THE DEKLEPTOCRACY REPORT
May 16, 2024
Welcome to The Dekleptocracy Report! The Dekleptocracy Project (TDP) is a 501(c)(3) based in Virginia. We’re on a mission to show how existing levers of accountability can protect democracy and prevent authoritarians, their networks, and enablers from exploiting or circumventing the US system. As always, please sign up and forward this newsletter.
BOTTOM LINE UP FRONT
Welcome to our tenth newsletter of 2024! As this newsletter was being finalized, reports came out of Slovakia about the attempted assassination of Prime Minister Robert Fico. Whether it’s the act of a troubled individual or a reflection of dark political undercurrents in Central Europe is too soon to say. What is certain is that it’s a troubling development that is likely to have longer-term consequences. Meanwhile, in this issue, we take an in-depth look at how one post-Soviet state, Azerbaijan, has built a lobbying machine in Washington, DC, over the past 30 years, leading recently to the indictment of a US representative for alleged bribery and conspiracy. The country, which has also built formidable networks in Brussels and London, has a long-running territorial dispute with its neighbor, Armenia, and, following Russia’s full-scale invasion of Ukraine in February 2022, has made itself central to Western energy policy. This makes its impact on Washington through direct and indirect lobbying efforts both important and sensitive.
In the Digest, we review a stunning week in Georgia where a significant percentage of the population has taken to the streets to protest the passage of a law targeting organizations with foreign funding sources, dubbed by many activists as “the Russian law” for its resemblance to 2012 legislation in that country that led to the dismantling of most independent media and non-governmental organizations. We also look at Xi Jinping’s recent European tour, which tellingly focused on three countries with very different orientations towards key institutions such as the US, EU and NATO: France, Hungary and Serbia.
In Qui Custodiet, the EU is talking, at last, about concrete steps to close European facilities to Russian LNG transshipment in its latest sanctions package, but will large importers of Russian LNG, including France and Spain, get onboard? We also look at a persuasive post on the Lawfare blog about the case for creating an open-source intelligence (OSINT) agency for the US intelligence community that can overcome the Washington habit of over-classifying and under-sharing information. In Around the World, we review reports of friction between Damascus and Tehran and what that means for the parties in Syria’s unending civil war. And we examine a recent push by US and other Western officials to get the UAE to disclose and clamp down on exports of sensitive materials, including electronic components, to Russia.
BAKU’S FRIENDS IN WASHINGTON
A recent indictment charges US Representative Henry Cuellar (D, Texas) and his wife with bribery and conspiracy for allegedly taking nearly US$600,000 from an Azerbaijan-controlled energy company and a bank in Mexico. Cuellar and his wife have asserted their innocence. It is only the second time that a sitting member of Congress has faced charges of acting as a foreign agent – the first such example is Senator Robert Menendez (D, NJ), who went on trial this week on unrelated charges. The case puts the lobbying activities of Azerbaijan – an effort going back nearly 30 years to its independence after the collapse of the Soviet Union – back in focus as that country seeks to consolidate military gains made in 2023 against neighboring Armenia, while Azerbaijani energy has become critical, especially for Europe, amid Russia’s war in Ukraine.
Azerbaijan has built a formidable influence machine in Washington, one shaped by the country’s three decades of conflict with Armenia. A December 2023 briefing paper by the Quincy Institute for Responsible Statecraft notes that Azerbaijan’s “caviar diplomacy” has led the country’s government to spend around US$7 million on declared lobbying and public relations firms registered under the Foreign Agents Registration Act (FARA) from 2015 through 2023. BGR Government Affairs has been one of the leading arms of this official effort, with a key focus being continued US military assistance. Azerbaijan has also engaged the Friedlander Group, headed by Ezra Friedlander, a prominent Israeli American lobbyist, reflecting a close strategic relationship between Tel Aviv and Baku, especially in the arms trade.
As Quincy reported, BGR signed an agreement in 2018 with Baker, Donelson, Bearman, Caldwell and Berkowitz (Baker Donelson) – a long time representative of Azerbaijan in Washington – to reportedly lobby the State, Foreign Operations, and Related Programs Subcommittee of the House Committee on Appropriations, which is responsible for, among other issues, determining the scale of US military assistance to both Armenia and Azerbaijan. Notably, a 1999 filing by Baker Donelson covering its work for Azerbaijan includes a US$40,000 line for “outside counsel” paid to JHS Associates, a company that is linked to John Sununu, the former governor of New Hampshire and Chief of Staff to President George H.W. Bush from 1989 to 1992. The link to the Sununu family, who have dominated New Hampshire politics for two generations (son Chris Sununu is currently governor), tells part of the much longer and bipartisan story of Azerbaijan’s influence in US politics.
Striking gold
Go back nearly 30 years to 1995 and it was a very different geopolitical environment in the aftermath of the dissolution of the Soviet Union. The first war over Nagorno-Karabakh, from 1988 to 1993, left thousands dead and tens of thousands displaced. Armenian forces had taken control over the region – internationally recognized as part of newly independent Azerbaijan – and held around 20% of Azerbaijan’s geographic territory. Heydar Aliyev, the father of the current president, Ilham Aliyev, took power in October 1993 as the third post-independence president of Azerbaijan. A 1992 American law, the Freedom for Russia and Emerging Eurasian Democracies and Open Markets Support Act (dubbed the Freedom Support Act), fostered closer ties between the US and countries emerging from the end of the Soviet Union, including material support, but Section 907 of the act explicitly banned any direct aid from the US government going to the government of Azerbaijan. In other words, Azerbaijan had much to fight for in Washington and elsewhere.
An early step was the foundation of the US-Azerbaijan Chamber of Commerce (USACC) in 1995. The founding chairman of the group was Reza Vaziri, an Iranian-born businessman, but the two original honorary counsels were heavyweight Washington figures from both sides of the aisle: former presidential Chief of Staff John Sununu and Zbigniew Brzezinski, national security adviser under President Jimmy Carter (the current honorary counsels are listed as Sununu, James Baker III and the late Henry Kissinger). Notably, the founding of the USACC came a few months after the so-called “Deal of the Century”, when a consortium of more than a dozen oil companies, including Exxon, BP and Amoco, signed a record production sharing agreement (PSA) to develop Azerbaijani oil and gas fields in the Caspian.
Sununu’s ties with Azerbaijan deepened when, in the late 1990s, he reportedly obtained a share – currently reported at around 9% — in Anglo Asian Mining (AAM), a gold, silver and copper mining company operating in Azerbaijan and listed on London’s Alternative Investment Market (AIM) exchange. Vaziri is the company’s founder and remains its single largest shareholder with around 29% of the company. As reported in 2020, after Azeri forces retook significant territory in Nagorno Karabakh, the company was poised to exercise rights to mine in the region. There is no suggestion that AAM has benefitted improperly from Sununu’s political profile, but it is striking that the Sununu family are major investors in Azerbaijan’s mineral extraction industry.
Beyond John Sununu’s business dealings in the country, other prominent US figures with links to Azerbaijan appeared to benefit from this relationship in the mid-to-late-1990s. Former National Security Advisor Brzezinski served as an advisor to AMOCO (an oil company that later merged with BP), which he helped to obtain a major stake in Azerbaijan’s largest oil PSA. Companies linked to Dick Cheney and other figures were also reported to have interests in energy projects in Azerbaijan.
Notably, Section 907 of the Freedom Support Act was not repealed, but in January 2002, President George W. Bush signed a one-year waiver of the provision that was extended by following administrations. This followed a Senate act in October 2001, just weeks after the 9/11 attacks and Azerbaijan’s pledge of support for the US counter-terrorism effort, authorizing the president to waive Section 907 without an intervening act of Congress.
Over the past two decades, the scope of Azerbaijani lobbying in Washington, as well as Brussels and London, has only grown, with the Organized Crime and Corruption Reporting Project covering in 2018, for instance, an alleged scheme to divert funds from shell companies to a US lobbying firm to promote Azerbaijani interests in the US. And the country continued to recruit senior figures from both major US parties, paying US$50,000 in 2009 for President Barack Obama’s former campaign manager, David Plouffe, to visit Baku and speak to local officials.
Reliable partners?
Since Russia’s full-scale invasion of Ukraine in February 2022, Azerbaijan’s geopolitical importance for the US has grown rapidly, as Europe has needed both natural gas and oil supplies to replace Russian hydrocarbons. At the same time, following Azerbaijan’s sweeping September 2023 offensive against the ethnic Armenian Artsakh statelet in Nagorno Karabakh, amid a blockade and credible claims of ethnic cleansing, members of Congress drafted the Armenian Protection Act of 2023, which would prevent the presidential waiver of Section 907 in 2024 and 2025. The bill is currently in committee.
For now, energy security concerns have prevailed. In the summer of 2022, the European Commission signed a new gas agreement with Azerbaijan. This agreement committed the country to doubling its gas exports to the EU in the coming years. Several EU member states, including Italy, Hungary, Austria, Bulgaria, Slovakia, and Romania – previously reliant on Russian gas natural supplies – have reportedly become increasingly reliant on Azerbaijani gas, which constituted 3.4% of total EU gas imports in 2022. During the proceedings, EC President Ursula von der Leyen described Azerbaijan as a “reliable partner.”
However, this deal was soon followed by Azerbaijan securing an agreement with Russia to increase Russian gas exports to Azerbaijan. Ironically, it appeared this step was taken in part due to Azerbaijan’s struggles with limited infrastructure capacity and rising domestic demand, which pressured the country to secure additional gas supplies to meet its export commitments to the EU. The deal underlines that Baku and Moscow are as much allies as competitors, including in the oil and gas markets.
Notably, the Parliamentary Assembly of the Council of Europe (PACE) is one of the few Western institutions to raise serious concerns in recent months about Azerbaijan’s abuse of human rights, including the country’s February 2024 presidential elections, which PACE was not allowed to observe. In January 2024, PACE decided to strip Azerbaijan of its parliamentary delegation credentials. Following these events, Azerbaijani state media reported that the country “no longer needs the Council of Europe” at all.
In the US, the Cuellar indictment is a warning that both overt and illicit lobbying by foreign governments can subvert Congress’s ability to protect America’s national interests through oversight and legislation. Azerbaijan, with a population of around 10 million people and from which the US imported just US$69 million in goods in 2023, has exercised an outsized influence on US politics for three decades and mostly achieved its perceived policy goals, specifically the repeated waiver of Section 907. As Armenia, which lacks its neighbor’s natural gas wealth, seeks to distance itself from Russian dominance, the US and EU should offer robust support without Baku’s overt or covert lobbying potentially dictating the outcome.
Georgian ruling party turns away from Europe
On May 14, the Georgian parliament adopted the “foreign agents” law amid chaos inside the chamber and determined-but-peaceful demonstrations on the streets outside. Dubbed the “Russian law,” it requires any organization, including media outlets and non-governmental organizations (NGOs), to register as “pursuing the interests of a foreign power” if it is receiving 20% or more of its funding from abroad. Georgian civil society defeated a previous attempt to pass the law in 2023, but the ruling Georgian Dream party, backed by oligarch and former Prime Minister Bidzina Ivanishvili, pushed the legislation through despite determined public protests and actual fistfights in parliament. The country’s president, Salome Zourabichvili, vowed to veto the bill, but the ruling party had the votes to override her. For its part, the EU, which granted Georgia candidate status in December, has said the law is “incompatible with European values.”
Why has the law provoked such outrage in Georgia, where up to 300,000 people demonstrated over the weekend in a country of 3.6 million people? First, many Georgians look at Russia, where similar legislation was passed after protests in 2012, leading to many media outlets and NGOs being singled out and subject to intense pressure, driving many out of the country or out of business. Second, many Georgians see the law as Georgian Dream’s conscious decision to forgo European integration and ally with Russia (where Ivanishvili earned much of his fortune). For anyone in the region, this evokes memories of November 2013. when Ukrainian then-President Viktor Yanukovych chose not to sign a bill driving European integration. In the case of Ukraine, the move set off months of protests that led Yanukovych to leave office in February 2014 but not before the deaths of more than 100 demonstrators and 13 police operatives. In Georgia, the police have not used real bullets on the crowds. But there has been significant violence, including by plainclothes agents who have reportedly gone to the homes of opposition figures to beat them up or even abduct them. For their part, protestors and opposition politicians have called for sanctions, including travel bans on key Georgian Dream officials. The country’s leadership appears to be banking on the EU and US opting to use a light touch in hopes of not pushing Georgian further into Russia’s orbit. But looking at the footage of large and determined crowds in the face of police violence, it is difficult not to see the clear parallels with Ukraine’s Revolution of Dignity. That was an outcome that proved to be a disaster for Moscow and a tragedy for the dozens of Ukrainians murdered by the regime before Yanukovych’s flight and the countless more killed by the decade of Russian aggression that followed.
President Xi’s European tour
Chinese President Xi Jinping’s itinerary for his first European visit in five years – with stops in France, Serbia and Hungary – last week speaks volumes about his foreign policy priorities. Notably, all three countries have staked out positions that are to some degree skeptical of the US-led global order, while Hungary and Serbia have overtly sought alternatives to EU structural funds that come with strings attached. In an editorial previewing Xi’s visit to Paris, published in the People’s Daily newspaper, China’s ambassador to France pointed out that Xi has visited France three times, including on his last European tour and called for a strong Sino-French relationship to strengthen China’s ties with the EU. Rhetoric aside, France is the second largest economy in the EU after Germany and, while a cornerstone of NATO, the country has for decades staked out a foreign policy and relationship with the Global South that is distinct and even competitive with the US. As the New York Times noted, President Emmanuel Macron has said that France “must never be a vassal of the United States,” even as he and EU leaders reportedly joined the US in putting pressure on Xi to use his influence on Moscow to bring an end to its invasion of Ukraine.
Xi’s decision to visit Hungary is not surprising but is equally telling. While Prime Minister Viktor Orbán has allied himself rhetorically with US conservatives, he has made close economic and even security ties with China the centerpiece of his foreign policy. Hungary hosts electronic giant Huawei’s largest logistics center in Europe as well as a major R&D facility. China electric vehicle maker BYD is building a US$500 million factory in the country, another project that contrasts with Orbán’s bickering with the European Commission over structural funds. Both Hungary and Serbia have signed security cooperation agreements with China, allowing Chinese law enforcement to “assist” their European colleagues. In short, Hungary provides China with a reliable ally in Central Europe and within the key institutions of the European Union and NATO. And Serbia represents an emerging European ally, one that is often hostile to the European Union and the site, 25 years earlier, of NATO’s mistaken bombing of the Chinese embassy in Belgrade. With Serbia’s prospects of joining the EU in the short to medium term being dim, Chinese economic and political support, including a free-trade deal, provides Belgrade with another axis of development and gives Beijing another loyal ally in the neighborhood. While the message of the US and the EU of Xi’s tour is clear, it should also be a warning to Moscow that China has far deeper pockets in countries that Russia has long considered dependable bastions within Europe.
EU focused on LNG in latest sanctions package
European Union foreign ministers have been negotiating the bloc’s 14th sanctions package against Russia since early May, with Russia’s liquified natural gas (LNG) exports in the crosshairs. According to an interview this week between Estonian broadcaster ERR and European Commissioner for Energy Kadri Simson, the package in its current form envisages “limiting the Russian Federation’s income from the sale of LNG by banning the use of EU infrastructure for transshipment of Russian LNG to third countries.” According to High North News, 25-30% of Russia’s LNG production from its flagship Yamal project currently passes through EU terminals to reach remote destinations like China and India. At the same time, Russia is looking to expand its LNG production, as we have reported, through its Arctic LNG-2 project, which has been directly targeted by US sanctions since late 2023. Russia remains dependent on European infrastructure for LNG exports, especially as sanctions have blocked the supply of ice-capable tankers needed to deliver LNG directly to Asian markets. According to Ukrainian energy analyst Oleh Savytskyi, writing for Euromaidan Press, the main LNG terminals that have received the bulk of supply from Russia’s Yamal LNG project are Zeebrugge in Belgium (accounting for around two-thirds of volumes), followed by Montoir-de-Bretagne in France, and Bilbao in Spain. He noted that there has been a significant shift in Europe, with Belgium, Germany, Italy, and Sweden publicly supporting the proposals in the current sanctions package. In the meantime, France and Spain have remained largely silent. Notably, France’s TotalEnergies has a 20% stake in the Yamal LNG project, and France and Spain remain major buyers of Russian LNG. Commissioner Simson has said that the sanctions package will need to be finalized at a summit, with the next European Council meeting scheduled for the end of June. This gives France and Spain a matter of weeks to set out a clear agenda on the issue.
US intelligence community needs OSINT
Writing for the Lawfare blog in early May, Ben Scott, a Senior Advisor at the National Security College, made the case for a dedicated, open-source intelligence (OSINT) agency in the US intelligence community (IC). As he notes, the call for such an agency is nothing new, and the investigations of WMD claims in Iraq and the 9-11 Commission findings both made clear the need for such a capacity. The Office of the Director of National Intelligence (ODNI), launched in 2005, included a mandate to create an ODNI Open Source Center (OSC), but, as Scott chronicled, it found itself the focus of turf battles, and in 2015, the CIA’s Open Source Enterprise (OSE) was established. Yet the IC’s efforts have trailed the apparent successes of privately funded initiatives like Bellingcat, leaving a chorus of former intelligence officers calling for change, while a February 2022 analysis by RAND warned that the IC continues “to face long-standing challenges related to collaboration, the use of open sources, analytic tradecraft, and the risk of politicization.” Against this background, the Director for National Intelligence’s IC OSINT Strategy 2024-26 appears to have hit the right notes, although Scott also makes clear that tasks, such as “establishing integrated OSINT collection management and common training standards” represent essential tasks outlined two decades ago. For the American IC, the long-standing tendency to overclassify and under-share information remains a chronic problem in a digital information age and helps explain why the private sector has generally been more successful, albeit in the service of narrower goals. As Scott argues, the creation of a dedicated OSINT agency not embedded in an existing agency dedicated to secrecy is a crucial step to creating a culture where openness and sharing is the norm and classified information is a narrow specialty, providing the public and decision-makers with information that can be shared, vetted and verified.
Reported tensions between Syria and Iran
The war in Gaza has strained relations between the government of Syrian President Bashar al-Assad and the Iranian government, according to reporting by London-based Arabic daily Asharq Al-Awsat. Unlike many of Iran’s other allies and proxies in the region, the al-Assad regime has stayed pointedly neutral throughout the post-October 7 conflict, despite Israeli strikes against Iranian forces on its territory. The article even relays allegations that Syrian Government officials may have passed intelligence on Iranian officers on to the Israelis. The alleged tensions also reflect Iranian concerns that any trend toward the normalization of relationships between al-Assad and other Arab states could weaken Tehran’s grip. While the friction between the two regimes appears unlikely to lead to a fundamental shift in their relationship, it reflects the al-Assad regime’s knack for playing off external and domestic allies and enemies against one another. Iranian and Russian support to the Syrian government has been decisive in ensuring the survival of the Syrian government through 13 years of bloody civil war. At the same time, the conflict is far from over. Large swathes of eastern Syria are under the control of US-backed, Kurdish-dominated militias. Turkey considers those militias terrorists and threatens periodic ground incursions. At the same time, Turkish protection of rebel-held areas of Aleppo and Idleb governorates has denied final victory to the Syrian Arab Army, but clashes are regular occurrences. The Islamic State remains a threat, especially in the east. Finally, while southern Syria has been nominally under regime control since 2018, it is rife with lawlessness, political unrest, violence and the production and trafficking of Captagon, an amphetamine popular in Gulf countries. The regime is heavily involved in the drug trade, which provides a substantial portion of the regime’s income and reportedly weaponizes it as a tool of foreign policy. Syria may be out of the news, but as a nexus of Russian, Iranian, and increasingly Chinese involvement on NATO’s southern flank, it’s an important player. This means it pays to keep an eye out for signs of tensions among the authoritarian states that are feeding conflict in the region.
US and allies press UAE over Russia ties
In early May, Reuters reported, citing sources, that officials from the US, the EU and UK had visited the UAE in a coordinated attempt to get the Gulf state to crack down on companies in its jurisdiction evading Western sanctions on Russia. Among other steps, officials have reportedly asked the UAE to “share detailed trade information on its exports to Russia and on the re-export of so-called dual-use goods that have both civilian and military purposes.” Reuters cited a local official as saying bans on such goods were already in place, and there had been no such re-exports this year. This claim would appear to contradict anecdotal data suggesting that the UAE has indeed been a site for transshipment, especially for electronics components. According to Reuters, again citing unnamed sources, UAE imports of some sanctioned dual-use products have increased since the imposition of wide-ranging Western sanctions after the full-scale Russian invasion of Ukraine in February 2023. The US has taken action against individual UAE firms, including for violations of the G7 price cap on Russian oil, and taken action against individuals allegedly linked to terrorist financing. Certain UAE institutions, especially banks, have made it harder for Russian companies and individuals to open accounts to avoid increased US scope for sanctions against foreign financial institutions under Executive Order 1414. In the meantime, the UAE and Turkey will remain key jurisdictions to watch to see if Western diplomatic pressure and threats of secondary sanctions result in substantive changes in enforcement with a measurable effect on Russia’s war machine.