Chapter III (continued)

7. International Drug-Control Cooperation

The transnational nature of the drug threat prevents any country from successfully combating it unilaterally. Our efforts to reduce drug availability, abuse, and adverse consequences within the United States are supported by extensive international activities. International programs confront illegal drug cultivation, production, trafficking, abuse, diversion of precursor chemicals, and the corrosive effects of the illegal drug trade — including corruption, violence, environmental degradation, damage to democratic institutions, and economic distortion.

A series of bilateral, multilateral, sub-regional, regional, and global accords create a bulwark for anti-drug measures. The international community's mature understanding of the scope of this problem is helping dissolve the myth that the U.S. market is the engine driving the global drug trade. In fact, the United States comprises just 2 percent of the world's consumers. Even with the relatively high price Americans are willing to pay for illegal drugs, U.S. citizens still account for only 10 to 15 percent of more than four hundred billion dollars spent globally on drugs every year.⁶²

Drug Control Efforts through International Organizations

Over the past year, the United States has been extremely successful in working with a number of international organizations on supply reduction. Following the June 1998 United Nations General Assembly Special Session, the United States increased its drug-control efforts through international organizations.

Recent U.S. activities through the UN Drug Control Program resulted in an expansion of South East Asia programs that focus on Burma, improved alternative development in Pakistan, and training law-enforcement officials in Asia and Latin America. In addition, UNDCP established regional Caribbean efforts to teach judicial personnel how to handle narcotics-related cases, assisted Southern African nations in developing anti-drug legislation, and established demand-reduction centers in Central Europe.

The contributions of the U.S. to the Colombo Plan's Drug Advisory Program led to increased commitment from other donors, particularly Japan, Korea, and Australia. Contributions fostered the development of host nation-funded drug treatment and drug- prevention coalitions in a number of countries throughout South and Southeast Asia.

The Department of State assisted in strengthening the mechanisms of the Dublin Group to enable it to be more effective in coordinating donor counternarcotics assistance. The Dublin Group is an informal donor coordination effort organized by the U.S., Australia, Japan, Norway, and the EU. The Department of State has also been successful in eliciting greater participation by European countries in international drug programs such as the effort to assess Nigeria's needs for assistance in the field of drug control.

Through the dynamism of the Inter-American Drug Abuse Control Commission (OAS/CICAD), a strong hemispheric consensus has developed and resulted in a regional anti-drug strategy. With Department of State funding, OAS/CICAD has launched training and technical assistance programs in all major narcotics control areas — from developing crop surveys to developing legal systems and strengthening national drug control agencies.

Certification for Major Illicit Drug-Producing and Transit Countries

The legislatively mandated certification process is an important instrument in our international narcotics-control policy. Under this law, the President is required to identify major illicit drug-producing and transit countries on an annual basis and then "certify" whether these nations cooperated fully with the United States or took adequate steps on their own to implement the 1988 UN Drug Convention. The President must impose certain economic sanctions on countries that do not meet these requirements unless he certifies that vital interests of the United States preclude such sanctions. The sanctions include cutting off foreign assistance (other than humanitarian and counternarcotics aid) and voting against requests for loans from multilateral lending institutions. The certification process helps underscore the importance the United States attaches to international narcotics control and encourages some countries to take steps they might otherwise have avoided in pursuit of sound drug-control policy. At the same time, this unilateral certification process is contentious in many countries.

Promoting International Demand Reduction

The problem of increasing drug abuse is shared by many nations. In 1996, the latest year for which a geographically balanced database exists, cannabis consumption increased in thirty-one nations, amphetamine type stimulant use increased in twenty-six, heroin use increased in twenty-one, cocaine consumption rose in eighteen, hallucinogen use increased in twelve, inhalant use rose in twelve, and benzodiazapine use increased in nine.⁶³ Drug-use rates also increased in "source" and "transit" countries. In Colombia, the most recent official national survey showed lifetime drug-use rates increased from 0.6 percent of the population in 1992 to 6.5 percent in 1996.⁶⁴ In Mexico, lifetime use of illegal drugs increased from 3.9 percent of the population in 1993 to 5.3 percent in 1998 — a 36 percent increase.⁶⁵

Recognizing that no government can reduce drug use and its consequences by itself, the United States works closely with individual countries and regional organizations on demand-reduction initiatives. The United States and Mexico hold annual binational demand reduction conferences; the third will be held in Phoenix, Arizona in May/June 2000. The U.S. participated in a demand reduction symposium in Bridgetown, Barbados, in March 1999. In October 1999 a Central American demand reduction summit was held in Guatemala. At this regional summit, eight countries from the Central America addressed the importance of epidemiological data collection and research for understanding the drug issue locally and to identify and prioritize their next steps. Federal public-health agencies are collaborating with the European Monitoring Centre for Drugs and Drug Addiction in Lisbon, Portugal to improve national survey instruments.

The U.S. Government also encourages private-sector initiatives in drug prevention education. Examples include the Consejo Publicitario Argentino, the Parceria Contra Drogas in Brazil, and the Alianza para una Venezuela sin drogas. Approximately 120,000 U.S. tax dollars helped establish these national organizations and contributed to the generation of more than 120 million dollars in anti-drug media messages in these three countries. The U.S. helped launch similar organizations in Peru and Uruguay in 1999. The Department of State supports public diplomacy campaigns that publicize the threat drugs pose to societies in source and transit nations.

Supporting Democracy and Human Rights

Democracies make peaceful neighbors and reliable trade partners. They are good for security and provide an environment for cooperation on drug issues. Democracies have a greater propensity to respect human rights, are less tolerant of corruption, and are more likely to build legal systems that set fair ground rules for everybody — including foreign investors. If any areas in the world can boast of a sweeping trend toward greater respect for democratic practices in the past quarter-century, Latin America and the Caribbean can be proud of their efforts. Civil society is still very weak in some countries. Greater honesty and ethics in government, improved administration of justice, effective and humane law enforcement, and greater respect for free expression are all needed.

The Administration continues to be very sensitive about human rights. Under the Leahy Amendment to the FY 1999 Foreign Operations Appropriation Bill, the administration can only provide training and assistance to those security units that do not tolerate violations of human rights. If the Secretary of State has credible evidence that a unit committed gross violations of human rights, no funds made available by that Act may be provided unless the Secretary reports to the Committees on Appropriations that the foreign government responsible is taking steps to bring the culprits to justice.

Regional Drug Control in the Western Hemisphere and the Multilateral Evaluation Mechanism

The Organization of American States' Inter-American Drug Abuse Control Commission (OAS/CICAD) has become an essential link in our international drug-control regime. U.S. contributions to OAS/CICAD have had a direct impact on the development of model workshops to target money laundering and asset forfeiture, regional mechanisms for tracking pre-cursor chemicals, anti-drug laws, and judicial or legal training.

After eighteen months of discussion and negotiation, a Multilateral Evaluation Mechanism (MEM) was inaugurated in 1999 during the twenty-sixth regular session of CICAD in Montevideo, Uruguay (October 1999). The MEM is a multilateral system of counter-drug performance measurement. Its creation was mandated by thirty-four heads of state who attended 1998 Summit of the Americas in Santiago, Chile. The establishment of the MEM will have no direct impact on the United States' annual drug certification process, which is required by law. The MEM will help to address this issue.

Although individual nations have made progress in developing comprehensive counterdrug strategies, many have yet to develop an adequate system to collect and report basic statistics on drug use, production, seizures, arrests, money laundering, chemical diversion, and drug trafficking. In addition, the data many nations collect is based on different methodologies. This problem prevents accurate regional comparisons, discourages information sharing, and inhibits the development of a hemispheric picture of the drug problem as it changes over time. MEM was designed to fix these difficulties.

Initial steps for implementing the MEM have already been taken. Nations have been sent a detailed questionnaire with sixty-two performance indicators, which require detailed answers pertaining to prevention, treatment, law enforcement, and interdiction. The questionnaires will be turned over for review to a Government Experts Group (GEG). Recommendations will be written by the GEG and published by CICAD on the Internet. Results of the first round of evaluations will be reported to the hemisphere's presidents at the Summit of the Americas in 2001 in Quebec City, Canada.

Bilateral Cooperation with Mexico

Most of the cocaine and much of the marijuana, heroin, and methamphetamine consumed in the U.S. comes through Mexico. Mexican drug networks control a substantial portion of the illicit drugs distributed in the United States. Conversely, cash and firearms derived from illegal drug trafficking move South from the U.S. into Mexico.

Senior levels of the Mexican government are willing to confront the national security threat posed by drug trafficking, drug-related corruption, and violence. Corruption and fragile counter-drug institutions have hurt Mexico. Mexico must remain committed to disrupting drug-trafficking organizations and reducing the amount of illegal substances that enter Mexico and the United States.

In the last four years, Mexico prosecuted a number of high-ranking public officials for corruption. It established a Confidence Control Center to address corruption. Mexico enacted anti-crime laws that strengthen law enforcement and provide the basis for effective prosecution. Cooperation between the two nations improved in terms of counterdrug information sharing, investigations, extradition, and military coordination. Twenty-five metric tons of cocaine were seized as the result of maritime coordination between the U.S. Coast Guard and the Mexican Navy during the first nine months of 1999. In January 2000, the U.S. and Mexico will conduct the first opium yield survey in almost fifteen years.

In 1998, the United States and Mexico developed a comprehensive bi-national anti-drug strategy. The strategy builds on the Bi-national Drug Threat Assessment and the U.S.-Mexico Alliance against Drugs signed by Presidents Clinton and Zedillo in 1997. The agreement demonstrates the shared commitment to address drug problems while upholding the principles of sovereignty, mutual respect, territorial integrity, and nonintervention. The U.S./Mexico Performance Measures of Effectiveness, developed in February 1999, are designed to measure progress by Mexico and the U.S. in implementing the bi-national strategy. A second bi-national demand-reduction conference was held in Tijuana, Mexico in June of 1999, and a third conference will take place in Phoenix, Arizona in May/June of 2000.

Over the long term, the United States and Mexico need to preserve institutions of cooperation like the U.S.-Mexico High Level Contact Group (HLCG) for Drug Control and the Senior Law Enforcement Plenary. Mexico must strengthen its law-enforcement and anti-corruption efforts in order to reduce the flow of drugs. Our two nations must also ensure the safety of law enforcement personnel who are confronting violent criminal drug organizations.

Targeting International Drug Trafficking Organizations

Over the last decade, Latin American drug-trafficking organizations fundamentally changed the way they do business. A diverse group of smaller, specialized Colombian drug rings have emerged following the collapse of the Medellin and Cali cartels. The smaller suppliers in South America and the transportation groups in the Caribbean and Mexico filled the void left by the demise of the large cartels and expanded their roles in the international cocaine industry.

The increase in smaller suppliers, producers, and trafficking groups made targeting drug-trafficking organizations much more difficult. The sheer power, influence, and sophistication of these groups put them in a category by themselves. Whereas traditional Mafia families bribed officers and judges, today's international drug organizations corrupt entire institutions of government.

These traffickers model their operations after international terrorists. They maintain tight control of their workers through highly compartmentalized cell structures that separate production, shipment, distribution, money laundering, communications, security, and recruitment. Traffickers have at their disposal the most technologically advanced airplanes, boats, vehicles, radar, communications equipment, and weapons. They have also established vast counterintelligence capabilities and transportation networks.

Although presented with a problem of growing complexity, international law enforcement had a number of important successes in 1999. One was Operation Millennium, a Special Operations Division investigation discussed previously. Operation Impunity was a year-long OCDETF and HIDTA investigation designed to dismantle a narcotics importation/distribution network that smuggled tonnage quantities of cocaine across the Southwest border at McAllen, Texas. The network concealed cocaine in tractor-trailers carrying watermelons and other produce. After the cocaine was smuggled across the border, the cocaine would be trucked to distribution centers in the Northeast and in the Chicago area. Members of the organization also collected millions of dollars in drug proceeds and transported the currency to Mexico in bulk shipments. Operation Impunity resulted in seizures netting 12,357 kilograms of cocaine, one-half kilo of heroin, 4,806 pounds of marijuana, and more than $19 million in U.S. currency. Prosecutors charged a total of 105 defendants in this operation.

International Money Laundering Efforts

A multi-agency training program is helping banks and law-enforcement agencies in emerging democracies detect and deter money laundering. Treasury's Financial Crimes Enforcement Network (FinCEN) and the Internal Revenue Service Criminal Investigation Division continue to work closely with other components of the US government and international partners to foster multilateral and bilateral initiatives to increase the number of countries engaged in the fight against money laundering. The efforts to build effective international cooperation encompass two major areas of activity: (1) establishing or strengthening its financial intelligence unit counterparts, and (2) facilitating the exchange of information among these institutions in support of anti-money laundering investigations.

The United States supports global efforts to disrupt the flow of illicit capital, track criminal sources of funds, forfeit ill-gained assets, and prosecute offenders. Twenty-nine nations belong to the Financial Action Task Force (FATF): Argentina, Brazil, and Mexico participate as observers. Formed by the G-7 Economic Summit in 1989, the FATF is dedicated to promoting anti-money laundering controls around the world. As a result, all members of the FATF have now criminalized money laundering and are working toward implementing a full range of international anti-money-laundering standards.

Working with the FATF and other governments, the U.S. promotes the establishment of FATF-style regional bodies. A major achievement of the FATF in 1999 was the second mutual evaluation of each member's anti-money laundering measures. The FATF's system of mutual evaluations has proven successful in ensuring that the standards are implemented consistently by each of the member governments and in spurring governments to make improvements in their individual systems. This past year, progress was made in creating an internationally accepted methodology to measure the financial dimensions of the illicit drug industry. In 1999, a unique partnership was forged among the G-7 FATF, the United Nations Drug Control Program, European Drugs Monitoring Center, and several other European agencies to produce the first reliable estimate of illicit drug proceeds in the FATF nations.

In addition, the United States has been working with FATF to develop Financial Intelligence Units (FIUs), which receive, analyze, and (where appropriate) refer for prosecution suspicious transactions reported by financial institutions. The operation of financial intelligence units (FIUs), modeled after FinCEN, may prove to be one of the most effective means for combating money laundering around the globe. This development provides a centralized mechanism for tracking criminal proceeds, collecting investigative data, and contributing to international cooperation by combating money laundering. There are now forty-eight FIUs in operation with more in the planning stages. The United States has been assisting interested countries with technical support associated with FIU operation. Currently, FinCEN is working with governments to share information through a secure Intranet. Accomplishing this goal will be important to U.S. efforts to identify, investigate, and prosecute transnational financial crimes.

The United States government is also attacking the financial networks of drug trafficking organizations by seizing illegally gained assets. In December of 1999, the President signed into law the Foreign Narcotic Kingpin Designation Act, which establishes a global program targeting the activities of narcotics traffickers. The new act provides a statutory framework for the President to institute sanctions against foreign drug kingpins in order to deny illegal businesses access to the U.S. financial system and benefits from U.S. trade. Once locked out of American trade, criminal organizations have difficulty participating in open commerce.

One facet of international money laundering — the Black Market Peso Exchange (BMPE) system — is of particular concern to the United States. The BMPE is the primary money laundering conduit used by Colombian narcotics traffickers in repatriating drug revenues from the United States. In this scheme, Colombian cartels sell U.S. currency earned from the sale of illegal drugs to black market peso brokers in Colombia. These brokers, along with their U.S.-based agents, place the dollars back into U.S. bank accounts while circumventing the Bank Secrecy Act reporting requirements. The exchange agents re-sell monetary instruments drawn on their bank accounts in the U.S. to Colombian importers who use these instruments to purchase foreign goods. Anecdotal law enforcement evidence, informant statements, and Colombian government officials estimate BMPE trade at between $3 billion and $6 billion a year.

Actions directed against drug assets work best when undertaken with international support. The United States must continue encouraging other nations to join in coordinated efforts against drug organizations. As kingpin designations are made under the new law, we will continue working with host governments to pursue additional measures against drug criminals.

International Asset Forfeiture Cooperation

In this era of globalization, the Department of Justice's efforts to disrupt and dismantle drug-trafficking organizations mandate international cooperation at all levels. In addition to working with other countries to develop international forfeiture cases, DOJ actively promotes international cooperation to halt the flow of illegal proceeds across borders and into foreign financial institutions through the negotiation of bilateral forfeiture cooperation and asset sharing agreements. Since the beginning of the program, DOJ has obtained some $192 million in forfeitures with the assistance of twenty-three countries and some $66 million has been shared with those cooperating countries. In FY 1998, the department continued its cooperative efforts with a variety of foreign countries. For example, the United States worked with Switzerland to complete the forfeiture of $178 million in assets held in Switzerland in connection with the 1995 prosecution of Sheila Arana de Nasser, ex-wife of notorious Colombian drug-trafficker Julio Nasser David. Approximately fifty percent or $89 million was repatriated in December 1998 to the United States as the result of an agreement with Switzerland.

Controlling Precursor Chemicals

The twenty-two chemicals most commonly used in the production of cocaine also have extensive industrial applications. We can disrupt illegal drug production if these chemicals are difficult to obtain. For this reason, an important element in the U.S. drug-control policy is to insure that all countries have flexible system that regulates the flow of precursor chemicals without jeopardizing legitimate commerce. The Multilateral Chemical Reporting Initiative — formulated by the U.S. and accepted internationally — completed its second year in 1999. This program encourages governments to exchange chemical-control information on a voluntary basis in order to identify suspicious orders. Over the past decade, key international bodies like the Commission on Narcotic Drugs and the U.N. General Assembly's Special Session (UNGASS) have addressed the issue of chemical diversion in conjunction with U.S. efforts. These organizations raised specific concerns about potassium permanganate (a chemical essential in making cocaine) and acetic anhydride (a heroin precursor).⁶⁶

To facilitate the flow of information about precursor chemicals, the United States — through its relationship with the Inter-American Drug Control Abuse Commission (CICAD) — continues to assess the status of precursor chemicals and assist countries in strengthening controls. Many countries still lack the capacity to determine whether the import or export of precursor chemicals is related to legitimate needs or illicit drugs. The problem is complicated by the fact that many chemical shipments are directed through third countries in an attempt to disguise their purpose and destination. More can be done to prevent diversions, and the international community — through the United Nations — has become increasingly involved in concerted global action to limit the availability of precursor chemicals.

In countries where strict chemical controls were put in place, illicit drug production has been seriously affected. For example, few of the chemicals needed to process coca leaf into cocaine HCl are manufactured in Bolivia. Most are smuggled in from neighboring countries with advanced chemical industries. DEA estimates that licensed importers are diverting only small amounts. However, increased interdiction of chemicals, particularly in the Chapare, raised the price of many smuggled chemicals in 1998. Bolivian lab operators are now using inferior substitutes (cement instead of lime, sodium bicarbonate for ammonia), recycled solvents (ether), and a streamlined production process that virtually eliminates oxidation in producing cocaine base. Some laboratory operators are not using sulfuric acid during the maceration stage; consequently, less cocaine alkaloid is extracted from the leaf, producing less HCl. The lower quality of Bolivian cocaine has affected its marketability.

In 1999, Operation Purple was conducted with the cooperation of seven major countries that produce potassium permanganate, exporting/transshipment countries, and cocaine-producing countries of the Andean region. This operation tracked shipments of potassium permanganate that were greater than a hundred kilograms. During seven months of operation, these investigative efforts had a major impact on the traffickers' ability to obtain chemicals necessary to process cocaine. There were twenty-four shipments seized or halted during transit — accounting for 1.7 million kilograms of potassium permanganate — which, if used for processing cocaine, could have created up to seventeen million kilograms of the drug.

Reducing Corruption

Like an opportunistic disease attacking a weakened immune system, the drug trade draws strength from the economic, social, and moral decay that corruption fosters. Drug syndicates exacerbate corruption through wealth. Enormous resources give the large drug organizations a nearly open-ended capacity to corrupt. We have seen instances in the recent past where senior officials charged with destroying drug syndicates were in fact in the syndicates' employ. By focusing world attention on the need to eliminate corruption, we can prevent this fate from befalling elected governments.

Stemming corruption and protecting the integrity of a nation's judicial system were central to Vice President Gore's global forum on fighting this problem, held in February 1999. Corruption was also discussed at the Western Hemisphere Drug Policy summit held in November 1999. Both forums emphasized the need for justice, security, and financial regulatory officials as well as accountability in the private sector and the press. Nations suffering from corruption must take the tough measures required to develop democratic institutions that inspire investor confidence and public support.