Friday, February 06, 2009

Illicit - Moisés Naím

The world of illicit trade is known for centuries and it is not new to us. We are living in a world of so called "Black Economy". One of the arguments floating around here that despite the global financial meltdown, India is largely isolated ( barring the IT sector with huge dependency on the US) because 70-75% of all the transactions in India are on Cash. While I am not certain about the figures, I do presume that many a transaction in India are done on hard cash.

Recommended and forwarded by my uncle, this book, by Moises Naim, former Minister of Trade of Venezuela, World Bank Executive Director, is bringing back our attention to the alarming issue of illicit Trade, which had been there since the day regulations are in place, and the extra ordinary proportion it had grown itself into, beyond the comprehension and control of the governments and the law enforcement authorities around the world. While every facts and numbers projected here are alarming, what is a greater concern is the inability of those in control to do anything about it.

In the initial chapters, he gets into the details of the various illicit trade such as Arm and ammunition, Drugs and Narcotics, Terrorism, Counterfeit Currency , Money Laundering, Intellectual Property violation, Prostitution and Human Trafficking, animal & timber, citing examples, giving facts and data from all over the globe. While they all look isolated and with independent identity and execution, most of these trades are interlinked and the operators are usually involved more than one trade at all times.

Why are they so difficult to identify , isolate and control ? Naim, gives us few reasons.
a) There is very finite divide between licit and illicit trade. Unlike the earlier days, these are not black and white any more.
b) The practitioners of these trades have both licit and illicit transactions and they hide behind the licit trade in front of the authorities. Eg, the same Nike factory in China, does involve in low quality low value fake shoes , usually operated in a night shift.
c) They have infiltrated themselves into the low enforcement agencies, governments and the trade bodies, thus controlling the outcome of the actions. In many countries, high ranking officials and ministers are involved in such business.
d) Many government themselves are involved / supportive of these business ( eg , North Korea / Afghanistan in drugs, China in human body parts , US and few European countries in Arms , Many of the erstwhile USSR countries in Nuclear and other arms / rockets)
and so on..

The change in the global trade after 1990s and the new onslaught of globalisation and technological advancement have made this trade more lucrative. These trade are now more globalised than ever before, often supported by the state of the art commincation tools, encryption methods and de-centralised operations.

While there are efforts and actions against these people, by nature of their operations, they are able to shut their operations in one location and start at another with ease and with speed, that are not matched by the governments. The sources are multiple ( for each of these business) , the middlemen are at far flung places with no direct connection with the traders, the users and the suppliers; traders are all across the world ; transit points are constantly shifted and the users are across continents. Hence a system to control and monitor all these are beyond the current capabilities of the Governments.

What makes them so elusive and better equipped than the governments ? It is the way they operate. Speed and trust are the key. Each operation is in nimble and isolated with no more informed than the in and out contact. The producers does not know the user. The hierarchy is defined and never questioned. They are so de centralised, even if one of the transit point/hub or the source is tracked and closed, the business is not affected.
Why are the governments failing ? For multiple reasons. Government bodies are controlled by processes and guidelines. There is also an element of bureaucracy in the government functions which make it slow in response. The counter / restrictive activities against these trades need an international action, by virtue of their behaviour. This is one hard nut to crack. Each country have their on priorities and views on multiple aspects and to have a common ground of operation is eluding for a long time now. Importantly, within a country various agencies ( anti-terror cell , narcotic bureau , IP right protection , immigration ) operate within their boundaries and there are no combined effort to comeout with a unified plan.

However, there are efforts by individuals and NGOs in exposing, creating awareness, preventing the trade and use all over the world. In many instances, they are more effective than the government agencies. Many individuals, mostly from the press community , have been victims of the wrath from the cartel. It will be interesting to note that many of these cartels / businesses do have their own front end NGOs and Media coverage to camouflage their real intentions.

As an individual, what can we do ? You dont need a study to tell you that more than 90% of the populations in the world ( more so in the developing world) are at some point of their time, have been the beneficiaries of one of such trade. I can remember the Burma bazaars, the street side book sellers, the pirated and downloaded movies, fake T-shirts and watches. While the governments are trying to prevent the production and distribution network, there aren't many actions done at the users level. Few actions like reducing trade barrier, penalising the users along with the practitioners ( like in prostitution, narcotics) etc have helped to a small extent, we need to have a larger scope of work in creating awareness among larger population.

According to Naim, the new world conflicts are not going to be between religion, ethnic, rich versus Poor lines. He says, it is going to be between "Geo-political Bright Sopts Vs Black holes". Those countries, regions with the lack of law and order where the production and distribution of such trade/products flourish , with those regions where there are growing demand for the output of such trades. The conflict around the world is likely to be on these areas.

Very informative book with a lot of insight to the illicit trade and its propagation, the effects and the actions , and its future in the world as a whole. Moises Naim, captures one's interest and attention to the details and makes it a fantastic read. The outcome is alarming, to the world economic and political scene, and re-iterates the necessity for a new global co-operation among the member countries.
Illicit - How Smugglers, Traffickers and Copycats are hijacking the global economy
Moisés Naím

Arrow Books
340 Pages
Further Read : Popmatters , Foreign Affairs

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