On the Criminality of Transition
The Balkans Between Omerta and Vendetta
Or: On the Criminality of Transition
By: Sam Vaknin, Ph.D.
In a State Department briefing on Thursday, August 5th, 1999, the spokesman
of this venerable and ever-so-truthful organ of the American administration,
James Rubin, said:
"We have supported and continue to support the regime in Montenegro that is a
democratic regime that has pursued a democratic course. We do believe that
Milosevic''s efforts to consolidate power have led to repeated violations of the
Yugoslav federal constitution, in particular the rights and privileges of
Montenegro.
In particular, Belgrade has sought to strip Montenegro''s constitutional
rights and powers and has prevented Montenegro from playing its constitutional
role in the federal government. We continue to believe that Montenegro''s leaders
have demonstrated a measured and rational approach to political and economic
reform, which we support. We commend their efforts to work within the FRY for
reforms that would bring democracy and a better life to all Yugoslav citizens.
To achieve that objective, we''ve been providing them assistance, we''ve been
exempting them from the effect of certain policies that apply to Belgrade and
the people of Serbia. We worked very, very hard during the war to avoid any
unnecessary damage to facilities or people in Montenegro as a result of the air
war. So we have been showing, I think, great efforts to try to build up the
democratic efforts that President Djukanovic has shown in Montenegro. We think
that they should continue to work within Yugoslavia to ensure their rights are
protected."
The war in Kosovo and the impending war in Montenegro and the wars that were
in Croatia and Bosnia - were all gangland warfare. These were skirmishes between
gangs of criminals, disguised as statesmen, politicians, members of
"parliaments" and businessmen. Some of them were protecting their turf - others
were trying to usurp it and they all made a killing, often literally. It is the
same the world over - from Lebanon to Myanmar, from Sierra Leone to Nigeria and
from Sarajevo and its ephemeral Stability Pact to the killing fields of Pristina.
Crime gangs, Mafiosi, local versions of omertas and vendettas, black hands and
red rivulets of the cheapest liquid of them all: blood.
Shadowy dealings, drug trafficking, white slavery, smuggling and forfeit
goods are all intertwined with political power in the Balkans. Thaci we
discussed elsewhere. Milosevic we discussed everywhere. But Djukanovic is
portrayed as different - more gentlemanly, "democratic", a protector of civil
rights.
Nothing can be further from the truth. The West - notably the USA - is in the
habit of creating pairs of villains and heroes, monsters and saints where there
are none. It provides for good soundbites, it raises the fighting spirits at
home and it focuses attention and energy on the enemy. Very often, the spin
doctors are caught in their own whirlwind and with them - if they happen to be
American - the rest of the world.
Shrewd villagers such as all Balkan politicians are, have caught on to this
self-delusion. They pose as democrats, autocrats, strong men, underdogs -
anything to get Western aid and investment flowing. It is currently very
fashionable and expedient to be a democrat - so Mr. Djukanovich is a democrat.
And the West duly delivers the goods: international recognition, money,
political support.
Milka Tadic is the Editor of the popular (and, as you will see, independent)
Montenegrin magazine "Monitor". This week, she wrote about Djukanovich (in
"Currency Wars", in IWPR number 63):
"Whenever Djukanovic, then Montenegro''s Prime Minister, demanded economic
liberalization and more economic independence, Milosevic would close the border
and block trade between Serbia and Montenegro. In retaliation, Djukanovic opened
Montenegro''s borders with Italy, to cigarette smuggling, and with Albania, for
oil imports.
Djukanovic also liberalized the import of foreign, second-hand cars- many of
them stolen vehicles from Western Europe that Montenegrins bought from the
Bosnian-Croat mafia, in border towns in Bosnia.
Taxes from imported cars, the smuggling of cigarettes and oil, provided
Djukanovic with the hard currency to replenish the republic''s coffers and begin
to chart an independent course away from Belgrade. In economic terms, this tiny
republic was becoming less and less dependent on its partner in the Yugoslav
federation.
...
As NATO launched its bombing campaign, the Yugoslav Army took over control of
the Montenegrin border crossings and custom posts, banning even the entrance of
humanitarian aid; speed boats smuggling cigarettes between Montenegro and Italy
could no longer break the blockade; and the border with Albania was also closed.
Djukanovic was facing economic disaster and was only saved by the end of the
war, since when Montenegro has resumed its dubious trade with its neighbours."
Hence the love affair with the West.
Human vice is the most certain thing after death and taxes, to paraphrase
Benjamin Franklin. The only variety of economic activity, which will surely
survive even a nuclear holocaust, is bound to be crime. Prostitution, gambling,
drugs and, in general, expressly illegal activities generate c. 400 billion USD
annually to their perpetrators, thus making crime the third biggest industry on
Earth (after the medical and pharmaceutical industries).
Many of the so called Economies in Transition and of HPICs (Highly Indebted
Poor Countries) do resemble post-nuclear-holocaust ashes. GDPs in most of these
economies either tumbled nominally or in real terms by more than 60% in the
space of less than a decade. The average monthly salary is the equivalent of the
average daily salary of the German industrial worker. The GDP per capita - with
very few notable exceptions - is around 20% of the EU''s average. These are the
telltale overt signs of a comprehensive collapse of the infrastructure and of
the export and internal markets. Mountains of internal debt, sky high interest
rates, cronyism, other forms of corruption, environmental, urban and rural
dilapidation - characterize these economies.
Into this vacuum - the interregnum between centrally planned and free market
economies - crept crime. In most of these countries criminals run at least half
the economy, are part of the governing elites (influencing them behind the
scenes through money contributions, outright bribes, or blackmail) and - through
the mechanism of money laundering - infiltrate slowly the legitimate economy.
What gives crime the edge, the competitive advantage versus the older,
ostensibly more well established elites?
The free market does. Criminals are much better equipped to deal with the
onslaught of this new conceptual beast, the mechanism of the market, than most
other economic players in these tattered economies are.
Criminals, by the very nature of their vocation, were always private
entrepreneurs. They were never state owned or subjected to any kind of central
planning. Thus, they became the only group in society that was not corrupted by
these un-natural inventions. They invested their own capital in small to medium
size enterprises and ran them later as any American manager would have done. To
a large extent the criminals, single handedly, created a private sector in these
derelict economies.
Having established a private sector business, devoid of any involvement of
the state, the criminal-entrepreneurs proceeded to study the market. Through
primitive forms of market research (neighbourhood activists) they were able to
identify the needs of their prospective customers, to monitor them in real time
and to respond with agility to changes in the patterns of supply and demand.
Criminals are market-animals and they are geared to respond to its gyrations and
vicissitudes. Though they were not likely to engage in conventional marketing
and advertising, they always stayed attuned to the market''s vibrations and
signals. They changed their product mix and their pricing to fit fluctuations in
demand and supply.
Criminals have proven to be good organizers and managers. They have very
effective ways of enforcing discipline in the workplace, of setting revenue
targets, of maintaining a flexible hierarchy combined with rigid obeisance -
with very high upward mobility and a clear career path. A complex system of
incentives and disincentives drives the workforce to dedication and
industriousness. The criminal rings are well run conglomerates and the more
classic industries would have done well to study their modes of organization and
management. Everything - from sales through territorially exclusive licences
(franchises) to effective "stock" options - has been invented in the
international crime organizations long before it acquired the respectability of
the corporate boardroom.
The criminal world has replicated those parts of the state which were
rendered ineffective by unrealistic ideology or by pure corruption. The court
system makes a fine example. The criminals instituted their own code of justice
("law") and their own court system. A unique - and often irreversible -
enforcement arm sees to it that respect towards these indispensable institutions
is maintained. Effective - often interactive - legislation, an efficient court
system, backed by ominous and ruthless agents of enforcement - ensure the
friction-free functioning of the giant wheels of crime. Crime has replicated
numerous other state institutions. Small wonder that when the state
disintegrated - crime was able to replace it with little difficulty. The same
pattern is discernible in certain parts of the world where terrorist
organizations duplicate the state and overtake it, in time. Schools, clinics,
legal assistance, family support, taxation, the court system, transportation and
telecommunication services, banking and industry - all have a criminal
doppelganger.
To secure this remarkable achievement - the underworld had to procure and
then maintain - infrastructure and technologies. Indeed, criminals are great at
innovating and even more formidable at making use of cutting edge technologies.
There is not a single technological advance, invention or discovery that
criminals were not the first to utilize or the first to contemplate and to grasp
its full potential. There are enormous industries of services rendered to the
criminal in his pursuits. Accountants and lawyers, forgers and cross border
guides, weapons experts and bankers, mechanics and hit-men - all stand at the
disposal of the average criminal. The choice is great and prices are always
negotiable. These auxiliary professionals are no different to their legitimate
counterparts, despite the difference in subject matter. A body of expertise,
know-how and a*****en has ac*****ulated over centuries of crime and is handed down
the generations in the criminal universities known as jail-houses and
penitentiaries. Roads less travelled, countries more lenient, passports to be
bought, sold, or forged, how to manuals, classified ads, goods and services on
offer and demand - all feature in this mass media ***** educational (mostly
verbal) bulletins. This is the real infrastructure of crime. As with more
mundane occupations, human capital is what counts.
Criminal activities are hugely profitable (though wealth ac*****ulation and
capital distribution are grossly non-egalitarian). Money is stashed away in
banking havens and in more regular banks and financial institutions all over the
globe. Electronic Do*****ent Interchange and electronic commerce transformed what
used to be an inconveniently slow and painfully transparent process - into a
speed-of-light here-I-am, here-I-am-gone type of operation. Money is easily
movable and virtually untraceable. Special experts take care of that: tax
havens, off shore banks, money transactions couriers with the right education
and a free spirit. This money, in due time and having cooled off - is reinvested
in legitimate activities. Crime is a major engine of economic growth in some
countries (where drugs are grown or traded, or in countries such as Italy, in
Russia and elsewhere in CEE). In many a place, criminals are the only ones who
have any liquidity at all. The other, more visible, sectors of the economy are
wallowing in the financial drought of a demonitized economy. People and
governments tend to lose both their scruples and their sense of fine
distinctions under these unhappy cir*****stances. They welcome any kind of money
to ensure their very survival. This is where crime comes in. In Central and
Eastern Europe the process was code-named: "privatization".
Moreover, most of the poor economies are also closed economies. They are the
economies of nations xenophobic, closed to the outside world, with currency
regulations, limitations on foreign ownership, constrained (instead of free)
trade. The vast majority of the populace of these economic wretches has never
been further than the neighbouring city - let alone outside the borders of their
countries. Freedom of movement is still restricted. The only ones to have
travelled freely - mostly without the required travel do*****ents - were the
criminals. Crime is international. It involves massive, intricate and
sophisticated operations of export and import, knowledge of languages, extensive
and frequent trips, an intimate acquaintance with world prices, the
international financial system, demand and supply in various markets, frequent
business negotiations with foreigners and so on. This list would fit any modern
businessman as well. Criminals are international businessmen. Their connections
abroad coupled with their connections with the various elites inside their
country and coupled with their financial prowess - made them the first and only
true businessmen of the economies in transition. There simply was no one else
qualified to fulfil this role - and the criminals stepped in willingly.
They planned and timed their moves as they always do: with shrewdness, an
uncanny knowledge of human psychology and relentless cruelty. There was no one
to oppose them - and so they won the day. It will take one or more generations
to get rid of them and to replace them by a more civilized breed of
entrepreneurs. But it will not happen overnight.
In the 19th century, the then expanding USA went through the same process.
Robber barons seized economic opportunities in the Wild East and in the Wild
West and really everywhere else. Morgan, Rockefeller, Pullman, Vanderbilt - the
most ennobled families of latter day America originated with these rascals. But
there is one important difference between the USA at that time and Central and
Eastern Europe today. A civic culture with civic values and an aspiration to,
ultimately, create a civic society permeated the popular as well as the
high-brow culture of America. Criminality was regarded as a shameful stepping
stone on the way to an orderly society of learned, civilized, law-abiding
citizens. This cannot be said about Russia, for instance. The criminal there is,
if anything, admired and emulated. The language of business in countries in
transition is suffused with the criminal parlance of violence. The next
generation is encouraged to behave similarly because no clear (not to mention
well embedded) alternative is propounded. There is no - and never was - a civic
tradition in these countries, a Bill of Rights, a veritable Constitution, a
modi***** of self rule, a true abolition of classes and nomenclatures. The future
is grim because the past was grim. Used to being governed by capricious,
paranoiac, criminal tyrants - these nations know no better. The current criminal
class seems to them to be a natural continuation and extension of
generations-long trends. That some criminals are members of the new political,
financial and industrial elites (and vice versa) - surprises them not.
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