Corruption as statecraft: Why urgent steps must be taken to guard against this form of hybrid warfare

18th November 2019

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.