Drug Legalization in Latin America: Could it be the Answer?

Last March, Central American nations held a drug legalization summit in Antigua, Guatemala. As the host of the summit, Guatemalan President Otto Pérez Molina suggested that production, consumption, and sales of narcotics should be regulated and legalized.¹ In April, current strategies to fight the war on drugs received frequent criticism at the Summit of the Americas. In fact, several other Latin American countries, namely Costa Rica, Colombia, and Uruguay suggested legalization and decriminalization approaches should be undertaken in an effort to reduce drug violence. Even U.S. President Barack Obama acknowledged that the issue should be discussed but thought that legalization, “[was] not the answer.”²

The above events represent the latest in the ongoing debate between the U.S. and Latin America on drug legalization. To one extent or another, Argentina, Colombia, Mexico, Brazil, Ecuador, and Uruguay have decriminalized various forms of consumption and possession; the current legalization rhetoric is still a substantial deviation from mainstream policy proposals. Furthermore, there is a substantial difference between legalization and decriminalization. Legalization transforms what was once an illegal black market into a legal industry.  On the other hand, decriminalization only legalizes particular aspects of the industry such as consumption.

Washington’s hard-lined anti-legalization position is unlikely to waiver regardless of who wins the upcoming U.S. presidential election. A more important question lies in Washington’s loss of influence within the region over the last ten years. As a result, the potential for legalization makes the overall political ramifications unpredictable for the region. This is especially true when it comes to Uruguay, a country that will soon be voting on the world’s first legalization legislation.  Montevideo, however, is hardly the only country in the hemisphere entertaining such an option: officials from Costa Rica, El Salvador, Colombia, and Mexico have all publicly indicated openness to the possibility of ratifying legalization legislation.³

Keeping this in mind, the following analysis compares the potential benefits and shortcomings of drug legalization as a policy initiative to reduce overall drug crime. It becomes prudent to first debunk a common misconception regarding legalization: there is no country, province, state, or region that has ever legalized any type of narcotic, including the Netherlands. While there has been previous decriminalization legislation, legalization initiatives are, as of now, unprecedented.  

Legalization Economics, Police Corruption, and Overcrowded Prisons

The drug trade mirrors the global economy as it involves a number of interdependent countries. It begins with drug producing countries (in this case, Colombia, Bolivia, and Peru), and then travels through the Northern Triangle (Guatemala, Honduras, and El Salvador), until it is trafficked through Mexico and into the U.S. for consumption.

Legalization appeals to Latin American countries for a variety of reasons. First, the countries too often frequented by violence believe that legalization can be an effective deterrent to drug-related crime. Substantial drug profits incentivize violence for drug trafficking organizations (DTOs), leading them to fight over limited lucrative drug transit routes. According to Matthew S. Jenner, J.D., the current drug trade is similar to an oligopoly—a market dominated by only a few firms. Prices are high because the drug trade is forced to avoid governmental authorities and because the few operating firms are driving the hemisphere’s drug prices. In the context of basic economic principles, an increase in legal narcotics would reduce current prices, as legitimate producers and traffickers would be able to enter the market.⁴ For many proponents, drug legalization is an effective way to affect the current market by diminishing the monetary incentives for DTOs to engage in violent tactics, if that is their mission.

Second, a reduction of DTO profits would also diminish the amount of contraband as well as other resources available to corrupt police forces. Mexico, along with the countries located in the Northern Triangle, are plagued with some of the highest rates of police corruption in all of Latin America.⁵ These authorities are unable to compete financially with the drug cartels operating inside their borders when it comes to maintaining the ethic of public interest within their police forces.  Although legalization would not address the corrupt police officer “culture,” at least DTOs would be unable to sustain their current levels of financial persuasion.

Third, legalization would almost certainly address the issue of overcrowded prisons across Latin America. A recent study in which the Transnational Institute (TNI) participated drew an important link between this issue and counter-narcotic policies through research conducted in Argentina, Bolivia, Brazil, Colombia, Ecuador, Mexico, Peru, and Uruguay. (Bolivia, Peru and Colombia are among the world’s largest producers of cocaine). The study concluded that most drug-related arrests have been low-level distributors and street dealers—with minimal arrests of “high-level players.”⁶  Low-level dealers are easily replaced. Within countries with decriminalization policies, users are regularly mistaken for dealers or traffickers, and, as a result, the prison systems are filled beyond operating capacity.⁷ Furthermore, the study found that drug-related offenses are disproportionately high compared to other classifications of crimes and carry severe punishments. For example, in the same Transnational Institute study, “In Ecuador, a low-level drug transporter, or ‘mule’ may receive a longer prison sentence than a murderer.”⁸ With legalization, the ambiguity of dealers versus users is nonexistent because the entire drug business becomes legal.

U.S. Narco-appetites and Incubation

If Latin American countries pass legislation to legalize drugs while Washington retains its current policies, it is likely that the U.S. drug demand and the resulting “incubation” effect will persist. The incubation effect is the redirection of criminal organizations into other forms of illegal activities as a result of residing inside a country for long periods of time.⁹ In other words, the drug trade allows criminal organizations to expand as they nestle deep into social fabrics. By all accounts, the incubation period will continue as long as U.S. drug demand finances profitable DTOs.

Los Zetas, a Mexican drug cartel, provides an interesting case study in illustrating this point. The Mexican DTO decided to venture into migrant smuggling in an effort to increase its profits. Today such smuggling is Los Zetas’ second most lucrative activity; its influence has spread all the way to Petén in northern Guatemala. According to the Guatemalan Human Rights Commission, human smuggling was not a part of organized criminal networks before Los Zetas began targeting the industry. Instead, “coyotes,” independent human smugglers, would charge fees to smuggle groups of migrants through Mexico and into the United States. Because of their substantial drug profits, Los Zetas completely transformed the human smuggling industry. While coyotes could only smuggle scarcely more than twenty migrants at a time, Los Zetas could smuggle hundreds of migrants in armored vehicles across the border. Ultimately, Los Zetas gained control of the Guatemalan human smuggling market, killing anyone attempting to travel beyond their control.¹⁰ The estimated industry value of migrant smuggling in Latin America today is $6.6 billion USD according to the U.N. report on crime globalization, having grown in no small part from Los Zetas.¹¹

Morris Panner, a former U.S. federal crime prosecutor, suggests that the trend of DTOs exploring new “business” ventures is far more pervasive than their drug trade involvement. He goes on to imply that the entire business model for Latin American organized crime is in a transitional period, in which these organizations are diversifying ways to earn money, either as a growth or survival strategy.¹² For example, PEMEX, the Mexican state-owned oil company, has reported that the local committee has lost approximately 40 percent of its production, or $750 million USD, to oil theft in cartel-controlled territory.¹³ While other figures are difficult to estimate, kidnap ransoming is valued between $200 million and $500 million USD annually.¹⁴ It appears that these industries are growing as a result of continuing U.S. drug demand and DTO incubation. While Panner does not adequately address the potential impact of widespread drug legalization, he does conclude that criminal organizations are “pursuing a larger, more extensive agenda.”¹⁵ It appears DTOs are able to expand into other illicit markets because of their substantial drug trade revenues.

Many variables, including the dissemination of accurate information, unpredictability, and other issues make the full effect of legalization on drug consumption within Latin America impossible to predict.  In comparison to global consumption levels, Latin America has been historically low, most likely because a large part of the population has difficulty affording food, let alone expensive drugs.  However, recent trends suggest consumption is on the rise.¹⁶ In the presence of a legalization drive, Latin American populations would be exposed to cheaper drugs, potentially causing demand to increase. Although this is only one possible scenario, it is doubtful that drug consumption in Latin America will decrease to any extent due to the fact it has been increasing in recent years despite current high prices.

Legalization as a Policy Recommendation?

The idealistic benefits of legalization make it an attractive policy choice for its potential to reduce cartel influence, unpack overcrowded prisons, and eradicate police corruption. However, the main problem with the Latin American legalization policies is that with all of these activities they would not alter U.S. demand. If the U.S. population could feed their drug habits domestically or their drug demand decreased, then it is possible that the current violent drug trade would not be able to continue as is.

Such uncomfortable data swirls around the current Washington-LAC line.  On the one hand, Latin America is no longer afraid to move ahead with policies without Washington’s endorsement, as evidenced by Uruguay’s current marijuana legalization initiative.  However, the volume of U.S. drug demand makes Washington’s cooperation essential since it is the driving force behind the drug trade.  It could still be argued that legalization has the potential to reduce the violence associated with the rising levels of Latin American drug consumption. Without a doubt, legalization would be more effective than decriminalization because the ambiguous definition of who is a “dealer” and who is a “user” would no longer be an issue.

Decriminalization policies that allow for various levels of consumption and possession have existed for years, most notably in Mexico, where homicide rates are among the highest in all of Latin America. Proponents still argue that legalization would at least help solve problems like overcrowded prisons throughout the region, even if Washington abstains from implementing such policies. However, the incubation effect would continue to provide low-level street dealers with suddenly illegal employment opportunities. Therefore, it appears that only addressing the issue of Latin American consumption, without addressing U.S. consumption, would be insufficient to stop the carnage of organized drug dealing in the region.

Conclusion

It is somewhat trite and simplistic to claim that drug initiatives are controversial and provocative initiatives. Certainly, many questions need to first appear on the table, much less answered, which include which drugs could be legalized. Here, cocaine, marijuana, heroin, and even methamphetamine are lumped together, however each requires a separate public health response. As drug consumption is on the rise in Latin America, it is difficult to predict how legalization would impact this trend.

As Washington’s political influence wanes in Latin America, leaders may use their position on the global stage as leverage against any U.S. policy of pressuring Latin Americans to engage in any ongoing supply-side strategies.  For example, some suggest that Guatemalan President Molina’s legalization rhetoric served as a front to serve as a means to provide for the resumption of military aid to Guatemala.¹⁷ If true, it must be emphasized that any politicizing of legalization could serve as a means to incentivize other Latin American leaders to engage in similar tactics.

Regardless, legislative measures appear to be futile without U.S. cooperation. While there are a wide variety of security issues that need to be addressed in Latin America, most appear to be tied to the drug trade along with the U.S profits that are associated with the demand for such drugs in the U.S. Although three states in the U.S. are currently voting on marijuana legalization laws, and Washington has initiated demand-side strategies, it is clear that many more measures need to be taken to reduce the rampant drug-related violence that abounds throughout the Americas.

Gene Bolton, Research Associate at the Council on Hemispheric Affairs

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