The main focus regarding drug trafficking in Latin America and the United States in media and politics is on security. Especially in the case of Mexico, the high level of violence has been widely discussed in recent years. Political measures are consequently primarily focused on police or military actions which aim at destroying plants, laboratories or transit routes. Nevertheless, drug trafficking is foremost an economic activity. The term trafficking also indicates the illegal character of this activity which results in high costs but also large profits—essentially attributable to the inelastic demand of drugs, that is, consumers’ (drug addicts) willingness to pay every price for the product. The present contribution revisits the political-economic aspects of narcotráfico in the Americas with a focus on cocaine trafficking. Cocaine is a drug that generates very high prices and consequently large profits for traders.
Historical Development of Drug Trafficking in the Americas
In the 1980s, the demand for cocaine in the United States (but also in Europe) increased decisively such that the production and trade of drugs became a weighty economic branch. Drug trafficking is, however, a much older phenomenon. Since the beginning of the 20th century, marijuana has been produced and smuggled to the U.S-market (Astorga 2001). The United States created a legal frame prohibiting narcotics like opium or cocaine between 1919 and 1933. Unlike Marijuana, however, the value adding industrial treatment of coca leafs to produce cocaine generates an integral economic sector. As such, this sector generates more than a simple agrarian good and participates in structuring the economy of producer and transit countries (Zinecker 2004, 9). During the Vietnam War many U.S.-soldiers became addicted to heroin. In 1971, President Richard Nixon (1969–74) declared the war on drugs. Ronald Reagan (1981–89), George Bush (1989–93), Bill Clinton (1993–2001), and George W. Bush (2001–2009) continued with this military strategy (Lacoste 2004). In the last two decades, the markets for synthetic drugs have been growing as well.
Latin American countries have been less affected by drugs as consumer markets although in these countries the number of illegal drug consumers is slightly increasing. They can be distinguished in producing countries such as Bolivia, Peru, or Colombia and transit countries mainly the Central American Republics, Brazil, and Mexico. Brazil is a transit point for cocaine exported to Europe. Mexico is the main transit country for cocaine to the U.S.-market (UNODC 2010). It is also a main producer for synthetic drugs. When in the 1980s the cocaine trade via the Caribbean islands was increasingly interrupted by U.S.-supported security forces, the transit routes shifted to the Mexican territory. Mexican drug cartels during this period of re-organization benefited from the cooperation with Columbian cartels and became more powerful. Additionally, Mexican drug cartels began to squeeze out other drug-distributing groups in the U.S.-market where the major monetary gains are obtained (see DEA 2004 and UNODC 2010). The systematic weakening of Columbian drug cartels in the 1990s favored Mexican cartels. They now control parts of the cocaine trade from the producing countries to the consumer markets. Drug trafficking organizations are consequently in a favorable position which allows them to appropriate a high surplus. While buying drugs from the producer is still relatively cheap its sale at the consumer market generates high prices—given the inelastic demand and the number of barriers (mainly state borders) on its transit route. The profits are especially large for traders and dealers (not the producers).1
The Economic and Political Impact of Narcotráfico
The (illegal) economic activity is highly interwoven with the legal economic circle. The revenues generated by drug trafficking are “recycled” (a term used for revenues generated by the export of crude oil, the so called petrodollars) by investments into other sectors, such as tourism, or they are transferred to international commercial banks (Zinecker 2004: 11). Nevertheless, the profitability of narcotráfico causes different actors to establish or maintain favorable political conditions which facilitate this illegal business. One aspect is without doubt the bribery of state employees, that is, the police, custom officials, the military, or (local) politicians (Astorga 2001, Chabat 2001, Resa Nestares 2003). On the other hand it has to be assumed that the relationship between narcotráfico is more than a question of corruption or self-privileging. Political actors are in a brokerage position in which they use their political position to appropriate those revenues. The possibility for self-privileging is closely related to the broker’s capacity, to maintain its powerful political position. In order to maintain an environment favorable for this activity—characterized by lacking transparency, accountability, and consequently, democracy—a part of the revenues have to be used and are used to create and to maintain loyal relationships, or clientelistic networks. Clientelism in those environments undermines democratic political participation. Clientelistic relations are nurtured, for instance, by investments in educational, health, or leisure projects. Another and more important aspect is the offering of jobs which can but don’t have to be related to the cultivation, production, and transport of drugs. This aspect is especially relevant in economies were the formal labor sector is very small (but the informal sector is very large) and in which the poor population needs certain support in order to allow subsistence that can poorly be maintained without clientelistic relations. Drug trafficking in those economies contributes to the maintenance of a system in which surplus labor can be nurtured by monopolistic surplus generating activities. Narcotráfico contributes to the maintenance of an economy characterized by the low bargaining capacity of labor. As long as the labor surplus can be nurtured by the surplus of rent-generating activities, local mass markets will not develop. Incentives for productivity increasing investments are reduced and consequently the supply of labor is not shortened. Inequality in these economies is therefore reproduced.
In the case of Mexico, narcotráfico has assumingly played a major role in the political transition process when the authoritarian, centralist PRI-regime (1929–2000) was weakened. With the help of revenues pouring in from oil exports, the PRI was able to maintain a corporatist system which was highly centralized. Declining oil prices in the 1980s weakened this system. But instead of democratization, the transition stagnated in the gray-zone between authoritarianism and democracy and narcotráfico became an increasingly important issue. These developments are accompanied by processes of decentralization which are not only the result of respective policies but also of fostering local power structures. In the case of Colombia, the production and transport of cocaine has been related to the fostering and reproduction of violent conflicts between the guerilla forces (Fuerzas Armadas Revolucionarias de Colombia, FARC) on the one hand and the state and paramilitary groups on the other hand. The entrance of Colombia to the international cocaine trade coincides with declining traditional rent revenues, mainly pouring in from coffee exports. Other than in the case of Mexico, whose economy (and political regime) relied on oil, in Colombia the importance of cocaine was already expanding during the 1970s (Zinecker 2004). Similarly to Mexico narcotráfico has decentralizing consequences strongly undermining the central state authority. Nevertheless, a central monopoly on violence has never existed in Colombia. In Peru the internal conflict is also nurtured by drug trafficking. The guerilla group Sendero Luminoso finances itself with narcotráfico.
The focus of politics and media on the security-threatening aspects of narcotráfico are short-sighted. In the last decades, the military war on drugs tended to favor certain actors and helped to further monopolization processes. The U.S.-administration under President Barack Obama (since 2009) has declared the war on drugs-strategy as failed and even considers the legalization of drugs as an option. Drug trafficking cannot be considered a distinct illegal economic branch operating clandestinely. Instead, as Zinecker or Astorga assert, it is highly interwoven with the legal economy. It also shapes political-economic structures. Specific development policies in producer- and transit countries are necessary to promote alternative economic activities and to strengthen labor. Only then, can clientelistic structures which hinder political participation and accountability and which favor territorial and societal fragmentation be overcome. On the other hand, it has to be considered that the drug market in the United States is “one of the most profitable in the world” (see DEA 2004). A debate on drug trafficking and a possible weakening of these activities need to include all of these highly interwoven aspects.
1 See Zinecker (2004), 12 and UNODC: Coca farmers receive less than 2 percent of the market value of cocaine (coming from the Andean region and being sold at the U.S.-market). More than 98 percent are for traffickers and dealers (2010, 77–78).
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