According to the U.S. State Department, a good 21 countries of Latin America are involved in various ways - production, refining, transit of the substances and of the chemical precursors, money laundering - in the drug trade. The key countries, however, are only three: Bolivia, Peru and Colombia. The first two are major producers of coca leaves, whereas the latter is an important refining and marketing centre.

According to the official statistics of the Bolivian government, in 1988, 61,000 acres were employed for growing coca: 4,3% of the country's cultivated land. Between 1980 and 1988, the agricultural production of Bolivia has grown 24,6%, versus 253% of the coca leaf production. It is estimated that 500,000 Bolivians are directly involved in the coca industry, or 20% of the labour force of this country, which counts 7 million inhabitants. The estimated yearly value ensuing from this activity varies from a minimum of $ 600 million to a maximum of $ 2 billion - the equivalent of 3/4 of legal exports according to the most cautious estimations, and 1/2 of the GNP according to the less cautious ones.

It seems an indisputable fact that the coca economy saved Bolivia from bankruptcy: the return of the civilians at the government in 1982, with President Siles Suazo, in practice coincided with the explosion of the debt crisis: between 1980 and 1984, the per capita income shrunk 30%: between 1984 and 1986, the export value dropped by one quarter, reflecting respectively the collapse and the fall in the price of two of the most important legal exports, tin and natural gas.

As of 1985, the governments of President Paz Estenssoro first and of Paz Zamora then, respected the stabilization plan decided with the Monetary Fund: the results were a modest rise in the GNP and a reduction of the inflation, from 24,000% in 1985 to 18% in 1990. The foreign debt also dropped 12% between 1987 and 1990. In order to achieve this, it has been necessary to resort to a cut in public expenditure and subsidies, but also to the assimilation in the national banking system of the profits generated by the drug trade. As of 1985, an amnesty on the crime of fiscal evasion on exported capital has been issued, and investigations on the origin of the wealth introduced in the country have been banned. Considering this situation, it is no wonder that the efforts to eradicate coca plantations are more cosmetic than anything else, like those to repress the traffic: in 1990, only 1% of the coca paste produced in Bolivia was intercepted.

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

The chief idea is to produce and market a coca infusion, which is already widely used in Peru: according to the government, this would increase the income of the producing farmers instead of boosting the profits now obtained by cocaine traffickers.

The economic situation in Peru collapsed later than in Bolivia, but, if possible, faster and with even more devastating effects. Between 1988 and 1991, the country's GNP shrunk approximately 30%. A month after his election, in August 1990, President Alberto Fujimori launched a stabilization program, decided with the Monetary Fund, whose impact on prices, salaries and employment was brutal and immediate.

However, this helped Peru lower the annual inflation rate to 140% (from 7,000% of the previous year), to have new access to international credit and to reorganize its foreign debt. Nonetheless, the suspension of Parliament and of the constitutional guaranties, decided by Fujimori on 8 April 1992 with the support of the army, had the effect of freezing part of the new credits. Moreover, less than a month after the president's self-coup, $ 200 million had already been taken abroad, according to the governmental estimates.

If this economic disaster were not enough, the country has had to confront a civil war between the government and the guerrillas from Sendero Luminoso. In twelve years, the conflict has caused over 200,000 victims and 200,000 domestic refugees. Even 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-military force of Sendero Luminoso is based on the violent mediation between the producing farmers and the Colombian traffickers who buy the coca paste, and on the farmers' defence from attempts to repress and eradicate the cultivations, enacted occasionally and with little conviction by the authorities. Thus, the guerrillas draw from this 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 range from a minimum of $ 1 billion to a maximum of $ 2,8 billion. The most conservative estimate corresponds to 2/3 of the value of all the other Peruvian productions 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 trade, through its own agencies in the valley of the upper Huallaga river - the area in which most of the coca industry is concentrated - and even sending employees to buy at the black stock market of Lima. The predictable result is that most of the foreign debt service is paid with the revenues of the drug traffic.

Compared to the situation of Bolivia and of Peru, Colombia can be considered a fortunate country, especially in economic terms. A unique case in the whole of Latin America, the GNP of this country has risen constantly throughout the eighties, and has met the deadlines for the payment of its foreign debt with perfect punctuality. Even if the drug economy has played a role in this success, the country's other resources should not be forgotten: oil, coal, gems, coffee and other agricultural products that are exported, such as flowers.

The political situation, however, is far less rosy. Despite the fact that the country can formally boast one of the longest democracies of the region, the current regime can be better defined as a two-party oligarchy which coexists with levels of violence that are almost beyond comparison.

The drug traffickers of the so-called Medellin cartel have been the architects, throughout the eighties, of the assassination of hundreds of military and policemen, dozens of judges and journalists, a minister of justice and a presidential candidate - without considering the countless kidnappings. Drugs, however, are not the only factor responsible for the violence in Colombia. In the movements of the right there are the so-called death squadrons and, in the left, guerrilla warfare movements with 12-15,000 fighters (in 1988).

After the election of César Gaviria Trujillo as president, in the summer of 1990, the Colombian government seems to have resolutely chosen the solution of a negotiation - opened, toward the guerrillas, by his predecessor, Virgilio Barco Vargas. One of the groups of armed opposition, M-19, peacefully introduced itself into the country's political life. As to the drug traffickers, the refusal of the extradition treaty with the United States lead to the surrender of the key exponents of the Medellin cartel - a largely symbolic surrender, given that they have continued controlling the drug traffic from their prisons.

Whatever the line adopted by the government, soft or hard, the practical impossibility of interrupting the flows of drug exports from Colombia seems to be unquestionable: despite the fact that Washington estimates that the seizures of cocaine from Latin America amount to 30% of the entire production, this has had no impact on the price and consumption in the United States. The explanation is to be found in the economic force of the traffickers: the estimated data on the value of the cocaine and marijuana exports - without, therefore, counting the more recent heroin - range from $ 1,5 to $ 15 billion yearly. As a term of comparison, legal exports in 1989 amounted to $ 5,7 billion, and the GNP to 39,4.

With such a mass of tax-free money at their disposal, the drug traffickers are obviously in the position to corrupt anyone. Moreover, as in Bolivia and in Peru, the central bank facilitates by all means the recovery of the capitals ensuing from the drug traffic. The narcodollars might even have a considerable role in the boom of the Colombian stock market, whose index in dollars rose six times between 1987 and 1992.

There are these according to which the economic benefits coming from the drug trade are modest. It is true, for example, that in Columbia the revenues of the drug traffic are concentrated in the hands of the few heads-of-cartel. These people enhance conspicuous consumption, real estate speculation and, given the quantity of money circulating, inflation - the latter, however, never grew more than 30% yearly in the last decade, a modest rate considering the region's average. Also, we should consider the costs for Columbia of the struggle against the drug traffic, estimated to amount to $ 2 billion yearly, as well as the political costs of the destabilization and violence related to this activity.

In the light of a cost-benefits estimation, however, the government's choices to negotiate with the traffickers and favour the return to Colombia of the capitals remain fully understandable. The negotiation, nonetheless, enables Colombia to minimize both the economic and the political costs of the struggle against the drug traffickers. The return of hard currency acquired through the drug traffic, while paying the price of the above mentioned distortions, facilitates stability in the exchange and in the debt service.