The Wall Street Journal published an excellent article this week on the rise in cocaine smuggling to Europe and the role of the strong euro in fueling another lucrative illicit enterprise: euro laundering.
The article raises several interesting and important issues related to the global trade in cocaine:
- Due to the strength of the euro and increased demand for cocaine in Spain and Italy, Europe has become a more lucrative market for narcotraffickers;
- Consumption of cocaine has soared in Western Europe, much of which is smuggled through West Africa where governments struggle to combat poverty, weak law enforcement, and widespread corruption;
- Spain has become an important center for narcotraffickers intent on disguising the origins of currency gained through illicit activities;
- Consumption of cocaine is on the rise in Spain where today 3% of the population uses the drug, compared with 2.3% in the US; this, combined with reports that a kilo of cocaine in Spain now fetches upwards of $43,000 as compared to $12,000-26,000 in the US, gives the Spanish market the potential to rival, perhaps even surpass, the potency of the US market;
- Spain is an important entry-point for cocaine due to its long shoreline, its proximity to Africa and its shared language with Colombian and other South American traffickers;
- Cocaine bound for Europe first is shipped first to West Africa where it is then sent over land or by water into Europe through Spain. Then the ill-gotten gains (euros) are flown back to South America and laundered through casas de cambio or money exchange businesses. That cash is then exchanged (laundered) by sending the euros to the United States where they are exchanged for other forms of currency as part of a seemingly legitimate business transaction.
