Kleptocratic Adaptation: Anticipating the Next Stage in the Battle Against Transnational Kleptocracy

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In the wake of Russia’s 2022 invasion of Ukraine, kleptocrats are increasingly weaponizing corrupt networks, relying on opaque shell companies, and turning to professional enabling services to allow them to continue their theft. They are able to loot and protect their stolen assets despite recent restrictions placed on them. As authoritarian actors adapt to the changing landscape, democracies must elevate the issue of fighting kleptocracy to other pressing national security threats and adapt accordingly. 

In a new International Forum report, Matthew T. Page and Jodi Vittori argue that kleptocracy must figure more prominently in democracies’ foreign and domestic policymaking strategies. 

On Friday, January 20th from 1:00-2:30pm, the International Forum will host a virtual event and report release with authors Matthew T. Page and Jodi Vittori, with additional commentary by Larry Diamond. Please register here to receive livestream information.

Executive Summary

Russia’s invasion of Ukraine has focused democracies’ attention on the overarching threat posed by kleptocratic networks, creating an opportunity to push back against them. Democracies initially reacted with remarkable speed and unity to sanction Russian oligarchs, freeze their assets, and introduce legislation to close opportunities for kleptocratic influence within democratic institutions. Despite the growing recognition of the fundamental threat posed by kleptocracy to democratic governance, accountability, and security, it is no longer clear that the democracies will sustain the momentum and shoulder the resolve to truly tackle transnational kleptocracy—especially as kleptocrats themselves adapt to changing circumstances. 

Though often treated as a niche policy concern, rather than a strategic national security interest, the authors of this paper argue that kleptocracy must figure more prominently in democracies’ foreign and domestic policymaking calculus. Resilient and adaptable, transnational kleptocracy is on par with strategic threats democracies have faced before. 

Kleptocrats have long favored laundering their illicit resources in democratic settings where they are protected by rule of law, which has had a corrosive impact as these assets are weaponized to fund spoiler political parties, foreign influence operations, and, in the case of Ukraine, war. This weaponized corruption is one of the many tools in the autocratic playbook designed to reshape global norms away from democracy, accountability, and governance and toward an entrenched form of authoritarianism that is fueled by kleptocracy. 

In addition, the authors illustrate how kleptocratic networks have shown their flexibility and ability to develop new ways to exploit the weakest links in measures designed to curtail them. Indeed, kleptocrats have already begun to redirect their illicit pipelines from democracies into “bridging regimes” or areas that have strong links to the international financial and trade systems, act as important destinations and conduits for ill-gotten wealth, and may be authoritarian or kleptocratic themselves. 

In response to this top-order challenge, democracies must develop a full-spectrum, unified response that works across all sectors of society and whose elements include 

  • Deepening support to civil society partners so they can do more to protect anticorruption champions worldwide from strategic lawsuits against public participation (SLAPPs), intimidation, violence, and imprisonment. 
  • Scaling up collaborative, networked journalism that has proven to be remarkably effective at exposing and combatting kleptocracy.  
  • Focusing on kleptocratic-enabling locales abroad, including in settings where democracies have traditionally deemphasized their anticorruption, democracy, and human rights concerns when dealing with strategically important countries. As a result, they have been allowed to act as conduits for illicit financial flows and kleptocratic influence, undermining democracies in turn. 
  • Enhancing cooperation between democratic policymakers, regulators, law enforcement agencies, civil society groups, investigative journalists, financial institutions, and businesses as a way to enable surge capabilities in the struggle against resilient transnational kleptocracy. 
  • Addressing the governance conditions in the deeply authoritarian settings that serve as the “source” for kleptocracy to address this issue at its root. 

Given its unyielding pace and serious strategic implications, kleptocratic adaptation is a threat that demands a stronger and more purposeful response from democracies worldwide. To rise to the challenge, they should recognize that the Kremlin’s full-scale invasion of Ukraine offers a powerful political justification for reforming and recapitalizing crucial antikleptocracy defenses. 

 

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Kleptocratic Adaptation: Anticipating the Next Stage in the Battle Against Transnational Kleptocracy, authored by Matthew T. Page and Jodi Vittori, is a report produced by the National Endowment for Democracy’s International Forum for Democratic Studies. 

 

 

more on transnational kleptocracy from the international forum


Countering Kleptocracy,” a curated newsletter focused on understanding transnational kleptocracy and democratic responses.

An Offshore Cold War: Forging a Democratic Alliance to Combat Transnational Kleptocracy, a report by Oliver Bullough.

Global Insights: Waking Up to Reputation Laundering as a Mechanism for Transnational Kleptocracy and Global Insights: Transnational Kleptocracy and COVID-19 , collections of essays based on workshops hosted by the International Forum.

Reputation Laundering in the University Sector of Open Societies, a report by Alexander Cooley, Tena Prelec, John Heathershaw, and Tom Mayne.

Past events on “Sustaining the Momentum: Countering Kleptocracy in Russia and Beyond” and “The Corrosive Impact of Illicit Finance: A Wake Up Call for Democracy.”

Power 3.0 blog posts on “Sanctioning Pipelines and Oligarchs is Not a Silver Bullet to Stop Putin’s War in Ukraine” by Kate Watters and “Blank Check: How Weak Multilateral Lending Standards Enable and Strengthen Kleptocracy” by Elsa Peraldi.

Power 3.0 podcast episodes, “Countering Kleptocracy After Russia’s Invasion of Ukraine: A Conversation with Jason Sharman” and “Kleptocratic Networks in Angola: Two Steps Forward, One Step Back?: A Conversation with Rafael Marques.