The drug world in the Americas is undergoing seismic shifts with changing patterns of drug production and consumption that are reshaping organized crime in the region.
Cocaine production is booming in Colombia, and an ongoing peace process with the country's main guerrilla group could transform the supply side dynamics. As security forces increase pressure on traditional trafficking routes, criminal groups are developing new transshipment paths that have led to growing security concerns in countries that had not previously been heavily affected by drug-related violence.
Rising demand for heroin in the United States has spurred Mexican criminal organizations to ramp up opium production and fight for control of the expanding market.
Crime groups across Latin America are also continuing to diversify their production and trafficking activities to include synthetic drugs, which are becoming increasingly popular in the region.
And some governments are moving ahead with legalization of marijuana, a policy that could potentially take a major bite out of crime groups' profits.
Although coca cultivation in Peru is at a 15-year low, neighboring Colombia is growing more of the cocaine-yielding crop than it has since 2009. We think that more cocaine than ever before is being produced. It is not just about the coca, but the cocaine yield per hectare which has tripled over the last decade, according to the anti-narcotics police.
This increase has coincided with rising demand in the region. According to the most recent United Nations drug-use statistics, the number of cocaine users in the Americas has increased since 2012 from around 8 million to nearly 14 million. Notably, the United States -- the world's biggest consumer of the drug -- recorded in 2015 its first increase in cocaine consumption and availability in nearly a decade.
A major change could be in store for this expanding illicit industry, as the Colombian government advances a peace process with the hemisphere's largest guerrilla group, the Revolutionary Armed Forces of Colombia (Fuerzas Armadas Revolucionarias de Colombia - FARC), which is arguably the single most important player in the global cocaine trade.
"There may well be another wave of violence as the underworld recomposes itself around the FARC's formal departure from the lucrative criminal economies they control," we noted in August. "Yet today there is a form of 'Pax Mafiosa' in the country, with very little fighting between criminal actors, who now prefer to cooperate and share the profits than fight for control. The FARC are already part of this world, providing [criminal groups known as] BACRIM and [transnational organized crime] with coca base and cocaine. These relationships are unlikely to die with any agreement in Havana. They will more likely evolve and give birth to a new generation of criminal actors, some of which will inevitably have FARC roots."
Shifts in the cocaine trade have also raised concerns in Brazil, which is both the world's second-largest consumer of cocaine as well as one of the most important transshipment countries for the drug. Some analysts have predicted that serious violence could result from the recent split between the country's two main drug-trafficking organizations, the São Paulo-based First Capital Command (Primeiro Comando da Capital - PCC) and the Rio de Janeiro-based Red Command (Comando Vermelho).
"Police in Brazil intercepted gang communications suggesting the First Capital Command is expanding in the state of Rio de Janeiro, potentially paving the way for violent confrontations with the now-rival Red Command following the recent breakdown of the two groups' long-standing alliance," we reported in December. "The police official who coordinated the investigation into the PCC's expansion in Rio, Antenor Lopes, said the group's strategy is to initially take over the drug trade in municipalities in the state of Rio before moving in on the capital city -- the birthplace and traditional stronghold of the Red Command, reported Estadão."
Increasing production and consumption of cocaine has led to the development of new local markets for the drug, in some cases generating violence as criminal groups compete for control. Authorities in Argentina, in particular, have recently grown increasingly concerned about this dynamic.
"The cities of Rosario and Santa Fe in Santa Fe province have become known as epicenters of increasing violence and corruption associated with Argentina's burgeoning domestic drug trade. Rosario marks the southern terminus of the infamous Ruta 34 -- a highway that snakes its way south from the Bolivian border and is often used to ship large quantities of drugs to Argentina's urban centers. Rosario lies less than 200 miles from Buenos Aires, the country's biggest drug market, and it also has numerous points of access to the Rio de la Plata, making it ideal for shipping drugs by river," we reported in February. "Drug-related violence has also increased in the city of Buenos Aires and the surrounding province. According to La Voz, Argentine, Peruvian, and Paraguayan criminals dominate the local market, often bringing in cocaine paste from Bolivia and Peru for local processing and distribution."
Criminal organizations have also come into conflict over transnational trafficking routes. In Central America, security forces have ramped up efforts in traditional cocaine trafficking countries like Honduras, forcing crime groups to seek alternative routes. Costa Rica in particular has seen a startling increase in violence linked to the country's growing role as a cocaine transshipment country.
"The expansion of drug trafficking in Costa Rica, and an alarming rise in insecurity, has sparked concern among local officials, who are anxious to avoid the extreme levels of violence seen in Central America's Northern Triangle nations of El Salvador, Guatemala, and Honduras," we noted in October.
Although a recent United Nations report suggests global demand for cocaine is decreasing, "cocaine trafficking remains the lifeblood" of organized crime in Latin America. Therefore, this development is "unlikely to herald a period of sustained decline for the cocaine trade and the organized crime networks it funds. Production is already again on the rise and the new global marketplace that is emerging holds the potential for huge profits."
Demand for heroin in the Americas has also increased in recent years. Much of this rise is due to the booming US appetite for opioids, driven by overprescription of painkillers. As has been the case with cocaine, rising demand for heroin has spurred violent competition between crime groups for control over key nodes in the drug's production and distribution chain. For example, the DEA warned last year that two of Mexico's most powerful crime groups -- the Jalisco Cartel - New Generation (Cartel de Jalisco - Nueva Generación) and the Sinaloa Cartel -- have come into conflict over the heroin trade.
Mexico has seen a huge increase in opium poppy production in recent years as criminal organizations seek to capitalize on the growing US market. But burgeoning demand for heroin may also be encouraging Colombian groups to increase production.
"According to a 2015 report from the United Nations Office on Drugs and Crime (UNODC), opium poppy cultivation in Colombia rose by almost 30 percent between 2013 and 2014, to 387 hectares -- the highest level observed since 2008. Moreover, according to the US State Department, heroin seizures in Colombia also ticked up from 349 kilograms in 2014 to 393 kilograms in 2015, suggesting a possible increase in production," we reported in March.
"Colombians are getting further and further from street level sales," DEA spokesperson Rusty Payne told InSight Crime at the time. "They've really stuck with the wholesale game."
Rising consumption and production of heroin in the region could lead to the growth of localized markets for heroin along trafficking routes, as occurred with cocaine. If this happens, it is possible that conflicts could increasingly arise over these smaller-scale markets for the drug.
Synthetic drugs like methamphetamine, LSD, "ecstasy," and others are also important sources of revenue for crime groups in Latin America. Although in general these drugs have not been associated with the same levels of violence surrounding the cocaine and heroin trades, criminal organizations may place increasing emphasis on synthetic substances as consumption rates rise in the region. And as has occurred with cocaine and heroin, conflicts could arise over the production and distribution of these drugs as markets develop.
Synthetic drugs pose unique challenges for authorities, as Argentina has discovered amid a 500 percent rise in seizures of these substances over 2016.
"The synthetic drug trade is essentially a constant cat-and-mouse game between the producers of synthetic drugs and those in the government seeking to outlaw them," we wrote in November. "With producers continually coming up with new formulas, it appears authorities are destined to play catch up unless they broaden the definition of 'illegal substances,' similar to what is being attempted in Argentina. While this may result in more seizures, it could also target consumers of the drugs, rather than producers."
Particularly in Mexico, there are signs that crime groups are deepening their involvement in the synthetic drug trade as a way of diversifying their criminal portfolios.
"Mexican criminal groups have increased their role in the methamphetamine trade in recent years to offset some of the losses from declining cocaine usage in the United States," we noted, drawing from an International Narcotics Control Board report. "Drug trafficking groups have also shifted some cultivation over from marijuana to poppy crops in order to meet the surging US demand for heroin."
Marijuana is by far the most widely consumed drug in the Americas, and as such it represents a substantial revenue source for criminal organizations. Micro-trafficking networks often diversify from marijuana into harder drugs or attempt to enter into the international markets.
While authorities in the region are generally continuing to pursue interdiction and eradication policies with respect to most drugs, there are some governments that are trying a different approach with marijuana. Most prominently, Uruguay has been moving ahead with implementing a first-of-its-kind law that legalized the sale of marijuana for recreational purposes.
"Uruguay's landmark legalization of recreational marijuana in 2013 made international headlines," we wrote in September. "But despite the fanfare, designing a complex regulatory system for the drug's sale and implementing legalization has proven a long and difficult process, which Uruguay has approached cautiously."
In November, three US states, including California, joined the ranks of Maine, Washington, Oregon and Colorado in legalizing recreational marijuana. This development could have a big impact on both the debate around the merits of legalization as well as the operations of organized crime in Latin America.
"The addition of California to the list of states that have now legalized marijuana is of particular significance," we wrote in November. "[Mexican] criminal organizations are increasingly switching to poppy in order to curb the financial losses incurred by the fall in marijuana profits. With the number of potential consumers in the legal US marijuana market quadrupling overnight, Mexican smuggling groups will be further incentivized to make the transition to heroin and other illicit drugs such as methamphetamine."
These experiments are in their early stages and in some cases they have had mixed results, but they are the first of their kind. If successful, they could perhaps provide an alternative model for drug control in the region.
Consumption and production of several widely used drugs is on the rise in the Americas, providing increasing revenues for criminal groups and sparking conflict over lucrative criminal economies related to the narcotics trade. Expanding domestic drug markets are also fueling the birth of new organized crime groups, foremost among them violent street gangs.
The drug trade is the most profitable illicit industry in the world, and it is the biggest source of revenue for many of the most powerful criminal groups in Latin America and the Caribbean. For this reason, ongoing shifts in drug production and consumption will play a key role in shaping the future of organized crime in the region.