Regulation & Policy
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The World Economic Forum recently published an article on how Blockchain can fight corruption in government. Today in the MENA region the Lebanese government has been protrayed as one of the most corrupt governments and yet digitization efforts have been none existent. Blockchain could be the entry point for Lebanon to gain trust of not only its citizens but also international community.
As per the WEF article, Blockchain can serve a unique role in preventing government corruption. Its technology offers a singular combination of permanent and tamper-evident record keeping, real-time transaction transparency and auditability, and automated smart contract functionality.
WEF article states as well, that blockchain alone cannot wholly prevent crimes or thwart bad actors. While blockchain can complement and enhance existing legal frameworks and social structures, its efficacy is only as great as the system in which it is a part. In the absence of consistent law enforcement, accurate informational inputs, adequate technological know-how, cooperative political elites, and societal good will, blockchain-based governance may prove no more a corruption deterrent than status quo laws and policies.
Nonetheless, key use cases demonstrate how the technology could be deployed to address weaknesses in current systems. These use cases also highlight the importance of a comprehensive and multi-faceted approach to blockchain-based governance. In many cases, they also include critical limitations and downsides to the use of this novel technology. While these limitations may recede with technological advancements, it is essential that governments weigh both the costs and the benefits of blockchain-based governance systems.
1. Public Procurement
One of the major issues on the table today in Lebanon is a law for government procurement. The WEF report states that Public procurement (or government contracting) is the single largest marketplace for government spending and the greatest source of official corruption worldwide. Various factors make this government process a hot bed of corruption in high-income and low-income countries alike. Vendor selection processes are complex and opaque, involving a high degree of human discretion. Not only do these vulnerabilities lead to massive financial waste, but they distort market prices, reduce healthy competition, and frequently result in substandard goods and ineffective services.
2. Land Title Registries
Registering land or any realestate in Lebanon is a cumbersome activity. In many occasions there has been fraud with multiple parties claiming ownership of certain land pieces, the most recent one being in Lasa area in Lebanon. According to WEF report various governments have begun experimenting with blockchain-based land title registries. Some initiatives, like those in Sweden, are motivated by a desire to increase efficiency in a transaction-intensive industry. Others, such as those in Honduras and India, are intent on instilling and expanding property rights and enhancing transparency in a process vulnerable to corrupt practices.
3. Electronic Voting
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The lebanese electorla process and law as well as voting activity has been under scrutnity and criticism both from Lebanese voters as well as NGOs who have tried to oversee the last parliament voting process in 2018. WEF report discusses how growing concern over election security, voter registration integrity, poll accessibility, and voter turnout has led governments to consider blockchain-based voting platforms as a means to increase faith and participation in essential democratic processes.
4. Beneficial Corporate Ownership Registries
Recent corruption scandals have raised concerns worldwide over opaque or undisclosed beneficial corporate ownership. Secretly operated companies can easily be used to launder money, pay bribes, or self-interestedly sway governmental investment.
5. Grant Disbursements
Many governments annually disburse millions of dollars to support education, arts, humanitarian aid, and social assistance, amongst other causes. This process is frequently convoluted, opaque, and inefficient, which causes money to be lost to banking fees and middlemen and opens the potential for corrupt financial diversions.
Balancing benefits and challenges
In addition to the application-specific concerns, overarching technological barriers may stymie effective blockchain-based governance. These barriers could range from implementation cost and scalability, to unknown negative externalities and underinformed policy-makers.
The World Economic Forum recently released a report to further assess blockchain’s ability to effectively reduce public corruption. The report, Exploring Blockchain Technology for Government Transparency: A Blockchain-Based Public Procurement System, focuses on the Forum’s ongoing project with the Inter-American Development Bank and Colombian Inspector General’s Office, which has investigated, designed, and tested the use case of blockchain-based procurement. The proof-of-concept, centered around a public permissionless Ethereum blockchain-based procurement auction, highlighted the potential applicability of this technology in a variety of additional corruption-prone areas of public governance.




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