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[Future Report] Transnational Organized Crime




Global Challenge 12: How can transnational organized crime be stopped from becoming more powerful and sophisticated enterprises.


(c) 2021 The Millennium Project


Brief Overview


Transnational organized crime takes in between 3% to 7% of world GDP annually; averaged together that would be $4.7 trillion per year, which is more than twice all military the world’s annual budgets combined ($1.9 trillion). Havocscope.com estimates the value of just black-market trade in 50 categories from 91 countries (105 countries not included) at $1.81 trillion, not including extortion, racketeering, corruption, and money laundering (due to their overlapping nature). Cybercrimes that increased 600% during the pandemic are also not included, but are estimated at $6 trillion in 2021. Governments are increasingly suspected of outsourcing information warfare to affect national elections. Distinctions among organized crime, insurgency, and terrorism have begun to blur, giving new markets for organized crime and increasing threats to democracies, development, and security. Hence, the total income of organized crime could be closer to $10 trillion.


In addition to these financial implications, the human misery caused by transnational organized crime must be taken into account. From terrorized villagers caught in gang wars, to deaths around the world due to fake drugs, organized crime is a crime against humanity that the ICC does not yet recognize. For example, according to The World Health Organization, “the manufacture, distribution, and supply of SF medical products is a low risk/high return activity with disproportionately low sanctions, and as such has attracted the attention of organized criminal activity”. Further, WHO reports that about 1 in 10 drugs in low and middle-income countries are counterfeits; 900 million counterfeit and illicit medicines were seized at the borders in Africa in 2016. However, the problem is also pervasive in developed states.


Problems persist in both the methodologies of researching transnational organized crime and in the policymaking process to address it. Statistics about the issue are inherently difficult to verify, and this has complicated efforts to develop a global prohibition regime against TOC. Although the UN Convention against Transnational Organized Crime came into force in 2003, a global prosecution strategy has not emerged; however, a review to improve the treaty is underway. OECD’s Financial Action Task Force has made 40 good recommendations to counter money laundering, and the Council of Europe’s Convention on Laundering came into force in May 2008, but the impacts are not clear. After years of Millennium Project interviews of relevant senior government officials, the outlines of a global strategy to counter TOC has emerged.


A financial prosecution system could be established as a new body to complement the related organizations addressing various parts of TOC today. In cooperation with these organizations, the new system would identify and establish priorities on top criminal groups (defined by the amount of money laundered) to be prosecuted one at a time. It would prepare legal cases, identify suspects’ assets that can be frozen, establish the current location of the suspects, assess the local authorities’ ability to make an arrest, and send the case to one of a number of preselected courts. Such courts, similarly to UN peacekeeping forces, could be established and trained, and then be ready for instant duty. When investigations are complete, arrest orders would be executed to apprehend the criminal(s), freeze access to their assets, open the court case, and then proceed to the next TOC group or individual on the priority list. The prosecution would be outside the country of the accused. Although extradition is accepted by the UN Convention against Transnational Organized Crime, a new protocol would be necessary for courts to be deputized, similar to the way military forces are deputized for UN peacekeeping. Each time a court would be needed, it could be selected via a lottery system among volunteering countries. After initial government funding, the system would receive its financial support from frozen assets of convicted criminals rather than depending on government contributions, which could be subject to bribery by organized crime. Countries that made the arrests and courts that prosecuted the cases would receive reimbursements from the frozen assets.


Meanwhile, the increasing digital transition is an anti-corruption tool improving transparency as money flows from government budgets to public institutions to citizens with less chance of illegal intervention. [status of the financial digitalization policies in India?]


Actions to Address Global Challenge 12:

  • Conduct a feasibility study of the above strategy.

  • Include organized crime as a crime against humanity recognized by the ICC.

  • Analyze outcomes and study transferability of India’s demonetization attempt to reduce organized crime

  • Draw lessons from the end of Colombia’s conflict with FARC, which sustained its armed insurgency with illicit drug trafficking, illegal mining, and extortion.

  • Engage farmers in high-income agricultural alternatives to illegal production, and focus policing efforts on drug traffickers rather than peasant farmers who grow illicit crops.

Transnational organized crime takes in over $4 trillion per year, which is twice all military annual budgets combined ($1.9 trillion). Havocscope.com estimates the value of black market trade in 50 categories from 91 countries (105 countries not included) at $1.81 trillion, not including extortion, racketeering, corruption, and money laundering (due to their overlapping nature). Cybercrimes are also not included, but is estimated at $6 trillion in 2021. Moreover, governments, lobbyists, and organized crime networks are increasingly suspected of cyber and information warfare collusion to affect national elections. Distinctions among organized crime, insurgency, and terrorism have begun to blur, giving new markets for organized crime and increasing threats to democracies, development, and security. Hence, the total income of organized crime could be closer to $10 trillion.


In addition to these financial implications, the human misery caused by transnational organized crime must be taken into account. From terrorized villagers caught in gang wars, to deaths around the world due to fake drugs, organized crime is a crime against humanity that the ICC does not yet recognize. For example, according to The World Health Organization, “the manufacture, distribution, and supply of SF medical products is a low risk/high return activity with disproportionately low sanctions, and as such has attracted the attention of organized criminal activity”. Further, WHO reports that about 1 in 10 drugs in low and middle-income countries are counterfeits; 900 million counterfeit and illicit medicines were seized at the borders in Africa in 2016. However, the problem is also pervasive in developed states.


Problems persist in both the methodologies of researching transnational organized crime and in the policymaking process to address it. Statistics about the issue are inherently difficult to verify, and this has complicated efforts to develop a global prohibition regime against TOC. Although the UN Convention against Transnational Organized Crime came into force in 2003, a global prosecution strategy has not emerged. OECD’s Financial Action Task Force has made 40 good recommendations to counter money laundering, and the Council of Europe’s Convention on Laundering came into force in May 2008, but the impacts are not clear. After years of Millennium Project interviews of relevant senior government officials, the outlines of a global strategy to counter TOC has emerged.


A financial prosecution system could be established as a new body to complement the related organizations addressing various parts of TOC today. In cooperation with these organizations, the new system would identify and establish priorities on top criminal groups (defined by the amount of money laundered) to be prosecuted one at a time. It would prepare legal cases, identify suspects’ assets that can be frozen, establish the current location of the suspects, assess the local authorities’ ability to make an arrest, and send the case to one of a number of preselected courts. Such courts, similarly to UN peacekeeping forces, could be established and trained, and then be ready for instant duty. When investigations are complete, arrest orders would be executed to apprehend the criminal(s), freeze access to their assets, open the court case, and then proceed to the next TOC group or individual on the priority list. The prosecution would be outside the country of the accused. Although extradition is accepted by the UN Convention against Transnational Organized Crime, a new protocol would be necessary for courts to be deputized, similar to the way military forces are deputized for UN peacekeeping. Each time a court would be needed, it could be selected via a lottery system among volunteering countries. After initial government funding, the system would receive its financial support from frozen assets of convicted criminals rather than depending on government contributions, which could be subject to bribery by organized crime. Countries that made the arrests and courts that prosecuted the cases would receive reimbursements from the frozen assets.


Actions to Address Global Challenge 12:

  • Conduct a feasibility study of the above strategy.

  • Include organized crime as a crime against humanity recognized by the ICC.

  • Analyze outcomes and study transferability of India’s demonetization attempt to reduce organized crime

  • Draw lessons from the end of Colombia’s conflict with FARC, which sustained its armed insurgency with illicit drug trafficking, illegal mining, and extortion.

  • Engage farmers in high-income agricultural alternatives to illegal production, and focus policing efforts on drug traffickers rather than peasant farmers who grow illicit crops.


Regional Considerations


Africa: The income from foreign aid to Africa and its losses from organized crime over the last 50 years are about the same – one trillion dollars; each year since 2000 it loses over $50 billion to illicit financial flows. Hundreds of billions of dollars are siphoned out of the continent through money laundering and industrial scale corporate tax avoidance. Over 15 million AIDS orphans in Sub-Saharan Africa, with few legal means to make a living, constitute a gigantic pool of new talent for the future of organized crime. ECOWAS is working with West African governments to improve coordinated implementation of counter-crime strategies. The Brazzaville Declaration signed by six Central African countries and related organizations pledges to counter illegal logging in the Congo Basin rain forest which is losing cover at a net rate of 700,000 ha per year. An estimated 1,215 rhinos were poached in South Africa in 2014, in a market valued at $60-200 million yearly, along with 360 great apes in Africa and Asia. Some experts are saying that the only solution is to completely ban trading in ivory. A UNEP official estimates the world wildlife illegal income to be at least $213 billion annually.


The Kofi Annan Foundation held an expert meeting on The Impact of Organized Crime and Drug Trafficking on Governance, Development & Security in West Africa, with the summary of the proceedings available online. The increased production and trade with qat (khat), which is legal in Djibouti, Ethiopia, Somalia, and Yemen is of growing concern to the international organizations. East Africa piracy has been dramatically reduced; as 27 February 2015 no major vessels were being held for ransom. There were 15 incidents off Somalia in 2013 compared to 75 in 2012, and 237 in 2011. However, piracy on the coast of West Africa continues to be a problem with 51 attacks in 2013. In September 2013 an INTERPOL operation in Ethiopia and Uganda resulted in the arrest of 53 persons, the liberation of more than 300 trafficking victims, and the identification of a large number of illegal immigrants. Nigeria, jointly with UNODC and the EU, has launched a nationwide three-year anti-human trafficking campaign. There are reports of males being trafficked from Kenya to the Gulf States as sex slaves. Kenya is starting a project to implant tracking chips in the horns of more than 1000 rhinos, to stem an epidemic of wildlife poaching, a crime that is a severe problem in much of the continent to supply Asian markets with rhino horns and other animal parts. Corruption remains one of the most serious impediments to fighting organized crime in most African countries.


Asia and Oceania: Asia continues to have the greatest number of slaves. ILO reports that 59% of human trafficking happens in Asia and the Middle East. India has 40% of world’s estimated 45.8 million slaves. China has 13% of the value of global illegal markets, the second largest in the world at $261 billion. The world’s worst drug addiction rate, more than 2%, is in Iran, which is spending $1 billion per year on countermeasures. UNODC estimates that the annual income to all those involved in the Afghan drug trade totals close to $3 billion, with the largest share going to the traffickers, and predicts the trade will increase. A UN/World Bank opinion is that the Afghan opium problem will take decades to eliminate. China is the main source for counterfeit goods sent to the EU. The relative deficit of females in China is leading to their being trafficked in from adjoining countries for marriage. India is a major producer of counterfeit medicines. North Korea is perceived as an organized crime state backed up by nuclear weapons, involved in illegal trade in weapons, counterfeit currency, sex slavery, drugs, and a range of counterfeit items. Myanmar is accused of deporting migrants to Thailand and Malaysia, where they are exploited, and has reportedly become a center for the ivory trade and elephant smuggling. Myanmar and China remain the primary sources of amphetamine-type stimulants in Asia, the top illicit drug threat in the area, although there are indications that TOC may be targeting the area’s huge and largely untapped cocaine market. Laos had almost eliminated opium production, but the problem has now returned. Opium cultivation in Myanmar increased by 13% in 2013, marking the seventh consecutive yearly increase. The country’s highly regarded product (especially in China) is rapidly overtaking Afghanistan’s output. UNODC and five countries of Central Asia committed $70 billion between 2015 and 2019 to counter organized crime between 2015-2019. The PATROL project, funded by Australia and the U.S., seeks to improve border security at land borders, seaports and airports by working with frontline officers in China and all the countries of Southeast Asia. The Tri-Border Initiative protects the vital seaways between Indonesia, Malaysia, and the Philippines against piracy, but piracy is reported returning to the Malacca Strait. Large tracts of land in Fiji are believed to have been bought up by the Russian Mafia. A report says Australia has a multi-billion-dollar drug enterprise, and Australians are among the world’s highest per capita consumers of illicit stimulants. There is a thriving illegal international trade in human organs bought from very poor people and sold to very rich ones.


Europe: Europol has published the EU Serious and Organized Crime Threat Assessment (SOCTA 2013), a systematic analysis of law enforcement information on criminal activities and groups affecting the EU. The report estimates that there are 3,600 active organized crime groups in the EU, 70% are composed of multiple nationalities, and that counterfeiting, substandard products, and cyber crimes are growing. There is a tendency for gangs to be replaced by individual criminal enterprises. The main illicit markets in the EU generate around 110 billion euro each year. The SOCTA is designed to assist strategic decision-makers in the prioritization of organized crime threats. Further, the European Monitoring Centre for Drugs and Drug Addiction (EMCDDA) is an agency of the EU, and publishes an annual European Drug Report. Europol is also funding a new European Cybercrime Centre to provide technical, analytic, and forensic help in investigations. The EC has adopted the EU Strategy towards the Eradication of Trafficking in Human Beings 2012–2016. The U.S. State Department has brought Russia, China, and Uzbekistan to the lowest level in the ranking of countries on their anti-human-trafficking performance. The UK’s Serious Organized Crime Agency Annual Plan 2012/13 stressed flexibility in its first national integrated strategy, Local to Global, but did not stress anticipation; however, it created the National Crime Agency which continues to operate under the same principals. Organized crime costs the UK £20-40 billion a year, and has 38,000 known individuals as part of 6,000 gangs. The EU has strengthened controls on money transfers across its borders to address trafficking and money laundering, especially in Eastern Europe, but the 2007 accession of Bulgaria and Romania has made trafficking of women from those countries easier. In 2012 an INTERPOL-led operation against illicit goods trafficking in Eastern Europe rounded up more than 1,400 individuals and seized 7.3 million illegally trafficked goods. Russian officials have declared the drug situation in that country “apocalyptic”, but the Financial Action Task Force has moved Russia up a level in its evaluation of countries’ combating of illegal financial transactions, putting it higher than the U.S. and Japan in that regard. Russia has enacted a tough new anti-poaching law, making it a crime to simply possess any endangered species material. Unfortunately, the country has an estimated 2.5 million drug addicts, 70 thousand of whom die in a year, largely because of a serious lack of treatment facilities. Use of cocaine in Europe has peaked, possibly due to the recession.


Latin America: Because Mexico and Colombia are succeeding against organized crime, criminals are migrating to other countries in Latin America from these two countries. Large numbers of children are fleeing drug wars in Central America to cross into the US. More than 60,000 people were killed in Mexican drug violence in 2006-2012; and 2,200 deaths were reported in December 2012 – January 2013. Mexico’s cartels receive more money (an estimated $25–$40 billion) from smuggling drugs to the U.S. than Mexico earns from oil exports. Mexican drug cartels are rapidly moving south, into Central America, and are branching out, with La Familia exporting $42 million worth of stolen iron ore from Michoacán in a year. Heavy police crackdowns in El Salvador, Guatemala, and Honduras have only made the gangs better organized and more violent. UNODC says crime is the single largest issue impeding Central American stability. Some Latin American countries say it is time to legalize drugs, considering the costs/benefits and as a strategy to curb gang violence. Drug purveyor is often the only cash job available to a youth in Latin America. Colombia’s government passed a bill for decriminalizing the cultivation of “drug plants,” while drugs’ processing and trafficking remain criminal. Uruguay became the first country in the world to legalize marijuana.The OAS has held discussions around changing drug laws, calling for drugs to be treated as public health issue, judicial reforms, and recognizing that TOC is a major factor in the regions drug issues. These are part of Latin America’s strategy for curbing drug trafficking. Brazil has instituted a $2.2 billion plan to combat crack trafficking and abuse nationwide, and UNODC and the federal government have begun a program to promote protective family relationships. The drug gangs have largely replaced the paramilitaries. Ecuador has become an important drug route, with its drug trade being controlled by foreign organizations. Mexican cartels control cocaine production in Peru generating more than $22 billion per year. While cocaine production is down 12% in Bolivia, and 25% in Colombia, Peru became the world’s top cocaine-producing nation. The “war on drugs” in Latin America is hindered by the lack of joint strategy among the governments of North and Latin America. It is also complicated by Latin America’s being a major locale for the phenomenon of “criminal diaspora” – criminals being driven to adjoining countries by law enforcement or seeing more opportunities for profit in the territory just over the border. The UNODC reportTransnational Organized Crime in Central America and the Caribbean: A Threat Assessment presents some mechanics of illicit trafficking and its potential impacts on governance and development of the region. The Caribbean has 27% of the world’s murders, including gang-related killings, with only 8.5% of world’s population.


North America: The FBI closed down the original online illegal drug market, Silk Road, in 2013.The Obama Administration issued its Strategy to Combat Transnational Organized Crime to bring more national coherence a counter organized crime strategy. Transnational Organized Crime Rewards Program authorizes the Secretary of State to give rewards for actions that help dismantle transnational criminal organizations, identify or locate key leaders, disrupt financial mechanisms, and lead to the arrest or conviction of members and leaders. The U.S. has a third of the world’s illegal market value at $625.6 billion. The International Organized Crime Intelligence and Operations Center integrates U.S. efforts to combat international organized crime and coordinates investigations and prosecutions. Drug criminal gangs have swelled in the U.S. to an estimated 1 million members, responsible for up to 80% of crimes in communities across the nation. Organized crime and its relationship to terrorism should be treated as a national security threat. Canada continues as a major producer and shipper of methamphetamines and ecstasy. A nationwide poll found that 66% of Canadians support decriminalization of marijuana possession in small amounts, an idea also endorsed by some main political parties. Colorado, Washington, and Washington, D.C. have legalized marijuana for recreational purposes; other states are expected to follow creating a legal conflict between state and federal law.


Value of countries’ illegal markets; 10 highest ranked countries and the rest of the world (billions, USD)


Source: havocscope.com

 

Writer: The Millennium Project of USIA Council Member Jerome C. Glenn

 

NOTE: USIA People have their own views and opinions that are not necessarily the USIA, and vice versa.

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