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You are here: Opinion Gustavo Silva The price of Colombia's drug war

The price of Colombia's drug war

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What is the price-tag of Colombia’s drug war? I started writing my senior thesis at Princeton with that question in mind. Every knowledgeable observer of Colombia is aware that the country’s fight against drugs has been costly in terms of human lives, resources, and lost productivity. Too many people have died in the violence that surrounds the world of cocaine, and too much government money has had to be allocated to the defense of the nation. With both drug lords and insurgencies turned narco-terrorists, the Colombian state had no choice but to fight back with determination.

However, imagine for a moment that it hadn’t had to be that way. Imagine a peaceful Colombia, free of cocaine, free of Pablo Escobars, Carlos Castaños and Manuel Marulandas (the beauty of that thought is so painful that it makes me want to stop fantasizing). Imagine, for example, that due to some mystery of fate, Colombia’s soil had proven totally incapable of growing marijuana and coca plants. Or, even better, imagine that the easy-money culture that comes with drug trafficking had never taken hold of the Colombian people. Just for one second, imagine…

Even if you would rather stay in fantasy land (I don’t blame you), we must now come back to reality. And reality is not nice. For decades now, Colombia has been a main battleground of the international war on drugs. The world’s top cocaine producer, Colombia has fought bravely and tirelessly to reduce drug production. There is no other country that has seen more of its citizens die in the battle against cocaine: since 1990 there have been 450,000 homicides in Colombia; in Mexico, another front of the war on drugs but with more than double the number of inhabitants, homicides in that same period amount to 220,000. For sure, cocaine has made Colombia bleed.

But the costs of the drug war go well beyond the number of casualties. The tragedy of the many Colombians who have been internally displaced since the 1980s has no parallel in the Western Hemisphere. Between 2.5 and 4 million people (there is debate over the exact number) have left their hometowns in the search for safety. In the meantime, hundreds of thousands of forest acres have been cut down to grow coca and build camps for the production of cocaine. For every cultivated hectare (2.5 acres) of coca, around three hectares of forest are destroyed – and last year alone the UN found 81,000 hectares of coca inside the country. It will take time for Colombians to realize the depth of the environmental impact that drug production has had on their country.

No doubt, the drug war has had terrible effects on the economy. The by-products of the war, the destruction of infrastructure and physical capital, have made the economy less prosperous, diminishing its prospects of growth. Although the size of the drug economy is not overwhelming (it fell from 4% to 1.6% of GDP between 2000 and 2007), drug lords have enough resources to create bubbles and distort markets significantly. The office of the Comptroller General has called attention to the fact that drug traffickers have bought large expanses of land in rural areas, thus increasing inequality indexes and often contributing to the displacement of peasants. According to those estimates, about one million hectares are thought to be in the hands of drug traffickers and their associates, although other analysts claimed the figure was as high as 5 million hectares. For its adverse effect on inequality, this phenomenon has been characterized as “an agrarian counter-reform.”

All these are social, economic, human and environmental costs of the war against drugs, and the list is far from complete. To these, we must add the added cost that the government’s justified retaliation has on the taxpayers. Not long ago, the Colombian state was weak, its military underfunded and overwhelmed, violence was out of control, and anarchy just around the corner. Without that steep rise in defense spending that the Uribe administration calls by the fancy name of "Democratic Security," Colombia would not have survived. America, much more generous than Europe in these affairs, was willing to lend a hand and pay for at least some of its responsibility for the Colombian drug trade.

So the country survived and improved to a large degree, but that transformation came at a high price. In the past five years, annual defense spending has been equivalent to 5.3% of the economy (between US$11 and 12 billion). In contrast, the average South American country spends the equivalent of 1.7% of GDP on its defense budget. Looking in the books, you will find that between 1988 and 1995 Colombia never spent more than 2.5% of GDP on defense, and the figure in the late 1990s rose to a maximum of 3.3% of the economy.

It is not hard to conclude that if Colombia were the average South American country with no drug war to fight, the government would not need to spend such a large amount of public funds on defense. That means that if Colombia had around 20 (and not its current 36) homicides per 100,000 inhabitants, almost no coca plants to eradicate, no insurgencies, and no cocaine to export, the government could make budget savings amounting to 3.6% of GDP, or about US$9 billion! I bet the government could erase the fiscal deficit with that.

If you want, take that number as a rough indicator of how much the Colombian taxpayers spend in their antidrug effort.  Consider that once you also add all the other costs of the war on cocaine (taking care of the internally displaced, lost production due to violence, market distortions due to money laundering, vanished human and social capital, dead forests, etc.) that number will go up significantly (perhaps to 6 or 7% of the economy?).

As I continue writing my senior thesis, I will explore these issues thoroughly. There is no question that Colombia today is a better place to live than at any other point in the last twenty years. But that privilege is costing us money, and as long as Colombia remains at the center of the war against drugs, the country will keep paying a high price for its security. Few things, though, are expensive if they work, especially if you are talking about protecting life, liberty, and property. So, is there an alternative? Would the country do better if it rejected the prohibition paradigm and embraced legalization?  These are complex questions that escape simple answers. For now, the war goes on. And its cost keep growing.