Eastern Europe

THE RISE OF white-collar and organized crime in the Eastern European (EE) nations closely parallels that of their powerful neighbor, Russia. Eastern Europe generally refers to the states formerly under the control of, or heavily influenced by the Soviet Union: Albania, Bulgaria, Czech Republic (Czechoslovakia), Hungary, Poland, Romania, and former Yugoslavia.

Once the state socialist economies collapsed in the late 1980s and early 1990s, massive economic crisis and sociopolitical dislocation created a power vacuum which has been largely filled by organized criminal elements. The economic crisis spawned by civil war and international military intervention in the Balkans also opened up opportunities for local mafias. As in Russia, neo-liberal policies, socioeconomic disparity and weak legal and democratic structures have fostered the integration of “legitimate” and “illegitimate” business. While the extent of the economic crisis in most of the EE nations has not been as severe as in Russia, all countries have registered a growing influence by organized crime in diverse economic sectors, and much of this crime is transnational with groups from various countries, especially Russia, intimately involved in numerous countries of the European continent.

The bureaucratic command economies of the EE regimes were highly centralized: production and distribution of goods were organized by state-controlled companies. As in Russia, increasing integration with the world market and growing problems in effectively coordinating the highly bureaucratic economy led, by the 1970s, to the development of a thriving black market, especially for consumer goods and foreign currency. In all the EE nations, there was misappropriation and outright theft of state property and speculation in scarce goods. Criminal networks, including officials from state institutions, gradually consolidated through the late 1970s and 1980s. Beginning as small-scale suppliers of clothing, household articles, and building materials, some groups branched out into the bootlegging of alcohol and drug trafficking.

After the fall of the Berlin Wall in 1989 and the rapid disintegration of the bureaucratic command economies, the openings for organized crime multiplied. Socioeconomic marginalization increased dramatically, providing a fresh recruiting ground for criminal organization as well as a sharp reduction in the population's trust in legal private enterprise and government structures. Liberalization and privatization programs were corruptly managed, giving white-collar criminals in organized crime new economic activities to exploit.

As Michel Chossudovsky writes, the privatization programs in all the EE nations “favored the transfer of a significant portion of state property to organized crime.” As traditional state economic structures were weakened, so too was law enforcement. Gradually, according to Ben Fowkes, organized crime brought “a culture of bribery, theft and even violence from the underground economy into the world of legal private enterprise.”

The emphasis by governments on property rights and market freedom occurred at the expense of public accountability, sociopolitical equality, and economic security. While there has been economic recovery in some countries, the lion's share of the wealth has been concentrated in the hands of a tiny minority of politicians and business people, most of whom have connections with organized crime.