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The Potential of Crime to Undermine
Australia’s National Security1
Peter Grabosky and John McFarlane
National security entails more than a country’s ability to withstand military invasion. A wider
conception of national security includes the burdens on the state that are imposed as a result of
crime. Domestic criminality can weaken a society and its economy, with obvious implications
for national security. Even crime that occurs on the other side of the world, whether it entails
major financial crime or the cultivation of opium, can have domestic ramifications. So too can
crime that occurs in neighbouring nations, whose own security problems may have unfortunate
spillover effects. This article explores crime and its impact on Australia’s national security. It
observes that a degree of convergence in Australian policing and security institutions has
become apparent, and is likely to continue.
Introduction: A Wider Conception of National Security
At first blush, aside from the traditional offences of treason and sedition,
crime and national security would appear to be different fields of inquiry.
However, the concept of national security has expanded significantly in
recent years, and the term now means many things to many people. Today,
national security entails more than merely the capacity to defend one’s
territorial borders against the invading armed forces of rival nation states.2
Even to the defence establishment, strategic threats today are very different
today from those of 1939. With the end of the Cold War and the actual or
impending collapse of a number of states around the world, Australia’s
strategic environment has changed dramatically.3 Today, two of the most
significant (if not the most significant) threats to Australia are posed by a
loose coalition of non-state actors,4 and by a strain of influenza.5
The end of the Cold War has seen an increase in the prevalence of state
failure. State failure can result from, and in turn, facilitate, various kinds of
criminal activity. The term “asymmetric warfare”6 embraces a good deal of
1
The authors would like to thank Douglas Kinnard, Michael Stohl, Stephan Frühling and an
anonymous reviewer for comments on an earlier draft.
2
Human Security Centre, Human Security Report 2005, New York, Oxford University Press,
2005.
3
See, for example, ‘The Failed States Index,’ Foreign Policy, no. 145 (May/June 2006), pp. 50-
58.
4
A. Dupont ‘Transformation or stagnation? Rethinking Australia's defence,’ Australian Journal of
International Affairs, vol. 57 no.1 (April 2003), pp. 55-76.
5
M. Perdue and D. Swayne, ‘Public Health Risk from Avian Influenza Viruses,’ Avian Diseases,
vol. 49, no. 3 (September 2005), pp. 317–327.
6
I. Arreguin-Toft, How the Weak Win Wars: A Theory of Asymmetric Conflict, Cambridge,
Cambridge University Press, 2005. In 1999, the United States Joint Chiefs of Staff defined
“Asymmetric Warfare” as “Attempts to circumvent or undermine U.S. strengths while exploiting
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activity that is punishable under conventional criminal law. And the nature of
crime itself has changed significantly in recent years. The rapid mobility of
people, ideas, finance, commodities, and viruses (both the microbial variety
and those that infect one’s hard drive), driven in large part by the revolution
in information technology and telecommunications, has been accompanied
by criminal opportunities that were unimaginable not long ago. The
successful exploitation of these opportunities can weaken a state. So the
relationship between crime and national security may be closer than
apparent at first glance.7
While a wider conception of national security may be novel in living memory,
it is by no means new to the 21st century. Consider the following thoughts,
more than 2000 years old:
Plans and projects for harming the enemy are not confined to any one
method. Sometimes entice his wise and virtuous men away so that he has
no counsellors. Or send treacherous people to his country to wreck his
administration. Sometimes use cunning deceptions to alienate his ministers
from the sovereign. Or send skilled craftsmen to encourage his people to
exhaust their wealth. Or present him with licentious musicians and dancers
to change his customs. Or give him beautiful women to bewilder him.8
As Sun Tzu perceived so long ago, there are many ways to harm a country
short of a military invasion. Sun Tzu may still have had eventual military
attack in the back of his mind, but was looking at the multidimensional
strength of a nation as the basis of security. A state is not necessarily
conquered by force of military dominance, but may also collapse for want of
popular support. The demise of the Soviet Union is illustrative.9 Today,
national security may be conceptualized to include not only defence of one’s
territory, but also the ability of governments to provide basic services to their
citizens, or at the very least, a stable platform for the functioning of free
markets.10 Whether one subscribes to this minimalist conceptualization or
U.S. weaknesses, using methods that differ significantly from the U.S.’ expected method of
operations. … [Asymmetric approaches] generally seek a major psychological impact, such as
shock or confusion, that affects an opponent’s initiative, freedom of action, or will. Asymmetric
methods require an appreciation of an opponent’s vulnerabilities. Asymmetric methods often
employ initiative, non-traditional tactics, weapons and technology, and can be applied at all
levels of political warfare – strategic, operational and tactical – and across the spectrum of
military operations.” CJCS, Joint Strategic Review, Washington, DC, 1999, p. 2.
7
J. McFarlane, ‘Transnational Crime as a Security Issue’, in Carolina G. Hernandez and Gina
R. Pattugalan (eds.), Transnational Crime and Regional Security in the Asia Pacific, Manila,
Council for Security Cooperation in the Asia Pacific/Institute for Strategic and Development
Studies, 1999, pp. 23-57.
8
Sun Tzu, The Art of War, transl. Samuel B. Griffith, London, Oxford University Press, 1971, pp
113-114.
9
R. Suny, The Revenge of the Past: Nationalism, Revolution, and the Collapse of the Soviet
Union, Stanford, Stanford University Press, 1993.
10
A. Dupont, East Asia Imperilled: Transnational Challenges to Security, Cambridge,
Cambridge University Press, 2001.
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rather to the multidimensional foundations of a strong state, powerful and
autonomous, consider the following as components of national security;
• Economy
• Political legitimacy
• Health
• Education
• Social welfare
• Social cohesion
• Interpersonal trust
• Environmental quality11
All of these impact upon a nation’s ability to defend itself territorially. A
serious deficit in any of these areas can weaken a country significantly. It is
not accidental that the economy heads this list, and dominates the policy
agendas of many nations. The famous observation “It’s the economy,
stupid”,12 made during the 1992 US presidential election, applied well
beyond American politics. A wealthy country can afford not only guns and
butter, but also schools, hospitals, clean water, and honest public servants.
To the extent that the wealthy country is ethnically or religiously diverse,
there will be enough of “the pie” to go around, and diverse elements will
have less cause to fight each other for a share.
Ours is a complex world, and it is popular nowadays to remark that
everything is related to everything else. While this may be a slight
11
The World Bank considers many of these issues in terms of “governance” which it defines as
“a set of traditions and institutions by which governments are selected, monitored and replaced;
formulate and implement sound policies; demonstrate respect of citizens and the state for
institutions that govern economic and social interactions among them.” The World Bank has
also established six “governance indicators” to measure the effectiveness and stability of
political systems, including their vulnerability to crime. The six Indicators are:
1. Voice and Accountability – i.e. the political process, freedom of the press, human rights, etc.;
2. Political Stability and the Absence of Violence – i.e. the physical strength or vulnerability of
the state;
3. Governance Effectiveness – including the independence of the bureaucracy;
4. Regulatory Quality – i.e. policies on contracts, prices, banks, trade, etc.;
5. Rule of Law – i.e. the incidence of crime, the quality of the criminal justice system, etc.;
6. Control of Corruption – defined as “the exercise of public power for private gain.”
771165~menuPK:1866365~pagePK:64168445~piPK:64168309~theSitePK:1740530,00.html>
[Accessed 26 March 2007].
12
Attributed to Democratic Party strategist, James Carville.
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exaggeration, crime can adversely impact on each of the above factors,
which bear upon the strength of the state and on the ability of the state to
defend itself and to provide for its citizens. The following pages will explore
these relationships in greater detail, and their relevance to Australia’s
national security.
Local and Global Manifestations of Crime
STREET CRIME
Crime is a mansion with many rooms. Some is entirely local. The term
“street crime” has been coined to refer to conventional crime in public
places. Of course, a great deal of crime is committed in private between
acquaintances and intimates. Homicide, assault, rape, robbery, burglary are
all classic street crimes.13
WHITE COLLAR CRIME
The term “white collar crime” was coined nearly seventy years ago to refer to
crimes committed by persons of relatively high social status in the course of
their occupation.14 The term is now used more often to refer to the offence
rather than to the offender, and embraces a range of criminal activities of a
financial nature, including embezzlement, fraud, insider trading, tax evasion
and corruption.15
TRANSNATIONAL CRIME16
Some crimes are transnational. The criminal act itself may involve the
crossing of national frontiers, as in smuggling, illegal immigration, or the
unauthorized incursion of fishers into one’s territorial waters.17 Alternatively,
the advent of digital technology may enable a crime to be committed in one
13
A. Graycar and P. Grabosky (eds.), The Cambridge Handbook of Australian Criminology,
Cambridge, Cambridge University Press, 2001.
14
E. Sutherland, White Collar Crime: The Uncut Version, New Haven, Yale University Press,
1983.
15
R. Smith ‘White Collar Crime,’ in A. Graycar and P.Grabosky (eds.), The Cambridge
Handbook of Australian Criminology, Cambridge, Cambridge University Press, 2001, pp. 126-
156. See also Kip Schlegel and David Weisburd (eds.), White Collar Crime Reconsidered,
Boston, Northeastern University Press, 1992; Stephen Rosoff, Henry Pontell and Robert Tillman
(eds.), Profit Without Honor: White-Collar Crime and the Looting of America, 4th Ed., Upper
Saddle River, NJ, Pearson Prentice Hall, 2007; and James Gobert and Maurice Punch,
Rethinking Corporate Crime, London, Butterworths LexisNexis, 2003.
16
Transnational crime exists where:
- It is committed in more than one state,
- It is committed in one state, but a substantial part of its preparation, planning, direction or
control takes place in another state
- It is committed in one state but involves a criminal group that engages in criminal activities in
more than one state,
- It is committed in one state, but has substantial effects on another state.
United Nations Convention Against Transnational Organised Crime, New York, United Nations,
2000, Art 3, para 2.
17
M. Galeotti, Global Crime Today, London, Routledge, 2005.
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country against a target in another.18 For example, when an extortionist in
Country A threatens to shut down the information system of a bank in
Country B unless an electronic funds transfer payment is made, or when a
hacker in Country A gains unauthorized access to the servers of a defence
installation in Country B, it is information in digital form, rather than human
actors or physical matter, which crosses boundaries.
Degrees of State Involvement in Crime
Not all crime is exclusively the work of private individuals. State involvement
in crime, and in the effects of such crime on the security of other states, can
vary.19
At one extreme, the state is a criminal actor. The criminal activity in question
is state sponsored. The most obvious example is state-sponsored
terrorism.20 When agents of the Libyan Government blow up a commercial
airliner over Lockerbie, or where agents of the French Government sink the
Rainbow Warrior, this is explicit state action. States may also be directly
involved in the commission of other types of transnational crime, as when
crew of a North Korean ship, the Pong Su, attempted to deliver drugs to
Australia.21
Just short of explicit state action is state complicity in private criminal activity.
Here, the state will encourage proxies to engage in criminal acts. The Iran-
Contra scandal arose from arrangements to place the executive branch of
the US Government at arm’s length from criminal activity. The emergence of
the private military industry may create further risks of the state’s complicity
in crime.22
Next, there are circumstances where the state may be aware of criminal
activity, but will turn a blind eye.23 Most criminal justice systems have more
18
P. Grabosky, ‘The Global Dimension of Cybercrime,’ Global Crime, vol. 6, no.1 (February
2004), pp. 146-157.
19
Robert J. Bunker and Pamela L. Bunker, ‘Defining Criminal-states’, Global Crime, vol. 7, no.
3-4 (August-November 2006), pp. 365-378; and Mark T. Clark, ‘Does Clausewitz Apply to
Criminal-States and Gangs?’, Global Crime, vol. 7, no. 3-4 (August-November 2006), pp. 407-
427.
20
M. Stohl and G. Lopez, The State as Terrorist: The Dynamics of Governmental Violence and
Repression, Westport, CT, Greenwood Press, 1984.
21
Bureau 39 of the Korean Workers’ Party has been engaged in revenue enhancement through
various criminal activity for some time. A. Spaeth, ‘Kim’s Rackets,’ Time Asia Magazine, 2 June
2003, [Accessed 12 October
2005]; R. Perl, ‘State Crime: The North Korean Drug Trade,’ Global Crime, vol. 6, no. 1 (Febrary
2004), pp. 117-128.
22
P.W. Singer, Corporate Warriors: The Rise of the Privatized Military Industry, Ithaca, Cornell
University Press, 2003.
23
Peter Lupsha, ‘Transnational Organized Crime versus the Nation-State,’ in Transnational
Organized Crime, vol. 2, no. 1 (Spring 1996), pp. 21-48; and Tamara Makarenko, ‘The Crime-
Terror Continuum: Tracing the Interplay between Transnational Organized Crime and
Terrorism,’ in Global Crime, vol. 6, no. 1 (February 2004), pp. 129-145, particularly pp. 135-139.
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business than they can handle. Each country sets its own priorities, which
may not be entirely consistent with those of other countries. Poor countries
for example, may have other things to worry about than the fact that their
ports are used for the transshipment of contraband.
One step beyond this is where the state is aware of criminal activity but lacks
the capacity to do anything about it. The poorest countries may simply be
unable to interdict the activities of powerful criminal organizations. Where
corruption is endemic, or where norms of reciprocity are deeply engrained in
local culture, the state may be powerless to respond. Circumstances in the
Solomon Islands prior to the RAMSI intervention reflected this degree of
governmental impotence.24
Crime in a Shrinking World
Some crimes are local, both in motive and in deed, but may have cross-
border ramifications. One may look to events of a decade ago in Albania to
see an example of the trans-national impact of domestic criminality. A
massive fraud resulted in a significant number of Albanians losing their life
savings. This in turn precipitated the collapse of the government, and a
substantial exodus of Albanians seeking refuge in neighbouring Italy, with
consequent strains on Italian law enforcement, emergency services, and
immigration resources.25
Even if Australians are not directly involved as victims or offenders
elsewhere in the world, overseas crime can have significant implications for
Australian interests. There are crimes that, although they occur abroad,
reverberate strongly in Australia. To the extent that illegal trafficking in
firearms overseas contributes to conflict and instability in our region,
Australia’s national security is at risk.26 Of no less significance is the
potential for corruption to facilitate some forms of the transnational criminal
activity noted above.27 The weakening of law enforcement or regulatory
24
E. Wainwright, ‘Responding to state failure--the case of Australia and Solomon Islands,’
Australian Journal of International Affairs, vol. 57, no. 3 (November 2003), pp. 485-498. See
also Makarenko, op. cit.
25
D. Bezemer, ‘Post-socialist financial fragility: the case of Albania,’ Cambridge Journal of
Economics, vol. 25, no. 1 (January 2001), pp. 1-23; T. Perlmutter, ‘The Politics of Proximity: The
Italian Response to the Albanian Crisis,’ International Migration Review, vol. 32, no. 1 (Spring
1998), pp. 203-222.
26
Philip Alpers and Conor Twyford, Small Arms in the Pacific, Geneva, Small Arms Survey,
2003; David Capie, ‘Small Arms Production and Transfers in Southeast Asia,’ Canberra Papers
on Strategy and Defence, no. 146, Canberra, Strategic and Defence Studies Centre, Australian
National University, 2003; See generally R. Stohl, M. Schroeder, and D. Smith, The Small Arms
Trade, Oxford, Oneworld Publications, 2007.
27
Margaret E. Beare, ‘Corruption and Organized Crime: A Means to an End,’ and Brice de
Ruyver and Tom van der Beken, ‘Corruption and Organized Crime,’ both in Barry Rider (ed.),
Corruption: The Enemy Within, The Hague, Kluwer Law International, 1997, pp. 65-76 and 77-
84, respectively; David L. Herbert and Howard Tritt, Corporations of Corruption: A Systematic
Study of Organized Crime, Springfield, IL, Charles C. Thomas, 1984; and Pasuk Phongpaichit,
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capabilities in one of Australia’s near neighbours can greatly enhance the
capacity of criminals to use that jurisdiction as a “safe haven”, a staging area
for a variety of criminal or terrorist activities, or as a trans-shipment point for
contraband. What appears at first glance to be an internal matter in a
nearby nation may ultimately impact on the streets of Sydney or Melbourne.
This alone is justification for the creation of Australian Federal Police (AFP)-
funded Jakarta Centre for Law Enforcement Cooperation in Semarang,
Indonesia, and the Pacific Transnational Crime Coordination Centre in Fiji,
and Transnational Crime Units in several other locations in the Asia-
Pacific.28
In general, Australia’s economic and strategic interests are best served by
world economic growth and political stability. To the extent that an overseas
nation’s economy is crippled by crime and corruption, it is a less attractive
market for Australian exports. Abroad and at home, crime—and
corruption—is bad for business.
More generally, large scale financial crimes such as those which lead to the
collapse of major financial institutions can shake the confidence of global
markets. In recent years, the demise of Barings Bank29 and the Sumitomo30
copper scandal have had significant reverberations for Australian institutions.
The Asian economic crisis of the late 1990s, arising in no small part from
criminal fraud, extortion, bribery and corruption in a number of nations that
are major purchasers of Australia’s exports, had a noticeable (if temporary)
impact on Australia’s domestic economy.31 By contrast, the massive size of
the US economy enabled it to withstand the Savings and Loans and Enron
scandals.32
Sungsidh Piriyarangsan and Nualnoi Treerat, Guns, Girls, Gambling, Ganja: Thailand’s Illegal
Economy and Public Policy, Chiang Mai, Silkworm Books, 1998.
28
John McFarlane, ‘Regional and International Cooperation in Tackling Transnational Crime,
Terrorism and Disrupted States’, Journal of Financial Crime, vol. 12, no. 4 (August 2005), pp.
301-309.
29
The Barings Bank, a venerable British institution which had helped finance the Napoleonic
Wars, collapsed in February 1995 after one of its traders lost US$1.3 billion in disastrous trading
in derivatives contracts. In the immediate aftermath of the collapse, Japan's Nikkei 225 index
fell 3.8%, and the British pound plunged to a record low against the Deutsche Mark. Michael
Lim Choo San, and Nicky Tan Ng Kuang, Barings Futures (Singapore) Pte Ltd : Investigation
pursuant to section 231 of the Companies Act (Chapter 50): the report of the Inspectors
appointed by the Minister for Finance, Singapore, Ministry of Finance, 1995.
30
An employee of the Sumitomo Corporation was blamed for single-handedly losing $1.8 billion
trading copper. Following the announcement, world copper prices fell to their lowest point in
over two years. See J. Kharouf, ‘The Copper Trader Who Fell from Grace,’ Futures Magazine,
vol. 25, no. 10, (August 1996), pp. 66-70.
31
John McFarlane, ‘Corruption and the Financial Sector: The Strategic Impact,’ Journal of
Financial Crime, vol. 9, no.1 (September 2001), pp. 8-21
32
K. Calavita, H. Pontell, R. Tillman, Big Money Crime: Fraud and Politics in the Savings and
Loan Crisis, Berkeley, University of California Press, 1997; R. Tillman and M. Indergaard, Pump
and Dump: The Rancid Rules of the New Economy, New Brunswick, NJ, Rutgers University
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CRIMES COMMITTED BY AUSTRALIANS ABROAD
Australians travelling abroad do not always conduct themselves with perfect
decorum. Hundreds of Australians are arrested overseas each year, and
between 150 and 200 are held in foreign prisons at any given time. Perhaps
the most common cases from an Australian perspective involve persons
unwise enough to be found trafficking or in possession of drugs in those
nations where such activity is met with very severe punishment. The most
recent misfortunes of Schapelle Corby and the so-called “Bali Nine” are but
two examples.33 Certain other forms of conduct on the part of Australians
overseas, may, for a variety of reasons, escape the full force of law in the
host country, but are nevertheless regarded as seriously repugnant. Most
prominent among these in recent years has been child sex tourism.
Crime by Australian expats may be regarded as unseemly (or worse) by
citizens or authorities in host countries, but it has not triggered the moral
outrage that (for example) crimes by US military personnel in Japan have
generated.34 Tensions have arisen, however, from Australian reactions to
perceived inappropriate treatment of fellow citizens in the arms of foreign
legal systems, which in turn may be perceived as patronizing or arrogant by
citizens or officials of the host state. The resulting strain on diplomatic
relations can be significant.35 The Corby and Bali Nine cases are illustrative,
and particularly significant given the importance of cooperation between
police services of Australia and Indonesia in the light of regional terrorist
activity.
Australian companies doing business in conflict-ridden countries also run the
risk of becoming implicated in illegal activities. By lending financial or
material support to a party (be it government or opposition) that is corrupt,
criminal or otherwise violates human rights, a company can create bad will
that can stain Australia’s international reputation.36
Press, 2005.
33
Schapelle Corby was convicted of attempting to import cannabis into Indonesia and
sentenced to twenty years prison in 2005. Nine Australians were arrested in Indonesia in April
2005 and charged with possessing heroin. At the end of 2007, nine were still imprisoned and
six were facing the death penalty.
34
A 1969 attack by an Australian messianic Christian on the Al Aqsa Mosque in Jerusalem
might have had wider ramifications had it occurred today. See E. Sprinzak, Y. Ariel, U.
Ne'eman, and A. Ramon, ‘Internal Report Submitted to the Jerusalem Institute for Israel
Studies’, Terrorism and Political Violence, vol. 14, no. 1 (2002), pp. 61-94.
35
The execution of a Filipina expatriate in Singapore severely strained diplomatic relations
between the two countries. Dupont, East Asia Imperilled: Transnational Challenges to Security,
note 7, p. 164. Similarly, when the Melbourne resident, Van Tuong Nguyen, was hanged in
Singapore on 2 December 2005 for possession of 396.2 mg of heroin, for a short while there
were serious tensions in the bilateral relationship with Singapore
36
Inquiry into certain Australian companies in relation to the UN Oil-For-Food Programme,
Canberra, Attorney General’s Department, 2006.
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CRIME AGAINST AUSTRALIANS ABROAD
Of the hundreds of thousands of law abiding Australians who are overseas
at any given time, most manage to stay out of harm’s way. But a few do not,
and fall victim to offences from purse snatching to homicide.37 While
certainly unfortunate, such incidents do not effect Australia’s national
security. But crimes against Australian business interests may be a different
matter. The globalization of commerce means that more Australian
businesses are active overseas than ever before. The intensely competitive
nature of world commerce is such that Australian companies face a
significant risk of becoming victims of a variety of offences. One potential
threat is that of industrial espionage. Competitors, and at times, foreign
governments, seek to acquire strategic economic intelligence, trade secrets,
or intellectual property by illegal means. Indeed, for many nations, corporate
intelligence collection may be more important than defence intelligence
collection.38
Another risk, less related to global competitiveness than to political and
social factors, is that of extortion. In some locations around the world where
public security is a major problem, expatriate executives and staff are
targeted for ransom kidnapping.39 In the case of minor offences, a tourist or
businessperson might be able to shrug off the experience as just an
unfortunate aspect of overseas travel. But depending on the gravity of the
incident, there may be a call on Australian consular services for emergency
assistance. In the case of crimes against businesses, security measures will
increase the cost of doing business, and may detract from the profitability of
an investment. An important consideration here from a national security
standpoint can be the extent to which a state is seen as giving in to
blackmail.
37
Between 1995 and 2003, a total of 158 Australians were murdered in 32 overseas countries.
Most of these (88) perished as a result of the first Bali bombing in 2002. John Venditto and
Jenny Mouzos, ‘The murder of overseas visitors in Australia’, Trends and Issues in Crime and
Criminal Justice, no. 316, Canberra, Australian Institute of Criminology, 2006.
38
Hedieh Nasheri, Corporate Espionage and Industrial Spying, Cambridge, Cambridge
University Press, 2005.
39
C. Beer, ‘Judicial Performance and the Rule of Law in the Mexican States’, Latin American
Politics & Society, vol. 48, no. 3 (Fall 2006), pp. 33-61. In August 2007, a South Australian
sheep farmer, Des Gregor, traveled to Mali to meet a Liberian refugee who he met over the
Internet and proposed to marry. When he arrived in Mali, he was kidnapped by men claiming to
be the woman's relatives, physically threatened and held for a US$86,000 ransom. Gregor's
relatives in Australia raised the alarm when they started to get emails asking for money, and
alerted the AFP. After 12 days in captivity, the AFP managed to persuade Gregor's kidnappers
to send him to the Canadian Embassy to pick up the ransom money, where Gregor was
recovered. This operation involved cooperation between the AFP Senior Liaison Officer in
Pretoria, the Mali National Police, the South African Police and the Canadian Embassy in
Bamako (Mali). Nick Bryat, ‘Australian taken hostage in Mali’, BBC News, 13 August 2007, at
and AFP briefing, 25 October 2007.
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The Impact of Crime on National Security
National security is not an either/or phenomenon. The security of a given
state at a given time can be located on a continuum between impregnability
on the one hand, and collapse on the other. Various factors, of which crime
is but one, will determine a state’s location on that continuum and its
movement in one direction or another.
The nexus between crime and national security began to attract wider
attention with the end of the Cold War.40 The collapse of the Soviet Empire
presented criminal opportunities of considerable magnitude. The
ascendancy of Russian organized crime had ramifications well beyond its
borders, and the availability of fissionable material diverted from Soviet
arsenals represented a threat worldwide.
But Australian criminologists have been mindful for at least three decades of
the nexus between crime and national security. The June 1975 issue of The
Australian and New Zealand Journal of Criminology contains no less than
three articles of relevance. In one, the inaugural Director of the Australian
Institute of Criminology (AIC) noted the rise of transnational crime. He
commented on
the great gaps in international legal practice which loom more like canyons
and caverns than the proverbial loopholes in our system or (sic) world
security and cooperation.41
In another, a lecturer at the University of Melbourne addressed the issue of
terrorism and international order. He noted that
we have in this country powerful minority groups which reflect all the
bitterness found in those areas of the world where terrorist operations are
active and most violent.42
In a third, a lecturer at the University of Sydney who currently sits as a
District Court Judge in New South Wales warned against the possible
criminal use of atomic or biochemical materials. He said that “As even the
most casual observer of the terrorist scene will be aware, the spirit of
kamikaze is still alive all over the world.”43
40
B. Buzan, People, States and Fear: An Agenda for International Security Studies in the Post
Cold War Era, Brighton, Harvester Wheatsheaf, 2001; M. van Creveld, The Transformation of
War, New York, Free Press, 1991; W. Clinton, ‘Remarks by the President to the UN General
Assembly,’ 22 October 1995
[Accessed 23 April 2007]; L. Shelley, ‘Transnational Organized Crime: An imminent threat to the
nation state’, Journal of International Affairs, vol. 48, no. 2 (Winter 1995), pp. 464-465.
41
W. Clifford, ‘New Dimensions in Criminality-- National and Transnational’, The Australian and
New Zealand Journal of Criminology, vol. 8, no. 2 (1975), p. 76.
42
K. Milte, ‘Terrorism and International Order’, The Australian and New Zealand Journal of
Criminology, vol. 8, no. 2 (1975), p. 102.
43
G. Woods, ‘The Possible Criminal use of Atomic or Biochemical Materials’, The Australian
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States vary in robustness. They differ widely in their ability to withstand
adverse circumstances, whether natural disasters, economic adversity, or
criminal insults. The impact of crime on national security is largely indirect,
and cumulative, except in states where crime is endemic.
From this vantage point, one can begin more clearly to see the relationship
between crime and national security. National security can be jeopardized
by domestic criminal threats as well as by transnational forces. Rampant
crime and violence on Australian soil will discourage tourism. Rampant
fraud and corruption will discourage investment. Rampant drug use and
environmental pollution can damage public health and detract from the
productivity of one’s workforce. In today’s increasingly competitive global
economy, that threatens national security. Fortunately, Australia’s
robustness makes it well situated to withstand the criminal insults that are
home grown.
When transnational influences are added to the equation, the relationship
become even more stark, especially in poorer countries. The use of bribery
in international business can be corrosive. When bribery and corruption
detract from the public’s trust in their leaders and in national institutions, that
is harmful to national security.44 No nation today, rich or poor, can boast of a
role model of integrity such as Nelson Mandela. But the strength of a state
is generally dependent upon its legitimacy. The legitimacy of a state, the
willingness of the public to accept the validity of the regime, will contribute to
national security.
When illegal international traffic in guns, drugs, people and other contraband
place greater burdens on law enforcement and other public services, that
threatens national security. When the inflow of “dirty” money to a small
nation’s economy impacts on exchange rates and reduces the
competitiveness of traditional exports, that threatens national security.
When extremist movements deal in contraband in order to finance terrorist
operations, that threatens national security.
The day is fast approaching when it will be possible to say “when China
sneezes, the world will catch cold.” We have begun to appreciate the extent
to which economic well-being in Australia depends on the health of the
Chinese economy, much as it has depended on the US economy since the
end of WWII. Authorities in China are acutely sensitive to the existence of
centrifugal forces and place a great deal of importance on social stability. A
strong Chinese state is more likely to deliver prosperity to its people than a
set of separate political entities. We might suggest that any criminal activity
within China that weakens the state, or the economy of that country, is
and New Zealand Journal of Criminology, vol. 8, no. 2 (1975), p. 117.
44
McFarlane, ‘Corruption and the Financial Sector: The Strategic Impact,’ note 20.
Security Challenges
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potentially harmful to Australia’s national security. Let us return to our
dimensions of national security and explore how they may be adversely
impacted by crime.
ECONOMY
Street crime can discourage economic activity at a micro-level. It can make
the difference between profit and loss for a small business. It can contribute
to the death of neighbourhoods. At the extreme, it can chill economic activity
across an entire city or country. One need only look to Port Moresby for an
example.45 White collar crime may be no less harmful. Markets that are
seen to be rigged will not attract investors. Small investors may shy away
from the stock market because they see it as the playground of insider
traders; others may be deterred by their perception of corporate high flyers
as looters of shareholders’ money. To the extent that a major institution of
the economy is seen as tainted, the economy will suffer. Some years ago,
the government of Albania fell after a significant proportion of the citizenry
fell victim to a Ponzi scheme46 and as a result lost their life savings. More
generally, endemic tax evasion may make it more difficult for the government
to afford both guns and butter. So too when a corrupt head of state and
other members of a corrupt national elite divert hundreds of millions of
dollars to personal bank accounts offshore.47
Australia incurs opportunity costs as a result of crime. While not all of these
represent dead-weight loss (those of us who are paid to study crime do not
regard ourselves as economic burdens), a great deal of Australia’s wealth
could be more productively spent on enhancing Australia’s national interest
and infrastructure.
The most rigorous analysis of the cost of crime in Australia has been
prepared by the AIC. A report released in 2003 found that crime costs
Australia $19 billion while the costs in dealing with crime cost close to
another $13 billion. This is nearly $1,600 per person in Australia and 5 per
cent of GDP. It is also twice the nation’s annual defence budget.48
45
S. Dinnen, ‘Law and Order in a Weak State: Crime and Politics in Papua New Guinea,’ Pacific
Islands Monograph Series, no. 17, Honolulu, Center for Pacific Islands Studies, University of
Hawaii Press, 2000.
46
Charles Ponzi was a North American swindler of the 1920s who promised investors
spectacular and rapid returns. His basic strategy was a pyramid scheme wherein the funds of
more recent investors were used to repay earlier investors. Such a scheme was inherently
unsustainable, with later stage investors usually losing their investment. The name Ponzi is
used today as a generic term for this type of fraud.
47
The recovery iof moneys diverted by corrupt elites is one of the key objectives of the United
Nations Convention Against Corruption, 2003.
48
P. Mayhew, ‘Counting the Costs of Crime in Australia’, Trends and Issues in Crime and
Criminal Justice, no. 247, Canberra, Australian Institute of Criminology, 2003; P. Mayhew,
‘Counting the Costs of Crime in Australia: Technical Report,’ Technical and Background Paper,
no. 4, Canberra, Australian Institute of Criminology, 2003.
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Table 1: Total Costs of Crime
Costs in dealing with crime $ million
Criminal justice system 6,400
Private security industry 3,140
Household precautions 1,830
Provision for victims 880
Insurance administrative costs 500
Sub-total 12,750
Crime costs
Property loss 4,070
Medical costs 250
Lost output 2,180
Intangible losses 3,320
Arson 1,350
Drugs (not elsewhere included) 1,960
Fraud 5,880
Sub-total 19,030
Total 31,780
Note: Figures may not sum to total due to rounding. Source: P. Mayhew, ‘Counting the Costs of
Crime in Australia’, Trends and Issues in Crime and Criminal Justice, no. 247, Canberra:
Australian Institute of Criminology, 2003.
HEALTH
Crime is hazardous to one’s health. The health effects (and economic costs)
of legal drugs are bad enough. Illicit drugs pose great risk to the mental
health of users. In addition they pose the risk of infectious disease. It goes
without saying that an unhealthy society, all else equal, is less able to defend
itself. The prevalence of HIV/AIDS in many developing nations has had a
devastating impact socially and economically. The costs of treating
HIV/AIDS can exhaust a poor nation’s health budget. To the extent that a
significant proportion of persons of military age are infected, this too can
detract from military preparedness. An assessment in 1999 found that 50%
of South African soldiers between 23 and 29 years were HIV positive.49
Australia’s major health burdens arise from abuse of tobacco and alcohol,
and to a lesser extent, from the abuse of illicit drugs. These costs are
significant; money spent on repairing damage arising from unfortunate
lifestyle choices could otherwise be available for more productive national
investments.
49
L. Heinecken, ‘Strategic implications of HIV/AIDS in South Africa’, Conflict, Security and
Development, vol. 1, no. 1 (2001), pp.109-115.
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EDUCATION
When young people conclude that they can earn a better living through
crime than through a legitimate vocation, they may be less inclined to finish
their education. Poor educational performance is itself a risk factor for crime.
Schools can play an important role, not only in improving cognitive skills in
children at risk, but also in fostering social control and social competency.
Schools can also help to mitigate the social and economic disadvantage that
contribute to delinquency.50 Today’s weapons systems are of such
complexity that they require educated people to operate them. Education is
also essential to economic productivity.
SOCIAL WELFARE
The effects of crime may be regressively redistributive. Crime tends to bear
most harshly on those least able to pay. Homeless people, for example, are
disproportionately at risk of victimization from street crime.51 The ability of
governments to provide a basic safety net for all becomes more difficult
through crime. The days when hordes of unemployed could be conscripted
and sent off to fight foreign wars are gone. Poverty impedes productivity,
and contributes to social dislocation. Deprived minorities may see no
alternative to crime as a strategy for survival.
SOCIAL COHESION
A divided society is a vulnerable society. Australia’s cosmopolitan,
multicultural society is at risk of division and conflict. Such division can arise
from a variety of stresses, of which crime is certainly one. While most crime
tends to occur between people of common background, those crimes that
occur across racial or ethnic lines pose particular risks of deepening social
divisions. For expressive as well as instrumental reasons, Australia has
enacted legislation criminalizing incitement to racial hatred, and racially
motivated violence.52
In Australia’s multicultural society, a degree of inter-ethnic crime is
inevitable. But xenophobic crime is neither systematic nor widespread.
Sexual assaults committed by males of Middle Eastern background against
victims of European ancestry have not gone unnoticed, but have not
threatened the social fabric.53 Imprisoned Australians from minority racial or
50
D. Farrington and B. Welsh, Saving Children from a Life of Crime, New York, Oxford
University Press, 2007; M. Klein and C. Maxson, Street Gang Patterns and Policies, New York,
Oxford University Press, 2006.
51
C. Schreck, ‘Danger on the Streets: Marginality and Victimization Among Homeless People,’
American Behavioral Scientist, vol. 48, no. 8 (2005), pp. 1055-1081.
52
Racial Hatred Act 1995 (Cth); Anti-Discrimination Act 1977 (NSW) s 20C(2); Wrongs Act 1936
(SA) s 37(1); Discrimination Act 1991 (ACT) s 66(2); Anti-Discrimination Act 1991 (Qld) s
124A(2); Racial and Religious Tolerance Act 2001 (Vic) s 11; Anti-Discrimination Act 1998 (Tas)
s 55.
53
K.Warner, ‘Gang Rape in Sydney: Crime, the Media, Politics, Race and Sentencing’,
Australian & New Zealand Journal of Criminology, vol. 37, no. 3 (2004), pp. 344-361.
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ethnic groups may also be vulnerable to radicalization whilst in prison. The
possibilities of prisons serving as a school for terrorists require that
considerable care be taken in the management of correctional facilities.
INTERPERSONAL TRUST
Trust is not only the foundation of commerce, but it is the cement of a
civilized society. Almost by definition, crime involves a violation of trust.54 A
society whose citizens are always looking over their shoulders at one
another may be less likely to join together in the common defence AND
citizens who defraud their government can weaken the capacity of their
country to defend itself.
The essence of fraud, in any of its manifestations, is the betrayal of trust. An
economy where violations of trust are common will be a weaker economy,
because mistrust per se may have a chilling effect on commerce; people will
forego risky transactions. The future of electronic commerce, and the
economy on which it is based, depends significantly on interpersonal trust.
Various means of safeguard and verification will themselves entail expense,
which will add to the cost of a transaction.
ENVIRONMENTAL QUALITY
While environmental quality was subordinate to economic development in
the century following the industrial revolution, the importance of
environmental protection is receiving increasing attention today. Activities
that are harmful to the environment are becoming criminalized, and as
environmental damage intensifies, environmental crime may be expected to
receive increasing attention. Meanwhile, the impact of environmental
damage on national security is becoming more apparent. Drought-affected
nations of sub-Saharan Africa are unable to sustain their populations.55
Fisheries around the world have been depleted as a result of overfishing.56
Australia’s chronic shortage of water and soil degradation have had an
adverse impact on the economy, but not to the extent that national security is
in jeopardy. The long term effects of climate change are, however, another
matter.57
54
S. Shapiro, ‘The Social Control of Impersonal Trust’, American Journal of Sociology, vol. 93,
no. 3 (November 1987), pp. 623-658.
55
H. Menghestab, ‘Weather patterns, food security and humanitarian response in sub-Saharan
Africa’, Philosophical Transactions of the Royal Society B: Biological Sciences, vol. 360, no.
1463 (2005), pp. 2169-2182.
56
D. Pauly, R. Watson, and J. Alder, ‘Global trends in world fisheries: impacts on marine
ecosystems and food security’, Philosophical Transactions of the Royal Society B: Biological
Sciences, vol. 360, no. 1453 (2005), pp. 5–12.
57
A. Dupont, ‘Heating Up The Planet: Climate Change and Security,’ Lowy Institute Paper, no.
12, Sydney, Lowy Institute, 2006.
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PUBLIC SECTOR INTEGRITY
Bribery and corruption invite imitation. Ultimately what is at state is the
legitimacy of government itself. Kleptocracy is an unsustainable form of
government. Endemic corruption has often preceded the collapse of
governments, indeed even states. At the very least, individuals are less
likely to go the extra mile in the defence of their country when they perceive
its leadership to be corrupt. Fortunately, Australian elected officials and
public servants are relatively honest by world standards.58
Crime and Terrorism
To many commentators, today’s most explicit threat to Australia’s national
security is terrorism. While there are those who see terrorism and crime as
distinct and unrelated, the connections are undeniable.59
For example, most if not all behaviour defined as terrorism will constitute
some breach of criminal law. In addition, criminal activity may be a predicate
to terrorism. Terrorists may obtain false identification obtain explosives or
other destructive substantives, or may engage in criminal activity to fund
terrorist operations. In Peru the Sendero Luminoso enaged in “protection” of
the drug trade to support their operations.60 The Nicaraguan Contras
generated revenue from drug trafficking.61 In 2005, IRA elements were
involved in a significant bank robbery in Northern Ireland.62 Tamara
Makarenko speaks of a “crime-terror continuum” in which the two forms of
activity have begun to share common organizational features, and to learn
from each other.63
Terrorists may also engage the services of organized criminal for particular
ends, such as the acquisition of high technology tracking equipment. The
use of defence forces to respond to certain forms of criminal activity is not
without precedent. For centuries, naval forces have sought to combat
maritime piracy. In the United States beginning in the Reagan
administration, naval and air forces became actively involved in tracking and
interdicting drug traffic on the high seas.64 Australian maritime constabulary
58
Transparency International, Corruption Perceptions Index, 2006
org/policy_research/surveys_indices/cpi/2006> [Accessed 2 March 2007]. However, the recent
revelations, such as the Australian Wheat Board scandal, cast doubt on whether Australia will
retain its high ranking in the TI Corruption Perceptions Index
59
John T. Picarelli, ‘The Turbulent Nexus of Transnational Organised Crime and Terrorism: A
theory of malevolent international relations’, Global Crime, vol. 7, no. 1 (February 2006), pp. 1-
24. See also Makarenko, op. cit., footnote 22.
60
C. McClintock, Revolutionary Movements in Latin America: El Salvador’s FMLN and Peru’s
Shining Path, Washington D.C., United States Institute of Peace Press, 1998, p. 341.
61
P. Scott and J.Marshall, Cocaine Politics: Drugs, Armies, and the CIA in Central America,
Berkeley, University of California Press, 1991.
62
E. O’Malley and M. Marsh, ‘Ireland’, European Journal of Political Research, vol. 45, nos. 7-8
(2006), pp. 1132–1134.
63
Makarenko, op. cit.
64
P. Andreas and E. Nadelmann, Policing the Globe: Criminalization and Crime Control in
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operations are sufficiently common that some strategists have expressed
concern that they detract from the capacity for war fighting.65
The relationship between terrorism and organized crime was noted most
recently in the Wheeler Review of Australian Airport Security.66 The Review
suggested that criminals may assist in the provision of weapons, identity
documents, or places of refuge for terrorists.67 It also suggested that
criminal activity in and around airports can be helpful in identifying security
weaknesses that might be exploitable by terrorists.
Conclusions
The world is becoming an increasingly interdependent place. Those
societies who ignore this do so at their peril. By contrast, those who
recognize this and plan for and adapt to a smaller world are likely to benefit
most and suffer least.
Crime is undeniably linked to Australian national security, and the potential
for crime to undermine Australia’s national security is certainly real. But
because of its healthy economy, cohesive society and stable political
system, contemporary Australia is sufficiently robust to withstand an
extensive array of criminal insults, whether home grown, transnational, or
offshore. By contrast, states like Papua New Guinea, the Solomon Islands
and Colombia are demonstrably insecure, in no small part because of crime.
And their security problems have become our security problems. Institutions
traditionally concerned only with crime, and those focused only on security
not only have a lot to learn from each other, but they will from now on find
themselves working together.
The global criminal environment is complex and fluid, with transnational
crime groups active at local, national and international levels. This requires
innovative and adaptable measures to address the criminal challenges
present in diverse geographical regions. For this reason, the AFP has a
range of international networks in place with other agencies, as well as AFP
International Liaison Officers located strategically around the world. There
are currently 87 officers at 33 posts in 27 countries. This represents one of
International Relations, New York, Oxford University Press, 2006.
65
K. Hussain, ‘Constabulary Operations’, and N. Tate, ‘Australian Constabulary Operations’,
both in G. Kerr (ed.), Papers in Australian Maritime Affairs, no. 14, Canberra: Sea Power
Centre, 2005, pp. 35-44 and pp. 45-58, respectively.
66
J. Wheeler, An Independent Review of Airport Security and Policing for the Government of
Australia, 2005,
[Accessed 23 September 2005].
67
Ibid, p.9.
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the largest international police liaison networks and is one of the largest
Australian Government agency networks overseas.68
In February 2004, the AFP International Deployment Group (IDG) was
established “to manage the deployment of Australian police overseas”
undertaking capacity building or peace operations.69 On 25 August 2006,
the government authorised the increase of IDG staffing levels to 1,200
personnel, over a period of five years. Included in that number will be a 200-
strong Operational Response Group (ORG) that is ready to respond at short
notice to emerging international law and order issues and stabilisation
operations. It will contribute to regional stability and security on behalf of the
Government of Australia by:
• Contributing to offshore law enforcement initiatives;
• Participating in capacity development programs within the Law and
Justice Sector.70
This will provide a Formed Police Unit71 capacity to the IDG not dissimilar to
that of the Italian Carabiniere, the French CRS [Republican Security
Companies] and the Portuguese GNR [Portuguese National Guard],
although each of these organisations are paramilitary rather than
conventional police.72
In its contribution to the Senate Standing Committee on Foreign Affairs,
Defence and Trade Inquiry into Australia’s Involvement in Peacekeeping
Operations, the AFP stated:
Partner relationships in law enforcement capacity building will increase and
demand greater coordination with AusAID. The secondment of AFP officers
to AusAID’s Fragile States Unit and the Office of Development Effectiveness
builds on the cooperative efforts both organisations enjoy.
68
Australian Federal Police, International Liaison,
[Accessed 22 April 2007].
69
In March 2007, the IDG had some 350 officers serving overseas in Cyprus, Solomon Islands,
Sudan, Timor Leste, Nauru, Tonga, Vanuatu, Cambodia and Afghanistan. Of this number,
about 100 members have been seconded from Victoria, South Australia, Tasmania,
Queensland, Northern Territory and Western Australia Police, and from thirteen Pacific Island
Nations.
70
Australian Federal Police, International Deployment Group (IDG) Fact File: Capacity Building
and Peace Operations,
IDG_Fact_File_27_March_07.pdf> [Accessed 22 April 2007].
71
Formed Police Units are a new innovation in United Nations police peace operations. They
specialise in dealing with civil disturbances and are normally the only armed UNPOL units.
Each unit numbers between 100 to 150 officers drawn from individual contributing countries.
AFP Briefing, 25 October 2007
72
A detachment of the Portuguese GNR is currently deployed in Timor Leste as part of the
United Nations Civilian Police (UNPOL) Formed Police Unit. There are also 50 AFP officers
attached to UNPOL, and an additional ten involved with a bilateral capacity development project
known as the Timor Leste Police Development Program (TLPDP).
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Joint operations with the Australian Defence Force as part of national
offshore crisis response will become more frequent and increased
interoperability will be necessary. Progression toward this objective will
partly be achieved this year with the embedding of AFP officers in Joint
Operations Command and the Australian Defence Force Warfare Centre,
and the meeting of mutually agreed milestones as expressed in the
interoperability joint Terms of Reference signed in November 2006.73
The IDG is at the leading edge of police preparation, planning and
operational capacity. It will continue to engage regional and global partners
to share experience and development of approaches to police capacity
building, interagency coordination and deployment.74
In recent years, the AFP has become an indispensable player in the
Australian Government’s “whole of government” approach to foreign
relations, overseas aid, border security, counter-terrorism policy and law
enforcement initiatives. It has also been a trend setter in relation to police
peace operations overseas, as envisaged in Recommendation 10 (Civilian
Police Personnel) of the Report of the Panel on United Nations Peace
Operations (Brahimi Report), of 21 August 2000.75 However, this also
means that the IDG has become an instrument of Government policy, rather
than a conventional element of the AFP, which is accountable to the courts,
under the law.
At the same time, the role of Australian Defence Forces is also becoming
more diverse. Over the past century we have seen disaster relief,
humanitarian assistance and peacekeeping replace trench warfare as core
defence business. Further evolution in the nature of both police and defence
institutions may be expected in the years ahead.
Peter Grabosky is a Professor in The Regulatory Institutions Network, Research School of
Pacific and Asian Studies, Australian National University. peter.grabosky@anu.edu.au.
John McFarlane is a Visiting Fellow in the School of Humanities and Social Sciences at the
University of New South Wales at the Australian Defence Force Academy. He lectures on
transnational crime, intelligence and security issues, corruption, police peace operations, and
related topics at ADFA, the ANU, Macquarie University, Victoria University of Wellington and
73
The AFP and Australian Defence Force are increasingly working together in peace operations
in the region. In the Solomon Islands, the Regional Assistance Mission to the Solomon Islands
(RAMSI) is a regional police-led operation with military support. In Timor Leste, due to the
current political situation, the military have primacy, with UNPOL in support.
74
Australian Federal Police, The Australian Federal Police Submission to the Senate Standing
Committee on Foreign Affairs, Defence and Trade Inquiry into Australia’s Involvement in
Peacekeeping Operations,
Peacekeeping%20Workshop/FW:%20Peacekeeping%20submission%20[SEC=UNCLASSIFIED
].EML/MAR%20-%20Senate%20Inquiry%20into%20peacekeeping%20-%20Submission
%20doc%20-%2029%20Mar.doc/C58EA28C-18C0-4a97-9AF2-036E93DDAFB3/MAR%20-
%20Senate%20Inquiry%20into%20peacekeeping%20-%20Submission%20doc%20-
%2029%20Mar.doc?attach=1> [Accessed 22 April 2007].
75
United Nations, Report of the Panel on United Nations Peace Operations, 21 August 2000,
Security Challenges
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several Defence establishments. He is a former Director of Intelligence in the Australian
Federal Police. j.mcfarlane@adfa.edu.au.
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