Drug Politics is an enlightening new book by a man who knows this disturbing and dangerous subject. A former United States ambassador to Peru, David C. Jordan has testified before the U.S. Senate and House Foreign Relations committees and has consulted with various government security organizations. His account of government protection of the criminal elements intertwined with local and global politics challenges many of the assumptions of current drug policies. Using examples from South America, Mexico, Russia, and the United States, Jordan shows that the narcotics problem is not merely one of supply and demand.
Jordan argues that many national and international financial systems are dependent on cash from money laundering, and some governments are far more involved in protecting than in combating criminal cartels.
About the Author
David C. Jordan served as United States Ambassador to Peru (1984-86). He is currently Professor of International Relations and Comparative Government, Woodrow Wilson Department of Government and Foreign Affairs, University of Virginia, and President of the New World Institute, Charlottesville, Virginia.
Read an Excerpt
Dirty Money and Democracies
By David C. Jordan
UNIVERSITY OF OKLAHOMA PRESSCopyright © 1999 University of Oklahoma Press
All rights reserved.
The growth and spread of narcotics trafficking accentuate the importance of the nation-state and the democratic republic in post–cold war world politics, even as the globalization of the market economy has led some to believe that the problems of the new world order were either too large for the nation state and therefore required supranational institutions or were too small and required substate or nongovernmental organizations (NGOs).
The supranationalists can be either globalists or regionalists. The globalists seek a universal rule-making organization, the demise of state sovereignty, and global regulation of the economy. The regionalists, on the other hand, best typified by European integrationists, seek, under the Maastricht Treaty, a central bank that would set monetary policy no European parliament could hold accountable.
Proponents of a network of nongovernmental organizations find in computers and telecommunications the information systems that would allow NGOs to deliver services that governments cannot match. NGOs are credited, for example, with forcing the United States and Mexico to consider cross-border pollution problems, health and safety provisions, and other issues that were not initially on the North American Free Trade Agreement (NAFTA) agenda.
The claim that narcotics trafficking revitalizes the understanding of the importance of the nation-state and the democratic republic does not belittle the significant growth of supranational institutions or NGOs. But it does highlight the fact that states ruled by accountable governments cannot and must not yield their power to repress transnational criminal enterprises to either supranational or substate entities. If the democratic states were to fail in this struggle, then the state system, supranational institutions, and NGOs would all be part of a criminal international world. The degree to which the globalization process, coupled with narcotics trafficking, is facilitating this corruption of the state — a process called narcostatization — emphasizes the importance of maintaining healthy nation-states and democratic republics.
The amount of money created outside the control of the individual states is enormous. It is capable of forcing devaluations and making huge profits on bets against national currencies. This global capital should not be considered as just a wealth-creating phenomena but as power in itself, a power that can devalue currencies, discipline governments and companies, and shelter profits from state taxes. Among the most prominent examples are the seven funds created by George Soros. Born in Hungary, Soros became an American citizen in the 1950s. Backed now by great European wealth, he operates globally outside the U.S. regulatory system. All of the Soros funds are offshore — that is, outside the control of the federal govenment — and do not have U.S. citizens as investors. Soros himself is the prototype transnational capitalist. His speculative operations have created a vast amount of unregulated world money that flows in and out of national economies at the push of a computer key. His Quota Fund wages huge bets on global currency, bond, equity, and commodity market trends. The most famous Soros fund, the Quantum Fund N.V., has speculated against European and Asian currencies and made over $1 billion against the British pound in 1992.
Transnational, or "overworld," elites like George Soros not only make huge sums in their speculative bets, they also transfer money to pet projects worldwide that sometimes exceed the foreign aid that even the U.S. government provides. For instance, in October 1997, the Soros Foundation announced plans, in addition to its work in eastern Europe, to provide between $350 million and $500 million to Moscow for maternal and child health care and for the government's military reform plans. In comparison, the United States government gave Russia $95 million in all of 1996. In 1998 Soros acknowledged second thoughts about his activities in relation to Russia.
One of the most interesting aspects of this overworld money has been its support for "alternatives" to the drug war, as they are euphemistically called. Transnational capitalist interests can operate locally and globally to weaken state resistance to drug trafficking. Because the supranational organizations and NGOs are too weak to deal with the narcotics problem, the state and its uncorrupted institutions are the principal means for combating trafficking. The new internationalism requires the state to forge relations with institutions of other states committed to controlling the drug trade. Thus the corruption of the state itself — and of its law enforcement agencies and judiciaries — can become a serious problem beyond its own borders, while within its borders, corruption undermines the accountability of the democratic republic.
Corruption can occur at every level of government and in all aspects of society, including the financial community. The very concept of democracy, arguably the most critical aspect of our culture, is under siege. Until now, experts have maintained that democracy is flourishing in the new global environment. However, new research shows that economic globalization, while in some ways helping democratization, is also hindering the consolidation of accountable government in many countries. Indeed, criminal, financial, scientific, social, and political factors are combining to threaten the international political environment.
Corruption generally is understood to be a discreet but illegitimate use of money by public officials or private citizens for illegal gain. Traditionally, corruption is considered to be an isolated event without a pervasive effect throughout a political system, even when it is chronic in police or other branches of a government's bureaucracy.
Some political scientists maintain that corruption is a structural phenomenon of the political system. In this view, the corrupt political system is far more powerful than civil society, and extortion and bribery become common practices. Official extortion takes place when public officials extract kickbacks or other payments from individuals for services, benefits, or permits the government normally offers free or with a minimal charge. Corruption within the political system also takes the shape of bribery, where strong forces in civil society buy favors from a weaker state.
Extortion and bribery can reflect a corrupt civil society as well as a corrupt state. Contemporary circumstances in some countries indicate a merger between a corrupt political system and criminal elements of civil society. Members of the ruling elite in both authoritarian and electoral governments find the merging of organized crime with the state useful, if not necessary, for maintaining power. Regimes with a tradition of elite domination, even where an electoral process exists, may find the temptation to work with organized crime particularly irresistible. When government and organized crime are allied, structural corruption is in place.
Of course, ruling elites are not always corrupt; they will, in fact, often use the forces of government to constrain corruption when it is in their interest. In this case, criminal mafias use their power within society against honest government officials. Sometimes the criminal mafias receive cooperation from government officials jockeying for influence within the ruling class. Officials in this kind of government ultimately manipulate drug trafficking as the most lucrative criminal activity. As one key aid to the leader of the Mexican Gulf cartel, Oscar Lopez Olivarez, reported, "Narco-trafficking is something that is completely managed by the government because from the protection of the marijuana plants ... everything is completely controlled, first by the army, then by the federal judicial police, even including the crop eradication section of the Attorney General's Office, which even inspects the crops on the farms that are included within the approved system."
A dynamic structural model stressing the merging of government and organized crime suggests that the political systems of certain countries are in a partial civil war. While elements within the government seek to control drug trafficking, other elements of the government form an alliance with the traffickers. The complex relation between elites and traffickers may corrupt both the democratic and the authoritarian state. Narcostatization does not respect political systems.
Since the end of the cold war, radical ethnic nationalisms and major cultural clashes have been portrayed as the most likely forms of conflict in the new international environment. Although these clashes certainly demand attention, conflicts between and within states, in the context of massive criminal and illegal government behavior, should be of at least equal concern. The increasingly rapid spread of global capitalism creates expanded opportunities for the former regionally based underworld networks to operate globally. When spreading international crime combines with corrupt elements of government, the possibilities for domestic and international conflict increase remarkably.
THE POST–COLD WAR ERA
For some theorists, the end of the cold war has meant the triumph of liberal democracy and capitalism and an ongoing, generally positive trend in human development. This has come to be known as the "end of history" theory. According to this theory, the basic positive trends of a cooperative international order lead to conditions whereby economies gradually combine and nondemocratic states, through a combination of internal pressure and external persuasion, gradually develop more enlightened governments. The consequences of this evolution are, quite naturally, the weakening of nationalist agendas and of the independence of states. At the same time, international free trade expands under the World Trade Organization (WTO), regional and world currencies rise, and eventually there is generalized world cooperation.
The process of growing economic cooperation and the spread of democratic governments under the leadership and prodding of the United States is known as "neoliberalism" and is seen as an essentially benign development. However, the dark elements in this rosy scenario for the post–cold war era have been the growth of narcotics trafficking, the spread of organized crime, and the corruption of governments.
The three major developments of the neoliberal order that threaten the state-to-state institutional cooperation of post–cold war democracies are (1) the globalization of economic finance, (2) the growing dependence of states on drug profits to service debts, and (3) the expanding dependence of a worldwide population on addictive drugs. Threats to democratic regimes are facilitated by the globalization of economic finance corrupted by organized crime. The main economic engine of organized crime is narcotics trafficking, which generates liquidity for states and profits for transnational financial institutions. The present increase in drug trafficking, in consumption of drugs, and in the widespread effects of drug trafficking, such as narcostatization, undermines domestic peace, strains international relations, weakens the democratic state, and seriously threatens fragile transitions to democracy.
David Held helps us understand that it is the globalized neoliberal system, more than a simple supply-and-demand, production-and-consumption concept, that explains what happens within political societies. The degree to which states are unable to control their own economic decision making alters the nature of democratic accountability. Held exposes the need to understand the problems of the democratic state in the context of the global economy.
The underlying premises of democratic theory, in both its liberal and radical guises, have ... been: that democracies can be treated as essentially self-contained units; that democracies are clearly demarcated one from another; that change within democracies can be understood largely with reference to the internal structures and dynamics of national democratic polities; and that democratic politics is itself ultimately an expression of the interplay between forces operating within the nation-state ... [but] the global interconnectedness of political decisions and outcomes raise[s] questions which go to the heart of the categories of classical democratic theory and its contemporary variants.
The implications of rivalry within the international system are that states will indulge in narcotics trafficking in order to defend themselves and to compete economically with other states. Even where a real interest in cooperation exists — or should exist — narcotics trafficking may be forced upon the states by the outside system. Domestic considerations may be subordinate to the international systemic pressures of competition. The structural implications of the neoliberal system make it in the interest of states to exploit that structure for their economic benefit.
NARCOTICS TRAFFICKING AND NEOLIBERALISM
The narcotics trafficking problem links governments in two ways to the international system. In the first, large powers use narcotics for economic and strategic purposes. The classic historical example of this is found in the nineteenth-century opium wars between the British and the Chinese. In the second way, small powers use the drug trade for defensive purposes — such as to reduce their economic vulnerability. In both ways, the states can be corrupted by the narcotics trade.
The first process is characterized in the use of narcotics trafficking by larger powers to control lesser states. Initially, this process was not seen as having a corrupting effect on the larger state's political system. It is quite evident that, as smaller states have become involved in the narcotics trade, clandestinely rather than openly, corruption within those states becomes a notorious given. But, corruption is increasingly detectable in the more developed and larger states as well. This has led to growing global concern of narcostatization — the corruption of the political regime as a result of narcotics trafficking.
Three interrelated phenomena work synergistically to produce the narcostate: organized crime, government policy, and transnational capitalism. The narcostate may develop in existing democratic regimes, in authoritarian regimes, or in regimes that are in transition to or from democracy. Narcostatization undermines weak democracies and transforms consolidated and transitional democratic regimes into pseudodemocracies, or anocracies. In the anocratizing process both consolidated and transitional democracies are in fact corrupted, and the political or ruling class maintains itself in power despite the apparent existence of contested elections and full public participation.
The term "anocracy" is sometimes used to describe a system where power is not concentrated in the hands of public authorities. However, for purposes of regime accountability, this book will use "anocracy" to mean a regime where democratic and autocratic features are mixed. The forms of democracy are in place, but the realities of power concentration in the executive preponderate over institutional and electoral constraints on the chief executive's power. The narcostate is one particular form of anocracy. Not all anocracies are narcostates, but narcostatization produces a form of anocracy. Some narcostatizations impact existing democracies and produce narcodemocracies; some impact autocracies and produce narcoauthoritarian regimes; some impact transition processes and produce narcoanocracies. For the public, there is little existential difference between narcoanocracies and narcodemocracies except that the latter are reversions from democracies and the former are incomplete democratic transitions.
The expectation for the evolving neoliberal world order was that cooperation would increase and economies would be combined, such as in the European Union. A consequence of this evolution was to be the weakening of individual states' policies and independence. But unexpected problems for this new world order include the growth of government corruption, the globalization of organized crime, and international money laundering. The impacts of this process are seen in the loss of control over the domestic economy, a decrease in political accountability, and problems in social behavior. Another possible consequence of the globalization of the world economy is the growth of worker discontent. In fact, much of the criticism of the neoliberal order focuses on its threat to workers' interests. Indeed, in the late 1990s, the growth of unemployment in Europe undermined the movement toward a single monetary unit.
Excerpted from Drug Politics by David C. Jordan. Copyright © 1999 University of Oklahoma Press. Excerpted by permission of UNIVERSITY OF OKLAHOMA PRESS.
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Table of Contents
ContentsList of Illustrations,
Part I. Drug Trafficking, State Corruption, and the Crisis of Democratic Theory,
2. Defining Democracy,
3. The Corruption of Elites,
Part II. Governments, Organized Crime, and International Finance,
4. Governments: From the Opium Wars to the Cold War,
5. The Development and Spread of Organized Crime,
6. The Criminalization of the International Finance System,
Part III. Corrupting Democratic Transitions and Consolidations,
7. Democratic Transitions and Organized Crime: Russia and the Andean Region,
8. Pretransition Regimes and Organized Crime: Mexico,
9. Consolidated Regimes and Organized Crime: Colombia,
Part IV. Drug Culture, Conflict, and Order,
10. Cultural Underpinnings of Modern Drug Consumption,
11. Anarchy, Narcostatization, and World Order,
Appendix. Medical Consequences of Drug Use: The University of Virginia Policy on Illegal Drugs (1996),