While speaking before the US Congress’ Central America Caucus on July 6, InSight Crime Co-Director Steven Dudley outlined how drug trafficking organizations on the isthmus operate and the implications for rule of law and security, before offering three concrete ways the US government can improve its counternarcotics strategy in the region.
Central America has long been a bridge that connects the producer countries in South America to the consumer nations in the north, principally the United States. This role has led to the development of several different types of criminal organizations, some of them transnational, some of them local, and many more of them hyper-local.
Some of the transnational criminal organizations (TCOs) have familiar names: the Sinaloa Cartel, the Gulf Cartel, the Zetas, and the Urabeños all have operatives in Central America. They purchase cocaine or coca base from producer nations like Colombia and Peru. And they oversee the movement of that product from production point to market.
In Central America, they oversee the second tier criminal organizations in these countries that provide the transportation for the illicit drugs. These so-called “transportistas” are often family-based groups with long criminal histories in contraband, human smuggling and other criminal activities, which give them a strong foundation to jump into narcotics trafficking.
Examples include the Cachiros, a Honduran-based organization that once controlled a prominent route through northern Honduras, between Nicaragua and Guatemala. The Cachiros started as cattle rustlers who sold their stolen cattle to one of the country’s most prominent elite families. Over the years, their land titles grew as did their role in illicit trafficking. By September 2013, the year the United States Treasury Department placed them on its “Kingpin” list, the Cachiros had accumulated anywhere between $500 million and $800 million in assets, much of which they had put into African Palm plantations, mining licenses, hotels, a prominent zoo-resort, and a local soccer team.
It is these second tier, or transportista groups that inflict the most damaging consequences as it relates to drug trafficking. The Cachiros financed political parties of all stripes from would-be mayors to congressmen and perhaps above. They undermined local investigations against them and others by infiltrating the police, the local Attorney General’s Office and courthouses throughout the country. They bought construction companies, so they could win government contracts, then kicked money back to the politicians who supported their bids. They backed land invasions of their business rivals. And they killed their drug trafficking rivals and others who opposed them with impunity.
The increased drug trafficking in the region has had a trickle-down effect as well. Drug trafficking groups, from the TCOs to the local transportistas, pay local contractors and collaborators in-kind. The resulting flood of illicit drugs has turned traditional economics on its head: at InSight Crime, we found evidence of powdered cocaine being sold in the poorest Honduran neighborhoods. To be sure, that is not the drug of choice in those neighborhoods. Marijuana is. But it gives you an idea of the amount of drugs in the country and illustrates that supply can sometimes drive demand.
The local dealers of these drugs are very often the street gangs. The gangs have no role in international drug trafficking. They are restricted to dealing drugs on the hyper-local level. This drug dealing has become a critical part of the gangs’ criminal economy and thus a strong source of tension between gangs. In other words, the fight for the proverbial corner has become extremely violent in the last few years and helps us account for what has made Central America and, in particular the Northern Triangle nations of Honduras, El Salvador and Guatemala, the most violent region in the world that is not at war.
Local drug dealing has also allowed the gangs to accumulate more sophisticated weaponry, establish safe houses, buy businesses and expand their political reach. In some places, we have found gangs who are controlling the wholesale drug market. And in all three Northern Triangle countries, there are some parts of the gangs that are trying to become transportistas themselves. It appears they are still a long way from achieving that goal, but some of them are trying.
Implications of Drug Trafficking
The implications of drug trafficking in the region are devastating. Here are four major ones:
The aforementioned transportista networks make the difference between how much the drugs cost when they receive them and how much they cost when they are passed to the next transportista. Our calculations are that an organization like the Cachiros can make between $5 million and $12 million per month at these rates. On the whole, trafficking in a country like Honduras can make close to $700 million per year, which is 4 percent of the GDP, or about half the value of the country’s top export, coffee. Guatemala and El Salvador have similar estimations, although El Salvador is more of a money laundering hub due to the dollarized economy.
The money is more than just economic capital. It is political and social capital as well. Proceeds from these transport networks go into legitimate and illegitimate businesses, which provide thousands of jobs and are a key motor of the economy in many areas. They fund political parties and candidates, giving the transportistas a say about security as well as economic development strategies. They fund social functions, church events, and soccer clubs, many of which leap to the first divisions and compete for championships, like the Cachiros’ funded club did from one year to the next.
We in the US understand how important sports are to local pride. And at InSight Crime, when we crossed various social networks working with the Cachiros, we found the soccer team was the most important place where the country’s elites, politicians and traffickers met and socialized. In the Cachiros case, their main business partners were from the Rosenthals, a prominent business and political family in the country. Jaime Rosenthal, the family patriarch, was thought to be one of the wealthiest people in Central America and was once vice president of Honduras. The Rosenthals own banks, insurance companies, television and media, telephone and communications companies, as well as soccer teams and many other businesses.
When I met with Jaime Rosenthal in June 2015, and asked him directly about his relationship with the Cachiros, he told me he first met them in the late 1970s. The family that would become the Cachiros would arrive to the Rosenthal’s meat-packing plant in a beat-up old truck to sell their cattle. Then they would sleep in the parking lot before driving back the next day. Over time, the Cachiros parked large amounts of their capital in the Rosenthal’s banks. The US government indicted the Rosenthals last October, presumably for some of these interactions they had with the Cachiros. But these relationships between criminal groups and elites continue in Honduras, El Salvador, and Guatemala.
The transportistas also buy off prosecutors, police, and judges. They influence the judicial process from the beginning, first trying to make sure no one gets started on an investigation; then thwarting these investigations if they do get started.
The Cachiros, for instance, were untouchable for years. No one even mentioned the name of the family at the center of it when I first started looking at the group in 2010. At InSight Crime, we spoke openly about them, but that is largely because we are not based in Honduras. Journalists in Honduras told me that they were too afraid to speak up, or that drug traffickers paid journalists to keep them out of the press.
The impunity that results is contagious and the patterns set by the transportistas are repeated by other criminal groups. Judicial and security forces are bought off. Journalists are frightened or paid off.
Although it is hard to quantify because the data is flawed or unavailable, the transportistas are involved in the violence that is afflicting this region. The maps of the most violent areas coincide with the areas presumed to be the drug trafficking routes. This includes the area where the Cachiros once operated, the municipality of Tocoa, which consistently has homicide rates of close to 100 per 100,000 inhabitants.
In addition to the transportistas’ role in the violence, which is largely rural in nature, we have to consider the spillover effect their activities have in urban areas. Specifically, we are talking about gang violence in the region’s largest cities. As described earlier, these gangs control many of the local drug markets where they sell everything from powdered cocaine to forms of crack to marijuana. Between them, they are fighting for the proverbial corner, which InSight Crime believes is one of the main causes of homicide in these countries.
The combination of corruption, impunity, and violence is a powerful push factor when it comes to migration. The areas from where we are seeing some of the most migrants are the areas of transportista and gang violence. The frustration and lack of trust these migrants have with their own authorities is evident in the countless testimonies that come across my desk. Others have done more systematic studies of these push factors, which I urge the Caucus to consult as they consider how to deal with this issue.
US policy as it relates to drug trafficking in the region is slowly evolving. I will mention three key strategies that are at the core of dealing with this issue.
a) Kingpin Strategy
The United States is focused on removing kingpins from the equation by either capturing or killing them. In some cases, the threat of a US capture leads suspects to hand themselves in to US authorities. This is what happened to the core of the Cachiros organization, which turned themselves in to the US in January 2015.
The strategy has its positives. It disrupts the distribution chain, although transportista groups are fairly easily replaced. It also requires a certain amount of political will and coordination, so it is an illustration of progress of the local government and an important political sign to the country that impunity is waning.
However, the kingpin strategy has its negatives. Cutting off the head of an organization can lead to chaos in the organization’s area of influence, leading to upticks in violence as the groups reorganize and a new leading organization emerges. This strategy also requires a huge commitment of resources on the part of the local government, something that can take away from other strategies it might deem more important, such as going after the most violent criminal groups (instead of the most prolific drug trafficking groups).
The second core strategy as it relates to dealing with drug trafficking is to interdict the flow of drugs. Intercepting drugs is a difficult and never-ending job, the fruits of which are rarely felt. The estimated amounts of drugs intercepted is small in the best of circumstances and miniscule in the case of the Northern Triangle nations. It requires a huge amount of resources, good will and practice. Yet it remains a key part of the US strategy.
c) Reforming/rebuilding the police
The third core strategy worth mentioning is that of reforming and rebuilding police forces. The perennial issue as it relates to US counter-drug assistance is how to purge and restock the police forces. The US also assists in developing special units that assist the US counternarcotics agents in capturing or killing drug traffickers, and interdicting drug loads. The work has had some good results, and many police who go through the US filtering system become important agents of change within their institutions.
The case of Guatemala is worth mentioning in this regard. Guatemala has added hundreds of new police in recent years, which have come through a more rigorous filter and passed through a longer training period. Honduras has also showed signs that it is ready to purge the police. A special Honduran police commission, with the blessing of the presidency, has started to remove questionable characters from the police. As opposed to most police commissions, this Honduran commission is starting from the top and moving its way downward. The US is assisting by prosecuting a number of police commanders for their involvement in a drug trafficking case.
It is difficult to completely change the course of counternarcotic strategy. It is less like the go-fast boats that carry drugs and more like the battleship that tries to corral them. But there is a need to update these strategies. Here are three recommendations of how to tweak US counternarcotic strategy:
1) Reconcile the US agenda with that of the local governments
Many local governments are happy to get the assistance from the United States. It helps them beef up intelligence services, train personnel across the board, and it comes with additional equipment and other resources.
But their agenda does not necessarily coincide with the US agenda, especially as it relates to counternarcotics. Many of these local governments are focused on violence, specifically homicides. And while the US agenda looks for results as it relates to the capture, killings and extraditions of kingpins, the locals want lower homicide rates and ways to reduce crimes like extortion.
The US would do better by these countries if it allowed for the assistance to be put towards fulfilling the local agenda. In some cases, such as police reform, these agendas overlap nicely. But in others, such as the aforementioned kingpin strategy, they do not. Be sensitive to this and allow for shifts in resources that correspond to these local decisions rather than insisting on diverting resources towards US goals. In the case of stemming violence and extortion, this approach would also help these countries stem the flow of migration.
2) Focus on the money
As noted, the US Treasury department has begun to play an important role in counternarcotics strategy. Indeed, it was not until Treasury put the Cachiros on the kingpin list in September of 2013, that things began to turn against the criminal group. The Treasury also put the Rosenthals on the kingpin list to coincide with the US Justice Department indictment of various family members in October 2015, including Jaime Rosenthal.
Much of this work can be done from the United States. The US Treasury, in particular, can essentially shut down an operation just by adding its business to the kingpin list, as it did with the Rosenthals. This strategy has its negatives, not the least of which is the lack of transparency in the process and the lack of due process given to the accused.
So in addition to adding more transparency to this process and providing some way to more effectively appeal these decisions before they become effective, the US government should devote more resources to dismantling the money side of these organizations. In the best case scenario, these designations for the kingpin list would go hand-in-hand with indictments.
Going after the money side has an additional benefit. It is part of the way to extract political and economic elites from organized crime. These elites can open or shut the doors to organized crime and drug trafficking interests. Too often that door is wide open. The US can change that calculation by investigating and prosecuting these elites more vigorously. The Rosenthal case sent shudders through the region’s elites. But the US cannot stop with the Rosenthals.
3) Provide more assistance to Attorney General’s Offices
The police are on the front lines of the battle against drug trafficking interests, and the US has long assisted in the strengthening of this institution, but the Attorney General’s Offices are where the war is won or lost. These offices are generally devoid of resources, and in some cases systematically starved. Yet, as we can see from the case of Guatemala — where the Attorney General’s Office is at the center of nothing less than a revolutionary transformation of how people conceive of justice and political reform in that country following the resignation last year of the president and vice president for corruption — these offices are forgotten by the US agencies that can most help them with training, resources, and support.
That support goes beyond just providing better facilities, more wire-tapping services, and witness protection programs. It involves providing them with important political support, especially as it relates to cases in which powerful elites who have long treated the government as their own guard dogs are under judicial scrutiny. The Attorney General’s Offices need political allies as much as they need financial support. The US can be that ally, ensuring judicial independence and ultimately opening the door for reform.