A Massive Drug Trade, and No Violence

Peru is the single largest producer of cocaine in the world. It's also an incredibly safe country.
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Anti-narcotics police chemists test cocaine from a bag before its incineration in Lima on April 18, 2013. (Enrique Castro-Mendivil/Reuters)

Peru is the single largest producer and exporter of cocaine in the world. And after decades of foreign-funded eradication efforts in the country, the industry is thriving. Most of the estimated 325 tons of the stuff produced each year is making its way to Brazilian and European markets, earning Peruvian organized crime well over $1 billion annually. By the time this hits the streets in Rio, it is worth five times that amount. Get it to London and you can multiply that figure tenfold. And because Peru enjoys economic growth that Europe can only dream of, its domestic drug market is expanding, promising yet more problems down the road.

The Peruvian authorities are worried about crime. Under increasing public pressure, President Ollanta Humala has made citizen security one of the center-pieces of his government. And with good reason: the drug trade alone is cause for concern, but the illegal gold-mining industry earns almost three times as much as the drug business. Put into the mix human trafficking, the trade in illicit timber, and the trafficking of Peruvian antiquities, the earnings for organized crime in the country add up to at least $5 billion a year, perhaps closer to $7 billion. This kind of cash has a corrosive effect on government institutions, including the armed forces, police, and customs and immigration officials.

But little is known about the scale or nature of organized crime in Peru. What experts do agree is that repression, interdiction, and coca eradication are not working out as planned, and that the dynamics of the drug trade have changed. Instead of feeding the once-insatiable U.S. market, Peru may now account for as little as five percent of the estimated 300 tons of cocaine Americans snort. Now Brazil, the world's second-biggest market, sucks up much of Peruvian drug production, often not as cocaine but its more addictive and cheaper variants, crack or "bazuco."

Most law enforcement specialists believe that locals run the production and local transportation of cocaine, while Colombian and Mexican intermediaries manage exports, with the recent appearance of the Russian mob to shake things up a bit. The business is supposedly straight-forward. Hundreds of campesinos (farmers) grow the crop, mainly in central and northern Peru. The cocaleros sell the coca leaf or coca base to clanes (small criminal groups often based around families), who ship either coca base or processed cocaine, to a handful of firmas (Peruvian organized crime syndicates), which shift the drugs to departure points (airports, seaports, and border areas) ready to move to Colombia, Ecuador, Bolivia, and Brazil. While some Peruvian capos (drug lords) are known to operate in neighboring countries, groups like the Sinaloa cartel and the Russian mob generally handle export.

In spite of government rhetoric to the contrary, organized crime seems to growing unmolested. Virtually no serious players are known to have been arrested or prosecuted for drug running. The one big case working its way through the courts at the moment, involving the notorious Sanchez Paredes clan, looks set to collapse. To add insult to impunity, former President Alan Garcia pardoned some 400 drug traffickers during his second term of office, citing overcrowded jails. And current President Humala also pardoned as many as 100 criminals convicted of trafficking since his election in 2011.

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There is remarkably little concern in Peru over all of this. Peruvians are far more worried about the common crime that touches their daily lives, than the organized crime that has shown itself capable of corrupting the police, prosecutors, judges, and it seems, presidents. And this is because, unlike in Colombia and Mexico, the drug trade involves very little violence. While popular perceptions of insecurity are rising slightly, Peru is widely considered one of the safest countries in South America.

There are at least two possible explanations for this paradox.

The first is that analysts (including the present authors) are completely misreading the situation. In other words, it could very well be that there is considerable violence between producers, dealers and exporters as they compete over market share. The fact is that it is almost impossible to know one way or another. There is no reliable baseline data on the situation and even the most basic figures are wildly inconsistent. For example, the Ministry of the Interior claims that there are 10,000 homicides each year, while the National Police argue that there are just 3,000.

A second possibility is that there is in fact complicity in the drug trade at the highest levels. This would imply that political, economic, and criminal elites are managing competition peacefully. It would also follow that there are pacts also negotiated between campesinos, clanes, firmas, and capos, as well as the foreign cartels. High rates of corruption in government would of course ensure limited interference in illicit business. Since there is so much illegal money washing around there is no need to fight for it, there is more than enough to go around. There may also be no need to resort to violence if bribes will work. One hardened, and frustrated, police veteran once commented that the plomo (lead) is seldom needed, as plata (silver) always does the job.

Whichever interpretation is right, the fact remains that Peru faces the almost certain prospect of a dangerous escalation of organized crime and criminal violence. After radically reducing its support to Peru in recent years, the United States has instead concentrated its attention on Colombia, Central America, and Mexico. Not surprisingly, Peru has sought to step-up alternative partnerships, particularly with Brazil, the main consumer of Peruvian drugs and the regional giant. In the past decade, Peru has signed more than 60 conventions to formalize intelligence, defense, police and judicial cooperation with Brazil, France, Russia, Spain and the United Kingdom, among others. Rather than asking for more funds, Peru is requesting technical and training support to improve the quality of its law enforcement sector. The government also recently spent some $400 million on attack helicopters.

Experts hope that the Peruvian authorities will balance muscular law and order activities with prevention programs, including alternative development.

If history is any guide, a heavy fist may only make matters worse.

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Presented by

Robert Muggah and Jeremy McDermott

Robert Muggah is research director of the Brazil-based Igarapé Institute, a drug-policy think tank, and a principal of the SecDev Group, a Canadian cybersecurity firm. Jeremy McDermott is co-director of InSight Crime, which researches organized crime in the Americas.

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