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A research paper by the United Nations Office on Drugs and Crime (UNODC), published on Thursday, foresees that measures designed to curb the spread of the disease will continue to have a “mixed impact” on the international supply of drugs.
The study follows a similar Europol report published last week, predicting that the drug trade will gradually stabilise as restrictions are eased, and that post-pandemic challenges will create new opportunities for economic crime, cybercrime and human smuggling.
In terms of drug production, the UNODC observes that labour shortages could negatively affect this year’s opium harvest in Afghanistan, while present restrictions on international movement might have resulted in a shortage of buyers in Myanmar, where harvests were completed before the outbreak of the disease.
A shortage of gasoline, a crucial ingredient for the manufacture of cocaine, has also interrupted the trade in Colombia, while in Peru, the reduction of trafficking opportunities has seen prices drop considerably.
Drug transportation has been disrupted, with tighter border enforcement leading to an uptick in seizures, notably in Iran and the Indian Ocean, as well as along established routes from Mexico into the United States. Maritime trafficking has also increased, as the result of limitations imposed on air travel.
However, the global drug market has historically proven extremely resilient to economic turbulence, and a resurgence in both production and transportation is anticipated once normal activity resumes, according to the agency’s report.
Europol’s study further suggests that the cancellation of many music festivals and other large-scale events may also result in a less lucrative summer for drug traffickers and producers.Â
But Adam Winstock, a consultant psychiatrist at University College London’s Institute of Epidemiology and the founder of the Global Drug Survey, told OCCRP that it will not be long before these groups start to recover their losses.
“The majority of MDMA production comes out of the southern Netherlands. Under lockdown, those producers will have been manufacturing millions of pills in preparation for the big European summer,” he said. “While there will be less going on this year, those groups will be sitting on stockpiles of good quality, high dose drugs, potentially flooding the market with cheap MDMA just as soon as things start opening up again.”
Winstock further notes that trends among recreational drug users differ to those among users who are dependent on drugs.
In the UK, he says, restrictions mean that “the majority of users are unable to beg or shoplift, and therefore don’t have the money available to buy. So there’s been a downturn both in demand and supply. On the plus side this drives people into treatment with potentially long lasting positive effects.”
“The risk here will be when the lockdown begins to lift - as people return to the streets, drug users will be able to generate funds again, which might see an increase in overdose and/or a decline in purity as dealers wait for dwindling supplies to pick up again,” he added.
Jon Petter Rui, a professor of law at the University of Bergen in Norway, told OCCRP on Thursday that illegal enterprises in the wake of the 2008 financial crash will provide an important framework for anticipating and responding to organised criminal activity in the coming years.
“In the case of the most recent recession, banks accepted billions of dollars in black money simply because they had to in order to remain stable,” he said. “If you look at what has happened before, of course this is going to happen again. There will surely be an influx of criminal proceeds into the legal economy.”
Rui added that the hard times ahead may also incentivise otherwise law-abiding businesspeople to accept capital with likely criminal origins. “It’s that much harder to uphold ethical standards when you are facing the bankruptcy of your firm. If you’re looking at total personal economic breakdown, it’s difficult to stick by your morals and values,” he said.
“Africa is a very good example. Corruption and bribery are widespread not necessarily because people are content for the law to be broken, or that they don’t care about ethical and societal problems - they permit it because they have to find some way to pay for their food, their education, their healthcare,” he added.
Europol’s report echoes Rui’s concerns. Following the 2008 economic crisis, “the EU and its Member States introduced far-reaching measures to limit cash transactions and prevent money laundering schemes. The current crisis and its impact on the economy may provide a real test to the effectiveness and resilience of these measures,” it reads.
In particular, the agency notes that the pandemic may lead to a reduction in prices of particular goods favoured by criminal actors as a means of laundering their proceeds.
“This potential development may be particularly noticeable in the real estate sector, which lends itself to the investment of criminal profits,” the report states. It also speculates that recent measures introduced by the EU, such as the 5th Anti-Money Laundering Directive, may further drive European criminal groups toward emerging economies, where controls are less tight.
Markus Meinzer, director and lead researcher at the Tax Justice Network, told OCCRP that Europol’s report “speaks a lot to the need to ensure the full implementation of beneficial ownership registries.”
These registries - effectively a list of all parties that hold interests in off-shore companies and accounts - diminish the veil of secrecy in tax havens that allow organised criminals to launder proceeds from their operations.
“Fast and proper implementation of these public registers would deter criminals from using these channels, as well as allow law enforcement to better connect the dots between these actors, to see through the maze of how criminals are able to hide their wealth,” he added.
Meinzer also said that he was surprised the report did not touch on the risk of organised criminals seeking to increase their interests in online gambling.
"We’ve seen in the past that this has become a sector of real importance for organised money laundering, where criminal groups can with a relatively low margin of risk either engage in smaller scale laundering operations by placing bets, or by taking over entire online casinos that are then operated like shell banks,” he said.
This has particularly been a problem “inside the EU, where several scandals have hit the industry in recent years,” he added.
Also included in Europol’s forecasts are a sustained increase in cybercrime and an anticipated uptick in human smuggling and trafficking.
Since the outbreak of the pandemic, OCCRP has been covering the global boom in cybercriminal activity, and last week reported that Global Initiative is warning governments around the world of the impact of the disease on illegal movement of persons by criminal groups.
