Within the State Department , many diplomats scoffed at President George W. Bush’s democracy agenda. Frank Ricciardone, Jr., the U.S. ambassador to Egypt , mocked it when, in 2005, he told young Egyptians that dictator Hosni Mubarak was so popular he could even win elections in the United States.

Secretary of State Hillary Clinton meanwhile sought a reset with Russia, while her aide Jake Sullivan embraced the fiction that Iran was democratic and that flooding so-called reformers with cash could bring the regime in from the cold. In Iraqi Kurdistan , the hostility to democracy meant doubling down on the dictatorship of the Barzanis and turning a blind eye to the corruption in which they engaged.

Diplomats rationalized their embrace of dictatorship in various ways. Realistically, the Barzanis controlled things; they were impossible to avoid. Democracies are messy, and many diplomats believe dictators can deliver. It can be nice to have a one-stop shop. Dictators might also guarantee security. Unstated is they might instigate violence if diplomats talk to their competitors. Many diplomats also condescend that Arabs, Russians, Turks, or Kurds are not culturally capable of democracy. Realists might simply say that the State Department should not let a local desire for freedom and liberty abroad interfere with core US.. interests.

Iraqi Kurdistan, however, increasingly shows why ignoring dictatorship and corruption undermines long-term interests.

Twenty years ago, George W. Bush ordered US forces into Iraq to ouster Saddam Hussein. The notion that oil motivated the war was nonsense. Fear of Iraq’s weapons programs and terror sponsorship was real. Saddam had already started two major wars. The status quo was not tenable. Sanctions were collapsing, and evidence conclusively shows Saddam planned to reconstitute his weapons of mass destruction as soon as freed from the yoke of sanctions.

Upon Iraq’s liberation, oil companies moved in. Washington encouraged American companies to invest in Iraq and Iraqi Kurdistan for two reasons: First, oil generated revenue for Iraq to rebuild. Second, American companies denied space to Russian and Chinese rivals.

Corruption, however, took a toll. Even more so than in Iraq, oil companies found that the political climate and corruption did not offset potential profits.

The Barzanis and their Kurdish partners systematically cheated on contracts in the belief that the lack of an independent judiciary would protect them from consequences. Outside arbitration is routinely found against Iraqi Kurdistan to the tune of billions of dollars. ExxonMobil quit. Kurdish politicians say that Houston-based HKN is not far behind. American oil field services companies like Baker Hughes are also abandoning the region. In several cases, the Iraqi Supreme Court decision against Kurdistan’s oil law is merely cover for a preordained decision. In the place of American companies, Russia’s Rosneft and China’s Addax Petroleum and Gezhouba Group have moved in. The Moscow and Beijing-based companies are not constrained by the foreign corrupt practices act, as theIR American counterparts are.

None of this was preordained, but the U.S. will not pay the price in regional influence for its two decades of ignoring corruption and poor governance. Every U.S. ambassador in Baghdad and consul-general in Erbil saw Iraqi Kurdistan only through the lens of short-term gains; they all ignored the long-term consequence of their actions.

In effect, they gifted not only billions of dollars but also geopolitical positioning to America’s rivals. That they did so upon the hopes of democracy and liberty only compounds the tragedy. There are no shortcuts nor such a thing as cost-free corruption in international affairs.

Michael Rubin ( @mrubin1971 ) is a contributor to the Washington Examiner's Beltway Confidential. He is a senior fellow at the American Enterprise Institute.