ABSTRACT: The first and second chapter mean to give a definition of drugs, and to describe the international regime that regulates them. The third chapter, which accounts for most of the paper, analyses the phenomenon from the point of view of the producing countries. The fourth chapter basically consists in a critical review of the estimates on the drug trade's total turnover and on the Italian one. The conclusion suggests further possible fields of investigation.

CONTENTS:

Introduction

1. Drugs and their regime

2. The role of the United Nations

3. Major producing countries

3.1. Burma

3.2. South-East Asia

3.3. South-West Asia

3.4. The Middle East

3.5. Latin America

4. Estimates on the drug trade's turnover

Conclusion

Charts

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Introduction

Throughout the eighties, the traffic of illegal drugs has progressively emerged as a an important issue of international economics and politics, while the specialized literature and the media have devoted more and more attention to the problem.

Why?

There seem to be two main reasons for this: an actual increase in the production and trade of narcotics on a global scale; the political resolve of the Reagan and Bush administrations to oppose the phenomenon with greater determination (1).

Consistently with their previous initiatives on the subject, the United States has immediately tried to mobilize the international community, pressuring the countries of origin of the raw materials so as to make them discontinue or reduce the production; stimulating the consuming countries to enact a common action to ban the traffic and curb consumption. As of the Paris summit in 1989, the drug issue has thus become an important subject of discussion in the G-7, which has in particular dealt with a number of financial aspects, such as money laundering, and commercial aspects, such as the control of the transfers of chemical agents used to process opium derivatives and coca leaf. Specific research groups have been formed also in the European Community (Pompidou Group) and at the level of the Organization for Economic Co-Operation and Development (OECD). The U.N. agencies on drugs have been reorganized, while a new International Convention was added in 1988, to the two previous ones in the field of narcotics.

As with similar wide-ranging terms, the drug trade also includes a variety of problems. Problems pertaining to their definition: understanding what should be meant by drugs. Medical and pharmacological problems: unlike what we are lead to believe, there are very few certainties as to the individual and social effects of narcotics. Normative problems, or paradigmatic ones: is it fair, appropriate and feasible to ban the production, trade and consumption of certain psychoactive substances? Problems of contiguity or confusion with other major political and economic issues: debt, underdevelopment and democracy in the Third World; drug dependency, crime and personal liberties in the developed countries. Problems of measurement: are the estimates on the drug traffickers' turnover, or the ones on the consumers and their behaviour toward drugs, plausible?

As far as possible, this list of problems represents the basis for this paper's structure. The first and second chapter mean to afford a definition of drugs and to describe the international regime regulating them. The third chapter, which accounts for most of the paper, analyses the phenomenon from the point of view of the producing countries. The fourth chapter essentially consists in a critical review of the estimates on the drug trade's global turnover and on the Italian one. Italy appears so to say as a study of the case, for the sole reason that the author is Italian and currently lives in Rome. The conclusions suggests further possible fields of investigation. Not incidentally, these concern precisely an aspect neglected by this paper: the domestic policies of the consuming countries.

Lastly, the acknowledgments: to the Green Group of the European Parliament, for having financed the research; to the staff of the USIS American Library, Rome, and to the library of the CeSPI for their kind and efficient co-operation.

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(1) Expenses for the U.S. anti-drug policy have increased from $1,7 billion in 1981 to $11,7 billion in 1992. Cf. National Drug Control Strategy, The White House, February 1991, pages 133-5.

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1. Drugs and their regime

The meaning commonly attributed to the word drug is the following: a substance that acts on the mind or on the nervous system, which creates tolerance or addiction, the production, trade and consumption for nonmedical purposes (2) of which are forbidden. The most frequently used synonyms are narcotic, psychotropic substance.

Fifteen multilateral treaties on drugs have been signed since the first International Convention on Opium in 1912. The most important ones currently in force are the following three.

- The Single Convention on Narcotics (New York, 30 March 1961, 133 participating countries) and the amendment protocol (Geneva, 25 March 1972, 106 participants).

- The Convention on Psychotropic Substances (Vienna, 21 February 1971, 106 participating countries).

- The United Nations Convention against the Illegal Traffic of Narcotics and Psychotropic Substances (Vienna, 20 December 1988, 50 participating countries plus the European Community).

Dozens of narcotics and psychotropic substances are listed in the charts enclosed to the first two conventions (3).

Anyone seeking in these documents a list of reasons for which the international community has decided to ban the production, trade and consumption for nonmedical purposes of the various substances, would be deceived. The preamble of the Convention of 1961 simply states that on the one hand "the medical use of narcotics is necessary in order to ease the pain", and that on the other "toxicomania is a plague for the individual, and represents an economic and social threat for mankind". The preamble of the Convention of 1971 on the one hand expresses concern "for the sanitary and social problem ensuing from the abuse of certain psychotropic substances", and on the other hand states that "the use of psychotropic substances for medical and scientific purposes is essential". However, there is no exhaustive general description of narcotics and psychotropic substances, of their effects on the individual and on society - a description which should bring to a distinction between lawful medical uses and unlawful nonmedi

cal uses. Instead, art. 1 of both Conventions contains a circular description according to which the terms narcotic and psychotropic substance refer to any substance contained in the charts enclosed to the conventions themselves.

In any case, it can be presumed that the prohibition of the nonmedical use of drugs is a result of their being substances that act on the mind and create addiction. However, a similar explanation clashes with the well-known fact that the Conventions disregard a variety of substances - alcohol, tobacco, coffee, etc. - which have one or both of these properties. Or they list substances, such as cannabis derivatives, which lack one or both properties: the creation of addiction.

A problem of its own is represented by the degree or the intensity with which the various substances have the aforementioned characteristics - whence perhaps the decision to make the stronger ones illegal. In this case too, however, the legality and illegality of the various substances does not seem to reflect a general agreement on the intensity of their effects, neither from a scientific nor from a political point of view.

For example, the "Report of the committee of inquiry on the diffusion of organized crime in relation to the drug traffic in the Community", filed at the European Parliament on 2 December 1991, suggests the following classification.

- Ultra-hard drugs: heroin, crack.

- Hard drugs: morphine, cocaine, phencyclidine, methadone, petidine.

- Medium to hard drugs: amphetamines, barbiturates, LSD, psilocybin, mescaline, chemical solvents, absinth.

- Medium to soft drugs: opium, hashish, khat, coca leaf, tobacco, distilled alcohol.

- Soft drugs: cannabis, fermented alcohol, peyote, hallucinogenic mushrooms, codeine and sedatives.

- Ultra-soft drugs: tea, coffee, chocolate.

The diffusion and legal status of the various psychoactive substances depend on historical and cultural circumstances. During the last century, the West's predominant attitude toward the more common drugs was very different compared to this century's attitude. Opium was sold without a medical prescription, and at affordable prices. Opium-based medicines such as laudanum, were used in all social classes as painkillers and sedatives. Despite the fact that its contraindications were known (Thomas De Quincey published the Confessions of an English Opium Eater in 1822, a book which was widely diffused), no one thought at the time of outlawing it, and Great Britain went so far as suppressing with military force China's attempt to ban opium imports from India (the so-called opium war of 1840-42) (4). Cocaine was also legal in the entire West, until the beginning of this century: apart from being consumed as such, small quantities of it were blended into products of all kinds, from Coca Cola to wine (5).

Chewing coca leaves is still a very common practice in many countries of Latin America. In the Asiatic regions that produce it, opium is traditionally used both for medical and for recreational purposes. In the Islamic world, the consumption of alcohol is severely punished, while that of hashish is not. These important cultural differences are acknowledged, albeit very partially, also by the Single Convention, art. 49 of which guaranties the parties the right to authorize by way of transition on its territory the use of opium (15 years), coca leaf and cannabis derivatives (25 years) for nontherapeutic purposes.

Essentially, the attitude toward psychoactive substances may vary radically from society to society: the trade and consumption of alcohol was banned from 1919 to 1932 in the United States; in Africa, the rise in the consumption of alcohol and synthetic substances is far more consistent and alarming than that of opium derivatives and cannabis (6); for countries such as Taiwan, South Korea and Japan, the drug problem lies not in heroin and cocaine, but in amphetamines and methamphetamines (7).

In any case, it is extremely difficult to classify the various psychoactive substances once and for all, according to their corresponding intrinsic harmfulness (long-range effects on the organism, addiction, etc.). Firstly because it is legitimate to expect extremely different reactions from one individual to the other. Secondly, because the numerous therapeutic uses point to the existence of a subtle border separating the good effects from the harmful ones, between use and abuse. In fact, almost all the substances mentioned in the previous paragraphs have current medical uses: barbiturates and amphetamines among the synthetic substances, morphine and codeine among the opium derivatives (8): more recently, it has been ascertained that marijuana counteracts the negative collateral effects of chemotherapy in cancer patients and those of AZT in AIDS patients or HIV-positive individuals.

It is equally difficult to classify the psychoactive substances according to their social harmfulness. While the consequences of the use and abuse of legal substances - typically, alcohol and tobacco - on a given population can be verified directly, those relative to the use and abuse of illegal substances are much less so. In the latter case, the regime of illegality creates a huge quantity of interferences in the medical and sociological survey, which include the absence of rules on the quality of the product, the absence of hygienic and sanitary controls, and the social peculiarity of the consumer - the latter brought about precisely by the criminalization of the use of the above mentioned substances, chiefly heroin. Estimating the social consequences of the legalization of certain drugs on developed societies, therefore, is necessarily a subjective fact, for the simple reason that such legalization has never occurred. The only available parameters are historical or anthropological cases - societies which

differ greatly from ours as an effect of time or culture.

The prohibitionist initiatives on psychoactive substances from the beginning of the century to date originate in the United States. Apart from the legitimate concern for the noxious effects ensuing from the abuse of these substances, as of the end of the 19th Century, the puritanism and moralism of the American society "played a key role in bringing about the passage of state and federal laws banning opiates, cocaine, alcohol, cigarettes, prostitution and much more. [The] moral belief that every form of intoxication was a thing to be abhorred, touched a sensitive spot in millions of Americans. [Such] praise of sobriety attracted sectors of the American élite, whose paternalistic concern for the lower classes' liability to abuse alcohol and drugs was combined with the fear that this could damage their productivity. [Moreover] the movements for the prohibition of alcohol and drugs drew strong support from the common association of drugs with the feared and despised minorities" (9) - alcohol as far as Catholic

and Jewish immigrants were concerned, opium for Asians, marijuana for Latin Americans, cocaine for the blacks.

The globalization of the American prohibition failed, in the case of alcohol, even before failing on a domestic scale. It succeeded instead, in the case of many other psychoactive substances, especially with opium derivatives, coca leaf and cannabis: the international drug enforcement regime such as we know it is a result of the American diplomatic initiative (10). The reason seems simple: while alcohol had deep cultural roots in the rest of the Western societies, i.e. in Europe, opium, coca leaf and cannabis had only very superficial ones. For their part, the countries of the Southern part of the world refused or were incapable of opposing this entirely Western separation of the psychoactive substances between legal and illegal ones: the vast majority of them joined the Single Convention of 1961.

Arbitrary as it may be, the current international drug enforcement regime, supported by the various national legislations, has therefore outlawed the production, trade and - almost everywhere - the use for nonmedical and nonscientific purposes of opium derivatives, coca leaf and cannabis - as well as of many other psychotropic substances. The persistent demand for these substances in the industrialized West generates the drug problem such as we commonly interpret it, as well as a turnover which is hard to estimate, but is surely not negligible.

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(2) In many languages, the word drug has other meanings: spice in Italian, medicinal compound in English and French, etc.

(3) As we said, the words narcotic and psychotropic substance are essentially synonyms. At first sight, one might think that the first refers to substances of natural origin, and the second to synthetic ones. This is not true: the Single Convention specifies that the word narcotic includes both categories. It remains a mystery why two separate conventions were made, rather than a single amendment of the Convention of 1961. In any case, with the Convention on Psychotropic Substances, the regime is extended to many synthetic substances, such as hallucinogens (LSD), stimulants (amphetamines) and hypnotic sedatives (barbiturates).

(4) The English literature of the 19th Century, from Coleridge to Wilkie Collins and De Quincey, was considerably influenced by opium.

(5) In 1863, a Corsican chemical engineer called Angelo Mariani introduced a table wine which contained between 35 and 70 mgs of cocaine per bottle. The "Mariani wine" was much appreciated by personalities such as Zola, Ibsen, Anatole France, Massenet, Rodin, Sarah Bernhardt, and was even awarded a gold medal by Pope Leon XIII. Cf. Ethan A. Nadelmann, "Légalisation: la fin du narco-trafic?", Politique Internationale, summer 1990.

(6) Cf. Jacques Iguel, L'alcool en Afrique noire: le Sud consomme ce que le Nord produit", in Guy Delbrel (edited by), Géopolitique de la drogue, Editions La Découverte, Paris, 1991; United Nations, Report of the International Narcotics Control Board for 1991 [from now on INCB 1991 Report], Vienna, 1992, pp. 12-15 e pp. 19-20.

(7) Cf. Bill Savadove, "High Society", Far Eastern Economic Review [from now on FEER], 12 September 1991; H. Richard Friman, "The United States, Japan, and the International Drug Trade", Asian Survey, September 1991.

(8) The medical use of opium has remote origins and continues until our days. The purpose of the 1961 Single Convention is precisely that of checking that the global production of drugs does not exceed the quantity considered "essential for medical and scientific purposes". For opiates, such quantity was estimated in 1990 to amount to 200 tons of equivalent morphine. Cf. INCB 1991 Report, p. 17.

(9) Ethan A. Nadelmann, "Global Prohibition Regimes", International Organization, Autumn 1990.

(10) "A key man of this initiative was Harry Anslinger, director of the Federal Bureau of Narcotics from its creation in 1930 until 1962, and previously in charge of the foreign section of the federal bureau on alcoholic prohibition". Ibidem.

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2. The role of the United Nations

It is the task of the United Nations to supervise and co-ordinate the rules laid down by the three international Conventions on drugs. The Vienna-based United Nations International Drug Control Program (UNDCP) is operative as of March 1991, and it combines the competences of three bodies that were previously separated: the Commission on Narcotic Drugs of the United Nations Economic and Social Council, created in 1946 with the purpose of providing political guidelines in the sector; the International Narcotics Control Board, formed by a group of experts and created in 1961 with the task of surveying the phenomenon's global trend; the United Nations Fund for Drug Abuse Control (UNFDAC), established in 1971 with the task of counseling the governments in the struggle against the production, traffic and abuse of drugs.

There is also an Expert Committee on Narcotic Drugs as part of the Department of Pharmacology and Toxicology of the World Health Organization (WHO). The WHO is charged by the Single Convention and by the Convention on Psychotropic Substances with supplying a judgement on the psychoactive substances, in the sense that this organization may suggest the inclusion of new substances in the charts, shifting them from one chart to the other, or removing them - an event which has never occurred.

The UNDCP has a yearly budget, based on voluntary contributions, of about $70 million. Italy is traditionally one of the main sponsors of UNFDAC first and now also of the UNDCP, and, as far as we know, has covered almost half of the 1992 budget (11). This should account for the fact that many Italians have been directors of this agency: Giorgio Giacomelli, current director of the UNDCP, succeeded to Giuseppe Di Gennaro, previously head of the UNFDAC.

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(11) Cf. Marcello D'Angelo, "Droga e riciclaggio ormai straripano sull'intero pianeta", Il Giorno, 13 April 1992; Ernesto Ugo Savona, "Nasce un nuovo organismo delle Nazioni Unite", Cooperazione, January 1991.

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3. Major producing countries

Despite the fact that many psychoactive substances have been made illegal, the international attention focuses almost exclusively on opium derivatives, coca leaf and cannabis. This depends chiefly on the fact that the few sources of systematic information available on the production and trade - all of U.S. origin - take into account only the three substances mentioned.

In any case, both in Europe and in the United States, there is a rapid growth in the consumption of a synthetic substance, methylene dioxymethamphetamine (MDMA), better know as Ecstasy, which is sold in the form of tablets. In Great Britain, for example, Ecstasy consumers are presumably already double the number of cocaine consumers. The retail price of a dose of this substance - between 30,000 and 80,000 lira, versus 200,000 for a gram of cocaine - seems such as to guarantee a wide margin of profit, even if the exact costs of its production are unknown. The main producers of the Ecstasy sold in Europe are supposedly in The Netherlands (75-80%) and in Poland (12).

Chart N.1 summarizes the estimates of the government of the United States on the major international producers of opium, coca leaf, marijuana and hashish. While not listed here, it is important to notice that the yearly production of marijuana in the United States is estimated to account for 1/3 of the total global production (13). Moreover, a series of facts should be considered when using these data: the persons who developed them declare to be reasonably certain only of the cultivated surface; much less certain as regards the productive potential of the relative crops, the results of the harvests (which may vary according to the atmospheric conditions and the techniques used) and the refinement processes. Summarizing, the data "represent an estimate of the potential production, whose quantity the government of the United States believes to have been produced if, and only if, all the available harvest were converted into finished drugs with an ordinary productive efficiency. Because the losses are not calc

ulated, the actual production cannot be accurately estimated; it could be greater or smaller than these estimates" (14). For example, the Bureau of International Narcotics Matters calculates that if Colombia, Bolivia and Peru had transformed all the coca leaf into cocaine in 1990 (deducing the seizures and the local consumption) between 700 and 890 tons of this drug would have been available for export (15).

Nonetheless, the estimates give a relatively accurate idea at least of the productive trend which, with the exception of hashish, seems to be on the rise. In particular, the availability of opium supposedly increased more than 50% between 1987 and 1990, thanks namely to the rise in production in Burma, which almost trebled over the same period.

As you can see, a total of 16 countries are mentioned. With the exception of Lebanon and Morocco - which nonetheless produce slightly more than 8% of hashish - there are three major productive areas in geographic terms: South-East Asia (Burma, Laos and Thailand), in an area otherwise known as the Golden Triangle; South-Western Asia (Afghanistan, Iran, Pakistan), in an area also know as Golden Crescent; Latin America.

From the point of view of the crops, it is rather clear that opium is concentrated in Asia and coca leaf in Latin America. Cannabis is produced and processed in Latin America, in South-West Asia and in the Middle East. Exceptions to this model are Lebanon and Mexico, which together produce almost 3% of the total opium.

Another recent exception is Colombia: according to the U.S. Drug Enforcement Administration (DEA), the Colombian organizations that process coca leaf and trade heroin were diversifying their activity in January 1992, by producing opium and refining heroin (16). Five months later, in June, Melvin Levitsky, in charge of drug problems for the U.S. State Department, testified at a Congress hearing that Colombia had become the third global producer of opium, with approximately 20,000 cultivated hectares, versus 29,000 in Laos and 161,000 in Burma (17). The rapid inclusion in the drug economy of the Andine areas of the Southern part of the country where opium is now grown, has triggered the usual vicious circle of violence and corruption, even if it has drastically increased the profits for the farmers involved (18).

More uncertain, but of increasing intensity, are the data concerning the increase of the poppy crops in the former Soviet Asian republics. More generally, it is estimated that the entire ex-communist world has rapidly become a new land of conquest for the drug traffickers, who presumably use it for the transit of drugs and for money-laundering purposes (19).

At any rate, the countries examined in this paper are Afghanistan, Burma, Bolivia, Colombia, Iran, Laos, Lebanon, Pakistan, Peru and Thailand.

As far as the remaining countries are concerned (Belize, Ecuador, Guatemala, Jamaica, Morocco and Mexico), the following applies.

Firstly, it has been decided to privilege the production and trade of heroin and cocaine, because of their higher economic profile. Following this type of logic, priority has been given to the greatest producers. As you can see, Mexico and Guatemala for heroin, Ecuador for cocaine, produce very limited quantities considering the total global production of the relative substances. Also, some of the main producers of hashish and marijuana are at the same time producers of hard drugs. They are Colombia, Pakistan and Afghanistan. For their part, Belize and Jamaica combined produced about 0.5% of the total production of marijuana.

Second point: we have taken into account the position of the various countries in the commercial chain: Thailand, Pakistan and Colombia have a leading role in refining and exporting heroin (the first two) and cocaine (Colombia), despite the fact that they are not chief producers of opium and coca leaf.

Third point: we have taken into account the global size of the various economies where the drug phenomenon is most evident: thus, the production and the marketing of cannabis and opium derivatives have a far greater role in Lebanon (2,7 million inhabitants, $3,3 billion GNP for 1987) than in Mexico (84 million inhabitants, $200 billion GNP for 1989).

As you see, the countries analysed are divided according to the following geographical areas: South-Western Asia (Golden Crescent), South-East Asia (Golden Triangle), Middle East, Latin America. A separate section is devoted to Burma, world leader in the production of opium, and to its scarcely known political and economic affairs.

Before carrying out an in-depth analysis of the politics and economy of these ten countries that produce drugs, it is possible to advance a few general remarks, by referring to charts 2 and 3. First of all, we are confronted with a situation of extreme poverty. Three countries (Afghanistan, Laos and Pakistan) are listed in the last quarter of the UNDP classification in terms of human development (a combination of income, education and life expectancy at birth); four are listed in the third quarter (Burma, Bolivia, Iran and Lebanon).

Apart from the considerable differences in terms of available wealth, all countries for which there are available data have a strong foreign debt: expressed as a percentage of the GNP, this ranges from a minimum of 34 for Thailand, to a maximum of 152 for Laos. Clearly, the reality behind these raw data is extremely different: unlike the others, Colombia and Thailand serve their debt with considerable ease, both have a fast-moving economy and a fairly high per capita income. It is true, nonetheless, that they all have impelling reasons to resort to any source of hard currency which becomes available.

The separation of the paper among countries, on the other hand, closely reflects the aforementioned economic differences. Colombia and Thailand, both with a fast-moving economy, strongly export-oriented, have the necessary resources to market the drugs as a finished product - respectively cocaine and heroin - including the fact that a sizeable amount of the commercial exchanges with foreign countries makes the material and financial cover-up easier. Similar remarks can apply to the role carried out by Pakistan in the marketing of heroin coming from the golden crescent - a role which takes advantage of the closed nature of Iran's economy and society on the one hand, and of the disastrous conditions of the Afghan economy and society on the other.

The leading producers of raw materials instead - opium and coca leaf - have to face social, economic and political situations which it is no exaggeration to label as desperate.

The economy of Peru has in practice been stagnating over the last decade, whereas the Bolivian one has suffered a contraction. Lebanon and Afghanistan have been upset by endless civil wars, the economic and social effects of which can easily be imagined, even in the absence of data. Large areas of the national territory of Burma and Peru, leading producer of opium the former and of coca leaf the latter, are controlled by armed political and/or ethnic revolutionary movements. In such areas, the drugs are produced and refined, activities which represent the chief economic and political support of these insurrectional movements.

Lastly, in all of these ten countries, democracy either does not exist or is strongly threatened. There is no democracy in Afghanistan and in Lebanon, as in the popular republic of Laos and in the Islamic republic of Iran; it has been suspended by the military or with their support in Burma (1990), in Thailand (1991) and in Peru (1992); it appears very fragile in Bolivia, Colombia and Pakistan. Obviously, it is not just a problem of form of government; none of these countries can boast an acceptable degree of respect of human rights, with forms of abuse which range from the lack of trial guaranties to torture.

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(12) Cf. Alison Jamieson, "Il Traffico di droga dopo il 1992", report delivered at the meeting on "Drugs, the new Empire of Evil - A global and planetary war", Rome 12 May 1992; Amelia Castilla, "Ir de `éxtasis'", El Pais, 23 February 1992.

(13) Cf. Iban de Rementeria, "Production: panorama mondial des cultures de drogue", in Guy Delbrel (edited by), op. cit. De Rementeira is a former director of UNFDAC. According to Ethan A. Nadelmann, "the United States is currently the leading producer of marijuana in the world"; Cf. "Légalisation: la fin du narco-trafic?", cit. These works do not take into account the rising use of greenhouse crops, mentioned also in INCB 1991 Report, p. 36.

(14) United States Department of State, Bureau of International Narcotics Matters, International Narcotics Control Strategy Report, Washington, March 1991, p. 9 (emphasis in the original version).

(15) Ibidem, p. 10, where reference is also made to an improvement in the efficiency of the refinement techniques over the last two years.

(16) Cf. Joseph B. Treaster, "Colombia Drug Lords Branching Out Into Heroin", International Herald Tribune [from now on IHT], 15 January 1992. Opium crops in Colombia are mentioned at least of the mid eighties. Cf. Bruce M. Bagley, "Colombia and the War on Drugs", Foreign Affairs, Autumn 1988.

(17) Cf. Norma Romano-Brenner, "Heroin Growth Concerns Bush Administration", United States Information Agency (USIA) Wireless File, 6 June 1992.

(18) Cf. Jorge Gomez Lizarazo, "Colombia Drug War: Too Many Innocents Are Dying", IHT, 31 January 1992; "A Pact With the Devil", Newsweek, 10 February 1992.

(19) Cf. e.g. Mino Vignolo, "The opium of the people is reigning in the East", Il Corriere della Sera, 6 September 1992.

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3.1. Burma

The contemporary political history of Burma, a former British colony, can be roughly divided into two periods: a first period, which lasted approximately ten years starting from the declaration of independence in 1948, of parliamentary democracy and of democratic socialism under the government of U Nu; a second period, from 1962 to 1988, characterized by the "Burmese way to socialism", under the government of General Ne Win. This second period can be better defined as a military dictatorship, that followed the Chinese and Soviet models in its domestic policy, but was strictly neutral as far as its foreign policy was concerned. The nationalization of the economy, the cessation of the exchanges with foreign countries, and the repression of dissent imposed by the regime of Ne Win, progressively translated into a fundamental stagnation of the Burmese economy and society, which climaxed in the achievement of the official status of least developed country given by the United Nations in 1987.

On the other hand, the regions near the Eastern and North-Western borders of the country have always remained outside of the control of the central administration. These are territories effectively ruled either by ethnic minorities (the Shan, the Kachin and the Karen being the leading three), or by armed formations of the Burmese Communist Party, or by "lords of the war", heirs of the Chinese nationalist military units pushed beyond the border in 1949, or, lastly, by temporary coalitions among several of these groups (20).

This double administrative regime has ultimately brought about a double economic regime. On the one hand there is the official planned economy of the capital, Rangoon, based on inefficient public enterprises, protected by the country's isolation from international competition (the non-alignment of Ne Win's regime with its Chinese and Soviet ideological models earned the country a yearly average of about $400 million in foreign aid, under the aegis of the World Bank).

On the other hand, there is an unofficial economy, based on smuggling (import of consumer goods from China and Thailand, export of gems, timber, opium and heroin), and administered by the ethnic minorities, by the various rebel groups and by the "lords of the war". For example, according to the Karen, a minority which is largely alien to the drug traffic, but on whose territory most of the smuggling with Thailand occurs, in the mid eighties they were making about $65 million a year from a 5% tax on the value of the goods in transit - amounting therefore to about $1,250 million, the equivalent of 20% of Burma's GNP at the time (21).

At the beginning of 1988, however, the Burmese regime appeared to be in complete economic and political bankruptcy. Economically, "the reserves in foreign currency amounted to a mere $12 million; a foreign debt of $5 billion corresponded to about 70% of the GNP" (22). Politically speaking, as of March a series of demonstrations of protest in Rangoon were brutally stifled by the regime, causing thousands of victims. After the resignation of Ne Win in July, and the 17-day attempt to entrust the government to a civilian, the chief of Staff of the armed forces, General Saw Maung, came into power in the name of the State Council for the Reinstatement of Law and Order. The Council's platform included free and democratic elections - elections which actually took place on 27 May 1990, and which were won by the democratic opposition headed by a woman, Mrs Aung San Suu Kyi, with a wide margin (392 seats out of 485 at the national assembly). Immediately after the result of the election, in any case, the State Council p

roclaimed that the transfer of power to the elected representatives would have taken from two to three years. The result was that Mrs Suu Kyi, who was awarded the Nobel Prize for Peace in 1991, lives in a state of house arrest as of 20 July 1989; the opposition has been strongly weakened by mass arrests, including that of 60 elected parliamentarians, and whose leadership now has its seat in the territory controlled by the Karen; the State Council still rules the country.

With the armed rebels, on the other hand, the junta immediately tried to reach an agreement, with the purpose of limiting the alliance with the democratic opposition to the Karens. The task was made easier by internal divisions among the insurrected: the Burmese Communist Party, for example, split into a series of small independent armed groups, lacking any political objective. Both with the communists and with the bulk of the Shan and Kachin armies, the junta has made vague promises of autonomy and especially of a participation in the profits of the smuggling and drug trade. This move enabled it both to increase its financial revenues and to concentrate on enhancing its military force and on repressing the democratic opposition and the Karens.

In parallel, the regime of Rangoon has tried to improve its relations with the Chinese and Thai governments, in order to better control the border traffics and to obtain a free hand from the Thai to prosecute militarily the Karen rebels in the sanctuaries across the border. This implicit agreement with the military in power in Bangkok recently started to waver when the Thai army and air force began to oppose the trespassing of Burmese forces (23). It cannot be ruled out that this change is a result of international pressure, especially on the part of the U.S.: the U.S. administration continues to deny Rangoon the status of co-operative country in the struggle against drugs (24). In early April 1992, two democrats (Patrick Moynihan and Paul Simon) and a republican (Jesse Helms) introduced a resolution at the U.S. Senate, requesting an international weapons embargo against Burma, and the cessation of commercial relations with the U.S. (25); the Association of the South-East Nations (Brunei, Philippines, Indone

sia, Malaysia, Singapore and Thailand) has started to consider the use of sanctions against the Burmese government, while a U.N. envoy visited Rangoon at the request of Bangladesh, after this country was invaded by 210,000 Muslims who had been expelled from Burma (26).

All this pressure seems to have had some effect: Saw Maung has resigned, and has been replaced by his deputy, General Than Shwe; Aung Suu Kyi, still at house arrest, has been granted a visit from her husband for the first time since December 1989; a certain number of political prisoners have been released (27).

In the first three years in which the military junta of Rangoon has had unrestricted freedom, however, the reserves in foreign currency rose to about $900 million, according to an unofficial estimate (28). It seems fairly logical to explain this reprise not only with the revenues of the official concessions for the exploitation of timber and fish, and for the oil surveys (29), but also with the revenues linked to the agreements with the unofficial economy, based on smuggling and traffic of drugs. All this perhaps would have been enough, in the short term, to make up for the interruption of the economic aid from abroad. However, most of these resources have been used to enhance the armed forces, which increased from 180,000 to 280,000 effectives over the last three years, and have been modernized with a new order of arms to China for over $1 billion, $400,000 of which paid in cash (30).

It is hard to estimate the importance of the drug traffic in Burma's current economy, but some considerations can be made. It seems ascertained that the drug traffic played a considerable role in the fast reprise of the currency reserves, for example. On the other hand, the data supplied by the U.S. Department of State (Cf. chart No. 1) show that the production of opium in Burma has trebled in two years' time, from about 800 tons in 1987 to 2,400 tons in 1989. This increase, brought about also by particularly favourable seasons, can only be due to the extension of the crops, and to the agreements with which the junta of Rangoon left the producers-traffickers a free hand. The increase in production translated into an increase in the supply. Thus, in 1991 in the United States "the abuse and traffic of heroin have given signs of increase, due to the increase in the supply and to the purity and lower prices, a consequence of the higher levels of production in South-East Asia" (31); the same opinion has been expr

essed by the U.S. Administration, according to which "key indicators show growing quantities of heroin coming into the United States...seizures have increased, and so has the purity, while the retail price continues to decrease" (32). According to another source, "in 1984 heroin from South-East Asia represented 24% of the market of New York, rising to 35% in 1985, 70% in 1988 and 80% today [March 1991)" (33).

In parallel with the increase, there has been a diversification of the production and of the commercial routes. Until a few years ago, practically all laboratories for the refinement of opium into heroin were close to the Southern border between Burma and Thailand. Heroin then passed from Thailand to the United States and to Europe, often via Hong Kong. More recently, such laboratories proliferated in the region of Kokang, in the Northern part of the country, at the border with the Chinese province of Yunnan. So much that it is estimated that 30% of the heroin production of the golden triangle for export in the United States and in Europe will now pass through China, avoiding more and more the intermediate port of Hong Kong (34).

It is almost impossible, on the other hand, to make a fairly credible estimate of the total sales of the Burmese opium industry. To do this, the following should be ascertained: a) whether the local poppy crops really generate the 2,200-2,400 tons of opium mentioned by the U.S. Department of State, a conclusion which that same source disavows; b) how much of the opium produced is consumed locally, and how much of it is destined to exportation; c) how much of the opium produced is locally refined into heroin, and how much of it is refined elsewhere, especially in Thailand; d) the costs of the refinement process; e) the sale price of the opium and heroin leaving Burma. As far as the latter point is concerned, it should be considered that: i) there surely isn't a single price, but various prices according to the area and to the relations between the producers and the peddlers; ii) there is no way of knowing to what point of the commercial chain the Burmese operators control. Possibly it controls a large portion

in the case of the Chinese route, less in the case of the Thai route, but there are endless possibilities, including joint ventures among operators of various nationalities, with all the possible combinations as to the shares of participation in the profits. Having established all this, it would take to know how much of the capitals generated by this industry comes back into the country or is rather invested elsewhere - if the interest is in knowing its overall importance in the Burmese economy. Regarding this point, it needs to be said that this economy has a twofold nature, in the sense that the official economy no doubt encourages the escape of capitals, whereas the unofficial one offers good opportunities of employment in the neighbouring sector of the smuggling of consumer goods.

Having said this, following are the results reached by combining the hypotheses made by various sources. Such results have a purely indicative value. For example, Bertil Lintner from the Far Eastern Economic Review estimates that the retail price per kilo of heroin n. 4 (the purest one) is $1,500 in the region of Kokang, a price which is five times higher just across the border with China (35). Taking into account those that have been just called joint ventures, we can calculate an average price of $4,000-5,000 per kilo. According to a French expert, Alain Labrousse, $4,000 (23,000-27,000 french francs) a kilo is also the retail price of heroin at the Thai border (36). Lintner again estimated that of the more than 2,000 tons of opium produced in Burma in 1991, "1,300 were available for conversion and export, generating about 90-100 tons of heroin No.4" (37). 100 tons at a price of $4,000 a kilo make $400 million, an amount which is the equivalent of the foreign economic aid which was sent to Burma before 19

89.

It is necessary to repeat that in actual fact, the turnover could be half or double this amount. For example, if a deductive rather than inductive process is adopted, there ensues that the estimates of the profits of Peru (2/3 of the global production of coca leaf, just as Burma in the case of opium) start from a minimum of $750-800 million a year. To reach the perhaps not entirely implausible conclusion that the Burmese profits are similar.

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(20) According to a Burmese author, precisely the presence of a variety of ethnic minorities makes the new name of Myanmar - the name of the majority ethnic group in the local language - given to the country in September 1989, unacceptable. Cf. Mya Maung, "The Burma Road from the Union of Burma to Myanmar", Asian Survey, June 1990.

(21) Cf. David I. Steinberg, "International Rivalries in Burma", Asian Survey, June 1989.

(22) Jonathan Friedland and Bertil Lintner, "A policy of pillage", FEER, 8 August 1991.

(23) Cf. "Thailand Ready to Retaliate", IHT, 17 March 1992; "A new wolf in South-East Asia", The Economist, 21 March 1992.

(24) Without such status, a country cannot have access to almost all types of U.S. economic aid. In 1992, apart from Burma, it was denied also to Afghanistan, Iran and Syria. It has been granted instead to all other producers of drugs, including Lebanon, despite the fact that it has never co-operated with Washington, on the basis of the "vital interest of the U.S. nation". Cf. Louise Fenner, "Coca Crop Down, Opium Poppy Up, Report Says", United States Information Agency - Wireless File, 3 February 1992.

(25) Cf. "Senators Press for Action on Burmese Junta", IHT, 7 April 1992.

(26) Cf. Michael Richardson, "ASEAN Weighs Moves Against Abuses in Burma", IHT, 31 March 1992.

(27) Cf. "Confused signals from Burma", The Independent, 4 May 1992.

(28) Cf. "A policy of pillage", cit.

(29) Regarding this last point, see Jonathan Friedland and Bertil Lintner, "Licensed to drill", FEER, 8 August 1991.

(30) Cf. Bertil Lintner, "Army of occupation" and "Hidden reserves", FEER, 23 May 1991 and 6 June 1991.

(31) INCB 1991 Report, p. 35.

(32) National Drug Control Strategy, cit.

(33) Bertil Lintner, "Triangular Ties", FEER, 28 March 1991.

(34) Ibidem.

(35) Ibidem.

(36) Cf. Alaine Labrousse, La drogue, l'argent et les armes, Fayard, Paris, 1991, p. 237.

(37) "Triangular ties", cit.

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3.2. South-East Asia

As we said, Thailand is traditionally the country of the Golden Triangle where the activities for the refinement and marketing of opium are concentrated. According to estimates made by the Thailand Development Research Institute, the profits ensuing from the trade of drugs which originate or transit in Thailand, including amphetamines and marijuana, amount to $3,9 billion a year, the equivalent of 17% of the value of all Thai exports in 1989 (38).

Over the last two or three years, Bangkok seems to have started to take measure against drug-related activities: the programs for the eradication of poppy crops have effectively lead to a reduction of the locally-produced opium, whereas police operations have caused the transfer of a great number of refineries across the borders with Laos and Burma. A bill was passed in 1991, which aims to repress the trade: according to this bill, the drug traffic is a crime of conspiracy, and is punished with the seizure of goods and currency as well as with severe penalties against the corruption of private and public officials.

Obviously, it is too soon to judge on the effects of these new measures. The doubts about their actual effectiveness, however, are justified by the fact that it is a country where the leading class and the army seem to be heavily involved in the drug trade. In early 1992, Narong Wongwan, running for Prime Minister in the pro-military coalition that won the elections of 22 March, was forced to move aside after the U.S. Department of State revealed having denied him a visa the previous year because of his implication in the drug traffic (39).

He was replaced in the office of Prime Minister by the General and Head of the Armed Forces Suchinda Kraprayoon, who was also forced to resign on 24 May after popular demonstrations that were barely stifled by the army, with hundreds of victims. The Thai parliament then passed constitutional reforms aiming to keep the military away from politics (40). The democratic opposition obtained the majority in new elections held in September, but there is uncertainty as to the effect of all these political changes on the drug traffic.

Officially speaking, Laos also seems to be active in a campaign for the eradication of poppy crops, a campaign which, while it has not yet had major results on the global production of opium, has served the purpose of obtaining funds from the UNDCP and from the United States (Hovaphon project) for the conversion of the crops (41). Laos is a very poor country, whose modest revenues for flying over royalties on the Bangkok-Hong Kong route represent one of the main items on the assets side of the official balance of payments. The government, while unable to pay salaries to the army, has granted the regional commanders the faculty of self-financing themselves with the timber trade (42). It would be no wonder that, as in Burma, the timber trade were combined with the heroin trade.

Generally speaking, there seems to be a multiplication of bilateral and multilateral agreements between the governments of the region - including China with increasing frequency - with the declared purpose of co-ordinating the relative anti-drug strategies (43). Needless to add, there are grounded reasons to question the truthfulness of these efforts, in particular of the Burmese junta.

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(38) Cf. Rodney Tasker, "Blocking the drug flow", FEER, 24 October 1991.

(39) Cf. "Thai Denies Trafficking in Drugs, as U.S. Asserts", IHT, 28-29 March 1992; "La majorité parlamentaire a proposé le général Suchinda Krapayoon pour le poste de premier ministre", Le Monde, 7 April 1992.

(40) Cf. Philip Shenon, "Thais Move to Curb the Army", IHT, 26 May 1992.

(41) INCB 1991 Report, pp.23-4; United States Department of State, Bureau of International Narcotics Matters, International Narcotics Control Strategy Report - Midyear Update, Washington, September 1991.

(42) Cf. "A dam shame", The Economist, 11 April 1992.

(43) Cf. Victor Mallet, "Golden triangle states agree on drugs fight", Financial Times, 16 March 1992.

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3.3. South-West Asia

In Afghanistan, the poppy cultivation has been one of the main means to finance the at least eight Islamic groups of resistance against the Soviet invasion of 1979, and the Afghan governments supported by Moscow. The official end of the civil war, with the fall of the Najibullah government in the Spring of 1992, far from reducing the poppy crops, is on the contrary intensifying them. The question now is not just that of finding the economic resources for the reconstruction, but also of financing the armed struggle for power among the winning factions - factions which can no longer count on the U.S. aid, which was discontinued on 21 December 1991 (44). As regards the reconstruction, thirteen years of civil war have caused almost one million casualties, over 500,000 invalid veterans, the destruction of a third of the villages, almost six million refugees (in Pakistan, Iran and in the West) on a population of about 17 million.

Several sources point out that this country is in fact producing quantities of opium far greater than the ones estimated by the U.S. Department of State: 800 tons in 1990 and as much as 3,000 in 1992 - the latter figures making Afghanistan the world's leading producer of the substance (45). The main areas of cultivation - the provinces of Badakshan, Nangarhar, Kandahar and Helmand - are all at the borders with Pakistan, where there are also several refineries for the conversion of opium into heroin. The heroin is then exported to the West via Pakistan and Iran. The UNDCP has a permanent mission in Kabul; in 1990, it accomplished two projects for the replacement of the crops in Nangarhar and a preliminary survey in Badakshan (46).

In Pakistan, opium is grown and refined mainly in the North-Western part of the country, at the borders with Afghanistan, in tribal areas that enjoy a great political autonomy and where not all national laws are applied. "The attempts made to persuade the tribal leaders to eliminate the production of opium have been partially successful" (47). The Pakistani authorities, like the Thai ones, often have a twofold attitude toward the drug traffic: on the one hand, according to the annual report of the International Narcotics Control Board, they seem to co-operate with the U.N. programs for the eradication and the conversion of the crops; on the other they are careful not to disturb the traffickers, and do all they can to keep the capitals generated by this trade inside the country. In March 1992, the Pakistani central bank launched the sale of five-year certificates in dollars, pounds, Deutschmarks and yens, at interest rates much higher than the ones offered by the countries of issue of these currencies, and dr

awing attention, through advertisements on the international press, on the fact that no information on the origin of the funds and on the identity of the buyers would have been requested: the operation soon aborted as a result of the block in the sales on the U.S. market, decided by the Federal Reserve, explicitly concerned about a possible use of the Pakistani certificates for the laundering of the so-called narco-dollars (48).

Similarly to the role played by Thailand in South-East Asia, Pakistan is the country where most of the refinement and first marketing of the heroin produced in South-Western Asia is performed. If the information on the dramatic increase in the production of opium in Afghanistan is plausible, the turnover of the Pakistani traffickers would be comparable to the ones estimated for their Thai counterparts: a couple billion dollars. However, with twice as many inhabitants, Pakistan's economy is about half that of Thailand.

In addition to producing hundreds of tons of opium every year on its own, Iran is a traditional transit site for the heroin of the region, which is then sent to Turkey and the Balkans, the final destination being Europe. The information on what goes on in the country is very scarce: generally speaking, it is believed that the authorities intervene very strongly against both consumers and traffickers, often resorting to summary executions. The vigilance at the border with Afghanistan was recently enhanced, while an anti-drug co-operation agreement of 1989 with the Pakistani government enabled a series of combined operations on both sides of the border (49). In spite of this, Washington continues to deny Teheran the status of co-operating country in the struggle against drugs - another example of how the U.S. judgement on the subject has little to do with the nature of the problem.

It is natural to wonder how producers and traffickers can survive in Iran, considering the pervasiveness of the social control in a regime which is known for its militant ideology - an ideology which includes a strong distaste for drugs. A possible explanation for this is that this trade is tolerated precisely because it is directed at undermining the so-called moral solidity of the Western societies. Another possible reason is the existence of a favourable environment: a second economy run by major businessmen and government officials, who take advantage, among others, of the difference between the official exchange and that of the private sector - in the second case, one dollar costs twenty times as much. Lastly, the need to attract capitals might have its importance: only $ 7 billion of the 27 established by the five-year of 1989 actually reached Iran in Spring 1992 (50).

The victory, at the legislative elections of April 1992, of the followers of President Hashemi Rafsanjani, considered to be a moderate figure, stressed the problem of a normalization in the relations with the West, and in particular with the United States. However, drugs do not seem to be a priority in the list of the U.S.'s conditions, at least not as much as nuclear proliferation, the struggle against terrorism, human rights and Iran's support to the Islamic fundamentalism (51).

____________________

(44) Cf. Jawed Naqvi, "Drugs are central to control of city", The Times, 16 April 1992.

(45) Cf. Edward W. Desmond, "Where the Poppies Bloom - and Boom", Time, 16 July 1990; Tim McGirk, "Hope that is built on heroin", The Independent, 6 June 1992.

(46) Cf. INCB 1991 Report, p. 27.

(47) Ibidem, p. 28.

(48) Cf. "Pakistan Halts Sale of Bonds", IHT, 23 March 1992. Italian treasury bonds and certificates are also to the bearer and at extremely convenient rates: the only difference is they are in Italian liras.

(49) Cf. INCB 1991 Report, pp.27-8.

(50) Cf. Elaine Sciolino, "Iran's Investment Pitch: For Most, It's Too Wild", IHT, 2-3 May 1992.

(51) Cf. Elaine Sciolino, "U.S. Weighs Reward for Iran but Can't Decide What or When", IHT, 8 June 1992.

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3.4. The Middle East

Disregarding Morocco for the above mentioned reasons, Lebanon is the only country of the region to carry out an important role in the drug trade. In this small country, drugs undergo a complete cycle: from the cultivation of cannabis and opium, to the refinement of hashish, heroin and cocaine, to the export of these substances especially to Europe but also to the United States.

As in Afghanistan, in Lebanon too the drug traffic has served the purpose of financing practically all the conflicting factions in a twenty-year long civil war, despite the fact that the main area of cultivation, the valley of the Bekaa, is long since considered to be controlled by the Syrians, who control the entire country through a co-operation agreement with the Lebanese government (52). Trying to get a clear picture of the combination of interests between drugs and factions in Lebanon is a formidable task, even when it is performed by a newspaper with a reputation for being clear, such as The Economist, which concluded an article on the subject a few years stating that "All this resembles the model of chaos financed by drugs, in some cases sponsored by U.S. agencies, which was inaugurated in South-East Asia in the '50s, developed in Central America in the '70s and now threatens Colombia" (53).

In any case, the Lebanese situation is thus described in the latest annual report of the United Nations: "The traffic of cannabis resin [i.e. hashish] and opiates from Lebanon to Europe and North America, as toward other countries of the region, remains significant. A traffic of transiting cocaine has been discovered, mainly from Brazil. Throughout 1990, more than 250 Kg of heroin have been seized in Europe from more than 100 Lebanese citizens. In the first three months of 1991, about 150 tons of cannabis resin have been seized in Lebanon, a fact which points to a vast production in the country. Cannabis is grown on over 16,000 hectares, especially in the Valley of the Bekaa. The cultivation of poppy occupies about 1,500 hectares. Heroin laboratories operate in the country, using both opium produced internally and in the Middle and Near East. In March 1991, cocaine and chemical agents used for the conversion of coca paste into cocaine were seized, a sign of the presence of cocaine laboratories" (54).

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(52) According to the UNDCP, the Syrians, complying with an explicit request of the U.S. administration advanced in the days of the Gulf War, allegedly destroyed the poppy and cannabis crops in the Valley of the Bekaa. Cf. Ian Hamilton Fazey, "Syria destroys Lebanese drug crop", Financial Times, 8 July 1992.

(53) "Under the influence", The Economist, 30 September 1989. Another praiseworthy attempt to justify the role of the drug traffic in the Lebanese situation may be found in Labrousse, op. cit., pp. 122-54.

(54) INCB 1991 Report, p. 28.

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3.5. Latin America

As we said, as far as drugs are concerned, a bit of everything is grown in this region: cannabis, poppy and coca leaf. But the coca industry remains by far the most important one, in terms of numbers of jobs and of profits it generates. After the panic of 1982, the problem of the debt stabilized, and the East-West competition disappeared, so that drugs seem to have become the dominant issue on the agenda of the relations between the United States and the rest of the continent: the main enemies of the war on drugs Washington claims to be waging are precisely the cocaine traffickers of Latin America.

According to the U.S. Department of State, 21 countries of the region are involved in the drug trade with various roles - production, refinement, transit of the substances and of the chemical precursors, money laundering, etc. These countries are Argentina, Bahamas, Belize, Bolivia, Brazil, Colombia, Costa Rica, Cuba, Dominican Republic, Ecuador, El Salvador, Guatemala, Haiti, Honduras, Jamaica, Mexico, Nicaragua, Panama, Paraguay, Peru and Venezuela (55). In practice, the entire continent.

The key countries, however, are only 3, and namely Bolivia, Peru and Colombia, the former two being major producers of coca leaf, and the third the chief centre for refinement and marketing.

According to the official statistics of the Bolivian government, in 1988 coca leaf was grown on 61,000 hectares, or 4.3% of the country's cultivated land. Between 1980 and 1988, the Bolivian agricultural production rose by 24.6% vs. 253% of the production of coca leaf (56). Half a million Bolivians are allegedly directly involved in the coca industry; in other words, about 20% of the labour force of a country with 7 million inhabitants (57). The estimates on the ensuing yearly value of this activity range from a minimum of $600 million to a maximum of $2 billion - the equivalent of 3/4 of the legal exports according to conservative estimates, half the GNP according to the less conservative ones (58).

The fact that the coca economy saved Bolivia from bankruptcy seems to be an ascertained fact: the return of the civilians to the government in 1982, with President Siles Suazo, coincided in practice with the explosion of the debt crisis; between 1980 and 1984, the per capita income shrunk 30%; between 1984 and 1986, the value of the exports decreased by 1/4, reflecting respectively the collapse and the fall of the price of the two most important legal exports, tin and natural gas.

As of 1985, the governments of presidents Paz Estenssoro first and later of Paz Zamora complied with the prescriptions of a drastic stabilization plan established in cooperation with the Monetary Fund: this has lead to a modest growth in the GNP and to a reduction of the inflation, from 24.000% of 1985 to 18% of 1990. The foreign debt has also dropped by 12% between 1987 and 1990. In order to achieve this, it has been necessary not only to reduce the public expenditure and subsidies - causing the loss of 80,000 jobs, obviously compensated by the simultaneous growth of the coca economy - but also to assimilate the profits generated by the drug traffic, deposited in the bank accounts of the Caribbean banks into the national banking system. As of 1985, an amnesty has been issued on the crime of fiscal evasion on exported capitals, and the investigations on the origin of the wealth introduced into the country have been banned. Furthermore, the central bank has its own counter - called ventanilla siniestra - wher

e foreign currency is changed without any embarrassing questions.

Considering this situation, it is no wonder that the efforts to eradicate the coca crops are more cosmetic than anything else, like the ones to repress the traffic: in 1990, only 1% of the coca paste produced in Bolivia has been intercepted.

The U.S. administration, while having cognizance of the country's economic-financial situation, insists on intensifying the struggle against the drug trade and on mobilizing the army: of the almost $190 million in U.S. aid to Bolivia, allotted in 1991, 2,1 went to the development of alternative crops, vs. 13,5 for the repression of the traffic and 26 used to enhance the armed forces (Cf. chart 4).

Most of the population fears this enhancement not only for its potential effects on the coca economy, but also for those on the democracy itself of the country.

Recently, the Bolivian government has been trying to persuade the international public opinion of the fact that some of the uses of coca leaf should be legalized: in May this year, Paz Zamora intervened at the WHO assembly, asking this agency to investigate the possible medical and nutritional uses of the substance.

The main idea is to produce and market a coca infusion, which is already largely consumed in Peru; according to the government, this would have the effect of increasing the revenues of the farmers-producers compared to the revenues presently obtained by the cocaine traffickers (59).

Spain, which had banned the consumption of coca infusion at the Seville expo, now seems to support the Bolivian proposal: Queen Sofia first and later the Prime Minister Felipe Gonzales tasted the drink while visiting the South American country; Gonzales also publicly appealed to the WHO, urging it to investigate the problem (60).

The economic situation of Peru collapsed later than the Bolivian one, but, if possible, in a quicker way and with worse effects. Between 1988 and 1991, the country's product contracted by about 30%. A month after his election, in August 1990, President Alberto Fujimori launched a stabilization program, decided in cooperation with the Monetary Fund, the effects of which on the prices over a 24 hours period were the following: food +700%; petrol +3.000%; drinkable water: +800%; electricity +500%. In a month's time, the salaries in the public sector shrunk by almost 60%, those of the private sector by about 40%. The consumption in the families of the capital, Lima, which has dropped by 46% in the period 1985-1990, lost a further 24% as of August 1990. At the end of 1991, about one million people had lost their job following the austerity plan. All this had at least enabled Peru to lower the annual inflation rate to 140% (from 7.000% of the previous year), to once again have access to international credit (with

Japan and the Inter-American Development Bank) and to reorganize part of its debt (with the Paris club of public creditors) (61). However, the suspension of Parliament and of the constitutional guaranties, decreed by Fujimori on 8 April 1992 with the support of the army, has had the effect of freezing part of these new credits. Moreover, less than a month after the president's self-coup, $200 million had already been taken abroad, according to estimates of the government. And all this despite the fact that the public opinion and the entrepreneurs welcomed the authoritarian turnabout (62).

If this economic disaster were not enough, the country must still deal with an authentic civil war between the government and the guerrillas of Sendero Luminoso. Over a period of 12 years, the conflict has claimed over 20,000 victims and 200,000 domestic refugees. Already before Fujimori's coup, 40% of the national territory was in a state of siege.

The Peruvian coca industry has far reaching effects both on the political and on the economic situation. The political and military force of Sendero Luminoso lies in its violent mediation between the farmers-producers and the Colombian traffickers who buy the coca paste, and in the defence of the farmers themselves from the attempts to repress and eradicate the crops, periodically attempted, through with scarce conviction, by the authorities. Thus, the guerrillas draw from it a political basis and a source of income - the latter through the collection of a sort of protection levy.

The estimates on the annual value of the coca production vary from a minimum of $1 billion to a maximum of $2,8 billion (63). The most conservative one corresponds to 2/3 of the value of all other Peruvian exports combined. About 15% of the labour force allegedly depends on this activity. Like the Bolivian one, the central bank of Peru does all it can to absorb the dollars generated by the drug traffic, through its agencies in the valleys of the upper Huallaga river - the area where most of the coca industry is concentrated - and even by sending its own employees to buy on Lima's black stock market. The predictable result is that part of the foreign debt service is paid with the revenues of the drug traffic.

Despite the fact that it would be patently suicidal for Peru to engage in an all-out war against coca, it is precisely for this reason that the U.S. administration continues to advance this request, at least officially. Of the $200 billion in U.S. aid to Lima in 1991, almost $18 finance the interdiction of the drug traffic and the eradication of the coca crops, $1 million goes to the development of alternative crops and $24 are in aid to the armed forces (Cf. chart 4). The Peruvian military, while having a record of abuses and heavy interference in the political life of their country, are nonetheless extremely reluctant to engage seriously in the repression of the drug traffic. They believe that this would be the best way to increase the political support to the guerrillas. Such belief is certainly strengthened by the ease with which they are corrupted by the drug traffickers.

Compared to the situation of Bolivia and Peru, Colombia could be considered a lucky country, especially from an economic point of view. A unique case in the whole of Latin America, this country has witnessed a constant growth in its product throughout the eighties, and has respected the payment of its foreign debt with perfect punctuality. Even if the drug economy has played a role in this success, the country's several other resources shouldn't be overlooked: oil, coal, precious stones, coffee and other agricultural products for export, such as flowers.

With the economic problems of the rest of the region, Colombia seems to share only the very bad distribution of its income, aggravated by a public expenditure which is strongly limited by fiscal evasion: the Colombian state collects and spends no more than 15% of the GNP (64). Despite the fall in the price of coffee and the inefficiencies in the electric networks have recently been creating further difficulties, the general situation remains one of the rosiest of Latin America.

However, the political situation is far less bright. Despite the fact that the country can formally boast one of the most long-lasting democracies of the region, the current regime can better be defined as a two-party oligarchy, which coexists with levels of violence which are almost unprecedented. With the exclusion of the countries at war, Colombia has the highest rate of homicides of the world, so much that this is the primary cause of death for male citizens aged between 15 and 45 (65). Throughout the eighties, the drug traffickers of the so-called Medellin cartel have been responsible for the assassination of hundreds of military, dozens of judges and journalists, a minister of justice (a former minister was severely wounded in an attempt in Budapest, where he was ambassador to Hungary) and a presidential candidate - without considering the countless kidnappings committed by the same people. Nonetheless, it would be a mistake to conclude that drugs are the sole cause for the violence in Colombia. First

of all, because of the country's historical precedents: the undeclared civil war of 1948-58 between the two major parties, the Liberal Party and the Conservative Party, has caused between 200,000 and 300,000 casualties, deserving the explicit but simple name of 'la violencia'. Traces of this period persist, for example in the presence, in the Right, of the so-called death squadrons, and, in the Left, of guerrilla movements with 12-15,000 guerrillas (in 1988) (66). Secondly, there are a variety of armed private police forces in almost all sectors of the economic and political life. Police forces in conflict with the others forces and with the State: it is estimated that the rivalries associated to the trade of precious stones has caused 3,000 casualties over a period of five years (67).

With regard to the drug traffickers, the Colombian governments have fluctuated between an attitude of inflexibility and one of negotiation, while it must in any case take into account the U.S.'s pressure on the one hand and the force of intimidation of the drug traffickers on the other. Several times during the last decade there has been a series of events opened with a campaign of governmental repression, followed by a wave of terror on the part of the traffickers, followed then by attempts to reach a settlement. The core of the conflict has almost always been the treaty of extradition with the United States, the application of which is opposed by the traffickers with all means.

In 1984, the Medellin cartel offered to withdraw from business, dismantle the organization and repatriate its capitals (estimated to amount to $ 15 billion, i.e. the country's entire foreign debt). In exchange, they asked for guaranties on the non-extradition to the United States and an amnesty enabling their reintegration in the Colombian society. The agreement failed, both for the opposition of Washington and for the government's belief of being close to a victory - after the assassination of the Minister of Justice, Lara Bonilla, a strong repressive action had forced the top traffickers to flee to Panama. It was a "missed opportunity to reach an advantageous agreement for Colombia" (68). Progressively, the cartel managed to reconstruct its organizations and commercial channels. The heads of the cartel also managed to return to Colombia.

The same thing occurred in 1987, when the extradition to the United States of one of the major traffickers, Carlos Ledher, triggered another wave of violence - all this leaving the quantity of cocaine sent abroad unaffected.

After the election of César Gaviria Trujillo for president, in Summer 1990, the Colombian government seems to have chosen the solution of the negotiation - opened with the guerrillas by his predecessor Virgilio Barco Varga. One of the groups of armed opposition, M-19, peacefully integrated itself in the country's political life, even if the Army of National Liberation (ELN) and the Revolutionary Armed Forces of Colombia (FARC) still remain active. An identical approach has been adopted toward the cartel of precious stones in war against each other and against the State. As to the drug traffickers, the rejection of the treaty of extradition with the United States has lead to the surrender of the major exponents of the Medellin cartel: the three Ochoa brothers, between December 1991 and February 1991, and Pablo Escobar Gaviria, in June 1991.

The importance of these arrests was more symbolic than material. Apart from the controversy on their conditions of imprisonment - a luxury villa, more than a prison, had been built for Escobar - the fact is that they had been able to continue to control the drug traffic. This had caused inevitable protests, especially on the part of the U.S., and lead the government to mobilize for Escobar's transfer. The latter reacted in July 1992 by escaping the prison in a spectacular way, a fact which greatly jeopardized Gaviria's credibility (69).

Whether the government adopted a hard or soft line, the practical impossibility of interrupting the flows of export of drugs from Colombia seems to be an ascertained fact (70). The explanation for this is rather simple, and lies in the economic force of the traffickers: the estimates on the value of the exports of cocaine and marijuana - without counting heroin, recently added - range from $1,5 to 15 billion yearly (71). To make a comparison, legal exports amounted in 1989 to $5,7 billion, the GNP to $39,4 (72).

First of all, with such a mass of tax-free money at their disposal, the drug traffickers are obviously in a position to corrupt anyone, all the more since the salaries of the public officials (police, judiciary, etc) are particularly meagre. Vice versa, they resort to violence when they are confronted with large-scale repressive campaigns, or to avert the threat of an extradition of the leaders of the organization to the United States. Moreover, the violent action affects almost exclusively the Medellin cartel. The other major circuit of drug traffickers of Colombia, the so-called Calì cartel, has on the contrary maintained a far less subversive profile, while administering a growing share of the drug industry (73).

Secondly, in addition to the direct corruption, there is an indirect one: as in Peru and Bolivia, the balance of payments and the foreign debt service are more than sufficient reasons to convince the government and the central bank to take all necessary measures to attract the capitals generated by the drug traffic into the country. The authorities themselves show with facts that the struggle against the drug industry is an enterprise which basically clashes with the general interests of the country.

There are theses that maintain the contrary. It is true, for example, that while in Bolivia and Peru consistent shares of the labour force depend on this industry, the revenues of the drug traffic concern a far more limited number of people: the refinement and marketing operators (74). Therefore, instead of being distributed in a relatively uniform manner, this form of income allegedly fosters visible consumption, property speculation and, for its great quantity, inflation - the latter, however, never grew beyond 30% yearly over the last decade, a modest rate considering the region's average (75). We must also consider the costs for Colombia of the struggle against the drug traffic, estimated to amount to $2 billion yearly (77), as well as the political costs of the destabilization and violence related to this activity.

In the light of a costs-benefits estimation, nonetheless, the government's choices to negotiate with the traffickers and encourage by all means the return of the capitals from abroad remain understandable. The negotiation enables Colombia to minimize both the economic and the political costs of the struggle against the drug traffickers. The return of hard currency acquired with the drug trade, while affected by the above mentioned distortions, facilitates the stability of the exchange rate and the debt service.

The Colombian government has been helped in this manoeuvre by the toughening of the measures against money laundering, enacted in the industrialized countries after the signing of the U.N. Convention of 1988 against the Illegal Traffic of Narcotics and Psychotropic Substances. It cannot be ruled out that the narcodollars play an important role also in the growth of the Colombian stock exchange, whose index in dollars rose six times between 1987 and 1992 (77).

Difficult as it may be to draw general conclusions from a review of countries that are so different, a few things many be remarked.

First of all, even taking with caution the most conservative estimates, one can conclude that the revenues ensuing from the production and trade of drugs play too important a role in the economy of these countries for them to seriously engage in a struggle against the drug traffic. On the contrary, there is the possibility that new producers, such as the Asian republics of the former Soviet Union, could add to the list, or that traditional producers such as Afghanistan, could increase the cultivated surface - while a diversification of the Colombian heroin industry seems to be an ascertained fact.

On the other hand, the sums which the North allots to the conversion of the crops are really not such as to represent a realistic incentive - as may be seen by the UNDCP's limited budget, and by the division of the U.S. aid to the Andine countries. It has been quite aptly said that "the prospect of providing alternative economic possibilities to convince the farmers of Peru, Colombia and Bolivia to relinquish the production of coca seems to be remote, considering that marijuana has become the most important crop in terms of value in California, where there are plenty of alternative possibilities" (78).

Nor is it likely that the aid for the conversion of the crops will be significantly increased in the near future: the idea, advanced at the U.N. level by a group of developing countries, to obtain a reduction in their foreign debt in exchange for the eradication of the crops has received a cool reception by the creditor countries, which are concerned about a possible blackmail effect: "the indebted countries might be tempted to reduce their anti-drug commitment, so as to force a debts-in-exchange-for-drugs agreement on the international community" (79).

Secondly, despite the importance of these revenues, the sums that remain in the producing countries are but a small share of the global turnover of the drug traffic - even if this, as we will see in the following chapter, is almost always calculated by excess. The profits generated by the drug industry remain mostly in the North of the world, both because it is at this stage of the distribution that the price increases, and because it is in the North that part of the capitals of the traffickers of the South is invested. Therefore, it cannot be ruled out that if the drugs were legalized, the producing countries would manage to keep the current profits, but with the obvious advantage of taxing them and removing them from the control of terrorists and criminals. Clearly, all this while other conditions remain: an excess supply caused by the introduction of new producers would change the entire scenario. In any case, the fact that a country such as Bolivia is attempting a solution of the kind of the legalization

is perhaps a sign of the credibility of such approach.

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(55) Cf. International Narcotics Control Strategy Report, cit., pp. 25-34.

(56) Cf. Alaine Labrousse, "Amérique Latine: l'économie de la drogue", Politique Internationale, summer 1990.

(57) Cf. "Latin America's killing fields", The Economist, 8 October 1988.

(58) Cf. Peter R. Andreas and Kenneth E. Sharpe, "Cocaine Politics in the Andes", Current History, February 1992; "The kickback from cocaine", The Economist, 21 July 1990.

(59) Cf. Nathaniel C. Nash, "Bolivians Make Their Case for (Legal) Coca-Leaf Tea", IHT, 18 June 1992.

(60) Cf. Ignacio Cembrero, "Felipe Gonzáles se muestra favorable a la legalización de la hoja de coca", El Pais, 11 June 1992.

(61) Cf. Andreas and Sharpe, cit.

(62) Cf. Nathaniel C. Nash, "Capital Flight Deepens Peruvian Gloom", IHT, 29 April 1992.

(63) Cf. Andreas and Sharpe, cit.; "The kickback form cocaine", cit.

(64) Cf. "Colombia's bloodstained peace", The Economist, 6 June 1992.

(65) Andreas and Sharpe, cit.

(66) Cf. Bagley, cit.

(67) Cf. "Gem wars", The Economist, 21 July 1990.

(68) Bagley, cit.

(69) Cf. Marcel Niedergang, "Une nation à la dérive", Le Monde, 24 July 1992.

(70) Despite the fact that the seizures of cocaine from South America are estimated by the U.S. government to represent about 30% of the global production, this has left both the price and the consumption unaffected. Cf. Melvyn Levitsky (Assistant Secretary for International Narcotics Matters), Statement before the Subcommittee on Terrorism, Narcotics, and International Operations of the Senate Foreign Relations Committee, 20 February 1992.

(71) Cf. "The kickback from cocaine" and "Latin American killing fields", The Economist, cit.

(72) Cf. The World Bank, World Development Report 1991, Oxford University Press, Oxford, 1991, pp.230 e 208.

(73) It is commonly held that the Medellin cartel controls the market of the east coast of the United States, whereas the Calì cartel controls the west coast and Europe.

(74) In any case, it should be considered that the role of the Colombian families is very advanced in the commercial chain: for years now, after having eliminated the Cuban-American rivals, the Medellin cartel supposedly controls most of the wholesale market in Miami. Cf. Bagley, cit.

(75) Cf. Paola Vinciguerra, "L'industria della droga in Colombia", Politica Internazionale, January-February 1991.

(76) Cf. Rensselaer W. Lee, "Colombia's Drug Negotiations", Orbis, Spring 1991.

(77) Cf. Catherine Burton, "Latin American Stocks Sustain the Pace", IHT, 29-30 August 1992.

(78) Theodore H. Moran, "International Economics and National Security", Foreign Affairs, winter 1990/91.

(79) Ian Hamilton Fazey, "Campaign to swap debt for drugs aid gathers pace", Financial Times, 6 May 1992.

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4. The estimates on the drug traffic's turnover

Whether it is academic publications or the daily press, it is almost impossible to read anything at all concerning the drug traffic without encountering some figures on the volume of the money it allegedly generates. This paper also contains several estimates, taken from the most different sources, on the profits of this or that producing country. How should they be considered? With enormous caution. A caution which it is wise to intensify when moving toward larger ensembles, such as the value of the sales of narcotics in the consuming countries.

There are plenty of reasons to mistrust any estimation on the subject. The formation of the retail price of the various drugs is highly atypical (80). The ascertained prices, both wholesale and retail, can vary greatly in time and space. The estimations on the number of consumers are affected everywhere by large margins of uncertainty. "One must remain in the realm of conjectures, with the risk of accepting some figures because they are frequently mentioned or used" (81).

To avoid this risk, one can try measuring some of these figures on the scale of more plausible economic data, starting from the highest estimate, originally circulated by an American magazine and then widely mentioned (82). Thus, the main report of the convention "Drugs: the new Empire of Evil - A global and planetary war" (sponsored by UNDCP, Presidency of the Republic, Ministry of Foreign Affairs, of the Interior, of Justice, of Social Affairs), held in Rome on 12 May 1992, states that "After the traffic of weapons, drugs generate more profits than any other activity, an estimated $500 billion yearly" (83).

Taking for granted the demand in the countries that produce drugs - a demand which it seems legitimate to attribute to self-consumption - the final consumers of narcotics need to be sought in the industrialized countries. These countries, placed at the end of the commercial chain, buy the product of the drug industry as it is commonly meant, and determine its turnover.

In the OECD, private consumption absorbs 3/5 of the GDP. It amounts to about $8,700 billion (1989). Is it reasonable to think that the consumption of drugs in the OECD corresponds to 5.7% ($500 billion out of $8,700) of the private consumption? Is it possible that more money is spent on drugs than for the purchase of automobiles (3% in Italy, 5% in the United States, always on consumption of the families) or for combustibles and energy (4% both in Italy and in the United States) (84)?

The answer can only be negative, considering also the drug-addicted population, i.e. those who presumably spend all their income - whatever the origin - on drugs. To give an example of the size, these are formed by a maximum of 300,000 people in Italy and 1,000,000 in the United States, respectively on a total population of 57 million and 249 million inhabitants (85). It is obvious that an estimation corresponding to 1/5 of the mentioned one, i.e. about $100 billion, or 1.2% of the private consumption of the OECD, is already incredibly high, and presumes a wide recreational consumption (i.e. on the part of non-addicts) of illegal drugs in the developed countries. However, the most frequently mentioned estimates sometimes greatly exceed the threshold of $100 billion (Cf. chart 5).

Before trying to see what conclusions may be reached - limitedly to Italy - with the opposite procedure, i.e. an inductive calculation on the basis of the estimated expenditures of the drug addicts, it is worth reanalyzing the quote we started off from, according to which the turnover relative to the illegal drugs is second only to the traffic or weapons.

This has also rapidly become a leitmotiv used by the media (86). However, it is odd that no one every stopped to check the amount of the arms traffic, obviously meaning by this the value of the international arms trade. Compared to the $500 billion attributed to drugs, these are lower figures: $49 billion in 1988, 56 in 1987, the last peak years before the recent, marked decline (87). Vice versa, the global expenditure for weapons - a different concept, as it includes the internal transactions, i.e. the supplies of the various national industries to the relative governments - should reasonably have amounted in those same years to $200-250 billion, i.e. 1/5 and 1/4 of the world military expenditure. In any case, we are far from the $500 billion mentioned.

This type of sensational comparisons, carried out with considerable superficiality, have ultimately given credit to a connection between weapons and drugs - of the kind of the Empire of Evil - which in my opinion is very scarcely buttressed by facts. Clearly, a series of Italian judicial investigations have revealed points of juxtaposition between the mafia and some clandestine supply of weapons. The mafia is also in the drug circuit, therefore weapons and drugs are related. But the sillogism is rather misleading.

The clandestine side of the international weapons transactions is but a small fraction of the legal and recognized one. The figures at hand are modest ones (no more than a few couple billion dollars yearly) compared to the more cautious estimates on the value of the drug traffic. Moreover, it is far easier to hide a substance in the form of powder than weapons and ammunition - a machine gun of the Kalashnikov type is sold at the same price as one or two grams of heroin, a howitzer shell weighs over 100 kilos, tanks and missiles are much more visible objects. The two types of trade call for extremely different skills, but it remains a fact that one of them, weapons, is far less profitable than the other. Therefore, why should there be some type of systematic connection? - which is something different from the occasional financial or personal combination.

On the other hand, it is true that the Colombian drug organizations provide themselves with explosive, weapons and ammunition. So does the mob. It is also true that the Lebanese and Afghan factions, the Peruvian and Burmese rebels and even the government of Rangoon have bought weapons with the profits of the drug trade. But the fact that the money of the drug traffic is used in this or that way is not very significant in itself. No one dares say that Rolex or Ferrari are implicated in the drug traffic for the simple fact that their products are bought by the Medellin or Calì lords.

Making an estimation of the turnover of the drug industry by deduction poses countless problems. For example, the price of the substances varies greatly from place to place and even in a same country, and from period to period in the same place. It is also difficult to interpret such changes in price in a correct manner: "An increase in the price [of heroin] can be caused by a greater demand, as would occur if the drug-addicted population grew for exogenous reasons, or by a shift in the curve of the supply, as could occur if greater police resources were involved in the struggle against the traffic. In the short term, an increase in the number of drug users, at the same conditions, increases the prices. In the long term, the casual relation is opposite: an increase in the price will discourage the flow of new addicts in the group of drug addicts" (88).

Even if we succeeded in establishing a price, it should be considered that many drug addicts or simple drug consumers discharge the cost of the substance on other consumers, buying wholesale, selling retail and keeping a share for themselves (the well-know figure of the consumer-dealer). Also, among the drug-addicted population, there is at every given time a subgroup in prison or in therapy, whose consumption is reduced or discontinued altogether. This may make a simple multiplication between the estimated number of drug addicts and the annual expenditure based on the daily consumption, misleading. Lastly, with the exception of a few surveys carried out in the U.S., there is total ignorance regarding the recreational consumption of illegal drugs, the one regarding the non-drug addicts: how many and who are these people, how much do they spend to buy the substances? This is simply unknown (89).

In the case of Italy, these difficulties have been taken into account in two surveys on the drug markets of Bologna and Verona, where reasonably plausible results have been obtained (90). It has been attempted to extend the method used in this study to the entire country, in a survey carried out by the Centre for Social Investment Studies (CENSIS) and by the National Centre for Social Prevention and Defence (CDS) (91). It is important to underline that, unlike other surveys, these advance reasonable hypotheses on the drug addicts' behaviours - the totality of whom are often attributed a consumption of 365 days all year round - as well as on the price and purity of the heroin. As to the drug-addicted population, the CENSIS-CDS survey is based on data from the Institute of Health and of the National Council for Research; data which lead to establish that the habitual consumers of heroin in Italy amount to about 150,000. The result is that the yearly value of the sales in Italy of this substance amount to about

2,400 billion lira - including the purchases of the few occasional consumers.

It cannot be ruled out that the number of Italian drug users has been underestimated in the sources used by the CENSIS-CDS researchers, possibly by factor two (92). Correcting the estimation as a consequence, the turnover of heroin would leap to about 5,000 billion yearly.

Doubling this figure, on a national basis, means making far but conservative hypotheses on the diffusion of drugs other than heroin. This will be more clear considering the following.

First of all, cocaine consumers. There are no data regarding Italy. However, there is a general agreement on the fact that the demand for this substance, while rapidly increasing, is generally lower than the demand in the U.S. The National Household Survey on Drug Abuse carried out by the National Institute on Drug Abuse (NIDA) has surveyed 660,000 people in 1990 in the U.S. who have consumed cocaine over the last week, and 1,600,000 people who have consumed it over the last month (93). Leaving out all those who use cocaine less than once a month (4,1 million in the U.S.), any transposition to Italy will hardly lead to more than 100-150,000 consumers " of the last week", and to 300-400,000 consumers "of the last month". Considering that the occasional use of the substance seems to be absolutely prevalent, it is already an exaggeration to attribute to a group this size a consumption which corresponds, in terms of value, to half of that of the drug addicts and occasional heroin consumers, i.e. 2,500 billion.

Secondly, there are cannabis consumers. The cost of this substance is much lower than the other ones considered (less than 1/10: Cf. chart 6), and generates a purely occasional consumption. There follows that those who use marijuana or hashish will hardly spend annual sums around 1 million lira. In order to generate the missing 2,500 billion or more, however, we need to hypothesize the existence of at least 2,5 million cannabis consumers, with an individual expense of one million lira yearly. According to the Ministry of Finance, on the contrary, this group is formed by about 2 million people, for a total annual expense of 900 billion (94).

Thirdly, the CENSIS-CDS research, that maintains - while basing itself on the "opinions and perceptions" of unspecified "experts in the field" - that the heroin market represents at least 55-60% of the Italian narcotics market.

As a further scale for the figures hypothesized in this study, we need to consider that 10,000 billion yearly would account for about one percentage point on the consumptions of all the Italian families - a far but negligible share (95).

In the case of Italy as well, nonetheless, there continue to circulate far greater estimates compared to the general hypotheses advanced here. Following are some of them. Some time ago, the CENSIS itself had estimated that the Italian turnover of the drug industry for 1985 amounted to 30,000 billion (96). In 1989, Il Sole-24 Ore calculated that it amounted to 93,000 billion (97). The Chambers of Commerce consider that the criminal organizations' profits from drugs and extortion amounts to $110 billion, or 15% of the GDP (98). While ignoring the part of this estimate that supposedly originates from extortion, the whole thing sounds exaggerated.

There is no need for such exaggerations. The margins of profit of the industry of illegal drugs (a partial indicator of which is the increase in price on moving up the commercial chain: chart 7) should be sufficiently high as to create considerable financial concentrations over a period of a few years - even with a smaller turnover and with criminal circuits which are not integrated among each other (i.e. the contrary of the Empire of Evil). In other words, there is all that is needed to expect an increase in the activities necessary to protect this type of business and to make it thrive: corruption, speculation, etc. In Milton Friedman's words, the drug industry "is not an example of an organized plot, but a predictable behaviour of the members of a branch of industry. That is to say that the drug lords behave no differently than the automobile tycoons" (98).

Why, then, does the problem of the drug traffic - also from the less controversial aspect, i.e. in terms of figures - continue to be handled with so many exaggerations?

The main explanation lies in the bureaucratic logic. It is a known fact that the military tend to exaggerate the enemy's capacities - the so-called worst case analysis - in order to mobilize the maximum of resources and to protect themselves from any criticism in the event of a defeat. The same behaviour characterizes the national and international anti-drug bureaucracies, all the more since the prevailing perception in the public is that of their defeat.

In fact, many antiprohibitionists also endorse these exaggerations, of the kind of the Empire of Evil, perhaps in the belief that these will further support their proposals for a legalization. However, this is a double-edged weapon. By refraining from criticizing the exaggerations, the antiprohibitionists run the risk of creating exasperated expectations on the legalization of drugs. It would be deceptive, for example, to expect from this measure such different things as the collapse of petty crime and the extinction of the Italian mobs, the overcoming of the military dictatorship in Burma and the end of the clandestine arms trade. On the contrary, the persistence of these phenomenons, while reduced, in a regime of legalization of drugs, could create precisely that type of generalized deception which is the ideal ground to relaunch prohibition.

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(80) Because the export price is on average less than 10% of the final price, the traffickers of the consuming countries are in a position to absorb any increase in price in the producing countries, or any reduction in the quantity (caused, for example, by the seizures) which does not cause an absolute scarcity. Cf. Peter Reuter, "Eternal Hope: America's Quest for Narcotics Control", The Public Interest, Spring 1985.

(81) German Fonseca, "Economie de la drogue: taille, caractéristiques et impact économique", Revue Tiers Monde, July-September 1992.

(82) Cf. Louis Kraar, "The Drug Trade", Fortune, 20 June, 1988.

(83) Jamieson, cit., p. 46.

(84) All these data are taken from the World Bank, op. cit.

(85) The number of 500,000 drug addicts in the U.S. in the mid-eighties has been criticized as excessive, and with extremely convincing arguments: "If we use the estimates, produced in various academic studies, of the number of crimes committed by drug addicts, we find once again that the drug-addicted population alone seems to commit more crimes against property than are actually committed". Peter Reuter, "The (continued) Vitality of Mythical Numbers", The Public Interest, Spring 1984.

(86) A single example among the dozens of possible ones. An article in which the author underlined the so-called weapons-drugs connections stated that "the investigation [of the Roman judge Mario Almerighi] proves that the chief traffic has always been that of weapons, whose turnover reaches unthinkable figures, whereas the one relative to drugs simply represents a first form of reinvestment of dirty capitals". Antonio Cipriani, "Spunta un rapporto segreto anche a Roma: 'I trafficanti di droga fanno incetta di Bot e Cct'", L'Unità, 5 January 1992.

(87) Cf. U.S. Arms Control and Disarmament Agency, World Military Expenditures and Arms Transfers 1989, Washington DC, Government Printing Office, 1990. L'ACDA, an agency of the U.S. government, does not take into account the supplies to sub-national groups, which can hardly represent, nonetheless, in terms of value, more than a couple of percentage points of the cumulative demand of the governments. The latter is calculated by the ACDA regardless of the supply, so as to include the black market of the unofficial suppliers as well. Lastly, it includes spare parts and ammunition.

(88) "The (continued) Vitality of Mythical Numbers", cit.

(89) Only now are the media starting to acknowledge the fact that there are occasional consumers also in the case of heroin. Cf. Joseph B. Treaster, "In New York, Juggling a Heroin Habit With Life at the Top", IHT, 23 July 1992.

(90) Cf. Pino Arlacchi and Roger Lewis, "Sociologia della droga: il caso di Verona", Micromega, 4/89; Pino Arlacchi and Roger Lewis, "Droga e criminalità a Bologna", Micromega, 4/90.

(91) Cf. Contro e Dentro, Milano, Franco Angeli, 1992, pp. 103-120.

(92) In the study on Bologna, Arlacchi and Lewis had indicated the average ration between drugs addicts in therapy at public and private structures and the total number of drug addicts as 1:4 (cf. "Droga e criminalità a Bologna", cit.). At 31 December 1991, the drug addicts in therapy in Italy amounted to 73,866. Cf. Carla Rossi (edited by), Osservatorio delle Leggi sulla Droga, VI Report, August 1992, Coordinamento Radicale Antiproibizionista e Millelire-Stampa Alternativa, Rome, 1992.

(93) Cf. National Drug Control Strategy, cit.

(94) Cf. Roberto Delera, "2 milioni di italiani lo fanno - stravaganti o colpevoli?", Epoca, 6 May 1992.

(95) If the objecttive is knowing the size of the profits generated by the drug traffic pocketed by the Italian criminal organizations, it is obvious that the exports to Europe and the United States have not been considered. Though it is generally held that mafia, 'ndrangheta and camorra export great quantities of drugs, especially to Europe, it is also legitimate to hypothesize some sort of role for the criminal organizations of the markets of arrival. A role which reduces the margins of profit. Even the Italian estimated turnover cannot be translated as it is into profit for the criminal enterprises: as in every other industry, it would be necessary to deduce the production costs, such as the purchase of raw materials, and intermediation costs. In this case, it can only be said that, compared to other legal activities, the former seem to be contained, while the latter (we need only think of the corruption or money laundering) should be considerable.

(96) Cf. Il peso dell'illecito in Italia, Milano, Franco Angeli, 1988. The same study (cf. pp. 143-4) maintained, on extremely fragile bases, that the ratio between the turnover of the clandestine weapon trade and the legal one was 1:1 (the latter being also overestimated). This gave a paradoxical result of 4,000 billion yearly.

(97) Cf. Lorenza Moz, "Il business della criminalità 'fattura' 200mila miliardi" and "Dal produttore al consumatore la 'coca' si ricarica del 2.300%", Il Sole-24 Ore, 4 September 1989. According to these figures, therefore, more than 10% of the private consumption and more than 6% of the GDP are allegedly used for the purchase of drugs.

(98) Cf. "Organized crime seeks to profit from Europe's single market", The Wall Street Journal Europe, 22 July 1992.

(99) "Der Drogenkrieg ist verloren", Der Spiegel, 30 March 1992.

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Conclusions

Having relinquished the estimates on the turnover of the drug industry, and with it the theories on the international plots, it seems more useful and realistic to address the survey in two directions.

Firstly, the costs of the struggle against drugs in the societies that consume them - disregarding, for reasons of order, the ones borne by the producing countries. It is an ascertained fact, for example, that the prohibition of the trade and consumption of narcotics absorbs a considerable part of the police resources, of the customs and of the judicial system. By way of principle, the quantity and costs of the penal proceedings for drug-related crimes can be established better than any estimate on the consumption of narcotics. It should also be possible to determine with accuracy the number of convicts for drug-related crimes: the imprisonment of these individuals involves an individual cost, which should be known, and an indirect collective cost on the global efficiency of the prison system - almost everywhere, in the West, in an overpopulation crisis (100). The number of operators and the budget resources which police and customs allot to the struggle against drugs should be known. Lastly, there are the c

osts of the international bodies that deal with the phenomenon, which can also be determined (101). In other words, instead of trying to know what cannot be known - how much the traffickers benefit from prohibition - it would be better to try to ascertain something that it is possible to ascertain: how much the taxpayer pays for prohibition. Which, while it is not the only element of judgement on the entire problem, would certainly encourage the formation of a balanced evaluation of the results of the struggle against drugs in a prohibitionist regime.

Secondly, the behaviour of the occasional consumers. This aspect would deserve serious sociological surveys, as it is probably one of the keys to understand the probable consequences of a legalization of drugs. On a deeper analysis, the vast majority of drug consumers are not addicted. The problem, therefore, is understanding the role played by prohibition in this result. For example: to what point are prices boosted by the regime of illegality, and the threat of administrative and penal sanctions in limiting the consumption (102)? Or rather, what is the role played by the consumers' capacity of self-regulation? Or: is illegality an obstacle or an incentive to the relinquishment of drug abuse?

Ultimately, we believe that investigating in the two directions outlined is the condition to take the discussion on the drug trade and the prohibitionist regime out of the hallucination of the mythical numbers and of the plots - to take it to the more solid field of rational choices.

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(100) In 1991 almost 23,000 arrests have been carried out in Italy for drug-related crimes; 34% of the convicts were drug addicts. Cf. Marcello D'Angelo, "I giovani si bucano meno", Il Giorno, 12 February 1992. Of the 15,000 convicts in the U.S. federal prisons, about 13,000 have committed drug-related crimes. The U.S. prison system (federal, state and local prisons) contains over one million people, is at 116% of its capacity of reception and costs $18 billion yearly. Cf. National Drug Control Strategy, cit., pp. 32-43.

(101) Even the health care system of the various countries bears costs ensuing from the illegality of the consumption. Nonetheless, in this case, the effects of the end of prohibition are far less obvious: the drug addicts' therapy should continue, and proabably be extended to a greater number of patients; rules on the quality of the substances sold and hygienic-sanitary controls should be introduced; and so on.

(102) In order to avoid the creation of a black market, the prices of the narcotics could be kept high also in a regime of legality, through a tax imposition.

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Charts

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Chart 1: Net world production of opium, coca leaf, marijuana and hashish. In tons.

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Country 1990 1989 1988 1987

Opium

Afghanistan 415 585 750 600

Iran 300 300 300 300

Pakistan 165 130 205 205

Total South-W Asia 880 1015 1255 1105

Burma 2250 2430 1285 835

Laos 275 375 255 225

Thailand 40 50 28 24

Total S-East Asia 2565 2855 1568 1084

Lebanon 32 45 na na

Guatemala 13 12 8 3

Mexico 62 66 50 50

Total opium 3520 3948 2881 2242

Coca leaf

Bolivia 81.000 77.600 78.400 79.200

Colombia 32.100 33.900 27.200 20.500

Peru 196.900 186.300 187.700 191.000

Ecuador 170 270 400 400

Total coca leaf 310.170 298.070 293.700 291.100

Marijuana

Mexico (*) 19.715 30.200 5.655 5.933

Colombia 1.500 2.800 7.775 5.600

Jamaica 825 190 405 460

Belize 60 65 120 200

Others 3.500 3.500 3.500 1.500

Total Marijuana 25.600 36.755 17.455 13.693

Hashish

Lebanon 100 905 700 700

Pakistan 200 200 200 200

Afghanistan 300 300 300 300

Morocco 85 85 85 60

Total hashish 685 1.490 1.285 1.260

(*) The previous estimates at 1989 had been made on other bases, and cannot therefore be compared to those of 1989 and 1990.

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Source: United States Department of State, Bureau of International Narcotics Matters, International Narcotics Control Strategy Report, Washington, March 1991.

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Chart 2: Ten drug-producing countries, plus Japan and Italy, classified according to the Human Development Index (HDI) of the United Nations Development Program (UNDP).

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Country HDI Position in the

general classific.

of 160 countries

Afghanistan 0,069 157

Burma 0,437 106

Bolivia 0,416 110

Colombia 0,757 61

Iran 0,577 92

Laos 0,253 128

Lebanon 0,592 88

Pakistan 0,311 120

Peru 0,644 78

Thailand 0,713 66

Japan 0,993 1

Italy 0,955 18

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Source: Programme des Nations Unies pour le développement, Rapport mondial sur le développement humain 1991, Economica, Paris, 1991.

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Chart 3: Population, per capita income, economic growth and foreign debt of ten drug-producing countries. Year 1989.

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Country a b c d e

Afghanistan (*) 17 na na na na

Burma 41 na na 4,1 na

Bolivia 7 620 -0,9 4,3 102,2

Colombia 32 1.200 3,5 16,8 45,8

Iran 53 3.200 0,5 na na

Laos 4 180 na 0,9 152,6

Lebanon (*) 3 na na 0,5 na

Pakistan 110 370 6,4 18,5 46,9

Peru 21 1.010 0,4 19,8 73,5

Thailand 55 1,220 7,0 23,4 34,1

a = Population in millions.

b = Per capita Gross National Product (GNP)L) in US$.

c = Average annual percentage growth of the Gross Domestic Product, 1980-89.

d = Foreign debt in US$.

e = Foreign debt as % of the GNP.

(*) Source as for chart 2.

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Source: The World Bank, World Development Report 1991, Oxford University Press, Oxford, 1991.

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Chart 4: U.S. aid to Bolivia, Peru and Colombia. In millions of US$. Fiscal year 1991 (in brackets the administration's request for 1992).

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Bolivia Peru Colombia

Economic aid 137,3 (180,8) 157,2 (187,7) 54,1 (53,8)

Military aid 35,9 (40,9) 24,5 (39,9) 51,5 (60.3)

Anti-drug 15,7 (15,7) 19,0 (19,0) 20,0 (20,0)

assistance, of which:

Repression 13,5 (14,3) 17,8 (17,9) 18,8 (18,6)

Prevention 0,0 (0,0) 0,2 (0,1) 0,3 (0,3)

Alternative 2,2 (1,5) 1,0 (1,0) 1,2 (1,4)

development

TOTAL 188,9 (237,4) 200,7 (246,6) 125,6 (134,1)

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Source: "Fact Sheet: U.S. Economic, Military, and Counter-Narcotics Program Assistance", U.S. Department of State Dispatch, 2 March 1992.

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Chart 5: A few estimates on the annual global turnover of the drug industry. In billions of US$.

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Source Estimate

FATF(a) 122

German government (b) 250

U.S. Department of State (c) 300

Fortune(d) 500

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(a) Mentioned in "Crime and Drug traffic in the Member States", report of the committee of inquiry of the European Parliament in the diffusion of organized crime related to the drug traffic in the Community, 2 December 1991. FAFT stands for Financial Action Task Force, a body created after the G-7 summit in Paris in July 1989. The estimate refers to the monetary value of the sales of heroin, cocaine and hashish in the United States and in Europe in 1989. it is interesting to remark the following: $106 billion are attributed to the consumption in the U.S., versus 16 in Europe; the heroin consumption is estimated to account for 10% of

the total consumption; slightly more than 2/3 of the total ($85 billion) are supposedly laundered.

(b) In "The EC Single Market promises to be a boon for the narcotics trade", The Wall Street Journal Europe, 2 September 1992.

(c) United States Department of State, Bureau of International Narcotics Matters, International Narcotics Control Strategy Report, Washington DC, Government Printing Office, March 1991, p. 16. Oddly, the source of this estimate is attributed precisely to the FATF.

(d) Louis Kraar, "The Drug Trade", Fortune, 20 June 1988.

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Chart 6: Average retail price of one gram of heroin, cocaine and hashish in Italy. In lire.

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Substance Price

Heroin (a) 160.000

Cocaine (b) 185.000

Hashish 12.000

(a) One gram of street heroin rarely contains more than 150 mgs. of substance, and corresponds to three or four single doses.

(b) One gram of cocaine corresponds to about forty single doses. Cf. Giancarlo Arnao, Proibizionismo, Antiprobizionsimo e Droghe, Millelire-Stampa Alternativa Editrice, Roma, s.d.

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Source: CENSIS-CDS, Contro e Dentro, Milano, Franco Angeli, 1992, pp. 108-9.

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Chart 7: Formation of the price of cocaine and heroin. In US$.

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Price

Heroin (1 kg.)

For the farmer (10 kg. of opium) 1.000

Wholesale 200.000

Retail 2.000.000

Cocaine (1 kg.)

For the farmer 1.200

Export (Colombia) 7.000

Import (Miami) 20.000

Wholesale (Detroit) 40.000

Retail 250.000

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Sources: for heroin, Jean-François Couvrat, Nicola Pless, La face cachée de l'économie mondiale, mentioned in Germàn Fonseca, "Economie de la drogue: taille, caractéristiques et impact économique", Revue Tiers Monde, July-September 1992; for cocaine, Peter Reuter, "Quantity Illusions and Paradoxes of Drug Interdiction into Vice Policy", mentioned in Morris J. Blachman, Kenneth E. Sharpe, "The War on Drugs", World Policy Journal, winter 1989-90.