Yes, the U.S. Can Fight Corruption Overseas

The crusade against corruption seems to be everywhere. In May, then-prime minister David Cameron hosted dozens of world leaders at the massive Global Anti-Corruption Summit in London. “Corruption is at the heart of so many of the world’s problems,” began the preamble to the summit communiqué. There’s no question that this is powerful rhetoric.

That eagerness to place the issue of corruption on the world stage was echoed across the Atlantic when U.S. Senator Ben Cardin quietly introduced legislation in July that would elevate the issue to a historically prominent place in U.S. development policy. Does his proposal go beyond rhetoric?

If passed, the Cardin bill would require future presidential administrations to rate countries around the world according to their commitment to tackling corruption — and then link any U.S. assistance to those ratings. Never before has the problem of corruption come so close to dictating future flows of U.S. funds to dozens of key (and complicated) allies and partners, from Iraq and Afghanistan to the Philippines, Ethiopia, Israel, and Ukraine.

“Anti-corruption measures are instrumental in protecting human rights and achieving sustainable economic growth,” the bill argues. These are ideals most observers can get behind. Corruption is a known impediment to development. It often exacerbates income inequality, and can lead to environmental degradation and the wasteful abuse of scarce public resources, particularly in low-income countries. Senator Cardin has been a stalwart champion of the anti-corruption agenda for years, most notably through his battle to successfully require publicly traded American energy companies to publish the amounts they pay foreign governments in exchange for access to oil and gas fields. This is a victory for which he — alongside many tireless civil society campaigners — deserves much credit.

But the approach laid out in his new legislation raises some red flags. For one thing, the bill leaves a particularly thorny question unanswered: How, precisely, would the U.S. government rate its allies and opponents according to their commitment to “anti-corruption,” a notoriously complicated and subjective issue? For another, it remains unclear whether such ratings would actually achieve anything in practice. “Name and shame” approaches to anti-corruption have a mixed track record when it comes to actually changing anything on the ground, and there’s reason to suspect that forcing U.S. administrations to undertake the task publicly would end in disappointment.

With small changes to the approach, however, the Cardin bill might stand a better chance of achieving its objective of “advancing anti-corruption efforts … and better serving United States taxpayers.”

At the heart of the legislation is a requirement that the State Department “author and publicly distribute a report, similar to its annual Trafficking in Persons Report, that summarizes the extent of corruption in countries worldwide and assigns tiered classifications based on … [their] efforts to combat corruption.” It then “specifies transparency and accountability measures” that U.S. government agencies would have to implement when providing assistance to “Tier 3 and Tier 4 countries” — those that are regarded as making only “minimal” anti-corruption efforts. In plain English, the bill would require future administrations to take special measures when providing foreign assistance to countries ranked as Tier 3 or Tier 4, including potentially “clawing back” funding.

There are several flaws in this approach. First, in a throwback to the early days of the anti-corruption movement in the 1990s, “corruption” is treated as a single, monolithic scourge. That’s a major shortcoming. We now know from many years of experience (and often failure) that, like cancer, corruption comes in many different forms, each requiring a specific and nuanced remedy. There are major differences between low-level government officials shaking down citizens for a petty bribe and trading government tenders for large-scale financial contributions to political parties.

Unfortunately, the Cardin bill is largely silent on these nuances, and might thus artificially force the U.S. government to lump petty corruption into the same category as large-scale “state capture” (see Iraq or Afghanistan). Needless to say, this would blunt the impact of what is supposed to be a sophisticated approach to tackling corruption. The effect is akin to requiring a surgeon to use a dull butter knife to carry out delicate brain surgery.

Second, it’s fair to say that most observers would raise serious doubts about the credibility of any U.S. government attempt to impartially rank countries according to their commitment to the anti-corruption agenda. The State Department has various interests at play in any given country, and political expediency often wins out over any attempt to be impartial. Witness, for example, the recent furor over the department’s controversial Trafficking in Persons reports (which are clearly the model for Cardin’s new legislation). Critics accused the department of whitewashing the results to favor certain political allies.

Third, it’s unclear whether external ratings are an effective way to get governments to change their behavior in the first place. The evidence is mixed. Recently published research commissioned by the Governance Data Alliance (a consortium of anti-corruption civil society organizations, donors, and governments) suggests that “name-and-shame” rankings are less influential than publishing in-depth studies of national governance and transparency challenges. Other research from scholars at Harvard and Duke reaches a different conclusion, suggesting that “countries are more likely to criminalize human trafficking when they are included in the U.S. annual Trafficking in Persons Report.” In short, the ratings approach spelled out in the Cardin legislation might have an effect on countries’ anti-corruption policies — or it might not. What we shouldn’t assume is that ratings automatically lead to policy change.

There are several ways to make the Cardin draft legislation work better in practice. The first would be to take the U.S. government out of the driver’s seat. Ratings will have a much better chance of achieving the desired effect if they rely on impartial, credible, third-party data, not the whims of State Department officials who may have other interests at stake, particularly in strategically important countries. While there are currently no comprehensive third-party data sets available, new efforts such as the governance data dashboards published by the Governance Data Alliance (of which both USAID and the U.S. Millennium Challenge Corporation are members) offer options for tracking corruption and governance that lend themselves to reliable analysis.

Second, if Congress is going to force the State Department to judge commitment to anti-corruption, it’s imperative to remove as much subjectivity as possible from the proposed “tiering” approach. One way to do so would be to mandate that the department simply collate the anti-corruption and transparency commitments that governments have already made. These could include whether countries have ratified the UN Convention Against Corruption and whether they have joined key anti-corruption “clubs” such as the Open Government Partnership, the Financial Action Task Force, the Global Initiative for Fiscal Transparency, and the Open Contracting Partnership. The danger is that such a requirement might encourage countries to simply “tick the box” by assuming these commitments without following through on enforcement or implementation. Even so, there is good reason to stick with this approach, which offers the possibility of straightforward stocktaking free of political interpretation.

Senator Cardin’s legislation is unlikely to be passed before a new presidential administration assumes power. But Cardin has a track record of dogged commitment when it comes to pushing anti-corruption issues, and for that reason no one should expect this bill to disappear quietly. Its prospects, indeed, may grow brighter after the election. Depending on what voters decide on November 8, there’s a chance that Senator Cardin could become the powerful chairman of the Foreign Relations Committee, of which he is currently the ranking minority member. In that case, his ambitious attempt to link the anti-corruption agenda with U.S. foreign assistance stands a good chance of becoming a reality — all the more reason to ensure that the bill is strengthened before it comes up for a vote.

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