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Stop the FTAA!  
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Drugs and Dollars
Joseph D. Douglass, Jr.

The New American, April 10, 2000

The real forces behind the drive to establish the U.S. dollar as the currency of the Americas include illegal drug trafficking and money laundering for organized crime.


There is a dark and hidden industry whose massive revenues surpass the gross domestic products of most countries. The annual profits of this mega-business dwarf the combined profits of Microsoft, AOL-Time Warner, General Motors, AT&T, Citibank, and several dozen more of the top blue chip corporations.

Why is it then that the financial and business literature pay so very little attention to the world’s largest and most profitable “business” — international organized crime and its primary component, narcotics trafficking? The UN’s Human Development Report for 1999 estimated the annual gross revenues of international organized crime at $1.6 trillion (the gross domestic product of the United Kingdom is only $1.3 trillion), about half of which was believed to be profit. This estimate was very conservative, for obvious reasons: The criminal capitalists are very adept at concealing their revenues; and, even more ominously, too many people in government want the true magnitude of this business to remain hidden.

The same UN report estimated that the world narcotics trade had gross revenues of $400 billion, or eight percent of world trade, making it one of the largest global industries. And it is growing. Over the past ten years the production of opium has more than tripled and the production of coca leaves has doubled. The $400 billion figure, however, almost certainly is a gross undercount. Estimates are low worldwide. No one wants to advertise how bad the problem is. In the U.S., the “Household Use” statistical method radically understates the true magnitude. First, the surveys are based on voluntarily provided information, which an Emory University School of Medicine field study showed to be low by a factor of three or four. Second, these surveys miss the heaviest drug users: those who are homeless, or in jails, shelters, or treatment facilities. Based on past experience, actual drug revenues may be double or triple the figure cited.

Failure to account for this gigantic industry has been especially evident in recent months in articles promoting “dollarization” as a way to stabilize various “troubled” economies — such as those of Russia, Argentina, Colombia, Ecuador, and Venezuela. Dollarization is the process whereby the U.S. dollar becomes the medium of exchange in a foreign country, supplanting the country’s national currency. The dollar has already become the de facto currency in some of these nations, but powerful political, business, and financial interests are pushing to make it the official currency throughout the entire Western Hemisphere — and beyond. They propose a system comparable to the collective “Euro” currency of Europe, managed by the Federal Reserve System. (See “One Hemisphere Under the Fed” in the October 11, 1999 issue of TNA).

Money Laundering

The proposals for official dollarization represent the most radical economic restructuring imaginable, yet little sense is to be found in most reporting on the subject. An April 1999 report issued by the congressional Joint Economic Committee of Congress, entitled “Encouraging Official Dollarization in Emerging Markets,” is a frightening example of the analytical myopia or outright deception being offered on this important matter. The JEC report, like many stories in the business pages of our newspapers, enthusiastically assesses the growing trend toward dollarization as a triumph of the free market, a case of people “voting with their wallets” in favor of the U.S. currency. Neither that report nor any of the many articles in the financial journals seem to have considered the obvious alternative explanation for this trend: money laundering of the massive profits of organized crime. Neither have they examined or reported on the incredible impact that official dollarization would have on facilitating this laundering process and the further corruption of our entire political-economic system.

A major part of the problem is that neither the international banking industry nor the governments of the world want serious light to be directed on global criminalism, because the people who make it all possible are themselves top officials in banks and governments. That includes especially our own U.S. banking and federal government officials. They do not want the people to recognize that the organized crime syndicates and narcotics trafficking operations have sponsors in government and in the financial community.

At least 50 percent of the deposits in Argentina are dollars; in Bolivia the figure is 80 percent; in Colombia, the deposits have been growing steadily to at least $34 billion. Russia, reportedly, has more dollars in circulation than does the U.S. Where did all of the dollars in these countries come from? Certainly not from tourists or businesses. Nor can counterfeiting be the main source.

Allow us to offer what our research would indicate is the most reasonable explanation: drug money laundering. A 1983 ABC News “Close up” on drugs and money laundering fingered Citibank, Marine Midland, Chase Manhattan, and “most of the 250 banks and branches in Miami.” When Ramon Milian Rodriguez, a top accountant and money launderer for the Medellin Cartel, testified before a Senate subcommittee in 1988, he implicated a veritable “Who’s Who” in U.S. finance: Citibank, Citicorp, Bank of America, and First National Bank of Boston. “In every instance,” said Rodriguez, “the banks knew who they were dealing with....” The evidence indicates that Rodriguez is right; the banks often play dumb, but they know what they’re doing. That same year, 1988, the U.S. Attorney for South Florida, Dexter Lehtinen, stated: “I know the names of banks that are crooked, public officials who are corrupt, zoning regulations changed for drug dealers, [but] we can’t pursue these investigations [due to lack of manpower].” A 1998 investigation of Citibank by the U.S. General Accounting Office (GAO) revealed the tip of a very large iceberg. The GAO report found that Citibank had secretly transferred between $90 million and $100 million of alleged drug money for a Mexican client, using many creative methods to camouflage the movement of the assets.

Red Penetration and Compromise

Money laundering is not merely a process for concealing and “cleaning” illicit lucre; it is also an inherently corrupting process that compromises individuals and institutions. This makes it an especially useful, double-edged tool for the sinister-minded. In the 1950s, along with its focus on drugs and organized crime, Soviet intelligence targeted banks around the world for penetration and compromise. This was not difficult, considering what the Soviets had to offer: incredible mountains of cash to be laundered. General Jan Sejna, one of the most important Soviet Bloc officials ever to defect to the West, has provided extremely valuable information on this subject. As one of Czechoslovakia’s top Communist officials, Sejna had personal knowledge of these operations, and the secret villas where regular meetings between Western bankers and Soviet commissars took place were under his control.

But the Soviet interest in banks went far beyond their use as a mechanism for laundering money. Banks were considered to be, next to organized crime, the best source of political intelligence and an excellent source for industrial intelligence. Banking institutions and their officers and employees are vast reservoirs of information about industries and governments as a natural by-product of the financing roles they play. They have access to data on assets and debts, troubled loans, technical reports, insider assessments, safety deposit box contents, and the thinking of top executives. True, such insider information is protected, but only insofar as it applies to protection from prying eyes that are not “connected.” However, to those who are connected and to whom the bankers are beholden, it’s an entirely different story. Insider information is a commodity they are expected to deliver with regularity to the Red dons and other powers behind the drug business.

The Russians have repeatedly demonstrated that they can obtain information on even supposedly secure bank accounts in Switzerland. This capacity was already well developed in Stalin’s time. Aware that many Communist leaders, including Lenin’s widow, Krupskaya, had been lining their own pockets and had established secret Swiss bank accounts, Stalin ordered Genrikh Yagoda, head of the OGPU (one of the earlier incarnations of the KGB), to provide him with a list of the numbers of their secret accounts. This Yagoda did, and many of the offending revolutionaries were executed — including Yagoda, who made the mistake of assuming that he was Stalin’s only source of information and had excluded the details of his own secret Swiss account.

The political, financial, legal, judicial, and law enforcement corruption that accompanies the narcotics trade can barely be exaggerated. For example, a Colombian drug trafficker apprehended in 1994 had a list of 2,000 names of influential persons on the cartel’s payroll: judges, members of congress, mayors, state governors, military and police officials, journalists, athletes, and entrepreneurs — all potential agents of influence. The Soviets, as part of their narcotics operations, together with their satellites, maintained dossiers on people in positions of influence and power who were corrupted by the drug trade. According to Gen. Sejna, by 1968, when the cocaine trafficking was just starting, the Soviets possessed upwards of 10,000 such dossiers. When a French Communist by the name of Batkoun was caught smuggling heroin into Canada in 1971, he was in possession of a list of 2,000 addicts, many of them prominent Canadian celebrities, civil servants, and academics.

Today, with the drug trade vastly magnified, the number of compromised individuals must also have seen a manifold increase. Consider the impact that such compromising information has likely played in the ongoing, and successful, Russian appeals for political or financial support. Why have Western governments and businesses, especially the international banks, been so willing to close their eyes to the realities of the Russian government, including the movement of hundreds of billions of dollars out of Russia and into safe havens in various banks? Why do so many members of Congress vote for government foreign aid scams that fleece the U.S. taxpayers of billions of dollars to send to Russia? Are narco-dollars sluicing into their campaign chests or personal bank accounts?

NAFTA: “Deal Made in Narco Heaven”

Why did so many members of Congress vote for the North American Free Trade Agreement (NAFTA)? Clearly, the American people did not want NAFTA. The phone calls and wires to congressmen ran nine to one against NAFTA — but it passed overwhelmingly. Although on the eve of NAFTA it was widely recognized that the primary beneficiaries of NAFTA would be the drug traffickers and money launderers, the well-financed publicity campaign of various governments, businesses, and banks assured an easy victory. We may eventually learn that direct bribes were given in exchange for congressional votes.

This much we do know: The primary beneficiaries of NAFTA have been the drug traffickers and money launderers. NAFTA, which the Clinton administration lists among its proudest achievements, has been a tremendous boon to drug smugglers and criminals of all varieties — including the Beijing-aligned Chinese mob. The May 5, 1995 edition of ABC’s Nightline reported that since NAFTA was signed in December 1993, “some 12,000 trucks a day have freely come into this country from Mexico, largely uninspected for safety, many carrying, along with televisions, computers and fresh produce, massive amounts of cocaine and heroin.” This was not an unanticipated development. A Drug Enforcement Agency (DEA) intelligence report completed before the NAFTA vote indicated that the accord would be, in the words of former DEA agent Phil Jordan, “a deal made in narco heaven,” and drug cartels began buying up business fronts along the border to take advantage of the dramatic upsurge in uninspected commerce. However, according to Jordan, DEA officials were told by the administration that the impact of NAFTA on drug enforcement “was a subject we could not discuss” prior to ratification of the agreement.

The recent manner in which the dollarization process has been reported in the newspapers and congressional studies as an almost natural phenomenon deserves careful scrutiny because of what is not being said:
  • As indicated above, the real forces behind the de facto dollarization include the illegal drug trafficking and money laundering of organized crime, not people voting with their wallets.
  • Special interests such as international bankers, drug traffickers, organized crime bosses, and Communist intelligence services have particular motivations for pushing official dollarization, which are unlikely to include prosaic notions like “the public good.”
  • The globalists at the Federal Reserve and Treasury Department have obvious concerns regarding what might happen if too many overseas narco-dollars start flooding back into the United States at once.
  • The dollarization drive is but the latest “convergence” campaign that would benefit certain elites — both capitalist and Communist — who view the nation-state as an archaic obstacle and something to be dispensed with as expeditiously as feasible.

Concerning that last point, we should note that the remaining major bastion of national sovereignty is the United States. The countries of the European Union have all but completely scuttled their sovereignty through the various EU governing bureaucracies, the European Court, and the Euro currency. Americans would not likely accept replacement of the dollar with a Euro counterpart any time soon. Dollarization, however, might be sold as a heaven-sent alternative. Hence it will be supported for all the “right” reasons by the same folks who championed NAFTA, GATT, and the WTO — with none of the real, underlying reasons ever expressed.


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