LATIN AMERICA AND THE MULTINATIONALDRUG TRADE

INSTITUTE OF LATIN AMERICAN STUDIES SERIES

General Editor: Victor Bulmer-Thomas, Professor of Economics andDirector, Institute of Latin American Studies, University of London

The Institute of Latin American Studies, a member of the School ofAdvanced Study of the University of London, was founded in 1965. TheInstitute is dedicated to research on Latin America in the social sciencesand humanities . The purpose of this series is to disseminate to a wideaudience the new work based on the research programmes and projectsorganised by academic staff and Associate Fellows of the Institute ofLatin American Studies.

Victor Bulmer-Thomas (editor)THE NEW ECONOMIC MODEL IN LATIN AMERICA AND ITSIMPACT ON INCOME DISTRIBUTION AND POVERTY

Victor Bulmer-Thomas, Nikki Craske and M6nica Serrano (editors)MEXICO AND TIlE NORTH AMERICAN FREE TRADEAGREEMENT: WHO WILL BENEFIT?

Elizabeth Joyce and Carlos Malamud (editors)LATIN AMERICA AND THE MULTINATIONAL DRUG TRADE

Walter Little and Eduardo Posada-Carbo (editors)POLITICAL CORRUPTION IN EUROPE AND LATIN AMERICA

Eduardo Posada-Carb6 (editor)COLOMBIA: THE POLITICS OF REFORMING THE STATE

ELECTIONS BEFORE DEMOCRACY: THE HISTORY OFELECTIONS IN EUROPE AND LATIN AMERICA

Rachel Sieder (editor)CENTRAL AMERICA: FRAGILE TRANSITION

John Weeks (editor)STRUCTURAL ADJUSTMENT AND THE AGRICULTURALSECTOR IN LATIN AMERICA AND THE CARIBBEAN

Latin America andthe MultinationalDrug Trade

Edited by

Elizabeth JoyceFulbright Scholar and Visiting ResearcherGeorgetown UniversityWashington . DC

and

Carlos MalamudDirector ofthe Contemporary Latin America ProgrammeInst ituto Universitario Ortega y GassetMadrid

in association withPALGRAVE MACMILLAN

First published in Great Britain 1998 byMACMILLAN PRESSLTDHoundmills, Basingstoke, Hampshire RG21 6XS and LondonCompanies and representatives throughout the world

A catalogue record for this book is available from the British Library .

First published in the United States of America 1998 byST.MARTIN'S PRESS, INC.,Scholarly and Reference Division.175 Fifth Avenue. New York. N.Y. 10010

ISBN 978-0-312-17615-0

Library of Congress Cataloging-in -Publication DataLatin America and the multinational drug trade / edited by ElizabethJoyce and Carlos Malamud.p. em. - (Institute of Latin American studies series)Includes bibliographical references and index.ISBN 978-0-312-17615-0 (cloth)I. Drug traffic-Economic aspects-Latin America. 2. Drugtraffic-Government policy-Latin America . 3. Narcotics. Controlof-Latin America. 4. Political corruption-Latin America.5. Money laundering-Latin America . 6. Latin America-Politics andgovernment. 7. Latin America-Foreign relations. I. Joyce.Elizabeth, 1961- 11. Malamud. Carlos. III. Series.HV5840.L3L37 1997363.4'5'098-<1c21 97-18828

CIP

© Instituteof Latin American Studies 1998Softcoverreprint ofthe hardcover 1st edition 1998

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Any person who does any unauthorised act in relation to this publication may be liable tocriminal prosecution and civil claims for damages.

The authors have asserted their rights to be identified as the authors of this work inaccordance with the Copyright, Designs and Patents Act 1988.

This book is printed on paper suitable for recycling and made from fully managed andsustained forest sources.

10 9 8 7 6 5 407 06 05 04 03 02 01

32100 99 98

ISBN 978-1-349-26049-2 ISBN 978-1-349-26047-8 (eBook)DOI 10.1007/978-1-349-26047-8

CONTENTS

List of ContributorsList of TablesList of Figures

viiviii

ix

Preface

Introduction

Elizabeth Joyce and Carlos Malamud

Fernando Cepeda Ulloa 3

PART I: CONSUMPTION PATTERNS IN EUROPE ANDLATIN AMERICA

Chapter I

Chapter 2

Foreign Demand for Latin American Drugs:The USA and EuropePeter Reuter

Drug Consumption in Latin AmericaAugusto Perez Gomez

23

45

PART II: DRUGS IN LATINAMERICA: THE PRODUCER COUNTRIES

Chapter 3

Chapter 4

Chapter 5

Chapter 6

The Drug Trade , Politics and the Economy:The Colombian ExperienceJorge Orlando Melo

The Economic and Political Impact of the DrugTrade and Drug Control Policies in BoliviaAndy Atkins

The Drug Trade in PeruRoberto Lerner

The Political Repercussions of DrugTrafficking in MexicoMaria Celia Toro

v

63

97

117

133

1

PART III: MONEY LAUNDERING AND INTERNATIONAL DRUG CONTROL

Chapter 7

Chapter 8

Chapter 9

BibliographyIndex

Offshore Banking in the Caribbean:The Panamanian CaseAnthony P. Maingot

Cocaine Trafficking and British Foreign PolicyElizabeth Joyce

**********

ConclusionsElizabeth Joyce

vi

149

173

193

211231

LIST OF CONTRIBUTORS

Andy Atkins is a Researcher at the Catholic Institute for InternationalRelations, London.

Fernando Cepeda Ulloa is previous Minister of Government andCommunication in Colombia, and previous Colombian Ambassador toLondon. He is currently the director of the magazine Estrategia.

Elizabeth Joyce is a Fulbright Senior Scholar at the Department ofGovernment, Georgetown University, and the Center for International andSecurity Studies at the University of Maryland.

Roberto Lerner is Managing Director of Lerner and Lerner PsychologicalServices and Associate Professor at the Catholic University of Lima.

Anthony Maingot is Professor of Sociology at Florida InternationalUniversity and Senior Research Associate at the North-South Center of theUniversity of Miami. His most recent book is The United States and TheCaribbean (London , 1994).

Carlos Malamud is Professor of American History at the UniversidadNacional de Educaci6n a Distancia and Director of the Contemporary LatinAmerica Programme at the Instituto Universitario Ortega y Gasset, Madrid.

Jorge Orlando Melo is a Colombian Historian and currently Director of theBiblioteca Luis Angel Arango, Bogota. He was Presidential Adviser forthe development of Medellin during the Gaviria administration (1990-94).

Augusto Perez G6mez is Professor of Psychology and Director of the 'LaCasa' Programme at the Universidad de los Andes, Bogota.

Peter Reuter is a Professor in the School of Public Affairs and theDepartment of Criminology at the University of Maryland.

Maria Celia Taro is Head of the Centro de Estudios Internacionales of EIColegio de Mexico and author of Mexico's "War" on Drugs (New York,1995).

VII

LIST OF TABLES

Chapter 1.Table 1: Arrestees Testing Positive for Illicit Drugs (Percentage) 28Table 2: Total US Consumption of Illicit Drugs, 1988-91

(in metric tonnes) 33Table 3: Total US Expenditures on Illicit Drugs, 1988-93

(in $ billions) 34Table 4: Prevalence of Marijuana Use Among Juveniles (circa 1990) 36

Chapter 2.Table 1: Estimated Number of Colombians Aged 12-45 Years

Using Drugs at Some Point in Their Life: 1993 48Table 2: Estimated Number of Colombians Aged 12-45 Years

Using Drugs in Year Prior to Survey: 1993 49Table 3: Drug Consumption in Peru by Substance: 1986, 1988,

1992 (as percentage of adults) 53Table 4: Drug Consumption in San Salvador (EI Salvador): 1991

(as percentage of adults) 54Table 5: Drug Consumption in Baja California, Southern Baja

California, Sonora and Sinaloa: 1992 (as percentage ofadults) 55

Chapter 7.Table 1: Worldwide Capital Flight (1975-85) 152Table 2: Type of Occupancy 159Table 3: Government Expenditure (as percentage of total) 159Table 4: Economic Structure (as percentage ofGDP) 160Table 5: Balance Sheet of Banks Operating in Panama 162

(US$ millions)Table 6: Panama: Legislating the New National Image 165

viii

LIST OF FIGURES

Chapter 1.Figure 1: High School Senior Prevalence Rates, 1975-93 25Figure 2: National Household Survey, 30-day PrevalenceRates

for 18-20 Year Olds 26Figure 3: Percentage of Washington, D.C. Arrestees Testing Positive 27Figure 4: Emergency Room (ER) Mentions ('OOOs) 30Figure 5: Cocaine-Related Emergency Room (ER) Episodes by

Facility Location, 1988-93 31

Chapter 2.Figure 1: Lifetime Prevalence of Drug Use in Colombia, 1993

(as percentage of adults) 47Figure 2: Prevalence of Drug Use in Colombia, 1993

(Year Prior to Survey) 48Figure 3: Prevalence of Periodic Drug Use in Bogota, by Gender:

1993 (as percentage of adults) 50Figure 4: Lifetime Prevalence of Drug Use on Bogota, by Age:

1993 (as percentage of age cohort) 51Figure 5: Prevalence of Drug Use in Bogota in Year Prior to Survey,

by Socio-Economic Status: 1993 (as percentageof adults) 52Figure 6: Drug Consumption in Mexico, Periodic Use: 1992

(as percentage of adults) 54

ix