COVID-19 and the Illicit Drug Trade

The disruptive impact of the COVID-19 pandemic on the global economy is without precedent in the modern age. The severity and rapid spread of the virus forced all countries to adopt strong defensive measures, as the focus shifted heavily to saving lives. As such, over the last six weeks much of the world’s population has been living under some form of stay-at-home order or state of emergency, in the more extreme cases. Against this backdrop, the demand for most goods and services plummeted, while unemployment mushroomed, breaking records in some jurisdictions. Most industries have been affected, but the pain has been particularly acute in the air travel, tourism, entertainment, energy and retail (excluding supermarkets) sectors. In response, policy makers around the world, especially in developed countries, have rolled out extraordinary fiscal and monetary policy initiatives to mitigate the economic impact of the pandemic. For instance, many governments have spent considerable sums on grants to affected businesses and households, while several central banks have substantially reduced benchmark rates (in some case to negative) and have increased financial sector liquidity to boost commercial banks’ lending.

The underworld economy has not been untouched. In fact, the pandemic has proven to be an equal opportunity disruptor, as this has also been a difficult time for many of the purveyors of illicit goods. As it relates to drug traffickers, they too have had to face a fall in sales and have had some trouble with their supply chains.

A major irony of the COVID-19 restrictions is that they simultaneously created the conditions that would slow the drug trade on one hand but drive an increasing number of individuals to use illegal drugs on the other. The massive loss of jobs and the confinement of large sections of the population to their homes imposed a significant emotional and psychological toll on many individuals, causing some to seek solace in illegal recreational drugs. However, with stay-at-home orders in play in many countries, it has been more difficult for illicit drug transactions to be conducted without attracting the attention of the authorities.

Legal trade provides significant opportunities for drug traffickers to disguise their activities. A substantial quantity of illegal drugs is shipped using legitimate trade routes by land, sea and air, many times with the help of corrupt officials. The measures implemented by governments to combat the spread of the virus have negatively affected both domestic and international trade and have decimated the travel industry. With notably less activity on the nations’ streets, airspace, seas and waterways, the movements of criminals have been a little easier for the authorities to identify. The fall-off in trade and travel, seem to have affected the confidence of drug traffickers to some extent and may have caused them to decrease their shipments via these modes. In a May 8th article in the Miami Herald, written by Mitchell Willets, it was revealed that border patrol agents based in El Paso, Texas, are seeing decreased drug seizures. This is happening, even though drug smugglers were more exposed during the period by the 60-70 percent fall in traffic from Mexico. A lot of the illegal drugs that enter the US comes from Mexico. Similarly, a research brief from the United Nations Office on Drugs and Crime (UNODC) indicated that Italy and parts of Central Asia experienced sharp decreases in seizures. Aside from the apparent reduced usage of bona fide trade routes by drug traffickers, with tighter border and other controls, several countries have also reported increased drug interdiction, while some have confirmed large-scale seizures. Recent interceptions of large shipments of opiates in Iran and increased drug interdiction in the UK have been attributed to COVID-19 enhanced security measures.

Against this backdrop, there has been some disruption to supply chains, which have resulted in increased street prices and reduced street purity for certain drugs in some jurisdictions. In some producer countries, the reduced opportunities to conceal drug shipments has resulted in high domestic supply and lower prices. For instance, the UNODC’s report suggested that the fall in the price of cocaine in Peru is indicative of a reduction in trafficking opportunities. In some regions, the production of synthetic drugs has been stymied by reduced shipments of precursor chemicals, which themselves may be produced illegally. In Mexico, there is evidence to suggest that the manufacture of Methamphetamine and Fentanyl has been negatively affected by the fall in supply of chemicals from South-East Asia, with the COVID-19-induced fall in trade. This has also affected the production of amphetamine-type stimulants in Lebanon and Syria.

Admittedly, much of these recent gains by law enforcement may prove to be temporary, as some nations have already begun to relax their virus-related restrictions. In any case, drug traffickers are unlikely to just stand by and allow their revenue to diminish. After all, we are talking about a highly motivated group, known for employing highly creative, innovative and yes, brutal tactics to not only get their product sold, but to also escape the gaze of the authorities. In addition to developing expansive underground tunnel networks and building purpose-built vehicles, boats and submarines etc., traffickers are also making use of technology. Drug cartels already use drones to smuggle drugs into prisons and other places; to protect their territory against the encroachment of rivals and to look out for police raids. It is therefore reasonable to expect that they would be looking for ways to protect their income in the current environment. This is likely to include looking for new routes and relying more heavily on technology, to name two. Alternatively, practitioners of the illegal drug trade may try to take advantage of the opportunities created by the pandemic. According to the UNODC, there are reports of members of the organized crime community in Balkans moving away from their regular drug trafficking activities to emerging crime linked to COVID-19, such as trafficking in counterfeit medicines. It should also be noted that it has not been all negative for the illicit drug industry. In several countries, where governments’ fiscal resources are strained, implementing programmes to combat COVID-19 meant that resources, including law enforcement personnel would have had to be diverted from elsewhere. This could provide opportunities for drug traffickers to regain lost ground or to establish stronger footholds in communities.

Shrewdly, some criminal groups have used the pandemic to enlarge their influence over the local populations and governments (building political capital), by distributing handouts to citizens. While this may be surprising to some, those familiar with the modus operandi of organised criminal gangs would know that this has been one of their tactics for decades. Such generosity is generally good for business, since it elevates key figures in these organisations to hero status in the minds of many people and helps to reduce the chances of them being prosecuted for their criminal acts. The advent of COVID-19 just provides the latest opportunity. For instance, in Mexico, Italy and Brazil organized crime groups have been providing aid in the form of food, hand sanitizers and cash even offering a delivery service in some cases. In addition, criminal groups in Mexico, Brazil and El Salvador have also imposed curfews. After all, the quicker things return to normal, the better for business.

When major events such as the COVID-19 pandemic force us to think about the economic prospects of a country or the world, not many people would immediately think of how such phenomena affect the criminal underground economy. However, we can rest assured that the participants in the sector and the authorities are ever mindful of the impact and the responses to various events. They know for example, that it is important for organized criminal groups to build political capital and this in part accounts for their resilience. They also know that in times of drastically reduced trade flows the operations of drug traffickers could be exposed. However, times of economic hardship do present some opportunities for drug traffickers, because in these conditions the demand for recreational drugs tends to increase and, in some jurisdictions, tight government resources could hamper interdictions efforts. In this regard, traffickers may be salivating over their expected gains in the months and years ahead, knowing that COVID-19 is likely to have a lasting economic impact on most countries.