After 40 years of defeat and failure, America's "war on drugs" is being buried in the same fashion as it was born – amid bloodshed, confusion, corruption and scandal. US agents are being pulled from South America; Washington is putting its narcotics policy under review, and a newly confident region is no longer prepared to swallow its fatal Prohibition error. Indeed, after the expenditure of billions of dollars and the violent deaths of tens of thousands of people, a suitable epitaph for America's longest "war" may well be the plan, in Bolivia, for every family to be given the right to grow coca in its own backyard.

The "war", declared unilaterally throughout the world by Richard Nixon in 1969, is expiring as its strategists start discarding plans that have proved futile over four decades: they are preparing to withdraw their agents from narcotics battlefields from Colombia to Afghanistan and beginning to coach them in the art of trumpeting victory and melting away into anonymous defeat. Not surprisingly, the new strategy is being gingerly aired in the media of the US establishment, from The Wall Street Journal to the Miami Herald.

Prospects in the new decade are thus opening up for vast amounts of useless government expenditure being reassigned to the treatment of addicts instead of their capture and imprisonment. And, no less important, the ever-expanding balloon of corruption that the "war" has brought to heads of government, armies and police forces wherever it has been waged may slowly start to deflate.

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Prepare to shed a tear over the loss of revenue that eventual decriminalisation of narcotics could bring to the traffickers, large and small, and to the contractors who have been making good money building and running the new prisons that help to bankrupt governments – in the US in particular, where drug offenders – principally small retailers and seldom the rich and important wholesalers – have helped to push the prison population to 1,600,000; their imprisonment is already straining federal and state budgets. In Mississippi, where drug offenders once had to serve 85 per cent of their sentences, they are now being required to serve less than a quarter. California has been ordered to release 40,000 inmates because its prisons are hugely overcrowded.

At the same time, some in the US are confused and fear that the new commission proposed by Congressman Eliot Engel, a man with a record of hostility to the Cuban and Venezuelan governments, may prove to be a broken reed. As he brought in his bill he added timidly: "Let me be absolutely clear that this bill has not been introduced to support the legalisation of illegal drugs. That is not something that I would like to see."

Part of the reason for the slow US retreat from the "war" is that the strategy of fighting it in foreign lands and not at home has proved valueless. Along the already sensitive frontier with Mexico the effect of US attempts to enforce a hard line by blasting drug dealers away has been bloody. Anxious to keep in check the flood of illegal immigrants into territory that once belonged to Mexico, Washington is building a wall and fence comparable to that which once cut through Berlin and that which is today causing havoc between Israelis and Palestinians.

In the areas of Mexico closest to the US frontier the toll of deaths in drug-related violence exceeded 7,000 people in 2009 (1,000 of them dying in January and February). This takes the death toll over three years to above 16,000, figures far in excess of US fatalities in Afghanistan. The bloodshed has continued despite – or perhaps because of – the intense US pressure on President Felipe Calderon to station a large part of the Mexican army in the region. It is deploying 49,000 men on its own soil in the campaign against drugs, a larger force than the 46,000 Britain sent to take part in the initial invasion of Iraq in 2003. But still the blood flows.

As in Colombia, where a multibillion-dollar US subsidy maintains that country's armed forces, there are well-founded suspicions that military operations are often rendered futile because the miserably paid local commanders and individual soldiers are easily bought off by drug dealers.

The quiet expiry of the "war" has dawned slowly on a world focused on the US's more palpable conflicts in Afghanistan and Iraq. Last month, the US House of Representatives gave unanimous approval to a bill creating an independent commission to reconsider domestic and international drug policies and suggest better ones. Congressman Engel, a Democrat from the Bronx and the sponsor of the bill, declared: "Billions upon billions of US taxpayer dollars have been spent over the years to combat the drug trade in Latin America and the Caribbean. In spite of our efforts, the positive results are few and far between."

As far back as last May, Gil Kerlikowske, the former police chief of Seattle who was named head of the US Office of National Drug Control Policy and thus boss of the campaign, announced he would not be using the term "war on drugs" any more. A few weeks earlier, former Latin American presidents of the centre and right – Fernando Henrique Cardoso of Brazil, Ernesto Zedillo of Mexico and Cesar Gaviria of Colombia – had told the new US President that the "war" had failed and appealed for greater emphasis on cutting drug consumption and the decriminalisation of cannabis.

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For the lives and sanity of millions, the seeing of the light is decidedly late. The conditions of the 1920s, when the US Congress outlawed alcohol and allowed Al Capone and his kin to make massive fortunes, have been re-created up and down Latin America.

Mexico's President has not been afraid to point out to Washington that official corruption is at the root of drug trafficking in the US just as it is in Mexico. "I say we should investigate on both sides. I'm cleaning my house and I hope that on the other side as well the house is being cleaned," he said pointedly last April before President Obama came visiting.

Furthermore, President Calderon says that lax gun control laws in the US caused an influx of firearms into Mexico. He has declared that 90 per cent of the 30,000 weapons that government forces seized from drug dealers in Mexico came from north of the border. For their part, the Latin Americans, under a new generation of more self-confident leaders, are tired of being hectored about their failings by the US, the world's principal source of cannabis whose agents continue the drug dealing they indulged in during the Iran-Contra affair of the Reagan years.

Evidence points to aircraft – familiarly known as "torture taxis" – used by the CIA to move captives seized in its kidnapping or "extraordinary rendition" operations through Gatwick and other airports in the EU being simultaneously used for drug distribution in the Western hemisphere. A Gulfstream II jet aircraft N9875A identified by the British Government and the European Parliament as being involved in this traffic crashed in Mexico in September 2008 while en route from Colombia to the US with a load of more than three tons of cocaine.

In 2004, another torture taxi crashed in a field in Nicaragua with a ton of cocaine aboard. It had been identified by Britain and the European Parliament's temporary committee on the alleged use of European countries by the CIA for the transport and illegal detention of prisoners as a frequent visitor in 2004 and 2005 to British, Cypriot, Czech, German, Greek, Hungarian, Spanish and other European cities with its cargo of captives for secret imprisonment and torture in Iraq, Jordan and Azerbaijan.

Given the circumstances, it is unremarkable that US strictures are being politely ignored. President Evo Morales of Bolivia – criticised by the US for defending Bolivians' practice of chewing coca leaves to assuage hunger and altitude sickness – wants to allow every Bolivian family around the city of Cochabamba to cultivate coca bushes for their own use. He also wants to export coca leaves to his country's neighbours. Mr Morales's authority, recently reinforced by winning a second presidential term in fair elections and by a strengthening of Bolivia's economy, has no need to worry about US criticism.

Venezuela and Bolivia have expelled US narcotics officers from their territory. At the end of last month, President Rafael Correa of Ecuador ended Washington's lease of a large air base on the Pacific from where US aircraft were engaged in the struggle against the region's increasingly powerful left.

This year should be the year that common sense vanquishes the mailed fist in an unwinnable war against an invisible enemy.