To win the war, stop fighting

Drug cartels and the underground economy fear legalisation and deregulation

Artillery Row

Looking at the underground economy in continental Europe this year is an instructive study as to how we should move past the failed “war on drugs”. Organised crime groups are prospering mightily from Covid restrictions that come on top of other well-intended restrictions, for example the prohibition of drugs. Let us see what is really happening so that we can consider what ought to be sensibly done instead.

This summer, drug violence escalated in Antwerp, Europe’s second biggest port. In 2016, the city took over from London as Europe’s “cocaine capital”. While the police and prosecutors are being flooded with cases related to narcotics, notwithstanding the campaign waged against them by Antwerp Mayor Bart De Wever from 2013 on, grenade attacks on houses in the middle of ordinary neighbourhoods keep happening. 

In Brussels, the situation is also tense. Belgian Police official Alain De Proft recently explained how drug clans operate: “they often have the same structure: a number of core members, with behind them a network of commercial legal entities, strawmen and a series of support elements in the certain neighbourhood. One clan can have quite a bit of impact in a neighbourhood: bars and restaurants serve as a sales point for drugs, real estate, you name it.” Clearly, drug trafficking is not all that different from a regular business.

Peter Muyshondt, who used to be police commissioner in the area around Antwerp, supports a completely different policy approach to repression: “Drugs should be removed from the illegal sphere”, he thinks, “because current drug policies inflict more damage than drugs themselves … Instead of criminalising drugs, it would be better for society to limit the damage they inflict”.

As counter-intuitive it may sound, he may be right. Others, like Vicente Fox, the former President of Mexico, which of course has been infamously hard hit by drug violence, have come to a similar conclusion: “Legalization of drugs is the way to combat cartels”.

We should think long and hard about what happens once, say, port officials are corrupted

Opponents of this idea will claim that legalising cannabis sales in the Netherlands has not ended the role of the drug mafia. But production was never legal in the Netherlands, so this remained the business of organised crime. Antwerp’s Mayor Bart De Wever, who’s frenetically dealing with the challenge, may be an opponent of legalisation but he still thinks that – theoretically at least – legalisation “is an option that one needs to consider”, even if he calls the option “terrible”.

He has also argued that in Canada, where production of cannabis was also legalised, organised crime remained very active nevertheless. Then Canada imposed lots of restrictions, which left great opportunities for crime groups. To his credit, De Wever does take this into account. He thinks that if drugs would be legalised, “it would in that case need to happen recklessly, not doing it halfway. Because otherwise, the criminals operating in the black market would merely be provided with a legitimate front”.

At the moment, Luxembourg is actually planning to completely legalise cannabis, as the first European country to do this. We can only hope it will learn from Canada’s mistakes.

Former police commissioner Peter Muyshondt has made the case for not only legalising cannabis, but also other narcotics, such as XTC and even heroin, but then “with strong government checks”.

This is less extreme than it sounds, because Portugal has actually decriminalised the use of both soft drugs and hard drugs since 2001, something Oregon voters also just decided.  This does not mean that one can trade these products It only means that the government will not criminally prosecute consumption, apart from a low fine. Portugal’s experience is very interesting, because it became evident that drug addiction did not increase as a result of the policy. On the contrary, the country experienced a dramatic drop in the number of overdoses and HIV infections. This in great contrast to thirty years ago, when the country was plagued by huge amounts of heroin addiction. Decriminalisation, as an option, has not appeared out of the blue, but as the conclusion of policies whereby addicts were not treated as criminals, but as victims. 

Of course, crimes still need to be prosecuted, not least when committed by drug addicts. The logic that the many problems resulting from drug abuse should be tackled at root – by criminalising drugs – can be understood, but in practice, this approach has inexorably led to even more crime. To ban drugs leads to opportunities for crime groups comparable with those existing for Al Capone at the time of alcohol prohibition in the United States. Whatever was wrong with alcohol, prohibition made it vastly worse for ordinary Americans: who seriously doubts this today?

There are worrying reports of the enormous financial firepower of the drug mafia. Belgian police official Stanny De Vlieger warned in 2018 in a confidential report for corruption linked to drugs, “and then not just corruption committed by port workers that handle delivery of cocaine from containers. Several of our cases point at links between customs and police”. Mayor De Wever even warned in 2018: “Antwerp is finding itself at the edge of where they are buying themselves political influence”. Fans of TV series The Wire will find this all too familiar. 

A second important consequence of legalising drugs is that the health risks of drug products will be a lot smaller when produced by legitimate companies than if produced by the likes of “Fat Nordin van den Dam“, a Belgian-Moroccan drug lord who was recently arrested in Dubai.

More and more voices within the corporate world are pointing at the economic potential and the benefits of turning the drugs business into a business subject to daylight. Chris Burggraeve, a former top executive of beer giant AB InBev and an investor into America’s cannabis industry, thinks cannabis should be legalised from 2021 on in Belgium, which is precisely 100 years after the country banned the product. It would be a first good step into the right direction, and also does not require changes to international treaties, which is needed to legalise hard drugs.

Legalisation will not solve all issues, but it would make drugs safer and it would signify a massive financial loss to criminals

In countries like Italy, organised crime makes as much money from drugs as car manufacturer Fiat makes from selling cars. The Portuguese precedent proves that legalisation does not have an effect on the addiction rate, which is also the case in the United States, despite 50 years of America’s “war on drugs”. The fear for an increase in the number of addictions is the main reason to oppose legalisation, but both the American and Portuguese experiences show that ultimately, a very tough or very relaxed policy with regards to drugs does not affect addiction rates. Legalisation will not solve all issues, but it would make drugs safer and it would signify a massive financial loss to criminals.

What is true for the drug trade is equally the case for other sectors within the underground economy. All kinds of well-intentioned initiatives to strictly regulate cigarettes, gambling products, alcohol, prostitution and trade in wild animals, tend to result in underground alternatives becoming comparatively cheaper, more accessible and therefore more attractive. Legitimate companies see their income eroded by criminals, who add it to their daily occupation of human smuggling, theft and protection rackets. On their own, those activities would never be sufficient to provide organised crime an income of 1% of Europe’s GDP.

A report by Euromonitor makes all of that clear. It concludes how the Covid crisis, which led to a lot of extra government intervention, has provided organised crime with a lot of extra opportunities. In particular, demand for medical protection equipment has led to much more illegally produced items. Illicit cigarettes were being smuggled under the cover of personal protective equipment (PPE).

The Euromonitor report mentions how the governments of Malaysia and South Africa “placed an outright ban on the sale and use of tobacco products to curb use during the COVID-19 pandemic”. As a result, “In South Africa, the price of a pack of cigarettes has reportedly tripled”, also costing millions in lost taxes. It notes that “In France, where the resale of masks was outlawed, the government captured over 500,000 masks while dismantling smuggling rings valued at over 30 million euro in April alone.” 

To legalise or alienate the regulatory burden not only of narcotics but also of all kinds of other products would squeeze the profit margins of crime groups, thereby pushing shady operators out of the market. They’re in it to make money, after all: hit their profit margins and you’ll put them out of business. 

The lesson here is that it is better to think twice before regulating or taxing things heavily, whether in a crisis or not. The police and the judiciary may do their best, but that won’t make a difference as long as excessive regulations or outright bans that have not been thought through continue to offer a market to organised crime. 

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