Moisés Naím, editor-in-chief of Foreign Policy magazine and author or editor of eight books, including Illicit: How Smugglers, Traffickers and Copycats Are Hijacking the Global Economy.  Formerly, he served as an executive director at the World Bank and as Venezuela's minister of trade and industry. 

Washington Profile: Illegal economic activity has existed everywhere and always.  How do today’s “black market” actors differ from those of the past? 

Naím: Those of the past were essentially regional or national.  Most smuggling networks worked by moving among adjacent countries, or they were regional in nature. Now smugglers from China are operating in Europe and the US; Nigerian traffickers are operating in Thailand; Colombian traffickers are operating in Africa, in Guinea-Bissau; and Balkans have a whole set of trafficking networks that operate worldwide. So they have become global in nature.  They have become therefore bigger financially and in the ability to influence governments, and the tools of globalization have helped them develop potencies and capabilities that they never had before.  Finally, the difference is that in the past, those were highly hierarchical organizations in which there was a boss.  They had an organizational structure, which was multilayered, vertical, and pyramidal, where power flowed from the top to the bottom.  This is a stylized description, but this more or less is the whole idea of a mafia, right? Now, instead, what we have is a collection of networks, highly decentralized, highly mobile, stateless, and transnational in nature.  They don’t have essentially one person who controls an entire operation, but instead have specialists in different parts of the league.

Washington Profile: You say that the illicit economy is larger than it was prior to globalization.  What factors make it possible for illegal trade to flourish?

Naím: Well, I never said that [the illicit economy] is bigger than it was prior to globalization, because globalization did not start at a specific moment. Globalization is a process that has always been with us. What I say is that in early 1990s there was a combination, a convergence, of revolutions in politics with revolutions in technology that created possibilities to link countries through criminal networks in a way that was unprecedented.  It’s a combination of the Internet with cargo containers with very sophisticated logistics and infrastructure, and of those technologies that range from prepaid cellular phone cards to prepaid calling cards, ATM machines and so on, with countries that took very profound, very bold reforms in their economies in seeking to integrate with the rest of the world. So we have that, we have the collapse of the Soviet Union, we have the emergence of China as a powerhouse in terms of exports and so on, and all of those together generate the conditions.

Washington Profile: The global economy continues to grow in spite of increased black market activity. Can you talk about why you consider these smuggling networks to be such a serious threat to our economic welfare?

Naím:The global economy does not grow despite these networks, the global economy partially grows thanks to these networks. These networks are part and parcel; they are very important elements in many countries. If you think, for example, of the export structure of a country like Afghanistan or Bolivia, you’ll discover that most of their revenues and the way they are integrated with the global economy is through the export of narcotics. In some other countries it is because they are exporting people; in other countries it’s logging and wood. In still others, it’s weapons. So these are very important parts of economy for many countries. In many countries, the illicit part of the economy is the biggest, most lucrative game in town.

The reason why these criminal international networks are a threat is because of the trends I discuss in the book Illicit. That is the growing criminalization of politics and the politicization of crime. By that I mean that when you have businesses that are illegal and that have acquired a huge size and scope, it’s impossible for them to operate without entangling in a myriad of ways governments and government agencies, the military, regional and local authorities, the media, and the legal systems. So when you have countries in which these are the main actors in the economy, than you get this intertwining of the private sector that is legal with the private sector that is criminal.  You have an intertwining of politicians and government officials with criminals. That is what creates what I called the politicization of crime and a criminalization of politics.

Washington Profile: What is the most devastating illicit activity to the global economy? 

Naím: When I started the book I thought that I was going to be able to identify the country or the place that was at the center, that was an epicenter of the illicit economy.  Today I am convinced that there is not such a thing, that it is widespread throughout the globe. In the same way I started thinking, what is the most threatening [activity] and the most difficult one, and no, they are all connected.  But if you have to pick one, of course, the international trade in weapons of mass destruction or the materials needed to build the weapons of mass destruction is certainly one, the other is the international trade in women and children for sexual exploitation.

Washington Profile: Why have governments been so ineffective at stopping so blatant a human rights abuse as human trafficking, for example, despite the seemingly high international attention to the problem?

Naím: Well, not only they have been ineffective at stopping the international trade in women and children, they have also been quite ineffective in stopping international trade in people, period, or the international trade in narcotics, or the international trade in weapons. When was the last time that you heard of an insurgent movement or guerilla movement that went out of business because it could not procure all of the weapons and ammunitions that it needed?  Never. So it looks like if you have an insurgency and you have money to fund it, you are able to get weapons and the munitions you like and need, regardless of international embargos and governmental controls and all sorts of attempts of stopping that.  The same with drugs, the United States has been fighting the war on drugs since the late 1960s. Yet, there is no evidence that the war on drugs, despite the fact that the U.S. government spends 40 billion dollars per year, is having any consequence in reducing the availability, the price, or the purity of the drugs available.  So, my point is that this is not just about the international trade in children and women, it’s about all kinds of illegal trade were governments are failing.

Washington Profile: You argue that the state is really insufficient at dealing with the problem of increased illicit trade. Why is that the case?

Naím: One of the biggest mistakes that people make in the conversation is just blaming governments. You know there is a lot of hypocrisy in the conversation. These trades exist because they are very lucrative. They are very lucrative because there are a lot of people wanting to pay for them. And those that are paying for them are people all around us. So, one needs to understand this phenomenon not just in terms of moral denunciations, which are appropriate, of course, but also in terms of incentives that are leading and driving the boom in the illicit trade.

Washington Profile: When we talk about the growth of "shadow" markets, is it that the demand for these illicit goods has increased, or just the sophistication and volume of supply? 

Naím: Both. In some markets it has definitely increased. The demand for counterfeited products has essentially boomed. It always existed, you know, in the 1970s and 1980s we had counterfeited goods, but never to the extent and sophistication and scale that we have them now.  That is in part because there is demand for them. The demand for human organs, for instance, did not exist in such scale 10-20 years ago because organ transplants were very risky. With innovations in technology and surgical procedures, liver transplants, cornea transplants, or kidney transplants are no longer very risky surgical procedures. Therefore, you now have a massive line of people waiting to get organs and the supply has not expanded, and therefore that that has created a huge international market for human organs.

Washington Profile: Not all that is illegal is immoral.  Many people point to bootlegging music, for example.  In your view, how detrimental are the lesser morally loaded kinds of underground trades?

Naím: Well, in my talks concerning counterfeiting, I always get two questions.  One is the question that if someone is pirating some product, nobody is getting hurt really, because the company continues to make a lot of money.  The second is the Robin Hood question, which says, at the end of the day we are just stealing from the rich to give to the poor.  So we are taking from these wealthy companies that charge these obscene prices for bags or sneakers or tee-shirts and essentially giving them to people who could not otherwise afford them, which generates a moral claim for legitimizing the purchasing of counterfeited goods.  That is, until you start thinking that counterfeiters are not just working with copied music and DVDs and fancy bags, they can also kill you [by making] toothpaste that is toxic, or cough syrup, that instead of curing, kills.   Recently there was a case in Panama where many, many children died because their mothers gave them cough syrup that was poisonous because it turns out it was not what they thought, it was a counterfeited cough syrup.  You get in an airplane, and the airplane has a defective part.  The counterfeited part made it into the process, and therefore, it’s a problem. One needs to take a look at this perspective also.

Washington Profile: What are your main recommendations for stopping these and other illicit trades?

Naím: My main recommendation is that people read chapter 12 of my book, which has a list of recommendations.  There are no one-liners. This is a process that is complex, that is not going to be solved with one silver bullet, but with a variety of things, some of which are listed in the book, but also nothing will happen unless society at large will begin to recognize that illicit trade is now one of the most important forces transforming world politics and economics.

Washington Profile: What will “black” networks look like twenty years from now, and how are they going to impact on our economic and daily lives?

Naím: I believe that in a few years illicit trade and the political role of criminal international networks is going to have as much attention as global warming is having now.  Illicit trade are to today’s global conversation what climate change was to the global conversation 5-10 years ago, when people simply did not pay attention and did not take it seriously.  Now most people and most scientists recognize that it is an issue and people are starting to think about what to do in a serious way.  I predict that in a few years, heightened awareness about the consequences will also propel the conversation to levels that will lead to better reactions and better policies to contain [these networks] and to contain the damaging effects.

Washington Profile: And what are the consequences that you are referring to?

Naím: We are witnessing a large number of countries that are becoming essentially wholly owned by these international trading networks.