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Hudson Institute | 20Oct2016 | Tim Judah

The Kleptocracy Curse: Rethinking Containment

Table of Contents

Preface                                         4
The Kleptocrats Are Coming    5
The Kleptocrats’ Curse             13
The London Laundromat          17
Kleptocratic Takeover               21
Containment for Kleptocrats    23
References                                   24


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.

[... 32-page pdf file ...]

The excerpts reproduced below summarize the gist of Tim Judah's article:

(p5) - 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.

(p13) - 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 financial flows.
- 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.

(p17) - 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 considerable influence.

(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.
(p24) - Kleptocratic containment will be about disarming authoritarian elites, reasserting Western law, reaffirming Western values, firewalling Western institutions, and closing down Western hypocrisy.

[W.Z. Tim 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.

The 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 institutions.

Within 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.]