As noted in the previous part of the paper, the global drug mafia is a three-level formation. The strategic objectives pursued at the executive Level 3 are:
• The whitewashing of the cash flows generated by drug sales;
• Revenue investment in various sectors of the economy;
• Organization and security of drug supply operations at Level 1 and Level 2;
• The creation of the conditions favorable to the expansion of the drug business in various countries.
Global Drug Mafia: Strategic Objectives and Real Bosses
I will dwell in what follows on how the first and second objectives from the above list are accomplished. As for the third one – the maintenance of drug operations security - the methods on the basis of which it is pursued are:
• The buying of state officials supposed to counter illicit drug-related activities (policemen, drug enforcement agents, customs service staff, etc);
• The infiltration of the corresponding government institutions;
• The armament of drug cartels and likewise groups.
Keeping competitors out of the respective drug market niches is also a purpose bracketed within the third of the objectives discussed.
The fourth objective translates into an extremely wide range of activities:
• Lobbyist promotion of the legislation favorable to circulating drugs (including the legislative initiatives aimed at legalizing narcotics);
• Propaganda of drug use in mass media;
• The lifting of restrictions on cargo transit, financial flows, and travel under the pretexts of liberalization and free trade;
• The support for the existence or creation of offshore zones where money laundering is relatively easy;
• The organization of political or military pressure – oftentimes in the guise of anti-terrorist campaigns - on the countries which attempt to crack down on the drug business.
The 2001 NATO invasion of Afghanistan – with the stated goal of hunting down terrorists - provides a stark example of an operation designed to establish a situation conductive to the expansion of the drug business in a whole country. Its actual result was a boost of drug output – of heroin and opium – in the settings of the international occupation. The Talibs who ruled Afghanistan prior to the coalition offensive managed to induce a considerable reduction of poppy farming, whereas the intervention led to an increase of drug production in Afghanistan by orders of magnitude and to the conversion of the country into the world's top narcotics supplier… Analysts, in fact, suggested that the September 11 terrorist attacks could have been arranged to help the drug business spread globally under the protection of the Western military coalition.
At the moment, Iran is one of the few countries to be credited with implementing a strong anti-drug program. The country not only suppresses illicit drug activities domestically but also does a lot to counter drag trafficking internationally, blocking the supply routes which head from Afghanistan or Asia towards Europe via the Iranian territory. This may be one of the reasons behind the US tendency to maintain chronic tensions around Iran.
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Level 3 of the drug mafia is managed by an extremely compact super-elite – members of royal families, bankers, and statesmen - which president of Drug Watch International John Coleman, one of top experts on the subject, loosely describes as the Committee of 300.
“From Colombia to Miami, from the Golden Triangle to the Golden Gate, from Hong Kong to New York, from Bogota to Frankfurt, the drug-trade, and more especially the heroin-trade, is BIG BUSINESS and it is run from the top down by some of the most "untouchable"* families in the world, and each of those families have at least one member who is on the Committee of 300. It is not a street-corner business, and it takes a great deal of money and expertise to keep it flowing smoothly. The machinery under control of the Committee of 300 ensures this”, asserts Coleman. Keeping it “flowing smoothly” takes the presence of drug mafia patrons in the executive authorities of most of the world's countries. According to Coleman, “IT IS BIG BUSINESS, a vast empire, this dirty drug-business. Of necessity, it is operated from the top down in every single country in the world”. The assets in the hands of the Committee of 300 may include banks, insurance companies, energy corporations, retailers, etc, but the core business of the group's members is the global drug corporation: “It is, in fact, the largest single enterprise in the world today, transcending all others”, says Coleman. The drug corporation started to take shape back in the XVIII century and has been gaining power ever since.
The Committee of 300 pursues the following objectives:
1. Drug revenues are used to bribe politicians statesmen, the army top brass, the media people, etc;
2. Drugs serve as an instrument of mind control;
3. The tide of narcotic dependency causes the reduction of the world population.
It should be noted in the context that banks are the key instrument employed at Level 3, the owners of the biggest of them sitting on the Committee of 300.
The History of Merger Between Banks and Drug Cartels
The merger between banks and the drug-supplying groups began roughly four centuries ago. In Great Britain, the alliance comprised the British East India Company to which the government issued an exclusive license for opium trade in India and other British colonies and the first British banks including the Bank of England, Barings Bank, and the Rothschild London Bank.
World War II presented the drug mafia with serious problems. The middle of the XX century saw the British colonial system crumble and national liberation movements come into play in the third world. The socialist China suppressed the drug trade which used to flourish in the country for around 200 years. The barriers between nations which were established in the 1930ies, in the epoch of the Great Depression, limited the economic interactions between countries. As for the socialist camp, the drug business on their territories was practically eradicated.
Still, the Western Hemisphere – the North and South America - remained a zone where the drug mafia suffered no considerable damage. The banks on both continents readily provided money laundering services – for example, it became known in 1950 that the Morgan Guaranty Trust and Rockefeller's Chase Manhattan Bank helped legalize the funds of the major drug syndicates based in Cali and Medellín. It was nevertheless true that, at the time, the banking system was able to function without relying on the drug business even in the Western Hemisphere.
Early in 2012, former UN Under-Secretary-General and Executive Director of the UN Office on Drugs and Crime Antonio Maria Costa outlined in an interview the key phases of the formation of the alliance between banks and the drug mafia in the post-war era. At the first phase, according to Costa, “the relationship between the banking system and the mafia started in the 1960s and '70s. In the '60s and '70s, the mafia basically handled cash in large amounts, although not as large as today because international crime was much smaller. It was mostly Italian, North American, and with some other affiliations, but it was limited in size”.
The second phase, in Costa's words, commenced in the late 1970ies – the early 1980ies: “Then, with the progressive opening of borders, communication, and business, in the late '70s and beginning of the '80s, organized crime, which also had established roots outside of Italy, started to use the banking system to transfer assets, to move their money around the world”. This was the time when the Bretton Woods system stopped to exist and the US took to printing money in extraordinary quantities, while the international financial dynamics was radically liberalized, with restrictions on capital transfers between many of the Western countries completely removed, the global financial market booming, and the financial offshores mushrooming. Governments serially toned down the economy regulation in line with the doctrines of Thatcherism and Reaganomics. Overall, the shifts made it easier for organized crime to equip itself with a global financial network.
From Costa's perspective, the period of time which can be described as the third phase of the merger became reality in the 1990ies when the developed countries created the international system charged with the mission to prevent money laundering, a plight which reached such proportions that the very stability of the West was put in jeopardy. In Costa's view, the creation of the Financial Action Task Force marked a pivotal point in the process: “FATF, of which I am one of the founders, started to be very active with specialized recommendations. Your readers may be familiar with this. And these recommendations started biting, slowly and progressively, at least in the major financial institutions, on both sides of the Atlantic, but not only. Because of this, the recycling of criminal money through the banking system was reduced very significantly”.
As I strongly suspect, the claim that major progress in fighting the drug mafia was achieved in the 1990ies is a gross overstatement. Locally, some of the efforts may have met with certain success and the money laundering in the Western countries indeed went down, but as a parallel process the same type of activity drifted to the third world, new offshore zones popped up and financial oversight disappeared entirely in the former socialist countries.
The so-called globalization peaked in the 1990ies. The phenomenon masked by the term was a combination of sweeping liberalization of trade and finances with the transparency of borders for products, money, and people. The institution of the ETO in 1995 was a milestone in the course of globalization as the group's mandate implied totally erasing national borders. Interpol agents explain with utmost clarity that whatever is good for free trade is good for crime. The overarching argument in the book “The Secret Rulers. Who Runs the World” by expert on organized crime Misha Glenny is that the emergence of the integrated global market powerfully amplified organized crime. Glenny writes that in the late 1980ies the liberalizing West withdrew a key privilege – to control incoming and outgoing financial flows – from sovereign states, causing corporations to go global and to retain only nominal links to the countries of origin. The progress of globalization and the expansion of organized crime were tightly interwoven as the currency holdings of corporations and the underworld mixed freely in the banking sector. Glenny further notes that, when the cocaine market in the US reached the point of saturation, the USSR collapsed, and that became a blessing for Columbian drug cartels which seized the opportunities to tap into the European market and to chart hitherto inconceivable supply routes.
The Final Phase of the Merger
The fourth phase of the merger between banks and drug cartels took off roughly a decade ago and was manifest in an unprecedented synergy of the two systems. “A few years later—let's say in 2002 and 2003—the first crisis hit, the IT bubble burst—and the banking system, which had spread enormously because of globalization, started to be infiltrated again by criminal assets. Namely, the anti-money-laundering controls which worked very effectively in Europe and North America in the 1990s, were weakened significantly in a number of off-shore jurisdictions which were much weaker. This started a new cycle of penetration of crime money”, says Costa. Citing the famous case of the Wachovia Bank, Costa mentions that: “We've had a number of historic episodes. The Wachovia Bank in New York is the most important one. According to the U.S. Justice Department, Wachovia recycled $480 million over a period of three years”. The global crisis, explains Costa, reinforced the marriage between banks and drug cartels.
It should be born in mind that the merger between banks and drug groups materialized as a result of two-way traffic. World-class banks seek out money globally and offer to drug lords the services in the form of whitewashing cash and investing it in legal sectors of the economy. The drug cartels, in turn, regard the banking sector as a priority investment niche. Glenny wrote that banks were the first recipients of investments from the Cali cartel. In 1974, the cartel actually founded its own bank - El Banco de los Trabajadores - and took to buying into banks across Central and South America which were linked to peer institutions in New York and Miami such as Manufacturer Hannover and Chase Manhattan.
To be continued