Edited by Michael Miklaucic and Jacqueline Brewer With a Foreword by Admiral James G. Stavridis, USN Published for the Center for Complex Operations Institute for National Strategic Studies By National Defense University Press Washington, D.C. 2013 Opinions, conclusions, and recommendations expressed or implied within are solely those of the contributors and do not necessarily represent the views of the Defense Department or any other agency of the Federal Government. Cleared for public release; distribution unlimited. Portions of this book may be quoted or reprinted without permission, provided that a standard source credit line is included. NDU Press would appreciate a courtesy copy of reprints or reviews. First printing, April 2013 NDU Press publications are sold by the U.S. Government Printing Office. For ordering information, call (202) 512–1800 or write to the Superintendent of Documents, U.S. Government Printing Office, Washington, D.C. 20402. For GPO publications on-line, access its Web site at: http://www.access. gpo.gov/su_docs/sale.html. For current publications of the Institute for National Strategic Studies, consult the National Defense University Web site at: http://www.ndu.edu. Contents Foreword vii James G. Stavridis Acknowledgments xi Introduction xiii Michael Miklaucic and Jacqueline Brewer Part I. A Clear and Present Danger Chapter 1 3 Deviant Globalization Nils Gilman, Jesse Goldhammer, and Steven Weber Chapter 2 15 Lawlessness and Disorder: An Emerging Paradigm for the 21st Century Phil Williams Chapter 3 37 Can We Estimate the Global Scale and Impact of Illicit Trade? Justin Picard Part II. Complex Illicit Operations Chapter 4 63 The Illicit Supply Chain Duncan Deville Chapter 5 75 Fixers, Super Fixers, and Shadow Facilitators: How Networks Connect Douglas Farah Chapter 6 97 The Geography of Badness: Mapping the Hubs of the Illicit Global Economy Patrick Radden Keefe Chapter 7 111 Threat Finance: A Critical Enabler for Illicit Networks Danielle Camner Lindholm and Celina B. Realuyo v Contents Chapter 8 131 Money Laundering into Real Estate Louise Shelley Part III. The Attack on Sovereignty Chapter 9 149 The Criminal State Michael Miklaucic and Moisés Naím Chapter 10 171 How Illicit Networks Impact Sovereignty John P. Sullivan Chapter 11 189 Counterinsurgency, Counternarcotics, and Illicit Economies in Afghanistan: Lessons for State-Building Vanda Felbab-Brown Part IV. Fighting Back Chapter 12 213 Fighting Networks with Networks David M. Luna Chapter 13 233 The Department of Defense’s Role in Combating Transnational Organized Crime William F. Wechsler and Gary Barnabo Chapter 14 243 Collaborating to Combat Illicit Networks Through Interagency and International Efforts Celina B. Realuyo About the Contributors 269 vi Foreword Admiral James G. Stavridis, USN llicit networks affect everyone in our modern, globalized world. From human trafficking Iin Eastern Europe to drug smuggling in East Asia, to the illicit arms trade in Africa, to terrorist cells in East Asia and insurgents in the Caucasus, transnational illicit networks have tentacles that reach everywhere. The trade in illegal narcotics is perhaps most worrisome, but of growing concern is the illicit trafficking of counterfeit items, weapons, natural resources, money, cultural property, and even people by shrewd, well-resourced, and nefarious adversaries. I have experience combating these threats personally at the tactical, operational, and stra- tegic levels. As a young naval officer on a variety of ships, I spent a fair amount of time patrolling the global commons where transnational criminals in the guise of pirates and drug smugglers proliferate. I was in the Pentagon on 9/11 and personally experienced the global reach of mod- ern terrorism. Later on, when I commanded U.S. Southern Command (USSOUTHCOM), one of my subordinate commands was Joint Interagency Task Force–South in Key West, Florida, a multinational and interagency/interministerial command that counters drug traf- ficking in the Western Hemisphere. I also experienced the pernicious effects that transnational crime has on our friends as it ranges throughout the entire Western Hemisphere. After leaving USSOUTHCOM to become commander at U.S. European Command (USEUCOM), I saw that Europe was also challenged by the same types of transnational crime. In response, I stood up the Joint/Interagency Counter Trafficking Center in Stuttgart, Germany, designed to counter transnational criminal networks in cooperation with our international partners. When I took command of USEUCOM, I also became the Supreme Allied Commander, Europe (SACEUR). As SACEUR, I command Operation Active Endeavor, which counters trafficking in the Mediterranean, and OperationOcean Shield, which is part of the international counterpiracy efforts off the Somali coast. In addition, we have pioneered responses to cyber threats. At the Supreme Headquarters Allied Powers Europe, we have the North Atlantic Treaty Organization Computer Incident Response Center, and at USEUCOM, we are taking steps to create a subunified cyber command that will have links to both U.S. Cyber Command in the United States and USEUCOM in Germany. All of these organizations were designed to facilitate a whole-of-government approach, where all elements of national power work together in order to address emerging threats. Eventually, once societies understand the nature of the threats facing them, they will hopefully mobilize nongovernmental assets, adopting a “whole of society” approach. When all of these vii Foreword elements work together, governmental and nongovernmental groups can join international regional and global groups to form a “whole of international society” approach, allowing us to close the seams that exist between nations and regions. Only then will we be able to close these illicit transnational networks. These networks have taken advantage of modern advances in communications and transportation to globalize. Narcotraffickers in the Andean Ridge, for instance, have expanded operations as far as their markets in the United States and Europe. Illegal arms merchants have expanded their operations around the world. Human smugglers have moved their slaves from underdeveloped countries to sex operations throughout the developed world. And, of course, we have all seen the global reach of modern transnational terrorism. No one is immune from this insidious threat. It will take a combination of initiatives to defeat the threats created by illicit criminal networks. These transnational organizations are a large part of the hybrid threat that forms the nexus of illicit drug trafficking—including routes, profits, and corruptive influences—and terrorism, both home grown as well as imported Islamic terrorism. With the latest wave of globalization allowing for even more movement of people, goods, and information, these actors have spread their tentacles wider and deeper, breaking new ground. At the same time, they have demonstrated an ability to adapt, diversify, and converge. This has allowed them to obtain vast resources and to continuously reorganize themselves to stay ahead of efforts to combat them. They have achieved a degree of globalized outreach and collaboration via networks, as well as horizontal diversification. Criminal networks have the advantage of three primary enablers. First are the huge profits realized by transnational criminal operations. Second is the ability of these organizations to recruit talent and reorganize along lines historically limited to corporations and militaries. The third is their newly developed ability to operate in milieus normally considered the preserve of the state, and often referred to as the diplomatic, informational, military, and economic elements of national power. In the past, although some corporations or cities wielded some of these elements of power, for the last 200 years or so, it was mainly states that did. Transnational criminal elements have recently been able to generate these state-like capabilities. Through resource development and reorganization, they now rival the capabilities of many states and overwhelm the capabilities of others. Access to large-scale resources is made possible by the incredible amount of money that transnational crime generates. This in turn enables other criminal activities. Criminals suborn rule of law actors within countries and are able to operate across borders. The end result is corruption. They can often use these resources to train and equip themselves better than those who seek to halt them. For example, the narcoterrorists in Mexico are often better armed than the government forces that they face. Their communications networks are also world class because they can afford the best equipment. These organizations have also adapted their recruiting and organizing. Drug cartels have been recruiting trained special operations forces and educating lawyers and accountants. Mara Salvatrucha (MS-13) has also adopted a technique of telling its more promising new members to avoid getting tattooed so that they can better blend into the societies they operate in. These organizations adapt in order to take advantage of the emerging situations that they viii Foreword find themselves in. The Revolutionary Armed Forces of Colombia, for instance, started out by guarding airfields for the cartels and quickly realized that they could take over the trade themselves. Over the space of a few years, they vertically integrated, morphing from terrorists to narcoterrorists. Other organizations