ALWAC Notes '19-'20

NOTES ON SPEAKERS, 2019-2020

Thieves of State: Why Corruption Threatens Global Security.

Summary of remarks

On 11 Sep. 2019, Sarah Chayes presented a lively view of the scale and pervasiveness of international corruption, originating with her encounters with the US-supported leadership of the Karzai family in Afghanistan. Spreading her observations to other developing countries, she argued that a popular response to local experience of corruption (among police or other local government officials) was to undermine the authority of a regime in favor of alternative movements such as the Taliban.
She also analyzed corrupt movements among public and private bodies as vertically integrated from officials and bosses down to local officers, and horizontally integrated among both public and private (mafia-type) bodies.
Skeptical of anti-corruption measures, she reported that most of her practical ideas for the US occupation forces in Afghanistan were not adopted because they would have bucked the trend of funding warlords and elite families to fight against the enemies of the US.
Questioners were very active, some interested in solutions to the problems of corruption.
She indicated that although she supported transparency measures such as open budgeting and freedom of information laws, they were unlikely to change political leaders' behavior in the countries studied.
Voters' revolts against corrupt regimes were no panacea for her: for example a comedian replacing a regime quickly became corrupt himself.
Overall, she concluded that corruption was itself a national security threat, stimulating local reactions to regimes.

Jeremy Lewis, VP
(Observations are those of the author and not of ALWAC as an organization)

Prepared remarks

Corruption helped fuel the 9/11 attack, as that one in 1993(?) against JP Morgan on Wall St, classical example of Jesus who threw the money around at the Temple, and connection will be drawn in next book.
Classical myth of King Midas, though in the original he suffered because all food turned to gold and became inedible.

Nathaniel Hawthorne’s modern version concerns Midas kissing his daughter who turned to gold, as tear solidified on cheek.

First coins do date from his actual reign in Frigia, a hundred years before Aristotle.

In Nigeria, she was told it mattered where the money came from, and if origin unknown, stained the holder.

When there is a race for money with no finish line, some will bend the rules.

In Afghan, $2-5 Billion corruption, not a crazy ideology, was driving people to the Taliban. Vertical integration.
Operating system of networks, vertically integrated.

Cop shakes you down at side of road, some goes up the line.

2010 bribery surveys showed large sums going upwards in return for protection downwards.

Horizontal integration, criminal networks.

Varies between countries, whether public or private sectors dominate corruption.
Network members holding public office have task of weaponizing public functions and bending public organizations to the purposes of the mafia organization.
Tunisia grows gorgeous dates which are prized in Middle East, but face need for water piping, controlled by water department in return for favors.

Mafias need to own the Justice department for a kleptocratic network.

President Karzai in Afghan was boasting about interfering with justice by picking up phone – mystified the Americans; but he needed to broadcast to organization that the deal still held.
Egyptian president Sisi directed cases to military courts that he could control, rather than civilian courts.

Energy, finance and luxury real estate are consistently targets of private sector mafias.
Nonprofits in Uzbek, Honduras, NGOs receiving much government welfare money.
Criminal sector, Chayes used to visit Ahmed Walid Karzai (brother of President) until realized his corruption (he was later shot). He appointed police officials in the provinces who would then be guided to let through convoys of drug dealers and arms dealers.
2016 Texas case on abortion followed by Gov. McDonald case VA, given money to get a drug tested and approved by institutions – convicted, upheld on appeal but amazingly the US Supreme Court voted 8-0 against, because the clear quid pro quo still did not constitute official corruption. RBG wrote of "vagueness shawl."
Shooting police in Afghan with a ready supply of weapons, may happen because of resentment over corruption or abuse rather than ideology.
In Nigeria, “sextortion” is rampant and if sister wants to get brother released and judge takes advantage of her, brother then wants to shoot judge. Fuels dissent.

Corruption distorts politics.

Admiral Mike Mullen (for whom Chayes worked for a while) did not expect Japan and Tunisia would be the two countries that kept him up at night. The Arab spring [examples] brought major international security issues.

A reform movement may not improve the politics.

Guatemala had an international commission against corruption, and courageous local prosecutors managed to convict leader -- but the comedian who was then elected became corrupt also.

The last time the developed world was ruled by kleptocratic type government was 100 years ago, in the Gilded age.

The panics of 1873, 1883, 1890, etc, crossed the Atlantic. Railroad bonds and real estate were the subject of bubbles.

Compares with modern savings and loans real estate, dot coms, and housing bubbles.

Where did the Gilded Age go? What did it cause?

WW1, Spanish, flu, Great Depression, WW2. It took all of this to undo kleptocratic practices.

Are we on the railroad tracks barreling towards that kind of outcome?
What do we do about it?

Offered detailed prescriptions in Afghan but they did not get traction.
“You cannot get to be a billionaire honestly.”
Epstein case: nobody knows where Harvard and MIT got his money from. His favorite lawyer was Alan Dershowitz.

Midas?

There was a golden aura to interview of Epstein accuser Aurora[?], typically accusers holding it together until they break over the realization that if they had come forward earlier, others would not have suffered. Epstein touched girls to the point where they lost humanity.

CFR just accepted large donation from [oligarch] Len Blavatnik, and cannot get protest petition signed by anti-corruption professionals.
Solutions?

Buy from local supplier. Get the money out of the politics for real.

Question Time

FOIA effective?

Used for example by Judicial Watch to address voter fraud, Clintons, Steel dossier, etc.?

FOIA is incredibly important, subpoenas need to be responded to. Wherever govt or private companies show excessive secrecy, something is wrong. Private equity is suspected to be a money laundering channel, for its reporting channels are very lax.

Chinese anti-corruption measures real or another motivation?

Popular anti-corruption uprisings against corruption a better sign, rather than elite, which may attack corruption selectively among its rivals.

Saudi crackdown selective – another instrument of state power is weaponized.
Police purge in Honduras, supported by AID, did get rid of corrupt officers but network was probably preserved.

Developing countries differ in operational style from developed?

Nepotism, tribalism.

In US, incredibly, corruption is legalized in some ways.
In Kandahar, Chayes hired workers for her non-profit group from outside the extended family circle of current employees -- but this was felt most unusual; it is normal for corrupt governments to hire own extended family members, for reasons of trust.

Panama papers only a flash in pan? What came of it?

Iceland and another government fell. Not fully examined in US but more so abroad?

FOIA works as a hammer but needs an anvil of institutions to have an effect – eg in SK end of President Park. Info can be weaponized for good or bad, or just fall flat.

Scale of ranking of US corruption?

Chayes does not believe in rankings, but the US was the sole country founded on ideals; we have to take action.

Audience member: politicians should wear patches of sponsors, like race car drivers.
Example of pipeline construction planning hearing where audience members were given only 90 seconds each to speak, in face of power of energy company.

Rebecca Grant is president of IRIS Independent Research, a small, woman-owned business specializing in defense and aerospace research and consulting. Recent projects include analysis of autonomy on the future battlefield, Tier 1 suppliers in the defense industrial base for the US Air Force (Assistant Secretary of the Air Force for Acquisition), assessment of long-range strike, and evaluation of intelligence, surveillance and reconnaissance (ISR) recapitalization for industry clients. Dr. Grant is also the author of major reports for the USAF and USN on air operations in Afghanistan and Iraq.

Dr. Grant is a frequent guest speaker on airpower and technology at venues ranging from active-duty Air Force units to Wall Street investors. She has lectured at the USAF’s Air University and for the air forces of the United Kingdom, Italy, the Netherlands, Australia and Turkey.

She has appeared on TV as an expert on national security for Fox News, Fox Business, CNN, MSNBC, OANN, The Smithsonian Channel and as a guest on Veterans Radio, The Laura Ingraham Show, and Sirius XM Patriot.

Dr. Grant has written over 100 articles for Air Force Magazine on air operations, technology trends, airpower history and great airmen. She served a three-year term as the founding director of the Mitchell Institute from 2008 to 2011.

Dr. Grant received her BA from Wellesley College and a PhD (at 25) in International Relations from the London School of Economics and Political Science, University of London. Her first job was with RAND in Santa Monica, California. She also spent three years on the Air Staff at the Pentagon working directly for Secretary of the Air Force and Air Force Chief of Staff.

She lives in the Washington, DC area with her husband and daughter and spends her leisure time with Thoroughbred ex-racehorses off the track. She has flown with the United States Air Force in the T-38, E-3 AWACS, B-52, F-16 Aggressors, F-15 in Exercise Cope North and in the B-2 Spirit bomber.

Prepared remarks: Trade Wars

Writes about air operations, aircraft trends, but tonight about trade wars.
Unprecedented acceleration of the use of tools of trade in foreign policy.

Example: 35 months into Trump presidency, powerful reshaping of US foreign policy and economic tools are almost as powerfully used as military force.
At times Trump admin has preferred trade tools as leading elements of national security.
Example: Iran shot down US Navy Global Hawk drone (purchased from USAF), 6 weeks after Trump had stopped extending to Iran the waivers of oil sales. Trump exited from JCPOA after 18 months of argument. Plans had been drawn up for small, proportional strike, perhaps against Air Defense batteries, but cancelled for unknown reasons.
Sanctioned individually the 5 Iranian Revy Guard commanders who had participated in shootdown.
Opted for cautious but effective financial sanction in lieu of military force.

Coercive economic tools.

40 years since Iranian regime took power, and sanctions have been employed forever since. Part of conventional wisdom is that sanctions do not lead to regime change and are limited to a slap on the wrist. This is beginning to change.
Cannot do a business deal with North Korea on US soil – a primary sanction.

Secondary sanctions are growing.

Treasury Secretary Mnuchin came from Goldman Sachs, [bringing awareness of global financial systems] – US can lock an entity out of US, and in fact global financial system. Increasing pressure of secondary sanctions.
They asked UK, France and Germany to set up a small trading mechanism INSTEX for food and medicine – but then Iran asked to expand it to oil sales and Europeans declined.
If there is a discussion, there may be a small amount of sanctions relief.
[Where sanctions bite,] we have beefed up force protection in [the Persian Gulf] region, and forces in Straits from UK and Australia.
Tactics of ‘tap the gas, tap the brakes’ also employed with Venezuela.
Small Italian shipping company was caught hauling oil from Venezuela, and put on sanctions list; they changed behavior and were removed from list.

Trade wars should be seen as expanding the arsenal of US weapons.
Tariffs and China.

In 1917, when the US was about to enter WWI, US established the Wilsonian outlook of free system of trade; carried forward by FDR, and became a consensus in US culture.
The theory came from Adam Smith, The Wealth of Nations [1776]: the more you specialized, the more wealth you received.
Consensus is that tariffs interrupted this specialization, though an over-simplification, and could bring down all economies.

Jay Hutton wrote that a highly productive home economy was an antidote to imperialism.

Autarkic economies the extreme, as in North Korea (despite smuggling).

But balance might be achieved between tariffs and trade.
Trump administration’s image is of a slightly more autarkic society.

The postwar Marshall Plan was very successful setting up a trading system in Europe. But we are not living in that world today – now we have two dominant economies in US and ChIna, that do not agree on rules of the system. Canada still a large partner.

So we see an unbalanced system of trade.

By the end of the 1990s, China was still outside the World Trade Organization (WTO) but participated on repeated waivers; entered in 2000, and many countries saw it as the way to go, and it would stimulate freedom in China.
Consensus in last few years is that China has still not adopted the Western rule book.
Chinese money is in films, Silicon Valley, US agricultural sector, but bipartisan view that it has not worked fairly.
Intellectual property theft; China hacked the Office of Personnel Management (OPM) database in 2013, [obtaining some 20 million records of federal officers].

Trump administration’s tariffs – fascinating to watch how they rolled out.

2017 started on short list, now a long list and has picked up speed since 2018. You can apply for product to waived via a form. Long period of negotiations with Lighthizer and a Harvard educated Chinese negotiator. Stunningly comprehensive.
Wanted to reset relationship with China, and the audience is US businesses such as supply chain managers. Major reconsideration now of what gets manufactured in China – and some is not just because China’s costs have increased and other Asian countries are now better value. US is still experiencing economic growth, before US debt limits that growth, window is open.

Needed for US national security?

Yes, illustrated by Huawei which is owned by one man close to Communist Party (CP) and daughter is still detained in Vancouver for violations of Iran sanctions. Huawei makes various devices, some for consumers and some you cannot buy on base or purchase for NATO.

Magnitsky Act, named for an anti-corruption accountant who died in Russian prison, enacted during the Obama administration allows sanctioning individuals for human rights violations. Canadians enacted similar law, and then the minister was dinged by Russians by violating their own act.
Obama sanctioned 400 individuals, Trump raised to 1500.

Like a precision strike after intensive Intelligence, Surveillance and Reconnaissance (ISR) which has become normal.
The next President will find these tools of tariff and sanctions useful; not just an artifact of this administration. Trade wars are here to stay.

Iran, why did Trump administration drop Joint Comprehensive Plan of Action (JCPOA) and how consistent policy when staff turnover?

JCPOA restricted enrichment and type of process – but since Iran was close to warhead, only for ten years. Iran would be free of deal but US not free of threat. Iran announces now how much material they have , and Iran’s declarations of progress now indicated their previous declarations under sanctions were false. Negotiators from Europe have returned saying impossible to deal with Iranians at present.

Methodical policy among rapid turnover of staff? I tend to find it so, but the churn of top staff does make this challenging. [Dr. Grant did not elaborate here].
Why have oil prices not increased with sanctions, even as shale oil has decreased in production? Trump signs waivers all the time. Complex process,, but Iran did …
For a small neutral country, would you pick the SU35 [current Russian fighter aircraft] or the [US] F35? F35, because it is a computer flown by a plane.
Japanese and Koreans? Historical issues motivate that tension, and we are not the only country that can use economic measures.

South Korea was pressured by China for deploying a Theater High Altitude Air Defense system (THAAD), though China backed off later.

Crypto-currencies as evasive tools?

Sanctions can be implemented with these also, but non-sovereign issuers of currency (including potentially Facebook) are still small. If they become larger, will be an issue.
Important for this President to use the economic tools and has been useful to try maximum economic pressure. Iran has been enriching uranium and sanctions take time to work.

Are we negotiating with amoral, corrupt countries while expecting them to be like us?

Russia has an economic growth problem, and economy smaller than the Canadian, and Putin would like to rejoin G7 so this is a carrot and stick approach. China still ‘gobsmacked,’ reset with China still unknown. Much corruption despite efforts, traditional phrase [for getting away with it] is ‘the mountains are high and the Emperor is far away.’

Are Chinese sanctions a blunt, retaliatory weapon that damages US farmers and companies?

Good solution would be more suppliers from other sources outside China. Reorient where we place the value of labor – we sent a lot overseas and do we want to move it away from China? Huge set of negotiations.

Yes, losses in short term, but on balance worth a go.

Chase Untermeyer is founding chairman of the Qatar-America Institute, which aims to increase understanding of the important Qatari-American relationship in security, education, and energy. From 2004 until 2007, he was United States ambassador to Qatar, on appointment of President George W. Bush.

A 1968 graduate of Harvard College with honors in government, he served during the Vietnam War as an officer in the United States Navy aboard a destroyer in the Western Pacific and as aide to the commander of US naval forces in the Philippines. Upon his return to Texas, Ambassador Untermeyer was a political reporter for the Houston Chronicle and a member of the Texas House of Representatives, elected for a district in Houston.

He left the Legislature in 1981 to go to Washington as executive assistant to then-Vice President Bush. Three years later, President Reagan appointed him Assistant Secretary of the Navy for Manpower & Reserve Affairs. When George Bush became president in 1989, Mr Untermeyer returned to the White House as Director of Presidential Personnel and in 1991 was appointed Director of the Voice of America.

Ambassador Untermeyer is a member of the Council on Foreign Relations. He is the author of three volumes of diary-based memoirs of the Reagan and first Bush administrations.

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Notes of guest speaker events at ALWAC

Speeches, 2019-20