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ARGENTINA

I. Summary

Argentina is not a major drug-producing or major drug-transit country, but it remains a conduit for cocaine flowing from neighboring Bolivia, with undetermined quantities of the drug also being moved through Argentina in international transit from Peru and Colombia. Within the last several years, Argentina also has become a transit area for Colombian heroin en route to the U.S. East Coast (primarily New York), although not in quantities determined to have a significant effect on the U.S. According to Argentine government statistics, drug use is growing. The number of people arrested for possession doubled in 1999. The smuggling of coca leaf into Argentina from Bolivia remains a problem, with what is suspected to be a thousand tons of coca leaf transported illegally into Argentina's northern provinces annually for local legal consumption. While aware of its responsibilities in the interdiction area, the Argentine government focuses its counternarcotics efforts on demand reduction.

A new draft law to modify existing money laundering legislation has been approved by the lower house of the Argentine Congress but awaits Senate consent. High-profile money laundering cases, including one involving Colombian drug lord Pablo Escobar's widow, drew public attention to the issue in late 1999. Federal counternarcotics policy is coordinated by the Secretariat for the Prevention of Drug Abuse and Narcotics Trafficking (SEDRONAR). The government has several national security forces involved in counternarcotics efforts, and provincial police forces also play an integral role. Argentina is a party to the 1988 U.N. Drug Convention.

II. Status of Country

Argentina is not a major drug-producing country. Illicit crop production remains negligible. There is very limited refining or manufacturing of illicit drugs. Argentina has a large and well-developed chemical industry, which manufactures almost all the precursors necessary for the processing of cocaine. According to the first national survey on drug use, released in June 1999, 2.9 percent of adults between the ages of 16-65 said they had consumed an illegal drug in the previous 30 days. Marijuana is the most popular illegal drug consumed, with cocaine hydrochloride (HCl) and inhalants ranked second and third.

Most officials agree that the trafficking of narcotics through Argentina is a problem, although it is impossible to quantify the flow with any degree of accuracy. Bolivia is the primary source of cocaine entering Argentina. Some drugs, such as marijuana, enter via Paraguay and Brazil. Within the past several years, the trafficking of Colombian heroin through Argentina to the U.S. East Coast has increased. Seizures of psycho-pharmaceuticals such as "ecstasy" continue to occur. Amphetamine seizures are increasing, as well.

Commercial air, private and commercial vehicles, containerized rail cargo, and foot traffic all serve as means of drug entry into Argentina. The thousands of uncontrolled airfields and small municipal airports, combined with the continuing lack of national radar coverage make Argentina attractive to potential traffickers. Riverine traffic from Paraguay and Brazil is another probable method for moving narcotics into and through Argentina. Drug shipments out of the country are mostly via commercial aircraft or through Argentina's maritime port systems. Couriers of cocaine from Buenos Aires' Ezeiza International Airport are primarily destined for Europe, South Africa, and Australia. Air couriers of heroin are primarily destined for the United States. Maritime transport from Argentina is conducted by both passengers, and possibly, containerized cargo. As a member of MERCOSUR, Argentina cannot open and inspect containers, sealed in another member state, which are transiting through the country. These sealed and uninspected containers are considered to be a high trafficking threat. The Government of Argentina (GOA) has expressed interest in discussing this issue with its MERCOSUR neighbors.

III. Country Actions Against Drugs in 1999

The government actively opposes drug trafficking and the sale and use of illegal narcotics within the country. In 1989, the Argentine Congress passed the laws necessary to bring the 1988 U.N. Convention into effect. Various presidential decrees since then have targeted money laundering and allowed asset seizures. In 1998, a witness protection program for key witnesses in drug-related prosecutions was created.

In 1989, the Menem Administration established the Secretariat for the Prevention of Drug Abuse and Narcotics Trafficking (SEDRONAR) to serve as the central federal anti-drug coordinating organization. In 1996, the government published a federal plan to combat illegal drugs and established a national strategic commission to oversee these efforts. The plan was designed to better coordinate the counternarcotics efforts of the federal and provincial police forces. SEDRONAR was charged with identifying the extent of the narcotics problem in Argentina and drafting a coordinated plan to address the problems on a national basis. The 1999 release of the first national drug survey was a major step forward in developing a scientifically-based national policy.

Argentina remains very active in multilateral counternarcotics organizations such as the Inter- American Drug Abuse Commission (CICAD), the International Drug Enforcement Conference (IDEC), and the U.N. Drug Control Program (UNDCP). In 1999, Argentina hosted several regional meetings on narcotics-related issues and encouraged MERCOSUR to play a larger role in money laundering and chemical precursor diversion investigations. The GOA will host the IDEC in 2000.

Demand Reduction. The GOA has traditionally focused its narcotics efforts on demand reduction. Drug use is treated as a medical problem and addicts are eligible to receive government-subsidized treatment. Buenos Aires Province (the most heavily populated) has its own well-established demand reduction program that targets a large population of drug users.

The USG is working with the Argentine Ad Council to develop the "Partnership for a Drug-Free Argentina." The Argentine Ad Council launched the program in late 1998, and believes that local media have donated over $12 million in free time and space. The campaign has been very successful, bringing in thousands of calls for information about prevention and rehabilitation programs.

Law Enforcement Efforts. Argentina has many federal and provincial police forces involved in the counternarcotics efforts. The primary federal forces involved are the Federal Police (which also have jurisdiction for crimes committed in or connected to the federal capital), the Gendarmeria Nacional (border police), the National Customs Service, the National Air Police, and the National Coast Guard. The provincial police forces of Buenos Aires, Salta, and Jujuy are also heavily involved in counternarcotics efforts.

The amount of illegal narcotics seized in Argentina in 1999 did not change significantly from 1998 rates. However, arrest statistics rose dramatically in 1999, which is consistent with a pattern of frequent small seizures of drugs and a doubling of the number of arrests for possession. As of late 1999, approximately 6 kilos of heroin were seized in Argentina, with another 22 kilos seized in the United States from people arriving from Argentina.

Corruption. Argentina is a party to the Inter-American Anti-Corruption Convention. The GOA neither encourages nor facilitates the production or distribution of narcotics or other controlled substances, nor the laundering of the proceeds from illegal drug transactions. The USG has no information that any senior member of the government is involved in narcotics corruption. Low-level corruption remains an important issue in Argentina, and the new government of Fernando de la Rua has promised to make fighting corruption one of its highest priorities.

Agreements and Treaties. In 1989, the U.S. and Argentina signed a cooperation agreement against drug trafficking. These programs continue, with a budget value of approximately $2.9 million. In 1990, Argentina and the U.S. signed a mutual legal assistance treaty (MLAT), which has been in force since 1993. In 1997, the U.S. and Argentina signed a new extradition treaty, which now has been ratified by both parties, and the exchange of instruments of ratification to bring the treaty into force is expected to occur shortly. A memorandum of understanding between the U.S. Treasury and SEDRONAR dealing with the exchange of financial information relating to money laundering was signed in 1995.

The GOA is a party to the 1988 U.N. Convention, and it has bilateral narcotics cooperation agreements with many countries. Dublin Group assistance, aside from the USG, remains limited. The United Kingdom, Germany, Australia, France, and Italy provide limited training and equipment support.

IV. U.S. Policy Initiatives and Programs

Under the current bilateral agreement, USG funding is used to provide a wide variety of training programs for Argentine law enforcement officials. Examples include providing essential information technology equipment to better coordinate police counternarcotics efforts and supporting the federal/provincial law enforcement "Northern Border Task Force," a major initiative in the frontier region with Bolivia devoted exclusively to counternarcotics work. The unit is showing good results. In early December 1999, the unit was involved in the seizure of 130 kilos of cocaine in four different operations.

The Road Ahead. The USG will continue to support GOA efforts on the critical northern border area where the vast majority of drugs enters Argentina, without neglecting other potentially important areas such as the tri-border area where Argentina, Paraguay, and Brazil meet. Additional efforts are required to support the Argentine Customs Service and Air Police to target heroin trafficking to the U.S. East Coast and cocaine movements by couriers through Argentina's airports. Moreover, the USG will work with the GOA to determine the extent of South Atlantic maritime trafficking. The USG will also continue to support SEDRONAR programs aimed at developing effective chemical controls and to identify the illegal diversion of precursor chemicals.

BOLIVIA

I. Summary

An extremely effective eradication program in the Chapare, Bolivia's principal coca-growing region, surpassed last year's record-setting results, reducing the number of hectares of coca under cultivation by more than half, and by 43 percent overall. Even though Bolivia produced less cocaine hydrochloride (HCl) and cocaine base than in 1998, interdiction forces increased arrests and drug seizures (measured in terms of a percentage of potential production). A highly effective chemical interdiction program has forced Bolivian traffickers to continue to rely on substitutes for scarce and expensive chemicals smuggled in from neighboring countries and an inferior process to streamline base and HCl production. As a consequence, the purity of Bolivian cocaine has been greatly reduced and most foreign traffickers now prefer to purchase base in Bolivia and process it into HCl in Brazil, where essential chemicals are readily available. Alternative development initiatives in the Chapare continue to provide licit alternatives to coca, but demand for alternative development is exceeding the ability of the Government of Bolivia (GOB) to provide it. The (GOB) enacted a new Code of Criminal Procedures and is training judges, prosecutors and police in the new trial procedures. No action was taken against money laundering in 1999. Bolivian media and public opinion continue to be largely supportive of counternarcotics efforts. Bolivia is a party to the 1988 UN Convention against Illicit Trafficking in Drugs and Psychotropic Substances (the 1988 UN Drug Convention).

II. Status of Country

During 1999, Bolivia fell further behind Colombia and Peru in the production of coca leaf and cocaine, but remains the world's third largest supplier of cocaine. During 1999, the GOB eradication program reduced coca cultivation by 43 percent nationwide-and by 68 percent in the Chapare. Potential cocaine production fell from 150 metric tons in 1998 to 70 metric tons-the lowest levels of cultivation and potential cocaine production since the USG began conducting imagery-based crop estimates for Bolivia in 1985. This year, for the first time, field abandonment became an important factor in the decline in coca leaf production, with farmers abandoning approximately 1,650 hectares.

As of the end of 1999, Bolivia has approximately 21,800 hectares of coca under cultivation (down from 38,000 hectares in 1998) with 7,500 hectares in the Chapare; 14,000 in the Yungas; and 300 in Apolo. In 2000, the GOB plans to continue eradicating coca in the Chapare and begin preparations for an eradication program in the Yungas. Article 29 of Law 1008, Bolivia's basic counternarcotics law, presently allows for the cultivation of 12,000 hectares in the Yungas in order to satisfy legal demand, although there is evidence that the needs of the legal coca market can be met with half that amount. The same article permits the government to periodically reevaluate the needs of the legal coca market and revise the limit accordingly, which the government plans to do during 2000. There is evidence that Yungas coca is being diverted to the illicit market for conversion to cocaine products, although there is no reliable seizure data at present. The GOB plans to initiate control operations in 2000. The amount of coca grown in Apolo is not significant, and there is no evidence it is being grown for other than legitimate purposes.

III. Country Actions Against Drugs in 1999

Policy Initiatives. The GOB announced the country's first-ever comprehensive counternarcotics strategy early in 1998, and began implementation shortly thereafter. The four part strategy has been extremely successful in eradication, interdiction and alternative development and somewhat less so in prevention/rehabilitation.

In 1999, the Bolivian Legislature enacted a new Code of Criminal Procedures. The new code establishes an accusatorial, adversarial, oral, and public criminal procedure designed to be more rapid and transparent than the current system. Public proceedings and citizen participation (cases will be heard by two professional judges and three citizen judges, i.e., jurors) should help to diminish the possibility of corruption and improve the credibility of the judicial system. The new code permits the police to use undercover agents and to make controlled deliveries of narcotics and other contraband.

The Judicial Council, created in 1998, was designed to de-politicize the selection of judges and to serve as a mechanism for disciplining members of the judiciary. Although it has not performed to expectations, its members unwilling or unable to work together, the Council did suspend or remove 23 judges in La Paz, Santa Cruz and Cochabamba on charges ranging from the acceptance of bribes to judicial misconduct. However, in reviewing the dismissal of a Cochabamba judge, the Constitutional Tribunal, created at the same time as the Judicial Council, reinstated the judge, concluding that members of the judiciary can only be removed subsequent to a final judgement by a criminal court, not an administrative body.

Cultivation. Of the total cultivation in Bolivia of 21,800 hectares at the end of 1999, 17,150 hectares were of mature, harvestable coca, a 40 percent reduction from the previous year. Only 800 hectares of new coca were planted.

One hectare of Chapare coca yields an average of 2.7 metric tons of sun-dried coca leaf, which, in turn, produces 7.44 kilos of cocaine. The elimination of 16,999 hectares of Chapare coca during this year, therefore, prevented approximately 113 metric tons of cocaine from being manufactured from harvestable coca and exported to the U.S. and other destinations.

Production. For the fifth year in a row, total potential cocaine production in Bolivia has declined, from 240 metric tons in 1995 to 70 metric tons in 1999. Moreover, the destruction of 9,725 hectares of new coca and 62,865 square meters of seedbeds ensures this trend will continue if the government's aggressive eradication effort is sustained in 2000.

Alternative Development. The U.S. Agency for International Development (USAID) provides support for the GOB's alternative development activities in Bolivia, which provide licit income-generating alternatives to growing coca. Alternative development assistance was given to those communities and farmer organizations that voluntarily eliminated all of their coca plantings or that had all of their coca forcibly eradicated-114 groups since June 1997 (or approximately 14,570 families).

Licit alternative development production totaling 58,388 metric tons left the Chapare during April, May and June of 1999, with a market retail value of $23.7 million and a farm gate value of $5.7 million. Volumes of all major Chapare products increased in 1999-nine percent in bananas, 437 percent in tangerines, 117 percent in oranges, 242 percent in papayas, 174 percent in pineapples and five percent in plantains. During July, August and September of 1999, while the Bolivian export sector suffered a 15-20 percent decrease, Chapare banana exports increased by 20 percent over the previous quarter, with USAID-assisted firms shipping 6000-7000 boxes per week to Argentina and Chile. One of the project-assisted palm heart packers began shipping 2,000 cases per week to supermarkets in Argentina.

Because of the GOB's resolve to eliminate illicit coca and because it is the second poorest country in Latin America, demand for alternative development is outpacing the GOB's ability to provide it. Only 25 percent of Chapare farmers have received the assistance, and current funding levels will enable the GOB to reach only 50 percent of the communities that have signed coca eradication agreements.

Money laundering. Bolivia's 1996 law against money laundering is still not being enforced, and the GOB is considering transferring jurisdiction from the Superintendency of Banks to a cabinet ministry.

Asset seizure. The seized asset regime set out in the new Code of Criminal Procedures does little to resolve the ambiguities and conflicts in Law 1008 and the Supreme Decree issued in the last year of the previous administration. The code provision appears to be unconstitutional on its face as it provides for the seizure and sale of the property of the accused before a final determination of guilt or innocence. The USG suspended its assistance to the seized asset directorate in 1998.

Extradition. Bolivia and the U.S. signed a bilateral extradition treaty in 1995. The treaty has been in force since 1996. There were no extraditions of Bolivian citizens to the U.S. in 1999. The U.S. has {six} requests pending with the Bolivian government-five of them related to narcotics violations. Two of these individuals are currently serving sentences in Bolivia.

Demand Reduction Programs. The Vice Ministry for Prevention and Rehabilitation received little funding in the GOB's 1999 budget and has been unable to plan a sustainable, comprehensive program.

Law Enforcement Efforts. As Bolivia produces few of the chemicals utilized in processing coca leaf into coca base and HCl, most are smuggled from neighboring countries. Over the last two years, the GOB has operated the region's most effective chemical interdiction program, making some essential chemicals hard to obtain or difficult to afford. In reaction, Bolivian traffickers have streamlined the cocaine production process to reduce or eliminate the need for some chemicals, and are using inferior substitutes for some chemicals and recycling others. As a consequence, the purity of Bolivian cocaine has been reduced to as low as 47%, and Bolivian traffickers continue to use cutting ingredients to make up the quantities requested by their customers. Understandably, demand for Bolivian HCl has fallen, with most foreign traffickers now preferring to purchase base and refine it into HCl in Brazil, where essential chemicals are readily available. This has also caused Bolivian traffickers to purchase Peruvian coca base and HCl. This is an emerging trend that will be closely monitored in 2000.

Even though Bolivia produced less cocaine in 1999 than the year before, drug seizures, expressed in terms of percentage of potential production, are up from 7.7 percent in 1998 to 9.8 percent in 1999.

In June, the special narcotics task force arrested Marino Diodato and fifteen members of his organization. Diodato and his accomplices are part of the Benedetto Santapaola Organization of the Italian Mafia. The Diodato trial is underway, and more than $5.7 million in assets held by him and his organization have been seized.

Corruption. Bolivia's small to mid-sized trafficking organizations do not seem to exercise a corruptive influence at the higher levels of the Bolivian government. Although there were no criminal cases of narcotics-related public corruption brought against senior level officials during 1999, several cases of corruption are pending against narcotics judges in Santa Cruz and Cochabamba. In addition, former Minister of Justice and Human Rights, Carlos Subirana, was forced to resign because of his attempted involvement on behalf of a Diodato co-conspirator during a pre-trial hearing. The present government neither condones, encourages nor facilitates any aspect of narcotics trafficking.

An Office of Professional Responsibility has been established within the Special Narcotics Task Force, the national police organization that supervises the activities of most police units involved in counternarcotics activities, to investigate allegations of corruption and human rights violations against judges, prosecutors and police. This unit investigated 60 allegations of improper action by the police. Of the 60 cases, 53 were investigated and closed, 4 are currently under investigation and 3 are awaiting final disposition. Of 13 cases where there were allegations of human rights violations by police, investigations revealed that only one was substantiated, and disciplinary action is pending in that case.

Agreements and Treaties. Bolivia is a party to the 1961 Single Convention on Narcotic Drugs, the 1972 Protocol thereto, and the 1971 Convention on Psychotropic Substances. Bolivia is also a party to the 1988 UN Drug Convention. Bolivia and the U.S. signed an extradition treaty in 1995. The treaty has been in force since 1996.

IV. U.S. Policy Initiatives and Programs

Policy Initiatives. To ensure that the human rights of Bolivian citizens are respected by USG-supported counternarcotics forces, the mission made the prompt, thorough and impartial investigation of all credible human rights violations-a conditional precedent for the disbursal of balance of payments funds. The mission is helping prepare Bolivian police and prosecutors for the implementation of the new Code of Criminal Procedure and the changes in their respective roles.

Bilateral Cooperation. Chaired by the U.S. ambassador and the Vice-President of Bolivia, the Bi-National Commission, made up of the Bolivian Ministers of Government, National Defense, and Agriculture, other relevant Bolivian officials and key counternarcotics officers of the U.S. Embassy in La Paz, meets regularly to monitor progress toward the goals set out in the 1998-1999 USG-GOB counternarcotics agreements and to consider new programs and initiatives. Many USG law enforcement agencies, including DEA and U.S. Customs, provided training to the Bolivian National Police and military units dedicated to the counternarcotics program.

Road ahead. During 2000, the GOB will concentrate on eradicating excess coca remaining in the Chapare and on planning and preparing for the implementation of an eradication program in the Yungas. Bolivia faces serious short-term economic difficulties and cannot provide the funds required to eliminate all of Bolivia's illegal coca and prevent its future cultivation absent substantial support from the USG and other concerned international donors.

Bolivia Statistics

(1991-1999)

1999 1998 1997 1996 1995 1994 1993 1992 1991
Coca

Net Cultivation(1) (ha)

21,800

38,000

45,800

48,100

48,600

48,100

47,200

45,500

47,900

Eradication (ha)

16,999

11,621

7,026

7,512

5,493

1,058

2,397

3,152

5,488

Cultivation (ha)

38,799

49,621

52,826

55,612

54,093

49,158

49,597

48,652

53,388

Leaf: Potential Harvest(2) (mt)

22,800

52,900

70,100

75,100

85,000

89,800

84,400

80,300

78,000

HCl: Potential (mt)

70

150

200

215

240

255

240

225

220

Seizures

Coca Leaf (mt)

56.01

93.72

50.60

76.40

110.09

202.13

201.25

188.90

5.45

Coca Paste(3) (mt)

-

-

0.008

-

0.05

0.02

0.01

0.33

0.94

Cocaine Base(4) (mt)

5.48

6.20

6.57

6.78

4.60

6.44

5.30

7.70

3.12

Cocaine HCl (mt)

1.43

3.12

3.82

3.17

3.59

1.02

0.31

0.70

0.32

Combined HCl & Base (mt)

6.91

9.32

10.39

9.95

8.19

7.46

5.61

8.40

3.44

Agua Rica(5) (ltrs)

30,120

44,560

1,149

2,275

16,874

16,874

14,255

50,820

23,230

Arrests/Detentions

2,050

1,926

1,766

955

600

1,469

1,045

1,226

1,003

Labs Destroyed

Cocaine HCl

1

1

1

7

18

32

10

17

34

Base

893

1,205

1,022

2,033

2,226

1,891

1,300

1,393

1,461

Domestic Consumption

Coca Leaf (licit)(6) (mt)

-

-

13,300

13,300

13,300

13,300

13,300

10,000

10,000

(1)The reported leaf-to-HCl conversion ratio is estimated to be 370 kg of leaf to one kg of cocaine HCl in the Chapare. In the Yungas, the reported ratio is 315:1.
(2)Most coca processors have eliminated the coca paste step in production.
(3)Includes dry cocaine content of agua rica (see subsequent footnote).
(4)In 1995, an additional 4.1 metric tons of cocaine HCl were seized in Peru based on information provided by DEA in Bolivia.
(5)Agua Rica (AR) is a suspension of cocaine base in a weak acid solution. AR seizures first occurred in late 1991. According to DEA, 37 liters of AR equal one kg of cocaine base.
(6)Licit consumption estimates revised in 1993.

BRAZIL

I. Summary

Although it is not a significant producer of illegal drugs, Brazil is a major transit country for illicit drugs shipped to the United States and a major producer of precursor chemicals and synthetic drugs. In 1999, Brazil strengthened its counternarcotics activities despite the distractions of a major currency devaluation and the lengthy process of choosing a new Federal Police director. The year's most significant counternarcotics event was the formation in April 1999 of the special Congressional Panel of Inquiry (CPI) on narcotics trafficking. Its hearings highlighted the linkage between narcotics trafficking, money laundering, organized crime and corruption in Brazil. In November, President Cardoso called for a national mobilization against narcotics and formed a special task force against impunity to attack narcotics trafficking and associated crimes. These actions reflect Brazil's heightened concern over the negative role that illegal narcotics play in the country's life, particularly since the country's domestic drug problem is increasing. Brazil cooperated with its neighbors, principally Peru and Colombia, to strengthen interdiction efforts in the remote frontier regions where illicit drugs are transported.

Federal Police reported seizing 5.91 metric tons of cocaine in 1999, 0.11 metric tons more than in 1998. However, since Brazil collects only Federal Police seizure and arrest statistics, not recording those generated by state, local and highway police forces, actual narcotics seizures are higher than reflected in these reports. With scant resources and limited authority, the Presidency's National Anti-Drug Secretariat (SENAD) sought to coordinate all counternarcotics efforts. Its recent inclusion in the special task force on impunity may help the coordination effort.

Brazil ratified the 1988 UN Drug Convention in 1991 and has been making significant efforts to meet the goals and objectives of the convention, but it has not yet adopted legislation necessary to fully implement it. Brazil has a bilateral narcotics agreement and a Memorandum of Understanding (MOU) with the U.S. that provide for bilateral counternarcotics cooperation. Brazil also cooperates bilaterally with several other countries and participates in multilateral counternarcotics initiatives such as the UN Drug Control Program (UNDCP) and the Organization of American States/Drug Abuse Control Commission (OAS/CICAD).

II. Status of Country

Brazil is not a significant drug producing country. Marijuana (cannabis) is grown in the interior of the northeast, but almost entirely for domestic consumption. Furthermore, these production centers are under heavy pressure from Brazilian eradication efforts; three times as much was destroyed and six times as much was seized in 1999 compared to the previous year.

Brazil is primarily a transit country for cocaine base moving from Andean Ridge cultivation areas to processing laboratories in Colombia. It is also a conduit for cocaine hydrochloride (HCl) bound from Colombia and other neighboring countries to North America, Europe and Brazilian cities. Brazilian Federal Police (DPF) statistics show little indication of an increase in the quantities of heroin entering the country from Colombia, although the media continue to make that claim.

Drugs from Bolivia and Peru move by air and land routes to the major cities in Brazil's southern region which, according to surveys, media accounts and other data, have the highest rates of drug use in the country. Major seaports at Santos, Rio de Janeiro and Rio Grande do Sul, as well as international airports at Sao Paulo, Rio de Janeiro and Porto Alegre, serve as transshipment points for these drugs.

Another major transit area in Brazil is the enormous western region, used in recent years by narcotics traffickers to avoid the active air interdiction policies of Peru and Colombia. The extensive Amazon riverine transportation network is used to move drugs to Atlantic ports for transshipment. This network also transports mostly Brazilian manufactured precursor chemicals to narcotics processing laboratories upriver, mainly in Colombia, although two laboratories were found in Brazil in 1999. Relatively few seizures of diverted or illicit chemicals have occurred.

Laws passed in 1998 on money laundering were implemented with limited results. Additional legislation remains pending as part of a larger package of measures to reform the entire financial system. However, a number of administrative regulations were promulgated in 1999 and officials at the Council for the Control of Financial Activities (COAF - which has the lead on money laundering) maintain they have all the legal authority they need to do their job. Similarly, construction continued on the Amazon Surveillance System (SIVAM), which will provide an integrated air- and land-based radar system by 2002 to detect trafficking and other illegal activity in the sparsely populated region.

Drug use continues to increase, especially among young people. Abuse of hard drugs such as the local version of "crack" cocaine is increasing among youths in the country's cities. Reputable news magazines claimed that the problem extended to the capital of Brasilia and even into Congress itself. The year-old Anti-Drug Secretariat (SENAD) also began to develop and oversee drug prevention and treatment programs, though it was hampered by scarce resources and personnel.

III. Country Actions Against Drugs in 1999

Policy Initiatives. Brazil's major counternarcotics initiative was the Chamber of Deputies' Congressional Panel of Inquiry (CPI) on narcotics trafficking. Initiated in April, the CPI held hearings and investigated criminality and narcotics trafficking in a blaze of publicity. As a result, Brazilian society ended the year sensitized to the narcotics problem in the country, particularly the relationship between narcotics trafficking, drug use, corruption and other forms of criminality.

The Brazilian Congress did not pass new counternarcotics legislation in 1999. However, it is actively considering an omnibus bill on national drug policy and another on crimes of special seriousness that would include narcotics trafficking. The Justice Ministry is also studying a proposal from the SENAD Director to revive a 1991 congressional bill that would grant judicial protection to police who act as undercover agents. Congress' most important action was the formation of the CPI, which served to publicize the penetration of government and society by narcotics traffickers and other criminal elements. Among its achievements were the expulsion of a member of Congress who was actively involved in narcotics trafficking and other criminal activities and the arrest of over 115 corrupt judges, gunmen, businessmen and rogue police officials. It also gave courage to previously isolated voices against corruption and impunity, making others willing to come forward to denounce illegal activities. An additional spin-off is that several state legislative assemblies are in the process of organizing their own CPIs. Most importantly, the CPI began changing the apparent tolerance of corruption and impunity.

Accomplishments. The Federal Police continued their efforts in the Amazon region and carried out often lengthy counternarcotics investigations countrywide. Seizures increased slightly in 1999, lifted by a record-breaking one month run of success in October. On October 9, the DPF captured 245 kilograms of crack and 50 kilograms of cocaine in San Pedro in the state of Sao Paulo. This was followed on October 21 when the DPF seized 60 kilograms of ecstasy at the Sao Paulo airport. Soon thereafter, on October 26, the DPF seized 780 kilograms of cocaine in the south of Para state. The latter seizure demonstrates the continuing focus of the DPF on the Amazon basin region, along with close attention to the southern trafficking routes to Sao Paulo.

National interdiction statistics are incomplete due to the exclusion of comprehensive state-level seizure information. However, Federal Police sources estimate they record approximately 75 percent of seizures and detentions, enough to extrapolate national trends. They add that the statistics of all Brazilian police forces will be consolidated in 2000 as the result of an agreement among the police forces.

Illicit Cultivation/Production. There is no significant evidence of illicit drug cultivation in Brazil, with the exception of some cannabis grown primarily for domestic consumption in the interior of the northeast region. SENAD and the DPF devoted considerable resources to inhibiting this local illicit production in 1999. Statistical evidence indicates the success of these efforts; eradication proceeded at over triple the pace of 1998 and marijuana seizures increased by six-fold. In late November, the GOB mounted its largest eradication and crop substitution effort ever in the marijuana-growing center of Pernambuco state. Designed to last four years, the initiative included the use of 1,500 army troops for the first time. As in past years, authorities identified no coca or opium cultivation in 1999. Although only two cocaine-processing laboratories were identified and dismantled, DPF analysts believe that international narcotics trafficking organizations may be sponsoring the construction of additional laboratories in Brazilian territory to exploit the ready availability of precursor chemicals.

Distribution. Extensive domestic distribution networks have developed in major and secondary cities in Brazil, and the DPF and state authorities are investigating. Access to the shantytowns (favelas) surrounding major cities such as Sao Paulo, Rio de Janeiro and Porto Alegre is controlled by local drug lords. This was dramatically demonstrated in early November, when CPI representatives on a fact-finding trip were forced to withdraw from a Rio favela under the threat of violence.

Sale, Transport and Financing. Federal Police focused efforts on the western Amazon region with a half dozen operations, all growing out of "Operation Porras" which originally began in 1997. Another major operation in the region features three-way cooperation among Brazil, Peru and Colombia. Despite ongoing operations, law enforcement efforts were hampered by insufficient resources and the vastness of the Amazon region where narcotics are shipped by air and along the extensive river system. The region remains difficult to police adequately. Some authorities claim that a majority of the cocaine shipped down the Amazon is destined for the United States. Manaus, the largest fresh-water port on the river, and Macapa and Belem on the Atlantic, serve as transshipment points for drugs from Colombia, Peru and Bolivia to be loaded on ships bound for the U.S., Europe and elsewhere.

Money Laundering. The CPI estimated that about $17 billion is laundered each year in Brazil, while the Central Bank estimated the amount at $28 billion. The Council on Financial Activities (COAF) complained publicly about a lack of cooperation from banks, including the Central Bank, in identifying laundered money. Banks in turn cited bank secrecy laws as justification for their lack of cooperation. Responding to pressure, however, the central bank has recently created a special internal group to trace money laundering.

Asset Seizure. Items useful to police work, particularly motor vehicles, can be seized during narcotics raids and put into immediate use under a March 1999 executive decree. Other assets are publicly auctioned with proceeds distributed according to court decisions. Federal Police records show that 21 airplanes, 308 automobiles and 180 firearms were seized and assimilated in 1999, compared to 15, 179 and 130 in 1998 and six, 77 and 71 in 1997.

Extradition. Brazil does not extradite its own citizens. It cooperates with other countries in the extradition of non- Brazilian nationals accused of narcotics-related crimes. Brazil and the U.S. are parties to a bilateral extradition treaty signed in 1961. There were no extraditions to the U.S. of persons accused of narcotics-related crimes in 1999.

Mutual Legal Assistance. The U.S. and Brazil signed a bilateral Mutual Legal Assistance Treaty (MLAT) in October 1997. The U.S. Senate approved the treaty in October 1998, but it still awaits approval by the Brazilian Congress. When it goes into effect, this treaty will support Brazilian efforts to deal with narcotics trafficking and organized crime, as well as other offenses.

Law Enforcement and Transit Cooperation. Top Brazilian counternarcotics officials in the DPF and SENAD continued expressing their strong interest in more active cooperation and coordination with U.S. drug control activities, particularly intelligence sharing.

U.S. Drug Enforcement Administration (DEA) agents were again invited in 1999 to observe Federal Police operations in the Amazon region, and information sharing with Brazilian police authorities has progressed well. Brazilian cooperation with authorities in neighboring countries, particularly in Colombia, Peru and Bolivia, also enhanced regional efforts to block trafficking.

Precursor Chemical Control. Brazil, South America's largest producer of industrial chemicals, requires registration with federal narcotics police for all production, transport and distribution of precursor chemicals. A 1995 law places eleven chemicals under federal control (the Justice Ministry is considering adding 14 more to the control list), sets minimum thresholds for reporting and record keeping on transactions, provides for import and export licensing, and fixes substantial administrative penalties for noncompliance. While compliance with the permit process appears to be widespread, a lack of resources (only three Federal Police agents and eight clerical workers to check on 22,000 chemical handlers) prevents active government follow-up or verification of most shipments and/or their ultimate destinations. As a result, the enforcers are largely dependent upon the integrity of chemical companies to accurately report on the production and handling of shipments. Consequently, some diversion of chemicals such as ether and acetone to neighboring Colombia, Peru and Bolivia still occurs. In September 1998, the United Nations Drug Control Program (UNDCP) initiated a multi-year, $9 million program to enhance precursor chemical control. Initial reports on the new program have been favorable.

Domestic Programs. Since the successful conclusion of the 1998 National Anti-Drug Conference, SENAD has been working with the Health Ministry to develop an updated list of Brazilian entities involved in drug prevention and rehabilitation programs. There are currently hundreds of such entities in the country and the most recent register available is from 1991. In June 1999 SENAD launched a national Anti-Drug Week to increase awareness among young people of the dangers of drug abuse. The U.S. contribution to the campaign was the provision of equipment and preparation of office space for the coordinating staff at SENAD. U.S. counternarcotics funds from FY 1999 have been earmarked to help support demand reduction and drug education programs in Brazil through a joint program with SENAD. One major focus has been on the PROERD (Educational Program for Resistance to Drugs and Violence) program, based on the U.S. D.A.R.E. model. PROERD provides training to uniformed state military police drug education volunteers in 17 of Brazil's 26 states, as well as in the federal district. In October, 75 professionals from the juvenile institution FEBEM (State Foundation for the Welfare of Minors) in Sao Paulo were trained through direct funding by the Bureau of International Narcotics and Law Enforcement Affairs (INL) in counseling and pedagogical techniques based on the internationally successful Daytop model of community therapy.

Law Enforcement Efforts. Federal Police cocaine seizures increased marginally in 1999 (5.91 metric tons) from 1998 (5.8 metric tons). Marijuana (cannabis) seizures of 54.96 metric tons in 1999 were nearly six times higher than the 9.47 metric tons seized in 1998. In addition, destruction of marijuana plants tripled to 3.08 million, compared to 806,765 in 1998. Two drug laboratories were also dismantled.

Corruption. The Brazilian government does not condone the production, shipment, or distribution of illicit drugs or laundering of drug money; nor do senior government officials engage in, encourage, or facilitate such activities. However, the Congressional Panel of Inquiry into narcotics trafficking repeatedly exposed nests of corruption throughout Brazilian society and government in 1999, particularly at the local and state level. It is hoped that this exposure will lead to stricter legislation and a weakening of the nexus between narcotics, organized crime and politics.

Agreements and Treaties. Brazil became a party to the 1988 UN Drug Convention in 1991, although it still lacks legislation formally implementing all of its provisions. While the pending omnibus narcotics law is needed to bring Brazil into full compliance with the UN Convention, in practice Brazil meets many of the overall objectives. Bilateral agreements based on the 1988 Convention form the basis for counternarcotics cooperation between the U.S. and Brazil. Brazil also has a number of narcotics control agreements with its South American neighbors, several European countries, South Africa and, in 1999, signed agreements with Peru, Spain and Romania. The Federal Police maintain liaison on counternarcotics matters with the U.S., Germany, Great Britain, France, Spain, the Netherlands, Canada and Italy through narcotics officers of those countries posted to their embassies in Brasilia. Brazil has agreements facilitating extradition and integration of police operations with its Mercosur partners (Argentina, Uruguay and Paraguay) and participates in a wide range of counternarcotics programs sponsored by UNDCP.

IV. U.S. Policy Initiatives and Programs

U.S. Policy Initiatives. U.S. counternarcotics policy in Brazil focuses on working with Brazilian authorities to identify and dismantle international narcotics trafficking organizations, reduce money laundering and increase awareness of the dangers of drug trafficking and drug abuse. Key goals are to assist Brazil to develop a strong legal structure for narcotics and money laundering control and to enhance cooperation at the policy level. Bilateral agreements provide for cooperation among U.S. agencies, the National Anti-Drug Secretariat and the Federal Police.

Bilateral Cooperation. Bilateral assistance in 1999 included: a DEA regional pipeline training course for two Federal Police officers; a drug interdiction training course for 1 highway patrol officer in Peru; a DEA intelligence analysis seminar for 30 Federal Police agents in Brasilia; an introductory DEA law enforcement seminar for 35 Federal Police agents in Brasilia; a seminar in Miami by the National Association of Drug Court Professionals for two judges and two prosecutors; a DEA training course in airport interdiction for two federal police agents and two customs agents in Buenos Aires; DEA training in asset forfeiture for two Federal Police agents in Bogota; USIS sponsored lectures on money laundering in three Brazilian cities in September; and a judicial seminar by and for Brazilians attended by forty judges, prosecutors and Federal Police agents in Belo Horizonte in October. Assistance was also provided for the renovation of the central kennel facilities in Brasilia (for drug-sniffing dogs), and for audio visual equipment and office supplies for the D.A.R.E. Brasil program in Sao Paulo. In the area of drug education and demand reduction, support was given to the Street Kids initiative for under-served urban youth in Campinas; to the D.A.R.E. International Summit with representatives from 23 countries in Sao Paulo in February; to the D.A.R.E.-PROERD mentor officer training course for 30 state policemen in Brasilia; for a speaker from the ONDCP in August; and for the last two modules of training provided for the 75-member staff of the FEBEM youth center in Sao Paulo. Several Brazilian visitors were also brought to the U.S. for training. These included: a Civil Police officer working with Brazilian schools to increase drug awareness; a member of the Sao Paulo state Drug Council; a leader of the Brazilian Federation of Therapeutic Communities of Campinas; and five Federal Police agents from Brasilia to study courses and methods at the FBI and DEA academies in Quantico. To further improve U.S./Brazilian cooperation in these various counternarcotics endeavors, the U.S. State Department hosted a Brazilian delegation of law-enforcement officials in January 1999 for a first-ever bilateral conference on illegal narcotics and law enforcement issues. Both country teams expressed satisfaction with the tone and substance of these talks, which included discussions on demand reduction, money laundering, legal reform, transshipment, interdiction and intelligence sharing.

The DEA continued to support numerous Federal Police counternarcotics operations in the Amazon region throughout 1999, assisting with information sharing and equipment and facilitating cooperation with police authorities in neighboring Colombia, Peru, Bolivia and Venezuela. DEA began assisting a joint anti-drug task force at the Sao Paulo International Airport in cooperation with Brazilian customs, the Federal Police and the Sao Paulo Civil Police with promising early results.

The DEA provided instruction at the Brazilian jungle school in 1999. Police forces from Colombia, Bolivia and Venezuela also participated in the training.

The Road Ahead. High-level Brazilian officials, including the President, his national drug czar and the new Federal Police director, continue to express strong interest and commitment to enhanced bilateral cooperation with the U.S. in the fight against narcotics trafficking. The government of Brazil also demonstrated a willingness to work closely with its neighbors in fighting the narcotics trade. President Cardoso strongly and publicly supported the work of the CPI on narcotics trafficking throughout the year as part of a national mobilization against narcotics. As a practical part of this mobilization, a special task force to combat impunity was formed in November to act in cases involving narcotics trafficking and associated crimes. In addition, the president promised to hire another 1,000 Federal Police officers (a 15 percent increase) and form 21 new police field offices. Further signs of Brazil's strong commitment to combat drug trafficking would include passage of omnibus counternarcotics legislation and pending legislation on serious crimes, including narcotics trafficking; promulgation of additional money laundering regulations and enhanced enforcement; continued high-level attention to counternarcotics efforts; further funding of counternarcotics programs and law enforcement agencies; and continued interdiction efforts in the regions most exploited by international narcotics traffickers.

Brazil Statistics

(1991-1999)

1999 1998 1997 1996 1995 1994 1993 1992 1991
Coca

Harvestable Cultivation (ha)

-

-

-

-

-

-

-

-

-

Eradication (mt)

-

-

-

-

-

-

20

0

0

Cocaine Seizures (mt)

5.91

4.00

4.00

3.10

5.70

11.80

7.70

2.81

3.70

Crack Cocaine (mt)

1.670

0.135

0.122

-

-

-

-

-

-

Cannabis

Harvestable Cultivation (ha)

-

-

-

-

-

-

-

-

-

Eradication(1) (mt)

1,001

760

821

884

763

1,643

Seized In-Country (mt)

55.0

9.5

31.7

19.8

11.7

18.4

10.0

19.6

8.5

Arrests

1,644

-

2,307

-

-

-

2,803

2,283

2,759

Labs Destroyed

Cocaine HCl

2

2

0

0

0

0

5

0

3

(1)In 1999, 3.08 million cannabis plants were destroyed. Conversion to metric tonnage not available.

CHILE

I. Summary

Chile is not a center of illicit narcotics production, but is a transshipment point for cocaine products moving to the U.S. and Europe. Until recently, Chile avoided many of the problems associated with large-scale shipments of narcotics, but consumption of cocaine and cocaine base, and associated low-level criminality are on a slow ascent. Chile continues to be a source of precursor chemicals exported for use in coca processing in Peru and Bolivia. The Chilean financial system, due to its relative sophistication and size, is vulnerable to money laundering. Narcotics corruption is not a serious issue affecting Chile. Chile is a party to the 1988 U.N. Drug Convention. Chile has private drug abuse and prevention programs, many funded by the Chilean government as part of a decentralized narcotics control strategy.

II. Status of the Country

Chile remains a source of precursor chemicals and a transshipment point for refined cocaine bound for Europe, and to a limited extent, the U.S. A 1995 law criminalized illicit association, trade in precursor chemicals destined for use in narcotics refining and money laundering, and authorized wire-taps. Chile is not a producer country for narcotics, aside from very small quantities of marijuana. Resources for enforcement and demand reduction remain limited. Multilaterally, the Government of Chile (GOC) exercises active leadership in the Inter-American Drug Abuse Control Commission (CICAD), and supports CICAD's effort to promote an effective Multilateral Evaluation Mechanism. In October 1999, the GOC sponsored a major regional academic conference on narcotics abuse, prevention, money laundering, and enforcement strategies.

III. Country Actions Against Drugs:

Policy Initiatives. Partly to counter the perception of rising crime associated with narcotics consumption, the GOC launched several efforts in 1999 to strengthen its hand in confronting the drug problem. The GOC proposed legislation to give trial judges greater discretion for small-scale drug distribution convictions. The GOC also proposed to alter its money laundering law to allow investigations without actual narcotics seizures in Chile, and the creation of a financial crimes investigative unit with the ability to cooperate more fully with the banking community. The national police launched a community-based prevention effort to coordinate government prevention, treatment and law enforcement efforts. However, resources for counternarcotics efforts remain limited; one press report (La Tercera) said that only $10,000 per month is available for undercover investigations, wire taps, controlled deliveries and similar activities.

The National Drug Control Council (CONACE), the main conduit for demand reduction-activities, has a total annual budget of approximately $12 million. CONACE's demand-reduction program for 1999 is $4.8 million with the following breakdown: $2 million for community-based prevention programs, $1 million for prevention targeted at schools, $1 million for drug treatment, and $800,000 for anti-drug networks at community levels. For 2000, the demand-reduction program will rise to $8 million.

Accomplishments. In general, seizures of illicit narcotics are up more than 10% this year, compared to 1998. Operation Corona, an international operation conducted in cooperation with Spanish narcotics authorities, netted 250 kg of cocaine in January 1999. The largest seizure of marijuana in Chilean history took place in September 1999 at the southern Chilean border-crossing point of Parajitos near Temuco, where Chilean customs authorities discovered 500 kg hidden in a truck container. A large cocaine seizure in Ecuador during 1999 was due to effective Chilean cooperation.

The GOC is actively engaged in the formulation of a stronger money-laundering statute that would include the formation of a Financial Intelligence Unit. The GOC, in cooperation with the DEA, hosted a precursor chemical conference in December, which attracted senior policymakers from neighboring producer countries as well as from Chile. The conference may act as a catalyst to jump-start more effective regional cooperation in chemical controls. The GOC also launched a community-based drug strategy, in which police directly target "micro-traffickers," community organizations and local governments direct demand-reduction activities, and the health ministry coordinates rehabilitation efforts with police and municipalities.

Corruption. Corruption among officials and senior law enforcement personnel is not a major problem. Where officials have been accused of corruption, GOC institutions have investigated the allegations and imposed appropriate sanctions.

Agreements and Treaties. The U.S. and Chile are parties to a bilateral extradition treaty signed in 1900, and extraditions from Chile under this outdated instrument are extremely arduous and expensive. The Chilean Ministry of Foreign Affairs is, however, interested in updating its extradition treaties with various countries, including the United States. The GOC has also indicated interest in the issue of asset forfeiture and asset sharing subsequent to seizure. Chile is a party to the Egmont Accord, which promotes the sharing of financial crimes data among relevant national agencies. As a party to the 1988 U.N. Drug Convention, Chile continues to work towards compliance with its goals and objectives via its 1995 counternarcotics law. Chile is also a party to the 1971 U.N. Convention on Psychotropic Substances. The GOC and USG are discussing the details of a new agreement for cooperation and mutual assistance in narcotics-related matters. Chile has similar agreements in force with the U.K., Spain, and the E.U. Bilateral agreement negotiations are underway with France, Germany, Poland, and the Czech Republic.

Drug Production, Flow, Transit. Extensive containerized cargo facilities at Chile's 10 ports provide convenient facilities for smugglers operating from source countries. Illegal coca products enter principally from Peruvian and Bolivian land points. Coca-paste destined for domestic consumption flows south along the Pan American Highway to Santiago and points beyond, while refined cocaine is mainly packaged for export via seaports. According to seizure statistics produced by CONACE, cocaine and cocaine base flow were up 44 and 8 percent respectively in 1999. Marijuana production remains scant, while imports of pressed marijuana destined for domestic production come principally from Paraguay directly to Chile's central region.

Demand Statistics and Demand Reduction Efforts. The public in Chile is concerned about rising drug use and distribution and associates these problems with rising street crime. CONACE's 1998 statistics indicate that 70,000 Chileans (5.3% of the population) had used illegal drugs in the past year and that 2.3% had done so in the pre-survey month. According to CONACE, 15% of current drug users are cocaine base or cocaine hydrochloride users. 17% of the population has tried illicit substances at least once. Non-governmental organizations (NGOs) are active in rehabilitation and education efforts, often under contract with CONACE as part of a decentralized decision-making initiative. Chilean schools incorporate drug education, using a curriculum designed by the NGO community.

IV. U.S. Policy Initiatives and Programs

U.S. initiatives in 1999 have been designed to reinforce joint U.S.-Chilean priorities of precursor chemicals, money laundering and containerized cargo. In December 1999, a major regional course addressing precursor chemicals was held, focusing on interagency cooperation and effective techniques to identify suspicious recipients. Also in December 1999, a combined team from the U.S. Treasury and Federal Bureau of Investigation presented seminars addressing money laundering and effective investigation techniques. In 1999, the USG, through its embassy, has been active in assisting the GOC to effect judicial reform, bringing experts from the U.S., sending judicial reform leaders in the GOC to specialized training schools, and providing training on police survival and undercover operations.

Bilateral Accomplishments. Chilean law enforcement cooperation was instrumental in the August 1999 seizure of 3.7 tons of cocaine in Ecuador, in which leads developed in Chile led directly to enterprises in Ecuador using containerized cargo to transport narcotics. The U.S. and Chile cooperated on a number of fronts related to training and capacity-building for Chilean authorities; 1999 saw experts from the U.S. conduct seminars on evidence collection and precursor chemical control.

The Road Ahead. Statistics show a marked increase in seizures of processed cocaine in Chile in 1999, along with steady seizures of cocaine base. CONACE believes that the increase is due to more effective narcotics-control strategies in neighboring source countries as the primary influence. Narcotics traffickers are using Chile to a greater degree to move refined product to developed-countries' markets as other avenues out of Peru and Bolivia are progressively closed.

In 2000, the USG intends to support GOC efforts to more closely integrate regional law-enforcement and chemical producers in denying source material to traffickers, move against the use of shipping containers to move narcotics, and establish a joint Chilean Customs-DEA-shipping companies task force. The USG will also continue to bring additional experts from law enforcement agencies to aid the Chilean Government to structure a financial crimes investigative unit, focus on judicial and prosecutorial capacity-building, and align USG demand-reduction efforts with GOC initiatives.

COLOMBIA

I. Summary

Colombia produces and distributes more cocaine than any other country in the world and is also an important supplier of heroin. Colombia bolstered its counternarcotics efforts in 1999 by extraditing a Colombian citizen to the United States on narcotics charges for the first time in nine years. The Colombian armed forces activated its elite, U.S.-trained, 931-man strong counternarcotics battalion. Additionally, the Colombian anti-narcotics police (DIRAN) formed an air-mobile interdiction unit, which received United States training, to conduct operations with the Colombian military.

After over a year in office, the Pastrana Administration remains committed to its peace dialogue with the largest insurgent group, the Revolutionary Armed Forces of Colombia (FARC). The government's talks with the FARC, which earns substantial funds from the drug trade, particularly from protection and taxation, have shown few gains thus far. Like the guerrillas, the paramilitaries are involved in the drug trade and are competing for an ever-greater share.

The combined U.S./GOC aerial eradication program had a successful year in 1999. The program sprayed over 42,000 hectares of coca and more than 8,000 hectares of opium poppy in 1999.

The "Antinarcotics Directorate" (DIRAN) of the Colombian National Police has continued its record of investigations and operations against narcotics trafficking. A cooperative effort between the Colombian National Police, the Prosecutor General's office (Fiscalia) and the U.S. Drug Enforcement Administration (DEA) led to the arrest of 30 significant Colombian drug traffickers in "Operation Millennium." The United States requested the extradition of all 30 suspects and awaits the GOC's decision on those requests.

As in 1998, guerrillas protecting the drug trade ratcheted up their attacks on Colombian security forces and hampered counternarcotics operations, particularly in the coca growing regions of southern and southeastern Colombia. As Colombia struggles to climb out of its worst economic crisis since the 1930s, the GOC is hard pressed to commit the resources necessary to combat the powerful combined threat of drug traffickers and guerrilla elements involved in the drug trade.

Colombia is a party to the 1988 UN Drug Convention.

II. Status of Country

Colombia remains the world's largest cocaine producer: up to three-quarters of the world's cocaine hydrochloride (HCl) is processed in Colombia from cocaine base imported from Peru and Bolivia and, increasingly, from locally grown coca. Coca cultivation in Colombia increased by 20 percent in 1999. Most of the increase occurred outside of the eradication areas. Although opinions differ over statistical baselines, it is generally agreed that despite efforts by the Government of Colombia to limit increases, cultivation expanded dramatically over the past three years. Estimated coca cultivation increased 36 percent in 1996, 18 percent in 1997 and 28 percent in 1998. Colombia is also a significant supplier of heroin to the United States, potentially producing, according to U.S. estimates, up to eight metric tons (mt) yearly, virtually all of which is destined for the U.S. market.

III. Country Actions Against Drugs in 1999

Policy Initiatives. In November 1999, Colombia extradited a Colombian citizen to the United States for the first time in nine years, fulfilling one of the USG's most sought-after, but elusive, counternarcotics goals with the GOC. Despite narcotics traffickers' attempts to throw up legal roadblocks, and bombings possibly linked to the extraditions, the Colombian Supreme Court and Pastrana Administration demonstrated their willingness to send narcotics traffickers to justice in the United States regardless of citizenship.

In a cooperative anti-narcotics operation with the USG, the GOC arrested 30 suspected narcotics traffickers in October 1999 as a result of "Operation Millennium." This joint operation, involved the Colombian National Police, the Colombian prosecutor general's office and the DEA. The United States requested the extradition of all 30 suspects.

The GOC succeeded in preserving some, but not all, key elements of its "faceless" justice system when congress approved the new "specialized" justice system in June 1999. The specialized system no longer protects the identity of judges, leading some judges to feel exposed to attempts at intimidation. However, the system still protects the identity of witnesses and prosecutors in a limited set of crimes such as narcotics trafficking, kidnapping and terrorism.

The asset forfeiture process in Colombia remains stalled. Although the GOC has seized millions of dollars worth of narcotics trafficker assets, including land, homes, automobiles and airplanes, the government has been unable to conclude the process and take legal ownership of or auction-off the assets.

The Colombian Air Force (FAC) is improving its monitoring and interdiction abilities. Over the last three years, the percentage of successful FAC interdiction attempts has increased from 25 percent in 1997 to nearly 40 percent in 1999. At the same time, the number of suspicious aircraft which radar has detected flying to or from Colombia has fallen dramatically, from 231 in 1997 to less than 100 in 1999.

The Colombian National Police successfully implemented a civil aviation registration program to curb the use of aircraft for drug trafficking. This program inspected 343 aircraft in 1999, seizing 50 of these for violation of protective seals that prevent tampering with cargoes.

In mid-1999, for the first time, the GOC permitted its eradication campaign to begin edging into coca-rich Putumayo department. The GOC had previously prohibited eradication in Putumayo; the mere threat of spraying there in 1996 ignited vehement public demonstrations against the government by residents of the coca growing areas. The eradication program has been careful to enter Putumayo slowly and without fanfare to avoid causing a backlash by farmers dependent on the coca trade. By November 1999, planes were eradicating fields 20 miles into the department, allowing them to reach approximately 30,000 hectares of coca. This has permitted the eradication program to enter the fastest growing coca cultivation area in the country.

The eradication program was hindered in 1999 by the diversion of escort helicopters for interdiction missions, civic unrest in poppy-growing areas that forced the evacuation of spray teams, and frequent ground-fire attacks on spray planes (resulting, in part, from too few escort aircraft). In 1999 spray planes suffered 67 hits from ground fire. Nonetheless, the program still managed to eradicate more than 50,000 hectares in 1999.

The February 1997 shipboarding agreement between the GOC and USG streamlined the process for approving the boarding of Colombian ships in international waters by U.S. officials and has enhanced cooperation with the Colombian Navy. Following talks between JIATF-East (USG inter-agency counternarcotics task force) and the Colombian Navy, a standing interdiction operations plan was signed in September 1999. This plan augments the maritime agreement and has led to three U.S.-Colombian combined maritime interdiction patrols since May 1999. The Colombian Navy's counternarcotics efforts, however, are limited by a lack of adequate resources for patrolling, including fuel.

The USG and GOC have worked to resolve differences regarding evidence preparation and delivery in cases where the USG is the interdicting authority. In September 1999, U.S. and Colombian authorities reached an accommodation concerning the evidence required by Colombian prosecutors and other evidentiary questions.

Prison security remains a serious problem in Colombia. Overcrowding, lack of administrative acumen and corruption among guards plague the system. Almost two percent of inmates escape each year. There are 50,000 prisoners in a system with capacity for 33,000 and only 1 guard for every 10 prisoners (compared with 1 guard for 4 in the U.S.). Violence among prisoners is rampant. Due to lax security and permissive conditions for prisoners, many convicted traffickers remain directly involved in their operations from within prison.

The Minister of Justice and his director of prisons appear committed to reforms. But thus far, the GOC has been more inclined to build additional prisons rather than to reform prison administration.

The "carrot and stick" approach that couples alternative development with aerial eradication is key to Colombia's national drug control strategy and to "Plan Colombia," unveiled by the GOC in September 1999. The National Alternative Development Plan (PLANTE) is the agency charged with implementing the GOC's alternative development strategy. Targeting approximately 35,000 small farmers nationwide, who each produce less than three hectares of coca or opium poppy, PLANTE focused on linking illicit crop abandonment or substitution to markets for the resulting new products or services. PLANTE organized strategic alliances with the private sector, which provide farmer organizations with risk capital and technical assistance in production, product processing and marketing.

As a matter of policy, the GOC does not encourage or facilitate illicit production or distribution of narcotic or psychotropic drugs or other controlled substances, or the laundering of proceeds from illegal drug transactions. The Pastrana government has made clear, on many occasions, its opposition to official corruption.

Accomplishments. Law enforcement operations by the counternarcotics police and others continue to be the most successful element of the GOC counternarcotics program. According to the CNP, GOC counternarcotics operations in 1999 included the seizure of: almost 30 metric tons (mt) of cocaine HCl and cocaine base; nearly 140 mt of coca leaves; 61 mt of marijuana; and 644 kilos of heroin, morphine and opium; the destruction of 96 cocaine base labs; 53 cocaine HCl labs and 10 heroin labs; the capture of over 760 mt of solid precursor chemicals and over 890,000 gallons of liquid precursors; the seizure of 540 vehicles, 189 boats, 51 aircraft and 422 weapons; the destruction of 44 clandestine airstrips, and the arrest of over 2,200 persons.

Elite investigative units within the CNP are developing long term investigations of trafficker organizations and are moving forward on asset forfeiture. The GOC heroin task force provided intelligence to effect drug seizures in Colombia and assist in U.S.-based investigations. Overall, GOC seizures of cocaine and heroin were higher in 1999 than in 1998.

The level of cooperation between the Colombian military and police, and between the services within the military, continued to improve in 1999. As in 1998, all of the armed forces conducted unilateral and joint counternarcotics operations with the police. Cooperation took the form of deployments in areas where police face a significant guerrilla threat. The air force, army, navy and marines coordinated with the CNP in multi-week, joint counternarcotics operations along the Pacific coast near the port of Buenaventura. These coordinated forces destroyed drug labs, confiscated narcotics and arrested individuals involved.

Furthermore, the Colombian police and army have participated in intensive joint training to prepare the army's new counternarcotics battalion, which is intended to assist the CNP during counternarcotics operations in the coca growing regions. The police and army have also agreed to work together on tactical operations that involve the new battalion. The co-located Joint Intelligence Center (JIC) includes personnel from the CNP.

CNP cooperation, including intelligence sharing, with international law enforcement entities continued this year. The CNP also provided information that led directly to the seizure of 30 mt of cocaine HCl outside of Colombian territory in 1999.

Agreements and Treaties. Colombia ratified the 1988 UN Drug Convention in September 1994 and the GOC's National Anti-Narcotics Plan of 1998 meets the strategic plan requirements of the Convention. Recent reforms have generally brought the government into line with the requirements of the Convention.

In February 1997, the GOC signed a maritime shipboarding agreement with the United States. The agreement, which allows for faster approval for shipboardings in international waters and sets guidelines for improved counternarcotics cooperation with the Colombian navy, has been credited with the seizure of 22 metric tons of cocaine since its signing. In February 1999, the Colombian justice system obtained the first convictions of individuals prosecuted for seizures related to the maritime agreement. However, reduced budgets and demands on resources for riverine programs south of the Andes limited the navy's counternarcotics operations.

1999 saw substantial improvement in the maritime agreement's intelligence and communications exchange process. JIATF-East has established direct communication links with Colombian navy operations centers in Bogota and Cartagena to speed the transfer of tactical interdiction information. The navy has also improved its own ship-to-shore communications. Unfortunately, implementation procedures for article 16 of the agreement have not been developed. Article 16 permits the prosecution of high-seas seizures by U.S. authorities without referral to Colombia's legal system and extradition process.

In September, U.S. and Colombian customs officials signed a Customs Mutual Assistance Agreement (CMAA). The CMAA will enhance the countries' ability to share information and investigate cases jointly.

Cultivation and Production. Coca and opium poppy remain the principal illicit crops grown in Colombia. In 1998, these crops were estimated to be 101,800 hectares and 6,100 hectares respectively. In 1999 there were estimated to be 122,500 hectares of coca and 7,500 hectares of poppy.

Coca, the predominant illicit crop, is primarily grown in two regions: on the eastern plains in Guaviare and neighboring departments, and along the Ecuadorian and Peruvian borders in the departments of Putumayo and Caqueta. Additionally, increasing amounts of coca are appearing in the northern departments of Bolivar and Norte de Santander. Most opium is grown on the eastern slopes of the Central Cordillera Mountains in Tolima, Huila and Cauca departments. Limited amounts are also found in Norte de Santander, southern Bolivar and Antioquia departments.

Larger and ever more complex cocaine HCl laboratories are replacing the less sophisticated labs previously encountered. HCl laboratories can be found in all regions of the country, but are primarily located in the plains and jungle regions, near the coca-growing zones under de facto guerrilla control. Numerous laboratories have been identified in extremely remote areas that are difficult to reach even by helicopter.

Most opiate laboratories are small, producing small quantities of drugs and using simple equipment and limited quantities of precursor chemicals. Colombia accounts for an estimated two percent of the world's opium poppy. Nearly all of the resulting heroin, however, is destined for the United States.

Marijuana cultivation remained active in 1999, but is not believed to have increased significantly. Colombian marijuana seizures in the United States are believed to be minimal.

Drug Flow/Transit. Colombia is the center of the international cocaine trade, with drugs flowing out of the country at a stable and constant rate. In addition to producing large quantities of cocaine base domestically, Colombian traffickers import cocaine base, by air and by river, from Peru and, to a lesser extent, from Bolivia. The base is converted into cocaine HCl at clandestine laboratories in the Colombian source zone. Cocaine HCl shipments move out of Colombia primarily by commercial maritime vessels (multi-ton loads) and general aviation aircraft (400-800 kgs shipments) to Mexico, Central America and the Caribbean, typically en route to the United States. Cocaine is also concealed in legitimate air and sea cargo destined for European ports.

Recent statistics indicate that approximately 85 percent of the heroin seized by federal authorities in the northeastern United States is of Colombian origin. DEA believes that almost all of the heroin produced in Colombia goes to the United States and is generally smuggled by human couriers on commercial airline flights in quantities of one to five kilograms.

Domestic Programs (Demand Reduction). The National Directorate for Narcotics Control administers cost sharing drug abuse prevention and education projects with the UNDCP. The annual UNDCP budget for Colombia programs is USD five to seven million.

The DNE coordinates GOC demand reduction programs through governmental and non-governmental organizations. Demand reduction efforts in Colombia faced an uphill battle in 1999 as domestic drug consumption continued to rise. Increasing drug abuse by Colombians has spurred greater efforts by the DNE to publicize the dangers of drug abuse and convince the public that local consumption is a problem for Colombia now, not in the future. The U.S. Embassy hopes that one result of this active media campaign will be that counternarcotics programs in general will be more palatable to the Colombian public.

The priority target group for programs to prevent the use of psychoactive substances is male students, ages 12-17, with high school level education. New users are located in the geographic areas with the highest population densities and greater economic development, such as the coffee producing region and cities such as Bogota, Medellin and Cali.

IV. U.S. Policy Initiatives and Programs.

Policy Initiatives. The USG continues to place its focus on institution building, especially within the law enforcement and judicial systems. The counternarcotics legislation passed in 1997 is an indirect result of advice and studies funded by the USG.

Bilateral Cooperation. Judicial reform in Colombia moves forward, albeit at an extremely slow pace. USAID coordinates the USG's justice sector reform program in cooperation with the Department of Justice (OPDAT and ICITAP). This long-term effort is aimed at strengthening the administration of justice in Colombia through support and training for judges, prosecutors, and investigators. Since 1991, several thousand law enforcement officials have received training in basic investigative techniques and planning. Recently, OPDAT and ICITAP have focused on the development of task force units (teams of prosecutors and police) that are charged with investigating money laundering, corruption, narcotics and human rights violations. Human rights training is an important element of the program and has been provided in the United States to some program participants. USAID and OPDAT continue to support the judicial branch in a challenging effort to establish oral trials in a country that has traditionally relied on written evidence and the inquisitorial system to resolve cases.

To reduce the amount of cocaine HCl reaching the U.S., many USG programs focus on the Colombian source zone to stop air transportation and drug production in this targeted area. This focus aims at improving not only bilateral and joint CNP-military operations, but multilateral cooperation, as well.

USG entities, including DEA, FBI, USAID, and training elements of the Department of Justice (OPDAT and ICITAP), work with GOC law enforcement and judicial entities to increase the effectiveness of the Colombian judicial system, developing and refining law enforcement capabilities, training host nation counterparts, and improving access, fairness and public perceptions of the justice system. Thousands of judges, prosecutors and investigators have been trained since 1991.

The U.S. Embassy in Bogota provided the impetus to establish a port cargo security program that is now in place at all five of Colombia's seaports. The private ports agreed to provide $ 1.5 million per year for the foreseeable future to fund 100 specially trained narcotics police who carry out inspection and interdiction operations at the ports. This private funding complements nominal USG sponsorship. The USG monitors performance and provides U.S. Customs Service trainers. As a result of this program, the ports have seized more than 16 mt of cocaine and 40 mt of marijuana, all at very little cost to the USG. Additionally, Colombia is one of seven countries participating in the U.S. Customs' Americas Counter Smuggling Initiative (ACSI), a program designed to deter narcotics smuggling in commercial shipments by enhancing private sector security programs at manufacturing and export facilities while also seeking to assist law enforcement agencies to improve their counternarcotics effectiveness and develop private sector partnerships.

In 1999, the total operating budget for the Narcotics Affairs Section (NAS) of the U.S. Embassy in Bogota was $38 million, with the largest sums going to support CNP air operations ($15.3 million) and the crop eradication program ($7.7 million). The CNP air wing consists of 47 helicopters and 20 fixed wing aircraft. The USG-funded private contractor that manages the CNP's eradication program operates an additional 12 helicopters, 9 spray planes, two intelligence-gathering planes and several transport planes. In addition to this assistance, the USG provided $96 million for the acquisition of six BlackHawk helicopters to enhance the CNP's counternarcotics capacity. The first three were delivered in November 1999 with the remaining three scheduled to arrive in the first quarter of 2000. The crews and technicians for these new helicopters were trained in the United States. The USG is also upgrading the CNP's Huey helicopter fleet. The first ten of 25 upgrades were performed in 1999 at a cost of $1.4 million each.

The CNP agreed to an audit of the CNP air services program, which receives substantial U.S. assistance. Unfortunately, in December 1999, the accounting firm contracted to perform the audit backed out, citing security concerns. Nonetheless, the CNP's agreement to have the audit performed is a positive step and the USG is working to contract another accounting firm for the project.

The GOC also worked with the U.S. Embassy's consular section to deny U.S. visas to persons involved or suspected of trafficking in drugs or related activities such as money laundering.

In 1999, ICITAP assisted the GOC in developing a unified training curriculum for Colombian investigators. In August 1999 the National Judicial Police Council formally adopted the curriculum and made it mandatory for all Colombian investigators after January 2000. For the first time, all Colombian law enforcement investigators will receive the same training.

The Colombian army's new counternarcotics battalion became operational late in 1999. The United States provided training and equipment to the 931-man battalion and will assist the GOC with the costs of maintaining the elite unit. In 1999, total USG assistance relating to the battalion was approximately $7.5 million. The battalion is expected to commence field operations in early 2000.

The USG also provided 18 UH-1N helicopters to the Colombian army to support the new counternarcotics battalion. Helicopter operations should begin in early 2000 with full operational capability shortly thereafter.

Using $6 million in supplemental USG funding, the DIRAN, with U.S. Embassy assistance, embarked on an ambitious program to upgrade security at 16 base sites throughout Colombia. Following recommendations by USG security experts, the DIRAN enhanced security at all 16 bases. As the program continues, the DIRAN will install electronic sensor systems at a number of bases.

In 1999, NAS/INL provided substantial training for CNP personnel, including 12 pilots, 37 technicians, 57 ground troops and 95 agents of the CNP's new air-mobile unit.

The Road Ahead. The GOC's "Plan Colombia" recognizes the interrelated nature of Colombia's counternarcotics efforts and its peace process. In 2000, the foremost obstacle to curbing narcotics trafficking in Colombia will still be guerrillas who depend heavily on the drug trade for their substantial annual income. These well-armed rebels violently oppose police eradication operations and CNP/military interdiction efforts. Some paramilitaries are also involved in the drug trade and likewise pose a threat to law enforcement efforts.

In the year 2000, PLANTE will fund many of these ongoing projects from the $ 15 million alternative development agreement signed with the USG in August 1999. Although the number of small farmers who have abandoned their illegal trade thus far is small, it is hoped that, as PLANTE's market-oriented projects take root and spray planes take to the air, an increasing number of farmers will see the benefit of getting out of coca or poppy cultivation.

USG programs will continue working with the GOC to solidify reforms in the DIRAN and support Colombia's efforts to sustain and improve the capability and efficiency of the judicial system, which remains one of the weakest links in the counternarcotics chain. The USG fully expects that the cooperation between U.S. and Colombian law enforcement agencies that produced Operation Millennium will continue to show results in 2000. The U.S. Embassy is confident that after extraditing a Colombian citizen to the United States for the first time in 9 years, the GOC will respond favorably on the merits to U.S. extradition requests for Colombian nationals and others involved in narcotics trafficking. The Colombian military's counternarcotics role may broaden in 2000, as its first counternarcotics battalion comes on line and as the GOC implements plans for additional specialized battalions.

Resources will be devoted to firming up the Colombian armed forces' and police's ability to institutionalize and carry forward the training they have received from the United States. Priorities will include enhancing the armed forces' capacity to conduct field medic training, as well as ground and small units training in counternarcotics operations. As Colombia's first counternarcotics battalion commences operations, plans continue to train and equip additional battalions to strengthen the army's counternarcotics capability and expertise.

Colombia Statistics

(1991-1999)

1999 1998 1997 1996 1995 1994 1993 1992 1991
Coca

Potential Harvest (ha)

122,500

101,800

79,500

67,200

50,900

44,700

39,700

37,100

37,500

Eradication (ha)

43,246

-

19,000

5,600

8,750

4,910

793

959

972

Estimated Cultivation (ha)

-

-

98,500

72,800

59,650

49,610

40,493

38,059

38,472

HCl: Potential(1) (mt)

520

435

350

300

230

70

65

60

60

Opium

Potential Harvest (ha)

7,500

6,100

6,600

6,300

6,540

20,000

20,000

20,000

1,344

Eradication (ha)

-

-

6,972

6,028

3,760

3,906

9,821

12,858

1,156

Estimated Cultivation (ha)

-

-

13,572

12,328

10,300

23,906

29,821

32,858

2,500

Potential Opium Gum (mt)

75

61

66

63

65

-

-

-

-

Cannabis(2)

Potential Harvest (ha)

5,000

5,000

5,000

5,000

4,980

4,986

5,000

2,000

2,000

Eradication (ha)

-

-

-

-

20

14

50

49

0

Estimated Cultivation (ha)

5,000

5,000

5,000

5,000

5,000

5,000

5,050

2,049

2,000

Potential Yield (mt)

4,150

4,150

4,150

4,150

4,133

4,138

4,125

1,650

1,650

Labs Destroyed

Cocaine/Base

156

311

213

861

396

560

401

224

239

Morphine/Heroin

10

10

9

9

11

9

10

7

5

Seizures(3)

Heroin/Morphine (mt)

0.504

0.317

0.261

0.183

0.419

0.181

0.261

0.05

-

Opium (mt)

0.183

0.100

0.120

0.036

0.078

0.128

0.261

0.43

-

Colombia Statistics (Cont.)

1999 1998 1997 1996 1995 1994 1993 1992 1991

Cannabis (mt)

65

69

136

235

166

2000

549

206

329

Base/Basuco (mt)

9.00

29.30

10.00

17.50

19.50

32.00

10.40

5.81

9.28

Cocaine HCl (mt)

22.73

54.70

34.00

23.50

21.50

30.00

21.76

31.92

77.07

Total HCl/Base (mt)

31.73

84.00

44.00

41.00

41.00

62.00

32.16

37.73

86.35

Domestic Consumption

Cocaine (mt)

2

2

2

2

2

2

2

2

2

Marijuana (mt)

2

2

2

2

2

2

2

2

2

Arrests

Nationals

-

1,879

1,478

1,482

1,646

-

-

-

-

Foreigners

-

82

68

79

99

-

-

-

-

Total Arrests

-

1,961

1,546

1,561

1,745

2,154

2,562

1,700

1,170

(1)Newly acquired data from field surveys has resulted in revised leaf yield and HCl production estimates from 1995 on.
(2)Reported cannabis cultivation has not been confirmed by USG survey.
(3)Seizure data show combined CNP and military figures.

Cocaine Base and HCL Seizures in Colombia (Chart)

ECUADOR

I. Summary.

Ecuador continues to be a major transit area for drugs destined for the U.S. and elsewhere, and for precursor chemicals destined for drug processing labs in Colombia, Ecuador and Peru. Traffickers exploit Ecuador's porous border with Colombia and Peru to consolidate smuggled cocaine and heroin into larger loads for bulk shipment to the U.S. and Europe hidden in containers of legitimate cargo. Despite the country's severe economic crisis, the Ecuadorian National Police (ENP) had a record year, seizing more than 10 tons of cocaine and coca base and 81 kg of heroin, dismantling cocaine laboratories and intercepting precursor chemicals. The Government of Ecuador (GOE) fully cooperates with the United States Government (USG) in the fight against narcotics trafficking. A solid example of this close cooperation was the completion in November 1999 of a ten-year agreement permitting the U.S. to operate regional counternarcotics detection and monitoring missions from an Ecuadorian air force base in the city of Manta. The Ecuadorian National Drug Council (CONSEP) published a new five-year counternarcotics strategy. The customs service was privatized to maximize efficiency and bolster interdiction efforts. In addition, the ENP established a unified anti-drug division to strengthen the management of counternarcotics law enforcement. However, Ecuador's depressed economy and lack of interagency cooperation continue to hamper counternarcotics efforts. Ecuador is a party to, and has enacted legislation to implement the provisions of, the 1988 United Nations Drug Convention.

II. Status of Country.

Ecuador is one of the primary transit routes for cocaine and heroin from Colombia and Peru. The country serves as a major staging area for smuggled cocaine and heroin, which are then shipped to the U.S. and Europe in bulk quantities. Some small fields of poppies and coca have been found within Ecuador, particularly near the border with Colombia, but have been eradicated by the ENP. A few small cocaine processing laboratories were also discovered and dismantled by the police.

Cocaine is smuggled into Ecuador primarily by truck in shipments of legitimate products via the Pan American Highway, and then loaded onto export shipments in the ports of Guayaquil, Esmeraldas, and Manta. Cocaine shipments are hidden in compartments in ocean-going vessels or concealed within containerized perishable (seafood, bananas, flowers) or bulk cargo. Heroin and cocaine are also smuggled by human couriers boarding international flights at the Quito and Guayaquil airports. Ecuador's northern border area with Colombia is of concern for movement of both drugs and chemicals, but insurgency and criminal activity in the region hinders effective police control.

Ecuador endured a major financial and economic crisis in 1999, with most of its major banks collapsing and requiring government intervention. By the end of 1999, the Ecuadorian government controlled 75 percent of the country's banking sector. Widespread capital flight and a 180 percent devaluation of the national currency have reduced the attractiveness of Ecuador as a site for money laundering, although some narcotics profits from Colombia may have been invested in Ecuadorian real estate. Drug money laundering is illegal under the 1990 narcotics law. However, the Ecuadorian government presently has no effective means to investigate or prosecute such crimes.

III. Country Actions Against Drugs in 1999

Policy Initiatives. The administration of President Jamil Mahuad, which took office in August 1998, made significant progress in strengthening bilateral counternarcotics cooperation with the U.S. The Ecuadorian National Drug Council published a new national drug strategy in 1999 which clearly identifies the roles and responsibilities of GOE agencies, including the armed forces, in combating drug trafficking and consumption.

The Ecuadorian National Police has primary responsibility for counternarcotics law enforcement in Ecuador. As part of a reorganization intended to strengthen the management of counternarcotics efforts, the National Police established a unified anti-drug division in 1999. This new division will consolidate the various specialized units (such as the mobile road interdiction group, the canine teams at airports and seaports, and various counternarcotics intelligence units) into a coherent organization. The police completed construction of the Joint Information Coordination Center (JICC) in Guayaquil, and plan to integrate this center with the national anti-drug division headquarters.

In an effort to clean up widespread corruption in Ecuador's customs service, the GOE first militarized the institution, then privatized the service in May 1999. The new managers of Ecuadorian customs come from the private sector and hope to streamline clearance procedures while working closely with the police to inspect suspicious cargoes. The U.S. Government, through the Narcotics Affairs Section (NAS), is funding a full time U.S. Customs advisor position to work with both the Ecuadorian police and customs service at the ports.

In November 1999, the Ecuadorian Congress passed a new criminal procedural code, which is intended to fundamentally change the country's criminal justice system from an inquisitorial to an accusatorial system. The new code empowers prosecutors with authority to investigate and prosecute crimes, and alters the role of judges to neutral arbiters presiding over oral trials. Although the bill as drafted contains serious flaws which inhibit the authority of the police and prosecutors during the investigative phase of a case, top GOE officials are attempting to rectify these problems in the new code. President Mahuad partially vetoed the draft code in response to those concerns.

Accomplishments. By signing a ten-year agreement to permit U.S. aircraft to utilize Manta as a forward operating location (FOL) in November 1999, the GOE demonstrated its strong commitment to bilateral counternarcotics cooperation with the United States Government (USG). This agreement will permit Ecuador and the U.S. to work even closer together in the detection and monitoring of clandestine aircraft transporting narcotics to Central America, Mexico and the Caribbean.

The Ecuadorian military also played a major role in tightening up control over Ecuador's border with Colombia. Following the 1998 signing of a peace treaty with Peru, the Ecuadorian armed forces shifted their attention to the northern border. The army placed additional forces in Sucumbios province, bordering Colombia's Putumayo department, which is the site of large-scale coca cultivation.

Despite some improvements, interagency cooperation between the military and police in Ecuador remains a serious problem. The Ecuadorian Navy controls the country's ports, but naval cooperation with the police varies widely from port to port. Additional efforts must be taken in 2000 to increase police presence in all commercial ports of Ecuador, particularly Manta and Machala.

Law Enforcement Efforts. The Ecuadorian National Police had a banner year in drug seizures and arrests in 1999. The police seized about 10 metric tons of cocaine and coca base (compared to only about 4 Mt in 1998) and about 81 kg of heroin (compared to 58 kg during the previous year). The police also seized record amounts of methyl ethyl ketone(MEK) and other precursor chemicals. The reasons for the improved interdiction performance this year were better use of intelligence, more aggressive leadership, and effective use of canine interdiction teams at Ecuador's seaports and airports.

The GOE has adopted a new criminal justice code to convert its judiciary from an inquisitorial to an accusatorial system. In order to facilitate the working relationships of police and prosecutors under the new code, the National Police signed an agreement with the nation's prosecutors in 1999 to permit joint training programs for criminal case investigations. The U.S. Department of Justice has also provided several training courses to help prepare Ecuadorian police and prosecutors for their new roles in an adversarial system.

With U.S. Southern Command financial support, the ENP has completed construction of a highway inspection checkpoint at a strategic road junction in Baeza, east of Quito. The police plan to deploy the NAS-supported mobile highway inspection unit (GEMA) to this location, assisting police interdiction of precursor chemicals entering the Sucumbios-Putumayo border region with Colombia.

The JICC in Guayaquil is in operation, although additional efforts must be taken by the police to ensure that it provides timely information to interdiction units at airports and seaports. Greater military participation is also needed to increase the effectiveness of the JICC. Intelligence-sharing between the Ecuadorian military and National Police also needs significant improvement.

Due to Ecuador's severe economic crisis, the Superintendency of Banks has focused its attention on the collapsing banking sector. Consequently, almost no investigations of money laundering were conducted in Ecuador during 1999.

Corruption. The 1990 narcotics law contains a provision for prosecuting any government official, including judges, who deliberately impedes the prosecution of anyone charged under that law. As a matter of government policy, the GOE does not encourage or facilitate the illicit production or distribution of drugs, other controlled substances or the laundering of drug money.

In November 1999, the Judicial Council announced that it had fired two judges involved in the premature release from custody of two suspected drug traffickers. In addition, the Council began a criminal investigation of these judges and other court employees involved in the case.

While narcotics-related corruption is a problem in Ecuador, in 1999 no senior Ecuadorian government official was identified as engaged in the production or distribution of drugs or in the laundering of illicit proceeds.

In collaboration with the U.S. Embassy and the Department of Justice, the chief prosecutor's office has agreed to set up a special task force that will work in close coordination with the ENP in pursuit of corruption crimes.

Arrests and/or Prosecutions. The USG and the GOE are working to strengthen law enforcement relationships, develop information sharing conduits, and bolster interdiction cooperation. Cooperation between the USG and GOE has resulted in several successful law enforcement operations as well as the expulsions of third country nationals indicted for drug-crimes in the U.S.

Agreements and Treaties. Although the USG and the GOE have an extradition treaty in force, the treaty is outdated. Ecuador has cooperated with the USG to deport or extradite non-Ecuadorian nationals. Ecuador does not extradite its own nationals, but participated in preliminary talks on revising the extradition treaty. The negotiation of a new treaty depends on whether Ecuador is ready to amend its constitution to permit extradition of Ecuadorian citizens.

Ecuador is a party to the 1988 UN Drug Convention, and has a narcotics law (Law 108) that incorporates the provisions of that treaty.

The GOE is a strong supporter of regional cooperation, and has signed bilateral counternarcotics agreements with Colombia, Cuba and the United States, as well as the Summit of the Americas money laundering initiative and the Organization of American States/Anti-Drug Abuse Council (OAS/CICAD) document on an hemispheric counternarcotics strategy.

In 1991, the GOE and the USG entered into an agreement on measures to prevent the diversion of chemical substances. In 1992, the two governments concluded an agreement to share information on currency transactions over $10,000.

The GOE has made progress in a number of important areas covered by the 1988 UN Drug Convention and OAS-CICAD model legislation, including upgrading its interdiction efforts, reducing the diversion of essential chemicals and beginning implementation of a program to reduce money laundering.

Cultivation/Production. The GOE continues to be vigilant about preventing illicit drug cultivation and processing activities. There is no evidence of large scale, commercial coca or opium poppy cultivation in Ecuador. However, the police have discovered and dismantled several small cocaine refineries processing coca paste imported from Peru and Colombia.

Drug Flow/Transit. Ecuador remains a major transit route for unrefined cocaine base shipped by air and land from northern Peru to southern Colombia for processing, and for refined cocaine hydrochloride moved from Colombia through Ecuador's seaports to U.S. and European markets. Colombian traffickers also export heroin through Ecuador using body carriers through the country's airports. Ecuador is also a major transit country for precursor and essential chemicals which are smuggled into Colombia and Peru for cocaine processing. A recent change to this pattern has been the discovery of several small cocaine refineries within Ecuador. The GOE is combating the spread of drug production into Ecuador by beefing up highway interdiction efforts and continuing to monitor the import of chemicals by legitimate companies to prevent their diversion to illicit markets.

Demand Reduction. The most recent national survey by the National Drug Council (CONSEP) showed drug use in Ecuador to be relatively low, with four percent of the respondents admitting to having used illicit drugs once in their lifetime. Ecuador's new national drug strategy made demand reduction a high national priority. CONSEP has a very ambitious drug prevention program, the police have instituted a D.A.R.E.-type program in classrooms, and the Ministry of Education has provided orientation seminars for the country's public school teachers. In addition, all public institutions, including the military, are required to establish drug prevention programs in the workplace.

IV. U.S. Policy Initiatives and Programs

U.S. counternarcotics policy in Ecuador seeks to strengthen the technical capability of Ecuadorian police, military and justice sector agencies to attack the narcotics trafficking problem in Ecuador, including improved border and port control, investigation and prosecution of narcotics trafficking organizations, and reduction of domestic drug consumption. USG-provided training courses were held in the areas of asset forfeiture, communications, intelligence, chemical diversion and seaport control.

All initiatives and strategies were planned and coordinated with the GOE via counternarcotics bilateral agreements with the National Police and the National Drug Council.

The U.S. Embassy has chaired meetings of a Mini-Dublin group for Ecuador, a mechanism for improving the coordination of narcotics and law enforcement assistance programs among donor countries. The U.S., British, French, Spanish and German embassies are active in this group.

The Road Ahead. The establishment of the forward operating location at Manta has significantly increased the potential for counternarcotics cooperation between the U.S. and Ecuador. Information generated from Manta-based monitoring flights should greatly abet the detection and interdiction of illegal drugs. We will continue to seek enhanced cooperation on control of chemical diversion, vigorous interdiction efforts on both sea and land, and improved interagency coordination between the Ecuadorian military and police. The reform of the Ecuadorian criminal justice system offers the prospects for improvements in the investigation and prosecution of drug trafficking cases

Ecuador Statistics

(1991-1999)

1999 1998 1997 1996 1995 1994 1993 1992 1991
Coca

Leaf (Potential Harvest) (ha)

0

0

0

0

0

0

0

0

40

Eradication (ha)

0

0

0

0

0

0

0

0

80

Cultivation (ha)

0

0

0

0

0

0

0

0

120

Seizures(1)

Cocaine (mt)

9.240

10.770

2.160

9.800

4.400

2.186

1.039

3.750

0.858

Base, paste (mt)

0.900

0.690

1.605

0.530

0.250

0.192

0.335

0.505

0.305

Total Cocaine Products (mt)

10.140

11.460

3.765

10.330

4.650

2.378

1.374

4.255

1.190

Cannabis (mt)

3.030

17.730

0.022

0.200

0.200

0.131

0.183

0.631

0.171

Heroin (mt)

0.081

0.053

0.034

0.070

0.053

0.024

0.027

0.003

0.000

Labs Destroyed

Cocaine

2

2

0

1

0

0

0

0

4

Arrests/Detentions

Nationals

3,500

3,596

3,346

2,075

1,858

2,872

2,775

1,810

2,794

Foreigners

250

292

346

204

2,214

201

213

165

198

Total Arrests 3,750 3,888 3,692 2,279 4,072 3,073 2,988 1,975 2,992

(1)Data for 1999 is through October.

PARAGUAY

I. Summary

The Government of Paraguay's (GOP) counternarcotics cooperation in 1999 included some notable actions, such as the ratification of a new bilateral extradition treaty with the U.S. which includes the extradition of nationals, the extradition to Brazil of a major cocaine trafficker, the enactment of conspiracy legislation, and the submission to congress of a draft law authorizing controlled deliveries and undercover operations. Following the assassination of Vice President Argana in March, however, political instability that led to the collapse of the Cubas government, judicial and other public corruption, and scarce resources were obstacles to more effective counternarcotics efforts. No action was taken against major trafficking organizations, and there were no seizures of large quantities of cocaine.

Paraguay is a transit country for significant amounts of mostly Bolivian cocaine en route to Argentina, Brazil, the U.S, Europe and Africa. It is also a source country for high-quality marijuana, none of which enters the U.S. Paraguay is a haven for money launderers, but it is unclear what portion is drug-related. Paraguay is a party to the 1988 UN Drug Convention.

II. Status of the Country

Paraguay is a transit country for significant amounts of cocaine from Bolivia en route to Argentina, Brazil, the U.S., Europe and Africa. Reasons the cocaine trade continues include Paraguay's central location in the heart of South America, its extensive river network, its lengthy and uncontrolled land borders, numerous unpoliced airstrips (both registered and unregistered), and persistent official corruption. Already fledgling counternarcotics operations were virtually paralyzed in the wake of the murder of the vice president and the collapse of the Cubas government in March.

Paraguay is also a large money-laundering center. Although promulgation of a strong anti-money laundering law in 1997 provided the GOP with the legal tools necessary to move against this criminal activity, the GOP has not fully implemented the law by funding the offices created by the law to control money laundering or by arresting/prosecuting violators. Banking sources confirm that significant money laundering occurs, but claim it is fueled primarily by the regional contraband trade, tax evasion and capital flight, more so than by narcotics trafficking.

III. Country Action Against Drugs in 1999

Policy Initiatives. Both houses of the GOP congress approved the new bilateral extradition treaty with the U.S., which includes extradition of nationals. The treaty is pending before the U.S. Senate. The GOP also put into effect the new penal code, which includes conspiracy provisions; and submitted to congress draft legislation explicitly authorizing undercover operations and controlled deliveries. A major Brazilian narcotics trafficker, arrested by the GOP in October 1997 for weapons violations, was extradited to Brazil. Although not a USG priority because it is not trafficked to the U.S., the GOP seized record amounts of marijuana in 1999.

Law Enforcement Efforts. The GOP provided counternarcotics cooperation to DEA investigations, but was ineffective in carrying out its own investigations of major traffickers operating out of Paraguay. In 1999 the counternarcotics secretariat (SENAD) seized 95 kilos of cocaine and arrested 211 suspected low level narcotics traffickers (including 50 for cocaine trafficking). However, most of this activity was accomplished during the Cubas Grau administration. Asset seizures-a new frontier for Paraguayan justice, complicated by prior conviction requirements-were minimal.

Corruption. The GOP recognizes corruption as a public policy challenge, but has not taken sufficient measures to prevent or punish public corruption in general, or specifically with respect to narcotics trafficking. Measures against traffickers often take place only after pressure from the USG. Judicial corruption was suspected in the release of significant cocaine trafficker Nestor Baez in March, 1999. In November, the GOP got the Supreme Court to overturn Baez's release and he was re-arrested. A new penal code, promulgated in 1997, went into effect in July 1999. Law 1340 of 1988 subjects public officials that engage in narcotics-related offenses to the maximum applicable penalties. No public officials were tried under this law in 1999.

As a matter of government policy, Paraguay does not encourage or facilitate illicit production or distribution of narcotic or psychotropic drugs or other controlled substances, or the laundering of proceeds from illegal drug transactions. Reports from a variety of sources indicate that some senior provincial, municipal, military, police and customs officials, as well as some congressmen and judges, are suspected of engaging in, encouraging, or facilitating the illicit production or distribution of such drugs or substances, or the laundering of proceeds from illegal drug transactions. However, law enforcement officials did not initiate or bring to the courts any cases against such officials in 1999.

Agreements and Treaties. Paraguay ratified the 1988 UN Drug Convention in 1990 and is a party to the 1961 Single Convention and its 1972 protocol. It has ratified the OAS Convention on Corruption, signed the OAS/CICAD hemispheric drug strategy, and agreed to the declaration of principles and plan of action adopted at the Summit of the Americas and at the 1995 money laundering ministerial. It entered into a bilateral assistance agreement with the U.S. in 1987, which was extended in 1999, meeting the requirements of the Chiles and Leahy amendments. Paraguay ratified a new bilateral extradition treaty with the U.S., including the extradition of nationals, in July. The treaty is pending before the U.S. Senate. Paraguay has entered into multipartite law enforcement agreements with Argentina, Brazil, and Bolivia, and has similar bilateral agreements with Chile and Venezuela.

Cultivation and Production. Cannabis is the only illicit crop cultivated in Paraguay, and is harvested throughout the year. The GOP estimates that roughly 2,500 hectares are under cultivation. According to SENAD, marijuana production is up in Paraguay over previous years, and has spread from the traditional growing areas in San Pedro and Amabay provinces to the neighboring provinces of Canindeyu and Caaguazu. During 1999, the GOP eradicated 944 hectares of marijuana fields.

Drug Flow/Transit. Although there are no precise figures for the amount of cocaine, which transits Paraguay, USG experts have estimated in recent studies that between 15 and 30 metric tons may originate in Bolivia each year. Colombian cocaine is also penetrating Paraguay.

Demand Reduction Programs. Paraguay has a relatively small but growing substance abuse problem. SENAD has the chief coordinating role under the national program against drug abuse, and works with the Ministries of Health and Education, as well as with local non-governmental organizations.

IV. U.S. Policy Initiatives and Programs

Policy Initiatives and Bilateral Cooperation. DEA provided aerial survey teams that identified suspicious activity and sites, including new airfields, along Paraguay's riverine system and elsewhere, and sent SENAD special agents to Argentina for training in airport interdiction and to Fort Bragg, N.C. for counternarcotics operations training. DEA also provided training, intelligence and guidance on operations and investigations. The Department of State's Bureau of International Narcotics and Law Enforcement Affairs (INL) continued supporting the detector dog program, and provided equipment support to SENAD. INL funded, and U.S. Customs provided border interdiction and instructor training for 41 Paraguayan customs and police officials, and sent a Paraguayan participant to advanced canine unit training in Bolivia. INL also provided money laundering investigation training to SEPRELAD through FinCEN, and equipped SEPRELAD with computers. USIS sent three IVP grantees funded by INL to the U.S. to participate in counternarcotics journalism and international narcotics matters training programs.

The Road Ahead. The GOP's task remains that of translating its often stated political will to reduce narcotics trafficking and money laundering into concrete enforcement successes against narcotics traffickers, money launderers, and corrupt public officials. This means investigating major cocaine traffickers, making significant seizures and arrests, carrying out successful prosecutions, preventing the escape of arrested drug traffickers or their release by corrupt judges, and implementing the anti-money laundering law and provisions of the anti-drug law aimed at punishing and preventing official corruption.

During 2000 the USG will seek to continue strengthening SENAD's anti-narcotics, tactical interdiction and financial investigation units, as well as SEPRELAD's financial analysis unit, through training, technical assistance and equipment donations. The USG will also work with the executive and legislative branches on passage of tougher anti-narcotics law enforcement legislation that explicitly authorizes controlled deliveries and undercover operations. INL will sponsor a training program for prosecutors and judges in the application of new conspiracy statutes.

Paraguay Statistics

(1991-1999)

1999 1998 1997 1996 1995 1994 1993 1992 1991
Seizures(1)

Cocaine (mt)

0.095

0.231

0.077

0.056

0.059

0.806

0.043

0.067

0.041

Marijuana (pressed) (mt)

13.98

4.36

2.28

3.24

-

3.08

4.64

20.35

0.97

Marijuana (harvested) (mt)

96.76

75.06

14.94

-

-

-

-

-

-

Arrests/Detentions

211

212

209

220

237

58

333

337

300

(1)Data for 1999 is through October. Marijuana seizure statistics for 1991-93 have been revised.

PERU

I. Summary

Peru is still one of the world's major producers of cocaine, although the Government of Peru (GOP) has made enormous strides toward its goal of eliminating illegal coca cultivation. It remains on the President's list of major drug-producing countries. Despite the rehabilitation of some previously abandoned coca fields, an additional 24 percent of coca cultivation was eliminated in 1999, for an overall reduction of 66 percent over the last four years. Contributing to this reduction was a 1999 manual coca cultivation eradication total of 15,000 hectares. The GOP counternarcotics alternative development program, working through 103 local governments, almost 700 communities, and more than 15,000 farmers, has significantly strengthened social and economic infrastructure in these areas and helped shift the economic balance in favor of licit activities. However, these gains are threatened by rising coca prices, which are a consequence of new trafficking routes and patterns bypassing previous aerial means of transportation.

Because of losses incurred in the mid-1990s through GOP aerial interdiction of narcotics (airbridge denial program), narcotics traffickers are using maritime shipment of cocaine from Callao and other Peruvian ports, riverine transport, and overland transport to move drugs out of Peru. Maritime transport of drugs is believed to have increased in 1999. Nonetheless, 1999 successes have included major precursor chemical seizures, arrests of principals in several drug-trafficking rings, and the destruction of several cocaine hydrochloride laboratories.

II. Status of Country

The price of coca rose sharply in 1999, possibly due to trafficker success in finding alternative means to transport drugs from Peru to external markets. Nonetheless, because of eradication and interdiction pressure by the GOP, coca cultivation decreased once again, from an estimated 51,000 hectares in 1998 to an estimated 38,700 hectares in 1999. Over the last four years, this has resulted in a 66 percent decline in the total amount of coca estimated to be cultivated in Peru. Most coca eradication was in the high cultivation areas near Aguaytia and in the Upper Huallaga Valley. The GOP is prepared to eradicate an additional 15,000 hectares in 2000, targeting the Monzon area of the Huallaga Valley.

During 1999, traffickers continued to improve their communications (using "chat rooms" and other secure devices). There is increasing evidence that traffickers are processing cocaine hydrochloride (HCl) within Peru's borders, setting up laboratories near the borders with Brazil, Colombia, and/or Bolivia, so that they can leave the country quickly without risk of interception. While there were no confiscation's or forcedowns of trafficker aircraft by the Peruvian Air Force (FAP) airbridge denial program in 1999, traffickers crashed two airplanes that had to be abandoned. These new patterns have had the effect of increasing coca leaf prices in coca cultivation areas to levels well beyond the break-even price point.

Reports from human sources and eradication campaigns indicate that Peru has an emerging opium poppy cultivation problem. Cultivation of opium poppy is illegal in Peru; whenever such plantings are identified, the GOP takes prompt action to destroy them. Reliable reports indicate that 55 kilos of latex gum were seized in 1999, and 34,000 plants were eradicated.

Peru is not a major money laundering center. However, the current Peruvian banking law does not provide a reliable or adequate mechanism to estimate the amount of "narcodollars" passing through Peru. Money laundering is criminal only when it is related to narcotics trafficking or "narcoterrorism." Only certain financial institutions are regulated under the money laundering law; no control is exercised over casinos or money transfer services. The USG recently provided the GOP with technical assistance to help lay the groundwork for new comprehensive money laundering legislation.

Asset seizure is an additional problem. In two years, the Peruvian National Police Directorate of Counternarcotics (DINANDRO) financial investigative unit (DINFI), which investigates financial transactions associated with illegal drug trafficking, seized at least two hundred properties, but none were turned over to DINANDRO to support counternarcotics efforts.

III. Country Action Against Drugs in 1999

Policy Initiatives. Until 1996, GOP policy permitted eradication of coca seedbeds only. Its main eradication agency is the "Coca Reduction Agency for the Upper Huallaga Valley" (CORAH) an office of the Ministry of the Interior. In 1996, the GOP authorized eradication of (illicit) mature coca on public lands. In 1997-8, the GOP expanded this policy to coca grown on private property, but in remote zones away from populated areas. The late-1999 "Operation Dina CORAH" initiative, supported by the USG with material and financial resources, eradicated about 6,000 hectares of coca (for a 1999 total of 15,000 hectares) without regard to their location.

CONTRADROGAS, Peru's executive branch counternarcotics policy office, plays a major role in policy issues, especially in the areas of alternative development and demand reduction. CONTRADROGAS president and Minister of Health, Dr. Alejandro Aguinaga, is an outspoken advocate on behalf of the GOP's drug control program, and has raised awareness of Peru's successes as well as its needs both domestically and within the donor community.

Accomplishments. The GOP was concerned that rapidly increasing coca leaf prices would lead to planting of new coca fields and rehabilitation of old fields. In fact, experts estimate that 30 percent of previously abandoned coca fields in the Apurimac Valley have been rehabilitated, and some coca cultivation is taking place in non-traditional coca-growing areas such as the Rio Manati/Santa Clotilde, San Pedro and Atun Quebrada areas. To counteract this, the GOP dedicated an additional 250 CORAH eradicators, and 150 DINANDRO and DINOES (special forces) police to its eradication program. Eradication units in Peru are now using a new tool that pulls coca plants out of the ground by the roots, which prevents rehabilitation of the plants.

The "Corps in Support of Alternative Development" (CADA), a division of the GOP's CORAH, measures and monitors coca cultivation to form the baseline for alternative development agreements and eradication campaigns. In 1999, CADA completed its measurements of coca cultivation in the Aguaytia and Alto Huallaga areas; in 2000 it will begin mapping the Monzon area. CADA's professional, computer-generated maps, coordinated with aerial estimates, have become the benchmark for coca cultivation estimates, and are relied upon by the European Union (EU) and other groups providing alternative development assistance to Peru.

Law Enforcement Efforts. In December, following six-months of investigation, DINANDRO arrested Segundo Cachique Rivera, a major drug trafficker and head of a major Peruvian drug-trafficking organization from 1994-98. Cachique was taken into custody at his camp near the jungle town of Ucayali. His brother Abelardo, arrested in 1995, is serving a life sentence.

Despite limitations in the criminal application of chemical control laws, the Peruvian National Police (PNP) chemical control unit, DICIQ, conducted over 1,500 regulatory and criminal investigations of suspect businesses in 1999, effecting 58 arrests and seizing over 112 tons of controlled chemicals and two chemical companies. The GOP has passed new legislation, which will enhance the control of precursor chemicals. One law increased the list of controlled chemicals, to include chemicals utilized in the illicit manufacture of cocaine and heroin. Another mandates that the PNP take a five-gram sample of all cocaine seizures in Peru to submit for signature analysis. Signature analysis of drug samples can be utilized to target specific drug trafficking groups, to identify laboratory sites and assist in overall strategic planning.

The joint riverine training center in Iquitos, which prepares personnel to interdict drug traffickers on Peru's extensive water system, has graduated six classes of DINANDRO and Peruvian Coast Guard officials to date. 1999 marked the delivery of the first riverine boats and floating maintenance facilities donated by the USG to both groups. DINANDRO and the Peruvian Coast Guard are beginning to overcome some of their traditional rivalries, and have improved their operational capabilities, including command and control, and mechanical and logistical problem-solving.

Private shipping companies, encouraged by the GOP, monitored sea cargo container activities during 1999, which led to the seizure by DINANDRO of over five tons of cocaine base and HCl bound for Europe. Following a November Organization of American States drug conference (OAS/CICAD) conference on port security, a public-private coalition is investigating the possibility of emulating Colombia's fee-supported port security program.

Corruption. No aspect of drug trafficking is condoned, encouraged, or facilitated by the GOP. The GOP has denounced all forms of public corruption, with a specific emphasis on drug trafficking. There have been no known cases of systemic institutional, narcotics-related corruption within GOP entities in the last few years, nor are there any senior level GOP officials known to be engaged in drug production, distribution or money laundering. However, the continuing low level of salaries in the public sector, especially for military and police officials, makes it difficult to ensure the integrity of officials. In a recent isolated incident, the chief prosecutor of Trujillo was dismissed because of his involvement with a major drug-trafficking ring.

Agreements and Treaties. The GOP strongly supports the objectives of the 1991 USG-GOP counternarcotics bilateral framework agreement currently in force, and the 1988 U.N. Drug Convention, to which Peru has been a party since 1992. Peru is also a party to the 1961 U.N. Single Convention, the 1972 protocol thereto, and the 1971 Convention on Psychotropic Substances. There is also a cash transaction information exchange agreement between the USG and Peru. A bilateral extradition treaty, signed in 1899, exists between Peru and the USG, and negotiations have been under way since 1998 for a modernized treaty.

Peru is a party with other Andean nations to a 1996 chemical control agreement with the European Union. In addition, Peru has bilateral drug control agreements in force with several other Latin American countries; the most recent GOP agreement, with Brazil, was signed in November, 1999. The GOP also signed an agreement in October with the Government of Finland for alternative development assistance.

Drug Flow/Transit. Drug traffickers continue to move large quantities of coca products out of Peru, particularly through Brazil, and overland through Ecuador, Colombia and Bolivia. HCl labs are situated near Peru's eastern border, allowing planes to exit the country before the FAP has time to respond. Finally, some drugs are moved from east of the Andes, processed near the coast, and shipped from Peru through Callao or other ports.

Alternative Development Progress. In 1999, the GOP's counternarcotics alternative development program operated in six coca cultivation zones, including the Palma Pampa region of the Apurimac River Valley. Over 255 km. of rural roads were rehabilitated during 1999, and five bridges constructed. Nearly 700 communities and farmers' organizations have signed agreements to reduce coca cultivation over a five-year period. Peru's economic recession has encouraged some farmers to rehabilitate coca fields, taking advantage of rising prices. Sustainability of alternative development gains will depend even more than in the past on coordination of alternative development with drug crop eradication and interdiction efforts.

The alternative development program is aimed at providing sustainable, licit economic opportunities for former coca growers, including rehabilitation of coffee and cacao plantations abandoned during the "coca boom," and diversification of agricultural production (including banana, pineapple and palm heart). The program also strengthens local governments, and improves access to basic services and markets for licit crops. Micro- and small credit assistance now provide timely financial support to over 3,500 farm families.

Following the 1998 Brussels Donors Consultative Group meeting arranged for the Peruvian Government by the Inter-American Development Bank and Organization of American States Drug Control Commission (OAS/CICAD), 19 donors pledged a total of U.S. $ 270.2 million for counternarcotics alternative development in Peru. Donor funding disbursements were slow to arrive in 1999, delaying implementation of many programs.

Domestic Programs (Demand Reduction). A strong cadre of NGOs cooperates with CONTRADROGAS, the Peruvian drug control agency, to address the problem of Peruvian drug consumption. Ironically, the rise in domestic drug consumption is largely the result of successful interdiction programs in the past. Denied the means for exporting drugs, traffickers were forced to develop domestic markets, which, although considerably less lucrative than external markets, generated a positive cash flow with little risk. It is estimated that the number of first time users is rising at the rate of about 50 percent per year. A recent poll by CEDRO, an influential non-governmental organization (NGO) indicates that most Peruvians now consider drugs to be one of the greatest threats facing Peru.

With impetus from a small USG grant, a new private sector demand reduction NGO, "Alianza para un Peru sin Drogas" ("Alliance for a Drug-Free Peru") was launched in November. The coalition of media, business and advertising is modeled on the U.S. "Partnership for a Drug-Free America" and similar Latin American initiatives, and has developed TV spots and other prevention messages aimed particularly at children.

IV. U.S. Policy Initiatives and Programs

Bilateral Cooperation. The USG is supporting GOP efforts to make the airbridge denial program more aggressive and effective by increasing its ability to enhance airborne radar support, stationing FAP aircraft at sites that will allow a more timely response, and working to increase the availability of FAP intercept aircraft. The GOP and USG have also worked closely to implement the successful eradication and alternative development programs. Fifteen USG-owned helicopters are flown and maintained by the GOP to provide transportation for drug cultivation eradicators and police. Helicopter pilots and mechanics receive training in the United States, which benefits Peru's counternarcotics aviation program.

USG law enforcement agencies support the GOP by working to upgrade police investigative capability, improve police capacity to plan operations based on intelligence and form mobile land interdiction units. The USG also supports the activities and equipment of seven narcotics prosecutors with national authority. Because Peruvian law requires that a prosecutor be present at an arrest, the prosecutors travel with police investigative units and on eradication actions.

USG training in detection of contraband for customs officers, as well as for airline and airport employees has resulted in a significant increase in the 1999 number of arrests at Lima's Jorge Chavez international airport of passengers body-carrying cocaine HCl.

The Road Ahead. Peru's significant reduction of coca under cultivation proves that its strategy is working. However, with higher prices being paid for coca, many farmers will be tempted to abandon licit crops. It is essential that manual eradication of illegal coca crops, counternarcotics-related alternative development, rehabilitation of the airbridge denial program, and land and maritime/riverine interdiction all continue as complementary programs. The GOP should also refine relevant laws, especially as they pertain to money laundering, asset seizure, and chemical controls.

Peru Statistics

(1991-1999)

1999 1998 1997 1996 1995 1994 1993 1992 1991
Coca

Net Cultivation (ha)

38,700

51,000

68,800

94,400

115,300

108,600

108,800

129,100

120,800

Eradication(1) (ha)

13,800

7,825

3,462

1,259

0

0

0

0

0

Cultivation (ha)

52,500

58,825

72,262

95,659

115,300

108,600

108,800

129,100

120,800

Leaf (Potential Harvest) (ha)

69,200

95,600

130,600

174,700

183,600

165,300

155,500

223,900

222,700

HCl (Potential) (mt)

175

240

325

435

460

435

410

550

525

Seizures

Coca Leaf (mt)

164.3

132.9

146.8

99.1

33.4

25.2

-

25.0

5.95

Coca Paste(2) (mt)

-

-

-

-

-

-

7.7

0.75

1.07

Cocaine HCl (mt)

3.59

1.70

2.30

1.01

7.65

0.10

0.47

0.23

0.76

Cocaine Base (mt)

6.65

19.70

8.80

18.68

15.00

10.60

5.3

6.7

4.41

Total Cocaine (mt)

10.24 21.40 11.10 19.69 22.65 10.70 5.77 6.93 5.17

Aircraft (items)

-

-

11

7

22

4

13

7

10

Arrests/Detentions
Labs Destroyed

Cocaine HCl

Base

Total Labs

Domestic Consumption

Coca Leaf (licit)

(1)In 1997, Peruvian authorities also reported destroying 96 square meters of seedbeds, equal to six hectares of mature cultivation.
(2)Since 1994, Peruvian National Police statistics have not distinguished between coca paste and cocaine base.

URUGUAY

I. Summary

Uruguay is not a drug producing country and is not a major transshipment country. Government of Uruguay (GOU) efforts to combat drug trafficking and consumption are well-coordinated under the leadership of a sub-cabinet official. A comprehensive anti-drug law, which criminalizes money laundering, controls and regulates precursor chemicals, and strengthens penalties against drug trafficking, was approved in October 1998. The law conforms to UN and OAS Inter-American Drug Abuse Control Commission (CICAD) standards. Money laundering remains an area of concern, although the GOU is working to improve implementation and enforcement of the October 1998 legislation. Bilateral cooperation between the GOU and USG is very good. Uruguay is a party to the 1988 UN Drug Convention.

II. Status of Country

Limited data suggest low levels of drug consumption in Uruguay with a slight increase in the past year. Uruguay is not a drug producing country and major trafficking routes do not pass through it. To a limited extent, traffickers use Uruguay for transit, as evidenced by seizures of small quantities from persons traveling to Europe. The movement of maritime containers through the port of Montevideo represents a potential opportunity for drug traffickers.

Uruguay's relatively sophisticated banking system and its economic and political stability has historically attracted foreign bank deposits, especially from Argentina and Brazil. As a regional financial center, with liberal currency exchange and bank secrecy laws, Uruguay is vulnerable to narcotics-related money laundering. The October 1998 anti-drug law makes money laundering a crime and requires banks and exchange houses to regularly transmit financial transaction data to the Uruguayan Central Bank for analysis. Although financial institutions were previously required to record all transactions in excess of $10,000; the Central Bank did not routinely review these records. The Central Bank now has the required computers and will soon implement a database for financial analysis.

III. Country Actions Against Drugs in 1999

Policy Initiatives. Counternarcotics is a GOU priority that receives strong presidential support, although funding levels remain relatively low. An October 28, 1999 presidential decree gave the National Drug Council (JND) permanent status at a sub-ministerial level under the current leadership of Alberto Scavarelli, Deputy Chief of Staff in the Office of the Presidency. The JND coordinates counternarcotics efforts and cooperation among law enforcement agencies. Formerly weak controls on money laundering and precursor chemicals have been improved by JND implementation of recent anti-drug legislation so as to achieve compliance with the 1988 UN Drug Convention.

Accomplishments. Uruguay is not a major transshipment country. However, seizures indicate that some drugs enter Uruguay from Brazil and Argentina. Efforts to interdict drugs entering from Brazil received a major boost from the 1998 opening of a new police anti-drug directorate (DGRTID) office in Rivera and this year DGRTID opened an office in Maldonado with jurisdiction extending to the eastern Brazilian border. DGRTID offices are also planned for Colonia, on the Argentine border, and Ciudad de la Costa. The Coast Guard recently obtained nine 44-foot motor lifeboats, which will greatly increase its ability to monitor riverine and coastal waters. The Coast Guard is also updating its computer system to establish a database of persons and vessels transiting Uruguayan territorial waters.

Uruguay adopted a law in October 1998 making money laundering illegal and bringing Uruguay into compliance with international standards. The Uruguayan banking association issued a code of conduct in 1997 designed to prevent money laundering in member banks. Computers have been acquired (with software and training in the pipeline), following U.S. Treasury Financial Crimes Division recommendations, for Central Bank financial analysis to detect money laundering.

Uruguay plays an active role in international anti-drug efforts. The GOU has cooperated with USG, Argentine, and Brazilian officials on controlling cross border movement of persons and narcotics. Uruguay and its neighbors regularly exchange narcotics-related information through participation in the Southern Cone working group of the annual International Drug Enforcement Conference (IDEC). The USG and GOU have an extradition treaty and a mutual legal assistance treaty (MLAT).

During 1999, implementing guidelines for the regulation of precursor chemicals were established and put into effect, with the Ministry of Industry registering businesses, the Ministry of Public Health issuing permits and DGRTID in charge of enforcement. The Ministry of Public Health also obtained computer equipment for the creation of a database for registration and permits of precursor chemicals. Uruguay is in accordance with model OAS/CICAD regulations on precursor chemical controls.

The low levels of drug consumption in Uruguay have risen slightly in recent years. Uruguay's demand reduction program centers on the inclusion of a strong drug-education curriculum in the national school system. The GOU sponsored a nationwide series of public seminars to heighten drug awareness. It also provided thousands of teachers in schools across the country with anti-drug training. The Alliance for a Drug-Free Uruguay has mounted an extensive publicity campaign to raise levels of public awareness.

Law Enforcement Efforts. Under the GOU's 1995 coordination strategy, enforcement agencies work together to increase the effectiveness of their anti-drug operations. Full support from Uruguayan Customs, however, continues to be lacking and an interagency law enforcement team formed to improve inspections of containerized cargo at the port of Montevideo has not been effective. Morale among law enforcement officers is good, although officers outside of the anti-drug directorate are still generally underpaid and poorly equipped.

The October 1998 anti-drug law increases judicial authority to seize assets. Judges may issue a seizure order at any time, and without prior notice, for possible asset confiscation or forfeiture. Asset seizures have been historically rare, but vehicles and other assets easily linked to narcotics are now being seized more regularly.

Corruption. The "Ley Cristal" (or transparency law), designed to fight government corruption, was approved by the Uruguayan Legislature in December 1998 and entered into force in January 1999. The statute criminalizes a broad range of potential abuses of power by government office holders, including the laundering of funds related to cases of public corruption, and institutes financial disclosure requirements for high government officials. Drug-related corruption is not a major problem and there is no evidence that any senior GOU official has engaged in drug trafficking or money laundering. Under the citizen security law, public officials who know of a drug-related crime or incident and do nothing about it can be charged with a "crime of omission."

Agreements and Treaties. The USG and the GOU have a valid extradition treaty, which entered into force in 1984, and the two governments have cooperated on narcotics-related extraditions. The Mutual Legal Assistance Treaty (MLAT) between the USG and the GOU entered into force in April 1994. The GOU is implementing the OAS/CICAD Mutual Evaluation Mechanism (MEM) adopted by OAS/CICAD members on October 7, 1999. Uruguay is a party to the 1988 UN Drug Convention.

Drug Cultivation/Transit. There is little cultivation or production of drugs in Uruguay. Uruguay is not a major drug-transit country, although its use as a transshipment point may be increasing. Most of the drug shipments seized in 1999 were destined for Europe. The large amount of containerized cargo passing through the port of Montevideo is susceptible to narcotics shipments. The porous border between northern Uruguay and Brazil may be a major entry point for drugs destined for both domestic use and international shipment and is a focus of DGRTID enforcement activity. This border is vulnerable to potential transshipments by air and truck of marijuana originating in Brazil and Paraguay, as well as cocaine from the Andean countries.

Domestic Programs (Demand Reduction). To halt the rise of domestic drug consumption, the GOU is implementing a coordinated and ambitious demand reduction program under the direction of the National Drug Commission (JND). The primary focus of this program has been to train primary and secondary school teachers to reach children during their formative years and to ensure that drug education is an integral part of the national school curriculum. Approximately 3,000 teachers had been trained through the project by 1999. In addition, in 1999 the GOU sponsored many seminars and public meetings throughout Uruguay relating to drug abuse and treatment.

IV. USG Policy Initiatives and Programs

USG Goals and Objectives. The GOU cooperates with the USG on law enforcement issues. INL funds provided through an annual bilateral cooperation agreement have contributed greatly to the GOU's fight against drug use and trafficking. DEA and Department of Justice training programs have enhanced operational effectiveness and professionalism. The Uruguayan national drug awareness media campaign also benefited from USG assistance.

Road Ahead. Particular emphasis will continue to be placed on money laundering. The USG plans to support the full implementation of the money laundering provisions of the new anti-drug law by supplying software and training to monitor and analyze financial transactions to the central bank. The USG also plans to continue anti-money laundering training for Uruguayan judges, prosecutors, police and bank officials.

The lack of concrete information on the transshipment of drugs is of great concern. If illegal drugs transit Uruguay bound for the U.S., they are most likely to be shipped via containerized cargo. The USG will support the operation of the interagency law enforcement team to inspect targeted containers at the port of Montevideo. Material support will be given to the police anti-drug directorate offices on Uruguay's Brazilian border and to help establish new offices in Colonia, on the Argentine border, and in Ciudad de la Costa.

VENEZUELA

I. Summary.

Venezuela is a significant transit route for illegal drugs destined for the U.S. and Europe. Cocaine from Colombia comprises the vast majority of this traffic (by some USG estimates, over 100 metric tons of cocaine transit Venezuela annually), although increasing amounts of heroin have also been detected. In 1999, despite significant political changes that included the drafting and adoption of a new constitution, Venezuela sustained its efforts to combat narcotics trafficking and consumption. Moreover, the new administration under President Hugo Chavez Frias pledged to attack the widespread corruption that has hampered counternarcotics action in the past. The year also saw a significant reform of the penal code, including transition of the judicial system from a secret, inquisitorial process to an open, accusatorial system similar to the U.S. model. The Chavez administration began the reorganization of law enforcement bodies responsible for drug interdiction. However, the Venezuelan Congress did not adopt a pending piece of vital anti-crime legislation that would provide law enforcement with tools to enhance actions against narcotics-related crime and money laundering. The National Anti-Drug Commission maintained its role as the Government of Venezuela's drug policy coordinating body, and during 1999 worked to combat the diversion of precursor chemicals used in the production of illegal drugs in the source countries, to enhance anti-money laundering actions, and to improve anti-drug police coordination.

In 1999 Venezuelan law enforcement authorities cooperated with U.S. law enforcement agencies in some anti-narcotics operations and Venezuela participated actively in multilateral organizations charged with enhancing anti-drug cooperation. Although the GOV's aerial interdiction policies were ineffective for most of 1999, understandings between the USG and GOV helped to establish a foundation for future cooperation on this issue of bilateral concern.

Venezuela is a party to the 1988 UN Drug Convention.

II. Status of Country

Increased drug production in neighboring Colombia in 1999 elevated Venezuela's importance as a significant transit route for illegal drugs to the U.S. and Europe. The majority of this traffic involves smuggling drugs by land into Venezuela from Colombia and then concealment of drugs in commercial cargo leaving major Venezuelan ports. Illegal drugs are also hidden in air cargo or transported by passengers on the more than twenty-five flights each day to U.S. destinations. Small private aircraft and boats that use Venezuelan airspace or territorial waters on their way to or from Caribbean transshipment points are another means of drug transit.

Essential chemicals used in the production of drugs in Colombia and other source countries either transit Venezuela from chemical exporting countries or are diverted from Venezuela's domestic chemical industry. Venezuelan gasoline and cement are also diverted from Venezuela for use in Colombian cocaine labs near the Venezuelan border.

Venezuela's proximity to the drug source countries and its modern financial, real estate and tourism sectors provide ample opportunity for laundering of drug profits. While the introduction of U.S.-style currency transaction reporting and suspicious activity reports have limited the more obvious money laundering schemes, evidence shows that Venezuela is still a route for return of drug profits from the U.S. and is a victim of various money laundering schemes.

Although Venezuela is primarily a drug transit country, Colombian cultivators have traditionally used a small, mountainous area along the northern part of Venezuela's border with Colombia to grow opium poppy. Heroin processing is carried out in Colombia and this small- scale problem has been limited to a cultivation area of under 50 hectares by continued aggressive eradication and expulsion activities by the Venezuelan military.

III. Country Actions Against Drugs

Policy Initiatives. The new administration of President Hugo Chavez adopted and reinforced the previous administration's four-year national strategic anti-drug plan. The Chavez administration confirmed the role of the National Anti Drug Commission (CONACUID) as the government's anti-drug coordinating organization. During 1999 the new CONACUID president appointed by the Chavez administration reinforced the commission by increasing the presence of law enforcement representatives, expanding Venezuela's participation in multilateral anti-drug organizations, and organizing activities and drafting legislation to combat the diversion of essential chemicals and counter money laundering.

The Chavez administration was elected on a strong anti- corruption platform. Once in office the administration established task forces to initiate investigations of corrupt officials and began the reorganization of law enforcement agencies. While corruption convictions have only been obtained in a few cases in the military, the Chavez administration states that once the new national legislature is in office, more progress will be made in this area. The National Assembly was established by the new Constitution, adopted by a popular referendum on December 15, 1999.

The Chavez administration also oversaw the implementation of a new Code Of Criminal Procedure (COPP) according to schedule in July 1999. The COPP (adopted under the previous administration) moves Venezuela from a secret, inquisitorial system of justice to an open, accusatorial system with similarities to the U.S. system. The new code requires prosecutors and investigators to work together to present cases orally in open court and has the potential to end corruption and provide a transparent, efficient system of justice.

Although the GOV's aerial interdiction policies were ineffective for much of 1999, steps were taken at year's end that have the potential to restrict the access of drug-trafficking aircraft to Venezuelan airspace.

A standing committee of the Venezuelan Congress assumed a caretaker role during the summer of 1999 when the National Assembly, whose members were elected in July, undertook the task of drafting a new constitution. Although President Chavez lobbied for passage of a draft anti-organized crime bill targeting conspiracy, facilitating asset seizure, expanding money laundering investigations and establishing the legal basis for many police procedures (such as undercover activities), the opposition controlled Congress did not adopt the bill in 1999. President Chavez has stated that this bill is a priority for the new National Assembly to be elected in 2000.

Accomplishments. In 1999 Venezuela improved efforts to prevent the diversion of essential chemicals for use in the production of illegal drugs in the source countries. The GOV implemented its control regime for imports and exports of chemicals and issued a list of 22 chemicals subject to controls pursuant to UN guidelines. Venezuelan law enforcement officials participated actively in DEA's worldwide interdiction campaign "Operation Purple" during 1999 and seized approximately 110 tons of potassium permanganate, a prime chemical used in the production of cocaine in Colombia. During the operation Venezuelan authorities uncovered evidence of involvement in chemical diversion by police and military officials. Military investigators launched a thorough investigation and the GOV stated those involved would receive stiff punishments. CONACUID established contacts with the Colombian government during the chemical control operation and signed an agreement to establish a mechanism to exchange information on chemical movements from Venezuela to Colombia.

The Venezuelan Financial Intelligence Unit and CONACUID strengthened efforts to improve Venezuela's anti-money laundering activities in 1999. Venezuela was accepted into the Egmont group (an international body charged with improving anti-money laundering efforts) and actively participated in the work of the regional anti-money laundering body, the Caribbean Financial Action Task Force (CFATF). In November a CFATF team visited Venezuela to carry out an evaluation of Venezuela's success in implementing the forty internationally accepted anti-money laundering recommendations. CONACUID is awaiting the team's report to assist in formulating new anti-money laundering controls. CONACUID re-established a dormant inter-ministerial anti-money laundering network to coordinate cooperation throughout the government and launched investigations into the casino licensing process and activities of state lotteries. Venezuelan law enforcement maintained pressure on money exchange institutions along the Colombian border.

CONACUID identified assets of narco-traffickers seized by the courts in 1999 and worked to streamline the process by which these assets are passed from the Ministry of Finance to different programs under the national drug control strategy.

Venezuelan law enforcement officials cooperated successfully with U.S. counterparts on several occasions to pursue third-country nationals involved in narcotics trafficking. In one case, following a joint operation, after police located and arrested an indicted trafficker sought by U.S. authorities, a judge released the individual on a technicality. Despite expressions of concern by senior GOV officials over the inadequacies of agreements to pursue international criminals, the Constitution adopted at the end of 1999 specifically barred the extradition of Venezuelan citizens for trial in foreign countries. Furthermore, Venezuela did not enter into negotiations with the U.S. to update the 1922 bilateral extradition treaty in 1999.

In 1999 the Venezuelan armed forces continued operations with Colombia in the Sierra de Perij� region along the Venezuelan border to prevent an increase in the cultivation of opium poppy. Eradication operations and actions to prevent Colombians from entering Venezuela illegally to grow narcotics kept cultivation below 50 hectares for the second consecutive year.

The U.S. Customs Service Business Anti-Smuggling Coalition (BASC) program made significant progress with the Venezuelan private sector in 1999. The program, designed to provide outreach to companies to prevent infiltration of drugs in shipments to the U.S., saw the establishment of two BASC chapters, one in Caracas and the other in the major industrial center of Valencia. U.S. Customs officers were deployed to Venezuela on three separate occasions to assist this extremely popular program. Venezuela is also one of seven countries participating in the U.S. Customs Americas Counter-Smuggling Initiative (ACSI), which seeks to increase the effectiveness of law enforcement officers in their efforts to deter narcotics smuggling in commercial cargo shipments and conveyances. ACSI enhances private sector security programs at manufacturing and export facilities in high threat narcotics source and transit countries.

Law Enforcement Efforts. Venezuelan law enforcement authorities seized 13.1 metric tons of cocaine and cocaine-based products in 1999. This figure demonstrates a significant increase over seizures in 1998, and Venezuelan authorities claim that efforts to reorganize law enforcement and increased attention to interdiction were factors in this increase. Arrests of individuals for drug related offenses, however, fell by 12 percent from 7,531 in 1998 to 6,630 in 1999.

As part of the new administration's focus on corruption, the Technical Judicial Police (PTJ) and the National Guard arm of the Venezuelan armed forces underwent major reorganizations in 1999, including transfer and dismissal of employees. During 1999 both the PTJ and the National Guard cooperated with DEA and the U.S. Customs Service in joint operations against narcotics trafficking. A major heroin smuggling organization was dismantled in the city of San Cristobal near the border with Colombia in early 1999. Key members of the organization were arrested and their case is currently being prosecuted in a Venezuelan court. Other joint operations led to arrests of members of trafficking organizations in Miami and New Orleans. An important money laundering ring was broken up and a key organizer was charged with masterminding the transfer of several million dollars in laundered proceeds from the U.S. through Venezuela. Unfortunately, the case was later dismissed for lack of evidence. This type of cooperation continued throughout the year but reorganizations of Venezuelan law enforcement offices, removal of officials for corruption, and the need to train new counterparts, led to a reduction in joint law enforcement operations in the last three months of 1999.

Actions by the National Guard at border entry points, airports and seaports were key to Venezuela's interdiction efforts. Stepped up activities in the border region contributed to much of the increase in seizures over 1998. The CONACUID president (Venezuela's "drug czar"), coordinated closely with all branches of the GOV and the judicial system including police, investigators, prosecutors and judges to enhance interdiction efforts. Both the PTJ and the National Guard assigned officials to staff offices in CONACUID to work on money laundering, chemical diversion control, and collection and coordination of drug intelligence. This coordination, coupled with CONACUID's work with senior representatives of all branches of government with an anti-drug role, enhanced the effectiveness of Venezuelan counternarcotics programs.

The U.S. Coast Guard attach� assigned to the embassy in Venezuela conducted a series of visits (including several training programs) during 1999 to units of the Venezuelan navy and coast guard to assist these organizations to improve anti-drug patrols and operations. Partly as a result of this cooperation, Venezuela increased maritime interdiction activity in 1999.

Under section 506(a)(2) of the Foreign Assistance Act, the Venezuelan military received two C-26 aircraft in 1999 to support counternarcotics programs. The Venezuelan air force intends to use the aircraft to support operations along the border with Colombia and is considering using the aircraft to assist in tracking and monitoring of suspect narcotics trafficking aircraft using Venezuelan airspace.

Law enforcement agencies and the Ministry of Defense received adequate resources to carry out counter- narcotics activities in 1999, although the PTJ stated that across-the-board GOV austerity measures introduced by President Chavez limited that organization's ability to increase its operations throughout Venezuela.

Corruption. The GOV does not as a matter of policy or practice encourage or facilitate drug trafficking or money laundering, nor do its senior officials engage in, encourage, or facilitate such activities. In 1999, the Chavez administration initiated a series of investigations of mid-level public officials for involvement in corruption, including drug- related cases. Convictions were obtained for several senior military officials for corruption in cases not linked to drugs. Members of the police and military were arrested for involvement in schemes to substitute talcum powder for cocaine and to divert essential chemicals to Colombia. Over 200 judges were investigated for corruption and misuse of office. Forty-three of the 200 were removed under expedited procedures initiated by the Chavez administration. For the first time judges were subject to extensive scrutiny by a specially established commission.

The Chavez administration also targeted the customs and tax organization in order to improve anti-smuggling actions and increase tax revenues by reducing corruption among customs and tax officials. Building on a 1998 law, the Chavez administration introduced a major restructuring of the customs administration during 1999.

Agreements and Treaties. Venezuela is a party to the 1988 UN Convention. Key bilateral agreements with the U.S. include: a ship-boarding agreement from 1991, updated with a new protocol in 1997; a customs mutual legal assistance agreement; an agreement on chemical precursor control in 1992; an aerial hot pursuit arrangement in 1994 (non-operative at the end of 1999). In 1999 the USG and GOV began initial negotiations on a maritime interdiction treaty to bolster the 1991 ship-boarding agreement, but these discussions stalled.

In March 1999, Venezuela became a member of the Egmont anti- money laundering group. Venezuela enhanced cooperation with Colombia on chemical precursor control in 1999 and signed anti-narcotics cooperation agreements with Guyana and other regional countries. Venezuela has also signed drug control agreements with European countries focusing on the area of domestic drug demand reduction.

Venezuela is a partner in the OAS/CICAD (Inter-American Drug Abuse Control Commission) telecommunications system designed to control traffic in drugs and precursors on the Orinoco River in the Tri-Border (Brazil, Colombia, and Venezuela) region. The three countries are working together to establish secure exchange of information on narcotics related traffic in this favorite area for narcotics traffickers.

In 1997, the U.S. and Venezuela signed a bilateral mutual legal assistance treaty (MLAT). Although ratified by the U.S., the MLAT has not been approved by the Venezuelan Congress and accordingly has not yet entered into force. The U.S. and Venezuela are also parties to an outdated 1922 bilateral extradition treaty; unfortunately, Venezuela's new 1999 constitution expressly prohibits the extradition of Venezuelan nationals. This provision severely hampers Venezuela's ability to develop effective extradition relationships with the U.S. and other countries in the hemisphere, many of which are eliminating, rather than erecting, barriers to extradition.

Drug Flow/Transit. The vast majority of drugs transiting Venezuela are concealed in commercial air and sea cargo. The GOV took steps to improve interdiction measures at major ports and airports in 1999. At the large, privatized port of Puerto Cabello, new facilities were constructed to provide better conditions for checking truck traffic entering the port with goods for export. The National Guard increased its operations at the port and worked with port staff and customs to increase the effectiveness of searches. U.S. Customs sent a team to build on previous training programs that have focussed on container search techniques and conducted a longer duration assistance program during the summer that included customs and PTJ officials. The new government's plans for modernization at Venezuela's principal international airport included measures aimed at improving security. Initial measures improved security and are the first steps to addressing drug flow in air cargo and carried by passengers.

Despite these efforts, drugs continued to pass through Venezuela's ports and airports. Drug seizures were up during the year and Venezuelan authorities worked with U.S. law enforcement agencies to target drug smuggling organizations working in Venezuela. One notable operation disrupted a drug "mule" operation that was sending heroin to the U.S. and cocaine to Europe. Twenty- eight "mules" were arrested over a fifteen day period in 1999 and the organization coordinating the operation was dismantled.

Demand reduction programs. CONACUID unveiled several plans to work more closely with the schools and the private sector. Building on a previous program with the states, CONACUID established new programs with the states to increase the effectiveness of regional demand reduction programs. Programs included a nationwide school awareness program, TV advertisements promoting anti-drug themes, and various youth oriented events. CONACUID updated links with key non-governmental organizations (NGOs), and streamlined procedures to register these organizations to participate in anti-drug efforts.

Several influential NGOs function in Venezuela including the highly successful, private sector initiative "Alliance For a Drug-Free Venezuela." These organizations work both independently and in conjunction with CONACUID to raise public awareness on the dangers of drug consumption.

IV. U.S. Policy Initiatives and Programs

The USG seeks to assist the GOV to improve its ability to prevent the use of its territory as a route for illegal drugs destined for the U.S. and to prevent the diversion of essential and precursor chemicals used in the production of illegal drugs. The U.S. will also support measures to strengthen the judicial system, to ensure the prosecution and punishment of those involved in drug trafficking, and to combat international money-laundering activities. Specific objectives to accomplish these goals include: providing equipment and training to law enforcement agencies working against drug-trafficking and related crime; assisting the Venezuelan armed forces to carry out effective counternarcotics operations; aiding implementation of control regimes related to money laundering and chemical controls; and providing assistance to Venezuela's reform of the judicial system.

Bilateral Cooperation. The USG has extensive cooperative programs with the GOV, including those conducted by the Narcotics Affairs Section, the U.S. Customs Service, DEA, the Department of Justice, FBI, and the Department of Defense. The USG has signed agreements with the Venezuelan Ministry of Defense, CONACUID, the PTJ, the Ministries of Interior and Justice, the Attorney General's Office, the Superintendency of Banks and the Ministry of Production and Commerce to support counternarcotics programs focusing on interdiction, money laundering, chemical control, and reinforcement of the judicial system. These agreements provide for provision of equipment, training and other assistance to implement shared counter- narcotics goals.

The GOV has been receptive to expansion of cooperation in accordance with the 1988 UN Drug Convention. In July 1999 the Chavez administration hosted a senior interagency USG counternarcotics briefing team led by the U.S. Office of National Drug Control Policy (ONDCP) to discuss expanded counternarcotics cooperation. As a follow up to this visit, a Department of Justice team visited Venezuela to review techniques used to address public corruption in the U.S. Both visits provided extensive exchanges of information on means to address aspects of counternarcotics cooperation. However, the GOV's decision in June 1999 to implement a unilateral aerial interdiction policy did not produce positive results. Late in 1999, initial steps were taken to amend the policies' shortcomings, and the USG will continue to work with the GOV to seek a mutually favorable resolution on this issue.

Road Ahead. The Chavez administration has acted vigorously to counter corruption. Despite considerable political change and the implementation of a new penal code, this theme provides a major opportunity to address one of the major obstacles to progress on our shared counternarcotics objectives. Venezuela's participation in multilateral anti-drug cooperation, including the new multilateral evaluation mechanism, shows a continuing commitment to combating narcotics trafficking and related crime. The GOV needs to complement this commitment with a more effective aerial interdiction policy to defend the integrity of its airspace against the incursions of narcotrafficking aircraft. The GOV can also strengthen international efforts targeting narco-criminals by revising its recent constitutional ban on extraditing Venezuelan nationals. The USG will continue to work with the GOV to expand law enforcement cooperation aimed at targeting major narco-trafficking organizations and to develop the Venezuelan judicial system that will permit more effective government action.

Venezuela Statistics

(1991-1999)

1999 1998 1997 1996 1995 1994 1993 1992 1991
Coca

Cultivation (ha)

unk

unk

unk

unk

unk

unk

unk

101

101

Eradication (ha)

-

-

-

10

20

70

-

-

-

Opium

Harvestable Cultivation (ha)

0

0

0

0

1,000

unk

-

-

-

Eradication (ha)

50

50

100

467

1,640

920

-

-

-

Cultivation (ha)

50

50

100

200

2,640

unk

-

-

-

Cannabis

Harvestable Cultivation (ha)

Eradication (ha)

-

-

-

-

40

107

-

-

21

Cultivation (ha)

unk

unk

unk

unk

unk

unk

-

-

-

Seizures

Cocaine HCl (mt)

12.48

7.30

14.58

5.60

6.17

5.10

2.00

4.19

8.7

Other Cocaine (Basuco) (mt)

0.62

1.30

1.60

1.60

1.60

1.60

1.30

1.61

1.10

Total Cocaine Products (mt)

13.10

8.60

16.18

7.20

7.77

6.70

3.30

5.80

9.80

Cannabis (mt)

19.69

4.50

5.52

5.30

13.70

10.00

1.00

2.61

3.67

Heroin (mt)

0.04

0.04

0.11

0.07

0.10

0.02

0.02

0.01

Arrests

Nationals

6,414

7,242

4,880

-

3,000

-

-

812

2,383

Foreigners

216

289

499

-

600

-

-

210

525

Total Arrests

6,630

7,531

5,379

-

3,600

-

-

1,022

2,908

[End.]

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