The impact of drug money on a small nation’s economy

The AP published an article regarding Guinea-Bissau, a small West Africa nation that is becoming a major hub in the global drug trade.

Guinea-Bissau’s minuscule economy has traditionally been driven by cashew, fish and peanut exports that only total around $100 million annually. Though the country of 1.5 million people suffered a 1998-1999 civil war, rivals there — unlike nearby resource-rich Nigeria, Liberia and Sierra Leone — have had little to fight over. At least until now.

“The fear is that the influx of drug money can easily generate a situation of instability, because the appetite among different local partners to get involved is getting bigger and bigger,” Antonio Mazzitelli, West Africa director of the U.N. Office of Drugs and Crime, said in a Thursday interview. “It’s no different than other wars and conflicts in West Africa in which diamonds or oil have created instability. It’s a dangerous situation.”

The tiny country is strategically located between South America and Europe that allows it to be a key docking point in the transportation lanes between the two continents. The amount of money in drugs that is being funneled through Guinea-Bissau is estimated to be over $1 Billion.

South American drug traffickers began arriving in Guinea-Bissau several years ago to exploit West Africa’s little-policed coastline, using it as a transshipment point to smuggle cocaine to Europe where it fetches two to three times its value on U.S. streets.

The government estimates as much as 1,750 pounds of cocaine transits the country’s borders each week.

With wholesale prices for the drug worth more than $18,000 per pound in Spain and almost $32,000 per pound in Norway, the business in Guinea-Bissau alone is worth at least $1.6 billion per year — more than five times the nation’s gross domestic product.

Nobody knows exactly how much of that money stays behind in Guinea-Bissau for bribes, logistic support and aid.

“The flow of money can’t be compared to any other sector, it’s money falling from the sky,” Mazzitelli said. “Drug trafficking has the potential to be the largest financial revenue in the country.”


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