At a time when the global economy is foundering, there is one sector that isn’t. It’s called transnational organized crime and it’s become a highly lucrative business.
Software piracy, internet fraud and trafficking in drugs, humans, wildlife, counterfeit goods and currency, human organs, small arms, diamonds and coloured gemstones, oil, timber, fish, art, cultural property and gold have grown, by some estimates, into a $7-trillion business, accounting for roughly 10 percent of global GDP. That’s huge and it’s reshaping society, politics and the very world in which we live. The rapid growth and sheer scale of these illicit markets, propelled by the forces of globalization and ICT (information communication technologies), is unprecedented in human history. It’s driven by sophisticated criminal networks that now span continents and have been able to take advantage of the anonymity afforded by IT while simultaneously exploiting the secrecy and unfathomable complexity of modern banking and financial systems.
The notorious Los Zetas criminal syndicate in Mexico, for example, whose brutal tactics include beheadings, torture and the massacre of innocent civilians, is now one of the most highly sophisticated criminal operations in the world. Los Zetas are involved not just in trafficking cocaine and production of methamphetamines for markets in the U.S. and Canada but also in human trafficking, extortion and racketeering. Its operations, like those of many other criminal syndicates, extend throughout the Western Hemisphere from countries such as Colombia, Peru and Bolivia, where cocaine and other opiates are produced, to Central America, the Caribbean and beyond. However, it’s not just the Western Hemisphere that is being affected by the expansion of these illicit crime syndicates and drug cartels. West Africa is now a key transshipment hub for cocaine and heroin that is destined for lucrative European markets.
Trade routes for opiates produced in Afghanistan and Myanmar also now crisscross much of the globe, as do the criminal networks that sustain drug production and trade. What is also striking about contemporary consumption patterns is that demand is no longer concentrated in the advanced industrialized economies of the West. In the case of heroin, for example, “emerging markets” (especially Russia, China, Pakistan, Iran, India and the countries of Southeast Asia) account for roughly two-thirds of total global consumption.
But it’s not just drugs, human trafficking and trade in illicit goods that we have to worry about. Criminal activity on the internet is also a major factor in the global crime tsunami. Brazil, Russia and the Ukraine, in particular, have become the great global incubators of cybercrime. In Russia, cybercriminals operate with the complicity of the government. They have been mobilized to launch attacks on countries such as Estonia and Georgia, which Russia views as adversaries. Even a developing country such as Kenya, which has leapfrogged the computer age by going directly to handheld devices, has become a hotbed for criminals adept at hacking into new mobile technology. And China’s role in supporting cybercrime and espionage is the world’s worst-kept secret.
ICT growth is contributing 4 percent, or even more, to global GDP. That figure is even higher (10 percent) for developing countries. But online fraud, identity theft intellectual property theft, online theft, and customer data losses are proving to be enormously costly. In 2009, AT&T’s chief security officer, Ed Amoroso, testified before the U.S. Congress that global cybercrime was an eye-popping $1-trillion business (or almost 2 percent of global GDP).
A recent estimate of the cost of cybercrime to the British economy alone put the figure at $27 billion, or approximately 2 percent of Britain’s total GDP. The Dutch have similarly put the losses from cybercrime to their economy in the 1.5-2 percent of GDP range.
Many criminal networks also work hand-in-glove with terrorist groups, such as al-Qaeda, Al-Shabaab, Hamas, Hezbollah, the Revolutionary Party of Kurdistan, Peru’s Shining Path and the FARC (Revolutionary Armed Forces of Colombia). They help deposit and launder monies through financial institutions and hawala (a money broker-based transfer of funds and other assets in the Middle East, South Asia, North Africa and the Horn of Africa), including funds that can be spunoff from “charitable” front organizations such as the Holy Land Foundation, which raised millions for Hamas until U.S. authorities closed it down.
The flourishing of transnational crime is not simply a law enforcement issue. It is also a development and security issue that threatens state and societal formation in much of the developing world.
The rapid increase in the volume of illicit flows coincides with institutional decline in many of the world’s poor and medium-income fragile and failing states. A recent major OECD study on Transnational Crime and Fragile States (2012) argues that there are powerful incentives for security forces and state officials to develop close links with transnational organized crime because there is an absence of public scrutiny or transparency in state institutions.
Furthermore, the same study notes “the transition to competitive electoral democracy in Central America, the introduction of devolved municipal powers in Colombia, and the political rivalry of the elite and clans in post-Soviet Central Asian Republics such as Tajikistan and Kyrgyzstan have all resulted in atomized state structures, in which officials, politicians and other power-holders vie for access to the additional resources provided by criminal activity.”
External efforts by Western donors to build state capacity and strengthen local governance by promoting transparency and building better policing and judicial systems are thus being undermined by organized crime. As law enforcement and criminal justice systems are eroded, the citizens of these countries are also being threatened by a rising tide of violence. In Mexico alone, drug-related violence has killed more than 55,000 people since 2006.
Although the issue of transnational organized crime has finally reached the UN, which has passed various resolutions on terrorist financing, small-arms trafficking and the effects of organized crime on peace-building efforts, the response of the international community overall has been weak. The United Nations Convention Against Transnational Organized Crime (UNCTOC) is the poor sister of the UN Convention on Anti-Corruption. The UNCTOC was opened for signature in 2000 and has been signed by 147 countries, including its associated protocols on human trafficking, smuggling and the illicit trafficking and smuggling of firearms.
However, efforts to create a proper implementation review mechanism are proving difficult because key states, including some prominent members of the G20 group of nations, are resistant to such review mechanisms.
Unless governments stop seeing organized crime as simply a law-enforcement problem and start working together to develop comprehensive solutions, there will be little progress in dealing with a problem that now threatens the very fabric of the modern world.