Authoritarian regimes have long used corruption to protect their power. Paying off public officials, buying off critical press coverage, and secretly funding influence campaigns are all standard tactics of the sophisticated modern despot. Exporting these techniques to influence democracies has bought them a global network of apologists, a practice the American diplomat Philip Zelikow has dubbed strategic corruption: the transformation of corruption into an instrument of national strategy. Of all forms of gray zone conflict between autocracies and democracies, this is perhaps the most toxic, as it corrodes the trust that is a necessary underpinning for successful open societies.
Starting with a few brave anti-corruption journalists and campaigners who first highlighted the nature of this threat, scholars and politicians have begun to uncover the scale of the rot. The U.S. Senate Intelligence Committee published a bipartisan report on Russian interference this year, showing how the aluminium billionaire Oleg Deripaska acts as a proxy for the Russian government, managing and financing influence operations to install pro-Kremlin regimes and strengthen Kremlin-aligned powerbrokers across the globe. The United Kingdom House of Commons report on the same topic demonstrated how Russian money has corrupted large swathes of the British establishment, making Russian influence an accepted norm in British politics. But Russia is not alone in applying what has become known as the “Kremlin Playbook,” using money to suborn democracies around the world. The Czech scholar, Martin Hála, has documented how the Chinese Communist Party purchased politial influence in his country. From Malaysia to Sri Lanka and Serbia, and across large parts of Africa, State-controlled Chinese companies, like CEFC China Energy, buy political influence, smuggle weapons and corrupt local leaders to promote Chinese interests. Special Counsel Robert Mueller’s investigation team looked into how an Egyptian State bank may have financed the Trump 2016 campaign, and doubtless we will learn of many more such efforts in future investigations once Trump leaves office.
The incoming Biden team recognizes the seriousness of this threat and the need to combat it vigorously. In 2018, Joe Biden and Michael Carpenter published an article in Foreign Affairs on how to defend democracy from the Kremlin, in which they drew attention to “the ways in which Russia has managed to effectively export the corruption that has warped its own politics and economy—weaponizing it, in a sense, and aiming it at vulnerable societies elsewhere.” Jake Sullivan, Biden’s pick for national security advisor, has declared that one of the administration’s top priorities will be “to rally our allies to combat corruption and kleptocracy, and to hold systems of authoritarian capitalism accountable for greater transparency and participation in a rules-based system.”
Shamefully, the United States has long been a laggard at home, while pushing anti-corruption reforms abroad, but this is beginning to change with new rules on beneficial ownership disclosure making their way into the bipartisan National Defense Authorization Act (NDAA).
The NDAA also requires the next Treasury secretary and attorney general to report back to Congress on what steps the administration should take to respond to autocratic regimes that undermine democratic governance in the United States and its allies through kleptocracy and corruption. A report we recently published at the Center for American Progress on this very topic shows that the U.S. government has a set of powerful tools at its disposal that it can apply to win this fight.
After 9/11, the U.S. Treasury built an office of Terrorism and Financial Intelligence (TFI) to squeeze al-Qaeda’s finances. It soon discovered that the authorities and tools it had developed to fight terrorists could also be used against other national security threats, most prominently to put pressure on North Korea’s nuclear program. After the office exposed the networks of banks in Macao that were funding the North Korean smuggling networks, China closed them down, forcing the North Koreans to the table. As one of their negotiators admitted: “You Americans have finally found a way to hurt us.”
Now, it is time to turn these tools against the authoritarian regimes, and their oligarchic supporters, who have attacked democracies around the world. An incoming president can designate strategic corruption as a national security threat, giving the Treasury Department the task of managing an interagency anti-corruption task force, while restructuring TFI to focus this work and adding corruption to the National Intelligence Priorities Framework. Congress can fund additional investigators and analysts at Treasury and the Intelligence Community. Targeted intelligence and analysis should yield a better understanding of kleptocratic influence networks, leading to sanctions and criminal referrals where appropriate. Treasury has a wide range of authorities to crack down against abuses of the financial system, most notably through the Global Magnitsky Act as well as through sanctions and special designations, which can cut banks off from the dollar system. The recent action to sanction ABLV Bank of Latvia for laundering fund for kleptocrats was encouraging, but there is much more to be done.
The ubiquity of the dollar, the skills in forensic financial investigations honed during 20 years of counter-terrorism work, and the rare bipartisan consensus that strategic corruption is a serious threat, are all priceless assets for an administration that is serious about the danger that this quiet menace poses to the very essence of democracy. Biden has spoken often about his plans to gather the world’s democracies to find ways of strengthening their institutions. Fighting strategic corruption will presumably be on the agenda. What better way of starting this conversation with America’s allies than by demonstrating that the United States can take action at home.
Image: Russian President Vladimir Putin and billionare, businessman Oleg Deripaska are seen visiting the RusVinyl Russian-Belgian joint polymer plant, near Nizhny Novgorod, in 2014. Photo by Sasha Mordovets/Getty Images