Publications

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Given that offshore tax havens are largely located in small, independent states or self-governing territories, it could be assumed that they have little connection to OECD states and major financial centers such as London and New York. This is not the case. The so-called tax havens are in fact part of a much larger network of financial and corporate services that depends on lawyers, accountants, and bankers located in major Western cities. Only one part of the havens’ business actually involves providing lower tax rates to individual foreign account holders.

These techniques originally developed to assist American executives and Belgian dentists, and later multinational corporations, to limit their exposure— sometimes lawfully, sometimes unlawfully—to their respective tax authorities. Today, they’re increasingly deployed to flows of tainted capital from developing countries, helping those funds transit from their home jurisdictions and ultimately to the West.



There are more capital flows into the offshore world from OECD states than from developing countries. The argument of this paper, however, is that while OECD origin capital flows erode the tax base and some of the flows amount to illegal tax evasion, the overall effect of the money coming from developing countries, especially the tainted flows, is more damaging from both an economic and a security perspective.

In other words, the West, with its rule of law and creation of the Western-governed offshore economy, has given corrupt elites in developing countries the tools and capacity to avoid ever establishing the rule of law in their own countries. They are the beneficiaries of the West’s firmly-established rule of law and can leverage that advantage against their own people to ensure that they never benefit from the rule of law themselves. This is the rule of law paradox.


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Human capital is fleeing Russia. Since President Vladimir Putin’s ascent to the presidency, between 1.6 and 2 million Russians – out of a total population of 145 million – have left for Western democracies. This emigration sped up with Putin’s return as president in 2012, followed by a weakening economy and growing repressions. It soon began to look like a politically driven brain drain, causing increasing concern among Russian and international observers.

In this pioneering study, the Council’s Eurasia Center offers a clear analysis of the Putin Exodus and its implications for Russia and the West. The study, which is authored by Ambassador John Herbst and Dr. Sergei Erofeev, examines the patterns and drivers of Russian emigration to the West since 2000 based on the findings from focused interviews and surveys with new Russian émigrés in four key cities in the United States and Europe.


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“Two years ago, the Kremlin attacked the United States through a coordinated influence operation targeting the 2016 presidential elections,” writes Dr. Alina Polyakova in The Kremlin’s Trojan Horses 3.0: Russian Influence in Denmark, The Netherlands, Norway, and Sweden, a new report from the Atlantic Council’s Eurasia Center. Following successful installments on Russian influence in France, Germany, Greece, Italy, Spain, and the United Kingdom, the report examines Russian efforts to establish a political presence in Northern Europe.

This report is the final installment of a three-year-long project that sought to expose a less often discussed element of the Kremlin’s political warfare: the cultivation of political allies in Europe’s core. The aim of the project is to draw attention to Western Europe, where for far too long the Russian threat was either dismissed, ignored, or overlooked. As is now known, the Kremlin’s tentacles do not stop in Ukraine, Georgia, or East Central Europe. They reach far and deep in the core of western societies. Acknowledging the ongoing threat is the first step to countering its effects and building long-term resilience.
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Territories between great powers—borderlands—have always been areas of strife. So it is with the countries caught between Russia and the West, those that were once part of the Soviet Union or firmly within its sphere of influence. Much of Europe has consolidated and, with the United States, established a lasting liberal democratic order, but Russia has been increasingly pushing back. Though most of the “borderlands” countries are now West-facing, Moscow wants to control at least the national security policies of its near neighbors.

The West should reject Moscow’s claim. It contradicts Western principles and is dangerous to our interests. The United States should lead the West in adopting an explicit strategy of promoting democracy, open markets, and the right of nations to choose their own foreign policy and alignments. This includes their right, if they meet the conditions, to join the EU and NATO.
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Russian President Vladimir Putin’s persistent efforts to influence the domestic politics of his neighbors and countries well beyond Russia’s borders have posed enormous challenges in Europe and across the Atlantic. More than any other country, Ukraine has been the unwanted recipient of Moscow’s attention, particularly during the past five years. The Kremlin has sought to place a pliable client in command in Kyiv and block Ukraine’s Euro-Atlantic aspirations, including by pressuring the previous Ukrainian leadership against signing. The March 2019 presidential election will be a pivotal event in Ukraine’s history.
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International political dark money is a crucial, but little-understood, part of a toolkit of techniques that have been used, with accelerating intensity, to influence major liberal democracies and transition states over the last decade. Using three concrete case studies, this report outlines the active threat of dark money in the context of hostile powers’ subversion operations, explains how current legislation and enforcement mechanisms are inadequate, and proposes a “layered defense.”
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The Republic of Moldova, a sliver of land bordering the European Union (EU) and NATO’s eastern edge, finds itself at a critical crossroads twenty-seven years after gaining independence from the Soviet Union. Eager to forge closer ties with Brussels and Washington, the government has made concerted efforts to bring the country closer in line with the West’s expectations and conditions required for a strong ally and partner. Genuine progress has been made over the past couple of years and the country has achieved financial and economic stability with the support of its development partners; it has reached over 4 percent economic growth, lowered inflation, fixed huge problems in the banking sector, and replaced Russia with the EU as its main trading partner.
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Today, Moldova is the site of a competition between two groups, vying for the country’s domestic and geopolitical orientation; Russia on the one hand and the United States and European Union on the other. Recent Russian policy documents, such as the Foreign Policy Concepts released in 2016, all identify the post-Soviet space as one of Moscow’s top priorities. Moldova does not top of the list in this region, but it is far more significant for Russian policy makers than most Western interlocutors realize.

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While the West continues to support efforts to democratize the countries of the Eastern Partnership (EaP), shifting international trends threaten to slow the momentum. Increasing confrontation among Western leaders—evidenced, inter alia, by the outbreak of protectionist trade policies and Donald Trump’s dissociation from G7 positions at the June 2018 summit in Quebec—can have unintended consequences across the EaP region, which needs Western harmony if it is to align with Euro-Atlantic visions of common values and security.
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Since the recession of 2008-09, the Russian economy has experienced dramatic highs and lows. Oil prices, sanctions, and geopolitics have all had an impact. Dr. Sergey Aleksashenko, a nonresident senior fellow for global economy and development at the Brookings Institution, analyzes the scale of the impact and the impact of the Russian government's economic and financial support. Dr. Aleksashenko discusses the short-term constraints and the long term challenges for Russian economic growth.


    

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