Legal Update – New Law on “Foreign Agent” NGOs

On July 21, Pres. Putin signed the much-discussed amendments to the Law on Nongovernmental Organizations (or, Noncommercial Organizations as their called in Russian). Given the back-drop of protests and other opposition activity, the new law generated more interest than usual, both in Russia and abroad. Indeed, both Russian activists and the U.S. State Department criticized the law, and many Russian NGOs have pledged non-compliance with its provisions. The NGO law has been in the works for a long time, with Pres. Putin warning NGOs from receiving foreign funds as early as 2005. At that time, Putin justified his position by stating, “He who pays the piper calls the tune” (Кто платит, тот и заказывает музыку). Coincidentally, this same phrase was invoked by Sen. Konstantin Tsybko and again by Putin, during consideration of the current NGO law (as well as by Putin spokesman Dmitry Peskov during a New Yorker interview last year, regarding state funding of television stations). Vedomosti Opinion editor Maxim Trudolyubov wrote an interesting piece on the “piper principle” that infuses Putin’s thinking.

What is in the NGO Law

Most important, the NGO law is not itself a stand-alone law, but rather a number of amendments to existing legislation. The NGO law is thus organized into four substantive sections, each amending a different, existing Russian law. Below is a summary of the amendments, broken down by the existing laws they amend:

Article 1 – Amendments to the Law “On Public Associations”

  • New Registration Requirements – in order to obtain legal status, a public associations must register with the Russian government. This registration process now includes a requirement that the public association declare its inclusion on the list of NGOs serving as a “foreign agent.” A public association serves as a “foreign agent” if it receives money or other property from foreign sources and engages in political activities (more on this in the “On Noncommercial Organizations” section below). A public association must also inform the federal registration body, in a form and time determined by that body, about the volume of money or property received from foreign sources, the purposes for which this money/property was intended, and the actual uses of the money/property.
  •  Limitation on Activities Prior to Registration - public associations serving as a “foreign agent” and participating in political activities must register prior to engaging in said political activity. Informational materials (i.e., on size/sources/purposes/expenditures of funds) must be provided on a quarterly basis.
  • Money Laundering / Terrorism Hook – the NGO law adds a requirement that the federal agency responsible for monitoring money laundering the financing of terrorism in Russia inform the federal registration body when a public association is in non-compliance with Russian law, either at the federal registration body’s request or on its own initiative.

Article 2 – Amendments to the Law “On Noncommercial Organizations”

  • “Foreign Agent” Provision – the heart of the law. This new provision defines and NGO as “serving as a foreign agent” when it (1) receives money or property from foreign governments, international organizations (e.g., UN, World Bank), foreign organizations, foreign citizens, stateless individuals, or Russian citizens receiving money or property from the aforementioned sources, and (2) engages in political activities (aside from political parties). An NGO is deemed to be engaged in political activities when, regardless of the goals stated in its charter documents, the NGO organizes and participates in political acts, aimed at influencing decision-making by public authorities, intended to change government policy, or intended to shape public opinion with respect to government decision-making or policy. Political activity does NOT include activity in the following fields: science, culture, art, health, social support, defense of motherhood/children, support for the disabled, environmental protection, philanthropy, and volunteerism.
  • Registration Requirement – similar to the public association requirements, NGOs serving as “foreign agents” must register as such.
  • Accounting Provisions – the NGO law subjects NGOs serving as “foreign agents” to mandatory statutory audits. Such NGOs also must submit a variety of documents and information to the government, including: sources, purposes, and actual uses of foreign money/property (quarterly basis); the composition of board/management bodies of the NGO (every 6 months); and an auditor’s report (yearly). The state entity to which these documents are provided may publish this information on its website or provide them to the media.
  • Audit Provisions – the NGO law also provides for planned and unplanned audits of NGOs serving as “foreign agents.” Planned audits may not occur more than once a year.  Unplanned audits, however, can be conducted on the basis of one of several circumstances: (1) expiration of the period within which an NGO is supposed to correct an alleged violation; (2) receipt of information from applications/declarations by citizens or mass media indicating that a “foreign agent” NGO is “extremist”; (3) receipt of information from government agencies that a “foreign agent” NGO is violating Russian law; or (4) an order issued by the head of the state authority responsible for overseeing “foreign agent” NGOs.
  • Suspension of Activity – if a “foreign agent” NGO fails to register with the state authority, it is prohibited from participating in mass/public rallies and from using bank deposits except to pay for day-to-day expenses and taxes.
  • Money Laundering / Terrorism Hook – same as section above
  • Public Warning – NGOs serving as “foreign agents” must include a warning label stating as much on any materials distributed through the mass media (including the internet).
  • Religious Organization Exemption – the NGO law explicitly exempts religious organizations “registered in the established legal framework” from the new “foreign agent” provision
  • State Corporation Exemption – the NGO law explicitly exempts from the “foreign agent” provision: state corporations (государственные корпорации), government companies (государственные компании), and NGOs created by them, and government and municipal institutions (государственные и муниципальные учреждения).
  • Business Groups Exemption – the NGO law explicitly exempts employer associations (объединения рабодателей) and chambers of commerce (торгово-промышленные палаты) from the “foreign agent” provision

Article 3 – Amendments to the Criminal Code of the Russian Federation

  • Illegitimate NGO Creation – a new criminal violation, for creating an NGO that threatens violence to or the health of citizens, carries with it a fine of up to RUR 300k or 4 years imprisonment. Creating an NGO that urges citizens to not perform their civic duties (гражданские обязанности) or other illegal acts carries a fine of RUR 200k or three years imprisonment. Participating in the activities of either of the previous two types of NGOs carries a fine of RUR 120k or 2 years imprisonment.
  • Willful Refusal to Comply with “Foreign Agent” Requirements – willfully refusing to comply with the requirements of the “foreign agent” provisions of the NGO law carry fines of up to RUR 300k or imprisonment or corrective labor (исправительная работа) of up to two years.

Article 4 – Amendments to the Law “On Combating Money Laundering and the Financing of Terrorism”

  • Obligatory Monitoring of Foreign Donations – foreign donations exceeding RUR 200k (around $6k) are now subject to obligatory monitoring.

Analysis

Based on the text of the NGO law, it is difficult to disagree with the law’s critics, who claim that it amounts to a wholesale attack on Russian civil society. The Bellona Foundation – an Environmental NGO based in Norway – wrote a detailed post on how the NGO law would affect organizations like itself, and some useful analysis as well. Other useful English-language analyses can be found here and here

Expansive Coverage

One point that stands out is the broad range of activities to which the NGO law could apply because of the expansive definition of “political activity.” Moreover, the NGO law contains an inherent contradiction in that it applies to NGOs regardless of their stated goals, while creating a categorical exception for a host of organizations of a religious, business, scientific, etc., nature. Thus, it is not clear whether a religious organization, by definition, is not subject to the “foreign agent” provision, or if it could be subject to that provision if it is found to be a religious organization that also happens to engage in political activity. My guess is that the latter applies.

Exceptional Exceptions

The exceptions themselves are fascinating and perhaps reveal something about the mindset of the Russian political elite. Aside from exempting state corporations – wouldn’t knowing the foreign sources of their funding serve the public interest? – the choice of expressly exempting religious organizations and business lobby groups is interesting. First, it is notable that the Russian orthodox church is one of the most trusted institutions in Russian society, and likely receives significant funding from abroad. Second, Russia is still trying to prove to foreign investors that it is a great place to put their money. Thus, the NGO law’s explicit exemption of these groups from the “foreign agent” provision seems like a “divide and conquer” strategy aimed at nudging these groups towards siding with the current regime over the opposition. But, as noted above, the NGO law still likely applies to religious and business groups engaged in “political activities,” making this a Faustian bargain indeed.

U.S. Law Copy?

Unsurprisingly, the negative reaction to the NGO law has generated replies that the law is an “exact copy” of the U.S. Foreign Agents Registration Act (FARA) (this is a good example of Russian “whataboutism“) . The Russian Legal Information Agency (RAPSI) already pointed out some differences between the two laws. Perhaps the most important distinction, however, is to which types of political activity the two laws apply. Whereas the Russian NGO law applies to political activity generally, so long as the NGO receives foreign funding, FARA applies to “political activities for or in the interests of … [a] foreign principal.” In other words, the U.S. government must demonstrate that the person or organization receiving the foreign funding is engaging in political activities on behalf of the source of that foreign funding in order for FARA to apply. One would assume that the Russian government would wholeheartedly accept a similar foreign principal-local agent nexus requirement, given that it believes opposition NGOs are acting on behalf of the State Department and other foreign interests.

“Piper Principle” Policy – Recipe for Failure

Perhaps the most telling fact about the law is the conspiratorial worldview it reflects, in which any foreign funding – even from, e.g., the UN – is equated with nefarious purposes. To be sure, Russia should have – and does already have – laws aimed at preventing improper influence on its government, including from abroad. But there is no evidence that (1) NGOs receiving foreign funding are systematically doing the bidding of foreign masters or (2) that the law could not be narrowly tailored to address only instances where an NGO acts on behalf of a foreign principal. Given the context in which it was adopted, it is more likely that the NGO law is aimed at deligitimizing legitimate critiques of Putin and the power vertical. The easiest way to accomplish this is through bureaucratic harassment and using the “foreign” label, which is actually quite popular with most Russians.

The problem with this strategy is that Russia cannot – to borrow another folk saying – have its cake and eat it too. As Russia’s leaders know, the modernization of its economy requires more interactions abroad, not less – both in terms of trade and investment. By fueling jingoistic attitudes to serve short-term political goals, Russia’s leaders will undermine the country’s long-term development goals.

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4 Responses to Legal Update – New Law on “Foreign Agent” NGOs

  1. marknesop says:

    “In other words, the U.S. government must demonstrate that the person or organization receiving the foreign funding is engaging in political activities on behalf of the source of that foreign funding in order for FARA to apply.”

    I’m afraid that’s a misleading interpretation of the law. According to the U.S. Department of Justice, “The purpose of FARA is to insure that the U.S. Government and the people of the United States are informed of the source of information (propaganda) and the identity of persons attempting to influence U.S. public opinion, policy, and laws.” It seems unlikely one could get out of that envelope simply by claiming the organization was lobbying on behalf of the United States but was funded by, say, Israel, and it would be difficult indeed to satisfy the conditions prescribed here by the DOJ were your interpretation correct. That would be too easy; you would simply set up your political NGO, then funnel its funds through a third country. FARA also specifically includes “any entity organized under the laws of a foreign country or having its principal place of business in a foreign country.”

    Nor is FARA the only law regulating the presence in the United States of foreign NGO’s or foreign lobbyists looking to shape American policy. The Lobbying Disclosure Act (LDA) of 1995 captures those who are engaged in lobbying activities, and they must register under the LDA.

    18 USC 951, “Agents of Foreign Governments” specifies that the term “agent of a foreign government” means an individual who agrees to operate within the United States subject to the direction or control of a foreign government or official, except that such term does not include—
    (1) a duly accredited diplomatic or consular officer of a foreign government, who is so recognized by the Department of State;
    (2) any officially and publicly acknowledged and sponsored official or representative of a foreign government;
    (3) any officially and publicly acknowledged and sponsored member of the staff of, or employee of, an officer, official, or representative described in paragraph (1) or (2), who is not a United States citizen; or
    (4) any person engaged in a legal commercial transaction.

    It goes on to close any potential loopholes in paragraph (4) by spelling out that “Notwithstanding paragraph (d)(4), any person engaged in a legal commercial transaction shall be considered to be an agent of a foreign government for purposes of this section if—
    (1) such person agrees to operate within the United States subject to the direction or control of a foreign government or official”.

    You can go to prison for 10 years if the government successfully proves you in violation of 18 USC 951.

    http://www.law.cornell.edu/uscode/text/18/951

    18 USC 2386, “Registration of Certain Organizations”, provides that an organization is “any group, club, league, society, committee, association, political party, or combination of individuals, whether incorporated or otherwise, but such term shall not include any corporation, association, community chest, fund, or foundation, organized and operated exclusively for religious, charitable, scientific, literary, or educational purposes” and that registration of said organization with the Attorney General is required if it engages in “any activity the purpose or aim of which, or one of the purposes or aims of which, is the control by force or overthrow of the Government of the United States or a political subdivision thereof, or any State or political subdivision thereof”. How many American-backed NGO’s in Russia might fall under that umbrella? Any group of individuals, one of whose aims is the political subdivision of the government of the Russian Federation?

    http://www.law.cornell.edu/uscode/text/18/2386

    I don’t know why every effort to illustrate normative comparison or rationalize legal reform has to labeled “Russian whataboutism”. What’s any potential defendant supposed to do; scuff the dirt with the toe of his show, hang his head and mumble, “Yeah, I guess that was a bad call. Let’s go back to the way it was, boys”? American law is considerably more restrictive in every respect and casts a much broader net. And even so, we are given to believe – by dint of no end of squalling – that the very highest aspiration Russia could entertain would be to pattern its laws on those of the United States of America.

    Just as long as the source is not acknowledged, apparently. Because unless the comparison is favourable, that would be whataboutism.

    • marknesop says:

      That should have been, “toe of his SHOE”, of course. Christ, no matter how many times I proofread, I always miss something that just jumps out on the first reading after it’s posted.

    • jesseheath says:

      Mark – it’s not an ‘interpretation’ of the law – it’s a direct quote. Follow the link if you like. Also, the other law you cite illustrates my point as well – it defines an agent of a foreign government as an “individual who agrees to operate within the United States subject to the direction or control of a foreign government or official.” In other words, a prosecutor would have to show the principal-agent nexus – it is not simply presumed based on the existence of financial support. Yes, an organization could claim it was organized for benign reasons, receive money from abroad, and actually do the bidding of its foreign masters in secret. But this is precisely what the prosecutor must disprove beyond a reasonable doubt in a court of law. U.S. law doesn’t shoehorn any organization that happens to receive money from foreign sources into a default suspicious category.

      “American law is considerably more restrictive in every respect and casts a much broader net.” Sorry Mark, this is just wrong, based on both the literal, written meaning of U.S. statutes and actual enforcement.

      • jesseheath says:

        One other thing: you wrote, “FARA also specifically includes “any entity organized under the laws of a foreign country or having its principal place of business in a foreign country.””

        Please read the statute carefully – this is included in the definition of a “foreign principal” under FARA (i.e., not “agent”).

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