1 December 2015

When the economy and the shadow economy are one


As a law abiding citizen living in Britain the illegal drug trade, and the state’s ongoing war upon it, rarely enters my sphere of consciousness. I reported on the odd drug bust as a trainee reporter and once saw armed police snooping around an estate in South London. But the biggest impact illegal drugs have had on my life thus far has been through watching The Wire. However in some countries the illicit narcotics industry reaches almost every aspect of public life and leaves almost no one untouched.

As something that either runs invisibly parallel to our normal lives or is so distant that it feels abstract, it’s worth considering its true scale. The UN Office on Drugs and Crime puts the value of the illicit drug trade at between 0.6 per cent and 0.9 per cent of global GDP. That translates to between $449 billion and $674 billion a year. The UNODC, who spend their days tracking the murky world of the shadow economy, say that illicit drugs is the largest income stream for transnational organised crime and helps fuel it’s other activities, including in some cases Islamist terrorism. All together the total proceeds of organised crime are between 2.3 per cent and 5.5 per cent of global GDP. The midpoint of this, 3.6 per cent, or $2.8 trillion, is roughly equivalent to the combined output of the economies of the African continent.

Obviously economic activity of this magnitude commands a considerable gravitational force, particularly as it is often strongest in poorer countries with more fragile institutions and less robust legitimate economies to resist its affects.  It shapes job creation, influences access to land and markets, drives cross border financial flows and affects public services and political decisions. While the conventional ‘war on drugs’ approach has been to see the illicit drug trade as a malignant tumour to be isolated and surgically removed, it is now too late for that. In many countries it has spread and is so entwined with the core functions of the body such surgery would kill the patient. Drug gangs  provide jobs, investment and stability, drug barons are elected to office and criminal syndicates operate as sub contractors of state security. Despite this complicated reality, law enforcement and counternarcotics operations continue to wage their never ending war, racking up arrests and incarcerations. Fifty years after the Single Convention on Narcotic Drugs was signed in 1961 and despite hundreds of billions of dollars spent, the illicit drugs industry is bigger than ever.

Many development agencies have been guilty of burying their heads in the sand. Not wanting to get drawn into the state’s one-dimensional war on drugs, organisations working to alleviate poverty have tended to treat the shadow economy as something entirely separate and ignored the problem. A new report by Christian Aid attempts to lift the lid on this grimy world and open up debate to get policy makers to start thinking more effectively.

In Mali, drug traffickers prior to the 2012 northern uprising by separatist rebels and terrorist groups, were akin to 18th century pirates, connecting up isolated communities and acting as an economic force stimulating commerce. Their seafaring forebears traded in opium, while Malian brigands traded primarily in cocaine and cannabis resin, but also fuel, mobile phones and Viagra. So successful were these ‘armed traders’ that they turned remote desert villages into bazaars for smuggled goods. Despite the illicit trade of drugs being ḥarām (forbidden) it was increasingly being facilitated by the assorted jihadist groups in the country such as Al-Mourabitoun which claimed responsibility for the recent attack on the Radisson Blu hotel.

For twenty years Mali boasted a relatively stable and democratically elected government, not to mention an impressive growth rate of 5.8 per cent between 1995 and 2005. But since the 2012 coup we not only find agents of the state acting like criminals, but also, criminals acting like the state. Smugglers facilitate the transit of goods providing transport, accommodation, water, credit, information and protection. Their lorries double up as buses, postal and medical couriers and remittance agents.

The blurred lines between the drug trade and the state has also been found in Colombia. Here some drug traffickers and criminal gangs rebranded themselves as paramilitary groups in order to increase their political influence. The drug lord brothers, Carlos and Fidel Castaño, adopted the politically acceptable name the Peasant Self-Defence Forces of Cordoba and Uraba, described themselves as a ‘civil resistance movement’ and justified their actions as defending ‘national rights’. Such groups have also become market regulators. In the central market of Santa Marta, paramilitary groups force traders to pay protection money and ‘in return’ set prices and ensure security.

Drug barons have even been used in state building. Following Tajikistan’s independence from the Soviet Union in 1991 civil war broke out. Ex-con Sangak Safarov and his militia toured the country giving speeches on national unity and restoring the order of the state. The Tajik economy has been growing in recent years, but not at a rate that can be easily explained. Many believe the rapid development of the legal economy has been fuelled mainly by criminal networks laundering their revenues from narcotics trafficking. In the peace settlement struck after the civil war, drug revenues were central to the shadow bargaining. The opportunity to continue trafficking narcotics represented a key incentive for warlords, allowing politicians to co-opt them into the establishment and help restore peace.

With the war on drugs failing other policy options are now being discussed. Partial legalisation has been adopted in the USA, Portugal, Uruguay and Bolivia. But if these examples show anything it’s that this problem needs a more nuanced approach. Such is the concern about its growing influence Colombia, Mexico and Guatemala requested a special session of the UN General Assembly to discuss the global drugs trade be brought forward from 2019 to early next year. Let’s hope they start to think more creatively than a continuation of the failed policies which have contributed to the current state of affairs.

Joe Ware is Church & Campaigns Journalist at Christian Aid.