Subtitles section Play video Print subtitles These are grim economic times, fellow TEDsters, grim economic times indeed. And so, I would like to cheer you up with one of the great, albeit largely unknown, commercial success stories of the past 20 years. Comparable, in its own very peculiar way, to the achievements of Microsoft or Google. And it's an industry which has bucked the current recession with equanimity. I refer to organized crime. Now organized crime has been around for a very long time, I hear you say, and these would be wise words, indeed. But in the last two decades, it has experienced an unprecedented expansion, now accounting for roughly 15 percent of the world's GDP. I like to call it the Global Shadow Economy, or McMafia, for short. So what triggered this extraordinary growth in cross-border crime? Well, of course, there is globalization, technology, communications, all that stuff, which we'll talk about a little bit later. But first, I would like to take you back to this event: the collapse of communism. All across Eastern Europe, a most momentous episode in our post-war history. Now it's time for full disclosure. This event meant a great deal to me personally. I had started smuggling books across the Iron Curtain to Democratic opposition groups in Eastern Europe, like Solidarity in Poland, when I was in my teens. I then started writing about Eastern Europe, and eventually I became the BBC's chief correspondent for the region, which is what I was doing in 1989. And so when 425 million people finally won the right to choose their own governments, I was ecstatic, but I was also a touch worried about some of the nastier things lurking behind the wall. It wasn't long, for example, before ethnic nationalism reared its bloody head in Yugoslavia. And amongst the chaos, amidst the euphoria, it took me a little while to understand that some of the people who had wielded power before 1989, in Eastern Europe, continued to do so after the revolutions there. Obviously there were characters like this. But there were also some more unexpected people who played a critical role in what was going on in Eastern Europe. Like this character. Remember these guys? They used to win the gold medals in weightlifting and wrestling, every four years in the Olympics, and they were the great celebrities of communism, with a fabulous lifestyle to go with it. They used to get great apartments in the center of town, casual sex on tap, and they could travel to the West very freely, which was a great luxury at the time. It may come as a surprise, but they played a critical role in the emergence of the market economy in Eastern Europe. Or as I like to call them, they are the midwives of capitalism. Here are some of those same weightlifters after their 1989 makeover. Now in Bulgaria -- this photograph was taken in Bulgaria -- when communism collapsed all over Eastern Europe, it wasn't just communism; it was the state that collapsed as well. That means your police force wasn't working. The court system wasn't functioning properly. So what was a business man in the brave new world of East European capitalism going to do to make sure that his contracts would be honored? Well, he would turn to people who were called, rather prosaically by sociologists, privatized law enforcement agencies. We prefer to know them as the mafia. And in Bulgaria, the mafia was soon joined with 14,000 people who were sacked from their jobs in the security services between 1989 and 1991. Now, when your state is collapsing, your economy is heading south at a rate of knots, the last people you want coming on to the labor market are 14,000 men and women whose chief skills are surveillance, are smuggling, building underground networks and killing people. But that's what happened all over Eastern Europe. Now, when I was working in the 1990s, I spent most of the time covering the appalling conflict in Yugoslavia. And I couldn't help notice that the people who were perpetrating the appalling atrocities, the paramilitary organizations, were actually the same people running the organized criminal syndicates. And I came to think that behind the violence lay a sinister criminal enterprise. And so I resolved to travel around the world examining this global criminal underworld by talking to policemen, by talking to victims, by talking to consumers of illicit goods and services. But above all else, by talking to the gangsters themselves. And the Balkans was a fabulous place to start. Why? Well of course there was the issue of law and order collapsing, but also, as they say in the retail trade, it's location, location, location. And what I noticed at the beginning of my research that the Balkans had turned into a vast transit zone for illicit goods and services coming from all over the world. Heroin, cocaine, women being trafficked into prostitution and precious minerals. And where were they heading? The European Union, which by now was beginning to reap the benefits of globalization, transforming it into the most affluent consumer market in history, eventually comprising some 500 million people. And a significant minority of those 500 million people like to spend some of their leisure time and spare cash sleeping with prostitutes, sticking 50 Euro notes up their nose and employing illegal migrant laborers. Now, organized crime in a globalizing world operates in the same way as any other business. It has zones of production, like Afghanistan and Columbia. It has zones of distribution, like Mexico and the Balkans. And then, of course, it has zones of consumption, like the European Union, Japan and of course, the United States. The zones of production and distribution tend to lie in the developing world, and they are often threatened by appalling violence and bloodshed. Take Mexico, for example. Six thousand people killed there in the last 18 months as a direct consequence of the cocaine trade. But what about the Democratic Republic of Congo? Since 1998, five million people have died there. It's not a conflict you read about much in the newspapers, but it's the biggest conflict on this planet since the Second World War. And why is it? Because mafias from all around the world cooperate with local paramilitaries in order to seize the supplies of the rich mineral resources of the region. In the year 2000, 80 percent of the world's coltan was sourced to the killing fields of the eastern Democratic Republic of Congo. Now, coltan you will find in almost every mobile phone, in almost every laptop and games console. The Congolese war lords were selling this stuff to the mafia in exchange for weapons, and the mafia would then sell it on to Western markets. And it is this Western desire to consume that is the primary driver of international organized crime.