1. Drugs and Banking: the World Picture
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Click here for Full Issue of EIR Volume 5, Number 42, October 31, 1978 ( SPICIAlREPORr Dope, Inc. it's the biggest How the 'HongShang' and other British banks run Although most politicians have been slow to realize it. now. wait for the banking story to start making its a wave of outrage against illegal narcotics is sweeping appearance. the country. The outrage is growing as evidence rolls The Executive Intelligence Review has obtained the out that. far from being a dirty little back-street material here from a wide-r anging and operation. drug dealing is the biggest business in the comprehensive report now being prepared for mass world. circulation by the U.S. Labor Party. The evidence It doesn't make it any less dirty. but the industry is included in the report is also being presented by the by no means little: Drugs. Inc. is financed by some of party to Federal Reserve hearings on the Hong Kong the biggest and most prestigious banks in the world. and Shanghai Banking Corp. 's proposed takeover of Like any other industry. it needs overdrafts. seasonal the Marine Midland. As can be seen from the credit lines. local rediscounting agencies. Like any extracts here. the HongShang oversees the portfolio. other industry. it must produce evidence of good ably assisted by the labyrinthine networks of overseas receivables. marketable inventory. reliable supply Chinese bourgeois who owe their economic status to and distribution networks. almost a century and a half of British banking But more than that. the well-connected banks dominance in the Far East. behind this operation are the same agencies that run The highlights of the document we print here will be most international "dirty money" speculation with the breaking story in a few months in your daily their ill-gotten gain. If you think drugs is a hot issue newspaper. 1. Drugs and banking: the world picture Assembled as one picture, the hard evidence available wallpaper: then, imagine the French police attempt from Drug Enforcement Administration and other ing to find it with magnifying glasses. law-enforcement bodies leaves only one possible When we speak of the drug-related illegal economy conclusion: the drug "industry" is run as a single - for drugs are the pivot on which most other illegal integrated world operation. from the opium poppy to activity turns-we are talking of a $200 billion per year the nickel bag of heroin sold on an inner-city business, the biggest business in the world. That is net, streetcorner. Not only is illegal drug traffic under the not gross, annual sales of drugs. plus related illicit control of a single world network, but opiates traffic in payments. particular is without doubt the best controlled How can such activity avoid sticking out wildly, production and distribution system of any commodity especially in areas of concentration such as the Far in international trade. illegal or legal. De Beers' East? The British monarchy organized most of the Central Selling Organization's 85 percent control of Far East to conform to the drug traffic! How can $200 world diamond wholesaling - an example not billion in illegal payments get through the irrelevant to the drug trade - pales by comparison to international banking system past the eyes of law the orderly marketing arrangements for heroin enforcement authorities? The answer is: the Anglo demonstrated by the hardest figures available. Dutch monarchies' "offshore" banking system. This Investigators are daunted by the fact that the and related precious metals and gems trade were solution to the problem is so damned obvious. Imagine designed around illegal money in the first place! Edgar Allan Poe's fictional purloined letter. Mere consideration of the obvious - or what will photographically enlarged to 8 by 20 feet. and used as quickly become obvious when the evidence of the 8 SPECIAL REPORT EXECUTIVE INTELLIGENCE REVIEW Oct. 31-Nov. 6. 1978 © 1978 EIR News Service Inc. All Rights Reserved. Reproduction in whole or in part without permission strictly prohibited. --------------------------------�) business of all the drug trade public record is assembled below - gives the financial margins of fluctuation depending on weather, specialist the equivalent of an inner-ear disorder. The enforcement, and other conditions, available supply financial world, remember, is one in which the stock exceeds demand by roughly a factor of ten. market will do flips over a measly few hundred million Approximately 700 tons annually are produced and dollars' difference in the weekly reported figures for transported out of the world's largest opium-growing the American money supply. Although most of the area, the Golden Triangle. Seven hundred tons of raw necessary evidence has long been available, both opium, in the form of balls of opium gum, are the investigators and the public prefer to see world drug equivalent of about 70 tons of refined heroin, although traffic and related illegal activity as a montage of in practice less than half of this amount is actually movie villains: Far Eastern warlords, free-lance refined into heroin; the remainder is sold in the form smugglers, jowly gangsters, and corrupt politicians. of either opium or morphine base, largely for smoking Such individuals figure into the world drug traffic, but purposes, and largely to an addict population in the as the arms and legs of a top-down operation, under Orient itself. However, by all estimates of the the immediate control of the British and allied American addict population, approximately three monarchies. tons per year of refined heroin are more than The most striking single fact for this conclusion is sufficient to meet annual consumption that the price series for heroin at retail level in major "requirements." About that much again is required to American cities shows virtually total uniformity. Law maintain all other heroin addicts in the OECD area. enforcement records show that, within the acceptable DEA and other official sources affirm the cited range of 3 to 6 percent purity at the street level, the production figures through direct monitoring of opium price of heroin has been constant between widely shipments and other sophisticated intelligence disparate distribution points during the past ten years. methods. Consumption and sales are obviously limited Arrests of local distribution chains, internecine by the possible size and financial resources of the warfare among drug traffickers, interdiction of addict population in the advanced sector. To use a smuggling routes, the virtual elimination of the rough example: if the full 30,000 kilograms of annual Turkish opium supply after 1972, the scouring of Asian Golden Triangle heroin production obtained the full and European transit points, and local changes in street price for heroin, the total retail value would be political and growing conditions in the Golden about $150 billion. But most estimates of annual illegal Triangle growing area, all have failed to have any purchases of retail heroin are under $15 billion. In effect on the single, world heroin price! The few short, most of it is never sold, because production exceptions prove the rule, and consist mainly of sharp capacity is enormous relative to the market's temporary drops in some local retail prices, absorption capacity. attributed to occasional free-lance supply through What happens to the rest of the heroin? Only a small returning Vietnam War veterans and the like. portion of the total comes into the hands of law enforcement agencies, whose capture of a few pounds of heroin is a matter for celebration. We still must Where does it go? account for tens of tons. The law enforcement records indicate that the drug is warehoused in huge Closely related to the striking uniformity of inner-city stockpiles against contingencies and to prevent heroin prices at retail level in the United States is the oversupply on the market. For example, during the gigantic discrepancy between known levels of opium height of the crackdown on Southeast Asia heroin production for illegal purposes and consumption by traffic in 1972 (immediately after U.S. troops the world's addict population. Fairly reliable withdrew), a single refinery captured by Thai police statistical data are available for both. Within great had on hand a stockpile of 3,000 kilograms, roughly Oct. 31-Nov.6. 1978 EXECUTIVE INTELLIGENCE REVIEW SPECIAL REPORT 9 one-tenth of Southeast Asian production. At the time. its world volume of sales. at roughly $25 billion for 21 refineries were known to be operational in the area. heroin alone and considerably more for smoking The law enforcement record shows that Drugs. Inc. opium and other derivatives. is substantially higher does its best to avoid such mishaps through careful than that of most of the commodities UNCT AD is research - on the streets of American cities - which presently considering for cartelization. A couple of is transmitted back to the poppy fields. Montagnard comparisons are in order. At the present world gold tribesmen in the Burmese or Yunnan Province hills do price of $225 per troy ounce. annual world gold mining not plant what they feel like. but what they are told to production (outside the Soviet Union) yields less than plant. This facet of the cycle production is well known $7 billion. During 1977. after an unprecedented price to law enforcement investigators. If for some reason run-up. world output of diamonds yielded less than $5 the market research is off. chaos will ensue. as it did billion. in 1972. when the Golden Triangle yielded a bumper Allowing for the relative ease with which a large harvest. after whosesalers told poppy-growing dollar value of heroin may be transported - the drug peasants to increase their acreage by 50 to 100 is worth at street level 366 times its weight in gold - percent.