THE INTERNATIONAL COCAINE INDUSTRY: PRODUCTION, TRAFFICKING, AND PROSPECTS FOR CONTROL

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP89M00699R002201800002-5
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 30
• Document Creation Date: December 27, 2016
• Document Release Date: February 28, 2012
• Sequence Number: 2
• Publication Date: November 1, 1987
• Content Type: REPORT

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..~~Director of
Central
Intelligence
Prospects for Control
The International Cocaine Industry:
Production, Trafficking, and
Interagency Intelligence Memorandum
cret
NI JIM 87-10016
November 1987
Copy 3 3 8
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NI I I M 87-10016
THE INTERNATIONAL COCAINE INDUSTRY:
PRODUCTION, TRAFFICKING, AND
PROSPECTS FOR CONTROL
Information available as of 7 October 1987 was
used in the preparation of this Memorandum
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CONTENTS
Page
SCOPE NOTE ...................................................................................... 1
KEY JUDGMENTS .............................................................................. 3
DISCUSSION ........................................................................................ 7
Coca Cultivation in South America: On the Increase ........................ 7
Coca Cultivation in Peru .................................................................. 7
Coca Cultivation in Bolivia .............................................................. 9
Coca Cultivation in Colombia ......................................................... 9
Coca Cultivation in Other South American Countries .................. 9
Cocaine Production and Trafficking ................................................... 10
The Organization of the Industry .................................................... 10
Profit Taking and Money Laundering in the Cocaine Industry ... 11
Colombia-The Undisputed Cocaine Production Center ............. 11
Bolivian and Peruvian Roles in Cocaine Production ..................... 12
Spillover Countries-The Narcotics Challenge of the Future ...... 14
Trafficking Routes and Techniques ................................................. 14
Essential Chemicals-Lifeblood of the Cocaine Industry ............. 15
Drug Control Efforts: An Uphill Battle ............................................... 15
Interdiction ........................................................................................ 16
Eradication ........................................................................................ 16
Crop Substitution .............................................................................. 16
Control of Chemicals ........................................................................ 17
Legal Reform .................................................................................... 18
Other Recent Efforts ......................................................................... 19
Obstacles To Control ............................................................................ 19
The Profits ......................................................................................... 19
Political and Practical Constraints ................................................... 20
Corruption and Trafficker Violence ................................................ 20
Insurgent-Trafficker Collusion ....................................................... 21
Cocaine's Economic Impact on Producing Countries .................... 22
Prospects for Control ............................................................................ 22
Controls in the Spillover Countries ................................................. 22
The Resource Problem ..................................................................... 22
Recognizing Local Drug Abuse ....................................................... 23
Conclusion ............................................................................................. 23
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SCOPE NOTE
This Interagency Intelligence Memorandum presents a compre-
hensive look at the international cocaine industry: its power and
influence; its infrastructure; the dynamic factors that affect the location
and development of cultivation and production centers and the traffick-
ing routes; the efforts taken to control cocaine; the obstacles to such ef-
forts; and the prospects for reducing cocaine supplies over the next two
years.
The paper will look at the role of Colombia, Peru, and Bolivia in
the cocaine industry and will explore the "spillover" of this trade into
other South American countries. It will assess generally the types of
drug control programs-including crop eradication, crop substitution,
and interdiction-that South American countries have developed to
counter the cocaine threat.
We will review the cocaine trade's far-reaching economic impact
on South American governments as well as the political and practical
constraints they face in building effective drug control programs.
Finally, this paper will deliver a prognosis on the fate of the
cocaine industry over the near term.
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KEY JUDGMENTS
The international cocaine industry is flourishing. Despite US-
sponsored programs to reduce the cultivation, production, and traffick-
ing of coca products from South America, the nonstop expansion of this
industry continues. We estimate that in 1986: coca was cultivated at
record levels of 140,000 to 170,000 hectares in Peru, Bolivia, Colombia,
and Ecuador; South America had at least 170 metric tons of cocaine
hydrochloride (cocaine HCl or simply "cocaine") available for export.
Coca cultivation is expanding at a rapid rate and all indications
point to a continued surplus of cocaine on the international market for
the foreseeable future. Coca cultivation and processing are highly
attractive to the South American farmer because coca sells for two to
three times as much as legitimate cash crops. At every stage the profit
margins in the cocaine industry are enormous.
Colombian trafficking organizations dominate the international
cocaine industry, even though only a relatively small percentage of the
world's coca is grown in Colombia. Peru and Bolivia supply most of the
coca paste and coca base that the Colombian organizations refine into
cocaine and distribute to the international market. Because of its
chemical properties, Colombian-grown coca yields less cocaine than
either Peruvian or Bolivian coca. The Colombian organizations
achieved dominance by pioneering the development of integrated
production, refining, and distribution networks; they take advantage of
their location, which gives them direct access to the shortest sea, air, and
land routes to smuggle their products into the United States.
Colombia's remote southeastern jungle region has been, since the
early 1980s, the site of the world's primary processing center for
multiton quantities of cocaine. In this region, isolated from government
enforcement arms, traffickers have established sophisticated laboratory
complexes that enjoy advantages of operational security and economies
of scale that would not be possible in more populous areas
Bolivia is emerging as a second important center for refining
cocaine and distributing it directly into the international market. This
trend became evident in 1986 during the joint US-Bolivian Operation
Blast Furnace which targeted Bolivian coca processing facilities for
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destruction. Although Bolivia continues to supply large quantities of
coca products to Colombian traffickers, we believe the Bolivians also
are building independent networks capable of refining and distributing
cocaine to the United States and international markets.
Peru grows more than half of the world's supply of coca leaf, most
of it in that country's Upper Huallaga River valley. This valley is the
most important coca growing region in the world and also serves as a
major trafficking point in the international cocaine pipeline. Like
Bolivia, Peru continues to supply significant quantities of its coca
products to Colombian traffickers for refining and distribution. How-
ever, there is evidence that Peruvian organizations also are attempting
to develop their own cocaine refining laboratories and international
distribution networks.
Colombian traffickers have developed an extensive underground
financial network to launder the large sums of money received from the
sale of cocaine. While other countries are involved in the movement of
drug money, Panama is the principal transit point.
The international cocaine industry, though highly structured, is
remarkably flexible. The major cocaine traffickers have developed
increasingly efficient and resilient organizations for producing and
getting their products to market. At the same time, law enforcement
pressures, competition from independent operators, and the require-
ments of servicing a worldwide market has stimulated the evolution of
trafficking "conglomerates."
Increased law enforcement pressures over the past few years in
Colombia and rising demand for cocaine in consuming countries have
caused significant expansion in international cocaine production and
distribution-most notably, a spillover of the refining industry into
other South American countries.
The presence of insurgent orces n many coca-producing areas
complicates the narcotics control programs of Latin American countries,
particularly Colombia and Peru. Some military leaders are reluctant to
divert their limited resources from counterinsurgent operations; some
are reluctant to expose the armed forces to the corrupting influence that
can accompany involvement in narcotics enforcement. In Colombia, the
government may feel constrained from conducting major counternar-
cotics operations in areas where the Colombian Revolutionary Armed
Forces (FARC) are present for fear that FARC will use the operations as
a pretext for declaring a total breakdown in the tenuous truce that has
existed between the two sides.
Some insurgent groups exploit the narcotics trade within their
territories for operational funds and other benefits; however, they do
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not appear to be generally involved in the highly profitable interna-
tional distribution sector of the trade. While insurgent groups and major
trafficking organizations share some common interests, the ultimate
political goals of the insurgents are antithetic to the purely mercenary
motives of the traffickers. Thus, although various insurgent groups and
traffickers occasionally cooperate, they reportedly also clash.
The traditional trafficking routes between South American suppli-
ers and North American and European consumers continue to be
through the Caribbean. In recent years, however, there has been a
significant rise in the use of Mexico for transshipment of cocaine into
the United States. Approximately one-third of the cocaine entering the
United States during 1985 transited Mexico. Trafficking routes also have
shifted to accommodate the growing international market. As European
demand has grown, cocaine is more frequently shipped directly from
Bolivia, Brazil, and Argentina
Although comprehensive drug control programs subsume a combi-
nation of enforcement, demand reduction, and economic development
programs, most South American governments have concentrated their
limited resources on cocaine interdiction. This is generally politically
more palatable than cracking down on small-time coca growers and
peasant farmers and safer than trying to dismantle the powerful
trafficking networks that manage the cocaine trade.
Manual eradication programs have proven only marginally effec-
tive against coca cultivation and are very costly to implement. An
aerially applied herbicide would appear to be the ideal method for
reducing coca cultivation. Although one potentially effective aerial
herbicide has been developed, it is not yet available for commercial use
because of political and environmental concerns.
Crop substitution will not work in the coca-growing countries as
long as coca remains so much more profitable than other crops.
We judge that the situation in most cocaine-trafficking countries
will continue to worsen in the near term. This deterioration may well
provoke additional public and official pressure for significant counter-
narcotics action. Rising domestic drug abuse, violence, corruption, drug
involvement by insurgents, and the growing power of major drug
dealers have already demonstrated to some South American leaders that
cocaine is no longer exclusively a foreign problem. Public opinion in
some countries also seems to be shifting in favor of more controls. C
Some steps are being taken toward regional cooperation. If success-
ful alliances against cocaine can be achieved among the key South
American countries, it will lessen the options open to traffickers for
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expansion and evasion of enforcement activities. Traffickers' cross-
border tactics, in particular their ability to flee areas of enforcement
and operate elsewhere, could be stymied by the creation of more
uniform international drug suppression mechanisms. Recently, South
American leaders have begun to call for the internationalization of
antinarcotics efforts. If these countries can overcome traditional rival-
ries and begin genuine cooperation, we believe a concerted regional
South American antidrug effort with broad international backing would
enhance existing national programs in the area.
The prognosis for the next two years for US supply reduction
programs to significantly decrease the success being enjoyed now by the
international cocaine industry is grim. The most that realistically can be
expected is that current programs will disrupt the trafficking, and
increase costs and risks of doing business. Well-planned and long-term
multinational programs offer the most potential for overall supply
reduction success.
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DISCUSSION
Coca Cultivation in South America: On the
Increase
1. The international cocaine industry is flourishing.
We estimate that in 1986 coca leaf was cultivated on
140,000 to 170,000 hectares in Peru, Bolivia, Colom-
bia, and Ecuador. Furthermore, coca growth is ex-
panding at a rapid rate. By our estimate, South
America had at least 170 metric tons of cocaine
hydrochloride (cocaine HC1 or simply "cocaine")
available for export in 1986.' According to the latest
estimate from the National Institute for Drug Abuse
(NIDA), US consumption of cocaine now is approxi-
mately 72 metric tons, more than twice the estimated
use in 1982
2. The coca bush is incredibly hardy and resistant
to currently available and politically acceptable herbi-
cides. It has a lifespan of 20 years or more and some
varieties can deliver a first harvest in as little as 12
months. Substitute crops such as citrus or coffee can
take three years or more for the first harvest. (See inset
on page 10.
3. Illicit coca cultivation is highly profitable to the
South American farmer, enabling him to earn many
times the return he would get from legitimate cash
crops. As many as one million persons may be directly
dependent on coca cultivation in South America.
' Little hard data are available on the amount of cocaine annually
produced from South America's coca growing areas. The National
Narcotics Intelligence Consumers Committee (using a dry leaf yield
per hectare of 1.4 tons for Bolivia, one ton for Peru, one ton for
Ecuador, .8 ton for Colombia, and an average conversion rate of 500
kilograms of dry leaf equating to one kilogram of cocaine) calculates
a total worldwide cocaine production capacity of 340 tons. This is
the theoretical maximum cocaine output and assumes that all the
leaf grown is converted into cocaine with high efficiency. It does not
take into consideration local domestic consumption abroad of coca
leaf and coca products; spoilage; inefficiencies in processing; and
losses from interdiction. In Peru, leaf chewers consume thousands of
tons. Traffickers there are known to use inefficient drying, storing,
and processing techniques. We believe these losses may drain off up
to two-thirds of Peru's annual cocaine production capacity. Much
less coca is cultivated in Bolivia; but, because of higher leaf yields,
smaller domestic consumption, and more efficient processing, a
much higher percentage of Bolivia's leaf is converted into cocaine.
In our judgment, Peru's cocaine output then is about 60 tons or
more, Bolivia's some 80 tons, with the remainder of the world's
supply accounted for by the smaller producers. (See figure 2.~
ideal crop to estimate
Because it is a perennial with a life cycle of 10 to 20
years, estimates of cultivated coca hectarage, once
obtained, may be reliable for years.
4. Peru has emerged in the last decade as by far the
world's leading producer of coca leaf, having more
than twice as much hectarage in coca cultivation as
Bolivia and Colombia combined. Peru's 1986 coca
crop is estimated to have been 106,000 hectares.
Extensive slash-and-burn activity was seen in 1986 in
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Figure 1
Coca Cultivation
Cosa
RI" .
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V V V??~ r V ~IiQ Guav,0,e
~ali ~\? Pao
Confirmed cultivation
Suspected cultivation
Porto
Velho
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Figure 2
Coca Leaf Cultivation by Country
Peru
106,000
all four of Peru's major growing regions, which indi-
cates that coca cultivation will probably expand in
these same general areas. According to this year's
estimate, about two-thirds of Peruvian coca is grown
in the Huallaga River valley region in the Depart-
ments of Huanuco and San Martin. We judge that
processing inefficiencies probably limit the amount of
cocaine produced from the large Peruvian hectarage
to about 60 metric tons a year. Peruvian traffickers are
reportedly improving processing techniques, however,
and therefore increased cocaine production in the
future is probable
5. We estimate that Bolivia has 32,000 to 38,000
hectares planted in coca. Our best estimate of cultiva-
tion is 34,250 hectares, with an estimated cocaine
output of 80 metric tons. The Chapare region is
Bolivia's largest coca producer, with an estimated
26,000 hectares under cultivation, or 75 percent of the
total for Bolivia. The Yungas is the second-largest coca
growing region in Bolivia with 95 percent of all
cultivated land there devoted to coca. Coca fields in
the Yungas are about half the size of those in Chapare.
The Yungas used to be a major fruit and citrus
supplier for Bolivia, but now only a few orange groves
and banana trees remain. Two of the smaller regions
are Apolo and Yapacani. Extensive slash-and-burn
activity has been seen recently in Apolo, indicating
that coca cultivation may significantly expand in this
region in the future
6. Although Colombian trafficking groups control
much of the cocaine trade, they rely on growers in
Peru and, to a lesser extent, Bolivia, to supply most of
the coca paste and cocaine base they need for conver-
sion to cocaine. The chemistry of Colombian coca
leaves, when compared to coca grown in Peru or
Bolivia, is such that much more coca is needed to
obtain the same amount of cocaine that could be
refined from leaf grown in Peru or Bolivia, assuming
that the processing methods remain uniform. On the
basis of a recently completed aerial survey of southeast
Colombia, we believe that growers there will have
some 20,000 hectares under cultivation by 1988.F_
Coca Cultivation in Other South American
Countries
7. Ecuador and Brazil have the potential to become
important coca producers. Ecuador is estimated to
have between 1,000 and 2,000 hectares of coca under
cultivation, most of it along the Ecuadoran/Colombian
border. Ecuadoran coca is a different variety than that
grown in Colombia, Peru, and Bolivia. The average
height of coca plants in Ecuador is 6 to 8 feet, with
some plants as tall as 12 feet. Most coca plantations in
Ecuador are believed to be owned and operated by
Colombians who move freely across the border. As is
the case in Bolivia and Peru, the bulk of Ecuador's
coca leaf crop is converted to coca paste before it is
transported to Colombia f r onversion to cocaine
hydrochloride.
8. In Brazil, neither the US Embassy nor the Brazil-
ian Department of Federal Police can offer a reliable
estimate of the area under coca cultivation and to date
there is no thorough coca crop assessment for the
eral information indicates that coca in the Upper
Amazon Basin is similar to the Ecuadoran variety,
grown interspersed with trees.
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Coca is one of the oldest plants cultivated in South
America. According to archaeological evidence it has
been grown for at least 5 millenia by indians of the
Andes and adjacent areas. These people still chew its
leaves to reduce fatigue, hunger, and the effects of high
altitude and use them to brew medicinal teas. Produc-
tion for such local uses is legal in both Bolivia and Peru.
The two major species of coca that contain the
cocaine alkaloid can be grown over a very wide range
of climates, limited apparently only by frost or near-
desert condition I
It is thought that only two species of coca (genus
Erythroxylon) contain enough cocaine in their leaves to
warrant cultivation: E. coca and E. novogranatense.
The many American species are all shrubs or small
trees. In the wild, coca is usually found growing below
1,000 meters in elevation, both in open thickets and in
the forest understory. Cultivated varieties grow at
elevations of at least 2,000 meters, sometimes to 2,500
meters. Coca species are widely distributed in both wet
and dry tropical areas of South America.
E. coca, also known as Bolivian coca, is grown in
moist, tropical valleys on the eastern slopes of the
Andes, mainly between elevations of 500 and 1,500
meters. It appears to be highly adaptive, as there are
numerous variants-some do better in shade, others
thrive on open ridges, and still others prefer low valleys.
A generally tough plant, probably native to the area, E.
coca seems to stay free of serious pests or diseases and
can live more than 20 years. Its greatest vulnerability is
that its seeds are viable for only a very short period and
are highly susceptible to drying out; however, the plant
can also be propagated from cuttings
A variant of E. coca, called Amazon or E. coca
variety ipadu, grows widely in the Amazon basin, in
Brazil and Ecuador, and in the lower eastern areas of
Colombia and Peru. Its leaves contain less cocaine and
the plant is shorter-lived than Bolivian coca, but Ama-
zon coca is usually propagated by cuttings and appears
to grow very fast. It can be harvested as early as six
months after planting and have its leaves picked fre-
quently thereafter.
The second cultivated species, E. novogranatense, is
also called Colombian coca. In pre-Colombian times
was grown on the Caribbean coasts of both South and
Central America. It also adapts easily to various envi-
ronmental conditions and is highly resistant to drought.
It can even survive in the subtropical conditions of
Miami.
Most of the above information is drawn from Botanical Perspec-
tives on Coca by Timothy Plowman, Ph.D., Botany Department, Field
Museum of Natural History, Chicago.
Figure 3
Coca Bush
Cocaine Production and ra cking
The Organization of the Industry
9. The huge and powerful international cocaine
trade is dominated by Colombian organizations, whose
astute manipulations of cultural norms, local political
systems, and the media are abetted by the selective use
of bribery, violence, and intimidation. The Colombian
organizations also have the advantage of their location,
which gives them direct access to the shortest sea, air,
and land routes to smuggle their products into the
United States through the Caribbean and Central
America. The industry is highly structured and yet
remarkably flexible. The major traffickers are devel-
oping increasingly efficient and resilient organizations
for getting their products to market. At the same time,
enforcement pressures, competition from independent
operators, and the requirements of servicing a world-
wide market have stimulated the evolution of traffick-
ing "conglomerates."
10. Major Colombian organizations have integrated
growing, processing, transporting, and marketing into
large vertical organizations held together by family
ties. Beginning in the early 1970s major traffickers
began to control the refining and distribution process,
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which eliminated profit taking by independent mid-
dlemen, provided better assurance of supply, more
leverage in the market, and reduced financial risks. In
the late 1970s they began to cultivate coca in the
southeast region of Colombia. These large, integrated
operations have been better able to utilize sophisticat-
ed communications, provide intelligence up and down
the trafficking chain, and more effectively bribe or
corrupt key officials. The heads of these large-scale,
integrated organizations, by being aware of the dy-
namics of world markets and the scope of antinarcotics
activities, are able to improve their business effective-
ness.
Profit Taking and Money Laundering in the
Cocaine Industry
11. We estimate, on the basis of Drug Enforcement
Administration's (DEA) figures, that gross receipts
from Colombian sales of cocaine in the United States
were between $6.8 and $8.5 billion as far back as 1983.
The industry has grown significantly since then. To
move contraband receipts from the United States to
creditors and safehavens overseas, Colombian traffick-
ers have developed an underground financial network.
This network enables them to sidestep US laws requir-
ing that large cash transactions be reported, and to
evade the tangled and inconsistent domestic exchange
controls in the Latin American countries that are the
destinations for much of the drug money. This net-
work extends from the United States through Central
America to most of the northern-tier South American
countries.
12. All available evidence indicates that Panama is
the principal transit point for drug money moved out
of the United States. The recent joint Drug Enforce-
ment Administration-Panamanian undercover opera-
tion, known as Operation PISCES, temporarily dis-
rupted money laundering activity in Panama but the
long-term effects of this effort are unknown at this
time. The current political instability in Panama re-
portedly is also disrupting money laundering activities.
Nevertheless, the popularity of Panama as a receiving
and disbursement center is likely to continue due to a
number of factors:
- Panama provides stringent bank secrecy along
with liberal incorporation laws that facilitate the
establishment of shell accounts to disguise the
true ownership of money.
- Panama is a major logistic crossroads for the drug
trade from South America.
- Panama's extremely liberal exchange policy pro-
vides an ideal environment for money launder-
ing in addition to Panama being a popular
meeting place, recreational center, and safeha-
ven for traffickers.
- Panama has no exchange controls, no import
licenses, no taxes or subsidies on exchange trans-
actions, and no limits on the exportation of
currency.
- The US dollar is legal tender in Panama.
- Colombia and Panama have strong historical,
social, and financial ties
13. Other countries are involved in the movement
of drug money because of their positions as suppliers
of cocaine and raw coca products, as suppliers of
processing chemicals, or as transit states for drug-
related materials. Peru and Bolivia, the major sources
of coca paste and cocaine base, have received large
amounts of US currency from the drug trade operating
through their borders. Ecuador and Venezuela have
received drug money primarily because they are
trafficking conduits. Brazilian smugglers acquire US
currency by supplying precursor chemicals not easily
obtained on the open market because of increased
governmental controls. Some Caribbean islands also
attract drug money as a result of drug smuggling
activities and, in some instances, because of banking
laws that are conducive to money laundering opera-
tions.
Colombia-The Undisputed Cocaine Production
Center
14. Colombians are the world's foremost processors
and traffickers of cocaine. The coca paste and cocaine
base are smuggled into Colombia, usually on private
aircraft, for refining into the final product-cocaine.
For many years, most cocaine refining took place in
small, clandestine laboratories in the major Colombian
cities of Medellin, Cali, and Bogota under the direct
supervision of trafficking families who had consolidat-
ed control of the trade.
15. By the early 1980s Colombia's remote south-
eastern jungle emerged as the world's primary process-
ing center for multiton quantities of cocaine. Unprece-
dented demand for the drug, primarily from the
United States, caused producers to seek new ways to
facilitate the vastly greater flows of both raw materials
and finished product necessitated by an expanding
market and to build sophisticated jungle laboratory
complexes in southeast Colombia. The jungles offered
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able in the more populous areas of Colombia
16. Government raids against the remote Colombi-
an jungle production sites, beginning in early 1984,
revealed for the first time how sophisticated the
cocaine refining business had become in Colombia.
Separate structures include laboratories, worker dor-
mitories, and kitchens; they house processing chemi-
cals and various equipment. Many of the larger com-
plexes are equipped with gasoline-powered generators
to provide electricity to run drying lamps, washing
machines, and other laboratory apparatus. Earth-mov-
ing equipment, such as bulldozers and tractors, are
often present on such sites to maintain the associated
airstrip, often capable of supporting multiengine trans-
port aircraft. Despite sporadic and largely unsuccessful
local government attempts to shut down these cocaine
refining centers, satellite imagery reveals that most of
these complexes are still operating in southeastern
Colombia.
17. In the late 1970s, coca cultivation in Colombia,
once a small-scale enterprise, began expanding dra-
matically along isolated stretches of rivers in the
southeastern jungles. This expansion continues today
and probably is an attempt by Colombian groups to
lessen their reliance on foreign coca paste supplies.
Although Colombian-grown coca is reported to be
lower in quality than Peruvian- or Bolivian-grown
coca, it is more than sufficient to supply the demand
for basuco-a cheap, semirefined form of cocaine
marketed largely in South America-and probably
supplements paste supplies for cocaine HCl operations
as well.
18. Traffickers can rely on the Colombian south-
eastern region's extensive aircraft-based transportation
infrastructure to
within Colombia.
indicated that, by late 1985, traffickers had
constructed over 50 dirt or sod airstrips near cocaine
processing and staging points. Traffickers now can also
distribute cocaine base from the approximately 100
airstrips associated with villages, ranches, farms, and
missionary camps that are within the country's coca-
growing region.
19. Once primarily a supplier of intermediate coca
products to Colombia, Bolivia has emerged as an
important producer of refined cocaine hydrochloride.
During the 1986 joint US/Bolivian Operation Blast
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Furnace (see inset), police raided 21 cocaine laborato-
ries, which, in our view, represented only a small
portion of Bolivia's refining capacity. Various sources
indicate that there are a number of refineries in
remote areas of the Beni, Pando, and Santa Cruz
Departments of Bolivia. Wealthy and influential Bo-
livian traffickers have used profits from cocaine ex-
ports to build independent networks that, in many
cases, oversee distribution of their product to the
United States and other consumer markets. In addi-
tion, reporting suggests that Bolivians are expanding
narcotics activity in southern regions of South America
in search of new smuggling routes as well as supplies
for refining operations.
20. As Bolivia has assumed more importance as a
producer of finished cocaine, drug processing has
become a highly organized activity. Whole communi-
ties in or near agricultural areas may be involved in
producing coca paste as a cottage industry. Coca paste
is taken to remote cocaine base and cocaine hydrochlo-
ride processing centers located in the largely undevel-
oped areas of northern and eastern Bolivia. Some
major traffickers own, either outright or through
fronts, large cattle ranches that serve as ideal sites for
storing and processing large quantities of coca prod-
ucts, and for shipping drug cargoes destined for
export. Most of these ranches have airstrips, and many
are equipped with hangars and modern radio commu-
nications gear. The bulk of Bolivia's cocaine is shipped
by air from Bolivia's nearly 1,700 airstrips, which are
also used to support the country's legitimate industries.
21. Peru's Huallaga River valley, the largest coca
growing region in the world, is the start of the cocaine
production pipeline. Coca products are typically flown
out of the region's numerous unregistered airstrips or
few municipal airports to remote areas in Peru's
northeastern jungles and to southeastern Colombia for
further processing. The importance of northeastern
Peru was underscored in mid-1985 when authorities
discovered several well-equipped paste/base process-
ing and staging complexes along the Colombian border
that were capable of handling multiton quantities of
the drug. Some coca products from Peru are carried
out on the thousands of kilometers of navigable tribu-
taries of the Amazon River. There are some indica-
tions that Peruvian drug organizations are attempting
to expand from their traditional role as paste and base
suppliers and move into the production of cocaine for
the international market.
Operation Blast Furnace
Operation Blast Furnace, a 1986 joint US-Bolivian
narcotics interdiction operation, consisted of raids by
Bolivian narcotics police on suspected drug facilities in
remote areas of northern and eastern Bolivia
During the 120-day operation (July to November
1986) joint counternarcotics forces raided 95 sites,
found and destroyed 21 cocaine hydrochloride labora-
tories, and identified 24 jungle airstrips probably used
as transshipment points for smuggling drugs to neigh-
boring countries. Authorities reported that all of the
laboratories were abandoned and, although there were
no arrests nor significant drug seizures, a variety of
equipment and chemicals used in processing coca into
cocaine were confiscated.
Blast Furnace was partially successful at temporarily
shutting down Bolivia's illicit cocaine processing and
smuggling industry. Most reports indicate trafficking
activity virtually stopped during Blast Furnace. Others
say that traffickers continued drug transactions during
the operation with some traffickers abandoning their
laboratories only hours before the antinarcotics police
arrived. There is some evidence that a number of small
to medium-sized trafficking organizations in El Beni and
Santa Cruz Departments stepped up drug sales during
the operation, taking advantage of the vacuum created
when many major traffickers cut back their activities
until US troops departed. Some traffickers probably
relied on stockpiles to fill orders and took special precau-
tions-such as conducting business at night using only
trusted contacts-to protect shipments.
By December 1986, cocaine refining activity in
Bolivia was back to normal. At least 10 of the cocaine
laboratories raided during Blast Furnace now have been
rebuilt and are active, according to the Drug Enforce-
ment Administration.
The most noticeable effect of the raids was the
temporary but sharp drop in the market price for coca
leaf in the Chapare region, where nearly three-fourths of
the Bolivian coca crop is grown. Blast Furnace created a
temporary coca leaf glut, because many traffickers
ceased purchases during the operation. The Embassy
reports that the price of coca leaves dropped to a record
low of $10 per hundred pounds during the height of
Blast Furnace raids, well below the $40 per hundred
pounds estimated as the farmers' cost of production. The
price rebounded, however, to nearly $150 per hundred-
weight at the conclusion of joint operations in mid-
November 1986. Various reporting also suggests a similar
drop and surge in prices in Bolivia for coca paste and
base products and refined cocaine during the course of
Operation Blast Furnace.
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Spillover Countries-The Narcotics Challenge of
the Future
22. Increased law enforcement pressures over the
past few years in Colombia and the rising demand for
cocaine in consuming countries have caused signifi-
cant expansion in international cocaine production
and distribution patterns-most notably, a spillover of
the refining industry into other South American coun-
tries. The northern-tier countries of Venezuela and
Ecuador have already experienced the "spillover" of
narcotics activities from their traditional centers in
Colombia. Venezuela has afforded excellent opportu-
nities for Colombian traffickers seeking to expand and
disperse their operations. Venezuela has remote jungle
regions similar to those in southeastern Colombia as
well as good commercial and transportation infrastruc-
tures. Police there have already discovered small-scale
cocaine laboratories in several parts of the country.
The western highlands are dissected by countless
tributaries of the Orinoco River that extend into
Colombian coca-growing regions, offering a transport
route for coca products and processing chemicals to
laboratory sites. The country is already a major trans-
shipment point for processing chemicals en route to
Colombian laboratories. Ecuador offers many of the
same advantages to Colombian traffickers, who report-
edly are stepping up operations there.
23. Argentina has emerged as a cocaine processing
and transshipment site. The US Embassy in Buenos
Aires has reported that Bolivian traffickers, concerned
about potential suppression at home and seeking easier
access to processing chemicals, have set up some drug
processing facilities in the remote northwestern prov-
inces of Argentina. It is reported that major cocaine
smuggling organizations, based in Bolivia and Peru,
have started using Argentina as a staging area for
cocaine shipments en route to the United States and
Europe. This suggests that these organizations may
view Argentina as potentially more secure than other,
more established routes. In addition, Argentina has a
reputation for lenient sentencing and slight emphasis
on narcotics enforcement
24. Brazil is an important cocaine trafficking cen-
ter. It is also significant in cocaine production because
it is the major supplier of ether and acetone, vital
precursor chemicals. An estimated 95 percent of the
chemicals seized at Bolivian lab sites during Operation
Blast Furnace were from Brazil. Brazil is also a
significant transit country for Bolivian cocaine. Police
drug enforcement operations in the past few years
have shown that trafficking organizations operating in
Brazil are growing more sophisticated
25. We believe that Paraguay is emerging as an
important transit point for the export of Bolivian
cocaine. This August in Brussels, Belgium police seized
115 kilos of cocaine-the largest cocaine seizure ever
in Europe. The cocaine was found onboard a Lineas
Aereas Paraguayas (LAP) flight from Asuncion. Para-
guay also plays a role in the movement of essential
chemicals from Brazil and Argentina to Bolivia.
Trafficking Routes and Techniques
26. Until the 1980s, most South American cocaine
exports were concealed in commercial air and sea
shipments and smuggled directly from Colombia to
major eastern ports in the United States. Traffickers
still follow these practices to some extent but, as their
markets have grown and interdiction efforts have
expanded, they have increased the size of their ship-
ments and relied more on their own fleets of aircraft
and ships to circumvent enforcement efforts. More
recently, however, a series of large cocaine seizures in
the United States indicate that traffickers are again
relying on the use of commercial vessel shipments to
smuggle cocaine. As with cocaine processing and
trafficking operations in the South American interior,
drug export routes and methods are extremely varied
and flexible.
27. The principal trafficking routes between South
American suppliers and North American and Europe-
an consumers continue to be Caribbean routes. The
geography of the islands makes the Caribbean a
natural transit area for smugglers. The area's poor
economy and its tradition of smuggling all forms of
contraband facilitate the use of the region by drug
traffickers. Until recent years, Jamaica and the Baha-
mas were the two main island groups used for smug-
gling cocaine into the southeastern United States.
While the Bahamas and Jamaica are still the major
transit areas, heightened law enforcement efforts in
these countries have forced traffickers to find alter-
nate routes such as the Cayman Islands, Haiti, the
Dominican Republic, and the eastern Caribbean is-
lands
28. In recent years, there has been a significant rise
in the use of Mexico for transshipment of cocaine into
the United States. Approximately one-third of the
cocaine entering the United States during 1986 transit-
ed Mexico. The upsurge in the use of Mexico reflects
not only efforts by Colombian traffickers to find
additional routes for moving cocaine into the United
States, but also the multidrug nature of Mexican
trafficking organizations. Traffickers' use of Mexico as
a narcotics conduit has proven to be relatively safe due
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to US consumers
29. Cocaine trafficking in several Central American
countries has increased in recent years, and seizures
are on the rise. The increasing use of Central America
probably reflects an effort to funnel additional cocaine
country.
to their established logistic systems and the widespread
corruption and incompetence of Mexican officials.
The vast majority of the cocaine entering Mexico
arrives by short-range and long-range aircraft which
use the over 2,000 airstrips and airports throughout the
30. Cocaine trafficking routes have also shifted to
accommodate the growing international market. South
American cocaine is shipped directly to almost all
West European countries. Significant seizures in Eu-
rope have been made in West Germany, Italy, Spain,
Belgium, France, and the Netherlands. Trafficking
patterns also are affected by cocaine's risen o ulari-
ty in South Africa, Australia, and Japan.
involved.
Essential Chemicals-Lifeblood of the Cocaine
Industry
31. The production of coca paste and cocaine base
uses widely available, inexpensive chemicals such as
gasoline, kerosene, and ammonia. The production of
cocaine hydrochloride, however, requires acetone and
ethyl ether, which are not readily available to the
trafficker because of increased governmental controls
around the world. Before Colombia imposed import
restrictions in 1983, traffickers there obtained ether
primarily from the United States and West Germany.
Government controls in Colombia, coupled with a
DEA-sponsored program to monitor major chemical
manufacturers worldwide has driven up the price of
illicitly obtained ether from Germany from $1,700 to
nearly $8,000 a barrel. Traffickers have been forced to
develop new sources of supply and new smuggling
routes for their chemicals. Drug processors today
obtain much of their ether from Brazil, the major
manufacturer of this chemical in South America. In
addition, there have been reports of clandestine ether
production in Colombia. As for the movement and
trafficking of these chemicals, several other countries
including Paraguay, Argentina, Chile, Venezuela, Ec-
uador, and several countries in Central America are
Drug Control Efforts: An Uphill Battle
32. Although cocaine control efforts encompass a
combination of eradication, interdiction, enforcement,
and demand reduction programs, most South Ameri-
can governments have concentrated their limited re-
sources on coca interdiction. This is politically more
Figure 5
Coca Processing Laboratories
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palatable than cracking down on small-time coca
growers and peasant farmers and safer than trying to
dismantle the powerful trafficking networks that man-
age the cocaine trade. Manual eradication programs
have proven only marginally effective and are very
costly to implement. Crop substitution will not work in
the coca-growing countries as long as coca remains so
much more profitable than other crops. Because of the
limitations of these approaches, the use of aircraft-
applied herbicides to eradicate coca crops would
appear to be the best alternative. Unfortunately, how-
ever, because of political and environmental restraints
on its use, there is no effective aerial herbicide
available now to use against coca. (See inset.)
33. Efforts to interdict stores or shipments of coca
product are made to some extent in all producing
countries. Bolivia, Peru, and Colombia all have imple-
mented interdiction campaigns in their countries. Oth-
er countries with smaller cocaine problems (Brazil,
Ecuador, Paraguay, Venezuela, and Argentina) have
also made interdiction efforts.
34. The lack of government control over or even
familiarity with their drug-producing areas impedes
interdiction. Geography favors the traffickers, who
have converted the various river, road, and trail
networks into an intricate and often confusing maze.
South American drug enforcement personnel cannot
adequately cover all of the cultivation, production,
and trafficking areas, and thus they tend to concen-
trate their efforts on transportation choke points or the
major cultivation areas. Many personnel are suscepti-
ble to bribes from traffickers who are prepared to pay
the drug enforcement officers many times their sala-
ries for cooperation.
35. To date the largest interdiction effort undertak-
en in South America was Bolivia's Operation Blast
Furnace, the joint US-Bolivian effort that extended
from July to November 1986 and was, by our estimate,
a moderate success. (See inset, page 13.) Other South
American efforts include Operation Condor, a US-
supported Peruvian police interdiction campaign cen-
tered on the northern Loreto Department; and Colom-
bia's recurring efforts against cocaine HC1 production
centers in its southeastern region-South America's
cocaine heartland. All the interdiction programs run so
far have caused only short-term disruptions for the
traffickers, who appear willing to suspend or relocate
their operations temporarily and thus avoid serious
and long-range business setbacks.
36. Colombia, Peru, Bolivia, Ecuador, Brazil, and
recently Venezuela have coca eradication programs,
but their achievements have been spotty. Extensive
manpower resources are needed to pull the plant up.
Until an environmentally safe, effective, and political-
ly acceptable aerial herbicide is available for use on
coca bushes, eradication efforts will be unable to keep
pace with present rates of expansion in coca cultiva-
tion.
37. Peru pulled. up about 2,600 hectares of coca in
1986, out of 106,000 hectares total; this eradication
was about half of the 1985 total. Bolivia had a 1986
elimination goal of 4,000 hectares of the 34,000 hect-
ares estimated to be under cultivation; actual eradica-
tion in Bolivia was negligible. Colombian eradication
efforts decreased sharply and accomplished little in
1986. Ecuador and Brazil conducted several minor
eradication operations in 1986. Venezuela has just
adopted an eradication program after recent confir-
mation of coca fields along its Colombian border.
38. A range of factors limits the effectiveness of
manual eradication. Many coca fields are inaccessible
from major roads or other transportation routes. The
large labor force required for direct application of
herbicides or manual plant destruction is difficult to
recruit because of the violence to which eradication
personnel are exposed. Violence against local and
foreign government officials and citizens who support
eradication also deters effective implementation. In
Colombia and Peru the situation is further complicat-
ed by ongoing insurgencies in coca-growing regions
39. To ensure effective eradication of a coca bush,
the roots must be killed or dug up, but most operations
merely cut the plant off at ground level or use
herbicides that damage only the upper plant. Coca
bushes sprayed with paraquat, for example, can still be
harvested up to three days after spraying and will leaf
out again in a few days. Effective eradication pro-
grams also depend on availability of chemicals that
destroy coca bushes with little or no damage to the
surrounding vegetation and environment. At the cur-
rent pace of manual coca eradication, it will take over
50 years to destroy South America's coca bushes even
without any expansion into new areas or greater crop
density.
Crop Substitution
40. The expanding international cocaine market
continues to keep the profitability of illicit coca far
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Figure 6
Eradication by Hand
above that of substitute crops, making crop substitu-
tion programs ineffective. Declining world market
prices for potential alternative commercial crops, such
as tea, bananas, cacao, corn, and citrus, make the
problem worse. According to Department of Agricul-
ture (USDA) officials, the failure of many crop substi-
tution programs is also a function of the lack of
developed markets for the alternative crops. Beyond
this, coca's morphological properties enable it to grow
in very poor soils, make it resistant to many diseases
and pests, and allow it to adapt more readily to
environmental conditions than most substitute crops.
The USDA holds that well-drained soil and the ab-
sence of frost are the principal factors supporting coca
growth; rainfall and soil characteristics are of second-
ary importance
41. Coca substitution projects, aided by US funding,
are currently under way in Bolivia and Peru. In
Bolivia, the Chapare Regional Development Project is
attempting to reduce coca cultivation by improving
varieties and yields of indigenous crops such as citrus,
yuca, corn, pineapple, and palm; a follow-up pro-
Since 1981, the Department of State's International
Narcotics Bureau (INM), through its diverse country
programs in the Andean region, has conducted exten-
sive crop eradication tests using herbicides against coca.
These tests have included a "cut and daub" technique
whereby the coca shrub is cut off almost to ground level
and the exposed stem is daubed with undiluted 2,4-D
herbicide. Other tests included basal spraying tech-
niques, which consist of applying a mixture of 2,4-D
and diesel fuel from a back-pack sprayer around the
coca shrub from ground level to approximately one foot
above. INM has also conducted numerous tests using a-
wide assortment of herbicides and emulsifiers applied
from back-pack sprayers.
Back-pack spraying is highly labor intensive, and the
workers are subject to the same dangers that manual
eradication workers face. The ultimate solution is to use
an aircraft (either fixed or rotary wing) to repeatedly
apply herbicide to kill the plant or at least defoliate it
before the leaves reach maturity. INM has identified an
herbicide but legal problems with the United States
manufacturer has delayed procurement. Consequently,
further tests are in abeyance until the health issue is
resolved.
Thus far, only a small, experimental spray program
has been undertaken in Colombia; it was conducted in a
sub-tropical environment. We do not know the chemi-
cal action of the herbicide at higher altitudes. Colombi-
an officials have stated they would be willing to resume
aerial spraying and the Peruvians have indicated inter-
est in testing an aerial spray. In Bolivia, however, the
new law pending before the Bolivian congress, which
would make most coca growing illegal, includes a ban
on any spraying of coca.
gram will introduce nonindigenous crops, including
coffee, cacao, rubber, and bamboo as coca substitutes.
In Peru, officials of the Special Project for the Upper
Huallaga (PEAH) are continuing efforts to establish
alternative crops such as corn, soybeans, coffee, tea,
and rice. United Nations-funded crop substitution
programs for Colombia have recently been estab-
lished. It is unrealistic, however, to expect crop substi-
tution programs to make a real dent in the problemF_
Control of Chemicals
42. International controls on chemicals essential to
the refining of cocaine have impeded traffickers some-
what, driving up the cost of doing business and forcing
changes in their operations. Some of the chemicals
(gasoline, kerosene, and ammonia) are so common that
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control is virtually impossible, but for certain other
chemicals, the limited sources, the few legitimate
applications, and the large volumes required make
them vulnerable to government restrictions. A high
consumption of acetone, for example, is difficult to
justify except in limited and specific industrial appli-
cations. Ethyl ether-hydrochloride-has few licit
uses outside the medical profession and the pharma-
ceutical industry.
43. The black-market price of critical chemicals
remains high today despite: the development of illicit
chemical processing locations inside and outside Co-
lombia; alternate supply routes for chemicals through
Brazil, Venezuela, Argentina, Ecuador, and Paraguay;
and new sources in Mexico, Brazil, and Chile. Some
countries, such as Brazil, have not committed suffi-
cient funds to police the chemical trade effectively.
Others, such as Paraguay, facilitate questionable
chemical transactions for their own gain, according to
a variety of sources. DEA sources indicate traffickers
are taking steps to establish front organizations to
justify chemical imports and increasingly are moving
final processing operations to places where chemicals
are more available-including the United States.
Legal Reform
44. Even if a trafficker is caught in actual posses-
sion of drugs, it is almost impossible to obtain a
conviction in most Latin American countries. The
specific reasons vary among the different countries but
there is one common area of concern: inadequate and
ineffective antidrug laws. The enactment of new laws
or major amendments to existing narcotics statutes is
needed in all countries in Latin America; however, the
prospects for passage of any legislation are tenuous at
best. There are three areas in the law where legislation
can help: asset seizure, conspiracy, and extradition of
nationals to the United States. The seizure of assets
belonging to drug traffickers that can be reasonably
inferred to have been acquired with profits from their
illegal activities would deal a serious blow to the
traffickers' financial power. For the most part, only
the instrumentalities of a crime such as laboratories,
planes, cars, and weapons are subject to confiscation.
Government authority to reach traffickers' assets
would undermine the traffickers' wealth, as well as
give the governments additional resources that could
be used to combat drug trafficking.
45. The failure of most Latin American legal sys-
tems to recognize the crime of conspiracy severely
limits law enforcement efforts to reach the heads of
drug trafficking organizations; the crime of conspiracy
in these countries is punishable solely in the context of
an act to overthrow the government, and its potential
use to attack criminal activities is not recognized. In
addition, the use of a conspiracy statute to punish acts
undertaken in preparation of a crime is unknown in
Latin American civil law countries, where an overt act
is generally required to establish the elements of
crime
46. Permitting the extradition of nationals to the
United States for trial is also a valuable tool against
drug traffickers. Most Latin American countries, how-
ever, are prohibited, either by their constitutions or by
the penal code, from extraditing their own nationals.
In brief, although extradition would allow for greater
cooperation between the United States and countries
in Latin America, it would also increase the odds that
traffickers would resort to violence and attempt the
corruption of government officials to prevent it. The
major advantages and disadvantages of allowing the
extradition of nationals can be measured in Colombia,
the one country that has allowed such extraditions to
take place. It is ironic that one way to measure the
success of the United States-Colombia extradition
treaty is by the high level of drug trafficker violence
directed against judges and government officials. Re-
cent judicial developments in Colombia, which have
effectively paralyzed the entire extradition mecha-
nism, underline the attendant problems. Nevertheless,
extradition to the United States remains one of the
most powerful tools potentially available for use
against traffickers.
47. Any efforts at legal reform must also address the
judiciary. Countries in Latin America follow the Euro-
pean civil law system rather than the English common
law inherited by the United States. Under the civil law
system, judges exercise tremendous power throughout
the entire case from the investigative stage through the
trial itself, which is decided exclusively by the judge
without a jury. Despite the enormous power wielded
by judges, they remain seriously underpaid and over-
worked and they lack public support and political
power. Court delays are extensive because of misman-
agement and the nature of the system itself. For
example, under some systems in Latin America, a
defendant remains in prison, even after a finding of
not guilty, while the sentence is automatically ap-
pealed to the highest court, a process that takes, at a
minimum, several years. This results in tremendous
delays and provides an incentive, even for the inno-
cent, to pay.
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Other Recent Efforts
48. Other efforts to control the burgeoning cocaine
industry overseas include a number of US-funded
initiatives. In an effort to improve intelligence collec-
tion, aircraft equipped with infrared devices to spot
laboratories have been used in Bolivia, Colombia, and
Peru with some success. The US Government has
increased funding for training programs for foreign
personnel involved in antidrug programs. A new $5
million reward fund authorizes up to a $500,000
payment for information leading to the arrest of a
major trafficker or the significant seizure of drugs. In
an attempt to interdict drugs after they leave South
America, funds have been increased for radars at the
major points where drugs enter the United States: the
Bahamas, the Caribbean, and the Mexican border. F-
Obstacles To Control
49. Because the growing and chewing of coca leaf is
an old local tradition, involvement in the coca industry
does not raise among South Americans the ethical or
social issues that influence US views of the narcotics
trade. Moreover, although opinion may be shifting, the
citizens of many cocaine-producing and trafficking
countries still believe that illicit production is more
beneficial than harmful to their national economies.
Most producing and processing operations also occur
in areas largely outside the control of central govern-
ments, and local agricultural populations benefit from
the drug trade, making licit agriculture less attractive.
Many small businessmen, from bankers to agricultural
supply salesmen, also benefit from the prosperity
brought by the illegal cocaine trade. Drug money buys
protection from enforcement and prosecution, reduc-
ing the risks of involvement in an illegal trade and, at
the same time, creating another group of people
highest for those running the greatest risk-wholesal-
ers and distributors, mostly Colombians.
51. A variety of people benefit from the cocaine
trade, not only the few at the top. US Customs officials
report cocaine trafficking often involves large trade
conspiracies that include exporters, freight forwarders,
truckers, servicers, brokers, consignees, airline person-
nel, warehouse workers, and security personnel-each
getting a cut. Corrupt officials all along the chain
further expand the circle of drug-money beneficiaries.
Describing their investigation of a smuggling operation
using the Colombian flower trade as a cover, US
Customs officers noted that organizers bought, intimi-
dated, or coerced countless others into cooperation
with the operation. In most cases, recruitment was
simple because poorly paid laborers chose the added
financial reward without regard to the legal conse- 25X1
quences. A typical cargo handler in Colombia earning
approximately $220 per month could supplement his
monthly income with an additional $1,200 to $5,000
by handling flower boxes containing cocaine.
52. The money available from the illegal cocaine
trade allows all involved to enjoy an improved stan-
dard of living. The wealth of the leading cocaine
entrepreneurs is most obvious because of their conspic-
uous consumption. Major traffickers in Medellin, Bar-
ranquilla, and Cali in Colombia, and Santa Cruz and
Cochabamba in Bolivia, use their enormous profits to
purchase lavish homes, ranches, apartments, vacation
villas, luxury automobiles, airplanes, and yachts. Many
also have extensive holdings in real estate and other
investments in many countries. The benefits also
trickle down. DEA country attaches report that many
small laboratory operators and paste brokers also enjoy
lifestyles considerably better than they could other-
wise achieve. According to the US Agency for Interna-
tional Development, supplementing their income from
coca allows farmers to continue growing essential but
dependent on the drug trade.
The Profits
50. The international trafficking of cocaine is one
of the most profitable economic enterprises in the
world today. In spite of the increased chemical and
other production costs and record low US wholesale
prices for cocaine, profits are still enormous. As little
as $500 will purchase enough coca leaf from a peasant
farmer in Peru or Bolivia to produce one kilogram (kg)
of cocaine base, which can be sold for $1,000 to
$1,800. After further processing, one kilogram of base
yields about one kilogram of cocaine hydrochloride-
worth $3,600 to $4,400 in Colombia and $17,000 to
$22,000 wholesale in the United States. Profits are
less profitable food crops.
53. Some major traffickers are seen as Robin Hood
figures by farm workers who also benefit from the
trade. Reliable sources report that rural communities
protect such kingpins from government drug enforce-
ment measures. Even journalists receiving no known
benefit from narcotics trafficking sometimes romanti-
cize the successful trafficker as "astute, calculating ...
a special kind of person, who makes a game out of
danger." This kind of romanticizing occurs less often
now than in the past because of the increase in
trafficker violence.
54. The judicious use of some of their profits for
political and media operations has enabled traffickers
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to undermine control programs and sometimes to
prevent governments from taking appropriate actions.
Traffickers in Bolivia are reportedly supplying coca
growers with money and arms to sharpen resistance to
drug-control measures. Narcotics money is also being
quietly invested in legitimate businesses. Such tactics
give drug elements significant power in the legitimate
economy and can provide political leverage against
government drug programs. We have reports that
traffickers in Colombia have banded together to
promise the government enormous sums of money
to pay off the national debt in exchange for the
avoidance of extradition and for the right to bring
drug profits home to Colombia without penalty.
Political and Practical Constraints
55. Governments face political and practical con-
straints in instituting vigorous drug control programs.
Poor economic performance, challenges by leftist in-
surgents, and the perennial problem of staying in
power in a volatile political environment compete for
the attention of national leaders in the major coca
growing and trafficking countries. Narcotics programs
generally receive lower priority than any of these
other issues. Leaders are hesitant to institute eradica-
tion programs that will eliminate the most lucrative
crop, bring appeals for aid from already tight govern-
ment budgets, and risk further alienating the disaffect-
ed rural population. At the same time, traffickers use
their profits to undercut enforcement actions by cor-
rupting or intimidating civilian and military officials.
56. According to assessments by US financial insti-
tutions and embassies, the illicit coca-producing coun-
tries face budget constraints that make it difficult to
increase government expenditures for drug programs.
In Peru, serious financial difficulties will continue to
limit government antinarcotics efforts regardless of the
intent of the Garcia administration. President Garcia's
policy of applying at most 10 percent of export
revenues toward the national debt service has caused
the withdrawal of major resources in order to sustain
basic government programs. Under these tight finan-
cial circumstances, most of Peru's budget will go
toward countering worsening economic problems and
increasing military expenditures to fight the.insurgen-
cy threat. Narcotics programs in these countries rely
heavily on US funds. Antinarcotics police forces re-
main inadequately armed and trained to carry out
their function. Although we judge only a small fraction
of the enormous revenues from the cocaine trade flows
back to source countries, we suspect that what does
return helps shelter some local and regional economies
from the impact of economic depression. As a result,
local officials are reluctant to crack down in depressed
economic times. Peru, Bolivia, and Colombia lack the
resources needed to cushion the economic and political
impact in rural areas of a shutdown of the cocaine
57. Narcotics traffickers exploit these concerns.
They know that drug suppression programs alienate
the small-scale coca farmers. Where chewing coca leaf
is part of the cultural heritage and its cultivation is
either legal-as in Bolivia-or permitted under the
theoretical control of a national monopoly-as in
Peru-the political problems of suppression are com-
pounded. In response to the new Bolivian antidrug law
being proposed and the antinarcotics campaign in the
Chapare region in mid-1987, the rural population,
probably supported by traffickers, turned violent and
accused government forces of "human rights viola-
tions, excesses and abuses." Getting on the bandwagon,
leaders of Bolivia's powerful labor movement (repre-
senting more than 40 union organizations claiming
more than 25,000 agricultural workers among their
members) successfully forced the government to in-
clude coca growers in the planning phase of drug-
control initiatives.
58. Most South American countries depend on po-
lice forces to implement eradication and interdiction
operations. These forces are poorly trained and
equipped for their task, as compared with the military
forces engaged in counterinsurgent and security opera-
tions. In Colombia and Peru, counterinsurgent opera-
tions generally take priority over military or police
antinarcotics operations. Colombian military authori-
ties have commented that the military mission, as they
see it, is to pursue insurgents, not to waste resources
fighting drugs. They argue that guerrillas would like
nothing better than to see the military deeply involved
in antinarcotics operations because it would reduce
pressure on the insurgents. Reports from several other
countries indicate that the military forces generally
denigrate police units and their personnel and do not
like working with them.
Corruption and Trafficker Violence
59. The extraordinary sums of money available to
drug traffickers has led to extensive corruption extend-
ing from high government officials down to the local
level that undercuts national counternarcotics pro-
grams in South America. Judges, cabinet ministers,
chiefs of police, and other officials have succumbed to
drug bribes. In the rural regions where most drug
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production occurs, special narcotics police are particu-
lar targets of traffickers. This pervasive drug corrup-
tion has contributed to a reluctance by some military
leaders to take a more active role in the drug war
because they know that their personnel are also sus-
ceptible to bribery. Among numerous examples of
recent corruption, a variety of sources have reported
the following: in Colombia, traffickers reportedly
bribed the judge to cast the decisive vote declaring the
extradition treaty unconstitutional; the Bolivian chief
of military air transportation took payoffs from a
major trafficker in exchange for the use of official
aircraft to transport the trafficker's drugs to the
United States and his profits back to Bolivia; rural
mobile antidrug police in Bolivia and Peru routinely
take bribes to facilitate trafficker shipments; and in
Paraguay the minister of interior recently has been
linked to drug trafficking
60. Corruption and intimidation are particularly
evident in the Latin American courtroom. Threatened
or real violence, including multiple assassinations
against judges and other high-level officials, has dimin-
ished their ranks and significantly reduced the effec-
tiveness of the courts. The correlation between major
drug enforcement initiatives and trafficker-sponsored
violence against government officials is well-docu-
mented-for example, the assassination of Colombian
Justice Minister Lara, the shooting of former Colombi-
an Justice Minister Parejo in Hungary, and the cam-
paign of violence designed to intimidate Colombia's
Supreme Court. Trafficking organizations in some
countries also are beginning to create strongholds-
sometimes in concert with insurgents-protected by
their own hired guns in regions that are out of reach of
or ignored by central governments. Peruvian drug
organizations now exercise virtual sovereignty over
many towns in Peru's remote Huallaga Valley, and
vast stretches of Colombia's southeast region are domi-
nated by cocaine traffickers and the armed insurgents
who tax and protect them. Trafficker strongholds
bring with them an overall increase in criminal vio-
lence, fueled by competition for the immense profits
associated with the drug trade. Traffickers are pur-
chasing and using more lethal weapons; at Tocache
Nuevo, in the Huallaga, traffickers destroyed an Air
Force helicopter with a rifle-fired grenade. They also
are using weapons more often and against a wider
variety of targets. Occasionally, drug organizations
fight one another in turf wars and for shares of the
trade, and increasingly they are battling police and
military units. Violence is also used routinely against
local officials and citizens opposed to the drug trade.
61. The local press in these countries is filled with
stories of the power of narcotics money to corrupt
judicial officials and see to it that key witnesses and
seized drugs disappear, traffickers vanish in transit
between prison facilities, and entire case records are
"lost." Preferential treatment of prisoners such as
special food and permission to leave prison at night, is
commonplace. A Peruvian newspaper described a
"golden prison" where, on a judge's recommendation,
incarcerated traffickers declared "ill" enjoy a hospital
atmosphere, family visits, and conditions typical of a
private clinic. In Bolivia, the press claims that most
drug traffickers do not serve their full sentences, but
rather leave prison with simple medical certificates in
hand. Although such accounts undoubtedly cause a
degree of public indignation, they also demonstrate to
the public the strength of the major traffickers as they
use their mightiest tool: corruption.
Insurgent-Trafficker Collusion
62. Government antinarcotics efforts in the coca-
and cocaine-producing regions of Peru and Colombia
are hampered by the presence of insurgent groups,
some of which have ties to drug traffickers. Some
degree of cooperation between Colombia's Revolution-
ary Armed Forces (FARC) and cocaine growers and
producers in southeastern Colombia has been report-
ed. According to several sources, the FARC receives
revenue from the traffickers in return for protection of
their laboratories and occasionally the FARC may
cultivate and produce drugs on their own. Colombian
antinarcotics police do not possess the firepower to
confront armed FARC resistance and are reluctant to
mount interdiction operations without the support of
the military. In 1986, antidrug police suspended oper-
ations against cocaine labs and airstrips in the south-
eastern region of Colombia after FARC guerrillas fired
on police patrols. Reportedly, President Virgilio Barco
is reluctant to risk confrontations with the drug traf-
fickers in these areas for fear that such attacks would
threaten the three-year-old truce with the FARC.
63. Limited information is also available on traf-
ficker links to other groups. In July 1987 the National
Liberation Army of Colombia (ELN) reportedly was
responsible for an attack on Venezuelan troops con-
ducting eradication operations near the Colombian
border. The attack left several dead and wounded.
Various sources have indicated that the 19th of April
Movement (M-19) of Colombia has links to traffickers.
In Peru, cooperation between cocaine producers and
the Maoist Shining Path (SL) reportedly is limited and
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episodic. On the other hand, unconfirmed press re-
ports indicate that SL and traffickers sometimes clash.
In Bolivia, there is no confirmed evidence of the
presence of any indigenous insurgent group at the
present time. While insurgent groups and major traf-
ficking organizations share some common interests, the
ultimate political goals of the insurgents are antithetic
to the purely mercenary motives of the traffickers.
Cocaine's Economic Impact on Producing
Countries
64. Cocaine money brings economic problems as
well as benefits. Money returned to the producing
countries is spent mainly for nationally nonproductive
items such as real estate speculation and imported
luxury goods, or for expansion of the illegal drug
business. Earnings from narcotics can have a destabi-
lizing effect on a national fiscal and monetary situa-
tion. Their contribution to inflationary pressures is the
most generally acknowledged detriment, but erratic
drug money influxes are also destabilizing to local
exchange markets in those areas with minimum con-
trols. In Colombia and Bolivia, clandestine narcodollar
movements finance a pervasive underground economy
that is completely outside government purview. One
of the more insidious features of such illicit economic
activity is the ease with which scarce capital can flee
through underground banking channels
Prospects For Control
65. We anticipate that illegal cocaine trafficking in
Colombia, Peru, Bolivia, and in some of the "spill-
over" countries will continue to expand. As trafficking
grows, public and official indignation in these coun-
tries could escalate, leading to more serious attempts at
narcotics control. Growing awareness and concern
over domestic drug use, possible insurgent involve-
ment, drug-related violence and corruption, and the
political and economic influence of major traffickers
could impel government authorities to more positive
actions but, even so, major setbacks for the cocaine
industry are unlikely in the near term.
66. Because drug trafficking is a cross-border, mul-
tinational operation, efforts at a regional approach
offer the potential for a long-term payoff. Leaders of
South America's major coca-producing countries and
officials from newly affected areas publicly acknowl-
edge the need for cooperation and multilateral initia-
tives on narcotics suppression, but bilateral mistrust
still undercuts complete cooperation. Neighbors wran-
gle over longstanding border disputes, suspect one
another's intelligence gathering objectives, and tend to
doubt the sincerity of the antinarcotics commitments
in adjacent countries. The internationalization of anti-
narcotics activity entails some risks, such as a tendency
to evade individual responsibility or to duplicate bu-
reaucratic structures unnecessarily; nevertheless, we
detect signs that the relevant countries may be ready
to do more than pay lipservice to a regional approach
as the most effective way to fight the cocaine problem.
On the bilateral front, Colombia and its neighbors are
developing stronger antidrug ties. An agreement
reached with Ecuador calls for increased cooperation,
including the return of drug fugitives. A joint commis-
sion with Venezuela has met periodically at alternate
sites along the border to discuss mutual drug problems.
Brazilian police likewise have increased cooperation
with Colombia; officials of the two countries have
established procedures for interaction in the frontier
area, and an acetone-ether control task force was
created several years ago. A US-funded regional com-
munications network was recently inaugurated to con-
nect Andean police organizations.
Controls in the Spillover Countries
67. We believe that the greatest successes in counter-
narcotics efforts in Latin America can be achieved in
the "spillover countries" where the illicit cocaine trade
is just beginning to take hold. These include Brazil,
Ecuador, Argentina, Venezuela, and Paraguay, all
faced in varying degrees with a developing cocaine
problem. Here trafficking organizations generally are
smaller, less sophisticated, relatively unskilled in co-
opting local authorities, and therefore more vulnerable
than their well-established counterparts in the major
cocaine countries. Attacking the cocaine connection
where it is still relatively weak fosters the development
of a model for effective regional cooperation; it may
even serve as a prototype for the large, cocaine-
producing countries as well. Unfortunately, the forces
arrayed against the traffickers in the "spillover coun-
tries" are seriously undermanned, underfunded, ill-
equipped, and untrained in countering drug traffick-
ing. An encouraging indicator, however, is the
expressed willingness of the governments to imple-
ment preemptive antidrug campaigns. In fact, among
the newly affected areas only Paraguay is a conspicu-
The Resource Problem
68. The lack of resources remains a problem for
countries committed to the fight against drugs. Broad-
er internationalization of the anticocaine campaign
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would help on this score. South American countries on
the whole are poor nations. National budgeting is often
focused on domestic aid to the poor and unemployed.
Money for counternarcotics is often low on the priority
list. Narcotics assistance programs extended to these
countries, including those sponsored by the United
States, must be keyed to the political and economic
realities of each nation. The US experience to date in
these countries suggests that single dimension pro-
graming-such as eradication alone-will not suffice.
Recognizing Local Drug Abuse
69. Perhaps the greatest prospect for long-range
cocaine control lies in the growing antidrug sentiment
abroad. Before effective narcotics control measures
can be sustained there has to be local public support
for them. There are some signs that Latin Americans
now recognize illegal cocaine production and traffick-
ing as a national problem. In a recent US Information
Service public opinion survey, urban populations in
Bolivia, Colombia, and Venezuela selected interna-
tional narcotics as the second most important interna-
tional problem, after foreign debt. This is just a
beginning, however, and getting the rural populations
to agree is another matter.
Conclusion
70. All factors considered, the prognosis for the next
two years for US supply reduction programs to deliver
a significant decrement to the success being enjoyed
now by the international cocaine industry is grim. The
most that realistically can be expected is that current
programs will cause the traffickers disruption, in-
creased costs, and increased risks in doing business.
Planned long-term multinational programs offer the
most potential for overall supply reduction success.
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