Date Posted: 14-Mar-2007

Going west - Baltic crime groups expand and diversify

Organised crime groups in Baltic countries are expanding operations beyond their traditional areas. Klas Karrstrand and Michael Jonsson assess recent trends and developments in drug trafficking and other organised crime activities in the region.

'Organised crime groups from the Baltics have increasingly made use of their organisational skills and the benefit of free movement throughout the EU to expand their activities'

AEuropol-led investigation (Operation Baltico) into an Estonian organised crime group alleged to have carried out armed robberies on jewellery stores in Europe, and particularly northern Italy, led to 35 European arrest warrants being issued by an Italian judge on 21 February.

The warrants, for 34 Estonian nationals and one Lithuanian, were executed in Estonia, Lithuania, Finland, Spain, France and Germany.

Europol Director Max-Peter Ratzel says: "This criminal group committed more than 200 armed robberies all over Europe, in particular: Austria, Belgium, Denmark, Finland, France, Germany, Italy, Netherlands, Portugal, Sweden, Spain, Switzerland and United Kingdom."

The geographic range of the group's activities and the locations of the arrests points to the mobility that organised crime groups can attain within the EU's new borders, but the case also draws attention to the activities of organised crime groups from the Baltic states, which are now spreading beyond their traditional operational areas.

Development of the groups

As the Cold War ended, the possibility arose of an invasion of Russian-speaking organised crimes groups via the Baltic countries into Western Europe. Initially, there was a general weakening of countries' authorities and substantial confusion regarding laws and regulations. Western policymakers' fears seemed to be confirmed as organised crime groups quickly made significant profits from activities such as the illegal metals trade from Russia. At the time, the capability of organised crime groups to earn illegal profits seemed to be limited less by law enforcement agencies than by fierce competition between the groups themselves. This competition led to violent turf wars between criminal groups.

In Estonia's case, the peak of these battles came to be known as the 'bloody autumn' of 1994, during which time some 100 organised crime-related murders were committed. As one Estonian police officer tells Jane's: "To get advice from Western colleagues on how to deal with crime felt a bit strange when we, on what felt like an almost day-to-day basis, had to face murder scenes with up to 10 people lying in pools of blood."

For a long time, the struggle against organised crime in the Baltics was mainly focused on countering the perceived threat from Russian-based organised crime. Law enforcement agencies were initially under-manned and faced a severe lack of resources. However, owing to the increased attention and resources allocated to fighting organised crime, they were eventually able to curb the most violent outbursts of the turf wars by the mid-1990s. At the same time, organised crime groups became involved in the highly profitable business of producing, smuggling and re-exporting of narcotics.

Today, organised crime groups have evolved and transformed, adapting their activities to the increasingly modernised Baltic societies. This has sometimes taken the form of developing ties with the state bureaucracy and the re-investment of illegally gained profits in ordinary businesses and the real estate market. When engaging in smuggling enterprises, these groups initially benefited from the geographic location of the Baltic region. Recently, however, they have increasingly made use of their organisational skills and the benefit of free movement throughout the EU to expand their activities into other parts of Europe.

Estonia

The major drug trafficking activity in Estonia has been, and remains, the smuggling of mainly synthetic drugs to Finland. Approximately 95 per cent of all amphetamine consumed in Finland is believed to come from Estonia. The trade is controlled by Estonian groups, although Finnish citizens are involved, often at the retail level. During 2005, 114 kg of amphetamine were seized in Finland. However, this was probably a relatively small proportion of the total amount of amphetamine entering Finland from Estonia.

The Finnish police estimate that approximately 35 couriers, predominantly of Estonian origin, traffic the route daily. As Finnish law enforcement agencies struggle to counter the inflow of drugs, the smugglers have begun to employ sophisticated smuggling schemes. As a result, the Finnish authorities have become increasingly reliant on co-operation with their Estonian counterparts. Between 1999 and 2003, 14 synthetic drug production facilities were discovered and shut down on Estonian territory, although the number of new discoveries is dropping: in 2005 and 2006 only two production facilities were shut down in Estonia. There are some indications that this drop has been partly caused by internal problems within parts of the Estonian police force.

Estonian organised crime groups, some of whom are suspected by the Italian police of having a military background due to their familiarity with firearms, have also become known for organising efficient robberies throughout Europe.

Specialising in attacking stores selling jewellery and valuable watches, these groups have toured Europe, perpetrating especially well-organised robberies. That Estonian robbers have made heists in Helsinki has been known for quite some time. In March 2006, the Finnish police found some EUR120,000 (USD158,000) worth of stolen watches and arrested several Estonians suspected of robbery. During the same month, 73 Estonians citizens were arrested by the German police on suspicion of being involved in robberies of banks and jewellery stores.

The full extent of the geographical mobility of the Estonian groups was revealed in February 2007, when Europol announced the results of Operation Baltico. The Carabinieri office in Milan, Italy, initiated the investigation in February 2005, after receiving information from Europol about a possible robbery in the city. An image of one suspect included in the Europol alert was recognised by local officers. Thirty-four Estonians were eventually arrested, together with one Lithuanian suspect. In total, the operation involved the law enforcement agencies of at least 13 European countries where the suspects had allegedly committed crimes. According to Europol, they have now been charged with 'criminal association aimed at the commission of armed robberies'.

A high level of professionalism, discipline and a stringent division of labour between the perpetrators characterised the groups behind the robberies. A similar modus operandi was used in all of the robberies. The crimes were carried out in broad daylight, often in city centres, as one perpetrator held bystanders and personnel at gunpoint while between two and three other accomplices smashed the showcases. The robberies often took less than a minute to carry out.

The stolen goods were quickly handed over to other members who smuggled them out of the country and a third subgroup was responsible for selling them. Europol estimates that the total value of the watches and jewellery was about EUR40 million (USD58 million). Part of this money was reported by Europol to have been invested in cocaine and hashish to be smuggled from Spain to the Nordic countries.

Lithuania

Lithuanian organised crime groups are seen by Baltic law enforcement agencies as more aggressive and expansive than their Latvian neighbours. The production, smuggling and distribution of synthetic drugs carried out by Lithuanian criminal groups has been highly organised, making use of sophisticated methods to diminish the risks of interference and penetration by law enforcement. The existence of illegal labs in Lithuania producing synthetic drugs, predominantly amphetamine and methamphetamine, has been known for several years. The labs have typically been situated in remote areas and have been able to produce up to 20 kg of amphetamine per day.

Eight illegal laboratories of this kind have been discovered since 2002, the latest of which was made in an abandoned mansion near Vilnius in October 2006. Judging by the quality of drugs seized by customs in destination countries, other illegal labs in Lithuania have yet to be discovered.

According to a Lithuanian customs official interviewed by Jane's, the primary end market for the drugs has traditionally been Sweden. However, an increasing share of the drugs is going to Norway, where synthetic drugs yield higher returns. Smuggling enterprises are typically not carried out by the producers, but instead by specialised groups.

These groups employ a number of different methods to avoid detection. Once the drugs reach Sweden, they are often buried underground and a map of the site is later sold to groups organising the final distribution.

As well as their involvement in the production of synthetic drugs, Lithuanian criminal groups also appear to be expanding into trafficking cocaine from South America to the EU and Eastern Europe. Initially, the cocaine entered Europe via international airports using human body carriers, so-called 'swallowers'.

More recently the trade has evolved, amounts have increased and methods have been adjusted accordingly.

A liaison officer based in the Baltics told Jane's that Lithuanian groups in co-operation with some Latvian citizens seem to be becoming organisers of smuggling enterprises in which larger consignments of cocaine are brought to Europe by boat. Parts of these consignments are destined for Eastern Europe. Lithuanians are also involved in various other types of drug-smuggling schemes throughout Europe. For example, in 2006 a group of Lithuanians was arrested in France while trying to bring in a large shipment of hashish by boat.

Latvia

Less is known about Latvian organised crime groups and their involvement in narcotics smuggling. In a Europol report from 2005, Latvia is mentioned as an entry point and a transit country for cocaine destined for the Russian and Scandinavian markets. However, there have been few seizures of narcotics in Latvia and it is hard to discern whether this is mainly due to low levels of drug trafficking or shortcomings among law enforcement authorities.

Apart from the seizures of synthetic drugs from Lithuanian crime groups using Latvian ports, there have been no seizures made that could indicate that Latvia is used as a transit hub for narcotics. In fact, up until 2005 the Latvian customs had made no seizures of narcotics at all. According to a customs official that Jane's spoke to, the absence of seizures was "due to internal problems".

Following EU accession in May 2004, customs offices at the borders between the Baltic countries were replaced by mobile teams based inland. Acting on specific intelligence on criminal groups, these teams have been more successful in seizing drug consignments. However, according to one customs official interviewed by Jane's, the problems of some unmotivated and easily bribed customs officials still persists along the Latvian-Russian border.

There is a possibility that changed visa regulations may lead to the Russian minorities in the Baltic countries becoming more involved in drug trafficking. The synthetic-drug trafficking business from the Baltics is at present dominated by Estonian and Lithuanian groups that enjoy freedom of movement within the EU.

The predominantly Russian-speaking group of non-citizens living in Latvia and Estonia have so far not been involved in these schemes. As non-citizens have had to apply for visas before travelling within the EU, any would-be couriers from within this group have been discouraged by the fact that their movements could be tracked by law enforcement officials. However, as of 19 January 2007 this population can travel without a visa to other EU countries. Very little is known about patterns of criminality within this group and it is too early too be able to evaluate any implications of the changed regulations. Nonetheless, these groups are generally socio-economically worse off compared to ethnic Latvians and Estonians.

While there is no hard evidence of large-scale drug smuggling in Latvia, there is clear evidence of alcohol and cigarettes being smuggled from Russia. Law enforcement officials say Latvia is used for the storage and transit of mostly Russian-produced cigarettes. These cigarettes are intended for domestic use as well as for export westwards, in small consignments brought as luggage by aircraft passengers and larger consignments transported by freight traffic. The smuggled cigarettes used to be mostly illegally produced, but are now being increasingly replaced by legally produced Russian cigarettes.

Corruption problems

The problem for the Baltic countries, and therefore the EU in general, is that the law enforcement agencies tasked with countering organised crime are hampered by corruption. For example, the relations between business and politics in Latvia have been described in a number of reports, among these in the World Bank report Corruption in Latvia: survey evidence in 1998 as "intertwined in a complex and non-transparent way" resulting in a situation where Latvia risks becoming "prone to high-level corruption" and a "breeding ground for crime and corruption". Before joining the EU, Latvia was repeatedly asked to remedy the situation. However, the response was mostly to adopt laws that fulfilled the formal requirements on paper, without putting enough effort into ensuring efficient compliance with these laws.

As such, almost three years after their accession to the EU, concerns are still being raised about corruption in the legal systems of the Baltic countries. Despite implementing a number of laws and, in the Latvian case, creating a special anti-corruption bureau, the political will to deal with corruption is still lacking. Latvian President Vaira Vike-Freiberga was quoted in The Baltic Times on 17 January as saying: "It is surprising how often court hearings are being postponed due to incomprehensible reasons - either the lawyer has not arrived, which is his core job, or any of the defendants fail to show up."

The situation in Estonia appears somewhat better when it comes to the existence of high-level corruption and involvement in criminal activity. Nonetheless, Estonian Minister for Justice Rein Lang was reported in January in the Estonian daily newspaper Postimees as saying that organised crime had infiltrated both politics and law enforcement in Estonia.

His statements may have been partly political, particularly with forthcoming elections in March. However, it was coherent with previous accounts referring to an underlying nexus of business, state administration, crime and politics in Estonia.

There have been several prosecutions of law enforcements officials on suspicions of either corruption or co-option by organised crime in all the Baltic countries. Whether this is indicative of increasing efficiency in combating corruption or of the true extent of the problem remains to be seen.

In Latvia, there has been a steady trickle of cases involving officer bribery in agencies designated to fight organised crime. A spokesman from the Latvian Corruption Prevention and Combating Bureau (Korupcijas noverÜanas un apkaroÜanas biroj: KNAB) told Jane's that the bureau estimates that between one third and one quarter of all police officers are involved in bribe taking. Apart from the instances of low-level police officers extorting and receiving bribes, there have been a few cases involving high-level justice officials investigated by KNAB.

The fight against the kind of systematic low-level corruption that facilitates the activities of organised crime groups is sometimes hampered by a lack of resources and political will. In Latvia, the budget allocation for the police force is about one third of what is spent on policing in Estonia and about one fifth of that in Lithuania.

A lack of resources has led to a situation where the wages of Latvian law enforcement officials have not kept up with the high inflation rate. The motivation of customs officers working at the EU's eastern border with Russia earning an equivalent of EUR320 (USD421) a month can therefore be quite low, which provides ample opportunity for smuggling groups to bribe their goods past customs. The work to stem the problem is further hampered by a high staff turnover and persistent vacancies due to record low unemployment.

Nevertheless, according to the KNAB, there has been a positive development in most government agencies, except for a few strategically important agencies. Many government agencies are today largely free from the kind of systematic extortion of bribes that used to plague Latvia. In Estonia, a union of state employees picketed in September 2006 demanding a minimum wage for police officials equivalent to some EUR480 (USD631) per month. As a result, Lang announced a pay rise of 15 per cent in 2007 and an overall increase in spending for the police and customs. Meanwhile, the report The Burden of Crime in the EU: A comparative analysis of the European Crime and Safety Survey released in February reveals that Estonians are among the least satisfied with the work of their police forces within the populations of 18 EU member countries surveyed.

Conclusion

The evidence available shows that there is a significant extent of drug trafficking from Estonia and Lithuania to Finland and Scandinavia. Given the low wages within the Latvian customs service, anecdotes of internal problems and the increased success of the mobile teams as compared to the stationary ones, the lack of drug seizures should not be interpreted as absolute evidence that no significant drug trafficking has taken place in Latvia.

Similarly, it is difficult to evaluate whether recent arrests and prosecutions of law enforcement officials on charges of corruption in all three countries is more indicative of increased efficiency or of the real extent of the problem. Meanwhile, Estonian groups have been organising robberies throughout the EU and Lithuanian groups seem intent on expanding their drug-trafficking operations into other parts of Europe. Just as the Baltic economies are using the advantages and expanded opportunities offered by the freedom of movement within the EU, so are the regions' criminal entrepreneurs, and hence seizures of drugs trafficked through these countries are set to continue.

1. Baltic states tempting targets for crime syndicates

2. Russian mafiya become more active in Eastern Europe

3. Latvia/security

Author
Klas Karrstrand and Michael Jonsson conduct research on organised crime and money laundering at the Silk Road Studies Program/Department of Eurasian Studies, Uppsala University.

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