Pablo Escobar and Cocaine Trade in Colombia Research Paper

Introduction

Illegal drug trafficking in Colombia has had a long history. However, this trade was renewed after a series of events that occurred just before the decade 70. Prior to this decade, trade in illegal narcotics used to take place in the entire Latin American region. They served the growing demand and market in the United States. However, US drug addiction became too intense in the mid sixties to early seventies. Its government had to do something quickly in order to protect its citizens from this ‘epidemic’. Consequently, the US and its cocaine suppliers in South East Asia signed a deal that stopped the manufacture of illegal drugs there. However, there was still a demand of the drugs and Colombia took up South East Asia’s place in the illegal drugs trade.

There were many reasons why Colombia was the destination of choice for this illegal business in the seventies. First of all, the country had a long history of trafficking and smuggling items. The items included both narcotics and other non-drug items such as coffee and emeralds. This meant that the country was already well structured for such an endeavor. Additionally, Colombia had a range of cocaine experts. These experts came from the Cuban Republic after Fidel Castro took over power. They had a lot of experience in the illegal trade and they would become valuable resources for cocaine trade in Colombia because they knew all the technological and geographical tactics necessary to survive in the cocaine world.

Colombia’s niche in the cocaine market was further secured by the fact that some of their other producers were slowly running out of business. For instance, Mexico had been selling some poisoned drugs and consumers no longer trusted them. Consequently, there was a higher demand for Colombia’ products and this furthered the trade. It was reported that by the 1990s, Colombia earned about eight billion dollars worth of revenue from the cocaine drug industry. This was a result of the shipping, refining and transportation activities involved.

Economic Impact

Overall analysis

It should be noted that the drug trafficking business is quite diverse. There are numerous drug types in the market toady. There are also a variety of producers. However, cocaine is of particular interest in comparison to other drug types such as marijuana because they are more expensive and therefore represent higher revenue for drug traffickers, producers and shippers. Cocaine accounts for about a third of the entire illegal drug trafficking that takes place in the world today.

The country that truly benefits from such a trade is Colombia because it is involved in the refining and transshipping process. Other countries growing the crop (coca leaves) may not benefit as much as Colombia. These countries include Peru, Ecuador and Bolivia. However, this does not mean that income from cocaine trade in Colombia trickles down to the common man. The cocaine trade in Colombia is dominated by a small group of people; drug families. A number of drug traffickers usually come together and form a unit known as a drug cartel. However, each drug cartel consists of only about five main groups. Two such examples include:

• The Medellin Cartel
• The Cali Cartel

Structure of the cocaine trade

Surveys conducted on illegal drug trafficking found that the drug families get about five billion to two billion in revenue every year. These groups are the only ones who benefit while the rest of the population is not included. As a result, the trade is made more and more illegal and more people are getting economically disempowered in the Colombian State.

It should be noted that this trade is mainly characterized by interpersonal relationships as much as there is existence of transnational structures. Most of these groups are operated through networks. These networks can only survive if there are certain emotional qualities present i.e.

• Cohesion in the group
• Fewer cases of social distance
• Proximity between networks
• Network centrality
• Presence of instrumental ties
• Network density
• Prevalence of clique patterns
• Trust

All the above traits must be present between the drug traffickers themselves and must also be present between the trafficker and the final consumer. However, the latter mentioned trait; trust is by far the most important since this is an illegal trade and chances are that there will be no formal documentation of the trade.

Surveys have also found that drug trafficking in Colombia is not conducted through vertical structures. Instead, there is a horizontal interconnection with instances of centrality. It should be noted that each drug unit in Colombia will indicate the kind of structure synonymous with its own environment. However, they still retain some elements of their parent corporation. Parent corporations are usually responsible for making transactional decisions and investment decisions. They are usually chosen by the degree of networks and influence that they display. Those drug units with the highest number of interconnections are usually the ones that have a large say in the cocaine trade. Other members of the network are not subordinate to the parent organization as such; they are simply loyal to it because they stand to benefit, because they have some common interests and because they need a network link.

The coordinating centre in this case is comprised of the drug cartels. They make decisions about who will ship the drugs, they coordinate coca leaf picking activities and they also ensure that the market has been identified. Other components of the network are the people who grow the leaves, the shippers and others

How the trade was coordinated

Colombia was the country of choice in this illegal trade because of a variety of reasons as hinted in the introduction. First of all, Colombia has quick access to the US market through its geographical location. Additionally, there are a large number of Colombian immigrants in the US and these agents can act as recipients. Also, Colombia is well endowed with the technological and refining expertise necessary in the cocaine trade.

At the beginning of the cocaine trade, there were minimal cases of coordination. That was in the seventies and eighties. One of the entrepreneurs at that time; Herrera Zuleta, was a well known emeralds smuggler. He used the knowledge he had acquired from that trade to establish himself in the cocaine business. However, this brought out a lot of fears among the emerald smugglers. Some of them felt that their businesses would be ruined if their routes were used for drug trafficking. They were also worried about the level of control exhibited by the cocaine traffickers. There were two major drug families that started controlling this trade as mentioned earlier. One of the experts in these families was Pablo Escobar. He came up with some sound strategies to manage the cocaine trade through institution of two aspects; transportation and communication.

Pablo Escobar was responsible for the institution of some sort of order in the drug cartels. This was because the greatest weakness in the drug trafficking business was brought about by the fact that business was conducted in an open manner. Those transporters who demonstrated to drug cartels that they had the capability to deal with the trade would be consigned. However, those who did not were to be given the chance of contracting their facilities. Consequently, there were increased cases of penetration by law officers. The open policy regime prevalent in the cocaine trade caused its success but was also its greatest weakness too. The open policy ensured that different people offered different services. As a result, risk was distributed and royalties due to policemen and the like were to be spread evenly. ⁵

Pablo Escobar’s role in the trade

As it has been noted earlier, drug cartels were the major sources of coordination in the Colombian Cocaine trade. There were a series of drug cartels and one of them was called The Medellin drug cartel. It started its operation in the seventies and most of their operations were done in Medellin. This Cartel would disembark their cocaine in the following ports:

• Branquilla
• Cartagena
• Uraba

The above routes were also led by a three principles and they were known as Jesus Emilio Escobar, Alfredo Lopez and Fabio Restepo Ochoa. They not only conducted the cocaine business but also dealt with the emerald drug smugglers. These traffickers later handed over their authority to their close families in subsequent years.

The drug smuggling cartels owned by the above mentioned persons were destroyed in the year 1976, at that time; Fabio Ochoa had barely been captured by officers at the border. Consequently, he decided to retire from the business and grant trading rights to a close family member- Jorge Luis. Luis took over when the cocaine trade was not doing very well; their distribution system was poorly coordinated. They were also overwhelmed by the demand for the drug.

At that time, there were some key people that were to meet with Pablo Escobar. The first among these was a Colombian prisoner known as Carlos Lehder. The latter had been taken in for involvement in the drug trade but was dissatisfied with the way Luis was running the Medellin drug cartel. He had a vision of streamlining the Medellin drug cartel. He wanted to make it more efficient by eliminating poor transportation methods such mules or single individuals. He shared this passion with another counterpart that he had met in prison. He told him how he wanted to purchase some small planes that would transport the merchandise between small ports and would therefore facilitate better transportation.

Upon release from prison, Carlos Lehder started shipping small portions of cocaine. With time, his distribution system grew. However, he did not receive any sort of welcome or warm reception from Pablo Escobar who was an indigenous Colombian dealer. It happened that Lehder was a Colombian but had grown up in the United States and had an ability to get along well with the major cocaine market ; the US. However, problems arose when there was a need to take care of some of the excess demands experienced in the sector. He did this through a partnership deal with Escobar.

Escobar had gown up in a Colombian suburb known as Envigado. While at this suburb, he started engaging in smuggling activities for a well known group called the Antioquenos. He used to participate in kidnapping activities and also in auto smuggling. With time, he grew to become one the most well established men in the Medellin Cartel. He did this through his calm personality. He was not a very out spoken man and most of his dealings would be conducted efficiently. He had established a reputation for revenge. Every person who would disrupt his cartel or any one who would even bother trying to arrest one of his smugglers would face Pablo Escobar’s wrath. He was also not a very trusting individual. He did not do business with new players in the industry. Even those who had established themselves in the business were not guaranteed a special place in Escobar’s list. He was an astute leader especially when it came to his cartels. However, with time, Escobar realized that the cocaine trade could flourish if they used air transport rather than the conventional types of transport they were using. Consequently, he employed the services offered by Lehder. At first, he was quite skeptical about Lehder because he thought that Lehder was rather flamboyant. But because he saw the value that this partnership would bring, he decide to overlook it. Escobar was responsible for streamlining the cocaine trade through air transport. He used to provide his cocaine ranch as a supply source and then use Lehder’s planes; this started in the year 1976. Two years later, Escobar had already gathered enough experience to contract the air transport business to other traffickers who were interested in them.

Escobar was one of the major drug lords in the Cocaine industry. He was able to establish two types of strata in the drug trafficking trade in Colombia. These two strata were oligopolies in nature. This is because they used the capos. Copas were experts in the cocaine business. They knew all there is to know about smuggling and also about the business itself. Normally, they are the ones involved in the process of determining a route for smuggling. Thereafter, they were responsible for protecting that route in order to avoid capture from the drug armies or gunmen. Additionally, they were also supposed to employ their knowledge in the process of contracting the route to other stakeholders who may not have the ability to make out a route for themselves. Consequently, most of the economic problems faced within the trade would be distributed evenly between various members. The capos created by Escobar had the ability to capitalize the cocaine. They were also supposed to take care of insurance delivery. In addition, there was the case of payment and money laundering that also had to be taken care of.

Escobar ensured that this sector becomes an oligopoly and that there were higher chances of security. This is especially in contracts to the other sector involving consumers i.e. the mid level section and it is the point at which most drug enforcement officers become involved in the process of determining the wrong doers. There is a lot of competition in this area and infiltrating their transactions is quite easy.

Escobar ensured that there is a high level of dispersion yet at the same time maintaining accountability. Dispersion ensures that risk is spread out evenly and that there are minimal chances of getting caught.

What the government has done to deal with the cocaine industry and how this is related to the economy

Statistics show that the highest percentage of cocaine comes from Colombia. It provides the world with sixty percent and grows about forty thousand hectares of this product. However, one would wonder why the government of Colombia has turned a blind eye on this trade yet it is hurting the country in a number of ways. First of all, it has caused a prolonged civil war for the past forty years. There is a paramilitary organization formed to protect the cocaine drug farmers from attack by the other group the FARC (Revolutionary Armed Forces of Colombia). This latter group conducts business in quite a radical fashion through kidnappings and other forms of torture.

The government of Colombia has tried a hands-on approach to the trade through destruction of the coca leaf plantations. The main problem with such a system is that the plantations are not grown openly. It takes the government considerable resources and time to simply establish where those plantations are located as they are found somewhere in the jungle. To make matters worse, coca plantations are found in high altitude areas. There is no way one can access them through road. The government has tried spraying the coca plantations with aerial herbicides in order to tackle this problem but this has not worked. It has to deal with law suits from neighboring territories such as Ecuador. They claimed that the Colombian government has ruined most of their legitimate crops. This also applies to local farmers in Colombia themselves. Pilots have a very hard time trying to reach some of these clients.

The government has also tried other approaches in order to provide employment for the common man. For example, they have introduced the issue of coca up-rooters. In the year 2006, the government employed about one hundred thousand workers to uproot coca plantations in Colombia. However, this has also not worked very well. The FARC were formed to protect cocaine crops. Consequently, up-rooters are endangering their lives by participating in the uprooting process. Most farms have bombs to help in the process of eliminating some of these government agents. As if this is not enough, the FARC army might shoot someone as they go about uprooting the crops. Even after the uprooting process is over, there are farmers who still replant the cocaine plant. They insist that there is no other plant that yields as much returns as the coca. They also argue that there is no other crop that grows a fast as the coca; it only needs a period of three months and it will grow its leaves. Farmers are also able to get some sales from the sale of crude paste to the dealers. This means that they can get a lot of returns on their investment even when the process of refining the cocaine itself may not profit the farmer per say.

Eradication of the coca plant has been seen as the worst approach to the cocaine trade by a number of economists. They argue that scarcity always increases value through increased demand. Farmers will be tempted to grow more of the plant because they are aware that it is scarce and fetches more money in the market. Framers are usually encouraged to continue growing the plant even after it has been eradicated because they are aware that they will always have market for it and also because of the fact that it only takes a period of twelve weeks for the crop to grow.

How the trade is distributed

There are a large number of workers that centre their livelihoods on the cocaine trade starting from the farmer. However, farmers are the ones who receive the least amount of compensation for their efforts. For instance, the farmer grows the cocaine (Ethyroxylum coca) plant. In order to create jut one kilogram of coca paste, the farmer will grow close to two hectares of the crop. Normally, the crushing process will be done manually by say four to five men. They usually place the coca leaves in a drum or pit. Then crushing is done until the leaves form a light brown thick paste. Here, there will be some addition of kerosene and sulfuric acid. For every kilogram of coca paste sold, farmers get revenue of one thousand five hundred dollars. According to Colombian standards, this is a very high amount of income since the average Colombian gets roughly eight hundred dollars per year. As if this is not enough, there are also other people along the chain who really stand to benefit. Refineries in Colombia are found somewhere in the jungle. In those refineries, the paste is taken and dissolved. It is then filtered and dried. The ratio of paste to cocaine powder produced is 5:4 which is quite a reasonable yield.

However, the person who stands to benefit most from the drug trade is the drug trafficker. Cocaine is transported to the United States and further diluted. After the dilution process, it is then divided into smaller quantities. But when the total is added up, it can be estimated that one kilogram of cocaine in US streets goes for about one hundred thousand dollars. The Colombian dealers found in the actual market are the ones who get to test the real profit of this business. Therefore, it cannot be underestimated how the real people behind the business get very little for their efforts.

After the drug has been manufactured in the jungle, it is given to transporters. These transporters normally place the drugs inside their clothes or somewhere in their luggage. Some of the means of transport used include:

• Speed boats
• Cargo ships
• Fishing vessels

It has also been reported that there are some special engineers who were contracted to produce a submarine made for the specific purpose of shipping cocaine from Colombia. The submarine enables shipping to take place quietly without the knowledge of the destinations’ governments.

There are also a vast number of groups who benefit from the trade indirectly. As it was stated earlier, there are a number of guerrillas and army men involved. There may be some who did not get a thing for their arms deals. They therefore decide to attack drug cartels in order to extort some sort of payments from them. However, these drug cartels also have their own source of protection as they have hired gunmen to escort the drugs as they move and also to be located in some strategic places. Arms dealers sell their wares to both groups and stand to gain economically from them. However, the government of Colombia is really getting affected by these activities. This is because it has to employ a huger number of troops from its own military to deal with the latter two groups. They have to deal with the high levels of crimes that include murders and kidnappings.

While government military activities may be able to capture some of these groups, it becomes quite difficult to capture the cartel bosses. Most of them have the ability to eliminate any traces or links to the drug trade. They normally take the revenue earned from the trade and invest it in Colombia in legitimate businesses. This makes such individuals untouchable by the government and further fuels the war on drugs.

There are also a number of corporate professionals involved in the trade. Some of these include:

• Investment consultants
• Tax advisors
• Lawyers

All these groups usually advice drug lords on how to avoid the law. They also benefit alongside other professionals. They include judges and magistrates. When some of these cases reach the courts, they may not receive any form of punishment because the Colombian judicial system is quite ineffective.

Matters are also made worse by the fact that most of their politicians are also corrupt. They are not keen on dealing with the problems adequately and they have not instituted laws that will prevent further trade in drugs. Most of their suggestions and legislations are usually short term and only serve to fuel the trade further. For example, by employing one hundred workers to uproot coca plantations, farmers are getting more for their produce by making the plants scarce and the up-rooters sill continue to do what they do. This creates an endless cycle in which the taxpayers’ money is simply going to waste.

Conclusion

Illegal drug trafficking began in Colombia in the seventies. However, there were still some activities going on prior to this event. Colombia was chosen because it has a long history of smuggling coffee and emeralds. Consequently, they had a well established route for the cocaine trade. Their close proximity to the world’s largest cocaine market also contributed to this. Additionally, there was some technological and geographical expertise necessary to conduct the cocaine trade.

The cocaine business is very well coordinated. However, one should not assume that there is vertical system of power. On the contrary, the trade is governed through trade. There is a need for establishment of trust and other interpersonal qualities between the various unit. The units themselves come in form of Cartels. The major cartels in Colombia are five in number and they are the ones who get eighty percent of the profits form this trade. However, the essay looks at the activities of one of these five cartels called Medellin. This is because this cartel was very instrumental in creating some sort of coordination and order in trade. The Cartel is also of interest because it was led by Pablo Escobar.

Pablo Escobar was brought up in a suburban within Colombia. He started his trade through small smuggling activities, however with time; he was able to penetrate the system. His main contribution to the cocaine trade was the fact that he introduced better transport systems through air. Additionally, he was responsible for distributing economic risks within the cocaine trade. He used to do this by establishment of a route through drug capos. The capos would then master the route and eventually outsource it to others traffickers who did not know how to establish their own routes.

The cocaine trade has had a huge economic impact in the country because it has been estimated that the Colombia gets close to five billion dollars in revenue. However, the main groups that benefit are the drug lords. They have the capability of evading the law through high profile lawyers and investment consultants. Their judicial system is also corrupt thus making it difficult to track these drug traffickers.

Coca plant farmers get the least returns from this trade but this is still a high amount compared to what other types of farmers get.

The government of Colombia has tried eradicating the trade but its efforts have not been fruitful. This is because they are going about in the wrong was. The rules of economics dictate that the scarcer a commodity is the more valuable it will be. Farmers are encouraged to grow more cocaine because they realize that their crops fetch greater prices. Some of the laborers hired by the government to up root coca plants normally risk their lives because there is a horrific group known as the FARC. It has been hired to ensure that the coca plants are protected. They may therefore gun down some of the up rooters. Additionally, they place bombs in the fields in order to ensure this success. ¹⁵

There are also other stakeholders involved in the cocaine business. Some of them include the arms dealers that sell their weapons to the crop protectors and attackers too. There are also refineries located in jungles. Besides this, vessels, cargo ships and submarine operators also get a share of the loop. All in all, the cocaine industry in Colombia is one of the largest underground businesses in the world. It mainly benefits drug cartels but small numbers also trickle down to the farmer.

Reference

William O. (1989): Walker III, Drug Control in the Americas, Revised Edition; University of New Mexico Press, 86.

Francisco, T. (1988): Some Implications of the Growth of the Underground Economy in Colombia, Journal of Inter American Affairs and World Studies Summer, 36.

Gugliotta, G. and Leen, J. (1990): Kings of Cocaine; New York: Harper & Row, 23.

Shannon, E. (1988): Desperados: Latin Drug Lords, U.S. Lawmen, and the War America Can’t Win; New York: Viking Press, 73.

Rensselaer, L. (1991): Colombia’s Cocaine Syndicates; Crime, Law and Social Change, No. 16.

Villar, S. (1999): Rethinking Hemispheric Antinarcotics Strategy and Security; Greenwood Press, pg.106.

Galloway, J. and Velez de Berliner, M. (1987): The Worldwide Illegal Cocaine Industry; paper presented at the 28th Annual Convention of the International Studies Association, Washington D.C.

Smith, P. (1992): Drug Policy in the America; Boulder: West view Press.

McRae, P. and Ackerman, D. (1993): The Illegal Narcotics Trade (INT) As a TNC: Implications for the TNC/Government Interface; Paper presented at the 1993 annual meeting of the American Political Science Association, Washington, D.C.

Lupsha, T. (1998): Networks Versus Networking: An Analysis of an Organized Crime Group; Career Criminal Journal, 59.

Ghosal, S. and Nohria, N. (1993): Horses for Courses: Organizational Forms for Multinational Corporations; Sloan Management Review, 1993. Vol. 34 No. 2, 23-35

Ghosal, S. and Bartlett, C. (1990): The Multinational Corporation as an Inter-organizational Network; Academy of Management Review, Vol. 15 No. 4, 603-625.

Dunning, H. (1988): The Eclectic Paradigm of International Production: A Restatement and Some Possible Extensions; Journal of International Business Studies, Vol. 19 No. 1, 366-390.