http://www.foreignpolicy.com/story/cms.php?story_id=3270
It's the Illicit Economy, Stupid
By Moisés Naím Page 1 of 1
November/December 2005
I recently asked a Swiss banker, "How much harder is it for you to move
$50 million and keep it hidden from authorities today than 10 years ago?" He
smiled and replied: "The main difference is that now I charge more."
That's discouraging. Apparently, the anti-money laundering laws that
many governments enacted after Sept. 11, 2001, have changed little. Indeed,
according to Edwin Truman and Peter Reuter's study for the Institute for
International Economics, in the United States, where these new protections are
most stringent, money launderers face only a 5 percent chance of being
convicted in any given year. Anywhere else, the chances are even less.
Laundered money is, of course, not the only illicit international trade
that governments are unable to stop. Despite a long-standing war on drugs, the
total size of the global drug trade probably doubled between 1992 and 2002. For
most of the 1990s, an average of 500,000 people crossed illegally into the
United States each year. The hope was that the border controls enacted after
9/11 would make that number drop. It hasn't. Half a million people are still
entering the country illegally every year. The same is true in Europe, where
tighter immigration controls have failed to yield any significant reduction in
illegal immigrants.
Governments have failed to stop a wide range of illegal commerce. Fifteen
years ago, the trade in pirated goods was almost insignificant. Today, it is
valued at $400 to $600 billion a year. No insurgency anywhere in the world
seems to have much difficulty procuring the weapons it needs, which is one of
the reasons that the illegal arms trade is worth $10 billion. International
human trafficking comes to another $10 billion. Stolen art, according to
Interpol, is worth $3 billion a year. In the last decade, all of these illegal
international trades have grown in size and scope.
The explosion of money laundering offers a glimpse of the total size of
the world's illicit economy. Money laundering has grown at least tenfold since
1990, reaching $1 to $1.5 trillion today. Considering that legitimate global
trade roughly doubled in the same period, from $5 to $10 trillion, it's easy to
see that the illicit economy is significant, vast, and surging.
Of course, smuggling, trafficking, and international crime have always
existed. But this familiarity creates a dangerous complacency because it treats
today's illicit trades largely as irritants, rather than systemic threats. In
the 1990s, revolutionary changes in politics and technology reduced the
obstacles that distance, borders, and governments imposed on the international
movement of goods, money, and people-legal and illegal. These changes allowed
regional traffickers to become global traffickers. And, as the reach of
criminal enterprises expanded, governments failed to keep up.
Now the criminals are only becoming more sophisticated. Because, as
illicit industries become big business, they naturally adopt the strategic
thinking of big businesses everywhere: diversify, politicize, and legitimize.
First, like any normal corporation, traffickers diversify to reduce the risk of
having all their revenues come from just one-in this case, illegal-enterprise.
Second, traffickers spend vast sums to gain the support and protection of
politicians and government officials. And third, they invest heavily in
reputation-enhancing activities-churches, sports teams, art exhibits, social
work, and media.
The intense diversification of groups engaged in illicit activities into
legitimate businesses-the Moroccan human trafficker who doubles as a
real-estate mogul in Spain, or the Russian arms smuggler who owns a bank in
Cyprus-blurs the line that traditionally differentiates legal and illegal
business activities. This blurring is further complicated by the close
association that international criminal networks develop with politicians and
bureaucrats at home and abroad. Indeed, in many instances, the relationships
are so close that government officials replace the national interest with that
of the criminal enterprise. For example, during most of the 1990s, Vladimiro
Montesinos was in charge of Peru's security, working closely with the U.S. Drug
Enforcement Agency and the CIA. He is now on trial accused of heading major
international trafficking rings in weapons, drugs, and money laundering. A.Q.
Khan, the father of Pakistan's atomic bomb, was selling nuclear technology to
North Korea and Libya not to further his country's national interest, but to
line his own pockets.
All big businesses-especially those whose industries are heavily
regulated-invest in lobbying or government relations. Why shouldn't criminals
do the same? Their "industry" is the most regulated of all-indeed it is banned!
Therefore, the return on their investment in government influence and
protection offers the highest returns.
The same applies to philanthropy. Successful businesses invest in club
memberships, patronize the arts, and are coveted donors for charities. Wealthy
criminals do, too. Walter C. Anderson, an American who was accused of hiding
$450 million in offshore accounts to evade taxes, argued that the money went to
his Panamanian foundation, which was devoted to advancing human rights, arms
control, and family planning. Pablo Escobar Gaviria, the legendary Colombian
drug kingpin, was the main funder of sports clubs and other charitable
activities in Medellín.
Criminals have always tried to grow their businesses, influence
politicians, gain social respectability, and buy into legitimate enterprises.
The difference is that they are now able to do it on a scale and with
consequences that are without precedent.
Moisés Naím is editor in chief of FOREIGN POLICY and author of Illicit:
How Smugglers, Traffickers, and Copycats are Hijacking the Global Economy (New
York: Doubleday, 2005).
[Non-text portions of this message have been removed]
------------------------ Yahoo! Groups Sponsor --------------------~-->
Help save the life of a child. Support St. Jude Children's Research Hospital.
http://us.click.yahoo.com/cRr2eB/lbOLAA/E2hLAA/BRUplB/TM
--------------------------------------------------------------------~->
***************************************************************************
Berdikusi dg Santun & Elegan, dg Semangat Persahabatan. Menuju Indonesia yg
Lebih Baik, in Commonality & Shared Destiny.
http://groups.yahoo.com/group/ppiindia
***************************************************************************
__________________________________________________________________________
Mohon Perhatian:
1. Harap tdk. memposting/reply yg menyinggung SARA (kecuali sbg otokritik)
2. Pesan yg akan direply harap dihapus, kecuali yg akan dikomentari.
3. Reading only, http://dear.to/ppi
4. Satu email perhari: [EMAIL PROTECTED]
5. No-email/web only: [EMAIL PROTECTED]
6. kembali menerima email: [EMAIL PROTECTED]
Yahoo! Groups Links
<*> To visit your group on the web, go to:
http://groups.yahoo.com/group/ppiindia/
<*> To unsubscribe from this group, send an email to:
[EMAIL PROTECTED]
<*> Your use of Yahoo! Groups is subject to:
http://docs.yahoo.com/info/terms/
