Michel Chossudovsky (by way of mediafilter) on Thu, 8 Apr 1999 07:49:27 +0200 (CEST)

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<nettime> KLA financed by Organised Crime



	Michel Chossudovsky

Professor of Economics at the University of Ottawa and author of The
Globalization of Poverty, Impacts of IMF and World Bank Reforms, Third
World Network, Penang and Zed Books, London, 1997. 

C Copyright by Michel Chossudovsky, Ottawa, 1999. All rights reserved.
Permission is granted to post this text on non-commercial internet
sites, provided the essay remains intact and the copyright note is
displayed. To publish this text in printed and/or other forms contact
the author at chossudovsky@sprint.ca 

Heralded by the global media as a humanitarian peace-keeping mission,
NATO's ruthless bombing of Belgrade and Pristina goes far beyond the
breach of international law. While Slobodan Milosevic is demonised,
portrayed as a remorseless dictator, the Kosovo Liberation Army (KLA)
is upheld as a self-respecting nationalist movement struggling for the
rights of ethnic Albanians. The truth of the matter is that the KLA is
sustained by organised crime with the tacit approval of the United
States and its allies. 

Following a pattern set during the War in Bosnia, public opinion has
been carefully misled. The multibillion dollar Balkans narcotics trade
has played a crucial role in "financing the conflict" in Kosovo in
accordance with Western economic, strategic and military objectives.
Amply documented by European police files, acknowledged by numerous
studies, the links of the Kosovo Liberation Army (KLA) to criminal
syndicates in Albania, Turkey and the European Union have been known to
Western governments and intelligence agencies since the mid-1990s. 

<paraindent><param>left</param>"...The financing of the Kosovo guerilla
war poses critical questions and it sorely test claims of an "ethical"
foreign policy. Should the West back a guerilla army that appears to
partly financed by organised crime." 1 


While KLA leaders were shaking hands with US Secretary of State
Madeleine Albright at Rambouillet, Europol (the European Police
Organization based in the Hague) was "preparing a report for European
interior and justice ministers on a connection between the KLA and
Albanian drug gangs."2 In the meantime, the rebel army has been
skilfully heralded by the global media (in the months preceding the
NATO bombings) as broadly representative of the interests of ethnic
Albanians in Kosovo. 

With KLA leader Hashim Thaci (a 29 year "freedom fighter") appointed as
chief negotiator at Rambouillet, the KLA has become the de facto
helmsman of the peace process on behalf of the ethnic Albanian majority
and this despite its links to the drug trade. The West was relying on
its KLA puppets to rubber-stamp an agreement which would have
transformed Kosovo into an occupied territory under Western

Ironically Robert Gelbard, America's special envoy to Bosnia, had
described the KLA last year as "terrorists". Christopher Hill,
America's chief negotiator and architect of the Rambouillet agreement
"has also been a strong critic of the KLA for its alleged dealings in
drugs."3  Moreover, barely a few two months before Rambouillet, the US
State Department had acknowledged (based on reports from the US
Observer Mission) the role of the KLA in terrorising and uprooting
ethnic Albanians: 

<paraindent><param>left</param>"...the KLA harass or kidnap anyone who
comes to the police, ... KLA representatives had threatened to kill
villagers and burn their homes if they did not join the KLA [a process
which has continued since the NATO bombings]... [T]he KLA harassment
has reached such intensity that residents of six villages in the
Stimlje region are "ready to flee." 4


While backing a "freedom movement" with links to the drug trade, the
West seems also intent in bypassing the civilian Kosovo Democratic
League and its leader Ibrahim Rugova who has called for an end to the
bombings and expressed his desire to negotiate a peaceful settlement
with the Yugoslav authorities.5 It is worth recalling that a few days
before his March 31st Press Conference, Rugova had been reported by the
KLA (alongside three other leaders including Fehmi Agani) to have been
killed by the Serbs. 

Covert Financing of "Freedom Fighters"

Remember Oliver North and the Contras? The pattern in Kosovo is similar
to other CIA covert operations in Central America, Haiti and
Afghanistan where "freedom fighters" were financed through the
laundering of drug money. Since the onslaught of the Cold War, Western
intelligence agencies have developed a complex relationship to the
illegal narcotics trade. In case after case, drug money laundered in
the international banking system has financed covert operations. 

According to author Alfred McCoy, the pattern of covert financing was
established in the Indochina war. In the 1960s, the Meo army in Laos
was funded by the narcotics trade as part of Washington's military
strategy against the combined forces of the neutralist government of
Prince Souvanna Phouma and the Pathet Lao.6 

The pattern of drug politics set in Indochina has since been replicated
in Central America and the Caribbean. "The rising curve of cocaine
imports to the US", wrote journalist John Dinges "followed almost
exactly the flow of US arms and military advisers to Central America".7

The military in Guatemala and Haiti, to which the CIA provided covert
support, were known to be involved in the trade of narcotics into
Southern Florida.  And as revealed in the Iran-Contra and Bank of
Commerce and Credit International (BCCI) scandals, there was strong
evidence that covert operations were funded through the laundering of
drug money. "Dirty money" recycled through the banking system--often
through an anonymous shell company-- became "covert money,"  used to
finance various rebel groups and guerilla movements including the
Nicaraguan Contras and the Afghan Mujahadeen. According to a 1991 Time
Magazine report: 

<paraindent><param>left</param>"Because the US wanted to supply the
mujehadeen rebels in Afghanistan with stinger missiles and other
military hardware it needed the full cooperation of Pakistan. By the
mid-1980s, the CIA operation in Islamabad was one of the largest US
intelligence stations in the World. `If BCCI is such an embarrassment
to the US that forthright investigations are not being pursued it has a
lot to do with the blind eye the US turned to the heroin trafficking in
Pakistan', said a US intelligence officer.8 


America and Germany join Hands

Since the early 1990s, Bonn and Washington have joined hands in
establishing their respective spheres of influence in the Balkans.
Their intelligence agencies have also collaborated. According to
intelligence analyst John Whitley, covert support to the Kosovo rebel
army was established as a joint endeavour between the CIA and Germany's
Bundes Nachrichten Dienst (BND) (which previously played a key role in
installing a right wing nationalist government under Franjo Tudjman in
Croatia).9  The task to create and finance the KLA was initially given
to Germany: "They used German uniforms, East German weapons and were
financed, in part, with drug money".10 According to Whitley, the CIA
was, subsequently instrumental in training and equipping the KLA in

The covert activities of Germany's BND were consistent with Bonn's
intent to expand its "Lebensraum" into the Balkans. Prior to the onset
of the civil war in Bosnia, Germany and its Foreign Minister Hans
Dietrich Genscher had actively supported secession; it had "forced the
pace of international diplomacy" and pressured its Western allies to
recognize Slovenia and Croatia. According to the Geopolitical Drug
Watch, both Germany and the US favoured (although not officially) the
formation of a "Greater Albania" encompassing Albania, Kosovo and parts
of Macedonia.12 According to Sean Gervasi, Germany was seeking a free
hand among its allies "to pursue economic dominance in the whole of

Islamic Fundamentalism in Support of the KLA

Bonn and Washington's "hidden agenda" consisted in triggering
nationalist liberation movements in Bosnia and Kosovo with the ultimate
purpose of destabilising Yugoslavia. The latter objective was also
carried out "by turning a blind eye" to the influx of mercenaries and
financial support from Islamic fundamentalist organisations.14 

Mercenaries financed by Saudi Arabia and Koweit had been fighting in
Bosnia.15 And the Bosnian pattern was replicated in Kosovo: Mujahadeen
mercenaries from various Islamic countries are reported to be fighting
alongside the KLA in Kosovo. German, Turkish and Afghan instructors
were reported to be training the KLA in guerilla and diversion

According to a Deutsche Press-Agentur report, financial support from
Islamic countries to the KLA had been channelled through the former
Albanian chief of the National Information Service (NIS), Bashkim
Gazidede.17 "Gazidede, reportedly a devout Moslem who fled Albania in
March of last year [1997], is presently [1998] being investigated for
his contacts with Islamic terrorist organizations."18 

The supply route for arming KLA "freedom fighters" are the rugged
mountainous borders of Albania with Kosovo and Macedonia. Albania is
also a key point of transit of the Balkans drug route which supplies
Western Europe with grade four heroin. 75% of the heroin entering
Western Europe is from Turkey. And a large part of drug shipments
originating in Turkey transits through the Balkans. According to the US
Drug Enforcement Administration (DEA), "it is estimated that 4-6 metric
tons of heroin leave each month from Turkey having [through the
Balkans] as destination Western Europe."19 A recent intelligence report
by Germany's Federal Criminal Agency suggests that: "Ethnic Albanians
are now the most prominent group in the distribution of heroin in
Western consumer countries."20 

The Laundering of Dirty Money

In order to thrive, the criminal syndicates involved in the Balkans
narcotics trade need friends in high places. Smuggling rings with
alleged links to the Turkish State are said to control the trafficking
of heroin through the Balkans "cooperating closely with other groups
with which they have political or religious ties" including criminal
groups in Albanian and Kosovo.21 In this new global financial
environment, powerful undercover political lobbies connected to
organized crime cultivate links to prominent political figures and
officials of the military and intelligence establishment. 

The narcotics trade nonetheless uses respectable banks to launder large
amounts of dirty money. While comfortably removed from the smuggling
operations per se, powerful banking interests in Turkey but mainly
those in financial centres in Western Europe discretely collect fat
commissions in a multibillion dollar money laundering operation. These
interests have high stakes in ensuring a safe passage of drug shipments
into Western European markets. 

The Albanian Connection

Arms smuggling from Albania into Kosovo and Macedonia started at the
beginning of 1992, when the Democratic Party came to power, headed by
President Sali Berisha. An expansive underground economy and cross
border trade had unfolded. A triangular trade in oil, arms and
narcotics had developed largely as a result of the embargo imposed by
the international community on Serbia and Montenegro and the blockade
enforced by Greece against Macedonia. 

Industry and agriculture in Kosovo were spearheaded into bankruptcy
following the IMF's lethal "economic medicine" imposed on Belgrade in
1990. The embargo was imposed on Yugoslavia. Ethnic Albanians and Serbs
were driven into abysmal poverty. Economic collapse  created an
environment which fostered the progress of illicit trade. In Kosovo,
the rate of unemployment increased to a staggering 70 percent
(according to Western sources). 

Poverty and economic collapse served to exacerbate simmering ethnic
tensions. Thousands of unemployed youths "barely out of their Teens"
from an impoverished population, were drafted into the ranks of the


In neighbouring Albania, the free market reforms adopted since 1992 had
created conditions which favoured the criminalisation of State
institutions. Drug money was also laundered in the Albanian pyramids
(ponzi schemes) which mushroomed during the government of former
President Sali Berisha (1992-1997).23 These shady investment funds were
an integral part of the economic reforms inflicted by Western creditors
on Albania. 

Drug barons in Kosovo, Albania and Macedonia (with links to the Italian
mafia) had become the new economic elites,  often associated with
Western business interests. In turn the financial proceeds of the trade
in drugs and arms were recycled towards other illicit activities (and
vice versa) including a vast prostitution racket between Albania and
Italy. Albanian criminal groups operating in Milan, "have become so
powerful running prostitution rackets that they have even taken over
the Calabrians in strength and influence."24 

The application of "strong economic medicine" under the guidance of the
Washington based Bretton Woods institutions had contributed to wrecking
Albania's banking system and precipitating the collapse of the Albanian
economy. The resulting chaos enabled American and European
transnationals to carefully position themselves. Several Western oil
companies including Occidental, Shell and British Petroleum had their
eyes rivetted on Albania's abundant and unexplored oil-deposits.
Western investors were also gawking Albania's extensive reserves of
chrome, copper, gold, nickel and platinum... The Adenauer Foundation
had been lobbying in the background on behalf of German mining
interests. 25

Berisha's Minister of Defence Safet Zoulali (alleged to have been
involved in the illegal oil and narcotics trade) was the architect of
the agreement with Germany's Preussag (handing over control over
Albania's chrome mines) against the competing bid of the US led
consortium of Macalloy Inc. in association with Rio Tinto Zimbabwe

Large amounts of narco-dollars had also been recycled into the
privatisation programmes leading to the acquisition of State assets by
the mafias. In  Albania, the privatisation programme had led virtually
overnight to the development of a property owning class firmly
committed to the "free market". In Northern Albania, this class was
associated with the Guegue "families" linked to the Democratic Party. 

Controlled by the Democratic Party under the presidency of Sali Berisha
(1992-97), Albania's largest financial "pyramid" VEFA Holdings had been
set up by the Guegue "families" of Northern Albania with the support of
Western banking interests. VEFA was under investigation in Italy in
1997 for its ties to the Mafia which allegedly used VEFA to launder
large amounts of dirty money.27 

According to one press report (based on intelligence sources), senior
members of the Albanian government during the Presidency of Sali
Berisha including cabinet members and members of the secret police SHIK
were alleged to be involved in drugs trafficking and illegal arms
trading into Kosovo: 


	(...) The allegations are very serious. Drugs, arms, contraband
cigarettes all are 	believed to have been handled by a company run
openly by Albania's ruling 	Democratic Party, Shqiponja (...). In the
course of 1996 Defence Minister, Safet 	Zhulali [was alleged] to had
used his office to facilitate the transport of arms, oil and
	contraband cigarettes.  (...) Drugs barons from Kosovo (...) operate
in Albania with 	impunity, and much of the transportation of heroin and
other drugs across Albania, 	from Macedonia and Greece en route to
Italy, is believed to be organised by Shik, the 	state security police
(...). Intelligence agents are convinced the chain of command in 	the
rackets goes all the way to the top and have had no hesitation in
naming ministers 	in their reports.28 

The trade in narcotics and weapons was allowed to prosper despite the
presence since 1993 of a large contingent of American troops at the
Albanian-Macedonian border with a mandate to enforce the embargo. The
West had turned a blind eye. The revenues from oil and narcotics were
used to finance the purchase of arms (often in terms of direct barter):
"Deliveries of oil to Macedonia (skirting the Greek embargo [in 1993-4]
can be used to cover heroin, as do deliveries of kalachnikov rifles to
Albanian `brothers' in Kosovo".29 

The Northern tribal clans or "fares" had also developed links with
Italy's crime syndicates.30 In turn, the latter played a key role in
smuggling arms across the Adriatic into the Albanian ports of Dures and
Valona. At the outset in 1992, the weapons channelled into Kosovo were
largely small arms including Kalashnikov AK-47 rifles, RPK and PPK
machine-guns, 12.7 calibre heavy machine-guns, etc. 

The proceeds of the narcotics trade has enabled the KLA to rapidly
develop a force of some 30,000 men. More recently, the KLA has acquired
more sophisticated weaponry including anti-aircraft and antiarmor
rockets. According to Belgrade, some of the funds have come directly
from the CIA "funnelled through a so-called "Government of Kosovo"
based in Geneva, Switzerland. Its Washington office employs the
public-relations firm of Ruder Finn--notorious for its slanders of the
Belgrade government".31 

The KLA has also acquired electronic surveillance equipment which
enables it to receive NATO satellite information concerning the
movement of the Yugoslav Army. The KLA training camp in Albania is said
to "concentrate on heavy weapons training - rocket propelled grenades,
medium caliber cannons, tanks and transporter use, as well as on
communications, and command and control".  (According to Yugoslav
government sources.32  

These extensive deliveries of weapons to the Kosovo rebel army were
consistent with Western geopolitical objectives. Not surprisingly,
there has been a "deafening silence" of the international media
regarding the Kosovo arms-drugs trade. In the words of a 1994 Report of
the Geopolitical Drug Watch: "the trafficking [of drugs and arms] is
basically being judged on its geostrategic implications (...) In
Kosovo, drugs and weapons trafficking is fuelling geopolitical hopes
and fears"...33 

The fate of Kosovo had already been carefully laid out prior to the
signing of the 1995 Dayton agreement. NATO had entered an unwholesome
"marriage of convenience" with the mafia. "Freedom fighters" were put
in place, the narcotics trade enabled Washington and Bonn to "finance
the Kosovo conflict" with the ultimate objective of destabilising the
Belgrade government and fully recolonising the Balkans. The destruction
of an entire country is the outcome. Western governments which
participated in the NATO operation bear a heavy burden of
responsibility in the deaths of civilians, the impoverishment of both
the ethnic Albanian and Serbian populations and the plight of those who
were brutally uprooted from towns and villages in Kosovo as a result of
the bombings.   


1. Roger Boyes and Eske Wright, Drugs Money Linked to the Kosovo Rebels
The Times, London, Monday, March 24, 1999.
2. Ibid.
3. Philip Smucker and Tim Butcher, "Shifting stance over KLA has
betrayed' Albanians", Daily Telegraph, London, 6 April 1999 
4. KDOM Daily Report, released by the Bureau of European and Canadian
Affairs, Office of South Central European Affairs, U.S. Department of
State, Washington, DC, December 21, 1998; Compiled by EUR/SCE
(202-647-4850) from daily reports of the U.S. element of the Kosovo
Diplomatic Observer Mission, December 21, 1998.
5. "Rugova, sous protection serbe appelle a l'arret des raides", Le
Devoir, Montreal, 1 April 1999.
6. See Alfred W. McCoy, The Politics of Heroin in Southeast Asia Harper
and Row, New York, 1972.
7. See John Dinges, Our Man in Panama, The Shrewd Rise and Brutal Fall
of Manuel Noriega, Times Books, New York, 1991.
8. "The Dirtiest Bank of All," Time, July 29, 1991, p. 22.
9. Truth in Media, Phoenix, 2 April, 1999; see also Michel Collon,
Poker Menteur, editions EPO, Brussels, 1997.
10. Quoted in Truth in Media, Phoenix, 2 April, 1999).    
11. Ibid.
12. Geopolitical Drug Watch, No 32, June 1994, p. 4
13. Sean Gervasi, "Germany, US and the Yugoslav Crisis", Covert Action
Quarterly, No. 43, Winter 1992-93). 
14. See Daily Telegraph, 29 December 1993.
15. For further details see Michel Collon, Poker Menteur, editions EPO,
Brussels, 1997, p. 288.
16. Truth in Media, Kosovo in Crisis, Phoenix, 2 April 1999.
17. Deutsche Presse-Agentur, March 13, 1998.
18. Ibid.
19. Daily News, Ankara, 5 March 1997.
20. Quoted in Boyes and Wright, op cit.
21. ANA, Athens, 28 January 1997, see also Turkish Daily News, 29
January 1997. 
22. Brian Murphy, KLA Volunteers Lack Experience, The Associated Press,
5 April 1999.
23. See Geopolitical Drug Watch, No. 35, 1994, p. 3, see also Barry
James, In Balkans, Arms for Drugs, The International Herald Tribune
Paris, June 6, 1994.
24. The Guardian, 25 March 1997.
25. For further details see Michel Chossudovsky, La crisi albanese,
Edizioni Gruppo Abele, Torino, 1998.
26. Ibid.
27. Andrew Gumbel, The Gangster Regime We Fund, The Independent,
February 14, 1997, p. 15.
28. Ibid.
29. Geopolitical Drug Watch, No. 35, 1994, p. 3.
30. Geopolitical Drug Watch, No 66, p. 4. 
31. Quoted in Workers' World, May 7, 1998.
32. See Government of Yugoslavia at
33. Geopolitical Drug Watch, No 32, June 1994, p. 4.

    Michel Chossudovsky
    Department of Economics,
    University of Ottawa, 
    Ottawa, K1N6N5
    Voice box: 1-613-562-5800, ext. 1415
    Fax: 1-514-425-6224
    E-Mail: chossudovsky@sprint.ca

Recent articles by Chossudovsky :

on Yugoslavia: http://www.hartford-hwp.com/archives/62/022.html

on the Brazilian financial crisis:

on global poverty and the financial crisis:


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