July 28, 2002

One of the banes of globalization is that it has internationalized crime as well. Phil Williams explains the phenomenon

Organized crime can become transnational in any one or more ways. In some cases, such as Colombian drug trafficking organizations, the bulk of the criminal activities will involve the crossing of borders and criminal operations in multiple markets and therefore multiple jurisdictions. In other cases, criminal organizations will be primarily domestic but might engage in transnational money-laundering in an attempt to protect their profits from law enforcement. Whatever the case, however, it is clear that the transnational nature of organized crime is not purely incidental. Not only does it reflect the globalization processes discussed above, but also rational decisions by criminal organizations related to both risk and profit. Indeed, there are several reasons why criminal organizations and activities will cross borders.

Criminal organizations generally seek to maximize profits within the constraints of acceptable risks. Indeed, the risk-profit equation is one that all criminal organizations face. Yet they do not all respond the same way. Some criminal organizations, for example, will try to avoid risk and confine their operations to low-risk jurisdictions, while others will seek the large profits that are to be obtained in countries such as the United States. Here there is considerable disposable income and a correspondingly large market for illicit goods and services, even though the risks from law enforcement are rather higher.

In the case of illicit products such as drugs, the producers are usually developing countries, while the major markets are in advanced industrialized and post-industrial societies. To get from the former to the latter it is often necessary to cross the borders of other states which then become — unwittingly and often unwillingly — trans-shipment states for criminal organizations.

Having obtained their profits, criminal organizations will also move them back to the home state or to states — such as offshore financial centres and bank secrecy jurisdictions — where they are unlikely to be seized. In addition, criminals will often use different laws, and the absence of extradition laws in some jurisdictions to find additional safe havens. Moreover, the crossing of borders, whether for criminals themselves or their proceeds complicates the tasks of national law-enforcement agencies.

While safe havens for criminal organizations are often found in the home base, where the state is generally weak, organized crime will seek to perpetuate and increase that weakness. In this connection its major instrument is corruption.

Corruption
Definitions and discussions of corruption are many and varied. They range from simple notions that corruption is the exercise of public power for private gain to more complex econometric analyses that try to measure the impact of corruption. Corruption has been attributed to a variety of factors ranging from cultural mores, particularly those based on patron-client relations and family and kinship networks, on the one side and individual greed on the other.

Yet other observers have seen corruption as an inevitable consequence of particular kinds of political and administrative arrangements. Robert Klitgaard, for example, has suggested that corruption stems from arrangements in which there is a monopoly of power, considerable discretion in how that power is used, and a lack of accountability about its use.

In terms of the impact of corruption, assessments range from those who believe it is purely negative to those who view it as a form of income re-distribution or a means of rewarding public servants who are not adequately recompensed by the state.

What became distinctive about corruption in the late 1990s, however, was the intensity of concern and the growing sense that the problem was almost becoming contagious. In response to what one observer termed the ‘global corruption epidemic’, the international community began to address the problem with a new urgency.

Spurred on by a series of scandals and encouraged by various NGOs such as Transparency International, governments and international donor agencies began to give anti-corruption initiatives greater visibility on their agendas.

The Clinton Administration, for example, with Vice-President Gore in the forefront, held a major international workshop in Washington dealing with corruption, and what could be done about it, while the Organization for Economic Cooperation and Development (OECD) adopted a convention making bribery by transnational companies illegal. The OECD convention, in particular, was hailed as a major advance in preventing and combating corruption. In fact, it deals with only one aspect of it — companies paying corrupt officials — and does not really touch on the organized crime aspect which, arguably, is the most pernicious form of corruption.

Moreover, by dealing only with the supply side of the equation (i.e. the supply of bribes) the focus on business could well have all sorts of inadvertent consequences. If the demand for bribery continues, and transnational business is no longer meeting this demand, then transnational organized crime could well fill the breach. This is likely to occur in Africa and elsewhere in the developing world, offering organized crime new opportunities to embed itself in state structures and making the task of combating transnational criminal organizations even more difficult.

Perhaps the most important aspect of corruption, but one that is being ignored in too much of the current debate, is its increasingly widespread use as an instrument of organized crime. This is not to suggest that all corruption is organized crime-related; nor is it to conflate corruption and organized crime. It is merely to argue that organized crime uses corruption as a major instrument — and that, therefore, the focus of attention, at least in part, needs to be on who is trying to corrupt whom for what purposes, using what means, and demanding what in exchange.....

Crime and corruption after the cold war
In considering the relationship between transnational criminal organizations and states, there are several trends that need to be considered — many of which appear to work in favour of the former. Perhaps the most striking change in the 1990s was that transnational criminal organizations became both more pervasive and more diverse. Traditional organized crime groups (such as the Cosa Nostra in the United States, the Sicilian Mafia, Chinese Triads, and the Japanese Yakuza) with a long — if not illustrious — pedigree have been joined by criminal parvenus such as Russian criminal networks, Turkish and Albanian clans, Nigerian organizations involved in drug trafficking and financial fraud, Mexican drug traffickers and a host of subsidiary criminal players.

The diversity of these groups is also striking. They vary considerably, for example, in their portfolio of activities; Colombian and Mexican groups are involved primarily, if not exclusively, in drug trafficking and everything else, such as money-laundering, has a direct connection to the trafficking business. Russian and Chinese groups engage in much more diverse activities ranging from financial fraud and extortion to car theft, alien smuggling, antiquities trafficking and trafficking in women for commercial sex. Another important development in the criminal world has been the development of cooperative linkages among criminal organizations. These linkages take a variety of forms and fulfil a variety of purposes. At the most advanced level they involve what can be termed long-term strategic alliances among criminal organizations. At the most basic level there are one-off supplier connections.....

Among the most important developments in this area has been the emergence of a triangular relationship involving Russian criminal networks, Italian Mafia families and Colombian drug traffickers. The triangle has been characterized by arms for drugs exchanges, mutual assistance in money-laundering, and the development of new drug markets in the FSU. Although such relationships can prove volatile, their significance is difficult to overestimate — they enormously complicated the task of governments in their efforts to combat transnational criminal organizations.

Another important trend is towards greater sophistication, whether in the armaments that are available to criminal organizations, the techniques and mechanisms utilized for money laundering, the methods for concealment of illegal products, or the exploitation of information technologies for more efficient management, as channels for both new and familiar forms of criminal activity and as both weapons and targets. One development that is likely to benefit transnational organized crime enormously is the diffusion of strong forms of encryption. This will make it very difficult for law enforcement effectively to intercept communications, a tool that the Federal Bureau of Investigation (FBI) used very effectively against Cosa Nostra in the United States.

Managing crime and corruption: criminal organizations versus states
All the trends described in the last section help transnational organized crime. They also help to ensure that the low-key but intense competition between transnational criminal organizations on the one side and states on the other will endure through much of the twenty-first century. While this competition is only one example of the interplay between the state-centric and the multi-centric worlds, several distinctive feature of this issue area will ensure an enduring competition rather than a rapid triumph for states.

This is not to suggest that states are oblivious to the challenge. Indeed, more and more states are developing legal frameworks that include provisions for attacking criminal organizations as organizations and that permit electronic surveillance techniques, the seizure and forfeiture of the proceeds of crime and witness protection. In addition, states are developing multiple layers of cooperation.

The UN is promulgating a convention against transnational organized crime, while the G8 has also developed 40 recommendations on steps to be taken; Europol has been developed to facilitate efforts to combat organized crime in the European Union, and efforts are increasingly being made to enhance the effectiveness of Interpol which is an important mechanism for international exchange of information.

The Financial Action Task Force, which was established by the G7 in 1989 and works within the framework of the OECD, has also developed a set of guidelines and standards for combating money-laundering. Efforts are also being made both to thicken and to widen the web of bilateral extradition treaties that allow citizens of one country to be sent for trial in the country where they committed crimes and mutual legal assistance treaties which allow states to provide information to one another that can be used in criminal investigations and trials.

In short, from the late 1980s onwards, states have been moving ahead on several fronts to establish global governance regimes to combat drug trafficking, money-laundering, and transnational organized crime. Yet, these governance efforts have been and are likely to continue to be sporadic, incomplete, ineffective and ultimately futile. The reasons for this can be found partly in the shortcomings of states and partly in the advantages of transnational criminal organizations.

One of the most important asymmetries favouring criminal organizations is that they operate, offensively at least, in what for their purposes has become virtually a borderless world. States, in contrast, are still constrained by national sovereignty, hampered by different legal systems and stymied by the complexity of cases involving multiple jurisdictions. As suggested above, the crossing of national borders by criminals, their illicit commodities, or the proceeds of their activities, is central to transnational organized crime.

Excerpted with permission from
Issues in world politics
Edited by Brian White, Richard Little and Michael Smith
Palgrave. Distributed in Pakistan by Paramount Books, 152/O, Block 2, PECH Society, Karachi-75400. Tel: 021-4310030. 
Email: paramount@cyber.net.pk
ISBN 0-333-80401-5
306pp. Rs1497

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