As Nathanial Heller, the director at the Results for Development Institute, reminds readers in a recent Foreign Affairs article, the issue of corruption—and the collective innovation employed to battle its sinister advances—is front and center on the global stage. Corruption still thrives in the shadowy depths of mundane, government bureaucracy and the fantastically open and destructive schemes of some of the wealthiest public officials in the world. According to statistics compiled by the OECD from the World Bank and the World Economic Forum, the cost of corruption equals more than 5% of global GDP and approximately $1 trillion (USD) is paid in bribes each year.
Determined to further entrench anti-corruption efforts as a key component of U.S. foreign policy, U.S. Senator Ben Cardin (the ranking member of the U.S. Senate Foreign Relations Committee) introduced legislation in July called the Combating Global Corruption and Ensuring Accountability Act of 2016. According to the bill, which has been assigned to committee, U.S. foreign assistance could be used as encouragement to fight corruption abroad, which in turn would advance U.S. interests in “regional stability, credible and legitimate United States partners, and markets for goods produced in the United States.”
Mr. Heller applauds Sen. Cardin’s effort while simultaneously pointing out a few shortcomings in the proposed legislation. While the act differentiates between petty corruption, major corruption and the types of actors involved in corruption, the ranking tiers of corruption defined in the bill do not adequately encompass differing responses to the extremely nuanced varieties of global corruption in today’s world. For example, corruption encompasses bribery, tax evasion and embezzlement, and can also foster a stagnant business climate or support terrorist organizations. The scale of corruption can also vary widely depending on the people involved—including their levels of authority—and the damage caused. In addition, because the U.S. government is responsible for ranking jurisdictions and publishing those rankings. Mr. Heller points out the serious doubts that might exist in the world on the impartiality of those rankings, as opposed to if the corruption rankings were simply the product of studies completed by non-state actors. Another commentator further noted that there is no mechanism within the act to test the efficacy of the ranking methodology on an on-going basis.
In addition to Mr. Heller’s helpful insights, the act should more clearly indicate what happens to an assistance recipient ranked within one of the higher corruption tiers. The act does set forth certain contractual and disclosure requirements in Section 6, such as the inclusion of an anti-corruption clause within a foreign assistance contract that provides for termination in certain contexts, but those requirements appear to be rational and natural inclusions for all recipients of foreign assistance from the U.S., regardless of corruption rankings. Further, and to the extent a country feels like it is unfairly ranked within a particular tier, what happens then? Should the act also include a more clearly defined remediation process?
Finally, “name and shame” (a term used to describe the inclusion on some version of a public bad actor list) might not having any meaningful impact on the corrupt conduct of higher-level actors within a particular government. In jurisdictions marred by corruption and a corresponding lack of “vibrant civil societies,” there is likely a minimal ability by lower level officials or even private citizens to create the sorts of changes required to move a country to a different corruption tier within the requirements of this act. Name-and-shame has seen success in other corruption-related areas, such as anti-money laundering legislation when the name-and-shame list came from the FATF, an international money-laundering monitoring group, as opposed to a single government. Just recently, Iran’s Supreme National Security Council passed a bill authorizing cooperation with FATF and Iran has adopted an action plan to address shortcoming in its anti-money laundering policies following Iran’s repeated inclusion on a FATF blacklist.
Sen. Cardin’s act highlights an important foreign policy tool available to combat corruption throughout the world. His bill highlights the importance of understanding where U.S. foreign assistance goes and how it is used. Even though foreign assistance historically comprises only one percent of the U.S. budget, combating corruption is key to ensuring U.S. foreign assistance makes the most meaningful impact and actually accomplishes its goals. Stay tuned to see what happens to the Combating Global Corruption and Ensuring Accountability Act of 2016.