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The Critic Essay

The shadowy economics of fentanyl

One professor is investigating how the deadly drug trade works — and how it might be fought

Bertrand Monnet isn’t your ordinary business school professor. Standing at well over six feet tall, he has a quiet intensity to him that’s reminiscent of the actor Vincent Cassel. A former French marine, Monnet now teaches at the EDHEC Business School in France, where he studies the international black market in illicit drugs, which, according to his estimates, is worth around three percent of global GDP. He has also developed a very unique method of field research that has led to him being held hostage multiple times. 

Monnet builds contacts with drug smugglers and organised crime syndicates, slowly gaining their trust until they eventually let him film them producing narcotics while they reveal the economics of their trade. The aim is to create video case studies that he can later show his students to help them understand the financial aspects of drug smuggling: how much start-up capital is needed to obtain raw materials that are eventually sold on for huge profits, the operating costs of corrupting the police and other officials and so on.

“The food chain in cocaine is possible to measure,” Monnet tells me over coffee in a busy hotel bar in central London on a dreary December afternoon. “For example: in Europe, cocaine is cut at 40 percent. We know precisely the quantity of cocaine in the final product. Right now, on average, the profitability of cocaine is 6000 percent.”

Monnet’s video investigations have an incredible level of access and his interview subjects are very open once they welcome him into their drug production labs where the illicit product is made prior to being exported to its main destination markets in North America, Europe, and, increasingly, Brazil. He has been working in this way for nearly 20 years, producing reports on a wide array of subjects, from cocaine to commercial piracy in Nigeria and Somalia to counterfeit cigarette smuggling in Montenegro. In his latest work, he embeds with one of the clans that compromise the notorious Sinaloa cartel in Mexico. They let him document how they turn raw fentanyl imported from China into the “M30” pills that fuel an opioid crisis that kills thousands of U.S. citizens every year.

I released a documentary about the Sinaloa cartel three years ago in [French newspaper] Le Monde about the heroin and cocaine business and I worked in exactly the same way,” says Monnet. “I’d be sitting with them in their little laboratories with the cocaine they’ve imported from Colombia, they’d be mixing it with the acetone and putting it in the microwave. At that point I saw some fentanyl pills. I knew that they produced fentanyl but I acted as though I didn’t, so I asked the guy like: ‘hey, is this fentanyl? He said: yes, yes, it’s fentanyl’. Then, when the business spiked about three years ago I asked them if it’s possible to do the same with fentanyl. I received a straight no.” 

“The boss of the laboratory said that if he lets me film his fentanyl production we’ll both be killed because it’s a sort of taboo,” he continues. “It’s a cash machine that was already killing so many people in the U.S. so it was a really sensitive topic. I left the subject alone but I became obsessed with it and kept insisting that they show me how they produce the fentanyl. All I did was keep asking … [eventually] they agreed to it because they saw from my previous documentaries that I didn’t put anybody at risk. All the voices, the faces, have been changed, nobody has been arrested, everything that I showed was the truth, and so they said: ‘okay, we trust you, you can come back’.”

Released in three parts by Le Monde, each segment of Monnet’s fentanyl documentary focuses in on three separate components of the M30 trade: its production in clandestine labs in the cartel’s home turf of Culiacan in Mexico, its sale on the streets of New York by dealers who obtain the drugs from Sinaloa-linked suppliers based in the U.S., to, finally, the laundering of the cartel’s funds via an opaque network of wealth managers and secretive trusts in the United Arab Emirates.

Monnet interviews figures of varying seniority within the cartel, from hitmen to bosses, who open up about the financial aspects of their business. He is even allowed to covertly sit in on their meetings with the investment consultants that wash the cartel’s ill-gotten earnings. Monnet’s overarching aim is to show his students, who tend to graduate into high-flying corporate careers, how illicit profits seep into the legitimate economy. This way, they are better equipped to identify suspicious funds should they ever come across them in their professional lives.

The professor took a particular interest in fentanyl for a very simple reason: although cocaine remains the number one international best-seller for the cartel, M30 pills are uniquely profitable because there are far less links in the supply chain and fewer intermediaries, which means that the Sinaloa gets to keep a far greater share of the eventual profits — around 50 percent, according to Monnet. So while a single kilo of cocaine in Colombia or Bolivia might sell for around $5000, Monnet estimates that the price of corrupting officials that allow a kilo to reach European seaports is around $18,000. These higher operating costs eat into the cartel’s earnings.

M30, meanwhile, is so profitable because it is highly potent, thereby more compact to transport, and Mexican producers simply pay smugglers to transport it alongside shipments of other established drugs like cocaine. This way, they leverage existing supply chains to drive down costs. Also, unlike cocaine, which has to be produced in South America and then transported onto Mexico, raw fentanyl arrives directly from laboratories in China. According to Monnet, one kilo costs $17,000. But only six grams of raw product is required to produce “thousands” of M30 pills, which, according to Monnet’s cartel contacts, are sold to smugglers for upwards of $400,000 per kilo.

“For me, it’s much more profitable for the Mexicans to be involved in the business of fentanyl than with any other drug,” Monnet tells me. “And that’s why they keep producing it: because it’s so profitable … They’re criminals. They’re in it for money. These people are what I call ‘business extremists’. So they won’t just stop.”

Although the Biden administration has taken steps to combat the production of fentanyl — in one scene in Monnet’s documentary, he stands in a field interviewing a cartel boss, while armed bodyguards scan the skies for U.S. military drones that work alongside the Mexican army to target the Sinaloa’s operations — Monnet questions how much of an impact these policies will have. While the quantities entering the U.S. will go down, it remains to be seen by how much.

Picture credit: by DON EMMERT/AFP via Getty Images

Ultimately, however, it’s unlikely to significantly wound the cartel or its operations because the narcos are very ingenious and will look for ways to adapt to changing circumstances. For example, Monnet says that it has already started reorienting towards Europe and small quantities of M30 have already reached France as cartel-linked importers test the market. Teaming up with the Mexican state to hound the narcos is also only a partial solution. China also has a role to play in sniffing out which government-approved laboratories are selling to them. But this is far from easy.

“The narcos explained to me that it’s impossible for them to go directly to executives in the Chinese laboratories that produce fentanyl, mainly because they don’t know them and they don’t speak Chinese,” Monnet explains. “If they actually traveled to China they’d also be immediately identified by the police. So what they do is they work through intermediaries who then bribe others in the food chain. These people have to be legitimate to approach the people working in the laboratories in China. They corrupt companies that legitimately buy fentanyl with the intention of selling them to hospitals around the world.”

“This is how the pharmaceutical business works,” he continues. “Pfizer doesn’t always sell vaccines to hospitals in Paris. Sometimes they go through intermediaries. So the cartels enter the chain, bribing people that legitimately buy shipments of fentanyl destined for hospitals and those people will divert a small part of this shipment and sell it onto the cartel. It’s just a small portion of the overall order so it doesn’t raise suspicions.”

Monnet is dismissive of the conspiracy theories peddled by certain American politicians that Chinese authorities are somehow involved in enabling the illicit production of fentanyl because it fuels the U.S. opioid epidemic, thereby creating domestic problems for a geopolitical adversary. This is both illogical and completely unverified, he says. But he does concede that maybe the Chinese weren’t particularly concerned with addressing this issue as it requires significant manpower to tackle. Whether that changes following the recent agreement between Biden and Xi Jingping remains to be seen.

But there is another, perhaps more effective way to combat the cartel, one that Monnet says has been strangely underutilised. That’s by targeting their ability to launder money. There have been some efforts to do this on a global level but certain tax havens have been put under less pressure than others and one financial black hole in the global economy that has been strangely overlooked is the United Arab Emirates.

This allows the cartel to transfer their dirty cash into the country and then invest it into the legitimate economy

Although this isn’t the only tax haven used by Mexican drug traffickers, Monnet says that the narcos describe Dubai as “a paradise”. There are a number of reasons for this. One is that it offers a luxury lifestyle that attracts the super-rich from all around the world. The other is the highly opaque banking secrecy laws that protect financial advisors and wealth managers from having to disclose any information about their clients.

This allows the cartel to transfer their dirty cash into the country and then invest it into the legitimate economy without having to answer difficult questions about how they earned that money. In the third and final episode of Monnet’s documentary, he travels to Dubai with a high-ranking member of the cartel where he is allowed to sit in on a meeting with a trio of wealth managers and secretly record a discussion where they explain precisely how the shadowy investment environment in the UAE works.

Basically, once a client’s funds have been transferred into the country, wealth managers set up a trust for their client that can be used to purchase luxury real estate. This way, the property is purchased in the name of the trust rather than the client themselves and the trust manager is under no obligation to reveal the identity of its beneficiaries. It can then sell the property for clean cash on the open market or by setting up a second trust owned by the same client to buy the property for cash that arrives dirty on one end and then, through the transaction, comes out clean on the other. Monnet describes this system as a “washing machine” for illicit earnings.

Monnet says that, although the Emirati authorities have officially agreed to collaborate with international efforts to clamp down on money laundering, his investigation casts doubt on whether this is anything more than lip service that they pay to their American allies. It’s difficult to know whether they’ve taken any concrete action and, as the documentary shows, the cartel funnels its funds through Dubai quite freely. Taking action against money laundering would require the Emiratis to act against their own economic interests, which is something that few nations are ever likely to do willingly.

Monnet describes the investment environment in Dubai as “a systemic Swiss army knife for money laundering”

“The Emirati authorities know that the future for their economy is real estate and tourism. Dubai is one of the most important offshore real estate locations in the world,” explains Monnet. “In Dubai, around $146 billion of [real estates] assets belong to foreign nationals. If they were to make it more difficult for rich investors to invest in real estate their economy will be hurt. And if you reduce the opacity, you will also reduce the investments. The economic model there is based on attracting investors through low tax and opacity.”

Monnet describes the investment environment in Dubai as “a systemic Swiss army knife for money laundering” and is dismissive when asked whether there might be a possibility that the Emiratis might be unaware of what is taking place in their country. “The state security services are really efficient and they know everything. There is no delinquency, there is no crime, the police are very efficient,” he says, which means that they are turning a blind eye to economic crime. But what’s perhaps more egregious is that, in a certain way, so is the American government.

If a citizen journalist like Monnet is able to uncover compelling evidence of these practices then it is unfathomable that they have managed to avoid the all-seeing eyes of U.S. intelligence and state law enforcement agencies. As the world’s dominant superpower, the American government has little difficulty in pressuring allies into falling in line with its demands. The fact that more hasn’t been done to rein in money laundering in Dubai suggests that Washington is unwilling to exert greater pressure on the Emiratis. When quizzed whether this might have something to do with the country’s status as a major fossil fuel exporter and U.S. security partner in the Middle East, Monnet replies affirmatively.

“Absolutely. That’s the truth. For decades the Middle East has been such a hotspot for instability, sadly. A state like the Emirates plays a very important role in an unstable region,” he says. “This can be both useful and dangerous for the U.S. and the EU. For me, this is the main reason why, so far, the Americans haven’t really pressured the Emirates … It’s a difficult choice, but the choice is between these two [foreign policy & public health]. If you really want to tackle the crisis you’re going to have to apply some sort of sanctions on these banking havens.”

For Monnet, there is an inherent logic that drives the ongoing fentanyl crisis: “By allowing the cartels to launder their money, you create an incentive to generate that money,” he says matter-of-factly. “These people are what I call business extremists. If they couldn’t launder their money they wouldn’t bother with drug trafficking. And the end result is that tens of thousands of people die every year [from fentanyl].”

Monnet doesn’t see this situation changing any time soon and he says that he gets the impression that the Biden administration appears to have focused its efforts on increasing access to naloxone, a drug used to reverse opioid overdoses, which could be seen as an admission of defeat in the fight against money laundering in Dubai. 

What this shows is that in an era of globalised finance, public health, geopolitics, and organised crime are all entwined and, within this system of competing priorities, it’s the lives of American drug users that sink to the bottom.

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