Assistant Secretary of State for International Narcotics
and Law Enforcement Affairs
Remarks to the Hispanic Council on International Relations
U.S. Foreign Policy Conference
U.S. Department of State
Washington, DC, April 26, 2000
U.S. Efforts to Combat International Narcotics and Crime
Good afternoon. I welcome this opportunity to talk to you about our efforts to combat international narcotics and crime. I would like to touch first on some of the direct and indirect threats that we face in this country and in the region, and then talk about some of the steps that we in the U.S. Government -- the State Department in particular -- are undertaking to try to deal with these threats.
I also want to highlight the point that any lasting progress in this particular area will ultimately depend on cooperation -- cooperation internationally among countries, and cooperation between governments and the business sectors and private individuals. In this regard, I'm really looking forward to your questions and comments at the end.
Transnational crime, as we know it, is what we call the dark side of globalization. It has grown and it has prospered, especially since the end of the Cold War by manipulating the very same factors that foster democracy and legitimate international commerce. Things like emerging markets, cyber-technology, expanding transportation and communications networks help criminals just as they help legitimate business. Combating transnational crime is not, however, an issue that most people associate with diplomacy. But we in the U.S. Government view transnational crime as one of the most serious threats affecting the safety, security, and well-being of citizens and governments of this region, if not the world.
A snapshot of transnational crime today extends well beyond narcotics trafficking. It includes money laundering, financial fraud, international auto theft, alien smuggling, trafficking in women and children, firearms trafficking, intellectual property piracy, computer or cyber-crime, and most certainly corruption.
In its various guises transnational crime affects millions of people and costs legitimate economies hundreds of billions of dollars. For example, in the U.S. alone 13.6 million of our citizens use illegal drugs once a month or more. And 52,000 Americans die each year from drug-induced or drug-related causes. We have $110 billion taken out of the U.S. economy on an annual basis for a variety of social costs associated with drug use.
We estimate the total social and economic costs of all forms of transnational crime in the United States at about $400 billion a year. But this is not just a U.S. phenomenon. It occurs on a global scale. And the UN estimates that the total take from international organized crime on a global annual basis is $1.5 trillion a year. That is larger than the gross national product of all but three of the world's largest economies.
Nonetheless, drug trafficking remains the most prominent and the most lucrative of all international crime activities. And we in the U.S. live in a large and wealthy country, which explains why we are such a lucrative drug market. But ours is not the sole engine driving this international scourge.
Potential worldwide heroin production tops 300 metric tons, but U.S. citizens consume probably only about 10-20 tons. Potential cocaine production, which has been steadily declining over the past 4 years, was about 765 metric tons in 1999 on a global basis. But the U.S. consumes only about 300 metric tons. The rest is going to Europe, to Asia, and to Latin America. And it is this area of the world that is the expanding market for trafficking in drugs these days.
The fact is more and more countries are finding themselves the victims of drug production and trafficking and abuse. Caracas and Rio have drug problems as serious as New York and Los Angeles. This trend is blurring the traditional division between the so-called "producer" and "consumer" countries. And this is an important fact and, I think, a hopeful fact. Because I believe, quite frankly, that ending this division and treating this as a problem for all nations is going to provide us with the best opportunity to be able to deal with this threat.
But drug trafficking is not, as I said, the only threat that we in this country and the world face from international organized crime. These criminal organizations are also involved in smuggling illegal migrants, particularly Chinese from Fujian province. It's nothing less than a modern day form of slavery. At $30,000 a smuggled head, this trade is potentially more lucrative and clearly less risky than drug trafficking.
Many of the migrants are smuggled in brutal conditions aboard cramped, rat-infested ships and they are often held in indentured servitude within this country and other countries around the world working off their debts through prostitution, drug trafficking, or other forms of crime.
In the Western Hemisphere, the smugglers or "snakeheads," run their operations through Mexico and Central America, or directly into the United States and Canada. They are probing for the easiest route, the least risky route, and they are looking for countries with the least stringent legal structures in order to evade capture.
Stolen vehicles and firearms, meanwhile, tend to move in the opposite direction -- out of the United States and into the global underworld. Every year some 200,000 cars are stolen in this country, worth over $1 billion. It is possible today to steal a car on the streets of Denver and to have that car across the Mexican border before the Denver police can put out the notice of it being stolen and alert border agents to monitor the license plates of that stolen car. Once outside the United States, the cars are marketed for three to four times their value. This trade is so lucrative that they are containerized in Mexico and Central America and then shipped to Eastern Europe, where they are sold for equal profit as they are in Latin America.
Likewise, we see firearms often going out of this country, often being bought with profits from narco-trafficking or other forms of illegal activity. They're taken in payment or partial payment for the contraband that's moved into this country. And they're smuggled out and put in use by criminals around the world, further fueling the cycle of violence and lawlessness.
Financial fraud is another concern. Credit card theft and fraud, embezzlement schemes, and real estate scams abound on a global basis, with Nigerian criminals being the most prominent practitioners. U.S. citizens are being bilked of about $100 million from Nigerian criminal organizations on an annual basis. And credit card fraud within the United States, although not divided between national and international crime, totals nearly $1 billion in losses a year.
High tech or computer-related crime is a new and increasing concern. The recent headlines about various Internet servers being tied up by hackers tells, I think, the clearest indication of what this threat looks like. But the implications are, in fact, much more severe than just to e-commerce. Imagine the possibility of hackers moving in -- as there have been some indications -- into financial computer networks and moving money instead of simply taking down servers that deal in e-commerce.
Money laundering has become a lifeline for virtually all forms of transnational crime. By concealing their profits, international criminals can elude the authorities. And hidden money flows also impose significant hardships on a country's legitimate commerce and financial sectors. Money laundering in countries with large and complex economies creates staggering regulatory burdens. Witness the effect of high-cost computers or TVs being sold below cost to launder drug trafficking dollars back into Colombia.
In small countries, like the Caribbean island micro-states, it can create enormous and unpredictable financial volatility. It can crowd out legitimate investors and it can undermine consumer confidence in the entire financial sector.
The sale of pirated or counterfeited goods is another criminal activity. Every compact disc, tape, movie, every piece of software, every brand name product can be counterfeited. In fact, as most of you know, the reason that we have these dollar bills today -- these new 20s and new 50s and new 100s -- is because these can be counterfeited just as easily by large trafficking organizations. It may seem innocuous to worry about such things as brand names being knocked off, but think about the potential consequences of inferior counterfeit spare parts that are used to assemble or repair air fleets around the world. Or poorly formulated counterfeit medicines that end up killing children rather than curing the sick and inoculating the weak.
You can see why our citizens need to be concerned. But there is another reason why transnational crime has captured our attention. As these criminal syndicates grow richer and stronger, they improve their capacity for corrupting governments and establishing operational safe havens around the world. Their goal is to replace the legitimate rule of law with a system that they can manipulate to further their own agendas, and in so doing, they destroy the democratic and free market processes we rely on to enhance our security around the world. And no country is immune from this process.
Let me move now to talk about what we, in the State Department, are trying to do to deal with these. As a first step, we're working to define international norms for effective criminal laws and to encourage foreign governments to enact and enforce those laws based on these norms. The United Nations Transnational Organized Crime Convention, 2 years in the making and hopefully to be signed this December, will go a long way toward establishing both the norms and a framework for international cooperation needed to fight these criminals.
This transnational organized crime convention represents a move from the 1988 Vienna Drug Convention to broaden the scope of transnational criminal activity from drugs to the full range of international organized crime. Along with this convention, we're negotiating three protocols that place particular emphasis on controlling migrant smuggling, illicit firearms, and trafficking in women and children. We are also moving to attack corruption and thereby give international business a more level playing field on which to compete.
In 1996, the Organization of American States adopted the Inter-American Convention Against Corruption. This is a hemispheric treaty signed by the United States and over 20 other countries calling for the enactment of legislation criminalizing corruption and the implementation of a wide range of international cooperative efforts such as extradition.
Last year, the State Department and the bureau that I head was honored to coordinate Vice President Gore's International Conference on Combating Corruption. We thought initially that only a few countries would attend. But as it turned out, delegations from nearly 90 countries and international organizations arrived at our door, and we were amazed by the candid recognition of the problem and the eagerness on the part of the delegates to share and discuss best practices and solutions. They pledged to work together. And we expect the Netherlands to hold another global conference in 2001 on this important subject.
In addition, after the conclusion of the UN Transnational Organized Crime Convention, we expect the next step will be the addition of a protocol on corruption to be negotiated on a global basis.
The latest in a series of regional agreements to combat narcotics in this hemisphere is the multilateral evaluation mechanism, or the MEM, which was finished last year in Montevideo. The MEM is unique. Beginning this year, Western Hemisphere countries for the first time will mutually evaluate one another's drug control strategies and programs to determine whether or not they are adequate to respond to the challenge.
Based on these assessments, the region will be more able, I think, to effectively implement new programs and efforts in order to deal with this transnational threat.
It's also important to note that even when countries adopt these norms and laws that have been worked out collectively, many governments have problems from lack of ability and lack of resources to enforce them. Consequently, the United States has a program to train police, investigators, prosecutors, judges, and regulators on how to prevent, investigate, and prosecute these crimes in their countries. This training helps raise professional standards, counter corruption, and reinforce the principle of the rule of law.
We're also proud of the international law enforcement academies that we've set up in Budapest and Bangkok and the ones we are trying now to set up in Southern Africa and in the Western Hemisphere. To date, these academies have trained over 3,100 officials from 35 countries. And we expect this effort to double over the next several years.
Let me close by talking about what I think are a few of the successes that we have had in the past several years. Coca-growing in Peru and Bolivia has been cut in more than half in the last several years. And despite the increase in Colombia, the Andean region as a whole was down by 7% last year and 19% since 1996. Colombia has proved that it can destroy major criminal trafficking organizations once thought to be indestructible if they focus their resources and efforts and use the laws at their disposal.
Increased attention by jurisdictions where money laundering has existed has allowed us to create both the laws and a mutual assessment structure put together by the Financial Action Task Force and the Caribbean Financial Action Task Force that bring pressure to bear on money launderers and governments that make it easy for money laundering.
The United States has negotiated a number of stolen car treaties with Central American and eastern European countries and has started an instant car check process that we hope will help break this billion dollar a year trade. In addition to that, we have negotiated a number of mutual legal assistance and extradition treaties, which have allowed senior criminals to be extradited to jurisdictions where their crimes were committed and where they have the best chance at being convicted.
However, I think it's also fair to say that the more we advance, the more complex and challenging transnational crime becomes to us. For instance, as we move rapidly to confront the high-tech challenges of the 21st century, we will increasingly face such thorny issues as balancing privacy and data protection requirements with law enforcement and public security responsibilities.
How do we best protect our citizens? I would submit that organized crime is turning the mythical notion of "Big Brother" on its head. Transnational criminals, not government investigators, are becoming the most dangerous threats to our privacy. Witness credit card fraud, witness all of the intrusions that international organized crime makes into our daily private lives and I think you will see what I am trying to convey.
To protect our citizens, our governments will need modernized laws and the technological tools of the 21st century to enforce them. The American people will need to realize that transnational crime threatens their privacy and that in a democratic society, government, is in fact, the protector of their rights.
This is not an easy sell argument, but there, I think, needs to be recognition that this is an issue that we're going to have to face. Finally, I would say that cooperation among governments and between governments and the private sector is going to be critical for achieving consensus to deal with this threat and realizing progress against it. Your cooperation in helping us to understand this threat and in generating ideas and public support for combating it will be deeply appreciated.
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