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  Number 361 | Agosto 2011
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Central America

The first horseman of neoliberalism: Drug traffickers

Drug trafficking, both wholesale and retail, has changed Central America’s “dessert economies” into increasingly more profitable and globalized “vice economies.” Wholesale drug trafficking affects politics and politicians and controls States. Retail drug dealing and its accompanying philanthropy changes municipalities, promotes development and provides employment. Drug traffickers are competitive and socially responsible capitalist entrepreneurs, The cost is violence. And the challenge is phenomenal.

José Luis Rocha

Political scientists identify three major political programs in Latin America: authoritarian, neoliberal and participatory. Authoritarian is the standard caudillismo (charismatic strongman politics), the one Vargas Llosa blames for giving the rest of the world “that unfortunate image of little republics ruled by pistol-toting gunmen” and inspired such novels as The Tyrant Banderas, Autumn of the Patriarch, The feast of the Goat and I, the Supreme. It has been utilized by rightwing or reformist militarists, fascistic populists and old and new breeds of self-styled leftists.

In Central America today, its revitalization is embodied by both Micheletti and Zelaya in Honduras, Ortega in Nicaragua and Funes in El Salvador. Micheletti took the presidency unconstitutionally while efforts of Ortega and Zelaya to remain in power are no less anti-constitutional. All of them camouflage their attempts at presidentialist regimes as the rule of law. The latest autocratic scenario is Funes’ attempt to guillotine the autonomous way four Constitutional Bench justices were ruling on cases in which friends of the powerful, who usually warm opulent presidential chairs, were sitting in the dock of the accused.

Drug traffickers write
straight on twisted lines

The neoliberal program has orchestrated state contracting that to varying degrees affects all Latin American countries, without exception. We are captivated by the cult of the market, as blind as justice (although not impartial), as voracious as Cronus, as capricious and inscrutable as any pre-modern deity, supreme secular judge of lives and property. In all its textures and dimensions, State contracting is the winning ticket that sediments into the ungovernability of financial flows, privatization of public safety (Guatemala has five and Honduras four times more private security guards than police and military), remittance-financed social security, etc.

Countering these two programs, the participatory program is slowly and uncertainly advancing, promoting benefits disparaged and despised by the dominant culture, such as consciousness, proactive intervention in political processes by the dispossessed, the possibility of another globalization, another trade, another world…

The political scientists who study the relationships between civil society and government strive to include NGO agendas, whose options—professed or not—coincide with these three programs. But where are the programs of three other groups with extensive clientele: the evangelizing fundamentalists, the drug traffickers and the gangs? Is it perhaps assumed that they have no proposals to back their appeal? In fact all three, among others that thrive in the hollow State’s shadow, definitely have their own diverse projects: apocalyptic, parasitic, millenarian…

The drug traffickers write undeviatingly straight on the twisted lines of conventional programs. I’m speaking mathematically here, as applied to the given setting: the shortest distance between Latin American secular poverty as their departure point and immense fortunes as their destination. There are transfers, exchanges, acquisitions and friction among all these programs. The neoliberal program can use the NGOs’ participatory projects. The narco-mall that the Central American streets, clubs, schools, universities have become can co-opt the neoliberal and authoritarian programs. One fact is clear: the emergence of two development programs. From the NGOs comes the management of institutionalized altruism and from the drug traffickers a narco-industry amalgamated with narco-philanthropy. In this article we’ll start by analyzing the narco-industry.

When Vesco arrived in Central America...

The conspicuous and unsuspected hand of Costa Rican President José (Pepe) Figueres helped Central America take one of its first steps into the quicksand of drug trafficking when Robert Lee Vesco, a 37 year old con-man and drug dealer, landed in Figueres’ country on June 29, 1972.

Vesco was under investigation by the US Securities and Exchange Commission and on the run from both the United States and Switzerland. Warmly welcomed by Figueres, Vesco moved his operations from the Bahamas to Costa Rica and gave don Pepe’s struggling businesses a loan of more than US$2 million. It didn’t take the SEC investigations long to show that Vesco had swiped US$224 million from his former partners in the United States. Figueres publicly defended him and, to protect him from slander and prospective threats of extradition, granted him the status of “retired financier” as a recently approved law had opportunely been created to encourage US citizens to retire in Costa Rica. Vesco continued expanding his curriculum by funding Nixon’s campaign and amplifying his relationships with the drug trafficking world. He was finally expelled from Costa Rica under Rodrigo Carazo’s government.

After an unsuccessful attempt to buy the island of Barbuda in order to establish a sovereign state, Vesco was taken in by Sandinista Nicaragua, then left there for Cuba, where he lived from 1982 until his death in 2007. He “invested” the last years of his life in drug trafficking, the medicine business (he connected Richard Nixon’s nephew with Raúl Castro) and, after being convicted of fraud and illicit trading in 1996, in prison.

According to an internal CIA report, a cable from the US embassy in Managua dated October 8, 1982, alerted that Vesco and Paul Atha, then a Nicaraguan Ministry of the Interior official, were planning a drug smuggling operation. The following day, another cable sent to CIA headquarters stated that Nicaragua’s Government Junta of National Reconstruction had authorized drug trafficking operations, with Interior Minister Tomás Borge Martínez as executor and Robert Vesco as adviser.

H&M Investments served as the legal buffer. Corn Island and El Bluff became transit ports for cocaine heading from the nearby Colombian island of San Andrés to the Bahamas. There were also reports that Borge commissioned Federico Vaughan and Paul Atha to deposit US$350,000 in the Continental Bank for money laundering purposes. Cables later showed that Borge’s drug trafficking missions were only known to the FSLN National Directorate and its closest collaborators: Atha, Vaughan and his assistant, Franco Montealegre.

These operations didn’t hinder Tomás Borge from declaring on November 23, 1986, that his ministry’s investigations had uncovered a vast drug trafficking network backed by the two anti-Sandinista military organizations—the Nicaraguan Democratic Force (FDN) and the anti-Sandinista union of Miskitus, Sumus and Ramas (MISURA) and “the mafia.”

Sandinista drug trafficking
vs. contra drug trafficking

The above-mentioned report (known as the Hitz Report for Frederick Hitz, the CIA inspector general who led the research), dealt with the links of the Nicaraguan counter-revolutionary/CIA/drug-trafficking triad—was it tolerated, fostered, funded?—and unveiled drug activities in four countries in the region: El Salvador, Honduras, Nicaragua and Costa Rica. The story begins as they all do: “Once upon a time… a few little leaves…” With a kiss from suitable princes, the little leaves turned into coca paste, then into cocaine powder and finally into crack. Until the 1970s, cocaine was only used by elites, as an alternative to the excessively common people’s preference for marihuana and the heavily prosecuted heroin. Ingenuity and greed discovered that “cut” cocaine—mixed and cooked with bicarbonate of soda and water, then broken up into small smokeable pieces—was a mass consumption product. You only had to guarantee a plentiful supply of the raw material, a logistical matter handled by Óscar Danilo Blandón, recognized as the “Johnny Appleseed” of crack, alluding to John Chapman, a man who went through Ohio, Indiana and Illinois planting apple trees in the early 19th century.

In their bestseller Freakonomics, economist Steven D. Levitt and journalist Stephen J. Dubner say that Blandón, a Nicaraguan emigrant, was suspected of importing more cocaine than any other drug smuggler. Blandón himself later claimed that he sold cocaine to raise funds for the CIA-backed contras in Nicaragua. He liked to say that, in return, the CIA had his back in the US, allowing him to sell cocaine with impunity. This statement supported the belief, still current today, especially amongst urban blacks, that the CIA was the main sponsor of the US crack market. Was it?

When Los Angeles was inundated with crack...

This link isn’t surprising in the light of the maxim by Andrés López, ex-drug trafficker and author of El cártel de los sapos (The cartel of snitches): “Drug traffickers have always been involved in businesses that are somewhere between legal and illegal.” Were there links between the CIA, the contras and drug traffickers? The facts speak for themselves: in the winter of 1982, US Attorney General William French Smith, sent then-CIA director William Casey a memorandum of understanding specifying the list of offenses CIA officials were required to report. The narcotics world was excluded and its absence was denounced by the Department of Justice. Instead of adding drugs to the initial list, Smith just sent another communiqué to the CIA director, making it clear that no formal request would be included in light of long-standing transparency between the CIA and the DEA. This wise subterfuge opened a black hole through which many tons of cocaine slipped into the United States.

The person who had the most effect in exposing the relationship of the contras and the CIA with the crack boom was Gary Webb, a reporter for the San Jose Mercury News and winner of the 1990 Pulitzer Prize who committed suicide under mysterious circumstances in 2004, years after he was subjected to a barrage of attacks from Newsweek, The Washington Post and The New York Times. His series of three articles titled Dark Alliance: The CIA, the Contras, and the Crack Cocaine Explosion focused on the conduct of US intelligence agencies during the contra war in Nicaragua.

Webb gathered evidence to show that the contras (whom Ronald Reagan called the moral equivalent of the founding fathers) had financed their war by trafficking the cocaine that flooded the streets of Los Angeles as crack in the early 1980s. Based on Webb’s story, Universal Pictures developed the film Kill the Messenger. The screen writer, Peter Landesman, defines it as the story of a reporter killed for telling the truth, an intense and relevant story given that the CIA and the US government continue making insidious deals with evil in the interests of what they allege to be the greater good.

Laundering in fridges...

Webb showed that to supply the contras, the CIA began recruiting people and companies involved in drug trafficking up to their ears. There were not only double but even quintuple agents, working at the same time for the cartels, the Customs Service, the CIA and the DEA and trafficking cocaine on their own account. One of the Costa Rican seafood companies contracted was Frigoríficos de Puntarenas (Puntarenas Refrigeration) which laundered dollar and was so efficient at trafficking that it managed to introduce a ton of cocaine into the US every week with help from the Miami-based Ocean Hunter.

Although the Internal Revenue Service had warned the FBI that Frigoríficos de Puntarenas was just a front for drug activities, the company received US$231,587 from the Nicaraguan Humanitarian Assistance Office for its services to the contras between January and May 1986. Years later, Luis Rodríguez, co-owner of both companies, testified that both were used for trafficking and money laundering. The Miami aviation company DIACSA, led by a Bay of Pigs veteran, received US$14,000 in humanitarian aid for the contras even though its owners were being accused of having imported 900 pounds of cocaine. For the same purposes, Vortex Aviation received US$317,000 from the US government, blind to the charges against Vortex’s owner, Michael Palmer, of having smuggled 300,000 pounds of marihuana into US territory.

Nicaraguan exiles Norwin Meneses and Óscar Danilo Blandón worked in partnership with Enrique Bermúdez, operational head of the contras’ northern front. Meneses, known as “the drug king,” recruited Blandón (former national wholesale markets director during Somoza’s time) to sell drugs to benefit the contras. Meneses worked on the East Coast and Blandón thrived in Los Angeles through a beneficial relationship with “Freeway” Ricky Ross, an enterprising manufacturer who sold US$1-2 million of crack a day, thanks to his suppliers’ diligence. While on trial for drug trafficking some years later, Blandón said that in 1981 alone the Meneses organization placed almost a ton of cocaine in the US, with a wholesale value of US$54 million.

The decade wasn’t “lost”...

The local Honduran link in the early eighties was Juan Ramón Matta Ballesteros, who was under surveillance by the DEA at the time. With the help of Manuel Ángel Félix Gallardo—the godfather—Matta had financed the 1978 coup against his country’s reformist President, General Melgar Castro, passing the sash on to a triumvirate at the service of the Guadalajara cartel. According to a 1978 DEA report, Matta partnered with coup participant General Policarpo Paz García, oiling the Central American cocaine toboggan between the Medellín and Guadalajara cartels. In 1983 the US Customs Service and the DEA suspected that half the cocaine reaching the US was shipped in by Matta, and two years later, Newsweek named him as the man responsible for a third of the cocaine brought into the US.

Lieutenant Colonel Oliver North found the ally he was looking for in Matta and made his company (SETCO AIR) the main contra supplier. Between 1983 and 1985, SETCO AIR carried millions of dollars in munitions, food and uniforms for the contras and further millions in cocaine to the ever-eager US market. In 1986, while the revealing Newsweek report was still hot, SETCO AIR received $185,924 to supply the “Freedom Fighters.” North’s diaries allow us to track his orders to Matta and others, and the amount of drug dollars going to support the contras: July 9, 1984: bring coca paste from Bolivia and take 1,500 kilos to the United States; July 12, 1985: $14 million to finance weapons coming from the sale of drugs. The Matta-North effect increased cocaine trafficking from 2.3 to 9.3 tons between 1985 and 1987.

Matta’s empire came to be worth US$2 billion. According to the annals in one of the USA vs. Matta Ballesteros trials, Matta and Félix Gallardo were pocketing US$5 million a week. The contras, Paz García and North must have been grateful for his services. But who was working for whom? Drug capitalists earned nearly US $14.2 billion between 1981 and 1989, a decade when internal wars were burning in Central America. The so-called “lost decade” wasn’t so lost for some: in Central America it marked the beginning of the crack age.

Weapons come, drugs go...

When the accumulated charges against the drug barons and their humble political servants surpassed the US officials’ considerable patience, the resentment in some sectors of public opinion led to an investigation. Senator John Kerry (the Democratic presidential candidate in 2004, who lost to George W. Bush, and now replacement of Boston’s Senator Kennedy) headed a commission in 1989 that revealed the pointy white tip of the iceberg. Colombian drug trafficker Jorge Morales told Senator Kerry under oath that in 1984, while being processed for drug trafficking, two CIA agents offered him his freedom in exchange for depositing US$250,000 a month into the contras’ coffers.

Once the war in Nicaragua ended, Morales said he had donated $3million to the contras. To check the veracity of Morales’ statements, Kerry contacted and interviewed Edén Pastora. With his usual bravado, Commander Zero admitted having received vast quantities of cash from Morales, as well as two helicopters and a C-47 airplane. Morales’ two pilots admitted having made repeated flights with weapons to Central America and with drugs to the United States, benefiting the contras by no less than US $40 million.

In El Salvador, Hangar 4 in Ilopango military airport was the starting point for the snowy cargo heading for Grand Cayman and then South Florida in the light aircraft piloted by Carlos Alberto Amador. Further research revealed that Amador was one of Pastora’s men on the contras’ Southern Front and that Hangar 4 was under the control of Lieutenant Colonel Oliver North, who had been commissioned by the White House to secure support for the contras. The CIA asked the DEA to stop researching Hangar 4 as it guaranteed the legitimacy of the operations taking place there. Hangar 4 was managed by Félix Rodríguez, a Vietnam veteran, participant in an attempt on Fidel Castro’s life and present at the execution of Ché Guevara. When the US mercenary Eugene Hasenfus was interrogated by the Nicaraguan army after it shot down the Fairchild C123 plane on which he was handling cargo for the contras, he named Rodríguez as his contact. The prosecutor on the Kerry Commission listed Rodríguez’s greatest feat as smuggling 12 tons of cocaine through the air force base in Florida.

The conclusion to the 1989 Kerry report stated that there was “substantial evidence of drug smuggling through the war zones on the part of individual contras, pilots who flew supplies, mercenaries who worked for the contras, and contra supporters throughout the region…. There are serious questions as to whether or not U.S. officials involved in Central America failed to address the drug problem for fear of jeopardizing the war effort against Nicaragua.” It adds that senior US policy makers were not immune to the idea that drug money was a perfect solution to the contras’ financial problems.

A decade later, the Hitz Report established that the CIA knew about three companies involved in drug trafficking that were contracted to support the contras between 1984 and 1988, and received information about 21 members of the counterrevolution involved in drug trafficking from bases in Honduras and Costa Rica; that Edén Pastora received money and small planes from Jorge Morales and admitted to living rent-free in one of Blandón’s houses in Honduras between 1984-1987; that both he and leaders of the contra organization called the September 15 Legion received money from drug trafficking; and that one of Pastora’s light aircraft smuggled cocaine into the Costa Rican capital.

When Pablo Escobar was allied with the FSLN...

Sandinista Nicaragua wasn’t just a victim in this bullets and cocaine conspiracy. The other side of the scales was weighted with FSLN links with Pablo Escobar Gaviria.

In his book Killing Pablo, US journalist Mark Bowden reveals that Escobar showed up in Managua after the spectacular failure of his relationship with General Noriega. On June 25, 1984, he was photographed in Los Brasiles airport supervising the cramming of a cocaine shipment into a light aircraft piloted by Barry Seal, a former drug trafficker and Oliver North collaborator, who cut a deal to collaborate with the DEA in exchange for his conviction. Using a camera hidden in the front of the plane, Seal photographed Escobar and his associate Rodríguez Gacha along with Federico Vaughan, at the time in charge of the Nicaraguan Interior Ministry’s finances. Years later, when questioned about this episode, Vaughan, also the Interior Ministry’s right-hand man for naval and, so it would seem, air affairs, declared that he had survived by virtue of the code of silence—omerta, as they say in Sicily. In 1988 a CIA cable reported that Escobar’s group had paid Interior Minister Tomás Borge US$3 million to guarantee Nicaragua as a base for the Medellín cartel’s operations.

An exploration of Pablo Escobar’s history throws light on his ideological affinity with the Sandinistas and the common justification for their bond. According to Bowden, Escobar’s brother-in-law, leftwing intellectual Mario Henao, supplied Pablo with the honorable patriotic arguments necessary to justify their trafficking business: the flow of cocaine to the United States could be considered a revolutionary tactic that, while soaking up US dollars, corrupts the brains and blood of decadent gringo youth. These arguments were attributed to Federico Vaughan in a CIA cable: “The idea is to inundate the United States with cocaine to the detriment of imperialist youth while helping the Nicaraguan revolution.”

A tsunami on the Colombian economy

By the end of the 1980s, Escobar and his Antioquian colleagues from the Medellín cartel controlled over half the cocaine entering the US, making billion dollar profits.

According to Bowden, their companies became the most important in Colombia and financed mayors, councilors, members of Congress and Presidents. By the mid 1980s Escobar owned 19 residences just in Medellín, each with a heliport. His enormous fortune had the impact of a tsunami on the Colombian economy. As Bowden describes it, the money that began to come in was more than anyone in Medellín even dared to dream of; money in such quantities that it could establish not only individuals, but also cities… and countries. Between 1976 and 1980 Colombian bank deposits more than doubled. Among the consequences were a construction boom, the birth of myriad new businesses and a dizzying drop in the unemployment rate. Over time, says Bowden, the economic explosion caused by cocaine money shook the country’s economy and turned the rule of law upside down.

Cocaine: A Cold War drug

Mexican journalist Diego Enrique Osorno wrote in his book, El cártel de Sinaloa. Una historia del uso político del narco (The Sinaloa Cartel. A history of the political use of drug trafficking), that “the rise in cocaine trafficking closely follows the routes of the Cold War and US policy. It’s a Cold War drug.” This statement is amply supported by a brief historical tour of the first steps cocaine took in Central America, an episode that involved four countries (El Salvador, Honduras, Nicaragua and Costa Rica), each of which added their little grains of “rock” to the crack boom in Los Angeles.

Costa Rica, through having been the operations platform of Edén Pastora’s counterrevolutionary effort and of Frigoríficos de Puntarenas; Honduras, through its drug-coup and its services as a base for the drugs-for-weapons exchange; El Salvador through the drug flights from Ilopango airport; and Nicaragua through the lucrative carte blanche the FSLN gave the Medellín cartel. The Sandinistas weren’t alone in the drug trade. Peru’s Sendero Luminoso (Shining Path) was already putting the same pragmatic system of co-existence with drug trafficking into practice: jointly controlling strategic territories and charging fees for light aircraft and for armed protection during the exchanges.

Other knotty bits in the Cold War’s indulgences, after failed demilitarization processes, are right up the drug traffickers’ alley: the survival and fury of the kaibiles, now affiliated to the Zetas; vast territories marked by governmental neglect that serve as compliant beachheads for the cartels; regions abused by governmental coercion in which villages and towns only know the cruel arm and frowning face of the law, for whose people “illegal” is just another label in the eternal struggle against a foreign power; and city-based, capital city oriented rules oblivious to the mud in the villages and overcrowding in the barrios. A number of these regions receive unexpected opportunities from the narco-industry.

We’re now drug economies

It’s impossible to calculate the dimensions and benefits of the narco-industry given its illicit nature. In the 1990s, Colombian Professor Francisco Thoumi, an expert in drug economics, said that “the profits from the cargo of a light aircraft, say 250 kilos of cocaine, are enough to buy between 1,200 and 4,800 hectares—even after paying US$150,000 to the pilot and abandoning a US$100,000 plane.” In other words, they are left with around US $10 million. The OAS, the UN and the National Drug Intelligence Center (NDIC) confirm that 90% of the world’s cocaine production passes through Central America. Experts on the subject assure us that, valued in capital, over US$250 million passes through the region every month. Cocaine seizures give a rough idea of the growth in drug trafficking: from 15,838 kilograms of cocaine seized in 2001 to 71,829 in 2006.

The psychotropic effects of this volume are felt at all levels of Central America’s economies. The Economist estimates that between 250 and 350 tons of cocaine pass through Guatemala each year. The result is evident: Petén is full of clandestine landing strips for drug-laden planes coming from Venezuela and Colombia.

Guatemala and Costa Rica:
Tons of cocaine and millions of dollars

Scions of the traditional elites study in the same exclusive schools and universities, frequent the same clubs, dance in the same restricted-clientele discotheques, eat in the same gourmet restaurants and swallow communion wafers in the same churches as the offspring of drug traffickers. In the Francisco Marroquín and del Valle universities, in The Village School and The Mayan School, in the Hacienda Nueva club and the San Isidro country club, with its unimaginable golf course, and in the St. Martin de Porres and Our Lady of Peace churches social relationships are woven with the drug elites who attend with washed and shaved faces or with the rouge and mascara that bestows full citizenship status. Social acceptance is bought and sold in the temples of knowledge, pleasure and the Lord.

The cocaine barons occupy managerial armchairs in the most respectable institutions. They stop access to entire towns so they can become racetracks for an evening’s entertainment, with bets being placed that are wads of hundreds of thousands of dollars. They build citadels such as the one in Bananeras. They rule extensive territories: Carlos Cabal Peniche, raised to the level of “model banker” by former Mexican President Carlos Salinas de Gortari and later reduced to being a fugitive from justice for money laundering and drug trafficking, got to control more than 10,000 hectares in the strategic corridor from Tabasco (Mexico) to Petén (Guatemala). The acquisition of Del Monte Fresh Produce allowed him territorial dominion and the movement of merchandise and storage capacity, an ideal fusion of infrastructure and alibis for the most profitable fruits in the world.

Costa Rica’s current President, Laura Chinchilla, acknowledged that Central America is no longer just a conduit for transporting cocaine, but a location for drug production, processing and use. The “Switzerland of Central American” has broken with its accustomed difference from the other, plebeian Central American countries and tilts its cervix to cocaine: Fernando Berrocal Soto, former public safety minister, reported that more than 50 tons of cocaine a year is now negotiated and trafficked in Costa Rica, producing so many millions of dollars that it has pushed down the exchange rate, “grossly distorting the economic variables, to the serious detriment of domestic producers and exporters.”

Honduras’ narco-municipalities

Honduras is the noble birthplace of Francisco Morazán and the somewhat less noble birthplace of Juan Ramón Matta Ballesteros. In March 2011 a sophisticated cocaine “kitchen” (drug lab) was discovered in the area of Cerro Negro, Omoa, Honduras. Other kitchens, cocaine-to-go shops and fast-cocaine stalls continue their underground life, generating jobs and infrastructure in villages and towns that rejoice in appreciation.

Drug towns are easily identifiable. In the lead is El Paraíso, the once-forgotten corner for cattle rustlers, now frequented by Miss Honduras and fashionable musical groups, the richest municipality in the extremely rural department of Copán. Its young mayor, Alexander Ardón, drives a shiny armored Lexus to inaugurate a cobbled street, surrounded by 20 burly bodyguards. All of his projects start with providential donations of hundreds of thousands of lempiras. “I’m king of the town,” he proclaims to the bewilderment of journalists, while assuring them that Copán’s fortunes come from cattle-raising and milk production: white liquid, not white powder, he insists, has brought development to the municipality.

That powder falls like manna from heaven and is turned into roads, churches, shopping centers, gigantic malls, hotels and parks in a Honduras where the migrants’ poverty-dollars and the cocaine dealers’ drug-dollars intermingle and are mutually reinforcing: remittances are spent on drugs, drug-dollars finance migration to “los Yunay” (the US). Menacing streets, mended streets... Eight decades of growing bananas in the most compliant of banana republics could not achieve a tenth of what cocaine is doing today.

The cocaine is high and plentiful and Morazán isn’t watching. The narco-jets come and go from the international airports with or without credentials, patiently watched by the authorities whose zeal in catching cocaine shipments leaves the DEA officials very unimpressed. There was a lot of talk about the jet that landed at Toncontín international airport on February 24, 2006, supposedly bringing “Chapo” Guzmán, a man Forbes lists as one of the 500 wealthiest in the world and experts say is protected by the mayor of El Paraíso; he’s a regular visitor to the Bay Islands and the Mayan ruins in Copán. While Luis Santos, bishop of Copán, courageously reported police chiefs colluding with drug traffickers, the judiciary freed “Mamalicha,” a drug boss who boasts of international protection.

Retail drug sales on the rise in Nicaragua

The link with Nicaragua exploded again in August 2004. Honduran police found an arsenal in drug boss Pedro García Montes’ mansion in El Zamorano that Al-Qaeda would envy: two M-16 rifles, 18 Fal light automatic rifles, four AK-47s with 18 magazines, 21 machine guns, 10 anti-aircraft rocket launchers, two 60-caliber anti-aircraft machineguns and one 50-caliber anti-aircraft machinegun capable of destroying aircraft and tanks. The artifacts came from Nicaragua and were destined for the Colombian FARC, in an exchange of weapons for cocaine.

A former Nicaraguan National Police drug director estimated that there are about 10,000 retail drug outlets in Nicaragua. In a talk with envío in December of last year, Roberto Orozco, Nicaraguan expert on security issues, said that “60-65% of the Nicaraguan population maintains its family economy with illegal activities and the majority of those in Nicaragua’s informal sector are involved in illegal economic activities.”

Drug dealing is one of the most important because it’s customary to pay local collaborators in kind and not in coin, thus increasing both regional sales and the consumption of cocaine and crack. Let’s evaluate the similar findings of two anthropologists who were admitted into the far reaches of Caribbean mangroves and the capital’s damaged asphalt.

In 2003, Philip A. Dennis published Cocaine in Miskitu Villages, a provocative article that explained how money generated from cocaine trafficking was used in Sandy Bay, a Northern Caribbean seaboard community of Miskitu people, to build houses, schools and churches and buy motor boats in a self-directed development project, albeit at a high cost in violence. In Globalization and Development Seen from Below (envío, March 2004), Dennis Rodgers explained that in a small Managua neighborhood the drug dealer’s work pyramid includes a drug trafficker, various pushers and stashers and 19 mules. The mules, located at the lowest stratum of the pyramid, were able to earn between $350 and $600 a month. Income generated from the drug sub-system was significant and its flow multiplied to feed other subsystems, usually through buying taxis and offering employment to neighbor-hood youths as drivers.

Drug dealing has brought life to depressed and drowsy neighborhoods. It has pulled families and whole communities out of stagnation. With populations of between 13% (El Salvador) and 32% (Nicaragua) living on less than two dollars a day, it isn’t surprising that drug dealing is becoming a very appealing activity in rural villages as much as in the cities. Bluefields is controlled by drug traffickers: schools, parks… and even the State. The regional prosecuting attorney had to be urgently and secretly removed because the local mafia didn’t like him coming and sticking his nose in their businesses.

When drugs come from the sea...

Moisés Arana, mayor of Bluefields in 2003, made some statements to envío in August 2003 that clarify the scope of drug dealing and its effects: “You must bear in mind that given the unemployment and poverty levels in Bluefields, drugs allow many people to survive, although naturally they also cause rapid social decomposition. When you attend a meeting and listen to what people say, explaining that the one reason they are eating is that they sell drugs, it becomes hard to pinpoint the borders between morality, immorality, amorality and double standards. How did we get to this point? Who can we go to, who can we complain to, to adequately address these realities?”

Arana found that the advent of drugs merged with local culture: “Some years ago, people of the Caribbean Coast, in both the north and the south, began to come upon the crated sacks of drugs Colombian traffickers threw into the sea from their boats [when they were being followed by Interpol]. Upon reaching the shore, these packages were very well received, especially by the Miskitu, who believe that “all that comes from the sea, all that comes from the rivers, all that comes from water, is a gift from God.” And as God’s gift, drugs were welcomed. They still are. There are Coast communities where the minister, the judge and the elders receive the drugs that come to them from the waters, divvy them up and then sell them. Overnight, the poorest of shacks become beautiful residences. And everyone knows what’s happened.”

A new drug vocabulary is spreading by word of mouth in the communities on Nicaragua’s Caribbean Coast. Playeros: beachcombers who go out, night after night, hoping to find a sack of drugs. Costear: the activity of walking the beach at night, ceaselessly searching for the white treasure that will one day smile at them from a sand bank. White lobster: a package of cocaine that a favorable high tide or perhaps a calm sea deposits on the beach. The person favored by the benevolence of the gods will sell the package for US$4,000 to a small Costa Rican cartel specializing in supplying tourists. With this small fortune he could open a little bar, one of the many in small coast towns without drinking water that can offer their customers bottles of Chivas Regal, Malibu, Cointreau, Napoleon brandy…

Small cartels, kitchens and cooks

Cocaine travels from the coast to Managua. The first drug boss who prospered in the barrio studied by gang expert Dennis Rodgers moved the drugs through family connections on the Caribbean Coast. Drug outlets flourish in the Reparto Schick neighborhood, as in many other poor Managua barrios. Everyone knows where they are, from the local police patrols to the wannabe-cool boys from the rich neighborhoods of Las Colinas and Santo Domingo who are among their most addicted clientele. Police “raids” are almost exclusively a service that police of various ranks offer the drug boss-associate to take their rivals out of circulation. Once a “little cartel”—as people usually call them—has been broken, others immediately crop up. It’s very easy and very profitable to “cook” a little cocaine and produce crack: a piece of crack, skillfully cut, can generate C$500 (US$22) in an afternoon and there are more than enough mules to place it.

Nicaragua, the only country in Central America and one of the few in the Americas, without a financial intelligence unit, has also been identified as a producer and distributor of methamphetamine. No one does a thorough search. The starched rules of the Superintendence of Banks are expected to do it, but they strain out mosquitoes and let camels pass through. Money launderers have paved the way, as have the crack cooks; chefs cook up crack in their “kitchens” day and night and send it out with their scullions, under the very noses of the hunters of little cartels.

The power of narco-philanthropy

This hardly comprehensive inventory of quantities and areas at least makes it possible to infer the growing economic and social legitimacy of the drug world, confronted by the cynicism of the DEA, an unpopular institution that is now demanding an urgent check to the trafficking it tolerated in the 1980s through hot feelings for the cold war. The legitimacy grows because drugs are actually creating the employment (stable, but risky) that politicians promise over loudspeakers then forget about once the switch is turned off.

Cocaine drops like morning dew on the Central American economies and its ability to permeate territories and localities is still expanding. If you see a mansion on the beach against a backdrop of coconut trees, you aren’t in Malibu: Welcome to Pearl Lagoon. If you stand openmouthed before a municipal building looking like something midway between the Parthenon and the Capitol, with a heliport and digital cameras and built at a cost of 12 million lempiras, you’re in El Paraíso, municipality of Copán, Honduras, which, despite its scant 18,000 inhabitants, laughs at the depart-mental capital’s humble municipal building in Santa Rosa de Copán, which administers to more than 52,000 souls along with their respective mortal bodies.

Narco­philanthropy is picking up where the welfare State was forced to leave off, remedying the decrepitude of public works ministries and municipal governments. Cocaine is paving highways where there were previously only narrow paths, giving medicines to those who can’t pay for them, offering transport to remote towns and complying with all the Catholic works of mercy. When a Nicaraguan anthropologist was researching his thesis on the Garífunas of Nicaragua’s Caribbean Coast in 1992, his journey between Bluefields and the Garífuna village of Orinoco took 4 hours. Today this journey takes only a little more than an hour because a local drug boss has put a boat with two 250-horsepower outboard motors at the service of both the drug trade and local people.

Narco-investments,
narco-salaries, narco-schools...

Narco-philanthropy has been the cornerstone of the narco-industry’s expansion. The banana companies could turn a blind eye to the peoples they cannibalized. Once their business was concluded, they declared a region hopeless, packed up their tents and went elsewhere with their music and their personal belongings. They even took their railroad tracks. This they did several times in Trujillo and on Honduras’ small islands. A few forgotten railroad sleepers between Sonaguera and Trujillo attest to the passage of the Trujillo Railroad Company.

The Pellas family in Nicaragua can ignore its former workers, suffering kidney failure due to the pesticides used on the plantations, who have been living next to Managua’s Cathedral in improvised black plastic tents protesting for years. According to the Nicaraguan Association of People Affected by Chronic Kidney Disease from 2005 to the present time, 3,437 people have died and 8,037 are on record as affected. Drug traffickers, in contrast, can’t ignore the towns situated along their routes. Business depends on them.

The success of the mafia and other secret societies depends on the deterioration of state authorities, police corruption and communal loyalty founded on the cultivating of local identity. Drug traffickers are forced to invest in the areas under their control in order to increase their social capital. Only by winning local sympathies can they ensure their control, permanence and security in a territory. This strategy raises their “glocal” (global and local) situation to its maximum expression: to ensure the transnational nature of their business, they must cultivate local insertion, be very strongly grounded.

Emplacements on the Caribbean Coast and good relations with local seafarers, who know how to move in calm or stormy waters, are vital for business. Relationships with fishermen from San Andrés and the Central American Caribbean Coast have opened the way for shipments. When local people are indispensable for moving merchandise, entrepreneurial strategies must be applied to the hilt. Hence the phenomena such as El Paraíso and the either obvious or surreptitious investments in coast towns and grassroots neighborhoods.

As an example, Roberto Orozco recounts that the entire community of Walpasiksa, in Nicaragua’s Caribbean are, supports Colombian drug traffickers. A drug trafficker’s notebook was found containing lists of people in the community who receive a monthly allowance for offering logistical support and ensuring security: C$3-5,000 (US $133-$222) each. The list includes the Moravian Church pastor.

Another example: in one sector of Managua’s Reparto Schick complex of neighborhoods, the local drug baron employed local boys and bought them cases of beer, never drugs. “Indio Viejo,” a neighborhood drug dealer studied by British anthropologist Dennis Rodgers, used to give his workers vacations in Montelimar, Barceló’s luxurious resort on the Nicaraguan Pacific Coast. The Black Disciples drug gang from Chicago recorded in their books such essential expenses as parties and community activities thrown by the gang. Emulating the practices of Pablo Escobar in the municipality of Envigado, Guatemalan drug traffickers improved the roads and built schools, health centers, sports complexes and elegant clubs.

They admire them,
thank them, love them…

Narco-philanthropy can be traced back to the origins of the cocaine boom. Bowden details how Pablo Escobar began to spend millions in improving the city’s infrastructure, far more concerned about the poor in the overcrowded slums than the government had ever been. He donated money and pressured his associates to fork over millions to pave the roads and erect new power lines, in addition to making soccer fields throughout the region. He set up skating rinks, handed out money on his public appearances and later began an urban housing project for the homeless called Barrio Pablo Escobar: a place where those who until then had inhabited shacks alongside the city’s garbage dumps could live. He even sponsored art exhibitions to raise money for charity and founded Medellín Sin Tugurios (Medellín without Slums) an organization whose goal was to build urban housing for the poor. Manuel Castells, the Spanish sociologist, recalls that “Escobar even tried to defend the human rights of his youth gangs against the flagrant abuses of the National Police.”

Manuel Ángel Félix Gallardo, founder of the Guadalajara cartel, donated money to various universities, contributed most of the funds needed to build the biggest library in the State of Sinaloa and maintained the Culiacán hospital and a pharmacy where medicines were free. This love of the drug bosses for their homelands is confirmed by Andrés López in El Cartel de los sapos, where he tells of the drug lord Urdinola’s funeral in his hometown, in which the fire engine led with the coffin followed by a crowd of three thousand fervent admirers: “The whole town attended the funeral, considering Urdinola a veritable legend; they admired him and they thanked him for bringing them electricity, water, drains, paved roads and, single-handedly, development.”

Global companies with local identities

Visiting a region controlled by drug traffickers, the Mexican journalist Osorno drew his own conclusions: “This was not the first time I was in Badiraguato. I have been here several times before and it’s clear to me that many people here love the drug traffickers more than the army. Everyone knows this. And they also know why: the drug traffickers have alleviated the grinding poverty and official neglect. Mr. Guzmán, as they call Chapo, in addition to having been born here in La Tuna, is today the visible face of the Sinaloa cartel, ‘the company’ to which thousands of Badiraguato peasants sell their marihuana and opium poppy crops.”

According to Osorno, narco-philanthropy follows a purely self-interested logic: “If a trafficker wants to have a long career, he must appear to be philanthropic, at least with the people in his community, because otherwise, instead of being the man, he could be classed as a common murderer or smuggler.” But Castells found that the drug traffickers’ social and infrastructural investments in their native regions and towns are symptomatic of the roots they share with others: “Drug traffickers’ attachment to their native country and regions is more than a strategic calculation. They were/are deeply rooted in their regional cultures, traditions and societies. Not only have they shared their wealth with their cities and invested a considerable part (but not most) of their fortunes in their country, but they have also restored local cultures, rebuilt rural life and vigorously reaffirmed their religious convictions and faith in local saints and miracles…”

However transnational their operations, agents and strategies have become, the drug traffickers retain their ethnic, cultural and territorial bases: “This is their strength. Criminal networks are probably ahead of multinational companies in their decisive ability to combine cultural identity and global business.”

Drug related social entropy and violence:
From scamp to hit-man

Narco-philanthropy has provoked understandable suspicion. Gabriel García Márquez laments its effects: “Years ago drug traffickers were in style for having an incredible aura. They enjoyed complete impunity, and even a certain popular prestige through their charity work in the poor neighborhoods where they spent their marginalized childhoods. If anyone wanted to arrest them they could send the cop on the beat to go look for them. But much of Colombian society viewed them with curiosity and an interest that seemed too much like complacency.” This acceptance is now happening in Central America, where drug bosses walk side by side with politicians and hold sway in elite clubs.

Narco-philanthropy strengthens what some call the “social legitimization of drug trafficking activities.” And it comes in the same package as social entropy. Castells warns: “Due to its volatility and willingness to accept high risks, criminal capital follows and increases the speculative turbulence of the financial markets. Thus it has become an important destabilizing force for financial markets and international capital.” We repeat: in Costa Rica today, there are analysts who maintain that drug activities have injected so many dollars into the Costa Rican economy that the value of the colón against the US dollar is artificially buttressed, incontestably prejudicing exporters.

Violence is the greatest perceived effect of drug-related social entropy. Picaresque is passé. It’s time for sicaresque (derived from sicaro, the Spanish word for hired assassin). Colombian professor Omar Rincón tells us that sicaresca is a new genre of story dwelling on a fascination for hired guns, truculence and a passion for excess... essayist Guadi Calvo explains that sicaresca is the method of young people to hire themselves out as killers to acquire clothes, a house for their mother, a fridge, televisions, to set their mother up well.” Violence has been analyzed a lot, but poorly and inadequately. It’s commonplace to emphasize the violent nature of drug traffickers. They are presented as inhuman monsters, which gets us nowhere.

Bowden tries to dig a little deeper, analyzing their criminal behavior, however selfish or absurd, as sending a social message. Their acts of violence and the crimes they committed were attacks on a removed and oppressive power. The stealth and cunning the men he studied showed in eluding the army and the police were causes to rejoice because, from time immemorial, the have been the only tactics available to the dispossessed.

This is the reason for the success of Camorra and the Cosa Nostra: the indifference and immemorial neglect of the Italian state. It’s the reason for the unprecedented success of Pietro Mascagni’s opera Cavalleria rusticana, based on a short story by Giovanni Verga. Michael Corleone’s son stars in it in the penultimate scene of the film Godfather III, set in Palermo’s sumptuous Teatro Massimo Opera House, playing out a story of jealousy, honor and revenge between Sicilian peasants, who came to constitute the mythifying of the mafioso ethos.

According to mafia historian John Dickie, honor in this context translates into a sense of professional worth, a system of values and the symbol of group identity for an organization that considers itself above good and evil. This opera portrays the independence of the villagers’ system of justice from the state system, imposed from mainland Italy.

There are drug worlds where there is no State

The mafia and the drug lords don’t establish another culture; they build on the informal justice mechanisms legitimized by custom. Bowden explains that it has always been one of the prerogatives of the rich and powerful in rural Colombia to administer their own justice, which represented the basis for the long and bloody tradition of “self defense” or private armies. Throughout history and geography, from Sicily to the Valle del Cauca o Tocoa, the tradition of “leapfrogging” the State is a legacy of territories where the public sector has had a skeletal presence. The drug world and its institutions expand where the State is absent, penetrated or mistrusted; where the State has failed.

Today, neoliberal privatization places its own stamp on this tradition: the drug traffickers’ armies are a terrifying and extreme version of the privatized personal that goes hand in hand with state contracting. In building on the existing culture, drug traffickers take it to the extreme: reductio ad absurdum. The record of local relationships with the State explains the estrangement that can be permuted into a desire to instrumentalize.

Narco-corruption and the
narco-State that supports it

Some of the characters left over from Central America’s narco-cold war have recycled themselves in the most unlikely ways. They have managed to slip through the cracks in the legal system and come in through the main door of the State, which sooner or later leads to perdition.

Blandón resurfaced in the mid-nineties as a DEA agent with an annual salary of US$42,000. He boasts of being the only immigrant granted permanent US residence to have had serious crimes proved against him. Tomás Borge published massive praise for Carlos Salinas de Gortari in Siglo XXI shortly before the Mexican leader’s drug services came to light and he had to take refuge in Ireland. Wikipedia describes the drug General Policarpo Paz García as the man who closed Honduran doors to military domination. Edén Pastora ran for President of Nicaragua in 1996 and for mayor of Managua in 2004. Three years later, his sworn enemies (an FSLN reinstated in three of the four branches of the State plus the coercive powers) put him in charge of dredging the San Juan River which divides Nicaragua from Costa Rica and is a vital drug trafficking route.

In the Central American countries, the narco-industry exploits state decrepitude in two ways: by colonizing territories that are terra ignota for the State, and by manipulating politicians, exploiting that discovery of the US banana company magnate and former president of United Fruit Company, Samuel Zemurray: “In Honduras a mule costs more than a congressman.”

Let’s start right there, with the country’s step-parents. Legislators and other statesmen are usually only involved in auxiliary work, contributing their political capital from the less risky shadows. But some aren’t satisfied with this dull, quiet work.

In the cases of Honduran representatives César Díaz and Armando Ávila Panchamé, they were very glossy and loud. Proven and seasoned drug traffickers, both were caught with their hands in the cocaine jar and convicted: the first by a public court and the second by the long arm of drug justice, shot inside the prison where he was serving a 20-year sentence of gentle state justice.

Drug corruption permeated all levels, from legislators on up to the police on down. On July 10, 2009, ten police officers were arrested on Honduras’ Caribbean Coast transporting 142 kilos of cocaine. Ten policemen aren’t worth tearing out your hair and bathing in ashes over. The case was remarkable only because the detainees belonged to the Anti-drug Operation Group of the new National Criminal Investigation Directorate. Even more notorious was the case of the Santa Barbara police chief who, on August 27, 2008, released the alleged head of the Atlantic cartel and ordered that the weapons his subordinates had seized from the drug boss’ bodyguards be returned.

Narco-judges and narco-police

In its 2010 International Narcotics Control Strategy Report, the US State Department earmarked Nicaragua’s Supreme Court as one of the most worrying impediments to implementation of anti-drug operations: money and other assets confiscated from drug traffickers have been disposed of at the court’s discretion, contravening legislation that stipulates that they should be equally distributed amongst the National Police, Ministry of Health, National Council for the Fight Against Drugs, the penitentiary system and various NGOs involved with rehabilitating drug addicts. State Department inquiries discovered that these assets are frequently unaccounted for after being processed and justices have kept expensive vehicles for themselves.

The 2007 report noted that judges released captured drug traffickers and reinstated them with the hundreds of thousands of dollars they carried in cash, minus an inevitable commission. The US government penalized these acts by cutting off all direct support to the Supreme Court and instead giving resources for the struggle against corruption to the National Police. This alternative must have been abandoned if a Wikileaks-published cable from the US ambassador in Managua, Robert Callahan, to Washington is true. Referring to Sandinista repression of a demonstration against the 2008 electoral fraud, in which the police didn’t even attempt to interfere, Callahan warns against expecting National Police Chief Aminta Granera to have the power, influence or even desire to change the course of these events, both within and outside the National Police.

Wikileaks also published a cable in which Ambassador Callahan reported that the FSLN has regularly received money from international drug trafficking to fund its electoral campaigns. It is usually as a reward for Sandinista judges’ clemency towards drug traffickers caught by the police.

And in Nicaragua we can’t leave unmentioned the unjustly forgotten case of then-President Arnoldo Alemán’s “narco-jet,” stolen and brought into Nicaragua without the requisite legal procedures. Alemán, then-Director of Customs Services Marco Aurelio Sánchez and then-Minister of Transport and Infrastructure Edgard Quintana, all had a hand in bringing this jet, in which traces of cocaine were later found, into Nicaragua.

In 2009, the usually pristine Costa Rica reported the dismissal of 40 police officers for involvement in drug trafficking. In the same year in Guatemala, the National Police director and other senior police officers were arrested for collaborating in drug trafficking. Both countries have been identified as bases for laundering dollars. Despite the belated and weak controls with which their legal systems hope to curb this activity, six offshore banks were operating in Costa Rica until 2008 and there was no supervision of offshore banks with branches in Guatemala until June 2002.

Narco-military in a narco-State

According to Spanish prosecutor, Carlos Castresana, who headed up the International Commission against Impunity in Guatemala (CICIG) between 2007 and 2010, 60% of Guatemala is controlled by drug traffickers, mainly Mexican, who recruit Mara Salvatrucha gang members and corrupt the country’s security forces and judiciary.

Although on a visit to Guatemala President Bill Clinton apologized for his government’s past complicity with the military apparatus that committed war crimes, his own administration turned a blind eye to that same apparatus’ involvement in drug trafficking. Clinton also emphasized the Colombian guerrillas’ role in the heyday of cocaine trafficking while choosing to ignore the military’s role.

Since 1990, DEA agents have been calling Guatemala “the warehouse.” One of the most active warehousemen was Lieutenant Colonel Carlos Ochoa Ruiz, outstanding alumnus of the School of the Americas in 1969. According to the DEA and to Texas Observer journalist Frank Smyth in The Untouchable Narco-State, Ochoa moved half a metric ton of cocaine from western Guatemala to Tampa, Florida, in 1990. He should have been extradited to the United States but a Guatemalan military court claimed jurisdiction over his case and he was acquitted for lack of evidence, after the judge who initially took the case was murdered and the verdict overturned. In 1997, when Ochoa’s star was falling, he was arrested again and sentenced to 14 years in prison for carrying 30 kilos of cocaine.

Other high-ranking officers in the Guatemalan army have been even more active, and reported, but to no avail. A group of peasants sent the US embassy a letter describing how they were expelled from their farms by army colonels who were building a drug route, but none of the officers was prosecuted. According to various sources, General Carlos Pozuelos Villavicencio, who retired from his command in the Air Force in 1993 but remained active in drug trafficking, takes pride in having a record as clean as a whistle.

It was on stories like these that Castells based his conclusions: “The classical paradigms of dependency and development have to be reworked to include, as a basic factor, the characteristics of the drug trafficking industry and its deep penetration into state institutions and social organizations…. In the absence of a decisive affirmation of state power, drug trafficking networks control as many people and organizations around them as they need.”

Why does it happen?

Castells asks why Colombia became such a propitious base for cocaine production and trade. The reasons are the same as for Central America: the existence of a marginalized entrepreneurial class, of upward social mobility at the point of a bayonet, of a tradition of violence, of a weak State that has low geographic coverage, of internal wars that have debilitated us and of vast areas that armed groups—legal or illegal—have controlled for the last 50 years.

Central America still is suffering the after effects of failed demilitarization processes which, as the German sociologist Peter Waldmann has shown, feed a culture of violence, interacting with its effects and escalating its resonance. Waldmann explains that Colombia’s culture of violence—and much the same can be said of Central America—is the result of both historical and contemporary factors: a State that fails to monopolize violence, laws that lack social validation and aren’t applied, drug-world rules that include economic incentives for excessive use of violence and class tensions in countries where the urban middle class is weakly developed.

Something similar in Sicily was a siren song to the Cosa Nostra. In the rubble of feudalism, as modernity was making its debut, a whole range of different kinds of men grasped the opportunity to shoot and stab their way into the developing economy. The incipient modern State tried to hold the monopoly on violence and promised to wage war on criminals, but the private militias of Sicily’s mighty lords didn’t disappear; they became economically stronger through smuggling and extortion, new challenges to state control. As entrepreneurs of violence, the mafia bosses challenged a State that the Sicilian population felt was detached, distant and imposed from Rome.

All these ingredients produced a breeding ground for drug trade and consumption. The State is both losing and renouncing an essential element of its sovereignty and legitimacy: its ability to impose law and order. As Castells noted, “The State is not only eluded from without by organized crime, it’s disintegrating from within. In addition to criminals’ ability to bribe or intimidate police, judges and government officials, there is a more insidious and devastating insertion: the corruption of democratic politics. The growing needs of political candidates and parties create golden opportunities for organized crime to offer its support at critical moments in political campaigns.”

Wrong answer: More militarization

Replacing the welfare state with narco-philanthropy, setting up drug routes and crops where the State is an entelechy and buying and extorting officials leads to what Susan George argues in the Lugano Report: “Some future wars will take place between traditional states and these new barbarians; the warlords, drug lords and organized gangs of all kinds who are henceforward in competition with the nation state. In some cases, although traditional authorities refuse to recognize the fact, they have already replaced the state, or have so permeated it that the two are virtually indis-tinguishable. (‘More and more governments are being overwhelmed by, run by or supplanted by an astonishing variety of criminal organizations and innovative structures for controlling wealth through violence and coercion.’)”

The response to these trends has been repression. The little State that exists becomes a militarized State. The US government is increasing its interventions: courting the region’s doubly prostitutable forces of order with bouquets of dollars and infiltrating the police and army to continue interdiction operations. It is taking the repressive model to the drugs’ backyard, rather than working on its own vast market of addicts and exploring alternatives that could include legalizing some drugs.

The symptoms of remilitarization are noticeable in the entire region: a state of siege in Alta Verapaz and Petén, harassment of travelers on the Nicaraguan/Costa Rican San Juan River, stigmatization of the Caribbean Coast through-out the isthmus, and backpedaling on the Border Control Agreement signed in June 2006 establishing free and unrestricted movement across the borders of the CA-4 countries (El Salvador, Guatemala Honduras and Nicaragua) for their citizens and a single permit covering all four countries for foreigners; travelers now have to submit to exhaustive searches and face intimidating and obtuse cops, etc.

The US government is encouraging and supporting such militaristic options, with the Mexican-Guatemalan border one of its primary objectives. On one side of the border, the Mexican Federal Army deployed soldiers to the Chiapas border with Guatemala in April of this year, creating two new military bases, each with 600 elements, and has stationed 14,000 troops there. On the other side, President Álvaro Colom aims to add 10,000 soldiers and 15,000 more police to the existing security forces in order to recover areas over which the Guatemalan government has no control.

Narco-territories and narco-wars

Mexico’s cartels are opening rearguard zones in Guatemala to rattle sabers at the blows from their country’s army in this context of all-out war on drug trafficking. Any attempt to combat this beachhead and the drug traffickers’ other outposts with purely repressive methods could lead to a violation of public freedoms that are timidly beginning to emerge after many decades of repression.

President Colom’s declaration of a state of siege in the Department of Alta Verapaz in December 2010 is a sign of this return to a military past and reinforces the dual nature of the Guatemalan government. According to the United Nations Development Programme’s 2010 Human Develop-
ment Report, it is strong at repressing dissidence and imposing order and weak at investing in development. Guatemala is the type of State where mafia groups thrive like fish in water, feeding on the grassroots opposition—silent or vocal—to a distant and punitive government.

The repressive model’s greatest achievement has been removing the heads from some cartels. But the fall of the great drug lords accentuates the violent character of the narco-industry for two basic reasons. On the one hand, it’s well known that the next generation is predominately composed of hired guns, a much bloodier breed than those being arrested. Accustomed to doing the dirty work, “they talk through the mouth of machine guns and their glittering language is that of bayonets.” They know no other way to prevail. On the other hand, the narco-industry is very territorial: once a major drug lord is dead or captured, the surviving lesser ones split apart and compete for positions, with weapons drawn. Guatemala and Honduras are beginning to feel the fight for control of territory and politicians. Their villages and jungles have become refuges for notorious Mexican drug traffickers fleeing the harassment (sometimes more from the media than the police) they are subjected to in their home country through the war on drugs Felipe Calderón declared to legitimize his fraudulent ascension to the presidency.

But once in their monastic retreats in Honduras or Guatemala, the drug lords are often the object of vendettas from competitors who can grease the palms of the hired killers and multifaceted narco-politicians’ cartel more and better. In other countries, the governing party exercises an ironclad monopoly of drug agreements and ensures relative peace for the tough business of drugs. Low levels of violence do not mean low levels of drug trafficking.

A profitable Latin American enterprise

The repressive model operates by ignoring vital economic and sociological data: drug trafficking thrives in the absence of government or its unpropitious presence. Drug trafficking may be an illegal enterprise, but it is an enterprise nonetheless and should be dealt with as such.

Manuel Castells made a keen observation experts on drug trafficking would do well to heed: “Unlike traditional models of internationalized production and trade in Latin America, this is an export-oriented industry, controlled by Latin America, with proven global competitiveness.” Andrés López Lopéz, the repentant drug trafficker brought into the public eye by major revelations, offers a portrait of the drug industry’s efficiency that shatters our traditional image of Latin American lack of coordination and negligence. “In the drug world you can’t afford to suspend work, or postpone it for any length of time; meeting cocaine orders has to be exact, since transport is coordinated in different places, including abroad, and it’s very hard to reorganize an operation that has suffered setbacks. Workers in cocaine processing laboratories do continuous 18 to 20 hour shifts with only two or three to rest then back to work.”

These changes and certain effects of the drug trade on the economy justify Castells’ question: “If drug trafficking has inverted the dependency model, is it developmental?” Opposing viewpoints range from total denial to pointing to the growth in foreign exchange and new investments from drug trafficking, to those who, like Castells, assess the impact according to the kind of development, the part of the industry and its geographic location. Let’s remember the changes in Peru and its astonishing capital investment between 1992 and 1996 and the 12% GDP growth in Bogotá in 1995. In Central America, a large part of what is recorded in the books as remittances is laundered dollars.

In the 1990s, Diego Montoya, one of the big drug lords of the Norte del Valle cartel, paid his cocaine manufacturers a dollar for each kilo of cocaine produced. Given that one of his “kitchens” could produce 1,200 kilos of cocaine a day, its workforce earned $1,200 a day.

Cocaine is a product very sensitive to geographic location, with the price of a kilo increasing exponentially as it moves north. Castells notes: “In 1991 the cost of producing a kilo of cocaine in Colombia (including the cost of producing coca paste coming from other countries) was estimated at $750. Its export price from Colombia was around $2,000. The wholesale price for that same kilo in Miami was $15,000; sold in grams on US city streets, once properly ‘cut’ with other ingredients, its value could exceed $135,000.”

Cut from the same cloth as
corsairs, pirates and conquerors

Faced with these figures, the efficiency, the impact on national and local economies, the use of high technology and the detailed division of labor, who can doubt that this is an economic industry on a massive scale that should be considered as such? We could say the same of drug traffickers that Marx said of the finance aristocracy: “nothing but the rebirth of the lupenproletariat on the heights of bourgeois society.”

Drug traffickers are an extremely impudent part of the lumpenbourgeoisie who, in the opinion of André Gunder Frank, produce lumpen-development. Drug traffickers could well endorse Hernán Cortés’ refrain: “We, Spaniards, suffer from a disease of the heart for which gold is the only remedy.” In his 1913 classic The Bourgeois, German economist and sociologist Werner Sombart classified the different types of bourgeois entrepreneurs starting with corsairs: “They are high-class conquerors, energetic adventurers accustomed to victory; brutal; greedy; a breed that has been disappearing for some time. These brilliant and ruthless pirates, especially numerous in England during the 16th century, are cut from the same cloth as the Italian mafia bosses, just that their spirit is more decidedly focused on the conquest of goods and money, i.e. they are closer to capitalist enterprise than these.” Pablo Escobar, Miguel Ángel Gallardo and Marcola are of the same lineage as the pirates Morgan and Drake, or of the Kennedys, who made their fortune by violating Prohibition in the 1930s.

“We’re stars, you’re clowns”

Marcos Camacho, better known by his alias “Marcola,” kingpin in the First Command of the Capital (PCC) which deals drugs in Sao Paulo, exposes the economic nature and incredibly overpowering force of the narco-industry: “Now, we have it. Do you think someone who has 40 million dollars like Beira Mar doesn’t rule? With 40 million dollars prison is a hotel, a desk… Which police is going to burn down this gold mine, you know? We’re a wealthy modern business. If a functionary vacillates, hesitates, he’s fired and ‘zapped.” You’re a broken, bankrupt State, dominated by incompe-tents. Our management methods are flexible and well-coordinated. You’re slow, bureaucratic. We’re fighting on our own turf. You, on foreign land, at home. We don’t fear death. You die of fear. We’re well armed. You use a 38-caliber. We’re on the attack. You, on the defense. You’re all for humanism. We’re cruel, ruthless. You’ve turned us into superstars of crime. You’re clowns to us. We’re helped by the people in the slums, whether out of fear or love. You’re hated. You are regional, provincial. Our weapons and products come from outside, we’re “global.” We don’t forget you; you’re our ‘clients.’ You forget about us once the shock of the violence we provoke passes.”

Capitalism has “laundered” all this

Capitalism has traditionally used brilliant, ruthless personalities like Marcola and Escobar to open the way for itself. Let’s recall how the ruling elite in Colombia paved the way for its participation in the bonanza without infringing the law. The banking system adapted, opening “side windows” for the unlimited conversion of drug dollars into immaculate Colombian pesos. The government favored the establishment of hedge funds paying sky-high interest rates. Bowden concludes: “The whole nation was ready to join Pablo Escobar’s party.” The Manchu dynasty, which criminalized opium use with the death penalty, had functionaries involved in producing it, profiting from it and hallucinating from it.

New classes and new countries emerge from these incarnations of the entrepreneurial spirit. Their terrain is one of the fields of primitive accumulation that Rosa Luxemburg omitted: trading in illegal products, which goes beyond illicit markets (smuggling, parallel markets.) The economy from illegal Havana cigars generated significant profits for Cuba, even though its history is littered with prohibitions, absurd regulations (for example, ordinary people couldn’t smoke in the street), governmental corruption and landowners’ abuses of field hands, as Fernando Ortiz describes in his unsurpassed Cuban Counterpoint: Tobacco and Sugar.

The Opium Wars were largely instigated by the fears of established capital. The war on drugs in Latin America is a war against the advancement of the nouveau riche, potentates without pedigree. Just as with the Manchu Dynasty in 18th- and early 19th-century China, drug trafficking is a headache for the Empire for economic reasons: millions upon millions of dollars flowing from the US to Latin America, escaping the transnational markets, not being spent on Calvin Klein pants (stitched in Nicaragua for a pittance), bananas (grown in Guatemalan in unhealthy areas) or T-shirts (sewn by women in the maquilas of Ciudad Juárez who later show up butchered). They are being spent on very costly cocaine, which generates massive profits for those at the top of the economic pyramid, and not inconsiderable income for those at the bottom.

From dessert economies
to profitable vice economies

The narco-industry gives the lie to the thesis of those declaring the precariousness of the “dessert economies,” so named from Central America’s traditional exports such as bananas, sugar, spices, coffee… The vice economies have proven very profitable. The drug economy has put the ten commandments of development, both liberal and leftist, into check. It ignores the economic textbooks’ most elementary laws.

Let’s see how some of its axioms have been turned upside down. For starters, the law of supply and demand, in which prices are supposed to decrease if supply increases and conversely a substantial price rise reduces demand. The cocaine supply has never exceeded demand. Addiction guarantees that the more you consume, the more you need: growth in supply increases demand. And prohibition guarantees rising prices. As with conspicuous consumption goods, the price can go up without reducing demand. Prohibition also increases demand. All bans expand the market: In 1729, when the first Manchu emperor ordered smugglers and owners of opium dens to be strangled, illegal imports—mostly by the Portuguese—rose to about one and a half tons. In 1820, when the death penalty was applied to both traffickers and users, smuggling increased to about 750 tons and two decades later surpassed 2,000 tons.

Should this industry reduce costs through import substitution? Its essential industrial assets—weapons, boats, light aircraft, radar, GPS call locators, even submarines—can’t be substituted but they never create an insurmountable debt: the balance is positive at the beginning, the middle and the end. Because cocaine isn’t a basic commodity, could its consumption plummet in times of crisis? Drugs are needed even more for overcoming the effects of the crisis. Top executives seek relief with drugs to cope with personal and national crises.

Surplus value, competition, costs, benefits…
economic laws turned upside down

Do drug capitalists live off surplus value? No, they live off the enormous profit margins that prohibition guarantees. DEA agents raise the production and marketing costs, but the increase is passed along to consumers, along with workers’ bonuses for the risks involved. The cocaine trade is the only economic activity where the elite—invariably fellow countrymen—are forced to share a high percentage of the profits with their “junior partners” and the commoners who run the small branches, franchises free of all controls except for protecting themselves against police and security measures.

Is competition good and does it guarantee better quality and lower prices? No. Monopoly is preferable to free and homicidal competition. Competition means war between cartels, a situation that endangers business and raises prices. And do profits then drop? The DEA’s non-tariff barriers raise costs and make products more expensive, but profits thus soar even higher. Costs and profits go hand in hand to a higher circle of hell. Should dependence on the US markets be avoided? Nonsense. Dependence on the US market is enormously beneficial. In fact, the narco-industry’s progress is conditional on it. Gringos not only provide the biggest consumer market but also finance the DEA operations that increase profits.

The spirit of capitalism became man
and is embodied in the drug traffickers

Drug trafficking is an independent development concept that doesn’t bow to the dictates of what is written in the economic textbooks and to those of imperialism about what is permitted and what forbidden. Drug wholesaling affects politics and drug retailing and drug philanthropy defines micro-politics. In the end, both the retailing and the wholesaling activities attract and affect many people, whether drug traffickers, mules, cooks or money launderers.

Should we observe and analyze drug traffickers as an anomaly, a tumor that must be removed because of its homicidal strategies? Throughout history, the State has used homicidal strategies to consolidate its power and, except for anarchists, nobody considers it a social tumor we must remove. We need to look at the roots of the drug industry’s success: the emaciated or failed states. It is precisely where the arm of the law doesn’t reach that the arm of narco-justice guarantees order and gets the social validation that drug traffickers tenaciously pursue and German sociologist and philosopher Habermas considers genuine legitimacy.

The other reticular aspect is the spirit of capitalism in its current expression. In his non-fiction book, News of a kidnapping, Gabriel García Márquez detects some signs: “A drug more harmful than the badly named heroic ones was introduced into national culture: easy money. The idea flourished that the law is the greatest obstacle to happiness; that learning to read and write is of no use; that you can live better and safer as a criminal than as a good person.” Are we to believe that mules, bosses, launderers and cooks are the only ones addicted to this drug? No way. Drug traffickers are merely the most enterprising, competitive and socially responsible of all the entrepreneurs Mammon has given birth to and suckled.
They are more enterprising in that they get to where no one wanted to go, using unusual means, clearing away scruples and mountains, decapitating obstacles and rivals, manipu-
lating chemical substances and laws, innovating formulas and routes. They are more competitive in that they practice capitalism’s savage competition, taking it to a quite literal extreme. They practice neoliberal flexibility, oiling the judicial machinery through extortion and bribery until it becomes loose-jointed: in the drug world legal flexibility is more important than labor flexibility. And what is narco-philanthropy if not the most generous, consistent and even tear-jerking demonstration of that lite commitment called social responsibility asked of the rich today, and who are rewarded for complying with it by a reduction in their tax burden?

Narco-culture is the spirit of capitalism taken to its extreme and the narco-industry is an aspect of the highest stage of capitalism. It isn’t a thorn in the heart of the system. It’s its most polished and machined expression. The most lauded attributes from the elite universities and business schools down to what are known as garage universities are adopted and adapted by the drug industry. Is being a micro- or macro-entrepreneur the greatest? It’s fab, and drug bosses, pushers, mules, etc. are micro-entrepreneurs with an enviable enterprising spirit. They are a caricature of capitalism, its values and its icons. In the wreckage of the end of wage labor the drug industry’s lifebelts save those blessed with an enterprising spirit.


José Luis Rocha is a researcher for the Jesuit Service for Central American Migrants (SJM) and a member of the envío editorial board. This series on the Four Horsemen of Neoliberalism, which began in envío’s June issue will continue with the second horseman: NGOs

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