Tuesday, November 25, 2014

Latin America’s Adaptive Gangsters

BOGOTÁ – Many Latin American countries have made impressive gains in building state capacity and strengthening democracy in recent decades. And yet criminal networks – entrenched relationships between legal and illegal agents engaged in organized criminal activities – continue to play a large role in these countries’ formal and informal economies and political institutions, rending the social fabric and threatening further progress.

Criminal networks distort the most important sources of change: globalization, technology, open markets, regional cooperation, and democracy. In a context of weak institutions, persistent inequalities, and high levels of marginalization and exclusion, new growth opportunities for organized crime have emerged. Latin America has more (formal) democracy, higher foreign-trade turnover, a larger middle class, and more advanced technology than it had 20 years ago. It also has more organized crime.

These networks bypass formal institutions to take advantage of the changes in recent decades, exploiting lacunae in the international system and the vulnerabilities of Latin American democracies. As a result, they have expanded into global markets, enabled by an extralegal system of relationships based on clientelism and corruption. Rather than resisting change, criminal networks have adapted the forces of modernization to their own advantage.

Criminal factions – whether Mexico’s “cartels,” Colombia’s “bands,” or Brazil’s “commandos” – are only the most visible part of these networks. The totality is based on a series of complex relationships that connect legal and illegal worlds, including politicians, judges, and prosecutors who are willing to alter sentences for money; policemen and military personnel involved in illegal activities; and businessmen who launder money.

The strength of these criminal networks rests on people and organizations – present at all levels of society – that engage with illegal markets when convenient. They expand locally and globally to satisfy market demand, providing the illicit goods and services that societies want.

Incomes produced by these illegal markets are huge, competing in size with Latin America’s most successful legal commodities. Consider just the profits from cocaine sales in North America, which, according to the United Nations Office on Drugs and Crime (UNODC), total roughly $35 billion. Another $26 billion in sales are made in Western and Central Europe.

The vast majority of these proceeds are retained by criminal organizations in rich countries and laundered by banks in global financial centers, with just a small amount returning to Latin America. According to the Colombian academics Alejandro Gaviria and Daniel Mejía, only 2.6% of the total street value of Colombian cocaine returns to the country. In Mexico, a recent report published by the magazine Nexos estimated organized crime’s total “rent” at $8 billion per year – a small portion of total profits, but enough to buy off underpaid cops, bribe corrupt public officials, and influence local economies.

Expansion of criminal networks occurs not only across borders; illegal markets have grown inside countries as well. Brazil is the world’s second-largest consumer of cocaine in absolute terms, and Argentina has the highest prevalence rate in the world, according to UNODC data. Likewise, extortion is growing in Central America, and illegal mining is a prosperous business in Colombia, with gold becoming the new cocaine – easy to market and with lower risk.

Violence is the other currency being traded in Latin America. With the exception of a few guerrilla groups, organized crime is the only strategic actor in the region that has the capacity to dispute the state’s claim to a monopoly on the legitimate use of force. Given the near-absence of legal forms of mediation, violence is the language used by criminal networks to resolve disputes. When corruption and alliances with public officials do not work, they confront state institutions directly.

Indeed, most Latin American countries far exceed the threshold of 10 homicides per 100,000 inhabitants that the World Health Organization uses to define an “epidemic” level of violence. Countries like Honduras, El Salvador, and Guatemala have the highest homicide rates in the world, owing to a high density of criminal structures. The obsession of politicians with imposing the rule of law through iron-fisted methods, it seems, brings about only more insecurity for their citizens.

Breaking the distorting power of these criminal networks requires first confronting the distortions that perpetuate it: the failed war on drugs and criminalization of consumers; the burgeoning privatization of security; police agencies that reproduce, rather than reduce, violence and crime; prisons that hone offenders’ criminal skills; and judicial systems that re-victimize crime victims.

Ultimately, the key is to build democratic institutions that are strong enough to de-escalate violence and protect citizens, which in turn requires that political leaders try new options, and that societies assume more responsibility for their fate. Latin America’s governments and citizens can recognize and address distortions in their own thinking, or they can remain on a path of corruption and violence that erodes states and citizenship alike.

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    1. CommentedGabriel Nagy

      This explains why no 'war on drugs' is fought in the streets of New York, London, Sidney or Frankfurt. Fighting the war in Latin America pushes profits upwards benefiting bankers, politicians and investor in rich economies.

    2. CommentedLuis Maria

      "Rome was not made in one day" . The LATAM development is in this respect amiracle. If needed let' s me remind you what CA and SA were in the 80's and the 90's. in Mexico real democracy arrived in Los pinos 12 years ago (only). And OC is for sure an externality of quick and ungoverned economic growth and democracy (see the fall of the USSR and the growth of Russian mafias and kleptocracy under the protection of former KGB agents). In mexico the homicide rate was 19.8 in 1992 against 24.6 in 2012 . Violence was there without the war on drugs.
      As data , for mexico check INEGI and UNODC

    3. CommentedBarbara Schieber

      We are trying to survive in Guatemala. We know the region and suffer the consequences of the failed US Foreign Policies that you are part of.

      We advocate immediate drug legalization. As you write, the developed nations get rich by the war on drugs, we get poorer. You know exactly who is to blame.

      We invite you to come here and try “democratizing” in a war zone. Preaching is easy from behind a desk.

      We are sick and tired of all these politically correct policy makers and “opinionators” in the US that make a living advocating policies that result in our deaths, violence, and economic disadvantages.

      Where are the master mind gangsters? In the developed world.

        Portrait of Juan Carlos Garzón Vergara

        CommentedJuan Carlos Garzón Vergara

        Barbara, thank you for your comments. This is a good opportunity to highlight some of the points that I wrote in my column. I identify “…the failed war on drugs and criminalization of consumers” as one of the distortions that contributes to perpetuate the presence and influence of organized crime. Additionally, I made explicit my disagreement with the “iron fist” policies that cause many deaths and human rights violations in countries like Guatemala. It is clear that I am not part of the “US Foreign Policies”. I also would like to share with you that I worked in Guatemala for two years, during which time I had the opportunity to travel across different regions and see the difficult situation of this country. As a Colombian I am deeply committed to Guatemalans and the need to rethink the way security is built.

    4. Portrait of Michael Heller

      CommentedMichael Heller

      You paint a grim broad-brush picture for the whole of Latin America with a hint of panic (“epidemic”) as though something new is happening. Certainly the violence has become more explosive in a few countries like El Salvador for specific reasons. Yet the general problems of the networked nexus of violence, crime, politics, and drugs in Latin America have been discussed with intensity and sociological fuzziness ever since I can remember (the 1980s).

      What’s really new in Latin America? Sure, one would expect crime to have adapted and modernised. It has everywhere in the world.

      The document on homicide rates you link to has only 2004 data! That is very old! More recent and detailed multi-level data is available through the World Bank and IDB (e.g. below). It is noticeable that homicide rates are always lowest (and declining) in Chile. Does capitalist development explain that? Yet rates are also low in Bolivia (does indo-socialist communitarianism explain that?).

      Not having read on this issue for many years I just spent an hour looking for new material (I cannot find your ‘Mafia’ publication on Amazon by the way).

      What struck me was the widely acknowledged poverty of data. Even a 2011 World Bank report is using old data (though more recent than yours) --

      The Inter-American Development Bank have an interesting new project on violence and crime prevention (2012-13) which will be worth keeping an eye on -

      I found an IDB debate from 2007 which was very revealing about the hideous complexity of discussion in this field.

      “Policy discussions over crime and violence in Latin America have oftentimes been framed using political and ideological themes. Thus, for example, calls for more police and tougher prison sentences are often seen as attempts by the “right” to control the underclass. Similarly, calls for prevention programs through better education, jobs, and an enhanced standard of living to reduce the desirability of illegal occupations are often seen as “socialist” solutions by the right. Given this political backdrop as well as the fact that the field of criminology itself has historical roots in sociology, there is scant empirical evidence on either the extent of criminal behavior or the effectiveness of prevention or control strategies in Latin America. Police records are notoriously poor – and often generated by corrupt politicians or police administrations to support their point of view. There have only been a few comprehensive victimization surveys in some countries, and any significant crosscountry comparisons that can be made are of only limited value unlike more detailed
      surveys in the U.S. and Europe. There are also no reliable indicators of drugs or arms trafficking or the influence of organized crime. Measures of these problems are largely indirect and subject to considerable uncertainty.”

      There was a hot reply from a World Bank expert advocating “hot-spot policing” solutions. http://idbdocs.iadb.org/wsdocs/getdocument.aspx?docnum=1186222

      Though it does not come across clearly in your article, I guess you might be on the side of the World Bank’s new thinking about “community responses to urban violence”?

      Now that might have been an interesting and manageable state of the art topic to discuss. Or the legalisation of drugs which I support. Jeffrey A. Miron of Harvard University is doing excellent economic analysis of this.

    5. CommentedKarina P

      I see Max Weber! I think that in arguing that political leaders must try new options you're forgetting your previous acknowledgment of corrupt politicians. A huge issue with many LatAm countries is the empowerment of irresponsible and inappropriate leadership. Corruption enables the least qualified leaders to rise to power, even the presidency. Given this, I would argue that change must come from the people and their rejection of corruption and support for leaders who will be powerful enough to stamp out crime and corruption and be champions for rule of law. Capriles ALMOST got through, perhaps others throughout the region will be courageous enough to try.