Rule by Thieves: Defining Kleptocracy
THE KLEPTOCRACY IN AMERICA REPORT
Issue #2
January 30, 2025
BOTTOM LINE UP FRONT
In our first Kleptocracy in America report, we argued that, with the second inauguration of Donald Trump as president, America – which already has a problem with corruption – is on the path to becoming a full-blown kleptocracy. Events since the inauguration haven’t reassured us otherwise. Given that President Biden’s farewell address prompted a spike in Google searches for “what is an oligarchy,” we think it’s important and timely to explain just what we mean when we talk about oligarchy’s less famous sibling – kleptocracy. In our Feature, below, we explain how kleptocracy is more than just a fancy term for a really corrupt government. It’s a specific type of political system, one that has popped up time and again throughout history and in many different places, and one which America is particularly vulnerable to becoming right now. It’s easy to write this off as something that happens elsewhere – but it can happen here. Read on to dig into the topic, and for our roundup of recent stories related to corruption and anti-corruption around the country.
FEATURE
RULE BY THIEVES: DEFINING KLEPTOCRACY
“Kleptocracy” is derived from Greek and literally means “rule of/by thieves.” Merriam-Webster defines a kleptocracy as “government by those who seek chiefly status and personal gain at the expense of the governed.” Most descriptions you’ll find capture this meaning. Other useful definitions draw on the model of government-as-vertically-integrated-criminal-syndicate reflecting how most modern-day kleptocracies function. To borrow a phrase from late Russian opposition leader Boris Nemtsov, a kleptocracy is a regime where corruption is not an externality to the political system, as it is in most advanced economies, but is rather the basis of the system. So how does it work in practice?
Rent seeking
Of course, all governments extract resources from their citizenry in the form of taxes. All government employees and contractors derive some private benefit from public funds. And all countries – even the best-run ones according to Transparency International’s Corruption Perceptions Index – have a problem with corruption. There is always the temptation for officials to extract rents, which here refers to revenues extracted from their control of offices or assets, often in the form of bribes, kickbacks, and diversion of public funds. In a kleptocracy, the regime is deliberately structured around facilitating illicit rent extraction for private gain.
While well-run states use tax revenues to provide goods and services to the public, kleptocratic regimes use their control of government to extort money and resources from the public. The corruption is centralized and hierarchically organized, or to borrow a phrase from business, vertically integrated. The ruler controls both the government and the corruption network, sitting atop the pyramid of illicit rents and protecting those that extract rents on his behalf. This systematic, centralized illicit rent extraction by a regime centered on an individual ruler largely defines a kleptocracy.
Key features
Kleptocracies are structured around systemic corruption, personalist power, and transactional politics based on an informal network of patron-client relationships consisting of officials and private actors, rather than institutions. It’s a system where a band of corrupt officials and their cronies run the institutions of government and society as front businesses for systematic theft. Kleptocracies like Vladimir Putin’s Russia are therefore often described as “mafia states”. As laid out in Sarah Chayes’s 2014 book Thieves of State, kleptocratic regimes function as vertically-integrated criminal syndicates.
Another way of looking at a kleptocracy is as a regime that looks outwardly like a modern state, but actually functions more like a feudal kingdom, with power held by an exclusionary hierarchy of individual elites who answer personally to each other, and ultimately to the ruler, rather than to democratic institutions. They rule for their own benefit by extracting wealth from the people. Some experts have characterized the dynamics of modern personalist systems as “court politics”.
The reason modern kleptocracies resemble mafias and medieval kingdoms is that they are all protection rackets. There are endless variations. But the networks that rule kleptocracies are all built on the same basic transactional deal between clients and their patrons within the system. Personal political loyalty, service, and a cut of the take are exchanged for the client’s tacit right to extract personal gain from public office and protection. Officials and their cronies are given free reign to steal. Loyalty and money flow up; protection flows down.
This basic arrangement – centered on a guarantee of protection down to the lowliest member of the mafia – is crucial to understanding the behavior of kleptocratic regimes and their vulnerabilities. If the deal breaks down, the entire system crumbles. Kleptocratic patrons will go to great lengths to protect their clients from the consequences of their misdeeds, which explains much of Russian foreign policy as well as the level of violence used against domestic critics.
The flip side of any protection racket is that any betrayal is punished harshly. While kleptocracies are built on exploitation of government power for theft, this theft remains technically illegal. The regime then uses arbitrary prosecution for the very corruption it promotes to punish subordinates who step out of line. Putin’s purges of the Russian Ministry of Defense last year are an example of this. By ensnaring officials and making them complicit in criminality, and thus dependent on the whims of the ruler who controls the justice system, the systemic corruption of a kleptocracy is not merely a means of profit, but a deliberate mechanism of power and control.
Kleptocracies can develop wherever elite self-interest and power intertwine. Most governments in Western history prior to the 19th century were kleptocracies organized for the benefit of a narrow elite. From medieval kingdoms to post-Soviet Russia, kleptocracy has often emerged out of state weakness or collapse or the breakup of empire. In the modern era, the end of the Cold War and universalization of neoliberal capitalism put the spread of kleptocracy on steroids. Sometimes kleptocracies can emerge from more or less functioning democracies, like the Hungary of Viktor Orbán, the Venezuela of Hugo Chávez (and now Nicolás Maduro), or the Turkey of Recep Tayyip Erdoğan. This often happens when an elected populist leader and his party are able to thoroughly dominate politics for an extended period of time and restructure government to operate for their own benefit.
Impact on communities
The most obvious negative impact of kleptocracy is from the systematic theft of common wealth and dominance of political and economic power by exclusionary, unaccountable networks. This has direct and indirect costs to ordinary people, from extortion by government officials to economic crises. All this hits people where they care most: their wallets. Economic growth gets choked by systemic theft, and as rule of law erodes, foreign trade and investment decrease, leading to fewer options on store shelves.
Kleptocracy and authoritarianism go hand in hand. The vast bulk of the population becomes meaningfully excluded from politics, and the regime uses the power of government and non-state allies alike to suppress dissent. People are punished through administrative action targeted at wealth, livelihoods and speech (like firing, blacklisting, expropriation, reputational attacks, harassment and more). Sometimes this punishment manifests as intimidation, arrests, violence, and even murder. The result is a withering of civil society and public life from top to bottom.
As officials turn justice into a private business, people come to see the government not as a neutral arbiter of disputes, but as an interested party and a threat to be avoided. This leads to a pervasive sense of insecurity as even minor disputes can become crises. People and communities start to “look to their own defense” and seek patronage that can protect them. As regime cronies come to dominate the economy with protection from competition and regulation, corner-cutting becomes widespread, with things like food safety standards and building codes compromised or ignored. Because the police in a kleptocracy prioritize protecting the regime over public safety, crime and violence can increase. Marginalized people become more vulnerable. Inequality skyrockets.
While kleptocracies are not generally fascist states, which are organized around war, they will sometimes blunder into war. This happens when they escalate international crises as a negotiating tactic or engage in opportunistic land grabs when they think they can make political or economic gains at minimal cost. In this way, kleptocracies are a security threat to their neighbors. As Chayes describes, they are also a security threat because of the backlash they cause among their own populations. Frustration with kleptocracy has caused countless uprisings, insurgencies, and revolutions throughout history, from medieval peasant rebellions, to the French Revolution, to the Color Revolutions and the Arab Spring. In the absence of participatory politics, people faced with systematic economic exclusion, theft, and humiliation may turn toward extremist ideologies and movements.
Kleptocracies come in many shapes and forms, but it is always pervasive, and extends down to the local level. For instance, police and other officials in kleptocracies will often buy their position from superiors – an up-front outlay for a projected return in the form of bribery and extortion, as the International Republican Institute points out in its useful taxonomy of kleptocracies. Ultimately, corruption in a kleptocracy is as much a tool of power and control, and maintaining a society-wide hierarchy of winners and losers, as it is a simple source of illicit gains. To secure its power, the regime needs to spread this system of control all the way down to the lowest levels.
Local corruption is the key entry point. Via politicized control of the justice system, a kleptocracy can entice or coerce local officials and their cronies into loyalty and political support. For instance, a local leader like New York’s mayor, charged with corruption, may believe he’ll get charges reduced or dismissed if he makes a public show of embracing a new administration widely reviled by his own constituency. While rule of law still mostly prevails, this could change if the Supreme Court continues narrowing the definition of public corruption and the executive uses pardons and selective prosecution to extend the protection racket downward. There is little public attention at the moment on such seemingly petty developments in the US.
Stopping the spread
The long-chronicled decay of local media in America has made the country outside of the largest cities an even more attractive opportunity for those seeking to secure power by propagating kleptocratic networks. But herein lies the rub and our mission. The local level is where pro-democracy actors are likely to retain the greatest power and freedom of action for the longest. It’s also where citizens see it most clearly. Investigations of corruption affect everyone in the community, providing a focus for energy that distant events in Washington may not. So our mission in this newsletter and our domestic programs is to empower those who seek to shine a light on local corruption. An American kleptocracy will flourish if local communities decide to play its rules and officials share in its spoils. And it is precisely here where it can be stopped in its tracks.
WHAT WE'RE FOLLOWING
MUST READS
This week it’s a must-watch, the confirmation hearing of Robert F. Kennedy Jr. as the country’s top health official. And if humanly possible, it’s something to be watched in full, not excerpted by the cable news channels at the top of the hour. His department oversees $1.7 trillion in federal spending and not only determines federal responses to health emergencies, it also dictates how data and disease on health outcomes is reported and shared. RFK Jr.’s past public comments comparing the work of the Centers for Disease Control to Nazi death camps and vaccine denialism are obviously critical material for any confirmation process.
But we’re also watching this as a masterful model of misdirection and the refusal of both parties to use the confirmation process to have a detailed, serious and most of all, adult conversation about healthcare policy. His objective kookiness also distracts from some critical points he makes about diet, lifestyle and role of pharmaceutical multinationals in American healthcare. It also moves discussion away from the administration’s opening salvos against the Affordable Care Act (ACA) and the continued absence of a comprehensive Trump healthcare policy – beyond defunding and closing institutions and pulling out of the World Healthcare Organization, kneecapping global efforts to prevent the next pandemic. If RFK Jr. makes it to his cabinet position it will be a setback for science and public health – but it will also be a continued distraction from any substantive discussion of plans to stratify patients by risk or reintroduce the skimpy, minimal plans that plagued the early days of the ACA and left the minimally insured with massive healthcare bills.
DC THROUGHLINE
Since the inauguration, there’s been a parade of events that should raise anti-corruption eyebrows. As the AP reported last week, Trump swiftly rescinded Biden-era ethics rules banning officials from receiving major gifts from lobbyists and seeking to shut the revolving door between government and lobbying. Trump’s meme coin, $TRUMP, launched just before his inauguration, has raised billions, and drawn accusations that he is profiting off the presidency in potential violation of the Emoluments Clauses. There’s the thwarted attempt to assert executive authority over funds already appropriated by Congress. Then there’s the mass firing of inspectors general, and the reassignment (and subsequent resignation) of the head of the anti-corruption Public Integrity Section, paving the way for a Justice Department firmly under administration control.
Equally troubling is the sweeping issuance of pardons, case dismissals and commutations to supporters, including over 1,500 people charged with crimes for participation in the January 6, 2021 riots (one of whom was promptly shot dead resisting police), two of the President’s co-defendants in the classified documents case, and a former GOP legislator. The actions smack of the sort of protection kleptocratic regimes extend to their loyalists. And the Senate is poised to confirm Tulsi Gabbard as Director of National Intelligence, who, ties with foreign kleptocrats aside, paid a DC public relations firm to cover up her membership in a fringe Hawaii-based fringe religious sect, which was, in turn, reportedly tied to a Hong Kong-based direct marketing firm accused of fraud and racketeering in at least seven countries.
It’s not all bad news, however: the Supreme Court allowed enforcement of the Corporate Transparency Act (CTA), which requires select companies to disclose beneficial ownership to the Federal government, but which had been under injunction, to resume. This means the fate of the CTA looks to be decided in Congress, where legislation is on the move in both houses to kill it in the name of small business and farmers.
NATIONAL ROUNDUP
Maine
Laboratories of democracy – and anti-corruption: On November 5, Maine voters passed a ballot measure restricting individual or business PAC donations to $5000, prompting a legal challenge by conservative groups that may put campaign finance once again in front of the Supreme Court, as Salon reported in December.
Massachusetts
Boston city councilor accused of corruption due back in court in March: Democratic Boston City Councilor Tania Fernandes Anderson, arrested in early December on corruption charges for an alleged kickback scheme, has had her next court date pushed to March, the Boston Herald reported last week.
New York
Adams charges in limbo: Democratic New York Mayor Eric Adams, indicted in Federal corruption charges that have rocked his administration, is defending NYC cooperation with ICE raids, a week after his attendance to Trump’s inauguration sparked speculation about pardon-seeking – and reporting suggests that federal charges may get dropped.
Pennsylvania
Something rotten in the county of Dauphin: After reports of alleged conflicts of interest led to trouble for former Dauphin County Commissioner, Republican Jeff Haste (whose wife attended the Jan 6 riots) and attention from the FBI, the new chairman of the Board of Commissioners has led an expanding drive to address concerns about possible corruption in the county, which includes the city of Harrisburg.
Virginia
Sheriff behind bars after conviction in badges for dollars scheme: Longtime GOP Culpeper County Sheriff Scott Jenkins was convicted in December of accepting up to $75,000 in bribes for “auxiliary deputy” badges to civilians, local media reported.
Mississippi
Embattled mayor may seek reelection: Jackson Mayor Chokwe Antar Lumamba may seek reelection, despite being indicted last fall on federal corruption charges, in a case that emerged out of a long-running FBI sting and highlights local racial and partisan fault lines (he heads a largely Black, Democratic city leadership in a state mostly run by white Republicans) – he has until the end of the week to decide his next move.
Ohio
Lt. Governor picked to fill JD Vance’s seat – in wake of largest corruption scandal in state history: Shortly before Trump’s inauguration, GOP Ohio Governor Mike DeWine picked his Lieutenant Governor, Jon Husted, to fill the new VP’s now-vacant Senate seat – on the same day as federal indictments were handed down for a case in which a utility, FirstEnergy, allegedly pushed millions of dollars in bribes to state legislators to pass a funding bill allegedly supported by Husted himself.
Nebraska
Pair alleged to have diverted millions from Oglala Sioux tribal coffers in fraud case: A man and woman were indicted earlier this month on federal charges related to an alleged scheme to divert millions from the tribal office one of them worked for, according to local reporting