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U.S. Government counternarcotics control achievements in 2004 show that persistence pays. Working with our allies, we significantly cut the size of the Western Hemisphere?s illicit drug crops, conducted successful interdiction operations against drugs bound for the United States, and weakened major drug trafficking organizations. We provided our partners essential training assistance to strengthen their law enforcement and judicial systems, while working with them to reduce their domestic drug consumption. We persuaded a greater number of governments to use extradition laws to deny powerful drug criminals a national safe haven they could once count on. We also fostered closer international cooperation among governments and financial institutions to make difficult for the drug trade to legitimize its enormous profits through complex and sophisticated money laundering schemes.

The Global Threat

The illicit drug trade is a threat to national security and international stability. It is inextricably linked with transnational organized crime and many terrorist organizations. The billions of dollars generated by the drug trade pay for a significant portion of all international criminal activity. Drug trafficking organizations in countries as far apart as Afghanistan, Colombia, Burma, and Mexico, direct the drug flows that poison societies, foster corruption, and finance international crime and terrorism. Cocaine revenues not only sustain the decades-old insurgency in Colombia, but also provide the operating funds for the networks of criminal organizations that move drugs to the U.S. through Central America, Mexico and the Caribbean. Afghan poppies, once the mainstay of the Taliban regime, have become the principal source of heroin for the international underworld and potentially help groups opposed to Afghanistan?s democratic government. On a world scale, illegal drug revenues are so great that it is likely that most large international criminal enterprises rely to some extent on drug money to finance part of their operations.

Drug Threat to the United States

The principal imported drugs that directly threaten the United States are cocaine, heroin, marijuana, and synthetic amphetamine-type stimulants (ATS). Since all of the cocaine and heroin, much of the marijuana, and the greater part of the ATS drugs come from abroad, stemming their flow requires a coordinated international effort. Cocaine, though less prevalent today than a decade ago, remains our primary drug threat. An estimated 300 metric tons or more of cocaine enter the U.S. every year. It feeds addiction, fuels crime, and saps the social and economic health of the nation. Fortunately, it is also vulnerable to crop control and interdiction operations.

Coca and Cocaine 

Unlike heroin, which can come from various geographical sources, all of the world?s cocaine comes from coca grown in the Andean countries of Colombia, Peru, and Bolivia. Colombia dominates the trade by a wide margin. Colombian drug syndicates cultivate over 70 per cent of the world?s coca and refine roughly 90 of the cocaine on the international market. By comparison, Peru and Bolivia cultivate about 20 percent and 10 percent respectively. It is obvious that we cannot expect a meaningful reduction in the overall cocaine supply without drastic reductions in Colombia. We have therefore directed the bulk of our counternarcotics resources to eliminating Colombian coca cultivation, disrupting cocaine production and flows, and keeping the drug from reaching our borders.

Constant pressure on the Colombian coca growers over the past three years has shown results. The joint Colombian-US eradication campaign, carried out under the aegis of the Andean Counterdrug Initiative, has inflicted serious damage on the crop. Although final USG cultivation estimates for 2004 had not been completed at the time of publication, the preliminary data are heartening. The U.S.-supported Anti-Narcotics Police Directorate sprayed over 136,000 hectares of coca, 3,000 hectares more than the 2003 record. They also aerially eradicated over 3,000 hectares of opium poppy.

With between 213 and 256 hectares required to produce a metric ton of finished cocaine (cocaine HCl), the hectares sprayed represent between 520 and 625 metric tons of cocaine that did not enter the supply chain. Using an average U.S. retail street price of $100 per gram, a metric ton of cocaine is worth $100 million. Spray operations thus theoretically kept between $50 and $60 billion out of international criminal channels.

Though Peru and Bolivia also carried out successful coca eradication campaigns in 2004, the governments of both countries faced increasingly strong opposition from cocalero (coca-grower) unions that link coca cultivation with national identity and sovereignty. Unlike Colombia, where coca has had few if any cultural roots, Peru and Bolivia have long traditions of coca consumption dating to pre-Columbian times. The coca plant is an icon in indigenous traditions. The cocaleros, quietly backed by trafficking interests, have equated coca eradication with the destruction of a sacred ancestral tradition that is an integral part of both countries? cultural identity. As formerly silent indigenous groups have become politically assertive, such appeals to ancient values have gained popular resonance and inspired caution in the governments of both countries. We can expect to see coca eradication campaigns continue, but at a pace tempered by local political and economic realities.

Interdiction

Interdiction operations in the Western Hemisphere region were remarkably successful in 2004. . In addition to direct U.S. Government action, Latin American governments seized more than 213 metric tons of cocaine and inflicted damage on several key drug trafficking organizations. Colombian Antinarcotics Police and Military Units broke all previous interdiction records by seizing over 178 Metric Tons of Cocaine HCl and cocaine base, and destroying 150 HCl processing laboratories. In Bolivia, counternarcotics forces seized over 8 metric tons of cocaine and destroyed 2,120 cocaine base labs. Peruvian authorities seized over 12 metric tons of cocaine base and HCl. Venezuelan and Mexican operations netted 19 metric tons and 25 metric tons of cocaine HCl respectively.

Mexican enforcement agencies, working closely with Colombian authorities, dismantled a major cocaine trafficking ring led by Juan Pablo "El Halcon" Rojas Lopez. They captured two senior lieutenants of the Arellano Felix Organization (AFO), Jorge "El Macumba" Aureliano Felix and Efrain "El Efra" Perez Arciniega, suspected respectively of handling security operations counterintelligence and "enforcement" activities for the drug group. They also arrested Gilberto "El Gilillo" Higuera Guerrero?a top-tier operator long affiliated with the AFO?outside of Mexicali, Baja California. The U.S. State Department Narcotics Rewards Program played a key role in bringing these three to justice.

These successes are tempered by sobering reports that the drug cartels continue to be directed by leaders incarcerated in Mexican maximum-security prisons. Continued power struggles have led to numerous murders in Northern Mexico. The cartels? reach is extensive: A member of Mexican President Fox?s security staff was dismissed and is accused of selling information to the Juarez cartel.

Opium and Heroin

Eradicating opium poppy, the source of heroin, presents a different set of challenges. In contrast to coca, which is concentrated in one geographical area, opium poppy will grow in nearly every region of the world. It is an easily sown annual crop with as many as three harvests per year. Farmers often plant it in small patches in remote locations in mountainous terrain, making eradication operations dangerous and difficult. Though most of the world?s illicit opium poppy grows in Afghanistan and Southeast Asia, the bulk of heroin consumed in the United States comes from Colombian and Mexican poppies. Between them the two countries account for less than six percent of estimated world opium production, but they produce enough to satisfy most of the heroin demand n the United States.

Geography is an important factor in deciding the destination. In general, Mexican drug rings supply much of the U.S. heroin west of the Mississippi River, while Colombian syndicates supply states east of the Mississippi. Since eliminating opium poppies on the ground in Colombia and Mexico obviously can limit the flow of U.S.-bound heroin, we have long-standing joint eradication programs in both countries.

Colombian authorities eradicated 3,855 hectares of opium poppy in 2004, slightly surpassing the last year?s figure of 3,830 hectares. Of these, 3,060 hectares were sprayed and 795 hectares uprooted via forced and voluntary manual eradication programs. The 2004 cultivation and production data were not available at the time of publication.

During the first 11 months of 2004, the Government of Mexico (GOM) reported eradicating almost 14,575 hectares of opium poppy, less than the 19,000 hectares reported for the same period in 2003, but an impressive number nonetheless. Full-year data could increase this figure. The 2004 cultivation and production data were not available at time of publication.

The remaining 90-plus percent of the world?s estimated opium gum production occurs in Afghanistan and Burma, with Afghanistan accounting for over 80 percent of that figure. Afghan opium alone could probably satisfy world heroin demand. The area devoted to poppy cultivation in 2004 in Afghanistan set a new record: 206,700 hectares. Global heroin traffic cannot be reduced unless there are important reductions in Afghan opium poppy cultivation. Poppy eradication, however, is physically difficult and politically sensitive. Rugged terrain, and attacks by remnants of the Taliban regime present daily obstacles to the exercise of central government authority throughout the country. After decades of war, political misrule and economic chaos, a young democracy must now try to reconstruct a country with a prosperous, legitimate economy based on commodities other than opium,

Reducing opium poppy cultivation will not be easy. It will require both time and patience and developing alternative crops that will give farmers a decent income. For more than a decade, opium poppy has been Afghanistan?s largest and most valuable cash crop. The old Taliban regime encouraged opium production, using taxes on the opium and trade as a revenue source to compensate for its other economic failures. Instead of legitimate crops, farmers were encouraged to plant opium poppy to raise operating funds for the regime. The economy became heavily dependent on opium. When, at the end of its tenure, the Taliban announced an opium ban-most likely to relieve a glut that had depressed heroin income-it was too late to restore a legitimate agricultural economy. With illicit opium sales accounting for between 40 and 60 per cent of the country?s GDP (IMF data), the task of creating a viable, legitimate economy has fallen to Afghanistan?s newly elected democratic government. It faces the daunting challenge of weaning the economy off opium revenues and finding viable economic alternatives without provoking violent uprisings in the areas of opium cultivation. The U.S. and its allies are working with the Afghan government to achieve this goal.

Because the drug trade is by nature clandestine, it is difficult to estimate precisely how much money it generates. The total $400 billion value attributed to global drug trafficking is an educated guess. The world financial community has only limited ability to track money that moves through the underground hawala system. However, given the street price of these drugs in Europe and further east, estimates of hundreds of millions of dollar are not out of order. Some of these proceeds may help fund elements hostile to the governments of Afghanistan and the United States.

Synthetic Drugs

Amphetamines. Demand for Amphetamine-Type Stimulants, such as methamphetamine, amphetamine, and MDMA ("Ecstasy"), is high throughout both the industrialized and the developing world. Amphetamines have displaced cocaine as the stimulant of choice in many parts of the globe, primarily in Central and Northern Europe, and Southeast Asia. The relative ease and low cost of manufacturing amphetamines from readily available chemicals appeals as much to small drug entrepreneurs as to the large international syndicates. Synthetics allow individual trafficking organizations to control the whole process, from manufacture to sale on the street. Synthetics can be made anywhere and offer enormous profit margins. And since they use fairly common chemicals also used for a multitude of legitimate medical and industrial purposes, it is hard to control them.

Methamphetamine abuse is a one of the fastest-growing drug threats in the United States today. Highly effective drug trafficking organizations, based in Mexico and California, control a large percentage of the U.S. methamphetamine trade. Though Mexico is still the principal foreign supplier of methamphetamine and principal transit country for ATS precursors-especially pseudoephedrine (PSE)-for the United States, U.S. counternarcotics authorities assess that a portion of the PSE imported into Canada continues to be diverted to the United States for the production of illicit drugs. Since the Government of Canada enacted new regulations controlling PSE and other precursor and essential chemicals in 2002, however, the numbers of both PSE imports and seizures have declined substantially.

Methamphetamine now dominates much of the drug trade in Burma and Thailand, displacing heroin as the principal trafficking drug. Methamphetamine production in the U.S. is also widespread and active, as demonstrated by DEA?s National Clandestine Drug Data reporting of the seizure of several thousand U.S. methamphetamine laboratories in 2004, with the largest numbers in Missouri (2,707), and Tennessee (1,259).

Ecstasy. There continues to be substantial global demand for MDMA (Ecstasy), the amphetamine analogue 3, 4-methylenedioxymethamphetamine. Clandestine laboratories in the Netherlands, and to a lesser extent in Belgium, remain major suppliers of MDMA to the international market. There is also an emerging problem of MDMA production in Canada. In 2004, a joint operation between the U.S. and Canadian governments dismantled a major ring producing MDMA in Canada and marketing it in both countries. Labs in Poland are major suppliers of amphetamines to the European market, with the United Kingdom and the Nordic countries among the heaviest consumers of amphetamine. In the United States, however, over the past three years Ecstasy use has plummeted among the teenage population most at risk. Past year and current use were each cut in half, while lifetime use dropped by almost two thirds.

Cannabis (Marijuana)

Cannabis (marijuana) production and consumption is a serious problem in many countries?including the United States, where it is by far the most widely used illicit drug. More than 10,000 metric tons of domestic marijuana and more than 5,000 metric tons of marijuana cultivated and harvested in Mexico and Canada is marketed to more than 20 million users in the United States. Colombia, Jamaica, and Paraguay also export marijuana to the U.S. The high-potency, indoor-grown marijuana, which is produced on a large scale in Canada (and has also been found within the United States), is a particular concern. This is not the "pot" of the 1970?s. It is grown in laboratory conditions-with specialized timers, ventilation, moveable lights on tracks, nutrients sprayed on exposed roots and special fertilizer-all designed to maximize the THC levels in the marijuana. The resulting drug is particularly powerful, dangerous and addictive. Although in the past some have suggested that marijuana was harmless, the latest scientific information indicates that marijuana produces withdrawal symptoms and is associated with learning and memory disturbances. The good news for the United States is that, according to the December 2004 Monitoring the Future Study; marijuana use by U.S. teenagers has been declining since 1996, most likely because of a growing awareness of its dangers. Nonetheless, there is no dearth of potent marijuana on the market.

Attacking Trafficking Organizations

Drug distribution depends upon well-organized, sophisticated trafficking organizations. Our common strategy targets the leadership of the main trafficking groups, focusing on the operations along the network that bring drugs to the United States. Working with our international counterparts, our goal is not simply disruption, but the eventual dismantling of these organizations-their leadership, the facilitators who launder money and provide the chemicals needed for the production of illicit drugs, and their networks. In addition to hampering the organizations? effectiveness, capturing key traffickers demonstrates?to the criminals and to the governments fighting them alike?that even the most powerful drug syndicates are vulnerable to joint action by U.S. and host-government authorities.

Mexican drug syndicates oversee much of the drug trafficking in the United States. They have a strong presence in most of the primary distribution centers in the United States, directing the movement of cocaine, heroin, ATS drugs, and marijuana. U.S. and Mexican officials developed a common targeting plan against major drug trafficking organizations in Mexico and the United States and developed secure mechanisms for data sharing. Mexican Federal enforcement and military authorities damaged several important trafficking syndicates.

Institutional Reform

An important component of our international drug control policy has been to help governments strengthen their judicial and banking systems to narrow the opportunities for their exploitation by the drug trade. Law enforcement agencies in many key drug source and transit countries have arrested prominent traffickers, only to see them released by the decision of a single judge on questionable legal grounds. But the situation is gradually changing. In 2004, a number of countries continued to modernize their laws and professionalize their court systems through reforms ranging from installing more modern equipment to major changes in the way judges are appointed. Though there are still instances of judges arbitrarily dismissing evidence against or releasing well-known drug traffickers, the number of such cases is declining, as governments make basic reforms, such as giving judges better pay and greater personal protection.

Extradition

Extradition is one of the most powerful law enforcement weapons in our arsenal. It is the sanction the drug trade and terrorist organizations fear most. The long list of prominent drug criminals serving long prison terms in the U.S. is a sober reminder to even the most powerful cartel bosses of what can happen when they are powerless to manipulate the judicial process through intimidation and bribery. In 2004, the United States continued to encourage other countries to facilitate extradition to the United States. Though the laws of several states still prohibit the extradition of their nationals, that situation is changing, as governments fighting the drug trade realize that extradition is a boon to their own law enforcement effectiveness. The number of drug-related extraditions to the U.S. from Colombia has increased dramatically. Over the past two and a half years, the Colombian government has extradited 180 drug criminals to the United States.

In 2004, Mexico extradited 34 fugitives to the United States in 2004 (up from the record numbers of 25 in 2002 and 31 in 2003). However, extraditions on drug charges have not increased: The 2001 Mexican Supreme Court decision prohibiting extradition in cases with a potential life sentence remains an important obstacle to the extradition of some major drug traffickers and other criminals. Disappointingly, on April 13, 2004, the Mexican Supreme Court reaffirmed its 2001 decision. This makes extradition illegal, and therefore impossible for crimes with potential life imprisonment without parole sentences, unless the United States provides adequate assurances that this sentence will not be imposed. (Extradition was granted in 2004 in most state cases in which the possible sentence is life imprisonment with a possibility of parole.) However, there is no parole in federal cases and U.S. conviction in cases involving more than five kilograms of cocaine, one kilogram of heroin, or fifty grams of pure methamphetamine carries a penalty of a minimum of 10 years and a maximum of life.

Controlling Drug Processing Chemicals

Cocaine, heroin and synthetic drugs cannot be manufactured without certain critical chemicals, many of which are subject to governmental control. Cocaine and heroin refining operations generally require widely available "essential chemicals." Substitutes for unavailable chemicals can be used for most of the chemicals used in the manufacturing process; but there are some chemicals?potassium permanganate for cocaine and acetic anhydride for heroin?for which there are few easily obtainable substitutes. Synthetic drug manufacture requires even more specific "precursor chemicals," such as ephedrine, pseudoephedrine, or phenylpropanolamine. These chemicals, used mainly for pharmaceutical purposes, have important but specific legitimate uses. They are commercially traded in smaller quantities to discrete users. Governments must, therefore, have efficient legal and regulatory regimes to control such chemicals, without placing undue burdens on legitimate commerce. The United States, other major chemical trading countries, and the UN?s International Narcotics Control Board worked in 2004 to improve controls on cocaine and heroin processing chemicals, and those used for manufacturing synthetic drugs.

Controlling Supply

Our goal is to cut off the flow of illegal drugs to the United States. We target drug supply at critical points along a five-point grower-to-user chain that links the consumer in the United States to the grower in a source country. In the case of cocaine or heroin, the chain begins with the growers cultivating coca or opium poppies, for instance, in the Andes or Afghanistan. It ends with the cocaine or heroin user in a U.S. town or city. The intermediate links are the processing (drug refining), transit (transport), and wholesale distribution stages.

Our international counternarcotics programs target the first three links of the grower-to-user chain: cultivation, processing, and transit. The closer we can attack to the source, the greater the likelihood of halting the flow of drugs altogether. Crop control is by far the most cost-effective means of cutting supply. If we destroy crops or force them to remain unharvested, no drugs will enter the system. It is the equivalent of destroying a hornets? nest before the hornets escape. Theoretically, with no drug crops to harvest, cocaine or heroin cannot enter the distribution chain?reducing or eliminating the need for costly enforcement and interdiction operations.

The obvious solution, however, is not always feasible. Broad-scale (aerial and chemical) eradication is illegal in many countries. Even when eradication is possible, destroying a lucrative illicit crop carries enormous political, economic and social consequences for the producing country. Frequently it means attacking the livelihood of a large-and often the poorest-sector of the population. Elected governments that take away vital, if illegal income, without providing viable alternatives do not last long in office. Such market development can take decades. Therefore, law enforcement targets subsequent links in the supply chain: laboratory processing and interdiction of drug shipments in transit.

Essential to success is the flexibility to shift resources to those links where we can achieve both an immediate impact and long-term results. We have seen in Bolivia and Peru that the proper combination of effective eradication, law enforcement actions and alternative development programs can deliver remarkable results. We work closely with the governments of the coca-growing countries to find the best way to eliminate illegal coca within the context of each country?s unique situation-a difficult task given the high price of coca and generally depressed markets for many replacement crops.

Alternative development programs play a vital role in countries seeking to liberate important parts of their agricultural sector from reliance on the drug trade. They offer farmers opportunities to abandon illegal activities and become part of the legitimate economy. In the Andean region, these programs provide funds and technical assistance to strengthen public and private institutions, expand rural infrastructure; improve natural resources management, introduce alternative legal crops, and develop local and international markets for these products.

Despite a host of obstacles, alternative development programs in Colombia were responsible for the manual eradication of more than 2,300 hectares of coca and 800 hectares of poppy in 2004. To encourage farmers to abandon the production of drug crops, the USG has supported the cultivation of over 55,000 hectares of legal crops and completed 874 social and productive infrastructure projects since 2001. A total of 44,015 families have also benefited from these programs in 17 Departments. In Peru, alternative development programs are making coca reduction sustainable through improving local governance, strengthening rule of law and increasing the economic competitiveness of coca-growing areas. Since October 2002, over 27,000 families have voluntarily eradicated 7,271 hectares of coca including almost 2,500 hectares of coca in 2004. In Bolivia, USAID alternative development assistance complemented coca reduction efforts in the Chapare by strengthening licit livelihoods, community development, legal land tenure, and access to justice. Through FY-04, USAID helped some 28,290-farm families with AD support, and licit cultivation increased to 143,887 hectares. Though the full impact of many alternative development programs will not be felt for years, progress to date suggests that eventually legitimate, economically viable agriculture can replace today?s illicit cultivation in many places.

Illegal Drugs, Spraying, and the Environment

The debate continues over the environmental risks of regular spraying of illegal drug crops. Colombia is at this time the only country that allows regular aerial spraying of coca and opium poppy. The Colombian government has authorized the herbicide that is used to conduct aerial eradication in the growing areas. The active ingredient in the herbicide used in the aerial eradication program is glyphosate, one of the most widely used agricultural herbicides in the world, including Colombia. It has been tested widely in the United States, Colombia, and elsewhere in the world. The U.S. Environmental Protection Agency (EPA) approved glyphosate for general use in 1974 and re-registered it in September 1993. The EPA has approved its use on food croplands, forests, residential areas, and around aquatic areas. It is one of the top five pesticides, including herbicides, used in the United States.

Environmental Consequences of Illicit Coca Cultivation

One must weigh the environmental impact of approved herbicides against the devastating potential of all aspects of coca cultivation. Over more than two decades, coca cultivation in the Andean region has led to the destruction of approximately six million acres of rainforest. Working in remote areas beyond settled populations, coca growers routinely slash and burn virgin forestland to make way for their illegal crops. Tropical rains quickly erode the thin topsoil of the fields, increasing soil runoff, depleting soil nutrients, and, by destroying timber and other resources that would otherwise be available for more sustainable uses, decreasing biological diversity. As growers regularly abandon non-productive parcels to prepare new plots, the destructive cycle continues. Traffickers destroy jungle forests to build clandestine landing strips and laboratories for processing raw coca and poppy into cocaine and heroin.

Illicit coca growers frequently are negligent in their use of fertilizers and pesticides. Largely ignorant about the consequences of indiscriminate use of strong chemicals, they dump large quantities of highly toxic herbicides and fertilizers on their crops. These chemicals include paraquat and endosulfan, both of which qualify under the U.S. Environmental Protection Agency?s highest classification for toxicity (Category I) and are legally restricted for sale within Colombia and the United States.

Most destructive are the toxic chemicals that are used at each stage of cocaine production. USG studies conducted in the early 1990s in Bolivia and Peru indicated that one kilogram of cocaine base required the use of three liters of concentrated sulfuric acid, 10 kilos of lime, 60 to 80 liters of kerosene, 200 grams of potassium permanganate, and one liter of concentrated ammonia. These toxic pesticides, fertilizers, and processing chemicals are then dumped into the nearest waterway or on the ground. They saturate the soil and contaminate waterways, poisoning water systems, and dependent species in the process.

Interdiction in the Transit Zone

Despite the international community?s best efforts to attack the drug supply within source countries, the United States and our allies must continue to provide an effective presence in the transit zone, specifically for cocaine moving north out of South America. This has required a well-coordinated effort between transit zone countries and USG agencies including DOD, DHS, and DOJ. Source country intelligence combined with post seizure intelligence has improved dramatically in the last several years to yield better actionable intelligence within the transit zone. The Joint Inter-Agency Task Force-South with billeted international partners from throughout the Caribbean Basin has focused that intelligence to detect and monitor maritime drug movements while maneuvering interdiction assets into position to effect a seizure. The USG?s efforts to create and expand authorities based on bilateral agreements with Caribbean and Latin American countries have eased the burden on these countries? law enforcement assets to conduct at sea boardings and search for contraband. These bilateral agreements have also allowed the USG to gain jurisdiction of cases and remove the corrosive pressure from large Trafficking Organizations on some foreign governments. This team effort led to unprecedented success by removing over 160 metric tons of cocaine from the transit zone in 2004 by USG assets. Continued success will depend on the allocation of tightly constrained resources to improve on the inroads and agreements reached in the last several years.

The Battle Against Corruption

The fight against the drug trade is also part of a broader struggle against corruption. The drug trade thrives on corruption in the way that an opportunistic disease flourishes amid conditions of social and moral decay. Drug organizations wield a powerful instrument for spreading corruption: the enormous sums of money generated by drug trafficking. In terms of weight and availability, there is currently no commodity more lucrative than illegal drugs. In most cases, drugs are relatively cheap to produce and offer enormous profit margins that allow the drug trade to generate criminal revenues on a scale without historical precedent. The revenues have become a mainstay of transnational organized crime and terrorists. At an average U.S. retail street price of one hundred dollars a gram, a metric ton of pure cocaine is worth a $100 million on the streets of the US; twice as much if the drug is cut with additives. By this measure, the 100 or so metric tons of cocaine that the USG typically seizes each year could theoretically be worth as much as $10 billion to the drug trade-more than the gross domestic product of many countries. Although only a portion of these profits may return directly to the drug syndicates, we are nonetheless speaking of hundreds of millions, if not billions, of dollars going into underworld channels. To put the magnitude of these sums into perspective, in FY 2005 the State Department?s budget for international drug control operations was approximately $ one billion. That equates to roughly ten metric tons of cocaine; the drug syndicates have lost that much in a few shipments without any evidence that they felt the loss.

Wealth on this scale gives large trafficking organizations a practically unlimited capacity to corrupt, particularly in countries where government and law enforcement officials are poorly paid. For Colombia, where insurgents from Foreign Terrorist Organizations control and feed upon income from the drug trade, the threat is obvious. In economically weak countries without revolutionary movements, the drug trade?s wealth makes it as great a threat to democratic government as an armed insurgency. Guerrilla armies or terrorist organizations overtly seek to topple governments by force; drug syndicates, like termites, prefer to destroy them surreptitiously from within. In theory, when a country?s interior or defense minister, attorney general, or even president, is on its payroll, the drug trade can count on a secure operating environment. And the longer established the drug organization, the stronger its capacity to corrupt. The ultimate fear of all democratic leaders in drug-affected countries should be that one day traffickers might take de facto control of a country by putting a majority of elected officials, including the president, on the payroll. While this has not yet occurred, recent instances of drug syndicates? penetration of a Western Hemisphere country?s President?s office show that it is a real and immediate possibility. The more we deprive the drug trade of its capacity to corrupt, the less likely are we to see a true "narcocracy" spring up in our hemisphere.

Next Steps

The drug trade is nothing if not adaptable. It learns quickly from its mistakes, each time becoming a slightly more astute and dangerous enemy. Our past successes have forced it to become more sophisticated in order to survive. We have seen this already in the difficulty of targeting the hundreds of small, hard-to-target drug syndicates that filled the void left by the destruction of Colombia?s two dominant cartels.

Yet the drug trade is also vulnerable. Its survival depends on an extensive infrastructure that is difficult to conceal and subject to attack at every stage. It needs raw materials, processing chemicals, means of transportation, and some way to move illegal cash into legitimate channels. Though drug syndicates are powerful in their underworld milieu, they lose their advantage when they have to operate in the legitimate world. They are most vulnerable when it comes to cashing in their profits. The drug trade?s ability to generate vast amounts of cash is both its strength and its weakness. To stay in business it needs a steady flow of drugs to generate revenue; at the same time it requires a steady stream of money to buy the drugs. Like a legitimate enterprise, the drug syndicates partially finance future growth by borrowing against future earnings. So every metric ton of drugs that does not make it to market represents a potential loss of tens of millions of dollars in essential revenue. On the revenue end of the process, criminal proceeds are useless unless they can be legitimized and reinvested in new drug crops, arms, bribes, etc. to keep the syndicates operating. If we can cut off the flow of money and drugs long enough, we can choke off the lifeblood of the drug trade.

As one of the countries most affected by illegal drugs, the United States will continue to provide leadership and assistance to its partners in the global counternarcotics effort. Though we have the resources to play a key role, we alone will not determine the success or failure of this effort. Equally, if not more important are the actions, commitment, and cooperation of the other major drug-affected governments. We can help provide resources, but these are only as effective as the cooperative effort between those fighting the drug trade. In democracies, the drug trade flourishes only when it can divide the population and corrupt institutions. It cannot withstand a concerted, sustained attack by a coalition of democratic nations individually committed to its elimination.

Demand Reduction

Drug "demand reduction" refers to efforts to reduce worldwide use and abuse of, and demand for narcotic drugs and psychotropic substances. The need for demand reduction is a fundamental and critical part of controlling the illicit drug trade. Escalating drug use and abuse continue to take a devastating toll on the health, welfare, safety, security, and economic stability of all nations. Recognizing this problem, the National Security Presidential Directive (NSPD#25) on International Drug Control Policy addressed rising global demand for illicit drugs as the principal narcotics-related threat to the U.S. A key objective of that policy urged the Secretary of State to expand U.S. international demand reduction assistance and information sharing programs in key source and transit countries. The NSPD also noted that international drug trafficking organizations and their linkage to international terrorist organizations constitutes a serious threat to U.S. national security. Demand reduction efforts aimed at reducing worldwide drug consumption therefore took on increased importance and served the national interest due to its potential for reducing the income that criminal and terrorist organizations derive from narcotics trafficking and for reducing crime/strengthening security in foreign countries that are key strategic allies of the United States.

Foreign countries are requesting technical and other assistance from the USG to address their problems, citing long-term U.S. experience and efforts on this issue. Our response has been a comprehensive and coordinated approach in which supply control and demand reduction reinforce each other. Such assistance plays an important role in helping to preserve the stability of societies threatened by the narcotics trade.

Our demand reduction strategy encompasses a wide range of initiatives to address the needs and national security threat posed by the illicit drug trade. These include efforts to prevent the onset of use, intervention at "critical decision points" in the lives of vulnerable populations to prevent both first use and further use, and effective treatment programs for the addicted. Other aspects encompass education and media campaigns to increase public awareness of the deleterious consequences of drug use/abuse and community-coalition building. This latter effort involves the development of coalitions of private/public social institutions, the faith community, and law enforcement entities to mobilize national and international opinion against the drug trade and to encourage governments to develop and implement strong counternarcotics policies and programs. The demand reduction program also provides for evaluations of the effectiveness of these efforts and for "best practice" research studies to use these findings to improve similar services provided in the U.S. and around the world.

In 2004, INL continued to fund bilateral training at various locations throughout the world on topics such as community/grassroots coalition building and networking, U.S. policies and programs, science-based drug prevention programming, and treatment within the criminal justice system. INL funded two regional demand reduction symposiums in Malaysia that resulted in the commitment of 800 Afghanistan mullahs to cooperate with the United States on providing mosque-based drug prevention and intervention services. Also as a result of the symposiums, leading Indonesian mullahs developed a plan to collaborate with the United States on providing drug prevention and outreach services through mosques and madrassahs. INL is also funding the establishment of drug prevention outreach centers and drug treatment aftercare centers in Muslim regions of southern Philippines and southern Thailand.

INL funding has provided new updated curricula to 24 Drug Abuse Resistance Education (D.A.R.E.) programs in Latin America and Asia. Countries in South America continued to implement their own national-level, counternarcotics media campaigns based on technical assistance funded by INL, school-based programs based on INL-funded training were established in Brazil and Chile. INL funding was also used to provide drug treatment training in Ecuador for Department of Correction officials. Funds were used to organize the regional Latin American Therapeutic Communities Conference in Ecuador where over 50 workshops were offered on science-based drug treatment and rehabilitation principles.

INL funded comprehensive multi-year scientific studies on pilot projects and programs developed from INL-funded training to learn how these initiatives can help assist U.S.-based demand reduction efforts. Research to access the long-term impact of INL-funded drug-treatment training in Peru was completed in 2004. Results of that study showed that drug use among those who received treatment had declined in every category. Specifically it showed that in the 30 days prior to treatment 90 percent of the clients had used drugs and at the 6 month follow-up after treatment only 34 percent were found to have used drugs; in the 30 days prior to treatment 30 percent reported using cocaine and at 6 month follow-up after treatment only 8 percent had used cocaine; in the 30 days prior to treatment 37 percent of those studied reported using cannabis and at 6 month follow-up after treatment only 13 percent had used cannabis; 72 percent of those who received treatment were employed; and over 90 percent had no further contact with the criminal justice system (i.e., arrests) after treatment.

Following publication and dissemination of an INL-funded, research-based demonstration program for high-risk youth in Peru, the Italian government contributed over $800,000 to the project while the Government of Luxembourg contributed nearly $500,000 to extend the project to adolescent girls. Research on selected prevention programs in Bolivia, Jamaica, Peru and Brazil that have developed promising prevention and antiviolence modalities from INL-funded training were completed in 2004. Additional programs in other regions will be studied in 2005 and results for all countries are expected to be published at the end of 2005.

Methodology for Estimating Illegal Drug Production

How Much Do We Know? The INCSR contains a variety of illicit drug-related data. These numbers represent the United States Government?s best effort to sketch the current dimensions of the international drug problem. Some numbers are more certain than others. Drug cultivation figures are relatively hard data derived by proven means, such as imagery with ground truth confirmation. Other numbers, such as crop production and drug yield estimates, become softer as more variables come into play. As we do every year, we publish these data with an important caveat: the yield figures are potential, not final numbers. Although they are useful for determining trends, even the best are ultimately approximations.

Each year, we revise our estimates in the light of field research. The clandestine, violent nature of the illegal drug trade makes such field research difficult. Geography is also an impediment, as the harsh terrain on which many drugs are cultivated is not always easily accessible This is particularly relevant given the tremendous geographic areas that must be covered, and the difficulty of collecting reliable information over diverse and treacherous terrain.

What We Know With Reasonable Certainty. Cultivation--the number of hectares under cultivation during any given year-is our most solid statistic. For nearly twenty years, the United States Government has estimated the extent of illicit cultivation in a dozen nations using proven statistical methods similar to those used to estimate the size of licit crops at home and abroad. We can therefore estimate the extent of cultivation with reasonable accuracy.

What We Know With Less Certainty. How much of a finished product a given area will produce is difficult to estimate. Small changes in factors such as soil fertility, weather, farming techniques, and disease can produce widely varying results from year to year and place to place. To add to our uncertainty, most illicit drug crop areas are not easily accessible to the United States Government, making scientific information difficult to obtain. Therefore, we are estimating the potential crop available for harvest. Not all of these estimates allow for losses, which could represent up to a third or more of a crop in some areas for some harvests. The value in estimating the size of the potential crop is to provide a consistent basis for a comparative analysis from year to year.

Harvest Estimates. We have gradually improved our yield estimates. Our confidence in coca leaf yield estimates, as well as in the finished product, has risen in the past few years, based upon the results of field studies conducted in Latin America. In all cases, however, multiplying average yields times available hectares indicates only the potential, not the actual final drug crop available for harvest. The size of the harvest depends upon the efficiency of farming practices and the wastage caused by poor practices or difficult weather conditions during and after harvest. Up to a third or more of a crop may be lost in some areas during harvests.

In addition, mature coca (two to six years old) is more productive than immature or aging coca. Variations such as these can dramatically affect potential yield and production. Additional information and analysis is allowing us to make adjustments for these factors. Similar deductions for local consumption of unprocessed coca leaf and opium may be possible as well through the accumulation of additional information and research.

Processing Estimates. The wide variation in processing efficiency achieved by traffickers complicates the task of estimating the quantity of cocaine or heroin that could be refined from a crop. Differences in the origin and quality of the raw material used, the technical processing method employed, the size and sophistication of laboratories, the skill and experience of local workers and chemists, and decisions made in response to enforcement pressures obviously affect production.

Figures Change as Techniques and Data Quality Improve. Each year, research produces revisions to United States Government estimates of potential drug production. This is typical of annualized figures for most other areas of statistical tracking that must be revised year to year, whether it be the size of the U.S. wheat crop, population figures, or the unemployment rate. For the present, these illicit drug statistics represent the state of the art. As new information becomes available and as the art improves, so will the precision of the estimates.

Worldwide Illicit Drug Cultivation
1997?2004 (All Figures in Hectares)