An Extreme Case of Globalization Gone Bad?

The illicit global economy is defined by clandestine cross-border flows of people, goods, money, and information that are unauthorized by the sending or receiving country. Typically this means flows that are prohibited (such as drugs and endangered species), regulated (such as cigarettes, arms, people), stolen (such as art, antiquities, and intellectual property), or counterfeit (such as prescription drugs or currency). Together, these flows reflect the illicit “underside” of economic globalization.

For authors Louise Shelley, Robert Mandel, and many of the other contributors to the edited volume, Convergence, globalization has empowered not just multinational corporations but also increasingly sophisticated transnational criminal organizations. Exploiting the revolutions in transportation and technology that have been defining features of globalization, these shadowy border hoppers are depicted as moving easily and swiftly, evading, corrupting, subverting, and sometimes violently confronting government authorities along the way. Everywhere these authors look, the state seems to be bullied, bought off, or simply bypassed. State actors are characterized as moving slowly, awkwardly, inefficiently—tied down by cumbersome rules, bureaucratic infighting, messy jurisdictional issues and sovereignty sensitivities, while illicit non-state actors, who face no such constraints, move across borders quickly, smoothly, and expertly. It is not a fair fight, these authors stress, with states increasingly on the losing side. In other words, states are losing control, and the dark side of globalization is largely to blame. And to make matters worse, the problem is characterized as so serious and spreading so rapidly that it now represents a first priority security threat to states and the international order.

But how big, exactly, is this threat, and how much has it grown? Unfortunately, we don’t really know—though this has not inhibited some observers from making bold and confident statistical claims. At best, these are guesstimates, and should be interpreted with a healthy dose of skepticism given their often highly politicized nature. ^{Footnote 2} A notable exception to simply glossing over these built-in measurement problems is the informative chapter in Convergence by Justin Picard, “Can We Estimate the Global Scale and Impact of Illicit Trade?” Picard tackles the quantification challenges head on, fully acknowledging and explaining the dubious nature of the data. The volume would have been significantly strengthened if the editors and other contributors had more explicitly engaged the concerns spelled out in this chapter.

Another basic problem with sweeping assertions about ever-weaker states being besieged by ever more powerful illicit transnational actors is that there is little, if any, historical perspective or comparison. The historical starting point tends to be the post-Cold War era. But if we go further back in time what most stands out is that many of the illicit activities focused on in these books, such as drug trafficking and money laundering, were not even criminalized and therefore not part of the illicit global economy a century or more ago. Most of the books reviewed here take criminalization for granted rather than something that needs explanation. At a minimum, however, it should be acknowledged that while the state faces a serious cross-border crime challenge, the state also in some respects has created more work for itself by criminalizing previously legal behavior.

In his introductory chapter in Dark Logic, Mandel covers history in just two or three sentences before moving on to emphasize how much everything has changed since the 1990s. The rest of the book is then mostly written in the present tense. This lack of historical perspective is especially puzzling since the Italian, Russian, Japanese, Colombian, and Chinese crime groups Mandel focuses on have deep historical roots—a number of which were arguably much more powerful in earlier eras. The so-called Colombian “cartels,” for instance, were actually a much bigger threat in the 1980s than they are today (and never came anywhere close to actually fitting the definition of a cartel). The Italian Mafia and the Japanese Yakuza are still going strong, but it is not at all clear that they are now stronger than in earlier decades let alone getting stronger—and their criminal activities have always been, and remain, mostly domestic (and therefore don’t easily fit Mandel’s story about the growing global reach of organized crime). Meanwhile, Mandel says surprisingly little about the rise of the Mexican crime groups that have supplanted the Colombian traffickers as the leading players in the Latin American drug trade—a particularly odd omission given the extraordinarily high level of drug-related violence in Mexico in the past decade.

While Mandel sees the world of transnational crime as one dominated by large-scale criminal organizations with many tentacles reaching across borders, in Human Smuggling and Border Crossings Gabriella Sanchez views it more from the ground up and sees a much messier and more fragmented world of cross-border crime in which illicit non-state actors are in reality mostly small-scale and loosely organized. Her focus is on the U.S.-Mexico border, one of the busiest borders in the world for both licit and illicit activity. Martinez is especially interested in making sense of how migrants are smuggled into the United States in the face of heightened border enforcement. Her study is a fascinating ethnographic account of the everyday practice and organization of clandestine border crossings, involving substantial participant observation and years of interviewing smuggled migrants.

Sanchez’s deeply grounded, “bottom up” case study provides an antidote to anxiety-producing political rhetoric and sensationalized media reporting about broken and besieged borders. Far from being easily crossed, Sanchez shows that the border is an increasingly dangerous obstacle course that must be carefully navigated—and indeed, it is the very challenge and difficulty of the crossing that makes migrants so dependent on professional smugglers for a successful journey. Unlike Mandel, Sanchez avoids characterizing smugglers as simply repugnant and evil. Some certainly fit this description, as evident by cases of smugglers leaving migrants stranded in the desert or locked in a cargo container. But what is particularly striking in Sanchez’s study is that migrants mostly consider smugglers to be useful clandestine travel service providers. And many of these smugglers care about their reputations, since they are often embedded within migrant sending communities and rely on a certain level of trust to secure continued business. What would further strengthen Sanchez’s account, of course, would be to also provide more comparative analysis across time and place. Do smugglers care less about their reputations and are they less trustworthy in other geographic and/or temporal contexts, and if so, why? Sanchez gives us few answers, or even clues, to these sorts of comparative questions.

In their broad conceptual chapter contribution to the edited volume, Convergence, Nils Gilman, Jesse Goldhammer, and Steven Weber zoom out to give us more of a snapshot of the various actors and activities involved in what they call “deviant globalization.” Yet their “big picture” account very much resonates with Sanchez’s “bottom up” border story. They stress the need to avoid moralizing stances that are not analytically useful, and instead point to the many roles and functions that illicit non-state actors play. This seems to directly counter the approach taken by the volume’s editors in their short overview introduction, in which those involved in illicit networks are simply labeled “bad actors.” Rejecting such black and white labels, Gilman, Goldhammer, and Weber instead unpack the varied nature of these actors and their motives (which, the authors stress, are often more about coping with globalization rather than simply greedily exploiting it). Like the editors of the volume and many of the other volume contributors, the authors blame globalization for fueling the “unpleasant underside of transnational integration,” but they have a much more nuanced and complex understanding of what this means.

International Cooperation Against the Illicit Global Economy

While there is a vast IR literature on international cooperation, the opposite is true of the literature on international cooperation against the illicit global economy. Indeed, Asif Efrat’s Governing Guns, Preventing Plunder is one of the few IR books on the subject. ^{Footnote 3} The bulk of the book focuses on three main cases: international cooperation against small arms, human trafficking, and the illicit trade in antiquities. A useful extensions chapter applies the argument to three additional cases: money laundering, drug trafficking, and counterfeiting. Efrat’s approach is decidedly “mainstream,” bringing a notoriously unconventional subject into a notoriously conventional literature. Efrat’s argument stays close to this literature’s roots. He confirms and extends more than challenges existing theory, albeit applied to an understudied realm. He applies a fairly simple and parsimonious cost-benefit analysis to international cooperation against illicit trade, and argues that the modest cooperation evident in this area reflects a lack of sufficient shared interest.

Efrat documents many of the reasons why states may not find it in their interests to cooperate more in combating illicit trade. He convincingly shows that this often reflects the interests of perfectly legal players rather than criminal organizations. In the case of the small arms trade, for example, powerful countries such as the United States and China have opposed greater regulation for self-interested reasons that have nothing to do with corruption or lobbying by illicit actors. And while weaker developing countries have played an important role in placing the small arms trade and the antiquities trade on the international agenda, it is not surprising that the results have been weak laws. At the same time, the United States has been the dominant player pushing the anti-human trafficking, anti-drug trade, anti-money laundering, and anti-counterfeiting agenda. This would seem to reaffirm the realist view that the international agenda primarily reflects the interests of the most powerful players—though Efrat tries to distance himself from a purely realist perspective. Here he “smuggles in” realist insights to explain what is often “coercive cooperation.”

Efrat’s theoretical model may be parsimonious and even elegant, but its application is at times rather mechanical and simplistic. In his model, for example, consuming countries have higher negative externalities from illicit trade than exporting countries. But this is clearly not true in some cases, such as the illicit drug trade—Mexico and Colombia, both leading drug exporters, have been far more negatively impacted than the United States, the world’s largest drug consumer. Countries that illicitly export antiquities and endangered species are also far more negatively affected than consuming countries. And the case of money laundering does not really fit an analysis of “exporters” and “consumers.”

Efrat also seems to assume that inadequate cooperation is the main explanation for the failure to stem these various illicit trades. This is a questionable conclusion given that the realm where international cooperation is most mature, institutionalized, and advanced—international drug control—is also a case of especially dismal policy failure. Efrat points to the lack of collective political will as the main obstacle to curbing illicit trade, but this understates capacity problems. For example, if the United States cannot even eradicate domestic marijuana production (one of the nation’s leading cash crops), or even keep drugs out of its prisons, why should we believe that the lack of international cooperation is the primary problem in combating the illicit drug trade? Efrat attributes the lack of cooperation to lack of shared interests. But at least in some cases it is equally plausible that the lack of cooperation simply reflects low confidence that much more cooperation—which mostly targets supply rather than demand—would solve the problem. Some governments may actually have “high interest” in curbing illicit trade, but have “low expectations” of success from much more international cooperation—and therefore have concluded that there are practical constraints on what they can hope to accomplish.

And this raises another question about motives. Efrat argues that the motivation for governments to cooperate in combating illicit trade is instrumental—the desire to reduce the harms generated by the targeted activity. But as a more social constructivist perspective would suggest, governments may also be motivated by symbolic politics—the desire to express moral resolve and signal moral condemnation regardless of effectiveness and sometimes even counterproductive results.

Indeed, this is J.C. Sharman’s explanation for the continued popularity of global anti-money laundering efforts in the face of highly questionable efficacy. In The Money Laundry, Sharman gives us not only a useful primer on the nitty-gritty of how money laundering works, but more importantly on how and why international cooperation in combating money laundering has emerged, spread, and matured in just a few decades. As Sharman points out, the global homogenization and standardization of anti-money laundering rules and procedures has extended so far that even the tiny pacific island republic of Nauru has an anti-money laundering apparatus despite being bankrupt and having a nonexistent financial sector. Refreshingly devoid of technical jargon, bloated literature reviews, and extended theoretical posturing, this may be the single most accessible, engaging, and persuasive book available on the topic of money laundering and anti-money-laundering efforts.

But even while Sharman makes a convincing case that the global anti-money laundering regime is mostly a feel-good measure for governments to project an image of “doing something” about illicit finance (with the regulatory burden falling disproportionately on poor countries), defenders of the regime can at least point to the fact that it is generally harder to launder money today than it was several decades ago. Long gone are the days when one could simply walk into a Miami bank with a duffel bag of cash and deposit it with no questions asked. Those who seek to launder their dirty money now face more hurdles—and banks face more compliance requirements—than ever before, even if the world of illicit finance continues to thrive. Still, as Sharman directly demonstrates by posing as a would-be money launderer (a methodologically innovative and audacious move), securing the services of anonymous shell companies to conceal the proceeds of crime turns out not to be all that difficult. As Sharman puts it, the best way to test the effectiveness of rules is to try to break them—and as he discovered, it was remarkably easy. Moreover, it turns out that the United States, the most forceful advocate of anti-money laundering initiatives, is the biggest culprit. Delaware, it seems, is a bigger obstacle to attacking criminal finance than “off-shore” financial havens such as the Cayman Islands. For the most part, anti-money laundering procedures, Sharman shows, are applied more rigorously in small countries than in major financial centers such as the United States.

A Growing Security Threat?

The study of security has significantly broadened since the end of the Cold War, mostly for the better, moving away from a singular preoccupation with interstate military threats to incorporate a wider diversity of activities and non-state actors—including, most prominently, transnational terrorists. Greater attention to the security implications of the illicit global economy has been part of this move to broaden the study of security, helping to push the security debate beyond its traditionally narrow confines. Some of the connections between the illicit global economy and security are self-evident, ranging from the trafficking of arms and nuclear smuggling to sanctions busting, to the use of illicit commodities to fund insurgencies. Yet emphasizing the security angle can also be overdone and distort analysis, leading to alarmist language and inflated rhetoric that generates more heat than light. This may be politically useful in terms of generating media and policy attention, but less useful in terms of diagnosing the problem.

A number of the books reviewed here highlight the security implications of the illicit global economy. In their short introductory overview, the editors of the volume, Convergence, argue that there is a rapidly growing convergence between criminal, terrorist, and insurgent networks—what they call the “crime-terror-insurgency nexus”—and that this presents a clear and present danger, indeed an existential threat. Yet this alleged convergence is mostly asserted rather than empirically demonstrated. Indeed, only a handful of the chapters in the volume even focus on it. And some chapters (such as Patrick Radden Keefe’s analysis of hubs in the illicit global economy) actually point to key differences between the requirements of terrorist and criminal operations. Thus, despite the title, much of the volume is not actually about convergence, and there is more divergence in terms of focus, perspectives, and approaches than the editors acknowledge (even if most of the contributors are in some form or another enmeshed in the Washington policy world). This actually makes for a more interesting volume even if it weakens the main argument of the editors.

Shelley’s Dirty Entanglements is also a book about convergence, in this case between transnational crime, terrorism, and corruption. The book has a simple and scary message: The dark worlds of terror, crime, and corruption have fundamentally changed in recent years, becoming increasingly intertwined and thus represent an alarming new global security threat.

Tracing such “dirty entanglements,” however, is easier said than done. Shelley provides a truly global survey, sometimes overstretching to connect the dots from case to case and place to place. She scrutinizes the many ways that crime and corruption—such as the use of fake IDs and dealing drugs, to bribing cops and other officials—have aided terrorist operations. Shelley contends that crime, corruption, and terrorism have in the past been analyzed as entirely distinct, but that this no longer makes sense in a globalized post-Cold War world. While there can be corruption and crime in the absence of terrorism, Shelley argues that terrorism relies heavily on corruption and crime, and that scholars and policymakers alike have failed to adequately realize this.

Perhaps the most important contribution of Dirty Entanglements is to encourage security scholars to think more like criminologists, and to encourage criminologists to devote more attention to security issues. Some crime and security issues have indeed been too artificially divorced in scholarly analysis, and Shelley has been at the forefront of trying to change that. But by pushing so hard to make her case, Shelley ultimately goes too far in this otherwise informative book. Shelley’s argument relies on oft-repeated claims of fundamental change and ever-growing threats. Words such as “new” and “transformed” appear on almost every page. Similarly, the problem is always identified as “worsening,” “growing,” or “increasing.” But while there has certainly been much change since the end of the Cold War, it is all too easy and tempting to overstate it—a problem that also characterizes much of the popular literature on transnational crime and terrorism (not to mention the often shrill and overheated policy debates on these topics). ^{Footnote 4}

Shelley does not consider possible counterarguments. She simply states that her book is the first to show the ever-closer ties between crime, corruption, and terrorism. Shelley does not acknowledge that some of her claims are actually hotly debated, including whether the terrorism threat may be overblown in some cases (and that the conveniently fuzzy “terrorist” label itself has become so loosely and widely used for political purposes that it has less and less analytical utility). ^{Footnote 5} For example, Shelley uses terms such as “narco-terrorism” without noting that this is highly contested. ^{Footnote 6}

Shelley goes to such lengths to expose the close links between crime, corruption, and terrorism that she does not tell us why such links are less evident in some cases. Crucial questions are not asked, let alone answered: What conditions are more or less conducive to forming, sustaining, and strengthening such links? For instance, in truly chaotic environments, it may be less necessary for crime and terrorist groups to buy off officials. Likewise, in less chaotic situations where there is stronger state presence, terrorist and crime groups may need to expend greater resources bribing officials.

Shelley is so adamant that terrorist and criminal interests are converging that she dismisses the possibility that in many cases their interests are not only not the same but may clash. We get no sense of what the conditions are, under which terrorist and criminal interests are most and least likely to converge. For example, drug trafficking organizations benefit from a porous U.S.-Mexico border and their smuggling business would be undermined by a border shutdown in the wake of a major terrorist border incident. Similarly, while Shelley repeatedly states that both criminals and terrorists thrive on chaos, many criminals actually benefit from a more stable and predictable business environment. Moreover, for many criminals, they simply wish to be left alone by the state—and what is most likely to provoke negative attention from the state in many cases (most notably the United States) is aiding and abetting terrorists.

Future Trends: Growing Chaos and Disorder?

None of the books under review here dwell much on the future and where we are most likely headed, though it is not hard to imagine that for authors such as Mandel and Shelley the future is a pretty bleak and scary place if current trends continue. There is no good news in their accounts. Quite the opposite—things just seem to be getting worse and worse. Phil Williams, in his chapter for the Convergence volume (provocatively titled, “Lawlessness and Disorder: An Emerging Paradigm for the Twenty-first Century”) provides the clearest—and grimmest—assessment of how things may play out in the coming years and decades. Williams projects that the future will be defined by a continuing weakening of states in which illicit non-state actors and activities spread in an increasingly violent, lawless, and out of control world. For Williams, a gathering storm of illicit flows that may turn into the “perfect storm” is a dark and dangerous future. Williams’ argument is partly persuasive—the growth of megacities in the global South, global warming, and migration pressures will plausibly create a much more fertile environment for criminal enterprise. But what Williams doesn’t take into account is that there may also be countertrends pushing in the other direction. For instance, full legalization of marijuana, already underway in some places, would remove the world’s most popular illicit drug from the illicit global economy, enabling law enforcement to focus on harder and more dangerous drugs. Technological advances not only aid law evasion but also law enforcement—for instance, technology has enabled governments to mostly stay one step ahead of currency counterfeiters (even if the headache of counterfeiting remains). Much to the frustration of law enforcement, new communications technologies often facilitate illicit trade, such as the use of cellphones for drug dealing, but at the same time this has greatly reduced visible open-air drug markets and the street violence associated with it. Thus, rather than pointing to trends that all lead in one direction toward a more lawless, violent, and illicit-flows saturated world, a more complete and complex picture of the future takes into consideration countertrends and ambiguous trends. If the past is any guide to the future, instead of expecting some sort of fundamental shift in the illicit global economy that leaves states paralyzed to do anything about it, we are arguably more likely to simply experience the latest chapter in an age-old story of continuity and change in the battle between law enforcers and law evaders. ^{Footnote 7}

This is not to suggest that the problems associated with the illicit global economy are not serious, and may even get worse, especially in some parts of the world. Illicit economic activity will likely continue to be a defining source of tension between developed and less developed regions (such as the EU in relation to its immediate neighbors to the east and south, and the United States in relation to its southern neighbors). Illicit flows may become more and more difficult to “weed out” of the growing volume of flows that define the process of globalization. But we need to take a deep breath and resist hyperventilating—especially when such hyperventilating can lead to knee-jerk policy responses that may do more harm than good and may even contribute to the very problem they are supposed to solve. The sky is not falling. The global economy is not being hijacked by the illicit dark side of globalization and is unlikely to be in the foreseeable future (and indeed, as the 2008 financial crisis powerfully demonstrated, the bigger threat may ultimately come from perfectly legitimate actors behaving recklessly even if not necessarily illegally ^{Footnote 8} ).

While there is much anxiety and handwringing over the threat of global crime, it is interesting to note that there is virtual silence in most of the books reviewed here regarding any negative repercussions of intensified state responses to this threat. For instance, just as we have seen an unprecedented expansion of the surveillance state in the aftermath of September 11 (with all sorts of troubling civil liberties implications), one can imagine the continued growth of the policing state in the name of fighting transnational organized crime. After all, the “war on drugs” has already transformed (and in some ways overwhelmed) the criminal justice system in the United States and throughout much of Latin America. And in some places, this has included a growing militarization of policing and a domestication of the military for policing tasks. ^{Footnote 9}