Organized Crime

Organised crime and those who perpetrate it are a menace to society. These sophisticated criminals are well organised, well resourced and well equipped. They have no compunction about using violence to achieve their ends, and have no concern for those whose lives they ruin, especially by addiction to the drugs they peddle. The consequences of their activities are misery and human tragedy on a huge scale.

Organized crime is defined by US law enforcement as a "continuing and self-perpetuating criminal conspiracy, having an organized structure, fed by fear and corruption, and motivated by greed." Organized crime groups often have a family or ethnic base, but members usually identify more closely with the organization than they do with blood relatives. They typically maintain their position through the threat or use of violence, corruption of public officials, graft, or extortion. The widespread political, economic, social, and technological changes occurring within the world have allowed organized crime groups to become increasingly active worldwide. The ability of organized crime groups to adapt to these changes and their use of improved transportation and communication technology have hindered law enforcement efforts against them.

Defining organized crime is a matter of some dispute among scholars and law enforcement specialists. That disagreement is heightened when the subject becomes transnational organized crime. Organized crime is crime committed by criminal organizations whose existence has continuity over time and across crimes, and that use systematic violence and corruption to facilitate their criminal activities. These criminal organizations have varying capacities to inflict economic, physical, psychological, and societal harm.

Transnational organized crime groups have their greatest impact in their home countries. However, their authoritarian practices have repercussions outside their domestic base, because these organizations are transnational. Recent examples of intimidation of foreign journalists and infiltration of foreign governments are evidence of the broadening reach of transnational organized crime groups. The legal institutions of the world are still bound to the nation-state, but the forces of coercion are increasingly transnational. Therefore, existing state-based legal systems cannot protect citizens from the new authoritarian threat provided by transnational organized crime.

Both traditional and non-state-based authoritarianism affect all aspects of society, including economic relations, political structures, legal institutions, citizen-state relations, and human rights. The authoritarian threat posed by transnational organized crime is not currently as dangerous as that of traditional authoritarian states. However, the increasing wealth and power of transnational organized crime groups has the potential to undermine even the strongest democracies and impede the transition to democracy in transitional countries. The coordinated international effort needed to combat transnational organized crime does not presently exist. This situation may usher in a new form of authoritarianism with severe long-term consequences for much of the world's citizenry.

Organized crime is a historical phenomenon that has existed for hundreds, and in some cases, for thousands of years in many different societies. But interestingly, unlike common crime, true organized crime as we define it is not present everywhere. Certain characteristics seem to differentiate countries burdened by organized crime from those that are not. Economic development, industrialization, and urbanization both stimulate and facilitate demand for goods and services. These include goods and services that are illegal (such as drugs), regulated (such as cigarettes or guns), or simply in short supply. When there is a plentiful supply of a legal, unregulated product, there is no incentive for organized crime to become a supplier.

The fundamental causes of organized crime are actually quite simple — greed and demand. The greed for money and power on the part of some is often (although not always) met by the demand of others for goods and services that are illegal or unavailable. The demand may be for drugs, firearms, or sex workers, or it may be for a service such as protection or resolving disputes when there is no acceptable legal means of doing so.

Because organized crime is made up of criminals who conspire to carry out illegal acts, a degree of trust is necessary among those criminals. Coconspirators must be able to trust that their collaborators will not talk to the police or to anyone who might talk to the police, and that they will not cheat them out of their money. A shared ethnicity, with its common language, background, and culture, has historically been a foundation for trust among organized crime figures.

In Colombian, Italian, Mexican, or other well-known forms of organized crime were based on ethnic or family structures. Organized crime in the United States provided a “crooked ladder of upward mobility” for some immigrants to the United States. Certain immigrants—sharing a common ethnicity, culture, and language, and, being on the bottom rung of the socioeconomic ladder, either having legitimate opportunities for advancement closed to them or rejecting the opportunities that were available — turned to crime, and specifically organized crime, to get ahead.

The sale of contraband cigarettes (legal or counterfeit) is one of the largest illegal markets in Europe. The price differentials of retail sales of cigarettes between the EU and its neighboring countries, between EU- 17 and EU-10E, or even within EU-17, create lucrative opportunities for criminals. A pack of smokes in Norway costs about €9, while the street value of the same package of cigarettes in Ukraine is about €0.7. An estimated 99 billion cigarettes are smuggled annually into the EU, of which 80% had been legally produced and 20% counterfeit. The main purpose of this illicit trade is avoiding excise taxes. Seizures account for only 3% of illicit trade in the EU. The losses to European governments according to some estimates are €10 billion.

The key drivers for cigarette smuggling are the price differentials, the proximity to supplies (from EU-10E), and the size of the market. These factors determine that the most attractive markets and those that have the highest share of duty-not-paid (i.e. smuggled) cigarettes are Germany, Poland, Romania, Spain, the UK, etc. However, although price differentials and cigarette affordability are extremely important, there are a number of (non-financial) factors that contribute significantly to the establishment and consolidation of illegal markets in cigarettes (and other tobacco products). These include: (a) a long history of cigarette smuggling; (b) the presence of informal distribution networks; and (c) levels of a country’s corruption that have been positively associated with the levels of illicit trade in cigarettes.

The border towns at the crossings are heavily dependent on bootlegging and trafficking excisable goods. The local customs and border authorities usually allow this trade as a routine way of survival. Central and local customs leadership generally tolerate this cross-border culture. There are different schemes for ‘border crossing fees’: from fixed amounts, which are split between the officers on a shift, with a share going to higher-ups, to fees determined according to the quantity smuggled. The bribes are paid either by ‘mules’ transporting the cigarettes or scheme organisers.

In the former communist countries, the prostitution market re-emerged after the democratic changes of the early 1990s. The transition to market economies that followed resulted in high levels of unemployment and marginalisation of many vulnerable groups, leading to a surge in the number of women involved in prostitution domestically and, above all, internationally. At the same time, the low standards of living created a relatively limited prostitution market. These countervailing factors, coupled with the demand for sexual services in EU-17 and the larger profits earned from prostitution abroad, lead to a substantial number of women being trafficked for the purpose of sexual exploitation to wealthier Member States.

In most EU Member States, there are four main market segments for prostitution: the street, brothels, elite prostitutes, and independent prostitutes. Although the four levels are often interrelated, the actors (prostitutes or criminal networks) in them are often different, as are the corruption targets. Elite prostitutes are used as a corruption instrument by organised crime to gain influence over politicians, magistrates, and representatives of multinational corporations.

One of the more significant developments since the end of the Cold War has been the growing involvement of insurgent, paramilitary, and extremist groups--whose crimes are primarily against the state -- in criminal activities more associated with traditional organized crime groups and drug-trafficking syndicates. Although various insurgent and extremist groups had been involved in traditional criminal activities before, particularly the drug trade, their role typically was more a subsidiary one of extorting or offering protection to drug trafficking and crime groups operating in areas they controlled. Partnerships that some of these insurgent or extremist groups had with drug traffickers and other criminal organizations were often fleeting, but sometimes longer-standing symbiotic arrangements based on a coincidence of interests. In either case, the relationship was often strained and marked by mutual suspicion and wariness.

While organized crime groups and other criminal networks have become more sophisticated in their operations and capabilities, corruption remains an indispensable tool of the criminal trade. Corruption is inherent to criminal activity; criminal groups corrupt society, business, law enforcement, and government. Beyond corrupting mid- and low-level law enforcement personnel and government bureaucrats to turn a blind eye or proactively facilitate their on-site criminal activities, crime groups seek to corrupt high-level politicians and government officials for a variety of reasons.

The rapid spread of international crime since the end of the Cold War is unprecedented in scale, facilitated by globalization and technological advances, and poses a significant challenge to the United States and democratic governments and free market economies around the world. The President has identified international crime as a direct and immediate threat to the national security of the United States.

Law enforcement officials around the world have reported a significant increase in the range and scope of international criminal activity since the early 1990s. The level and severity of this activity and the accompanying growth in the power and influence of international criminal organizations have raised concerns among governments all over the world--particularly in Western democracies--about the threat criminals pose to governability and stability in many countries and to the global economy. International criminal networks have been quick to take advantage of the opportunities resulting from the revolutionary changes in world politics, business, technology, and communications that have strengthened democracy and free markets, brought the world's nations closer together, and given the United States unprecedented security and prosperity.

The end of the Cold War resulted in the breakdown of political and economic barriers not only in Europe but also around the world. This change opened the way for substantially increased trade, movement of people, and capital flows between democracies and free market countries and the formerly closed societies and markets that had been controlled by Soviet power. The end of the Cold War also brought with it an end to superpower rivalry in other regions of the world, encouraging movement toward peace and more open borders. These developments have allowed international criminals to expand their networks and increase their cooperation in illicit activities and financial transactions.

Increasing economic interdependence has both promoted and benefited from reforms in many countries opening or liberalizing state-controlled economies with the intention of boosting trade and becoming more competitive in the global marketplace. Criminals have taken advantage of transitioning and more open economies to establish front companies and quasi-legitimate businesses that facilitate smuggling, money laundering, financial frauds, intellectual property piracy, and other illicit ventures. Multilateral economic agreements reducing trade barriers in North America, Europe, Asia, and other regions of the world have substantially increased the volume of international trade. In the United States, the volume of trade has doubled since 1994, according to the US Customs Service, and will double again by 2005. Criminal groups have taken advantage of the high volume of legitimate trade to smuggle drugs, arms, and other contraband across national boundaries.

The advent of intermodal commercial shipping-- including standardized cargo containers, computerized cargo tracking, and automated cargo-transfer equipment--enables shippers to securely and efficiently transfer containers delivered by sea to other ships for onward shipment or to commercial railroads and trucks for overland transportation. Criminals are able to exploit the complexity of the intermodal system to hide drugs or other contraband or to conceal the true origin and ownership of cargo within which contraband is hidden.

Recent decades have presented revolutionary advances in information and communications technologies that have brought the world closer together. Modern telecommunications and information systems that underpin legitimate commercial activity in today's fast-paced global market are as easily used by criminal networks. Commercially available state-of-the-art communications equipment greatly facilitates international criminal transactions--including making deals and coordinating the large volume of illicit trade. In addition to the reliability and swiftness of the communications, this also affords criminals considerable security from law enforcement operations. According to US law enforcement agencies, many international crime groups and drug traffickers use a combination of pirated and encrypted cellular phones and bootleg or stolen phone cards that they replace after short periods of use.

Through the use of computers, international criminals have an unprecedented capability to obtain, process, and protect information and sidestep law enforcement investigations. They can use the interactive capabilities of advanced computers and telecommunications systems to plot marketing strategies for drugs and other illicit commodities, to find the most efficient routes and methods for smuggling and moving money in the financial system, and to create false trails for law enforcement or banking security. International criminals also take advantage of the speed and magnitude of financial transactions and the fact that there are few safeguards to prevent abuse of the system to move large amounts of money without scrutiny. More threateningly, some criminal organizations appear to be adept at using technology for counterintelligence purposes and for tracking law enforcement activities.

The revolution in modern telecommunications and information systems and lowering of political and economic barriers that have so greatly quickened the pace, volume, and scope of international commerce are daily being exploited by criminal networks worldwide. International criminals are attracted to major global commercial and banking centers where they take advantage of gateway seaports and airports, the high volume of international trade, the concentration of modern telecommunications and information systems, and the presence of major financial institutions. They count on avoiding close scrutiny of their activities because of the importance to businesses and governments of facilitating commercial and financial transactions and rapid transshipment of products.

With the breaking down of international political and economic barriers and the globalization of business, there is more freedom of movement, and international transportation of goods and services is easier. The proliferation of air transportation connections and easing of immigration and visa restrictions in many countries to promote international commerce, especially within regional trade blocs, have also facilitated criminal activity. In the past, more limited travel options between countries and more stringent border checks made crossing national boundaries difficult for international criminals. Now, criminals have a great many choices of travel routes and can arrange itineraries to minimize risk. Border controls within many regional economic blocs--such as the European Union--are often nonexistent.