'Cartels are scrambling' as virus snarls global drug trade

Coronavirus is paralysing economies and severing supply chains in China

FILE PHOTO: Police officers patrol at a road after fellow police officers were killed during an ambush by suspected cartel hitmen in El Aguaje, in Michoacan state, Mexico October 14, 2019. REUTERS/Alan Ortega/File Photo

Coronavirus is dealing a gut punch to the illegal narcotics trade, paralysing economies, closing borders and severing the supply chains in China that traffickers rely on for the chemicals to make such profitable drugs as methamphetamine and fentanyl.

One of the main suppliers that shut down was in Wuhan, the epicentre of the global outbreak.

Associated Press interviews with nearly two dozen law enforcement officials and trafficking experts found Mexican and Colombian cartels were still plying their trade as evidenced by recent drug seizures but the lockdowns that have turned cities into ghost towns are disrupting everything from production to transport to sales.

Along the 2,000-mile US-Mexico border through which the vast majority of illegal drugs crosses, the normally bustling vehicle traffic that smugglers use for cover has slowed to a trickle. Bars, nightclubs and motels across the country that are ordinarily fertile marketplaces for drug dealers have shut. And prices for drugs in short supply have soared.

"They are facing a supply problem and a demand problem," said Alejandro Hope, a security analyst and former official with CISEN, the Mexican intelligence agency. "Once you get them to the market, who are you going to sell to?"

Virtually every illicit drug has been affected, with supply chain disruptions at both the wholesale and retail level. Traffickers are stockpiling narcotics and cash along the border, and the US Drug Enforcement Administration (DEA) reported a decrease in money laundering and online drug sales on the so-called dark web.

"The godfathers of the cartels are scrambling," said Phil Jordan, a former director of the DEA's El Paso intelligence centre.

Cocaine prices are up 20 per cent or more in some cities. Heroin has become harder to find in Denver and Chicago, while supplies of fentanyl are falling in Houston and Philadelphia. In Los Angeles, the price of methamphetamine has more than doubled in recent weeks to $1,800 per pound.

"You have shortages but also some greedy individuals who see an opportunity to make more money," said Jack Riley, the former deputy administrator of the DEA. "The bad guys frequently use situations that affect the national conscience to raise prices."

Synthetic drugs such as methamphetamine and fentanyl have been among the most affected, in large part because they rely on precursor chemicals that Mexican cartels import from China, cook into drugs on an industrial scale and then ship to the US.

"This is something we would use as a lesson learned for us," the head of the DEA, Uttam Dhillon, told AP. "If the disruption is that significant, we need to continue to work with our global partners to ensure that, once we come out of the pandemic, those precursor chemicals are not available to these drug-trafficking organisations."

Cartels are increasingly shifting away from drugs that require planting and growing seasons, like heroin and marijuana, in favour of synthetic opioids such as fentanyl, which can be cooked  throughout the year, are up to 50 times more powerful than heroin and produce a greater profit margin.

Although some clandestine labs that make fentanyl from scratch have popped up sporadically in Mexico, cartels are still very much reliant upon Chinese companies for precursor drugs.

Huge amounts of these mail-order components can be traced to a single, state-subsidised company in Wuhan that shut down after the outbreak earlier this year, said Louise Shelley, director of the Terrorism, Transnational Crime and Corruption Centre at George Mason University, which monitors Chinese websites selling fentanyl.

"The quarantine of Wuhan and all the chaos there definitely affected the fentanyl trade, particularly between China and Mexico," said Ben Westhoff, author of Fentanyl, Inc.

"The main reason China has been the main supplier is the main reason China is the supplier of everything — it does it so cheaply," Westhoff said. "There was really no cost incentive for the cartels to develop this themselves."

But costs have been rising and, as in many legitimate industries, the coronavirus is bringing about changes.

Advertised prices across China for precursors of fentanyl, methamphetamine and cutting agents have risen between 25 per cent and 400 per cent since late February, said Logan Pauley, an analyst at the Centre for Advanced Defence Studies, a Washington-based security research non-profit organisation.

So even as drug precursor plants in China are slowly reopening after the worst of the coronavirus crisis there, some cartels have been taking steps to decrease their reliance on overseas suppliers by enlisting scientists to make their own precursor chemicals.

"Because of the coronavirus they're starting to do it in house," Westhoff said.

Some Chinese companies that once pushed precursors are now advertising drugs like hydroxychloroquine, which President Donald Trump has promoted as potential treatment for Covid-19, as well as personal protective gear such as face masks and hand sanitisers.

Meanwhile, the situation on the US-Mexico border resembled a stalled chess match where nobody, especially the traffickers, wanted to make a wrong move, said Kyle Williamson, special agent in charge of the DEA's El Paso, Texas, field division.

"They're in a pause right now," Mr Williamson said. "They don't want to get sloppy and take a lot of risks."

Some Mexican drug cartels are even holding back existing methamphetamine supplies to manipulate the market, recognising that "no good crisis should be wasted", said Joseph Brown, the US attorney in the Eastern District of Texas.

"Some cartels have given direct orders to members of their organisation that anyone caught selling methamphetamine during this time will be killed," said Mr Brown, whose sprawling jurisdiction stretches from the suburbs of Dallas to Beaumont.

To be sure, narcotics were still making their way into the US, as evidenced by a bust last month in which nearly $30 million worth of street drugs were seized in a new smuggling tunnel connecting a warehouse in Tijuana to southern San Diego. Ms Shelley said that bust was notable in that only about two pounds of fentanyl was recovered, "much lower than usual shipments".

Mr Trump announced this month that US Navy ships were being moved toward Venezuela as part of a effort to beef up counter-narcotics operations in the Caribbean following a US drug indictment against President Nicolas Maduro.

But the pandemic also has limited law enforcement's effectiveness, as departments coped with drug investigators working remotely, falling ill and navigating a new landscape in which their own activities have become more conspicuous. In Los Angeles county, half of the narcotics detectives have been put on patrol duty, potentially imperilling long-term investigations.

Nonetheless, Captain Chris Sandoval, who oversees special investigations for the Houston-based Harris County Sheriff's Office, said there was a new saying among his detectives: "Not even the dope dealers can hide from the coronavirus."