Cocaine Recession Is No Blow to the Cartels

Cocaine Recession Is No Blow to the Cartels

By May Wilkerson 07/30/12

Colombian cocaine production has plunged, along with demand. But savvy cartels find alternative ways to thrive.

Is the cocaine economy going up in smoke?
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Colombia, which has long reigned as the world's primary coke producer, seems to have lost its crown. The South American country's coke production has dropped an estimated 72% since 2001—including a 25% fall in the last year—according to US drug czar Gil Kerlikowske. So for the first time since 1995, Peru and Bolivia have moved ahead. The Office of National Drug Control Policy says these results "didn’t happen overnight," but reflect "a sustained effort requiring nearly a decade of steady, strategic pressure across more than one administration in both the United States and Colombia." The drop in cocaine production coincides with lower consumption of the drug in the US—evidenced by fewer recorded cocaine OD's and seizures, and a significant drop in positive workplace drug tests. “The results are historic and have tremendous implications, not just for the United States and the Western Hemisphere,” says Kerlikowske.

So will this decline in cocaine production drive Latin America's notorious cartels out of business? It seems unlikely. The US is still ravenous for marijuana—much of it coming from Mexico. And as The Economist's "Schumpeter" blog points out, the cartels will likely prosper for some time yet, due to their flexibility, resourcefulness and willingness to use tactics that are—often literally—cutthroat. A number of factors not enjoyed by large legal multinationals work in their favor, including the ability to dodge tariffs by trafficking illegally across country lines. They're also adept at adapting to shifting markets, claims Schumpter, and have switched their focus to Europe—where demand for cocaine remains high. Unfortunately for the tens of thousands losing their lives to the collateral violence, it seems even a major cocaine recession won't put the cartels out of business anytime soon.