Latin America's drug cartels are diversifying and booming — the FT's deep read

Summary

Latin America's drug cartels have evolved from single-product criminal enterprises into diversified operations. Flush with cash from cocaine sales, they now run gold smuggling, human trafficking, and other illicit businesses with the operational sophistication of multinational conglomerates.

Cocaine production in Colombia jumped 53% from 2022 to 2023, hitting all-time highs. Europe has overtaken the US as the world's largest cocaine market, driven by two decades of accelerating demand. Brazilian law enforcement reports tons of cocaine moving weekly from production labs in Peru and Colombia through the Amazon to ports like Manaus and Belém for export to Europe and Africa.

Traffickers now use drones to scout routes before moving shipments. Semi-submersible vessels sitting just below the surface carry several tons at a time across Amazon tributaries. Cartels have begun deploying Starlink for remote connectivity, allowing them to operate these craft without human pilots aboard and reducing personnel risk while maintaining operational control.

Cocaine purchased from producers costs roughly $300 per kilo and sells for €60,000 in Europe. That 200x margin funds rapid reinvestment into other criminal economies.

Jeremy McDermott, co-founder of Insight Crime, identifies 2024 as the most lucrative year for organized crime in Latin America. Three criminal economies dominate the landscape: cocaine, gold smuggling running close behind, and human trafficking. Cartels now operate diversified criminal portfolios robust enough to absorb downturns in any single revenue stream, much like legal conglomerates.

Drug-related violence used to concentrate in producing nations like Peru, Colombia, and Mexico. It now reaches formerly insulated countries including Argentina, Chile, Costa Rica, and Uruguay. The former president of Costa Rica warns that organized crime has become the main threat to institutional stability across the region.

Cartels accumulate revenues at scales approaching national GDPs, operate across borders where legal systems were designed for an earlier era, and control transit corridors that allow them to move anything beyond drugs. They function as criminal holding companies managing whatever passes through their territory.

The US has escalated its response. Trump administration officials designated eight Latin American cartels as foreign terrorist organizations and signed a classified directive to the Pentagon authorizing military force against them. The US has deployed surveillance drones over Mexico for real-time intelligence gathering and naval forces into the Caribbean. Direct strikes remain unlikely in the near term, but the option is no longer off the table.