Monday, December 06, 2010

Battling organized crime

Organized crime in the Balkans is a recurrent theme. According to WikiLeaks it is farther east an even larger problem. Today some musings about how you can battle organized crime.

For battling organized crime some resolve is necessary. This relates badly with our present over-juridicized society. The only one to defeat the mafia in Italy was Mussolini and his great advantage was that he didn't have to adhere to the the law. Unfortunately when the Americans invaded Sicily they did this in alliance with the mafia who so got its power back. Similarly Al Capone, the famous crime boss in Chicago, was sent to prison for tax evasion. Obviously when battling organized crime you must be prepared to go to the limits of the law.

A good example is the case of Khodorkovsky in Russia. No one believes he got rich by strictly adhering to the law. So I am rather amazed by all those human rights activists who defend him because of some legalistic details. You can't make exceptions in the battle against organized crime because someone shares your political views.

I see a great similarity in how the US supported the mafia in Italy in 1944 and how it helped the Russian mafia with its support to Yeltsin. And these are not the only examples of harmful foreign influence. In many privatizations and major government projects in the Balkans foreign pressure to give the orders to their companies was obvious. I am curious what Wikileaks will tell us about the order for the Albanian highway to Bechtel or the sale of the Serbian steel industry.

I good example of the aspects of battling organized crime is Saakashvili in Georgia. In the beginning he did some high profile reforms, that included the firing of 80% of the police force. That police reform worked: nowadays over 85% of the population trusts the police - much more than in other former Soviet states. Similar reforms took care that businesses need less different permits and pay less types of taxes.

So he reduced low level corruption. But there remain complaints about an overbearing tax office and pressure on businesses to invest in government pet projects like tourism at the Black Sea coast. As a consequence who gets rich is still to a considerable degree dependent on having the right connections. And that is exactly what corruption is in the end about.

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