Anticipating Organized and Transnational Crime

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Crime, Law & Social Change 37: 311–355, 2002. © 2002 Kluwer Academic Publishers. Printed in the Netherlands. 311 Anticipating organized and transnational crime PHIL…


Crime, Law & Social Change 37: 311–355, 2002. © 2002 Kluwer Academic Publishers. Printed in the Netherlands. 311 Anticipating organized and transnational crime PHIL WILLIAMS & ROY GODSON University of Pittsburgh, The Matthew B. Ridway Center for International Security Studies, 4G23 Forbes Quadrangle, PA 15260, Pittsburgh, U.S.A. Abstract. This paper seeks to identify ways in which governments and law enforcement agencies might enhance the effectiveness of their efforts to anticipate organized crime. It starts by defining what is meant by anticipation, and differentiating it from the much more difficult task of prediction. The analysis then identifies some of the methods and models that are generally accepted as part of the existing knowledge base on organized crime and highlights how these can be used to anticipate future developments and to develop warnings about how criminal organizations might evolve and behave in the future. The knowledge base includes political, economic, sociological, strategic, and composite models and shows how they provide a foundation for anticipating future developments in organized crime. The models are either models about the kind of environment in which organized crime flourishes or models about the ways in which organized crime behaves. What we do, in effect, is to identify and elucidate ‘models’ in ways that provide propositions about the kinds of developments, innovations or changes we might see in organized crime (both domestic and transnational) in the future. Underlying indicators provide warning about future manifestations of organized crime. Anticipating these manifestations provides a basis for appropriate preventive, defensive or mitigating strategies. Finally, the article provides some examples of specific techniques of information collection and intelligence analysis that might assist in this task of anticipation. Introduction Organized crime has reached levels in the post-Cold War world that have surprised even close observers. Many criminal organizations have not only become transnational in scope but also exhibit a degree of flexibility and adaptability in methods and modes that poses considerable challenges for intelligence, law enforcement agencies, and society at large. Unfortunately, there is no quick and simple methodology for anticipating the major activities of criminal organizations, operational methods for moving various forms of contraband, innovations in money laundering, the development of new markets, or the measures taken by criminal organizations to counter law enforcement. Many criminal organizations are adept at concealment and disguise, at presenting a moving and evasive target for both law enforcement agencies and rivals in the criminal world. This is hardly surprising; if they fail in these areas then they often go out of business. What this means, however, is that the task of anticipating organized crime is particularly difficult. 312 PHIL WILLIAMS AND ROY GODSON It is in this area that social science and academic analysis can provide assistance to governments and the private sector, especially at the intelligence and strategic planning levels but also at the operational level. There is a tendency particularly among government officials to regard the term academic as a synonym (or euphemism) for “theoretical,” “abstract,” “irrelevant,” or “impractical.” The argument, here, however, is that social science theories, concepts and models, if used judiciously and with an awareness of their limitations, have significant utility. They can help to inform policy making and facilitate the development of strategies that are also more pro-active than is often the case in law enforcement. In effect, the earlier the warning the less the policy and law enforcement response has to be a scramble to catch up, and the greater the prospect that effective and coherent strategies can be developed. Among the developments it is important to anticipate are the following: • The overall level and scope of organized crime within countries, within particular regions, and at the global level. As a subset of this, it is necessary to be concerned with possible redistribution of criminal activity from one region to another, perhaps because the opportunities are greater and the risks are lower. • A continued increase in the level of transnational organized crime, i.e. crimes that involve the crossing of border by the criminals themselves, the products that they are supplying, or the proceeds of their activities. • The relationships between criminal organizations and government officials which can be instigated by either party but are established and maintained for the benefit of both. Symbiotic relations of this kind – sometimes termed the political-criminal nexus – have been important in the rise of organized crime in a number of countries and are also one of the biggest obstacles to effective action against organized crime. • Changes in the pattern of criminal activities, both domestic and transnational, including the development of new illicit market niches or the supply of new products and services. • Strategies that transnational criminal organizations use in their efforts to counter law enforcement and to manage the risks they face as a result of law enforcement activities. These include efforts by organized crime to infiltrate government and law enforcement both directly and through the creation and cultivation of corruption networks. • Efforts by organized crime to infiltrate businesses and financial institutions. Which businesses are particularly vulnerable and what are the characteristics that make them so? What are the critical entry points into business that need to be protected?1 ANTICIPATING ORGANIZED AND TRANSNATIONAL CRIME 313 • Cooperative relationships among local, regional, and global criminal organizations that provide multiplier effects for criminals and make the task of law enforcement even more formidable. • The rise and fall of criminal organizations. There is a constant dynamic to the criminal world with some groups in decline and others emerging. This can have important implications for the kind of expertise that law enforcement needs in terms of languages, cultural understanding, diversity of recruits etc. • The results of success. What might be the unintended results of successful counter strategies? Are there ways in which we might be worse off as a result of our successes, keeping in mind the “pillow” or “balloon effect” increasingly familiar in the drug trafficking business? This is not intended as an exhaustive list; it serves merely to identify some of the dynamics of organized crime, operating both domestically and at a transnational level, that require greater illumination and, where possible, anticipation. This paper starts by defining what is meant by anticipation, and differentiating it from the more difficult task of prediction. The paper then identifies some of the methods and “models” that are generally accepted as part of the existing knowledge base on organized crime and highlights how these can be used to anticipate future developments and to develop warnings about how criminal organizations might evolve and behave in the future. The knowledge base includes political, economic, sociological, strategic, and composite models and shows how they provide a foundation for anticipating future developments in organized crime. The paper identifies and elucidates underlying conditions that provide propositions about developments, innovations, or changes in organized crime, and future manifestations of organized crime. Anticipating these manifestations provides a basis for appropriate preventive, defensive or mitigating strategies. Finally, the paper provides some examples of specific techniques of collecting information and intelligence that might assist in this task of anticipation. What is meant by anticipation The Oxford English Dictionary defines the verb anticipate as: to seize or take possession of beforehand; to use in advance; to spend (money) before it is at one’s disposal; to take up or deal with (a thing) or perform (an action) before another person or agent has had time to act, so as to gain an advantage; to deal with beforehand, forestall (an action); to be before (another) in acting, to forestall; to observe or practise in advance of the due date; to cause to happen earlier, accelerate; to occur earlier, to advance in time; to take into consideration before the appropriate or due time; to realize beforehand (a certain 314 PHIL WILLIAMS AND ROY GODSON future event). Anticipation is, of course, related to these various meanings of anticipate, but is also defined as intuitive preconception, a priori knowledge, precognition, and presentiment. The notion of anticipation that we are emphasizing here involves developing information and analysis that enables governments and non-state agencies to be prepared for new directions in organized crime, and in so doing to have an enhanced capacity to take precautionary or defensive measures in order to gain an advantage and in some cases to forestall or pre-empt these new directions or initiatives. Effective anticipation requires an effective knowledge base, makes good use of underlying warning indicators, and requires intelligence that is both timely and actionable. While this might seem obvious, what is striking about strategy to counter organized crime in the past is that it has rarely succeeded in moving beyond the reactive. Usually, it has been running to catch up with the criminals. There are good reasons for this – including the reluctance in law to take action until a crime is committed and the difficulty of justifying action against future challenges when there are already many existing problems, challenges and cases to deal with. Nevertheless, there are also some less positive reasons, including the focus on individual cases rather than the overall phenomenon under investigation, a clear disdain for strategy in some government circles, and a reluctance to blur or cross the traditional distinctions between social science research, intelligence, and law enforcement. Difficulties of anticipating organized crime Anticipation, whether of nature, or man-made initiatives is inherently problematic. When trying to anticipate organized crime and transnational organized crime, the problems are compounded by the capacity of criminal organizations to conceal their activities within a variety of licit transactions, to act rapidly in order to exploit new opportunities, and to reconfigure and reconstitute organizational structures in response to law enforcement successes. Consequently, our propositions about future behavior are conditional or contingent rather than scientific laws. We are not offering a crystal ball that can be used for predicting new criminal organizations, new modalities of organized crime, or new strategies implemented by criminal enterprises. Nor is there any suggestion that we can develop absolute predictions based on the identification of necessary and sufficient conditions for a particular development to occur. Social phenomena are often too complex for social science to emulate the natural sciences. However, careful use of models and extrapolations from past experiences enable us to contend that if certain conditions are present then there is a serious probability that particular kinds of developments will occur. By taking existing knowledge about organized and transnational crime ANTICIPATING ORGANIZED AND TRANSNATIONAL CRIME 315 – much of which is encapsulated in so-called models – and using this as a framework for thinking systematically and imaginatively about the future it is possible to make contingent propositions about the further evolution of organized crime. Models and their implications In recent years there have been critical failures in anticipating the expansion of organized criminal activities in many places such as Mexico, Russia, and China. Yet such failures encourage the development of both more knowledge and more refined models that, if used with care and judiciousness, can provide a significant starting point for extrapolation and successful anticipation of future developments. Accordingly, this section identifies models of organized crime and then extrapolates from them contingent propositions about future behavior. There are various ways of classifying the existing models or frameworks at the national and transnational levels. Here they are organized under five major headings: political, economic, social, strategic, and composite or hybrid models. Variants of each model also are discussed. The models are of two kinds: models of conditions – political, economic, and social, – that are conducive to the expansion of organized crime, and models about how organized crime operates. In effect, they cover both the attributes of the environment and the attributes of the actors. Some are well-established; others more recent. We have chosen them, however, on the basis of their utility in helping us anticipate future developments in organized crime.2 In each case, we provide a succinct summary of the central ideas and hypotheses embedded in particular models or approaches and a series of propositions regarding future directions and activities of criminal organizations that stem from these models. Political models Weak states Political models revolve around the nature of the state and political institutions. Critical dimensions appear to be the strength or weakness of the state, the extent to which its government is authoritarian or democratic, and the degree of its institutionalization of the rule of law.3 Strength and legitimacy of the state are among the most important determinants in the work of several authors. These include Francisco Thoumi who argues that Colombia became corporate headquarters of the cocaine trade because the weaknesses of the state gave Colombian drug traffickers an important competitive advantage over their counterparts in Peru and Bolivia.4 Colombia had an extremely 316 PHIL WILLIAMS AND ROY GODSON polarized political system that was characterized by a high level of violence. The low level of effectiveness and legitimacy of the state meant that drug trafficking organizations could operate with a high level of impunity. During the 1990s, in particular, the lack of financial support for election campaigns provided a perfect way for drug trafficking and organized crime groups to obtain access to the political elite and to develop and perpetuate political-criminal symbiotic relationships. Another perspective on the weakness theme was provided in the analysis by Diego Gambetta to explain the rise of the Mafia in Sicily.5 He suggests that mafias come into existence in order to provide private protection and contract enforcement. They arise where the state itself is incapable of providing such protection and, in this sense, are a necessary evil. The Mafia in Sicily, in his view, came to monopolize the business of providing private protection and contract enforcement, filling the vacuum and offering services that in most other countries were provided by the state. Organized crime evolved from there, and in the period after the Second World War developed a symbiotic relationship with the Christian Democratic party that was based in part on Mafia help in mobilizing votes during elections. The political-criminal nexus in Italy was a major factor in allowing the Mafia not only to remain a deeply entrenched part of Italian social, economic and political life but also to operate with a high degree of impunity – at least until the 1980s. Strong regimes becoming weak While weak states have long been associated with the rise of organized crime, there kas been a more recent recognition that strong authoritarian regimes can also act as incubators for organized crime. These regimes are generally characterized by one-party rule, a lack of oversight of the ruling elite, an absence of checks and balances and civil society, and the prevalence of patron-client relations. The conditions for corruption – described by one analyst as “monopoly plus discretion minus accountability” – are almost always present in authoritarian states and exploited by officials who often extend their corrupt activities into links with criminal organizations.6 In effect, this kind of state encourages the development of organized crime – but within limits that are established, defined, and maintained by state authorities. Criminals tend to be at the service of the political establishment rather than a threat to it. Traditionally, Mexico and the former Soviet Union approximated this situation.7 Both had organized crime, but it was muted rather than overt, its realm of operations circumscribed by the power and authority of states with strong social control mechanisms. There were collusive relationships between criminals and state or party officials – but they were under the control of the officials rather than the criminals. ANTICIPATING ORGANIZED AND TRANSNATIONAL CRIME 317 With the transition from authoritarian to more democratic forms of government in the 1990s, however, not only was the existing pattern fundamentally altered but also this controlled equilibrium was destroyed. The trigger to the upsurge of organized crime was a weakening of state structures that seems to be an inevitable accompaniment to the transition process. In the Russian case, the collapse of the Soviet state with its well-established mechanisms for social and political control, and the moves towards democratic structures and procedures, changed the power relationship between officials and the criminals. Without a strong enforcement apparatus to ensure the criminals were kept within existing boundaries, organized crime was able to expand the scope of its activities in ways that were unprecedented. Symbiotic or collusive relationships remained, but the establishment was no longer the dominant partner. The change was reflected in patterns of corruption – which were no longer intended primarily to enrich the nomenklatura but to ensure the criminals were able to act with impunity. The result, of course, was a major expansion of organized crime in Russia and other Newly Independent States. The process was accelerated by hyper-inflation, unemployment and a general decline in economic conditions which provided both incentives and pressures for criminal activity as a means of survival and advancement in a new economic environment. Indeed, the distinctive feature of the post-Soviet states was their “dual transition” – from authoritarianism to democracy and from a centrally-controlled economy to freer markets. With political change accompanied by economic reform the absence of legal and regulatory frameworks for new businesses provided major opportunities for organized crime to expand the domain of its activities. The result – and this is where there is an interesting parallel with the Sicilian experience – is that criminal organizations in Russia and elsewhere in the Newly Independent States helped fill the regulatory vacuum. The need for protection, debt collection, and contract enforcement for business provided a whole new set of opportunities and functions for Russian criminal organizations. With the state failing to provide what was needed, organized crime came to play a significant role in the Russian economy. At the same time, the lack of safeguards in the privatization process ensured that criminals and officials were the major beneficiaries. There are variations on this theme in Mexico. Political corruption and the system of bribery and corruption have been present at least since Spanish rule. These conditions continued in the 20th Century, during most of which the PRI had a virtual monopoly of power. Politics and society during this period were based on patron-client relations and the relationship between government and organized crime accorded with this general pattern. Leaders of the government and ruling party used organized crime for personal enrichment and to provide funding for the social control apparatus. In turn, they allowed organ- 318 PHIL WILLIAMS AND ROY GODSON ized crime to operate with a high degree of immunity. Lupsha and Pimentel have termed this the Elite-Exploitative model – a term that could be applied equally well to authoritarian regimes.8 However, in Mexico and elsewhere this situation has broken down. As the PRI dominance of both political and economic sectors eroded, so did its control over organized crime. As a result, organized crime in Mexico – helped also by links with Colombian drug traffickers and proximity to United States markets – expanded. In an interesting contrast with the Russian (and Italian) case, local extortion in Mexico has been far less pervasive. Organized crime in Mexico has taken the form predominantly of trafficking in drugs, people, motor vehicles and various other forms of contraband. This is not entirely surprising. The proximity of the US market as well as a long tradition of smuggling across the common border meant that organized crime focused its activities predominantly in this area. Such variations notwithstanding, both cases are examples of the weakening of authoritarian states, with far-reaching implications for the level of organized crime. Even some parts of pluralistic democratic systems can be so strong that they encourage or facilitate criminal activities. In New York, for example, the effective licensing and regulatory practices, in effect, very strong state mechanisms with little real accountability, transparency, or rule of law, apparently had some of the characteristics and incentives to criminality seen in a number of authoritarian systems. The US Cosa Nostra was able to benefit from these arrangements for many decades, dominating a variety of industrial sectors and the construction industry in particular. In the 1990s, however, changes in accountability and the development of more effective rule of law mechanisms at the state, federal, as well as New York City levels, apparently led to the diminution of Mafia control.9 Weak states characterized by ethnic conflict or terrorist activity Fertile soil for the growth of organized crime is also found in states that, in effect, implode or disintegrate. The low level of legitimacy of some states can take the form either of ethnic secession movements or an attempt to obtain control of the state apparatus by force and exclude competing factions. Where this results in the disintegration of the state, as in the former Yugoslavia, there is likely to be an increase in criminal activities for several reasons. • The collapse of central authority is likely to be accompanied by a collapse of the criminal justice system and the removal of constraints on behavior. War crimes and organized crimes sometimes have the same perpetrators. • Competing factions or separatists often resort to criminal behavior to fund their political struggle. This was evident, for example, with the ANTICIPATING ORGANIZED AND TRANSNATIONAL CRIME 319 Kosovo Liberation Army which reportedly used profits accrued through the involvement of Kosovo Albanians in heroin trafficking in several countries in Western Europe.10 During the last several years of the 1990s, the number of Kosovo Albanians arrested in Europe for drug trafficking has increased significantly. The US and many Latin American governments also claim similar developments occurred in Peru in the 1980s (e.g., Sendero Luminoso), and with the Colombian FARC, ELN, and “paramilitaries” in the 1990s. • Conditions of chaos provide a fertile ground for criminal entrepreneurship and a lucrative payoff for the supply of even legal goods that are in high demand but low supply. Those who can supply goods that are not readily available reap large rewards. Ironically, the opportunities for criminal profiteering in regions of ethnic conflict are increased significantly by the imposition of international embargoes which create illegal markets such as those in the Balkans. During the war in Bosnia, for example, the Serb paramilitary leader Arkan (formerly a contract killer for the Yugoslav Communist party, and wanted for armed robberies in the Netherlands and Sweden) gained control of gasoline and other products and, according to the UN War Crimes Tribunal, became wealthy as a result.11 • The cessation of conflict can also lead to an upsurge of organized crime as former combatants use their expertise in violence in furtherance of criminal activities. The end of the war in Bosnia, for example, was associated with the spread of organized crime from the Balkans into Central and Western Europe. Criminal groups from the Balkans have not only become active in Austria and elsewhere, but are also extremely violent. A major study of organized crime in the Netherlands noted that “outside the circles of Dutch criminal groups, it is mainly former Yugoslav gangs that repeatedly exhibit a willingness to use violence against police officers.”12 This is hardly surprising given the number of specialists in violence who had graduated from military to criminal activities. None of this is to claim that all domestic conflicts, whether based on ethnic hatred, ideological differences, or religious intolerance, have an organized crime spin-off. There are cases in which this has not occurred. Nevertheless, these should not obscure the fact that in an era when conflicts over identity and political power have become ubiquitous – and funding from other states has become far more tenuous than during the Cold War – one of the most important means of obtaining the funding for political and military struggle is through criminal activities, a development that typically results in “fightersturned-felons.”13 320 PHIL WILLIAMS AND ROY GODSON Similar dynamics are evident in countries in which unsatisfied demands for self-government among a significant minority of the population have generated terrorist campaigns. In some of these terrorist groups engage in criminal activity to fund their political activities. The Basque ETA, for example, has a subordinate organization called KAS that typically committed crime for profit on its behalf, collected “revolutionary taxes,” and had control over Jarrai, a youth group which is heavily involved in street violence and provides an important source of recruitment.14 Similarly during the 1980s surprising numbers of Tamils were arrested in Europe for drug trafficking. Even the IRA, which obtained much of its financing from voluntary contributions, helped to finance its armed struggle through a variety of criminal activities ranging from video piracy and Eurofraud to bank robberies, extortion of small businesses and the theft and sale of construction equipment from Britain.15 One possibility for the future – and this is speculative – is that some terrorist groups will transform themselves into criminal organizations primarily focusing their activities on illegal profit-making activities. For example, where a political settlement removes the political rationale for continued violence or where some members of terrorist organizations are so hooked on the lifestyle and so attracted by the profits, they are tempted to continue the illegal profit-making – for mercenary rather than political reasons. In Northern Ireland, for example, some terrorists, instead of reverting to law-abiding citizens, have become full-time criminal entrepreneurs. There are precedents for this. Perhaps the most notable of which is the transformation of Chinese Triads from political to criminal organizations. Initially established in the 17th Century to oppose the Qing dynasty, the many Triads were bereft of their cause by the collapse of the Qing and the establishment of the Republic of China in 1912. While some members entered politics, “those who were not absorbed by the political machine returned to the well-established Triad organizations for power and status. However, without a patriotic cause to pursue, the secretive and anti-establishment nature of the organizations helped transform them into criminal groups.”16 This kind of transformation from political activism or terrorism to organized crime is not pre-ordained, but is a distinct possibility that needs to be considered. Democratic states with high legitimacy as crime resistant states Identifying the conditions under which organized crime can flourish is also suggestive of conditions which it finds inhospitable. Well-functioning democracies with a high level of political legitimacy, a strong and deeply entrenched culture of legality, rule of law, structures for accountability and oversight, and high levels of transparency inhibit the emergence of organized crime. If these characteristics are present, it is more difficult for organized ANTICIPATING ORGANIZED AND TRANSNATIONAL CRIME 321 crime to develop a symbiotic relationship with the political and administrative elites and to come into the mainstream of political life in the country. Resulting propositions about the political environment and organized crime From all this it is possible to formulate several propositions about the sets of conditions under which criminal organizations develop and flourish – and conversely do not develop – in particular states: • States that are weak provide a congenial home base for criminal organizations. Operating from this home base criminal groups can extend their operations elsewhere, especially if they have products (whether drugs, women, or arms) which are in demand elsewhere. • Strong states act as incubators for criminal organizations but generally succeed in circumscribing and containing these activities. The weakening of these states, either gradually or suddenly, as part of a transition from one form of political and/or economic system to another, facilitates the expansion of criminal activities well beyond the previous limits. Although the political-criminal nexus that developed in the previous regime will tend to survive the change, the power relationship within the nexus is likely to move in favor of the criminals. Similarly, corruption which in the old system was used to benefit the political elites now becomes a major instrument used by organized crime to protect itself. These developments tend to perpetuate the weakness of the state and hinder the prospects for a successful transformation to the rule of law and to a functioning and vibrant democracy. • States in which there is not only a political transition but also transition from a command economy to a free market will experience not only a significant increase in the level of organized crime but also more pervasive forms of organized crime. In such economic transformations, organized crime is likely to go well beyond the supply of illicit goods and services to become deeply entrenched in the economy. Criminal groups will exert control over many business enterprises, especially those in the export sector, will have a significant influence on financial institutions such as banks, and will also demand protection money from large and small businesses alike. Extortion will become one of the staples of organized crime in transition economies as criminal groups develop parasitical relationships with new enterprises. The converse is that in states in which the transition is only political, organized crime will not develop in these directions to anything like the same extent. 322 PHIL WILLIAMS AND ROY GODSON • States in which there are ethnic conflicts or terrorist movements are also likely to see an increase in organized criminal activity, as are neighboring states, especially in weak or ungovemable regions. • Peace agreements in ethnic conflicts, civil wars, or states in which terrorist groups have been active sometimes generate an increase in organized crime if former members of military or para-military organizations turn their attention to crime for mercenary or personal, rather than political, reasons. Although the proposition about the transformation from a command economy to the free market suggests that it might be possible to anticipate, in broad terms, the form that criminal activities will take in certain kinds of transition, for the most part the political models help us to understand the scale of organized crime and the conditions that lead to its increase. The various models are encapsulated in Table 1: Other models provide opportunities to anticipate in more detail the activities and strategies of criminal organizations at both the domestic and transnational levels. Economic models There are two closely related economic models that provide a basis for anticipating future trends in organized crime. The first is about market demand and the nature of criminal markets; the second is about the way criminal enterprises behave in criminal markets. Both models emphasize the profit motive and economic considerations as opposed to political conditions. Both also provide insights into the kinds of organized crime behavior that it might be possible to anticipate. The market model The first model focuses on the dynamics of supply and demand in illegal markets whether local or global. An illegal market has been defined as “a place or situation in which there is a constant exchange of goods and services, whose production, marketing and consumption are legally forbidden or severely restricted by the majority of states. Moreover, the activities of that illegal market are socially and institutionally condemned as an inherent threat to human dignity and the public good. Typical markets of this kind . . . include hard drugs, illicit arms sales, trade in economic and sexual slavery, capital originating from criminal activity, and deals involving secret information and intelligence.”17 At least four different kinds of products are the focus of criminal markets: prohibited goods such as drugs; regulated goods such as fauna and flora or antiquities; stolen (and counterfeit) goods such as cars; and products that are differentially taxed in different jurisdictions and are often ANTICIPATING ORGANIZED AND TRANSNATIONAL CRIME 323 Table 1. Political conditions Weak state Implications Opportunities for organized crime to develop with little interference; Role of organized crime as substitute for protective and regulatory functions of the state Strong state becoming weak Initial incubation then expansion of power of organized crime as state loses power States in transition particularly vulnerable to organized crime inhibiting progress toward democracy, rule of law, and the free market Increase in organized crime, including violence, within the state and its neighbors. End of conflict may lead to transformation of terrorist organizations into primarily criminal organizations Organized crime provides illicit goods and seeks vulnerable economic sectors but largely on the defensive Result to anticipate Organized crime can flourish and use the state as a home base States characterized by Factions use criminal activities ethnic conflict, insurgency to fund their political struggle; or terrorism and use embargoes as opportunity for trafficking and profiteering Strong democratie states Constant struggle between with high levels of organized crime and law legitimacy, transparency, enforcement rule of law smuggled from the low tax jurisdiction to the one with higher taxes. Research and analysis of illicit markets suggests that they are often disorganized, rather than highly organized, with multiple participants who cooperate and compete in complex and unpredictable ways.18 Indeed, one proponent of this approach is highly skeptical about the role of hierarchical criminal organizations in illicit entrepreneurship, contending instead that organization is merely a form of govemance in, or regulation and enforcement, in the criminal world.19 The argument is that it is individuals or small groups of members of a criminal organization rather than the organization per se who meet the demand for illicit products. 324 PHIL WILLIAMS AND ROY GODSON The critical dimension in this view is not criminal organizations, but the dynamics of illegal markets. Prohibition regimes (which simply reduce supply but not demand and therefore push up price) generally encourage an influx of suppliers, varying greatly in size and power. These markets are rarely dominated by a small number of large syndicates. A good example is the trafficking of women for commercial sex – an area of activity that is generally regarded as being controlled by organized crime. In fact, although criminal organizations are the single most important kind of player in this market, there is a wide range of participants in the trade, including: brokers and agencies who recruit the women, often using false promises of employment; corrupt officials who assist in provision of passports, visas, work permits, and any other documentation; brothel owners and criminal groups who pay the suppliers and put the women to work; and corrupt policemen and politicians who take payoffs – in money or in kind – for turning a blind eye to prostitution in their jurisdiction. Moreover, although some criminal organizations are directly engaged in the trafficking, others simply facilitate the process and protect, or “tax” the agencies and entrepreneurs involved. The implication of all this is that the much touted monopoly control over markets is much more elusive (except perhaps at the local level) than many traditional accounts of organized crime imply. The enterprise model The second economic model starts from the notion that organized crime groups are essentially enterprises with the emphasis on the business dimension rather than the criminal.20 There is a continuum of business enterprises from licit firms which engage solely in licit businesses, through licit firms which sometimes act in illicit ways, to illicit firms which operate in illegal markets and provide prohibited or highly regulated goods and services. This is not to ignore the characteristics of criminal enterprises that differentiate them from their licit counterparts – the need to conceal their activities, the importance of security precautions, the use of violence and the use of corruption. Important as these differences are, though, they should not obscure the commonalities, the most important of which is the desire for profit. Indeed, wherever enterprises fall on the licit-illicit continuum they behave in essentially similar ways: they typically scan their environment for opportunities, seek to make rational judgments about opportunities and dangers, and seek to maximize their profits where this does not involve unacceptably high levels of risk. Not all criminal organizations engage in a formal planning process; nevertheless their thinking, intuitively or deliberately, will reflect standard business needs and take into account such factors as new product opportunit- ANTICIPATING ORGANIZED AND TRANSNATIONAL CRIME 325 ies, product dominance, profit margin, market needs and opportunities, degree of competition, risk management, retirement strategy, and the like. Resulting propositions Although there are differences among these two economic models, they both place considerable emphasis on the market and the opportunities it provides. They see criminals as rational actors constantly seeking new opportunities to maximize their profits. Furthermore, even if one accepts the argument that criminal entrepreneurs are usually a few individuals or small groups and that criminal markets are not dominated by large-scale hierarchical organizations, the implication is not to reject parallels with licit business. In both the licit business world and the world of criminal enterprises, there are enormous variations in size and structure of the “firms.” Acknowledging that much criminal enterprise is run by small businesses rather than large conglomerates simply reflects this diversity. Consequently, these two models can, in effect, be lumped together to suggest the following propositions about criminal operations and the kinds of developments that can be anticipated: • Criminal organizations will constantly seek new geographic markets and if these markets are lucrative will not usually be deterred unless met by overwhelming countervailing power or cultural resistance. This helps to explain why a growing number of criminal organizations have increasingly become transnational in their operations. Globalization has offered new opportunities and provided new imperatives for licit businesses seeking to be competitive. It has had the same effect in the criminal world, encouraging criminal organizations to meet (or create) market demand well beyond their home state. In effect, criminal organizations go where the rewards are greatest, exploiting disparities in price, as well as differential laws and regulations and culture. The implication of this is that even states that have well-established criminal justice systems that in some ways are resistant to organized crime find themselves attracting criminal organizations that see them as a lucrative venue for business. Not surprisingly, therefore, the United States has become a host or target state for transnational criminal organizations with home bases in other states. The search for new markets also explains why, since the end of apartheid, South Africa, with its open borders, weak criminal justice system, well-developed infrastructure and – by African standards at least – high level of wealth – has become a major target for African criminal organizations as well as those from elsewhere. Nigerian criminals have transformed the South African drug market through largescale imports of cocaine, while Chinese, Russian Moroccan, and Italian criminals are also active in the country.21 In a similar vein, Colombian 326 PHIL WILLIAMS AND ROY GODSON drug trafficking organizations, through the 1990s, developed major new markets in Western Europe and the former Soviet Union. This is evident in the increasingly large seizures of cocaine in the Newly Independent States. • In terms of products, the enterprise model suggests that some criminal organizations will increasingly diversify their activities into a range of illicit products. Among the illicit markets that have taken on new dimensions in recent years are commercial sex and the trafficking of women and children, CFCs, automobile theft, and illegal trafficking in fauna and flora. Furthermore, we should expect to see both product specialization and the rise of poly-commodity trafficking organizations. There is evidence of the latter in the Florida-Puerto Rico, California-Baja channels which are used for bringing drugs and people to the United States from Central and South America and for taking motor vehicles from the United States to Central and South America. Among the criminal enterprises that are operating simultaneously in a variety of illegal markets are Mexican, US, Chinese, Nigerian, and Turkish groups. Chinese criminal enterprises engage in a wide variety of activities ranging from the smuggling of illegal aliens to large-scale intellectual property theft and counterfeiting; Turkish entrepreneurs traffic in heroin, people, antiquities, and, in some cases, nuclear materials; while Nigerian groups in a section of Johannesburg operate both drugs and prostitution. This pattern of diversification is likely to be replicated elsewhere. • Just like licit enterprises seeking to minimize their tax burdens, criminal enterprises seek to protect their profits. They often use offshore financial centers and bank secrecy jurisdictions to protect their money. It would not be surprising if, in the future, they also make increasing use of smart cards and e-money to break the audit or investigative trail. In order to keep ahead of efforts to clamp down on money laundering through more stringent regulation of the banking sector even in offshore financial centers, they have an incentive to use other mechanisms such as trusts, international business corporations, and new financial instruments such as options and derivatives that protect the identity of the beneficial owner. As new offshore financial centers open up, so criminal entrepreneurs use them, tentatively at first, and more fully as they become more confident of the protection they provide. • Just as licit enterprises engage in cooperative as well as competitive behavior, criminal organizations are likely to collaborate with one another against common adversaries, particularly law enforcement. The collaboration may take diverse forms ranging from strategic alliances and joint ventures at the most ambitious level through tactical alliances, contract ANTICIPATING ORGANIZED AND TRANSNATIONAL CRIME 327 relationships, supplier customer relations, to spot sales at the most basic level. Cooperation will be particularly attractive when well-established criminal enterprises have saturated the existing market but are facing obstacles in their efforts to break into new markets. A local partner can greatly facilitate such an entry and by exploiting existing distribution channels and corruption networks can ensure the rapid development of the market.22 • Where cooperation has resulted in the development of major competitors with a large market share, criminal enterprises will seek to develop alternative allies, to re-establish their market position and to diversify into new markets. This suggests that not only will some Colombian drug trafficking organizations seek alternative partners to Mexican trafficking organizations (as they seem to have done with the Dominicans) but they will use routes that do not go through Mexico and develop new markets where Mexican organizations are not major players. • To operate effectively in markets that are diffused or “disorganized” and contain multiple players, criminal enterprises will seek to develop patterns of cooperation with participants in the licit world who play a critical role in supplying the commodity (parents of villagers who sell their daughters; officials at chemical manufacturing plants willing to divert precursors), in moving the commodity (customs and immigration officials who have to be bribed) or in selling the commodity (art and auction houses who sell antiques that do not have proven provenance). In short, any criminal enterprise seeking to develop an effective market niche will develop significantly collusive linkages with the licit world. • Criminal enterprises will seek to penetrate legitimate business to protect their funds, to provide apparent legitimacy for wealth, and, in a few cases to provide an option for a transition to licit business or retirement from criminal activities. Licit business enterprises also can be excellent covers for various kinds of trafficking activities. In order to diversify and protect their profits, criminal enterprises will move into the licit business world, exploiting vulnerable points of entry into particular firms or industries. This was done in the garbage disposal and construction industries in the United States, hazardous waste disposal in ltaly, and, more recently, the commodities, aluminum, banking, and export industries in Russia. Criminal organizations will not only use these licit enterprises as a cover for illicit activities, and possibly as a further source of profit, but also, over the medium and long term, as a means of legitimization. Whereas the political models were useful primarily for anticipating changes in the magnitude and type of organized crime, the enterprise and market models provide more insight into the business opportunities and incentives 328 Table 2. Economic model Market dynamics PHIL WILLIAMS AND ROY GODSON Implications Organized crime responds to market dynamics and exploits demand for its goods and services especially where there are prohibition regimes Criminal organizations will act in ways similar to licit enterprises and will seek out new business opportunities, structures, and strategies to maximize profits Result to anticipate Criminal organizations will become major participants in a variety of criminal markets, but will not have monopoly control over these markets Criminal enterprises will seek to diversify markets and products, to protect profits (for example, by using offshore financial centers), and will cooperate with other criminal organizations and will collude with various individuals, institutions and agencies in the licit world Enterprise model that are available and the kinds of strategies that particular groups are likely to adopt to maximize their profits. Understanding the dynamics of illegal markets and the business strategies pursued by criminal enterprises to should enable governments and private enterprises to anticipate new departures in criminal activity. This is summarized in Table 2. Anticipation of criminal initiatives, however, requires that analysts understand the specific perspectives and perceptions of the criminal organizations and understand their logic, their assessment of risks and opportunities and the considerations that will determine their ultimate policy choices. This theme is discussed further below. Social models Although the political and economic models of organized crime are among the most compelling, they are certainly not the only significant models. Social models emphasize such factors as the cultural basis for organized crime, the idea of criminal networks as a social system, and the importance of trust and bonding mechanisms as the basis for criminal organization. Whereas political models focus on the opportunities available in particular kinds of governmental arrangements and enterprise models focus on the market opportunities ANTICIPATING ORGANIZED AND TRANSNATIONAL CRIME 329 and how they might be exploited, social models focus on the grass-roots level, the cultural conditions that encourage and facilitate criminality, as well as the way in which crime is actually organized. The cultural model Organized crime is facilitated by particular cultural and subcultural factors such as patron-client relations, ties of family and kinship, suspicion of outsiders, and informal exchange networks.23 Communities where social organization has these characteristics generally are characterized by the absence of an effective rule of law system and the expectation of a culture of lawlessness. Often they also are characterized by the emergence of secret societies engaged in criminal activities. In Sicily, for example, where there was a powerful tradition of clientelism in which success was believed to depend on connections with those with power, the Mafia structure itself is territorial and “family” based. Loyalty to the local crime “family” (cosu) was reinforced by oaths and rituals designed to encourage omerta “silence before the law.”24 Indeed, the creation and maintenance of loyalty and allegiance, achieved through rituals and oaths and backed up by penalties for defections, was simultaneously a sub-cultural norm and a fundamental defense mechanism against the power of the ruling class and its repressive legal techniques. Traditional Chinese organized crime had similar cultural underpinnings. As one observer has noted, “In the development of Chinese crime groups, the values and norms of the Triad subculture have been paramount.”25 Initially, the Triads were politically motivated secret societies and although they degenerated into criminal organizations, their character and many of their functions continued to be influenced by their origin. The criminal Triads, for example, continued to use oaths and rituals to induct new members. In many respects, these resembled the oaths and rituals of the Sicilian Mafia and were similarly intended to instill a high sense of loyalty and an enormous fear of disloyalty. Indeed, the Triad emphasis on loyalty, “brotherhood” and secrecy although not “intrinsically criminal” provided an important basis for criminal activities.26 Yet, there has also been some dilution of this component of Chinese organized crime and the formal Triad structure and Triad norms have become less important. As the groups “replaced their patriotic or benevolent causes with criminal activities,” other changes also occurred.27 “Membership was granted to almost anybody who wanted to join, and leaders lost track of and control over their followers. Members became interested in enhancing their individual gains. Nowadays, the Triad values of patriotism, brotherhood, righteousness, and loyalty remain only in proclamations.”28 For some observers, however, there is still an important cultural underpinning for Chinese organized crime. This is the notion of guanxi or reciprocal obligation 330 PHIL WILLIAMS AND ROY GODSON which treats family obligation as an imperative even if its spans generations and continents. Although guanxi relationships are not as tightly enmeshed as those of traditional Triad ties, some observers believe they provide a basis for the global activities of Chinese criminals. Guanxi provides a basis for trust and therefore facilitates a great deal of criminal activity in the same way that it facilitates much licit business.29 It is also arguable that cultures in which the culture of lawlessness and corruption is endemic provide an important incubator for the development of indigenous organized crime and an attractive target for transnational organized crime looking for new opportunities. In Nigeria, for example, the political system is based largely on what has been termed “prebendalism,” that is “a pattern of political behavior in which individuals compete for public offices in order to use them for the personal benefit of the office-holder and his faction.”30 Closely related to this are patronage and clientelism, patterns of behavior that place much more emphasis on contacts and favors as a means of getting ahead and accumulating wealth than on norms, standards of behavior, or the rule of law. Such a cultural climate easily condones criminal activities so long as they are successful in the acquisition of resources. When coupled with authoritarian military rule that characterized Nigerian politics for several decades, this cultural factor helps to explain the rise of Nigerian organized crime. High levels of education, mobility, and well-established trading patterns, as well as the link to Britain, all help to explain why Nigerian crime has become ubiquitous at the global level. Indeed, the cultural model is sometimes incorporated – implicitly or explicitly – into the next model which focuses on ethnic networks. The ethnic network model Ethnic and diaspora networks have been significant, particularly in the development of transnational organized crime. As one component of the broader process of globalization, transnational ethnic networks transcend national borders and often facilitate transnational criminal activities. Even though most immigrants are law-abiding citizens who are more likely to be the victims rather than the perpetrators of crimes, the Sicilian diaspora helped to bring Mafia-like organized crime to the United States in the late nineteenth and first half of the twentieth century. In the second half of the twentieth century this process was extended to, among other places, Australia and Venezuela. Similarly, the Chinese diaspora brought the Chinese variant to many parts of the Pacific and other regions, such as the United States, Western Europe, and even Russia. For its part, the Nigerian diaspora has allowed Nigerian criminal groups to pose problems for law enforcement in countries as diverse as Britain, South Africa, the United States, Russia, Italy, and Brazil. Colombians ANTICIPATING ORGANIZED AND TRANSNATIONAL CRIME 331 in the United States, Turks in Western Europe, and Russians in Israel have greatly facilitated the creation of network structures for criminal activities. Indeed, ethnic communities can be an important resource for transnational criminal enterprises, providing recruitment opportunities, cover and support. Recruitment based on ethnic loyalties is facilitated when immigrant groups are alienated rather than integrated into their adopted society. As one analyst observed: “Many immigrant groups have been totally marginalized in Europe, some live in cultural ghettos. They readily provide some of the personnel for international organized crime.”31 Low status and poor conditions mean that the rewards offered for assistance in smuggling or other illegal activities are relatively attractive in spite of the risks. Even casual participation or involvement on the margins can yield greater rewards than can be obtained through the licit economy. Furthermore, ethnically-based criminal networks are also difficult to penetrate since they have inbuilt defense mechanisms provided by their language and culture. These barriers are often strengthened by ties of kinship, and inherent suspicion of authority. A further consideration is the vulnerability of their relatives at home to punishment should the migrants decide to collaborate with law enforcement in their new home country. Just as transnational corporations have their local subsidiaries, transnational criminal organizations often have their ethnically based criminal groups and networks within immigrant communities. The social network model A third social model of organized crime is sufficiently broad to encompass both the cultural and ethnic network models while also extending beyond them. This can be termed the social network model. Part of the impetus for this came from dissatisfaction with descriptions of the Mafia in the United States as simple hierarchies. Joseph Albini’s work, for example, revealed that even Italian organized crime in the United States could best be understood through patron-client relations rather than formal hierarchies.32 A similar conclusion emerged from a historical study of organized crime in New York, in which Alan Block concluded that not only was organized crime more fragmented and chaotic than believed, but also it involved “webs of influence” linking criminals with those in positions of power in the political and economic world. These patterns of affiliation and influence were far more important than any formal structure and allowed criminals to maximize opportunities. In a similar vein, Francis Ianni highlighted the importance of networks in African-American and Puerto Rican criminal activities in New York.33 In some quarters, however, there is still a tendency to regard traditional hierarchical models such as the Cosa Nostra in the United States, as “real” organized crime, to equate hierarchy with organization, and to dismiss 332 PHIL WILLIAMS AND ROY GODSON networks as disorganized crime. Such assumptions are misleading and mask significant anticipated organized crime behavior. This is even more apparent from the recognition given to networks as an effective organizational form for innovation whether in business or in politics. Society has developed through various stages, each characterized by various organizational or institutional patterns. It has evolved through tribes, institutions, and markets, with networks, it is argued, now becoming a dominant organizational form.34 At each stage a new organizational pattern does not replace old ones, but surpasses them in efficiency and effectiveness for at least some tasks. In the business context, the search for affiliates, allies, and partners, and the formation of transnational business networks has become critical in enabling firms to compete effectively on the global level. In effect, there has been widespread adoption of the keiretsu model that was long seen as a critical ingredient in the competitiveness and efficiency of many Japanese companies. The internal counterpart of this has been the tendency in some firms to seek skillful management, innovation, and enhanced productivity through largely horizontal network based structures rather than the traditional pyramids or hierarchies. The same tendency is visible in organized crime. Gary Potter, for example, has suggested that organized crime in the United States can best be understood in network terms, while Finckenauer and Waring, in a study on Russian emigre criminals in the United States concluded that they operate largely through network structures.35 Nor is reliance on networks confined to the United States. As one data-rich report on organized crime in the Netherlands noted in reference to the Dutch drug trade: “There is no evidence of one big organic identity at the command of one leader with various echelons functioning quasi-automatically within it. The world of the Dutch wholesale trading drugs can better be described as an extensive network where thousands of individuals, often in cliques and groups, are linked by formal or informal relations, or where these relations are easy to establish through ‘friends of friends’ if business so requires. Intersections can be discemed in the network, and individuals and groups with more power than others.”36 The authors also emphasize the dynamic quality of these networks: they contend that although many of the relationships are not particularly stable, clashes among them are generally followed by the creation of new action sets to implement specific criminal activities or more long-term coalitions.37 This is not surprising: networks are sophisticated organizational structures that are well suited for criminal activities. Among the major characteristics of criminal networks are the following: • They are flexible and adaptable, able to respond quickly to market opportunities and to the efforts of law enforcement to disrupt their activities. ANTICIPATING ORGANIZED AND TRANSNATIONAL CRIME 333 • They are highly resistant to disruption and even when they have been degraded have a significant capacity for reconstitution. • They are capable of considerable expansion through recruitment of new members, whether individuals or organizations. • They have a capacity to extend across national borders either through ethnic linkages or through simple business linkages that enable them to exploit new opportunities. • They can extend in ways that allow them to cross boundaries of demarcation such as that between the licit and illicit sectors of the economy and society. • Networks seek to defend themselves through expansion into the “upperworld” and recruitment of politicians, bureaucrats, judges, and law enforcement agents who are susceptible to coercion or bribery. • Criminal networks develop safeguards against infiltration and damage. In particular, they develop mechanisms to insulate the central figures who are responsible for organizing the core of the network and directing the networks activities. In addition, they will develop a high degree of redundancy and duplication, something that in licit business is regarded as wasteful and unnecessary. For criminal networks, in contrast, such redundancy is essential. It makes them highly resilient to disruption and provides a significant capacity for reconstitution in the event that they are damaged by law enforcement. In view of these characteristics, networks are an ideal vehicle for executing transnational criminal activities such as drug trafficking and other forms of smuggling.38 Understanding their characteristics therefore, should enable analysts to anticipate certain kinds of criminal behavior. Indeed, each of these social models yields certain insights that can be used to anticipate some of the activities of criminal organizations. Resulting propositions These various social models yield propositions about the evolution of organized crime that have implications for prevention and enforcement efforts and their likely degree of success: • Where patron-client relations are a key component of a national culture, criminals will seek high level patronage and protection from the political establishment. In return, they will provide either monetary or political favors, or some mixture of both. This overlaps with one of the political models but whereas that model emphasizes the opportunities that come from weak oversight and transparency, the emphasis here is on the cultural conditions that transform patronage, clientelism, and culture into criminal-political relationships.39 334 PHIL WILLIAMS AND ROY GODSON • Since defections are a fundamental challenge to criminal organizations rooted in sub-cultural norms, cooperation with the authorities will invariably result in attempted retribution against the defectors and their families. This can be understood partly in terms of simple revenge. Yet, such killings also represent an effort by criminal organizations to re-establish and re-impose norms that are not only essential to their operations but that are critical to their sense of identity. In other words, traditional criminal organizations will seek to maintain or restore their sub-cultural traditions and norms even if this requires extensive violence. • Diaspora communities can become a base from which certain criminal organizations operate. As a country’s population becomes more diverse so will its criminal organizations. Moreover, different criminal organizations tend to develop different styles of operation. Nigerian groups for example, typically exploit targets of convenience whether the social welfare system in Britain, or credit cards in the United States and Canada, or the demand for heroin in any number of countries. Consequently, where immigrant communities are growing, law enforcement should expect manifestations of organized crime to emerge from within them and to spread well beyond them. Once again this points to the need for a greater understanding of the diverse forms that organized crime can take. • Criminal networks will seek to expand and co-opt a whole set of support players who provide entry points to the licit worlds of government, finance and business. Organized crime-corruption networks will become increasingly pervasive and make use of the “upperworld” – professionals such as lawyers and accountants for services such as money laundering, of government officials for network protection and support, and law enforcement officers for counterintelligence. • Once established, criminal networks will not be easily defeated. Unless the nodes and connections that are identified and eliminated are critical to the functioning of the network, criminal networks will simply use alternative nodes and connections. The redundancies they create as defense mechanisms mean that it is difficult to degrade them. Moreover, even if they are seriously impaired they will often display a remarkable capacity to reconstitute and regenerate themselves in a short time period. Indeed, the remnants of one criminal network can continue to function even in truncated form. In Colombia, for example, the destruction of the Cali cartel meant that Colombian organizations became part of a less-concentrated trafficking network which has continued to supply the United States and other drug markets. The possibility for regeneration is something that crime prevention and law enforcement practitioners can monitor in order to minimize the prospect of being taken by surprise. ANTICIPATING ORGANIZED AND TRANSNATIONAL CRIME 335 Table 3. Social models Cultural and sub-cultural model based on patron-client relations, ties of family and kinship or on patterns of corruption Implications Loyalty is not to state but to family, kin or ethnic group. Personal exchange relationships are more important than the rule of law. Result to anticipate Criminal organizations will not only flourish but will penetrate government, creating crime-corruption networks that are difficult to eradicate. In many cases diasporas will be followed by the growth of organized criminality. For host societies this means that organized crime will become more diverse. Network organizations will extend into the licit political and economic world and will also extend across national borders. Networks will prove highly resistant to traditional law enforcement attacks. Ethnic network model based Transnational ethnic networks on ethnic ties in immigrant and immigrant communities communities that are marginalized provide cover and recruitment for criminal organizations and are difficult for law enforcement to penetrate Social network model based on the notion that networks are not “disorganized” but are highly sophisticated organizational forms Organized crime can best be understood in terms of network structures that are characterized by high levels of flexibility, redundancy, and resilience as well as a capacity to cross boundaries. If the political models help us to understand the level of organized crime and the enterprise and market models to understand their business strategy, the social models highlight yet other dimensions. Recognizing the cultural origins of particular groups, the importance of ethnic networks as a facilitator for forms of organized crime that are novel to the host countries, the propensity of criminal networks to expand across borders and into the licit world, and the capacity of these networks to defend and even regenerate themselves provides opportunities to anticipate developments. These models are encapsulated in Table 3. The strategic or risk management model Another model that has not been fully developed in the organized crime literature, but that recognizes that criminal organizations are in an adversarial relationship with government and law enforcement agencies, as well as each other, is what can be termed the strategic or risk management model. This 336 PHIL WILLIAMS AND ROY GODSON model is based partly on the proposition that criminal organizations seek not only to maintain their survival and maximize profits, but also to minimize the “law enforcement risk.”40 It is also based on the recognition that in adversarial relationships each side tries to anticipate the behavior of the other and act accordingly. While analogies such as American football or chess are over-simplistic since they depend heavily on rules, the essence of the competitive structure is similar in that criminal organizations and government agencies are intent on outwitting each other, anticipating each other’s initiatives, and taking appropriate countermeasures. In some respects, of course, this overlaps with the model of organized crime as criminal enterprise, which also recognizes that criminal organizations face risks from government and rival groups. It explicitly acknowledges that criminal organizations have to operate not only in a competitive environment, in which force becomes the arbiter of competition, but also an environment in which governments and law enforcement agencies are, in effect, trying to put them out of business. Consequently, criminal enterprises face a distinct form of risk which has implications for their structure and behavior. Hence, criminal enterprises are risk management entities par excellence.41 Their risk management strategies can range from simple efforts to separate the organization (or its leaders) and the crime, or they can be much more elaborate and extensive. Indeed, it is possible to identify three kinds of measures that are or can be generally incorporated into risk management strategies: • Initiatives designed for risk prevention whether through passive avoidance or more proactive measures designed to shape the environment in which criminal organizations operate. Criminal groups function most effectively when focused on entrepreneurial initiatives rather than countering law enforcement. Consequently, they seek to ensure the safety of the leaders, the continued viability of the organizations and the immunity of their proceeds from seizure through the creation of a low-risk environment and the exploitation of safe havens. The proceeds of crime in the face of aggressive law enforcement will typically be sent to offshore financial centers and bank secrecy havens where they are relatively safe from forfeiture and seizure laws. • Defensive measures and tactics that attempt to control the risks that have to be incurred even in a relatively benign environment. Even though Cali drug trafficking organizations had tried to co-opt major parts of the Colombian government, its leaders developed extensive counter-intelligence methods and acquired state of the art-technology to obtain adequate warning of law enforcement and intelligence initiatives directed against them.42 ANTICIPATING ORGANIZED AND TRANSNATIONAL CRIME 337 • Measures designed to mitigate damage and ensure that the organization exhibits a high degree of resilience even in a hostile environment in which defensive measures have proved inadequate. Although there is some overlap among the three strategies, they are complementary. The optimum strategy is to reduce risk through creating a congenial environment for the leadership and its activities; as in other forms of business, however, it is impossible to avoid risk altogether. Consequently, the second component of risk management consists of measures taken to defend against or control risks. Although this can go a long way to avoiding the imposition of costs by law enforcement or rivals, almost invariably some costs will be inflicted on the organization. It is essential, therefore, for criminal organizations to make preparations to mitigate the damage (including, as suggested above, a reliance on network structures that can be reconstituted). Some risks can be anticipated and costs avoided; other risks and costs can be limited, contained or controlled; but some simply have to be accepted as part of the price of engaging in a continuing criminal enterprise. The crucial thing therefore is to ensure that inescapable risks and costs do not become overwhelming. Risk management strategies developed by criminal leaders are multi-dimensional and multi-purpose. This is not surprising. The risks they confront are both varied and pervasive: they include risks that their illegal products will be seized, that the proceeds of their crimes will be forfeited, that their personnel will be killed, arrested or defect to law enforcement, that the integrity of the criminal network will be compromised by infiltration, and that the enterprise will be disrupted or destroyed. Consequently, considerable energy, time, and resources are devoted to managing these risks. The strategies that result are designed to protect a variety of things including the leadership, organizational integrity, financial assets (most of which represent the accrued profits from criminal activities), operational personnel, and the products of the criminal organization. Not all these things have the same importance, however, and both products and operational personnel will generally be regarded as less important and more dispensable than leaders and profits. Resulting propositions The strategic and risk management model has significant implications for much of the behavior of criminal enterprises. Among the kinds of strategies and tactics that can be anticipated are the following: • Criminal leaders will be intent on creating or maintaining a safe haven, sanctuary, or retirement strategy. One way is to take steps to ensure that their home base, at least, remains a congenial environment or sanctuary from which they can operate with relative impunity. One of the most important ways to do this is through the use of systemic or institutionalized 338 PHIL WILLIAMS AND ROY GODSON corruption whereby the criminal enterprise obtains allies and protectors at high levels in the state apparatus and the community at large. The proposition is that this strategy is likely to become even more widespread and that regions in which organized crime develops will face a real problem from systemic corruption that will prove enormously difficult to reverse and eradicate. • As part of their defensive strategy, criminal organizations will operate secretly, denying information to outsiders, and try to learn the secrets of rival organizations and law enforcement agencies. They will also seek to penetrate or infiltrate governments, law enforcement bodies, and private sector security, thereby obtaining not only intimate knowledge of their tactics and techniques, but also advance notice of any operations. There are many cases of this, including some in Chicago where members of some of the larger and more powerful street gangs became policemen.43 In other cases, drug trafficking organizations, for example in Colombia, used their lawyers to learn about the methods the government was adopting against them. In yet others, groups such as the Hell’s Angels have used bribery to corrupt policemen and thereby obtain critical counter-intelligence that enabled them to undermine investigations.44 The proposition here is that such activities, far from being aberrations, are increasingly likely to be the norm as organized crime, both domestic and transnational, becomes the subject of increasing pressure from law enforcement. • Criminal organizations concerned to protect themselves will make increasing use of proxies and contractors at the operational level, allowing the proxies to incur the risks of detection and apprehension. Nigerian criminal organizations have become particularly adept at this, using a range of couriers – from US military personnel to middle aged white women – who do not fit the profile of typical drug traffickers developed by customs organizations worldwide. This has a dual pay-off: it increases the chances that the drugs will reach the market and it minimizes the risks to the Nigerian criminals who have, in effect, graduated from a service role to a managerial position. • Criminal organizations will become increasingly adept at disguise and concealment of their products and will use technology, the capacity to embed illicit products in licit, and the availability of multiple trafficking routes in an effort to circumvent the efforts of law enforcement. Often criminals will choose the route of least resistance, a calculation which explains why radioactive material trafficking had shifted from Austria and Germany in the mid-1990s to the Caucasus, Turkey and Central Asia in the late 1990s.45 ANTICIPATING ORGANIZED AND TRANSNATIONAL CRIME 339 • Criminal organizations will increasingly exploit technological developments, including information technologies as a means to enhance and improve their risk management efforts. The most obvious case in point is encryption which has been appearing increasingly in criminal cases and offers opportunities to neutralize electronic surveillance which, in the last few decades, has been one of the most potent law enforcement weapons against organized crime. Encryption of communications and computer systems will make it difficult for law enforcement to obtain advanced warning of criminal activities, to disrupt criminal operations, and to provide evidence of criminal activities that can be used in court cases. If some of the earlier models help us to anticipate the extent of organized crime or the kinds of business strategies pursued by criminal organizations, the strategy and risk management model has very obvious practical implications. Anticipating risk management strategies and the way they are implemented should enable law enforcement to exploit the vulnerabilities of the criminal organizations and to impose substantial costs upon them. An assessment of the risk management strategies adopted by a criminal enterprise, for example, can reveal the priorities for protection and, by implication, the major vulnerabilities of the enterprise. This, in turn, could enable law enforcement to deploy its own efforts and resources more effectively in pursuit of high value targets. Furthermore, identifying the kinds of precautionary actions that a criminal organization is taking (such as contracting out for money laundering) provides opportunities to exploit these actions (through the creation of money laundering fronts) and thereby damage and dislocate the organization. The risk management model is summarized in Table 4. Table 4. Risk management model Risk management model is based on the idea that criminal organizations are in adversarial relationships in which strategy is critical Implications Criminal organizations will develop a comprehensive range of measures aimed at the prevention, control, and mitigation of the risks they face from law enforcement and rivals Result to anticipate Organized crime will seek safe havens from which to operate and will look to neutralize governments and law enforcement agencies through corruption, counterintelligence and security practices, including making greater use of information technologies. 340 PHIL WILLIAMS AND ROY GODSON Hybrid or composite models A fifth set of approaches to anticipating organized crime lacks the analytical purity of other models. It is useful nonetheless, not least because it emphasizes the dynamic nature of organized crime. Such approaches can be described as composite models. They combine, political, economic, social and strategy factors at both the domestic and international levels. The first example of a composite model might be termed the transnational model. It seeks to understand the rise of transnational criminal organizations in terms of a particular confluence of opportunities, motivations (both incentives and pressures), and resources that help to determine which groups will be successful and which will not.46 These three categories – opportunities, motivations, and resources – are explored at the global and national levels. The framework incorporates, to one degree or another, some aspects of the other models discussed above. The idea of weak states, for example, can be understood as offering opportunities, while the economic pressures from transitions provide incentives and pressures for entry into the criminal economy as the opportunities in the licit economy are, for the vast majority of people, very limited. Ethnic networks are an important resource that have made it much easier for some criminal organizations to operate on a transnational basis with considerable success. Opportunities at the global level, of course, stem from long term secular trends in global politics and economics that have encouraged the development of a myriad of transnational organizations. The emergence of a “global village” has fundamentally altered the environment in which both legitimate and illegitimate businesses operate. The global financial system, the free trade system, and the emphasis on open borders, global communications and information systems have opened up unprecedented opportunities for transnational crime. At the national level, criminal organizations with the capacity for cross border activities have flourished where the state has been weak, acquiescent, corrupt or collusive. If global motivations for the rise of transnational criminal organizations are diverse, the most important is the demand for a variety of illicit products that transnational criminal organizations are able and willing to supply – at considerable profit. For example, just as people migrate from the licit economy to the licit, they also try to migrate to countries where economic opportunities are greater. Immigration restrictions in some of these countries do not stem the flow of immigrants; they just push them into the hands of those, such as Chinese snakeheads, who are able to circumvent the restrictions and move illegal migrants to their destination. The people-smuggling business has become extremely lucrative and involves not only Chinese and Mexican groups but also Turkish and Albanian criminal organizations. ANTICIPATING ORGANIZED AND TRANSNATIONAL CRIME 341 Similarly, in terms of pressures, continued global inequalities among nations and the biases of the international trade system against developing states make drug production in many developing countries a more attractive option than the cultivation of other agricultural products. At the national level, economic collapse or dislocation is an important underlying cause of the rise of criminal organizations. Economic depression in licit industries can lead to those involved moving into illicit industries – and bringing with them all the skills of the traditional entrepreneur. It can also provide the trigger that takes an organization into a new phase of activity. Moreover, economic disruption almost certainly adds to the recruitment pool for criminal organizations, and provides conditions in which these organizations can very easily appear as a positive rather than negative force. Seizing opportunities and responding to pressures and incentives, however, is only possible if those involved possess and are able to exploit some critical resources. Resources can be understood in terms of skills or capabilities that have been built up over time. At the international level, ethnic networks – as suggested in the section on social models – can be understood as a vitally important resource for criminal organizations. It is possible, for example, that the Yakuza has become less transnational in scope than other criminal organizations, because Japanese migrant networks overseas are far smaller and less well-entrenched than are Italian, Chinese or Nigerian networks. At the domestic level resources include an entrepreneurial culture and tradition, cultural norms that encourage upward mobility by whatever means are available and impose no social stigma for activities that are outside the law, a high tolerance for the use of violence, experience in smuggling and a familiarity with corruption. The three factors – opportunities, pressures and incentives, and resources – provide a “package” that helps to explain the rise of transnational criminal organizations, especially when combined with some kind of trigger mechanisms – that is, abrupt developments that bring about a change in the opportunity structure, the pressures and incentives, or the availability of resources and that result in a shift in the level, status, pattern of activity, or strategy of organized crime. These triggers can be political (a change in the nature of the state – for example, from strong to weak), economic, (disruption and the sudden constriction of opportunities in the licit economy) or social (for example, the dislocation and breakdown of social norms or the flaring up of ethnic tensions). They can operate at the global or the national level. The crucial point about triggers, however, is that they are often very sudden, involve considerable dislocation, and catalyze underlying conditions in ways that profoundly change the situation. A good example is provided by the 342 PHIL WILLIAMS AND ROY GODSON upsurge of Nigerian organized crime and drug trafficking. Nigerians grew up in an atmosphere – stemming from its days as a British colony – fostering trade and international travel and communications. The oil boom of the 1970s expanded Nigeria’s reach into countries throughout the world. With the collapse of oil prices a portion of Nigeria’s young, aggressive and experienced entrepreneurs and traders shifted to criminal activities. Much of the energy and resourcefulness that had been dedicated to licit business activities was transferred to fraudulent business activities and other activities such as heroin and cocaine smuggling. A second example of this composite approach could be termed the transshipment model. Developed by Shona Morrison, an Australian criminal intelligence analyst, it seeks to explain why particular states become transit points for drug trafficking orgamzations.47 Building on Richard Friman’s analysis which argues that states become transshipment points if they provide access to the target or destination state for trafficking organizations and are open to easy and relatively safe transit, Morrison distinguishes between vulnerable states and sensitive states.48 She suggests that both types of state are generally coastal and the source of a large volume of imports to the target country. Vulnerable states are also characterized by corruption or instability or some combination of the two. Sensitive states lack this quality but are characterized by a “one-product economy” or a “transitional economy” or a “clean reputation” (which, of course, has the advantage that incoming commodities are unlikely to be carefully scrutinized). An increase in corruption or a decline in stability would, of course, move sensitive states into the vulnerable category. Morrison uses these combinations of characteristics for a country by country analysis of potential transit points to Australia, but her approach could equally well be useful to other states concerned about becoming either a final destination or a transshipment point for drugs and other illicit commodities. Resulting propositions The composite model suggests a number of important propositions: • As a result of globalization and both the opportunities and pressures that accompany it, there will be a growing tendency for organized crime to become transnational in scope. Although purely domestic criminal organizations can be both successful and wealthy, the power and success of criminal enterprises could depend increasingly on their capacity to act transnationally. This will certainly be the case if the impulse to exploit globalization is as compelling in the world of criminal enterprise as it is for legal businesses. The corollary is that existing criminal organizations which are already transnational in scope will expand their operations in the search for new markets. This has certainly been the case with ANTICIPATING ORGANIZED AND TRANSNATIONAL CRIME 343 Colombian drug trafficking organizations which have increasingly supplied markets in Western Europe, the former Soviet Union, and South Africa. • Transnational criminal organizations will increasingly exploit licit transnational business to disguise their illicit activities. Specific cases of this will continue to include manipulation of import and export prices to provide a cover for money laundering and the use of containers for drug trafficking and other contraband smuggling, including – often with tragic consequences – the trafficking of illegal aliens. • Using the transshipment model, it is possible to look at existing and emerging markets for drugs and other illicit products and then to identify specific countries that are likely to be used for transshipment – especially as governments try to inhibit or contain existing transshipment efforts. In this connection, Brazil is likely to become particularly important for transshipment as increased efforts are made to combat drug trafficking to the United States through Mexico and the Caribbean. In addition, Brazil, which scores high in terms of opportunities, motivations and resources could emerge as an increasingly important player in the transnational crime world with a role going well beyond drug transshipment.49 Among the factors that suggest this are: a capacity for drug cultivation; a weak central state which not only lacks control over large portions of the country outside the major cities but also tolerates no-go areas in some of these cities; a clientelist political system with well-established patterns of corruption; a sophisticated infrastructure that is already used to facilitate transportation of illicit products and to launder proceeds of crime; extensive trade patterns that could be used as cover for various products, and existing criminal organizations which, although largely localized, are well entrenched and, given the highly cosmopolitan nature of Brazilian society, are likely to develop links with criminal groups from elsewhere. The mix is suggestive of a state that at the very least needs to be watched carefully. • We will see the emergence of several other countries as home states for major transnational criminal organizations. Even if there is some level of organized crime associated with these states at the moment, there are likely to be far-reaching shifts in the power, wealth and level of activity of existing groups as well as the development of new criminal organizations. A prime candidate for this is China, which has extensive corruption networks, large disparities in wealth, a central government that finds it difficult to exert control over rural provinces, the development of people-smuggling enterprises and counterfeiting in its southern coastal regions, large ethnic networks overseas held together in large 344 PHIL WILLIAMS AND ROY GODSON part by the concept of guanxi, and the potential for a transition from a communist political system to something else. Hong Kong potentially provides an important outlet for illicit as well as licit commercial activities. The triads that traditionally operated from Hong Kong, Macao and Taiwan still exist and are forging cooperative relationships with groups from the mainland. Among the possible triggers that would help to generate a significant increase in the power and reach of Chinese organized crime are a change in the system to explicit rather than tacit capitalism, a loosening of political controls (which at the moment, are imperfectly applied but still impose some degree of restraint on criminal groups), some kind of economic crisis that halts or reverses the rapid economic growth that has been achieved in recent years and precipitates large-scale migration from the licit economy to the illicit, and the expected massive movement of peoples from rural to urban areas. • In the same vein, Cuba will become both home and host state for criminal organizations. Cuba has in place extensive corruption networks and the substantial informal economy or black market that almost invariably accompanies a political and economic system that is notoriously inefficient. There are also high levels of poverty and limited economic opportunities in the licit economy. The transnational linkages between Cubans in Cuba and Cubans in the United States provides an important resource that could very easily be exploited by Cuban criminal organizations. The main trigger would be the collapse of the communist state and the resulting transition. As Cuba follows other communist states and rejects the principles and precepts of the past four decades in favor of capitalism, this is likely to have several implications for organized crime. A Cuba in transition would have the ingredients for becoming a home state for criminal organizations: weak central authority, at least for a few years, as the post-communist government establishes itself; the removal of social safety nets coupled with limited opportunities in the licit economy; traditions of smuggling and contraband; and links with a very substantial Cuban emigre community that could provide both recruitment and cover for Cuban criminal activities in the United States. Even more important, it would appear that Cuba is likely to become both a host state for organized crime – as it was for the American Mafia during the Batista years – and a transshipment state for drug trafficking. The opening up of Cuba once again would make it very attractive for transnational criminal organizations operating in Central or South America and the United States. Similarly, as former Soviet officials built up contacts with criminal elements during the dual transition in the 1980s and 1990s, Cuban and Russian officials will be able to build on the Russian-Cuban ANTICIPATING ORGANIZED AND TRANSNATIONAL CRIME 345 contacts established during the Cold War. As far as its potential role in transshipment is concerned, this could be enormous, dwarfing any involvement in drug trafficking to the United States during the Castro era. With trade between Cuba and the United States restored, it would be much easier for drug traffickers to embed drugs within licit exports coming to the United States. Given Cuba’s location close to Florida, it could also become an important transshipment state for alien trafficking to the United States. An additional incentive for organized crime involvement is the commercial sex trade. The market for commercial sex in Castro’s Cuba is currently driven by imperatives of subsistence rather than the enrichment of criminal enterprises. Nevertheless, the existence of such a market makes Cuba very attractive for criminal organizations desiring to reap the benefits of what is already a very lucrative trade and one that will become even more profitable when Cuba is once again a tourist destination for United States citizens. The resurgence of prostitution in Cuba during the 1990s is a potential magnet for organized crime which will seek to control the market for commercial sex as it did prior to the Castro era. Another attraction is the large tourist industry which has many cash businesses that are perfect for laundering money. A related possibility is that Cuba will become an offshore financial center and bank secrecy haven, something for which there are already many successful models in the Caribbean. In order to be competitive in a world of deregulation, Cuba is likely to adopt a permissive approach to offshore finance, especially in the early years as it tries to establish itself as a viable alternative to Antigua, the Cayman Islands and other jurisdictions. For organized crime this will offer a major opportunity to infiltrate an offshore financial center from the bottom up – an attractive option for any criminal enterprise looking for avenues for money laundering. In short, the post-Communist transition in Cuba has the capacity to create some real opportunities and advantages for transnational organized crime groups including Russian, Sicilian, Mexican, Colombian and US groups. • Another very real possibility for the future is that at least some African nations will become much more heavily involved in transnational organized crime, following what could, in effect, be described as the Nigerian model. Indeed, one component of this is likely to be an increase in levels of criminal activity by Nigerian groups themselves. Nigeria could well face an increasingly inhospitable economic environment as continued population growth requires an ever increasing percentage of Nigerian oil supplies to be used for domestic consumption rather than available for export earnings. At some point this is likely to result in economic 346 PHIL WILLIAMS AND ROY GODSON shocks that, in turn, create far-reaching social and economic dislocation. In these circumstances, the pressure to emulate those – that is criminals – who remain relatively shielded from economic downturns could become even more widespread. New criminals can build on the expertise that already exists, on the Nigerian diaspora, and on the highlevel corruption and collusion that, at least until the end of the Abacha regime, made Nigeria a very congenial home base. If a further increase in Nigerian criminal activities is one aspect of growing African involvement in transnational crime, others include a growing number of states becoming home to groups that try to emulate Nigerian organizations. Indeed, the phenomenon of Nigerian organized crime has already broaderied into a West African phenomenon and it is only a matter of time before it spreads further. Many African governments have very weak states with inadequate criminal justice systems, limited opportunities in the licit economy and traditions of corruption. Border controls in many countries in Africa are weak or non-existent and provide ideal opportunities for smuggling a wide variety of illicit products. Much of the contraband trade will increasingly go into and through South Africa which has excellent transportation and financial systems, important trade and travel links with the rest of the world, and highly porous borders. For its part, South Africa could well provide a case study that accords almost completely with the Morrison model of transshipment states. lt clearly meets the prerequisites of ease of transit, and access to a variety of target states and markets.50 Should there also be an increase in corruption or instability – and there is certainly evidence of a growth in corruption in South Africa – then it would move from a state sensitive to transshipment to fit very neatly into Morrison’s category of states that are highly vulnerable to becoming transshipment states.51 The broad propositions enshrined in the two composite models are summarized in Table 5, while Table 6 encapsulates the arguments about specific countries that are likely to witness a major increase in organized crime activity and power. Indeed, the conditions likely to generate a major increase in organized crime in certain countries are summarized in Table 6 which identifies underlying conditions, possible triggers, and likely results. All five sets of models of organized crime provide insights that are useful in anticipating levels of organized crime, the emergence of particular countries as home bases of major criminal organizations, the patterns of activities of transnational criminal organizations and the strategies these organizations adopt. In using them, however, it is important to acknowledge that they are dynamic rather than static, reflecting the learning capacity of organized crime ANTICIPATING ORGANIZED AND TRANSNATIONAL CRIME 347 Table 5. Composite models Implications Result to anticipate Transnational criminal organizations will not only take control of much of the domestic economy of certain states but will operate in a variety of host states where there are lucrative markets and ethnic networks Coastal states which not only have a large volume of exports to consumer countries but are also characterized by corruption or instability will be major targets for transshipment of drugs and other illicit goods Transnational organized Transnational criminal crime model organizations will operate from a safe home base characterized by weak government, economic dislocation, social upheaval and integration into the global economy Transshipment model Organized crime will identify and exploit states where there is ease of transit and access to the final destination for the transshipment of illicit goods groups as well as their opportunistic nature, and their adversarial relationship with law enforcement. They also need to be combined with some specific techniques of information and intelligence gathering that will enhance the capacity for anticipation. Specific research and data collection techniques The problems of anticipation remain formidable. If governments and civil society are to respond effectively to criminal organizations and criminal markets, however, it is essential that more systematic efforts be made in this direction. In this connection there are several techniques or methods that have proven useful in efforts to anticipate more traditional national security threats and that could profitably be used to enhance the prospects for anticipation in the area of organized crime: The “red team” approach. This typically involves putting oneself in the place of the adversary and looking at the world from his perspective and where possible, with his value system. Following the business logic of organized crime which presumes that criminal enterprises constantly scan their 348 Table 6. Country Underlying conditions Brazil PHIL WILLIAMS AND ROY GODSON Possible triggers Economic crisis Pressure on Mexico Likely results Increased importance as a transshipment state and possible emergence of indigenous Brazilian organizations as major players in drug trafficking and other organized crime Cooperation between indigenous Chinese criminal organizations and Hong Kong and Macau based triads as well as increase in Chinese organized crime in those countries where there is a large Chinese immigrant community Develop some indigenous organized crime but become a major host to Russian and Sicilian criminal organizations, traditional organized crime groups in the United States, and Mexican and Colombian drug traffickers. Also become an offshore financial center attracting dirt money. Patron-client relations; weak government; “no-go” areas in cities; extensive rural areas where state is weak; existing use for transshipment; extensive trade patterns; absence of culture of lawfulness Existing corruption networks; lack of control over rural provinces; peoplesmuggling enterprises, large ethnic networks overseas; concept of guanxi, integration of Hong Kong, Macau and special enterprise zones; absence of culture of lawfulness Patterns of corruption; poverty; international isolation encourage smuggling of various kinds; networks with Cubans in United States; absence of culture of lawfulness China Transition from a communist political system to a more uncertain rule of law and reformist government which removes or eases some social controls. Cuba Collapse of Communist regime perhaps on death of Castro ANTICIPATING ORGANIZED AND TRANSNATIONAL CRIME 349 Table 6. Continued Country Underlying Some African Weak government; states patterns of corruption; economic pressures; large informal economies; weak border controls; Nigerian model; absence of culture of lawfulne Possible triggers Democratization process offers new opportunities for diffusion of corruption and entry of transnational criminal organizations which could provide financial support for elections Likely results See increase in indigenous and foreign organized crime in many African states as Nigeria becomes model to emulate and organized crime in South Africa becomes deeply entrenched. environment for new opportunities which are then exploited, it is possible to use a red team approach to understand the logic of criminal enterprises, the assessment of risks and opportunities, and the kinds of considerations that will determine ultimate policy choices. For example, criminal organizations often seek to infiltrate licit businesses targets that are not only lucrative but also highly vulnerable. If some industries are protected and others are not, then those that are not will tend to become the next victims. Consequently, by engaging in red team analysis and examining the opportunities, obstacles and constraints from the perspective of the criminal organizations themselves, it might be possible more effectively to anticipate both methods and targets. This could easily result in some false positives, but this would be a price worth paying if it also encouraged protective measures that would make the licit business world as a whole much more resistant to penetration by organized crime. More extensive use of intelligente sources. Increased use can be made of intelligence, i.e., the combination of information from open and clandestine sources. Much broader data collection and analysis than has traditionally been undertaken by law enforcement and intelligence agencies is facilitated by the ready availability of open sources through on-line databases and new journals. Other fruitful sources that have been underutilized are convicted prisoners, collaborating witnesses and defectors, (including professionals – lawyers, accountants and bankers – who are hired by criminal organizations to launder and manage the proceeds of crime). Current information that is obtained from interviews with defectors or prisoners often provided the basis for government offensives against criminal organizations. Once the immediate offensives have been completed, more extensive, systematic interviewing can 350 PHIL WILLIAMS AND ROY GODSON be undertaken and the results disseminated, thereby enabling other agencies in other countries to benefit from the knowledge that has been obtained. Traffic and travel analysis. Another technique that can be brought from the intelligence world is traffic analysis. This focuses not on the content of information flows among criminals but on the volume and direction of messages exchanged, i.e., the “traffic.” This might help for example, in identifying potential new ventures by criminal organizations, their spread into different localities or even different nations. In this area, it should be possible to build on telephone toll analysis, and seek not just to establish specific connections among individuals but to look at changing patterns of activity by and among criminal organizations. In other words, toll analysis can be used for strategic as well as tactical purposes. In addition, it should be possible to extend these techniques to look at travel patterns of criminals, something that is increasingly important as criminal organizations from different countries increasingly establish cooperative links that provide major new market opportunities and generally enhance their power and reach. Vulnerability assessments. Efforts can be made to examine particular industries, businesses or government agencies to identify why they might appear attractive to organized crime and how criminal organizations might try to infiltrate them, the points of vulnerability, points of entry, and the methods that might be used. This has been done, for example, by Hong Kong’s Independent Commission against Corruption (ICAC). The natural concomitant is strategic analyses of protective measures that might be initiated to reduce these vulnerabilities. Even more ambitious, but along the same lines are vulnerability assessments of particular countries looking at political, economic and social trends and conditions and attempting to tease out how these might impact on the prospects for organized crime. National indicators would help to reveal if particular states are becoming weaker or more corrupt and, in some cases, will highlight the need to look at patterns of interaction between criminal organizations and politicians. Anomalies and early warning. It is important to have some capacity for going beyond a particular industry, national, or regional focus. Governments could usefully include small groups which are set up to look for anomalies (i.e. events and activities that do not fit established patterns or models) and to identify new trends as has been done by sophisticated intelligence analysts. They can obtain information from a wide range of sources and should not be bound by existing models or frameworks. This is not intended as a substitute for the other methods of anticipation outlined above, but simply as a complementary effort.52 ANTICIPATING ORGANIZED AND TRANSNATIONAL CRIME 351 Knowledge fusion. The availability of information does not in itself guarantee good analysis. Perhaps even more important in anticipating new trends and developments in organized crime is the combination of novel forms of expertise – specialists on organized crime and business and industry specialists or regional or national specialists. While all source data fusion is a familiar buzz phrase in intelligence matters, what we are referring to here could be described more appropriately as knowledge fusion. Fusion of this kind is essential if we are to have any real success in anticipating new trends and developments in organized crime. In effect, it requires matching information with the models, seeing where it fits and where it does not, and if necessary refining the models. These techniques used in conjunction with the models and projections outlined above could enhance the capacity to anticipate developments in organized crime. They are neither foolproof nor are they a panacea. Nevertheless, they provide a stronger basis than currently exists for both intelligence-led law enforcement and for the development of far more effective long-term strategies against organized crime than currently exist. Concluding observations In 1997 an important study on warning and response in international relations noted that “early warning indicators typically do not speak for themselves; they require analysis and interpretation. But the kinds of knowledge and theories needed for this purpose may be in short supply.”53 The discussion here is an attempt to increase this supply in relation to organized crime and at least identify developments and trends that could prove significant. At the same time, there is a clear recognition here that there is no “silver bullet” in anticipating organized crime, whether domestic or transnational. Understanding the cultures and sub-cultures that facilitate organized crime can provide an important basis for planning. So too can an enhanced awareness of the political and economic incubators for criminal enterprises. Similarly, anticipating the risk management strategies of criminal enterprises can facilitate the development of appropriate precautions or counter-measures by law enforcement agencies. If successful anticipation can be a powerful tool, however, it does not follow that it will always lead to successful policies or strategies. Warning is contingent and cannot always be turned into effective response. This is as true in the area of combating organized crime as it is in other policy areas such as military security. There are several reasons for this gap between adequate warning and appropriate response. If trends are caught early, before they have fully matured, for example, they might not be compelling enough to demand decisive ac- 352 PHIL WILLIAMS AND ROY GODSON tion, especially if this requires difficult or unpalatable decisions or a significant allocation of scarce resources.54 This is particularly true in government and even private security agencies, where there is a natural and inevitable preoccupation with existing cases and problems. Law enforcement is predominantly and inherently reactive. Moving to a pro-active stance requires a fundamental change in deeply embedded attitudes and a willingness to recognize that combating organized crime requires efforts to reduce the same political, social and economic vulnerabilities that criminal organizations seek to exploit. Anticipation allows societies to do this. When done with care and effort it can significantly reduce the opportunities for organized crime to develop to a point where the criminals can not only develop new markets but also coopt political and economic elites, neutralize government and law enforcement initiatives and generally act with impunity. Unfortunately, even if anticipation is successful and there is a deliberate and unequivocal response this might not be commensurate with the developing challenge. Alternatively, even adequate warning and a response that is entirely appropriate in terms of both its focus and the level of resources involved, are still no guarantee of success in preventing untoward developments. Organized crime is not only deeply rooted in conditions that are enormously difficult to change but also exploits secular trends that in most other respects are very positive in their impact. The implication is that if maximum benefit is to be derived from successful anticipation this has to be followed by the formulation and implementation of broadly based policies and strategies which not only attack the criminal organizations but also attempt to make the environment in which they operate far less congenial. Just as law enforcement agencies cannot deal exclusively with organized crime through its traditional focus on cases, governments cannot deal with organized crime through an exclusive focus on law enforcement. Anticipating the activities of criminal organizations, whether operating domestically or across borders, requires not only law enforcement and regulatory efforts. It also requires education, cultural change, and public-private partnerships. Seen in this way, it is clear that effective anticipation is not the last word in combating organized crime but merely an essential first step. Notes 1. For a discussion of this issue see Jay Albanese, “Where Organized and White Collar Crime Meet: Predicting the Infiltration of Legitimate Business,” in Jay Albanese (ed.), Contemporary Issues in Organized Crime (Monsey, New York: Willow Tree Press, 1995) pp. 35–60. 2. The question could still be asked, of course, about why we have chosen these five sets of models rather than any other. The answer concerns their utility in anticipating both ANTICIPATING ORGANIZED AND TRANSNATIONAL CRIME 353 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. future developments likely to impinge on organized crime, and the future behavior of criminal organizations. An alternative and useful conceptualization of organized crime that also categorizes models can be found in Boronia Halstead, “The Use of Models in the Analysis of Organized Crime and Development of Policy,” Transnational Organized Crime Spring 1998 (4:1), 1–24. This reflects work done on the Political-Criminal Nexus by Roy Godson and the National Strategy Information Center. See, for example, Trends in Organized Crime Spring 1999 (4:3) and Fall 2000 (5:1). Francisco E. Thoumi, Political Economy and Illegal Drugs in Colombia (Boulder: Lynne Reinner, 1995). Diego Gambetta, The Sicilian Mafia: The Business of Private Protection (Cambridge Mass.: Harvard University Press, 1995). This formula was developed by Robert Klitgaard. See, for example, his “International Cooperation Against Corruption,” Finance & Development March 1998 (35:1), 3–7. See Stanley Pimentel, “The Nexus of Organized Crime and Politics in Mexico,” and Louise Shelley, “The Political-Criminal Nexus: Russian-Ukrainian Case Studies,” in Trends in Organized Crime, Transaction Periodicals Consortium Spring 1999 (4:3). Stanley Pimentel, “The Nexus of Organized Crime and Politics: Mexico,” Trends in Organized Crime Spring 1999 (4:3). See Robert Kelly, “The Political-Criminal Nexus in the United States,” in Trends in Organized Crime, Transaction Periodicals Consortium Fall 2000 (5:1). Also, James J. Jacobs et al., Gotham Unbound: How New York was Liberated from the Grip of Organized Crime (New York: New York University Press, 1999). Buckovic, “Heroin for Kalashnikovs,” Belgrade Borba in Serbo-Croatian 17 Jun 1998 p. 6. The involvement of the Kosovo Albanians in drug trafficking became a much more frequent item in press reports during the Kosovo crisis in March and April 1999. CNN/Time Impact: Interview Transcript “Cherif Bassiouni on Arkan and ethnic cleansing,” . Cyrille Fijnaut, Frank Bovenkerk, Gerben Bruinsma, and Henk van de Bunt, Organized Crime in the Netherlands (The Hague: Kluwer Law International, 1998) p. 194. Charles Hanley, “Increasingly, Guerrillas Financed by Drugs,” Toronto Star December 29, 1994, p. A19. R. Thomas Naylor, “The Insurgent Economy: Black Market Operations of Guerilla Organizations,” Crime, Law and Social Change 1993 (20), 13–51. Soledad Alameda, “Floren Aoiz,” El Pais Dec 13, 1992 (95), 14–27. We are grateful for this reference to Magdalena Hindie and have drawn on her unpublished paper, “Terror in Spain” Graduate School of Public and International Affairs, University of Pittsburgh (January 1998). Paul K. Clare, Racketeering in Northern Ireland – A New Version of the Patriot Game (Chicago: Office of International Criminal Justice at the University of Illinois at Chicago, 1989). Ko-lin Chin, Chinese Subculture and Criminality: Non-traditional Crime Groups in America (New York: Greenwood Press, 1990) p. 9. Pino Arlacchi, “Large Scale Crime and World Illegal Markets,” in Organized Crime: International Strategies Report of the International Seminar on Policies and Strategies to Combat Organized Crime held under the auspices of the United Nations and the University of New Mexico, Albuquerque, New Mexico (December 8–11, 1987) pp. 47–61 at p. 49. See Peter Reuter, The Organization of Illegal Markets: An Economic Analysis (Washington DC.: National Institute of Justice, 1985) and R. Thomas Naylor, “From Cold War to 354 PHIL WILLIAMS AND ROY GODSON 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35. 36. 37. Crime War: The Search for a New National Security Threat,” Transnational Organized Crime 1995 (1:4), 37–56. See Naylor, Ibid. This theme is also developed in the same author’s “Mafias, Myths and Markets: On the Theory and Practice of Enterprise Crime” in Transnational Organized Crime 1997 (3:3), 1–45. This view of organized crime is most clearly associated with Dwight C. Smith. See, for example, his “Paragons, Pariahs, and Pirates: a Spectrum Based Theory of Enterprise,” in Crime and Delinquency July 1982 (26), 358–386. The analysis here also draws on remarks by Ambassador David Miller at an NSIC workshop on transnational organized crime held Nov 17–18 1994. Peter Gastrow, Organized Crime in South Africa (Johannesburg: Institute for Security Studies, 1998). It is also worth noting that the converse of this can also occur with criminal organizations providing information to law enforcement regarding their competitors. Members of the Medellin and Cali drug trafficking organizations routinely did this as part of their struggle during the late 1980s and early 1990s. One of the best statements and illustrations of this argument is Letizia Paoli, The Pledge to Secrecy: Culture, Structure and Action of Mafia Associations, Unpublished Ph.D. thesis, European University Institute Firenze, June 1997. Jane Schneider, Trends in Organized Crime Winter 1998 (4:1). Ko-lin Chin, Chinese Subculture and Criminality: Non-traditional Crime Groups in America (New York: Greenwood Press, 1990) p. 9. Ibid. p. 19. Ibid. p. 11. Ibid. For the criteria and rituals of traditional Triad membership see W.P. Morgan, Triad Societies in Hong Kong (Hong Kong: Government Printer, 1960), which was used in Hong Kong courts to identify Triad members. For a discussion of guanxi see M. Cordell Hart, “ ‘Guanxi’: an Important Concept for the Law Enforcement Officer,” Trends in Organized Crime 1996 (2:2). Some believe the concept is too broad to serve as an effective indicator of criminal association. R. Sandbrook, Politics of Africa’s Economic Recovery (Cambridge: Cambridge University Press 1999) p. 28 quoted in Rachel Flanary, “The State in Africa: Implications for Democratic Reform,” Crime, Law and Social Change 1998 (29:2–3), 179–196 in endnote 4 at p. 193. Frank Bovenkerk, “Crime and the Multi-ethnic Society: a View from Europe,” Crime, Law and Social Change 1993 (19), 271–280 at p. 279. See Joseph Albini, The American Mafia: Genesis of a Legend (New York: Appleton, Crofts, 1971) and Francis J. Ianni, Black Mafia: Ethnic Succession in Organized Crime (New York: Simon and Schuster, 1974). Alan Block, East Side-West Side: Organizing Crime in New York 1939–1959 (Swansea UK.: Christopher Davis, 1979). See David Ronfeldt, Tribes, Institutions, Markets, Networks: a Framework about Societal Evolution (Santa Monica: RAND P-7967, 1996). Gary Potter, Criminal Organizations: Vice Racketeering and Politics in an American City (Prospect Heights Ill.: Waveland Press, 1993) and James O. Finckenauer and Elin J. Waring, Russian Mafia in America (Boston: Northeastern University Press, 1998). Fijnaut et al., Organized Crime in the Netherlands p. 74. Ibid. ANTICIPATING ORGANIZED AND TRANSNATIONAL CRIME 355 38. For a fuller analysis see Phil Williams, “The Nature of Drug Trafficking Networks,” Current History April 1998, 154–159. 39. The most documented case is that of the Sicilian Cosa Nostra. On the relationship between organized crime and politics in Mexico, see John Bailey and Roy Godson (eds.), Organized Crime and Democratic Governability: Mexico and the U.S. Mexican Borderlands (Pittsburgh Pa.: University of Pittsburgh Press, 2001). 40. See Ernesto U. Savona, Harmonising Policies for Reducing The Transnational Organised Crime Risk Transcrime (University of Trento) Working Paper No. 2 (June 1995). 41. The following analysis is based on a chapter by Phil Williams entitled “Risk Management by Transnational Criminal Organizations: Threat or Opportunity for Law Enforcement?,” in Gina Pattagulan (ed.), Transnational Organized Crime in the Asia-Pacific Region (forthcoming). 42. The most extensive and detailed published discussion of the strategic interaction between the Cali and Medellin cartels, and the US and Colombian governments, can be found in Robert J. Nieves, Colombian Cocaine Cartels: Lessons from the Front US Working Group on Organized Crime (Washington: National Strategy Information Center, April 1997). 43. Lawrence B. Sulc, Law Enforcement Counter Intelligence (Kansas City: Varro Press, 1996) pp. 65–67. 44. Yves Lavigne, Hell’s Angels (Toronto: Carol Publishing Group, 1996) pp. 133–143. 45. This emerges clearly from the chronology of nuclear material smuggling incidents developed by Paul N. Woessner at the Ridgway Center for International Security Studies, University of Pittsburgh. An earlier version was published as “Chronology of Radioactive and Nuclear Materials Smuggling Incidents July 1991–June 1997,” Transnational Organized Crime Spring 1997 (3:1), 114–209. 46. Phil Williams and Carl Florez, “Transnational Criminal Organizations and Drug Trafficking,” Bulletin of Narcotics 1994 (46:2), 9–24. 47. Shona Morrison, “The Dynamics of Illicit Drugs Shipments and Potential Transit Points for Australia,” Transnational Organized Crime Spring 1997 (3:1), 1–22. 48. Richard Friman, “Just Passing Through: Transit States and the Dynamics of Illicit Transshipment,” Transnational Organized Crime 1995 (1:1), 65–83. 49. Maria Velez de Berliner and Kristin Lado, “Brazil: The Emerging Drug Superpower,” Transnational Organized Crime 1995 (1:2), 239–260. 50. Richard Friman, “Just Passing Through: Transit States and the Dynamics of Illicit Transshipment,” Transnational Organized Crime 1995 (1:1), 65–83. 51. Shona Morrison, “The Dynamics of Illicit Drugs Shipments and Potential Transit Points for Australia,” Transnational Organized Crime 1997 (3:1), 1–22. 52. See Roy Godson, Dirty Tricks or Trump Cards (Rutgers, NJ: Transaction, 2000) pp. 196– 198. 53. Alexander L. George and Jane E. Holl, The Warning-Response Problems and Missed Opportunities in Preventive Diplomacy, A Report to the Carnegie Commission on Preventing Deadly Conflict (New York: Carnegie Corporation, May 1997) p. 11. The following paragraphs adapt several of the arguments put forward by George and Holl to the subject being considered here. 54. Ibid. p. 5.


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