Global Financial Integrity


From Mexico to Kosovo: The Lands Ungoverned


Cross-posted from the blog of the Task Force on Financial Integrity and Economic Development.

In August 2010, the bodies of 72 immigrants were discovered in Tamaulipas, a state in northeastern Mexico. While nobody knows the sequence of events that led to this massacre, it is well known that Tamaulipas is at the center of a turf war between two powerful drug cartels, the Zetas and the Gulf Cartel. Control of territory and trafficking routes is critical as it enables the cartels to expand their criminal operations to include other moneymaking endeavors like fuel bunkering, prostitution, kidnapping, and even software piracy.

Across the Atlantic, a recent report for the Council of Europe has named Hashim Thaçi, the prime minister of Kosovo and wartime leader of the Kosovo Liberation Army (KLA), in connection with the Drenica organized crime group. This criminal organization “flourished in Kosovo and Albania after the war and exerted control over numerous rackets, including the heroin trade, and six secret detention centers in Albania, some used in a black market in human organs.”

One need not look too hard to find stories like these in newspapers the world over. The simple fact is that transnational organized crime is big business in an increasingly globalized economy. From China to Nigeria to Mexico, entrepreneurial criminals will navigate around laws and across borders, supplying illegal (or illegally acquired) goods and services to meet the demand of the highest bidder. Whether it is drugs, human kidneys, human beings, illegal fish, small arms, or rhinoceros horns, as long as someone is willing to buy it, someone will be willing to sell it.

There are those who would look at these markets and balk at the immorality of it, and certainly a case can be made that the buying and selling of something like human organs is, at the very least, unsavory. But what of timber, or gold, or fish? The illegal harvesting of wood products might be the only way for an impoverished Malaysian man to make a living. Is this immoral? Who does this hurt? Furthermore, what of the argument that these criminal flows bring an inflow of capital to developing economies? “Like it or not,” one could say, “production of counterfeit goods in China creates jobs for people who would otherwise be unemployed.”

But any economic argument FOR transnational organized crime is thin and short-sighted. Offering low-paid, sweatshop-style labor as a positive alternative to unemployment is nothing more than a developmental cop-out. Rather than exploiting workers to mass-produce cheap knock-off products, wouldn’t the Chinese economy and industries benefit more by establishing their own strong, internationally recognized brands? Furthermore, the little money that may trickle into the economy is a drop in the bucket compared to what the criminals are making.  In the $1.3 billion illicit market for diamonds and gemstones, for example, artisanal miners in developing countries make as little as one dollar per day.

Organized crime groups thrive in weak states. They exploit the desperation of impoverished people. They operate in ungoverned territory. They use corruption and fraud to grease the wheels of their smuggling operations. In short, they profit from, and seek to perpetuate, the conditions of underdevelopment. Sure, some criminal money may trickle into developing countries, but the lion’s share of criminal financial flows do immeasurable structural damage to developing economies by empowering forces which erode the capacity of the state.