Organized crime in the Baltic States

One of the more dubious blessings of democratization and greater integration into the global economy experienced by the Baltic States after achieving their renewed independence from the Soviet Union was a dramatic upsurge in organized and transnational crime

In the 1990s, foreign gangs briefly dominated the Baltic underworld before being stemmed by a combination of strengthened police and judicial systems, and even a fight-back by local criminals unwilling to remain in the shadow of Russian, Chechen and Ukrainian gangsters.

Nonetheless, serious challenges remain, the Baltic States— close by, with still-developing institutions, and substantial local Russian-speaking populations— continue to provide opportunities for the Russian gangs.

Whereas in the 1990s they sought “conquest” of the Baltic underworld, now they use the Baltic states for criminal services, ranging from money laundering through to gateways into Europe.

 

Three distinct forces are currently reshaping the underworlds of what Europol calls the “North East Hub” of European organized crime:

  • Improving law enforcement. Despite pressures on resources, over time local and national police forces are becoming increasingly effective, and this has been matched by developments in the institutional structures such as courts and prisons. Even though Lithuania continues to lag — Europol has called its gangs among the “best-resourced groups” in Europe, key traffickers of a variety of narcotics and smuggled or counterfeit goods, especially cigarettes—across the board, organized crime is coming under pressure. One unexpected consequence has been a Darwinian process whereby smaller and less efficient gangs are swallowed by larger and more effective ones.

In the short term, the result is actually a more challenging crime threat. For example, according to Andrejs Sinavins, head of the State Police’s Organized Crime Department, there have been some 70 organized crime gangs operating in Latvia, a country of little more than two million citizens. However, some estimates suggest that half of these gangs are really now subsumed within perhaps a dozen networks.

  • The lingering effects of the 2008 economic slowdown. All three countries recovered relatively well, with income levels are converging toward those of Europe’s more economies that are advanced. However, especially given that, this has been a recovery eschewing credit; many financial institutions have been left eagerly seeking new business.

This has especially hindered attempts to reduce the region’s potential involvement in the moving, caching and laundering of criminal funds, as short-term business interests vie with long-term policy. This has been a particular problem in Latvia, where the large boutique-banking sector aggressively markets its services in post-Soviet Eurasia. Although again progress is being made, especially in Latvia, the relative ease with which dirty money can be laundered has not only helped local gangs, it also ensures that the major Russian crime networks retain a business interest in the region.

  • The “new Cold War.” While in truth it is more a “hot peace” than a new Cold War, the new tensions between Russia and the West following Moscow’s annexation of Crimea and intrusion into eastern Ukraine, especially the sanctions regime, have had a perverse effect on Russian and Belarussian organized crime’s activities in the region.

Gangsters and corrupt officials alike have been seeking to move their assets out of Russia, leading to an upsurge not just in the movement of money into and through the Baltics but also efforts to buy local businesses and property and thus acquire residency rights. The financial crisis in Russia and Kremlin counter-sanctions on Western food imports has also meant greater smuggling into Kaliningrad and through Belarus, further strengthening ties with local gangs.

As a result, although the overt organized crime threat in all three Baltic States appears to have become increasingly controlled, at present local underworlds are becoming increasingly coherent and efficient.

Furthermore, old links to Russian gangs are being developed, as the Russians seek to protect their assets and bypass sanctions. What makes this especially significant are the growing signs that Moscow is using organized crime as an instrument to gather intelligence and exert influence abroad. Estonia’s Kapo Security Police, for example, have highlighted this as a key security threat. Thus, it becomes doubly crucial that the Baltic States continue to wage an unrelenting struggle against corruption and organized crime.

Mark Galeotti
New York University professor and analyst of people of dubious character, from organized criminals and terrorists to spies and spinmasters.