Tyuleubekov Sabyrzhan
Policies used to tackle illicit drug markets.
In this essay, I want to define how the problem of illicit drug market is tackled by the governments one by one and jointly. I will try to determine which policies are the best in preventing illicit drug market and what policies international community regarding that problem uses.
There are 4 types of illegal markets defined by Jens Beckert and Frank Wehinger, and the one I want to focus on is of type 1 (“illegality due to the outlawing of specific products”[1]). Free sale of hard drugs (excluding alcohol and nicotine) is prohibited everywhere and of soft drugs is prohibited almost everywhere. However, the global illicit drug market is huge and it has big impact on international community because of drug trafficking, drug-related crimes and the number of people involved in producing, transporting and selling drugs. States and international communities are making efforts to eradicate drugs from the society spending substantial parts of their budgets.
As to international community’s efforts, the United Nations is the prime organization that “controls” drug flows around the globe. Since 1912 Hague Opium Convention, the international community decided to focus on supply side of the global drug market. They decided to allocate all resources on battling the supply side, because they thought that once they control supply side they would prevent drug use and abuse. Such supply-centric policies are damaging countries in which drugs are produced
(hereinafter “producer countries”) and countries via which drugs are transited (hereinafter “transit countries”) to final market countries (usually developed ones). Countries of first two types must spend a lot of money on preventing such crimes and “the supply-centric strategy not only unachievable, but in many cases actively damaging to human security and socio-economic development.”[2] Since the international community’s policy was to reduce the supply, it encompassed such measures as military intervention, border enforcement and outlawing consumption of drugs. All these measures induce huge financial costs and social problems. These measures probably reduce the amount of drugs in the country, which would lead to increase in the price of drugs. But drugs is an inelastic product, as long as there is no good alternative for it.[2]
Therefore, the quantity demanded would be slightly less, nevertheless in final market countries can be another case. The UN “one size fits all” policy considered to be unsuccessful. The UN policy implies the worldwide prohibitionist approach regarding the drug use. “An effective and rational drug policy should aim to manage drug harms via a multifaceted and evidence-based approach, not a one-sizefits-all, one-dimensional war strategy based on impossible targets.”[2]
However, prohibitionist approach may benefit for final market countries, but not for producer countries and transit countries. Jonathan P. Caulkins claims that different policies should apply to different types of drugs. He differs between four types of drugs: “(1) the expensive majors
(cocaine/crack, heroin and methamphetamine), (2) cannabis, (3) diverted pharmaceuticals and (4) the minor drugs (LSD, PCP, GHB, etc.).”[3] Jonathan P. Caulkins in his paper “Effects of Prohibition,
Enforcement and Interdiction on Drug Use” claims that if cocaine would have been legalized (so the government would have controlled the market) the retail price of 1 gram of pure cocaine would be only $20 now it is $175 (case of the US).[3] Such a high price of illegal drugs is explained by high risks

of distributing them and if country is more aggressive in the enforcement of its prohibition policy then prices are higher. Assuming that one can calculate the elasticity of demand for cocaine and cannabis and the price changes after legislation of those drugs, the projected price-induced increase in consumption would be almost surely underestimated.[3]
Likewise, Mr. Caulkins estimates that if cannabis and cocaine would have been legalized in the US then the number of possible dependent people on cannabis would double (now the number is some
2.2 millions) and the number of possible dependent people on cocaine would triple (now the number is some 2.25 millions).[3] Taking into account this data, we can conclude that prohibition-oriented policy in the US (the enforcement of which is one of the most aggressive in the world) is probably efficient. Because it is preventing about 2.2 millions of people from cannabis use and abuse and about 4.5 millions of people from cocaine. Nonetheless, it is hard to make precise calculations in order to determine whether overall economic and social benefits exceed costs of implementing prohibition-oriented policy and granting drug interdiction.
Since the UN has been using “one size fits all” policy, and this policy is supply-centric and prohibitionist, it implies that all countries are advised to use such policy. As mentioned above, prohibitionist policy can be efficient in final market countries, meanwhile in producer countries and transit countries it is not true. The following part will be based on the case of Latin America, because the whole region is the main source of cocaine. Countries of Latin America, such as Colombia,
Mexico and Peru are allocating a lot of resources for fighting drug cartels. Implementing of prohibitionist policies is very costly, inasmuch as it induces violence and corruption. Likewise, international community requires Latin American countries to implement prohibitionist policies and even partially cover costs of implementing them; the latter fact indirectly restricts Latin countries in implementing the policies the way solely they want to. Recently, the Latin American Commission on
Drugs and Democracy and The Global Commission on Drug Policy published two reports. “Both reports made an urgent call for a revision of prohibitionist drug policies and advocated treating drug consumption as a public health issue, not as a criminal offence.”[4] These reports offer decriminalization and legal regulation. So far, the prohibition policy, aimed to reduce the supply, comprised the following measures: eradication of illicit crops (aerial spraying or simply burning out of illicit crops), the interdiction of drug trafficking, spotting of laboratories where drugs are produced and consecutive demolishing of them, the arrests of everybody involved in narco-business. All those measures induce corruption and violence; in addition, they are very costly. However final market countries provide financial aid and in some cases military aid to producer and transit countries.
American military aid to Afghanistan is the example. Also the US helps Colombia, they jointly created
Plan Colombia. Both the US and Colombia allocate some amount of money, equaled to some share of Colombia’s GDP (roughly more than one per cent), on cutting cocaine production and trafficking and eradicating related criminal groups. In spite of such financial contributions, policies of Plan
Colombia “tend to be very ineffective – and costly – in reducing the cultivation of coca crops and cocaine production.” [4] In addition, aerial sprayings (one of the measures of Plan Colombia) caused health problems in populations living near coca crops. Nonetheless, Plan Colombia significantly reduced the production of cocaine in Colombia, but not in the region. Organized crime groups just moved the production to other countries, where the production was easier and more profitable due to cheaper inputs (Peru, Venezuela, Mexico etc.). These movements of production cause increases in levels of violence in the countries to which organized crime groups move the production. There is

an interesting trend, when cocaine production in Colombia shrank the homicide rate in Mexico soared.[4] Interdiction policies in Colombia were implemented in 2007 and the level of cocaine production started to decrease, meanwhile in Mexico, President Felipe Calderon decided to “declare a war” to drug trafficking organizations and involved army in it. The consequence of “war” was bad.
The homicide rate tripled. Thus, I can conclude that the case of Colombian “success” in reducing cocaine production by means of prohibition and supply-centric policies is more of exception than tendency. Moreover, costs of such policies consist of not only human lives, which are the severest, but there is also an increase of the levels of corruption. Drug cartels have become powerful to the extent when they can fund political campaigns, have control over media and owning football teams etc. Drug cartels are also not afraid to intimidate, kidnap, or even kill people who cause or may cause problems to them. Empirical evidence shows that prohibition policies are not useful in the producer and transit countries.[4] In recent years, Latin American countries debated over how costs should be distributed among producer, transit and final market countries. Latin American countries now want to refuse aid from final market countries’, which is considered by them not sufficient, in favor of totally independent decision-making which policies to implement.
In this part, I would like to write about how drug trafficking is prevented, thereby to more focus on transit countries and which policies are used there. I will focus on some main international routes.
Smugglers choose routes that incur minimal costs. Costs for smugglers consist of many factors; the main cost is possible imprisonment, also costs often include bribes to the officials at borders. Usually smugglers need to cross more than one border: the border between producer country and transit country and the border between transit country and final market country, however many smugglers cross more than two borders due to crackdowns on certain borders and corrupted officials on alternative borders. On rare occasions smugglers choose direct routes, since they are strictly monitored and usually are via air (where are already high precautionary measures). Countries become transit usually because of geographical closeness to both producer country and final market country, for example Caribbean nations, and Mexico particularly, are located between cocaine producers in South America and the US – the main destination of cocaine. In Europe, Balkan countries act as a hub between Turkey, which is also a transit country, and Western European countries. But geographical closeness is not always the main factor, for me it was a surprise to know that Nigeria is known as main hub between Asia, Europe and the US, though Nigeria is located far away from both major producer and final market countries. Nigeria is attractive for drug trafficking organizations due to high level of corruption and low level of wages in the country, also many ethnic Nigerians live in final market countries, and this fact simplifies travel formalities (such as purpose of stay and etc.). So costs for smugglers are minimized, since couriers will not demand high price for transporting drugs and low amount of money is required for bribing custom officers. At similar fashion heroin is transported from Afghanistan to Europe and Russia. To Europe heroin goes via Turkey, because there is huge Turkish diaspora in Western Europe (Germany is a well-known example) and then via Balkan states. To Russia narcotics travel via Central Asia, because of high levels of corruption and presence of big ethnic diasporas in Russia. (At this point, I would like to remark that I do not want to offend any citizens of transit countries.) Also the route the Netherlands Antilles – the Netherlands is well known; the Netherlands Antilles are located close to Venezuela (cocaine producer country), and via this route cocaine was transported to Western Europe. Due to such variety and complexity of routes, international cooperation is vital. However, local measure are also effective, but only on local level,

not regional. There were measures taken by the Netherlands authorities due to increased amount of smugglers in the beginning of 2000s. The approach of the Dutch government was called “substance
– oriented”.[5] New policy was to come off suspected passengers in the Netherlands Antilles, and if narcotics found, and the amount is less than 3 kilograms, the passenger is added to ban list, narcotics are confiscated and courier is set free. The policy was successful, the number of detected smugglers decreased in long run, and for the authorities it has become easier to process trials (since the number of detained decreased); then the limit of ‘non-detentional’ amount of cocaine was reduced from 3 kilograms to 1.5 kilograms.[5] Notwithstanding it was a win for the Netherlands, it was not a win for the Western Europe. The routes of transiting narcotics are changed in a similar fashion as places of production of narcotics, to where it is easier to do business (Peter Reuter in his paper “The mobility of drug trafficking” names such behavior “the balloon effect”)[5]. Thus, West Africa became one of the main routes for smugglers entering the EU. West African nations attract smugglers due to high corruption, low wages and weak institutions. I do not think that it is the pure coincidence: that
‘closing’ of the Netherlands Antilles route and ‘opening’ of West African route come at the almost same time. By UNODC (United Nations Office on Drugs and Crime) estimates the amount of transited cocaine through West African nations to the EU increased from the level of 3 tons in 2004 (Dutch government implemented its policy in December 2003) to the level of 17 tons in 2005 and to the level of 47 tons in 2007.[5] The problem with West African countries is obvious, they cannot afford strict prohibition enforcement, they are less developed, have low wages and high corruption, so international aid in tackling the problem of drug trafficking is vitally needed.
In the following part, I would like to focus on supply side policies, namely which policies are better in producer countries and how they can be improved. The main argument of proponents of strict interdiction policy is that by shrinking supply - street prices of drugs increase thereby overall consumption decrease. However, “In the US, consumption of cocaine has been declining steadily mainly because hardcore users have been aging. At the same time, consumption of methamphetamines and of synthetic and prescription drugs has increased.”[6] One can assume that if there were no such strict law enforcement in the US, the level of consumption would skyrocket, or even more strict law enforcement is needed in order to eradicate narcotics from the streets. One of the goals of such policy is to deprive income of criminal drug groups by decreasing demand, but here the paradox appears. Since we know that narcotics is an inelastic good, the quantity demanded will slightly decrease in response to price increase, so the income of narco-businessmen will barely decrease. Prohibition policies are efficient only in short term. “Source country suppression policies – eradication and interdiction – have at most succeeded in generating a two-year lag before production and supply recovered.”[6] Eradication and interdiction are insufficient because of low level of development in the regions where drug crops are cultivated. Drug trafficking organizations provide jobs to the population in those areas, and population accepts them not because of their own desire to work on criminals but because of shortage of legal jobs. Because, for instance, in Western Europe there are also opportunities for people to cultivate, for example, cannabis and it would be more lucrative for some, but most choose to work on legal job. On account of provision of jobs to population, drug cartels gain political capital from population and population is less willing to cooperate with police and government. Therefore, straightforward suppression policies are ineffective, the population will trust and respect government more if government would economically and socially develop those regions. In addition, key condition for eradicating illicit drug

production is control over the whole country, neglecting of some parts is unacceptable. Since, when the government will loosen its control over one area in favor of another drug business will just move to the former one (“the balloon effect”). Only “Mao’s eradication of opium poppy cultivation in China in the 1950s and 1960s has been the most effective and lasting eradication campaign ever; but it involved levels of brutality that would be, appropriately so, intolerable in most countries.”[6] As to softer policies, the provision of alternative jobs in the regions where drug crops are cultivated should not be in a short term, so this should be long-lasting and well managed policy, also there should not be any conflicts undergoing in the region. Those alternative jobs should be decent enough, so the population can earn enough money and should have access to licit markets. The government should help those regions until it establishes good environment for working market. “Alternative livelihoods really mean comprehensive rural and overall economic and social development. As such, the programmes require a lot of time, the politically difficult willingness to concentrate resources and lasting security in the area where they are undertaken.”[6] Prominent examples of worsening the situation due to implementing straightforward ‘war on drugs’ are Afghanistan and Mexico. In
Afghanistan, the government concentrated its efforts in battling small traders, which led to strengthening of Taliban, now the most powerful organization in Afghanistan and region. In Mexico,
‘war on drugs’ caused violent wars between drug criminal groups, which tried to gain power over the region. I think main reasons of failed ‘war on drugs’ is lack of control over whole country and high level of corruption in both countries. Intention to break up big criminal groups into small ones I find right, since it is easier to fight with many small organizations rather than with one big cooperating entity. However, such policy requires government to minimize cooperation between small criminal groups, probably to pit them against each other but public security must be guaranteed. Moreover, possible movement of narco-business should be predicted, and possible detriment should be evaluated. The narco-business can move to regions where already a terrorist group operates, and then it would become extremely difficult to tackle the problem of drug trafficking.
This part is about policy of legalizing the production of some drugs. Licensing of cultivation of some illicit drug crops is one of the policy in order to reduce the size of illicit market. Turkey, as an example of such country, licensed opium poppy cultivation for medical use and illicit market of opium was eradicated. However, the success of Turkey consists in the fact that the government has full control over the country and it used special technology “the so-called poppy straw method, that makes diversion of morphine into the illicit trade very difficult.”[6] Thorough analysis is required in implementing such policy. The proponents of legislation say that the effect of such policy will decrease income of organized crime groups, by the way coincides with the goal of prohibition policy mentioned above, because price will decrease and the market will be controlled by the state. The state will benefit from the taxes and the monitoring of users and abusers will improve, so better health care for them may be provided. Many jobs will be created for poor population as well.
Nevertheless all this seems attractive, there are some obstacles. Government should still strictly control the market and grant the exclusion of criminal groups in the market. The new legal market will require many resources in order to be managed. The occurrence of grey market is very likely.
Coexistence of grey markets of cigarettes and alcohol with legal ones are good examples.
In conclusion, there are three types of countries involved in global drug market: producer, transit and final market countries. Countries of all three types should not be advised to use same policies. I found that producer and transit countries should use similar policies, namely licensing of drug crops,

providing poor population with decent jobs, eradicating of corruption and providing decent public security. Generally, producer and transit countries have big areas populated by poor that have high levels of violence, governments must develop such areas. Good monitoring of sequential implementing of policies is vital. Final market countries should revise their prohibitionist policies, since full eradication of drug use seems impossible. They may focus on rehabilitation of those addicted to drugs. Final market countries should decrease the demand not only by inflating the price of illicit drugs. Legalizing some drugs may have positive effects, because the market will be controlled by the state, and more precise numbers will be available (amount of drug addicted etc.). So more useful health care may be provided. As for international cooperation, it is obligatory especially when we talk about trafficking routes. The balloon effect is present and closing of one route means opening of another. Equal monitoring must be provided everywhere and at this point final market countries should help to transit and producer countries due to existing vulnerability of former ones. Obviously, there is no policy that will be effective for all countries, due to their uniqueness. Even in countries of one type, unique combination of policies should be implemented. Therefore, the UN policy “one size fits all” supple-centric and prohibitionist policy is totally wrong.
References:
[1] - Jens Beckert and Frank Wehinger (2011) In the Shadow: Illegal Markets and Economic Sociology, pp. 3. Available at http://www.mpifg.de/pu/mpifg_dp/dp11-9.pdf [Accessed at January 6, 2015]
[2] - John Collins (2014) The Economics of a New Global Strategy, Ending the Drug Wars Report of the
LSE Expert Group on the Economics of Drug Policy, pp. 8-15. Available at http://www.lse.ac.uk/IDEAS/publications/reports/pdf/LSE-IDEAS-DRUGS-REPORT-FINAL-WEB.pdf [Accessed at January 6, 2015]
[3] - Jonathan P. Caulkins (2014) Effects of Prohibition, Enforcement and Interdiction on Drug Use,
Ending the Drug Wars Report of the LSE Expert Group on the Economics of Drug Policy, pp. 16-25.
Available at http://www.lse.ac.uk/IDEAS/publications/reports/pdf/LSE-IDEAS-DRUGS-REPORTFINAL-WEB.pdf [Accessed at January 6, 2015]
[4] - Daniel Mejia and Pascual Restrepo (2014) Why Is Strict Prohibition Collapsing? A Perspective from Producer and Transit Countries, Ending the Drug Wars Report of the LSE Expert Group on the
Economics
of
Drug
Policy, pp. 26-32.
Available
at http://www.lse.ac.uk/IDEAS/publications/reports/pdf/LSE-IDEAS-DRUGS-REPORT-FINAL-WEB.pdf [Accessed at January 6, 2015]
[5] - Peter Reuter (2014) The Mobility of Drug Trafficking, Ending the Drug Wars Report of the LSE
Expert Group on the Economics of Drug Policy, pp. 33-40. Available at http://www.lse.ac.uk/IDEAS/publications/reports/pdf/LSE-IDEAS-DRUGS-REPORT-FINAL-WEB.pdf [Accessed at January 6, 2015]
[6] - Vanda Felbab-Brown (2014) Improving Supply-Side Policies: Smarter Eradication, Interdiction and Alternative Livelihoods – and the Possibility of Licensing, Ending the Drug Wars Report of the LSE
Expert Group on the Economics of Drug Policy, pp. 41-48. Available at http://www.lse.ac.uk/IDEAS/publications/reports/pdf/LSE-IDEAS-DRUGS-REPORT-FINAL-WEB.pdf [Accessed at January 6, 2015]