The Baksheesh Factor

Baksheesh is a popular term used through out the Middle East, of persian origin it means "lavish remuneration and bribes". Despite the fact that corruption is widespread in many countries of the Middle East and in North Africa, it is still a very sensitive issue and it is very difficult for individuals and companies to discuss it in a frank and open manner. Yet one of the main issues that arab spring revolutionaries have been decrying over and over again has been about the wide spread corruption in their countries. Indeed corruption has stifled the economic welfare and growth of many developing countries. The general population is nearly always confronted with additional "tips" that public servants require of them to get any bureaucratic job done. But beyond individuals, practically all corporations are victims or are complicit in the Baksheesh dilemma.

In some developing countries, several key public and administrative positions, which have a high economic value are highly sought after. Sometimes these positions are often bid over or bought. An example of such positions would be customs duty officers or at a higher level those dealing with public tenders. Corruption can be highly organized, they are often built up as complex parallel hierarchical structures.
For many non-local corporations and individuals this Baksheesh culture is initially not easily visible. Often those involved in it would out of shame and some sense of honor not openly make a display of such "lavish remuneration". But corporations often need to take account of the Baksheesh factor. Companies that stoically try to resist paying the Baksheesh are often penalized and often have difficulty in being competitive in the "open" market. This is an important moral and ethical dilemma for many. Unfortunately it is an additional cost that needs to be taken account of, whether as a direct cost, such as "additional" custom duties or as an indirect cost, such as "gifts" or as "marketing & sales cost". The problem is that the Baksheesh factor knows no limit, an unscrupulous corporation with deep enough pockets can buy its way to a monopolistic situation.
There is also an important cultural aspect to Baksheesh or the general idea of remuneration. The concept of providing assistance and providing generous gift is an important social aspect of Islamic culture. Furthermore, business negotiations is very much an issue of deepening one's trust of one another and of building relationships, this is especially true in the Middle East and North Africa. The concept that "if you scratch my back and I scratch yours" is expected. But unfortunately, this usually beneficial aspect of Islamic business ethics can become morally blurred when it starts having a negative impact on the broader society and the economy.
Nonetheless, the situation is not as bleak as it seems. Many countries in the Middle East and North Africa are on a real "Crusade" or rather on a real "Jihad" against corruption. There has been a lot of progress, especially in GCC countries, where Qatar leads the pack as the 14th least corrupt nation in the world. But on the other end of the scale, Iraq is considered to be the world's 3rd most corrupt country. The fight against corruption has also found new strength as a key demand in many recent popular uprisings and protests of the region.

Useful references:

• Website: Transparency International (Corruption perception Index 2010 results)
• Book: Economic Performance in the Middle East and North Africa: Institutions, Corruption and Reform (Routledge Political Economy of the Middle East and North Africa)