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THE POLITICAL ECONOMY OF DRUG TRAFFICKING

Explore the global market structure and the impact of drug trafficking on Latin America. Analyze consumption patterns, profit margins, and the U.S. policy on drug wars. Gain insights into the implications for public policy and alternative strategies.

charlesvargas
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THE POLITICAL ECONOMY OF DRUG TRAFFICKING

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  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. 8 [review] • CR Selection 5: Astorga and Shirk, “Drug Trafficking Organizations and Counter-Drug Strategies” • DFC, Contemporary, chs. 2 and 9 (Mexico + Colombia)

  3. 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?

  4. 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

  5. Global Production and Trafficking MDMA Amphetamine Type Stimulants Cocaine Heroin Potential Cocaine Production (mt)

  6. 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

  7. 3 percent Direct to U.S. 43 percent Caribbean Corridor Estimated Cocaine Flows 54 percent Mexico/Central American Corridor

  8. 1990 2000 CHANGES IN THREAT • World consumption dominated by US • Transit movement via aircraft • Cultivation primarily from Peru and Bolivia • Increasing European consumption • Transit movement via maritime vessels • Cultivation primarily from Colombia Challenges to Interdiction ARRIVAL ZONE 3% direct TRANSIT ZONE 21% 10% 16% 50% SOURCE ZONE ONDCP/FEB02 SOURCE: Annual Interagency Assessment of Cocaine Movement, April 2001

  9. 75 METRIC TONS DETECTED DEPARTING FOR NON-US MARKETS Interdiction of Cocaine, 1999 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 CARIBBEAN CORRIDOR -14 MT -7 MT 3% 15 MT DIRECT TO CONTINENTAL U.S. -12 MT

  10. 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

  11. New survey series* Percent Reporting Past Month Use of Any Illicit Drug Trends in Drug Consumption, 1985-2000 *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.

  12. 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. Past Month Users (in Millions) Current Usage by Drug, 2000 (incl. crack) (any psychotherapeutic) Source: 2000 National Household Survey on Drug Abuse

  14. 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

  15. Percent Reporting Past Month Use of an Illicit Drug 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. Percent Reporting Use of “Any Illicit Drug” Drug usage among American Students Source: Monitoring the Future Study

  17. U.S. Users Spend $63.2 Billion Annually Consumer Expenditures on Illicit Drugs, 2000 Billions of Dollars (Projections for 1999) Source: ONDCP Paper, What America’s Users Spend on Illegal Drugs

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

  19. Calculation of Economic Costs of Drug Abuse (Billions of dollars) Source: Office of National Drug Control Policy, 2001.

  20. 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

  21. Fiscal Year 1986 -2003 Dollars, in Billions Composition of Federal Expenditures, 2000

  22. Federal Prisons 145,416 U.S. Prison Population, 1985-2000 Local Jails 621,149 Number of Inmates, in Millions State Prisons 1,236,476 Source: Bureau of Justice Statistics, 2001

  23. 68,360 Drug Offenders in Federal Prison in 1999 Imprisonment of Drug Offenders, 1980-2000 251,200 Drug Offenders in State Prisons in 1999 Source: Bureau of Justice Statistics

  24. Reasons for Drug Arrests, 2000 Source: Uniform Crime Reports, FBI.

  25. 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 sovereignty—e.g., invasion of Panama 1989 Process of “certification” (now modified)

  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?

  30. Availability of Treatment Percent of Population 12 or Older .

  31. Costs and Benefits of Drug Treatment Source: CSAT, National Evaluation Data Services Report

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

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