Friday, December 29, 2006

Heroin Seizures - 2006

As some of you may have noticed, there was a rapid upsurge in heroin seizures in December 2006. As much as 50 Kg of No. 4 grade heroin was seized from couriers by the BSF and the NCB. To put this number in perspective our total heroin seizures annually are about 200 Kg of white powder. So in one month we picked up about a fourth of our annual capture. The market value of these seizures is a couple of million USD. Heroin usually sells for about 1 Cr rupees per Kg.

The packs containing heroin were marked "Marble Ifaq Factory" of the "Meer Marble Agency of Pakistan Afghanistan Limited". "Pakistan Afghanistan Limited" is allegedly owned by one Bashir Pathan (sometimes also referred to as Mori Gul). Additionally a Canadian NRI was arrested with a substantial quantity of heroin in Punjab and two nigerians were arrested in Delhi with about 18 Kg of white powder by Special Cell. This suggests that the heroin was bound for western markets.

As you all know 2006 has been a tumultous year for drug seizures in India. In addition to the huge haul of Cocaine at Nhava Sheva, there was a stunningly large seizure of Mandax in New Delhi. Earlier in 2006 a network running approximately 42 Million USD worth of heroin each year via Sri Lanka was busted. You are also probably aware that India has been put on a US list as a country of concern due to "leakage" of licit Heroin in India on to the illegal market. Some observers have openly opined that India is emerging as the new hub for narcotics transport in the world and there will soon be considerable pressure on India to disrupt.

The news from South America is particularly interesting, rumours suggest that someone close to President Hugo Chavez is tying Venezuela's oil economy to existing Cocaine economies in the region and this has propelled an anti-American shift in the loyalties of South American Cocaine producers and trafficers. Afghanistan does not present a pretty picture either, opiate production is at record levels. Myanmar is also recording staggering rises in Heroin production. Rumour circulating suggest that heroin and cocaine cartels all over the world are overproducing and driving the prices down. Another idea doing rounds is that a powerful Heroin for Cocaine exchange is building up in Nigeria, and it is rapidly connecting the economies of South America, Africa, Pakistan and Afghanistan.

It is difficult to imagine that drug lords will take kindly to a high rate of interception in India. In other transit countries, narcotics groups have routinely funded terrorist acts when faced with regulatory pressure. The objective of such terrorist acts is to discredit the government of the land publicly and to leverage an end to terror in exhange of a reduction in regulation. A combination of growing domestic demand and changing trafficing patterns will create regulatory pressures in India and this is likely to provide incentive to narcoterrorism.

We are heading for a very difficult time in these matters.

5 Comments:

At 1:48 AM, Anonymous Nitin said...

Maverick,

Thanks for keeping a focus on this. The facts are a wake-up call. But do you think this is "organic" or that it is a manifestation of changed tactics by 'people like us'?

 
At 12:05 PM, Anonymous Anonymous said...

Maverick,

Whenever you have the time could you write up a post that describes the narcotics trade in and around Asia? Things such as:

(1) The major sources and destinations along with the routes taken between them.

(2) The major players involved in manufacturing at the sources, transport along the routes and distribution at the destination.

(3) How the narcotics trade interfaces with other interests of the aforementioned players.

(4) The various governments involved in the narcotics trade via their intelligence agencies and their means and reasons for doing so.

This would have tremendous archival value. Thanks.

 
At 2:10 PM, Blogger maverick said...

Nitin,

I don't want to say anything right now because I still don't know where this is leading. Ideally, narcotics has a potential to destroy society and given the global reach of these cartels, I do not see any alternative to a global strategy to control it, that said I can see very easily why such a strategy would never get off the ground given how different countries view narco-trafficing differently.

anonymous,

some answers.

1) There are two major sources for heroin - burma and Afghanistan-Pakistan. This is where the bulk of the refineries are. The Burmese heroin goes mostly to China. Pak-Afghan heroin comes to India via Punjab, Nepal and the sea. Cocaine is most from South America. It reaches India in "various" ways.

2) No comment.

3) Narcotics trade generates revenue , staggering amounts of it. This money has to be invested otherwise it becomes useless. A currency exchange like the BMPE is needed to manipulate the liquidity and a network like Hawala is needed to move the funds around. Whoever can dip his/her hand into the golden pot gets money for whatever they want to do.

4) Pakistani government allegedly uses Heroin as a currency reserve, much the same way India uses gold. The pricing control structure on the heroin transit trade gives the Pakistanis a huge amount of revenue which some estimate to be equal to the size of the white economy of Pakistan some ~ 40 Bn dollars. That is enough of a motivation for anyone. Means, as many as the mind can create. For a while Pakistani Airforce jets were being used to fly heroin directly into the US. One rumor has it that Gen. Zia ul Haq flew several tons of white powder heroin into the US on a PIA flight.

 
At 8:56 PM, Anonymous Nitin said...

Maverick,

What do you think of (India and the US) buying the crop at source (in Afghanistan) on condition that the next crop is something else...the next crop (say wheat) can be purchased in future years at rates competitive to that of poppy.

We need to tackle the microeconomics of opium cultivation in Afghanistan; provide better incentives for small and big farmers to plant something else.

I'm sure cost-wise, it'll be far less that what say, the US spends on fighting trafficking. But that expenditure creates jobs at home, while paying off the Afghan farmer is just money out of the pocket. Unfortunately.

 
At 11:56 AM, Blogger maverick said...

Hi Nitin,

The Pakistanis have market dominance. They know everything there is to know about the trade and they have large existing stocks of material in warehouses.

They control the raw material markets and the refineries and they have a well developed trade route.

If we attempt to establish an alternative presence, we will have to compete with their pricing structure from a position of ignorance and with no real access to an economical transit route.

If we somehow establish a toehold and hoard as much resource as we can, they have the option of simply dropping their prices and dumping stuff on our streets.

That will leave us with a hellish war on our streets and undercut the profitability of our transaction.

They are running what is amounting to an almost natural monopoly. And any which way we do this, there will be major restructuring costs.

If you get a chance read a 1992 study by Phillip Jones, called "Sowing the Wind". It is a CIA study of heroin in Pakistan and in some way presages the problems of today.

 

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