How authoritarian regimes are exploiting the UN SDGs

0:12Welcome to the latest Margin Notes podcast with me, Simony Kiriakou, editor of ETI Advisor. Earlier this year, as you may remember, I interviewed a researcher from the University of Buckingham, Sergei Christo, about some extraordinary revelations uncovered by his research into European ESG funds. He discovered that hundreds of ESG funds had been investing into Russian assets, including those not typically found in ESG portfolios, such as oil and gas, even after it had become widely known that President Putin intended to invade Ukraine. This exploded the common assumption that had prevailed since 2022, namely that ESG funds had been accidentally caught up in the war and they were therefore unintentionally investing in such assets.

0:55But FTA Advisors' podcast led to a can of worms being opened, including revelations that dozens of authoritarian regimes have been deliberately flouting the UN's sustainable development goals. This summer, the Human Rights Foundation has produced a 98-page report which analyzes the current state of the SDGs and explores how authoritarian regimes are manipulating and exploiting them for their own interests. The hope is that this will land on the tables of policymakers at the upcoming UN General Assembly. As the report, which has been seen by FT Advisor, states, in context where repression, absence of civil society and impunity prevail, these regimes repurpose the goals as tools of control, propaganda and international legitimization rather than engines of genuine development.

1:43Here to talk with us is the author of that report, Sergei Korotkov. He's an international legal associate with the Human Rights Foundation. By the end of this podcast, which qualifies for 30 minutes of CPD, you should be able to outline the ways in which authoritarian regimes undermine the UN's sustainable development goals, list the ways in which policymakers could take action to rectify this, and summarise the ways that advisors and investors can play their part in holding these countries to account. Sergei, thank you so much for joining us. Thank you so much for having me. That's great. Sergei, could I ask you just briefly, what prompted this report?

2:21Well, two things, really. At Human Rights Foundation, the lion's share of what we do consists of documenting abuses committed by autocratic regimes, studying them and advocating against engaging them, including investing in these cryptocratic dictatorships. and ultimately because that engagement fuels the human rights abuses they commit. And sustainable development initiatives, in our view, is just the part of that general picture. But really, the main reason, and it's quite personal, really, is that today the view from the window is kind of big, to be honest. A climate is breaking negative factors.

3:06That is easy to attest. hunger, poverty, inequality, they're all rising. They're not getting much better, judging by any metrics. And all that, at the same time, and that is slightly the good ahead of the story, the initiative that is meant to tackle all of it, to solve all of it, the United Nations Sustainable Development Goals, is on track to achieve only 16 % of its targets. And that is according to the most recent report. The remaining 84 are just stalled. They're regressing. And that is the result of 10 years since their adoption. Four years until the deadline in 2013. So we're literally moving away from it.

3:54Can I ask there, though? I mean, those are really stark figures. But is that because people and countries have understood the Sustainable Development Goals as just aspirations or pledges? Or is it supposed to be an actual agenda that people are held accountable to? Well, the SDGs are the aspirations. That is true. They were adopted in 2015, Sustainable Development Goals, 17 of them collectively as 2030 Agenda, as a United Nations resolution. So it is not a treaty, it doesn't carry legal obligations. But I would say that they steal much more than promises. They provided a clear blueprint, a map, for the countries to achieve.

4:45But because of inherent drawbacks in its system, the drawbacks that we reported on the report as well, this underperformance happened. That is mostly the outcome, not of the goals themselves, but of the way how they were formulated, how they were structured, how they were designed. If you let me elaborate, you see, despite them being a roadmap, a blueprint, they nonetheless are voluntary and they rely on self-reporting. countries do submit these voluntary national reviews in which they assess and report on their own performance. And they don't have any penalties for noncompliance. They don't have any sanctions.

5:39And so it allows them basically to self-report. It provides them a cost-free opportunity to self-report on the progress even when there is no progress at all. And so what they do, they basically grade their own homework. So they're basically manipulating. They're manipulating the way that they're reporting on the goals. And that means that they can look like they're actively engaging with the SDGs. But in reality, they're doing anything but. Is there a financial incentive or a political incentive for them to be deliberately manipulating the SDGs rather than just saying we're not interested at all?

6:22Well, the way we see it, and that relates to how political science views authoritarian regimes, is that regardless of the flavor of autocracy, that could be an authoritarian state, a party state, an absolute monarchy, a competitive authoritarian state, they all are generally focused on one goal only, and that is, well, maximize the chances of their survival, keep the power of all costs. And all the policy decisions, all the measures that we adopt, domestic or external or foreign, they are all focused on achieving that single goal. And then, of course, they can also attach and obtain some resources on the way.

7:09But at the end of the day, that is for the law and survival. And that is what we reported and that we documented as well. We analyzed nine authoritarian countries. And just to basically explain to the listeners how we define authoritarian countries, it's quite easy. We look at the different pillars, we look whether or not there are elections, whether or not they limit the political freedoms, whether or not there are working courts and other accountability institutions. We created the whole tyranny tracker for it. It's our project that tracks and maps countries for their regime. And we looked in depth at the nine of the authoritarian countries.

7:53Yeah, so Azerbaijan, Belarus, China, Iran, North Korea, Nicaragua, Russia, Saudi Arabia and Venezuela. Exactly. Yeah, exactly. And we looked at them to see how they interact with sustainable development goals. And the conclusions we reached, and because we base it on some theoretical backbone robust framework, I think can be extrapolated to all other authoritarian countries engaged with sustainable development goals as well. Yeah, I could see that. And you've given some very helpful tables to explain in a nutshell, very visual graphic there, talking about whether they're sort of not committed at all to the SDG pillars.

8:34And, you know, the SDG pillars, people, planet, prosperity, peace and partnerships. And I can see that out of the nine, two you've classified as being selectively committed and China and Saudi Arabia. And as our readers will know, these countries have very strong geopolitical ties. What happens in one of these countries affects nearly every other country, not just in their region, but globally. So if you can sort of look at China, because China's often been upheld as a paragon of virtue when it comes to electric vehicles and driving the green transport revolution. But in reality, they don't score very highly on a lot of the commitment to the framework.

9:22And there are still some serious questions. So can we look at China and how that fits in as an example of why it's only selectively committed to the SDGs? Indeed. To explain how all this occurs, it's important to understand that authoritarian countries view SDGs as a sort of a la carte menu. They choose to support some of the goals that are convenient to them, that doesn't oppose their ultimate goal of survival. But they systematically ignore anything at least somewhat related to accountability, human rights, transparency, the rule of law, anything that endanger the rule of law, the rule in general.

10:08And China is a very good example of it. It adopts limited policies aimed at the environment protection, at the social points, but at the same time, it does so in a politically constrained environment. So some of the policies adopted might not be effectively enforced. That is something that we observed in all of the countries analyzed. as long as you have ports silenced, constrained, you cannot really sue the government for failure to abide by the international aims at achieving some non-pollution records, right? And so they might adopt some policies, but their enforcement will not be good. And that is the case of China.

10:57But what they also do, they tweak the narratives in the way that is convenient to them, sometimes to the whole detriment of the framework. And since you brought the China, it's a very good example. The regime is quite famous for its poverty alleviation campaigns. It frames them in a very much sanitized, sustainable development economics language. But what they really do, they take Uyghur farmers, other ethnic minorities, they strip them of their ancestral lands, take their cultural centers, take their way of life, and then they forcefully coerge them into working into a highly surveilled factory environment.

11:44And I think that is something that many people know already. It's heavily reported on. Yes, Amnesty International has done big reports on this, and it's been sort of noted at the UN as well. So if people know about this, why are people still sort of putting money into China and investing in China in those particular areas where there is known to be a sort of a reappropriation or a misappropriation of an ethnic minority's land and farms? Why would you put money into that? Well, there are China, which practices, some at least are heavily documented, but there are other countries, practices of which are not as documented.

12:26I think somewhat documented, but still a very good example is Azerbaijan, another country that we reported on, is that it is a highly centralized state ruled by the Aliyev family for many, many decades. And the major sector of its economy is fuel exports, right? But at the same time, they adopt these environmental policies, It seems counterintuitive. Well, what they do, they free the sector of domestic economy, reserve for fuel and oil, and then they channel it to increase the exports to Europe. Ultimately, it is a judgment of the overall sustainability agenda. But they nonetheless paint it as aimed at the SDG achievement.

13:16People still invest in it. Well, because the regimes are successful in building these narratives. They invest heavily on their image. Azerbaijan just recently hosted a COP meeting in which a lot of countries, diplomats, investors engaged with sustainable development agenda travel to Azerbaijan, to Baku, to participate in it. And so the success of these regimes in framing that, in framing their participation and engagement in SDGs as actually aimed at SDGs, makes people actually invest in it. Not many people really go into the depths about where this money and how this money expands. but they actually rely on the UN branding because at the end of the day, what these countries do, they use this umbrella of marvelous UN branding, SDGs branding, and they say, all right, we are doing something aimed at this achievement.

14:17But at the end of the day, again, they basically self-report on their successes. They omit their drawbacks. And even when they report, they may not be genuinely interested in providing the correct information. Still, some people base their decisions on that. Sure. And we can see from documents widely available on the internet, for example, that regimes such as Azerbaijan, they've allocated specific budget resources towards SDG implementation via its national priorities. But do we actually see the output as one thing to allocate budget resources to implementing SDGs, But if we don't see the measurable impacts, if we don't see outcomes, how can investors really test to see whether this has happened or whether this is happening?

15:09Well, as with any project, I think, independent audit is the best way to check the results, which is not available with the Sustainable Development Goals. They can channel resources. Some of them may land into some viable projects. But in many cases of countries that we have documented, especially, say, in Latin American countries, many of these funds are being misappropriated. That is happening. And in the absence of free press, in the absence of civil society, there are no one left to actually undercover all these practices. So it's really a very granular work of trying to find small evidence pieces to stitch together the whole picture of this manipulation happening.

15:59So yes, that's basically it. So what you're sort of saying in a nutshell is that it's not a case of the spirit being willing, but the infrastructure or the government being weak. You know, the spirit is willing, but the body is weak. is like they haven't actually got a will. The spirit is still not willing. So it's not just we want to do the right thing, but we're finding that we can't. It's we don't want to do the right thing, but we just want to look like we're doing it so that we can get FDI and we can get people investing and we can get some money somehow, which gets channeled into different areas.

16:39Exactly. That's exactly what is happening. And we looked not only at the instances of manipulation, but again at how they are committed to the SDGs. And we found time and again, again and again, that the countries are not committed. They couldn't care less about sustainable development. Only as long as it doesn't intervene with their rule, with their control. But this is something that we also identified in the report. sustainable development cannot be coincided with the totalitarian dictatorship control over the country, because democracy is an instrument of accountability. You cannot maintain sustainable related policies and not be accountable for their implementation.

17:28So they are not genuinely interested, and that stems from the nature of things, the nature of how authoritarian countries operate. And the way they manipulate, yes, it can be to attract FDI. Another instance that I think is quite notable for the attention of many listeners, I think, is that the UN brand allows them to effectively weaponize it to achieve their goals. For example, sanction relief. That is quite notable and coordinated effort that we have identified. So countries like Belarus, Iran, North Korea, Russia, Venezuela, Nicaragua, they routinely go to these UN SDG summits. They deliver speeches arguing that Western economic sanctions is the sole barrier preventing them from achieving the sustainable development.

18:20And they basically use these SDGs to get the sanction relief. They say it's because of the sanctions that we cannot attain sustainable development. We are really willing to. And, of course, sanctions may impose some effect on the SDGs' achievement, but sanctions there are for some reason. Usually they're imposed in response to human rights abuses, corruption, other forms of repression. And they tend to remain there as long as the repression remains in place. So instead of engaging in negotiations, stopping the abuses, pursuing sanctions relief through available channels, They weaponize the SDGs.

19:00They sell the image that we are aimed at bringing you the sustainable future. But please allow us to do that because sanctions don't. That is, of course, complete weaponization of the idea. Absolutely. And I would say, and please correct me if I'm wrong, that to date, the UN seems to be acting quite circumspectly with regards to those claims. It hasn't rushed to remove sanctions on these countries. But I'm wondering whether the UN could do more, policymakers could do more to say, we will remove sanctions if you show that you have made a concerted and measurable effort towards doing this. So meet us halfway.

19:49Well, generally all sanctions are aimed at behavioural change. So if a country shows the change in their approach towards the depression, human rights abuses, the premise of the sanctions is that they should be alleviated. That is the purpose, at least in theory. Of course, there are politics in place. But at the end of the day, you need to justify the sanctions. And it's easy to justify them as long as the human rights abuses persist. Get rid of the human rights abuses. Release political prisoners. stop this indiscriminate total control over your society, then maybe the sanctions will be removed and you will be able to engage consistently with sustainable development agenda as well.

20:34Because again, you cannot do environmental stuff and at the same time don't do human rights stuff. That doesn't work like that. It's interchanged. And this is something that UN highlighted themselves on numerous occasions. But the UN cannot enforce it meaningfully, again, because the UN is a universal organization, and they have consisted of the countries that we named, the Italian countries. And it is the UN that created that look-all with the lack of mandatory effect, with the lack of audit, with the United Nations Sustainable Development Goals that allow this manipulation to persist. So if we are looking for a change, we need to tackle policymakers.

21:14We need to tackle, on a domestic level, to tackle our own elected officials, to move towards the change in the entire UN system. Because again, the UN has a very fine promise of a better world, of a peaceful world, a promise that we all really strive to live in. But it's also marked by deficiencies. The deficiencies that have identified themselves and were recorded by many people outside our world. So it's not a monolith. It still does a lot of very good job. But at the same time, it does, to me, this practice to continue basically negating all the positive stuff that were achieved. Sure. And I note that when it comes to sanctions, the European Union has imposed sanctions on many of the countries that are on your list in your report.

22:04But then I compared that to the UN list of countries and regimes under UN sanctions. And while there is a crossover, such as Iran, such as North Korea, not all the countries on your list are actually sanctioned by the UN. So should the UN actually impose greater sanctions or impose hard-hitting sanctions specifically with a view to improving the SDGs? Well, that is, I must say, of course, slightly outside of the scope of the report as it pertains to the sanctioning policy. But the UN has an inherent institutional weakness, that is Security Council and permanent members to it, which maintain the total control or the sanctions that are implemented under the United Nations Charter.

22:54The United Nations Charter allows sanctions to be imposed only after the Security Council agrees to do so. And while the Russian Federation, other countries that commit human rights abuses, engage in waters of aggression, that will not happen. Security Council will not impose any sanctions whatsoever. But it's yet another weakness that the UN system has. A weakness that has been identified and should be worked with. I think that if we're speaking about how to improve the attainment of sustainable development goals or any other compatible goals, we need to look at the structural changes. SDGs are just the symptom of it.

23:39And the continuation of the weaknesses are shared within the entire United Nations system. Again, at the end of the day, the UN does a very fine job. There are a lot of very impactful initiatives that they do, but they also carry weaknesses that undermine the total and overall assets that they implement. hmm well i you know it's a sort of in a way it's asking for turkeys to vote for christmas because russia is a permanent member of the un security council it's got veto power it's never going to block any enforcement measures or mandatory sanctions against itself or against its its friends um such as belarus so you can't i guess you can't really use a policy lever there but what What could policymakers do to make sure that the sustainable goals are not just some kind of nice to have or some kind of affirmative agendas, but actually make it that it is actually measurable and timely and countries must sign up by a certain time or something will happen?

24:51Well, first and foremost, instead of completely dismantling the system of the United Nations and other international organizations, policymakers all around the world, I think, should recognize the challenges that we're facing. that indeed the promise of the bright and sustainable future is sleeping further away from us today. They should take it seriously and undertake at least discussions at this point, but the discussions might be too late, active changes to the structure of the system to make it more efficient in tackling these universal problems. And that will be possible only after the entire system will undergo substantial changes, go to the General Assembly, introduce the resolution stores, the change of the United Nation.

25:42There are multiple avenues how it can be achieved. With the Sustainable Development Goals, one of the most imminent changes that should be implemented, or with any other framework that will happen after the SDGs are finished with the 2030 deadline, it is to introduce more robust monitoring, internal independent audit, not linked to self-reporting by the states themselves. And I do believe that a major factor in all of this, as with any decision-making, I think, lies on the people in general, not only on the policymakers, but on the populace, on the people who elect officials to make clear that this is something that should be tackled.

26:29in their time in their office, but also by the people with power and with the resources. A lot of these strategic projects that countries like Azerbaijan, China, other countries implement, they rely on sovereign and private funds acquired through FDI, through other resources, through other sources. And many people, many organizations do invest in all of this under the very fine premise that they are funding the sustainable development. So with this report, I think we are asking them not to rely on state-supplied data, not in this environment, not when we documented how easily weaponized it is.

27:17The worst-case scenario, the money spent to the bed-fired sustainability projects will be lost, misappropriated. The worst-case scenario, they will fuel repression. that may happen in countries like China, where these poverty alleviation policies happen. So, yes, this is something that can be done. And if the money will stop going into these sources, into these projects, maybe then something will change. Because as with the market relationship, if you don't buy a product, supply will adjust its marketing practices. And that applies not just to people actually putting money into these infrastructure projects, but also to ordinary investors.

28:00So, if I'm an investor and I want to invest in an ethical or sustainable fund, I need to be putting pressure on the fund manager to make sure that he or she is paying attention to what they are investing in. And are the companies really doing what they say? Are the countries in which they're operating, really adhering to the SDGs and really putting their money where their mouths are. Because this is an important thing for ordinary investors in the UK rely on their advisor, the platform, or the fund manager to do all that heavy lifting for them. But at the end of the day, it's our money. So we could pull it if we wanted to.

28:42And lots and lots of people pulling their money could also be a significant signal that's sent to these countries and to these companies, right? Right, exactly. And that is something that can be done. And I do believe it will have a most immediate effect on the outcome. Policies take time. Moneys are much more flexible, I believe, and may have much more prominent effect and much more prompt effect on the outcome of these situations that we have identified. And I think also there's a great work that ratings agencies perhaps can do, or people who are creating indices of, mostly these are emerging market countries by far and above, or frontier market, but emerging market indices, people creating those could actually perhaps create a carve out and say well actually if a country isn't adhering in spirit and in deed to the SDGs then we're not going to include it in our ethical index or our green index or our FTSE or MSCI for good kind of indices so that might also be quite significant because then all of the passive investors all of the people investing in index funds and there's billions of worldwide being invested in these index funds, that automatically then gets taken out of the system.

30:10So we're talking that could be quite a phenomenally large economic impact, right? Exactly. At the end of the day, we, again, need to be mindful about what is happening on the ground. It's, again, another reminder to be very careful with where you put your money and to make all the due diligence research about this. UK investment advisors have the forced labor supply legislation, but that's the only part of the picture. There are much more aspects not covered by the acting legislation. And we do have these very fine shortcuts, like United Nations Sustainable Development Goals, that arguably make a promise that if we put their money, our money, at the projects under the umbrella of SDGs, it will end up in compliance with the relevant legislation and in compliance with the spirit of SDGs.

31:08Well, not always. And that is something that we, any investor, anyone really, should keep in mind is that, again, authoritarian states acting as they are. That is exactly what they do. They manipulate. They try to strive for their survival. We don't live in a fairytale. And these countries will not stop doing that even when engaging with a sustainable development agenda. So let's keep pressure. Let's keep pushing for actual change, for meaningful change. Because at the end of the day, that is the future of our children. And I, again, as I said at the very beginning, the image from the window is very bleak.

31:52Unless we do something now, we might be missing the train. So, Gai, can I ask, when is this report going to be made widely available? Apart from what neftyadvisor.com, of course. We are hoping to release it closer to the United Nations General Assembly meeting. And it will be available on our platform as well, on the Human Rights Foundation, HRF.org. Excellent. Well, thank you very much, Sergei, for talking to us. And I'm sure that we will be able to drive positive change because I believe in the greater good and I believe most people are good people at heart. Thank you so much, truly. Thank you.

32:30Well, thank you very much, Sergei, for talking to us. And thank you also for listening. I just want to remind you that this qualifies for CPD. For more information on this subject, stay tuned at ftadvisor.com. And until next time, take care.

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