Misha Glenny was at Oxford to promote his recent book - very much about crime, but no fiction here - McMafia: Crime Without Frontiers. In a superb presentation, he talked his way through a Powerpoint array of pictures, illustrations and short videos, managing to tour many of the world's crime capitals and explained how the west is partly reponsible for the growth in crime. Various sources estimate that 15% to 20% of the world's GDP comes from the shadow economy which includes organised crime, tax evasion, corruption and fraud. The EU values counterfeit goods at up to $500bn a year. At $100bn p.a., cyber crime is the fastest growing sector.
He started by saying that in 1989 with the fall of communism, we saw "250m people liberated from Stalinist systems that had ossified in eastern Europe" and that "none had thought of the implication of all this and how complex the legacy would be on integrating the new democracies". In the mid 80s the west was also seeing the advent of globalisation. Markets became more accessible resulting in increased trade across the world and the movement of money. He described this as an "entrepreneurial opportunity knocks".
Then he showed us a picture saying that in eastern Europe we had the "sudden appearance of these characters". In the book it carries the caption "Bulgaria's nascent capitalist class gathers for its Annual General Meeting. At the beach, three men are sporting enough bling, that if gold - and we assume that it is - it could probably buy a couple of beach huts on the Suffolk coast. They look like they've spent a lot of time in the gym, but gave up in the last year as fat is creeping in below those thick necks and man boobs are becoming evident. They are the sort of men, well, you simply would not want to be near them.
They had, said Glenny, access to apartments, cars, and sex on tap that no one else had. Their privileges no longer came from the state. With the fall in policing, people with surveillance came on the market and got together with the body builders to police themselves. Pablo Escobar linked to the Bulgarians to move more cocaine.
The yakuza in Japan, in bed with Japan's political class, was making lots of money. When this collapsed in 91/92, leading to the yakuza recession, they lost little, even though everyone else did. When money needed shifting, Israel was popular with the Russians.
The EU has become the most affluent environment in history, explained Glenny, and is a demand driven market. "We can't get enough of women, cheap labour, narcotics, untaxed cigarettes" he declared, adding that the former Yugoslavia is the conduit for this movement. He traced the route and the initial movement is to Italy. These guys only have the best and he then showed us a video of an attempt by the Italians to intercept a boat carrying cigarettes. They simply can't match the speed of the importers, so the only way to stop them is to chase them for long enough that they run out of fuel. By the end of the video we had seen just how many boats the Italians had to use to have a chance of doing this.
After covering the former Soviet Union, Glenny talked about the lack of control in the banking system in the 90s. Clinton had noticed that money was being stashed into the usual off-shore places, so he put organised crime on a par with terrorism and started a more controlled banking system intended to be global. Then along came Bush who demolished the regulatory system, as he saw the EU as trying to remove US competitiveness. Glenny noted that even though some countries sign up to the anti-money laundering regime, they don't actually do anything about it.
Then we crossed the border to Canada. When it comes to the narcotics trade, British Columbia has the highest organisation of crime syndicates, about which law enforcement can do "the square root of bugger all". Vancouver alone had 25k growth operations in residential units, but last year Quebec overtook them.
And now, forget where you are because it doesn't matter much: the biggest growth sector at the moment is cyber crime. Glenny believes that banks don't care too much about this as they saved so much money on personnel when they moved to the internet. Risks lie in identity theft and online banking. He mentioned Operation Pegasus and showed the gmail page to prove that 27,143 people had replied to a spam email in one month alone. There are two types of crime here, explained Glenny:
- to the individual (and at £10/£15 a shot you can see how much money can be made per month)
- to businesses (where the battle is on, e.g. data kidnapping).
Back in 2004, 90% of cyber crime came from ego hackers. By 2007, 90% of cyber crime came from criminal hackers. The main centres of cyber crime are the BRIC countries: Brazil; Russia; India and China. [And how worrying to see India on that list given how many call centres have been outsourced to that country from UK businesses, especially in the banking sector.] In these countries, said Glenny, high levels of poverty mix with access to computers, good education and powerful economic growth.
So what of the future for organised crime? Well, the future looks bleak according to Glenny. The EU estimates that 60% of the exported goods from China are counterfeit, but the west has become used to cheap goods from China. With a recession coming, contraction will lead to a fight over wealth in the world. Glenny believes that the best way to attack the shadow economy is to tackle the money-side of things and the banking sector.
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This was an excellent presentation and the book became a "must read". Afterwards, I asked Glenny, should a recession come, with up to 20% of the world's GDP from the shadow economy, surely we are at more risk than we were in the 90s? I got an affirmative in response. And I suppose that Gordon Brown's done nothing about this? He waved his hand as if swatting a fly. So, if you haven't done so already, belt-tightening needs to start now. (Today, we have seen reports that house prices have seen a greater monthly fall in March than in 1992.)
I note that Glenny is also appearing at this year's Hay Literary Festival (draft programme), scheduled for Saturday May 31 at 14:30. If you are going, please do book this event as Glenny, while highlighting risks, also entertains and educates. I'd put this in the "not to be missed" category, without doubt.
I am dipping into this book on an almost daily basis. The language may be colourful on times, but I believe this serves to make it more accessible in terms of readership. A more formal approach would make it more of an academic tome and restrict readers. This is the world out there and Glenny knocks more than a few nails on the head. For crime fiction writers who want to have a global plot, I can imagine this becoming a seminal text for research purposes. For anyone who wants a better understanding of how organised crime affects their life: it's a must.
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Posted by: Valentin Vasilescu | 12 April 2008 at 20:49