ISSUE BRIEF 07.06.16 Globalization and Organized Crime: Challenges for International Cooperation

Juan Carlos Gachúz, Ph.D., Puentes Visiting Scholar, Mexico Center

organizations are willing to use violence, INTRODUCTION bribery, and other such instruments to carry The concept of transnational organized crime out their business activities. And, of course, is not clear-cut or straightforward. There is a main characteristic of these groups is no standard definition for it in criminological that their criminal practices are not limited 2 or criminal law theories. Moreover, to national boundaries. In the Convention transnational criminal organizations against Transnational Organized Crime differ substantially from each other—in (CATOC), the United Nations stated that an organizational structure, types of activities, offense is transnational in nature if: (a) it is or size, for example. Despite this lack of committed in more than one State; (b) it is consensus on the definition of transnational committed in one State but a substantial organized crime, several crucial elements part of its preparation, planning, direction, are evident in all cases. or control takes place in another State; (c) First, such organizations conduct it is committed in one State but involves an criminal acts, violating legal frameworks organized criminal group that engages in and carrying out punishment outside the criminal activities in more than one State; legitimate procedures of law enforcement. or (d) it is committed in one State but has 3 Individuals who intentionally join the substantial effects in another State. groups operate under the direction of In an earlier document, the United established leaders and execute their Nations also listed several categories of activities efficiently. And although they transnational organized crime: money are well organized, their structure is more laundering, terrorist activities, theft or less permanent, even when they are of art and cultural objects, intellectual not composed of rigidly subordinated property theft, illicit arms trafficking, groups. Sometimes, transnational organized aircraft hijacking, sea piracy, land crime in fact occurs through a network of hijacking, insurance fraud, cyber crime, homogeneous groups linked to one another environmental crimes, trafficking of across borders by various forms of solidarity, persons, trade of human body parts, illicit complicity, and a hierarchical order.1 drug trafficking, fraudulent bankruptcy, Additionally, transnational criminal infiltration of legal business, corruption organizations are active in a variety of fields. and bribery of public officials as defined Their full spectrum of activities includes in national legislation, corruption and bank fraud, cyber crime, and the illegal bribery of party officials and elected trafficking of goods or people. Moreover, representatives as defined in national in order to achieve their goals and protect legislation, and other offenses committed 4 their interests, transnational criminal by organized criminal groups. RICE UNIVERSITY’S BAKER INSTITUTE FOR PUBLIC POLICY // ISSUE BRIEF // 07.06.16

economic liberalization, the removal of GLOBAL CRIME: A NEGATIVE barriers to the international trade of goods EXTERNALITY OF GLOBALIZATION and the free flow of funds have just as easily 6 There has been some discussion on the facilitated cross-border illicit trade. There relationship between globalization and is, in other words, no reason to believe that organized crime. According to professor Phil these developments would one-sidedly Williams, globalization has been beneficial benefit only legal activities and not become Financial deregulation to transnational organized crime. He instruments for illegal transactions as well. argues that, while globalization facilitates Thus, transnational networks now have benefits criminal actors access to state of the art technologies (planes, because it allows them international trade and the exchange of goods, it also increases the difficulty of submarines, drones, etc.) to transport illicit to launder money. regulating other activities such as the trade drugs and also use complex cyber operations of illegal goods and the enforcement of for money laundering and financial laws that intend to stop them. In the same operations. The power of transnational context, the global financial system has crime has grown dramatically in recent undergone widespread deregulation since years. Based on available academic research, the 1980s, facilitating money laundering organized crime now accounts for perhaps as 7 to hide the ill-gotten profits of organized much as 15 percent of the world’s GDP. crime. In other words, financial deregulation benefits criminal actors because it allows them to launder money through placement, DRUG TRAFFICKING IN GLOBALIZED layering, and ultimately integration into the MARKETS legitimate financial system. Moreover, the One of the main transnational criminal negative externalities of globalization may activities under aggressive expansion is illegal have contributed to engrossing the ranks of drug trafficking. For illegal drugs, modern organized crime. As Williams (2012) put it: transportation and telecommunications In terms of sociological impacts, act as a conveyor belt. It is estimated, for The removal of barriers globalization has also brought about example, that almost 90 percent of the to the international some negative effects...The process of cocaine transported to the United States by globalization generated not just winners, trade of goods and plane is loaded onto aircrafts in Honduras. but also losers. Its disruptive effect, The cocaine itself originates in Colombia the free flow of funds causing higher inequality and poverty for and can make several stops at various hubs have just as easily many across the globe, led some people for further transport to North America or facilitated cross-border into engaging in organized crime and Europe. In the United States, Mexican dealers illicit trade. criminal activities, mainly as the result of and their American counterparts distribute a lack of opportunities and an extreme drugs in several parts of the country, with unequal income distribution.5 well-heeled business models, markets Broude and Teichman argue that in taking organized into territories, and profit- advantage of globalization processes, sharing arrangements. Networks are often transnational crime organizations also organized in cells involving at least four expanded their networks not only at regional countries, all of which are well coordinated levels but also globally as well. Broude in their operations. Regional coordination and Teichman draw particular attention to and cooperation mechanisms expand from technological developments. They state South to Central to North America and all that illicit activities flourished, just as legal along the U.S.-Mexico border. Production, international business transactions have, due transportation, retail, financial, and to technological advances in transportation enforcement wings work in tandem. Units and telecommunications that facilitate specialized in coopting law enforcement and the freer movement of goods, services, political actors are in place along the Mexican money, and people. Just as there are direct border, and U.S.-trained special police forces links between technological progress and have been deployed in addition to existing units, as is the case in Honduras.8 2 GLOBALIZATION AND ORGANIZED CRIME: CHALLENGES FOR INTERNATIONAL COOPERATION

Another point to revisit is the fact that globalized crime. The State itself needs to the drug cartels have been able to grow to reformulate its institutions and the way they a global scale thanks to the similarities they work bilaterally and in a global context. As share with legal multinational companies. Williams argues, “States and the communities International business professor Peter of states are still bureaucratic, hierarchical, Enderwick detected four crucial similarities: slow to operate, slow to respond to groups that are very agile, very networked, very First, both appear to pursue similar flexible, and able to respond very quickly objectives, with profit assumed to be the both to opportunities and dangers.”11 key driver. For legitimate businesses, this Governments from the United States assumption is endemic, and the same and Mexico seem to understand the growing applies for the transnational criminal global scope of organized crime and have organizations. Second, both types of started to develop a combined approach One of the main businesses establish worldwide facilities toward combatting it. Implicit in this to maximize the production, marketing, transnational criminal approach is the fact that isolated nation- and distribution of products and services. activities under based law enforcement or even traditional Third, output and growth are led by aggressive expansion cooperation among countries is no longer market demand. Fourth, the level of an efficient mechanism to fight organized is illegal drug analysis generally adopted in examining crime. Organized crime, however, is ahead of trafficking. both the legitimate and illegitimate governments, given that most anti-organized sectors are comparable.9 crime is still largely based on traditional In this context, drug cartels are able to methods of policing, bilateral cooperation, expand not only at the regional level but also and country-based law enforcement. into other continents, taking advantage of the technological, commercial, and financial frameworks that carry other globalization FINAL REMARKS processes. All the similarities multinational companies share with transnational crime The process of globalization has brought organizations have in many ways been the about the need to reform the way in which byproduct of globalization, a link not yet institutions are structured and how they made very clear in the literature in general. operate in different contexts. International Paradoxically, increasing cross-border cooperation among domestic institutions is global trade flows, pushing economic not enough anymore to face international liberalization reforms, and weakening the challenges such as global crime. New power of the nation-state have all also institutional structures involving participation facilitated opportunities for transnational from states and non-state actors has become organized crime by providing gray spaces a requirement to overcome global problems. The growing problem of where these “dark” corporations can flourish There is a need for the domestic institutions transnational organized and offering the incentives to profit from the to become more “global” and work where trade of illicit goods and services, expand overall good is desired instead of aspiring criminal networks has their networks, and ultimately prosper.10 for national advantages or looking for media stimulated countries attention.12 The State faces enormous to cooperate in joint challenges due to global crime, and the approaches to tackle INSUFFICIENT COOPERATIVE current institutions and legal systems are the issue. MECHANISMS TO FACE GLOBALIZED sometimes isolated or work only within a CRIMINAL NETWORKS national scope. These imperfections are used by the organized crime groups, which freely The growing problem of transnational exploit the loopholes of state-based legal organized criminal networks has stimulated systems to extend their reach.13 countries to cooperate in joint approaches to Globalization processes have provided tackle the issue. However, these mechanisms opportunities for the worldwide expansion of are no longer enough and need to be legal businesses, but also illegal businesses. reformed to face the new challenges of The traditional mechanisms to control 3 RICE UNIVERSITY’S BAKER INSTITUTE FOR PUBLIC POLICY // ISSUE BRIEF // 07.06.16

organized crime on a global scale are not transnational-crime/globalization-affects- enough. Nation-states must now look for transnational-crime/p28403. new and improved ways of combatting 6. See Tomer Broude and Doron illegal businesses, much as they seek new Teichman, “Outsourcing and Insourcing Crime: and innovative ways to regulate world The Political Economy of Globalized Criminal corporations. Academic research shows Activity,” The Hebrew University of Jerusalem, that one of the greatest challenges of 2008. http://ssrn.com/abstract=1111399. international collaboration are differing 7. Misha Glenny, “How Global Crime national penal laws.14 Globalization calls Networks Grow,” filmed July 2009, TED for nations to set common law principles in video, 19:30. https://www.ted.com/talks/ order to fight crime. Just like transnational misha_glenny_investigates_global_crime_ organized crime groups use a horizontal networks?language=en#t-972495. hierarchal system in order to do business, 8. Alexander Nicoll and Jessica Delaney, nations should establish similar systems in “New Approaches to Central American fighting them. States are called to evolve, Organised Crime,” The International Institute look beyond their borders, and act against for Strategic Studies, 2014. the grand, negative impact of organized 9. Peter Enderwick, “…of Globalized crime through mutual collaboration. The Criminal Activity,” Vanderbilt Law Review harmonization of national legislations is one 62.3, 2009. Print. of the main challenges in the fight against 10. See Mark Hanna, “Chapter 3: transnational organized crime within the Transnational Organized Crime in an Era of context of globalization. Accelerating Change,” SOF Role in Combating Transnational Organized Crime, U.S. Department of Defense, 2016. http://cco.ndu. ENDNOTES edu/Portals/96/Documents/books/JSOU%20 SOF/JSOU16_MendelMcCabe_CTOC_final.pdf. 1. See Fulvio Attina, “Globalization and 11. Williams, interview with Stewart M. See more issue briefs at: crime. The emerging role of international Patrick. www.bakerinstitute.org/issue-briefs institutions,” University of Catania, 1997. 12. Attina, “Globalization and crime. The http://aei.pitt.edu/389/1/jmwp07.htm. This publication was written by a emerging role of international institutions.” 2. Yuriy A. Voronin, “Measures to Control researcher (or researchers) who 13. See Louise Shelley, “The Globalization participated in a Baker Institute project. Transnational Organized Crime, Summary,” of Crime and Terrorism,” IIP Digital U.S. Wherever feasible, this research is National Institute of Justice, October 5, Embassy, February 2006. http://iipdigital. reviewed by outside experts before it is 2000. https://www.ncjrs.gov/pdffiles1/nij/ usembassy.gov/st/english/publication/20 released. However, the views expressed grants/184773.pdf. 08/06/20080608103639xjyrrep4.21869 herein are those of the individual 3. United Nations Office on Drugs and author(s), and do not necessarily 2e-02.html#axzz4AM8WPVwS. represent the views of Rice University’s Crime, “Convention against Transnational 14. Attina, “Globalization and crime. The Baker Institute for Public Policy. Organized Crime and the Protocols Thereto,” emerging role of international institutions.” 2004. https://www.unodc.org/documents/ © 2016 Rice University’s Baker Institute middleeastandnorthafrica/organised-crime/ for Public Policy UNITED_NATIONS_CONVENTION_AGAINST_ AUTHOR TRANSNATIONAL_ORGANIZED_CRIME_AND_ This material may be quoted or reproduced without prior permission, THE_PROTOCOLS_THERETO.pdf. Juan Carlos Gachúz, Ph.D., is the Puentes provided appropriate credit is given to 4. United Nations General Assembly, Visiting Scholar at the Baker Institute the author and Rice University’s Baker “Ninth United Nations Congress on the Mexico Center. He is also a professor at the Institute for Public Policy. Prevention of Crime and the Treatment of Universidad de las Américas Puebla where he Offenders,” 1995. http://www.un.org/docu- teaches international political economy and Cite as: Gachúz, Juan Carlos. 2016. Globalization ments/ecosoc/res/1995/eres1995-8.htm. theories of international security. and Organized Crime: Challenges for 5. See Phil Williams, interview with International Cooperation. Issue brief no. Stewart M. Patrick, “How Globalization Affects 07.06.16. Rice University’s Baker Institute Transnational Crime,” Council on Foreign for Public Policy, Houston, Texas. Relations, May 30, 2012. http://www.cfr.org/

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