Family Incorporated: Organized Crime and the Nation-State

ISN: It is often claimed that criminal organizations have grown in influence and – in some countries – become more powerful than governments and security forces, especially since the end of the Cold War. Do you believe such claims are accurate?

Prem Mahadevan: The short answer is ‘yes‘. The long answer is much more complicated – it depends on two interrelated factors: the specific region, and what one means by criminal organizations. When the term is applied to street gangs in Latin America, then access to sophisticated firearms, obtained locally from corrupt officials and/or transnationally from smuggling networks, has enhanced their capacity to confront security forces. When applied to smugglers in Eurasia, then the transition from communism to capitalism has provided opportunities for criminal entrepreneurs with connections to the state bureaucracy to move contraband into the EU. When applied to insurgent groups across Africa and parts of Asia, then the trade in conflict minerals and narcotics has become a necessary source of sustenance due to the erratic nature of foreign sponsorship, post- 1989 and the end of the Cold War. All three examples share a common feature: the government on the receiving end of organized crime is chronically cash-strapped and unable to upgrade its security apparatus to cope with the challenge of policing legitimate cross-border trade, within which organized criminal activity finds refuge. Contrast this with the developed world, where electronic surveillance has been substantially enhanced over the past decade due to concerns about terrorism. The overall picture, therefore, seems to be mixed, albeit with a general trend favoring criminal organizations, simply because very few states combine a robust policing mechanism with good governance. Both these qualities are needed if a state is to contain organized crime amidst an expansion of trade relations.

What about the global recession of 2008? Did this provide opportunities for criminal organizations to increase their power and influence vis-à-vis governments?

Once again, it depends on the context. There has been some speculation that the current economic downturn could force legitimate businesses to borrow money from criminal syndicates, thereby increasing the latter’s power. This would be a problem in the construction industry or in extractive industries such as mining, for example. With narcotics, there is no clear trend: some analysts believe that, due to the recession, recreational drug users have less disposable income to play around with, so they forego the vices to which they would otherwise treat themselves. The same applies to prostitution. However, the 2008 economic recession has had an uneven impact globally. In certain regions such as Latin America, organized crime appears to have grown more powerful on the back of a strong performance by the legitimate economy. In Russia, economic difficulties have forced some criminal organizations to expand their share of the Afghan heroin trade, which, coincidentally, is booming due to the bad security situation in Afghanistan. As one of the more violent forms of organized crime, drug trafficking also tends to provoke a stronger state response. So, extrapolating causality from a varied set of factors is not advisable. What can be said is that the liquidity which some powerful criminal syndicates possess might, in theory, allow them to purchase political protection, particularly in weak democracies where winning elections is often just a matter of buying or rigging votes.

There has been some buzz recently about the rise in significance of so-called ‘mafia states’ – or governments that have been essentially taken over by criminal organizations. What do you make of this? Is there evidence this is happening?

The term ‘mafia state’ is polemical—a bit like ‘terrorist state’. Its utility from an analytical perspective is near zero, but it is politically useful in focusing public and legislative debates on an emerging security threat. The term has famously been applied to some countries of the former Soviet bloc, where state-owned businesses were privatized almost literally overnight amidst no transparency. In the process, several politically-connected ‘oligarchs’ rose to prominence, in some cases with support from elements within national intelligence services. This last factor, the link between intelligence agencies and criminal syndicates, seems to be a staple of the ‘mafia state’ discourse. The problem is, it is invoked selectively. Certain states with a tradition of authoritarian governance are now being called ‘mafia states’, while others, which in the past have been just as opportunistic in using criminal organizations for their own ends, are ignored. Realistically, no state is completely free of the taint of organized crime, either as a perpetrator or as a facilitator. There are some obvious candidates, but there are also others which would not automatically come to mind, such as cases where organized criminal activity is very high but not directly sponsored by the head of state or the head of national intelligence. Israel, for instance, was long a hub of human trafficking and money laundering from Eurasia. South Africa faces a huge problem with violent acquisitive crime. India, supposedly a model of Asiatic democracy, is a hub of crony capitalism. Pakistan is controlled by an army that was heavily involved in the Afghan heroin trade and, more recently, has enriched itself through arbitrary property seizures. A polemical commentator might be tempted to label some of these countries as ‘mafia states’, but such use of the term would not help in focusing reasoned debate.

Would you say, then, that there has been a rise in the significance of links between criminal syndicates and national intelligence services – even if ‘mafia states’ is an inappropriate term for it? Would you characterize this as an emerging security threat?

Given the nature of intelligence work, it is practically impossible to assess whether intelligence contacts with criminal syndicates are going up in quantity or quality. What can be said is that intelligence services have historically tended to make use of trans-border smugglers for a variety of covert tasks, the most prominent of which is support for paramilitary operations. During the Soviet-Afghan War, for example, the CIA and the Pakistani intelligence service ISI are thought to have used the services of drug traffickers while providing deniable support to the Afghan Mujahedeen. Very little appears in the public domain about such contacts; as is usually the case with all paramilitary operations, only tantalizing hints are made available through media leaks and off-the-record briefings. With regard to other forms of covert action, such as psychological warfare or para-economic action, organized crime can help in instigating civil unrest, as reportedly happened recently in India, or injecting counterfeit currency into a targeted country to weaken its economy. However, evidence of links between intelligence and organized crime are difficult to obtain, particularly since counterintelligence agencies in the targeted states are usually more focused on penetrating and manipulating enemy spy networks than breaking them up and bringing their members to trial. With conventional warfare having become rarer due to nuclear deterrence, as well as a more general political culture of risk aversion, it seems likely that intelligence agencies will keep themselves busy with low-key covert operations, using local intermediaries from criminal groups. These are not likely to be dominated by paramilitary action, however, except in regions that are already subject to civil wars.

Earlier, you described a general trend favoring criminal organizations in the post-Cold War era. While this is usually considered an unambiguously bad thing, are there instances (in parts of Latin America perhaps) where the phenomenon has actually enhanced security in this period? Or been a ‘good thing’ more generally?

It is difficult to think of a scenario where criminality can enhance security, except in a very fleeting sense and only at the local level. Usually, what happens is that a criminal organization with plenty of access to firearms but little political protection goes about killing off its rivals and any police officers who try to roll back its operations. This triggers the formation of a balancing criminal coalition, which selectively cooperates with the government to bring down the rogue group. During the 1980s and early 1990s, for example, Colombia was wracked by narco-terrorism in the form of the Medellin cartel, led by Pablo Escobar. The cartel was eventually decapitated by a combination of American and Colombian law enforcement efforts, plus intrigue from the equally powerful but less violent Cali cartel. The latter used its financial clout to buy influence within sections of the government, and subsequently moved in to assume the dominant role previously held by the Medellin cartel. This then meant that the Cali cartel had to be neutralized in turn. Closer to the present, when one looks at the drug war in Mexico, one finds that some drug trafficking groups might have been harder hit by security forces than others, because they tend to be more indiscriminately violent. In general, street-level security tends to be threatened by inter-organizational rivalry among criminal syndicates, and usually has to be restored by an accommodation between the government and one set of criminals, so that the most immediate threat can be dealt with.

What about since 2008? Would you say the same was true?

The 2008 recession would have generated greater competition among criminal organizations, all eager to exploit their rivals’ vulnerability and corner a larger share of the market. This would happen irrespective of whether the particular criminal market, be it drugs, human trafficking or anything else, is expanding or shrinking. Economic shocks create short-term cashflow problems for criminals and lower the barriers to entry, as new groups come up owing to the inability of established syndicates to crush them early enough. In the absence of hard information on current developments, it is difficult to say precisely where inter-group conflict could pose an extraordinarily severe threat to public safety.