Update: I originally didn't want to publish this because I didn't think it was good enough, but I hit the wrong button. Anyway, Alistair Morgan read it and thinks one of the premises of the whole thing is wrong. Namely, the weapons were going in the same direction as the drugs, not the other way around. Well, at least the story moved on a bit, but this renders mostly useless a whole additional post I put together from reading a lot of crazy-but-interesting stuff out of the bottom of the Internet. Also, despite the Jessie J reference there's better music at the bottom if you get that far.
So, Alistair Morgan's twitter feed frequently hints at "cocaine, weapons, and Ireland" as well as police corruption as being factors involved in the case of his brother, Daniel Morgan, the private detective murdered in 1987, probably by people who were since employed by News International. It's often been said that Morgan was on the point of publishing some sort of huge revelation when he was killed, but nobody knows what it was beyond his brother's hints based on what the police told him at the time.
Since the eruption of the phone-hacking scandal, a number of sidelights have come up which linked the News of the World, its cadre of ex-police gumshoes, and its contacts inside the police force. Notably, it seems to have spied on the former Army intelligence agent-handler, Ian Hurst, on an NGO, British-Irish Rights Watch (because documents of theirs were on Hurst's computer when they hacked it), and perhaps on the chief of police, Sir Philip Orde. It would have been hard for people working for the press not to have covered at least one Northern Irish story in the last 20-odd years simply because it was such a news staple, but it's worth noting their interest.
The War Economy of Northern Ireland
So, what might link Morgan, cocaine, weapons, Ireland, and policemen? There are some fairly well-known stylised facts or stereotypes about the economy of the Troubles. The IRA mostly funded itself from money collected in the United States, from bank robberies, and from unofficial taxes it collected in the North. It also got contributions from friendly countries, specifically Libya. The Loyalists didn't have a reliable source of their own money abroad like NorAid, and so specialised in protection and drugs. Both sides also got involved in smuggling across the border as a commercial exercise.
That's a glib summary 'graf; obviously, I collect a revolutionary tax for the struggle, you impose fines on drug dealers and dishonestly stick to some of the money, and they are merely thugs operating a protection racket. Traditionally, both Sinn Fein and the British tended to stereotype the Loyalists as basically criminal and the IRA as proper insurgents - there may be some truth in there, but the distinction is one of emphasis and degree and also of propaganda rather than of kind.
Having obtained money, they both needed to convert some of it into arms. The IRA got a famous delivery in the 80s from Libya in its role as Secret Santa, and also often bought guns in the US over the counter and smuggled them back. I don't know how well characterised the sources of Loyalist arms are, which of course gives me license to speculate.
Permanently Operating Factors
Now for the cocaine, which has often been known to land in bulk quantities on the wilder, less populated bits of the Atlantic coast that also offer good harbours. This is a rare combination, as people live near ports. Two of the best bits on that score are northwest Spain and southwest Ireland. Having landed, you can move it on anywhere in the UK-Ireland common travel area without much more trouble. Since the creation of the Schengen area, Galicia is even better for this because there is such a choice of markets you can reach without a customs inspection. But in 1987 this was an un-fact, so you might as well go to Ireland.
This transit trade had important consequences - notably the rise of Martin "The General" Cahill, the assassination of Veronica Guerin, and probably a substantial chunk of the Irish property bubble via the laundering of profits and also by the boost to those ol' animal spirits the drug provides.
Imagine, then, that an important criminal actor supplying the London market with cocaine also had access to a reliable surplus of weapons. There is the potential for trade here.
However, it's not that simple - the famous Libyan shipment would have fit in a couple of shipping containers, and it kept the IRA going up until peace was signed, with a fair bit left over to be buried in concrete by the international commissioners on decommissioning. It is very unlikely that any plausible flow of arms to Northern Ireland would have paid for the flow of cocaine into the South-East.
We Don't Need Your Money, Money, Money, We Just Wanna Make The World Dance...
There's something else going on - Diego Gambetta would have already pointed out that you need to understand the trade in protection. To sell protection, you need weapons, which are the capital equipment of the business of private protection. In so far as the buyers in the UK were paying in guns as well as cash, they were arguably expressing a protector-protectee relationship. While on our territory, we protect you, and license you to provide protection. This was also reciprocated. In accepting them, were the sellers of the cocaine undertaking to protect it in transit on their own territory?
Another way of looking at this, which Gambetta would also approve of, would be in terms of costly signalling. Being both a supplier and a protector is a powerful position, but it might be worth letting the other side have it as a guarantee or hostage, to signal that you didn't intend to break the agreement and deal with some other supplier. This makes even more sense given that you still have a regular supply of guns you could cut off or use against them, and therefore both parties have something to lose.
Now, Gambetta's work mostly deals with Sicily, where a very important protection supplier has often been irrelevant. London is a very different society from this point of view. Whatever you think of the police, you can't just ignore them as a factor. In some other societies, the police might be protection consumers, but here, police corruption usually takes the form of policemen selling protection. (In a sense, the more effective the police, the more tempting this will be. Nothing sells like the good stuff.)
So, gazing down on this complex, neo-medieval exchange of cash, credit, and protection, there is a sort of Sun King whose permission is required for any protection contract to be signed. It's like a feudal society. My liege lord is only so, because he is the King's subject, and the King at least theoretically owes duties to the Emperor, or later, directly to God. Our buyer is in a position to offer protection for his end of the business because he enjoys protection supplied by the police.
Who were the recipients, the sellers? They might have been drug dealers who needed to buy protection from one or other paramilitary group. They might have been drug dealers who wanted to build up enough arms that they could stop buying protection, or rather, change protector. Or they might have been paramilitaries who sold protection to the drugs trade. The distinction is surprisingly unimportant.
So, to put the pieces together, there was some group of South-East London villains importing cocaine from transit providers in Ireland, who were also exporting weapons in the opposite direction as part of an exchange of protection for their common business. This required buying protection from the police. Where did the weapons come from? And why is News International involved?