Author: jon.lemarquand

The theme of this year’s annual Munich Security Conference was ‘Westlessness’.  Awkward to pronounce and going by the evidence, equally awkward to discuss in (polite) internationally mixed company.  That those countries self-identifying as ‘Western’, are having a moment of self-doubt is not in dispute.  But as the US Secretary of State, Mike Pompeo was at pains to stress during his speech to the conference, the list of the West’s competitive advantages is as long as it is impressive.  Despite that, somehow the doubts remain.  There is no shortage of books, journal articles and editorials attempting to explain why the assumptions that have dominated global discourse and conduct on security and defence for the past 70 years are now under siege.  Aside from concerns over the US’s continued commitment to fortify the West’s key brands like NATO, the other most often cited evidence for Westlessness was the sense that the international rules based order too is no longer the default standard it once was.

For some, including the authors of the Conference’s report and leaders such as France’s President Macron, the answer lies in finding – and presumably before that, agreeing to – a joint plan for action.  For Macron, this would come from the European Union.  Others continue to look to the US in the hope that at some point, and maybe as early as November, signs will emerge that normal business will soon be resumed.  Nonetheless, some things once said cannot be unsaid, and now that the genie of self-doubt is out the bottle, and has been named, any re-set will require sustained stewardship and patient hard work by all those with an interest in maintaining the West’s values and its underpinning ideals.

So what might be done while the West waits for the emergence of a plan, be that joint, US led, EU led or otherwise?  Are there parallels with other governance reform efforts that seek to help institutions that have lost their way?  For some fifteen years, Transparency International’s Defence and Security programme (TI-DS) has been working tirelessly to raise awareness of the corrosive effects of corruption in the global defence sector. Challenging the view that corruption is merely an economic or financial cost, its work continues to show that once a more rounded interpretation of corruption is combined with a sector specific approach and a deeper appreciation of its precursors, patterns are revealed and wider implications become better understood.  TI-DS work indicates how the onset of institutional malaise can help create the conditions for corruption to take root in a sector, while also pointing to decay in the broader governance of the political system of which it is a part.  Running in parallel, is corruption’s relationship with the breakdown of trust between the public and those they fund (through their taxes) to protect them, undermining confidence in the State and if left unchecked, how it can lead to instability, insecurity and ultimately to conflict.

This is not to say, that what lies at the heart of the West’s strategic drift is corruption.  The temptations that can lead to corrupt behaviour, in all its guises, can and do exist in the most transparent and accountable of systems, and the bastions of the West’s defence are no less immune to it than others.  Rather, that the common thread that connects the two is ‘complacency’.  It is complacency that starts the erosion of oversight mechanisms and institutional safeguards. The difficult and often mundane work that politicians, military leaders and bureaucracies are required to do to tend and maintain the complex web of checks, balances, customs and practices, needs constant attention and insistent reaffirmation. The problem for the generation that inherits a system, as opposed to generation that built and in some cases fought for it, is that the prevailing conditions are seen as a given, somehow self-governing and possibly even inevitable.  And what might be true for institutions that govern national defense and security, can also true for a wider political system and by extension, a broader international system, especially one built on rarely explained shared values and inherited assumptions.  In the absence of a conscious effort to maintain its safeguards, it is perhaps inevitable that cracks will appear that can be exploited by those motivated to take advantage of perceived weakness or discord.

For Transparency International Defence and Security, the first step in any successful institutional reform programme is the identification of reform-minded leaders willing to take on the challenge of re-instilling the confidence in the organisations they lead.  In turn, those that are led need to believe that’s their leaders understand the problem and mean to do what it takes to mend it.  But this leadership must come from within the institution; be that a single branch of the military, a ministry, or within a government.  Rarely, does it come from outside.  In the same way, calls by Western leaders for joint action, or US leadership, overlook important options much closer to home.  The complacency that crept up on the West after the fall of the Berlin Wall arguably took hold because collectively, the West took its values, its justifications and its popularity for granted.  Moreover, they believed that liberal democracy’s victory in the Cold War, had proven that it was inevitable; and as such it didn’t need to be explained, justified or renewed.

The first step in redressing the West’s moment of self-doubt therefore, like the first step in tackling corruption within an institution, is to recognise that reform starts when its leaders re-build and re-assert the case for shared values with its disillusioned rank and file, and begin the process of reconnecting with sceptical populations. Reform and renewal isn’t easy at any level, but it is best led by those closest to the problem.  Waiting for the leadership of others, or a proposal for a joint action, will only allow the doubt to linger and unpalatable alternatives to gain greater currency and increase their traction. If and when joint action or the leadership of others is eventually offered, those that have already started to tackle to problem at source, will always be better placed to contribute

In 2016, Transparency International – Ukraine and Transparency International – Defence & Security created the Independent Defence Anti-Corruption Committee (NAKO). A year ago, NAKO became an independent NGO.

As NAKO moves through the transition toward effective governance and full operational autonomy, we  wish to thank all those who have contributed to its and our work so far. In particular, our thanks go to the NAKO Committee members: Drago Kos, Yulia Marushevska, Volodymyr Ogrysko, Oleh Rybachuk, James Wasserstrom and Michel Yakovleff, as well as previous Committee members – Timothy Evans and Sevgil Musaeva.

Director of Transparency International Defence and Security, Steve Francis, said:

“We thank the committee members for their insight and commitment. They have been key to the progress NAKO has made since it was set up three years ago in working towards building integrity, transparency and accountability in the defence sector in Ukraine.”

We look forward to continue working with NAKO as a strategic partner in Ukraine, and to support its efforts to combat corruption in the Ukrainian defence sector, thereby increasing the effectiveness of defence spending, improving living conditions of defence personnel and ensuring Ukraine’s defence forces provide state and human security.

25 November, London – Security and stability across the Middle East and North Africa continues to be undermined by the risk of corruption in defence institutions, according to new research by Transparency International – Defence & Security.

11 of the 12 Middle East and North Africa states assessed in the 2020 Government Defence Integrity Index released today received E or F grades, indicating either a “very high” or “critical” risk of defence corruption. Only Tunisia performed better, scoring a D.

These findings come against a backdrop of insecurity and fragility in the region. Mass protests – driven by grievances including corruption and financial mismanagement by government – continue in Egypt, Iraq and Lebanon. Meanwhile protracted armed conflicts in Syria, Yemen and Libya show no sign of ending.

Steve Francis OBE, Director of Transparency International – Defence & Security, said:

The Middle East and North Africa remains one of the most conflict-riven regions in the world and this instability has a major impact on international security. While some states have made some improvements in their anti-corruption safeguards, the overall picture is one of stagnation and in some cases regression. Given the empirical link between corruption and insecurity, these results make worrying reading.

Military institutions across the region continue to conduct much of their business under a shroud of secrecy and away from even the most basic public scrutiny or legislative oversight. This lack of accountability fuels mistrust in security services and governments, which in turn feeds instability.

With the regional picture looking bleak, tools like our Government Defence Integrity Index are more important than ever. By highlighting areas where safeguards against corruption are weak or non-existent, campaigners on the ground and reform minded military leaders and politicians can use these results to push for real change. Taking action to improve transparency and close loopholes which allow corruption to thrive would improve public trust and bolster national security.

Defence sectors across the region continue to suffer from excessive secrecy, and a lack of oversight and transparency, the research found. Meanwhile, defence spending in the region continues to surge to record levels.

The countries with defence sectors at a ‘critical’ risk of corruption are Algeria, Egypt, Jordan, Morocco, Oman, Qatar and Saudi Arabia, as there is virtually no accountability or transparency of defence and security institutions. Many of these countries are either major arms importers or benefit from significant international military aid.

In Lebanon, a lack of clear independent auditing mechanisms and gaps between anti-corruption laws adopted in the last two years and their implementation contributed to the country’s “very high” risk status, despite the Lebanese Armed Forces demonstrating high levels of integrity and a willingness to remain neutral and avoid using excessive against protesters.

Tunisia was the only country in the region to rank higher, with new whistleblower protections, improved oversight and public commitments to promoting integrity in the armed forces contributing to its score. But the continued use of counter-terrorism justifications combined with an ingrained culture of secrecy within the defence sector prevented Tunisia from scoring higher.

 

Country	Risk banding
Tunisia	High risk
Lebanon	Very high risk
Palestine
Kuwait
UAE
Algeria	Critical risk
Egypt
Jordan
Morocco
Oman
Qatar
Saudi Arabia

 

Notes to editors:

The full, country-specific Government Defence Integrity Index (GDI) results for the Middle East and North Africa will be available here

The GDI assesses the existence, effectiveness and enforcement of institutional and informal controls to manage the risk of corruption in defence and security institutions.

Our team of experts draws together evidence from a wide variety of sources and interviewees across 77 indicators to provide a detailed assessment of the integrity of national defence institutions, and awards a score for each country from A to F.

The GDI was previously known as the Government Defence Anti-Corruption Index (GI). The Index underwent a major update for the 2020 version, including changes to the methodology and scoring underpinning the project. This means overall country scores from this 2020 version cannot be accurately compared with country scores from previous iterations of the Index.

Subsequent GDI results will be released in 2020, covering Central and Eastern Europe and Latin America, G-20 countries, the Asia Pacific region, East and Southern Africa, and NATO+.

 

Contact:

Harvey Gavin
Harvey.gavin@transparency.org.uk
+44 (0)20 3096 7695
++44 (0)79 6456 0340

 

Mallary Gelb
mallary.gelb@transparency.org.uk
+44 (0)20 3096 7695
++44 (0)79 6456 0340

November 19, London – Corruption is being harnessed by authoritarian regimes as a foreign policy tool, research by Transparency International – Defence & Security warns – and the West could be at risk unless action is taken to address vulnerabilities in key institutions.

Corrupt practices like bribery and embezzlement of public funds have traditionally been viewed as a means of personal enrichment for individuals and networks, but new research published today reveals how policymakers have overlooked a key issue: corruption can be weaponised to achieve foreign policy goals and could potentially become a tool of hybrid warfare.

Corruption as Statecraft details how ‘corruption with intent’ schemes have already been used as part of the foreign policy arsenal of authoritarian states like Russia. They are often based on a dependence in a strategic sector, such as energy exports or infrastructure investments.

Those dependencies, based on a real need and combined with opaque governance and economic arrangements, can enable cross-border schemes where money is funnelled to decision makers in one country with a view to ensuring foreign policy decisions favourable to another country.

Dr Karolina MacLachlan, Regional Programme Manager for Transparency International – Defence and Security, said:

“Typically practices like bribery, money laundering and embezzlement of state funds are used by a corrupt elite for economic gain, but ‘corruption with intent’ schemes are far more insidious. These strategies are not aimed at making money, but are instead focussed on corrupting decision makers and public institutions in other countries in the pursuit of foreign policy goals.

“The damage corruption causes to individuals, communities and entire countries is well documented – and the poorest in society are inevitably left to suffer the brunt of the impact. This indiscriminate ‘collateral damage’ is what needs to make policy makes pay attention.”

Corruption as a tool of foreign policy can be deployed anywhere there is opaque company and government contracting structures, bribery, lack of oversight, and loopholes in key regulations. This means Europe and the United States are both at risk.

The Parliamentary Assembly of the Council of Europe has already been targeted by a corruption with intent scheme – and its ethics watchdog initially failed to stop it. The European Parliament, unable to fully account for MEPs’ external employment and outside income, is also at risk.

Dr Karolina MacLachlan said:

“While it would be tempting to assume that this weaponising of corruption is only a threat to emerging democracies such as Ukraine or Armenia, our research also highlights a vulnerability at the heart of the Europe Union which malign actors have already exploited – and others that can be exploited in the future.

“Worryingly, there are vulnerabilities in European energy trade and infrastructure investment carried out as part of China’s trillion-dollar Belt and Road Initiative. Large-sale commitments made by a number of countries, alongside limited transparency in international contracts and with legal loopholes, limit countries’ room for manoeuvre and open them up to external pressures and corrupt schemes.

“Despite the warning signs, there is still time for policymakers to address these chinks in the armour. The link between corruption with intent and strategic dependence means that European countries and the US not only need to pay far more attention to their own vulnerabilities and treat corruption as the strategic threat it can be, but also reconsider how they can help other countries fight corruption. Anti-corruption programmes need to be joined with wider political and economic considerations to manage the dependence that corruption schemes can be based on.”

How ‘corruption with intent’ schemes can work:

1. There is a real or perceived need: infrastructure investment, energy, arms imports
2. The need is met by an entity from another country (government, state-owned enterprise, a private company linked to government)
3. The contracting and mode of implementation of the project(s) are opaque, involve intermediaries, are based on unfavourable terms, and create dependence. They are facilitated by local loopholes
4. Opacity is used to funnel money to elites in the recipient country to secure favourable foreign policy outcomes

 

Contact:

Harvey Gavin
harvey.gavin@transparency.org.uk
+44 (0)20 3096 7695
+44 (0)79 6456 0340

By Dr Karolina MacLachlan

States and corrupt elite are turning to corruption to achieve foreign policy goals and a way to carry out hybrid warfare.

This kind of corruption is not aimed at economic benefit: rather, it relies on a willingness to forgo economic gains in favour of increased influence, desired political outcomes, and an ability to spread political norms and practices.

If successful, the use of corruption within a foreign policy arsenal can enable elites in one country to hold whole political classes in other countries to ransom, to undermine government institutions and exert illegitimate influence in the target state, and sow insecurity and instability.

In their most dangerous and durable form, these ‘corruption as statecraft’ schemes are built on political and economic dependence, usually in key sectors such as energy, defence and military equipment or even infrastructure projects.

Russia’s attempts to shape the domestic and foreign policy decisions of Ukraine over the last two decades, for example, reportedly utilised corrupt schemes in the energy sector. These schemes capitalized on Ukraine’s dependence on Russia’s state-owned energy giant, Gazprom, for gas imports to strengthen and leverage corrupt networks in Ukraine to help achieve foreign policy goals. The fluctuations in gas prices, often orchestrated by Gazprom’s political masters; threats of supplies being held up; and the use of opaque, anonymously owned intermediaries between Gazprom and Ukrainian state-owned energy company Naftogaz to redirect profits to oligarchs and political parties enabled a combination of pressure and bribery that helped further Russia’s foreign policy interests.

Corruption can also be a tool of hybrid warfare, alongside disinformation and cyber-attacks. Electoral campaign contributions could be traded for political influence or promises of decisions favourable to individuals. For example, Former Lithuanian President Rolandas Paksas was accused of having received campaign financing from individuals suspected to be linked to Russian organised crime, in exchange for granting them Lithuanian citizenship and for divulging classified information on investigations into their business dealings. While Paksas was eventually cleared of the charges of divulging state secrets to his campaign contributors, similar schemes could be employed to undermine institutions managing crucial infrastructure or those responsible for deterring aggression and providing security.

‘Corruption as statecraft’ is hard to detect and difficult to prove because it is often intertwined with complex, opaque corruption and criminal networks, both in the state employing corruption and in the target state. Where governing elites have extensive links to organised crime and where the distinction between public and private is blurred, criminal networks can be harnessed by the state to exercise influence, thereby turning corruption into a weapon

The ‘Azerbaijani Laundromat’, a money-laundering scheme transferred a total of $2.9 billion USD from Azerbaijani companies and government departments through four UK-based shell companies. This money bankrolled both private enrichment and foreign policy schemes aimed at improving the country’s international reputation. Azerbaijani officials appear to have used funds passed through the ‘Laundromat’ to bribe members of the Parliamentary Assembly of the Council of Europe in order to water down official criticism of Azerbaijan’s human rights record; at the same time, top officials used it as a slush fund to pay for luxury goods and services.

Schemes like these also pose significant problems in mature democracies. Authoritarian, kleptocratic elites from across the globe use financial channels that enable opacity and anonymity, but also offer political stability and protection of the rule of law not only to hide and legitimise wealth, but to export their way of doing business.

Unless countered, practices ranging from the illegal (bribery and tax evasion) to the unethical (such as tax avoidance through offshore banking) will weaken institutions and laws across multiple states in which corrupt networks operate. Ultimately, the use of corruption to undermine national and international institutions threatens upon which many societies are based.

The links between corruption and insecurity have already been recognised in the US, with calls for Congress to take action to block financial flows which can not only undermine allies, but also influence the US political system. In the EU there has been even more progress in addressing the prevalence of anonymous companies and reporting financial flows, but verifying data, monitoring financial flows, and understanding their purpose pose ongoing challenges.

Only by understanding and addressing the strategic dependence that often underpins these schemes can we begin to attempt to dismantle them effectively. Even a robust anti-corruption effort will only have limited effects if it’s not combined with efforts to address the underlying issues. Whether it is a crucial resource such as energy, a key state asset such as defence and military power, or investment in important infrastructure projects, these dependencies have to be tackled if countries are to have a chance of dismantling the schemes that grow out of them, and to maintain independence and freedom of manoeuvre on the international scene.

This article is based on Corruption as Statecraft, a new report by Transparency International – Defence and Security, available here.