Conversation with Simin Rouzgar

Dr. Ali Diniterkamani, a graduate of the Economic Development program at the University of Tehran, is currently an assistant professor at the Institute of Commercial Studies and Research. Over the past two decades, in addition to ten books and one hundred articles authored or translated by Dr. Diniterkamani have been published.

This prominent institutionalist economist, in a conversation about the main factors of administrative corruption, while pointing out that the fundamental problem of our administrative system is its “nested” structure, says: “When the law is within the law, regulations within regulations, and the apparatus within the apparatus, the prominent characteristic of our administrative system is weak accountability and responsibility, and the possibility of bypassing and escaping consequences is maximized.”

Ali Dinani Turkmani also adds: “If inequality is excessive, it can lead to an increase in corruption; especially when this inequality is not legitimate in the eyes of citizens. In such conditions, two mechanisms for increasing corruption come into play. In the lower layers, the sense of social exclusion increases the likelihood of involvement in various social crimes. In the upper layers, the intense competition to not fall behind individuals who have taken a shortcut to success leads to an increase in the likelihood of involvement in major embezzlements.”

Dear Dr. Deeni, what is the definition of “administrative corruption” in scientific texts of economics and international organizations?

Corruption refers to any action that is illegal and is carried out with the aim of generating income. Smuggling goods and drugs is corruption. Accepting bribes to perform tasks that are the responsibility of an individual or institution is also corruption. Engaging in embezzlement to secure a loan for an applicant and receiving a commission is also corruption. Corruption comes in various forms, but they all have one thing in common. It is like a termite that eats away at the roots of social health and empties it. In all economies, there is a certain level of corruption; there is no doubt about it. However, it is also not in doubt that the level varies significantly from one country to another. Based on data from Transparency International and the World Bank Governance Data, countries can be divided into five groups in terms of corruption: some, like Scandinavian countries and Japan, have the lowest levels of corruption in the first group, while others, like Nigeria, have the highest levels of corruption

Some believe that because the economy of Iran is state-owned and the government plays the role of legislator, executor, and supervisor at the same time, this leads to strengthening administrative corruption in the country. Some suggest privatization and reducing the size of the government as alternatives. Is there a significant relationship between administrative corruption and the size of the government and the private sector?

Yes, some believe within the framework of public choice theory that the government’s control of the economy is the main cause of corruption. In their view, there is no difference between government officials and private sector agents in terms of behavior, as they are both focused on maximizing profits. Therefore, if government officials find a way, they will try to go under the radar and maximize their profits through rent-seeking and using their government positions for personal gain. From this perspective, they advocate for a smaller government as much as possible. However, the root cause of corruption is not just related to the level of government intervention in the economy, but also influenced by existing inequalities in the economy and within the government organization itself. If the internal government organization is based on meritocratic and rule-based criteria and strives to uphold legal justice as much as possible, then corruption will be minimized. But if this is not the case and relationships are more determining than rules, the moral order of society will collapse and corruption will increase. In

Some others also believe that the main cause of corruption in our economy is its dependence on oil and they theorize it within the framework of the “Dutch disease”. It is true that if oil revenues are poured into the economy, the exchange rate becomes excessively cheap and this has a negative impact on exports and imports. However, a reserve account is set up to prevent excessive pumping of oil currency into the economy and to control the exchange rate in a way that mitigates this negative impact. The same is true for corruption. If oil revenues are used in a way that promotes balanced regional development and is based on fair and strict standards for the benefit of the people, corruption decreases. If the increased oil revenues, which are a natural rent resulting from the increase in oil prices, are not distributed according to these standards, it is obvious that it will lead to an increase in corruption. Therefore, it is not possible to make a general judgment about the relationship between oil and corruption or oil and efficiency. Depending

You refer to the concept of “you are an institution” as a lack of development in the country; to what extent does this factor play a role in the formation and strengthening of administrative corruption?

The main reason that is most closely related to the lack of preventive mechanisms for pre-occurrence of large-scale financial corruption is the “nestedness” phenomenon. This characteristic of Iran’s economy, as I have emphasized many times, leads to several important negative consequences: parallel activities and waste of financial resources; weak accountability and responsibility; circumventing laws and institutions and involvement in corruption; and severe instability in organizational structures. As long as the problem of nestedness is not addressed, the possibility of circumventing laws and institutions and involvement in corruption will remain.

In your opinion, to what extent is the economic structure of our country involved in administrative corruption in Iran?

Between corruption and per capita income, there must be an inverse relationship for Al-Qaeda; meaning that as per capita income increases, the expectation is that corruption will decrease. “Poverty enters through one door, and faith exits through another.” Lower per capita income means a higher likelihood of involvement in social crimes. However, comparative data on societies shows that in some countries with lower per capita income, the level of corruption is lower than in other countries with higher per capita income; therefore, in addition to per capita income, its distribution is also important. If inequality is excessive, it can lead to an increase in corruption; especially when this inequality is not legitimate in the eyes of citizens. In such circumstances, two mechanisms for increasing corruption come into play. In the lower layers, the sense of social exclusion increases the likelihood of involvement in various social crimes. In the upper layers, the intense competition to not fall behind individuals who have made a hundred-year journey in one night increases the likelihood of involvement in major

To summarize; from a social perspective, unequal distribution of wealth and income is one of the main factors contributing to the growth of corruption. Especially when some people become overnight millionaires, social order is disrupted. Others also try to join the cycle of corruption in order to reach such individuals. Lack of legal and judicial justice is another cause. If all corrupt individuals are not dealt with equally, corruption will continue to grow. Some believe they can take advantage of existing relationships and loopholes and bypass the law and justice. Therefore, there is a tendency to get involved in corruption. Ignoring the media, especially television, for exposing corrupt gangs is another factor. If there is a program like the “90” program by Fereydoun Pourfakhr, which covers everything in different areas and presents it to millions of people, the likelihood of getting involved in corruption will be reduced.

What is the reason for the sustainability of corruption? When the power to prevent corruption is weak and the power to confront it is also weak, corruption grows and over time, with the formation of networks and interest groups associated with it, it gains the ability to reproduce itself. In these circumstances, corruption acts as a negative social capital. Individuals involved in these networks and groups collude with each other and tempt others to get involved. In this way, it becomes deep and widespread over time.

Some experts believe that formal privatizations during the Ahmadinejad era or, for example, the $100 oil conditions have contributed to an increase in administrative corruption in the country. To what extent do you agree with this view? Should administrative corruption in Iran be solely attributed to the ninth and tenth governments, or does it have roots in the past?

In my opinion, the fundamental reason that you are always present is because you are inherent. However, in this text, some governments have not been committed to laws and transparency; therefore, the possibility of getting involved in corruption has increased for some, while others have made commitments and reduced the possibility of getting involved.

What mechanisms are proposed for achieving development and preventing administrative corruption? For example, what is the experience of developed countries in controlling administrative corruption?

Several steps are necessary in this regard. Legal and judicial justice must be strengthened. Society must be assured that in case of involvement in corruption, individuals in any position will face equal legal and judicial consequences. Without such justice, it is not possible to promote social ethics. The prerequisite for fighting corruption is ensuring legal and judicial justice. Similarly, there must be a serious determination to fight against embezzlement and pseudo-entrepreneurship. We must fight against money laundering and also make the tax system fairer in order to distribute income and wealth more justly. At the same time, we must strengthen monitoring systems by addressing the fundamental problem of our administrative system, which is the “nested institution” problem. When the law is in the law, regulations are in regulations, and the system is in the system, the weak accountability and responsibility and the possibility of circumventing and escaping become the prominent features of our administrative system. Finally, we must give more importance to the role of media as a deterrent

It is said that fighting against economic corruption is like walking on the edge of a blade; because on one hand, if the fight against economic corruption is not carried out – as you yourself have mentioned – economic diseases will become more chronic day by day, and if the fight is done in an irrational way, it will cause fear among investors and capital flight from the country. In such circumstances, what is your solution for getting out of this situation and reaching a state of balance?

As I mentioned before, legal and judicial justice not only prevents but also ensures equal treatment after the occurrence. As a result, it plays a crucial role in reducing corruption. Eliminating nepotism is essential because it has created a system where accountability is not clear. Different institutions get involved in matters unrelated to their main missions. In such circumstances, corruption transforms from an individual to an organized state.

Thank you for the opportunity you have given us.