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The International Crooks Now in Power

One evening in the winter of 2004, while working as Newsweek‘s Jerusalem bureau chief, I found myself in a dark parking lot outside a banquet hall in suburban Tel Aviv, waiting for Israel’s most powerful gangster, Ze’ev Rosenstein, alias the “Fat Man.” The son of Romanian Jewish immigrants, born in Jaffa, just south of Tel Aviv, Rosenstein controlled one of the world’s largest international drug trafficking rings, and had survived seven assassination attempts, including an aborted guided missile attack on his convoy a few months earlier.

I had spent weeks trying to arrange a meeting with him, and was staking him out at his eldest son’s wedding. Rosenstein pulled up to the banquet hall’s marble-columned entrance in his armored Mercedes, followed by a koda full of bodyguards. He emerged from the back—a short, compact man, nicely dressed in a charcoal suit—with three young sons. I called out his name, and Rosenstein froze, looking nervously between me and four security men. They quickly formed a cordon around him. “Private party, bud,” the burliest of the bunch told me in a New York accent, semiautomatic M-16 dangling from a shoulder strap. I never got to talk with Rosenstein.

So I was interested to find the Fat Man showing up in Misha Glenny’s McMafia: A Journey Through the Global Criminal Underworld, his engrossing and disturbing survey of international organized crime in the post–cold war era. A long-standing expert on the Balkans and a former correspondent for the BBC, Glenny is also the author of The Fall of Yugoslavia (1992), the definitive account of the violent breakup of that country under Slobodan Milosevic, and he is intimately familiar with the ways that Serbia, Montenegro, Croatia, and other Balkan countries became mafia states during the sectarian wars of the 1990s. Here he shows how organized crime syndicates throughout the world have become increasingly interconnected and interdependent, in a crooked form of globalization.

Ze’ev Rosenstein is a typical felon of the global age. His rise from petty jewel thief to international drug dealer coincided with Israel’s emergence as a transit point of criminal routes stretching from Moldova to Dubai to Miami Beach. In the 1990s, together with software and information technology, organized crime was beginning to have a major part in the Israeli economy. The mass migration of Russian Jews to Israel in the post-Soviet era brought with it underworld criminals who recreated their syndicates in Israeli cities. These Russian mobsters in turn transformed Israel into a principal link in the global sex trade: Glenny found that Bedouin gangs working with the Russians have smuggled thousands of young women from Moldova, Russia, and other Eastern European countries into Israel across the Sinai Desert to work as prostitutes. (Many were held as sex slaves.) Meanwhile, loosening restrictions on money flow and the rise of financial safe havens such as Dubai made it easier for criminal organizations in Israel and elsewhere to expand their operations around the world.

For Israeli gangsters such as Rosenstein—who ran homegrown syndicates that competed with the Russians—the opportunities grew larger. Rosenstein rose to power in Tel Aviv running illegal casinos near the central bus station, but he later earned tens of millions of dollars moving large supplies of ecstasy and other drugs from Belgium and the Netherlands to Australia and the United States. In 2003, Glenny writes, the US State Department claimed in a report that

Israeli drug-trafficking organizations are the main source of distribution of the drug to groups in the US, using express mail services, commercial airlines, and recently also using air cargo services.

(One Hasidic Jewish New Yorker, indicted in 2003, allegedly laundered more than $40 million in profits for Rosenstein’s gang.)

As the stakes rose, so did the violence: during the early part of this decade, when I was based in Israel, it was often said that parts of Tel Aviv had come to resemble Chicago in the 1920s. Hoodlums were dying at an alarming rate in feuds between Russian, Yemeni, and other Israeli crime families for control of the gambling and drug rackets; civilians were sometimes killed in the crossfire. A bomb blast outside a Tel Aviv money-exchange shop in December 2003 that killed three passersby and wounded two dozen was at first blamed on Palestinian militants. Within hours, however, police realized that the target had been Rosenstein, who had escaped the blast with a slightly injured hand and shredded clothes. “Are they completely insane? What have we come to? Jews blowing up Jews?” one survivor told the local press.

As Glenny tells it at the start of his book, two related events marked the beginnings of this deadly new age of international crime. The 1991 collapse of the Soviet Union unleashed the pent-up energy of millions of former citizens of the Communist empire. Ilya Pavlov, a Bulgarian wrestler turned secret policeman, exploited his connections to members of Bulgaria’s former Communist hierarchy, looting the state’s assets and channeling the money into a variety of illegal transnational enterprises. His corporation Multigroup, staffed by other former Bulgarian athletes and secret policemen cast adrift in the post-Soviet era, cornered the international market in car theft by using long- standing Balkan trade routes—expensive cars would be stolen from Western European cities and smuggled to Eastern Europe and the Balkans, where they could be easily resold.

The disintegration of Yugoslavia during the 1990s gave Pavlov and other Balkan criminals a huge financial windfall. When Milosevic ordered Serb nationalist forces in 1991 to “ethnically cleanse” Bosnia and Croatia, the West imposed economic sanctions. War profiteers, including Pavlov and Milosevic’s son, Marko, then smuggled vital goods—ranging from cars to cigarettes to oil—into Serbia, where they could be sold for large profits. “The Balkans…was…transformed into a smuggling and criminal machine that had few if any parallels in history,” Glenny writes.

The Balkan mafias started putting aside their ethnic differences to engage in a breathtaking criminal collaboration. This would in turn reach out to counterparts across the globe, bringing together the mafias of Colombia, Russia, and the Golden Triangle [an opium-producing region in Southeast Asia], to name but the most influential.

Glenny describes how these criminal networks quickly expanded across Eastern Europe and beyond. Once hermetically sealed Albania, for example, turned overnight into a paradise for the sellers of cheap stolen vehicles:

Cars were banned in Communist Albania except for official use; the roads were designed to accommodate a few trucks a day, and nobody except the small band of state chauffeurs learned how to drive. In the chaos of collapsing Communism, the floodgates opened and anyone able to get his hands on a (stolen) car hit the public highways with Mediterranean gusto despite never having sat behind a wheel. Mayhem! The country was transformed into a huge and deadly dodgem ride, while any vehicle was fair game for thieves…. The cars that didn’t stay in Albania were sold in Macedonia, Bulgaria, Russia, the Middle East, the Caucasus, and former Soviet Central Asia.

(Glenny’s account reminded me that in April 1999, while traveling with the Kosovo Liberation Army in remote Bajram Curri, Albania, the Toyota 4x4 I was riding in, stuffed with the laptop computers and satellite phones of half a dozen correspondents, was seized at gunpoint by members of the local mafia. The car was halfway to Montenegro before the mob leader realized that it had been under the protection of a KLA chieftain, and radioed his underlings; we got the Toyota back an hour later.)

Perhaps no figure epitomized the anything-goes atmosphere of the Balkans during that era, the blurring line between politics and crime, more than Milo Djukanovi´c. A former pro basketball player, Djukanovi´c had been a protégé of Slobodan Milosevic, supporting Serbia in the Balkan wars as prime minister of the Yugoslav republic of Montenegro. (Only later did he openly criticize Milosevic for engineering a bloody ethnic-cleansing campaign, in which Montenegro had also taken part.) By the mid-1990s he was earning tens of millions of dollars a year from cigarette smuggling. This business is particularly lucrative because cigarettes are heavily taxed in the European Union, and many Europeans are prepared to buy them off the street from smugglers. Glenny describes how cigarettes from US factories made their way via the free trade zones of the European Union to Montenegro, where they were loaded onto speedboats and smuggled back across the Adriatic to Italy—to be sold across the European Union at prices roughly 10 percent of what cigarettes would normally cost.

Djukanovi´c took a percentage of the sales of every case of cigarettes that passed through Montenegro. The money helped to keep Montenegro solvent at a time when its political status remained in doubt and Western governments, eager to embrace Djukanovi´c following his break with Milosevic in 1997, did not show much concern for the business dealings of his regime. By the time Milosevic fell from power in Serbia in October 2000, and the US government stopped turning a blind eye to Djukanovi´c’s activities, organized crime had penetrated nearly every corner of the Balkans:

With no wars left to fight, former paramilitaries became engaged full-time in the transit of heroin, cigarettes, labor migrants, and women into Western Europe. The Keystone Cops regime of the UN and NATO in Kosovo had no resources to combat the Albanian fighters from the Kosovo Liberation Army who had consolidated Kosovo as a new center for the distribution of heroin from Turkey to the European Union. Elsewhere, Bosnia and Hercegovina were mired in an early scandal involving UN peacekeepers and trafficked women and as the local money-laundering center. Macedonia was about to dissolve into a civil war that was provoked almost exclusively by a dispute between mafia groups over control of the illegal cigarette routes through the country.

As for Montenegro, it voted for independence from the federation with Serbia in May 2006 and Milo Djukanovic´ became its first prime minister.

Starting out from the Balkan badlands and the streets of Tel Aviv, Glenny begins an ambitious tour of international organized crime. He writes about marijuana growers and smugglers in British Columbia, showing how strict US drug laws have kept US pot prices particularly high and transformed western Canada, where much of the cannabis supplied to the US is grown, into “the largest per capita concentration of organized criminal syndicates in the world.” Much of the profits of these gangs would disappear if there were a legal market for marijuana, and Glenny makes a persuasive argument for the decriminalization of soft drugs.

He traces the chilling story of Dawood Ibrahim, a Bombay street thug and observant Muslim who built a global empire on heroin and the sedative mandrax. Seething over the murders of hundreds of Muslims by extremist Hindu mobs in Bombay in December 1992 and January 1993, Dawood obtained eight tons of explosives from the Pakistan military, which he used to mastermind the March 1993 bombings at multiple locations in the city, in which hundreds died.

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