ECON 2001Research Report TheUnderground Economy Prof: – TimBerry AnkishShenoy #N01070627 TheUnderground Economy in Columbia Columbia is a developing nation situated in thenorthwest of South America.
Columbia also shares borders to the northwest withPanama an illegal drug trade paradise, east of Venezuela and south of Ecuadorand Peru. They became a focus of public attention for all the wrong and illegalactivities carried out in the country. Mafia, drugs and crime business is themajor headlines for news channel and this is not only affecting the Columbianeconomy but also adversely affecting other neighbouring countries. Columbiamajor image was affected due to the large-scale production of cocaine tradecarried out in the 80’s.
My major key research in this paper would be to talkabout the criminal groups that are involved and how the economy of Columbia isaffected. (Illegal Drug Trade in Canada, 2010) Drug Cartel network in ColumbiaColumbia has four major criminal drug business cartelsand many small drug trafficking groups that created their own social class andinfluenced the Columbian politics, economy and culture. There has been anongoing rivalry war between narcoparamilitary groups, drug cartel groups andguerrillas fighting all over Columbia to increase their influence against theColumbian Government. Cocaine that was produced at approximately $1500/kilowould be sold for around $50000/kilo because of the high demand in the market.
These drugs were supplied throughout the world of which more than half of themwere supplied to the United States of America. The United States Governmenttried to intervene and put a stop to these drugs from entering the UnitedStates. During that time drug lord and drug barons of Columbia Jose Rodriguezand Pablo Escobar were the most influenced people in the whole of Columbia andwere considered to be very dangerous, powerful and wealthy men across theworld.
Pablo Escobar’s criminal organization supplied approximately 85% of thecocaine supplied to the United States having a turnover capital of $21.9million. He was titled the King of Cocaine and was known as the richestcriminal with a net worth of $30 billion. He was known not only to supply cocaine butalso kidnapping and extortion.
During the 80’s approximately 60 to 70 ton ofcocaine was smuggled from Columbia to United States monthly. His criminalbusiness name operated under Medellin Cartel that often competed across othercriminal organizations locally and internationally resulting in wars, murdersand death of many locals, politicians and police officials. Pablo began hiscocaine smuggling operation in 1975 by flying out planes from Columbia toPanama across the route of United States where he would often smuggle hisproducts and expand relations.
Due to small aircrafts, the smuggle would takelonger which made Pablo buy 15 large aircrafts and 6 helicopters that would decreasetime and increase export. (Bowden, 2015) Establishment of Drug NetworkPablo Escobar was elected as a member of Chamber ofRepresentatives of Columbia for Liberal Alternative movement in 1982. He became well known and his network MedellinCartel took charge of a large portion of drugs that were smuggled into Mexico,Dominican Republic, Puerto Rico and United States. (Escobar, 2014) Pablo Escobarfurther worked with Roberto Suarez Gomes to increase the cocaine production andbegin export of Cocaine to Asia. Pablo Escobar was a criminal drug lord mafiain front of the Columbian and United States Government but on the other hand hewas a role model to many poor people. According to many poor people he workedfor the goodwill among the people of Columbia. He was known for constructing houses for theneedy people and football fields in Western Columbia that made him famous.
Because of his good nature towards the poor people of Columbia many would helphim to hide from the police and protect him from the authorities. Many drugtraffickers in Columbia would hand over 25% to 40% of their profits to PabloEscobar as he would in return help them smuggle their cocaine production to theUnited States. Soon because of many crime organization and cartels developingColumbia became a murder capital in 1991 with deaths estimated of 24100 and27200 in 1992. Pablo Escobar gave rewards to his hitmen for killing policeofficials that resulted in these numbers.
Pablo Escobar was then killed n ashootout carried out by Columbian forces. Hundreds of soldiers and police officialstook charge of his Medellin hide out and killed him. (Bowden, 2015) After Medellin Cartel that aged between 1976 – 1993,the next most powerful was Cali Cartel that was based in South of Columbiabetween 1977 – 1998. This cartel was led by Rodriguez Orejuela and two brothersMiguel and Gilberto.
They initially based out by kidnapping people for ransomand then used that money for financing their drug trafficking business. Theystarted their drug trafficking business with Marijuana and then moved toCocaine with a profit of approximately $8 billion annually. After collapse ofCali Cartel, the North Coast Cartel led to empowerment between 1999 – 2004 thatwas led Alberto Orlandez Gamboa. He was considered as ruthless as Pablo Escobarand given the title as “Caracol” that means a snail. Unlike other drugtrafficking cartel leaders, Gamboa categorized his dealings. It was indicatedby DEA Intelligence that many drug trafficking organizations needed to getpermission from Gamboa before shipping drugs to other places or conductingassassinations. Alberto Gamboa was caught by the Columbian National Police onJune 6th, 1998. (Siebert, 2011) Even after that the drug trafficking business did notstop.
Many cartels carried out drug trades and many of them were exported tothe United States and Europe. The way they export drugs is when drugs arrive tothe Columbia’s coastline they are then loaded onto container ships and aresailed to port hubs in United States and Caribbean which are supervised bycrime cartels of Mexican Sinaloa. (Winslow, 2005) In some cases, the local governmentofficials are bribed and then they coordinate with the drug traffickingcartels.
In the recent years, Venezuela a nation bordering Columbia has becomea hub for cocaine. Many aircrafts containing cocaine have been used to fly inand out to closer places like Puerto Rico, Dominican Republic and Bahamas. Formation of Paramilitary GroupsMany new paramilitary groups formed after 2006 thatare present in the drug trafficking and have been operating in the AUC process.According to the Columbian Police intelligence 40% of cocaine exports fromColumbia were controlled by these groups.
An investigation carried out in 2011in a local newspaper “El Tiempo” states that 50% of cocaine was controlled byBACRIM groups. (Reports, 2017) These paramilitary group organizations have many small groups build inthem of which some are: -1. Los Rastrojos2. The Black Eagles3. Los machos4.
Los Urabenos5. Los Paisas These groups are well known to carry out the drugtrafficking trade, spread human rights abuses and oppose FARC EP guerrillas.Their main targets are Labor union, victims of AUC members, people defendinghuman rights. (Reports W. , 2011) Conclusion After carrying out research on the underground economyin Columbia, I would like to conclude by saying that underground economy inColumbia has existed since a long time and there is still a lot of drug traffickingand black market that is carried out in Columbia, but unlike before due tointervene of Columbian Government and help from US Government they have reducedto quite an extent. Columbia is restructuring as a place where people can nowlive in peace and efforts are been made by the Columbian Government to sustainthe illegal trades carried out in Columbia.
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(2018, January 14). Retrieved January 14, 2018, fromhttps://en.wikipedia.org/wiki/Illegal_drug_trade_in_Colombia#Overview 3. C.
(2017, November 09). Colombia drug trafficking | Fact sheet. Retrieved January14, 2018, from https://colombiareports.com/drug-trafficking-in-colombia/ 4.
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6. Marroqui?n, S.(2017). Pablo Escobar, my father. New York: Thomas Dunne Books, St. Martins Press.
7. World Report 2011:Colombia. (2015, November 02). Retrieved January 18, 2018, fromhttps://www.hrw.org/world-report/2011/country-chapters/colombia