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2002 National Drug Control Strategy

National Priorities III: Disrupting the Market


  • Border Control and Enforcement: +$76.3 million
    (+$11.4 million of which is drug related). This enhancement of the U.S. Border Patrol includes hiring an additional 570 agents to enforce national borders and to combat international drug trafficking.
  • Southwest Border Drug Prosecutions: $50 million.
    The President's fiscal year 2003 Budget maintains funding of $50 million for the Southwest Border Drug Prosecution Initiative. This program provides critical support to counties along the Southwest Border for the costs of detaining and prosecuting drug cases referred to them by U.S. Attorneys.

  • Andean Counterdrug Initiative (ACI): $731 million.
    The fiscal year 2003 Budget requests an increase of $106 million over funding enacted for the ACI account in fiscal year 2002. This request includes resources to continue enforcement, border control, crop reduction, alternative development, institution building, and administration of justice and human rights programs. For Colombia, funding will be used for several broad categories including operations and maintenance of air assets provided with Plan Colombia supplemental funding; Colombian National Police and Army Counternarcotics Brigade operational support; and herbicide application programs. Additional funding will support critical Agency for International Development-implemented humanitarian, social, economic, and alternative development programs; support vulnerable groups; and provide resources for justice-sector reform projects.

Disrupting the Market: Attacking the Economic Basis of the Drug Trade

Few areas of public policy boast linkages as clear as those that exist between the availability and use of illegal drugs. Simply put, the demand for drugs tends to vary with their price and availability. Disrupting this market relationship provides policymakers with a clear lever to reduce use.

For decades, the "supply effect" was understood more on the basis of anecdote than hard science. One oft-cited example involves heroin use by American servicemen during the Vietnam war. Southeast Asia offered cheap, potent heroin, which American servicemen used in sufficient numbers to provoke widespread alarm in Washington and the creation of an unprecedented program to administer drug tests on those returning from the war. As it turned out, this prudent strategy was partly for naught. Returning to a world where heroin was expensive, impure, and difficult to obtain, the vast majority of servicemen simply stopped using it. At first, supply had fostered demand. Later, for many, lack of supply would curtail demand.

The supply effect helps explain why some countries are so much more successful than others in controlling drug use among their citizens. Even countries with well-managed law enforcement systems can be overrun if geography conspires to make it difficult to interdict illegal drugs at the border or beyond.

Consider Malaysia, a nation with an effective drug control force and strict sanctions for drug trafficking (including a mandatory death sentence for certain drug crimes). Malaysia's chief misfortune is one over which it has little control—being located astride trafficking routes from nearby Burma and Thailand, making heroin cheap and plentiful. As a result, Malaysia's population has a serious problem with intravenous heroin addiction.

It seems obvious that availability is a precondition for use. Yet availability is a relative term—what really matters to the drug user is that the market for illegal drugs produces availability at a price. Understanding of this fact has been obscured by images in the popular culture of crazed addicts who will do anything for a fix. Whatever compulsion drives them, most addicts are in fact quite conscious of and sensitive to the price and purity of the drugs they consume. Addicts must spend almost all their money on illegal drugs; rising prices for drugs such as cocaine and heroin do not magically enable them to beg, borrow, or steal more. (Conversely, the arrival of a ubiquitous, low-cost drug like crack cocaine can be a tremendous spur to consumption.) Above all, even heavy users of drugs are rational consumers, and the market signal conveyed by a drop in availability (or a dispiriting series of "rip-off " transactions) may be a powerful spur to enter a drug treatment program.

Recent research suggests that casual users, even teenagers, are susceptible to supply effects. A research paper, Marijuana and Youth, funded by the Robert Wood Johnson Foundation, concludes that changes in the price of marijuana "contributed significantly to the trends in youth marijuana use between 1982 and 1998, particularly during the contraction in use from 1982 to 1992." That contraction was a product of many factors, including a concerted effort among federal agencies to disrupt domestic production; these factors contributed to a doubling of the street price of marijuana in the space of a year.

It should not come as a surprise that drug users respond to market forces. The drug trade is in fact a vast market, one that faces numerous and often overlooked obstacles that may be used as pressure points.

Major drug-trafficking organizations and their suppliers face the colossal management challenge of supervising the cultivation of hundreds of thousands of acres of drug crops and importing thousands of tons of illicit chemicals into remote production areas that are often controlled by guerrilla armies. Traffickers must then move hundreds of tons of illegal drugs across continents and through intermediaries and a maze of specialized border smuggling organizations, then into the waiting hands of mid-level distributors in a foreign country where senior managers will never risk setting foot.

Even success—the shipment of illegal drugs to the United States—brings its own set of challenges, including the unlikely problem of money. The drug trade relies on the international banking system to launder billions of dollars each year, an increasingly uncertain proposition at a time when financial transactions are coming under increasing scrutiny. Where it is unable to infiltrate local banking systems, the drug trade must resort to reverse smuggling, in bulk form, enormous quantities of cash, which often weigh two to three times as much as the drugs that were smuggled in. Each of these processes involves a series of finely honed systems. Every finely honed system has its weaknesses. The drug trade's complexity and sheer vastness will prove to be its greatest weakness.

As we mount law enforcement programs here at home and with our international partners abroad, the Federal Government will be guided by this understanding of the illegal drug trade as a market. To effectively manage our efforts, we will better define the market by estimating the flow of illicit drugs from their sources to our streets. We will gauge our success by our ability to reduce the supply of drugs.

Disrupting Markets at Home

Domestically, disrupting drug markets will involve the cooperative, combined efforts of federal, state, and local law enforcement—each of which contributes in crucial ways. Effective drug supply reduction efforts will focus on intercepting drugs at the border and dismantling the drug networks that transport and distribute drugs and illicit proceeds from their sale throughout the United States.

Driving up the price of drugs such as cocaine and marijuana will require us to target the top of the trafficking pyramid using sophisticated cooperative mechanisms such as the Special Operations Division, a DEA-managed, multiagency operations center that includes participants from the Department of Justice and the U.S. Treasury. The virtue of this program is that it manages the challenging task of exploiting sensitive information in a manner that protects intelligence sources and methods, while making major strides in creating an environment in which federal law enforcement agencies can share information.

The Organized Crime Drug Enforcement Task Force (OCDETF) program was created in 1982 to focus resources on dismantling and disrupting major drug-trafficking organizations and their money-laundering operations. Today, the Justice Department part of OCDETF has matured into a nationwide structure of task forces—including federal prosecutors and federal, state and local law enforcement agents—in nine regions receiving a total of $338.6 million in fiscal year 2002, and focusing entirely on drug law enforcement. Yet, over the past several years, only 1 in 10 OCDETF investigations has included a financial investigation, and only 21 percent of these investigations have reached the leadership level of drug organizations, according to Justice Department figures. The Attorney General has refocused the OCDETF program to ensure that law enforcement efforts are directed at the most significant drug-trafficking organizations responsible for distributing most of the drugs in the United States. Under the OCDETF program, law enforcement will strategically identify the most sophisticated trafficking organizations, eliminate their leadership, take down their transportation and distribution operations, and dismantle their financial infrastructure. The effectiveness of the OCDETF program will be measured by its impact in reducing the supply of drugs in the United States.

The High Intensity Drug Trafficking Areas (HIDTA) program is administered by ONDCP in 28 HIDTA regions around the country. Over the coming months, ONDCP will consult with the Attorney General; the Secretary of the Treasury; heads of law enforcement agencies at the federal, state, and local levels; and relevant governors and mayors to see how best to ensure that the HIDTA program focuses on high-value trafficking targets and financial infrastructure.

Collaborative efforts like the Treasury Department's Financial Crimes Enforcement Network (FinCEN) must play a leading role in helping federal, state and local law enforcement uncover the financial crimes of drug traffickers.

The Treasury Department, as part of the National Money Laundering Strategy, has intensified the efforts of High Intensity Money Laundering and Related Financial Crimes Areas (HIFCAs), jointly managed with the Department of Justice. Federal law enforcement and regulatory efforts will focus on major money-laundering enterprises in these areas.

Over the long term, however, everything federal law enforcement does requires a public consensus that the laws they enforce are fair and that they enforce those laws in a fair manner. That consensus has eroded to an alarming extent in recent years. Law enforcement has been the target of a campaign that derides its work as sending users and low-level dealers to prison with sentences that are excessively harsh. Reams of data—including the most current information on federal convictions—argue otherwise.

According to the United States Sentencing Commission, the median quantity involved in cocaine-trafficking cases is 1,999 grams for powder, and 68.7 grams for crack cocaine—more than 600 "rocks" of crack. The relevant figures for heroin and marijuana are 512 grams and 56,110 grams, respectively—enough, in either case, for tens of thousands of doses. The notion that the federal criminal justice system is causing the arrest of legions of small-time drug offenders is thus revealed to be unsupportable, as is the claim that federal law enforcement agencies are busily locking up individuals for possession of—as opposed to trafficking in—illegal drugs. In fiscal year 2000, the most recent year for which we have data, there were just 232 federal possession convictions for cocaine, marijuana, and heroin combined.

The sentencing structure has fostered among some a perception of racial injustice within the criminal justice system. Clearly, the government must create and administer laws in a fair and equitable fashion, but it is equally important that the public perceive that the government is doing so because if some believe that a law discriminates against a certain population, it hinders the ability of the government to enforce that law for the benefit of all in society. This Administration is committed to working with all interested parties to ensure that our criminal justice system is both fair and perceived as fair.

Going to the Source

While the bulk of our drug control program is based at home, there are elements of an effective drug control program that can only be pursued abroad. Internationally, we and our allies will attack the power and pocketbook of those international criminal and terrorist organizations that threaten our national security. We will support our international partners in their efforts to attack the drug trade within their borders, and we will work through international financial and banking institutions to combat drugs and terrorism-related money-laundering activities. In addition, we will work to strengthen democratic institutions and the rule of law in allied nations under attack from the illegal drug trade. Making it clear to traffickers that there is no safe haven from justice, we will work with our foreign counterparts to support their prosecutorial efforts and will prosecute foreign traffickers using the extraterritorial application of U.S. law.

We will continue to target the supply of illegal drugs in the source countries. The illicit industry that cultivates coca and produces, transports, and markets cocaine is vulnerable to effective law enforcement action. Coca, the raw material for cocaine, is produced in commercial quantities exclusively in the Andean region of South America. Much of the heroin consumed in the United States is produced in the Andean region as well.

The coca industry thrives in areas devoid of effective law enforcement control. Yet with a meaningful government presence, capable law enforcement, and the political will to confront entrenched corruption and powerful political groups, the cocaine industry can be disrupted. Historically, international supply reduction efforts have reduced the cultivation of opium poppy and coca crops in a number of countries including Bolivia, Ecuador, Guatemala, Pakistan, Panama, Peru, and Thailand. In each of these cases, some combination of alternative development, eradication, enforcement, and interdiction programs was successfully adapted to local conditions.

Democracy is under pressure in the Andean region, in large measure because money generated by narcotics production and trafficking is available to well-armed antidemocratic groups. Past successes in crop control in Bolivia and Peru have been partially offset by coca cultivation increases in Colombia. Now, nearly 90 percent of the cocaine and the majority of the heroin arriving in the United States come from Colombia, mostly originating in southern Colombia where government control is weakest.

To date, government presence and security remain limited, at best, in southern Colombia. Aerial eradication has not been delivered continuously or intensely enough, and it has not been sufficient to change the economic equation in Colombia's Putumayo region. Coca remains the most lucrative crop in the southern growing areas, and growers, although willing to sign up for alternative development programs as a hedge, have little incentive to follow through with voluntary eradication without the pervasive threat of involuntary eradication and interdiction. As the Government of Colombia begins to make inroads against the massive increase in coca production in areas under illegal armed group control, drug traffickers will look for new sources of supply.

Economic Costs to Society. The total economic cost to society of illegal drug use in 2000 was an estimated $160 billion, a 57 percent increase from 1992. The three major components of the total cost are health care costs ($14.9 billion), productivity losses ($110.5 billion), and other costs ($35.2 billion), including the cost of goods and services lost to crime, the criminal justice system, and social welfare.

Expenditures for Illegal Drugs. Americans spent approximately $64 billion for illegal drugs in 2000—more than 8 times the total federal outlays for research on HIV/AIDS, cancer, and heart disease. Domestic drug users expended more than half that amount ($35 billion) on cocaine. Expenditures for heroin and marijuana use totaled about $10 billion each; methamphetamine expenditures totaled $5 billion.

Drug-Related Deaths. The Centers for Disease Control and Prevention (CDC) estimate that 19,102 people died in 1999 (or 52 such deaths per day) as the direct result of drug-induced causes. Although current CDC data are not directly comparable with prior-year estimates, there was a steady increase in drug-induced deaths between 1990 and 1998—from 9,463 to 16,926.

The United States stands ready to support Peru and Bolivia, as well as Ecuador and other countries in the region, to ensure that coca production does not migrate as a result of pressure being exerted in Colombia. The Administration requests $731 million in dedicated funds in the fiscal year 2003 budget for the Andean Counterdrug Initiative to be applied in Bolivia, Brazil, Colombia, Ecuador, Panama, Peru, and Venezuela. About half the assistance is for Colombia's neighbors; the remainder is for sustaining ongoing programs in Colombia. Similarly, roughly half the assistance is dedicated to interdiction and eradication efforts; the remainder will go to alternative development and institution-building programs, such as anticorruption and judicial system programs. An example of the latter is the Casas de Justicia program, which already has extended courtroom dispute resolution services to 18 underserved communities.

Roughly two-thirds of the U.S.-bound cocaine produced in the Andean region enters the United States across our border with Mexico. The recent extradition of major traffickers, including Everardo Arturo Paez Martinez, is evidence that the bilateral drug control relationship has improved since the beginning of the Fox and Bush administrations. Nonetheless, Mexico faces serious implementation difficulties because of corruption and underdeveloped institutions. Our primary strategy in working with the Government of Mexico will be to focus on disrupting and dismantling major transnational drug-trafficking organizations. The extent of our mutual interest in such a strategy is underscored by estimates that cocaine consumption in that country has been rising sharply in recent years.

The terrorist attacks of September 11 have created a new awareness of our domestic vulnerability and highlight the need for an examination of how we do business at our borders. The Administration is currently reviewing a range of options for better controlling our borders to stop drugs from entering the United States.

In the Caribbean, we face a lack of Caribbean nation resources to take an aggressive stance against drug trafficking. In this area, we will focus on increasing maritime cooperation to interdict the flow of drugs, improving national capabilities to resist drug trafficking, providing assistance to strengthen regional counterdrug forces, and supporting anti-money laundering initiatives.

We will also employ more agile interdiction packages, such as the combination of a ship, an armed helicopter, and an extended-range pursuit boat currently utilized in the Coast Guard's Operation New Frontier. The success of New Frontier—which can use nonlethal force including warning shots and disabling fire—has changed the calculus of maritime smugglers in areas where it has been deployed. We will develop similarly effective interdiction packages, including the use of U.S. Customs Service P-3 aircraft, to disrupt trafficker operations in other areas of the Caribbean.

In Central Asia, we face a different set of challenges. Under the Taliban, Afghanistan became the source of more than 70 percent of the world's opium. After announcing a ban on opium production, the Taliban profited greatly from increased prices for stockpiled opium under their control. As Afghanistan is reconstructed, U.S. objectives include ensuring that illegal drug income will never again finance regional instability or the threat of international terrorism.

Afghanistan's interim Foreign Minister has already made a public pronouncement indicating that the provisional government will move to eradicate drug production and trafficking. Nonetheless, crops are already being planted, and a significant drug harvest this spring could allow the drug trade to continue. Development assistance to Afghanistan should be designed to provide an incentive to steer away from a drug-crop economy, and law enforcement should provide sanctions to be employed against drug producers and traffickers. These actions will be particularly challenging during the early days of reconstruction and will require continuing involvement and encouragement from the international donor community.

The illegal drug proceeds of the Taliban represent just part of a global problem in which drug revenue helps fuel terrorist violence; 12 of the 28 international terrorist groups listed by the U.S. Department of State are alleged to be involved to some degree in drug trafficking. In Colombia, all three of the major terrorist groups are involved in the drug trade as a source of operational funding. This underscores the need to ensure that cooperative international law enforcement operations target those trafficking organizations that directly or indirectly help bankroll international terrorism.

The drug trade is a transnational market; disrupting it will require a cooperative international response. As in our other international efforts, we will also seek out international coalitions and trusted allies to combat drug production and trafficking. We will support regional, bilateral, and multilateral efforts that fight the drug-trafficking industry, and the destructive market that it purveys.

Last Updated: July 9, 2002