Illegal drug trade

• 1. Introduction

  ›

  The illegal drug trade is, by any measure, one of the largest industries on earth. In 2014, the think tank Global Financial Integrity estimated its value at somewhere between US$426 billion and US$652 billion. That same year, world GDP stood at US$78 trillion, which means the illicit drug trade may have amounted to nearly one percent of all global commerce. This is not a shadow economy. It is an economy. What follows is the story of how that economy grew, who controls it, and what it costs the societies it passes through.

• 2. Roots of Prohibition

  ›

  Long before the 20th century, governments rarely tried to stop people from using recreational drugs. Tobacco was one of the first to attract official alarm. Authorities in New Spain, the Ottoman Empire, Germany, Austria, and the Russian Empire all passed laws against smoking it. China's Qing dynasty issued edicts banning opium smoking in 1730, then again in 1796, and again in 1800. The edicts kept coming because they kept failing.

  The East India Company made that failure worse. Beginning in the 18th century, EIC merchants began smuggling Indian opium to Chinese buyers, creating a lucrative black market from scratch. By 1838, somewhere between four and twelve million people in China were addicted to opium. Qing officials destroyed a massive stockpile of opium at Humen, and that act of enforcement triggered the First Opium War with Britain in 1839. The 1842 Treaty of Nanking ended the fighting but did not legalize opium imports. Western merchants simply kept smuggling. The 1858 Treaty of Tianjin, which ended the Second Opium War, finally forced the Qing government to open several ports to foreign trade, including opium.

  Western governments began their own prohibitions in the late 19th and early 20th centuries. Britain restricted the sale of opium through the 1868 Pharmacy Act. In the United States, control over opium remained a state-level matter until the Harrison Act of 1914, which followed twelve international powers signing the First International Opium Convention in 1912. Between 1920 and roughly 1933, the Eighteenth Amendment to the United States Constitution banned alcohol outright. Prohibition proved nearly impossible to enforce, and the resulting power vacuum gave rise to organized crime, including the modern American Mafia, which found enormous opportunity in manufacturing, smuggling, and selling illicit liquor.

• 3. The Price of Violence

  ›

  Honduras, through which an estimated 79 percent of cocaine passes on its way to the United States, had the highest murder rate in the world as of 2011. That figure is not an abstraction. The International Crisis Group found that the most violent regions in Central America, particularly along the Guatemala-Honduras border, closely corresponded with the heaviest drug trafficking activity.

  In the United States, the Federal Bureau of Investigation estimated in the late 1990s that five percent of murders were drug-related. In Mexico, the figure was dramatically higher. After US and Mexican authorities cracked down on border crossings following the September 11 attacks, violence inside Mexico surged, and the Mexican government estimated that 90 percent of the killings were drug-related.

  A UK government Drug Strategy Unit report, leaked to the press, put a precise economic cost on this dynamic. It found that drug use drove the great majority of acquisitive crime in Britain, accounting for 85 percent of shoplifting, 70 to 80 percent of burglaries, and 54 percent of robberies. The report concluded that the cost of crime committed to support illegal cocaine and heroin habits amounted to 16 billion pounds a year. Ecuador provides a human dimension to these numbers. The country absorbed up to 300,000 refugees from Colombia, people fleeing guerrillas, paramilitaries, and drug lords, a displacement driven in large part by the cocaine trade passing through their homeland.

  Penalties imposed on traffickers have grown to match the severity with which governments view the trade. Singapore, Malaysia, and Indonesia all permit the death penalty for drug smuggling. In December 2005, Van Tuong Nguyen, a 25-year-old Australian, was hanged in Singapore after being convicted in March 2004 of drug smuggling. In 2010, two people in Malaysia were sentenced to death for trafficking one kilogram of cannabis into the country.

• 4. Syria's Captagon State

  ›

  As of 2022, the Syrian government financed what analysts described as the biggest multi-billion dollar drug trade in the world, centered on a synthetic stimulant called Captagon. The Assad regime's revenues from Captagon smuggling alone were estimated at $57 billion annually in 2022, roughly three times the total trade of all Mexican cartels combined.

  General Maher al-Assad, younger brother of Syrian dictator Bashar al-Assad and commander of the Fourth Armoured Division, directly supervised the production, smuggling, and profit-taking of the drug operation. Captagon was said to be the "lifeline" of a regime already suffering from corruption and civil war, accounting for more than 90 percent of its total revenue. In 2020, Italian police seized 84 million Captagon pills originating from Syrian ports in a single shipment interception.

  In June 2023, the US State Department's Bureau of Near Eastern Affairs published a report to Congress outlining a strategy to dismantle the Assad regime's narcotics networks. A joint investigation by the Organized Crime and Corruption Reporting Project and BBC News Arabic published simultaneously identified Lebanese criminal and drug kingpin Hassan Daqou as a collaborator with the Fourth Armoured Division, operating under the command of General Ghassan Bilal, Maher al-Assad's right-hand man. The investigation also documented Hezbollah's role in the production and smuggling networks. Days after the documentary aired, the Assad government banned all BBC media outlets and barred affiliated journalists from Syria.

  An investigative report published by The Insider in 2024 quoted journalist Yuriy Matsarsky noting that Captagon "produced in underground labs and in actual Syrian pharmaceutical facilities is distributed to the fighters of Bashar Assad's army," and that the quantities produced far exceeded the military's internal demand, with criminal gangs building distribution networks in countries where the drug had not previously been popular.

• 5. Mexico: Cartels and Governance

  ›

  In 1929, the Institutional Revolutionary Party, known by its Spanish acronym PRI, was formed to restore order after the chaos of the Mexican Revolution. Over subsequent decades it became deeply intertwined with drug traffickers. By the 1940s, the relationship between the PRI and cartel leaders had solidified into something resembling a formal arrangement, one that granted immunity to cartel bosses in exchange for political stability.

  When the rival National Action Party began winning elections in the 1990s and the PRI's grip loosened, cartels adapted. Rather than negotiating with a central authority, they shifted to bribing local mayors and police, exploiting a legal quirk that prohibited mayors from serving consecutive terms. The resulting leadership vacuums gave cartels recurring opportunities to expand their influence.

  Approximately 500 cities in Mexico are directly engaged in drug trafficking. Nearly 450,000 people are employed by drug cartels, and the livelihoods of 3.2 million more are dependent on them. Between local and international sales, Mexican cartels earn an estimated $25 to $30 billion per year, money that flows through international banks including HSBC. A portion of cartel profits is invested back into local communities, funding education and healthcare in areas where cartels effectively substitute for absent government services.

  The arrested traffickers tell part of the story: Miguel Angel Felix Gallardo of the Guadalajara Cartel was taken in 1989, Joaquin Archivaldo Guzman Loera of the Sinaloa Cartel in 1993, and Osiel Cardenas of the Gulf Cartel in 2003, among others. Despite these high-profile arrests, Mexican narcogangs have continued to outnumber and outgun the Mexican Army. A US program called the Merida Initiative, launched in 2008, increased security assistance to $1.4 billion over several years, supplying Mexican forces with equipment ranging from helicopters to surveillance technology, but cartel operations across the border persisted.

• 6. Street Economics

  ›

  Sociologist Sudhir Venkatesh spent years in the 1990s embedded with a gang affiliated with the Black Gangster Disciple Nation in Chicago, and what he found challenged a widespread assumption. The gang he studied was organized like a franchise. Its leader, a college graduate named J.T., oversaw three senior officers and between 25 and 75 street-level salesmen, depending on the season. Selling crack cocaine, the operation took in approximately $32,000 per month over a six-year period.

  The breakdown of those earnings is revealing. $5,000 per month went to the board of twenty directors overseeing roughly 100 such gangs, generating approximately $500,000 in monthly income at that level. Another $5,000 monthly covered cocaine supply costs, and $4,000 went to non-wage expenses. J.T. took $8,500 monthly for himself. The remaining $9,500 was divided among the rest of the employees, paying officers $7 per hour and foot soldiers $3.30 per hour. Many of those foot soldiers lived with their mothers by financial necessity. Despite these thin wages, the gang had four times as many unpaid members who were hoping to become foot soldiers.

  At the other end of the scale, United Nations Office on Drugs and Crime Executive Director Antonio Maria Costa made a striking claim in December 2009. He said illegal drug money had helped save the banking industry from collapse during the financial crisis of 2008, arguing that proceeds from organized crime had been "the only liquid investment capital" available to some banks on the brink of failure. He said a majority of the $352 billion in drug profits estimated for that period was absorbed into the economic system. Costa declined to name specific countries or banks, but noted that inter-bank loans had been funded in part by money originating from the drug trade.

• 7. Fentanyl and the Shifting Frontier

  ›

  Fentanyl is 20 to 40 times more potent than heroin and 100 times more potent than morphine. Its primary clinical use is in pain management for cancer patients and people recovering from major surgeries. On the street, it has driven an overdose crisis of historic scale. From 2011 to 2021, deaths from synthetic opioids in the United States rose from 2,600 per year to 70,601. Since 2018, fentanyl and its chemical relatives have been responsible for the majority of drug overdose deaths in the country, causing over 71,238 deaths in 2021 alone.

  The broader heroin market has also undergone a major geographic shift. In the 1950s and 1960s, most heroin reaching the United States was produced in Turkey and moved through France via the French Connection crime ring. A landmark seizure on the 26th of April 1968 captured 246 pounds of heroin smuggled aboard the ocean liner SS France. By 2007, that route was a relic. Afghanistan had by then become the source of 93 percent of the world's opiates, with an export value of about US$4 billion, a quarter of which reached opium farmers and the rest going to officials, insurgents, warlords, and traffickers. By November 2023, however, a UN report found that poppy cultivation in Afghanistan had dropped by over 95 percent, displacing it from its position as the world's largest opium producer.