vulnerabilities to corruption. Bribes can dilute deterrence against violations of law (Polinsky and Shavell, 2005). Corruption is all the more problematic in the security sector because the sector typically is expected to play a major role (of deterrence and prosecution) in the fight against corruption.

In addition to sound public financial management, other aspects of a good governance system include (see Figure 4):<sup>16</sup>

- **Political oversight and accountability** : including by Parliament (discussed above).

- **Civil society oversight** (see also the previous section): it is important to give sufficient access to information (on policy choices and on actual implementation) to various groups in civil society (media, groups of experts in academia, private sector, other members of the public).

- **Interface with the private sector** : whenever possible, the private sector should be given a role in oversight and providing checks with respect to the security sector. For instance, the private sector can be appropriately involved in oversight of public procurement for the security sector to ensure good governance and value for money. Justice and police are a key driver of the investment climate, and the private sector should have opportunities to voice its concerns in a constructive manner.

- **Public sector management** : in addition to public financial management (see previous section), good public sector management requires several elements.  First is civil _oversight_ in the security sector ministries (as well as, in the area of PFM, in the Ministry of Finance) and through the President’s Office or National Security Council.  This has to be complemented by strong, effective, and ethical _leadership_ (which itself can be complemented by some technical measures, including asset declaration, ethical norms or codes of conduct for personnel in the security sector, etc.).  Second, _personnel management_ is critical for the effectiveness and legitimacy of the sector.  Experience in the civil service underlines the importance of merit-based processes, ethnic diversity, and avoiding patronage and its adverse impact.  An important issue, which relates to corruption, is the salary level of personnel in the armed forces and in the judiciary, which needs to be sufficiently attractive while remaining fiscally affordable and not distorting the labor market.  Third, good public sector management requires effective _coordination among agencies_ .  This is often linked to ethnic issues, particularly if various institutions are dominated by different ethnic or political groups, as in the case of Afghanistan, Palestine, and often Lebanon.

- **Decentralization and local participation** (this was discussed in Section 4, showing some potential but important limits to this factor for the security sector).

- **Cutting across these issues is the role of the international community** , reviewed in Box 2.

> 16 Some of the elements discussed here are reviewed on the World Bank website on “Law and Justice Institutions”: ~ <u>http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTLAWJUSTINST/0,,menuPK:1974074 pagePK:149018</u> ~piPK:149093~theSitePK:1974062,00.html.

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