The Dangers of Illicit Trade

High profits fuel criminal and terrorist groups that threaten American security.

In Mexico and the Afghanistan-Pakistan region, President Obama made dramatic moves this spring to shore up governments whose collapse would play into the hands of criminal and terrorist groups.

To the southern border, he dispatched hundreds of federal agents to help curb the flow of drugs, humans, guns and cash. Secretary of State Hillary Clinton, Attorney General Eric Holder and Homeland Security Secretary Janet Napolitano traveled to Mexico this spring, as did the president himself. Mexico has stepped up efforts against drug cartels, but they remain a powerful and corrupting force. Gangs of illicit traffickers have been invading homes and kidnapping, killing, even beheading people not just in border towns but in major U.S. cities such as Phoenix and Atlanta.

To Afghanistan, Obama dispatched more diplomats, troops and cash, and he said of that country's frontier with Pakistan, "for the American people, this border region has become the most dangerous place in the world." In early April, special representative Richard C. Holbrooke and Joint Chiefs of Staff Chairman Mike Mullen made high-profile visits to the capitals of Afghanistan and Pakistan, seeking agreement on steps to stabilize the region.

U.S. military and independent analysts have suggested that our southern neighbor might, like Pakistan, be a candidate for sudden and rapid collapse-of great concern not least because Mexico, Pakistan and Afghanistan share a dubious history as havens for lethal criminal enterprises that would only become more powerful.

And these are not the only places where the world has witnessed a rising tide of illegal trade and the criminal networks that profit from it. Indeed, as Foreign Policy magazine editor Moisés Naím argues in his book Illicit: How Smugglers, Traffickers and Copycats Are Hijacking the Global Economy (Doubleday, 2005), unlawful trade is changing the world by transforming economies, reshaping politics and capturing governments.

Naím's book opens one's eyes to the vast reach of international criminal enterprise that's mentioned, if not highlighted, in news stories every day. Counterfeit clothes, cosmetics, medicines, CDs and DVDs are everywhere. The flow of narcotics is growing despite extensive efforts to stop it. Traffic in human organs, often taken from living subjects, is on the rise, facilitated by Internet-enabled just-in-time delivery. Traffic in weapons, many to fuel African conflicts, has boomed since the Cold War ended; Naím reports that the small Eastern European state of Transdneister is little more than a criminal enterprise managing the gun trade. And a black market in nuclear technology sprang from the enterprise of Pakistani scientist A.Q. Khan.

"In the past 10 years, no government in the world can claim victory over illicit trade," Naím told me. "Every aspect of it is growing, despite massive efforts and money spent. Today, while legitimate economies are in free fall, illegal trade is just booming in Russia, Central Europe and parts of Asia, for example."

Profit is the incentive. And profits rise when government constrains and criminalizes supply, driving up prices for the consumer. The commerce breeds corruption. So several Mexican states are captive of the drug lords, and Mexico's government has taken the controversial step of deploying its army to patrol problem cities.

The collapse of nuclear-armed Pakistan, or poppy-producing Afghanistan, would facilitate more illicit exports from the region and more income to criminal and terrorist groups. The power of Mexican gangs, already operating in some 230 U.S. cities, would increase if the country's government's authority is compromised.

Cooperative international law enforcement is essential to combating illicit trade, and that is what we are seeking on the Mexican and Afghan- Pakistani borders. But powerful economic incentives will make it difficult to stop the surge in illicit trade that finances the violence in these and other regions of the world.

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