As new industries are emerging to support the energy transition, anti-corruption sanctions are an important part of the international effort to ensure that the global economy operates on clean, fair, and transparent lines. The energy transition will require more resources and critical minerals, but bad actors—those who are willing to bribe and defraud—can undermine support for mining and extractive operations (as is the case in Guatemala[1]) or create risk exposure for companies that are involved. Reducing the involvement of such bad actors is an important component of ensuring they do not exploit their positions or create impediments for cooperation. The United States and its partners around the world can together use anti-corruption sanctions to effectively target and deal with these otherwise latent problems.
Economic statecraft involves a wide assortment of tools and techniques devised by policymakers, civil society, and strategists around the world that use power to accomplish foreign policy goals. Tariffs, forced collateralization[2] of frozen assets, and all manner of sanctions point to a substantial reimagining of the power afforded by the last 30 years of economic globalization. Many have pointed to risks inherent in this boom in economic weaponization (including the author in 2015[3]), and policymakers in the United States, Europe, and elsewhere are increasingly mindful of the risks, as demonstrated by the caution employed in the sanctions strategy against Russia.[4] One side effect of this larger critique and caution is the potential minimization of sanctions as a tool for positive, collective economic statecraft when dealing with individual bad actors.
Controversial Sanctions
Conceptually, almost every country on earth should be happy to join a global effort to target corrupt actors and those who enable their bad acts. Sanctions that freeze the assets of individuals engaged in corrupt actions or that restrict their ability to travel are exceptionally targeted tools, hitting particular individuals and their entities with precise consequences. Such actors thereby lose their ability to use their ill-gotten gains or to enjoy free access to luxury hotels, beaches, and other pleasant locales.
Furthermore, the UN Convention against Corruption[5] (UNCAC) is littered with language about freezing or seizing assets and denying access and services to bad actors. Its adherents include 191 parties,[6] yet sanctions are controversial at UNCAC events, with Iran, Russia,[7] and Venezuela[8] often leading the charge against sanctions use.[9] Much of this criticism has focused not on sanctions related to corrupt actors but instead on sanctions in general and, doubtless, sanctions related to specific circumstances. Comments are less often focused on anti-corruption sanctions because the idea of denying safe haven to corrupt actors is a key part of the convention.
From that perspective, every member of the conference would be supportive of using sanctions to curtail access and hinder the work of corrupt individuals. The reality is that only Australia, Canada, the United Kingdom, and the United States have anti-corruption sanctions regimes in place, and they have not been used aggressively. The European Union has debated creating such a regime for years, but has declined to proceed. And no other countries have shown an inclination to consider their own regimes.
Risky Anti-corruption Sanctions
The EU’s internal disagreements concerning an anti-corruption sanctions regime mirror concerns from other, non-EU governments, with a mixture of principled and practical factors.[10] For some critics, there are legitimate, good faith concerns[11] about the impact of a sanctions regime on the ability of states to undertake criminal prosecutions of bad actors because sanctions could be read as prejudging guilt and imposing punishment before a court of law has weighed evidence or where evidence is lacking.[12] They worry too about legal challenges, especially from the EU Court of Human Rights, which has prioritized due process concerns repeatedly in its evaluation of sanctions cases and cancelled dozens of designations as a result.[13] These critics see anti-corruption sanctions as a never-ending source of disagreement and legal challenge that would sap utility from the entire exercise, and observe other tools might be more effective long term.[14]
Some of these critiques have real merit, particularly the reality that proving corrupt behavior is difficult, making sustaining these sanctions harder than in cases against terrorists, human rights violators, or proliferators. Unlike those typical sanctions targets, corrupt actors are often wealthy or enabled by the wealth of their friends. Some corrupt actors own major companies or hold significant financial stakes in important industries, such as the mining sector of the Democratic Republic of Congo.[15] These actors are able to litigate their designations and use lawsuits to intimidate journalists, NGOs, and think tanks.[16]
For many critics of sanctions use, the answer is to defer to law enforcement and its usually higher evidentiary standards and burdens. But prosecutions against corrupt actors are difficult to secure, especially if a justice system is also pervaded with corruption or if legislation is tailored to enable bad actors to get away with their crimes. Moreover, law enforcement may not be able to move fast enough to hinder the movement of financial and other resources that otherwise could be frozen or seized.
More philosophically, law enforcement is also concerned with justice and making wrong right. These are noble objectives, but arguably distinct from those of economic statecraft, which is about using power to create a more conducive environment for a country and its interests. The United States[17] and its partners[18] have asserted that a rule-based, fair, transparent global economy is in their interest; to achieve this, these countries need to be more agile in responding to corruption and its utilizers.
Revising Anti-corruption Sanctions
At least three challenges to anti-corruption efforts exist, and the United States and its partners in the G-7 could prioritize the development or reform of anti-corruption sanctions tools for use by each of their economies to address them. These three categories of behavior could be prioritized for asset freezes, travel restrictions, and other impediments:
- Enablers. Some individuals and entities support corrupt actors by moving their money, shielding them from prosecution, and protecting their image. Sanctioning these actors will impose consequences on those sanctioned and potentially deter others from being willing to engage in such conduct.
- Non-financial quid pro quo and/or state capture. Spotting financial bribes is hard work but relatively easy when compared to political quid pro quo or capturing a state in which the bribe is granting control of an industry to a political crony rather than handing over a plain brown envelope.
- Strategic corruption and uneven enforcement of anti-bribery requirements. Creating consequences for those countries that use corruption as a weapon or consciously look the other way is important to ensure fairness in global economic competition.
Moreover, this sanctions endeavor could be strengthened by:
- Clear standards for imposition and removal of sanctions. Right now, there is tremendous uncertainty among officials, businesses, service providers, and other actors as to what behavior might trigger sanctions and no real guidance as to how sanctions might be removed.
- The widest multilateral support and associated support structures. This support could include information sharing mechanisms that build on existing models such as the International Anti-Corruption Coordination Centre.[19]
[1] https://www.wola.org/2022/11/us-treasury-sanction-russian-corruption-guatemala-mining/
[2] https://www.politico.com/news/2024/06/13/g7-leaders-strike-deal-on-using-russian-assets-to-back-50b-loan-to-ukraine-00163146
[3] https://www.energypolicy.columbia.edu/publications/future-economic-sanctions-global-economy
[4] https://insights.som.yale.edu/insights/better-sanctions-can-weaken-russia
[5] https://www.unodc.org/documents/brussels/UN_Convention_Against_Corruption.pdf
[6] https://www.unodc.org/corruption/en/uncac/learn-about-uncac.html
[7] https://mid.ru/en/foreign_policy/news/1919257/
[8] https://orinocotribune.com/venezuela-condemns-unilateral-coercive-measures-asks-un-to-intervene/
[9] Disclosure: These three countries—Iran, Russia, and Venezuela—tried to block the author’s election as president of the Conference of States Parties to the UN Convention against Corruption in December 2023, due to his role in sanctions policy in the United States.
[10] https://www.opensocietyfoundations.org/publications/why-the-european-union-needs-anticorruption-sanctions
[11] https://www.rferl.org/a/wider-europe-briefing-brussels-sanctions-loopholes/32401603.html
[12] https://www.rferl.org/a/wider-europe-briefing-brussels-sanctions-loopholes/32401603.html
[13] https://www.rferl.org/a/wider-europe-briefing-jozwiak-eu-sanctions-corruption-kremlin/32915588.html
[14] https://iaccseries.org/planned-eu-anti-corruption-sanctions-no-solution-experts-claim/
[15] https://home.treasury.gov/news/press-releases/jy0515
[16] https://www.thebureauinvestigates.com/explainers/silencers-of-the-truth-what-are-slapps/
[17] https://www.whitehouse.gov/wp-content/uploads/2022/10/Biden-Harris-Administrations-National-Security-Strategy-10.2022.pdf
[18] https://www.whitehouse.gov/briefing-room/statements-releases/2023/05/20/g7-leaders-statement-on-economic-resilience-and-economic-security/
[19] https://www.nationalcrimeagency.gov.uk/what-we-do/crime-threats/bribery-corruption-and-sanctions-evasion/international-anti-corruption-centre
