Informal Economy Reports

EUROSTAT: Trafficking of Arms

Introduction

Illicit firearms trafficking is one of Europol's priority crime areas¹ . In 2014, the European Union Agency for Law Enforcement Cooperation estimated that there were almost half a million lost or stolen firearms in the EU² . According to other estimates 'the illegal firearms trade generates between EUR 125 million to EUR 236 million per year globally, which represents between 10 to 20 % of the total trade in legal firearms'³ . A key feature of illicit firearms trafficking is that it is mainly caused by diversions from the legal firearms trade and from conflict-related stockpiles. The illegal firearms trade occurs on both large and small scales, and the firearms are traded by a variety of methods (some more sophisticated than others)⁴.

Scope, Methodology, Compilation Practices, and Data Sources

Although there is no explicit definition of illicit firearms and their trafficking in the macroeconomic statistical manuals, a definition of this particular illegal economic activity (IEA) could be borrowed from Article 3(e) of the United Nations Firearms Protocol⁵, which defines it as:

'…the import, export, acquisition, sale, delivery, movement or transfer of firearms, their parts and components, and ammunition from or across the territory of one State Party to that of another State Party if any one of the States Parties concerned does not authorize it in accordance with the terms of this Protocol or if the firearms are not marked in accordance with Article 8 of this Protocol.'

On that basis, an illegal firearms trafficker could be defined as a person who deals or trades in illegal firearms. Such traffickers are considered to be self-employed and their economic activity is classified according to the latest version of the Statistical classification of economic activities in the European Community (NACE rev. 2) as 'Other retail sale not in stores, stalls or markets'.

As is the case with other IEAs, the available data on illicit firearms trafficking is scarce overall. One of the common datasets used as a proxy for quantities is data on seizures from the police and customs services⁶. Therefore, supply-side models would be better fitted to model the illegal firearms trade. However, data on seizures represent only a fraction of all illicit firearms trafficking, so adjustments for the perceived detection rate are necessary. Another issue with seizures is that the data tends to be quite volatile, so models should be based on long-term trend analysis of the time series if possible. Other input data for a supply-side model could be firearm diversions (thefts/losses); crimes committed with firearms; firearms registries; and the legal production and trade of firearms.

For prices, data might be available in Member State interior ministries, police records, investigative reports and research. In conflict zones, prices tend to increase as security decreases⁷. Another data source on prices of illicit firearms could be the cryptomarkets⁸. It has to be noted, however, that evidence suggests prices quoted in the Dark Net tend to be above the average for a number of countries⁹.

As with other IEAs, data from estimates are usually calculated for a given benchmark year and then extrapolated. Proxies that could be used for this purpose are to be found in crime statistics, for instance by using firearms-related homicide rates.

Various sources indicate that the firearms trafficking market in Europe is in general rather small, and that 'trafficking is almost exclusively a supplementary rather than a primary source of income for a small number of organised criminal groups involved'¹⁰. A similar conclusion is suggested, for example, by Smekens and Verbruggen (2005) who estimate a maximum annual benchmark value of 12 million euro due to trafficking of firearms in the Netherlands, which 'is negligible in the context of the [Dutch] national accounts'¹¹. For this reason, estimates of this IEA are not included in the EU national accounts and balance of payments data.

Current Challenges and Conclusions

Trafficking of arms is conceptually similar and follows the same manner of recording as with smuggling of other products. On the other hand, unlike most other smuggled products firearms are durable, i.e. 'a well-maintained AK-47 will last indefinitely'¹². In this regard attention should be paid to potential misclassification issues and/or risks of double-counting.

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¹European Commission, Europol, https://www.europol.europa.eu/crime-areas-and-trends/crime-areas/illicit-firearms-trafficking

²Ibid.

³European Commission (2013), http://europa.eu/rapid/press-release_MEMO-13-916_en.pdf

⁴European Commission (2018), 'Handbook on the compilation of statistics on illegal economic activities in national accounts and balance of payments', Luxembourg, paragraph 141.

⁵United Nations (2001), 'Protocol against the Illicit Manufacturing of and Trafficking in Firearms, Their Parts and Components and Ammunition, supplementing the United Nations Convention against Transnational Organised Crime', New York.

⁶According to the European Systems of Accounts 2010 (paragraph 6.10) these are classified as uncompensated seizures (K.4).

⁷Florquin, N. (2014), 'Arms Prices and Conflict Onset: Insights from Lebanon and Syria', European Journal on Criminal Policy and Research, Vol. 20-3, pp. 323-341.

⁸As discussed during the third meeting of the task force on the compilation of statistics on IEA in NA and BOP.

⁹Global Financial Integrity (2017), 'Transnational Crime and the Developing World', Washington, p. 14.

¹⁰Europol, https://www.europol.europa.eu/crime-areas-and-trends/crime-areas/illicit-firearms-trafficking

¹¹Smekens, M. and Verbruggen, M. (2005), The illegal economy in the Netherlands, Statistics Netherlands.

¹²United Nations Office on Drugs and Crime (2010), The Globalization of Crime: A Transnational Organized Crime Threat Assessment, p.129.