GLOBAL CRIMINAL ECONOMY 209

criminal centers is likely to overwhelm these states even further. It

follows a downward spiral where, ultimately, criminal organizations
may control some states: not by following the violent confrontation of
the Medellin type of tactics, but by combining bribery, intimidation,
the financing of politics, and the affirmation of cultural identity with
skillful international business management. Colombia, then Mexico,
then Russia, then Thailand, then Nigeria, then Albania, then . . .
Globalization and identity interact in the criminal economy of
Latin America. They organize the perverse connection that redefines
development and dependency in historically unforeseen ways.

The Impact of Global Crime on Economy,

Politics, and Culture

Money laundering, and its derivatives, have become a significant and

troubling component of global financial flows and stock markets. The
size of these capitals, while unknown, is likely to be considerable. But
more important is their mobility. To avoid tracking, capital originat-
ing in the criminal economy shifts constantly from financial institu-
tion to financial institution, from currency to currency, from stock to
stock, from investment in real estate to investment in entertainment.
Because of its volatility, and its willingness to take high risks, criminal
capital follows, and amplifies, speculative turbulences in financial
markets. Thus, it has become an important source of destabilization
of international finance and capital markets.
Criminal activity has also a powerful direct effect on a number of
national economies. In some cases, the size of its capital overwhelms
the economy of small countries. In other cases, such as Colombia,
Peru, Bolivia, and Nigeria, it represents an amount sizeable enough to
condition macroeconomic processes, becoming decisive in specific
regions or sectors. Still in other countries, such as Russia and Italy,
its penetration of business and institutions transforms the economic
environment, making it unpredictable, and favoring investment strat-
egies focused on short-term returns. Even in economies as large and
solid as Japan, financial crises can be triggered by criminal maneu-
vers, as was the case in 1995 of the savings and loans defaults, for
hundreds of billions of dollars, as a result of bad loans forced on some
bankers by the Yakuza. The distorting effects of the unseen criminal
economy on monetary policies, and on economic policies at large,
make it even more difficult to control nationally based economic
processes in a globalized economy, one component of which has no
official existence.
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The impact of crime on state institutions and politics is even

greater. State sovereignty, already battered by the processes of
globalization and identification, is directly threatened by flexible
networks of crime that bypass controls, and assume a level of risk
that no other organizations are capable of absorbing (see volume II,
chapter 5). The technological and organizational opportunity to set
up global networks has transformed, and empowered, organized
crime. For a long time, its fundamental strategy was to penetrate
national and local state institutions in its home country, in order to
protect its activities. The Sicilian Mafia, the Japanese Yakuza, the
Hong Kong-based, or Taiwan-based, or Bangkok-based Triads, the
Colombian cartels relied on their capacity to build over time a deep
connection with segments of national and regional states, both with
bureaucrats and with politicians. This is still an important element in
the operational procedures of organized crime: it can only survive on
the basis of corruption and intimidation of state personnel and,
sometimes, of state institutions. However, in recent times, globaliza-
tion has added a decisive twist to the institutional strategy of organ-
ized crime. Safe, or relatively safe, houses have been found around the
planet: small (Aruba), medium (Colombia), large (Mexico) or extra-
large (Russia), among many others. Besides, the high mobility and
extreme flexibility of the networks makes it possible to evade national
regulations and the rigid procedures of international police cooper-
ation. Thus, the consolidation of the European Union has handed
organized crime a wonderful opportunity to take advantage of con-
tradictions between national legislations and of the reluctance of most
police forces to relinquish their independence. Thus, Germany has
become a major operational center for the Sicilian Mafia, Galicia is a
major staging point for the Colombian cartels, and The Netherlands
harbors important nodes of heroin traffic of the Chinese Triads.59
When pressure from the state, and from international forces (usually
US intelligence agencies), becomes excessive in a given country, even
in a region that was ‘‘safe’’ for organized crime (for example, the
significant repression of crime in Sicily in 1995–6, or in Medellin and
Cali in 1994–6), the flexibility of the network allows it to shift its
organizational geometry, moving supply bases, altering transporta-
tion routes, and finding new places of residence for their bosses,
increasingly in respectable countries, such as Switzerland, Spain,
and Austria. As for the real thing, that is the money, it circulates

59 Sterling (1994); Roth and Frey (1995); The Economist (1999b).

 GLOBAL CRIMINAL ECONOMY 211
safely in the flows of computerized financial transactions, managed
from offshore banking bases that direct its swirling in time and space.
Furthermore, escaping police control through networking and
globalization allows organized crime to keep its grip on its national
bases. For instance, in the mid-1990s, while the Colombian cartels
(particularly Medellin) suffered serious blows, Colombian drug traf-
fickers survived by modifying their organization and decentralizing
their structure. In fact, they were never a hierarchical, consolidated
cartel, but a loose association of exporters, including, in Cali, for
instance, over 200 independent organizations. Thus, when some lead-
ers become too inconvenient (as, for example, Rodriguez Gacha or
Escobar), or are eliminated, these networks find new arrangements,
new power relationships, and new, albeit unstable, forms of cooper-
ation. By emphasizing local flexibility and international complexity,
the criminal economy adapts itself to the desperate control attempts
by rigid, nationally bound state institutions, that, for the time being,
know they are losing the battle. With it, they are also losing an
essential component of state sovereignty and legitimacy: its ability
to impose law and order.
In a desperate reaction to the growing power of organized crime,
democratic states, in self-defense, resort to measures that curtail, and
will curtail, democratic liberties. Furthermore, since immigrant net-
works are often used by organized crime to penetrate societies, the
excessive, and unjust, association between immigration and crime
triggers xenophobic feelings in public opinion, undermining the tol-
erance and capacity of coexistence that our increasingly multi-ethnic
societies desperately need. With the nation-state under siege, and with
national societies and economies already insecure from their inter-
twining with transnational networks of capital and people, the grow-
ing influence of global crime may induce a substantial retrenchment
of democratic rights, values, and institutions.
The state is not only being bypassed from outside by organized
crime. It is disintegrating from within. Besides the ability of criminals
to bribe and/or intimidate police, judges, and government officials,
there is a more insidious and devastating penetration: the corruption
of democratic politics. The increasingly important financial needs of
political candidates and parties create a golden opportunity for or-
ganized crime to offer support in critical moments of political cam-
paigns. Any movement in this direction will haunt the politician for
ever. Furthermore, the domination of the democratic process by scan-
dal politics, character assassination, and image-making also offers
organized crime a privileged terrain of political influence (see volume
212 GLOBAL CRIMINAL ECONOMY

II, chapter 6). By luring politicians into sex, drugs, and money, or
fabricating allegations as necessary, organized crime has created a
wide network of intelligence and extortion, which traffics influence
against silence. In the 1990s, the politics of many countries, not only
in Latin America, have been dominated by scandals and crises in-
duced by the direct or indirect connection between organized crime
and politics. But in addition to these known, or suspected, cases of
political corruption, the pervasiveness of scandal politics suggests the
possibility that organized crime has discretely positioned itself in the
world of politics and media in a number of countries, for instance in
Japan (Yakuza),60 and Italy (Sicilian Mafia).
The influence of global crime also reaches the cultural realm in
more subtle ways. On the one hand, cultural identity nurtures most of
these criminal networks, and provides the codes and bonding that
build trust and communication within each network. This complicity
does not preclude violence against their own kind. On the contrary,
most violence is within the network. Yet there is a broader level of
sharing and understanding in the criminal organization, that builds
on history, culture, and tradition, and generates its own legitimizing
ideology. This has been documented in numerous studies of the Sicil-
ian and American Mafias, since their resistance to French occupation
in the eighteenth century, and among the Chinese Triads, which
originated in southern resistance to northern invaders, and then
developed as a brotherhood in foreign lands. In my brief description
of the Colombian cartels I have given a glimpse of their deep rooting
in regional culture, and in their rural past, which they tried to revive.
As for Russian crime, which is probably the most cosmopolitan in its
projection, it is also embedded in Russian culture and institutions. In
fact, the more organized crime becomes global, the more its most
important components emphasize their cultural identity, so as not to
disappear in the whirlwind of the space of flows. In so doing, they
preserve their ethnic, cultural, and, where possible, territorial bases.
This is their strength. Criminal networks are probably in advance of

60 To mention just one example of penetration of government by organized crime in Japan, let
me summarize a report from a reliable Japanese magazine. On January 3, 1997, former Minister
of Defense of the Japanese government, Keisuke Nakanishi, still a leading politician of the
Shinshinto party, was attacked and slightly injured at Haneda Airport by two members of the
Yakuza. The attack seemed to have been motivated by a dispute between the Yakuza and the ex-
Minister about his behavior while securing a large loan from a bank to a developer for the benefit
of the Yakuza. During the transaction, about 200 million yen disappeared, and the Yakuza was
using intimidation to recover the money. Mr Nakanishi was suspected of engaging in various joint
business ventures with Yakuza groups during his tenure as Minister of Defense (from Shukan
Shincho, January 16, 1997).
 GLOBAL CRIMINAL ECONOMY 213
multinational corporations in their decisive ability to combine cul-
tural identity and global business.
However, the main cultural impact of global crime networks on
societies at large, beyond the expression of their own cultural identity,
is in the new culture they induce. In many contexts, daring, successful
criminals have become role models for a young generation that does
not see an easy way out of poverty, and certainly no chance of
enjoying consumption and live adventure. From Russia to Colombia,
observers emphasize the fascination of local youth for the mafiosi. In
a world of exclusion, and in the midst of a crisis of political legitim-
acy, the boundary between protest, patterns of immediate gratifica-
tion, adventure, and crime becomes increasingly blurred. Perhaps
Garcia Marquez, better than anyone else, has captured the ‘‘culture
of urgency’’ of young killers in the world of organized crime. In his
nonfiction book Noticia de un secuestro (1996), he describes the
fatalism and negativism of young killers. For them, there is no hope
in society, and everything, particularly politics and politicians, is
rotten. Life itself has no meaning, and their life has no future. They
know they will die soon. So, only the moment counts, immediate
consumption, good clothing, good life, on the run, together with the
satisfaction of inducing fear, of feeling powerful with their guns. Just
one supreme value: their families, and in particular their mother, for
whom they would do anything. And their religious beliefs, particu-
larly for specific saints that would help in bad moments. In striking
literary terms, Garcia Marquez recounts the phenomenon that many
social scientists around the world have observed: young criminals are
caught between their enthusiasm for life and the realization of their
limits. Thus, they compress life into a few instants, to live it fully, and
then disappear. For those brief moments of existence, the breaking of
the rules, and the feeling of empowerment, compensates for the
monotone display of a longer, but miserable life. Their values are, to
a large extent, shared by many other youngsters, albeit in less extreme
forms.61
The diffusion of the culture of organized crime is reinforced by
the pervasiveness of the everyday life of the criminal world in the
media. People around the world are probably more acquainted
with the media version of the working conditions and psyche of
‘‘hit men’’ and drug traffickers than with the dynamics of financial
markets where people invest their money. The collective fascination
of the entire planet with action movies where the protagonists are
the players in organized crime cannot be explained just by the

61 Souza Minayo et al. (1999); Waiselfisz (1999).

214 GLOBAL CRIMINAL ECONOMY

repressed urge for violence in our psychological make up. It may well
indicate the cultural breakdown of traditional moral order, and the
implicit recognition of a new society, made up of communal identity
and unruly competition, of which global crime is a condensed
expression.