Title

Title

The Fight Against Corruption Needs Economists
Foreign Affairs
Josh Rudolph
Monday, May 17, 2021

Combating corruption and kleptocracy has traditionally been an afterthought in U.S. foreign policy: a goal that most policymakers considered laudable but hardly a priority. That attitude is no longer acceptable. In recent years, countries such as China and Russia have “weaponized” corruption, as Philip Zelikow, Eric Edelman, Kristofer Harrison, and Celeste Ward Gventer argued in these pages last year. For the ruling regimes in those countries, they wrote, bribery and graft have “become core instruments of national strategy” through which authoritarian rulers seek to exploit “the relative openness and freedom of democratic countries [that] make them particularly vulnerable to this kind of malign influence.”

Strikingly, one particular form of financial aggression—covert foreign money funneled directly into the political processes of democracies—has increased by a factor of ten since 2014. Over roughly the same period of time, American voters have become highly receptive to narratives about corruption, and politicians across the ideological spectrum now routinely allege that the economy is rigged and deride their opponents as crooked and corrupt. Thus, the needs of U.S. foreign policy and domestic politics have neatly aligned to offer a historic opportunity for a sweeping anticorruption campaign that would institutionalize transparency, resilience, and accountability throughout the United States and in the international financial, diplomatic, and legal systems.

President Joe Biden, his closest foreign policy advisers, and an increasingly active cohort of lawmakers are intent on carrying out precisely that kind of effort. But there is one big problem: leaders in the Treasury Department and some of the officials running international economic policy in the Biden administration are not fully on board. Their reluctance to focus on corruption could severely hinder the mission, because they control the most powerful tools that Washington can bring to the fight.

Follow the Money

No American political figure has done more to frame corruption as a national security issue than Biden. As vice president, he led the U.S. fight against graft abroad and publicly warned in 2015 that, for authoritarian states, “corruption is the new tool of foreign policy.” Writing as a presidential candidate in these pages, Biden promised to issue a policy directive enshrining anticorruption as a core national security interest and pledged to “lead efforts internationally to bring transparency to the global financial system” and to “go after illicit tax havens.” Fighting corruption will be a major focus of the Summit for Democracy that Biden pledged to host in his first year in office.

The foreign policy specialists who have spent years working with Biden are all in sync on this issue. In his first major speech as secretary of state, Antony Blinken prioritized fighting corruption in the contexts of both economic inclusivity and democratic renewal. Blinken has already bestowed honorary awards on anticorruption activists and banned the most powerful oligarch in Ukraine from entering the United States due to corruption; he is now considering naming an anticorruption special envoy. Samantha Power, who heads the United States Agency for International Development, recently wrote that fighting corruption is crucial to restoring U.S. leadership and pledged that doing so would be “a huge priority” at the agency under her leadership. In his first interview after being named the national security adviser, Jake Sullivan said that combating corruption and kleptocracy is one of his highest goals, and the administration’s interim national security strategic guidance mentions corruption half a dozen times.

The leadership at the Treasury Department, however, does not seem nearly as focused on the issue, taking few specific steps to start fighting corruption in the first 100 days of the administration. Until recently, the word “corruption” never appeared in any Treasury speeches, tweets, readouts of calls with foreign officials, or press releases (except for mostly stock language in a few sanctions announcements). In late April, Treasury did release an expression of support for a British anticorruption initiative. But according to one administration official, the White House instructed Treasury to make that statement. When Treasury Secretary Janet Yellen separately addressed international standards against dirty money, rather than calling for a focus on corruption, she emphasized two other priorities: the role of virtual assets such as cryptocurrencies and the financing that enables the proliferation of weapons. At first, Yellen’s inattention to corruption seemed entirely understandable, because she was focused on the public health and economic crises caused by the pandemic. But when she laid out her international agenda in a February letter to the G-20 and in a major speech in April, she did not describe combating corruption and kleptocracy as a priority. Correcting these omissions in a clear and public way should be a top priority for Treasury’s second 100 days.

Dirty Money, Dismal Science

Mobilizing financial regulations and international diplomacy to wage war on corruption and kleptocracy might not come naturally to economists, even accomplished ones such as Yellen and her staffers, because economics has come to be seen as an academic discipline independent of the realities of state power. That is partly because, during the Cold War, Washington’s strategic goals and its economic interests generally converged: in an ideological competition against communism, the spread of free trade and free markets also naturally advanced the geopolitical campaign to win support for liberal democratic capitalism. Hence there was little need for American economists to pay close attention to strategic considerations, because there was not much tension between purely economic interests and U.S. grand strategy.

Since then, however, the nature of authoritarian regimes has evolved, with strategic implications for U.S. policy. Instead of trying to win over the hearts and minds of the masses with communist ideology, the countries that threaten U.S. power today are organized as kleptocracies, stealing from their own people to buy the loyalty of cronies. They hide their ill-gotten gains in Western markets, which presents an Achilles’ heel if financial authorities can manage to find their dirty money.

Unfortunately, this new reality has not yet been taken on board by most economists. In many cases, their views have been shaped by a neoliberal consensus that fails to account for the ways in which deregulation and globalization opened pathways to subvert American democracy and reinforce the power of kleptocracies. Meanwhile, policymakers hoping to shift away from neoliberal dogma have generally not included anticorruption as an element of economic policy. The Biden administration’s vision of a “foreign policy for the middle class,” for example, leaves out fighting corruption. Elsewhere, the administration has cast anticorruption efforts as part of its campaign to revitalize democracy rather than as part of its agenda to set international economic policies that can serve all Americans. And when Yellen has described the costs of corruption, she has focused on its negative effects on growth and poverty in other countries rather than the threat it poses to U.S. national security.

All Aboard

If Biden wants to make progress against corruption, he needs to push his Treasury Department to get with the program. A good first step would be to start preparing a National Corruption Risk Assessment that would expose the financial networks used by oligarchs and kleptocrats. Next month, the department will publish guidance for banks regarding anti–money laundering priorities, and it should use that occasion to emphasize the risks of corruption. And for a broader public audience, a top Treasury official should give a major speech launching a war on corruption, perhaps at the first-ever United Nations session dedicated to corruption, which is scheduled for early June.

Treasury should also develop strong regulations for implementing a law that Congress enacted in January that outlaws anonymous shell companies. According to a number of anticorruption experts who maintain contacts in the administration and who have been imploring senior Treasury officials to prioritize this issue, the department was initially reluctant to designate a senior official to serve as a point person for these regulations. Eventually, public pressure from outside critics and private urging from security and economic officials in the White House led to an appointment. Citing funding constraints, however, Treasury has still not hired outside experts to advise it on enforcing the new law, such as civil society advocates who know which regulations to prioritize, what lobbying pushback to expect, and how to close loopholes through seemingly mundane steps such as updating standard forms.

Fortunately, lawmakers are ramping up pressure on Treasury to get serious about prioritizing anticorruption. On May 3, Representative Tom Malinowski, Democrat from New Jersey, and Senator Sheldon Whitehouse, Democrat from Rhode Island, wrote a letter to Yellen to “underscore the crucial role of Treasury in combatting international corruption and kleptocracy and to urge you to take early steps to confront this key national security threat.” Malinowski and Whitehouse argued that “the top policy priority in the fight against dirty money should now become the expansion of [anti–money laundering] obligations to cover financial facilitators and professional service providers that can enable corruption.”

They recommended first regulating private equity firms and hedge funds before moving on to real estate companies, lawyers, accountants, and others who sometimes enable bribery and graft. They also suggested that Treasury should “lead a landmark international agreement to end offshore financial secrecy and illicit tax havens once and for all . . . backed up by concrete commitments around an array of reporting mechanisms.” Malinowski and Whitehouse also called on Yellen to develop a medium-term anti-kleptocracy plan and appoint anticorruption specialists at Treasury. Meanwhile, the Helsinki Commission—an interagency body created by Congress in 1975 to coordinate security policy with Europe—plans to launch a new “counter-kleptocracy caucus” in June to share perspectives and coordinate efforts across political parties and congressional committees.

Congressional attention to this issue is good news. But to live up to Biden’s ambitious vision for fighting corruption, his entire administration needs to match Capitol Hill’s energy. And that means making sure that every department—including Treasury—devotes itself to the effort.

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    Twenty years after U.S. citizens Ylli, Agron, and Mehmet Bytyqi were brutally murdered in Serbia in the aftermath of the 1999 conflict in Kosovo, their brother Ilir documents his family’s fight for justice in the face of inaction by Serbian authorities. Ilir is joined by family lawyer Praveen Madhiraju and Helsinki Commission senior policy advisor Robert Hand. "Helsinki on the Hill" is series of conversations hosted by the U.S. Helsinki Commission on human rights and comprehensive security in Europe and beyond. The Helsinki Commission, formally known as the Commission on Security and Cooperation in Europe, promotes human rights, military security, and economic cooperation in 57 countries in Europe, Eurasia, and North America. Transcript | Episode 2: Seeking Justice in Serbia | Helsinki on the Hill

  • Podcast: Open Skies

    What was a Russian military plane doing taking pictures over Washington, DC? Arms control experts Alexandra Bell, Senior Policy Director at the Center for Arms Control and Non-Proliferation, and Anthony Wier, Legislative Secretary for Nuclear Disarmament and Pentagon Spending at the Friends Committee on National Legislation, discuss the Treaty on Open Skies. The Open Skies agreement fosters inter-military transparency and cooperation among 34 different countries—including the United States and Russia—by allowing participants to overfly each other’s territory to record and share imagery of military and other installations. During the episode, Bell and Weir outline the role of Open Skies in the Euro-Atlantic security architecture, the treaty’s benefits, the complexity of execution, and current challenges in implementation. "Helsinki on the Hill" is series of conversations hosted by the U.S. Helsinki Commission on human rights and comprehensive security in Europe and beyond. The Helsinki Commission, formally known as the Commission on Security and Cooperation in Europe, promotes human rights, military security, and economic cooperation in 57 countries in Europe, Eurasia, and North America. Transcript | Episode 4: Open Skies | Helsinki on the Hill

  • Justice at Home

    Promoting human rights, good governance, and anti-corruption abroad can only be possible if the United States lives up to its values at home. By signing the Helsinki Final Act, the United States committed to respecting human rights and fundamental freedoms, even under the most challenging circumstances. However, like other OSCE participating States, the United States sometimes struggles to foster racial and religious equity, counter hate and discrimination, defend fundamental freedoms, and hold those in positions of authority accountable for their actions. The Helsinki Commission works to ensure that U.S. practices align with the country’s international commitments and that the United States remains responsive to legitimate concerns raised in the OSCE context, including about the death penalty, use of force by law enforcement, racial and religious profiling, and other criminal justice practices; the conduct of elections; and the status and treatment of detainees at Guantanamo Bay and elsewhere.

  • Justice Overseas

    Human rights within states are crucial to security among states. Prioritizing respect for human rights and fundamental freedoms, defending the principles of liberty, and encouraging tolerance within societies must be at the forefront of America's foreign policy agenda. Peace, security, and prosperity cannot be sustained if national governments repress their citizens, stifle their media, or imprison members of the political opposition. Authoritarian regimes become increasingly unstable as citizens chafe under the bonds of persecution and violence, and pose a danger not only to their citizens, but also to neighboring nations. The Helsinki Commission strives to ensure that the protection of human rights and defense of democratic values are central to U.S. foreign policy; that they are applied consistently in U.S. relations with other countries; that violations of Helsinki provisions are given full consideration in U.S. policymaking; and that the United States holds those who repress their citizens accountable for their actions. This includes battling corruption;  protecting the fundamental freedoms of all people, especially those who historically have been persecuted and marginalized; promoting the sustainable management of resources; and balancing national security interests with respect for human rights to achieve long-term positive outcomes rather than short-term gains.

  • Max Kampelman Fellowships

    The Commission on Security and Cooperation in Europe seeks candidates for its Max Kampelman Fellowship program. Named for a longtime U.S. Ambassador to the Conference on Security and Cooperation in Europe, Kampelman Fellows represent the next generation of American leaders in security policy, human rights, and strategic communications. Kampelman Fellows join a team of world-class experts at an independent, bicameral, bipartisan, inter-branch federal agency. The Helsinki Commission advances American national security and national interests by promoting human rights, military security, and economic cooperation in 57 countries.  Kampelman Fellowships last three months, with fellows expected to work 30 hours per week. Fellows are paid $25 per hour and are offered ongoing enrichment, professional development, and networking opportunities facilitated by senior commission staff. Meet the current Kampelman Fellows. Policy Fellowships Policy fellows will work in political and military affairs, economic and environmental matters, or respect for human rights and fundamental freedoms, based on their areas of interest, expertise, and needs of the Commission. Under the direction of commission policy advisors, policy fellows research topics and trends relating to international military, economic, and human rights issues throughout the 57-country OSCE region; assist staff advisors with hearings, briefings, congressional delegations, legislation, and publications; attend congressional hearings, panels, and events; and perform administrative duties. Each fellow is expected to write at least one article for potential publication on the commission website during his or her fellowship period. Communications Fellowships Under the direction of the communications director, communications fellows support projects and initiatives in all areas of the commission’s portfolio. Communications fellows assist with media outreach activities; help publicize Commission hearings and briefings; staff Commission events; develop web content; and craft creative and engaging content to be shared on social media. They also assist with other special communications projects and perform administrative duties. Each fellow is expected to write at least one article for publication on the commission website during his or her fellowship period. Qualifications The Kampelman Fellowship program is open to recent undergraduates (the beginning of the fellowship term should be less than one year since graduation), current graduate students, and undergraduate students with previous internship experience. All Kampelman Fellowship candidates should have a keen interest in learning more about international affairs, the inner workings of Congress, and the relationship between the legislative and executive branches in the realm of foreign policy. Proficiency in a second OSCE language is an asset. Pursuant to Section 704 of the Consolidated Appropriations Act, 2017, Pub. L. No. 115-31 (May 5, 2017), as amended, an applicant must be one of the following: (1) a citizen of the United States; (2) a person who is lawfully admitted for permanent residence and is seeking citizenship as outlined in 8 U.S.C. 1324b(a)(3)(B); (3) a person who is admitted as a refugee under 8 U.S.C. 1157 or is granted asylum under 8 U.S.C. 1158 and has filed a declaration of intention to become a lawful permanent resident and then a citizen when eligible; or (4) a person who owes allegiance to the United States. Policy-Focused Fellows: A broad liberal arts education is ideal. Applicants should demonstrate excellent writing, analysis, research, and oral presentation skills, as well as an interest in government, international relations, and human rights. Communications-Focused Fellows: Candidates with a focus on marketing, communications, journalism, public relations, or related disciplines are encouraged to apply. Applicants should demonstrate excellent writing and editing skills; a good working knowledge of photography, cutting-edge web content management systems, and new media platforms; and an interest in government, international relations, and human rights. How to Apply Please send the following application package to csce[dot]fellowships[at]mail[dot]house[dot]gov. Brief cover letter indicating the following: Why you want to work for the Commission, including relevant background or personal experiences Your specific areas of interest as they relate to the work of the Commission Your availability (start and end dates, as well as hours per week) Résumé of no more than two pages Academic transcript(s) (official or unofficial) Writing sample of three pages or less In the subject line of your e-mail application, please indicate whether you are applying for a policy fellowship or a communications fellowship and for which term you are applying. Only complete applications received by the deadline will be considered. Please do not contact the commission, or the offices of our commissioners, to inquire about the status of your application. Finalists will be notified if they have been selected for an interview. Upcoming Terms and Application Deadlines Spring 2022 (January 18 – April 22): Deadline for applications is November 5, 2021 at 11:59 PM EST Summer 2022 (April 25 – July 29): Applications will be accepted from October 25 until January 25, 2022 at 11:59 PM EST Fall 2022 (September 12 – December 16): Applications will be accepted from March 12 until June 12, 2022 at 11:59 PM EST

  • OSCE Election Observation

    In 1990, OSCE participating States pledged to hold free and fair elections and to invite foreign observers to observe its elections. Elections observation has since been recognized as one of the most transparent and methodical ways to encourage States’ commitment to democratic standards and has become a core element of the OSCE’s efforts to promote human rights, democracy, and the rule of law. In 2020 alone, the OSCE has been invited to observe elections in nearly 20 OSCE participating States (Azerbaijan, Croatia, Georgia, Iceland, Ireland, Kyrgyzstan, Lithuania, Moldova, Monogolia, Montenegro, North Macedonia, Poland, Serbia, Slovakia, Tajikistan, Ukraine, and the United States).* History of OSCE Election Observation All OSCE participating States have committed to holding democratic elections that meet the same basic standards: universal access, equality, fairness, freedom, transparency, accountability, and privacy in voter submission. Because violations of these commitments can endanger stability in the OSCE region, as well as within an individual country, OSCE nations also agreed to open their elections to observers from other participating countries. To encourage compliance and confidence in the results of the observation missions, countries agreed to observe elections together under the OSCE umbrella. Since the 1990s, OSCE election observers have been present at more than 300 elections throughout the OSCE region. While some OSCE countries benefit from foreign observation more than others – especially those that formerly had one-party communist systems and little experience with democracy – the OSCE also observes elections in more established and stable democracies, such as the United States, Canada, Germany, and the United Kingdom. Even these countries can benefit from consideration of the objective conclusions of those with an outside, comparative perspective.  Perhaps more important, observation across the OSCE region removes any sense of stigmatization associated with the repeated hosting of election observation missions as well as any argument against hosting by those political leaders in some countries who continue to resist holding even reasonably free and fair elections. As one of the original 35 members of the OSCE, the United States has participated actively in OSCE election observation missions, both by providing observers for foreign elections as well as by inviting the OSCE to observe every general and midterm election since 2002. Election Observation Methodology ODIHR's election monitoring methodology takes account of the situation before, during, and after an election. All aspects of the electoral process are considered, to include a review of the legal framework; the performance of elections officials; the conduct of campaigns; the media environment and equitable media access; the complaints and appeals process; voting, counting, and tabulation; and the announcement of results.  Recently, ODIHR has further expanded its methodology to explore the participation of women and national minorities. Election Observers OSCE election observation missions often are undertaken jointly by the OSCE Office of Democratic Institutions and Human Rights (ODIHR) and the OSCE Parliamentary Assembly (PA). A typical election observation mission comprises around 12 core team members, as well as several dozen long-term observers and several hundred short-term observers. The missions, which combine strong technical expertise and sound political judgement, include ODIHR officials, professional analysts, parliamentarians, and others on loan from OSCE member countries. To ensure that no single country’s point of view is overrepresented, the OSCE limits the number of observers from any one country. No matter where they are from, observers commit to an election observation code of conduct, which limits their role to observing and reporting. Observers have no authority to instruct, assist, or interfere in the voting, counting, tabulation, or other aspects of the electoral process. Election Observation, Reporting, and Recommendations Ahead of the elections, observers receive briefings from the host government, political parties, civil society, and media representatives. Long-term observers also follow pre-election activities including candidate and voter registration, political campaigns, and media coverage. On Election Day, two-person teams of short-term observers fan out across the country to observe the conduct of the election, including opening of polling stations; checking whether ballot boxes are empty and properly sealed; the counting of ballots; the handling of spoiled or unused ballots; and the transmission of polling station results. Observers monitor how voters are processed, the accuracy of voter registries, and whether voters are able to vote in secret and in an environment that is free from intimidation. After the elections, long-term observers note how electoral complaints and appeals are handled. The OSCE election observation mission publishes preliminary findings immediately after the elections, with a final comprehensive report issued a few weeks later. The final report includes in-depth analysis of the election’s political context and legislative framework; election administration; voter and candidate registration; the election campaign; the media; participation of women and national minorities; and the voting, counting, and tabulation processes. Impact The OSCE methodology represents the global standard for quality election observation. By analyzing election-related laws and systems, as well as the effectiveness of their implementation, election observation missions help document whether elections in OSCE countries are free and fair for voters and candidates alike.  Its expertise has been shared with other regional organizations, and the OSCE has contributed to observation efforts outside the OSCE region. The Helsinki Commission Contribution The U.S. Helsinki Commission was the first to propose concrete commitments regarding free and fair elections more than a year before they were adopted by the OSCE in June 1990. By that time, Commissioners and staff had already observed the conduct of the first multi-party elections in seven East and Central European countries transitioning from one-party communist states to functioning democracies. As the OSCE developed its institutional capacities in the mid-1990s, the Commission joined the efforts of an increasing number of observer teams from across the OSCE region, which evolved into the well-planned, professional election observation missions of today.  Commissioners and staff have observed well over 100 elections since 1990. More broadly speaking, the United States support OSCE observation efforts, to include deployment of civilian, parliamentary, and diplomatic observers abroad, but also supporting OSCE’s observation of domestic elections, with a focus on countries where resistance to democratic change remains the strongest. Learn More Elections: OSCE Office of Democratic Institutions and Human Rights Election Observation: OSCE Parliamentary Assembly * Following Needs Assessment Missions designed to assess the situation and determine the scale of a potential observation activity in a particular country, election observation was deemed unnecessary in some cases.

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