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Policy brief

Illicit Financial Flows and Disinformation in Southeast Europe

Policy Brief No.126

Southeast Europe (SEE) remains one of the most vulnerable soft targets for the Kremlin’s ongoing hybrid war against the European Union and the democratic West. The combination of state and media capture, simmering ethnic divisions both between and within countries, and the legacy of Russian cognitive bias all make the region  vulnerable to Kremlin’s aggression following their invasion of Ukraine. Illicit finance and disinformation are two of the most potent sharp power tools that the Kremlin has deployed to undermine democratic processes in Southeast Europe. The usage of these tools has also provided fertile ground for the corrosive influence of China and other authoritarian powers.

Illicit financial flows (IFFs) underpin state and media capture oligarchic networks across SEE. Amounting to 6% of the region’s GDP, IFFs are more pervasive in the Balkans than the global average, which stands at 3-5% of world GDP. Widespread disinformation is one of the most insidious symptoms of media capture in SEE. Serbia in particular has emerged as the primary launchpad for both illicit financial flows and pro-Kremlin disinformation in the Western Balkans. However, Bulgaria’s experience has demonstrated that even EU membership does not wipe these problems away. Tackling the nexus of IFFs and media capture in the Balkans calls for continued democratization and rule of law reforms within the framework of an accelerated EU integration. Political leaders throughout the region should be called to account for their support, either open or indirect, of outside authoritarian influence and corrosive capital inflows.

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