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International Narcotics Control Strategy Report, 1996 Released by the Bureau for International Narcotics and Law Enforcement Affairs, U.S. Department of State Washington, DC, March 1997

EUROPE AND CENTRAL ASIA

I. Summary

Drug trafficking groups appear to be targeting Armenia as a conduit to smuggle drugs to Western Europe. However, there are no reliable estimates on the magnitude of this problem. The Armenian illicit drug market is small, but Government of Armenia (GOA) officials are concerned that drug abuse and drug­related crime is increasing. Armenia is not a major drug­producing country, and drug use is modest at present, although growing. Authorities confiscated heroin and cocaine in the Armenian market for the first time in 1996. A State Interagency Antinarcotics Commission was established in 1995, and has drafted a program of counternarcotics actions; it has been passed to the government of Armenia (GOAM) for review. Armenia hosted two visits by representatives of the UNDCP in September 1996 and January 1997. Armenia is a party to the 1988 UN Convention.

II. Status of Country

Drug transit is becoming a serious concern for Armenia, even though borders with Turkey are nominally closed due to the Nagorno­Karabakh conflict. The Ministry of Interior (MVD) believes that Armenia is becoming an increasingly important drug transit point due to its geographical position. A source in the presidential staff also theorized in 1995 that Armenia was more attractive to international drug cartels because the traditional trafficking routes via Turkey and the Balkans had been effectively closed off.

The main drugs transported are opium and hashish, though heroin and cocaine recently became a focus of concern. Traffickers smuggle drugs into Armenia by truck from Iran and Turkey. They also use other routes, however: a heroin shipment seized in 1996 was suspected by the MVD to have been delivered from Moscow by plane, whereas Buprenorphine was confiscated from a passenger on a Yerevan­Delhi flight in Yerevan. Drug shipments from Central Asia are also brought to Armenia by plane, according to the MVD.

Domestic drug appears to be limited in Armenia, and the MVD believes that the local market for narcotics is not large. The traditional drugs of choice are opium and cannabis. Hemp and opium poppy grow in the wild. A small amount is used for local native foods. Northwestern Armenia and border areas, where many military personnel are stationed, are the regions with the highest rates of drug abuse.

In 1996, some new drugs appeared on the Armenian drug market. For the first time, police confiscated heroin and cocaine. By MVD estimates, the total amount of heroin brought to Armenia for consumption was small, about 2 kgs. Also, the MVD seized a shipment of 1,091 ampules (five­gram vials) of Buprenorphine produced in India under the brand name "Morphine". While these are small amounts, the MVD says it is quite concerned about the potential for increased drug trafficking and abuse in the future. Low local prices for heroin and cocaine could attract customers and slowly convert Armenia into a more important market.

The upward trend in drug abuse is another indicator of potential market expansion. The MVD estimates that there are currently roughly 19,000 drug addicts in Armenia; for 1995 the number was estimated at 10,000. These estimates are corroborated by the chief physician of the counternarcotics dispensary.

III. Country Actions Against Drugs in 1996

Policy Initiatives. A 1995 presidential decree gave "priority status" to narcotics control programs in Armenia. Accordingly, a State Interagency Commission was created which includes representatives of MVD, Health Care, Education and Science, National Security and "No to Alcohol and Drug Abuse", a private sector organization. The Commission's major activity has focused on drafting a National Narcotics Control Master Plan on measures to strengthen border controls, law enforcement activities, and health care programs. The plan has been passed to the government for review. If approved, it will then be presented to the National Assembly as a set of draft laws.

There were no new antinarcotics laws passed in Armenia in 1996.

Law Enforcement Efforts. There was a slight drop in drug­related crimes during the year. MVD reports 517 drug­related crimes committed in 1996 compared to 569 in 1995 and 525 in 1994. The Prosecutor General's Office reported 430 indictments in 1996, involving 515 suspects. The police destroyed 113 mt of cannabis and opium plants.

In November, the Ministry of National Security (MNS) and the MVD were merged into a single agency, the Ministry of Interior and National Security (MINS); it is now headed by the former Minister of National Security.

The spokesperson for the Central Bank of Armenia claimed in a December interview that money laundering does not constitute a serious problem in Armenia. This seems likely, as Armenia is isolated, and its banking system is rudimentary. The country is beset by economic problems and is therefore an unlikely site for extensive money laundering activity.

Demand Reduction. The Public Health Service reports a significant increase in drug use, especially among teenagers. Both physicians and the MVD acknowledge that the officially registered number of drug addicts does not reflect the true picture. By their estimates, at present there are about 19,000 drug addicts in Armenia, compared to about 10,000 in 1995. By the physicians' estimates, almost one­third of their drug­addicted patients are opiate addicts. Most drug addicts choose not to apply for treatment because this automatically leads to criminal punishment. Currently, there are fewer than 300 patients officially registered at the dispensary as drug addicts, primarily males.

Corruption. Corruption is a serious impediment to efforts to stem the flow of narcotics to and through Armenia. Efforts to combat the problem of corruption have only just begun. In November, authorities arrested three employees of the MVD Narcotics Department and charged them with abuse of power, bribes and false arrest of innocent people as drug dealers. The investigation was conducted by a joint group from the Ministry of National Security and MVD. As a result of this scandal, the Chief and Deputy Chief of the MVD Narcotics Department were dismissed.

Agreements and Treaties. In addition to being a party to the 1988 UN Convention, Armenia is a party to 1971 Convention on Psychotropic Substances and the 1961 UN Single Convention and its 1972 Protocol. Also, Armenia signed bilateral agreements on cooperation against illicit traffic in narcotics and psychotropic substances with the State Customs Service of Turkmenistan, the Customs Committee of the Republic of Georgia, and the Customs Committee of Tajikistan. Armenia is a signatory to the 1996 Dushanbe Agreement on Narcotics Control Assistance among the Confederation of Independent States (CIS), a grouping of some of the successor countries to the former Soviet Union.

Cultivation and Production. Hemp and opium poppy grow in the wild in the northern areas of Armenia, in particular, in the Sevan Lake Basin and in nearby mountainous areas. The MVD destroyed 113 mt in 1996.

Domestic Programs/Demand Reduction. The interagency Narcotics Commission is reportedly considering the establishment of a rehabilitation center for drug addicts. The conditions at the narcotics dispensary, which is currently the only place for treatment of drug addicts, are far below acceptable standards; test methodology is outdated and medicines and staff are inadequate.

IV. US Policy Initiatives and Programs

Policy Initiatives. The USG maintains a limited dialogue with the GOA to urge it to give priority to the drug issue. Efforts focus on identifying existing problems, on possible areas of assistance, and on the need to exchange information on narcotics activities. Two officers from the Ministry of National Security and two officers from MVD participated in the regional Basic Drug Enforcement Seminar in Moscow in March 1996, organized by the DEA. An MVD forensic chemist participated in the Forensic Chemists' Seminar in Washington.

The Road Ahead. Over the next year, the USG will encourage Armenia to expand its drug control activities and to establish the necessary legislative and institutional capabilities to ensure efficient interdiction and prosecution of narcotics traffickers.

I. Summary

Austria is primarily a transit country for drugs from Eastern Europe and the Balkans to larger West European markets. Authorities believe no significant production or cultivation of illegal drugs occurs in Austria. In preparation for becoming party to 1988 UN Drug Conventions, which Austria has signed but has not ratified, and the 1971 Convention on Psychotropic Substances, the Austrian Parliament is reviewing a draft Narcotic Substances Act for approval. Legislation abolishing anonymous securities accounts took effect in 1996 to close loopholes for money launderers. However, the USG believes Austria requires further strengthening of its money­laundering legislation to reduce its vulnerability to launderers.

II. Status of Country

Austrian authorities believe drug use is leveling off at approximately 10,000 drug addicts. However, foreign­based organized crime, including drug activity, continues to grow in Austria. Drug­related deaths dropped to 241 in 1995 from 250 in 1994.

Austria has a system for identifying, tracing, freezing, seizing and forfeiting drug­related assets, but does not share seized assets with other countries. The Government of Austria (GOA) passed legislation in 1996 to abolish anonymous securities accounts, for future accounts. To limit insider trading on the Vienna stock exchange, however, the old ones may be sold off with anonymity intact. The legislation also limits the ability of criminal enterprises to conceal their profits. Austria requires bankers and other financial institutions, including insurance companies, to report suspicious financial transactions; however, other sectors such as real estate, automobile sales, and attorneys' services are not required to report suspicious transactions. This lack of reporting requirements and continued allowance of anonymous pass book accounts leave Austria vulnerable to exploitation by money launderers.

Austrian authorities reported no cases of the diversion of precursor and essential chemicals from Austria to drug traffickers in 1996.

III. Country Action Against Drugs in 1996

Policy Initiatives. In 1996, the Ministry of Health and Consumer Protection and the Federal Ministry of Justice sent to Parliament a new narcotics substances bill. The bill is expected to be passed in Spring 1997. This legislation will help bring Austria into compliance with the requirements of the 1988 UN Convention.

The GOA drafted legislation to enhance narcotics­related investigations. When enacted, the new legislation will reduce restrictions on the use of wiretapping and other electronic surveillance methods, provide legal authority to merge data banks, and allow for the establishment of witness protection programs. The Austrian Parliament is expected to review and bring this legislation to a vote in 1997.

Austria participates in a number of international counternarcotics fora including the Dublin Group, the Financial Action Task Force, the Council of Europe's "Pompidou Group," and the United Nations International Drug Control Plan (UNDCP). Austria contributed $995,000 to UNDCP in 1996.

Accomplishments. In August 1996, legislation took effect to abolish anonymity for securities accounts in Austria. In November 1996, Parliament passed a penal code amendment to expedite extradition, expand judicial assistance, enable courts to declare assets of criminal organizations as forfeited, and to enable courts to confiscate property and assets derived from the proceeds of illegal activities, including drug trafficking.

Law Enforcement Efforts. The number of drug­related criminal offenses in Austria increased by 3.7 percent to 13,093 in 1995 (latest available figures) from 1994. GOA authorities believe that one out of two criminal offenses are drug­related. The number of drug seizures and the amounts of most narcotic substances seized increased in 1995 from 1994. In 1995, there were 3,757 seizures of various forms of cannabis totaling 697 kgs, 10 seizures of poppy straw totaling 8.6 kgs, 17 seizures of raw opium totaling 1.8 kgs, 1,298 seizures of heroin totaling 47 kgs, 421 seizures of cocaine totaling 55 kgs, 80 seizures of LSD totaling 2,602 dosage units, and 153 seizures of ecstasy totaling 31,338 doses.

Corruption. The USG is not aware of high­level Austrian government officials' involvement in drug­related corruption.

Agreements and Treaties. Austria signed a mutual legal assistance Treaty with the USG in 1995 which was ratified in November. Austria is expected to ratify the MLAT in the Spring of 1997. Negotiations continue with the US on a new extradition treaty to replace the 1934 treaty currently in force. Austria has signed, but not ratified, the 1988 UN Convention. A new drug bill awaiting parliamentary approval will enable Austria to ratify this Convention, as well as the 1993 Council of Europe Convention on laundering, tracking, and seizing profits from criminal actions. Austria is a party to the 1961 Single Convention on Narcotic Drugs and its 1972 Protocol.

Cultivation/Production. Austria's Health Ministry reports that some home­growing of cannabis in small quantities takes place. The USG is not aware of any other significant cultivation or production of illicit drugs in Austria.

Drug Flow/Transit. Southeast Asian heroin enters Austria via the Balkan drug route, and is mostly destined to larger markets in Europe. Turkish groups dominate this trade, followed by traffickers from countries of the former Yugoslavia. Romanian and Bulgarian nationals have also become increasingly active. In 1995, drug arrests at Vienna's international airport rose from 79 in 1994 to 120, but the size of seizures decreased. Austrian authorities believe that South American drug cartels are increasingly using East European airports in their drug routes.

Demand Reduction. Austrian authorities tend to address drug addiction as a health issue rather than a criminal matter. Federal Ministries' programs emphasize prevention, drug treatment and counseling, as well as "harm reduction." Primary intervention encompasses the pre­school through secondary school levels, and includes information kits and videos, as well as extra­curricular youth counseling, educational campaigns via mass media, telephone services, and community programs, such as drug­free discotheques. Most drug treatment, and counseling services are provided by non­government organizations.

IV. US Policy Initiatives and Programs

Austrian and US law enforcement cooperation is excellent. Austria has no specific bilateral narcotics agreement with the US. An investigation begun in Austria in 1995, in cooperation with the USG was completed in 1996, resulting in convictions of four defendants and the acceptance of the first Austrian into the U.S. Federal Witness Protection Program.

The Road Ahead. The US will continue to support Austrian efforts to create more effective tools for law enforcement, as well as to work with Austria within the context of U.S.­EU counternarcotics cooperative initiatives. The USG will continue urging GOA ratification of the 1988 UN Convention, and further toughening of its money laundering legislation.

I. Summary

Azerbaijan is a transshipment point for smuggling hashish and opium from Central Asia, Iran, and Afghanistan to Russia and Europe. Although antidrug efforts in 1996 were limited, the Government of Azerbaijan (GOA) announced it will draw up a national drug control strategy, including appropriate legislation during 1997. Cultivation of opium poppy is illegal, but sporadic reports indicate some export­oriented cultivation of opium poppy and cannabis adjacent to the Iranian border. Azerbaijan is a party to the 1988 UN Convention. There are no demand reduction or treatment programs in Azerbaijan.

II. Status of Country

Azerbaijan is a conduit for drugs smuggled from Afghanistan and South Asia, enter Azerbaijani territory from Iran and across the Caspian Sea from Central Asia, and continue on to markets in Russia and Europe. Azerbaijan is more attractive as a transit route because of the Disruption of the Balkan heroin smuggling route due to conflict in the former Yugoslavia. Moreover, the collapse of the Soviet Union left Azerbaijan with a nearly 700 km frontier with Iran, but with inadequate police forces or know­how to patrol it. Iranian and other traffickers have begun to exploit this situation. Traffickers also use cross­Caspian ferries to smuggle narcotics.

Consumption of illicit drugs is increasing, with 5,952 persons registered in hospitals for drug abuse. However, GOA officials estimate that the actual level of drug abuse is many times higher.

There is illegal poppy and cannabis cultivation, mostly in the south of the country. Corruption permeates the economy, government structures, and law enforcement, severely impeding counternarcotics efforts. Government authorities fear that many among the numerous unemployed and displaced persons from the conflict concerning Nagorno­Karabakh are being drawn into drug trafficking as a source of income. The government also claims that ethnic Armenians in the Armenian­occupied areas of Azerbaijan engage in drug cultivation and trafficking.

III. Country Action Against Drugs in 1996.

Policy Initiatives. Recognizing the extent of the drug problem in Azerbaijan, GOA officials have begun to take steps towards developing a national drug plan. The August visit by UNDCP Director Giocomelli played an important role in changing the government's attitude towards the emerging narcotics problem. In August, the President decreed the creation of a government commission chaired by the Deputy Prime Minister to draw up a national plan for "...combating the spread of narcotic and psychotropic substances." This plan is to include draft counternarcotics legislation. At present, there are laws which criminalize drug use and trafficking, but current legislation does not cover money laundering and is inadequate to tackle police and judicial corruption. The President's decree also instructs the Foreign Ministry to conclude counternarcotics agreements with neighboring countries and other states.

The government signaled a greater commitment to work closely with the UNDCP. Azerbaijan cooperates with Black Sea and Caspian Sea littoral states in tracking and interdicting narcotics shipments, especially morphine base and heroin. Caspian Sea regional cooperation includes efforts to interdict narcotics transported across the Caspian Sea by ferry. Law enforcement officials report they have good cooperation with Russia, but encounter considerable reluctance from Iran.

Police seized 133 kgs of opium in 1996, some locally produced and some in transit. They also seized 78 kgs of marijuana. Police discovered and destroyed 350 mt of illicitly cultivated narcotics plants, mostly hemp and opium poppy. There were 2,527 arrests, down slightly from 1995. No data is available on prosecutions or convictions. Police lack basic equipment and have little experience in modern counternarcotics methods. Border inspection facilities on the Iranian border are inadequate.

Corruption. Corruption is a major problem for Azerbaijani society, and, of course, effects law enforcement as well. Senior government officials, including the President and Prime Minister, admitted the gravity of the problem. However, there is no formal anti­corruption legislation, nor have there been prosecutions of prominent offenders that would have a broader deterrent effect. Thus, corruption is a key issue for the Counternarcotics Commission to confront as it begins its deliberations.

Agreements and Treaties. Azerbaijan has no narcotics­related agreements or treaties with the US, and no extradition treaty. Azerbaijan is a party to the 1988 UN Convention. In July, Azerbaijan signed a protocol of intent on counternarcotics cooperation with Iran.

Cultivation/Production. Cannabis and poppy are cultivated illegally in Azerbaijan. Authorities discovered and destroyed 350 mt of cannabis and opium poppy under cultivation, mostly in southern Azerbaijan.

Domestic Programs/Demand Reduction. The government has not made the case publicly for national drug control education initiatives aimed at curbing consumption. However, government officials have requested printed educational materials from the US to begin such a campaign.

Part IV. US Policy Initiatives and Programs

Policy Initiatives and Bilateral Cooperation The USG maintains a limited dialogue with the GOA to exchange information on counternarcotics. The US Embassy in Baku maintains close liaison with appropriate officials on narcotics­related issues, and DEA officers responsible for narcotics law enforcement periodically make visit liaison visits to Azerbaijan.

The Road Ahead The USG will encourage Azerbaijan to expand its drug control activities and to establish the necessary legislation and institutional capabilities to improve intra­government cooperation and ensure effective prosecution of drug­related crimes. The USG will urge the GOA to implement the provisions of the 1988 UN Convention.

THE BALTICS

I. Summary

Increasing drug­related crime and drug use are prompting concern in Estonia. Recent large quantity drug seizures in neighboring countries suggest that Estonia is becoming a conduit for narcotics smuggling. Moreover, drugs are becoming increasingly popular among youth. As a result of these concerns, the media and society appear to be focused more on the problems, and the government has begun to take steps to bolster its antidrug program. The Government of Estonia (GOE) has not yet ratified the 1988 UN Convention. However, new antinarcotics legislation now pending in Parliament will support the ratification and implementation of the Convention, if it is adopted. Efforts to develop a national antidrug campaign are limited by the lack of resources and coordination among agencies.

II. Status of Country

The drug trade is gaining ground in Estonia. While domestic drug abuse is still minimal, the crime problems associated with trafficking and money laundering in Estonia are growing steadily. Estonia's location linking the Nordic countries to Central Europe, and Russia to Western Europe, makes it attractive to drug smugglers. Russian and Central Asian crime groups, which often include connections to Estonian groups, control much of the drug smuggling through Estonia. Estonian authorities report that drug networks from Afghanistan, Pakistan, and Turkey smuggle drugs through Estonia.

Law enforcement officials are concerned that cold­weather resistant strains of opium poppy and cannabis from Central Asia may be introduced to Estonia. So far there have been no credible reports that this has occurred.

Precursor chemical control and amphetamine production and trafficking are largely uncontrolled due to the lack of legislation. In 1996, police discovered an amphetamine laboratory in Tallinn and confiscated both precursor chemicals and amphetamine. Police strongly suspect that an amphetamine laboratory is located on Estonia's border with Latvia. Moreover, the marked increase in seizures of small amounts from users, weak legislation, widespread availability of highly educated unemployed or underemployed chemists, and the availability of laboratory equipment from closed chemical laboratories suggest that amphetamine production may increase.

Estonian authorities are also concerned about financial crimes, especially money laundering, as Estonia's role as a regional financial center grows. An intergovernmental working group supported by the EU and the UNDCP has been established to assist the Baltic nations in their anti­money laundering efforts. The working group includes representatives from the Central Bank, Ministries of Justice and Finance, as well as the economic police. Most Estonian authorities believe, however, that the major part of the funds laundered in Estonian banks are from tax evasion and from sources other than narcotics.

Drug abuse appears to be minimal, but increasing in Estonia, according to health authorities. They note the need for greater public awareness efforts combating drug abuse targeted at juveniles, particularly as the decriminalization/legalization debate gains ground among youth and the media.

III. Country Action Against Drugs in 1996

Policy Initiatives. The GOE made progress in developing new antidrug legislation which would include key drug provisions to allow for ratification and implementation of the 1988 UN Convention. This legislation, if adopted, will reduce penalties for users, but raise them for traffickers and dealers.

GOE has taken some steps to implement an antidrug strategy, but with limited impact. Although the GOE established a ministerial­level counternarcotics committee chaired by the Prime Minister during the year, it had little success in developing a coordinated government counternarcotics program.

The GOE increased the number of full­time counternarcotics police assigned to the Tallinn­based Central Criminal Bureau, charged with combating organized crime, from four to eight. One officer in each police prefecture is specifically responsible for drug matters along with many other responsibilities. Although there is only limited coordination among law enforcement and customs agencies, both services are increasing their efforts. The number of drug­related cases rose from 51 in 1995 to 83 in 1996. In ten months, the police seized about 7 kgs of poppy straw, one kilo of hashish and a kilo of pure amphetamine.

Corruption. The USG is not aware of any reports of official narcotics­related corruption in Estonia in 1996.

Agreements and Treaties. Estonia became a party to the 1961 Single Convention, but is not yet a party to the 1988 UN Convention, the 1972 Protocol to the 1961 Convention, or the 1971 UN Convention on Psychotropic Substances. The bill on a drug trafficking and abuse is now in the Parliament and will be adopted with a law on psychiatry.

Estonia has bilateral narcotics control agreements with Latvia, Lithuania, Finland, and several of the Newly Independent States. There is a 1924 extradition treaty with the US, and Estonia signed the European Community treaty on extradition after regaining independence in 1991.

Cultivation and Production. Although cultivation of opium poppy is illegal in Estonia, it is cultivated for cooking uses and possibly for illicit opiates production, according to GOE officials.

Domestic Programs. The GOE has established an inter­ministerial committee on drug control, which focuses on providing treatment to registered drug addicts. There is a limited drug abuse treatment program that targets registered drug addicts. The GOE estimates it that only has registered one­quarter of illicit drug user; the number of drug users is estimated to be 9,500, although officials suspect the number is much higher. Estonia's largest specialized hospital which has 90 beds is in Tallinn.

IV. U.S. Policy Initiatives and Programs

Policy Initiatives and Bilateral Cooperation. The USG promotes increased attention to the drug problem by Estonia. The USG urged the GOE to identify drug problems, possible areas for assistance, and implement the UN drug conventions.

Estonian police officers and customs officials benefited from law enforcement training by the US, NORDIC and EU countries. INL provided Estonian police and customs officials training and drug test kits.

The Road Ahead. Over the next year, the USG will encourage the GOE to become a party to and implement the 1988 UN Convention. The USG and other donors will offer Estonia additional training dealing with drug enforcement and organized and financial crimes. Through the mini­Dublin Group, established in Estonia in 1994, donors will facilitate a dialogue between the Estonian Government and international agencies and governments providing drug­related assistance. The UNDCP plans to provide additional training and administrative support to Estonia law enforcement agencies and to encourage the development of a proper legal environment.

I. Summary

Latvia is increasingly vulnerable to the illicit drug trade. Drug trafficking networks exploit increased trade and transportation networks, as well as ineffective customs and border control services. Moreover, the production of amphetamines and other synthetic illicit drugs appears to be on the rise, according to Government of Latvia (GOL) authorities. Drug control is not a high priority in Latvia; in 1996, as in most previous years, drug seizures were insignificant. The absence of money laundering legislation and foreign exchange controls facilitates the use of banks and non­bank financial institutions for laundering narcotics proceeds. Latvia made progress in chemical control with the adoption in May of new legislation to control the export and import of precursor chemicals. Moreover, the GOL is in the process of developing anti­money laundering legislation. Latvia is a party to the 1988 UN Convention.

II. Status of Country

Latvia is ideally positioned to serve as a conduit for illicit narcotics traffic with three major ports and numerous non­controlled small ports, and excellent rail and road connections to Russia and other parts of the CIS. Traffickers can easily exploit lax border controls with Russia and Belarus. Authorities believe that hashish and poppy straw originating in the Caucasus and Central Asia increasingly enter Latvia by road and rail through Russia and Lithuania. Additionally, opium is often smuggled from Central Asia in cotton shipments.

Interior Ministry and police officials confirm that the drug trade and transshipment of illegal narcotics are controlled by Latvian and Russian organized crime groups.

While most of the heroin and cocaine that transits Latvia is destined for markets in Western Europe, particularly Sweden, health authorities believe that domestic drug use is rising. Official statistics, however, report less than 1,000 users, but the recent increase in the number of teen­age drug users is of particular concern. While Latvia is primarily a transit country, there is also limited domestic cultivation of opium poppy. Most poppy cultivation is for cooking purposes, but criminal police indicate that some cultivation may be for local illicit consumption.

Latvia is a regional banking center and officials fear it could become a major drug money laundering center. There are still no currency reporting requirements to inhibit money laundering. Moreover, the lack of money laundering legislation, the absence of strict banking accountability, and the number of banks formed under very loose regulations, make the banking industry increasingly vulnerable.

III. Country Action Against Drugs in 1996

Policy Initiatives. Government efforts to develop a national drug strategy are still slow. The inter­ministerial commission, which has not met over the past year, has been revived under the new Minister of Interior. He has also recently created a working group under the commission.

As a party to the 1961, 1971 and 1988 UN conventions, Latvia has begun to develop the necessary implementation legislation. In May, the Latvian Parliament passed a law on control of trade and sale of pharmaceuticals with opiate and psychotropic bases. The 22 precursors under international control have been placed in Schedule IV of the national list of controlled drugs. Although Latvia passed legislation requiring that creditors know their depositors and outlawing anonymous accounts, new money laundering legislation is expected in 1997. The Latvian Government already has established an inter­ministerial group to draft the legislation to meet the requirements of the 1988 UN Convention and the EU convention.

Law Enforcement. Hampered by bureaucratic problems, low salaries, and limited training and equipment, law enforcement officials were unable to make any major drug seizures during the year. The Drug Enforcement Bureau (DEB), with a staff of 38 officers, is seeking to increase its efforts and is investigating several large amphetamine production cases.

Corruption. The USG is unaware of any reports of official narcotics­related corruption in Latvia, and there were no drug­related corruption cases of senior officials in 1996. However, high­level corruption is considered a problem in Latvia; the Prime Minister recently announced that he has asked the World Bank for technical assistance in rooting out government corruption.

Agreements and Treaties. In February 1994, the GOL acceded to the 1988 UN Convention. In July 1993, the GOL acceded to the 1961 UN Single Convention on Narcotic Drugs and its 1972 Protocol, and the 1971 UN Convention on Psychotropic Substances. However, the GOL's domestic antidrug law must be modified to implement the 1988 UN Convention.

U.S.­ Latvian extradition relations are governed by a treaty signed in 1923. Latvia and the US negotiated a multilateral legal assistance treaty (MLAT) in 1996. The substance of the treaty is completed; only conformity of the two language texts is pending.

Cultivation and Production. Cultivation of poppy is illegal in Latvia. Nevertheless, law enforcement officials believe that there is poppy cultivation for cooking purposes as well as limited production of illicit opium poppy straw extract. Although cannabis also grows wild in Latvia, there have been few cases of illicit cultivation.

During the Soviet occupation Latvia developed a strong technical base for the production of pharmaceuticals. After the loss of markets in the former Soviet Union, the surplus of unemployed chemists and under utilized production facilities have become vulnerable to the illicit amphetamine production.

Domestic Programs. The GOL continues to run five substance abuse centers and to finance the work of several non­governmental organizations in demand reduction treatment centers. Moreover, a number of rehabilitation centers have been established with assistance from Western and Nordic European countries. The GOL has approved a new national demand reduction plan and allocated funds for prevention, education and information activities, with an emphasis on treatment and rehabilitation. Optional drug prevention programs have been introduced in 40 elementary schools.

IV. US Policy Initiatives and Programs

Policy Initiatives and Bilateral Cooperation. The USG promotes increased attention to the drug problem by the Baltic States. In 1996, the USG urged the GOL to identify drug problems and possible areas for assistance. Latvian police and customs officials have received training and drug test kits from the USG. The USG worked with other donor nations, through the Mini­Dublin group in Tallinn and bilaterally in Riga and Vilnius, to promote increased assistance from West Europeans and the UNDCP to the Baltic nations.

Following USG/UNDCP sponsorship of two money laundering seminars, the three Baltic prime ministers signed the Riga Declaration against money laundering. The USG will continue to work with UNDCP to design an assistance program to enable the Latvian government to implement legislation and build necessary institutions. The Department of Justice is expected to assign a Regional Law Advisor to Latvia who will coordinate a more comprehensive assistance program related to law enforcement and rule of law.

The Road Ahead. Over the next year, the USG will continue to encourage Latvia to expand its drug control activities and establish legislative and institutional antidrug capabilities. The USG will encourage increased coordination with the other Baltic countries. The USG plans to provide law enforcement training for customs and law enforcement officials including border guards, as well as training to target financial crimes. The USG also will encourage support from UNDCP to assist Latvian customs and police officials by providing detection equipment and training.

I. Summary

Lithuania is vulnerable to the illicit drug trade. Difficult economic circumstances, a rising crime rate, and the country's geographic location are giving a new impetus to drug trafficking and abuse in Lithuania. While doctors at the narcotics abuse center in Vilnius report 1,700 addicts, police officials estimate that the total number of drug users could be as high as 10­15,000. The Government of Lithuania (GOL) has begun to take steps to target drug smugglers, including arresting drug traffickers and eradicating opium poppy crops. Nevertheless, effective antidrug efforts by the GOL have been limited. The GOL is not yet a party to the 1988 UN Convention or the 1972 Protocol, but it is a party to the 1961 Single Convention on Narcotic Drugs and 1971 Convention on Psychotropic Substances. Concerns about enhanced police powers have sparked debate in the Parliament, and stalled new antinarcotics legislation.

II. Status of Country

Lithuania has emerged as a conduit for smuggling illicit drugs from Central Asia to Western Europe. Drug­related crime is also on the rise and Lithuanian police report that there are more than 144 organized crime groups involved in the drug trade. These organizations have well­established connections with drug­producing countries in Central and Southwest Asia, and Turkey. Although law enforcement officials note that opiates and cannabis are the primary drugs smuggled through the region, cocaine trafficking also is rising.

Modest quantities of cocaine are smuggled through Lithuania via Germany to Russia and vice versa. Meanwhile, regulation of Lithuania's private banking sector is still in nascent stages and money laundering appears to be widespread.

II. Country Action Against Drugs in 1996

Ther has been slow progress in developing a national counterdrug program. As noted, the GOL is not yet a party to the 1988 UN Convention. The GOL established an interagency task force to review and draft appropriate legislation for accession to the 1988 Convention and the implementation of all three UN drug conventions. However, there is some concern over provisions in the 1988 UN Convention which require that police be allowed to conduct controlled deliveries and investigations of suspected money­laundering operations.

Lithuania did increase its interdiction and eradication efforts during the year. Enforcement officials eradicated 81,152 square meters in 1996 of opium poppy and 1,061 square meters of cannabis. In addition, the Education Committee of Vilnius' City Council now has a narcotics coordinator.

Corruption. The USG is unaware of any reports of official narcotics­related corruption in Lithuania and there were no reported cases of high­level corruption associated with the drug trade in 1996.

Agreements and Treaties. As noted, the GOL is not a party to the 1988 UN Convention, although in 1994 it became a party to the 1961 Single Convention and the 1971 UN Convention.

Cultivation and Production. Cultivation of opium poppy is illegal in Lithuania. However, law enforcement officials find it difficult to enforce this ban because of the widespread use of poppy for cooking purposes. Law enforcement officials also believe that poppy is cultivated to produce illicit poppy straw extract.

Domestic Programs. The GOL has begun to establish a new health program which includes demand reduction. It will include rehabilitation as well as public awareness components.

IV. U.S. Policy Initiatives and Programs

Policy Initiatives and Bilateral Cooperation. The USG is promoting increased attention to the drug problem by Lithuania. In 1996, the USG urged the GOL to identify drug problems and possible areas for assistance, and to become party to and implement the 1988 UN drug conventions.

The USG provided training to the Lithuanian police and customs officials as well as some modest amounts of equipment. Additionally, the USG urged increased UNDCP support. The UNDCP is providing a national training program for the police in drug enforcement techniques and endeavoring to equip them with sophisticated detection and surveillance devices ­­ including drug­detecting dogs.

The Road Ahead. Over the next year, the USG will continue to encourage the GOE to become a party to the 1988 UN Convention and to establish legislative and institutional antidrug capabilities. The USG plans to provide law enforcement training for customs and law enforcement officials including border guards, as well as training to target financial crimes.

I. Summary

Belarus is increasingly vulnerable to the illicit drug trade. Belarus' location between Russia and the West, its good rail and road transportation, and a customs union with Russia that eliminated internal borders between the two countries add to Belarus' potential as a narcotics transit corridor. Efforts to move to a market economy have dislocated many workers. Increased organized crime activity and the lack of legislation are likely to fuel increased drug trafficking and production by those organizations. The Government of Belarus (GOB) has not made drug control a priority. There has only been limited progress on enacting a comprehensive antidrug strategy. However, Belarus is a party to all the international drug conventions, including the 1988 UN Convention. The GOB lacks both the legislative framework and the financial resources to combat drug trafficking.

II. Status of Country

Drug trafficking groups are expanding smuggling operations through Belarus. Traffickers seeking new routes to Russia and Western Europe are now moving opiates from Southwest Asia through Belarus. Most smuggling operations involve the shipment of heroin, hashish, and/or opium from Afghanistan and Pakistan by rail. The most frequent transit route is between Ukraine and St. Petersburg and Moscow. Law enforcement agencies also noted an increase in the flow of heroin and cocaine from Russia through Belarus to Western Europe in 1996. In addition, there has been an increase in incidents of drug smuggling to Poland and Germany as a result of the customs union that eliminated internal borders between Belarus and Russia.

Drug­related crime is also rising. The Ministry of Internal Affairs estimates that 2.1 percent of all crimes are drug­related. In addition, there is some cultivation of opium poppy in Belarus, although the extent is not known.

Health authorities believe that such transit trade is fueling a domestic drug market. According to the Ministry of Health and the Ministry of Interior, there has been an annual increase in the number of registered drug addicts. Although the number of registered drug addicts is quite low ­­ 3,000 in 1996 ­­ this is a 35 percent increase over 1995. Some officials believe that the increase in HIV in some cities such as Svetlogorsk is linked to the drug situation. Most Belarusian addicts use products made of opium poppy, oil poppy or cannabis. However, they are also using synthetic drugs such as ecstasy, heroin, cocaine, barbiturates, and other drugs in increasing amounts.

The large chemical industry in Belarus is vulnerable to the illicit drug industry. The GOB has made no effort to establish a chemical control monitoring regime and law enforcement officials are not trained to investigate exports or clandestine amphetamine production. In November, however, the KGB discovered an amphetamine laboratory and distribution ring at the Vitebsk medical institute.

GOB officials are unaware of any extensive money laundering operations. Nevertheless, Belarus does not have anti­money laundering legislation or asset seizure laws and it permits bank secrecy. In addition, the growing number of casinos and other legitimate establishments may be used for money laundering.

III. Country Actions Against Drugs in 1996

Policy Initiatives. Although President Lukashenko announced a decree in December 1994 on fighting crime and drugs, the GOB has not formulated any long­range antidrug plans.

GOB drug control efforts focus on interdiction. Responsibility for investigating and discovering narcotics­related crime is divided among the Ministry of Internal Affairs, KGB, the Customs Committee, Border Guards and Ministry of Health. The government established an interagency commission to coordinate antidrug activities in June 1995; it is headed by Prosecutor General O. Bozhelko. Seizures in 1996 included: 56 kgs of cannabis; 4 grams heroin; 3 grams cocaine; 305 grams synthetic drugs; 1.8 kgs poppy straw; and 82 kgs of extracted opium. GOB also eradicated approximately 16,000 square meters of opium poppy; and 775 square meters of cannabis.

Cultivation and Production. Although opium cultivation is outlawed, GOB officials believe that there is cultivation for domestically produced drugs as well as for traditional cooking uses. Belarus also has the resources necessary for the production of synthetic narcotics. Laboratory and technical capabilities are in place while much of the industrial plants are idle.

Corruption. The USG does not have any reports of high­level official narcotics­related corruption in Belarus.

Agreements and Treaties. Belarus is a party to the 1988 UN Convention, the 1961 Single Convention on Narcotic Drugs, and the 1971 UN Convention on Psychotropic Substances. Belarus signed an agreement in 1993 on drug control assistance with Italy, and plans to conclude similar agreements with Austria, Bulgaria, Sweden and Germany. The GOB also has signed interstate treaties on assistance with Lithuania and China. Belarus is a party to the CIS Convention on Legal Assistance and has become a member of Interpol.

Demand Reduction. The GOB has not developed a national drug abuse prevention strategy. Demand reduction programs emphasize treatment and social rehabilitation of current drug addicts. Treatment for drug addicts is generally performed in psychiatric hospitals, either through arrest or self­enrollment.

IV. U.S. Policy Initiatives and Programs

Policy Initiatives. The USG will encourage the GOB to expand its drug control activities and to establish the necessary legislative and institutional capabilities. During 1997, the USG will focus its support on urging Belarus to implement the 1988 UN Convention.

I. Summary

Belgium is a transit country for illicit drugs bound for other markets in Europe. Narcotics traffickers exploit Belgium's large port facilities, transportation infrastructure, and central location in Western Europe. Belgium is not a significant producer of illicit drugs for precursor and essential chemicals used in the production of illicit narcotics. Belgium is a party to the 1988 UN Convention.

II. Status of Country

Belgian authorities estimate that there are between 10,000 and 20,000 heroin addicts. A survey published in 1996 by the European Monitoring Centre in Lisbon indicated that over 5 percent of all adults in Belgium have used cannabis products. There are no statistics on cocaine and synthetic drug use; however, GOB authorities believe the use of ecstasy and LSD is increasing.

Belgian has intensified its efforts to control money laundering. During the twelve­month period ending June 30, 1996, financial institutions reported to the authorities 4,436 suspicious transactions with a total value of approximately $1.1 billion. During this period, 187 cases of alleged money laundering were referred to prosecutors. About 69 percent of money laundering cases in Belgium are linked to illegal drug trafficking.

III. Country Actions Against Drugs in 1996

Policy Initiatives. The Belgian Ministry of Justice maintains drug liaison offices in ten foreign cities with territorial competence for thirty­one countries. The Ministry of Justice has drafted legislation for Belgian ratification of Europol (European Police Organization) and it expects full parliamentary approval for the treaty before the end of 1997.

The Belgian Senate plans to ratify in early 1997 a new law governing seizure and confiscation of illegal proceeds based on judicial requests from foreign governments. This law is designed to facilitate provisions of the 1988 UN Convention.

Accomplishments. Responding to new trends in money laundering, the Belgian Council of Ministers adopted an action plan against organized crime that endorses a broader definition of money laundering to cover other professions and activities, including notaries, financial advisors, accountants, real estate agents, and casinos.

The GOB entered into bilateral police narcotics cooperation agreements with Hungary, Poland and Romania.

Law Enforcement Efforts. Belgian law enforcement authorities vigorously investigate individuals and organizations involved in illegal narcotics trafficking into and through Belgium. Authorities closed two ecstasy labs in 1996. During the first three quarters of the year, they seized more than 150,000 ecstasy tablets, 13,500 doses of LSD, 11 kgs of heroin, approximately 595 kgs of cocaine, and more than 84,000 kgs of cannabis. They arrested more than 245 persons in connection with these seizures.

Corruption. Drug­related corruption among public officials is not considered to be a problem in Belgium. Belgium has effective laws to combat and punish corruption.

Agreements and Treaties. Belgium ratified the 1988 UN Convention in 1995 and fully meets the Convention's goals and objectives. The US and Belgium have long had an extradition treaty. An updated treaty was ratified by Belgium in 1988 and by the USG in November. They will exchange instruments of ratification in Washington early in 1997. A mutual legal assistance treaty (MLAT), signed in 1988 and ratified by the USG in 1989, is scheduled to be reviewed by the Belgian Parliament early in 1997.

Belgium is a member of several international antidrug organizations, including the Heads of European Narcotics Law Enforcement Agencies (HONLEA), the Dublin Group, and the European Committee to Combat Drugs (CELAD). Belgium is a major donor to the UNDCP. Most Belgian aid is channeled through the UNDCP for alternative development programs in Bolivia and Vietnam. Belgium is a member of the Financial Action Task Force (FATF) and will chair the organization's ninth session (1997­1998). Belgium has implemented the EU Directive on Money Laundering and participates in the Contact Committee established by the Directive.

Cultivation/Production. There is no significant cultivation or production of illicit drugs in Belgium.

Drug Flow/Transit. Belgium is an important transit point for drug traffickers because of its port facilities, airports, and excellent road connections to neighboring European countries. Most illicit drugs pass through Belgium via the ports of Antwerp and Zeebrugge, across the border from the Netherlands or, to a lesser degree, through Brussels' Zaventem airport. Smuggling routes change constantly, but Belgian authorities believe drug shipments arrive from Asia and the Middle East through Eastern Europe and the former Soviet Republics.

Demand Reduction/Domestic Programs. Belgium has an active antidrug educational program which targets the country's youth.

IV. U.S. Policy Initiatives and Programs

Bilateral Cooperation. Cooperation between the USG and Belgium is excellent. In December, senior USG and GOB officials completed the first of a planned series of annual bilateral consultations to improve judicial cooperation involving letters rogatory, controlled deliveries and extradition cases.

Belgium participates in an informal forum for cooperation on money laundering issues known as the Egmont Group, which held its inaugural meeting in June 1995 at the Egmont Palace in Brussels under the sponsorship of the US Financial Crimes Enforcement Network (FinCEN), and Belgium's Financial Intelligence Processing Unit (CTIF/CFI). Belgium chairs the Egmont legal working group, which drafted a model memorandum of understanding on international cooperation on money laundering issues.

The Road Ahead. The USG looks forward to continued close cooperation with Belgium on drug­related issues and to continued Belgian participation in multilateral counternarcotics fora such as the Dublin Group and the UNDCP.

I. Summary

Bulgaria is an important transit point to Western Europe for Southwest Asian heroin and Southeast Asian marijuana. Authorities have seized South American cocaine in Bulgaria en route to Western Europe, and the heroin essential chemical acetic anhydride en route to Turkey. With the lifting of the Yugoslav embargo in 1996, trafficking has returned to the traditional Balkan route from Turkey to Bulgaria to Serbia. Maritime transport of narcotics has also increased. Bulgaria has minor cultivation of opium and cannabis. Bulgaria is a party to the 1988 UN Convention. In 1996, the GOB approved a new money laundering law, drafted a counternarcotics master plan, and approved a drug demand reduction strategy. Domestic drug use, while relatively low, is increasing. Law enforcement authorities cooperated actively with US and third country counterparts on specific counternarcotics cases and in controlled deliveries.

II. Status of Country

Bulgaria is a significant drug transit country centrally situated on the Balkan route. Bulgaria also serves as a transit point between Turkey and both Romania and the former Yugoslav Republic of Macedonia.

Small quantities of opium poppies and cannabis are grown in Bulgaria. Clandestine labs produce amphetamines. Bulgaria is not a significant source of chemicals used in the illicit drug manufacture. However, some acetic anhydride is diverted and transported from Bulgaria to Turkey. In Bulgaria's transition from a socialist system to a more market­oriented economy, large­scale redistribution of ownership rights has facilitated laundering of illegally obtained funds. The country's recent economic crisis and banking sector collapse likely reduced the laundering possibilities. In this context, the central bank has increased its oversight of exchange houses.

III. Country Actions Against Drugs in 1996

Policy Initiatives. To achieve the objectives of the 1988 UN Convention, Bulgaria's Inter­Ministerial Council Against Drug Abuse and Drug Trafficking developed a draft counternarcotics master plan which, after final review, will be presented to the Council of Ministers. The draft master plan envisions preparation by the Inter­Ministerial Council of a comprehensive national counternarcotics law. A draft law on controlled deliveries is also now under consideration by Parliament.

Bulgaria's new money laundering law was promulgated on June 4. Implementing regulations have not yet been finalized, and the law's potential effectiveness remains unclear. Banks, exchange houses, insurance companies, investment companies, privatization entities, state tendering agents, and gambling establishments have six months to institute internal procedures required by the law to identify possible money laundering.

Accomplishments. The 1972 Protocol to the Single Convention on Narcotic Drugs of 1961 came into force in Bulgaria on August 17. The government has taken important steps towards achieving compliance with the goals and objectives of the 1988 UN Convention including passage of the new money laundering law, development of the draft counternarcotics master plan, and initiation of a three­year demand reduction strategy.

On December 12­14, 1996, Bulgaria hosted a regional conference of justice ministers on "corruption and organized crime in states in transition" as part of a joint project between the Council of Europe and the Commission of the European Communities. The conference recommended priorities for action at the national and international level to fight corruption and organized crime.

Bulgarian Customs and Ministry of Interior officials cooperated with German officials in two controlled cocaine deliveries from Frankfurt, Germany, and an internal controlled delivery from Varna to Sofia of five mt of marijuana.

There has been excellent cooperation between law enforcement officials in the US and Bulgaria. Timely information from the Bulgarian Ministry of Interior led to the arrest of a Bulgarian­American trafficker upon entry into the US; Ministry of Interior evidence and testimony aided in his conviction.

Law Enforcement Efforts. Bulgaria's placed a high priority on counternarcotics law enforcement, although resources were scarce in a very difficult economic year. Law enforcement officials seized over 15,000 kgs of illegal drugs at border points, airports, and inland points of distribution. They made two seizures of the heroin essential chemical acetic anhydride. There has also been cooperation between Bulgarian police and customs officials in large seizures and controlled deliveries.

Corruption. Corruption is widespread in Bulgaria, including among police and customs officials. However, the USG has no specific information that senior GOB officials are involved in drug trafficking or other narcotics­related crimes. The GOB has taken steps against corruption; Minister of Interior Dobrev announced on December 13 that, as a result of a several­month probe, he had identified corrupt government officers at all levels of administration and had submitted evidence to the chief prosecutor's office where action is pending.

Agreements and Treaties. Bulgaria is a party to the 1988 UN Convention, the 1961 Single Convention and its 1972 Protocol, and the 1971 Convention on Psychotropic Substances. Bulgaria is also party to the 1957 Council of Europe Convention on Extradition, the 1959 European Mutual Legal Assistance Treaty in Penal Measures, the 1983 Council of Europe Convention on Transfer of Sentenced Persons, and the 1990 Council of Europe Convention on Laundering, Search, Seizure and Confiscation of Proceeds from Crime.

Bulgaria has a bilateral treaty with Turkey for the transfer of convicted persons. Bulgarian Customs has MOUs on mutual assistance and cooperation with a number of its European counterparts and is preparing or updating others. Bulgaria signed an MOU with Russian Customs in November.

The US­Bulgarian extradition treaty dates from 1924; the GOB this year expressed an interest in updating it.

Cultivation and Production. Law enforcement officials found and eradicated 8,263 hectares of illegal cannabis cultivation during the year. No opium poppy cultivation was found or eradicated.

Law enforcement officials do not routinely calculate crop size and yields for illegal narcotics crops. When necessary, authorities make case­specific determinations on the weight of the dry leaves yielded from one square meter times the dimensions of the field. In general, these yield calculations are approximate since it is not unusual to find cannabis interspersed in a field of legitimate crops.

Drug Flow/Transit. The main drug transiting Bulgaria is heroin, but seizures indicate an increase in cocaine and cannabis transit. The Balkan route from Turkey through Bulgaria to Serbia and other overland routes north to Romania and west to the Former Yugoslav Republic of Macedonia have traditionally been the most heavily used. There is also evidence of increased trafficking by sea. A five­ton plus shipment of marijuana from Thailand arrived by sea in the port of Varna and was seized after a controlled delivery to Sofia. Authorities seized a large (almost 10 mt) shipment of hashish from a truck. It had traveled by sea from Pakistan to Greece. Both shipment were believed destined for The Netherlands. Law enforcement officials have also seen an increase in cocaine trafficking, some for Bulgarian markets and some believed in transit to Germany.

Domestic Programs (Demand Reduction). The drug abuse problem in Bulgaria is small but growing. Experts estimate that there are 20,000 to 30,000 heroin­dependent addicts in this nation of 8.4 million people. Cocaine is too expensive for all but the wealthy. Marijuana is a new problem, but growing rapidly. The age of first use of illegal narcotics is going down.

Demand reduction programs are not a high priority for the GOB, and drug treatment/prevention programs are centered primarily in the large cities of Sofia, Varna and Burgas. Bulgaria's National Center for Addictions, however, has developed a three­year national strategy on drug demand reduction and also a national drug prevention plan, both of which have been approved by the Ministries of Health and Education. The Center also has an outreach program, a school­based drug prevention program and a methadone clinic pilot project. It has been assisted in drug treatment training and demand reduction programs by the USG, Italy and the UNDCP.

IV. U.S. Policy Initiatives and Programs

Policy Initiatives. The USG seeks to promote increased attention to the problems of narcotics trafficking, to assist counternarcotics law enforcement efforts with training and some equipment, and to encourage further counternarcotics cooperation between Bulgarian and other law enforcement agencies, including the DEA.

Bilateral Cooperation. US bilateral assistance for law enforcement and counternarcotics over the past year focused on training, including an International Law Enforcement Academy training program, a USCG boarding officers course, an FBI course on financial and economic crime, and a regional DEA basic drug enforcement seminar. Through the INL program, the USG allocated $100,000 in FY 1996 funds for computers, radios, and drug detection and testing equipment for Bulgaria's counternarcotics effort. An additional $195,000 of inspection equipment was provided by US Customs to facilitate the border checkpoint operations of Bulgarian customs.

The Road Ahead. The USG will encourage the GOB in its antidrug efforts, with special emphasis on effective implementation of the new money laundering law and the demand reduction strategy, and the completion of the counternarcotics master plan. It will work with the GOB to identify its counternarcotics equipment and training needs and to provide limited assistance to meet those needs. It will promote counternarcotics cooperation with regional and Western European countries, and encourage Western European assistance and UNDCP support for Bulgarian law enforcement authorities.

I. Summary

Croatian authorities increasingly are concerned about a rise in drug trafficking and drug use in Croatia. Of particular concern is the possibility of the rejuvenation of Balkan route variants which crossed a large part of Croatia's territory. To respond to the growing threat, the Ministry of Interior reorganized the criminal police and established a new Narcotics Division. Smaller drug divisions and units have been established in every police department throughout the country. The Narcotics Division has developed an action plan and a national strategy to combat drug abuse; it is actively training relevant officials. Croatia is a party to the 1988 UN Convention.

II. Status of Country

Croatia, with its extensive coast line, geographic location, and limited resources for patrolling its coast, offers great possibilities for transshipping narcotics. Variants of the Balkan route crossed a large part of Croatian territory prior to the war in the former Yugoslavia. With the lifting of the Yugoslav embargo in 1996, narcotics traffickers are increasingly using the southern portion of the route from Turkey through Bulgaria to Serbia. They may seek to use legs from Serbia through Croatia to West European markets. There are indications that the amount of narcotics transiting Croatia are increasing. There are also indications that the number of persons using drugs is increasing, particularly in the major urban areas (Zagreb, Split, Osijek, and Rijeka).

Croatian authorities are concerned that Croatia's banking sector, which is being reformed, may be vulnerable to money laundering. Ineffective legislation hampers enforcement efforts and prosecutions. However, the parliament is considering a law to improve the government's ability to investigate and prosecute money laundering.

III. Country Actions Against Drugs in 1996

Policy Initiatives. The Government of Croatia (GOC) reorganized the criminal police within the Ministry of Interior to combat the increasing narcotics threat. A new Narcotics Division was formed within the Ministry and smaller drug divisions and units were established in every police department throughout the country. The Narcotics Division has established cooperative relationships with Interpol, and counterparts in Slovenia, Italy, Germany, the former Yugoslav Republic of Macedonia, Hungary, and the US. Law enforcement contacts expanded with several other nations, including China, Bulgaria, Greece, and Pakistan. The Ministry of Interior established a counternarcotics action plan. With the participation of other relevant ministries, it also developed a national strategy to combat drug abuse.

Parliament amended the penal code to make possession of any quantity of narcotic drugs a criminal offense. However, efforts to interdict drugs have been hindered by inadequate legal provisions permitting undercover operations, use of controlled deliveries, and technical collection of evidence (i.e. audio and video recording).

Accomplishments. The GOC has established controls on the newly reopened Zagreb/Belgrade highway to inhibit renewed use of the route for the transit of narcotics. There is little indication of increased narcotics transiting the highway, which was an important transshipment route prior to Yugoslavia's dissolution. The GOC also has placed stringent controls on the entry of drug­essential chemicals into Croatia.

Law Enforcement Efforts. GOC officials claim a marked improvement in Croatia's counternarcotics capabilities with the assigning of at least one officer for narcotics matters at every police station. Law enforcement efforts focused on arresting users and suppliers and confiscating narcotics.

Corruption. There have been allegations of corruption within senior levels of the ruling party and government, but none of these allegations have linked officials to narcotics­related corruption.

Agreements and Treaties. Croatia is a party to the 1988 UN Convention.

Cultivation/Production. Some cannabis is cultivated in Croatia, but it is unlikely Croatia will become a significant source of cannabis or other narcotics.

Drug Flow/Transit. Croatian officials are concerned that the consolidation of peace in the region may result in the resurgence of the Balkan route. Although they have hindered the flow of narcotics on the Zagreb/Belgrade highway, they have not established such controls on the Bosnia/Croatia border in southern Croatia (Dalmatia), and there has been an increase in narcotics seized in the Dalmatia region.

Domestic Programs (Demand Reduction). The Ministry of Health, with primary responsibility for domestic programs, has established some demand reduction programs. The Ministry of Education requires drug education programs in elementary and secondary schools. The state­run National Medical System also offers treatment programs for drug users.

IV. US Policy Initiatives and Programs

Bilateral Cooperation. The USG urged increased GOC attention to the drug issue. Our efforts focused on identifying existing problems and possible areas of assistance. At the request of Croatian authorities, DEA conducted a two­week training seminar for senior counternarcotics police officials. The US Customs Service conducted a two­day seminar on money laundering. The US Coast Guard conducted an assessment of the GOC's current ability and future requirements to control Croatia's coast to include combatting drug trafficking.

The Road Ahead. Drug trafficking through Croatia is likely to increase in 1997, increasing the opportunities for organized crime involvement and money laundering. Over the next year, the USG will encourage the GOC to expand its drug control activities, and to establish the necessary legislative and institutional capabilities to support such activities. We also hope to train Croatian additional counternarcotics officials, and to build stronger ties to the GOC institutions combatting narcotics.

I. Summary

Cypriots do not produce or consume significant amounts of narcotics, but hashish use by young Cypriots and tourists is growing. Drug traffickers use Cyprus as a meeting place to broker deals, taking advantage of its relatively sophisticated business and communications infrastructure. Cyprus strictly enforces tough antidrug laws, and police and customs authorities maintain excellent relations with US and other foreign government officials. Cyprus previously ratified the Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime; legislation to implement the Convention was passed in April 1996. In response to its obligations under the law, Cyprus has established a money laundering investigations unit, comprised of representatives of the Attorney General's office, the Director of Customs and the Chief of Police. Authorities also have circulated customer identification regulations to the commercial banks. US officials expect the Government of Cyprus to complete development and promulgation of other regulations related to the new law in 1997. Cyprus does monitor the importation and exportation of chemicals for local markets; however, Cyprus' geographic location and the free­port status of its two main seaports make it an ideal transit country for trade in chemicals and most goods between Europe and the Middle East. Cyprus is a party to the 1988 UN Drug Convention.

II. Status of Country

Cyprus' strategic location in the Eastern Mediterranean and its current status as a gateway to and from Lebanon and elsewhere make it a convenient stopover for traffickers, especially from Lebanon and Turkey. Highly developed business and tourism facilities, a modern telecommunications system, and the fourth­largest merchant shipping fleet in the world also serve to attract traffickers to Cyprus. Here they negotiate deals with third­country buyers, conceal heroin and cannabis resin in the substantial container traffic transshipped through Cyprus and take advantage of air connections to transship currency and bullion to and from Europe. Still low by international standards, drug­related crime is rising.

Cyprus has attracted over 25,000 offshore companies from all over the world, more than 2,500 of which are Russian. Cyprus' success as an international offshore center has made it vulnerable to international money laundering activities. Reports in the local and foreign press have suggested that the Russian mafia, among others, is using Cyprus for money laundering, although such claims are difficult to prove. The Central Bank of Cyprus believes its monitoring of monetary activities in general, and its concerted efforts to combat money laundering in recent years, have reduced money laundering activity, some of which would be drug related. However, it is possible that money launderers use the legitimate facilities of Cyprus to further their activities in other countries.

Cypriot law now carries a maximum prison term of one year for drug users under 25 years of age with no police record. Sentences for drug traffickers range from four years to life, depending on the substances involved and the offender's criminal record. Cypriot law allows the confiscation of drug­related profits and allows the freezing of profits or a special investigation of the suspect's financial records, although no assets have ever been seized under this law.

III. Country Action Against Drugs in 1996

Policy Initiatives. In April, the Cypriot Parliament passed the Prevention and Suppression of Money Laundering Activities Law of 1996, which expands the definition of money laundering to include proceeds of drug and non­drug­related serious crimes. The Government of Cyprus has issued "guidance notes" (regulations) to banks on the customer identification requirements of the new law. Other guidance notes are currently being prepared. The government has established a money laundering investigations unit, comprised of representatives of the Offices of the Attorney General, Director of Customs and Chief of Police, in line with the new money laundering law.

Law Enforcement Efforts. Cyprus aggressively pursues drug seizures, arrests, and prosecutions for drug violations. Cyprus focuses on major traffickers when the opportunities are available, and readily supports the international community in its efforts. There have been no significant changes in the structure of the Cypriot law enforcement agencies. Cypriot police are generally effective in their law enforcement efforts; their techniques and capacity are restricted by a shortage of financial resources. International enforcement cooperation is limited somewhat by the political division of the island into the internationally recognized Republic of Cyprus in the south and the "Turkish Republic of Northern Cyprus," which is recognized only by Turkey, in the north. The Republic of Cyprus authorities have no relations with Turkish Cypriot enforcement authorities in the north. Turkish Cypriots have their own law enforcement organization, responsible for the investigation of all narcotics­related matters. These Turkish Cypriot authorities have shown a willingness to pursue narcotics traffickers and provide assistance when asked by foreign law enforcement authorities.

Corruption. Corruption in Cyprus is limited. There is no evidence of senior or other officials facilitating the production, processing or shipment of drugs.

Agreements and Treaties. A new extradition treaty between the US and Cyprus was signed in June, which will replace the 1931 US­UK Extradition Treaty currently in force for Cyprus. The ratification process is under way in both countries. Consultations on implementation and other mutual legal assistance matters will continue into 1997. There is no mutual legal assistance treaty (MLAT) in force between Cyprus and the US. Cyprus is a signatory to the 1988 UN Convention and the Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime.

Cultivation/Production. The only known production is the limited, but increasing, cultivation of cannabis for individual use and, on a smaller scale, for resale. Cypriot authorities are working to eliminate such cultivation and abuse.

Drug Flow/Transit. No significant increase has been observed over the last year. Cyprus police believe their efforts in combating drug trafficking have mostly converted Cyprus from a drug transit point to a broker site for dealers. This change is likely also the result of improved conditions in Lebanon. Lebanese containerized freight now moves directly to third countries without transiting Cyprus. However, there were occasions in 1996 when kilograms of heroin seized in London were identified as transiting northern Cyprus from Turkey. In addition, Cyprus has become a transit point for cocaine transported by commercial air from Brazil via Cyprus to the Middle East and the former Soviet Union.

Domestic Programs. Drug abuse is relatively rare in Cyprus. Hashish is the most commonly encountered drug, followed by heroin and cocaine, all of which are available in most major cities. Users consist primarily of young people and tourists. Recent increases in drug use have prompted the government to actively promote demand reduction programs through the school system and social organizations, occasionally with DEA­Nicosia participation. Drug treatment is available.

IV. US Policy Initiatives and Programs

The USG is working to:

­­ support the Cyprus Government's efforts to deter money laundering activities in Cyprus;
­­ encourage the Cyprus Government to enhance the authority of police and customs officials to investigate narcotics violations;
­­ encourage Cyprus Customs authorities to be vigilant in their efforts to prevent trafficking groups from utilizing the free ports of Larnaca and Limassol to conceal the diversion of precursor chemicals;
­­ with the assistance of the Cypriot authorities, gather intelligence on and destroy major trafficking organizations that are responsible for the production, transportation, and distribution of illegal drugs destined for the US and other world markets. These efforts include the recovery of profits from the sale of drugs.

Bilateral Cooperation. There are no bilateral agreements in place at this time.

The Road Ahead. The USG anticipates continued excellent cooperation from both the Cyprus police and Cyprus customs officials in our drug enforcement efforts. The USG expects to track closely government efforts to prevent the use of Cyprus' offshore sector as a money laundering center, and especially to track the influence/effect of Russian organized crime on Cyprus.

I. Summary

The Czech Republic remained a target of drug traffickers and a conduit for illicit drug smuggling to Western Europe in 1996. Drug traffickers expanded drug markets: a medical survey found rapid growth in the number of heroin users and a rate of intravenous drug use (over 50 percent) that may be the highest in Europe. "Drug tourists" from Austria and Germany are attracted by low drug prices in the Czech Republic and legislation which permits the possession of drugs for personal use. New legislation took effect which allows for undercover law enforcement operations and targets money laundering; it should significantly increase the effectiveness of Government of the Czech Republic (GOCR) counternarcotics operations. The government also is working on a new three­year national antidrug campaign which, once adopted, will emphasize both law enforcement and demand reduction programs.

II. Status of Country

According to Czech officials, organized crime groups from the Newly Independent States (NIS) and the former Yugoslavia, as well as Italian groups such as the Neapolitan camorra and the Sicilian mafia, are established in the Czech Republic. Their members are using more violent methods to expand their narcotics smuggling, money laundering and local trafficking operations. These groups use Czechs, Turks, Kosovo Albanians, Russians, and former Yugoslavs to move large cargoes of heroin from Southwest Asia to Western European markets. Continuing a trend apparent in the last few years, South American cocaine traffickers also use the Czech Republic as a staging ground to reach Western European markets.

III. Country Actions Against Drugs in 1996

Policy Initiatives. The Czech National Drug Commission (NDC) was reorganized to include four Ministries ­­ Interior, Education, Health, and Justice. The Prime Minister was made chairman. It is anticipated that, after a policy review still underway at year's end, NDC membership will be expanded as part of a new drug policy for the next three years. That policy is expected to feature a balance between demand reduction and law enforcement.

A bill submitted by the government in 1995 to regulate narcotics and psychotropic substances died with the end of the parliamentary term in May 1996. The bill would have provided statutory authority to the Ministry of Health to impose controls through licensing of manufacturers, importers, exporters, and health­care and research institutes producing or handling such substances; through extending this licensing authority to the precursor and essential chemicals included in the 1988 UN Convention; and by granting the Ministry new powers to register the cultivation of poppy seeds and hemp. Although some of these powers are currently conferred by Decree 192 of 1988, the bill would give them a stronger legal basis. The Ministry is now incorporating minor changes in legal terminology into a substantially identical bill, which it plans to re­submit in early 1997.

Accomplishments. To implement the 1988 UN Convention and to improve the legal environment for combatting drugs, the Czech authorities took several measures:

­­ The police conducted several successful undercover operations, as permitted by amendments to the penal code which took effect in September 1995
­­ A law against money laundering came into effect in July, requiring banks and other financial organizations to report unusual financial transactions and cash transactions over 500,000 Czech crowns (about $18,000) to a financial information unit (FIU) in the Ministry of Finance. The FIU established contacts with counterpart organizations such as the US Financial Crimes Enforcement Network and the European Egmont Group.

In addition, the antidrug coordinators, who were first appointed in 81 districts (roughly equivalent to US counties) throughout the Czech Republic in 1995, organized their operations. Each coordinator collects information describing the local drug situation, develops working contacts with all governmental and non­governmental bodies involved in counternarcotics work, and coordinates antidrug activities in the district. Antidrug commissions have also been established at the local, district, and regional levels.

Law Enforcement Efforts. In the first ten months of 1996, Czech police and customs agents seized 36.5 kgs of heroin, 22 kgs of cocaine, 11.8 mt of cannabis products, 21.3 kgs of amphetamine, and 93 kgs of ephedrine. Authorities seized seventeen small labs producing pervitin, a local methamphetamine. In addition, as the result of international cooperation on controlled deliveries, authorities abroad intercepted another 72 kgs of heroin and 1 kg of cocaine which had passed through the Czech Republic.

The Czech Republic expanded cooperation with the DEA and authorities of other countries to regulate Czech production and commerce in the precursor chemicals ephedrine and pseudoephedrine in order to stem their diversion to illicit methamphetamine manufacture.

Corruption. The USG is unaware of any reports of official narcotics­related corruption in the Czech Republic.

Agreements and Treaties. The Czech Republic is a party to the three UN conventions on narcotics: the 1961 UN Single Convention on Narcotic Drugs and the 1972 Protocol thereto, the 1971 UN Convention on Psychotropic Substances, and the 1988 UN Convention. The bilateral extradition treaty between the Czech Republic and the US includes drug­related offenses listed in the 1988 UN Convention.

Cultivation and Production. The Czech statistical office reported in 1996 about 15,000 hectares of licit opium poppy cultivation for pharmaceutical and food products. Authorities predict that the area devoted to poppies in 1997 will increase to about 20,000 hectares. Although no information is available about large­scale cannabis cultivation, authorities believe that cannabis is cultivated for personal use. Authorities believe that illicit methamphetamine (previtin) production is extensive, but most data are anecdotal.

Drug Flow/Transit. The Czech Republic's geographic location adjacent to or near major West European drug markets makes it a logical transit point for drugs into these markets. Southwest Asian heroin exiting from the Balkan route has been the traditional transit drug, but cocaine and synthetic drug traffickers are taking advantage of more open borders to move their drugs through the Czech Republic. Small­scale drug couriers or mail parcels are apparently being used.

Domestic Programs (Demand Reduction). The National Hygienic Service, on the basis of its quarterly survey, reported a 12­percent overall increase for the first three quarters of 1996 in problem drug users. The service also warned of the following unfavorable trends: rapid growth in the number of heroin users; persistence of pervitin as the most frequently abused drug; the progressively lower ages at which individuals begin taking drugs (nine percent before the age of 15 and nearly two­thirds before age 19); and the unfavorably high percentage (over 50 percent) of drug injection. Comparison with a multi­city study of individual European cities indicated that the rate of intravenous drug use in the Czech Republic is the highest in Europe.

The Public Health Service registered 1,258 addicts under regular treatment programs as of October and a similar number, approximately 1,000, problem drug users visit treatment centers irregularly.

IV. U.S. Policy Initiatives and Programs.

Policy Initiatives and Bilateral Cooperation. The USG, as well as neighboring West European nations, is providing assistance to improve the GOCR's ability to combat drug trafficking and consumption. DEA and U.S. Customs conducted three narcotics enforcement seminars for Czech and regional counterparts, and the FBI organized a course on financial fraud and money laundering. Czech police have praised their cooperation with US authorities and requested increasingly sophisticated training courses.

The Road Ahead. The USG will encourage the Czech Republic to expand its drug control activities and to build up the nation's counternarcotics institutional capabilities. In 1997, the USG plans to provide over $200,000 in drug detection and related equipment, and to help develop a school­based drug abuse prevention program. The US and the UNDCP will support Czech participation in the central European regional demand reduction program in Italy.

I. Summary

Denmark is a drug­transit country because of its geographical location and its excellent air traffic and shipping facilities; Denmark is Europe's major northern transportation hub. In addition to collaborating closely with its neighbors and the EU to halt the transit of illicit drugs, Danish authorities play a major role in assisting the Baltic states in their efforts to combat narcotics trafficking. While the amounts of drugs seized in transit were relatively small, Danish authorities estimated that significant amounts of drugs transiting Denmark went undetected due to the open border agreements within Europe and the gigantic volume of goods moving through Denmark. The availability of cocaine in Denmark grew in 1996, and the use of ecstacy pills (MDMA) became popular among an increasing number of young Danes. Denmark is a party to the 1988 UN Convention.

II. Status of Country

Drug traffickers take advantage of Denmark's excellent transportation facilities to bring illicit drugs to Denmark for domestic use and for transshipment to other Nordic countries. There is also evidence that drugs from Russia, the Baltics and Central Europe transit Denmark en route to other EU countries and the US, although not in quantities significantly affecting the US.

III. Country Action Against Drugs in 1996

Policy Initiatives. Denmark has met the requirements of all major international conventions and agreements on counternarcotics. Denmark worked toward the development of common counternarcotics standards within the international organizations of which it is a member. Denmark's interagency group responsible for monitoring the distribution of precursor chemicals reported no infractions during the year. It did, however, stop several Danish firms from exporting certain chemicals (e.g., ephedrin) to Eastern Europe because it was suspected they would be converted to amphetamine. Denmark provided training, financing, and coordination assistance to the three Baltic states, primarily to improve interdiction efforts.

Accomplishments. Danish police strengthened their antinarcotics efforts. In a highly publicized drug bust in Copenhagen, police arrested 41 drug dealers, most of whom were foreigners. The public's frustration with the inability of police to charge many of these dealers under current law this year prompted a change in the law: Danish officials expect this will lead to more prison sentences for Danish dealers and expulsion of the foreign dealers who are in Denmark illegally. Danish officials consider narcotics­related money laundering to be a manageable problem despite Denmark's role as a major financial center. Banking procedures are transparent and are subject to government review procedures to minimize the possibility of illegal use of the banking system.

Danish law permits asset forfeiture and seizure in drug­related criminal cases. Authorities vigorously enforce existing asset seizure and forfeiture laws and cooperate with foreign authorities in such cases. Statistics on asset seizure are unavailable. Denmark works to encourage international cooperation on chemical precursors.

Law Enforcement Efforts. Danish authorities seized significantly higher amounts of heroin and ecstacy (MDMA) pills in 1996 than in 1995, a result which is indicative of an increasingly active and effective narcotics control effort. Seizures of hashish for domestic consumption continued the decline seen in previous years, from 10,141 kgs in 1994, 1,778 kgs in 1995, to 1,385 kgs during the first ten months of 1996. Danish police also recorded the seizure of 7,340 ecstacy pills in 1996: they recorded no such seizures in previous years. Danish law enforcement officials cooperated closely with neighboring countries, especially Sweden; this resulted in several important drug interdictions. Denmark supported the improvement of interdiction capabilities in the Baltic states. There is a well established pilot project on the island of Bornholm in which the customs services and police, in close collaboration with the Danish navy, worked to interdict narcotics, other smuggled goods and illegal migration.

Corruption. The USG is not aware of any cases of Danish government officials involved with any aspect of drug production or sale, or of laundering the proceeds of such activity.

Agreements and Treaties. Denmark ratified the 1988 UN Convention in 1991. Denmark did not enter into any formal agreements or treaties in the past year. Denmark participated in the Dublin Group and EU meetings on related topics.

Drug Flow/Transit. Drugs transit Denmark between its neighbors and, in small quantities, en route to the US. The amount of heroin seized in transit almost doubled ­­ from 33 kgs in 1995 to 59 kgs in 1996. The amount of cocaine and hashish seized in transit rose modestly, however, while the amount of amphetamines seized in transit actually decreased from 63 kgs in 1995 to 45 kgs in 1996.

Demand Reduction. The Ministry of Health estimates that there are between 10,000 and 12,000 drug users in Denmark. The country has an extensive antidrug education program in schools and youth centers. Drug addicts are treated in a large number of institutions throughout Denmark. In addition to in­patient care at hospitals, out­patient programs are administered through hospitals, youth crisis centers, and special out­patient clinics. All programs of this type are free in Denmark to Danish residents. The government introduced localized pilot programs during the year which involved "forced treatment" of addicts; those who entered into an agreement with authorities for treatment as an alternative to prison sentences for certain criminals. These programs are small in scope. The government also attempted to declare certain prisons "free from drugs." Political debate focused on a proposal to allow doctors to supply some addicts with heroin; an inter­ministerial group is studying the feasibility and desirability of such a program.

IV. US Policy Initiatives and Programs

Policy Initiatives. The USG encourages Denmark's active participation in the Dublin group and UNDCP. We support Denmark's antinarcotics efforts in the Baltics, and will cooperate with Denmark in joint antinarcotics efforts as appropriate.

Bilateral Cooperation. The DEA office in Copenhagen cooperates with the Danish law enforcement community. The USG has an excellent and close working relationship with the Danish Ministries of Justice and Foreign Affairs in both bilateral and multilateral narcotics control issues.

The Road Ahead. The USG anticipates close cooperation with the Danish government in law enforcement. We look forward to expanding joint operational efforts with Danish officials on individual cases of mutual interest. We will encourage Denmark to expand its support of UNDCP programs.

I. Summary

Following the suspension and subsequent lifting of UN sanctions, Serbia/Montenegro appears to be resuming its role as an important link in the Balkan route for drug trafficking from the Middle East and Southwest Asia to Western Europe. Serbia/Montenegro is not a member of the UN, but holds itself responsible for meeting the standards of the 1988 UN Convention. The US has not granted full diplomatic recognition to the "Federal Republic of Yugoslavia (FRY)" and cooperation with federal authorities is thus limited. These circumstances make it difficult to obtain information concerning the extent of narcotics trafficking in Serbia/Montenegro. Most information supplied in this report is from local media sources. Reliable information on money laundering and drug use is not available.

II. Status of the Country

Before the disintegration of former Yugoslavia, one of the major avenues drugs from the Middle East and Southwest Asia to Western Europe was via various routes, collectively termed the Balkan route, through the former Yugoslavia. One major variant entered Serbia from Bulgaria and another entered the then Yugoslav Republic of Macedonia from Greece and continued on through Serbia. During the period of sanctions, restricted transit traffic reduced the opportunity for trafficking. Increasing drug interdictions on the Serbian­Bulgarian border, however, indicate that routes through Serbia/Montenegro have been reopened.

One effect of UN trade sanctions was to encourage the government to condone or participate in smuggling activities in order to evade sanctions. Smuggling remains an important source of supply for goods such as cigarettes. These conditions could foster the development of smuggling channels for narcotics.

Serbia/Montenegro's banking system is in poor shape due to the sanctions, hyperinflation, and government policies. A high percentage of business in Serbia is done on a cash or swap basis. Montenegro declared itself an international offshore business zone in mid­November, a change which opens the door to offshore banking operations.

III. Country Actions Against Drugsin 1996

Policy Initiatives. We have no information on any policy initiatives during the year.

Accomplishments. The media reports that Serbia/Montenegro has taken actions against drug cultivation and trafficking. There have been no reports of actions to control potential money laundering.

Law Enforcement Efforts. The press reported the following drug­related incidents:

­­ On October 13, a Slovene truck was found to be carrying 190 kgs of heroin in 288 packages hidden in a cargo of peppers. The truck was trying to cross from Bulgaria into Serbia at the Gradina border crossing point.
­­ On October 31, authorities interdicted a Bulgarian truck at the Gradina crossing point with 373 kgs of heroin concealed in secret compartments. The heroin reportedly was loaded in the Bulgarian town of Troyan.
­­ On October 6, 1996, two hectares of marijuana were discovered and destroyed in Vojvodina. Its strength was comparable to that of Colombian marijuana. This was by far the largest known instance of drug cultivation in Serbia/Montenegro and surprised the Serbian authorities.

Corruption. There are no known drug­related corruption charges against government officials. However, unconfirmed allegations have surfaced regarding Montenegrin Government involvement in drug smuggling.

Agreements and Treaties. As a successor state to the former Yugoslavia, the "FRY" remains a party to the 1961 Single Convention on Narcotic Drugs as amended by the 1972 Protocol, the 1971 Convention on Psychotropic Substances, and the 1988 UN Convention.

Cultivation/Production. An August 26 UNDCP document notes reports of sporadic low­scale cultivation of opium poppy and cannabis for individual consumption. The two hectares of marijuana cited above would be an exception. The same UNDCP document cites officials sources to the effect that illicit production or manufacturing of narcotic drugs have not been detected.

Drug Flow/Transit. The resurgence of the Balkan route has been noted. Further evidence is the December 4 seizure on the Bulgarian side of the Serbia/Bulgaria border of 150 kgs of heroin on a Bulgarian bus bound for Prague, Czech Republic.

The November 6, 1996 arrest in Tirana, Albania of two Kosovo (Serbia) Albanians with 2.8 kgs of heroin, falsified passports and foreign currency indicates the involvement of Serbia nationals in trafficking operations in neighboring countries.

Domestic Programs (Demand Reduction). Open sources have provided poorly documented estimates that marijuana consumption in Belgrade is ten kgs per day and that there are 10,000 drug addicts in Serbia/Montenegro. There are no known treatment programs.

IV. U.S. Policy Initiatives.

The USG has undertaken no bilateral counternarcotics policy initiatives with Serbia and Montenegro. We do urge that UNDCP include them in regional UNDCP programs.

I. Summary

Finland is not a significant narcotics trafficking or money laundering country. Illicit narcotics cultivation/production is not a problem. However, Finnish authorities are concerned that increasing drug­related arrests indicate a rising trend of Finnish citizens' involvement in the illicit drug culture. In 1996, the Government of Finland (GOF) distributed new counternarcotics educational material to assist educators and health workers to combat drug use. Finnish law enforcement authorities are efficient and effective. GOF officials believe tight controls on the Russian border have effectively controlled cross­border drug trafficking to Finland. Finland is a party to the 1988 UN Convention .

II. Status of Country

The GOF does not maintain statistics on drug use. However, Finnish law enforcement authorities estimate there are approximately 5,000 drug addicts and approximately 50,000 drug users.

Finland is not a major financial center or a tax haven. Money laundering is not considered to be a significant problem. Finland enacted legislation criminalizing money laundering in 1994. Finnish authorities prosecuted a small group of individuals for narcotics­related money laundering in 1996.

The GOF tightly controls the distribution of the 22 key precursor chemicals which could be used for cocaine, amphetamine and heroin production.

III. Country Action Against Drugs in 1996

Policy Initiatives. The GOF organized a committee of justice, public health, social, and welfare experts who developed and distributed information material to educators, social workers and physicians for their antidrug efforts. The committee's objective was to raise awareness of recreational drug users and small­scale dealers on the health and criminal justice consequences of illicit drug use.

Finland is a member of the UNDCP. The majority of the GOF's counternarcotics assistance to drug producing and transit countries has been channeled through the UNDCP.

Law Enforcement Efforts. Finnish law enforcement authorities are effective and efficient. In the first nine months of 1996 they seized 57 kgs of hashish, 38 gms of cocaine 5 kgs of heroin, 15 kgs of amphetamines and very small amounts of LSD. Approximately 4,300 suspects were arrested for drug­related offenses in Finland during the year, compared to 3,900 arrests in 1995.

Agreements and Treaties. Finland is a party to the 1988 UN Convention and is meeting the Convention's requirements. Existing Finnish counternarcotics legislation covers the use, sale and transport of narcotic substances, as well as extradition, law enforcement cooperation, chemical precursor and money laundering controls. Finland is also a party to the 1961 UN Single Convention and its 1972 Protocol, as well as the 1971 UN Convention on Psychotropic Substances.

Drug Flow/Transit. Most illicit drugs originating from South America and Asia entering Finland transit the Netherlands and Sweden via car and passenger and/or cargo ferries. Amphetamine trafficking from Estonia has increased. Finnish and Estonian law enforcement officials are cooperating closely to combat this trade.

Corruption. Drug­related corruption among public officials has not been a problem in Finland. There are no recorded cases of Finnish government officials involved in narcotics­related crimes.

Cultivation/Production. Cultivation or production of narcotics is not a problem in Finland. Finnish authorities believe very small amounts of cannabis are cultivated for personal use.

Demand Reduction. The GOF's antidrug programs generally emphasize treatment rather than punishment. The Finnish Ministry of Social Affairs and Health is primarily responsible for drug abuse treatment and prevention programs.

IV. US Policy Initiatives and Programs

There is excellent drug enforcement cooperation between the USG and GOF. Finnish authorities take advantage of drug­related training opportunities offered by the US. In 1996, 17 Finnish counternarcotics officials visited the US to learn about counternarcotics policies and law enforcement techniques.

The Road Ahead. The USG will maintain its close law enforcement cooperation with Finnish authorities. The US will encourage GOF active involvement in UNDCP and Finland's continued law enforcement assistance to Estonia and other countries in the region.

I. Summary

France is an important transit country, particularly for narcotics originating in the Middle East and Southwest Asia. Heroin continued to be of primary concern to French law enforcement officials. French officials are concerned about French citizens' use of cocaine and its trafficking in, and transit through France.

The Government of France (GOF) enhanced its drug control measures in 1996 by enacting new money laundering, asset seizure, and banking reporting laws. France is a party to the 1988 UN Convention.

II. Status of Country

French Government narcotics data for 1995, released in the Spring of 1996, show that heroin consumption and transit are the principal narcotics problems in France (narcotics data for 1996 will be released in the Spring of 1997). The number of heroin addicts in France reached 170,000 in 1995. The number of arrests for heroin use/resale (17,356) and for heroin trafficking (3,329) were significantly greater than for any other drug. French authorities believe seizures of 854 kgs of cocaine and cocaine­related arrests of 449 persons indicate a significant demand for cocaine in France. Cannabis is the most widely abused drug in France, with an estimated 4 million users.

III. Country Action Against Drugs in 1996

Policy Initiatives. The Government of France (GOF) enacted new asset seizure legislation which lessens the burden of proof for asset seizure proceedings in certain circumstances involving drug traffickers. France extended the crime of money laundering beyond narcotics trafficking offenses to include money laundering connected with "all crimes and offenses," and tightened controls on foreign exchange bureaus. Together, these initiatives provide France with some of the toughest laws in Western Europe for reducing criminal profits from narcotics trafficking.

Agreements and Treaties. France is a party to the 1988 UN Convention. It is a party to the 1961 UN Single Convention and its 1972 Protocol, as well as the 1971 UN Convention on Psycotropic Substances. The USG and the GOF have narcotics­related agreements, including a 1971 agreement on Coordinating Action Against Illicit Trafficking. The US and France signed in 1996 a new and strengthened extradition treaty ­­ the first since 1909. Though French law does not permit the extradition of French citizens, the GOF has formally arranged with the USG and other countries to prosecute its nationals domestically for extraditable crimes committed elsewhere.

French officials participate in international drug control fora, including UNDCP, the Financial Action Task Force (FATF), and the Dublin Group. France pledged $1.5 million to the UNDCP during they year. The Foreign Ministry's Office of Security Affairs, which monitors terrorism, organized crime, narcotics and money laundering, participated actively in international drug control efforts during the year.

Law Enforcement. French counternarcotics authorities are efficient and effective. Approximately 68% of the heroin seized in France was destined for domestic users in 1995. Heroin seizures in that year declined by 24% (to 498 kgs) and by 81% for cocaine (to 854 kgs). French authorities attribute the decline to the record­breaking nature of 1994 statistics which were inflated by large seizures in the French Antilles rather than to a weakening of GOF counternarcotics efforts in Metropolitan France.

Corruption. Narcotics­related corruption among French public officials is not a problem. The USG is not aware of any involvement by senior officials in the production or distribution of drugs, or in the laundering of drug proceeds.

Drug Flow/Transit. France is an important transshipment point for illicit drugs, especially heroin to other European countries. Heroin is shipped from the Netherlands, Pakistan and Turkey into the French domestic market, and then transshipped primarily to other European markets or, in some instances, North America; however, we have no evidence that drugs transiting France have a significant effect on the US. France also is a significant transit route for Moroccan and Southwest Asian hashish destined for European markets and for South American cocaine destined for Central and Eastern Europe.

Cultivation/Production. French authorities believe the manufacture and cultivation of illicit drugs is not a problem in France.

France produces amphetamines and reports its production to the International Narcotics Control Board (INCB). France is cooperating with the DEA) to monitor and control these products.

Demand Reduction. France's drug control agency, the Mission Interministerielle de Lutte Contre la Drogue et la Toxicomanie (MILDT), is responsible for coordinating demand reduction programs. Drug education efforts target government officials, counselors, teachers, and medical personnel. The GOF is expanding its experimental methadone treatment program. France is a strong advocate in Europe opposing drug decriminalization.

IV. US Policy Initiatives and Programs

Bilateral Cooperation. USG and GOF counternarcotics law enforcement cooperation is excellent. The French police participate in USG­sponsored money laundering courses and in specialized narcotics training courses.

The Road Ahead. The US will continue its cooperation with France on all counternarcotics fronts, including in multilateral fora such as the Dublin Group and UNDCP. The USG looks forward to concluding a bilateral maritime agreement for the Caribbean with France in 1997 and will urge conclusion of a bilateral agreement on sharing seized and forfeited assets.

I. Summary

Seizures of opiates elsewhere in the Transcaucases, Central Asia, Turkey, and Western Europe suggest that there is drug trafficking through Georgia. Nevertheless, Government of Georgia (GOG) authorities have provided little new information on the illicit drug situation. Counternarcotics law enforcement activities are not a priority for the GOG, although the GOG has increased efforts to reduce street crime and protect the political system from infiltration by criminal elements. Georgia has not taken steps to become a party to the 1988 UN Convention and made no significant progress in 1996 to enact legislation needed to implement the UN drug conventions.

II. Status of Country

Georgia is a transshipment point for drugs from Central Asia. Several record seizures of heroin and opium in Georgia several years ago demonstrated the region's vulnerability. The central government lacks effective control over large parts of Georgia's territory and borders. Its border guards and Customs officials lack proper training and equipment, and are subject to corruption. Turkish authorities seized 1.5 mt of Afghan morphine base in 1992 and 1.3 mt of opium that had transited Georgia in 1993.

Although Western authorities report that illicit drug smugglers are using Georgia as a conduit for opiate smuggling from Central Asia and the Golden Crescent to the West, there are no new reports from the GOG. Western authorities and the UN report that two of Georgia's major drug transit areas, the separatist regions of Abkhazia and south Ossetia, are inaccessible to Georgian law enforcement agencies. Many uncharted roads in the region bordering Armenia and Azerbaijan offer opportunities for traffickers to conceal shipments from Georgian authorities.

Georgia is not a significant producer of narcotics or precursor chemicals. Due to the small size of the economy and its rudimentary banking system, money laundering is not a significant issue at this time; it could emerge as a concern as the Georgian economy grows stronger.

III. Country Actions Against Drugs in 1996

Policy Initiatives. Counternarcotics issues were a low priority for the GOG. However, Georgia did create an inter­agency working group on narcotics control. The group is chaired by the head of the Interior Ministry's (MVD's) antinarcotics unit to coordinate inter­agency efforts. Bureaucratic in­fighting between the Interior Ministry and State Security is a problem and adversely affects narcotics enforcement. The Interior Ministry's Anti­narcotics Bureau prepared a National Counternarcotics Program.

Counternarcotics is a shared responsibility between the MVD and the Ministry for State Security (MGB). All of the relevant law enforcement agencies in Georgia suffer from a lack of resources. Their personnel are under­equipped and poorly trained.

Counternarcotics interdiction, as such, was a low priority issue for Georgian law enforcement during the year. Law enforcement efforts focused on reducing the role of organized criminal activity in the Georgian economy; this did have clear benefits for counternarcotics objectives, given the role of organized crime in illicit narcotics. The MVD, the lead law enforcement agency, began a process of internal reform intended to reduce corruption and increase internal controls. As Georgia's regional economic role expands, Georgia will grow in importance as a transit country for drug shipments.

Corruption. Corruption is a significant problem within Georgia's law enforcement organizations. The MVD began an internal reform effort in 1996 intended to reduce corruption by strengthening internal controls and by weeding out corrupt officials. The effort has not yet borne fruit. The Parliament's Commission on Corruption is working to highlight official corruption within the law enforcement agencies. These efforts are hampered by the widespread nature of corruption within Georgian society. Petty corruption is still widely tolerated as an inevitable consequence of economic hardship and low salaries. To the USG's knowledge, no government official encourages or facilitates illegal narcotic activity, but it is inevitable that the generalized practice of corruption adversely affects narcotics law enforcement.

Agreements and Treaties. The Government of Georgia has no counternarcotics agreements with the US. Georgia is not a party to the 1988 UN Convention, or the 1971 or 1961 UN drug conventions.

Cultivation. Opium poppy and marijuana are cultivated in Georgia, but there are no GOG estimates for 1996 on the extent of cultivation. However, GOG officials reported in 1995 that the cannabis yield for 1995 was 7.5 mt, and that authorities seized 12,000 opium poppy plants and 2.5 mt of marijuana during that year. Georgian authorities also believe that heroin refining laboratories operate on the Black Sea coast just north of the Turkish border.

Domestic Programs/Demand Reduction. The National Narcotic Strategy, prepared by the MVD's antinarcotics unit, includes a section on prevention and treatment. The program has not been implemented due to resource constraints, but it represents a good start should international assistance become available. It provides a framework within which Georgia's counternarcotics efforts can proceed. Georgia's health care system broke down in the aftermath of economic depression and political turmoil, following the break­up of the former Soviet Union. The MVD believes that there are many more addicts than those registered with the health system, but uses the figure of 5,000 officially.

IV. US Policy Initiatives and Programs

Policy Initiatives. The USG encouraged the GOG to identify drug problems, and possible areas for assistance and cooperation. The USG is promoting antidrug assistance from those nations, primarily in Western Europe, most directly effected by opiate smuggling through Georgia. A DEA basic investigative course was offered to the national police in 1995.

The Road Ahead. The US will encourage Georgia to take action to accede to and implement the provisions of the 1961, 1971, and the 1988 UN conventions, expand drug control activities, and establish the necessary legislative and institutional drug control capabilities to implement the UN conventions. Stabilization of the political situation and progress in economic development will advance the effort on the narcotics front as well.

I. Summary

Germany is a major transit area to other European countries, and a consumer country, but it is a minor producer of narcotics. Most of the seized heroin arrives primarily in cars via Balkan land routes from Turkey, and most of the seized amphetamines come from the Netherlands. Consumption of heroin and cocaine is basically unchanged, but consumption of ecstasy and LSD is rising. German authorities have noted a sharp increase in cross­border cash movements, an activity which is not subject to reporting requirements and which represents a serious loophole in the eyes of local law enforcement. Germany is a party to the 1988 UN Convention.

II. Status of Country

According to the German government's narcotics situation report for the period from 1 January to 30 September 1996, the seizures of raw opium increased markedly but the number of new users has remained basically unchanged. Seizures and consumption of amphetamines and designer drugs have almost doubled compared with the same period in 1995.

By the end of September, there were 1,182 drug deaths recorded in Germany, a 12.5 percent increase over the same period in 1995. Heroin abuse and multiple addiction are the main causes of drug deaths.

III. Country Actions Against Drugs in 1996

Policy Initiatives. The 1990 National Narcotics Prevention Plan, the product of a consensus between the federal and state governments, remains the basis for Germany's antinarcotics activities. However, several state governments made proposals in 1996 to make cannabis available in pharmacies and to offer controlled distribution of heroin at specific centers. The proposals were not implemented.

Accomplishments. Seizures of synthetic drugs, especially ecstasy, increased. Germany is working to improve the control of precursor drugs, particularly those used for synthetic drugs.

Enforcement Efforts. US officials judge German law enforcement to be effective at both federal and state levels. There is excellent cooperation with US officials. Despite severe budget pressures, the police receive adequate resources.

Corruption. Drug­related corruption is not a problem in Germany.

Agreements and Treaties. Germany ratified the 1988 UN Convention in 1993. The US and Germany do not have a legal assistance treaty, but negotiations on a mutual legal assistance treaty resumed and will continue in 1997. Germany signed a bilateral agreement with the Netherlands to facilitate police cooperation. Germany also signed training and technical assistance agreements with Poland, the Czech Republic, and Albania to enhance police cooperation.

Cultivation/Production. There is no reported illicit cultivation of opium or coca in Germany. There is a small, tightly controlled, licensed growth of opium poppies in Bavaria to produce poppy seeds for bakeries. There is a growing trend toward illegal cannabis cultivation. German authorities discovered a large facility for the illegal cultivation of cannabis consisting of three greenhouses containing approximately 8,000 plants. The cannabis was being cultivated for transport to the Netherlands. Between January and September, German authorities discovered 10 illegal laboratories; four produced amphetamines; two produced ecstasy; and one each produced crack, eve (MDE), cocaine, and another substance that has not yet been identified.

Drug Flow/Transit. The Balkan route is the most important supply route for transporting large quantities of heroin through Germany. Most of the heroin seized in Germany arrived via Turkey on its way to other destinations. Turkish nationals play by far the most important role in heroin trafficking, but during 1996, individuals from Eastern Europe became more prominent. West African international traffickers increasingly are using white couriers. Cocaine transits Germany from Colombia via Germany's principal airports. Authorities seize most synthetic drugs and cannabis at the border with the Netherlands. Authorities made the largest single seizure of marijuana, however, at Frankfurt airport on a flight that originated in Bangkok. Germany has been a source of anabolic steroids mailed to the US.

Domestic Programs. Germany's prevention program focuses on education on the dangers of drug abuse; it targets kindergartens, elementary schools, and parent initiatives. The government promotes self­help programs for rehabilitating drug users and funds pilot programs in these areas for three years; thereafter state governments assume funding.

IV. US Policy Initiatives and Programs

US and German law enforcement agencies cooperate closely and extensively. DEA is a member of the "permanent German narcotics working group (STAR)" and participates in other regional narcotics working groups designed to exchange information to develop operational strategy and policy. During the year, the Internal Revenue Service presented money laundering and exchange of information seminars to law enforcement, customs, and tax officials of the former East Germany. The IRS conducted seminars in Erfurt, Dresden, and Magdeburg to improve money laundering investigations in the new German states. In August, the IRS established a position for an IRS special agent at the US Consulate in Frankfurt charged with implementing joint efforts with the German authorities on money laundering and criminal tax investigations. DEA and US Customs provide assistance to a German­government sponsored institute studying specific issues of money laundering enforcement in Germany. US Customs now routinely presents a training segment at every German Customs financial training course, as well at several German state police schools.

The Road Ahead. The USG will work closely with the German authorities at the federal and state level. Part of this effort consists of consulting with the German government in the context of the Dublin Group, and other international counternarcotics fora.

I. Summary

Greece is on a transit route to Western Europe for narcotics produced in the Near East and South Asia. Border crossings with Turkey are used to transit heroin and hashish. Greek authorities believe drug abuse, particularly of heroin, is steadily increasing.

There is excellent cooperation among Greek and US law enforcement agencies. The Government of Greece (GOG) actively participates in various international antidrug organizations, including the Financial Action Task Force and the Dublin Group, where Greece chairs the Balkans/Near East Regional Working Group. Greece is a party to the 1988 UN Convention and implementing legislation.

II. Status of Country

Greece is an attractive drug transshipment route to other points in Europe, due to its extensive coastline (the longest in Europe), numerous islands, large merchant marine industry, and "open" borders with other European Union (EU) states. Drug routes through the Balkan peninsula pass from Turkey through Greece and Albania to Italy, and from Greece and Turkey to Bulgaria then north to Central and Western Europe.

There is a small but growing domestic market for illicit drugs, particularly heroin. Increasing amounts of cocaine, LSD, ecstasy, barbiturates, amphetamines and locally grown marijuana are also used. GOG officials believe there are approximately 70,000­80,000 heroin users in Greece.

Although Greece is not considered a major financial or money laundering center, money laundering is occurring on an increasingly large scale. The GOG has noted an increase in the number of illegal money couriers transiting Greece en route to Cyprus with large quantities of cash.

While not a major producer, supplier or transshipment point for precursor chemicals, Greece has a special customs unit that tracks and investigates chemical imports and exports.

III. Country Actions Against Drugs in 1996

Policy Initiatives. The Greek Banking Association and the Hellenic­American Chamber of Commerce held a panel discussion of money laundering in their annual banking industry conference in December. It emphasized the importance of exercising "know­your­ customer" policies.

The Greek Ministry of Health opened several pilot methadone treatment centers in January 1996.

Greece is active in a number of international antidrug organizations, including the Dublin Group, where it serves as regional chair of the Balkan and Middle East working groups. In February 1996, Greece sent a delegation to a US­sponsored meeting on chemical precursor controls in Vienna. Greece also offered to provide free office space in Thessaloniki to the ECOSOC Commission on Narcotics for the establishment of a regional office for the Balkans.

Law Enforcement Efforts. The Central Narcotics Council, consisting of representatives of the Ministries of Public Order, Finance, and the Merchant Marine, coordinate drug enforcement activities. US and Greek law enforcement cooperation is excellent, and the GOG routinely meets USG legal assistance requests. Greece has no laws permitting sharing of assets with the US.

US and Greek law enforcement cooperation is problematic, and the USG legal assistance requests languish. In December, Greek Customs authorities, working with USG law enforcement authorities, raided an illegal drug warehouse and seized 61,000 dosage units of commercially produced pharmaceuticals, including anabolic steroids. The drugs were destined for the US. Other previous cases had shown Greece as the source for steroids and other controlled substances being mailed to the US.

Corruption. There is not a significant corruption problem among GOG officials. However, there may be problems in lower level Greek courts.

Agreements and Treaties. Greece ratified the 1988 UN Convention in 1992, and is meeting the Convention's goals and objectives relating to drug cultivation, distribution, sale, transport, law enforcement, transit cooperation, and demand reduction. Greece also passed legislation for essential and precursor chemical controls. The GOG and the USG have an extradition treaty from 1932, and an agreement to exchange information on narcotics trafficking from 1928. The Department of Justice is requesting authorization to begin negotiations on a new extradition treaty and a mutual legal assistance treaty (MLAT).

Cultivation/Production. The only illicit drug produced in Greece, aside from very small amounts of opium poppies in the mountains, is cannabis; it is grown in small amounts for local use. Additionally, some cannabis seed is exported to Albania.

Drug Flow/Transit. Greece is a major transshipment route for heroin and hashish from the Middle East and South Asia to Western Europe; a small amount also goes to the US. Hashish is off­loaded in remote areas of the country and transported to Western Europe by boat or overland. Larger amounts of drugs are smuggled into Greece in ship containers, on bonded "TIR&quo