The Enough Project’s new-found interest in the links between corruption and mass atrocity is welcome. Here are some proposals for how it could make a difference.

In the introduction to its new project, The Sentry, George Clooney and John Prendergast draw attention the relationship between the flow of money out of state coffers and into purchases that effectively privatize and militarize public funds, with the occurrence of mass atrocities. They write:

Political, military, and commercial elites in these countries – often collaborating with neighbors – control and run the state and its institutions, use their power to transfer a large fraction of society’s resources to enrich themselves, and use brute force to remain in power. In these states, high-level corruption linked to violence is not anomalous; it constitutes the actual system of governance.

Responsibility for this situation, they argue, does not belong to the few corrupt individuals alone, but to entire financial networks from conflict zones into the global economic centers, where they mix with legitimate systems of international finance and trade.

That’s a good beginning. Let’s draw in some of what is known about global illicit financial flows, the criminalization of governance, violence and atrocity, to see what an effective response might look like.

First: don’t only chase the known bad guys. The Enough Project has a habit of targeting the well-known gallery of rogues. It wasn’t news to anyone that Sudan’s president Omar al Bashir ran a government responsible for mass atrocities against civilians. A project aimed at stopping mass atrocities needed to point out that Bashir’s challengers—the leaders of the Sudan People’s Liberation Movement and Army—did not have a better record. Since the eruption of civil war in South Sudan in December 2013, that fact has become painfully obvious—but the depths of corruption and militarization, and South Sudanese leaders’ sense of impunity and recklessness were evident beforehand. Similarly, everyone agrees that Joseph Kony, leader of the Ugandan Lord’s Resistance Army is a villain. But in terms of sheer numbers of people harmed and damage done to the fabric of society, the Ugandan army is comparably destructive. The Ugandan defense budget is the black heart of corruption in that country—and remains a valued partner for U.S. security cooperation. South Sudan’s pathological political economy appeared on American advocates’ radar only after mass atrocities occurred—let that not be the case for Uganda.

Second, recognize that U.S. policies and interests are at the heart of most problems. Actions by Washington (and Brussels, London and Paris) can only be effective if the nature and extent of those governments’ involvement is taken on board. Sarah Chayes in her recent book Thieves of State describes how U.S. money and license to act with impunity changed Afghanistan from a corrupt patrimonial system into a vertically-integrated and transnationally-linked criminal cartel. The Pentagon and the CIA were the chief accomplices in the criminal takeover of the Afghan state. Repeatedly, when anti-corruption officers identified a highly-placed person responsible for thievery, they found that individual was protected by the CIA—purportedly indispensible for America’s war on the Taliban and Al-Qaeda.

It is no different in Africa. Chad’s president Idriss Déby is a ruthless dictator who runs his country as a personal business. But his troops are valued by France and the U.S. for military operations against militants in Mali and Nigeria, so he gets a free pass. The firehose of counter-terror funding—now increasingly blended with peacekeeping operations—is generating out-of-control security establishments across the world. Army generals and security chiefs receive hard currency for which they do not need to account. We shouldn’t be surprised to find that these security entrepreneurs have an interest in keeping crises bubbling away, and are networked in both to counter-insurgency and insurgency.

Much the same is true of the forward frontiers for the ‘war on drugs’ and ‘fortress Europe’: the plan for militarized policing of rich world borders, in the territories of central America and North Africa. This is a policy that exports the problems of failed narcotics and immigration policies to poor and poorly governed countries, and is a standing invitation to those countries’ elites to profit from crime and from law enforcement at the same time.

Corruption, violence and impunity are not anomalies: they are how individuals respond to the incentives and opportunities they face. The black budgets of the U.S. national security establishment, the monies associated with arms deals, and the blanket secrecy that covers all of these, are the fuel in this engine.

Third, the biggest issue, by far, in illicit financial flows is profit shifting by transnational corporations. Notoriously, Starbucks managed its accounts so as to make no profit at all in the U.K. This became a concern to rich countries following the financial crisis of 2008, when it became clear that corporations were finding ways to avoid paying tax by ensuring that all their profits were made in places where they paid minimal tax, or none at all. As a result, the tax base in countries like the U.K. was eroding. A closely-linked phenomenon is secrecy jurisdictions, also known as tax havens. The City of London is the world’s biggest tax haven for global finance—a privilege for which Londoners pay a steep price through grossly inflated property prices—though there are many other offshore locations around the world.

The recent Financing For Development conference in Addis Ababa marked the biggest international effort to date to grapple with this issue. Most analysts agree that the best option is a form of unitary taxation, under which transnational corporations file a single set of accounts, and their tax payments are then apportioned to different countries on the basis of how much business they do in those countries. This system would retain hundreds of billions of dollars each year in developing countries, far outstripping any aid or debt relief. But the rich world club, the Organization for Economic Cooperation and Development, prefers to patch up the existing system with better exchange of information across different tax jurisdictions. African initiatives for tax justice were pressured into yielding to a compromise that favors the OECD approach.

The global tax reform agenda is at an early stage. The current system is dysfunctional and needs fixing in numerous ways. Groups such as the Tax Justice Network and Global Financial Integrity provide fine analyses, relevant to most countries. But we need to add to their agenda with a program for the financial rehabilitation of repeat offenders. Countries caught in networked warlordism will benefit least from tax reform—even as their people don’t benefit from today’s menu of punitive measures.

Economic and financial sanctions rarely work: their best record is when they are short-term, have specific asks, and are targeted at friendly countries. Long-term, broad sanctions punishing hostile countries tend to compound the harm. Depriving a government of any legal way of getting the finance it needs to function, means it works criminal networks instead. Sudan is a case in point: a raft of U.S. financial and economic sanctions has contributed to the dominance of an entrenched security-commercial cartel at the top of government, whose members are personally enriched by this system. When a state is captured by such a network, regime change becomes extraordinarily difficult. There’s no way out of this trap without normalizing state finance—and that means transforming the sanctions regime.

The final and most fundamental point is that we cannot escape this problem with the same tools and the same frameworks that got us collectively into it in the first place.

This agenda for change is neither charity nor coercive intervention, because the problem is ours as well. In Afghanistan, Iraq, Libya, Somalia and South Sudan, international interventions have made a bad situation worse. We share the same international financial and security systems: we all suffer the consequences, and all need to fix them. In western, developed countries, we experience the concentration of wealth into a tiny fraction of extremely rich people, alongside policies that have cut into the middle class, and limited the future of the next generation. We have a closed security establishment that considers itself above the rules that govern society as a whole, and permitted to crooks in the name of protecting the public. Their worldview subordinates public interest to greed and fear, and their prescriptions for global problems don’t challenge this formula.

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3 Responses to On corruption and mass atrocities

  1. Michael Kleinman says:

    I agree overall, but you could argue that long-term sanctions have been successful vis-a-vis Iran, if you view the goal of those sanctions as putting pressure on Iran to seek a negotiated agreement on nukes (as opposed to Iranian involvement in Syria, etc.).

    Also, while US sanctions have certainly helped cement the Ingaz security-commercial cartel, I think it might be overstating the case to present US sanctions as the cause of their continued hold on power. Sanctions didn’t lead to state capture; instead, elites already in power were adroit enough to take advantage of changing circumstances (such as sanctions) to remain in power. Ending the sanctions regime wouldn’t therefore necessarily undermine the existing cartel as a whole (though it might harm individual members), as simply force it to adapt again.

    Finally, would you argue that a structurally similar security-commercial cartel held sway under Nimeiri?

  2. Alex de Waal says:

    Dear Michael,

    It is interesting that three cases of successful major long-term sanctions have been targeted at the nuclear programs of Libya, Iraq and Iran. This warrants special attention. I will only raise the question here.

    I wouldn’t claim that U.S. sanctions were the major reason why the Islamist-security cartel stayed in power. But they contributed to the criminalization of the regime. The criminalization of the government began under Nimeiri (as you note) and stayed that way, in slightly different incarnations, subsequently. My argument is that when sanctions–starting with the 1986 suspension from the IMF and continuing in the 1990s and 2000s–didn’t help with reform. This is a complicated issue. To begin with, sanctions that were imposed with one goal in mind, such as ending state sponsorship of al Qaida, were sustained even when Sudan had ceased supporting AQ. Similarly, promises of lifting sanctions when the CPA was signed or the UN was permitted into Darfur, or the South was allowed peacefully to secede, were not met. So the Sudanese government has no confidence that the US will ever lift any sanctions for any action short of regime change, removing any incentive for reform.

    But the more substantive argument is that normalization of state finance through debt relief under HIPC, and opening up Sudan to regular financial flows and FDI, would be a first step towards normalizing the country’s financial politics. It would be a modest step, as the last thirty years of corrupt and criminalized political financing cannot easily be undone. But putting more sanctions in place is not going to help.

  3. Anwar Elhaj says:

    Well, I see mixture of the ins and outs of the subject. The ins are the internal dynamics of what is happening in S. Sudan or what I call the enablers of corruption. The outs are the international enablers, the links to international actors. The serious mistake by many, is the attempt to look at these enablers from the same angle because they are not extension of each others but separate domains. A case in point, if the Ingaz commercial and security cartel is effective, then how do you explain the Ingaz desperate attempts using every tactic for sale to left the sanctions. The security cartel is failing when major loop holes were closed such as the BNP Bank.

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