Globalization and the narcotics trade
By Eduardo Porter

Thursday, August 2, 2007
For all its global reach, there is something antiquated about the drug trade. The story of a bag of cocaine peddled in an American suburb, for instance, often begins in the Andes, where Quechua and Aymara Indians have harvested coca for centuries.

Cooked in nearby labs and transported through Mexico into the United States by Mexican cartels, cocaine's path to market is not unlike that of a shirt - a straightforward chain from raw material in the third world to finished product in the first.

Chemistry, and globalization, are changing this dynamic, however. The unusual case of Zhenli Ye Gon, who was arrested in Maryland last week following the discovery of $205 million of alleged drug money in his house in Mexico City, underscores how the same process of global sourcing that ripped apart the integrated industries of the 20th century, replacing them with networks of production scattered around the globe, is reconfiguring the drug trade, too.

Ye Gon, who was born in Shanghai, migrated to Mexico in 1990 and became a Mexican citizen five years ago, is accused of illegally importing into Mexico tons of pseudoephedrine and other chemicals from China and other countries to supply methamphetamine labs run by Mexican drug cartels in Mexico and American border states.

The new Mexican-made drug has virtually replaced American homegrown meth, which used to be made by small producers that often sourced their pseudoephedrine at the local pharmacy. Seizures of imported meth along the southwest border increased from 2,706 pounds in 2003 to 4,346 pounds in 2005. The number of methamphetamine labs seized in the United States plummeted from 10,212 to 5,846 over the same period.

This shift of the meth supply is changing the American market for illegal substances. The National Drug Intelligence Center reports that nearly 40 percent of state and local law enforcement officials nationwide say meth now represents the greatest drug threat to their areas.

Stopping large-scale traffickers who can source raw materials anywhere around the globe will make interdiction much more difficult for law enforcement. Mexico has seen a surge in illegal imports of pseudoephedrine from China and Germany. According to officials from the U.S. Drug Enforcement Agency, India is another source. These shipments are not easy to track. Mexican officials noted that many of Ye Gon's pseudoephedrine shipments to Mexico passed unnoticed through U.S. ports with fake documents.

This pattern of global sourcing also points to big changes in the economics of Mexican crime. Following Ye Gon's arrest, the head of Colombia's national police warned that Mexico and Colombia would have to prepare to do battle against Chinese and Russian organized crime.

Ye Gon is the first Chinese-born to be charged of drug trafficking in Mexico in at least a decade, according to Mexican news media reports. But the irruption of Ye Gon into Mexican drug trafficking is also emblematic of much broader changes as Mexico adapts to China's emergence in the global economy.

For at least a century, successive Mexican governments have been wary of China. Chinese immigration to northern Mexico in the earlier part of the last century was often met with violence. In 1911, troops loyal to General Francisco Villa massacred 250 Chinese in Torreon. In 1921, president Alvaro Obregon passed a law barring future immigration of Chinese workers. In 1931, thousands of Chinese were expelled from the country. Until recently, Mexico's economic ties to China were tenuous, at best. A decade ago, Mexico imported merely $1 billion worth of Chinese products.

Yet the bilateral links have grown. Last year, Mexico imported $24.4 billion in Chinese goods. Fears of competition from China, and its enormous and inexpensive labor force, have grown apace. Reports in recent years that some of the maquiladora plants along Mexico's northern border have decamped to China have sent Mexicans into paroxysms of economic anxiety.

The saga of Ye Gon suggests that this rivalry is now extending into the most insatiable consumer market in the world.

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