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Evolution of an Industry PDF Print E-mail
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Books - The Cocaine Connection
Written by Merrill Collett   

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Over the last decade drug trafficking has established itself as the world's fastest-growing industry, and business is getting better. Despite some evidence that the consumption of marijuana and cocaine is leveling off in the United States, U.S. citizens still spend an estimated $100 billion per year on illegal narcotics, and the European demand for drugs is rising. The amount of land dedicated to the cultivation of drug-producing plants increases every year. Smuggling rings have grown from crime syndicates into vePtically integrated conglomerates. More and more nations are being drawn into the drug-supply network, either as producers or as transit routes. How did this happen?

The new industry grew out of a U.S. social revolution in the 1960s that stripped away the social stigma associated with drug use. Marijuana became fashionable among young North Americans. When they started buying marijuana in Mexican border towns, neighbors to the south heard opportunity knock. The cultivation of marijuana earned Mexican peasants many times more than any other crop, and soon the tall, green plants were sprouting on the western slopes of the Sierra Madre and truckloads of "pot" were heading north to the booming U.S. market. In 1964 U.S. Customs Service agents confiscated 7,000 pounds of marijuana, mostly at the Mexican border. Experts believe that for many years the interdiction of marijuana only netted 3 percent of the amount actually smuggled in, which means that even at this early date the United States imported 100 metric tons of the drug in a single year.

Mexicans supplied most of the U.S. demand for marijuana in the 1960s, but in the early 1970s the United States pressured the Mexican government to begin spraying the herbicide paraquat on marijuana fields. U.S. pot smokers had to turn to other sources. Jamaica was one of them, and the fledgling domestic U.S. industry was another, but it was Colombia that filled the vacuum left by the collapse of Mexican supply. By the end of the decade Colombia provided nearly three quarters of the marijuana smuggled into the United States.

Colombians entered into the trade with their own variety of the cannabis plant. Grown in the fertile coastal mountains of the Sierra Nevada de Santa Marta, "Colombian Gold" had a distinctive yellow color and a strong potency that made it the drug of choice for pot smokers who could afford to pay its higher price. But the Colombians were not content with a small share of the booming U.S. market. Demonstrating a capacity for inventive entrepreneurship that would characterize the Colombian cocaine smugglers who were to follow, the marijuana traffickers adopted a new mode of transport that allowed them to expand greatly the volume of marijuana shipped. They loaded it onto freighters and fishing trawlers and carried it to the Eastern Seaboard of the United States. There they rendezvoused with small boats that delivered the drugs to distributors on shore. In 1974 agents of the U.S. Drug Enforcement Administration (DEA) in New Orleans discovered 24 tons of marijuana on one of the mother ships.

Pot of Gold

Colombian involvement in the U.S. marijuana trade ended at the wholesale level and did not extend into street distribution, but with pot selling for at least $300 a pound wholesale and Americans consuming about 9,000 tons of the drug every year from all sources, according to conservative estimates, the Colombian traffickers earned fabulous profits nonetheless. How much they earned is a matter of informed speculation. A frequently seen number is $1 billion annually, but illicit drug business statistics are notoriously unreliable. Although it is a global industry, its companies publish no annual reports, and research very quickly becomes a matter of sorting out the best guesses. First there is the problem of obtaining information about an illegal activity deliberately obscured by those involved in it. Second, illegal narcotics is such a highly emotional issue that even objective analysts are subject to strong biases that skew their results. The problem is even more acute when it comes to data supplied by politicians and governments. As RAND Corporation economist Peter Reuter notes in his 1984 article in The Public Interest, officials often use the drug issue to build public support for their own agendas. Every statistic on drugs—prices, volume, earnings, arrests, numbers of users and addicts—must be interpreted in this light. But although drug statistics are imprecise, they can point toward reasonable generalizations. In the case of marijuana, the numbers suggest that the new industry had a major impact on Colombian coastal society.

Marijuana cultivation is highly labor intensive. One U.S. political scientist who has done interviews along the Caribbean coast of Colombia says that by the end of the 1970s the industry employed 30,000 to 50,000 peasants who lived entirely on the sale of their marimba (marijuana) crops and another 50,000 people who had some role in the trade, such as guards, drivers, seasonal laborers and bankers. The most conspicuous members of the drug business were those who ran it. Newly rich marimberos cruised about in luxury cars and built beach resorts where they could display their wealth, but not all of the narcotraficantes were nouveaux riches. Old, landed families on the coast, with roots reaching back to the Spanish conquest, were attracted by the easy money of the marijuana bonanza. Shielded by their inherited political influence, they built up networks of drug dealers and tapped into the new source of wealth. For the most part these members of Colombia's traditional oligarchy used their marijuana money to replenish failing family fortunes and firm up their social status. Once that was done, they retired from the trade, leaving behind a legacy of corrupted public officials and dead antidrug agents. Neither the old families nor the marimberos followed the drug business into its next, more profitable and more violent phase of cocaine trafficking. Today Colombia continues to export large amounts of marijuana to the United States, but its market share has been pushed down to about one quarter of the total by competition from domestic U.S. growers, by the resurgence of Mexican supply and by aggressive interdiction, since marijuana is bulky and thus easy to detect.

Cocaine—the Miracle Drug

Cocaine is derived from the shiny green leaves of a South American shrub known to botanists as Erythroxylon and to the Aymara Indians of the Andes as coca, a word that means simply plant or tree, suggesting that coca is so central to Indian culture that it is the plant. Writing in the January 1989 National Geographic, Peter T. White points out that the coca shrub has been cultivated by Indians for many millennia to be used as a folk medicine, a sacrament in their religious rituals and a mild stimulant that provides renewed energy and increased mental clarity, rather like a cup of coffee. Today the younger generation of Indians seems to be moving away from the practice of chewing coca, but there are millions who still wedge a wad of dried coca leaves into a corner of their mouths. The United Nations contends that coca leaf mastication harms mental processes, but that assessment is based on research that is nearly 40 years old. Most medical experts now say that coca is not physically damaging and may be of benefit by providing calories and vitamins for malnourished populations. Cocaine is another matter. When a German chemist isolated the active alkaloids in coca leaves, he converted a mild stimulant into a toxic drug.

The invention of cocaine is attributed to Friedrich Gaedcke, a German chemist who distilled a white crystalline powder from coca leaves in 1855. European doctors were soon singing the praises of the new miracle substance. They said it anesthetized the body without dulling the mind, and surgeons used it in eye and throat operations. Cocaine moved into mass consumption when a Corsican chemist and entrepreneur named Angelo Mariani patented a mixture of coca extract and wine. His "Vin Mariani" won the endorsements of Sarah Bernhardt, Thomas Edison and Pope Leo XIII and was a smash success in the United States. In 1885 a pharmacist in Georgia entered the booming U.S. market for cocaine products with Coca-Cola, which he sold first as a coca wine, then as a medicine and finally as "the intellectual beverage and temperance drink." The advertisements for these and the other proliferating cocaine-based drinks, syrups, balms and powders stressed their therapeutic benefit as a pick-me-up. Doctors generally supported the claim that these nostrums contributed to mental well-being, and in 1884 Sigmund Freud wrote an influential paper in praise of cocaine euphoria. Freud experimented with its use himself and administered it to his friends. One of them became painfully dependent on the drug, pointing the way toward the coming shift in medical opinion. By the end of the century, doctors were warning against the dangers of cocaine addiction. In 1906 the Pure Food and Drug Act required the listing of narcotic ingredients on labels of patent medicines, and the Harrison Narcotic Act of 1914 required that the production and sale of opiates and cocaine be registered and records 'kept. Cocaine declined in popularity throughout the 1920s, and by 1930 it had sunk into the North American underground as an illicit white powder that was sniffed by jazz musicians, movie stars and wealthy eccentrics.

The 1960s saw the birth of a rebellious youth movement whose slogan was "drugs, sex and rock and roll." Cocaine, whose harmful effects had been forgotten, emerged from the underground. It only gradually entered the mainstream of U.S. life, however. The 1960s subculture at first regarded cocaine as an expensive, inaccessible drug whose hard-edged euphoria could be achieved more cheaply and more easily with amphetamines. But by the end of the decade amphetamines were passing out of favor as a hazardous drug, and a police crackdown was making them more difficult to obtain. Encouraged by movies whose heroes were cocaine dealers (Easy Rider, Superfly), and by rock musicians, who had started wearing tiny "coke" spoons around their necks, young North Americans were attracted to the drug, whose high cost added to its glamour. Cocaine consumption started to rise. In 1970 the U.S. government seized 305 pounds of cocaine. The next year the volume more than doubled, to 787 pounds. Cocaine was taking off as a chic narcotic. In time it would move from the drug culture into middle-class culture, becoming a required luxury of the affluent. In 1985 U.S. agents seized over 50,000 pounds of the white powder. •

Did pot smokers "graduate" to coke sniffing? There is evidence that marijuana traffickers in Miami, Florida, shifted to smuggling cocaine when the drug became popular, but there is &thing in the pharmacology of either drug to suggest that marijuana created a need for cocaine. Their effects are different: marijuana enervates while cocaine energizes. The link between the drugs is social, rather than physiological. The use of both has a common origin in the defiant subculture that encouraged youth to challenge social taboos against the use of narcotics. In the 1960s consumption increased for every illicit drug—heroin, LSD, Quaaludes, PCP, barbiturates, inhalants and others. Cocaine rose to popularity on this wave of mass experimentation.

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Bolivian Pioneers

In 1970 Bolivia and Peru grew almost all of the world's coca. It was legally cultivated in these two countries to supply the internal demand for leaves and the foreign demand for soft-drink flavoring and pharmaceuticals. It was illegal to manufacture coca derivatives, but coca production started to turn in that direction as the news of the U.S. hunger for cocaine reached the Andes. The first to respond were agro-industrialists living in the Bolivian departments of Beni and Santa Cruz, remote rural regions which reached to the borders with Brazil and Paraguay and had a long tradition of smuggling. The landowners in the area were agile businessmen who had become wealthy by quickly shifting from one agricultural export to another to obtain the best profits on the world market. When world cotton prices rose, they cultivated cotton. When cotton prices collapsed in the mid-1970s, they moved into a new growth commodity—cocaine. The shift to the drug trade by Bolivian cotton growers underscores what is now considered a truism: although other Latin American enterprises may fail, drugs always succeed.

Coca must be the world's easiest cash crop to cultivate. It flourishes in poor soil, requires no fertilizer or irrigation, resists blight and pests, produces its first harvest in a year to 18 months and continues to produce for at least 20 years even though its leaves are stripped off four or five times annually. The leaves themselves are nonperishable and lightweight, making transport easy. As for cocaine, the process of transforming coca leaves into the drug is a three-stage process. The first two steps are simple, inexpensive and easily adaptable to almost any work space, from the back of a pickup truck to the inside of an adobe house, and for that reason they are often done by the coca-growing peasants themselves. First, bales of the dried leaves are placed in tubs of water and kerosene and stomped on for several hours. Then the resulting gummy mixture is combined with sulfuric acid, lime, potassium permanganate and more kerosene and squeezed to produce a cream-colored substance known as pasta bsica, or "basic paste." Pasta básica is the intermediate product from which cocaine is made in the third and final step of the process. The paste is combined with ether and acetone to remove impurities and then filtered to produce a slurry which is dried into a fine white powder—cocaine hydrochloride (C17H211\104HCL). This final step requires more skill and an investment in chemical solvents not available to peasant processors. It has been done traditionally in a centralized laboratory fed by shipments of pasta básica and controlled by top traffickers, but recently there has been a trend toward hard-to-detect "kitchen sink" labs equipped with microwave ovens.

There are astronomical profits to be made in the cocaine trade, but most of the value is added at the distribution end of the business, as compared to cultivation and refining. The peasants who produce the raw material, coca leaves, typically receive as little as 0.5 percent of the retail price of the final product, cocaine. Even that small percentage is much more than they could earn selling any other crop. Bolivia's coca-campesinos soon found themselves with annual incomes as much as 20 times the country's per capita gross national product. But the really big bucks went to the top, creating a cocaine aristocracy that was headed by Santa Cruz cattle rancher Roberto Suárez Gómez, the self-styled King of Cocaine.

Suárez Gómez was an expert pilot who used his fleet of small planes to build an air bridge from the coca fields of Bolivia to cocaine laboratories in Colombia. By 1980 his drug operations were earning him an estimated $400 million a year. A flamboyant figure who carried a gold-plated handgun and kept a pet leopard said to wear a diamond-studded collar, Suarez Gómez fancied himself a modern-day Robin Hood who took from rich Yanqui cocaine consumers to give to poor Bolivians. He funded the education of children in his district while taunting the United States to capture him. Suárez Gómez was only the first top trafficker to polish this folk-hero image.

Colombian Captains of Industry

If Bolivians pioneered the cocaine trade, Colombians turned it into a big business. In a single decade of drug dealing that began in the mid-1970s, the Colombians forged a chaotic criminal activity into a vertically integrated conglomerate that now supplies most of the huge U.S. market. The Colombian traffickers did not force their product on unwilling buyers. U.S. demand attracted Colombian supply. Nevertheless the Colombians, especially the shrewd citizens from the businesswise city of Medellin, brought to trafficking a special organizational talent. They quickly learned how to mass market a product that had been supplied spontaneously. They consolidated lines of supply that reached from coca-growing Bolivia and Peru to their laboratories in Colombia. When foreign coca paste supply could not meet the exploding U.S. demand, they expanded supply by extending coca cultivation in the backlands of Colombia itself.oIn 1987, 90 percent of the world's coca leaves came from Bolivia and Peru, according to the U.S. government, while 70 to 80 percent of the processed cocaine on the U.S. market came from Colombia, according to Bruce Bagley, an academic expert.

The Colombians revolutionized the way cocaine was smuggled into the United States by replacing human "myks," who "body packed" cocaine across borders, with more-mechanized means of transport that could take full advantage of the growing U.S. market. While serving a marijuana-smuggling sentence in a U.S. prison, Carlos Lehder Rivas dreamed up the scheme of moving cocaine in small private planes and boats. Later the Medellin cocaine cartel of which Lehder was a founding member moved cocaine by the ton in cargo containers carried on freighters. This transport revolution raised the quality and the volume of cocaine in the United States and pushed down its street price so that by 1988 it had fallen to $70-$170 per gram (a gram is 1/28th of an ounce), the lowest point ever.

The lower price of cocaine made it possible and profitable for dealers to develop a new merchandizing item-s--"crack." Said to be the invention of Jamaican gangs, crack is a boiled-down cocaine residue that can be smoked in small quantities to produce quick euphoria. This cheap and highly addictive form of the drug spread rapidly across the United States. Thus the Colombian traffickers not only took advantage of a business opportunity, they also deepened the U.S. drug problem.

The lure of drug profits many times greater than those that could be made from marijuana set off an explosion of illegal economic activity inside Colombia, eventually generating a powerful, self-conscious group of drug-dealing entrepreneurs. Whatever Colombia gains from the cocaine trade in economic benefits, the country loses in the damage done to its political and social stability by this violent new stratum of cocaine capitalists.

Cocaine and Politics

The South American cocaine trade is centered in three countries, where it involves an estimated one million people, half of them Colombians. These range from peasant coca cultivators to buyers of half-processed coca paste to money-laundering accountants to the top traffickers who employ them. In various statements and documents, the Colombian traffickers have argued that they serve society by creating jobs and generating wealth, but most of the wealth flows toward the top. Unlike the labor-intensive marijuana trade, cocaine trafficking requires substantial capital and tends to concentrate wealth in the hands of a few. The number of those on top is difficult to assess, but one Colombian narcotics expert estimates there are at least 1,000 traffickers with assets worth from $15 million to $200 million. Forbes magazine says Pablo Escobar Gaviria, Jorge Luis Ochoa Vásquez and Gonzalo Rodriguez Gacha—the big three of Medellin-have more than $1 billion each. Less is known about Gilberto Rodriguez Orejuela and José Santacruz Londono, the leaders of the Cali cartel. (The use of the term cartel to describe cocaine-trafficking groups is misleading, since none of them controls the market price.)

These men bring back between $1 billion and $3 billion annually to consume and invest in Colombia. Given the steady devaluation of the Colombian peso, dollar repatriation on this scale is an unsound business practice, but the traffickers are moved by more than the profit motive. They want big bank accounts in Switzerland, but they also want prestige and power back home. They want to launder not only their money but their names. Their lust for legitimacy explains why the Colombian traffickers have invested heavily in politics.

For a while it appeared the emerging cocaine capitalists would buy their way into the inner circles of the country's two major political parties. Both parties accepted drug dollars as campaign donations, and Pablo Escobar, who built up his popularity by playing Robin Hood to Medellin's poor, won a seat in Congress in 1982. He was hounded out by a crusading young senator from the reform wing of the Liberals, Rodrigo Lara Bonilla. Lara Bonilla was murdered in 1984. According to government prosecutors, his two assassins were paid by Pablo Escobar. Lara Bonilla's murder forced Colombia's political elites to confront the traffickers instead of accommodating them, and Colombia's last two presidents have taken strong stands against them.

Although the front door to Colombian party politics is now closed to the traffickers, they may be gaining political power through a side entrance. Farmers' and cattlemen's associations have a lot of political clout in Colombia, and the traffickers have been buying up rural real estate in large amounts, which gives them access to these organizations. It also positions the traffickers to take control of municipal governments, now that a recent political reform has done away with the appointment of Colombia's mayors by the central government in Bogota and established the local election of these officials.

'Narco-cattlemen'
Drug traffickers have snapped up some 2.5 million acres of farmland, according to one study. The phenomenon is so widespread that the army's main drug fighter, Gen. Jaime Ruiz Barrera, has coined a term for the new landed gentry—narcocattlemen. In the countryside, their ranches can be identified by the impeccably maintained fences and the ostentatious entryways. The most famous of these belongs to Pablo Escobar, whose Hacienda Napoles is entered under an arch that holds an actual small plane said to have carried his first cocaine shipment to the United States.

There are many reasons why the narcos are setting themselves up in the countryside. Real estate is an uncomplicated business to enter for the rising new rich unskilled in industrial investments and without access to Colombia's clannish commercial class. Another obvious attraction is security. The rolling hills of a cattle ranch offer good escape routes. Although General Ruiz has a reputation as a tenacious enemy of drug traffickers, he has captured none of them since he was sent to Medellin in early 1988. On one raid the Army found an underground bunker and tunnel system, but the traffickers had fled. Remote ranches can hide not only traffickers but drug laboratories and the clandestine airstrips used to fly out the finished product. In June 1988 General Ruiz's raiders discovered four labs, 2,600 kilograms (5,720 pounds) of cocaine and three airstrips on one of Escobar's ranches on the west bank of the Magdalena River, not far from Hacienda NApoles.

The middle section of the long Magdalena River Valley that divides Colombia has become a flourishing center for agricultural investments by the traffickers. There the traffickers' rural presence has taken on violent political overtones. Rodriguez Gacha and Fidel Castazio, two fanatically anti-Communist cocaine kings, have built up large cattle ranches in the area. Colombian prosecutors say Castaiio and Rodriguez Gacha are using their ranches as training camps for paramilitary groups which the traffickers deploy against villagers who sympathize with leftist guerrillas and the political party they founded, the Patriotic Union. Patriotic Union chairman Jaime Pardo Leal was murdered in October 1987, and the government says his killers were working for Rodriguez Gacha. Pardo's murder was apparently a retaliatory blow for pressure by the guerrillas, who force the traffickers to keep up the price paid peasants for coca paste in the regions under guerrilla control.

The complexity of Colombia's narcopolitics should not obscure the fact that the foundation of the cocaine empire rests on U.S. demand for the drug. As the drug fad of the 1960s became a permanent feature of U.S. life, the steady flow of large amounts of money into the Latin American underground gave rise to a sophisticated, diversified industry-and a new interdependence between Latin America and the United States.

 

Our valuable member Merrill Collett has been with us since Tuesday, 21 February 2012.

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