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Tracking the World s Black Market Fresh Air, Moises Naim, editor and publisher of Foreign Policy magazine. His new book is Illicit: How Smugglers, Traffickers and Copycats Are Hijacking the Global Economy. In it, Naim describes an international black market in which illegal arms, drugs and knockoff goods trade across the globe. Previously, Naim served as Venezuela s minister of trade and industry, where he helped institute reforms in the early 1990s. He also has worked with the Carnegie Endowment for International Peace and the World Bank. Read the First Chapter of Illicit: The famous former United States president, for eight years the most powerful man on earth, was born in a small country town blessed with "very good feng shui." As an adolescent struggling to excel in spite of his modest rural circumstances, he "admired the ambition of Gu Yanwu, who said we should walk 10,000 miles and read 10,000 books." Often during his political career he sought wisdom and guidance in the sayings of Chairman Mao. As for the starstruck young intern with whom he had an affair that nearly destroyed his presidency, he had this to say: "She was very fat." The Chinese version of Bill Clinton s autobiography My Life that hit the streets in July 2004, months before the official, licensed translation, was obviously a grotesque forgery. In Colombia, for instance, an entire cottage industry specializes in unlicensed copies of the works of the country s great novelist Gabriel Garca Mrquez. In 2004 a master copy of the Nobel Prize winner s first novel in ten years vanished without a trace from the printing press. Days later, a pirate edition could be found on Bogot sidewalks, its text accurate but for the final revisions that Garca Mrquez, a perfectionist, had been waiting until the last moment to turn in. Laughable as they may seem, little separates these scams from others with far more dire consequences. The same "knockoff markets" sell not only bootleg books and DVDs but pirated Microsoft and Adobe software; not only faux Gucci and Chanel accessories but bogus brand name machinery made with substandard parts that can cause industrial accidents; not only placebo Viagra for gullible mail order shoppers, but also expired or adulterated medicines that don t cure but kill. In defiance of regulations and taxes, treaties and laws, virtually anything of value is offered for sale in today s global marketplace including illegal drugs, endangered species, human chattel for sex slavery and sweatshops, human cadavers and live organs for transplant, machine guns and rocket launchers, and centrifuges and precursor chemicals used in nuclear weapons development. This trade is illicit trade. It is trade that breaks the rules the laws, regulations, licenses, taxes, embargos, and all the procedures that nations employ to organize commerce, protect their citizens, raise revenues, and enforce moral codes. It includes purchases and sales that are strictly illegal everywhere and others that may be illegal in some countries and accepted in others. Illicit trade is highly disruptive, of course, to legitimate businesses except when it isn t. For as we shall see, there is an enormous gray area between legal and illegal transactions, a gray area that the illicit traders have turned to great advantage. The marketing and distribution channels that transport all this contraband and the financial circuits that move the hundreds of billions of dollars that it generates every year aren t exactly hidden from view. Some of the physical marketplaces can even be looked up in tourist guides to the world s great cities: Silk Alley in Beijing, Charoen Krung Road in Bangkok, Canal Street in New York City. Others, like the arms and drugs bazaar town of Dara Adam Khel in northwest Pakistan or the multiproduct trafficking and money laundering center of Ciudad del Este in Paraguay, serving the Argentine and Brazilian markets, aren t exactly leisure spots but are no less widely known. Shipments of methamphetamine and bootleg videos and night vision military goggles often travel in the same containers and cargo holds as loads of semiconductors and frozen fish and grapefruit. The proceeds of illicit trade merge with the greatest of ease into the vast daily flow of interbank settlements and Western Union money transfers. And the Internet not only boosts the speed and efficiency of all of these trades but expands the possibilities by, for instance, hosting online markets for prostitutes from Moldova and Ukraine destined for shipment to markets in Britain, France, Germany, Japan, and the United States. Neither are those who benefit from illicit trade always careful to hide in the shadows. In Thailand, a massage parlor operator ran for public office in 2003 on a platform of criticizing the police in effect, running to defend his own interests in the trade in human beings while tapping into broader public discontent. In neighboring Cambodia, the national police are partners with international watchdogs in cracking down on the traffic in children for sex, but the local units collect payment envelopes from known traffickers in full public view. Illicit traders may have forsaken grand, hubristic gestures Pablo Escobar Gaviria, the famed drug kingpin, in his heyday offered to pay up Colombia s entire national debt but they have grown sophisticated in forming front companies with complex financial structures spanning numerous countries, blurring their traces so well that they can safely operate in the open. Which means that not only is illicit trade on the rise, but its interplay with social crisis conflict, corruption, exploitation is more complex than it has been since the abolition of the Atlantic slave trade. Yet in the face of all the evidence, at least three grand illusions persist in the way we the public and the politicians in whom we place our trust address global illicit trade. First is the illusion that there is nothing new. Illicit trade is age old, a continuous facet and side effect of market economies or of commerce in general. Illicit trade s ancestor, smuggling, ugg sale canada traces back to ancient times, and many a "thieves market" survives in the world s commercial hubs. Therefore, skeptics would argue that since smuggling has always been more a nuisance than a scourge, it is a threat we can learn to live with as we have always done. But this skepticism ignores the important transformations of the 1990s. Changes in political and economic life, along with revolutionary technologies in the hands of civilians, have dissolved the sealants that governments traditionally relied on to secure their national borders. At the same time, the market oriented economic reforms that swept the world in the 1990s boosted incentives to break through these sealants legally or otherwise. Not only did the hold of governments on borders weaken, but the reforms amplified the rewards awaiting those who were prepared to break the rules. Technology enlarged the market, not just geographically by lowering transport costs but also by making possible the trade in a whole range of goods that didn t exist before, such as pirated software or genetically modified marijuana. New technologies also made it possible to trade internationally products that in the past were hard or impossible to transport or hold in "inventory" human kidneys, for instance. Markets, of course, were also enlarged when governments deregulated previously closed or tightly controlled economies and allowed foreigners to visit, trade, and invest more freely. The massive transfer of goods and equipment once under the exclusive control of national armies into private hands released into the market products ranging from rocket launchers to SCUD missiles and nuclear designs and machinery. Moreover, governments also boosted illicit trade by criminalizing new activities. File sharing through the internet, for example, is a newly illegal activity that has added millions to the ranks of illicit traders. A clue to the explosion of illicit trade is the relentless rise of money laundering. Eventually, every illicit line of business generates money that needs to be laundered. And there is ample evidence that despite all the precautions and enforcement measures now in place, there is more and more dirty money floating in the international financial system now than ever before. Yet until now, with the exception of narcotics, illicit trade has simply not been a priority in international law and treaty making, or in international police work and cooperative law enforcement. The United Nations devised common language to describe it only in the year 2000, and most countries have a long way to go in adapting their laws to international standards, let alone enforcing them. It took the advent of software piracy and the birth of "intellectual property crime" to add a fillip to international efforts against counterfeiting. And trafficking in persons the most morally outrageous of all the forms of illicit trade was defined in the 1990s only by academics and activists, and made the subject of a specific, comprehensive law in the United States in 2000. (Only seventeen other countries have done the same.) The second illusion is that illicit trade is just about crime. It is true that criminal activities surged and became global in the 1990s. But thinking about international illicit trade as just another manifestation of criminal behavior misses a larger, more consequential point. Global criminal activities are transforming the international system, upending the rules, creating new players, and reconfiguring power in international politics and economics. The United States attacked Iraq because it feared that Saddam Hussein had acquired weapons of mass destruction. But during the same time a stealthy network led by A. Q. Khan, a Pakistani engineer, was profiting by selling nuclear bomb making technology to whoever could pay for it. Throughout the twentieth century, to the extent that governments paid attention to illicit trade at all, they framed it to their public, and to themselves as the work of criminal organizations. Consciously or not, investigators around the world took the model of the American and Sicilian Mafia as their blueprint. Propelled by this mind set, the search for traffickers almost always in drugs led to what investigators thought could be only corporate like organizations: structured, disciplined, and hierarchical. The Colombian cartels, Chinese tongs, Hong Kong triads, Japanese yakuza, and eventually after 1989 the Russian mafiya were all approached this way: first as criminal organizations, only later as traders. In most countries, the laws employed to prosecute illicit traders remain those born of the fight against organized crime, like the racketeering and corrupt organizations (RICO) statutes in the United States. Only recently has this mind set began to shift. The problem is that the world still thinks of these networks mostly in terms of terrorism. Yet, as the pages ahead show, profit can be as ugg boots women sale powerful a motivator as God. Networks of stateless traders in illicit goods are changing the world as much as terrorists are probably more. But a world obsessed with terrorists has not yet taken notice. The third illusion is the idea that illicit trade is an "underground" phenomenon. Even accepting that trafficking has grown in volume and complexity, many not least politicians seek to relegate it to a different world than that of ordinary, honest citizens and constituents. The language we use to describe illicit trade and to frame our efforts to contain it betrays the enduring power of this illusion. The word offshore as in offshore finance vividly captures this sense that illicit trade takes place somewhere else. So does black market, or the supposedly clearly distinct clean and dirty money. All signify a clarity, an ability to draw moral and economic lines and patrol their boundaries that is confounded in practice. This is the most dangerous of all these illusions, because it treads on moral grounds and arguably lulls citizens and hence public opinion into a sense of heightened righteousness and false security. This point is not about moral relativism. A thief is a thief. But how do you describe a woman who manages to provide some material well being to her destitute family in Albania or Nigeria by entering another country illegally and working the streets as a prostitute or as a peddler of counterfeited goods? What about bankers in Manhattan or London who take home big year end bonuses as a reward for having ugg classic tall sale stocked their bank s vaults with the deposits of "high net worth individuals" whose only known job has been with a government in another country? Many American high schoolers can procure a joint of marijuana more easily than they can purchase a bottle of vodka or a pack of cigarettes, and they know they don t really run any major risk in doing so. government funds to the tune of $40 billion a year. These are not just infuriating contradictions, unfair double standards, or interesting paradoxes. They are powerful clues about how age old human mores have acquired new hues. Since the early 1990s, global illicit trade has embarked on a great mutation. It is the same mutation as that of international terrorist organizations like al Qaeda or Islamic Jihad or for that matter, of activists for the global good like the environmental movement or the World Social Forum. All have moved away from fixed hierarchies and toward decentralized networks; away from controlling leaders and toward multiple, loosely linked, dispersed agents and cells; away from rigid lines of control and exchange and toward constantly shifting transactions as opportunities dictate. It is a mutation that governments in the 1990s barely recognized and could not, in any case, hope to emulate. The world s first unmistakable glimpse of this transformation came on September 11, 2001. Politicians would later say that on that day "the world changed." It might be more apt to say that on that day something about the world was revealed at the very least, the incredible power now residing in the hands of an entirely new kind of international entity, inherently stateless and deeply elusive. As subsequent events demonstrated, even experts disagreed as to what they were observing, and what it might have to do with specific states and regimes. Left unchecked, illicit trade can only pursue its already well advanced mutation. There is ample evidence that it offers terrorists and other miscreants means of survival and methods of financial transfer and exchange. Its effect on geopolitics will go further. In developing countries and those in transition from communism, criminal networks often constitute the most powerful vested interests confronting the government. In some countries, their resources and capabilities even surpass those of their governments. These capabilities often translate into political clout. Traffickers and their associates control political parties, own significant media operations, or are the major philanthropists behind nongovernmental organizations. This is a natural outcome in countries where no economic activity can match illicit trade in size or profits and therefore traffickers become the nation s "big business." And once their business becomes large and stable, trafficking networks do as big businesses are prone to do everywhere else: diversify into other businesses and invest in politics. After all, gaining access and influence and seeking government protection has always been part and parcel of big business. Therefore not only are illicit networks tightly intertwined with licit private sector activities, but they are also deeply embedded within the public sector and the political system. And once they have spread into licit private corporations, political parties, parliaments, local governments, media groups, the courts, the military, and the nonprofit sector, trafficking networks assume a powerful and in some countries unrivalled influence on matters of state. Excerpted by permission of Doubleday, a division of Random House, Inc. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
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