Thieves of State: Why Corruption Threatens Global Security (31 page)

CITIZENS’ TOOLS

P
RIVATE CITIZENS
in Western countries can assist anticorruption efforts by identifying grassroots organizations fighting corruption in foreign countries and—where the connection would not endanger them—supporting them and publicizing their work.
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Citizens can also negatively spotlight enablers in their own countries—banks, or accounting firms, or legal professionals who provide their services to abusively corrupt officials in developing countries.

Similarly, just as citizens’ campaigns have raised multinational corporations’ awareness about the rights of workers producing their goods or the safety of their overseas factories, campaigns about the way companies enable corrupt practices can impact branding and employee pride. Light can be shed on the ways corrupt governments have attracted a particular company’s investment—such as shutting down local competition, deactivating local regulations, or forgiving taxes. Or Western citizens can explain the inadequacy of “offsets” that corporations may publicize, such as providing mosquito netting in an African country where raw materials are extracted without guarantees that the revenues accrue to the population rather than to the kleptocratic rulers’ private coffers.

Citizens can also expose purchases by members of kleptocratic networks of luxury goods in their countries and help shame the purveyors.

INCENTIVES

A
STRATEGIC
and synchronized campaign to reduce acute corruption must also include rewards and incentives for reform. Loans and grants, development assistance, provision of equipment, and valuable contracts are all potential incentives.

So are bilateral or multilateral trade deals, and membership in the World Trade or World Customs Organizations, or the European Union, or other multilateral “clubs” such as the Extractive Industries Transparency Initiative, or decisions to hold important international gatherings in a given country. Highly corrupt governments often long for an international seal of approval and the status associated with membership in such bodies. Such benefits should not be accorded lightly. They should be used to reward true reform.

TRADE-OFFS

P
OLICY DECISIONS
are always the product of trade-offs between competing or even conflicting priorities or options, or policy preferences promoted by different government agencies. Some of the considerations weighing on policy makers that may conflict with an anticorruption agenda include the value of maintaining a given relationship, especially when it is seen as the “least bad” in a tough neighborhood or when the country in question has become a sole source of needed goods, facilities, or services. Other trade-offs include demand for natural resources a country might possess, its pivotal geopolitical position and relationships, or its presumed ability to do harm.

Targeted corrupt officials may be conscious of the other items on their 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, cut off energy supplies to neighbors, cease sharing intelligence, cease 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.

Top decision makers in Western countries, moreover, are under staggering time pressures. Officials’ time and bandwidth are as limited as budgets in an age of austerity, and policies that might help curb acute corruption place demands on all three. Short-term, crisis-driven decision making, of the type that prevails in Washington as in other capitals, favors work with whoever the current foreign partner happens to be and encourages focus on leaders in general, not on populations. It also reinforces risk aversion. And employing most of the leverage listed here entails political risks.

Without an accurate measure of those risks, however, or the true likely costs and benefits of all courses of action, policy trade-offs will be based on false premises, a skewed calculus.

Western governments must begin systematically analyzing the costs of
not
addressing corruption, which currently go unweighed in national security decision making. More time and effort should be spent identifying “least bad” alternatives to enabling alliances with kleptocratic rulers. International partners and proxies could be encouraged to play the role of “heavy” on corruption issues in specific cases; they should be identified and skillfully enabled.

Advocates for a tougher stance against acute corruption should be alert for windows of opportunity or strategic openings regarding specific countries, and be nimble enough to exploit them. They should acknowledge potential costs of the policies they promote to other national security objectives, and they should think through ways of reducing those costs. They should work on objectively quantifying the likely real value or impact of steps they advocate, including the chances they will in fact contribute to change. Or their value to national interests even if they don’t—relieving the United States or other Western countries of “command responsibility,” for example, by distancing them from the behavior of corrupt governments.

The political courage to make use of such leverage—absent a burning crisis and before one is even sure to burst out—is hard to muster. The most prudent tack so often seems to be leaving well enough alone. Crises, moreover, provide the inescapable rationale for dramatic action.
And yet the stakes are just too high not to try to intervene otherwise, and upstream of a visible white-water crisis. If Western countries wish to reduce the likelihood of extremist or revolutionary violence abroad, if they want to curtail their use of military force when emergencies erupt—with the staggering financial and human costs and uneven chances of success such use of force entails—they must be willing to take political risks ahead of time. They must work to create redress for legitimate grievances. They must show as much courage in deploying leverage as they have, to date, in deploying soldiers.

These tools should be thought of as prevention, worth the proverbial pound of cure. By helping damp down one key driver of dangerous insecurity, they represent alternatives to military action at some later date. They reduce the “command responsibility” of Western countries in enabling abusive corruption. And most important, these products of a constitutional order offer aggrieved citizens of captured states at least somewhere, on earth, to turn. They provide a measure of appeal.

EPILOGUE

Self-Reflection

T
he analysis in this book does not just apply to the extreme cases it has examined, where the whole of government has morphed into a criminal organization bent to no other business than personal enrichment, and has retooled the crucial gears of state power to that end. To highlight the problem of kleptocracy only in places like Nigeria and Afghanistan is to reinforce a tacit superiority complex: those populations, of the global south, are somehow unsuited to rational government. They are culturally prone to predation. Reform is not possible, only containment.

It is also to duck the significance of the global economic meltdown of 2008.

The analysis here applies, and strikingly, to countries closer to home, where governments have been dangerously encroached upon in recent years—even partially colonized—by what John Locke would call “some party of men.”

As was devastatingly chronicled by Fintan O’Toole in his 2010
Ship of Fools
, Ireland’s economy was largely taken over by the 1990s by a kleptocratic network that wove together public officials, top banking executives, and real estate developers. The initial result was a country that seemed to shake its historical demons of poverty and backwardness to become a global example of prosperity, fueled by low taxes, low wages, a hyperactive financial services industry, debt, and a property boom. Growth rates hovered above 7 percent. Ireland was hailed as a “Celtic Tiger.”

Until it imploded. In 2008 the Irish economy collapsed. Ghosts of the nineteenth-century Great Hunger seemed to awaken, to haunt anew the acres of abandoned houses that disfigured the moors, their doors creaking in a bitter wind, while thousands of Irish took the road of exile, once again, to try to earn their keep abroad.

O’Toole emphasizes the impunity that Irish political wrongdoers enjoyed during these years, and banking regulators’ narrow focus on the level of assets that financial institutions could declare on paper as counterweight to their obligations. He examines the unwillingness of Irish citizens to confront the manifest criminality that surrounded them, evoking “the idea of disassociation in psychiatry, where, in response to trauma, the mind distances itself from experiences that it does not wish to process. This mechanism was at work in relation to corruption.” Irish politicians, writes O’Toole, mastered this mechanism

with a clarity approaching genius. Instead of hiding the vast wealth for which an innocent explanation was impossible, [they] flaunted it, relying on the capacity of the public at large both to know that [they] must be corrupt, and somehow to confine this knowledge to a dark corner of the brain where it remained inert and irrelevant.
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A similar unwillingness to confront the corruption in their midst seems to afflict the citizens of other Western countries.

More explicitly than many, O’Toole explores the interplay of morality and economics that underlies the ambiguity of the word “corruption.” In Ireland, he points out, a culture prevailed that “saw sex, rather than money, as the currency of sin.”
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There has to be a general recognition that this crisis is moral as well as economic. It is, indeed, a perfect illustration of the economics of morality—the absence of a sense of propriety, of restraint and of right and wrong, was not just obnoxious, it was economically disastrous.
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Iceland was another example of a model northern European market-driven democracy that fell prey to partial capture by a tight-knit network of government officials and banking executives. A revolving door seemed to spin between the top reaches of government and the banking sector, as the longest-reigning prime minister, David Oddsson, departed government only to take up the reins of the central bank.

As was the case in Tunisia or Egypt, a financial sector that was rapidly privatized around 2000 fell into the hands of ruling party cronies. Regulation was lax, and borrowing—both institutional and personal—epic. Tiny Iceland’s banks made loans totaling some 900 percent of GDP.
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As in Ireland, real estate speculation fueled a bubble. Officials also ceded public land for such controversial foreign investments as a sprawling, futuristic project to harness the energy of three rivers in the island nation’s fragile northeastern wilderness for the purposes of firing an Alcoa aluminum smelter.
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The environment minister waved away severe adverse environmental impacts detailed in studies submitted by the developers themselves. Questions mounted as to the advisability, but also the propriety, of the deals.

When an acute liquidity crisis began crippling the international financial system in late summer 2008, followed by a run on banks, Iceland’s economy gave way.
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The gigantically overleveraged banks proved “too big to bail” and had nowhere to go but under. “There is a real danger,” Prime Minister Geir Haarde told his fellow citizens, “that the Icelandic economy . . . could be sucked into the whirlpool, and the result could be national bankruptcy.”
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The ingredients of Iceland’s poisonous stew sound familiar. But the antidotes the nation’s—albeit tiny—population selected broke new ground. Though they were imperfect and ultimately derailed by the networks they targeted, Iceland’s initial responses to its crisis suggest ways forward for other Western nations that have strayed dangerously close to kleptocratic governance themselves.

After the failure of Iceland’s top three banks, thousands took to the streets of Reykjavik in a din of clanging casseroles and frying pans. The first demand of this “kitchenware revolution” was accountability. Prime Minister Haarde was forced to resign and became the first Icelandic
minister ever to be indicted for official misconduct. Some citizens worried he was being scapegoated, and the parliamentary court eventually whittled the charges against him down to the trivial.

In a March 2012
Guardian
op-ed, economics writer Alda Sigmundsdóttir acknowledged that Haarde would likely beat the charges, that it might not be fair to hold a single man accountable for the multiple failings that led to the meltdown. Yet, she argued,

the trial is necessary. The Icelandic collapse was not just an economic collapse—it was also a moral collapse. It was a collapse of the people’s trust in its country’s politicians, institutions and financial system. It revealed to the vast majority of us that we’d had no idea of the extent of the political corruption and neglect that lurked beneath the surface of our society for decades.
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Haarde was the only Western leader to be made answerable in any way for deeds connected with the 2008 economic crash.

But Icelanders did not stop with drumming their prime minister out of office and putting him on trial. To address the underlying weaknesses in Iceland’s governing framework and democratic procedures, they demanded a sweeping revision of their nation’s constitution.

The approach they adopted was remarkable. Nine hundred and fifty citizens were drawn at random from the national register to form a constitutional assembly. Within a day of convening, the body agreed upon the need for a substantially new constitution, and defined priorities to guide the efforts of those who would actually draw up the document.

Twenty-five drafters posted versions of their work online, soliciting feedback from the public via social media, among other formats. The resulting provisions restructured the oversight relationships between the legislative, executive, and judicial branches of government, revamped the rules governing elections, and declared that natural resources not then privately owned were the “joint and perpetual property of the nation,” which could only be leased, not permanently acquired.
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