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Transnational Crime and Geopolitical Contestation along the Mekong

August 18th, 2023  •  Author:   International Crisis Group  •  7 minute read
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Over the last fifteen years, an illicit economy – comprising everything from unregistered casinos to online scamming operations – has boomed along a stretch of the Mekong River separating Laos and Myanmar. Regional states will need to work together to rein in the criminal syndicates behind it.

What’s new? Myanmar’s Shan State and northern Laos’s Bokeo province have become a contiguous zone of vibrant criminality, much of it beyond the reach of state authorities. The Mekong River, which bisects the zone, is also an axis of geopolitical competition, complicating efforts to combat organised crime.

Why does it matter? The sheer size of illicit businesses, which dwarf the legal economies of both Shan State and northern Laos, means that they have an enormous local impact, entrenching corruption, weakening governance institutions and damaging community bonds in both these areas. The effects ripple throughout the region and beyond.

What should be done? Though geopolitical competition between the U.S. and China may get in the way, a coordinated regional approach to addressing criminality should be a top political priority. In addition to intelligence sharing and joint law enforcement operations, interested governments should work together to address underlying governance and socio-economic issues.

Executive Summary

Myanmar’s Shan State and Laos’s Bokeo province, which straddle the Mekong River, have emerged as a contiguous zone of vibrant criminality, much of which is beyond the reach of national authorities. Unregulated casinos, money laundering, drug production and trafficking, online scamming operations, and illegal wildlife trade all thrive, entrenching corruption, weakening governance and damaging the bonds that create community. The criminal networks involved have regional – in some cases, global – reach and can rapidly shift from one jurisdiction to another to minimise risks to their operations. A coordinated regional approach is thus vital for tackling them. But geopolitical competition between China and the U.S. complicates coordination. Regional states continue to rely heavily on unilateral criminal justice responses, but collaborative law enforcement is needed, as are multi-state efforts to ameliorate the governance and socio-economic problems that allow these criminal syndicates to prosper. Ideally, these efforts would involve agencies with migration, development and other relevant expertise.

Parts of the Mekong, particularly the 100km section that forms the Myanmar-Lao border, have long been a frontier of unregulated and illicit trade, far from centres of power and commerce. Given its importance as a conduit between China and South East Asia, in recent decades governments have aspired for the Mekong to become a major transport route. But along with physical obstacles – sandbanks, shoals and rapids – insecurity has impeded riverborne trade, most commonly in the form of piracy and extortion of boats plying the route. The situation came to a head in October 2011, when thirteen Chinese merchant mariners were murdered – the deadliest attack on Chinese nationals abroad since World War II. China pinned the blame on Myanmar pirates, whose leader it captured in Laos and executed following a complex extra-territorial police operation. (It later emerged that others may have been primarily responsible.) Beijing then initiated joint gunboat patrols with neighbouring countries, allowing it to project force down the Mekong.

While these actions put an end to piracy on this key stretch of river, they did not deter other forms of crime. Since 2011, the territories on the Myanmar and Lao sides of the Mekong have emerged as hotbeds of illegal activity, from drug production and trafficking to online gambling, money laundering and cyber-scam operations that often use captive workers from around the world. Not only do transnational criminal organisations operating in this zone benefit from lax or non-existent regulations, but they also take advantage of its multi-jurisdictional character, quickly shifting operations from one place to another to evade crackdowns.

Coordinated law enforcement across the region is crucial if governments want any chance of tackling these expanding criminal activities, but other capabilities must also be brought to bear. Authorities in the region need to acknowledge that any solution to this transnational problem will involve government agencies from several jurisdictions – as opposed to the typical security or police approach that treats immediate symptoms, but not the fundamental causes of the problem, including weak governance and rampant corruption, not to mention a willingness or desire of some jurisdictions to court illicit investments.

The Mekong is a locus of big-power rivalry, where longstanding U.S. ties with Thailand and other countries are being tested by China’s rising power.

So far, however, a coordinated response is lacking, in large part due to geopolitical considerations. The Mekong is a locus of big-power rivalry, where longstanding U.S. ties with Thailand and other countries are being tested by China’s rising power and regional ambitions. The contestation has greatly limited cooperation between Western governments and China on transnational crime in the Mekong, while making it difficult for other countries to balance their relations with the two.

China is by far the most influential actor and could play a critical role if it chose to. China could adopt a more consistent approach to criminality in the Mekong sub-region, using its influence over regional governments and non-state actors to curtail illicit activities. But Beijing is also guided by strategic considerations, including its inclination to view economic investment, even if it is partly illicit, as something that can help build peace along its borders, and its desire to leverage enclaves in its neighbourhood controlled by pliant entities in order to project its power. It has thus far tended to focus on law enforcement only selectively, responding only when it considers its national interests under direct threat, including with crackdowns on online gambling and efforts to shut down online scam operations across South East Asia. At the same time, it has ignored much of the crime in locations controlled by entities and enterprises friendly to China.

Ideally, the U.S. and China should set aside their geopolitical rivalry when it comes to cooperating on combating transnational crime in the Mekong. Doing so could encourage greater Chinese cooperation with initiatives such as the U.S.-led Global Coalition to Address Synthetic Drug Threats, as well as the Thai operations and intelligence centre on transnational organised crime in the Mekong. Although this scenario is more aspirational than likely, the two powers could also bring about enhanced regional collaboration by focusing on ways in which their respective Mekong cooperation platforms (the Mekong-U.S. partnership and the Lancang-Mekong Cooperation) could support initiatives to tackle the governance and socio-economic factors that allow organised crime to flourish, with programs designed to foster good governance, fight corruption, alleviate poverty and create jobs.

It is equally important to address the human cost of transnational crime. States should provide more assistance to secure the release of, and support, the thousands of people from countries across the world being held against their will and often severely abused in online scam centres where they are forced to carry out criminal activities in Myanmar, Laos and elsewhere in the region. Too often, these people, even if they are rescued or able to escape, are held on immigration offences or charged for the crimes they were forced to commit. A more proactive approach from their embassies in the relevant countries is needed, as is a victim-centred approach from the countries where they were held or fled to.

Reining in the sprawling illegality that has grown along the Mekong will not be easy. But the consequences of permitting the region’s illicit businesses to keep booming are too great for governments not to try their best. Better coordination is the place to start.

Bangkok/Brussels, 18 August 2023


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