The impact of the new US anti-corruption strategy on Latin America
Focusing on anti-corruption requires some tough tradeoffs.
The White House issued a new Strategy on Countering Corruption. And it’s good. The Biden administration has already made countering corruption a “core national security interest.” The new strategy document outlines five strategic pillars and then a bunch of specific actions under each pillar that they hope to accomplish. As far as strategy documents go, big thumbs up.
This document should help define US policy towards Latin America moving forward. Assuming the Biden administration is serious about implementing this (and I think they are), what can Latin American governments and companies operating in the region expect?
An increase in corruption investigations. Putting more resources towards anti-corruption means there almost certainly will be an increase in the number of corruption investigations occurring. Some prosecutions may occur in the US. Others may occur in the region as US investigators and regional investigators backed with US funds and political support take on corrupt actors in their home countries.
An increasing number of sanctioned corrupt officials. The US is already pushing forward with using sanctions against corrupt officials and this document suggests this trend will increase. It’s not clear that sanctions do much to deter, prevent, or undo corruption. But sanctioning corrupt officials is arguably better than letting them operate in impunity and better than sectoral or other large-scale sanctions that impact populations and economies more broadly. The sanctions process will increase compliance costs for some companies and create second order effects in which some individuals are debanked or deplatformed or cannot obtain work out of concerns about increased sanctions processes and prosecutions.
An increase in threats, political retribution and violence against anti-corruption actors. While this new strategy promises attention and resources to protect anti-corruption actors, the corrupt know that swift and brutal repression and reprisals are among their most likely successful counter-strategies. The US needs to expect that violence and political maneuvering will increase swiftly and make protecting anti-corruption actors a priority.
The full politicization of anti-corruption. Political actors already use the anti-corruption mantra to take on their opponents, and the new strategic focus by the Biden administration is going to encourage that trend. In the short term, sometimes it’s a good thing. A politicized anti-corruption investigation and prosecution is often better than a pact among corrupt actors to allow each other to operate with impunity. However, the politicization often quickly devolves into acts of political power and control where semi-democratic regimes can justify their more autocratic actions in the name of anti-corruption.
A potential increase in investigations against US companies as retribution. US companies operating in the hemisphere, even if they are not involved in corruption, must consider the potential that they will be targeted for “anti-corruption” prosecutions as a countermeasure by corrupt actors in the hemisphere.
In addition to the above, there is plenty this anti-corruption strategy won’t do in the short term. There is no magical end to corruption. Corrupt and authoritarian regimes won’t suddenly fall because the US is spending more resources investigating and prosecuting their networks. Progress will take years of work.
Meanwhile, there will be some tradeoffs. If everything is going smoothly, that signals that “anti-corruption” is just rhetoric, not reality. If the US treats this anti-corruption strategy seriously, not just as a club to beat antagonistic governments over the head, there will be limitations on security and counter-narcotics cooperation as well as migration issues. There may be restrictions on trade and economic cooperation due to corruption concerns. There will be investigations and prosecutions of US allies that sometimes benefit antagonistic governments.
If it’s working, this strategy should cause a bit of economic pain and diplomatic discomfort. That’s not a typical measure of effectiveness, but it’s one that we’ll hopefully see in the short term.