New York’s Metropolitan Museum of Art expelled an attorney for the Cambodian government from a Tuesday meeting between museum officials and the representatives of Cambodia’s culture ministry, heightening tensions in a yearslong campaign to press the museum to return Khmer treasures to their home country.
The attorney, Brad Gordon, has been one of the most prominent faces of Cambodia’s national effort to trace lost ancient artifacts looted during years of turbulent civil war. Gordon has worked for the Cambodian government in that capacity for a decade. Many of the pieces were trafficked to the United States and other Western nations and sold to ultrawealthy art patrons and some of the world’s largest museums, including the Met.
Officials from Cambodia’s Ministry of Culture and Fine Arts visited the Met on Tuesday as part of a U.S. State Department program that provides tours of U.S. institutions for foreigners. While the Cambodian delegations’ itinerary included stops at multiple American museums, their visit to the Met held special significance — and sensitivity — because of Cambodia’s extensive push to reclaim cultural objects from the museum.
In recent years, the museum’s Cambodian pieces have been a focal point of increasing scrutiny on the Met’s collection by journalists and law enforcement. In 2021, the International Consortium of Investigative Journalists and its partners began asking the Met questions about more than a dozen pieces in its collection that had passed through the hands of accused antiquities trafficker Douglas Latchford or his associates. This followed a long run of attention from online sleuths, including the Chasing Aphrodite blog. Latchford was indicted in 2019 by federal prosecutors in New York and accused of helping orchestrate the large-scale looting of Cambodian cultural heritage decades ago. Latchford died in 2020 before the case against him proceeded.
In March 2023, ICIJ and media partners found at least 1,109 pieces in the Met’s collection that were previously owned by individuals who had been either indicted or convicted of antiquities crimes. The museum subsequently hired a team of researchers to vet its collection, and in December it announced it would repatriate more than a dozen works to Cambodia. But that didn’t end the saga. The Cambodian government claims that dozens more of its stolen treasures remain in the Met’s collection, and it wants them back.
Gordon said that when he arrived at the Met on Tuesday, he was led to a conference room where the Cambodian delegation would meet with Met officials. Immediately upon arriving, he said, two Met attorneys approached him and asked to speak with him privately outside the conference room. He said he was then asked to gather his belongings. From there, the officials told Gordon he was barred from the meeting before a guard escorted him out of the museum, according to his account.
A Met spokesperson said that Gordon had not been invited to the meeting and was “asked politely to leave.” The spokesperson said that afterward, “The Met continued amicable discussions with their Cambodian colleagues, including a gallery tour and agreement to meet further to expand cooperation.”
Among the planned attendees at the meeting was Lucian Simmons, the Met’s new head of provenance research. Last year the museum hired Simmons to lead a team of researchers to scour and identify potentially problematic pieces in the museum’s collection. Simmons’ hiring was portrayed in the press as a sign of the museum bolstering its approach toward addressing concerns over trafficked art in its sprawling collection.
Gordon said that the exact agenda of yesterday’s meeting was unclear but related to conservation issues. He told ICIJ that he had been specifically asked to join the meeting by H.E. Hab Touch, a senior official in the Cambodian culture ministry, who is leading the delegation.
“As you know, we are in the midst of negotiations for the return of additional stolen artefacts from the Met,” Gordon said in an email to several State Department officials that he shared with ICIJ. He added that because the situation with the Met was delicate, the Cambodian delegation had been “very clear that they wanted me as their counsel to be present” in the meeting.
Gordon said he pleaded with the Met to let him stay in the meeting, with a member of the delegation even calling Cambodia’s minister of culture to affirm the importance of his attendance. Gordon added that the Met officials offered no explanation for his expulsion apart from saying it was a State Department meeting.
“After the MET rejected the Minister’s request for me to attend, I agreed to leave,” Gordon told the State Department. “I have never felt so humiliated in my life.”
The campaign is drawing to a close for Algeria’s presidential election this weekend.The only real unknown is how many voters will turn out.
Tuesday was the final day of campaigning for the vote on Saturday, 7 September, with a media blackout to be imposed from Wednesday. The outcome is largely predictable – Incumbent President Abdelmadjid Tebbounewillsecure his re-election with a majority of votes in the first of the two rounds of voting. We’ve expected, this election has proceeded without any surprises. In this country, elections tend to be meticulously orchestrated and tightly managed. Tebboune has the support of the administration as the incumbent president.He has eased relations with Algeria’s powerful military. He is also expected to benefit from a change in the election schedule, which left his rivals with less time to campaign.Originally scheduled for December, the poll was brought forward because of what the President called the current international situation and the dangers looming over Algeria.
The country typically avoids holding elections in the summer, when intense heat makes campaigning difficult – but this year’s campaign kicked off in mid-August.
While campaign staff would usually head out into streets and markets to talk to voters, in recent weeks they have tried to meet voters in their homes.
The opposition has complained of intimidation, with dozens of people arrested last month over alleged election fraud and three would-be candidates placed under judicial supervision.
The opposition leader, Fethi Ghares, was detained last week. He stands accused of insulting the president and spreading disinformation online.
the so-called ban on leaving the national territory (ISTN), rarely justified by a court decision, affects hundreds of activists, journalists, businessmen and politicians.
A prominent figure on Algeria’s secular left, Ghares was involved in the 2019 Hirak movement, the series of mass protests that led to the ousting of long-time president Abdelaziz Bouteflika.His party, the Democratic and Social Movement, succeeded the Algerian Communist Party, but was banned in February 2023.
“The situation is disastrous because civic space and freedoms have been reduced over the years since the start of the Hirak and there are strong reasons to believe that the situation could potentially get worse.
It is very difficult to do politics in Algeria. and to exist as an opponent. Some journalists or even citizens who have published posts on social media can get arrested.
A lot of people still fear repercussions and do not speak to journalists, for instance, because they are afraid for their safety.People ultimately do not make comments on politics in public, or say things that are a little general.
However Algeria’s political system itself is evolving, and is no longer set around this duality between the armed forces and the political power. Civilians are trying to have a role.
With members of the opposition calling for a boycott, however, some voters are refusing to participate.This is an authoritarian regime that does not respect the rules of democracy. Every Algerian knows the outcome of this election in advance. The current regime fully assumes its authoritarian natureAuthoritarian laws justify the repression of political opponents.In 2021, the Algerian authorities amended the penal code to qualify as a terrorist act and sabotage “any act targeting the security of the state, national unity, stability and the normal functioning of institutions”through actions that “work or incite by any means whatsoever to access power or change the system of governance by non-constitutional means and to undermine the integrity of the national territory.
Article 97 of the penal code, for example, prohibits any type of gathering, while the 2012 laws relating to political parties and associations subject the formation of an NGO or a political party to prior government approval.
In 2023, a new milestone in the restriction of freedom of expression was reached with the adoption of a law on information that bans Algerians with dual nationality from owning or being shareholders in a media outlet in Algeria.
Algerian election campaign marked by social pledges and claims of unfair play.
The last presidential election of 2019 was widely boycotted, resulting in low turnout that undermined the legitimacy of Tebboune’s victory.
The president and his supporters are hoping to up participation this time round.
The public appears to be responding positively to Tebboune’s leadership and policy decisions. The crucial question now is whether this level of support will endure, and what the implications of another five years under Tebboune’s leadership will be for Algeria’s future.”
But In its sixty-two-year modern history, Algeria has never witnessed a smooth transfer of power from one president to another.
The country’s first post-independence president was deposed in a military coup after just three years in office. The coup leader, Houari Boumediene, ruled with an iron grip for more than a decade, entrenching a system of military rule with a thin civilian façade that has endured ever since.
His successor, Chadli Bendjedid, elected in 1979, ruled until an oil price slump obliged the state to curtail social spending, provoking a crisis. His solution, a hasty political opening, nearly delivered the country to an extremist Islamist party. To prevent that outcome, the army seized power in 1992, triggering a civil war. The military tapped independence hero Mohamed Boudiaf—but soon regretted its choice when he launched ambitious anti-corruption and reform campaigns that threatened its interests. After just five months in office, Boudiaf was assassinated on live television by his own bodyguard. the army’s hand-picked candidate, former Foreign Minister Abdelaziz Bouteflika, won an election intended to turn the page on Algeria’s “dark decade.” He was reelected three times and, despite being incapacitated by poor health, remained le pouvoir’s default pick in 2019.
Tebboune, a former regional governor, housing minister, and failed prime minister—who holds the distinction of being Algeria’s shortest-serving premier, lasting less than three months in 2017—emerged as the army’s anointed pick in the controversial polls, which protesters boycotted. He was elected amid record-low turnout.
The Military Establishment:
Role in Elections: The military in Algeria has historically played a significant role in the country’s politics. While they may not publicly endorse a specific candidate, their support is crucial for anyone aspiring to hold the presidency. They are likely to back a candidate who aligns with their interests and can ensure stability. This will be the incumbent President Abdelmadjid Tebboune.
Potential Candidates: If the military perceives a candidate as a stabilizing force or someone who will maintain the status quo, they are more likely to support that person, either overtly or behind the scenes.
Support Base: The FLN, the party that led Algeria to independence, has been a dominant political force in the country. However, its influence has waned in recent years due to internal divisions and public dissatisfaction.
Alliances: The FLN may support a candidate who promises to revitalize the party or someone who represents the traditional power structure in Algeria.
3. Islamist Parties:
Influence: Islamist parties, such as the Movement of Society for Peace (MSP), have a substantial support base, especially among those dissatisfied with the current system. They are likely to support a candidate who promises reforms that align with their religious and political goals.
Unity or Fragmentation: Islamist parties in Algeria have a history of both uniting and fragmenting, so their support could be split among different candidates, depending on who best represents their interests.
4. Civil Society and Protest Movements:
Hirak Movement: The Hirak protest movement, which began in 2019, represents a significant force in Algerian politics. It includes a broad coalition of civil society groups, activists, and ordinary citizens demanding systemic change.
Support for Reformist Candidates: This movement is likely to back candidates who advocate for genuine reforms, transparency, and an end to corruption. However, they may also call for a boycott if they believe the elections are not free and fair.
5. International Actors:
France and Other Foreign Powers: Algeria’s former colonial power, France, as well as other countries, may have an interest in the outcome of the elections. While they may not openly endorse candidates, their diplomatic actions and relationships could indirectly influence the election by signaling preferences for stability or reform. We assured This is incumbent PresidentTebboune.
6. Incumbent or Government-Backed Candidates:
Government Support: Candidates backed by the current government or those perceived to be close to the existing power structures, including the presidency and the ruling party, are likely to receive support from state institutions and resources.This is incumbent President Abdelmadjid Tebboune.
Public Reception: However, public perception of these candidates could be mixed, especially if they are seen as representatives of the status quo, which has been a source of frustration for many Algerians.
7. Youth and First-Time Voters:
Decisive Factor: Algeria has a young population, and youth voters could play a crucial role in the elections. Their support may go to candidates who address issues like unemployment, education, and social justice.
Support for Change: Given the disenchantment with traditional politics, younger voters might gravitate toward newer, more progressive candidates who promise change.
The support in Algeria’s elections will depend on how various candidates position themselves in relation to the military, political parties, civil society, and the general public’s demands. The military’s role is pivotal, but the influence of protest movements and the public’s appetite for reform will also shape the election’s dynamics.
Eswatini’s King Mswati III’s plans to wed Nomcebo Zuma, the daughter of former South African President Jacob Zuma, as his 16th wife. This will strengthen the ties between the two leaders.
A royal delegation from Eswatini visited Jacob Zuma’s homestead at Nkandla in July in accordance with tradition, marking the start of Mswati’s marriage proposal to Zuma.
This union can be seen as a strategic move, cementing economic and political interests.
President Zuma’s role and capacity to be a major ambassador for Swaziland or the Swazi royal family is a noncontestable issue and has become even far more important in view with the development or the emergence of MK [uMkhonto weSizwe] as a political party with President Zuma as its absolute president.
However, Zuma’s diminished role in South African politics renders him unable to influence Swazi politics.
But the marriage strengthening bilateral relations between the king of Swaziland and the former president. The former president of South Africa and king are actually business partners and so, we expect that part of their relationship will actually blossom.
Zuma is expected to go on trial on multiple corruption and racketeering charges next April. He has pleaded not guilty.
Meanwhile, Mswati has been criticized for his controversial polygamy and lavish lifestyle.
This high-profile wedding, with its steep dowry of 100 cattle and R2 million (2 million rands(, or USD $113,300 and all the other hidden costs associated with a wedding of this nature, puts a significant strain on Swaziland’s economy. Within royal circles, this union has also been met with internal opposition among the royal wives. … This marriage will cause an uproar.
Whether seen as a strategic union of two powerful families or a personal decision to extend influence and financial gain, the king’s marriage to Nomcebo Zuma will have a lasting impact on the two nations’ ties, for better or worse.
The engagement between King Mswati III of Eswatini and Princess Ntandoyesizwe, carries several potential implications:
1. Strengthening of Political Ties between Eswatini and South Africa:
Diplomatic Relations: The marriage could symbolize a deepening of ties between Eswatini and South Africa, especially given the familial connection to a former South African leader. This could foster stronger diplomatic relations and closer collaboration between the two nations, which already share cultural and historical ties.
Political Influence: By aligning with a family that has held significant political power in South Africa, King Mswati might gain a more influential position or a channel to influence political matters in the region.
2. Impact on Domestic Politics in Eswatini:
Public Perception: Eswatini has experienced political unrest, with calls for democratic reforms and more participation from the public in governance. King Mswati’s engagement to someone from a high-profile political family might be seen as a move to bolster his position, but it could also attract criticism if seen as prioritizing alliances over addressing domestic issues.
Symbolic Unity: For supporters of the monarchy, this engagement might be seen as a strengthening of traditional and royal values, reinforcing the king’s stature as a leader who can unite influential families.
3. Economic Implications:
Business and Economic Ventures: The Zuma family has various business interests, and this alliance could pave the way for economic collaborations or investments between businesses in South Africa and Eswatini. It could potentially attract South African investors who are aligned with or influenced by the Zuma family.
Tourism and Cultural Exchange: The engagement could lead to an increase in tourism and cultural exchanges between the two countries, capitalizing on the royal connection and shared cultural heritage.
4. Regional Power Dynamics:
Influence in Southern Africa: The marriage may influence regional power dynamics, especially within the Southern African Development Community (SADC). The Zuma family’s involvement in South African politics, coupled with King Mswati’s status as Africa’s last absolute monarch, could create a bloc of influence, affecting negotiations and alliances within the SADC region.
Potential for Mediation Roles: Given their statuses, both families might be seen as potential mediators or power brokers in regional conflicts or disputes, which could impact political negotiations in southern Africa.
5. Public Opinion and Reactions:
Criticism and Support: The engagement has already sparked diverse reactions on social media, with some viewing it as a union of power and wealth, while others criticize it as part of ongoing political maneuvering. The public’s reaction will play a crucial role in shaping the narrative around this engagement.
Gender and Social Justice Issues: In both Eswatini and South Africa, issues related to gender equality and social justice are prominent. The engagement could bring these topics to the forefront, especially considering King Mswati’s history of multiple marriages and the ongoing debates about traditional versus modern values.
6. Potential Impact on Jacob Zuma’s Legacy:
Public Perception: The engagement could affect how Jacob Zuma is perceived, especially if it is seen as extending his influence beyond his political career. It may also be viewed as a way for him to maintain relevance in South African and regional politics.
Legal and Corruption Cases: Zuma faces ongoing legal battles in South Africa over corruption charges. The royal connection could be seen as a strategic move to gain favor or leverage, although it is unlikely to directly impact legal proceedings.
7. Cultural and Traditional Significance:
Traditional Alliances: Marriages have historically been used to cement alliances and strengthen ties between powerful families. This engagement could be seen as a continuation of that tradition, reinforcing the cultural practices of both the Zulu and Swazi peoples.
Royal Protocols and Customs: The engagement may highlight and reinforce traditional customs and protocols within the royal families, setting an example for other traditional leaders in the region.
In conclusion, while the engagement is primarily a personal and familial matter, it has broader political, economic, and social implications for Eswatini, South Africa, and the southern African region. The actual impact will depend on how these relationships and alliances are managed and perceived by the public and political leaders.
For those working in the information security and cybersecurity industries, the technical impacts of a data breach are generally understood. But for those outside of these technical functions, such as executives, operators and business support functions, “explaining” the real impact of a breach can be difficult. Therefore, explaining impacts in terms of quantifiable financial figures and other simple metrics creates a relatively level playing field for most stakeholders, including law enforcement.
IBM’s 2024 Cost of a Data Breach (“CODB”) Report helps to explain the financial impact when law enforcement is involved in the response. Specifically, the CODB report, which studied over 600 organizations, found that when law enforcement assisted the victim during a ransomware attack the cost of a breach lowered by an average of $1 million, excluding the cost of any ransom paid. That is an increase compared to the 2023 CODB Report when the difference was closer to $470,000.
But law enforcement involvement is not ubiquitous. For example, when an organization faced a ransomware attack only 52% of those surveyed involved law enforcement, but the majority of those (63%) also did not end up paying the ransom. Moreover, the CODB Report found law enforcement support helped reduce the time to identify and contain a breach from 297 days to 281.
So why are nearly half of victims not reaching out to law enforcement? Let us look at a few possibilities.
Outside of cyberspace, a 911 call to local law enforcement is a pretty reasonable first call when falling victim to a crime. But there is no “911” to dial for a cyberattack, and certainly no menu options for ransomware, data exfiltration or destructive attacks. Even experienced incident responders will likely share experiences where opening questions to the victim are, “Have you contacted law enforcement?” or “Have you reported this IC3?” The first answer is often “no” or “not yet,” while the second is “I see what?” Therefore, the awareness issue is still prevalent.
We must also consider emotional responses, such as embarrassment. Think of the employee who may be thinking, “Was I responsible for this by clicking a wrong link?” Embarrassment leads to reluctance, therefore both organizations and law enforcement must message better to their people and partners that reaching out for help is okay. Moreover, add in another psychological factor: additional threats made by the actor demanding victims not contact law enforcement.
There is the secrecy aspect, especially from a business impact perspective. Decision makers may not yet know the business impact of law enforcement involvement. Will the news go public? Will competitors find out? What privacy assurances are available? All of these are reasonable questions, and likely to be important with the regulatory requirements of reporting cyber crimes.
Trust ties all these factors together, ranging from benign “Can I trust law enforcement?” to explicit “We do not trust law enforcement.” These gaps must be bridged.
Building relationships and the future of reporting
Managing a crisis requires competence, but also trust, so exchange business cards before the incident. The issues identified can be proactively addressed by reaching out to law enforcement partners when you do not need them. Learn the capabilities of your local agencies; request meet-and-greets with those in your state and federal regions.
Remember, there is a little “Customer Service 101” here. When the incident hits, what do you want: the general helpline, or somebody you know and have a bond with?
Moreover, the future of cyber crime reporting is becoming more of a public matter, such as SEC reporting rules. Having relationships in place will be beneficial. They can buy time and serve as extra hands.
The case for involving law enforcement from a cost-savings perspective appears pretty transparent. Therefore, it is more of a cultural issue. Make friends, build two-way trust and establish protocols. These can go a long way to reduce the pain and cost of an attack.
European banking giant Nordea has agreed to pay $35 million to New York’s financial services watchdog following an investigation into the Helsinki-based bank’s alleged failure to prevent money laundering and other criminal activities, including some exposed in the Panama Papers leak.
The New York State Department of Financial Services said it had identified “significant compliance failures” between 2008 and 2019 by the bank, which failed to conduct proper due diligence of its clients and banking partners as required by the Bank Secrecy Act.
“International financial entities such as Nordea must safeguard against criminal activity in the global financial system, and for years Nordea failed in these respects,” said Superintendent Adrienne Harris, who leads DFS, in a statement.
According to the regulator, Nordea’s weak compliance program exposed the bank’s financial channels, and therefore the New York financial system, to “a high risk of criminal abuse.”
The consent order cited ICIJ’s 2016 Panama Papers investigation, which exposed a shadowy global industry of law firms and big banks selling financial secrecy to clients — including politicians, celebrities and fraudsters — around the world.
The investigation was based on 11.5 million leaked documents, which named 72 customers of Nordea’s international branch in Vesterport, Denmark. DFS said the revelations exposed Nordea as one of many financial institutions that failed to “follow legal requirements that would ensure their customers were not involved in criminal endeavors, tax evasion, or political misconduct.”
It said that Nordea was linked to billions of dollars of suspicious transactions over roughly a decade, and that the Vesterport branch was also implicated in two other high-profile money laundering schemes, known as the “Russian Laundromat” and “Azerbaijani Laundromat.”
Last month, Danish authorities indicted Nordea for violating anti-money laundering laws by failing to stop $3.7 billion of suspicious transactions involving Russian clients, shortcomings previously exposed in a separate ICIJ investigation a decade ago.
ICIJ media partner Politiken revealed in 2013 as part of Secrecy for Sale that Russian nationals and others used services of Nordea’s Copenhagen branch to maintain about 100 offshore companies, sparking an eight-year investigation.
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Nordea’s chief compliance officer, Jamie Graham, acknowledged in a statement that the bank had “historically … underestimated the complexity of preventing financial crime and the resources needed for that purpose.” The statement noted that Nordea had invested some 1.5 billion euros, or roughly $1.7 billion, in anti-money laundering controls since 2015.
“The bank has taken significant measures to improve financial crime processes and procedures since the period covered by DFS’s investigation,” Graham said.
According to the consent order, Nordea’s total assets were worth approximately $627 billion as of 2023, with its New York branch holding more than $37 billion in assets. The bank’s statement said the New York fine would have “no material impact on the financial position of Nordea.”
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Columbia University law professor John Coffee, who specializes in white-collar crime, told ICIJ via email that the settlement agreement implied the state regulators were “very happy with Nordea’s level of cooperation.”
Suzanne Lynch, an adjunct professor on financial crime at Utica University, also noted the heavy emphasis on cooperation. Lynch said she was surprised to see scarce mention of federal-level investigations in the 44-page consent order.
“So the question remains, will the feds go after them too?” she said. “They’re the ones that ultimately really deal with the financial intelligence gathered.”
In early 2010, U.S. lawmakers gave what was supposed to be a gift to IRS agents with the grueling job of ensuring the wealthiest people and largest corporations pay their fair share of taxes. Tucked inside President Barack Obama’s landmark Affordable Care Act was a new law that prohibited shifting money around for the sole purpose of avoiding taxes. This struck at the heart of the complex offshore tax maneuvers — the shell companies, sham trusts and dubious intercompany loans — that the affluent use to help keep billions of dollars from government coffers. Suddenly the notion that many of these schemes were technically legal was cast in doubt. Now it was up to the IRS to enforce the new law.
In an era of government cuts and starved social services, this new law — known as the economic substance doctrine — was supposed to help U.S. tax authorities fight the estimated $688 billion a year in unpaid taxes. But then nothing happened. The IRS hardly touched its new weapon against high-end tax evasion — leaving billions of dollars on the table and its agents with little experience in using the law. But why?
An investigation by the International Consortium of Investigative Journalists shows how, after coming under pressure from the industries that help wealthy people and corporations avoid taxes, the IRS’s Large Business and International Division, or LB&I, issued a directive that blocked agents from using the economic substance doctrine.
“The IRS had this institutional view not to raise it,” Monte Jackel, a tax attorney who has served several stints as a high-ranking IRS lawyer, said of the economic substance doctrine. “For a decade or so, it was a dead letter — invisible.”
ICIJ found that this IRS directive not only echoed some of the key requests of powerful tax industry players, it also copied several sentences directly from an industry lobbying letter that had urged restrictions on the new law, turning the exact words of tax attorneys for the wealthiest people into official IRS policy. Among those who prepared the lobbying letter were at least four tax attorneys at the corporate law firm Skadden, Arps, Slate, Meagher & Flom, where the IRS official who issued the directive had recently worked. That official, Heather Maloy, has since risen to top brass at the IRS, overseeing all of its enforcement divisions.
A congressional committee estimated that the new tax law was supposed to raise billions in revenue, meaning that the directive may have quietly cost the government large sums.
The reporting adds to growing evidence that LB&I, the office tasked with policing the wealthiest taxpayers, often takes a deferential approach to these powerful players. It also sheds light on the prevalence in the leadership of the IRS and the Treasury Department of tax lawyers who have recently represented the sorts of wealthy taxpayers LB&I is supposed to regulate.
In response to ICIJ’s questions, the IRS emphasized that a recent inspector general report found that the agency did not give large multinational corporations preferential treatment. It also defended its handling of the economic substance doctrine and said that it values input from outside the government. “A cornerstone element of fair and balanced tax administration is allowing those affected by IRS policies to have an opportunity to offer input,” the agency said in an emailed statement to ICIJ. “The tax system cannot operate in a vacuum, and we have a responsibility to give taxpayers the opportunity to be heard as we implement policy.”
ICIJ recently revealed that LB&I applies different and friendlier rules when auditing the wealthy as opposed to small businesses, and that its upper management shies away from even considering egregious tax-dodging cases for criminal referrals. The tiny number of such referrals from LB&I — no more than 22 in a recent span of five years — has frustrated some officials within the IRS’s Criminal Investigation Division, who say they’re often unsupported in identifying cases involving the biggest taxpayers.
President Joe Biden’s administration vowed to tackle high-end tax evasion and secured a historic $80 billion from Congress in part to fulfill this pledge. Now, with this infusion of funding, LB&I is being put to the test. The agency recently made a dramatic reversal in how it regards the economic substance doctrine, touting it as a key tool to stand up to powerful tax cheats.
The IRS now has to play catch-up with its deployment of the doctrine, after letting it gather dust since 2010. At stake are not only billions in government revenue, but also the fate of a key Biden campaign promise to stand up to some of the world’s wealthiest taxpayers.
At least for the richest Americans, avoiding huge amounts of tax often comes down to paying well-heeled accountants and tax attorneys to create complex arrangements that exploit legal loopholes. Corporate tax advisers, though, fear the economic substance doctrine because it can cut through the artificial complexity at the center of many of these schemes.
In the decades leading up to 2010, the economic substance doctrine lived informally in the court system. The government used the doctrine based on case law — i.e., the opinions of previous judges — to cobble together ad hoc and sometimes inconsistent ways of asserting it in tax cases.
Lawmakers saw formalizing the doctrine in federal legislation as a crucial step to strengthen it as a deterrent to high-end tax evasion. The issue united Democrats and Republicans in the belief that the growing tax shelter industry posed a threat to the country’s governance.
For a decade, a group of U.S. senators tried repeatedly to make the doctrine official law and consequently faced fierce opposition from the industry representing private tax advisers. In 2003, then-Sen. Joe Lieberman, D-Conn., said that legislating the doctrine would help fight the “systemic corruption that plagues the accounting, legal and financial communities in the pursuit of tax shelters.” Sen. Chuck Grassley, R-Iowa, a two-time chairman of the tax-writing Senate Finance Committee, declared in 2007 that it was the “right policy.”
Although its enactment into law in 2010 was eclipsed in the news by the larger health-care reform bill, high-end tax advisers quickly took notice.
In public pronouncements, the industry warned that the legislation had ushered in a new world where the codified economic substance doctrine could “dramatically change the tax enforcement landscape.” Just hours after the law passed, the corporate law giant Skadden, which has represented some of the country’s highest-profile tax evaders, warned that it “will have an immediate effect on transactions in the planning stage” and said “taxpayers will need to proceed cautiously.”
The Big Four accounting firms — known to design highly complex structures of offshore shell companies for clients seeking to avoid taxes — also recoiled.
PwC sought to shield itself from the potential impact of the economic substance doctrine. Image: Michael Kappeler/picture alliance via Getty Images
Tax advisers should have difficult conversations with clients and take “a back-to-basics, prudent course,” warned an article in an industry publication co-authored by two tax accountants at accounting giant PwC.
The Big Four firms began trying to shield themselves from the law’s impact, according to documents leaked to ICIJ as part of the Paradise and Pandora Papers. In an agreement to provide tax services to a hedge fund using an entity in the British Virgin Islands, PwC stated it would not be liable for “penalties imposed on you if any portion of a transaction is determined to lack economic substance,” citing the 2010 law. In another tax services contract for a major private equity firm using shell companies in the Cayman Islands, Deloitte said it assumed no “responsibility for any penalties resulting from client’s failure to meet the requirements of the economic substance doctrine.”
Deloitte and PwC did not comment for this story.
The law appeared to be changing the behavior of some of the largest firms. But would this last?
Like Santa Claus
Back in the U.S., the powerful tax law firms that work closely with the Big Four pressed the IRS to restrain its new powers. On Jan. 18, 2011, a group of eminent corporate tax lawyers sent a 66-page letter to then-LB&I Commissioner Maloy and other IRS executives. It urged the IRS to place extensive restrictions on the law that would, in practice, widely obstruct agents’ ability to use it. The letter called the law’s civil fines “a significant stick” and urged the IRS “to be measured in how it swings this stick.”
This letter was written and reviewed by various prominent lawyers, including at least four tax attorneys at Skadden, the firm where Maloy had recently worked as a tax attorney. Two of those were partners at Skadden.
It didn’t take long for the private sector to get what it wanted from LB&I.
On July 15, 2011, Maloy issued a directive that required agents take a series of steps and analyze more than two dozen factors before even asking for approval from a high-ranking IRS executive to use the new law. Agents had to notify the taxpayer as soon as they even considered asking for approval to pursue the economic substance doctrine, and then an IRS executive had to offer the taxpayer a chance to explain their position before the agent could receive approval to use the doctrine. The directive narrowed the scope of penalties agents could seek and defined how agents were generally supposed to analyze transactions — provisions sought by industry.
By placing procedural hurdles in the way of using the doctrine, the directive effectively torpedoed a tax law that legislators had fought for a decade to pass. In addition to fulfilling key requests of industry players, the directive copied three sentences directly from the 66-page lobbying letter into official government policy.
High-end tax attorneys celebrated the directive. A news bulletin on one tax law firm’s website trumpeted: “LB&I directive softens economic substance doctrine.” Another firm declared that the steps imposed on agents will likely place “a damper on the number” of cases in which the doctrine could be used.
Industry players themselves “could not have written a more favorable set of audit guidelines than those in the new LB&I Directive,” observed Jasper Cummings, a tax attorney with the law firm Alston & Bird LLP who co-authored the 66-page lobbying letter, in a memo posted to the firm’s website.
“As a result of the Directive recently issued,” Cummings added, “the Economic Substance Doctrine will begin to share a key attribute of Santa Claus: to be more talked about than seen.”
In a memo posted to its website, Skadden described the directive as fulfilling hopes of the industry and said it provided a “welcome assurance” that the new law “will not be asserted without considered review.”
Counsel said the approval process was too burdensome, so they didn’t want to pursue it … They made it administratively impossible to use.
One industry contributor to the 66-page lobbying letter said in a 2018 academic article that as a result of the Maloy directive, the “economic substance doctrine arguably loses any deterrent effect … because taxpayers know that the IRS is unlikely to raise the economic substance issue.”
An LB&I agent who spoke on the condition of anonymity because he was not authorized to speak with the press said he worked on an audit several years ago in which a wealthy individual had dodged millions in taxes through a series of maneuvers that the agent believed could be challenged under the economic substance doctrine. But, the agent said, the July 2011 directive stopped him from using it, partly because of hesitance from the IRS attorneys he worked with.
“Counsel said the approval process was too burdensome, so they didn’t want to pursue it,” the agent told ICIJ.
After this instance, the agent said that he did not try to use the doctrine again: “They made it administratively impossible to use.”
The U.S. Treasury building in Washington, D.C., U.S. Image: Al Drago/Bloomberg via Getty Images
‘A revolving door influence’
For years, watchdogs and lawmakers have expressed concern about the potentially corrupting effects of individuals from the private tax industry ending up in high ranks of the IRS and its parent agency, the Treasury Department. Prominent tax attorneys from Big Four accounting firms or corporate law firms sometimes help implement favorable policies for their former clients. These officials often rejoin the private firms with rapid promotions.
Earlier this year, ICIJ reporting showed that top executives in LB&I commonly switch hats from regulating the wealthiest taxpayers to working for them. A review of LB&I executive lists from the past 13 years shows that out of 114 top executives named, at least a quarter either had worked for a major accounting firm, a tax consulting firm or a major tax law firm shortly before joining the IRS, or left the IRS for such private sector roles.
The IRS’s watchdog, the Treasury Inspector General for Tax Administration (TIGTA), warned last year that the movement of employees between the IRS and accounting firms and big companies raised “impartiality concerns.”
As the IRS embarks on a major hiring spree with its new billions, the questions around guarding against industry influence have gained new urgency.
“People from the private sector provide important viewpoints and unique expertise needed to help the IRS run the tax system,” IRS spokesperson Robyn Walker told ICIJ in a statement for a previous story. “This takes on even more importance as the agency works to build compliance work in high-risk corporate and high-wealth areas.”
The agency also told ICIJ that safeguards are in place to prevent conflicts of interest. These rules forbid officials from working on matters too closely related to their work for a former employer in the private sector. Yet these safeguards generally rely on these officials to proactively identify and declare such conflicts to the agency.
In January 2022, TIGTA received an eight-page complaint from an agent alleging that Maloy’s directive had been influenced by the private sector. The complaint alleged that “we at the IRS are not enforcing our tax laws on multinational taxpayers using tax structures lacking economic substance.”
The complaint emphasized that the 66-page letter urging LB&I to restrict the new law was co-authored by attorneys at Skadden, Maloy’s former employer, and alleged that the government was not enforcing its own rules around conflicts of interest.
“There’s clearly a revolving door influence in play within the IRS,” the complaint stated.
“Private sector attorneys from numerous firms known to be involved in promoting, opining, and defending abusive tax structures seized the opportunity to use revolving door colleagues in the executive ranks of the IRS to request, influence and craft guidance,” the complaint also said. The complaint urged the inspector general to assist the IRS in reviewing and revoking the directive.
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One of the world’s largest corporate law firms, Skadden has a tax practice that employs a former IRS commissioner and a former executive of LB&I. One of the authors of the 66-page letter, Brendan O’Dell, left Skadden in 2016 to spend six years in high-ranking positions within LB&I and Treasury before becoming the director of tax controversy for Amazon. Another of the letter’s authors, Cary Douglas Pugh, left Skadden in 2014 to become a judge in federal tax court in Washington, D.C., making her among the most powerful people in tax law.
The IRS agent’s complaint to TIGTA has not been previously reported. Michael Welu, a former IRS agent who has been outspoken on the issues he saw within LB&I during his more than three decades at the IRS, provided a copy of the complaint to ICIJ. The complaint’s author, Brian Visalli, is a special agent in the Criminal Investigation Division.
“While I’ll confirm I’m a government whistleblower, I will not confirm or deny any specific complaints or documents I’ve provided to TIGTA,” Visalli told ICIJ in a LinkedIn message. Visalli added that, due to concerns over retaliation, he would not comment further.
In 2015, after almost six years of running LB&I, Maloy left the IRS to become the US Tax Controversy Leader at the Big Four accounting firm EY. EY’s website from that time lists Maloy as a contact in relation to its services around a highly technical practice known as “transfer pricing” that is at the heart of some of the largest tax avoidance schemes.
After five years at EY, Maloy returned to the IRS as a top executive in charge of the entire agency’s compliance efforts. The heads of LB&I, Criminal Investigation and other major compliance divisions now report to her.
ICIJ found that Maloy was not the only government official receiving policy requests from former private-sector colleagues related to the 2010 law. In January 2011, Lisa Zarlenga, then a tax partner at Steptoe & Johnson LLP — a corporate law firm that had opposed to the new law — was named as an author on the 66-page letter requesting restrictions on the IRS’s use of the doctrine. Two of Zarlenga’s colleagues at Steptoe, Mark Silverman and Amanda Varma, were also co-authors of the letter.
But a similar letter co-authored by Silverman and Varma and sent just 3½ months later listed Zarlenga as a recipient. This was because Zarlenga had switched hats to become a high-ranking tax policy official at Treasury.
In an interview with ICIJ, Zarlenga said she had nothing to do with Maloy’s directive. “Treasury would have had no involvement in that directive. I saw it when it was published in Tax Notes along with everyone else.”
In an interview after the the 2011 directive, Silverman — who had helped lead Steptoe’s opposition to the doctrine — called the directive “thoughtful” and “extremely well done.”
Zarlenga, who now heads Steptoe’s Tax Policy Practice, said that it’s both common and important for the industry to weigh in on what the IRS is working on. “Government officials interact pretty regularly with practitioners,” she said. “It’s all part of the flow of information. Otherwise, the government attorneys are sort of sitting in an ivory tower and they don’t know what is going on.”
New life for an old law
Several months after TIGTA received the complaint in 2022, the IRS quietly rolled back the LB&I directive at issue, replacing it with a set of rules that stripped away a number of restrictions on agents’ use of the economic substance doctrine. This was more than a decade after Congress passed the doctrine into law.
The IRS did not respond to requests to comment on this story or answer questions about why it changed its rules around the doctrine in 2022.
Suddenly the industry that had once applauded the directive sounded the alarm once more. In the wake of the new guidance, EY told its clients that “taxpayers should focus on penalty protection” and should consult tax professionals “before entering into transactions with related parties” — a technical term that generally means shifting assets or liabilities between entities all owned by a single person or business.
In a post on its website, corporate law giant Baker McKenzie said the updated directive exemplifies what it called “the IRS’s increasingly offensive posture.”
The law firm was right. In August 2022, Biden signed the Inflation Reduction Act, which included the $80 billion for the IRS to help fulfill his promise to make the wealthiest people and corporations pay their fair share of taxes.
Despite its languid existence after being passed, the 2010 law has become a critical part of this effort. In June, the IRS announced an initiative to tackle tax abuse in the highly complex realm of investment partnerships, which have become a key means for the richest people on Earth to increase their wealth while minimizing the U.S. government’s slice of the pie. In announcing the move, U.S. Treasury Secretary Janet Yellen raised eyebrows by stating that “many of these transactions violate the codified economic substance doctrine” — a clear shot at the tax planners serving the ultrawealthy.
Following through on this tougher rhetoric may be difficult, though. Recent ICIJ reporting showed that LB&I often takes an accommodating approach toward the largest taxpayers. Over the past five years, the division flagged no more than 22 instances of possible tax crimes for criminal investigators to review further — out of trillions of dollars in annual income from large corporations and ultrawealthy people that the office oversees. The IRS office that covers small businesses and self-employed people flagged roughly 40 times more possible crimes.
In the agency’s own comments to ICIJ for earlier stories, the IRS suggested that large corporations break the law less often than other types of businesses, saying their checks and balances and their use of independent accountants “generally limit the opportunity for criminal activity.” ICIJ found that the agency treats these powerful taxpayers accordingly.
On Wednesday, TIGTA released an extensive report on the IRS’s challenges to stand up to tax evasion by multinational corporations and addressed frustrations of agents around the difficulty of using the economic substance doctrine. The report also said that the IRS’s 2022 change to the directive was “a result of gaining experience and a level of comfort in the application of the doctrine.” It added that “the IRS could not provide us with the number of cases where examination teams considered the Economic Substance Doctrine.”
The report, which was premised on determining whether the IRS gives multinational corporations preferential treatment, said it found no instances of such treatment. It did, however, recommend that LB&I review its procedures around enforcement of multinational taxpayers, including around its use of the economic substance doctrine.
Experts say that the decade when the doctrine lay dormant may put the office at a disadvantage for a number of reasons. One is that the IRS’s agents and attorneys have little experience using it and could be forced into a trial-and-error approach. Some commentators say that, despite all of the commotion around the law, it may be vulnerable to legal challenges. The previous dearth of cases involving the new law also means that judges are just now getting the chance to issue significant rulings on it. The way judges interpret any tax law sends important signals to the IRS about how to pursue winning legal arguments in court — where they face tax attorneys for large corporations and the ultrawealthy known to spend massively to defeat the IRS.
“They haven’t had a lot of experience in actually applying it in real-world cases or seriously thinking about it,” Jackel, the tax attorney, said of the 2010 law. “It will be a slow process for them to get up to speed on it and be confident in their ability to assert the doctrine.”
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Some of the IRS’s cases using the 2010 law are beginning to make their way through the courts. Most significant of these is the agency’s attempt to invalidate a $2.4 billion tax deduction claimed by Liberty Global, the multinational telecommunications firm led by billionaire John C. Malone. With a net worth of roughly $9.8 billion, Malone is the largest voting shareholder in Liberty Global and is listed by Bloomberg as the second largest private landowner in the U.S., holding some 2 million acres across the country.
In 2020, Liberty Global asked the IRS for a $110 million refund for overpaying its 2018 taxes. The massive refund request was based on a complex series of maneuvers — involving shuffling assets between subsidiaries in places like Belgium, the Netherlands and Slovakia — that had been created by Liberty Global’s tax department with help from Deloitte. In challenging the refund request, Justice Department lawyers alleged that the entire point of the transactions was to improperly exploit a new loophole in federal tax law.
Billionaire John C. Malone is the largest shareholder in Liberty Global. In 2020, Liberty Global asked the IRS for a $110 million refund for overpaying its 2018 taxes. Image: David Paul Morris/Bloomberg via Getty Images
Liberty Global’s tactics did not emerge out of thin air. In one filing, the Justice Department noted that the “situation arises because tax litigators have been developing strategies” like Liberty Global’s. In emails contained in court records, Liberty Global’s tax department discussed paying Deloitte and another Big Four firm, KPMG, hundreds of thousands of dollars for their work on the complex international tax structures. The Justice Department attorneys noted that Skadden had publicly endorsed a refund tactic similar to that of Liberty Global.
Skadden did not respond to a request for comment.
In October 2023, the IRS won its case against Liberty Global, with a federal judge in Colorado ruling that the company’s use of a loophole was not permitted under the 2010 law.
That ruling was “the worst nightmare for tax planners who rely on ‘catching’ Congress in a glitch in the law,” wrote Jasper Cummings, the tax attorney at Alston & Bird. “This Liberty Global opinion is by far the scariest [economic substance doctrine] opinion of recent times and shows a Justice Department unleashed from the historic norms of the income tax.”
Liberty Global maintains that its tax reporting in connection with the case was correct. Although Liberty Global had acknowledged that the maneuvers did not have any true business purpose apart from avoiding taxes, according to court documents, it appealed the ruling in April on technical grounds around applying the doctrine. The firm’s lawyers said “the court fundamentally misunderstood” the case and asserted that the IRS “wrongly wields the economic substance doctrine to rewrite, rather than interpret, the law.”
If Liberty Global prevails in its appeal, it could create a precedent, perhaps as high as with the U.S. Supreme Court, that would weaken the IRS’s use of the doctrine moving forward.
The law firm representing Liberty Global in this quest: Skadden.
Delphine Reuter and Rick Sia contributed to reporting
Are Russian military defectors spies? War criminals? Or heroes? That’s one of the central questions of this week’s episode of Reveal, which follows the dramatic journey of an officer who deserted the Russian army, fled the country, and now lives in exile.
This week, Associated Press reporter Erika Kinetz examines the costs of people who leave Russia’s military with the help of Idite Lesom, an antiwar group whose name translates roughly to, “Get Lost.” As Russia’s war on Ukraine enters its third year, the group has helped thousands of people desert military service or evade it altogether.
For the man at the center of the episode, sacrifices are constant. “You can only leave wounded or dead,” another former military Russian officer tells Kinetz. “No one wants to leave dead.” He decides his best option is to ask a comrade to shoot him in the leg.
Former soldiers like him are waiting for a welcome from western nations that hasn’t come. This week, in partnership with the Associated Press, we’ll hear about why these defectors are not finding sanctuary in the West, and how staggering casualty rates may affect the future of the war. We’ll also meet a Ukrainian man on a quest to give fallen soldiers—Russian and Ukrainian alike—a final resting place. Don’t miss this gripping story on this week’s episode of Reveal, available wherever you get your podcasts.
Today marks one year since Wall Street Journal reporter Evan Gershkovich was arrested in Russia on what American officials say are false charges of espionage. He has been held in jail ever since.
Members of Russia’s Federal Security Service—the country’s intelligence agency, also known as the FSB—detained Gershkovich while he was on a reporting assignment in the city of Yekaterinburg, according to the Journal. Gershkovich had deep familiarity the country: his parentsfled the Soviet Union in the 1970s. He had full press credentials from Russia’s foreign ministry and had reported from Moscow for Agence France Press and the Moscow Times before joining the Journal in January 2022. Russia has not publicly presented evidence of its espionage claims against Gershkovich, the Journal reports.
Since his arrest—which marks the first time an American journalist has been held on such charges in Russia since the end of the Cold War—Gershkovich has been in Russia’s notorious Lefortovo prison, where he spends 90 percent of his day in a small cell, according to the paper. Earlier this week, a Russian court extended Gershkovich’s pre-trial detention by three months, until June 30. The Committee to Protect Journalists condemned the extension, calling it “another cynical affront to press freedom by the Russian authorities.”
In a letter published today, Journal editor-in-chief Emma Tucker called Gershkovich’s detention “a blatant attack on the rights of the free press,” adding that “given the lessons of history and the arbitrary power of the Russian state, if there is a trial, we would expect a guilty verdict—something we would view as a travesty of justice.” A conviction could carry a sentence of 10 to 20 years, the Journalreports.
Roger Carstens, the Biden administration’s special envoy for hostage affairs, told the New York Times that the US government is involved in “intensive efforts” to secure the releases of Gershkovich and ex-Marine Paul Whelan, who has been in Russian custody since 2018 and was sentenced to 16 years in prison on espionage charges, which American officials also deny.
The Journaldedicated its front page to Gershkovich today, leaving much of it blank under the headline, “His story should be here,” alongside other stories on his detention and the threats authoritarians pose to journalists around the world. (More than 520 journalists are imprisoned worldwide, according to the group Reporters Without Borders.)
The Journal also hosted a public, 24-hour read-a-thon, which streamed live on social media, of Gershkovich’s work, with participants such as NBC’s Lester Holt and Andrea Mitchell, ABC’s David Muir, and CNN’s Jake Tapper and Kaitlan Collins.
In a statement released today, President Joe Biden said he will “never give up hope” of freeing Gershkovich.
“We will continue working every day to secure his release,” Biden said. “We will continue to denounce and impose costs for Russia’s appalling attempts to use Americans as bargaining chips. And we will continue to stand strong against all those who seek to attack the press or target journalists—the pillars of free society.”
Secretary of State Antony Blinken also acknowledged the anniversary of Gershkovich’s arrest, noting that “Russia has provided no evidence of wrongdoing for a simple reason: Evan did nothing wrong. Journalism is not a crime.”
Gershkovich’s parents have said “he’s doing the best he can under the circumstances, and the circumstances are very hard.” The reporter sends his parents letters weekly, his mother, Ella Milman, added in an interview with Tucker in January. They told the Times he also plays chess with his father over email and reads books recommended by friends.
In the meantime, we’ll echo something you’ll probably hear a lot of today: Journalism is not a crime.
Nuclear war is a topic few care to think about. We sometimes call it unthinkable. But we need to think carefully, and to talk—particularly with high-ranking foreign officials whose motives we may have reason to distrust, just as they distrust ours—about how we can collectively avoid launching a weapon that would end our civilization.
Pulitzer Prize finalist Annie Jacobsen’s timely new book, Nuclear War: A Scenario, is a lightning-fast read intended to put the nuclear threat squarely back on everyone’s radar. Her narrative thread, as the title suggests, is a fact-based (though thankfully fictional) scenario that shows how a nuclear launch can escalate into World War III at dizzying speed.
Jacobsen tees up her cinematic approach with chapters describing how we got here, including a discussion of America’s Single Integrated Operational Plan (SIOP) for General Nuclear War—which was devised in the 1960s and, as Jacobsen details in this Mother Jones book excerpt, was more or less a recipe for the end of the world.
Because that’s nuclear war: One bad assumption, one shot, one retaliation, and it’s unstoppable.
Your book is frightful. What made you want to write in such detail how a nuclear war could unfold?
As a national security reporter, I have written six previous books on military and intelligence programs—CIA, Pentagon, DARPA—all designed to prevent nuclear World War III. During the Trump administration, amid the “fire and fury” rhetoric, I was watching STRATCOM commanders and deputy commanders speak freely on C-SPAN about the dangers therein. I began to wonder, My god, what would happen if deterrence failed? I began to interview people during Covid, when people had more time on their hands for someone like me—and that began the terrifying process of learning that nuclear war is, in essence, a sequence of events, and that once it starts it almost certainly will not stop.
The US public hasn’t thought a whole lot about nuclear weapons since the Cold War. We have more nuclear nations today, but far fewer weapons in the global arsenal. Are we safer now?
Well, as I show in the book, it doesn’t take but one weapon to set off a chain reaction to unleash the current arsenal, which is forward deployed in launch-on-warning positions and could be fired in as little as a minute—15 minutes for the submarines. There are enough weapons in those positions right now to bring on a nuclear winter that would kill an estimated 5 billion people.
Are there too many? Absolutely. Have we made progress? The all-time high in 1986 was 70,481 nuclear weapons. Now, there are approximately 12,500. But to your point, there are nine nuclear-armed nations, not just two or three superpowers. And that presents a lot of unknowns that create serious unease and room for catastrophe.
So we may be less safe because we don’t really know how certain nations might behave—notably North Korea.
Absolutely. Reporting and writing this book was one surprise after another. For example, I did not know until I had it confirmed with US nuclear experts that North Korea does not announce any of its missile tests, whereas the other countries do. North Korea has launched 100 missiles since January 2022. After you read my book, you realize what happens to the US nuclear command and control apparatus in the seconds and minutes after a launch is seen by the advanced super satellite system we have. You can now imagine what goes on in those command centers.
A total frenzy.
Imagine!
One thing that really struck me is the unbelievable speed at which nuclear war is waged.
Gen. Robert Kehler, the former commander of STRATCOM, said to me that the world could end in the next couple of hours. It took me a minute to ask my next question, because coming from someone in that position of authority—the most significant role in the entire nuclear apparatus—that really blew my mind.
Ditto goes for an interview I did with President Barack Obama’s FEMA chief, Craig Fugate. Of course, FEMA is the agency in charge of what’s called population protection planning for American citizens in the event of hurricanes, floods, earthquakes. Fugate told me that after a nuclear war, there wouldn’t be any population protection planning because everyone would be dead.
Help is not coming.
I said, “Well, what should people do?” He more or less said, “Self-survive, and don’t forget your morals, and I hope you stocked Pedialyte”—because radiation poisoning makes you vomit and have diarrhea and away go all of your electrolytes, which leads to secondary problems.
I learned from your book that FEMA plays a unique role in the event of a nuclear attack, and it’s not what one might expect.
That’s right. In the ’50s and ’60s, the US position was that a nuclear war could be fought and won. That is no longer the official position. But plans were put in place for the continuity of government programs—the idea that the government must continue functioning no matter what. That is also a fantasy.
To hear from former Secretary of Defense Bill Perry about the madness and mayhem and anarchy that would follow, in his mind, in the event of a nuclear war, you really get the sense that civilization will fail. I believe one of the reasons so many of these sources went on the record for me is because they know that this is the truth. And they know it is up to the people to change the trajectory of where we’re headed. I mean, my god, look at the saber-rattling going on as we do this interview.
Potential nuclear nightmares range from an accidental detonation to a massive “decapitation” strike to someone using a small nuke on the battlefield. You picked the madman scenario: North Korea inexplicably launches a long-range missile at Washington, DC. Why that one?
I did a series of interviews with [physicist] Richard Garwin, who is now 95. He is arguably the most knowledgeable person about nuclear weapons on the planet, and he probably knows more about policy over the long lens of history because he was 23 or 24 years old when he designed the first thermonuclear bomb.
In the “Ivy Mike” test, it exploded with 10.4 megatons of power—about 1,000 Hiroshimas. Garwin said to me that his biggest fear was now, and always had been, the madman theory you referred to. He used the French phrase Après moi, le déluge—after me, the flood—referring to this idea that a maniacal, egotistical, narcissistic madman leader could launch a nuclear weapon for reasons no one would ever know.
And to counterattack North Korea, as in your scenario, the US would need to send missiles over Russia, which has a very unreliable early warning system.
That’s right. Learning about the technological limitations of some of the Russian systems was just as terrifying as any part of reporting this book.
It’s almost like you’d want to reach out to the Russians and say, look, just take our technology so you won’t launch on a false alarm—but the US would never do that.
There have been many opportunities to have a dialogue with the Russians—Putin inquired about joining NATO back during the Clinton administration. One really has to lean upon one’s leaders to think about communicating rather than saber-rattling, because I hope that my book demonstrates in appalling detail how horrific nuclear war would be. And we know from the Proud Prophet war games that no matter how it begins, it ends in nuclear apocalypse.
For context, Proud Prophet was a classified series of war games President Ronald Reagan ordered in 1983. Civilian and military planners convened for two weeks to run through scenarios that could spark a nuclear war and see how they played out.
That Proud Prophet was declassified is interesting. Nuclear war games are among the government’s most jealously guarded secrets. I printed a copy of what a couple pages of the declassified war game look like—95 percent is redacted. It’s literally a couple of headers and a few numbers.
But when something like that gets declassified, it becomes very valuable to the people. An individual like Paul Bracken—a civilian professor at Yale who participated in Proud Prophet—can now speak about it in general terms. He wrote in his own book that everyone left very depressed, because no matter how the nuclear scenario begins—if NATO is involved or not involved, China is involved or not—it always ends the same way, the most terrible way, because America has a “launch on warning” policy.
We do not wait to absorb a nuclear blow. Once a missile is on the way and there is secondary confirmation from ground radar, the president is asked to launch a counterstrike. In the book—I have the president asking this because it came up in my discussions with sources—he says, “How do we know it’s a nuclear weapon?”
And we don’t.
That is a fact. The answer is, Well, it could be a biological weapon. Another answer I was told is that no one launches a ballistic missile at the United States unless they’re expecting a counterattack. So now you are looping into the Orwellian world of: This is deterrence. Deterrence will hold. Don’t you dare launch at us or else! Which becomes part and parcel for why the counterattack is required, per the deterrence doctrine. There is no room for saying, well, maybe we’ll wait and see.
Once you break deterrence, everything else goes out the window.
Correct. One of the most haunting quotes in the book is from the deputy commander of STRATCOM, Lt. Gen. Tom Bussiere. I located an unclassified discussion he had with insiders, and the quote is along the lines of, When deterrence fails, it all unravels. In seconds and minutes and hours—not days and weeks and months.
Twelve thousand years of civilization extinguished in a few hours.
General Kehler was not speaking hyperbolically when he said that.
Say more about “launch on warning.” You cite Paul Nitze, a former defense secretary and later presidential adviser, calling the policy “inexcusably dangerous.” Presidents Bush, Obama, and Biden wanted it scrapped. So why is it still in place?
I’d like to shout out William Burr, who runs the Nuclear Documentation Project at the National Security Archive at George Washington University, because many of those quotes and documents come from that organization, which made them accessible to journalists like me. Nitze was one of the biggest hawks across the Cold War. To have a guy like that go on the record and say this is inexcusably dangerous says a lot.
Multiple presidents have campaigned on the promise that they will change this dangerous policy, but then they become president and you never hear of it again. That speaks to the kind of secret-keeping that is dangerous and can be changed. I wrote Nuclear War: A Scenario for the layperson to be able to rip through it in a night, no matter how terrifying. I do not bog the reader down with polemics or jargon, because this is an issue everybody should know about. Because only in knowing about it is change possible. We can look to The Day After battle, what’s known in inner circles as the Reagan Reversal policy of 1983.
Wait, what’s that?
So in 1983—I’m dating myself here—I was a high school student. And I watched the ABC movie The Day After.
I was the same age, and watching it too.
It’s a fictional account of a nuclear war between America and Soviet Russia, and half the country watched it. Interestingly, behind the scenes, ABC got a lot of pressure not to air it. Well, one very important American watched it: Reagan had a private screening at Camp David. His chief of staff tried to suggest that he shouldn’t watch it, but he did. And he wrote in his diary that he became “greatly depressed,” and he picked up the phone and called [then–Soviet President Mikhail] Gorbachev, and the two leaders communicated—which is really the only solution for any of this.
Because of those communications and because of their conference and because of the treaty, the insane nuclear arsenal has been reduced to the approximately 12,500 we have now, which is a considerable reduction. The president’s position prior to seeing The Day After was a much harder, more saber-rattling approach. He changed his position and became much more dovish.
“Launch on warning” puts extraordinary pressure on a president. The one in your scenario is pretty clueless. He hasn’t ever rehearsed. Nobody told him he’d have just six minutes to choose from a Denny’s breakfast menu of existential options in response to what may or may not be an incoming nuke. It’s hard to believe the Pentagon doesn’t put every new president through a series of war games.
I was just as surprised as you are. But that’s coming from multiple secretaries of defense and national security advisers—people in a position to advise the president on a nuclear counterattack. The best summation came from Leon Panetta, who explained that as White House chief of staff he was witness to the fact that the president is primarily concerned with domestic issues—like his popularity. I asked Panetta how clued in he was when he was the CIA director, and he said almost not at all, because the CIA is about intelligence, not nuclear operations.
Only when he became secretary of defense did it really hit home, the weight of all of this. He spoke about visiting missile silos, submarine bases, and nuclear command bunkers—once you go to places like that, your entire perspective changes. And that is why I believe he was willing to go on the record. You really get the sense that things are precarious once they begin, and decisions follow that are out of everyone’s control.
Right. And our continued existence depends not only on our internal communications and processes, but those of our adversaries, about which we know little.
Absolutely.
Your book busts some common myths, for instance the belief that the US could shoot down an incoming nuclear missile. We really can’t defend against nuclear weapons, can we?
We can’t. That is pure fantasy. During the final fact-checking incantations, I had the book read by a lieutenant general who ran these scenarios for NORAD. I was almost hoping someone would say, Annie, you should take this part out of the book, because we have a secret Iron Dome that you can’t report on. No. The truth is that the United States relies upon 44 interceptor missiles to stop any incoming missiles. Russia alone has 1,674 nuclear warheads in “ready to launch” position. Adding to that, according to congressional reports, the interceptors are only approximately 50 percent effective.
Under the best of circumstances.
Absolutely, like when you’re doing a test and you know precisely where the missile is going to be. It’s a curated test. So people have this idea that we have an Iron Dome–type shield. And we don’t.
The Reagan Reversal bit reminds me of a moment from your scenario. Your secretary of defense is sworn in as president because the president and others in the line of succession are dead or AWOL, and he has this moment of humanity. Russia has launched all its ICBMs at us, so we know we’re goners. And the new guy asks: Why respond now if all it will do is kill millions more people? The STRATCOM commander is like, Nope, we’re doing this. Humanity is already doomed, yet Russia and the United States keep launching their weapons until practically none are left. It’s nonsensical. But is it realistic?
It is if you talk to the sources I spoke to. A lot of the decision-tree situations involving the defense secretary came from my multiple discussions with former Secretary of Defense Bill Perry, who has thought a lot about this—and what an individual’s thought process would be. The point of including that question was to demonstrate how the madness of MAD—mutual assured destruction—takes over.
I asked [retired weapons engineer] Glen McDuff—the curator of the classified museum at the Los Alamos National Laboratory—the question you’re kind of asking me: What did he think, as an insider, about the notion that people would not follow orders? He basically said: Annie, I would suggest betting on Powerball, because you’d have a better chance of winning than betting on a high-ranking individual in the nuclear command and control system not following orders.
Right. It seems like folks in the nuclear command and control structure have rehearsed these scenarios over and over. They’re on autopilot to a degree. Which gets at the notion of “apes on a treadmill” that you write about late in the book: We’ve made this plan, and we’re going to follow it—even if it’s completely bonkers.
Apes on the treadmill was just such a brilliant concept. It goes back to the Cold War when it was used as a metaphor for people slavishly following away in this nuclear arms race.
But even more interesting was the present-day anecdote I found. It was a scientific experiment having nothing to do with the original metaphor but was literally apes on a treadmill. The researchers were studying bipedalism: They put humans on the treadmill and they put apes on the treadmill. Anecdotally, one of the scientists said, and I’m paraphrasing, that some of the apes got fed up with walking to nowhere and got off the treadmill.
I thought, my god, the apes are smarter than the humans when it comes to mutual assured destruction.
Little known to those outside of Finland, Finnish Karelia is a land of lakes and deep forests and the home of a culture that founded elements of today’s Finnish identity and politics. It is also a zone contested through history: a contact line between Eastern and Western forms of Christianity, between the Swedish and Russian empires from the Middle Ages to the 19th century, and between Finnish and Soviet armies in the 20th. In the twenty-first century, Finnish Karelia has become a line of contact between a liberal, integrationist governance model and an increasingly authoritarian one in Russia.
Since Finland’s independence in 1917, Karelia has been split between it and Russia but it was once a Finnic space: the shores of the Baltic Sea and the Gulf of Finland were home to a variety of peoples speaking languages and following life patterns similar to those of the Finns, Estonians and Sami, and these extended to the White Sea, the Barents Sea, east towards the Ural Mountains and well into modern Sweden and Norway.
In the nineteenth century, its forest-bound isolation preserved a culture of poet-singers, men and women who recited from memory verses passed down for generations. These verses contained traces of an ancient Finnic mythology, layered with tales of creation, heroes and tragedy, and the arrival of Christianity. These cultural materials formed the substance of the country’s national epic poem, the Kalevala, and the work of its greatest musical composer, Jean Sibelius. The cultural movement of Karelianism shaped Finnish architecture, painting and literary imagination, lending itself to characters, metaphors and an artistic mood that persist in cultural life in the country to this day.
The establishment of St. Petersburg had a radical consequence for that Finnic space. The “wretched Finns”, as the Russian poet Aleksandr Pushkin put it in the “Bronze Horseman”, living as fishers, hunters, foresters and agrarians at the head of the River Neva, were displaced by a much more grandiose project, that of Russian Tsar Peter I, the “Great,” and his opening a “window on the West” for his empire. The decision to found an imperial capital on the Gulf of Finland reverberated across the region, portending a future of altered contact between Finnic speaking peoples and their Russian-speaking neighbours, relations that are known to have existed from the earliest medieval records.
Border crossing on Finnish–Russian border in Imatra, Finland, 2013. Photo: Wikimedia, Alexei Ivanov
Two corners of Karelia remain in today’s Finland, the North and South Karelias. Today, by train you emerge from the forests into North Karelia’s capital, the small city of Joensuu. It is the regional hub for many small and exotically named towns and hamlets. The town names often are based on words from Karelian, a Finnic language tinged with Russian diction, phonetics and metaphors. The spoken language there today, the modern Finnish dialect of Karelian, with its distinctive phonetics and vocabulary, is a cultural signifier in the country. In North Karelia, you see the marks of its past: a rich engagement with Russian Orthodox Christianity and a relationship to the other side of a border severed by time and repeated spats of high and violent politics.
Even today in Finland’s capital of Helsinki some few hundred kilometres southwest of Joensuu, you get the feeling that you’re on an edge, a liminal space in which a society perched itself on the first line of contact between competing systems. This mood existed profoundly during the Cold War, when Finland was not as much an edge as an interstice, weaving a distinctive geopolitics of neutrality between Soviet and American power, engendering an almost solipsistic domestic perception that Finland was in it alone when it came to survival.
On 24 February 2022, Russia’s attack on Ukraine again perched Finland on the edge, but in the very different conditions of the twenty-first century it has opted for defence integration, turning to NATO to produce greater security for itself. Living on the edge of an interstice, as Finnish Karelians have done for centuries, has had a profound effect not just on government, foreign policy and academic elites, but on the general populace.
Geopolitics is full of wagers, bets on uncertain outcomes, attempts to shift the current towards an actor’s set of preferences. Among the most famous of these wagers in recent times has been the liberal one – that exchange through a trade liberated of national barriers would foster democratic society and politics. Often our thoughts turn to the big bets, like those placed on China and Russia: the USA’s bet that trade and investment would integrate China into democracy, Germany’s staking its competitiveness on inexpensive Russian natural gas, betting economic interdependence would foster stability.
When thinking of such wagers, our thoughts rarely travel to liminal places like Karelia but that misses something about the lived experience of geopolitics, at the day-to-day level, for people who are not diplomats, intelligence agents, uniformed military or elected leaders. In places set along geopolitical fault lines, individuals experience these wagers, and keenly. It is an interesting feature of geopolitics that the experience of them is often more immediate for individuals in small societies than for those in larger societies or cities. The potential to specialize in the labour force amid more abundant economic and diverse cultural opportunity carve foreign policy, defence and national security off into esoteric activities for a sect of specialists and often secretive officials and national politicians. What is theory and strategy in Washington, London, or Ottawa is lived and felt by people in Ukraine, Taiwan, Gaza and Israel – or Karelia.
In small places on the edge, the experience of security extends from daily matters of economic security — finding a job, affordable housing, quality schooling for the next generation — to roles in the geopolitics of the day, as both subjects and objects. Subjects, in that they are more likely to fill the roles of soldier, border guard, cross-border trader. Objects, in that their “located life plans,” to use the terminology of philosopher Anna Stilz, are more likely to be undermined by events over which they have no control.
Finnish Karelians are living that experience. Russia’s aggression and its manifold consequences resonate at an individual level. In conversation in Joensuu in October, local experts conveyed to me some of the sentiments being expressed by Karelian residents. Some were asking questions like: has joining NATO made us part of the enemy camp? Were all of our efforts to cooperate with our neighbours in Russia — the front line the liberal bet — in vain? Others think, why should these grand politics affect our everyday lives? For some local inhabitants, the people of Russian Karelia seem unlikely agents of Putinist designs to rework the European map in Muscovy’s favour.
Dense forests of Ladoga Karelia at Kollaa. A Soviet tank on the road in the background during WWII.
An understandable but curious thought. Finland once held much more Karelia, around Lake Ladoga. Finnic peoples had inhabited these lands since the Middle Ages. That land was shorn away by the peace settlement of World War II. Some 420,000 — basically the region’s whole Finnish citizenry and 11% of the country’s total population — were resettled in the rest of Finland. Few places have felt Russian power more acutely.
But the 1990s infused a sense that neighbouring Russia presented an opportunity. Closed lands were now open. In Helsinki and Brussels, Finland in general and the border areas in particular were seen as gateways to Russia. St. Petersburg’s proximity no longer cast a dark shadow, but emitted a bright beacon.
Academics Dr. Joni Virkkunen and Dr. Minna Piipponen, who I heard speak in Joensuu at a conference of specialists on border dynamics, have periodized Russian-Finnish Karelia cross-border evolution since January 1992, in the immediate aftermath of the Soviet Union’s dissolution mere weeks before. An era of expectation unfolded between 1992 and 1995 as the border opened, Finland sought EU membership and Russia wobbled into democracy. This then evolved into advocacy for cross-border ties from 1995 to 2000, led by the European Union and welcomed on the Russian side, and the consolidation of those ties from 2001-2013. Virkkunen and Piipponen pointed out this was not all about trade deals and diplomatic negotiations, but about people-to-people contacts being forged across the border in the forestry sector, in academia, in tourism. A perspicuous reminder of the lived experience of geopolitics.
Rumblings of trouble existed throughout the consolidation period as Russia strengthened, Virkkunen and Piipponen noted. Geopolitics in earnest intervened in 2014, when Russia annexed Ukraine’s Crimean Peninsula and started a war in eastern Ukraine’s Donbas region. From 2014 to 2021, a nervous pragmatism reigned, as local actors tried to navigate between sanctions and cooperation; the events in Ukraine were mostly “sauna talk.” That era ended in early 2022, as Russia backed up its revisionist rhetoric with revisionist action.
The sentiments of the inhabitants of North and South Karelia reflect a local expression of the disorientation and frustration geopolitics are visiting on many in Europe, North America and beyond. Finland’s Karelians now can no longer look 360º for opportunities – a microcosm of Finnish experience more broadly, but felt more acutely, more personally and more directly there, due to tight economic opportunities. They now look west and south, and increasingly north, as part of Arctic-oriented supply and value chains, for an elusive prosperity.
Echoes of previous cross-border movement — and current displacement — could be heard in Joensuu’s city square, where young Russian-speaking people gathered. PhD candidate Virpi Kaisto described how the population centres amid this “borderscape” bear the marks of the rupture, as well as the remaining effects of the COVID crisis.
Kaisto has documented and analyzed how a once thriving commerce in cross-border shopping ground to a halt, leaving parking lots empty and many Cyrillic signs taken down in the South Karelian centres of Lappeenranta and Imatra. Abundant Russian tourists, sometimes conspicuously consuming, are now conspicuously absent. In the brief time between COVID restrictions loosening and visa restrictions tightening in 2022. Russians coming to South Karelia saw Russian-language signs protesting the war and pointing to their agency in Russia’s agency: “Putin is not Russia. You are Russia,” they read. These Russians were exposed to the open debate of a liberal political culture. That window of contact closed in fall 2022.
Regionally, Russian engagement with the markets and institutions of the European Union did, at times, shape Russian participation, even if it failed to change the mentality of Russian leadership. In a case study, researcher Maria Tyshiachniouk explored the cross-border timber trade. Her work draws attention to efforts to preserve old-growth forests from the White Sea to Norway, to how Finnish and Russian civil society actors and programs of environmental certification in European markets influenced industry practices in Russian Karelia — the slow but steady and often overlooked march of the liberal bet, progress that ultimately proved to be at odds with the geopolitical instincts of the governing elite in Moscow. Now turning east to sell these products, such sustainable practices are less likely to survive, although a sort of positive inertia in the Russian industry is perpetuating them, in part because a market of Russian consumers have come to demand those standards, Tyshiachniouk discovered. Losing Finnish Karelia is certainly a loss for the political and economic development of Russia and its northwest, but the legacy of over two decades of interaction has left a strong institutional mark.
“Russia is not Putin. You are Russia.” Imatra, Finland, September 2022 Photo:MLI
These marks are almost certainly what Russia’s political elite fears. This summer, Nikolay Patrushev, a long-time senior security figure in the Putin government, was reviving anti-Finnish tropes during a visit to the Russian Karelian capital of Petrozavodsk, tropes that had mostly lain quite since the 1930s. The Putinist narrative alleges that Finns are, with Western colleagues, fomenting separatism and unrest in Russian Karelia. These are preposterous claims: Finnish authorities long ago abandoned seeking the return of territories lost in World War II. But these allegations are all too credible, if one sees, as the Russian leadership does, the forces of democratization and integration with European and Western institutions and markets as existential threats to their power. As the Finnish diplomat and commentator Max Jakobson noted in the 1960s, it is perceptions that count in dealing with Russia, and the Russian leadership perceives a threat in Russia’s contact with European modernity.
In all likelihood, the next few years will see North and South Karelia mutate from a locally-influenced space of border negotiation to one shaped by distantly adumbrated high strategy. Dr. Pasi Tuunainen, a historian at the University of Eastern Finland and major in the military reserves, told me about some of the dynamics. He sensed that Finns, while in general supportive of the county’s NATO membership, were keen to solidify the bilateral defence relationship with the USA, the two countries are in the final stages of agreeing upon a Defence Cooperation Agreement (DCA) — and were “enthusiastic” about extra-regional UK-led initiatives like the Joint Expeditionary Force, a ten-country grouping of Nordic and Baltic countries along with the Netherlands. A lingering reluctance held, he thought, among Finns about NATO bases or housing nuclear weapons. Norwegian approaches, which had seen a lighter military presence and no NATO basing in the country’s northern-most regions, might appeal most to Finns, he thought, although a rotating NATO presence would be welcomed. It is notable, however, that in Norway these acts of geopolitical balancing are under question in the face of Russian aggression.
As soon as Finland reopened its border to Russia, groups of migrants moved towards the border-crossing points December 14, 2023. Screenshot of video: Independent Barents Observer
Some of the transformation is visible. Finland is building a fence along parts of the border, a measure officials see as dealing with Russia’s callous manipulation of migrants, directing them to an often-unwelcoming Europe Union. According to Dr. Jussi Laine, a professor at the University of Eastern Finland’s Karelia Institute, however, they are more performative, a way to offer visible signs of reassurance to Finns, rather than producing real security. In November, the number of asylum seekers arriving at Finland’s land borders with Russia spiked precipitously to over 500, an acceleration that can only be explained by the conscious work of Russian state agencies. Finland’s decision on 30 November to close the land border entirely with Russia perhaps recognizes that reality: a larger rupture with Russia has occurred, one that even the metaphor of a fence only partially captures.
Finnish Karelia is again a frontier. New wagers are being laid in distant capitals, bets that Western alliances will produce real security. NATO membership means that Finland is integrating into the world’s largest, most powerful defensive alliance. It is transforming Finnish Karelia from an interstice to an edge in the encounter between authoritarian and liberal-democratic geopolitics. It is likely to be a sharp one.
Alexander Dalziel is a senior fellow at the Macdonald-Laurier Institute in Ottawa. He has over 20 years of experience in Canada’s national security community. Previously, he held positions with the Privy Council Office, Canada School of Public Service, Department of National Defence and Canada Border Services Agency. In the 1990s, he spent an academic year at the University of Eastern Finland in Joensuu.
