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ORGANIZED CRIME

AND THE CRISIS

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Dr. Liviu MURESANARTSJune 2010


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Transnational organized crime is one of themajor threats to human security, impendingthe social, economic, political and cultural

development of societies worldwide, andinvolved in trafficking in human beings, drugsand firearms, money laundering, etc.

According to the United Nations Office on Drugs and Crime (UNODC)

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Criminals are ahead of governments inexploiting the most advanced tools ofglobalization, such as international travel,

banking or trade, and are benefiting from theeconomic-financial crisis.

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Supporting criminal networks is a range ofprofessionals operating along the margins ofcriminality: lawyers, accountants, financialadvisers, bankers, stockbrokers, IT

specialists, businessmen, chemists, corruptpoliticians, judges and magistrates,government officials, police, customs officers

and military personnel, even compliant mediapeople and clerics.

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The structures of contemporary criminalnetworks have evolved from pyramid shapedhierarchies to networks of cells where almostevery unit is operating independently. They

are continuously changing constellations,partners and even geographical locationswhich makes it nearly impossible to map out

an entire network.

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The economics of Transnational Organized Crime

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HAVOSCOPE, an online database of black marketactivities estimates world illicit trade to be almostUS$730 bn/year, with counterfeiting and piracyUS$300 bn US$1 trn, trade in environmental goods

US$69 bn and weapons trade US$10 bn.

The illicit drug trade is valued at between US$500and US$900bn worldwide. Trafficking in persons forsexual exploitation or forced labor is one of organizedcrimes largest revenue sources, generating US$9.5bn annually. Theft and breaches from cybercrime maycost businesses as much as US$1 trn in 2008 inbribes US$1.5 6 trn in laundered money.

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UN Security Council debated the issue of organizedcrime as a threat to international peace on 24th February2010. The issue has also been hot in the G8 andregional organizations like the OSCE.

The vicious circle: crime is attracted by insecurity,underdevelopment and weak governance, while thelatter are exacerbated by crime.

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Arch financial ponzi king, Bernard Madoff and his US$65 bn fraud

seemed to set to set some kind of record but his lawyers say heshould only get 12 years because of his age, cooperation, and hisexpression of shame.

Something like $14 trillion worth of nominal dollars is being sucked

into a cosmic vortex never to be seen again. It was last seen in thespectral forms of so many collateralized debt obligations, creditdefault swaps, so-called structured investment vehicles and othernow-obvious frauds. That giant sucking sound we hear means theprocess is still underway, and the money disappearing into yawning

oblivion will out-pace any effort

James Howard Kuntsler


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The financial crisis is not just restricted to the United States it is a

global event that is also having a severe impact on economies inEurope, Asia and the developing world. Things are tough all over, andthis financial strain will create some large security problems forcorporations and governments.

One of the first functions cut during tough times often us corporatesecurity. A security department typically has a pretty substantialbudget (it costs a lot for all those guards, access-control devices,cameras and alarms). The security budget is seen as an easy place toquickly reduce costs in an effort to balance the profit-and-loss

statement.

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The different perspectives, the new insides, the complexassessments and the long term development scenarios haveput the transborder organized crime in surprisinglychallenging dimensions.

Being used to seeing some of the organized crime activitieson the streets, reflected in the newspapers or in the TVevening news, we almost forget the real impact of this threaton governance at local, national, international, but also atglobal levels.

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As it was mentioned already by the Stability PactInitiative against Organized Crime in South EastEurope (SPOC) this phenomena is of increasedconcern because it threatens democracy, the

rule of law, human rights, security and stabilityand social and economic progress.

The concerns raised among governments aroundthe world about the capacity of the organizedcrime to threaten the governance ability andstability in numerous countries as well in theglobal economy and finance.

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The break down of the political and economicbarriers at the end of the Could War has offered tothe organized crime the chance to take advantagefrom the new international environment.

The increased trade, free movement of people,capital and goods, the modern technologies ofcommunication, the electronic capital tradingsystem, all within the reach of international

criminal organizations, are bringing out a newpicture of the complexity of the situation today.

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One of the major concerns about the impact oforganized crime on the good governance is the factthat it is too difficult to draw a clear line betweenlegal and illegal actions.

Within the current economic life, most of thebusiness activities are legal. Some of them couldturn into illegal zone due to the unreasonabletaxation rules, loopholes in the existing legislation,advantages of the grey economy or due to the linksto corrupt bureaucracy, financing political activitiesand others.

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Organized crime acting mainly in the illegal zoneis most likely to have some of its activities legalbecause of the need for visibility - as a result ofthe protection of corrupt politicians and law

enforcement representatives and in connection tothe laundering of important amounts of moneyinto the legal economy (through the privatizationprocess, buying real estate a.o).

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ORGANIZED

CRIME

BUSINESSLEGAL

ILLEGAL

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GLOBALIZATION of the Organized crime

CRIMINALIZATION of the World Economy

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The large amount of money allowscriminals to buy the knowledge andtechnology necessary to create new

forms of crime which could generateeven more profits. For example, thedaily international transfers of $ 2trillion via computer communications

make tempting targets.

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Transnational crime could be seen as the worldsfastest growing industry. In the next future,powerful transnational crime syndicates, who arealready intertwined with many local governments on

the world scale, will increasingly influence theworld and due to its actual power it is alreadyinterfering more and more with the ability ofgovernments to act.

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Organized crime, terrorism are now new actors of the global

governance together with the international financial bodies,UN agencies, multinational companies, professional bodiesor NGOs.

As was presented already in the 2003 State of the Futurereport, potential synergies among organized crime,corruption and terrorism supported by money laundering,could evolve into significant force counter to governmentdecision making with public interest.

In the following scheme we propose to you some of the

interlink ages among organized crime structures, corruption,governance capacity and national security.

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The authorities are at constant war withthe organized crime but one of the mainconstraints they have to face are thefinancial means allocated to them forthis propose. Thus their are obliged tospend the money to the fighting with thebasic levels of the organized crime,

where most criminals are active.

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In the meanwhile, the organized crimeis becoming more and more able topenetrate these structures, due to the

amount of money they are earning eachyear as well as other factors - mainlytheir flexibility and capacity to tackle the

decision levels, which represents a realrisk for the national security.

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As one of the conclusions which could be subjectof concern is the quite modest governancecapacity to combat organized crime at the toplevel and the more robust and efficientintervention at the basic level.

By 2010 the criminal threats to the democraticstates will be more diversified and will have amore direct impact on the strategic interests of

states.

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In this perspective any initiative at national,regional and global level has to be welcomed.

The countries of our region have shown their

determination to contribute to establishing somecontrol over the criminal activities, both domesticand transnational.

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In 2000 the Regional Center for CombatingTransborder Crime was set up, an internationalinstitution created in Bucharest within theframework of the South Eastern EuropeCooperation Initiative.

12 countries from the region (Albania, Bosnia-Herzegovina, Bulgaria, Croatia, Greece,Hungary, Macedonia, Moldova, Romania,Slovenia, Serbia and Montenegro, Turkey) sentpolice and customs representatives to work

together in fighting organized crime.

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REASONS OF CONCERN

The 7 criminal pyramids

Use of corruption by theorganized crime by rank

Number of personsinvolved in the

organized crime byrank

Incomes from theorganized crime by

rank

Capacity of integration ofthe organized crime in the

political structures

Personal risks forpeople involved in the

organized crime byrank

Amounts of moneydedicated by the

authorities to put undercontrol the organized

crime

Risks for thenationalsecurity

Governance capacity tocombat organized crime

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REASONS OF CONCERN

1. Financial crisis winner: organized crime Violence and criminality on the streets (SALW)

Budget cuts affecting the security sector

White color criminals

the cash is king, a.o.

2. The enemy within (FBI)

3. Deadly triangle for law enforcement

Politics

OrganizedCrime

Business

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REASONS OF CONCERN

5. Nexus terrorism organized crime - corruption;

6. Fragile interagency cooperation;

7. Critical Infrastructure vulnerabilities: protection and

resiliency8. Management of instability:

So-called stability by polar world (before 89)

Profound and generalized instability (after 89)

Stabilizing instability9. Crisis of the global governance

Citizen are better informed

Leaders are less competent / prepared

World is more complicated

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REASONS OF OPTIMISM

1. Success Story: Regional Center for CombatingTransborder Crime (SECI Center since 1999)

2. Cooperation of professionals with different areasof expertise a key for positive results in thelast 10 years

3. Making best use of the money

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REASONS OF OPTIMISM

4. Lessons learned and transfer of expertise inother geographic areas

5. First joint event Swedish EU Presidency (Oct

2009): Swedish Civil Contingencies Agency &Homeland Security, Dept. Science andTechnology Explosive threats, surveillance networks and

detection, radicalization, securing power and watersupply, electromagnetic terrorism against criticalinfrastructures

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REASONS OF OPTIMISM

6. A more secure and open Europe StockholmProgramme

The Stockholm Programme is to define theframework for EU police and customs cooperation,rescue services, criminal and civil law cooperation,asylum, migration, visa policy for the period 2010 2014. The Programme was discussed at the

informal ministerial meeting in Stockholm in July2009 and will be ultimately adopted by EU Heads ofSate and Government at the Summit in December2009.

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REASONS OF OPTIMISM

7. Launching of the Final Report of the EuropeanSecurity Research and Innovation Forum (ESRIF),Brussels 2010

Societal Security Human beings are at the coreof security process

Societal Resilience certain risks cannot becatered for, nor avoided. Societies must prepare forface shocks and must have the ability to recover

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Trust Assuring security implies nurturing trustamong people, institutions and technologies

Awareness raising through education andtraining Security is a common responsibility of allstakeholders, the citizen is at the fore front

Innovation Europe can rely on its own scientific,technological and industrial competences

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REASONS OF OPTIMISM

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Industrial policy A competitive Europeansecurity industry is a prerequisite for future

security. The EU must address the fragmentationof its security markets.

Interoperability A seamless approach tosecurity is essential for Europe; interoperability isessential to allow security forces together.

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REASONS OF OPTIMISM

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Dr. Liviu Muresan

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Executive PresidentEURISC Foundation

PO BOX 2 101 Bucuresti 2, RomaniaTel.: 0040 21 212 21 02;E-mail: [email protected]: www.eurisc.org

liviu muresan_crima organizata si criza

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