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  Opinion   Oped  27 Oct 2018  America is central to the economy of drugs

America is central to the economy of drugs

The writer, a policy analyst studying economic and security issues, held senior positions in government and industry. He also specialises in the Chinese economy
Published : Oct 27, 2018, 12:31 am IST
Updated : Oct 27, 2018, 12:31 am IST

The world’s major cocaine production centres are all located in South America.

Three quarters of the US’ total annual consumption of almost $45 billion worth of cocaine comes from Colombia.
 Three quarters of the US’ total annual consumption of almost $45 billion worth of cocaine comes from Colombia.

In terms of turnover, the illicit drugs trade could now be the world’s single largest business. According to the report of the International Narcotics Control Board, this is now a $500 billion business. Like in other commodities, the US is the world’s single-greatest narcotics importing country, spending over $100 billion on doing drugs. Since the narcotics trade is mostly conducted in top dollar, this becomes a major contributer to keeping the dollar as king worldwide. The choice as the world’s preferred currency is made more on the world’s streets than in the world’s central banks.

While cocaine is the preferred recreational drug of the western upper classes and the small imitative upper classes of the developing world, it is heroin that is truly the common man’s narcotic the world over. The Bayer pharmaceutical company of Germany first manufactured heroin in 1879, and derived the word from the Greek word heros, meaning half-God, half-man. It was so named because those who took the drug suffered delusions of heroism. But whether it is cocaine or heroin or any of the new synthesized drugs like amphetamines, almost the entire conversion of the primary commodity, whether it is coca leaves or opium poppy, is located in some of the poorest and least governed countries of the world. Unfortunately little of the great wealth generated by this business flows down to the primary producers, for unlike most commodity businesses, the narcotics business has a very high value-addition factor at every stage of the business and production is the earliest and easiest part of it. Even so, drugs have become a major reason why countries like Burma, Afghanistan, Peru, Colombia, and even Pakistan remain financially afloat.


The world’s major cocaine production centres are all located in South America. Three quarters of the US’ total annual consumption of almost $45 billion worth of cocaine comes from Colombia. According to Britain’s National Crime Intelligence Service, the street retail price of a gram of cocaine was US$96, while that of heroin was a little over $100. The good news or bad news depending on how you see this problem is that there has been a declining trend evident in street prices since 1990, when the equivalent prices of cocaine and heroin were almost 50 per cent more than the present prices. This is only reflective of the greater availability made possible by superior and more efficient production and not due to any reduction in demand. The consumption is estimated to be growing at an unhealthy 12 per cent.


As the single biggest consumer of narcotics, the US has a great vested interest in being the world’s most proactive drug policeman. It has an active interdiction program in South America, which consists not only of military assistance, but large dollops of cash to several Latin American governments. Its proactive measures include drumming out of office of political leaders involved in drug trafficking, either directly or indirectly. Out of the $948 million the US gave as assistance for International Narcotics Control, as much as $762 million was earmarked for South America. In addition to this, the Pentagon spends $1 billion on military assistance. In all, the US spends $19 billion annually on narcotics control.


Evidently, the US’ efforts are more skewed towards interdicting cocaine and controlling its production. There seems to be a reason for this. A survey of 800-COCAINE hotline callers reveals that the average caller was “a 31-year-old, white, middle class male with some college education” and an annual salary well above the median. The most alarming trend was the increase in adolescent usage, especially among high school students.

Heroin, on the other hand, is the poor man’s preferred drug. A study of heroin users by Stanford University’s professor John Kaplan reveals that 75 per cent were male, 55 per cent were black, 44 per cent were Hispanic, 36 per cent were less than 30 years old, 61 per cent had less than 11 years of education, and 81 per cent were unemployed. This is quite clearly the underclass, and the resultant lack of emphasis and urgency in the US’ international efforts clearly reflect the bias of the US Administration.


Today, the two major production centres are the Golden Triangle and the Golden Crescent. The Golden Triangle refers to the secluded opium poppy producing and heroin processing badlands of northern Burma, Thailand and Laos, while the Golden Crescent refers to the rugged borderlands of Pakistan and Afghanistan. With India sandwiched in between the two “golden” areas, it is not surprising that many Indians are seeking some of that gold. It is a major disembarkation point. This strategic location has also enabled it to become a major producer of acetic anhydride, which is central to the process of turning morphine base into pure heroin. A visit to the town of Gajraula in western Uttar Pradesh will tell you how big the acetic anhydride business now is. The sometime politician Amar Singh also owns an acetic anhydride factory in Ghaziabad.


It takes more than ten tons of opium to process one ton of heroin. According to the UNDCP, 2.65 lakh hectares were under opium cultivation in Asia producing 4,861 tons of opium. Every hectare of opium yields an Afghan grower about $16,000 as profit. On the other hand, an Afghan farmer is now being offered $1,250 a hectare to destroy his crop. Afghans are better businessmen than that.

Afghanistan and Burma now account for 80 per cent of illicit opium poppy cultivation and 90 per cent of global production. According to the US government, Burma is responsible for 60 per cent of the world’s production of heroin, which is twice as much as what Afghanistan now produces. There is much irony in this, for the concentration of heroin production in these two areas is a direct consequence of the CIA’s single-minded pursuit of “containing” communism.


Ever since the Arabs introduced opium to India in the initial years of the last millennium, the use of opium and its derivatives has driven economies and history with an intensity that proselytisers of religions and ideologies would envy. In the sixteenth century, the Portuguese introduced it to indentured Chinese labour in Java. It then spread to China. The East India Company stole the business from the Portuguese, and by 1838, Bengal was exporting 2,400 tons annually to China. When China attempted to close the trade, the British waged the First Opium War (1839-41) to defend the principles of “free trade” and “diplomatic equality”.


China then tried to beat imports by allowing opium to be grown in Yunnan. It succeeded. But when the communists came to power in 1949, production moved to Burma, with the KMT generals driven out of southern China. In 1950, the CIA began regrouping the KMT forces in Shan state for a projected invasion of southern China. This trade then expanded to include the generals in Thailand. Drugs, CIA supplied arms and the dense forests have spawned many insurgencies in Burma. Out of the 387 known terrorist and insurgent groups in the world, Burma accounts for over 40.

While there was always some opium poppy production in Afghanistan and northwestern Pakistan, its production got a major impetus in 1978 when the CIA arrived on the scene to foment a jihad to contain communism. America had to pay a high price for this. Within two years of the CIA intervention in Afghanistan, the Pakistan-Afghanistan borderlands became the world’s top heroin producer, supplying 60 per cent of US demand. And also got Osama bin Laden in the blowback!


This heroin business now earns Pakistan over $4 billion a year. Cheap heroin flooding Pakistan has resulted in the number of addicts zooming from near zero in 1979 to about three million now. Inevitably, heroin (smack) has made inroads in India and it has over three lakhs registered as addicts and the number of addicts may even be 20 times that. And now, rather than religion being the opiate of the masses, it seems it is the other way round!

Tags: international narcotics control board, america