Rethinking America

The Biden Administration’s Anti-Corruption Agenda

Will key European leaders join Biden’s approach on fighting kleptocratic regimes, whether Russia, China, Iran or Turkey?

Takeaways


  • Biden counts on his West European allies to support his view that anti-corruption is an issue of national security.
  • Joe Biden: "Fighting corruption is not just good governance. It is self-defense. It is patriotism and essential to the preservation of our democracy and our future.”
  • Putin and other kleptocratic regimes (like China, Iran and Turkey) may hope that the Europeans will be reluctant to go nearly as far as Biden wants.
  • The US sees anti-corruption as a core issue of national security in the vital contest across the globe between authoritarianism and democracy.
  • The UK and the EU have launched efforts to reform company laws so that the true beneficial ownership of all corporations is transparent.
  • In the UK and EU, it is much harder now for investors in illicit financial vehicles to hide their assets in offshore opaque holding companies.
  • Germany and France are keen to sell goods and services to Russia and hate to see trade curbed because of the Kremlin’s far-reaching corruption.
  • If the Western democracies are to counter the corruption of kleptocratic regimes, a far more robust, coordinated and strongly funded strategy is essential.

It was no coincidence that President Biden took personal charge of issuing his first National Security Council Memorandum (NSCM) on the eve of his recent trip to Europe. He detailed a strong anti-corruption agenda.

The U.S.’s goals

His aim was to send two messages:

First, the U.S. government counts on its West European partners and allies to support his view that anti-corruption is a major issue of national security and demands robust coordinated approaches.

Second, the U.S. considers the Russian government in particular as a corrupt regime and is determined to implement forceful measures to curb its activities. This applies especially to Russian efforts connected to the goal of undermining Western democracies.

Biden’s commitment

Emphasizing why he views the issue as so important, President Biden stated: “Fighting corruption is not just good governance. It is self-defense. It is patriotism, and it’s essential to the preservation of our democracy and our future.”

He added, “Corruption is a risk to our national security, and we must recognize it as such.”

Fighting corruption: A matter of intelligence

Senior U.S. administration officials stressed that the U.S. government will boost its efforts to gather intelligence across the world on corruption.

This involves strengthening its investigations and prosecutions of money laundering, boosting foreign aid to assist countries to counter graft and increasing efforts to coordinate actions with like-minded governments.

A rare national consensus

The President’s anti-corruption strategy has increasing support in the U.S. Congress. It was no coincidence that his announcement coincided with the launch in the U.S. House of Representatives of an “Anti-Kleptocracy Caucus,” enjoying bi-partisan support.

A similar initiative is likely in the U.S. Senate. New anti-corruption legislation is now planned.

Putin’s response

We do not know if Biden explicitly discussed corruption in his meeting in Geneva and, if so, how Putin responded.

However, it is safe to assume that Putin, and all other kleptocrats, are aware of the U.S. government’s resolve.

The success of the Biden strategy crucially depends upon full cooperation, in particular, by the governments of the U.K. Germany, France, Italy, as well as the European Commission.

Putin and other kleptocratic regimes such as those running China, Iran and Turkey may hope that the Europeans will be reluctant to go nearly as far as Biden wants. Indeed, for the U.S. leader this is a tough sell.

Corruption: How authoritarians undermine democracy

In the corridors of the G7 and NATO summits, prior to the meeting with Putin, Biden and his associates forcefully stressed that the US sees anti-corruption now as a core issue of national security in the vital contest across the globe between authoritarianism and democracy.

The final G7 Summit communiqué made only passing reference to corruption. In fact, it was buried so deeply in the document that it looked as if it had just been inserted by a U.S. official.

However, Acting Assistant Secretary of State James Walsh responded to a question from me on this issue: “We had corruption high on the G7 Summit agenda, even if the media did not report this.”

European softballing?

To their credit, the UK and the EU have launched efforts to reform company laws so that the true beneficial ownership of all corporations is transparent.

As a principal matter, it is much harder now for the investors in illicit financial vehicles to hide their assets in offshore opaque holding companies.

All for public show?

Astonishingly, though, neither the UK nor any EU member country has provided law enforcement authorities with the budget resources adequate to meaningfully take on the money-launderers in their midst.

This makes it hard to expose the dirty cash schemes perpetrated in their countries by the representatives of kleptocrats and their cronies, as well as by organized crime.

Governments run by private interests?

Importantly, the most serious concerns that many European leaders of democracies have when it comes to corruption are domestic.

The issue comes into sharp focus with the publication by Transparency International (TI) of its new “Barometer” survey of public opinions in the 27 EU countries that shows that: “Almost a third of people think corruption is getting worse in their country. A further 44% think it’s not getting any better.”

The survey found that around one-half of the 40,000 people questioned think that bribes or connections are commonly used by businesses to secure profitable government contracts and that big companies often avoid paying their taxes.

TI said: “It is not surprising, then, that more than half of people in the EU think their government is run by private interests.”

European business pressures

And indeed, commercial influence and interests are the major constraint on European governments acting nearly as forcefully as they should in dealing with foreign corrupt regimes.

Germany and France, for example, are keen to sell goods and services to Russia (and to other kleptocracies) and hate to see trade curbed because of the Kremlin’s far-reaching corruption.

They act in that manner even though they must be aware that this way of accommodating Russia undermines Western democracies and strengthen Russia’s geopolitical influence.

Londongrad: The UK’s uninspiring example

The British authorities turn a blind eye to the armies of Russians, often kleptocrats, who have bought large swathes of property to create “Londongrad.”

These Russian “businessmen” are then “aided” by an British financial institutions, lawyers, real estate brokers and consultants eager to earn high fees for their transactional services.

And these high end professionals, in turn, wield the kind of political influence to ensure that their income streams are unchallenged.

Can the West do better: Summit for Democracy?

The feeble response by Western democracies to the enormous corruption pursued by the leaders of authoritarian regimes in scores of countries will continue unless things change clear-headed thinking finally prevails.

In coming months, moving towards the “Summit for Democracy” that President Biden is planning for late this year, senior U.S. officials will fan out across Europe’s capitals to win acceptance of the view that countering corruption is a vital national security challenge. They know that convincing the European allies will be difficult.

Conclusion

If the Western democracies are to counter the efforts of kleptocratic regimes to use illicit finance and corrupt schemes, then a far more robust, highly coordinated, strongly funded, international anti-corruption strategy is essential.

The new White House “Memorandum on Establishing the Fight Against Corruption as a Core United States National Security Interest” is an excellent start.

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About Frank Vogl

Frank Vogl is co-founder of Transparency International and author of Waging War on Corruption: Inside the Movement Fighting the Abuse of Power. [Washington D.C., United States]

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