THE CARIBBEAN NARCO-ECONOMY

A third wave of globalization, following centuries of sugar monoculture and
the postwar growth of island tourism, is washing across the Caribbean. It
is the spreading global narco-economy, and it threatens the political and
economic stability of the archipelago.

United States efforts in recent years to staunch the flow of Colombian
drugs across the Mexican border have deflected trafficking eastward across
the island chain from Bahamas to Aruba. Roughly a third of all cocaine and
heroin consumed in the US crisscrosses the area, and money-laundering drug
profits have infested several of the region's offshore financial centers.
The Caribbean narco-economy has been nourished by several factors:
strategic location between southern producers and northern consumers, vast
unguarded coastlines and inaccessible mountainous interiors, a
long-standing trade network, plus the anonymity afforded by hordes of tourists.

The common route is from the north coast of Colombia to remote Bahamian
islands, where air-dropped drugs are loaded onto high-speed boats for a
final run to the US mainland. More recently, the eastern Caribbean has
provided another corridor for stockpiling contraband for later transit by
sea or air to the US Virgin Islands and Puerto Rico. There they are
repackaged as domestic freight and transported north by cargo or courier
via busy airports with perfunctory customs checks.

Traffickers have displayed a remarkable resilience and ingenuity in keeping
one step ahead of detection. Sophisticated satellite-positioning systems
and the latest communication technology are often used to coordinate drops
in the least policed waters. To elude US radar, they now use "stealth
boats" made entirely from wood and fiberglass, as well as semi-submersible
vessels.

During the past two decades the region's economy has been shocked by
destructive hurricanes, declining sugar exports, the loss of textile
investment and employment to Mexico via NAFTA, and the loss of banana
export preferences.

In addition, since the demise of communism, the diplomatic downgrading of
the Caribbean (the Cuban threat in particular) has resulted in an 80
percent cut in US aid. Some scholars also argue that the IMF and World Bank
structural adjustment policies mandated for the larger debt-burdened
countries such as Jamaica have resulted in declining living standards and
social expenditure, especially in urban areas where the drug trade
flourishes among an underclass of poor and unemployed youths.

Such ghetto subcultures are springing up across the islands, led by
organized posses that surfaced in Jamaica in the 1970s. They originated as
local ganja gangs but were also supported by political factionalism, as
rival political parties began arming ghetto youth. By the 1980s these
posses had graduated to exporting marijuana to the US. Today, in
cooperation with Colombian cartels, they control much of the island cocaine
traffic.

Evidence of the spreading narco-economy is mounting. Island police report
sharp increases in property-related crimes. Most serious crimes are
drug-related, involving violence and firearms and increasingly marginalized
young addicts. Police note the rising prominence of home-grown posses in
organized crime (trafficking, arms smuggling, money-laundering,
prostitution) and the increasing menace of thousands of returning felons
deported from the US, who are sophisticated drug and gun traffickers with
substantial stateside narcotics experience.

Further evidence is the alarming rise in citizen gun purchases, the spread
of private security agencies and high-tech alarm systems, and the
proliferation of guard dogs, high-wire fencing, and grilled windows. Few
segments of island life have gone untouched. They include: growing
addiction; active complicity by local police, customs, shipping officials,
and airline workers; collusion among top law-enforcement and elected
officials in at least 10 countries; and overflowing prisons and clogged
courts due to drug-related offenders.

The economic impact is heavy. The value of drugs in transit dwarfs the
gross domestic products and government budgets even of the larger islands.
And it involves the steady payroll to various pilots, boat captains,
baggage handlers, couriers, pushers, enforcers and public officials. Like
an economic narcotic, this cash infusion sustains many local livelihoods
and businesses.

In the long run, the large-scale scope of the traffic and associated
money-laundering tarnish the investment climate, reduce the credibility of
government through creeping corruption, and weaken respect for law and
honest work among youths.

There must be more innovative efforts to reduce the demand for these drugs
in the north. Joint US efforts with Caribbean and Latin American
governments to reduce supply in the south should include eradication and
crop substitution, enhanced airport and border security and surveillance,
and relaxation of bank secrecy codes. The insular narco-economy otherwise
will continue to flourish and threaten the future of tourism and offshore
finance - the two pillars of many small island economies.