How Russian oligarchs, the Saudis, and China are swaying American elections

Hello friends,

In 2017, Donald Trump repeatedly lied that between 3 and 5 million unauthorized immigrants had voted for Hillary Clinton. In the last few weeks, Trump has resurrected his lie during campaign rallies for the Republican primary candidates he has endorsed — whipping up fears of “open borders and horrible elections,” and calling for stricter voter ID laws and proof of citizenship at the ballot box.

Trump endorsees have been amplifying the lie. J.D. Vance, the Trump-backed winner of last week’s Ohio Republican Senate primary, claimed that President Biden’s immigration policy has resulted in “more Democrat voters pouring into this country.”

In fact, voter fraud is exceptionally rare, and claims that widespread numbers of undocumented immigrants are voting have been repeatedly discredited.

There is a problem of foreigners influencing American elections, however — a problem that has nothing to do with immigrants or fraudulent voting. 

The problem is foreign money flowing into U.S. campaigns.

Some of the flow is illegal. Last October, Lev Parnas, a Florida businessman who helped Rudy Giuliani’s effort to dig up dirt on Joe Biden in Ukraine, was convicted of funneling a Russian entrepreneur’s money to U.S. politicians.

The real scandal is how much foreign money flows into U.S. elections legally.

The Supreme Court’s 2010 decision in Citizens United v. Federal Election Commission opened the gates. It allows foreigners to influence U.S. elections through their investments in politically active American corporations.

The (then) five-justice conservative majority said that when it comes to political speech, the identity of the speaker is irrelevant, and that more speech is always better. In dissent, Justice John Paul Stevens argued that the logic of the Court’s ruling would allow foreign spending on American elections, threatening American interests. Stevens was right. If the identity of the speaker doesn’t matter and more speech is always better, what’s to stop foreign spending on U.S. elections?

Non-Americans whose money is now flowing into American campaigns — mostly into those of Republican candidates — include Russian oligarchs, the Saudi royal family, European financiers, Chinese corporate conglomerates, and many other people and organizations that owe their allegiance to powers other than the United States.  

This growing problem emerges from three realities:

First, foreign investors now own a whopping 40 percent of the shares of American corporations. That’s up from just 5 percent in 1982.

Second, American corporations are spending hundreds of millions of dollars to influence elections — not counting their separate corporate political action committees or personal donations by executives and employees. Much of this spending is through dark money channels that opened after the Citizens United decision.

Third, by law, corporate directors and managers are accountable to their shareholders, including foreign shareholders — not to America. As the then-CEO of U.S.-based Exxon Mobil Corp. unabashedly stated, “I’m not a U.S. company and I don’t make decisions based on what’s good for the U.S.”

The second and third of these points pose substantial threats to American democracy on their own. Add in the first, and you’ve got a sieve through which non-Americans — whose interests don’t necessarily correspond to the interests of the United States — assert growing influence over American politics.

Follow the money. In recent years, Russian billionaire oligarchs have owned significant amounts of Facebook, Twitter, and Airbnb. Saudi Arabia owns about 10 percent of U.S.-based Uber and has a seat on its board. 

Many of America’s largest corporations with substantial foreign ownership (including AT&T, Comcast, and Citigroup) have contributed millions of dollars to the Republican Attorney Generals Association, which in turn bankrolled the pro-Trump rally on the morning of the January 6 insurrection.  

What to do about this? The Center for American Progress has a sensible proposal: It recommends that no U.S. corporation with 5 percent or more of its stock under foreign ownership or 1 percent or more controlled by a single foreign owner be allowed to spend money to sway the outcomes of U.S. elections or ballot measures. Corporate governance experts and regulators agree that these thresholds capture the level of ownership necessary to influence corporate decision-making.

Okay, but how to get this proposal enacted, when big American-based corporations with significant foreign investment have so much influence over Congress?

Democrats should make this an issue in the run-up to the 2022 midterms. While Republicans rail against the utterly fake danger to the United States of undocumented immigrants voting in American elections, Democrats should rail against the real danger to American democracy of foreign money affecting American elections through foreign investments in American corporations.

What do you think?

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit robertreich.substack.com/subscribe