FIMUN 2020 STUDY GUIDE COMMITTEE: UNODC

Topic-1: Preventing Illicit Financial Gain from Drug Trafficking and Organized Crime Committee Directors: Azra Rüya Kaykaç / Dilay Keskin /

Ali Emir Şanal

Distinguished Delegates,

It is our pleasure to welcome to Final Model United Nations 2020, we are

delighted for being able to host you in this year’s UNODC committee.

The UN Office on Drugs and Crime is one of the most entertaining yet

challenging committees. This committee mainly deals with illicit drugs and

organized crime. Some of the world’s biggest and most dangerous issues are

tackled here. The committee plays a big part in researching and combating

international drug cartels and crime syndicates.

The mission of the committee is to enforce the knowledge within delegates;

you are required to do your own research, as well as to stick with your

country´s position. We expect every delegation to have accurate information in

order to debate the topics. Your research should be based on facts and existing

information about the topics.

We aspire towards constructive debates, long term solutions, and well-written

resolutions. We’re looking forward to meeting you all. If you have any

questions don’t hesitate to contact us via:

aliemirsanaldc@gmail.com

dilaykeskin2003@gmail.com

azraruyakykac01@gmail.com

Introduction to the Topic

2011 of the Global Commission on Drug Policy stated that “The global war on

drugs has failed, with devastating consequences for individuals and societies

around the world. Fifty years after the initiation of the UN Single Convention on

Narcotic Drugs, and 40 years after President Nixon launched the US

government’s war on drugs, fundamental reforms in national and global drug

control policies are urgently needed.”

Organized crime groups have existed in various parts of the world for centuries,

and they have been involved in the international drug trade for almost 100

years. Over this time, their operations and structures have been transformed

by technology, legislation, and shifts in politics; many of the most infamous

drug trafficking gangs have come and gone.

It is estimated that 35% of organized crime units are participating in drug trafficking and that transnational organized crime groups across the globe were estimated to have generated between approximately one fifth and one-third of their revenues from drug sales. However, organized crime groups have widened their portfolio of illicit activities. New crime areas such as cybercrime and environmental crime have emerged. Fewer groups are exclusively dedicated to drug trafficking, while more are also operating in other illicit sectors. However, a UNODC study with a global focus suggested that by 2002 half of the

40 criminal groups operating in the 16 countries investigated counted illicit

drugs as their main or core activity. Despite the transformations in recent

decades and a trend towards crime diversification, the drug market continues

to play a key role in organized crime activities. In Europe, illicit drugs not only

constitute the single largest organized crime market.

Definition of Key Terms:

Organized Crime Group

A structured group of three or more persons, existing for a period of time and

acting in concert with the aim of committing one or more serious crimes or

offenses in order to obtain, directly or indirectly, a financial or other material

benefits

Illicit

Not allowed by the law

Drug Trafficking

The smuggling, distribution, and sale of illegal drugs

Opiates

A subset of opioids comprising the various products derived from the opium

poppy plant, including opium, morphine, and heroin.

War on drugs

A largely unsuccessful campaign, led by the U.S. federal government, of drug

prohibition, military aid, and military intervention, with the aim being the

reduction of the illegal drug trade in the United States.

Market

The business or trade in a particular product, including financial products

Corruption

Illegal, bad, or dishonest behavior, especially by people in positions of power

Money Laundering

The crime of moving money that has been obtained illegally through banks and

other businesses to make it seem as if the money has been obtained legally

Smuggling

The act or process of taking things or people to or from a place secretly and

often illegally:

Drug cartel

A drug cartel is any criminal organization with the intention of supplying drug

trafficking operations.

General Overview:

Billions of dollars flow through the hands of drug trafficking organizations each

year, and what they do with that money can have a huge impact on local and

wider economies. They might smuggle cash out of their home country, buy or

build real estate, invest in restaurants and casinos for money laundering

purposes, or stash their profits in offshore financial centers. Depending on the

method they choose, property prices can be distorted, unfair competition

created, licit businesses crowded out, corruption bolstered and the climate to

attract international investment spoilt, ultimately eroding rule of law and

economic stability.

The 2010 estimate in the European Union was equivalent to roughly 25 percent

of overall criminal proceeds, making drugs the third-largest source of income

from organized crime there, after tax fraud and counterfeiting. Excluding tax

fraud, drugs accounted for 34 percent of total revenues of organized crime in

the European Union.

Drug sales expressed in constant currency units have fallen in the United States

since the late 1980s, but in Europe, they have increased over the past two

decades. This suggests that the marked decline in the proportion of drug sales

to GDP in Europe is the result of stronger growth of GDP in other sectors rather

than a declining drug market.

Laundering drug profits

Estimates suggest that well over half of the gross profits generated by the drug

trade are channeled into money laundering.

In the late 1980s, the Financial Action Task Force (FATF) assumed that between

two thirds and 70 percent of drug money was laundered. The FATF study, one

of the first to make such an estimate, based its figures on interviews with

experts in the field.

The UNODC study also suggested that the figure varied according to location.

Overall, the proportion of gross profits available for laundering at the

wholesale level ranged from 87 to 94 percent, and at the retail level from 32 to

50 percent, between sub-regions.

Drug traffickers spend their profits in a variety of ways — from buying luxury

items such as yachts and jewelry, to investing in real estate and using offshore

financial centers. Some traffickers use laundering networks embedded into

their overall organizational structure and directly employ accountants and

lawyers; other groups outsource to “independent” networks that specialize in

hiding the proceeds of crime. With the slow decline of hierarchical crime

organizations and the emergence of loose hierarchical or networked structures,

the trend is moving towards professional outsourcing.

The economic impact of drug money

The flow of drug money from the hands of traffickers, through launderers, and

finally into the licit economy, has all sorts of complex socioeconomic effects. In

the short term, an inflow of drug money back into the economy can boost

investment and local GDP, generating employment and revenue. The long-term

effects, however, tend to be negative, particularly when drug-related proceeds

comprise a relatively larger portion of the total economy of a community or a

country. In this scenario, drug money has the potential to inflate property

prices, distort export figures, create unfair competition, reinforce skewed

income and wealth distributions and increase corruption. In the process,

legitimate businesses, without access to illicit funds, may be squeezed out of

the market, and new legitimate investments may not take place. The rise of an

illicit economy helps to weaken the rule of law and facilitates corruption, which

in turn reinforces the vicious economic cycle.

Studies suggest that the flow of laundered money, including drug proceeds,

back into the domestic economy is associated with reductions in overall annual

economic growth rates, 72 particularly in smaller and less developed countries.

One estimate, based on a study of 17 OECD countries, suggested that a $1

billion increase in money laundering can reduce overall economic growth by

between 0.03 and 0.06 percentage points.

Possible solutions

Decriminalization of drugs

The artificially high profits of the illicit drug market provide a great incentive for

drug cartels, which lead to gang wars and crime in order to gain or retain a

share of the black market for drugs. For this reason countries, and even sub

national territories and cities have expressed a desire for decriminalization in

the past. These countries emphasize on the rehabilitation of the offenders and

the promotion of drug-related education and awareness campaigns rather than

prosecution. As such, they hope to spend fewer resources on tracking down

criminals and incarcerating them, by concentrating instead on public health

and education initiatives, which would be tackling the roots of the problem.

Decriminalization of drugs could be achieved by subjecting the production,

trade and consumption of drugs to international regulations, which would

mean that certain limits and conditions would be imposed and monitored.

Rehabilitation

Countries could provide rehabilitation to drug users and prevent the

consumption of drugs by strengthening their systems of public health and

social services. By ensuring that treatment is widely accessible, these countries

would be able to undermine the illicit drug market and reduce the negative

effects that widespread drug abuse causes on society. Another measure which

will prove useful is the provision of psychological treatment to abusers in order

to tackle to the underlying reasons for their addiction.

Education and Employment

By ensuring a proper education and a good work environment, states can

ensure that people pursue other activities than drug cultivation. Training,

internships and vocational skills can be offered to the young, unemployed or

rehabilitated. Better education will also prove necessary to prevent the rise in

the number of drug users, by making people understand the consequences of

drug abuse and hence limit the demand for drugs. Education initiatives

concerning drugs can be reinforced, along with the spreading the knowledge of

the dangers of sharing hypodermic needles.

Search and Destroy

One can’t have drugs if no one produces it. Instead of promoting strategies to alter

the legal status of drugs, or change the incentives of its producers, there is always the

ever so slightly more confrontational way. A United Nations anti-drug task force could

go in and slash and burn drugs fields, raid container ships trafficking the drugs, or

even assault overland drug caravans. Maybe a harsh international law could be

enacted where all drug producers worldwide will fall under the same laws. UN Special

Forces could quickly descend and dispatch drug cartels in Mexico, Afghanistan and

Myanmar, putting an end to middle men, and/or producers.

Another measure, which could be used to limit the international drug trade, would be

stricter border controls in order to prevent the transit of drugs and its components to

other states, thus reducing the supply of drugs. Cooperation among neighbor states

to achieve stricter border controls is necessary and Interpol may be able to play an

important role in coordinating the different states’ forces.

Alternative Development

Alternative development initiatives work on the assumption that reductions in opium

and coca cultivation are conditional upon the general social and economic

development of source areas and their integration into the nation state. As such the

elimination of drug crop cultivation is often a positive externality of the process of

enhancing food security, increasing household incomes and an improvement in the

quality of life. Alternative development via the introduction of substitute crops and

diversified cropping patterns has disproved the myth that coca and opium offer the

highest returns to small farmers. Substitution efforts in Northern Thailand have

illustrated that annual profits per square meter can be increased by over 50 times by

replacing opium with flowers. In the Chapare rubber has been found to accrue four

times that of coca per hectare. In Buner, Pakistan household incomes were more

than doubled through development efforts between 1976 and 1991 whilst opium

cultivation had been all but eliminated since 1983. Moreover, Thailand's success in

reducing the level of opium production has proved what development efforts can

achieve where decades of coercion have failed. Current levels of production are half

that produced in 1984 and only a quarter of that produced in the mid 1960's.

Consequently, Thailand's programme is considered as one of the most effective in the

world.

Major parties involved

United States The effects of the illegal drug trade in the United States can be seen in a range

of political, economic and social aspects. Increasing drug related violence can

be tied to the racial tension that arose during the late 20th century along with

the political upheaval prevalent throughout the 1960s and 70s. The second half

of the 20th century was a period when increased wealth, and increased

discretionary spending, increased the demand for illicit drugs in certain areas of

the United States. Large-scale drug trafficking is one of the few capital crimes,

and may result in a death sentence prescribed at the federal level.

Although narcotics are illegal in the US, they have become integrated into the

nation's culture and are seen as a recreational activity by sections of the

population. Most of the U.S. imports of drugs come from Mexican drug cartels.

Mexico Corruption in Mexico has contributed to the domination of Mexican cartels in

the illicit drug trade. Since the beginning of the 20th century, Mexico's political

environment allowed the growth of drug-related activity. The loose regulation

over the transportation of illegal drugs and the failure to prosecute known drug

traffickers and gangs increased the growth of the drug industry. Toleration of

drug trafficking has undermined the authority of the Mexican government and

has decreased the power of law enforcement officers in regulation over such

activities. These policies of tolerance fostered the growing power of drug

cartels in the Mexican economy and have made drug traders wealthier. Over

the past few decades drug cartels have become integrated into Mexico's

economy.

Mexico is widely known as one of the countries where drug abuse is relatively

high, but when the government realized that black market and the drug cartels

had been causing a substantial destruction where they led to a great number of

deaths, they decided to decriminalize many drugs in 2009 and a lot of these

legalized drugs are deemed to be from the hard ones, including heroin and

cocaine. The government has done so, hoping that the decriminalization would

help in making Mexico a safer place.

Colombia

Colombia has had a significant role in the illegal drug trade in Latin America.

While active in the drug trade since the 1930s, Colombia's role in the drug

trade did not truly become dominant until the 1970s. When Mexico eradicated

marijuana plantations, demand stayed the same. Colombia met much of the

demand by growing more marijuana. Grown in the strategic northeast region of

Colombia, marijuana soon became the leading cash crop in Colombia. This

success was short-lived due to anti-marijuana campaigns that were enforced by

the US military throughout the Caribbean.

China

China has a long history of illicit drug use. Opium was first trafficked into China

by ancient Arabians in early 700 BC. The number of drug addicts exceeded 20

million in 1949 when the new China was founded. Following the launching of

an extensive anti-drug campaign in the early 1950s, the Chinese government

news agency announced in 1953 that drug abuse was completely eliminated

from the mainland, which led China to be considered a drug-free country for

the next thirty years. Drug use re-emerged in China as it adopted economic

reforms and an open door policy to the outside in 1980s. The drug trafficking

activities were carried out mainly through the route from the Golden Triangle

region

China had the third largest heroin seizures in the world and the largest cocaine

seizures in Asia in 2006. According to the China Ministry of Public Security, the

number of registered drug users increased from 70,000 in 1990 to 1.16 million

in 2005; however, the estimated number is believed to be higher. The majority

of drug users use heroin. Most of them are young, have little education and do

not have stable employment.

Bibliography

https://wdr.unodc.org/wdr2019/prelaunch/WDR19_Booklet_1_EXECUTIVE_SUMMARY.pdf

https://link.springer.com/content/pdf/10.1186/1477-7517-7-4.pdf

https://www.unodc.org/pdf/Alternative%20Development/AD_BulletinNarcotics.pdf

https://www.washingtontimes.com/news/2009/apr/26/solutions-nadleman-piper-decriminalizing-

marijuana/

https://www.ncjrs.gov/ondcppubs/publications/policy/99ndcs/iv-g.html

https://www.unodc.org/wdr2017/field/Booklet_5_NEXUS.pdf