This Week in Markets and Democracy: Malaysia’s Corruption Scandal, Migration Crisis Threatens EU Political Unity, and More

CFR’s Civil Society, Markets, and Democracy (CSMD) Program highlights noteworthy events and articles each Friday in “This Week in Markets and Democracy.”

Anti-Corruption Conference Coincides with Malaysian Corruption Scandal

With prescient timing, Transparency International is holding its biennial International Anti-Corruption Conference (IACC) this week in Malaysia as a massive corruption scandal unfolds. Prime Minister Najib Razak (who pulled out of his planned IACC keynote speech) faces public pressure to step down after government investigations into a collapsing state-run investment fund uncovered $630 million in transfers to Najib’s personal bank account. Najib and his supporters claim the money in question was a political donation from an unnamed Arab benefactor for his 2013 election campaign, but few Malaysian citizens are convinced. Last weekend, the Malaysian pro-democracy group Bersih led tens of thousands in protest, calling for the prime minister’s resignation. Najib denies wrongdoing and vows to remain in power. Transparency International board chair José Ugaz called out the prime minister in his opening remarks at IACC, linking Malaysia’s progress against corruption to his answering questions about the funds.

Migration Crisis Calls EU Borders into Question

Beyond the grave humanitarian implications, Europe’s migrant and refugee crisis could threaten European Union (EU) unity. Starting on Tuesday, Hungary blocked migrants from traveling on trains to Germany and Austria by requiring them to show documentation—undermining the EU’s passport-free travel (a right for EU citizens and a pillar of the single market system). British Prime Minister David Cameron signaled on Wednesday that the UK will limit border crossings as well, in advance of a planned 2017 referendum on whether Britain will remain in the EU. German Chancellor Angela Merkel, in contrast, defended Europe’s open border policy. This week she called on other EU countries to share the burden in accepting more refugees as Germany announced it expects 800,000 migrants and asylum seekers this year—the largest influx in its post-war history. EU officials now plan to meet in Brussels on September 14 for an emergency session in attempt to forge a coordinated response. If unable to agree on rules for who is permitted to stay and where they can settle, deeper EU integration and plans for a political union could falter.

Lebanon and Iraq: Public Service Failures Reveal Weak Governance

In Lebanon and Iraq, protests over failing government services are morphing into broader calls against political ineptitude, graft, and sectarian-based patronage. Disgust with Beirut’s garbage-filled streets, due in part to the corrupt process of awarding collections contracts, has ignited deeper frustrations with Lebanon’s political gridlock and stagnant growth. So far, demonstrators have overcome historic partisan divides to unite in demands for the environment minister’s resignation and for greater government accountability. In Iraq too, initial frustration with basic public services is expanding to challenge the political system. Power outages during a record heat wave led to broader protests over corruption, sectarianism, and incompetence. The reforms Iraqi Prime Minister Haider al-Abadi announced in response were met with skepticism—many citizens distrust the political establishment and its capacity for change.

Migrant and Refugee Crisis: What We Are Reading…

Carnegie Europe’s Judy Dempsey asked eleven leading Europe experts–including former Swedish Prime Minister Carl Bildt and Thomson Reuters European Affairs Editor Paul Taylor–if now is the time to pursue a European political union.

Quartz questions why Arab governments are not doing more to resettle Syrian refugees, helping shoulder the burden facing their war-torn neighbors.

The Washington Post argues that Europe’s travails are drawing attention away from a larger crisis in the Middle East. Iraq, Jordan, Lebanon, and Turkey have received the vast majority of an estimated four million Syrian refuges, posing risks for wider political and economic destabilization.

The Conversation provides an explainer of The Dublin Rules and the “Schengen area” at the heart of European debates over which states have responsibility for migrant protection, and whether migrants have the right to move within the EU to seek asylum.

In a special section covering the crisis, The Atlantic shows in three charts where asylum seekers are coming from, where they are heading, and which countries are granting asylum to first-time applicants.

A CFR Backgrounder on Europe’s Migration Crisis explains conditions refugees and migrants face, the EU response, and proposals for managing the crisis.