While cocaine production ravages countries in Central America, consumers in the US and Europe are helping developed economies grow rich from the profits, a study claims
By Ed Vulliamy
Information Clearing House
June 05, 2012
The most far-reaching and detailed analysis to date of the drug economy in any country ~ in this case, Colombia ~ shows that 2.6% of the total street value of cocaine produced remains within the country, while a staggering 97.4% of profits are reaped by criminal syndicates, and laundered by banks, in first-world consuming countries.
Said one of the authors of the study, Alejandro Gaviria, launching its English edition last week:
"The story of who makes the money from Colombian cocaine is a metaphor for the disproportionate burden placed in every way on 'producing' nations like Colombia as a result of the prohibition of drugs,
"Colombian society has suffered to almost no economic advantage from the drugs trade, while huge profits are made by criminal distribution networks in consuming countries, and recycled by banks which operate with nothing like the restrictions that Colombia's own banking system is subject to."
"The whole system operated by authorities in the consuming nations is based around going after the small guy, the weakest link in the chain, and never the big business or financial systems where the big money is."
Gaviria and Mejía estimate that the lowest possible street value (at $100 per gram, about £65) of "net cocaine, after interdiction" produced in Colombia during the year studied (2008) amounts to $300bn. But of that only $7.8bn remained in the country.
"It is a minuscule proportion of GDP," said Mejía, "which can impact disastrously on society and political life, but not on the Colombian economy. The economy for Colombian cocaine is outside Colombia."
Mejía told the Observer:
"The way I try to put it is this: prohibition is a transfer of the cost of the drug problem from the consuming to the producing countries."
"I put it to Americans like this ~ suppose all cocaine consumption in the US disappeared and went to Canada. Would Americans be happy to see the homicide rates in Seattle skyrocket in order to prevent the cocaine and the money going to Canada? That way they start to understand for a moment the cost to Colombia and Mexico."
But no one went to jail, and the bank is now in the clear. "Overall, there's great reluctance to go after the big money," said Mejía. "They don't target those parts of the chain where there's a large value added. In Europe and America the money is dispersed ~ once it reaches the consuming country it goes into the system, in every city and state. They'd rather go after the petty economy, the small people and coca crops in Colombia, even though the economy is tiny."
Colombia's banks, meanwhile, said Mejía,
"Are subject to rigorous control, to stop laundering of profits that may return to our country. Just to bank $2,000 involves a huge amount of paperwork ~ and much of this is overseen by Americans."
Dr Mejia said:
"It's an extension of the way they operate at home. Go after the lower classes, the weak link in the chain ~ the little guy, to show results. Again, transferring the cost of the drug war on to the poorest, but not the financial system and the big business that moves all this along."
Gaviria said: "We know that authorities in the US and UK know far more than they act upon. The authorities realize things about certain people they think are moving money for the drug trade ~ but the DEA [US Drugs Enforcement Administration] only acts on a fraction of what it knows."
"It's taboo to go after the big banks," added Mejía. "It's political suicide in this economic climate, because the amounts of money recycled are so high."
Anti-Drugs Policies In Colombia: Successes, Failures And Wrong Turns, edited by Alejandro Gaviria and Daniel Mejía, Ediciones Uniandes, 2011