Transnational Organised Crime and Globalisation

17 November 2005

Transnational Organised Crime and Globalisation

At their annual summit in 1998 in Birmingham the leaders of the G8 – the eight most powerful nations in the world – issued a statement that said that "globalisation has been accompanied by a dramatic increase in transnational crime" posing "a threat not only to our own citizens and their communities, through lives blighted by drugs and societies living in fear of organised crime; but also a global threat which can undermine the democratic and economic basis of societies through the investment of illegal money by international cartels, corruption, a weakening of institutions and a loss of confidence in the rule of law." [1]

With the statement, the G8-leaders affirmed – or rather re-affirmed, only this time with a clear reference to 'globalisation' – a trend in international politics to blame 'transnational organised crime' (TOC) as a negative side effect of the current globalisation process, without questioning if the current globalisation process in itself is not generating the crime and violence that threatens it – exacerbating already existing conditions of poverty and inequality. The present era of globalisation, driven by competitive global markets, is outpacing the governance of markets and the repercussions on people, according to the 1999 Human Development Report (HDR), "neglecting the needs of people that markets cannot meet. The process is concentrating power and marginalizing the poor, both countries and people." [2] (See: Migration into Illegality)

Although, the HDR has an open eye for the negative aspects and uneven distribution of wealth and power of the current globalisation process, it nevertheless echoed the concern of the G8-leaders about the impact of organised crime. According to the report transnational crime syndicates, estimated to gross US$ 1.5 trillion a year, were "rivalling multinational corporations as an economic power."[...] Global crime groups have the power to criminalize politics, business and the police, developing efficient networks, extending their reach deep and wide." [...] "All have operations extending beyond national borders, and they are now developing strategic alliances linked in a global network, reaping the benefits of globalization." [3]

The HDR identified the international illicit drug trade as one of the major earners in the global underground economy, generating an estimated US$ 400 billion a year, equaling the gas and oil industry in its share of world trade. [4] However, the frenetic efforts to quantify the impact of TOC in order to proof its threat, are based on a very shaky guesstimates. A recent expert seminar on The Impact of the Illicit Drug Industry organised by TNI, illustrated the widespread recourse to inflated figures, doubtful evaluation processes and the institutional need for numbers. To say that the illicit drugs trade is equal to around 8 per cent of global trade, equalling the oil industry, was extremely misleading. The US$ 400 billion figure is turnover at the retail level, which is much greater than the value of the illicit international drug trade. [5]

The seminar stressed a need to demystify the ‘numbers game’ as Francisco Thoumi baptised the process. Most existing estimates simply do not have plausibility and only serve other purposes, such as to impress the public, to request appropriations, or to explain the existence of international conspiracies to continue ineffective policies.

The construction of the TOC threat

Even if the figures were right, are the ‘crime syndicates’ that allegedly control these financial and economic resources comparable with legal transnational corporations? The HDR identifies the usual suspects, like the Sicilian Mafia, the Japanese Yakuza and Chinese Triads, Colombian and Mexican cartels and emerging Russian organised crime groups. But do they really exist as transnational, organised criminal corporations? What is the real extent of their financial resources and power to corrupt societies?

Rapid succession of acts and actors challenging the fashion industry.

Nowadays, most researchers on transnational organised crime agree that it is better understood as a loose configuration of fragmented, very flexible and dynamic – sometimes collaborating, sometimes competing – networks. "Network structures have become particularly prevalent in contemporary organised crime, [...] characteristics that help make them extremely difficult to combat". [1]

As such illegal organised crime syndicates are not the same as large transnational legal business corporations. What does that mean for the assessment of their economic power – and the alleged threat to the globalisation process? Although the traditional hierarchic model of the Mafia is replaced by a much more diverse and confused notion of more or less small entrepreneurial groups that collaborate in business alliances, nevertheless, criminal organisations or networks are increasingly viewed as a global threat.

In an analysis of global trends, the US National Intelligence Council noted, "criminal organisations and networks [...] will expand the scale and scope of their activities." They will use their economical power to disrupt states and societies: "They will form loose alliances with one another, with smaller criminal entrepreneurs, and with insurgent movements for specific operations. They will corrupt leaders of unstable, economically fragile, or failing states, insinuate themselves into troubled banks and businesses, and co­operate with insurgent political movements to control substantial geographic areas." [2]

Since the 9/11 attacks, the ‘criminal underworld’ is increasingly merged with that of political terrorism and constructed into one underground ‘axis of evil’ that is a major nationalsecurity threat. According to the US State Department: "As we move through the first decade of the 21st century, the United States faces serious threats to its security from international terrorist networks and their allies in the illegal drug trade and international criminal enterprises. Terrorism, international drug trafficking and transnational organised crime simultaneously target Americans and American interests both at home and abroad." [3]

A new paradigm seems to emerge – or is it an old one re-discovered? What is certain is that policies are re-oriented towards this assumed threat, while critical analyses of the basic assumption are ignored. The seminar aimed to offer a forum for critical analysis outside the conventional law enforcement agenda of how to combat the problem.

There is an expansion of new economic and political formations that ignore national borders, according to Nordstrom. These power blocks follow their own logic of territorial development in the form of surrogate or shadow states that are difficult to gain access to. They provide some of the world’s most political unstable and marginal economic regions with arms, mercenaries, food, medicine and luxury commodities. These power blocks offer good opportunities for collaboration with rising political strongmen or warlords who desire unlimited power and profits. Economic power and political control go hand in hand. Entire regions such as Liberia and Sierra Leone or the Congo come to mind, but the situation in the slums of Rio de Janeiro that are dominated by drug gangs does not differ that much – although these are just areas of an otherwise more or less functioning state or even a city.

According to Margaret Beare, the Convention ignores the ‘fringe—the professionals without whom organized crime would often not be possible. To my mind the missing piece is the acknowledgement of the fringe (or not so fringe) professionals that facilitate transnational crimes and still tend to be slapped rather than handcuffed. The Convention addresses the need to hold companies and corporations liable for taking part in or profiting from serious crimes involving organized crime groups as well as for money laundering activities but there is still little appreciation that the corporation may in fact be the organized crime group. [x]

[1] G8 Birmingham Summit, Communiqué on Drugs and International Crime, May 17, 1998.

[2] United Nations Development Programme (UNDP), Human Development Report 1999: Globalization with a Human Face, Oxford University Press: New YorkOxford, 1999, p. 30.

[3] Human Development Report 1999, pp. 5 and 42.

[4] Human Development Report 1999, p. 41.

[5] See also: Francisco Thoumi, The Numbers’ Game: Let’s All Guess the Size of the Illegal Drugs Industry!, paper prepared for TNI seminar on The Economic Impact of the Illicit Drug Industry, December 2003. [PDF]

[1] Phil Williams, Transnational Criminal Networks, in Networks and Netwars: The Future of Terror, Crime, and Militancy, John Arquilla & David Ronfeldt (editors), Rand Docu­ments, 2001, p. 72.

[2] National Intelligence Council, Global Trends 2015, December 2000, p. 41.

[3] United States Department of State, FY 2004 Congressional Budget Justification for Foreign Operations, p. 63.

[x] Margaret E. Beare, Investigating Transnational Organized Crime: Current Situation and Guidelines from the Palermo Convention, presentation at a UNICRI Symposium on Transnational Organized Crime, February 2002.