1. 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. 2 READING Smith, Talons, ch. 14 DFC, Contemporary, chs. 2 and 9 (Mexico + Colombia)

3. 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. 4 Global Production and Trafficking Amphetamine Type Stimulants Cocaine MDMA Potential Cocaine Production (mt) Heroin

5. Sources of Heroin * Values for Latin America are projected 3,4413,389 3,671 3,302 4,068 5,106 5,000 4,452 4,263 5,082 1,264 Metric Tons ONDCP/FEB02

6. 6 54 percent Mexico/Central American Corridor Estimated Cocaine Flows ca. 2000 43 percent Caribbean Corridor 3 percent Direct to U.S.

7. 7

8. 8 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.

9. 9 Cocaine and Heroin Prices: 1981-2010

10. 10 Cultivation: 2000-2009

11. 11 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…?

12. 12 Trends in Drug Consumption, 1985-2000 Percent Reporting Past Month Use of Any Illicit Drug 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*

13. 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. 14 Marijuan a 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. 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. 16 Drug usage among American Students Percent Reporting Use of “Any Illicit Drug” Source: Monitoring the Future Study

17. 17 Drug Use by Drug Type

18. 18 Consumer Expenditures on Illicit Drugs, 2000 U.S. Users Spend $63.2 Billion Annually Billions of Dollars (Projections for 1999) Source: ONDCP Paper, What America’s Users Spend on Illegal Drugs

19. 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. 20 Composition of Federal Expenditures, 2000 Fiscal Year 1986 -2003 Dollars, in Billions

21. 21 U.S. Prison Population, 1985-2000 Source: Bureau of Justice Statistics, 2001 State Prisons 1,236,476 Local Jails 621,149 Federal Prisons 145,416 Number of Inmates, in Millions

22. 22 Reasons for Drug Arrests, 2000 Source: Uniform Crime Reports, FBI.

23. 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)

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26. 26 QUESTIONS OF PUBLIC POLICY: WHAT ARE THE ALTERNATIVES? INTRODUCTION 1. What might be desirable? Or feasible? 2. What are the prospects?

27. 27 ARE THERE ALTERNATIVES? 1.Continuation (or acceleration) of current policy:  Increased budgets  Establish coherence  Long-term durability

28. 28 2. Legalization:  Regulation, not legalization  Decriminalization?  Partial or complete?

29. 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. ENLIGHTENMENT IN LATIN AMERICA! Marijuana personal use is decriminalized in : –Argentina –Brazil (depenalized) –Colombia –Costa Rica –Mexico –Peru –Uruguay –Venezuela 30