The Pandemic Depression
The Global Economy Will Never Be the Same
During the 1980s, El Salvador was the single largest recipient of U.S.-issued military hardware in the Western Hemisphere. All manner of weaponry—including over 32,500 M-16s and 270,000 grenades—seeped into the country from 1980 to 1993. Most of it was destined for the military-led government so that it could wage a vicious war against the Farabundo Marti National Liberation Front, or FMNL. Although the armed conflict officially ended in 1992, the guns, grenades, and bullets linger. Officials estimate that at least half of the weapons turning up in crime scenes in the country can be traced back to the United States. And that is a lot of crime scenes; El Salvador has the highest murder rate in the world.
El Salvador wasn’t the only recipient of American guns. Most Central and South American countries aligned with the West were devoted consumers of military and civilian-issue small arms and munitions made in the U.S.A. The rest were supplied primarily with Soviet armaments, especially the ubiquitous AK-47. These client relationships have proven surprisingly resilient. United States and Russian sales continue to the present, even as dozens of exporters—such as Austria, Belgium, China, the Czech Republic, Germany, Israel, Italy, Spain, and Turkey—have piled on. More recently, several Latin America countries have also emerged as arms producers in their own right.
Thanks to legal sales and illicit trafficking, the region’s criminal organizations, street gangs, private security firms, and vigilantes have access to a steady supply of weapons. In turn, Latin American countries and cities are the world’s most exposed to gun-related violence. The regional homicide rate hovers above 28 per 100,000 people, compared to a global average of closer to seven per 100,000. Just four countries—Brazil, Colombia, Mexico, and Venezuela—account for roughly one-fifth of all gun-related deaths around the planet each year. A recent study also reveals that 47 of the world’s 50 most murderous cities are in Latin America and the Caribbean (two are in the United States and one is in South Africa).
Meanwhile, roughly 75 percent of all homicides in Latin America are the result of gunshot injuries, compared to the global average of under 50 percent. The proportion of gun deaths soars to 90 percent in Brazil, Colombia, El Salvador, Guatemala, and Honduras. Assault rifles and handguns alone do not cause homicide or violent crime. There are several factors, ranging from weak law and order to societal norms that condone violence and broken families. Even so, there is overwhelming evidence that an abundance of guns and ammunition dramatically increases the risk of a lethal outcome during spats between intimate partners, hold-ups, home invasions, and gangland disputes.
As the world’s largest arms exporter and importer, the United States plays an outsized role in ensuring the ready supply of firearms and ammunition to Latin America. Most weapons are transferred legally, although there is also evidence of illegal trafficking. As a general rule of thumb, the closer a country's border is to the United States, the greater the influx of legal and illegal weaponry will be. Take the case of Mexico, a recipient of hundreds of millions of dollars’ worth of attack helicopters, Humvees, arms, and high-tech gear for counter-narcotics operations. In 2014, the United States legally transferred some 28,000 weapons—most of them assault rifles—valued at some $21.6 million. Meanwhile, as many as 212,000 illegal firearms are making their way into Mexico each year. The illegal weapons come mainly through fraudulent purchases from federally licensed dealers in the United States.
Similarly, the United States has long serviced client states across the Americas. From the 1960s to the 1990s, U.S. intelligence organizations supplied governments and rebel factions in Colombia, Cuba, the Dominican Republic, El Salvador, Guatemala, Haiti, Honduras, Peru, and Nicaragua. And those sales largely continue today. According to data collected by the Norwegian Initiative on Small Arms Transfers and the UN Customs Database, the United States shipped more than $1.5 billion worth of small arms, light weapons, and ammunition between 2000 and 2014. The total value of the arms trade fluctuated throughout this period, hitting a low of $43.7 million (2004) and a peak of $172.7 million (2010).
The surge in the last five years is due to an increase in U.S. exports of small arms, light weapons, and ammunition to Brazil, Chile, Colombia, Mexico, Panama, and Paraguay. The ebb and flow of arms transfers coincides with efforts by specific governments to take down guerrillas and drug traffickers. For example, Colombia saw a peak in small arms and ammunition imports from the United States in 2010 (nearly $75 million) as part of its ongoing counter-insurgency campaigns against the Revolutionary Armed Forces of Colombia (FARC), the National Liberation Army (ELN), and the so-called criminal bands (BACRIM) formed of remnants of paramilitary forces. Mexico also witnessed a dramatic escalation in weapons imports from 2006 to 2010, a direct response to then-President Felipe Calderon's expanded drug war. According to one source, Mexican imports of all types of arms increased by another 330 percent from 2010-2015.
Not surprisingly, some Latin American countries are more enthusiastic consumers of U.S. firearms, ammunition, and related equipment than others. Brazil, Chile, Colombia, and Mexico together accounted for nearly two-thirds (63 percent) of all U.S. small arms exports to Latin America and the Caribbean between 2000 and 2014. Colombia and Mexico are the standout recipients: of 41 countries in the region buying U.S.-manufactured arms and ammunition, these two states received 45 percent of all U.S. exports over the period.
Different countries invariably have different defense requirements. For example, Brazil's primary imports over the past five years have included ammunition, explosives, and missiles; these are suited for military defense and training requirements. Meanwhile, Colombia has focused primarily on importing light weapons, military-style rifles, and ammunition, intended for ground operations against insurgent and crime groups. Chile's profile is similar to Brazil's, whereas Mexico has seen a dramatic uptick in military-style weapons imports useful for counter-narcotics operations. And Paraguay, considered a gateway for illicit arms across the region, has imported pistols and revolvers, which are easiest to pass on to other parties.
In response to evolving geopolitical alliances, some Latin American countries have also weaned themselves off U.S. exports in recent years. For example, Bolivia, Ecuador, and Venezuela have all reduced their reliance on U.S. products as they pursued contracts with Chinese, Russian, and other vendors. Another reason is that Caracas signed a licensing agreement with Russia to build AKM-series military assault rifles at home. These and other countries have also pursued more favorable trade deals for weaponry from other partners in Europe and Asia, not least China.
The United States is also a major source of illegal arms and ammunition to Latin American consumers. The scope of the diversion of weapons into the grey and black markets is difficult to determine with any precision. The most common method used to estimate the scale of illicit trafficking is through documented firearms and ammunition seizures and by tracking the original source of interdicted weapons. The United States, for example, established the eTrace system to exchange firearm data with participating law enforcement agencies as one means of gauging the scope of trafficked goods. The system was expanded to Latin America in 2009.
Although all Latin American regions are affected by illegal trafficking of arms and ammunition, some are more so than others. The Bureau for Alcohol, Tobacco, Firearms, and Explosives (ATF) periodically releases eTrace data on firearms that ended up illegally in Mexico. For example, of the 15,937 firearms seized by Mexican authorities and submitted to ATF for tracing in 2014, 11,061 (71.9 percent) were originally purchased or otherwise acquired in the United States. The ATF has also released trace data from Caribbean and Central American states. Between 40 and 60 percent of traced weapons in the region are from the United States.
Meanwhile, the World Custom Organization’s Enforcement Network (CEN) offers some insight into the extent of arms trafficking globally, including in Latin America. In 2013—the latest date for which data is available—some 4,902 seizures were reported around the world involving around 1.4 million individual items. Although the sample of global seizures is far from exhaustive, Latin American countries are nonetheless disproportionately represented.
Specifically, Brazil, Colombia, and Mexico (together with Iraq) are the only countries to report seizures of over 10,000 firearms per year. Meanwhile, Argentina, Chile, Costa Rica, Ecuador, El Salvador, Guatemala, Panama, Peru, and Uruguay report annual seizures of arms and ammunition in the thousands. Many factors shape the dynamics of seizures, including changes in legislation, reporting systems, police practices, and criminal demand and capacity.
It is not just firearms that are trafficked but also ammunition. A recent assessment of CEN data detected some 23 million rounds of ammunition seized between 2010 and 2013 in just 31 countries. Although data is provided on a voluntary basis and is thus not entirely representative, Latin American countries nevertheless figure prominently. Mexico led the region (and the world), accounting for some 12 million rounds seized during the reporting period. For their part, Colombia, Chile, Ecuador, and Guatemala registered seizures in the tens and hundreds of thousands of rounds over the same period.
Another method for tracking firearms moving through the black market is by examining price data of specific types of weapons from around the world. Researchers associated with the Small Arms Data Observatory have collected thousands of recorded prices for various types of weapons from over 150 countries. A new study concludes that "Latin America and the Caribbean is the only region in which the average price of illicit small arms declined during the 2000s from where it was in the 1990s. All other parts of the world witnessed a monotonic rise in average prices." In other words, Latin American appears to have an excess supply of weaponry.
Not surprisingly, there is considerable variation in price data for black market firearms across Latin America and the Caribbean. For example, quarterly prices for small arms rose steeply in Haiti following the reinstatement of President Jean-Bertrand Aristide in 1994, dropped for about a decade, and then spiked again in the wake of a UN Stabilization Mission (MINUSTAH) from 2004 onward. Prices rose sharply during periods of political and social uncertainty when militia and gangs stockpiled guns and ammunition. Colombia, too, saw a sharp rise in prices for assault rifles following an amnesty/buy-back program for paramilitaries and guerrillas in 2003. By taking a sizeable number of weapons out of the black market, the intervention effectively made it harder to procure new assault rifles.
Where prices are low, there is most likely a surplus of weapons and ammunition. To put it in economic terms, the gun supply exceeds consumer demand. But low prices can translate into lethal consequences. In Brazil, after a long period of generally high prices, costs started dropping in the mid-1990s. In other words, the market became flooded with weaponry. Today, the county sees, on average, 42,000 gun homicides a year. Mexico has witnessed a similar decline in prices over the past 25 years, likely owing to a brisk trade in arms across the United States–Mexican border.
Because of the sheer diversity and scale, the movement of arms and ammunition into Latin America constitutes a serious policy challenge. It is not enough just to strengthen arms export and import regulations or to introduce additional border and custom controls, although such measures are necessary. What is also needed is additional oversight over local arms production and better controls and management of military, police, and private security arsenals. The region does not necessarily need more legislation but, rather, much better enforcement of the laws already on the books.
The United States, it would seem, has a special obligation to ensure the responsible export of arms and ammunition to Latin America. There is much that it can do to improve transparency regarding the brokers and end users involved in the trade. For one, Congress could ratify the Arms Trade Treaty (ATT), which it signed in 2014. The ATT seeks to regulate the international trade in conventional weapons—from small arms to battle tanks, combat aircraft, and warships. The United States should also expand support for the Blue Lantern and Golden Sentry end-use monitoring programs. These initiatives are supposed to oversee the legality of individual transfers and ensure that consignments reach the intended end users. Together, Blue Lantern and Golden Sentry have vetted tens of thousands of suspicious license requests and transfers to military and civilian recipients.
The United States can also expand its role in regional monitoring of legal and illegal arms transfers. This will require some coaxing given the frustratingly limited regional cooperation among Latin American countries. In a bid to help build confidence in the region, the United States could encourage its Latin American counterparts to report more regularly to the UN Conventional Arms Register, a mechanism designed to improve transparency around global arms exports and imports. It could also encourage additional Organization of American State (OAS) members meet the obligations agreed under the Firearms Convention, the only legally-binding agreement to prevent and eliminate illicit manufacturing and trafficking in arms, ammunition, and explosives in the world.
The United States should expand support to specific countries that are reeling from the effects of gun violence. Most countries in the region are likely to experience rising armed violence in the coming years, in contrast to virtually every other part of the world. Obvious steps include responsible regulation, including targeted amnesties and programs to help the region’s militaries and police forces better manage stockpile inventories and permanently destroy surplus equipment. Focused investment in improving security sector governance and reducing corruption in the military, police, and customs services would go a long way. Finally, improved oversight over the local retailing of firearms (both online and off) in the United States and improved oversight over international exports and imports would help to reduce the toll of lethal violence in some of the most dangerous places on earth.