ALL THE SHIPS THAT NEVER SAILED: A GENERAL MODEL OF ILLICIT MARKET SUPPRESSION A Dissertation submitted to the Faculty of the Graduate School of Arts and Sciences of Georgetown University in partial fulfillment of the requirements for the degree of Doctor of Philosophy in Government. By David Joseph Blair, M.P.P. Washington, DC September 15, 2014 Copyright 2014 by David Joseph Blair. All Rights Reserved. The views expressed in this dissertation do not reflect the official policy or position of the United States Air Force, Department of Defense, or the U.S. Government. ii ALL THE SHIPS THAT NEVER SAILED: A GENERAL MODEL OF TRANSNATIONAL ILLICIT MARKET SUPPRESSION David Joseph Blair, M.P.P. Thesis Advisor: Daniel L. Byman, Ph.D. ABSTRACT This model predicts progress in transnational illicit market suppression campaigns by comparing the relative efficiency and support of the suppression regime vis-à-vis the targeted illicit market. Focusing on competitive adaptive processes, this ‘Boxer’ model theorizes that these campaigns proceed cyclically, with the illicit market expressing itself through a clandestine business model, and the suppression regime attempting to identify and disrupt this model. Success in disruption causes the illicit network to ‘reboot’ and repeat the cycle. If the suppression network is quick enough to continually impose these ‘rebooting’ costs on the illicit network, and robust enough to endure long enough to reshape the path dependencies that underwrite the illicit market, it will prevail. Two scripts put this model into practice. The organizational script uses two variables, efficiency and support, to predict organizational evolution in response to competitive pressures. The suppression network should become ‘flat’ and ‘market-like,’ in order to rapidly adapt, and it should maintain a deeply embedded social movement backing the campaign. Success allows for progress through the operational script, which predicts changes in the illicit market using economic theory. Initially, the illicit market uses public ‘focal points’ to conduct business. If the suppressor succeeds in injecting unacceptable risk in these focal points through patrolling, the illicit market is forced to take a firm-like ‘black market’ form. The suppressor shifts to iii interdiction in response, and if successful again, they subsidize alternate demand path dependencies. Suppression ends either by the suppressor abandoning the attempt or through a path dependency swap to a benign substitute. I test these theories using historical cases - the British suppression of the Atlantic Slave Trade and the USCG’s ‘Rum War’ during Prohibition. Using a multi-method approach inspired by operations research, I use process tracing, statistical analysis, primary historical research, and social network analysis to evaluate changes in relative efficiency and support over time. I then apply the model to contemporary cases – piracy, human trafficking, money laundering, and drug trafficking – for sensitivity and robustness checks. A large-n analysis provides further scoping. Finally, I apply the model to the policy problem of cyberspace-facilitated modern-day slavery. iv To all the captives who deserved freedom And all the heroes who deserved glory And all the guardians who deserved respect And all those in chains who deserve better v I thank my long-suffering family and friends for their patience over the last few years. Specifically, I would like to thank my father, Sergeant Bruce Blair (Retired), Montgomery County Police Department, my mother Linda, sister Katy and brother-in-law Conner for their time and thoughts about this project, and their support in general. My friends have been a source of endless encouragement, joy and solace over this time. I am especially indebted to Jess, whose keen mind and generous gift of time shaped this project tremendously. I could not have asked for a better experience at Georgetown, and I am thankful for all classmates, faculty and staff that made it so. The members of my committee have shaped my intellectual journey in ways I am just beginning to realize – mostly by way of cringing after re-reading papers I’d previously written. I thank them for their mentorship and inspiration. I am lastly thankful to the Air Force for giving me this opportunity. I will do my best to ensure their investment proves worthwhile. S. D. G. vi TABLE OF CONTENTS SECTION 1: THEORY Chapter 1, Introduction: Wicked Problems and Complex Solutions……………………………. 1 Chapter 2, Literature Review: Theory Foundations…………………………………................. 17 Chapter 3, The ‘Boxer’ Theory: Illicit Market Suppression Theoretical Model……………….. 74 Chapter 4, Applied ‘Scripts’: Testing Strategy & Policy Application Framework….……….. 117 SECTION 2: SLAVE TRADE Section 2 Introduction: All The Ships that Never Sailed……………….……………………... 168 Chapter 5, Grey Market: The Ratchet Strategy………………………………………............... 186 Chapter 6, Black Market: Nothing Ventured, Nothing Gained..……………….……………… 245 Chapter 7, Demand: Sowing Salt in the Sea………………………………..…..........................312 Section 2 Conclusion: Skiing the Avalanche………………………………….…..................... 352 SECTION 3: RUM WAR Section 3 Introduction: From Sugar to Rum…..……………………………………................. 372 Chapter 8, Demand Shift: The Three Black Boxes……………….…………………................ 394 Chapter 9, Grey Market: Evicting Rum Row……………….…………………......................... 438 Chapter 10, Black Market: Racing Sideways………………….………………......................... 500 Section 3 Conclusion: Playing Both Decks………………………………………..................... 574 SECTION 4: APPLICATIONS Chapter 11, Historical Case Conclusions: Circling Back…………………………………....... 587 Chapter 12, Contemporary Mini-Cases: Redlining the Model………………………………... 605 Chapter 13, Large-n Survey: Downshifting and Loose Ends…………………………………. 655 Chapter 14, Conclusion & Policy Applications: A Movement to Defeat a Market………….... 699 APPENDICES Appendix A, Deep Theory: Convergence and Governance………………………………….... 726 Appendix B, ‘Voyages’ Dataset Additions………………………………………..................... 747 Appendix C, The ‘Rum-runnner’ Dataset………………………………………....................... 748 Selected Bibliography, by Topic…………………………………...………………………….. 764 SPECIAL ADDENDA Rum War Capture & Intelligence Report Animation Digital Media vii SECTION 1: THEORY CHAPTER 1, INTRODUCTION: WICKED PROBLEMS AND COMPLEX SOLUTIONS. SUCCESS AND FAILURE IN TRANSNATIONAL ILLICIT MARKET SUPPRESSION CAMPAIGNS. RESEARCH QUESTION: WHY TRANSNATIONAL ILLICIT MARKETS? International Security inherently involves questions of control. In an increasingly interconnected world, that control is expressed in gradients rather than lines. As I write this chapter, more than a half-dozen nations are fully engaged in major shooting wars, none of which involve states openly fighting other states.1 At least a dozen more are embroiled in protracted struggles with illicit criminal networks for functional control of their own state. These sub-state struggles for control are not confined to weak states - despite the enormity of American power, the nation cannot presently consolidate functional control over its southern border, and its southern neighbor is caught up in a civil war with criminal networks. Whether terror networks, criminal networks, insurgent networks or a combination of the three, the afflictions of these states do not fold nicely into Westphalian theories of warfare. Conditions on the ground in these contemporary conflicts have less to do with the positions of bold lines on maps, and more to do with the panoply of actors between the nominal sovereign and the ground truth. Local government, insurgents, hostile powers, criminal networks and the various factions of public opinion interact in complex patterns of cross-cutting interests. This unpredictable cocktail might amplify, dampen, or even reverse the initial intent of the formal authorities on a given issue. If sovereignty is the monopoly of legitimate force within a space, malign violent networks within that space may constitute as much of a threat to sovereignty as any neighboring power. 1 Ukraine, Iraq, Syria, Afghanistan, Israel, Palestine, Somalia, amongst others. 1 These sub-state, non-state and inter-state threats muddle the division between national security and law enforcement. For instance, drug trafficking finances insurgencies while insurgencies provide sanctuary to drug production. Admiral James Stavridis describes this convergence as the “dark side of globalization,”2 where low-level illicit actors of all sorts make use of common global information and transportation architectures, and hence begin to emulate and even partner with each other.3 Mexico’s present drug war, well into the realm of insurgency by now, stands as a particularly regrettable study in this process.4 Sovereignty is not what it used to be, but perhaps it never was. Peter Andreas, in Smuggler Nation, argues that the American Revolution owed much to smuggling networks, both in its origin and in its conduct.5 During the height of the Pax Britannica, the British devoted a considerable portion of their military strength to suppressing the slave trade, yet almost abandoned the endeavor in exasperation after a half-century’s effort. The United States amended liquor suppression into its Constitution, and ended up amending it back out after a decade of frustrating enforcement failures. Due to the lack of a counterfactual, the ever-controversial ‘War on Drugs’ is hard to assess, but it has certainly proved costly for