draining development.pdf - Khazar University

164 Draining Development?During the last decade, the control of the industry by warlords hasmeant that a significant share of the illegal drug revenues has been usedto fund the armed conflict: the purchase of weapons, payments to thearmed personnel in the counterinsurgency, and the like. This presents aproblem in estimating illegal capital inflows because it is difficult todefine weapons as capital. A study by the intergovernmental FinancialAction Task Force concludes that “a project team investigated the linksbetween narcotics trafficking and terrorist financing, but had to concludethat this subject was less suitable for analysis through publicly accessibleinformation” (FATF 2005, 1). This assertion might be valid in cases ofinternational terrorist organizations that implement suicide attacks orplant bombs, but do not have armies to support. In the case of Colombia,there is no question that drugs have sustained the armed personnel andallowed the guerrillas and paramilitary groups to grow. It is remarkablethat, before the expansion of the coca plantings, FARC was able to survive,though it had never become an important problem or a threat to theestablishment. Similarly, the paramilitary movement became strong onlyafter coca and cocaine had come to account for important activities.ConclusionOver the last 35 years, the main issue in illegal capital flows has been theconsequences of the entry of the foreign revenues of the illicit drugindustry into the country. In contrast to many other countries, the mainpolicy issue has been the control of illegal capital inflows, not the controlof illegal outflows.From the 1970s onward, these revenues have been invested in the legaleconomy and have created a particularly grave problem in rural andurban real estate. They have also aggravated rural land concentration,which has been a factor in making Colombia a more violent country, witha displacement of people second only to Sudan in the world. There is noquestion that, although almost 80 percent of the population is urban, theunresolved land problem remains a key policy issue in Colombia.The government has been unable to impose the rule of law over thenational territory, and various regions have developed their own norms.Other factors, including the persistently high level of violence, havecompounded the problem, and civil society has become increasingly