The South American Cocaine Trade:
An "Industry" in Transition

June 1996

Contents

• Introduction
• Impact of Operations against the Cali Drug Mafia
• Impact of Operations against the Air Bridge
• Expanded Role of "Spill-Over" Countries in the Drug Trade
• Decentralization of Cocaine Production and Trafficking
• Final Observations

Introduction

The heart of the international cocaine trade is located in the Andean region of South America. Virtually all of the world's cocaine base, the intermediate product used to manufacture cocaine hydrochloride (cocaine HCl), is produced in Peru, Bolivia, or Colombia. Cocaine base production in Peru and Bolivia in 1995 represented about 90 percent of the world's cocaine base; the remaining 10 percent was produced in Colombia. Operation BREAKTHROUGH estimated worldwide cocaine production in 1995 at 715 metric tons.¹

The major Colombian drug trafficking groups continue to produce most of the world's cocaine HCl. They import hundreds of tons of cocaine base from Peru and Bolivia, convert it into cocaine HCl at clandestine drug laboratories in Colombia, and export the illicit product to the United States and Europe. Independent Bolivian and Peruvian trafficking groups, however, increasingly are producing cocaine HCl.

The governments in the Andean region took unprecedented steps against the drug trade in 1995. Notable counterdrug successes included the arrest or surrender of seven of the eight top Cali drug mafia leaders and the successful execution of an assertive air interdiction campaign against the traditional Peru-Colombia air bridge. These counterdrug initiatives have accelerated the trend toward decentralization of the "Cali-centric" drug trade and compelled traffickers to change the way they "do business" in South America.

Impact of Operations against the Cali Drug Mafia

The death of Jose Santacruz-Londono and the arrest or surrender of such major traffickers as Victor Patino, Jose Castrillon Henao and Juan Carlos Ramirez Abadia (aka "Chupeta") have disrupted some Cali drug mafia drug trafficking operations. The Cali drug mafia per se, however, has not been dismantled in that Cali drug lord Helmer "Pacho" Herrera remains at large and the Rodriguez-Orejuela brothers continue to manage aspects of their trafficking organizations from prison.

DEA reporting suggests, however, that a new generation of relatively young North Coast, Northern Valle del Cauca, and Cali traffickers will attempt to exploit any "power vacuum" created by the arrests of the Cali drug lords. The Henao Montoya brothers, for example, appear to be seeking to increase their power and influence relative to the Cali "old guard." One important result of this heightened competition between rival Colombian trafficking groups has been an increase in drug-related violence.

The major drug trafficking organizations in Mexico also may be expected to exploit the situation in Colombia in order to expand their business contacts with cocaine suppliers in Peru and Bolivia.

Impact of Operations against the Air Bridge

Assertive air interdiction campaigns against the traditional air bridge by the governments of Peru and Colombia have forced traffickers in Peru to transport cocaine base increasingly via land and riverine routes to airstrips in Peru that are located near the Brazilian or Colombian borders. This smuggling strategy minimizes the time that drug pilots are put at risk in Peruvian Air Force (FAP) areas of operation.²

Detected drug flights from Peru to Colombia in 1995 decreased significantly compared to 1994. Intelligence in 1995 indicated that this decline in drug flights resulted in a glut of cocaine base in Peru. This, in turn, led to a plunge in cocaine base prices in Peru. Reporting in early 1996, however, indicates that cocaine base prices in Peru are on the rebound. Although the air bridge interdiction initiative is considered to be a counterdrug success, this year-long campaign does not appear to have caused any measurable shortage of cocaine base for processing in Colombia.

Expanded Role of "Spill-Over" Countries in the Drug Trade

Aggressive drug law enforcement efforts in Colombia and Peru have forced traffickers to relocate some of their trafficking operations to Brazil, Ecuador, and Venezuela. Brazil has become increasingly important as a major cocaine transit route. Limited reporting also suggests that cocaine HCl production has increased in Brazil.

Venezuela remains a major transit country for cocaine HCl produced in Colombia. Venezuela also is an important conduit for essential chemicals and a financial center for drug money laundering. Likewise, Ecuador is an important transit country for cocaine from Colombia. The countries of the Southern Cone (Argentina, Chile, Paraguay, and Uruguay) are ranked as secondary transshipment regions for cocaine destined for the United States and Europe.

Decentralization of Cocaine Production and Trafficking

The emergence of independent Bolivian, Peruvian, and Mexican trafficking organizations highlights the trend toward decentralization of the "Cali-centric" cocaine trade. Increasing quantities of cocaine HCl are being produced by independent trafficking groups in Bolivia and Peru.

Cocaine HCl production in Bolivia has increased significantly in recent years. In 1995, 61 percent of the cocaine seized in Bolivia was cocaine HCl, as opposed to cocaine base. In contrast, cocaine HCl comprised only 9 percent of the cocaine seized in Bolivia during 1994.

DEA reporting also indicates that independent Mexican, Peruvian, Brazilian, and Bolivian trafficking organizations are increasing their activities in Bolivia. To date, however, these organizations have not demonstrated the capability to produce and transport multiton quantities of cocaine HCl from South America on a regular basis. The Colombian drug mafias continue to play an important role in cocaine production and distribution in Bolivia.

Recent intelligence and investigative reporting indicates that some independent trafficking groups in Peru increasingly are producing cocaine HCl. These independent Peruvian organizations, however, continue to sell the majority of their cocaine base to Colombian traffickers, who then process the cocaine base into cocaine HCl at clandestine drug laboratories in Colombia.

The trend toward decentralization of the cocaine trade, of course, is not limited to South America. Today, the major Mexican trafficking organizations are second only to the Colombian drug mafias in terms of power, sophistication, and international scope of operations. Accordingly, Mexico's drug lords may be expected to exploit opportunities to expand operations.

Limited reporting suggests that certain Mexican trafficking organizations are attempting to bypass the Colombian drug mafias and deal directly with Bolivian and Peruvian cocaine HCl suppliers. While predictions of a fundamental "power shift" in the drug trade away from the Cali drug mafia and toward the "Mexican Federation" are premature, additional expansion of Mexican trafficker contracts with cocaine suppliers in Peru and Bolivia is anticipated. The major Colombian drug trafficking organizations, however, are expected to remain dominant players in the international cocaine trade in the next five years.

Final Observations

The decentralization of the traditional "Cali-centric" cocaine trade presents international drug law enforcement authorities with new challenges. Traditional enforcement strategies and intelligence collection programs designed to target the major Colombian "cartels" may not provide optimum results against a fragmented cocaine "industry" comprised of hundreds of smaller, but significant, Latin American trafficking organizations. The international drug law enforcement community must explore new and innovative strategies to confront successfully the evolving cocaine trade into the 21st Century.

Footnotes

(Click on footnote number to return to document.)

1) Operation BREAKTHROUGH is a DEA scientific research project designed to estimate the amount of cocaine produced in the Andean region by examining the yield and alkaloid content of coca crops and the efficiency of clandestine laboratory operations.
2) Drug pilots have reasonable cause to avoid the traditional Peru-Colombia air bridge. In 1995, the FAP forced down or shot down 20 drug aircraft. Likewise, the Colombian Air Force strafed or forced down at least 15 drug aircraft.

This report was prepared by the Latin America Unit of the Strategic Intelligence Section. For additional information, please contact the Intelligence Production Unit, Intelligence Division, DEA Headquarters, at (202) 307-8726.