June 15th, 2008
An Honest Citizen
Map: Colombia, Cocaine and Cash: Colombia

Colombia is currently the center of the South American drug trade, producing more than 80 percent of the world’s cocaine supply. Located at the northern tip of South America, Colombia borders Panama, Venezuela, Ecuador, Peru, and Brazil. The country is accessible from both the Caribbean and the Pacific Oceans, a fact which, in the 1970s made the country a preferred transshipment point for drug traffickers who needed to move cocaine by land, sea, and air.

By the 1980s Colombian traffickers — taking advantage of the country’s ideal climate and growing conditions — had become the primary processors of cocaine and had begun large-scale local cultivation of coca. As U.S.-sponsored eradication efforts disrupted cultivation in Peru and Bolivia, Colombia became the center of coca cultivation as well, outstripping the other Andean nations. As of 2004, Colombia produces twice as much cocaine as its nearest competitors, Peru and Bolivia. Most of Colombia’s coca is cultivated in the southwestern Putumayo-Caquetá region, in the Amazon basin and in the central Meta-Guaviare-Vaupés area, in the Orinoco basin. U.S.-backed aerial fumigation of those regions in the late 1990s and early part of this century has pushed growers north and east, and planting has picked up in the northern regions of Arauca, Norte de Santander, Bolivar, and Antioquia.

The cultivation, production, and trafficking of cocaine in Colombia remains a major industry, employing — as of 2004 — about 200,000 people and generating annual revenues estimated at 2.2 billion dollars, equivalent to nearly 3 percent of Colombia’s legitimate GDP. The nature of the industry, however, has changed radically over the past few decades.

Through the early 1990s, the Medellín and Cali cartels (named after the two major cities in which they were centered) had near complete control over the production and trafficking of cocaine throughout the world. But following Pablo Escobar’s death in 1993 and the arrests of the Rodriguez brothers in 1995, the cartels collapsed, and the drug trafficking industry adapted quickly to a new set of conditions.

Instead of recreating the hierarchies of the cartels, traffickers banded together in loose, decentralized alliances, spreading the responsibility and risk of the business among a number of independent operators. In addition, Colombia’s armed groups became significantly involved in the drug trade, first by exacting a “tax” on shipments moving through their territories, hiring outside the cartel to protect smugglers, and eventually becoming only directly involved in the trafficking itself.

Today diverse groups working independently in small cells control the traffic and distribution of illegal drugs. Cocaine is smuggled into the United States in a variety of methods, though they rely primarily on land routes through Mexico to reach the markets of the western U.S., and sea routes through the Caribbean to transport drugs bound for the East Coast and Europe.

Every trafficker faces the problem of what to do with the money generated by the business. Drug trafficking generates huge sums of cash, which can’t simply be deposited into a legitimate bank account. Furthermore, the proceeds tend to come home as U.S. dollars, which cannot easily be spent in Colombia. The cartels originally transported bulk shipments of U.S. dollars home to Colombia in the false walls and floors of containers, spending cash where it would be accepted. Tales are told of traffickers burying whatever they could not spend. But the traffickers have grown more sophisticated and have increasingly invested drug proceeds in legitimate business, creating the opportunity to launder proceeds from the drug trade. Because of international legislation and aggressive efforts by U.S. and Colombian law enforcement to crack down on money laundering, Colombian drug traffickers have devised a number of ingenious ways to transfer their profits home, laundering the drug money through the purchase of domestic goods and a unique scheme known as the “Black Market Peso Exchange.”

Sources: U.S. Department of Justice, U.S. Department of the Treasury, National Drug Intelligence Center; U.S. Drug Enforcement Administration “The Drug Trade in Colombia: A Threat Assessment”; CIA World Factbook; U.S. Department of State, Bureau of Western Hemisphere Affairs; Interpol; Executive Office of the President, Office of National Drug Control Policy; United Nations Office on Drugs and Crime, “World Drug Report 2004”

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