Sound governance frameworks are a critical deterrent of illicit trade. Consequently, economies with poor governance structures, such as those suffering from armed conflicts, are particularly prone to this threat. Moreover, parties engaged in disputes have an interest in driving illicit trade, or at least in ignoring it. For these parties, illicit trade can be an effective way of obtaining supplies of commodities (e.g. arms) or, most often, a source of revenue generation, especially when traditional revenue collection opportunities are reduced or lost altogether. In addition, countering illicit trade requires resources that, in a case of armed conflict, are likely to be engaged in other areas.
This study looks at illicit trade flows in four conflict-affected countries in the MENA region: Iraq, Libya, Syria, and Yemen, focusing on Yemen. These countries are also conveniently located transit point for international trade, especially to the European Union.
Yemen. For the past seventy years, Yemen has experienced almost non-stop conflict, significantly affecting the development of the economy as well as governance, notably governance frameworks designed to counter illicit trade flows. As a result, Yemen has long been a hub and conduit for both the regional and international arms trade and trafficking, as well as other illegal activities and goods. These include the outward smuggling of cheap, heavily subsidized fuel from Yemen to East Africa; the smuggling of people from East Africa and the Horn of Africa through Yemen to seek employment in Gulf countries; and the smuggling of narcotics into neighbouring countries.
In addition, Yemen suffers from illicit trafficking of cultural property, as many cultural objects are looted from archaeological sites and sold for a profit. Recently, the risk of wildlife trafficking has also grown, as the rich and unique wildlife on the Yemeni island of Socotra has been attracting both opportunistic wildlife traders as well as collectors. Finally, quantitative analysis of recent data of customs seizures confirms that Yemen is a remarkably vibrant hub for the illicit trade in fakes, most of them fake pharmaceuticals.
Libya. Since 2011, Libya has been in a severe state of insecurity that greatly affected Libya’s governance frameworks to counter illicit trade. There seems to be little or no effort by either of the central authorities in Libya to counter illicit trade, as groups involved in the civil conflict are preoccupied with fighting each other and organizing an internationally recognized government. Consequently, arms flows are the most important and impactful illicit dynamic in Libya, with both local and global ramifications. As in Yemen, Libya is also severely affected by the illicit drug trade. It is located at the centre of most trans-Saharan trade routes and has vital links with the Mediterranean region. In addition to arms and drugs, human trafficking is a significant part of overall illicit trade in Libya; local militias have formed international ties with various tribes to facilitate illicit human trafficking flows. The final component of illicit trade in Libya is the illegal trade of cultural artefacts and counterfeits.
Syria. Since 2011, Syria has been in disarray. Given its geographical location, Syria has historically been a critical trade corridor; today, Syria acts as a major highway for illicit trading activities. Many smuggling groups are apolitical, private, and profit-oriented networks composed of connected businesspeople and border residents. One of these critical sectors is defence, although the arms trade in Syria appears to be less intense than in Yemen and Libya. The most extensive illicit trade operation in Syria seems to be drug smuggling. There is also a criminal industry to facilitate human trafficking. The illegal excavation of Syrian cultural objects from archaeology sites has worsened since the conflict began in 2011, a practice that bears certain similarities to Yemen and the smuggling of historical and cultural artefacts from Saudi Arabia’s southern neighbour. The dataset on customs seizures also indicates that counterfeit goods coming from Syria are primarily destined for European countries
Iraq. A considerable conflict began in Iraq in 2014 when the Islamic State advanced from Syria and took control over northern parts of the country and the city of Mosul. Illicit trade in Iraq is driven by political instability and socioeconomic strife. Non-state actors control many ports of entry around the nation, with the border in Iran being a major weak point. Illegal arms smuggling is a problem in Iraq, although it appears to be less significant than the trade between Yemen and Libya. Drug trafficking and abuse in Iraq have been steadily increasing. Historically, Iraq was a transit point for global drug operations, but, more recently, a domestic market has emerged. Iraq is also emerging as a worldwide hub for the illicit trade in body organs. The final sector heavily affected by the illicit trade in Iraq is national antiquity and cultural heritage.
The evidence summarized in this report confirms that actors involved in illicit trade, particularly those associated with armed conflicts and organized crime, respond quickly to changes in the risk-reward structures. These risk-reward structures are, in turn, affected by international legal frameworks, national legislation, and enforcement policies. Consequently, policy makers may wish to consider the following avenues for action.
First, there is a need to develop a viable national strategy that not only addresses current illicit trade but also recognizes the limitations imposed by the current conflicts and plans for action in a post-conflict setting. This is particularly the case of Yemen, where the lack of information surrounding the current efforts to prevent and penalize smuggling results in uninformed local and international responses. A thorough study could help determine the best short-, medium, and long-term strategies for mitigating the impact of illicit flows and the breakdown of anti-smuggling governance during the conflict.
Second, support is needed to existing governance frameworks and institutions to counter illicit trade, such as the Yemeni coast guard, in terms of equipment, training, and technical support.
Third, international co-ordination involving neighbouring countries is necessary to strengthen the response to smuggling. This also includes multilateral co-ordination among neighbouring countries on anti-illicit activity policies.