The Flow of Precursor Chemicals for Synthetic Drug Production in Mexico
This is a report from Insight Crime that investigates the production of synthetic drugs in Mexico. This is an entirely new form of drug production compared with plant-based production. The latter had some sort of the rural base - concerning poppy, coca leaf, or marijuana cultivation whereas synthetic drug production depends on access to chemical substances that have already been produced - fentanyl or meth in its final form - or the precursors, pre-precursors, and other chemicals (bonding agents, catalysts, reagents, etc) needed to manufacture synthetic drugs. The supply chains for producing synthetics are completely different and effective drug policy needs to focus on controlling them through multilateral diplomatic efforts as well as regional (at the level of North America) and national (at the level of Mexico) policies. I will summarize this report, beginning with the major findings. First, there is a general skepticism in the document about the feasibility of supply-side policies for the controlling production of synthetic drugs. The chemical substances that need to be regulated are widely produced. Many have multiple uses and can be readily diverted toward the international drug trade. The regulatory systems differ for different substances across different national jurisdictions, as does the willingness of governments to regulate their respective chemical industries. Ultimately, the proposed solutions suggested by this report focus on the development of more effective forms of regulatory harmonization, anchored in existing UN treaties. Here is a statement of the problem from Insight Crime:
The 1961 UN convention created to lists of narcotic drugs and psychotropic substances - Schedule one and Schedule two. More were added in the 1971 UN convention. And in its 1988 convention, the UN established a list of "controlled substances" that could be considered precursors and essential chemical substances in the production of these drugs. However, each member country established its own regulatory and legal frameworks, which sometimes complement and sometimes ignore the UN conventions and the UN lists of controlled substances (13). The implication of the foregoing is that a new multilateral framework does not have to be created from scratch. The framework already exists, but it must be extended, strengthened, and fine-tuned.
The report reaches different conclusions concerning methamphetamines and fentanyl. About the former, drug traffickers in Mexico have already developed autonomous production capabilities. Indeed, "there are at least 100 ways to produce methamphetamines" (15). When methamphetamine precursors are well-regulated, pre-precursors are not. Trafficking groups now can synthesize precursors from pre-precursors (15). Indeed, most seizures of a key methamphetamine precursor, P2P, are from clandestine laboratories rather than ports of entry, suggesting that most of this substance in Mexico is synthesized domestically (29). One indicator of increased production capacity is the steeply declining price of methamphetamines, dropping from a wholesale price of $17,000 per kilogram in 2016 to $3,500 in 2022 (25). This is where some of the supply-side skepticism comes into play. Governments should indeed try to track precursor and precursor substances, but they should also focus on the demand side of the equation since autonomous production capacity for meth is now a fact.
On the other hand, the ability of the drug trafficking groups to produce fentanyl is still not well developed. Still, trafficking groups are following a similar trajectory toward production autonomy. The challenge is to exert greater control over the circulation of precursors and pre-precursors before drug trafficking groups become more advanced. For example, one method of producing fentanyl is the so-called Gupta method where the Mexican producers are now capable of making ANPP - a key precursor - from pre-precursors. (20). An additional difficulty of fentanyl lies, in part, with the fact that fentanyl is a highly powerful substance. It requires a far lower volume of precursors or pre-precursors to fabricate and therefore poses starker challenges in terms of controlling the movements of these substances. Insight Crime, for example, compares fentanyl consumption in the U.S. with cocaine consumption: 3.75 to 5 tons of fentanyl is consumed in the U.S. as compared with 100 tons of cocaine. Note another relevant comparison: Insight Crime estimates that Mexican criminal groups produce between 291.16 and 434.4 tons of methamphetamines and between 3.5 and 4.5 tons of pure fentanyl - a considerable difference (27). A little fentanyl goes a long way: fentanyl-laced pills typically have less than 5% purity and consist of 95% adulterants and additives. All of the fentanyl a user might consume in a given year could be contained in a single 4-gram packet of sugar (26). It follows from this that a small number of production facilities could easily satisfy the needs of traffickers (90). Moreover, confection sites could be anywhere. They do not require sophisticated machinery nor do they emit telltale scents. Accordingly, barriers to entry for the production of fentanyl are lower and the production process - given the availability of precursors and pre-precursors - is relatively simple so that cooks following recipes - rather than trained chemists - are capable of producing fentanyl and so the labor requirements of producing the drug are not high, suggesting, once again, low barriers to entry. Organizationally, production units tend to be subcontracted by the larger drug organizations rather than being subsumed within them, which testifies, once again, to the horizontal rather than vertical organizational structure of drug trafficking organizations (or “cartels”) (91).
It is also the case, as Insight Crime suggests, that criminal organizations like the Sinaloa Cartel or the Cartel Jalisco de Nueva Generacion, are just one part of the supply chain: "In general, they do not get heavily involved in the precursor trade until these substances have been sourced to Mexico and are ready to distribute amongst producers" (10). Indeed, as Insight Crime continues, "Production of synthetic drugs is outsourced to various semi-autonomous cells, which sometimes operate independently, creating the vibrant, flexible, and resilient market" (10). The implication here is that the synthetic drug networks have a different and more dispersed geography and are, accordingly, more networked and less vertical - in the sense of being under the control of some hierarchical organization - i.e., "a cartel." This means that policy proposals that advocate military action against cartels (by labeling them as terrorist organizations) are unlikely to be effective as a means of interdicting the supply of synthetic drugs. It must also be added that interdiction efforts targeted at plant-based drug production systems have not been successful as well. More of the same - militarized interdiction - promises to miss a key part of the problem: not the cartels but the movement of precursor and pre-precursor substances, particularly concerning fentanyl.
This included not only precursor and pre-precursor substances but also other chemicals that are necessary for the production of fentanyl, such as acetone. The amount of acetone needed to produce current levels of fentanyl would be quite high - almost a quarter of all legal imports to Mexico. This suggests that it should be possible to take account of acetone imports which are diverted toward fentanyl production and curtail these flows (30). This is the promise of the recommendations that Insight Crime outlines at the end of this investigation. But even concerning the precursors and pre-precursors, Mexico is underperforming, accounting for just 10% of ANNP seizures worldwide in 2022. The market value of these precursors is considerable. For NNP, $462 million based on the estimated total production of fentanyl in Mexico (33) - a big market, which could be curtailed through effective policy interventions. But the challenge here is not so much in Mexico but spread around the world. As Insight Crime notes:
"In our research…we found that the chemical production phase remains a vast well of potential producers, mainly based in China but increasingly from India; that many other essential chemicals needed come from US and European-based companies, as well as Mexican companies, that independent “chemists” work for one or numerous criminal organizations; that - notwithstanding the dominance of two organizations in the drug transportation sector - the number of criminal groups producing synthetic drugs seems to be increasing, not decreasing ("36).
Where do all these substances come from? In a word, they come from the private sector, although in different ways - direct production of substances or precursors for sale on the web and diversion of chemical substances from large chemical corporations engaged in high-volume international trade, for whom such diversions are quite small in comparison to the scale of their operations.
Insight Crime does credit China with some degree of success in cutting the production of precursors. Evidence of this can be seen in the sharp drop in airborne seizures of fentanyl arriving in the United States (40) as well as international mail seizures of fentanyl. It is also the case that fentanyl seizures are low in Mexico, undermining the contention of Mexican officials, such as Mexican President Lopez Obrador, that Mexico is not producing fentanyl, but rather that the drug is arriving, already made, in Mexico and then smuggled to the United States (41). In China, some companies produce fentanyl precursors and, in the wake of the Chinese ban in 2019, have shifted to selling these substances in gray markets while other firms continue to produce scheduled chemicals (42). In China, gray market producers abound in provincial regions where they are celebrated by local party officials because they generate taxes and employment for their regions (44). Gray market transactions are characterized by the use of encrypted communications and cyber-currency transactions, which do not go through the international banking system. Shipments of the precursors which are tightly regulated in China occur through standard mail, express courier services, or in clandestinely packaged containers - difficult to detect because the volumes of precursors required for current production levels are relatively low (46). Insight Crime characterizes gray market transactions in terms of clandestine commerce, hidden within a much great volume of licit commerce - the proverbial needle in the haystack (56). It is also the case that salesmen from grey market companies have little understanding of what they are selling because they have no training in chemistry. The same is the case for clerks on the receiving end of this commerce.
High-ranking officials are caught in a dilemma of not wanting to undermine provincial officials but also not wanting to have China labeled as a drug-pushing country. It is also the case, as the New York Times points out, that Chinese enforcement activity varies in relationship to U.S. policy and that the tough anti-China policies of the current Biden administration have diminished China's willingness to cooperate in suppressing the sale of controlled substances. But in any event, restrictions in China open the door to the import of the precursors through India's chemical industry, which is weakly regulated and where diversions to chemical substances to illegal markets are common, Billions of synthetic opioid tables and tons of precursors originating from India were seized across the world in 2021, according to the U.S. State Department (47-48). In Europe and the United States, the primary problem is diversion of the essential chemical substances (50).
Fentanyl seizures have skyrocketed inside of Mexico (62), evidence that Mexico is, as Ann Milgram, administrator of DEA claims, "mass producing" fentanyl (61). Are they? Insight Crime produces such evidence to the contrary, by considering the efficiency of securing precursors from China rather than making them from scratch in Mexico. The key narrative that Insight Crime articulates here is that Mexican drug trafficking groups are developing autonomous production capacities with fentanyl, just as they had with methamphetamines. Insight Crime presents several arguments to the contrary - favoring the position of the Mexican government (Mexican criminal groups cannot produce to produce fentanyl). The underlying fact, though, is that a lot of controlled substances are being diverted to Mexico, sometimes by Mexican firms (67), sometimes using shipments to other countries (like the U.S.) where the controlled substances are subsequently smuggled into Mexico, and sometimes using speed boats where the scheduled substances are removed cargo ships before they can reach the port (76). And, in another variation on this theme, chemicals are simply stolen from businesses. But this is the work of the intermediary criminal organizations rather than the name-brand cartels (78). The cartels "do not get directly involved in the chain of precursors and pre-precursor chemicals until these substances have been gathered in bulk in Mexico” (78), again suggesting a more delimited and focused role of the cartels in narco-trafficking and also greater complexity of the networks through which narco-trafficking is organized.
Mexican criminal groups are also training more cooks and attempting to produce fentanyl through other chemical processes - more or less from scratch - all of which testify to the idea that Mexican criminal groups are attempting to wean themselves from dependence on outside courses of crucial chemical substances (69). But the capacities of many of these cooks are limited. Accidents and errors occur in the production of fentanyl and the confection of fentanyl-laced pills and dealers and users cannot be certain about the actual concentration of fentanyl in the drugs that they sell and consume. These are confusions that lead to frequent overdose deaths (93).
Cofrepris, the bureaucratic agency that oversees the importation of medical devices and goods into Mexico is also, according to its direction, rife with corruption schemes that entail importing scheduled substances for medical use. These permits operate on a pay-to-play basis (69). In an interview granted to the Washington Post, director Svarch (of Cofepris) noted that the agency had discovered a permit to import 40 tons of tartaric acid, used to increase the purity of methamphetamines. Svarch added: “Mexico had largely become the number one important chemical precursors in the world" (75). Svarch’s comments raise questions about Mexico’s regulatory capacities. These are summarized by the OAS’s Inter-American Drug Abuse Control Commission. They assess that while Mexico has comprehensive national programs, it lacks "...established mechanisms for inter-institutional cooperation between public and private institutions to provide a comprehensive response to the illicit production of drugs” (110). In particular, there is a reluctance on the part of customs authorities to report criminal activities to the FGR because these officials do not want to be involved in criminal proceedings. Logically, this would include the military since the military is now in charge of customs - and is, in its own right, complicit in various corruption networks. Another regulatory shortcoming highlighted in this section of the report is that Mexico is not engaged in talks with China or India about the development of strategies to control the flow of precursor chemicals (111).
These points lead, finally, to discussions about recommendations. The first recommendation is that focusing all effort on the supply side is not going to be sufficient. Complete interdiction of synthetic drugs is not a feasible goal, but greater control is possible through strategies carried out at different levels of governance. At the international level, the International Narcotics Control Board, which oversees the implementation of the UN treaties related to narcotic drugs, has two key enforcement tools, PEN Online (PEN = pre-export notification program), and GRIDS (Global Rapid Interdiction of Dangerous Substances) - both of these instruments of information sharing and control which operate through public/private partnerships. The general recommendation is to shift focus from China, the US, and Mexico's efforts to control the movement of scheduled and potentially dangerous substances to multilateral efforts using full compliance with PEN online, a surge of support for GRIDS on strengthen its capacity to link analysis with coordinated police action, and also to train, through UNODC, Mexican authorities on more responsible handling of precursor chemicals (114). Apply, using a CND resolution, scheduling to all analogs of any controlled substance. Train the private sector on voluntary reporting requirements and government regulations. Use model legislation, through the OAS secretariat, to control to address the diversion of the chemicals to address, via the OAS, the fentanyl threat (115). In terms of bilateral and trilateral policy, get Mexico to prioritize precursor chemical control with India and China. Encourage the development of China's anti-narcotics global leadership (116). The recommendations continue for several more pages. Most of it is focused on developing additional state capacity to regulate flows of precursor chemicals through international cooperation and public/private partnerships. One key concept to reiterate in all of this is the significance of regulatory harmonization to prevent the diversion of chemicals toward illicit uses - much of this is targeted toward the Mexican private sector. In terms of public diplomacy, Insight Crime calls the labeling of fentanyl as a poison rather than as a narcotic, because it is so highly lethal (121). Note that a similar rhetorical strategy is employed by various Republican officials who have advocated using military force against Mexican cartels because they are poisoning (i.e., killing) Americans. Finally, the report advocates elevating the issue of synthetic drugs so that it does not become politicized. There is a need to take bold, non-partisan actions. This reads as a very implicit critique of using the U.S. military against Mexican cartels and instead embracing the combination of capacity building and public/private partnerships outlined here.
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