Transnational Organised Crime

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Why in News?

Recently, leaders from the Financial Action Task Force (FATF), Interpol, and the United Nations Office on Drugs and Crime (UNODC) stressed the urgent need to crack down on the huge illegal profits made by international criminal organizations.

Additionally, the Indian Cyber Crime Coordination Centre (I4C), part of the Ministry of Home Affairs (MHA), has highlighted the growing danger of cybercrime against Indian citizens.

What is Transnational Organised Crime?

Organised crime involves illegal activities done by groups or networks, often using violence or corruption to make money.

Transnational organised crime (TOC) happens when these activities or groups operate in multiple countries.

Different Forms:

• Money Laundering: Hides the source of illegal money, making it look legal. Globally, over USD 800 billion to USD 2 trillion is laundered each year, which is 2% to 5% of the world’s GDP.
• Drug Trafficking: The most profitable criminal activity, worth about USD 650 billion globally, making up 30% of the illicit economy.
• Human Trafficking: Involves exploiting men, women, and children for sex or labor. This crime makes USD 150 billion annually and affects 25 million people worldwide, with 80% in forced labor and 20% in sex trafficking.
• Smuggling of Migrants: A criminal business that illegally moves people across borders. In 2009, it made USD 6.6 billion by smuggling 3 million migrants from Latin America to North America.
• Illicit Firearms Trafficking: Involves illegal trade of weapons, explosives, and ammunition, earning between USD 170 million to USD 320 million yearly.
• Trafficking in Natural Resources: Deals with illegal trade of resources like minerals, wildlife, and fishery products. In 2010, the sale of elephant ivory, rhino horn, and tiger parts in Asia was worth USD 75 million.
• Fraudulent Medicines: Includes fake medicines and those diverted from legal supply chains, which can cause harm or death and lead to drug resistance.
• Cybercrime and Identity Theft: Criminals use the Internet to steal private information, access bank accounts, and commit payment fraud.

What is the Impact of Transnational Organized Crime?

• Global Public Health: Counterfeit medicines, especially common in low- and middle-income countries, can be ineffective or harmful, causing an estimated 1 million deaths per year globally. The World Health Organization (WHO) estimates that these fake or poor-quality medicines result in over 1 million deaths annually, with 200,000 of those deaths occurring in Africa.
• Resilient and Inclusive Global Economy: Money laundering and illicit financial flows harm financial integrity and public finances, hindering economic development. Transnational organized crime (TOC) can deplete foreign exchange reserves and impact asset prices, destabilizing economies. The global offshore economy hides about 10% of the world's wealth, including money from organized crime.
• Planet Health: Organized environmental crime leads to deforestation, biodiversity loss, and increased carbon emissions, contributing to climate change. The illegal production and smuggling of synthetic refrigerants (HFCs) undermine the Montreal Protocol and worsen climate change. A lack of consensus on defining and criminalizing environmental crimes allows criminals to avoid enforcement.
• International Peace and Security: The illegal arms trade supports armed conflicts, violent crime, and other organized criminal activities. Non-state armed groups use illicit markets to fund their activities, including resource extraction and smuggling. In Central and South America, violence related to organized crime often results in more casualties than armed conflicts.
• Local Effects: Transnational organized crime impacts local areas significantly. It can destabilize countries and regions, undermining development efforts. Organized crime groups may collaborate with local criminals, increasing corruption, extortion, racketeering, violence, and other sophisticated crimes. This leads to higher public spending on security and policing and weakens human rights standards.

Why is it Crucial to Target Illicit Profits?

Sustainable Development Goals:

• Positive Impact on SDGs: Targeting illicit profits can help achieve the 2030 Sustainable Development Agenda goals like financial stability, inclusive economic growth, and stronger institutions and governance.

Disrupts Criminal Activities:

• Financial Strain on Criminals: Going after illegal profits makes it harder for criminals to fund and maintain their operations.
• Prevents Further Crimes: Cutting off these funds helps stop other illegal activities.

Promotes Rule of Law:

• Crime Doesn't Pay: Confiscating illicit profits reinforces the rule of law and shows that crime is not profitable.

Aids Development Goals:

• Support for Legitimate Purposes: Redirecting illicit funds to legitimate uses can boost economic growth and support development projects.

Enhances Global Security:

• Combating Threats: Money laundering and terrorism financing threaten international peace and security. Targeting illegal profits helps fight these threats.

Safeguards Vulnerable Populations:

• Protection: Criminal activities often exploit vulnerable people. By targeting illicit profits, we can better protect these populations.

International Cooperation:

• Encourages Unity: It promotes global collaboration in fighting transnational organized crime and terrorism financing.

What are the Challenges Regarding Controlling TOC?

Diverse Legal Systems:

Complications in Combating TOC: Different legal frameworks across countries make international efforts to combat transnational organized crime (TOC) challenging.

Lack of Consensus:

• Global Agreement Issues: Reaching a global consensus on how to address TOC is difficult due to differing national interests and priorities.
• UNTOC Limitations: The UN Convention Against Transnational Organized Crime (UNTOC) is the main legal tool, but its implementation and cooperation regime are often ineffective.
• Fragmented Strategies: The UNODC and other bodies lack a unified strategy, often taking a fragmented approach.
• Informal Solutions: Powerful states often prefer informal, unilateral solutions, which can lack oversight and challenge the rule of law and human rights.

Corruption:

• Undermining Law Enforcement: TOC frequently involves corruption, which infiltrates and weakens law enforcement and governance structures.

Technological Advancements:

• Criminal Use of Technology: Criminals use technology to carry out illicit activities, often staying ahead of law enforcement capabilities.

Armed Conflict:

• Fueling Violence and Instability: In conflict regions, TOC can exacerbate violence and instability, making control efforts more difficult.
• TOC and Terrorism Link: The connection between TOC and terrorism, where criminal profits fund terrorist activities, poses a significant threat.

Way Forward

Blockchain Forensics:

• Track Illicit Cryptocurrency Flows: Use blockchain technology to follow the movement of cryptocurrencies, a growing source of income for TOC.
• Dismantle Money Laundering Networks: Apply advanced tracing methods to identify and break up money laundering operations.

Dark Web Infiltration:

• Specialized Units: Develop teams trained to navigate the dark web, infiltrate online marketplaces used by TOC, and gather vital intelligence.

Transparency Initiatives:

• Promote Transparency: Implement measures to make government institutions more transparent, reducing opportunities for bribery and collusion with TOC.
• Citizen Reporting: Empower citizens to report corruption through secure and anonymous channels.

Political Will:

• Comprehensive Understanding: Foster a deep understanding of how TOC and corruption undermine global public goods.
• International Cooperation: Build political will for effective global cooperation through multilateral tools.

• Integrated Strategies: Include strategies to combat TOC in conflict prevention, peace operations, and peacebuilding efforts.
• Holistic Approach: Adopt a comprehensive approach that goes beyond criminal justice, addressing developmental, human rights, and security impacts.

Real-Time Fusion Centers:

• Immediate Collaboration: Establish centers for real-time collaboration between law enforcement, intelligence agencies, and private sector partners.
• Swift Data Analysis: Enable quick analysis of data, identification of trends, and coordinated responses to organized crime activities.

Influence of Wind Shear on Hurricanes

Why in News?

Recently, wind shear has garnered more attention because it plays a critical role in determining whether a storm will intensify into a destructive hurricane.

What is Wind Shear?

Wind Shear:

Wind shear is a meteorological phenomenon where there is a sudden change in wind speed and/or direction over a short distance.

Types:

1. Vertical Wind Shear:

• Description: Wind speed and/or direction changes rapidly with altitude.
• Examples:  Low-level jet streams and wind shear associated with thunderstorms.

2. Horizontal Wind Shear:

• Description: Wind speed and/or direction changes rapidly over a horizontal distance.
• Examples: Frontal systems and sea breezes where wind direction may shift suddenly.

Major Causes:

1. Temperature Inversion:

• Description: Occurs on calm nights when warm air near the ground traps cooler air above, creating strong vertical wind shear.
• Impact: Can be hazardous for aircraft during take-off and landing.

2. Thunderstorms:

• Description: Powerful updrafts and downdrafts within thunderstorms cause both horizontal and vertical wind shear.
• Impact: Makes flying near thunderstorms dangerous.

3. Frontal Systems:

• Description: Boundaries between warm and cold air masses (fronts) create rapid changes in wind speed and direction.
• Impact: Results in horizontal wind shear that can challenge aircraft navigation.

Detection Methods:

1. Low-Level Wind Shear Alert System (LLWAS):

• Description: A network of ground-based towers around airports using anemometers and wind direction sensors to measure wind conditions at multiple points.

2. Doppler Radar:

• Description: Ground-based radars that track wind speed and direction to detect wind shear zones.

3. LIDAR:

• Description: Uses light to detect wind shear, particularly useful for identifying clear air turbulence.

What are the Effects of Wind Shear on Hurricanes?

About Hurricanes:

• Description: Hurricanes, also known as Tropical Cyclones, are violent storms that form over tropical oceans and can cause extensive damage when they move to coastal areas. They bring strong winds, heavy rainfall, and storm surges.
• Formation: Their formation and initial development depend on the transfer of water vapor and heat from the warm ocean to the air above, primarily through evaporation from the sea surface.

Regional Names:

• Typhoons: China Sea and Pacific Ocean
• Tornados: Guinea lands of West Africa and Southern USA
• Willy-willies: Northwestern Australia
• Tropical Cyclones: Indian Ocean
• Hurricanes: West Indian islands in the Caribbean Sea and Atlantic Ocean

Effects of Wind Shear on Hurricanes:

• Favorable Conditions: Hurricanes thrive with minimal vertical wind shear, which allows for a symmetrical structure and efficient rotation.
• Disruptive Effects: Strong vertical wind shear can disrupt a hurricane's vertical structure by offsetting the storm's top from its bottom. This weakens the hurricane's wind circulation, heat transport, and moisture supply.
• Destructive Impact: Excessive vertical wind shear can potentially tear a hurricane apart.

Other Factors Affecting Hurricane Intensity:

• Beyond Wind Shear: While vertical wind shear is significant, other factors also influence hurricane intensity, including sea surface temperatures, atmospheric moisture, and pressure systems.
• Warm Sea Surface Temperatures: Exceptionally warm sea surface temperatures can sometimes counteract the effects of increased wind shear, as seen during the 2023 hurricane season.

What is the Influence of EL Nino and La Lina on Wind Shear?

El Nino's Influence on Wind Shear:

• Stronger Wind Shear: During El Nino years, stronger-than-usual vertical wind shear is typically observed over the Atlantic Ocean during hurricane season.
• Sea Surface Temperatures: El Nino events are characterized by warmer sea surface temperatures in the eastern Pacific Ocean and cooler temperatures in the western Pacific.
• Upper-Level Winds: This temperature pattern leads to stronger upper-level winds over the Atlantic, resulting in increased vertical wind shear.
• Hurricane Development: The increased wind shear during El Nino years can make it more challenging for hurricanes to develop and intensify in the Atlantic basin.

La Nina's Influence on Wind Shear:

• Weaker Wind Shear: La Nina conditions, which are the opposite of El Nino, tend to be more favourable for hurricane development in the Atlantic.
• Favourable Conditions: During La Nina years, vertical wind shear is generally weaker over the Atlantic, allowing for more active hurricane seasons.
• Record-Breaking Season: The record-breaking 2020 Atlantic hurricane season occurred during a La Nina event.

US Federal Reserve Keeps Rates Steady as Inflation Persists

Why in News?

Recently, the US Federal Reserve kept interest rates in a target range of 5.25%-5.5% and signalled that borrowing costs will likely remain high. The annual inflation rate in the US is currently 3.5%, while it is 3.2% in the UK and 2.4% in the eurozone.

What are the Reasons Behind the Recent US Federal Reserve Decision?

Inflationary Pressures:

• Peak Rates: The US inflation rate peaked at 7.0% in 2021 and 6.5% in 2022.
• Current Rate: Despite declining at the end of 2023, it remains high at 3.5%, well above the US Fed's target of 2%.
• Persistent Inflation: This persistent inflation indicates that previous measures, such as raising interest rates, have not reduced inflation as quickly as hoped.

The Wait-and-See Approach:

Revised Projections: Earlier this year, the Fed anticipated a decline in inflation and projected rate cuts. However, the current situation has forced them to reconsider.

Holding Rates: By maintaining the current rates, the US Fed is buying time to gather more data.

Monitoring Data: The Fed will closely monitor inflation metrics, employment figures, and consumer spending patterns.

Future Decisions: This data will guide future decisions on whether to raise rates further to combat inflation or leave them unchanged to support economic growth.

How do US Fed Rates Impact the Indian Economy?

Capital Outflows:

• Attractive US Assets: The Fed's rate hikes make US dollar-denominated assets more attractive, triggering a "carry trade."
• Capital Flight: Investors borrow money in low-interest-rate countries like India and invest it in the US for higher returns, causing capital outflow from these countries.
• Economic Growth Slowdown: Reduced foreign investment can hinder the growth of Indian companies and the overall economy.
• Stock Market Impact: Sudden withdrawal of foreign investment can lead to stock market volatility and decreased valuations.

Inflation:

• Exchange Rate Effects: Changes in US Fed rates affect capital flows and exchange rates, potentially leading to inflation.
• RBI Measures: The Reserve Bank of India (RBI) can adjust domestic interest rates and liquidity measures to mitigate inflationary impacts of a weaker rupee.

Weaker Rupee:

• Capital Outflow Consequence: When foreign investors withdraw funds from India due to higher US returns, it reduces the USD supply in India and increases the INR supply, weakening the rupee.
• Imported Inflation: A weaker rupee makes imports more expensive, particularly crucial resources like oil, increasing the overall cost of living.
• Export Boost: A weaker rupee can make Indian exports cheaper globally, potentially boosting their competitiveness.

Higher Borrowing Costs:

• RBI Interest Rate Hikes: To match the Fed's move, the RBI might raise interest rates in India to:
• Control Inflation: Higher interest rates discourage borrowing and spending, potentially curbing inflation.
• Stem Capital Flight: Making domestic investments more attractive to prevent further capital outflow.

Stock Market Fluctuations:

• Reduced Foreign Investment: As investors seek higher US returns, the Indian stock market might experience:
• Decreased Demand: Lower demand for Indian stocks due to reduced foreign investment can cause a decline in stock prices.

Increased Debt Burden:

• Costlier External Debt: A weaker rupee makes it more expensive for India to service its external debt, which is mostly in US dollars.
• Strain on Public Finances: The government may need to allocate more funds to debt repayment, affecting other developmental plans.

Benefits for Banks:

• Interest Rate Rise Advantage: Banks benefit from rising interest rates as they can re-price their loan portfolios faster than deposit rates, increasing their net interest margin.

How can India Reduce the Impact of the US Federal Reserve Decisions on its Economy?

Balancing Interest Rates:

Raising Rates:

• Attract Foreign Investment: Higher interest rates can make Indian investments more appealing to foreign investors, potentially boosting demand for the rupee and stabilizing its value.
• Control Inflation: Increased rates can discourage borrowing and spending, aiding in inflation control, especially when coupled with a depreciating rupee.

Diversifying the Reserve Basket:

Reducing Dollar Dependence: India can diversify its foreign exchange reserves by increasing holdings of other major currencies like the Euro, Yen, or Yuan, reducing vulnerability to US dollar fluctuations. However, managing a diversified basket can be complex.

Expanding Trade Horizons:

• Exploring Export Markets: Identifying new export markets can diversify India's trade base and reduce reliance on US markets.
• Trade Agreements: Negotiating bilateral trade deals can reduce trade barriers and enhance trade flows with non-US countries, diminishing dependence on the US Dollar.

Stimulating Domestic Consumption:

• Boosting Demand: Tax cuts can increase disposable income, stimulating spending. Initiatives like increased tax rebates for lower-income earners can encourage consumption.
• Subsidies: Targeted subsidies for essentials can maintain purchasing power. Programs like the Public Distribution System (PDS) and Pradhan Mantri Ujjwala Yojana (PMUY) provide examples.

Reducing Reliance on Oil:

• Embracing Renewables: Investing in renewable energy sources like solar and wind can reduce reliance on imported oil and buffer against oil price fluctuations.
• Exploring Biofuels: Developing biofuels such as ethanol can offer an alternative fuel source, further reducing dependence on imported oil.