MOSCOW - Over the past couple of months, experts on international crime have started raising the alarm: criminal activity is crossing borders like never before. The response from law enforcement must therefore be no less transnational.
The European Parliament has recently launched a Special Commission on Organized Crime, Corruption and Money Laundering (CRIM) that is supposed to create anti-mafia measures that will work on an international level, with some measures considered quite revolutionary. It’s amazing what just the repeal of bank secrecy is worth!
The members of CRIM are convinced that the standing laws to combat organized crime are no longer effective. According to Sonia Alfano, the president of the commission and the daughter of a prominent Italian journalist murdered by the Mafia in the early 1990s, the value placed on bank secrecy gave rise to the spread of dubious banking practices from Spain to Luxembourg.
Of course, this isn’t just about financial movements. According to Europol, there are around 3600 criminal gangs that are active in the European Union. Drug trafficking represents 12 billion euros per year.
The most recent study of the global black market, led by by Jose Torreblanca, head of the Madrid office of the European Union’s Council on International Relations, found that the worldwide black market is worth $1.8 trillion per year - more than the entire GDP of Spain.
How does Russia fit into the global criminal landscape?
“Usually when you are calculating the GDP of a country, you are supposed to include all economic activity, even things like prostitution, but it’s pretty hard to do that," explains Aleksei Ponomarenko, the assistant dean for statistics at Russia's Higher School for Economics. "There are occasional attempts to put value on illegal activities in Russia, based on law enforcement data, but it’s not really at the level it should be.”
Ponomarenko notes that when we are talking about the so-called "shadow economy," we are usually talking about hidden production (which is the production of goods that are legal, but underreported for tax evasion purposes) and the informal economy (old ladies who grow strawberries and sell them). In Russia this shadow economy accounts for about 20% of the nation's GDP, much more than in Western Europe, though significantly less than in Africa or some parts of Asia.
Largest black market is neither drugs or weapons
Western experts don’t agree with Ponomarenko’s accounting of the shadow economy in Russia, estimating that it makes up 46% of the country’s GDP.
But when it comes to illegal items like narcotics and counterfeit medicines, Ponomarenko is certain that Russia is more of a transit country than a producer. The only exception is bootleg alcohol, which has long been and continues to be Russia’s specialty.
According to Torreblanca’s report, the largest black market is for counterfeit medicine, which has a global market worth around $200 billion. The second largest market is prostitution, worth $187 billion, followed by counterfeit electronics. The drug trade and electronic piracy also make the top 10, but in contrast to popular notions, black-market weapons sales only makes it to the 24th spot.
The Unites States is the country with the largest criminal economy, while Russia comes in ninth, next to Britain and Germany. There were also some surprising (and shocking) figures included in the report: the cheapest place to buy a baby is Ghana, where a young child costs $350 for the parents, $300 for the middleman. In war-torn North Caucasus, a baby costs $17,500. Torreblanca did not respond to a request to clarify his sources or methods for arriving at these and other numbers. But based on reports by other organizations about things like trafficking in human organs, they are hardly far-fetched.