"Criminals, key business players"
"The real engine behind the wars was very little to do with nationalist conflict, and all to do with organized crime. Finding the way of seizing as much economic power in the various areas of the former Yugoslavia as possible, and establishing themselves as the key economic players in these countries."Guest: Misha Glenny, Journalist: Senka Vlatković
B92: Mr. Glenny, your book is called McMafia, which is a very interesting book title. What are you trying to say to us at the beginning of the book? What does the name of the book try to suggest?
Glenny: Well, the book started in the Balkans, and I was working here in a variety of capacities, both as a journalist and trying to assist the reconstruction of the entire region. And, of course here in Serbia, in Croatia and in Bosnia, where ever you were, organized crime was part of the furniture, we didn't really notice it because it was so ever-present.
But I started looking at what the connections were, between the Balkans organized crime and organized crime elsewhere around the world, and I did found fairly quickly that the Balkans had become during the 1990s a huge transit zone for illicit goods and services, coming from all over the world, into its primary, most lucrative market, which was the European Union.
And the easiest way to get to the European Union was through the Balkans, and so the Balkans was only one part of the global shadow economy which worked very well, and which was basically functioning according to the principles of supply and demand, as laid down by Adam Smith in his book, The Wealth of Nations.
B92: What's the main reason for the boom of organized crime in Europe, especially in Eastern Europe – you are not only dealing with the Balkans, but also with Russia, the Czech Republic... the Eastern Europe region in its entirety. So, what is the main reason of the development of organized crime?
Glenny: It's very important: there were two main reasons for "the boom", as you call it, and the first reason I look at is in Eastern Europe, and it's a consequence of 1989, because, when communism collapsed, it wasn't just the ideology that collapsed, it was also the capacity of the state which collapsed. And so, the police weren't functioning properly, court system certainly wasn't functioning properly, and in addition to this you had at the same time the introduction of the free market everywhere.
Now, the free market is based on the contract law. You enter into a contract with another businessman, and if you and the other businessman have a dispute, then you go to the police, or to the courts. And if you can't go to the police or to the courts because they are not working, you have to go to someone else.
And, so, all over Eastern Europe, these groups emerged, we recognized them from Serbia as from elsewhere, of protection rackets, protection services, what colloquially we refer to as the mafia. Their initial function was to guarantee that the contracts entered into by businessmen would be honored by the other side. Nine times out of ten, there would be no dispute; it would be resolved by talking. But on the tenth time, they wouldn't be able to resolve it by talking, and so they will resolve it by shooting as well. Now, we know here in Serbia for example, this was very obvious.
There were a lot of assassinations, in Belgrade and elsewhere, but particularly in Belgrade, of businessmen who had connections with political parties, of gangsters on the streets. This had nothing to do with what was going on in the battlefields of Croatia or Bosnia, this was about who was getting hold of economic power inside Serbia itself. And that - the phenomenon of the murdered businessmen and the murdered gangsters, that was happening all over Eastern Europe for the same reason.
So you had this lawlessness where gangsters had a big influence and they decided what was legal and what was illegal. And basically they decided that everything was legal. So not only cars, but women who had been trafficked, drugs... they were entering into this market, both locally and internationally, and this is where the outside world started to hook up with the areas where the communism had collapsed.
B92: Can you define the moment when organized crime started to develop, or to proliferate in Serbia, or in the former Yugoslavia?
Glenny: I think that as a process it happened between 1988,1989 and 1991, by the time the war broke out in Croatia and the federal structures had completely collapsed. Then, all sides, particularly Serbia and particularly Croatia, very quickly Macedonia and Slovenia as well had created their paramilitary armies which were indistinguishable from the gangsters on the streets. And it's no coincidence that all of the major criminal figures, in Serbia or in Croatia, for example, had a role to play in the war as well.
B92: In what way did their cooperation develop during the war?
Glenny: Well, here in Serbia, and in Croatia, and in Bosnia, one of the things that was going on was that the war was used as an excuse for, what one would call in Marxist terms, Primitive Capital Accumulation, i.e. in the battlefields, if the Croat unit or the Serb unit took an area, than, there would be a paramilitary team that would clear it of all its goods.
Television, fridges, whatever they could get their hands on. Sometimes, in the case of Eastern Slavonia, entire vineyards, oilfields and so on, and they would use this to start building up a criminal empire. Now what I felt when I was researching this about the 1990s, is because in the key instances there was a cooperation between gangsters and paramilitaries of all sides, i.e. Croats and Serbs cooperating together, Serbs and Albanians cooperating together in the heroin trade for example, that actually I came to review my belief about what happened in 1990s.
The real engine behind the wars was very little to do with nationalist conflict, and all to do with organized crime. Finding the way of seizing as much economic power in the various areas of the former Yugoslavia as possible, and establishing themselves as the key economic players in these countries.
B92: What was the role of the state? What was the role of the security services in Eastern Europe when it came to the development of organized crime?
Glenny: It was different in the former Yugoslavia from everywhere else. And that is because the slide to war meant that the state remained more powerful in Yugoslavia than it did, say, in neighboring Bulgaria. So, in neighboring Bulgaria, what tended to happen was that large number of security forces in 1989, 1990, were sacked from their jobs, and they were unemployed. They then used their skills of surveillance, creating criminal, or creating underground networks, killing people, smuggling - in Bulgaria, smuggling was very important - they became the new organized crime.
Here in Serbia or in Croatia, it was different because UDBA [former Yugoslav secret service] basically remained intact. It split along national lines obviously, but essentially the networks remained consistent with the state, and what they did was to develop a relationship with the paramilitaries, with the organized crime gangs, and so when you come on to something like cigarette smuggling from 1994 onwards, all of the states were getting their percentage, their cut from allowing the cigarette trade to go on through. They became mutually dependant.
B92: What are the largest criminal networks in the world today?
Glenny: You have to remember that there are different types of organized crime, and in terms of the really big time, than it is the Russians. The Russians tend to deal with billions, most other people tend to deal with millions, and that's the fundamental difference. And it means that Russian organized crime operates on a different level from others. But what that is fundamentally about, is that a small group of the Russian elite have gone through the process that we know as money laundering, and what they're looking for is reputation laundering, and what they are also looking for is to see how they can coordinate with the Russian state, in terms of actually projecting Russian power.
B92: Does the KGB have a role in all that?
Glenny: Well, the KGB... again it was more like Bulgaria, but in the 1990s the KGB collapsed, and its members often left the KGB and joined the oligarchs. If you look at the oligarchs, in the early 1990s, most of their senior security people who were organizing the organized crime groups were former KGB generals. Not officers, but generals.
And one of the reasons why Putin became popular in Russia is because he re-established the power of the KGB which had been dispersed everywhere during 1990s. So, yes, the KGB has played the role and it's frequently played the role in organizing and defining what the relationship between the state and organized crime is, which has changed in Russia a great deal.
B92: You say in your book that the Russians love their Slavic brothers, but that in the world of organized crime and weapons trade, one could hardly notice that.
Glenny: This is really important for me. The realization. When looking at the arms flows coming out of Ukraine and Russia, once the arms embargo was imposed on all republics of the former Yugoslavia, the amount of weaponry that went into Croatia from Ukraine and Russia is really quite astonishing. It was their primary source, the largest percentage of weapons coming into Croatia came from Russia and Ukraine and so, you know, it's an example of how the mythology of strong political bond between, say, Moscow and Belgrade, is just that. When it comes to money, nationalism plays really insignificant role.
B92: Did the break up of the USSR, or the fall of Berlin Wall have any kind of influence on the spreading of organized crime? That is the third scope that you are talking about?
Glenny: You had first of all this huge area of post communism, and of states which were in transition, and which were failing or disintegrating states. Then you have other people looking for markets. And the most striking example of the coming together of the new organized crime groups in Eastern Europe, and more established organized crime groups, was the meetings arranged by the couple of Italian lawyers, on the island of Aruba in the Caribbean, between the biggest gang in Moscow and the two largest drug cartels in Colombia.
But what happened in the early 1990s was that Colombians were selling as much drugs as they could into America, but America had reached its saturation point. Five percent of the world's population in America – forty percent of the world's cocaine consumption. And so the Columbians wanted to expand their markets in Europe. So they met with the Russians in Aruba, and devised the opening up of the new markets and new transit routes. One of those new transit routes was via Bulgaria, Albania and Croatia. The Bulgarian one, which was the most important was coming from South America to Varna, from Varna to Sofia, and then from Sofia to Belgrade.
And this is one of the things the Zemun Clan was heavily involved with - the transit of cocaine from South America, to Belgrade and into the European Union. And, so, what you saw was, you first had the collapse of communism, and then you have globalization. The increased trade flows, the increased capital flows, the increased migratory flows; and those two things together were responsible for what you referred to earlier as the boom.
B92: Can you describe the role our criminals had in the development of organized crime? What was the role of the criminals from the former Yugoslavia?
Glenny: It was the very important role. And the reason why it was the important role is partly because of the specific function of the transit zone. For drugs, for women, for cigarettes, all going to the European Union, and it's important to remember that this trade in Europe was driven by the huge demand of the EU citizens for drugs, illegal migrant labor, women, and so on... and it had a very important role there.
But, the other thing was the issue of the war, as a smoke screen for this activity, the so called fog of war), and also after the imposition of sanctions on the then Federal Republic of Yugoslavia, i.e. Serbia and Montenegro. Those sanctions were a disaster. Because Serbia and Montenegro were self sufficient in food, all they needed to get was oil, and all the surrounding countries were very, very weak, going through tough transitions. So over night in 1992, you've created the Pan-Balkan Mafia.
This was where the Bulgarians the Serbs, the Croats, the Romanians, the Hungarians, the Greeks, the Albanians, everyone became involved in supply of oil to Serbia, and then in order to finance the wars, the transit of goods and services out through the Balkans and into the EU. And that was an absolutely massive increase. Now, this all drew the attention of secret services in the European Union and the United States. They knew that there was a hell of a lot going on in the Balkans, they didn't exactly know what to do about it, but its role in the 1990s, and in the first few years of the post millennium period, the "naughties" as we called them, was really important.
B92: You have dedicated the last chapter of your book to the future of organized crime. How is it different from what it is today?
Glenny: organized crime has adapted to globalization, very, very quickly. It seizes opportunities as soon as they emerge. Now, one of the things is that you see this great growth in patterns of migration, and migration brings with it people with the entrepreneurial spirit. And when you move about and you've got this possibility to buy and sell things, you come into territories where it's unclear what is legal, what is illegal, what is on the edge and what isn't. The greatest growth in migration pattern is with the Chinese, since the early 1990s.
We saw this in Belgrade in the second half of 1990s, where, just a few blocks where we're speaking from, there was a fantastic Chinese market and Belgrade was used as a transit zone for workers from China and into the EU. And this was a sort of a stopping place, where they filled up with provisions and went on. This is happening all over the world, and it is generating a lot of very positive economic activity.
But it also means when you have these migratory patterns, that organized crime comes with it. And you have seen a big growth in the network of Chinese organized crime, but there is another aspect to it which is quite unique, and that is, what happened with the globalization, is that the manufacturing base of industry, from the EU to the U.S. in particular, has shifted over to China and East Asia. That means that for us, in the West, things like creative industries, making movies, publishing books, coming up with scientific innovation, coming up with all sorts of design innovation, that is really where we make our money, more and more.
And it is very important for us that people respect the rules, and do not indulge in copying and pirating. Now we saw this in the Balkans, both in Serbia and Bulgaria and Romania in the 1990s, is all these fake DVDs, and CD ROMs, end everything coming out of here, it was because there was this huge capacity, and it was a reflection of very good education system here in Serbia and in Bulgaria and in Romania, amazingly, they could do this stuff, but there were high levels of unemployment.
It is interesting for me to observe Bulgaria, where criminal elements are at this time more powerful than in Serbia, but Bulgaria is now an EU members. I think that organized crime and its power in Serbia are directly connected to Serbia's links with the EU. If Serbia becomes an EU member, it will receive all sorts of incentives that are perhaps not visible now, but that are necessary, above all financial injections into the economically devastated areas. These areas are southern Serbia for example, near the borders. These are the generators of organized crime.
There's Belgrade, too, of course, where most of the money is. If Serbia becomes an EU members, the organized crime problem will slowly diminish in the 10 to 15-year period. That has happed in the Czech Republic, Hungary, Slovakia, to a lesser degree in Poland, although that's a specific problem. I'm sure it will happen in Bulgaria too. EU membership will destroy organized crime or bring it to an acceptable level. If, however Serbia remains outside the EU, then possibilities for organized crime to consolidate and increase its influence in the country will open up.