18 November 2008 **** Front Page

"Free market" meets crime

By Tapani Lausti

Misha Glenny, McMafia: Crime Without Frontiers. The Bodley Head 2008.

When the current financial crisis started unravelling, some commentators asked "where are the handcuffs?" Dealing with "toxic" financial products was compared to selling any toxic product. Of course, no law was found which could be used to punish financial operators who were causing misery to millions of people. However, the question about handcuffs was relevant in the sense that in the real world the much trumpeted "free market" conducts its operations close to criminality and sometimes becomes part of the shadowy world.

There is a certain naiveté among many decision-makers about how the world operates. They seem to have had only a hazy idea, if any at all, how the deregulation of international finance opened the gates not only for reckless financial activities but for outright criminal operations as well. (Of course, those who gained most from deregulation probably understood all this but couldn't care less about any side effects. Indifference to people's suffering is part of their mental constitution.)

One specific example comes from the Balkans which Misha Glenny knows intimately: "Then — and not for the last time — the West did something really, really dumb. On May 30th, 1992, the UN Security Council in New York passed Resolution 754, which imposed economic sanctions on Serbia and Montenegro. The Balkans — war-ravaged, impoverished and traumatised — were about to be transformed into a smuggling and criminal machine that had few, if any, paralells in history. While the world wrung its hands and fretted over the terrible nationalist urges of the Yugoslav peoples and their leaderships, the Balkan mafias started putting aside their ethnic differences to engage in a breathtaking criminal collaboration." (p. 31)

One might ask indeed whether the lesson is that a common interest which unites people — like a functioning, reasonably egalitarian economy — would in no time at all weaken those destructive nationalistic or ethnic urges. Instead the Western attitude only continued policies of neoliberal "free market" ideology which played a great part in tearing the old Yugoslavia apart in the first place.

The single most important cause for the huge rise in organised crime, according to Glenny, was the collapse of the Soviet Union: "Almost overnight, it provoked a chaotic scramble for riches and survival. From the bitter wars of the Caucasus to the lethal shoot-outs in towns and cities, this was a deadly environment as a new class of capitalist exploited the vacuum of power by seizing whole industries and raiding the state coffers." (p. 67)

This Russian version of the Chicago-school market economics cohabited nicely with ruthless and violent criminal culture. Here international finance "experts" were again making fools of themselves: "As the IMF shovelled billions into Russia to stabilise the economy and prop up the ruble, the oligarchs sent even larger sums to obscure banks in every corner of the world (...) to be swallowed almost immediately in bafflingly complex money-laundering schemes. The whole process was dramatic testimony to how venality and myopic stupidity are always likely to triumph in the absence of regulatory institutions." (p. 72-73)

Glenny continues his journey following criminal trails around the world: India, China, Nigeria, South Africa, South and North America. The story is appalling as scenes of cruelty and violence unfold. Narcotics, of course, are one of the main merchandises in this bloody underground world. The UN estimates that 70 per cent of financial resources available to organised crime derives from the narcotics industry.

Indeed, many people who have watched the narcotics trade have come to the conclusion that the only way out is the legalisation of drugs. Glenny believes that in the US "the war on drugs inflicts massively disproportionate damage on America's underprivileged minority communities". (p. 273) He reports that a growing number of former law-enforcement officers speak out in favour of the decriminalisation or legalisation of narcotics in the US. However, the political scene makes this impossible although there are some signs that attitudes might be slowly changing. It is easy to show what a failure the War on Drugs has been: "... slowly the American people may be reflecting that, after almost four decades of the War on Drugs, dependency levels and usage are higher that ever before..." (p. 276)

Misha Glenny's book throws interesting light on the downside of the globalised system. As the leaders of the world's nations are struggling to cope with the semi-collapsed financial and industrial system, Glenny points out that where there is inability to account properly for financial dealings, "the ability of criminals to launder their money through this merry-go-round of speculation is greatly increased. The Caymans, The British Virgin Islands and all the other offshore banking centres are the back door through which criminal money can enter the legitimate, if increasingly opaque, money markets. Western governments could close this anomaly overnight if they took decisive action, making money-laundering a significantly trickier prospect. But they don't." (p. 393)


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