Drugs & Crime

How the U.S. economic meltdown helped create a crisis in Honduras.

By Fernando Carrera Castro

The coup d'état in Honduras has received due international attention for its political implications -- and its potential to erode democracy across Latin America. Unfortunately, that's only half the story. Equally important are the economic factors that both catalyzed discontent and could now exacerbate the country's internal crisis.

Honduras is the most open economy of Central America and the one that most depends on its relationship with the United States. Exports to the United States accounted for almost a quarter of Honduras's GDP in 2007 (the second highest in Central America, after Nicaragua), according to figures collected by the Central American Institute for Fiscal Studies. Remittances from migrants amounted to 21 percent of GDP in 2008 and are expected to remain about the same this year. Meanwhile, U.S. direct investment in Honduras is among the highest in Central America. All told, Honduras's links to the U.S. economy represented close to 60 percent of the country's GDP in 2007.

Such a remarkable dependence was a blessing from 2003 to early 2008, while markets were booming and U.S. consumption was at an all-time high. But it turned out to be a major problem with the first signs of economic downturn, and since the last quarter of 2008, the situation has become a nightmare. The impact on exports, foreign direct investment, and tourism has resonated across Honduras. Businesses have gone belly up, consumer expenditure is down, unemployment and poverty are rising, and the government's coffers are running dry.

The downturn might have played well for ousted President Manuel Zelaya's increasingly populist rhetoric. But it also presented Zelaya with an awkward reality: Despite his nationalist rhetoric, Honduras would desperately need help from the United States and the international community to keep his government afloat. Calculations made in the early months of 2009 indicated that a fifth of the fiscal budget was expected to be financed with international loans and donations. By June, with the worsening economic situation and fallen fiscal revenue, this figure might have reached 35 percent. It is clear, then, that the government was not going to be able to pay its employees' salaries this year without external financial support. And this was the situation before the coup.

The current political crisis can only make matters worse (if such a situation is even possible). Any Honduran government will depend on the international community's financial support to survive in the coming year. The poorest citizens in Honduras, with one of the highest malnutrition and infant mortality rates in Latin America, might even need international humanitarian assistance if things continue on their current path.

Given this daunting situation, it is rather impressive that anyone wants to be president of Honduras at all. But if you are not poor, and your future is not threatened by the current economic crisis, you might find the presidency a very attractive job. One could ask Manuel Zelaya and Roberto Micheletti about that.

Fernando Carrera Castro is executive director of the Central American Institute for Fiscal Studies (Instituto Centroamericano de Estudios Fiscales).

Photo: ORLANDO SIERRA/AFP/Getty Images

Ignoring failed drug war policies is not the problem; it's coming up with anything better.

By Mark A.R. Kleiman

A break in the ideological ice that has kept global drug policy frozen for 40 years, as Moisés Naím calls for here, would be welcome news. But simply substituting antiprohibitionist slogans for drug-war slogans, though it adds variety, does not give us clarity.

There are two distinct "drug problems." First -- logically, not in importance -- is the damage that drug toxicity, intoxication, and addiction can do to people who consume drugs, and lead them to do to other people. That we might call the "drug problem" proper.

The existence of that drug problem has led to a variety of efforts to reduce drug consumption by making various drugs more expensive, harder to find, or legally risky to possess: taxes on alcohol, restrictions on tobacco marketing, bans on sales of alcohol and tobacco to minors, bans on any sale of cocaine or heroin for nonmedical use, bans on any sale whatever of MDMA ("ecstasy"). Every such tax, regulation, or prohibition creates opportunities for profitable evasion: moonshining, cigarette smuggling, a street-corner drunk buying a six-pack for a teenager, a patient selling prescription narcotics, illicit production and sale of alcohol during the Prohibition era or of cannabis, cocaine, heroin, and methamphetamine today.

Those illicit markets sometimes generate violence and disorder, and the higher prices they create stimulate income-producing crime by some drug users. The enforcement effort also generates harm: arrest, incarceration, bribery, gunfights between enforcers and dealers. The problem of the illicit market constitutes the second "drug problem."

Drug warriors tend to focus narrowly on the drug abuse problem and reject any attempt to limit the harms done by trafficking and enforcement, other than by putting dealers out of business. But the logic of the market dictates that incarcerated dealers will be replaced as long as there are customers willing to pay illicit-market prices. After more than a generation of fighting this war, there is overwhelming evidence that drug-law enforcement is a weak tool at best for reducing drug consumption. That evidence strongly suggests that enforcement agencies should concentrate on minimizing the drug-market threats to public safety and order rather than waste their efforts in a fruitless quest to reduce drug supply.

Alas, the fact that enforcement mostly fails to reduce drug consumption does not imply that we have some magical process called "education and treatment" that will be more effective. In fact, we do not. Nor is "decriminalization" -- easing up on drug users -- a panacea. Most of the harms from illicit markets and drug enforcement come from dealers, not users; and decriminalization alone does nothing to reduce the revenues, or the violence, of drug-trafficking organizations.

The United States could -- and should -- greatly de-escalate its domestic drug war, halving the number of dealers behind bars, without greatly increasing drug abuse. It should redirect enforcement to reducing violence and disorder. Americans should insist that offenders under community supervision -- who consume a substantial share of all illicit drugs -- refrain from illicit drug use, or face quick, brief, but certain jail stays. That process has reduced methamphetamine use among Honolulu's probationers to an extent that drug-treatment providers could only dream of.

Internationally, Americans should stop allowing the fantasy of drug-supply reduction to dominate U.S. foreign policy toward Mexico and Afghanistan.

But all of that will require careful thought and skillful execution. Both no-brainer "solutions" to the drug problem --"a drug-free society" and "ending the drug war" -- are equally delusional. The two drug problems are both here to stay. Let's learn to deal with that fact.

Mark A.R. Kleiman is professor of public policy at the University of California, Los Angeles; the author of Against Excess: Drug Policy for Results; and the editor of the Journal of Drug Policy Analysis. Princeton University Press will publish his new book When Brute Force Fails: How to Have Less Crime and Less Punishment this summer.

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