THE ILLEGAL DRUG TRADE IS ACTUALLY OBEYING THE LAW -- OF SUPPLY AND DEMAND

The Bush Administration Should Shift Its Focus Away From The Source
Countries And Toward Cutting Domestic Use.

The illegal drug trade may be the only free market left in the world. It
operates without tariffs, taxes or unions. It is the classic economic
model: low production costs; dependable avenues of distribution; a price
structure dictated solely by supply and demand; and, with more
sophisticated methods of money laundering, a way of getting huge returns
quickly.

But drug trafficking is contrary to U.S. laws and policy. And drugs are a
dagger to the heart of civilized society. Yet U.S. policy has done nothing
to deal with the core of the problem -- curtailing demand. At the same
time, the United States has spent much and accomplished precious little
when it comes to eradicating the supply.

Washington's counter-narcotics policy has since the 1990s focused almost
exclusively on supply-side interdiction of South American drug sources,
which account for most of the cocaine and heroin in the U.S. The bilateral
strategy, authorized by Congress in 1999, is a $1.3-billion aid package
known as Plan Colombia, the primary feature of which is spraying land where
the coca and opium poppies grow.

The plan was so named because drug traffic in the 1990s was directed by
Colombia's infamous Medellin and Cali drug cartels. The effort ended those
cartels, but the drug dealers soon reemerged with mini-cartels and
paramilitaries operating out of Colombia and other countries in the region.

Plan Colombia has been a wrongheaded failure. It has done nothing but
exacerbate the central problem of Latin America -- lack of per capita
economic growth. It has only hurt the impoverished rural farmers who grow
coca or poppies along with legitimate crops as the only means to support
their families.

The cartels of narco-terrorists, large and small, continue to reap the
spoils of the drug harvest. Hardly a drug kingpin has been killed or
captured under Plan Colombia since Pablo Escobar in 1993. Most of those at
the highest echelons of the drug trade live luxuriously with impunity.

The evidence on exfoliation, moreover, is less than convincing. The Bush
administration released new figures last month showing that coca
cultivation in 2003 in Colombia and Peru was less than in 2002. But roiled
by decades-long civil conflict, Colombia is virtually a failed state, and
it is highly unlikely that it can hold the line next year on narcotics
production. And in Bolivia, cultivation increased by almost 20%.

So, though U.S. counter-narcotics policies have been superficially
effective on a country-by-country basis, they have failed to stem the tide
in the region overall where acreage cultivated has remained the same over
the last four years.

The government has lost sight of the "D word" -- demand. Secretary of
Defense Donald Rumsfeld paid lip service to the concept when he said in
August as he was leaving for Colombia: It's "a demand problem. It's a
problem that a lot of people who want it; a lot of people with money who
will pay for it=85. And that you can squeeze it down in one country to zero
and you don't change at all the amount of the product that ends up in =85
the United States because it's demand that determines how much is going to
get in there."

However, although the administration claims that 45% of its counter-drug
funding goes toward reducing demand, there is still no comprehensive
government-sponsored public awareness and prevention campaign, no
discernible improvement in access to effective treatment and rehabilitation
programs and no ratcheting up of community law enforcement.

So what is the way forward? First, stop the fumigation program and make
supply-side interdiction efforts more effective by focusing directly on the
narco-terrorists -- degrade their operations and drain the swamp of
laundered funds on which they subsist. Then the U.S. needs to spur domestic
rehabilitation programs.

A Rand study in the 1990s found that, in a single year, $34 million
invested in treatment reduced cocaine use as much as the $783 million spent
for programs targeting the source in foreign countries or the $366 million
for interdiction. Yet today, the Bush administration still spends most of
its annual global drug-control budget on supply-control efforts.

Instead, the focus should be on the demand side. Target the major dealers
and distributors rather than the street pushers. Fund enhanced domestic
media and community campaigns. If the word on the street is that it is cool
to do drugs, the word in the schools and on television must be that drugs
ruin lives and destroy families.

As for Latin America, we can redeploy at least some of the Plan Colombia
funding into economic development, land reform, strengthening the rule of
law and other effective programs geared to improving political stability in
the region.

The rule of free markets is that where there is demand, supply will find a
way to it. Shift U.S. priorities to stemming demand.

James D. Zirin, a partner in a New York law firm, is a member of the
Council on Foreign Relations.