Corruption is a pervasive problem in many societies and has the effect of undermining public confidence in democratic institutions, a Senate Foreign Relations Committee heard today.
“Systems in which independent media, civil society, courts, and political opposition are weak or marginalized are particularly vulnerable because they do not possess the needed accountability and transparency to prevent corrupt practices from taking root. In kleptocracies, however, the challenge is much more acute,” he said:
In kleptocracies, the instruments of the state are directed to shielding and enabling the corrupt activities of dominant power holders. Corruption is the lifeblood of these systems, like the one in present day Russia, and the glue for regime survival. Therefore, in kleptocratic systems where the stakes for power are all or nothing, whistleblowers who seek to expose corrupt practices themselves routinely become targets of law enforcement; investigative journalists and oppositionists become enemies of the state; and independent businesses are brought to heel in order to preserve the kleptocratic order.
A Democratic senator argued that “corruption and the dysfunction that follows it fuels violent extremism” around the world, The Washington Examiner reports.
“Corruption pushes young people towards violence and extremism because they lose faith in institutions that are supposed to protect and serve them. And terrorist groups use corruption to recruit followers in their hateful crimes,” said Sen. Ben Cardin, D-Md., at the hearing.
It needs to be emphasized that in the era of globalization, kleptocracy represents an exceedingly dangerous threat to democracy internationally, Gershman added:
Corruption has generally been considered a problem that corrodes developing democracies from within. Well-resourced kleptocracies differ in that they project their sophisticated corrupt practices beyond national borders with an ever-increasing impact felt in new and established democracies alike. Kleptocracy has emerged a serious global threat. Parasitic at home, abroad kleptocratic regimes by their nature seek to exploit the vulnerabilities in the institutions of individual democratic states, as well as regional and global rules-based institutions. They use global financial institutions to invest and protect their money, and with their stolen resources, they buy influence in the democracies and neutralize political opposition.
Kleptocracy has become a crucial pillar of the international resurgence of authoritarian countries, Gershman said, highlighting several key points relating to the challenge posed by kleptocracy:
- Kleptocracy is a global threat. …Kleptocracy is a key pillar of the global authoritarian resurgence that is visible in so many critical spheres. This includes in regional and international organizations, activities such as election monitoring and the autocrats’ treatment of civil society, as well as the projection of propaganda through lavishly funded international media enterprises, such as the Russian government’s RT. Simply put, these regimes are reshaping the rules of the game. …
- Kleptocracy subverts Democracy. Kleptocrats exploit the benefits of globalization to enrich themselves, hollow out their own countries’ institutions, and subvert the democracies. Given these particular features, kleptocracy should be understood as an especially acute subset of corrupt systems. The issue of kleptocracy is an important one for activists who are working for democracy in countries ruled by hybrid and autocratic governments. Such activists are on the frontlines in the struggle against resurgent authoritarianism where regimes are tightening political controls and closing civic space. . …
- The problem of Western enablers. The purchase of multimillion dollar properties, the arrangement of opaque offshore financial instruments, and the laundering of a kleptocrat’s public image, do not happen by accident or on its own. Professional intermediaries in the established democracies are critical links for venal kleptocrats who seek to move ill-gotten gains from authoritarian systems into the democracies, where they can enjoy the rule of law. ….
- Kleptocracy is an engine for extremism. Kleptocratic governments by their nature extinguish or prevent the emergence of institutions that can hold them accountable, leading to governance arrangements that feature unchecked power and impunity. This is the modus operandi of “rule by thieves.” Critically, kleptocratic regimes deny space for moderate political voices that could offer possible alternatives to existing policies and leaders.
But even as risks and threats posed by corruption continue to increase, we are seeing new windows of opportunity emerge. said Gayle Smith, Administrator of the U.S. Agency for International Development:
- First, all across the world, there is growing popular demand for increased accountability and transparency from governments. It was a call to end corruption that helped spur the Tunisian revolution in 2010, and that same call drove hundreds of thousands of Ukrainians to the Maidan three years later. More recently the release of the Panama Papers turned the world’s attention to illicit financial activity by the wealthy and well-connected on every continent, spurring massive protests and the Prime Minister’s resignation in Iceland and sparking outrage and debate from North America to Asia. In Guatemala last year, where impunity once reigned, people took to the streets and spurred the legal and orderly removal of the sitting President and Vice President. All over the world, civil society has intensified its demands for honest government and seeks to remove corrupt leaders from office through elections, impeachment, prosecutions, or civil protest.
- Second, we are seeing more – though still insufficient – top-down interest in reform, as leaders are increasingly demonstrating a willingness to put political capital in the fight against corruption. Some governments have shown they have the political will to build the institutions required to reduce and prevent corruption, increase transparency of public revenues and finances, and enhance accountability for budgeting and delivery of services. For example, Senegal passed a sweeping transparency law in 2012, and the Tunisian Minister of Finance is working directly with USAID to root out corruption in tax and customs collections. The leaders of Nigeria and Afghanistan – two countries historically plagued by severe corruption – have each made significant commitments to combat corruption and have followed up with concrete actions. ….
- Finally, a global consensus is now emerging that transparency and accountability are pre-requisites for achieving sustained and inclusive development progress. It was not long ago that the United States was one of few governments consistently championing transparency and accountability, but that is no longer the case. This new global consensus is embodied in the Sustainable Development Goals (SDGs), which world leaders from 193 countries endorsed in September 2015. In part due to the hard work and engagement of the U.S. Government, the goals explicitly recognize – through Goal 16 – that corruption and related challenges hinder growth and progress. Importantly, the SDGs are more than just aspirational; they include targets against which governments – and their citizens – can measure progress. And growing multilateral partnerships like the Open Government Partnership are helping countries meet Goal 16 targets and pursue other governance reforms.
“Success in the fight against violent extremism depends in part on maintaining trust between governments and the communities where violent extremists hide and seek recruits,” said Assistant Secretary Tom Malinowski of the State Department’s Democracy, Human Rights and Labor Bureau. “Corruption destroys that trust. When the authorities are as likely to shake people down as they are to protect them, people sometimes end up fearing the authorities more than the violent extremists. And some will be susceptible to terrorist propaganda that promises to purify their societies of this scourge.”
A Three-Pronged Approach
Over the last several years, independent civil society-led investigations supported by the State Department’s Bureau for Democracy, Rights, and Labor (DRL) and USAID have steadily worked to reveal instances of massive corruption involving foreign companies and foreign 3 officials in their communities, and to report on law enforcement actions taken abroad against such officials and those who would corrupt them. For just a few million dollars in U.S. support for civil society, this approach represents a good return on investment and an important element of a broader, effective strategy to combat grand corruption, he added:
- That strategy begins by promoting greater transparency globally and domestically and supporting multilateral anti-corruption initiatives. Law enforcement investigations like those I described have become more successful in part because of reforms the United States has promoted through the G-20, the United Nations Convention Against Corruption, the Financial Action Task Force (FATF), the Extractive Industries Transparency Initiative, and other institutions to increase the transparency of banking transactions, company records, extractive industry payments to governments, and the assets of public officials. The Bureau for International Law and Narcotics’ Anti-Corruption team is at negotiating tables around the world to ensure these standards are continuously strengthened. Greater transparency and accountability also empowers civil society to expose corruption affecting their own communities….
- Second, we need to support civil society-led investigations. Greater transparency leaves evidence of corruption hiding in plain sight, but someone still has to sort through the gigabytes of information that governments, companies, and financial institutions disclose each day to find it. Transnational networks of journalists and non-governmental organizations like those that have recently reported on notorious examples of kleptocracy can effectively advance this work through a combination of local knowledge and relationships with counterparts in other countries. Journalists and NGO networks are often the first to uncover illicit activity because they can deploy researchers in multiple countries at once, and because they tend to have anonymous sources who provide them with information, key documents, or road maps for how to obtain them….
- Third, we need to support effective law enforcement. Ultimately, corruption is a crime committed by powerful people accustomed to impunity. While non-governmental networks can expose suspect activity, only governments can prosecute it. Furthermore, civil society often lacks the access to financial and other protected information available to law enforcement. RTWT
It is not so important to ask what is being spent on what programs designed to curb corruption, but rather what steps are being taken to shape flagship projects, said the Carnegie Endowment’s Sarah Chayes. The Foreign Relations Committee can push Congress to help remedy some of these deficiencies in approach by taking the following steps:
- For every assistance package (USAID, INL, and State Department-overseen military programming) of significant size, require that a systemic political economy analysis, depicting the structure of corrupt networks, the main revenue streams they capture, and their key external enablers and facilitators be completed and submitted to Congress alongside the funding request.
- Require that such a request include a strategy for mitigating any reinforcement the programming might provide to the corrupt governing system. x Require that budgets for projects that, due to some other security or diplomatic imperative, are knowingly launched in severely corrupt environments devote a greater than normal proportion of the funds to monitoring and evaluation.
- Require that the RFP or project design include oversight of project delivery, and suspension or cancellation where misuse of funds is discovered. Improvement of governance should be considered as an equally important goal of such projects as their stated objectives.
- Redirect some appropriations away from the already well-resourced U.S. Department of Defense counterterrorism or countering-violent-extremism programming toward civilian-led activities….
- Direct the U.S. Department of State and USAID to increase the number of billets, including intelligence billets, for personnel deeply versed in corruption and its implications for the broad range of programming and diplomatic relations. (And direct USAID to spend its allocated anti-corruption budget to this effect, instead of passing it along to State.)
- Direct the U.S. Department of State to develop mandatory training on the implications of corruption, its structure and functioning, and ways in which diplomatic relations, trade promotion, and civilian and military assistance interact with it, for all political, economy, and political-military officers.