The social and economic impact of drug traffickingParis - The Mexican drug cartels, as major suppliers of the North American market, rake in annual profits of between 10 and 30 billion dollars.
When Mexico was deep in financial crisis in 1995, the drug money laundered was equal to what the country earned from its oil exports. These two estimates illustrate the enormous industry that drug trafficking had become during the 1980s and 1990s. But this is only the tip of the iceberg. Little is known about the profound impact such trafficking has on economies and societies or its political implications.
A lot of studies have been done of the drug phenomenon but governments have focused on the dangers it posed to health, or on stamping it out. In 1996, UNESCO's Management of Social Transformations Programme (MOST) launched a research project to study the economic and social transformations connected to international drug trafficking. It was started and supervised by the late anthropologist Christian Geffray (who died in 2001), China expert Guilhem Fabre and economist Michel Schiray, and carried out by a team of sociologists, ethnologists, anthropologists and economists, with support from the UN Office for Drug Control and Crime Prevention.
The results of the project, which mainly involved four large countries with broad-based economies - Brazil, China, India and Mexico - have just been released on CD-Rom and on the MOST website under the title of Globalisation, Drugs and Criminalisation. The researchers, mostly natives of the regions studied, met and talked with drug dealers and consumers, judges and police, lawyers and government officials. They went through years of press articles and court decisions concerning drugs, studied the movement of capital and funds and the operation of tax havens. Completion of the project shows that social and economic research can be done even in the very closed world of economic crime.
The project's main conclusion is that drug trafficking - and the money-laundering that goes with it - is directly tied to a whole range of other criminal activities and that the general growth of these activities over the past 20 years stems largely from the greater opportunities that financial deregulation and globalisation provide. Some of the studies are revealing about the use of offshore banks, which are termed "legal illegality." The important and harmful role of tax havens is clearly shown, especially the murky handling of the money of the very rich.
The report says the impunity the drug lords enjoy is due to their skill in neutralising or undermining the work of the police through systematic corruption and, in some cases, by infiltrating government forces. For the authors "the form of corruption prevailing in a given country is strictly dependent upon the nature of the State and the balance of power […] between State institutions and drug trafficking networks […] In this regard, the case of Mexico, where the civil service remained for a long time under the de facto tutelage of a single party, may show greater similarity to the case of China than, for example, to that of Brazil or Colombia. "
The study on the Brazilian state of Rondonia provides striking examples of drug lords elected as mayors, parliamentary deputies and senators. Mexico - with its corrido, popular songs that once celebrated revolutionary heroes like Pancho Villa and Emilio Zapata and now praise the deeds of drug lords -- illustrates the "social embellishment" of the image of some of these criminals, who have become heroes of their neighbourhoods and hometowns.
The political influence of criminal networks, seen locally but also at regional and national level, obviously poses the question of the gap between the law on paper and its enforcement. Only the small-time traffickers seem to be targeted by the police who, along with the courts, seem unable to move against certain political and economic interests. This happens to such an extent that it sometimes threatens the whole legitimacy of such institutions. Situations where "the rule of law is perverted," with summary executions by police under cover of arrests that supposedly go wrong, do not augur well for the future of such societies.
The report also says that "if the illegal traffic of drugs represents only a small percentage of economic activity in comparison to the formal legal economy, nevertheless the money laundering of the profits from the totality of the illegal activities controlled by the criminal networks can have an effect on financial crises.
This theory was proved by the Mexican financial crises (1994-1995), and also in Thailand (1997) and Japan (since 1990)." What economists have called "the tequila effect" - the artificial prosperity that preceded the financial crisis in Mexico - probably had something to do with "the cocaine effect." According to the researchers, future studies will perhaps show this has happened in other countries, such as Turkey, Argentina and Nigeria, in 2000 and 2001.
The report affirms the permeability between different economies, and focuses on the "grey economy" - the twilight zone between the legal economy and the "black" economy of smuggling and illegality. A striking example is provided by Operation Casablanca, the biggest ever investigation of money-laundering, done in 1998 by North American investigators, which resulted in the arrest of 25 top officials from 12 of Mexico's 19 biggest banks.
Before it ends up in banks, drug money can travel different routes - through the coffee trade, for example, the film industry or trade in gold or precious stones - depending on the country. This link between criminal networks and national economies can no longer be ignored, either at national or international level, by the authorities in charge of working out how best to fight drug trafficking. And other studies like the present one are clearly needed.
During its six years, from 1996 to 2002, the MOST project combined the efforts of drug experts and investigators in various parts of the world, who have now formed a network of their own. Other practical results include the setting up in France of the "Cluny Group," a drug research association which has extended its brief to other kinds of crime, and the creation of two university chairs on drugs for 2002-2004, one at Mexico's National Autonomous University and the other in Brazil (shared between three universities, two in Rio de Janeiro and one in Belem). The holders of these chairs are among the authors of this report.
Contact: Monique Perrot-Lanaud
Bureau of Public Information, Editorial Section
Tel.: 33 (0)1 45 68 17 14