Think of drug cartels and what comes to mind? Murder, grotesque mutilations, stacks of black money and bribing the police. Of course, this is all true, but in many ways a successful cartel is run very similarly to large legitimate businesses. They face the same old problems, finding the right talent, keeping up with the latest innovation and even managing public perceptions. This article will you give you a flavour for what goes on behind the scenes at a cartel.
1. Finding the Right Talent.
Recruitment is probably the biggest issue a cartel boss faces. Why? Well, when you have over 10,000 ‘employees’ dying each year, staff turnover can be pretty high. Luckily for cartels, there are an estimated 7.5 million ninis – 15-29 year olds neither in education or work – to fill the vacancies. The problem with this, as is the problem faced by many legitimate companies, is a lack of skilled workers to fill the upper level jobs. This has meant looking abroad for more talented people. For example, the Zetas – considered “the most technologically advanced… ruthless, and dangerous cartel operating in Mexico” – turned to ex-members of Guatemala’s special forces. Soldiers who specialise in jungle warfare and counter-insurgency can be pretty valuable additions. Let’s not forget that the need for work visas and background checks is limited for them.
2. Managing Public Perceptions
Normally, a company that contributes to the death of over 80,000 people in 9 years, wouldn’t usually last that long. Yes, the fear factor and bribes to local police institutions helps keep the business running. But another key part is a practice most big businesses apply – enter corporate social responsibility. In places like the rural areas of Mexico, support from the government is limited. So, donations by cartels to local facilities such as churches and sports fields, and the creation of limited social-security systems enables them to operate amongst normal civilians without being reported to the authorities. Joaquín Guzmán who you might know as ‘El Chapo’, even gave toys to the children of his hometown during holidays.
3. Changing Business Models
Like many major businesses, cartels are having to evolve with the ever-growing reach of the internet. For them, it’s not the regular internet they’re interested in, but the dark web. Sites on the dark web are becoming an increasingly popular method of buying drugs. Between 2012 and 2015, dark web purchases increased from $15-17 million to $150-180 million. The internet can become a gateway to new customers. If products receive good reviews here, it can help develop a franchise in a secure and anonymous way, all requiring limited manpower. Despite this, major cartels haven’t really made inroads in using the dark web. There are several reasons. First, it’s a pretty new market and in many ways cartels are just getting to know it. Then, there’s the fact that cartels don’t want to disrupt existing supply chains they’ve worked hard to establish. What’s most interesting however, is that the internet drug cartel requires some very different skills to the one on the ground, so it’s not easy to just switch.
4. Tax Avoidance. Tax Evasion. Just Not Paying Anything.
A major advantage for cartels over legitimate businesses is there’s no real need to pay tax. When you’re breaking most other laws in the country, what’s a little tax evasion, eh? Yes, they might have to dig a couple of tunnels here and there, but they can sell their product in any country and keep all the profits. If a cartel only transports a tonne of cocaine from Colombia to the US, it can be worth $28,000 more. If a cartel can distribute drugs themselves, this figure can rise to $98,000 in profits. The war on drugs is often criticised because it has focused on trying to increase the costs of raw materials (i.e. cocoa leaves) for cartels. With such high profit margins, it is easy to see why this strategy has been unsuccessful. It is like trying to stop a musician making a new album by increasing the price of guitar strings, it would never make a big enough impact on the profits to matter to them.
5. Staying ahead of Competitors
Probably the biggest modern day threat to cartels is the legalisation and regulation of cannabis consumption. It would take an estimated $45 billion chunk out of the cartels’ profits and this is from the US alone. However, with the help of conservative groups around the world resisting legalisation and the fact that other drugs than marijuana are unlikely to be legalised any time soon, drug cartels look likely to continue to be profitable businesses.
The drug industry is estimated to be worth about 400-billion-dollars and has been growing despite the billions of dollars pumped into the war on drugs. The war on drugs has made limited gains and perhaps it’s because we’ve failed to see the sophistication with which many cartels operate today. What drives a drug cartel is not blood. Ultimately, it’s business.