THE DARK SIDE OF THE GLOBAL ECONOMY

In Eastern Europe, traffickers ship girls through the Balkans and into sex
slavery. Russians launder money through tiny Pacific islands that have
hundreds of banks but scarcely any roads. Colombian drug barons accumulate
such vast resources that they can acquire a Soviet submarine to ship
cocaine to the United States.

In the decade since the Soviet Union fell, there has been an explosion of
international crime, which governments are just beginning to fight. And
yet, on reflection, it is clear that the globalization of crime is a
logical outcome of the fall of Communism.

Capitalism and Communism, ideologies that served as intellectual
straitjackets for Americans and Soviets, allowed them to feel justified in
using unsavory proxies to fight their cold war. When those alliances
dissolved, those proxies sought other outlets to maintain — or improve —
their positions. The transformation of apparatchiks into gangsters or
money-launderers in the former Soviet republics and the Balkans is just the
most familiar example.

Angola presents another. Its civil war was cast as a struggle for
democratic or Communist domination, but it rages still, financed by
revenues from the very oil and diamonds that once intrigued the
superpowers. (The diamonds are smuggled throughout Africa by a network run
by, according to United Nations reports, a former Soviet army translator.)

Another significant boost for international crime came not from proxies,
but from principals. In the Soviet Union, the authorities themselves often
scrambled for new sources of income and power as the Communist Party's grip
loosened, blurring the lines between officials and those who operated
beyond the law.

This was by no means the first such fusion in history, but it was the first
in a country with so vast a military arsenal. In the past decade, much of
the American engagement with the old Soviet bloc has been an effort to stop
military equipment and weapons of mass destruction — or the knowledge of
how to make them — from passing to unfriendly regimes, terrorists or
criminal networks.

The end of the cold war also brought a burst of international financial
growth. But wealthy nations' push toward a new, more open global economy —
through the growth of communications and the lowering of trade and
financial barriers — also produced a global casino in which money could be
moved around easily and instantly. If it was the fall of the Berlin Wall
that spurred the relatively unrestricted movement of people, it was the
growth of that casino that enabled the criminals to hide and move their
ever-expanding holdings.

Today, the power of immensely wealthy criminals to overwhelm weak states is
one of the real challenges faced by the Bush administration. A recent
report — prepared by the National Intelligence Council, a body of senior
intelligence officials working alongside the C.I.A., and with outside
experts — ranks it among the new threats to American security.

Of course, traditional organized crime was there all along. It just got bigger.

When the Soviet Union collapsed, most of its institutions imploded, said
Stephen Handelman, author of "Comrade Criminal: Russia's New Mafia" (Yale
University Press, 1995). Criminal groups that had sprung up in the dying
days of the Communist system "took up where the government left off," he
said. "The Mafia did not spring wholly formed from the earth in 1991; it
was always there, and had a close connection with government officials."

Shady characters in East and West wasted no time establishing links after
the Wall came down. Members of the well-established Italian and the newly
minted Russian mafias began meeting in Prague, Budapest, Vienna and Berlin.
The police observed, but were virtually powerless to act; a telling image
of the early 1990's was of impoverished police in burned-out east European
sedans giving vain chase to the sleek Mercedes favored by the newly monied.

These criminal groups, Mr. Handelman said, penetrated local, regional and
then central government. Meanwhile, the West was shoveling over aid, hoping
that Communist societies would be reborn as free-market democracies and
that the newly rich would invest at home. Instead, the old intelligentsia
was impoverished and became susceptible to bribes. The new middle class and
the hugely rich, to avoid bad banks and impossible taxes, stashed money
abroad. "We thought: `We'll give them money, and eventually it will trickle
down,' " Mr. Handelman said. "It ended up trickling out."

That cash is hard to trace. Cyprus, for instance, became a banking haven
for Russians and for the Yugoslav regime of Slobodan Milosevic. The
island's government is now looking harder at the origins of the money in
its numerous banks, but tracing Mr. Milosevic's funds has proven close to
impossible. And, noted Mr. Handelman, "if Cyprus shuts down, the Russians
will just go to Vanuatu, or London, or New York."

The report that warned of the power of wealthy criminals, Global Trends
2015, gives some idea of the scale of the illegitimate economy: narcotics
trafficking remains the overwhelming king, with annual revenues estimated
at $100 billion to $300 billion. Automobile theft in the United States and
Europe, by comparison, nets $9 billion, and the fast-growing trade in
smuggling people $7 billion, according to the report. The Center for Public
Integrity in Washington estimates that every third cigarette exported is
sold on the black market.

There are less tangible costs, too. The 2015 report estimates that
corruption costs about $500 billion a year — 1 percent of the global
economy — in slower growth, reduced foreign investment and lower profits.

On this shadowy stage, politicians struggle to identify crimes, to punish
and control. The United Nations has adopted conventions against new crimes;
a task force of the Organization for Economic Cooperation and Development
publishes an annual list of money launderers. And the European Union is
beginning to define the crime of trafficking in human beings and to pool
resources to fight the criminals who smuggle in as many as 500,000 people a
year.

Thomas Bodstrom, justice minister in Sweden, which led the union for the
first half of this year, is most concerned with the enforced prostitution
of tens of thousands of women trafficked mainly from the poor east of
Europe. In Sarajevo, he met a woman who said she had been "sold" 18 times.

"I think it surprised all of us that it was actually slavery going on in
Europe," he said. "Bosnia has just been in a war — there is not the same
possibility to have authority. But what can we say in Europe? In Sweden? Or
in Holland? They are selling people." How many people, smuggled by whom?
Mr. Bodstrom was disarmingly frank. "The truth," he replied, `is that we
don't know."