Democracy is under attack all over the world. This democratic recession has been building for more than a decade but has deepened as autocrats, often backed by China or Russia, violently repress their people and corrode independent institutions. From Belarus to Cambodia, tyrannical rulers are doing everything they can to stay in power. But they have an Achilles’ heel: their reliance on state-sponsored corruption and the growing outrage of their people over it. To win the fight against autocracy, the United States will have to take on the rise of kleptocracy.
Kleptocracy represents a new form of governance in which authoritarians weaponize corruption and globalization to amass power and wealth. Today’s strongmen accumulate and retain power using the kleptocrat’s playbook. This myriad of tactics – from co-opting rivals and patronage to laundering their money and laundering their reputations via charitable investments abroad – provide the political and economic leverage needed to cement control and suppress corruption. dissent.
The good news is that kleptocracy has finally become a national security priority in the United States, triggering unprecedented executive and legislative action. President Joe Biden has elevated foreign corruption as a national security threat: Last month, his administration announced a new US strategy to counter it globally.
Yet as a challenge to democratic survival, kleptocracy remains largely misunderstood. Proponents’ focus on the role of destination countries and illicit financial flows, while necessary, has often obscured other equally important facets of the problem, including the political, enforcement and branding efforts that are necessary to the survival of this toxic form of government.
Looking ahead, only a clear understanding of the symbiotic relationship between authoritarianism and corruption will help the United States appropriately deploy the democratic arsenal to help it win the competition against illiberal challengers. Here, we present a new framework for understanding kleptocracy and outline a strategy for dismantling it.
A Multifaceted Transnational Threat
Kleptocracy is defined by its transnational nature and, in particular, by the vital role played by professional intermediaries in third countries in the laundering of illegally acquired assets. Often these “facilitators” sit in the offices of reputable law firms, real estate agents, art dealers, and other white-collar businesses in places like New York, London, or Panama. While modest initiatives in the United States and Europe are beginning to close some of the loopholes that kleptocrats enjoy, such as bank secrecy and beneficial ownership laws, the recent Pandora Papers are a powerful reminder that new measures and harmonization multilateralism are still needed.
However, the transnational crime element of kleptocratic governance is not the whole story. Focusing on it, as analysts have done for years, presents an incomplete diagnosis of the problem. In addition to exploiting Western jurisdictions, tax havens and financial centers for pecuniary gain, the kleptocratic regime relies on a vast web of practices and behaviors that transcend the world of global finance.
The kleptocrat’s playbook includes the use of overseas agents, but also strategies that take place within a country’s borders. Likewise, kleptocrats do not stop at activities whose goal is personal enrichment. An array of financial and economic tactics allow kleptocratic regimes to thrive, including bribing foreign officials, buying government posts, or diverting public funds to favor allies.
Kleptocrats and their cronies also employ political strategies, ranging from patronage to abuse of state office and influence peddling. These are corrupt practices that exist in most societies; what is unique about kleptocracy is how it is strategically deployed to maintain political control. Internationally, this often includes strategic bribery as a means of neutralizing external opposition forces and sources of control.
Repressive methods become central elements of the kleptocrat’s playbook. Journalism can be a very dangerous business in highly corrupt and kleptocratic countries, with retaliatory killings against journalists doubling in the past year. In some established democracies, the rise of intimidation lawsuits aimed at deterring journalists and researchers from disclosing information has led some publishers in the UK to preemptively self-censor. The Chinese Communist Party (CCP), under the guise of an overseas anti-corruption campaign, has disproportionately targeted political opponents and critics. This militarization of the fight against corruption is not unique to the CCP.
Finally, a key feature of contemporary kleptocracy is the importance of branding and image management, from hosting international sporting and cultural events to promoting “development narratives” that link authoritarian forms of governance to accelerated economic growth. Outside their home countries, kleptocrats have become more nimble: through targeted donations to universities, think tanks, and other academic institutions, they are increasingly able to shape perceptions of repression and corruption of their regimes. We have seen notorious examples of these reputation laundering attempts from Russia and the Gulf States, among others.
No One Solution: Strategically Deploy US Efforts
Just as kleptocrats deploy tactics across multiple dimensions, responses to their behavior must be multilevel. Improving understanding of how kleptocrats manipulate legal channels and engage in illicit activities to create wealth, undermining democracy in the process, is the first step in crafting a global response. Second, the democratic community, led by the United States, should tap into three sources of resilience that only democracies possess: a superior ability to forge enduring alliances, the ability to develop inclusive norms and effective institutions, and the existence of a civic space separate from government.
It takes a network to defeat a network. In order to elevate the fight against kleptocracy, it is essential that current initiatives aimed at creating an environment conducive to kleptocratic abuse in the United States result in concerted action with other transit and destination countries.
This includes promoting the full implementation of existing anti-corruption and anti-money laundering commitments under international agreements, including the most recent Financial Action Task Force recommendations. Washington should coordinate the introduction of global Magnitsky sanctions targeting human rights abuses and corruption with other democracies whenever possible. The “Year of Action” following the Democracy Summit in December offers a unique opportunity to prioritize these core elements of the anti-kleptocracy agenda.
Second, the United States should redouble its efforts to help consolidating democracies penetrated by kleptocratic networks, or at risk of becoming kleptocracies themselves, to develop a normative and institutional architecture conducive to good governance. This includes strengthening the rule of law to ensure that corrupt practices are not only prohibited but effectively prosecuted, as well as providing strong protections for journalists and whistleblowers. US leadership in the fight against kleptocracy, both in Congress and in the White House, has renewed US credibility on the issue, creating a window of opportunity to push partner governments to act.
Supporting healthy civic space in vulnerable countries should be the third step in America’s anti-kleptocracy strategy. Individual citizens and organized civil society are the last line of defense against the kleptocratic regime. In the face of more powerful forces, they need the protection of consolidated democracies against violence, intimidation and vexatious legal threats.
Legal assistance and asylum are only the first step. Publicly highlighting courageous individuals and organizations can continue to provide a shield against the worst forms of repression. The International Anti-Corruption Award that the State Department launched in 2020 should be accompanied by new initiatives of democratic solidarity with those on the front lines of kleptocracy. Ongoing outreach is needed to remind kleptocrats that they must play by the rules or they will be held accountable.
If the authoritarians seem to be winning, it is at least partly because Western nations let them. A concerted campaign by democracies to neutralize kleptocracy would expose the many ways they exploit the rules-based international order that they simultaneously challenge. In a world awash with more money (legal and illicit) than ever before, it’s time to level the playing field so that democratic forces have a fair chance. Only then can free nations turn the tide of authoritarianism.
Daniel Twining is president of the International Republican Institute (IRI), where Eguiar Lizundia is associate director for technical advancement. The IRI supports democratic development in more than 100 countries and is a central institute of the National Endowment for Democracy.