Saturday

16th Feb 2019

UN highlights economic cost of organised crime in Italy

With Italy increasingly being seen by markets as the next Greece, a major UN report has highlighted how organised crime is harming the Italian economy.

The study by the UN Office on Drugs and Crime in Vienna out on Tuesday (25 October) estimates that organised crime in Italy - mostly illegal waste disposal, drugs and people trafficking - is worth €116 billion a year, equivalent to 7.7 percent of the country's GDP.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

The scale of the problem is far larger than in other industrialised nations - organised crime accounts for 1.3 percent of the economy in Germany, 1.2 percent in the UK and 2.3 percent in the US.

The UN notes that crime has short-term positive effects: Money laundering sees dirty income invested in small businesses, creating jobs, or saved in banks, easing credit flows and liquidity.

But the medium and long term effects are destructive.

Criminal groups tend to invest cash in businesses where it can most easily be hidden - real estate, restaurants, transport companies - rather than where it will generate the most profit.

Criminally-backed enterprises damage competitiveness by driving legitimate firms out of business. "Front companies may offer their goods and services at below-market rates or even at a loss because their primary objective is to launder money. Such companies do not need to compete properly in the marketplace," the UN said.

The lack of transparency also distorts national economic data, macroeconomic analysis and policy-making. Crime aggravates volatility because "criminal flows may be suddenly disrupted and related investments may disappear due to law enforcement actions." Meanwhile, corruption of legal institutions and bribing of "friendly" political parties "can have a negative impact on overall tax morality" and scare away foreign investors.

On top of this, the price of booming illegal drugs consumption in terms of the burden on national health services and the petty crime it generates can cost up to 3.5 percent of GDP.

"International rating agencies will use this information to downgrade the credit risk of the countries concerned," the UN warned.

In global terms, the study notes that organised crime is worth around $2.1 trillion a year with some $580 billion in cash - 1 percent of the world economy - available for money laundering. Just 0.2 percent of the illegal money is currently being intercepted.

The UN points to offshore banking centres in Europe - mostly Luxembourg, Switzerland and the UK - as a favoured destination for cocaine-related laundering. The region is said to legitimise around $7 billion of cocaine income a year, second only to the US on $10 billion.

Italy: Euro crisis meeting could strain coalition

Italian leader Silvio Berlusconi's coalition government is to face a major test at 6pm local time on Monday, when ministers meet to push through austerity measures under pressure from fellow EU leaders.

ECB returns to markets to help Italy and Spain

The European Central Bank has decided buy bonds from troubled eurozone countries after a five-month pause in a bid to stem the crisis from spilling to Italy and Spain.

Feature

The changing face of Europe's mafia

The landscape of European organised crime is “completely changing”, says the director of Europe's leading research institute into organised crime groups.

News in Brief

  1. Spain's Sanchez calls snap election on 28 April
  2. 15,000 Belgian school kids march against climate change
  3. May suffers fresh Brexit defeat in parliament
  4. Warning for British banks over Brexit staff relocation
  5. Former Italian PM wants Merkel for top EU post
  6. Antisemitic incidents up 10% in Germany
  7. Italy's asylum rejection rate at record high
  8. Hungary will not claim EU funds for fraudulent project

Stakeholders' Highlights

  1. Counter BalanceEU bank urged to free itself from fossil fuels and take climate leadership
  2. Intercultural Dialogue PlatformRoundtable: Muslim Heresy and the Politics of Human Rights, Dr. Matthew J. Nelson
  3. Platform for Peace and JusticeTurkey suffering from the lack of the rule of law
  4. UNESDASoft Drinks Europe welcomes Tim Brett as its new president
  5. Nordic Council of MinistersNordic ministers take the lead in combatting climate change
  6. Counter BalanceEuropean Parliament takes incoherent steps on climate in future EU investments
  7. International Partnership For Human RightsKyrgyz authorities have to immediately release human rights defender Azimjon Askarov
  8. Nordic Council of MinistersSeminar on disability and user involvement
  9. Nordic Council of MinistersInternational appetite for Nordic food policies
  10. Nordic Council of MinistersNew Nordic Innovation House in Hong Kong
  11. Nordic Council of MinistersNordic Region has chance to become world leader when it comes to start-ups
  12. Nordic Council of MinistersTheresa May: “We will not be turning our backs on the Nordic region”

Latest News

  1. Sluggish procedure against Hungary back on table
  2. Could Finnish presidency fix labour-chain abuse?
  3. Brexit and trip to Egypt for Arab League This WEEK
  4. Belgian spy scandal puts EU and Nato at risk
  5. EU Parliament demands Saudi lobby transparency
  6. Saudi Arabia, but not Russia, on EU 'dirty money' list
  7. EU agrees draft copyright reform, riling tech giants
  8. Rutte warns EU to embrace 'Realpolitik' foreign policy

Join EUobserver

Support quality EU news

Join us