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Combating Organized Crime in the 21st Century
2 March 2005

Opening Remarks of Dr. Ognian Shentov, Chairman, Center for the Study of Democracy

Bulgaria’s efforts to join the European Union contributed greatly to the strengthening of the country’s government institutions. Security sector reforms were made possible largely as a result of the involvement and support of EU members and the United States. Two years prior to Bulgaria’s entry into the EU, however, the country continues to face serious challenges. The process of tackling them should start today, so that they do not become an EU problem tomorrow.

These challenges are related to three broad issues. First, illegally generated capital and organized crime groups have gradually permeated Bulgaria’s formal economy. Second, law-enforcement bodies and the judiciary lack inefficiency. Third, Bulgarian organized crime is becoming increasingly integrated into international and European criminal networks.

1. Criminal capital is transformed into legal businesses

In recent years the most salient problem has been the infusion of capital generated through criminal activities into the legal economy. This process started before 1997—the year when Bulgaria introduced a currency board and achieved political stability. The capital acquired from corrupt privatization deals and financial frauds in the early 1990s, as well as profits from smuggling and other criminal activities during the Yugoslav wars, were invested in Bulgaria’s economy or laundered through legal or semi-legal businesses. Since September 11, it has become increasingly problematic for organized crime groups to invest in Western Europe and North America. As a result, crime-profits were diverted towards Bulgaria and other transition economies. During last year, the most common investment of such profits was in real-estate.

Organized crime groups, though, have diversified from the earlier investments in retail or wholesale markets. They have aggressively pursued business opportunities in tourism, trade, transportation, and the energy sector (such as small power-plants or mining). In addition, businesses controlled by organized crime figures have formed partnerships with multinational corporations. Some analysts view all these developments as positive because fresh capital is infused in Bulgaria’s economy, while grey economic activities are being abandoned since they are being perceived as riskier. Unfortunately, such a point of view is rather too simplistic. Unlike other businesses, companies or individuals associated with organized crime tend not to pay taxes, seek to establish monopolistic market positions, and breed political corruption to ensure protection not only of their legal but also their illegal activities.

Thus, organized crime continues its illegal activities even though it engages in legal business. The latter are often related to the organized crime’s “grey” and “black” businesses, from which they draw additional financial, organizational and human resources. This allows them to undermine fair competition and establish monopolies in many sectors. The dynamics of illegal economic activities is captured by the Hidden Economy Index developed by the Center for the Study of Democracy (CSD). This index revealed that the government’s policies are unlikely to be sustainable because they had only a limited effect on scaling down the grey economy and practically no impact on the black economy. Thus, the constant transmutation of organized crime businesses among black, grey and legal business is a great obstacle to apprehending the leading crime figures.

2. The low efficiency of the Bulgarian law-enforcement agencies and the judiciary continues to present another problem. In recent years it was revealed that a number of organized crime groups or individuals were closely linked to law-enforcement and judiciary officials, thus securing favorable outcomes of the pre-trial criminal procedures or court hearings.

The inefficiency of the law-enforcement agencies should be analyzed with a focus on the current position of the special security agencies. Given the fragmented legal framework governing them, their structure and the relations between them are often the result of party politics. In the last fifteen years the coordination between them has been poor at best, and even impeding each other’s efforts. It should hardly come as a surprise then, that security officers are often used by rival crime syndicates.

3. The integration of Bulgarian organized crime into European networks

The European Union has already become an important target of Bulgarian organized crime groups. There are several factors for this:

First, incomes in Bulgaria are very low. Bulgaria is among the countries with lowest incomes in Europe. Similarly to Albania and the prominent role of Albanian drug couriers, Bulgarian “mules” are heavily involved in Balkan trafficking channels.

Second, Bulgarian nationals travel without visa restrictions around the Schengen countries. As a result Bulgarian crime networks are in a more competitive position than the rivaling networks of nationals of Turkey, Albania, Macedonia, Serbia and Montenegro, Bosnia and Herzegovina, or the Central Asian countries.

Last, but not least, the upper echelons of organized crime groups remain beyond the reach of law-enforcement agencies. Regardless of the numerous Bulgarian nationals arrested for smuggling drugs, worth millions of dollars, the Bulgarian individuals at the highest levels of drug-trafficking networks have not been brought to justice. An analysis of trial-records shows that only low-level operatives, or occasionally to small two or three person groups, are being convicted.


When discussing strategies to counter organized crime one should keep in mind the fact that organized crime groups form a multitude of overlapping networks with junctures not only in the black and grey markets but also in the fastest developing economic sectors. A number of CSD studies have shown that it is in legal businesses where the key crime figures usually operate. Considering this, the government should not rely solely on the Ministry of Interior’s efforts to counter organized crime. Instead, the whole state apparatus should be engaged. If the growing influence of organized crime figures over Bulgarian politicians and the judiciary is not curtailed, it may soon have clout over decision making in Brussels.
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