Tag Archives: war on drugs

How the War on Drugs Destabilized the Global Economy

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This is truly, truly fantastic. If you haven’t already read this stunning story from the Guardian: How a big US bank laundered billions from Mexico’s murderous drug gangs. This is, in essence a chronicle how the dark and sordid side of banking and about how one US bank – Wachovia – essentially allowed Mexican drug cartels to launder a whopping $378B.

But this interestingly, is just the tip of the iceberg. It turns out that Mexican money may have been the only thing holding the US financial system together. Check out the following and the last paragraph especially (I’ve bolded it, it is so stunning):

More shocking, and more important, the bank was sanctioned for failing to apply the proper anti-laundering strictures to the transfer of $378.4bn – a sum equivalent to one-third of Mexico’s gross national product – into dollar accounts from so-called casas de cambio (CDCs) in Mexico, currency exchange houses with which the bank did business.

“Wachovia’s blatant disregard for our banking laws gave international cocaine cartels a virtual carte blanche to finance their operations,” said Jeffrey Sloman, the federal prosecutor. Yet the total fine was less than 2% of the bank’s $12.3bn profit for 2009. On 24 March 2010, Wells Fargo stock traded at $30.86 – up 1% on the week of the court settlement.

The conclusion to the case was only the tip of an iceberg, demonstrating the role of the “legal” banking sector in swilling hundreds of billions of dollars – the blood money from the murderous drug trade in Mexico and other places in the world – around their global operations, now bailed out by the taxpayer.

At the height of the 2008 banking crisis, Antonio Maria Costa, then head of the United Nations office on drugs and crime, said he had evidence to suggest the proceeds from drugs and crime were “the only liquid investment capital” available to banks on the brink of collapse. “Inter-bank loans were funded by money that originated from the drugs trade,” he said. “There were signs that some banks were rescued that way.”

But the more interesting part of the story, that picks up on the above quote by Antonio Maria Costa, lies deeper in the story:

“In April and May 2007, Wachovia – as a result of increasing interest and pressure from the US attorney’s office – began to close its relationship with some of the casas de cambio.”

and, a paragraph later…

“In July 2007, all of Wachovia’s remaining 10 Mexican casa de cambio clients operating through London suddenly stopped doing so.”

In other words from April through July, with increasing intensity, Wachovia got out of the drug money laundering business. Of course, this just also happens to be at the exact same time that the liquidity crisis starts hitting US banks prompting “The Bank Run We Knew So Little About.”

This is not to say that the financial crises was caused by drug money – it wasn’t. All those crazy mortgages and masses of consumer debt created a house of cards that was teetering away. But it could be that the sudden end to access of vast billions of Latin America drug money did tip the system over the edge.

I say this because here in Canada we have a government that not only does not believe in harm reduction as an effective way to deal with the drug problem, but it intends to pursue a prison focused US style approach to crime that even the most ardent US conservatives are calling a failure. And why does this matter? I mention the above stories because it is worth noting the size, scope and complexity of problem with face. This is a structural, systemic problem, not something that is going to be solved by throwing an additional 1,000 or even 100,000 people in jail. $378B. Through one bank. One third of Mexico’s GDP. And that’s all just pure profit. That’s probably 80 times more than we spend on fighting the war on drugs every year. Through one bank.

And, as the US authorities appear to have demonstrated it may be that the only thing more expensive than losing the war on drugs is winning a major battle – as apparently that can throw the entire global financial system into disarray. So if we think that upping the amount we spend on this war by $1B or even $10B is going to make a lick of difference, we’ve got another thing coming. But I suppose in the mean time, it will secure a few votes.

Emerging Neo-Progressive Issues: Drug Policy

As many of you know Taylor and I wrote a piece on what we termed neo-progressivism in last September’s Literary Review of Canada.

Since then we’ve keep our eye out for other discussions where we think neo-progressives are gaining traction in the public discourse. Some of the indicators we looking for are policies where:

  • The conversation is deadlocked and going nowhere
  • The conversation isn’t possible because alternatives to the status quo are considered taboo
  • Areas where the gap between ideology and research or evidence is significant
  • Debates where their are real divisions within either the left or right
  • Debates which unite odd factions from within the left and right
  • Policy areas where individual freedom is curtailed
  • Places where the impact on the public in general is growing

This list isn’t exhaustive nor is it a scientific – they are just a couple of triggers wer look our for.

Well, if you are looking at this list you may have noticed that last month a potential candidate emerged far on the horizon. It was a surprising one for me since I do some volunteering around this issue here in Vancouver and I really didn’t see it coming.

I’m talking of drug prohibition.

The aha moment was seeing the (very) conservative Cato Institute publish a report by Glen Greenwald (a case study neo-pragmatists) in which he analyzed the impact of drug decriminalization in Portugal. As the report’s summary states:

For over seven years, drugs have been decriminalized in Portugal. This new study examines the Portuguese model and the data concerning drug-related trends in Portugal, and argues that, “judged by virtually every metric, the Portuguese decriminalization framework has been a resounding success.”

Then consider drug prohibition against the list I outlined above. This topic should not have snuck up on me:

  • Deadlocked conversation: The “War on Drugs” vs. “Marijuana activists” increasingly leaves the public turned off. The war on drugs industry and its militarization of the police is costly, dangerous to civil liberties and has failed to address the problem for 30 years. Indeed, as the RCMP now admits, reducing the flow of drugs actually renders the situation more dangerous for citizens. Conversely, the counter-culture movement around pot activists is equally alienating. It is hard to attract middle class support when every middle class parent fears that this counter-culture will become the norm and their children will be destined life as a pot-head.
  • Alternatives to the status quo are taboo: For most politicians talking about ending drug prohibition is absolutely taboo, although this is shifting. Vancouver’s mayor recently stated that the sate should “regulate, control and tax marijuana,” and that “the prohibition approach to it is not working.” The Liberals under Martin considered decriminalizing marijuana. Even in the US there is movement. The legislatures of New York State, California and Massachusetts have begun to reconsider overly punitive drug laws. Senators Jim Webb and Arlen Specter recently proposed Congress create a national commission to explore prison reform and drug-sentencing policy.
  • Large gap between ideology and research or evidence: Here the Cato report, along with the data coming out of the Downtown Eastside around Insite and NAOMI trials is most devastating. The rhetoric around law & order does not stack up against the results. Consider that in Portugal after decriminalization (pulled from this Time Magazine article on the report)
    • lifetime use of any illegal drug among seventh through ninth graders fell from 14.1% to 10.6%; drug use in older teens also declined. (a 33% drop!!!)
    • lifetime heroin use among 16-to-18-year-olds fell from 2.5% to 1.8% (although there was a slight increase in marijuana use in that age group). (a 25% drop!)
    • new HIV infections in drug users fell by 17% between 1999 and 2003, and deaths related to heroin and similar drugs were cut by more than half.
    • the number of people on methadone and buprenorphine treatment for drug addiction rose to 14,877 from 6,040, after decriminalization, and money saved on enforcement allowed for increased funding of drug-free treatment as well. (150% increase in people seeking treatment!)
  • Divides the left or right: Check out this Western Standard blog (possible the most conservative publication in Canada) in which a conservative columnist argues with a conservative reader about the evidence around ending prohibition. I never thought I’d see the day where a Western Standard columnist would explore the possibility of ending prohibition. Could endorsing harm reduction strategies be far behind?
  • Unite odd factions from within the left and right: Could possible unite traditional left wing progressives with right-wing libertarians.
  • Individual freedom is curtailed: Check. The literature of the impact of the “war on drugs” on civil liberties in the United States is vast.
  • Growing impact on the public: drug violence in the US and Canada appears to be on the rise and a bordering country, Mexico, is becoming unstable. Much like alchohol prohibition in the 30’s at some point the public is going to connect gang violence with drugs – at which point a wider debate may become possible.

Do I think drug prohibition is going to end tomorrow? Absolutely not. But I won’t be surprised if we see movement at the local and state/provincial level this issue. Indeed, I believe it has been gaining traction for some time.

Follow the link to get a free copy of the Cato Institute’s study “Drug Decriminalization in Portugal: Lessons for Creating Fair and Successful Drug Policies.”

Shootings in Vancouver – how our definition of success leads us to failure

After a rash of shootings in Vancouver last week (which continues) I was completely astounded to read this quote by the RCMP in the Globe and Mai:

Violence between competing Mexican cartels is squeezing the flow of drugs from source countries such as Mexico and Colombia through cities such as Los Angeles, one of the major sources for Vancouver-based groups that buy and sell illegal drugs, says Pat Fogarty, RCMP superintendent with the combined forces special enforcement unit. Gangs in the Lower Mainland are now fighting over the dwindling supply.

“The distribution lines have been disrupted,” Supt. Fogarty said yesterday in an interview. “It’s like in any marketplace – the demand stays high, but there’s not as many distributors out there because the little guys get knocked off.”

“The bigger ones survive, the other ones don’t. And these guys don’t resolve things through a court process. It’s ‘I want my piece of the pie’ – well, there’s none left for you.”

Essentially, the RCMP is admitting that the more successful it becomes – the more capable it gets at limiting the flow of drugs – the more violence we can expect from drug dealers on our streets.

Why? Because when demand remains constant and fewer drugs are available, their value will increase making it more tempting to use violence to hold on to, or increase, your share of the marketplace. In essence, the RCMP is admitting that attacking the supply side of the drug trade is an ineffective approach. (The irony of course, is that the reduction has nothing to do with RCMP strategy or tactics but, as the Center for Strategic International Studies notes, everything to do with the geopolitics of the drug trade).

So, the RCMP has inadvertently admitted that the key to managing the War on Drugs is not to reduce supply, but to reduce demand.

This is precisely what makes projects like the NAOMI trial and the Insite injection site so important – they help to both reduce demand for drugs and, in the case of NAOMI, eliminate the demand from illegal sources altogether. This is what makes the RCMP’s opposition to Insite and NAOMI even more puzzling. If – by their own admission – reducing demand is the only way to effectively reduce the crime associated with the drug trade, why are they trying to shut down our most effective tools?

Injection site lies

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So the conservatives have started sending around this flier which very subtly uses language to undermine the Insite injection site and harm reduction strategies. It also, of course, misleads the public about the course of action that is effective in addressing drug use. Pumping billions of dollars into a 3 decades old “drug war” that has seen drug use increase and narcotics become more available and cheaper, is portrayed as the only effective answer.

It is a fear based approach more and more people are starting to question. For example, in this piece, Mark Easton of the BBC charts how the war on drugs has actually helped grow the drug industry in the UK.

So in order to help fight the disinformation of the Conservative machine, I’ve taken a quick stab at highlighting some of the fliers problems.

Update: Turns out that the Vancouver Sun has deemed this news worthy as well. 24 hours after this post they published this story.

For those interested in a sensible drug policy… sign here.

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Here is an opportunity to sign the resolution coming out of the Community Forum on the National Anti-Drug Strategy held in Toronto on March 26th.

Signatures generated at the Forum and from the on-line version total over 1600, from people across Canada.  We will be presenting the resolution to Parliament soon, so please add your signature asap, if you haven’t already.  Please also forward this message to any interested contacts or networks. And while you are at it, consider signing the Insite injection site petition as well.

As many of you know I believe a drug policy built on scientific research and evidence – not fear – is one that will most likely generate results.

That said, I know this won’t change the world, but it might help a little.

Vancouver is on the fast track to regulating the illicit drug trade

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The rash of gang related shootings in Vancouver is causing everybody to rethink everything. More and more people I talk to, from doctors and lawyers to people on the street, are coming to the conclusion that the war on drugs is accomplishing little – except making the streets of Vancouver more dangerous.

As if to put on exclamation mark on that point, Ian Mulgrew – a columnist with the Vancouver Sun – wrote a great column entitled Legalize pot, a key drug fuelling gang wars.

For those not based in Vancouver – read it. Something is brewing out here.

The old, old, old war on drugs

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Last night I was able to swing by the Wosk Centre for Dialogue to see Prof. Bruce Alexander receive the Nora and Ted Sterling Prize in support of Controversy (A prize established at Simon Fraser University to honor work which challenges complacency and that provokes controversy).

Prof. Alexander spoke of his personal history and research into addiction, but during the speech one factoid really stuck out.

He pointed out that the war on drugs has been going on much longer than I suspected. Indeed, in 1922 the government of the day apparently introduced whipping and deportation as a punishment for addiction and drug use. This is a level of shaming and deterrence the current government could only dream of implementing.

Did it have any impact on drug use? Of course not.

If whipping didn’t work, how is a “just say no” combined with stiffer criminal penalties going to have an impact? The creation of mandatory minimum sentences in the 1970s’ had no impact on drug use… how will this differ?

So why does the current government believe it’s new “tough on drugs” approach will yield better results? Because the new conservative drug policy isn’t about achieving results, it is about looking tough. Sadly, as it drives drug users and addicts further underground it will likely push them further out of reach of health and social workers, making the problem worse, not better.

Sigh…