Qaddafi’s Corrupt Influence in the U.S.: International State Capture?

It’s quite common to hear about low-level bureaucrats demanding bribes in many countries to expedite a business license or driver’s permit. For a long time, this type of administrative corruption has been the focus of corruption research since it is not very difficult to quantify and has become an acceptable topic of discussion in high levels of government and in international organizations.

However, bureaucratic or administrative corruption is not the most damaging type of corruption. High-level political corruption, and within it, the particular form we have called “state capture”, can be far more damaging where it is prevalent. Starting with my joint research with Joel Hellman over a dozen years ago, we have been emphasizing the problem of state capture— the undue influence of corporate elites in shaping the rules of the game in a country. Long ago, we wrote about state capture in the context of countries like Russia and Ukraine, and more recently I have also discussed this challenge in the particular context of the U.S. financial sector.

While it is more difficult, it is feasible to quantify state capture. The very same vested interests that are responsible for capturing institutions (regulations, policies, laws, etc) also tend to discourage an open and frank debate on the problem of capture. This is particularly the case in official circles of domestic and international elites. But in light of the Wall Street debacle and detailed insider accounts of what transpired before, during and after the 2008 financial crisis, it has become more difficult to mask regulatory and state capture.

However, there is still a particular dimension of state capture that goes relatively unrecognized – the capture of states’ foreign policies vis-à-vis autocratic countries by multinationals and lobbyists who favor the lenient treatment of these autocratic regimes so to pursue commercial objectives. In short, I am talking about state capture in the international arena or international state capture.

The ongoing crisis in Libya is exposing this type of capture. It is becoming increasingly evident that for many years a number of powerful U.S.-based multinational oil companies have been very proactive in trying to influence U.S. foreign policy toward Libyan leader Muammar Qaddafi. Highly paid U.S. consultants and lobbyists, including Ivy League academics and former U.S. ambassadors, have been recruited to burnish the image of Qaddafi, to lobby for pro-Libya policies, to emphasize commercial interests in the country and to laud Libya’s “stability” to the U.S. government and media.

Concern for the totalitarian nature of the regime or its human rights abuses did not feature prominently in any of their work to put it mildly. Furthermore, the well known “revolving door” of lobbying firms, regulators and the regulated industries seems to have played a role in this more international U.S.-Libya case as well. For instance, according to a media report, the founding chairman of the lobbying group, the U.S.-Libya Business Association (USLBA), went on to hold an influential position coordinating energy issues with Middle East countries at the U.S. State Department.

All this and much more, including information on the role of other lobbying and consulting firms played and the list of oil companies behind their efforts, are described in detail in recent reports in The Huffington Post and Mother Jones. The first article contains the now off-site web-based brochure on Libya written by USLBA lobbyists, along with excerpts from a diplomatic cable from U.S. embassy officials in Tripoli released by WikiLeaks. The second article focuses on another lobbying association, USA*Engage, with big oil clients like Halliburton. Only days ago, USA*Engage appeared to be lobbying against imposing U.S. sanctions against Libya.

As the Qaddafi situation continues to be painfully played out, surely more information on this type of international vested interests will be exposed and some dire lessons may be drawn. The Huffington Post and Mother Jones reports should warrant outside scrutiny given the sensitive nature of their allegations against multinationals, lobbyists and government officials and their ties with Qaddafi’s Libya.

On a broader level, it may not be premature to suggest that Qaddafi’s Libya could become a case study of international state capture, in which effective lobbying and commercial interests (alongside the fight against terror) unduly influenced U.S. foreign policy in a direction that paid little attention to the nefarious nature of a brutally autocratic leader, who engaged in gross human rights violations and denied socio-economic development to the Libyan people.

Qaddafi’s Libya may also become a case study of the fallacy that diplomacy and development go hand in hand. Realistically speaking, they are often opposed to each other. Geopolitical and/or commercially-influenced diplomacy often gain the upper hand over development objectives. It is important to openly debate these issues at this juncture, not only given Qaddafi’s debacle, but also in the context of the increasingly permissive ‘money-in-politics’ corporate environment in the U.S. in the aftermath of the recent landmark Supreme Court decision on Citizen United vs. the Federal Electoral Commission.

Of course, the challenge of international state capture and undue commercially-driven foreign policy is not unique to the United States. As hinted to in my previous post on Qaddafi’s Libya, the case of how the U.K. pandered to Qaddafi has many similarities.

In a recent Brookings video podcast, I touch on these issues and specifically discuss the “Faustian Bargain”, wherein global commercial oil interests dwarf human rights and development concerns.