Commerce

Commerce
Opaque financial flows from authoritarian influencers undermine the rule of law and democratic governance in recipient countries.
Overview
The extraordinary growth of international trade and investment is a defining feature of globalization. In this enabling environment, authoritarians wield state-owned and nominally private economic entities as political instruments. The state-capture systems mastered by oligarchs while building power and influence at home are being deployed abroad and used by authoritarian powers to gain a foothold in strategic markets such as energy, telecommunications, and banking.

Authoritarian “corrosive capital” is enabled by weak legal safeguards and limited accountability and transparency mechanisms. The openness of the international financial system also makes it difficult to identify linkages to authoritarian actors who can easily route funds through firms registered under beneficial ownership accounts in third-party countries.
Sharp Power Influence
Autocratic actors leverage capital to exaggerate governance gaps and influence economic, political, and social developments in recipient countries through multiple mechanisms :
- State-sponsored loans that mimic traditional development assistance
- Support for large-scale infrastructure projects that rope countries into long-term, lopsided economic relationships
- Foreign direct investment by nominally private firms that are ultimately linked to an authoritarian state-backed entity
- Restricted market access that induces foreign companies to tout authoritarian narratives and censor content deemed unfavorable
These efforts are not necessarily predicated on huge amounts of money but instead stem from strategically-focused agreements with well-connected elites in strategic sectors of open societies.
Corrosive capital hides amid layers of larger exchanges with authoritarian regimes, the majority of which may appear legitimate and can have a financial, political, or cultural character. As established democracies and their private sectors come to grips with the threat posed by strategic corruption, democracies with less developed institutional frameworks for preventing corruption and providing transparency are at an even greater risk.
The Kremlin’s ability to wield state-owned and nominally private economic entities as political instruments, swiftly and without visible deliberation, has allowed it to achieve outsized global influence.
Democratic Responses
Civil society can help bolster the institutions and accountability mechanisms needed for a strong defense against authoritarian corrosive capital.
Norms and Standard Setting
- Private sector firms should adopt business strategies that prevent authoritarian actors from inducing the revision of public statements, the sanctioning of employees, the alteration of maps, and the like.
- Businesses should weigh the reputational risks associated with censoring content, especially when authoritarian demands conflict with the expectations of their consumers.
Cross-Sector Collaboration
- National security agencies, antitrust authorities, and financial market regulators should strengthen their capacity to investigate money-laundering activities in cooperation with civil society and whistleblowers.
- Civil society activists, think tank analysts, and investigative journalists can collaborate to follow financial flows and study negotiations, agreements, and transactions in local settings.
Education and Awareness
- Civil society-led efforts to expose domestic and foreign state-capture practices are an effective check on corrosive capital inflows linked to large-scale infrastructure projects or strategic mergers and acquisitions.
Commerce
The reporting and analysis catalogued in the Portal illustrates how authoritarian powers compromise the integrity of civic institutions in countries around the world through corrosive capital agreements and opaque investments.

Latest Resources
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Source: Atlantic Council
Publication Date: April 19, 2022
China’s Discourse Power Operations in the Global South: An Overview of Chinese Activities in Sub-Saharan Africa, Latin America, and the Middle East
Authoritarian Country: China
Affected Region: Middle East and North Africa, South Africa, Iran, Venezuela, Sub-Saharan Africa, Latin America and the Caribbean
Author: Kenton Thibaut
Case studies on South Africa, Venezuela, and Iran reveal evidence of a symbiotic relationship between Beijing’s efforts to enhance its discourse power—including by co-opting the voices of foreign leaders—and local governments’ efforts to weaken the checks and balances that civil…
Source: The Diplomat
Publication Date: April 15, 2022
The CCP’s Ukraine War Propaganda
Authoritarian Country: Russia, China
Affected Region: Global
Author: Sarah Cook
Three tactics played an outsized role in the Chinese Communist Party’s campaign to shape public opinion about Russia’s invasion of Ukraine: flagship state media echoing Russian state disinformation, manipulation of social media hashtags, and censorship of alternative viewpoints and information…
Source: Journal of Democracy
Publication Date: April 14, 2022
How Beijing Runs the Show in Hollywood
Authoritarian Country: China
Affected Region: North America, United States
Author: Aynne Kokas
The relationship between PRC rules, the Chinese entertainment industry, and U.S. media conglomerates underscores a transition in the role of entertainment in politics. Beijing increasingly weaponizes technology and corporations’ dependence on political authorities for market access to control content.
Source: Journal of Democracy
Publication Date: April 14, 2022
China’s Tech-Enhanced Authoritarianism
Authoritarian Country: China
Affected Region: Global
Author: Samantha Hoffman
Emerging technologies, particularly those utilizing big data, are a critical component of the Chinese Communist Party’s efforts to manipulate global audiences. Large datasets can reveal trends in human behavior, enabling the party-state to better understand public sentiment and disseminate propaganda.
Source: Doublethink Lab
Publication Date: March 30, 2022
Analysis: How Ukraine Has Been Nazified in the Chinese Information Space?
Authoritarian Country: China
Affected Region: Ukraine, Europe
Author: Jerry Yu
Previously established cooperation agreements laid the groundwork for Russian and Chinese state media and state-linked social media to work in tandem to influence public opinion in China, Taiwan, and the Chinese diaspora in favor of the invasion of Ukraine on…
Source: Associated Press
Publication Date: March 29, 2022
How China’s TikTok, Facebook Influencers Push Propaganda
Authoritarian Country: China
Affected Region: Global
Author: Amanda Seitz, Eric Tucker, Mike Catalini
The Chinese Communist Party has built a network of social media personalities who proffer propaganda to users around the globe, operating in lockstep as they deflect international criticism of human rights abuses and advance Beijing’s talking points on world affairs…