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CRIMINAL PROSPERITY : DRUG TRAFFICKING, MONEY LAUNDERING AND FINANCIAL CRISIS AFTER THE COLD WAR
(excerpts)

Guilhem Fabre[*]

UNESCO/Éditions de l’Aube, 1999
(to be published by Curzon Press, UK, 2002)[**]

    The history of organised crime and of the recycling of its profits cannot be separated from the politics of the surrounding society. This book makes the point vividly by drawing a parallel between the colonisation of Asia before 1914, which was financed in part by the illicit opium trade, and the post-Cold war globalisation, which favoured Mafia-like tendencies in many emerging countries, such as China.

    The corruption of the system which develops easily in the new context of commercial and financial globalisation, facilitates the formation of a true criminal economy, based on the use or the threatened use of violence, infiltrating governments at the provincial or even central levels.

   As this economy grows and its benefits are recycled -a process of which  the best known and most analysed aspect is the drug trade-  they come to play a significant role in the multiple crisis of the international financial system. The author demonstrates this convincingly through the examples of Japan, Mexico, Thailand and Russia. His argument could be extended to the financial crisis which shook Argentina and Turkey in 2000-2001.

   The uneventful slide from everyday corruption to a genuine criminal economy, marginal in relation to the formal economy, but aggressive and influential in political terms, creates a race, each stage of which influences the very nature of the globalisation process.
 

CONTENTS

Introduction

I/ The mirror of history
    Opium and colonization

II/ Drugs and post-communism: the Chinese Case
    The rise of drugs trafficking and consumption in China
    The new drugs war
    The expansion and diversification of drugs supplies
    Yunnan : drugs and geo-politics in Sino-Burmese relations

III/ The socio-economic stakes of drug trafficking
    The laundering matter
    The role of off-shore banking

IV/ Japan: the Yakuza  recession
    Lessons from the Japanese crisis

V/ Crisis and laundering in Mexico: from the "tequila effect" to the "cocaine effect"

VI/ Crisis and laundering in Thailand: the provincial godfathers' launch on Bangkok

Conclusion

Introduction

As of the end of the Cold War the world is witnessing wide-spreading corruption, organized crime, and drug trafficking and consumption. This book attempts to sort out the ties between these three phenomena on the basis of evidence which points to their convergence in the 19th century and currently, to the extensive encroachment of the illicit economy. The UN and IMF estimate current organized crime turnover at one trillion dollars. That which is the equivalent of 4% of global GDP. At least 50% of this sum corresponds to earnings from narcotics trafficking, the sector which is best known. Indications are that criminal networks do not limit their activities solely to drug trafficking but that organized crime partakes in all other forms of illicit profit, namely, smuggling; arms and fissionable materials trafficking; slave trade and prostitution procurement; dangerous waste and toxin products export; the theft of cars, art objects and archaeological pieces, and other activities of the sort. What we are seeing is the strengthening of multiservices networks as of trade globalization.

The mirror of history, as seen in the first chapter through the example of the Middle Empire, and more generally that of Asia, projects the image of the incestuous ties knit between opium, colonial accumulation, and corruption. The end of the Cold War signals a market economy expansion at a planetary scale similar to that which prevailed before the World War I (1914-1918). This movement is accompanied by a comeback of illicit economy, drug trafficking, and corruption in emerging and transition countries. The Chinese example, developed in the second chapter, allows us to analyze the institutional, social and geopolitical issues tied to the resurgence of drugs in a country from which opium had been eliminated after the 1949 revolution.

The third chapter deals with the economic effects of the narcotics traffic, and more widely of organized crime, as of the money laundering issue. One of the essential paradoxes of drug policies relates to the fact that criminalization is enforced at the consumption level whereas money laundering ¾the center of gravity of the economic market¾ basically goes unpunished. Despite calls for decriminalization of consumption by numerous doctors and even Interpol General Secretary, Raymond Kendall, prisons are crammed with user-dealers who are to provide the future criminal work force in the USA. Thus, for example, two thirds of all inmates have serious drug abuse problems.

The clamor which is kept up regarding drug consumption contrasts with the relative silence surrounding the laundering of narcoproceeds. Although the pointers pile up, one after the other, through a series of judicial scandals involving highly-placed persons, including several heads of state, public opinion still does not clearly perceive the qualitative changes attained by “elite-level” delinquency. Not too long ago, robbing a bank was one of the most profitable crimes there was. Nowadays, however, it is far more profitable to get the money into the bank. The principal threat comes, not from the bank robber, but from the banker who is paid off to keep quiet regarding these transactions. In other words, corruption becomes the weapon used to commit the crime. The banking profession is fairly well respected and has an image which is far from the temptations to which it is a prey. It remains sheltered from the suspicions of a public opinion otherwise generously provided with anecdotic details regarding the mafia.. Extremely high earnings of globalized financial markets have accustomed many operators to wide profit margins which are hard to reach through actual production processes but which can be easily negotiated through laundering activities, which have a turnover of up to 25% or 30% on the monies invested.

Convergence of the licit, illicit and criminal spheres owes much to this financization dynamic and to the anonymity enjoyed by users of off-shore banking systems. Its effects, already being loosely studied by the IMF, are quite significant, as recounted in the pages of this book which tracks the ties between money laundering and financial stabilization in the Mexican, and later Thai and Japanese crises, which spilled over to all of Asia and the rest of the world. If organized crime’s best ally is the fear it inspires and the silence it maintains, the time has come to disclose the prosperities to which it resorts to build its economic and political expansion.

Introduction translated by María Mercedes Moreno, Mama Coca


[*] Sinologist and socioeconomist, Professor at the Faculty of International Affairs, Le Havre University.
[**] Published in Chinese. Pu Jilan (translated by Li Yuping): FANZUI ZHI FU : DUPING ZOUSI, XI QIAN YU LENGZHAN HOU DE JINGRONG WEIJI Beijing, Shehui kexue wenxian chubanshe, 2001, 216p

By the same author


Révo.cul dans la Chine pop. : Anthologie de la presse des gardes rouges 1966-1967 (Editor), Paris, Editions 10/18, 1974.

Le nouveau conte d’hiver, by Yu Luojin, translated from the Chinese in collaboration with Huang San, Paris, Editions Christian Bourgois, 1982.

Conte de printemps, by Yu Luojin, translated from the Chinese in collaboration with Huang San, Paris, Editions Christian Bourgois, 1984.

Genèse du pouvoir et de l’opposition en Chine : le printemps de Yan’an, 1942, Paris, Editions L’Harmattan, 1990.

Le miroir chinois de la transition : Genèse d’une crise, 1989-2000, Paris, Editions L’Harmattan, 2002.

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