Gangs And The New Insurgency In Latin America

By Hal Brands, World Economic Review

Throughout the developing world, the post-Cold War era has seen the emergence of increasingly powerful and violent criminal organizations, often referred to as "third-generation gangs." These groups have exploited the major international trends of the past 20 years -- including economic and financial integration, innovations in communication technology, the prevalence of weak and failed states, and a thriving global arms trade -- to seize control over a myriad of illicit commercial networks. They now use violence and corruption to undermine the governments that oppose them.

Latin America has proven particularly vulnerable to this phenomenon. The region has porous borders and numerous illegal markets, and is awash with guns -- all factors conducive to organized crime. Corruption is endemic, and state institutions are weak. Widespread poverty and social alienation ensure the gangs a steady supply of young recruits. Densely packed urban slums give them near-impenetrable havens in which to operate. Finally, the deportation of tens of thousands of gang members from the United States over the past 15 years has overwhelmed local law enforcement systems -- especially in Central America and, in particular, El Salvador and Guatemala.

As a result, Latin America is now home to some of the world's most fearsome third-generation gangs. Central American maras such as MS-13 and M-18 have tens of thousands of members spread across several countries. The First Capital Command (PCC) of Sao Paulo, with perhaps 100,000 members, dominates the slums and prisons of South America's largest city and maintains alliances with mafia groups throughout South America. In Mexico, the drug trade has given rise to groups like Los Zetas, a relatively small organization that has nonetheless carved out lucrative trafficking and distribution networks, while cultivating relations with gangs in Central America and the U.S..

Third-generation gangs in Latin America share several key characteristics. They all participate in a broad range of criminal enterprises -- among them drug trafficking, human smuggling, kidnapping, extortion, arms dealing, contract killings, and money laundering. They are well-organized, with top-level bosses overseeing multi-tiered structures that operate according to a division of labor. They are also technologically sophisticated, using Web sites for recruiting and propaganda purposes, as well as electronic surveillance to track and eliminate their rivals.

Above all, these gangs are extremely violent. They use a panoply of advanced weapons -- including rocket-propelled grenades and improvised explosive devices -- to strike with astounding brazenness and savagery. Torture, beheadings, assassinations, and even massacres of innocent civilians have become commonplace. Though often described as senseless or random, this violence, which invariably comes in response to government crackdowns on gang activity, in fact serves to intimidate the state -- and the population -- into allowing the gangs a free hand in pursuing their lucrative business dealings.

Across the region, gangs like the PCC, the maras, and the Zetas have now gone a step further, using violence to carve out geographic areas where the government is essentially powerless to intervene. In some cities, gang violence has become so intense that the authorities have effectively surrendered them to the gangs. Just as Cold War-era insurgents had their "liberated zones," the gangs now control sectors where they effectively "rule."

Along with violence, the use of corruption also plays an integral role in undermining state institutions. Latin American criminals have long used the formula of "plata o plomo" -- "money or bullets" -- to corrupt government officials. Third-generation gangs have become masters of this strategy. Confronted with the choice between an easy payout and a gruesome death, law enforcement personnel frequently opt for the former.

The effects of gang activity have been devastating for Latin America. Public security has declined precipitously, with the regional murder rate the highest in the world, and corruption is more pervasive than ever. According to the Inter-American Development Bank, the economic costs of violence in Latin America may be as much as 14 percent of gross domestic product. Confidence in democracy has declined region-wide, spurring fears that Latin America's young democracies are being hollowed out from within.

Unfortunately, there is no easy answer to the gang problem. Latin American gangs are often better-armed than the police, and the transnational nature of their activity means that no single country can address the issue alone. The gang problem is also inextricably tied to other problems -- such as poverty, corruption, and the structural weaknesses of Latin American states. As a result, the "mano dura" ("iron fist") approach of incarcerating tens of thousands of suspected gang members has not provided any lasting solution.

For an anti-gang strategy to succeed, it must enhance internal security capabilities in Latin America while also addressing the underlying issues that fuel gang activity. On the former count, the U.S. can help Latin American countries train and equip their security forces, develop intelligence-sharing procedures on returning deportees, implement effective anti-gang legislation laws, and interdict cross-border drug and weapons flows. On the latter, Washington should help formulate initiatives to combat corruption, rehabilitate young gang members, and ease the poverty and alienation that makes gang membership such an attractive option for young Latin Americans.

A number of nascent programs already point the way in this regard: judicial reform initiatives in Mexico, community policing projects and rehabilitation programs in Central America, personnel exchanges between the FBI and its Latin American counterparts, and targeted social spending in a variety of countries. None of these projects are panaceas, but they do indicate promising avenues for sustainable progress in the fight against the gangs.

Defeating third-generation gangs will require an integrated strategy that combines security assistance with social programs. Implementing such a strategy will be neither cheap nor easy, but the alternative -- a lawless region where democratic governments cannot protect their citizens -- would be far worse.

Hal Brands is a defense analyst in Washington, D.C. He is the author of "From Berlin to Baghdad: America's Search for Purpose in the Post-Cold War World," and recently received his Ph.D. in history from Yale University.

Making Smugglers Pay: Underwriting Egyptian Border Security

By Matthew Levitt and Becca Wasser - The Washington Institute for Near East Study

This past weekend, Egyptian police detained a man who was transporting $2 million dollars to North Sinai to be smuggled to Hamas in the Gaza Strip. This came on the heels of two separate attempts by Hamas to smuggle nearly $10 million dollars from Egypt into the Strip. This was not their first attempt to smuggle a large amount of cash into Gaza, nor will it likely be the last. The United States should encourage the Egyptians to crack down on the organization's bulk cash smuggling more effectively and push Cairo to develop an asset forfeiture regime, using funds seized under this program to finance more-robust law enforcement efforts along the border. European and American programs aimed at combating bulk cash smuggling offer a useful example for a similar Egyptian initiative.

Bulk Cash Smuggling into Gaza
Since the armed takeover of Gaza in 2007, the international community has put in place broad sanctions prohibiting financial support for Hamas. To circumvent these economic sanctions, Hamas has frequently turned to bulk cash smuggling to obtain necessary funds. In February 2009, for example, following the Gaza conflict, Egyptian border police caught Hamas officials attempting to smuggle suitcases holding around $9 million in cash into the Strip. The following month, Hamas officials returning from reconciliation talks in Egypt attempted to smuggle $850,000 in cash hidden in candy tins. Both cases were clearly in violation of Egypt's prohibition on persons leaving its borders carrying more than $10,000 in undeclared cash.

While these efforts were thwarted, Hamas has succeeded on many other occasions. According to Palestinian officials, in June 2006, former Palestinian foreign minister and Hamas member Mahmoud al-Zahar successfully crossed the Egyptian-Gaza border with $20 million in cash stuffed into twelve suitcases. Similarly, in November 2006, two Hamas lawmakers, Mushir al-Masri and Ahmad Bahar, smuggled in more than $4 million.

Egyptian police officers, historically underpaid, have accepted bribes in exchange for turning a blind eye to weapons smuggling through tunnels into Gaza. Several media reports suggest that Egyptian police stationed at border crossings are more than willing to do the same in regard to cash. The recent seizure of these funds, however, represents an opportunity not only to crack down on illicit financial activity but also to boost the meager salaries of Egyptian border guards and finance their underresourced mission of securing the Egyptian border.

International Efforts to Combat Smuggling
On March 13, 2009, the United States, Canada, and seven European nations agreed to a plan to prevent arms smuggling into the Gaza Strip. Coming off the heels of a joint U.S.-Israeli agreement in January 2008 to combat weapons smuggling, this plan promotes tactical cooperation to stop, search, and seize ships and other transportation vehicles suspected of transferring weapons to Hamas.

Although these agreements are positive developments, neither specifically addresses the issue of bulk cash smuggling, which is disconcerting because the participating nations have broad experience in combating exactly this issue. For instance, according to the State Department's 2009 International Narcotics Control Strategy Report, in September 2008, Germany participated in a multinational customs cash-smuggling enforcement operation that included many European Union and North African countries, with assistance from the U.S. Department of Homeland Security's (DHS) Bureau of Immigration and Customs Enforcement. By the end of the weeklong effort, officials discovered 181 cases of money smuggling and seized 5.5 million euros. Countries with experience in this area, such as the United States and EU members, could help Egypt develop its own efforts to combat the growing industry of bulk cash smuggling into Gaza.

Cooperative Relationships
International efforts to combat smuggling into the Gaza Strip must not focus on the border alone. Both Egypt and Israel have made efforts to hinder weapons smuggling by exposing, blocking, and demolishing smuggling tunnels. This has been relatively ineffective, however, since new tunnels are dug and Egyptian follow-up efforts have been desultory. This, coupled with the high rate of bribery among Egyptian border police, has created an environment ripe for bulk cash and other illicit smuggling.

The United States could adopt several measures to improve Egyptian performance in this area. DHS has developed cooperative relationships with foreign partners aimed at combating the illicit movement of currency. This type of cooperation has proven successful in the past with international partners, and could be effective with the Egyptians as well. Recent U.S.-Israeli custom efforts, for example, have thwarted bulk cash smuggling between the two countries. Under the DHS's "Hands Across the World" initiative, a four-day series of coordinated law enforcement actions resulted in one arrest and two seizures in the United States and fourteen seizures in Israel. Combined, the seizures totaled nearly $500,000 in cash, negotiable checks, gold, and diamonds.

The United States could also encourage the Egyptians to develop an asset forfeiture program to complement its beefed-up efforts to target bulk cash smuggling. The Egyptians could then use seized funds to bolster its law enforcement presence and capabilities at the border. Such asset forfeiture programs have been successful in the United States, where seized assets have long been applied toward the cost of financing government activity. Not only does asset forfeiture act as a high-impact tool to deter and punish criminal activity, it also can help underwrite the costs of such law enforcement activities.

For fiscal year 2008, the net position of the Treasury Departments Forfeiture Fund totaled $427 million. Treasury allocated $90 million to federal, state, and local law enforcement agencies and $200,000 to foreign countries to strengthen asset forfeiture programs and cover the cost of investigations, operations, and related travel and efforts.

In addition, authorities seize and disburse more than just money to law enforcement agencies. For example, local law enforcement and federal agencies, such as the Drug Enforcement Agency; FBI; Alcohol, Tobacco and Firearms; and DHS have received firearms, vehicles, electronic equipment, and other tools to aid them in their daily activities. These seized assets greatly strengthen the ability of these agencies and departments to perform their jobs.

The U.S. asset forfeiture program has been utilized specifically to deter the financing of terrorist groups. In fact, Hamas is fully aware that the proceeds of its illicit activities may be seized. In the United States, the Holy Land Foundation, a charity convicted in November 2008 of material support for funding Hamas, had to forfeit $12.4 million due to money-laundering convictions.

Conclusion
Adopting an asset forfeiture program to systematically prevent bulk cash smuggling along the Gaza border would not only act as a deterrent to potential smugglers, it would also significantly enhance the capabilities and resources of local border police by reducing their susceptibility to bribes. Reducing the success of cash smuggling from Egypt to Gaza would hurt Hamas, striking at the heart of the group's ability to strengthen and arm its terrorist and militia wings.

Matthew Levitt is a senior fellow and director of The Washington Institute's Stein Program on Counterterrorism and Intelligence. Becca Wasser is a research assistant at the Institute.

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