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The EU's hidden EUR120bn cost

Samuel Russell investigates the cost of corruption: the hidden EUR120bn the EU pays each year.

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CC Photo Courtesy of TPCOM, Flickr
CC Photo Courtesy of TPCOM, Flickr

"Corruption alone is estimated to cost the EU economy EUR120bn per year, just a little less than the annual budget of the European Union" is perhaps the most shocking finding from the EU anti-corruption report, released on the 3rd of February by the European Commission.

The report, the first in a new series of biennial studies on this matter, raised eyebrows across the continent for both the sheer level of corruption and the public's perception of it. Corruption has numerous effects: it increases inequality by granting the rich better services whilst depriving the poor; it reduces economic efficiency by levying a de facto tax on any major project - the proceeds only benefiting individuals and not the state; it subverts laws and fairness among others.

74 per cent of Europeans believe that this disease is infecting their country whilst "over two thirds believe that political parties aren't transparent enough in their funding". Around Europe the major political parties are losing their support. Citizens grow tired of the cronyism that infects every country of this continent. Despite the fact that only 8 per cent of respondents claimed to have personally experienced a case of corruption (bribery or similar), the majority are still convinced.

According to the British Parliament, "90 per cent of MPs are university graduates, compared with 20 per cent across the adult population" and "more than one-third of MPs elected in 2010 attended fee paying schools...compared with less than 10 per cent of the adult population". In Britain, and indeed in the rest of Europe, the privileged rule, manage companies, and have attended the same establishments. Ordinary people are so convinced of corruption not due to direct bribe taking, but because of indirect corruption, using connections and friends to advance which are made at these elitist establishments - oneself above the rest.

This might help to explain why more than 4 out of 10 firms find corruption to be an impediment to doing business. Though direct corruption may only affect small areas of the EU, indirect affects the majority. This adversely affects any non-incumbent businesses. As an association that prides itself allowing any individual or business to work or operate wherever it pleases within its area, its inability to eradicate this pest is problematic.

Europe was long supposed to be rid of this evil, though jokes and stories were often told about how having the right 'connections' is the most important thing. The headline figure, that corruption costs Europe EUR120bn per year, is only the realisation of this attitude. The worry is that it caused so much shock.

Despite almost 64 per cent of British people believing corruption to be a problem it has never featured as a prominent electoral issue. A similar trend has been repeated across Europe, on average "only 23 per cent of people felt their government was effective at fighting corruption". This report has already created much discussion about a hitherto accepted subject, a unique 'custom' to some countries, but it remains to be seen whether any actions will arise from the words.

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