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Crime, Law & Social Change 37: 311355, 2002.

2002 Kluwer Academic Publishers. Printed in the Netherlands.311

Anticipating organized and transnational crime

PHIL WILLIAMS & ROY GODSONUniversity of Pittsburgh, The Matthew B. Ridway Center for International Security Studies,

4G23 Forbes Quadrangle, PA 15260, Pittsburgh, U.S.A.

Abstract. This paper seeks to identify ways in which governments and law enforcement

agencies might enhance the effectiveness of their efforts to anticipate organized crime. It

starts by defining what is meant by anticipation, and differentiating it from the much more

difficult task of prediction. The analysis then identifies some of the methods and models

that are generally accepted as part of the existing knowledge base on organized crime and

highlights how these can be used to anticipate future developments and to develop warnings

about how criminal organizations might evolve and behave in the future. The knowledge

base includes political, economic, sociological, strategic, and composite models and showshow they provide a foundation for anticipating future developments in organized crime. The

models are either models about the kind of environment in which organized crime flourishes or

models about the ways in which organized crime behaves. What we do, in effect, is to identify

and elucidate models in ways that provide propositions about the kinds of developments,

innovations or changes we might see in organized crime (both domestic and transnational)

in the future. Underlying indicators provide warning about future manifestations of organized

crime. Anticipating these manifestations provides a basis for appropriate preventive, defensive

or mitigating strategies. Finally, the article provides some examples of specific techniques of

information collection and intelligence analysis that might assist in this task of anticipation.

Introduction

Organized crime has reached levels in the post-Cold War world that have

surprised even close observers. Many criminal organizations have not only

become transnational in scope but also exhibit a degree of flexibility and

adaptability in methods and modes that poses considerable challenges for

intelligence, law enforcement agencies, and society at large. Unfortunately,

there is no quick and simple methodology for anticipating the major activities

of criminal organizations, operational methods for moving various forms of

contraband, innovations in money laundering, the development of new mar-

kets, or the measures taken by criminal organizations to counter law enforce-

ment. Many criminal organizations are adept at concealment and disguise, at

presenting a moving and evasive target for both law enforcement agenciesand rivals in the criminal world. This is hardly surprising; if they fail in these

areas then they often go out of business. What this means, however, is that

the task of anticipating organized crime is particularly difficult.


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312 PHIL WILLIAMS AND ROY GODSON

It is in this area that social science and academic analysis can provide

assistance to governments and the private sector, especially at the intelligence

and strategic planning levels but also at the operational level. There is a tend-

ency particularly among government officials to regard the term academic

as a synonym (or euphemism) for theoretical, abstract, irrelevant, or

impractical. The argument, here, however, is that social science theories,

concepts and models, if used judiciously and with an awareness of their lim-

itations, have significant utility. They can help to inform policy making and

facilitate the development of strategies that are also more pro-active than is

often the case in law enforcement. In effect, the earlier the warning the less the

policy and law enforcement response has to be a scramble to catch up, and the

greater the prospect that effective and coherent strategies can be developed.

Among the developments it is important to anticipate are the following:

The overall level and scope of organized crime within countries, within

particular regions, and at the global level. As a subset of this, it is ne-

cessary to be concerned with possible redistribution of criminal activity

from one region to another, perhaps because the opportunities are greater

and the risks are lower.

A continued increase in the level of transnational organized crime, i.e.

crimes that involve the crossing of border by the criminals themselves,

the products that they are supplying, or the proceeds of their activities.

The relationships between criminal organizations and government of-

ficials which can be instigated by either party but are established and

maintained for the benefit of both. Symbiotic relations of this kind

sometimes termed the political-criminal nexus have been important in

the rise of organized crime in a number of countries and are also one ofthe biggest obstacles to effective action against organized crime.

Changes in the pattern of criminal activities, both domestic and transna-

tional, including the development of new illicit market niches or the

supply of new products and services.

Strategies that transnational criminal organizations use in their efforts to

counter law enforcement and to manage the risks they face as a result of

law enforcement activities. These include efforts by organized crime to

infiltrate government and law enforcement both directly and through the

creation and cultivation of corruption networks.

Efforts by organized crime to infiltrate businesses and financial insti-tutions. Which businesses are particularly vulnerable and what are the

characteristics that make them so? What are the critical entry points into

business that need to be protected?1


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ANTICIPATING ORGANIZED AND TRANSNATIONAL CRIME 313

Cooperative relationships among local, regional, and global criminal or-

ganizations that provide multiplier effects for criminals and make the

task of law enforcement even more formidable.

The rise and fall of criminal organizations. There is a constant dynamic

to the criminal world with some groups in decline and others emer-

ging. This can have important implications for the kind of expertise that

law enforcement needs in terms of languages, cultural understanding,

diversity of recruits etc.

The results of success. What might be the unintended results of success-

ful counter strategies? Are there ways in which we might be worse off

as a result of our successes, keeping in mind the pillow or balloon

effect increasingly familiar in the drug trafficking business?

This is not intended as an exhaustive list; it serves merely to identify some

of the dynamics of organized crime, operating both domestically and at a

transnational level, that require greater illumination and, where possible, an-

ticipation.This paper starts by defining what is meant by anticipation, and differen-

tiating it from the more difficult task of prediction. The paper then identifies

some of the methods and models that are generally accepted as part of

the existing knowledge base on organized crime and highlights how these

can be used to anticipate future developments and to develop warnings about

how criminal organizations might evolve and behave in the future. The know-

ledge base includes political, economic, sociological, strategic, and compos-

ite models and shows how they provide a foundation for anticipating future

developments in organized crime. The paper identifies and elucidates under-

lying conditions that provide propositions about developments, innovations,

or changes in organized crime, and future manifestations of organized crime.Anticipating these manifestations provides a basis for appropriate preventive,

defensive or mitigating strategies. Finally, the paper provides some examples

of specific techniques of collecting information and intelligence that might

assist in this task of anticipation.

What is meant by anticipation

The Oxford English Dictionary defines the verb anticipate as: to seize or take

possession of beforehand; to use in advance; to spend (money) before it is at

ones disposal; to take up or deal with (a thing) or perform (an action) before

another person or agent has had time to act, so as to gain an advantage; to

deal with beforehand, forestall (an action); to be before (another) in acting, toforestall; to observe or practise in advance of the due date; to cause to happen

earlier, accelerate; to occur earlier, to advance in time; to take into consid-

eration before the appropriate or due time; to realize beforehand (a certain


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future event). Anticipation is, of course, related to these various meanings of

anticipate, but is also defined as intuitive preconception, a priori knowledge,

precognition, and presentiment.

The notion of anticipation that we are emphasizing here involves develop-

ing information and analysis that enables governments and non-state agencies

to be prepared for new directions in organized crime, and in so doing to have

an enhanced capacity to take precautionary or defensive measures in order to

gain an advantage and in some cases to forestall or pre-empt these new dir-

ections or initiatives. Effective anticipation requires an effective knowledge

base, makes good use of underlying warning indicators, and requires intelli-

gence that is both timely and actionable. While this might seem obvious, what

is striking about strategy to counter organized crime in the past is that it has

rarely succeeded in moving beyond the reactive. Usually, it has been running

to catch up with the criminals. There are good reasons for this including the

reluctance in law to take action until a crime is committed and the difficulty

of justifying action against future challenges when there are already manyexisting problems, challenges and cases to deal with. Nevertheless, there

are also some less positive reasons, including the focus on individual cases

rather than the overall phenomenon under investigation, a clear disdain for

strategy in some government circles, and a reluctance to blur or cross the

traditional distinctions between social science research, intelligence, and law

enforcement.

Difficulties of anticipating organized crime

Anticipation, whether of nature, or man-made initiatives is inherently prob-

lematic. When trying to anticipate organized crime and transnational organ-

ized crime, the problems are compounded by the capacity of criminal organ-

izations to conceal their activities within a variety of licit transactions, to act

rapidly in order to exploit new opportunities, and to reconfigure and recon-

stitute organizational structures in response to law enforcement successes.

Consequently, our propositions about future behavior are conditional or con-

tingent rather than scientific laws. We are not offering a crystal ball that can be

used for predicting new criminal organizations, new modalities of organized

crime, or new strategies implemented by criminal enterprises. Nor is there

any suggestion that we can develop absolute predictions based on the identi-

fication of necessary and sufficient conditions for a particular development to

occur. Social phenomena are often too complex for social science to emulate

the natural sciences. However, careful use of models and extrapolations frompast experiences enable us to contend that if certain conditions are present

then there is a serious probability that particular kinds of developments will

occur. By taking existing knowledge about organized and transnational crime


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much of which is encapsulated in so-called models and using this as a

framework for thinking systematically and imaginatively about the future it

is possible to make contingent propositions about the further evolution of

organized crime.

Models and their implications

In recent years there have been critical failures in anticipating the expansion

of organized criminal activities in many places such as Mexico, Russia, and

China. Yet such failures encourage the development of both more knowledge

and more refined models that, if used with care and judiciousness, can provide

a significant starting point for extrapolation and successful anticipation of

future developments. Accordingly, this section identifies models of organized

crime and then extrapolates from them contingent propositions about future

behavior. There are various ways of classifying the existing models or frame-works at the national and transnational levels. Here they are organized under

five major headings: political, economic, social, strategic, and composite or

hybrid models. Variants of each model also are discussed. The models are

of two kinds: models of conditions political, economic, and social, that

are conducive to the expansion of organized crime, and models about how

organized crime operates. In effect, they cover both the attributes of the en-

vironment and the attributes of the actors. Some are well-established; others

more recent. We have chosen them, however, on the basis of their utility in

helping us anticipate future developments in organized crime.2 In each case,

we provide a succinct summary of the central ideas and hypotheses embed-

ded in particular models or approaches and a series of propositions regarding

future directions and activities of criminal organizations that stem from these

models.

Political models

Weak states

Political models revolve around the nature of the state and political institu-

tions. Critical dimensions appear to be the strength or weakness of the state,

the extent to which its government is authoritarian or democratic, and the

degree of its institutionalization of the rule of law. 3 Strength and legitimacy

of the state are among the most important determinants in the work of several

authors. These include Francisco Thoumi who argues that Colombia becamecorporate headquarters of the cocaine trade because the weaknesses of the

state gave Colombian drug traffickers an important competitive advantage

over their counterparts in Peru and Bolivia.4 Colombia had an extremely


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polarized political system that was characterized by a high level of viol-

ence. The low level of effectiveness and legitimacy of the state meant that

drug trafficking organizations could operate with a high level of impunity.

During the 1990s, in particular, the lack of financial support for election

campaigns provided a perfect way for drug trafficking and organized crime

groups to obtain access to the political elite and to develop and perpetuate

political-criminal symbiotic relationships.

Another perspective on the weakness theme was provided in the analysis

by Diego Gambetta to explain the rise of the Mafia in Sicily.5 He suggests that

mafias come into existence in order to provide private protection and contract

enforcement. They arise where the state itself is incapable of providing such

protection and, in this sense, are a necessary evil. The Mafia in Sicily, in

his view, came to monopolize the business of providing private protection

and contract enforcement, filling the vacuum and offering services that in

most other countries were provided by the state. Organized crime evolved

from there, and in the period after the Second World War developed a sym-biotic relationship with the Christian Democratic party that was based in part

on Mafia help in mobilizing votes during elections. The political-criminal

nexus in Italy was a major factor in allowing the Mafia not only to remain a

deeply entrenched part of Italian social, economic and political life but also

to operate with a high degree of impunity at least until the 1980s.

Strong regimes becoming weak

While weak states have long been associated with the rise of organized crime,

there kas been a more recent recognition that strong authoritarian regimes can

also act as incubators for organized crime. These regimes are generally char-

acterized by one-party rule, a lack of oversight of the ruling elite, an absence

of checks and balances and civil society, and the prevalence of patron-client

relations. The conditions for corruption described by one analyst as mono-

poly plus discretion minus accountability are almost always present in

authoritarian states and exploited by officials who often extend their corrupt

activities into links with criminal organizations.6 In effect, this kind of state

encourages the development of organized crime but within limits that are

established, defined, and maintained by state authorities. Criminals tend to be

at the service of the political establishment rather than a threat to it. Tradi-

tionally, Mexico and the former Soviet Union approximated this situation.7

Both had organized crime, but it was muted rather than overt, its realm of op-

erations circumscribed by the power and authority of states with strong socialcontrol mechanisms. There were collusive relationships between criminals

and state or party officials but they were under the control of the officials

rather than the criminals.


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With the transition from authoritarian to more democratic forms of gov-

ernment in the 1990s, however, not only was the existing pattern fundament-

ally altered but also this controlled equilibrium was destroyed. The trigger to

the upsurge of organized crime was a weakening of state structures that seems

to be an inevitable accompaniment to the transition process. In the Russian

case, the collapse of the Soviet state with its well-established mechanisms

for social and political control, and the moves towards democratic structures

and procedures, changed the power relationship between officials and the

criminals. Without a strong enforcement apparatus to ensure the criminals

were kept within existing boundaries, organized crime was able to expand the

scope of its activities in ways that were unprecedented. Symbiotic or collusive

relationships remained, but the establishment was no longer the dominant

partner. The change was reflected in patterns of corruption which were

no longer intended primarily to enrich the nomenklatura but to ensure the

criminals were able to act with impunity. The result, of course, was a major

expansion of organized crime in Russia and other Newly Independent States.The process was accelerated by hyper-inflation, unemployment and a gen-

eral decline in economic conditions which provided both incentives and pres-

sures for criminal activity as a means of survival and advancement in a new

economic environment. Indeed, the distinctive feature of the post-Soviet states

was their dual transition from authoritarianism to democracy and from a

centrally-controlled economy to freer markets. With political change accom-

panied by economic reform the absence of legal and regulatory frameworks

for new businesses provided major opportunities for organized crime to ex-

pand the domain of its activities. The result and this is where there is an

interesting parallel with the Sicilian experience is that criminal organiza-

tions in Russia and elsewhere in the Newly Independent States helped fillthe regulatory vacuum. The need for protection, debt collection, and con-

tract enforcement for business provided a whole new set of opportunities and

functions for Russian criminal organizations. With the state failing to provide

what was needed, organized crime came to play a significant role in the Rus-

sian economy. At the same time, the lack of safeguards in the privatization

process ensured that criminals and officials were the major beneficiaries.

There are variations on this theme in Mexico. Political corruption and the

system of bribery and corruption have been present at least since Spanish rule.

These conditions continued in the 20th Century, during most of which the PRI

had a virtual monopoly of power. Politics and society during this period were

based on patron-client relations and the relationship between government and

organized crime accorded with this general pattern. Leaders of the govern-ment and ruling party used organized crime for personal enrichment and to

provide funding for the social control apparatus. In turn, they allowed organ-


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ized crime to operate with a high degree of immunity. Lupsha and Pimentel

have termed this the Elite-Exploitative model a term that could be applied

equally well to authoritarian regimes.8 However, in Mexico and elsewhere

this situation has broken down. As the PRI dominance of both political and

economic sectors eroded, so did its control over organized crime. As a result,

organized crime in Mexico helped also by links with Colombian drug traf-

fickers and proximity to United States markets expanded. In an interesting

contrast with the Russian (and Italian) case, local extortion in Mexico has

been far less pervasive. Organized crime in Mexico has taken the form pre-

dominantly of trafficking in drugs, people, motor vehicles and various other

forms of contraband. This is not entirely surprising. The proximity of the US

market as well as a long tradition of smuggling across the common border

meant that organized crime focused its activities predominantly in this area.

Such variations notwithstanding, both cases are examples of the weakening of

authoritarian states, with far-reaching implications for the level of organized

crime.Even some parts of pluralistic democratic systems can be so strong that

they encourage or facilitate criminal activities. In New York, for example, the

effective licensing and regulatory practices, in effect, very strong state mech-

anisms with little real accountability, transparency, or rule of law, apparently

had some of the characteristics and incentives to criminality seen in a number

of authoritarian systems. The US Cosa Nostra was able to benefit from these

arrangements for many decades, dominating a variety of industrial sectors

and the construction industry in particular. In the 1990s, however, changes in

accountability and the development of more effective rule of law mechanisms

at the state, federal, as well as New York City levels, apparently led to the

diminution of Mafia control.

9

Weak states characterized by ethnic conflict or terrorist activity

Fertile soil for the growth of organized crime is also found in states that, in

effect, implode or disintegrate. The low level of legitimacy of some states can

take the form either of ethnic secession movements or an attempt to obtain

control of the state apparatus by force and exclude competing factions. Where

this results in the disintegration of the state, as in the former Yugoslavia, there

is likely to be an increase in criminal activities for several reasons.

The collapse of central authority is likely to be accompanied by a col-

lapse of the criminal justice system and the removal of constraints on

behavior. War crimes and organized crimes sometimes have the sameperpetrators.

Competing factions or separatists often resort to criminal behavior to

fund their political struggle. This was evident, for example, with the


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Kosovo Liberation Army which reportedly used profits accrued through

the involvement of Kosovo Albanians in heroin trafficking in several

countries in Western Europe.10 During the last several years of the 1990s,

the number of Kosovo Albanians arrested in Europe for drug trafficking

has increased significantly. The US and many Latin American govern-

ments also claim similar developments occurred in Peru in the 1980s

(e.g., Sendero Luminoso), and with the Colombian FARC, ELN, and

paramilitaries in the 1990s.

Conditions of chaos provide a fertile ground for criminal entrepreneur-

ship and a lucrative payoff for the supply of even legal goods that are

in high demand but low supply. Those who can supply goods that are

not readily available reap large rewards. Ironically, the opportunities for

criminal profiteering in regions of ethnic conflict are increased signific-

antly by the imposition of international embargoes which create illegal

markets such as those in the Balkans. During the war in Bosnia, for ex-ample, the Serb paramilitary leader Arkan (formerly a contract killer for

the Yugoslav Communist party, and wanted for armed robberies in the

Netherlands and Sweden) gained control of gasoline and other products

and, according to the UN War Crimes Tribunal, became wealthy as a

result.11

The cessation of conflict can also lead to an upsurge of organized crime

as former combatants use their expertise in violence in furtherance of

criminal activities. The end of the war in Bosnia, for example, was asso-

ciated with the spread of organized crime from the Balkans into Central

and Western Europe. Criminal groups from the Balkans have not only

become active in Austria and elsewhere, but are also extremely violent.A major study of organized crime in the Netherlands noted that out-

side the circles of Dutch criminal groups, it is mainly former Yugoslav

gangs that repeatedly exhibit a willingness to use violence against police

officers.12 This is hardly surprising given the number of specialists in

violence who had graduated from military to criminal activities.

None of this is to claim that all domestic conflicts, whether based on ethnic

hatred, ideological differences, or religious intolerance, have an organized

crime spin-off. There are cases in which this has not occurred. Nevertheless,

these should not obscure the fact that in an era when conflicts over identity

and political power have become ubiquitous and funding from other states

has become far more tenuous than during the Cold War one of the mostimportant means of obtaining the funding for political and military struggle

is through criminal activities, a development that typically results in fighters-

turned-felons.13


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Similar dynamics are evident in countries in which unsatisfied demands

for self-government among a significant minority of the population have gen-

erated terrorist campaigns. In some of these terrorist groups engage in crim-

inal activity to fund their political activities. The Basque ETA, for example,

has a subordinate organization called KAS that typically committed crime

for profit on its behalf, collected revolutionary taxes, and had control over

Jarrai, a youth group which is heavily involved in street violence and provides

an important source of recruitment.14 Similarly during the 1980s surprising

numbers of Tamils were arrested in Europe for drug trafficking. Even the

IRA, which obtained much of its financing from voluntary contributions,

helped to finance its armed struggle through a variety of criminal activities

ranging from video piracy and Eurofraud to bank robberies, extortion of small

businesses and the theft and sale of construction equipment from Britain.15

One possibility for the future and this is speculative is that some

terrorist groups will transform themselves into criminal organizations primar-

ily focusing their activities on illegal profit-making activities. For example,where a political settlement removes the political rationale for continued vi-

olence or where some members of terrorist organizations are so hooked on

the lifestyle and so attracted by the profits, they are tempted to continue the

illegal profit-making for mercenary rather than political reasons. In North-

ern Ireland, for example, some terrorists, instead of reverting to law-abiding

citizens, have become full-time criminal entrepreneurs. There are precedents

for this. Perhaps the most notable of which is the transformation of Chinese

Triads from political to criminal organizations. Initially established in the

17th Century to oppose the Qing dynasty, the many Triads were bereft of

their cause by the collapse of the Qing and the establishment of the Republic

of China in 1912. While some members entered politics, those who werenot absorbed by the political machine returned to the well-established Triad

organizations for power and status. However, without a patriotic cause to pur-

sue, the secretive and anti-establishment nature of the organizations helped

transform them into criminal groups.16 This kind of transformation from

political activism or terrorism to organized crime is not pre-ordained, but is a

distinct possibility that needs to be considered.

Democratic states with high legitimacy as crime resistant states

Identifying the conditions under which organized crime can flourish is also

suggestive of conditions which it finds inhospitable. Well-functioning demo-

cracies with a high level of political legitimacy, a strong and deeply en-trenched culture of legality, rule of law, structures for accountability and

oversight, and high levels of transparency inhibit the emergence of organized

crime. If these characteristics are present, it is more difficult for organized


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crime to develop a symbiotic relationship with the political and administrative

elites and to come into the mainstream of political life in the country.

Resulting propositions about the political environment and organized crime

From all this it is possible to formulate several propositions about the sets

of conditions under which criminal organizations develop and flourish and

conversely do not develop in particular states:

States that are weak provide a congenial home base for criminal organiz-

ations. Operating from this home base criminal groups can extend their

operations elsewhere, especially if they have products (whether drugs,

women, or arms) which are in demand elsewhere.

Strong states act as incubators for criminal organizations but generally

succeed in circumscribing and containing these activities. The weaken-

ing of these states, either gradually or suddenly, as part of a transition

from one form of political and/or economic system to another, facilit-

ates the expansion of criminal activities well beyond the previous limits.

Although the political-criminal nexus that developed in the previous re-

gime will tend to survive the change, the power relationship within the

nexus is likely to move in favor of the criminals. Similarly, corruption

which in the old system was used to benefit the political elites now

becomes a major instrument used by organized crime to protect itself.

These developments tend to perpetuate the weakness of the state and

hinder the prospects for a successful transformation to the rule of law

and to a functioning and vibrant democracy.

States in which there is not only a political transition but also transition

from a command economy to a free market will experience not only a

significant increase in the level of organized crime but also more per-

vasive forms of organized crime. In such economic transformations, or-

ganized crime is likely to go well beyond the supply of illicit goods and

services to become deeply entrenched in the economy. Criminal groups

will exert control over many business enterprises, especially those in

the export sector, will have a significant influence on financial institu-

tions such as banks, and will also demand protection money from large

and small businesses alike. Extortion will become one of the staples

of organized crime in transition economies as criminal groups developparasitical relationships with new enterprises. The converse is that in

states in which the transition is only political, organized crime will not

develop in these directions to anything like the same extent.


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States in which there are ethnic conflicts or terrorist movements are also

likely to see an increase in organized criminal activity, as are neighbor-

ing states, especially in weak or ungovemable regions.

Peace agreements in ethnic conflicts, civil wars, or states in which terror-

ist groups have been active sometimes generate an increase in organized

crime if former members of military or para-military organizations turn

their attention to crime for mercenary or personal, rather than political,

reasons.

Although the proposition about the transformation from a command economy

to the free market suggests that it might be possible to anticipate, in broad

terms, the form that criminal activities will take in certain kinds of transition,

for the most part the political models help us to understand the scale of or-

ganized crime and the conditions that lead to its increase. The various models

are encapsulated in Table 1:

Other models provide opportunities to anticipate in more detail the activit-

ies and strategies of criminal organizations at both the domestic and transna-tional levels.

Economic models

There are two closely related economic models that provide a basis for anti-

cipating future trends in organized crime. The first is about market demand

and the nature of criminal markets; the second is about the way criminal

enterprises behave in criminal markets. Both models emphasize the profit

motive and economic considerations as opposed to political conditions. Both

also provide insights into the kinds of organized crime behavior that it might

be possible to anticipate.

The market model

The first model focuses on the dynamics of supply and demand in illegal

markets whether local or global. An illegal market has been defined as a

place or situation in which there is a constant exchange of goods and ser-

vices, whose production, marketing and consumption are legally forbidden

or severely restricted by the majority of states. Moreover, the activities of

that illegal market are socially and institutionally condemned as an inherent

threat to human dignity and the public good. Typical markets of this kind . . .

include hard drugs, illicit arms sales, trade in economic and sexual slavery,

capital originating from criminal activity, and deals involving secret informa-

tion and intelligence.17

At least four different kinds of products are the focusof criminal markets: prohibited goods such as drugs; regulated goods such as

fauna and flora or antiquities; stolen (and counterfeit) goods such as cars; and

products that are differentially taxed in different jurisdictions and are often


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Table 1.

Political conditions Implications Result to anticipate

Weak state Opportunities for organized Organized crime can flourish

crime to develop with little and use the state as a home

interference; base

Role of organized crime as

substitute for protective and

regulatory functions of the

state

Strong state becoming Initial incubation then States in transition particularly

weak expansion of power of vulnerable to organized crime

organized crime as state loses inhibiting progress toward

power democracy, rule of law, and

the free marketStates characterized by Factions use criminal activities Increase in organized crime,

ethnic conflict, insurgency to fund their political struggle; including violence, within the

or terrorism and use embargoes as state and its neighbors.

opportunity for trafficking and End of conflict may lead to

profiteering transformation of terrorist

organizations into primarily

criminal organizations

Strong democratie states Constant struggle between Organized crime provides

with high levels of organized crime and law illicit goods and seeks

legitimacy, transparency, enforcement vulnerable economic sectors

rule of law but largely on the defensive

smuggled from the low tax jurisdiction to the one with higher taxes. Research

and analysis of illicit markets suggests that they are often disorganized, rather

than highly organized, with multiple participants who cooperate and compete

in complex and unpredictable ways.18 Indeed, one proponent of this approach

is highly skeptical about the role of hierarchical criminal organizations in

illicit entrepreneurship, contending instead that organization is merely a form

of govemance in, or regulation and enforcement, in the criminal world.19

Theargument is that it is individuals or small groups of members of a criminal

organization rather than the organization per se who meet the demand for

illicit products.


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The critical dimension in this view is not criminal organizations, but the

dynamics of illegal markets. Prohibition regimes (which simply reduce sup-

ply but not demand and therefore push up price) generally encourage an influx

of suppliers, varying greatly in size and power. These markets are rarely

dominated by a small number of large syndicates. A good example is the

trafficking of women for commercial sex an area of activity that is generally

regarded as being controlled by organized crime. In fact, although criminal

organizations are the single most important kind of player in this market, there

is a wide range of participants in the trade, including: brokers and agencies

who recruit the women, often using false promises of employment; corrupt

officials who assist in provision of passports, visas, work permits, and any

other documentation; brothel owners and criminal groups who pay the sup-

pliers and put the women to work; and corrupt policemen and politicians

who take payoffs in money or in kind for turning a blind eye to prosti-

tution in their jurisdiction. Moreover, although some criminal organizations

are directly engaged in the trafficking, others simply facilitate the process andprotect, or tax the agencies and entrepreneurs involved. The implication of

all this is that the much touted monopoly control over markets is much more

elusive (except perhaps at the local level) than many traditional accounts of

organized crime imply.

The enterprise model

The second economic model starts from the notion that organized crime

groups are essentially enterprises with the emphasis on the business dimen-

sion rather than the criminal.20 There is a continuum of business enterprises

from licit firms which engage solely in licit businesses, through licit firms

which sometimes act in illicit ways, to illicit firms which operate in illegal

markets and provide prohibited or highly regulated goods and services. This

is not to ignore the characteristics of criminal enterprises that differentiate

them from their licit counterparts the need to conceal their activities, the

importance of security precautions, the use of violence and the use of corrup-

tion. Important as these differences are, though, they should not obscure the

commonalities, the most important of which is the desire for profit. Indeed,

wherever enterprises fall on the licit-illicit continuum they behave in essen-

tially similar ways: they typically scan their environment for opportunities,

seek to make rational judgments about opportunities and dangers, and seek to

maximize their profits where this does not involve unacceptably high levelsof risk. Not all criminal organizations engage in a formal planning process;

nevertheless their thinking, intuitively or deliberately, will reflect standard

business needs and take into account such factors as new product opportunit-


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ies, product dominance, profit margin, market needs and opportunities, degree

of competition, risk management, retirement strategy, and the like.

Resulting propositionsAlthough there are differences among these two economic models, they both

place considerable emphasis on the market and the opportunities it provides.

They see criminals as rational actors constantly seeking new opportunities

to maximize their profits. Furthermore, even if one accepts the argument

that criminal entrepreneurs are usually a few individuals or small groups

and that criminal markets are not dominated by large-scale hierarchical or-

ganizations, the implication is not to reject parallels with licit business. In

both the licit business world and the world of criminal enterprises, there

are enormous variations in size and structure of the firms. Acknowledging

that much criminal enterprise is run by small businesses rather than large

conglomerates simply reflects this diversity. Consequently, these two modelscan, in effect, be lumped together to suggest the following propositions about

criminal operations and the kinds of developments that can be anticipated:

Criminal organizations will constantly seek new geographic markets and

if these markets are lucrative will not usually be deterred unless met by

overwhelming countervailing power or cultural resistance. This helps

to explain why a growing number of criminal organizations have in-

creasingly become transnational in their operations. Globalization has

offered new opportunities and provided new imperatives for licit busi-

nesses seeking to be competitive. It has had the same effect in the crim-

inal world, encouraging criminal organizations to meet (or create) mar-

ket demand well beyond their home state. In effect, criminal organiza-

tions go where the rewards are greatest, exploiting disparities in price,

as well as differential laws and regulations and culture. The implication

of this is that even states that have well-established criminal justice sys-

tems that in some ways are resistant to organized crime find themselves

attracting criminal organizations that see them as a lucrative venue for

business. Not surprisingly, therefore, the United States has become a

host or target state for transnational criminal organizations with home

bases in other states. The search for new markets also explains why,

since the end of apartheid, South Africa, with its open borders, weak

criminal justice system, well-developed infrastructure and by African

standards at least high level of wealth has become a major target for

African criminal organizations as well as those from elsewhere. Nigeriancriminals have transformed the South African drug market through large-

scale imports of cocaine, while Chinese, Russian Moroccan, and Italian

criminals are also active in the country.21 In a similar vein, Colombian


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drug trafficking organizations, through the 1990s, developed major new

markets in Western Europe and the former Soviet Union. This is evident

in the increasingly large seizures of cocaine in the Newly Independent

States.

In terms of products, the enterprise model suggests that some criminal

organizations will increasingly diversify their activities into a range of

illicit products. Among the illicit markets that have taken on new dimen-

sions in recent years are commercial sex and the trafficking of women

and children, CFCs, automobile theft, and illegal trafficking in fauna

and flora. Furthermore, we should expect to see both product specializ-

ation and the rise of poly-commodity trafficking organizations. There is

evidence of the latter in the Florida-Puerto Rico, California-Baja chan-

nels which are used for bringing drugs and people to the United States

from Central and South America and for taking motor vehicles from

the United States to Central and South America. Among the criminal

enterprises that are operating simultaneously in a variety of illegal mar-

kets are Mexican, US, Chinese, Nigerian, and Turkish groups. Chinese

criminal enterprises engage in a wide variety of activities ranging from

the smuggling of illegal aliens to large-scale intellectual property theft

and counterfeiting; Turkish entrepreneurs traffic in heroin, people, an-

tiquities, and, in some cases, nuclear materials; while Nigerian groups

in a section of Johannesburg operate both drugs and prostitution. This

pattern of diversification is likely to be replicated elsewhere.

Just like licit enterprises seeking to minimize their tax burdens, crim-

inal enterprises seek to protect their profits. They often use offshore

financial centers and bank secrecy jurisdictions to protect their money.

It would not be surprising if, in the future, they also make increasinguse of smart cards and e-money to break the audit or investigative trail.

In order to keep ahead of efforts to clamp down on money laundering

through more stringent regulation of the banking sector even in offshore

financial centers, they have an incentive to use other mechanisms such as

trusts, international business corporations, and new financial instruments

such as options and derivatives that protect the identity of the beneficial

owner. As new offshore financial centers open up, so criminal entrepren-

eurs use them, tentatively at first, and more fully as they become more

confident of the protection they provide.

Just as licit enterprises engage in cooperative as well as competitive be-

havior, criminal organizations are likely to collaborate with one anotheragainst common adversaries, particularly law enforcement. The collab-

oration may take diverse forms ranging from strategic alliances and joint

ventures at the most ambitious level through tactical alliances, contract


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relationships, supplier customer relations, to spot sales at the most basic

level. Cooperation will be particularly attractive when well-established

criminal enterprises have saturated the existing market but are facing

obstacles in their efforts to break into new markets. A local partner can

greatly facilitate such an entry and by exploiting existing distribution

channels and corruption networks can ensure the rapid development of

the market.22

Where cooperation has resulted in the development of major competit-

ors with a large market share, criminal enterprises will seek to develop

alternative allies, to re-establish their market position and to diversify

into new markets. This suggests that not only will some Colombian drug

trafficking organizations seek alternative partners to Mexican trafficking

organizations (as they seem to have done with the Dominicans) but they

will use routes that do not go through Mexico and develop new markets

where Mexican organizations are not major players.

To operate effectively in markets that are diffused or disorganized

and contain multiple players, criminal enterprises will seek to develop

patterns of cooperation with participants in the licit world who play a

critical role in supplying the commodity (parents of villagers who sell

their daughters; officials at chemical manufacturing plants willing to di-

vert precursors), in moving the commodity (customs and immigration

officials who have to be bribed) or in selling the commodity (art and

auction houses who sell antiques that do not have proven provenance).

In short, any criminal enterprise seeking to develop an effective market

niche will develop significantly collusive linkages with the licit world.

Criminal enterprises will seek to penetrate legitimate business to protect

their funds, to provide apparent legitimacy for wealth, and, in a few casesto provide an option for a transition to licit business or retirement from

criminal activities. Licit business enterprises also can be excellent covers

for various kinds of trafficking activities. In order to diversify and protect

their profits, criminal enterprises will move into the licit business world,

exploiting vulnerable points of entry into particular firms or industries.

This was done in the garbage disposal and construction industries in

the United States, hazardous waste disposal in ltaly, and, more recently,

the commodities, aluminum, banking, and export industries in Russia.

Criminal organizations will not only use these licit enterprises as a cover

for illicit activities, and possibly as a further source of profit, but also,

over the medium and long term, as a means of legitimization.Whereas the political models were useful primarily for anticipating changes

in the magnitude and type of organized crime, the enterprise and market

models provide more insight into the business opportunities and incentives


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Table 2.

Economic model Implications Result to anticipate

Market dynamics Organized crime responds to Criminal organizations will

market dynamics and exploits become major participants in a

demand for its goods and variety of criminal markets,

services especially where there but will not have monopoly

are prohibition regimes control over these markets

Enterprise model Criminal organizations will Criminal enterprises will seek

act in ways similar to licit to diversify markets and

enterprises and will seek out products, to protect profits (for

new business opportunities, example, by using offshore

structures, and strategies to financial centers), and will

maximize profits cooperate with other criminal

organizations and will collude

with various individuals,

institutions and agencies in the

licit world

that are available and the kinds of strategies that particular groups are likely

to adopt to maximize their profits. Understanding the dynamics of illegal

markets and the business strategies pursued by criminal enterprises to should

enable governments and private enterprises to anticipate new departures in

criminal activity. This is summarized in Table 2.

Anticipation of criminal initiatives, however, requires that analysts under-stand the specific perspectives and perceptions of the criminal organizations

and understand their logic, their assessment of risks and opportunities and the

considerations that will determine their ultimate policy choices. This theme

is discussed further below.

Social models

Although the political and economic models of organized crime are among

the most compelling, they are certainly not the only significant models. Social

models emphasize such factors as the cultural basis for organized crime, the

idea of criminal networks as a social system, and the importance of trust andbonding mechanisms as the basis for criminal organization. Whereas political

models focus on the opportunities available in particular kinds of govern-

mental arrangements and enterprise models focus on the market opportunities


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and how they might be exploited, social models focus on the grass-roots level,

the cultural conditions that encourage and facilitate criminality, as well as the

way in which crime is actually organized.

The cultural model

Organized crime is facilitated by particular cultural and subcultural factors

such as patron-client relations, ties of family and kinship, suspicion of out-

siders, and informal exchange networks.23 Communities where social organ-

ization has these characteristics generally are characterized by the absence

of an effective rule of law system and the expectation of a culture of law-

lessness. Often they also are characterized by the emergence of secret societ-

ies engaged in criminal activities. In Sicily, for example, where there was a

powerful tradition of clientelism in which success was believed to depend on

connections with those with power, the Mafia structure itself is territorial and

family based. Loyalty to the local crime family (cosu) was reinforced byoaths and rituals designed to encourage omerta silence before the law.24

Indeed, the creation and maintenance of loyalty and allegiance, achieved

through rituals and oaths and backed up by penalties for defections, was

simultaneously a sub-cultural norm and a fundamental defense mechanism

against the power of the ruling class and its repressive legal techniques.

Traditional Chinese organized crime had similar cultural underpinnings.

As one observer has noted, In the development of Chinese crime groups,

the values and norms of the Triad subculture have been paramount.25 Ini-

tially, the Triads were politically motivated secret societies and although they

degenerated into criminal organizations, their character and many of their

functions continued to be influenced by their origin. The criminal Triads,

for example, continued to use oaths and rituals to induct new members. In

many respects, these resembled the oaths and rituals of the Sicilian Mafia and

were similarly intended to instill a high sense of loyalty and an enormous

fear of disloyalty. Indeed, the Triad emphasis on loyalty, brotherhood and

secrecy although not intrinsically criminal provided an important basis for

criminal activities.26 Yet, there has also been some dilution of this compon-

ent of Chinese organized crime and the formal Triad structure and Triad

norms have become less important. As the groups replaced their patriotic

or benevolent causes with criminal activities, other changes also occurred.27

Membership was granted to almost anybody who wanted to join, and leaders

lost track of and control over their followers. Members became interested in

enhancing their individual gains. Nowadays, the Triad values of patriotism,brotherhood, righteousness, and loyalty remain only in proclamations.28 For

some observers, however, there is still an important cultural underpinning for

Chinese organized crime. This is the notion of guanxi or reciprocal obligation


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which treats family obligation as an imperative even if its spans generations

and continents. Although guanxi relationships are not as tightly enmeshed as

those of traditional Triad ties, some observers believe they provide a basis for

the global activities of Chinese criminals. Guanxi provides a basis for trust

and therefore facilitates a great deal of criminal activity in the same way that

it facilitates much licit business.29

It is also arguable that cultures in which the culture of lawlessness and

corruption is endemic provide an important incubator for the development

of indigenous organized crime and an attractive target for transnational or-

ganized crime looking for new opportunities. In Nigeria, for example, the

political system is based largely on what has been termed prebendalism,

that is a pattern of political behavior in which individuals compete for public

offices in order to use them for the personal benefit of the office-holder and

his faction.30 Closely related to this are patronage and clientelism, patterns of

behavior that place much more emphasis on contacts and favors as a means

of getting ahead and accumulating wealth than on norms, standards of be-havior, or the rule of law. Such a cultural climate easily condones criminal

activities so long as they are successful in the acquisition of resources. When

coupled with authoritarian military rule that characterized Nigerian politics

for several decades, this cultural factor helps to explain the rise of Nigerian

organized crime. High levels of education, mobility, and well-established

trading patterns, as well as the link to Britain, all help to explain why Nigerian

crime has become ubiquitous at the global level. Indeed, the cultural model is

sometimes incorporated implicitly or explicitly into the next model which

focuses on ethnic networks.

The ethnic network model

Ethnic and diaspora networks have been significant, particularly in the devel-

opment of transnational organized crime. As one component of the broader

process of globalization, transnational ethnic networks transcend national

borders and often facilitate transnational criminal activities. Even though most

immigrants are law-abiding citizens who are more likely to be the victims

rather than the perpetrators of crimes, the Sicilian diaspora helped to bring

Mafia-like organized crime to the United States in the late nineteenth and

first half of the twentieth century. In the second half of the twentieth century

this process was extended to, among other places, Australia and Venezuela.

Similarly, the Chinese diaspora brought the Chinese variant to many parts of

the Pacific and other regions, such as the United States, Western Europe, andeven Russia. For its part, the Nigerian diaspora has allowed Nigerian criminal

groups to pose problems for law enforcement in countries as diverse as Bri-

tain, South Africa, the United States, Russia, Italy, and Brazil. Colombians


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in the United States, Turks in Western Europe, and Russians in Israel have

greatly facilitated the creation of network structures for criminal activities.

Indeed, ethnic communities can be an important resource for transnational

criminal enterprises, providing recruitment opportunities, cover and support.

Recruitment based on ethnic loyalties is facilitated when immigrant groups

are alienated rather than integrated into their adopted society. As one analyst

observed: Many immigrant groups have been totally marginalized in Europe,

some live in cultural ghettos. They readily provide some of the personnel for

international organized crime.31 Low status and poor conditions mean that

the rewards offered for assistance in smuggling or other illegal activities are

relatively attractive in spite of the risks. Even casual participation or involve-

ment on the margins can yield greater rewards than can be obtained through

the licit economy. Furthermore, ethnically-based criminal networks are also

difficult to penetrate since they have inbuilt defense mechanisms provided by

their language and culture. These barriers are often strengthened by ties of

kinship, and inherent suspicion of authority. A further consideration is thevulnerability of their relatives at home to punishment should the migrants

decide to collaborate with law enforcement in their new home country. Just as

transnational corporations have their local subsidiaries, transnational criminal

organizations often have their ethnically based criminal groups and networks

within immigrant communities.

The social network model

A third social model of organized crime is sufficiently broad to encompass

both the cultural and ethnic network models while also extending beyond

them. This can be termed the social network model. Part of the impetus for

this came from dissatisfaction with descriptions of the Mafia in the United

States as simple hierarchies. Joseph Albinis work, for example, revealed that

even Italian organized crime in the United States could best be understood

through patron-client relations rather than formal hierarchies.32 A similar

conclusion emerged from a historical study of organized crime in New York,

in which Alan Block concluded that not only was organized crime more

fragmented and chaotic than believed, but also it involved webs of influ-

ence linking criminals with those in positions of power in the political and

economic world. These patterns of affiliation and influence were far more

important than any formal structure and allowed criminals to maximize op-

portunities. In a similar vein, Francis Ianni highlighted the importance of

networks in African-American and Puerto Rican criminal activities in NewYork.33 In some quarters, however, there is still a tendency to regard tradi-

tional hierarchical models such as the Cosa Nostra in the United States, as

real organized crime, to equate hierarchy with organization, and to dismiss


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networks as disorganized crime. Such assumptions are misleading and mask

significant anticipated organized crime behavior.

This is even more apparent from the recognition given to networks as an

effective organizational form for innovation whether in business or in politics.

Society has developed through various stages, each characterized by various

organizational or institutional patterns. It has evolved through tribes, institu-

tions, and markets, with networks, it is argued, now becoming a dominant

organizational form.34 At each stage a new organizational pattern does not

replace old ones, but surpasses them in efficiency and effectiveness for at

least some tasks. In the business context, the search for affiliates, allies, and

partners, and the formation of transnational business networks has become

critical in enabling firms to compete effectively on the global level. In effect,

there has been widespread adoption of the keiretsu model that was long seen

as a critical ingredient in the competitiveness and efficiency of many Japanese

companies. The internal counterpart of this has been the tendency in some

firms to seek skillful management, innovation, and enhanced productivitythrough largely horizontal network based structures rather than the traditional

pyramids or hierarchies.

The same tendency is visible in organized crime. Gary Potter, for example,

has suggested that organized crime in the United States can best be under-

stood in network terms, while Finckenauer and Waring, in a study on Russian

emigre criminals in the United States concluded that they operate largely

through network structures.35 Nor is reliance on networks confined to the

United States. As one data-rich report on organized crime in the Netherlands

noted in reference to the Dutch drug trade: There is no evidence of one big

organic identity at the command of one leader with various echelons function-

ing quasi-automatically within it. The world of the Dutch wholesale tradingdrugs can better be described as an extensive network where thousands of

individuals, often in cliques and groups, are linked by formal or informal

relations, or where these relations are easy to establish through friends of

friends if business so requires. Intersections can be discemed in the network,

and individuals and groups with more power than others.36 The authors also

emphasize the dynamic quality of these networks: they contend that although

many of the relationships are not particularly stable, clashes among them are

generally followed by the creation of new action sets to implement specific

criminal activities or more long-term coalitions.37

This is not surprising: networks are sophisticated organizational structures

that are well suited for criminal activities. Among the major characteristics

of criminal networks are the following:

They are flexible and adaptable, able to respond quickly to market oppor-

tunities and to the efforts of law enforcement to disrupt their activities.


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They are highly resistant to disruption and even when they have been

degraded have a significant capacity for reconstitution.

They are capable of considerable expansion through recruitment of new

members, whether individuals or organizations. They have a capacity to extend across national borders either through

ethnic linkages or through simple business linkages that enable them to

exploit new opportunities.

They can extend in ways that allow them to cross boundaries of demarc-

ation such as that between the licit and illicit sectors of the economy and

society.

Networks seek to defend themselves through expansion into the upper-

world and recruitment of politicians, bureaucrats, judges, and law en-

forcement agents who are susceptible to coercion or bribery.

Criminal networks develop safeguards against infiltration and damage.

In particular, they develop mechanisms to insulate the central figures

who are responsible for organizing the core of the network and directing

the networks activities. In addition, they will develop a high degree of

redundancy and duplication, something that in licit business is regarded

as wasteful and unnecessary. For criminal networks, in contrast, such

redundancy is essential. It makes them highly resilient to disruption and

provides a significant capacity for reconstitution in the event that they

are damaged by law enforcement.

In view of these characteristics, networks are an ideal vehicle for execut-

ing transnational criminal activities such as drug trafficking and other forms

of smuggling.38 Understanding their characteristics therefore, should enable

analysts to anticipate certain kinds of criminal behavior. Indeed, each of these

social models yields certain insights that can be used to anticipate some of theactivities of criminal organizations.

Resulting propositions

These various social models yield propositions about the evolution of organ-

ized crime that have implications for prevention and enforcement efforts and

their likely degree of success:

Where patron-client relations are a key component of a national culture,

criminals will seek high level patronage and protection from the political

establishment. In return, they will provide either monetary or political

favors, or some mixture of both. This overlaps with one of the political

models but whereas that model emphasizes the opportunities that comefrom weak oversight and transparency, the emphasis here is on the cul-

tural conditions that transform patronage, clientelism, and culture into

criminal-political relationships.39


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Since defections are a fundamental challenge to criminal organizations

rooted in sub-cultural norms, cooperation with the authorities will invari-

ably result in attempted retribution against the defectors and their famil-

ies. This can be understood partly in terms of simple revenge. Yet, such

killings also represent an effort by criminal organizations to re-establish

and re-impose norms that are not only essential to their operations but

that are critical to their sense of identity. In other words, traditional

criminal organizations will seek to maintain or restore their sub-cultural

traditions and norms even if this requires extensive violence.

Diaspora communities can become a base from which certain criminal

organizations operate. As a countrys population becomes more diverse

so will its criminal organizations. Moreover, different criminal organiz-

ations tend to develop different styles of operation. Nigerian groups for

example, typically exploit targets of convenience whether the social wel-

fare system in Britain, or credit cards in the United States and Canada, or

the demand for heroin in any number of countries. Consequently, where

immigrant communities are growing, law enforcement should expect

manifestations of organized crime to emerge from within them and to

spread well beyond them. Once again this points to the need for a greater

understanding of the diverse forms that organized crime can take.

Criminal networks will seek to expand and co-opt a whole set of sup-

port players who provide entry points to the licit worlds of government,

finance and business. Organized crime-corruption networks will become

increasingly pervasive and make use of the upperworld professionals

such as lawyers and accountants for services such as money laundering,

of government officials for network protection and support, and law

enforcement officers for counterintelligence.

Once established, criminal networks will not be easily defeated. Unless

the nodes and connections that are identified and eliminated are critical

to the functioning of the network, criminal networks will simply use

alternative nodes and connections. The redundancies they create as de-

fense mechanisms mean that it is difficult to degrade them. Moreover,

even if they are seriously impaired they will often display a remarkable

capacity to reconstitute and regenerate themselves in a short time period.

Indeed, the remnants of one criminal network can continue to function

even in truncated form. In Colombia, for example, the destruction of

the Cali cartel meant that Colombian organizations became part of a

less-concentrated trafficking network which has continued to supply theUnited States and other drug markets. The possibility for regeneration is

something that crime prevention and law enforcement practitioners can

monitor in order to minimize the prospect of being taken by surprise.


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Table 3.

Social models Implications Result to anticipate

Cultural and sub-cultural Loyalty is not to state but to Criminal organizations will

model based on patron-client family, kin or ethnic group. not only flourish but will

relations, ties of family and Personal exchange penetrate government, creating

kinship or on patterns of relationships are more crime-corruption networks

corruption important than the rule of law. that are difficult to eradicate.

Ethnic network model based Transnational ethnic networks In many cases diasporas will

on ethnic ties in immigrant and immigrant communities be followed by the growth of

communities that are marginalized provide organized criminality. For host

cover and recruitment for societies this means that

criminal organizations and are organized crime will become

difficult for law enforcement more diverse.

to penetrate

Social network model based Organized crime can best be Network organizations will

on the notion that networks understood in terms of extend into the licit political

are not disorganized but network structures that are and economic world and will

are highly sophisticated characterized by high levels of also extend across national

organizational forms flexibility, redundancy, and borders. Networks will prove

resilience as well as a capacity highly resistant to traditional

to cross boundaries. law enforcement attacks.

If the political models help us to understand the level of organized crime and

the enterprise and market models to understand their business strategy, the so-

cial models highlight yet other dimensions. Recognizing the cultural origins

of particular groups, the importance of ethnic networks as a facilitator for

forms of organized crime that are novel to the host countries, the propensity

of criminal networks to expand across borders and into the licit world, and the

capacity of these networks to defend and even regenerate themselves provides

opportunities to anticipate developments. These models are encapsulated in

Table 3.

The strategic or risk management model

Another model that has not been fully developed in the organized crime lit-erature, but that recognizes that criminal organizations are in an adversarial

relationship with government and law enforcement agencies, as well as each

other, is what can be termed the strategic or risk management model. This


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model is based partly on the proposition that criminal organizations seek not

only to maintain their survival and maximize profits, but also to minimize the

law enforcement risk.40 It is also based on the recognition that in adversarial

relationships each side tries to anticipate the behavior of the other and act

accordingly.

While analogies such as American football or chess are over-simplistic

since they depend heavily on rules, the essence of the competitive structure

is similar in that criminal organizations and government agencies are intent

on outwitting each other, anticipating each others initiatives, and taking ap-

propriate countermeasures. In some respects, of course, this overlaps with the

model of organized crime as criminal enterprise, which also recognizes that

criminal organizations face risks from government and rival groups. It expli-

citly acknowledges that criminal organizations have to operate not only in a

competitive environment, in which force becomes the arbiter of competition,

but also an environment in which governments and law enforcement agencies

are, in effect, trying to put them out of business. Consequently, criminal en-terprises face a distinct form of risk which has implications for their structure

and behavior. Hence, criminal enterprises are risk management entities par

excellence.41 Their risk management strategies can range from simple efforts

to separate the organization (or its leaders) and the crime, or they can be much

more elaborate and extensive.

Indeed, it is possible to identify three kinds of measures that are or can be

generally incorporated into risk management strategies:

Initiatives designed for risk prevention whether through passive avoid-

ance or more proactive measures designed to shape the environment in

which criminal organizations operate. Criminal groups function most

effectively when focused on entrepreneurial initiatives rather than coun-tering law enforcement. Consequently, they seek to ensure the safety of

the leaders, the continued viability of the organizations and the immunity

of their proceeds from seizure through the creation of a low-risk envir-

onment and the exploitation of safe havens. The proceeds of crime in

the face of aggressive law enforcement will typically be sent to offshore

financial centers and bank secrecy havens where they are relatively safe

from forfeiture and seizure laws.

Defensive measures and tactics that attempt to control the risks that have

to be incurred even in a relatively benign environment. Even though

Cali drug trafficking organizations had tried to co-opt major parts of

the Colombian government, its leaders developed extensive counter-in-telligence methods and acquired state of the art-technology to obtain ad-

equate warning of law enforcement and intelligence initiatives directed

against them.42


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Measures designed to mitigate damage and ensure that the organization

exhibits a high degree of resilience even in a hostile environment in

which defensive measures have proved inadequate.

Although there is some overlap among the three strategies, they are comple-mentary. The optimum strategy is to reduce risk through creating a congenial

environment for the leadership and its activities; as in other forms of business,

however, it is impossible to avoid risk altogether. Consequently, the second

component of risk management consists of measures taken to defend against

or control risks. Although this can go a long way to avoiding the imposition

of costs by law enforcement or rivals, almost invariably some costs will be in-

flicted on the organization. It is essential, therefore, for criminal organizations

to make preparations to mitigate the damage (including, as suggested above,

a reliance on network structures that can be reconstituted). Some risks can be

anticipated and costs avoided; other risks and costs can be limited, contained

or controlled; but some simply have to be accepted as part of the price of

engaging in a continuing criminal enterprise. The crucial thing therefore is toensure that inescapable risks and costs do not become overwhelming.

Risk management strategies developed by criminal leaders are multi-di-

mensional and multi-purpose. This is not surprising. The risks they confront

are both varied and pervasive: they include risks that their illegal products will

be seized, that the proceeds of their crimes will be forfeited, that their person-

nel will be killed, arrested or defect to law enforcement, that the integrity of

the criminal network will be compromised by infiltration, and that the enter-

prise will be disrupted or destroyed. Consequently, considerable energy, time,

and resources are devoted to managing these risks. The strategies that result

are designed to protect a variety of things including the leadership, organiz-

ational integrity, financial assets (most of which represent the accrued profitsfrom criminal activities), operational personnel, and the products of the crim-

inal organization. Not all these things have the same importance, however,

and both products and operational personnel will generally be regarded as

less important and more dispensable than leaders and profits.

Resulting propositions

The strategic and risk management model has significant implications for

much of the behavior of criminal enterprises. Among the kinds of strategies

and tactics that can be anticipated are the following:

Criminal leaders will be intent on creating or maintaining a safe haven,

sanctuary, or retirement strategy. One way is to take steps to ensure thattheir home base, at least, remains a congenial environment or sanctuary

from which they can operate with relative impunity. One of the most im-

portant ways to do this is through the use of systemic or institutionalized


28/47


corruption whereby the criminal enterprise obtains allies and protectors

at high levels in the state apparatus and the community at large. The pro-

position is that this strategy is likely to become even more widespread

and that regions in which organized crime develops will face a real

problem from systemic corruption that will prove enormously difficult

to reverse and eradicate.

As part of their defensive strategy, criminal organizations will operate

secretly, denying information to outsiders, and try to learn the secrets of

rival organizations and law enforcement agencies. They will also seek to

penetrate or infiltrate governments, law enforcement bodies, and private

sector security, thereby obtaining not only intimate knowledge of their

tactics and techniques, but also advance notice of any operations. There

are many cases of this, including some in Chicago where members of

some of the larger and more powerful street gangs became policemen.43

In other cases, drug trafficking organizations, for example in Colom-

bia, used their lawyers to learn about the methods the government was

adopting against them. In yet others, groups such as the Hells An-

gels have used bribery to corrupt policemen and thereby obtain critical

counter-intelligence that enabled them to undermine investigations.44

The proposition here is that such activities, far from being aberrations,

are increasingly likely to be the norm as organized crime, both domestic

and transnational, becomes the subject of increasing pressure from law

enforcement.

Criminal organizations concerned to protect themselves will make in-

creasing use of proxies and contractors at the operational level, allowing

the proxies to incur the risks of detection and apprehension. Nigerian

criminal organizations have become particularly adept at this, using arange of couriers from US military personnel to middle aged white wo-

men who do not fit the profile of typical drug traffickers developed by

customs organizations worldwide. This has a dual pay-off: it increases

the chances that the drugs will reach the market and it minimizes the

risks to the Nigerian criminals who have, in effect, graduated from a

service role to a managerial position.

Criminal organizations will become increasingly adept at disguise and

concealment of their products and will use technology, the capacity to

embed illicit products in licit, and the availability of multiple trafficking

routes in an effort to circumvent the efforts of law enforcement. Often

criminals will choose the route of least resistance, a calculation whichexplains why radioactive material trafficking had shifted from Austria

and Germany in the mid-1990s to the Caucasus, Turkey and Central Asia

in the late 1990s.45


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Criminal organizations will increasingly exploit technological develop-

ments, including information technologies as a means to enhance and

improve their risk management efforts. The most obvious case in point

is encryption which has been appearing increasingly in criminal cases

and offers opportunities to neutralize electronic surveillance which, in

the last few decades, has been one of the most potent law enforcement

weapons against organized crime. Encryption of communications and

computer systems will make it difficult for law enforcement to obtain

advanced warning of criminal activities, to disrupt criminal operations,

and to provide evidence of criminal activities that can be used in court

cases.

If some of the earlier models help us to anticipate the extent of organized

crime or the kinds of business strategies pursued by criminal organizations,

the strategy and risk management model has very obvious practical implic-

ations. Anticipating risk management strategies and the way they are imple-

mented should enable law enforcement to exploit the vulnerabilities of thecriminal organizations and to impose substantial costs upon them. An assess-

ment of the risk management strategies adopted by a criminal enterprise, for

example, can reveal the priorities for protection and, by implication, the major

vulnerabilities of the enterprise. This, in turn, could enable law enforcement

to deploy its own efforts and resources more effectively in pursuit of high

value targets. Furthermore, identifying the kinds of precautionary actions that

a criminal organization is taking (such as contracting out for money launder-

ing) provides opportunities to exploit these actions (through the creation of

money laundering fronts) and thereby damage and dislocate the organization.

The risk management model is summarized in Table 4.

Table 4.

Risk management model Implications Result to anticipate

Risk management model is Criminal organizations will Organized crime will seek safe

based on the idea that develop a comprehensive havens from which to operate

criminal organizations are in range of measures aimed at and will look to neutralize

adversarial relationships in the prevention, control, and governments and law

which strategy is critical mitigation of the risks they enforcement agencies through

face from law enforcement corruption, counter-

and rivals intelligence and security

practices, including making

greater use of information

technologies.


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Hybrid or composite models

A fifth set of approaches to anticipating organized crime lacks th

anticipating toc wilson select

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