Dr Mark Galeotti of the Center for Global Affairs at New York University
May 16, 2013
The term "post-Soviet organized crime" has an increasingly antiquated sound to it; the rather clumsy "Russian-speaking organized crime" is still used a lot; while "Eurasian organized crime" is favoured by others. But whatever you call it, it is a significant and growing problem in Europe in general, Central Europe in particular and the Czech Republic especially.
The initial influx of gangsters from the former Soviet Union into the new democracies like the Czech Republic in the 1990s created a predictable moral panic – and not without reason. This was the age of the bandits, of criminal gangs turbocharged by seemingly inexhaustible economic resources and a guaranteed haven at home. However, the most aggressive inroads were beaten back, sometimes quickly, and we saw a wide-reaching rollback of Russian and other Eurasian criminal power in Central Europe, Italy and the Baltic States.
But there is a new wave of outlaw rising in Russia as well as in other post-Soviet republics – essentially the criminal entrepreneur, the avtoritet gangster-businessman, who looks different and works in a new way. The growing problem of Russian organized crime in say, the Czech Republic, is now much more a criminal business – it's the world of the avtoritet rather than the bandits. Whereas they used to come as conquistadors, planning to conquer virgin territories, now these criminals come as merchant-adventurers, offering all kinds of opportunities – the heroin business, money laundering, cybercrime, contract killing – to local organized crime gangs.
The overt violence – indeed the overt gangsterism overall – is far, far less in evidence. Rather, this new breed of Eurasian criminals tends to be much less noticeable and obvious. They are better educated and have a more market-oriented perspective on crime; they're not interested in the loyalty, respect and other community-based values of traditional vory v zakone, the older Russian criminal subculture – the name literally means "thieves within the law" – who were born in the Stalinist labour camps and adhered to a humble lifestyle. These criminal entrepreneurs and gangster businessmen don't care about codes; they don't want to wear elaborate tattoos or anything else that makes them identifiable as criminals. They want to get invited to the ambassador's reception, send their kids to the best private schools, and travel freely so they can spend their money in London, New York and Paris.
Evidence of the emergence of a new Russian criminal elite is backed up by local law enforcement in the Czech Republic. The most recent declassified report of the police Organized Crime Unit (UOOZ) notes strong links to "large supranational criminal structures," especially Russian-speaking entities.
Of course, that doesn’t make these new criminals any less dangerous, but rather than their danger is measured as much as anything else through how they empower other gangs, as they are much more prone to be facilitators, suppliers and partners of local criminals.
The distinguishing factor for all these groups is, of course, their links to Russia and its still-thoroughly corrupted banking system. And it's the developed and conservative nature of the Czech financial infrastructure that forms one part of the attraction for the country.
Home away from home
With the European banking crisis rumbling on – about two-thirds of the estimated €30bn of Russian money stashed in Cypriot banks that has been hit by the emergency tax was of dubious provenance – these criminals have been casting about for a new haven to put their money. The Czech Republic with its relatively dependable banking sector, stable political system, cultural links to Russia and relatively high level of corruption makes it an ideal destination. I'm not saying that these criminals are trying to take over the Czech Republic, but they regard the country as an increasingly interesting area of operation.
While there is no evidence yet of substantial direct flows of truly dirty money running through the Czech banking system, money that has been pre-laundered is almost certainly coming though Prague on its way to London or New York – the places where these criminals really want to get their assets. Thus the Czech Republic gives this money a certain level of provenance that it might not previously have had.
Then there's the Czech Republic's geographical location in the heart of Europe. A growing share of Afghan heroin is not going through the traditional routes like the Middle East and Turkey, but instead is being trafficked via the so-called northern route through Russia. The existing heroin markets in Europe are supplied through Russia and gangs are constantly looking for new European routes to take this heroin. The Czech Republic is attractive due to its central location, small size and thus relatively small law enforcement community. The large profits made from this trade money can then be siphoned through the country's developed financial infrastructure.
The Czech Republic's deepening problem of corruption within the state also opens up a useful avenue for this new breed of criminal to exploit. The recent report from Czech organized crime unit notes the transition from open violence to "more latent criminal activity" and an expansion of "strictly economically oriented criminal activity" that involves setting up puppet companies as well as infiltrating corporate and state entities. "One of the most significant factors supporting the development of organized crime is corruption within the public administration," the report says. "Highly placed civil servants do not only succumb to corrupt activity; surprisingly often, they themselves initiate it."
Finally, the Czech Republic is a place that in many ways doesn't resemble a criminal haven, making it attractive. There is something specific about the Czech Republic – it is small enough to be vulnerable, but stable and established enough to be appealing. Though Russian-Czech relations are complicated by history, there is a large (and growing) settled Russian community. And it is located nearer to the home country than London, which is becoming a less-welcoming place for Russian criminals.
The Czech Republic represents a safe bolt-hole, an escape from Russia where for a variety of reasons tensions are rising. The odds of a mob war in Russia are about 50-50 at the moment, and we've seen a steady rise in the number of killings recently as gangs try to squeeze out others. Prague is a good place to buy a second home, send the wife and educate the kids at one of a growing number of international schools with good academic records.
Are the Czech authorities aware and concerned about these developments? From my contacts in the Czech law enforcement community, they are cognizant of the growing problem, but there appears understandably little appetite for a general, broad-based campaign. A key problem, after all, is that the modern avtoritet is a criminal-businessman and has legal as well as illicit interests – it is often difficult and controversial to distinguish him from his more legitimate counterparts.
Instead, the burden of dealing with Russian organized crime will as usual rest on the operational arms of the police and financial regulatory authorities. However, the limitations to this approach can be seen in the UK, which is far better resourced and experienced, yet has a bad track record in confronting the problem. These people don't make it easy to spot them; they excel at hiding the true source of their wealth; and they have learned how to get round the law and use the political system to their advantage. They are, in short, a thoroughly modern challenge to modern societies, and they are coming to the Czech Republic.
Dr Mark Galeotti is professor of global affairs at New York University’s Center for Global Affairs and an expert on Russian and transnational organized crime.