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Monday, September 23, 2013

Drug cartels: A billion dollar industry

By Gloria Moore

In a world where every industry’s economy seems to be suffering, there is one industry that continues to thrive under the radar and that’s the world of illegal drugs, specifically, cocaine. Right now, the cocaine industry alone is worth billions and billions of dollars. It is a money-maker like no other industry. Why, is something so illegal so profitable? Let’s look at this case a little more closely.

Drug cartels, an illicit cartel formed to control the production and distribution of narcotic drugs, are all over the world. The largest and most successful of them reside mainly in Latin and South America. The Sinaloa cartel is known as the most powerful and dangerous cartel in the world. The hit man for the cartel was recently captured. He alone, is responsible for over 350 murders relating to the cartel. The head of this cartel is known as “El Chapo” Guzman. Glorified like the bank-robbers in the Wild West, “El Chapo” has become a myth and a legend in the Western Hemisphere. Let’s take a look at the break down of profit for this cartel alone.

The Sinaloa cartel purchases cocaine (in kilos) from Peru or Columbia for about $2,000. As it goes through the steps, it gains value. In Mexico alone, the cocaine is worth around $10,000. The U.S. will maximize profit, over $30,000 wholesale. Let’s say the kilo is broken into gram-sized amounts, it can be worth over $100,000. The Sinaloa cartel exports a lot more than cocaine, producing and exporting heroin, methamphetamine and marijuana.

The Justice Department approximates that Columbian and Mexican cartels make $18 – 39 billion in profit from drug sales to the U.S. annually. Taking the lowest of those numbers, the Sinaloa cartel alone is a major player in this market, sharing at least 40% of that total revenue (and as much as 60%). By those numbers, El Chapo is earning an annual revenue of over $3 billion at the lowest. To show you just how large that is, U.S. companies such as Netflix and Facebook have similar earnings.

Since 2006, the drug war in Mexico alone has taken over 50,000 lives. Through the bloodiness of this industry, a complex and very integrated business model is revealed. More than a dozen countries are involved in this industry. The scary part is, cartels aren’t just surviving through the tough economic times, but are actually thriving. Despite the violence surrounding the industry, the cartels now control even more territory along the U.S. borders than they ever did in the past.

“El Chapo” has become a figure of recognition similar to that of the godfather. He is completely focused in his business and an entrepreneur like no other. He operates his multi-billion dollar business from a remote location in the mountains of Columbia or Mexico. It can be argued that this is the most sophisticated business in today’s economy due to the fact that it must all need to be done in secret. When looking at it from an economic perspective, its profitability, longevity and future projections may make it the most successful crime business in the economy today.

Sinaloa is a refuge of violent man in Mexico, isolated as Sicily is to Italy. It is home to the country’s most violent and notorious drug traffickers. Once the U.S. caught on to the traffickers’ Caribbean route, they had to switch their business model to focus on the Mexican route. This was the beginning of El Chapo’s reign of success in the drug cartel business.

The Colombians paid Mexican smugglers in cocaine instead of cash. This transition realigned the power dynamics along the narcotics supply chain in the Americas. Mexican smugglers were no longer then middlemen but the actual head of the operation, due to their ability to produce and sell the product from start to finish. This had only made the Sinaloa cartel, and El Chapo stronger and more successful.

The drug trafficking business has only gained momentum in recent years and continues to thrive in a world where law enforcement still can’t control it.

About the author: Gloria Moore is a rehab writer with a passion for holistic therapy and healing.