Chapter IV


Consequences for US Strategic Interests

The Problem of Criminal Safehavens, Kleptocracies, and Failed States


Consequences for US Strategic Interests

Consistent with the priority of protecting the lives, property, and livelihood of US citizens at home and abroad, the United States has a fundamental strategic interest in supporting democracy and free markets around the world. These are critical factors underpinning global political and economic stability. Increasing worldwide criminal activity and the growing power and influence of organized crime groups are significant threats to democratic institutions and free market systems in many countries and regions. Emerging democracies engaged in wide-ranging reforms to meet these objectives, including the former Soviet Union and Eastern Europe, are most vulnerable. Organized crime threatens democratic and free market systems, as well as vital US national interests, by:

The Problem of Criminal Safehavens, Kleptocracies, and Failed States

Increasing power and influence of criminal organizations over political and economic structures may cause some countries to become "safehavens" where criminals can operate with virtual impunity. Criminal groups rely on safehavens as staging or transit areas for moving illicit contraband--particularly drugs, arms, and illegal immigrants--and for laundering, hiding, or investing their illicit proceeds. They also use these countries' financial and commercial sectors to arrange illicit financing of criminal activities and to broker prohibited transactions, including those for regulated and proscribed materials and technologies of interest to states of concern or terrorist groups. Countries that limit extradition, do not recognize the relevance of some US laws, or that have no legal statutes to deal with some criminal activities are often home to criminals seeking to evade justice in the United States and other countries their criminal acts victimize.

In some cases, state-sanctioned criminality and corruption may be so corrosive that the country itself has become a "kleptocracy." Rather than serve the public interest, the top leaders in such countries use the resources of the state solely to enrich themselves and keep themselves and their cronies in power. Ruling their countries as virtually a personal business enterprise, kleptocratic leaders exploit the most profitable areas of the national economy for personal gain, often resulting in losses for the state treasury and sometimes impoverishing the country. Gross corruption aimed principally at enriching the political leadership leads to distorted economic decision making that weakens a sound economy. Kleptocratic governments also set the stage for social and political upheavals.

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Organized Crime Threat to Society

Unconstrained criminal activity may so corrupt and compromise the integrity of law enforcement and other government institutions that a country becomes a "failed state" incapable of meeting many of the accepted standards and responsibilities of sovereign control over its territory. In failed states, government institutions responsible for law enforcement, maintaining public order, or regulating the financial sector have broken down to such an extent that they are unable to maintain rule of law or to develop sufficient political motivation to act against criminal groups and activities operating in the country. Their governments are unable or unwilling to fulfill international obligations that would help prevent their countries from becoming major bases for global crime. The failure of institutions to fulfill the public responsibilities expected of them and any substantial breakdown of the rule of law may lead to significant economic deterioration and political unrest that threatens both internal and regional stability.

The international scope of the global crime threat places a premium on bilateral and international cooperation to prevent organized crime, drug trafficking, and terrorist groups and other criminal networks from establishing secure bases of operations. Without effective law enforcement throughout the international community, criminals will continue to threaten US interests, as well as those of other democratic and free market countries, simply by conducting their activities from, and through, those jurisdictions where law enforcement is weak. The absence of effective law enforcement or political willingness to grapple with the problem in countries that are safehavens or failed states precludes effective counterdrug and law enforcement cooperation with the United States and other countries, stymies US efforts to enhance international measures against money laundering, corrupt business practices, and IPR violations, and complicates broader US political and security interests.