December 26, 2023
On December 26, 1991, the New York Times ran a banner headline: “Gorbachev, Last Soviet Leader, Resigns; U.S. Recognizes Republics’ Independence.” On December 25, Soviet president Mikhail Gorbachev had resigned, marking the end of the Union of Soviet Socialist Republics, often referred to as the Soviet Union or USSR.
Former Soviet republics had begun declaring their independence in March 1990, the Warsaw Pact linking the USSR’s Eastern European satellites into a defense treaty dissolved by July 1991, and by December 1991 the movement had gathered enough power that Belarus, Russia, and Ukraine joined together in a “union treaty” as their leaders announced they were creating a new Commonwealth of Independent States. When almost all the other Soviet republics announced on December 21 that they were joining the new alliance, Gorbachev could either try to hold the USSR together by force or step down. He chose to step down, handing power to the president of the Russian Federation, Boris Yeltsin.
The dissolution of the USSR meant the end of the Cold War, and those Americans who had come to define the world as a fight between the dark forces of communism and the good forces of capitalism believed their ideology had triumphed. Two years ago, Gorbachev said that with the collapse of the Soviet Union, "They grew arrogant and self-confident. They declared victory in the Cold War."
The collapse of the USSR gave the branch of the Republican Party that wanted to destroy the New Deal confidence that their ideology was right. Believing that their ideology of radical individualism had destroyed the USSR, these so-called Movement Conservatives very deliberately set out to destroy what they saw as Soviet-like socialist ideology at home. As anti-tax crusader Grover Norquist wrote in the Wall Street Journal: “For 40 years conservatives fought a two-front battle against statism, against the Soviet empire abroad and the American left at home. Now the Soviet Union is gone and conservatives can redeploy. And this time, the other team doesn't have nuclear weapons.”
In the 1990s the Movement Conservatives turned their firepower on those they considered insufficiently committed to free enterprise, including traditional Republicans who agreed with Democrats that the government should regulate the economy, provide a basic social safety net, and promote infrastructure. Movement Conservatives called these traditional Republicans “Republicans in Name Only” or RINOs and said that, along with Democrats, such RINOs were bringing “socialism” to America.
With the “evil empire,” as President Ronald Reagan had dubbed the Soviet Union, no longer a viable enemy, Movement Conservatives, aided by new talk radio hosts, increasingly demonized their domestic political opponents. As they strengthened their hold on the Republican Party, Movement Conservatives cut taxes, slashed the social safety net, and deregulated the economy.
At the same time, the oligarchs who rose to power in the former Soviet republics looked to park their illicit money in western democracies, where the rule of law would protect their investments. Once invested in the United States, they favored the Republicans who focused on the protection of wealth rather than social services. For their part, Republican politicians focused on spreading capitalism rather than democracy, arguing that the two went hand in hand.
The financial deregulation that made the U.S. a good bet for oligarchs to launder money got a boost when, shortly after the September 11, 2001, attacks, Congress passed the PATRIOT Act to address the threat of terrorism. The law took on money laundering and the illicit funding of terrorism, requiring financial institutions to inspect large sums of money passing through them. But the Financial Crimes Enforcement Network (FinCEN) exempted many real estate deals from the new regulations.
The United States became one of the money-laundering capitals of the world, with hundreds of billions of dollars laundered in the U.S. every year.
In 2011 the international movement of illicit money led then–FBI director Robert Mueller to tell the Citizens Crime Commission of New York City that globalization and technology had changed the nature of organized crime. International enterprises, he said, “are running multi-national, multi-billion dollar schemes from start to finish…. They may be former members of nation-state governments, security services, or the military…. These criminal enterprises are making billions of dollars from human trafficking, health care fraud, computer intrusions, and copyright infringement. They are cornering the market on natural gas, oil, and precious metals, and selling to the highest bidder…. These groups may infiltrate our businesses. They may provide logistical support to hostile foreign powers. They may try to manipulate those at the highest levels of government. Indeed, these so-called ‘iron triangles’ of organized criminals, corrupt government officials, and business leaders pose a significant national security threat.”
In 2021, Congress addressed this threat by including the Corporate Transparency Act in the National Defense Authorization Act. It undercut shell companies and money laundering by requiring the owners of any company that is not otherwise overseen by the federal government (by filing taxes, for example, or through close regulation) to file with FinCEN a report identifying (by name, birth date, address, and an identifying number) each person associated with the company who either owns 25% or more of it or exercised substantial control over it. The measure also increased penalties for money laundering and streamlined cooperation between banks and foreign law enforcement authorities.
But that act wouldn’t take effect for another three years.
Meanwhile, once in office, the Biden administration made fighting corruption a centerpiece of its attempt to shore up democracy both at home and abroad. In June 2021, Biden declared the fight against corruption a core U.S. national security interest. “Corruption threatens United States national security, economic equity, global anti-poverty and development efforts, and democracy itself,” he wrote. “But by effectively preventing and countering corruption and demonstrating the advantages of transparent and accountable governance, we can secure a critical advantage for the United States and other democracies.”
In March 2023 the Treasury told Congress that “[m]oney laundering perpetrated by the Government of the Russian Federation (GOR), Russian [state-owned enterprises], Russian organized crime, and Russian elites poses a significant threat to the national security of the United States and the integrity of the international financial system,” and it outlined the ways in which it had been trying to combat that corruption. “In light of Russia’s further invasion of Ukraine,” it said, “we must redouble our efforts to prevent Russia from abusing the U.S. financial system to sustain its war and counter Russian sanctioned individuals and firms seeking to exploit vulnerabilities in the U.S. financial system.”
The collapse of the USSR helped to undermine the Cold War democracy that opposed it. In the past 32 years we have torn ourselves apart as politicians adhering to an extreme ideology demonized their opponents. That demonization also helped to justify the deregulation of our economy and then the illicit money from the rising oligarchs it attracted, money that has corrupted our democratic system.
But there are at least signs that the financial free-for-all might be changing. The three years are up, and the Corporate Transparency Act will take effect on January 1, 2024.
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Notes:
https://www.politico.com/news/2021/12/25/gorbachev-resign-soviet-union-russia-526141
https://www.cbsnews.com/news/gorbachev-says-u-s-became-arrogant-after-soviet-union-collapsed/
Grover C. Norquist, “How Conservatism Stumbled After Reagan,” Wall Street Journal, August 3, 1994, p. A8.
https://www.chathamhouse.org/2021/12/uks-kleptocracy-problem/02-supply-and-demand
https://irp.fas.org/offdocs/nsm/nssm-1.pdf
https://www.treasury.gov/press-center/press-releases/Documents/js1751.pdf
https://archives.fbi.gov/archives/news/speeches/the-evolving-organized-crime-threat
https://rollcall.com/2020/12/23/trump-vetoes-defense-bill/
https://home.treasury.gov/system/files/136/Treasury-NDAA-Ru-IFR-508.pdf
The hubris of the US after the fall of the Soviet Union is an example of the complete lack of foresight and wisdom of the GOP in contrast to the democrats post WWll help in rebuilding Japan and Germany making Allie’s who were once enemies.
Thanks Heather!
Thank you Heather. Certainly Reagan took undue credit for the Berlin wall. The former Soviet Union became entangled in too many conflicts and proxy wars, which drained its economy. For example, their own Afghanistan adventure (which preceded our own).
The conservatives fought against FDR and the New Deal during its implementation. And perhaps in some narrow cases, due to the thought of individualism over collectivism. Nevertheless, the funding of the GOP machine is directed, not as a political donation to cause gun rights to proliferate everywhere while eliminating Women's rights (and other important hard-earned rights). The funding is an investment with a return on investment being far more attractive than any yield offered by the stock or bond market. And it is all about the concentration of wealth, and thus power.
The obscenely wealthy don't care whether an impoverished 15 year old has to flee her home state to gain access to healthcare. They don't care if someone is shooting up a public school or mall -they won't be spending time in either. They merely care that there will not be a wealth tax. They care that they can amass generational wealth and pass it along to their heir(s) -unimpeded by estate taxes. They don't want anyone to touch offshore tax havens and loopholes -allowing them to pile wealth on top of wealth -while shifting the burden of debt to the working class in terms of higher income and sales taxes, or to the impoverished -through the elimination of vital social programs.
The USSR was simply a useful boogeyman, the monster under the bed. The real enemy is the public, little profit-centers who should just obediently mass-consume and stay out of topics like equity, justice, and democracy.
If Americans could stop falling into the trap set by people like Grover Norquist, Paul Weyrich, Newt Gingrich, and others, could stop allowing themselves to be intentionally divided by Rupert Murdoch, they could collaborate across declared political ideologies, transcend different religions, and bring responsible gun owners together with those working to prevent gun violence -and put America back on track toward the beacon of democracy it has the potential to be. If we continue on the road we are on it will simply be a footnote in history books of the future as a nice try and failed experiment. Of course, no worries that real history might actually be taught someday.