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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.