Latin America’s drug gangs have had a good pandemic

T HE EVENT had all the trappings of a new-year celebration. Fireworks lit up the sky. Young men danced arm-in-arm, singing, waving flags and blasting music. Only it was not an end-of-year party, but an evening in July. The fireworks were accompanied by rounds of gunshots. And the revellers in Santiago, the capital of Chile, were mourning a young man with alleged ties to drug traffickers during what was supposed to be a national lockdown.

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Chile has long been considered one of Latin America’s safest countries. Yet between May 2019 and December 2020 criminal gangs held nearly 800 so-called narcofunerales, according to the country’s chief of national police. Normally such grandiose affairs are associated with Mexican drug lords, but they have become ever more popular in a place which is becoming ever more violent (prison murders in Chile reached a four-year high of at least 61 in 2020). It is just one sign that gangs are gaining clout across Latin America.

In some ways this is surprising. Covid-19 hit Latin America hard. Many people expected it to hurt drug traffickers, too. They were already under pressure, thanks to the legalisation of marijuana in many places and the incarceration of various kingpins in the United States and elsewhere. When covid stopped young people from clubbing, demand for party drugs like cocaine and ecstasy was expected to fall. As the global shutdown affected the supply of everyday goods, many observers thought it might make it harder for gangs to lay hands on the raw materials to make drugs, or to ship their wares across borders.

Instead the pandemic has confirmed that the drug business is resilient and adaptable. Although supply chains were initially affected, many have bounced back. Gangs have exploited the chaos of covid to attract fresh recruits, luring out-of-school children in Colombia to pick coca and hiring young “cyber-mules” to move profits around in cryptocurrencies. They have also branched out into other crimes.

As the industry has changed, so too has the policy of the United States towards it. For half a century American administrations have tried, without success, to stem the flow of drugs. Now President Joe Biden’s policy appears to prioritise stemming the flow of drug money. On December 15th he signed two executive orders: one creating a national council to fight transnational organised crime and another imposing sanctions on 24 groups involved in the drug trade. How much difference this will make remains to be seen.

The crystal shipping route

The profits from selling illegal drugs are so vast that dreaming up creative ways around the law is just a cost of business. Prohibition has so far proven ineffective at every step in the supply chain. In Colombia, which produces over 60% of the world’s cocaine, the army eradicated record amounts of coca in 2020 by hand. But coca-growers simply planted new bushes. So despite the eradication campaign and early disruptions caused by covid, cocaine production reached record highs (see chart).

Similarly in Peru, the world’s second-biggest producer, coca-leaf prices, at $1.40 a kilo, are half of what they were two years ago. Yet it remains more profitable than other crops, says Marianne Zavala of the national group of coca growers. (A small legal market exists there for coca leaf.) Gangs, used to shipping their wares covertly across borders, responded to national lockdowns more innovatively than most. Mexican ones dug tunnels and flew drones across the border to keep supplying cocaine and other drugs to the United States, says Irene Mia at the International Institute for Strategic Studies, a think-tank in London. (Ms Mia formerly worked for The Economist’s sister company.) Others were more brazen: in September 2021 one Brazilian gang stole three planes from an airport, including one belonging to Almir Sater, a country singer. The First Capital Command, a Brazilian criminal network founded by prisoners in the 1990s which tops Mr Biden’s list of groups to be sanctioned, relied upon corrupt highway and port officials to keep business going, says Marcos Alan Ferreira at the Federal University of Paraíba, in João Pessoa.

Move that dope

As roads closed and commercial flights were cancelled, traffickers increased the proportion of drugs they moved by river, lake and sea. Like other businesses, they were frustrated by lengthy shipping delays and soaring shipping costs; even before the pandemic, Brazil and Colombia had some of the highest costs in the world. So many increased the size of their cargo in shipping containers. This has led, in turn, to record hauls of cocaine being seized. Others hired yachts and submarines.

The pandemic also sped up existing trends. According to the US Drug Enforcement Administration criminal groups now mostly deal with customers through social media or messenger apps, rather than using the dark web (although such markets are still worth around $315m annually). Digitisation has increased in other areas. Cryptocurrencies such as Bitcoin, which is now legal tender in El Salvador, make it easier to launder money.

For years gangs have been moving into newer synthetic highs, such as methamphetamines and fentanyl, and more potent pot strains. This trend appears to have accelerated. According to figures released by Mexico’s defence department in December, 3,500kg of fentanyl, a synthetic opioid, were seized between 2019-20, compared with 560kg between 2016-18.

In November the US attorney’s office announced that the largest haul of the past two years of meth and fentanyl had been found in a truck near San Diego. Fentanyl is more potent than heroin; tens of thousands of Americans die each year from overdoses of it.

Just as legitimate companies are contemplating more post-pandemic “reshoring”, so too can gangs make these drugs nearer to home, says Scott Stewart, a security analyst. Mexican gangs increasingly produce what they used to import from Europe, sourcing raw materials from China. In 2020 Brazil’s First Capital Command used 38 medical and dental clinics as fronts to procure chemical precursors, one police investigation found. During a pandemic, it hardly looks suspicious for such places to be stocking up.

In addition to diversifying the drugs they sell, traffickers are expanding into other industries. Some steal cars or fuel from pipelines, or money from banks. It helps when police are staying at home to avoid catching covid.

Once a gang has established a monopoly of violence on its turf, it can control or demand a cut from all the illegal activity that takes place on it. It can also extort money from legal businesses. Mexican gangs do all this, and also prey on the migrants who flee illegally from Central America to the United States. They are reckoned to make up to $5bn per year from helping migrants across borders, often robbing them en route. Covid has prompted governments to close some borders almost entirely. This creates an opportunity for gangs, who charge high fees to smuggle people and goods, for example between Venezuela and Colombia.

The criminal groups that have done best out of the pandemic are those with strong international networks. Mexican gangs, some of which had been using the Chilean port of Valparaíso to ship drugs before the pandemic, were well-placed to increase activities there during it. But the nature of such partnerships is changing. Criminal networks are relying less on the rigid control of traditional Colombian and Mexican kingpins. To use management jargon, they are decentralising. The First Capital Command outsources “contract work” to Paraguayan subsidiaries.

Such regional expansion has increased violence across the Americas. Mexican gangs have stirred up trouble in central Chile to distract attention from their activities in the ports. Turf wars between rival groups in Mexico or between Brazilian gangs for access to trafficking routes and natural resources in the Amazon are flaring up. In Tulum, a Mexican beach resort, there have been three gang battles in the past three months, including one in which two tourists were killed in the crossfire.

Pockets of violence can be found across the region. Amambay, a Paraguayan department on the drug route controlled by the First Capital Command, has just 2.4% of the country’s population, but in 2020 accounted for nearly a third of its murders.

In Ecuador President Guillermo Lasso declared a state of emergency in October 2021 to combat drug violence, following a prison riot which killed 119 inmates. The beheading of six people during the riots, and a nationwide surge in street crime alongside the killings, were taken as evidence that two Mexican gangs, Sinaloa and Jalisco New Generation, were fighting a proxy war to control supply chains. Such extreme violence is rare outside Mexico. But Christian Zurita, a local reporter, thinks it is more likely that the brutality represents a domestic struggle for market share, caused by the splintering of Ecuador’s biggest gang, Los Choneros.

When polled, most Chileans now say that fighting drug-trafficking is the most important national-security issue, above covid and climate change. Such concerns pushed José Antonio Kast, a hard-right candidate who had promised to ban narcofunerales, into Chile’s presidential run-off; a contest he lost on December 19th.

These fears can be found across the region. According to a recent report from Gallup, a pollster, people in Latin America are, with those in sub-Saharan Africa, the least likely to feel secure in their neighbourhoods, as measured by trust in the police and feeling safe walking home.

The needle and the damage done

Most businesses have been forced to adapt to the strange pandemic world: whether by grappling with the mute button on Zoom or dealing with shortages of basic goods. Similarly, covid forced the First Capital Command to become more sophisticated, thinks Ryan Berg of the Centre for Strategic and International Studies, a think-tank in Washington. The group expanded into legitimate areas—making hand sanitiser, for example—and found new ways to launder money. Other gangs are likely to expand into legal industries, thinks Ms Mia.

But drugs remain the easiest source of profits for gangs, and will be so long as they remain illegal. The pandemic appears not to have curbed demand for most highs. Nor have lockdowns prevented suppliers from satisfying the ravenous demand for them. Whatever global calamities buffet drug gangs, the rewards of their trade give them a powerful spur to adapt. ■