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International Narcotics Control Strategy Report, 1999 Released by the Bureau for International Narcotics and Law Enforcement Affairs, U.S. Department of State Washington, DC, March 2000

SOUTHWEST ASIA

AFGHANISTAN

I. Summary

According to USG estimates, Afghanistan became the world's largest producer of opium poppy in 1999. Traffickers of Afghan heroin route most of their production to Europe but also target North America. There is no single central government in Afghanistan where the Taliban and Northern Alliance factions (there are others) vie for national control. Despite UNDCP and NGO assistance, efforts at crop eradication, drug supply reduction, counter narcotics law enforcement, and demand reduction have completely failed. In fact, these factions, especially the Taliban, who control 97% of the territory where poppy is grown, promote poppy cultivation to finance their war machines. Those in positions of authority have made proclamations against poppy production but otherwise evinced no political will to fight narcotics. Rather, they are in active collusion with smugglers and criminal elements to manufacture and export heroin.

Cultivators have lived through twenty-two years of civil war and generally view opium as their only means for survival in a hostile and uncertain environment. Institutional framework, or capacity, and resources to deal with problems at national, provincial and local levels as well as across different sectors simply do not exist in Afghanistan.

The Taliban destroyed a handful of drug laboratories and eradicated 20 to 100 hectares of poppy fields, but otherwise took no significant action to discourage poppy cultivation, seize precursor chemicals or arrest and prosecute narcotics traffickers. Numerous reports indicated that all warring factions continued to profit from all facets of the drug trade at all levels. In spite of its own 1997 ban on the cultivation of opium poppy, the Taliban tax the opium poppy crop at about 10 percent, allow it to be sold in open bazaars, traded and transported, and receive payments from traffickers. Crop taxation imparts legitimacy to opium cultivation and distribution, and means that the Taliban benefit directly from the whole opium business.

Afghanistan is party to the 1988 UN Drug Convention, but, as indicated, none of the political factions took meaningful steps to meet Afghanistan's obligations under the Convention.

II. Status Of Country -

In 1999, Afghanistan became the largest producer of opium poppy in the world, despite an on-going civil war and political instability. The Taliban and Northern Alliance continued to preoccupy themselves with the internal struggle for the control of Afghanistan. By year's end, the Taliban controlled 85 percent - 90 percent of the country's territory, including over 97 percent of the area where opium poppy is cultivated. The Northern Alliance generally controls the balance of the opium growing areas, mostly in the provinces of Badakhshan and Takhar.

According to USG data, as a conservative estimate 1670 metric tons (MT) of opium were produced from approximately 51,500 hectares (ha) of poppy. In 1999 poppy cultivation on an additional 10,000 hectares (ha) led to a 23 percent increase in opium. New areas of poppy cultivation, high opium prices at planting and favorable weather during the growing season spurred the record crop.

Heroin and morphine production at laboratories in Afghanistan requires large quantities of acetic anhydride, produced in Europe, Russia and Asia, China and India. Morphine and heroin pour across Afghanistan's difficult-to-police borders with Pakistan, Iran, and the Central Asian Republics of Tajikistan, Turkmenistan, and Uzbekistan. In addition to the corrupting influence on Afghan officials, drug production in and trafficking from Afghanistan has funded terrorist groups, increased regional heroin addiction in refugee and indigenous populations, undermined rule of law, led to frequent incidents of armed conflict between traffickers and law enforcement forces in neighboring countries, destabilizing the entire region.

Afghanistan is not a center for money laundering; financial institutions barely exist. Private investment of drug trafficking profits reportedly accounted in some measure for a surge in building construction and other licit, commercial activity in Kandahar city during 1998. Afghanistan has not criminalized money laundering.

III. Country Actions Against Drugs in 1999

Policy Initiatives. Afghanistan's lack of a national government precluded formulation and implementation of a countrywide, counter narcotics policy in 1999. In addition, the political will of Afghan military factions and the capacity of their "governmental" structures to effectively carry out drug control efforts are weak at best. Poppy cultivation increased and spread to new areas in 1999. The explosion in Afghan opium production is exacerbating regional tensions and doubling heroin flows to Europe.

In the past, the Taliban admitted that consumption of "intoxicants," including opiates, is contrary to Islam and that, by extension, cultivation of opium poppy, the manufacture of morphine and heroin and trafficking in these drugs was in violation of Sharia (Islamic) law. Nonetheless, almost all poppy is cultivated in Taliban-held areas. The Taliban enjoys significant financial benefits from a reported ten percent tax on opium transactions.

After the much-publicized release of the UNDCP's estimate that opium production had increased by seventy percent in one year, the Taliban made a political decision to unilaterally reduce poppy cultivation in Taliban-controlled territory. Mullah Omar, the supreme leader of the Taliban, issued a decree on September 30 to reduce poppy cultivation nation-wide by one-third in the 1999/2000 growing season. It remains to be seen if the Taliban will enforce this decree. Given current trends, even an unlikely 1/3 decrease in opium production would leave Afghanistan producing more opium than just two years ago.

The governor of Nangarhar province (Taliban chief of the eastern zone of Afghanistan) and the governor of Kandahar (Taliban chief of the southwestern zone) issued two executive orders. The first imposed a total ban on poppy cultivation on government land and halved poppy cultivation in four districts. In addition, the governor of Kandahar issued a November 1 executive order implementing Mullah Omar's decree to reduce poppy cultivation in Kandahar, Zabol, Nimroz, Oruzgan and Farah provinces. The governors of Nimroz, Herat, Farah, Oruzgan, Zabol provinces followed suit with similar executive orders implementing Mullah Omar's decree in poppy growing areas. Again, there is no evidence these bans are anything but postures.

Local authorities continued to maintain a 1998 ban on opium production imposed in the Xebec district of Badakhshan province. Badakhshan authorities subsequently extended it to the districts of Eshkashem and parts of Baharak in 1999.

Accomplishments. None of the Afghan factions took any significant steps to achieve the goals and objectives of the 1988 UN Drug Convention. On the contrary, evidence indicates that the Taliban used alternative development in Afghanistan to boost opium production and fuel their war effort in 1999.

The state high commission for drug control (SHCDC) is a partner with UNDCP in Taliban-controlled areas on drug control projects. While the U.S.continues to support UNDCP programs to monitor cultivation and production of opium poppy, UNDCP-managed small-scale development assistance projects have been swamped by the vast increase in opium cultivation. UNDCP's pilot alternative development/poppy reduction projects in Nangarhar and Kandahar provinces have also had mixed results in achieving poppy reduction targets.

Security concerns also hampered USG on-site monitoring of the alternative development efforts of the USG-funded NGO, Mercy Corps International (MCI), in Helmand province. Local authorities did not meet commitments to significantly reduce poppy cultivation. The USG ended support in 1999 for the MCI project, because the Taliban failed to cooperate to reduce poppy planting in the project areas, in spite of extensive rehabilitation of the agricultural infrastructure. In fact poppy cultivation expanded significantly in the project areas.

The USG strongly supports the UN Special Mission to Afghanistan and its efforts to break the apparent impasse in the peace process and to facilitate development of a broad-based government that respects international norms of behavior on narcotics, human rights, and terrorism. The Afghan Support Group (ASG) of major donors met twice during the year. At the meeting in Ottawa in December, the U.S.delegation strongly urged the ASG to include a cross-cutting narcotics theme as part of its action plan. The ASG agreed that the narcotics issues should be included as an important factor in all assistance planning for Afghanistan. The USG expressed its strong reservations about the efficacy of alternative development programs in Afghanistan, given current Taliban practices.

Law Enforcement Efforts. In the absence of an effective central government and an operational drug policy in Afghanistan, enforcement of drug-related laws has been largely neglected. There are no effective national institutional arrangements for the planning and coordination of drug control efforts in Afghanistan.

There were no independently verifiable instances in which narcotics or precursor chemicals were seized or destroyed as a result of law enforcement activities. According to the UNDCP, the Taliban destroyed 34 heroin narcotics laboratories in Nangarhar province in a series of well-publicized raids February 1999. The Taliban authorities claimed to have seized in the same raids 500 kilograms of opium, 70 kilograms of mixed heroin, 1200 liters of acetic anhydride, 500 liters of hydrochloric acid (HCl), 800 kilograms of ammonium chloride, 900 kilograms of charcoal, 1200 liters of sulfuric acid, 700 liters of ammonium hydroxide, and 380 liters of ethyl alcohol, but there was no independent verification. There are reports that laboratory owners subsequently relocated their operations to more concealed sites in the province. In March 1999, the Taliban head of the State High Commission for Drug Control (SHCDC) made a commitment to locate and dismantle similar heroin laboratories in Kandahar and Helmand provinces. Nonetheless, those laboratories continued to operate with impunity throughout the year.

There were no independently verifiable reports of arrest or prosecution of drug traffickers or local drug dealers. The February Nangarhar raids netted 25 laboratory workers. The Taliban claim to have arrested traffickers and seized drugs coming through international airports under their control.

In Kandahar, local authorities reportedly eradicated 400 hectares of poppy in May 1999; however, independent observers were unable to verify the full extent of the operation. The Secretary General of the Taliban's Anti-Narcotics Commission confirmed destruction of 200 hectares of opium poppy in Ghorak, 175 hectares in Khakhrez, and 25 hectares in Maiwand districts, where UNDCP-funded pilot crop substitution projects started in November 1997.

Agreements and Treaties. Successive Afghan governments have signed a wide array of international conventions and made specific commitments with regards to the cultivation, trafficking and abuse of illicit drugs in Afghanistan, but independent evidence that any of their commitments were actually carried out is absent. Afghanistan is a party to the 1988 UN Drug Convention, the 1971 UN Convention on Psychotropic Substances, and the 1961 Single Convention.

Cultivation and Production. Afghanistan is the world's largest producer of opium and a major producer of cannabis. By USG estimates, an estimated 1670 metric tons (MT) of opium gum (compared to 1350 MT in 1998) was produced from approximately 51,500 hectares (ha) of poppy in 1999. Poppy cultivation and opium production increased by 23 and 24 percent respectively, spurred by Taliban policy to tax cultivation (which unofficially legitimized it), high opium prices at planting, favorable weather conditions during the growing season, and the non-opposition of authorities in developing new areas for poppy cultivation.

Opium poppy cultivation was found in 18 out of 29 provinces. Helmand and Nangarhar provinces accounted for three-fourths of the total opium poppy cultivation in Afghanistan according to the UNDCP. By USG estimates, Helmand province dominated cultivation with 25,500 ha, compared to Nangarhar province with 12,500 ha in 1999.

Poppy cultivation is spreading in Afghanistan. In some provinces like Kunar, Lagman, and Takhar farmers have recently taken up opium poppy cultivation. The UNDCP poppy survey found cultivation in 27 districts in which opium cultivation had not been reported prior to 1999.

The poppy growing season for most of Afghanistan begins in October/November and ends by May/June. For alternative development/poppy reduction projects to work, both local authorities and national level Taliban officials must be unambiguously committed to achieving reductions-something not yet in evidence. In addition, project implementers must make available sufficient resources by the beginning of the sowing season to induce farmers to substitute a licit crop. The SHCDC's work plan for achieving one-third reduction in poppy cultivation for the 1999 sowing season does not include a crop substitution component, but depends primarily on local authorities, public awareness of target sowing levels, and the threat of crop eradication for excessive cultivation to attain the planned goal. While local Shuras (Elders) are frequently of the opinion that reduction should match UNDCP assistance, future reductions, except those due to economic reasons and/or inclement growing conditions, will not occur without an unambiguous Taliban commitment, and are unlikely as long as hostilities, now financed largely by drug money, continue.

Most laboratories refining opium into heroin operate in Nangarhar and Helmand provinces. There is evidence that heroin labs are being located close to the borders of some Central Asian countries.

Drug Flow and Transit. Opium trading in Afghanistan and Southwest Asia is well-organized and well developed. Traders offer growers advances to finance inputs, and tide growers over while the crop is in the ground. They visit households to buy opium. This credit, or advance payment on future opium production is an integral part of livelihood strategies in poppy producing areas of Afghanistan. The relatively stable value of opium and its non-perishability mean that it also serves as an important source of savings and investment among traders and cultivators.

The UNDCP estimates that about half the quantity of illicit drug produced in Afghanistan is consumed by Afghanistan and its neighbors Iran, Pakistan, Tajikistan, Uzbekistan, and Turkmenistan. The smuggling routes selected depend on the destination and on the commodity being smuggled. Historically heroin has been trafficked to Europe and, to a lesser extent, the United States through Iran and Pakistan, but increasingly now through the Central Asian Republics. Opium for the Pakistan market enters through Baluchistan and the Northwest Frontier Province. Raw opium remains primarily for local consumption in Pakistan and Iran. Trafficking organizations also have strong links to Gulf countries, and Dubai seems to be emerging as an important center for money laundering.

Cannabis is usually transported from Afghanistan through Baluchistan to the Makran coast of Pakistan and from there by ship to the Gulf States and Europe. Cannabis is also increasingly transported through the Central Asian Republics by rail.

UNDCP is the sole mandated UN organization in Afghanistan to make efforts to address drug trafficking. UNDCP has recommended organizing in Afghanistan competition against opium trading via a well-organized, and well funded, marketing program for legal, exportable crops. On a regional basis, UNDCP operates a number of programs to reduce Afghan drug trafficking in Southwest Asia, including specific law enforcement programs with Turkmenistan, Uzbekistan, Tajikistan, Pakistan, and Iran. Iranian and Pakistani law enforcement forces are more frequently engaging in armed confrontations with well-equipped narcotics traffickers moving large convoys across the Afghanistan border.

Domestic Programs/Demand Reduction. Drug abuse is on the rise in Afghanistan. According to the UNDCP, heroin, opium and hashish are the most commonly abused drugs, along with a wide variety of easily available pharmaceutical drugs such as analgesics, hypno-sedatives and tranquilizers. Heroin, opium and other narcotics are used nearly exclusively by mouth or by inhalation, very rarely by injection. Of particular concern is opium abuse among women and passive opium exposure of very young children.

Heroin addition is a rapidly growing problem especially in Jalabad, Kabul, Kandahar, Herat and expatriate Afghan communities in refugee camps. The Taliban Supreme Court in October 1997 issued a decision that "addicts of illicit drugs should be referred to a hospital/treatment center to receive proper treatment." Effective institutional arrangements for the planning and coordination of demand reduction programs, in particular, are not in place in Afghanistan. Kabul's only remaining mental hospital is reportedly the only place in Afghanistan providing limited treatment for drug addicts. A specialist drug treatment NGO for Afghan refugees operates in Peshawar, Pakistan.

In Badakhshan province between 10 to 25 percent of the local population are believed to use opium. At least one NGO in Badakhshan has set up drug treatment facilities. The UNDCP distributed anti-drug materials among Afghan communities in Peshawar and Badakhshan. In June 1999, the Taliban launched an anti-narcotics campaign by dropping thousands of pamphlets on the capital of Kabul. Throughout the summer, the Kabul DCCU carried out a drug awareness campaign in city mosques and educational institutions. The Taliban have broadcast anti-drug radio programs during the year and local Kabul newspapers published anti-drug articles.

In 1999, UNDCP redesigned its drug demand reduction sub-program to address the need for providing community based drug treatment and prevention programs. The programs are located in primary drug abuse areas in Afghanistan (Kabul, Jalabad, Herat, Maser and Kandahar) and around Afghan refugee camps (Peshawar and Quetta) in Pakistan where there is an identifiable drug abuse problem. Security problems and the changing geo-political situation in Afghanistan resulted in closing the UNDCP Badakhshan demand reduction program.

IV. U.S.Policy Initiatives and Programs

U.S.Policy Initiatives. The USG continues to urge the Afghan factions to demonstrate that they take international drug control obligations seriously. USG officials have repeatedly urged Taliban officials to respect and implement Afghanistan's international obligations on terrorism, narcotics, and human rights.

Road Ahead. As long as war continues, prospects for meaningful progress on drug control efforts throughout Afghanistan remain dim. There is no indication that the Taliban intend to take serious action to reduce opium poppy cultivation, destroy heroin or morphine base laboratories or stop drug trafficking. To the extent that poppy continues to displace wheat production in Helmand and in the country as a whole, Afghanistan will face increasingly severe food shortages. The USG seeks to contain the flow of opium and heroin from Afghanistan through a stronger focus on regional counter narcotics cooperation. The USG will continue to impress upon the Afghan factions the importance that the USG attaches to unconditional counter narcotics measures by them. Unfulfilled commitments by the Taliban to reduce poppy cultivation have led the USG to halt funding for alternative development projects in Afghanistan.

The Afghan Support Group (ASG) process continues to introduce anti-narcotics requirements in all appropriate development aid projects in Afghanistan. The USG supports UNDCP efforts in Afghanistan to institute such drug control conditionality in all assistance programs, but the significant rise in poppy cultivation in 1999 has drawn into question the future viability of alternative development/poppy reduction projects in Afghanistan. In the absence of action by the Taliban and the Northern Alliance to curb narcotics cultivation and trafficking, the USG will concentrate its efforts on law enforcement assistance to neighboring transit countries.

Afghanistan Statistics
(1991-1999)

	1999	1998	1997	1996	1995	1994	1993	1992	1991
Opium
Potential Harvest (ha)	51,500	41,720	39,150	37,950	38,740	29,180	21,080	19,470	17,190
Eradication (ha)	-	-	-	-	-	-	-	-	-
Cultivation (ha)	51,500	41,720	39,150	37,950	38,740	29,180	21,080	19,470	19,470
Potential Yield (mt)1	1,670	1,350	1,265	1,230	1,250	950	685	640	570

¹ DEA believes, based upon foreign reporting and human sources, that opium production in Afghanistan may have exceeded 900 metric tons in both 1992 and 1993.

BANGLADESH

I. Summary

Bangladesh is surrounded by major drug producing and exporting countries, and it lies in the middle of one of the largest drug producing regions in the world. Still, there is no evidence that Bangladesh is a significant producer of narcotics, or used as a major transit route for narcotics shipment, possibly due to the country's poor transportation infrastructure. Law enforcement in Bangladesh is a feeble and ineffective institution, due in part to widespread corruption in police and government offices, coupled with limited resources and an absence of coordination at the national level. Bangladesh is a party to the 1988 UN Drug Convention.

II. Status of the Country

Although it is surrounded geographically by two major drug producing and exporting countries (Burma and India), there is no evidence that Bangladesh is a significant producer of narcotics. The transit of drugs through Bangladesh is also insignificant, perhaps because of poor transportation infrastructure. Precursor chemicals are not produced in Bangladesh in any significant amount, and narcotics- related money laundering is likewise insignificant. In September 1999, law enforcement officials seized 24 kilograms of heroin in Dhaka. Bangladesh and India are currently discussing a transshipment agreement to allow Indian goods to travel across Bangladesh between India's northeastern states and West Bengal. If an agreement is reached and implemented, it is possible that new routes will be created for the flow of illegal drugs and precursor chemicals.

III. Country Actions Against Drugs In 1999

Policy Initiatives. With the assistance of the United Nations Drug Control Program (UNDCP), Bangladesh adopted a five year master plan against drug abuse in April 1994, which extended to the end of 1999. UNDCP and the Bangladesh government have agreed to extend the plan through June 2000. UNDCP is working with the Bangladesh government to secure donor support for an ongoing drug control project to begin in late 2000. Parliament is expected to pass a new anti-narcotics bill in 2000, revising and updating the Narcotics Control Act of 1990.

Accomplishments. Bangladesh is trying to strengthen its efforts against the cultivation, production, distribution and sale of narcotics. In 1999, Bangladesh continued construction of its central chemical laboratory, which is to be used by the Bangladesh Department of Narcotics Control (DNC) in identifying and evaluating seized drugs. The project will likely be finished in mid-2000. The National Narcotics Control Board (NNCB), dormant since January 1998, met in November of 1999 and vowed to oversee and coordinate national efforts against drug abuse and drug trafficking. DNC is making the first parliamentary funding request for support of NNCB. Agents of the DNC and Bangladeshi police attended a DEA basic training seminar in Nepal, sponsored by the USG.

Law Enforcement Efforts. Seizures of narcotics were much higher than in 1998. In September, the DNC seized over 20 kilograms of heroin in a single raid. Less than 10 kilograms of heroin were seized in all of 1998. Seizures of phensidyl, a codeine based cough syrup widely abused in Bangladesh, also increased in 1999. Rampant corruption and generally haphazard law enforcement make it difficult to determine whether the increase in seizures is due to increased drug traffic, better police work, or accident. The Bangladesh government formed a drug control strategy group to assess the effectiveness of five law enforcement agencies in dealing with drug abuse and drug trafficking. DNC recruited 100 new employees in 1999, a 10% increase in personnel.

Corruption. Corruption of government officials and law enforcement personnel is widespread in Bangladesh. Anecdotal evidence and press accounts suggest local police officers and government officials assist in smuggling all kinds of goods, including narcotics. Corruption cases are rarely prosecuted, and corrupt officials are usually not punished beyond suspension or termination of government employment.

Agreements and Treaties. Bangladesh is a party to all three UN Drug Conventions. Bangladesh also exchanges narcotics-related information with Burma, and it has previously entered into a memorandum of understanding on narcotics cooperation with Iran.

Domestic Programs (Demand Reduction). The number of illegal drug users in Bangladesh is unknown. Figures vary from 100,000 to one million, but reliable confirmation of any number is unavailable. The DNC sponsors programs to reduce demand and increase public awareness using seminars, school visits, leaflets, and television and radio advertisements. Nearly all of the funding for such programs comes from the UNDCP. There are a few drug rehabilitation programs in Bangladesh run by NGOs and charities. Drug abuse in Bangladesh appears to be growing, although hard evidence to support that assertion is unavailable. UNDCP plans to conduct, in March 2000, a rapid assessment survey of drug abuse in Bangladesh. The survey should yield a more accurate snapshot of the extent of drug abuse in Bangladesh.

IV. U.S.Policy Initiatives and Programs.

Bilateral Cooperation. The USG donated several pieces of technical equipment to the Bangladeshi central chemical laboratory for analysis of illicit drugs. The USG also sponsored a DEA training seminar in Nepal, funding the attendance of Bangladesh law enforcement personnel. Bangladesh cooperates well with member nations of the South Asia Association For Regional Cooperation (SAARC), and provides reports on narcotics trafficking to the SAARC drug offenses monitoring desk in Colombo, Sri Lanka.

The Road Ahead. The FBI will send a training team to Bangladesh to provide basic law enforcement training to members of the Bangladesh police sometime during 2000. The USG will continue to promote professionalism and competence among law enforcement officers through training and technical assistance.

INDIA

I. Summary

India is the world's largest producer of licit opium and the only producer of licit gum opium. Located between Afghanistan and Burma, the two main world sources of illicitly-grown opium, India is a transit point for heroin, generally destined for Europe. Heroin is produced in and trafficked through India, but evidence to indicate that significant quantities of heroin from India reach the United States is scant. The government of India (GOI) has a cooperative relationship with the U.S.Drug Enforcement Administration (DEA) and is a party to the 1988 United Nations UN Drug Convention.

Licitly produced Indian opium is diverted to the illicit market. The exact extent of this diversion is unclear. India has had an elaborate and expensive-to-maintain system in place to counter this threat of diversion for years, and India took additional steps to avert diversion this year. Still, credible reports suggest that diversion may have increased during the 1998-1999 growing season, but if there was such an increase, and knowledgeable observers debate this, the increase took place despite intensified Indian government actions. India is certainly meeting its responsibilities to take adequate steps to prevent significant diversion. There are a few steps the USG would recommend to improve India's control regime. The GOI has not yet agreed to USG suggestions to undertake a comprehensive joint licit opium yield survey, which would provide a firmer scientific basis for the GOI to set Minimum Qualifying Yields (MQY's) for farmers. Setting these yields correctly, by region, helps limit diversion. The GOI appears to have had genuine success in reducing illicit poppy cultivation, which in 1999 was just a fraction of what it was five years ago. India met formally with Pakistan in 1999 to discuss narcotics matters and is committed to continuing the process and to developing practical results, which have been limited to date. In 1999 India also met with Burmese officials to discuss cross-border counternarcotics issues.

Indian controls restrict access to Acetic Anhydride (AA), a chemical used to process opium into heroin, and the GOI has made significant progress in controlling the production and export of all the narcotics chemical precursors produced by India's large chemical industry. Nevertheless, there remain unauthorized exports of essential chemicals and of methaqualone (Mandrax), a popular drug in Africa. Authorities have had limited success in prosecuting major narcotics offenders because of the lack of enforcement funding and weaknesses in the intelligence and judicial infrastructure.

On December 2, 1999, lower house of the Indian parliament passed legislation on money laundering; it still has to pass the upper house where further amendments are possible before a text of the new law is publicly available. India is not an international or regional finance center, has no known drugs money laundering, and is unlikely to be the destination or transit point for any significant proceeds from international narcotics trafficking, and does not appear to be a major international money laundering country. However, years of currency controls have driven many transactions into an unofficial, hand-to-hand underground money transfer sector. There is a potential for money laundering in this sector's activities.

II. Status Of The Country

India is the world's largest producer of legal opiates for pharmaceutical purposes and the only country that still produces gum opium rather than concentrate of poppy straw (CPS). It is the only licit opium producing country with a significant diversion problem. Opium is produced legally in the states of Madhya Pradesh, Rajasthan, and Uttar Pradesh. Under the terms of internationally agreed covenants, and to meet U.S.certification requirements, India is required to maintain licit production of opium and carry over stocks at levels no higher than those consistent with licit market demand, i.e., to avoid excessive production and stockpiling which could "leak" into illicit markets. India has certainly complied with this requirement. Indeed, the problem its licit opium industry has faced recently is inadequate harvests and carry-over stocks. In 1994, the GOI was unable to fill pharmaceutical companies' demands for opium because of an inaccurate inventory of opium stocks, and at the end of 1995, the chief controller of the factories estimated only 5-10 mts remained in stock until the next harvest. This inadequate stocking continued in 1996, but in 1997 sufficient rains combined with improved police enforcement and crop management techniques produced a sharp rise in the realized harvest to a record 1341 MT (at 70 percent solid).

Unfortunately, disastrous weather during the 1997-98 poppy growing season combined with a cultivator's "strike" which delayed planting led to a 1998 harvest that is one of the smallest on record. About 260 MT (at 90 percent solid), well under even GOI estimates made immediately after the harvest. To meet domestic and international demand the Indian government was forced to "completely exhaust" its licit opium stockpile leaving no carryover stock from 1998 whatsoever. This precarious situation made an adequate 1999 harvest extremely important.

To meet India's share of anticipated world demand for licit opium in 1999, and to begin rebuilding domestic stockpiles toward an International Narcotics Control Board (INCB)recommended level of about 750 MT (90 percent solid), the Indian government set a licit opium harvest target of 1300 MT (90 percent solid) in 1999 (870 MT for export, 130 MT for domestic use, and 300 MT to begin rebuilding the buffer stock). To meet this goal, the GOI reversed years of reductions in the area permitted to be sown to poppies (a step taken to improve control of diversion) and increased both the area under cultivation to 33,459 hectares for the 1998-1999 poppy growing season (a 10 percent rise from 30,714 hectares in 1997-1998), and the number of licit cultivators to 156,071, well above the 92,292 licensed in 1997-1998. (In fact, about 3200 hectares was either not sown or subsequently uprooted, so the 1999 harvest actually came from about 30,000 hectares.) The minimum qualifying yield (MQY) for opium cultivators was initially set at 52 kg/ha in most growing areas. Despite good weather and the large increase in the number of cultivators and the area under cultivation, the realized 1998-1999 harvest reached only 971 MT (at 90 percent solid), and about 64 percent of the licensed cultivators did not reach their MQY's. Many experts believe that a portion of the actual 1998-1999 harvest was diverted to the illicit market and thus did not reach government warehouses. However, the Indian government believes that diversion was limited, and that many cultivators simply failed to meet the very high Minimum Qualifying Yields set at the beginning of the crop year. The USG believes that India has taken exceptional steps to control diversion, and that these steps have held diversion down to levels which are not excessive.

While criminal elements produce heroin from both diverted legal opium and illegally-grown opium, no reliable data are available on the extent of this production. Poppies are grown illicitly in the Himalayan foothills of Kashmir and Uttar Pradesh, and in northeast India near the Bangladesh and Burmese borders in the states of Manipur, Mizoram, Nagaland, and Arunachal Pradesh. The quantities of illicit production appear relatively small, and there is little current indication that such opiates find their way into the export market to the United States. Heroin base ("brown sugar" heroin) is the domestic drug of choice in India, except in the northeast state of Manipur where injectable heroin is the most common. Needle sharing from the intravenous use of Southeast Asian heroin has spread the AIDS virus. "Brown sugar" heroin, originating in India, is often available in Nepal, Bangladesh, Sri Lanka, and the Maldives. During 1999, Indian authorities made two seizures totaling more than 100 kg of refined heroin, at least part of which was produced in India, destined for Sri Lanka.

India produces acetic anhydride (AA) largely for the tanning industry. A quantity is still believed to be diverted to heroin laboratories throughout Southern Asia, but considerably less than pre-1993 levels. In 1993 the government of India imposed controls on the production, sale, transportation, import, and export of AA, especially near the Indo-Pak and Indo-Burma borders. These controls have reduced the availability of the chemical to the illicit market. Nevertheless, illicit diversion of precursor chemicals from India continues to occur. In February 1999 authorities discovered nine MT of Indian AA in the United Arab Emirates bound for Afghanistan.

India is also a transit route for illicit heroin, hashish, and morphine base from Afghanistan, Pakistan, Burma, and to a lessor extent, Nepal. Herbal cannabis smuggled from Nepal is mainly consumed within India, but most of the drug is intended for Western destinations. There are few statistics available for the amount of Indian-origin heroin or other drugs that enter the United States, but it is not believed to be significant. Some trafficking in Indian-produced methaqualone (Mandrax) to Southern and Eastern Africa continues, but this trade seems to have decreased as more methaqualone is produced in Africa.

III. Country Action Against Drugs in 1999

Policy Initiatives. Money laundering legislation passed the lower house of Parliament on December 2. It still has to pass the upper house where further amendments are possible. The text of the new legislation has not yet been made public. The provisions relating to drugs were not controversial since, as far as can be determined, there is little drug money laundering in India at present. But other provisions of the bill focusing on money laundering relating to white collar crime, bank fraud, corruption, and tax evasion were hotly contested among regulatory agencies and within the Indian business community.

In August 1997, the government introduced in Parliament proposed amendments to the Narcotic Drugs And Psychotropic Substances Act (NDPS) of 1985 designed to modify the law in several useful ways: (1) streamline provisions relating to search and seizure by enforcement officials, (2) codify provisions for the civil forfeiture of the assets of drug traffickers, (3) simplify the procedures for controlled delivery enforcement operations, (4) reform sentencing guidelines to allow greater differentiation between minor and serious crimes to facilitate convictions of offenders, (5) clarify the application of bail for serious offenders more likely to disappear before trial, and (6) close various technical loopholes that hinder the prosecution and conviction of drug traffickers. These amendments are pending in the Parliament.

To align Indian law more closely with recommendations of ECOSOC and the UN Commission On Narcotic Drugs, the GOI has brought all substances included in schedules III and IV of the 1971 UN Drug Convention under Indian import/export controls. In addition, the following new substances have been brought under controls: Etryptamine, Methcathinone, Zipeprol, Aminorex, Brotizolam, and Mesocarb. Regulations covering the precursor chemicals n-Acetyl-Anthranillic acid and AA have been amended to require sellers to establish the identity of buyers before sales can be completed.

Accomplishments. The Central Bureau Of Narcotics (CBN) and the Narcotics Control Bureau (NCB), responsible respectively for coordinating licit and illicit drug control policies, have sought to reduce trafficking. In 1999, the Indian government took further steps to meet world licit opium demand and control narcotics trafficking.

India reacted rapidly to the disastrous 1998 licit opium harvest and the threat to its ability to meet its share of world licit demand by sharply raising the area to be licensed for cultivation and the number of licensed.

To increase incentives to licit cultivators for declaring and selling to the government all licitly-grown opium, the GOI has periodically raised the official prices paid to farmers. The more productive the cultivator, the higher the price he receives per unit of output.

Licit opium diversion controls expanded in 1998-1999 have been continued in 1999-2000 to include re-surveys of plots after the planted crop reaches a particular stage of growth to insure that the area under cultivation matches that licensed. Cultivation more than five percent above the licensed amount is destroyed, and the cultivator is liable to prosecution. Controls during the poppy lancing period at harvest have also been strengthened.

To increase control over licit opium production, offenses relating to cultivation and diversion of opium by licensed cultivators are punished with similar severity to other trafficking offenses. Convictions can result in ten to twenty years imprisonment and fines up to $6,000.

The government has continued a systematic program to combat illicit opium cultivation, especially in the north of India, by combining remote sensing information with raids and the destruction of illicit crops. Crop substitution programs are also part of the GOI's program. Indian authorities are also studying the feasibility of establishing a continuous aerial/satellite-based system for monitoring of licit and illicit opium cultivation nationwide.

The NCB reports that cooperation from industry in controlling the availability of precursor chemicals continues to be strong. A series of meetings by NCB with the industry in 1996 produced a voluntary code of conduct among firms that is aiding the enforcement effort. NCB says that seizures of illegal precursor chemicals shipments remained low in 1999 apparently because of the reduced illegal supplies available. Prices of precursor chemicals have risen.

Indian authorities continued to work closely with the drug enforcement agencies of other countries. In May 1999, DRI cooperated with the Royal Canadian Mounted Police to seize 384 KGS of hashish in Bombay bound for Canada. Again in May 1999, DRI and South African authorities intercepted a consignment of methaqualone bound for South Africa. In July 1999, Indian authorities provided information to the United Kingdom Customs Service that led to the arrest of three persons and the seizure of 7 KGS of heroin in the United Kingdom.

To decrease the backlog of cases, the GOI continues to work with special state courts for narcotics matters. Federal narcotics enforcement officials continue to meet quarterly with their state government counterparts to share information and provide training, and federal efforts have spurred the formation of specialized narcotics units in state and metropolitan police agencies.

To learn more about India's own drug problem, the Ministry of Social Justice and Empowerment is working with the UNDCP to carry out a comprehensive survey of narcotics addiction nationwide. First results of the survey are expected in 2000. Under the "Scheme For Prohibition And Drug Abuse Prevention" begun in 1985, the government continues to fund 90 percent of the costs of 340 NGOs in maintaining 425 drug treatment centers nationwide. The government is also working with the ILO and the UNDCP to implement the "Community-Based Rehabilitation Program" and the "Workplace Prevention Program."

Realizing the need for adequate numbers of professionally-trained rehabilitation professionals, the Ministry of Social Justice and Empowerment has established The Center For Drug Abuse Prevention as part of the government's National Institute Of Social Defense in New Delhi.

With USG encouragement, counter narcotics officials of India and Pakistan have continued the cooperation begun in 1994. India and Pakistan counternarcotics officials met most recently at the working level in November 1999. Some tangible results, mostly shared operational information, have come out of these meetings, but more cooperative enforcement actions are needed.

Periodic meetings also take place with Burmese officials along the border, most recently in June 1999. As with the bilateral contacts with Pakistan, their greatest significance is to pave the way for more substantive future joint efforts.

Law Enforcement Efforts. In 1998 GOI authorities seized 2031 KGS of opium as compared to 3221 KGS in 1997, a decrease of 37 percent in 1998 over the amount seized the previous year. Opium seizures have generally been in the vicinity of licit poppy cultivating areas of Uttar Pradesh, Madhya Pradesh, and Rajasthan. In 1999, through October, 1251 KGS of opium was seized. During the same period, a further 18 MT of opium was seized by the CBN in the growing areas from cultivators who did not fully declare their licit opium harvests. Heroin seizures in 1998 continued to be concentrated near the Indo-Pak border. Of the total of 459 KGS of heroin seized nationwide in 1999 through October, about one third (156 KGS) is believed to be of Southwest Asian origin (and mostly seized in the Indo-Pak border areas of Jammu and Kashmir, Rajasthan, Gujarat, and the Punjab). In 1999 through October, 459 KGS of heroin were seized nationwide.

Enforcement officials seized 19 KGS of morphine in 1998 and 26 KGS in 1999 through October. Most of these seizures were in the states of Uttar Pradesh and Madhya Pradesh. Authorities seized 10,106 KGS of hashish nationwide in 1998, and an additional 2666 KGS in 1999 through October. The bulk of these seizures were made in Gujarat of southwest Asian hashish.

Seizures of precursor chemicals have decreased sharply in recent years. In 1998, 6145 liters of acetic anhydride (AA) were seized nationwide. In 1999 through October, 2757 liters of AA were seized in 3 cases. Under the new controls, exports of precursor chemicals are allowed only on receipt of the original copy of the import certificate showing a legitimate end use issued by the competent government authority of the importing country. In the 1993 law, AA is considered a "controlled substance," and its production, sale, transportation, import, and export are regulated.

Among the psychotropic substances, methaqualone is the most likely to be found smuggled in India, often in transit to Africa, especially to South Africa. Bombay has been the preferred point of origin for shipments to Africa by both air and sea. Since 1992 Indian enforcement officials have enjoyed notable successes against methaqualone smugglers to Africa. Nevertheless, Indian authorities believe that significant illegal methaqualone exports to Africa continue, but the trend may be declining as more methaqualone is manufactured directly in Africa. During 1998, 2257 KGS of methaqualone were seized in India nationwide, as compared to 20,485 KGS as recently as 1995. The decline in the amount seized recently is believed by the GOI to reflect successful seizures (over 60 MT) of methaqualone and the accompanying destruction of clandestine laboratories and arrests of major smugglers in the mid 1990's. In 1999 through October, only 363 KGS of methaqualone were seized in 6 cases.

While the regular employees of NCB are small in number (about 400 nationwide) as compared to the size of the country and the level of trafficking, there are several other enforcement agencies that contribute to the narcotics effort in India including the Central Bureau of Investigation (CBI--the federal police force), the Directorate of Revenue Intelligence (DRI--tax and customs revenue investigators), the BSF, the Customs and Central Excise Service, state excise tax authorities, and state police agencies. In fact, state agencies usually are responsible for about 90 percent of all drugs seizures in India.

Corruption. Media reports allege corruption among police, government officials, and local politicians in a wide range of governmental activities in India, but successful prosecutions are rare. Criminal courts release some drug defendants without explanation or on weak legal grounds. The USG receives reports of narcotics-related corruption, but cannot independently verify the extent. The CBN has taken a number of steps to curb corruption, including transferring officers regularly, not allowing officers to verify the areas under cultivation in their home districts, making the most productive farmers in the village responsible for checking the production of all farmers in the village (with violations resulting in the loss of license for both the offending farmer and the supervisor), and cross checking assays and weights of opium as it is delivered to government processing facilities.

Agreement and Treaties. India is a party to all three UN Drug Conventions. These conventions were implemented in India through the Narcotic Drug and Psychotropic Substances Act (NDPS) of 1985, as amended in 1989. A new extradition treaty between the U.S.and India entered into force July 21, 1999, replacing the 1931 US-UK Extradition Treaty.

Cultivation and Production. India is the world's largest source of opium for legitimate pharmaceutical use, producing 833 MT in 1995, 849 MT in 1996, and 1341 MT in 1997 (at 70 percent solid). Production grew sharply in 1995 (from 426 MT in 1994) because of the much larger area under cultivation that year, as well as slightly higher average yields. Unfortunately, bad weather and a cultivator's "strike" that delayed planting resulted in a 1998 harvest of only 260 MT, the smallest harvest on record. With good weather and a sharp increase in the number of licensed cultivators and area under cultivation resulted in the realized 1999 harvest returning to more normal levels, but many experts believe that this realized harvest was reduced by a marked increase in opium diversion to the illicit market.

Unlike other opiate raw material suppliers, only India produces opium gum, with a high content of thebaine and other alkaloids essential to certain pharmaceuticals. The GOI has completed a preliminary feasibility study on converting some production to the concentrate of poppy straw (CPS) method to reduce diversion opportunities and has concluded that conversion is not economically feasible without financial support.

Opium in India is cultivated and harvested under strict licensing and control, and the government tries to extract every gram from the cultivators. The area under licit poppy cultivation was substantially reduced over the years through 1997 (from 66,000 hectares in 1978 to 29,777 hectares for the 1996-97 crop year). Because of this reduction and a severe drought, there was a decline in availability of opium to meet India's domestic and export requirements for several years in the early 1990's. After 1998's disastrous harvest, both the area under cultivation and the number of licensed cultivators were increased in the 1998-1999 growing season to about 30,000 hectares and 156,071 cultivators respectively in an attempt to increase the 1999 harvest.

In 1999, fully 100,000 cultivators, 64 percent of the total licensed for the 1998-1999 growing season, failed to meet the MQY and thus by law were subject to de-licensing. But ex post facto, the government arbitrarily decided to de-license only those cultivators failing to produce at least 42 kg/ha, about 40,000 cultivators, in order to maintain sufficient numbers of potential cultivators in the next season. For the 1999-2000 growing season, the government plans to license 140,000 cultivators to plant 32,000 hectares.

Some diversion into illicit channels from licensed poppy fields has been taking place over the years. Potentially large profits (illicit prices per kilo are perhaps 20-25 times the official price) means that such opium finds a ready market, especially in the states of Punjab, Orissa, west Bengal, Rajasthan, Kerala, Tamil Nadu, and Maharashtra.

A well-designed crop study could provide accurate data on crop yields and would be an important step in establishing reasonable levels for the minimum qualifying yield, and thus in obtaining reliable measures of diversion. The USG has offered to fund and participate with the GOI in a joint licit opium poppy yield survey and a smaller survey centered in Rajasthan, but to date the GOI has not accepted the offer.

In addition to the diversion of licit opium, there is a problem of illicit cultivation. (Illicit opium is usually rapidly converted into morphine or heroin base, which is easier to sell and to smuggle, and which brings much higher profits.) Efforts to locate and destroy illicit cultivation has continued with vigor. The USG has supplied satellite data along with coordinates of suspected areas of illicit poppy cultivation, and the GOI has carried out extensive field surveys and some random aerial surveys. Some of the surveys were carried out with the assistance of DEA representatives in India. To date, however, little evidence of extensive illegal poppy cultivation has been found. In all, about 350 hectares were found and destroyed in 1999.

The problem of illicit opium cultivation is centered in areas such as Jammu and Kashmir where GOI control is challenged by insurgent groups and in some remote areas of Uttar Pradesh and the northeast of India. In 1999 the government pursued a vigorous program of detection and destruction of illicit crops and prosecutions of the illicit cultivators, including through joint operations of the NCB, the CBI, the Customs and Excise Service, and state police agencies. The GOI is now considering the feasibility of using Indian aerial and satellite remote sensing resources to maintain a more systematic monitoring of both illicit and licit opium cultivation in India. In cooperation with the UNDCP, the government is also exploring alternative development measures to curtail illicit poppy cultivation by giving remote and poor rural areas a chance to produce alternative cash crops.

Drug flow and Transit. India is a transshipment point for heroin from Southwest Asia (Afghanistan and Pakistan), and from Southeast Asia (Burma, Laos, and Thailand). Heroin is smuggled from Pakistan and Burma, with some quantities transshipped through Nepal. In 1999, there were continued high seizures by the border security forces of heroin of Pakistani origin and two major seizures totaling 100 KGS of possible Indian-origin heroin bound for Sri Lanka. Most heroin shipped from India apparently is destined for Europe, and most seizures of heroin at the New Delhi airport are from flights bound for Europe. From those statistics that are available, the amount of Indian-origin and transit heroin bound for the United States is not significant.

Demand reduction. At present, no accurate data on the extent of opium and heroin addiction exist. Government estimates of from one to five million opium users, and about one million heroin addicts throughout India, remain unchanged, but some NGOs estimates of the number of addicts are much higher. The Ministry of Social Justice and Empowerment and the UNDCP are now jointly carrying out a comprehensive survey of narcotics addiction in India, and first results are expected to be available in 2000.

The health and welfare ministries, UNDCP, and police groups support treatment and rehabilitation centers. Voluntary agencies conduct demand reduction and public awareness programs under grants from the Indian government, but lack both adequate funding and staff, despite an increase in GOI budget support for drug abuse prevention and rehabilitation programs. GOI expenditure rose from about $1.5 million in 1991-92 to $4.9 million in 1997-98. The GOI is cooperating with the UNDCP/ILO in the development of a drug rehabilitation and prevention program in several major cities. Plans have been drawn up to expand this program nationwide and seek support from the corporate sector. In addition, the GOI and the UNDCP together are developing a comprehensive program for the northeastern states including detoxification centers, training courses, and an awareness program. The GOI is also considering new initiatives to reduce illicit demand and reduce HIV/AIDS transmission through new community-based facilities.

The NIDA(U.S.National Institute of Drug Abuse)-US-India fund (USIF) research project on IV drug users and HIV prevention in New Delhi, scheduled to end in 1999, received a six-month no-cost extension through March 2000. In addition, NIDA will sponsor a workshop on training and epidemiology for HIV and IV drug users which is scheduled to be held in the northeast of India in march or April 2000.

IV. U.S.Policy Initiatives and Programs

Policy Initiatives. During 1999, the USG worked with the GOI to focus more high-level attention on and allocate more resources to narcotics control programs and insuring an adequate supply of licit opium to the world market. The U.S.also urged the GOI to update its domestic laws to comply with the obligations of the 1988 UN convention, particularly those related to asset forfeiture and money laundering.

Bilateral Cooperation. The USG funds training for enforcement personnel including the Indian Coast Guard. In January 1999, the U.S.Customs service presented a counternarcotics training program for 54 Indian customs personnel. The USG also signed a Memorandum of Understanding (MOU) with the GOI to fund $15,000 in counter narcotics equipment acquisitions for Indian drug enforcement authorities. Relations between the DEA and NCB are good, with emphasis on exchange of narcotics enforcement and intelligence information.

The Road Ahead. The GOI has taken a number of steps in the past several years to address what it conceded are serious shortcomings in its licit opium cultivation program. It first concentrated on improving factory and inventory security. In 1997, it turned its attention to collecting the harvested opium gum into government warehouses, with a sharp increase in the realized 1997 harvest. But more resources are needed for counter narcotics forces, particularly to combat licit opium diversion, corruption, and to close legislative loopholes. In the coming years, the United States plans to encourage the GOI to insure an adequate supply of licit opium, control licit opium diversion, intensify its efforts to combat illicit cultivation and trafficking, improve its extradition practices under the Indo-U.S.Extradition Treaty that has now entered into force, identify, prosecute and convict corrupt officials, and pass enabling legislation in support of the 1988 UN Drug Convention.

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Continuation of Southwest Asia

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