Russian, Ukrainian Crime Groups Set to Corner Global Drug Market
Apr 08, 2002 Stratfor.biz

Summary

The Bush administration's new national counter-drug advertising campaign tells the U.S. public that consumers of marijuana, cocaine, heroin and other illegal drugs are financing international terrorism. What the ads don't say is that most of the professional criminals who increasingly dominate the global narcotics and weapons trade where organized crime and political terrorism cross paths are Russian- or Ukrainian-born citizens of Israel.

Analysis

Russian and Ukrainian crime syndicates have been deeply involved in drug trafficking and illegal arms deals with militant organizations and insurgent groups around the world for years. However, the U.S. war against al Qaeda in Afghanistan, the escalation of the Colombian conflict, and the recent fall of several top Mexican drug kingpins have combined to create a window of opportunity for these lesser known syndicates to quickly become the dominant players in the global cocaine and heroin trade.

Recent reports from the Western Hemisphere and Central Asia indicate that this process has already begun. Russian mobsters are reportedly increasing their control of drug-smuggling routes from Afghanistan through Turkey and the former Soviet republics into Russia. It appears they are also developing strategic partnerships with drug traffickers in Colombia and Peru to grow poppy and export heroin to the United States and European Union.

As Russian and Ukrainian crime syndicates become the dominant actors in a global drug trade stretching from Central Asia to the Western Hemisphere, the U.S. government will likely be slow to adapt its counter-drug and counter-terrorism policies. So far, the Bush administration has not publicly identified Russian and Ukrainian syndicates as targets in the war on terrorism -- despite ample evidence that these rings have supplied huge amounts of weapons, armor and explosives to Islamic militants for years, and that they are substantially involved in drug trafficking and multiple other criminal enterprises in dozens of countries (the United States included).

The slow U.S. government response could be a reflection of a creaky American bureaucracy saddled with too many foreign policy crises simultaneously. It is also possible that the U.S. administration has yet to develop a policy for attacking international crime syndicates headquartered in politically difficult countries like Israel, Russia and Ukraine.

Another possibility is that the Bush administration has not directly addressed the issue of how to deal with these crime syndicates that are supplying weapons to militant groups because the majority of the Russian and Ukrainian crime lords that would be targeted are Jewish citizens of Israel. According to former State Department official Jonathan Winer, all 75 of the top Russian and Ukrainian crime kingpins the U.S. government was tracking worldwide at the end of the 1990s were citizens of Israel.

Robert I. Friedman -- a Ukrainian-American investigative reporter who is also Jewish and has written extensively about the Russian and Ukrainian mafia -- claims that efforts by U.S. federal law enforcement officials to investigate suspected mafia leaders have been blocked internally for years by higher-ups in the U.S. government, or have been hindered by negative publicity asserting that the investigations were motivated by anti-Semitism.

NEW CHALLENGES IN FIGHTING CRIME

U.S. policymakers given the task of developing a policy to interdict and dismantle the Russian and Ukrainian syndicates will confront a host of new challenges they have not faced while fighting Colombian and Mexican drug cartels.

For example, despite these organizations' international reach, the leaders of the top Colombian and Mexican cartels have always been based in their respective countries. They were able to escape detection and arrest for years by doling out bribes and laying low inside their own borders. However, the Medellin and Cali cartels were dismantled in Colombia during the 1990s, and now the leaders of Mexico's top rings are also being taken down.

In contrast, Russian and Ukrainian crime syndicates are borderless. Instead of being geographically confined to a single country, they operate out of multiple hubs in dozens of countries, linked by sophisticated computer and communications technologies and rapid commercial air travel. This broad geographic dispersal and multiplicity of command/control hubs, combined with the demonstrated ability of Russian and Ukrainian mobsters to build and dissolve strategic partnerships at will with other ethnic crime groups, will make it more difficult for U.S. counter-drug and -terrorism agents to track, interdict and dismantle the senior hierarchies.

Attacking these crime syndicates effectively means the U.S. government would have to negotiate new law enforcement partnerships with the governments of Israel, Russia and Ukraine, for starters. Tel Aviv, Moscow and Kiev are important command/control hubs for the international activities of Russian and Ukrainian mafia, according to U.S. and international law enforcement sources.

The U.S. government could not pursue these syndicates effectively without the full cooperation of the Israeli, Russian and Ukrainian governments, but securing such cooperation could be difficult. Israel will not extradite citizens, and it is believed that mafia groups are deeply entrenched in the Russian and Ukrainian governments.

DIVERSIFIED INDUSTRIES

Published U.S. and international reports indicate that other important hub cities in the global organizational map of the Russian and Ukrainian syndicates include Berlin, Budapest, Buenos Aires, Chicago, Dallas, Denver, Dublin, Geneva, Glasgow, Karlsbad, London, Los Angeles, Macao, Madrid, Miami, New York, Prague, Quebec, Sydney, Toronto, Vancouver, Warsaw and Washington.

The FBI has identified Russian and Ukrainian organized crime syndicates operating in 50 countries and 30 U.S. states. Other mafia experts, including investigative journalist Friedman, estimate that more than 250 major Russian and Ukrainian crime syndicates are operating worldwide today, and at least 30 of the largest are operating from within the United States.

In addition to geographic dispersal, many Russian and Ukrainian syndicates are reportedly led and crewed by individuals with master's and doctorate degrees in mathematics, physics, economics and engineering. Some are former KGB or military officials with backgrounds in special operations, intelligence and espionage. They are significantly more educated and worldly than their Colombian, Mexican or American counterparts, and they have access to financial and technological resources in Russia and Ukraine not readily available to Colombian, Mexican or Cosa Nostra criminal organizations. Russian and Ukrainian mobsters are also much more violent than their Colombian or Mexican counterparts, according to U.S. law enforcement sources.

Numerous published news reports, congressional testimony in Washington and official statements from governments and law enforcement agencies around the world paint the following picture of the Russian and Ukrainian mafia:

In the United States, these groups already have pulled off some the biggest insurance, Medicare and stock frauds in history. They also run sophisticated Internet credit card scams, deal in counterfeit currencies and launder money, traffic narcotics and weapons, run gambling and protection rackets, manage prostitution and sex slave industries, and steal gasoline and other fuels. Ukrainian Jewish mafia kingpins also reportedly laundered about $9 billion through the Bank of New York during Russia's financial meltdown in 1998, and are believed to be fixing games in the National Hockey League.

Outside the United States, these crime syndicates are supplying weapons to insurgents, paramilitaries and drug traffickers in Colombia, Brazil and the Andean region. For example, Ukrainian mobsters operating from Tel Aviv and Kiev are believed to have participated in the shipment of 10,000 AK-47s to the Revolutionary Armed Forces of Colombia (FARC) in 1998 through former Peruvian spy chief Vladimir Montesinos.

Mafia groups based in the North Hollywood district of Los Angeles and Brighton Beach in New York City have also negotiated strategic partnerships with Mexico's Tijuana cartel in Baja California, and with drug traffickers in Colombia, to ship hundreds of tons of cocaine to North America. In fact, Russian and Ukrainian syndicates have been swapping weapons for drugs with Colombian drug traffickers, guerrillas and paramilitaries since the early 1990s.

These groups also have sold huge amounts of weapons -- including tanks, armored personnel carriers, field artillery, helicopters and fixed-wing combat aircraft -- to clients such as the Taliban in Afghanistan and combatants in Serbia, Bosnia, Croatia, Sierra Leone, Congo, Rwanda, Angola and Chechnya. There, separatist Chechen rebels use Russian weapons supplied by Russian mobsters to kill Russian soldiers.

Mafia syndicates are said to have also sold cargo aircraft and helicopters to the Colombian drug cartels, provided them with sophisticated weapons and communications equipment and laundered Colombian and Mexican drug money in Russia, where organized crime syndicates are believed to own or control more than 80 percent of the country's banks. On two occasions, Russian syndicates also tried unsuccessfully to provide Colombian drug traffickers with submarines to ship multi-ton loads of cocaine.

In Canada, the mafia completely disrupted the diamond industry with moissanite faux-stones smuggled from Russia that are difficult to distinguish from real diamonds. Crime groups are moving into Vancouver in an effort to corner the city's booming marijuana industry and build strategic partnerships with ethnic Chinese gangs running criminal rackets along the U.S. West Coast.

Mafia syndicates reportedly control cigarette-smuggling and prostitution in Britain's Midlands region, run counterfeit passport operations out of Ireland and are buying up choice real estate on Australia's Gold Coast while they simultaneously build arms and drug distribution networks in the Asia Pacific region.

Russian organized crime syndicates have also reportedly made drugs-for-weapons business with Islamic extremist groups for years, including with Osama bin Laden's al Qaeda organization. For example, the newspaper Scotland on Sunday reported Sept. 16, 2001 that bin Laden built his fortune in part by working with Russian mafia operations in Qatar and Cyprus. Russian mobsters also reportedly bought weapons for bin Laden in Ukraine and shipped them secretly into the Persian Gulf and Horn of Africa, and laundered money for bin Laden through mafia-owned banks in Central Asia and Eastern Europe.

Additionally, on Oct. 4, 2001, the Ottawa Citizen reported that Russian and Central Asian organized crime syndicates had close ties with the Islamic Movement of Uzbekistan, an extremist Muslim group that allegedly swaps heroin for weapons with the Russians. The IMU is tied to al Qaeda, the newspaper report added. Two weeks later, on Oct. 16, the Czech News agency quoted arms control expert Friedrich Steinhausler saying in an ARD Television interview that al Qaeda tried to obtain nuclear material with the help of Russian organized crime syndicates.

FOCUS ON ISRAEL

Any concerted global strategy by the United States to take down the most dangerous Russian and Ukrainian crime lords would have to include Israel very early in its execution.

News reports in the United States, Israel, Europe and Russia indicate that many Russian and Ukrainian crime syndicates view Israel as a vital and secure hub from which to conduct their shady international enterprises, including arms smuggling, drug trafficking and money laundering. In fact, Israeli law enforcement officials estimate that Russian and Ukrainian syndicates have invested between $4 billion and $20 billion in the Israeli economy since the 1970s. Some Israeli law enforcement officials also believe that up to 10 percent of the more than 800,000 Russian Jews who settled in Israel during the past 30 years are involved in organized criminal enterprises, mainly in other countries.

Moreover, in June 1996, the chief of Israeli police intelligence, Brig. Gen. Hezi Leder, reportedly prepared a classified intelligence assessment in which he concluded that Russian crime groups had become a "strategic threat" to Israel's existence.

Investigative journalist Friedman says some of these crime syndicates are so entrenched in Israel's economic and political establishment that in the mid-1990s they ran several handpicked candidates for local and national office. Mafia leaders are also believed to have contributed more than $1.5 million to former Prime Minister Benjamin Netanyahu's campaign in 1996, with introductions arranged by Russian-born Natan Sharansky -- leader of the Russian Yisrael Ba-Aliya and interior minister in Ehud Barak's government.

Sharansky has admitted publicly that he accepted political contributions and aid from Grigori Loutchansky -- who, according to the U.S. State Department and CIA, is a longtime bridge between Russian organized crime and foreign governments -- in return for resettling Russian Jews.

Netanyahu denied the allegation that he accepted any contributions from Russian crime figures. However, as prime minister he terminated an investigation of Russian and Ukrainian crime syndicate penetration of Israel's economy and government, which had been launched as a result of police Chief Leder's June 1996 intelligence assessment. The investigation has not been revived.