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Transnational Crime

Crime Victimizes Both Society and Democracy

By Professor Louise Shelley
Director, Transnational Crime and Corruption Center
American University

In some emerging societies, the corruption and power of organized crime groups
has become so corrosive that citizens' faith in their nation and their leaders is at risk.


The increasing visibility, assets, and political influence of organized criminal groups have become a matter of mounting international concern in recent years. Transnational crime groups control thousands of millions of dollars in assets. Their huge economic clout facilitates corruption domestically and internationally. They undermine governments and the transition to democracy for former socialist and authoritarian societies. They undermine attempts of developing and transitional countries to build democracies and become free market economies.

Transnational organized crime will be a defining issue of the 21st century for policymakers -- as defining as the Cold War was for the 20th century and colonialism was for the 19th. No area of international affairs will remain untouched, as the social fabric and political and financial systems of many countries deteriorate under the increasing economic power of international organized crime groups.

Illicit trade in nuclear materials threatens the security of the United States and other nations. Large-scale arms smuggling may spark or fuel regional conflicts. Drug trafficking and illegal-alien smuggling are expected to exact an ever-higher human cost in larger numbers of source and destination countries. The proliferation of international prostitution and pornography rings has serious social and health consequences. The illicit timber trade and trafficking in rare species and nuclear wastes have already done grave damage to the global environment.

The massive profits of the diverse transnational organized crime groups, laundered in international financial markets, are undermining the security of the world's financial system. Meanwhile, the competitiveness of legitimate businesses is being undercut by organized crime's involvement in industrial and technological espionage.

There is no form of government immune from the development of transnational criminal organizations, no legal system capable of fully controlling the growth of such crime, and no economic or financial system that is secure against the temptation of profits at levels far greater than those possible from legal activities.

The consequences are most devastating, however, in transitional states where people are attempting to establish democracy, self-determination, and the rule of law. Nations in this situation are found in many parts of the globe, but in this article we will look at those states that were part of the former Soviet Union and Eastern Europe. Many of these countries are now contending with stagnant economies, weak governments, and limited uncorrupted law enforcement capacity. They are fertile ground for organized crime.

Organized crime in the former Soviet states has emerged with an intensity and diversity of activities unmatched by other transnational crime groups in the international arena. In these newly independent states, crime groups number in the thousands. Rather than the rigid hierarchical structure of the prototypical organized crime family, the groups are based on network structures, often using violence as part of their business strategy. Unlike other countries where established crime syndicates have specialized in particular goods and services, post-Soviet organized crime has infiltrated a full range of illicit activities. These groups have also penetrated deeply into the legitimate economy, including many companies that used to belong to the state and have been privatized.

Post-Soviet organized crime exploits the traditional market in illicit goods and services that includes prostitution, gambling, drugs, contract killings, supply of cheap, illegal labor, stolen automobiles, and extortion of legitimate businesses. It has also branched out to include such diverse activities as the illegal export of oil and raw materials, and the smuggling of weapons, nuclear materials, and human beings.

These groups are often comprised of unusual coalitions of professional criminals, former members of the underground economy, and members of the Communist Party elite and security apparatus. Their ranks contain highly trained specialists (such as statisticians and money launderers) not readily accessible to transnational crime groups in other parts of the world.

Organized crime has penetrated these states, from the municipal to the federal level, by financing selected political campaigns and the election of their members to parliament. Criminal groups have co-opted officials of the government. In some cases, the groups have supplanted the state by providing the protection, employment, and social services no longer available from the struggling new government.

Organized crime and endemic corruption threaten stability and the transition to a market economy. The indigenous crime problem within these countries is significant, but widespread criminal activity throughout the region worsens the situation. Criminal links operate across the former USSR and increasingly groups interact with their counterparts around the world.

At the end of the Soviet period, many of these emerging nations were left without the institutional capacity to address organized crime. Most of the expertise and the institutions to deal with the problem remained in Russia, which inherited the centralized institutions of the Soviet state. The new countries had to create their own legal norms and structure.

In the early years of transition, organized crime and corruption grew unimpeded by laws or personnel capable of addressing them. Economic development often floundered without appropriate legal structure and the presence of established enforcement mechanisms. Resources continued to flow to the elite as a result of high-level corruption, leaving the mass of the citizenry impoverished and without faith in their new governments.

Criminal groups in tandem with corrupt officials picked the national pockets with impunity, robbing ordinary citizens of the assets they were to have inherited from the Soviet state through privatization.

Corruption and criminal activity also deterred foreign investors, reducing economic growth and depriving the state of revenues needed to repair depleted infrastructures and create new economic opportunity. Thousands of millions of dollars in assets have been laundered overseas by sophisticated criminals, depriving the state of assets needed to pay salaries and pensions. Many would-be investors have decided that there are easier and safer places to put their money. For those who did invest, the high level of corruption became an added concern, especially for American businesses that must comply with the Foreign Corrupt Practices Act. That law criminalizes a variety of practices, including bribery, that are commonplace in the region.

The hijacking of the privatization process by organized crime and corrupt officials has resulted in economically polarized societies in many of the Soviet successor states. Instead of an emerging middle class, there is now a small, extremely rich, new elite, and a large, impoverished population. This is particularly problematic in former socialist societies where citizens were educated in an ideology committed to social equality. Although economic inequality existed during the Soviet period, it was more hidden from view than that of the new elites who flaunt their wealth both domestically and overseas.

The political costs of organized crime are staggering. The pervasive corruption and penetration of organized crime into the political process are inhibiting the development of new laws needed as a foundation for a democratic free market economy. An often highly corrupted tax authority and the links of government personnel to organized crime deprive the state of needed revenues. Substantial numbers of citizens have lost faith in the integrity and capacity of the legal process, and in the ability of their new governments to deliver on basic obligations, such as payment of wages and retirement benefits, and provision of health care.

These newly emerging states cannot separate their crime problems from those of the Baltics, Russia, or nearby states. The current diversification and flexibility of post-Soviet crime groups operating across all the successor states and the pervasiveness of corruption suggest that the phenomenon will not rapidly disappear as each of the countries pursues its transition from a Soviet satellite to an independent nation.

Just as corporate entities build power and influence through acquisition and partnership with other companies in the legitimate business world, criminal groups are building alliances with counterparts in other nations. Colombian drug traffickers are linking up with Nigerian crime groups providing couriers for European deliveries, which are routed through Eastern Europe or the former Soviet Union to minimize detection. Proceeds from these crimes may be laundered through four different countries before reaching their final destination in an offshore haven in the Caribbean. Local law enforcement, whether in an emerging nation or one of the member countries of the Organization for Economic Cooperation and Development (OECD), is hard-pressed to track suspects and evidence through this convoluted maze. Only bilateral and multilateral efforts can work effectively to inhibit organized crime that is invading every part of the world. It is clear that despite the challenges posed by crime groups around the world, the international community has a large stake in assisting the ability of nations to address their rising political and economic power.

The new-found strength that organized crime has gained through international alliances is also its weakness. Networks of these enterprises are brutal, but fragile. Though groups may exploit gaps in legislation and enforcement abroad, they can also be severely weakened when law enforcement and prosecutors in many nations coordinate their efforts and strategies. If united in common cause, governments can prevail against criminal groups to protect democracy, free markets, and the public.


Louise I. Shelley is a professor in the Department of Justice, Law and Society and the School of International Service, American University, and the author of numerous articles and book chapters on international crime. See www.american.edu/traccc.