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Shifts In World Cocaine Market
Could Changes In Cocaine Traffickers' Market Strategy Be Restricting Availability In US?
The US government asserts that recent fluctuations in the domestic cocaine market are being caused by successful law enforcement efforts and heightened seizures. A simpler and more likely explanation is that traffickers are expanding into new markets.
USA Today reported on Sept. 13, 2007 ("DEA Hopeful Over Drop in Cocaine") that "The DEA found a broad drop in the quantity of cocaine at the top levels of the supply chain in every region of the country except the Pacific Northwest, according to a recently declassified DEA analysis. The analysis found the most significant decreases in supply and largest price increases for big suppliers rather than street-level dealers, suggesting dealers may be selling cocaine that is less pure to keep prices stable for regular customers."
According to USA Today, "In Los Angeles, where a kilo has cost around $13,000 for nearly a decade, prices edged up to $19,000 over the past year, says DEA Special Agent Sarah Pullen, the agency's Los Angeles spokeswoman. 'There's a definite reduction in supply,' she says. 'Organizations are having a hard time getting it from their sources in South America.' .In Nashville, police in April noticed a kilo that sold for $18,000 to $20,000 a year ago was selling for $27,000, police spokesman Don Aaron says. Supply also decreased. 'And we think a major explanation for that is the strengthening of the border between Mexico and Texas and Arizona,' he says. Prices in Nashville have decreased slightly in the past two weeks, but price fluctuations are normal, Aaron adds. Philadelphia says any decrease in its cocaine market was short-lived. 'We had seen some lulls over the course of the year. We saw some tightening up over the market,' says a police spokesman, Capt. Benjamin Naish. 'Cocaine is available. The price is stable.'"
USA Today noted that "Peter Reuter, a University of Maryland professor who studies drug policy, says it is too early to declare the recent price spikes a trend, but he says the odd patterns bear watching. 'What I know of the data supports the notion that there is something out there,' he says. 'There have been these kinds of interruptions before and turned out to be short-lived. How permanent this is, there is absolutely no way of knowing.' DEA analysts examined 11,538 domestic cocaine samples tested in their labs from April 2005 though June 2007. On average at all levels of the supply chain, the price jumped 24% between January and June 2007, [DEA intelligence chief Tony] Placido says. Midlevel wholesale cocaine purchases from 1 to 10 ounces showed the largest price increases -- 33% -- from $53.09 to $70.30 per pure gram. Street-level sales up to 10 grams increased 15%, from $145.42 to $166.90 per pure gram. To confirm their findings, DEA analysts also studied 6,613 cocaine purchases and seizures logged by the Justice Department's National Forensic Laboratory. They found a significant decrease in the purity of the cocaine seized. A June 5 report from the Justice Department's National Drug Intelligence Center also concluded the cocaine supply had decreased in several big and midsize East Coast markets over the previous four months as prices increased. It attributed the market disruption to large seizures of cocaine in transit from South America to Mexico and major busts of key players in Mexican drug-trafficking groups."
Left unmentioned is that cocaine traffickers appear to be moving more of their product to non-US markets. The LA Times reported on March 14, 2007 ("West Africa a New Hub in Cocaine Trafficking") that "A landmark shift in trafficking routes has transformed West Africa into a hub for cocaine smuggled from South America to a booming European market, anti-drug officials on three continents say. Traffickers have established a haven and transit area along the Gulf of Guinea to elude aggressive efforts to seize cocaine headed to Europe. Anti-drug officials fear the new route will worsen lawlessness in African countries already overwhelmed by crime, poverty and instability. Colombian gangsters have brought their swagger to the tiny West African country of Guinea-Bissau, setting up elaborate front companies, tooling around in flashy cars and allegedly buying high-level protection. The use of drug 'mules' has increased dramatically: A single flight arriving in Amsterdam from Morocco in December carried 32 West African passengers who had swallowed cocaine packets or concealed them in their luggage. 'What was seen before as a threat has become a reality,' said Lt. Juan Llorente, an intelligence analyst for Spain's paramilitary Guardia Civil. On April 1, eight European nations will launch a military-law enforcement task force targeting cocaine traffic from Africa. The Maritime Analysis Operations Center based in Lisbon will team police, navy and customs resources, a model similar to a U.S. interdiction unit in Florida. The United States is the world's top market for cocaine, but use is declining. In Europe, demand has hit all-time highs, led by Britain, Spain, Italy and the Netherlands. A kilo ( 2.2 pounds ) of cocaine brings about $45,000 in Europe, compared with about $25,000 in the U.S."
According to the Times, "Traffickers stockpile cocaine in countries such as Cape Verde, Guinea-Bissau, Guinea, Togo, Benin, Ghana, Nigeria, Senegal and Mauritania. It is then moved north, often to clandestine landing zones on the coasts of Spain and Portugal, or commercial ports such as Barcelona, Rotterdam and Antwerp. Smugglers use fishing vessels and commercial ship containers, and occasionally enlist Moroccan smugglers to cross the Mediterranean. Intelligence indicates that small planes and trucks, the latter plying desert contraband trails, transport loads to North Africa, DEA officials say. The partnerships combine South American suppliers, transport specialists predominantly from Nigeria and Ghana, and European distributors, officials say. Colombian traffickers, whether freelancers or cartel operatives, are popping up in remote African locales. 'There are so many Colombians in Guinea-Bissau,' said a DEA official who asked not to be identified. 'They are running supposedly legit businesses, driving Mercedeses. And they have informants -- they know when the DEA shows up.' The former Portuguese colony, one of the 10 poorest nations in the world, lacks a secure prison, border controls or police labs. 'All the institutions have collapsed,' said Koli Kouame of Ivory Coast, secretary of the U.N.'s International Narcotics Control Board. Guinea-Bissau police firing guns in the air captured two Colombians unloading 1,500 pounds of cocaine in September. After a police chief announced the seizure, he was threatened by fellow officials allegedly allied with Colombian traffickers. Authorities refused to let a DEA agent see the drugs or the suspects, whom a judge released, U.S. and European investigators say. Colombians also set up a fish-processing factory, where in 2004 police found arms, drugs and a clandestine landing strip. Experts worry that traffickers could eventually smuggle in precursor chemicals and set up labs, enabling them to ship coca base across the Atlantic instead of the more expensive finished product. In addition, Guinea-Bissau is selling some of its islands, raising fear that drug lords could buy one, Antonio Mazzitelli, regional representative for the United Nations Office on Drugs and Crime, said in Senegal. Even in comparatively stable Ghana, top officials were accused last year of protecting a Venezuelan drug lord. Ghanaian police recorded the continent's biggest cocaine bust last year, arresting Ghanaian and Nigerian suspects with a Mercedes van containing almost 2 tons of the drug concealed in boxes of fish."
The Times noted that "The Africa-Europe route developed because of geography, economics, interdiction and enterprising criminals. Criminal organizations from around the world do business with Colombian traffickers, said Gen. Oscar A. Naranjo of Colombia's national police, and both leftist guerrillas and their right-wing paramilitary enemies take part in the drug trade."