198: David Luna, State-sponsored criminality in strategic competition

In this episode, Mariah Yager is interviewing David Luna and Jack Gaines as they discuss how adversaries use criminality to achieve their foreign policy goals while removing U.S. influence and capability. 

The interview is based on a presentation at SMA (Strategic Multilayer Assessment), an online Pentagon forum. Link to the show and resources: https://nsiteam.com/smaspeakerseries_22august2024/ 

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One CA is a product of the civil affairs association 

and brings in people who are current or former military, diplomats, development officers, and field agents to discuss their experiences on the ground with a partner nation's people and leadership.

We aim to inspire anyone interested in working in the "last three feet" of U.S. foreign relations. 

To contact the show, email us at CApodcasting@gmail.com 

or look us up on the Civil Affairs Association website at www civilaffairsassoc.org

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Special thanks to the Epidemic Blues channel for the sample of Peter Crosby - Jailhouse Blues. Retrieved from https://www.youtube.com/watch?v=zuyc-bIjQ10

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Transcript

00:00:06    Introduction
Welcome to the 1CA Podcast, a product of the Civil Affairs Association and brings in people who are current or former military, diplomats, development officers, and field agents to discuss their experiences on ground with the partner nation's people and leadership. Our goal is to inspire anyone interested in working the last three feet of foreign relations. To contact the show, email us at capodcasting at gmail .com or look us up on the Civil Affairs Association website. at www .civilaffairsassos .org. I'll have those in the show notes.

00:00:39    MARIAH YAGER
Hi, everyone. I'm Mariah Yeager, and welcome to today's guest, David Luna, the founder of International Coalition Against Illicit Economies. Prior to ICAIE, David Luna was the Senior Director for International Security and Diplomacy at the State Department's Bureau of International Narcotics and Law Enforcement. He focused on strengthening international cooperation and fighting threat to illicit networks. And David also helped launch the Organization for Economic Coordination and Development Task Force on Countering Illicit Trade. But with that, Mr. Luna, I'd like to hand the floor over to you.

00:01:11    DAVID LUNA
Thank you very much Mariah and Jack. It is great to be here to participate about the radar warfare in grey zones related to China and Russia, manipulating instability through co -option and coercive economics, including by weaponizing corruption. including election interference, as Secretary Blinken has underscored in recent months, elicit financial flows to support pro -authoritarian candidates that advance malign influence and that exploit governance gaps to secure friendly policies, while harming our U .S. national interests. This also includes the leveraging of criminal networks, proxies, and professional enablers. to advance policies to construct a multipolar world, exploiting grey zones in the process from small islands in the Asia -Pacific region to fragile democracies in Latin America, Africa, and Southeast Europe. The United States remains unprepared for irregular warfare. China, Iran, and Russia continue to seek to undercut U .S. influence. They degrade American relationships with key allies and partners. and to exploit the global environment to their advantage, including by exploiting instruments of competition, strategic corruption, blind influence operations, terrorism, sabotage, and subversion through asymmetrical and clandestine efforts. And so we can dictate the costs related to these hostile actions by effectively prosecuting the strategic use of corruption. and predatory criminality by adversaries across race zones to ensure that democracy reigns over authoritarianism. Greaterly the rule of law and international -based systems must outlive targeted chaos, abversion, and malign influence. I think that we must use such current and horizontal threats to repressive threat convergence so that we can develop actional responses to counter illegality. that is corroding the rule of law and interconnected with the threats networks. Through this framework, I firmly believe that we can better help DOD, the intelligence community, the interagency community, our combatant commanders, and our warfighters to understand the threat and to equip them with pragmatic resource sustain, irregular warfare tools, and anti -crime capabilities. The Department of Defense and our interagency partners to develop more dynamic NASA security military strategies and to get ahead of the game in planning for future irregular warfare campaigns, using these innovative capabilities to expand the competitive space to the U .S. advantage of their allies. A few months ago, I had the distinct pleasure of delivering the keynote address at a meeting hosted by the Department of Defense. Office for Special Operations, as well as the Cali Narcotics and Cali Transnational Organized Crime Program. At that time, I focused more on criminal networks, and I would like to expand on that discussion. I've been focusing more on the policy actions that I believe are needed and that must be integrated into greater warfare strategies. Last month, the Office of the Director for National Intelligence released a brief report. entitled Conflict and the Gray Zones, highlighting non -relations, will increasingly feature an array of hostile gray zones activities. As China, Iran, North Korea, and Russia seek to challenge the United States and to gain advantage over other countries through deliberate campaigns while also trying to avoid war. These gray zones are more often than unexploited in places where corruption thrives. Criminals finance chaos, impunity, and insecurity. So I will focus again on some of these reasons to give you a better understanding how some of these adversaries are leveraging illicit criminal activities, using climate grids, using organized criminals, and other proxies to promote authoritarianism and weaken democracies. erode institutions and undermine the rule of law and global order. Russia and Iran and China continually work to gain access and gain control over strategic locations, critical minerals, ports, and other infrastructure, with the aim of becoming board operating bases for their military forces and intelligence agencies. The islands in the Pacific Rim have become a challenge in recent years that has corroded American influence in these countries and, of course, more globally. We continue to work across sectors with cutting edge research to help map these threat networks, to help the United States and its allies to really understand today's threat environment, to see the interconnections of illicit vectors. to pinpoint nodes of crime convergence, identify those gray zones that are being exploited by some of these malign state actors, and to track illicit rude supply chains and illicit financial flows that enable authoritarians to weaken democracies. So we hope that these challenges or relays will drive further analyses and investigations to disrupt illicit threat networks and their...

00:07:10    MARIAH YAGER
Hey, David, thank you so much. The Criminality Index, how were those calculated? How did that data come together?

00:07:19    DAVID LUNA
This is the Organized Crime Index that was developed by the Global Initiative Against Transnational Organized Crime. Without getting too much in the weeds of their methodology, they do look at various baskets of data sets from different international organizations. different governments to share more of their methodology.

00:07:41    MARIAH YAGER
And on that, I did post your white paper that you mentioned, and then these slides and your remarks, so everyone can look through the different sources. I mean, there's just some great resources there, from ACLED to some of the track stuff, so I will get those available.

00:07:57    DAVID LUNA
And we also emphasize that despite many successes within the law enforcement community, Global criminality and corruption has expanded greatly today compared to even a decade ago. Illicit entrepreneurial networks collectively continue to exploit the lucrative illicit economies, which, according to some estimates, are between 7 % to 15 % of the world's economy, or up to $20 trillion a year. They really go towards criminal networks. and they contribute to expanding these illicit economies. $20 trillion a year, that is staggering. Equally concerning, adversaries such as Russia, China, Iran, underwrite armed conflicts and malign operations against Western democracies and free markets. Among the reason local conflicts no longer end is that they are supported by illicit threat networks. For example, paramilitary groups supported by criminal opportunists, profit -driven, illicit companies who exploit conflict, and instability to expand criminal economies. In fact, rampant corruption and the violence wrought by organized criminals and terrorist networks help to soften the conditions for insecurity that are exploited to weaken other fragile governments. The state capture aided by criminality and strategic use of corruption results in democracies sliding into optocracies and through proxies helped to start and expand conflicts of regional insecurity. For example, if we look at Russia's Wagner group, who had assisted in a series of coups in Africa that had brought some lundas to power or enabled further optocracies to raid. In exchange, Proxies now rod global high -value commodities in those countries and allow for autocrats to remain in power. In the Central African Republic, Wagner's successors continue to employ active measures to disrupt African efforts to move their countries from violent conflict to stability by moving money and weapons around the continent through an intricate web of shell companies and through criminal networks that specialize in illicit trafficking and legal trading. and sanctions busting. What results is chaos, furthering the corruptive influence of extremist insurgencies in many cases, or regime protection of authoritarians who have faced sanctions and condemnations, including for their human rights abuses. Some of the dirty money that is derived by Russian mercenaries in Africa have helped Russia bypass global sanctions to fund its war in Ukraine, or to support political upheavals. paramilitary misadventures in the Middle East, the Balkans, and forward Soviet republics. Inland America, Russian proxies are selling some of the more advanced surveillance technologies to state and non -state actors across the hemisphere, greatly enhancing their ability to monitor and attack political enemies, law enforcement, officials, anyone else that they perceive as a threat. And as many experts correctly pointed out, Russia remains a criminalized state, led by a ruthless and thugish godfather. In fact, the Russian mafia is an extension of the Putin regime in advancing Russia's national interests overseas, and as an instrument of power operating in the shadows, elicit facilitators, super -fixers to other criminal networks. Russian cybercriminals not only penetrate businesses, it steals. trade secrets and bonds, but also to launch cyberattacks against enemies of the Gremlin. The Siloviki, too, may be asked to engage in kidnappings or assassinations on behalf of their masters in Moscow. Finally, one last point related to Russia. While annexation of Crimea and the recent invasion of Ukraine have significantly affected regionalized economies, Russian criminal networks continue to aid Russian intelligence and special forces in smuggling needed weapons and technology. Obviously, this undermines Western sanctions and transport bans for highly sought consumer goods and helps to londer the assets of Russian countergrants and oligarchs in places like Dubai, London, New York, and Western capitals. Now let me focus for a few minutes on the bigger threat. China. According to FBI Director Christopher Wray, China has become the biggest threat to our national security and to the homeland. This is not because of the global ambitions and active involvement of transnational crimes, but also through political interference operations. China's involvement in expanding illicit economies around the world has a triple whammy effect. Yet, first of all, it increases tremendous illicit wealth. hurts U .S. national security, American competitiveness, and innovation. Finances showing this ambition to become the predominant superpower by 2049. President Xi has openly stated, he would like China to become that predominant power. Through our research and through other institutions like the Terrorism Transnational Crime and Corruption Center, the CCP has leveraged corruption, illicit markets, Predatory crime to become the world's largest player in almost every sector of transnational crime, including counterfeits, trafficking of weapons, humans, wildlife, illegally harvest timber, fish, natural resources, the theft of IP, and trade secrets, illicit tobacco, organ harvesting, and other crimes. Several trillion U .S. dollars in the list of proceeds every year are generated from productive fences for money laundering that touch China's jurisdictions and markets and are often used to finance China's authoritarian regime. According to our ICAO research, China may very well be the biggest money laundering hub in the world. So, on so many fronts, China poses a serious geopolitical and organized criminal threat. Given its proximity to make money on crime and laundering dirty monies for drug cartels or other counterparts, terrorists, sanctioned rogue states, and other pariahs, China has also helped Russia, Iran, and others evade international sanctions, including on oil exports. threats will continue to garner more attention across different illicit industries driven by China as they continue to expand across the developing world. In Latin America and in Panama, for example, China is leveraging bribery of government officials to win concessions to control the port and other critical infrastructure along the Panama Canal. Alarmingly, China already controls or operates in more than 40 ports across Latin America. In many of these ports, the Chinese triads are also quite active. As the former Salcom commander testified a few years ago, China continues to be the number one underwriter for the Mexican drug cartels and other criminal networks. In Venezuela, China is firmly supported to corrupt the Jura regime. not only because of its access and investment in the oil sector, but because it truly is a strategic partner to counter American influence. If we look at Canada in recent years, it has become a crime convergence zone, a foreign operation pump for some of the most notorious criminal networks, including for the Mexican cartels, the Chinese syndicates, and for Hezbollah financial. If we were to look at the so -called CCP police stations in North America, as certain investigative journalists have done in recent months, we have a nexus of PRC intelligence services operators converging with local Chinese triads, often with syndicates. Such police stations are physically and mentally projecting Beijing's political power. They are connected to... underground, casinos, human trafficking, and other illicit trade. And again, find the uses of triads to foment insecurity and illegality of democracies, including through diasporic communities. Through economic coercion, China is also buying highlands across the Caribbean, for example, in Antigua and Barbuda, building special economic zones, and likely planning to use these commercial outposts for military purposes. As we know, in the U .S. Indo -Pacific Command Theater, BRC efforts have destabilized, for example, the Solomon Islands, undermined democracy in the northern Mariana Islands and other Pacific Rim Islands. As democracy weakens across the Pacific Rim Islands, China pounces and expands its influence through strategic corruption to advance their multi -polar agenda. We see the Chinese with a lot of influence as well in Myanmar as they work with the junta to build fentanyl factories, which again helps to fund more global online influence for CCP Inc. And China continues to build military bases on several islands, for example in the spread of the islands in the south, which contravene international law. These opposed bases and airfields continue to expand the offensive capability of China beyond their continental shores to gain control over disputed territories. In fact, one can argue that China's Belt and Road Initiative, the BRI, is intended to finance economic, trade, and military expansion all around the world, and as a result of the BRI. No -ling sectocrats continue to just simply align their pockets and continue to provide China with the global footprint to again expand their multi -polar agenda. If you were to overlay the BRI with some of these jurisdictions with high corruption, with democracy, as well as organized crime, you see that the Chinese tribes are always behind the expansion policies of China. So it's this confluence of social security interests. We're ensuring that Russia and Iran continue to strengthen intelligence, military ties to weak and democratic institutions, expand illicit economies, and bolster autocratic governance around the world.

00:19:05    MARIAH YAGER
What do you see as the most promising way forward? Specifically, do you see as a significant part of the solution, implementation of the 2023? DoD's strategy for operations in the information environment, which argues for a whole of government's integrated campaign across the competition continuum, which includes the gray zone.

00:19:25    DAVID LUNA
Yeah, I think it's all of that, frankly. I do think we need our intelligence community needs to really look more closely these overlays as well. To be able to articulate the interconnections, corruption, money, laundry, crime. We got to understand a panorama to be able to breathe the U .S. Congress to have more resources, right? It is about more resources to build capacities as well. Economic development, you know, and again, I mentioned the G7 initiative, but I don't think it's been funded. I could be wrong, but not more than 10, 15%. Whereas China is investing hundreds of billions of dollars all over the world. Not only through the strategic use of corruption and bribing collective grads, but in developing some of their critical infrastructure, which, again, they're able to have access and control not only for themselves, but other aligned authoritarian guard guards and their criminal network proxies. So resources, I think, is very important. But we need to get Congress to really see these interconnections a little bit more strategically. So what do we do about this? We must innovate, no doubt. We must ensure a more anticipatory approach. So we need to really underscore the importance of sharing threat intelligence in a timely manner to mitigate these harms. We must also make sure that we devote the requisite investments necessary to counter these collective transnational security networks. We might want to consider... Developing an interagency or even a Department of Defense of regular warfare special action teams to counter malign influence and strategic transnational threats so that we can stabilize and countering such malign influence. These could be rapid response strike forces. Again, there will be developed to investigate and prosecute these webs of foreign bribery, strategic corruption, and cross -border criminality to ensure that we reinforce the rule of law in our partner nations. In closing these data sets and overlaying, we do begin to see the interconnections of various threats. I think it does become very important. to develop these more innovative irregular warfare frameworks to counter strategic corruption and criminality.

00:22:02    MARIAH YAGER
Assuming that local and national level law enforcement and regulatory agencies are the first line of detection and defense against these gray zone illicit activities, how might we better integrate those to get a better picture of the totality of the methods to disrupt those activities?

00:22:19    DAVID LUNA
Our U .S. embassies, a lot of them have law enforcement working groups. I mentioned the need for these special action teams to counter malign influence and strategic use of corruption as well by helping our partners in some of these nations to be able to investigate not only corruption, but to prosecute, to be able to track the corrupt payments that they receive to enable China, for example, to have more access and control. And then Jack gave this a good opportunity to talk a little bit more about an idea that we had been brainstorming with others on these special action teams. Jack?

00:23:00    JACK GAINES
I'm here. The white paper describes a minimum viable product for how the National Guard and the service reserves can further help U .S. and partner nation law enforcement counter adversaries and malign competitors to work to diminish U .S. and international rule of law and advance their nation's foreign policy goals. builds off of current Title 10 and 32 operations to support law enforcement. It just expands their reach and capability. The paper highlights areas where the Guard and Reserve could bring in professional specialties to expand law enforcement operations. Everything from investigations to prosecutions by creating special action teams that work directly for a law enforcement lead. It's very similar to a law enforcement special supervisory agent working at an agency, having teams of investigators and agents working on different cases. But in this scenario, the law enforcement lead would have guard and reserve teams built to support the investigations. And that would be in helping our partners and allies in the U .S. territories defend against state -sponsored criminality. For example, if an agent needs a financial fraud investigator or multiple investigators, The Guard and Reserve have them. An agent needs building evidence packets. Same thing. We have specialists that do that. These skills are available all the way after bringing in federal judges and attorney generals who can consult on judicial processes or even coordinate outreach to support a case. And these skills are available because the Guard and Reserves bring in people with these skills from their civilian careers. And I get it. Once they're in uniform, they're soldiers. More often than not, the military takes people with specialized civilian skills and asks them to use those skills for supporting a mission. In my civil affairs command, an assistant district attorney, he is working in Europe, working on special legal matters that only his civilian skills could have brought to the fight. And the paper recommends using those types of skills to help law enforcement because they're overwhelmed right now by adversaries using criminality. to expand their work, and to better counter the current threat.

00:25:13    MARIAH YAGER
So regarding the proposed framework, how does this differ from the existing organized crime drug enforcement task forces that are multi -agency, investigator -led, intel -driven efforts?

00:25:25    DAVID LUNA
This would reinforce some of these other mechanisms, some of the other testers, but it's an opportunity to leverage the great expertise and skills of the reserve, as Jack was talking about. but to specifically focus on malign influence networks. It means strategic hotspots. But the Pacific Islands, for example, I think we need to be expanding more resources and having these more strategic teams that includes law enforcement. But again, this whole government approach, whole society, leveraging State Department, leveraging USA. and others to be able to strengthen the capacities, to be able to resist the economic coercion by China, Russia, Iran, and others.

00:26:17    JACK GAINES
Hey, David, can I jump in for a second? Yes, of course. Okay. The special action teams are different than what we already have at the Jayad of Sinjiktik because they would be able to work on ground as their military. So they could go to the embassies, they could go into the field. They could do narcotics monitoring or reporting. They could do intelligence sharing with partner nations. They could go work with the foreign security officers. They can work with the military liaison on actually working with partner nations law enforcement on building prosecution packets, investigative efforts, international law issues. For Title 32 example, the Marianas right now, the governor is asking for help with investigations and prosecutions against the PRC. as well as by the locals who are enabling folks from China coming in and slipping over to Guam. He does not have the resources. He is asking for help. And by bringing him National Guard members who are everything from agents to special agents to financial fraud, criminal investigators, and maritime security, it would build up his ability to slow or even stop criminal encroachment into the Marianas and then make it harder for China to then forward its goals of causing the Marianas to vote out people like the governor, bringing people that are PRC -friendly, and then shifting the whole region away from the United States over to the PRC orbit.

00:27:43    MARIAH YAGER
To add on that, does your concept for the special action teams include follow -up stability activities to actually replace what we seek to disrupt or eliminate?

00:27:52    JACK GAINES
A few years ago, I'd sent a recommendation for CJTF Horn of Africa to build a law enforcement task force. And it was a combination of military and law enforcement leads coming into the Order of Africa, specifically focused on that issue of once we pull out an illicit network, how do we build in reforms so that those actors cannot come back? Or if a nation had a coup and they threw out a dictator that was also an oligarch or an autocrat that was stealing all the resources, how do we bring in teams that can support? building in reforms and legal checks and balances so that nation can represent the people and the economy. There are forms of doing that. By civil affairs background, I usually defer to the people who do stability operations and transition operations.

00:28:42    MARIAH YAGER
Thank you. This idea of corruption being one of the center issues just resonates so much about China and their activities in South and Central America, their roles. And how are they exacerbating and taking advantage of the situation? And a lot of it tends to come back to corruption. And so if you were to want some of these anti -corruption measures, what specifically you might recommend?

00:29:12    DAVID LUNA
Yeah, we have to be doing more investigations. We've got to be tracking more of the cryptocratic assets, especially since this is where Russia or China are providing. Some of these fragile democracies are even more, you know, top scenes, right? Given the scale of DOD and its resources, working across the interagency to make anti -corruption a higher priority in this very complex environment and not only DOD, but the intelligence community and encourage the intelligence community to look at the strategic overlays of corruption money laundering.

00:29:48    JACK GAINES
Here's a very specific. Example, this came from Cleo Pascal, who writes for Freedom for Democracies and submitted a paper to the Air University on the Marianas. And basically, her investigation found that the Chinese citizens enjoy visa -free travel to the Marianas, which is a U .S. territory. So they take direct flights from Hong Kong, come into the Marianas without a visa, and then they disappear. Some of them show up in the Solomons. Some of them show up in Guam. Some of them disappear into the casinos, and then they are later arrested for walking on the military base, found in criminal networks, working drug shipments through U .S. postal systems, or working in political influence and using money to bribe people or support pro -PRC political parties. A lot of them get into Cuba trafficking. A lot of them get into casinos for money laundering. They're using that poorest border to gain access. And then they're going into the southern islands and they're using drugs and gambling and money laundering and human trafficking to build cash that they give to politicians that support the PRC or don't necessarily have a position at all. They groom them. They use propaganda and campaigns to get them elected. And then, like in the Solomons, suddenly they start shifting away from the U .S. orbit into more PRC -favorable ones, which, as a result, Solomons no longer allows Coast Guard to port. They don't even allow the Peace Corps to come in. So that's what we're talking about, is that flow of people that becomes criminality, and then that supports the political regime change from within.

00:31:31    DAVID LUNA
Canada is being decimated by Chinese law firm, not only by the Chinese state. by the triads just harassing, doing hostile actions to corrupt and destabilize Canada, to divide Canada from the U .S. So this is happening in other places as well, but we should be looking more closely at what China and other authoritarian states are doing in Canada.

00:32:00    MARIAH YAGER
All right. I wanted to get into lawfare. How are we looking at the use of lawfare? as part of this and maybe where does that fit within DOD?

00:32:10    JACK GAINES
Most of what we're promoting here is what's considered defense lawfare. Investigating, prosecuting, adversarial actions through criminality. There are offensive lawfare techniques. Say we want to target South Sudan because the leader is a criminal. All he does is create chaos and conflict and steal the resource to make money. An offensive lawfare option would be to map his illicit money that's hidden in Western banks in case he ever gets a coup against him and loses his power. To map that money and then go in and start negotiating with him for either him to have a peaceful, free, fair election and then transition out. Or we take the money and we stop him from doing any future types of banking with the Western nations. So it's that type of reverse extortion, as I call it. the types of lawfare operations that can happen. I can't tell you if they have or not. I know that Angola's former dictator, when he left power, there were agreements that part of the money that he had stolen would go back towards NGOs to build up a more representative democracy and check some balances in that country. So there are ways to go at it. We can discuss that at another time.

00:33:25    DAVID LUNA
If you look at the website of the U .S. Chamber of Commerce, These sovereign wealth funds, who are often associated with some of these authoritarian states, are abusing American courts to be able to harass our corporations, to use discovery as well, to obtain IP and sensitive trade information as well.

00:33:48    MARIAH YAGER
All right. Thank you for addressing those last couple of points. I really appreciate that. So to our audience, thank you so much for joining us today. And I posted the white paper, the slides. So, Ms. Julina, thank you so much for joining us today. And thank you.

00:34:05    Close
Thanks for listening. If you get a chance, please like and subscribe and rate the show on your favorite podcast platform. Also, if you're interested in coming on the show or hosting an episode, email us at capodcasting at gmail .com. I'll have the email and CA Association website in the show notes. And now, most importantly, to those currently out in the field working with a partner nation's people or leadership to forward U .S. relations, thank you all for what you're doing. Stay tuned for more great episodes. One CA Podcast.