The cocaine market is bigger than ever

Key Concepts

• Narco Divers: Specialists who attach cocaine to ship hulls.
• Narco Subs: Submersible vessels capable of transporting large quantities of cocaine.
• Narcochemists: Experts who chemically mask cocaine to evade detection.
• Apple Air Tags: Technology used for tracking cocaine shipments.
• Stablecoins: Cryptocurrencies used for laundering drug profits due to their borderless transfer capabilities.
• Decentralization: The shift from centralized drug empires to a network of subcontractors.
• Ecuador's Homicide Rate: A consequence of increased cocaine trafficking.
• Global Cocaine Market: Europe's emergence as a highly valuable market, with significant price premiums in Asia and Australia.

Cocaine Industry: Expansion and Evolving Tactics

The cocaine industry is experiencing unprecedented growth, with production more than tripling since 2014 and consumption reaching record highs. This expansion is characterized by a significant shift from centralized, hierarchical structures to a complex, decentralized network of subcontractors and specialists. This evolution makes the industry more resilient and harder to disrupt.

Specialized Roles in the Cocaine Trade

The modern cocaine trade relies on a diverse range of specialized skills:

• Narco Divers: These experts are employed to attach cocaine directly to the hulls of ships. This method bypasses the more heavily monitored containers on board. An example of this tactic was observed when Spanish police retrieved 22 kilograms of cocaine from a vessel in Las Palmas.
• Narco Sub Construction: The creation of "narco subs," semi-submersible vessels, represents another specialized area. These subs are capable of transporting substantial amounts of cocaine, with some able to carry up to 8 tons. In the past year, approximately 25 narco subs were seized, indicating that hundreds likely remain in operation.
• Narcochemists: This is a growing specialization. Narcochemists possess the expertise to chemically mask cocaine, rendering it undetectable by standard spot tests at ports. Once the shipment reaches its destination, the cocaine is chemically extracted back to its original form. This method has been used to conceal drugs within items such as passion fruit pulp.

Technology and Trust in the Criminal Network

The subcontracting nature of the modern cocaine industry necessitates a high degree of trust among participants. In legitimate commerce, laws and courts provide a framework for resolving disputes and ensuring reliability. However, within the criminal underworld, technology is increasingly employed to address these trust issues:

• Apple Air Tags: These devices are embedded in cocaine bricks, allowing both buyers and sellers to track the progress of their shipments via their mobile phones.
• Stablecoins: For laundering profits, stablecoins have become a popular choice. Unlike traditional cash, stablecoins can be transferred across borders from one digital wallet to another with minimal oversight or checks, facilitating illicit financial flows.

The Role of Violence and its Economic Drivers

Violence remains a critical tool for maintaining order and enforcing contracts within the cocaine trade. The risk of severe repercussions, including torture and public murders, deters theft of merchandise, even from subcontractors. The transcript highlights Ecuador as a case study, where the shift of cocaine trafficking through its ports has led to one of the world's highest homicide rates. This economic model suggests that such violence could potentially spread globally as drug trafficking routes evolve.

Shifting Market Dynamics and Profitability

Historically, the United States was the primary focus for cocaine traffickers. However, the increasing popularity of fentanyl and other drugs in the US has led to a redirection of cocaine trafficking towards Europe, which has now become the world's most valuable cocaine market.

• Wholesale Prices:
  • America: Approximately $30,000 per kilogram.
  • Europe: Between $39,000 and $45,000 per kilogram.
• Emerging Lucrative Markets: Even more profitable markets are developing in Asia and Australia:
  • Hong Kong: $65,000 per kilogram.
  • Australia: Up to $250,000 per kilogram.

This significant price premium in Asian and Australian markets indicates an expected rapid increase in new trafficking routes to these regions.

Resilience of the Decentralized Model

The decentralized structure of the contemporary cocaine industry makes it exceptionally resilient. When a shipment is intercepted, tracing the ultimate owners is exceedingly difficult. Consequently, actions like bombing drug boats are unlikely to have any lasting impact on the overall supply of drugs. The transcript concludes with the assertion that the cocaine business is likely to become increasingly prevalent and accessible, potentially arriving "at a port near you."