Vladimir Platov

27.09.2014 Column: Society Region: USA in the World

Organized Crime – Major Threat of the 21st Century

In recent years, a growing number of European experts based ontheir conducted analysis of the activity of transnational organizedcrime groups (OCG) have come to the conclusion that OCG activitieshave become the major threat of the 21st century. This threat isconsidered to be much greater than the threat of terrorist attacks,which does not have the necessary powers and resources to endangerthe functioning of states. Indeed, in contrast to terrorist groups whoare trying to make a statement through public violence, OCG areoperating in the strictest confidence. Organized crime in recent years

has significantly gained ground, directly threatening democratic states and seeking to control the national economy.

It is precisely the substantial financial power of transnational criminal groups that makes them more and moremenacing. Although statistics on the secondary income of OCG remain secret, the United Nations Office on Drugsand Crime (UNODC) believes that these revenues stand at $2.1 trillion, not subject to taxation. This means that 3.6%of global GDP has very "shady" sources, mainly originating from smuggling activities, illegal production andtrafficking of drugs, transportation of illegal migrants, racketeering, human and arms trafficking, circulation ofcounterfeit goods, etc.

A significant portion of the illegal funds obtained by OCG is reinvested into respectable securities markets, and as aresult an increasing proportion of the public debt of many countries is now partially kept within criminalorganizations in the form of public and treasury obligations. Some of these countries due to the fault of creditors aredirectly dependent on criminal groups.

In addition, these criminal groups exercise significant influence on the macroeconomic policies of differentgovernments. Tax havens in offshore zones make possible the laundering of a considerable part of the immenseincomes of OCG. Using this mechanism, many micro-states have found a way to subsidize their economies, withoutwhich they would not have survived, as their legal resources are limited. Some countries are already dependent onOCG: Kosovo, Montenegro, Guinea Bissau, and several others. Many states may fall under the influence of organizedcrime in the near future, such as Guinea, Mozambique, certain Balkan countries, Mexico and the Central Americanregion.

When OCG infiltrate state structures, the consequences are the most dramatic, since they get access to officiallegalized documents, the banking sector, diplomatic missions and by using these elements they gain moreunderstanding in matters of transportation of criminal goods and extraterritoriality.

Moreover, as soon as a particular organized crime group manages to infiltrate a legitimate economy, it is verydifficult to detect it and the group becomes almost ineradicable, since tough action against the OCG mayautomatically result in the destruction of the economic structure. A prime example in this case is the French Côted'Azur: the tough fight against OCG (mainly Italian, Russian and Corsican) in this region could lead to thedisappearance of thousands of jobs in various fields such as tourism and catering, real estate, recreation and so on.That is the problem facing the French law enforcement agencies in their fight against OCG.

In order to secretly find their way into the legitimate economy, OCG targets are investment banks, legal, brokerageand transportation companies that are both involved in the inspection of OCG and their legal coverage. OCG alsoinvest their assets into stock exchange activity, into speculation activities in raw material and food production

markets, using various dummy companies.

What was formerly considered as the shadow economy, unfortunately, now in many countries has become an officialcommercial activity, often dependent on organized crime. For example, hand-made fakes of the 1990s have nowreached the industrial level, directly endangering the existence of some small and medium-sized enterprises in theWest, which are less protected than large companies. Due to the progressive decline of the average purchasingpower of consumers in the West (a direct result of the economic crisis), large companies do not hesitate to buy morelow-cost products, the origin of which is sometimes in question. This is done not only to the detriment of nationalindustries, but sometimes this endangers the lives of people. The matter is not as serious in the case of counterfeitwatches or luxury clothes, but it is an entirely different matter when it comes to children's toys or important partsfor vehicles, counterfeit medication or spare parts for aircraft. Of course, airplanes providing international flightsare regularly monitored, but the situation is completely different with domestic flights, especially those in developingcountries. A series of disasters involving Iranian civil and military aircraft is a clear example. Over the last ten yearsin Iran around fifteen air collisions have claimed the lives of more than 900 people. According to experts, this islargely caused by the fact that Iran, which is under international sanctions, is forced to buy aircraft spare parts fromChina, which often offers counterfeit dubious products.

Furthermore, OCG are fully utilizing globalization and the recent economic crisis, injecting illegally earned moneyinto companies that can no longer take out loans from financial institutions experiencing difficulties. In the long run,these "sponsors" of organized crime as a way of debt settlement buy out many respectable firms and this reinforcesand legitimizes OCG in society.

Before 1990, criminal organizations were usually located in the countries of their national activities, with theexception of the Italian Mafia, which has already spread into Western Europe and the US. However, after thedemocratic changes that took place at that time in several European countries, organized crime groups spread allover the world, sometimes engaging in armed conflict with local crime units in other states, however, more oftenthan not, they entered into alliance with their foreign counterparts. They have created a sort of global "CommonMarket" of organized crime. Lack of resources and expertise from law enforcement agencies in many countries havecontributed to the growth of OCG.

The success of organized crime has also been fueled by large sums of money, which have been given as bribes topoliticians, employees and other individuals who could be of use to OCG. Corruption, coupled with the threat "plata oplomo (a bribe or a bullet) is a sort of "disharmonized cocktail" which has permitted OCG to get rid of manyobstacles on their way to power. In a world where salaries are often very low (the lower the salary, the easier it is forcorruption to spread) and where the authorities intervene only after a crime has been committed (threats are alwaysmore effective when people are left without the prospect of possible protection), this method has indeed becomecompelling.

However, many experts agree that perhaps the most important reason for the strengthening of organized crime inmany countries is the fact that after the September 11 terrorist attacks, the main efforts and measures by moststates were directed at the fight against terrorism (Global War On Terrorism/GWOT) at the expense of the fightagainst OCG. This resulted in the reduction of organized crime squads, their funding and size. An illustrativeexample is the US Federal Bureau of Investigation (FBI), which in compliance with the political order of the time,placed the fight against organized crime lower on its agenda. Hundreds of American federal agents left organizedcrime squads and entered into units for combating terrorism. This was immediately taken advantage of by OCG.

The fight against organized crime is very complex and includes three inevitable steps: thorough proactive monitoringof OCG activities; the engagement of policy-making authorities and specialized agencies and improving the penalsystem.

Clearly, it is extremely difficult to carry out the search for information, infiltration and selection of sources insidemafia groups. OCG members are often limited to the family circle; everyone knows everything about each other. Newarrivals always fall under suspicion and they are often immediately rejected. However, this issue can be solved theItalian way – when law enforcement agencies work with those who have confessed. However, in this case there mustbe a reliable system of witness protection, since the safety of the witnesses and their close relative is seriouslythreatened.

There is another solution, which could be very helpful in organizing the fight against OCG. Using the interests of thecrime groups in external structures for the successful conduct of activities: law firms, financial, tax andtransportation companies, notaries, etc. In this connection, there is always the possibility to gain access to OCG

through them. It is also possible to deliberately create such institutions, which could lure criminals and theninformation could be gathered and used in the fight against OCG.

On the issue of using such services French experts in particular have drawn attention to the possibility of successfulutilizing nongovernmental organizations such as “Anti-Mafia” in the fight against OCG. Such NGOs have proven tobe successful in Italy, but they are not used in other European countries, despite the efforts of several volunteers.The media can also play a decisive role in the crackdown on organized crime, especially as they continue to carry outindependent investigations.

Finally, punishment should focus on the most sensitive element to criminals: money. To do this, experts say, nationallegislation must provide for the complete confiscation of ill-gotten funds along with the appropriate additionalpenalties. Although it is possible to doubt the real effectiveness of seizures carried out by the Italian justice system,which is quite widely used as a solution. Indeed, the amounts seized averaged 729 million Euros per year, while arough estimate of the criminals’ capital turnover varies between 130 and 180 billion Euros. For this reason it cannotbe ruled out that the criminals are placing these losses into the section "lost profits" or they might be paying out verygenerous sums to corrupt police officers and representatives of the justice system in Italy.

Yet the confiscation of "property" should be accompanied by prosecution procedures and the exposure of thoseresponsible for the committed crimes. For these purposes, the international police and judicial cooperation should byall means be strengthened.

On top of all that, according to European experts, this problem needs to be dealt with more effectively by isolatingconvicted OCG members in order to exclude the possibility of them pursuing their criminal activities from prison, asis often the case in many countries.

Vladimir Platov, Middle East expert, exclusively for theonline magazine "New Eastern Outlook".