Loose cannons: Covert commerce and underground finance in the modern arms black market

The 1990s have already witnessed an explosion of social and political violence, with the threat of much more on the way. Many explanations have been offered — the stripping of the constraints formerly imposed by the Cold War alliance system; the delegitimization of states and the resurgence of ethno-religious identification; the end of the post-War social consensus that promised (though often did not deliver) a modicum of distributive justice.The paper stresses another, more mundane explanation — namely, the triumph over efforts at control of a free market in the instruments for effecting social and political change by violent means. It explains the contradiction between the amount of human, social and political damage weapons do and the ease with which they are acquired by exploring structural changes in the world arms black market since the 1980s.First, it argues that existing data showing a sharp decrease in international arms transfers can be reinterpreted in a much more pessimistic way, in part because of the operation of the modern black market.Second, a definition is offered of a black market transaction, differentiating it from otherwise legitimate deals that are criminalized on either the supply or demand sides.Third, it notes dramatic changes in the nature of the demand for weapons that drives more buyers into the black market.Fourth, it examines changes on the supply side that have made it so easy for a black market participant to acquire weapons, whether for direct end-use or for resale.Fifth, broad structural changes in the machinery of black marketeering in general, and their applications to the arms market in particular, are outlined.Sixth, a profile of the modern, as distinct from the traditional, gun running profession is offered, stressing the ambiguous role of the intelligence services in the traffic.Seventh, a black market arms deal is traced in its various stages through the machinery of covert commerce, while exploring at each stage the implications for pricing.Eight, the return flow of money is analyzed, from the point of view both of the form in which payment is made and the role of the formal banking system in handling and laundering the flow.Ninth, the financial problems facing non-state buyers and the consequent role of unconventional currencies is examined.Finally, some observations are offered about the implications of recent developments in the arms market for issues of arms control and international security.