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Congratulations to the CIA Drug List and its REAL DEAL researchers and
reporters who broke the "Grasso Factor" wide open and immortalized it into
the narco dollar map of the world....
"The prince shall have allies who has victories in the field"
---Machiavelli
-----Original Message-----
From: Virtual Agency [mailto:[EMAIL PROTECTED]]
Sent: Saturday, December 22, 2001 2:03 AM
To: [EMAIL PROTECTED]
Subject: Dope Inc 600 Billion Plus
This article appears in the December 14, 2001 issue of
Executive Intelligence Review.
Dope, Inc. Is $600 Billion and Growing
by Jeffrey Steinberg
In the Summer of 1996, EIR conducted an exhaustive
study of the worldwide illegal drug trade, "Britain's
Dope, Inc. Grows To A $521 Billion Business" (EIR,
July 26, 1996). That study was, in part, provoked by
an Autumn 1995 EIR profile of the "new international
terrorism," which highlighted the very Afghansi
mujahideen and Ibero-American narco-terrorist
organizations that have waged war against every
nation-state on this planet for the past decade,
culminating in the irregular warfare assaults of Sept.
11, 2001.
What linked those two EIR reports was the fact that
the global $1 trillion per year underground economy of
guns and drugs represents the logistical heart of the
new international terrorism. From the opium fields of
Afghanistan to the coca plantations of Colombia, the
legions of modern irregular warfare combatants,
deployed top-down by factions of the Anglo-American
oligarchy (with generous assistance from elements
within the Israeli military and intelligence
structures), survive or fall, on the strength of the
"logistics in depth" of the underground economy of
illegal weapons and drugs.
To defeat international terrorism today, governments
of the world, led by the United States and Russia,
must undertake a no-holds-barred assault on the
underground economy of illegal drugs and weapons what
EIR first labeled "Dope, Inc." back in 1979. The black
market in guns and drugs is the "Achilles' heel" of
the modern irregular warfare apparatus. Take out that
infrastructure, and the capacity of this network to
conduct their warfare is destabilized, decisively.
This means, above all else, that the "Grasso Factor"
can no longer be tolerated, if the world is to survive
the drive for a global "clash of civilizations" aimed
at spreading war and chaos across the entire Eurasian
land-mass. The "Grasso Factor" refers to the infamous
visit that the Chairman of the New York Stock
Exchange, Richard Grasso, paid to the Colombian
jungles, in June 1999, where he embraced a top leader
of the Revolutionary Armed Forces of Colombia (FARC),
Razl Reyes, and pronounced one of the world's leading
narco-terrorists "a man Wall Street can do business
with."
Since the Grasso visit, new damning evidence has
surfaced about the FARC's far-flung drug operations,
including a multibillion-dollar-a-year guns-for-drugs
alliance with the Mexican Arellano Filix drug cartel,
the biggest and most murderous drug gang in that
country.
It is now an open secret that the major Wall Street
and City of London commercial banks launder hundreds
of billions of dollars in illegal drug money every
year as a matter of policy. U.S. intelligence
officials privately acknowledge that all of the major
New York commercial banks have emissaries in Colombia,
Peru, Paraguay, and the other targets of Dope, Inc.,
soliciting the narco-traffickers' business. There is a
fierce competition for narco-dollars one of the
biggest sources of cash flow in the world today, at a
moment when the global financial system is on the
verge of total collapse.
The pace at which the global financial and irregular
warfare crises are unfolding, did not permit the EIR
team to undertake the same painstaking study of the
present world illegal drug trade that we conducted in
1996. However, EIR editors have reviewed some of the
critical data, and have interviewed senior anti-drug
officials from the United States and several
Ibero-American nations. The report that follows
represents a highly accurate summary profile of the
status of Dope, Inc. at the dawn of the new
millennium.
A Paradox
The 1996 EIR study concluded that Dope, Inc. had grown
to a $521 billion a year illegal business nearly
doubling from the $259 billion annual revenue of 1985.
The recent EIR review of U.S. government data,
including the "National Drug Threat Assessment 2001"
report, produced in October 2000 by the National Drug
Intelligence Center (NDIC), confirms that Dope, Inc.
now represents an annual cash flow of well over $600
billion. This is an extremely conservative estimate.
More precise figures, which we are not prepared to
state at this time, are likely significantly higher.
At the same time, it is important to report a
significant, seemingly paradoxical phenomenon.
According to the March 2000 "International Narcotics
Control Strategy Report," the annual State Department
study of the world underground narcotics economy, both
opium and coca production declined during 1995-99. The
declines were very specific: Bolivia and Peru carried
out intensive campaigns to eradicate coca production.
Over that five-year period, Bolivian coca production
fell by a staggering 71%, and Peru, under the
Presidency of Alberto Fujimori, cut coca production by
62%.
During the same time frame, as the FARC was
supplanting the Medellmn and Cali cartels as the
country's leading cocaine-trafficking organization,
Colombia's coca production shot up by 126%. Colombia
also emerged as an opium-producing and
heroin-processing country, which now provides a
substantial portion of the high-grade heroin sold on
the streets of North America. Colombian anti-narcotics
officials who recently visited Washington reported,
during a behind-closed-doors briefing, that the opium
fields and heroin laboratories were established in
Colombia, with the assistance of Afghani and Pakistani
agricultural specialists and chemists, leading to
suspicions about a possible narco-link between the
FARC and Afghani and Pakistani drug lords, who, after
1996, had worked out a drug tax-for-protection
arrangement with the Taliban.
Afghan opium production increased between 1995 and
1999 by 34%, but at the same time, the government of
Myanmar launched a successful crackdown against opium
growers, reducing output by 53%.
What is the significance of these opposing trends over
the past half-decade? While overall drug production
has been on the rise, countries that showed a
determination to crack down on the production of
cocaine and opium were not only successful, but their
efforts reduced global production figures for cocaine
and opium by 18% and 26%, respectively, from 1995 to
1999.
So much for the drug legalizers' arguments that Dope,
Inc. is "too big" to defeat. A global, concerted
effort, that may now be politically possible, in the
wake of the Sept. 11 attacks, can succeed. The
trillion-dollar question is: Will the Bush
Administration, the Putin government in Russia, and
allied governments in Europe and other parts of the
world, at long last, launch the kind of coordinated
effort that aims to win?
Putin Takes a Stand
Russian President Putin called for precisely such an
effort to wipe out the underground narcotics economy,
as a means of defeating international terrorism. At
the Sept. 28 session of the Russian Security Council,
Putin described the "acute" drug abuse crisis in
Russia. "This problem is extremely acute today, and
not only in and of itself," he told his top security
aides. "It is directly connected with the success of
the struggle against crime ... and of course, it is
very closely interwoven with topic number one in the
world, the struggle against terrorism. The
narco-business is one of the main sources of financing
for terrorist groups and irregular military units."
He elaborated: "Terrorism and narcotics are absolutely
kindred phenomena. They have common roots and a
similar destructive force. Terrorism, like the drug
trade, has a highly ramified international network,
and is transnational.... This illegal business
produces superprofits, and 'dirty' monies are spent
for 'dirty' purposes."
He concluded: "We must put an effective barrier to all
forms of penetration of narcotics into illegal
circulation, destroy the infrastructure of the
narco-networks, and eliminate demand.... Therefore our
objective is to close off all channels for the
proliferation of narcotics, both external and
domestic.... An important subset of tasks has to do
with eliminating the financial channels for the
narco-business, which can be done not only by a fight
against criminal elements, but also with an entire
system of special measures. These include combatting
the legalization of criminal incomes."
If the opportunity posed by the post-Sept. 11
Russian-American cooperation is lost, then the other
side of the picture the continuing overall growth of
Dope, Inc. will dominate and destroy.
The Global Picture
The local success stories in Bolivia, Peru, and
Myanmar hardly offset the fact that Dope, Inc.
continued to grow, albeit at a slower pace, over the
1995-99 interval. EIR's comparative review of core
data the estimated volumes of production of cocaine,
heroin, marijuana, and synthetic drugs; and the
changes in retail prices and street-level purity
(normally among the most accurate data assembled by
national law enforcement agencies) points to certain
conclusions:
First, the dramatic increase in production and use of
marijuana and ever-more-sophisticated and addictive
synthetic drugs, more than offset the decline in raw
opium and coca production over the five-year period.
This is confirmed by both statistical data assembled
by the NDIC and the State Department, and by anecdotal
reports, largely featured in the NDIC's "Threat
Assessment 2001." In fact, even in the cases of heroin
and cocaine, the NDIC study suggested that
pre-existing stockpiles of previous-year production
meant that retail use in the United States continued
to increase, even as new production declined, as the
result of the targetted efforts of Bolivia, Peru, and
Myanmar.
By the year 2000, the proceeds from the illegal drug
trade had certainly passed $600 billion per annum,
given the continuing growth trends in the United
States, Central Europe, Russia, and in many of the
producer-countries that, in the past, had been immune
to large-scale drug abuse, because crops were largely
exported to the industrialized countries.
Among the findings of the NDIC was that cocaine use
continued to grow after 1997, but at a slower rate;
and heroin use stabilized after 1997, but after having
doubled between 1993 and 1997. Additionally, the
spread of the "rave" culture has increased adolescent
abuse of "designer" drugs, including combinations of
heroin and MDMA. The NDIC warned, "The rave culture
and the criminal activity that surrounds it pose a
major threat to America's youth." In addition to the
widespread presence of smokeable and inhalable heroin
at rave concerts, the report warned of a big increase
in heroin, MDMA, LSD, and boutique designer drugs on
college campuses, "in visually appealing and easy to
administer forms."
The reports also noted an explosion in the illegal
manufacture and distribution of methamphetamines. In
1999 alone, more than 7,200 clandestine
methamphetamine labs were shut down by police in the
United States alone! Canada, since 1996, has emerged
as a major supply point for precursor chemicals,
required for the manufacture of methamphetamines.
Overall, Canada has become a hub of drug abuse and of
illegal drug flows into the United States. This may be
called "the NAFTA effect," as the North American Free
Trade Agreement has opened the borders.
While methamphetamine and "club drugs" like MDMA,
ecstasy, and XTC were identified by the NDIC as the
biggest expansion threats, marijuana abuse also
continued to increase, with new and far more potent
strains of the drug being produced in sophisticated
indoor hydroponic "pot farms." Canada, again, has
become a major production center.
There are no figures available from the U.S.
government on domestic marijuana production, which
makes any precise estimate of worldwide crop size or
cash value impossible. In many U.S. states, marijuana
remains the number-one cash crop.
The second issue that the recent U.S. government drug
surveys highlighted, was that the links between the
illegal drugs and weapons economy and terrorism have
become more and more evident. Whereas, in the past,
the argument was often made, in official U.S.
government publications, that the narco-terror links
were tenuous and opportunistic, the 2001 NDIC study
stated, bluntly, that "traffickers used laundered drug
proceeds to ... fund insurgency and terrorist
organizations."
Indeed, while the case of the FARC in Colombia
represents perhaps the most clear-cut example of the
narco-terrorist phenomenon, other cases, with profound
implications for Presidents Bush and Putin's "war on
terrorism," can be found on every continent. In South
and Central Asia, the Taliban case has already been
cited.
But in the heart of Europe, the ethnic Albanian Kosovo
Liberation Army (KLA), with its offshoots operating
inside Macedonia, has been exposed as one more
narco-terrorist gang. One feature of the links between
the KLA and the Egyptian Islamic Jihad (the core
component of the so-called Osama bin Laden
organization, al-Qaeda) is that the KLA smuggles
Afghan heroin and hashish into Russia and Western and
Central Europe.
Money Laundering: Follow the Hedge Funds
Newly elected U.S. Sen. Joe Corzine (D-N.J.) has
recently emphasized that major money laundering can be
carried out far more securely and efficiently through
hedge funds, whose activities are subject to virtually
no government scrutiny, than through the commercial
banks. Corzine should know. Until his election to the
U.S. Senate, he was chairman of the board of Goldman
Sachs, one of the biggest Wall Street brokerage
houses.
With combined cash flows surpassing $1 trillion, Dope,
Inc. requires enormous access to the global financial
system, and its access is from the top down, as
evidenced by the Grasso visit to the FARC jungle. A
recent Senate Permanent Investigations Subcommittee
study by the Democratic staffers, commissioned by Sen.
Carl Levin (D-Mich.), revealed that the private
banking units of most of the major New York commercial
banks maintained a strict "see no evil" attitude
toward their wealthy clientele. And the same banks
engaged in the worst kinds of criminal collusion
through their corresponding banking relationships with
offshore British Commonwealth banks and branches, that
operate totally outside the law.
The pivotal role of international financial
institutions in the laundering of drug money was
underscored by a report released by the United Nations
Office for Drug Control and Crime Prevention on May
29, 1998, titled "Financial Havens, Banking Secrecy,
And Money-Laundering." The authors were four leading
experts on money laundering: Jack Blum, Michael Levi,
R.T. Naylor, and Phil Williams. Blum is particularly
well-known for his work as Special Counsel to the
Senate Foreign Relations Committee's Kerry Commission,
which exposed the role of U.S. intelligence agencies
in the 1980s in a global guns-for-drugs operation,
associated with the Iran-Contra Affair and the Afghan
mujahideen program, and which revealed the role of the
Bank of Credit and Commerce International (BCCI) in
laundering the proceeds of Golden Crescent opium and
heroin trafficking to finance the war against the
Soviet Army in Afghanistan.
That 1998 United Nations report shed light on the role
of offshore banks, the Euro-market, hedge funds, and
other commodity traders, in laundering the proceeds of
the underground economy of drugs and weapons,
facilitating tax evasion, and other criminal activity.
The study also endorsed the financial estimates,
published two years earlier by EIR, to a great extent.
The UN report estimated that, in 1997, the proceeds
from illegal drug sales were more than $400 billion,
and the total revenues of the criminal underground
were above $1 trillion.
The report identified four factors, as contributing to
the vast expansion of drug-money laundering in recent
years. First, the global black market has been
dollarized. The report noted: "Although most illegal
transactions at the retail level are conducted in the
currency of the country where they occur, around the
world there has been a steadily growing appetite for
United States high-denomination bank notes as a
vehicle for conducting covert wholesale transactions,
for hiding international financial transfers, and for
holding underground savings. This applies to the full
spectrum of illicit and underground activity, but it
also has direct implications for the proceeds of
serious crimes, including drug trafficking. A foreign
currency black market exchanging local currency for
United States $100 bills is going to be equally
accommodating to cigarette smugglers and tax evaders,
dealers in banned wildlife, or traffickers in heroin.
The more popular the use of the United States dollar,
the more easily someone can bring United States
currency to parallel money markets, convert it to
local currency, deposit the local currency in a
financial institution and wire it anywhere else, while
attracting considerably less attention than the direct
deposit of the United States currency would attract."
The report added that the dollars also are frequently
used to purchase hard commodities, which are then
resold, creating the impression that the narco-dollars
are actually the proceeds of legitimate commerce.
Dollarization, the report concluded, poses a grave
challenge to international law enforcement and crime
control.
As of the writing of the UN study, $400 billion in
United States currency notes were in circulation, with
$300 billion of those dollars circulating outside the
United States. This global circulation of U.S.
currency is officially supported by the Federal
Reserve Bank, which annually prints $16 billion in new
currency, for shipment abroad at a near 100% profit.
So long as those bills never return to the United
States, they constitute an interest-free loan with no
terms of repayment. At the height of the growth of the
Russian mafia during the Boris Yeltsin Presidency, the
New York Federal Reserve Bank was shipping planeloads
of $100 bills to mafia-run Russian banks on a daily
basis.
Second, the report highlighted the "trend towards
financial deregulation" as a thorn in the side of
efforts to stop drug-money laundering. The UN team
emphasized that, domestically, deregulation has
created the new phenomenon of "financial service
supermarkets," which provide their large clients with
a full range of financial services, including banking,
commodity brokerage, insurance, and fiduciary
services, "along with departments skilled in creating
foreign shell corporations and offshore trusts." The
report highlighted the tremendous growth of "private
banking," once the exclusive domain of a handful of
Geneva banks that catered to very wealthy clients.
Today, every major commercial bank in the
industrialized sector competes for this high-profit
business, and all standards of due diligence have been
abandoned.
The case of Citibank and its role in laundering drug
money for Razl Salinas, the brother of former Mexican
President Carlos Salinas de Gortari, is but the most
notorious of the recent cases of private banking,
under deregulation, facilitating the laundering of
drug money.
In addition to the domestic implications of
deregulation, the UN study highlighted the global
dimensions, particularly the complete breakdown of
exchange controls and currency controls. As the result
of this, flight capital has become a source of grave
instability, as highlighted in the 1997-98 hedge-fund
assault on the "Asian Tiger" economies. To counter the
devastating consequences of unbridled capital
mobility, many countries have been forced to
facilitate the inflow of drug money as a means of
offsetting the losses. In a discussion in 2000 with
this author, Blum observed that, while the Colombian
economy has been in a state of collapse for years,
Colombia is the one country in South America that has
never gone to the International Monetary Fund for a
bailout. Colombian governments have facilitated the
repatriation of narco-profits, going so far as to
contract out management of the national lottery to a
company in a Caribbean hot-money haven.
The third trend highlighted in the UN study was the
expansion of the Euro-market, which coincided with the
expansion of offshore banking centers that specialize
in handling financial transactions of non-citizens. In
these offshore banking centers, wealthy individuals
hide their taxable earnings, multinational
corporations dodge securities regulations by hiding
their profits and dodging tax obligations, and
criminals launder their profits. According to the UN
report, these offshore banking centers house $5
trillion in assets: $1 trillion in bank deposits and
$4 trillion in stocks, bonds, real estate, and
commodities. The $1 trillion in annual revenues from
the black market in narcotics, weapons, gold,
diamonds, etc. is, thus, commingled with other money,
much of which originates in the legal economy, further
adding to the challenge posed to criminal
investigators. So long as the system of globalization
exists, the hot-money flows will make the task of
shutting down drug-money laundering a most daunting
challenge.
The fourth trend noted by the UN report was the
proliferation of offshore centers that offer the
protection of bank secrecy.
Another feature of globalization that the study
identified was the growing role of "megabyte money" in
the world economy, another factor that blurs the
distinction between legitimate global commerce and the
drugs-for-weapons trade. Today, most of the world cash
flow is electronic, not the physical transfer of
currency. The study noted: "The massive growth of
electronic payments has been made possible by the
development of the electronic transfer mechanisms
operated by the Society for Worldwide Interbank
Financial Telecommunications System (SWIFT), the
Federal Reserve (Fedwire), and the Clearinghouse
Interbank Payments System (CHIPS). The volume and
value of the transactions that move through these
mechanisms are staggering."
The UN study cited estimates of $2 trillion in daily
electronic financial transfers by Fedwire and CHIPS
alone, involving approximately 465,000 separate
transactions. SWIFT conducts an estimated 220,000
transfer messages a day (dollar figures were not
available). The U.S. Office of Technology Assessments,
now defunct, estimated in 1997 that 0.05-0.1% of the
daily transactions involve laundered funds, for a
daily estimate of at least $300 million. Compared to
the $2-3 trillion a day in total electronic movements
of money, the $300 million is a small component,
easily buried unless the drugs-for-weapons trade is
tackled in a top-down, comprehensive fashion.
Regional drug cartels have established global
alliances, to take full advantage of the offshore and
related money-laundering facilities at their disposal.
Russian crime money, in one intricate set of
transactions, was recently traced to Israel, on to
Antwerp, to Gibraltar, to Spain, eventually winding up
in a London commercial real estate purchase. The
Russian, Colombian, and Italian syndicates conduct
joint operations. Poland has become a hub for
drug-money and other criminal laundering. As of the
time the UN study was published, Poland had a
population of 39 million people and 49 million bank
accounts! Poland has become the Liechtenstein of
Central Europe, with strong ties to the continent's
most notorious bank-secrecy havens.
Furthermore, every major commercial bank in the world
today has a branch in one or more of the offshore and
bank-secrecy havens. Offshore banks have accounts at
the big American, European, and Japanese commercial
banks, enabling them to transfer funds from all of
their clients to onshore banks, through corresponding
relations that constitute one more big loophole in the
system encouraged from the top down.
The UN report concluded with a ringing endorsement of
the findings of the authors of EIR's Dope, Inc. more
than 20 years ago: "The time has come to connect the
dots. The common denominator in all of these problems
is the enabling machinery that has been created in the
financial havens. The effectiveness of these centers
in helping people and companies hide assets is not the
result of any single device. Changing bank-secrecy
rules alone will not help. Rather, the centers have
created a tool kit composed of new corporate
instruments, foundations, trusts, trust companies,
banks, and bank accounts. The tools are mixed and
matched with jurisdictions that have made a point of
non-cooperation with the rest of the international
community in criminal and tax investigations.
"What started as a business to service the needs of a
privileged few has become an enormous hole in the
international legal and fiscal system. It is estimated
that there are now more than a million anonymous
corporations. Consultants for the offshore banking
centers say that the centers are home to more than
$5,000 billion in assets....
"If the international community is to develop a rule
of law to match the globalization of trade and the
global movement of people, the issues raised by this
hole will have to be addressed. The approach will have
to be systemic."
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