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Korruptionsindex: Schlechtes Zeugnis für Österreich

Österreich wird im Langzeitvergleich zunehmend als korruptes Land wahrgenommen, geht aus dem heute veröffentlichten „Korruptionswahrnehmungsindex“ (CPI) von Transparency International (TI) hervor.


Mit 7,8 Punkten rangiert das Land derzeit im internationalen Vergleich auf Rang 16 – was ja noch nicht so schlecht klingt, wie auch die Organisation einräumt. Verglichen mit auch demokratisch hoch entwickelten Industriestaaten aber sei Österreich heuer „nur noch im eher schlechten Mittelfeld“ platziert, heißt es. TI attestiert Österreich daher ein „beständiges leichtes Absinken“.

Österreich verliert an Boden

Der Index bezieht sich auf eine Punkteskala von null (Wahrnehmung umfassender Korruption) bis zehn (völlige Korruptionsfreiheit) und misst die Einschätzung der Verbreitung von Korruption im gesamten staatlichen Sektor durch Unternehmensberatungsagenturen und das Management international tätiger Unternehmen.

In dieser Erhebung hat Österreich in den vergangenen sechs Jahren an Boden verloren: von Rang zehn 2005 auf Rang 16 2011. Der Punktewert sank von 8,7 auf 7,8, wobei TI darauf hinweist, dass die Punktewerte aufgrund methodischer Änderungen nur eingeschränkt vergleichbar seien, was aber keine Auswirkungen auf die Position im internationalen Vergleich habe.

Die Organisation rechnet damit, dass sich das „schleichende Absinken Österreichs“ fortsetzen werde, wenn die Politik nicht „unverzüglich“ und „energisch“ gegensteuert.

Quelle : http://orf.at/stories/2092390/

The Southeastern Europe Pipeline Race

by Ioannis Michaletos

The geo-economic landscape in Southeastern Europe, as in other regions in the world presently, is being shaped to a great extent by the competition between numerous energy-producing states, large consumers and multinational corporations all vying to control the bulk of the energy-transport systems, most importantly pipelines. The European Union has formed a strategy called Southern Corridor, relating to the formation of a pipeline that will diversify the supplies of natural gas for E.U. states that currently rely on Russia and Algeria. The plan attracts the attention of all global energy corporations that aim for long-term lucrative contracts, and at the same time countries that have vital interests in the global energy sector are involved in the plannings, by backing up projects that they can influence. The target is to control the energy flow so as to gain political and diplomatic clout.

New players

Recently, the company British Petroleum entered the game by announcing its planning for the Southern Corridor, which it names South East Europe Pipeline (SEEP). According to press announcements and statements from officials, the pipeline will transfer gas from the Caspian region through Turkey, Bulgaria and Romania, onwards to the energy-thirsty industrialized nations of central and northern Europe, where some 150 million consumers are located and major global companies such as BMW, Daimler, Siemens, Airbus, Thyssen and others have their production facilities.

BP’s planning is directly competitive with the Nabucco pipeline, which aims to follow the same route and exploit the same energy resources, although its shareholders are mostly German, Turkish and Austrian companies. Apart from the obvious economic competition, the two pipelines share an antagonism that is reminiscent of the Belle Époque era, when the energy-seeking British and German Empires contested ferociously over oil reserves from the Danube to the Middle East. The victory of the Brits secured global economic predominance for the Anglo-Saxon companies up to date.

BP manages the vast and Azeri gas field of Shakh Deniz together with the Norwegian Statoil, a company that has its own plans for the Southern Corridor by participating in the Trans-Adriatic Pipeline project, known as TAP. BP’s move indicates that these two companies, since they have a joint venture in a field that can potentially secure gas supplies to Europe, may decide to merge their respective plans in the near future.

Moreover, BP as a corporate entity has been seriously battered due to the Mexican Gulf offshore drilling disaster in 2010 and the failure of negotiations with the Russian government relating to acquiring rights to the Arctic Sea reserves. These two failures have cost the company dearly in terms of shareholder value. Thus the London-based energy giant is playing perhaps a last grand move in order to stay on top of a highly volatile and changing market and at the same time secure a mega energy project of direct geopolitical implications that may well lead into a renewed antagonism between the ailing British corporate power and that of the European Union, which is based upon German and French companies.

BP, in order to antagonize Nabucco, promises to offer a project costing a third of that of the other pipeline, since it will transfer initially much smaller quantities. Purely financially speaking, that plan seems promising; nevertheless there are other antagonizing routes to be considered that are also gathering pace.

The rest of the plans

The Interconnector Turkey-Italy-Greece is another project that is backed by companies of the respective countries and aims at the same target, meaning the exportation of Azeri gas to Europe of approximately 12 billion cubic meters per year. The Azeri state energy company SOCAR stated recently that is in negotiations with Turkey in order to finish up details for that project, the most important one being the agreement upon the transit fees of the latter. Should these negotiations prove to be fruitful, ITGI can be put into action by 2013, thus surpassing all of its competitors. In short, the Azeri government is being seen as a precious bride by all interested parties who rely on their future plans.

Within the last three months of 2011, SOCAR will review all plans by Nabucco, ITGI, TAP and SEEP, and it is estimated that it will then decide which will be given the green light to move on. That makes Azerbaijan presently the most focal country for geo-energy affairs in the world, because all interested parties know very well that the winner takes (almost) all and will leave precious little quantity of gas for its competitors to export. The estimation by many independent energy analysts is that a final decision will be ultimately postponed for 2012 or even further in the future and that mergers will take place between those four pipeline projects, depending on the national interests of the four countries with high stakes in that field, namely the United States, Germany, the United Kingdom and France.

The Russian factor

A crucial aspect of the pipeline discussion is the role of the Russian-Italian-backed plan of the South Stream pipeline, which recently admitted new shareholders from Germany and France. It is the only project that is not related to Azerbaijan or Turkmenistan and other Caspian states, and aims to deliver gas to Europe via a different avenue and coming from the Russian and possibly Kazakh reserves. Estimations to date, along with various reliable data, point out that Azerbaijan is not able to provide a full load of the gas needed for the Southern Corridor. Moreover, insoluble legal barriers on the status of the Caspian Sea and current disagreements between all neighboring states for the offshore gas fields are major obstacle for a long-term pipeline-related decision. The obstacles may prohibit any future plans to connect Turkmenistan reserves for export with those of Azerbaijan, since any pipeline will have to trespass the bottom of the Caspian Sea.

It seems that the South Stream, since it is backed by 50 percent shares by Gazprom, which is essentially a state-owned and -run Russian company, can secure the capital needed for a long-term massive investment of up to 16 billion euros, whereas other plans such as Nabucco, where quite a few mid-sized private companies participate, will find difficulty raising capital and making a profit. In any case, the existence of a Russian plan backed by several big European energy players reveals that there is a long way before any pipeline is being constructed amid a ferocious interstate and corporate antagonism.

Estimations

The gas share in the European Union’s energy balance will continue to grow in the coming decades against the background of the negative attitudes of Europeans against nuclear energy, as was manifested in Germany and Switzerland, and the desire to reduce carbon emissions. For the moment, the only important project aiming for the above strategy is the North Stream, a joint German-Russian venture, which begins commercial operations the last weeks of 2011, manages to secure stable gas deliveries in Europe, and solves to an extent the issue of energy supply in the European Union in anticipation of winter.

Concerning the Southern Corridor, the markets under which gas can be secured and exported are Azerbaijan, Turkmenistan, Russia-Kazakhstan, Iraq and Iran. It is not clear whether Azerbaijan has the necessary capability of delivering over 1 trillion cubic meters of the product for the next 35 years—a median life span of such a project. Turkmenistan faces the legal barrier of the Caspian Sea and the all-encompassing political-diplomatic influence of Moscow. Russia-Kazakhstan does have the necessary amounts, but as far as Russia is concerned, it will certainly face political opposition. Iraq is still in a state of flux and nobody can guarantee a safe passage of large amounts of gas through the Kurdish-controlled territories where, in the case of those in Turkey, a vicious guerrilla war is being fought. Iran, lastly, is marginalized by the international community due to its involvement in its nuclear program and its support to international terrorist groups.

The only certainty is that the pipeline competition in Southeastern Europe is far from over, and last-minute surprises, such as new players entering the game, remain a possibility. Most importantly, the issue far exceeds the little publicity it gets from mainstream international media, and it is at the top of the agenda of most global policymakers, making it of historic nature and of binding long-term political consequences for a significant part of the Southern Eurasian mass.

The South Stream project

The pipeline project named South Stream is planned to carry 63 billion cubic meters of natural gas per year from Southern Russia up to Italy. The pipeline is expected to cost 19 billion to 24 billion euros, and a significant section of the pipeline will be offshore, crossing the Black Sea from Novorossiysk and reaching to Burgas port in Bulgaria

The pipeline will be built and operated by several project companies. The offshore section of the pipeline will be built and operated by South Stream AG, a joint company of Gazprom and Eni.

The South Stream is an energy project aimed at merging the Russian Federation producers and most notably Gazprom with the E.U. consumers, especially Italy and Germany-Austria. It bypasses both Ukraine and Turkey, aiming at reducing dependency of Russia towards these two countries. Presently the bulk of the gas exports to the west of Russia traverses through Ukraine.

South Stream could be seen as a complementary route to that of North Stream, which already delivers gas from the Baltic shores of Russia to Northern Germany, and which bypasses Poland. In a few words, the South Stream is a political project first and foremost aiming at decreasing the dependency of the Russian energy exporters to countries of Western Europe, with which it has various frictions.

The head of Gazprom’s South Stream project, Sergey V. Korovin, commented regarding confrontation of this project with other ones, “The European gas consumption projections envisage a significant increase by 2020. Therefore, additional volumes of gas will be needed. South Stream, and Nabucco are by no means mutually exclusive projects. If both Nabucco and South Stream are built, Gazprom will cooperate closely with our European partners to optimize the gas flows of the different pipelines in order to guarantee a smooth functioning of the gas supply system.”

The Nabucco project

The Nabucco pipeline (also referred to as the Turkey-Austria gas pipeline) is a proposed natural gas pipeline from Erzurum in Turkey to Baumgarten an der March in Austria. The project is backed by several E.U. states and the United States and is often seen as rival to the Gazprom-led South Stream pipeline project

The project is developed by the Nabucco Gas Pipeline International GmbH. The shareholders of the company are OMV (Austria), MOL (Hungary), Transgaz (Romania), Bulgargaz (Bulgaria), BOTAS (Turkey), RWE (Germany). The pipeline is estimated to cost around 7.9 billion euros, and the company leading the project is OMV.

The final investment decision is scheduled to be made in 2011, and the pipeline is expected to be operational by 2015. In September 2010, the consortium signed an agreement with EIB, EBRD and the International Finance Corporation (IFC), according to which the banks will conduct due diligence for a financing package of 4 billion euros.

Nabucco is considered as a project with strong diplomatic backing by the United States, although no American companies participate. The reason is two-fold. First of all, it decreases Russian energy involvement in the European Union, since no Russian company participates. Secondly, the final aim of Nabucco is to export Iraqi gas to Europe, therefore increasing the indirect dependence of the European Union toward the United States, since Iraq is under direct American influence for obvious reasons.

According to the head of communications for the consortium, Christian Dolezal, regarding the competition or not of Nabucco with other pipelines, he said, “Nabucco and other pipeline projects as South Stream are not competitors since Nabucco has different objectives. Nabucco aims at providing secure and stable supplies of natural gas in the heart of Europe to meet the future demand and to boost industry. The key word is [providing] ‘secure’ supplies.”

The Trans-Adriatic project

The Trans-Adriatic Pipeline project, known as TAP, is a venture between Statoil, EGL and EON, and it is scheduled to transfer natural gas from the Caspian states to the European markets through Turkey, Greece and Albania. Statoil is already involved in Azerbaitzan through its 25 percent of the Shakh Deniz reserve, and full-time production is to begin by 2015.

The pipeline will be in most part a series of extensions in the existing pipeline connections between Greece and Turkey before moving on to Albania and Italy and possibly Montenegro.

TAP aims to find the middle ground between the two big competitors, namely South Stream and Nabucco. From one point of view it includes some of the biggest names in the European energy market, and on the other, strives to increase independence both from the Russian gas reserves and from the indirect American energy politics towards the European Union. All of course depends on the ability of the consortium to acquire the necessary and long-term quantities from Azerbaitzan and the Caspian region—a difficult task.

The head of communications of the TAP consortium, Michael Hoffmann, commented regarding the nature of the competition between TAP project and others, “The question is not about ‘if’ all projects can be realized; the question is more about ‘when.’ In the long term, the wider Caspian and Middle Eastern regions can provide enough gas to fill all the pipelines, allowing all projects to coexist. Really, the question is about which project will be built first and who will be the first to open the Southern Gas Corridor.”

The Poseidon project

The “Poseidon” natural gas pipeline is the Western part of the ITGI pipeline that is a Turkish-Greek-Italian energy project that will transfer 11.5 billion cubic meters of gas per year, from which 2.5 billion will be allocated for the Greek market and another 8 billion for the Italian one. Poseidon is a 203 km undersea link to Otranto-Italy, and the whole ITGI system will supply the aforementioned markets with Azeri natural gas.

ITGI already connects Turkey and Greece (since early 2008), and the Poseidon link will be fully operational by 2012 to 2014 with a total cost of around 500 million euros.

DEPA and the Italian company EDISON each own 50 percent of Poseidon. The European Union has characterized the ITGI project as an “absolute priority one.”

This project is a direct competitor to the TAP one, and again it strives to be the middle ground between the two gigantic projects of South Stream and Nabucco. Its eventual success—as in the case of TAP—depends on the ability to take hold of the Azeri gas reserves in long-term contracts.

The Greek alternate minister, Ioannis Maniatis, speaking on behalf of his government in a recent international energy conference, blamed Brussels for overly promoting Nabucco and claimed that the Southern gas corridor should be envisioned on purely financial and technical viability data and not on political criteria. In that sense he explained that the only sensible project that fits the aforementioned is the ITGI pipeline connecting Turkey-Greece and Italy and which is going to be filled mostly by Azeri gas, depending on the progress of the Shakh Deniz 2 gas field.

The pipeline game will be fierce

Overall, the plans as they have been laid by all major corporations are based on the assumption that Azerbaitzan has enough quantities through its Shakh Deniz 2 field to cover the supply for them. By excluding the South Stream, which seems to rely on the unified gas system of the Russian Federation, the rest of the projects will fiercely compete on one reserve basically, unless a conclusive agreement is being reached—something very difficult to be achieved, taking into account the actual reserves and the divergence of the existing business and political interests. It has also to be noted that Iran’s reserves are out of the game, due to the international sanctions of that country, and the Iraqi reserves have a ways to go before they can be securely exported to other markets.

In such a case, it is not unthinkable that pipeline projects will merge, or that some players will exit the race. Moreover, the geopolitical balance of the region along with the wider global energy politics will complicate even further the situation before any final decision is being made.

The only certainty so far, is that all entities involved in this pipeline game will compete for more political back up, both on a national level but also on a trans-national one, and especially on the E.U. level.

Lastly, the upheaval in North Africa and the Middle East adds another significant worry for energy policy makers in Europe who have to act fast before an energy security crisis becomes a reality due to the dependence of most E.U. states on producers from those regions. An estimation that can be reached for the moment is that by taking into account the business schedules of most companies involved in the projects, the series of elections in many participating countries and the situation in the Mediterranean Basin, most of the final decisions will take place between mid-2011 and mid-2012, and these actions will definitely shape the energy landscape of Europe for the coming decades, bringing about political repercussions as well.

Trends in Balkan Organized Crime Activities

by Ioannis Michaletos

The perennial issue of the existence of strong organized crime structures in the Balkan region is of great concern for the whole of Europe, due to the importance of this region as a main geo-economic hub between the European Union, Turkey and the Middle East, and Russia.

The United Nations International Narcotics Control Board in its 2010 annual report detailing the global trends in the illicit drug market outlines several interesting aspects regarding the organized crime activities in the Balkans. In respect to the main heroin problem in Europe, the report shows that almost all European heroin originates in Afghanistan, mostly smuggled in through Turkey and the Balkans. According to the report, the four top national markets in Europe account for 60 percent of all European heroin consumption. They are the United Kingdom (21 percent), Italy (20 percent), France (11 percent) and Germany (8 percent). The majority of the crime networks trafficking heroin into these markets is from the Balkans.

The 2007 World Drug Report issued by the United Nations Office on Drugs and Crimes points to an alarming new drug alliance between the notorious South American drug lords and the Albanian drug mafia in the Balkans that already controls much of the wholesale network in Europe. The section “Concerns about Cocaine along the Balkan Route” reads, “While most cocaine shipments from South America continue to be directed towards Western Europe … some shipments to East Europe and the Balkan countries have been noticed by enforcement agencies.”

Further back in recent times, while the 2005 U.N. Drug report identified Kosovo Albanian organized crime groups responsible for controlling heroin market, the 2007 report, additionally, identified them as developers of the new traffic regarding the importation of South American cocaine: “This raises concerns about the development of new trafficking routes and/or the incorporation of cocaine into the range of products offered by traditional heroin trafficking groups operating along the Balkan route.” The report adds that Albanian drug gangs control ports in Romania, in addition to ones in Montenegro (Bar) and Albania (Durres). “Some cases of cocaine shipments via the Black Sea to Romania and via the Adriatic Sea to Montenegro often organized by Albanian criminal groups have already been observed,” says the report.

Thus the traditional narcotics market structure has evolved further over the previous years and now the smugglers are able to exploit both the main road corridors of the region from east to west and north to south, but also they got a hold of the main sea trade import bases and revealed themselves into a greater and global role.

The U.S. State Department International Strategy for Narcotics Control report, released in March 2010, says that the Balkan countries remain major transit points for Afghan heroin, while the war against traffickers is hampered by corruption and weak state institutions. According to the report, Albania, Bulgaria, Kosovo, Serbia, Croatia, and Bosnia and Herzegovina are used by narcotics traffickers to move Afghan heroin from Central Asia to destinations around Western Europe. To a lesser extent, Romania and Montenegro are also considered as staging posts for traffickers. Apart from being an important transit country for heroin and cocaine, Bulgaria is also a producer of illicit narcotics, the report says. With its geographic position on Balkan transit routes, Bulgaria is vulnerable to illegal flows of drugs, people, contraband and money.

The Interpol is quite specific in identifying the real importance of the Balkans in the present day European narcotics market. According to the research of that organization, two primary routes are used to smuggle heroin: the Balkan route, which runs through south-eastern Europe, and the silk route, which runs through Central Asia.

The anchor point for the Balkan route is Turkey, which remains a major staging area and transportation route for heroin destined for European markets. The Balkan route is divided into three sub-routes: The southern route runs through Turkey, Greece, Albania and Italy; the central route runs through Turkey, Bulgaria, the Former Yugoslav Republic of Macedonia, Serbia, Montenegro, Bosnia and Herzegovina, Croatia, Slovenia, and into either Italy or Austria; and the northern route runs from Turkey, Bulgaria and Romania to Austria, Hungary, the Czech Republic, Poland or Germany. Large quantities of heroin are destined for either the Netherlands or the United Kingdom.

The magnitude of the organized crime groups in the region can be well illustrated by the case of the “Saric network” in Serbia. The organization of Darko Saric had funnelled 1.3 billion euros to Serbia, but may have amassed up to 5 billion, according to investigators. Saric and his companions laundered the narcotics money through companies in Serbia, Montenegro and “some Western European countries.”

Moreover, the powerful crime clan, said to be one of the major cocaine suppliers in Europe, was involved in the attempt to smuggle 2.7 tons of cocaine to Europe in the autumn of 2009 from Latin America. Since the sheer amount of this trafficking attempt is quite substantial, it can be estimated that the nexus between the South American cartels and those in the Balkans is becoming stronger and of importance for the world police authorities. In this case Serbian and Montenegro citizens were involved, as well as suppliers from Argentina and Bolivia who worked together for years and in a fashion that resembles the workings of any modern multinational corporation.

Furthermore, reportages by Bulgarian media have revealed that Bulgarian criminal gangs are among the major cocaine traffickers in south-eastern Europe. More specifically, a Darik News investigation noted that “over the past months, local drug dealers have abandoned the heroin trade, because of the drug’s high price and the low demand and they switched to cocaine.” The Bulgarian journalist Nikolay Hristov reported that five major organizations in this Balkan country have their hands on the cocaine market. Similar findings are to be found for Greece also, where in Athens five well-organized criminal gangs control the local cocaine market with Greeks, Albanians, Bulgarians and Georgians to act as kingpins of such illegal trade.

The perils associated with organized crime activities in the Balkans have long been associated with wider ramifications in other countries due to the penetration of the European crime scene by Balkan groups. For instance, about 80 percent of the Hungarian heroin market is controlled by the so-called Albanian mafia, which then invests its profits from that country by procuring weapons from Italian crime groups.

Therefore the criminal syndicates not only exploit local markets and facilitate the spread of illegal substances, but also assist in funnelling further criminal action into other countries and finally create a wide network of illegal activities that involve a large number of individuals and serious problems for the authorities in different states, who find it hard to either control or even identify the complexity of the situation.

Since the Balkans is one of the main import points and staging grounds for the expansion of organized criminal activities in the European Union, a pan-European anti-crime policy is expected to be centered in that region. Moreover the security authorities should be aware of the flexibility and the adaptability of the criminal groups that seek to maximize their returns at any given moment, and in many instances they tend to create an illegal market as soon as they realize that a need has to be met by non-legal means.

For example, it is quite likely to expect a shift from the traditional trafficking operations that transfer immigrants from Asia and Africa to Europe, towards an inter-European trafficking movement of illegal immigrants who have been stuck into countries with low or even negative economic growth. The case of Greece is significant, since the country had a 5 percent drop in GDP in 2010 and possibly another 5.5 percent in 2011. Already there is an exodus of immigrants from the country. Illegal ones from Asia and Africa find it quite hard to move elsewhere due to lack of documents.

It is estimated that approximately 400,000 individuals are in such a situation in Greece, who are increasingly at risk of no employment, due to the dramatic drop in the construction business and the recession in the commercial and industrial sectors. If one adds the number of illegal immigrants in Spain, Portugal and Italy who face similar concerns, a new illegal market seems to be opening that will almost certainly be taken advantage of by the same networks that presently deal with trafficking of weapons, narcotics and persons. In parallel, both Bulgaria and Romania enter the Schengen treaty on October 1, and that will make them an attractive target for Turkish and Middle Eastern human traffickers who will try to exploit the “opening” of the borders towards the European Union in that region.

Moreover, a much worrying trend is the formation of ethnically mixed gangs in the Balkans that tend to recruit people from various states and conduct their operations by adapting fully to the local environment. For the moment there seems to be a combination of Bulgarian and Romanian gangs and of Croatian and Montenegrins ones. The Albanians often join Greek gangs in Greece and the Turks are well placed within gangs in FYROM, Kosovo and Bulgaria.

Yugoslavian gangs encompassing citizens from most ex-federation countries are active as well as networks including Middle Eastern and Western Europeans. Thus the work of the security services becomes more complicated; the criminals can use the outreaches of their individual members to penetrate each country, acquiring much-needed information and local resources.

Lastly the current criminal groups in the Balkans have already amassed a significant amount of capital that cannot be numerated precisely, but it can be safely assumed that is reaches quite a few billion euros, along with thousands of properties and merchant companies. Thus, sooner or later this criminal capital will have to be laundered through the legal system. That requires the collaboration of financial institutions, which likely will be concentrated in the Balkans, since the rest of the European banking system would not allow such a massive breach of regulations and most importantly a change of balance in the already established equilibrium of capital power in Europe.

The Balkans, already known for its corrupted public sector and proximity to the Middle East, will most likely become an important world hub for money laundering and the creation of new business elite with a direct criminal background. A trend of such nature already occurs and it will become more visible in the short term.

The divergence in economic growth in the European Union and the rise in unemployment in at least half of the E.U. member states will inevitably provide yet another golden opportunity for the Balkan mafia, as the wars of the 90s were for contraband trade, and the ease in travel in the 00s for their human trafficking operations and their spectacular global criminal expansion.

Organized Crime in Central Europe

by Ioannis Michaletos

The countries of Central Europe, especially the Czech Republic and Hungary, are used as centers for coordination, communication and conciliation between very powerful international crime syndicates, which have managed to install their headquarters in the heart of the European Union.

Hungary

Hungary has the unique geo-economic advantage of occupying the middle of Europe in the midst of the important axis of the Danube as well as the Baltic-Aegean axis. As an effect, crime syndicates were apt in using this country as a major transit ground for their pan-European operations and as a base for coordinating their cells in other regions.

Similarly, the accumulation of capital in this country as in most former communist countries was made during the 90s, partly due to smuggling and illegal activities. The criminal activity occurred in an institutionalized societal manner along with corrupted practices in the security and the judicial sectors.

The local criminal networks in Hungary and Budapest in particular are formed by former members of security forces and pre-existing black marketers who maintained contacts with the local authorities. The rapid development of the networks gained control of up to 20 percent of local GDP, due to a number of endogenous and exogenous factors.

First, the geo-economic position of the country facilitates the traffickers moving illicit cargo by road and rail routes. For example, from Ukraine tobacco and women are trafficked towards Austria, and from Romania illegal immigrants are transferred, whilst from Croatia and Serbia weapons and drugs are being imported.

Hungary has adequate public infrastructure and storage services, providing a strong reason for crime syndicates to pursue their activities there. In order for criminal groups to transform themselves into an integrated, organized crime structure, there has to be the necessary infrastructure that will enable them to have a continuous and smooth flow of contraband merchandise, which in turn will provide economies of scale for their operations. Under this assumption, Hungary seems a perfect destination.

Another important factor was the widespread corruption in the local security forces and the coexistence of former and present executives with links to members of organized crime. The result was poor security controls and in general non-compliance with the law.

Currently Budapest hosts the global epicenters of illegal pornographic material, contraband cigarettes and is also a meeting point and negotiation center between the heads of international crime groups in the sectors of arms, women and drug trafficking. Money laundering is also another thriving illegal industry, closely associated with the above.

The Hungarian Security Council, a government agency providing guidelines and action against crime in the country, has noted disturbing trends for the foreseeable future. Reports of the local police found that the number of criminal organizations has increased considerably since 2007. Also, it is estimated that construction companies and business groups involved in public procurement are now subject to the control of organized crime, and groups coming from China and Latin America have managed to establish their presence there, in order to increase their positions in Western Europe via Budapest.

Furthermore, the Hungarian Intelligence Service (NBH) in 2008 reported that, after the accession to the European Union in 2004, a great increase was witnessed in the turnover of the organized crime groups, which became more flexible and multifaceted, effectively penetrating more legitimate businesses. Hungarian officials—many of whom have been trained in the United State—are actively fighting the flow of black money that tends to trace back to key executives in many respectable businesses not directly associated with illegal activities.

In general, taking into account that the current global financial crisis creates the need for many legitimate businesses of fresh capital, one can assume that Hungary will have to face more challenges in those issues in the short term. So far the security forces of Germany, Italy, Austria, Sweden and the United States work very closely with the authorities and have made several successful joint operations.

Czech Republic and Slovakia

The Czech Republic is an economically and socially developed country in Central Europe that has been facing for years serious issues relating with the activities of organized crime. Local security authorities relay in their reports that they are facing some 100 organized groups in the country with at least 3,000 members, staffed by accounting, legal and other professional functions. Of all these criminal groups, 30 are integrated and internationalized, with diverse activities in many countries around the world.

Local leaders of criminal networks are nationals of the former Soviet Union and especially Russia, Ukraine, Georgia and Moldova. Also Croats, Serbs, Albanians, Bulgarians, Romanians, Vietnamese and Chinese make up the majority of the groups. There are also groups from Turkey and Greece specialized in money laundering and managing drug loads moving to Germany as well as illegal prostitution.

Finally, there is a definite presence of the so-called Italian mafia and various groups from Latin America, Lebanon, Iran and Nigeria. The Czech nationals tend not to create their own organizations but to adhere to foreign ones, and not as heads but as support staff, which both demonstrates the prevalence of foreign organized crime in society and also the difficulty for the authorities to collect information on the important criminal echelons.

On the other hand, Czechs arch-criminals have managed to form groups outside the country, particularly in France, Italy, Croatia and Bulgaria. Occasionally there are reports of activity in Greece, Turkey and Cyprus.

The Czech Republic, because of its extensive borders with Germany—considered the prime market of smuggled goods and drugs in Europe—facilitates trafficking to there and acts as a coordinating center for groups wishing to enter Germany. Moreover, in recent years several cases have been revealed of coordination and delivery of drugs’ original source from the Middle East to the United States via Prague and Ostrava. Regarding illegal migration and trafficking, the Czech Republic is infamous as a place of concentration and transit of Ukrainian and Moldovan nationals sent to Germany and the Scandinavian countries.

In Slovakia also the issue of organized crime is high in the news and the police reports. The country “hosts” 50 groups with over 700 regular members. Most of those are foreigners, Kosovo-Albanians, Ukrainians, Russians and Georgians working with local elements.

Slovakia from the late 90s has been informally divided into zones of influence between these groups in order to avoid unnecessary turf wars that had claimed many victims previously. The capital Bratislava has a strong Albanian presence, specializing in the illegal prostitution industry with annual turnover that may exceed 50 million euros. Slovakia has become a center of negotiation between pan-European criminal groups that regularly meet in mountain vacation hotels in the south of the country and agree into wider activities.

The Romanian teams specializing in car theft “divide” their illegal sales when negotiating in the Slovakian territory and representatives of other groups from Germany and the Netherlands divide the market relating to illegal prostitution. The narcotics contraband provides the opportunity for contacts between different groups from the Netherlands, Scandinavia, Turkey, Albania-Kosovo and Germany that agree on promoting substances in specific locations.

In Slovakia there is an extensive weapons-smuggling network, which mainly imports weaponry from Moldova, the Caucasus and the Balkans. At times customers have come even from sub-Saharan Africa and the Middle East looking for explosives and anti-tank rockets and missiles.

One of the fastest growing groups are the Chinese and Vietnamese, who now have formed a well-structured organized crime network that stretches from Athens, Greece to Glasgow, Scotland, a development that will most certainly occupy the actions of the European security authorities in the coming years. The Vietnamese especially are considered prime dealers and distributors of contraband cigarettes, clothing and other consumer items.

The Vietnamese network is also specialized in illegal immigration from East Asia to Europe and is of trans-border nature, since the Vietnamese in Czech (Prague, Brno, Ostrava), are in contact with their fellow compatriots in Germany, Poland and Austria. Thus a wider ethnic network emerges that has expanded considerably over the past 20 years.

There is a strong trend of “phony marriages” to be recorded, especially between Vietnamese organized members and locals, in order to facilitate the integration of the former in the society. Similar findings have been found regarding Albania, Russian and nationals from the ex-Yugoslavian countries. Therefore the members of the crime syndicates are able to firmly root themselves in the European Union and attain the status of a citizen that protects them from expulsion should their activities become known to the authorities.

In Hungary, Czech Republic and Slovakia, 90 percent of drugs sold within the territory are being distributed by foreigners. Typically, there is an abundance of hard drugs in Prague and Budapest, and the price of heroin is half that sold in Berlin and Paris. It is similar with other drugs like ecstasy. This creates what is called “narco-tourism,” which along with “sex tourism” in the same cities creates ideal conditions for the accumulation of large amounts of black capital for the criminal organizations.

It is indicative of the great economic momentum gained by the criminal syndicates that only in Budapest it is roughly estimated that 1,000 “international escorts” are being illegally employed earning an income in excess of 80 million euros for organized crime syndicates per annum.

A similar situation occurs in other countries, and if one adds the whole range of the illegal sex industry in Central Europe (clubs, entertainment, movies, brothels, Internet-phone appointments, etc), then it could be safely estimated that an annual turnover of over 5 billion Euros is being generated. As it can be seen, the so-called “real economy” is being greatly influenced by the parallel illegal one, creating a symbiosis that is based in the importation of substantial amounts of capital.

In recent years, Prague has witnessed the establishment of Russian-originating criminal groups that have set up perfectly legitimate businesses, in particular hotels, restaurants and real estate companies, in order to launder capital. More than 150 have been made known over the past few year, and they also include businesses, mansions and horse riding clubs in the tourist regions of Karlovy Vary and Marianske Lazne.

The ultimate goal of this new strategy, according to a confidential report by the Czech Ministry of Interior, is the penetration by the Mafiosi of the economic and political life of the country. Already numerous cases of corruption involving mayors and local council heads have been recorded.

The research on organized crime activities in Central Europe may gain further notice for the European security architecture, since the countries located in this geographical zone are being used as stage points for further inclusion of criminal structures in the larger E.U. countries such as Germany and to a lesser extent France and Italy.

Moreover the European integration process and the lack of border controls creates a unique opportunity for further empowerment of those criminal networks that are able to tap into their specialization and acquired experience and further enlarge their illegal activities, as is the case over the past 20 years.

The collapse of communism in 1989 provided a challenge for the security authorities across the European Union that it is becoming vividly clear nowadays and will most certainly be of importance regarding the future of the continent that has to confront a series of important challenges related to the security of its citizens.