Corruption. Live coverage now on cspan3. I bear the distinct honor of introducing myself on the aai stage as the gene kirkpatrick fellow in foreign defense policy studies here. I hold four degrees in Political Science, one of them a ph. D. From the university of south carolina. This event is a discussion of my latest report called dismantling the authoritarian corruption nexus, which is now available for download on the aei website. Read it, share it, let me know what you think. For followup see my aei scholar page or find me on twitter at clay r fuller. The American Enterprise institute is a nonpartisan nonprofit educational organization. The institute takes no institutional positions on any issues and the views expressed in this report are mine and mine alone. Im going to make some brief comments on the report. Then we are going to invite our distinguished guests to the stage. I will give them an introduction and i will sit with them and we will chat about this topic until about 4 00 and then well take questions from the audience and then we will dismiss right promptly at 4 30. So what is this all about . I am a political scientist. This meaning that i study and explain how the political world works. Its not my jo be to offer my opinions. Its my job to explain how things work. So my work here stems from actual personal frustration, letting you know my opinions. I have been frustrated with being able to predict terrible outcomes in the worlds authoritarian regimes. Looking afternoo looking around, seeing terrible things that are going to happen, knowing they are going to happen, and frustrated by the fact that i am unable to do anything about it in my personal capacity. What are these things . Authoritarian regimes are involved in every single war. They are among the worst human rights abusers around the world. Authoritarian regimes tend to end just as violently or suddenly as they begin. And they are generally horrific in how they deal with individual people and individual rights all around the world. In authoritarian regimes around the world corruption is a feature, not a bug. And all of this, wars, corruption, by the way, is terrible for markets anywhere. However, we have to recognize and know that authoritarian regimes around the world are sovereign states, but they are now interconnected with our markets and our politics in any number of ways that are quickly expanding, changing, and deepening. And so what this means is that it presents our policymakers with a core challenge. How are you going to go about addressing authoritarian regimes and authoritarian corruption without sacrificing our own values . Without harming our own interests as free societies or without harming our own capitalist markets . How are we going to do this . This is the core challenge. We should not shy away from using our military and economic power to defend our friends and ourselves and advance our own interests. This deepening and expanding of integration with authoritarian regimes means that these traditional methods of dealing with National Security threats such as military interventions and sanctions that tend to treat authoritarian states as unitary isolated actors are going to become less and less and less successful over time. On the converse side of that, liberal International Institutions such as the World Trade Organization or the United Nations that tend to depend upon the dreams or the hopes of people for better action are going to continue to fall prey to illiberal actors around the world looking to influence then and pebend them to their own wi. Essentially, what im saying is that liberty needs a strategy. Democracy needs a strategy. The rule of law needs a strategy. America, especially, needs a strategy for navigating the postcold war era of authoritarian regimes. To sum it up in a sentence, i would say we need to consolidate gains and liberty where it already exists and then lead by example. So con sal late gains where they exist and then lead by example. Now, you might say easier said than done, right . But it really is pretty simple. What i have done is created a handy new concept that can help explain why. The authoritarian corruption nexus. The authoritarian corruption nexus is the growing convergence of licit and illicit state and nonstate actor that launder the profits of illegal activity reinforcing the strength and r survival of authoritarian states and governments around the world. Thats kind of a big definition. So, in other words, authoritarian governments, they abuse their access to u. S. Markets to prolong their own rule at home and gain strength. And in the meantime what happens is that terrorist groups, International Terrorist groups, Transnational Criminal Organizations use these exact same methods and avenues to support and gain strength in their own activities. So the nexus is where we need to focus, but the problem is, is that it overlaps into free societies and free markets as well. So in the report what i to is i characterize modern Great Power Competition as not a clash of civilizations, but as a clash of governance systems. This is freedom versus toratore authoritarianism. The method which atoretarions seek to remain in office, thats the method they use to remain in office. Second, its the channel which they infect free economies and countries with greater amounts of corruption. So, to be clear about this, getting to the term kleptocracies, because i have written a bunch about this, all atore the authoritarian regimes in my view are a form of kleptocracy. Now, in foreign in defense questions, all of our enemies are authoritarian regimes. They are also kleptocracies, but not all authoritarian regimes are enemies. We have a lot of authoritarian regimes that were friendly with, and thats okay, but thats no reason to sympathy turn a blind eye to the corruption that exists in those countries, thats feeding this nexus. We need some adjustments. Some recalibrations, if you will. So the first aspect, before i get into the policy recommendations i put forward here, the first is that American Foreign policy in general needs to make a clearer distinction between the people that suffer under authoritarian corruption and the regimes and leaders that create those conditions for those people. In other words, china is not the enemy. The communist party is. Iran is not our enemy. The ayatollahs are. Russia and north korea are not our enemies. The putin and kim jong un regimes are. To better understand these threats in a strategic and, as i have said many times, nonviolent manner, domestically what we need to do is look in the mirror. What we need to do is deal with the abuse of anonymous Shell Company formation in the United States, number one. Second, i would say give the Financial Crimes Enforcement Network a clearer mission. What are they doing in the world . Who are the enemies . What are they trying to do . Third, we need to deal with Money Laundering in a better more systematic way in real estate. Thats outlined in the report. Fourth, clearly evaluate how the Global Network of Foreign Trade sfwloens around the world work. There are some 3,500, 4,000 zones around the world that we dont know much about how they work. They dont have a singular devin f kevin anything for them in ounds understanding how that works with trade fraud and issues related to this. Fifth, i would say reevaluate the role of the foreign agents registration act in fighting disinformation campaigns, which i go into in the report as well. And then, finally, give the private sector a greater role in anticorruption efforts worldwide. This could be done fairly simply by amending the foreign corrupt practices act to punish the fcpa to punish the demand side of bribery. Now looking internationally outside of the United States, what i think is that we need to formalize the group of seven. So the g7, which was the g 8 until we haphazardly kicked russia out in 2014. The g7 should be made as a formalized institution only for established democracies. Thats what it is now. Its not formal and doesnt have a charter. And in that charter for the g7 i think we need a clear mechanism for ascension to the charter to provide an attraction anth for others to get in the charter and also need to have a clearer method for expulsion, which is something that other International Institutions lack and were seeing problems with that across europe and other places. Lastly, i would say the Financial Action task force, which was created by the g7 in 1989, needs to find ways to refine its mutual evaluation reporting to look at how other countries are doing with antiMoney Laundering and step up to start focusing on tradebased Money Laundering. Its one of the least understood, most pervasive, worst elements of Money Laundering problems around the world that is right under yoour noses and we are not doing much about it. So, in conclusion, i would say the rule of law in democracy are roads with no set endpoint, and i would say its time to begin road improvements. And thats how we win this round of Great Power Competition. Thank you. And now id like it call my two distinguished panelists up. I will tell them, tell you all a little bit about them after they sit down and then we will sit down and have a discussion. So dr. Bruce is the julius silver professor of politics at new york university, a senior fellow as Stanfords Hoover Institution and a partner in selectors llc, a Consulting Firm that uses his gain theory investments to address government and business problems. A member of the American Academy of arts and sciences and on the council on foreign relations. A former guggenheim fellow and 2007 dmz peace prize. He is the author of 21 books, including the spoils of war, greed, power with alex smith, dictators handbookk, the prediction years game using the lodge irk of brazen selfinterests to see and shape the future and my favorite the logic of political survival with al ster smith, randall ciphererson and james monroe. He is author of 140 articles and numerous pieces in major newspapers and the subject of feature stories in the new york, the wall street journal, the economist, u. S. And news world report, independent, Financial Times and a two hour documentary about his political forecasting. He has a doctorate in Political Science from the university of michigan and doctorates from the university of grunnen general and the university of hyfa. Three doctorates. Welcome, doctor. Dr. Daniel twinge joined the International Republican institute as president in september 2017. He leads iris team of nearly 600 global experts to link people in governments, motivate people to engage in the political process and guide politicians and government officials to be responsive to citizens. Previously he served as counselor and director of the asia program at the German Marshall Fund of the United States. Before that dr. Twining served as a member of the u. S. Secretary of states policy planning staff as the Foreign Policy advisor to senator john mccain and as a staff member of the u. S. Trade representative. He has taught at Georgetown University and served as a military instructor associated with the naval postgraduate school. Also a columnist for Foreign Policy and served as an advisor to six president ial campaigns. Please join me in welcoming our guests. [ applause ] so welcome. Thank you. How did you like my little speech . I have been told i can be a little evangelical in how i talk. Apologies for that. Evangelical in pursuit of freedom is a good thing. Well start with that. I wanted to start by asking both of you, you have had advanced copies of the report and have had a chance to look them over. And im curious from your own personal perspective, we have two very different perspectives here on this, i want to see what you thought of it, what you think is your key takeaway, its strengths, its weaknesses. I thought you raised extremely important questions that are understudied, not discussed enough. You started your talk this afternoon with a list of problematic types of people, including autocrats and terrorists and drug dealers and so forth. And i thought you left somebody off the list that is fundamental to addressing the issues of corruption that you raise in your report, and that is we, the people. And the leaders that we elect. Mindful of the subtitle of the dictators handbook, bad policy is almost always good politics. Corruption is not an accident. Its not a consequence of bad people, but of bad institutions, as you indicate. Unfortunately, as you also indicate, democratic governments ex employed the opportunities that corruption provides not to enrich themselves in the corrupt sense, but rather to make deals with a kratz. Well give you money on foreign aid or a pass on corrupt activity and in exchange you give us policy concessions. So weve extracted east with israel from egypt in exchange we pay the money. We buy the peace. We want the pakistani government to pursue militants and we give them money to pursue militants. These are good things. So we face, as a people in addressing skrupgcorruption, a tough problem. We want those policies to be conceded to us, and the governments in power need to pay off their cronies to stay in power. The way they make these concessions to us is we give them the money to pay off the cronies. So we have a difficult decision to make in tackling corruption, which is a disaster for the people in the countries that are most victimized by it, as you note, and that tension is that we also have to address how do we satisfy our constituents at home on important policy areas without essentially bribing corrupt governments to do our bidding. So thats my concern. I think on the normative side i am in agreement with everything in the report. Its thoughtful. Its pretty precise. But we do have to address why we, the people, reward politicians for rewarding dictators thats something that we have been reluctant to d. Thats a fair point. Before i respond, ill give dan a chance to say what he thinks about the report. Okay. Im here because i like the report a lot. Congratulations. Thank you. You know, there are a lot of people out there in America Today who understand that we are in a Great Power Competition, who understand that the world is much more competitive and a adversarial than at any point since the end of the cold war, but they essentially think that the solution to that is the Defense Budget and building up American Military power. Of course, thats got to be a part of it, but thats part of it. Thortarions are using nonmilitary, nonkinetic instruments to corrupt, subvert, and assault open societies. By definition, you argue that there is an authoritarian corruption nexus because where there are lacks of checks and balances, where there is personalistic oneparty control over state resources, you do end up with gross abuses. All sorts of corrupt forms. But one key insight from your paper is that corruption in such a country does not stay in such a country. In fact, corruption is essentially laundered out of that country into the west. And so you argue, quite persuasively, that we have it in our capacity, it is in our wheelhouse to take on this issue of corrupt atore terian actors who are working to subvert, attack, weaken our leadership in the world and our own Democratic Practice at home. Clay, you point out very compellingly that we talk about these separate strands of threat against the United States and our way of life. As if they were separate things. Mass migration, conflict that produces failed states and pathologies, Great Power Competition, kpeters like russia, china, human trafficking. All of these syndromes, in fact, emanating from a similar cause, which is governance that is corrupt and kleptocratic, despot i can, et cetera. This takes different forms in a country that is poor and weak than in one that is strong and vigorous. Thinking about the difference between, say, libya and china. But in fact the glowback, the fallout moves to our shores. And so i like your argument that the solution to dismantning the authoritarian corruption nexus lie in democratic capitallism. Free people and free markets go together, and free People Living under durable reputable accountable institutions do not export their pathologies abroad in ways that threaten america, free people in well governed societies, governed by rule of law, credible institutions look after themselves quite well and all of the challenges to us emanating from cases where that is not true. You also argue that dependence on illicit Transnational Networks is the achilles heel of corrupt thortarions. Corrupt atore theirions rely on international nonstate actors to preserve wealth, to launder money, to educate their children, to park resources offshore of kbochbigoverning el. Ultimately, in a century that will prize technological innovation and human capital, which is the greatest resource of the 21st century, democracies, open societies should still have an advantage. A fundamental advantage, which is that our way of life is more attractive, our systems more competitive, we innovate, we care about people if the way that corrupt authoritarians do not but we need to safeguard our societies from these transnational entities. So i want to r