Latin American illicit drug business

Latin American drug cartels have shown themselves to be powerful, resilient, and flexible organisations which for decades have been major players supplying the US and international markets with illicit drugs such as cocaine and heroin. They have adapted as needed to changing patterns of drug consumption and law enforcement. The ‘war against drugs’ proclaimed in 1971 by US President Richard Nixon (1969-1974), which promised hard line measures to eradicate production, distribution, and consumption of illicit substances, is now over half a century old and has been deemed by many to have been an abject failure, reducing neither drug consumption nor cartel violence. Arguably, no new, comprehensive, and credible strategy has yet emerged to fill the vacuum. As a result, governments today lack a clear road map to contain the spread of addiction and cartel violence. On a country-by-country basis some policies focusing on public health and harm reduction have made modest progress, but there has also been regression.

The drugs business has meanwhile not stood still. The industry has recently been influenced by the massive surge in opioid consumption in the US, centred on the rise of synthetic drugs like fentanyl, which have contributed to a major spike in overdose deaths. Some analysts have speculated that this might in the end be good news for countries like Colombia, as it tries to diversify away from cocaine.

Almost exactly six years ago, in 2017, LatinNews published a special report titled Crime and security – trends and solutions. In an attempt to capture a snapshot of the drugs and crime business in Latin America as it looked at that point in time, the report started out by listing what it called the eight main ‘headlines’ affecting the region. As a framework for comparison six years later, the list is a useful way of providing some context.

The eight ‘headlines’ of 2017 were listed as follows:

1. Despite fluctuations and some short-term falls, the homicide rate in Latin American drugs producing countries, measured as the number intentional killings per 100,000 inhabitants, remains exceptionally high by international standards
2. Although suffering some setbacks and the capture of some of their leaders the criminal cartels, led by transnational organisations like the Sinaloa cartel (Mexico), Cartel Jalisco Nueva Generación (CJNG -Mexico), Cartel del Golfo (Gulf Cartel – Colombia), and Primeiro Comando da Capital (PCC- Brazil) remain strong and resilient.
3. The economics of the wider crime business which includes drug trafficking, illegal logging, and illegal mining continues to be highly profitable. Demand is largely price inelastic.
4. The rise of the heroin and opioids epidemic in the United States could be a game changer.
5. Also likely to have a ripple effect is a surge in Colombian cocaine production.
6. Latin American counties are experiencing a crisis in their prison systems, affected by overcrowding, underfunding, and gang control, thereby providing a flow of new recruits and ‘foot soldiers’ for the cartels.
7. Despite serious corruption in the judiciary and public service, some prosecutors and judges have been prepared to tackle high-profile cases of drug-related corruption, money laundering, and bribery.
8. Many of the region’s criminal justice systems remain unfit for purpose and require major reform and modernisation   

Looking back after six years, the outstanding impression is how little has changed. Most of the headlines remain relevant. Largely because of fighting between rival drug cartels and law enforcement, Latin America remains the most murderous region of the world (excluding war zones). This in turn continues to have a major negative impact in terms of lost GDP and harm to the region’s citizens.

Admittedly, a new and potentially positive factor has emerged in Colombia where centre-left President Gustavo Petro, who took office in 2022, introduced the concept of ‘total peace’, an attempt to negotiate parallel peace deals with all the country’s rebel political and criminal armed groups, most of whom are also involved in drug trafficking. It will however take some years to assess the overall impact of the policy, which among other things seeks to divert rural families away from illicit crop cultivation. In any case, Petro will face big challenges in his attempt to break deeply embedded cycles of violence

The cartels, particularly in Mexico, continue to show an ability to recover from setbacks. Despite the arrest and deportation to the US of Sinaloa cartel leader Joaquín ‘El Chapo’ Guzmán in 2016-2017, and a degree of internal feuding, the cartel he once led has remained a major force. Similarly, the capture and deportation to the US of ‘Otoniel’ (real name Dairo Antonio Úsuga) in 2021-2023, the leader of Colombia’s Gulf Clan, did not seriously impair the group’s drug trafficking activities. The US-promoted strategy of trying to ‘decapitate’ criminal organisations has therefore had at best mixed results.

It is worth noting at least one apparent success story for an alternative, much more hardline, approach. In March 2022, El Salvador’s President Nayib Bukele introduced a state of emergency which allowed his security forces to conduct mass arrests of members of street gangs involved in drug and people trafficking and extortion. By August 2023 security forces had locked up an estimated 70,000 people, one of the world’s highest incarceration rates, equivalent to 2% of the adult population. Human rights organisations have criticised these arrests without trial and the associated inhumane prison conditions. But after peaking at 106 violent deaths per 100,000 inhabitants in 2015, El Salvador’s homicide rate dropped steadily to only 8 per 100,000 in 2022. In mid-2023 Bukele’s approval rating reached a remarkable 91% making him the most popular Latin American politician. Critics believe the policy of mass incarceration is not sustainable or compatible with the rule of law, but Bukele’s political popularity is almost certain to persuade other countries to adopt versions of his mano dura (hardline) approach.

The reality is that despite some exceptions, the headlines relating to the prison crisis, the ongoing struggle against corruption, and the poor state of criminal justice systems all remain relevant today. Six years on, what does seem to be a genuinely new element is the evolving situation caused by various overlapping factors: the US opioids crisis, the Chinese and Mexican role in the fentanyl supply chain, and some signs of weakness in the cocaine market. These are the issues which we will consider next.

Opioids are a class of drugs that include heroin and prescription pain relievers such as oxycodone (Oxycontin), hydrocodone (Vicodon), codeine, morphine, fentanyl, methadone, and others. They are used to reduce pain (for example as a form of end-stage cancer treatment) but can also cause intense euphoria or a high which can lead to dependence and addiction. Opioid overdoses cause respiratory arrest, coma, and death. Symptoms include mental confusion and severe sweating and nausea. Fentanyl is assessed to be between 50 and 100 times more potent that heroin or prescription opioids. It can be taken in pure form or used to ‘cut’ or adulterate other typical street drugs such as heroin, cocaine, or prescription pills.

Drug overdose death rate by drug type, United States, 1999 to 2020
Annual number of deaths in the United States from drug overdose per 100,000 people

According to the US Justice Department, “Overdose deaths often result from a user’s unwitting purchase and use of fentanyl when believing he or she is purchasing heroin or prescription pills.” A very small dose of fentanyl - around 2 milligrams - can be fatal to the user. The Justice department adds that fentanyl can now be found in fake tablets, pills, and gel capsules mimicking the look of prescription drugs. Further complicating efforts to control the epidemic is the fact that there are also many fentanyl ‘analogues’ in circulation – synthetic drugs with similar but not identical composition. In November 2021 the independent US-based International Narcotics Control Board said it had identified more than 150 fentanyl-related substances with “no currently known legitimate uses”.  The United Nations Office on Drugs and Crime (UNODC) estimates that illicit laboratories could potentially synthesize thousands of other fentanyl analogues.

When President Nixon first spoke about launching a “war on drugs” in 1971, annual overdose deaths in the US stood at 6,771. By 2022 that had multiplied by a factor of 15 to reach 107,375. Of that total, around 70% of the deaths were attributed to fentanyl. The level of concern over the epidemic in the US is acute. A Brookings report in 2019 stated that in the preceding decade over 1m US citizens had died from suicide, drug, or alcohol related deaths. It termed them “deaths of despair” and noted they were most prevalent “in the American heartland, in places where manufacturing and other blue-collar jobs have disappeared”. The report also stated that “the crisis is both demand and supply driven: desperation related to the decline in the quantity and quality of low skilled jobs collides with a market flooded with opioids and other drugs”. The fentanyl crisis is held responsible for what might otherwise appear as a statistical anomaly: the US is the only wealthy country in the world where mortality rates are climbing, rather than falling.

Mortality is rising in the United States
All cause-mortality ages 45-54 for U.S. non-Hispanic whites (USW), U.S. Hispanics (USH), and six comparison countries

    Source: Brookings

Some analysts have made an interesting but dark correlation. Expressed as a proportion of the total population, overdose deaths in the United States have now increased to a level comparable with drug violence-related killings in a number of Latin American countries. For example, in 2020, US overdose deaths from “any opioids” totalled 20.1 per 100,000 inhabitants. In the same year Mexican deaths from “intentional homicides” (mainly drug-war related) totalled 29 per 100,000; those in Colombia were 24.3 per 100,000. The comparison highlights the human costs of the illicit drug business at opposite ends of the supply chain.

There is some discussion over the way in which fentanyl addiction may, or may not, spread beyond the United States. The United Nations Office on Drugs and Crime (UNODC) in its World Drug Report 2023, emphasises that synthetic drug production is inherently different from plant-based drugs such as cocaine, heroin, and marijuana. Synthetic drugs can be produced in labs anywhere, anytime, unconstrained by weather conditions or by the need to conceal illicit fields of cultivation from government surveillance aeroplanes or drones. UNODC says this advantage of synthetic drugs has led to a boom in laboratory drug production in the Middle East (mainly captagon) and Africa and Central Asia (tramadol), as well as North America (fentanyl).

But the report also says that there are only small-scale consumer markets for synthetic drugs in South America. These markets trade drugs like MDMA and ketamine (which is used in tusi, a South American synthetic preparation known as ‘pink cocaine’). Fentanyl has only been detected in small quantities in Argentina, Paraguay, and Brazil. A possible reason for this is that fentanyl tends only to appear where there has been a large pre-established opioid market, focused around legal prescriptions and pain relief. UNODC researcher Brice Pardoe told specialised website InSight Crime: “There is not a major heroin market in South America. There is not a major diverted-prescription opioid market in South America. Fentanyl is not really going to show up there to any great extent.”

The story however is different in northern Mexico with its multiple migration, trade, and social connections across the long border with the United States. Fentanyl consumption by heroin users was for example detected in cities like Tijuana from 2007 onwards. There are also indications (discussed below) that pharmacies in border areas are increasingly cutting prescription drugs with fentanyl.

In the early stages of the opioids crisis the roles of the three main countries – the US, China, and Mexico - appeared relatively clear. The US was the main consumer country, with strong demand from users and addicts, but also with a government motivated to prevent the flood of fentanyl coming across its borders and fuelling its public health crisis. China was the main producer country, with a massive chemical and pharmaceutical industry churning out not only fentanyl but also the precursor chemicals and pre-precursor chemicals used in its manufacture, as well as in the manufacture of analogues.

Mexico, or more precisely, Mexico’s main drug-trafficking cartels, was left to find a role for itself in the new emerging market. Some pure fentanyl was being sent directly from China to the US, often in the form of small packages sent through the post. An early role was for Mexico to import fentanyl from China and use its own northern cross-border trafficking routes to get the product into the US. Perhaps more significantly, the Mexican cartels also began cutting heroin and cocaine with fentanyl, and thereby maximising their profits from selling the adulterated versions of the drug into the US. That also included building clandestine synthetic opioid laboratories and hiring expert chemical ‘cooks’ with the right experience and qualifications to manage the labs.

By all accounts May 2019 was a key turning point in the triangular relationship. Up to and immediately after that point, the Chinese government had responded relatively positively to US requests for cooperation to limit the flow of fentanyl. The US had invoked the UN Single Convention on Narcotic Drugs of 1961, which provides for agreements to ‘schedule’ or list harmful drugs for international regulatory controls. In 2017 UN member states had already agreed to list two fentanyl precursors, later followed by three further precursors. Effective from May 2019, China applied corresponding domestic controls.

A report by the US Congressional Research Service says that as a result of bilateral discussions with China in this period, four major successes were achieved. First, China agreed to list all fentanyl-related substances. According to testimony by Kemp Chester of the White House Office of National Drug Control Policy (ONDCP), as a result “the direct shipment of fentanyl and fentanyl related substances from China to the United States went down to almost zero”. Second, Chinese courts in Hebei and Shanghai for the first-time sentenced defendants for trafficking fentanyl (according to some accounts this was assisted by US-provided intelligence). Third, and also according to ONDCP, seizures of fentanyl precursor and pre-precursor chemicals in China reached “consistently high” numbers. And finally, in fourth place, the Beijing government approved a US request to allow the Drug Enforcement Administration (DEA) to open additional offices in the country (it already had a presence in Beijing, Shanghai, Guangzhou, and Hong Kong).

Fentanyl flow to the United States 2019

Source: DEA

However, as diplomatic tensions between Washington and Beijing resumed, the progress that had been achieved on fentanyl went into reverse. An initial trigger point came in May 2020 when Washington listed an institute based in the Xinjiang autonomous region and controlled by China’s ministry of public security, which it said was “implicated in human rights violations and abuses”. The US imposed export controls on the institute. A statement by the Chinese embassy in Washington said the listing “greatly affected China’s goodwill to help the US in fighting drugs”. Then, in August 2022, China reacted angrily to then-House Speaker Nancy Pelosi’s visit to Taiwan, announcing the formal suspension of cooperation in five areas, one of which was counter-narcotics. Since then, China has not scheduled any newly available fentanyl precursors. It has also dismissed the idea of introducing ‘know your customer’ protocols for drugs-exporting companies, an idea suggested by the US.  

The weakening of US-China cooperation has in effect created new opportunities for non-state and criminal actors in all three countries. In testimony to a House of Representatives subcommittee in March this year, Brookings senior fellow Vanda Felbab-Brown outlined the way the fentanyl market is now operating. She saw the likelihood of China “meaningfully” intensifying its drug cooperation with the US as low. In the new situation, China continues to block direct fentanyl exports to the US, but in effect turns a blind eye to large flows of precursor chemicals being shipped to Mexico. Mexico has, as a result, become the main source of fentanyl entering the US. Felbab-Brown said: “Instead of finished fentanyl being shipped directly to the United States, most smuggling to the US now takes place via Mexico. Mexican criminal groups source fentanyl, fentanyl precursors, and increasingly, pre-precursors from China, and then traffic finished fentanyl from Mexico to the United States. Scheduling of fentanyl and its precursors in China is not sufficient to stem fentanyl flows to the United States.”

According to Felbab-Brown’s testimony small and middle level actors in China’s chemical and pharmaceutical industries are at the forefront of supplying Mexico’s criminal cartels with fentanyl precursors. China’s own criminal groups such as the triads are less directly involved. However, she and other analysts point to the emergence of a sophisticated money-laundering network around the fentanyl business, including product barter.

According to reporting by The Underworld Podcast, a network of Chinese businesses and communities in the US is now playing an important role in laundering fentanyl profits. In one case the owner of a Chinese restaurant in New York was receiving millions of dollars in cash from illicit drug sales. The money was ‘cleaned’ when he deposited it at the subsidiaries of Chinese banks in New York claiming it was revenue from the legitimate restaurant business. After taking a handling commission, the Chinese restaurant owner would then arrange for the money to be paid to Mexican bank subsidiaries, ultimately finding its way back to the Mexican cartels. An advantage of this procedure was that no US banks or financial institutions were directly involved, reducing the probability of stringent KYC (know your customer) scrutiny. Many Chinese expatriate communities also use informal money-transfer systems which can conceal drug-money flows.

In general, money laundering and other operations to stop the authorities detecting illicit fentanyl-related financial flows have become much more sophisticated than in the past. They now include trade-based laundering and barter, covering protected wildlife products, seafoods, timber, real estate, cryptocurrencies, and casinos and gambling. An example of how gambling can be used for money laundering is where bulk cash – the proceeds of drug sales - is brought to a casino in Vancouver, and ‘lost’ by the cartel-linked gambler. Meanwhile, his money laundering associate in Macao, China, coincidentally ‘wins’ an equivalent amount of money which can then be used to pay Chinese exporters of precursor chemicals.  

By using barter, criminal groups can also reduce the net size of the financial flows needed to settle accounts between them, thereby making them less likely to attract suspicion. There is evidence that through front companies the Sinaloa cartel is seeking to control a large share of the fishing industry, and that Chinese precursor networks are prepared to take part-payment for their chemicals in abalone, jellyfish, and lobster. Payments in kind have also been made using the swim bladder of the rare and protected Mexican totoaba fish, highly valued in China because of its presumed health and aphrodisiac qualities. These tactics are important in a context where the overall value of drug-related transactions is very high. The UNODC for example has estimated Mexico’s illicit drug-export revenues to have been somewhere between US$6bn and US$21bn a year in 2010-2018.

Theoretically at least, greater control and reduction of the fentanyl business can be achieved by closer cooperation along the three bilateral sides of the US-China-Mexico triangle. As we have seen, however, US-China cooperation reached a peak in 2019, and since 2020 it has run into serious difficulties. Because of entrenched super-power rivalry, it is unlikely to improve in the near future. China-Mexico cooperation, for its part, is likely to remain at fairly low levels. Bilateral trade is limited, and diplomatic relations have traditionally been given low priority by both governments.

In what seems to have been largely a public relations exercise, in April 2023 Andrés Manuel López Obrador (AMLO) wrote an open letter to Chinese leader Xi Jinping, urging him to control the flow of fentanyl while at the same time heavily criticising US anti-narcotics policies for making “rude threats” against Mexico. In the letter AMLO said the US was “Unjustly…blaming us for problems that in large measure have to do with their loss of values, their welfare crisis”. AMLO went on to claim that “These positions are in themselves a lack of respect and a threat to our sovereignty, and moreover they are based on an absurd, manipulative, propagandistic and demagogic attitude”. It was only further down in the body of the letter that AMLO said he was making his plea to Xi “to ask you for humanitarian reasons to help us by controlling the shipments of fentanyl”.

There was no immediate direct public response from Beijing which has repeatedly downplayed any involvement in the fentanyl trade. But a Chinse foreign ministry spokesperson later said, “there is no such things as illegal trafficking of fentanyl between China and Mexico”. That stance has remained in place, despite Mexico reporting the following month that a shipment from China’s Qingdao port with hidden cargo containing both fentanyl and methamphetamines had been detected in the Pacific port of Lázaro Cárdenas.

As things stand, China has little incentive to crack down on precursor chemical exports to Mexico. Mexico in turn, has, under its current populist-left government, largely avoided cracking down on the cartels, and, despite AMLO’s letter-writing, has shown little real intention of asking China to rein in its precursor exporters.

That, therefore, leaves US-Mexico bilateral cooperation as the only remaining avenue for improvement. Theoretically speaking, prospects for cooperation on this axis should be good. The countries share deep historical links. A significant part of the US population is of Mexican heritage. The two countries are neighbours and have long-standing mutual interests around trade, investment, energy, migration, and environmental issues such as water resources and climate change. Although with mixed outcomes, there is also a multi-decades long history of collaboration on security and narcotics control.

The problem however is that under AMLO’s six-year presidency starting in 2018 and running through to next year (2024) Mexico has shown little interest in meaningfully stepping up security collaboration with its northern neighbour. AMLO is best known for supporting a domestic security policy dubbed abrazos no balazos (hugs, not bullets). This was initially welcomed by many security analysts as representing an overdue and legitimate recognition of the need to tackle not just the violent symptoms but also the underlying structural causes of cartel membership and criminality among young males – poverty, inequality, and the lack of employment opportunities.

However, with a slow-growing economy and limited improvements in social conditions, the policy and the rhetoric around it has begun to be seen as no more than a rhetorical smoke screen, intended to provide cover for ‘business as usual’, the fact that compared to its predecessors this government is doing nothing new in terms of security policy or of reducing cartel violence. Despite AMLO’s earlier criticism of the army’s propensity for human rights violations and brutality, the government has radically expanded the role of the army, and created a new, militarised National Guard. But it has been unwilling or unable to roll back the power and territorial control exercised by top cartels such as Sinaloa and CJNG. It has also remained deeply suspicious of collaboration with the US.

With hindsight another key turning point may have come on 15 October 2020. On that day former Mexican defence minister General Salvador Cienfuegos (in office 2012-2018) was arrested by the US authorities on arrival at Los Angeles airport and charged with drug and money-laundering offences. Even though Cienfuegos had served in the preceding centre-right government, often criticised by AMLO, the new president was reportedly furious that he had not been given advance warning of the arrest or indictment. Media reports said that, in response, the Mexican government threatened to withdraw all security cooperation and expel DEA officials from the country. In the event, and to avoid this outcome, a deal was done. Despite promising to take a hard line against Mexico, the government of Donald Trump, then in office (2017-2021), essentially caved in and accepted the Mexican ultimatum. The US dropped the charges and released Cienfuegos who immediately flew back to Mexico. While the Mexican attorney general’s office made a public show of reviewing the US allegations against Cienfuegos, it all came to nothing. By January 2021 all charges were dropped.

The Cienfuegos affair seems to have led to increased mutual suspicion and a lasting reduction in security cooperation between the two countries. Felbab-Brown says that US-Mexico counternarcotics efforts have been “hollowed out” and “eviscerated”. In December 2020, Mexico approved a security law requiring foreign agents (such as DEA members) to share all information with their Mexican counterparts. The law also removed their immunity from prosecution. Given fears that some Mexican law enforcement bodies have been infiltrated by the cartels, the effect of the new legislation has been to radically reduce information sharing.  

Monthly U.S.-Mexico border fentanyl seizures, by sector

Source: WOLA

Populist leaders like Trump on the right or AMLO on the left are notorious for creating an electorally focused narrative which disregards any inconvenient facts. AMLO remains remarkably popular (60%-plus approval ratings in the fifth out of his six years in office). This in part reflects his strong communications skills, delivered through extended daily morning press conferences known as mañaneras. A feature of these is that he makes many unsubstantiated claims - another way of saying that he tells untruths – so as to create a favourable ‘spin’. He is of course not the only politician within or beyond Latin America who does so.

In the case of fentanyl, a key part of AMLO’s narrative is to claim that, against all hard evidence to the contrary, it is simply not produced in Mexico and is a US problem essentially caused by US decadence and weak family values. In April for example, the Mexican president said: “Here, we do not produce fentanyl, and we do not have consumption of fentanyl. Why don’t they [the United States] take care of their problems of social decay?” AMLO went on to list reasons why he thought US citizens might be turning to the drug, including the existence of single parent families, parents who force their grown children to leave their home, and people who put elderly relatives in old-age homes “and visit them once a year”. While politically on the left, this reflects the fact that AMLO is at heart a social conservative. Referring to the US, AMLO has said: “There is a lot of disintegration of families, there is a lot of individualism, there is a lack of love, of brotherhood, of hugs and embraces.”

AMLO has insisted on this view despite the consensus among most US and Mexican analysts that almost all the fentanyl consumed in the United States is now produced and processed in Mexico, using precursor chemicals supplied from China. In February of this year the army said it had seized more than half a million fentanyl pills in a raid in Culiacán, Sinaloa, in what it described as the largest synthetic drug lab yet discovered. How this could happen in a country with “zero fentanyl production” was not explained. More recently, in August 2023, AMLO suggested US data on fentanyl is contradictory, saying “that’s a problem that they have, with all due respect in the US government. There is no coordination between themselves.” The Mexican president has also used his catchphrase when presented with any information that portrays his administration in a poor light: yo tengo otros datos (‘I have other information’).  

Mexican security analyst David Saucedo concludes bluntly that “the president is lying. The Mexican cartels, above all the CJNG and the Sinaloa cartel, have learned to manufacture it…they themselves buy the precursor chemicals, set up laboratories and distribute it to cities in the US.” Saucedo also said that the cartels were “little by little” building a fentanyl monopoly as they had taken a presence “along the whole chain of production and sales”.

US officials take the same view. Anne Milgram, a DEA director, said that CJNG and Sinaloa cartels are responsible for “virtually all” the fentanyl and methamphetamine consumed in the United States. She has said: “They buy precursor chemicals from China, ship them to Mexico, mass-produce fentanyl, use much of it to make fake pills, and then smuggle it into the United States by land, sea, and air.” Another official, US Assistant Secretary of State for International Narcotics and Law Enforcement Affairs Todd Robinson, also confirmed that fentanyl is produced in Mexico adding “I’ve seen it myself”. Robinson claimed nevertheless that, despite public disagreements over where the drug is being manufactured, anti-narcotics cooperation between the two countries is “very good”.

Fentanyl flows through Mexico

Source: InSight Crime

In both countries public debate over fentanyl is deeply influenced by electoral politics. Mexico is preparing for presidential and general elections in June 2024. The US is in the early stage of the primaries campaign, ahead of the general election due in November 2024. Politicians in both countries are therefore looking to develop vote-winning narratives around issues of crime, drug trafficking, and migration. Conventional wisdom suggests Mexican politicians do well appealing to nationalist and anti-US sentiment, although this may be changing. Likewise, US politicians have gained from articulating anti-immigrant sentiment, particularly over drugs, immigration, and the alleged loss of US blue collar jobs resulting from trade with Mexico. In the current developing primaries campaign, important sections of the US Republican party seem to believe once more that there are votes to be won by taking a hard-line anti-Mexico stance.

This year various Republican contenders have outlined a whole range of extreme proposals for dealing with the fentanyl crisis. In July a group of Republican think-tanks published an open letter warning that US-Mexico collaboration on drugs and security issues had “collapsed”. It said the AMLO government was working in a “conscious and willing symbiosis” with the cartels and accused the Mexican president of having “expressed his openness to a pact with the cartels”.  

Earlier, in April, advisers to former president Donald Trump, widely expected to win the Republican nomination (despite multiple legal cases against him), said he had discussed “sending special forces” and “using cyber warfare” to target cartel leaders. A report by Rolling Stone magazine said Trump’s advisers had briefed the former president on “battle plans” with a range of options including unilateral military strikes and troop deployments conducted without Mexican government approval.

One far-right think tank, the Center for Renewing America, has outlined possible justifications and procedures for a Trump presidency to “formally” declare “war against the cartels”. Two Republican members of congress have drawn up a bill seeking authorisation for the use of military force to “put us at war with the cartels”. Senator Tom Cotton, a Republican from Arkansas, says he is open to sending US troops into Mexico even if Mexican permission is withheld. Mike Waltz, a Lower Houser member from Florida and former Green Beret, says: “We need to start thinking about these groups more like we do ISIS and less like we do the mafia.” In both houses of congress there have been proposals to designate the cartels as foreign terrorist organisations (FTOs).

Candidates for the Republican presidential nomination appear to be competing among themselves to see who can come up with the most draconian and headline-grabbing ideas. In a campaign video, Trump said that if re-elected he would “order the Department of Defense to make appropriate use of special forces, cyber warfare, and other overt and covert actions to inflict maximum damage on cartel leadership, infrastructure and operations”. Vivek Ramaswamy, another contender for the Republican nomination, said that using military force without Mexican permission “would not be the preferred option, but we would absolutely be willing to do it”.

If they were adopted as official policy, such hard-line postures would have massively uncertain outcomes, but at the moment they are primarily seen as an instrument to rally US conservative sentiment. Moderate Republicans have nevertheless warned of the enormity of the risks involved. Some analysts point out that conducting military operations on the territory of a foreign country, without its approval, in effect constitutes an act of war. One Republican congressional aide told the Politico website: “If you thought Iraq was a bad situation, wait until you invade a country on our border…our grandchildren will be dealing with this.”

This source said that according to US military assessments 30% to 35% of Mexican territory is currently “ungoverned” meaning that any invasion would likely trigger a surge of people with legitimate claims to seek asylum in the US, highly counterproductive for any political party that wants to reduce inward immigration. Others point out that these ideas only address the supply side of the fentanyl problem, not the public-health problem of excess US demand.

Some US politicians may seek to conflate the surge in undocumented migrant inflows with the trafficking of fentanyl across the border. However, the evidence does not point in that direction. Around 90% of fentanyl seizures take place at legal points of entry. Mexican cartels largely hire US citizens, not migrants, to smuggle the drug into the country. US citizens represent over 85% of those convicted on fentanyl charges. One of the more typical forms of fentanyl smuggling is to hide the drug in concealed vehicle compartments driven by US citizens with US number plates.

Fentanyl drug traffickers are overwhelmingly U.S. citizens, not illegal immigrants
Citizenship status of defendants convicted of fentanyl drug trafficking, 2018-2021

Source: Cato Institute

The suggestion by some members of the US congress from both major parties for Mexico’s two major criminal organisations, the Sinaloa cartel and Cartel Jalisco Nueva Generación (CJNG), to be designated as foreign terrorist organisations (FTOs) is particularly notable because US legislation authorises military strikes against FTOs. However, opponents of the idea say the cartels’ current designation as Transnational Criminal Organisations (TCOs) already gives the Washington administration significant powers, including the ability to apply economic and financial sanctions. Seeking to raise that to FTO status would deeply alienate the AMLO government for no significant corresponding gain in law enforcement.

That said, the issue is likely to remain on the US political agenda as it gives Republicans a rallying call to mobilise their supporters. In early 2023 two Republicans, Dan Crenshaw (Texas) and Mike Waltz (Florida), introduced a bill titled “[Authorisation for the Use of Military Force] Cartel Influence Resolution” which would allow the US president to use “all necessary and appropriate force” against foreign nations, organisations or persons that the president “may determine have committed drug-related offences”. Meanwhile, 18 state attorneys wrote to President Biden requesting that he designate fentanyl as a “weapon of mass destruction”. Florida governor and presidential contender Ron de Santis said he favoured “direct action” including a possible blockade of Mexican ports. Brian Finucane of the International Crisis Group (ICG) lobbying organisation has warned that what he calls “war talk” will “only serve to strain US-Mexico ties, potentially complicating the two neighbours economic relations and their capacity to work together in promoting safe, orderly migration and fighting transnational crime”.

The political situation, in effect, makes it difficult for the Democratic Party administration of President Joe Biden to fully confront the fentanyl problem. At a formal level the administration is pursuing various initiatives, but Mexico’s less than whole-hearted commitment raises doubts as to their ability to succeed. Following the January 2023 North American Summit between the three regional leaders – Biden for the US, AMLO for Mexico, and Justin Trudeau for Canada - there was an agreement to “jointly confront the deadly scourge of synthetic drugs”. In July the specially created Trilateral Fentanyl Committee listed four main actions that would, it said, be taken by its members:

• intensifying and expanding prosecution of drug traffickers;
• targeting the supply of precursor chemicals and enlisting the support of private chemical and shipping companies to prevent diversion for illicit use;
• preventing drug trafficking across borders; and
• promoting public health services to reduce harm and demand, as well as providing education and treatment on substance abuse.

The three countries also pledged support for another Biden administration initiative, the newly created Global Coalition to Address Synthetic Drug Threats, which is supported by 80 countries but so far not by China (which is reported to have neither accepted nor rejected its invitation to join). The first priorities of the coalition, set up in July this year, are to prevent manufacturing and trafficking of illicit synthetic drugs, detect emerging new drug threats, and promote appropriate health responses. Caroline Rose, director of the Washington-based New Lines Institute for Strategy and Policy, a think tank largely focused on the Captagon trade in the Middle East, said that the Global Coalition would help fill information gaps. “Improved multilateral dialogue on supply and demand, interdiction strategies, intelligence-sharing, and harm reduction pathways has been sorely needed” she told UAE based news portal thenational.com.

The key problem facing the Biden administration, however, is that it is dependent on Mexico’s goodwill to try and limit the flow of migrant and asylum seekers entering the US across the southern land border. This is such a politically sensitive subject that it appears to carry a higher priority than action to crack down on the cross-border fentanyl trade. In other words, the Biden administration is unwilling to confront AMLO over his inaction and disinformation on fentanyl for fear that the Mexican president will withdraw collaboration on the migration issue.

Jose Díaz Briseno, Washington correspondent for Mexico’s Reforma newspaper, says that both US Democrats and Republicans are deeply nervous about the security situation. In his view “the Biden administration has concerns about AMLO and particularly in the area of democracy and democratic backsliding”, but it has chosen to mute its criticism because it needs AMLO’s cooperation over migration. He sees migration as the key factor in the bilateral relationship. AMLO has helped both the Trump and Biden administrations by allowing Mexico to be used as a buffer state, requiring migrants requesting asylum in the US to remain in Mexico pending the result of their cases. Briseno adds: “The fact that AMLO is willing to turn Mexico into a buffer state to hold the migrants there and prevent them from reaching the US border makes him an invaluable asset.”

There is also an impression that both the US and Canada are now waiting for the end of the AMLO presidency, to see what deals can be struck with his successor, who is due take office late next year. Political analyst Carlos Bravo Regidor says: “They know that López Obrador is a president who picks fights, who likes conflict, who’s constantly looking for people to get into the ring with him, and I think both Canada and the US have opted to be the adults in the room, not to respond to provocations, and simply wait for AMLO’s term to end.”

On 12 August, Colombian President Gustavo Petro shared some of his thinking on his country’s evolving anti-drug policies on X (formerly Twitter). He argued that market geography and cocaine smuggling routes are beginning to change as a result of the rise of fentanyl consumption in the United Sates. In the past, he said, the geography of coca cultivation and the location of cocaine laboratories was primarily defined by patterns of US demand. As a result, the main drug-trafficking routes lay to the north of his country, leaving Colombia either through the Pacific or the Caribbean. The president said these were now “progressively changing” and up to a point swinging around to the south. The cartels, he claimed, “are abandoning the coastal areas and instead penetrating the eastern slopes of the Andes and into the Amazon”.

As result, Colombia’s main coca cultivation areas were no longer to be found in Tumaco (on the Pacific coast of Nariño department) or in Catatumbo (near the frontier with Venezuela). Instead, Petro asserted, “the world’s top cocaine production area is now located in a 10km strip of land on the Colombian side of the Colombia-Ecuador border”. Cocaine produced there is shipped southward through the river network. Some goes through Brazil as a gateway to Europe and Africa, and some goes to Ecuador and Peru, seen as gateways to reach central Asia, Japan, and Australia.     

Petro went on to argue that the shift in supply routes had been a major factor in the dramatic spread of violence in formerly peaceful Ecuador, where Mexican and other top international cartels are fighting a proxy war for control of territory. This was the background to the August assassination of the Ecuadorean anti-crime presidential candidate Fernando Villavicencio. The Colombian president said the “shift to the south” might see Paraguayan and Uruguayan criminal groups fighting to secure control of cocaine production in Bolivia. For him, a related and major driver of change is the sharp drop in global cocaine prices.

Crucially, Petro suggested the “shift to the south” might be beneficial to Colombia in the long term. As he put it, “Colombia, a country that lacks the manufacturing capacity to produce fentanyl, might escape from this narco-trafficking geography: that escape, for us, would mean peace”. However, the recent fall in cocaine prices does not simply reflect demand-side factors, such as the rise of fentanyl. Colombia is the world’s dominant cocaine producer, accounting for about 60% of global supply. In Cauca, in Colombia’s southwest, the price of a bushel of coca leaves (12.5kg) has nearly halved, from 70,000 pesos (US$17.30) to 38,000 pesos (US$9.40) in the year to August 2023. Similar drops have been seen in Nariño, Cauca, and Catatumbo. Various factors explain the price drop. In broad terms supply has gone up, both in Colombia and in neighbouring countries like Peru and Bolivia while international demand remains broadly stable.

Coca cultivation in the Andes, 1987-2021 (U.S. government estimate)

Source: WOLA

In Colombia the coca cultivation area has expanded sharply (up by 43% in 2021 to 204,000 hectares). Partly because of the change of administration last year government eradication efforts have been paused. Coca cultivation and laboratory processing has meanwhile become more efficient. The UN estimates that cocaine hydrochloride yield has increased from 6.5kg to 7.9kg per cultivated hectare over the last four years. A further factor may be the fragmentation of criminal cartels which has led to more competition between them and increased supply. Ana María Rueda of lobby group Fundación Ideas para la Paz told The Economist: “Now there are more than 500 criminal groups across the country. Gangs who buy cocaine wholesale can pick and choose which regions they purchase it from and drive prices down locally.”

There are also suggestions that the crop eradication policies of Petro’s predecessors may have been counterproductive. Poor families were paid to switch away from coca leaf production, but in some cases they appear to have responded by actually planting more coca bushes, so as to be able to claim more of the subsidy for substituting them. The Petro administration has in any case said it wants to focus its efforts more on cocaine interdiction than on coca leaf eradication.

What is clear, however, is that the cocaine market is going through a global ‘bust’ that is creating real hardship in some areas of Colombia. It is estimated, for example, that around 230,000 farming families depend on coca cultivation to earn a livelihood. The government has begun an emergency programme of cash payments in 181 municipalities to help.

The Petro government has taken some time to develop a detailed anti-narcotics policy, partly because it has been eager to do so in consultation with local communities in some of the areas most affected by drug trafficking and violence. At the end of August – when the new government had been in office for a year - Camilo Umaña Hernández, Deputy Minister for Criminal Policy and Restorative Justice, outlined some of the key points of a draft 10-year drugs policy covering 2023-2033, which he said included inputs from 2,700 social leaders and 274 “national organisations”.

The deputy minister said the overall policy had three major priorities. One, to break up the large criminal cartels; two, to encourage economic alternatives for community development; and, three, to promote protection of the environment. Speaking at a community meeting in Puerto Asís, Putumayo department (on the border with Ecuador), Hernández said the aim was for government intervention in areas of conflict to come in two forms, to be known as “suffocation” and “oxygen”.

“Suffocation” measures would be designed to reduce the influence and organisational capacity of criminal organisations responsible for drug trafficking and human rights violations. Under this heading the deputy minister said the objective was “to break up these organisations and create conditions for peace and security in the communities”. Under the “Oxygen” heading, on the other hand, the aim was to transform communities through the promotion of alternative and legal economic activities. This would involve presenting the communities with development options, creating a climate of co-existence, safety, and respect for human rights.

The idea that fentanyl addiction is unlikely to take root in South America may be over-optimistic. A special investigation by the Los Angeles Times published in February this year had disturbing implications. It found that pharmacies in a group of north-western Mexican cities near the US border were selling counterfeit prescription pills laced with stronger drugs such as fentanyl and passing them off as legitimate medicines. The newspaper found that pills sold as oxycodone and Adderall in Tijuana and Cabo San Lucas contained fentanyl and methamphetamines. In total the newspaper found that 71% of a total of 17 pills tested came up positive for more powerful drugs. That meant that both US tourists and Mexican residents may be unknowingly purchasing what they think are legitimate low-potency over-the-counter pain killers, which are in fact laced with fentanyl and therefore expose them to risks of addiction and even death by overdose.

The true extent of the “fentanyl-sold-via-pharmacies” problem is difficult to measure, not least because Mexico’s mortality data is believed to under-report all types of overdose deaths. While the US is reporting over 100,000 overdose deaths a year, limited Mexican data puts fatalities from all drugs, including alcohol, at under 2,000. Recorded fentanyl overdose deaths are no more than a few dozen. Chelsea Shover, a UCLA researcher conducting a study cited by the newspaper, said: “We don’t know exactly when this started, and we don’t know how widespread it is. We don’t know who is buying these pills. We don’t know who’s taking them, and we don’t know what’s happening to the people that are taking them. The most important unknown is probably how many people have died or had serious health consequences from it, and we don’t have any idea.”

The manner in which fentanyl is consumed is important. It first appeared on the streets in powder form consumed either by shooting up (injecting intravenously) or by snorting. That meant that consumers had to become involved in, or risk becoming victims of, criminal activity on the streets to get their fix. By comparison, acquiring the drug in the form of over-the-counter, legitimate-looking, pharmacy pills appears to be a much safer experience. In effect, it allows the cartels to target a wider, more middle-class market for its products. That could also mean selling more drugs inside Mexico or other Latin American countries. A UCLA assistant professor told the newspaper: “Selling fentanyl in the form of pills is really marketing to a group of the population that may not be willing to try ‘hard drugs’.”

Los Angeles Times reporters found a very high number of pharmacies selling fake painkillers. Tablets were on sale for between US$15-$35 each, depending on potency. A separate study conducted by UCLA focused on 40 pharmacies and found that a majority of them were selling high-powered prescription drugs over the counter. Given the prices, it is thought the pharmacies were mainly targeting US tourists, but they could also be selling to local residents.

In conclusion and returning briefly to the eight headlines dating back six years ago, the fact that there has been little change underlines a somewhat disappointing but unavoidable reality. The drugs business is profitable, highly violent, and deeply embedded in Latin American economies and political systems. Put simply, it is not going to go away anytime soon. Massive demand for illicit drugs coming from the United States and other relatively wealthy countries tends to call forth the necessary supply. If one cartel is neutralised, or otherwise removed from the picture, new criminal organisations quickly spring up to fill the vacuum left behind it.  

While both the business and government efforts to eliminate illicit drugs will continue evolving, there appears to be no single ‘silver bullet’ or policy recommendation capable of guaranteeing short term anti-narcotics success. According to US foreign policy think tank Responsible Statecraft, “there will be no quick fix to the current drug crisis, only multipronged solutions that address both the supply and demand of fentanyl”.

On a more positive note, tackling not just one but a combination of the areas covered by the eight headlines is likely to yield some results. Any government that can meaningfully pursue strategies to break up the big cartels, follow the money trail tackling the money laundering of billion-dollar revenues, improve the criminal justice system, and restore control of prisons is likely to register perhaps modest but still important progress.

That said, it is also true that the fentanyl crisis introduces some genuinely new elements into an already complex drugs equation. The most important of these is that production of the drug is no longer tied to plant cultivation in particular geographic locations, vulnerable to weather and government-led eradication efforts. With the right precursor chemicals, fentanyl can be produced anywhere in hard-to-detect clandestine laboratories. A very literal response would therefore be to say that the arrival of fentanyl is eroding the drug crops near- monopoly enjoyed within Latin America by the Mexican and Colombian cartels, while triggering a consumer shift away from cocaine.

That too would be an oversimplification. The Mexican cartels in particular have shown their ability to adapt to the threats and opportunities presented by fentanyl. They have maintained the cocaine business, while lacing some of their product with fentanyl. In the face of US-China tensions, they have exploited a window of opportunity to become major fentanyl producers in their own right. With production no longer tied to illicit crop-growing areas, they have nevertheless pursued comparative advantage by efficiently sourcing precursor chemicals and hiring qualified chemists. At the same time, they are innovating by selling fentanyl-laced painkillers through networks of pharmacies.

Reports of the ‘death of cocaine’ are much exaggerated. Changing patterns of drug consumption can take years. Under certain conditions marijuana is now legal in many parts of the US, but more than half a century since they began selling it, the cartels still have a small stake in the business. Demand for cocaine appears relatively stable, with the current low prices likely to be one of many cyclical ups and downs that the industry has frequently experienced.