The Department of State’s International Narcotics Control Strategy Report (INCSR) has been prepared in accordance with section 489 of the Foreign Assistance Act of 1961, as amended (the “FAA,” 22 U.S.C. § 2291). The 2009 INCSR, published in March 2009, covers the year January 1 to December 31, 2008 and is published in two volumes, the second of which covers money laundering and financial crimes. In addition to addressing the reporting requirements of section 489 of the FAA (as well as sections 481(d) (2) and 484(c) of the FAA and section 804 of the Narcotics Control Trade Act of 1974, as amended), the INCSR provides the factual basis for the designations contained in the President’s report to Congress on the major drug-transit or major illicit drug producing countries initially set forth in section 591 of the Kenneth M. Ludden Foreign Operations, Export Financing, and Related Programs Appropriations Act, 2002 (P.L. 107-115) (the “FOAA”), and now made permanent pursuant to section 706 of the Foreign Relations Authorization Act, Fiscal Year 2003 (P.L. 107-228) (the “FRAA”).
Section 706 of the FRAA requires that the President submit an annual report no later than September 15 identifying each country determined by the President to be a major drug-transit country or major illicit drug producing country. The President is also required in that report to identify any country on the majors list that has “failed demonstrably....to make substantial efforts” during the previous 12 months to adhere to international counternarcotics agreements and to take certain counternarcotics measures set forth in U.S. law. U.S. assistance under the current foreign operations appropriations act may not be provided to any country designated as having “failed demonstrably” unless the President determines that the provision of such assistance is vital to U.S. national interests or that the country, at any time after the President’s initial report to Congress, has made “substantial efforts” to comply with the counternarcotics conditions in the legislation. This prohibition does not affect humanitarian, counternarcotics, and certain other types of assistance that are authorized to be provided notwithstanding any other provision of law.
The FAA requires a report on the extent to which each country or entity that received assistance under chapter 8 of Part I of the Foreign Assistance Act in the past two fiscal years has “met the goals and objectives of the United Nations Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances” (the “1988 UN Drug Convention”). FAA § 489(a) (1) (A).
Although the Convention does not contain a list of goals and objectives, it does set forth a number of obligations that the parties agree to undertake. Generally speaking, it requires the parties to take legal measures to outlaw and punish all forms of illicit drug production, trafficking, and drug money laundering, to control chemicals that can be used to process illicit drugs, and to cooperate in international efforts to these ends. The statute lists actions by foreign countries on the following issues as relevant to evaluating performance under the 1988 UN Drug Convention: illicit cultivation, production, distribution, sale, transport and financing, and money laundering, asset seizure, extradition, mutual legal assistance, law enforcement and transit cooperation, precursor chemical control, and demand reduction.
Section 489(a) (3) of the FAA requires the INCSR to identify:
(A) Major illicit drug producing and major drug-transit countries;
(B) Major sources of precursor chemicals used in the production of illicit narcotics; or
(C) Major money laundering countries.
These countries are identified below.
Major Illicit Drug Producing and Major Drug-Transit Countries
A major illicit drug producing country is one in which:
A major drug-transit country is one:
Afghanistan, The Bahamas, Bolivia, Brazil, Burma, Colombia, Dominican Republic, Ecuador, Guatemala, Haiti, India, Jamaica, Laos, Mexico, Nigeria, Pakistan, Panama, Paraguay, Peru, and Venezuela.
Of these 20 countries, Burma, Bolivia, and Venezuela were designated by the President as having “failed demonstrably” during the previous 12 months to adhere to their obligations under international counternarcotics agreements and take the measures set forth in section 489(a)(1) of the FAA. The President determined, however, in accordance with provisions of Section 706(3) (A) of the FRAA, that support for programs to aid Venezuela’s democratic institutions is vital to the national interests of the United States. Moreover, a vital national interests’ waiver permits funding to Bolivia for programs critical to our vital national interests.
Major Precursor Chemical Source Countries
The following countries and jurisdictions have been identified to be major sources of precursor or essential chemicals used in the production of illicit narcotics:
Argentina, Brazil, Canada, Chile, China, Germany, India, Mexico, the Netherlands, Singapore, South Korea, Taiwan, Thailand, the United Kingdom, and the United States.
A major money laundering country is defined by statute as one “whose financial institutions engage in currency transactions involving significant amounts of proceeds from international narcotics trafficking.” FAA § 481(e) (7). However, the complex nature of money laundering transactions today makes it difficult in many cases to distinguish the proceeds of narcotics trafficking from the proceeds of other serious crime. Moreover, financial institutions engaging in transactions involving significant amounts of proceeds of other serious crime are vulnerable to narcotics-related money laundering. This year’s list of major money laundering countries recognizes this relationship by including all countries and other jurisdictions, whose financial institutions engage in transactions involving significant amounts of proceeds from all serious crime. The following countries/jurisdictions have been identified this year in this category:
Afghanistan, Antigua and Barbuda, Australia, Austria, Bahamas, Belize, Bolivia, Brazil, Burma, Cambodia, Canada, Cayman Islands, China, Colombia, Costa Rica, Cyprus, Dominican Republic, France, Germany, Greece, Guatemala, Guernsey, Guinea-Bissau, Haiti, Hong Kong, India, Indonesia, Iran, Isle of Man, Israel, Italy, Japan, Jersey, Kenya, Latvia, Lebanon, Liechtenstein, Luxembourg, Macau, Mexico, Netherlands, Nigeria, Pakistan, Panama, Paraguay, Philippines, Russia, Singapore, Spain, Switzerland, Taiwan, Thailand, Turkey, Ukraine, United Arab Emirates, United Kingdom, United States, Uruguay, Venezuela, and Zimbabwe.
Further information on these countries/jurisdictions and United States money laundering policies, as required by section 489 of the FAA, is set forth in Volume II of the INCSR in the section entitled “Money Laundering and Financial Crimes.”
White House Press Release
Office of the Press Secretary
September 15, 2008
Presidential Determination No. 2008-28
Pursuant to Section 706(1) of the Foreign Relations Authorization Act, FY03 (P.L. 107-228)(the FRAA), I hereby identify the following countries as major drug transit or major illicit drug producing countries: Afghanistan, The Bahamas, Bolivia, Brazil, Burma, Colombia, Dominican Republic, Ecuador, Guatemala, Haiti, India, Jamaica, Laos, Mexico, Nigeria, Pakistan, Panama, Paraguay, Peru, and Venezuela.
A country's presence on the Majors List is not necessarily an adverse reflection of its government's counternarcotics efforts or level of cooperation with the United States. Consistent with the statutory definition of a major drug-transit or drug producing country set forth in section 481(e) (2) and (5) of the Foreign Assistance Act of 1961, as amended (the FAA), one of the reasons that major drug transit or illicit drug producing countries are placed on the list is the combination of geographic, commercial, and economic factors that allow drugs to transit or be produced despite the concerned government’s most assiduous enforcement measures.Pursuant to Section 706(2)(A) of the FRAA, I hereby designate Bolivia, Burma and Venezuela as countries that have failed demonstrably during the previous 12 months to adhere to their obligations under international counternarcotics agreements and take the measures set forth in section 489(a)(1) of the FAA. Attached to this report (Tab A) are justifications for the determinations on Bolivia, Burma and Venezuela, as required by section 706(2) (B).
I have also determined, in accordance with provisions of Section 706(3)(A) of the FRAA, that support for programs to aid Venezuela’s democratic institutions and continued support for bilateral programs in Bolivia are vital to the national interests of the United States.
Under the leadership of President Karzai, the Government of Afghanistan has made some progress in combating narcotics. However, drug trafficking remains a serious threat to the future of Afghanistan, contributing to widespread public corruption, damaging legitimate economic growth, and fueling violence and insurgency.
A successful counternarcotics strategy in Afghanistan hinges on maintaining security, building public capacity, attaining local support, and actively pursuing our joint counter-narcotics strategy.
Poppy cultivation continues to be marked by the divide between the increasingly poppy-free northern provinces and the insurgency-dominated regions in the south. Through political will, and by using a mixture of incentives and disincentives, governors in key northern provinces, like Badakshan and Nangarhar, have significantly reduced poppy cultivation.
Inspired by the Nangarhar model, the newly appointed governor of the southern province of Helmand has taken bold steps to implement the first truly serious counternarcotics campaign in the province. It is clear that progress in Helmand Province will not come easily. Drug control efforts in this area of pronounced poppy cultivation are thwarted by heavily entrenched Taliban centers of power; in 2007 Helmand Province cultivated more than half of Afghanistan’s illegal poppy crop.
Difficult security conditions greatly impede counternarcotics operations, particularly in the south and southwest provinces, areas in which the insurgency and organized crime groups predominate and where over 85 percent of Afghan poppy is cultivated.
Drug-related corruption in Afghanistan—one of the most intransigent problems in the country—must be confronted, particularly at provincial and district government levels. Corruption and illegal drugs in Afghanistan threaten to undermine all aspects of the country’s efforts to build a sustainable economic infrastructure and functioning democracy.
The United States enjoys close cooperation with Canada across a broad range of law enforcement issues. Both of our nations face a serious challenge from the two-way flow of drugs across our long border. While Canada is primarily a drug consuming country, it is also a significant producer of highly potent marijuana and has become the primary source country for MDMA (ecstasy) available in the United States. Additionally, Canada serves as a transit or diversion point for precursor chemicals and over-the-counter pharmaceuticals used to produce illicit synthetic drugs, most notably MDMA. While methamphetamine use has decreased in the United States due, in large part, to past efforts to reduce precursor chemical diversion by Canadian authorities, production of finished methamphetamine is increasing in Canada and could lead to greater supplies in the United States. Canada is pursuing a new National Anti-Drug Strategy that focuses on proven approaches to reduce drug use and deter drug trafficking. The U.S. and Canada continue to work productively in joint law enforcement operations that disrupt drug and currency smuggling operations along the border.
The growing expansion of drug trafficking in Central America poses serious challenges to the region’s limited capability to combat both the narcotics trade and organized crime. We are particularly concerned about the increasing presence of drug trafficking organizations in Central America that are fleeing more robust counternarcotics regimes elsewhere, especially in Mexico and Colombia. Often unimpeded, traffickers easily use long Central American coastlines for illegal maritime drug shipments. Even though there have been noteworthy seizures, a high proportion of drugs transiting Central America are not detected or seized.
The March 2008 gun battle between drug organizations in Guatemala demonstrates that criminal organizations such as the Sinaloa cartel are trying to reinforce their trafficking strongholds in Central America. In 2008, Guatemala passed new anti-organized crime and extradition laws. While such actions are encouraging, Guatemala must work aggressively to implement these measures, just as neighboring countries must redouble their practical efforts to implement adopted reforms aimed at thwarting criminal activity.
The United States is encouraged by the commitment of the Regional Integration System to a regional response, such as sharing counternarcotics intelligence. Support for cohesive regional institution building and practical law enforcement enhancements in Central America are critical components to a successful regional counternarcotics strategy. We look forward to working with Guatemala and other Central American nations to support counter-drug programs and the rule of law under the new Merida Initiative.
The countries of West Africa have emerged as key transit hubs for Andean cocaine trafficked through Venezuela and Brazil and destined for European markets. This trafficking is undermining many of the already fragile institutions of countries in the region. Narcotics traffickers have focused their illegal activities in Guinea-Bissau, but have recently extended their operations south to Guinea. The presence of Latin American drug traffickers and the large quantities of cocaine trafficked openly suggest that drug criminals may exercise the prerogatives of sovereign nation-states in these two countries. West Africa has long been a hub for illicit criminal networks. West African states lack resources to sufficiently counter efforts by drug trafficking organizations whose activity threatens the stability of these countries and the wellbeing of their people. International donors and organizations are working to assist governments in their counterdrug efforts. We support these efforts to preserve and protect stability and positive growth in this region.
Nigeria, a major transit country for illicit drugs destined for the United States, continues to make some progress on counter narcotics, and has cooperated effectively with the United States on drug-related money laundering cases. Since it began operations in 2005, the Nigerian Financial Intelligence Unit has investigated numerous suspicious transaction reports that have resulted in high profile convictions recorded by the Economic and Financial Crimes Commission (EFCC). In the past, we have commended the role of the EFCC in Nigeria’s counter-drug and anti-money laundering effort. However, recent developments in Nigeria raise questions about whether the EFCC will remain an effective anti-corruption agency. We have expressed our concerns to numerous Nigerian government officials and have conveyed that we expect to see improved progress on anti-corruption from the EFCC under its new leadership. The U.S. Government has had extradition requests pending in Nigeria for years and is concerned that Nigeria’s extradition practices and procedures remain obstacles to the effectiveness of this essential counternarcotics law enforcement tool. We are encouraged that Nigeria’s use of U.S.-donated body scanners at its four major international airports has resulted in the arrest of numerous drug traffickers. Moreover, we fully support the National Drug Law Enforcement Agency’s recent cooperation in regional search and seizure operations.
The Government of India maintains a strong track record of regulating monitoring and curbing its licit opium production and distribution process. India has introduced robust, high-tech methods to control cultivation by licensed opium farmers. In this sense, India must continue to refine its control measures to guard against the continuing problem of diversion of licit opium crops, grown for the production of pharmaceutical products, to illegal markets. The U.S. continues to be concerned about illicit opium poppy production in certain areas of the country, such as West Bengal and the state of Uttaranchal along the India-China Border, previously thought to be free of such cultivation. Nevertheless, during the past year the country has destroyed substantial areas of illicit poppy cultivation. The Indian Government must also continue to investigate cases of large, criminal illicit poppy production and accordingly bring perpetrators to trial. The United States, along with other foreign governments and international organizations, has a good working relationship with India to interdict the flow of narcotics being smuggled across India's borders.
You are hereby authorized and directed to submit this report under Section 706 of the FRAA, transmit it to the Congress, and publish it in the Federal Register.
Bolivia failed demonstrably to make sufficient efforts during the last 12 months to meet its obligations under international counternarcotics agreements or to take the counternarcotics measures set forth in Section 489(a)(1) of the Foreign Assistance Act of 1961, as amended.
The Government of Bolivia (GOB) failed to take sufficient action against illicit coca cultivation, processing, and trafficking. Although the GOB attained minimum annual levels of coca eradication under the terms of our bilateral Letter of Agreement (LOA), Bolivia’s policies and actions encouraged the illicit cultivation of coca, the result being a net 14% increase in the area under illicit coca cultivation. The Government of Bolivia realized an increase in the amount of cocaine interdicted, but this was in large measure the result of increased cocaine production stemming from officially sanctioned increases in coca cultivation.
The Government of Bolivia has failed to close illegal coca markets, facilitated the legalization of additional coca markets, and has not imposed effective controls on commerce in coca leaf. Both production and sale of coca leaf far exceed the demand for traditional use and excess coca leaf is readily diverted to the production of cocaine hydrochloride. President Morales supports an increase in ‘licit’ cultivation well beyond the 12,000 hectares currently allowed under Bolivian law to 20,000 hectares. This not only contravenes provisions of the UN Convention to which the GOB is a signatory, but the inevitable result will be yet greater production of ‘licit’ coca leaf and even greater diversion of leaf to the production of cocaine hydrochloride.
On September 11, 2008, the GOB declared the U.S. Ambassador to Bolivia persona non grata, reinforcing that Bolivia does not want to cooperate with the United States on counternarcotics. Additionally the Government of Bolivia recently forced the removal of USAID operators in the Chapare working on programs designed to provide an alternative to cocaine production. The Government of Bolivia also required the withdrawal of Drug Enforcement Administration agents from the Chapare. These actions are elements of the Government of Bolivia’s emerging policy of restricting the scope of United States Government involvement in counternarcotics activities. They are having a profound, negative impact on the performance of previously effective bilateral programs and relationships.
Despite some successes in interdiction, and success in meeting minimum levels of eradication, the total effort of the Government of Bolivia falls well short of its obligations to the international community. The Government of Bolivia’s official policy of permissiveness with respect to the cultivation of coca, as evidenced by its policy decision to increase the total area allotted to licit coca cultivation and to allow 43,000 coca growers to cultivate coca on un-policed personal plots known as “catos”, not only contravenes its obligations under the UN Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances, but also signals an official disregard to the injurious effects of coca cultivation and trafficking in cocaine hydrochloride on the health as well as the economic and political stability of its neighbors as well as the broader international community.
A determination as having failed demonstratively does not affect funding for humanitarian and counternarcotics programs. A vital national interest waiver permits funding for other programs critical to our foreign policy interests.
Memorandum of Justification for Presidential Determination on Major Drug Transit or Illicit Drug Producing Countries for FY 2009
Burma failed demonstrably to make sufficient efforts during the last 12 months to meet its obligations under international counter-narcotics agreements or to take the counternarcotics measures set forth in section 489(a)(1) of the Foreign Assistance Act of 1961, as amended.
Burma remains the largest source for methamphetamine tablets in Asia. The United Wa State Army, an ethnic minority organization seeking autonomy from Burma, is led by U.S. indicted criminals engaged in the manufacture and trafficking in narcotics. The Burmese Government does not consistently enforce Burma’s anti-narcotics laws against the United Wa State Army. The United Wa State Army is in effect permitted to continue manufacturing of and trafficking in methamphetamine pills, which have a devastating impact on Burma’s neighbors, especially Thailand.
Given the scale of the drug trade in Burma, corruption is a contributing factor. No action is taken against military and police units charged with border security and operating check points along major roads who are known to take bribes to pass drugs. It is probable that higher level officials of the military regime protect some traffickers. However, in June 2008, State Peace and Development Council member Lt General Ye Myint retired from his position as Chief of the Bureau of Special Operations Number 1 shortly after his son was arrested on drug trafficking charges.
Burma has not approved a U.S.-led Opium-Yield Survey since before 2005. However, Burmese officials expressed interest in 2006 and 2007, though they did not communicate their desire in time to conduct the survey. They have remained silent on the prospects of a survey this year. After a long period of declining opium production, Burma experienced an increase in production in 2007, underscoring the need to assess production trends during the current crop year. The Burmese continue to work with UNODC in conducting a yearly opium crop survey. Last year the Chinese conducted a survey and it is expected that a Chinese survey will occur during this year’s planting season as well.
The Burmese junta’s suspicions of non-governmental organizations (NGOs) deprive its people of better drug treatment. Few international NGOs are permitted to offer treatment in Burma, and the Burmese authorities themselves offer only minimal treatment and spend almost nothing on what they do provide.
Despite the Burmese regime’s failure to meet its obligations under international counternarcotics agreements and U.S. domestic counternarcotics requirements, there have been positive developments. Opium production in Burma is down more than 80 percent from its 1996 peak, in part as a result of Burmese Government efforts. Seizures of opium during the first six months of 2008 appeared to be on a trend to increase slightly from last year, but methamphetamine drug seizures are sharply down in 2008.
Memorandum of Justification for Presidential Determination on Major Drug Transit or Illicit Drug Producing Countries for FY 2009
Venezuela has failed demonstrably to make sufficient efforts to meet its obligations under international counternarcotics agreements and U.S. domestic counternarcotics requirements for the third straight year.
This determination comes as the result of the Government of Venezuela’s failure to meet its international obligations and responsibilities to the international community by taking sufficient action against the rising drug trafficking problem within and through its borders. The Government of Venezuela has also failed to respond to specific U.S. Government requests for counternarcotics cooperation.
Although the Government of Venezuela indicated it has increased seizures and launched new initiatives to fight against drug trafficking, U.S. requests to take samples of seized narcotics have been refused. A small number of new initiatives, including the bombing of dirt airstrips near the border with Colombia, have been insufficient had little impact. There also continue to be a lack of significant inspections at ports of entry and exit, despite the completion in late 2006 of a cargo inspection facility in Puerto Cabello was completed in late 2006 with U.S. counter-narcotics assistance, but the Venezuelan government has since left the facility idle. The facility has since been seized by the State of Carabobo-controlled Port Authority. Venezuela has also not attempted meaningful prosecutions of traffickers or of corrupt officials.
Venezuela’s importance as a transshipment point for drugs bound for the United States and Europe continues to increase, a situation both enabled and exploited by corrupt Venezuelan officials and a weak judicial system. In 2007, 17 percent of the documented cocaine flow from South America went through Venezuela – a five-fold increase from the 51 metric tons estimated to have flowed through Venezuela in 2002. The vast majority of cocaine going to the United States or Europe is trafficked by sea. However, an increasing proportion is being moved by non-commercial air through the Caribbean toward the United States. Documented air flow of cocaine flights from Venezuela went from 21 flights in 2002 to 219 flights in 2007. We are particularly concerned about the corrosive effect of unchecked cocaine trafficking through Venezuela to the countries of West Africa as part of the route to Europe.
The Venezuelan government has not renewed formal counternarcotics cooperation agreements with the U.S. Government, including signing a letter of agreement that would make funds available for cooperative programs to fight the flow of drugs to the United States.
Last, the expulsion of our Ambassador by the Government of Venezuela reflects the country’s unwillingness to cooperate with the United States on counternarcotics.
The vital national interest certification will allow the U.S. Government to provide funds to support civil society programs and other beleaguered democratic institutions and to assist in small community development programs for the benefit of the Venezuelan people.