DIAMONDS, PORTS, DRUGS

DIAMONDS, PORTS, DRUGS - HUDTERS INTERNATIONAL RURAL...

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Unformatted text preview: HUDTERS INTERNATIONAL RURAL NAMIBIA. , MUNDS AND FISH NG GLOBAL H STORY ore I began this study into the intersections of un/regulated nomies, I had absolutely no interest in seafood, other than to eat it. if you study smuggling and the extra-legal, it seems you can’t get away _ . m running illegal narcotics to fish smuggling. Abalone and its cousins illegally harvested and sold worldwide, but my favorite story is the one ut the Patagonian Toothfish. The Toothfish is an endangered Antarctic sea bass that fetches hun- ds of dollars per kilo in the world’s markets. Because Dr'ssosticlms slayi- ' sis such a mouthful, the fish is sometimes called “white gold” — and s certainly doesn’t refer to its looks. The Toothfish represents the clas— endangered species/expensive markets cycle. A delicacy in Asia and to . me extent North America, it has been fished to dangerously low levels its natural habitats, and to extinction in some sites. As the prices for uggled seafood go up, gangs leave less lucrative work, narcotics for example, to get into the fish trade. Fish don’t usually conjure up images of murder and mayhem, but elanie Gosling, a Cape Town journalist for the Wizekend 11mm who fol- Gosling explained that poached abalone, crayfish, and Patagonian Toothfish are involved in massive international smuggling networks. The gangs that harvest the fish transfer their products to contacts in other countries who work with freight, customs, and transport personnel to move the goods across international borders. These people then work with middlean in the purchasing countries to get the proscribed goods to wholesalers and retailers. Without this complex internationalization, the fish would not be endangered. I continued to encounter fish stories as I researched the extra-legal. Each turned out to be a step in my grow- ing understanding of how local economies, smuggling, profiteering, and globalization shape markets and politics — all the way to the United Nations. lillifiEll FISH John, a South African computer executive, told me the following story. Eight of us were sitting around the dinner table of a leading academic in Johannesburg. John was in his thirties, the product of an urban upbring- ing and an excellent education: cosmopolitan, witty, intelligent. The peo- ple at the table all knew John and his ex-girlfriend, and threw in com- ments as he told his tale. It was funny to everyone there, but not unusual: these stories were the stuff of everyday life. My old girlfriend got involved big—time with fish. Profitable, but none too legal. After we broke up, she met a European in the fishing industry, and moved to Namibia, where he was based. He ran a fleet of trawlers, and packed the fish up to the European markets. He made decent money in the coastal waters of Namibia, but it was too regulated for him. Like so many others from all over the world, he ran his trawlers up into Angolan waters. Because Angola has been at war for so long, the national fishing industry has all but dried up, and until all these trawlers arrived. the waters off the coast were teeming with fish. My old girlfriend’s new guy kept running deals up in Angola, and look— ing for “big” backing. Finally he scored: he partnered up with a general, and somehow managed the sole concession for fishing rights in an impressively large expanse of coastal waters. Because of his partnership, he’s exempt from the normal rules, regulations, taxes, and monitoring. Basically, he is working outside the law with an official OK. That's when things got wild, and I started getting lots of calls from my old girlfriend asking me what she should do. Angola‘s a wild frontier. Her boyfriend was fishing the place out and running all these scams getting the fish packed and sent to Europe. When someone would come into this guy's turf, he’d call the general, and the general would come along and blast the guys out of the water. National security, and all. It’s like something out of the old Wild West movies, and this boyfriend is buying into the whole thing, act- ing like a cowboy warlord. I’m told John’s ex-girlfriend’s boyfriend has been able to retire at a young age with a tidy fortune. And while the world’s key diamond pro- ducers meet time and again to draft legislation controlling the diamond industry, fish smuggling barely gets a line in a local newspaper. fllAMllllllS ARE A flSH‘S llESl Flllfllll Fish don’t tend to travel alone. If there is a shipment of drugs to move out, they can easily travel with fish — as can Marlboros, beer, diamonds, and col-tan, the hot mineral critical to cell phones and Sony PlayStations. It isn’t uncommon to hear of drugs, diamonds, or even priceless art objects being shipped with fish. What, I began to wonder, did trawlers carry on their way to the fishing grounds? Ostensibly, they would be empty — but trawlers kept cropping up in my exploration of the world of extra-legal goods. A leading official at the World Customs Organization headquarters in Brussels, Belgium, oifered some insight. “When the empty trawlers are heading out to the fishing sites, do they carry commodities?" I asked. Sure, why would a good businessperson sail empty half the way? “Are these legal transactions?" Sometimes, he said. ‘ . “Are trawlers expected to call at ports and go through legal monitoring in the countries they work in?" . Of course, and some do. But that’s not really the point. Ships can stop anywhere at sea, meet up with any other ship at sea, exchange just about anything with anyone at sea—and who is there to monitor? They're floating supermarkets. This is huge—and I can't underscore enough the word huge— business. The linkages kept expanding. In Angola, a man explained to me the human side of diamond smuggling. He told me about average poor at- izens caught on the fronttines who had to mine for the military and the concessionaires. Paid a pittance, some were able to pocket a good gem, the promise of some relief in their lives. I asked him how the stones got from the landlocked marketplace in central Angola to the gem dealers in Europe, for example. Well, what comes into town? Food. This food comes in from Portugal. Portugal’s connections are stronger here in this area than in other areas, where trade with South Africa is more developed. This is because of the enduring nature of the old trade routes forged in colonial times and still in place—not because these routes are better or more efficient or smarter or smoother, but because they are in place; habit 80 stones follow this old trade routing, Bi’e—Luanda—PortugaI—Europe. FISH AHII BIIIIIIII. PIIWEII HEEIMES The final piece of the expanding story of fish, politics, and globalization came from a conversation with several senior United Nations economists. I had run into a fascinating conundrum in my research. By UN estimates, Angola’s economy in the late 1990s was 90 percent non-formal. But it was impossible to find out empirically how the non-formal economy worked, or the quality and degree of its impact on the nation as a whole. When I asked for reports, indices, and statistics from the United Nations and the World Bank, only formal data were included — without exception. To me, this very lack of data was a research goldmine. How could an accurate understanding of a country’s economic health — much less viable devel- opment programs — be implemented using only one-tenth of a country’s economic data? It was a question I put to several leading UN economists. People like my friends and myself here will do everything we can to sup- port your work. “But you have excellent people on the ground in your UN offices world- wide. I’ve spoken with them and they would love to do this kind of work." It isn't something we as the UN do. “Why?” I began to add that their on-site economists had better access than I did. It's not how we are set up. It's not what we do. It's not in our mandate. “So, why not change the mandate?" The senior person in the room stopped for a moment to look at me. He took off his glasses and rubbed his head, signaling that the tone of the conversation was about to change. He leaned across the table toward me and opened his palms in a gesture indicating that he was opening up a dif- ficult truth: Look, we at the UN have to follow the mandates set out for us, and as important as studying economies outside the formal sector may be, these issues fall outside the realm of our mandate. Period. He held up his hand to stave off any more questions from me, took a deep breath, and continued: And why? Look where the mandates come from. They come from the leaders forging UN policy. They come from the leading countries in the world. And think about it, think about all that seafood illegally harvested off the coasts of Africa, for example, and sold around the world. Who do you think is doing that harvesting? Who do you think is selling and eating all that seafood? You are talking about a huge international set of businesses. About sig- nificant profits. About food that graces the tables of millions of citizens in scores of major countries. The citizens of the countries forging our man- dates. Multiply these considerations when it comes to the mined resources of Southern Africa. Then extend that equation out to other “non-formal” goods and services worldwide. Then ask yourself why the UN is specifically not given a mandate to study non-formal economies. What if we had a mandate to study this, to publish the linkages between informal markets, non-legal resource profiteering, the respected multina- tional industries of our world‘s powers, and getting affordable food to their citizens’ tables? AVIEW EHIIM THE TIJP: THE ELITE GDHFIIHATE PERSPECTIVE From the Gov’nor’s tomatoes to the flood of illegal weapons, from little Okidi’s Marlboros to the shiny Sonys in bombed-out villages, each com- modity that moves outside formal channels represents profit for an industry and the country that hosts it. Extra-state economies are good for business. Most of Africa relies heavily on non-formal business. More than half of the continent’s economies run outside of formal reckoning. But this isn’t unusual: half of the economies of Italy, Russia, and Peru are extra— state as well. And they are linked. As the head of Imperial Cigarettes in United Kingdom said, to stay competitive in business, their cigarettes have to be smuggled competitiver So too with weapons, pharmaceuti- cals, industrial supplies, and currency. A conversation with the chief financial officer of a well-known multi- national corporation — famous in world markets for over two centuries — gave me an idea of the complexities of the intersections of un/regulated business activities. I was surprised when I entered the corporate lounge and met the man: he seemed too young and too fashionable to be the CFO of such a large and prestigious corporation. “Franklin” looked to be in his early forties and had an easy air about him. He was funny, open, and articulate. He graciously spent several hours talking with me in Johannes- burg. He said he would speak honestly as long as I agreed not to' use his name or that of his corporation in any deleterious way. I made it clear from the start that I was interested in gaining a better understanding of how large-scale transnational industries dealt with the realms of the non/formal. During our conversation, Franklin would begin a discussion of this and then move to talk about more formal (legal) issues. He talked about material that was sensitive and restricted, but veered away from actually addressing non-formal activities. He recog- nized this and, laughing, acknowledged that there was an unspoken but powerful ethic in business that the unregulated — like any taboo topic — is discussed only in certain specific contexts. A formal interview in the imposing corporate lounge is the domain of the public and the published; backyard barbecues, restaurants, clubs, and unofficial oflice chats are the accepted venue for delving into less-than-formal activities. Finally he loosened his tie, relaxed in his chair, and said: , OK, there are many aspects to this. Informal—sure, it’s a fact of life. But let’s start at the top. I’m responsible for the final economic work of this cor- poration. I believe in what this company is doing; I’m not going tojimmy the accounts at this level. But you ask about non-formal activities, and l have to respond. The truth is, look at the guy at each level going out to the field. Start at the top: we have to go into a new country to work a deal with the government and part- ner business ventures to get a site up and going. This is infinitely more dif- ficult and complex than most realize. Franklin explained the seemingly endless departments and people you have to work through to get anything done. He warmed to the topic: some, he said, wanted to develop their country legitimately; others wanted personal bribes, kickbacks, larger business venture partnerships. Governments can impose regulations and restrictions that shackle the company from doing what it needs to do to make a profit, or, he said pan- tomlrnmg consternation, force the company into competition or part- nerships with other multinational interests it doesn’t want to be associ- ated with. “Like?” I asked. “The real scoundrels,” he answered. We have to juggle all of this. Our people doing these negotiations are on the trontlines, so to speak: they meet at government offices, in boardrooms, at private meetings, behind closed doors. They spend days, weeks, months working out acceptable deals. They come back to us, to the officers, to the board and tell us the final word on what they have managed, and we forge our response. We develop an approach that can meet public scrutiny. But what goes on behind those closed doors, that's their business, their work. Walk it down a level. So a project gets started in some country. Some guy is out on a production site and he has to get things done. He has to get parts, supplies, labor, contracts, transport, negotiations, you name it. He is beholden to us at corporate headquarters—he has to get things done, done on time, and done cost-effectively. And he is beholden to the conditions and the people out with him. He needs something, and the only way to get it is on the black market. He plays with customs; he crafts “creative” ways to get around policies; he greases the palms of people he depends on. That is how it works. But he doesn't send this to us in a report. He doesn’t come up to headquarters or meet with an officer of the corporation and talk about these things. He does it and turns in the kinds of reports the system expects. He gets things done, or he risks losing his job. You can walk this all the way down the line. The people working for this manager know they have to get the job done. If they don't, there are others willing to step in. And so they do it. And they don't write this up in reports for the site manager any more than he writes it up for us. I guess we know it. I guess we know how it works. But we don’t. Because this all Works by not asking. We don‘t ask the site manger how he got a sys- tem up and running. He does, or he doesn't. We ask for the formal reports. 7 We know not to ask for the, ah, details. This is how the vast non-formal works—how it is both possible and undisclosed at the same time. It is a fact of all business. The CFO’s words capture the local “anywhere” of globalization and the illicit — the daily actions and decisions of a very specific someone in a very specific somewhere just trying to get through his day. The larger networks of business and politics depend on this. Practicalities and invisibilities. AND A VIEW EIIIJM THE NEW IIENTEB: GLOBALIZATION ANI] A NEW IIIINBEPTIIAL IIEALITY ' These practicalities and invisibilities are larger than mere corporations. They are rooted in a series of political and economic transformations and in complex value systems shared across continents. I brought my ques- tions on non/formal economies and globalization to Augusto Alfredo, the economic correspondent for the national Angolan newspaper, the]0mal deAngola. His words capture the underlying heartbeat of this complicated process: We are all seeking to regain the things we have lost: formal markets, social- ist conditions, fixed values, a life free of the ravages of inflation, theopen- ing of markets. a Augusto was explaining that people were now living in the midst of uran- sitions, from socialism to capitalism, across war and peace. With this came the confusions of emerging forms of taxation, war deprivations, privati- zation — and new markets openng to cover what the government cannot. That means — he smiled — they run the gamut of the informal. .But hey, now we all drink Coca-Cola. The links are there—it's the life. A religion. Survival. What is the relevance of the legal and the informal to peo- ple in all this? I To understand, you must think socially. In the city, people are preoccu- pied with image, with the imagined . . . Here Augusto swept his hand around to capture the vast contradictions that defined Luanda, pointing out his office window to the lean street vendors and broken streets below, and then to the towering new build- ings built with oil and commerce monies. This, he explained, is born of the intersections of the desperate search for survival and globalization — the shared dress, shared lifestyle; the influence of our irnaginaries and our imaginations. Take this a step further: a German, for example, goes to China. He sees the same sun, but everything is strange for him. One day, he finds a Mercedes car, and he is happy, delighted. Why does he have this sentiment? He identifies with these things, with these objects and objectives. He feels. The life is contained inv,one thing. So you have global people. Consume Coke, Big Macs. We; eat these things, we watch these films, we drive these cars-and we feel the identity of the larger world. The familiar is globalized. The frontiers are diluted. if we eat the same food, we think about the same things, we have the same preoccupations, the same dreams. The desire. The global doesn't have a place. This allows people to make contacts across places; to consume culture. People become more open to others. It is hard to call a person a stranger when you share something. And it goes farther. When everything is available in the shops—things from worldwide, things shared across cultures-a person “meets” everything. Looking, searching, is the base of life. This is what is permanent. The frontiers, the borders, are lost and broached. But this means people are more open to the perspectives of another. Sometimes in a person’s personal life they have conflicts that are localized, and seem so difficult, and then when they run to another place—in war, in searchingI in fleeing-it becomes possible to mediate these conflicts. You pass borders and share with oth- ers in a new place, share even the burden of your problems, and you begin to realize that others’ cultures are no better or worse-that the solutions rest in the sharing. Globalization is a process of learning, of sharing, lives. Fish personify the extra-legal; multinational business interests rely on corruption while deleting this fact from their corporate accounts; and for many, a Big Mac is as positive in twenty—first—century irnaginaries as it is detrimental. And herein rests the answer as to why corruption is pan— demic, multinationals are implicated in the full gamut of il/legal practices, and globalization is about more than power and its spreadsheets. The roles of the military commanders and political officials are con- structed in larger transglobal practices. Layers of in/formalization define interpersonal and intergovernmental trade and industrial relations alike. “Negotiations,” signature bonuses, bribes, kickbacks, tax and policy manipulations, customs and excise latitude, layered organizational struc— tures, and a generous notion of what constitutes a fair profit are interna- tional realities that shape local responses. Having the ability to define these economies internationally is the zenith of power. Who, making barely poverty-level wages and gaining a little extra informally, will blow the whistle on those at higher administrative levels who do the same, albeit for vastly larger sums.> But the conundrum is far more complicated. If this were simply a mat- ter of skim-offs and kickbacks —— personalized corruption — legal and developmental solutions would be straightforward. But, as the story of the shopkeeper Kadonga demonstrates, working around the formal legal system is also, for many, a way to develop, to survive amidst the strangle- hold of excessive bureaucracy, onerous policy and taxation requirements, elite control, and fragile infrastructural and developmental systems. If globalization is a dangerous form of economic hegemony, it is also, as the journalist Augusto Alfredo notes, the means by which the displaced war refugee can -— in the broadest sense — find the place to survive, and per— haps even flourish. i am... naAsiwnasawsmw m m*‘<&s‘:msi&wm'm<xmgmesexism“w . , i' . ...,~.:= 34...; mun,- s. ;. a . 7' L 1* v w ‘ SOUTH SEA FREIGHTER. GHAPTEH 12 a. PURTS Some shores have been tamed, however temporarily, but beyond the horizon lies a place that refuses to submit. It’s the wave maker, an anar- chic expanse, the open ocean of the high seas. . . . Geographically, it isn’t the exception to our planet, but by far its greatest defining feature. By political and social measures it is important too —— not merely as a wilderness that has always existed or as a reminder of the world as it was before, but also quite possibly as a harbinger of a larger chaos to come. . . . At a time when every last patch of land is claimed by one gov- ernment or another, and when citizenship is treated as an absolute con- dition of human existence, the ocean is a realm that remains radically free. LANGEWIESCHE (2004) The war orphan’s cigarettes, the shop owner’s wares, the military’s weapons, the truckers’ commodities all tend to journey through ports. More than 90 percent of world trade is conducted by the international shipping industry. Around 50,000 ships registered in 150 countries are manned by more than a million sailors from Virtually every country in the world.l THE UNTULUEY OF TRADE To understand economic globalization, it is useful to see the world as traders always have. For them, the world is not neatly divided into sov— 115 mamas-ism: " ':/’ ereign states easily identified as unchanging landmasses with distinct bor— ders and even more distinct rules, laws, and regulations. Goods move. In the world of trade, goods have their own kind of sovereignty. In a way, while traders and trade are situated in, and respect, specific local, national, and world contexts, they constitute their own unique — one might say sovereign-like — state. Movement is primary, borders are secondary. Laws, some might argue, are tertiary. Traders see the uninterrupted flow of commodities, people, and serv- ices. Borders, to them, aren’t regulated national institutions as much as they are unregulated opportunities. The seas are a broad expanse of profit outside of state jurisdiction, as dynamic a part of the commercial world as industrial centers. Transit is not just the time between two points, but a universe of meaning unto itself. Transport routes are arteries of com- modity flow. Taxes and tariffs are obstacles, not obligations. This view is critical to understanding the intersections of il/legality. A state—based actor breaking a law must contend with a land-locked national response: cod— ified laws upholding the canons of the state are backed up by security forces. The transgressor can be taken to a very real jail under national jurisdiction. ' But for the trader moving on the high seas, on international rail and road links, walking across unmarked and unmanned borders, this sheer physicality bound to an overarching single sovereign governing system does not exist. A business may take raw fiber from one country, ship it to another to be made into fabric, then transport it to another to be sewn into clothing. It may then ship the clothing to be sold in a country where import taxes are low; but on the way, the ship stops in international waters, where part of the cargo is covertly transferred to yet another ship and smuggled to another country— one with high import taxes. What legal system, what governing body, is seen as an authority structure cov- ering all these transnational exchanges? International law, however pow- erful its ideas and ideals, remains grounded in national authority. The intersection of fluid global networks and land-based sovereign states opens up a world of economics that falls outside the scope of state intervention. ‘ Trade has always had its own special province, and providence. The fact that much of maritime law today is derived from Rhodian sea law is an indication of both the continuity and the power of the worldview of transnational commerce. The fact that much of our commercial and cus- tomary law today derives from ad hoc councils set up in marketplaces along major trade routes like the silk route in the middle ages shows that trade can trump political power. These market courts were revolutionary: in the era of royal rule and kingdoms, they circumvented both kineg con- trol and country-specific interests. They also demonstrated that interna— tional associations of people with no formal governing controls could and did institute laws, courts, mediation mechanisms, regulations, and codes of conduct — ones capable of enduring centuries of change from wagon— based transport to cargo jets and massive container ships. In the final analysis, such examples suggest that while governing systems — from kingdoms through dictatorships to the modern state — change, trade practices hold constant. GUMINE INTI] CAPE TM" The cigarettes Okidi sold on the streets of Angola probably came to the continent by ship. So does over 80 percent of the region’s goods. In 2002, when I conducted the interviews below, the seven major ports of South Africa handled nearly 200 million tons of cargo and over 14,000 vessel calls. In addition to bulk cargo like petroleum, timber, and coal, South Africa’s ports handled approximately 2 million containers, or TEUs (Twenty-foot Equivalent Units), as they are called. These are the classic 20 X 8 X 8—foot metal containers that are the foundations of modern ship- ping. Cape Town handled 6 percent of this cargo, and over 300,000 TEUs. Bear with me as we work through the following numbers. They will illuminate the illusion of security and the world of smuggling: — 3,010 vessels arrived in Cape Town in 2002. That’s 250 a month, 58 a week, a little over 8 a day. — The average small bulk transport ship docking in Cape Town can carry bulk cargo like grains or fertilizers, or 1,000 containers. — The average container ships carry around 1,700 containers; the sturdier ones, up to 3,000. The large intercontinental ships carry 6,000 containers. New super ships, too big for the Panama Canal, can carry 8,000 to 12,000. " — A typical small ship arrives with 20,000 tons of cargo; a large cargo ship with 120,000 tons. (Legally declared tons, that is. Longshore- men around the world tell me they find single containers over- loaded by up to 20 tons.) To inspect a Single container, South Africa National Port Authority rep— resentatives must ~ bring the ship to berth, assuming one is available; — bring cranes and stevedores to unload the container; — put the contents on a vehicle; — move the container to the container depot; — make sure suflicient port officials, container depot crew and facil- ities, and ship or cargo owner’s representatives are present to over- see the opening and inspection of the container; and — unpack the container in the presence of the importer and the agent. According to Customs and Excise oflicials, this work takes four to six hours per container for a cursory inspection. A complete inspection of all the goods inside a container can take over a day. If you figure five hours per container, a typical small ship would require 5,000 hours to have its containers inspected. A large ship would demand 30,000 work hours which adds up to 1,250 days of round—the-clock work— a total of 3.4.; years. Per ship. . In Cape Town, a relatively small port, about 10 ships were now arriv- ing a day. There are 150 Customs and Excise staff in the entire port. What are the odds of them stopping even a tiny fraction of smuggled goods? The most sophisticated ports in the world can inspect a maximum of only 5 percent of the cargo passing through customs, a figure that South Africa tries to match. One percent of the cargo is stopped at random. In South Africa, oflicials explained to me that of this I percent, they find something wrong with more than a third of them. This can range from underdeclaring the value of the goods, wrongly declaring what the goods are, incorrect papers, and improper practices— in other words, smug- gling. In Cape Town, there are eight to ten ships in the harbor under arrest at any given time. . To those unfamiliar with the world of shipping, the 5 percent inspec- tion rate may seem startlingly low: 95 percent of all shipments pass unin- spected. But even the 5 percent figure is misleading. Nearly 2 million con- tainers pass through South Africa’s ports a year. The I percent random check covers 20,000 containers: at five hours per container, that adds up to 100,000 work hours, or 4,167 round-the-clock days. As the harbormaster, and thus the leading Cape Town customs official, “Jonathon” explained: Theoretically, we could handle the stops; we could handle the containers. But then, what do we produce? I’ll tell you. Gridlock. Total shipping gridlock, which is trade gridlock, which is economic gridlock. Jonathon was a researchei’s dream: he could explain the invisible and was willing to do so with patience and a wry grin. I had walked into the Cape Town harbor unannounced and asked for an interview. I was met with a graciousness I seldom encounter in similar situations in my own country. After being “vetted,” first and most importantly by the secre- tary for the harbormaster’s office, and then by the second in command, I was ushered in to the inner chamber to meet the man who oversees a global market flowing through his jurisdiction. I was first struck by his jovial mustache, and then by his forthcoming manner. It was this visit to Cape Town’s port that taught me the basics of how to research the truths behind transnational commodity flows. Jonathon continued his explanation: lf you hold up a ship in port, not only do you incur significant costs for the ship and for the port authority—which is taxpayer money—but you slow down trade altogether. The trade a country depends on to function. The trade business depends on to stay solvent. The trade people depend on for survival. Try holding a ship long enough to open all its containers, or try inspect- ing all the ships you have in port on any given day. You not only hold up these ships, but every other ship scheduled to arrive in port. Try holding up petrol that industries need, food that will rot, essentials like medicines, equipment that construction firms and factories requireto operate. If you let 95 percent through unopened, why not 96 percent, or 97 per- cent? What is the greater threat, that, or gridlock? The figure of a maximum of 5 percent inspections holds worldwide, but the volume of cargo differs widely. Major global routes intersect in hub ports like Dubai and Singapore. Where Cape Town has 350,000 con- tainers coming into port yearly, Singapore has over 23 million a year. The world of shipping is a smuggler’s paradise. The media and popular culture focus on shadowy criminal organiza- tions as the primary smugglers, but in fact legitimate businesses and multinational corporations are the biggest oifenders. Underdeclaring and i»v:.1fiksf.§fiifihfikv<(&\ ‘ " misrepresenting the goods they ship are basic tools of the trade. Ionathon’s tone turned sarcastic for a moment, indicating his frustration, as harbormaster, with these truths: You want to know who we catch most often? Companies that sell the familiar everyday things in our lives, things so common we don't even think about them. The ketchup sitting on the table, the table itself, and the chairs. The paint on the walls. the clothes we wear, the parts for the vehi- cle we drive. Pick up the things around you and you'll be looking at what‘s smuggled. I mentioned that the shipping agents I had been speaking with consis- tently estimated that 90 percent or more of all shipped goods are under- declared or undeclared. One savvy agent who admitted to me he had been involved in smuggling in his younger seafaring days explained: It's in the mind-set of everyone. People go through the tariff books to find the cheapest possible rate. They will take sophisticated electronic items and find the cheapest component or metal they contain, then list the shipment as, say, some cheap metallic alloy or plastic. Cars may go as used spare ‘ parts. We seen a Mirage plane come in listed as “air tools." I told the harbormaster that my favorite quote to date came from a ship- ping and inspection agent who told me: The manifests and all the documents said “scrap metal,” but it sure looked like a MIG fighter [jet] when it came out. Jonathon leaned forward in his chair and said he would tell it like it is. It's a game. Tariff assessments are tremendously complicated. Scrap metal isn't assessed at the same price as weapons, or cars. You get a shipment of pieces of steel, it pays duty at a lower rate, and it looks like pieces of steel until you put it all together into a gun. People work the tariffs with amazing ingenuity: cheap canvas and scrap rubber are listed on the inventories, and in fact it’s Nike shoes. And then you sometimes find drugs in the barrels of the guns or the heels of the shoes. But the continuous big evasions? Floor lamps [lower in tariffs] are de- clared when it's a shipment of major clothing consignments. Or you find symbolic associations, apparently intended to throw off any cursory spot- check: a shipment of I‘clothespins” which are really counterfeit cigarettes— about the same size and shape but decidedly different in taxation, and in legality. ' Jonathon, like every other port official I asked, said that most fre- quently “undeclared” (a nice word for smuggled) commodities are elec— tronic equipment, clothing, shoes, textiles, engineering equipment, and a host of household and business brand names: Anything with high rates of duty; anything that can be disposed of quickly. The electronic field is the biggest; but in fact any product where high rates of duty create an incentive to smuggle. Cars; consider the fact that the rate of duty in South Africa is 65 percent of the value of the vehicle, mclusrve. What greater incentive to smuggle is there? Also meat, flour, produce, daily products . . . The harbormaster was about to continue his list when he caught himself, a serious look settling on his face. He took a deep breath and said: Consider the true impact: underdeclaration of goods creates a huge tax gap in South Africa. We figure we lose $1 billion a year. Popular culture would have it that illegal drugs and arms shipments are the bane of customs and shipping and the ultimate threat to civilized trade. There is no doubt that untold fortunes are made and countless lives lost to harmful illegal commodities. Yet whether it’s smuggled opium or tomato juice, the proceeds go directly into the hands of the traders: no taxes are paid, no tariffs levied, no duties or quality controls invoked. This, of course, is the true cost of smuggling: no money is available to build schools and clinics, improve trade infrastructure, and develop the country. A secret lies at the core of the shipping industry. Even if it were possible to inspect every ship and every shipment coming into port, it would make little dent in smuggling. Everyone I talked to agreed. A harbormaster: Once a ship is over the horizon, we don't know what they’re doing. A customs official: Ships meet up all the time in open waters. It’s acceptable to move cargo and people from one ship to another on the high seas. As long as all the man- ifests, records, and paperwork are updated legally, this is no problem. But . ...»a...a..,....... ... :: . would you like to guess how much is exchanged at sea that isn't documented? The head of British Customs and Excise: To understand the truth of shipping, follow the unrecorded ship stops at sea. But of course you can't follow them; that's the whole point. A drug smuggler, introduced to me by his friend as the biggest one in the area: Getting my merchandise is a breeze. A ship carrying the goods just stops out on Its normal route not too far from coast, and we send out little work boats, meet up, transfer the goods, and bring them back to an empty stretch of beach, pack it onto a truck, and head off to sell it. t I hear you’re writing a piece on illicit economies. You should hear the sto- ries of diamonds here. . l‘m a scuba diver. We have a real culture here. We work the water- diamond areas across several countries. Best for us are the places where rivers dump gems in the ocean. We take gigs legally, and we work “un— registered” as well. Someone wants to work the field, buy diamonds, what- ever. . . . well, there are the bars where we hang out. For my kind of specialty the best are on the coast. We’re kind of a group, kind of a special culture: You go to these places, you find out the score. THE AHTFUl llllllEEli Another example shows the difliculty of prosecuting maritime offenses. It’s the equivalent of prosecuting phantoms. In the port of Cape Town I was shown a ship I’ll call “The Argfid Barge?” that had been tied up for some weeks, under arrest. But whom to arrest became a real problem. The case demonstrates how extensive illicit systems can operate with such impunity. TheArtfid Dodger was a former Russian Navy fleet replenishment ves- 861 that had been “leased out” to a business plying international waters. After leaving Russia and before arriving in Africa, the ship pulled into a large hub port for repairs. But the Russian government wasn’t able to pay for the repairs, and the ship was arrested. The ship was given (by the authorities of the arresting country) to the shipyard, where the repairs were done under the provision that the ship could not be sublet. Before the ink was dry on these papers, the ship was sublet to people who oper- ate as part of a known criminal organization. The ship was reregistered in Belize. However, it was never deregistered from Russia. It was then run by a new company, and they chartered it out commercially to clients. They were not paying their debts, the crew’s wages, or the char- ter fees. The enterprise collapsed when The/1rth Dodger was arrested in Cape Town, where I finally met her. At-that time, I was told, the ship did not have much debt —“only about $5 million.” This statement alone gives an indication of the kinds of monies that attach to shipping. But after the ship was arrested, a flood of other debts came out, from shipyards to char- terers. While the investigation was taking place and the local courts were deciding what to do with the ship, South Africa had to pay all the expenses, which were substantial. Berthing rates alone are significant, and any ship that takes up berth space keeps out paying ships. Of course, even determining who owns the ship can be an exercise in futility. Assessing who is responsible for the debt can be next to impossible. In maritime law, if a ship has broken the law or failed to meet its pay- ments, a “sister ship” —- a ship owned by the same company— can be arrested anywhere in the world and be held accountable for the debt. But proving who is a sister ship can be extremely difficult, as the exam- ple of The Artfid Dodger shows. Maritime law takes these complexities and manipulations of ownership into account by following the “con- trolling mind.” For example, if a director of company X is also a direc- tor for corporation Z, a sister ship from corporation Z can be im- pounded to satisfy the arrest of a ship from company X. But, as arresting maritime sheriffs told me, a legion of cases have been overturned because, in the myriad linkages of ownership, the authorities have not been able to correctly trace ship ownership for the arrested ships or the sister ships. If this explanation alone causes headaches, it barely does justice to the realities of shipping law. “Maritime law is a logic unto itself,” explained the police officer in Cape Town who was investigating The Artfid Dodger. It’s a sprawling, amazing field that bears little resemblance to sovereign, national, or international law. in this water-based world of law. fishing ves- sels aren't governed by the same rules as commercial vessels. Hundreds of years of commerce, survival, and tradition have produced these curious real- ities. Believe it or not, there are rules in force today that derive from the Lex Rhodia, or Rhodian sea law, a body of seventh-century regulations govern— ing commercial trade and navigation in the Byzantine Empire. i C a. i Maritime law differs from land law in part because it’s situated in the large fluid interstices of sovereignty, and in part because shipping figures so importantly in the running of transcontinental empires. THE LARGER UNIVERSE 0F SHIPPING The story of unregulated transactions does not end with ships, their car— gos, and their owners. When a ship comes into port, it deals with agents and requires stores, supplies, repairs, fuel, and a host of other things, necessities and luxuries alike. Virtually every exchange can be, and often is, grounded on “commissions” - skim-offs, presents, bribes, favors, kickbacks, backhands, and undocumented deals. A European man who had been in sailing all his life, from military to private, and across all the seven seas, explained the system to me. He had seen most all there was to see, he said: he now had his captain’s license, but he had spent many years working his way up the crewing ladder. He had grown up in a shipyard, sailed on working freighters, served in the navy, crewed billionaires’ yachts. Skim-offs by the ship’s crew are just a fact of life. We pull into port, and it's just a given that 15 percent is tacked on to the fuel charges. The owner pays the full price, none the wiser, and the crew splits the rest. The suppliers are in onthis, and they get their cut. Everyone does this, and the owners never catch on. They're just too high and too far away from the daily grind of life. Maybe they care, maybe they just accept it, but it’s the system. Same with stores: we buy food, materials, supplies, labor, repairs, whatever, and we add our take. Just about anywhere you go in the world, you know what the going skim—off percentages are: no one gouges, no one wants to get cheated of their fair share of skim-off. This is the legal world of shipping and sailing. This conversation led me to talk with ship Chandlers and suppliers for the land-based side of this skim-off equation. Many spoke openly with me. Typical figures for skim-offs in the international arena include the following: A ship’s master will get 15 percent in cash (undeclared). The shipping agency gets 5—10 percent on top of payments (often declared in terms of tax/legal purposes, but unsupported by ship’s owners), but any backhanders the agents get are undeclared. An employment agency (service providers) gets 2-10 percent (unde- clared). Up to 30 percent is budgeted for agencies by contractors (legal but unethical), and 5—10 percent for repairs (undeclared). Stevedores get presents to encourage certain kinds of “help” — any- thing from cash to a new Sony. As one told me, “You seldom walk away from any job without a little gift of some kind.” Fuel skim-offs aren’t as common in the world of commercial shipping as they are in the yachting industry, but they happen. The fuelers and the ship’s crew both profit from the skim—offs. In some cases, fuel is actually pumped off and resold elsewhere; in others the bills are merely jimrnied. Considering the fact that an average-size commercial container ship requires 2,000 tons to fill, at $120 a ton for heavy-grade fuel, and uses about 60 tons a day, the money pocketed can be considerable. These practices d0 vary by region and competition. Competition can be fierce in the world of shipping, and shipping agents told me that while many are happy with the 5—10 percent “commission” they take, they don’t like turning a blind eye to misdeclared goods and other questionable prac- tices. But they do it to get the business. I was curious to see what response I would get if I walked unan- nounced into a ship supply agency in the USA and asked what the “cuts” were. I chose one at the Port of Los Angeles, walked in just before clos- ing time, and asked to speak to someone who could “give me some decent information.” I asked the harried man behind the desk what the typical “add-on” rate was. Just a couple percent. “That’s low," I responded, with a surprised look. Competition. Hey, most ships come in here are foreign owned, and they buy in their home countries. “What can you provide?” ‘ What can't we provide? You need it, you tell me, we’ll get it. And I’ll get out there personally and get it fast. No questions asked. Twenty-four hours a day, every day, no exception. “Wow,” I said, fascinated with this workload. “Don’t you burn out?" I’m young, but I can't handle this forever. More than anything, I want to be a longshoreman here. I’d make a much better salary, and really have a life. , N x. Imam Here I was, a stranger walking in oflr the street with no introduction, and in this short exchange, I was told: — This man is willing to take a small, “couple percentage cut” and I, “the buyer,” can pocket the rest of the skim-off. — He will get me anything I need, indicating his willingness to . negotiate prices, commodities, and services across legalities. — He’ll do the work himself, insuring confidentiality. — A system is in place that has rules, prices, and codes of conduct that I, the buyer, can trust. On board the ships, the crew is often running moneymaking schemes from legal to illegal. They may buy clothing in one port cheaply and sell in another where the prices are much higher, or trade for other items of value. They may barter ship’s stores for valuable commodities. They may move pirated DVDs or drugs. They may carry new computer compo- nents or bring in banned pornography. As one port agent, formerly a sailor, told me: It's so institutionalized that it's symbolically enacted each time a customs official or port authority boards a ship. When they come on board, they’re almost always handed a carton of cigarettes by the captain. You might say it’s a ritual of the central role of present giving. When I asked about the extent of undeclared uansfers, every person in the shipping industry —— whether commercial or private —- looked at me with the same expression. It clearly said I was asking about the obvious. One answered: Oh, 80 percent, 90 percent. You know, darn near all of it, in one way or another. As one official said: There’s a culture among crews of not asking questions. An agent with the Los Angeles Port Authority leaned back in his chair, smiling. He had his own way of explaining the system: You want to know how it works so easily? Look at the flow. The other day we got a call. . . . The man laughed so hard he had to wipe tears from his eyes. A hotshot captain from a well—known ship had gone to town for din- ner. He was in full uniform, but he didn’t have his identity papers, and the guards at the port gates wouldn't let him through to get back to his ship. Hie shouted and pointed to his uniform and his captain’s insignia and tried logic and shouted some more. It was all for naught. The guards wouldn’t let him through without his pass or papers. 80 he called me. I But as he's standing there, held up at the gates, groups of prostitutes are wandering past him in and out of the gates freely, with no one stopping them or asking for passes or papers. ,4 t. p 5 3f; ,3 . ; a; ,i- PHOTOGRAPH [1F DPIUM. MUSEUM [1N NARBUTIC DRUGS. MUNGLA, MYANMAR CHAPTER 13 ’7 DRUGS TWO BUSTS On March 16, 2002, The Herald (South Africa) ran two brief articles on drug busts. Both were short pieces on the inside pages; neither warranted headline status. Both were about raids of illegal shipments coming into South African ports. The first embodied the lore of drugs: shipping containers carrying many kilos of cocaine. Multi—million—dollar dreams and disruption. The newspaper didn’t give a detailed picture of the ship, its crew, and the drug runners, but they didn’t have to. Popular movies, incensed community leaders, and chain-bookstore publications have long painted a graphic pic— ture of shadowy people in dark clothing and darker morals peddling the dangerous sweets of addiction. In our mind’s eye, we immediately see grim factories in a barren countryside or decayed urban zone where crim- inal “elements” wearing dusty jeans and threadbare T-shirts work for over- lord bosses in bad suits who are protected by guns, gangs, mercenaries, and payoffs. The second drug bust involved shipping containers with twenty-two tons of illegal merchandise, which could also fetch millions of dollars in dreams and disruption. But the drugs aboard this ship weren’t cocaine; they were pharmaceuticals, controlled antibiotics worth rand 211 million (approximately $30 million). The drugs had been packaged in Hong Kong and shipped to South Africa. A prominent businessman had pur- chased them for rand 500 ($70) (Neethling 2002: 4.). No media images and political rhetoric accompanied this bust. There are no ready—made ideas of what these smugglers look like, where they 129 mud.» come from, or who their bosses are. Are these shady characters wearing dusty jeans, working for gangland bosses, or are they sophisticated exec— utives in expensive suits? Who smuggles pharmaceuticals? Who profits? And what is their impact on society? The United Nations estimates that the illegal narcotics business gen- erates some $500 billion a year. People like urban sociologist Manuel Castells put it at closer to a trillion. No figures exist for the illicit phar- maceutical trade, though my data suggest the profits are immense. Narcotics is the focus of massive police, research, publishing, and gov- ernmental work. Pharmaceuticals smuggling is largely ignored. Why? The day these two drug busts were reported in the paper, I happened to be at a dance in a South African coastal town halfway between the two ports. The townspeople I was with began discussing my research inter- ests, and when sufficient trust had been gained, one of the group clapped another man on the back, turned to me, and said, “You’re looking at the largest drug dealer in the area.” The dealer smiled, and, after some oblig- atory small talk, explained that the whole business of pulling into port was a waste of time and security. Here, large cargo ships merely stopped in coastal waters and fishing boats went out, ostensibly to work, and met the ships to transfer drugs for dollars, he said. Or perhaps for diamonds. Fast, efficient, effective. I looked at the “largest drug dealer in the region” and thought about stereotypes, none of which he fit. He wasn’t some mar- ginal, shadowy character in dark stubble and leather, but a member of the community with investments in a string of legitimate business interests. The smuggler had an easy smile and a firm handshake and was dressed in Docker khakis and a brand-name polo shirt. “Drugs” perhaps captures as well as any commodity the complexities and ironies that surround the globalization of the il/licit. The very word shows the conundrums: the word means everything and nothing, depending on context. If you say “drugs” at a hospital, it generally refers to pharmaceuticals. If you are talking about a drug bust, it means illegal narcotics. One undifferentiated word for two realms of activity so fre- quently seen as polar opposites. In practice, the only discernible difference is that illegal narcotics are luxury items taken for recreation, while phar- maceuticals, legal or illegal, are generally health necessities. For me, illegal narcotics areonly mildly interesting. Their impact on global economics and law enforcement is central to understanding unreg- ulated markets. But they are predictable: from production through mar- keting to consumption, they are illegal. They aren’t tied to life’s necessi- ties, but are luxury commodities, and as such affect the lives of a select group. In some important ways, the illegal narcotic industries are run like parallel-economy multinational enterprises. Illicit pharmaceuticals, on the other hand, represent the very heart of perdurability. Virtually all of the earth’s 6.7 billion citizens will become ill and require medications at some point in their lives. Their quest for health is not a luxury. The pharmaceutical industry has been called one of the most critical to the survival of societies, and one of the most corrupt. The attention “drugs” receives in law enforcement, the media, and lit- erature has little relationship to the reality of the impact of illegal drugs in people’s lives. Walk into any law-enforcement institution and ask what most preoccupies their attention, and the topic almost always turns to illegal drugs. I have never heard illegal pharmaceuticals mentioned. [IN THE STREETS: HESEAHHH THROUGH MALAHIA Some time after the 2002 drug busts in South Africa, I had the good for- tune to interview several experts at the World Health Organization in Geneva, as well as Howard Marks, aka “Mr. Nice,” one of the biggest and most successful late twentieth—century cannabis smugglers in the world. I present these conversations over this and the next chapter. But the story actually begins earlier, back in Angola and the hometown of the war orphan. Southern Africa, with its transitional politics and need for hard currency, is one of the new hot transit spots for illegal narcotics. Given the limited health resources, the illicit pharmaceutical trade flour- ishes as well. The trades aren’t reckoned in the millions of dollars, but in the billions. The stakes are high. Higher, with the recognition that illicit pharmaceuticals are addressing life-and-death issues such as high infant mortality rates (those in Angola, DR Congo, and Zimbabwe are among the world’s highest), HIV/AIDS (Southern Africa has the highest rates of infection in the world), malaria, TB, and a host of urban ills such as coronary disease. The contradictions of countries like Angola—where illicit pharma— ceuticals are often people’s only hope of obtaining needed medicines — have long prompted me to follow the story of “drugs.” But I know from my own personal experience in Angola that even the legal clinical phar- maceuticals I encountered could be substandard or dangerous. A straight- forward case of dysentery took two weeks to cure because the pharmacy- procured antibiotics I took were so substandard. The malaria drug I was given (I later found out) had been banned by the WHO for causing heart damage and then had been dumped illegally — and without warnings —— by large pharmaceutical companies in needy locales like Angola. My luck finding decent pharmaceuticals was at least as good, if not better, buying from the unlicensed “street drug markets.” This prompted me to look into the availability of “drugs” in general. Basically, I found that illegal narcotics occupied people’s thoughts very lit- tle. They are largely found in transit (from producing countries to con- sumer countries). Drugs in licensed dispensaries were affordable to the wealthy. Unlicensed street-market drugs were available and affordable to everyone. People said clinic drugs and street pharmaceuticals didn’t dif- fer too much in quality, only in availability and cost. In Mata’lo, the war- tom Angolan town described in chapter 4. where people were dying from lack of basic necessities, I found four pharmaceutical vendors with a range of drugs from name—brand antibiotics, through malaria drugs, to anal- gesics in a market still so poor that cooking oil was sold in one-ounce units carefully tied into tiny strips of plastic wrap and hung from trees like precious ornaments. The hospital, when it was open, had no medicines. Street vendors of pharmaceuticals provide a service, one that they are often proud of. They frequently work in the same spot for years and accu- mulate a loyal clientele. Such businesspeople don’t think of themselves as smugglers or as merchants of the illicit. I got to know some of them over the years I visited Angola. The more established worked off wooden tables set up in open markets, their wares neatly and carefully arranged, most in their original packets, according to function: antibiotics, anal- gesics, birth control pills, vitamins, and so on. The smaller “pharmacies” operated out of cardboard boxes right on the streets. Their inventories were smaller, but given a request, they could get almost anything. One of the sellers —— I’ll call him “Lucas” — explained the system to me. He’s a soft-spoken man of slight build, with an animated face. He radi— ates professionalism. He gives the impression of truly listening to what a person says, of being a person you can trust with your health-care woes. I’ve built up my networks over years. We each have our favorite sources. There are a number of them. There is the container trade (we often go directly to containers, where container agents sell directly to vendors). Over timeI we get to know what manufacturers are reliable. inexpensive, honest. Indian products tend to be a favorite. No one I know of pays duties and tar- iffs on drugs. They would be unaffordable if we did. There is the military trade. The military orders large amounts of phar- maceuticals, which they are more likely to sell to the general population than for military use. Those selling do not spend any of their own money, and sell at a good price. It's low enough for people to afford. Pure profit for them. good products for us. Some comes through the hospitals. through the backdoor. And there are [counterfeit drug] factories that make a number of popu- lar drugs-people here tend to think the best drugs come from the reputable ones in Southern Africa and in places like India They can make a good copy ofjust about any major drug from any major drug company, like Pfizer. or a good generic. lllSAS-A JllllllllEY INTO THE BUSINESS ETHISS [IF SflUNTEflFEITINS Pharmaceuticals travel well in containers, planes, trucks, cars, donkey carts, and shoulder bags. They are the quintessential “small-size, low- weight, high-value, high-profit, and highly taxed” commodity that according to customs people worldwide drives smuggling. As I discuss later, most governments, INGOs, and the United Nations see this trade as dangerous. There is no doubt that lack of regulation in an industry dealing with living and dying is serious. But the issue is far more complex. Three general assumptions underpin official views of illegal drugs: 1. Street vendors and counterfeit factories are responsible for the majority of substandard drugs. 2. Legally produced pharmaceuticals are safe. 3. The war on drugs is, and should be, about illegal narcotics. The first assumption: Lucas isn’t a shadowy street figure who exploits human misery by selling substandard drugs to the desperate, only to dis- appear back into the shadows to avoid prosecution. Dressed in neat slacks and a button-down shirt, his pharmaceuticals carefully packaged, he has shown up at the same wooden table in the same spot in the central mar- ket day after day for years. His customers are neither stupid nor passive: if Lucas, and the others like him, sell bad drugs, their careers, and poten- tially even their lives, are at risk. Angolans often take it upon themselves to “discipline” thieves and cheats. I have seen such punishment meted out: it is swift and effective. But this is not the only reason Lucas avoids selling bad drugs. Like most any businessperson, he seeks the respect of his community. I sell good drugs and people come back. What do you think will happen to me if I sell bad pharmaceuticals? People will say, "That Lucas is not to be trusted, his goods are bad," and they will not come back. if someone gets sick from my drugs, they will be angry with me, and that is worse. What do you think they will do to me? I have a family to keep. I can’t afford to lose my income. Why would I risk that? l have done this work for years. I am professional. I know every brand; I know which factories around the world produce the best drugs for the best prices. I know how to get them. I know which counterfeit factories make decent drugs. I know how to read the trademarks, no matter what the boxes say. i know what worksI what doesn‘t, and why. And I know without these drugs, many people wouldn’t make it. It's my home. my community. I care. Lucas explains that these sentiments can extend to counterfeit factories: The best ones have well-trained personnel. They run good organizations, and if their products are good. they stay in business. become respected, and grow. When one of us learns of a good one, we try it, and if its reputation is deserved, we tell all our friends selling too. If the factory sells bad drugs, we stop buying. Then what does that factory do? What do the workers do? They have nojob now, no way to put food on the table for their children. They can’t just go out and start another factory; their reputations follow them. Of course, this isn’t always true. But the tendency is to do good work. Clearly, not all unlicensed pharmaceutical manufacturers and vendors produce safe, reliable, industry-standard drugs. But neither do all licensed manufacturers. This gets to the heart of the second assumption, that legally produced and sold drugs are of legal quality. The WHO, increas- ingly concerned with the problem of substandard drugs, has collected a number of studies and instituted international conferences on this topic. The studies are generally conducted in what the WHO calls develop- ing countries. In these studies, the WHO analyzes pharmaceuticals col- lected from retail sales markets. One set of results is not surprising: sub- standard drugs more often come from unlicensed factories. But another set of results is surprising: licensed manufacturers produce a substantial number of substandard drugs. Studies find that substandard drugs — with less of the active ingredients than required, with the wrong ingredients, with missing ingredients, or with no active ingredients at all — generally account for between 5 and 25 percent of drugs tested. I was told at WHO headquarters in Geneva that studies have not been done on coun- terfeit drug manufacturers - those who forge brand-name and trademark pharmaceuticals. The assumption is that such factories, by definition, would produce dangerous drugs with no or little active ingredients. WHO has not met the Lucases of the pharmaceutical world. The fact that some 25 percent of all pharmaceuticals in places like Southeast Asia may be substandard or counterfeit throws the whole ques— tion of “the war on drugs” into a new light. Throughout this research, I have been asking law-enforcement per- sonnel, lawyers, human-rights advocates, and smugglers whether it’s better to have smuggled pharmaceuticals than no pharmaceuticals, and if illegal pharmaceuticals are as illegal as illegal narcotics. Virtually all said there is a hierarchy of illegality, and smuggled pharmaceuticals are a lesser offense. Police say they aren’t as likely to bust pharmaceutical smuggling as they are narcotics. In the words of a British Crown Agent expert responsible for developing the “zero-tolerance policy” for customs fraud in Angola: “We don’t even try to stop or ask questions when crates of pharmaceuticals come in and are picked up and whisked away by the mil- itary for untaxed distribution.” But in all these interviews, no one has ever mentioned the problem of substandard drugs produced by licensed man- ufacturers. Everyone seems to assume that pharmaceuticals by brand- name companies, whether sold legally or illicitly, meet industry standards. If one assumes that licensed manufacturers produce quality pharma- ceuticals, smuggling them to desperately needy populations can be seen as a humanitarian act rather than as a crime. But what happens to this equation when legally made substandard pharmaceuticals are dumped on unsuspecting populations? FROM THE STREETS TO THE Wflfllll HEALTH DHHAHIZATIUN The question comes into strong relief with an observation by Eshetu Wondemagegnehu, who works at the World Health Organization head- quarters in Geneva.1 Upon introducing myself, I explained I was inter- ested in why law enforcement and the media tended to focus almost exclusively on illegal narcotics, given the ubiquity of pharmaceutical smuggling. What was the WHO finding out about smuggled and coun- terfeit pharmaceuticals? I asked. Mr. Wondemagegnehu shook my hand and commented: I am surprised to hear you say this. | havejust returned from Hong Kong and a large conference on pharmaceuticals, and we were all just saying this. That at the bottom line, taking illegal narcotics is something people choose to do. A relatively small percentage of people. It is a drug defined by choice. mama“? But counterfeit pharmaceuticals—this is something people have to take, it is a matter of life and death. It is not a drug defined by choice, but by neces- sity. If you smuggle narcotics, you smuggle to people who elect to take them. If you provide substandard drugs to the world‘s ill, they have no choice. Why do the police and the policies focus on illegal narcotics when the problems of substandard pharmaceuticals produce greater suffering, death, and disaster? At the end of our conversation, Mr. Wondemagegnehu returned to the question he raised above: Why, in the “war on drugs,” security forces focused their energies on illegal narcotics, while few beyond the WHO investigated illicit pharmaceuticals. In my personal opinion—l can‘t speak for the WHO and the UN here- it’s politics. Politics and simple economics. Look at Angola; the wealth is not equally distributed. Why do we find illegal outlets in developing countries? Because the legal is expensive. highly taxed, unattainable. This same gap exists in the USA. As long as the gap between what people have and can have continues to increase, the majority of people are going to be affected, not only in terms of having to access illegal pharmaceuticals, but in all aspects of their lives. Illegal pharmaceuticals? The problem can be solved: share the wealth. Truth is, most problems relate to politics. ' Here at the WHO, dealing with the problems of illegal pharmaceuticals, we look at pharmaceuticals. We can't talk of politics; we can't talk of eco- nomics. We can only talk of pharmaceutical regulatory mechanisms. I think sometimes we aren't giving the right advice. Perhaps we should be telling people to fight corruption, to advance freedom of speech, to advo- cate for a change of government in working to solve the problems of sub- standard and illegal pharmaceuticals. I asked Wondemagegnehu my standard question: no matter how much we would wish for affordable and accessible legal pharmaceuticals, this does not yet exist. Until it does, does the WHO support smuggled phar- maceuticals to populations who otherwise would have no access to drugs? That is a very difficult question. The truth is, technically it should not hap- pen. I may not like it, but it will happen. What alternative do people have? The WHO isn‘t here to promote illegal importation. But it is very, very difficult to say if smuggling is good or bad when people are living in desperation. These situations are very complex. It has to do with the authorities. It all boils down to politics, to the gap between rich and poor, between who has the right to speak and who does not. Those who run the politics also run the economics. . But l would like to point out to you that pharmaceuticals is just one aspect Do you really want to focus just on this in terms of the health of peo- ple? It is a sensitive area, but ask why few people have access to adequate food and clean water, why we have starvation. Think politics. I am not supporting illegal manufacturing nor making a moral argu- ment here; I am assessing the risk, danger, and power in illicit economies. As I walk through the vulnerable populations of war-tom countries, tran— sitional nations, and economic empires, I observe that illicit pharmaceu- ticals constitute a domain as large as that of illegal narcotics in terms of profit — larger in that it affects a significant part of any given population, not just a self-selected minority. Yet the domain of illegal narcotics is cen- tral in legal, media, and popular awareness, whereas pharmaceutical smuggling remains largely invisible and unrecognized. Why? ...
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This note was uploaded on 01/31/2010 for the course ANTH 1200 taught by Professor Lawrence,p during the Spring '08 term at Colorado.

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DIAMONDS, PORTS, DRUGS - HUDTERS INTERNATIONAL RURAL...

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