Case Study: Illicit Drugs and Globalization
Case Study: Illicit Drugs and Globalization

Unfortunately, there are very few issues that thoroughly relate to every aspect of globalization. International trade in illicit goods, such as drugs, weapons, and body parts, is one of them. These industries have been around since the dawn of time and will continue to thrive and prosper as long as there is demand. Intricate production and distribution networks span the globe and globalization increases the ease in which these transactions can take place.

Moises Naim, former Minister of Trade for Venezuela and Editor of Foreign Policy, wrote the seminal book on the subject: Illicit: How Smugglers, Traffickers, and Copycats are Hijacking the Global Economy. In the book, he notes that illicit trade is trade first and crime second—in other words, those involved view the transaction as a source of income. Illicit trade follows many of the same rules as trade in licit goods. Illicit trade takes advantage of all aspects of the global economy, such as the leveling of tariffs and the use of advanced technologies. Most of illicit trade is carried out through decentralized networks, which change with every transaction and/or set-back (such as an arrest). New networks arise when old ones are broken down.

This analysis examines the illegal drug trade and how it relates to culture, economic development, human rights, migration, international law, the environment, health, investment, technology, and terrorism.

State of Trade in Illegal Drugs
Trade in illegal drugs is estimated at five to six percent of overall world trade, which is slightly larger than the combined global trade in agricultural products and cars.1 The UN estimates that the international drug trade alone is about eight percent of all international trade, about $400 billion annually.2 In the U.S. , the cannabis crop is worth $25 billion annually (making it one of the top three U.S. “agricultural products” behind soy beans and corn).3

Coca used to create cocaine is not only grown in Peru, Bolivia, and Colombia (which still is the largest coca producer in the world), but also in Ecuador, Brazil, Venezuela, Panama, Guyana, and elsewhere. Opium poppy plants are mainly grown in South East Asia’s Golden Triangle (Laos, Myanmar, Thailand) and the Golden Crescent (Afghanistan, Iran, Pakistan), though they area also grown in Turkey, Egypt, Eastern Europe, Mexico, Central America, and Central Asia. According to the Vienna-based, UN-Drug Control Programme, 50 percent of the rural population in five Central Asian Republics grows drugs.4

According the UN’s 2007 World Drug Report, 4.8 percent of the world’s 15-64 year–old population (200 million people) use drugs; only .6 percent are considered “problem-drug users” (use on a monthly basis).5

Role of Culture
The truth is that mind-altering drugs provide a fertile battleground for some of the cultural clashes that result from the process of globalization.” 6

Dr. Francis Thoumi, a professor at Universidad del Rosario in Bogotá, Colombia, researched the reasons behind the tremendous growth of coca in Colombia (since all tropical countries can produce coca) and the prevalence of coca and other mind-altering drugs in the U.S. Thoumi questions current explanations of poverty, unequal distribution of wealth and income, and corruption as the reasons why Colombia is such a central player in coca production. Many countries are poorer, have worse economic crises, and are more corrupt, yet they do not have an illicit drug industry.

Thoumi notes that Colombia’s position as a top coco producer could be related to the lack of national identity and the resulting lack of social capital. He thinks these factors are the main reasons behind Colombia’s drug status:

  1. Geography (Colombia’s geography has been an obstacle for the central government’s ability to exert sovereignty over the whole country);
  2. Regional diversity (more local loyalties than loyalties to a strong, central state);
  3. Weak armed forces (who cannot create a national identity);
  4. Violence and large numbers of uprooted peoples (who do not have nuclear or extended families);
  5. Absence of an external enemy.7

The lack of social capital and the institutional weakness of the state make it a target of insurgent movements and illicit trade. These insurgent movements control the land where the product is grown and charge taxes to dealers and laboratories. Thoumi says: “The truth is that the illicit drug industry is a symptom of unresolved social problems which generate guerrillas, paramilitaries, drug traffickers, and white collar crimes.”8

Thoumi also believes that the lack of social capital in the U.S is the reason for the proclivity of certain groups for using drugs. The evolution of the U.S. family away from the traditional nuclear unit is one potential culprit. Other reasons could include:
1) Children
going away from home at a younger age;
2) The extended family playing a smaller role in child rearing;
3) H
igh divorce rates; and,
4) Single –parent homes.

Adjustment problems faced by African Americans and involuntary immigrants are another culprit. Youth facing the “de-evolution of the family” and other adjustment problems often join gangs, whom view prison time as a rite of passage.9

This phenomenon is not only found in the U.S. Drug abuse is also prevalent among immigrant populations in France, Germany, and Sweden. Studies from these three countries conclude that drug abuse is a consequence of difficult social integration.10

Economic Development and Human Rights
Economic development is a key element because most of the plants (such as coca plants and poppy) used in the creation of mind-altering drugs are grown in the developing world. However, the processing of these plants takes place in both the developing and developed world. Many people in the developing world make their living as subsistence farmers and, in certain countries/regions, drug precursor plants are one of the few profitable choices.

Sandro Calvani Representative, UNODC Field Office Colombia, supports alternative development as a means to combat the drug problem at its source, which helps poor farmers gain a different means of livelihood. He suggests that alternative development programs should:

  • Adapt the local production infrastructure and transfer the relevant production technology;
  • Consolidate communal transformation and assure the availability of safe and constant mechanisms to commercialize the products;
  • Group production areas in the correct zones, so that there can be conservation and reforestation efforts;
  • Train new workers for forest management and protection.11

Calvani stresses the importance of building both social and human capital, such as strengthening the community of producers by encouraging self-management, and by providing education and health care. This is a human rights issue as well as a development issue, especially for many native populations who do not have other rights and sources of income.

Calvani also notes the importance of monitoring and tracking using Geographical Information Systems (GIS) to have accurate, up-to-date information about what is going on “on the ground,” which is especially important for donors.

These types of programs do not get much funding. In 2005, $12.4 billion was spent by the U.S. on federal drug control programs, most of which were spent on incarceration and prosecution.12 Only a very small portion was spent on alternative development programs.

For example, from 2000 to 2002, $145 million of $1.8 billion allocated in Plan Colombia, was spent on alternative development projects. Farmers did not have access to credit, seeds, fertilizers, or low cost methods to bring the crops to market. This brought financial loss to the participants. Despite these flaws, 35,000 families signed the pact. Outlook for this pact looks grim, as not enough time or funds have been allocated to make reasonable progress.13

For alternative development to be successful, Peter Reuter, a professor in the School of Public Policy and the Department of Criminology at the University of Maryland, suggests, “convincing the targeted farmers that the markets and infrastructures will be there for the bulkier crops that are competing with cocaine paste. There have been enough occasions in recent years when the government [Columbia] has lost control of specific areas that recent immigrants may doubt the government’s reliability in this respect.”14 Dedicating the funds is not enough, following through on the efforts and making sure the funds are used properly is extremely important.

Migration
Both the U.S. and Europe view the drug problem as connected to migration issues. The U.S. worries about drugs being smuggled along its borders with Mexico and Canada. The US-Mexico’s border is the main entry point for cocaine into the U.S (about 65 percent enters via the Southwest). Other drugs are also smuggled along the U.S.-Mexico border, such as heroin and methamphetamines. Because of the increased volume of trade  between the US and Mexico since NAFTA, border guards are too busy to monitor every vehicle. There are 4.5 million trucks per year that cross the border.15 Canada is a source country for indoor-grown, high-potency marijuana as well. U.S. border patrol is much lighter though along the U.S.-Canadian border.

Europe also faces migration/drug problems along its borders as well. Tensions exist between Spain and Morocco over drugs and migration. To deal with the trafficking of drugs, in 2007, the EU opened an intelligence agency, the Maritime Analysis and Operations Centre-Narcotics (MAOC-N), located in Portugal. The center collaborates on maritime efforts between Spain, Ireland, France, Italy, the Netherlands, Portugal, Great Britain, and Europol. The success of this center depends on collaboration with African police authorities.16

International Law and National Approaches
There is a strong body of international law, complimented by regional and national laws, which deals with all aspects of the trade in illicit drugs. The United Nations Office on Drugs and Crime works on alternative development projects, reducing corruption, crop monitoring, HIV/AIDS prevention and care among injecting drug users, and other terrorism, trafficking, and crime-related issues.

There are three main UN international drug treaties:

In Europe, there are many treaties and legislative bodies dealing with the trade of illicit drugs. The Treaty of the European Union (“Maastricht Treaty”), effective since 1993, deals with drug addiction; drug trafficking and delinquency linked to drugs; cooperation in the fields of justice and internal affairs; and, drug production. The Amsterdam Treaty, effective in 1999, focuses on reducing demand.

Recently, the Anti-Drug Strategy of the European Union (2005-2012), tries to reduce drug consumption, improve coordination between security forces of the Member states, and improve coordination between the Member states and the European Commission, as well as evaluations. Overall European policy tends to focus on harm reduction.17 One of the challenges facing the EU though is fragmentation because drug policies are not centralized in one institution. The U.S. on the other hand, employs a drug Czar, in addition to the federal Drug Enforcement Agency.

In the U.S., the first formal law against the production, sale, and use of drugs was the Harrison Act, passed in 1914. This law though, was not really applied until 1972 when President Nixon declared a war on drugs. U.S. policy overall focuses on:

  • interdiction;
  • high level enforcement (in 2002, federal prisons held some 70,000 inmates sentenced for drug offenses (55 percent of all inmates);18 and,
  • retail enforcement: (in 2000, there were 1.6 million drug-related arrests and in 2004, 450,000 people were incarcerated for drug-related offenses in stated and federal prisons).19

One of the most controversial drug programs in the US is the annual certification process, enacted in 1986, requiring that administration “certifies” to Congress that countries are cooperating with U.S. efforts or are taking significant measures against drug production, trafficking, etc within their borders. The U.S. draws up a list of major, illicit, drug producing countries and those countries must undergo a certification evaluation. Countries that are not certified can face sanctions, suspension of all United States foreign assistance (except counter-drug and humanitarian assistance), United States opposition to loans by multilateral development banks, and possible trade sanctions. 20

Certification is political and not all countries are treated the same. Colombia was the first country to be fully decertified in 1996 and 1997. Venezuela did not receive a full certification in 2005, yet Haiti did (Haiti is a major trans-shipping point for Colombian cocaine into the U.S.).21

Environmental and Health Consequences of Drug Policy
There are numerous environmental and health consequences associated with crop eradication and other efforts to destroy the illicit drugs at their source. In Colombia, U.S. planes spray glyphosate, a poison, over the coca fields, drying out and killing coca plants, but also causing gastro-intestinal problems, fevers, headaches, nausea, colds and vomiting in people and similar problems in animals. Legal food plants also die and water sources become contaminated. Farmers cut down trees to create new spaces to grow the coca plants and use other harsh chemicals to grow the plants. Sometimes the spraying forces whole villages to be abandoned.22

The U.S. and Great Britain developed a killer fungus to destroy opium poppy, which targets just poppy plants. Similar fungi have been developed to kill coca leaves and marijuana plants. While addressing the problem of harming ecosystems, scientists fear that these fungi may wipe out entire plant species. Supporters view these fungi as a silver bullet; opposition says that even if all the plants were wiped out, alternatives would be found.23

The issue of health also relates to the drug policies in Europe and Canada, who focus on harm reduction. Europe and Canada have come to the conclusion that these drugs are not going to disappear and instead of spending lots of money on arrests and imprisonment, they focus on educating about the harm of these drugs and decreasing their negative effects. Examples of this policy include needle exchange programs, expanding treatment centers, and working with drug users to decrease anti-social behaviors.24 Many drug policy specialists recommend this policy for the U.S.

Investment
International investment plays an important role in the financing of the drug networks and the laundering of the funds. Money laundering from all illicit trade exceeds $1 trillion dollars per year.25 Money laundering is not just taking place in offshore islands, but in major financial centers as illicit and licit accounts are blurred. It is hard for banks to verify that all wire transfers, checks, and other financial transactions are “clean.”

Some of the drug money even has their own exchanges. In the Black Market Peso Exchange (BMPE), Colombian drug traffickers give their dollars to brokers who then make purchases on behalf of the customers at a favorable exchange rate. The customers pay the brokers in pesos. An estimated $5 billion are reycled annually via the BMPE.26

Many countries are offering offshore banking services, including the Bahamas, Bahrain, Cyprus, Malta, Grenada, and others. These countries are competing for customers and are trying to outdo the other with financial services. Brand name banks have opened up correspondent branches with local banks to get access to new markets, but problems occur when the local bank does not provide the same level of scrutiny. It is not easy to track the accounts that are tied to illegal activities, nor is there necessarily a desire to do so.27

Technology
Advances in technology help drug suppliers, distributors, and financers, as well as law enforcement. Shipments, both legitimatie and illicit, can be tracked via satellite from the point of origin to the destination. The Internet has become an open marketplace for the sale of illicit drugs.

Online and mobile payment systems help drug traffickers launder their funds. Some customers use mobile payments, which are estimated to reach $55 billion in the U.S. in 2008. Online payments allow anonymity of both sides. Some traffickers even legitimize their drug income through online role-playing games, for example selling virtual game items to settle accounts, accepting virtual money in exchange for drugs, and selling virtual currency in exchange for real money.28

Terrorism
Karen P. Tandy, Administrator, Drug Enforcement Administration, addressed the issue of Narco-terrorism in Afghanistan in a 2004 speech to Congress:

As you know, opium production in Afghanistan has resumed over the last two years, although it is still lower than the highest level reached under the Taliban. While we expect that only a small portion of the resulting opium and heroin will ultimately reach the United States, these drugs are of great concern because they increase worldwide supply and have the potential to fund terrorists and other destabilizing groups… A narco-terrorist organization is an organized group that is complicit in the activities of drug trafficking to further or fund premeditated, politically motivated violence to influence a government or group of people. Although the DEA does not specifically target terrorists, some of the powerful international drug trafficking organizations we have targeted have never hesitated to use violence and terror to advance their interests. As of October 2003, the DEA has identified seventeen Foreign Terrorist Organizations, as designated by the Department of State, with potential ties to the drug trade. More generally, we know that drugs and terror frequently share a common ground of geography, money, and violence.

There is a strong connection between terrorism and drug trafficking. Unfortunately, as noted by Luis Astorga, sociologist and researcher at the Institute of Social Research of the National Autonomous University of Mexico, (IIS-UNAM), many of these trafficking networks exist only because of Western demand for the drugs.29

Policy Solution
Most countries in the world have prohibitionist policies toward mind-altering drugs, including Sweden, all of the former Soviet Union, Australia, China, India, all of the Islamic world, African countries south of the Sahara, Japan, Australia, and almost all the countries in Latin America. Many drug policy specialists recommend legalizing drugs, however, their approach seems to be at odds with existing attitudes towards the use of illicit drugs.

Ethan Nadelman, founder and executive director of the Drug Policy Alliance, recommends:
1) Opening up the debate
2) Increasing cooperation among law enforcement agencies (which he states is good, but irrelevant, because it distracts policymakers from dealing with substantive issues)
3) Understanding the history of drug prohibition in Latin America (steming from US pressures)
4) Changing the rhetoric (the problem with drugs in Latin America stem more from prohibition than from drug use)
5) Using Canadian and European “harm reduction” measures as a model
6) Taking advantage of potential alliances with Canada, Europe, and Australiasia
7) Re-legitimizing and legalizing the production, sale and consumption of coca-based products (there is no scientific evidence that shows that small quantities are harmful)
8) Favorably interpreting international anti-drug conventions
9) Making positive drug reforms at the state-level in the U.S.
10) Thinking and acting strategically within Latin America.

There is no silver bullet when it comes to dealing with the trade of illicit drugs. Any solution will need to look at the issue holistically and take into account all the aspects of the problem (environmental, health, cultural, legal, historical, economic, etc.) The issue of trade in illicit drugs will also need to be addressed within the larger sphere of illicit trade, as many illicit traders use the same routes, technology, and money laundering schemes. This will not be easy, but as the world becomes more and more integrated, the need to address this problem will only grow.


 1 Milanovic, Branko. “Globalization and Corrupt States.” YaleGlobal. November 2nd 2007. http://yaleglobal.yale.edu/display.article?id=9920
2 “The Globalization of the Drug Trade.” UNESCO. http://www.unesco.org/most/sourdren.pdf
3 “The State of the Drug Problem in Europe.” European Monitoring Centre for Drugs and Drug Addiction 2007 Annual Report. http://www.emcdda.europa.eu/
html.cfm/index419EN.html

4 “The Globalization of the Drug Trade.” UNESCO. http://www.unesco.org/most/sourdren.pdf
5 http://www.unodc.org/pdf/research/wdr07/WDR_2007_executive_summary.pdf
6 Thoumi, Francis. “Drug Policies, Reforms, and Columbo-American Relations.” Proceedings from the international seminar Drug Trafficking: the Relations between Europe, Latin America and the United States. Bogotá, Colombia October 24-26, 2005. http://www.drugpolicy.org/docUploads/
Drug_Trafficking_Europe_Latin_America_United_States.pdf

7 Ibid.
8 Ibid.
9 Ibid.
10 Mauro Giovanni Carta, Mariola Bernal, Maria Carolina Hardoy, Josep Maria Haro-Abad, and the “Report on the Mental Health in Europe” working group. “Migration and mental health in Europe.” Clin Pract Epidemol Ment Health. 2005; 1: 13. http://www.pubmedcentral.nih.gov/articlerender.fcgi?artid=1236945
11 Calvani, Sandro. “Should Colombia Just Reduce Its Illicit Crops, or Also Diminish the Number of Cocaine Producers, Slaves of Cocaine Traffickers, Slaves of Armed Groups?” Proceedings from the international seminar Drug Trafficking: the Relations between Europe, Latin America and the United States,Bogotá, Colombia October 24-26, 2005 http://www.drugpolicy.org/docUploads/
Drug_Trafficking_Europe_Latin_America_United_States.pdf

12 Reuter, Peter. “On the consistency of United States policy toward Colombia.” Proceedings from the international seminar Drug Trafficking: the Relations between Europe, Latin America and the United States,Bogotá, Colombia October 24-26, 2005 http://www.drugpolicy.org/docUploads/
Drug_Trafficking_Europe_Latin_America_United_States.pdf

13 Isaacson, Adam. “The tragedy of alternative development in Colombia.” Colombia Journal Online. December 3rd, 2001. http://www.colombiajournal.org/colombia92.htm
14 Reuter, Peter. “On the consistency of United States policy toward Colombia.” Proceedings from the international seminar Drug Trafficking: the Relations between Europe, Latin America and the United States,Bogotá, Colombia October 24-26, 2005 http://www.drugpolicy.org/docUploads
/Drug_Trafficking_Europe_Latin_America_United_States.pdf

15 Naim, Moises. Illicit How Smugglers, Traffickers, and Copycats are Hijacking the Global Economy. Double Day. 2005
16 “European Union- Africa: security policies regarding illegal immigration and drug trafficking.” Intellibriefs. December 5th, 2007. http://intellibriefs.blogspot.com/2007/12/european-union-africa-security-policies.html
17 Estievant, Georges. “Anti-Drug strategy of the European Union and Latin America.” Proceedings from the international seminar Drug Trafficking: the Relations between Europe, Latin America and the United States,Bogotá, Colombia October 24-26, 2005 http://www.drugpolicy.org/docUploads
/Drug_Trafficking_Europe_Latin_America_United_States.pdf

18 Reuter, Peter. “On the consistency of United States policy toward Colombia.” Proceedings from the international seminar Drug Trafficking: the Relations between Europe, Latin America and the United States,Bogotá, Colombia October 24-26, 2005 http://www.drugpolicy.org/docUploads/
Drug_Trafficking_Europe_Latin_America_United_States.pdf

19 Ibid.
20 Youngsters, Colletta. “Drugs, Narco-Terrorism, and United States-Latin American relations.” Proceedings from the international seminar Drug Trafficking: the Relations between Europe, Latin America and the United States,Bogotá, Colombia October 24-26, 2005 http://www.drugpolicy.org/docUploads
/Drug_Trafficking_Europe_Latin_America_United_States.pdf

21 http://www.policyalmanac.org/crime/archive/drug_trafficking.shtml
22 “Illegal drugs — scourge or globalization’s great equalizer?” Global Envision. January 26, 2005. http://globalenvision.org/index.php?category=9&fuseaction=library.print&itemid=720&printerfriendly=1
23 “Environmental Consequences.” http://www.drugpolicy.org/global/
24 Nadelman, Ethan. “Reducing the Harm of Drugs.” Proceedings from the international seminar Drug Trafficking: the Relations between Europe, Latin America and the United States,Bogotá, Colombia October 24-26, 2005 http://www.drugpolicy.org/docUploads/
Drug_Trafficking_Europe_Latin_America_United_States.pdf

25 Naim, Moises. Illicit: How Smugglers, Traffickers, and Copycats are Hijacking the Global Economy. Anchor: October 10, 2006.
26 Ibid.
27 Ibid.
28 “Illicit Finance.” National Drug Threat Assessment. National Drug Intelligence Center. October 2007. http://www.usdoj.gov/ndic/pubs25/25921/finance.htm
29 Astorga, Luis. “Drug Trafficking in Mexico: A First General Assessment.” http://www.unesco.org/most/astorga.htm#author
30 Thoumi, Francis. “Drug Policies, Reforms, and Columbo-American Relations.” Proceedings from the international seminar Drug Trafficking: the Relations between Europe, Latin America and the United States. Bogotá, Colombia October 24-26, 2005. http://www.drugpolicy.org/docUploads/
Drug_Trafficking_Europe_Latin_America_United_States.pdf

31 Nadelman, Ethan. “Reducing the Harm of Drugs.” Proceedings from the international seminar Drug Trafficking: the Relations between Europe, Latin America and the United States,Bogotá, Colombia October 24-26, 2005 http://www.drugpolicy.org/docUploads/
Drug_Trafficking_Europe_Latin_America_United_States.pdf

Leave a Reply


× one = 2