Peter L. Berger's Blog, page 563

US Destroyer Sails into 12-Mile Zone

As promised, a U.S. destroyer sailed within 12 miles of China’s artificial outposts in the South China Sea yesterday. Beijing, unsurprisingly, wasn’t thrilled, according to Reuters:

“China strongly urges the U.S. side to conscientiously handle China’s serious representations, immediately correct its mistake and not take any dangerous or provocative acts that threat China’s sovereignty and security interests,” the ministry said in a statement on its website.

Beijing says it followed the ship closely and, today, summoned the American ambassador in protest.

But that was all. China has every incentive to be patient: unlike a waning power such as Russia, China has the strength and staying power to play the long game. (General Karl W. Eikenberry described how the game works, and the players strengths and weaknesses, in our July/August issue of this year.) Of course, China’s ambition is a good reason for the United States to establish a precedent early. Eventually, Beijing may feel it can get away with a tougher response.

Smart Green Calls Out EU’s Anti-GMO Hypocrisy

When the European Commission outlined an “opt-out” process for members wary of genetically modified crops this spring, it hoped to craft a compromise between the Luddite environmentalists who oppose these GMOs and the farmers and scientists who again and again have come out in support of them. The idea was simple: at the central level, scientists would determine if specific GM crops were safe for human consumption, and if a crop in question passed those tests, then EU nations could decide whether or not they would permit its cultivation. Since then, the number of countries “opting out” of safe GM crops has ballooned, and that has Mark Lynas questioning Europe’s credibility ahead of this December’s landmark climate summit in Paris. He writes for the New York Times:

In effect, the Continent is shutting up shop for an entire field of human scientific and technological endeavor. This is analogous to America’s declaring an automobile boycott in 1910, or Europe’s prohibiting the printing press in the 15th century. […]

This decision of a majority of European countries to apparently ignore their own experts may undermine any claim to the moral high ground at the coming Paris talks on climate change. The worldwide scientific consensus on the safety of genetic engineering is as solid as that which underpins human-caused global warming. Yet this inconvenient truth on G.M.O.s — that they’re as safe as conventionally cultivated food — is ignored when ideological interests are threatened.

It’s hard to overstate how refreshing it is to see this sort of thinking on display outside our own corner of the internet. Mark Lynas once helped lead the environmental movement’s opposition to GMOs, but has since reversed course and become one of the technology’s most vocal champions. As he put it, “[a]fter writing two books on the science of climate change, I decided I could no longer continue taking a pro-science position on global warming and an anti-science position on G.M.O.s.” Truer words…

Modern greens are still irrationally biased against the extraordinary potential of genetically modified foods, which has a special kind of irony when you consider these advanced crops—with their drought and pest resistance and higher yields—are uniquely suited to solve the kinds of problems climate change and a more crowded world pose, according to those same environmentalists. It seems greens are more willing to diagnose the ailment than they are to prescribe the cure.On a related note, we would much rather spend our time praising smart green thinking like Lynas’s than criticizing the foolhardiness of eco-hypocrisy or the short-sighted image-first policymaking so prominently on display in Europe. Sadly, these chances come few and far between.

Letter from Montenegro: Organized Crime’s State of Play

In the modern film remake of Ian Fleming’s Casino Royale, James Bond gets involved in a battle of bluff and deception at a glamorous hotel casino. Pitted in a game of cards against the villainous Le Chiffre, Bond is flanked by several equally intriguing competitors. Luxury cars and sharply dressed security chaps stand guard outside.

The script reads straight from the original. However, while Fleming’s 1953 novel takes place on the French coast, the 2006 film sets the scene in Montenegro.To Balkan moviegoers, the film’s setting felt natural. But the new global association of this Adriatic jewel with intrigue and espionage, with murky businessmen and the international jet set, reveals that Montenegro has truly arrived—albeit in ways not entirely flattering.Since the 1990s, Montenegro has been known for high-level corruption and an organized crime sector disproportionate to the country’s size and population of 650,000. While Montenegro’s stunning mountains and sparkling sea have driven a tourism boom, the crime-and-corruption stigma remains. In February, the European Commission’s country expert, Dirk Lange, reiterated concerns expressed in Montenegro’s latest candidate progress report. “Progress that is visible in reality is what is credible,” said Lange, noting that the government had avoided implementing regulations. “Such progress is needed especially in the area of fighting corruption and crime.”Montenegro’s parliamentary committee for security matters dutifully convened, with senior prosecutors, police and intelligence officials; this came after “a series of criminal showdowns, unsolved murders and car bombs.” In June, authorities announced a new special prosecutor’s office for organized crime and corruption, pledging to investigate even high-level politicians.Indeed, on August 13, police arrested the Mayor of the resort town of Budva, Lazar Rađenović, his predecessor, and seven others, for various financial indiscretions. However, while some saw new vigor behind these arrests, “others say all that is occurring is a settling of scores within the strongest party,” one report noted.This bloc, the Democratic Party of Socialists, has long been led by Milo Đukanović. Tall, clever and charismatic, Đukanović has run Montenegro as President or Premier during most of the past 24 years. For outlasting all other post-Yugoslav leaders, Đukanović was crowned “the smartest man in the Balkans” by Radio Free Europe in 2008. However, RFE also noted that “charges of nepotism and shady links to tycoons continue to dog him.”These charges involve Đukanović’s alleged role in Montenegro’s legendary 1990s contraband cigarette traffic. He has defended the former state-run trade as legal and necessary, at a time when Montenegro and Serbia (Yugoslavia’s final members) were afflicted by international sanctions. With high unemployment, bleak prospects, and volatile neighbors, the cigarette trade helped preserve stability, defenders claim.This argument might be more credible if the trade had been conducted transparently, and if proceeds had reached the average Montenegrin. Neither of these things happened. Instead, the highly sophisticated traffic was organized top-down by Serbian and Montenegrin officials, aided by middlemen, Swiss banks, and Italy-based secret agents.In the early 1990s, Italy’s Anti-Mafia Police were investigating links between Camorra leaders and their kin in America; these links soon led back to Montenegro, too. Rumblings in 2001 erupted in July 2003, when Neapolitan prosecutors released their 354-page report; it included “transcripts of bugged telephone conversations between Mr Djukanovic and Italian mafia figures.”Italian police wanted Montenegro’s leader extradited. However, the judge denied this, citing Đukanović’s diplomatic immunity. The applicability of this status was debated for years, until charges were dropped in 2009.For the Camorra and other Italian crime groups, Montenegro was the solution to a simple problem: how to avoid paying onerous EU taxes on imported American cigarettes. The Croatian newspaper Nacional followed the case closely from 2001 (founder Ivo Pukanić would be assassinated in Zagreb in 2008, allegedly by the tobacco mafia). Vindicating Nacional’s investigations, Naples police found that mafiosi and their U.S.-based kin purchased tons of cigarettes from American producers and routed them by ship to Montenegro, via Dutch and Slovenian ports. Then, from Bar on Montenegro’s coast, speedboats regularly served Bari, across the Adriatic in Apulia. Resold untaxed on the black market, the cigarettes brought huge profits.Special firms like Montenegro Tabak Trade (MTT) and Zetatrans handled logistics and accounting: For their trouble, the Montenegrins were paid through Swiss bank accounts. In 2003, Goran Stanjević, a former government insider recalled that “the Italians paid the Montenegrins about $63 for each crate of cigarettes. Only $30 ended up in the Zetatrans account and was later transferred to the state budget. The rest ended up in private accounts.”Montenegro had exported up to one billion cigarettes monthly in this way, the Bari prosecutor’s office reported in 2009 during its investigation of the Sacra Corona Unita, Apulia’s crime family (“The Montenegro Connection: Love, Tobacco, and the Mafia”). This represented an extra $700 million annually for Montenegrin interests; though the trade eventually declined due to international police scrutiny and outside competition, it meant a rapid and substantial accumulation of wealth by the elite—even as ordinary people suffered from a breakdown of social services, unemployment and general uncertainty of “transition” existence. Emigration to Western Europe intensified.Montenegro was still languishing comfortably in its post-transition torpor when I first visited Budva in summer 2003. Since then, this popular and historic resort town, set beneath arid cliffs on the central coast, has seen intense (and controversial) development. In 2003, however, Budva was still Yugoslav enough—$10 would get you a decent private room near the beach, and the food was cheap too. A certain local indifference to labor, which manifested in the sluggish café service, seemed to confirm an old Montenegrin witticism: “We’re not lazy, we just like to do things slowly.”While the built-up Budva of today certainly looks different, the influx of foreign investment since 2003 has not resulted in any wider distribution of wealth. But this isn’t really a surprise. The constancy of central political and economic control, in fact, has increased existing Balkan apathy and fatalism.A symbol of Montenegro’s tightly controlled and crime-related wealth shimmers in the sea, visible from Budva’s medieval ramparts. Sveti Nikola, a half-mile south, is a pine-crested, rocky island with popular beaches. Back in 2003, I swam there from Budva’s shores. Nothing much was happening. Ten years later, however, Italian police found something much more interesting there than lounging swimmers. The island’s marina was allegedly central command for a reborn cigarette smuggling enterprise—once again, with Italian mobsters.Investigative journalists explored linkages between the island’s ship repair company and traffickers, possibly associated with Stanko Subotić, the Serbian businessman who owned Sveti Nikola from 2007 through 2010. The boat repair company was founded soon after this longtime Đukanović ally purchased the island, where Italian police believe smugglers handled logistics and communications. When in 2013 a journalist asked island beach bar staff how to obtain permission to open a café there, “they gave her the cell phone number of Djukanovic’s head of security.”Like Đukanović, Subotić was also accused of transition-era cigarette smuggling, in Serbia especially. Today, his international business empire operates from Geneva. Subotić has claimed his critics are either business rivals or anti-Montenegro ideologues.When purchasing Sveti Nikola, Subotić announced plans for a luxury hotel. The coastal property rush was on, and everyone wanted a slice. Instead, the global financial crisis hit, forcing Subotić into loan default. (An unknown British Virgin Islands-registered company bought his island). The loan had come from Montenegro’s Prva Banka (First Bank), controlled by the Prime Minister’s brother, Aco Đukanović.Prva Banka is a veritable institution; it is the modern incarnation of Montenegro’s oldest financial establishment, Nikšićka Banka, founded in 1901. In November 2006, the Đukanović clan gained control of it, and cumulative deposits soon jumped from €23 million to €127 million, alarming Central Bank regulators; according to one investigation, “the bank’s explosive growth and ties to a number of the country’s biggest projects made failure a dangerous possibility with implications that could undermine the whole banking sector.”1These fears were realized in 2008, when Prva Banka received an emergency government bailout. It had given too many unsecured, long-term repayable loans to political cronies and dubious businesses. Property developers halted work as liquidity shrank. Heated government negotiations with the Central Bank featured legislative trickery and stopgap measures. The critical chief regulator was fired.The damage was so extensive that Prva Banka only survived thanks to the hasty privatization of state electric company, Elektroprivreda Crne Gore (EPCG), which was partially sold to Italy’s A2A. The privatization infused Prva Banka with a fresh €100 million in October 2009, according to investigators, following “frenzied negotiations” between Đukanović and Italy’s Silvio Berlusconi. The flamboyant Berlusconi doubtless enjoyed playing the role of Godfather. (A generally reliable intelligence source claims that the €100 million actually came from the Russians, to increase Moscow’s Adriatic influence). By November 2011, EPCG owned 18 percent of Prva Banka.Prva Banka’s loan-making misadventures tell only part of the criminal money-laundering story, however. Another bank client, native Montenegrin Darko Šarić, was imprisoned for twenty years in Serbia on July 13, 2015—Montenegro’s Statehood Day, commemorating the Great Powers’ 1878 recognition of Montenegrin independence.Šarić had been accused by Serbia and the United States of running an international narcotics trafficking network. According to the Financial Times, “the ring allegedly laundered more than €1bn of its narcotics profits in Serbia alone.” Drug profits were funneled through offshore companies and banks. The Šarić organization reportedly laundered millions through Prva Banka, helping keep it afloat during the perilous year of 2008. Investments from affiliated companies, also through the bank, included significant coastal real estate, hotels, and clubs.Skeptics have asked whether a businessman from Pljevlja, a coal-mining town in Montenegro’s mountain interior, could really be the kingpin of an international cartel, equivalent to a Bond villain. During the Šarić trial, for example, criminologist Dobrivoje Radovanović averred that the Transatlantic cocaine trade “could not be organized by Serbs from here, but only by Serbs from South and North America.” It required leaders who were “much better organized, and with international connections” than Darko Šarić. Balkan-based drug lords were dismissed as mere “dealers and distributors.”Since the 1930s, many thousands of Serbs, Montenegrins, and Croats have migrated to South America. Something extraordinary happened there in October 2009 that caused the fairly unknown Darko Šarić to vanish from Pljevlja: the seizure of 2.8 tons of cocaine, worth $170 million, from a yacht off the Uruguayan coast.The bust was the signature event of the DEA’s Operation Balkan Warrior, which involved historic cooperation between American law enforcement, Serbia’s intelligence agency (BIA), and partner agencies in other countries. The list of countries did not include Montenegro, which Serbia would depict as untrustworthy in this case. In November 2009, Argentine police captured 492 kilos of cocaine and arrested more accomplices. Arrests continued in early 2010, in South America and Europe. Montenegro was pressured to cooperate.Operation Balkan Warrior revealed that a powerful, highly organized, and discreet organization led by Serb, Montenegrin, and Croat traffickers had been shipping cocaine to European ports, via South Africa. Tight diaspora networks became trustworthy communications and logistics networks. And the same Italian mafia groups that had guided the 1990s trans-Adriatic cigarette trade had now facilitated their Balkan partners’ contact with Colombian cartels, creating a much more ambitious Transatlantic traffic.The Balkan crime bosses also watched Italian organized crime’s steady transformation, and learned from it. In the 1990s, the assassinations of prosecutors, witnesses and police had sparked public fury in Italy and brought unwanted attention to the mafia. Bosses reacted by lowering their profile and concentrating on more “legitimate” business activities. Their financial interests migrated north, to “proper” cities like Milan, where Balkan criminal groups were already long-established.Balkan bosses also adopted a friendlier style of organized crime, which still largely characterizes it. Indeed, until the Uruguay bust, Darko Šarić was practically unknown. A 2011 Croatian newspaper described the new crime bosses thus: “no alcohol, women or drugs. In no way do they attract attention. They greet you politely… investing in legal businesses, using subtle acts of blackmail, corrupting officials from the local to national levels—these are the methods developed by the new generation of criminals.”Similarly, referencing two infamous paramilitary criminals from the Yugoslav war era, Italian journalist Matteo Albertini adds that “the time of Arkan and Legija has passed: if we are looking for the prototype of the current mafia leaders in the Balkans, we should not seek warlords who built their fortunes conducting massacres and robbery during the conflict in Croatia, Bosnia and Kosovo.”Two contemporaneous international police operations, in 2009 and 2010, further clarified Balkan-Italian criminal cooperation. The first, “Operation Domino,” saw 83 arrested, including Savino Parisi, the Sacra Corona Unita boss. Milan was revealed as “the center of a joint venture between Parisi’s clan and the Serbo-Montenegrin ones … the ‘Balkan Holy Alliance’ administrates the routes along with Colombian narco-producers and provides Italian clans with drugs to be distributed on the territory.”The second investigation, “Operation Checkmate,” resulted in the February 2010 arrest of Duško Mićunović; his brother, Brano Mićunović, was considered Montenegro’s organized crime leader, active in Italy, Switzerland, and Sweden. Soon after, Montenegro also arrested Darko Šarić’s brother, Duško. However, the government had not seemed very enthusiastic; local media linked pressure for the arrests with the recent visit of Pietro Grasso, Italy’s Anti-Mafia chief prosecutor.On December 21, 2010, Milo Đukanović smoothly resigned. He had done so previously in October 2006, just months after securing independence, in a controversial referendum that barely met the threshold required for legitimacy. Đukanović’s second temporary retirement came just days after another landmark event: Montenegro’s attainment of official EU candidate status.It remains unknown whether Đukanović’s 2010 resignation was the price of candidacy; he himself denied this. The time was right for a change, he said, adding with (perhaps ironic) flair, “I want to ease back on the throttle in a more relaxing business environment.” He had said something similar the first time, in 2006.But something else had happened just before Đukanović’s 2010 resignation. The man who the DEA fingered as Darko Šarić’s main accomplice—another Pljevlja native, Goran Soković—was acquitted by Montenegrin authorities. There was not enough evidence against him, said the prosecutor, and Đukanović agreed. Serbian investigators, and the DEA, were not impressed.They also believed that Montenegrin authorities were sheltering, here or there, the man who had gone underground after the Uruguay bust: Darko Šarić. Only after the Serbian police and intelligence service had launched a massive worldwide manhunt was Šarić persuaded to surrender, in 2014. By then, Đukanović was two years into his fourth term as premier.Milo Đukanović’s durability has long intrigued observers. He has emerged from countless political, legal, and diplomatic battles victorious, vindicated, or at least intact. Yet while his continued political success would seem auspicious, only Đukanović himself may know the cost this success has had to himself, to the Montenegrin people, and to the national interest.Originally a Communist youth activist, Đukanović became a politician, allying himself closely with Serbia’s Slobodan Milošević. By 1996, however, the latter’s eventual downfall was becoming clear, and the savvy young Montenegrin gradually turned towards the pro-Montenegrin independence camp. Steering carefully between rival local and international interests, Đukanović emerged from NATO’s 1999 Kosovo intervention more pro-Western. The path towards independence—and, with it, new sources of money—seemed open. The gold rush had come.Around that time, gold tycoon Peter Munk got a hot tip from Belgrade. “The [Canadian] ambassador said Montenegro is going to be independent and was convinced it would become like Monaco,” Munk recalled in 2014. Despite lacking local experience, the elderly Canadian joined an A-Team of investors that included Lord Rothschild and Oleg Deripaska, the Russian metals magnate.Today, their grand vision has replaced a rusting naval base, at Tivat, near Kotor. The Porto Montenegro project, which has cost more than $300 million so far, is a superyacht marina replete with a golf course, pools, restaurants, nightclubs, and luxury living quarters.Although never fully occupied (Montenegro’s summer season lasts barely three months), Porto Montenegro is a political asset, not only a financial one: Its investors, and their friends on the international power-brokering super-yacht scene, can open some pretty formidable Rolodexes for a government once known merely for dinking around in speedboats with a few cigarettes.Porto Montenegro was fast-tracked after independence in 2006. Unlike many coastal property investments, it survived the financial crisis and Prva Banka’s near-collapse. Today, it has become the symbol of the “new Montenegro”—a country where the coast has been privatized wholesale, according to a quixotic, avaricious desire for luxury tourism.Nevertheless, however much projects like Porto Montenegro may horrify advocates of a sustainable and environmentally friendly tourism sector based on local ownership, there is simply too much money involved for serious dissent. Locals and visitors alike will have to get used to the spectacle of hulking vessels clogging up the gorgeous Bay of Kotor, blocking the sight of its enchanted fjords, belching diesel into the blue. And, by offering heavily discounted fuel for ships up to 200 meters in length, the government seems determined to turn Montenegro into a glorified gas station by the sea.It has not all been smooth sailing for politicians navigating the choppy waters of international affairs, however. The crime-and-corruption stigma has been exploited repeatedly by foreign interests seeking to exert influence. In this respect, organized crime has become a major state vulnerability.In 2004, while government helicopters were flying the likes of Peter Munk around to inspect properties, potential legal trouble still dogged Montenegro’s leader. That December, an Italian court ruled that, since Montenegro was not a sovereign state, Đukanović lacked diplomatic immunity in the tobacco smuggling case.Fortunately, Đukanović had picked the right lawyer. Pious and distinguished, Enrico Tuccillo had, ironically enough, started his legal career by successfully defending a Greek ship captain arrested for smuggling in the 1960s. Later, he represented the Church’s grievances in a case against provocative gay filmmaker Pier Paolo Pasolini, who would be brutally murdered in 1975 under murky circumstances. Tuccillo rose fast, befriending Vatican insiders and defending high-profile figures like Neapolitan Archbishop Cardinal Michele Giordano, who was exonerated of financial indiscretion charges in 2000.How Milo Đukanović first encountered one of Naples’ most powerful defense attorneys is unclear. What is clear, however, is that, despite the small size of its Catholic population, Montenegro is critical to the Vatican’s long-term interests in Southeastern Europe.2Many suspect that the establishment (in the 1990s) of a so-called “Montenegrin Orthodox Church” to rival the long-established Serbian one had the pope’s blessing. Set up by defrocked churchmen and suspected criminals, the MOC remains unrecognized by most Orthodox churches; a recent census, however, indicated that 30 percent of Orthodox Montenegrins support the MOC, which claims all Montenegro’s movable and immovable Orthodox objects for itself.A more formidable group with special claims on Montenegro’s religious heritage is the Sovereign Military Order of Malta, which originated in the Crusades. Today, it issues its own passports and keeps diplomatic relations with 105 countries (though not the United States). The Order’s elite membership gives it an outsized international influence, as Montenegrins know well.Foremost among the knights’ erstwhile treasures were three priceless relics: St. John the Baptist’s right hand, pieces of the True Cross, and a miraculous icon painted by the Apostle Luke himself. Later shuffled between various European courts, the relics eventually reached Serbia’s royal family. During World War II, the royals entrusted them to a Montenegrin monastery.Spying an opportunity, the latter-day knights requested Montenegrin leaders return the relics in the 1990s. While the government made vague promises, resistance from citizens, opposition parties, and the Serbian Orthodox Church has been fierce. Was the criminally compromised Milo Đukanović beholden to a secretive Catholic cabal—one which had also lobbied internationally for Montenegrin independence? No one could say. But after the successful referendum, Enrico Tuccillo—himself, a Malta knight—cheered that his client’s rightful diplomatic immunity had been restored.Despite the Catholic group’s assistance, the relics received national treasure status in 2012, a setback for the Order. Yet many suspect the knights will return to fight another day. After all, they never really left: Five years on, Đukanović’s chivalrous legal defender, Enrico Tuccillo, remains the Order’s official ambassador to Montenegro.“Montenegro is where it all began,” recounted Interpol’s William Labruyère in June 2015 in Budva. “We all remember Predrag Vujosevic from Cetinje who is believed to have led the gang.”The gang in question—the international jewel thieves known as the Pink Panthers—has become legendary for its elaborate disguises, tactical trickery, spectacular getaways, and armed jailbreaks.Nevertheless, while these daring exploits have captivated the world, the Panthers’ place in Montenegrin organized crime is often misunderstood. Indeed, their collective experience reveals the other side of criminality during the corrupt 1990s transition period—and how that era created a generation of have-nots who mastered types of crime not already monopolized by the elites.Labruyère’s comments came during the 2015 summit of Interpol’s special working group on the Panthers, established in 2007. This May was the first time Montenegro has hosted the summit, and local authorities were clearly excited by the dubious honor. The police chief stated that his force had “made a key contribution” to investigations of the Pink Panthers, who since 1999 have committed almost 400 robberies in 35 countries, stealing more than $500 million worth of diamonds and jewelry. Although Interpol is currently looking into approximately 800 international suspects, the gang started with a small core of Montenegrins and Serbs.The scale and audacity of the Pink Panthers’ heists (along with breathless media portrayals that tend to humiliate and irritate police) prompted Interpol to form the working group and create a centralized criminal database. With 200 arrests made since then, it seems police are gradually winning. In 2014 Spanish police arrested Borko Ilincic; he had been on INTERPOL’s wanted list since 2007’s spectacular Dubai jewelry heist, in which thieves rammed a stolen Audi through a shop window before escaping with the loot.A certain opacity regarding the Pink Panthers’ leadership, and even its existence remains; after each new arrest, triumphant police spokesmen invariably announce that another Pink Panther mastermind has been caught. Certainly, commanding the attention of detectives from Belgium, Hong Kong, Japan, Luxembourg, Monaco, and Switzerland (just some of Interpol’s police attendees in Budva) gives the Pink Panthers a certain cachet. But the reality is often more pedestrian than a myth that has been sustained by giddy media portrayals.Take the above-mentioned Predrag Vujošević. He left his hometown of Bijela after accidentally killing a motorist in a car crash. Fleeing to Italy, he fell in with a certain crowd. Vujošević became famous overnight in 2003, after a stunning jewel heist at Graffe’s on New Bond Street in London. One of the diamonds Vujošević helped lift was later discovered by police in a jar of face cream—a detail from the Peter Sellers movie that the British tabloids noted, when christening the thieves as the “Pink Panthers,” creating a Balkan crime legend.Vujošević was already wanted for similar jobs across Europe, and would be arrested later in France. But much remains unclear about the Pink Panthers and their rightful place in Montenegrin organized crime’s hall of fame.There is a vast literature on the Pink Panthers in the popular media.3 Beyond the human-interest dimension and more cinematic aspects, we can draw some conclusions. The group was originally small, composed mostly of Serbs and Montenegrins who had few economic prospects in a country damaged by hyperinflation, sanctions, all-pervasive corruption, and state-organized smuggling. Some had already turned to crime for survival, and many had military or technical backgrounds useful for the gang’s trademark precise and well-organized heists.Also crucial were the far-flung Balkan diasporas, which provided vital logistical assistance. Some insiders have claimed that Scandinavia is home turf for the top Serb and Montenegrin Panthers. However, others have stated that theirs is a decentralized, network-based organization, lacking any Mafia-style hierarchy.Indeed, while background leaders may select every high-end target, the painstaking tasks of surveillance, research, technical support, and execution are performed by small teams recruited specifically for each job. Serbia, Montenegro, and Kosovo offer R&R between heists.The Pink Panther organization is not only distinct from other Balkan crime groups in structural terms; fundamentally, it arose as a reaction to the existing political elite’s corruption and state mismanagement, which allowed few legitimate or independent ways to get ahead. Thus unlike the state-run smuggling rackets that dominated the 1990s, the Panthers were neither political nor institutionalized. Alienated from the ruling elite, they are also thus fair game for security forces in places like Montenegro; the Pink Panthers are “expendable” thieves, unlike their politically connected peers.There is another compelling aspect to the Pink Panthers phenomenon: its worldliness. As with antiquities smuggling and art theft, the contraband diamond trade exists at the nebulous convergence point where licit and illicit business becomes nearly indistinguishable. While the daring thieves get all the glory, they certainly don’t get all the money. Between them and the “client” is a shadow network that may include diamond cutters, discreet middlemen, and “legitimate” corporations.This is clearly a sensitive spot, one that police investigators do not want to touch; the New Yorker hit it squarely on the head in 2010 when it asked why investigations target Balkan locals, rather than those higher up the diversified criminal chain. An Interpol official called the question “shocking,” and denied that Interpol “paid any attention to the national origin of the people it pursues.”Montenegro aspires to join NATO at the alliance’s Warsaw summit in July 2016. Three months after that, it will hold parliamentary elections.If recent history is any guide, Milo Đukanović—bolstered by yet another international diplomatic victory—will easily win another term as Premier. And if history repeats itself he will also quietly resign soon thereafter—perhaps for good, though not necessarily for the better.It is indisputable that Montenegro’s politics, commerce, and some organized crime have been controlled, for more than two decades now, by a tiny elite. But Montenegro is also a tiny country, with a miniscule population, that has historically been clan-based, rebellious, and commercially “creative.” So while true believers in democratic transparency and the transformative power of NATO membership may be left disappointed, Montenegro will likely remain a fiefdom. But it is also most manageable that way.Indeed, it is ironic to note that Montenegro has been knocking loudly on Western doors for more than a decade now precisely because Western leaders enjoy considerable leverage, due to Montenegro’s crime and corruption stigma. Perhaps some things just come with the territory.1This comment, and subsequent account, comes from the Organized Crime and Corruption Reporting Project’s account of the Prva Banka affair, available here.2We have examined this in the context of contemporary regional religious trends, in an e-book available on Amazon Kindle ( The Vatican’s Challenges in the Balkans: Bolstering the Catholic Church in 2015 and Beyond ). For details, visit http://www.balkanalysis.com/vatican.3Probably the most insightful reportage is David Samuels’s New Yorker essay. Havana Marking’s 2013 documentary, Smash and Grab: The Story of the Pink Panthers is also informative.

Reuters: U.S. Destroyer to Challenge Beijing in South China Sea

Will they or won’t they? That’s been the question on everyone’s mind about whether the United States would sail ships within 12 miles of China’s artificial islands in the South China Sea. The White House has sent mixed signals for months. Now, Reuters reports, they’ve made a decision:

The U.S. Navy plans to send the USS Lassen destroyer within 12 nautical miles of artificial islands built by China in the South China Sea within 24 hours, the first of more regular challenges to China’s territorial claims, a U.S. defense official said on Monday.

The destroyer’s patrol would occur near Subi and Mischief reefs in the Spratly archipelago, features that were formerly submerged at high tide before China began a massive dredging project to turn them into islands in 2014.The ship would likely be accompanied by a U.S. Navy P-8A surveillance plane, and possibly P-3 surveillance plane, which have been conducting regular surveillance missions in the region, according to the official.The patrol will mark the most serious U.S. challenge yet to the 12-nautical-mile territorial limit China claims around the islands, and follows months of deliberation.

We haven’t heard this level of certainty before, but we’ve seen so much backtracking it’s almost impossible to know what’s actually going to happen. Don’t blame us when we say we’ll only believe it when we see it.

Airbus Chief: Germany Must Open Labor Markets to Help Immigrants

Now that the initial shock of the European refugee crisis has passed, some German leaders are thinking about what comes next. Open Europe reports:

In an op-ed for Süddeutsche Zeitung, Airbus CEO Tom Enders suggests that Germany should open its labour market to refugees to “better integrate” them. He is calling for exceptions to the minimum wage and more flexibility with regards to limited working contracts.

Good—integration will be needed in order for this experiment in large-scale immigration not to lead to serious social problems, and getting a job is key to integrating into any economy. This will be trickier than it looks though. As TAI Editor Adam Garfinkle has pointed out, Europeans talking excitedly about the high percentage of college degree holders among the refugees are almost certainly unaware of the (dismal) state of education in the Arab world: “Only a tiny percentage of these asylum seekers are well enough educated to hold down a middle-class enabling professional job in an economy like Germany’s.” German leaders may be in for something of a shock.

Furthermore, labor liberalization is likely to raise an even bigger question: if labor liberalization is good for Syrian refugees, why isn’t it good for jobless Europeans? German unemployment and labor participation rates are relatively healthy, if slightly behind the U.S., but as you move south to Italy or west to France, the bottom drops out: youth unemployment is at 40 and 25 percent respectively. Labor participation and overall unemployment are also troublesome. Since, as it’s widely acknowledged, Europe is increasingly being run on a German economic order, why shouldn’t the unemployed of Milan or Marseilles benefit from the same relief offered to the newcomers. (Dangerous thought: for that matter, if this relief is beneficial… why shouldn’t the whole system be reformed?)As Walter Russell Mead has written, the European immigration situation in many ways reflects the crises of two civilizations. And while the Arab crisis producing these refugees is more visible now, the problems in Europe are likely to become more apparent over time, as the strain of accommodating newcomers into a system that’s only barely keeping up now begins to tell. Europeans are going to have to think even more broadly than Enders—though he’s made a good start—to get through this one.

India Putting Down Roots in Contested Territory

Over fifty years ago, India and China fought a war over Arunachal Pradesh, a remote northeastern state now administered by India, though China still lays claim to the territory. About 1.4 million people live in the Himalayan region, a population India’s Prime Minister Narendra Modi hopes will grow substantially. According to Bloomberg, Modi is planning to invest billions of dollars on infrastructure in the region:

Prime Minister Narendra Modi’s government is finalizing blueprints for a $6 billion highway in Arunachal Pradesh, which is also claimed by China. Construction on the 2,000-kilometer (1,243-mile) road will start as early as 2018, Kiren Rijiju, minister of state for home affairs, said in an interview.

“If China is developing on their side of the territory, we should develop on our side,” Rijiju, a native of Arunachal Pradesh, said at his New Delhi residence on Saturday. “India has failed the people living along that border. We’re now taking very concrete steps in that direction.”

The chattering classes like to imagine that territorial disputes are a thing of our oh-so-backward past, yet land grabs and settlement-building are tools still employed by governments around the world. Many of today’s most consequential geopolitical questions are about who should control land and sea: the Spratlys, Crimea, the Senkaku/Diaoyu islands, the Arctic Sea—to name a few. It’s remarkable how easily Westerners can forget the many bloody wars Europe fought to create stable nation-states, and it’s foolish to assume the rest of the world will resolve its conflicts some other way.

Yet Another Obamacare Glitch

Has any major piece of federal legislation been this poorly conceived and drafted? The New York Times reports on new Obamacare glitch that will impact the most vulnerable Americans:

Tens of thousands of people with modest incomes are at risk of losing health insurance subsidies in January because they did not file income tax returns, federal officials and consumer advocates say.

Under federal rules, anyone who receives an insurance subsidy must file a tax return to verify that the person was eligible and received the proper amount of financial assistance based on household income. […]

In July, the Internal Revenue Service said 710,000 people who had received subsidies under the Affordable Care Act had not filed tax returns and had not requested more time to do so.

If those people do not return to the marketplace this fall, they may be automatically re-enrolled in the same or similar health plans at full price. And when they receive an invoice from the insurance company next year, they may be shocked to see that their subsidies have been cut to zero.

The Affordable Care Act is looking more like a clown car than an emergency rescue vehicle. While there is definitely some good in the law, and proponents were absolutely right to say that the U.S. health care system was in need of reform, the new system has never really worked—and the more the law is applied and phased in, the worse the problems are getting.

With even Democratic frontrunner Hillary Clinton now supporting repeal of a key provision (the Cadillac health care plan tax, which is an essential part of the payment mechanism but which threatens labor union bureaucracies), and Obamacare co-ops withering on the vine even as premiums rise and costs escalate, reform of the reform is now inevitable.The next president and the next congress won’t be so much celebrating a historic legacy as cleaning the stables. Obamacare is not the future of American health care, not so much because of the opposition of its enemies as because of the design flaws imposed on it by its friends.

UK ISP Customers Bank Accounts Emptied

A massive cyberattack on a major British Internet Service Provider has prompted millions of customers to threaten to cancel their accounts, The Times reports:

TalkTalk customers have had their bank accounts emptied after a huge cyberattack on the telecoms company, it was revealed last night.

Senior staff ignored a warning more than a year ago that online security was lacking, The Times has learnt.Police are investigating a ransom demand from someone claiming to be behind the “sustained and sophisticated” attack in which the personal details of millions of customers are feared to have been stolen. Islamist groups are among the suspects

Americans should be paying close attention. As WRM wrote in testimony delivered to the Senate Armed Services Committee last week,

Cyber conflict is a new arena of action, one in which non-state, quasi-state and state actors are all present. With almost every day bringing stories of utterly lamentable failures of American cyber security, it must be clearly said that the U.S. government has allowed itself to be made into a global laughingstock even as some of our most vital national security (and corporate and personal) information is captured by adversaries with, apparently, impunity.

One of a government’s chief responsibilities is to defend its citizens from attack, not just in physical arenas but in virtual ones. The internet creates opportunities for all sorts of asymmetrical warfare. America’s material military advantage isn’t enough to protect the free flow of information (although it could, one hopes, stop rumored Russian designs to cut vital undersea cables). China has grand plans to consolidate its cyber warfare units. What is Washington’s strategy? What is London’s?

Ready for American LNG Exports?

The first LNG cargoes could depart American shores in January, as Cheniere prepares to start shipping orders out of its Sabine Pass export terminal in Louisiana in just a matter of months. But as Reuters reports, burgeoning LNG supply and weak demand are weakening the profit motive for sending U.S. shale gas abroad:

[A]mple supplies, combined with slowing growth in China and falling demand in top importers Japan and South Korea, have cut prices and prompted a battle for market share…Spot LNG prices in Asia LNG-AS have tumbled by half from a year ago, narrowing the gap with U.S. benchmark prices. Tracking the plunge in energy prices, Cheniere’s shares are down by almost half from their peak in 2014. [,,,]

The current pricing structure is not a strong argument for building further LNG plants, [Cheniere CEO Charif Souki] said, with any projects needing at least $8 per million British thermal units (mmBtu) to sell to Europe and $9 per mmBtu to sell to Asia.

LNG isn’t cheap for producers. It involves chilling gas down to extremely low temperatures at expensive, purpose-built facilities, shipping that liquid product around the world, and then ultimately regassifying it. Together, those steps typically add around $5 per million BTU to the cost of the gas, so LNG prices need to be substantially greater than domestic U.S. prices to justify this form of gas exporting.

At the beginning of this year, Asian LNG was selling for $15 per million BTU, but that’s halved now down below $8 thanks to slowing demand and an increase in global supplies, especially those coming from Australia. Here in the states, natural gas is selling for less than $2.50 per million BTU, and if we do the back of the envelope math, that virtually erases the price imperative to go through the effort of selling off our gas glut in the form of LNG.This isn’t to say that natural gas prices domestically or abroad won’t go up in the future, but it does put a damper on what was once seen as a no-brainer. America will be sending off its first shipments of LNG next year, but the way the market looks other U.S. firms won’t be tripping over themselves to follow suit.

Saudi Arabia Raises Stakes in Shi’a Showdown

Sectarian tensions in Saudi Arabia may be about to get a whole lot worse. The Guardian reports:

Saudi Arabia’s supreme court has rejected an appeal against the death sentence passed earlier this year on on the Shia cleric Sheikh Nimr al-Nimr, who had called for pro-democracy demonstrations and whose arrest in 2012 sparked protests in which three people died.

Nimr’s brother Mohammed said the sentence had been upheld after hearings that took place without his lawyers or family members being given prior notice. His fate now rests with King Salman, who is empowered to issue a pardon.Nimr and six other Saudi Shias, including his nephew Ali, have been sentenced to death and then to have their bodies put on public display in the most severe penalty available to judges in the Sunni majority kingdom.

It’s hard to say from the outside what is happening here. One explanation is that the Saudis have decided to crack down with everything they have got in an effort to kill dissent and intimidate the Shi’a minority once and for all. Another is that King Salman now has a bargaining chip with Iran. If Iran comes forward with concessions Salman likes, the defendants can be spared. Otherwise, the hammer comes down.

Either way, it’s yet another sign of the severe stress under which the Saudi system is currently operating. Facing an Iran-Russia alliance in the region and a restive religious minority at home, the Saudis are looking hard at their options.And finally, it also looks as if this is yet another sign of lack of confidence in the United States. Secretary of State John Kerry’s visit, and another set of U.S. promises to work with the Saudis to build the “moderate opposition” to Assad don’t seem to have induced the Saudis to moderate their stance.There is not a single country in the Middle East where the U.S. retains as much influence as it had before the Arab Spring, or before President Obama began to signal his long retreat from the region. The result isn’t, as some might have hoped, a more peaceful Arab-Muslim world. From Saudi Arabia on down, it is as anti-American as ever, more torn by violence than ever, democracy is on the run almost everywhere, and human rights are held in even less regard.