A RECESSION IN THE DRUG MARKET

WASHINGTON - Here's a recession that's welcome.

The criminal enterprises that sell illegal drugs are seeing less
profit, and some are losing money, according to the U.N. Office on
Drugs and Crime.

Drug abuse is down dramatically in the United States. It is flat
around the world for the third year in a row.

What happened?

The war on drugs has shifted to a public health focus toward users,
and a private business focus toward sellers.

Drug trafficking is a business, with weaknesses that can be exploited
more effectively than waging war with ever-greater firepower against
drug kingpins.

"It may not be the best thing to arrest the most people. It may not be
the best thing to focus brute force on them," said John P. Walters,
director of the White House Office of National Drug Control Policy.
"We're getting better indicators of how their business is working, and
once we know how they are doing business, now can we disrupt that."

"It's new - the most promising thing I've seen in 20 years of this
effort," he said.

Along the border

Mexican drug gangs continue to commit horrific violence along the
border as they seek to hold territory and profits. But much of this
violence is a reaction to the success of strategies designed to
disrupt and collapse weak spots in their business systems, said
Mexican Attorney General Eduardo Medina-Mora Icaza.

"The violence is not a reflection of the strength of these groups.
Quite the opposite," Mr. Medina-Mora said last week.

"It reflects the reduction in their total income. ... They have less
cash, so they are participating in more types of crime. Extortion,
kidnapping."

Local, national and international laws restricting the sale of
chemicals used to manufacture the drugs have proved surprisingly
effective in disrupting the traffic in methamphetamines, or crystal
meth, an illegal stimulant. Local governments were the first to curb
sales of cold medicines containing ephedrine and pseudoephedrine,
followed in 2006 by national legislation.

The drug makers moved manufacturing to Mexico. As of January, however,
Mexico has banned imports of these chemicals.

Pharmaceutical companies in Mexico have until the end of the year to
deplete their remaining supplies.

As a result of these disruptions, the U.S. Drug Enforcement
Administration reports the price of methamphetamines increased 73
percent last year, while average purity has dropped by 31 percent.

Cocaine disruption

Cocaine supply has also been disrupted. Prices on the street jumped 44
percent last year. Drug traffickers sent an estimated 912 metric tons
of cocaine to the U.S. market via Mexico last year, but a third of
that was seized before it reached buyers. The seizure target for the
current year is 40 percent.

Globally, the U.N. Office of Drugs and Crime estimates half of all
cocaine produced is now being intercepted.

Businesslike thinking

Like any business, however, drug traffickers respond to adversity. Mr.
Walters said traffickers now tend to operate in networks, where
different enterprises handle different parts of the business. One
group might take care of the manufacturing, another finances, and
another gun running. If one enterprise is rolled up by law
enforcement, the rest are likely to stay alive.

Mr. Medina-Mora is particularly concerned about the networks running
guns and cash into Mexico from the United States.

More than 12,000 gun dealers do business along the border, primarily
in Arizona and Texas. A Mexican government study estimates as many as
2,000 guns a day enter Mexico from the United States.

The U.S. Justice Department has moved resources into this fight in the
last few months, and Mexican law enforcement now has access to
e-Trace, the U.S. registry of firearms sales.

Weapons count

Mr. Walters wants to know the scope of the problem - how many weapons
are moving across the border - to get a sense of how many weapons
seizures it will take to damage the traffickers.

"If I'm at 2 percent, that's just the cost of doing business. Do I
have to hit them at 30 percent, 40 percent, to take down this
enterprise?" he asked.

Banking regulations limit traffickers' access to the U.S. financial
system, so most of their revenues move in bricks of cash back to
Mexico. The amount is estimated at anywhere between $10 billion and
$20 billion. Not much cash

Not much of this cash is seized, however. Mr. Walters admits, "We've
never had an instance where we forced the collapse of a major segment
of the drug business [because] we've gone after the money."

So there's lots of work left to do. Still, U.S. workplace drug tests
are coming back positive at the lowest rates since 1988, according to
the White House drug policy office. And the U.S. government's measure
of drug abuse among young people is down 24 percent since 2001.

For drug dealers, that's a recession.