Merchant of Death
Money, Guns, Planes, and the Man Who Makes War Possible

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A Crucial Difference in Failed States and Criminal States, and Why it Matters
In academic and policy circles there is growing concern about the phenomena of failed states, fragile states, grey areas, "black holes" or any number of other names for areas that are not in control of a central government.

As the new Congressional Research Service report on North Korea shows, however, there is another phenomena that is just as troubling but is often lumped in pile of failed states-the state as a functioning criminal enterprise.

These two types of states offer different, though complimentary advantages to terrorist groups, transnational criminal organizations and non-state insurgencies and militias. I have outlined some of these themes in a recent paper for the International Assessment and Strategy Center..

Failed states, according to the Feb. 27 Annual Threat Assessment of the Director of National Intelligence
create "terrorist safehavens and ungoverned regions that endanger the international community and its citizens."

That is certainly true, and such spaces present a particular challenge when they offer valuable natural resources. The new reports of illegal uranium sales in the Democratic Republic of Congo is only the latest example of how terrorist or criminal groups can profit in areas where there is no state control. The training of Salafist groups in the the Sahel region is another example.

But the CRS report details a separate though often undistinguished threat of states as criminal enterprises. The report details the North Korean regime's extensive ties to drug trafficking, counterfeiting and other criminal activities used to earn hard currency.

A similar situation developed in Liberia under Charles Taylor. Though consistently described as a failed state, it too was a prime example of a ruthless efficient state at the service of a criminal enterprise. In Taylor's case it was diamonds and timber, primarily.

In both cases the state was, in some ways remarkably efficient. It maintained a virtual monopoly on the use of force, controlled the entry and exit point of the country, could issue diplomatic passports and control a central bank. The states could not feed the people, collect the trash, provide electrical services, health care or education.

But the state in each case was perfectly capable of diverting millions of dollars to the small group running the regimes for their own personal enrichment.

The extraction of resources in Liberia or the control of multiple criminal enterprises operating simultaneously in collaboration with the North Korean regime are of surpassing importance because of the opportunities they offer for transnational criminal organizations and terrorist groups.

In Liberia, Hezbollah, al Qaeda, Viktor Bout, Lenoid Minin and other terrorists and transnational criminals were able to function not because the state failed, but because the state could guarantee their safety and well-being. The same is true for AQK network in dealing with North Korean and Libya. Kahn dealt with them not because of the failure of those states, but because those states had the architecture to protect him and make his nuclear sales lucrative.

It is an important distinction to keep in mind as we look to the future of this long war.
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