CAPITALISM'S ACHILLES HEEL Dirty Money and How to

Magnitudes and Misunderstandings 167
The illegal arms trade is especially difficult to estimate, because in recent
years Russia and ex-Soviet states have been dumping large stocks of surplus
arms on world markets, as well as delivering newly manufactured weapons
to clandestine buyers. The Small Arms Survey in 2003 estimated global illegal
sales of this portion of the trade at $1 billion annually. 9 Illegal sales of
conventional weapons are a black hole in arms data but are estimated by several
sources at $2 billion to $10 billion annually. Conservatively, for small
arms and conventional weapons together, a low-end figure of $3 billion is
suggested, ranging as high as $10 billion.
Smuggling of items other than arms and counterfeit goods is another
large uncertainty. Cigarette smuggling is big business, with tobacco manufacturers
themselves sometimes found to be complicit. UN statistics put
global exports at $16 billion. 10 The proportion of legitimately exported cigarettes
that are then illegally imported into other countries has been estimated
at some 25 percent, or $4 billion. In addition, the transportation cost
and a slice of usually hefty customs duties not paid adds to cross-border
flows of money arising from cigarette smuggling, probably bringing the take
from this activity into the $5 to $10 billion range.
Unrecorded oil sales out of Saudi Arabia (believed to be ongoing for
years), Russia, Nigeria, Angola, perhaps still Iraq, and elsewhere easily push
upwards to 500,000 barrels a day, valued at some $8 billion annually. Most
of this ends up deposited abroad, adding to laundered funds entering the financial
system.
Illegal timber trade is estimated at 10 percent of the legitimate trade of
$150 billion a year, putting this business at $15 billion annually, emerging
from the Amazon Basin, Central America, Africa, Russia, and Southeast
Asia. 11 Of the $15 billion export value, perhaps $5 billion enters the global
financial system annually. Smuggling of endangered species may be overestimated
at $8 billion a year. 12 Conflict diamonds and other gems smuggled
out of Africa and Asia add millions a year to distant accounts.
The cross-border traffic in stolen goods has surged. Cars heisted in
Western Europe are taken east, in North America are taken south, and in
Japan are taken to other Asian countries. This trade is easily in the range of
$10 to $20 billion annually. Interpol puts art and antiquities theft as the
fourth largest criminal activity, with one estimate placing a value of $5 billion
a year on stolen objets. 13
Combining just cigarettes, oil, timber, endangered species, gems, cars,