illicit: media & interviews

The Miami Herald (January 2, 2006)

Editor looks at global market's threat
Moises Naim, editor and publisher of Foreign Policy magazine, talks about smuggling, trafficking and money laundering in his new book.
by Jim Wyss

Walking into a Coral Gables chocolate shop, Moíses Naím seems far too sunny to be the author of a new book that so darkly describes the global marketplace.

In Illicit: How Smugglers, Traffickers, and Copycats are Hijacking the Global Economy (Doubleday, $26), Naím describes how a kidney from a more- or-less-willing donor in Indonesia or the Philippines can be purchased for about $2,000; how sex slaves can be bought in Albanian villages for about $1,000; and how the right to dump radioactive waste on the shores of Somalia can run just pennies on the pound.

''If nature abhors a vacuum and greed is part of human nature, then greed too abhors a vacuum,'' Naím writes. "That is why profit opportunities never go untapped for too long.''

Smuggling has been around since the dawn of commerce, but recent changes in technology and politics have transformed the trade. Just as the Internet has made it possible to send messages and money around the globe at the click of a mouse, governments from South America to Eastern Europe have been deregulating their economies. The mix has spawned Uber -cartels.

''Smuggling is no longer what crooks do between two countries across borders,'' said Naím, the editor and publisher of Foreign Policy magazine. "Now we are talking about large, wealthy, ruthless, global, agile networks that are undermining governance, democracy and governmental functioning in many countries.''

The poster boys for this new breed are people like A.Q. Khan. The father of the Pakistani nuclear bomb, Khan is accused of sending bomb-making materials to Iran and North Korea. The book also highlights the Ukrainian government officials who allowed 18 nuclear-capable missiles to be smuggled into Iran and China. In both instances it was profits, not politics, that sparked the deals.

As Venezuela's former minister of trade and industry, Naím--who holds Ph.D and master's degrees from Massachusetts Institute of Technology--played a key role in launching major economic reforms in the early 1990s.

Naím said there's no yardstick to accurately measure illicit trade, but maintains that money laundering is a solid proxy. Since 1990 money laundering has grown ten-fold to an estimated $1 trillion to $1.5 trillion. During the same period, legitimate global trade roughly doubled to about $10 trillion, he said.

What makes the increase more worrisome is that traditional countermeasures aren't working, Naím said. A common theme abroad, he said, is that -- regardless of the resources being aimed at illicit trade -- every branch of the industry is booming.

''The U.S. spends $40 billion each year in trying to contain the importation and distribution of drugs,'' he said. "[ But] drugs continue to be widely available, prices are either stagnant or declining and the quality and purity of drugs available is perfect and increasing. The war on drugs was launched by Richard Nixon, so we are talking about several decades now that it's not working. Yet there is a great reluctance to recognize that.''

Key to the United States' problem is its ''addiction to source control,'' Naím said. While the government is willing to bash China for churning out fake apparel, it does little to punish shoppers in downtown Manhattan who openly purchase counterfeit goods. And while the government is prepared to invest millions in a border fence to stem the tide of illegal Mexican workers, the number of fines imposed on U.S. companies for employing illegals has droped 82 percent since 1990, he said.

To compound the problem, overwhelmed law-enforcement agencies are seeing new fronts open up.

''Each year there is an additional criminalization,'' he explained. "File sharing of music [for example] was not a crime until a few years ago. Now it's another thing the government has to go after.''

Increased criminalization is a classic -- and doomed -- approach to illicit trade, he said. Just as the government's reliance on ''courts, classrooms and churches'' has proved ineffective.

''This is not a story about low morals it's a story about high profits,'' he said. "These are not bad values at work, these are powerful markets at work.''

Despite the bleak landscape Naím sees ways to counter smuggling.

For starters, the nation needs to make ''difficult choices'' and begin decriminalizing activities that do not pose a true threat.

''We should be worrying more about the international trade of women or weapons of mass destruction than copied Gucci bags and the latest Harry Potter movie,'' he said.

The fluidity of transnational cartels also demands more international cooperation.

But ultimately, it will take the right mix of market-based reforms and innovative ideas to stem the smuggling boom, he said.

''Profit will never fully vanquish ideas, nor will ideas ever eradicate the drive to profit,'' he writes. "To stop the trend -- to exit the downward spiral -- will require putting both to use.''