Crime and Narcotics Center
of the Cocaine Trade
Law enforcement successes against South American drug enterprisestable or declining market for cocaine in the Unitedtheore diverse illicit drug industry thatrowing array of consumers around the globe, especially in Europe, Traffickers from many nation* increasingly are collaborating in the purchase, transport, and distribution of coca derivatives, and in the process eschewing traditional preferences for criminal partnerships with single-ethnic groups.
The growing cocaine trade outside the United States provides buyer competition lhat tends to stabilize US consumerdespite large increases in
Colombian cocaine production over the past twomaklne Ihe drue
affordable to some US users.
APPROVED FOSEK DATS: KAY
Drivers of Ihe Globalization Trend
The increasingly broad geographic scope of cocaine trafficking appears drivenonvergence of factors, including successful counterdrug operations in South America, changes in markets for cocaine, and the expanded reach of Russian-speaking organized crime. These trends are fundamentally altering the character of the cocaine trade in often unpredictable ways.
Impact of Antidrug Successes. The dismantlement of the Medellin cartel3 and the arrests of most top leaders of the Cali mafia56 have opened the Colombian cocaine trade to independent trafficking groups and made it more accessible to foreign buyers. The resultroliferation of the independent organizations, who in the past would have sought lucrative and secure relationshipsajor trafficking patron but now are free to negotiate their own deals.
Imge international sellers or transporters of cocaine. Many independent groups have increased operations in non-US market for drugs, where prices are higher and risks of facing US-style justice are comparatively low.
Successful US-backed efforts in Peru and Colombia to target drug flights have also contributed substantiallyore decentralized, global cocaine trade.'
Colombian accesseliable supply of Peruvian cocaine base, Colombian traffickers were forced to ereourage greater coca cultivation and processing closer to home.1
Growing Colombian self-sufficiency has affected the export patterns for coca derivatives from both Peru and neighboring Bolivia. Traffickers in both countries, faced with declining Colombian purchases, were forced to expand exporta,!
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Bolivian exports through Brazil and the Southern Cone countries have helped spur greater demand for cocaine there, which over time has become large enough loarge portion of the dwindling Bolivian cocaine supply. Increased drug flows though transit coautries often have resulted in greater consumption in those places.
ikely reason is the habit oFmany traffickers of paying locally-hired help in narcotics rather than cash. Traffickers appear to preferractice because they do not have to advance or launder the cash needed to cover local payroll expenses and because drugs are worth more to the foreign employees than cost tbe traffickers to procure at the source. Local employees paid inoften lack the contacts and sophistication to sell themforced to develop local markets to liquidate such payments into
[me official US estimate of Colombia's potential
cocaine production from its domestic crop will increase substantially Inmi8 estimateetric tons.1
Expanding Consumer Markets. The changing destination for cocaine movements is being driven by fluid consumption patterns. Alter substantial growth in, the US market in recent years haslateau, accordingariety of indicators. The price and purity of gram- and kilogram-sized quantities of cocaine sold in the United States have been stable in recent years, according to US Drug Enforcement Administration statistics. National Household Survey data moreover shows that the number of cocaine users has remained relatively stableangingeakillion users
Average US Street-Level Priceilogram of Cocaine Hydrochloride
verage Purity for
Sold Cocaine (Expressed in Percentage)
US Drug Enforcement Admin isnation, the Supply of Illicit Drugs to the United Sutes. (in draft).
77ie preceding tables are
Outside the United States, however, cocaine consumption appears to have increased. This trend reflects greater disposable income among many potential drug consumers and increased social tolerance in some countriesj"
[It alsoeluctance ot many abusers to consume alternative drugs that need to be injected intravenously, risk unpleasantr produce unwanted physiological or psychological side effects. The rise in cocaine demand outside the US has pushed prices higher there and made trafficking in the drug more profitable,-
Southern Florida California at Mexico Border Northern Mexico Spain
Cocaine Consumption Increasing in Europe (U)
The most important change in demand trends has been in Europe. While there are few reliable statistics on continent-wide drug use, several countries individually report an increase in the number of cocaine abusers. Most European officials believe that the amount of cocaine consumed there rangesetric tons, putting collective Europeanlose second behind that of the Unitedocaine prices in Europe generally are higher that those in the United States,
Cocaine Seizures in Europe (U) Kilograms
2 The term "organized crime" encompass any group, association, ot other body, whether formally or informally organized, lhal undertakes illegal activity for financial gain. This includes both groups with centrally controlled hierarchies and those made up of fluid and often changing alliances or networks of individuals engaged in criminal activity. (U)
Growing Rote of International Organizedhe expanded reach of international organizedbyproductore globally-integrated economy, the collapse of the Soviet Union, the subsequent social and political upheaval ia the former Communistcontributed greatlylobalized cocaine trade. Organized crime syndicates arc the natural allies of drug traffickers: they maintain highly secretive networks dedicated to illegal activities, cultivate and nuunlain stables of corrupt officials, raise significant sums of capital with which they can easily afford major drug purchases, and employ highly developed mechanisms to move funds around the globe to hide illicit proceeds..
Expanding Legitimate Trade and Commerce. The increased volume of trade between countries has provided traffickers greater opportunities to commingle licit and illicit cargoes and has severely strained the ability of foreign customs officials to inspectodest percentage of goods shipped,]
_JParticularly important to the expansion ot cocaine trarticlcing has been the economic and political integration of Europe, where many countries no longer require customs or immigration checks for travelers who originated in other Europeanoreover, expanded trade ties appear to have made some governments more reluctant to institute aggressive customsspecific intelligence about drugof fear of provoking retaliatory delays in their own country's lucrative exports.
The Trafficker Melting Pot ^
Law enforcement successes, shifting markets, and the involvement of powerful criminal forces from outside Latin America have broken the Colombian cartels' earlier dominance of cocaine trafficking. Colombians today stillentral role in international drug trafficking, but the way has been opened for criminal syndicates from other countries,bp_th within Latin America and elsewhere, toroad role in the trade.
Non-Colombian Latin American Trafficking
The waning dominance of major Colombian groups has coincided with thein powerorganizations and has encouraged the growing
independence o: trattickers from other parts of Latin America.!
3 The Schengen Accord, creeled5 nnd implemented by oil original signatories5 andbolished internal border controls, allowing persons and goods to travel freely oocc they have entered wiy member slate of the European Union, except ihe United Kingdom and Ireland. Two non-EU countries, Norway and Iceland, are Schengcn group members, ami several other European countries are considering joining. (U>
traffickers have expanded their exports of finished cocaineEurope, Mexico, and the United States, and atew small groupstrying to duplicate the Colombians' success in producing heroin for themost
groups lacK tne infrastructure ana networks to promote drug
abroad, many appear to rely on buyers or brokers willing to come to them. Others seek the help of independent Colombian traffickers in making and financing direct connections with buyers. Time and experience, however, are likely to lead more
to expand their overseas presence, similar to that of the
trafficking groups already have established important overseas relationships.
Cocaine Groups From Outside Latin America (U)
International criminal syndicates from outside Latin America have expanded involvement in the global cocaine trade, exploiting their presence in and knowledge of emerging consumer markets in Europe and elsewhere.]-
Russian-speaking criminalsole in arranging cocaine shipments to Central and
are active in Argentina, Belize, Colombia, Ecuador, Panama, and probably other countries. Colombian police chief Rosso Jose Serrano has claimed publicly that Russian-speaking criminals dominate much of the European-bound cocaine trade; he cites extensive telephone contacts between suspected Russian-spcakinK criminals in Colombia with their colleagues back home. [
Jthere is little doubt that Russian-speaking criminals are
involved in cocaine movements.
Asian prganized crime syndicaies with tentacles in South America also appear to be trafficking in cocaine, in addition to other criniinal activities that include heroin trading, alien smuggling, arms dealing, prostitution, and extortion.
Venezuelan authorities arrested several employees of ancrime syndicate andilograms of cocaine earlieraccording to local press reports.
Brazilian officials also arrested ethnic Chinese trafficker Jose Luis Ye Xu for smugglingilograms of cocaine to Madrid inccording to press
Nigerian and other African syndicates are increasingly active in cocaine trading,
Unlike many other international trafficking groups, Nigerian syndicates typically move cocaine using "armies" of couriers, many of whom ingest packets of drugs before boarding commercial airliners,
syndicates also have access to ample supplies of heroin, mostly from southeast Asia. The recent rise in heroin consumption in Brazil reported by public health officials suggests the possibilitywo-way drug trade involving South America.f"
increased Ties Between Groups (u)
Many trafficking groups, out of necessity or greed, appear to be relying less on the exclusive collaboration from members of their own ethic or family groups and are working together with groups from different countries. Italian anti-mafia prosecutor Pierro Luigi recently said that criminals from Russia, Albania, Montenegro, China, Poland, Latin America, Kosovo, and Albania were merging efforts to conduct large-scale trafficking activities.^
Antidrug Challenges and Opportunities (u)
Expanded global markets for Latin Americas cocaine and the decentralization of the drug trade paradoxically make the industryhole more impervious to disruption, while increasing the vulnerability of individual groups. Today's cocaine traffickers must cope with the greater distances involved in reaching transatlantic markets, the increased need for long-range communications to coordinate transoceanic deals, added language barriers, and the need to trust collaborators from outside their own extended families or ethnic circle. Changes in consumption patterns, moreover, arc forcing several countries toougher line toward narcocriminals, increasing the prospect that many ultimately will face justice. To add to the traffickers' woes, the growing competition for international business increases the chance that aspiring smugglers will inform on more-established rivals to help clear the way to build their own fortunes.!
While the risks for individual groups may be high, the increasingly diverse cocaine industry is likely to become less vulnerable to disruption. The expansion of consumer markets and the greater number of foreign groups involved provides Andean traffickers and their allies abroad more options when interdiction forceslxnen route. International collaboration, moreover, helps criminals meet shirting consumer demands by allowing them to swap products; traffickers from Latin America, for instance, could trade cocaine, which sellsremium east of the Atlantic, for heroin produced by southwest Asian or European traffickers that wouldigher value in North America. Such deals would reduce the problems of moving cash to cover drug transactions and allow both parties to maximize their profits and manage their risks.
The growing territorial scope of the cocaine trade will challenge antidrug forces in important new ways. Nations are protective of sovereignty and slow to respond with new laws or expanded capabilities in rhe race of changing drug movement patterns; traffickers are typically more flexible in their operations and more willing to cross national boundaries. Traffickers likewise have demonstrated little problem in working cooperatively with foreign groups when necessary, but governments most often require diplomatic agreements or standing associations with multinational organizations before sharing their information, expertise, or antidrug resources. While criminals care almost exclusively about bottom lines, governments must balance their desire to expand countemarcotics bilateral or international cooperat onost of competing political and economic interests that may be in conflict.
Implications for the United States (U)
The broad scope of cocaine trafficking iside range of US policy interests. Increased consumption and trafficking of the drug outside the United States are likely to boost the willingness of many affected countries to cooperate with Washington on antidrug initiatives. However, the increase in cocaine use by populations of developing countries also is likely to spur renewed demands and competition for US countemarcotics assistance. New demands for aid are likely to rise from the countries that sit astride transportation routes for cocaine bound for the European or other developing markets. The smaller and less strong of these countries, moreover, will become more vulnerable to the corruptive power of traffickers.
Fearing an increase in health, crime, and even national security problems, not all countries will see the needough counterdrug approach. Some Caribbean and European states are likely to favor more permissiveto those adopted by theat reducing the societal and economic harm of personal drug use.
Competition for cocaine from markets outside the United States probably will have some positive impact on constraining potential US cocaine availabilityajor expansion in Colombian cocaine production by making the drug less affordable to American consumers. While production appears sufficiently robust Io meet basic demand in all markets, competition from foreign purchases could help keep cocaine above the price at which some US consumers will choose it over other alternatives, such as marijuana. |Original document.