Ryan Grimm, author of “This is your country on drugs”, in reference to John Walters crowing about an increase in the price of cocaine (all emphasis mine):
It’s far from clear what caused the brief price hike in 2007. Walters unsurprisingly credited enforcement and interdiction efforts. But it’s unlikely the ONDCP and DEA really had the cocaine cartels in retreat. The more plausible explanation is that cocaine producers were targeting more lucrative markets. The rise of the euro and the concomitant decline of the dollar have made it less profitable to sell cocaine to Americans.
“The euro has replaced the dollar in the Western Hemisphere as the currency of choice among these traffickers, which is an extraordinary shift,” Karen Tandy, head of the DEA, told an antinarcotics conference in Spain in April 2007. “As cocaine use has declined in the U.S. dramatically, in the European market it has risen.”
Officials at the Spain conference said a kilogram of coke that would fetch $30,000 in the United States was worth $50,000 in Europe—and the dollar has fallen further against the euro since then. On April 1, 2007, a dollar was worth about 0.74 euro; a year later, it was worth only 0.63 euro; it’s now at about 0.7. Because of this price differential, it is theoretically profitable to smuggle cocaine out of the United States. Buried in its 2009 National Drug Threat Assessment, the Department of Justice cited the currency exchange rate as one possible explanation for decreased imports. The “declining value of the U.S. dollar provides a financial incentive for drug traffickers to sell cocaine in foreign markets where the wholesale price of cocaine is already much higher than in the United States,” the report said.
Size matters too. The euro is denominated in notes of 200 and 500, making transportation of large sums of money much easier, given that the biggest American note is worth only about 70 euros. When you’re moving hundreds of millions of dollars, that represents a real convenience.
No surprise here. If the fluctuations of currency affect the price of our legal addictions — oil and debt — obviously they affect the price of the illegal ones. I doubt Project Pat pays much attention to global monetary issues though, so I wouldn’t bet on him rhyming about sniffing coke through a rolled up €200 any time soon.