The Economic Benefits of Drug Policy Reforms

April 2004.The Economic Benefits of Drug Policy Reforms

Speech By Joep Oomen, Encod

ENCOD was founded in 1993, in order to build a platform of European citizens’ associations who wish to campaign for new drug policies that are “just and effective”, referring above all to the effects of this policy on the involved population in North and South. At this moment, about 70 organisations are member of ENCOD, whereas approx. 200 organisations from about 40 countries from allover the world have signed up to the International Coalition of NGOs for Just and Effective Drug Policy, that was created by ENCOD in 1998.

Our mission is to contribute to adequate policies concerning the drug phenomenon in all its aspects -production, distribution and consumption. We are convinced that current policies on drugs, including those of European Union countries, are counterproductive, as they are creating significant harms, not only to public health and human rights, but also to sound economy. Firstly because of the creation of a huge criminal empire, secondly because of the costs of maintaining prohibition for public expenditure, and finally because of the fact that developing countries are unable to apply concrete opportunities for sustainable development due to the fact that these opportunities involve crops that are currently illegal.

Even official figures from the UN Office on Drugs and Crime show clearly that the fight against illicit drugs is completely useless. Since 1998, the year in which the governments of the world announced their commitment to eliminate or significantly reduce the drug phenomenon by 2008, the amounts of illicit drugs have increased again. Experts calculate that police operations against international drug trafficking will first be succesful in reducing the profits if they are able to seize 70 to 80 % of the produced amounts. At the moment, they are not able to capture more than 10-20%. And even if they succeed in stopping more, the only impact will very likely be a change of routes or a decrease in purity.

If drug prohibition were a commercial enterprise, it would soon go broke. However, it is a public enterprise, that is run with tax payers money. Contrary to what one may expect from open and democratic societies, there is virtually no debate on the question whether it should continue. On international fora such as the annual meetings of the UN Commission on Drugs in Vienna, government delegates tend to repeat the same rhetoric, blaming all the problems that are related to drugs to the fact that they exist, in stead of the approach that has been taken so far to deal with them. So what are the reasons for this silence?

Today, traders in illegal drugs operate in an environment that could best be described as a truely ‘free market’, without any rules or limitations. Drugs are easily available to anyone including children. There exists no control whatsoever on the quality, price or ways of production and distribution. Production costs represent between 1 and 5 % of the final price drugs are sold for, so profits involved in the illegal drug industry are enormous. According to UN estimations, every second, around 12.500 EURO is earned through the sale of illegal drugs, up to a total of 4 to 500 billion EURO a year. After oil, drugs trade is the second largest economic sector in the world. It is one of the key engines of organised crime.

As the recent reforms of the international markets tend to facilitate the circulation and recycling of dirty money in the international banking system, legal and illegal businesses are increasingly intertwined. Thus, illicit money enters normal financial and business operations as well as the organs of state power.

Michel Chossudowsky, professor of the University of Ottawa, describes this process as follows:

“Criminal organisations (e.g. with interest in the drug economy) acquire banking and productive assets in the legal economy; on the other hand legal economic and financial interests have a financial stake in the illicit economy. There is in this context a consequent distortion in political structures and social relations which has a direct bearing on policy formulation by national governments, including the articulation of macro-economic and financial reforms. Criminal organisations involved in illicit trade increasingly constitute a powerful undercover lobby operating both at the national and international levels influencing the scope and direction of government policy.”(in: Drugs and dependence, Conference organised by the Council of Europe and ENCOD in Lisbon, March 1996)

Needless to say that one of the issues that this undercover lobby will continue to strongly put forward is the need to fight against drugs. In this effort they will surely count with the support of the public entities that benefit from the maintenance of drug prohibition and particularly the investment of public funding into law enforcement that can be justified with the need to fight against drugs. According to the European monitoring centre on drugs and drug addiction, during the decade of the 1990s EU countries spent 5,2 billion EURO a year as public expenditure related to drugs of which 70 procent to law enforcement and 30 procent to health care. This means that every day in the 1990s almost 10 million EURO was spent in Europe to pay the wages of people working for police, customs, prisons and the legal apparatus, not counting the expenditure on health care or international programmes aiming to counter the flow of drugs from developing countries. If drugs were legal, this money could be spent in another way.

Drug prohibition hands a monopoly of these substances or services to provide them to criminal groups who are greedy by nature and avoid accountability and responsibility. Much like other legal enterprises, they benefit from the conditions offered in both the poorest and richest parts of the world. In drug producer countries in Latin America or Asia, farmers are faced with sheer poverty, armed conflicts and a repressive state. Their answer is destroy large areas of tropical forests in order to produce coca leaves or opium, selling their harvest to middlemen for a price that is lower than 1 procent of the street value in the industrialised world.

European Union policy towards drug production has been focusing primarily on so-called ‘alternative development programmes’ that aim to replace illegal crops with legal sources of income. But this approach has been unable to address the determining factors for the increase of cultivation of coca leaves, opium and cannabis. These problems are, of course, lack of land reforms, lack of basic infrastructure, unstable and decreasing prices for traditional crops, in short, problems that are maintained by economic policies oriented towards the promotion of liberal and free-market principles.

Coca leaves, cannabis and opium are crops that can be used in many other ways. As a matter of fact, they have been useful to mankind during thousands of years, as medicine or food supplement, element of rituals and social life, and in the case of cannabis or hemp, as raw material for construction, clothes, as an energy source etcetera. If hemp could be grown without restriction, it could become a serious alternative for the import of synthetic textiles or the products of the oil industry that so many developing countries are dependent on. If coca leaves could be commercialised in the form of coca tea, countries like Bolivia or Peru could not only stop erradicating the source of income of millions of their inhabitants, they could even increase coca cultivation and improve their population’s life conditions in a sustainable way.

There is no doubt that the only way to really minimise all harms related to drug production, distribution and consumption is to change the basic logic of traditional drug policies: to stop prohibiting and start regulating. This is not an ideological position; it is simply a prediction of the logical order of events that WILL happen, sooner or later. What we urgently need is an international agreement on the regulation of Production, Trade and Consumption of Drugs (including those that are legal today). Only when society through its legitimate representatives regains control of the market, will it be able to get to grips with all the social evils that are related with it today.

According to this agreement, every single country in the world should be allowed to establish its own mechanisms to regulate the production and consumption of drugs, and form bilateral agreements with other countries concerning the supply of drugs they cannot produce themselves. Sustainable relationships could be fostered between drug producers and consumers, based on mutual respect that includes the recognition of the fact that fair trade relationships serves mutual benefits. Establishment of basic health care and education facilities, measures to avoid environmental damage and mechanisms to ensure food security, fair prices and market access for any products, also including legal outlets for plants like coca, cannabis and opium, will contribute to a rationalization of drug production.

Regulation of the market will also act to counter the intervention of unscrupulous middlemen with measures that protect the interests of producers and consumers. These can include quality control in places of consumption, accurate information on prices and quality to producers and consumers, and methods of controlled distribution. Countries, which decide to allow the distribution of drugs could do this either through the public provision or through the private market. Social and health authorities could be supervising the drug trade, and specific limitations (with regards to advertising or sale to minors, for instance) could be maintained.

Access to drugs that present significant risks to the user should be controlled in one way or another. Drugs with a greater potential for harmful use may be more tightly regulated. However, this regulatory scheme should not be so restrictive as to produce a significant illegal market in the substance. Once a significant illicit trade in a substance appears, we can be sure that our policy is a failure and bound to contribute to, rather than minimize the harms of the commerce and use of that substance. Therefore, the lack of impact of the current UN Conventions is best illustrated by the dimension of the criminal industry, which, as mentioned before, makes 12.500 USD a second dealing drugs.

Now what can be done to achieve this major shift in drug policy, that will undermine the interests of the world’s largest criminal interests and saving at least 10 million EURO a day in the “old” EU alone? Money that could be used in health care, development cooperation and other ways to improve living conditions of millions of people around the world?

As an international coalition of organisations, representing citizens and independent experts, ENCOD has been trying to use every opportunity to show that UN Conventions need to be reviewed in order to allow countries to implement policies that manage to cope with drugs rather than eliminate them and the people who are involved.

We sent public letters to EU and UN authorities, organised several events in various countries, and among others a large international demonstration in Vienna during the days of the UN Meeting to evaluate drug policy that took part in April 2003. We never got any official reply, but instead were accused of making pro-drug publicity, collaborating with drug maffia, etc. We also found out through research that the major part of information dealing with the drug issue in the European media is about the war against drug trafficking, and is based on information coming from one side, the law enforcement agencies.

Therefore we will continue these public appearances, as the drug policy debate is more than ever an issue of democracy. We need to inform the people of Europe that another drug policy is possible. Already on a local level, authorities are increasingly convinced of the need to get rid of drug prohibition. Local politicians, who are supposed to have a better knowledge of the concerns of citizens, have been among the first to recognise that we should start live with the phenomenon, that we should reduce harms in stead of drugs. Authorities of Amsterdam, Zürich, Geneva, Frankfurt, Barcelona and many other cities have implemented harm reduction policies, whereas national governments and the UN maintain prohibition as the only basis for drug policy.

So the role of ENCOD will continue to be to link local groups and motivate them to use each other’s experiences and work on a common strategy. One concrete goal is to motivate local authorities throughout Europe to convince their national colleagues to put a review of the UN Conventions on the agenda next time the UN Commission meets in Vienna. Another one is to ensure continuous presence of citizens affected and concerned by drug prohibition in forums like this one, and particularly around the UN meeting, that takes place every March or April.

Our current campaign, “springtime to end the war on drugs” has been succesfull to a certain extent. We have been invited to several conferences in Spain, United Kingdom and to the EU Summit on Drug Policy that is organised in ten days from now in Dublin, Ireland. Tomorrow and next Saturday, various ENCOD members will actively participate in Marches for the Liberation of Cannabis and other illicit plants allover Europe. And we hope to organise a large assembly of members in the town of Copenhagen, Denmark, on 25 and 26 June, among others to support our danish friends who face the repression against the 15 year old cannabis market in Christiania that Danish government decided to in March this year.

Joep Oomen

European NGO Council on Drug Policy

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