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LESSONLESSON 3 CartelsCartels andand thethe GrowingGrowing DDrugrug TTraderade

QuickQuick WriteWrite he drug trade is dangerous not just because it produces problems such as addiction and gang Tviolence—serious though those are. The drug trade also generates immense amounts of money, enough to fund a whole army. In , the drug trade supports a Marxist guerrilla What effect do you group called the Revolutionary Armed Forces of Colombia, suppose the rescue or FARC. FARC began its campaign to topple the Colombian of the 15 FARC hostages government in 1964. It has funded its efforts with hundreds had on ? of millions of dollars in drug profi ts. On FARC members? On the Colombian The government has fought back. In recent years, it has government? met with some great successes, including killing top FARC leaders. In addition, the ranks of FARC’s foot soldiers have shrunk by about half over 10 years. But the rebels still have some things going for them: the drug trade and hostages. FARC has nabbed hundreds of civilian and military hostages over the years. LearnLearn AboutAbout None was higher profi le than one particular group of 15 hostages that included three American contractors • the key factors that drive and Ingrid Betancourt Pulaceo. Betancourt, a former and sustain the drug trade Colombian presidential candidate, was held captive for • how the drug trade six years. With family in France, she had become a cause undermines local célèbre—her circumstances aroused a lot of sympathy governments and damages economies and interest—especially in the European press. • how the US and local In a daring operation in July 2008, the Colombian military governments have tried rescued all 15 hostages “safe and sound.” Not a single shot to cut off the drug trade was fi red, Betancourt said afterward. It was a more forceful blow against FARC, analysts said, than the government could ever have delivered with a missile. How did they do it? A “mole”—a secret government agent— had infi ltrated FARC. He had persuaded his FARC superiors to transfer the 15 hostages to the camp of the group’s new top leader, Alfonso Cano.

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75162_C5L3_p534-549_AFJROTC_FINAL.indd 534 11/14/09 10:31 AM The hostages thought they were going to be part of a prisoner VocabularyVoca bulary exchange. The rebels tied the hostages’ hands and feet. They took the hostages to a camp supposedly belonging to a “friendly” •graft nongovernmental organization (NGO). When the hostages •narcotic saw what looked like more guerrillas at the NGO camp, their • hearts sank. •forfeiture But the “guerrillas” turned out to be Colombian Army commandos in disguise. As the commandos tied up the rebel leaders, one of the pilots called out to the hostages: “We are with the army. You are free.”

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75162_C5L3_p534-549_AFJROTC_FINAL.indd 535 11/14/09 10:31 AM The Key Factors That Drive and Sustain the Drug Trade

The drug trade is a dangerous, criminal business. But it is a business. Looking at it that way will help you understand better how the illegal trade works.

fastfastFFACTACT The Importance of a Good Climate for Growing and Marijuana Classical economics teaches that every country should do what it does best. Unfortunately, much of Latin America is well suited for growing coca—from which is made—or marijuana, or both. Marijuana plants thrive under the intense sun of places like . Coca fl ourishes in the Andes Mountains.

How Widespread Poverty Contributes to the Drug Trade Widespread poverty makes coca and marijuana irresistibly attractive to farmers as cash crops. Not unlike sugar in the colonial period, they are relatively lightweight, high-value commodities. They are well worth the cost of shipping to markets in North America and elsewhere. Farmers can feed their families much more easily on the earnings from a small plot if it’s planted in marijuana or coca than if they raised wheat or corn. In strictly business terms, such farmers are seeking the best return on their investment. Lack of opportunity feeds the drug trade in another way. In crowded Latin American cities with few job choices, many people take work as a lookout or messenger for a drug merchant. In these communities the richest and most “successful” businessmen are often drug lords. People who are poor and looking for work have a hard time resisting the wages drug lords are willing to pay.

Why Being Close to the Matters Classical economics also teaches that if demand is great, suppliers will enter the market to meet that demand. There is, unfortunately, great demand for illegal drugs in the United States. In an economic sense, demand for drugs means not just the desire for them, but desire backed with money to pay for them. Latin American countries have their own problems with drug use among their citizens. But being so close to such a large market of potential US customers is an important factor in the Latin American drug trade.

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During President Ronald Reagan’s administration, his wife, Nancy, promoted an antidrug campaign with the slogan “Just say no!” It drew widespread criticism as too simplistic. But its underlying logic was sound: The market for drugs would vanish if Americans ceased to demand them. How Sea, Land, and Air Access Makes Drugs Easier The US-Mexican border runs for nearly 2,000 miles and is one of the most frequently crossed frontiers in the world. NAFTA, the North American Free Trade Agreement, has only tightened the connections between the two countries since it took effect. And that in turn has only increased the opportunities for smuggling. Some drugs come into the United States by water—in small craft making their way through the Caribbean Sea or the Gulf of Mexico and making landfall on the Florida coast. Others get into America by land—stuffed into car fenders and other ingenious hiding places as smugglers try to get their payloads past US Immigration and Customs Enforcement offi cers. Some people, called drug mules, simply carry their illegal loads across the Southwestern deserts into the United States. Other smugglers bring drugs in by air. They often use small planes that evade detection by radars at the edge of US territorial waters.

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75162_C5L3_p534-549_AFJROTC_FINAL.indd 537 11/14/09 10:32 AM How Weak Local Governments and Widespread Corruption Impact the Drug Trade As you read in Lesson 2, the drug trade can bring so much money into an area that it overwhelms the local economy and corrupts local governments. Gaviria, who controlled the Colombian drug trade in the 1980s, used the phrase “plata o plomo” to describe the choice he offered those who got in his way: “silver or lead.” They could accept a bribe or face his bullets. It’s believed that Escobar ordered the killings of hundreds if not thousands of politicians, judges, and policemen. You might say the way weak local governments and widespread corruption impact the drug trade is by enabling it to continue.

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How the Drug Trade Undermines Local t i n

Governments and Damages Economies A m

In a speech a few years ago, Dante Caputo, secretary for political affairs for the e r

Organization of American States (OAS), described drug traffi cking as a form i c

of that ultimately amounts to an attack on democratic power. a He reminded his listeners of Latin America’s special vulnerabilities when it comes to the drug trade. “Our American hemisphere is the fi rst region in the world—there have been no others—to bring together such democracy, poverty, and inequality,” he said. This triangle of factors requires special attention, Caputo suggested. Poverty makes a society fragile, he said. This fragility opens doors for the drug trade. And once the doors are open then the weaknesses of Latin American democracies—still relatively young— make it hard to defend against the drug lords’ power.

How Violence, Bribery, and Graft Lead to Corruption in Government and Business In his speech, Caputo told of his experience as an election monitor in an unnamed Latin American country. He saw drug traffi ckers buying votes to install their own mayors in certain towns. If traffi ckers control a city’s mayor and town council, he said, they need not fear the law holding them to account. In fact, with their own politicians in place, the drug kings can then also engage in graft— the illegal use of power to get more power, money, and property.

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75162_C5L3_p534-549_AFJROTC_FINAL.indd 539 11/14/09 10:32 AM Drug lords are no longer interested in just selling drugs, Caputo warned. They want power, too—at a local level fi rst, but ultimately at a national level. “In some of our countries,” he added, “they are knocking on the doors of the central government.” Rivas, a Medellín Cartel leader in Colombia, is an example of a who tried to become a political power. US authorities eventually prosecuted him and got him convicted. But before that, Lehder bought interests in local Colombian radio stations and newspapers. He even created something he called the Latino Nationalist Party. He promoted his political ideology, a combination of nationalism and fascism, through his newspaper, Quindio Libre. Pablo Escobar is another drug lord who tried—with success—to buy his way into the people’s hearts. He could certainly afford to do so. At the peak of his power, Forbes magazine identifi ed him as the seventh-richest man in the world. He handed out cash to the poor. He built housing for poor people. He bought sports teams and built stadiums for them. Like Lehder, he, too, made his way into politics. In 1982 Escobar won election as an alternate congressman—a sort of deputy representative to fi ll in during the absence of the main representative—in the national legislature.

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The Infl uence of Increased Levels of Drug Addiction on the Workforce The drug trade doesn’t just corrupt governments and tarnish legitimate economies. It leads to health problems as well. As the drug trade developed during the 1960s and 1970s, Latin Americans tended to think serious drug use was a problem just for North Americans. But over time, they learned they were wrong. In Colombia during the early 1980s, for instance, many young people became addicted to basuco. Basuco is a highly addictive and damaging form of cocaine, normally smoked with marijuana or tobacco. Smugglers dumped it on the domestic market at low prices because it wasn’t of “export” quality. Basuco caused the same kinds of problems that crack cocaine was causing in the United States around the same time. It was cheap. And it soon became more popular than marijuana. Hundreds of thousands of Colombians grew addicted. Many suffered permanent nervous disorders. In Mexico, which has become a major drug smuggling center, more than 460,000 people are addicted to drugs, according to a study reported by the Times. That’s an increase of 51 percent between 2002 and 2008, the newspaper said.

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75162_C5L3_p534-549_AFJROTC_FINAL.indd 541 11/14/09 10:32 AM This has obvious implications for society as a whole. But it also has special signifi cance for the workforce. As you have read, income inequality in Latin America is extreme. And so it is crucial for individual men and women to better their lot by fi nding ways to take part in the economy at a higher skill level. Latin America needs fewer farm laborers and more technicians. Its people need to fi nd ways to work smarter, not harder. But it’s hard to do that while addicted to drugs. In addition, drug addiction among the population tends to drive away outside investors. A company looking to build a state-of-the-art factory in a particular town, for instance, will study its working-age population. Company offi cials will ask, “Will we be able to fi nd enough people who can operate our expensive high-tech equipment safely and effectively? Will they be able to use our sensitive instruments correctly?” If company offi cials see evidence of widespread drug addiction in the community, they will answer those questions “no.” And they will put the factory somewhere else.

How Illegal Monies From Drug Trades Creates Economic Infl ation The drug trade has other damaging economic effects. Among them is infl ation, or an increase in prices. To put it the other way around, infl ation is a decline in purchasing power. Infl ation is the reason you get less for your money. Too much money chasing the same amount of goods causes a jump in prices. Not all price rises are because of infl ation. Sometimes prices rise because values rise. If house prices rise in a neighborhood because the streets and sewers have been improved and the neighborhood becomes a more attractive place to live, that’s not necessarily infl ation. That’s increased value. Nor is it infl ation if wages rise because workers become more productive. fastfastFFACTACT But drug money coming into an area tends to force up prices generally, without any real value added. Consider a farmer needing help with his banana crop. If he has to compete with marijuana or coca growers for the same pool of workers, he’s likely to have to pay more—even though bananas are still bananas and still sell for the same price. Similarly, drug barons drive up land prices. Every time a drug lord can outbid a banana farmer on a piece of property, for instance, that higher sale price affects the whole land market. The higher price becomes “the new normal”—even though the land hasn’t really become more valuable in any legal way. It’s just that someone with more money to spend has come along.

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How the US and Local Governments t i n

Have Tried to Cut Off the Drug Trade A m

The US government has spent most of the twentieth century and all of the e r

twenty-fi rst so far fi ghting the importation and use of illegal drugs. Under heavy i c

pressure and with help from the US government, Colombia was fi nally able to a rein in the two biggest drug cartels, in Medellín and its rival in Cali. But Americans’ continuing demand for illegal drugs has led new suppliers to enter the marketplace. The focus of US concern has now shifted to Mexico, where at least 6,500 people—mostly criminals—died in drug-related violence in 2008 and the fi rst quarter of 2009. The US Department of Justice has called Mexican drug cartels the greatest organized crime threat facing the United States. People usually think of “organized crime” as the Mafi a, or “the Mob.” But now US offi cials see the Mexican drug cartels as posing a similar threat. The picture is not entirely bleak, however. The federal government has scored some important victories against the Mafi a. Now it’s using the same approach to choke off the Mexican drug trade and its violence.

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75162_C5L3_p534-549_AFJROTC_FINAL.indd 543 11/14/09 10:32 AM Two Justice Department offi cials testifi ed before Congress in March 2009. They said that task forces are the best way to fi ght these drug cartels. must lead the task forces. And they must be backed by solid intelligence. This approach also brings local, state, federal, and even international resources to bear on the problem. This worked well in the late 1980s and during groundbreaking Mafi a prosecutions in the United States and Italy. In their testimony, the Justice offi cials said this approach “broke the back” of the Mafi a. And today federal authorities are fi ghting the drug cartels in the same way. This approach has fi ve key elements: • The extensive use of coordinated intelligence • A strong focus on key cartel leaders—on investigating them, arresting them, and bringing them to the United States for trial • Investigation and prosecution of gun-, cash-, and drug-smuggling cases • action against the “spillover” effects in the United States of cartel violence in Mexico • Prosecutions in federal court of those responsible for smuggling, , and violence.

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The Justice testimony described Operation Xcellerator. This two-year operation a t

led to the arrest of more than 750 people on narcotics charges. (A narcotic i n

is an addictive drug that alters mood or behavior and usually induces sleep.) A

It was a multiagency, multinational effort that began in May 2007. Its target m

was Mexico’s . This cartel has brought tons of cocaine into e r i

the United States and distributed it through an extensive network. c a Mexico is fi ghting hard against the cartels. In some locations, the federal government and the drug lords are waging open warfare. Along with the criminals, many Mexican offi cials, police, and soldiers have died in the violence. The United States and its neighbors and partners aren’t the only ones in Latin America fi ghting the spread of drugs. The seven countries of Central America plus the have united with Mexico to fi ght drugs, crime, and terrorism. These countries have found themselves caught in the middle. The world’s biggest cocaine consumer—North America—lies to the north. And the world’s biggest supplier, , lies to the south. In high-level meetings in the fi rst half of 2009, representatives of those countries stressed the need for greater border security, more and better drug-abuse prevention and treatment programs, and stronger efforts against organized crime. Traffi cking in drugs and arms is of special concern to these countries.

Efforts to Identify, Arrest, and Prosecute Leaders It all starts with intelligence. Since 2003 the US Justice Department has worked with other agencies to develop a target list of the world’s “most wanted” drug kingpins. This list helps the Justice Department and its partner agencies focus their resources. Extradition is another part of the effort. Extradition is the legal process by which one country surrenders a criminal or criminal suspect to another for punishment or trial. It’s often quite a sensitive issue. This is especially true when a country extradites one of its own citizens. “Will our citizen get a fair trial in this foreign country?” offi cials have to ask themselves. For this reason, it’s important that in recent years both Colombia and Mexico have returned fugitives to the United States in unprecedented numbers. Extradition is key to prosecution. Some of those extradited have been major drug lords, including leaders of Mexico’s Tijuana and Gulf cartels.

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75162_C5L3_p534-549_AFJROTC_FINAL.indd 545 11/14/09 10:33 AM Efforts to Seize Drug Cartels’ Assets Another part of the US strategy against the cartels is asset forfeiture. Forfeiture is the government’s seizure of property involved in criminal activity. The US government wants to take the cartels’ arms and cash away from them. Asset forfeiture is a powerful tool to strip criminals of illicit wealth, including homes and cars. It’s part of every US government operation thought to involve drugs. Between 2007 and 2008, for example, the Justice Department seized $2.9 billion in forfeited assets. In the case of the Sinaloa Cartel, for instance, agents not only made hundreds of arrests but also seized around $59 million in currency, more than 12,000 kilos of cocaine, 1.3 million Ecstasy pills, and thousands of pounds of other drugs. They also seized 169 guns, 149 motor vehicles, three aircraft, and three boats.

Efforts to Disrupt the Flow of Cash and Arms The US government focuses not just on eliminating the drug cartels’ leadership. Attacking and dismantling their fi nancial systems is also a top priority. The National Drug Intelligence Center estimates that Mexican cartels gross between $17 billion and $38 billion annually from drug sales. Much of that ends up as “bulk currency”—suitcases or even truckloads of cash.

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When drug cartel members fall into authorities’ hands, it’s often state troopers or local police who make the arrests. They seize cash at the scene. The actual banknotes often can provide valuable clues. These notes help lead the police to the cartel leaders. But state and local law agencies may lack resources for such investigations. So federal agents often step in to take over that work. Although the drug cartels are Mexican, US offi cials know that money from the United States fuels the drug trade. They also know that guns from the United States play a role in much of the drug violence. Stopping the gun trade is primarily the charge of the Bureau of Alcohol, Tobacco, Firearms, and Explosives. It’s a part of the Justice Department and is widely known simply as ATF.

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75162_C5L3_p534-549_AFJROTC_FINAL.indd 547 11/14/09 10:33 AM ATF agents seize individual weapons when they can. But the real work of stopping the fl ow of arms involves identifying the sources of traffi cked guns. Project Gunrunner is the ATF’s plan for combating fi rearms violence by cartels along the Southwest border. It involves spotting the relatively small number of dealers who don’t follow the rules for gun sales. Then agents go after them to investigate. Ultimately they seek to eliminate them as sources of illegal arms. The drug trade is one of the most important issues in inter-American relations. It affects countries from the mountains of South America to the shores of Hudson Bay. North Americans like to blame South American governments for not doing enough to stop it. South Americans reply that without demand from wealthy North Americans, there would be no supply in the fi rst place. But it’s not so simple—plenty of North Americans are involved in the supply network, and many Latin Americans have become consumers. The fact is that both supply and demand are responsible for the situation. They can only be controlled if North America and Latin America cooperate. Working out the details of that cooperation will keep diplomats busy for years to come.

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CHECKCHECK POINTSPOINTS ✔ A m e r i

Lesson 3 Review c Using complete sentences, answer the following questions on a sheet of paper. a 1. Why would a farmer with only a small plot of land be tempted to grow coca or marijuana instead of wheat or corn? 2. What, in economic terms, does the phrase “demand for drugs” mean? 3. What is basuco and what problems does it cause? 4. What’s an example of how drug money creates infl ation? 5. What is extradition and why is it important? 6. What is asset forfeiture?

Applying Your Learning 7. Do you think the United States can win the war on drugs? Why or why not?

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