The problems of organized crime and terrorism were often considered separate phenomena prior to September 11th. The security studies committee, the military and parts of law enforcement increasingly viewed terrorism and transnational crime as strategic threats. But these problems were often seen as distinct. Seminars would discuss the emerging threat of transnational crime or terrorism but the important links between the two were rarely made.

September 11th has changed the strategic thinking in this area. Terrorism and transnational crime are now central threats to our national and international security. Yet more needs to be understood about the links between these two phenomena. Many illustrations of the crime and terrorism link in Western Europe and the United States have appeared in the mass media. Much less has been written on this subject in the Pacific context. But the same linkages occur that have been identified elsewhere and the linkages between the two phenomena compound the potency of each. Illustrations of the links between organized crime and terrorism are the following:

1) Terrorists engage in organized crime activity to support themselves financially
2) Organized crime groups and terrorists often operate on network structures and these structures sometimes intersect, terrorists can hide themselves among transnational criminal organizations
3) Both organized crime group and terrorists operate in areas with little governmental controls, weak enforcement of laws and open borders
4) Both organized criminals and terrorists corrupt local officials to achieve their objectives
5) Organized crime groups and terrorists often use similar means to communicate-exploiting modern technology
6) Organized crime and terrorists launder their money, often using the same methods and often the same operators to move their funds.

Each of the points above will be illustrated with examples from the Pacific Region. The particular areas where these links will occur are in areas with weak controls and little effective political authority:

Russian Far East

Southern Philippines

Sri Lanka

Golden Triangle

Parts of Indonesia

Financial Support from Illicit Activity

The increasing share of the world economy attributable to illicit activity provides the financial resources for transnational crime groups to operate and hire expertise. The source of the illicit capital in the Pacific region are such illicit commodities as drugs, human beings smuggled and trafficked, small arms and valuable natural resources such as timber. A particular feature of organized crime in the Pacific region is piracy, some of it linked to the maritime transport of high technology. This is proving increasingly profitable for the organized crime groups.

Counterfeiting of goods, dollars and CDs and other electronic equipment is a major financial problem for organized crime. This is not exclusively an organized crime problem as North Koreans are involved in the massive counterfeiting of dollars.

The nexus of drug crime and terrorism widely recognized in Colombia (FARC) and in the Balkans (KLA) is highly prevalent in Asia. The most notable examples of this are in Afghanistan (Taliban and Al Qaeda) and Sri Lanka (Tamil Tigers) but the linkages also exist in the Northern region of the Pacific Rim among the North Koreans, the Russians and other organized crime groups operating in the region. Many of these groups are involved in more aspects of the drug trade than just cultivation but help transport and even distribute drugs closer to the main markets.

The blending of the legitimate and the illegitimate characterizes the financing of their operations. The resources of the terrorists or the profits of transnational crime groups are combined with legitimate funds making it hard to detect where the criminal ends and the legitimate funds begins. For example, in the Bank of New York Case, millions of funds emanating from criminal activity were combined with legitimate accounts of corresponding banks in Russia. Al Qaeda uses charities to move money. Some of the charities funds are directed towards social welfare activities in the community whereas a tithe or more is used to support terrorists.

Organized Crime Groups Operate as Networks

Transnational crime groups often operate on a network structure. The network structure is not unique to this group but characterizes many other terrorist groups and many of the new transnational organized crime groups. Unlike the top-down-hierarchical structure of a mafia-type organization, newer organized crime groups such as Russian-speaking groups and terrorist groups such as the Al Qaeda function as networks. It gives organizational flexibility, reduces the possibility of penetration and provides greater efficiency. These structures make it more difficult to identify leaders. The newer criminal groups and leading terrorist organizations resemble more modern legitimate business structures than the older corporations like Ford and the steel industry.

Organized crime group networks are often of the same nationality, though they form alliances with other crime groups to conduct their activities. In contrast, the networks of groups such as Al Qaeda are themselves transnational. They can unite individuals from the Middle East with those in the Far East. Likewise, the organized crime groups from the Russian Far East work with North and South Koreans, Japanese, Chinese and Vietnamese among others. The networks are not affiliated with any particular state. They are non-state actors striking at the citizens of a state, states or different states.

Base of Operations

Organized crime groups and terrorists function where the controls of the central state are least, where there are porous borders and weak law enforcement. In areas with weak controls, transnational crime groups operate. Others provide the home base for terrorist groups. In some, a cooperative or/even symbiotic relationship exists between the crime group and the terrorist group operating within the region. The Russian Far East has become a central locale for the operation of organized crime and terrorists because it is far from the central controls of Moscow and the governmental and law enforcement structures are heavily infiltrated by organized crime.¹ The same absence of controls characterizes the area adjoining the Golden Triangle. The terrorist groups of Myanmar can support themselves by the drug trade and can operate with impunity near Southern China, Laos and to a lesser extent Northern Thailand. The Southern part of the Philippines remains outside of central state control. Likewise, the Fukian province in China from which so much human trafficking originates is an area outside the control of the Chinese central government where complicit officials allow the crime groups to operate.

Indonesia, in the post-Suharto period, has lost the central controls of the previous period. The lack of state control, the weak and ineffective law enforcement and the multi-national nature of the society makes it possible for terrorist groups to operate in parts of the country. Furthermore, while significant transnational crime groups are not yet institutionalized, there are increasingly visible organized violent groups.

Corruption of Officials

Organized crime and terrorist groups are dependent on officials who can be corrupted or look the other way. The bossism of the local political bosses in the Philippines, the corruption of cadres in the Chinese Communist Party,² the pervasive corruption of the Soviet political system and the now infamous corruption of the Suharto government have provided a fertile ground for these crime groups to operate. In the Philippines, prostitution, smuggling and protection rackets of crime groups have been tolerated by the authorities, often because they take their local cut.³

In Thailand, the police derive a significant amount of their income from the pervasive prostitution. Pay-offs to the police are a central part of the operations of the crime bosses.⁴ This endemic corruption means that there has been no curb on the growth of organized crime.

In the Far East of Russia and in China, strong crime groups, with links to the surviving Communist power structure have stepped in to fill the power vacuum and now operate on a global scale. Members of the security apparatus, the FSB, in Russia and in Public Security Bureau of China are involved. In China, as in Russia, the collusion of government officials is central to the capacity of smugglers to operate. Crime groups also work with corrupt officials in other countries and cooperate with international crime groups as necessary.⁵ The trade in human beings from both countries owes much to the legacy of corrupted Party power structures.

Communications

Terrorists, like transnational organized crime, exploit information technology to maximize the effectiveness of their operations. They use cellular and satellite telephones, the Internet, email and chat rooms. They code their messages through encryption and steganography (hiding messages within other messages). They exploit the anonymyzer features of the Internet to evade detection. The Internet is a tool for perpetration of their crimes. Whereas, organized criminals run gambling on the Internet, terrorists solicit funds through websites for charities that fund terrorist groups. International fund movements are facilitated by information technology. Instructions for money transfers through the financial centers of the legitimate global economy are made through the phone and Internet. Yet, the underground banking system of hawala (the banking of the Indian subcontinent) is even more dependent on rapid and secure transmissions of information by phone and web.⁶ Members of the terrorist group are provided special training in computers and software and computer engineers are hired by the groups to facilitate communications.

International organized crime groups and terrorists both employ specialists. These specialists conduct intelligence operations, move money, and specialize in information technology and communications. The most successful of these groups have educated specialists within their ranks while others contract out for these services. Those hired on a contractual basis may be knowing accomplices or may be hired through intermediaries, unaware who are the end users of their services. For example, Asian language specialists are hired by Russian organized crime to be their intermediaries.

Criminals and terrorists both engage in illicit activity. The transnational criminals do this solely to make money. Whereas for terrorists, this ordinary criminal activity is used to support their larger political and ideological objectives. Yet the crimes committed by these two groups differ only in motive and not in substance. Both types of transnational criminals traffic drugs, human beings, counterfeit, and engage in diverse forms of fraud.

Money Laundering

Money laundering is a central part of organized crime activity in the Pacific Rim as well as elsewhere in the world. The problems of investigating this activity are particularly severe because of the widespread use of underground banking systems in the region such as hawala in the communities of the Asian sub continent and the gold exchanges of the Chinese community. Russian organized crime in the region has developed enormous varieties in the ways that it launders money. The absence of regulation of it its banking system has provided fertile ground for money laundering. Furthermore, the absence of controls in Japan over the banking system and the collusion between the banks and organized crime have aggravated this problem.

The possibility of moving illicit funds so easily in the region promotes the ability of transnational criminals and terrorists to operate. Furthermore, it allows the funds of both these groups to commingle with facility.

Conclusion

Transnational crime will be a defining problem of the 21st century because of the enormous economic discrepancies between developing and developed countries, the presence of many weak states in which crime and terrorist groups can operate and an international demand for the goods and services which these groups provide. This problem is particularly apparent in the Pacific region where rapid economic development has created a widening divide between the haves and have nots. This is true within countries such as the widening financial gap among citizens in China and the very significant differences in income per capita among countries within the region. For example, the enormous difference in the standard of living between the citizens of the Russian Far East where monthly income averages less than a $100 a month and neighboring South Korea and Japan with high income levels provides a fertile ground for illicit activity of both the criminal and political kind. This outcome is particularly true when one considers the weak political controls and criminalized elite that operated in many regions of the Russian Far East.

The massive international illegitimate economy allows the illicit to operate with facility amongst the licit. The enormous discrepancies in regulation in a globalized world allows criminals and terrorists to exploit this lack of consistency to their advantage. This is particularly true with the large amounts of money that move on the basis of trust and not through formalized financial institutions.

The United States has declared a war against terrorism. As national strategy is developed to counter the security threat of terrorism, it is imperative that the struggle be based not just on attacking the most visible manifestation of the program but the larger conditions which allow these groups to operate. This will require more attention to the problem of weak states, lack of harmonization in regulation and the failure to have effective law enforcement cooperation across borders. Enhanced training of law enforcement personnel is not sufficient. Individuals must see that their benefits in cooperating with the authorities in attacking organized crime. The proceeds of organized crime and terrorism must be channeled to development.

The war against terrorism cannot be separated from the fight against transnational crime. The points of convergence of the two forms of transnational crime make it impossible to address one with out the other. By focusing on the crime element of the terrorism problem, it is possible to detect terrorist operations in ways that might not otherwise be detectable.

Moreover, many of the strategies presently being applied to combat terrorism, following of money trails, freezing of assets, and safeguarding borders are ones used to combat transnational crime. The current emphasis on locating the financial resources of terrorists and harmonizing laws regulating international financial movements are just part of a need to achieve greater transparency and international cooperation in law enforcement and financial regulation.

Transnational organized criminals and terrorists use network structures to run their operations. Our national strategy needs to respond to networks with networks. Coalitions and cooperation are needed as to get at the larger structures that allow the cells to operate effectively.

The national strategy to fight transnational crime and criminals must focus away from the state level policies of the Cold War era to the non-state actors who operate among the cracks of the state systems, penetrating countries and exploiting the differences in state based regulation. This is particularly true in many regions of Asia. Major structural change in government, the private sector and in international relations needs to be made to effectively address the security threats posed by the joint problems of transnational crime and terrorism.

NOTES

1. See Organized Crime Watch on the website of which has publications of the Russian Far East Center. For in depth analysis of crime in the Far East see A.G. Korchagin, V. A. Nomokonov and V.I. Shulga, Organizovannaia prestupnost' i bor'ba s nei (Organized Crime and the Struggle with It) Vladivostok, 1995: Organizovannia Prestupnost' Dal'nego Vostoka: Obshchie i regional'nye cherty (Organized Crime of the Far East General and Regional Characteristics) Vladivostok: 1998 and V.A. Nomokonov and V.I. Shulga, "Murder for Hire as a Manifestation of Organized Crime," "Demokratizatsiya Vol.6, no.4, 1998, pp.676-80.

2. Xiaobo Lu, Cadres and Corruption: The Organizational Involution of the Chinese Communist Party. Stanford: Stanford University Press, 2000.

3. John T. Sidel, Capital, Coercion and Crime : Bossism in the Philippines. Stanford: Stanford University Press, 1999.

4. Pasuk Phongpaichit, Sugsidh Piriyarangasan and Nualnoi Treerat, Guns Girls Gambling Ganja: Thailand's Illegal Economy and Public Policy. Chiang Mai: Silkworm Books, 1998.

5. Ko-lin Chin, Smuggled Chinese: Clandestine Immigration to the United States. Philadelphia: Temple University Press, 1999, pp.41-45; W. Myers "Transnational Ethnic Chinese Organized Crime: A Global Challenge to the Security of the United States, Analysis and Recommendations," Testimony before U.S. Senate Committee on Foreign Affairs, Subcommittee on Terrorism, Narcotics and International Operations, April 21, 1994.

6. Nikos Passas, Informal Value Transfer Systems and Criminal Organizations. Hague: Netherlands, Ministry of Justice, 1999.

Dr. Shelley is the founder and director of American University's Transnational Crime and Corruption Center. She is also Professor of Justice, Law and Society in the School of Public Affairs, American University. She earned her Phd from the University of Pennsylvania.

Dr. Shelley is a world-renowned expert on transnational crime, organized crime, and the criminal justice system in the former Soviet Union. She has been an expert witness for the House International Relations Committee on Transnational Organized Crime. Major media, including CBS's "60 Minutes, CNN, the "New York Times," and the "Los Angeles Times," have sought her expert opinion on organized crime in Russia.

She is the editor of "Trends in Organized Crime" and "Demokratizatsiya," a journal covering post-Soviet democratization; author of "Policing Soviet Society"; and editor of "Crime and Control in Comparative Perspective." A Russian speaker, Dr. Shelley is presently running projects in Russia and the Ukraine to fight organized crime.