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Russia’s Tustle with USAID

September 19, 2012

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.

flickr / USAID_IMAGES

Since the 1999 Duma election, which was widely considered free and fair, Russia has descended from a “Partly Free” society, according to Freedom House’s Freedom in the World Rankings, to “Not Free” this year. In the last six years, Russia has passed a law giving bureaucrats discretion to shut down NGOs; an assassin murdered Anna Politkovskaya, an investigative journalist who was critical of the Kremlin, in cold blood; and the government heavily manipulated the parliamentary elections to give a majority to pro-government parties.

Corruption has been an endemic part of Russia’s public and private sectors for decades. Global Financial Integrity estimates that the country loses about $50 billion in illicit financial flows per year, a number which money transferred abroad stemming from tax evasion, corruption, and trade mispricing. According to WikiLeaks, extortion is so widespread that it has “become the business of the Interior Ministry and the federal intelligence service.”  The government has transformed into an organization more closely resembling “the mafia” and the line separating government from business is so blurred it is nearly non-existent.

It was shortly after taking office in March of 2000, that Russian President Valdimir Putin—who took over office when Yeltsin resigned—began to investigate the tax affairs of Russia’s oligarchs—a class of rich businessmen whose deeply-entrenched wealth was rooted in the privatization of Russia in 1990s. Putin claimed his effort was a part of a new anticorruption campaign. In reality, Putin’s moves were an attempt to consolidate his own political power by limiting the influence of the oligarchs over state policy.

When Putin left office in 2008 and Demitri Medvedev replaced him, we held onto some hope that things might change. In 2011, Medvedev signed a bill that would outlaw foreign bribery and gives prosecutors the authority to seek massive fines for graft—up to 100 times the amount of the bribe. Medvedev, has asserted his intentions to tackle corruption in the court systems, stating that Russia should do its best to “make the courts become as much as possible independent from the authorities and at the same time to absolutely depend on society.”

Whether Medvedev’s efforts were sincere or not—many of his critics argued his speeches talked of radical change, but only skin deep reform—it doesn’t much matter. Vladmir Putin is once more President of Russia and it seems he’s once again using the doctrine of anticorruption to solidify his grip of power.

On Wednesday, Russia accused the United States of using its aid to influence Russian politics and the outcome of its elections. The accusation bears some resemblance to the truth that USAID allocates 60 percent of its $50 million budget for Russia to the promotion of democracy and civil society. Some of this money goes to Golos, Russia’s only independent monitoring group, which state-owned television has directly denounced and accused of corruption.

USAID has responded that it “completely reject[s] the notion that our support for civil society, democracy, human rights in any way interferes with elections, whether in Russia or anywhere else in the world. […] We are even-handed as to access to the resources for political parties.”

By contrast Russian’s foreign ministry characterized the operations as “attempts to influence political processes, including elections of various types, and institutions of civil society though the distribution of grants.”

So what’s the difference between using funds to support democracy and to influence the political process? Well, in the case of Russia, the answer is…not much. That is, if the political process you’re hoping for doesn’t include democracy and civil society.

As Steven Pifer, a former U.S. ambassador to Ukraine who is now at the Brookings Institution think tank, put it “They see AID’s efforts in Russia as being a prime funder of the NGOs that are concerned about their elections and concerned about the regression of democracy in Russia.” And the regression of democracy in Russia is only good for one group of people—the ones that already have the power.

Media outlets in the United States have been calling this move a slap in the face to America. And it probably is. But more importantly, it’s disingenuous to the Russian people. And this case highlights the problem with words like “anticorruption.” What anticorruption efforts should be about is universally, and evenly, limiting excessive power among the political and economic elite. What leaders in many countries use it for—including those in Russia—is a way to limit the political power of those they don’t like.

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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.

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