From Mon May 29 15:16:08 2000
Date: Tue, 2 May 2000 22:45:02 -0500 (CDT)
From: Michael Eisenscher <>
Subject: First Model of Globalization: Drug Trade & Money Laundering
Article: 95206
To: undisclosed-recipients:;

Gangster states

By Jean de Maillard, The Guardian, 2 May 2000

A French judge warns that global crime is exploding as offshore tax havens prostitute their legal systems

Sadly, the deregulation that characterises current globalisation has opened up a worldwide new market, which people would rather not admit exists.The dark side of economic globalisation is the market in law, exploited by crime.

Even governments rush to sell their regulations to the highest bidder.

The 1960s drugs traffickers were the real pioneers of globalisation, who never asked permission before trading internationally and intercontinentally in the world's most expensive and profitable commodities.

The United States, worried about the revival in heroin dealing in the early 1970s, which it blamed on French chemists and traffickers, demanded that the government root out the French connection, based in Marseilles. But the only real result was to encourage secondary outbreaks all over the world, as trafficking was taken over by the Sicilian and North American mafias. The networks' centre of gravity then shifted to the US, that apologist for free trade. The rest we know.

Crime is now big business, run by professionals who have learned all the rules of modern management. Capable of a flexibility unmatched in the formal economy, they are able to exploit instability anywhere in the world.

An exodus of refugees fleeing a war zone is held to ransom by mafia-organised clandestine emigration networks. A country whose underprivileged resort to the synthetic paradise of drugs makes millions of addicts easy prey for dealers. A country where the gap between rich and poor is so great that the most wretched have only their bodies to sell is swooped upon by traders in women, children, workers or sources of transplant organs.

Governments were quick to lower the barriers to trade and the movement of goods and capital. They cared little for what they were letting loose.

For criminals, this was the opportunity to entrench their business in our societies, ploughing their gains back into an economic system always greedy for fresh capital and increasingly careless of its origin.

But global deregulation could not have taken off without the development of offshore financial centres, those banking and tax havens. They have increasingly become legal havens, too, where the law is conscientiously bypassed.

If these obliging centres of international liberalism were used only for tax evasion, the wrong they did to an honest economy, while great, would be kept within bounds.

But the problem is quite different. These offshore centres have been allowed to prosper. They enact laws with the sole purpose of getting around the laws of other countries. These microstates, whose international sovereignty is vague or legally doubtful, sell their sovereignty and their laws to the highest bidder.

Tax havens in Europe include the Isle of Man, Jersey, Guernsey Alderney and Sark, Switzerland, Luxemburg, Lichtenstein, Monaco, the Vatican, Malta, Cyprus, Gibraltar, Andorra. Two dozen other havens are in the Caribbean and the far east.

By simple accounting tricks, people are able to export or expatriate their wealth or their activities to these black holes of finance. Such offshore havens are good at invoking the rules of a sovereignty that is still the foundation of international relations, even if it is obsolete in practice. The fiction suits everyone, since it avoids having to face the challenge of globalisation.

All the rest is only for show. Declarations of heads of state and government made at every summit never actually come to pass. The results of the battle against money laundering, corruption, fraud and international trafficking are derisory.

They represent only a tiny part of a lawlessness that is exploding everywhere. International crime has a turnover of hundreds of billions of dollars every year, all of it quietly recycled in the formal economic systems without anyone really worrying.

Governments and police hail as victories the adoption of a few documents such as the recent Organisation for Economic Cooperation and Development convention on combating bribery of foreign public officials.

But such puny progress runs up against intractable logic: there is no point in banning what we lack the means to prevent. The measures absent-mindedly taken against practices encouraged elsewhere result at best in the sentence of a few random scapegoats.

This does not mean that we should stop pursuing criminals, but it does mean that we are not pursuing them today because we lack the resources. We have to draw lessons from globalisation and recognise that the international community is entitled to impose the minimum standards of the rule of law on gangster states and their private and public accomplices. But then we would lose the enormous profits from the shameless exploitation of the market in law.