How Non-State Actors Export Kleptocratic Norms to the West

On October 11th, Hudson Institute’s Kleptocracy Initiative held a discussion of Ilya Zaslavskiy’s report, How Non-State Actors Export Kleptocratic Norms to the West.

Recent global events show that the post-Cold War flow of money and values was not a one-way affair. The West is witnessing an increasingly coordinated assault on its own democratic system. This destructive import of corrupt practices comes not only from post-Soviet kleptocratic regimes like Azerbaijan, Kazakhstan, and Russia, but also from China and other countries around the world whose ruling elites now possess far-reaching financial and political interests in the West.

After opening remarks by Mr. Zaslavskiy, two expert panels explored the development of corrupt norms and the true nature of contemporary kleptocratic regimes, as well as the methods they deploy to undermine Western democracy – and what can be done to fight back.

Mr. Zaslavskiy was introduced by Charles Davidson, and joined on the panels by Sarah Chayes, Jeffrey Gedmin, Ambassador Richard D. Kauzlarich, David Kramer, Paul Massaro, and Louise Shelley.

Mr. Massaro, a Policy Advisor at the U.S. Commission on Security and Cooperation in Europe (Helsinki Commission), made the following statement on behalf of the Commission.

Good morning and thank you for having me here today to speak about kleptocracy and how we aim to confront this serious challenge. My name is Paul Massaro and I am the Helsinki Commission policy advisor responsible for anti-corruption. I would especially like to thank the Hudson Institute for hosting this discussion and, Charles Davidson and Ilya Zaslavskiy for the attention they have brought to this issue. Your work is invaluable in efforts to confront corruption and ensure that we uphold our democratic values.

Kleptocracy is the gravest transnational threat that Western states face. It encourages and empowers authoritarian governance, while undermining the rule of law and democratic institutions. Unchallenged, kleptocratic behavior becomes the modus operandi of government, subverting democracy and co-opting vast tracts of society into its institutionalized corruption scheme.

Kleptocracy also imperils the security and prosperity of our allies. Kleptocratic behavior both entrenches oppressive governance in authoritarian states and sows the seeds of anti-democratic values in the West.  Kleptocrats infiltrate and exploit our institutions, and encourage illegal and illiberal activity among our elites and civil society leaders, undercutting the foundations of our democracy.

Kleptocracy has entrenched itself nowhere in the OSCE region more so than Russia. The Russian government engages in kleptocratic activity in order to stifle democracy and sustain its domestic authority. The Kremlin governs undemocratically, suppresses free commerce, and stymies political transparency by stealing and hiding the assets of the Russian people through an opaque network of agents. Russian kleptocracy reinforces its authoritarian system and leaves its citizens with no possible recourse to contest it.

Criminals, cronies, and the state have established a system that relies on secrecy and intimidation to maintain and grow their own authority and profits. All of these elements disdain every day, law-abiding citizens and jointly strive to suppress dissent. Kleptocrats view people as objects to be bought or eliminated. They only view themselves and their inner circle as having the right to free choice and protection.

Considered together, these factors have contributed to create a culture of criminality that has become idealized through the popular culture of kleptocratic states. Their lifestyle, behavior, and power is illustrative of this pervasive and damaging reality. As a consequence, citizens of kleptocratic states often see no other alternative to this ubiquitous system of corruption and are forced to accept it.

Alone, nations cannot challenge kleptocracy, given the enormity and extent of the threat. We must work cooperatively and involve international institutions in this endeavor.

The OSCE, the world’s largest regional security organization, which includes all FSU states, upholds democratic values, enshrines the sovereignty of its participating states, and promotes human rights. The agreements reached by participating states, including the founding Helsinki Final Act, ordain the OSCE to safeguard the post-Cold War order that is marked by economic freedom, political transparency, and participatory democracy. Kleptocracy and other corrupt practices jeopardize democratic stability in the OSCE region. Without question, opposing corruption and kleptocracy is central to the OSCE’s founding mission, especially when it emanates from one of its signatory members.

Over the past few years, the OSCE has paid greater attention to the scourge of corruption in participating states and outlined strategies to promote good governance and eliminate corruption and other kleptocratic activities. In this regard, the Dublin and Basel Declarations, finalized in 2012 and 2014 respectively, are excellent examples. Both agreements promote domestic reforms targeting political transparency initiatives in tandem with more concerted anti-corruption efforts. They also advocate for OSCE participating states to strengthen multi-stakeholder cooperation between the public and private sectors. Moreover, the OSCE seeks to encourage a greater role for private firms in identifying and combating blatant corruption. In order for the United States and its allies to extinguish kleptocracy in Europe, adherence to these agreements, core OSCE practices, and participation in future summits will be critically important.

The Helsinki Commission, too, is concerned by the rise and spread of kleptocracy, and is strongly committed to combating it. The Helsinki Commission is an independent Commission of the U.S. Congress, established in 1976 and led by nine Senators, nine Representatives, and three appointees from the executive branch. It is mandated to monitor the compliance of participating states with the consensus-based commitments of the OSCE.

Since July, the Commission has held a hearing on combatting kleptocracy with incorporation transparency; held briefings concerning the recovery of stolen assets, combating energy sector corruption, and the extent of Kremlin ties to corruption; and published multiple online pieces addressing the subject. On the Hill, we have become the primary forum for discussion of the topic. We will continue to work to expose the severity of kleptocratic practice to ensure that the United States is able to counter kleptocracy in all its forms.

As a result of our public engagement on this issue, we have already cultivated important relationships on Capitol Hill and elsewhere, building a network of committed policymakers and experts that offers fresh insights and new tactics to combat kleptocracy and reverse its deleterious influence. Today’s event is part of this process and I encourage all stakeholders to reach out to me—my door is always open. Only through collaboration can we successfully repel kleptocracy and the authoritarianism it engenders.

Commissioners have been hard at work to tackle global corruption. Commissioner Senator Sheldon Whitehouse introduced the “True Incorporation Transparency for Law Enforcement Act” (S. 1454), which would establish incorporation transparency such that anonymous shell companies cannot be abused by kleptocrats to launder their ill-gotten gains in the United States. Commissioner Senator Marco Rubio introduced the “The Corporate Transparency Act” (S. 1717), along with Senator Ron Wyden, which would do the same, though through a different mechanism. The Commission’s Co-Chairman Representative Chris Smith and Commissioner Representative Gwen Moore are co-sponsors of the House version of this bill (H.R. 3089).

Ranking Senate Commissioner Senator Ben Cardin introduced the “Combating Global Corruption Act” (S. 859), which envisions a tiered system of countries based off their level of corruption and efforts to fight said corruption. Commissioner Rubio has cosponsored this legislation. This is by no means an exhaustive list, but only a few examples of Commissioner engagement.

Ultimately, combating kleptocracy is more than a question of merely upholding the law and ensuring the free operation of public institutions—it is an ideological conflict between corruption and the rule of law. Kleptocratic regimes promote and export values that are inimical to our own. This systematic challenge to participatory democracy and the rule of law cannot be ignored.

As Ilya notes in his research, the Kremlin has imparted corrosive and illiberal values through its extensive kleptocratic campaign, encouraging its vast network of cronies, lawyers, and other prominent public figures to undermine our public institutions and profit from it. His latest paper succinctly outlines the weaponization of corruption and is a tremendous contribution to the field.

We must recognize this ideological threat, how it operates, and what we can do to combat it. Kleptocracy is the key challenge of the 21st century and we must be prepared to face it. Thank you.