Nuevo Arco Iris (3): The ELN Alfredo Molano: “Consolidation, Inc.”
Dec 052008

This is the first Friday since October that program staff are (1) in Washington and (2) not preparing frantically for a trip or event. It’s nice to be back.

  • The collapse of pyramid schemes in Colombia, and especially of DMG – which appears to have been more money-laundering operation than pyramid scheme – not only threatens President Álvaro Uribe’s prospects of getting re-elected to a third term in 2010. It may also mean a resurgence of coca cultivation in southern Colombian departments (especially Putumayo and Caquetá) where much of the population had become dependent on these “easy money” projects.
  • Latin American drug lords are starting to take up residence in West African countries like Senegal, Guinea-Bissau, Sierra Leone and Ghana, reports the UK’s Telegraph newspaper.
  • Excellent article by Los Angeles Times reporter Chris Kraul on re-armed or “emerging” paramilitary groups in the department of Nariño in southwestern Colombia.
  • CODHES, a prominent Bogotá-based human rights NGO, claims that 2,009 people in Puerto Guzmán, Putumayo, were forcibly displaced by aerial fumigation in their rural communities.
  • Colombia’s Police have manually eradicated a record 91,742 hectares of coca so far this year.
  • Here is a charming video of the outgoing chief of Peru’s army telling a roomful of people that “Chileans who enter will not exit, and if they do, they’ll do so in a coffin.”
  • The top officer in the U.S. Navy visited Chile this week.
  • For the first time since its annual poll began in 1991, a majority of Miami’s Cuban-American community favored lifting the U.S. embargo of Cuba.
  • U.S. Ambassador to Colombia William Brownfield likes baseball, Cambio magazine reveals.

14 Responses to “Friday links”

  1. Edwin Devers Says:

    “not only threatens President Álvaro Uribe’s prospects of getting re-elected to a third term in 2010″
    It would be nice to know who is Mr. Humberto Tobón, the writer of the article. You can find in every country colomnists who don’t agree with the government even in the USA, isn’t it???. Why don’t you mention an article from a columnist who agrees with the President? Second President Uribe has never expressed that he wants to be reelected to a third time in 2010. What is more the reelection in 2010 was even not accepted in Congress, The only possibility that really exists for reelection is in 2014.

  2. Randy Paul Says:

    Yeah and how do we not know that this Tobón character isn’t related to Valerio Tobón, one of the founders of the Postobón soft drink company that sells all over my neighborhood in Jackson Heights.

    I bet Tobón secretly wants to get the children in my neighborhood addicted to his drinks and have them lying in the gutter screaming “Mas manzana, por favor!”

    Snark aside, I just goggled his name. He even has a blog.

  3. Camilla Says:

    The great Amsterdam drug bazaar experiment is about to end and the Netherlands is about to fire up the drug war again. But didn’t the libertarians tell us legalizing drugs would end drug crime? And the only problem was those benighted Colombians and Americans and others who stubbornly insisted on fighting the drug war? Weren’t they the ‘bigger’ problem than the drugs? Amsterdam happily provided a beacon alternative and yet somehow they want to get rid of it. It was the paradise libertarians told us about! And they are exchanging it for benighted unprogressive drug eradication instead. How could this be? /s

    http://news.yahoo.com/s/ap/20081206/ap_on_re_eu/eu_netherlands_amsterdam_cleanup;_ylt=AuPAZjxzJzeSxylMLfiHEfEDW7oF

  4. MZR Says:

    With reference to John Walters article, “Our Drug Policy Is a Success”…

    John Walters claims that “Crackdowns in Colombia and Mexico have caused the price of cocaine to roughly double in the past two years.”

    According to statistics published by the United Nations Office on Drugs and Crime, this statement is false. Assuming that Mr Walters is using most recent 2007 figures regarding illicit drug prices, and that he is talking about the street price for a gram of cocaine in the US, then the price of cocaine has increased from US$ 99 in 2005 to US$ 119 in 2007. This represents an approximate 20% increase. Not quite “roughly double”, as claimed by Mr Walters. Moreover, this may simply be one price hike as a result of significant cocaine seizures in Mexico during 2007. We may see that prices have fallen this year and, indeed, such price hikes have definitely not been the norm over the past ten years. This is perfectly highlighted when we look at the street price of cocaine in 1999 (before the implementation of Plan Colombia), and compare it 2007. In 1999, the street price for a gram of cocaine (adjusted for inflation) was US$ 142, compared with US$ 119 in 2007. This represents a fall of 16% in cocaine prices over the period 1999-2007, indicating that the supply of cocaine to the US has either remained (at best) stable or actually increased. As such, to argue that this latest price increase attests to the success of U.S. drug policy is simply another falsehood.

  5. Kyle Says:

    Well argued MZR. Nice to see this kind of comments here. My only critique would be the purity needs to be taken into account. Where I live in CT, people tell me it is about $40 a gram for cocaine, well under the national average; they also remark it is usually cut with something, frequently, I have been told, with ecstasy. I’ll look into that now, get the statistics and get back. Perhaps a proportion from purity to price would be a good measurement.

  6. Kyle Says:

    OK, according to the ONDCP, purity in the US (on average from their four types of measurement) is just over 60% for 1999, probably about 63%. Then we need to calculate the price in order to get one pure gram of cocaine. This of course will be a rough estimation. (I’ve decided that calculating the price to get one gram of actual cocaine will probably be a better indicator; it is a calculation of the proportion of purity to price, though.) Also, I looked at the UNWDR 2008 and it does say that their prices are for a gram at street level purity. This concludes are calculations are at least necessary. So for $142 (adjusted for inflation) you got roughly .63 grams of cocaine, in order to get 1.0 grams of cocaine, it is a simple calculation of .63/142 = 1/x. We then get .63x = 142, and when we divide by .63, we get 225.396… thus, I get $225.40 for one pure gram. I double checked by figuring out the price of .01 grams of pure cocaine, which was 225.396… In the WDR 2008, the purity range given for the US in 2007 is 71%. And our price, as MZR has stated, is $119 a gram for a street level purity gram of cocaine. We can already see just by looking at the numbers where we are going to end up. In order to find the price for one pure gram of cocaine we have .71/119 as 1.0/x. We then get .71x = 119. When we divide by .71 we get x = 167.6056… We get the same with the same double checking method used before. Thus, in 1999, the price of one pure gram of cocaine, on average (and again, roughly) is $225.40. In 2007, the same statistic equals $167.61. This would represent an increase in average purity of about 12.7% and a drop in price of 25.6%. This could mean that demand is down, thus price is down and purity is up (to attract buyers with better quality) or that demand is equal or increased, and there is more competition, due to more cocaine in the market. This is a point often overlooked by many, I think. Many assume lower prices are indication of failure while higher indication of success, without completely taking the two demand possibilities into account. Thus we need to find what has occurred with demand in order to find out what is going on in the market.
    In 2000, 1.5% of people over 12 said they had used cocaine in the previous year, or 1999. The most recent data for this statistic we have is percentage of those who used cocaine in the last year as of 2007, meaning usage in 2006, which gives us 2.3%. Thus, it is safe to say that demand has increased. For the same statistic but for the last month, the percentage increased from .5% to .8%. This second statistic would imply an increase in more regular drug use than just once a year. Thus, we can safely conclude that demand has increased overall. Regular use, if remained as a constant within markets, would have increased as well; increased purity also implies increased regular use as a high percentage of people are likely to become addicted to the drug. Overall, if demand increases and prices drop, we are seeing an increase in supply as well, meaning more competition in the market, thus forcing prices to drop, even with increased purity.
    Therefore, the change from 1999 to 2007 can be summed up as:
    -increase in demand and usage overall
    -drop in price by about 25%
    -slight increase in purity from .63 to .71, or about 12.7%
    -The previous three points occurred within an environment with an increase in cocaine in the market leading to increased competition or increased pressure to sell more cocaine more quickly; the first implies an increased number of retail dealers, while the second a constant or decreasing number of retail dealers. All of these three are expected to occur in this type of environment as well, strengthening the argument.
    So has drug policy worked at home? With regards to cocaine, no. Are these increases in usage typical of illegal markets and demand? The increases of demand/usage are substantial. In 2000, 3,328,000 people over 12 used cocaine the previous year; 1,213,000 the previous month. In 2007, these number had increased to 5,738,000 and 2,075,000 respectively. Their respective increases in percentage of 2000 users are 72.4% and 71.1%. It seems the trends year to year may not be huge shifts, and somewhat typical even, yet over a period of eight years, a constant trend ends up being a massive shift. With regards to cocaine usage, it seems we are going horribly in the wrong direction.
    (Please critique as well)

  7. Kyle Says:

    Oh yeah, some sources with URLs:

    UN WDR 2008 – http://www.unodc.org/documents/wdr/WDR_2008/WDR_2008_eng_web.pdf
    Price and Purity of Illicit Drugs: 1981 Through Second Quarter of 2003 – http://www.ondcp.gov/publications/price_purity/price_purity.pdf

    Drug Use Surveys:
    2007 – http://oas.samhsa.gov/NSDUH/2k7NSDUH/tabs/Sect1peTabs1to46.htm
    2000 – http://oas.samhsa.gov/nhsda/2kdetailedtabs/Vol_1_Part_1/sect1v1.htm#1.1a

  8. Adam Isacson Says:

    Edwin, you can find a few more links to articles making similar observations to Tobón’s here:

    http://justf.org/News_Links?colombia_tags=Reelection+Debate&full_text=dmg

    It’s everything we’ve seen that we tagged “Reelection Debate” in our news database that happens to have “DMG” in the text. Note especially the two Semana pieces from Monday, which probably were more deserving of being linked in this post.

    Good discussion here of drug price/purity. Walters’ piece left me scratching my head too. It has been well over a year since they’ve released any cocaine price data, so with the “doubling” claim either he’s got it very wrong or he’s working off 2008 numbers that nobody else has seen.

    Turmoil in Mexico and competition among the “new” post-AUC, post-Norte de Valle narcos in Colombia could be causing the cocaine price to act strangely this year – but doubling? Hard to believe – and further decline, as indicated here, is just as possible.

  9. MZR Says:

    Thanks Kyle…

    I was just about to write that purity levels have remained static or, indeed, exhibited a slight increase. This is highlighted in the relevant World Drug Reports and the sources you have given (so you’ve saved me a job, Kyle!). But, other research also concurs. For example, according to research from the International Crisis Groups, purity levels have risen, arguing that: “The ultimate goal — to reduce the cocaine entering the U.S. — is far from being realised: prices have continued to fall, purity has risen, and consumption remains at least stable, if not rising.”

    Source: International Crisis Group Report (2005), War and Drugs in Colombia, Latin America Report, no. 11

    The war on drugs is failing. U.S. policy on fighting illicit drugs is failing. Plan Colombia, for example, is having successes against the FARC but, against drug production, it is failing miserably.

  10. Kyle Says:

    Adam,

    Thanks for pointing out that, indeed, Walters could be using data no one outside the US gov’t has seen. I agree with you that it seems highly unlikely, if not impossible. The turmoil in Mexico may have incurred new costs for traffickers in Mexico, yet such a sharp increase in costs is unimaginable. After all, given the Mexican dominance over the trade now (at least the upper echelons of the drug production/trafficking ladder), many options remain for the cartels, including demanding lower prices from Colombian export cartelitos; lower purity; demanding more from dealers in the US (which would lead to price increase). Yet, there is also a possibility that cartel leaders are taking less profits themselves, or lowering payments to members in order to fight the war, which would indicate price stability. Given higher demand though, a price increase would not be surprising though. Higher prices though do not automatically equate less usage, lower purity, less demand, etc. Also, it seems while the cartels in Mexico are caught up in a large fight, they seem to be doing quite well in that fight. They seem to have actually increased their area of attacks throughout Mexico, especially near trafficking corridors. While this war may be costly, we do not really know the actions the cartels have taken to pay for the war; it could go either way, like you said Adam. After all, when Escobar took on the Colombian government head on, we did not see a doubling of cocaine prices despite the war’s costs and Escobar’s dominance of the cocaine market (the Cali Cartel had a big hand but not as strong as Escobar).
    The fall out on the Colombian chain, with Norte del Valle groups now taking each other head on, post-AUC power vacuums, etc, to me, would indicate a few possibilities on price. The cartelitos could charge more due to security issues facing larger groups; they historically have had to deal with this and really cannot demand too much as another group could undercut them or kill them off, including larger groups such as Los Machos, Los Rastrojos, and other armed cartel groups that have grown in the last few years.
    Also, with new groups trying to get into the trade, they may have to pay more to campesinos or the people immediately below them on the chain. Yet, those costs must be incurred by the group itself. Why? Because they have little control over the price demanded by groups at the higher end of the chain. At best, the group on the immediate step higher on the ladder my agree to incur a small percentage of that cost. By the time the cocaine reaches the US, that shift may not be reflected in cocaine price, especially with the power of the Mexican groups.
    My point here, I guess, is that, as Adam said, turmoil in Mexico and Colombia could mean a drop, increase or no change at all in cocaine price. It all depends on how groups deal with price shifts, which historically have been passed on to the final product price. Yet, despite Escobar’s war, the AUC/FARC increase in the 1990s, the fall of the Cartels and the emergence of the cartelitos, the emergence of “emerging groups”, etc, the price has consistently dropped. A doubling in price from $119 to $238 in two years is highly unlikely. Anecdotally, I have not heard of an increase at all in cocaine prices in CT, nor anything about changes in purity, just that usually it is cut to some extent.

  11. Jaime Bustos Says:

    The link to the wsj article on drug relegalization is broken. Here:

    http://online.wsj.com/article/SB122843683581681375.html

  12. Sergio Méndez Says:

    Camilla:

    You must have some brain damage if you consider what happened in neetherlands “legalization” of drugs. At best, what the dutch have is a strictly tighly controled legal sell of MARIHUANA only (and even the article you quote admits its illegal. Just that it wont be persecuted when owned on small ammounts).

  13. Chris Says:

    The concept of legalization doesn’t work if you’re the only country in the area pushing it… because you unwittingly become the drug hub for trafficking to your neighbors.

    Legalization has to be done in tandem in order to see results.

  14. Kyle Says:

    Unless you are the US.

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