Defense In Depth
Why U.S. Security Depends on Alliances—Now More Than Ever
In December 2013, competing factions of South Sudan’s ruling party plunged the country into a horrific civil war as they fought over the spoils of the world’s newest state. Now in its fourth year, the conflict has ravaged the economy, resulted in tens of thousands of deaths, brought hundreds of thousands to the brink of famine, and displaced more than four million people, making this Africa’s largest refugee crisis since the 1994 genocide in Rwanda. And yet, amid all the suffering, a small clique of government elites and their cronies inside and outside South Sudan have benefited financially from the fighting, siphoning off the country’s oil wealth and storing the money in their private bank accounts and in luxury real estate in neighboring countries.
South Sudan’s top officials and their families and associates serve as the main beneficiaries to lucrative contracts, and they steal an astonishing amount from state coffers. As a new Sentry investigation reveals, between 2014 and 2015, top politicians, military leaders, government agencies, and companies owned by politicians and their family members have plundered more than $80 million. To name but one example, Mary Ayen Mayardit, the wife of President Salva Kiir, partially owns an air cargo company that received half a dozen payments from the state oil company, Nilepet. The funds were then used toward military and national security operations, including three payments during an intense period of fighting between April and May 2015. This opaque military procurement process enables the first family to benefit financially from the war—a massive conflict of interest.
Other documents obtained by the Sentry show how Stephen Dhieu Dau, the petroleum minister at the time, used oil revenue to support a militia that had allegedly committed atrocities. A company partly owned by Ajok Wol Atak, the wife of then military chief of staff Paul Malong Awan; Bol Aguer Dok, the nephew of Dau; and Garwec Nyok Kekui, a business associate of the petroleum minister, also received payments from Nilepet for war-related operations at the height of the conflict in early 2015. Each of these same officials also owns high-end properties in neighboring Kenya and Uganda. Their fortunes are tucked away, safely outside of South Sudan’s borders, while a war they created rages on, making life hell for the rest of the country’s population.
The scenario in South Sudan is hardly unique. Something similar plays out across many African countries torn by conflict, including the Central African Republic, the Democratic Republic of the Congo, and Sudan. Oil, gold, diamonds, cobalt, copper, and a variety of other mineral deposits and trafficked wildlife provide immense opportunity for those in power to line their own pockets. Brutally repressing all forms of opposition is seen as the only way to maintain control of the spoils.
Remarkably, there is currently no coordinated strategy to disrupt the illicit siphoning of money by leaders and their foreign business partners. For leaders, giving up power almost certainly means losing access to their spoils, and it might even mean facing prosecution. Every year, billions of aid dollars pour into Africa: taxpayers and donors around the world fund peacekeeping forces, state-building programs, humanitarian assistance, elections, and peace processes. But none of this support has been able to keep corrupt leaders and their network of beneficiaries from stealing billions of dollars.
Every year, billions of aid dollars pour into Africa: taxpayers and donors around the world fund peacekeeping forces, state-building programs, humanitarian assistance, elections, and peace processes. But none of this support has been able to keep corrupt leaders and their network of beneficiaries from stealing billions of dollars.
This is the fatal flaw of peacemaking in Africa: those supporting mediation lack the leverage necessary to stop corrupt figures from using their forces to bomb, burn, imprison, silence, torture, starve, impoverish, kill, and rape to maintain or gain power. South Sudanese peace talks, for example, are currently stuck because Kiir and his allies have rejected any notion of sharing power with the rebels, since such an arrangement would require giving up their exclusive grip on the crudely-constructed looting machine masquerading as a government.
For years, the tool of choice for building leverage against actors undermining peace or human rights has been to impose targeted sanctions. But sanctions have been used sparingly in Africa. They have been applied to only a few individuals at a time, with very little enforcement, and are rarely extended to predatory commercial collaborators, both inside and outside Africa, who facilitate and enable official misdeeds. Over time, warring parties have come to regard sanctions as a vague annoyance for their public relations rather than as any serious threat to their power. The Obama and Trump administrations recently removed comprehensive sanctions against neighboring Sudan, but were unable to extract meaningful changes in Khartoum’s behavior. This move is a potent example of the folly of current peace efforts in Africa, which have for the most part eschewed the use of readily available tools for applying pressure that are both more sophisticated and better focused.
This standard but failing approach can change. Serious financial pressure with real bite is not only possible; it has proved effective in the past.
As a start, sanctions must be levied against entire networks, not just individuals. That was the approach the United States took with Iran and North Korea in order to drive them to the negotiating table. The United States deployed extensive sanctions targeting Iran’s leadership and military networks in an effort to disrupt the illicit funding streams used by the country’s ruling elites to maintain their grip on Iran’s economy. For example, in June 2013, the U.S. Treasury Department blacklisted the Execution of Imam Khomeini’s Order, a state-owned entity that includes 37 ostensibly private businesses located around the world, many of which were used as front companies meant to evade sanctions. They generated and controlled massive, off-the-books investments that they hid from both the Iranian people and international regulators.
Sanctions that target networks in this way are powerful tools for changing behavior and pressuring targeted individuals to come to the negotiating table. These “network sanctions” work because they affect not only the primary individual themselves but also those who are acting on their behalf and entities owned or controlled by the primary individual. By sanctioning these individuals and entities at once, or in close succession, the individual’s network does not have enough time to absorb and adjust to the financial impact of being cut off from the U.S. financial system.
Although it may be too early to say, the fact that Leader Kim Jong Un agreed to a moratorium on missile testing—and that there is now an expected meeting between Kim and President Donald Trump in the works (as controversial as it might be)—suggests that the sanctions over the last year or so have worked. So far, the current administration has sanctioned more North Korean targets than were sanctioned during the entire Obama presidency.
Perhaps the best example of systemic sanctions, or “network sanctions,” is in counternarcotics. Under the Foreign Narcotics Kingpin Designation Act, the U.S. Treasury Department regularly sanctions the networks of drug cartels, including individuals acting on their behalf and companies owned or controlled by them. This approach has been used extensively in Colombia, where the U.S. Treasury’s use of network sanctions, alongside Colombian banks’ voluntary compliance with these sanctions, has dramatically limited the ability of drug trafficking organizations to operate and move their money. Laundering the proceeds of drug sales is no different from laundering the proceeds of other crimes, such as corruption. The approach should thus be the same. Going after the accountants, the lawyers, and the bankers—or the “money guys”—is essentially striking the Achilles’ heel of these kinds of malign actors.
A comprehensive strategy of using financial pressure for peace and human rights in South Sudan and other African war zones would cost very little. But it would give African mediators and their supporters in Washington, London, and elsewhere leverage in peace negotiations.
Systemic sanctions would have a dramatic effect in South Sudan, the Central African Republic, and Congo, all places where interlocking kleptocratic networks involving political and military officials, allied businessmen, arms dealers, and international financial facilitators profit from mayhem. In December, the U.S. government, using the newly minted authorities of the Global Magnitsky Act (an incredibly potent tool that enables the executive branch to sanction or revoke the U.S. visas of individuals who violate human rights or are engaged in corruption), took an important first step in this regard by sanctioning the Israeli mining tycoon Dan Gertler, who is a close friend of Congolese President Joseph Kabila. The sanction also targeted one of Gertler’s close associates and 19 of his and his associates’ companies. One of Kiir’s key business proxies and two of his companies were also targeted in the same action. The U.S. Treasury Department, as well as its counterparts in the European Union and elsewhere, should go further, escalating the financial pressures against entire networks in South Sudan and in other conflict zones.
For these sanctions to work, however, they need to be enforced. Most governments and banks do not prioritize the collection of evidence on Africa’s illicit financial flows, which means that companies benefiting from them face little risk of getting caught. But some private companies are risk averse, especially major banks, which have faced huge penalties in recent years from the U.S. Treasury for failing to comply with sanctions and anti-money-laundering laws. In September, a bureau of the U.S. Treasury Department issued an advisory warning of the risks of money laundering when conducting business in South Sudan or with South Sudanese officials and their families, even when such activity takes place outside of the country. This move significantly raised the profile of South Sudanese corruption and money laundering, prompting regional and global banks to begin conducting long-overdue investigations and taking action against specific accounts. Other financial authorities around the world should follow suit by issuing alerts that deter companies from doing business with unseemly actors.
Since Kenya and Uganda have capable financial regulators of their own, and are uniquely exposed to the illicit activity of South Sudanese officials due to their geographic proximity and their ongoing relationships with regional financial institutions, the national authorities there should take the lead in ensuring that their financial institutions exercise enhanced due diligence when dealing with South Sudanese officials and their associates. This should include enforcing the international standards established by the Financial Action Task Force, a global organization that fights money laundering and terrorist financing. Officials in Kenya and Uganda should also work closely with major domestic financial institutions and with global banks that move U.S. dollars. U.S. banks that maintain relations with local banks in Kenya and Uganda to clear transactions in U.S. dollars, and European banks that do the same for euros, should ensure that they are maintaining high standards for their correspondent partners in the region, many of whom are the first point of entry for South Sudanese officials seeking to access the international financial system. Furthermore, the U.S. Treasury’s financial intelligence unit, FinCEN, should enact anti-money laundering controls on specific types of transactions, such as high-end real estate and luxury vehicles, and should fine banks that are found to be connected to money laundering. The Sentry, for its part, has worked to plug major gaps in financial intelligence gathering by governments in eastern and central Africa, and has turned over dossiers to governments and banks for action. Policymakers, bankers, and prosecutors can thus no longer claim not to know where stolen money ends up.
Finally, Washington must take advantage of the fact that war criminals and their facilitators tend to use U.S. dollars to move their spoils through the international financial system. Such activities often fall under the jurisdiction of the U.S. Treasury Department, and any banks that conduct business in U.S. dollars are required to report on suspicious activities and shut them down when they find evidence of illicit transactions. The United States is just beginning to deploy anti-money-laundering measures in South Sudan, but similar efforts could also help stem mass violence in Congo as Kabila uses every trick in the book to hang onto power long after his constitutional mandate has expired.
A comprehensive strategy of using financial pressure for peace and human rights in South Sudan and other African war zones would cost very little. But it would give African mediators and their supporters in Washington, London, and elsewhere leverage in peace negotiations. It would put new wind in the sails of African anticorruption and human rights activists, create real accountability for the mass theft of Africa’s resources, and finally begin to dismantle the system that incentivizes those in power to hijack the government for personal enrichment. Without taking aggressive measures to go after the spoils that drive conflict in South Sudan and other African countries, it is difficult to imagine any future other than one of deepening repression, growing famine, and spiraling warfare.