FROM: U.S. STATE DEPARTMENT
Confronting Converging Threats and the Dark Shadows of the Global Economy: Preventing Downward Spirals of Chaos, Insecurity, and Instability
Remarks
David M. Luna
Director for Anticrime Programs, Bureau of International Narcotics and Law Enforcement Affairs
Conseil Superieur de la Formation et de la Recherche Strategique
Paris, France
December 13, 2013
[As Prepared]
Good afternoon.
I would like to thank Alain Bauer, President of the Conseil Supérieur de la Formation et de la Recherche Stratégique (CSFRS) and the Government of France for their kind invitation to attend the “IVèmes Assises Nationales de la Recherche Stratégique” and share the U.S. perspective on some of the transnational challenges and risks that threaten our common security and interests in many parts of the world today.
It is always a pleasure for me to participate in events at military centers of learning like the École Militaire, where students and scholars can educate one other about the strategic art of confronting complex threats and challenges in a rapidly-changing world.
I can personally attest to the value of higher military education, having studied at the U.S. Army War College. While at the War College, not only did I gain a nuanced understanding of current global threats and pathways to promote and defend our national interests, I learned also that the Defense Department and the State Department are not from different planets, as we used to say in Washington. I came to understand that collaboration—across agencies, across borders—could act as a force multiplier for our own efforts.
So a big “hooah!” all around to military colleges for educating future leaders and fostering a Whole-of-Government, Whole-of-Society approach to global security.
Finally, I would also like to recognize my good friend Dr. Xavier Raufer, Université Paris II MCC, Conseil Scientifique, for his leadership over the years to address global security issues and foster collaboration between the United States and France against transnational crime, terrorism, and corruption.
In the time allotted to me, I would like to outline the converging threats that are increasingly alarming to the United States and our partners; how the United States is responding to these threats; and, finally, how the international community mitigates these threats and builds resiliency through collective action.
Navigating Global Threats and Geo-Security Risks: Human Disasters
Distinguished ladies and gentlemen, we live at a time of great promise and great peril. The theme of this roundtable—“Disorders of the world and crime: structural perspectives”—is timely.
Ever the optimist, I believe that through collaborative platforms, networks, and partnerships, we can create order from chaos and increase our ability to pull humanity back from the brink of disaster, especially where criminal entrepreneurs and illicit networks exploit calamity to erode our collective security and economic stability.
Corruption
Corruption is a particularly destabilizing force to our security, development, and prosperity agenda. Corruption is the lifeblood of transnational organized crime. International criminals have tremendous financial resources, and they spare no expense to corrupt government and law enforcement officials. Not only does corruption undermine security, development, and the rule of law, but it also erodes public trust in institutions, distorts markets, and fuels the spread of organized crime and terror.
Many of the threats we see emerging today are unified in one way or another by one common factor: corruption. Even in the most advanced economies, dark corners exist where a parallel, illicit market thrives. In these dark shadows, corrupt business leaders, government officials, and criminals are working together to influence the economies of many countries. Wherever criminal elements and their corrupt facilitators operate with impunity, our collective efforts to rid the world of ungoverned spaces, promote democracy and the rule of law, and expand legitimate economic opportunities will always be incomplete.
Illicit Trade
Illicit trade—or, as some have called it, “the dark side of globalization”—is another human-caused disaster, and one that I had the opportunity to discuss yesterday at the OECD High-Level Risk Forum as chair of the OECD Task Force on Charting Illicit Trade.
The illegal economy includes narcotics trafficking, wildlife trafficking, human trafficking, illegal logging, counterfeit consumer goods and medications, and other illicit enterprises. It is a network of shadowy markets in which illegal arms brokers and narcotics kingpins act as the new CEOs and venture capitalists.
According to some estimates, the illegal economy accounts for eight to 15 percent of world GDP, and in many parts of the developing world, it may account for several times this estimate. The estimated annual costs and revenues generated by transnational illicit networks and organized crime groups are staggering:
Bribery: Significant portion of $1 trillion
Narcotics Trafficking: $750 billion to $1 trillion
Counterfeited and Pirated Products: $500 billion
Environmental Crime (illegal wildlife trade, logging, trade in CFCs, and toxic waste dumping): $20 to $40 billion
Human Trafficking: 20.9 million victims globally, $32 billion annually
Credit Card Fraud: $10 to 12 billion
Simply put, illicit trade is a barrier to economic growth. It distorts legitimate markets, disrupts global supply chains, and depletes natural resources. It also imperils our collective security. We all experience the effects of illicit trade every day:
When governments cannot afford to provide vital public services and law enforcement because legitimate revenue streams from legitimate commerce are being siphoned away by corrupt officials, smugglers, and criminals;
When businesses suffer loss of revenue because of counterfeiting or black market distribution of their products;
When men, women, and children are trafficked and exploited, leading to the breakdown of families and communities, degradation of human capital, threats to public health, and extortion and subversion of government officials; and
When illicit financial flows and dirty money enter the global financial system, eroding the integrity of legitimate markets while giving false hope to victimized communities that illicit enterprise can replace fair and open markets.
Legitimate commerce loses as the illegal economy expands. We must shut down the illegal economy and create legitimate, transparent markets across the investment frontiers of tomorrow.
Terrorism
We have also come to understand how terrorism can create world disorder, chaos, and insecurity as terrorists engage in cowardly and criminal acts to destabilize peace and security across our communities.
Corruption, crime, and terrorism—the “unholy trinity” as Dr. Louise Shelley, Dr. Raufer, and other distinguished scholars have dubbed it—are the drivers of the global threat environment, the merging and blending of an ever-expanding array of illicit actors and networks.
In an interconnected world, the pipelines linking these threat actors and networks cut across borders, infiltrate and corrupt licit markets, penetrate fragile governments, and undercut the interests and security of our partners across the international community.
The growing illegal economy supports and enables corrupt officials, criminals, terrorists, and insurgents to mingle and conduct business with another. We must build our own networks to fight these illicit networks and break their corruptive influence.
Navigating Global Threats and Geo-Security Risks: Natural Disasters
Let me now say a few words about the cataclysmic events that threaten global security, especially those forces of nature that, when crossed with human disasters, engender an unprecedented level of vulnerability. Catastrophic heat waves, typhoons, earthquakes, flooding, new diseases—any one of these disasters can cause major disruptions to our physical infrastructure, economies, and institutions. When they converge with other geo-security threats, they create the “perfect storm” that can wreak havoc on the stability and security of states and communities. Across the Sahel, climate change, scarcity of resources, and human-caused disasters are contributing to anti-government movements, instability, and the breakdown of social harmony and cohesion.
I cannot emphasize this enough: to manage change and mitigate emerging geo-security risks such as these, we must better understand the adverse effects that corruption, illicit trade, and other global threats can have on economic growth and on achieving millennium development goals, as well as our security. More so now than ever before, it is crucial that we work together to address these international and transnational challenges.
Ladies and gentlemen, corruption and crime exist in every corner of the globe. So do terrorism and climate change. They occur in many of our communities, and on those occasions when they converge, they can bring disorder and instability. In this scenario, shadowy markets, criminal entrepreneurs, and illicit networks could become de facto service providers as governments collapse and chaos and insecurity increase, and in the worst case scenario, prey on the victims of pandemics, storms, and other disasters.
Diplomatic Engagement, Collaborative Platforms, Public-Private Partnerships, and Resiliency
In this ever-changing world, we need to adopt smarter, proactive approaches to market forces, natural disasters, and our own ethical failings. If we do not act, transnational threats will continue to imperil our communities, economies, and ways of life.
We must build a community of responsible governments, businesses, and civil society organizations, working together to build market resiliency, safeguard government integrity, and preserve our common security.
The United States has recently taken steps to make countering the convergence of illicit threats a national security priority. On July 25, 2011, the White House released the Strategy to Combat Transnational Organized Crime: Addressing Converging Threats to National Security, which aims to protect Americans and citizens of partner nations from violence and exploitation at the hands of transnational criminal networks.
While the problem of transnational illicit networks is as ancient as the trade routes that many such networks still employ today, the United States and its partners recognize the importance of net-centric partnerships to confront converging threats and the lethal nexus of organized crime, corruption, and terrorism along global illicit pathways and financial hubs.
Of growing concern are illicit financial hubs and their potentially complicit banks and market-based facilitators and super fixers—such as corrupt lawyers, accountants, black market procurers of commodities and services, and cross-border illicit transport movers.
Illicit financial hubs and sanctuaries help to create the permissive environment that enables illicit funds to enter through vulnerable points in the system and be transferred very rapidly, often with little control or regulation, anywhere in the world. All it takes is a single illicit actor or bank to accept an unsavory client for illicit funds or goods to spread and disguise themselves across the globe, from financial markets in New York and London to Dubai, Hong Kong, and other financial centers.
In support of the Strategy, the U.S. Congress established the Transnational Organized Crime Rewards Program in order to assist efforts to dismantle transnational criminal organizations and bring their leaders and members to justice. The new program complements the Narcotics Rewards Program by offering rewards up to $5 million for information on significant transnational criminal organizations involved in activities beyond drug trafficking, such as human trafficking, money laundering, maritime piracy, and trafficking in arms, counterfeits, and other illicit goods. We anticipate that by rewarding informants who provide leads and tips that help hobble transnational organized criminals, we can protect our citizens and homeland, and target similar threats abroad.
Moving forward, the United States will continue to build collaborative partnerships and knowledge-based platforms with the United Nations Office on Drugs and Crime (UNODC), the World Bank, the G8/G20, INTERPOL, the Financial Action Task Force (FATF), World Customs Organization (WCO), the European Union, the Asia Pacific Economic Cooperation Forum (APEC), Association of Southeast Asian Nations (ASEAN), Organization of American States (OAS), African Union (AU), and other regional and sub-regional bodies.
A New Paradigm to Confronting Transnational Threats: Convergence
In closing, at a time when global risks are growing and converging, the international community must come together to better understand the current and future disorders of our world. To confront today’s threats, risk and challenges, we must escape the conventional, inside-the-box mindset, and think more four-dimensionally—we must view today’s converging threats through a more panoramic prism and better understand how threats are increasingly linked and how illicit vectors come together in some of today’s” hot spots” and create a bigger threat altogether.
I would like to share five converging threats that I believe will be among the most critical for the international community to confront in the coming years.
Sustainability and Security: Harming our environment also harms humanity. Environmental security issues will be among the great challenges we face in the coming decades, including the impact that climate change, rapid urbanization, deforestation, natural disasters, and pandemics will have on food supplies, water levels, fisheries, and other critical resources. Given that we are a global community, consuming annually what some estimate is the equivalent of one-and-one half times our planet’s carry capacity, our ecological footprint is detrimental and unsustainable. Moreover, when we couple this with climate change, droughts, scarcity of resources, and humanitarian disasters that will trigger forced migrations. I expect that we will see more conflict and violence across some parts of the world. Global health security threats are likely to increase for many reasons, among them climate change bringing existing diseases to new areas; urbanization packing more people together in unhealthy environments, cheek-by-jowl with domestic animals that harbor cross-species viruses; and even progress in the life sciences that could enable malefactors to create microbial threats even as legitimate scientists develop new tools to defend ourselves against disease. In some of these ungoverned spaces and insecurity hubs, criminal networks and other illicit actors may become increasingly dominant.
Cybercrime and Virtual Currencies: Another emerging threat that many in the international community are concerned about these days is cybercrime. Cyber-based threats will continue to increase daily and as communities around the world lose data, money, and ideas through cyber intrusions and cyber criminals. In recent months, there has also been much reporting on the criminal exploitation of virtual currency systems that further transnational criminal operations, and the opportunities that cyberspace provides to entrepreneurial criminals to engage in illicit activities on-line and to launder their “dirty money” undetected. For example, earlier this year law enforcement shutdown several virtual currency platforms exploited by illicit actors including those involved in the Liberty Reserve $6 billion money laundering operation, which included credit card fraud, identity theft, investment fraud, computer hacking, narcotics trafficking, and child pornography. In another case, the U.S. Department of Justice has alleged that customers of Silk Road, the largest narcotic and contraband marketplace on the Internet to date, were required to pay in bitcoins to enable both the operator of Silk Road and its sellers to evade detection and launder hundreds of millions of dollars. While of growing concern, virtual currencies, have yet to overtake more traditional methods to move funds internationally, whether for legitimate or criminal purposes. Nonetheless, use of virtual currencies will continue to grow, especially among criminals eyeing to launder their illicit proceeds.
Human Trafficking and Enslaved Human Capital: Human trafficking will also continue to be a threat to communities across the world, especially as organized criminal networks target vulnerable men, women, and children. In many countries, victims of human trafficking, also known as trafficking in persons and modern slavery, are exploited, abused and forced to work in sweatshops, brothels, fields, and other trades and settings, some hidden behind dark corners, others in plain view, including as child soldiers. The thriving business that human trafficking constitutes allows criminals to make billions from the labor and exploitation of their victims. In addition to poverty, unemployment, and a lack of opportunities, as discussed earlier, natural disasters, conflict and political instability can also increase the incidence of human trafficking as people become vulnerable due to insecurity and economic distress. As long as some countries continue to turn a blind eye to the extent of human trafficking within and across their borders, governments and communities will not be able to build the new markets and investment frontiers to grow their economy due to the significant loss of their human and social capital.
Megacities, Population Tsunamis, and Dark Slums of Criminality: Megacities as a security issue will demand increasing attention as more and more people gravitate to cities for economic opportunities, escape from conflict zones, forced migration related to climate change, or are trafficked as indentured slaves. Many megacities are taxed and overflowing with newcomers, and yet they only keep increasing in population size. Faced with poverty and resource distribution imbalances, newcomers may be marginalized and resort to the shadowy economy to sustain themselves, leaving insecure pockets, crime ridden communities, and heightened ethnic and religious fault lines. In the coming years, it is reasonable for megacities to experience a convergence of economic security, environment security, sustainable security, and national security coming together to deal with the pressures of urbanization. Unmitigated, social unrest in megacities will have destabilizing impacts that will provide platforms for organized crime and other illicit networks to exploit, including trafficking people or exporting extremist recruits to spawn violence in other parts of the world.
Crime-Terror Convergence/Pipelines: I have been talking a lot about crime-terror pipelines over the past several years. In fact, through a partnership between the Defense and State Departments, the United States has brought together some of the top experts in the world to examine not only the possible crime-terror nexus but also to help us better understand the crime-terror pipelines across the global threat environment so that we can work with the international community to map threat networks, identify interlocking nodes, and to coordinate efforts to disrupt and dismantle transnational illicit bad actors and networks. We need to leverage more non-kinetic methods, especially financial tools and criminal justice responses, to better target corrupt actors and illicit pathways, and follow the money to disrupt and dismantle pipelines, target their facilitators, and eliminate their financial resources. We also need to better coordinate diplomatic efforts to identify and uproot safe havens and exploitable sanctuaries that enable criminals, terrorists, and other illicit actors and networks to corrupt governments, access illegal markets, and stage operations without fear of reprisal from law enforcement. I also believe, as Doug Farah and others have advanced, that there is a greater need to coordinate and expose and prevent conditions for the nesting of illicit forces with criminalized states such as we see, for example, in some parts of the Sahel. Some of the thinking and research which helped to inform our dialogues on combating crime-terror pipelines can be found in a book published in May 2013 by the National Defense University, “Convergence: Illicit Networks and National Security in the Age of Globalization.”
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The geo-security threats and risks that the international community confronts each day are very real and growing in complexity. However, our commitment to work through our common challenges will help us navigate the global threat environment. The United States is keen to strengthen cooperation with France and other committed partners to address these cross-border threats, in coordination with the international community and leaders and stewards of global security in both public and private sectors.
In the immortal words of one of the world’s greatest leaders and humanitarians of our lifetime, and someone who has had a tremendous impact on my views on humanity and security, I would like to conclude with a quote from Nelson Mandela, which I hope will end on a positive, inspiring note on the power of resiliency:
I am fundamentally an optimist. Whether that comes from nature or nurture, I cannot say. Part of being optimistic is keeping one’s head pointed toward the sun, one’s feet moving forward. There were many dark moments when my faith in humanity was sorely tested, but I would not and could not give myself up to despair. That way lays defeat and death.
We cannot give ourselves up to despair, we must march forward together to confront today’s global threats and anticipate tomorrow’s challenges recognizing that the real threat centers in their convergence. Thank you.
