Cocaine Nation

by Thomas Feiling

  Wholesale drugs traffickers in the United States are thought to generate and launder between £4 billion and £12 billion in proceeds from marijuana, methamphetamine, heroin and cocaine sales every year.19 The Chicago Police Department estimates that in the three years up to 2007, gang members in the city laundered £90 million of their drug proceeds through fraudulent real estate transactions and mortgage fraud.20 Christian, the former cocaine trafficker from Miami, told me about the methods used by Colombian traffickers to smuggle their proceeds south. ‘Just the same way that the drugs come in, hidden under whatever it may be, the cash will go right back hidden in something else. One time, I went back to Colombia with $90,000 sewn into my pants. A lot of times they’ll try to send large cash shipments back to Colombia, and every once in a while they’ll get popped with $30 million in a container. Or the cash goes back in double-sided suitcases that can hold up to $200,000. Those one-dollar stores that you see popping up were started by the cartels. They’d get these cheap Chinese products that you buy for ten, fifteen cents a piece, and sell them for a dollar, but they’d report the earnings as much higher.’

  Perhaps the simplest method is to get multiple payees, known as ‘smurfs’, to send sums up to £1,500 via Western Union Bank. Drug dealers are not the only ones that need money-laundering services. There are plenty of white-collar offenders, Medicare fraudsters, recording pirates and tax evaders who need to hide the origins of their wealth. The former cocaine trafficker Fabio Ochoa described how Colombia’s biggest capo laundered his takings. ‘Salvatore Mancuso used to bring the money back to Colombia by different routes. He never used private planes. He’d bring the cash in through commercial airports, which meant that he had to buy off a lot of people. Mancuso’s got a group of lawyers that set up companies and buy farms. Just in terms of land, he has more than 100,000 hectares. The guy’s worth $500 million.’

  Since 1989, international law enforcement agencies have developed increasingly intrusive measures to keep drug money out of the financial system. The control regime has extended from banks to car dealers, casinos, corner-shop money-transmission businesses, jewellers, pawnbrokers and insurance companies. Policing the international financial system has become harder because free trade zones, extra-territorial banking, electronic money transfers and smart cards have made the movement of capital much easier over the past twenty years. Every day, there are 70,000 international money transfers, shunting £1 trillion to and from accounts around the world. In 1979, there were seventy-five offshore tax havens. Today, there are more than 3,000, and nearly half of the world’s money supply passes through them. These havens have institutionalized tax evasion by the world’s greatest fortunes. They have also given money-launderers many more options.

  The neo-liberal economic reforms that have been foisted on the Third World also favour the international drugs trade. The logic of neo-liberalism is to reduce governments’ ability to withstand external market pressures, thereby forcing them to conform to the dictates of the international marketplace. Unfortunately, there is depressingly little the world market wants from countries like Peru and Bolivia other than coca. Despite wide-ranging economic reforms, the legal export sector is stagnant in both countries, and coca generates most of their reserves of foreign exchange, because it is the export commodity which provides both countries with the best returns in the global economy.

  Since Peru and Bolivia are struggling to keep up with interest payments on their enormous foreign debts and face declining revenues from their traditional exports, both have welcomed the influx of US dollars from the cocaine business into the banking system. The Bolivian government approved a number of measures that eased the absorption of drugs money into the financial system, such as loosening the disclosure requirements of the Central Bank and declaring a tax amnesty on repatriated capital. Narco-dollars have financed Bolivia’s debt repayments to foreign banks, an open secret since new laws prohibited official inquiries into the origins of any wealth brought into the country.

  This puts the Peruvian and Bolivian governments in a tight spot, because the aid and diplomatic favour of the United States government are conditional on their compliance with the diktat of both neo-liberalism and anti-drugs policies.21 Officially, Peru and Bolivia are loyal allies. As far as the World Bank is concerned, Peru’s most important agricultural export is asparagus. Unofficially, both countries have defected from the war on drugs, while playing a delicate game of drug diplomacy. Since the war on drugs is one fought with resolutions and exhortations rather than facts or logic, there is plenty of room for what the CIA might call ‘perception management’. Bolivian and Peruvian politicians blame their lack of progress in curbing drug production on corruption, bureaucratic mismanagement or inadequate resources. They make occasional high-profile drug seizures and arrests of drug traffickers, which have little impact on the cocaine trade, but appease policy-makers in Washington. Were Washington’s drug warriors and neo-liberal economists to address one another instead of the governments of Peru and Bolivia, their rhetoric would surely lose its lustre. Since they don’t, current economic policies and drug prohibition policies have shown a remarkable capacity to coexist, even when they operate at cross-purposes.

  Why don’t Latin American governments challenge this flawed anti-drugs strategy? Because the United States threatens any Latin American government that challenges their handling of the drugs trade with decertification. Decertification is the system enacted by the United States Congress in 1986 to punish foreign countries that don’t toe the party line in the war on drugs. When US representatives in organizations such as the World Bank and the International Monetary Fund threaten to vote against loans to the offending country, impose tariffs on its exports and suspend air transport between it and the United States, the Americans can be sure of the offending government’s undivided attention. When Colombia was decertified in 1996, it went into a recession from which it is only now emerging. Such is their fear of the big stick of decertification, countries like Mexico have thrown their military forces into battle with the cartels because at least they are cleaner than their police forces. But as the Mexican army has come face to face with the cocaine business, it too has succumbed to the traffickers’ bribes. Reliance on the military also diverts attention and resources from the essential reforms of the police, intelligence apparatus and judiciary necessary to have any long-term impact on the drugs trade, or anything else for that matter. Perhaps in belated recognition of the negative effects of their big stick, in 2002 the US Congress modified the process by which their allies earn brownie points. Countries are now automatically certified as willing partners in the war on drugs unless their counter-drug efforts are toe-curlingly poor.

  The threat of decertification also nips any hint of a challenge to prohibition in the bud. In 2001, Jamaican Prime Minister P. J. Patterson appointed a National Commission to look into the possible decriminalization of marijuana for personal use. The Commission’s report concluded that ‘the criminalization of thousands of people for simple possession does more harm than could be done by the use of ganja itself’. No mention was made of legalization, which would have contravened the 1961 United Nations Single Convention to which Jamaica is party. All the same, the US Embassy in Kingston made it plain that it would not tolerate the decriminalization of any drug in Jamaica, and issued a thinly veiled warning of decertification.22 The Ganja Commission’s recommendations, despite cross-party support in the Jamaican Parliament, have since been quietly shelved. The Jamaican ganja crop is still the target of government eradication squads, but this is widely regarded as window-dressing to keep the White House happy.23

  The irony is that the United States government can more readily impose its will on small Third World nations than it can on states such as California, which has legalized the medical use of marijuana, in the face of staunch opposition from the federal government.24 Many other states in the Union have passed legislation that permits the use of marijuana for the relief of severe pai
n, after glaucoma sufferers and AIDS patients sued the government for their right to use marijuana for medical purposes. In response, the federal government has cautioned the public against ‘misplaced compassion’.

  The law enforcement approach that has ingrained the drugs war into inner-city life across the Americas is based on tackling the supply of drugs. The supply-reduction strategy assumes that if enough coca fields are fumigated with herbicides, cocaine laboratories destroyed, shipments intercepted and traffickers arrested, less cocaine will be available to buy on the streets of the United States. If the authorities can thereby drive the purity of what is available down, and prices up, people will be dissuaded from buying cocaine and smugglers will give up trying to bring the drug to market.

  This is not what has happened. In the ten years up to 2007, the United States government spent $31 billion on overseas drug control, which is almost twice the amount spent in the previous ten years.25 In spite of this huge increase in resources, cocaine has only been getting purer. Street cocaine sold in New York City in 1970 was reported to contain just 6 per cent cocaine.26 This rose to an average of 40 per cent purity in 1981 and to 63 per cent in 2003.27 Cocaine prices fell over the decade leading up to 2003: in Western Europe by 45 per cent and in the United States by about 50 per cent.28 The DEA counters that there has been a marked increase in retail cocaine prices in American cities since 2003. While this is true (the average price per gram went from $80 to $100 between 2003 and 2005), this is not necessarily good news for the DEA. To some extent, the price rise is due to stepped-up policing by the Mexican authorities and disputes between rival drug-trafficking organizations in Mexico. But more significant has been the increased demand for cocaine in Europe, where prices are higher and the value of the euro has risen against the dollar. The North American cocaine market has also lost out to growing demand for cocaine in transit countries such as Mexico, Brazil and Argentina. What appears at first sight to be the first signs of a long-awaited improvement proves on closer inspection to be quite the opposite. Cocaine is produced in quantities sufficient to supply the biggest markets, plus enough to cover anticipated government seizures, and has been for some time. The situation shows no sign of changing, however much money the United States throws at the problem.29 Former US drug tsar Lee Dogoloff acknowledged as much when he said that ‘everyone has agreed for the past twenty or thirty years that the only real improvements will come from demand reduction, not supply reduction’.

  PART THREE

  Where Do We Go From Here?

  9

  The Demand for Cocaine

  All laws which can be violated without doing anyone any injury are laughed at. Nay, so far are they from doing anything to control the desires and passions of man that, on the contrary, they direct and incite men’s thoughts toward these very objects; for we always strive toward what is forbidden and desire the things we are not allowed to have. And men of leisure are never deficient in the ingenuity needed to enable them to outwit laws framed to regulate things which cannot be entirely forbidden. He who tries to determine everything by law will foment crime rather than lessen it.

  Baruch Spinoza, Political Treatise, 1677

  ‘You can have all sorts of successes in the war on drugs, as has happened with heroin in Turkey, India and Thailand, where there have been big successes, but as long as there is demand, the supply will come from somewhere, and the war on drugs is just fuelling conflicts which will continue unabated.’ I had asked Sir Keith Morris what conclusion he had drawn about the war on drugs from his tenure as British ambassador to Colombia between 1990 and 1994. Addressing the demand for drugs seems obvious, and lip service has long been paid to the need to reduce the demand for drugs. But drug-taking is illegal, and so it is furtive, which makes it difficult to analyse. The gaps in official understanding leave plenty of space for pontificating by people with little knowledge of, and strong objections to drug-taking, which cannot be a good basis for analysing, let alone controlling, anything.

  About 5 per cent of the world’s adult population, equivalent to 200 million people, is thought to take illegal drugs. Cannabis remains far and away the most widely used drug: about 162 million people smoke it on a regular basis. Of the 13 million cocaine users around the world, two thirds live in the United States and a quarter live in Europe, where cocaine use has been rising for the past ten years. The American cocaine experience has played a pivotal role in determining the rest of the world’s drug policies, but that experience and the poverty, racism and zealous law enforcement agenda that shaped it is far from typical. Arguably, a more representative scenario can be found in the United Kingdom. In the 1990s, growing numbers of British people were willing to try illegal drugs, culminating in 2000, when 34 per cent of British adults admitted having used an illicit drug at some time in their lives, up from 28 per cent in 1994.1 Fourteen per cent of them, equivalent to 4.5 million people, have tried a ‘class A’ drug, the category to which the British government’s medical scientists despatch the psychoactive substances they consider most dangerous, which includes cocaine, ecstasy and heroin. Most people used them occasionally, not habitually. Over the course of 2001, just over a million British adults used a class A drug at some point, and 500,000 of them had used a hard drug in the past month.

  In the UK and Spain, more young adults now take cocaine than take ecstasy, and in both countries, cocaine is the second most popular drug after cannabis.2 In 2000, 4 per cent of Spaniards admitted taking cocaine at some point in their lives.3 While this is a sizeable portion of the adult population, one could just as easily extrapolate the conclusion that hard-drug use appeals to remarkably few people. Even allowing for the prodigious increase in cocaine use in the UK, Spain, Ireland and Italy, just over 1 per cent of teenagers and adults in Western Europe took cocaine last year. Even in the United States, the world’s biggest cocaine market, the average rate is just 2.3 per cent.

  Why such low numbers of people should be of such concern may be because drug use is more common among young people. Almost 6 per cent of the UK’s sixteen to twenty-four-year olds—that’s 350,000 people—took cocaine last year.4 According to a report from Liverpool John Moores University, 50 per cent of young people in Liverpool took cocaine in 2008.5 Whichever statistic comes closer to the truth, it leaves questions of why people take cocaine and to what extent it need be cause for concern unanswered. As long as cocaine enjoys a reputation among Europeans which, as the UN’s World Drug Report of 2006 put it, ‘is still not very negative’, they can be expected to consume more of it in the future.6 This makes a clear understanding of the demand for cocaine more important than ever.

  Considering the terrible fear of ‘instant addiction’ that the American press indulged in throughout the 1980s, the first point to make is that few of those who try crack or powder cocaine become regular users, much less addicts, of either. In 2003, 35 million Americans admitted trying cocaine at some point in their lives, but less than 6 million of them had taken cocaine in the past year. Far from succumbing to cocaine addiction, most Americans who try cocaine never take it again. Almost 8 million Americans admit having tried crack at some time in their lives, but only 1.4 million of them had smoked it in the past year.7 This is not to deny that plenty of people become dependent on cocaine and crack, but drug dependency cannot be explained by the inherent qualities of the drug itself. A more profitable line of enquiry would be to look at the difference between the 604,000 Americans who smoked crack in the past month and the 800,000 Americans who smoked crack in the past year but not in the past month. Why do some people run into problems with cocaine while others don’t?

  Interpreting drug use, like drug use itself, is subject to fashion. Young people have adopted a more relaxed attitude to class A drugs since the rise of ecstasy in the 1990s. Despite being categorized as a class A drug, nobody became addicted to ecstasy, and few people suffered ill-effects. Well-publicized exceptions only served to convince drug-takers that press and politicians were hysterical,
hypocritical or possibly both. They became more suspicious of their teachers’ and politicians’ admonitions, less wary of ecstasy and more willing to take powerful stimulants in combination with other drugs. As the American experience shows, drug users have often been stigmatized as part of a wider culture war between liberals and conservatives, but Britain’s ecstasy generation has largely escaped attempts to caricature it because ecstasy seemed to be a drug without political affiliation. It was certainly celebrated as a quest for unity after the divisive Thatcher years, but as such, it appealed to people on both sides of the divide. It was not a badge of exclusion or exclusivity, but an escapist attempt to transcend both.

  As the quality of ecstasy pills has fallen over the past five years, many drug users have looked for the strong stimulation offered by ecstasy and found it in cocaine, which has become more affordable. Britons were paying an average of £65 for a gram of cocaine for their Millennium Eve parties. By 2005, the average price had fallen below £50.8

  One of those users was Bridget. ‘I’m thirty-five,’ she told me. ‘When I was eighteen, the drug of choice was most definitely ecstasy. The parties were in fields and disused warehouses, but it wasn’t as if the organizers were making loads of money on the bar, because although you might get a couple of bottles of water, ecstasy is not something that you drink with. As the acid house thing started to wind down, it pushed people into bar culture through the ’90s. We had the rise of the style bars, and DJs playing in bars and that definitely goes hand in hand with cocaine. People wouldn’t necessarily pay to get in, but they would stay all night to dance, and the bar would make its money on drinks. As cocaine began to get cheaper and there were more and more bars, you’d have a couple of lines and go bar-hopping. I used to run bars and it was so in our interest to have people on coke because they just drink and drink and drink. There would be big signs up saying that if you got caught doing drugs you’d be thrown out, but as long as people didn’t start fighting, I didn’t see there was a massive problem with there being some coke available.’