In countries where drugs are produced, border closures and the subsequent difficulties in international transportation have made local markets saturated with unmarketable substances.
by Ahmed J. Saade -Source: Annahar
The pandemic has disrupted global supply chains, including that of illicit drugs. Great news isn’t it? Probably not.
Let us first understand how different drugs are trafficked across continents. Cocaine is mostly smuggled by sea, Heroin by land, and Meth by air. Closed borders and airports have clearly disturbed Heroin and Meth traffic, as evidenced by the decrease in border seizures and the reported shortage of these substances at the street level (UNODC). Cocaine, however, did not experience a supply dip of that size, as captures in European ports remain important. But why does it matter?
On the demand level, the difficulties in supply are translating into an increase in price. For the average drug user who can no longer afford to buy the substance and is unwilling to be treated, two options are at hand: Either engaging in socially destructive behavior, such as theft, to secure the necessary sum of money, or simply switch to a cheaper/less pure form of substance. Indeed, previous drug droughts have coincided with a reduced purity of Heroin, further escalating fatalities (SSA). Other more affordable substances, like benzodiazepines or fentanyl, are much more lethal and their use is on the rise. In fact, as per a recent official report, the number of drug-related deaths in the UK is at a record high. Another danger caused by the pandemic is the increasing number of intravenous users who are sharing their injection equipment, signaling a spread in HIV, Hepatitis C, and other diseases (UNODC).
In countries where drugs are produced, border closures and the subsequent difficulties in international transportation have made local markets saturated with unmarketable substances. This has led to a decrease in price at the local level, causing further misery in already poor countries. The international decrease in demand, however, will not make cultivation less attractive: with economic conditions at their worst, poverty on the rise and security forces busy with other priorities, many farmers are expected to switch to cultivating those crops that are used for drug production, such as the coca bush in South America. Indeed, trade of the legal produce they cultivate is also suffering from the crisis, hence the shift to a more lucrative alternative. This is bad news for the long term, as it signals an increase in international supply once borders open.
On the dealership level, we can expect a dangerous restructuring of the illicit drug market. Natural selection is already underway, as the strongest and best-established traffickers are forecasted to gain market share by virtue of their logistical and structural superiority. Their unrivaled capabilities will put smaller competitors out of business, which will further increase their dominance in the years to come. Authorities should thus anticipate a new golden age for international cartels and, much as in any kind of restrictive industries, a stabilization of retail-prices at a dangerously high level.
The pandemic-induced transformation of the illicit-drug market is difficult if not impossible to predict. What remains certain, however, is the challenge that comes ahead for our governments and populations.
Ahmed J. Saade is a Doctoral Researcher in Labour Markets and Macroeconomic Policy at Cranfield University. The Economics Group he belongs to is consistently ranked among the best in the world.