Combating Transnational Crime

Concepts, Activities and Responses

Dimitri Vlassis, Phil Williams

• Publisher: Routledge
• Year: 2013
• Print ISBN: 9780714651569
• eBook ISBN: 9781136337918
• Edition: 1
• Topic: History
• Subtopic: Military & Maritime History
• Index: History

This work examines the challenges posed by transnational crime and the steps being taken by the international community to meet these challenges. It offers comprehensive analysis of different forms of transnational crime and the various responses that are being developed.

PART 1

CONCEPTUAL ISSUES

The Dynamics of Illegal Markets

PINO ARLACCHI

THE NATURE OF ILLEGAL MARKETS

An illegal market is a place or principle within which there is an exchange of goods and services, the production, selling and consumption of which are forbidden or strictly regulated by the majority of states and/or by international law. The very existence of illegal markets is considered a threat to human dignity and the public good. Markets in hard drugs, in armaments sold outside official agreements, in human beings reduced to economic or sexual slavery, in capital of criminal origin are typical of this category of exchanges.

In view of their origins in an array of formal juridical prohibitions, illegal markets are, to a large extent, artificial creations. They have grown in parallel both with the functions of the modern welfare state, and with the development of international law in the wake of the two world wars. Multilateral treaties on the protection of human rights, international conventions on slavery, narcotics and psychotropic substances, the outlawing of violence in interstate disputes, more restrictive domestic and international regulations on the use and trade of arms, are some of the basic examples of legal provisions that have contributed to the creation of today’s illegal markets.

Such markets, therefore, cannot just be analysed from an economist’s standpoint as the simple result of an increase in supply and demand for some particular goods and services. They must also be examined as an undesired consequence of the effort to protect the ‘human and natural substance of society’ from the destructive effects of the very same market forces.

To some extent, illegal markets are governed by normal economic forces. There are buyers and sellers, wholesalers and retailers, importers and distributors, and so on. There is a ‘retail’ sector, composed of numerous small and medium sized, semi-independent firms supplying goods and services to final consumers.

Upon close examination, however, some of the dynamics of criminal markets are substantially different from those that drive legal markets. Illegal enterprises can resort to the use of violence and intimidation against their competitors and opponents that results in the easy establishment of local monopolies. They also corrupt those who should uphold the law and those who are in positions to manipulate public institutions.

While the core of their activity is to supply illegal goods and services, illegal enterprises are also extensively involved in legitimate business, allowing them to launder money and appear respectable.

The cost of doing business within the illegal economy is much higher than in the legal economy — which is reflected in the market price of most illegal goods. This largely is due to additional costs incurred in the attempt to minimize the risks of being caught. For this reason, illicit markets are often built upon personal relationships — groups based on ethnic, political or religious solidarity. This minimizes the risk of exposure and, in turn, reduces the transaction costs.

THE ROLE OF CRIMINAL ORGANIZATIONS

At first glance, many criminal organizations appear as legal enterprises. However, it is more accurate to say that they tend to imitate their legal counterparts. They move the focus of their activities from one sector to another — from trafficking in stolen goods to counterfeiting, from drugs to trafficking in human beings, and so on — with an ease not known in the past.

The rise of this brand of predatory capitalism has led to an increase in the demand for criminal labor. Consequently, organized criminals have established links with ordinary and juvenile crime — which is clearly seen in the establishment of drug distribution chains that require a whole range of operators — including the recruitment of small-time gang members or prostitutes.

Those who support the legalization of drugs fail to recognize these developments. They naively believe that if countries legalize drugs, organized crime will be seriously damaged — and the public will enjoy the double benefit of a reduced demand for drugs and a decrease in the amount of crime. Unfortunately, this is wishful thinking. We have recently seen several leading mafias lose their slice of the international drug market without disruptive effects on their structure and power. Take the Sicilian Cosa Nostra. When its transatlantic heroin network was dismantled in the late 1980s, it simply shifted the center of its activities from narcotics to extortion and corruption. Other criminal constellations have moved toward more sophisticated businesses such as money laundering. Others have moved towards the new forms of slavery — trafficking in human beings.

SHATTERING THE MYTH OF INVINCIBILITY

In spite of its growth and global spread, it should be remembered that organized crime is a historical phenomenon like others. It has a life cycle, which has a beginning, a development and an end. My personal experience and research have taught me that there is nothing metaphysical in the nature of the mafia. Indeed, every time a criminal cartel has been challenged with the appropriate level of resources, legal tools and political determination, it has been defeated.

It is not true that efforts to fight organized crime at the national and international levels have failed. Even with the limited resources deployed until now, significant breakthroughs have been achieved. Indeed, the single most important accomplishment in the last 15 years in fighting organized crime was to challenge and destroy the myth of invincibility of criminal cartels.

In the 1990s, the Colombians dismantled two of the most powerful criminal coalitions that ever existed. The Medellin and Cali cartels are over — thanks to the formidable drive by the best part of the Colombian state and civil society. Their success has also led to a substantial reduction in the amount of drug money in the Colombian economy. According to a recent study, earnings from the export of all illicit drugs have dropped by half — from a record high of US$4 billion in 1984 to US$2 billion in 1996. This means a drop from the equivalent of 97 per cent of legal exports to 21 per cent, and from 11 per cent to 2.6 per cent of gross national product (GNP).

Similarly in Bolivia, the drug cartels of the 1980s have been dismantled, resulting in a decrease in the coca economy from 9.2 per cent of Bolivia’s gross domestic profit (GDP) of the late 1980s to the three per cent of the late 1990s. Whereas drugs constituted the equivalent of 87 per cent of legitimate merchandise exports, that proportion is now under 15 per cent. In Southeast Asia some of the most famous drug lords of the former Golden Triangle have negotiated their withdrawal from the drug trade with governments. In Italy, too, a ten-year effort by the authorities and civil society succeeded in destroying — at least temporarily — the almost mythical Sicilian Cosa Nostra.

In many of these examples, however, we see the space occupied by the big criminal cartels of the 1980s being filled by an array of smaller, less visible organizations. These smaller players are even more difficult to identify and combat than their brazen predecessors. They adopt a low-profile strategy in their relationship with public opinion and the authorities. They are more inclined to manipulate and corrupt than to shoot and bomb. Nevertheless, even with new actors on the scene, the myth of invincibility that for decades has been glamorized and perpetuated in the media has collapsed. Progress has been made.

THE CONVENTION AGAINST TRANSNATIONAL CRIME

So, what next? The next step must be to attack the structural underpinnings of major crime groups worldwide. We need a new global strategy that takes into account the changes just described. The vehicle for it is the Convention Against Transnational Organized Crime. For many of us, this is the fruition of a long-sought vision. For myself, this process means the fulfilment of a proposal I conceived in the early 1980s. In the last sentence of my 1985 book, Mafia Business,¹ called for a global strategy — the linchpin of which was an international convention against large-scale crime. This process, leading to the Convention, is synthesizing the best experiences of the past 20 years on combating the most dangerous aspects of organized crime.

Co-operation Among Countries

The Convention should open the doors for much better co-operation among countries. Until now only a few states have developed sufficient networks of agreements that allow them to work with other countries. Even with these in place, differences between the bilateral agreements create procedural discrepancies that, in practice, make co-operation very difficult. So, for many countries, this Convention will provide the basis for working together in a uniform and co-ordinated manner when building a case. The result will be an easier exchange of information and a more rapid transfer of prisoners and proceedings.

We must ensure that we ultimately achieve a structure that allows for easy and fast responses — for practical tools that practitioners can use. Moreover, the Convention should bring about the harmonization of laws among states on a number of issues, such as participation in a criminal organization or conspiracy.

Preventing Money Laundering

Harmonized laws should also make money laundering a criminal offence. Without money laundering organized crime would not flourish as it has. Preventing criminals from transforming dirty money into what appears to be clean wealth will destroy one of the main purposes of their activities: profits — profits that the International Monetary Fund (IMF) estimates to be two to five per cent of the world GDP. The flow of this money into the legitimate economy also harms economic growth.

Financial havens are increasingly used by criminals to launder money. The lack of harmonized rules among countries jeopardizes efforts to prevent dirty money entering financial systems. Also bank secrecy and a lack of transparency in financial transactions prevent investigators from identifying criminals and their schemes. We must use the opportunity of this Convention to address these issues.

Witness Protection

The Convention should also address the issue of witness protection schemes. Only if witnesses are sufficiently protected can we expect them to provide valuable information to prosecuting agencies and evidence at trial. The concrete experience of some countries demonstrates that a member of a powerful criminal gang who is induced to co-operate with the authorities — a turncoat — is worth between five and seven years of normal investigations.

PROPOSED PROTOCOLS

The proposed protocols of this Convention contain strong measures to address trafficking in women and children, smuggling in migrants and the illicit manufacturing of and trafficking in firearms.

Traffi...

Table of contents

• Cover
• Half Title
• ISPAC
• Full Title
• Copyright
• Contents
• Introduction and Overview
• PART 1: CONCEPTUAL ISSUES
• PART 2: CRIMINAL ACTIVITIES AND MARKETS
• PART 3: RESPONDING TO TRANSNATIONAL ORGANIZED CRIME
• Abstracts
• Notes on Contributors
• Index