Cocaine and currency cocktail fuelling terror

The dollar has long been the currency of choice for Central banks, tourists, smugglers, African dictators and individuals around the world as it's liquid, easily convertible, stable and never goes out of style. But now there are signs that dollar is losing some of the most devoted fans: Drug Dealers. The euro has become the currency of choice for Latin American cocaine traffickers as the drug's popularity among Europeans has soared and the value of the currency against the dollar has risen.

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The drug traffickers had shifted their focus from the U.S. market towards Europe as cocaine craze grips Europe in its claws and it becomes important more than ever to understand the relation between the choice of Euros over Dollars in this illicit trade of narcotics.

The introduction of a common European currency has facilitated the activity of laundering bulk cash in Europe. The absence of a homogenous money laundering legislation coupled with the proliferation of offshore facilities in Europe, has encouraged organized crime to wash drug money in the Old Continent.

• The euro zone has been expanding with the addition of new countries and the continued integration between Eastern and Western Europe.

• Cocaine use has declined in the U.S. dramatically while in the European market it has risen.

• Traffickers are drawn by bigger profits on the European street, where a kilogram of cocaine sells for about $50,000, compared with $30,000 in the United States.

• Finally, in the past two years, euros have also become easier to carry, store, and hide than dollars. Generally, the largest denomination of U.S. currency readily available is the $100 bill. But in the past two years, the European Central Bank has started to print 200-euro and 500-euro bills. These larger bills thus allow for the concentration of wealth in smaller packages. At today's rates, a 500-euro note is worth $682.

What does a devalued dollar mean?

It leads to several basic economic problems-

1) A devalued dollar means the US has a higher probability of importing inflation. The Federal Reserve is charged with price stability and its ability to lower interest rates in the event of an economic slowdown will edge.

2) The use of the euro in international oil trade will strengthen its status as an alternative oil transaction currency, leading to a massive selling of the dollar and buying of the euro. This would spell disaster for the US economy which is already weakening under massive debt, a debt that makes it mostly dependent on the high demand for its currency in order to remain afloat.

3) The possibility of the dollar being shocked by a random economic event is higher and this is the reason why foreign central banks are playing a giant international game of chicken. So, they all want to slowly sell dollars and buy more euros simply because of the dollar's precarious valuation.

However, the most serious threat comes to the picture as drug cartels successfully establish a joint-venture with terror groups. It is one of the areas where criminal organizations and terror groups have successfully established a commercial co-operation.

This is another but the most devastating outcome of superpowers interference in the affairs of other nations that have destabilized of entire regions and disintegrated their economies.

The dollar's decline against the euro shows no sign of ending however, if we relate this decline to Iraq war that was primarily in quest for the so-called WMD or perhaps Saddam Hussein...oh! Did I miss oil?

Of course, it was about oil. Although completely unreported by the U.S. media and government, the reason why US went to its infamous misadventure in Iraq was simple yet shocking - it was in large part an oil currency war. Prior to the US/UK invasion of Iraq, Saddam changed Iraq's oil trading currency from dollars to euros. And then as Iran's oil bourse became a euro-based oil exchange - instead of US dollars it was high time for US to look for reasons to take on Iran but sadly Russia ruined its plans of another warmongering.

However, these super powers have already screwed the oil heartlands in the game of euros over dollars or vice-versa paving the way for new kind of threat that will take its toll not only on the economies of the nations but also on the security of the world.

The fight against drug trafficking should take into account the consequence of the illicit trade of narcotics, how it sustains terror groups and fuels the illegal economy. Any policy to curb terror should involve the fight against illegal drug trade. As long as governments will continue to ignore the link between drugs and terror, they are putting their own citizens in danger of new terror attacks. Terror needs money and one way to reduce their monetary life-line is to eradicate the trade of illegal drugs from society.