Commentary 25 February 2018

The Dark Arts of Foreign Influence-Peddling

by Thorsten Benner               The Atlantic

These days, it’s never good news for Paul Manafort. On Friday, special counsel Robert Mueller released his latest indictment against President Donald Trump’s one-time campaign chairman. It charged that Manafort “secretly retained” a small group of former European leaders to “act informally and without any visible relationship with the Government of Ukraine.” Dubbed the “Hapsburg Group,” this coterie of paid lobbyists allegedly worked to advance the interests of the corrupt regime of Viktor Yanukovych, the former president of Ukraine, in both Europe and the United States.

The group as a whole reportedly received at least $2 million for its services. It was led by “a former European chancellor,” a person the indictment doesn’t name but who has since been identified in numerous press reports as Alfred Gusenbauer. Gusenbauer, the former chancellor of Austria, has confirmed that he lobbied not on behalf of Yanukovych, but only for the cause of bringing Ukraine closer to the rest of Europe. He has not denied that he was paid for his services by a U.S. company. Reports have also alleged that another of Manafort’s secretly paid lobbyists was Romano Prodi, the former prime minister of Italy and EU Commission president. In a statement, Prodi acknowledged working to bring the European Union closer to Ukraine, an effort that involved “numerous meetings and public speeches (some of them regularly paid), which took place in a variety of European capitals.” In his statement, he denied “both to have played a role in any lobbying effort and to be part of a secret lobby,” and added that he “did not receive any money for these activities.”

If this latest indictment’s allegations are proven true, what they reveal is just a tiny sample of how non-democratic powers buy the services of former Western officials to advance their agendas. In the process, these retired politicians often become enablers of kleptocratic and authoritarian individuals. Even worse, they put their credibility on the line to assist regimes antithetical to the democracies they once served.

Examples are now legion. Tony Blair, the former prime minister of Britain, sold his services to Central Asian dictators. China is moving to enlist former Western leaders. Late last year, HNA, a Chinese conglomerate with close ties to the Chinese government, hired former German vice chancellor Philipp Rösler to run its foundation in New York. One Chinese billionaire with close connections to the Chinese Communist Party has secured the services of an ex-trade minister of Australia, who took a $680,000-a-year consulting job with him not long after leaving parliament.

One of the most high-profile cases is that of Gerhard Schröder, the former chancellor of Germany. Last year, he became chairman of the board of Rosneft, Russia’s state-backed oil company, supplementing his generous government retirement package handsomely. He also serves on the board of the Nordstream 2 pipeline, a venture owned by Gazprom, another Russian state-backed energy giant. Documents obtained by Der Tagesspiegel last December showed how Schröder recently brokered a meeting between Gazprom chairman Alexei Miller and Germany’s economics minister.

There’s nothing inherently illegal about providing such services. But it’s another question whether it’s wise. Schröder’s role with Rosneft has arguably helped legitimize what amounts to the crown jewel of authoritarian state capitalism, and a key vehicle for Putin’s exercise of power. For Putin, Schröder must be a handy mascot. Having him in the Kremlin’s service could send a signal to European democracies: Your leaders are no more virtuous than the titans of kleptocracy in Russia that you despise. Putin thrives on such moral equivalence. When former leaders like Schröder and Blair promote the beneficiaries of authoritarianism and kleptocracy, they do real damage to liberal democracy.

To prevent such damage, open societies need clear, enforceable rules for their officials to commit to before taking the oath of office. The formal grace periods between the end of an official’s public service and a career in the private sector that some countries have adopted are not sufficient. Democracies should require that officials sign legal declarations pledging never to work or lobby in any capacity for a foreign non-democratic government, or for a company headquartered in an authoritarian system. If they do work in the private sector, it’s not asking too much for them to decline positions that amount to them simply selling access to their rolodex.

But the effort can’t stop there. The new Manafort indictment alleges that his operation relied on a network of lobbyists, attorneys, offshore banks, and think tanks. This is a common pattern. Law firms and bankers often provide similar services well within the boundaries of the law. Think tanks like the “Dialogue of Civilizations Institute” in Berlin which is bankrolled by a close Putin ally and where Gusenbauer sits on the board, receive funding through legal channels. (The Institute denies any direct connection to the Kremlin.)

Mandatory transparency and awareness-building help leverage one of the key assets of open societies: the power of public debate. Exposing the tools that authoritarian influence-peddlers use could very well curb their freedom. One way to do this would be to compel consultants, along with public relations and accounting firms and other companies competing for public tenders and government contracts in the EU and the United States, to disclose any business relationship (past or present), with clients working on behalf of authoritarian states. Under such a system, lobbyists would also have to disclose such relationships, as would non-profits, sports clubs, faith groups, universities, and political parties.

In this context, law firms pose a particularly thorny challenge because of client confidentiality rules. The latest Manafort indictment alleged that a U.S. law firm received $4 million to write a report on the trial of Yanukovych rival Yulia Tymoshenko, among other things. There are other cases where former officials used their role as attorneys to lobby on behalf of clients representing authoritarian systems. As Der Spiegel detailed, Otto Schily, a former interior minister of Germany who now works as an attorney, represented the interests of the Kazakh regime, with his payment channeled through a Kazakh foundation that an Austrian court found to be a front group for the Kazakh intelligence service. Der Spiegel’s report alleged his tasks mostly involved lobbying, not legal work in the strict sense.

Transparency rules can help to raise the costs for western enablers who currently have little to fear from the court of public opinion. But not all manners of influencing would be exposed through these transparency measures, especially influence-peddling operations run through clandestine political and financial channels (as was the case with Manafort). To expose all this, the public needs more cooperation “across the boundaries of journalism, academic and policy research,” as researchers Alexander Cooley and John Heathershaw have written. And where there are legal breaches, investigative authorities need to step in. The Mueller probe has shown what a well-resourced investigation can bring to light. “If one sends a team of 30 top-level prosecutors to any big lobbying or political consulting firm with international clients, there could be a lot of surprises,” a person familiar with Manafort’s operations told the Financial Times last year.

A key aim of the Mueller investigation is to shed light on the influence operations that tainted America’s election in 2016. But the importance of what he’s now alleging goes much broader than that. Getting to the bottom of the morass of authoritarian enablers like Manafort is now an essential front in the defense of liberal democracy worldwide.

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This commentary was originally published in The Atlantic  on February 25, 2018.

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