How Armed Groups Make Money from Crime

In the latest issue of Studies in Conflict & Terrorism, Bilal Saab and Alexandra Taylor look at the different ways in which Colombian armed groups are connected to criminal activity.

Transnational crime poses a daunting economic security problem. The volume of activity, including the $300-500 billion drug trade, accounts for between 2 and 5 % of the global GDP. Pretty remarkable.

That connections exist between armed groups, including guerillas and insurgents, and transnational crime is rather obvious, but how the connections work is a bit more complicated. Some theories suggest that armed political group develop business arrangements with existing criminal organizations. Others, however, suggest that the once-politically motivated groups are themselves morphing into criminal enterprises. To put it simply: some partner with crime specialists, while others develop their own “in-house” capacity.

“One fundamental characteristic, however, distinguishes armed insurgent groups from organized criminals. Participants in organized crime are motivated by the pursuit of profit, while armed insurgent groups use profits from crime as a means to support their political goals. For an armed group to transition into a criminal organization, it would need to supplant its political motivations with a drive to pursue illegal profits.” P. 457

Saab and Taylor analyze these relationships among the major sub-state armed groups in modern Colombia: (1) The loose coalition of paramilitaries previously organized under the recently demobilized Autodefensas Unidas de Colombia (AUC) and (2) what was once one of the largest guerrilla organizations in the world, Fuerzas Armadas Revolucionarias de Colombia (Revolutionary Armed Forces of Colombia—FARC). Both enterprises – the authors suggest – “derive the majority of their revenues from criminal activities, including kidnapping, extortion, and the protection, production, and trafficking of Andean-grown narcotics. However, paramilitary groups and FARC differ in the level and form of their participation in the international drug trade.” (p. 455)

The authors note that “before its demobilization, the AUC developed the ability engage in almost all levels of drug production and trafficking without resorting to alliances with autonomous criminal organizations (p. 463-4).” They established a vertical presence in the drug trade, as they essentially morphed into a criminal enterprise. FARC, on the other hand, controlled a substantial amount of coca, but made some tactical alliances with a several criminal groups to handle the trafficking and distribution, and instead focused their “in-house” criminal infrastructure development to support
kidnapping and extortion.

“Proponents of “in-house” criminality theories persuasively explain why armed groups and organized criminals would generally avoid collaboration. Such interaction is risky and may increase the likelihood of law enforcement surveillance, and generally such groups are likely to regard each other as market competitors and even political opponents, as violent political insurgents and terrorists seek to upset a comfortable status-quo enjoyed by criminal organizations. Despite these drawbacks, and based on the examples of FARC and the AUC, this article suggests two possible reasons why armed groups would choose to form alliances with criminal organizations over developing “in-house” criminal capabilities. First, some criminal activities—like trafficking and distributing narcotics—require resources and networks that are difficult and costly for an armed group to create. Second, the political environment may make certain criminal activities too politically costly for an armed group to be associated with; thus, armed groups may prefer to form short-term agreements with criminal groups and deny that their members take part in such activities.” P. 468

Saab, B., & Taylor, A. (2009). Criminality and Armed Groups: A Comparative Study of FARC and Paramilitary Groups in Colombia Studies in Conflict & Terrorism, 32 (6), 455-475 DOI: 10.1080/10576100902892570