Learn About Illicit Financial Flows
Key Terms

From Egypt to Afghanistan: U.S. Self-Interest and the Unfortunate By-Product of Corruption

February 10, 2011

By Ann Hollingshead

Ann Hollingshead is a Financial Transparency Coalition blog contributor, whose posts appear weekly. Formerly a Junior Economist at Global Financial Integrity, Ann is now pursuing a Master of Public Policy (MPP) from the University of California Berkeley. Follow her on Twitter: @AnnHollingshead.

On the Task Force, blog authors often argue with passion and conviction against a broad suite of crimes against the impoverished.   With perhaps some of the most vehemence and certainty, we point to the evils of corruption: its destructive impact on development, its destabilizing effect on political systems, and its brutal consequences for the world’s poorest people.  Since it is such a clear evil, we rarely discuss the phenomenon in a nuanced context or in terms of incompatible interests, which it often represents.  For that reason, I believe it is important to have a discussion of corruption from another view—not from the standpoint of brutalization, but rather as it is an indirect by-product of certain U.S. diplomatic relationships.

I’m thinking specifically of several recent events, but let me start with a little history.  In 1947, Greece and Turkey faced military and political pressure from the Soviet Union, and in response President Truman vowed the United States would support these countries to resist “attempted subjugation” by outside pressures.  Called the Truman Doctrine, this strategy later came to wield enormous influence on U.S. foreign policy as the American government sought to contain the “domino effect” of communism.  Frightened that if one country succumbed to communism the surrounding countries would as well, the U.S. chose to intervene in a variety of internal conflicts worldwide to overthrow leaders perceived as pro-Soviet or to support leaders who might otherwise be vulnerable to communist uprisings.

As a result of this policy, a line of U.S. presidents, both Democrats and Republicans, empowered a variety of pro-America leaders and overthrew progressive, pro-Soviet governments across South America, Asia and the Middle East.  Under President Eisenhower, a CIA-organized coup overthrew Jacobo Arbenz, the democratically elected president of Guatemala, who was suggested to have some influence under the Soviet Union.  President Lyndon Johnson deployed 23,000 troops to the Dominican Republic to intervene in their civil war. President Ronald Reagan waged covert warfare in Nicaragua.  Many American-installed leaders later turned into corrupt despots who ruled their nations with brutality.

Today the relationship isn’t as distinct.  Without a clear existential threat, America has fewer obvious reasons to empower corruption.  But, while it is not as obvious, the dynamic still remains.

Take Egypt and Tunisia.  The U.S. has a very good relationship with Hosni Mubarak, the current president in Egypt, and has maintained a close relationship with Zine El Abidine Ben Ali, the now-former president of Tunisia, consistent with a long diplomatic history with both countries.  The United States has maintained official representation in Tunis almost continuously since 1795 and signed the American Friendship Treaty with Tunisia in 1799.  Mubarak is also a close ally of the United States, and has long offered the United States military access to the region in a crisis, including overflight rights and Egyptian troops, who sometimes participate in international coalitions.

If and, perhaps, when Mubarak finally relinquishes power in response to the overwhelming popular uprising, the U.S. would lose military access to a critical point in the region, as any replacement government will almost certainly maintain a more distant relationship with the West.  As Daniel Byman, a Senior Fellow at the Brookings Institution, has noted, U.S. counterterrorism will also suffer as “a new government would, and should, purge its security services, but these are the same services that also help the United States combat Al Qaeda.” Even more importantly, perhaps, Byman also notes “Egypt will no longer be a voice pushing Palestinians to make compromises [with Israelis] in the name of peace or helping legitimate any concessions they do make.”

On the other hand, these leaders are clearly massively harmful to their people.  As Global Financial Integrity has noted in a report, crime and corruption cost Egypt approximately $6 billion per year and Tunisia loses approximately $1.2 billion in illicit financial flows every year, a figure which includes losses due to corruption, bribery, and kickbacks.  Protestors took to the streets in both countries in response to the injustices of corruption in Tunisia successfully forced former President Ben Ali from power.  Egyptians, inspired by their success, now wave the same banner.

The U.S. seems yet again caught in that uncomfortable place between self-interest and greater good.  Though the United States government has the world’s longest and deepest history of foreign anti-corruption efforts and President Obama has announced public support of the democratic protestors in Egypt, a tension inevitably and frequently exists between the U.S.’s short-term policy goals and the long-term desires of the world’s populations. Yesterday in the New York Times, Nicolas Kristof argued that Obama’s failure to insist Mubarak resign now puts the U.S. “on the wrong side of history.”   He added that Egyptians are increasingly resentful of America’s attitude toward the regime (still) in power.

The tension between U.S. ideology on corruption and its strategic interests are perhaps most pronounced in Afghanistan.  The U.S. plays a constant balancing act between maintaining a positive-working relationship with President Karzai, who is elemental in the U.S. campaign to root out the Taliban, and eliminating the deep and persistent corruption that plagues Afghanistan, which is in large part perpetrated by Karzai’s own administration.  In the discussion over Afghan corruption, many U.S. officials opine that corruption is only a problem in the lower levels.  As one official put it: “The corruption we need to combat is the corruption that undermines the fight against the Taliban.  That means going after officials who abuse ordinary Afghans and drive them to the other side — a plundering landlord or a brutal, thieving cop.”

Unfortunately, nothing could be further from the truth.  As I argued recently, the corruption scandal at Kabul Bank, which has come from the highest levels of Afghan government and perhaps even Karzai himself, continues to threaten the solvency of the bank and as a result, the stability of Afghanistan’s banking industry.  If the Bank of Kabul fails, the shockwaves that would reverberate throughout the economy would be so severe it could trigger the collapse of the President Obama’s Afghan strategy.

I would argue, with only the slightest touch of self-conscious ideality, that despite all of the evidence I have pointed to above, that in fact the U.S.’s long-term goals of security and peace for its own citizens are completely harmonious with the goals of economic development and political stability of the rest of the world, including the citizens suffering under despotic, yet pro-American leaders.  I say this because the world’s political system is a complex and ever-changing monster, which takes twists and turns that are not to be anticipated.

In this argument, like my last, Afghanistan is again the perfect example.  When the CIA supported an anti-Soviet movement in Afghanistan, how could it have known it was creating a militaristic basis for the Taliban—the same monster that has now cost the U.S. trillions of dollars and hundreds of lives in a never-ending military operation?  This example does not stand alone.  In an attempt to champion security, the U.S. has made calculated, yet egregious errors many times over and in many situations where, had the U.S. stood by its ideals instead, the outcome likely would have been more favorable.

In Afghanistan, Egypt, and Tunisia, the U.S. is not right to block anti-corruption movements or efforts in an interest of self-preservation.  It does not represent the ideals America strives to epitomize, but it also does not serve the long-term interests of the U.S. or the world.  Corruption is massively destabilizing, its effects are far-reaching and more complicated than one government can seek to control.  A far better solution is to stick with what we know is right.

Share

Disclaimer: Unless specifically stated to be the views of the Financial Transparency Coalition, the opinions expressed on this blog are solely the opinions of the individual blogger and are not necessarily those of the Financial Transparency Coalition.

Latest Press Releases

$2 lost for every $1 gained: New report shows global financial system fails developing countries

Eurodad · December 18, 2014

Developing countries are losing twice as much money as they earn because of issues like tax evasion, profits taken out by foreign ...

Eurodad and Tax Justice Network Named to List of “Global Tax 50”

Financial Transparency Coalition · December 17, 2014

WASHINGTON D.C.—The Financial Transparency Coalition congratulates two members of its Coordinating Committee who were named to the International Tax Review’s “Global ...

EU compromise tightens regulation on shell companies, but without public access, many still in the dark

Financial Transparency Coalition · December 17, 2014

BRUSSELS — In a deal reached last night, parliamentarians and campaigners have succeeded in making company ownership a fundamental topic. While EU ...