Hudson Institute | 20Oct2016 | Tim Judah
The Kleptocracy Curse: Rethinking Containment
Table of Contents
The Kleptocrats Are
The United States needs to start paying attention to what has happened
to the world economy. Gigantic sums of money are now traveling the
world incognito. This has turned globalization into the golden age of
money laundering. Nestling in Western economies are offshore financial
structures (and their professional enablers) which allow funds to
instantaneously and anonymously jump between countries, empowering
authoritarians and corrupting Western institutions. This now presents a
growing national security threat.
Across the world, money laundering on an epidemic scale is undermining
American foreign policy: crippling development, threatening democracy,
damaging Western soft power and fueling state collapse. Across the
West, this staggering flow of illicit funds has turned authoritarian
kleptocrats into powerful players increasingly able to wield power
inside Western institutions and game them to their own ends. There is
only one way to block the illicit flows that empower kleptocrats and
undermine democracy: Ending anonymous shell companies must become a
national security priority for the U.S.
pdf file ...]
The excerpts reproduced below summarize the gist of Tim Judah's article:
- This is why nothing is more beautiful for a corrupt dictator than the
ability to anonymously and untraceably move enormous sums
electronically around the world.
(p6) - Since the 1970s the complex of lawyers, bankers, lobbyists,
accountants, and public relations experts (best described as the
“wealth defense industry”) have matured in power and skill.
(p11) - Chinese officials, just like Russian ones, find Western bankers their willing enablers.
- A poignant counterfactual for foreign policy practitioners to ask
themselves is, “how different would Russia look today if the CIA had
blocked illicit capital flight?”
(p15) - We see the kleptocrats’
curse most clearly in Ukraine. ... Global Financial Integrity estimates
that between 2004 and 2013 Ukraine lost over $116 billion in illicit
- As Western diplomats struggled to impress on
Ukrainian politicians the importance of the rule of law and
responsible government, Western bankers, lawyers, accountants, real
estate agents, and public relations consultants were laundering and
sequestering illicitly extracted Ukrainian wealth in the West.
- Speaking in the British parliament, the leading authority on
organized crime, Roberto Saviano, is adamant that London is the most
corrupt city in the world.
(p18) - Russia today is undoubtedly a
kleptocracy, where corruption is both a tool and a privilege of power.
... Moscow’s allies in London are the Russian superrich, a mixture of
politically exposed officials and oligarchs, who, supported by the
British wealth defense industry, have turned their fortunes into
(p21) - Autocrats have skillfully
developed a new globalization strategy which penetrates, undermines,
and in the worst case captures Western democratic institutions in
partnership with enablers, both politicians and professionals.
(p23) - There
is an all-American “Looting Machine.” The jurisdiction of Delaware
operates as an international tax haven. ... The U.S. has its own Cayman
and British Virgin Islands, and individual states are booming.
- Kleptocratic containment will be about disarming authoritarian
elites, reasserting Western law, reaffirming Western values,
firewalling Western institutions, and closing down Western hypocrisy.
Judah states that the kleptocrats' curse is seen most clearly in
Ukraine. In my opinion, it will be very difficult to institute reforms
in Ukraine against the interests of the Oligarchs and organized crime
(both inside and outside of Ukraine) until the West cleans out the
corruption in its own bailiwick.
2016 U.S. presidential election campaign won by Donald Trump clearly
illustrated the deep penetration of Russian "enablers" into both the
Democratic and Republican parties. Historically, this was also the case
during WWII as documented by Evans and Romerstein in their book Stalin's Secret Agents and by Susan Butler in My Dear Mr. Stalin.
Vladimir Putin is no less adept than Josef Stalin in infiltrating
"agents of influence" into American political, financial and social
the Ukrainian-Canadian community there are two individuals that have
been warning us of corruption within our society for decades: Stefan
Lemieszewski and Yaroslav Kokodyniak.
Gerry Kokodyniak is one of the owners/operators of the Ukrainian website Infoukes at http://www.infoukes.com/ which also hosts mailing lists such as Announce and Politics .
The contributions of Stefan Lemieszewski are archived back to April 1997 in the Politics mailing list.
The Ukrainian-Canadian community owes these two individuls a debt of gratitude. And I would further encourage readers to subscribe to these mailing lists.]