WEF publishes article on Blockchain in fighting corruption

Lebanese government and state can utilize Blockchain to fight its inherent corruption

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.

How blockchain can help: A blockchain-based process can directly address procurement’s corruption-risk factors by facilitating third-party oversight of tamper-evident transactions and enabling greater objectivity and uniformity through automated smart contracts, thus enhancing the transparency and accountability of transactions and actors.
Key limitations: A number of hurdles can complicate effective deployment. For example, the easier it is to access and use the blockchain platform, the more vulnerable it is to abuse. “Spamming” or “draining” attacks may cripple a system’s anti-corruption potential by flooding it with useless or malicious information or robbing it of the funds necessary to complete each transaction. Additionally, the blockchain platform may not capture the entire universe of relevant human interactions. If collusion, bribery, or even regular vendor selection continue to occur offline, the anti-corruption potential of blockchain-based procurement will be severely stunted.

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.

How blockchain can help: Blockchain-based land registries can potentially provide a secure, decentralized, publicly verifiable, and immutable record system through which individuals could definitively prove their land rights. These qualities reduce the opportunity for self-interested manipulation of land rights and increase the resilience of land ownership more generally.
Key limitations: Blockchain technology itself cannot formalize property ownership or solve ineffective governance. Countries with nonexistent, incomplete, or incorrect land registries need to go through the difficult process of gathering, cleaning, and digitizing this information before a blockchain-based land title registry can function. Additionally, the degree of connectivity and tech savviness within a population may determine the feasibility of a blockchain-based land registry in the short-term.

3. Electronic Voting