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Wednesday, 14 July 2010 06:50

Tom Friedman says the “world is flat”.  I don’t know if that is the right analogy.  But the world is now much more open than it ever was to the movement of goods, services, finance, people and ideas.

This means that while there is lots of good globalization, there is also lots of dirty and illegal trade in things like drugs, arms, counterfeits, slaves and organs, stolen artefacts, stolen environmental resources, and so on.  And these illegal activities are often managed by criminal conglomerates (crime syndicates) which multiply their criminality through money laundering, corruption and political subversion.





In 2005, Foreign Policy editor Moises Naim documented this brilliantly in his book “Illicit”.  And the United Nations has provided excellent information in its recent publication on the globalization of crime.


What is the extent of illicit trade?  We will never know exactly.  But according to Naim, illicit trade has grown immensely in value.  It has extended its scope in terms of both products and activities.  One example that he cites is that it took 400 years to bring 12 million African slaves to the New World. Yet in the past 10 years alone, some 30 million women and children have been trafficked in Southeast Asia.


This illicit trade is conducted by globe-spanning criminal networks which are organized in decentralized, cell-like structures.  They use cutting-edge transportation technology, in addition to satellite global positioning systems, that give them the logistical flexibility of a FedEx or Wal-Mart Stores.


Some of the evidence on illicit trade highlighted by the United Nations follows :


. There are an estimated 140,000 victims of human trafficking for the purposes of sexual exploitation in Europe alone, generating a gross annual income of US$3 billion for their exploiters.

. The two most prominent flows for smuggling migrants are from Africa to Europe and from Latin America to the US. Around 2.5-3 million migrants are smuggled from Latin America to the United States every year, generating US$6.6 billion for smugglers.

. Cocaine is trafficked from South America to the US valued at $138 billion in 2008.  The North American cocaine market is shrinking, because of lower demand and greater law enforcement. This has generated a turf war among trafficking gangs, particularly in Mexico, and new drug routes.

. Afghan heroin feeds a global market worth $55 billion annually.  Europe is the highest value regional heroin market (US$20 billion), while Russia is now the single largest national heroin consumer in the world (70 tons).

. The countries that grow most of the world's illicit drugs, like Afghanistan (opium) and Colombia (coca), receive the most attention and criticism. Yet, most drug profits are made in the destination (rich) countries. For example, out of a global market of perhaps US$55 billion for Afghan heroin, only about 5 per cent (US$2.3 billions) accrues to Afghan farmers, traders and insurgents. Of the US$72 billion cocaine market in North America and Europe, some 70 per cent of the profits are made by mid-level dealers in the consumer countries, not in the Andean region.

. The massive traffic in firearms serves those who need weapons for criminal purposes (like the movement of firearms from the US to Mexico) and those who need them for political purposes (such as the outflow of guns from Eastern Europe).

. Environmental crime can take several forms.  One is crime related to pollution, in particular hazardous waste dumping and trade in ozone depleting substances.  The second is crimes related to illicit harvesting of natural resources like threatened animal species, timber and fish.  Two important instances of environmental resource theft and trafficking are: the trafficking of endangered species from Africa and South-East Asia to Asia as a whole, and the trafficking of timber from South East Asia to Europe and Asia.  This disrupts fragile eco-systems and driving species to extinction.

. While China has become the world’s manufacturing workshop, it has also become the world’s capital for counterfeit products of all sorts, with two-thirds of counterfeits detected globally in recent years coming from China.  Asia has also emerged as a key source of counterfeit medicine.  The number of counterfeit goods detected at the European border has gone up by a factor of ten over the past decade, for a yearly value of more than US$10 billion. As much as half of medications tested in Africa and South East Asia are counterfeited and substandard, increasing, rather than reducing the chance of illness.

. Cybercrime has many dimensions like hacking, phishing (computer-related forgery and fraud), and so on.  Of most relevance to us are trade in child pornography and the fraud of identity theft.  More than 1.5 million people a year suffer the theft of their identity for an economic loss estimated at US$1billion.


What is driving the growth illicit trade?


There are several factors.  First, since the end of the Cold War and the opening of China to the rest of the world, the world is now open and borders are very easy to cross.  Second, information technology and the rise of the Internet make electronically based crime very easy.  They also facilitate the coordination of many criminal activities.


Third, many goods and services of great value are cheap to supply.  Intellectual property regimes mean that a medicine, a DVD or a bootlegged software programme have high market value. So do prohibitions on the sale of narcotics, arms, endangered species or the services of prostitutes. So, again, does the cachet of Luis Vuitton or Rolex.  Fourth, the large gaps between rich and poor (which are now highly visible through the Internet) create huge incentives to move people, providers of illicit services, such as prostitution, and highly demanded, albeit illegal, products, such as narcotics, across borders.


What can we do to solve this problem?


According to Naim, governments are failing miserably in their attempts to tackle illicit trade.  He proposes four responses to tackle the problem.


First, the high value of some trafficked items like drugs could be tackled by legalization, as was done in the case of alcohol.  Public education campaigns, like the case of tobacco, can then be used as a powerful tool to reduce consumption.  This would leave authorities with more time to concentrate on issues like nuclear proliferation or large-scale coercive trafficking in children and women.


Second, greater efforts should be employed against traffickers and those complicit in these activities.  If we want to stop illegal migration, we should target the traffickers who exploit poor people, and those who employ these illegal migrants -- not the poor migrant victim.


Third, intellectual property regimes must be made enforceable and be seriously enforced.


Fourth, governments need to treat global economic crime as a systemic issue, and all the different parts of government working on different aspects must work together nationally and internationally.


Antonio Maria Costa, Executive Director of the United Nations Office on Drugs and Crime, argues that "The breaking-up of criminal groups per se does not work, as those arrested are immediately replaced".  He cautioned that "law enforcement against mafia groups will not stop illicit activities if the underlying markets remain unaddressed, including the army of white-collar criminals - lawyers, accountants, realtors and bankers - who cover them up and launder their proceeds. The greed of white collar professionals is driving black markets, as much as that of crime syndicates."


Since crime has gone global, national responses are inadequate.  "Crime has internationalized faster than law enforcement and world governance," said Mr. Costa. "The UN Palermo Convention was created precisely to generate an international response to these trans-national threats, but is often neglected," he said. "Governments that are serious about tackling the globalization of crime should spur the nations that are lagging behind in the implementation of the Convention," said the head of UNODC.


Costa also called attention to the difference between countries being unwilling rather than being unable to fight organized crime.  "When states fail to deliver public services and security, criminals fill the vacuum," said Mr. Costa.


This does not give us much cause for hope, with the high number of failed states.  But the stakes are high.  California’s drug habit is progressively destroying Mexico, in part because America’s crazy obsession with guns is also arming the Mexican mafia.  If Mexico really falls apart, which is possible, this could greatly destabilize the US.




Illicit: How Smugglers, Traffickers and Copycats are Hijacking the Global Economy, by Moises Naim


The Globalisation of Crime: A Transnational Organised Crime Threat Assessment

United Nations Office on Drugs and Crime.  June 2010


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