Weekly InSight: Uruguay’s Historic Marijuana Legalization Experiment

In our July 20 Facebook Live session, Senior Editor Mike LaSusa and Geoff Ramsey, a research and communications associate at the Washington Office on Latin America (WOLA), discussed Uruguay‘s experience establishing a legal and regulated marijuana market, as well as the implications of this for organized crime and future discussions about drug policy…

Read this piece in its entirety at InSight Crime. You can watch the full live stream below:

What Next, After Mexico Marijuana Reforms?

A ruling by Mexico‘s Supreme Court will allow four individuals to grow and possess marijuana for personal consumption, setting a legal precedent for further challenges to the country’s laws banning production and distribution of the drug…

Read this piece in its entirety at InSight Crime.

U.S. Tolerates But Won’t Support Bolivia’s “Coca Yes, Cocaine No” Policy

Last month, the White House called out Bolivia for “failing demonstrably” to comply with international anti-drug agreements for the seventh year in a row. Out of the 22 nations labeled major players in the global drug trade, Bolivia, the only country that permits nationwide legal coca cultivation, was also the only one denied U.S. State Department-managed anti-narcotics aid for the second year in a row. The White House claims it cut funding “due to a lack of sufficient cooperation from the Bolivian government.” While evidence suggests the country might be becoming a bigger player in the international drug trade, the determination has more to do with politics than actual coca cultivation or amount of cocaine trafficked…

This piece was co-authored with Angelika Albaladejo. Read it in its entirety at Security Assistance Monitor.


Another Way Uruguay’s Legalization Experiment Could Go Wrong

I wrote a few months ago that legalizing marijuana in Uruguay could be a bad idea because gangs and drug traffickers might export cheap, price-controlled government pot for sale in foreign countries where it is illegal. Recently, Quartz had an interesting article that made me rethink the issue.

Citing Paraguayan officials who say illegal pot from Paraguay will be still cheaper for Uruguayans than the government’s product – $0.30 a gram versus the government price of $1 (in Paraguay it fetches only $0.06 per gram) – the article describes how Paraguayan smugglers might have an opportunity to undercut the state-controlled Uruguayan market.

The head of Paraguay’s National Anti-drugs Secretariat Luis Rojas said his government is “more than convinced [legalization] is going to stimulate internal consumption [in Uruguay] and thus the trafficking of marijuana towards there.” Non-citizens are not covered under the law, so the least-risky way for smugglers to grow and move weed in the country would be to contract production and transportation to local Uruguayans.

As much as 80% of cannabis from Paraguay ends up in Brazil. The new law could give Paraguayan trafficking organizations the opportunity to increase their presence in Uruguay and open up new routes and networks into Brazil – especially the southern city of Porto Alegre, Brazil’s fourth largest metropolitan area.

If all these hypotheticals actually came to fruition, you could end up with an expanded presence of drug trafficking organizations in two, three, or possibly four or more countries, including Bolivia and Argentina, and an influx of revenue and personnel for DTOs, which could paradoxically exacerbate the problem Uruguay supposedly set out to remedy.

Criminal organizations don’t just traffic pot, nor do they only deal drugs. They also derive significant revenues from money laundering, identity theft, human trafficking, arms trafficking, kidnapping, extortion, robbery, murder for hire and even child pornography – and I don’t advocate legalizing any of those activities.

However, in order to have the resources to focus on and combat those harmful illicit activities, the international community needs to develop a more effective approach to the problem of the role of drug use and the drug trade in funding organized criminal activity. All around the world, violent criminal and terrorist organizations are financed in large part by money from the production and distribution of illegal drugs; the Taliban in Afghanistan, the FARC in Colombia, Mexican cartels, US and Canadian gangs.

Instead of criminalizing simple cultivation, possession and distribution and cramming prisons full of low-level dealers and users, governments should work to establish a well-regulated, legitimate market for recreational drugs on both the domestic and international levels. There are also socioeconomic and political considerations to explore – providing alternate economic avenues for people wishing to quit or avoid a criminal lifestyle, educational and career opportunities for young and disadvantaged people, effective police forces and judicial institutions.

For all the ill effects of tobacco and alcohol use, many countries have at least some regulatory infrastructure surrounding the sale of those products. The challenges of abuse, addiction, smuggling, sale to minors and the rest are common to all drugs, even medicines, including many that are now legal and which few would propose banning, like oxycontin, codeine, ritalin and others. As Jeffrey Miron and others have argued, prohibition “almost certainly the worst possible choice” for achieving the stated goals of US and international drug policies.

Nevertheless, that does not mean that Uruguay got it right here. The legalization/nationalization law was unpopular with the country’s people and it seems poorly thought-out from a number of angles. Colorado, on the other hand, has shown some initial success with its private, but heavily regulated market, with some reports claiming it has saved the state upwards of $40 million and brought in over $5 million in tax revenue.

Workable solutions to international problems require international cooperation and consultation. Uruguay seems to have foregone that process in favor of a somewhat radical unilateral approach. As I wrote in October, “[m]y main concern is that this seemingly well-intentioned effort will fail and that will in turn scare off other countries from pursuing decriminalization or legalization efforts in the future.”

A number of high-level government officials from various Latin American nations have voiced support for a new approach to the drug issue. However, the onus is not just on the countries producing and trafficking the substances, but also on the countries that consume those drugs who are responsible for shaping a solution to these problems.

Police and Thieves: Mexico, the United States, and the Drug War

Note: The following was adapted from an essay I wrote for a class on US-Latin American relations. The original text can be found here along with a bibliography (pdf).

The roots of the current “drug war” can be found in the 1909 anti-opium conference held in Shanghai, which was marked by the first of many US efforts to push its domestic drug legislation as a model for the international community.

Shortly thereafter, during the era of alcohol prohibition in the United States, the current two-way cross-border trade in illicit goods was born. Illicit substances (mainly alcohol, but also marijuana and opium, all of which were produced domestically in Mexico) were trafficked north as guns and money came south – a pattern that has persisted to the present day.

In 1925, the United States and Mexico forged an anti-smuggling agreement, but it failed to achieve its desired results. In 1938, Mexico attempted to nationalize the production of intoxicating substances, to which the United States responded by embargoing all medicinal shipments to Mexico while simultaneously encouraging the Mexican government to allow for hemp and opium production to help the Allied war effort.

After World War II, the Mexican government attempted many US-backed eradication efforts, which had the perverse effect of dispersing drug cultivation throughout a wider area of the country and beyond the reach of even the so-called “Grand Campaign” (“Gran Campaña”) of the 1950s.

The 1960s and 1970s were characterized by an explosion of drug use in the United States and increased bilateralism between the United States and Mexico on the drug issue. After the ham-handed “Operation Intercept” (later rebranded as “Operation Cooperation”) strained relations between the United States and Mexico, nearly shutting down the border in the late 1960s, the Mexican government once again ratcheted up areal eradication efforts in the mid-1970s and succeeded in drastically reducing the amount of drugs coming into the United States from Mexico until the latter half of the 1980s.

While some experts considered these efforts successful at the time, it is likely they would revise their analyses in light of the circumstances of the present day. These “mano dura” tactics likely pushed smaller, less daring criminals out of the market, accelerating the development of more violent, more powerful drug cartels. Also, trafficking simply shifted out of Mexico and into Colombia and other Caribbean countries.

In the 1970s, free market reforms pushed many Mexican citizens out of the “formal” market and encouraged “informal” market activities such as drug production and smuggling. Displacement of rural populations due to socio-economic shifts, including deportations of criminals from the United States, demographic “youth bulges,” and a massive influx of drug money from the “coke craze” in the United States during the 1970s kick started the “globalization” process of drug cartels throughout the region.

US-backed crackdowns on the Colombian coke trade and a decline in the supply of Turkish heroin through the “French Connection” in the 1980s led to a relocation of trafficking routes for cocaine and heroin through Mexico. This was accompanied by an increase in anti-drug spending by both the US and Mexican governments that continued through the 1990s and focused on eradication and interdiction efforts in Mexico and heavy-handed prohibition and incarceration in the United States, which continue to the present day.

The introduction of democratic reforms in Mexico during the 1990s chipped away at the long-ruling PRI’s one-party system, which created opportunities for new alliances between cartels and the government and police forces. The introduction of NAFTA lowered trade barriers between Mexico and the world’s largest economy just to its north, spurring an expansion of the drug trade and other illegal activities by organized crime groups in Mexico. Today, these drug gangs have established supply routes in Africa and Europe and continue to terrorize citizens in Mexico with horrific acts of violent intimidation.

In Latin American opinion polls, public safety and security consistently rank among the top concerns of the population, along with government and judicial corruption and unemployment. In many places in Latin America – and especially along drug trafficking routes in Mexico – criminal organizations often have more power than the state and are willing and capable of wielding horrific and sometimes indiscriminate violence against police and military forces as well as journalists, politicians, and other civilians.

On the other hand, they also offer lucrative sums of money that are difficult for many Mexicans to attain in the formal market. This is known as the “plomo o plata” dilemma – “lead or sliver.”

The violence, addiction, institutional corruption, and underground employment – including the cultivation, processing, trafficking, distribution, and “enforcement” of the drug trade not to mention other illicit activities such as human trafficking, prostitution, extortion, kidnapping, etc. – that are associated with the presence of gangs and organized crime undermine the legitimacy of local and national governments, judicial systems, police forces, legitimate commerce, and the general rule of law.

There are essentially three approaches to this problem. “Doves” argue that securitization, interdiction, and eradication efforts have had little or no success (or have even had negative impacts) in terms of reducing the violence and corruption associated with the presence of drug cartels. A reorientation away from law-enforcement and military operations toward social and economic programs such as encouragement of alternative crop cultivation, addiction treatment, decriminalization and/or legalization of drug possession and consumption, and strengthening governmental and judicial institutions would provide the best remedy for the current situation.

The “hawks” focus on security-related measures as the best solution for stopping the drug trade. For this school, intensification of law-enforcement and military initiatives as well as a continued focus on interdiction and eradication programs are crucial to combating problems associated with drugs and the cartels that control their distribution. Some suggest more effort should be put into cracking down on low-level drug possession in the United States in order to deter drug use, thereby (theoretically) reducing demand and revenues for drug trafficking organizations (DTOs).

In a “middle-of-the-road” approach that overlaps with the views of both “hawks” and “doves, “owls” tend to favor a balanced approach of continued police and military efforts aimed at stopping violent crime along with anti-corruption measures, but only in combination with a focus on strengthening governmental and judicial institutional capacity, stopping money laundering and related crimes, and reevaluating drug prohibition policies, along with other “dovish” policies such as crop substitution and anti-poverty programs.

As Moisés Naím put it in his article in the May/June 2012 issue of Foreign Affairs (“Mafia States – Organized Crime Takes Office,”) the “[t]op positions in some of the world’s most profitable illicit enterprises are no longer filled only by professional criminals; they now include senior government officials, legislators, spy chiefs, heads of police departments, military officers, and, in some extreme cases, even heads of state or their family members.” In his words “ordinary people” have become an integral part of a wide-ranging “criminal ecosystem” that encompasses much more than drugs alone.

Prohibitionist policies encourage the integration of rural peasants, the urban poor, government employees, police, and even the middle class into the drug distribution chain. Former Executive Director of the Center for International Studies at MIT, Elizabeth Leeds, in her examination of cocaine trafficking in Brazil, calls this integration a form of “parallel politics,” whose “structures… [arise] in a space left empty by the lack of truly protective state structures.”

I generally agree with Naím that this issue “is better understood as a political problem with national security implications,” but this does not preclude the idea of considering drug trafficking as separate and distinct from other illegal activities carried out by organized criminal enterprises, such as political terrorism, kidnapping, extortion, human smuggling, and murder for hire.

The “whack-a-mole effect,” whereby crackdowns in one area fragment and disperse criminal organizations and their operations, is also referred to as the “efecto cucaracha” (“cockroach effect”). The proliferation of criminal organizations into weaker countries nearby and potentially increasing internecine violence as these groups vie for control of new territories. The Chair of University of Miami’s Department of International Studies, Bruce Bagley, also points to “deinstitutionalization effects” (corruption and dysfunction in government and the judiciary), “demand control failures” (consistently underfunded drug abuse prevention and treatment programs), and “regulatory failures” (a “prohibitionist” international framework that has been an obstacle to progress) as ubiquitous themes of the century-old drug war.

Thus, the question becomes a “chicken or the egg” conundrum. Is the drug trade violent because it is illegal, or is it illegal due to its inherently violent characteristics? Some argue that decriminalization of drugs (as opposed to legalization) would have no effect on drug gangs, as it only allows for toleration of personal consumption and petty possession and does not address the illegality of the large-scale production and distribution of drugs, which is the main reason for their profitability.

Full-scale legalization by the United States combined with the continuation of many current US policies could be sufficient to reduce revenues to the cartels and the violence and corruption associated with their powerful presence. However, Mexico has a long way to go in terms of combating poverty, inequality, and corruption.

Harvard economics professor Jeffrey Miron calls prohibition “almost certainly the worst possible choice” for achieving the stated goals of US and Mexican drug policies. Because underground economies cannot use legitimate dispute resolution mechanisms, they go outside of, undermine, and corrupt them using violence, bribery, and other forms of coercion in order to increase their market share. Also, government “regulation” of the industry is non-existent. In a legalized and regulated environment, Miron argues that a “sin tax” to keep drug prices at “prohibition-era” levels would presumably keep drug use at current levels while reducing negative externalities by dramatically decreasing incarceration, government anti-drug spending, and illicit revenues to criminals, thereby making it more difficult for organized crime to engage in other, more harmful activities.

The idea that the “supply-side” approach common to U.S. drug policy often pushes the drug trade out of one area and into another (the “whack-a-mole effect”), thus failing to address the overarching problems of addiction and demand, has been around for decades. While policies focused heavily on interdiction at the border and eradication in source countries are politically popular in the United States, they should be reevaluated in light of mounting evidence that stemming the demand for drugs through education and treatment programs would likely be a more effective strategy than attempts at supply containment by eradication and interdiction. Such a strategy would presumably be more efficacious in terms of reducing drug-related crime as well as addiction and other problems associated with the drug trade.

The militarization of border-security efforts and covert actions undertaken by the US government in Mexico in regard to the drug war have often inflamed diplomatic tensions between the two countries and have polarized many politicians and citizens on both sides of the border, as evidenced by reactions to Operation Casablanca and the Mérida Initiative. Under President Obama’s administration, the United States’ response continues to be increased interdiction and incarceration efforts combined with attempts to stem the flow of firearms to Mexico. While some experts conclude that Mexican and US armed forces will likely play a greater role in confronting the problem of Mexican drug cartels, many believe this approach has failed to achieve its stated goals and has only hurt the potential for long-term cooperation between the United States and Latin America on the issue of drug trafficking.

Many experts in the field, as well as a number of high-level government officials, are coming around to the view that legalization will almost necessarily be a part of any solution to the current crises of public security caused by the fight against organized crime in Latin America. Still, despite ample evidence that the “drug problem” can (and should) be treated as a public health issue, the fact remains that criminal organizations engage in activities that are significantly more harmful than drug trafficking.

While legalization may allow governments to regulate and tax the sale of substances that currently provide resources for criminal organizations, this logic does not apply to actions such as murder for hire and extortion. In other words, Naím’s “ordinary people” will consent to becoming part of the drug trade, but rarely do they consent to being victims of associated violent crimes or being the subjects of corrupted and ineffective governments.

Drug use rates in the United States have remained on a relative plateau since the late 1980s, but drug use in Mexico is rising – likely as a consequence of DTOs paying their “employees” in product rather than in cash. While estimates of the proportion of DTO revenues derived from drugs are scattered, few put the figure over 50 or 60%. Prostitution, human trafficking, extortion, and fraud are just a few of many other profitable illegal enterprises pursued by organized crime.

Legalization of drugs (in the United States, but also internationally by extension) is an essential part of solving the current dilemma, but organized crime will continue to operate even in the absence of one of its largest sources of revenue. A comprehensive and well-coordinated effort to move drug use into the regulated, legal market should be combined with efforts to combat violent organized crime and to increase democratic representation and accountability.

Drug cartels are often intimately intertwined with the military and law-enforcement, and the focus of anti-drug policies of the Mexican and US governments have often served to increase the power of the cartels as well as the violence and corruption with which they are associated. Legalization alone will not be enough to combat the problems born of the drug trade, as cartels have moved into other forms of highly-profitable criminal activities, such as assassinations, child pornography, and counterfeiting. Strengthening institutions and implementing social programs must be a key part of any new policies to reduce the detrimental effects of organized crime and drug use on both sides of the border.

Despite its political improbability, there is much discussion about legalization or decriminalization of drugs to free up resources for pursuing more “serious” crimes. In November 2012, two US states, Colorado and Washington, legalized marijuana for recreational use. The implications of these historic votes have yet to play out, but there has been discussion of such a move south of the border as well. In summation, the fight against organized crime in Mexico is best approached with the owls’ “all of the above” strategy consisting of initiatives to reevaluate drug policies, strengthen institutions, provide for political and economic inclusion, and maintain a focus on combating violent crime, fraud, human trafficking, money laundering, and corruption.