How Black-Market Tobacco Funds the World’s Bad Actors

Targeting the Illicit Activities and Illicit Financing of North Korea, Threat Networks, and Criminal Regimes

Published in: Defense One, 16 September 2017

How Black-Market Tobacco Funds the World’s Bad Actors

BY DAVID M. LUNA

It’s time to focus the world’s attention on a smuggling enterprise that helps underwrite North Korea’s nukes and Taliban terror.

Where does North Korea, whose gross domestic product is less than that of some American cities, get the money to fund its nuclear efforts? Kim Jong-un and his regime obtain much of their money from a vast series of criminal enterprises that trade in everything from goods made by forced labor to counterfeit currency to narcotics. And like many insurgent groups and criminal organizations worldwide, Kim and his circle also traffic in illegal tobacco.

That may sound like something of an anticlimax. But smuggling tobacco products so they may be sold without the high taxes and tariffs that prevail in many countries is big business: globally, tens of billions of dollars a year. Compared to narcotics trafficking, it is a high reward, low-risk enterprise. A shipping container loaded with smuggled tobacco can be obtained for $100,000 and resold for $2 million, with criminal penalties paling in comparison to the lengthy prison terms handed down to drug traffickers.

During my tenure at the U.S. State Department’s Bureau of International Narcotics and Law Enforcement Affairs, we released a 2015 interagency report that underscored how illicit tobacco funds bad actors and “fuels transnational crime, corruption, and terrorism.” Through numerous open source reports, we know that 15 of the world’s leading terrorist groups regularly rely on illicit cigarettes for funding, including al Qaeda, the Taliban, Hezbollah, and Hamas. Illicit cigarettes are now second only to the heroin trade in helping fund some of the Taliban militias. Put simply: illicit tobacco flows threaten national security.

Several recent moves by Congress have begun to raise awareness of the dangers. The Senate’s 2018 National Defense Authorization Act includes a provision, championed by Sen. Joni Ernst, R-Iowa, that directs the Pentagon to report on its efforts to combat the trafficking of drugs, people, weapons, antiquities, and tobacco. In July, Sens. Marco Rubio, R-Fla., and Jeanne Shaheen, D-N.H., introduced legislation meant to improve our ability to combat Hezbollah; among other things, it would require a comprehensive federal examination of the illicit tobacco trafficking networks used by that group and other foreign terrorist organizations to finance their operations.

Also last month, the U.S. Commission on Security and Cooperation in Europe held a hearing to examine the threats posed by black market tobacco. Its chairman, Sen. Roger Wicker, R-Miss., stressed that the “ongoing illicit trade helps fund terrorist activities, foster corruption, and undermine the rule of law.” At the hearing, Dr. Louise Shelley, who runs George Mason University’s Terrorism, Transnational Crime and Corruption Center, testified that one of the terrorists who killed the cartoonists of Charlie Hebdo was involved in the illegal sale of cigarettes.

What we need now is better coordination of existing efforts around the world, within the U.S. government, and even with private industry. Better cooperation should allow us to more effectively implement “whole-of-government” strategies, execute multi-disciplinary approaches, coordinate enforcement across borders, and develop enduring impact solutions. 

First, it is imperative that global action on countering illicit trade is elevated within critical organizations, including the United Nations, the Organization for Economic Cooperation and Development, the World Customs Organization, and INTERPOL. Similarly, we need to ensure that blocs such as the European Union, the Organization of American States, the Asia Pacific Economic Cooperation Forum, the Gulf Cooperation Council, and others, make the fight against illicit trade a greater priority.

At a national level, governments should begin folding illicit trade strategies to combat illegal tobacco and other illicit commodities into their broader security policy and legislative agendas that help to target their harmful effects on their economies and communities alike.

Also crucial: more dynamic cross-sectoral, cross-industry partnerships can be decisive to protect the integrity of our markets, the security of the legitimate global supply chain, and the health and safety of our people. These collective action-oriented coalitions are a win-win for all market stakeholders.

Finally, we must elevate the fight against illicit trade by targeting the culture of impunity behind the webs of corruption and criminality across the global illegal economy. We must accelerate cross-border intelligence-led policing to disrupt and dismantle the illicit trafficking networks that are fueling today’s global insecurity, and confiscate their criminally derived profits from illegal tobacco and other illicit commodities.

By smartly targeting the illicit activities of North Korea, and other threat networks, we can curtail the financing that enables these criminal regimes to exist, better safeguard our security and world order, and help to win the peace.

David M. Luna is CEO and president of Luna Global Networks & Convergence Strategies LLC and the departing chair of the OECD Task Force on Countering Illicit Trade. He is the former Senior Director for National Security and Diplomacy, Anti-Crime Programs, Bureau of International Narcotics and Law Enforcement (INL) Affairs at the U.S. Department of State