Romania, Bulgaria and Croatia most corrupt countries in EU, study shows

By bne IntelliNews March 23, 2016

Romania is the most corrupt country in the EU, according to a study carried out for the European Parliament by the Rand Europe research institute. It was followed by Bulgaria and Croatia.

The study, which uses three scenarios, found that the costs of corruption in terms of lost GDP to the EU economy is between €179bn and €990bn. The €990bn figure represents 6.3% of the GDP of the EU.

These figures are higher than the estimate of €120bn included in the 2014 EU Anticorruption Report (ACR), because the estimate in the EU ACR does not account for the indirect effects of corruption, it looks at costs in terms of lost tax revenues and foreign investment because of corruption.

The countries with relative high levels of corruption lose most economic output, the study noted. Bulgaria, Croatia, Romania and Latvia lose almost 15% of their annual GDP because of corruption.

The Czech Republic, Estonia, Greece, Hungary, Lithuania, Poland, Slovakia and Slovenia also have levels of corruption above the EU average. The lowest levels of corruption are, according to the study, in Denmark, Sweden and Finland.

The study also notes that, apart from the financial cost, corruption in the EU has significant social and political costs, being associated with more unequal societies, higher levels of organised crime, weaker rule of law, reduced voter turnout in national parliamentary elections and lower trust in EU institutions.

The cost of the corruption risk in EU public procurement is seen at around €5bn per year.

The study also makes some recommendations which would lead to significant cost savings. These include the extension of the Cooperation and Verification Mechanism, used in Bulgaria and Romania, to other member states. This could reduce corruption costs by €70bn annually.

“According to our calculations, a large part of this reduction would come from applying aspects of the CVM to Italy. If the measure were only applied to Croatia (the most recently acceding member state), the potential gains would be around €2bn [of] previously lost GDP per annum,” the report noted.

Another recommendation is the setting up of a European Public Prosecutors' Office, which would assist the European Commission Anti-Fraud Office in investigating corruption. The measure could reduce corruption costs by €200mn annually.

In addition, the EU should implement a full EU-wide procurement system, potentially reducing corruption costs by €920mn per year, the report says.

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