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Transnational Turmoil – A “Gift” from Russia’s Underworld?

After a decade of relative calm, Russia's underworld is now violently restructuring itself. That’s bad news, writes NYU's Mark Galeotti. Given its aggressive, entrepreneurial and transnational nature, how Russian organized crime reorganizes itself will negatively impact the wider world.

By Mark Galeotti for ISN Security Watch

In the 1990s, Russia’s gangsters – who were not only Russians, but of every post-Soviet ethnicity, from Armenian to Uzbek – fought for resources, territory and precedence in a series of ferocious turf wars. Since then, though, the country’s underworld has been largely stable, both because those conflicts created a durable set of boundaries and hierarchies between gangs and also because Vladimir Putin’s state-building project entailed a tacit understanding with the criminals. They avoided any large-scale crackdown in return for acknowledging the primacy of the regime and abandoning the indiscriminate street violence that had been such a feature of the 1990s. So long as they did not seem to challenge the state, then the criminals could largely continue their operations.
For a number of reasons, though, this stability is now under threat. The financial crisis of 2008-2009 unsettled the old balance of power, impoverishing some gangs more than others. As a result, competition for new sources of revenue became steadily more ferocious. The opportunity to exploit the massive public spending on the 2014 Sochi Winter Olympics and new casino tourism developments became the focus of increasingly lethal competition. The greatest opportunity of all, though, lay in the expanding ‘Northern Route’ for Afghan heroin. Estimates of the flow heading through Central Asia and Russia range from 25% upwards, but all agree that it is increasing. This is having a dramatic impact on the Russian underworld, opening up new fronts for competition.
This has led to a revival of violent power struggle between gangs, most recently touched off by the murder in January of senior organized crime figure Aslan Usoyan, known as ‘Ded Khasan.’ A Georgian Kurd, the 75-year-old Usoyan was perhaps the most powerful Caucasian gangster in Russia and he was one of the first to appreciate the opportunities in Sochi. Suspicion fell on his long-time rival Tariel Oniani (‘Taro’), who had instead concentrated on the heroin trade, and hungry Azeri rising power Rovshan Janiev (‘Rovshan Lenkoransky’). Usoyan’s confederates seem to regard Janiev as the guilty party and shortly afterwards two of his lieutenants were murdered, in Abkhazia and Moscow. Meanwhile the predominantly ethnic Russian gangs that still make up the preponderance of the underworld began positioning themselves, potentially to seize assets from Caucasian gangs weakened by these feuds.
The internal politics of the underworld could have a significant impact on Russia as a whole. Many groups are closely linked to local and even national political elites, there is considerable overlap between the worlds of crime and business, and a resurgence of gang violence would reflect badly on President Putin and his legitimating myth as the man who restored order to the country. However, Russian organized crime is a transnational phenomenon, which has for two decades not only extended its operations around the world but also developed important strategic partnerships with allies ranging from the Italian Mafia to mainland Chinese gangs. The state of Russian organized crime thus has wider potential implications.
The Invisible Empire
Russian crime networks are powerful players within the underworlds of many post-Soviet states. In Ukraine, for example, the Moscow-based Solntsevo grouping remains a key influence, while many groupings have allies and subsidiaries in Central Asia (especially to control the heroin trade) and the Southern Caucasus. The Russians are also especially strong in the pseudo-states which have emerged, largely under Moscow’s aegis: Abkhazia, South Ossetia and Transdnestria. Even further afield, many Russian-based transnational networks are significant elements of the underworlds of countries ranging from Spain to Israel and many key figures are resident in Dubai.
Already, the Russian criminal conflict has begun to spread beyond its borders. One of Janiev’s henchmen was murdered in his native Abkhazia and unconfirmed rumors suggest that Janiev may have been killed in Istanbul. Although Georgia had adopted an aggressive policy against the traditional criminal elite of the vory v zakone (‘thieves within the code’), if direct hostilities emerge between the Usoyan and Oniani networks, then this will almost certainly also be fought out in Tbilisi and along the country’s Black Sea coast, where both retain significant assets and local agents.
The nature of the Caucasian gangs of Usoyan, Oniani and Janiev is that they are largely strong in Russia, Georgia and Azerbaijan.However, if the gang war begins to spread to the Slavic gangs then the prospects for direct competition outside Russia’s borders.[VBF1] Already, there are suggestions of growing tensions between Russian criminals in Latvia, for example, a country that is a key hub for laundering their money. Likewise, in Ukraine the Ukrainian Security Service (SBU) has already begun making preparations to address any potential violence, given the presence of such Russian networks there as the Moscow-based Solntsevo and Tambovskaya groupings.
Further Afield
The growing instability within the Russian underworld is also making itself felt far beyond Russia’s borders. If a more generalized conflict emerges, this will affect the Northern Route and its heroin supplies. Disruptions caused by gang clashes and police responses alike will affect the market in Europe and China, driving prices up (which tends to contribute to rising street crime) and encouraging traffickers to move more drugs through alternative routes. The Iran-Turkey-Balkans route will see an upsurge, profiting and thus empowering local gangs and corrupt officials. To service the growing Chinese market, gangs will probably look to increase imports from Burma, where a downward trend in opium production has already been reversing in recent years. This will play into the hands of corrupt officials and local warlords. However, it is also likely that new routes would be developed from Afghanistan through Pakistan and northern India.
Nor is this a problem confined to Asia. The attempted murder of banker German Gorbuntsov in London in March 2012 represented the first gang-related hit in the UK. This breached an unspoken but powerful injunction not to make waves in a jurisdiction much favored by senior gangsters as a safe haven and money-laundering hub. It reflected the steady erosion of a consensus within the criminal elite that has helped limit inter-gang violence outside as well as inside Russia.
Furthermore, there appears to be a rise in efforts to transfer dirty money out of Russia, as mobsters contemplate the possibility of having to flee their rivals or, perhaps, ride out a government clamp-down on their assets. The fourth quarter of 2012 saw a spike in capital outflow from the non-financial sector, one of the better indices of criminal money-movement. This means that many financial systems, not least those ofLatvia and Lithuania, Ukraine,Israel,Spain, Cyprus, the United Arab Emirates and Switzerland, face a growing problem dealing with the influx of criminal assets. While much will simply flow through their banks on the way elsewhere, some is then re-invested in everything from real estate and domestic companies to outright criminal ventures. Beyond representing an economic security challenge, it can also prove a political one. For instance, Germany’s position on providing aid to Cyprus has been complicated by the findings by the BND, its security service, that $26 billion—distinctly more than the country’s GDP—had been deposited in Cyprus by Russian businesspeople and gangsters.
The instability within the Russian underworld is thus a security issue outside Russia’s borders. It raises the prospect of violence as inter-gang conflicts are prosecuted abroad. It also generates less obvious but nonetheless pernicious challenges as organized crime groups move assets and even people abroad. Finally, its impact on existing criminal flows through Russia will have a domino effect, strengthening some gangs and creating grounds for further conflict as new opportunities arise for mobsters around the world.
Dr Mark Galeotti is Professor of Global Affairs at New York University’s SCPS Center for Global Affairs and author of the In Moscow’s Shadows blog.

Cop Sentenced To Four Days For Bogus Arrest Of Sheepshead Bay Man
A cop who falsely claimed that a Sheepshead Bay man tried to run him down in a car was sentenced to four days in prison – only one day more than his victim was locked up based on the officer’s bogus charges.
Officer Diego Palacios pleaded guilty at a hearing on Thursday in Brooklyn Supreme Court in exchange for a sentence of four days and his resignation from the New York City Police Department, the District Attorney’s office told Sheepshead Bites.
The three-day sentence has Palacios’s victim, East 23rd Street resident John Hockenjos, furious – and afraid for his safety.
“This individual spends four days in prison, with no probation, and he gets out of jail today or tomorrow and he’s a free man to do whatever he wants,” Hockenjos told Sheepshead Bites. “And I have to be in pure fear that there could be retribution. I should not be in this position; there should at least be probation.”
Palacios arrested Hockenjos in February 2012, saying on a police report that Hockenjos drove his car at “a high rate of speed” towards the officer in an attempt to hit him, forcing him “to jump out of the way.” Hockenjos was charged with felony reckless endangerment and spent three days behind bars before making bail.
Video of Hockenjos pulling into the driveway and being arrested.
Hockenjos could have lost his freedom for seven years. Surveillance video from Hockenjos’ home, though, cleared his name. The video shows Hockenjos slowly pulling into the driveway and stopping several feet away from the officers. Hockenjos and his wife got out of the car to talk to the police. The officer did not budge, as he had claimed.
In June, a grand jury indicted Palacios for offering a false instrument for filing, falsifying business records, making an apparently sworn false statement, perjury and making a punishable false written statement. He was also charged with official misconduct.
According to Hockenjos, four days in prison is no more than just a slap on the wrist for the man who nearly took everything from him.
“It looks like he really did nothing. It’s almost as if someone was charged with shoplifting, like picking up a pack a gum from the drug store,” Hockenjos said. “It’s like my life, all of my assets, my reputation is worth just a pack of gum. That’s what they’re saying.”
Even more galling, Hockenjos said, is that the assistant District Attorney on the case, Elizabeth Moehle, abandoned all the usual courtesies for the victim in prosecuting the case. Hockenjos said he wasn’t told about Thursday’s hearing until after the fact, and the District Attorney’s office never ran the plea deal by him.
“I started crying right away,” Hockenjos said of hearing news of the deal last week. “I’m afraid now. What’s going to happen to me?”
Though not required by law, the District Attorney’s office said that as a matter of policy, their office seeks the victim’s approval for all plea deals.
A spokesperson for District Attorney Charles Hynes told Sheepshead Bites that Hockenjos did give the thumbs up to the deal.
“We never do a plea unless the victim agrees to it. So that actually happened,” said Hynes spokesperson Sandy Silverstein.
Hockenjos said the only previous plea agreements discussed were in the early stages, when he was told the officer was likely to face three years.
“They said it would be three years, I thought it should be five. We had different opinions, but at least the order of magnitude is correct. To give him four days – one day more than I spent in prison – for the things he did to me is out of this world. It’s unreasonable,” said Hockenjos.
Hockenjos and his wife, Irena, say they live in fear that Palacios and his former colleagues at the 61st Precinct will seek retribution. Since the initial arrest, they’ve been afraid to call officers to report suspicious activity, or to protect them in an ongoing property dispute with a neighbor, who they claim has physically attacked them in the past.
“Now police officers can just shoot us to death and they won’t even face jail time, they’ll just resign from the police department,” Irena said. “This is very scary. I’m afraid to stay in the house; I’m afraid to step out.”
On the occasions that they have called 911, police have arrived only to shout at Irena Hockenjos, she said, and their complaints to the Internal Affairs Bureau have gone unanswered. They have also confronted the precinct’s former commanding officer, to no avail, they said.
“The 61st Precinct officers, they know what happened, and they know they can do whatever they want,” said John Hockenjos.
The NYPD’s spokesperson did not immediately respond to a request for comment. This post will be updated if a comment is received.

The Transnational Aspects of Russian Organized Crime

The Transnational Aspects of Russian Organized Crime
Thursday, February 14, 2013 - 12:00pm - 1:30pm

Columbia University Morningside Campus International Affairs Building Marshall D. Shulman Seminar Room 1219
Please join the Harriman Institute for a talk by Mark Galeotti, Clinical Professor of Global Affairs at New York University's SCPS Center for Global Affairs. Whether we call it Russian, Russia-based and Eurasian organized crime -- each term carries its own nuance -- this is a serious global issue. Networked, supremely entrepreneurial, and largely secure at home, these organized crime groups traffic a growing share of Afghan heroin, deal commodities from arms to people, and have established operations around the world, including within the USA. In the midst of a sometimes-bloody transition from the old order of the tattooed prison veterans to a new generation of cosmopolitan criminal-businessmen, they are also increasingly connected to other criminal groups. Through providing criminal goods and services, they thus facilitate the operations of organized crime around the world -- and also the Russian intelligence services, with whom they frequently have connections.