“Corruption: The International Security Dimension”

“Corruption: The International Security Dimension”

“Fighting corruption is fighting terrorism.”

Vaclav Havel

Why is Corruption an International Security Problem?

The Global War on Terrorism has exposed a number of critical weaknesses and vulnerabilities in the international system. While it has long been understood that terrorists and organized criminals have used sovereign states as havens from which to conduct operations, it was unclear until fairly recently to what extent these groups had insinuated themselves in a number of regions and how. A significant key to unraveling this mystery lies in one word: corruption. Terrorists and organized criminal groups have exploited many countries’ systemic weaknesses for corrupt practices. They have duped and suborned individuals in governments into virtually selling their sovereignty so as to create ‘states of convenience’ for themselves. Corruption is no longer simply the greasing of the wheels of commerce, the paying off of government officials to expedite matters, or the rigging of elections. Nor can it any longer be called an internal financial and legal domestic problem. Rather, criminal organizations and terrorists use corruption to breach the sovereignty of many states and then continue to employ it to distort domestic and international affairs. More importantly, corruption has become the enabler by which groups who commit conspiracies on a global scale may threaten international stability and security with relative impunity.

Fighting corruption has become a significant component of the battle against international organized crime and terrorism. An important international rift is developing between those states that provide criminals and terrorists sanctuary and those that do not. Leaving groups with no place to plan conspiracies and conduct criminal enterprise will impede both their current and future operations. Closing the avenue of corruption will be integral to lessening the likelihood that they will be able to either penetrate or remain in any state for very long. While this paper uses examples from South East Asia, corruption is an international problem that knows no boundaries and one that must be addressed if the fight against international terrorism and organized crime is to be won. The threat that these groups currently level at international stability and security is grave and the key to either enabling or thwarting them clearly lies within the means of states to dictate.

Corruption Has Mutated

Official corruption may be defined as the misuse of public office for private-regarding interests. Political corruption is widespread in many countries and often accompanies violence to debilitate the capacity of states to operate effectively. Several authoritarian states of the past, such as Zaire and Uganda, were characterized as virtual kleptocracies; the theft of public assets by leaders was so great. While there are few kleptocrats left in the world, rampant corruption combined with violence continues to be the exact recipe to concoct a condition of near ungovernability in many countries.

Many of the changes in the character of corruption have occurred in conjunction with the developments that the fast pace of globalization has wrought. The lack of predictability that characterizes the post-Cold War era, coupled with rapid globalization, presents a greater challenge for some governments than others. For some, attempting to maintain order in the face of rapid social change, endemic poverty, and chronic unemployment -- while at the same time advance economically -- has not met with great success. For many states, internal travails have spread onto the international stage, and now threaten global stability. For a few, chronic civil unrest and an inability to guarantee the rule of law have lured international criminals and terrorists who, in the midst of uncertain government dominance, build significant strongholds from which to direct operations.

Added to this, are corrupt business sectors that are reaping the rewards of the globalization of international finance. These sectors significantly enable criminals and terrorists to obscure illegal transactions as well as to launder and manipulate money quickly and anonymously. The ability to move vast quantities of wealth utilizing modern day wire transfers, faxes, and Internet connections is a strategic advantage of criminal and terrorist networks. Yet these manipulations cannot be successfully accomplished without the collusion of states and their financial institutions. Such complicity, in recent years has permitted many criminal and terrorist groups to extend beyond one or a few states to build large multinational empires with pervasive, well-funded, subsidiaries.

Corruption in General

Joseph S. Nye posits a fairly comprehensive definition of corruption:

Corruption is behavior which deviates from the formal duties of a public role because of private-regarding (family, close family, private clique) pecuniary or status gains; or violates rules against the exercise of certain types of private-regarding influence. This includes such behavior as bribery; use of a reward to pervert the judgment of a person in a position of trust; nepotism (bestowal of patronage by reason of ascriptive relationship rather than merit); and misappropriation (illegal appropriation of public resources for private-regarding uses).[1]

Generally, corruption is rooted in human nature, with its attendant flaws. As such, instances of fraud (an act of deception deliberately practiced with the view of gaining unlawful advantage), extortion (exacting money coercively), embezzlement (appropriating fraudulently to one's own use what is entrusted to one's care), violence, and other forms of criminal activity can be added to the above definition. Because corruption is most often a consensual crime, the common theme that runs through its many forms is secrecy and collusion. Thus, even major exposures of corruption may only scratch the surface of much larger conspiracies because most corruption goes unreported.

One of the most prevalent forms of corruption is clientelism or patron-client relationships.[2] This is a situation in which private-regarding individuals use their public offices for the personal aggrandizement or favorable advantage of themselves and their friends and associates as a result of a complex network of personal or familial affiliations and ties. A majority of states of South East Asia have a long tradition of personal and/or factional loyalties taking precedence over the commitment to public policies, and indeed constitutions. In some states government jobs are therefore a much sought after and highly prized commodity commanding allegiance to those in the position to distribute them. As a result, many government offices tend to be overstaffed with persons whose particularistic loyalties lie in relationships rather than institutions, causing a precarious reliance on roles and relations rather than on rules and regulations. In other words, rather than being agents of government in their official capacities, individuals are the government.

From the perspective of organized crime and terrorist groups, governments that willingly acquiesce or actively facilitate criminal transactions are ideal sovereigns. Other ideal circumstances for criminal groups are those states in which the personal interests and loyalties of public officials take precedence over most civic considerations. In such circumstances, relations are based on a system of near unchecked power; there is a precarious reliance on persons rather than institutions. Indeed, where so-called leaders constantly jockey for position and control over ever-diminishing resources and when political survival is based more on the dispensation of favors to loyal followers than to any public legitimacy, there is little room for the business of institutional government. Almost half of the world’s countries have been brought to near economic and political ruin by misguided and corrupt leadership; estimated losses due to corruption exceed some country’s foreign debt.[3] In such cases corruption and incompetence have degraded state institutions to the point that there is a chronic inability to deal with perceived social injustice and deprivations.

The other effects of corruption vary depending on their nature and extent. Typically, corrupt personal and factional considerations divert the energy and attention of those engaged in it away from the legitimate goals and objectives of the public realm. As the activities of the bureaucracy become suborned to corruption, the administration increasingly fails to respond to public need. In some cases a virus-like effect occurs in which the corruption of one institution eventually and inevitably begins to spread to those other institutions with which they come in contact. Sometimes the epidemic reaches national proportions and every public office is afflicted with graft, personal loyalties, waste, and serious misallocation of national public policy objectives

Corruption in Areas of Critical Vulnerability

Justice Systems

One of the more serious consequences of corruption is felt in criminal justice systems. Justice systems that are ‘defective’ and unable to detect and prosecute criminals and terrorists lead to an eventual breakdown in society. Organized crime and terrorist groups are thus found on the darker side of the system of vested interests and factional struggle. If the infiltration and subornation of a political system ultimately leads to the use of the justice system for their own ends, criminal and terrorist groups are well on their way to entirely co-opting the state. Indeed, this is probably the best of all possible environments for organized crime and terrorists to thrive. Hence, states that have a criminal justice system susceptible to corruption are likely at the greatest risk of being commandeered by terrorists and criminals.

Additionally, the coercive power of some sub-state groups already rivals state law enforcement agencies in a number of states; often these criminals are better equipped and outfitted than are justice officials or security forces. Criminal and terrorist groups frequently have extensive intelligence networks that inform them of the activities of the police and military, many of whom they ultimately co-opt into their fraternity. Police are paid to provide information on planned raids, and on when arrests will occur and how investigations will proceed. Prosecutors are further bribed not to prosecute, judges not to convict and penal officials to release criminals and terrorists that do end up in jail. Such impunity translates to great power and leaves communities vulnerable to capricious rule. As a result, the citizens in these regions are often subject to as much arbitrary rule as exists in any authoritarian state. The lack of liberty and personal safety that are characteristic of both authoritarian government and corrupt states amount to the same thing, but in the latter case the coercion is simply employed by groups other than the government.

Security Forces

Corruption in security forces has particularly egregious affects. Border guards, customs officers, and immigration personnel are notable targets of corruption. Criminal and terrorist groups depend on unimpeded cross-border movements. For such people the bribes need not be particularly high, as much of what is required of them is to ‘look the other way’ when contraband and people pass. Military personnel are just as susceptible to bribery as are civilians, but the potential consequences are more serious. A small bribe of $100,000 to a commanding officer to look the other way while a load of heroin is transported across an international border might prove irresistible. For the trafficker, the cost would be a small business expense. For a poorly paid officer, however, the bribe would mean much more. In the long term, such corruption spreads, as does an attendant loss of morale and respect for the command structure. Further, once an officer has been bribed, he/she is “hooked” and is usually vulnerable to further subornation and or extortion for espionage and further criminal purposes. This scenario has been played out in a number of military corps throughout the world with disastrous consequences.

The primary mission of most military forces is to deter war, to deter and defeat threats of organized violence to their citizenry, and to protect the national security and integrity of their country. In fact, it is felt in many states that a country’s national security is only as strong as the people who stand watch over it. Further, the military is generally thought of as a complementary element of a nation’s power that stands with the other instruments of coercion wielded by a government.

Indeed, the military institution is thought to reflect society and its values. Thus, if a particular society accepts corruption and the abuse of government, then the military cannot be expected to be exempt from such low standards. Essentially, to quote Lt. General Sir John Hackett, “what a society gets in its armed services is exactly what it asks for, no more and no less. What it asks for tends to be a reflection of what it is. When a county looks at its fighting forces, it is looking into a mirror; if the mirror is a true one the face that it sees there will be its own.”[4] The ultimate effect of corruption in military forces is compromised national security with criminals and terrorists operating at will and international relations on increasingly shaky ground. The implications of such instability not only portend ill for the future of the country in question, but also for entire regions and sometimes international security.

Financial Sectors

Corruption in the financial sector is another area for great concern. A corrupt financial sector is an essential service for organized crime and terrorist groups. If a state is a haven for money laundering and manipulation, a combination of three conditions may be applicable with regard the central government: it has a lax attitude toward money laundering; it attempts to attract foreign capital regardless of its source, and/or; it is already so corrupt that criminal groups must only suborn the right people to obscure and launder their money. Some states have become money laundering havens because they have bank secrecy legislation and instruments like asset protection trusts, “economic” citizenship, tax advantages, and licensed banks with neither personnel nor a physical presence in the country. Significant government corruption exacerbates these conditions and is exploited by criminal groups to counter international efforts to halt these practices. Lawyers, accountants, and bank managers also play their part in disguising and legitimizing funds in such states.

At the end of the day, a country’s financial system may become as dependent on the steady influx of large amounts of dirty money as is its hierarchy on regular criminal kickbacks and bribes. Currently, a number of states continue to act as safe havens for money laundering and manipulation.[5] Complying with international money laundering regulations would presumably mean a significant loss of both foreign exchange to some states, and income augmentation to select individuals. It would appear that the benefits of rogue capital for a corrupt minority continue to offset the damage done to international reputations. Or, perhaps it simply means that the international community has not been forceful or explicit enough in dictating an end to such entrepreneurship.

Corruption in South East Asia

The problem of corruption is only one of many difficulties for countries in a region that has been struggling to cope with two serious economic slumps in four years in addition to the growing pains of democratization and coexisting with numerous disaffected domestic groups. The most recent bad news is that the war on terrorism is slowly shifting to some Asian countries in which a number of foreign “sleeper” cells linked to al Qaeda are alleged to be hiding.

As do most parts of the world, Asian countries have their share of mafias, warlords, and terrorist groups. For many, “money politics” is a reality: some of these countries’ most powerful politicians allegedly owe their positions to their links with the underworld.[6] Activities of this area’s mafia groups include extortion, gambling rings, prostitution, loan sharking, piracy, smuggling of humans, and drug and weapons trafficking. While these groups may be a domestic scourge, drug smuggling, human smuggling and terrorist operations lend an international wrinkle to the problem. Consequently, countries such as the United States and Britain must pressure already overburdened state systems to stop these international crimes.

Not only are there internal regions in such Asian countries as Burma, Thailand, Indonesia and the Philippines that are virtually ungovernable by the central government, but a number of groups, including terrorists, insurgents and mafias, have all but replaced state authority. Organized crime groups such as the Wa in Northern Burma have established a “state within a state” replete with an organized infrastructure and well-grounded political base that virtually guarantees their impunity. Because the government in Rangoon is financially and militarily unable to tackle this group, the Wa live like barons of medieval feudal fiefdoms, with the law of the ‘jungle’ as a guide for the dispensation of their largesse and their justice.[7]

In many countries, economic development has helped change the face of politics leading newly enriched businessmen and middle class groups to enter the public arena in order to protect their interests. Unfortunately, it has also strengthened the position of the many mafias. Mafias have allegedly backed candidates from political parties and their support is sometimes sought out by the national government. "In many cases, political parties consult with these godfathers in order to determine who should be nominated as their candidate."[8]

Some countries have been particularly susceptible to terrorist groups exploiting their territory for training and conspiracy. Militant Islamic movements such as Laskar Jihad in Indonesia, Abu Sayyaf in the Philippines, the Jemaah Islamiyah in Singapore, the Pattini United Liberation organization in Thailand, and the Malaysian Mujahideen all reportedly have ties with each other and some, if not all, to al Qaeda.[9] While there is little evidence to support the assertion that these groups have operated beyond the scrutiny of law enforcement for a long period of time as a result of corruption, some combination of subornation, religious suasion, and extortion has likely occurred for this to be the case.

It has been suggested, for example, that Indonesia is the ideal hiding place for foreign terrorist groups as it has a weak central government, chronic corruption, lagging law enforcement, lax banking regulations, porous borders, and 210 million people, most of them Muslims, stretched over an archipelago of 17,000 islands. It has further been postulated that some members of the Indonesian military indulge foreign terrorist “sleeper” cells. These cells have allegedly operated an al Qaeda-linked training camp in Sulawesi.[10] The U.S. envoy to Indonesia, Ambassador Lavin, recently expressed frustration that five Singaporean nationals suspected of plotting terrorist attacks against American targets in Singapore had fled to Indonesia; there the government has been reticent to apprehend and detain them or to even investigate bank accounts on the Bush Administration’s terrorist list.[11]

Since December 2000, Singapore, the Philippines, and Malaysia have apprehended a number of purported terrorists sending a clear message that their countries will not become havens to terrorists. Singapore has arrested 13 alleged members of Jemaah Islamiah involved in the Singapore conspiracy, while the Philippines has detained 5 and Malaysia 22 involved in the same plot. Yet regardless of the arrests, the Financial Action Task Force, currently focusing on terrorism-related funding, has blacklisted the Philippines, Indonesia, and Myanmar for failing to cooperate on fighting money laundering. The Task Force notes that terrorists raise, manipulate, and launder money in a manner similar to organized criminal procedures. In order to impede their operations, countries must cooperate on closing the money laundering loopholes.[12]

Terrorist groups have a definite advantage over organized crime in terms of their ability to hijack governments. They have the added and invaluable dimension of religious or ideological popular appeal. Hence, their subornation of officials may not constitute a significant expenditure relative to other expenses. If exposed, from the vantage point of public opinion, such corruption may not be viewed as particularly deleterious to society. This is so because terrorists are often seen as having important, overarching and long-term social goals that outweigh any negative effects their corruption might have. To fund both the subornation campaigns and their terrorist conspiracies, terrorists must raise money. They do this through charities in many countries, but they also engage in drug trafficking, kidnapping and extortion, fraud, smuggling of arms and contraband, and other criminal operations. As organized criminal groups do, to avoid detection and prosecution by justice officials, terrorist groups must pay for their operations to be overlooked by officials.

Attacking Organized Crime and Terrorism by Eradicating Corruption

In a press release shortly after the 9/11 attacks, Interpol’s Chief, Ronald Noble, stated that the fight against terrorism cannot be won on a military battlefield alone, and that “[t]he most sophisticated security systems, the best structures, or trained and dedicated security personnel are useless, if they are undermined from the inside by a single act of corruption”.[13] Much of the battle against the transnational threats posed by terrorists and organized crime groups is still being waged within sovereign states. Corruption is a clear impediment to such efforts. Organized criminal and terrorist groups may be able to commit almost faceless crimes and then launder their money from points in cyberspace, but their members must live somewhere. Because of this a safe haven is of utmost importance: when states are weak and their governments are susceptible to being suborned, they are a natural sanctuaries for criminals and terrorists.

Some important multilateral advances have been made with regard to corruption in S.E. Asia. The Asian Development Bank (ADB) combats graft and corruption with its governance and capacity-building initiatives. Its Board unanimously approved an Anticorruption Policy in1998 that promotes efficient, effective, accountable, and transparent public administration in its member countries. The ADB has collaborated extensively with the OECD, among other things, to end the tax deductibility of bribes and to criminalize the bribery of foreign officials. Both organizations agree that attacking corruption as simply a problem of criminality cannot end its tenure as a facilitator for organized crime and terrorist groups. An overall strategy of promoting good governance through structural, legal, and administrative reforms is thus one of the major cornerstones of both organizations’ initiatives in the region. There is indeed a recognition that economic development and institution building will be as important to rooting out terrorists and organized crime groups as will military and law enforcement measures.

At the Asia Regional Ministerial Meeting on Transnational Crime, held in Manila in 1998, the assembled representatives wholeheartedly adopted the 1994 U.N. Naples Political Declaration and Global Action Plan against Organized Transnational Crime, the U.N. International Code of Conduct for Public Officials, and the U.N. Declaration against Corruption and Bribery in International Commercial Transactions, as well as the recommendations of the U.N. Expert Group Meeting on Corruption (1997). At the Manila Ministerial, the assembly acknowledged that organized crime, drug trafficking, corruption, and other economic crimes, such as money laundering, negatively affect the development process of countries. The subsequent Experts’ Group Meeting on Transnational Crime held in Seoul in 2000 and the 2001 ASEAN Declaration on Joint Action to Counter Terrorism both address transnational criminality and terrorism. While no mention of corruption was made in the Summary of the Seoul meeting or in the 2001 Declaration, it appears to be implicit that, in order to cooperate on combating international crime and terrorism, member states must overcome corrupt practices.

The IMF and the World Bank, both of which tie anti-corruption efforts to their loan programs, provide technical assistance to those countries that combat corruption. The IMF Code of Good Practices on Fiscal Transparency (2001) stresses good governance in terms of accountability of fiscal policy and transparency of government activities. The Code sets objectives for principles and practices, distilled from the IMF’s knowledge of governance issues in member countries. Transparency International also provides extensive guidance to states combating corruption and money laundering. It publishes a daily bulletin on corruption -- in essence using publicity and peer pressure to “shame” governments into complying with anti-corruption regimes. Most recently it has focused on exposing the trail of corruption and money laundering related to terrorism.

Conclusion

Clearly corruption is not limited to region, culture, or state of development. Every country has clientelism, patronage, and greedy politicians, to some degree. What is startling is that, when actually compared, countries that appear to have very little in common historically, politically, and economically, are rather similar when it comes to their experiences with corruption. Most countries in S.E. Asia appear willing to collaborate, to share expertise, intelligence, conduct joint-training and work more closely with inter-governmental organizations. Yet, if their systems have been corrupted and their officials suborned, the information being shared is likely tainted and their efforts can be only partly effective.

Organized criminals and terrorists successfully target weak and corruption-riddled states to become their safe havens. Once situated, these groups continue to work the system by assembling an extensive web of compliant officials whom they suborn to leave them alone, to facilitate their operations and financial transactions, to supply them with information on government plans, and to provide protection. In this manner, they slowly erode whatever legitimacy is left of institutions, corrode the rule of law, and undermine the ability of central governments to cooperate on global agenda items. The fact that terrorists and international criminal groups continue to exploit corruption is no longer simply an internal state problem. The threats these groups pose to international security are significant. Fighting corruption will be part of the strategic initiative to deny them safe havens and is therefore of critical importance in the Global War on Terrorism.

The events of September 11 2001 have brought new awareness of how interrelated transnational threats are undermining the security and stability of many countries in the Asia-Pacific Region.

The current threat of piracy and large scale smuggling in the Asia-Pacific Region is serious and is growing in brutal significance. This paper will discuss the historical pattern of piracy and smuggling, show how piracy has been eradicated in the past, outline the way the International Community is tackling the problem now, and suggest ways that the impetus for action emanating from the World Trade Centre atrocity could be utilized to help counter and mitigate the scourge of piracy and large scale smuggling.

^*^* Dr. Thachuk is a Senior Research Fellow at the Institute for National Strategic Studies, National Defense University and can be reached at (202) 685-2377 or via e-mail at thachukk@ndu.edu. This paper was presented at the NDU Symposium, Addressing Transnational Security Threats in the Asia-Pacific Region, February 20-21, 2002. Opinions, conclusions, and recommendtions expressed or implied in this paper are solely those of the author and do not necessarily represent the views of the National Defense University, the Department of Defense, or any other agency of the U.S. Government.