ISSN 2330-717X

Transnational Organized Crime: A Threat To Global Public Goods – Analysis

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By Dr. Marina Caparini*

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In September 2021 United Nations Secretary-General António Guterres warned that the world stands at an ‘inflection point’, facing a stark choice between ‘breakdown’ and ‘breakthrough’. Societies and the planet are at risk from the compounding effects of climate change, increasing armed conflict, pandemics, and rising hunger, poverty, injustice and exclusion.  

Our Common Agenda is the secretary-general’s response—a major initiative to reinvigorate multilateralism to benefit all people by advancing the global public goods of peace, a healthy environment, healthy populations and economic stability.

Guterres appointed a High-Level Advisory Board on Effective Multilateralism, co-chaired by former Swedish prime minister and new SIPRI Governing Board Chair Stefan Löfven and former Liberian president Ellen Johnson Sirleaf, to develop an independent report on how to strengthen governance arrangements that can deliver on the core global public goods. 

While Our Common Agenda is focused on positive principles and norms, we must also seek to mitigate the risks that could undermine progress. One of the most significant and neglected of these risks is transnational organized crime.

Transnational organized crime

Organized crime has been defined as ‘illegal activities, conducted by groups or networks acting in concert, by engaging in violence, corruption or related activities in order to obtain, directly or indirectly, a financial or material benefit’. Transnational organized crime occurs when these activities, or these groups or networks, operate in two or more countries. 

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Transnational organized crime can take many forms and is constantly evolving. The groups and networks involved are fluid, and channels for trafficking one commodity are often used for others. Some of the typical activities carried out by transnational criminal organizations are trafficking in humans, arms, drugs, minerals and wildlife; production and trade of counterfeit goods; fraud and extortion; money laundering and cybercrime.

Globalization, digitization and other advances in technology are further changing the nature of illicit markets and the modi operandi of transnational organized crime, recently including the emerging use of cryptocurrencies that make illicit financial flows harder to trace.  

Transnational organized crime and global public goods

Global public goods benefit all countries and all citizens of the world; no one can be excluded from enjoying them, and they cannot be adequately provided by any one state acting alone. Clean air, biodiversity and healthy oceans are prime examples of global public goods. Recent years have demonstrated all too clearly how seemingly local environmental issues such as deforestation and plastic pollution can have cross-border or global ramifications, and the same is true across other domains as well. 

The transnational dimension of much organized crime helps it to evade law enforcement, which is primarily set up to operate within national borders. Transnational crime actors systematically exploit jurisdictional gaps and differences in the law enforcement approaches and capacities of different countries. Combating transnational organized crime successfully therefore demands international cooperation.

Transnational organized crime is a significant barrier to progress on at least four global public goods identified in Our Common Agenda, as explored below.

Global public health

Transnational organized crime can negatively impact global public health through the widespread and increasing production and trafficking of counterfeit medicines. The problem especially afflicts low- and middle-income countries, where according to the World Health Organization an estimated one in ten medical products is either substandard or falsified. In 2015 the prevalence was estimated to be as high as 70 per cent in some parts of Africa and Asia. The trade in counterfeit medicines often has a transnational element, as the drugs are manufactured in one country (China, India and Singapore being major source countries) and then distributed to many others, and inserted into legitimate global medicine supply chains.

Counterfeit medicines may be ineffective at treating the targeted disease, and at worst may seriously harm or kill those who take them. The WHO estimates that over 1 million deaths per year worldwide result from substandard or falsified medicines, the largest number of cases (200 000) occurring in Africa. 

Counterfeit antibiotics are the leading type of counterfeit medicine, and have been directly linked to the rise in acquired bacterial resistance to antibiotics, including the global rise in drug-resistant tuberculosis.  

A resilient and inclusive global economy 

Another global public good identified in Our Common Agenda is a ‘more sustainable, inclusive and resilient global economy’. Financial integrity and combating tax evasion are key here. Transnational organized crime directly affects the public financing capacities of states and can obstruct economic development through tax evasion and illicit financial flows. This is especially corrosive for developing countries, depriving state treasuries of finances badly needed for investment in public goods like health, education and infrastructure. Transnational organized crime can also undermine the economic stabilityof a country by draining foreign exchange reserves and affecting asset prices. 

Money laundering involves a diverse range of financial, legal and commercial actors deliberately helping criminals to convert the proceeds of criminal income into assets that cannot be traced back to the underlying crime, and channeling illicit funds into the legitimate economy. 

Illicit financial flows involve the movement of money across borders that is illegal in its source, transfer or use, according to the International Monetary Fund. These flows can have consequences for local markets and societies. For example, several advanced economies have seen illicit financial flows distorting their property markets, as in Germany and the United Kingdom, exacerbating housing problems for local residents. As the Panama Papers and subsequent Pandora Papers document leaks showed, a vast global offshore economy operates alongside the legitimate international economy, with an estimated 10 per cent of the world’s wealth concealed in offshore financial assets by many of the world’s richest and most powerful individuals and entities, including former heads of state, heads of government and public officials, and members of the business elite. 

A healthy planet

Transnational organized crime has also undermined conservation of the environment and sustainable management of natural resources. Organized environmental crime is a broad field stretching from illegal logging, illegal natural resource extraction, and trade in protected species to the dumping of banned chemicals and waste. While the immediate impacts are often localized, with devastating effects on communities and ecosystems, the consequences can also be global. For example, organized environmental crime is reportedly a primary driver of deforestation in Central and South America, harming biodiversity and releasing vast amounts of carbon that contributes to global climate change. 

Another example is the illicit production and smuggling of synthetic refrigerants, hydrofluorocarbons (HFCs), which is undermining the achievements of the Montreal Protocol in reducing the production and use of ozone-depleting substances. HFCs are considered ‘super pollutants’ because they can be hundreds to thousands of times more potent than carbon dioxide in contributing to climate change, per unit of mass. Europe has seen significant smuggling of HFC refrigerants, an unintended consequence of the agreed 2016 phase-down in their production, skyrocketing prices and the low risk of serious penalties for smuggling.

Organized environmental crime has grown rapidly as a result of being highly lucrative yet coming with low risk. For example, one study of a small sample of 27 cases of illicit dumping of waste and toxic materials found them to have generated proceeds ranging from US$175 000 to $58 million. The lack of consensus on what constitutes organized environmental crimes; countries’ differing approaches to criminalization and enforcement; and ‘forum shopping’ by criminals have enabled many of them to evade enforcement efforts.

International peace and security

Organized crime undermines international peace and security by sustaining violence and armed conflict. The illicit arms trade is ranked as the third most pervasive illicit market globally. The illicit flow of arms escalates conflict and heightens conflict risk, and facilitates violent crime and other organized criminal activities. In conflict zones, non-state armed groups engage in illicit markets as a means of support, including illicit extraction and trade in natural resources and various forms of smuggling. Nevertheless, the involvement of non-state armed groups in transnational criminal markets is often eclipsed by the role of state actors, underscoring the close links between transnational organized crime, political power and public institutions, and corruption in many parts of the world. 

Annual casualty rates from organized crime often far exceed those from armed conflicts. Organized crime-related violence particularly afflicts several countries in Central and South America. The corrosive transnational effects of organized crime-related violence are increasingly visible in Central and South America, as destabilization and violence are spreading into some of the region’s smaller, formerly peaceful countries. 

The challenge now confronting the international community is how to address transnational organized crime as an obstacle to development, and at international level, how to stop it undermining global public goods. 

The scale of transnational organized crime

Estimates of the scale of transnational organized crime are difficult to arrive at due to the secretive nature of the activities and under-reporting by victims, but also due to the different, overlapping definitions and indicators used. Nevertheless, the UN has found that an estimated $1.6 trillion, or 2.7 per cent of global GDP, is laundered annually. And according to the World Bank, $1 trillion per year is used to bribe public officials. 

To put these figures in context, the total official development assistance going to developing countries in 2020 was only $194 billion. This demands a rethink of what today are the main threats to societal well-being and global public goods. 

Multilateral responses to transnational organized crime

The 2000 UN Convention Against Transnational Organized Crime (UNTOC) is the main legal instrument to combat transnational organized crime and establishes legislative standards for states. UNTOC and its protocols are currently under review by states parties. The UN Office on Drugs and Crime (UNODC) is the secretariat for UNTOC and other major international legal instruments to address transnational organized crime, including the 2003 UN Convention Against Corruption. The UNODC’s two governing bodies are the UN Commission on Crime Prevention and Criminal Justice and the Commission on Narcotic Drugs. Both have mandates that include aspects of transnational organized crime. 

The International Criminal Police Organization (INTERPOL), an intergovernmental organization,provides support to national law enforcement efforts against organized crime, including transnational organized crime. Within the European Union (EU), Europol, conducts analysis on crime and terrorism and supports the law enforcement efforts of member states, as well as cooperating with non-EU partner states and international organizations.

Unfortunately, multilateral efforts to develop collective responses to transnational organized crime have been weak and fragmented, and the current cooperation regime has been described by the Global Initiative Against Transnational Organized Crime as ineffective and antiquated. A 2019 report by the Global Initiative finds that 79 of the 102 UN entities, bodies and agencies have mandates that address some dimension of organized crime, and several other multilateral organizations are also engaged in efforts to combat the problem. Despite the UN’s broad coverage, the report says, it has no coherent strategy on tackling transnational organized crime and instead takes a piecemeal approach.

UNTOC has struggled to remain relevant in a context of rapid adaptation to change by criminal groups and states parties’ lack of enthusiasm for using the convention as a basis for cooperation. Certain powerful states prefer informal, unilateral solutions to dealing with transnational organized crime over using complex and slow formal international channels; however, these approaches often lack oversight and pose challenges to the rule of law and human rights. 

Reinvigorating multilateralism

Responding to transnational organized crime and corruption should inform the process to reinvigorate multilateralism launched by Our Common Agenda, and which will culminate in the 2023 Summit of the Future. There are two key tasks for strengthening multilateral responses to transnational organized crime. First, efforts should be made to develop a more comprehensive understanding of how transnational organized crime and corruption undermine essential global public goods. Second, political will needs to be built to work through effective instruments for international cooperation. 

In addition, a joined-up response and strategy to combat transnational organized crime in conflict prevention, peace operations and peacebuilding must be addressed in the New Agenda for Peace, a report that Guterres has promised will respond to the profound changes in the global environment, and will set out collective mechanisms and responses to traditional and emerging threats to peace and security. A more holistic vision and approach are needed that goes beyond purely criminal justice responses, and address the developmental, human rights and security implications of transnational organized crime and corruption for some of the world’s most vulnerable populations.

This commentary is the product of a research project on the role of peace operations in countering organized crime. SIPRI acknowledges the generous support of the Swedish Police Authority.

About the author: Dr Marina Caparini is a Senior Researcher and Director of the SIPRI Governance and Society Programme.

Source: This article was published by SIPRI

SIPRI

SIPRI is an independent international institute dedicated to research into conflict, armaments, arms control and disarmament. Established in 1966, SIPRI provides data, analysis and recommendations, based on open sources, to policymakers, researchers, media and the interested public. Based in Stockholm, SIPRI also has a presence in Beijing, and is regularly ranked among the most respected think tanks worldwide.

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