LARS SCHALL – Asia Times (Hong Kong)
The corruption prohibition produces is so much more extensive than most people realize. An unholy alliance between governments and cartels and, like a cancer, is eating us alive from the inside. Here is a taste of reality that explains how so many feed at the narco-trough and why no one who is making this money, be they sheriff, legislator, or mule has any real interest in ending prohibition.
Lars Schall is a German financial journalist.
Oliver Villar is a lecturer in politics at Charles Sturt University in Bathurst, Australia, a country where he has lived for most of his life. He was born in Mendoza, Argentina. In 2008 he completed his PhD on the political economy of contemporary Colombia in the context of the cocaine drug trade at the UWS Latin American Research Group (LARG). Whilst completing his PhD, Villar's research interests in political economy, Latin America and the global drug trade followed teaching positions in politics at UWS and Macquarie University.
For the past decade his research has been devoted to the book (co-written with Drew Cottle) Cocaine, Death Squads, and the War on Terror: US Imperialism and Class Struggle in Colombia (Monthly Review Press, 2011). He has published broadly on the Inter-American cocaine drug trade, the US War on Drugs and Terror in Colombia, and US-Colombian relations. This abiding interest extends across economic thought, economic development and the development of social and political relationships between the First World and Third World (in particular between the United States and Latin America) and the impact of neoliberal economic globalization.
“If you look at the drug war from a purely economic point of view, the role of the government is to protect the drug cartel.” Milton Friedman
Lars Schall: What has been your main motivation to spend 10 years of your life to the subject of the drug trade?
Oliver Villar: The main motivation goes sometime back. I think it has to do firstly with my own experiences in growing up in working class suburbs in Sydney, Australia. It always has been an area that I found very curious and fascinating just to think about how rampant and persuasive drugs really are in our communities, and just by looking at it in more recent times how much worse the drug problem has become, not just in lower socio-economic areas, but everywhere.
But from then on, when I finally had the opportunity to do so, I actually undertook this as a PhD thesis. I spent my time carefully looking at firstly what was written on the drug trade, but as coming from Latin America, I was very interested in particular in the Latin American drug trade as well.
So I looked at the classic works such Alfred W McCoy's Politics of Heroin, Peter Dale Scott's Cocaine Politics, Douglas Valentine's The Strength of the Wolf, and works that related not just to the drug trade, but from various angles including political science perspectives to see what we know about drugs.
I found there were a lot of gaps missing, and there was a lot written on Asia, on Central America, particular from the 1980s, if you recall the Iran-Contra theme and scandal, but nothing really on where drugs actually come from. Eventually my research took me to Colombia, and in the Western hemisphere at least, cocaine became that subject of investigation. I looked at it from a political economy perspective, and so from there on you can kind of get an idea about some of the influences in my background in eventually taking that much time to do it.
LS: Does the drug trade work very differently than people usually assume?
OV: Well, yes. What do people usually assume? Well, it's a criminological subject of investigation, it's a crime approach, it's criminals, it's pretty much a Hollywood kind of spectacle where it becomes clear who the good and the bad guys are. But what I found, it's far more than just simply criminals at work.
What we do know, if you go back to the history of the global drug trade, which I did pursue, you find that states, not just individuals or criminals, were also part of the process of production and distribution. The most notorious example is the British colonial opium trade, where much of that process was happening in a very wide scale, where the British not only gained financially but also used it as a political form of social control and repression.
What did they do? In China they were able quite effectively to open up the market to British control. This is just one example. And from there on I looked at other great powers and the way they also somehow managed to use drugs as a political instrument, but also as a form of financial wealth, as you could say, or revenue to maintain and sustain their power. The great power of today I have to say is the United States, of course. These are some of the episodes and investigations that I have looked at in my new book.
LS: From my perspective as a financial journalist it is remarkable to see that you treat cocaine as just another capitalist commodity, like copper, soy beans or coffee, but then again as a uniquely imperial commodity.  Can you explain this approach, please?
OV:Again drawing upon past empires or great powers, it becomes an imperial commodity because it is primarily serving the interests of that imperial state. If we look at the United States for instance, it becomes an imperial commodity just as much as opium became a British imperial commodity in a way it related to the Chinese. It means the imperial state is there to gain from the wealth, the United States in this case, but it also means that it serves as a political instrument to harness and maintain a political economy which is favorable to imperial interests.
We had the “War on Drugs”, for example. It is a way how an imperial power can intervene and also penetrate a society much like the British were able to do with China in many respects. So it is an imperial commodity because it does serve that profit mechanism, but it is also an instrument for social control and repression.
We see this continuity with examples where this takes place. And Colombia, I think, was the most outstanding and unique example which I have made into an investigative case study itself.
Another thing worth mentioning is what actually makes the largest sectors of global trade, what are they? It's oil, arms, and drugs – the difference being that because drugs are seen as an illegal product, economists don't study it as just another capitalist commodity – but it is a commodity. If you look at it from a market perspective, it works pretty much the same way as other commodities in the global financial system.
LS: Cocaine has become one more means for extracting surplus value on which to realize profits and thus accumulate capital. But isn't it the criminalized status of drugs that makes this whole business possible in the first place?
OV: We have to think about what would happen if it was decriminalized? It would actually be a bad thing if you were a drug lord or someone to a large extent gaining from the drug trade. What happens if it is criminalized is that you are able to gain wealth and profit from something that is very harmful to society. First of all, it will never be politically acceptable for politicians to say: You know, we think that the war on drugs is failing, so we decriminalize it. That would be almost political suicide.
We know it is very harmful to society, and by keeping it criminalized it leaves a very grey area, not only in the studies and investigations that I've noticed on the drug trade, but it also leaves a very grey area in terms of how the state actually tackles the drug problem.
In many ways for law enforcement it allows a grey area in order to fight it. For instance, we can look for example at the financial center, which gains predominantly from it. But it also allows the criminal elements, which are so key to making it work, flourish.
And by not touching that, by largely ignoring the main criminal operation to take form and to operate, then what you are doing by criminalizing drugs is that you are actually stimulating that demand. So there is also that financial element to the whole issue as well. That's why this business is actually possible by that criminalized status.
LS: Do you think that those who were responsible to make cocaine or opium globally illegal were unaware that they were creating a very profitable business with that arrangement?
OV: If you are looking at the true pioneers who started much of the cocaine trade in South America, these were drug traffickers from places like Bolivia, which had a clear monopoly of coca production, and also at the people that formed the cartels in the 1980's like the Medellin cartel or the Cali cartel and other groups, I think they were not aware of the way things would eventually turn out.
But the other element, the state element, which made it part of their imperial interests to allow the drug trade to flourish, I think they perhaps had some sense – just looking at things in retrospective, of course – that this would be a very profitable business within that arrangement.
At the time of the 1980s in Latin America, it was pretty much seen as a means to fund operations, and at that time these were essentially counter-insurgency operations in the context of the Cold War. There was no real big ambition to say “We will create the drug trade because it is a very large business opportunity.” I think it just became that because it was something that was of convenience – and that's exactly what we see now in how the banks operate today: it's of financial convenience, why get rid of it? Out of these historical patterns it has become what it has become, but for different reasons.
I don't think that even Pablo Escobar would have imagined just how enormous the global drug trade would become. They were largely driven by self-interests and their own profits. But then the state made it much bigger and made it into a regional institutionalized phenomenon that we see to this day. And we can see also how the state in parts of South America, like Bolivia with the 1980 Cocaine Coup as it was known, and also the rampant institutionalization of cocaine in Colombia, has become very much part of this arrangement.
But then again, it would not have been possible without the imperial hand of particular the United States and the intelligence agencies. There we have that imperial commodity and imperial connection as well. They didn't work alone, in all these criminal elements, of course, there was an imperial hand in much of all of this, but why it happened, I think, is the matter of debate.
LS: Catherine Austin Fitts, a former investment banker from Wall Street, shared this observation once with me:
Essentially, I would say the governments run the drug trade, but they're not the ultimate power, they're just one part, if you will, of managing the operations. Nobody can run a drug business, unless the banks will do their transactions and handle their money. If you want to understand who controls the drug trade in a place, you need to ask yourself who is it that has to accept to manage the transactions and to manage the capital, and that will lead you to the answer who's in control. 
What are your thoughts on this essential equation?
OV: Going back to my emphasis on the state, coming from a political science background, this is what some criminologists would say, that this is state-organized crime, and the emphasis is the state. And again if we go back to the global history of the drug trade, this isn't something new. If we look at piracy, for example, that was another form of state-organized crime sanctioned by the state because it served very similar means as the drug capital of today serves as well.
So yes, the state is very much involved in managing it but it cannot do it alone. You have the US Drug Enforcement Administration, for example, which is officially the law enforcement department of the US state in charge of combating the drugs; and you also have other intelligence agencies like the CIA [Central Intelligence Agency] that are involved in fighting drugs, but also, as I have seen in my studies, actually allowing much of the drug and financial operations to continue.
We saw recently similar things unfolding in Mexico with the operation “Fast and Furious”, where CIA arms were making their way to drug cartels in Mexico. We can draw our own conclusions, but what we do know is that the state is central to understanding these operations, involving governments, their agencies, and banks fulfilling a role.
LS: How does the money laundering work and where does the money primarily go to?
OV: We know that the estimated value of the global drug trade – and this is also debated by analysts – is worth something between US$300 billion to $500 billion a year. Half of that, something between $250-$300 billion and over actually goes to the United States. So what does this say if you use that imperial political economy approach I've talked about? It means that the imperial center, the financial center, is getting the most, and so it is in no interest for any great power (or state) to stop this if great amounts of the profits are flowing to the imperial center.
What I find very interesting and very valuable are the contemporary events that are unfolding right now, the reports that even come out in the mainstream media about Citigroup and other very well-known money laundering banks being caught out laundering drug money for drug traffickers across South America and in Mexico as well, as the so-called war on drugs is unfolding.
The global financial crisis is another example, because the United Nations Office on Drugs and Crime came out and said it was thanks to the global drug trade that the financial system was kept afloat, where all this money was being pumped in from were from key imperial financial centers like New York, like London and Switzerland, and so on. In this case, money laundering is simply beyond again that criminology framework; it does involve that imperial state perspective, and I think that's the way it remains because of these benefits.
LS: Do you think that “lax policies” are responsible for the fact that large multi-national banks are laundering drug profits? 
OV: If you think again about the criminalized status of drugs, it's criminalized in society, but when it comes to the economic and financial sector, which should be criminalized, it is actually decriminalized. So we have some kind of contradiction and paradox where it would be great if it would be criminalized, but when it comes to the financial sector, it is actually fine – it's lax, it's unregulated, and we know that the US Federal Reserve, for example, can monitor any deposit over $10,000, so it's not that they don't know – they know what's going on.
It rolls back to your previous question. It continues to benefit the imperial global architecture, particular in the West, and so it becomes a lax policy approach towards these money laundering banks because they wouldn't have it any other way, there is much resistance to it.
Since Barack Obama came to power in 2008 and the financial crisis took hold thereafter, we've heard a lot of promises from Western leaders that they would get tough and so on, yet today we see that nothing much has changed. We've had now this episode with Barclays in the UK and the price fixing [of the important London Interbank Offered Rate] – this goes on.
Of course, they prefer to have this contradiction and paradox in place, because this is in fact what is allowing the drug profits to come in. If the government would take this problem seriously and would actually do something about these money-laundering banks, we would see a real effort to fight the drug problem, but that is not going to happen any time soon.
The last time we ever heard there was a serious effort to do this was in the 1980s and only because of much pressure, where George Bush Sr was forced to act in what was known as “Operation Greenback”.
What happened was that they started to find an increasing number of drug money-laundering receipts in Florida and other southern parts of the United States. This started to work, they put pressure on the financial companies which were actually involved in that process – and then he suspended it all, the whole investigation. That would have been an opportunity to actually do something, but of course it was suspended, and ever since we haven't seen any serious effort, despite the rhetoric, to actually do something.
LS: Why is it that the [George W] Bush and Obama Departments of Justice have spent trillions of dollars on a war on terrorism and a war on drugs, while letting US banks launder money for the same people that the nation is supposedly at war with”? 
OV: That is another issue that is part of the contradiction of imperialism, or the process that I call “narco-colonialism”. The stated objectives are very different to the real objectives. They may claim that they are fighting a war on drugs or on terror, but in fact they are fighting a war for the drug financial revenue through terror, and by doing that they have to make alliances with the very same people who are benefiting from the drug trade as we see in Colombia.
The main landlords and the business class who own the best land have connections with right-wing paramilitaries, which the DEA knows are actually exporting the drugs, and have direct connections to various governments and presidencies throughout recent Colombian history. These are the same people who are actually being given carte blanche to fight the war on terror in the Western hemisphere – yet this is a contradiction that no one ever questions.
So I think it's not about fighting the real terrorists, it's about fighting and financing resistance to that problem, and in Colombia there has been a civil war for quite a number of years. It's really the same paradox; it's funding the very same state mechanisms to allow the whole thing to continue.
LS: What should our readers know about the political economy of the drug trade created by the war on drugs?
OV: What we should know is that there needs to be a complete restructure and revision in the way we examine the drug trade. First of all, it's not crime that is at the center of the political economy, but it is the state, imperialism and class – that I think is essential, or at least I find it very useful in examining the drug trade.
We can see that clear in Colombia, where you have a narco-bourgeoisie which is essentially the main beneficiary there. These aren't just the landlords, these are also the paramilitaries, key members of the police, the military and the government; but also the connection to the United States, which is a political relationship, which is financing them to fight their common enemy, which is at this point in time the left-wing guerrillas, predominantly the Revolutionary Armed Forces of Colombia, the FARC.
So this again goes back to your previous question about this contradiction: why are trillions of dollars being waged to fight the drug trade in Colombia, but also in Afghanistan, when like in Colombia, everybody knows Afghanistan has a very corrupt regime and many of them are drug lords themselves who are the main beneficiaries in that country?
It has little to do with drugs, it has little to do with terrorists, it has everything to do with empire building, of which the main beneficiary is the United States.
LS: Since you already mentioned it, what is the major importance of the narco-bourgeoisie in Colombia seen from a market perspective?
OV: This goes again back to the notion of who is managing the drug trade, and Catherine Austin Fitts' perspective includes the government, and I sympathize with that approach, but we must bring class to that political economy of drugs. Why is class important? Why is a narco-bourgeoisie important? Well, it's because without a class that not only is growing, producing, and distributing the drugs and has the state resources to do so thanks to US financial assistance and military training and operations, we would not have a cocaine trade.
So the narco-bourgeoisie is essential and the main connection to that imperial relationship that the United States has. Without that kind of arrangement there would be no market in Colombia. So from a market perspective, these are the people who are essentially arranging and managing the drug trade in order to let the cocaine trade actually flourish. In the past, the same kind of people were fighting communists; today they are fighting “terrorists” supposedly.
LS: You are arguing in your book that the war on drugs is no failure at all, but a success. How do you come to that conclusion?
OV: I come to that conclusion because what do we know so far about the war on drugs? Well, the US has spent about US$1 trillion throughout the globe. Can we simply say it has failed? Has it failed the drug money-laundering banks? No. Has it failed the key Western financial centers? No. Has it failed the narco-bourgeoisie in Colombia – or in Afghanistan, where we can see similar patterns emerging? No. Is it a success in maintaining that political economy? Absolutely.
So I have to say when we are looking at it from that political economy / class basis approach with this emphasis on imperialism and the state rather than simply crime, it has been a success because what it is actually doing is allowing that political economy to thrive. I mean, we have to ask the question: how can such a drug trade flourish under the very nose of the leading hegemonic power in the Americas, if not the world, the United States? You had the Chinese Revolution, you had even authoritarian regimes, fascist regimes, that were able to wipe out the drug trade. Why can't the Western powers with all the resources that they have put a dent on it?
But instead they have actually exacerbated the problem. It's getting worse, and the fact is there is never a real end in sight, and they don't want to change their policies, so someone is clearly benefiting and suffering from this.
The logic, if we can call it that, is the conclusion that it is part of that paradox and part of their interest to maintain this political economy. We can look at it from a different angle, if you like.
Look at oil, our dependence on hydrocarbons. We know that is bad for our environment, we know what scientists call “Peak Oil”, and we know we will have problems with that form of energy system, but it continues. So is it in their interest to stop this? No, it isn't. This is what I see as the very fabric of capitalism and imperialism, and that the logic becomes the illogical and the conclusion becomes part of the contradiction. That's why I don't see it as a failure at all but very much in the interest, stubbornly or not, of US imperialism to drag on this war on drugs.
LS: Can you tell us some of the reasons for the period in Colombian history that is called “La Violencia” and how it played a role ideologically in the Cold War as it was fought in Colombia?
O.V. “La Violencia” was a period in Colombian history and probably the only time that the Colombian state acknowledged that the country was in a war with itself, a civil war, if you will. In 1948, there was a popular liberal candidate named Jorge Eliecer Gaitan, a populist leader, who was promising land reform, and he promised at least to the landless and the poorest in Colombia that something would change in the country.
Since then, an ultra-conservative and reactionary oligarchy has remained in power in Colombia. What this candidate stood for was some shake-up in the system. Gaitain was assassinated, conservatives were blamed for the assassination, and from there on we saw a civil war that dragged on up until 1958, when you saw the nucleus of the main body of armed resistance, which is now the FARC, take shape.
Ideologically, the Cold War was seen as a way to justify the state repression which continued. Something like 300,000 people were killed in “La Violencia”. But not much changed afterward. After 1958, there was no end to the class war. This was basically a war between those with land and those without land, which is important to understand in the political economy of cocaine in Colombia: that's the land, the problem of land. And this dragged on after 1958. So rather than viewing it as a problem that's historical involving land, they saw it as a problem of communism, but of course, once the Cold War ended there needed to be a justification to drag on this repression.
Conveniently, we increasingly heard terms like the “war on drugs”, “narco-terrorism” – and that provided ideological ammunition for the United States and the Colombian state and its ruling class to target the same revolutionary and main forms of resistance in Colombia. This included trade unions, student associations, peasant organization, and the same kind of what are considered subversive elements in Colombia.
So the “war on terror” you could say is a continuation of very much the same rational that the state was using during “La Violencia”. It is a continuing problem, which continues to be resolved by the state with force, which means to treat the security problem through military repression. So it's a serious problem in the wake of this political economy because violence becomes the means in which this political economy can be maintained.
LS: When did the cocaine business actually begin big time in Colombia? According to the book Cocaine: Global Histories, before cocaine was made illegal by the single convention of the United Nations in March 1961 it came primarily from Indonesia, Malaysia and Thailand.  Why was the shift taking place then from Asia to Colombia, Peru and Bolivia?
OV: In the context of the Cold War, it wasn't just simply an ideological war, it was also very much a real war in where there was resistance to capitalist and financial arrangements that were implemented throughout the world financial system at that time.
In Asia we know, of course, there was the Vietnam War; we also had the Chinese Revolution beforehand, as I have mentioned before, and we know that drugs became a way to finance much of the counterinsurgency operations that were going on. We know for example that Chiang Kai-shek, the leader of the Kuomintang who fought Mao Zedong in the Chinese civil war and the Chinese Revolutionary process, was a drug trafficker himself. Many of the contacts that the CIA had in Vietnam, particular in South Vietnam, were also deeply enmeshed in the drug trade.
What was known as the World Anti-Communist League at that time drew much of these alliances and organizations together in order to finance much of their operations. But when the Vietnam war eventually draw to a close, what did we see? We began to see a shift, not only with counter-insurgency operations against what was seen as communist insurgencies, but also in drug trafficking operations.
This was essentially the time where I noticed, and this was of vital importance for the book, that the same kind of arrangements were emerging in Latin America. The regional section of World Anti-Communist League was the Confederation in Latin America, which was then headed by Argentina, particularly the military junta of 1976, and they saw by learning from lessons in Asia that by allying themselves and by managing drug operations themselves, and so forth, and by using the same elements to finance these operations against the communists, they could do the same.
From there we saw some very important unfolding of history, which was the great concentration of operations within the drug trade, in Bolivia in particular with the Cocaine Coup of 1980, where you even had former Nazis who were employed and used with their experience to undergo these operations.  The Colombians, long before they became the main cocaine production center, saw this as an opportunity to get involved and take advantage of the situation. From there we saw the beginnings of the modern cocaine trade in Latin America which is now global, and has reached a global scale.
LS: What function had in their time famous drug lords like Pablo Escobar? What was the secret of his success in particular?
OV: As an entrepreneur he did see the events, particularly in Bolivia, I think, as an opportunity. Before then it was marijuana, not cocaine, that was the main drug at that time in the late 1970's. He saw a great opportunity to actually invest. He was the first to really begin to use small planes to traffic and smuggle cocaine into the United States. He became famous and a pioneer because he saw the opportunities at least from a capitalist perspective – what this would bring for what would became the Medellin Cartel.
He became after the Bolivian chapter the clear cocaine monopolist from the 1980s and so on. I think it had to do with his experience in the marijuana trade which allowed it to happen. He also made contacts with the very Bolivians who were providing him with the supply of coca. It was his far-sightedness to take full advantage of the situation.
LS: Despite the US claims that it is engaged in a war against drugs in Colombia, it is in fact engaged in an anti-insurgency war against the left-wing FARC guerillas, is this correct?
OV: This is correct. What is known as “Plan Colombia” was a program first devised by president Bill Clinton, and, as I explained, from the Cold War onwards we had that growing drug problem in Colombia. What Clinton saw as the solution to deal with the insurgency was to say: Let's give it a drug package. What “Plan Colombia” did though was under the mask of the war on drugs it actually made it into a military package itself. Most of the money had military operations and training in focus. So what this did since the late 1990s is in fact make it a war against the FARC guerrillas.
You have to take into account that the FARC have been there long before the cocaine trade appeared in the 1980s or the cocaine decade when it became big time. And so by focusing on the FARC, they can also be blamed for the drug trade. The New York Times is good at that, they see them seen as narco-terrorists. So the Colombian state can say: Well, we are fighting a war on drugs and terror, and the United States can also say: Well, they are our key partners in the Western hemisphere in this war. And they can also gear themselves to deal with the broader politics in the region, to deal with Venezuela, Bolivia, Ecuador and other nations which are fast becoming much more independent and left-leaning.
So it brings in a whole lot of other politics into question, but by fighting the FARC as the main threat to the Colombian state it deals with it in a very military way. They are a threat indeed, because they are not simply as they are called narco-terrorists, they are a group that has been indigenous to the history of Colombia, which past presidencies have actually acknowledged. But since September 11, 2001, there has been this increasing radicalization by the ruling class in Colombia to see no other alternative but finally to destroy the FARC once and for all.
LS: Which has come, sadly enough, as a high price to the Colombian population in general.
OV: Yes, we are looking at horrific statistics that go way beyond the state crimes of the 20th century in Latin America. Up until now it was Central America, Guatemala who held the record of victims from state-terror – 200,000. Second came Argentina with 30,000. Colombia has experienced 250,000 victims of state-terrorism in the past two presidencies alone, so since 2002 onwards. So this is quite horrific. Also the effects on trade unions are quite horrific. More trade unionists are killed in Colombia than in the whole world combined. It has the lowest rate of unionization in the whole continent. It has actually come to the point where there are not many more unionists to murder.
Yet, this is not an issue, this is not a problem, and much of the world does not know much about this. It is quite ironic if we look at the war on terror in the Middle East, where we are hearing a lot of news about the Assad regime in Syria, the “rebels” there, and Muammar Gaddafi in Libya was also terrible so we had to go in there and support the “rebels” – yet, we got the world's oldest rebel organization, more than half-a-century old, which has popular support among the poorest in Colombian society, and that is why they are able to continue the fight, and it's not drugs or terrorism, no.
Where is the support for the rebels in Colombia? Where is the debate about Colombian democracy? So the FARC become the target of the counter-insurgency-“counter-terror” war which both Washington and Bogota see as their number one priority there.
LS: Throughout the implementation of “Plan Colombia”, the private military companies (PMCs) which waged the “war on drugs” also made huge amounts of money. Is the “war on drugs” a business model for them, and has the “war on drugs” thus to continue as long as possible in order to perpetuate the profits that can be gained from it?
OV: It is very much a business model. I like that terminology because the Fortune 500 too are involved. Why is it a business model? We know that the narco-bourgeoisie manages the affairs of the drug trade at the colonial center, if we are going back to that narco-colonialism concept that I have used before, but who handles the rest of the operations for the empire, or from a US state perspective? Who else has the technology? Who is involved in executing the so called war on drugs?
These are essentially private-military companies, at least since “Plan Colombia” and with a history. That would be DynCorp and other key private-military companies like MPRI that had been involved, for example, in the aerial spraying of the coca crops in Colombia and military training. We know that rather than actually doing something about drug operations, what happened was that the very same firms were merely strengthening those involved in drug smuggling operations, and this is an ongoing problem which we have seen in this war on drugs, as I have documented in my studies.
This also means that these private companies are also involved in that financial arrangement that Catherine Austin Fitts suggested earlier on regarding the financial center. So the financial center is not just the financial system, but the main corporations and banks that are heavily involved in doing this. So by having these same private-military companies engaged in the war on drugs, they then can also invest their profits in the imperial center and play a role in managing the drug trade for the US imperial state.
LS: From A to Z, so to speak.
OV: Yes. You have a collaboration happening between the narco-bourgeoisie in Colombia and the imperial center by using private-military companies which have been involved in much of that history. If we go back to the history of what we do know about the Iran-Contra scandal, for instance, we see that many of these companies were sold off after they were used as contractors by the CIA, they were privatized by the very same companies that had been involved in “Plan Colombia” since the late 1990's.
These are the same people and same companies that were actually involved in past criminal operations. I don't see that simply as a coincidence. I see it as a continuity in how this is actually taking place.
LS: So I guess the real question is if the inter-linked “war on terror” / “war on drugs” is actually an effective way to keep competition small and under control?
OV: Yes, it's about control, it's about what Peter Dale Scott would describe as “managing market share”. It is really the imperial state through its agencies, but also by taking care of the financial center and also the operations through the PMCs they are deciding who gets the market share.
In the 1980s we saw a process where the Medellin cartel pretty much had unregulated control for their operations, but then we also saw the liquidation of Pablo Escobar and the handing over to the Cali Cartel, who also withered away for the Colombian state. Now we have an ongoing issue with Mexico replacing Colombian cartels as distributors with the same kind of episodes, and we hear analysts and officials basically saying again, yes, it's the imperial state that is involved in all of this. It is about control, and more specifically, it's the control of market share, which I think is essential to understand.
LS: Usually, where there are important commodities like oil and/or drugs in large quantities, the US intelligence services and the US military are never far away. Therefore, is oil another reason to link “the war on terror” and “the war on drugs” in Colombia?
OV: Well, if there ever is any commodity like oil that is of financial value definitely any imperial power will take advantage. This is a long history in itself. What I find interesting is that drugs are never considered. But if there are wars fought over oil and other commodities, why not drugs? In fact, if you re-examine the history of the global drug trade, what is happening in Colombia is pretty much the same kind of wars for commodities that have been fought since the dawn of time. Essentially, it is a fact that this is where the intelligence services go out and do the kind of cornerstone work in service of the commodity; in this case, I have to say, it is drugs.
LS: Why is the drug situation in Colombia by and large out of the news compared to the 1980s?
OV: Well, I think it's the case because now Mexico is seen as the problem. In a way it serves as a distraction, and drugs are no longer seen as a state security problem in Colombia. It has been officially a success. You look at any report by the United States or even the United Nations on the Colombian situation, they say it has been a success; since 2008, they say, there was an 18% decline in drug production. But what it doesn't say is that there hasn't been a decline in drug use or drug distribution. Where are all the drugs coming from then? In fact, it's the Mexicans doing the distribution for the Colombians now. So by distracting the focus and diverting the attention to Mexico, what it is doing is allowing a rerun of the same episode of the 1980s in Colombia, by ignoring Colombia and manufacturing unrealistic figures.
We will eventually see an arrangement, a compromise emerging in Mexico, and we will hear statements from the DEA and the White House saying how successful the war on drugs was, but we will also see the same kind of arrangements happening there with some cartels being taken over.
We will see the same key people in positions of power who are benefiting from the drug trade and who'll be the official selected drug lords. At the moment, we are seeing that struggle of market share that I have mentioned earlier, where the state, in particular in the imperial center, has a great hand in influencing and shaping the events.
And by ignoring Colombia, by normalizing Colombia, by saying it is a stable country and a formal democratic state, they can actually switch the attention on Mexico and also claim success that everything is going right. And by doing that they can also use Colombia as a model for Afghanistan and Central America, and we hear much discussion about this.
But again we will see the same kind of patterns emerge in which the same people will be involved, the same people will be benefiting, and the same people will be targeted, when people are resisting rather than maintaining that political economy.
LS: Related to the drug war raging in Mexico, what are your thoughts on the claim by a Mexican official that the CIA manages the drug trade? 
OV: It's the state, but in particular the armed bodies of the state, like the intelligence agencies, which as political entities are able to actually police these kinds of operations. How else can it be done? What is the history? What we know from researchers like Peter Dale Scott and Douglas Valentine is that this has been true since at least the 1970s in the Latin American context. 
And I would have to agree to some extent that it manages it, because it decides as a policy maker how and for whom the market share will actually be determined. Again, in Mexico this is what we see right now. How the events unfold will determine who will get that market share, who will be the monopolists, and who will be the official drug lords. It has nothing to do really with what we hear in the media.
LS: So the CIA is in the drug trade something like the middle-man for the financial sector?
OV: Yes, I think that analogy would be quite useful. As a middle-man, as a liaison and enforcer, and as also a communicator between these various criminal elements before the drug trade shapes itself into a form that is both beneficial and subservient to US imperialism.
LS: Thank you very much for taking your time, Mr Villar.
1. Related to the topic “Cocaine as just another commodity”, compare also Steven Topik, Carlos Marichal, Zephyr Frank (Edit.) From Silver to Cocaine: Latin American Commodity Chains and the Building of the World Economy, 1500-2000, Duke University Press, 2006.
2. Lars Schall, Behind the Wheel, Interview with Catherine Austin Fitts, August 29, 2010.
3. Compare for example “HSBC exposed: Drug money banking, terror dealings”, published July 17, 2012. “International banking giant HSBC may have financed terrorist groups and funneled Mexican drug money into the US economy through its lax policies, a damning Senate report reveals. The bank's bosses have apologized for the misconduct.”
4. Mark Karlin: “US Government Gives Wink and Nod to Banks Laundering Money for Drug Lords, Terrorist Affiliated Banks and Rogue Nations”, published July 24, 2012.
5. Compare Paul Gootenberg (Edit.): Cocaine: Global Histories, Routledge, 1999.
6. Compare Henrik Kruger: The Great Heroin Coup: Drugs, Intelligence, and International Fascism, South End Press, 1980.
7. Chris Arsenault: “Mexican official: CIA ‘manages' drug trade”. July 24, 2012.
8. Compare for example Peter Dale Scott: Drugs, Oil, and War: The United States in Afghanistan, Colombia, and Indochina, Rowman and Littlefield, 2003.