Deploying the Democratic Arsenal Against Kleptocracy

Addressing the symbiotic relationship between authoritarianism and corruption will determine who wins the contest between democracy and its illiberal challengers

U.S. Capitol Building

“Democracy is under assault across the globe. This democratic recession has been building for over a decade but has worsened as autocrats, often backed by China or Russia, violently suppress their people and corrode independent institutions. From Belarus to Cambodia, tyrannical leaders are pulling out all the stops to stay in power. But they have an Achilles’ heel: their reliance on state-sponsored corruption and their people’s growing outrage about it. To win the struggle against autocracy, the United States will need to play offense against the rise of kleptocracy.

“Kleptocracy represents a novel form of governance in which authoritarians weaponize corruption and globalization to amass power and wealth. Today’s strongmen accrue and retain power by using the kleptocrat’s playbook. This myriad of tactics—from coopting rivals through favoritism to laundering their money and whitewashing their reputation via charitable investments abroad—provides the political and economic influence necessary to cement control and suppress dissent.

“Kleptocracy is defined by its transnational nature, and in particular, the vital role professional intermediaries in third countries play in laundering illegally acquired assets. Often, these ‘enablers’ sit in the offices of reputed law firms, real estate agents, art dealers, and other white-collar businesses in places like New York, London, or Panama. Whereas modest initiatives in the United States and Europe are starting to close some of the loopholes kleptocrats benefit from, like bank secrecy and beneficial ownership laws, the recent Pandora Papers are a powerful reminder that further steps and multilateral harmonization are still needed.

“The kleptocrat’s playbook includes relying on agents overseas, but also strategies that take place within a country’s borders. Similarly, kleptocrats do not stop at activities whose purpose is self-enrichment. An array of financial and economic tactics allow kleptocratic regimes to thrive, including bribing foreign officials, purchasing government positions, or misappropriating public funds to favor allies.

“Repressive methods are becoming central components of the kleptocrat’s playbook. Journalism can be a very dangerous endeavor in highly corrupt and kleptocratic countries, with retaliatory killings of reporters doubling in the last year. In some established democracies, the proliferation of intimidation lawsuits to dissuade journalists and researchers from exposing information has led some publishing houses in the United Kingdom to preemptively self-censor. The Chinese Communist Party (CCP), under the guise of a campaign to address corruption overseas, has disproportionately targeted political opponents and critics. This weaponization of anti-corruption is not unique to the CCP.

“Just as kleptocrats deploy tactics across multiple dimensions, the responses to their behavior must be multi-layered. Improving the understanding of how kleptocrats manipulate legal channels and engage in illicit activities to build wealth for themselves, undermining democracy in the process, is the first step in devising a global response. Next, the democratic community, led by the United States, should leverage three sources of resilience that only democracies have: a superior capacity to forge durable 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 vital that current initiatives to address the enabling environment for kleptocratic abuse in the United States are translated into concerted action with other transit and destination countries.

“If authoritarians appear to be winning, it is at least in part is because Western nations have let them. A concerted campaign by democracies to neutralize kleptocracy would expose the many ways they are exploiting the international rules-based order that they simultaneously challenge. In a world awash in more money (licit and illicit) than ever before, it is time to level the playing field so that democratic forces have a fair shot. Only then can free nations reverse the authoritarian tide.”

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