Global Drug Trade Gets More Efficient, Defies US War on Drugs, Revolt Builds in Latin America

By Don Quijones, Spain & Mexico, editor at WOLF STREET. His blog: Raging Bull-Shit

As is now common global knowledge, on September 26, 2014, two buses ferrying student activists through the small city of Iguala, Guerrero, were stopped by a motley crew of police officers and narco foot soldiers and sprayed indiscriminately with machine-gun fire, allegedly on the orders of the city’s narco mayor and his wife. Six students were killed in the one-sided shoot out and another 43 were kidnapped in the ensuing chaos. Almost exactly four months later, the students are still missing.

What is not so much common knowledge is the fact that of the 228 firearms seized by the police for suspected involvement in the massacre, 36 were G36 assault rifles manufactured by Heckler & Koch, a German company already under investigation by Stuttgart authorities for illegal sales of arms to Mexican states gripped by violent conflict.

The German Connection

This is not the first time that Heckler & Koch weapons have been found at a bloody crime scene in Mexico. In fact, both state forces and narco-soldiers have been repeatedly caught on camera sporting H&K hardware.

The question is: how did the weapons get into their hands, especially given that their export to conflict zones, including the Mexican states of Guerrero, Chihuahua and Jalisco, is strictly prohibited under German law? Naturally, H&K management denied any knowledge – a strategy that worked perfectly well until a worker with a heavy conscience leaked photos, videos and first-hand testimony of company envoys providing bespoke training programs to the “forces of order” of prohibited countries such as Mexico.

Like most arms dealers, H&K was simply finding a way around the legal responsibilities imposed unduly upon it. As the company’s management would no doubt argue, it is merely satisfying a surging demand in Mexico for precision-made assault rifles – a demand that is flourishing on both sides of a war that continues to destabilize Mexico after nine years of bloodshed. The same applies to US arms manufacturers, which supply over 70% of the small arms in Mexico.

Yet whenever the press – in particular, the international press – covers Mexico’s recent and ongoing history of violence, it is the northward-bound trade in drugs, and not the southward-bound trade in guns, that gets almost all the attention. In fact, the trade in guns barely even warrants a mention.

This is one of the many bitter ironies of Mexico’s current problems. Here’s another: despite the fact that just about every single government-led effort to stem the flow of drugs northwards has not only failed spectacularly but has actually fuelled the culture of lawlessness and wanton violence on Mexico’s mean streets, the solution always remains the same: increased security. In other words, more guns and an ever larger role for the armed forces in public order policing – all, of course, at the behest of the world’s biggest ever drug warrior, the U.S. Government.

An Unwinnable War

When the Mexican President Felipe Calderon announced the country’s War on Drugs in 2006, he did so under intense U.S. pressure. Yet despite the slaughter of over 100,000 people in a war that no one is winning and just about everyone is losing, the drugs keep crossing the border, and indeed in greater numbers than ever before. According to a 2013 report published in the British Medical Journal, even as the U.S. has cranked up its war on narcotics over the last two decades, heroin, cocaine and cannabis have become cheaper, even as they have generally become more pure and potent.

None of this should come as a surprise: if there’s one thing the practitioners of the dismal science (a.k.a. economics) have actually got right over the last few hundred years, it is that when there’s a high enough demand for a given product or service, someone, somewhere, will somehow supply it – regardless of the risks involved. In fact, over time, the risks just become a mere cost of doing business and are gradually subsumed into the end price.

This is particularly true in the case of the global arms industry and drugs trade, whose margins are so enticing that dealers and merchants are willing not only to bend or break any law that stands in their way; they’re willing to fight it tooth and nail. And at the moment, they’re winning.

Rising Opposition

However, as Laura Carlsen, the director of Mexico City-based Americas Program of the Center for International Policy, reports, opposition against the U.S.- backed War on Drugs is building in Latin America.

At the 2013 UN General Assembly Latin American leaders rose to the podium to take a stand against the war. They included Bolivia’s Evo Morales, Costa Rica’s Laura Chinchilla, Guatemalan president Otto Perez Molina, Mexico’s foreign minister José Antonio Meade, and Juan Manuel Santos, the president of Colombia, the United States’ closest ally in South America and third largest recipient of US military aid after Israel and Egypt. Santos noted that his country, which received more than $3.5 billion in counternarcotics aid between 2002 and 2011 and is frequently cited as a model by the Obama administration, “has suffered more deaths, more bloodshed and more sacrifices in this war” than almost any other, with the obvious exception of Mexico.

Santos concluded with a jab at the U.S.-led drug war. “If we act together with a comprehensive and modern vision – free of ideological and political biases – imagine how much harm and how much violence we could avoid.”

The governments of Latin America have every reason to want to change the script. The region currently dominates the world rankings for violent cities. As one study suggests, a full one-third of global homicides occur in Latin America even though the region has just 8% of the world’s population, according to United Nations data. Naturally, there are many reasons for this trend, including homegrown political instability, institutional voids, corruption and extreme poverty. It’s no coincidence that Latin America and the Caribbean is the world’s most unequal region.

“It’s Just Business”

Unfortunately, all of these debilitating factors make many of Latin America’s towns and cities ripe for takeover by global organized crime networks. The region’s ports are particularly prized assets. As the Mexican journalist Ana Lilia Perez painstakingly documents in her book Mares de Cocaína (Cocaine Seas), between 70% and 80% of the global cocaine trade – a trade estimated to be worth some $400 billion per year – is transported by sea. As such, it’s no coincidence that many of the region’s most dangerous cities – cities such as Calí (Colombia), Fortaleza (Brazil) and Lazaro Cardenas (Michoacan, Mexico) – happen to boast some of its busiest ports.

Once the merchandise is loaded onto ships – often hidden among cargoes of legitimate goods, such as chile powder in the case of Mexico – it is dispatched to ports in North America, Europe (in particular Spain), Africa’s growing number of narco-states, Asia (also a vital source of many of the raw ingredients in drugs such as Crystal Meths) and even Australia, the world’s most expensive cocaine market whose supply is largely controlled by Mexico’s Sinoloa cartel and where a gram of so-called “luxury” cocaine can set you back as much as US$350 – more than a thousand times the original cost.

According to Lilia Perez, the same ports are also often used for the shipment of arms. The logic is simple in today’s world of super-fast global trade, says Roberto Saviano, the best-selling author of Gomorra and Zero Zero Zero: a port that handles containers slowly is as good as dead, while a port that receives and processes many containers as quickly as possible has a strong future:

To give a hypothetical example, if a port were to decide to check all of the containers it handled, no company would ever want to use it. Put simply, the faster the port, the better. It’s this paradox that helps to make the drugs trade possible.

As Michael Corleone was fond of saying, “it’s just business.” However, when it comes to the global drug trade and the doomed war our governments choose, however reluctantly, to wage against it, it’s a business that threatens not just communities but entire nations and regions of the world.

Yet even as the United States’ direct neighbor to the South is brought to its knees, the Obama Administration continues to resist and even mute Latin American calls to reduce militarized counternarcotics operations in favor of other approaches, such as those based on public health, violence reduction, respect for human rights, and cooperation to reduce the flow of arms and illegal funds. As Carlsen points out, the Drug War is a critical piece in the Pentagon’s global deployment plans.

It also feeds hugely powerful defense-intelligence industries, not to mention the prison industrial complex at home. Indeed, as Tom Dispatch reports, the Obama Administration is intent on further up-armoring the U.S.-Mexico border in what’s been termed – in langauge eerily reminiscent of recent U.S. war zones – a “border surge.”

Meanwhile opposition, both at grassroots and governmental level, continues to grow throughout the Americas, including in the U.S. where state legislatures are beginning to legalize the recreational use of marihuana. As drugs trafficking organizations expand their operations to countries like Argentina, Chile and Costa Rica, the existential threat posed to the region by global organized crime can no longer be ignored. Put simply, the externalities of a global drugs trade driven by demand in the world’s richest nations are being borne almost exclusively by some of the world’s poorest. As such, it’s only a matter of time before more governments take a leaf out of Uruguay’s former President José Mujica’s example and begin seeking a saner, more effective response to what is in essence a market problem. By Don Quijones.

With its vibrant street life, rich culture, sunny climes, and succulent, spicy food, Mexico is – or at least should be – a perfect destination. Yet these days, whenever I tell friends or family that I’m going to Mexico, a hushed silence inevitably follows. Read… U.S. State Department Heaps Further Pressure on Mexico’s Struggling Economy

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  6 comments for “Global Drug Trade Gets More Efficient, Defies US War on Drugs, Revolt Builds in Latin America

  1. Dan Romig
    Jan 28, 2015 at 6:49 am

    Legalization is the answer. The United States claims to be the land of “Life, Liberty and the pursuit of happiness.” Cannabis is now legal in a few states, and the voters in the District of Columbia overwhelming voted for legalization last November. But, since citizens in DC are second tier to those in the 50 states, Congress denied this legalization in the 1,603 page Cromnibus bill.

    If a person wants to do drugs, it should be their choice as long as they don’t infringe upon others. It’s called freedom. Land of the free, and home of the brave? Not so much I reckon.

  2. Petunia
    Jan 28, 2015 at 8:59 am

    DQ,

    We know the drugs come north and the guns go south, but where is the bulk of the money going? Is investment in Mexico up, are they investing/spending in the US or Europe? All the profits cannot be going just to guns.

    • Don Quijones
      Jan 28, 2015 at 3:45 pm

      Hi Petunia,

      The money goes quite literally everywhere, North, South, East and West. We are talking about hundreds of billions of dollars per year in liquid cash that end up penetrating just about every economy on the planet. Here are a couple of comments Roberto Saviano made about Europe’s central role in the drugs trade:

      — European Banks Open Their Vaults to the Drug Lords

      These days, the big drug cartels do not use tax havens, or at least they use them less than before. Instead, they use European [and obviously American] banks. In the new book (Zero Zero Zero), I mention Antonio María Costa, the former Under-Secretary of the United Nations Office on Drugs and Crime, who said at the beginning of the financial crisis that the European banking system had lowered its security barriers. In other words, they had opened the floodgates to drugs money. Costa stated on the record that the European financial system was as good as saved by the global drugs trade, yet not a single EU government has responded to his accusation.

      — The Role of the Global Drugs Trade in Spain’s Property Boom

      Who’s behind Catalonia’s real estate speculation? Narco traficantes. Where did all the money that fed Spain’s property bubble come from? It came from the drugs trade. Speak to the police in Spain and they will tell you that they don’t have the resources to requisition the mafia’s money. They don’t have the means to arrest the big players. Spain has all the weapons necessary to fight the problem, but the political will just doesn’t exist. As the Catalans say, “money is money”.

      You can read the full article here: http://ragingbullshit.com/2014/03/21/roberto-saviano-spain-is-europes-biggest-narco-state/

  3. Falcon
    Jan 28, 2015 at 10:19 am

    The money and tentacles run deep. The book ” Underground Empire – Where Crime and Governments Embrace ” by James Mills is a firsthand trip down the rabbit hole. Cartels will buy , load and ship 10 cargos . If only one shipment makes it, that pays for everything else , including profits.
    Success is better than 10 % . Cost of business indeed.

  4. Jan 28, 2015 at 2:05 pm

    This drug war has killed more people than the drugs themselves! The only people that want the drug war to go on is the U.S Law Enforcement, because they get all that money the Feds give them to fight this war.
    Now the states are saying to the federal government back off. Plus if all the states would legalize Cannabis the cartels would lose 75% of there business!
    I’ve seen farms that grow Cannabis here in California legally for dispensaries, so the cartels are becoming useless.

  5. RDE
    Jan 29, 2015 at 9:26 am

    Want to destroy the cartel business model and end the drug wars? Legalize all drugs and for a transitional period, instead of taxing their distribution to the point where underground production is still profitable (see Washington State) actually subsidize their distribution. The cartels would collapse quicker than a fracked gas well. And addiction would not increase in the long run, especially if the economic system provided alternatives for the street dealers who make their living on the bottom ladder of the distribution chain.

    Who would be the losers apart from the cartels? Police department budgets everywhere. The entire prison-industrial complex. Realtors in Miami. International banks that launder the money. Entire countries like Panama that exist as depositories for drug profits and recycling equally illegitimate profits from global corporations. Start-ups like Mitt Romney’s Bain Capital that owed their seed money to oligarchs with drug ties. Insurance companies that profit from a high level of street crime and the attendant rates their services command.
    Politicians everywhere who are directly or indirectly on the payrolls. Judges and lawyers administering “justice”. And clandestine “National Security Services” that use drug profits to fund off-the-record operations.

    Looks like public welfare has been out-voted again—–.

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