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They're basically talking about social engineering. AFAIK, they used the CIA to funnel in cocaine, etc... to minority neighborhoods, then applied social engineering, adverts, and glorified drug abuse. Then the police and FBI went and killed them or jailed them. When they say "black", they effectively mean anyone they consider "non-white". They did it to all the minorities in various forms.
I was skeptical of this quote, because for some reason Dan Baum sat on it for twenty years instead of publishing it in his book on the subject. Huffington Post, however, asked him about that:

Baum explained to The Huffington Post why he didn’t include the quote in his 1996 book, Smoke and Mirrors: The War on Drugs and the Politics of Failure.

“There are no authorial interviews in [Smoke and Mirrors] at all; it’s written to put the reader in the room as events transpire,” Baum said in an email. “Therefore, the quote didn’t fit. It did change all the reporting I did for the book, though, and changed the way I worked thereafter.”

The quote does, however, appear in the 2012 book The Moment, a collection of “life-changing stories” from writers and artists.

(http://www.huffingtonpost.com/entry/nixon-drug-war-racist_us...)

Thanks; that's helpful though not entirely convincing. Has anyone asked John Ehrlichman (the person quoted) about it?
Ehrlichman died in 1999, so there's no independent verification here.
I have trouble taking this at face value. A second hand anecdote from Baum who recalls an in-person interview with Ehrlichman, 20 years after the fact, that already 20 years ago.

Keep in mind that Ehrlichman served jail time for his role in Watergate. That doesn't make him all that trustworthy, and it's not unreasonable to think that even being in the inner circle he hated and blamed Nixon. Ever seen a criminal come out of jail and sing the praises of their compatriots? Failing that, why in the heck would he just admit this? What's his motivation?

This story is already passing into legend. It's probably a total fabrication. Ehrlichman has been dead since 1999, btw, so who knows what he really said.

Well, one test would be to look at how the law has been applied since it was instituted. Has the law been used to target mostly leftists and minorities?
The subsequent application of the law has no bearing on the veracity of the quote as the people who have and are applying the law are in no way bound by anything that Ehrlichman may or may not have said.
The actions of the executive branch of government were at least somewhat bound by what Nixon might or might not have instructed them.
So the War on Drugs was actually a monumental success, just not at the goal that was advertised on the box.
Many questions:

Other countries also made these drugs illegal. Was it around the same time? It seems unlikely they also had Nixon's motives, but then why did they do it? Did the U.S. establish the trend? Pressure others? Or perhaps Nixon saw the trend already happening and was opportunistic about it? Would it have happened eventually if not for Nixon?

However, if drugs are illegal in most countries, why would the U.S. incarcaration rate be higher (which I think is due to drug crimes, but I'm not sure)? Higher rates of drug use? Higher rates of incarcaration for the drug users?

I'm not trying to shoot down the story. First, I now understand why the drug war can be seen as a war on poor and minorities: The vices of the poor are criminalized; the vices of the rich (prescription drugs, pot on college campuses, etc.) are treated with a wink, shrug, or empathy. Second, I used to doubt these slightly conspiratorial political stories on their face, but then I've heard and read people talking about how these things are planned and implemented, such as using "school busing" as a dog whistle for racists. Lee Atwater, leading GOP (operative?), in 1981:

You start out in 1954 by saying, "N-ger, n-ger, n-ger." By 1968 you can't say "n-ger"-that hurts you, backfires. So you say stuff like, uh, forced busing, states' rights, and all that stuff, and you're getting so abstract. Now, you're talking about cutting taxes, and all these things you're talking about are totally economic things and a byproduct of them is, blacks get hurt worse than whites. ... "We want to cut this," is much more abstract than even the busing thing, uh, and a hell of a lot more abstract than "N-ger, n-ger."

http://www.thenation.com/article/exclusive-lee-atwaters-infa...

The US did pressure plenty of countries to make drugs illegal / more illegal.

Also of note it's an old drug, with a complex history.

In 1894, the Report of the Indian Hemp Drugs Commission, commissioned by the UK Secretary of State and the government of India, was instrumental in a decision not to criminalize the drug in those countries (See Shamir and Hacker (2001) in 'further readings' below.)[15] From the year 1860, different states in the US started to implement regulations for sales of Cannabis sativa

The name marijuana (Mexican Spanish marihuana, mariguana) is associated almost exclusively with the plant's psychoactive use. The term is now well known in English largely due to the efforts of American drug prohibitionists during the 1920s and 1930s.

The Marijuana Tax Act of 1937 was the first US national law making cannabis possession illegal, with the exception of industrial or medical purposes.

It's my understanding that nearly everyone who went to jail for Watergate was incredibly angry at Nixon for throwing them under the bus and letting them actually do time.

If Nixon was a bigoted racist or just a really bad president, is hard to tell from a guy with a huge ax to grind and waiting 40 years to spill the beans.

There's no question that he was a bigoted racist. The question is whether he created the war on drugs to criminalize black activists and the left.

edit: for example, he was against abortion, but he thought there should be an exception for rape and interracial parentage.

http://www.nytimes.com/2009/06/24/us/politics/24nixon.html

Nixon was most certainly a bigot. If you doubt that statement, listen to him confirm it for yourself in this great documentary: "Richard Nixon In His Own Words" (https://www.youtube.com/watch?v=rbWataLl9k8) which is comprised of secret recordings he ordered on himself.
HR Haldeman wasn't incredibly angry. I knew him and his family. One anecdote is that around 1990 Nixon was in Santa Barbara. Bob knew when Dick's motorcade would be passing by and walked to the end of his driveway and waved to Nixon as he passed. Time heals most wounds.

Bob did the prison time and Jo started a career to support the family. I've read Jo's unpublished autobiography. The saga was difficult for them—especially Peter, the youngest son—but they paid their dues and moved on.

I doubt that was the primary goal... more of a "happy" side effect...
I thought the war on drugs started in earnest in the 80's and 90's in response to a growing crime wave. My (uneducated) belief was that it was championed by the inner city churches in an effort to clean up their neighborhoods.

see eg: 1969. December 3. President Richard Nixon convenes a gathering of nation’s governors to talk about drug crisis. Says that part of the solution must be treatment and rehabilitation. “When you’re talking about thirteen year olds and fourteen year olds and fifteen year olds, the answer is not more penalties. The answer is information. The answer is understanding,” Nixon says. According to CBS News, Nixon administration is considering reduced penalties for marijuana possession, along with more education, in an effort to convince young people to avoid “experimenting with still stronger drugs.”

http://prisontime.org/2013/08/12/timeline-black-support-for-...

and

Rep. Charles Rangel, a newly-elected Democrat from New York City and a former Federal prosecutor, urges Nixon to do more to fight drugs without waiting for further congressional action, warning that support might soon build for drug legalization. “You do have the power and we implore you to use it as you would if this were a national crisis and I think we’ve reached that,” Rangel insists. Before departing, the Black Caucus presented Nixon with a manifesto of sixty priorities for the African American community. It included the demand that “drug abuse and addiction be declared a major national crisis” and a call to use “all existing resources” to stop the trafficking of drugs. http://prisontime.org/2013/08/12/timeline-black-support-for-...

There's a fantastic documentary on the failed 'war on drugs' called 'The House I Live In' from Eugene Jarecki (http://www.thehouseilivein.org).

It suggests that the criminalization of narcotics (opium, cocaine, marijuana, etc) was set in motion purely as a way to prevent non-whites from 'stealing jobs.'

Whether you agree with this or not, it's an interesting view. It also gets into crack and the massive penalties that come with crack possession vs cocaine possession.