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Kleptocracy (from Ancient Greek κλέπτης (kléptēs, “thief”), κλέπτω (kléptō, “steal”), from Proto-Indo-European *klep- (“to steal”); and from the Ancient Greek suffix -κρατία (-kratía), from κράτος (krátos, “power, rule”; klépto- thieves + -kratos rule, literally "rule by thieves") is a government with corrupt leaders (kleptocrats) that use their power to exploit the people and natural resources of their own territory in order to extend their personal wealth and political power. Typically this system involves embezzlement of funds at the expense of the wider population.
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Kleptocracies are generally associated with dictatorships, oligarchies, military juntas, or other forms of autocratic and nepotist governments in which external oversight is impossible or does not exist. This lack of oversight can be caused or exacerbated by the ability of the kleptocratic officials to control both the supply of public funds and the means of disbursal for those funds. Kleptocratic rulers often treat their country's treasury as a source of personal wealth, spending funds on luxury goods and extravagances as they see fit. Many kleptocratic rulers secretly transfer public funds into hidden personal numbered bank accounts in foreign countries to provide for themselves if removed from power.
Kleptocracy is most common in developing countries whose economies are based on the export of natural resources. Such export incomes constitute a form of economic rent and are easier to siphon off without causing the income to decrease.
A specific case of kleptocracy is Raubwirtschaft, German for "plunder economy" or "rapine economy", where the whole economy of the state is based on robbery, looting and plundering the conquered territories. Such states are either in continuous warfare with their neighbours or they simply milk their subjects as long as they have any taxable assets. Such rapine-based economies were commonplace in the past before the rise of Capitalism. Arnold Toynbee has claimed the Roman Empire was basically a Raubwirtschaft
The effects of a kleptocratic regime or government on a nation are typically adverse in regards to the welfare of the state's economy, political affairs and civil rights. Kleptocratic governance typically ruins prospects of foreign investment and drastically weakens the domestic market and cross-border trade. As kleptocracies often embezzle money from their citizens by misusing funds derived from tax payments, or engage heavily in money laundering schemes, they tend to heavily degrade quality of life for citizens.
In addition, the money that kleptocrats steal is diverted from funds earmarked for public amenities such as the building of hospitals, schools, roads, parks – having further adverse effects on the quality of life of citizens. The informal oligarchy that results from a kleptocratic elite subverts democracy (or any other political format).
In early 2004, the German anti-corruption NGO Transparency International released a list of what it believes to be the ten most self-enriching leaders in the past two decades. In order of amount allegedly stolen USD, they were:
- Former Indonesian President Suharto ($15 billion – $35 billion)
- Former Philippine President Ferdinand Marcos (at least $10 billion by 1986, equivalent to about $21.6 billion in 2014 dollars)
- Former Congolese President Mobutu Sese Seko ($5 billion)
- Former Nigerian Head of State Sani Abacha ($2 billion – $5 billion)
- Former Yugoslav President Slobodan Milošević ($1 billion)
- Former Haitian President Jean-Claude Duvalier ("Baby Doc") ($300 million – $800 million)
- Former Peruvian President Alberto Fujimori ($600 million)
- Former Ukrainian Prime Minister Pavlo Lazarenko ($114 million – $200 million)
- Former Nicaraguan President Arnoldo Alemán ($100 million)
- Former Philippine President Joseph Estrada ($78 million – $80 million)
The Russian president Vladimir Putin is alleged to be the "head of the clan", whose assets are estimated at over $200 billion. A list of Russian and Ukrainian politicians associated with "kleptocratic style" has been published by the Kleptocracy Archives project.
In addition, other sources have listed former PLO Chairman Yasser Arafat as having stolen $1 billion to $10 billion; and Pakistani President Asif Ali Zardari to have received kickbacks on contracts and misappropriating public funds, siphoning over $2 billion to his Swiss accounts. Moreover, the International Consortium of Investigative Journalist have outlined that current Prime Minister of Pakistan Nawas Sharif has created offshore companies through the Panamanian law firm Mosssak Fonseca to hide vast amount of money illegally transferred from Pakistan in the name of children.
China's former prime minister, Wen Jiabao, left office in 2013 with his close relatives controlling assets worth at least $2.7 billion. These revelations were censored in print and censored online in China.
The term kleptocracy was also used to refer to the Russian economy soon after the Soviet collapse in 1991. The "democrats," led by Yegor Gaidar and Anatoly Chubais, freed prices in 1992 and unleashed hyperinflation before they privatized Russia's assets. Most Russian citizens lost their savings in only a few weeks. A few billionaire "oligarchs" amassed fortunes not by creating new enterprises, but by arbitraging the huge difference between old domestic prices for Russian commodities and the prices prevailing on the world market. Instead of investing in the Russian economy, they stashed billions of dollars in Swiss bank accounts. Experts estimate that as much as $15 billion left Russia each year as either capital flight or laundered money from illegal transactions. Referring to Russia, Daniel Kimmage also used the terms: "kerdocracy" ("rule based on the desire for material gain") or "khrematisamenocracy" ("rule by those who transact business for their own profit").
South Sudan obtained independence in July 2011 as a kleptocracy – a militarized, corrupt neo-patrimonial system of governance. By the time of independence, the South Sudanese “political marketplace” was so expensive that the country's comparatively copious revenue was consumed by the military-political patronage system, with almost nothing left for public services, development or institution building. The efforts of national technocrats and foreign donors produced bubbles of institutional integrity but the system as a whole was entirely resistant to reform. The January 2012 shutdown of oil production bankrupted the system. Even an experienced and talented political business manager would have struggled, and President Salva Kiir did not display the required skills. No sooner had shots been fired than the compact holding the SPLA together fell apart and civil war ensued. Drawing upon long-term observation of elite politics in South Sudan, this article explains both the roots of kleptocratic government and its dire consequences.
In 2016, the FBI announced it was trying to retrieve around $1 billion in funds associated with 1Malaysia Development Berhad, an investment fund owned by the government of Malaysia. This was the largest single action ever brought under the Kleptocracy Asset Recovery Initiative.
A narcokleptocracy is a society in which criminals involved in the trade of narcotics have undue influence in the governance of a state. For instance, the term was used to describe the regime of Manuel Noriega in Panama in a report prepared by a subcommittee of the United States Senate Committee on Foreign Relations Committee chaired by Massachusetts Senator John Kerry. The term narcostate has the same meaning.
- Crony capitalism
- Elite capture
- Failed state
- Kleptocracy Tour
- Mafia state
- Political corruption
- Rentier state
- Liddell, Henry George &Scott, Robert. An Intermediate Greek-English Lexicon. Oxford. Clarendon Press. 1889.
- wordreference webpage
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- Hunt, Luke (January 8, 2013). "End of 30-Year Hunt for Marcos Billions?". The Diplomat, Asian Beat section.
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- Ezrow, Natasha M. & Franz, Erica (2011). Dictators and Dictatorships: Understanding Authoritarian Regimes and Their Leaders. Continuum Publishing. p. 135. ISBN 978-1-4411-7396-6.
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- For a general overview of the crucial importance of foreign funding in the peace process, and the PNA's use of such aid, see Rex Brynen, A Very Political Economy: Peacebuilding and Foreign Aid in the West Bank and Gaza, United States Institute of Peace Press, 2000
- Stahl, Lesley (2003-11-09). "Arafat's Billions, One Man's Quest To Track Down Unaccounted-For Public Funds". CBS News. Retrieved 2007-07-21.
- Backgrounder: Corruption in the PLO’s Financial Empire Archived December 14, 2014, at the Wayback Machine.
- "Panama Papers: Pakistan PM Nawaz Sharif to face investigators". 20 April 2017 – via www.bbc.com.
- LaSusa, Mike; Asmann, Parker (June 12, 2017). "Corruption Is the 'Operating System' in Honduras: Report". InSight Crime. Retrieved June 15, 2017.
- Chayes, Sarah (May 30, 2017). "When Corruption Is the Operating System: The Case of Honduras". Carnegie Endowment for International Peace. Retrieved June 15, 2017.
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- Johanna Granville, "Dermokratizatsiya and Prikhvatizatsiya: The Russian Kleptocracy and Rise of Organized Crime,"Demokratizatsiya (summer 2003), pp. 448-457.
- Kimmage, Daniel (2008-08-12). "Russian 'Hard Power' Changes Balance In Caucasus". Rferl.org. Retrieved 2014-03-29.
- Freel, By Chrystia. "Some cracks in the technocrat cult".
- "U.S. Seeks to Recover $1 Billion in Largest Kleptocracy Case to Date".
- Subcommittee on Terrorism, Narcotics and International Operations, Committee on Foreign Relations, United States Senate (December 1988). "Panama". Drugs, Law Enforcement and Foreign Policy: A Report (PDF). S. Prt. 100-165. Washington, D.C.: United States Government Printing Office (published 1989). p. 83. OCLC 19806126. Archived from the original (PDF) on 7 October 2016.
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