Cocaine industry according to a 1987 CIA's report

Official CIA's documents dated november 1987 entitled "The International cocaine Industry, production, trafficking and Prospect for Control" declassified on 2012, give a comprehensive look at the international cocaine industry.

Originally presented as Interagency Intelligence Memorandum, documents gave a look into the role on cocaine industry of  some traditional country of origin such as Peru, Colombia and Bolivia. Analysis offered try to explain roles of others south american countries involvement in this industry.

Starting point was the assumption of flourishing of cocaine industry, despite US government programs to reduce both production and trafficking. Hectares of soil cultivated with coca crops expanded in 1986 in South America from 140.000 to 170.000. (106.000 Peru, 13.000 Colombia, 34.000 Bolivia).

From a farmer's point of view this was an extremely profiting business for coca harvesting was from two to three time more sellable than others licit cultures.

What's interesting on international trafficking dating 1987 is that it was totally controlled by colombian criminal organizations even if only a small portion of coca yelds was cultivated in that country.

Columbia and Peru supplied most of the coca paste that Colombian organizations refined into cocaine and distributed to the national market. And above all Colombian coca yelds contains less cocaine than the Peruvian and the Bolivian one.  

Integration of cocaine industry activities, that is production, refining and distribution, from Colombian organizations took advantage from their geographical position, which was the shortest distance from the United States both from the air and from the sea. Plus, inaccessible southeastern Colombian jungle region made possible to organize there most part of the refining activity.

More than half of the world's supply of coca leaves, that is two third of Peruvian coca, came from the Upper Huallaga River valley and San Martin. Colombian criminal organizations were the first able to organize extensive financial network to launder the large amount of money that came from the cocaine trafficking activity. 

On the financial side this explains the reason why Panama has become main financial destination.

Both in Peru and Bolivia there were insurgents activity (FARCS). This meant that most military insurgents groups were not accepting to cooperate with anti trafficking government forces. 

But even if cocaine smuggler organization didn't cooperate with insurgents in general, some military groups used to finance its insurgent activity with cocaine smuggling.

Anyway the growing anti trafficking activity from Colombian government and International organizations produced a shift from original trafficking route to new ones, involving new South American states such as Mexico. In recent years there has been a massive use of Mexico for transhipment of cocaine in the US, with nearly 30% of total cocaine smuggled passing through Maxico. This meant a new geography both in refining activity and in distribution one, with growing importance of Bolivia, Brasil and Argentina. 

Both Brazil and Ecuador could potentially become important coca producer, in fact up to 1986 Ecuador cultivating areas were estimated between 1.000 and 2.000 hectares, most along the Columbian border. This cultivations were supposed to belong to Colombians who move freely across the border. As it happened with Peru and Bolivia coca leaves 're transformed into coca paste before to leave to Colombia, where they'd be converted into cocaine hydrochloride.

In reference to Brazil up to 1986 there was no reliable estimation over the global soil dedicated to coca leaves breeding. Controls activity revealed that coca breeding in the upper Amazon Basin was similar to the Ecuadorian variety

DEA estimated that revenue from cocaine distribution was the US goes between 6.8 and 8.5 billion dollars as far as back as 1983. But up to now the business is supposed to have grown.

For moving large amount of cash Colombian criminal organization developed underground financial network enabling them not to get traced as US laws require.

This network extended from the US to Central America to most of the northern South American countries.

Evidences showed that Panama was the principal transit point for the money moved out from the US coming from cocaine distribution.

Constant political instability of Panama made it a perfect money laundering destination. This situation was not going to change due to some keys elements: bank secrecy regime currently operating in Panama enabling to shild anonymous companies ultimate beneficiary and their bank accounts.

Panama was also a logistic hub due to the canal which was mandatory for container ships heading to Europe, Africa or Asia. But most of all Panama was an extremely liberal country in reference to commercial laws. This meant no controls in exchange activity, no import license, no taxes or subside in reference to transactions and no limits in cash transport. And US dollar was legal tender in Panama. (cm) 


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