INTERNATIONAL NARCOTICS BIWEEKLY REVIEW

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00912A001800010025-3
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 31
• Document Creation Date: December 22, 2016
• Document Release Date: May 12, 2009
• Sequence Number: 25
• Publication Date: November 23, 1977
• Content Type: REPORT

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, Foreign
Center
International Narcotics
Biweekly Review
DOJ Review
Completed.
DIA and DOS review(s)
completed.
Secret
PS SNIN 77-024
23 November 1977
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LAOS: UN Narcotics Control Program . . . . . . . . 3
AFGHANISTAN: Current Narcotics
Situation . . . . . . . . . . . . . . . . . . . . 5
COLOMBIA: Reported Discovery of Poppy
Plantations . . . . . . . . . . . . . . . . . . . 11
NOTEWORTHY POLITICAL AND ECONOMIC DEVELOPMENTS:
1? Burma . . . . 20
. . . . . . . . . . . . . .
3. Pakistan . . . . . . . . . . . . . . . . . . 26
4. Afghanistan . . . . . . . . . . . . . . . . . 28
5. Caribbean Area . . . . . . . . . . . . . . 31.
This publication is prepared by analysts in the National Foreign Assessment Center
for specialists in the Washington community who are interested in international
narcotics matters. Comments and queries are welcome. They should be directed to
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LAOS: UN Narcotics Control Program
Lao and UNFDAC officials may sign documents imple-
menting a narcotics control program in the near future.
The program, which includes rehabilitation and crop sub-
stitution schemes, is meant to encourage and support
Lao efforts to eliminate opium production.
The program has been in a state of flux for some
time. Lao officials wanted more funds devoted to a
center for addict treatment and rehabilitation, while
the UNFDAC placed higher priority on efforts to estab-
lish new villages for Hmong (Meo) tribesmen in which
other crops would replace opium cultivation. In June,
the UNFDAC offered $350,000 for the preliminary phases
of the program, with $165,000 allocated for the rehabil-
itation center and $185,000 for the new villages. The
level of funding is scheduled to be reviewed in 1979.
Delays in implementing the program have stemmed
partly from the lack of Lao enthusiasm for the new
village and crop substitution project. They have re-
sulted from disagreement on the wording of program
documents, failure of the Lao to provide maps of the
sites of proposed new villages, and postponements in
the arrival of UN teams which will survey the village
sites and draw up work plans. UNFDAC representatives
are concerned that the Lao may try to shift funds from
the new village project to the rehabilitation center.
They have insisted that the two schemes be implemented
simultaneously and be given equal priority and that the
Hmong be resettled in highland areas where they have
traditionally lived rather than on less desirable low-
land sites.
A second major reason for the delay of the program
has been UNFDAC concern that Laos is selling opium
abroad and attempting to establish an opium processing
facility with foreign assistance. Reports indicated
that Laos was planning to sell opium to Bulgaria and
that it had approached Hungary, the Netherlands, and
the World Health Organization (WHO) regarding assistance
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in setting up a pharmaceutical factory. UNFDAC offi-
cials felt these efforts might conflict with the goal--
formally agreed to by the Lao Government--of eliminating
opium cultivation in Laos and insisted that implementa-
tion of the narcotics control program was contingent
upon resolving these issues.
It has subsequently been determined that the WHO
feasibility study and the Dutch aid plan included no
opiate processing facilities--the pharmaceutical factory
would not use opium poppies as a source of raw material.
.The sale of opium to Bulgaria has been referred to the
INCB; it will probably be approved if the amounts fall
within Bulgaria's estimated requirements and if Laos
designates the export as seized opium.
In late October, the UNFDAC representative in Laos
received word that the Lao Ministry of Interior was im-
patient with the progress of the narcotics control pro-
gram and was considering dropping out of it. He recom-
mended that the implementing document be signed on Lao
terms, even though that might enable Lao officials to
circumvent some provisions and obtain support for the
rehabilitation center without making a simultaneous
commitment to the new village scheme.
Unless additional problems arise, Lao and UNFDAC
officials will probably sign the narcotics control pro-
gram documents in the near future. The program will be
closely monitored, and will provide at least a rough
measure of how seriously Lao authorities take their
commitment to end the production of opium by 1981.
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AFGHANISTAN: Current Narcotics Situation
There have been no major changes in the Afghan
narcotics picture since the US Embassy submitted a
comprehensive report last June. There have been some
m-ior changes in the situation, however
Hashish production is believed down for 1977, but
will still be immense. Although statistics are poor,
the 1976 crop is estimated at 200-400 tons. The govern-
ment claims it has destroyed an additional 136 tons.
The US Drug Enforcement Agency is making a province by
province survey in an effort to get more reliable figures.
Despite continuing reports of heroin production in
Afghanistan, there is still no firm evidence. An Afghan
had been reported converting o ium to heroin but
has so far been unsuccessful.
In its earlier report, the Embassy treated with con-
siderable skepticism claims that opium production had
been eradicated in Badakhshan Province.)
bad weather cut the opium crop
to 8-10 tons there this year. Much of the opium apparently
is consumed locally. Addiction had been estimated at 20
percent of the population in Badakhshan, but, according
to a DEA source, it may be as high as 35 percent. Any
Afghan statistics should be treated with caution, however,
and those on Badakhshan are among the least reliable.
Nevertheless, the use of opium is so widespread in the
province that it is certainly possible that a third of
the population there is addicted.
Foreign efforts to make a dent in the Afghan problem
continue. Recently, the Dutch provided?$500,000 for
addict rehabilitation in Badakhshan, and the United Nations
Fund for Drug Abuse Control (UNFDAC) is making a study
which may well lead to a crop replacement program in the
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Helmand Valley where--unlike Badakhshan--most of the
opium is grown for export.
/ Afghanistan
remains a major source of hashish and a major potential
source of opium and heroin for international traffickers.
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Opium Poppy Cultivation in the Cauca Valley
VENEZUELA
Environmental Conditions in the Cauca Valley
near Buga:
Altitude: 960 m (3150 ft)
Annual Rainfall: 140 cm (55 in)
Mean Temperature: 1B?C (65?F)
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VAL,JPES e....~
IN B R A Z I L
A M AZO N A S
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COLOMBIA: Reported Discovery of Poppy Plantations
Speaking on a recent radio news broadcast in Bogota,
Minister of Justice Cesar Gomez Estrada said that poppy
plantations geared for the manufacture of heroin had been
discovered in the Colombian departments of Valle and Cauca.
Gomez expressed his grave concern about the discovery and
stated that Colombia must take immediate and appropriate
steps to combat the problem, or the country would find
itself in the "same situation as Mexico." The Minister
of Justice indicated that a bill calling for expropria-
tion of lands used in the cultivation of illicit poppies
would be sent to the Colombian Congress for consideration.
We previously reported that Mexican heroin traffick-
ers, whose business was suffering as a result of the
eradication campaign, were sending a number of peasants
skilled in poppy cultivation to the Buga area of Cauca,
Colombia, to establish opium poppy plantations. (Inter-
national Narcotics Developments, 22 June 1977.) A US
Drug Enforcement Administration (DEA) pilot, who has had
experience spotting poppy fields in Mexico, recently flew
a reconnaissance mission in the Cauca Valley and surround-
ing mountainous areas. The pilot reported that no poppy
fields were discovered in the areas he investigated.
The evidence is apparently strong enough to have prompted
DEA to plan aerial surveys of different areas. It seems
likely that the extensive eradication efforts under way
in Mexico will eventually force heroin suppliers there
to look for new poppy cultivation sites. Colombia is
definitely a potential alternative.
If opium poppies are actually being cultivated in
Colombia, this would add a new dimension to US-Colombian
bilateral drug control programs. Gomez pointed out that
Mexico's drug eradication campaign has received wider
"international support" than Colombia's. He based his
opinion on the fact that the US has supplied Mexico with
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50 narcotics control helicopters as compared to three for
Colombia. It is possible, therefore, that the Colombians
will press Washington for additional helicopters as well
as other financial and material support.
This possibility is reinforced by the fact that nar-
cotics has emerged as the type of issue, similar to hu-
man rights, which can be used by governmental leaders to
curry favor with Washington. Mrs. Rosalyn Carter and
high-level envoys from Washington have gone to Bogota to
discuss narcotics. President Carter has spoken personally
with and sent messages to President Lopez encouraging the
Colombian chief executive to continue with narcotics con-
trol measures.
We have discussed in other publications some of the
pressing problems--national elections, persistent economic
difficulties, and social unrest--which have diverted Lopez'
attention from the narcotics situation in Colombia in re-
cent months. It is possible, however, that Lopez' suc-
cessor, if he chooses to cooperate at all on narcotics
control, will attempt to ingratiate himself with Washing-
ton by promising elaborate and expensive drug control
measures--measures which the US will be expected to finance.
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NOTEWORTHY POLITICAL AND ECONOMIC DEVELOPMENTS
(Editor's Note: These items, produced for other
CIA publications, do not deal specifically with
the international narcotics situation. Theu are
included here, however, because they concern
developing situations that could impact on the
international narcotics control effort.)
BURMA: Communist Offensive
De-
spite fighting of unprece erne intensity, i oes not
appear that the Communists will expand appreciably
beyond the territory they now hold.
The Communist offensive, kicked off early last
month, resulted in as many as 400 Burmese troops killed
in October, double the monthly toll in previous upsurges
of fighting.
The heaviest fighting has occurred in northern Shan
State, where the Communists have tried to dislodge the
Burmese Army from its last foothold east of the Salween
River. Although the Communists captured four strategic
positions from the Burmese and appeared to threaten the
bridge across the Salween at. Kunlong, the Army appears
to have at least stopped the Communist advance.
A second area of heavy fighting has been around
Ke-hsi Mansam, well west of the Salween and north of
Taunggyi. A Communist brigade established itself in
this area last winter and held off a Burmese Army at-
tempt to oust it last summer, despite Rangoon's claim
at the time to have done so.
A third worry to the Burmese is the presence of two
Communist brigades between the Salween and the major
district town of Kengtung. The Burmese fear these
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groups may try to cut off road access to Kengtung and
move west to attack the vital bridge at Takaw.
The highly unusual visit of all military vice
chiefs of staff to the battle area around Kunlong in
late October was a measure of Rangoon's concern. Also,
Ne Win's military aide went to Europe to persuade the
President to return early from his annual sojourn.
Even so, it appears unlikely that the Communists
can sustain the current high level of fighting for much
longer; their military "staying power" is less than
that of the Burmese Army. Neither do the Communists
have good prospects of establishing themselves in the
Burman-populated heartland. Communist forces are made up
overwhelmingly of non-Burman ethnic minorities trom the
China border region--a bar against their acceptance by
the dominant Burmans.
Probably as disturbing to the Burmese as the level
of fighting is the awareness that Ne Win's series of
goodwill visits to Peking have not induced the Chinese
to reduce their support to the insurgents. Even though
the insurgents appear in large measure to decide their
own tactics, the Burmese conclude that the weapons
needed for the current offensive could only have.come
from China.
One implication for the US in the current fighting
is the likelihood of a slowdown in Burmese efforts to
suppress narcotics. The Burmese are unlikely to mount
any large-scale operations against opium refineries
along the Thai border so long as their attention and
resources are focused on the Communist threat further
north. One operation believed scheduled for this month
now appears to have been pushed back at least until De-
cember or January.
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PAKISTAN: Corps Commanders Reassigned
Reported new jobs for Pakistan's three most impor-
tant corps commanders reflect a continuing drift toward
prolonged military rule and seem intended partly to in-
crease Chief Martial Law Administrator Zia-ul-Haq's con-
trol over the Army.
Lieutenant General Mohammed Iqbal Khan, who is cur-
rently commanding the corps in the Lahore area, will re-
portedly become Deputy Chief of Army Staff, a post that
has been vacant for several years. Although Zia will
remain Chief of Army Staff, Iqbal will presumably take
effective command of the Army, freeing Zia to concentrate
on ruling Pakistan.
Iqbal and Zia have not always agreed, but Igbal's
planned promotion indicates that his strong advocacy of
prolonged military rule is at least acceptable to Zia.
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Moreover, Zia presumably realizes that, although he of-
ficially retains command, it will be difficult for him
to take back any powers he gives Iqbal. Zia originally
intended to return to being full time Army commander
after he restored civilian rule; he may now have another
job in mind--according to many, the presidency.
Igbal's replacement in Lahore will be Major General
Fazal-i-Haq, the commander of the Army division in Pesha-
war. Fazal-i-Haq is a capable commander, but is also
regarded as one of Zia's favorites. His promotion may
be designed in part to weaken Iqbal's hold on his old
corps. Iqbal, rather than Zia, however, appears to have
gained the most by the shift.
The planned shift of Lieutenant General Jehanzeb
Arbab to a vacant slot in the Punjabi city of Multan is
clearly a demotion. Arbab had been commander of the
corps responsible for the Sind and Baluchistan and was
also martial law administrator for Sind Province. His
new corps is less important than his old one, and, al-
though Arbab will be senior to Iqbal's successor in Lahore,
the acting US Defense Attache expects Fazal-i-Haq, rather
than Arbab, to replace Iqbal as martial law administrator
for the Punjab.
Zia has been at odds with Arbab, whom he suspects
of being too close to former Prime Minister Bhutto
Arbab's replacement, presumably as both corps com-
mander and martial law administrator in the Sind, will
be Major General Sadiq ur Rashid Mohammed Abbasi, the
Chief of the General Staff. Abbasi moved to the senior
staff position in the Army from commander of a division
in Baluchistan after Zia seized power, and his promotion
to corps commander would be a further indication of Zia's
confidence in him.
Lieutenant General Faiz Ali Chisti has already been
named Chief of Staff to the Chief Martial Law Administrator.
Chisti has been one of Zia's closest advisers, and his
appointment to the newly created post may merely formal-
ize what he has already been doing. There are contra-
dictory reports on whether Chisti will retain command
of the corps headquartered near Islamabad, but Zia may
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be reluctant to risk turning over command of the troops
in the capital area to another officer.
The shifts downgrade one of Zia's rivals--Arbab--
put the two most important corps--those headquartered
in Karachi and Lahore--in the hands of men closer to Zia
than the previous commanders, and presumably will pro-
vide Zia with provincial martial law administrators in
whom he has confidence in the two most.important prov-
inces. Iqbal's increased power, however, could offset
Zia's gains. Iqbal is a loyal soldier, but in no sense
Zia's man, and if discontent in the military with the
latter's policies and performance should grow, Iqbal
would be a leading, if reluctant, candidate to succeed
Zia as Chief Martial Law Administrator.
AFGHANISTAN: Military Council and Political Party Ap-
pointments
President Daoud recenLiy established the High Coun--
cil of the Armed Forces and, the Central Council of the
National Revolutionary Party, both of which are provided
for in the constitution that was adopted last: February.
The establishment of these bodies is presumably designed to
increase Daoud's control of the government and to ensure
that Afghanistan continues along the course set by the
68-year-old President.
According to the constitution, the military will
"particpate in national activities through the High Coun-
cil." The constitution does not indicate how this is to
be done, however, aside from making members of the council
ex-officio members of the Loya Jirga, the Grand Assembly,
which meets only rarely on major issues such as election
of the President, declaring war, and amending the consti-
tution.
The majority of the 12 council members appear to
have been appointed because of their standing in the
military including the Defense Minister, the Chief of
the General Staff, and the commander of the Air Defense
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Forces. Four of the members, however, belonged to a
small group of officers, many of whom had been trained
in the USSR, that overthrew the monarchy in 1973. These
men were members of the Central Committee which appeared
to exercise great power briefly and which named Daoud
head of state. Within a few months, however, the com-
mittee no longer had any real power as Daoud moved to
consolidate his rule.
Although it could be argued that the appointment
of these men to the military council indicates that the
central committeemen still retain considerable influence
and power, it seems more likely that Daoud selected these
individuals because thci- sresence on the committee is
useful to him.
Daoud does not app-,:..r to have major doubts about
their loyalty. Two of the officers command the armored
units near Kabul that overthrew the monarchy and would
be a major threat to Daoud if their commanders were at
odds with the President.
Daoud, in the past, has tried to avoid situations
in which any person, no matter how loyal, gains signifi-
cant power. Former Deputy Prime Minister Sharq, for ex-
ample, had no major differences with Daoud, but his grow-
ing power may have been seen as a potential threat. When
a new cabinet was formed shortly after the adoption of the
constitution last winter, Sharq was moved to the relatively
unimportant job of Ambassador to Japan.
Sharq's departure coincided with the increase in
power of General Haider Rasuli, who was already commander
of both the army and the army corps in the Kabul area and
was named Defense minister in the new cabinet. There are
no indications of problems between Daoud and the general,
but Daoud could be raising the status of the former mili-
tary council members--who were close to Sharq--in an ef-
fort to counterbalance Haider Rasuli. (The General's
appointment to the Revolutionary Party's Central Council,
however, indicates that Daoud does not yet regard him as
a serious threat.)
There has also been speculation.that the appointments
to the military council reflect an effort to meet Soviet
desires for greater representation by pro-Soviet figures
in the highest levels of government. Daoud may well have
seen the appointments as a way of pleasing Moscow, but
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it is unlikely either that this was his main reason for
the appointments, or that the orientation of members of
the military council--or any other body in the govern-
ment--will make any significant difference in what poli-
cies Daoud pursues.
Nevertheless, the military council is important to
Daoud. The loyalty of the military is crucial to the
survival of any Afghan Government. Daoud may hope that
the military will channel its political activities
through the council, which will be under his control,
although, he probably does not expect all plotting
against his government to stop.
Perhaps the most impo:rant decisions that Daoud ex-
pects the council to make will be in the selection of
his successor. A major reason for the establishment of
a constitutional government was to provide a guideline
for future governments. With men appointed by Daoud in
charge of the military's political activities, the chances
of a successor who will continue Daoud's policies probably
would be further improved.
Daoud has also named four men as members of the Cen-
tral Council of the National Revolutionary Party. Under
the constitution, the party is to be Afghanistan's only
political party and will select all candidates for elec-
tions.
The establishment of the party has been delayed for
a variety of reasons--alleged leftist efforts to infil-
trate the party, opposition from Daoud's clan which tra-
ditionally has been the closest thing the country has
had to a ruling party, and a lack of experience in the
country in the organization and operation of political
parties.
Daoud apparently has decided he can no longer delay
establishment of the party. Although his original plans
may have been to build the party from the bottom, he now
appears to be building from the top. Daoud and the four
council members may, in fact, be the only members of the
party at this time.
Three of the men Daoud has selected, Defense Minister
Haider Rasuli, Minister of State Abdul Majid, and Finance
Minister Abdulillah hold important government posts and
are close to Daoud. Majid is roughly the equivalent of
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prime minister, with responsibility for coordinating
some of the activities of other ministers, although he
apparently has little independent power. Abdulillah is
extremely close to Daoud, a relationship nearly that of
father and son. The reasons for choosing the fourth
member, Border Affairs Minister Abdul Qayum, will prob-
ably remain as unclear as the reasons Daoud has kept him
in the cabinet.
the appoint-
ments are a pre iminary to thee of one or more
vice presidents, with Majid and Abdulillah two of the
leading candidates. Another possible choice is Mohammed
Naim, Daoud's brother and perhaps the only person in the
country with real influence over the President. Naim
presumably could have any office he wanted, but he has
preferred to operate from behind the scenes.
For both the party council and the military coun-
cil, Daoud has chosen men on whom he can count, who at
least so far, do not seem likely to be a threat to his
position, and who are likely to keep Afghanistan on the
road the President has chosen. In the meantime, Daoud
will continue to make all important decisions along with
many of the unimportant ones.
CARIBBEAN ECONOMIES: Gloomy Situation To Continue
Balance-of-payments problems in the Caribbean
economies* have contributed to three years of anemic
economic growth, mounting unemployment, and increased
trade restrictions. This set of difficulties has under-
cut efforts to establish a viable common market in the
region. Economic conditions there will remain depressed
because of limited prospects for higher world sugar
*Bahamas, Barbados, Dominican Republic, Guyana, Jamaica,
Surinam, and Trinidad and Tobago. Cuba, Haiti, and a
number of smaZZer islands are not included.
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prices, heavy competition from Western Europe for the
US tourist dollar, and the continuing diversion of new
investment away from the area.
The region's economic situation began deteriorating
in 1975 when a fall in tourism and commodity export earn-
ings combined with rising import prices to create serious
payments problems. The payments squeeze worsened last
year as a result of the continued sharp drop in the
world price of sugar, which accounts for about 15 per-
cent of regional exports. Prices on the world market,
where 15 percent of the region's sugar is sold, averaged
about 11.6 cents per pound in 1976, compared with 20.5
cents in 1975 and 30.0 cents in 1974. Because of in-
creased competition with Western Europe, high prices
and deteriorating service, and violence in Jamaica--
which hurt the reputations of other resort areas as
well--tourism in 1976 failed to register the buoyant
revival normally expected with US economic recovery.
Declining foreign investor confidence aggravated
the payments problem by reducing the inflows of private
foreign capital. Nationalistic policies proved particu-
larly damaging in Jamaica, Guyana, and the Bahamas,
which experienced reductions in net foreign private in-
vestment. Lacking sound credit ratings needed to raise
long-term foreign funds, Jamaica and Guyana resorted to
patchworks of short-term commercial credits, small-scale
economic assistance, and drawdowns of foreign reserves.
At the same time, import restrictions had to be strength-
ened to keep trade deficits within manageable limits.
Economic austerity measures aimed at reducing im-
ports, along with the falloff in foreign investment,
cut sharply into real growth. Average real growth
dropped from 3.7 percent in 1973-74 to 1.6 percent in
1975-76. Guyana and Jamaica were hardest hit last year
with real GDP declining 13 percent and 7 percent, re-
spectively. Except for the Dominican Republic and Trini-
dad and Tobago, economic expansion has lagged far behind
growth in the labor force. As a consequence, unemploy-
ment in the region as a whole reached 22 percent by the
end of 1976. Despite the rise in unemployment, infla-
tion continued to range between 7 and 15 percent in the
various economies because of supply shortages resulting
primarily from import curbs.
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Caribbean Economies: Unemployment and Changes in Real GDP
Unem- Changes in Real GDP
ployment
1976 1973 1974 1975 1976 1977'
Bahamas ........................................................ 21 8.5 6.9 -14.4 4.8 2.6
Barbados ...................................................... 20 2.1 -1.6 -1.7 6.2 2.0
Dominican Republic .................................. 20 12.1 8.9 5.1 5.5 4.0
Guyana ........................................................ 20 0.3 7.0 5.0 -13.0 -5.0
Jamaica ........................................................ 30 -2.6 -2.1 -1.0 -6.9 -4.0
Surinam ........................................................ 15 6.0 -.8.8 2.9 0 2.0
Trinidad and Tobago .................................. 15 -0.5 0 7.1 4.8 5.0
Weighted average ...................................... 22 4.4 3.0 1.8 1.5 1.9
The general economic situation of these countries
remains poor this year. The one bright spot has been
the recovery of the world aluminum market, which has
bolstered Caribbean bauxite/alumina sales. World sugar
prices are still depressed, averaging 7 to 8 cents a
pound during the first 10 months of 1977. As for tour-
ism, the moderate revival that began last year appeared
to have reached a plateau by mid-1977. In these circum-
stances we expect total earnings from goods and services
in current dollars to increase only about 5 percent this
year.
For several of the countries, balance-of-payments
strains have remained severe or have even intensified
since the start of 1977. In the case of Jamaica and
Guyana, sources of foreign assistance and short-term
commercial credits are now generally depleted, and for-
eign investment inflows have almost disappeared. With
foreign reserves dangerously low, both countries have
had to tighten import restrictions further. Most other
Caribbean countries are continuing to keep close con-
trols on their imports.
Continued import restrictions are blocking a re-
vival of economic growth, adding to unemployment, and
exerting inflationary pressure in most of the economies.
We expect average real GDP this year to increase by
only 1.9 percent, compared with last year's gain of 1.5
percent. The best performer will be Trinidad and Tobago,
reflecting its position as an oil refiner and exporter.
Growth is slowing in Barbados and the Bahamas as the re-
vival in tourism loses strength. Weak sugar prices are
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hurting the Dominican Republic. For the first half of
1977, inflation has been running at a 14-percent annual
rate in the region as a whole.
Jamaica and Guyana remain the hardest hit by the
recent difficulties. Although official foreign assis-
tance since the International Monetary Fund's standby
credit in July should allow Jamaica to meet essential
foreign obligations this year, Kingston has had to cut
imports 4 percent from last year's depressed level.
Real GDP will probably drop for the fifth consecutive
year, to 84 percent of the 1972 level, and unemployment
and inflation have worsened. Guyana, unable to obtain
substantial foreign assistance, faces at least a 15-per-
cent import cut this year to bring external obligations
to a manageable level. Real GDP will probably drop at
least 5 percent--to 83 percent of the 1975 level--and
unemployment will climb beyond 20 percent of the labor
force.
Current problems underscore basic economic and po-
litical factors that argue against the success of re-
gional integration. The economies are extremely competi-
tive, leaving little opportunity for mutual trade except
in light manufactures, which can often be purchased for
less outside the region. The share of intraregional
imports, which grew from only 5 percent of the imports
of the present CARICOM members in 1967 to 8 percent in
1975, may well have declined in 1976 and 1977.
The recent setbacks expose the area's basic struc-
tural weaknesses imposed by limited resources and small
domestic markets. Most of the economies are heavily
dependent on imports and rely on one or two prominent
export industries--such as sugar, bauxite, or tourism--
that are typically operated as foreign-owned enclaves
with little linkage to the domestic economies. Moreover,
widespread distaste for farm labor has prevented most
countries from fully exploiting their agricultural re-
sources. As a result, sugar production has declined
steadily since the mid-1960s, except in the Dominican
Republic. A large and growing share of food require-
ments must be imported despite the existence of unused
arable land. Two major exceptions to these developments
are the Dominican Republic, which has a diversified econ-
omy based on minerals, agriculture, and light manufac-
turing, and Trinidad and Tobago, which has the region's
only known oil and gas deposits. Despite recently tight-
ened foreign investment codes, the resource bases and
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political stability of these two countries give them the
area's most attractive investment climate.
With the major exceptions of the Dominican Republic
and Trinidad and Tobago, prospects for a substantial re-
covery of the larger Caribbean economies are dim over
the next several years. Although bauxite/alumina pro-
ducers will continue to benefit from rising sales, as-
suming the continued recovery of the world aluminum in-
dustry, capacity constraints will soon put a lid on ex-
pansion of output. Even with a new international sugar
agreement, sugar prices are unlikely to rise much above
production costs of 10 to 12 cents per pound. The out-
look for tourism will remain clouded by the region's
deteriorating and costly tourist services, its reputa-
tion for violence, and competition from Western Europe.
As a result, over the next couple of years, most of the
countries will be hard pressed to pay for needed imports,
economic growth will remain sluggish, and unemployment
will continue to rise.
The bleak export market outlook combined with na-
tionalistic economic policies in most of the countries
will discourage private investment in the immediate
future. A case in point is the shift of bauxite/alumina
investments from the Caribbean to Brazil, Guinea, and
Australia. Moreover, potential foreign investors in
import substitution industries will continue to be
deterred by weak internal demand.
In these circumstances, the economic and social
problems of the area will worsen. Unemployment, partic-
ularly among youth, will increase, thereby exerting ad-
ditional pressure on governments to raise funds for wel-
fare and public investment; this could engender higher
taxes on, and greater equity participation in, foreign-
owned business--moves detrimental to future growth.
Progress toward a fully operative Caribbean common
market over the next several years remains unlikely.
Continuing import restrictions will further intensify
regional economic and political rivalries and will
lessen the already limited opportunities for intrare-
gional trade. These rivalries will be magnified by a
further fragmentation of the region as more of the small
islands opt for independence over the next few years.
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INDIA: Legal opium production in India exceeded 1,450
metric tons last year, according to a recent report
from Calcutta. India has lbng been the world's
largest producer and exporter of licit opium; but
this alleged production figure exceeds previous
estimates. The American Consul in Calcutta notes
that some 9 tons of illicit opium reportedly were
seized from smugglers in India in 1976. Although
some leakage from the generally effective Indian
opium control system has long been suspected, esti-
mates are usually quoted in percentages and usually
run somewhat higher than this figure would represent.
Most of the leakage apparently is absorbed by the
domestic Indian market. This is a very sensitive
area of information for the Indian Government, how-
ever, and attempts to get more precise information
on narcotics trafficking in India have been largely
unproductive. During a recent narcotics conference
in eastern India, the Narcotics Commissioner noted
that existing laws in India against smuggling are
"not effective enough." He told the conference that
the government is preparing more comprehensive
legislation which should be enacted shortly.
According to the Indian official, there are currently
over 66,000 registered narcotics "users" in India
representing an annual consumption of about 1.5 tons
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UNITED NATIONS: The General Assembly, which is running
about two weeks behind schedule, is expected to
discuss the international narcotics situation
before the end of November, according to the latest
word from the US Mission at the UN Headquarters in
New York. The Mission feels that the current session
of the General Assembly offers an opportunity for a
UN initiative on narcotics. Several draft resolutions
on demand, trafficking, and rehabilitation are cur-
rently under study and some at least apparently will
be introduced during the current session. The draft
resolution on rehabilitation calls for the Economic
and Social Council (ECOSOC) to convene a special
session directed at the problems of narcotics abuse.
All narcotics producing, trafficking, transshipping,
and using countries would be invited. The special
ECOSOC session would be aimed at launching a program
that will focus on the "root causes" of narcotics
addiction, on providing substitute income production
programs, and on developing "substantive programs
for the reduction of demand" throughout the world.
TURKEY: The Multispectral Opium Poppy Sensor (MOPS)
program in Turkey, which has been beset with diffi-
culties and delays, faces still further problems,
according to a recent report from Ankara. The
earlier delay in Ankara's signing the MOPS agree-
ment apparently resulted from the failure of the
Turkish Minister of Foreign Affairs and the Gendarmerie
to clear the draft agreement in advance with the
Turkish General Staff. By law, the Army is the
only organization authorized to conduct aerial pho-
tography over Turkey. The new difficulty with the
MOPS program in Turkey is the provision of the agree-
ment which calls for additional training for the
Turks next spring. Many Turks feel this is un-
necessary; they claim that their own pilots and
technicians are already qualified and that there is
no need for the training consultants to return to
Turkey.
There is perhaps greater
concern a the Turks eel they can modify agree-
ments with the UN Fund for Drug Abuse Control,
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(UNFDAC) at any time. The situation apparently is
further complicated by the failure of the Turkish
Government to sign the 1977 program agreement.
Consequently, none of the programs scheduled to be
implemented this year is currently under way, and
this year's funding could be lost. The Embassy
speculates that the Turks may be dragging their
feet on the 1977 agreement with UNFDAC out of pique
that UNFDAC has refused to create a contingency
fund to help the Turks handle their current poppy
straw situation. Unless the Turks cut production
sharply for at least the next few years, they probably
will be faced with substantial surpluses representing
an added drain on the Turkish economy.
TURKEY: Turkish officials, including a representative of
the Soil Products Office (TMO) reportedly view this
year's bumper opium poppy straw crop--some 35,000-
40,000 metric tons--as triple the amount they will
be able to sell at current world prices. The
Turkish officials reportedly admit privately that
the high government subsidy--$1,200 to $1,300 per
metric ton--paid to opium poppy farmers is the cause
of the high price of Turkish poppy straw which dis-
courages the international market. They foresee no
change in the price situation, however. In anticipa-
tion that their own poppy straw processing plant will
be on-stream by mid-1979, the Turks are trying to
negotiate prices for poppy straw concentrate which
will be produced by that plant, which is expected
to have a capacity of some 20,000 tons of poppy
straw annually.
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