Drug Politics
Dirty Money and Democracies
By David C. Jordan
Cloth $24.95
URL:
<http://www.ou.edu/oupress/jord3174.htm>
Description:
Drug Politics is an enlightening new book by a man who knows this
disturbing and dangerous subject. A former United States ambassador to
Peru, David C. Jordan has testified before the U.S. Senate and House
Foreign Relations committees and has consulted with various government
security organizations. His account of government protection of the
criminal elements intertwined with local and global politics challenges
many of the assumptions of current drug policies. Using examples from
South America, Mexico, Russia, and the United States, Jordan shows that
o the narcotics problem is not merely one of supply and demand
o the post-Cold War globalization process is not necessarily benign
o the democratization of formerly autocratic states does not guarantee a
new era of democratic peace
o organized crime is not confined to specific
ethnic groups
Jordan explains that the theory of supply-and-demand ignores or downplays
the fact that the drug trade depends on state cooperation and compliance
to sustain multibillion-dollar levels of illicit global commerce. He
exposes features of the globalization process that permit wealthy elites
to operate outside accountable political processes and reveals how
organized crime develops under political protection, becomes multiethnic,
and forges transnational alliances. Jordan argues that many national and
international financial systems are dependent on cash from money
laundering, and some governments are far more involved in protecting than
in combating criminal cartels. Sure to stimulate debate, Drug Politics
makes a strong case for a reexamination of American and international
policies in the drug and culture wars.
Volume 1 In The International And Security Affairs Series
David C. Jordan served as United States Ambassador to Peru (1984-86). He
is currently Professor of International Relations and Comparative
Government, Woodrow Wilson Department of Government and Foreign Affairs,
University of Virginia, and President of the New World Institute,
Charlottesville, Virginia.
304 pages, 5 figures, 4 tables, appendix, notes, bibliography, index,
6 x 9. ISBN: 0-8061-3174-8 Cloth $24.95
-----------
CHAPTER 1
INTRODUCTION
The growth and spread of narcotics trafficking accentuate the importance
of the nation-state and the democratic republic in post-cold war world
politics, even as the globalization of the market economy has led some to
believe that the problems of the new world order were either too large for
the nation state and therefore required supranational institutions or were
too small and required substate or nongovernmental organizations (NGOs).¹
The supranationalists can be either globalists or regionalists. The
globalists seek a universal rule-making organization, the demise of the
state sovereignty, and global regulation of the economy. The regionalists,
on the other hand, best typified by European integrationists, seek, under
the Maastricht Treaty, a central bank that would set monetary policy no
European parliament could hold accountable. Proponents of a network of
nongovernmental organizations find in computers and telecommunications the
information systems that would allow NGOs to deliver services that
governments cannot match. NGOs are credited, for example, with forcing the
United States and Mexico to consider cross-border pollution problems,
health and safety provisions, and other issues that were not initially on
the North American Free Trade Agreement (NAFTA) agenda. The claim that
narcotics trafficking revitalizes the understanding of the importance of
the nation-state and the democratic republic does not belittle the
significant growth of supranational institutions or NGOs. But it does
highlight the fact that states ruled by accountable governments cannot and
must not yield their power to repress transnational criminal enterprises
to either supranational or substate entities. If the democratic states
were to fail in this struggle, then the state system, supranational
institutions, and NGOs would all be part of a criminal international
world. The degree to which the globalization process, coupled with
narcotics trafficking, is facilitating this corruption of the state-a
process called narcostatization-emphasizes the importance of maintaining
healthy nation-states and democratic republics. The amount of money
created outside the control of the individual states is enormous. It is
capable of forcing devaluations and making huge profits on bets against
national currencies. This global capital should not be considered as just
a wealth-creating phenomena but as power in itself, a power that can
devalue currencies, discipline governments and companies, and shelter
profits from state taxes. Among the most prominent examples are the seven
funds created by George Soros. Born in Hungary, Soros became an American
citizen in the 1950s. Backed now by great European wealth, he operates
globally outside the U.S. citizens as investors. Soros himself is the
prototype transnational capitalist. His speculative operations have
created a vast amount of unregulated world money that flows in and out of
national economies at the push of a computer key.² His Quota Fund wages
huge bets on global currency, bond, equity, and commodity market trends.³
The most famous Soros fund, the Quantum Fund N.V., has speculated against
European and Asian currencies and made over $1 billion against the British
pound in 1992. Transnational, or "overworld," elites like George Soros not
only make huge sums in their speculative bets, they also transfer money to
pet projects worldwide that sometimes exceed the foreign aid that even the
U.S. government provides. For instance, in October 1997, the Soros
Foundation announced plans, in addition to its work in eastern Europe, to
provide between $350 million and $500 million to Moscow for maternal and
child health care and for the government's military reform plans. In
comparision, the United States government gave Russia $95 million in all
of 1996. In 1998 Soros acknowledged second thoughts about his activities
in relation to Russia. One of the most interesting aspects of this
overworld money has been its support for "alternatives" to the drug war,
as they are euphemistically called. Transnational capitalist interests can
operate locally and globally to weaken state resistance to drug
trafficking. Because the supernational organizations and NGOs are too weak
to deal with the narcotics problem, the state and its uncorrupted
institutions are the principal means for combating trafficking. The new
internationalism requires the state to forge relations with institutions
of other states committed to controlling the drug trade. Thus the
corruption of the state itself-and of its law enforcement agencies and
judiciaries-can become a serious problem beyond its own borders, while
within its borders, corruption undermines the accountability of the
democratic republic.
IMPLICATIONS FOR THE UNITED STATES
The implication of the state interest in narcotics trafficking is that the
United States may have to reevaluate is commitment to the globalization of
an unregulated international economic system. It is not necessary here to
stipulate what these controls should be-other than the need for state
institutions to network internationally-but it is important to see how the
growth of the unregulated international financial and trade system
facilitates narcotics trafficking. It cannot be disputed that the United
States has felt the impact of drug trafficking in undermining its society
and in weakening the will to combat widespread drug use. The war on drugs
in the United States is not being won. According to the director of the
U.S. Office of National Drug Control Policy(ONDCP), 12 million Americans
used illegal drugs in 1995 and teen tolerance for drugs increased in that
same year 167 percent among eighth graders, 81 percent among tenth
graders, and 46 percent among twelfth graders. Addiction experts predict
that about 820,000 of this new group of marijuana smokers will eventually
try cocaine. The cost of drug abuse and trafficking is enormous: · 100,000
deaths were recorded and $300 billion spent in the 1990s alone. · 500,000
new emergency room cases occur each year. · 250,000 Americans currently
serve time for drug law violations. · Drug use is involved in at least a
third of all homicides, assaults, and property crimes. The prevailing U.S.
government model for conducting the war on drugs is based on the
supply-and-demand approach. An entire school of policy analysts contends
that drug trafficking is driven by consumption. Some of these analysts,
such as Peter Andreas, present the consumption model as a public health
issue: "Changing course in drug policy requires redefining the problem as
fundamentally a public health rather than a law enforcement and national
security concern," Andreas has said, "In other words, the surgeon general,
rather than the attorney general and a retired military general, should
direct our drug policy." Although Andreas offers a different perspective,
his approach is still based on the supply-and-demand model. The war on
drugs was crippled in the 1980s and 1990s because policy makers adopted
the supply-and-demand model focused on the impact of the producer and
consumer countries and trade routes. It did not bring into the equation
the emergence of a global financial system that was out of the control of
any single state. This growth in the global financial system, coupled with
the liberalization of international trade, meant that states not only lost
control of trade but also of their capital markets. There has been a shift
in emphasis from the supply to the demand side in the war on drugs, and
prevention and reduction of drug addiction has become a primary goal of
the U.S. government. But attention has been focused on the 20 percent of
drug users, the hard-core users, who account for 80 percent of total
street sales of cocaine, and resources have not been allocated to
prevention programs for casual and nonusers. Since 1995, the White House's
national drug control strategy has identified its top priority as support
for drug treatment "so that those who need treatment can receive it." For
this priority, requests for funds increased in FY95 ($2.647 billion), FY96
($2.827 billion), and FY97 ($2.908 billion). The shift in emphasis to
reducing demand via treatment- if it is to succeed-requires that the
removal of hard-core users from the treatment centers exceed the number of
casual users who become hard-core users. However, treatment that provides
hard drugs for addicts has actually caused an increase in the numbers in
treatment centers. The U.S. experience suggests that, if more resources
are directed at hard-core users than casual users, the number of casual
users increases. If this relationship is not understood, the current
treatment policy of the United States, in both its domestic and foreign
applications, will lead to increases in both hard-core and casual use of
drugs. Legitimate efforts to reduce demand and to treat victims of drug
abuse have been vulnerable to the influence of those who would bring about
drug liberalization under the slogan "harm reduction." The ultimate
objective of those who exploit the U.S. demand-reduction strategy is
easily seen as the liberalization and then the regulation of drugs.
FIVE ASSUMPTIONS BEHIND THE WAR ON DRUGS
This book challenges the premises of the five current assumptions behind
the war on drugs. The first assumption provides the model for
understanding the problem; it sets the problem up as simply an economic
issue of supply and demand. Within this model there is a debate between
those who emphasize the supply side and those who stress the demand. The
supply-side focus aims at disrupting the flow of drugs to consumers. All
the stages in the process are targeted: cultivation, processing, transit,
wholesale distribution, and street sales. Based on U.S. government
findings that two hundred hectares of coca produce a metric ton of retail
cocaine, crop eradication campaigns, became one of the most significant
features of the "stop the supply" strategy in the 1980s. But the supply
focus also deals with the production-distribution networks. As a result, a
vast number of government agencies are involved in disrupting the flow of
drugs to consumers. This complex of agencies includes the Departments of
State, Defense, Treasury, and Agriculture; the Central Intelligence Agency
(CIA); the Drug Enforcement Administration (DEA); the Federal Bureau of
Invesitgation (FBI); the U.S. Customs Service; the U.S. Forest Service;
the border patrol; the Bureau of Land Management; the Bureau of Alcohol,
Tobacco, and Firearms (ATF); the Coast Guard; the National Guard; and four
major intelligence centers: the DEA's in El Paso, Texas; the CIA's at
Langley, Virginia; the FBI's at Johnstown, Pennsylvania; and the
Treasury's at Arlington, Virginia. The supply-side focus attempts to
disrupt the flow of profits back to cartel bosses. The effort to disrupt
the money-laundering side of the business falls primarily on the
Department of the Treasury's Financial Crimes Enforcement network
(FinCEN). The Federal Reserve banks report their cash-flow data to FinCEN
monthly, which helps FinCEN identify areas for investigation A principal
tool of the Federal Reserve is the cash transaction report (CTR). Since
1970, all banks are required to report all cash transactions of $10,000 or
more. The supply-side focus has been under sustained assault from those
who argue that the war on drugs has failed. This argument comes from
individuals representing a number of groups whose agenda ranges from
legalizing drugs to treating the issue as a public health problem. These
groups claim that treatment is a more cost-effective way to reduce
consumption. They call for a shift from the punitive paradigm to the
treatment-and-prevention paradigm. They argue that there are three fatal
flaws in the supply-side war on drugs. The first is that illegality raises
the price for drugs, thereby making it more profitable and hence more
attractive to criminal gangs. This is the so-called profit paradox. The
second is that efforts to crush the producers actually only spread
production to new area, the "hydra effect." The third flaw is the "punish
to deter fallacy." Those who see supply-side strategy as failing point to
the statistics that show that more than two-thirds of arrested heroin
addicts, for example, return to drug use and criminal behavior upon
release from jail. These critics call for a shift to a public health
paradigm, which they claim would promote "healing without harm" The public
health paradigm, however, is only one more version of the
supply-and-demand paradigm. In fact, public health proponents claim the
drug trade is a business "driven by the laws of supply and demand." The
second assumption at the base of the current war on drugs is that the
major culprits are ethnic or national gangs. The picture that is
constantly held before us is of organized criminal elements-such as the
Russian and sicilian mafias, the Chinese triads, and the Japanese
yakuza-victimizing governments, populations, and financial institutions.
This assumption would make sense if the problem were exclusively one of a
criminal economic group facilitating the production and distribution of
narcotics and of obtaining the profits. However, a thorough understanding
of how the political and economic structure of neoliberalism facilitates
and protects criminal activity forces a reexamination of the assumption
that criminal gangs stand alone in promoting the drug problem. The third
assumption on which the war on drugs has thus far been based is that the
financial system is essentially victimized by the criminal gangs because
of their massive economic capability. In this view, banks and the
financial systems of various governments are essentially opposed to
allowing criminals to launder their profits and invest them in legitimate
businesses but find that, under the globalizing financial system, it is
too difficult for them to staunch such activity. This assumption claims
the financial institutions are merely victims and not part of the problem.
On the other hand, if the model for approaching the problem of narcotics
trafficking is the globalization of the neoliberal economic system and the
unregulated activity of transnational capitalists, then it may well be
that major components of the national and international financial system
are not victims, but active participants in the money-laundering
operations of the narcotics trade. The fourth assumption in the current
war on drugs is that governments are essentially committed to combating
the narcotics trade but in most cases are victimized by the criminal
cartels through corruption and intimidation. Although it is clear that
these elements are embedded in many governments, the problem must be
understood as specific to the structural arrangements of the international
system generally and of the post-cold war neoliberal order in particular.
Governments may have a substantial interest in protecting the drug trade
not only for economic reasons, such as earning foreign exchange and
servicing national debts, but also for political motives-preventing a
greater gap between the more and the less developed countries, for
instance, and/or weakening a rival power. A thorough understanding of this
perspective will reveal deficiencies in the standard definition of war. An
expanded definition of "war" would include forms of conflict in which the
armed forces of one country are not necessarily directly involved against
those of another nation. This expanded definition would force further
revisions in political thinking abou6t the democratization process and the
" democratic peace" theory, the theory that holds that democratic states
do not fight other democratic states. This kind of rethinking would
necessarily reveal the vulnerability of the democratization and
liberalization processes and would suggest the need for the uncorrupted
institution of states to cooperate with each other in order to avoid
internal war and to lessen interstate conflict. The final assumption in
the current war on drugs is that the major societal forces in the United
States and other countries oppose the consumption of narcotics and strive
to maintain the criminalization of the production and distribution of
addictive substances. However, major societal and institutional trends in
the United States have led to a delegitimizing of the values and beliefs
that are most predictive of resisting drug consumption. Indeed, these
trends have promoted consumption and lifestyles that are conducive to
consumption. Thus society itself becomes a factor in encouraging drug
consumption. If the conventional assumptions are inadequate, then an
alternative set of premises will be required if there is to be a
successful effort in the war against drugs. In addition, the model for
understanding the war on drugs requires a post-cold war interpretation of
the international political and economic systems. The war on drugs will
not be won until appropriate assumptions are in place.
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