At the end of each year, InSight Crime gazes into the crystal ball and seeks to make predictions on where organized crime is going to find particularly fertile ground in the coming year or where criminal dynamics are set to change.
We often use the year past as a guide. In 2015, corruption and crime at the highest levels have led to unprecedented judicial action in various countries. But the underworld remains adept at undermining prosecutors. What’s more, the end of old conflicts — as well as the unraveling of a truce — will open new possibilities for transnational organized crime (TOC). (See 2015 Game Changers below)
For 2016, we have listed seven nations where we expect changes to the criminal status quo, or where organized crime is likely to make gains.
Colombia could enter a period of criminal flux in 2016. The country is likely to sign a peace agreement with its largest rebel group, the Revolutionary Armed Forces of Colombia (Fuerzas Armadas Revolucionarias de Colombia – FARC), although not on the expected date in March; more likely in the second half of the year.
This is going to change the criminal dynamics of the entire region, not least because the FARC control up to 70 percent of the country’s coca, the raw material for cocaine. The FARC are also involved with numerous other criminal economies including contraband, extortion and illegal mining. In all, the rebels earn more than half a billion dollars every year.
However there is already evidence of other criminal actors positioning themselves to take any earnings that the FARC leave behind. Foremost among those groups is the National Liberation Army (Ejército de Liberación Nacional – ELN), the country’s second rebel group and the FARC’s ally. There are also the latest generation of Colombian drug trafficking organizations, referred to as BACRIM (drawn from the Spanish for criminal gangs, “bandas criminales”) as well as a dissident faction of the long demobilized rebel group, the People’s Liberation Army (Ejército Popular de Liberación – EPL), which appears to have plans to expand from its base in the region of Catatumbo along the Venezuelan border.
Should the FARC sign a peace deal, it is inevitable that some of their units will evolve into new criminal structures, while other criminal economies will be swallowed by allies and rivals alike. The critical question is whether the government can contain this problem.
While Colombia is seeing a de-escalation of conflict, the trend in Venezuela is in the other direction. Homicide rates in Venezuela long ago overtook those of Colombia, and transnational organized crime (TOC) now has deep roots in this Andean nation.
Traditionally, the drug trade was dominated by the Colombians operating in Venezuela, but the Venezuelans have come into their own, led by corrupt elements of the governing Chavista regime called the Cartel of the Suns. It is not a cartel, nor even a hierarchical organization, but rather a network of corrupt Chavista officials.
A series of arrests and US indictments illustrate that drug trafficking may reach to the very highest echelons of the Venezuelan government of President Nicolás Maduro. The regime’s former drug czar, General Néstor Reverol, has been charged with cocaine trafficking, and two nephews of the First Lady now face drug trafficking charges in the US after their capture in Haiti. Investigations are also circling ever closer to the Chavista strongman, Diosdado Cabello.
The regime is also facing political challenges at home, which could hasten its drift towards a criminal state. The government is nearly bankrupt and with the opposition’s crushing victory in December’s elections — which gave it control of the National Assembly — the Maduro administration is stumbling.
The likelihood is that the Chavista regime will dedicate all of its energy to a political war against the opposition via the other parts of government that it still controls (most of the judicial system, the military, and others), while protecting its senior figures already indicted or under investigation for corruption and drug trafficking. Specifically, the government will sidestep the National Assembly, while the opposition will use the Assembly to try to hamstring Maduro.
Desperate for cash and allies, the Maduro administration will face a Faustian bargain. The corrupt machinery of the Cartel of the Suns needs oiling and with no more money to rob from an almost bankrupt state, we believe that a deepening involvement of elements of the state in drug trafficking is inevitable to find funds to prop up the faltering regime.
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With the breakdown of a truce between the country’s two largest rival street gangs — the Mara Salvatrucha (MS13) and the Barrio 18 — murders climbed throughout 2015, reaching levels not seen since the civil war and likely making El Salvador the region’s murder capital.
Equally alarming is evidence that some gang leaders, especially in the MS13, are maturing and have greatly increased their sophistication, even if they remain bit players in TOC.
This provides a stark contrast to a stumbling government that has been unable to come up with a serious response to the increasing violence or formulate an innovative security policy. While the leftist administration of President Salvador Sánchez Céren has paid lip service to more social and economic assistance to poor areas and is even raising taxes on the wealthy, it has also emboldened hardline factions within the security forces, who may be moving to take this low intensity war into their own hands.
There is little to suggest that this dynamic will change in 2016. Indeed, El Salvador is bracing itself for another record-setting, violent year.
When Brazil hosted the World Cup in 2014, the security forces, via their vaunted “pacification” program, flooded into Rio de Janeiro’s favelas. This was a mixed blessing for those areas: homicides went down; police violence increased. That pattern is likely to be repeated in 2016, when Rio hosts the Olympic Games.
What’s more, the political situation in Brazil is far more delicate than it was in 2014. A widening corruption scandal in the state oil company, Petrobras, has implicated key sectors of Brazil’s elite. President Dilma Rousseff only narrowly escaped impeachment at the end of 2015 and is fighting for her political life.
All of this means that attention is likely to be focused away from TOC, which counts several Brazilian groups amongst its largest and most sophisticated actors. These groups are shipping hundreds of tons of cocaine and its derivatives into Brazil, not only for the booming domestic market but for transit to Europe, Australia, and parts of Asia, where a kilo of the drug can be worth more than $100,000. With the cost of producing a kilo of high purity cocaine between $2,000 and $3,000, profits (and incentives) remain very high.
The upshot is that while Rousseff will likely survive, her weakened status and the pressure to pull off a high-profile event like the Olympics, will steer attention away from the burgeoning criminal economy and the actors that control it.
Although they have taken some hits and have had to restructure themselves, Mexico’s drug trafficking organizations are still the most powerful and potent criminal structures in the region. What’s more, President Enrique Peña Nieto is reeling in large part because of his administration’s security failures.
The escape of the world’s most notorious drug trafficker, Joaquin “El Chapo” Guzman, was a major embarrassment to the government and a shot in the arm for the mighty Sinaloa Cartel. The bungled investigation into the disappearance of 43 students in the conflict-ridden state of Guerrero, combined with systematic allegations of security force abuses, extra-judicial killings and corruption have devoured the president’s political capital and his ability to try anything new or present long-term social or economic solutions.
The Mexican government will continue to stumble through 2016. Meanwhile, organized crime will continue to refashion itself with the two top tier organizations — the Sinaloa Cartel and the Jalisco Cartel – New Generation (Cartel de Jalisco Nueva Generación – CJNG) — likely to stand out; and a series of smaller, but potent groups — the Zetas, the Gulf Cartel, the Beltran Leyva Organization, among many others — jockeying for control of other, relatively new local revenue from mining, the theft of petrol, and local drug peddling.
In 2015, Guatemala issued the strongest possible challenge to corruption and organized crime with mass protests and judicial investigations into the country’s top-tier criminal organizations. The result was the arrest of Vice President Roxana Baldetti and then President Otto Pérez, among many others.
This revolution, however, is on standby after the Guatemalan people elected a former comedian with potential ties to some of these criminal groups as their new president. Expect incoming President Jimmy Morales to face more public protests, especially if the cases against indicted former politicians and officials do not progress and end in convictions.
The key question going forward is whether the power and will of the international community — mostly channeled via the United Nations-backed International Commission Against Impunity in Guatemala (Comisión Internacional Contra la Impunidad en Guatemala – CICIG) — can continue its mission of prosecuting and dismantling these criminal networks. With a mandate that extends into 2017, InSight Crime believes the CICIG will continue to apply the pressure, which may squeeze the Morales into a corner. How he reacts will determine his own fate and how organized crime reacts.
Guatemala has provided a template for Hondurans who are clamoring for their own CICIG-like body to help them attack corruption and crime at the highest levels. But it’s not clear the country even needs a new judicial body. In the last two years, some of Honduras’ largest criminal structures have been dismantled by Honduran authorities, suppported by the US, and many of their members extradited northwards.
This has set the stage for what promises to be the trial of the century for Honduras: the US money laundering case against political and economic juggernaut Jaime Rosenthal, his son Yani, his nephew Yankel, and a lawyer for their powerful economic conglomerate, Grupo Continental. Yani and Yankel are already in the United States, presumably cooperating with US authorities and trying to get Jaime off the hook for alleged criminal dealings with the group known as the Cachiros, who are providing the bulk of the evidence against the Rosenthal clan.
What we do not know is if the US is planning more indictments of elites or whether this was just a warning to the rest of the corrupt and criminally-inclined business class. While more indictments seem unlikely at this time, other elites will undoubtedly face pressure from the US and other international actors to sever ties with criminal structures. This will alter the underworld significantly, as the criminal groups try to create more sophisticated and clandestine means of working with political and economic elites.