THE POLITICAL ECONOMY OF DRUG TRAFFICKING

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THE POLITICAL ECONOMY OF DRUG TRAFFICKING

• INTRODUCTION
• 1. Pervasiveness of issue
• 2. Typicality? Or an extreme case?
• 3. Categorizing illicit drugs
• Marijuana
• Heroin
• Cocaine
• ATS/designer drugs
• 4. Note Dangerous prescription drugs

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READING

• Smith, Talons, ch. 8 review
• CR Selection 5 Astorga and Shirk, Drug
  Trafficking Organizations and Counter-Drug
  Strategies
• DFC, Contemporary, chs. 2 and 9 (Mexico
  Colombia)

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OUTLINE

• The Global Market
• The Structure of Profits
• Patterns in U.S. Consumption
• U.S. Policy The Drug Wars
• Implications for Latin America
• Drug Wars in Mexico
• Questions of Public Policy What Are the
  Alternatives?

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• THE GLOBAL MARKET
• STRUCTURE AND SCALE
• 1. Worldwide flows, variations by drug
• 2. Consumption around the world
• 3. Roles for Latin America the rise of
  cartels
• 4. The U.S. market magnitudes, profits and costs

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Global Production and Trafficking
MDMA
Amphetamine Type Stimulants
Cocaine
Heroin
Potential Cocaine Production (mt)
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Sources of Heroin
Metric Tons

5,106
5,082
5,000
4,452
4,263
4,068
3,671
3,441
3,389
3,302
1,264
ONDCP/FEB02
Values for Latin America are projected
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Estimated Cocaine Flows

54 percent Mexico/Central American Corridor
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Challenges to Interdiction
ARRIVAL ZONE
3 direct
TRANSIT ZONE
21
10
16
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SOURCE ZONE
ONDCP/FEB02
SOURCE Annual Interagency Assessment of Cocaine
Movement, April 2001
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• Interdiction of Cocaine, 1999

75 METRIC TONS DETECTED DEPARTING FOR NON-US
MARKETS
Arrival Zone Seizures
Transit Zone Seizures

MEXICO / CENTRAL AMERICAN CORRIDOR
-60 MT
-37 MT
54 277 MT
512 Metric Tons Depart South America for U.S.
382 MT Potentially Arrives in the U.S.

43 220 MT
-14 MT
-7 MT
CARIBBEAN CORRIDOR
3 15 MT
DIRECT TO CONTINENTAL U.S.
-12 MT
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Who Are the Winners?

• Where are the profits?
• Price structure of one kilo of pure cocaine,
  mid-1990s
• Coca leaf (e.g., farmgate in Peru) 370
• Export of finished product (Colombia) 1,200
• Import of finished product (Miami) 20,500
• Wholesale by kilo (in Chicago) 31,000
• Wholesale in one-ounce packets (Chicago)
  62,000
• Final retail value (Chicago) 148,000

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• Trends in Drug Consumption, 1985-2000

Percent Reporting Past Month Use of Any Illicit
Drug
The survey methodology was changed in 1999.
Estimates based on the new survey series are not
comparable to previous years.
Source SAMHSA, National Household Survey on
Drug Abuse.
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U.S. DRUG USERS

• 1990 13.5 million (6.7)
• 2000 14.0 million (6.3)
• 2007 19.9 million (? 8)
• 2010 22.6 million (8.9)

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• Current Usage by Drug, 2000

Past Month Users (in Millions)
(incl. crack)
(any psychotherapeutic)
Source 2000 National Household Survey on Drug
Abuse
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Usage of Marijuana
Percent Reporting Past Month Use of Illicit
Drugs, 2000
Only a drug other than marijuana
Marijuana only
Marijuana and some other drug
Source 2000 National Household Survey on Drug
Abuse
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• Drug Abuse by Age Cohort

Percent Reporting Past Month Use of an Illicit
Drug
Prime example of an aging cohort of drug users --
this group began use in 1970s.
Source 2000 National Household Survey on Drug
Abuse
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• Drug usage among American Students

Percent Reporting Use of Any Illicit Drug
Source Monitoring the Future Study
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• Consumer Expenditures on Illicit Drugs, 2000

U.S. Users Spend 63.2 Billion Annually
Billions of Dollars (Projections for 1999)
Source ONDCP Paper, What Americas Users Spend
on Illegal Drugs
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• Economic Costs of Drug Abuse

Dollars, in Billions
Source Office of National Drug Control Policy,
2001.
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• Calculation of Economic Costs of
• Drug Abuse

(Billions of dollars)
Source Office of National Drug Control Policy,
2001.
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• U.S. POLICY THE DRUG WARS
• 1. Participants and processes
• 2. Strategic content
• Goal Reduce illegal drug use and availability
• Enforcement gt education, treatment, thus 21
  ratio in federal budget
• Supply control gt demand reduction, thus
  interdiction and eradication
• Assumption One policy fits all.
• Criteria for evaluation

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• Composition of Federal Expenditures, 2000

Fiscal Year 1986 -2003
Dollars, in Billions
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• U.S. Prison Population, 1985-2000

Federal Prisons 145,416
Local Jails 621,149
Number of Inmates, in Millions
State Prisons 1,236,476
Source Bureau of Justice Statistics, 2001
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• Imprisonment of Drug Offenders, 1980-2000

68,360 Drug Offenders in Federal Prison in 1999
251,200 Drug Offenders in State Prisons in 1999
Source Bureau of Justice Statistics
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• Reasons for Drug Arrests, 2000

Source Uniform Crime Reports, FBI.
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• IMPLICATIONS FOR LATIN AMERICA
• 1. Economic costs and benefits
• 2. Violence (and drug wars in multiple forms)
• 3. Corruption
• 4. Growth in consumption
• 5. Threats to governability
• Challenges to sovereigntye.g., invasion of
  Panama 1989
• Process of certification (now modified)

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QUESTIONS OF PUBLIC POLICY WHAT ARE THE
ALTERNATIVES?

• INTRODUCTION
• 1. What might be desirable? Or feasible?
• 2.    What are the prospects?
•  
•  

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• ARE THERE ALTERNATIVES?
• 1. Continuation (or acceleration) of current
  policy
•          Increased budgets
•          Establish coherence
•          Long-term durability
•  

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• 2.      Legalization
•         Regulation, not legalization
•         Decriminalization?
•         Partial or complete?

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• 3. Changing priorities
•         Demand reduction gt law enforcement
•         Law enforcement more on money
  laundering, less on retail pushers
•         Focus on governability as key issue in
  Latin America
•         Multilateral efforts against
  consumption and demand, rather than supply
•         What about certification?
•  
•  

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Availability of Treatment
Percent of Population 12 or Older
.
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• Costs and Benefits of Drug Treatment

Source CSAT, National Evaluation Data Services
Report
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ENLIGHTENMENT IN LATIN AMERICA!

• Marijuana personal use is decriminalized in
• Argentina
• Brazil (depenalized)
• Colombia
• Costa Rica
• Mexico
• Peru
• Uruguay
• Venezuela