Blood Profits

by Vanessa Neumann

  To get to Ulaanbaatar, Mongolia, I had to take four flights and travel more than thirty hours from Guatemala City. My last flight connection to Ulaanbaatar was in the Beijing airport. It was August 2012, and I had never seen anything like it. I gazed up and around like some country cousin arriving among Manhattan’s skyscrapers for the first time. Beijing’s massive airport had the latest in technology, from screens to trains, and it all ran impeccably.

  The Beijing airport flaunted the might of the Chinese security apparatus. Once I made it through the biometrics scanning my face or my eyes (I couldn’t tell which), the customs agents had me take out every single item from my carry-on. They were bemused by all my charging cables for phones and laptops and camera. They were suspicious of my intent: I had to explain why I had each item with me. I was naïvely amused.

  I hadn’t yet learned that none of my colleagues would dream of traveling to China with their laptops and cell phones. China’s People’s Liberation Army famously infiltrates the machines and systems of anyone who appears even remotely interesting. When you turn on your cell phone or laptop and join a Wi-Fi, you’re cooked.

  I waited for hours at the gate for the flight to Ulaanbaatar, which was delayed. My brain was shrouded in fog and my eyes were failing from exhaustion. I slept as we flew for hours over empty steppes before landing at the rather more ramshackle Chinggis Khaan International Airport.1

  Yep, I thought as we pulled into the center of town from the airport, this is a country set up for extractive industries, all right. In Ulaanbaatar’s central square, sculptures were interspersed with Soviet-style buildings framed by Louis Vuitton, Chanel, Bulgari, Cartier, and Ferrari showrooms. On the roads beyond the square, some of those Ferraris struggled to navigate potholes big enough to swallow them and yaks carrying loads or pulling carts. The inference was clear: a few people were making a lot of money, but it wasn’t being spread around broadly to the locals or even being invested in the infrastructure. The people buying the Ferraris were whisking their money elsewhere.

  But I wasn’t there to discuss corruption or asset repatriation; I was there to speak about illicit trafficking at the Central Asia Counter Transnational Threats Symposium, cohosted by the US Defense Department and Mongolia’s Institute for Strategic Studies. Situated between Russia and China, Mongolia is in what pundits call “a tough neighborhood.” Though geographically far to the east, in some respects Mongolia is considered part of another tough neighborhood, Central Asia: Azerbaijan, Uzbekistan, Turkmenistan, Kyrgyzstan, Tajikistan, and (lest we forget) Pakistan and Afghanistan. Central Asia and Mongolia are tied by ethnicity and history. The Mongolian empire, the largest contiguous land empire in history, was founded in 1206 by Chinggis Khan. His grandson, Kublai Khan, conquered China and established the Yuan dynasty. The Mongol’s stocky physique and straight black hair, framing a flat, broad face with narrow eyes, have left a strong genetic imprint from China to Uzbekistan.

  I joined the rest of the congregants checking into a massive Soviet-era hotel, whose bizarre blocks in triangulated interlocking shapes made it look like a game of Tetris played by giants. Inevitably, it, too, was named Chinggis Khan. It would be our home, as well as conference site, giving us (in typical US Defense Department fashion) little reason to leave its walls. I, of course, had other plans: there was no way I would fly all the way to Ulaanbaatar and not slip away at an opportune moment to do a little sightseeing.

  The overall mood of the place was of neglected grandeur. Right in the middle of the lobby, an enormous portrait of the great Chinggis Khan himself peeked from behind streams of crystals that gave it simultaneously a demure and a grandiose appearance. It struck me as a flashier version of those curtains behind which noble European families of the Middle Ages hid their religious paintings, lest the painted subject bear witness to the unholy activities of the house’s residents. The rooms were terrible: the Formica bathroom countertop and the monastically plain wooden night tables all had cigarette burns; the carpets were stained.

  Our Mongolian hosts were kind enough to break us into the time zone gently. Before we got down to business, they took us on a half-day field trip so we could see a sliver of landscape beyond the capital and get to know each other before we were locked into a room together for three days of work. The big bus bounced its way along, shedding the buildings and heading straight onto a narrow highway, at some section of which we stopped for a display of falconing. You could photograph the tribally attired men and their birds, but donations were requested, of course.

  Then back on the bus for more bouncing along until we arrived at the pièce de résistance: the massive edifice in honor of Chinggis Khan, out in the middle of nowhere. Legend has it that it was at this spot that the great Khan found the whip that he used on his horse through his conquests over what is now Russia, China, and Eastern Europe. A man and his horse. He faces east to symbolize the sun rising on the Mongol empire.

  Inside the huge rotunda under the horse’s feet, we were treated like dignitaries and given a sumptuous feast to enjoy while exotic boys and girls danced and sang in full tribal regalia. After lunch, we exited at the top of the horse’s mane to check out the view: other than the parking lot, there was nothing but hills and fields as far as the eye could see. It would be quite something to be part of a Mongol horde out here: nothing but horses, men, whips, and weapons—a military reductio ad absurdum.

  Upon returning to the hotel, my head was swirling from the jet lag. I worried I wouldn’t be able to string a coherent sentence together at the conference. My standard remedy is to seek out the gym. The elevator told me it was in the basement. When I got there, it was locked and dark and looked like no one had visited in years.

  Indeed, they were downright confused when I asked at the front desk if someone had the key or knew how to get in. One person at reception was surprised to hear they had a gym; the other struggled to find where such a key might be kept. Finally, the helpful man found it and emerged victorious from some nether region of the reception desk. But our joy was short-lived: the musty, dark room had machines from the 1980s—yes, the Soviet era.

  The conference hall, however, was enormous and designed to impress. The outsized ballroom had been arranged with large tables in a U shape to frame the alternating presenters under the fluorescent lights. I was one of the presenters, and discussed what had become my security terrain: how criminal groups and terrorists were increasingly benefiting from collaborating in the gray areas of illicit trade.

  In one of the breakout sessions (held in glass enclosures), we worked directly with the military and political representatives of the Central Asian nations, mapping out on whiteboards different ways to approach solutions to their smuggling problems. These illicit economies were big, and some of the people in the room were probably benefiting from them. But no one could say that; we were there to advise on “capacity building,” helping them identify security gaps that allowed illicit goods to flow through their countries.

  For Central Asia, the goods are heroin (coming mainly from Afghanistan), terrorists, and weapons (particularly into and out of Afghanistan and Pakistan). Azerbaijan and Kazakhstan have a lot of oil and gas and a great deal of corruption; few people know where that dark money ends up. Mongolia’s legal system and financial structures to fight money laundering are weak, despite its being a signatory to the UN Convention Against Corruption and its commitment to the Financial Action Task Force standards, leaving it wide open not only to its own corruption but to exploitation by Russian and Chinese organized crime groups.

  The 2004 reopening of North Korea’s embassy in Ulaanbaatar raised international concerns that would be used to finance North Korea’s illicit financial activities through narcotics trafficking and counterfeiting. Office 39 is a North Korean government bureau dedicated to raising hard currency for the sanctioned country through illicit activities, including the manufacture of counterfeit US$50 and US$100 bills (of which North Korea is the main source) and counterfeit cigarettes,
narcotics manufacture and trafficking, and the sale of missile technology.2 Mongolia is in a tough neighborhood indeed.

  “Tell me about your border controls,” I inquired of one Central Asian military commander, as I stood by the whiteboard in one of the glass-enclosed rooms.

  “What border controls?”

  Great. I think my work is done here. Where do I send my invoice?

  They were charming, though, in their own Central Asian way. During coffee breaks, when I emerged seeking sunlight to keep me awake, it was into a fog of cigarette smoke: to a man, they puffed away on strong brands no one had ever heard of. It made accepting a cigarette from them a pleasure that was extra-guilty.

  “Oh, I think it’s a legal requirement throughout Central Asia that everyone over the age of fourteen smoke relentlessly,” said Brianne Todd of the Defense Department’s Near East South Asia Center for Strategic Studies (the NESA Center), as her boss, Roger Kangas, nodded his head.

  I have yet to meet greater experts on Central Asia than those two. They taught me a lot about the region, including what to order off the Mongolian menu when we made a break for dinner outside the hotel one night. Brianne Todd in particular impressed me: she is unrelentingly smart and tough, her wit taking no prisoners, and though much younger than I, she had spent an inordinate amount of time traveling through Central Asian capitals and badlands, working with (and no doubt schooling) many of the region’s strongmen, in a region that takes particular pride in them: presidents-for-life are the norm.

  I persuaded Roger and Brianne to take a little excursion with me that was not on the official schedule: to Hustai National Park, to find the elusive Takhi horses, the wild horses of Mongolia. These are not the horses the Khans rode into battle; no one has ridden them. They are the only breed of horse never to have been tamed, and are therefore legendary. They run only at dawn and dusk, and you are not supposed to get within three hundred meters of them.

  It was a long drive in the dim light of a rainy crepuscular penumbra. After paying our entry fee, we stood by a field a guide had recommended. We were quite sodden and tired, heading toward despondent. And then, they appeared: the horses, a little horde of their own. They galloped over the hill, wild and free, shaking their manes as if taunting us: You will never touch me, much less bridle me. We were lucky: they ran by closer than they apparently usually do, allowing us to admire them all the more. And then, just like that, they were over the hill and into the horizon. We chattered with delight all the way back to our hotel.

  On our last night of the conference, our Mongolian hosts thanked us by giving us commemorative mugs filled with desiccated nuggets of curdled yak’s milk—a local delicacy to which I didn’t take a liking. Using the excuse that the foodstuff might not survive the journey home or be approved by US Customs and Border Protection, I dumped the nuggets, but kept the mug. I still have my morning coffee in it.

  ENTERING BEIJING

  On my way back to New York, I decided to take a few days on my own in the Chinese capital, since I didn’t know when I might return to that side of the world. I was still climbing the learning curve of the gray markets of illicit trade.

  Upon landing back in Beijing, I got into a tiny but tidy taxi and handed the driver the address of my Western chain luxury hotel, not too far from the Forbidden City. Vast highways channeled cars that ran without delay past towers, the most gleaming of which was the headquarters of the CCTV, the state-run channel, on which I have since been interviewed a few times. The enormous reflective square (not cube) building looks like some giant tried to pull it apart, gave up the effort, and plopped it on one of its crooked sides. From a different angle, it forms an upside-down U, like a magnet fallen from the heavens and stuck to the Earth.

  My first stop was not the Imperial Palace or Tiananmen Square or the Great Wall, but a hutong that a friendly China expert had recommended I experience and given me a book (which I read) explaining why. Hutongs are old, crowded neighborhoods with crumbling housing and very narrow streets that were standard in the China of yesteryear. Not just geographic locations, they often center on an activity or a family, giving each its distinct character, with names like “Drum and Bells” and “9 Turns.” One of the most popular is Wudaoying Hutong, now hip and popular with strolling tourists, hunting the boutiques and cafés lining the narrow alleys.

  It is somewhat ironic that both the Chinese and tourists are enjoying the coolness of what have been Beijing’s truly residential areas for centuries; sequential government programs sought to raze them in the interest of modernization, first during the Great Leap Forward when communism was fresh, and then in time for the 2008 Olympics. By the time the Olympics rolled around, though, China’s understanding of soft power (the power of exporting one’s culture and ideas) had grown. Some in the Chinese Communist Party had come to appreciate that the preservation of some of those hutongs would be good for the Chinese narrative that would be sold to the world. So they are maintained (some even slightly “improved,” cleaned up to the point of sterility) as jewel-like curiosities in all their messy, crowded, noisiness, as slices of true Chinese life for consumption by the tourists.

  THE SILK ROAD MARKET: COUNTERFEITS AND TRIADS

  While the tourists wonder at Chinese history—from the boisterous to the cleansed, from the imperial to the Communist—they also consume another Chinese claim to fame: counterfeiting of Western products. China’s consumption of Western intellectual property has been ravenous, as any manufacturer (not just of luxury goods) can tell you. From Louis Vuitton handbags to Apple chargers to Viagra, it is all counterfeited in China. According to the Organisation for Economic Co-operation and Development (and anyone else who hasn’t been living under a rock), China is the number one source of counterfeited goods.3 Behemoth Chinese online retailer Alibaba may have undertaken measures to clean up its act since it floated its shares on the New York Stock Exchange, but in Beijing there remains the Silk Road market: a whole shopping mall full of counterfeits, from the luxurious to the mundane.

  The Silk Road market is a five-story, all-counterfeit shopping center featured in “Best of Beijing” lists on Web sites, including TripAdvisor. It has learned some things the hard way, though: you can tell which companies are the most aggressive in pursuing copyright infringement, because those are the products for which you have to ask. I walked through every floor. Tory Burch and Chanel shoes were mixed in with frankly fake Rolexes. But I felt like I hadn’t hit pay dirt yet, like I was missing something. I went in search of expensive luggage and handbags. Louis Vuitton and Hermès were the real prizes.

  I knew women on New York’s Park Avenue and London’s Mayfair who bought fake Hermès from other genteel women who sold them out of their apartments. They even ranked them by quality of copy. A good fake Birkin went in New York for about $1,000—much cheaper than the $15,000 often paid for the real thing, if you were lucky enough to get off the waiting list. If Londoners and New Yorkers were getting them from here, and I was in the epicenter of counterfeiting, I was sure I could find the source if I pressed hard enough. I browsed nonchalantly through one more upscale luggage vendor and opened with a slightly easier target.

  “Have anything more interesting?”

  “What you want?”

  “Louis Vuitton.”

  The woman looked me over suspiciously. She glanced around the tiny shop to make sure no one else had entered. She stepped outside the door to scan for anyone who might be within earshot. Then she came back to me.

  “Follow me.”

  She opened a door in the back of the shop and shut it behind me promptly. There were lots of LV-emblazoned suitcases, handbags, wallets, and cosmetic cases, some of them wrapped in clear plastic.

  “We careful. Louis Vuitton. They send spies and they sue. So we hide.”

  I nodded and looked around.

  “Tell no one. What you want?”

  I felt like an undercover DEA agent doing a drug buy. “A carry-on. Small suitcase.”

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bsp; She showed me several. She explained that the better ones came with the logo-stamped locks and keys, and she showed me the certificate of authenticity inside.

  “Better. No difference. More money.”

  Judging by the relative fluency of her English, she likely did this negotiation a lot, covert or not. She wanted around $600. I haggled with her, then thanked her for her time, saying I would think about it, and walked away. I was intrigued that this was so easy.

  The next day, I hired a guide and driver to take me out to the Great Wall of China. In fit shape, I trekked high and far, but what I was seeing for myself was only a minuscule fraction of the huge snaking structure that can be seen from space. The counterfeits remained on my mind, though. Descending from the Wall, I asked my guide (who had waited in the car) if she knew where one could buy counterfeit Hermès Birkin bags.

  “Yes. I know the best.” Lily’s English was perfectly fluent. Her other job was as an interpreter.

  We drove back into central Beijing, just a few blocks from my counterfeit shopping mall of the day before, to a business known as “Jinyie Xi Li.” The car wound its way through low buildings toward the back of a warehouse. It stopped at the top of the alleyway, and we got out to walk the rest of the way.

  “You’re from New York?” Lily asked.

  “Yes. How can you tell?”

  “You walk fast. People from New York always walk faster than any other American.”

  “That’s true. We are always in a hurry,” I agreed.

  Ascending some small metal steps, Lily pressed a buzzer next to a small metal door. A voice on an intercom under a camera answered. They spoke in Mandarin, and the door was buzzed open. Inside there was a glass-enclosed window, with a man behind it. Lily approached the man, provided some sort of identification, and spoke more Mandarin, gesturing to me, presumably explaining I was a client. He emerged and unlocked another metal door.