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BELIZE

I. Summary

Belize was removed from the list of major drug transit countries in 1999 because of declining estimates of the amounts of drugs transiting there in route to the U.S. and Mexico and little in the way of drug seizures in the past two years. There is no evidence establishing that drugs coming to the U.S. from Belize are coming in significant enough quantities to have a significant effect on the U.S. However, the geography and proximity of Belize to Mexico and western Caribbean drug transit routes make it a logical transshipment point for drugs destined for the United States. Therefore, it remains a country of concern. The Government of Belize (GOB) recognizes this problem and works closely with the United States on narcotics control and other international crime issues primarily through the efforts of the Belize Police Force (BPF) and the Belize Defense Force (BPF). Over the past year, the GOB has made strides to build up the police infrastructure by increasing personnel, renovating police stations, and enhancing police equipment and training. Belize is a party to the 1988 UN Drug convention.

II. Status of Country

Contiguous borders with Guatemala and Mexico, large tracts of unpopulated jungle and forested, a long unprotected coastline, hundreds of small cayes offshore, many inland waterways and a rudimentary infrastructure for combating drug trafficking and drug abuse make Belize a potentially significant transshipment point for illicit drugs.

III. Country Actions Against Drugs

Policy Initiatives. The new police commissioner, named in September 1999, is working to create a counternarcotics task force. The initiative marks the first time a law enforcement unit will be dedicated solely to counternarcotics. The GOB has authorized on-site collaboration of a U.S. law enforcement officer with the new counternarcotics task force. U.S. law enforcement training and technical assistance will be provided to assist in establishing the unit.

The GOB also created a national drug council, which developed the nation's first comprehensive drug control strategy with the assistance of the Organization of American States. The Ministry of National Security and Immigration intends to finalize the strategy in early 2000.

The GOB hosted the regional International Drug Enforcement Conference, (IDEC) Group D conference in June 1999 and continues to support regional counternarcotics efforts. The GOB fully participated in joint counternarcotics operations with the USG, such as Central Skies and Regional Aerial Reconnaissance and Eradication (RARE) missions. Throughout the year the GOB also carries out its own counternarcotics operations.

Accomplishments. According to GOB statistics, in the last year the GOB increased the size of the police department by 10 percent, renovated dozens of police stations countrywide, trained approximately 25 percent of the police force, and acquired equipment and uniforms for law enforcement personnel. U.S. counternarcotics and law enforcement assistance has focused on renovating the Belize City police station, constructing the Joint Information Coordination Center (JICC) and establishing the new anti-money laundering unit. Ongoing support of equipment and training was provided to the police canine unit and rapid response force (Dragon Unit), and the Joint Intelligence Coordinating Center (JICC).

Illicit Cultivation/Production. In the first ten months of 1999, just over 300,000 marijuana plants were eradicated in Belize. Illicit cultivation of marijuana continues to occur in Belize, but at reduced levels from the widespread cultivation of a decade ago, when Belize ranked fourth in worldwide marijuana production. The BPD and BDF routinely conduct manual marijuana eradication missions involving, at times, modest-size fields, ranging from 500 to several thousand plants.

Because of environmental concerns, the GOB does not allow spray missions for the eradication of marijuana. However, it actively continues to cooperate and encourage RARE operations. Such missions are followed by police and Belize defense Force (BDF) manual eradication of marijuana fields and seedlings, which the GOB views as effective and more environmentally sound. There are indications that marijuana cultivation is slightly up from last year. Although thousands of plants were destroyed in various operations, few arrests were made. Because marijuana fields are usually found in fairly remote regions, far from the homes of those who cultivate the crops, few arrests result from these operations.

Precursor Chemical Control. There is no evidence of traffic in precursor chemicals in Belize. Almost no industry in Belize requires the use of precursor chemicals. However, the GOB, in support of the 1988 U. N. Drug Convention, developed a precursor chemical program. There is no evidence of production of drugs other than cultivation of marijuana in Belize.

Money Laundering. There is little evidence at this point that Belize is an active money laundering center. However, money laundering remains a major potential threat in Belize. The Government of Belize's banking control legislation, the Offshore Banking Act and the Money Laundering Prevention Act have been in force since August 1, 1996. The latter criminalizes money laundering, while also allowing for international cooperation. However, Belizean law enforcement authorities have yet to seize any assets or try a single case under its money laundering law. The GOB expects to gain a better assessment of money laundering activity and potential when the new Belizean financial investigations unit starts its fieldwork in 2000. Belize participates in the Caribbean Financial Action Task Force (CFATF). A CFATF assessment team is scheduled to visit Belize early in 2000.

Asset Seizure. The GOB is becoming more aggressive in its seizure of assets taken in connection with drug trafficking. However, negotiations to implement an International Asset Sharing program in Belize have been stalled for the last year. Joint investigations between the Belize Police force and U.S. law enforcement agencies targeting assets are currently being planned for 2000.

Extradition. The GOB continues to extradite Belizean Nationals indicted under U.S. Law under the 1972 U.S.-U.K. Extradition Treaty. Three such extraditions have taken place over the last several years. The GOG, however, has inserted serious obstacles to the conclusion of a new, modern extradition treaty.

Law Enforcement and Transit Cooperation. Belize cooperates with nations in the region to combat drug trafficking or other serious crime. In June 1999, Belize hosted the Regional IDEC, Group D meeting. The GOB has also hosted operational meetings and has shared case-specific information of ongoing investigations with Mexico, Colombia, and Guatemala. The GOB was a partner with the USG in two Central Skies operations during the year. The GOB consistently gives the U.S. Coast Guard permission to board Belize-registered ships suspected of illegal activity on the high seas.

Belizean officials routinely participate in a variety of international training seminars. Belize sent two high level officials to the Western Hemisphere Drug Policy leadership conference and participated in the Central America Regional Demand Reduction Conference. GOB law enforcement personnel participate in regional training seminars both in Central America and in the Caribbean. Over the past year, Belize hosted a number of U.S. law enforcement training teams (FBI, U.S. Coast Guard, U.S. Customs, EPIC) which trained approximately 100 Belizeans in counternarcotics and investigative techniques.

Demand Reduction. GOB demand reduction efforts are coordinated by the National Drug Abuse Control Council (NDACC) which provides drug abuse education, information, counseling, rehabilitation and outreach. NDACC is taking a leadership role in developing Belize's national drug strategy. NDACC received a three-year $6500 grant from the European Union to strengthen demand reduction efforts throughout the country.

Law Enforcement Efforts. At 37 kilograms, seizures of cocaine in 1999 were approximately equal the amount seized in 1998. While Belize is a potential transit zone for cocaine, little evidence is available to confirm the passage of large shipments of cocaine through Belizean waters, except for the occasional single kilo cocaine packages that regularly wash ashore. The GOB does not have resources to pursue major maritime interdiction efforts. However, GOB efforts to eradicate marijuana have been very successful. 1999 figures for marijuana eradication surpassed last year's totals by about 50 percent. Likewise, arrests for drug-related offenses are up from last year. The biggest internal drug problem faced by Belize is primarily from drug-associated criminality. The newly appointed Commissioner of Police is in the process of creating a new drug task force dedicated to handling counternarcotics cases. Counternarcotics operations are consistently conducted throughout the year. Obtaining convictions remains a problem as the Belizean prosecutor's office is understaffed, poorly equipped and trained, and has historically been ineffective.

Corruption. There have been no test cases since the new Commissioner of Police was appointed. However, in 1999 the GOB created an Ombudsman office which can independently investigate allegations of government wrongdoing. The police also have an internal affairs investigator charged with handling complaints against police officers.

Agreements and Treaties. Belize has been a party to the 1988 UN Convention since 1996. In March 1997, Belize ratified a stolen car treaty with the USG. In September 1997, the GOB signed the National Crime Information Center Pilot project assessment agreement which allows for the sharing of information and data between the U.S. and Belize. In 1992, Belize set the standard for maritime counter-drug cooperation by signing a shiprider agreement with the USG. An overflight/order-to-land amendment to the agreement is under negotiation. Negotiation of new extradition treaty and an MLAT have been stalled by the GOB for several years.

Drug Flow/Transit. Maritime routes along Belize's long coastline, remote border crossings, and inland waterways are the suspected means for trafficking narcotics through Belize to Mexico, Guatemala and the U.S. With limited seizures of cocaine during the past two years, transit patterns have been difficult to verify.

IV. U.S. Policy Initiatives and Programs

The U.S. strategy in Belize continues to focus on assisting the GOB to developing a sustainable infrastructure which will allow it to combat its drug problems effectively. In 1999, USG support included equipment and training for several units of the police department, including the canine unit, the dragon unit, the violent crimes and intelligence unit and the JICC. USG assistance has also provided partial funding to renovate the district police headquarters in Belize City and construction of the larger JICC headquarters in Belmopan. The GOB has also requested and received the support of elements of the U.S. Coast Guard and the U.S. military for counternarcotics activities and training.

The Road Ahead. As pressure on other avenues of transport increases, the potential remains for Belize to be a significant transshipment point for cocaine and marijuana. Marijuana cultivation continues to require monitoring and periodic eradication. After a year in power the People's United Party government continues to rank combating drug trafficking and associated crime as a top priority. To further our partnership with the GOB the USG will vigorously pursue completion of overflight, extradition and MLAT agreements. In addition, USG support will focus on building maritime capabilities, supporting police counternarcotics units and improving the administration of justice.

Belize Statistics

(1991-1999)

1999

1998

1997

1996

1995

1994

1993

1992

1991

Cannabis

Net Cultivation (ha)

unk

unk

unk

unk

unk

unk

unk

unk

54

Eradication (plants)

270,136

202,803

294,712

129,771

135,216

10,751

89

51

266

Cultivation (ha)

unk

unk

unk

unk

unk

unk

49

unk

320

Seizures

Cocaine HCl (mt)

0.037

0.040

2.691

0.087

0.840

0.141

0.010

0.850

0.013

Cannabis (mt)

0.4

1.6

0.3

0.2

2.8

4.8

93.0

52.0

0.8

Arrests/Detentions

2,369

1,743

1,701

1,766

1,227

1,227

1,287

1,529

658

Cocaine Seizures in Belize (Chart)

CANADA

I. Summary

Canada, like the United States, is primarily a drug-consuming country and also produces large amounts of marijuana. Much of the Canadian-produced marijuana is shipped to the U.S. International drug traffickers frequently attempt to route drug shipments, primarily heroin, through Canada to the U.S., taking advantage of the long and open Canada-U.S. border, the massive flow of legitimate commerce, and the lower risk of long prison terms or forfeiture of assets if caught in Canada compared with the U.S. Money laundering and chemical diversion are also problems. Legislation is being drafted to strengthen Canada's ability to control money laundering.

With approximately 1,000,000 drug users in Canada, including some 250,000 cocaine addicts and 40,000 heroin addicts, The Government of Canada's (GOC) drug control strategy emphasizes drug abuse prevention and treatment. The law enforcement component emphasizes action against organized crime. Canadian law enforcement officials cooperate closely with their U.S. counterparts on narcotics investigations and interdiction efforts. Canada is a party to the 1988 UN Drug Convention and participates actively in international drug control efforts.

II. Status of Country

Narcotics production, distribution, and use are illegal in Canada. Drugs are smuggled into Canada for domestic use and for transshipment to the U.S. While the level of illicit drug transshipment through Canada to the U.S. is not known, Canadian and U.S. law enforcement agencies are taking the problem very seriously, particularly with respect to Asian-sourced heroin.

Southeast Asian heroin continues to enter North America predominantly by sea containers, but also by air and overland. Major ports of entry include Vancouver, Montreal, and Halifax. Given the long and open U.S.-Canada border, Canada will continue to be targeted by smugglers for potential transit points to and from the U.S. market. U.S. and Canadian law enforcement coordinate closely at all levels to curb trafficking, but recognize that constant vigilance is required. Money laundering and chemical diversion are also problems in Canada.

Canada has a relatively low crime rate compared with most countries in the Western Hemisphere, but organized crime and drug trafficking are becoming more serious problems. Toronto, Canada's largest city, has experienced growing problems with organized criminals from Asia and Russia. Asian ethnic groups, particularly gangs from China, dominate the heroin trade, alien smuggling, and credit card fraud, much of which is aimed at the United States. Vancouver, which also has significant Asian gang activity, now suffers from epidemic drug abuse with nearly one death per day from heroin overdoses. There have also been reports that outlaw motorcycle gang activities are on the rise nationwide, including methamphetamine trafficking.

Arrests in Europe have also indicated that Romanian and other criminal groups have smuggled Turkish-origin heroin to Vancouver as well. Canadian-based cocaine traffickers once relied primarily on U.S.-based suppliers, but are increasingly going directly to Colombia, according to the RCMP. Shipments arrive via mothership, marine containers, and occasionally by clandestine flights. Colombian organizations dominate the cocaine trade in eastern and central Canada. Italian organized crime is also involved in drug trafficking. The RCMP estimates that between 50-100 tons of foreign marijuana, 100 tons of hashish (plus 6 tons of liquid hashish), 15 tons of cocaine and at least one ton of heroin are imported into Canada each year, producing up to CAN$4 billion in wholesale profits and CAN$18 billion in street-level profits.

Canada's drug strategy, the third in a series of five-year plans, was issued in 1998. While the strategy is comprehensive, addressing all of the foregoing problems, it focuses most of its counternarcotics efforts, and resources (approximately 70%), on domestic demand reduction. Building on stronger anti-drug legislation passed in 1997, the Canadian drug strategy calls for a new targeting imperative on organized crime by the Solicitor General's Office.

III. Country Actions Against Drugs in 1999

Policy Initiatives. Canada's large and diverse financial sector, and lack of mandatory reporting requirements for suspicious transactions, has become an attractive venue for international money launderers. Recognizing this increasing threat, and responding to recommendations made to Canada by the Financial Action Task Force (FATF), the GOC promulgated control legislation in 1999. It has also taken steps to increase the capabilities of Canadian law enforcement authorities to detect suspicious transactions and to conduct money laundering investigations. Canada also added ten new integrated proceeds-of-crime law enforcement units, based on pilot projects in three cities.

Accomplishments. In 1999 (as of September), Canadian authorities made 12,541 drug-related arrests (compared with 7,531 in 1998). As of September 1999, GOC authorities had seized 500 kilograms of cocaine (down from 1.22 metric tons during the same period in 1998), 51 kilograms of heroin (down from 121 kilograms for this period in 1998), 4.289 metric tons of marijuana (down from 5.955 metric tons for this period in 1998), and 3.35 metric tons of hashish (down from 819 kilograms as of September 1998).

Canadian law enforcement operations, often in cooperation with U.S. agencies, resulted in the interdiction of numerous large-scale narcotics shipments and disruption of trafficking organizations. After a two-year investigation, Royal Canadian Mounted Police (RCMP) arrested Alfonso Caruana, reputed leader of the Caruana/Contreara organized crime family. This organization was responsible for the acquisition of cocaine in Mexico, which was ultimately shipped to the U.S., Canada and Italy. As part of this investigation, 200 kilograms of cocaine were seized in Houston, Texas.

The RCMP cooperated with the Hong Kong Narcotics Bureau in January to arrest members of a heroin ring operating between China and Canada. There were simultaneous arrests in Hong Kong, Vancouver and Toronto, along with seizures of large amounts of heroin and drug proceeds. Canadian customs inspectors arrested two Hong Kong traffickers who arrived in Toronto from Vancouver in possession of 43 kilograms of heroin; they were en route to London.

In June, after a three-year investigation, the RCMP launched a full-scale operation against a major international heroin ring that had been smuggling large amounts of Burmese-origin heroin into Vancouver for distribution in Canada and the U.S. Over 30 suspects were arrested and 56 kilograms (120 pounds) of heroin seized. According to the RCMP, the group moved enough heroin that it could occasionally stockpile supplies in Canada and drive up prices in North American markets. Parallel raids and arrests were conducted by the FBI in New York and Puerto Rico, and by Thai and Hong Kong authorities. This exceptional investigative work and international coordination dismantled the organization.

Law Enforcement Efforts. During 1999, Canadian authorities continued to implement the five-year anti-drug strategy issued in 1998. The strategy recognizes the growing threat from transnational organized crime, particularly narcotics traffickers, and directs a concerted effort against it. In addition to creating proceeds of crime units, the offensive focuses law enforcement resources on criminal organizations and money laundering operations. These efforts will be enhanced once expected suspicious transaction reporting requirements legislation is passed next year and a new financial investigation unit is created. After five years of consecutive budget cuts to law enforcement, the improving national budget situation permitted an increase in funding in 1999.

While the RCMP has mounted effective operations against narcotics and other criminal organizations, the impact of these efforts have been undermined in numerous cases by court decisions. Canadian courts have been reluctant to impose tough prison sentences, often opting for fines, reflecting a widespread view that drugs are a "victimless" crime or simply a health issue, not a criminal or public safety concern. For example, one court dismissed charges against an individual arrested for snorting crack in a public restroom, calling it an invasion of his privacy. The Supreme Court has questioned the legality of police involvement in "sting"-type operations, undercover "buys" and other techniques now commonly used around the world in drug investigations, largely on privacy grounds, as a potential violation of the 1982 Canadian Charter of Rights and Freedoms. Canadian press reports indicate that only about 20% of those convicted of growing marijuana in Vancouver receive jail terms, and that British Colombia has the highest rate of acquittal rates in the nation. In January, a judge ruled that a convicted criminal, who had already been deported by the GOC, must be returned to Canada at GOC expense to pursue his request for refugee status, despite having aided two Colombian drug traffickers to escape from jail.

Corruption. Canada holds its officials and law enforcement personnel to very high standards of conduct and has strong anti-corruption controls in place. Government personnel found to be engaged in malfeasance of any kind are removed and subject to prosecution.

Agreements and Treaties. Canada is a party to the 1988 UN Drug Convention. The U.S. and Canada have long-standing agreements on law enforcement cooperation, including extradition and mutual legal assistance treaties and an asset sharing agreement. In 1998, the RCMP became the first foreign law enforcement organization to be afforded access to the El Paso Intelligence Center (EPIC), the USG's tactical drug intelligence center.

The USG has concluded a Customs Mutual Assistance Agreement (CMAA) with the Government of Canada. Canada is also a party to the World Customs Organization's International Convention on Mutual Administrative Assistance for the Prevention, Investigation, and Repression of Customs Offenses (Nairobi Convention), Annex X on Assistance in Narcotics Cases.

Canada actively participates in international anti-drug fora including: the United Nations International Drug Control Program (UNDCP), the Inter-American Drug Abuse Control Commission of the Organization of American States (CICAD), the Dublin Group, the Financial Action Task Force, and other groups. Canada is an active participant in the UN negotiations on a global crime convention.

During 1998-9, Deputy Solicitor General Jean Fournier chaired the inter-governmental working group that negotiated the Multilateral Evaluation Mechanism (MEM), a hemispheric peer review system to evaluate each OAS Member State's anti-drug strategies and efforts. The MEM, which was mandated by the 1998 Summit of the Americas, was completed in Ottawa, Canada in August after 18 months of negotiations. It was approved by the OAS in October. The first MEM evaluations will be completed during 2000.

Minister of Foreign Affairs Axworthy organized a Foreign Ministers' Dialogue Group at the June OAS General Assembly to explore the drug issue from the perspective of "Human Security," including the impact of law enforcement or drug control activities on individuals and communities. Canada provided CAN$650,000 to UNDCP for 1998. It also contributed CAN$246,900 cash and CAN$132,000 in kind directly to CICAD.

Cultivation and Production. Cannabis is grown throughout the country and is particularly abundant in the Provinces of Quebec and British Columbia. While the GOC does not produce a formal production estimate, Canadian law enforcement authorities estimate it at around 800 metric tons per year, with up to 60 percent of that smuggled into the United States. According to Canadian intelligence, marijuana cultivation in British Columbia is a sophisticated, one billion dollar-a-year growth industry. RCMP investigations suggest that high-THC content, hydroponically-grown marijuana is exchanged pound-for-pound with cocaine from the U.S. U.S.-produced marijuana is also imported into Canada, although the level of this activity is not known.

Domestic Programs. The GOC emphasizes demand reduction in its drug control strategy and, along with non-governmental organizations, offers extensive drug abuse prevention programs. The focus on prevention is considered a more cost-effective intervention. There are substantial regional differences in the patterns of drug abuse. For example, Vancouver suffered a wave of heroin overdose deaths while native American communities in the prairie provinces were plagued with propane and glue-sniffing and an injected combination of two legal drugs (over-the-counter Talwin and prescription Ritalin) known as "poor-man's heroin."

IV. U.S. Policy Initiatives and Programs

U.S. law enforcement agencies maintain broad, deep, and highly productive cooperation with their Canadian counterparts. In this context, the USG continues to press the following goals:

Work to strengthen legislation and regulatory practice in an effort to bring them more in line with international standards and practices;

Maintain and expand two-way intelligence sharing;

Maintain and expand professional exchanges and cooperative training activities between our law enforcement agencies; and,

Maintain joint cross-border investigations and operations.

Bilateral Cooperation. In addition to the extensive cooperation described elsewhere in this report, the U.S. and Canada established the Cross-Border Crime Forum in 1997 to regularize and institutionalize, at a high level, coordination on policy matters, projects and operations and to resolve any problems or impediments that arise in the relationship. The Forum met in June in Canada. It is actively working on establishing a mechanism to enhance intelligence sharing and develop priorities for joint targeting of criminal groups involved in drug trafficking.

Other U.S.-Canada cooperative mechanisms include often-used extradition and mutual legal assistance (MLAT) treaties, and an information sharing agreement between the U.S. Drug Enforcement Administration (DEA) and the RCMP.

The Road Ahead. The United States looks forward to continuing its already excellent law enforcement cooperation with Canada at both the bilateral and international level. The GOC has taken important steps to enhance the capabilities of Canadian law enforcement to confront the growing threat of international organized crime, drug trafficking and money laundering in Canada: the organized crime focus of its new anti-drug strategy, strengthened laws and regulations, improved organization of police and security entities, and increased funding for law enforcement. However, greater support from other sectors, notably the judicial and financial sectors, would increase the impact of the GOC's law enforcement efforts significantly and create a stronger deterrent to crime.

COSTA RICA

I. Summary

Costa Rica is a transshipment country for the smuggling of cocaine from South America to the United States. The first six-part, comprehensive bilateral Maritime Counterdrug Cooperation Agreement in the region entered into force in November 1999. The legal reforms enacted in May 1998 continue to augment law enforcement's ability to address narcotics trafficking activity as well as strengthen controls within the banking sector against narcotics-related money laundering. Costa Rica is a party to the 1988 United Nations Drug Convention.

II. Status of Country

Costa Rica's location on the Central American isthmus makes it a transshipment country and a temporary storage area for cocaine being smuggled to the United States and Europe, although we do not have evidence of sufficient quantities to have a significant effect on the United States. This year has seen a marked decrease in cocaine seizures as compared to the previous two years (approximately 1.9 tons thus far in 1999 versus roughly seven tons in 1997 and eight tons in 1998). Faced with enhanced land interdiction capabilities by Costa Rican officials, drug trafficking organizations adapted, in part, by bypassing traditional overland routes. Some traffickers may be transporting drug shipments to points north via go-fast boats and aircraft. Costa Ricans are increasingly concerned over local consumption of illicit narcotics, particularly crack cocaine, and violent crimes associated with drug use and trafficking. The Government of Costa Rica's (GOCR) adoption of anti-drug measures, such as wiretap laws and the maritime accord, are an attempt to meet the serious threats posed by narcotics trafficking. However, resource limitations continue to constrain enforcement.

III. Country Actions Against Drugs in 1999

Policy Initiatives. The U.S.-Costa Rica six-part bilateral Maritime Counterdrug Cooperation Agreement, signed on December 1, 1998, entered into force on November 19, 1999. The Administration of President Rodriguez also continued efforts to implement reforms that established within the banking sector, deposit reporting requirements and laws against laundering the proceeds of narcotics activities. The professionalization of executive branch police forces continued under the National Police Code enacted in 1994. All new enlisted recruits must undergo training at the Public Security Ministry's National Police School. Additionally, the GOCR enacted legislation in November to transform the Maritime Surveillance Service into a professional Coast Guard organization. The Criminal Procedure Code, enacted in January 1998, which strengthens prosecutorial responsibilities in investigations, saw its second year of implementation. The Judicial Investigative Police and the Public Prosecutor's Office are attempting to work more closely, as mandated in the new Code.

Accomplishments. Relations between USG law enforcement agencies and GOCR counternarcotics officials remain close and productive resulting in routine sharing of information and joint operations. The Judicial Investigative Police initiated an investigation of a group of Cuban-American traffickers using information provided from U.S. law enforcement agencies. The operation netted over one million U.S. dollars in currency in Costa Rica and led to additional seizures of cash and properties in the United States, bringing the total seizure value to more than two million dollars. The suspects in this case were arrested by GOCR authorities and are currently in custody awaiting trial.

Costa Rica hosted three successful joint operations under the auspices of USG regional engagement, known as "Central Skies." Personnel from the Public Security Ministry destroyed over 1.6 million marijuana plants in the mountainous regions of southern Costa Rica during the Central Skies deployment in June 1999. The Drug Department of the Public Health Ministry operates an effective program to license the import and distribution of precursor chemicals and prescription medicines.

Law Enforcement Efforts. The Judicial Investigative Police operate a small, but highly professional Narcotics Section that specializes in investigating international narcotics trafficking. The Narcotics Section uses the full range of investigative techniques permitted under the country's progressive anti-drug statutes, including use of wiretaps, controlled deliveries, and undercover agents. Costa Rica's wiretap law has disrupted criminal organizations, making those organizations increasingly more guarded in their communications and more likely to use pay telephones and/or pre-paid cards and to switch cellular phones on a more frequent basis. The Drug Control Police of the Public Security Ministry investigate both domestic and international drug smuggling and distribution.

Costa Rica does not have an expeditious asset forfeiture procedure. Current law does not put the burden of proof on the defendant to prove the legitimate purchase of assets. The development of a comprehensive asset forfeiture legal procedure would facilitate law enforcement efforts and provide the GOCR with a much needed resource base.

Corruption. President Rodriquez has worked to deter corruption among public officials. USG law enforcement agencies consider most units within the public security forces to be full partners in counternarcotics investigations and operations with little or no fear of compromise to on-going cases.

Agreements and Treaties. The six-part bilateral Maritime Agreement is the most comprehensive agreement of its kind in the region. The agreement is designed to promote closer cooperation in the interdiction of maritime drug smuggling. The U.S. and Costa Rica signed at the same time a bilateral Memorandum of Understanding on maritime cooperation and assistance, under which the U.S. agreed to take steps toward securing equipment and technical and training assistance for the Costa Rican Coast Guard. The GOCR ratified a bilateral Stolen Vehicles Treaty with the United States in June 1999. The U.S. and Costa Rica extradition treaty has been in force since October 11, 1991. Although Costa Rican law does not permit the extradition of nationals, the treaty is actively used for the extradition of U.S.citizens. Costa Rica is a party to the 1988 UN Drug Convention and all other UN narcotics agreements. Costa Rica and the U.S. are also parties to bilateral drug information and intelligence sharing agreements dating from 1975 and 1976. Costa Rica is a member of the Caribbean Financial Action Task Force.

Cultivation and Production. Marijuana cultivation is relatively small-scale and sometimes intermixed with legitimate crops. There is no evidence of marijuana exportation from Costa Rica. Costa Rica does not produce other illicit drug crops.

Drug Flow and Transit. Overland shipments transiting Costa Rica are more likely to be transported in smaller vehicles as opposed to the more traditional tractor-trailers. Historically, overland shipments would proceed to San Jose for temporary storage prior to consolidation or re-packing for transit northward. Current information indicates that such shipments are being moved directly from the southern to the northern border as quickly as possible, from where they pass into Nicaragua. The Judicial Investigative Police have reported a dramatic shortage of cocaine in Costa Rica at the street level, as evidenced by a recent rise in prices. The price of crack cocaine has almost doubled and cocaine HCl has increased by 50 percent compared to 1998.

Domestic Programs (Demand Reduction). Costa Ricans are increasingly concerned over local consumption, especially of crack cocaine. Abuse appears highest in the Central Valley (including the major cities of San Jose, Alajuela, Cartago, and Heredia), the port cities of Limon and Puntarenas, the north near Barro del Colorado, and along the southern border. The National Drug Prevention Council (CENADRO) supervises demand reduction efforts throughout the country, primarily through well-developed educational programs for use in schools and community centers. CENADRO also serves as the custodian for assets seized from narcotics traffickers. The Costa Rican Drug Abuse Resistance Education (DARE) Foundation, modeled after its U.S. counterpart, conducts drug awareness programs at public and private schools, and is considered one of the top international DARE programs. President Rodriquez has called for greater international cooperation in the fight against illicit narcotics, including during the June 1998 United Nations General Assembly Special Session on Drugs. However, resource constraints continue to limit enforcement actions, as drug trafficking outstrips the GOCR's improved efforts.

IV. U.S. Policy Initiatives and Programs

U.S. Policy Initiatives. U.S. counternarcotics efforts in Costa Rica center on the goal of reducing significantly the transit of drugs through Costa Rica aimed for U.S. markets. Objectives include reducing the flow of illicit narcotics through Costa Rica, enhancing the effectiveness of the criminal justice system, reducing the use of Costa Rica as a money laundering center; and supporting efforts to locate and destroy marijuana fields. Specific objectives include implementation of the bilateral Maritime Agreement; enhancing interdiction of drug shipments in tractor-trailers through supporting facilities upgrades and training personnel at the northern border crossing of Penas Blancas; enhancing the ability of the Air Section of the Public Security Ministry to respond to illicit drug activities by providing equipment and technical training; improving law enforcement capacity through providing specialized training and equipment to the Judicial Investigation Police Narcotics Section, the Drug Control Police, Joint Counternarcotics Intelligence Center (CICAD), and the Customs Control Police; and increasing public awareness of dangers posed by drug use through assistance to Costa Rican demand reduction programs and initiatives.

A U.S.Customs (USCS) training team traveled to Costa Rica during January 1999 to provide on-the-job land border interdiction training for the Costa Rican drug control police and Customs officers. In addition, two USCS experts conducted an assessment of the Penas Blancas port of entry along the Costa Rica/Nicaragua border. The experts provided the U.S.Embassy with a model and recommendations for infrastructure improvements to the port facilities and enhanced border control.

Costa Rica is one of seven countries participating in the U.S.Customs Americas Counter Smuggling Initiative (ACSI). This initiative seeks to assist GOCR law enforcement agencies to improve their counternarcotics effectiveness and develop industry partnerships with the private sector. U.S.Customs ACSI teams were deployed to Costa Rica on several occasions during 1999 for periods of 2-4 weeks.

Bilateral Cooperation. The USG sponsored numerous technical assistance and training projects in which Costa Rican officials participated during 1999, including GOCR participation in regional toxicology and demand reduction seminars; a regional auto theft seminar; and a training seminar on precursor chemicals. An 82-foot U.S.Coast Guard cutter was transferred to Costa Rica in December. The USCG completed a needs assessment and site survey of the Costa Rican Coast Guard and provided formal recommendations to the GOCR on actions required to bring its fleet to a sustainable, fully operational status. The site survey was followed by deployment of USCG Mobile Training Teams to train Costa Rican Coast Guard personnel in maintenance, logistics, repairs and other essentials as part of the cutter transfer package. A USCG liaison position was established to provide training and support. In addition to the Central Skies joint operations previously mentioned, DOD funded a two-week deployment of the 9th Special Operations squadron for joint exercises with the Air Service and a seven week counternarcotics training support deployment with members of Costa Rica's Interagency Counterdrug Task Force.

The Road Ahead. USG-GOCR cooperation will intensify as we move to implement the Maritime Counterdrug Agreement and increase Costa Rica's ability to engage in the contemplated joint operations. The United States seeks to improve GOCR capabilities to curtail the use of Costa Rica as a narcotics transshipment and temporary storage area, discourage drug consumption, and fight money laundering. The GOCR needs to develop an effective asset forfeiture procedure to facilitate Law Enforcement Efforts. The USG will cooperate with the GOCR in its efforts to professionalize its public security forces and implement the strict controls enacted against money laundering in 1998.

EL SALVADOR

I. Summary

El Salvador is a transit country for narcotics, mainly cocaine, moving to the U.S. However, there is no evidence that the drugs coming into the U.S. from El Salvador are of sufficient quantity to have a significant effect on the U.S. Local consumption is on the rise, and law enforcement agencies have noted a significant increase in the production and sale of low-cost crack cocaine. Since its inauguration in June, the administration of President Francisco Flores has taken significant steps toward coordinating counternarcotics policy, with the creation of ministerial-level working groups directed against drug trafficking and drug consumption and the designation of a central counternarcotics coordinator. The professionalism of the Anti-Narcotics Division (DAN) of the National Civilian Police (PNC) continues. The new PNC director has named a new DAN chief, and has committed himself to increasing the DAN's budget and staffing. El Salvador produces limited amounts of cannabis for domestic consumption. In response to the devastation of Hurricane Mitch and the resultant challenges to the institutional capabilities of the Salvadoran law enforcement system, the United States has designed a far-reaching assistance program directed, both nationally and regionally, at the fight against corruption, the control of the transit of illegal contraband, and the erection of barriers to alien smuggling. El Salvador's 1998 money laundering law went into effect in June 1999, and the Financial Investigation Unit (FIU) was created on schedule in November. The U.S. will continue to assist in the development of the FIU. El Salvador is a party to the 1988 UN Drug Convention.

II. Status of Country

Cocaine seizures in El Salvador are far short of those in neighboring countries. The quantity of illegal narcotics seized in El Salvador likely does not reflect the true level of trafficking. The fact that El Salvador does not have a Caribbean coast, and evidence that some drug trafficking routes in the Eastern Pacific by-pass El Salvador indicated that there may be a lower level of overall trafficking through the country. On the other hand, multi-ton cocaine seizures from container freight crossing the Salvadoran border into Guatemala indicate that drugs are transiting Salvadoran territory along the Pan American highway. It is also likely that illegal narcotics transit the seaport of Acajutla in route to ports in Guatemala and Mexico, where they are staged for further transport to the United States. The installation of a new air traffic control radar at the Comalapa International Airport provides a powerful new tool for monitoring unregistered air traffic through Salvadoran air space. This, combined with increased attention to the region's air interdiction needs should have an effect on illegal air shipments through the Salvadoran air space. The implementation, with U.S. assistance, of El Salvador's 1998 money laundering law should deal a sharp blow to the nascent problem of money laundering. An interagency group has been formed to address the problem of precursor chemicals and Salvadoran law enforcement agents have received U.S. training on the control of these materials.

III. Country Actions Against Drugs in 1999

Policy Initiatives. The new administration has created two ministerial-level commissions to coordinate El Salvador's counternarcotics activities. The Anti-Narcotics Trafficking Commission will focus on the problem of drug trafficking, and the Anti-Drug Commission will focus on demand reduction within the country. The creation of the new position of executive director of the Narcotics Trafficking Commission will provide a single point of contact on issues relating to the transit of illicit drugs through the country. The new director of the National Civilian Police (PNC) has committed El Salvador to significantly increase drug seizures over the coming year. In order to meet this objective, he has stated his intention to increase both the budget and the staffing of the DAN. The Administration has approved the use of data from the air traffic control radar at Comalapa International Airport for law enforcement purposes.

Accomplishments. The implementation of the 1998 law against money laundering is underway, and a Financial Investigation Unit has been established. The U.S. will continue to assist the Government of El Salvador (GOES) in the development and training of the FIU. The creation of new counternarcotics policy bodies (the President's anti-narcotics trafficking and anti-drug commissions) promises a new focus in the fight against illegal drugs.

Law Enforcement Efforts. Seizures of 23.8 kilograms of cocaine during the first ten months of 1999 represent a continuing drop in the amount of cocaine seized, compared to the 1998 figure of 42 kilograms. Cannabis seizures in 1999 amounted to 280.8 kilograms, a slight increase from the 1998 figures when 262.4 kilograms of Cannabis were seized. This situation is likely the continuing result of the GOES's interpretation of the new criminal codes to prohibit undercover police operations. The police have only limited resources to engage in maritime interdiction operations, and have only a few aircraft which can engage in the eradication of local cannabis fields. The GOES is investigating the use of military air and naval assets to support law enforcement efforts to interdict illicit air and maritime drug traffic.

Corruption. Cases of corruption have arisen in the criminal justice system. However, there is no evidence that official corruption is deep or widespread. Under the U.S. assistance program provided in the aftermath of Hurricane Mitch, funds will go toward the development of the internal affairs unit of the PNC Inspector General's Office; an Office of Crimes Against the State in the Attorney General's Office; and an independent Office of Government Ethics.

Agreements and Treaties. The implementation of the 1998 money laundering law follows up on El Salvador's ratification of the Central American Convention against Money Laundering. Law enforcement officials from the GOES and the U.S. have discussed the need to develop a financial information exchange agreement and other bilateral instruments used in the fight against narcotics trafficking and organized crime. The GOES and the various political parties have taken steps toward developing a new constitutional amendment permitting the extradition of Salvadoran nationals. If passed with broad support, this amendment could be ratified as early as the summer of 2000. Once this step is taken, the GOES has expressed a willingness to negotiate a modern extradition treaty to replace a bilateral agreement dating from 1911. A bilateral treaty on stolen vehicles is nearing approval. The GOES is a party to the 1988 UN Drug Convention.

Drug Flow/Transit. While, local consumption continues to grow in El Salvador, and crack is increasingly in evidence on the streets of San Salvador, U.S. law enforcement authorities believe most of the illegal narcotics which enter El Salvador are destined for the U.S. However, there is no evidence that the amount entering the U.S. from El Salvador is sufficient to have a significant effect on the U.S. The bulk of the narcotics traffic appears to move by land, along the Pan American highway. Small boats may be in use for regional trafficking and large shipments likely transit the seaport of Acajutla on the way to ports in Guatemala and Mexico. Preliminary data indicates that small planes are conducting unregistered flights through Salvadoran airspace to the Salvadoran Pacific coast and onward to the Guatemalan/Mexican border area. Some of this clandestine air traffic may be related to narcotics trafficking.

Domestic Programs/Demand Reduction: The President's Anti-Drug Commission is dedicated to demand reduction in El Salvador. The executive director of El Salvador's premier substance abuse institution, "FUNDASALVA", is a member both of the anti-drug commission and the National Public Security Council, a high-level body charged with overseeing the public security function as a whole.

The Drug Abuse Resistance Education (DARE) program is now in its fourth year and has been given new emphasis by the new director of the PNC.

IV. U.S. Policy Initiatives and Programs

U.S. Policy Initiatives. The goals of U.S. counternarcotics assistance efforts are an effective and self-sufficient DAN and a criminal justice apparatus capable of deterring the flow of illegal narcotics through the country.

Bilateral Cooperation. FY 1999 State Department funding provided under the terms of the bilateral Letter of Agreement (LOA) included $123,000 for general counternarcotics assistance. These funds provided equipment for counternarcotics operations, training in El Salvador and elsewhere, maintenance and replacement of DAN equipment, and support for the Joint Information Coordinating Center (JICC). Another component of FY 1999 funding provided $234,000 for support of El Salvador's money laundering law by providing expert assistance in the design and establishment of the Financial Investigations Unit, training for those implementing the law and purchase of equipment. Funds provided to El Salvador under the Hurricane Mitch supplemental include $950,000 for support of anti-corruption institutions. These are the PNC Inspector General's Internal Affairs Unit, the Attorney General's Office of Crimes Against the State (directed against official corruption), and the independent Office of Government Ethics. Portions of regional projects funded under the Hurricane Mitch supplemental will go toward El Salvador's participation in a regional commercial freight tracking system and toward efforts against alien smuggling.

Road Ahead. El Salvador's new administration has committed itself to making important strides in the war against drugs. The U.S. assistance program is dedicated to the development of a self-sufficient and effective PNC. The new institutional mechanisms which are being put into place will help to focus El Salvador's counternarcotics efforts, aiding considerably our efforts to interdict illegal drugs enroute to the U.S. Assistance in the establishment of El Salvador's Financial Investigations Unit, programmed for the coming year, is designed to have a major impact on criminals attempting to launder the proceeds of their illegal activities in El Salvador. Hurricane Mitch supplemental funding will help significantly in restoring El Salvador's institutional capacity to combat corruption and transnational crime. The anti-corruption elements of this assistance have been welcomed in El Salvador as an important contribution to the continued development and strengthening of democratic institutions. In keeping with the U.S. goals to combat transnational crime, the USG has worked to develop a consensus across El Salvador's political spectrum in favor of the principle of extradition of Salvadoran criminals. As a result, there is a growing support for a new constitutional amendment on Extradition. On this basis, the USG and GOES would be in a position to negotiate a new, modern extradition treaty to replace the existing 1911 instrument.

GUATEMALA

I. Summary

Guatemala is a major drug transit country for South American cocaine en route to Mexico, the United States and Europe. Cocaine is transshipped through Guatemala by air, road, and in seagoing containers. U.S. Government (USG) law enforcement agencies worked with the Government of Guatemala (GOG) to increase law enforcement capabilities to counter the growing volume of drugs transiting the country, and in 1999, cooperated in the seizure of more than 10 metric tons of cocaine. While minimal amounts of opium poppy continue to be grown in Guatemala, air and ground eradication programs reduced gross poppy cultivation to less than 5 hectares in 1999. Professionalization of the National Civilian Police Department Anti-Narcotics Operations section (DOAN), the main Guatemalan counternarcotics force, is prime objective of the Government of Guatemala. The GOG is working, with USG assistance, to develop effective, integrated law enforcement and counternarcotics training programs to improve the quality of this small elite force and to enhance interdiction and eradication operations. The GOG supports an active demand reduction program for Guatemala. The GOG has been a leader in the region supporting regional cooperation, hosting the first regional demand reduction conference in October and a Ministerial-level, counternarcotics meeting in March 1999. The GOG also leads the region with its anti-alien smuggling legislation, precursor chemicals program and bilateral stolen vehicle treaty.

Guatemala is a party to the 1988 UN Drug Convention, but has not yet passed the necessary legislation to implement all of its provisions. The GOG has yet to seriously consider enacting money-laundering legislation and has not responded to USG overtures for a full six-part maritime counternarcotics agreement.

II. Status of Country

Guatemala is the preferred Central American location for storage and consolidation for onward shipment of cocaine to the United States and Europe. Current USG interagency flow estimates indicate that 300 to 400 metric tons of cocaine are shipped through the Central American corridor to Mexico and the United States annually. Guatemalan law enforcement agencies interdicted over 10 metric tons of cocaine in 1999.

The GOG increased the Department of Anti-Narcotics Operations (DOAN) of the National Civilian Police (PNC) staffing to 600 personnel and has various specialized counternarcotics units that cooperate with USG law enforcement agencies.

The Public Ministry's special narcotics prosecutor's office has increased its number of cases tried and convicted. Unfortunately, a mixture of corruption and ineptness has limited its effectiveness. An intimidated and corrupt judiciary adds significantly to the GOG's lack of success in prosecuting and convicting major drug traffickers. The Attorney General has begun reorganizing the narcotics prosecutors unit, eliminating ineffective or suspected corrupt prosecutors.

The GOG enthusiastically participates in USG Central Skies and Regional Aerial Reconnaissance and Eradication (RARE) deployments, which have resulted in several major seizures.

Guatemala produces minimal quantities of opium poppy, and some marijuana, for local consumption. A recently completed aerial reconnaissance confirmed that the opium crop declined in former growing areas. Diversion of precursor chemicals is also a problem in Guatemala. Though the GOG recently passed legislation regulating 46 chemicals, it still has not passed implementing regulations nor fully staffed the newly formed chemical control unit.

The GOG has an aggressive demand reduction program aimed at a growing substance abuse problem. As part of its master plan, Guatemala 's National Drug Coordinator, SECCATID, held several seminars, and conducted several surveys of estimated drug abuse. Drug traffickers often pay for transportation and protection services with cocaine, some of which is sold on the local market. This, coupled with the growing crack cocaine problem, portends a potentially devastating Guatemalan consumption problem. This year, the GOG co-hosted the first ever Central American demand reduction conference to discuss regional strategies and strengthen coordination of national and regional demand reduction programs.

III. Country Actions Against Drugs in 1999

Policy Initiatives. In July 1999, Guatemala signed Letters of Agreement on counternarcotics cooperation with the USG, in which the GOG committed to increase funding and staffing for public security functions, and to continue with critical institutional reforms including narcotics control. While the GOG met its commitment to increase DOAN staffing to 600, the original timetable was delayed by almost a year to accommodate staffing requirements in rural areas as mandated by the peace accords. The MOG has committed to continue to increase DOAN staffing, and will participate in special USG training programs to integrate new recruits.

The United States and Guatemala initiated discussions on a maritime counter-drug agreement in 1997, but the draft agreement met with resistance from various sectors based on traditional sovereignty grounds.

The GOG worked, with USG assistance, to equip and staff a new DOAN headquarters facility, including a new planning, command and control center. With the planned addition of a direct communications link to USG counternarcotics information tracking services in early 2000 and a scheduled operations and planning course, the DOAN staff should be able to plan and execute more effective counternarcotics operations. The GOG also inaugurated new offices in the Public Ministry dedicated to pursuing stolen vehicles and organized crime cases. These units are now fully functional and receive logistical and training assistance from the USG.

A full-time U.S. Advisor works closely with the Guatemalan authorities, including officers of the DOAN, to improve enforcement training and technical assistance in support of the Port Security Programs. A U.S. Customs training team traveled to Guatemala during January 1999 to conduct a post-funded "Seized Property " course for DOAN officials.

Accomplishments. In 1999, PNC and DOAN agents seized over 10.0 metric tons of cocaine. The 1999 seizures included the interception of major shipments delivered via land, sea, and air, including the largest seizure ever made by Guatemalan authorities (2.556 metric tons). Agents also seized over 51 kilos of heroin and three kilos of crack cocaine. The DOAN discovered and dismantled two repackaging factories and seven crack laboratories in 1999. The GOG also took major steps in passing a new asset seizure law and implementing recently passed legislation dealing with precursor chemicals. The Port Security Program was expanded to Puerto Quetzal and La Aurora International airport in Guatemala City and has succeeded in uncovering at least one major smuggling ring and interdicting over 4.9 metric tons of cocaine in the past 18 months. The GOG has committed resources to prepare the DOAN to receive direct, real-time information on narcotics traffickers movements from USG sources. In CY 2000, GOG increases in DOAN staffing will establish new units in the critical land border ports of entry.

Illicit Cultivation. Though Guatemala was a significant producer of opium poppy in the late 80's and early 90's, aerial eradication operations effectively reduced the crop to a few isolated patches of less than 5 hectares in 1999. Marijuana cultivation for local consumption, however, is still a problem in northern jungle areas of the country. Although the GOG has aggressively pursued its eradication program, widespread deforestation in the Peten department of northern Guatemala has left cleared areas of the former jungle available for illicit cultivation. In 1999 over 46 hectares were located and destroyed. USG RARE deployments have been instrumental in reducing total production in traditional and new growing areas.

Production. Narcotics are not normally produced in Guatemala, apart from marijuana, grown for local consumption. The GOG does not encourage or facilitate illicit production or distribution of narcotics or psychotropic substances. The GOG has been fully cooperative in seeking out and eliminating illicit narcotics production whenever and wherever possible. However, its strategic location, has made Guatemala a major redistributing and temporary storage center for South American drugs bound for Mexico and the U.S.

Distribution. The GOG fully cooperates with all USG law enforcement agencies in interdiction operations. On March 16, 1999, during the "Mayan Jaguar" joint U.S./Guatemalan law enforcement operation, the DOAN used USG-provided information to seize 2.556 metric tons of cocaine hidden in a false bottom floor of one 45' and two 40' containers en route from El Salvador along the Pan American highway. This was the largest single land seizure of cocaine ever in Central America. Guatemalan law enforcement agencies also seized several large loads of cocaine with the assistance of USG-provided aircraft track information. In a single operation, the DOAN intercepted boats carrying more than 42 kilograms of heroin. This year GOG law enforcement operations interdicted over 10 metric tons of cocaine and 51.7 kilograms of heroin.

Sale, Transport and Financing. The Pan-American Highway is the major conduit of illegal drugs traveling north to Mexico and the U.S. In an effort to disrupt and interdict shipments, there has been increased emphasis on port, border crossing and mobile checkpoint operations. On March 17, 1999, one day after finishing a USG sponsored training program, a DOAN K9 team at Puente Melendrez, on the Mexico/Guatemala border, found .214 metric tons of cocaine hidden behind a false wall of a 45' cargo container. An additional 3.527 metric tons of cocaine were seized during inspections of vehicles and containers during routine border checkpoint operations along highway crossing points and in the ports. Drugs are also being transported to Europe through Guatemalan commercial sea-freight connections. Earlier this year Italian police seized 1.202 metric tons of cocaine in a shipment of frozen fruit from Guatemala, one of the largest European seizures of cocaine tied to Guatemala.

Asset Seizures. The GOG passed reforms to drug enforcement legislation in November 1998 to allow the use of seized assets by the PNC. The DOAN is now using seized vehicles to support their own operational requirements. In May 1999, the Guatemalan congress rejected GOG efforts to reform the constitution to permit the police to use monies seized in narcotics cases. The use of seized assets is conditioned on factors of the case and ruling by a judge pending trial.

Extradition. The GOG extradited a Guatemalan fugitive to the U.S. in February 1999, the first extradition of a Guatemalan national since 1995. Over the years, the U.S. has requested the extradition of a number of other fugitives, but in most cases, arrest warrants have not been executed and the fugitives remain at large. Despite the lack of success with formal extraditions, the GOG will [does?] expel/deport U. S. fugitives on the basis of violations of Guatemalan immigration laws. One such deportation involved a U.S. citizen who was returned to the U.S. in September 1999 to sand trial on federal drug trafficking charges after the decision to extradite him was overturned by a Guatemalan court on a technicality.

Mutual Legal Assistance. The USG does not have a mutual legal assistance treaty with Guatemala.

Law Enforcement and Transit Cooperation. GOG representatives work enthusiastically with USG personnel and organizations to curtail the flow of drugs through Guatemala. Several USG law enforcement agencies have active collaborative relationships with Guatemalan law enforcement authorities. Guatemala has been in the forefront exchanging information and maintaining links with Joint Intelligence Coordination Centers (JICC) throughout Central America and with the El Paso Intelligence Center (EPIC).

Especially noteworthy is the Port Security Program (PSP), a self-financed program that fosters cooperation between the GOG, the USG and the private shipping companies that operate in Guatemala. The program is funded by a $0.09 fee per exported/imported ton levied on shipping companies and used to finance the program's day-to-day operations. In 1999, the PSP manager position became fully funded by the inspection fees paid by importer/exporters. The USG provides technical, logistical and training assistance. Guatemalan national and private ports provide buildings for container inspection and heavy machinery to move containers. In 1999, the PSP was expanded to cover La Aurora International Airport as well as Puerto Quetzal, a major port on the Pacific coast of Guatemala. The PSP now covers all major sea and airports in Guatemala. In the past 18 months PSP DOAN and Customs agents have seized over 4.9 metric tons of cocaine, a half million dollars in U.S. currency and 4 vehicles that were stolen in the U.S.

Demand Reduction. The GOG is firmly opposed to illicit drugs and continues to increase support for drug education and rehabilitation programs. In 1999, SECCATID implemented a variety of projects as part of their comprehensive demand reduction strategy. Through the National Program of Preventive Education (PRONEPI), SECCATID trained 337 instructors, using six training locations. One of the most significant projects was the drug education training-seminar provided to parents. During this project, SECCATID was able to train 276 parents in four separate seminars throughout the country. SECCATID also held prevention programs in the border areas where drug traffickers are most active and abuse is growing at alarming rates. This year, SECCATID developed and distributed drug educational materials, including pamphlets, and bookmarks with anti-drug messages for distribution in schools and fairs. SECCATID also began an aggressive public relations campaign, including radio announcements advertising a national hot line and a countrywide drug awareness campaign.

The GOG has also played a leading role in regional demand reduction efforts. In October, the GOG co-sponsored the first-ever Central American demand reduction conference. The three-day conference brought together leading anti-narcotics officials from El Salvador, Honduras, Nicaragua, Belize, Panama, Costa Rica, Guatemala and the United States to discuss regional strategies, exchange experiences and develop an awareness of the importance of research and epidemiological studies. Most importantly, the conference strengthened coordination of national and regional narcotics demand reduction programs and highlighted the need to exchange information, share strategies and develop a regional approach to narcotics demand reduction.

Law Enforcement Efforts. The GOG continues to modernize the PNC. This year efforts centered on developing and installing new software to modernize case tracking and police reporting, updating the DOAN intelligence functions and establishing a counternarcotics command and control center. The GOG has also expanded the port security program to cover La Aurora International airport in Guatemala City and Puerto Quetzal. In addition, the GOG has worked to establish new units to fight organized crime and corruption, and reorganize and purge the narcotics prosecutors unit of inept and suspected corrupt prosecutors. The GOG is placing special emphasis on developing evidence control procedures for the PNC, including the DOAN, and forming a task force to address sophisticated criminal enterprises dedicated to drug-trafficking and related crimes.

Corruption. Ineffectiveness, intimidation and corruption in the Guatemalan justice system continue to be serious concerns. GOG efforts to fight corruption have been generally ineffective and have led to disillusionment with the current government's commitment to solving this problem. Prosecutors continued to mishandle cases, seeing many cases summarily dismissed by the courts. Some judges appear to be colluding with the traffickers. The recent release by the courts of two Colombian nationals who were caught with an aircraft loaded with cocaine at the Guatemala City International Airport has led the Supreme Court of Justice to initiate an investigation on alleged collusion by the judges that approved the release.

The Public Ministry (MP) is in the final stages of developing an anti-corruption unit with government-wide purview. Once established, the unit will become an integral element of the Public Ministry's mandate to seek out and prosecute official corruption in all elements of the Guatemalan government. Although the initial focus of the unit may be the judiciary and the public prosecutors, the unit is expected to be very active investigating Customs and government port operations.

Agreements and Treaties. Guatemala is a party to the 1961 UN Single Convention and its 1972 Protocol, the 1971 UN Convention on Psychotropic Substances, the 1988 UN Drug Convention, the Central American Commission for the Eradication of Production, Traffic, Consumption and Illicit Use of Psychotropic Drugs and Substances, and the Central American Treaty on Joint Legal Assistance for Penal Issues. Guatemala has also signed bilateral counternarcotics agreements, including information exchanges with Venezuela (1991), Mexico (1991), and Ecuador (1992). While most GOG law enforcement efforts have been fully consistent with the goals and objectives of the 1988 UN Drug Convention, some aspects of the Convention, such as the provisions on extradition and money laundering, have not been codified into law and regulations. U.S.-Guatemalan extraditions continue under the 1903 extradition treaty and 1940 supplementary extradition convention.

IV. The Road Ahead

Cocaine transshipment through Guatemala is expected to continue to increase, with no letup projected in the foreseeable future. Air transshipment of cocaine increased in 1999. Although the Port Security Program has had some success, the use of commercial containers, both on land and through seaports, continues to offer the best opportunity for smuggling drugs through Guatemala. One container is suspected of having made a round trip to and from the U.S. before being intercepted with drugs in Guatemala. A USG regional project, to begin in 2000, will begin tracking commercial freight to counter this threat, providing training and facilities enhancement assistance to participating Central American governments. USG efforts will continue to focus on developing an effective interdiction program, a more professional DOAN with effective intelligence capabilities, and continued training and support for the narcotics prosecutors and members of the judicial system. The GOG anti-narcotics forces will continue to develop qualitatively and quantitatively, with more effective investigative and law enforcement units to control transshipment, expanded case management and tracking, increased data collection and analysis capability, and greater regional cooperation. The USG will continue to press the GOG to pass specific legislation to control money laundering before it becomes a threat to the stability of Guatemala 's fragile financial sector. While little progress has been made to date with SECCATID-drafted money laundering legislation, this is expected to be a priority for the new government in 2000.

Some opium poppy cultivation continues in the remote highlands and may increase due to the GOG's lack of aerial reconnaissance and eradication capabilities. Marijuana cultivation is also expected to continue at low levels. USG Regional Aerial Reconnaissance and Eradication deployments will continue to provide support for GOG efforts to eradicate this threat.

The GOG plans to increase public education and demand reduction efforts, bringing in more private and public funding and expanding regional cooperation. Cocaine abuse is expected to grow as traffickers continue to trade a percentage of cocaine shipments for transportation and security services. This same bartered cocaine is increasingly sold on the local market in the form of crack cocaine. This domestic cocaine trafficking and use will increase drug-related domestic crime, further straining the fledgling, resource-poor PNC.

Guatemala Statistics

(1991-1999)

1999

1998

1997

1996

1995

1994

1993

1992

1991

Opium

Potential Harvest (ha)

0

10

7

0

39

50

438

730

1,145

Eradication (ha)

1

5

3

12

86

150

426

470

576

Cultivation (ha)

1

15

10

12

125

200

864

1,200

1,721

Potential Yield (mt)

0.00

0.20

0.10

0.00

0.40

0.50

4

7.0

11.5

Cannabis

Potential Harvest (ha)

0

82

100

41

50

100

unk

80

55

Eradication (ha)

52

58

50

213

250

100

200

40

66

Cultivation (ha)

52

140

150

254

300

200

unk

120

121

Potential Yield (mt)

0

10

12

5

6

12

20

55

Seizures

Cocaine (mt)

10.1

9.2

4.3

4.0

1.0

2.0

7.6

9.5

15.4

Cannabis (mt)

0.65

0.42

0.34

16.40

0.50

1.76

2.1

0.7

1.3

Heroin (kg)

52.00

3.65

16.20

7.80

0.00

0.00

0.00

0.001

Opium (kg)

0.0

0.0

0.0

0.0

0.0

0.0

2.0

Arrests

472

928

188

189

Cocaine Seizures in Guatemala (Chart)

HONDURAS

I. Summary

Honduras is a transit country for drugs, primarily cocaine, moving toward Mexico and the U.S. from South America. We do not have evidence that drugs coming to the U.S. from Honduras are coming in sufficient quantities to have a significant effect on the U.S. The Government of Honduras (GOH) concluded a bilateral counternarcotics accord with Spain in 1999 to help address drug-related problems and is negotiating a maritime counternarcotics agreement with the U.S. The National Counternarcotics Council drafted a national drug control plan that is pending approval. The Honduran military was given a counternarcotics role under a constitutional amendment that went into effect in January, 1999 and military forces participated in several counternarcotics exercises. Honduran counternarcotics capabilities, however, remain weak, particularly as the government and economy struggle to recuperate from the devastating effects of Hurricane Mitch in late 1998. The judicial system is under severe strain due to corrupt, inefficient and overworked judges and lack of training and equipment. The government approved a new criminal procedures code in December, 1999 and has taken steps to root out corrupt judges, prosecutors and law enforcement agents, but much more remains to be accomplished. Honduras is a party to the 1988 UN Drug Convention.

II. Status of Country

Honduras is not a significant drug-producing country, but illicit drugs are trafficked through it via air, maritime and land routes. Honduran ports serve numerous U.S. cities. There are direct air connections to the U.S., and the Pan American Highway, the major land route from Panama to Mexico and the U.S., passes through Honduras. Drug smuggling rings frequently use light aircraft and "go-fast" vessels to traffic drugs through Honduran airspace and waters. The Honduran police and Navy have limited maritime assets to counteract narcotics trafficking. Money laundering in Honduras is believed to be increasing.

III. Country Actions Against Drugs in 1999

Policy Initiatives. The National Congress passed a constitutional amendment establishing a counternarcotics mission for the military that took effect in January. The government gave high priority to the conclusion of a maritime counternarcotics agreement with the U.S., which was in the final stages of negotiation at the end of 1999, and approved, for the first time, a U.S. Coast Guard counternarcotics patrol within Honduran waters. The government's National Counternarcotics Council oversaw the drafting of a counternarcotics master plan, now awaiting final approval. The government's new ministry of security coordinated national preventive and investigative police activities. An effort is underway to draft legislation that would broaden the definition of money laundering to include proceeds from non-drug related criminal activity.

Under the 1998 Counternarcotics Drawdown Order, U.S. Customs was directed to provide narcotics detector dogs and training to nine Honduran canine officers. In anticipation of the training, a U.S. Customs training officer traveled to Honduras in May 1999 to conduct an assessment of the Honduran canine training program and to brief U.S. embassy officials on the requirements to support and maintain an effective program. Also in May 1999, a U.S. Customs canine team (dog/handler) traveled to Honduras on a DEA-funded operation to assist with special road block searches near land border crossings. In September 1999, a U.S. Customs training team traveled to Honduras to conduct land border narcotics interdiction training for 35 Honduran Customs officers.

Accomplishments. Cocaine seizures stood at .714 metric tons as of December 1, 1999, compared with 1.875 metric tons seized in 1998. The Honduran merchant marine is preparing a 24-hour operations center that can respond rapidly to requests for boarding authority and other counternarcotics coordination needs. The National Police-run Joint Information Coordination Center (JICC) continued to provide useful data on narcotics trafficking activities. The Public (Justice) Ministry's counternarcotics directorate took delivery of two U.S.- provided 36-foot boats to improve its maritime capabilities on the north coast.

Law Enforcement Efforts. Counternarcotics operations are an increasingly high priority for the government, but law enforcement agencies continue to suffer from lack of resources and training. Recent arrests of Honduran Police officers for narcotics-related crime suggest some penetration by narcotics traffickers. This corruption within the ranks of the Honduran police is evidenced by the arrest on February 4, 1999, of Honduran Army Lieutenant Colonel Wilfredo Layva-Cabrera and four other Hondurans who were associates of a recently deceased major Honduran drug trafficker. The GOH arrested 1,210 suspects for narcotics offenses in 1999, compared with 922 detained in 1998. In January, law enforcement personnel arrested 17 Mexican nationals found to be carrying 241 kilos of cocaine concealed in 3 vehicles that they attempted to bring into Honduras from Nicaragua. In September, GOH authorities seized a helicopter, which landed in Honduras en route from Nicaragua to Guatemala, with 425 kilos of cocaine and arrested two persons. They also destroyed a large marijuana plantation near the border with Nicaragua in November. U.S. law enforcement agencies are preparing to augment the Honduran Canine Program.

Corruption. Corruption is a major problem in all aspects of national life. In 1999 the government removed or suspended, as in previous years, dozens of judges, police officials and other public employees suspected of corrupt practices, including participation in the illicit narcotics trade.

Agreements and Treaties. The GOH is an active member of the Inter-American Drug Abuse Control Commission (CICAD). Honduras hosts the office of the newly created Regional Center for (counternarcotics) Development and Judicial Cooperation in Central America, which is also headed by a Honduran. The Center, which aims to harmonize counternarcotics legislation, is funded by the UN Development Program, CICAD, the Central American governments and Mexico. Honduras has counternarcotics agreements with the U.S., Belize, Columbia, Jamaica, Mexico, and Venezuela, and signed a new agreement with Spain in November 1999. A 1909 extradition treaty between the U.S. and Honduras is in force, however, the 1982 Honduran Constitution prohibits extradition of Honduran nationals. The U.S. reached agreement with the government in January 1999 to share the proceeds from the sale of a Honduran-flagged narcotics trafficker vessel seized after the discovery of more than 2.25 metric tons of cocaine aboard. The U.S. continues to discuss a stolen vehicle treaty with the GOH. A U.S. Coast Guard cutter conducted the first joint maritime patrol within Honduran waters in September 1999 under an interim agreement. In late 1999, considerable progress was made on the negotiation of a comprehensive U.S.-Honduras maritime counternarcotics agreement.

Cultivation/Production. Marijuana is the only illegal drug known to be cultivated in Honduras. Although the GOH employs aerial photography, it has no sophisticated technology for determining crop size. Aerial herbicides are not used, as illegal crops are cultivated alongside food sources.

Drug Flow/Transit. Most drugs entering Honduras merely transit the country or its territorial waters and airspace. U.S. law enforcement authorities believe that the volume of illegal transits rose during 1999, as traffickers took advantage of the GOH's preoccupation with reconstruction efforts following the devastation of Hurricane Mitch. We do not have evidence, however, that the volume of drugs transiting Honduras to the U.S. is sufficient in quantity to have a significant effect on the U.S. Non-commercial maritime flows via "go fast" boats off the north coast are of particular concern, as well as overland routes through established border crossings with Nicaragua, El Salvador and Guatemala. It is also believed that narcotics smuggling continues via non-commercial aircraft over-flights and airdrops.

Domestic Programs/Demand Reduction. The abuse of alcohol and inhalants remain the most serious substance abuse problems in the country, followed by marijuana and cocaine. Crack cocaine use is increasing, particularly on the northern coast and in urban centers. As the Honduran Government's demand reduction entity, the Institute for the Prevention of Alcoholism and Drug Addiction conducts prevention programs throughout the country. As chair of the Honduran Interinstitutional Coordination Body for Addiction, it also oversees programs operated by the ministries of Public Health and Education, as well as non-governmental organizations. Some of these programs include workshops and training seminars for parents, teachers and community leaders, and the development of alternative activities for at-risk populations. In 1999, the Honduran National Preventive Police expanded the coverage of its DARE program to five departments outside of Tegucigalpa, reaching a total of 5480 secondary school children. The October 1999 Central American Demand Reduction Conference in Guatemala City was attended by Honduran officials. The UN Drug Control Program (UNDCP) has established a three-year project, started in January 1999, to train Honduran demand reduction personnel.

IV. U.S. Policy Initiatives and Programs

U.S. Policy Initiatives. U.S. counternarcotics and anti-corruption efforts increased sharply in Central America in 1999, in anticipation of increased vulnerability due to the devastation caused in October 1998 by Hurricane Mitch. State Department funds for counternarcotics projects more than doubled, to $565,000 and the USG donated equipment including ten vehicles and three boats valued at about $2 million to law enforcement agencies at mid-year. A Congressional emergency supplemental appropriation funded several anti-corruption projects that are being carried out with such key Honduran agencies as the Office of Administrative Probity, the Criminal Investigation Directorate, and the Public Ministry. U.S. Southern Command sponsored two conferences to establish a regional approach to countering illicit drug trafficking flights throughout Central America and the U.S. Customs service assumed a higher profile by providing counternarcotics and anti-corruption seminars. The USG is also pursuing a bilateral maritime counternarcotics accord and continues to press for the conclusion of a stolen vehicle treaty.

Bilateral Cooperation. Honduran police and military took part in two Central Skies counternarcotics joint exercises with U.S. forces in May and September. The U.S. Embassy and Honduran government officials formed a bilateral counternarcotics working group which met quarterly in 1999. The USG provided new software for the Joint Information Coordination Center (JICC), and training and logistical help to numerous law enforcement agencies, under a letter of agreement in place since 1994. The Department of Justice's International Criminal Investigative and Training Assistance Program (ICITAP) brought an expert to Honduras to help the government draft money-laundering legislation. The USG is coordinating the development of a new border inspection station at a major port of entry along the Honduran/Nicaraguan border.

The Road Ahead. The GOH is firmly committed to the battle against the use or transport of illegal drugs. Top Honduran military officials appear committed to working with the USG to fulfill their new counternarcotics mission. The USG is encouraging Honduras to revise its money-laundering legislation and adopt a counternarcotics master plan. Corruption and intimidation of public servants remain a major obstacle to successful interdiction, detention and prosecution of narcotics traffickers. The Government of Honduras is increasingly aware of the threat posed by drug trafficking and determined to attack the problem on a variety of fronts.

Money Laundering. Honduras is not a major money-laundering center and is not considered an offshore financial center. The exact extent of local money laundering is difficult to determine. What money laundering does occur in Honduras is likely to be related to a variety of criminal activities including narcotics trafficking, auto theft, kidnappings, bank fraud, prostitution, and Corruption. Money laundering is not limited to the banking sector, but includes currency exchange firms, casinos, and front companies.

Drug-related money laundering is a crime in Honduras, but prosecution is difficult. There has not been one successful prosecution under the money laundering law to date. An effort is underway to draft legislation, which would broaden the application of the law to include proceeds from any criminal activity. This new legislation would have to be approved by the national congress.

The law against money laundering requires that bank and financial institutions maintain a registry of suspicious transactions and report them to the National Banking Commission. The Commission and the reporting banks are required to keep this registry for five years. It is possible that some transactions are not reported at all.

Honduras is a party to the 1988 UN Drug Convention and cooperates with the U.S.investigations, and requests for information. The GOH adheres to the core principles for effective banking supervision that the Basel Committee adopted in 1997. At the regional level, Honduras is a member of the Central American Council of Bank Superintendents, which meets periodically to exchange information.

Asset Seizure and Forfeiture. The National Congress enacted an asset seizure law in 1993 that subsequent Honduran Supreme Court rulings substantially weakened. The draft legislation mentioned above would, however, strengthen the asset seizure provisions of Honduran Law.

Chemical Control. The GOH continues to try to limit the illicit introduction of precursor chemicals into the country. However, comprehensive regulations to control the sale of chemicals necessary for the processing of illegal narcotics have never been developed. There is no evidence to suggest the presence of large-scale narcotics labs in Honduras.

MEXICO

I. Summary

Mexico faces a broad array of drug-related problems, from production and transshipment of illicit drugs to growing consumption. The drug issue remains at the top of the Zedillo Administration's priorities and has been designated as Mexico's principal national security threat. While the Government of Mexico's (GOM) counternarcotics (CN) effort made progress in 1999 against the production, traffic and abuse of illicit drugs, it still faces daunting challenges. The cartels which control the production and shipment of drugs, and related money laundering and organized crime activities, are powerful and well-organized and have made a concerted effort to corrupt and intimidate public officials responsible for combating them.

Mexico's national drug strategy stresses the need for a comprehensive, multi-faceted approach, including the importance of cooperation with other nations, particularly the United States. The results of Mexico's anti-drug effort in 1999 largely paralleled its 1998 performance. There was, however, a significant increase in cocaine seizures, largely as a result of improved maritime cooperation with the U.S. Aggressive eradication has reduced net cultivation of marijuana to a record low, and reduced the opium poppy crop to the second lowest level this decade. The GOM extradited two Mexican national drug fugitives to the U.S., including one who killed a U.S. Border Patrol agent in 1998. Although there were some successes in drug law enforcement cooperation with the U.S., the year saw limited developments in building corruption-resistant law enforcement institutions, including specialized "vetted units."

II. Status of Country

Mexico continued to be the principal transit route to the U.S. for up to 60 percent of the South American cocaine sold in the U.S. During 1999, there was a detected shift in smuggling activity from the Yucatan peninsula to the Pacific coast of Mexico. The eastern Pacific is ideal for air and maritime trafficking because of vast ocean areas and a lack of natural choke points. Multiple maritime events are estimated to occur there monthly using go-fast boats, fishing vessels and commercial carriers.

Drugs are smuggled into Mexico via every kind of commercial and non-commercial transportation means available, including smuggling across the land border with Guatemala; concealed shipments in air or containerized maritime cargo; smuggling by fishing vessels; flights to clandestine landing points; and air drops to go-fast boats off Mexican coasts. Once inside Mexico, illegal drugs are moved to northern border areas for stockpiling and entry into the U.S. They are then smuggled across the U.S. border in everything from containerized cargo, commercial trucks, rail cars, airplanes, automobiles and off-road vehicles to human "mules," including undocumented migrants and children, who backpack or strap the drugs to their bodies.

Mexico-based transnational criminal organizations have become the most significant distributors in the U.S. of methamphetamine and its precursor chemicals. Several bulk ephedrine seizures destined for Mexico have focused attention on the magnitude of ephedrine acquisition by Mexican organized crime groups. Mexico is also a transit point for the movement of potassium permanganate, used in the purification process for cocaine.

In addition, Mexico is a significant producer of some "designer" drugs, illicit steroids, and diverted pharmaceuticals, such as Valium and Rohypnol.

Although Mexico produces only about two percent of the world's opium, nearly all of its harvested illicit crop is converted into heroin and shipped to the western United States. USG estimates of opium drug crop production during the past three years show yields of some 4 to 6 metric tons of heroin annually.

During the past thee years, marijuana cultivation has yielded an estimated annual average of some 2,300 to 2,500 metric tons. In crop field surveys during the past two years, a more robust plant has been observed throughout Mexico. The plant grows to a height of two meters and has more flowering area. Mexican agronomists assess the plant as having more THC and, because of resin-coated foliage, is more resistant to herbicides. Most illicit drug crop cultivation occurs in small fields located on remote lands to evade detection and eradication. Since lands used for illicit cultivation are subject to seizure, many growers use public or communal lands to thwart tracing ownership.

Mexico's eradication program is one of the largest, most experienced and sophisticated in the world. The Army's considerable field presence in manual eradication operations relies on some 20,000 troops daily and more during peak seasons. These operations, combined with the Mexican Navy's eradication efforts in coastal areas, are responsible for about 75 percent of all eradication performed. The Office of the Attorney General (PGR) accomplishes the remainder by aerial spraying.

The GOM is fully aware of the threat posed to Mexico's security and democratic institutions by drug trafficking. President Ernesto Zedillo Ponce de Leon has identified narcotics trafficking as Mexico's primary national security threat and called on Mexican federal and state prosecutors to attack official and police corruption aggressively. Drug trafficking organizations generate violence, corruption and other forms of crime. The GOM has responded by increasing its law enforcement budget, creating a new Federal Preventative Police (FPP), strengthening its laws and enhancing its cooperation with the U.S. and other countries. However, the GOM still lacks broad institutional capability to implement fully its anti-drug legislation and national drug strategy. While the GOM has intensified law enforcement actions against drug trafficking, it has not disrupted the activities of the major drug cartels. Chronic problems of corruption, weak police and criminal justice institutions, budget constraints, and severe poverty in rural areas where drug crops are cultivated hamper Mexico's ability to combat drug trafficking effectively.

In recent years, international money launderers have turned increasingly to Mexico for initial placement of drug proceeds into the global financial system. Measures enacted by Mexico in 1996 and 1997 have provided the legal framework for more effective control of money laundering. Initial court decisions, however, made convictions difficult as judges have ruled that a prior conviction on illegal enrichment or other underlying offenses is necessary to convict on money laundering. There has been only one conviction under the 1996 law. Recent legislation, which does not require prior conviction but rather the identification of a likely source of illegal proceeds that can be associated with a specified criminal act, may improve the GOM's ability to prosecute such cases. In August, legislation went into effect to strengthen asset forfeiture regulations and to allow Mexico to cooperate with other countries in international asset sharing.

III. Country Actions Against Drugs in 1999

Policy Initiatives. Mexico's national anti-drug strategy encompasses the full range of actions called for in the 1988 UN Drug Convention and highlights the importance of international cooperation, particularly with neighboring states. In February 1999, President Clinton and President Zedillo announced an agreement on measures to gauge bilateral progress toward the goals of the Binational Drug Strategy.

Also in February, President Zedillo announced a new national public security plan, with a budget of $500 million over the next four to five years. This plan included the establishment of a new Federal Preventative Police (FPP) to integrate the law enforcement responsibilities of several existing federal agencies and to focus on crime prevention and public security.

During Mexico's annual conference for its 32 state Attorneys General, 28 states agreed to form joint federal-state task forces to combat drug use and urban drug trafficking. These task forces will monitor the arrests made by state judicial police of persons carrying drugs for sale or consumption.

Amendments to the Mexican Constitution aimed at streamlining requirements for obtaining an arrest warrant and dismissing corrupt law enforcement agents went into effect in March 1999. In December 1999, President Zedillo proposed new legal reforms to create specialized courts with "faceless judges." This was in response to requests by the judiciary for protection when the courts are deciding cases of dangerous crimes such as narcotics trafficking. This proposal is part of an overall initiative to reform and accelerate the resolution of cases.

To strengthen its ability to detect financial crimes, the Secretariat of the Treasury (Hacienda) took steps to initiate automated filing of currency transaction reports by the banking community to Hacienda's Financial Intelligence Unit. The USG provided technical support for that initiative. The Mexican Congress passed legislation in April enabling Hacienda to take possession of and to distribute goods seized from organized crime and ordered forfeited by the courts. The GOM must still work out rules for distribution of these assets to entities within Mexico. The U.S. and Mexico are in the process of negotiating a reciprocal asset sharing agreement between the two governments.

Mexico became a Cooperating and Supporting Nation (COSUN) of the Caribbean Financial Action Task Force (CFATF) and was admitted as an observer to the Financial Action Task Force (FATF) in 1999. It is scheduled to undergo a mutual evaluation of its money laundering control regime by FATF in early 2000 as a step toward full membership.

Institutional Development. The PGR expanded and improved the capability of its law enforcement entities during 1999. To combat cross-border drug smuggling, the PGR purchased ten mobile x-ray machines for use in inspecting vehicles and cargo. Additionally, the PGR installed an x-ray machine at the Tijuana international airport and plans to purchase three more for installation in places with the heaviest traffic. The PGR initiated a major aviation upgrade program with the purchase of 27 helicopters, three for interdiction purposes and 24 for eradication.

The Mexican Secretariat of National Defense (SEDENA), which comprises the Army and the Air Force, and the Secretariat of the Navy rank counternarcotics operations as priority missions. In December 1998, SEDENA created a separate unit, the S-7, with its own budget, to be responsible for the military's direct support to Mexican law enforcement counter-drug elements. The Army created a special amphibious force (GANFES) in May to operate in remote and isolated coastal areas.

The Navy continued its fleet modernization program to enhance its ability to confront maritime drug trafficking. This upgrade included: production of medium-sized patrol boats with state-of-the-art electronics and intercept capability, conversion of two Knox class frigates for CN operations, and purchase of 20 speedboats for coastal and riverine patrolling.

Law Enforcement Efforts. Mexico's anti-drug enforcement actions included organized crime investigations, a pronounced increase in the amount of seized cocaine, an increase in marijuana eradication results, money laundering investigations (see money laundering annex), chemical diversion control (see chemical control annex), and air, land and maritime drug interdiction.

The PGR and military mounted an intensive operation against officials in the state of Quintana Roo, including the governor, Mario Villanueva, who was believed to be cooperating with the Carrillo Fuentes cartel. One of the major figures of the cartel was captured by Venezuelan authorities in February after escaping PGR custody, allegedly due to a bribe paid to prosecutors. Governor Villanueva disappeared in March, 10 days before the end of his term of office and immunity from prosecution, and is still at large.

The Mexican military continued its own counter-drug activities in 1999 with operations in the Yucatan, interdiction, and drug crop eradication. The Army and Navy engaged in cooperative efforts to seal off Mexico's large, isolated coastal areas from use by narcotics traffickers. The armed forces also play an important role in supporting PGR internal highway checkpoints.

Narcotics investigations were carried out by the PGR's Office of the Special Prosecutor for Crimes Against Health (FEADS), the Organized Crime Unit (OCU), the Sensitive Investigations Unit (SIU), and the Bilateral Task Forces (BTF). In December, Mexico invited the U.S. to participate in a technical review of the operations of the OCU, SIU, and BTFs to identify ways to improve their operational effectiveness.

Arrests. In 1999, the GOM arrested some 10,464 individuals, including 203 foreigners and 10,261 Mexicans on drug-related charges. While the GOM arrested a number of mid-level traffickers in 1999, no principal member of a major drug trafficking organization was arrested. Notable arrests included:

Carlos Colin Padilla, mid-level money launderer for the Carillo Fuentes cartel;

Oscar Benjamin Garcia Davila, ex-federal judicial police agent who, in Quintana Roo, served as the liaison between former governor Villanueva and major drug transportation broker Alcides Ramon Magana;

Jaime Aguilar Gastelum, associated with elements of the Carillo Fuentes cartel and remnants of the Gulf cartel;

Guillermo Moreno Rios, Colombian associated with major Colombian trafficker Alejandro Bernal Madrigal;

Juan Jose Quintero Payan, one of the founders and former leaders of the Carillo Fuentes cartel;

Eduardo Salazar Carillo, ex Comandante of PJF, charged with drug trafficking and possession of arms;

Benjamin Garcia Gaxiola, low-level trafficker in Sonora, ex-PGR commandante, associate of Ramon Alcides Magana;

Antonio Mendoza Cruz, former aide to Joaquin "El Chapo" Guzman (former head of Sinaloa cartel);

Alvaro Munoz Carrasco, brother in law Albino Quintero Meraz, major drug transportation broker for the Carillo Fuentes cartel.

Seizures.According to GOM statistics, Mexican law enforcement and military entities reported seized or destroyed:

33.5 metric tons of cocaine (48% increase over last year)

1459 metric tons of marijuana (37% increase)

258 kilograms of heroin (114% increase)

800 kilograms of opium gum (435% increase)

358 kilograms of methamphetamine (273% increase)

14 clandestine laboratories (100% increase).

During 1999, there were three multi-ton maritime seizures of cocaine due to successful joint efforts of the Mexican Navy, the PGR, the U.S. Department of Defense, and the U.S. Coast Guard. These efforts required close coordination and the use of sophisticated maritime navigation and communications techniques. Maritime seizures alone totaled over 24 metric tons.

Illicit Cultivation and Production. As a result of the GOM's aggressive eradication campaign, illicit cultivation in Mexico is characterized by small fields which are widely dispersed across a very large potential growing area. Mexican eradication, and to a lesser degree drought in early 1999, has reduced net cultivation of marijuana to a record low and reduced the opium poppy crop to a near-record low.

The GOM does not produce estimates of illegal drug crop cultivation. However U.S. experts estimate that Mexico's net opium drug crop production in 1999 was 43 metric tons (mt) of opium gum (compared to 60 mt in 1998 and 46 mt in 1997) and net marijuana cultivation was 6,700 metric tons of cannabis, (compared with 8,300 mt in 1998 and 8,600 mt in 1997). Marijuana production has declined steadily throughout the 1990s while opium poppy production, which had fluctuated roughly between 4,000 and 5,000 hectares of net cultivation, dropped to its second lowest level in the 1990s.

During 1999, the GOM eradicated some 15,470 hectares of opium poppy (down from 17,449 in 1998) and 33,583 hectares of cannabis (up from 23,928 in 1998). Extrapolating from those figures, U.S. experts estimate that the impact of these efforts resulted in the elimination of the potential production of 7,900 hectares of opium poppy and 19,400 hectares of marijuana. In 1998, eradication resulted in the elimination of 9,500 hectares each of both opium poppy and marijuana.

Extradition. The GOM extradited 14 fugitives to the U.S. in 1999, nine sought for narcotics-related offenses. Of those extradited, two were Mexican citizens: one, Tirzo Angel Robles, on drug charges and the other, Luis Arena Hernandez, on murder and drug charges. Robles had escaped from a U.S. prison in 1995 while serving a sentence for drug-related crimes and Arena Hernandez was being sought for the June 1998 killing of a U.S. Border Patrol agent while attempting to smuggle marijuana into the U.S.

Several important drug traffickers, including methamphetamine traffickers Jesus and Luis Amezcua, have been approved for extradition to the U.S. by the Secretariat of Foreign Relations (SRE), but are contesting the extraditions through the judicial appeals process on a variety of grounds, including the constitutional implications of a possible life sentence. Based on conflicting appeals court decisions in other extradition cases involving drug traffickers, the Mexican Supreme Court has agreed to rule on a perceived contradiction between the Mexican Penal Code and the U.S.-Mexico extradition treaty over whether Mexican citizens may be extradited "in exceptional cases" or must be tried in Mexico for crimes committed abroad. The Supreme Court decision, which is expected in early 2000, will profoundly affect Mexico's ability to effect extraditions abroad. An adverse decision would effectively prohibit the extradition of any Mexican citizen. Likewise, the life imprisonment issue, which is raised with greater frequency by fugitives, is troubling since most major fugitives whose extradition the U.S. seeks face criminal charges that carry possible life sentences.

At the end of 1999, there were approximately 40 persons in Mexican custody and subject to extradition proceedings based on U.S. provisional arrest warrants and extradition requests.

During 1999, the U.S. extradited 16 fugitives to Mexico, none sought for narcotics-related offenses and one of whom was a U.S. citizen.

Precursor Chemical Control. In September, Mexico published regulations that defined reporting and notification requirements for the import and export of precursor chemicals and authorized Mexican government entities to share information with other governments. Cooperative efforts to combat the diversion of chemicals occurred regularly in 1999 through working groups and training programs. In late 1999, Mexico joined "Operation Purple," a global DEA initiative to target the movement of potassium permanganate.

Demand Reduction. The GOM published the results of a national drug abuse survey in May 1999 which indicated that drug abuse in Mexico, particularly in communities along the U.S.-Mexican border, has increased. Survey data showed the following increases in 1998 as compared to 1993: individuals admitting to using drugs at least once, 3.9 percent to 5.27 percent; marijuana use, 3.32 percent to 4.7 percent; cocaine use, .22 percent to .36 percent; and heroin use, .07 percent to .09 percent. The study also concluded that most illegal drug users are young males although females are increasingly using drugs and age of initiation is earlier, now about 10 years old. The northwestern region of the country is experiencing a widespread increase in the use of heroin and methamphetamine.

Corruption. Corruption continues to be a very serious problem in Mexican law enforcement institutions and Attorney General Madrazo has taken aggressive measures at the federal level. In December 1999, he stated that since April 1997, more than 1400 of 3500 federal police officers had been fired for corruption and that 357 federal officers had been prosecuted. In announcing the establishment of the Federal Preventative Police (FPP), public officials acknowledged that corruption in existing police ranks was a major factor in the decision to create the new force.

The National Public Safety System has established a national police registry to prevent corrupt police officials from being hired by another law enforcement entity. Additionally, the organic law of the PGR was amended in July to formalize and expand the functions of its employee suitability review unit, the Confidence Control Center. Prior to this amendment, only employees of the federal counternarcotics agency (FEADS) and the PGR's Organized Crime Unit (OCU) were required to undergo background checks and polygraphs. The amendment extended this evaluation process to all federal prosecutors, police agents, experts and pilots assigned to narcotic eradication duties. Moreover, employees who are removed through due process after failing the screening, or who are found to be corrupt or incompetent, have no right to reinstatement, although under certain circumstances they may be compensated for their dismissal.

The Mexican military has also suffered from "narco-Corruption." In October, four Army personnel in Chihuahua were placed under arrest after the discovery that nearly seven kilos of cocaine - supposedly burned along with other seizures of marijuana and opium gum - turned out to be baking flour instead of cocaine. In August, two military officers of the Air Mobile Special Forces (GAFE) were arrested for allegedly offering protection to the late Amado Carrillo Fuentes.

A joint U.S.-Mexico initiative to create specially-vetted counternarcotics units insulated from corruption has not yet lived up to its potential. While the units are responsible for several of the accomplishments listed elsewhere in this report, failure to adhere to internal security principles has resulted in compromises or instances of corruption during 1999:

In February, a Special Investigative Unit officer was arrested in Coahuila for possession of 198 kg of marijuana, but became a fugitive after he walked out of a local police station.

In March, three BTF agents from Monterrey were arrested for alleged extortion. One was released for lack of evidence; the other two remain incarcerated.

In September 1999, a Mexico City judge found sufficient evidence to issue arrest warrants for eight FEADS agents on kidnapping charges, abuse of power, and violations of the organized crime law. Four had been vetted under U.S. standards and three had been trained by the U.S. but had never been assigned to a vetted unit.

In November 1999, a former member of the OCU, Mario Silva Calderon, was arrested for alleged links to the Carillo Fuentes Cartel, specifically to Alcides Ramon Magana.

The continuing revelations of corruption even within vetted units poses a serious challenge to Mexican law enforcement institutions and, derivatively, to bilateral counternarcotics cooperation.

Combating corruption is a long-term challenge that will require sustained effort at all levels of Mexican government and society. The GOM has recognized the problem and set into motion programs to deal with it. Cases have been identified, however, that indicate these programs have not been adequately implemented. For example, a senior law enforcement official removed from the OCU for allegations of corruption was recently reassigned to another high-level position. Mexico must continue to investigate all allegations of corruption and take strong action against personnel who have been compromised, both for the integrity of its institutions and the confidence of its international partners.

Agreements and Treaties. Mexico is a party to the 1988 UN Drug Convention, the 1961 UN Single Convention on Narcotic Drugs as amended by the 1972 Protocol, and the 1971 UN Convention On Psychotropic Substances. It also subscribes to regional drug commitments, including the 1996 Anti-Drug Strategy in the Hemisphere and 1990 Declaration of Ixtapa, which commits signatories to take strong action against drug trafficking, including controlling money laundering and chemical diversion. Mexico has bilateral narcotics accords with 32 countries.

Mexico and the U.S. are parties to numerous treaties and agreements relating to law enforcement cooperation, including a mutual legal assistance treaty (MLAT), signed in 1987 and entered into force in 1991; a 1995 executive agreement on asset sharing; and the Financial Information Exchange Agreement (FIEA). The 1998 Bi-National Drug Strategy and its accompanying Performance Measures of Effectiveness (PMEs) have provided guidelines for accomplishing the two nations' mutual goals of combating drug trafficking and organized crime. On February 15, 1999, President Clinton and President Zedillo signed in Merida a memorandum of understanding for procedures for cooperation between law enforcement agencies of the United States and Mexico. The Merida agreement was a follow-on to the "Brownsville Letter" of July 25, 1998 between Mexican Attorney General Madrazo and U.S. Attorney General Reno.

The U.S./Mexico extradition treaty has been in force since 1980. A U.S.-Mexico protocol to the extradition treaty permitting the temporary surrender for trial of fugitives who are serving a sentence in one country but also are wanted on criminal charges in the other was approved by the U.S. Senate in October 1998 and ratified by President Clinton in January 1999. The GOM has not yet submitted the protocol to the Mexican Congress for ratification.

Bilateral Cooperation. The U.S. and Mexico participate in a range of bilateral counternarcotics and law enforcement fora, including:

HLCG. The High-Level Contact Group on Drug Control (HLCG), led by Office of National Drug Control Policy (ONDCP) Director Barry McCaffrey, U.S. Attorney General Janet Reno, Mexican Foreign Secretary Rosario Green, and Mexican Attorney General Jorge Madrazo met in June and November to report on progress made by the four HLCG working groups, to review action plans and goals, and to develop priorities for future cooperative action.

Senior Law Enforcement Plenary: The Senior Law Enforcement Plenary, a forum that facilitates communication and cooperation on a broad array of anti-drug and law enforcement issues, met in May in Mexico and again in October in Washington, D.C. The Plenary group established a new working group to advance mutual goals on the safety of foreign law enforcement agents serving in the other country.

Military to Military Cooperation. Under Secretary of Defense for Policy James Bodner visited Mexico in February to discuss cooperation on counternarcotics and other areas of mutual interest. General Juan Heriberto Salinas Altes, SEDENA Chief of Staff, reciprocated with a visit to Washington to continue the dialogue, and to prepare for a visit by Secretary of Defense Cervantes to the U.S. in January 2000.

Seventy-two UH-1H helicopters provided to SEDENA by the U.S. remained grounded, largely relating to worldwide safety-of-flight messages. After exploring possible repair options, SEDENA decided that it was not cost-effective to continue the UH-1H program and returned the aircraft to the U.S. SEDENA will, instead, purchase new aircraft for its fleet.

Money Laundering. The U.S. carries out more money laundering investigations with Mexico than with any other country and bilateral cooperation continued in 1999. Hacienda and the PGR processed 16 major simultaneous and four coordinated bilateral money laundering investigations in cooperation with USG agencies. A financial crimes working group, comprising Hacienda's Financial Intelligence Unit, the PGR's anti-money laundering unit, the U.S. Customs Service, and the Internal Revenue Service, was established in July to discuss cases of concern to both countries.

Maritime Interdiction. Cooperation between the Mexican Navy, the PGR, the U.S. Coast Guard, and the Department of Defense resulted in three multi-ton maritime drug seizures. In June, the seizure of the Mexican flag vessel "Mazatlan IV" netted seven metric tons of cocaine. In August, the Mexican flag vessel "Xoloescuintle" was pursued by the U.S. Coast Guard and seized by the Mexican Navy in international waters; 9.5 metric tons of cocaine were found aboard, the second largest maritime cocaine seizure on record. In December, the Mexican fishing vessel, "Alfonso M.D. II" was seized by the Mexican Navy, with active participation by the U.S. Coast Guard; 8.1 metric tons of cocaine were found aboard.

Maritime interdiction is a new and significant area of cooperation between the U.S. and Mexico. In addition to the operations mentioned above, the U.S. contributed ion scan technical assistance for three dockside boardings of suspect vessels, and conducted a four-week counternarcotics boarding team training class for the Mexican Navy and Marine Corps. The PGR has also assigned a liaison officer to the U.S. Domestic Air Interdiction Center in Riverside, California, and is in the process of assigning a liaison officer to the U.S. Coast Guard's Joint Interagency Task Force-West in Alameda, California.

Demand Reduction. Mexico and the U.S. have made considerable progress in enhancing cooperation and communication in demand reduction. The bilateral working group on demand reduction met several times in 1999, and coordinated a bi-national drug conference in Tijuana in June, presided over by ONDCP Director McCaffrey and Mexican Health Secretary de la Fuente. The USG and the Mexican National Council Against Addictions (CONADIC) cooperated in disseminating the results of this conference.

Two USG-funded NGO projects in Mexico City helped university-aged youth and street children avoid drug addiction through education and job training. A Chihuahua-based, USG-funded NGO worked with indigenous communities to discourage drug cultivation and promote sustainable development in the Sierra Madre mountains.

Prosecutor Exchanges. The GOM and USG continued close cooperation on training for federal law enforcement personnel as well as on professional exchanges between prosecutors. As a follow-on to the U.S. Department of Justice's 1998 prosecutors' conference in South Carolina, the PGR hosted a similar conference in Mexico City in June 1999. Federal prosecutors from both countries exchanged information on organized crime, extradition and other subjects of mutual interest.

Judicial Exchanges. The U.S.-Mexico Judicial Exchange Program, coordinated by a binational committee of judges, has helped to increase communication and mutual understanding among the judiciaries of the two nations. Over 500 Mexican judges have participated in USG-sponsored conferences, seminars, training courses and graduate programs in the past two years. The president of the Mexican Supreme Court and representatives of Mexico's National University's Institute for Juridical Research visited Washington in November to discuss ways to strengthen the program and better respond to the interests and concerns of the participating Mexican and U.S. judges. The National Center for State Courts (NCSC), the Federal Judicial Center and the World Bank have all been invited to offer technical advice on justice reform priorities for federal and state courts.

Law Enforcement Cooperation. In late November, the U.S. and Mexico began an unprecedented bilateral effort to locate the bodies of Mexican and U.S. victims of drug-related killings believed to be buried near Ciudad Juarez, Mexico. The effort involved excavations at four locations; nine bodies had been recovered by the end of 1999. In the face of criticism concerning infringement of sovereignty, Attorney General Madrazo showed strong support for the operation.

With the Mexican Vetted Unit Program entering its third year, it was mutually recognized that the program had not achieved the level of effectiveness originally envisioned. As a result, a comprehensive bilateral survey of the program was conducted to identify its needs, strengths, and weaknesses.

Eradication and Production. Cooperation between GOM and U.S. entities involved in eradication and assessment of drug crop production has been excellent. The two governments held frequent exchanges of information regarding new types of drug crops resistant to herbicides and eradication operations. In December 1999, five PGR officials visited the U.S. Department of Agriculture to study opium yield analysis methods. This was the first phase of a bilateral effort by a team of agronomists, biologists, and crop production experts to undertake a complete analysis of the poppy currently under cultivation in Mexico and to analyze its opium gum yield.

IV. U.S. Policy Initiatives and Programs

As neighboring states facing a common criminal threat, each country's anti-drug efforts are directly affected by the policies and efforts of the other. Therefore, both countries have sought, through bilateral fora such as the HLCG and Senior Law Enforcement Plenary, and through the Bi-National Drug Strategy, to construct complementary programs and policies. U.S. narcotics control policy for Mexico is aimed at supporting the political commitment and strengthening institutional capability of the GOM to take effective measures against the production and trafficking of illicit drugs and related crimes. The USG seeks to work collaboratively with Mexico to apprehend and prosecute the leaders of the transnational criminal organizations, to disrupt or dismantle cartel operations, to combat money laundering and precursor chemicals diversion, and to reduce the demand for drugs.

Cooperative initiatives along our common border are a priority for both nations. In addition, the U.S. seeks to support the GOM's efforts to strengthen institutions, to improve training for its personnel, to modernize the justice sector, and to promote anti-corruption reforms. Critical to this success is the identification and prosecution of corrupt law enforcement, military, political, and business leaders who protect traffickers.

The Road Ahead. Mexico and the U.S. will continue to cooperate against narcotics activities in all its forms, including drug abuse, trafficking and production. The effectiveness of national and bilateral efforts against drug crimes will depend largely on demonstrable progress in disrupting and dismantling transnational narcotics trafficking organizations. This includes apprehending, prosecuting and convicting major drug traffickers, and exposing and prosecuting individuals and businesses involved in providing critical support networks such as money laundering and front companies, security, transportation, and warehousing.

Continued measurable progress in reducing the production of illicit drugs and the flow of such drugs through Mexico into the U.S. has long been a shared USG-GOM objective. Programs to exchange information or experiences in specialized areas as well as to find ways to improve both countries' eradication programs will contribute to such progress.

New asset seizure and forfeiture legislation has provided an important potential source of funding for law enforcement, courtroom modernization, drug treatment and education, and alternative development. Increased cooperation on post-seizure and post-arrest analysis would enhance investigations against major trafficking organizations. The president of the Mexican Supreme Court and President Zedillo have agreed that reforms to the cumbersome appeals process should be a key priority in the 2000 legislative session. If passed, such reforms could shorten the appeals process and speed the extradition of criminals.

An agreement to revive the bilateral polygraph process to permit screening of officials to serve in specialized units would enhance information sharing and Bilateral Cooperation. Practical issues need to be addressed such as ensuring the specialized units are fully staffed, funded, equipped and maintain the highest levels of professionalism.

Security for both Mexican and U.S. personnel is of paramount importance. The significance of this issue was illustrated in recent events in which drug traffickers assaulted U.S. government agents in Mexico. Continued efforts on both sides of the border should be made to ensure the safety of USG agents in Mexico.

Mexico is still relatively open to money laundering and chemical diversion, and corruption of public officials remains a serious problem. The USG will continue to offer technical support to Mexico in developing and strengthening its counternarcotics institutions. Despite increased GOM support to law enforcement, better equipment, more and better trained personnel, and improved salaries and benefits are still needed to bring law enforcement units to full operating efficiency.

Extradition is one of the most powerful tools that can be used against international organized crime, and the U.S. looks to the GOM for expanded use of the "exceptional circumstances" provision of its extradition law to ensure that drug fugitives facing charges in the U.S. can be brought to justice. We are encouraged by the GOM's efforts to appeal judicial decisions which undermine its ability to follow through on extradition orders and the delivery of fugitives for prosecution in the U.S. Nevertheless, a negative Supreme Court decision could nullify the positive advances made during the Zedillo Administration. Legislative or other remedies would then be required to preserve Mexico's ability to effect extraditions.

The two countries have made progress in initiating or implementing the following elements of the common strategy for cooperative action against illicit drugs. Mexico and the U.S. in 2000 will seek to:

Reduce the demand for illicit drugs in both countries through intensification of anti-drug information and education;

Improve our respective capacities to disrupt drug shipments by land, air and sea;

Focus law enforcement efforts against criminal organizations and those who facilitate their operations;

Strengthen U.S./Mexican law enforcement cooperation and policy coordination, especially through the vetted unit program;

Ensure that fugitives are brought to justice expeditiously and with due legal process;

Implement mechanisms to ensure appropriate status and physical protections for USG law enforcement personnel in Mexico;

Increase the abilities of our democratic institutions to attack the corrupting influence of the illegal drug trade;

Control essential and precursor chemicals and pharmaceutical drugs to prevent their diversion and illicit use;

Enforce existing laws more effectively, including the use of criminal tax evasion statues, to detect and penalize money laundering;

Seize and forfeit the proceeds of drug trafficking, and direct them to drug prevention and law enforcement;

Continue training and technical cooperation programs; and

Improve information exchange and coordination of CN activities.

Mexico Statistics

(1991-1999)

1999

1998

1997

1996

1995

1994

1993

1992

1991

Opium

Potential Harvest (ha)

3,600

5,500

4,000

5,100

5,050

5,795

3,960

3,310

3,765

USG Estimated Impact(1) (ha)

7,900

9,500

8,000

7,900

8,450

6,620

7,820

6,860

6,545

Eradication (ha)

15,469

17,449

17,732

14,671

15,389

11,036

13,015

11,583

-

Cultivation (ha)

11,500

15,000

12,000

13,000

13,500

12,415

11,780

10,170

10,310

Potential Yield (mt)

43

60

46

54

53

60

49

40

41

Cannabis

Potential Harvest (ha)

3,700

4,600

4,800

6,500

6,900

10,550

11,220

16,420

17,915

USG Estimated Impact(1) (ha)

19,400

9,500

10,500

12,200

11,750

8,495

9,970

12,100

10,795

Eradication (ha)

33,583

23,928

23,576

22,961

21,573

14,227

16,645

16,872

Cultivation (ha)

23,100

14,100

15,300

18,700

18,650

19,045

21,190

28,520

28,710

Potential Yield(2) (mt)

6,700

8,300

8,600

11,700

12,400

5,908

6,283

7,795

7,775

Seizures

Opium (mt)

0.80

0.15

0.34

0.22

0.22

0.15

0.13

0.17

0.10

Heroin (mt)

0.258

0.120

0.115

0.363

0.203

0.297

0.062

0.097

0.15

Cocaine (mt)

33.5

22.6

34.9

23.6

22.2

22.1

46.2

38.8

50.3

Cannabis (mt)

1,459

1,062

1,038

1,015

780

528

495

405

254.9

Methamphetamine (mt)

0.358

0.096

0.039

0.172

0.496

0.265

-

-

-

Arrests

Nationals(3)

10,261

10,034

10,572

11,038

9,728

6,860

17,551

27,369

8,621

Foreigners

203

255

170

207

173

146

75

208

141

Total Arrests

10,464

10,289

10,742

11,245

9,901

7,006

17,626

27,577

8,762

Labs Destroyed

7

8

19

19

9

5

4

9

(1)The eradication figures shown are derived from data supplied by Mexican authorities. The effective eradication figure is an estimate of the actual amount of a crop destroyed-factoring in replanting, repeated spraying of one area, and other factors.
(2)Cannabis potential yield figures for previous years have been revised based upon refinements in cannabis yield methodology.
(3)In 1995, the PGR revised downward the 1994 national detainees figure from 14,968 to 6,860

NICARAGUA

I. Summary

Nicaragua is a transshipment country for drugs from South America to the U.S. For this reason, Nicaragua remains a country of concern to the U.S. The country continues to have a consumption problem, especially in the Atlantic Coast region. President Arnoldo Aleman is committed to confronting the international narcotics trade. The Nicaraguan National Police's efforts to combat trafficking have generally been effective, although these efforts are constrained by resource shortfalls. Important legal reforms were implemented in 1999, and the judicial system demonstrated more willingness to convict traffickers. During 1999, the USG provided significant assistance to the Police's counternarcotics efforts. Nicaragua is party to the 1988 UN Drug Convention.

II. Status of Country

The Nicaraguan National Police continues to be a highly capable law enforcement organization, but its effectiveness is limited by severe resource constraints. Consumption of illegal drugs (especially crack cocaine) is a serious and growing problem, especially on the Atlantic Coast. Although the police are principally responsible for law enforcement, the army, which includes a naval unit, also supports Law Enforcement Efforts.

Policy Initiatives. In 1998, the National Assembly approved legislation to strengthen Nicaragua's counternarcotics efforts. That law went into effect in April 1999. The law increased penalties for drug trafficking, eliminated bail for trafficking offenses, and criminalized drug-related money laundering. Although the number of convictions increased in 1999, corruption and an antiquated legal system makes it difficult to keep prisoners incarcerated.

The GON, with USG assistance, continued efforts to reform the judicial system. The organic law of the judiciary, which established the foundation for a reformed court system, went into effect in January. The new criminal code was drafted and approved by the National Assembly's Justice Commission. It was presented to the Assembly for approval in mid- December. The criminal procedures code, dating from the 1800's and in clear need of replacement, was drafted and is under review by the Justice Commission. Building a more effective criminal justice system is the best way to increase the prospects that traffickers arrested in Nicaragua will receive appropriate punishment for their crimes.

Law Enforcement Efforts. Nicaraguan authorities seized 1,100 kilos of cocaine, two kilograms of heroin, 317,639 marijuana plants, and 10,568 crack stones during 1999. They also eradicated 308,200 marijuana plants and arrested 459 persons on drug-related charges. The biggest obstacle to police interdiction efforts is a severe lack of resources. The Narcotics Unit has only 96 officers, including administrative support. Despite this impediment, the GON added an additional 20 people to the anti-drug unit.

Corruption. The GON is working toward establishing an anti-corruption task force, to be composed of representatives from key agencies. The GON is also in the process of developing a national integrity plan geared toward greater transparency and governability. The plan will call for a civil service law to professionalize government employees. Police efforts to resist corruption are complicated by the fact that the police have the lowest salaries in Central America-an entry-level police officer makes less than $80 a month. A growing phenomenon in Nicaragua is the increasing misuse of medical parole, where convicted individuals with significant resources are buying their freedom under the guise of medical ailments.

Agreements and Treaties. Nicaragua is a party to the 1961 UN Single Convention, the 1971 UN Convention on Psychotropic Substances and the 1988 UN Drug Convention. A U.S./Nicaragua extradition treaty has been in effect since 1907; however, the Nicaraguan constitution prohibits extradition of Nicaraguan nationals. The GON reiterated its desire to re-open negotiations on a bilateral counternarcotics maritime agreement. Nicaragua is a member of CFATF.

Cultivation/Production. Marijuana is the only illegal drug known to be cultivated in Nicaragua. Police believe it is grown principally for local consumption. During 1999, eradication continued, but limited police resources were more focused on halting cocaine transshipment than on eliminating the local marijuana industry.

Drug Flow/Transit. Nicaragua remains a country of concern because of its potential, due to its location, to become a major drug-transit country. Traffickers use several routes through Nicaraguan territory. The area of the country most vulnerable to drug trafficking is the sparsely populated, isolated Atlantic Coast. Packets of cocaine frequently wash ashore, suggesting the cocaine was not destined for Nicaragua. Some Atlantic Coast residents support the traffickers by refueling trafficker vessels and by storing drugs. Drug trafficking appears to be the principal economic activity in several coastal communities. Seizures and other information indicate that drugs move north through Nicaragua along the Pan American highway. Maritime trafficking also occurs on the Pacific Coast.

Domestic Programs. Drug consumption in Nicaragua appears to be growing, especially crack cocaine usage on the Atlantic Coast. The Ministries of Education and Health, the police, and the Nicaraguan Fund for Children and Family (FONIF) undertake demand reduction campaigns within the parameters of their limited budgets. International donors, including the U.S., have also supported demand reduction efforts. The principal barriers to reducing narcotics demand on the Atlantic Coast is the lack of economic alternatives for those who would distribute the drugs, the endemic 60-70 percent unemployment, and a woefully insufficient number of law enforcement personnel.

III. U.S. Policy Initiatives and Programs

Bilateral Cooperation. The U.S. and Nicaragua have a good bilateral counternarcotics relationship. Relations between the U.S. and the Nicaraguan police, an entity established by the Sandinistas, had long been complicated by the politicization of Nicaraguan law enforcement. Over the past few years, however, the police have made great strides toward the professionalization of their institution as an effective and clearly apolitical entity. Relations between the police and the Managua DEA country office, established in 1997 at Nicaragua's request, are excellent. During 1999, the USG continued to provide significant anti-narcotics and law enforcement assistance to the National Police. The Department of Justice's International Criminal Investigative Training Assistance Program (ICITAP) provided assistance aimed at strengthening and restructuring the overall investigative division. The USG provided additional assistance to Nicaragua in the wake of Hurricane Mitch, which devastated law enforcement resources as well as elements of civil society. The emergency supplemental funding was directed toward strengthening anti-corruption, anti-alien smuggling and land freight drug trafficking interdiction capabilities.

The Road Ahead. The United States seeks to improve GON law enforcement capabilities to deter drug traffickers and other transnational criminals from using its territory as a transit route to the U.S. The U.S. concentrates its efforts on strengthening accountable democratic institutions. The U.S. encourages reform of the justice system that will lead to a more transparent and effective system. The USG will cooperate with the GON to re-open negotiations on a bilateral maritime agreement in order to facilitate joint operations and interdiction efforts in the region. The U.S. endorses the GON's efforts to criminalize drug-related money laundering and encourages further developments to deter the use of Nicaragua's financial institutions for illicit purposes. The U.S. strongly supports and will encourage the Nicaraguans to support the expansion of regional counternarcotics cooperation.

PANAMA

I. Summary

The government of Panama (GOP) continues to demonstrate its willingness to combat transnational drug trafficking. The GOP seized significant amounts of illicit drugs in 1999, despite apparent changes in trafficking routes. The new Mireya Moscoso Administration has demonstrated its commitment to combat money laundering, corruption, drug trafficking, and other transnational crimes. Immediately after taking office, the new Administration set up an anti-corruption unit in the Ministry of Economy and Finance. Talks on a full maritime agreement moved forward. A draft agreement is under review by the Ministry of Foreign Affairs. Panama's law enforcement agencies continue to maintain excellent relations with their U.S. counterparts. Panama is a party to the 1988 UN Drug Convention.

Panama is a major transshipment point for illicit drugs smuggled from Colombia. Cocaine is stockpiled in Panama prior to being repackaged for passage to the U.S. and Europe. Panama's location, largely unpatrolled coastlines, advanced infrastructure, underdeveloped judicial system, and well-developed financial services sector make it a crossroads for transnational crime, such as drug trafficking, money laundering, illicit arms sales and alien smuggling. Panama's Canal, containerized seaports, the Pan-American Highway, an active international airport, and numerous uncontrolled airfields provide organized crime groups almost unlimited transportation options through the country.

Panama's international banking center, a long established tax haven, combined with the Colon Free Zone (CFZ ) and a U.S. dollar-based economy render Panama vulnerable to money laundering. Panama hosted the "Third Hemispheric Congress on the Prevention of Money Laundering" in August 1999. The new Administration has expressed its interest in improving money-laundering controls and cooperating in these efforts with the U.S. and other countries in the region.

II. Status of Country

Panama continued to be a major drug transit country because of its proximity to the world's largest cocaine producer and because of its inadequate border, airport, and maritime controls. Domestic drug abuse continues to increase. Panama is not a significant producer of drugs or precursor chemicals. Panama's large and sophisticated banking and trading center, its dollar-based economy, and proximity to Colombia, make it an attractive site for money laundering, especially through the Colombian Black Market Peso Exchange (BMPE). The BMPE is a complex network dedicated to changing U.S. dollars into Colombian pesos and is used by drug traffickers and smugglers, as well as by legitimate industry attempting to avoid trade tariffs. The new Moscoso Administration has expressed interest in bolstering Panama's anti-money laundering measures (See Money Laundering Section). Panama is a member of the Caribbean Financial Action Task Force (CFATF).

III. Country Actions Against Drugs in 1999

Policy Initiatives. CONAPRED, Panama's national drug policy office, took a major step forward in 1999 through active efforts to establish a national chemical control policy. The initiative seeks to integrate government entities regulating chemical control with private sector businesses involved in the chemical industry and transportation of precursor chemicals.

Accomplishments. Panama continued to implement its own national counternarcotics plan, the "National Drug Strategy -1996-2001," through CONAPRED. This program, under the authority of the Attorney General, coordinates GOP and non-governmental organization (NGO) work and stresses prevention, treatment, rehabilitation, control of supply, and interdiction. Panama also made significant progress in implementing its comprehensive chemical control program. In August, Panama hosted the "Third Hemispheric Congress on the Prevention of Money Laundering," organized by the GOP's Financial Analysis Unit (UAF) and the Panama Banking Association. Officials and experts from Latin America, the U.S. and Europe gathered to focus on money laundering issues.

Law Enforcement Efforts. GOP agencies seized 2,576 kilograms (kgs) of cocaine, 1,558 kilos of marijuana, 46 kilos of heroin, 600 liters of acetic anhydride, and made 131 arrests for international drug-related offenses in 1999. Although 1999 cocaine seizures declined from record 1997-98 seizures, decreased seizures were due to changes in drug trafficking patterns rather than change in flow. Heroin seizures continued to increase, further establishing Panama as a principal link in the chain that funnels Colombian heroin to the U.S.

In January 1999, the National Assembly passed a law changing authority to designate and dismiss Technical Judicial Police (PTJ) executives from the Attorney General to the Supreme Court. The transfer led to confrontation between the two organizations that resulted in a serious deterioration in law enforcement cooperation to the extent that meaningful investigations, police work, and ultimately, successful prosecutions have been negatively affected. Nevertheless, U.S.-Panama bilateral cooperation with the PTJ's counternarcotics squad, which is co-housed with the Public Ministry's drug prosecutor, continues to be excellent.

The National Maritime Service (SMN ) has been Panama's interdiction success story. In 1999, the SMN conducted operations resulting in seizures of 453 kilos of cocaine and over 600 liters of acetic anhydride. The SMN seized several go-fast boats that were subsequently provided by the Attorney General to be utilized as SMN patrol craft. The SMN has a strong working relationship with the National Air Service (SAN), the Panamanian National Police (PNP), the PTJ, and the drug prosecutor's office and with their USG counterparts. The key to the SMN's strength is its leadership, both within the institution and as a lead agency in counternarcotics operations and seizures. SMN participation in high seas operations led to the seizure of 27 Mt. of cocaine from Panamanian flagged vessels outside of Panamanian territorial waters. The presence of U.S. Coast Guard (USCG) personnel to train and assist in joint mission planning and professional exchanges that are conducted during joint operations has been invaluable.

Despite limited air assets and internal structural problems, the SAN conducted two cannabis eradication operations in coordination with the Attorney General's drug prosecutor's office and provided excellent logistical support for USCG air assets.

The Direccion de Fiscalia Aduanal (DFA), the Customs branch responsible for interdiction efforts at seaports and international airports, seized multi-kilo shipments along the Costa Rican border and at Tocumen international airport. During 1999, DFA personnel assigned to Tocumen successfully seized in excess of two million dollars in U.S. currency concealed within airfreight. DFA was also responsible for a number of heroin seizures and for increasing coordination and cooperation with the PTJ, leading to all-around better drug enforcement.

Precursor Chemicals. Panama is not a major producer or significant consumer of chemicals used in processing illegal drugs. However, a large volume of chemicals transits the CFZ for other countries. This year, with the assistance of the Inter-American Drug Abuse Control Commission (CICAD), Panama took significant steps toward developing a regulatory/enforcement infrastructure to control the use and shipment of precursor chemicals.

Asset Forfeiture. The Panamanian legal system provides for asset forfeiture, including a system for identifying and forfeiting narcotics-related assets. Forfeiture actions have supplemented the PTJ, the PNP and other GOP law enforcement agencies with numerous vehicles. Although Panama has not enacted a specific law that provides for sharing seized narcotics assets with other governments, the GOP shares assets with other countries on a case-by-case basis. Current negotiations between the United States Attorney's office and the office of Panama's Attorney General to permit asset sharing in the multi-million dollar Gonzalo Rodriguez Gacha case exemplify this cooperation.

Money Laundering. Although cooperation between the U.S. and Panama on money laundering improved with the new Administration, the pursuit of money laundering cases remains constrained by laws requiring prosecutors to present an unusually high burden of proof and to meet extremely difficult evidentiary standards. (See money laundering section).

Corruption. The Moscoso Administration took office in September 1999 with a publicly-stated commitment to integrity and transparency. A presidential decree established a National Anti-Corruption Office in the Ministry of Economy and Finance. In 2000, the anti-corruption office is expected to propose legislation to define ethical conduct by government employees and specific sanctions for those breaking the law.

The GOP pursues those who produce, distribute, or traffic in narcotics and/or other controlled substances. However, outdated procedures and corruption undermine Panama's judicial system. Lack of prosecutions coupled with relatively low pay for law enforcement officers and insufficient resources negatively affects police morale. These factors inherently foster individual corruption and make it challenging to develop long-term, criminal investigations against top-echelon drug and money laundering violators. The new president of the Supreme Court is committed to making the judicial system more effective and transparent.

Agreements and Treaties. Panama is a party to the 1988 UN Drug Convention, the 1961 UN Single Convention and its 1972 Protocol, and the 1971 UN Convention on Psychotropic Substances. A mutual legal assistance treaty and an extradition treaty are in force between the U.S. and Panama. The Panamanian constitution, does not permit the extradition of Panamanian nationals. In 1991, the USG and the GOP signed a maritime operations agreement, which included provisions for shipriders and USCG support and assistance to the SMN. The USG concluded a Customs Mutual Assistance Agreement (CMAA) with the GOP in 1999. The GOP participates in CICAD, the Caribbean Financial Action Task Force (CFATF), and the Basle Committees' Offshore Group of Bank Supervisors (OGBS). In addition, Panama has bilateral agreements on drug trafficking with the United Kingdom, Colombia, Mexico, Cuba, and Peru and MLATs with the UK, Colombia, Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua. In 1997, Panama became the first Latin American country to join the Egmont group, an alliance of some 30 nations with centralized financial analysis units to combat money laundering.

The GOP has not signed a US-Panama bilateral comprehensive maritime counternarcotics treaty, although a draft agreement is currently under review by the Ministry of Foreign Affairs. Discussions with the new Administration on the text will continue in 2000.

Cultivation and Production. In 1996, the entire coca cultivation in the traditional growing areas of the eastern Darien region along the Colombian border was eradicated. Aerial reconnaissance confirms that the cultivators have not replanted any fields. The limited amounts of marijuana being cultivated supply the local market and are insufficient for export. The presence of significant quantities of Colombian heroin transiting Panama during 1999 indicates that South American drug organizations remain committed to increasing their share of the highly profitable heroin market.

Drug Flow and Transit. Panama is a key hub for the transit and distribution of South American cocaine and increasingly, precursor chemicals and heroin. Fishing vessels, cargo ships and "go-fast" boats transit Panamanian waters and either continue on to other Central American countries or drop off their cargo in Panama. Shipments dropped off in Panama are repackaged and moved northward on the Pan-American Highway or depart in sea freight containers. There were reports of small, low-flying planes entering Panamanian airspace and dropping drug loads in remote, sparsely populated areas. Cocaine and heroin are also moved to the U.S. and Europe by couriers transiting Panama by commercial air flights.

Domestic Programs (Demand Reduction). Drug abuse continues to plague Panama, with use of cocaine and its derivatives reaching ever-higher levels. About 20 percent of seizures in 1999 consisted of drugs destined for Panamanian consumption. Several years ago, Colombian trafficking organizations began giving their Panamanian associates cocaine as payment rather than cash. In order for the Panamanian middlemen to convert the cocaine to cash, it had to be distributed locally. This change was the genesis of Panama's current cocaine/crack epidemic. Crack or "bazuco" is sold to urban youth and Kuna Indians, whose home, the San Blas autonomous region, has emerged as a major drug airdrop center. Kuna leaders have expressed concern over the impact of the drug trade on their society. GOP officials fear that the increase of heroin trafficking will give rise to a serious heroin abuse problem.

Panama continued to vigorously implement CONAPRED's counternarcotics plan developed under the auspices of the Attorney General's National Drug Strategy. The demand reduction portion of the strategy stresses prevention, as well as treatment, rehabilitation and reinsertion of drug users into the labor force. The Ministry of Education and CONAPRED promote demand reduction through training for teachers, information programs, anti-drug abuse training for youth, school curriculum programs and support for the National Drug Information Center (CENAID). These efforts are integrated with the Ministry of Health's treatment and rehabilitation programs and those of the Catholic church, Panamanian NGO "Cruz Blanca (White Cross)," the University of Panama, the "Panama Coalition For A Drug- Free Community," and the "Pride Foundation." One weakness in GOP drug treatment programs is that there are no long-term rehabilitation programs outside of the major urban centers.

IV. U.S.Policy Initiatives and Programs

Program agreements between the U.S. and Panama provide crucial equipment, training, and information to enhance the performance of GOP counternarcotics institutions. The key objectives of these programs are to improve Panama's prosecutorial and investigative capabilities, strengthen Panama's judicial system, encourage the enactment of more effective laws and regulations covering counternarcotics, money laundering and corruption, and ensure strict enforcement of existing Panamanian laws. The U.S., through USAID and ICITAP, is assisting the GOP to develop a comprehensive Administration of Justice (AOJ) program to strengthen law enforcement and judicial institutions and procedures.

During 1999, the U.S. Coast Guard continued to work closely with the SMN, enhancing its effectiveness as a maritime interdiction force. In 1999, the U.S. provided the SMN with two 82-foot Point class Coast Guard patrol boats and helped the GOP to establish an SMN station on the Caribbean mouth of the Panama Canal. The U.S. has traditionally had an excellent relationship with Panamanian Customs and U.S. programs have provided Panamanian Customs with training and operational tools.

Other U.S. projects in 1999 supported the Ministry of Education's teacher training for demand reduction programs and joint counternarcotics operations between DEA, Customs and the Coast Guard and their Panamanian counterparts in PTJ, Customs, and the SMN. The USG provided training, equipment, and operational support to the PTJ, the PNP, CONAPRED, the Joint Intelligence Coordination Center (JICC), the office of the drug prosecutor, Customs and Immigration. The Embassy has also purchased an ion scanner machine for the use of Panama's law enforcement community and is working with the PTJ forensics laboratory to examine upgrading its equipment. The U.S. continued to fund and develop Panama's JICC, including upgrading software and training for the JICCs employees and providing precursor chemical control training.

Bilateral Cooperation. The new Administration has demonstrated its political will to increase joint counternarcotics efforts and strengthen national law enforcement institutions. The GOP cooperates with U.S. requests to board and search Panamanian-flagged vessels suspected of drug smuggling in international waters. In 1999, U.S. and Panama carried out four joint operations. The PTJ and the PNP, with support from the U.S. Immigration Service, U.S. Customs and DEA, executed three major joint interdiction operations along the Costa Rican border against alien smuggling and drug trafficking.

The Moscoso Administration requested U.S. assistance in developing Panama's law enforcement/national security strategy. The U.S. and Panama held the first bilateral meeting of the new Administration in November 1999 to address U.S. support for strategy development. The U.S. and Panama discussed an array of issues in the context of four working groups: society and the environment, law enforcement, trade, and security. The Law Enforcement Working Group exchanged information and presented recommendations on counternarcotics, extradition, asset forfeiture, justice reform, alien smuggling, and money laundering. These meetings demonstrated the new Administration's determination to build successful law enforcement and justice institutions and enhance Bilateral Cooperation.

The GOP pursued major drug kingpins. Pierre Janeiro Barbe was implicated as the principal transporter/owner of over 5 mt of cocaine seized from two ships. Concluding a thirteen-month investigation in October 1999 by the Panama drug prosecutor's office, PTJ and DEA, the GOP executed arrest, search, and seizure warrants. While Barbe remains at large, he has been declared a fugitive from Panamanian justice and his assets have been seized.

The Panamanian drug prosecutor's office participated in a bilateral investigation to target a Panamanian export company involved in the seizure of 432 kgs of cocaine in June 1999 in New York and obtained evidence in the U.S. case for prosecution in Panama. The drug prosecutor authorized the initial arrest of individuals in Panama believed to be integral members of the cocaine distribution network.

Road Ahead. The Moscoso Administration has demonstrated willingness to build strong law enforcement institutions, combat money laundering, and ensure security of the canal. The GOP has repeatedly noted its interest in maintaining the security of the Darien region from infiltration by Colombian "narco-guerillas." The U.S. and Panama will continue to cooperate in these areas and strengthen joint counternarcotics efforts. Conclusion of a bilateral maritime agreement will greatly facilitate joint cooperation.

Panama's law enforcement efforts would be enhanced through closer coordination between its law enforcement agencies and with U.S. counterparts. The U.S. will work with the GOP to help strengthen Panama's law enforcement institutional capacity, particularly in training, interdiction, investigation and prosecution. The U.S. will support anti-corruption efforts and criminal justice reform. Panama's anti-money laundering efforts would be strengthened through implementation of banking reforms. A major goal will be to seek enactment of legislation to widen the existing law against drug money laundering to include the proceeds from all serious crimes, and to permit the UAF to share information with domestic and international counterparts.

The USG will continue to work with the Ministries of Health and Education and NGOs to expand Panama's demand reduction program. While realizing that the GOP has budgetary limits, the USG will encourage the GOP to seek new sources of funds, such as those available through effective money laundering prosecutions and asset forfeiture, to provide sufficient resources to law enforcement agencies.

Panama Statistics

(1991-1999)

1999

1998

1997

1996

1995

1994

1993

1992

1991

Coca

Net Cultivation (ha)

-

0

0

0

10

10

-

-

Eradication (ha)

-

-

0

125

110

90

60

-

-

Cultivation (ha)

0

125

110

100

70

-

-

Seizures

Cocaine (mt)

2.58

1.00

9.96

8.60

5.89

8.60

5.68

9.80

9.30

Cannabis (mt)

1.56

10.47

13.82

18.12

0.06

0.01

32.5

7.33

9.88

Heroin (mt)

0.046

0.022

0.033

0.010

0.030

0.007

0.013

0.001

Arrests/Detentions

Nationals

-

1,393

1,143

1,113

737

879

696

412

610

Foreigners

131

139

217

139

137

284

104

105

149

Total Arrests

131

1,532

1,360

1,252

874

1,163

800

517

759

[End.]

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