Transnational crimes: how nations should cooperate and why they don't*

• Published date: 01 October 2023
• Author: Mehmet Bac
• Date: 01 October 2023
• DOI: http://doi.org/10.1111/sjoe.12534

Scand. J. of Economics 125(4), 860–899, 2023

DOI: 10.1111/sjoe.12534

Transnational crimes: how nations should

cooperate and why they don’t*

Mehmet Bac

Sabancı University, Faculty of Arts and Social Sciences, Tuzla, Istanbul 34956, Turkey

bac@sabanciuniv.edu

Abstract

Chain-form crime partnerships and intelligence sharing by national authorities to detect

cross-border partners create multiple externalities in the combat against transnational crimes

and illicit traff‌icking. Cooperative enforcements that minimize global harms prioritize the

country with lower intelligence production and/or superior detection capability. In equilibrium,

as in practice, national enforcements are underbudgeted and might prioritize the wrong

side – predominantly the high-budget, high-harm country. Governments might not share

intelligence out of fear of importing enforcement burden, and harmonizing criminal sanctions

alone might not be effective. Shocks on crime deterrence in a target country are f‌irst absorbed

by source countries, implying weaker horizontal crime transfer effects than projected.

Keywords: Harm minimization; illicit traff‌icking; terrorism; budget allocation; enforcement

externalities; intelligence sharing

JEL classif‌ication:H11; K42

1. Introduction

A crime is transnational when its execution in one country involves

perpetrators, victims, or institutions of another country. Prime examples

are illicit traff‌icking of humans, drugs, nuclear materials, and cultural artifacts

from source countries to destination markets across the border. Many terror

strikes are planned and the instruments prepared in an “upstream” country

for execution by “downstream” partners in a target country. Such crime

partnerships create multiple links between national enforcement agencies and

a strong case for cooperation.

Despite the proliferation of international conventions, practical cooperation

is def‌icient.1This paper studies what form international cooperation should

*I thank three anonymous referees for very useful comments. An annual research fund from

TUBA is gratefully acknowledged.

1The United Nations Convention against Illicit Traff‌ic in Narcotic Drugs and Psychotropic

Substances in 1988 and the Palermo Protocol signed in 2000 involve a large number of

participants. The Paris Pact initiative has 58 states targeting opiates that originate in a single

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M. Bac 861

take, and what strategic considerations and outcomes arise if countries fail

to coordinate. It takes a different perspective, focusing on two underexplored

features of transnational crime and its enforcement: the chain structure of

crime links (partnerships) and the possibility of intelligence sharing between

national authorities.

There is substantial evidence that transnational crimes are predominantly

executed by small and ephemeral groups.2The falling trend in organization

size and the chain structure of crime links raise two fundamental questions.

For two countries in a forged relationship to address the problems associated

with illegal drugs, guns, and immigration, curtailing one leg of crimes would

create partner shortages and reduce the harm in both countries. Thus, which

country should joint enforcement prioritize to minimize the harms? Intuition

suggests that the answer should depend on total harms and not the distribution.

However, for national authorities, the harms across the border matter little and

incentives to divert enforcement resources to local crimes, even earmarked

foreign aid, are strong. Thus, how will the countries allocate resources

between local and transnational crimes if they do not cooperate, or if they

conf‌ine cooperation to specif‌ic areas?

The transnational context presents a rich set of policy issues. Some of these

issues, in particular those bearing on technical forms of cooperation, have

not been subjected to scrutiny. Investigations in one country can reveal crime

partners across the border and lead to their arrest. This kind of information

exchange adds another layer of enforcement externality and has strategic

policy implications. Harmonizing criminal sanctions is also thought to be

effective by raising deterrence in source countries with weaker enforcements.

It is not clear, however, if these piecemeal measures could disturb actual

crime links and deliver harm reductions in target countries with stronger

enforcement.

I develop a model in which an upstream country (source) and a

downstream country (target) allocate their enforcement budgets between

local and transnational crimes to minimize expected harms within their

borders. Undeterred transnational criminals seek crime partners from the

source country, Afghanistan. Annual reports published by the United Nations stress the need for

action and stronger global cooperation (see United Nations Off‌ice on Drugs and Crime, 2020).

Cooperation failures are attributed to concerns about autonomy, sovereignty, corruption, lack of

trust, and asymmetry of resources and political will. Indeed, few of the 157 states that are party

to the Palermo Convention have used it as an instrument to facilitate international cooperation.

2The decline in market concentration in the international drug trade is documented in Golz and

D’Amico (2018). Bouchard (2006) studies a sample of incarcerated dealers in Quebec and reports

that 60 percent were active in organizations of 2–10 members. Bouchard and Morselli (2014,

see also references therein) observe that “offenders get together for one importation or a few

transactions, and then they split up”.

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862 Transnational crimes: how nations should cooperate and why they don’t

other side to complete their crimes. The probability of matching at one side

depends on the measures of potential criminals seeking to match from both

sides, and thus on deterrence in both countries. Those who f‌ind a partner

and complete their crimes can be detected directly by enforcement units

of the country in which they operate and, if the countries share intelligence,

indirectly through their partners detected across the border. As such, the model

highlights two types of enforcement externalities. First, powerful enforcement

in country 𝑖reduces the number of individuals/organizations participating

in transnational criminal activity by creating shortages of 𝑖-criminals. This

“matching-shortage” externality operates by lowering the matching probability

for potential 𝑗-criminals and consequently reduces crime in country 𝑗as well.

Second, and independently, if the countries share intelligence, then an increase

in one country’s enforcement raises the probability of detection in the other

country. This positive “trace-back” externality can be asymmetric.3If the

countries do not coordinate, then both types of externalities will distort the

allocation of global enforcement resources. I study cooperative resource

allocations minimizing joint harms, contrast these with non-cooperative

equilibrium outcomes with and without intelligence sharing, and evaluate

sanction harmonization initiatives. An extension of the model focuses on

horizontal crime transfer effects between downstream countries.

The analysis shows that total harms are minimized by prioritizing one

side of the border, even if enforcement resources and technologies are

fully symmetric, regardless of the harm distribution. The matching-shortage

externality can operate in one direction only. If enforcement technologies

(direct detection capabilities) are identical, the country to prioritize is the

weaker side of intelligence, for this will maximize the measure of cross-border

criminals traced back from the side with superior intelligence. If intelligence

capabilities are symmetric, then of course the side with superior enforcement

should be prioritized.

The main problem with actual enforcement of transnational crimes is

not that some countries seem to do less and others more – because, as

this paper shows, enforcement outcomes are asymmetric at all levels of

cooperation – but that the allocations might be prioritizing the wrong side.

The bulk of drug traff‌icking enforcement takes place in target countries

with little or no intelligence support from source countries, and efforts to

counter human traff‌icking scrutinize borders instead of recruitment activities

3Intelligence production capabilities differ and depend on coordinated efforts by several

departments. Intelligence effortsare multidisciplinary, as in the testing laboratories that determine

the origins of heroine and cocaine seizures. The Fentanyl Signature Prof‌iling Program of the

Drug Enforcement Agency in the United States, for example, has established 96 linkages

involving 192 cases since its inception United States Department of State (2020).

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