Homeland Security

Statement of Raphael Perl, Specialist in International Affairs

Congressional Research Service

before the

House Judiciary Committee, Subcommittee on Crime

December 13, 2000

Mr. Chairman and Members of the Subcommittee.

I appear today in my capacity as a specialist at the Congressional Research Service [CRS]. I thank the Committee for the opportunity to appear here and address the issue of the threat posed by the convergence of organized crime, drug trafficking, and terrorism.

Globalization presents the opportunity for "domestic" crime to transform itself into a national and international security issue.

Organized crime, drug trafficking, and terrorism are nothing new. What most observers see as new is the expanding scale of current operations; the ability of such operations to threaten important national and international interests; and the increasing complexity of responding to transnational criminal activity.

Illegitimate business activity, criminal activity, and terrorist activity, like legitimate business activity, seek new opportunities for expansion, safehaven, and profit. Transnational crime goes where the money is, or where the money or the operations generating it are protected. And terrorists obviously seek soft targets and unregulated or politically friendly operating environments. In today's world, opportunities for profit, protection, and the commission of terrorist acts are often available in a global transnational environment.

Increasingly, we see a blurring--an overlapping symbiotic relationship--between terrorism, drugs, and organized crime. Terrorism and drug trafficking are both specialized forms of criminal activity.

Drugs and terrorism often cut across traditional bureaucratic and subject jurisdictions and structures. Today there are some 50 U.S. agencies with some degree of counterdrug responsibilities and at least 12 federal agencies with important counterterrorism responsibilities.

Drug trafficking, terrorism, and other organized criminal activity are generally clandestine activities that share operational similarities. Terrorists, like drug traffickers and other criminal groups, need weapons and engage in violence to achieve goals. Terrorists, like other criminal groups, are often involved in hiding and laundering sources of funds. Terrorists, drug traffickers, and other criminal groups operate transnationally and often seek logistical and operational support from local communities.

Terrorists and drug traffickers often rely on the criminal community for support: they may need smuggled weapons, forged documents and safehouses to operate effectively. As a practical matter, this means that drug traffickers and terrorists can become increasingly vulnerable to effective law enforcement activity.

Terrorists increasingly rely on drug money for funding.

Terrorists and criminals alike need a steady cash flow to operate. In the case of terrorists, where state sources of funding may be diminishing, drug trafficking is an attractive funding option. Increasingly, terrorist organizations are looking to criminal activity and specifically the drug trade as a source of funding. The FARC in Colombia is but one of many cases in point. It is estimated that drug trafficking activity generates between $400 and $600 million of tax free dollars a year for FARC guerrilla coffers.

In the case of North Korea, some analysts have suggested that North Korean government-supported criminal activity, carefully targeted to meet specific needs, generated at least $85 million in 1997: $71 million from drugs and $15 million from counterfeiting. Estimates vary, but most observers believe that the total figure is at least $100 million. However, there are indications that the figures may be considerably higher: $500 million to $1 billion annually generated by criminal activities.

Differences exist, however, between drugs and terrorism. The drug trade has a strong demand component. In contrast, there is no addiction-based international demand for terrorism. Profit drives the drug trade. Terrorists do need money to operate, but for the terrorist, funding generally is a means to an end and not an end in itself. Political ideology, radical religious viewpoints, alienation, or revenge, and not a desire for financial profit, usually drive terrorist activity. A central characteristic often used to distinguish terrorism from profit-motivated common crime is the willingness of terrorists to go after often random innocent targets in the claimed pursuit of some greater cause.

One danger facing organizations and governments involved in drug trafficking and criminal activity is that the illicit activity can become institutionalized, and the income generated, addictive. It has been suggested that should organizations such as the FARC or the North Korean regime desire to end drug trafficking and other criminal activities, they might find it difficult to do so.

To many drug policy analysts, a danger of the drug trade beyond drug use itself is the corrupting power of the organizations engaged in the trade. Funded by drug trafficking, organizations can gain the resources, routes, and networks to engage in a whole series of other forms of criminal activity, including illicit arms trading, possible proliferation of chemical and nuclear weapons, technology theft, smuggling of aliens, extortion, and even smuggling of stolen body parts. The policy response to such developments by a number of governments has been to disrupt drug organizations wherever possible, regardless of whether such activity results in a reduction of available drug supply in the involved country.

After the collapse of the Soviet empire and as some nations attempt to redefine themselves geographically with borders to accommodate indigenous ethic groups, what is often a loss of centralized control provides fertile ground for breakdowns in law and order. A growth of criminal organizations, particularly those engaged in the illicit production and smuggling of narcotics, can easily follow, especially if financed from without. Such organizations can threaten the stability of fragile governments and subvert emerging democratic institutions. Moreover, opportunities for active expansion of their smuggling activities into the national security-sensitive areas such as weapons proliferation may be available. A related problem arises as members of ruling elites use state-protected channels to facilitate drug-trafficking activities. The possible emergence of such "narcocracies," proliferating criminal organizations engaged in the drug trade could be an increasing problem in the coming decade.

Insurgency and limited guerrilla warfare were threats that characterized the cold war environment. Drug trafficking, terrorism, and crime appear to be growing threats in the post cold war environment. And as we move into the twenty-first century, the transnational criminal or terrorist may become a more important actor.

Governments often compartmentalize their organizational structures and response to criminal activity when drug trafficking and terrorism are involved.

To some degree governments have established an compartmentalized way of looking at drugs, terrorism, and crime as phenomena distinct and separate in and of themselves. In today's environment, these approaches may need to be reexamined. What some have characterized as a new and growing opportunistic relationship between drugs, terrorism, and organized crime could well result in an increased role of law enforcement and counterdrug personnel in counterterrorism, and an expanded role for counterdrug and terrorism personnel in anti-crime policy planning and implementation. Changes of this kind could prompt a reassessment of concepts, responsibilities, capabilities, and methodologies. For example, the incorporation of the State Department's Bureau of International Narcotics Matters (INM) into the Bureau of International Narcotics and Law Enforcement (INL) could reflect this kind of operational shift.

Perhaps even more important to many economies is the issue of tax evasion by groups engaged in large scale criminal activity. Throughout the world, governments are experiencing fiscal deficits. The demand for their services rises; meanwhile, their tax base is often dramatically eroding.

Challenges. A major challenge facing policy makers is how to develop a less congenial and more costly operating environment for drug traffickers, terrorists, and other organized criminal groups. Such a response is complicated by the fact that although linkages among these groups and their activities are increasing, we are generally not dealing with monolithic groups. Instead, we are dealing with different organizations, structures, activities, operating modes, and agendas.

Analysts argue that the aggregate potential threat posed by such groups should not be underestimated. In countries like Russia, the rampant spread of such activity can result in increased popular support for old authoritarian methods, at the expense of weak democratic institutions.

Policy Options. Numerous approaches for responding to this challenge have been proposed.

9. Promoting research to examine the feasibility of international or specialized national criminal courts to handle issues such as money-laundering.

In the coming decade, organized crime, drug trafficking, and terrorism are likely to receive increased attention in the law enforcement, foreign policy, and national defense communities. The challenges associated with realistically assessing threats, allocating resources, and insuring an effective congressional role in combating organized crime, terrorism and drug trafficking are complex. Addressing these problems, according to many observers, will require bringing together the diverse elements of the anti-crime, drug and terrorism communities to share information, experiences, ideas, and suggestions about how to deal more effectively with law enforcement, national security, and public policy concerns.