Transparency International’s Corruption Perceptions Index: An Iraq-centric review

Transparency International’s much-awaited annual Corruption Perceptions Index (CPI) was released last month. This year, New Zealand emerged on top with an overall score of 89/100 while Somalia was ranked as the country with the highest levels of perceived corruption with a score of 9/100. The average global score was 43/100.[1]

Iraq’s ranking only slightly improved on last year’s result. The country’s overall score rose from 17/100 in 2017 to 18/100 in 2018, placing it 169^th out of a total of 180 countries. In the Middle East, the United Arab Emirates performed the best with a score of 71/100 and a global rank of 21^st.

A comparison of Iraq’s CPI score 2012-17

Some important points should be considered when analyzing the results: firstly, the CPI does not measure actual corruption, but rather perceptions of corruption among country experts and business leaders. Secondly, the surveys and assessments are not conducted by Transparency International (TI) per se. Rather, TI relies on the findings of a defined number of external assessments whose scores are standardised and aggregated to make up the CPI scores. Thirdly, the CPI scores for this year are predominantly based on assessments that were conducted in 2017. In some cases, surveys are conducted every 2 years so the last available data is from 2016.

How is Iraq’s CPI score calculated?

The CPI is an aggregate indicator that ranks countries based on the degree to which corruption is perceived to exist in the public sector. It relies on thirteen surveys[2] from organisations that are independent of Transparency International, including the World Bank and Freedom House. Three of the surveys are based on the opinions of local businesspeople, while the remaining ten sources are assessments from both resident and non-resident country experts. [3]

Iraq’s overall score is based on only 5 individual surveys since the remaining surveys either do not apply to Iraq, such as the African Development Bank assessment, or they have yet to incorporate Iraq, such as the World Economic Forum’s Executive Opinion Survey. In contrast, the UAE’s CPI score is based on 7 surveys while South Korea’s incorporates 10 surveys.

The table below shows a comparison of standardised scores for each of the five assessments that make up Iraq’s overall score from 2016 and 2017. Because each of the assessments uses a different scoring scale, the CPI standardises these scores using a mathematical calculation so that results can be compared and aggregated.

Below are brief descriptions of these five assessments:

1. Bertelsmann Foundation’s Transformation Index 2018 (BTI)

The Bertelsmann Foundation is a private German organization based in Gütersloh. It is primarily financed by the affiliated multinational corporation, the Bertelsmann Group, which specializes in mass media. The foundation has offices in Brussels, Barcelona and Washington DC.

The BTI is an expert assessment that is conducted by a small group of non-resident country experts. The initial assessment is conducted by a single researcher who is required to answer two questions pertaining to corruption:  To what extent are there legal or political penalties for stakeholders who abuse their positions?; and secondly, to what extent can the government successfully contain corruption? For each question, a score out of 10 is assigned by the country expert. In the BTI 2016 report, Iraq scored 2/10 for the first question, and 3/10 for the second.

A second unidentified expert then reviews the initial assessment and if necessary, offers an adjustment to the scores with valid justifications. Each country’s assessment is then reviewed by a regional coordinator before the board of the foundation, which is composed of some 20 European academics, makes a final decision on each country’s scores.

The CPI 2018 report relies on the forthcoming BTI 2017-2018 report, due to be published at the end of March. The full report will be made publicly available online[4]. Iraq’s standardised BTI score improved slightly from 20/100 in 2016 to 25/100 in 2017.

Economist Intelligence Unit Country Risk Service 2017 (EIU)

The Economist Intelligence Unit is the research arm of the London-based The Economist magazine. It is a global research and advisory firm that caters for businesses and policymakers worldwide. The Country Risk Ratings report is another expert assessment that is compiled by in-house specialists. On corruption, scores are given between 0 (very low incidence of corruption) to 4 (very high incidence of corruption). Reports are only available to clients and subscribers, thus there is limited public information available on the assessment process and the extent to which the EIU’s score is informed by on -the-ground insights.

Global Insight Country Risk Ratings 2016 (GI)

GI is a report produced by IHS Global Insight, a global information and consultancy company based in Washington, DC, that predominantly serves business clients. The GI incorporates six factors into its corruption assessment, namely political, economic, legal, tax operational and security risk. Scores assigned to each country are based on a qualitative assessment by in-house country specialists that typically rely on experts based in each respective country. The report is only available to clients and subscribers, so like the EIU report, it is difficult to ascertain the extent to which IHS specialists rely on experts within Iraq. Furthermore, since 2015, IHS has stopped providing Transparency International with the GI reports, so the data is accessed through the World Bank’s World Governance Indicators portal. The most recent data available is from 2016.

The ratings range from a minimum of 1.0 (maximum corruption) to 5.0 (minimum corruption). Iraq’s standardised GI score in 2017 remained unchanged at 10/100, which is the worst score out of the five assessments.

The PRS Group International Country Risk Guide 2017 (PRS)

Similarly, this report is published by a private risk consultancy based in Syracuse, New York. PRS produces a monthly country risk report that is only available to subscribers and assesses corruption within the political system. Scores range from 0 (highest potential risk) to 6 (lowest potential risk). The overall country score is calculated as an aggregate of quarterly assessments covering the period of August 2016 to August 2017.

Iraq’s standardised score remained unchanged at 15/100.

Varieties of Democracy 2017 (V-DEM)

This is another expert assessment that is organized by the University of Gothenburg, Sweden, and the University of Notre Dame, USA. Rather than relying on a single expert assessor, V-DEM incorporates the views of multiple locally-based organisations, although the identities of these organisations are not publicly disclosed. V-DEM seeks to answer the question: how pervasive is political corruption? Scores are assigned on a scale of 0 (low) to 1 (high). V-DEM’s most recent assessment scored Iraq 0.82, which equates to a standardised score of 20/100.

How can the CPI assessment for Iraq be enhanced?

There are three more sources recognized by Transparency International that could potentially include Iraq in their assessments but have yet to do so: the World Justice Project Rule of Law Index; the IMD World Competitiveness Yearbook; and the World Economic Forum Executive Opinion Survey (EOS). All three have incorporated several other Middle Eastern countries in their assessments. The latter two surveys in particular would enrich Iraq’s overall assessment because they are based on multiple surveys of businesspeople who operate inside the country. Their views would offer far more insight than the expert assessments conducted by specialists that are not based in Iraq and do not have regular interactions with public sector bureaucrats.

IMD is a Swiss-based university that specialises in business administration and produces the annual World Competitiveness Yearbook (WCY) that includes 63 countries around the world in its coverage. IMD works with local partner institutes to gauge the perceptions of business executives in each country through opinion surveys. Specifically on corruption, the WCY seeks to understand the extent of bribery. In the Middle East, IMD partners with 5 institutions including the Qatari Ministry of Development Planning and Statistics; the Jordanian Ministry of Planning; the Saudi Arabian Investment Authority; and the UAE’s Federal Competitiveness and Statistics Authority.

The World Economic Forum has a very similar approach to IMD, conducting over 40 opinion surveys with business leaders in each country of coverage. While the WEF insists on working solely with non-governmental organisations, in several instances their local partners are government bodies, including the Iranian Department of Economic Affairs and the UAE Department of Economic Development. In fact, the only Middle Eastern countries that have yet to be included by the World Economic Forum are Syria, Libya and Iraq. Despite official requests by Iraqi civil society organisations to collaborate, the WEF has so far declined to engage with Iraq.

In summary, Iraq’s CPI score has consistently remained in the bottom 5% of TI’s annual global ranking. A more rigorous assessment of perceptions of corruption in Iraq would be greatly enhanced by incorporating assessments that are based on the views of business executives who operate in Iraq.

[1]–https://www.transparency.org/news/feature/corruption_perceptions_index_2017

[2]–http://www.transparencykazakhstan.org/UserFiles/file/CPI_2009_methodology_eng.pdf

[3]–http://www.transparency.org/policy_research/surveys_indices/cpi/2009/faqs

[4]–http://www.bti-project.org/en/home/