Combatting kleptocracy? Why nondemocratic states can’t deliver on corruption


Targeted, personal sanctions aimed at oligarchs create a genuine problem for Vladimir Putin’s hold on power, notes analyst Natalie Nougayrède. Russia is an authoritarian kleptocracy. The elite’s loyalty to the president hinges greatly on the protection he can guarantee them, she writes for the Guardian:

Putin is readying himself for re-election next March, aged 65, but he wants to be sure the ruling system he’s built remains iron-clad. Oligarchs dislike sanctions, especially those that make it harder for them to enjoy the wealth they’ve amassed and placed abroad, whether in luxury properties in London, New York and the Riviera, or in a wide network of offshore accounts, as the Panama Papers revealed.

Kleptocracy is one of the aspects of China’s economic model that renders it a non-viable alternative to Western free-market liberalism, says Dr. Chongyi Feng, Associate Professor in China Studies, University of Technology, Sydney, Australia and adjunct Professor of History, Nankai University. “Socialism with Chinese characteristics” is a party-state capitalism in which the communist party-state dominates markets primarily for its political gain, acting as the dominant economic player, controlling the upper stream industries and using markets primarily for maximization of the state power without legal limits, he tells the Diplomat:

Over the last four decades, China has achieved economic growth similar to developed economies at the stage of industrialization and urbanization, with assistance by unprecedented grand transfer of capital and technologies enabled by globalization. Rapid development in China has resulted from a combination of communist brutality and neoliberal brutality, leading to systematic violation of human rights, resource exhaustion, environmental degeneration, structural corruption, and kleptocracy. RTWT

Anticorruption purges of the kind seen in Saudi Arabia and China raise the question of whether nondemocratic states can deliver such a just order while maintaining an absolute monopoly on power unencumbered by the ballot box or an independent judiciary, notes Trevor Sutton, a fellow for National Security and International Policy at American Progress. Many autocratic regimes, eyeing the global upheaval fueled by resentment at corrupt elites, would like the answer to be yes. … Yet the actions of such leaders ultimately rest on the arbitrary and unaccountable exercise of authority that is the enemy of anticorruption activists the world over, he writes for the National Interest:

None of this is meant to suggest that democracy is the silver bullet in the fight against graft. …. But the fact remains that the most accountable, least corrupt governments in the world are overwhelmingly democratic, and whatever progress authoritarian regimes make against graft depends entirely on the continued goodwill of a small circle of senior decision-makers, rather than any enduring feature of the political system.

Gaps in U.S. anti-money laundering regulations have enabled kleptocracy and in turn, strengthened authoritarianism, state failure, civil unrest, and social degradation, notes a new analysis from the Hudson Institute’s Kleptocracy Initiative. Recent reports paint an alarming picture of Western financial entanglement with authoritarian states and build a framework for combatting kleptocracy while safeguarding Western democracies. But the U.S. anti-money laundering (AML) system is inadequate to its purpose, analysts Ben Judah and Belinda Li contend in Money Laundering for 21st Century Authoritarianism.

The Coalition for Integrity this week bestowed the 2017 CFI Integrity Award on Senator John McCain for having co-sponsored a series of measures, including the Sergei Magnitsky Human Rights Accountability Act of 2012 and the Global Magnitsky Human Rights Accountability Act of 2016, all of which are “crucial in the fight against kleptocracies.”

Credit; BPC

A series of papers examine the causes and consequences of corruption in Turkey, and the impact on U.S. interests in the Middle East and around the world, the Bipartisan policy Center’s National Security Project reports:

The first in this series, Power and Corruption in Erdogan’s Turkey: Context and Consequences, looks at how the case of Reza Zarrab (left), a Turkish-Iranian businessman, is symptomatic of a much larger crisis than simply evading sanctions on Iran. A separate brief explains how allegations against Zarrab were first raised in Turkey in 2013, with connections that pierced the top levels of the Turkish government. This new interactive graphic shows the complicated structure of Zarrab’s enterprise, how it operated, and why it required the buy-in of high-level Turkish officials. Review all of the resources in this new series: Corruption In Turkey

Credit: Carnegie Endowment

Controlling Corruption with Public Financial Management

The Center for International Private Enterprise (CIPE) – one of the four core institutes of the National Endowment for Democracy is hosting an event featuring the Honduras Minister of Finance, Wilfredo Cerrato, to discuss the importance of augmenting efforts to control corruption with public financial management reforms. Through more transparent and accountable budgeting, expenditure, procurement, and human resource management, Honduras is seeking to improve the efficiency of public investment and the delivery of critical health, education, and infrastructure services for its citizens.

The Millennium Challenge Corporation program is helping the Government of Honduras save money and improve the procurement and delivery of public services, and reduce opportunities for corruption—ultimately strengthening governance overall. Reducing opportunities for corruption is the principal goal of CIPE’s Centers of Excellence for Anti-corruption and Compliance. The Government of Honduras is providing unprecedented access to its procurement, payment, and human resource records to allow civil society and donors to identify problems with budgeting, payment arrears, procurement, and contracting. The event speakers will review the progress the Government of Honduras has made under the MCC Threshold Program and other initiatives, as well as providing an assessment of the challenges ahead.

Friday, December 1, 2017,  10:30am – Noon – 1211 Connecticut Avenue NW, Suite 700,  Washington, DC, 20036

Welcoming Remarks:

John Wingle, Millennium Challenge Corporation (MCC)


Tim Ridout, Program Officer for Latin America and the Caribbean at CIPE

Panel Discussion:

  • Wilfredo Cerato, Government of Honduras Minister Of Finance
  • John Wingle, Millennium Challenge Corporation
  • Frank Brown, Senior Program Officer for Anti-Corruption, CIPE
  • Marco Bográn, Executive Director MCA-Honduras, MCC
  • Andrew Wilson, Managing Director, CIPE

See CIPE website for speaker bios. RSVP here!

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