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Human Trafficking: Transnational Crime and Links with Terrorism

Louise Shelley
Professor and Director
Transnational Crime and Corruption Center
American University

Statement to the House Committee on International Relations
Subcommittee on International Terrorism, Nonproliferation and Human Rights
June 25, 2003

Committee on International Relations
U.S. House of Representatives
Washington, D.C. 20515-0128

Human trafficking is a growing and serious form of organized crime. Far from being a homogeneous phenomenon, trafficking ranges from small networks to a highly organized trade by large crime groups that delivers individuals across continents. Human trafficking in some regions of the world links with the funding of terrorism in the intermingled world of the illicit economy. Human trafficking requires the cooperation of facilitators from the legitimate world and even legitimate corporations. The vast global reach of traffickers, their large profits and significant regional variations suggests that international cooperation is needed at the same time that a response must focus on the cultural and business perspectives of a particular crime group. The flexibile nature of the networks which run this activity permits the continue reconstruction of trafficking groups. Therefore, strategies must be long-term and efforts sustained to address the problem.

The current trade in human beings combines traditional actors with new actors from the former socialist states and Africa. Without effective law enforcement at home, perpetrators are able to recruit almost with impunity in their home countries. Corruption of local law enforcement, border and customs officials facilitates cross-border trade across vast geographic regions. This allows large-scale movement from poorer countries in Asia and Africa to Western Europe and the United States.

Human Smuggling and Sex Trafficking as Businesses-Regional Differences

Smuggling and trafficking generate high profits with low risk of detection and low penalties for the traffickers. Therefore, crime groups which once trafficked in other commodities have moved into this sector and to new groups which have recently developed. The vast profits of this business allow them to hire high-level expertise just as the drug trafficking organizations have done in recent decades. This trade thrives not only because of the traffickers from poor and violence- ridden societies but also because of highly paid facilitators in the west. A Harvard-educated lawyer was recently arrested as the facilitator for a Chinese smuggling ring¹.

Many trafficking and smuggling organizations exist only for the last fifteen years but have already developed distinctive styles of operation and structure. There is not one form of human trafficking organization, just as the mafia is a very different phenomenon from the Yakuza in Japan.. Trafficking organizations differ regionally by size and mode of operation.

The trade in human beings is not a uniform business and operates very differently in different cultural and political contexts. Traditional patterns of trade and investment shape the trade in human beings as they do the trade in "other commodities." Despite the fact that much of the "new" trade has emerged from the former socialist world, the trade in human beings is very different out of Albania, Russia and China. This suggests that pre-revolutionary traditions of trade, family and historical factors may be more important in determining the trade than the common features of the socialist system². Women from Eastern Europe and the former Soviet Union are particularly vulnerable because the post-socialist transition has displaced many women and the feminization of poverty has been particularly acute in these former socialist countries.

Categorization of Trafficking Groups as Different Business Types or Criminal Enterprises

At least five different business model exist in the trafficking area. Each of these models is associated with a different national group and reflects deep historical influences, geographical realities and the market forces which drive the trade. These are ideal types and every crime group from a particular region does not fit a model. But they provide a means to categorize the business of human smuggling and trafficking. The models address the businesses that recruit men, women and children to be smuggled and trafficked. These models apply to different regions of the world as women are trafficked from former socialist countries, China, Latin America and Africa³.

1) Natural Resource Model: Post-Soviet Organized Crime

This model pertains almost only to the trafficking of women. It does not reflect an integrated business but its focus is on short-term profits with little concern for the maintenance of supply and the long-term durability of the business. Post-Soviet organized crime sells women as if they were a readily available natural resource such as timber or furs. In this respect this business reflects the pre-revolutionary Russian trade in natural resources and the new Russian emphasis on the sale of oil and gas⁴.

The business focuses on the recruitment of women and their sale to intermediaries who deliver them to the markets where they will "serve clients." Most often the women are sold off to nearby trading partners (usually the most proximate crime group). This model does not maximize profits and profits are not repatriated or used for development. Profits are disposed of through conspicuous consumption or are sometimes used to purchase another commodity with a rapid turnover. British law enforcement found that the profits from trade in women were used to buy rubber boots for sale in Ukraine or cars for sale in the Baltics.

This model results in very significant violations of human rights because the traffickers have no long-term interest in wresting long-term profits from these women and have no connections to their families. Repatriation efforts are often unsuccessful because the women are broken by the experience and there are not adequate social support services in their home communities.

2) Trade and Development Model: Chinese Traffickers

This model is most applicable to the smuggling of men but also is used to traffick women who may represent as much as ten percent of the total human trade (judging from confiscated ship logs). Chinese and Thai (controlled by Chinese-Thai) trafficking operations operate as a business that is integrated from start to finish. The control of the smuggling from recruitment through debt bondage or trafficking from recruitment to assignment to a brothel allows for long-term profits. The structured business generates very high profits. This trade resembles other Chinese trade that is integrated across continents and results in significant investment capital for China.

Much of the profits are repatriated and fuel development in Southern China, Northern Thailand, Bangkok and beach resorts south of Bangkok. Investigators can follow these cases because of the links of those trafficked with their families. Assets are laundered back sometimes through wire transfers but multi-millions are returned through the system of Chinese underground banking such as through gold shops and other similar techniques.

The vast majority of Chinese are smuggled and trafficked into the United States but this model is not applicable only to the United States. There is a rise of Chinese trafficking to Europe and other parts of the world. The outcome of the smuggling differs significantly based on the country to which the individual is trafficked. Smugglers of Chinese to the United States free those they smuggled after they have worked off their debt whereas prosecutors in Italy report that the individuals remain enslaved because individuals cannot be absorbed into the legitimate Italian economy and pay the smugglers to transport other members of their families. In the United States, it is in the financial interests of the smugglers to uphold their contracts with those smuggled but it is not in Italy.

This model results in less significant violations of human rights than in Model 1 because the smugglers and traffickers have long term interest in wresting long term profits from these women and often have connections to their families. Violations may be greater in Europe than in the United States because individuals have less chance of being amnestied and integrated into the legitimate economy.

3) Supermarket Model: Low Cost and High Volume U.S. - Mexican trade

The trade is based on maximizing profits by moving the largest numbers of people and not charging significant sums for each individual. The smugglers may charge as little as several hundred dollars for their services.

This model is most applicable to the smuggling of men and women but the trafficking cases suggest that they use the same model. The trade in women is part of a much larger trade that involves moving large numbers of people across the border at low cost. In most cases the smugglers just facilitated the cross-border trade. This trade may require multiple attempts because 1.8 million individuals were arrested on the border in 2000. In a small percentage of cases, traffickers exploit vulnerable individuals such as a group of deaf who were forced to peddle or young girls who forced into brothels in the Cadena case⁵. Most of the "people movers" specialize in this trade that is based on large-scale supply and existing demand.

The on-going trade requires significant profit sharing with local border officials. The Cadena case of young women trafficked to the southeastern U.S. gave insight into patterns of money laundering. Millions of dollars of profits were returned to Mexico and were invested in land and farms in Mexico. Detection is difficult because trafficking is hidden within large scale smuggling operations. Trafficked women often serve legal and illegal immigrants who have little contact with law enforcement This model results in many significant violations of human rights and even fatalities of those smuggled. Because there is little profit to be gained from each individual who is moved, smugglers are not always concerned about the safe delivery of those smuggled to their ultimate destination. The desert region of the border area makes smugglers and traffickers obligated to provide adequate water to those who cross the border, an obligation that is not always fulfilled. Traffickers prey on the most vulnerable sectors of Mexican society, such as the deaf and minors.

4) Violent Entrepreneur Model: Balkan Crime Groups

This model pertains almost only to the trafficking of women. It involves large number of women from the Balkans and those sold off to Balkan traders by crime groups from the former Soviet Union and Eastern Europe. Therefore, it controls women from their base in the Balkans through their exploitation in the brothels of Western Europe. Balkan traders in women run an integrated business and are middlemen for the groups from Eastern Europe.

This is an opportunistic model in both the source and recipient countries. The instability and civil conflict in the home region provide a large number of women who are vulnerable to be trafficked. Balkan groups take over existing markets in Continental Europe and Great Britain by use of force against already established organized crime groups⁶. Trafficking victims and law enforcement professionals who seek to investigate these crimes become targets of the crime groups. The direct involvement of top-level law enforcement personnel in the home country makes international investigation more difficult. The control of many women in the highly profitable sex markets of Western Europe generates very high levels of profits for the traffickers. Profits from this trade appear to be used to finance other illicit activities at home and for investments in property and trade businesses overseas and at home. The money is returned through wire transfers and cash carried by couriers to the home country⁷.

In regions of extreme conflict such as the Balkans, the peacekeepers often contribute significantly to the growth of the trafficking networks and the embedding of organized crime within the community⁸. The peacekeepers are a major revenue source for the brothel owners who keep the trafficked women. These revenues are used to neutralize law enforcement through corruption and to invest in the technology, intelligence gathering, and communications that are needed to make the human trade grow.

This model results in very significant violations of human rights and terrible violence against trafficked women. This model's reliance on violence in all stages of its operations makes it the most serious violator of human rights. Threats to family members at home are combined with terrible physical abuse of the women.

5) Traditional Slavery with Modern Technology: Trafficking out of Nigeria and West Africa

Nigerian organized crime groups which traffick women are multi-faceted crime groups in which trade in women is one part of their criminal profile. Using female recruiters who conclude contracts with girls and women and manipulating voodoo traditions, they are able to force compliance through psychological as well physical pressure. Using the modern transport links of present-day Nigeria, they are very effective because they "combine the best of both modern and older worlds by allying sophisticated forms of modern technology to tribal customs.⁹" Exploiting the vulnerability of uneducated women, the trade resembles traditional slavery that has been modernized to the global age.

Human rights violations are significant, as children are abandoned in recipient countries and women are pressured to work in the most physically dangerous conditions at the lowest end of the prostitution market usually as streetwalkers exposed to the elements. Physical violence is common.

Significant financial resources are gained from this activity as there has been a tremendous rise in African trafficking, particularly to Europe, since the late 1990s. Small amounts of the profits are returned to the local operations of the crime groups and occasionally to family members of the girls and women. Much of the profits are believed to flow to other illicit activities and are laundered¹⁰.

Centrality of Corruption to Traffickers

Trafficking does not exist in a vacuum. Without corrupt law enforcement, consular officials, diplomats and lawyers this trade could not exist. Also central to the success of traffickers in the corruption of border guards, police, security sector and transport. Without personnel in the airports and railroad industry turning a blind eye, often after thepayment of a significant sum, this organized crime could not proceed. The isolation and prosecution of the facilitators of trafficking both at home and abroad is as necessary as targeting the crime groups themselves.

Involvement of the Private Sector

Many trafficking organizations could not survive without the complicity of important, legitimate sectors of the economy. Sometimes these businesses know what they are doing and are complicit because of the high level of profits this generates. For others, it is a failure to make the connections between organized crime and their activity.

Examples of this include the hotels which tolerate prostitution because it is good for business, but instead they are allowing trafficking rings to obtain profits. Newspapers accept adds for escort services. The newspapers involved are not just shady publications but some of the most reputable in the industry. Often the advertised escort services have trafficked women. These highly lucrative ads are often not scrutinized by the newspapers. Yet they have been used by sophisticated anti-trafficking investigators to help break trafficking rings.

Other key legitimate sectors which facilitate the organized traffickers include the wire transfer businesses and transport firms. French investigators, tracing the money flows of the traffickers back to their home countries, have cited Western Union for its cooperation in assisting them in identifying money flows. But many other corporations in the wire transfer business who are facilitating the money flows are not so cooperative and willing to work with law enforcement.

In the aviation sector, some airlines have guidelines to prevent the trafficking and smuggling of people. But the implementation of these policies often takes enormous courage by the individuals in the locales where these policies need to be implemented. In one recent case in which I was involved, a senior employee of a Western airline tried to impede a smuggling ring. He received threats and was even beaten. The Western airline did not back him up or protect him. Having anti-smuggling and anti-trafficking policies is one thing. Backing them up and protecting the individuals who need to implement them requires greater will and the willingness to sacrifice profits in the name of a larger goal.

Just as the professional facilitators, the lawyers and bankers, can be prosecuted for participation in a criminal organization for assisting traffickers, we must move beyond the individual actors and look at some of the multinational corporations who are so crucial to the success of the traffickers. Greater education of the corporate sector on their role in facilitating this form of organized crime must be initiated. In the absence of an effective response, there must be targeted prosecutions of some of the more egregious offenders.

Links of Trafficking with Terrorism

Trafficking and terrorism are linked in some parts of the world. Terrorists use the transportation networks of smugglers and traffickers to move operatives. In many parts of the world, the huge profits of the illicit drug trade provides the funds for terrorism. The link between trafficking and terrorism does not appear to be as strong. For example, trafficking is not a major profit source for trafficking groups in Latin America as is the drug trade. It is in other regions of the world where trafficking is a large and significant component of the illicit economy where this link exists. Examples of this might include the Balkans, Southeast Asia, Phillippines and parts of the former Soviet Union. In the Balkans, trafficking is a major source of profits for organized crime groups which have links to terrorists. The Russian Duma is justifying its new law against the "Trafficking in Human Beings" because of the links between terrorism and crime. In Southeast Asia and the Phillippines where trafficking is a significant part of the illicit economy, potential terrorists can move their money easily through the channels of the illicit economy.

Conclusion

The business of human trafficking closely resembles the trade patterns of businesses and cultures of the region where trafficking operations are based. Trafficking is not its own sui generic business model but closely mirrors the trade in legitimate commodities. Therefore, anyone addressing the problem must understand the phenomenon in the context of the society where it operates.

The profits of the trafficking business are enormous. In some cases, they fuel development and support families without other means of support. Understanding that trafficking sometimes serves an economic function not only for the traffickers is crucial to addressing the phenomena. Trafficking cannot be combated solely through legal and administrative measures alone. Economic strategies to seize the assets of the traffickers and to find other financial means of support to trafficking victims and their families is key to developing a strategy to reduce trafficking. Furthermore, the facilitators in the legitimate economy who facilitate the trade in trafficking must also be targeted in law enforcement efforts.

A future anti-trafficking strategy must include the following:

1. Greater study and analysis of the operations of different trafficking organizations as forms of organized crime

2. Greater study and analysis of the links between transnational crime and terrorism operate in the operational and financial sides of the business

3. Greater efforts to address the facilitators of trafficking activities

4. Greater international cooperation in addressing trafficking. This includes coordination of laws, investigations and the seizure of crime proceeds.

5. Greater efforts to seize the profits of traffickers and use them for assistance and development

6. Greater educational programs for the public and the business sector on how they may be contributing to the problem of trafficking through its involvement with the legitimate economy

NOTES

1. Mark Hamblett, "Government Outlines Case Against Porges," New York Law Journal September 27,2000, p.1.

2. Louise I. Shelley, "Post-Communist Transitions and Illegal Movement of Peoples: Chinese Smuggling and Russian Trafficking in Women", in Annals of Scholarship, Vol. 14, No. 2, 2000, pp.71-84.

3. Louise I. Shelley, "Trafficking in Women: The Business Model Approach," Brown Journal of International Affairs, Vol. X, Issue I, 2003, pp.119-32 provides a full discussion of this.

4. Louise I. Shelley, "Post-Communist Transitions and Illegal Movement of Peoples: Chinese Smuggling and Russian Trafficking in Women."

5. Louise Shelley, "Corruption and Organized Crime in Mexico in the Post-PRI Transition," Journal of Contemporary Criminal Justice Vol.17, No.3, August 2001, p.226.

6. Lawless Rule Versus Rule of Law in the Balkans Special Report No.97, U.S. Institute of Peace, December 2002.

7. Testimony of Jean-Michel Colombani, 25 April 2001 in Assemble Nationale, L'esclavage, en France, aujourd'hui Document 3459, 2001, pp. 27-37.

8. "Trafficking, Slavery and Peacekeeping:The Balkan Case" Conference for International Experts May 9-10, 2002 in Turin, Italy. This meeting, organized by TraCCC and United National Interregional Crime and Justice Research Institute (UNICRI), had the aim of collecting, analyzing and comparing operational suggestions on how to tackle the traffic of human beings in Peacekeeping Operations (PKO) areas, .

9. "European Union Organised Crime Situation Report," Europol 2000 .

10. IOM, Trafficking in Women to Italy for Sexual Exploitation," 1996. .

This paper is available on the website for the U.S. House of Representatives Committee on International Relations, Subcommittee on International Terrorism, Nonproliferation and Human Rights.