Brazil debates privatization of South America’s largest port under the shadow of drug trafficking

While the issue of privatization of state-owned companies, against which the new government of Luiz Inácio Lula da Silva has raged, has been at the forefront of public debate in recent weeks, little or nothing has been said about the real risks of privatizing the port of Santos, on the São Paulo coast.

It is Brazil’s largest port and the main port complex in Latin America, whose trade alone accounts for 67% of the country’s Gross Domestic Product (GDP).

It is the port of departure for goods crucial to the Brazilian economy, from meat to sugar to soybeans.

In short, a true commercial power ranked 39th worldwide for container handling.

On its future, the political debate is at a standstill.

Lula, who from the day of his inauguration declared himself opposed to its privatization, has now taken a step back by proposing an intermediate solution.

Instead of transferring the entire port to the private sector, it would only be allowed to control the services provided on-site to the companies, keeping the port authority under state management.

The Union’s Court of Auditors (TCU) has also expressed perplexity that the entire task of port control could be entrusted to private companies, as the past handing over of cargo scanning services to private companies had attracted much criticism.

Lula’s tug-of-war with the new governor of São Paulo, Tarcísio de Freitas, former minister of Infrastructure in the previous government of Jair Messias Bolsonaro, however, is increasingly acrimonious.

Tarcísio declared a few days ago at an event organized by the agri-food sector that the privatization process “is ready, will be a spectacle, and will create many jobs.”

According to his calculations, a privatized port could generate  R$20 billion (about US$4 billion) of investment and increase the supply of transport and infrastructure.

Tarcísio, who was already embroiled in a storm of controversy during the election campaign for a criticized proposal to remove the video camera from the uniforms of military police officers, now seems to exclude from his reasoning a no lesser problem: security.

“The port of Santos is the largest cocaine trafficking center in the world,” Arthur Weintraub, former Secretary of Security of the Organization of American States (OAS) and author of the book ‘Security and Organized Crime’, explained to Infobae.

“We are talking about hundreds of tons of cocaine leaving the port every month to reach Europe and many other countries, drugs hidden with any trickery, in liquid form in fruits and the hulls of ships,” Weintraub added.

Who controls the illicit activities in the port of Santos is the First Capital Command (PCC), an army of more than 112,000 fierce criminals – according to estimates by the Public Ministry of São Paulo – which has in the trafficking of cocaine and marijuana one of its biggest economic revenues, about R$3 billion reais a year, (US$600 million).

“The PCC has become the largest transnational criminal organization in South America, and it works with international mafias everywhere, in Europe, the United States, Asia, and Africa,” Weintraub said.

“It is impossible to think of it operating in the port of Santos without the support of the Brazilian state structure, with which it has connections. That is why I speak of a narco-state.”

Despite the excellent intelligence work of the port’s Federal Police, led by a woman, Luciana Fuschini Nave, the PCC has become a scourge that crosses the borders of the port of Santos and Brazil and negotiates with powerful mafias such as the Italian ‘Ndrangheta.

“Brazil is increasingly strategic, as confirmed by the arrest in the state of São Paulo of Anderson Lacerda Pereira, known as Gordão (“the big fat man”) linked to the PCC, one of the privileged partners of the ‘Ndrangheta in Brazil,” Antonio Nicaso, one of the world’s leading experts on the ‘Ndrangheta, explained to Infobae.

“The power of the PCC has grown a lot in recent years. One of the new routes studied by the ‘ndrangheta and the PCC is from Ecuador to Panama via the Pacific Ocean. From Panama, the containers are diverted to the Atlantic”.

The Italian experience, where the Mafia has been infiltrating the State for years to the point of controlling part of the country’s politics and economy, should serve as a warning to Brazil.

In particular, it is enough to look at the port of Gioia Tauro in Calabria, which represents the alter ego of the port of Santos but in the Mediterranean.

“Over time, the ‘ndrangheta has managed to infiltrate even the port management, especially among those who had access to the docks,” explains Nicaso.

“Today, Gioia Tauro is one of the main supply ports for cocaine coming from Latin America, particularly Brazil. However, it is not the only one. The ‘Ndrangheta’s strategy is to diversify routes using different ports.”

“In addition to the Italian ones, the preferred ones are the ports of Rotterdam and Antwerp.”

“On the Brazilian front, the port of Santos is one of the most used.”

“In the 1990s, following the Fortaleza operation, the operational evolution of the Calabrian mafia was discovered: no longer small shipments, but increasingly larger quantities, in the order of hundreds of kilos”.

Given this scenario, privatizing the port authority would entail enormous security risks.

Criminal groups such as the ‘ndrangheta and the PCC have long specialized exclusively in legal, economic investments to launder the proceeds of drug trafficking.

Investing in the port would be a perfect investment for them to control the entire logistics chain while taking much less risk.

Selling the port without a specific security strategy, a topic excluded from the debate these days would mean opening the door to very high risks for all of Brazil.

And that the issue is not simple, is shown by the often contradictory statements of the industry.

On the one hand, representatives of the container terminal arm of the MSC group recently told the Brazilian press that if new areas are not opened, container ship handling could reach its limit within eight years.

Moreover, MSC suspended its land-based activities throughout Latin America last year due to criminal networks intercepting containers and taking advantage of their logistics to hide tons of cocaine.

Between 2016 and March 2022, 111 tonnes of cocaine were seized in the port of Santos alone.

Drugs hidden in Islamic-certified halal meats are also on the rise.

In 2018, news of the seizure at the port of Oran in Algeria of 701 kg of cocaine hidden in boxes containing halal meats from the port of Santos caused a sensation.

The police arrested what the local press called the Pablo Escobar of Algeria, Kamel Chikhi, known as “El Bouchi”, who had an exclusive since 2007 to import meat from a specific Brazilian brand, Minerva Foods.

The ‘Ndrangheta would then place the drug on the European market.

According to the local press, Chikhi used the money to finance mosques and Koranic schools.

His family had been involved in the Armed Islamic Group (GIA), the terrorist organization that provoked a season of attacks in France in 1995.

With information from Infobae