THE POLITICAL ECONOMY OF DRUG TRAFFICKING

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

3. THE GLOBAL MARKET: SOURCES OF SUPPLY 1. Worldwide flows, variations by drug Consumption around the world * 149-272 million users * 15-20 million “addicts” or problem users * $320 billion per year (est.)

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

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

6. 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

7. Who Are the Winners…? 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

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

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%)

10. Drug Use by Drug Type

11. Percent Reporting Past Month Use of any 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

12. Percent Reporting Use of “Any Illicit Drug” Drug Usage among Students, 2000 Source: Monitoring the Future Study

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. Cocaine and Heroin Prices: 1981-2010

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

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

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

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

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

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)

23. COSTS AND BENEFITS OF TREATMENTS

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