Nazarbayev and the Rise of the Kleptocrats

A new report details, in part, how Kazakhstan’s pres­i­dent has helped define the new author­i­tar­i­an normal.

Credit: Russian Presidential Press and Information Office

From ossi­fy­ing dic­ta­tor­ships in Russia and Venezuela to pro­to-auto­crat­ic lead­ers in Hungary and the Philippines, it’s clear that the 2010s are rapid­ly being defined as an era of demo­c­ra­t­ic retrench­ment. Instead of rely­ing sole­ly on brute repres­sion, how­ev­er, elites with­in ris­ing author­i­tar­i­an regimes have found anoth­er tool that pre­ced­ing autoc­ra­cies could have only dreamed of: a trans-nation­al finan­cial net­work that the remain­ing democ­ra­cies, includ­ing the United States and United Kingdom, have been only too will­ing to pro­vide to rul­ing post-Soviet, Gulf, and Chinese oligarchs.

As Ben Judah ably dis­plays in a new report from the Hudson Institute, it is these net­works — these means of off­shoriza­tion, shell cor­po­ra­tions, and legal loop­holes — that have allowed the cor­rupt­ed elites in remain­ing and prospec­tive autoc­ra­cies to park their ill-got­ten gains abroad, from Manhattan lofts to anony­mous com­pa­nies in Panama and the British Virgin Islands. Indeed, as Judah notes, we have entered a “gold­en age of mon­ey laun­der­ing,” with as much as 5 per­cent of world­wide GDP stand­ing as laun­dered mon­ey. “It has nev­er been sim­pler or safer to be a klep­to­crat,” Judah adds, point­ing to an esti­mate from inves­tiga­tive econ­o­mist James Henry that upwards of $32 tril­lion is being held off­shore. “Globalization’s deep, struc­tur­al motors are in fact enabling authoritarians.”

As Judah details, few lead­ers illus­trate the rise of the new author­i­tar­i­ans, espe­cial­ly as it per­tains to warp­ing Western actors to his bid­ding, bet­ter than Kazakhstani President Nursultan Nazarbayev. Nazarbayev’s cor­rup­tion isn’t nec­es­sar­i­ly a sur­prise; a decade ago, U.S. offi­cials were describ­ing Nazarbayev as the most “noto­ri­ous­ly cor­rupt” leader “in the free world.” In the years since — with Nazarbayev tak­ing 98 per­cent in the last pres­i­den­tial elec­tion, and with Kazakhstan now fac­ing its first reces­sion in near­ly two decades — lit­tle has changed.

If any­thing, Nazarbayev has rei­fied a mod­el that oth­er auto­crats have been eager to imi­tate. “Nazarbayev is the new nor­mal; con­tem­po­rary author­i­tar­i­ans are most­ly klep­to­crats,” Judah writes. “This means cor­rup­tion is not a fea­ture of their regimes, but rather the invari­able nature of their rule.” 

Not only has Nazarbayev parked his funds in London’s prop­er­ty mar­ket, “but his wealth and that of his clique has been fun­neled out of the coun­try by exploit­ing off­shore net­works. In the 21st cen­tu­ry Nazarbayev is not the excep­tion, but the norm; he is par­a­dig­mat­ic of the new author­i­tar­i­ans for whom there is no containment.”

But it’s not sim­ply that Nazarbayev’s regime has tak­en full advan­tage of the shad­ow-financ­ing prof­fered by the West. If any­thing, Nazarbayev has bought in ful­ly to the “wealth defense indus­try” pushed by Western actors, includ­ing bankers and accoun­tants, lob­by­ists and pub­lic rela­tions experts. To wit, Tony Blair’s role as an offi­cial advis­er to Nazarbayev, which has only now begun wrap­ping up, allowed Astana to ignore anti-cor­rup­tion advice from the West, rest­ing ful­ly upon the hypocrisy atten­dant in Blair’s pres­ence in Kazakhstan. This comes in addi­tion to the PR machine Kazakhstan has unleashed on both sides of the Atlantic, with Western firms eager to take Astana’s excess hydro­car­bon funds to white­wash the country’s Soviet-era leadership. 

To be sure, while Nazarbayev stands as an exem­plar of the expan­sive dic­ta­tor­ships tak­ing advan­tage of Western finan­cial and lob­by­ing net­works, Kazakhstan is but one of numer­ous autoc­ra­cies detailed in the recent report. China, for instance, has seen its rela­tion­ship with the West “warped by the dynam­ics of this shad­ow sys­tem,” Judah writes. “China is bleed­ing bil­lions in ille­gal­ly trans­ferred funds… Today some $1 tril­lion dol­lars leaves China annu­al­ly.” Meanwhile, the “most extreme and suc­cess­ful case of klep­to­crat­ic takeover to date was under­tak­en by Azerbaijani pres­i­dent Ilham Aliyev, the head of a dic­ta­tor­ship that has ruled the coun­try since 2003.” And accord­ing to one researcher — in one of the most remark­able stats through­out the entire report — more than half of Russia’s wealth remains squir­reled offshore.

Western sys­tems of shell cor­po­ra­tions and off­shoriza­tion not only weak­en the West’s soft pow­er, but fur­ther entrench the nascent dic­ta­tor­ships mush­room­ing in place of failed efforts of democ­ra­ti­za­tion. While the United States is final­ly play­ing a bit of catch-up, elites through­out post-Soviet autoc­ra­cies have proven over-eager to stash their funds abroad, instead of rein­vest­ing their largesse in domes­tic industries. 

The sys­tems, and the abuse there­in, are clear. The time has come, as Judah writes, for the West “to reeval­u­ate author­i­tar­i­ans like Nazarbayev.”

Casey Michel, The Diplomat

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