Conference on Illicit Trafficking Activities in the Western Hemisphere, Center for Hemispheric Defense Studies and Office of National Drug Control Policy

Conceptualizing Crime as Competition in State-Making and Designing an Effective Response

In a presentation given on May 21, 2010 at the "Conference on Illicit Trafficking Activities in the Western Hemisphere: Possible Strategies and Lessons Learned", Vanda Felbab-Brown explains the threats posed when extensive illicit economies compromise political systems.

I. Threats Illicit Economies Pose

The drug trade and other illegal economies generate multiple threats to the United States and other states and societies. Not only does it feed drug addiction and abuse in consuming countries, but also it also often threatens public safety, at times even national security, in supply and transshipment countries. Extensive illicit economies can compromise their political systems by increasing corruption and penetration by criminal entities, undermine their legal economies, and eviscerate their judicial and law enforcement capacity.

II. Society and Crime

At the same time, large populations around the world in areas with minimal state presence, great poverty, and social and political marginalization are dependent on illicit economies, including the drug trade, for economic survival and the satisfaction of other socio-economic needs. For many, participation in informal economies, if not outright illegal ones is the only way to satisfy their human security and provides any chance of their social advancement, even as they continue to exist in a trap of insecurity, criminality, and marginalization. The more the state is absent or deficient in the provision of public goods – starting with public safety and suppression of street crime and including the provision of dispute resolution mechanisms and access to justice, enforcement of contracts, and also socio-economic public goods, such as infrastructure, access to health care, and education – the more communities become susceptible to becoming dependent on and supporters of criminal entities and belligerent actors who sponsor the drug trade and other illegal economies.

By sponsoring especially labor-intensive illicit economies criminal and belligerent actors provide public goods, suboptimal as they may be: First, they provide employment in the illegal economy. In the case of illicit crop cultivation, these job opportunities are often extensive, generating employment for hundreds of thousands, if not millions of people in particular locale. Other aspects of the drug trade, such as processing, smuggling, or the production of synthetic drugs are considerably less labor-intensive, but nonetheless generate spillovers that often foster economic activity, such as retail. This ability to provide employment is all the more significant in Latin America, where political-economic arrangements, such as taxation systems, weak fiscal capacity, limited access to even deficient education, and monopolistic economic and political setups often fail to create jobs even at times of economic growth.

Second, both criminal entities and belligerent groups also often provide security. Of course, they are the sources of insecurity and crime in the first place, but they often regulate the level of violence, suppress street crime, such as robberies, thefts, kidnapping, and even homicides. Street or common crime in Latin America is extremely intensive, one of the highest in the world, in fact. Functioning as an order and rule provider brings criminal entities important support from the community, in addition to facilitating their illegal business since that too benefits from reduced transaction costs and increased predictability. In fact, in many parts of Latin America, public safety has become increasingly privatized: with upper and middle classes relying on a combination of official law enforcement and legal and illegal private security entities while marginalized segments rely on organized criminal groups to establish order on the streets. Organized criminal groups and belligerent actors also provide dispute resolution mechanisms and even set up unofficial courts and enforce contracts – be they the PCC in Sao Paolo’s shantytowns, the mafia in Sicily, or the Taliban in Afghanistan. They also provide socio-economic public goods, such as roads and health clinics. The extent to which they provide these public goods varies, of course, but their provision often takes place regardless of whether the non-state entities are politically-motivated actors or criminal enterprises. The more they do so, the more they become de facto proto-state governing entities.

In turn, such groups obtain not only large financial benefits from their participation in the drug trade and other illegal economies, but also large political capital – support from the population and even identification of the population with these criminal and other nonstate entities. Their political capital and ability to act as protostates increase the more they transform themselves into polycrime franchise enterprises and also acquire control of informal economies, in addition illegal ones.

III. A Competition in State-Making

It is thus important to stop thinking about crime solely as aberrant social activity to be suppressed, but instead think of crime as a competition in state-making. In strong states that effectively address the needs of their societies, the non-state entities cannot outcompete the state. But in areas of socio-political marginalization and poverty – in many Latin American countries, conditions of easily upward of a third of the population – nonstate entities do often outcompete the state and secure the allegiance and identification of large segments of society.

While non-state entities can thus outcompete the state in governance in areas of marginalization, it is also important to note that states, especially weak and unaccountable states, also often use crime and criminal entities for their purposes, including to strengthen their ruling power structures. And criminal entities also of course seek not only to dominate society, but also to control or at least influence the state and its ruling power arrangements.

In such areas of state weakness and underprovision of public goods, the effective state strategy toward organized crime is thus not simply one of law enforcement suppression of crime. Approaches such as mano dura policies, saturation of areas with law enforcement officers, especially if they are corrupt and inadequately trained, or highly repressive measures rarely tend to be effective in suppressing organized crime and often only attack the symptoms of the social crisis, rather than its underlying conditions.

IV. An Effective Response

An appropriate response is a multifaceted state-building effort that seeks to strengthen the bonds between the state and marginalized communities dependent on or vulnerable to participation in the drug trade for reasons of economic survival and physical insecurity. The goal of supply-side measures in counternarcotics efforts should not only be to narrowly suppress the symptoms of illegality and state-weakness, such as illicit crops or smuggling, but rather to reduce the threat that the drug trade poses from a national security concern to one of public safety problem that does not threaten the state or the society at large.

Such a multifaceted approach requires that the state address all the complex reasons why populations turn to illegality, including law enforcement deficiencies and physical insecurity, economic poverty, and social marginalization.  Efforts need to focus on ensuring that peoples and communities will obey laws – by increasing the likelihood that illegal behavior and corruption will be punished, but also by creating the social, economic, and political environment in which the laws are consistent with the needs of the people so that the laws can be seen as legitimate and hence be internalized.

In the case of narcotics suppression, one aspect of such a multifaceted approach that seeks to strengthen the bonds between the state and society and weaken the bonds between marginalized populations and criminal and armed actors is the proper sequencing of eradication and the development of economic alternatives. For many years, the United States has emphasized eradication of illicit crops, including forced eradication, above rural development, such as alternative livelihoods efforts. Moreover, the United States has also insisted on eradication first. Such an approach has been at odds with -- in fact, the reverse of -- the counternarcotics policy of the European Union and many individual Western European countries. Such sequencing and emphasis has also been at odds with the lessons learned from the most successful rural development effort in the context of illicit crop cultivation, Thailand. Indeed, Thailand offers the only example where rural development succeeded in eliminating illicit crop cultivation.

Effective rural development does require not only proper sequencing with eradication and security, but also a well-funded, long-lasting, and comprehensive approach that does not center merely on searching for the replacement crop. Alternative development efforts need to address all the structural drivers of why communities participate in illegal economies -- such as access to markets and their development, deficiencies in infrastructure and irrigation systems, access to microcredit, and the establishment of value-added chains.

Such economic approaches to reducing illegality and crime should not be limited only to rural areas: there is great need for such programs even in urban areas afflicted by extensive and pervasive illegality where communities are vulnerable to capture by organized crime, such as in Mexico. Often the single most difficult problem is the creation of jobs in the legal economy, at times requiring overall GDP growth. Such job creation has been a major problem in Mexico, Colombia, Afghanistan, and Pakistan, and will continue to be so for the foreseeable future. But as I mentioned before, GDP growth is often not sufficient to generate jobs and lift people out of poverty as long the structural political-economic arrangements stimulate a capital-intensive growth, but not job creation – a common feature in Latin America, and one that only increases inequality.

It is important, however, that such social interventions are designed as comprehensive rural development or comprehensive urban planning efforts, not simply limited handouts or buyoffs. The latter approaches fail – whether they were conducted in Medellín as a part of the demobilization process of the former paramilitaries many of whom have returned as bandas criminales or in Rio’s favelas. The handout and buyoff shortcuts often also paradoxically strengthen criminal and belligerent entities and set up difficult-to-break perverse social equilibria where criminal entities continue to control marginalized segments of society while striking a let-live bargain with the state, under which criminal actors even control territories and limit state access.

An effective multifaceted response by the state also entails other components:

  • addressing street crime to restore communities’ associational capacity and give a boost to legal economies;
  • providing access to dispute resolution and justice mechanisms – Colombia’s casas de justicia are one example;
  • encouraging protection of human rights, reconciliation, and nonviolent approaches;
  • improving access to effective education as well as health care – a form of investment in human capital;
  • insulating informal economies from takeover by the state and limiting the capacity of criminal groups to become polycrime franchises; and
  • creating public spaces free of violence and repression in which civil society can recreate its associational capacity and social capital.

Boosting the capacity of communities to resist coercion and cooptation by criminal enterprises, however, does not mean that the state can rely on communities themselves to tackle crime, esp. violent organized crime, on their own. In fact, there is a great deal of danger in the state attempting to mobilize civil society to take on crime prematurely while the state is not still capable of assuring the protection of the people. Without the state’s ability to back up communities and secure them from violence by organized crime or militancy, the population will not provide intelligence to the state under such circumstance. And actionable and accurate human intelligence is often critical for success of not only counterinsurgency, but also anti-organized crime efforts. Equally significantly, the community can all the more sour on the state. It will then be very hard for the state to mobilize civil society the second time around and restore trust in state capacity and commitment. Mistakes are very costly.

A concentration of resources, both non-corrupt law enforcement and socio-economic efforts to strengthen communities, often improves the chance that the state will succeed in such as complex undertaking. It is often very hard politically to concentrate resources and tackle organized crime neighborhood by neighborhood and illegal economies municipality by municipality. But spreading resources over extensive areas – as much as they may be acutely in need of intervention – without achieving a necessary law enforcement and socio-economic development momentum in any place greatly augments chances of failure.

Critically, the associational and organizational capacity and social action potential of communities becomes extremely quickly eviscerated during intense violence. It may well be that the narcos are killing each other, but when they do so on streets of cities or rural areas where the population lives, they also hollow out the communities. The bullets may only be flying overhead, but they are still deeply injuring the community underneath. Often, success hinges on the state’s ability to bring violence down: without a reduction in violence, socio-economic interventions do not have a chance to take off and even institutional reforms become difficult to sustain as political support weakens.

Finally, all such social interventions require careful and consistent monitoring and the ability to correct and restructure policy that is not effective. Both the monitoring and policy adaptation are often very difficult to institutionalize effectively. It is critical to remember that inadequate implementation can kill the best strategy. Effective implementation among others depends on how operationalization corresponds to local cultural and institutional settings.

I am happy to address specifics regarding Colombia, the Andes, Mexico, or Brazil’s favelas in the Q & A. And although this is a conference on Latin America, I am happy to talk also about Afghanistan and Burma and other parts of Asia for comparative purposes and lessons learned.