PERSPECTIVE ON THE DRUG TRADE : Overstating a Cocaine Bust : There never were any ‘cartels’ with a lock on Colombia; entrepreneurs will take up the slack.

Has the cocaine industry been dealt a knockout blow with the recent roundup of leaders of the Cali syndicate? Probably not, but it’s the “why not?” that is far more interesting.

The international cocaine trade has gone through several metamorphoses in the past two decades, each shaped by the strengths and weakness of prevailing law enforcement strategies. In the 1970s, there were many small players in the cocaine trade--mostly Colombians and a few Bolivians. The business was small-scale, with shipments under 100 kilos usually transported by courier on commercial airlines.

Then characters like Pablo Escobar and his cronies capitalized on new bulk transportation techniques and nabbed a large share of the market. They also grabbed the attention of authorities. As soon as law enforcement picked off each of the big Medellin traffickers, the toughest competition was eliminated and new groups expanded their market share. These groups, Cali in particular, developed new structures and strategies and altered their transportation routes to elude police detection.

As a consequence of these changes, wholesale prices for powder cocaine plummeted by as much as 76% in the 1980s as supply bottlenecks cleared up. Cocaine flooded the market faster than demand. Although nominal prices in the past several years have remained somewhat steady, real prices, corrected for inflation, have continued to fall.

All of this points to one of the many perpetuated fallacies about Latin American cocaine trafficking organizations--that they are “cartels.” Whether based in Medellin, Cali or elsewhere in Colombia or in Peru, Bolivia or Mexico, these organizations are not cartels and never have been. A “cartel” is a small group of producers controlling a significant market share and limiting supply to maintain prices. The term was originally used by the Drug Enforcement Administration 13 years ago when it decoded strange markings on seized kilos and traced them to a handful of traffickers in Medellin. The DEA suspected collusion because each seized shipment contained coded kilos from different traffickers. This suggested a cartel-like organization, with each participant assigned a quota.

Instead, the traffickers used this shipping technique merely as an insurance policy. Better to lose only a few kilos among many than to suffer individually the loss of many hundreds of kilos in the event of a seizure. But the “cartel” label stuck. Only now are the media catching on, tentatively groping for alternative descriptions such as “syndicate,” “consortium,” “drug mob” or “drug mafia.”

Far from being monopolistic, the cocaine trade is relatively competitive, with many smaller players entering the industry in recent years. There are now numerous cocaine marketing organizations, based not only in Colombia, but also in countries such as Venezuela and Mexico, that are engaged in the transportation, storage and distribution of goods bound for the North American market. So it is precisely the absence of a cartel and the competitiveness of the cocaine market that make it so difficult to dent. The short-term vacuum created by the arrest of the Cali traffickers will soon be filled by others.

The most common reaction to this explanation is that suppliers are flourishing because of our inability to control demand in the United States. While it is true that the market is shaped by demand, much of that demand is generated by street-level suppliers, with their free samples and surreptitious advertising. There are also other long-term consumer trends resulting from changes in price, the availability of substitute drugs, street-level enforcement and other considerations.

Although casual cocaine use is considerably lower than it was 10 years ago, addicted use of cocaine and crack is still a problem. Some users have moved from cocaine to cocaine/heroin mixtures to heroin exclusively. In fact, heroin use in the United States is climbing at an alarming rate. Can we expect from these trends that the cocaine industry profits might eventually shrink? Not exactly. Entrepreneurial traffickers have been forming partnerships with Sicilian and Russian criminal organizations, among others, to expand cocaine sales in Europe.

Still, the capture of most of the high-level Cali cocaine traffickers is an important victory. Such successful operations provide an enormous psychological victory for intrepid crime fighters who, like the rest of us, need a boost every now and then in this seemingly endless war.