Sarah Chayes on Kleptocracy as a Security Issue

Now that the teaching quarter is over, I can get to my piled-up “must-read” list.

Sarah Chayes’s Thieves of State is high on that list. My students doing their master’s project on income maintenance in Afghanistan found it invaluable.

Fortunately, today I was treated to the low-cost substitute for reading a whole book: Chayes gave a talk at UCLA. She wasn’t as funny as she was on The Daily Show, but the analysis was pretty damned compelling.

I’ve always made fun of “corruption” as an academic topic because of its excessive focus on relatively minor cash payoffs, to  the exclusion of other forms of rent-seeking. That’s not an objection that anyone could raise to Chaye’s presentation. Even the talk was too complex to be well-summarized in a blog post, but these seemed to be the key points:

1. The idea of corruption as a malfunction in governance due to poor institutional design misses the point with respect to full-on kleptocracy, which is an increasingly widespread form of government (Afghanistan, Iraq, Russia, Ukraine, Pakistan, Nigeria). In a real kleptocracy, stealing isn’t something that happens in the course of governing; rather, governing is a means of stealing, and what look like bugs in the system are in fact features from the viewpoint of the people running it.

2. Insurgency, whether it takes a religious form or not, is often motivated primarily by corruption.

3. Petty extortion always involves insult as well as financial injury, and sometimes involves physical injury. That makes people mad; sometimes mad enough to want to kill a cop. When someone from ISIS or Boko Haram (or, I would have added, Sendero Luminoso) hands such a person a gun and tells him that cop-killing is not only justifiable but is a religious or patriotic duty, he may well take up the suggestion.

4. In a real government, taxes are paid by ordinary people and businesses to the central government, and then sent back down to officials and contractors who do the work and to citizens and businesses in the form of services and benefits. In a kleptocracy, lower-level officials exact bribes and extortion payments from citizens and businesses, and pass the money up the chain.

5. Sometimes there’s a single fount of corruption. Sometimes there are cooperating kleptocratic networks. Sometimes those networks compete rather than cooperating, in which case politics becomes a blood sport.

6. Lots of Westerners shrug and say, “Well, that’s the way business is done over there; it’s in the culture.” But no one Chayes has talked to living under kleptocracy has that viewpoint; they’re all outraged.

7. The free flow of international capital, currency convertibility, and the sale of state assets to private parties have increased the opportunities for, and benefits of, massive corruption. A Soviet official could have a dacha, but not much of a Swiss bank account, since the ruble wasn’t actually worth anything. A Russian kleptocrat can have a bank account in London and a $20 million apartment in New York.

8. Ignoring corruption and governance in order to deal with “security issues” – or, worse, making corrupt payments to kleptocrats to keep them on our side (in Iraq or Afghanistan, for example) gets the causal arrows wrong. Corruption and government are security issues, perhaps the paramount ones.

9. Since the money winds up in the West, Western institutions, including governments, have both culpability for allowing the theft to continue and some capacity to tamp it down.

10. A serious attack on kleptocracy would involved the same sort of careful network diagrams that characterize counter-terrorist work. And it would use visa denial and in rem seizure of assets in the U.S. as systematic techniques.

11. Kleptocracy can happen here.

The talk included lots of interesting historical material (including an analysis of Luther’s 95 Theses as an anti-corruption tract) and several terrific illustrative events. Here’s my favorite. Several months before Boko Haram kidnapped 300 girls, the head of the Nigerian Central Bank – brought in to bail out the banking system in the 2009 financial crisis – discovered that $20 billion had gone missing from the state’s oil revenues. When he announced that he was going to examine banking records to figure out who had stolen the money and where had landed, the President of Nigeria fired him.

Chayes then asked how many in the audience knew about the kidnappings (all of us) and how many about the theft of $20B an the firing of the central banker (three out of about 75, at a law school talk advertised as being about corruption). [No, I wasn’t among the three.]

The punchline, from Chayes’s viewpoint: when the President of the United States offered the President of Nigeria sympathy, and aid against Boko Haram, in the wake of the kidnapping, no one asked about the $20 billion, or about who had stolen the money that was supposed to pay for the bullets that the Nigerian soldiers fighting Boko Haram didn’t have. Terrorism is punished, or at least is the source of serious outrage; systemic corruption is shrugged at.

Sounds like a problem we ought to do something about. And – for the first time – I now think that there is something to be done about it, over and above my usual prescription of raising the salaries of cops and other civil servants so they can afford to be honest.

[Cross-posted at The Reality-Based Community]

Mark Kleiman

Mark Kleiman is a professor of public policy at the New York University Marron Institute.