Drug trafficking

1. 1
THE POLITICAL ECONOMY OF
DRUG TRAFFICKING
INTRODUCTION
1. Pervasiveness of issue
2. Challenges for research
3. Categorizing “illicit drugs”—
• Marijuana
• Heroin
• Cocaine
• ATS/designer drugs
4. Note: Dangerous prescription drugs

2. 2
READING
• SSG, Modern Latin America, chs. 15-16

3. 3
THE GLOBAL MARKET:
SOURCES OF SUPPLY
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.)

4. 4
0
200
400
600
800
1000
1996 1997 1998 1999 2000
Bolivia
Peru
Colombia
Global Production and Trafficking
Amphetamine Type
Stimulants
Cocaine
MDMA
Potential
Cocaine
Production
(mt)
0
1000
2000
3000
4000
5000
6000
1996 1997 1998 1999 2000
Potential
Opium
Production
(mt)
Mexico
Colombia
SE Asia
SWAsia
Heroin

5. 5
54 percent
Mexico/Central
American Corridor
Estimated Cocaine Flows ca. 2000
43 percent
Caribbean
Corridor
3 percent
Direct to U.S.

6. 6
Interdiction of Cocaine, 1999
512
Metric
Tons
Depart
South
America
for U.S.
Arrival Zone
Seizures
Transit Zone
Seizures
MEXICO /
CENTRAL
AMERICAN
CORRIDOR
-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 MT
DIRECT TO
CONTINENTAL
U.S.
CARIBBEAN
CORRIDOR
382 MT
Potentially
Arrives in
the U.S.

7. 7
• Where are the profits?
• Price structure of one kilo of pure
cocaine, ca. 2000:
Coca leaf (e.g., farmgate in Peru) $ 300
Coca base (farmgate) 900
Cocaine hydrochloride (export/Colombia) 1,500
Cocaine hydrochloride (import/Miami) 15,000
Cocaine (67% pure/dealer U.S.) 40,000
Cocaine (67% pure/retail U.S.) 150,000
Who Are the Winners…?

8. 8
DIMENSIONS OF U.S. DEMAND
% Reporting Past Month Usage, 1985-2000
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 survey
series*

9. U.S. DRUG USERS, 1990-2010
• 1990 = 13.5 million (6.7%)
• 2000 = 14.0 million (6.3%) ($63.2 bn)
• 2007 = 19.9 million (̴ 8%)
• 2010 = 22.6 million (8.9%)
9

10. 10
Drug Use by Drug Type

11. 11
Percent Reporting Past Month Use of any Illicit Drug
3
9.8
16.4
19.6
13.2
7.8 7
5.3
6.5
4.8
2.4
0.3
0
5
10
15
20
25
12-13
Years
of 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

12. 12
Drug Usage among Students, 2000
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-Day
Annual
Lifetime

13. 13
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….
• Incarceration as deterrent

14. 14
Cocaine and Heroin Prices: 1981-2010

15. 15
Arrests for Drug Abuse Violations, 2000
9.3%
5.6%
4.1%
40.9%
24.2%
15.8%
Sale/Manufacture
Heroin/Cocaine
Sale/Manufacture
Marijuana
Sale/Manufacture
Other Drugs
Possession Marijuana
Possession
Heroin/Cocaine
Possession other
Dangerous Drugs
Reasons for Drug Arrests, 2000
Source: Uniform Crime Reports, FBI.

16. 16
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)

17. 17

18. 18
QUESTIONS OF PUBLIC POLICY:
WHAT ARE THE ALTERNATIVES?
INTRODUCTION
1. What might be desirable? Or feasible?
2. What are the prospects?

19. 19
ARE THERE ALTERNATIVES?
1. Continuation (or acceleration) of
current policy:
 Increased budgets
 Establish coherence
 Long-term durability

20. 20
2. Legalization:
 Regulation, not legalization
 Decriminalization?
 Partial or complete?

21. 21
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
 Terminate/ignore certification?

22. AVAILABILITY OF TREATMENT
(% 12 AND OLDER)
22
6.3
1.2
0.6
0
1
2
3
4
5
6
7
Current Drug
User
Drug Dependent Received
Treatment

23. COSTS AND BENEFITS OF
TREATMENTS
23
$2,051
$3,813
$2,895
$4,160
$7,630
$13,902
$7,954
$5,259
$2,547
$2,575
$0
$3,000
$6,000
$9,000
$12,000
$15,000
Ambulatory
Outpatient
Long-Term
Residential
Short-Term
Residential
Outpatient
Methadone
Short-Term
Hospital
Cost
Benefit

24. ENLIGHTENMENT IN
LATIN AMERICA!
• Marijuana personal use is decriminalized in :
– Argentina
– Brazil (depenalized)
– Colombia
– Costa Rica
– Mexico
– Peru
– Uruguay (now broadly legalized)
– Venezuela 24