'worrying' signs of government corruption". Wall Street Journal. Retrieved 1 December 2016.
  51. ↑ "#StateCapture report: Molefe-Gupta ties revealed | IOL". Retrieved 2016-12-25.
  52. ↑ Reuters Editorial. "South Africa's Guptas to challenge influence-peddling report at inquiry". Reuters India. Retrieved 2016-12-25. {{cite news}}: |author= has generic name (help)
  53. ↑ Macharia, James (3 Nov 2016). "South Africa's Guptas to challenge state capture report at inquiry". CNBC Africa. Retrieved 1 December 2016.
  54. ↑ Dzonzi, Mike Cohen, Thembisile Augustine. "Gupta bombshell: Zuma on the ropes after Gordhan's gloves come off". The M&G Online. Retrieved 2016-12-25.{{cite news}}: CS1 maint: multiple names: authors list (link)
  55. ↑ Africa News Network 7 TV (2017-11-13), #StraightTalk: ANN7 exclusive interview with Pres Jacob Zuma, retrieved 2017-11-21{{citation}}: CS1 maint: numeric names: authors list (link)
  56. ↑ "State Capture Report: What John Cena Wants Inquiry to Probe". EWN. 3 November 2016.
  57. ↑ "Zuma denies blocking state capture probe | IOL News". Retrieved 2017-10-16.
  58. ↑ reporter, Citizen. "R250bn lost to state capture in the last three years, says Gordhan". The Citizen. Retrieved 2017-11-29.
  59. ↑ Merten, Marianne (28 February 2019). "ANALYSIS: State Capture wipes out third of SA's R4.9-trillion GDP – never mind lost trust, confidence, opportunity". Daily Maverick. Retrieved 2019-06-09.
  60. ↑ Maguban, Khulekani (2019-06-06). "Damage from state capture 'worse than suspected' - SARB". Fin24. Retrieved 2019-07-29.
  61. ↑ Weiss, Andrew S.; Rumer, Eugene (1 December 2019). "Nuclear Enrichment: Russia's Ill-Fated Influence Campaign in South Africa" (PDF). Carnegie Endowment for International Peace. Retrieved 6 January 2021.
  62. 1 2 Weiss & Rumer 2019, p. 9
  63. 1 2 Maina, Wachira (May 2019). "State Capture: Inside Kenya's Inability to Fight Corruption". Africa Centre for Open Governance. Retrieved 2022-07-20.
  64. ↑ "Kenya Kwanza Manifesto: DP Ruto promises to end state capture". Citizen Digital. 2022-06-30. Retrieved 2022-07-20.

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