Russian Spies Have Gone Full Mafia Mode Because of Ukraine

Russian-backed crime gangs are expanding illegal operations such as smuggling heroin and millions of bootleg cigarettes to boost hard cash revenues in the wake of ongoing sanctions related to the war in Ukraine, senior intelligence and law enforcement officials have told VICE World News.

In early September, in a joint operation with Poland’s border service and other countries, Belgian customs and federal police broke up a Belarus-based smuggling ring which had pumped 57 million cigarettes and 48 tons of cut tobacco, with a total tax value of more than €32 million (around £28 million), into illegal factories in Belgium intended for sale across the EU.

While such illegal operations have been commonplace in the past, multiple NATO and European Union officials believe the massive operation was state-sanctioned by Belarusian and Russian intelligence as a way to replace operational incomes lost to Ukraine-related sanctions.

That operation followed a Lithuanian operation in late May where two fake cigarette factories run by Russian-linked organised crime groups believed to be working directly on behalf of Russia’s federal security service, the FSB, were raided in Lithuania. The factories were producing bootleg versions of popular brands for the UK market worth an estimated €73 million (around £63 million). 

“Tobacco is easy and low profile [to produce and smuggle] compared to illegal drugs and the risks are lower when caught,” said a Belgian Federal Police official, who is prohibited from speaking on the record to the media. “But what we have seen since the Ukraine-related sanctions is even more overt backing for these operations from government facilities in both Belarus and Russia. The mafia used to pay governments for protection, now it seems it's become a way to collect hard currency, to replace income lost to sanctions.”

The Lithuanian bust had initially been seen by law enforcement as a normal organised crime operation. But the Belgian police official said that intelligence services have since reported the operation was in fact directed by intelligence officials in Moscow to raise money for operations such as spying in the Baltic states. This, according to officials, is an increasing trend across all aspects of traditional Russian organised crime activity in the European Union, whereby proceeds of crime are being diverted to Russian intelligence operational accounts. 

So far in 2022, Belgian authorities have discovered five illegal tobacco production sites and 15 storage warehouses across the country, confiscating more than 274 million cigarettes, 88 tons of cut tobacco, 65 tons of water pipe tobacco and 40 tons of raw tobacco. Official estimates put the total tax value of the confiscated products at more than €139 million. In June a study on behalf of cigarette manufacturer Philip Morris International, found that “the number of illegal cigarette factories in Belgium is on an alarming rise” and described how factories in the country supply most of northern Europe with illegal cigarettes. 

At the time, Kristian Vanderwaeren, Belgian General Administration of Customs and Excise, told VICE World News in an interview: “The first half of the year, we were forced to push large amounts of resources intended to combat cocaine and other illegal drug trafficking to monitor the new sanction regimes of Belarus and Russia and prevent newly banned trade. By midyear, we had seen a massive increase in traditional illegal activity from Russian-linked groups that appear to have Russian government backing working to develop new revenue streams to replace damage from the sanctions.”

For Vanderwaeren, whose responsibilities include Antwerp’s port, the physically largest in the world, the immediate threat was an increase in counterfeit and untaxed tobacco products. Illegal tobacco lacks the cache of illegal drugs such as cocaine and heroin but represents huge revenues for illegal groups that are often involved in other smuggling operations.

Law enforcement and intelligence officials said that there is now little operational difference between Belarusian and Russian organised crime and intelligence activities. The two countries have grown even closer since the failed 2020 uprising to oust the Belarusian regime and in the wake of both countries becoming virtually international pariahs following the invasion of Ukraine in February.

“[Russian and Belarusan mafias] have always worked together but post-Ukraine, there’s an ever tightening space between the two,” said a NATO intelligence official, who tracks Russian organised crime across Europe, and cannot be named. “We have seen a huge uptick in operations to both make money for government operations and to destabilise Western Europe. None of this is particularly new but the scale is developing into a tsunami of illegal activity backed by state actors aka Putin’s operatives.” 

Three law enforcement and intelligence officials, speaking in general terms on background, said that increases in drug and human trafficking, counterfeit goods, and widespread criminal activity have been tracked, all directly linked to Russian organised crime with clear support from Moscow.

“Over the past 20 years, we witnessed the consolidation of Russian organised crime around oligarchs controlled by Putin or directly by the Russian intelligence services,” said a central European counterintelligence officer, who works undercover for a government semi-friendly to Russia, who asked not to be named for safety reasons. “It became a situation where everyone was free to earn however they liked, but with the caveat that favours, tribute, and operations to support Russian intelligence and political priorities were mandatory.”

But since the invasion of Ukraine and the extensive sanctions that hit the Russians and limited the ability of various pro-regime oligarchs to openly operate in Europe, there’s been a policy shift to open up what the Belgian police official called, “the criminal environment around Europe,” to increasingly overt criminal activity that is believed to specifically benefit Russian intelligence operations.

“They [intelligence operations] need hard currency to operate in Western and Central Europe and while sanctions have not devastated Russia, we have clear indications that there’s a cash crunch for off-the-books intelligence operations that were once funded by oligarchs at the request of Moscow,” said the Central European officer. “And we have seen a shift to completely illegal activity from drugs, to bootleg products, to illegal sales of oil and gas, and even a shift by state controlled industries, particularly Belarus to producing illegal or counterfeit goods like pharmaceuticals.”

“Spooks need hard cash to operate and have been tasked with making their own incomes to conduct operations because of Moscow’s limits due to spending on the war and the bite of sanctions,” confirmed the NATO intelligence official, who also cannot be named. “Putin can still demand an oligarch pay for an operation but it’s a bit harder to move money around… crime has always paid Moscow well and with relations with the West so damaged, there’s little incentive for Putin to reign things in. Quite the opposite.”

One area of particular alarm is heroin smuggling, which has been a traditional money maker for Russian organised crime, particularly Chechen groups with direct links to strongman Ramzan Kadyrov, a key Putin ally, with estimates that Russian-linked groups control at least a third of Europe’s heroin because of its access to Central Asia. 

“Putin needs cash and the Taliban needs cash,” said the NATO official. “Afghans and Russians have a long history of cooperating over the drug trade and we have already seen increases in smuggling along the northern European routes, whatever restraint there was in place to manage the flow of drugs from east to west on the part of Putin disappeared with the new sanctions.”

Vanderwaeren said that Belgian customs had intercepted multiple tons of heroin at the Antwerp port in 2022, which he described as “extremely unusual.” Antwerp seized nearly 83 metric tons of cocaine in 2021 at the port but traditionally heroin seizures have been small and rare by comparison. 

“The Kurdish-Turkish mafias have traditionally smuggled heroin by land up the Balkans to southern and central Europe, that flow has remained consistent but we are seeing huge increases of heroin smuggling in northern routes traditionally controlled by Russian affiliated groups,” said the Belgian federal police official.  

“Nobody with access to intelligence would deny that all the previous restraints on Russian organised crime appear to have been lifted in an effort to raise money,” said the NATO official. “There’s always been a lot but now we see them openly using the tools of the state. If Putin's Russia was once a hybrid government-mafia, post Ukraine and sanctions, it’s transforming into a state controlled mafia and it’s only going to get worse as Putin looks for ways to interfere in Western Europe – attacking the economy and law and order – while also raising critical hard currency they can actually spend aka dollars and euros.”

The direct involvement of a state like Russia or Belarus in criminal enterprises, warned multiple officials, meant access to an industrial base – factories for pharmaceuticals in particular were mentioned repeatedly - not normally usable by mafia style organisations. 

“It’s one thing to traffic and produce counterfeit pharmaceuticals or illegal drugs, that’s evergreen,” said one NATO intelligence official. “But access to a national industrial base like Belarus and Russia means exponential changes in scale and we are already seeing major increases in production, as well as money that normally goes to the gangs used to fund Russian intelligence operations. And every indication is that this will get much worse [as sanctions increasingly bite and Russia becomes further politically and economically isolated.]”