Editorial: If the US government could make the illegal drug trade disappear, would it? 8/8/97

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Does the US Government really want to "Win" the War on Drugs?

A report out of Reuter's News Service this week highlights a special report in Latin Trade Magazine regarding the enormous sums of drug money being laundered in Mexico. According to Latin Trade, an estimated $15 Billion in drug profits, equal to 5% of Mexico's GDP, is flowing through Mexican banks and into real estate, the Mexican stock and bond markets, and other legitimate sectors. The report concludes that if this money were to stop flowing, the Mexican economy would be "seriously destabilized." This does not even address the additional concern of the concentration of Mexican assets in the hands of criminals. (And Mexico is far from the only country with this problem.)

The current (August 21) issue of Rolling Stone Magazine details the extraordinary volume and complexity of money laundering worldwide, as the largest and most profitable criminal organizations in the history of the world reintegrate their wealth into the stream of legitimate business. This has resulted in a thriving black market in American currency in source countries such as Colombia, where otherwise legitimate businessmen can buy American currency from drug traffickers at a 17% discount.

The New York Times has reported that American companies including General Electric, Microsoft, Apple Computer and General Motors have sold goods to fronts for the "Cali Cartel." The illegal money flowing into Colombia is such that it has turned a $5 billion per year US trade deficit into a $5 billion trade surplus as American products are bought for newly laundered funds. The US government also gets a stream of revenue from whatever illicit funds it can lay claim to, whether seized outright or bargained-for in return for lighter sentences for captured drug kingpins.

In response to the enormous scope of money laundering in the US, the Treasury Department's hope is to reduce notification requirements (the threshold at which a financial transaction must be reported to the IRS) from $10,000 all the way down to $750. This would give the government unprecedented knowledge of and control over the financial activities of its citizens, yet another level of public surveillance justified by the exigencies of the Drug War.

Perhaps the booty from the illicit drug trade, much of which comes from the pockets of the poor and middle class, is not necessarily a "problem" for the US government after all. It props up a Mexican economy (which we only recently bailed out to the tune of $50 billion) the stability of which is important to US security (and securities). It pads the accounts of legitimate US businesses in the form of exports, both to front organizations and to legitimate source-country businesses operating with discounted currency. It gives Uncle Sam an excuse to watch its citizens more closely. And it is being reabsorbed by the US government both through seizures and by taxes on US corporations.

Just how big is the global trade in illegal drugs? The U.N. Commission on Narcotic Drugs estimates that the total is about $500 billion. That's about the same size as the international telecommunications trade, larger than the international petroleum trade, and larger than the Gross Domestic Products of nearly every nation on earth.

Incredibly, the U.N. estimate does not include the enormous "legitimate" business of Drug War Inc. (prisons, law enforcement, defense, military hardware, drug testing, forced treatment, etc., etc., etc.)

It is worth noting that the price of drugs, and thus the relative size of the illegal market, is wildly inflated by Prohibition. Any system which removed the black market premium from the price of drugs would immediately see the economic size of the trade reduced by orders of magnitude. What remained would be significant, to be sure, but certainly not a primary cog in the functioning of the world economy. (According to an editorial in the 7/26 issue of The Economist, legalizing certain drugs would slash, overnight, profits that account for "perhaps three-quarters of all the laundered money.") The longer it takes to reign this in -- and that will not be done by building more prisons in the US, nor by sending more weapons to Latin America -- the more dependent the world economy will become on a policy which thrives on massive incarceration, the unrestrained seizure of citizens' assets, and the destruction of millions of lives.

The Drug War then, is a game of money and power and control, sold to Americans as if it were about drugs and children and health. Given the mythical opportunity to "win" the drug war, that is, to make drugs disappear forever, the US government would most likely have to turn it down. There is too much being gained in this never-ending game of cat and mouse. But you will never hear General McCaffrey tell you that, nor President Clinton, nor Jesse Helms nor Newt Gingrich. Because for them, 'tis the game that's the thing. And in this game, where the government wins by merely playing, they don't want to have to tell us that the stakes are ours, and that we can only lose.

Adam J. Smith
Associate Director, DRCNet

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Issue #6, 8/8/97 National household Survey Results: Teen Marijuana use levels off. Heroin use up among 18-25 year-olds | Needle Exchange: Two Representatives have introduced a bill to lift the ban on federal funding | International: Foreign press gets real about the War on Drugs | Medical Marijuana: Breaking News: NIH Medical Marijuana Panel Releases Report | 60th Anniversary of Marijuana Prohibition | Quote of the Week: It's time... | Link of the Week: Esequiel Hernandez | Editorial: If the US government could make the illegal drug trade disappear, would it?

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