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Foreign Money for Mitt?

Mitt Romney has just completed an overseas trip that featured missteps and bumper-sticker foreign-policy pronouncements. It was clearly intended to shine a light on his accomplishments as coordinator of the Salt Lake City Winter Olympics and to burnish his foreign-policy credentials. It did neither, but its secondary purpose, to raise money for his campaign, was somewhat more successful. Mitt hosted a $25,000 per couple fundraiser that raised $2 million while in London and followed up on that with a $50,000 per couple event in Israel that raised $1 million.

Media coverage surrounding the Romney campaign explained the fundraisers by asserting that they were targeting the estimated 7 million U.S. citizens living and working abroad. Bob Diamond, the disgraced head of Barclay’s Bank, Boston-born and U.S.-educated, was the initial chair of the Romney fundraiser in London. The one in Israel was organized by the Republican Jewish Committee. One assumes that only American citizens were welcome at the two events, but apart from checking passports at the door, such a restriction would be hard to enforce. There were certainly many Israeli-American dual-nationals present at the event in Tel Aviv, out of the 168,000 reported to be living in Israel, but dual-nationals are U.S. citizens.

When a U.S. citizen chooses to live in another country, it might be for a good reason like a job opportunity, but it also might be because he or she actually prefers the other country and regards the United States only as a place of birth that provides a useful passport. Deliberately seeking money for a U.S. political campaign among expats resident in foreign lands should therefore raise some serious concerns. The Foreign Agents Registration Act of 1966 prohibits the involvement of foreigners in funding election campaigns. If foreigners are not permanent residents of the United States possessing a green immigration card, they cannot contribute to a political campaign at any level. This was most recently confirmed by the Supreme Court on January 9, when two Canadian citizens temporarily living in the U.S. were denied the right to contribute to either the Republican or Democratic Party. The justices dismissed arguments that the prohibition was a violation of the First Amendment right to free expression. The suit had been filed by the plaintiffs in the wake of the Citizens United ruling of two years ago, which opened the door to increased political contributions by entities such as labor unions and corporations.

The prohibition on foreign involvement in U.S. political campaigns is quite broad and includes foreign-owned companies and even the U.S. subsidiaries of foreign firms. But there are nevertheless some enormous loopholes in the law seeking to limit access to overseas money. The Supreme Court ruled in Citizens United that corporations can spend unlimited money on Political Action Committees. Because many large corporations operate internationally, the ability to monitor money flows becomes problematic, particularly in terms of defining what actually constitutes an American company. As a general rule of thumb, a company must be legally registered in the United States to comply, but some corporations that are located in part overseas for tax reasons can also make the cut. Because of the complexity in determining what is foreign, in many cases the candidate’s campaign staff itself must report suspected infractions, and there is inevitably considerable doubt that the self-policing is very effective.

Another channel for foreign money to enter the system is through the recently created Super PACs. Romney’s principal Super PAC is Restore Our Future, while Obama’s is Priorities USA. Super PACs are legally independent political organizations, not tied to any specific campaign or candidate, so they are able to take in money and disburse it without disclosing the source of the funds. If the Federal Election Commission were to become aware of foreign money actually winding up in a candidate’s coffers such contributions would be illegal, but as currently constituted the flow of money from the Super PACs is not normally broken down to indicate the original sources of funds.

There are also trade and interest-group organizations, including the United States Chamber of Commerce, that obtain money from both domestic and foreign sources and then use the money to support certain candidates and positions. As in the case of the Super PACs, foreign money is not supposed to wind up being used to support a specific candidate or party, but the regulation is purely internal in that the organization involved must itself determine how to disburse the funds legally. President Obama and former President Bill Clinton have both accused the U.S. Chamber of Commerce of using funds obtained from foreign governments and corporations that are members of the chamber to pay for ads supporting particular candidates. They and other critics note that money is fungible, and even if the ads technically come out of an account that has been checked to make sure that it is wholly American in origin, foreign funds can be used for other activities, freeing up the U.S. money in the first place.

And then there are issue ads. Any organization can place ads that address certain specific policies, even when they are closely identified with the platform of a particular party or candidate. The government refers to these as “ballot issues” to distinguish them from actual electoral campaigns. A foreign government can, for example, fund an advertising campaign that disputes the evidence supporting an impending referendum or vote that will have a negative impact on it. The Turks did so when Congress was last debating approval for an Armenian genocide resolution, and Kuwait very effectively campaigned for the United States to intervene against Saddam Hussein in 1991.

Finally, there is money laundering. It is impossible to estimate how much money from foreign sources winds up in bank accounts of American citizens and corporations only to be recycled to use in influence buying campaigns focused on U.S. politicians. FBI whistleblower Sibel Edmonds has suggested that considerable money has circulated in that fashion, most particularly on behalf of Turkey and Israel.

All of the above is not to suggest that the United States is awash with foreign money that is altering the course of elections or adversely influencing policy, and it must be noted that President Barack Obama is also seeking funds overseas, including in China. But the decision by the Mitt Romney campaign to openly stage major fundraisers abroad is troubling. It is perhaps a recognition that Romney is seeking to become president with the support of a financial-services constituency that is both international in nature and which shares here and abroad a certain common viewpoint on regulation, or lack thereof. They have a vested interest in being heard by a politician who hopes to take the helm of the world’s only superpower. Bankers have been rightly criticized for furthering their own interests while simultaneously enabling a number of national economies to slide into recession, damaging the livelihoods of millions. So the real question will have to be, who will own Mitt Romney if he is elected?

Philip Giraldi, a former CIA officer, is executive director of the Council for the National Interest.

about the author

Phil Giraldi is a former CIA Case Officer and Army Intelligence Officer who spent twenty years overseas in Europe and the Middle East working terrorism cases. He holds a BA with honors from the University of Chicago and an MA and PhD in Modern History from the University of London. In addition to TAC, where he has been a contributing editor for nine years, he writes regularly for Antiwar.com. He is currently Executive Director of the Council for the National Interest and resides with his wife of 32 years in Virginia horse country close to his daughters and grandchildren. He has begun talking far too much to his English bulldog Dudley of late, thinks of himself as a gourmet cook, and will not drink Chardonnay under any circumstances. He does not tweet, and avoids all social media.

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