There is perhaps no other “commercial activity” where the overriding law of capitalism, that of offer and demand, expresses itself with such precision as in the narcotics trade. The demand and offer of drugs have been calibrated in an optimum manner to provide the infinite efficiency that this activity has shown over time, growing permanently from the Eighties of the last century and becoming so lucrative that there has been no way of interrupting it.
Flow of cocaine to the United States from South America 2017
As Alain Labrousse points out in his interesting book, The World Geopolitics of Drugs, the end of the Cold War brought about the “democratisation” of narcotics that started to be used as an instrument in the majority of conflicts.
But in the drug-conflict relationship, the fundamental part is played by the profit factor, particularly in reference to cocaine and opioids. The United States has parked its army in two countries to assure ordered and controlled trafficking. Therefore, from its invasion of Afghanistan in 2001 and the start of Plan Colombia towards the end of the last century, the production, transportation and distribution of opioids derived from poppy and cocaine from coca has grown exponentially from these two countries, the major global producers of these substances respectively.
According to Labrousse citing sources in the United Nations, the increase in earnings are owed to the obstacles that have to be overcome in transporting the drugs from the producer country to the consumer. Put another way, the control of the intermediaries increases the costs. Thus, for example, the production of a kilogram of Colombian cocaine in 2005 needed 200 kg of coca leaves that entailed $400 for the farmers. The cycle started from there on: 1 kg of the basic paste cost $800; 1 kg of cocaine hydrochloride paid for by the Colombian exporter, $5,000; 1 kg paid for by the wholesale importer in Miami, $10,000; the wholesale New York price, $15,000; the retail sale gave returns of between $150,000 and $500,000 for the same kilogram of cocaine.
The farmer is left with between 0.00027% and 0.00080% of the total profits; perhaps the Colombian (now Mexican) exporter obtains between 0.01% and 0.03% of the final value of the product. That is to say, more that 99% of the returns that the cocaine trade generates remains in the United States. It is worth asking: where is the money?
The only time that the U.S. government tried to seriously investigate the flow of drugs money through its financial system was in 1979 when, faced with the increase in the capital deposit in the Miami banks, it planned “Operation Greenback”, the objective of which was to supervise the North American banks that handled drugs money. The operation was cancelled without explanation in 1982 by George H.W. Bush during the Reagan administration. Evidently, an in-depth investigation would have made public the collusion of the proprietors of the big banks with drugs-trafficking. The matter was never dealt with again.