Customer Reviews

Illicit: How Smugglers, Traffickers and Copycats are Hijacking the Global Economy

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Illicit bursts with detail and example, though it contains very little in the way of illustrative anecdotes. The author seems mainly concerned with communicating two main points. First, our conceptions about the nature and organizational structure of international trafficking networks has fallen dangerously out of date. Second, operating assumptions and ideological sacred cows prevent governments from framing the problem of illicit trafficking in a way that will allow for constructive action.

Concerning the first point, the "cartel and kingpin" conception of narco-trafficking formed and propagated in the 80's no longer applies. Our present counter-narcotics strategies assume that the enemy organization has a hierarchical structure with information and power flowing up and down a chain of command. In fact, trafficking organizations these days take the form of decentralized networks which shift continuously, assuming new configurations as opportunities present themselves and then morphing again to meet the needs of the next moment. Also, today's traffickers don`t specialize in a single commodity like cocaine. Instead, they move whatever goods present an opportunity for profit in the present moment; drugs today, arms tomorrow, people the next day and then knock-off designer handbags after that. Only the small players at the beginning and end of the supply chain specialize in particular products, e.g. the Bolivian coca farmer and the illegal immigrant selling bootlegged DVDs or knock-off Rolexes on the streets of New York.

The author's second point concerns two ideological sacred cows. First, he warns against the politically entrenched practice of talking about illicit traffic in strictly moral terms. Government officials denounce illicit traffickers as evil-doers rather than acknowledging that traffickers act from economic motives determined by market forces. Drugs and other illicit goods bring great financial reward when moved from one place where traffickers can purchase them at a low price to some other place where they command a high price. Adaptive systems like markets and networks make short work of the kinds of problems that prohibition-minded bureaucratic hierarchies place in their way. Talking about illicit trafficking in economic rather than moral terms would produce a more intelligent discussion and offer more effective courses of action.

Here and there throughout the early chapters, the author drops the occasional hint that he advocates legalizing marijuana, and at the book's end he makes that point explicit. In a free society marked by an ever-increasing volume of international trade, governments will have to pick their battles. Spending billions to try to interrupt the traffic in marijuana makes no sense if we hope to make any headway curtailing the trade in nuclear weapons technology, radiological materials and sex slaves. Don't mistake Naim for any kind of Libertarian. He makes it quite clear that he wants to see governments win the battle against illicit traffickers. He just knows that, realistically speaking, we have to prioritize, and that trying to keep millions of eager marijuana customers from millions of eager sellers serves no useful purpose and consumes resources that could otherwise be put to good use.

The other ideological sacred cow involves national sovereignty. Naim doesn't advocate subordinating the US federal government to the U.N., but he does call for much greater coordination of efforts with our closest allies, and such a move will entail some compromise of the absolute national sovereignty upon which the US government now insists.

I have known Moises Naim for many years, and admired his pragmatic approach to managing the content of Foreign Policy, as published under the auspices of the Canegie Endowment for International Peace. He has been Minister of Trade and Industry in Venezuela, a dean and professor of business administration, executive director of the World Bank, and an accomplished thinker and author. Above all he has been moral. He gets it: morality in politics and morality in business are priceless.

This book is important in two very big ways: the first, the one that most are noticing, is that it documents very ably the fact that crime pays--the author has done a superb job of itemizing the global illegal trade industry in a manner that could be understood by anyone, and the bottom line is frightening in that illicit trade is perhaps $2 trillion a year, while legal trade is between $5 trillion and $10 trillion. Off-the-books bartering and immoral invoicing within corporations are additional reducers of government tax revenue--import export tax fraud in the USA is known to be $50 billion a year ($25 rocket engines going out, $10 pencils coming in).

The second reason this book is important, the real value of this book, is in documenting the revenues lost to government. Legalizing prostitition has economic as well as public health implications. Reducing the arms trade, where the US is the greatest exporter of violence and bribery, has implications across ethnic conflict, stability, water and oil conservations, and so on. Eliminating counterfeiting and illegal immigration would have enormous implications for positive constructive government revenue. I personally know where $500 billion a year can be found in additional tax revenue for the US, mostly from eliminating pork barrel subsidies and corporate fraud, and by restoring the traditional share of corporations to the tax fund--when Halliburn pays $15M on billions in profit, when Exxon makes $3 billion in profit in a single quarter with no requisite tax bite, the system is broken. Eliminating crime, and corporate crime, provides the financial foundation for restoring the democratic contract, the social contract, with the working class and the middle class.

Moises Naim has, in brief, delivered the seminal work on one of the five factors that will determine how the human species does in its World War with itself and with bacteria. The other four factors are the end of cheap oil, the end of free water, the virulent re-emergence of infectuous diseases accompanied by the mutation and migration of new diseases from animal hosts to humans; and the promising but by no means assured emergence of collective democratic intelligence, perhaps aided by real-life decision support games such as those produced by BreakAwayLtd.com.

I consider Dr. Naim to be one of the most precious intellects now active--as penetrating but more pragmatic than Joe Nye, as strategic but more pragmatic as Zbigniew Brzezinski, as articulate but more pragmatic than my all time favorite strategist, Dr. Colin Gray from the United Kingdom.

Naim is a giant. He also represents, if I may be permitted an observation from my decades in Latin America and my Colombian-born mother, why Latin America is the future and why the US ignores the Chinese takeover of Latin American lands and resources, the Iranian penetrations, and the related Brazilian, Indian, Pakistani, and Russian incursions, at its peril. Latin America is both the source, and the solution, for most of the illicit trade that undermines the Republic. It's time we recognize that morality matters, crime is a greater threat than isolated terrorism, and Latin America is part of the Americas--the part that may achieve informed populist democracy before the USA recovers from the neo-conservative coup d'etat and ethical misadventures of a White House owned by Halliburton and dismissive of both the domestic and international publics.

This is one of the the best books I have read this year. I could not stop reading it once I started. It combines jaw-dropping facts that we should all know-- but don't --with fascinating stories about how the globalization of smuggling is changing politics everywhere. As the Editor of The Economist writes in the back cover this book changes the way one sees the world. Naim is a great writer. Read this book.

"Illicit" provides an interesting (but sometimes repetitive) summary of the various genre of illicit trade, difficulties in prosecuting such activities and how they sometimes conflict with government decision-making, but little in the way of data that allows one to put the topic into perspective - eg. what percentage of total trade is illicit, and how is that changing over time? (Steel's review provides some data, but no details as to its origin.)

Naim states that illicit trade in developing nations and those leaving communism is often the most powerful vested interest - in some cases more powerful than government. Raising barriers simply increases profit rates and incentives.

Arms Trade: A. Q. Khan, national hero in Pakistan, has provided nuclear technology to other nations (presumably for primarily economic, rather than ideologic reasons), surplus arms released from Cold War downsizing, arms manufacturers seeking to replace former markets and unguarded Iraq arsenals have all served to increase supply. As for deterrence, Naim points out that the U.S. (under Bush II) sidetracked a U.N. conference on illicit trade in small arms/light weapons on the grounds that such would violate its Constitution.

Drugs: Naim reports that research has led to new forms of cocaine resistant to herbicides and increased plant size, while violence and bribes are endemic in the industry.

Counterfeiting of software, drugs, music, consumer goods, parts, etc. represents 5-10% of GDP, per Naim.

Moneylaundering, a prime concern of those opposing terrorism, is aided by the very large flows of money, reduction of exchange controls, reduced restrictions on foreign investment, and the ease with which one can break down large amounts for electronic transfer using computers and the Internet.

Other topics include organ trafficking, stolen art and antiquities.

Barriers include multiple jurisdictions within a nation - combined with "stove-piping" structures that inhibit sharing information across similar levels, variation in what's illegal in the nations involved, involvement of multiple nations, and serious threats and bribes for those that would oppose illicit activity. Industry group efforts to contain eg. software piracy are cited as a "plus" by Naim.

Naim recommends reducing the overfocus on supply-side (eg. illegal immigrants - focus more on employers), terrorism as a state issue, increased use of biometrics, and decriminalization of some areas such as marijuana and counterfeiting of consumer goods to allow increased focus on more serious areas. Good suggestions, but not likely to make major impact.

Illicit is a thought-provoking, though somewhat derivative, study of modern-day transnational crime and the challenges it poses to governments. The significance of interconnections between globalization, illicit trade, and world politics has long been apparent to specialists, if not to inveterate cold warriors and rarefied academic traditionalists. The writer skimps a little on important topics; for example, there is much more to the "loose nukes" problem than the machinations of A.Q. Khan and his associates. However, the chapters are generally an excellent read. As a one-time consultant for Microsoft in greater China, I found the chapter on the cross-cutting economic implications of counterfeiting especially insightful.

Effective countermeasures to illicit trade are necessarily elusive.The author is critical of supply-side enforcement, and indeed it hasn't worked well for drugs and other mass-market commodities. He suggests that to "stand between millions of customers desperate to buy and millions of merchants desperate to sell and stop them" may be asking too much of governments. Demand-side remedies may work better, though for items with great destructive potential, demand-reduction equates to conflict resolution--a long-term and uncertain proposition at best. In such areas, interdiction and source control programs-- locking down Russian nuclear warheads and materials, for example--remain indispensable guarantees of international security and stability.

Moises Naim's "Illicit" represents a good attempt to provide a (rather general) overview of the main types of illicit trade. Unfortunately, the book does not go beyond the overview-level. It is way too superficial and lacks depth. A disappointment...

Naim starts his book by describing the corrupting influence of global trade. He argues that the rapid fall in trade barriers during the 90s has produced a boom in illicit trade. Just as it is easier to make an international call or buy clothing manufactured in China, it is now trivial to traffic slaves and contraband. With all their cash flow, smugglers have made a big business of tax evasion. In some places, it is cheaper for smugglers to buy the government than fight it. Once purchased, they can make their line of business 'legal', at least within their own territorial domain. The consumer can politely ignore all of this until smuggler profits fund political violence such as 9/11. The way modern smuggling threatens the peace provides Naim with a great story line, something that should interest a wide audience.

With uncontrolled global trade identified as the primary culprit, Naim turns to detailed stories regarding the immoral traffic in slaves, drugs, body-parts and weapons. I use the term 'immoral' because Naim relies on 'moral outrage' to maintain reader interest.

Naim paints a picture of global smuggling networks composed of independent, but cooperative agents now finding a stealthy niche in international commerce. He shows how these agents arbitrage the differences between legal systems. When useful, they can simply buy the government and grant themselves legitimacy. The amounts of money are huge. They specialize in cross border movement and make the most of high tech gadgets. Take out any individual, and a competitor quickly fills the gap. There is no long vertical chain which would allow police to immobilize the smuggling network by taking out a few kingpins. These networks are very robust.

Naim spends the last 10% of the book on policy recommendations, but they seem tentative and conventional. He lists 6 steps:
1. Enhance surveillance technology (eavesdropping, biometrics, etc.)
2. Unify government agencies (do 'homeland security', but do it right)
3. Give government goals that can be achieved
4. Use global solutions
5. Build political will power to do reasonable things (like legalize marijuana).
6. Get everyone involved.

The 6 step program strikes me as schizophrenic. The first two steps are very conventional 'big government' solutions. The last 4 might be rephrased to read 'educate the voters, and kick out the rascals'. Who wants more big brother programs? What is the educational curriculum, the joys of surveillance?

What gets ignored is rising gang violence. Naim is curiously silent on levels of kidnapping, extortion and blackmail. These problems are particularly bad on the borders. Nor does Naim discuss theft of real property. For example, the theft of electricity and oil from various energy networks (bunkering) never makes it into his book.

Rather than explore the nature of network violence, Naim seeks to show 'illicit' trade is simply an economic issue. Time and again, Naim tells us that these criminals are capitalists, driven by economic goals. He asks us to think of them as bankers rather than bootleggers. They are driven by profits and only become 'criminals' because of misguided political events. Naim argues that few bootleggers are purely doing illicit business. They are really generalists. Almost all have some 'licit' business. Further, if you really take a close look at yourself, everyone has done an 'illicit' deal at some point in their lives. We are all in the 'illicit' business.

It is a little harder to make this case if robbery, kidnapping, extortion and blackmail are included in the list of 'illicit' activities. One can argue that economics illuminates murderous motivations, but I've always found such arguments hollow. I'm not convinced that thugs are purely economic actors. The thugs I've met instinctively like violence and domination, regardless the economic consequences.

Naim spends the last 10 pages describing the declining importance of the 'nation-state'. He derides the Bush administration for expecting terrorism to be 'state sponsored'. This represents a 7th recommendation. He argues that terrorist are sponsored by global illicit trade, not 'states'. Instead of looking for the 'state', we should be looking for the 'network'. One is left wondering what 'looking for the network' might mean.

"Illicit" by Moises Naim is a good primer on the underground economy. Mr. Naim's experience as an Editor at Foreign Policy magazine appears to have helped the author hone his skills at synthesizing an impressive quantity of third-party research to support his thesis. It is also evident that Mr. Naim's discussions with numerous high-level personal and professional contacts around the world have helped him reflect on the topic at length, leading him to offer many pages of thoughtful critique and analysis. The end result is a balanced and nuanced book that makes a valuable contribution to our understanding about an increasingly urgent and worrisome problem.

Some might also read Mr. Naim's description of how globalization empowers illicit trade as a riposte to free market cheerleaders such as Thomas Friedman, who tend to equate entrepreneurship with utopianism. To the contrary, we find that many counterfeiters and traffickers are highly skilled and creative people who excel at exploiting decentralized and flexible underground marketing, sales and production networks for personal gain but at great expense to our collective peace and security. According to Mr. Naim, "profits...was the name of the game" for nuclear weapons traders such as A.Q. Khan, and it is on this basis that the struggle to curtail illict trade must be based.

Given that governments around the world are currently losing this struggle, Mr. Naim argues for a strategy of harm reduction including the removal of the artificial barriers that create myriad profit opportunities for criminals. For example, this might include the decriminalization of marijuana. The author reasons that law enforcement could better focus on much more dangerous activities and on enforcing the laws in more readily attainable ways, such as prosecuting major drug dealers and the employers of illegal aliens. I found Mr. Naim's recommendations to be refreshingly commonsensical when compared with the more politically expedient but ineffective supply-side fixes that are proposed by far too many policymakers today.

Regrettably, Mr. Naim fails to take the book to a deeper level of analysis by making a stronger connection between neoliberal ideology, democracy and illicit trade. To be sure, Mr. Naim highlights the fact that some places on our planet have become anarchic, controlled by criminal gangs of all sorts whose economic power has allowed them to buy off their local governments (if they exist at all). However, he does not acknowledge the fairly obvious fact that illicit trade might represent precisely what neoliberalism desires: pure capitalism without the restraining influence of government. Might his recommendations have been made stronger by insisting on ways to achieve meaningful social and environmental justice through radical democratic reforms, rather than plugging holes in an already far too leaky and decrepit system of global neoliberal governance?

Setting aside this reasonable difference in opinion, I found this book to be an engagingly interesting and informative read. I highly recommend it to all.

What do fake Rolex watches sold in New York street fairs have in common with DVDs on sale in Hong Kong, with prostitution in Phnom Penh, and with breached fences between Mexico and Texas?

They are all manifestations of a new world phenomenon, illicit trade.

With globalization eliminating the restrictive controls imposed on international trade, goods and services flow more freely, but of course the intention is for legitimate business to take place. Unfortunately the mushrooming of legitimate business flows and activities have created a stream in which illegal business can travel undetected alongside legitimate trading. Because controls have for all practical purposes been abolished, illegal business deals can hide much more easily. This effect was unintended, largely unforeseen, and it is what links child prostitutes in Bangkok to illegal immigrant workers in the US.

Moisés Naím comprehensively describes the most important areas of the illicit global trade. The first two chapters explain the concept of illicit trade and smuggling, then following chapters examine individual illicit industries: the arms trade, the drug trade, the slave trade, intellectual property theft, the human organ trade, etc.

Naím concludes that because of the volumes and of the amounts of money involved, none of this trade would be possible without tacit government and corporate support, usually in the form of outright corruption or passive acceptance. He describes how money from illicit operations is laundered to appear legitimate. One surprising finding is how drugs, because they are compact, are used to move profits around: the million dollar haul from an illegal lumber trade is more easily carried around as a pound of pure heroin than as a large suitcase full of cash!

He also describes how government agencies are corrupted, and how the very structure of government service keeps them from cooperating effectively. And that's _within_ a country! Between agencies in different countries, it is even more difficult to build trusting relationships.

Naím isn't completely without hope. He shows journalists as being effective investigators, at great peril to their lives. He sees non-government organizations (NGOs) as being innovative, flexible, and driven in a way government agencies cannot hope to ever be. He closes with advice on what we can do as private individuals to stem what he calls the hijacking of the global economy.

Vincent Poirier, Tokyo

This is a dense expose of the dark side of globalization. The depth and detail of topics seems out of place for a book that can fit in your pocket. Illicit reads like crime thriller or espionage novel but provides tangible facts that are useful for the professional and accessible to the layman. The most pivotal quote Naim's assertion that "illicit traffic is about transactions and not products." There is a solution within this quote, one that shifts enforcement resources to blocking the transfer of money and contraband rather than the contraband itself. Illicit is a modern handbook of global crime trends that will leave you alarmed, disgusted and enlightened.