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McMafia and the Balkans

McMafia - Misha Glenny
McMafia. Photo: The Bodley Head

Misha Glenny's books about the fall of communism and the Balkans were amongst the most influential of their generation. The reason for that was that, unlike many of the academics who came along behind him he, as a journalist, had witnessed everything he wrote about and he did so with zest and colour. In 2008 Glenny published a book about organised crime around the world. It is not specifically about the Balkans. It starts there but rapidly moves to Russia, to South Africa to Canada, Colombia and beyond. Organised crime is one of those difficult topics in the Balkans and we at ESI, while not wanting to play down its significance, tend to try and emphasize positive development in the region. Still, we would be fools if we also tried to pretend the issue was irrelevant. One of the big questions is where organised crime ends and legitimate politics begins. For example, Glenny writes: "Montenegro's entanglement with the mob was the rule, not the exception. More than any other communist country, politics and organised crime were tightly intertwined throughout the former Yugoslavia as it descended into the most frightful fratricidal civil war at the beginning of the 1990s. Organised crime controlled dictators, opposition politicians, liberals, nationalists and democrats alike." In this extract Glenny discusses how Milo Djukanovic, then Montenegro's president, became involved in the cigarette smuggling or "transit" business to keep his country running after being hit by international sanctions. In October 2002 EU prosecutors filed a lawsuit against two US tobacco giants, R.J.Reynolds and Philip Morris accusing them of complicity in the sanctions busting and tax evasion scheme.

The charges levelled in 2002 were wide-ranging, including the claim that the Balkan cigarette trade was linked to the money-laundering of Colombian drugs money. The lawyers included a detailed breakdown of how the Montenegrin state made hundreds of millions of dollars from smuggling. Two Montenegrin companies, both controlled by Djukanovic and the secret service, levied £20 on each case transited through the country. "This money was divided up among various Montenegrin officials involved in this business and who controlled the licences to ship cigarettes through Montenegro," stated the EU court submission. The second company, with the disarmingly frank name of Montenegrin Tabak Transit (MTT) was co-owned by Italians who have subsequently come under EU, Italian and Serbian investigation. "MTT was created by certain members of organised crime in conjunction with Montenegrin officials. The company was officially sanctioned by the Montenegrin Foreign Investment Agency and operated under the special protection of Milo Djukanovic," the EU document claimed.

As early as 1994, the EU had learned that the cigarette mafia with whom Djukanovic did his business was costing it an estimated £4-6 billion annually in lost tax revenue alone, largely in Italy and the United Kingdom. Italian prosecutors were desperate to indict Djukanovic on charges of smuggling. Yet at the same time, the United States sent discreet messages to the Italian Government in Rome, requesting that the Italians lay off Djukanovic. Washington needed the Montenegrin President in their battle with Milosevic.

Djukanovic claims that the annual revenue from the tobacco trade was £20 million and that with this he was able to pay for most of the state's running costs. In 1998, when the Italians were looking to indict Djukanovic, [Clinton aide] Dick Sklar was sent to Rome to negotiate on behalf of the West's Balkan ally. Sklar posed the eminently logical question, "Why don't you just pay him £20 million and then he will close down the trade?" The Italians refused (quite illogically), but by the time Clinton met Djukanovic in the summer of 1999, the Kosovo war had been won and so the Montenegrin President was no longer quite so valuable as an ally. Washington was now telling him that if he wanted closer relations with NATO and the EU, it was time to get out of the cigarette business. "After meeting with Clinton, I told Milo that he had now better put on a clean starched shirt and he had to stop getting those shirts messed up by the nasty company he was keeping," Dick Sklar explained. By October 2001, British intelligence finally reported that Montenegro had finally reined in the speedboat traders. Djukanovic had got the message and acted upon it.

Click here and see Misha Glenny talking about his book on an interactive map of the world. 

McMafia: Crime without Frontiers. Misha Glenny. 2008.
[pp.  36-37 / The Bodley Head]

January 2009
Tim Judah

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