The Foreign Service Journal, March 2020

20 MARCH 2020 | THE FOREIGN SERVICE JOURNAL Career professionals at State need to give high priority to protecting the FCPA and sustaining and upgrading the OECD Convention. The “MCC Effect” and Corruption in Security Assistance Economists—including me—were slow to recognize the extent to which cor- ruption impeded economic development in poorer countries. When the George W. Bush administration sought to create a new foreign assistance institution that would appeal to Republicans as well as Democrats, President Bush insisted on incorporating strong and objective anticorruption conditionality into the admission requirements for what became the Millennium Challenge Corporation. As a result of the “MCC effect,” poten- tial recipients of MCC programs became quite proactive in initiating reforms to address their perceived weaknesses, including in curbing corruption. It is important that the American people, some of whom believe foreign aid budgets are bigger than they are, have confidence that aid is not wasted and foreign assistance professionals are good stewards of tax dol- lars allocated for foreign assistance. The MCC was designed to take a long-term and deliberative approach to economic assistance, specifying certain indicators of good governance, economic freedom and countries’ investments in their own people to inform decisions about recipients. But such a deliberative approach is not always possible. For example, the Bush administration soon confronted the very different challenge of devising emergency economic and security assis- tance programs for Afghanistan and Iraq after military interventions there. Even in those early days, there were indications that massive U.S. economic and security assistance programs would be plagued by corruption. And they were. Our government never completely resolved the problem of corruption in our assistance programs to those two coun- tries. In December 2019 The Washington Post published articles based on “Les- sons Learned” interviews with a range of senior U.S. government officials involved in these programs conducted by the Office of the Special Inspector General for Afghanistan Reconstruction. The interviews suggest not only that reconstruction efforts were deeply thwarted by corruption, but also that our procurement methods, the massive amounts of aid, and intelligence officials’ cash payments to Afghan leaders actually exacerbated and fueled the corruption already present in Afghan society. I expect that a similar review of our experience in Iraq would produce broadly similar conclusions. We owe the American people a serious effort to review and learn from the failures and successes of the past 15 years. Our development professionals must rigorously implement anticorruption provisions in all foreign assistance pro- grams, and introduce effective programs to assist countries in curbing corruption. Interagency discussions should be held aimed at translating the lessons learned, especially those about corrup- tion, into workable principles for major economic reconstruction programs moti- vated by national security concerns. The Challenge of China and Russia Addressing corruption will also fig- ure prominently in foreign policy chal- lenges ahead with China and Russia. Because so many economic decisions are centralized and placed in the hands of government officials, authoritarian and communist governments are espe- cially prone to corruption. As there is neither transparency nor mechanisms to ensure accountability of the powerful to the people, government officials often extort companies and indi- viduals. Ordinary citizens and companies that would otherwise shun bribery find that it is a survival technique. In testimony to the Senate on trade relations with Russia in 2012, I called for the United States to pursue a “rule of law for business” agenda alongside normal trading relations. I suggested a rule- of-law triangle focusing on open trade, investment protection and fighting cor- ruption. Congress embraced this sugges- tion and called on the State Department to report each year on progress achieved. It will come as no surprise to Journal readers that Vladimir Putin and Russia have been unresponsive, and the depart- ment so far has had little to report. But as the United States looks to rebuild its economic relationship with Russia, we must insist that a “rule of law for busi- ness” agenda form a central part of any new economic relationship. China is a more complex potential threat to our system and values because it has developed a strong economy that is deeply intertwined with ours. Formu- lating policy toward China wisely and executing it effectively will be major tasks for the next generation. China is not invincible, however, and the leadership of this rising power sees official corruption, and the disgust of the Chinese people toward it, as a vital threat to the regime. The Chinese people want more elbow room to exercise political rights most people take for granted. As we reformulate and refine trade policy toward China, we must bring Bei- jing into the OECD Anti-Bribery Conven-