On fight against corruption, impact of Biden’s program remains uncertain

In early June, President Joe Biden issued a memorandum “making the fight against corruption a fundamental US national security interest” and ordering a significant mobilization of government resources to address this problem. The move comes amid heightened public awareness of the threats to democracy and security posed by foreign bribery, mainly due to the Panama Papers leaks that began in 2016 as well as various investigations into allegations of embezzlement against it. former President Donald Trump and his associates.

Yet while some federal agencies and departments have taken steps to turn Biden’s laudable rhetoric into reality, it remains unclear exactly what shape the United States’ war on kleptocracy will take.

Biden is not the first US president to recognize the need to fight global corruption. As early as 2006, George W. Bush released a high-level national anti-corruption strategy, while Barack Obama launched a global anti-corruption program in 2014. Even Trump declared corruption a national emergency when he significantly broadened the scope of sanctions imposed under the Global Agreement. Magnitsky Act, allowing them to better target corrupt foreign officials.

To his credit, however, Biden is the first president to systematically identify corruption as a major threat to national security and integrate it into his broader view of foreign policy. Even before declaring his run for president, he warned in a 2018 op-ed for Politico, co-authored with Michael Carpenter, that shell companies and other financial loopholes make American democracy vulnerable to foreign influence campaigns. In a foreign affairs article last year outlining his vision for foreign policy, then-candidate Biden pledged to make the fight against corruption a central pillar of a summit for democracy project. , even including specific details on how his administration would follow. And after Biden won last year’s presidential election, his new national security adviser, Jake Sullivan, highlighted the issue in media interviews during the transition.

Last month’s memorandum should therefore not have been a surprise. Its most important element is a 200-day interagency review process, overseen by Chandana Ravindranath, who has been appointed to the newly created post of Director of Anti-Corruption at the National Security Council, in which 15 departments and agencies concerned will have to develop a strategy aimed at “significantly strengthening” US anti-corruption capabilities. They will report to the White House sometime before Biden’s proposed democracy summit, suggesting that the outcome of the review will provide an important anti-corruption platform that the White House hopes will rally its partners and allies.

The main challenge for National Security Council staff during the review period will be to push Washington’s bureaucracy away from its decades-old focus on more traditional security threats, such as the terrorism and drug trafficking, to adopt a more balanced approach that also includes financial harm. To be fair, some departments already consider anti-corruption efforts firmly to be their responsibility. Biden’s State Department, for example, has made vigorous use of visa bans and other punitive tools, notably against Ukrainian oligarch Ihor Kolomoisky and 55 “corrupt and undemocratic actors” in Central America. Of course, visa bans have only limited effectiveness, especially when targets do not intend to travel to the United States. But they have a powerful side effect: they flag people designated as untrustworthy to financial institutions around the world, who can then refuse to do business with them.

While some federal agencies have taken steps to turn Biden’s laudable rhetoric into reality, it’s still unclear exactly what shape America’s war on kleptocracy will take.

The Justice Department has a well-established Kleptocracy asset recovery initiative, which has recovered nearly $ 2 billion in stolen funds over the past decade, and is now expanding its work alongside the growing number of international squads. of FBI corruption. And the administrator of the United States Agency for International Development, Samantha Power, has spoken particularly in favor of Biden’s anti-corruption agenda. Following the publication of Biden’s memo last month, she announced the launch of a new task force and rapid reaction mechanism, among other measures.

Unfortunately, however, the Cabinet official who has arguably the most work to do is the one who has shown the least enthusiasm for tackling corruption on a global scale. Treasury Secretary Janet Yellen is responsible for anti-money laundering reforms, strengthening financial intelligence and deploying sanctions, but she has barely mentioned corruption since taking office and left out the subject of a speech of April which outlined its seven major international priorities. This prompted two prominent members of Congress, Representative Tom Malinowski and Senator Sheldon Whitehouse, to send a letter urging him to take the issue more seriously.

Even while the interagency review is underway, Yellen could take some far-reaching action with the stroke of a pen. The Treasury Department could immediately target the world’s most notorious kleptocrats with sanctions and freeze their stolen assets, but the department appears to be pleased with the less strict reprimand offered by the State Department’s visa bans. Yellen could also do more to put U.S. lawyers, real estate agents and other professionals routinely involved in money laundering schemes under the same kind of scrutiny as U.S. banks. In particular, the FBI is reportedly concerned that hedge funds and other private investment vehicles are used to launder money. A rule proposal developed by the anti-money laundering branch of the Treasury Department in 2015 establish stricter rules for the $ 10 trillion private equity fund industry, but the draft rule has languished under the Trump administration, and Yellen has so far shown no desire to revive it.

Beyond the necessary institutional reforms arises a bigger question: how will Biden’s war on corruption fit into his broader foreign and national security policy agenda. Anti-corruption measures, after all, do not exist in a political vacuum; sanctions and indictments are often seen by foreign powers as aggressive and confrontational measures, especially when they target senior officials within authoritarian personalist regimes. There is a real risk that for all of Biden’s high-profile rhetoric, he is reluctant to spend the political capital necessary to hold the world’s most powerful kleptocrats accountable.

At the very least, those hoping for a series of “maximum pressure” campaigns against the world’s worst kleptocracies, involving the aggressive use of sanctions and law enforcement tactics, are likely to be disappointed. In particular, the administration has reportedly indicated that it plans to exercise restraint on unilateral sanctions – a key tool in denying kleptocratic regimes access to U.S. financial institutions and the global economy – in favor of multilateral efforts. As if to underscore this softer approach, Biden in May lifted U.S. sanctions against the company overseeing the construction of Russia’s Nord Stream 2 pipeline to Germany despite serious corruption concerns surrounding the project. Biden’s decision has been widely criticized across the American political spectrum as a boon to Russia’s influence in Europe.

But the executive branch is not the only part of the US government adopting an anti-corruption agenda. In January, Congress passed the most significant upgrade to the US anti-money laundering regime in two decades by banning anonymous ownership of shell companies. And less than a week after Biden’s June memo, a bipartisan group of lawmakers launched the first congressional caucus against foreign corruption and kleptocracy. The group has previously introduced bills that would provide more funding for anti-corruption measures, introduce greater transparency in asset recovery procedures, end U.S. visa fraud by corrupt foreign officials, and punish foreign officials who engage in corruption that harms American businesses and individuals. That momentum on Capitol Hill could end up tying Biden to a more aggressive anti-corruption campaign than some in his administration would prefer.

What should America’s Democratic allies think about all of this? Despite some uncertainty about the extent of the Biden administration’s engagement, the fight against corruption and kleptocracy is now firmly entrenched in the narrative and institutions of the US national security apparatus, and those who wish remaining close partners should start aligning their own policies accordingly. Whether Biden’s anti-corruption crusade has real teeth, or simply involves a series of light institutional reforms, will become clearer early next year, once the interagency review process is complete. This is the timeline by which the Biden administration’s efforts should be judged, and which other countries would be wise to adhere to in their own reform efforts.

Nate Sibley is a researcher at the Kleptocracy Initiative at the Hudson Institute. He is the co-author of three Hudson Institute reports, including “Countering the global kleptocracyAnd his work has appeared in Foreign Policy, The Washington Examiner, and The Washington Post, among others. He has appeared on the BBC and CNN, and hosts the show “Make a murder“Podcast.

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