Rotten States?: Corruption, Post-Communism, and Neoliberalism

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Official corruption has become increasingly prevalent around the world since the early 1990s. The situation appears to be particularly acute in the post-communist states. Corruption—be it real or perceived—is a major problem with concrete implications, including a lowered likelihood of foreign investment. In Rotten States? Leslie Holmes analyzes corruption in post-communist countries, paying particular attention to Bulgaria, Hungary, Poland, and Russia, as well as China, which Holmes argues has produced, through its recent economic liberalization, a system similar to post-communism. As he points out, these countries offer useful comparisons: they vary in terms of size, religious orientation, ethnic homogeneity, and their approaches to and economic success with the transition from communism.

Drawing on data including surveys commissioned especially for this study, Holmes examines the causes and consequences of official corruption as well as ways of combating it. He focuses particular attention on the timing of the recent increase in reports of corruption, the relationship between post-communism and corruption, and the interplay between corruption and the delegitimation and weakening of the state. Holmes argues that the global turn toward neoliberalism—with its focus on ends over means, flexibility, and a reduced role for the state—has generated much of the corruption in post-communist states. At the same time, he points out that neoliberalism is perhaps the single most powerful tool for overcoming the communist legacy, which is an even more significant cause of corruption. Among the conclusions that Holmes draws is that a strong democratic state is needed in the early stages of the transition from communism in order to prevent corruption from taking hold.

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Editorial Reviews

From the Publisher

“Leslie Holmes’s book charts the shady terrain of post-communist corruption with rigor and elegance. Among his accomplishments are a fine-grained conceptual analysis, the compilation of a uniquely rich body of data on five countries, and a thorough and imaginative discussion of the causes, consequences, and potential cures of corruption in societies facing transitions to neoliberalism.”—Claus Offe, author of Varieties of Transition: The East European and East German Experience

“This is a well-documented book based on keen comparisons of the corruption that permeates several Central and Eastern European countries, their institutions, their organizations, and their cadres. Combining these elements, Leslie Holmes offers stimulating insights that move us closer to a theory of corruption.”—Harry Makler, Professor Emeritus, University of Toronto, and Visiting Scholar, Stanford University

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Product Details

  • ISBN-13: 9780822337928
  • Publisher: Duke University Press
  • Publication date: 4/28/2006
  • Edition description: New Edition
  • Pages: 440
  • Sales rank: 1,470,917
  • Product dimensions: 6.10 (w) x 9.20 (h) x 1.20 (d)

Meet the Author

Leslie Holmes is Professor of Political Science at the University of Melbourne. His books include Post-Communism: An Introduction, also published by Duke University Press; The End of Communist Power: Anti-Corruption Campaigns and Legitimation Crisis; and (with John S. Dryzek) Post-Communist Democratization: Political Discourses across Thirteen Countries.

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Read an Excerpt

Rotten States?


Duke University Press

Copyright © 2006 Duke University Press
All right reserved.

ISBN: 978-0-8223-3792-8

Chapter One


This book is about a phenomenon that has become a salient aspect of politics in most parts of the world: official corruption. There is a particular focus on the post-communist world, here meaning those countries that were ruled by communist parties until the revolutions of 1989-91. This focus has been adopted partly because of my own expertise and research, but also because one part of this area, the CIS, was by the late 1990s considered by some analysts the most corrupt region in the world; another major part, Central and Eastern Europe (CEE), was perceived as less corrupt than the CIS, but still as having a major problem. Given that as influential and powerful an agency as the World Bank has identified corruption as the single greatest source of poverty in today's world, it becomes clear why the topic is important, and why it is relevant to concentrate on the post-communist regions. Meanwhile in China, Jiang Zemin during his tenure as president and as general secretary of the Communist Party identified corruption as the problem that could bring about the collapse of the communist system (Renmin Ribao, 22 August 1993, 1; BR 36, no. 36:5-6). By studying an area inwhich the problem is particularly acute, it is hoped to shed light on the problem, and perhaps even contribute to overcoming it elsewhere.

Despite its principal focus, the study raises issues that are relevant to every type of state and large-scale society, since there is none in which corruption does not exist. Moreover, examples of corruption can be found in all the political institutions of the contemporary state, including ministries, local councils, the police, the judiciary, customs and immigration offices, the military, and political parties. An analysis of corruption helps to illuminate both the particular difficulty of building political systems in the post-communist world and the more general reality that states everywhere are beset with problems, including actual or potential crises of identity and legitimacy.

The focus is on post-communist states generally, particularly the European ones, since it is a basic premiss here that all of them shared the legacy of communism and the international context of the 1990s; at least in theory, most also shared a commitment to the same basic goals of democracy and a market economy. This said, the precommunist history and traditions, the political culture more broadly, and the methods chosen for reaching the basic goals are unique to each country; it would be impossible in a single book to examine them all, or even several, properly. Hence, although a comparative approach is employed here and aspects of corruption from most post-communist states are examined, the emphasis is on four CEE and CIS countries-Bulgaria, Hungary, Poland, and Russia; there is also more on China than on most other countries. Because a detailed analysis of five case studies is provided, the comparative and theoretical arguments become more persuasive.

Despite the putative focus on five countries, it would be more accurate to claim four and a half, with the half being China. This does not reflect an indifferent attitude toward China, which is of indisputable size and significance. Rather, it reflects the status of China as a post-communist state; as is argued below, the PRC is post-communist only in some ways. In others China still is clearly communist. For example, most post-communist states had high levels of censorship until their communist regimes collapsed or were on the verge of collapse (depending on the country). China still does, and it does not permit foreigners to conduct surveys of politically sensitive issues, of which corruption is an example. At various points in this book, reference is made to four surveys conducted in mid-2000 in Bulgaria, Hungary, Poland, and Russia; since we were unable to conduct a similar exercise in China, and since even the findings of surveys on corruption by the Chinese themselves are not generally available to outsiders, our database on China is considerably poorer than for the other countries.

For the sake of simplicity, however, a focus on five countries is claimed. The reasons for focusing on these five are several, and relate to some of the major factors most frequently adduced for explaining differences in levels and types of corruption. First, this choice means that both large and small countries (in terms of population and area) have been included. Moreover, in terms of political and administrative structures, one of the two large countries (Russia) is federalized, while the other (China) is essentially unitary. Second, the choice provides a wide range of cultural backgrounds. Poland and to a lesser extent Hungary are both Catholic countries that nowadays consider themselves increasingly part of "the West," and certainly European; this image will only strengthen now that they are members of the European Union (May 2004). Russia is predominantly Orthodox, and cannot decide whether it is European or sui generis, leading Samuel Huntington (1996, 139-54) to describe it as one of the world's four major "torn" countries. Indeed, it has been experiencing profound problems with its own identity since 1991, in the wake of one of the fastest and most extensive imperial collapses ever (on Russia's identity problems see Dunlop 1997; Tolz 1998). Bulgaria is also predominantly Orthodox, but it clearly considers itself European, and does not suffer from the "loss of empire" identity problems that Russia is experiencing. China has a mainly Confucian tradition and is much more confident about its own identity than Russia is; it is Asian, and has no desire to become western in any significant way.

Third, the countries chosen include both ethnically homogeneous countries (Poland, Hungary, and to a lesser extent China); a country with just one numerically significant ethnic minority (Bulgaria, with a large Turkish minority); and a country that ethnically is highly diverse (Russia has in excess of one hundred recognized ethnic groups, even though Russians account for some 87 percent of the population). Fourth, the five countries have adopted diverse approaches and sequencing to their economic transitions, and have experienced very different success rates. Both Poland and Hungary are among the most successful post-communist states. Yet they are often seen as having adopted radically different approaches to their economic transitions, with Poland considered by many to have adopted "shock therapy" and Hungary a "gradualist" policy. Although this contrast is usually overdone (L. Holmes 1996; see too Murrell 1993, on how the concept of Polish shock therapy has been exaggerated), there have been important differences in the way the Poles and the Hungarians have approached economic restructuring. One of our interests was to see if this difference was reflected in different rates or types of corruption. In contrast, Bulgaria is often seen as a "late starter" in terms of both economic and political transition, and in this limited sense it constitutes a different kind of post-communist state. Russia has been among the most troubled post-communist states, inconsistent in its attitudes toward major reform. Having begun to adopt radical economic policies in the early 1990s under the influence of Gaidar, it then lost its way and in some ways virtually stagnated in the late Yeltsin era. Vladimir Putin's ambiguous approach to ownership-state versus private-has only compounded and prolonged the problem of inconsistency. Moreover, Russia's problems tend to affect other countries more than the problems of smaller states do; it would be eccentric not to include such an influential state.

China might appear to be an anomaly, since many would question the application of the concept of "post-communism" to a country in which, at the time of writing, the communists still appeared to be well ensconced (the country is still communist politically). But China is already post-communist in the economic sphere, and increasingly so in terms of social (class) structure. Indeed, if the "radical critics" referred to by Gordon White (1996, 157-58, 167) are correct in referring to a "value vacuum," a "crisis in values," and a collapse in faith, China is already much more post-communist than is generally appreciated. It therefore constitutes yet another kind of state emerging from the communist past, despite its significant differences from the other four. And since many believe-in my view erroneously-that the USSR could have survived both as a country and as a communist state had its leaders introduced the kinds of policies that Deng Xiaoping and others introduced into China from the late 1970s, a comparison of the situation in the prc with countries that have had political as well as economic revolutions is warranted.

Despite the emphasis here on post-communist countries, corruption is ubiquitous in the contemporary world, and reaches the highest levels. For instance, investigations of Willy Claes, secretary general of the North Atlantic Treaty Organization (NATO), began in February 1995 after allegations that he had been involved in the acceptance by his party (the Flemish Socialist Party) of a $1.7 million kickback in 1988, when he was the Belgian economics minister. The kickback was linked to the purchase of forty-six helicopters from the Italian company Agusta, which secured the order despite fierce competition from French and German companies. There was allegedly a further kickback to his party of $3 million (approximately) from the French arms company Dassault. As a result of the allegations and investigations, Claes resigned his NATO post in October 1995, when the Belgian parliament lifted his parliamentary immunity so that he could stand trial. He was found guilty of corruption in December 1998 and sentenced to a three-year suspended prison sentence and a small fine; he was also barred from holding public office for five years.

In considering corruption relating to Italy since the start of the Tangentopoli ("bribe city") scandal and the mani pulite ("clean hands") campaign in 1992, the western mass media have had a field day listing alleged misconduct by literally thousands of Italian businesspeople and politicians, including the former and current prime ministers Giulio Andreotti, Silvio Berlusconi, and Bettino Craxi (on Italian corruption see Magatti 1996; Scamuzzi ed. 1996; Barbacetto, Gomez, and Travaglio 2002; Newell and Bull 2003). In Spain, many see corruption as the main reason for the failure of Felipe Gonzalez's socialist government to continue its thirteen-year rule beyond the elections of March 1996, after a major scandal that broke in late 1994 (see Time, 25 September 1995, 38- 39; on Spanish corruption more generally see Heywood 1995; Jiménez and Caínzos 2003). In France, Prime Minister Pierre Bérégovoy committed suicide in May 1993, after allegations that he had been involved in corruption. Between 1990 and 2000, mayors in Cannes, Grenoble, Lyon, Nice, and Paris were forced to resign, and in some cases prosecuted, because of alleged corruption, as were at least five French cabinet ministers (see for example International Herald Tribune, 7 February 1997, 5; Wall Street Journal Europe, 3 November 1999, 1, 12, 14; Age [Melbourne], 3 March 2000, 12), while the reputation of the Socialist Party (PS) has been severely tarnished by corruption (for the effects on the reputation of the French PS see Mény 1997). After allegations of corruption in the Paris branch of his party (the Rally for the Republic), President Jacques Chirac was accused in October 1999 of being involved in fraudulent activities, relating specifically to his unsuccessful presidential candidacy in 1988 and more generally to his tenure as mayor of Paris from 1977 to 1995, when he was elected president in his second attempt. Chirac's reelection as president in May 2002 meant among other things that he could stave o possible legal action for another seven years (on corruption in France see Evans 2003).

Even West European countries with a reputation for being relatively clean appear to have experienced an increase in corruption in recent years. This is true of both Germany and the Netherlands, for instance (on Germany see for example Claussen 1995; J. Roth 1997; McKay 2003; Ramge 2003; on the Netherlands see Kroes and de Boer 1996; van Duyne, Huberts, and van den Heuvel 2003). In Germany a major corruption scandal erupted in late 1999 around the man who had headed the political system for some sixteen years, Chancellor Helmut Kohl. Kohl eventually paid a substantial fine in early 2001 to bring legal closure to this sorry episode; political closure had to await the tabling of a parliamentary commission's report in July 2002 that found the Christian Democratic Union, or CDU (Kohl's party), guilty of illegally raising millions of Marks, although the commission was unable to determine the source of the funds.

Ireland's prime minister, Charles Haughey, had to resign in 1992 partly because of allegations of corruption; in May 2000 he was accused by the Moriarty Tribunal of having improperly received more than six million Irish pounds between 1979 and 1996. And many commentators saw the "sleaze factor" as one of the two or three principal causes underlying the end of eighteen years of Conservative rule in the UK in May 1997-although the "New Labour" government of Tony Blair that succeeded it has not been without corruption scandals either, despite Blair's promise in 1997 and on various occasions since to clean up public life.

The problem is by no means confined to Europe. While this did not bring him down, President Bill Clinton's reputation was dented by the so-called Whitewater scandal that emerged in 1993. Corruption has played a significant role in toppling long-standing governments in Japan and India, as seen in the poor electoral performances of the Liberal Democratic Party in 1993 in Japan and of the Congress Party in 1996 in India (on Japanese corruption see Woodall 1996; Bouissou 1997; Rothacher 2003; on India see Singh 1997). The Thai military used the corruption of the government of Chatichai Choonhawan as an excuse for staging a coup against an elected civilian government in February 1991 (on this and other aspects of Thai corruption see Pasuk Phongpaichit and Sungsidh Piriyarangsan 1996). It has been alleged that the election victory in 1994 of the Colombian president, Ernesto Samper, was secured partly because of substantial campaign funding from the Cali drug cartel (though a congressional committee cleared Samper of these charges in late 1995-according to some reports because too thorough an investigation of the matter would have had embarrassing consequences for many members of Congress), while the former Ecuadorean vice president Alberto Dahik fled the country in late 1995 shortly before being found guilty of embezzlement and illicit enrichment. Two former South Korean presidents, Chun Doo Hwan and Roh Tae Woo, were found guilty in August 1996 of having accepted large-scale bribes when in oce from household company names such as Daewoo and Samsung (on Korean corruption see Kim 2002).

Nor are Islamic countries immune to corruption. High-level corruption is said to have been the major reason for the dismissal of Benazir Bhutto and her government in Pakistan in November 1996. Few would dispute that corruption was a major factor in the collapse of the Soeharto regime in Indonesia in 1998. Indonesia, Nigeria, and Bangladesh often figure prominently in comparative tables (considered in chapter 4) of the world's most corrupt states. Of all the post-communist states that have been assessed by Transparency International (TI) for its annual Corruption Perceptions Index (CPI), Azerbaijan and Tajikistan (both Muslim) were perceived to be two of the three most corrupt in 2003. The CPI for 2003 assessed a total of eighteen Arab states (including Palestine), of which Oman was perceived to be the least corrupt (twenty-sixth out of 133 states altogether, scoring 6.3), and Libya the most (118th, scoring 2.1). But even the lowest-ranked Arab state was perceived to be less corrupt than either Azerbaijan or Tajikistan. One concrete example of a corruption scandal in an Islamic state of the Middle East is that which surrounded the mayor of Teheran, who was formally charged with corruption in April 1998. He was found guilty in July and sentenced to two years' imprisonment, a fine equivalent to more than half a million dollars, and a ten-year ban on seeking public office.

It is not only Islamic states in the Middle East that have had major corruption scandals. In Israel Benyamin Netanyahu was accused in October 1999 both of illegally keeping gifts made to him and his wife in their official capacities while he was premier (1996-99) and of involvement in a building scam; although the legal charges were dropped in September 2000 because of insufficient evidence, Netanyahu's behavior was described by the Israeli attorney general as "improper." And a new corruption scandal, in which allegations were made publicly about both Prime Minister Ariel Sharon and his Likud Party, erupted in early 2003 (Economist, 11-17 January 2003, 40). Although the Israeli authorities dropped the case in 2004 for lack of sufficient evidence, they did not fully clear Sharon. In sum, while the perceived scale and role of corruption varies from country to country, there are clearly no neat Huntingtonian dividing lines on this issue. Many more examples from many more countries could be cited.


Excerpted from Rotten States? by LESLIE HOLMES Copyright © 2006 by Duke University Press. Excerpted by permission.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.

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Table of Contents

1 Introduction 1
2 Definitional and taxonomical aspects of corruption 17
3 Actual, alleged, and arguable corruption 44
4 On the scale and main areas of corruption 90
5 The impact of corruption 146
6 Causes of corruption 176
7 Measures against corruption 211
8 Conclusions 270
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