Without doubt the most compelling development in organized crime at the end of the twentieth century is the trend toward the development of transnational organized crime groups and the suggestion that these groups are beginning to collaborate and cooperate in a systematic manner to facilitate the delivery of illicit goods and services on an international scale. While organized crime scholars have thus far been quite careful in their description of this phenomenon, a real danger of a reconstructed and rehabilitated “alien conspiracy theory” of organized crime as a replacement for the discredited “Mafia” model of years past, emanating from the news media and the state, lurks as an imminent danger.
The fact is, despite the internationalization of crime, little has changed in the organization of syndicates. They are still rather informal, loosely structured, open, flexible organizations highly reactive to changes in the political and economic environments. The internationalization of organized crime has not resulted from some master plan by arch-criminals. It is simply a reflection of that reactive, ephemeral, flexible characteristic of crime syndicates that has allowed them to respond to technological advancements in communications and transportation; to market adaptations resulting from the internationalization of investment capital, financial services, and banking; to the internationalization of manufacturing and increased segmentation and fragmentation of production across international borders; and to the increased emphasis on international and unrestricted trade across borders.
Organized crime syndicates are still rooted in local conditions, shielded by local politics, and limited by the need to control personnel at the local level. The European Union weakens borders and encourages the free flow of people and goods. Russian, Italian, Romanian, British, and Corsican syndicates simply respond to the new reality. It is neither the Malina nor the Mafia who created these opportunities; rather, it is the state and multinational corporations. Nigerian drug traffickers are not responsible for the enormous recent increase in international trade or heightened flow of people across borders. They merely take advantage of the situation. When they collaborate with Asian heroin producers, it does not signify the birth of a new international criminal order; it merely reflects the same types of arrangements that are occurring in the business community at large. Poppy growers can now market their products over a wider arena. Nigerian smugglers have a mechanism in place to efficiently take advantage of new technologies and opportunities. Collaboration is as natural as a compact between U.S. car manufacturers and parts producers in Brazil or Mexico. However, the fact remains that the Nigerian syndicates are firmly rooted in economic inequality and pervasive patterns of corruption that are distinctly Nigerian.
The major issue is not collaboration between and among organized crime groups but increased political corruption brought on by greater rewards from international commerce and weakened central governments whose powers have been surpassed and often usurped by multinational corporations. National sovereignty is not threatened by Colombian cartels, Southeast Asian warlords, Russian criminal entrepreneurs, or Zambian cattle poachers; it is threatened by pervasive and growing corruption and the increasing irrelevance of individual states in an international economy.
Organized crime has not changed very much from the system of patron-client relations described by Albini, the system that operates within the context of illicit entrepreneurship described by Smith, or that which is facilitated by the businessmen, law enforcement officials, and politicians of Chambliss’s crime networks. Organized crime syndicates are still localized, fragmented, and highly ephemeral entities. The only difference is that the world has changed, and organized crime has adapted. An understanding of the nature of those world changes is vital for an understanding of transnational organized crime in the twenty-first century.
The International Political Economy and Organized Crime
As a complex social phenomenon, organized crime has always been highly sensitive to developments in the economy, the political environment, and the social world. Dramatic late twentieth and early twenty-first century changes in global politics and economics have impacted both the opportunities and constraints confronting organized crime and, as a result, have initiated a series of organic changes in the way criminal organizations do business. The contexts within which criminal organizations operate are undergoing fundamental change.
The emergence and development of the ”global village” in the second half of the twentieth century has fundamentally changed the context in which both legitimate and illegitimate businesses operate (Williams 1994):
Increased interdependence between nations, the ease of international travel and communications, the permeability of national boundaries, and the globalization of international financial networks have facilitated the emergence of what is, in effect, a single global market for both licit and illicit commodities.
Certainly, recent years have seen a vast increase in transnational commerce, as information, money, physical goods, people, and other tangible commodities move freely across state boundaries. This globalization of trade and a growing international consumer demand for leisure products have created a natural impetus for a fundamental change in the character of many criminal organizations from essentially localized vice networks to transnational organized crime groups (Williams 1994). These opportunities have manifested themselves in five areas, all of which are outside the domain of organized crime groups, but each of which profoundly impacts criminal organizations: (1) the ease of international transport, (2) the growth of international trade, (3) new computer and communications technology, (4) the rapacious growth of global financial networks, and (5) the creation of and opening of new markets.
In the last half of the twentieth century, the ability of people to easily move across large distances increased dramatically, as did the ability of people to move materials across equally large distances. In 1999, some 395 million people entered the United States overland from Mexico and Canada, seventy-six million people arrived on more than 928,000 commercial airline and private flights, and nine million arrived by sea. In addition, 135 million vehicles—including automobiles and commercial trucks—crossed U.S. borders with Mexico and Canada, and more than two hundred thousand merchant and passenger ships and other maritime vessels docked at U.S. seaports or U.S. coastal harbors. U.S. seaports handled more than 4.4 million shipping containers and four hundred million tons of cargo in 1999. U.S. Customs is able to inspect only about 3% of the goods entering the United States, a figure that will drop to about 1% by the end of the first decade of the new century as the volume of trade continues to grow. The movement of vast numbers of people across international frontiers significantly increases the recruitment base for criminal organizations around the world (Godson and Olson 1995).
The growth of free trade and the gradual elimination of tariffs, restrictive covenants, and international barriers to commerce has resulted in an explosive growth in import and export markets. In the United States, the volume of trade doubled between 1994 and 2005. The same global trade network that facilitates legitimate import-export operations also serves criminal organizations well. Global trade networks enhance the mobility of criminal organizations and create new markets for both illicit and licit services provided by criminal organizations (Williams 1994). The shift of some cocaine cartels to heroin as a product line and the entry of other cocaine cartels into the European market are prime examples of market mobility enhanced by international trade (Godson and Olson 1995).
Recent innovations in computer and communications technology also have important implications for criminal organizations, particularly with regard to their overall flexibility and adaptability in hostile environments (Godson and Olson 1995). Electronic fund transfer systems move billions of dollars around the world with the click of a mouse, making money laundering and the concealment of financial assets much easier than in the past. Encryption technology for faxes and cellular telephones have rendered electronic monitoring and tracing problematic at best. Signal interceptors, now readily available on aircraft, make it much easier for drug couriers to plot radar and avoid monitoring (Elliott 1993). Conducting business across state borders enhances the ability of criminal organizations to keep law enforcement at bay. Problems of coordination, security, and corruption often become insurmountable for state agencies. In addition, diversifying illicit operations and locales greatly enhance the ability of criminal organizations to recover from losses resulting from social control activity or even the acts of competitors (Godson and Olson 1995).
Money is the most fungible of all commodities, since it can be transmitted instantaneously and at low cost. It is chameleon in character, changing its identity easily. In the newly expanded global financial networks, money can be traced only with the greatest of difficulty, if at all. Governments were already at extreme disadvantages in areas of taxation, regulation, and the control of economic activities. The present-day global financial network makes the transfer of profits from illegal transactions easy, fast, and virtually immune from discovery. Money laundering, already an art form, is now an art form conducted at warp speed. The internationalization of finance has rendered state law and state economic policy impotent (Williams 1994).
The expansion of international trade, the globalization of financial networks, and the revolution in communications technology have led to the development of new markets in industrial and postindustrial mass consumption societies. In addition, the heightened level of integration brought about by the creation of a global economy has resulted in a degree of global transparency that has accentuated inequalities between societies and that has led to the emulation by developing countries of patterns of consumption in economically advanced societies. This combined with the ease of travel and the expansion in international communications has led to a convergence of consumer tastes in many societies around the world. Entrepreneurs, both criminal and noncriminal, have recognized the opportunities this presents for global markets and have tried to exploit them (Williams 1994).
The Changing Character of Organized Crime in a Global Economy
The creation of mass consumer markets encourages the growth of organized crime in several ways. First, just as with multinational corporations, these new transnational markets are open to criminal organizations. Second, criminal organizations may be better suited to exploit these opportunities than legitimate corporations. Criminal organizations have expertise in operating outside the law, outside regulations, and outside norms of business practice, and they have few qualms about legal niceties in violating international borders. Criminal organizations operate outside the existing structures of authority and have developed strategies for circumventing law enforcement both in individual nations and across international boundaries (Williams 1994).
Increasingly, criminal organizations are becoming transnational in nature, conducting centrally directed operations in the territory of two or more nation-states, mobilizing resources and pursuing optimizing strategies across international borders. These organizations are still functionally specific in that they seek only to penetrate new markets, not to acquire new ”turf.” Unlike their multinational corporate counterparts, who seek to gain access to new territories and markets through negotiations with states, criminal organizations obtain access through circumventions, not consent. They engage in systematic activities to evade governmental controls, which is possible because the conditions that give rise to their emergence also make it very difficult for governments to contain and control them (Williams 1994).
Criminal organizations continue to be extremely diverse in their structure, outlook, and membership. But in the postmodern world what they have in common is that changes in technology, economy, and trade rules have made them highly mobile, even more adaptive than before, and have vested them with the ability to operate across national borders with ease. This is partly the result of the forces discussed above and partly because criminal organizations have always been constructed as informal social networks rather than formal organizations, immensely increasing their flexibility and adaptability.
It is a matter of more than passing interest that formal, legal organizations, including corporations and some agencies of the state, have been moving in the direction of more flexible, fluid, network structures in response to changes in the global economy. Not surprisingly, then, criminal organizations have a distinct advantage in that they have always operated covertly and have always deemphasized fixed structures as a rational response to their illegality (Williams 1994).
Strategic Alliances and Modern Organized Crime
As a result of their increasingly transnational character and following the lead of transnational corporations, criminal organizations have increasingly sought out strategic alliances with other criminal organizations. For multinational corporations, strategic alliances facilitate production where costs are low and allow corporations to take advantage of local knowledge and experience in marketing and distribution. Criminal organizations pursue strategic alliances for many of the same reasons (Williams 1994).
First of all, strategic alliances are simply rational responses to the emergence of global markets and in particular to what is called the global-local nexus. The concept of a global market may still sound foreboding to some, but in fact it is just a composite of local markets that have become increasingly homogenized. For any corporation, legal or illegal, there are two ways to increase profits in the marketplace: One is to gain entrance to new markets and the other to expand market share in existing markets. Multinational corporations and criminal organizations alike often find it easier to enter local markets that have been outside their purview or area of activity if they cooperate with organizations that are already entrenched in these markets, which have greater knowledge of local conditions and are more attuned to local problems, rather than trying to insert themselves as competitors in unfamiliar territory. Linking with host criminal groups to facilitate access to new markets is the major impetus behind transnational strategic alliances between criminal organizations (Williams 1994).
Strategic alliances are also quite useful as mechanisms to neutralize and/or co-opt potential competitors in a market. Cooperative strategies often offer a rational and effective response to a highly competitive situation. Cooperation with a strong competitor already enjoying high profitability in a market can lead to local market dominance. A strong local competitor can be offered various incentives for entering into a strategic alliance. For example, the local organization’s market share could be increased through the introduction of more diverse products. The promise of an entirely new market might be contingent on a strategic alliance or the exchange of some other valuable goods or services (for example, political contacts, ancillary services, or specialized support). Whatever the reasons, the promise of mutual benefit is the foundation of transnational strategic alliances between criminal organizations (Williams 1995).
Third, strategic alliances are also very effective as a means of circumventing restrictions, regulations, and barriers to markets. Where state regulations make it difficult to enter a market, the formation of an alliance with an organization that already has access to the market is an attractive means of overcoming obstacles (Williams 1995).
Finally, the formation of a strategic alliance can be an indispensable means of minimizing or spreading risk. Multinational corporations know that expanding their activities and entering new markets requires new investments and capital cost outlays. Being able to reduce or spread risks enables both corporations and criminal organizations to take advantage of opportunities that might otherwise have appeared to be too risky. The synergy inherent in a strategic alliance means that the participants are able to do things that neither one could do alone, at least not with anything like the same effectiveness or confidence (Williams 1995).
Strategic alliances are usually configured in one of three ways, depending upon the objectives of the criminal organizations involved. The most common form is a franchise alliance that is anchored by a large, well-developed, and highly stable criminal organization that does business with several smaller, independent local criminal organizations. Another common form strategic alliances take is that of a compensatory alliance, in which two criminal organizations recognize that each one, acting alone, has several inherent weaknesses that are offset by an alliance. A third type of strategic alliance is the specialization alliance, in which one criminal organization seeks an alliance with another in order to fulfill needs for specialized tasks beyond the purview and abilities of the first organization. Specialization alliances are contractual relationships covering specific tasks and responsibilities. Countertrade alliances are simple exchange relationships between criminal organizations in which goods or services are exchanged for other goods or services. Finally, a supplier alliance involves regularized relationships between various suppliers of basic raw materials and organizations that transform these materials into consumer products. Such alliances are common in the drug trade (Williams 1995).
Future Trends Impacting Criminal Organizations
The character changes in organized crime initiated by rapidly expanding international travel and trade, developing communications technology, and the globalization of finance will likely continue to accelerate in the coming years. A number of factors point to this acceleration.
For poor farmers in many nations around the world, choosing to grow drug-related crops makes the greatest economic sense. Markets for other commodities such as coffee, rice, and gladiolus are far less profitable and very unstable. In most places, even where the necessary marketing infrastructure and expertise exist, government controls make entry into those legitimate markets almost impossible for peasants. At the same time, drug entrepreneurs are expanding into markets where drugs have not been a major consumer item in the past. Without dramatic and unlikely changes, raw materials for drug production will continue to be readily available (Godson and Olson 1995).
There is a global trend toward un-governability—that is, the declining ability of governments to govern, to manage a modern state, and to provide adequate or effective services. In some cases criminal organizations have been able to capitalize on the fact that large areas, such as the Andes and Amazon regions in South America or much of the Golden Triangle in Southeast Asia, were never under effective government control. Criminal organizations have moved into these remote regions and have provided the major source of authority and social control in them. In other cases, criminal organizations have begun to contest local control of areas with the government. This situation provides favorable conditions for criminal groups to establish bases of operations and safe havens, particularly in areas key to drug trafficking and alien smuggling. Political geographers predict further continuing global fragmentation. Criminal organizations thrive where governments are weak (Godson and Olson 1995).
Local criminal organizations often expand following immigration patterns. As the new century unfolds, economic pressures and widespread ethnic turmoil are likely to generate refugees and immigrants from regions where international criminal groups are based. Criminal organizations tend to exploit immigrant communities in a variety of ways. Such communities may provide cover and concealment. Immigrants also provide a pool of recruits. In addition, new immigrants are also usually fearful of law enforcement. Their recent experiences in their countries of origin make them reluctant to cooperate with police in their new countries.
Technological and transportation advances will facilitate growth in transnational criminal operations. The ease of modern communications makes contact among criminal organizations easy, fast, and more secure. New digital technologies make it more difficult for law enforcement agencies to intercept communications. The movements of trillions of dollars in wire transfers each day make it possible for most actors to evade state monitoring (Godson and Olson 1995).
Preventing, disrupting, and prosecuting organized crime is difficult even under the best of conditions. The growth of transnational markets and the accompanying criminal organizations ready and willing to operate in those markets will make the task even more complex and immensely more difficult.
