Legal Loopholes Leave the U.S. Vulnerable to Election Interference

Report finds Russia, China, and other countries have spent over $300 million to influence the democratic process in countries around the world.

U.S. President Donald Trump (left) and Russian President Vladimir Putin
U.S. President Donald Trump (left) and Russian President Vladimir Putin answer questions about allegations of collusion in the 2016 U.S presidential election during a joint press conference in Helsinki on July 16, 2018. Chris McGrath/Getty Images

Authoritarian regimes including Russia and China have spent more than $300 million over the past decade to interfere in political processes of dozens of other countries around the world, according to a new report released Tuesday by the German Marshall Fund think tank. 

In addition to cyberattacks and disinformation, these governments and their proxies have exploited legal loopholes to funnel money through straw donors, nonprofits, shell companies, and in-kind campaign contributions to buy influence in at least 33 countries, researchers found. 

These interference efforts have escalated dramatically over the past decade, with almost 80 percent of the cases documented in the report taking place since 2016. 

Increased media scrutiny of foreign election interference following the 2016 U.S. presidential election may account for some of this rise. But the period in question coincides with what experts say is a decision by both Russian President Vladimir Putin and Chinese President Xi Jinping to escalate foreign interference efforts.

In the vast majority of cases examined in the report, the perpetrators exploited legal loopholes to influence the political process. Little has been done in the United States to close these loopholes, including ones that allow foreign money to seep into the democratic process ahead of the presidential election this November. 

“The United States has failed to similarly fortify its financial defenses since malign finance and other tools of election interference became top national security threats in 2016,” the report says.

Foreign funding is “just as threatening as the online interference, the disinformation and cyberattacks,” said Josh Rudolph, one of the report’s authors and an expert on malign finance at the German Marshall Fund. 

“But it’s actually easier to close these legal loopholes.” 

The report comes as U.S. intelligence officials have repeatedly warned that Russia and other countries at odds with the United States are likely to try and interfere in the November vote. 

In a briefing to Congress in February, U.S. intelligence officials said Russia was refining and expanding the interference playbook it used in 2016 in a bid to undermine Americans’ faith in the integrity of the election system and to tip the vote in favor of President Donald Trump. 

A law enforcement memo written the same month outlined a range of tactics that could be used by Russia, including hacking and leaking but also economic and business measures. “Russia has sought to take advantage of countries that have perceived loopholes in laws preventing foreign campaign assistance,” noted the memo, which was prepared by the Department of Homeland Security and the FBI and obtained by the Associated Press in May. 

Earlier this month, U.S. intelligence officials released an assessment of Russian, Chinese, and Iranian efforts to influence the election, noting that Moscow is using a “range of measures” to undermine challenger Joe Biden’s campaign while China, which views Trump as erratic, would prefer the incumbent not be reelected.

Iran for its part seeks to use online disinformation to undermine Trump, according to the assessment released by William Evanina, the director of the National Counterintelligence and Security Center. 

Foreign election interference has been heavily scrutinized since Russian operatives used cyberattacks and disinformation in a bid to tip the 2016 presidential election in Trump’s favor. Less scrutinized are the ways in which Russia and other foreign actors have sought to use what the new report’s authors describe as “malign finance” to influence the democratic process.  

FBI Director Christopher Wray recently described foreign malign influence as “subversive, undeclared, criminal, or coercive attempts to sway our government’s policies, distort our country’s public discourse, and undermine confidence in our democratic processes and values.” He made the remark at a speech on China at the Hudson Institute.

As opposed to corporate attempts at political influence, which often have economic motives, malign finance sponsored by nation-states and their proxies is “a form of geopolitical hostility that involves surreptitiously influencing political debate, decision-making, electoral outcomes, and societal cohesion in order to harm a country,” the authors of the German Marshall Fund report write. 

Their findings are based on an analysis of media reports in 16 languages as well as interviews with 90 current and former U.S. officials, congressional staffers, legal scholars, and other experts. “We only catalogue cases when authoritarian regimes are credibly shown to be funding political elements in order to weaken the target country,” the authors write, having compiled a database of 115 instances of foreign financial interference in dozens of countries.

Eighty two percent of the cases were perpetrated by Russia, with the rest coming from China and a handful from Iran and the United Arab Emirates. Over half of the cases included in the study are Russian efforts to meddle in Europe, but the report notes that there has been a surge of Russian activity in Africa. Strategists working for the businessman Yevgeny Prigozhin, who was indicted for his role in interfering in the 2016 U.S. presidential elections, were involved in political campaigns in 20 African countries in 2019. The total value of foreign election interference efforts outlined in the report was $300 million, but Rudolph said the true figure is likely higher. 

Some of the cases examined in the report were illegal, such as Russian efforts to funnel tens of millions of dollars to Italy’s far-right League party, far outstripping the country’s maximum campaign donation cap at the time of just over $100,000. But in 83 percent of the cases, the malign influence was perpetrated using legal loopholes, which the authors break down into seven broad categories: in-kind campaign contributions from foreign nationals, the use of straw donors to funnel foreign donations, the use of anonymous shell companies and nonprofits that are not required to disclose their donors, online political advertising, foreign-funded media outlets, and the use of emerging technologies such as cryptocurrency to make anonymous campaign contributions.

The extensive exploitation of legal loopholes, “underscores the amount of policy reform that needs to be implemented,” the report says. While law enforcement agencies in the United States have stepped up their efforts to counter foreign election interference since 2016, there has been little legislative progress to address these vulnerabilities, Rudolph said. A bill passed by the U.S. House of Representatives would close about half the loopholes outlined in the report, but it has stalled in the Senate, underscoring the extent to which election interference has become a partisan issue in Washington.

“It is essential that this work is done in a bipartisan way,” Rudolph said. “Interference in our democracy, unlike all other attacks in our country in the past, has not really brought us together politically.” 

“It really strikes at the heart of our politics, and it’s meant to divide us, so the political response can take some time,” he said.

Amy Mackinnon is a national security and intelligence reporter at Foreign Policy. Twitter: @ak_mack

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