– Bernd Debusmann is a Reuters columnist. The opinions expressed are his own –

Why have billions of dollars and thousands of anti-narcotics agents around the world failed to throttle the global traffic in cocaine, heroin and marijuana? Blame wrong-headed policies, largely driven by the United States, and what experts call the balloon effect.

Squeezing a balloon in one place makes it expand in another. Destroy drug crops in one region and cultivation moves to another. Cut a supply route in one place and another one springs up. Take the example of Colombia and Mexico, at present a focus of U.S. attention because of large-scale violence that threatens to spill across the border.

In the 1970s and early 1980s, almost all the cocaine consumed in the United States was grown in Colombia and shipped to South Florida along a variety of sea and air routes. Colombian traffickers fighting for market share turned Miami into a city where shootouts, contract killings and kidnappings became part of daily life.

That began to change when enraged citizens appealed to the federal government for help to crack down on the “cocaine cowboys.” Then President Ronald Reagan established a special force to cut the cocaine pipelines and end the violence. “The Mexicans must rue the day the South Florida Task Force was set up,” said Peter Reuter, a scholar at the University of Maryland. “That was the beginning of the problems it faces today.”

Within weeks of its formation in 1982, the task force scored several spectacular successes. A string of seizures of large quantities of cocaine and marijuana prompted Colombian trafficking organisations to shift their smuggling routes to Mexico, where they partnered with criminal networks.

By 1988, the balloon effect had become obvious: The Mexican Defence Ministry reported it had discovered 4.8 tonnes of cocaine in a cave in Chihuahua near the U.S. border. It was then the world’s biggest seizure of the drug. Its Colombian origin was not in doubt — Mexico produced no cocaine of its own.

Now, two decades later, the U.S. State Department estimates that as much as 90 percent of the cocaine consumed in the United States comes through Mexico, which is also a major source of heroin, methamphetamine and marijuana. The State Department’s estimates speak volumes about the failure of policies that emphasised crop eradication, interdiction and punishment for drug users.

FARTHER AWAY THAN EVER

As a Latin American commission led by three former presidents (of Colombia, Mexico, and Brazil) put it recently: “Prohibitionist policies based on the eradication of production and on the disruption of drug flows as well as on the criminalization of consumption have not yielded the expected results. We are farther away than ever from the announced goal of eradicating drugs.”

If it were possible to seal the border, there would be no reason for Mexico’s drug mafias to wage war against each other. They are fighting for access to the main gateways into the U.S. In one border city alone, Ciudad Juarez, more than 1,000 people have been killed in the first two months of the year.

There has been growing criticism of the war on drugs, and not only from advocates of legalization who argue that drugs should be sold and regulated in the same way as alcohol and tobacco is now regulated.

On a visit to Mexico this week, Secretary of State Hillary Clinton said that “our insatiable demand for illegal drugs fuels the drug trade.” Though it was a statement of the obvious — the drug trade is driven by the laws of supply and demand — officials of previous administrations have not been nearly as blunt.

Discussing the drug problem as a presidential candidate, Barack Obama he said he believed in “shifting the paradigm, shifting the model so that we can focus more on a public health approach.”

The public health approach, know as “harm reduction” in a global dispute over drug strategies, means treating drug addicts not as criminals who participate in an illegal market but as patients who deserve care in the public health system. Most of Europe favors harm reduction over filling the prisons with drug abusers, the standard procedure in the United States.

On any give day, about half a million people are behind bars in the United States for drug offences. Obama’s choice of drug czar, Seattle police chief Gil Kerlikowski, signals a new direction, at least in the drug war at home. Seattle has been on the forefront of drug reform developments, including a needle exchange program for addicts. And for Seattle police, marijuana arrests have been the lowest law enforcement priority.

The drug czar heads the White House Office of National Drug Control Policy, a 130-member group which sets anti-drug policy. “The success of our efforts to reduce the flow of drugs is largely dependent on our ability to reduce demand for them,” Kerlikowske said after his nomination.

Reducing demand for illicit drugs in the United States, the world’s largest market, is an ambitious goal. Earlier attempts have failed, including Nancy Reagan’s “Just Say No” campaign. A program still active called DARE — Drug Abuse Resistance Education — aimed at high school students is drawing mixed reviews.

But optimists point to the success of campaigns to discourage smoking by making it socially unacceptable. It took a long time. But it worked.

– Bernd Debusmann is a Reuters columnist. The opinions expressed are his own. —

In the first two months of this year, around 2.5 million Americans bought guns, a 26 percent increase over the same period in 2008. It was great news for gun makers and a sign of a dark mood in the country.

Gun sales shot up almost immediately after Barack Obama won the U.S. presidential elections on November 4 and firearm enthusiasts rushed to stores, fearing he would tighten gun controls despite campaign pledges to the contrary.

After the November spike, gun dealers say, a second motive has helped drive sales: fear of social unrest as the ailing economy pushes the newly destitute deeper into misery. Many of the newly poor come from the relentlessly rising ranks of the unemployed. In February alone, an average of 23,000 people a day lost their jobs.

Tent cities for the homeless have expanded outside a string of American cities, from Sacramento and Phoenix to Atlanta and Seattle, for people who are living the American dream in reverse. First they lose their jobs, then their health insurance, then their homes, then their hopes. The encampments are reminiscent of Third World refugee camps.

Often former members of the middle class, tent dwellers’ accounts of their plight to television cameras have a common theme: “I never thought this could happen to me.” Unlike the victims of Katrina, the 2005 hurricane that destroyed much of New Orleans, many of the newly-poor are white.

The FBI says it carried out 1,213,885 criminal background checks on prospective firearms buyers in January and 1,259,078 in February, jumps of 28% and 23.3% respectively. Keen demand turned the stocks of publicly-trade firearms companies like Smith & Wesson (up 80% since November) and Sturm Ruger (up more than 100%) into shining stars on the New York Stock Exchange.

There are no statistics on how many guns are bought by people who think they need them to defend themselves against desperate fellow citizens.

But, as columnist David Ignatius put it in the Washington Post, “there’s an ugly mood developing as people start looking for villains to blame for the economic mess.” In November, an analysis published by the U.S. Army War College’s Strategic Studies Institute listed “unforeseen economic collapse” as one of the possible causes of future “widespread civil violence.”

The American economy is down but not out, and in mid-March some experts reported signs that the pace of the decline was slowing. But it hasn’t slowed enough to sweep away the sense of anxiety and fear that comes through in many conversations and commentaries about the future of this normally optimistic country.

While Obama’s approval rating remains high, at 59%, almost two thirds of the population thinks the country is on the wrong track, according to a poll commissioned by National Public Radio in mid-March.

“What is really remarkable about all this is that there hasn’t been social unrest,” remarked an executive with business interests in Latin American countries where riots and street demonstrations in response to economic squeezes are routine. “The conditions for it are all there.”

ANGER ABOUT BAILOUTS

Anger is building. Just under half of those surveyed in a poll by the Pew Research Center this month expressed anger about “bailing out banks and financial institutions that made poor decisions.” The poll was taken before details became known of the full extent of the bonus-paying spree to members of the very team that brought the insurance giant AIG close to collapse.

The government propped up AIG with close to $200 billion and now owns 80% of the company. The argument that $165 million in bonuses had to be paid under contractual obligations went down particularly badly with workers of the three U.S. car companies whose leaders appealed for support from the Bush administration last year when the economic crisis gathered steam.

One of the conditions for the billions that were dispensed to the car industry was that contracts between auto workers and their union, the United Auto Workers, had to be renegotiated to cut costs. The union agreed, and the question arises: are contracts with blue-collar workers less binding than those with highly-paid derivatives traders?

Some see this as another sign of the inequalities that Obama promised to address. Remember his famous exchange with Joe Wurzelbacher, aka Joe the Plumber, during a campaign stop? “I think when you spread the wealth around, it’s good for everybody,” Obama told him.

There’s less wealth to spread around now as trillions of dollars has evaporated with increasing speed in the deepening crisis. In housing alone, more than $5 trillion has vanished. The gap between rich and poor, a gap of Third World proportions, has not changed. A full-time worker, on average, made $37,606 last year, considerably less than in 1973, adjusted for inflation.

While CEOs made 45 times as much as workers in 1973 they make more than 300 times as much today, according to Holly Sklar, author of “Raise the Floor, Wages and Policies that Work for All of US.”

To what extent those gaps will shrink under Obama remains to be seen and the outlook for swift action is not promising. There are, in fact, not many things for which the outlook is promising. Exceptions include Smith&Wesson. They expect revenue to double within the next three years.

You can contact the author at Debusmann@Reuters.com.