RESTORATION WATCH #2: RUSSIA’S ORGANIZED CRIME

(Washington, D.C.): One of the most
portentous indications of where Russia is
headed was provided to the Senate Foreign
Relations Committee yesterday by CIA
Director James Woolsey. Of particular
concern is the picture painted by Mr.
Woolsey of the cancerous growth of
Russia’s organized crime in recent months
— and the current and potential impact
of these criminal elements on U.S.
national security interests.

Highlights of the Woolsey testimony
included the following:

• “According to the Russian
  Ministry of Internal Affairs,
  there are roughly 5,700 organized
  crime groups in Russia, with an
  additional 1,000 in the former
  Soviet republics. [Of these],
  200, approximately, are large,
  sophisticated criminal
  organizations engaged in criminal
  activity throughout the former
  Soviet Union and 29 other
  countries.”
• “A recent report prepared by
  President Yeltsin’s staff
  concluded that 70 to 80
  percent of privatized enterprises
  and commercial banks have been
  victims of extortion [by
  organized crime].
• “Russian criminal groups are
  actively involved in the illegal
  transport and sale of narcotics,
  antiques, icons, raw materials,
  stolen vehicles, illegal
  immigrants, weapons, and some
  nuclear materials….[T]hese
  groups have the resources with
  which to bribe nuclear weapons
  handlers or employees at
  facilities with weapons grade
  nuclear material. They
  also have established smuggling
  networks that could be used to
  move such material out of the
  former Soviet Union.”
• “Criminal groups are also
  targeting the financial sector
  where economic reforms have led
  to explosions in the number of
  banks, in the complexity of their
  transactions, and in the
  geographic scope of their
  activities. ..[T]hese banks have
  become a particular target for
  money-laundering schemes. Indeed,
  links have been forged between
  Russian and Italian organized
  crime groups to move money
  through the Russian banking
  system. In addition to taking
  advantage of these banks,
  organized crime groups have set
  up front companies throughout
  eastern Europe and Russia.”
• “The power of
  Russian organized crime is
  largely due to their ties to
  corrupt government officials….Criminal
  groups may be spending as much as
  30 to 50 percent of their profits
  trying to buy off well-connected
  government officials, including
  Customs, militia, and police
  officials.
• “[The ramifications are
  enormous. For Russia
  itself there’s a real threat that
  the surge in crime will sour the
  Russian people on President
  Yeltsin’s reform program and
  drive them into the arms of
  Russia’s hard-line political
  forces.…Beyond the
  threat to Russian reform, the
  growth of organized crime could
  seriously affect our efforts
  worldwide to combat international
  crime.

As it happened, Roger W.
Robinson, Jr., formerly Chief
Economist at the Reagan National Security
Council and a distinguished member of the
Center for Security Policy’s Board of
Advisors, yesterday issued similar
warnings about the security implications
of emerging organized crime operations.
Speaking before the World Affairs Council
of Pittsburgh, Robinson made the
following observations:

• “At a time when the
  traditional firewall insulating
  market fundamentals is already
  being routinely breached by
  unpredictable political
  shockwaves and tremors — like
  the Colosio assassination in
  Mexico and the ominous directions
  of the North Korean nuclear
  crisis, Whitewater, bilateral
  trade relations with both Japan
  and China, and an increasingly
  revanchist Russia — the witting
  or unwitting disruption of these
  markets by the coordinated acts
  of crime syndicates becomes ever
  more perilous.”
• “Left unchecked, global
  organized crime will not only
  undermine domestic institutions,
  erode U.S. alliance structures
  and provide infrastructure for
  military and other operations
  against the United States. We are
  now on the threshold of such
  nefarious activities contributing
  to significant increases in U.S.
  long-term interest rates,
  inflation and unemployment, in
  part because they create an
  atmosphere of profound
  uncertainty and inflationary
  expectations.
• “Virtually every American
  borrower will end up paying this
  new tax-equivalent stemming from
  global organized crime over and
  above the already debilitating
  taxpayer costs associated with
  narcotics trafficking, violent
  crime, financial fraud,
  extortion, racketeering, illegal
  immigration, the destruction of
  neighborhoods, the spread of
  communicable diseases, higher law
  enforcement expenditures and
  other existing by-products of
  this scourge.”
• “It is surely getting
  difficult for the G-7 summit
  partners to ignore some $1
  trillion in laundered funds
  cycling annually through Western
  economies….If this kind of
  ‘sticker shock’ fails to awake
  the G-7, perhaps the new
  strategic alliances being forged
  between terrorist organizations
  and major criminal groups will do
  so. As nuclear materials
  — even plutonium — stream out
  of the former Soviet Union
  through military/KGB
  entrepreneurs and covert weapons
  procurement networks (à la that
  of Saddam Hussein) proliferate
  among the world’s pariah states,
  the consequences for Western
  security interests can no longer
  be permitted to fall victim to
  traditional U.S. interagency
  squabbling.”
• “A Senior
  Interdepartmental Group — Global
  Organized Crime (SIG-GOC) should
  be established — along the lines
  of the Reagan Administration’s
  SIG for International Economic
  Policy….Statutory
  members of this group should
  include National Security
  Council, Central Intelligence
  Agency, Department of State,
  Department of the Treasury, the
  Federal Reserve, Customs,
  Department of Defense, Defense
  Intelligence Agency, National
  Security Agency, Federal Bureau
  of Investigation, Internal
  Revenue Service, Drug Enforcement
  Agency and Immigration and
  Naturalization Service.
• “The private U.S. business
  and financial community must also
  be more sensitized to the
  symptoms of global organized
  crime, with appropriate penalties
  — including the application of
  the RICO statutes — for those
  entities knowingly facilitating
  such operations or compliant in
  the face of ample evidence of
  wrongdoing.
• “At an alliance level, the
  G-7 Financial Action Task Force
  must share more intelligence and
  prioritize targets of opportunity
  for joint allied action in the
  areas of prevention, preemption
  and enforcement. Not only
  should global organized crime be
  an agenda item at this July’s
  Naples Economic Summit, but a
  classified G-7 task force should
  be created by the heads
  of state comprised of
  representatives of finance
  ministries, customs, law
  enforcement, the security and
  intelligence communities, foreign
  affairs, defense ministries and
  central banks.
• “…There is no avoiding the
  need to bring U.S. and allied
  special forces and other military
  assets to bear on international
  crime-related missions.
  Preemptive action, in particular,
  will be essential if
  international economic and
  financial calamities like those
  described today are to be
  averted.”
• “Despite the courageous and
  dedicated work of U.S. law
  enforcement agencies (e.g., the
  FBI, Customs, DEA, etc.), the
  leadership of this country has
  not yet demonstrated the
  political will to undertake
  seriously this long twilight
  struggle. So long as this is the
  case, these agencies are being
  sent into the fray without the
  resources required for
  victory….In short, these
  international crime lords have to
  be made to pay a far more
  serious, sustained price which
  only the proper and coordinated
  use of our national security
  assets can exact.”

The Bottom Line

These insights into the looming
dangers arising from international
organized crime — and the Russian
contribution thereto — merit the urgent
attention of U.S. policy-makers and their
constituents. Otherwise, highly
publicized legislative initiatives like
the crime bill now moving through the
Congress will inevitably be seen as the
equivalent of “pin-prick
bombing” outside of Gorazde.