NO. 66 DECEMBER 2020 Introduction

A Gangster’s Paradise? Transnational Organised Crime in the Covid-19 Pandemic Maria Dellasega and Judith Vorrath

Since the outbreak of the Covid-19 pandemic, certain illegal business practices, such as the trade in counterfeit medical products, have been experiencing a boom. Other typical sources of income for organised crime (OC) temporarily dried up due to lock- downs, travel restrictions and border closures. With the changing infection dynamics and increasingly localised countermeasures, the situation has demanded constant adaptation from many businesses – and criminal organisations are no exception. The effects of the pandemic on OC are not only short-lived, however: the economic, social and political consequences can also impact OC in the medium term. In addition to shifts in illegal (drug) markets, the potential for criminal exploitation could increase as a result of the health crisis and the influence of criminal groups on the state and society could grow. Some of these developments are already visible. The associated risks require increased scrutiny by political decision-makers and law enforcement agencies and more targeted international cooperation.

After the first wave of coronavirus, it did disbursement of aid payments and the not take long for the media to report an strong increase in digital transactions. A increase in illicit business practices. It was large proportion of the criminal offences primarily the trade in counterfeit masks, directly linked to the pandemic fell into the disinfectants or test kits and the fraudulent category of fraud, including online credit sale of alleged treatments or vaccines for card fraud and the forging of websites to Covid-19 that made the headlines. But the divert donations away from real charities. impact of the pandemic went far beyond There was also an increase in online drugs that. trafficking and distribution of child sexual abuse material. However, the health crisis also presented Crime During the First Lockdown OC with challenges: travel restrictions, border closures and lockdowns interrupted It is hardly surprising that, as soon as the illegal supply chains and transport routes. pandemic hit, criminal actors immediately In Mexico, the production of fentanyl and tried to profit from the shortage of medical methamphetamine apparently declined goods, the rapid and often unbureaucratic because chemical precursors could not be

imported from China to the same extent Covid-19. However, the pandemic offered as before. In addition, the of new opportunities for criminal actors, espe- to Europe and the United States cially due to the sharp rise in demand for was hampered at various stages of the sup- certain medical goods. ply chain. It has also been more difficult Yet, the consequences of Covid-19 for for networks and to deliver drugs to the legal economy affect illegal business users, forcing them to make greater use of and trade flows in other ways as well: the postal service or couriers disguised as Criminal actors can, for example, benefit “essential workers” during lockdowns. In from supply shortages in legal markets, some places, the restrictions imposed on which have occurred due to temporary mobility were temporarily accompanied restrictions on the production of certain by a significant decline in offences such as goods during lockdown. These criminals are pickpocketing and burglary carried out by in a position to meet part of the demand, organised criminal groups. Certain criminal largely through counterfeit products. This sources of income, such as human smug- applies not only to pharmaceutical products gling, dried up almost entirely in places; and medical supplies, but to all kinds of subsequently stranding many migrants consumer goods and durables. This busi- along the smuggling routes. ness could also flourish if consumers who However, these developments primarily have lost income as a consequence of the resulted from the restrictive measures taken pandemic increasingly resort to cheaper at the beginning of the pandemic. How counterfeits and smuggled products, such Covid-19 will affect organised crime in the as cigarettes. This situation certainly creates medium term depends, among other things, risks for the end users, who are not neces- on how the infection rates and related sarily aware of the origin of the goods due restrictions continue to develop. That said, to the interconnectedness of legal and far-reaching economic, social and political illegal markets. consequences are already becoming appar- A second field that promises more profits ent. Even if OC phenomena differ signifi- beyond the short term are criminal activ- cantly across regions and countries, related ities in the virtual space. On the one hand, criminal activities are often not only trans- it can be assumed that even when the pan- national, but interconnected across differ- demic subsides, the increase in legal and ent continents. Moreover, illegal and legal illegal services provided online will con- markets are often intertwined in many tinue. On the other hand, advancing digita- ways. Consequently, the ongoing pandemic lisation is generally increasing the potential will inevitably have an impact on cross- for cybercrime, such as online fraud, phish- border OC that goes beyond the short-term ing or attacks with ransomware. For crimi- shifts mentioned above. The four develop- nal networks, this development opens up ments described below pose particular various sources of profit. Because of the risks. lower barriers to access the online market, this potential profit can also be tapped into by new players who do not necessarily fall New Opportunities for Profit into the organised crime category. The situa- tion in the international drug trade is rather Criminal networks usually respond quickly different. First and foremost, due to the fact to new profit opportunities. The trade in that the substances being traded are pro- falsified and substandard medicines and hibited – with a few local or national excep- medical products has long been a profitable tions in the case of cannabis (products) – business (see SWP Comment 25/2019) and the drug trade takes place almost entirely in the nature of related criminal activities as the illegal sphere. well as the modus operandi were not neces- sarily any different after the outbreak of

SWP Comment 66 December 2020

2 Shifts in the International the increased demand for cannabis prod- Drug Trade ucts in Europe during the first lockdown was met more easily because of the much The impact of the pandemic on the drug shorter supply chains. trade is particularly relevant for two Prices could “normalise” quickly if the reasons. First, the drug business remains pandemic were to be effectively contained the most lucrative source of income for OC in Europe and North America. However, worldwide. The retail value in the European interregional drug trafficking will remain Union (EU) alone is estimated at 30 billion hampered, at the very least, for the foresee- euros annually. Second, due to shifts of able future, partly because of reduced inter- power at different stages along the supply national air traffic and tighter controls at chain, there is a risk of longstanding ar- some key borders. According to the Inter- rangements between criminal actors un- national Civil Aviation Organization, 186 ravelling – with possible negative con- airports worldwide were still completely or sequences such as an increase in violence. partially closed by the end of October 2020. International reports, from Europol The established criminal organisations are for instance, regularly point out that OC being very creative when it comes to re- groups – particularly those engaged in sponding to the restrictions on smuggling. the international drug trade – are exploit- For example, it has been reported ing the increase in global trade flows and that drones have increasingly been used to mobility. But what happens if these general transport drugs across the closed U.S.-Mexi- conditions start to falter? can border. As well as using more elaborate The markets for cocaine and heroin in technologies, criminal organisations some- particular are susceptible to disruptions times had to take higher risks because of in interregional transport routes. Although the pandemic conditions, for example by the transactions of the sale can be completed smuggling opiates overland in Central Asia. via the Internet, including the darknet, This is one of the reasons why heroin traf- physical smuggling must first take place fickers currently seem to be increasing the over long distances – in the case of cocaine, transport of drugs to Europe by sea along mainly from the Andean region, and in the the southern route across the Indian Ocean. case of heroin, mainly from Asia, especially Changes can also be observed along the Afghanistan and Myanmar, but also from maritime routes of cocaine trafficking to Mexico and other Latin American countries. Europe. Numerous drugs seizures in Euro- From there, the substances need to be traf- pean ports during the summer suggest ficked to the main destination markets, pri- that these continue to be important entry marily Europe and North America. Appar- points. However, the volumes confiscated ently, the pandemic has had little impact could also indicate that larger quantities on the harvest in the areas where plants of cocaine are being transported in in- are traditionally grown to produce drugs; dividual shipments. Most notably, the in fact, it is generally expected that the newly imposed or extended measures economic crisis will lead to an expansion for fighting the pandemic are likely to im- of cultivation. Nevertheless, the United pede the further distribution of cocaine Nations Office on Drugs and Crime (UNODC) over land. has observed rising prices in Europe and Such developments could also affect the a decline in the quality of drugs such as consumption in key markets such as Europe cocaine. It seems that supply shortages have or the USA. With rising prices, consumers forced some users to switch to prescription might increasingly use synthetic opiates, drugs. With regard to heroin, Europol which can be produced closer to the market also concluded, based on rising prices and instead of heroin. Cocaine competes with declining quality, that this drug was less new psychoactive substances and (meth)am- available on the key market. In contrast, phetamines, which are also produced in

SWP Comment 66 December 2020

3 Europe. With the reintroduction of curfews tion as well as taxes on opium poppy culti- and closure of venues in Europe and else- vation and the trafficking of drugs. where in autumn 2020 and with economies However, the effects of the pandemic on barely recovering, it will take some time the drug trade are not limited to cultivation before the demand for recreational drugs and transit areas. A report on the impact such as cocaine picks up again. After the of Covid-19 on European drug markets con- 2008 financial crisis, for example, users cludes that criminal transactions along the increasingly switched to cheaper synthetic supply chain in Europe are taking place in or mixed drugs. Accurately predicting fu- an increasingly volatile environment and ture demand is difficult. However, UNODC that this instability has already led to in- reported a sudden drop in the price of creased violence among mid-level suppliers opium in Myanmar in the summer, and and distributors. Even before Covid-19, there falling cocaine prices, especially in . were indications of increasing competition This may be a sign of declining demand, in the international cocaine trade, triggered, but also disrupted supply chains. among other things, by new groups entering The international trade in drugs will the market alongside the dominant Colom- remain very profitable. However, restric- bian and Italian criminal organisations. If tions related to Covid-19 and the economic the pandemic lasts for a longer period, in- consequences of the pandemic will require ternationally well-connected organisations constant adjustments by the criminal actors may have important advantages. This espe- involved. The uncertainties on the market cially applies to those that control the entire already seem to have led to stronger, even supply chain from the cultivation areas to predatory competition in some places. In the destination markets, such as the Alba- and Mexico, for example, nian organisation Kompania Bello, which an increase in violence between criminal was targeted by a European law enforce- groups has been observed, which is attri- ment operation in September. Other groups buted to the struggle over a shrinking core could engage in more violent crime when market and access to trade routes. Despite faced with reduced profits. Thus, pandemic- the lockdown, the homicide rate in Mexico related shifts in the international drug trade reached a new record high in March, could also affect European internal security. and violence against civilians has also increased. Violent clashes may also be fuelled by the fact that some groups are Vulnerability to Criminal experiencing declining returns from Exploitation Increases protection rackets in territories under their control. At the very least, some groups Almost a year after the outbreak of Covid- are trying to diversify their sources of 19, it is already apparent that social resili- income, such as gangs in Central America ence to OC is declining as a result of the entering the cocaine and cannabis trade as health crisis. Certain groups of the popula- a sideline. Shifts in the drug trade could tion are becoming more vulnerable to ex- also have serious effects in cultivation ploitation by criminal organisations. areas. During the lockdown in , The World Bank estimates that Covid-19 violence against civilians has been will increase the number of people living in concentrated in certain provinces, for poverty by about 115 million. People from example in Cauca, where various criminal middle-income countries, those living in organisations are fighting over the control cities and those with a higher level of edu- of the growing areas. Market changes could cation, in particular, will slide into poverty even have consequences for the peace because of the pandemic. As a consequence, process in Afghanistan, as the Taliban’s they are at a higher risk of being recruited sources of financing include heroin produc- by criminal groups and becoming victims of sexual or labour exploitation.

SWP Comment 66 December 2020

4 Previous experience shows that human In general, people who are smuggled trafficking increases after the outbreak of across borders are also at higher risk of an epidemic. The UN Special Rapporteur becoming victims of human trafficking. on Human Trafficking stated in October Overall, Covid-19 has exacerbated the situa- that “more people are at risk [...] especially tion for migrants along the smuggling routes. in the informal economy”. Traffickers could The 85 percent drop in irregular migration easily take advantage of the desperate situa- at European borders from March to April tion many people find themselves in. Many 2020 was primarily due to the temporary people in informal employment have simply interruption of transport routes. The major- lost their income during the pandemic. In ity of migrants who reach Europe from the absence of government aid, there is a North Africa use the services of organised real danger that they will turn to criminal smuggling networks. Given the changing organisations for support. Children are also conditions, these networks are demanding at greater risk. For example, in Colombia, more money from migrants and are more as many children already joined organised likely to exploit them or sell them on for criminal groups in the first half of 2020 exploitation. as in the whole of 2019. The long school In European countries, the recession closures in some places and the additional is expected to increase the potential for time children are spending online at home labour exploitation in sectors such as have also significantly increased the threat the hospitality industry, for instance. In the of child sexual abuse via the Internet. Euro- field of prostitution, many established pol expects a longer-term increase in such criminal groups have quickly found ways cases and a growing demand for online of adapting their business model during material of this type. the lockdowns. But for those who are forced With the pandemic, the detection of to work in these sectors, the more difficult human trafficking has also become more business environment will often mean they difficult as its impact on public life and earn less while the conditions will tend to mobility has pushed crime further under- become even more dangerous and humili- ground. Moreover, the assistance usually ating. In Italy, thousands of women from provided to victims has been partly sus- Nigeria who were coerced into working in pended or reduced. the sex business have been without income Another negative impact is that many of because of lockdowns and continue to be the millions of migrant workers worldwide harassed by debt collectors. The growing have been stranded since the start of the potential for various forms of exploitation pandemic. In Lebanon, countless domestic by criminal groups thus requires more workers from African countries have simply robust responses and greater prevention been thrown out on the street by their em- efforts within the EU as well. ployers due to the economic crisis, which was further exacerbated by the pandemic. Often left without identity papers or money, Widening Scope for Influence of many cannot return home and only very Criminal Groups few receive support from social services or embassies. In the Gulf region, reported The consequences of the pandemic could cases of labour exploitation have tripled also strengthen the influence of criminal since the beginning of the pandemic. organisations in the public sphere. Firstly, Migrants are regularly deprived of wages, OC will have more opportunities to infil- while their debts to pay recruitment fees trate the legal economy. The economic and living expenses continue to rise. In ramifications of the lockdowns and restric- such situations, workers are easy targets tions open up additional opportunities for (further) exploitation. for OC to support or completely take over weakened companies – for example in the

SWP Comment 66 December 2020

5 transport, catering or tourism industries. Criminal organisations that already have Particularly in contexts where government a territorial stronghold and provide some aid programmes are not effective, such as in kind of governance will react differently to the informal sector, OC groups can step in the crisis than loose networks with no local as convenient and unbureaucratic lenders. power base. For example, various OC groups This not only facilitates money laundering, provided their own form of support and but creates dependencies and loyalties in security measures in the fight against the different segments of the population. pandemic. Criminal organisations portrayed Second, criminal organisations also try themselves as “benefactors” in the commu- to access financial resources from official nities they controlled. A good illustration assistance programmes themselves. For of this is the Sinaloa Cartel in Mexico, where example, the Calabrian mafia ‘Ndrangheta one of the daughters of El Chapo, the for- has tried to obtain Italian aid through com- mer leader of the cartel, distributed aid panies in the steel sector. Transparency packages in its name to people in need – International has warned that organised printed with images of her father. Also in criminals are likely to take advantage of the favelas of , criminal gangs national and European aid, such as the EU depicted themselves as guarantors of public Recovery Fund. The increased and acceler- safety and health care. By sending text mes- ated disbursement of aid funds provides OC sages to the residents, they made it clear a wide range of opportunities for embezzle- that the government forces had failed to ment, bribery or to take on public contracts, combat the virus and that the members of especially in the health sector that is cur- the groups themselves would implement rently so important. This not only allows health protection measures, even using criminal organisations to increase their force. More recently, various mafia groups profits, but also enables them to access in Italy have been mobilising against the public funds and sectors. Depending on renewed lockdown and attempting to stir the environment, this can lead to new links up distrust against the Italian state. How- and dependencies between criminal and ever, it seems relatively unlikely that the state actors. pandemic will enable new groups to domi- Third, many places are likely to see an nate and govern particular territories that increase in corruption as a result of the they have not previously controlled. pandemic. Therefore, criminal organisa- tions may find it even easier to conduct their illegal operations. In the shadow of Not a Gangster’s Paradise, the Covid-19 crisis, arrangements between But Increased Risks the political and criminal spheres – for example political decision-makers protect- With the spread of Covid-19 and related ing certain criminal groups in exchange for countermeasures, the conditions for OC financial support in election campaigns – have changed, but they have not necessarily could be strengthened in some countries. improved across the board. In the short Given the serious economic consequences term, new opportunities for profit are ac- of the pandemic, this is especially likely companied by logistical obstacles and in- in some of the world’s fragile states. creased risks at different points along the How these three aspects interact and smuggling routes. The world will probably how much OC can actually expand its in- not become a “gangster’s paradise”, but fluence on state and society, will vary there are signs of developments that could greatly depending on the context. A state have a negative impact on state and human that was already weak before the pandemic security. These developments depend not will presumably continue to lose legitimacy only on the further course of the pandemic among its population if criminal groups and the measures taken against it, but also efficiently assume state-like functions. on the economic, social and political con-

SWP Comment 66 December 2020

6 sequences of the crisis. As these vary region- trafficking. From Colombia and Haiti to ally and nationally, different responses are Afghanistan and Mali, shifts in illicit trade also needed from Germany and the EU. could become a factor in fragile peace and In some areas, the EU can take direct stabilisation processes in which Germany action internally, for example by addressing and the EU are involved in various ways. “enablers” of OC such as corruption or International cooperation in combating money-laundering. Western countries can OC is becoming more important than ever, also expect OC to increasingly infiltrate even beyond these aspects. In the medium the legal economy and to divert funds from term, the financial situation of many states Corona emergency plans and financial assis- (including those in the West) will be strained. tance programmes. To prevent this, best It is rather unlikely that law enforcement practices of due diligence, transparent allo- agencies will be able to “upgrade” enough cation processes and real-time audits will to keep pace with the changes in OC, espe- remain crucial, as has been emphasised by cially in terms of IT expertise and technical UNODC. The lockdowns have not strength- equipment. The reduction or temporary ened criminal organisations on the whole. suspension of social services as well as re- The Neapolitan Camorra, for example, has strictions affecting civil society initiatives – apparently become “hungrier” rather than whether directly as a result of the pandemic stronger under the conditions of the pan- measures or in the medium term as a result demic. Such actors will increasingly exploit of declining budgets – will also have a any weakness of the state, the judiciary and negative impact. civil society to improve their own position. It will therefore become even more cru- In many cases, however, we need to look cial to not only cooperate across borders in beyond Europe – if only because the con- the area of law enforcement, through the sequences of Covid-19 are affecting prac- exchange of information and administra- tically all regions of the world and the EU tive assistance, but also to develop joint is connected to them in many ways through approaches for responding to OC at the po- illegal markets and OC activities. Seizures litical, civil society and private sector level, of large cocaine shipments, such as the across countries and regions. one in October in the port of Antwerp, are Global forums are not necessarily the an indicator that global flows have not best suited starting point for this. Although been interrupted. To some extent, however, this year’s conference of the parties to there seems to have been a change in the the UN Convention against Transnational means of transport, routes and modus took place in a hybrid operandi. format, there was a lack of opportunities This makes a continual analysis of rele- for informal consultation and the participa- vant shifts along the supply chain even tion of non-governmental organisations. more important. Another question that The UN Crime Congress, postponed to deserves attention is the extent to which March 2021, can provide a framework for legal international trade will change after discussing the new challenges posed by the pandemic due to a possible increase in Covid-19. But it is not to be expected that “de-coupling” and what consequences this the Congress will provide strong momen- would have for illicit interregional trade. tum, if only because of the lack of consen- Something else that should be closely moni- sus on politically sensitive issues. tored in the context of the drug trade is the Cooperation with third countries and possible increase in violence and instability neighbouring regions is therefore even if changes in criminal groups’ arrange- more relevant for Europe. Germany and the ments and routes prove to be more long EU are linked with other parts of the world term. The effects of such upheavals could through OC in many ways. First, a better also manifest themselves in conflict areas understanding of the nature of these links that are cultivation or transit sites for drug and the interests of the affected states is

SWP Comment 66 December 2020

7 needed. Second, security, foreign and devel- opment policy priorities must be coordinated with action for combating and preventing OC internally. For example, the increased potential for criminal exploitation as a result of the pandemic, requires special attention of politicians, law enforcement, the judiciary and social services across Europe. At the same time, the authorities along the trafficking routes to Europe need © Stiftung Wissenschaft to clearly identify cases of human traffick- und Politik, 2020 ing, despite its overlap with the smuggling All rights reserved of migrants. As early as 2018, Interpol com- mented in a report on OC in West Africa This Comment reflects that “exploitation is often overlooked in the authors’ views. favour of issues of illegal migration, some- The online version of times leading to the re-victimization of this publication contains those who have been smuggled across bor- functioning links to other ders”. This problem is likely be exacerbated SWP texts and other relevant by the pandemic. Here the EU should set sources. clear priorities in its cooperation with third SWP Comments are subject countries to combat human trafficking to internal peer review, fact- and exploitation in a more targeted man- checking and copy-editing. ner. Interregional programmes such as For further information on the Organized Crime for West Africa Region our quality control pro- (OCWAR) projects recently launched by the cedures, please visit the SWP website: https://www.swp- EU with separate components on traffick- berlin.org/en/about-swp/ ing, cybercrime and money laundering, are quality-management-for- a useful approach. A continuous exchange swp-publications/ of concepts, instruments and best practices in dealing with OC across the silo structures SWP of internal and external departments and Stiftung Wissenschaft und Politik policies would also be a step forward. Such German Institute for an exchange will be all the more relevant International and when it comes to accurately identifying the Security Affairs dangerous effects of the pandemic on trans- national OC and effectively countering them Ludwigkirchplatz 3–4 10719 Berlin under more difficult circumstances. Telephone +49 30 880 07-0 Fax +49 30 880 07-100 www.swp-berlin.org [email protected]

ISSN 1861-1761 doi: 10.18449/2020C66

(English version of SWP-Aktuell 93/2020)

Maria Dellasega was an intern in the International Security Research Division from June to September 2020. Dr. Judith Vorrath is a Senior Associate in the International Security Research Division.

SWP Comment 66 December 2020

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