Wednesday

5th Oct 2022

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

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe 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.

MEPs condemn EU Commission 'leniency' on Hungary

MEPs criticised the EU Commission for what they see as the executive not being tough enough on the government of Viktor Orbán, as Hungary's parliament passed new legislation as part of a deal with the EU executive.

Opinion

What von der Leyen's 'State of Union' didn't mention

Ursula von der Leyen barely noticed that European democracy is under attack not only from external threats, but from within. Two of the world's leading autocratic countries are EU member states.

News in Brief

  1. Russia's stand-in EU ambassador reprimanded on Ukraine
  2. France warns over incoming eighth Covid wave
  3. EU adds Anguilla, Bahamas and Turks and Caicos to tax-haven blacklist
  4. Czechs warn joint-nationality citizens in Russia on mobilisation
  5. Greece to unveil proposal for capping EU gas prices
  6. Four dead, 29 missing, after dinghy found off Canary Islands
  7. Orbán: German €200bn shield is start of 'cannibalism in EU'
  8. Lithuania expels top Russian diplomat

Stakeholders' Highlights

  1. The European Association for Storage of EnergyRegister for the Energy Storage Global Conference, held in Brussels on 11-13 Oct.
  2. EFBWW – EFBH – FETBBA lot more needs to be done to better protect construction workers from asbestos
  3. European Committee of the RegionsThe 20th edition of EURegionsWeek is ready to take off. Save your spot in Brussels.
  4. UNESDA - Soft Drinks EuropeCall for EU action – SMEs in the beverage industry call for fairer access to recycled material
  5. Nordic Council of MinistersNordic prime ministers: “We will deepen co-operation on defence”
  6. EFBWW – EFBH – FETBBConstruction workers can check wages and working conditions in 36 countries

Latest News

  1. EU debates new pandemic-type loans to deal with crisis
  2. MEPs condemn EU Commission 'leniency' on Hungary
  3. Czech EU presidency wants asylum pledges to be secret
  4. European navies must stay on Suez trade routes, EU diplomats warn
  5. Macron's 'European Political Community' — how could it work?
  6. EU adopts common charger law, forces iPhone redesign
  7. Last-minute legal changes to Bosnian election law stir controversy
  8. EU wants probe into alleged war crimes by Azerbaijan

Join EUobserver

Support quality EU news

Join us