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 Designer drugs 4. Note: Dangerous prescription drugs

2 READING Smith, Talons, ch. 8 CR Selection 4: Astorga and Shirk, “Drug Trafficking Organizations and Counter-Drug Strategies” CR Selection 5: Youngers and Rosin, “The U.S. ‘War on Drugs’: Its Impact on Latin America and the Caribbean” Film “The Mexican Cartel” (90 minutes)

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 Amphetamine Type Stimulants Cocaine MDMA Potential Cocaine Production (mt) Heroin

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

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8 54 percent Mexico/Central American Corridor Estimated Cocaine Flows 43 percent Caribbean Corridor 3 percent Direct to U.S.

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10 Perspectives on Cocaine U.S. Portion of Worldwide Consumption Declining 1990 = 400 MT 2000 = 300 MT Worldwide Consumption Increasing 1990 = 500 MT 2000 = 600 MT All coca grown in the Andean Region

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12 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 Who Are the Winners…?

13 Trends in Drug Consumption, Percent Reporting Past Month Use of Any Illicit Drug 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*

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

15 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

16 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

17 Drug usage among High-School Seniors Percent Reporting Use of “Any Illicit Drug” Source: Monitoring the Future Study

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

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

21 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

22 Federal Expenditures on Drug Control, Dollars, in Billions FY 2003: President’s Request FY 2002: Enacted Level All Other Year: Actual Expenditures

23 Composition of Federal Expenditures, 2000 Fiscal Year Dollars, in Billions

24 Challenges to Interdiction 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 TRANSIT ZONE SOURCE ZONE ARRIVAL ZONE 50% 3% direct 16% 21% 10% SOURCE: Annual Interagency Assessment of Cocaine Movement, April 2001 ONDCP/FEB02

25 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.

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

27 Imprisonment of Drug Offenders, Source: Bureau of Justice Statistics 251,200 Drug Offenders in State Prisons in ,360 Drug Offenders in Federal Prison in 1999

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

29 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 Pressures of “certification”

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

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

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

35 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?

36 Availability of Treatment Percent of Population 12 or Older.

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

40 AND NOW, THE WAR ON TERRORISM…