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

3 THE GLOBAL MARKET: SOURCES OF SUPPLY 1.Worldwide flows, variations by drug 2.Consumption around the world * million users * million “addicts” or problem users * $320 billion per year (est.)

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

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

6 Interdiction of Cocaine, 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 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 DIMENSIONS OF U.S. DEMAND % Reporting Past Month Usage, Source: SAMHSA, National Household Survey on Drug Abuse. *The survey methodology was changed in Estimates based on the new survey series are not comparable to previous years. New survey series*

U.S. DRUG USERS, = 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 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 Drug Usage among Students, 2000 Percent Reporting Use of “Any Illicit Drug” Source: Monitoring the Future Study

13 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

14 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

15 Cocaine and Heroin Prices:

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

17 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 Process of “certification” (now modified)

18

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

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

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

22 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?

ENLIGHTENMENT IN LATIN AMERICA! Marijuana personal use is decriminalized in : –Argentina –Brazil (depenalized) –Colombia –Costa Rica –Mexico –Peru –Uruguay (now broadly legalized) –Venezuela 23