Corruption: The Unrecognized Threat to International Security

Systemic corruption has an unrecognized bearing on international security. Policymakers and private companies often pay insufficient attention to corruption when deciding what foreign and defense policies to pursue or where to invest. Greater understanding of the nature of acute corruption and its impact on global security would contribute to a better assessment of costs and benefits and therefore to improved policy and practice.

 

 

Security Implications of Severe Corruption

• Acute corruption should be understood not as a failure or distortion of government but as a functioning system in which ruling networks use selected levers of power to capture specific revenue streams. This effort often overshadows activities connected with running a state.
• Such systematic corruption evokes indignation in populations, making it a factor in social unrest and insurgency.
• It contributes to other international security threats, such as symbiotic relationships between states and transnational organized crime networks, facilitation for terrorist organizations, permeable international security regimes, and acute economic disruptions.
• Corruption does not fuel these threats alone. It combines with other risk factors, such as ethnic, religious, or linguistic rifts in a population or severe economic disparities, to increase the likelihood of a security challenge.
• Western policymakers typically prioritize other considerations, such as immediate security imperatives, the economic or strategic value of maintaining relations with a given government, or return on investment, over corruption concerns. As a result, Western institutions and individuals often enable corrupt governments, exacerbating security threats and incurring sometimes dangerous reputational risk.

Recommendations for Public- and Private-Sector Decisionmakers

Rigorously analyze systemically corrupt countries. Gather information on the structure of ruling networks, the levers of power and revenue streams they capture, and other risk factors with which acute corruption may be interacting.

Use the analysis to inform choices on engaging with severely corrupt regimes. Policymakers and business executives alike should conduct nuanced cost-benefit analyses before deciding to invest in a systemically corrupt state. Where involvement is unavoidable or fulfills a separate policy priority, modifications to standard operating procedures can reduce the likelihood of crises and help avoid the costs associated with interventions that might otherwise be required.

Devise creative ways to avoid enabling systemic corruption. Decisionmakers should take advantage of the wide variety of available tools and leverage when approaching corrupt countries (see appendix in full paper). Depending on the circumstances, changes in diplomatic practice, military assistance, development efforts, aid to civil society, membership requirements for multilateral regimes, business investment, and rules regulating international capital flows will be required.

Corruption: Misunderstanding the Impact

The latest in a string of popular uprisings that have toppled governments from Tunisia to Kyrgyzstan escalated into a crisis in 2014 as Ukrainians threw off the rule of then president Viktor Yanukovych and Moscow responded by invading Crimea.

At the same time, jihadis from several continents flocked to Syria, where an estimated 150,000 people were dead after three years of civil war and millions fled their homes. In Afghanistan, Taliban insurgents were exacting a record toll on local security forces as North Atlantic Treaty Organization (NATO) troops were leaving a still-unstable country in the wake of their withdrawal. And in Nigeria, militants from the Boko Haram extremist group were conducting a series of attacks on schoolchildren and villagers, while the governor of the country’s central bank was fired for investigating the disappearance of some $20 billion in oil revenues.

Is there a thread linking these far-flung events, all high on the West’s list of security priorities?

Acute, structured government corruption is a factor in all of them. Yet, despite the remarkable correlation, the role this phenomenon may play in exacerbating international insecurity is often overlooked.

Corruption is typically seen as a pathology, a fraying at the edges of a system or, at worst, a sign of system failure. Consequently, much of the work to devise remedies is entrusted to aid agencies and local civil society actors, whose hard-fought efforts strive for small-scale, concrete successes. These interventions tend to be focused on remedying technical deficiencies or building capacity.

But in a range of countries around the globe, corruption is the system. Governments have been repurposed to serve an objective that has little to do with public administration: the personal enrichment of ruling networks. And they achieve this aim quite effectively. Capacity deficits and other weaknesses may be part of the way the system functions, rather than reflecting a breakdown.

This structural dynamic—together with the strong correlation between acute corruption and breaches of international security—suggests that corruption may be a higher-stakes problem than has been commonly thought. Foreign and defense policymakers, as well as multinational corporations, need to mainstream consideration of corruption into their decisionmaking processes.

But currently, Western governments and key business actors are not well set up to respond in this holistic way. Information on the organization, manning, and practices of kleptocratic networks in key countries is not systematically gathered. Corruption is not on the agenda for high-level bilateral exchanges. Experts and specialized departments working on the issue are rarely at the table when critical decisions are made. They are insufficiently resourced even to carry out the relatively marginal tasks they are assigned. And relationships or cooperation models come in too few varieties, precluding subtle or creative ways of furthering anticorruption priorities so an all-or-nothing approach prevails.

A better understanding of acute and structured corruption as a functioning system, and of how it interacts with other risk factors to exacerbate threats to international security, could better public- and private-sector decisionmaking in a number of ways. It would:

• Improve risk analysis, flagging countries such as Tunisia or Egypt prior to their respective revolutions in 2011, where—despite surface stability—kleptocratic governance, combined with other risk factors, made upheaval likely. It might help determine whether other countries, including Algeria, Angola, Bulgaria, Ethiopia, Turkey, and Uzbekistan, fall into this category today.
• Contribute to a more accurate calculation of the real trade-offs when foreign policy priorities compete.
• Paint a more detailed picture of how different interventions—including diplomatic interactions, military cooperation, private investment, and humanitarian and development assistance—play out in environments marked by acute corruption.
• Contribute to more sustainable peace deals by reducing the distortion of negotiations between governments or between governments and insurgent groups that often hampers post-conflict consolidation.

As a result, a more sophisticated understanding of acute corruption could reduce the need for military interventions once crises erupt by helping head them off through more effective use of nonmilitary policy instruments, before conflict actually breaks out. Or, where intervention has taken place, it could increase the chances of achieving security objectives by improving operations.

Corruption and Security: Basic Correlations

An overlay of well-known indices tracking corruption on the one hand and violence or instability on the other reveals a visible correspondence: countries characterized by severe corruption also tend to suffer conflict or state failure (see figures 1 and 2). Twelve of the fifteen lowest-ranking countries on Transparency International’s 2013 Corruption Perceptions Index, for example, are the scene of insurgencies, harbor extremist groups, or pose other grave threats to international security.

 

 

While such simple correlations are arresting, they are not very informative about the dynamics of systemic corruption and how, precisely, it may threaten global security. Transparency International’s Corruption Perceptions Index does a great service by focusing world attention on the problem of corruption and mobilizing efforts to fight it. While it was never intended to be an authoritative analytical tool, however, analysts and policymakers often use it that way—despite Transparency International’s caveats.1  Based in part on attitudes of elite business communities, such indices may be distorted by some of the sophisticated forms today’s acute corruption takes, diminishing their value in helping predict security risks.2  When public funds are pumped into private banks to maintain a country’s capital reserves, for example, the pillage of those banks by kleptocratic elites may be invisible to outside observers—as was the case when Tunisia was widely seen as an exemplar of accountable government just months before its anticorruption revolution.3  Where pure pay-to-play arrangements are dressed up as foreign direct investments in local industries, as occurs regularly in Uzbekistan’s communications sector,4  outside perceptions of corruption may not match the reality.

Pinpointing a correlation between failing states and states that are seen as corrupt, moreover, proves nothing about causation. Could a reputation for chaos merely be translating into a reputation for corruption, muddying the analytical waters? How to determine if state collapse is providing opportunities for corruption or if corruption is causing state collapse?

Finally, the notion that disintegrating states pose dangers to their neighborhoods constitutes little more than a tautology. More difficult to discern are clues that states seen as stable—such as Tunisia, Egypt, or Mali in 2010 or Cameroon today—may represent significant threats.

To usefully build on the correlations between severe corruption and threats to international security, closer examination is needed of both the ways corruption is structured in a given country and the independent risk factors with which it interacts.

Categories of Systemic Corruption

At issue in this context is not garden-variety corruption, the kind that exists in every country. Such public-sector criminality is never to be condoned, and it presents its own security hazards. At the most basic level, such hazards can be described as vulnerabilities that mischief makers will exploit.

But the situation is qualitatively different when a country harbors endemic corruption that pervades the political system, or when the critical levers of government action are captured—resulting in a veritable repurposing of the state to the material benefit of a few elite networks. That kind of severe corruption poses security risks of a different order.

Such acutely corrupt countries fall into two rough categories.5  

The first consists of those whose corruption is relatively structured, whose governing systems have been bent to benefit one or a very few cliques, best thought of as networks. States may have one or multiple kleptocratic networks, which often coexist only uneasily.

One example of this type is former president Hosni Mubarak’s Egypt, where two main networks controlled much of the economy—the military on the one hand and a crony capitalist network led by Mubarak’s son Gamal on the other. Ukraine under former president Yanukovych also fits this mold. Afghanistan, counterintuitively, is another case, for while different networks divide up the major revenue streams, President Hamid Karzai’s arbitrage has remained paramount in providing access to opportunities—and in providing protection from legal repercussions. Other countries that fit this pattern include Algeria, Angola, Azerbaijan, Cameroon, Peru under former president Alberto Fujimori, Tunisia under former president Zine el-Abidine Ben Ali, Uzbekistan, and Venezuela.

In this category of corrupt states, kleptocratic networks control the government functions that matter.

A top priority is instruments of force, both formal and informal. In Algeria and Pakistan, the ruling network is co-equal with the primary instrument of force: the army. The same is true in Egypt today. There, under Mubarak, Gamal’s crony capitalist network captured its own armed branch, the detested Amn al-Shurta, or auxiliary police, omnipresent throughout Egyptian life. In Ben Ali’s Tunisia, the army was excluded from the workings of the kleptocracy and the police provided the ruling network with muscle. In Cameroon, President Paul Biya relies heavily on the army’s elite Rapid Response Battalion (Bataillon d’Intervention Rapide).

To ensure impunity, kleptocratic networks typically co-opt judicial function. Afghanistan’s Karzai regularly calls his attorney general to influence cases or personally orders the release of suspects from pre-trial detention, aborting the cases against them.6  In Cameroon, Biya himself appoints every member of the judiciary, “from the chief justice of the supreme court to the lowliest clerk,” in the words of Christophe Fomunyoh of the National Democratic Institute.7  Judges in Mubarak’s Egypt retained a significant degree of formal independence—although the rules of criminal procedure removed much of their discretion and cultural factors encouraged a legitimist stance. As a result, the judiciary could not constitute an effective accountability mechanism.

Control over legislative systems further guarantees corrupt networks’ ability to achieve their objectives. Arranging technical legality for corrupt activities by way of legislation that suits them is a hallmark of kleptocracies. “They made villainous laws to circumvent law by law,” says anticorruption activist Taoufik Chamari of Ben Ali’s Tunisia. The retired administrator of an urban zone in Alexandria, Egypt, remembered how Ahmad Fathi Sorour, speaker of parliament under Mubarak, “made laws for Gamal so he could circumvent the whole judicial system.” In Azerbaijan, President Ilham Aliyev and his New Azerbaijan Party control the legislature, an arrangement that facilitates “legal corruption” in ways that mask the criminality of elite windfalls.9  Otherwise, kleptocracies give network members a (revocable) pass to ignore laws.

The financial system played a remarkable role in Ben Ali’s Tunisia. Banks tendered loans to Ben Ali insiders with no expectation of recovery—except as a punishment. “Every year there was a list of loans that were written off,” says Tunis public accountant Imed Ennouri. “Accountants would sign off on the decisions to keep getting work.” Tax fraud functioned the same way: many were allowed to dodge taxes, but audits were used as a means of coercion.10  

In Algeria, Egypt, Nigeria, Russia, and Uzbekistan, among other countries, the civil service siphons significant public funds into private purses through fraudulent contracting procedures. Typical ruses include funding unnecessary or overpriced public works projects, substituting inferior materials for the costly, high-quality ones called for in a contract, and contracting with companies run by officials’ family members. Civil servants are also instrumental in awarding public assets (such as land or business licenses) to network members at below-market prices.

Critical to the dynamic of this structured kleptocracy—and its impact on populations—is the significant vertical integration of the networks involved. While elite capture of staggering rents may dominate headlines, it is far from the sole dimension of corruption. Abusive extortion of “petty” bribes, with a percentage demanded by superiors up the chain, is also a key element, and one that adds to the population’s sense of grievance. Officials purchase their positions at a hefty price and then have to make good on their investments, adding to their incentive to extort bribes. Shakedowns become a daily feature of ordinary people’s lives, often inflicted with a humiliating arrogance that adds a psychological twist to the material hardship victims suffer. For those living under them, these governments become a source of lacerating shame.

The second category of severely corrupt states is somewhat different. It includes those that may experience pervasive corruption, but without the same degree of consolidation at the top of the pyramid. Monopolies on the instruments of force may be less complete, so elite networks may engage in open, violent competition to capture revenue streams—conflict that itself threatens international security. Competition over land, resources, and state revenues has fueled recent electoral violence in Ivory Coast. Pervasive, but fragmented, corrupt networks have similarly driven insecurity in Colombia for years. Local government structures, more fragile than their national counterparts, are often easier to capture. Border localities in particular play an important role for trafficking networks and may be prime targets.

Or the corrupt system in these states may simply be less coordinated. A federal political infrastructure may prevent centralization, as in India, or the weakness of government institutions even at the top may preclude the degree of control exercised by corrupt networks in the first category of states. Some further examples of this type include Colombia, Guatemala, Honduras, Mexico, Somalia, and South Sudan.

Naturally, any effort to categorize such complex phenomena will be imperfect. Some countries may fall on the cusp between these two broad categories, and their placement or precise description may be the subject of significant debate.

Even this schematic framework, however, suggests that statements about absolute levels of corruption may be of limited value, either for predicting risk or tailoring interventions. As Dominik Zaum of the University of Reading points out, “Afghanistan and Burma (Myanmar) might have the same score on Transparency International’s Corruption Perceptions Index, but how corruption affects governance, economic development, and security, what its implications are, and how it is best addressed will be different for each of these countries.”11  Popular attitudes may also differ in important details and should be investigated directly in each environment.

Similarly, emphasis on different “types” of corruption within a single country can also be misleading. When the U.S. government was developing anticorruption policy for Afghanistan in late 2010, the underlying analysis made a sharp distinction between “grand corruption,” perpetrated by political leaders, “petty corruption,” which was seen as greasing the wheels of public administration and therefore not a concern, and “predatory corruption”—largely defined as police shakedowns—which was described as most offensive to ordinary people.12  Usually, however, different types of corruption like these prove to be interconnected elements of a fairly unified system whose structure and vertical integration such descriptions underestimate. To entirely disaggregate them is akin to describing the steering and brakes of a car as two entirely separate machines.

Revenue Streams

The objective in both groups of countries is, of course, wealth. Some sources of elite rents are so distinctive in their impact as to be identified with a special category of government malfunction. The “resource curse” describes countries blessed with natural resources whose riches do little to improve their populations’ development outcomes. Hydrocarbon or mineral wealth, because of its concentration and frequent designation as government property, is particularly susceptible to capture by kleptocratic networks. Or such apparently free riches may spawn violent competition between more equally matched networks.

Looked at another way, however, natural resources represent merely one of a number of revenue streams that acutely corrupt governments seek to capture. Identifying such revenue streams on a country-by-country basis may help better understand the nature of each corrupt structure and suggest improved ways of engaging.

In resource-poor countries, public land is a source of wealth that kleptocratic networks almost universally endeavor to award to themselves. In arid countries, such as Afghanistan or Sudan, access to water and thus suitability for agriculture is the key feature determining a piece of land’s value. Elsewhere, as in Morocco or Tunisia, the most important factor may be proximity to the seashore or other tourist attractions. In tiny Bahrain, land of any kind is so scarce that the government has undertaken repeated dredging operations—at public expense—to add to the island’s surface area, increasing it by some 10 percent over several decades.13  Most of the new land was awarded to regime insiders for development purposes. Elsewhere, control over land corridors allows corrupt officials to dominate traffic in arms, drugs, and other destabilizing goods.

In Afghanistan, Colombia, and Yemen, opium, cocaine, or other narcotics may be a critical revenue stream that governing networks tap, usually with profoundly destabilizing consequences. Logging or the trade in restricted wildlife products may be particularly lucrative in other countries. “In Zimbabwe,” write two of France’s most distinguished Africa analysts, Jean-François Bayart and Béatrice Hibou, along with the African Studies Center’s Stephen Ellis, “the traffic in ivory and rhinoceros horn has involved not only guerrilla movements but also the military authorities.”14  Cash crops, too, such as cocoa, cotton, or palm oil, may be captured in destructive ways by kleptocratic networks.

International officials should not underestimate the degree to which corrupt networks structure themselves to monopolize external financial assistance. Ill-advised European Union or World Bank infrastructure loans—such as those financing the construction of an unnecessary high-speed rail line linking Rabat to Casablanca in Morocco or the $115 million the World Bank accorded to Kenya in 1996—have become another revenue stream for corrupt governments. And when these governments are overthrown, successor regimes are left to pay back the loans, prompting citizens of some postrevolutionary countries to push for reductions in this “odious debt.”15

Military or counterterrorism assistance provided to Algeria, Egypt, Pakistan, or Yemen may provide a perverse incentive to ensure the persistence or appearance of some terrorist activity in order to keep the dollars flowing. Even the service of soldiers, like Ghana’s, as peacekeepers may become a critical revenue stream enabling kleptocratic networks.

“Government-operated nongovernmental organizations,” referred to as GONGOs, may also be founded, expressly in order to capture development grants.16  Or governments may stridently demand that foreign assistance be channeled directly into state budgets, exploiting donor countries’ sensitivity to sovereignty issues or development practitioners’ desire to encourage local ownership and avoid creating parallel structures.

So-called petty bribery, too, when added up, proves not to be petty at all and can represent a significant revenue stream. Typical totals could make a real difference to national economies. In Afghanistan, the annual sum of daily shakedowns people suffered at the hands of the police, doctors, judges, or clerks processing applications for licenses, passports, or even death certificates is estimated to total between $2 billion and $4 billion.17  

Finally, in far too many countries that practice any degree of electoral politics, campaign financing and expenditure constitute a significant source of revenue. The sheer quantity of money in politics distorts and compromises the political process and often serves as a cover for outright bribery and payoffs.

The choice of revenue stream will vary in different countries, depending on geography, topography, and historical factors, and should be examined as part of a comprehensive portrait of a given kleptocratic structure. An understanding of which revenue streams serve primarily to sustain and enable abusive government corruption—as opposed to those that provide some benefits to the population—may help inform more constructive public- and private-sector engagements.

External Enablers

In today’s globalized world, no country or governing system exists in a vacuum. The ability of highly corrupt governments to monopolize their countries’ resources is facilitated by outside enablers—often respectable Western institutions and individuals. Perhaps the most significant such enabler is the international banking industry. Despite real changes to banking secrecy norms and measures to curb money laundering, this sector continues to serve as a key vector for transferring national wealth into private hands and secreting it outside the country.18  Other Western professionals, such as prestigious attorneys or accounting firms, often acting through regional subsidiaries, play a similar, if less central, role.

Careless or undifferentiated promotion of private investment by foreign ministries in the West can provide a whitewash for dubious sectors within a corrupt country, misleading Western businesses that look to their governments for signals on how to operate abroad.

In Cameroon and Ukraine, a more powerful kleptocratic network in a neighboring country (in Nigeria and Russia, respectively) has served as a key enabler for ruling elites. The stronger network may provide cash or cut-rate natural resources, collude in customs fraud, or provide other facilities that reinforce the weaker network.

Corrupt officials also use photo opportunities with Western chiefs of state, status-enhancing personal relationships, or exchanges of favors to their advantage. These officials may brandish membership in “best-practices” associations, such as the Extractive Industries Transparency Initiative or other such international clubs, to attract increased development funds or private investment.19  

When considering how to address dangerously acute corruption overseas, Western decisionmakers must be clear-sighted about the ways actors in their own communities are facilitating corrupt behavior or contributing to incentive structures that select for it.

Security Threats

Many analysts see corruption—or “elite bargains”—as constituting a factor of stability in some cases, as long as competing networks divide the spoils rather than fighting over them. Making this argument in the context of Afghanistan and India, one analyst contends that elite corruption has been pivotal in creating political stability and promoting developmental goals. “Corruption,” he contends, “must be accepted as an undesirable but nonetheless potentially legitimate mechanism for engaging with societies organized along different lines.”20  U.S. President Barack Obama, in a 2009 BBC interview, described then Egyptian president Mubarak as a “force for stability and good in the region.”21

Yet, such an analysis, in its focus on elites, underestimates the agency of ordinary people—their perceptions of corruption (not Western assumptions of what those perceptions might be) and the increasing tendency of populations to lash out violently against governing systems they can no longer tolerate. The security implications of acute corruption, in fact, are likely to outweigh its potential advantages (figure 3). They vary in type depending on the structure of corrupt networks, the levers of power they capture, and the revenue streams upon which their sights are set.

 

One such threat, still often underestimated, is the rage that acute—and especially structured and concentrated—corruption can ignite in its victims and the likelihood that some will express that rage in violent or destabilizing ways. Every country that harbors an extremist insurgency today suffers from kleptocratic governance, including such apparent outliers as the Philippines or Thailand. The motivational literature of those extremist movements is littered with references to corruption.22  

Every government that faced significant mass protests during the 2011 Arab uprisings, from Tunisia to Egypt, Syria, Bahrain, and Yemen, perpetrated acute corruption on behalf of narrow cliques that included top government officials and their close relatives. Marchers shouted anticorruption slogans, while posters displayed political leaders behind bars. Ukraine is just the most recent country on that list. And as mobile and electronic communications give citizens more access to information and to each other, levels of outrage—and mobilization—are likely to keep rising.

Where the United States or other Western countries are seen as enabling the kleptocratic practices of corrupt governments, moreover, some of the victims’ rage will inevitably be directed outward, past the hated regime and toward its perceived American or allied backers.

For Atiyah Abd al-Rahman, a prominent member of al-Qaeda killed in a U.S. drone strike in 2011, the main rationale for the attacks on September 11, 2001, was the U.S. role in enabling Arab kleptocracies. In 2009, he decried U.S. and Western officials for “setting up in our countries treasonous regimes loyal to them, then backing these corrupt regimes and governments against their populations.” This Western support for Middle Eastern kleptocracies, according to Rahman, was “the true cause that motivated the mujahidin to carry out” the 9/11 attacks.23  

To the victims, in other words, the foreign governments that play an enabling role often seem no less corrupt than their own. And, exposed by ever-greater electronic media transparency, hypocritical discrepancies between stated values and actual behavior are increasingly telling.

But these dramatic recent examples of the security fallout from acute corruption do not exhaust its possible implications for international stability.

The loss of state legitimacy is a crucial factor in many crises. For, although transnational organized crime attracts much enforcement attention, the exploits of effective criminal networks do not violate expectations. Criminals behave nefariously by definition. But citizens have quite different presumptions of their governments, whose functions are supposed to include protection, care, and neutral regulation of social and economic activities. So when governments systematically behave in criminal ways, their legitimacy founders. Profound disenchantment results, and the very fabric of society begins to fray—with unpredictable consequences.

When every government function is up for sale to the highest bidder, furthermore, violations of international as well as domestic law become the norm. Nonproliferation or international sanctions regimes are regularly circumvented.24  Intellectual property rights are ignored.

Acutely corrupt governance aids extremist organizations not only by motivating indignant citizens to join them, moreover, but also by providing a haven and logistical support for those very same groups, as officials become lax—for a fee. Nairobi residents exchange grim remarks about the “Shabab bribe” (double the normal rate) that allowed attackers from the terrorist group al-Shabab to infiltrate the Westgate Mall in a September 2013 siege that claimed more than 60 lives. In the same vein, trafficking rings that have secured safe passage past corrupt officials for migrants or sex slaves may provide transit for mules carrying a dirty bomb.

In Albania, Argentina, Bulgaria, Colombia, Honduras, Mexico, Montenegro, Mozambique, and Myanmar, among other highly corrupt countries, public officials have entered into profoundly destabilizing alliances, even symbiosis, with transnational criminal superpowers—drug and weapons syndicates whose activities span continents. While Western law enforcement efforts have focused increasingly on criminal networks in the past decade or two, the close interweaving of such networks with corrupt governments that helps sustain them is sometimes overlooked. In these and other cases, some rival criminal network, often posing as a “Robin Hood,” may mount a violent challenge to corrupt government networks. Such scenarios have exacted a shocking price from populations both inside and beyond national boundaries.25

In some cases, corrupt ruling elites may deliberately cultivate conflict because of the diverse opportunities for profiteering and wealth transfer that fighting affords. Persistent underdevelopment as well as the miseries attendant upon civil strife also provide access to international assistance, which corrupt officials may be loath to give up. A perverse incentive structure can thus be created, with corruption and conflict interacting symbiotically.

The militaries in countries where public corruption is pervasive make unreliable allies. As defense funding is siphoned off to the purses of the powerful, armies are often poorly trained and equipped, their rosters full of “ghost soldiers.” Officers sell matériel, including to the very enemies they are supposed to be fighting. Military professionalism and capabilities are inadequate to protect borders, leaving such countries vulnerable to attack.

Kleptocratic governments cannot be expected to honor the conditions attached to the provision of military aid. Proliferation, forging of end-user certificates, and other types of fraud are likely to be the norm. And cooperation, like Pakistan’s in allowing NATO to use its overland routes into Afghanistan, is often provided only for a price, which can be raised as soon as dependence is established.

Other corruption-related security threats burn on a slower fuse. Corrupt government practices contribute to severe economic distortions, threatening financial-sector stability, for example, when fraudulent banking practices prevail. Kleptocratic networks undermine the economic diversity of their countries, as they focus government energies on resource streams they can capture. Other economic sectors wither or are actively undermined by cheating on customs or other types of unfair competition. Economic opportunities dry up. Unemployment rises. And the distortions that result can have destabilizing impacts on entire economic ecosystems.

Acute corruption damages physical ecosystems just as indelibly. Local and national officials in these contexts do not care much about environmental degradation. Their policies—or lack thereof—often exacerbate the impact of climate change, for example, and incapacitate efforts to curb it. Worsening environmental conditions, in turn, increase the suffering of populations, making them more likely to revolt.26  In climate-vulnerable zones, such as Haiti or the Philippines, the impact of natural disasters is compounded by corruption.

Interaction With Other Risk Factors

Corruption—or any other single driver—cannot be solely blamed for such complex phenomena as insurgency, revolution, economic depression, or the partial capture of states by transnational criminal organizations. Other factors, in combination with kleptocratic governance, increase the likelihood of a severe international security event at a given time.

The geographic proximity of networks determined to exploit weaknesses, such as al-Qaeda franchises capitalizing on local grievances in Syria or Mali, for example, or criminal superpowers on the hunt for leaders who can be co-opted, as in Mexico, is one such factor.

A deep rift in self-identification within a population, be it religious (as in Nigeria or Syria), ethnic and linguistic (Turkey), or related to national identity (Ukraine), might be another risk factor, as might a preexisting separatist movement. Severe economic disparities caused by local geographic or environmental factors can also increase the likelihood of security challenges. Such discrepancies are evident in Nigeria between the north and the comparatively rich south; in Syria, where residents of drought-stricken areas launched the 2011 protests; and in Tunisia, with its sharp development disparity between the affluent northern coastal area and the impoverished interior. Climate impacts or environmental damage contribute to risk factors in this category.

A consideration of the security implications of corruption in a given country should examine risk factors such as these that may conjugate with it. In many cases, security implications are exacerbated by a feedback loop between acute corruption and these other key risk factors.

Policy Trade-Offs

Significant progress has been made over the past fifteen years in building an international fretwork of laws and conventions aimed at curbing many aspects of corruption, such as the Organization for Economic Cooperation and Development’s anti-bribery convention, the Group of 20’s Anti-Corruption Action Plan, and stricter international money-laundering rules.

But when nations or businesses interact bilaterally with partners in highly corrupt environments, immediate priorities still tend to trump corruption concerns. This reflex should come as no surprise. Policy decisions are always the product of trade-offs between competing or even conflicting priorities, options, or policy preferences promoted by different government agencies or various departments within a single corporation.

Some of the considerations weighing on Western policymakers that may conflict with an anticorruption agenda include the value of maintaining a relationship with a particular government, especially when the country in question is seen as the “least bad” in a tough geographic neighborhood or has become the sole source of needed goods, facilities, or services. Several kleptocratic governments maintain privileged relationships with other problem countries, and their service as interlocutors is needed. Some corrupt states have strategic geographic locations that make friendly relations with them seem paramount. Or, as in the case of China or Russia, the complexity of the great-power relationship may seem to overpower any possibility of addressing corruption.

Targeted corrupt officials may be conscious of the other items on their Western partner’s agenda and strike back in ways that threaten those other priorities. To deter punitive action, venally corrupt officials may close overland routes or airspace, for example, leverage access to prized resources, cease sharing intelligence or complying with international treaties, or refuse to assist diplomatically with other problem countries when crises arise. Pressure on such governments may precipitate instability in their countries—or their leaders may suggest that it will, presenting short-term kleptocratic stability as the only alternative to chaos. Mubarak defended his rule as being “in the interest of stability, in the interest of ensuring people about [the] future.”27  

The time and bandwidth of top Western decisionmakers are even rarer commodities than spare money in their budgets, and policies that might help curb acute corruption place demands on all three. Short-term, crisis-driven decisionmaking, often the result of such constraints, favors work with whomever the current foreign partner happens to be. It encourages focus on leaders in general, not populations. It also reinforces risk aversion.

Without an accurate measure of the risks, however, or of the true likely costs and benefits of all courses of action, officials will often misjudge policy trade-offs. Resulting decisions may be counterproductive. A better understanding of the nature of acute corruption and its implications for international security—as well as systematic analysis of the costs of not addressing it and the availability of “least bad” alternatives—would contribute to improved policy and practice in government, civil society, and business.

Operational Implications

This framework for understanding acute corruption, together with the rigorous study of relevant countries along the lines suggested above, may help rebalance short-term versus long-term policy trade-offs. The resulting new calculus may incite officials to shape and use some of the plentiful leverage available to government agencies—ideally in a concerted, strategic, and synchronized fashion. (Please see appendix for a partial list.) And even where opportunities to change kleptocratic behavior may seem slim, the benefits of distancing Western governments from these practices may be non-negligible.

The implications of applying this framework differ for various sectors. For the intelligence community, new priority information requirements must be drafted to capture the types of information critical to better understanding acute corruption. Without explicit tasking, collectors and analysts will not focus on such topics. The security implications of acute corruption should be included in national intelligence estimates and similar documents. Such new requirements will entail the re-tasking of intelligence capacity from other duties—such as targeting—to this effort.

Diplomats will need to significantly change their assumptions about and procedures for interacting with officials from corrupt states. They should assume that such governments will structure themselves to capture most Western interventions—from development aid to high-level visits—for their own benefit, not that of their people. As a result, diplomats should moderate the imperative to preserve good relationships with counterpart governments at almost any cost. (This rule tends to hold except in cases of countries with little strategic significance for the diplomat’s home country, or states considered enemies—in which case the opposite rule tends to apply.) Too often, despite the great flexibility of available diplomatic tools, an all-or-nothing approach prevails.

Foreign assistance—both bilateral and multilateral—must be better tailored to avoid its capture as just another rent. Donors should apply stricter conditionality, including monitoring and payback clauses if benchmarks are not met.

This thinking might also suggest ways to more carefully tailor military assistance so that it contributes to beneficiary nation stability where doing so is a priority while also helping improve government practices. Cooperation with units known to serve as kleptocratic networks’ attack dogs might be reduced, or the types of hardware provided to them restricted. Unnecessary, status-enhancing weaponry might be placed off-limits to such governments. And training opportunities might be shaped with these considerations in mind.

Operational implications for units deploying to such environments include changes in contracting procedures, as well as more careful selection of local partners and less tolerance of abusive behavior in exchange for these partners’ helpfulness in meeting other requirements.

Analyzing acute corruption through this lens also reveals significant lessons as to the benefit of anticorruption programs that work on the margins of a kleptocratic system, especially when the bulk of international support and interaction enables that selfsame system. The Combined Joint Interagency Task Force Shafafiyat, an anticorruption program in Afghanistan, has made important contributions in road testing new military contracting procedures and exposing officers to corruption concerns. However, the guidance provided to Shafafiyat called for letting the kleptocratic Afghan system itself take the lead in eradicating corruption—a policy oxymoron. And with the U.S. government supporting these corrupt actors by way of cash deliveries, among numerous other benefits, the messages sent to corrupt Afghan officials were at best mixed. Policymakers should avoid overemphasizing marginal anticorruption programs as offsets when most engagements with corrupt governments cut in favor of their abuses.

Implications for support to civil society organizations are similarly far-reaching. No corrupt regime can be reformed or revamped without significant demand and persistent struggle on the part of the local population. However, international government and business enablers of such regimes should not use this fact as an excuse to off-load their own responsibilities onto the shoulders of often inexperienced, vastly out-resourced, and vulnerable civil society organizations.

Autocratic governments have been lashing out at such groups with unaccustomed ferocity in recent years, especially those that obtain funding and technical assistance from abroad.28  External support is more crucial than ever in these contexts but must be provided in smarter ways, with more attention to potential impacts on civil society organizations and actors, especially their physical safety. Such support, moreover, must be part of a holistic approach that includes reductions in donor-nation actions that enable the very regimes civil society groups are fighting.

Membership in international “clubs” such as the World Trade Organization or the European Union or participation in specialized transparency regimes, even such donor frameworks as Millennium Challenge Corporation grants, can serve as useful incentives and forcing functions for improving kleptocratic practices. These groups often include requirements that provide tools for civil society’s opposition to ongoing corruption.

However, when standards for entry are too lax, membership in such organizations can have the opposite of their intended effect. They may serve as a fig leaf, conveying a seal of international approval for unacceptable practices. In the worst cases, they open the door to increased financial support without preventing capture of the money by corrupt governing networks.

Implications for business actors include a more nuanced cost-benefit analyses for investing in such environments altogether. These assessments should include the likelihood of reputational risk, as consumers and employees pay increasing attention to the conditions under which goods are produced.

Applying this framework can help businesses identify sectors or partners less central to kleptocratic functioning or avoid inputs, logistics, or markets over which corrupt government networks have monopoly control and can thus block access in return for payment. It will also help predict increasingly sophisticated versions of pay-to-play bribery demands, which will inevitably fall under the purview of legislation such as the U.S. Foreign Corrupt Practices Act as such laws evolve.

Perhaps most importantly, a better understanding of the impact of severe corruption will raise the stakes for those businesses that typically act as external enablers to acutely corrupt systems—such as accountants, legal service providers, and especially banks—and highlight the long-term costs of playing this role.

The interaction between new manifestations of acute government corruption, especially visible since the mid-1990s, and public reactions, which are also taking new forms, is still insufficiently understood. But the role of corruption in catalyzing significant international security hazards is now undeniable. Careful study of its ramifications in specific contexts can help policymakers make better choices among a broader array of options for engagement to reduce the likelihood of open conflict or crisis.

Appendix: Recommended Approaches

Below is a nonexhaustive list of approaches to highly corrupt countries that are available to different private- and public-sector actors. Some can be incorporated into routine operating procedures. Others, used selectively and in combination as appropriate, constitute elements of a targeted strategy to help curb acute corruption in particular countries—in concert with local civil society.
Chief of State

Enunciate a clear anticorruption policy by means of an executive order, presidential memorandum, or similar instrument, directing all agencies to apply relevant authorities and resources to the effort.
Consider acute corruption when deciding whether to engage in publicized, status-enhancing face-to-face meetings with a foreign chief of state or bestow public accolades.

Intelligence

• Include corruption in annual assessments of security risks compiled by intelligence communities.

• Increase the number of personnel assigned to study the structure, manning, operating procedures, favored revenue streams, facilitators, protection mechanisms, patterns of life, and vulnerabilities of corrupt governing networks.
• Design new collection requirements to fill knowledge gaps regarding corrupt networks, including the ways in which Western governments and private-sector actors enable such systems, and focus on financial intelligence.
• Establish “fusion cells,” bringing different types of specialized expertise to bear collectively on the problem.
• Subject intelligence agency payments to key members of corrupt governing networks to high-level interagency debate.

Diplomacy

• Consider a foreign official’s kleptocratic practices when shaping engagements with him or her. Avoid inadvertently glorifying those practices through publicized high-level interactions or overly close personal relationships.
• Include corruption in talking points for bilateral meetings, but avoid threats of repercussions if political will to follow up is lacking. Where Western countries possess concrete leverage, actions speak louder than words. In other situations, diplomatic imprimatur is highly desired by corrupt leaders.
• Avoid using corrupt networks’ cutouts for everyday business.
• Exercise more discretion regarding the officials who will be sent on high-status training and cooperation opportunities.
• Make use of expansive visa-denial authorities.
• Provide expedited visas and other facilities to bona fide whistle-blowers and justice professionals legitimately seeking to address the problem.
• Take corruption (and corrupt networks’ preferred revenue streams) into account when promoting bilateral trade and investment. Western businesses take their cues from their governments and should not be encouraged into a facilitating relationship with a severely corrupt government.
• Encourage the implementation and monitoring of relevant multilateral agreements and the tightening of standards for entry as appropriate.
• Press for more stringent banking regulations in new money-laundering and asset-sheltering safe havens, such as the United Arab Emirates, Singapore, Africa, and Central Asia.

Financial System

• Make full use of authorities for enhanced monitoring of financial transactions by money-laundering suspects and politically exposed persons.
• Consider establishing a new, more stringent deposit thresholds for automatic referral for investigation.
• Apply current sanctions programs (such as those for foreign narcotics kingpins or transnational organized crime) to kleptocratic officials whose activities fall within these categories.
• Enact, by executive order or legislation, a new sanctions regime aimed at kleptocratic government officials. Language can be adapted from the 2014 Ukraine Support Act (H.R. 4278) that imposed sanctions on Russian individuals.
• Provide investigative personnel and enhanced technical assistance for asset-recovery cases, especially for countries that are transitioning away from kleptocratic governance—like the twelve-person “rapid response” team created by the U.S. Federal Bureau of Investigation (FBI) in April 2014.
• Develop clear criteria to define politically exposed persons and require enhanced monitoring of their assets in U.S. banks. Monitor compliance with those requirements.
• Pressure developing countries to reform their banking systems holistically rather than merely requiring higher capital reserves.

Law Enforcement

• Increase incentives for investigators (the FBI and its equivalents) working on white-collar crime and financial investigations.
• Target prosecutions under anti-bribery legislation and the Racketeer Influenced and Corrupt Organizations Act (or their equivalents) at businesses suspected of bribing a corrupt official who is part of a network under policy focus.
• Use plea bargains and other incentives to gain a broader picture of bribe takers, network operations, and other bribe payers.
• Prosecute dual nationals under Western national law.
• Enhance and more carefully target prosecutions under civil law against assets connected to a crime (in rem forfeiture). Target current, not just former, ruling kleptocrats, and include prestigious real-estate or other property held in Western countries.
• Build a routine (interagency) mechanism for determining the best way to repatriate seized assets, taking the current nature of the relevant government into account.
• Push for reinforced searches and seizures of cash above the legal limit in airports that serve as hubs, such as Delhi, Dubai, or Frankfurt.
• Provide robust legal assistance to law enforcement professionals in transitioning nations.
• Expand victims’ rights to sue in third-party jurisdictions.

Development Assistance

• Cease to consider corruption as primarily a technical problem to be addressed by means of capacity building or equipment support.
• Apply personnel to the task of understanding, on a country-by-country basis, how development assistance, including infrastructure loans and Millennium Challenge assistance, becomes a “rent” captured by kleptocratic ruling networks. The use of government-organized nongovernmental organizations (GONGOs) and other cutouts, pervasive contract padding, and other financial irregularities should be assessed upstream of decisions to provide aid or loans.
• Change incentive structures within aid organizations that exclusively reward the spending of money so that equal consideration can be given to the policy and development advantages of not providing aid as to those of providing aid in a severely corrupt environment.
• Facilitate collection of information on financial irregularities and other misuses of development assistance through systematic guidance to project managers, standard reporting forms, and whistle-blower facilitation, protection, and rewards.
• Write firm “zero-tolerance” clauses into development assistance contracts regarding financial irregularities that provide for repayment of aid money in case of violation.
• Systematically suspend aid payments when suspicion of financial irregularity or misuse warrants investigation.
• Direct officials who manage aid, by means of standard contracting guidelines, to avoid implementing partners whose beneficial owners are members of corruption networks. Conduct rigorous cost-benefit analyses when doing so is impossible.
• Include independent monitoring and evaluation in every aid contract. Include the budget line in the program funds, not the overhead.
• Expand the mandates of inspectors general to include systematic oversight for financial irregularities, along the lines of Norway’s financial control units or the U.S. offices of special inspectors general for reconstruction in Afghanistan and Iraq. Increase staff as necessary.
• Provide anticorruption capacity-building and technical support only to those governments that show a bona fide desire to combat the problem.
• In kleptocratic environments, provide anticorruption support to civil society organizations (including professional or sectoral organizations as appropriate) that are inclined and structured to take on the problem.
• Support measures to increase transparency, especially in countries with robust civil society anticorruption efforts. But cease thinking of transparency as a synonym for accountability and assuming that transparency measures in and of themselves lead to accountability.

Security Sector

• Train military units that will be forward deployed (especially special operations teams) to consider the potential downstream effects of inadvertently enabling kleptocratic networks when they establish themselves on foreign soil or participate in train and assist missions.
• Instruct military trainers to observe, report on, and intervene in their trainees’ corrupt practices.
• Assign military intelligence assets to the task of understanding the linkages and practices of host-nation partners.
• Provide guidance to contracting officers to avoid local security companies or service providers whose beneficial owners are members of corrupt networks.
• Take corruption into consideration when awarding and shaping military assistance and cooperation packages and when designing and implementing disarmament, demobilization, and reintegration programs for foreign militias.
• In cases where the Western chief of defense effectively serves as chief diplomat (especially countries formally or effectively run by militaries, such as Pakistan or Egypt), expand considerations beyond the usual military-to-military relationship boundaries, using tools from the “intelligence” and “diplomacy” sections above.

Multilateral Initiatives

• Make use of relevant approaches from the “development assistance” section above.
• Apply transparency guidelines to grants, making information on their purpose and effective expenditure available to host-nation populations.
• Enforce and if necessary tighten reporting requirements for the financial services industry and land registries under such programs as the Extractive Industries Transparency Initiative.
• Police enforcement of such anticorruption conventions as the Organization for Economic Cooperation and Development’s anti-bribery convention or the United Nation’s anticorruption convention.
• Consider establishing international monitoring bodies for one or more such conventions, along the lines of the Organization for the Prohibition of Chemical Weapons.
• Ensure high bars to entry, so that multinational institutions and initiatives do not serve to legitimize acutely corrupt governments and the multinational corporations that do business with them.
• Further reduce barriers to sharing financial intelligence.
• Choose not to hold important international meetings in acutely corrupt countries.
• Place the issue of acute corruption and its various security, economic, and environmental impacts high on the agenda for important international summit meetings such as the Group of Seven.
• Consider canceling “odious debt” for formerly corrupt countries in transition.

Citizens

• Identify civil society organizations fighting corruption in their home countries and, where doing so will not endanger them, financially support or publicize these groups’ work.
• Identify key Western facilitators and enablers (such as banks and law firms) and spotlight their role.
• Mount public campaigns against such enablers or multinational corporations that make significant investments in sectors that serve as key revenue streams for corrupt networks.
• Shed light on the ways corrupt governments attract foreign investment, such as by shutting down competition, deactivating local labor or environmental legislation, and forgiving taxes. Such favors also hurt Western economies by creating unfair competition.
• Publicize corrupt officials’ purchases of luxury property in Western countries.
• Develop agile social media platforms to raise awareness and engage in these campaigns.
• Report bribe solicitations when seeking to invest in corrupt countries.

Participants

This paper grew out of a workshop and follow-on activities in which the following organizations, among others, took part:

American University Washington College of Law
Bloomberg News
Business Executives for National Security
Canadian Department of Foreign Affairs, Trade, and Development
Carnegie Endowment for International Peace
Egyptian Initiative for Personal Rights
Egyptian Transparency and Integrity Center
Fund for Peace
Global Financial Integrity
Global Integrity
Global Witness
Good Governance Group
Leveraged Outcomes LLC
National Endowment for Democracy
Norwegian Ministry of Foreign Affairs
Office of the Special Inspector General for Afghanistan Reconstruction
Open Society Foundations
Transparency International, Secretariat
Transparency International, country chapters: Bangladesh, Colombia, Peru
Transparency International, Defence and Security
U.S. Department of Defense
U.S. Department of Justice
U.S. Department of State
U.S. Department of the Treasury
World Bank Group
World Justice Project

The work was facilitated by Sarah Chayes.

Participants in this project are grateful to Yusuf Ahmad, Tiffany Joslin, Molly Pallman, and Anisha Mehta for their support, and to the UK Department for International Development, whose funding and collaboration made this project possible.