This section concentrates, first on uncontrolled territories, such as the post-conflict or conflict areas Abkhazia and South Ossetia in Georgia, that are now entirely outside the control of the central authorities and are significant actors in transnational organized criminal activity. Second, I discuss semi-separatist areas loosely controlled by the central government, such as Adjaria in Georgia before May 2004. Third, I address lawless territories such as the Pankisi Gorge in Georgia before 2003, and the Osh region in Kyrgyzstan. The threat from the Pankisi Gorge ceased as a result of the US-funded Georgia Train and Equip Program (GTEP) and subsequent anti-terrorist operations. At the same time, allegedly the Osh region is still a “grey zone” on Kyrgyz territory. In September 2005, Uzbek authorities claimed that the Andijon unrest was planned by Islamic militants at a terrorist base in southern Kyrgyzstan, a claim dismissed by the Kyrgyz Defence Ministry as groundless. Ruslan Baibolsunov, an Osh- based military analyst, said some bases may exist in the country’s mountainous regions that are hard to control.726 No parallel exists in Ukraine, i.e. Ukraine has no “grey zone” on its territory; however, it has a “black hole” in its border that is the Transdniester breakaway republic in Moldova. In addition to lawless zones in Georgia and Kyrgyzstan, I will discuss Transdniester’s role in smuggling through Ukraine, and how this strengthens regional criminal networks.
1. Transdniester: “Black hole” in the Ukrainian border?
The region of Transdniester seperated from Moldova after a violent conflict in 1992 and gained de-facto independence. Transdniester is landlocked between Moldova and Ukraine, and like other separatist regions in the post-Soviet space became a smuggling hub, with much of its contraband goods transited through Ukrainian territory and destined for the Odessa seaport in Ukraine for further export.
Vladimir Smirnov, the son of the President of Transdniester, heads the customs department of the region. It is assumed that he is the main leader of the consortium called
Sheriff,which controls literally everything in the region, from mobile communication and gas
stations to supermarkets.727The company has also constructed a gigantic sports complex near Tiraspol that by the estimation of Western diplomats is worth USD 200 million, twice as much as the annual budget of Moldova.728 Due to Sheriff’s monopolistic nature, Transdniester was nicknamed “Respublika Sheriff.”
Contraband items from Transdniester reach world markets through Ukraine in two ways. The first is through the Ukraine-Transdniester border, and the second through the Moldova -Ukraine border, which seems to be the most profitable route for smugglers because it leads to the Black Sea port of Odessa. Odessa is known as the smugglers’ “life route.”729 This smuggling has long contributed to the transnational political-criminal nexus, especially in illicit arms when the various ethnic conflicts erupted in former Soviet republics in the 1980s and 1990s. According to a letter obtained during my field research in Moldova in 2004, among those involved in organized crime in Transdniester are Polish crime groups, officials of Transdniestrian de-facto state institutions, high-ranking officers of the Russian Ministry of Defence and several major professional criminals.730“With the support of Odessa city authorities, arms were transported by trucks to the Odessa seaport, where weapons were loaded onto the ships of a Ukrainian company, “Ascoflot,” and sent to Chechnya, Armenia, Abkhazia and Tajikistan,” the letter alleges.731
Ukraine’ border with Transdniester is 386 km,732 and remained porous and open for smuggling. Besides the legally established customs posts, there are dozens of secondary pathways at the border which are not guarded. In 2004 the Deputy Prosecutor of the Odessa Region denied any smuggling occurred between Transdniester and Odessa.733
In March 2005 Kyiv announced that it would only accept imports that are stamped by customs officials in the Moldovan capital of Chisinau. In parallel, a border monitoring mission under the auspices of the European Union was established to end arms smuggling and customs fraud. As a result, the trafficking of illegal goods between Ukraine and Moldova through Transdniester has decreased, causing turmoil among interested criminal groups on both sides of the border.734
727Interview with professors of Transdniester State University, Tiraspol, Transdniester, April 14, 2004. 728
George (2004).
729Provokacia (2003).
730Letter of the former Rector of the Transdniester State University (1999). 731Ibid.
732
Perepelytsya (2003, p. 277).
733Author’s interview with Deputy Prosecutor of Odessa region, April 8, 2004. 734Lavrov (2006).
1.2. Odessa
The major Black Sea port city of Odessa, known informally as the “Mama of corruption”, has long been a centre of illegal sea trading and various forms of organized crime, especially in the oil transportation business. Proximity to Transdniester has only exacerbated the organized crime problem.
In the early 1990s, Viktor Kulivar aka Karabas was dominating the underworld and the oil business. After his assassination in 1997, conflict over the division of spoils started between the groups of Angert and Stoyan.735 The former won through the collusion with regional and city law enforcement structures and local politicians.736 Angert was allied to Aleksandr Zhukov,737 local entrepreneur, in controlling the oil business. They broke the opposition of Chechens competing for illegal oil profits.738In the mid and late 1990s, Angert changed political affiliation several times, and was allied at one point with Ruslan Bodelan, regional governor, then defected to Eduard Hurvits, Odessa mayor. The latter had extensive links in both the local and Kyiv underworlds. In the late 1990s, Eduard Hurwitz publicly confirmed that he is acquainted with Aleksandr Nikolayevskyi, aka Batsila.739 Batsila is a criminal with business interests in Ukrainian real estate and bodybuilding.740
Ruslan Bodelan controlled both regional power structures and trade until he lost this control after the Orange Revolution.741 Hurvits, though, entered the Orange coalition and got re-appointed as city mayor in 2005. In general, despite the anti-criminal rhetoric and the assertion that “convicts will not rule Ukraine,” some of the senior appointments in Odessa by President Yushchenko were questionable. For instance Mykola Bondarenko, Yushchenko’s classmate and deputy governor of Odessa, had a record for criminal embezzlement and forgery, and a conviction for cooperation with criminal spirits trading.742
735Arkusha (2003, pp. 7-12). 736
Author’s interview with U1 and U2, October-December 2007. See also RFE/RL (2002), Pirovich (2004).
737
In 2001, he was implicated in illegal arms trafficking in Italy but the court dropped the charges. On the link between Angert and Zhukov see Cande and Ozon (2006), Agenstvo federalnikh isledovanyi (2001), Association of Investigative Journalism of Bulgaria (2003).
738
Author’s interview with U2, 22 October 2007, Kyiv, Ukraine.
739Zerkalo Nedeli (1998).
740Author’s interview with U1, 10 December 2007, Odessa, Ukraine. He is referred as the vice-president of
Odessa regional branch of bodybuilding federation of Ukraine on the website of real estate company Alians that is allegedly co-owned by him. Seehttp://www.alians.com.ua/?pid=bodysport3, accessed 6 April 2008.
741Williams and Picarelli (2002, p. 157). 742Zerkalo Nedeli (May 7, 2005).
2. Smuggling through Georgia’s uncontrolled territories
2.1. Abkhazia and South Ossetia
Smuggling through the uncontrolled territories of Georgia arguably best depicts the impact of regime transition on criminality and corruption. The smuggling networks that formed in post-conflict settings were disrupted immediately after the Rose Revolution as a consequence of government change in Tbilisi and reforms in the law enforcement system.
Due to armed civil conflicts in 1990-1993, two of the secessionist regions, Abkhazia and South Ossetia, remained outside the jurisdiction of the Government of Georgia. These post- conflict areas emerged as the most influential geographic factors facilitating the movement of contraband through the country. In both regions, well-established smuggling networks emerged comprising corrupt officials, law enforcement structures, crime groups from both sides (Georgian-Abkhazian and Georgian-Ossetian), Russian peacekeepers, and an impoverished and marginalized portion of the population (primarily IDPs, proper refugees, and people still residing in conflict zones).743
Organized crime groups from both sides have cooperated with each other in smuggling activities, with occasional outbursts of violence over division of spoils. Frequently, Georgian officials and criminals cooperated with their counterparts in the breakaway republics in illicit trading. As a result, the cease-fire lines have become criminal zones before 2004, with strong signs of the criminalized “shadow economy” discussed by Goodland that is characterized by the presence of “conflict profiteers,” extensive extraction of natural resources and smuggling of various commodities.744These kinds of interest groups often may “find the continuation or institutionalization of war at a certain level of intensity desirable,”745 as Berdal and Keen would argue. This shadow economy was partially damaged in the aftermath of Rose Revolution mainly due to the reforms of criminal justice system in Georgia and disengagement of criminal actors from Georgian side.746 The smuggling has decreased to minimum after the war between Russia and Georgia in August 2008.
Thus, much like the civil and ethnic wars in the Balkans and Africa, the separatist conflicts in Abkhazia and South Ossetia have developed into smuggling-based post-war economies; these conflicts remained “frozen” because numerous actors, including the
743For a comprehensive analysis of the issue see Kukhianidze, Kupatadze, and Gotsiridze (2003) 744
Goodhand (2004).
745Berdal and Keen, (1997, p. 798). 746Kupatadze (2005).
breakaway regions’ authorities and the members of the central government in Tbilisi, had material interest in the trafficking of contraband goods and wanted to maintain the status quo. As Keen argues, the parties involved were “more anxious to prolong a war than to win it” due to their potential illicit earnings from continued warfare.747 The majority of the assassinations, kidnappings and infighting across the ceasefire lines (CFLs) in Abkhazia and South Ossetia have been linked with smuggling, that certain corrupt authorities profited more from by allowing than curtailing.748
The situation began to change in 2004, when the new “Rose Revolution” government attempted to “de-freeze” the conflicts. The policy of the new authorities stressed what Ballentine and Nitzschke would call “attacking the financial lifelines of combatants, by targeting white-collar and organized criminal activities through which their financing is channelled.”749 Consequently, much of the smuggling-related violence decreased and politically-motivated violence increased.750
Various armed groups, including Georgian guerrillas in Abkhazia,751paramilitary militias and law enforcement structures of the breakaway republics752 and Russian peacekeepers, were heavily involved in smuggling. Generally all actors involved in smuggling fall under the category of “spoilers” discussed by Stedman.753 Spoilers sabotage the peace process for personal gains. For them, disruptions to peace and alliances with organized crime networks guarantee income.754
The turnover of illegal and legal goods was protected bykryshas(influential government officials) both in and outside the secessionist territories. Pyramids of corruption assured the distribution of illegal incomes to the protectors. Some of the organized criminal groups controlling the trade in the Ergneti market755 had patrons in the State Chancellery and in the Ministry of Internal Affairs during the Shevardnadze era.756 High-ranking officials were
747Keen (2000, p. 27). 748
Kupatadze (2008).
749Ballentine and Nitzschke (2005, p. 6). 750See Kupatadze (2008).
751Before the Rose Revolution, armed groups on the Georgian side could be divided into two camps: guerilla
groups, and so-called Zviadist groups (armed followers of Zviad Gamsakhurdia, ex-president of Georgia, ousted as a result of the coup d’etat in January 1992). Two major guerilla groups on the Georgian side were the “Forest Brothers” and the “White Legion.”
752For instance, some of the Abkhaz armed groups operating in the Gali district had an “official” status,
representing secessionist law enforcement structures. The largest and most powerful group that is still functional is headed by Valmer Butba.
753Stedman (1997). 754Hartwell (2005, p. 2). 755
The market was situated on the administrative border between South Ossetia and Georgia, close to Tskhinvali.
engaging in everything that would generate high profits, legal or not. One law enforcement officer reported a case in the early 2000s when he detained trucks of contraband spirits going to South Ossetia for further delivery in Russia. Soon, he said, he knew that the trucks were moving under the custody of the Minister of this law enforcement structure.757 Berdal and Keen demonstrate the importance of clandestine, informal and criminal links between the security sector and various economic interests. According to them, “the persistence of these linkages does much to explain the continuation of violence and the lack of progress” in the process of conflict resolution.758
The most popular contraband of the Ergneti market was cigarettes, fuel, and wheat flour. According to the estimates of the Transnational Crime and Corruption Centre in Georgia, more than 70-80 percent of the breakaway republic’s budget income was derived from illegal business sources. De-facto government officials and criminals also owned shares in, and benefited from the contraband business, the market nevertheless played a crucial role in confidence-building between Georgians and Ossetians. Roughly 2,000-3,000 people – both Ossetians and Georgians – worked there and even more residents of the conflict zone were indirectly engaged in activities related to its operation.759 The market was closed down by Georgian law enforcers after the Rose Revolution. Interestingly the closing down was one of the major factors that led to resumption of violence in August 2004. However, the involvement of state representatives continued. According to Shida Kartli’s governor, nearly 250 of the region’s policemen were sacked in the aftermath of regime change for alleged participation in smuggling.760 The closure of Ergneti market has several other implications. First, smuggling increased throughout the other parts of Georgia. Second, the organization of smuggling through South Ossetia has degenerated. Third, business relations between Georgians and Ossetians were damaged to an uncertain extent. Although illegal, the Ergneti market was convenient and useful for exchange between Georgian and Ossetian traders.
In Abkhazia smuggling mostly involved cigarettes, fuel, food and scrap metal. Also, several isolated cases have been reported of illicit trafficking in arms and drugs. Many were benefiting from the illicit trade, including the local population, who paid less for the most frequently consumed items. However, those benefiting most were political-criminal clans. The motive behind illicit smuggling has beenprofitfor most of the actors, however, political motivations was also a relevant causative element, that would be in line with the argument of
757Personal communication with G20, 26 June 2006, Tbilisi, Georgia. 758
Berdal and Keen (1997, p. 814).
759Civil Georgia (June 22, 2005). 760Civil Georgia (March 14, 2005).
Nikos Passas.761 For instance, guerrilla activity was motivated by both criminal and ideological zeal combined in one campaign. Georgian guerillas had a dual role: first, a political part in fighting Abkhaz separatism, and second, a criminal objective with pecuniary incentives for them to cooperate with Abkhaz militia and criminal groups in smuggling.762 The elimination of guerrilla groups substantially damaged the smuggling networks across ceasefire lines. In early 2004 a large anti-criminal operation was conducted in the Zugdidi region that led to the arrest of 30 guerrillas and recovered large stockpiles of arms.763 Interestingly, some guerrilla leaders took refuge on the Abkhaz side, indicating their cooperative links on the other side of the ceasefire line.764
As a result, Abkhazian and Ossetian paramilitary and criminal groups (as well as average Ossetians) lost their “partners in the business” on the other side of the cease-fire lines (CFLs). This significant change of affairs eventually led to a decrease of organized smuggling765 though the demand for cheaper, smuggled products remained constant inside Georgia. As a result, petty smuggling increased to satisfy the demand. Smuggling operations have become the domain of petty traders, also known as “women with bags” in 2004-2005.766 These shadow business heirs are former peddlers of contraband cigarettes that were once transferred to them by police, guerrillas, and other criminal groups. The smugglers paid them on the other side of the ceasefire line only after they sold the goods on the territory of Georgia. After the anti-smuggling operations conducted by the Georgian police, most of the smuggling groups were bankrupted.767 Additionally after the smuggling networks were successfully targeted by Georgian law enforcement it did not make sense to smuggle goods in large quantities from Russia to South Ossetia or Abkhazia since local markets are small and yield little profits. Furthermore, rapid rises in prices on oil and certain consumer goods in Russia since 2005 do not make smuggling profitable into Georgia.
Reforms following the Rose Revolution of 2003 disrupted many ties between organized crime and law enforcement. As a result police were able to better detect and prosecute criminals. Additionally, the Financial Police under the Ministry of Finance was established to centralize the fight against economic crime, including smuggling. Before the Rose Revolution, fighting economic crime was dispersed among various law enforcement
761
Passas (2002, p. 32).
762Kukhianidze, Kupatadze, and Gotsiridze (2003, p. 24). 763Kupatadze (2008).
764Khvalindeli dge (2004). 765
Findings of TraCCC group’s field research in Zugdidi and Ergneti market, March 2004.
766Kupatadze (2005). 767Kupatadze (2008).
structures, resulting in poor coordination and ineffective combat against contraband. Reform of the police, and the Ministry of the Interior, had a dual effect on smuggling. First, many of the dismissed 16,000 policemen moved to the smuggling business, thereby professionalizing the criminal groups involved in illicit trade. For instance, in Shida Kartli next door to South Ossetia, former policemen were arrested several times for smuggling cigarettes out of the conflict zone.768 The operational and logistical capabilities of law enforcement have improved, and a clean up of the Georgian legal system means more success against corruption in the highest echelons of government.
2.2. Adjara
Over a twelve-year period ending on May 6, 2004, all economic activity in the Adjarian Autonomous Republic was controlled by a small group of local government officials, headed by the autonomous republic’s chief, Aslan Abashidze. Abashidze tightly controlled the law enforcement system and the strategic resources of the autonomous republic, particularly the Batumi seaport and the Sarfi customs point on the Georgian-Turkish border. Furthermore, Kikabidze and Losaberidze demonstrated that 57 percent of executive and 54 percent of legislative government were close relatives of Aslan Abashidze or his wife.769 Soso Gogitidze, the brother-in-law of Abashidze, was Minister of State Security of Adjaria, and other relatives filled the posts of Deputy Minister of State Security and of Internal Affairs. In short, given the family monopolies, Adjarian politics and its economy were closed to all but those approved by the Abashidze clan.770
Security and law enforcement officials owned and controlled front company Basri Limited in Adjaria. Officially, the firm’s activities involved graphic design and providing internet services. These activities, however, were a cover for the Abashidze clan’s illicit activities, including drug trafficking and car smuggling from Chechnya into Adjaria, directed by Soso Gogitidze.771
Abashidze retained extensive criminal and public official connections within Russia.