1

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

2

READING

• Smith, Talons, ch. 14

• DFC, Contemporary, chs. 2 and 9 (Mexico + Colombia)

3

THE GLOBAL MARKET:

STRUCTURE AND SCALE

1. Worldwide flows, variations by drug

2. Consumption around the world

* 149-272 million users

* 15-20 million “addicts” or problem users

* $320 billion per year (est.)

3. The U.S. market: magnitudes, profits and costs

4

0

200

400

600

800

1000

1996 1997 1998 1999 2000

Bolivia

Peru

Colombia

Global Production and Trafficking

Amphetamine Type Stimulants

Cocaine

MDMA

Pot

enti

al C

ocai

ne P

rodu

ctio

n (m

t)

0

1000

2000

3000

4000

5000

6000

1996 1997 1998 1999 2000

Pot

enti

al O

pium

Pro

duct

ion

(mt)

MexicoColombiaSE AsiaSWAsia

Heroin

Sources of Heroin

0

1,000

2,000

3,000

4,000

5,000

6,000

91 92 93 94 95 96 97 98 99 00 01*

Colombia

Mexico

Pakistan

Thailand

Vietnam

Laos

Afghanistan

Burma

* Values for Latin America are projected

3,441 3,3893,671

3,302

4,068

5,106 5,000

4,452 4,263

5,082

1,264

Metric Tons

ONDCP/FEB02

6

54 percent

Mexico/CentralAmerican Corridor

Estimated Cocaine Flows ca. 2000

43 percentCaribbean Corridor

3 percentDirect to U.S.

7

ONDCP/FEB02

EUROPE 92%

AFRICA < 1%

CANADA 7%

ASIA < 1%

Cocaine Flows to Non-U.S. Markets

8

Interdiction of Cocaine, 1999

512Metric Tons

DepartSouth

Americafor U.S.

Arrival Zone Seizures

Transit Zone Seizures

MEXICO /CENTRAL

AMERICANCORRIDOR

-60 MT -37 MT

3% 15 MT

43%220 MT

54%277 MT

75 METRIC TONS DETECTED

DEPARTING FOR NON-US MARKETS

-14 MT -7 MT

-12 MTDIRECT TO CONTINENTAL U.S.

CARIBBEANCORRIDOR

382 MTPotentially

Arrives in the U.S.

9

Cocaine and Heroin Prices: 1981-2010

10

Cultivation: 2000-2009

11

• Where are the profits?

• Price structure of one kilo of pure cocaine, ca. 2000:

Coca leaf (e.g., farmgate in Peru) $ 300Coca base (farmgate) 900Cocaine hydrochloride (export/Colombia) 1,500Cocaine hydrochloride (import/Miami) 15,000Cocaine (67% pure/dealer U.S.) 40,000Cocaine (67% pure (retail/U.S.) 150,000

Who Are the Winners…?

12

Trends in Drug Consumption, 1985-2000

Percent Reporting Past Month Use of Any Illicit Drug

0

5

10

15

1985 1988 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

Source: SAMHSA, National Household Survey on Drug Abuse.

*The survey methodology was changed in 1999. Estimates based on the new survey series are not comparable to previous years.

New surveyseries*

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%)13

14

17%59%

24%

Marijuana only

Marijuana and some

other drug

Only a drug other than marijuana

Percent Reporting Past Month Use of Illicit Drugs, 2000

Source: 2000 National Household Survey on Drug Abuse

Usage of Marijuana

15

Percent Reporting Past Month Use of an Illicit Drug

3

9.8

16.4

19.6

13.2

7.8 75.3

6.54.8

2.40.3

0

5

10

15

20

25

12-13Yearsof age

14-15 16-17 18-20 21-25 26-29 30-34 35-39 40-44 45-49 50-64 65+

Drug Abuse by Age Cohort

Prime example of an aging cohort of drug users -- this group began use in 1970s.

Source: 2000 National Household Survey on Drug Abuse

16

Drug usage among American Students

Percent Reporting Use of “Any Illicit Drug”

Source: Monitoring the Future Study

26.8

45.6

53.9

19.5

37.2

41.4

11.7

22.7

25.7

0 10 20 30 40 50 60

8th

10th

12th

30-DayAnnualLifetime

17

Drug Use by Drug Type

18

Consumer Expenditures on Illicit Drugs, 2000

U.S. Users Spend $63.2 Billion Annually

Billions of Dollars (Projections for 1999)

2.31.6

10.411.9

37.1

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

Cocaine Heroin Marijuana Meth Other

Source: ONDCP Paper, What America’s Users Spend on

Illegal Drugs

19

U.S. POLICY: THE DRUG WARS 1. Participants and processes

2. Strategic content:

• Goal: Reduce illegal drug use and availability

• Enforcement > education, treatment, thus 2:1 ratio in federal budget

• Supply control > demand reduction, thus interdiction and eradication

• Assumption: One policy fits all….

• Criteria for evaluation

20

0

5

10

15

20

InterdictionInternationalDomestic Law EnforcementDemand Reduction

Composition of Federal Expenditures, 2000

Fiscal Year 1986 -2003Dollars, in Billions

21

0

350

700

1,050

1,400

1,750

2,100

1985 1987 1989 1991 1993 1995 1997 1998 1999 2000

U.S. Prison Population, 1985-2000

Source: Bureau of Justice Statistics, 2001

State Prisons1,236,476

Local Jails621,149

Federal Prisons145,416

Nu

mb

er o

f In

mat

es, i

n M

illi

ons

22

Arrests for Drug Abuse Violations, 2000

9.3%

5.6%

4.1%

40.9%

24.2%

15.8%

Sale/ManufactureHeroin/Cocaine

Sale/ManufactureMarijuana

Sale/ManufactureOther Drugs

Possession Marijuana

PossessionHeroin/Cocaine

Possession otherDangerous Drugs

Reasons for Drug Arrests, 2000

Source: Uniform Crime Reports, FBI.

23

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

6. Challenges to sovereignty—e.g., invasion of Panama 1989

7. Process of “certification” (now modified)

24

25

26

QUESTIONS OF PUBLIC POLICY: WHAT ARE THE ALTERNATIVES?

INTRODUCTION

1. What might be desirable? Or feasible?

2.    What are the prospects? 

 

27

ARE THERE ALTERNATIVES?

1. Continuation (or acceleration) of current policy:

         Increased budgets

         Establish coherence

         Long-term durability

 

28

2.      Legalization:

        Regulation, not legalization

        Decriminalization?

        Partial or complete?

29

3. Changing priorities:

        Demand reduction > 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?

 

 

ENLIGHTENMENT IN LATIN AMERICA!

• Marijuana personal use is decriminalized in :– Argentina– Brazil (depenalized)– Colombia– Costa Rica– Mexico– Peru– Uruguay– Venezuela 30