Combatting Foreign Interference

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Man typing on laptop with map of United States and Russian flag in background

In America, we have a system of government that is supposed to be of, by, and for the people free from foreign influence to protect the right of American citizens to democratic self-governance.

To protect our right to self-governance, federal law bans foreign nationals, including foreign citizens and governments, from spending in federal, state, and local elections. However, in 2016 and 2018, foreign interests spent substantial sums to influence U.S. elections exposing the vulnerabilities of campaign finance laws. The laws governing our campaign finance system have failed to catch up to the digital age, and they have failed to protect our democracy and the right of American citizens to democratic self-governance.

Special Counsel Robert Muellers report on Russian interference in 2016 confirmed that foreign interests made huge, systematic efforts to secretly influence U.S. elections without detection through paid digital advertising and fake accounts, designed to either promote a candidate or create public unrest. As Mueller wrote, Russian actors carried out a social media campaign designed to provoke and amplify political discord in the United States.

A combination of inadequate electoral transparency laws and inaction by the Federal Elections Commission (FEC) opened the door for Russian actors and others to engage in these efforts to influence U.S. elections without detection. Nearly $1 billion in secret money known as “dark money,” has been spent on U.S. elections over the past decade. The true sources of dark money used to influence our elections are not publicly disclosed, so we do not know how much may have come from foreign sources.

Moreover, foreign interests have a green light to spend money on state and local ballot measures. Despite the ban on foreign spending in federal, state, and local elections, the FEC interprets the ban to apply only to races for elective office, letting foreign interests pour millions of dollars into state and local ballot measure campaigns.

Ultimately, we may never know whether foreign influences swayed the outcome of any election, but we do know that if gaps in our laws are left unaddressed, foreign interests will continue to exploit them. While Congress and the FEC have failed to act, states and local governments can take steps that tighten the restrictions on foreign campaign spending and stop secret, unlimited political contributions, which can hide illegal foreign money. Plugging the loopholes that permit foreign spending and creating full transparency about the true source of all campaign funds can prevent foreign interests from influencing our elections.

First, a strong policy to prevent foreign interference in our elections must include updating our treatment of digital campaign ads, described more fully in our Digital Ad Disclosure Toolkit, and requiring disclosure of the true source of campaign funds, explained in Stopping Secret Spending. Second, lawmakers should prohibit spending in elections by foreign-influenced corporations and extend the foreign national ban to prohibit spending to influence ballot measures.

Foreign Interference Toggle

We need to update the existing ban on foreign spending in our elections to ensure that corporations with significant foreign ownership or control are subject to the same rules as foreign individuals or governments. Before the Supreme Court’s 2010 decision in Citizens United, all corporations were prohibited from paying for campaign ads with their business profits. Election spending by corporations with significant foreign influence was not a major issue. But in the aftermath of Citizens United, Congress and the FEC have failed to address whether corporations with significant foreign influence are subject to the ban on foreign interference in U.S. elections.

In the 2016 presidential election, a foreign-owned corporation known as American Pacific International Capital (APIC) contributed $1.3 million to a super PAC supporting presidential candidate Jeb Bush. This illegal contribution came to light because one of the owners of APIC, a foreign national from China, admitted to a reporter that he directed the contribution. Instead of relying on wayward comments to reporters, the law needs to provide clear standards to prevent foreign nationals from attempting to spend in U.S. elections.

 

How does it work?

The prohibition on foreign political spending needs to be expanded to ensure that corporations with significant foreign influence cannot spend in our elections. This means specifically preventing political spending by corporations that are considered “foreign-influenced,” including:

  1. Corporations with a foreign owner who is involved with decision-making for the corporation’s political spending.
  2. A 501(c)(4) non-profit organization that receives more than 20% of its donations from foreign sources.
  3. Corporations for which a single foreign owner holds 5% or more of total equity or outstanding voting shares.
  4. Corporations for which two or more foreign owners hold 20% or more of total equity or outstanding voting shares.
  5. Corporations that are organized under the laws of or having their principal place of business in a foreign country.

 

Legislative highlight:

At the federal level, the proposed REFUSE Act of 2018 includes a prohibition on political spending that applies to corporations with certain levels of foreign ownership, decision-making, or funding. In St. Petersburg, Florida, the city passed a law in 2017 that helps determine whether a corporation is “foreign influenced” and, thus, prohibited from spending in city elections.

Current federal law includes a ban on foreign spending in connection with U.S. candidate elections for federal, state, and local office, but a more effective ban would also prohibit foreign nationals from spending on state and local ballot measures that can have a far-reaching impact on states and municipalities. Ballot measures are the most direct form of democratic law-making. Foreign spending has no place in this kind of direct democracy.

In 2020, a Canadian public utility owned by the Government of Quebec spent more than $8 million to defeat a state ballot measure in Maine. The public utility, Hydro-Quebec, is involved in a $1 billion power transmission project in the state, but concerned Mainers organized to run a ballot initiative opposing the project. To help defeat the ballot measure, Hydro-Quebec spent eight times as much as the group supporting the measure, outspending the group by more than $7 million. Maine’s experience is similar to other states and cities, in which corporations with substantial foreign influence have spent tens of millions of dollars on ballot measures, threatening to drown out local voices.

 

Legislative highlight

At the federal level, the proposed DISCLOSE Act of 2019—which is included in H.R. 1, the “For the People Act”—would extend the foreign national ban to prohibit foreign spending on state and local ballot measures nationwide. At the state level, seven states have enacted laws that prohibit foreign spending on state and local ballot measures. These states include California, Colorado, Maryland, Nevada, North Dakota, South Dakota, and Washington

 

If you have questions about this policy proposal, we'd love to hear from you! Just e-mail us. 

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