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U.S. Department of State
   

Press Statement
Office of the Spokesman
Washington, DC
March 4, 2005


2005 International Narcotics Control Strategy Report

Paula Dobriansky, Under Secretary of State for Global Affairs
Robert B. Charles, Assistant Secretary of State for International Narcotics and Law Enforcement Affairs

(2:05 p.m. EST)

UNDER SECRETARY DOBRIANSKY:  Good afternoon.  I'm Paula Dobriansky, Under Secretary of State for Global Affairs.  On behalf of Secretary Rice, I am very pleased to be here with Assistant Secretary of State for International Narcotics and Law Enforcement Affairs Robert Charles to roll out the 2004 International Narcotics Control Strategy Report, or INCSR, as it is known.

The purpose of the INCSR is to measure the progress governments abroad have made over the past year combating drug trafficking and money laundering.  We have drawn unprecedented attention to the scourge of drug trafficking through this report and, like its 18 predecessors, this INCSR is specific and comprehensive. 

The INCSR underscores that one of the most significant global challenges to freedom, security and stability stems from the trafficking of illicit narcotics.  Addressing this challenge requires that we recognize the many linkages among drug trafficking and organized crime, money laundering, terrorism, trafficking in persons, weapons smuggling and government corruption, where the existence of each helps create the conditions for others to thrive. 

Drug trafficking is also a cause of other grave problems that threaten our world.  Drug abuse imperils public health by spreading HIV/AIDS and other infectious diseases.  Drug trafficking is linked to the growth of youth gangs and still more crime and violence.

Drug production -- the manufacturer of heroin, cocaine, and methamphetamines -- poses an environmental risk through the utilization of toxic chemicals that are haphazardly dumped on the land and into streams and rivers.  Alone and together, these enterprises contribute to the erosion of human rights, the rule of law, democracy and economic development.  As President Bush said in Colombia last November, defeating drug traffickers "is vital to the safety of our peoples and to the stability of the hemisphere."

Combating the drug trade requires a global effort.  It also requires that we work in common purpose.  The United States is committed to taking action in close cooperation with other governments against drug trafficking and activities that are linked to it.  Meeting the challenge of drug trafficking requires the use of integrated measures.  Combining alternative development with eradication, law enforcement, criminal justice and public information is essential.

The United States , through the State Department and other agencies, provides more than a billion dollars in counternarcotics assistance each year to nations throughout the Americas and the world.  Much of this aid assists foreign military and law enforcement in improving their capacity to fight the scourge of illicit drugs while respecting human rights and the rule of law.  The State Department also provides training and technical assistance to help countries strengthen their border controls, develop stronger law enforcement, improve financial regulation and build judicial systems and a culture of lawfulness. 

Combating illicit narcotics trafficking is high among President Bush's priorities.  To stop drugs from flourishing, the President committed more than $1.2 billion dollars in funding for our efforts.  As the INSCR illustrates, the world made significant progress against narcotics trafficking in 2004.  One only has to look at the record-breaking decline in coca and opium poppy cultivation in Colombia to see the advantages of close and determined cooperation on counternarcotics.  In fact, positive achievements were recorded in numerous countries from Latin America to Southeast Asia > .  At the same time, the 2004 INSCR makes clear that despite our successes, we still have a long way to go and that all nations must redouble their efforts to meet the challenge posed by drug trafficking. 

On behalf of Secretary Rice, I am grateful to all those in the State Department here and also around the world as well as those in other agencies who are working hard to advance our nation's commitment to fight narcotics trafficking and international crime.  Now I will turn the briefing over to Assistant Secretary Bobby Charles of the Bureau of International Narcotics and Law Enforcement.  Bobby and the rest of the Bureau have done tremendous work this year, both in our counternarcotics and anti-money laundering assistance efforts, and in producing this report.

Assistant Secretary Charles will take you through the report in greater detail and answer your questions.  Thank you. 

Assistant Secretary Charles.

ASSISTANT SECRETARY CHARLES:  Thank you.  I thank you, Under Secretary Dobriansky, and thank you all for being here today.  I actually favor the Q&A side of all this, but I feel some obligation to walk methodically through some pieces of the report itself, and so what Iím going to do is do that.

Let me say at the outset Dr. Dobriansky, who isn't here to hear it now, but has been a real force in our ability to get a lot of these things done. She has helped us work through the interagency, she has helped us work through issues around the world in 70 countries, and I think she's really been enormously supportive and we're very grateful for that.

Please take note that these two big volumes, which I hope and trust everybody who wants them has now, which are widely read, sort of one-of-a-kind reference volumes, are things -- and they do make a pretense, at least, to covering all things counternarcotics and law enforcement -- that these are the product of an enormous amount of work, and not by me but by a lot of other people.  They're more of a Webster's Dictionary than a War And Peace, since War and Peace is at least putatively readable.  And they are really a reference document.  They're sort of a walking library on these issues. 

Among those that I would like to thank and just not forget to thank are hundreds of people in my own Bureau, but also those -- and in particular, let me just single out Ken Thompson, Ed Rindler and John Lyle for their extraordinary efforts in making this two-volume set possible and marginally readable.

In addition, DEA, Departments of Homeland Security and Justice, U.S. Coast Guard, ICE, Treasury, FINCEN, ONDCP, other State Department posts around the world, all of them have contributed in a significant way to this document.  So I am sort of the roller-outer, but I am not the producer and a great many people have put effort in here.

I'll quickly breeze -- I'll actually skip the objectives.  You know what we do.  What we do is counternarcotics, money laundering and every component, in effect, of that mission.  Let me say that we can go through it in the Q&A, country by country, in terms of what we do in those countries, but eradication, alternative income streams, training material for law enforcement, the criminal justice system standing up, capacity building, interdiction and education and a whole range of issues from human rights to prevention and, in fact, even treatment in places like Laos and around the world.

We are very involved in every aspect of the counternarcotics mission.  This is the 19th volume of this effort and it's released at this time every year.  It is a unique volume.  It does not contain, as in the last two years, any direct impact on certification, for those that get easily confused, like me, about this.  This is a document that comes out early in the year that's factual in its orientation, and then in September the President reaches the decisions that relate to certification.

And finally, let me say it's a document that I think has wide enough currency and use as you go forward that, in fact, recently the 9/11 Commission praised its work, which I think is rather unique.

So themes.  There really -- let me say there's one big theme this year and that is the metrics, I think, are beginning to bear out a degree of real success in counternarcotics and money laundering.  Now, let's be crystal clear.  There's no such thing as definitively winning the drug war.  That is not something that -- winning the drug war does not mean that we sort of roll up all bad guys and all future bad guys and we're done and now we go home and do something else.  It means that we make steady progress in reducing these threats to our security, our stability -- direct threats, as in the drugs, and the indirect threats such as all the things that the money laundering goes to support -- the instability, the corruption that we want to get rid of.

And what you -- you will never eliminate crime from Los Angeles.  We will never eliminate it from Washington, D.C., permanently.  But we will make steady progress in pushing it down to a point where its management allows us to live in civilized societies which are safer and obviously give us and our kids and everybody else a better chance at doing the other things we do.

So the metrics are extremely important because what we're seeing is trend lines and the trend lines are what I want to bring to your attention, three of them basically. 

It's clear that drug trafficking matters greatly to a number of nations around the world.  I think it matters to more nations this year than the year before and maybe more than the year before and the year before that.  It has a direct impact on the violence, instability, corruption, terrorist funding, all the pieces of what we worry about most when we're falling asleep.  At least I do on a day-to-day basis.  No nation or region is untouched.

Point two, I think real leadership -- and that means international leadership, it means multilateral and bilateral efforts -- have generated real results.  And that's something -- leadership produces results and absence of leadership produces drift.  We are seeing results.  And whether you're talking about President Uribe in Colombia or anywhere else in the world, you are seeing movement in the right direction.  There are areas where we have enormous worry, but they are -- by and large, the trend line is a positive one.

And third, the international commitment, both in terms of helping third parties and helping ourselves or individual nations around the world helping themselves and their neighbors, I think is also growing and the metrics, I think, support that.  And that applies to whether you're talking about drug growers, drug producers, drug traffickers, moving against organized crime, moving against terrorists.  It is really, in many ways, coming together and there is an international consensus emerging that these are issues that overlap one another, something that many of us have thought for a long time, but also that they are worth tackling in a concerted way, regionally and globally.

So I'm going to just jump into the big metrics and you can follow me, you can disagree with me, and we'll happily talk about it in the Q&A, but let's talk about cultivation first, cultivation numbers.  Colombia looms large on that horizon, both in coca and in heroin.  While the 2004 cultivation numbers are not yet available -- I think they'll be available at the end of this month, that's something that's out of my control -- there were record reductions in the cultivation of Colombian and Andean coca in a multiyear, over the last two previous years, and we measured the last two previous years.  That is to say, in 2002 and 2003, you saw multiyear double-digit reductions in Colombia.

Now, that is something we have never seen before.  In 2002, we saw a 21 percent reduction in cultivation.  In 2003, we saw a 15 percent reduction.  This is going to get harder as time goes on because you're compressing the areas in both coca and in poppy.  You're compressing the areas.  You're making them -- they're more highly protected, if you will, right now by the drug traffickers and the drug trafficking organizations which, in that country, are also narcoterrorist organizations.  But there is real progress.

In 2004, a number I can give you, Colombia's spray and manual eradication efforts set a record.  There were more than 135,000 hectares of coca sprayed and 3,000 hectares of poppy eradicated by spray and an additional 1,400 by hand.  These gains, again, are going to be sequentially, I predict, smaller over time because you necessarily get more and more and more of the crop, and at the end of the day, what you're doing is you backfill it with alternative development.  And we can talk region by region; we can talk about Putumayo, we can talk about Bolivia, we can talk about other countries and what they've been able to do.

But as you change the paradigm, it gets tougher and tougher until some moment when you actually get almost all of it out of the way.  In 2005, already we are ahead of the hectarage eradication numbers in 2004.  As of March 2nd -- what was that, Tuesday? -- we already had sprayed more than 35,000 hectares, up from 31,000 in the same period in 2004 of coca.

That moves us directly to the balloon effect, the notion that somehow, when you win in one country, which we saw over the last 15 years -- I've watched this evolution up and down and when we won in Peru and Bolivia, to a large extent, it somehow moved us over into Colombia.  What's fascinating on the metrics is that we are really not seeing the balloon effect.  In terms of the entire region in 2003, there was an overall regional reduction of 16 percent of cultivation.  That's a remarkable thing by itself.  

In 2004, the indications are that while it's tough, it's still strong and we can again talk country by country.  But I think what you can see is an effort that is extremely strong in Colombia, an engine of positive change for the region, which is strong but can be stronger in Bolivia and Peru.  But in Bolivia, for example, in 2004, President Mesa reaffirmed his commitment to counternarcotics, exceeding his original eradication goal of 8,000 hectares.  In Peru, more than 10,500 hectares were eradicated in 2004 and a public relations campaign proved to be very effective in beginning to move the public dial in the area of cocaleros and their -- the ability of the cocaleros, to have some impact on their policy.  Notably, the Peruvian Government, and I will say this, must be constantly on guard against the future possibility that steady eradication could be outstripped by accelerated planting.  It's somehow, in some ways goes without saying, but it needs still to be said because we all have to be on guard against the fact that victory today does not mean victory tomorrow. 

By the undercounting of young against older plants, and frankly, in short, good news today means that we should be glad for the policies that are working, but it also means we need to recommit ourselves to a regional effort to really make sure there is no balloon effect long term.

These also run parallel in heroin area.  I will tell you we've had over the last two years a 33 percent reduction.  It's a coincidence that there's been both a 33 percent reduction in coca and a 33 percent reduction in heroin.  Heroin is more -- is influenced by manual eradication more probably and certainly in Colombia than it is aerial, but it is nevertheless extremely important that we are winning against both of them. 

Again, we are making progress, and I guess I'll say moving east for a moment on cultivation:  Thailand, Laos and across the Far East.  Thailand's success was recognized last summer when President Bush removed it from the majors list.  That happened between the last time I stood up here with you and now.  Thailand is now a net importer, not an exporter, of heroin.  Laos also aims to be poppy-free by the end of this year and is making progress, although it is the number three producer, although far behind Burma and Afghanistan. 

There are still 22 countries on the majors list -- the major producers, by statute.  But there is definite progress.  I mean, one of the most interesting things in Thailand is the accelerated progress that has occurred over the last several years.  And just in many ways as I think Colombia is an engine of real positive change in this area, in this hemisphere, I think Thailand is a real engine of change in that hemisphere. 

While Burma remains the second largest producer of heroin next to Afghanistan, poppy cultivation is down again in Burma this year.  There has also been a steep decline in Pakistan, which has gone from really being a major producer to more marginal producer of opium and opiates.  And while Afghanistan remains a major challenge, new comprehensive and international counter-drug assistance has in many ways crystallized recently in support of the nation's newly elected president, who himself is resolute in battling back the growth of heroin poppy.  The problem, I will say, in Afghanistan is considerable and we can talk about that more.  But the commitments to address it have grown markedly.  And frankly, there is a real focus on the counter-drug piece in tandem with the other pieces of guaranteeing or working toward a brighter Afghan future. 

Let's shift to interdiction because this is another big metrics issue this year.  On the interdiction front, 2003 and 2004 saw another unprecedented uptick particularly in seizures in this hemisphere.  In 2004, with U.S. support, the Colombian national police and public forces destroyed a total of 200 -- and this is a record -- major drug production laboratories in this hemisphere -- in Colombia, and seized 178 metric tons of cocaine hydrochloride and cocaine base.  Interestingly, in context, that 178 number is 23 tons more than was seized in 2003 and 98 tons more than in 2001, and all of that is against the backdrop of a 33 percent reduction in cultivation.  Not an insignificant juxtaposition there, showing I think double effort against the odds and success on the metrics. 

In Bolivia, 2004 represented a strong year of interdiction also, based on a record 2,254 cocaine base labs destroyed and a tripling in seizures compared to 2003.  And likewise in Peru in 2004, authorities seized 12 metric tons of cocaine and destroyed more than 800 smaller labs. 

In Mexico, there was a palpable increase, I believe, in cooperation with nationwide efforts to ramp up eradication of poppies in marijuana, apprehension and prosecution of three key members of the Arellano Felix organization, an institutionalization of professional law enforcement at the federal level with AFI, and new efforts at data sharing on border security.  There are challenges, again, and you will not see me avert my gaze in talking about them.  But the trend line is a good one and President Fox has been a leader with whom we have achieved previously, I think, unthinkable results.  The challenges of border security, corruption, prosecution, conviction and sentencing under existing anti-drug laws and expanded extradition in particular remain.  But the promise of breakthroughs, I think, is well worth the effort put in. 

In addition, again, on the numbers, there was no change in the number of countries listed as major precursor chemical source countries.  There are nine of those and I would note that the United States is one of them. 

Broader law enforcement and extradition starting in the Western Hemisphere, a third big area of metrics.  On broader law enforcement and extradition, you saw a record number of drug trafficker extraditions from both Colombia and Mexico to the United States for federal prosecution.  Mexico extradited 34 major drug figures, up from 31 in 2003 and 25 in 2002.  Colombia has extradited more than 180 drug traffickers to the United States over the past two years, including Gilberto Rodriguez Orejuela, head of the Cali Cartel, and actually even further additional large major figures involved in the Cali Cartel and others. 

President Uribe has been an untiring leader, in my view, in the battle to rid his nation of these violent traffickers, chasing down individual terrorists and working to break up, destabilize and disband Colombia's leading narco-terrorist organizations, as most people in this room know the FARC, AUC and ELN.  His efforts support the conclusion that the United States Congressí grand gamble in the 1990s, to Plan Colombia -- their support for Plan Colombia, to support Plan Colombia, together with President Bush's resolute commitment to support progress in that nation is generating what I have described before, and I think the metrics are beginning to prove out, is a paradigm shift. 

We are half way up.  We are not there yet.  But we are making a genuine move toward a different world.  And by the way, I think the Colombian people and the public opinion polls support that.  Seventy percent or more of the Colombian people today can envision a world in which they do not have civil war and serious drug trafficking on their soil, by one recent poll I saw.  That is a remarkable fact and it supports the longer range objective of trying to help our neighbors to stabilize not only their own futures but our future and this hemisphere's future.

Jumping a little again  While some nations in the hemisphere maybe less committed, reduced terrorist incidents in Colombia, let's look at, again, a number of metrics that are sort of secondary metrics, but I think they are indicative.  There's a 42 percent reduction in terrorist events in 2004 in Colombia.  That is the second double-digit decline in that nation and I think that the previous year was 48 percent reduction.  Kidnappings dropped by more than 35 percent, homicides by 15 percent, other major crimes substantially, and each of those in 2003 also had double-digit declines. 

That trend line, in my view, supports something that is like a rumbling in the rails.  It is a real and significant stabilization and a sense of rooting deeper the civil society in Colombia and the effect that can have on the entire region, I think is profound.  The police reinsertion program in Colombia this year, 1,098 municipalities all now stabilized by police presence. 

What does it all mean?  I think, frankly, it proves out a significant freedom-loving principle and that some people have heard me talk about this, but this is the old notion that John Locke put forward, which is that if you stabilize an environment under a social compact, under democracy, and democracy becomes the expectation and the institutionally supported form of government, what happens is people begin to mix their labor with the land.  If that were true, we should see growth rates that are remarkable and we are beginning to see them.  In 2003, Colombia had a 3.8 percent growth rate.  That was a radical break from the recent past before that.  In 2004, they had a 4.3 percent growth rate and just in the last several weeks the World Bank has named them one of the top ten locations for foreign investment. 

It is clearly the case that when people begin to see democracy take root, economic progress follows, and this is a paradigm, in my view, well worth watching and following and encouraging.

Finally, in the Far East on interdiction, let me say quickly Central Asia, we're beginning to see gains there, Tajikistan, Uzbekistan, the Kyrgyz Republic.  Tajikistan, for example, is the third largest interdictor of heroin in the world.  A lot of concern about corruption in a lot of these countries, but it is nevertheless the case that you're seeing metrics and we can go back and you go back to the document and look at it.  Further east, working with Thailand, Indonesia, Malaysia, and the Philippines, we're seeing movement there.  In Thailand, again, the seizures are up in both heroin and methamphetamine over the past two years as well as going after drug trafficking -- drug traffickers, the arrest numbers and major trafficking rings. 

Afghanistan, of course, is the special case and it stands out.  Nearly 90 percent of the world's heroin, estimates are -- there's a degree of fluidity to them, but 87 to 90 percent, let's say, of the world's heroin comes from Afghanistan.  And yet, there has been a redoubled effort both by their allies and the Afghan Government to go after this.  The numbers are stark and they are a warning to all of us and they have been out there for several months, but I'm going to repeat them because they're worth remembering and putting in any story you put forward.  In 2003, there were 61,000 hectares of heroin poppy.  In 2004, that number leapt up to 206,000 hectares, which is a 239 percent increase.  In response, we are working now very directly with our allies, foremost with the United Kingdom.  And I'll go into this in much detail if people want, and I presume they may, on the Five Pillar Program, which essentially addresses each of the major areas where you'd want to see metrics that would turn those numbers around.  In some ways, they are not unexpected numbers, even though I think we expected the growth rate might be less than that.  But I think that the reality is in a post-conflict environment, in which you have very fragile institutions of democracies and you have the third poorest country in the world, it is not unlikely that you would see a growth rate something like that. 

In any event, at present, the Administration has a $780 million Fiscal 2005 supplemental appropriations request in front of Congress to help the implementation plan -- those Five Pillars, including alternative development, interdiction, eradication, law enforcement and a public diplomacy piece that will also support the criminal justice sector being grown.  And there is a broad multilateral commitment to that endgame. 

Let me then jump also to others in this hemisphere and in Europe.  Canada and the Netherlands.  We have an issue -- have had a big issue, as most people know, with Ecstasy and pseudoephedrine and, in fact, amphetamine-type substances generally.  There is some very good news there as well.  If you look in the report under Canada, you will see significant movement in the direction of tackling the pseudoephedrine problem, and there are a number of metrics that you can roll out there.  Those are very encouraging.  Similar gains apply against the Netherlands, and one of the things that I'm saying there is that you see less apprehension of drug -- of that drug type in the United States having come from those two countries.  And that is a very important sign of success.  There are also institutional commitments that have been made, and the Netherlands, for example, has made a serious, serious commitment to knock down the Ecstasy problem, which is working.

Burma -- and by the way, that's being reflected in our domestic numbers as well.  If you look -- or talk with John Walters and others, you'll see there is a reduction in actual Ecstasy use in this country by youth.  Burma represents another special case worthy of pause.  While poppy cultivation has fallen 88 percent in the last eight years, Burma, again, is still the number two producer of heroin poppies, number one producer of amphetamine-type substances in the Far East.  And there were several hundred million meth tablets this year coming out of Burma that showed up in Thailand, China and India.

Finally, I want to say a word about money laundering.  Again, the metrics are with us.  It has been what I will boldly call a banner year.  While there are 53 countries which qualify as those which, "whose financial institutions engage in currency transactions involving significant amounts of proceeds from international narcotics trafficking," there have been some notable firsts.

The number of countries with anti-terrorism financing laws jumped under enormous effort from 87 to 113 over the past year.  It takes political will to make that kind of a number change, and that political will is what's showing up out there.  Only three countries remain on the Financial Action Task Force noncooperative list of jurisdictions, down from 23 five years ago.  Three countries -- Guatemala, Egypt and Ukraine -- were removed in 2004, and three more -- Indonesia, the Philippines and the Cook Islands -- were removed earlier this year, indicating strong cooperation from those countries on both tracing and tracking money laundering, progress that has again revealed what I talked about as one of those early themes:  an international consensus around the ideas that these things really do matter.

Another factor.  Money laundering in the traditional financial sector is down.  If you at the second of these two volumes and go country by country or look at the broad theme lines that are identified at the front end, you find a downtick, a dramatic downtick in traditional financial sector money laundering.  That is, however, paralleled by increases in alternative remittances that are being used to launder money.

Drugs, which tends to be my focus, is one area in which value can be transferred in a nonperishable value that is recognizable, can be transferred outside of an institution-to-institution transfer, but there are also hawala, there is a -- there is the invoice fraud with legitimate trade, there are legitimately traded items like gold and diamonds which can be then used for money laundering illegitimate trade.  And yet, I will also note that even in those spheres, we are tracking sort of man to man, if you will, or zone to zone, depending on how you look at it, we are tracking these developments with, for example, a trade transparency initiative that is substantial out there in the interagency process right now.

So where am I really going?  I will tell you that I stood before you a year ago and said I think we are on the verge of some tipping -- a tipping point, that there is a -- that there is something here -- what is a tipping point?  It's not a -- it's not an indefinite thing.  It is a time, a moment in time, where you see the acceleration of objective metrics toward an endgame.  And that is what I think is happening in some of these key areas.

And I think with that, I will just -- again, I want to thank our allies.  I want to thank those in the interagency who made this report possible.  I want to encourage you to stay in contact with me and this office in case there are things that come up after you read it.  And I want to just open it up for Q&A.

Yes, sir.

QUESTION:  Is there any way -- I mean, you've put a very positive spin on all of this.  Is there any way to describe what's happened in Afghanistan as anything other than a abysmal failure of U.S. counternarcotics efforts there?  I mean, you've had a tripling in the area of -- under poppy cultivation.  You have -- now this report says that Afghanistan essentially amounts for the world's heroin production.  I mean, number two, Burma is 1/17th of production.  Basically, it's all Afghanistan.

And you also say it represents an enormous threat to world stability in this report, which is different from your emphasis.  I'm just wondering, how is this such an enormous threat to world stability and what's being done to reverse course?

ASSISTANT SECRETARY CHARLES:  It's a good question, one that I anticipated.  Let me say, first, my emphasis is positive for reasons that are objective and I will go through those.  The facts are, as I said -- facts are stubborn things, Ronald Reagan used to say, and there are stubborn things in this case.  I don't know if we've brought our charts with us.  Did we bring charts, Michael?  Okay.  I may use some of those in a minute.

But the short version of this is that the numbers on poppy production -- poppy growth are the driving reason why we fear that this is a big -- or we all, I think, identify this as a serious problem, one that is bigger than it was two years ago.  It doubled between '02 and '03 and then it rose by 239 percent between '03 and '04.

But it's important to keep that problem, which we are putting new emphasis and effort on supporting the Karzai government in tackling, and which, by the way, I think there has been no backsliding at all whatsoever on the Karzai government's part.  I think they are committed, they are calling the shots, and we are doing everything in our power to support them to address this as a major threat to their own security.

Let me keep it in perspective for you or give you some reasons to keep it in perspective.  The overall growth in 2003, the total hectarage of land used for growing poppies in 2003, was about eight percent.  The bulk of the land, the bulk of the growing, despite the fact that it doesn't get much press attention, went to wheat, barley, cereals and corn, I believe.  You've got -- okay, here's one of the charts.  It's a UN chart, it's not an INL chart, but it gives you an important perspective on this problem. 

What it shows you is that not everybody in Afghanistan is growing heroin poppy.  There is a dramatic growth in a very poor country.  Here is another fact that goes into the overall equation.  It is a very poor country.  Again, as I said, I think it ranks on the international level.  It was ranked recently 173rd out of 176, something like that.  It is a very poor economy.  That economy -- I don't want to compare it to Dallas or Los Angeles, but it is not a large, powerful economy.  The potential -- the ability to flip an economy like that, which incidentally, I think, is dominated about 40 percent right now by the poppy trade -- the average farmer gets about $1 on every $100 that shows up over in a unit of heroin that shows up in Paris or in London.

But the reality on this thing is that a substantial influx of international support behind a commitment, a political will on the part of the government, has a very high likelihood of turning that around in a fairly -- let's say in the midterm.  Not overnight, but it's not going to take -- it doesn't necessarily mean it's going to take forever either.  It's a relatively poor economy where, if you put in more effort, you can get a lot out of that. 

You're talking about a country, too -- and I just -- it's important to keep these things in perspective -- which has very little in the way of criminal justice institutions, if you will.  As we move rapidly ahead to seed institutions, to literally build courthouses, to train judges, to train prosecutors, to put people in prison and to send a signal out there, to set expectations -- you're in an environment right now where there is very little stick to discourage someone from growing poppy.

What you need is a very strong -- let's put it this way.  You need a lot of carrots and you need a strong stick.  And I want to talk for a minute about the carrots because this is something that is often ignored.  I read a piece this morning -- I read everything I can get my hands on -- on Afghanistan, and it said something along the lines of all we want to do is eradication and eradication isn't going to solve the problem.  Eradication by itself will never solve the problem.  It is one of many sticks.  It is one of many disincentives to the growth of heroin poppy, as it is with coca, and remember, it has worked very well in Colombia and it's worked elsewhere in the world very well.

What I want to point out, though, is that USAID has given, I think in the last year, $510.3 million.  There has been pledged already, beyond that, $170.6 million.  The ring road itself is a couple of million -- a couple of hundred million dollars.  We have, in the supplemental, a new pledge for more than a hundred million, a new effort to put more than a hundred million dollars.  All of that is alternative livelihoods.  All of that is the infrastructure that helps you to tie legitimate crops to legitimate markets, create a legitimate economy and begin to move that country out of poverty.

People may say, "Well, you know, you're thinking wishfully here.  It's too much hectarage."  It is an enormous amount of hectarage.  And why do I worry about it?  Because that money goes back to bad guys.  But is it a hopeless situation?  Absolutely not, and places like Bolivia show you that.  Last year -- two years ago in the Chapare -- and I'll answer every question, don't worry -- but two years ago in the Chapare -- three years ago, let's say, in the Chapare, there was very little hope that you could really take out hundreds of square hectares of coca. 

Today, you have that whole -- and I overfly that in helicopter and I see hundreds of square miles or kilometers of pineapple and all kinds of -- even dairy, everything that you can imagine that's legitimate, very tightly tied to export markets.  And remember that prior to 1979 and the Russia -- and the Soviet invasion, Afghanistan was self-sufficient in food and had -- 30 percent of their export market was food.  So it is a very doable thing. 

Yes.

QUESTION:  If I could follow up, though?

ASSISTANT SECRETARY CHARLES:  Yes, ma'am.

QUESTION:  On that chart, I understand that you're talking about -- you know, you're talking about hectarage.

ASSISTANT SECRETARY CHARLES:  Yes.

QUESTION:  But in this report it says that 40 to 60 percent of the GDP is illicit drugs, which -- and you say that it's on the verge of becoming a narco-state.  So, I mean, do those numbers of hectares --

ASSISTANT SECRETARY CHARLES:  Yeah, I know it does say that and --

QUESTION:  Do those hectarage really match up with -- I mean, does it really matter about hectarage or is it more about the percentage of GDP that is going towards drugs?  I mean, what you're saying is you have to --

ASSISTANT SECRETARY CHARLES:  Both of them matter.

QUESTION:  -- supplement 40 to 60 percent of Afghan's economy for alternative livelihood.

ASSISTANT SECRETARY CHARLES:  What you have to do is you have to disincentivize them from violating the law.  You have to make sure there is law and then you have to disincentivize them from violating the law, give the farmers another source of income.  They're not looking to become millionaires.  They're looking to become able to survive.  And that means that if you pump enough alternative livelihoods resources in, you create seed money for legitimate economies, regional economies, and ultimately a legitimate national economy.  And you provide roads so that they can get things out and you provide a criminal justice system that makes it clear and the expectations -- I don't think we could have asked for a clearer signal from President Karzai that he does not want a heroin economy to be the future of his country.

QUESTION:  But does he have control over it, though?  I mean --

ASSISTANT SECRETARY CHARLES:  I think he has the ability to set expectations.  He has an enormous amount of legitimacy attached to being the first democratically elected president.  He is going to have ever more legitimacy as time passes.  I think what you see is a need to get -- to be crystal clear that corruption will not be permitted, that expectations are they are going to move into legitimate streams of income.  You have to have a criminal justice system, which we are working very hard to make possible to support him, that will allow him to make real the threat that if you do traffic in narcotics, you will be prosecuted.

You have to have a bona fide set of signals being sent on eradication.  It doesn't mean you need to do aerial eradication.  It does mean that you need to do serious eradication that shows that you're not going to let that be -- that you're not going to turn your gaze away from it. 

I think the other thing I would just point out is that President Karzai has made enormous progress in the short period of time that he has been there.  There was this sort of mini-Loya Jirga on drugs.  There's a very clear commitment that they do not want to make this the future of that country. 

I even read a survey recently that said that 85 percent of the Afghan mullahs oppose having heroin be part of their, at least, local economy.  That is a very, very significant statistic because it reveals a certain moral fabric, based on Sharia law, against this becoming the norm.  The problem is they have to have income and therefore you have to create a combination, again, of bona fides carrots with bona fides sticks, and they have to stick -- both of those things have to be done at the same time and that is the five pillar strategy.

QUESTION:  Okay.  I don't --

ASSISTANT SECRETARY CHARLES:  Sure.

QUESTION:  -- understand why -- this chart seems to be completely irrelevant.  I don't understand why you've put it up here.

ASSISTANT SECRETARY CHARLES:  Well, this is a United Nations chart that shows --

QUESTION:  Okay.  But your report here says that in 2004 the acreage went up to 206,000 hectares.

ASSISTANT SECRETARY CHARLES:  It jumped by about --

QUESTION:  So, this is 2002 --

ASSISTANT SECRETARY CHARLES:  The UN has not -- the UN has not put this chart out yet for 2004, and you can take the 8 percent and probably bring it up to just under, maybe, 20 percent right now.  But what I'm trying to show you is that cereals, wheat, barley, rice and corn make up an enormous part of that economy and that only feeds, by the way, right now, about a third of the country. 

Yes.

QUESTION:  But the bottom --

QUESTION:  But it doesn't make up an enormous part of the economy if 40 to 60 percent is drugs.  How could that --

ASSISTANT SECRETARY CHARLES:  It depends -- this is the land that is being farmed.  This is the number of -- if you will, the amount of land that's being farmed.  What you're seeing back is the price of heroin having a distortive effect on this so-called GDP.  Can I also tell you, the GDP estimates for Afghanistan are necessarily very, very loose.  Drug traffickers don't file financial transactions reports.  They don't tell you how much money they're making.  We're making reasonable estimates on this.

I want to answer one other question that you asked within that question and that question was, why does this really matter?  On the one hand, you're driving more resources at it and yeah, you've got this comprehensive effort and you're moving now from the post-combat environment where it was just counter-terrorism to a combination of counter-terrorism and counter-narcotics.  But why?

The real reason is the money that comes back in that 40 percent figure, because the average -- I recently read again that the multiplier effect -- and I think this is an important factor -- the average multiplier effect of a dollar in the U.S. economy is 16.  In Afghanistan, it's about two.  So two pockets get that money; pretty much, drug traffickers get that money. 

Who are these drug traffickers?  Well, they're very tightly overlapped with extremists groups.  And we know that.  We know HIG, IMU, remnants of the Taliban and possibly even al-Qaida are tied to some of that money.  That is the external reason why we are worried.  Going beyond the stability of Afghanistan, the stability of the region, we do not want to see power projection on drug money outside of that country.

Yes, sir.

QUESTION:  Mr. Charles, largely, especially here in Hollywood, we have an entertainment industry.  That's our culture, our society, which involve movies, of course, and music.  It's a youth culture.  And for any of these illicit drugs -- you've just been talking about Afghanistan and Burma -- that is also supplemented by -- we just had a drug bust up in Canada, reports today, five Canadian Mounted Police were gunned down.  How critical is it to get to both of these entertainment industries, as well as to the politicians in some areas such as British Columbia?  You mentioned earlier The Netherlands.  They've had a very liberal type of thought concerning this over a decade or two.

ASSISTANT SECRETARY CHARLES:  Sure.  The short answer is:  very.  And what do I mean by that?  No drug policy anywhere in the world, despite my emphasis on supply reduction, is going to be successful without demand reduction, and without speaking in lingo here, to come back to basics, you need to teach kids and parents that this is dangerous and you need to teach Hollywood that this is dangerous.

I don't know of anybody that chooses to be a drug addict, and I think it's one of the saddest end results of decision making that I can imagine.  So I think we have to put special effort.  But I would note that people like John Walters in ONDCP are doing that.  I would also note that we, in this Bureau, do demand reduction all over the world.

I visited drug treatment centers in Far East, South America.  We are very aggressive on both fronts.  And that is the way you solve a problem.  You teach people not to do the bad thing.  You help the people who have made a bad decision to get out of that.  And you try because drugs are so addictive because they're a supply that generates their own market, their own demand, you try to reduce the supply so that there will not be that addictive substance in the society.

QUESTION:  Do you also see a change in these entertainment industries?

ASSISTANT SECRETARY CHARLES:  To be honest, I do.  I will tell you that the expert on this is not me; it is John Walters and ONDCP.  But there is a definite movement in terms of the public discussion, and I think President Bush is to be credited for having driven that out there.

Yes, sir.

QUESTION:  Sir, if, despite the efforts of President Fox, the Mexican cartels are putting Mexico as the new transit country of cocaine and a major producer of heroin, methamphetamine and marijuana, what it means?  Are the Mexican cartels getting stronger, maybe producing more?  Or what is going on?  And how do you see the war between drug smugglers along the southern border?

ASSISTANT SECRETARY CHARLES:  Well, I will direct you first to the report; and secondly, we can have a longer conversation later about this.  But there are individual metrics, again, region by region, that I think show -- I think President Fox's leadership has made a difference.  I think at the federal level you have reduced corruption.  I think you have the AFI has proved out that you can really go after some of these people.

I don't believe the cartels are stronger, no.  I see the eradication effort.  But, look, there is room for improvement and you'll see that.  The room for improvement lies in each of the areas of the drug trade.  You can eradicate more.  There are some people who say, if you eradicated just 10 percent more in Mexico, you would hit some kind of a magic point after which the industrial capacity would begin to break down.  I don't know if that's true or not, but I know you can do more; we can all do more.

Mexico does an enormous amount of eradication on their own, in both -- they do it all on their own -- in both opium and in marijuana.  On cocaine and coca, it is a matter of -- and DEA, again, is an expert on this.  But they have driven new numbers out there in terms of going after traffickers and in terms of extraditions.  They just set a record, Mexico set a record on extraditions, and some of them were very high-profile extraditions.

Should we be doing more?  You bet.  But are they doing well?  I think they're doing well.  I don't think there is back slippage.

QUESTION:  What other extraditions would you like to see?  For example, I suppose, maybe the big figures of the Mexican cartels.  Would you like to be -- would you like them to be extradited to U.S.?

ASSISTANT SECRETARY CHARLES:  Sure, absolutely, and I think if the Department of Justice were standing up here they would say just what I said twice.  I mean, I think the answer is yes, we have to work closely together because our national security interests are very closely tied together.

Yes, sir.

QUESTION:  Burma, second largest producer of opium.  How much Burmese Government has been cooperating with DEA?  And we know that (inaudible) as a leader who has had a very strong connection with the Burmese military regime, were (inaudible) in the New York State last -- in January.  And do you have any kind of communication with the Burmese military regime on this matter to extradite them?

ASSISTANT SECRETARY CHARLES:  What I can tell you is the following.  There were indictments of the Wa.  The DEA and the Department of Justice are the experts on those.  I don't even have those indictments here, or I didn't go through them in anticipation of this, but I know they were out there and I read the summaries.  DEA does have a presence and does obviously interact on the ground operationally.  We do not directly support them, so I think that's where I would take the question. 

I want to give them a little more time, just roll through a few more.  I know, I know it's coming, but --

STAFF:  Just trying to keep you --

ASSISTANT SECRETARY CHARLES:  That's -- I appreciate it, no, I appreciate it. 

Yes sir.

QUESTION:  Mr. Charles, concerning -- you mentioned both the progress that Colombia and Mexico have made in both arresting alleged kingpins and extraditing suspects.  Guatemala, as you know, has made no progress in -- or very little progress in prosecuting any of its own kingpins inside Guatemala.  And now there's been an effort, a request made to extradite some suspects that were recently arrested -- mid-level suspects -- but no suspects have been extradited in more than ten years, as you know. 

Can you address that issue and explain what the problem is in Guatemala?

ASSISTANT SECRETARY CHARLES:  Yes.  I think I can.  Let me say there was a recent change of government in Guatemala.  That's a big deal.  I have met with them a couple of times.  It is clear to me their commitment is different and real.  They did help us on the extradition of one non-Guatemalan, and that was a big person and they helped us get that person here. 

They are under -- they have a number -- in terms of public corruption against both the army and others, they have a number of investigations underway right now.  And I think these are path-breaking.  I think they're different from anything you and I have seen in ten years.  So I'm actually very hopeful.  I do say -- like with all our allies that tackle this problem, personally I think we need to keep doing more to help them and I think we need to reward those if we can who are doing the right thing to wring corruption out of their governments, and I think they are.

QUESTION:  What about the two suspects that the first Bush Administration named as drug traffickers, the former intelligence chiefs, Callejas y Callejas and Ortega Menaldo?  Ambassador Hamilton has come out in favor of a proposal for having a UN taskforce investigate the alleged clandestine security forces.  Do you support that effort?  Do you think that will help toward bringing people -- those alleged suspects to justice?

ASSISTANT SECRETARY CHARLES:  I would say I do.  I'd have to go back and study the individual cases.  I can't say I studied them in anticipation of this moment.  But I will -- in fact, I'll carry on a dialogue with you afterwards or Monday on that.  But I think the short answer is we do. 

QUESTION:  Thank you.

ASSISTANT SECRETARY CHARLES:  Yes ma'am.

QUESTION:  Well, you're saying that you don't see any -- this is Latin America -- you don't see any balloon effect going on in the region, but the reduction in Colombia and the very good success that you mentioned in Peru and Bolivia, what's going on with that cocaine?  Is it moving through Central America?  Is it moving?  Is it disappearing?  What's going on?

ASSISTANT SECRETARY CHARLES:  Excellent point.  Let me say the amount of cocaine for coca that would have become cocaine that was removed this year -- a record -- is in the vicinity of, I'm told, $60 billion.  Okay, that is an enormous amount of cocaine and lives directly affected that don't see that cocaine.  The question that you haven't asked me that I think is the tougher question is the question, "When are you going see the price and purity change here on the streets of America?"  Because that's going to be when it affects us directly. 

The answer to that question, which I think is completely honest and it is what we have to watch for, and that goes to the point of what's the production capacity and where's the cocaine coming from and how much is there and where is it -- why aren't we stopping everything dead in its tracks, is that, in many ways, it's like draining a swimming pool and waiting to see a statue that sits at the bottom of the pool.  All right?  You have to get the excess capacity out of the production and we're getting it out.  Think about that:  33 percent reduction in cultivation together with record interdictions.  You are squeezing it from both ends.  And the hope is that you're -- and I predict we will -- if we stay on this track, if the political will remains solid, I think within a year or two you will begin to see palpable, measurable, in things like stride data and other data points, you will be able to see changes in the -- I think you'll actually see a change in price first and then you'll see a change in measurable purity in major metropolitan areas. 

QUESTION:  Would it work the other way around, that the cocaine price in the United States is going to go even higher to buy more cocaine than probably --

ASSISTANT SECRETARY CHARLES:  Yes.

QUESTION:  -- and ingest more --

ASSISTANT SECRETARY CHARLES:  What I said was price change.  You see prices rise and purity levels fall in response to a squeeze on supply.  By the way, this isn't theory.  We know this because it happened in the late-1980s.  We know -- up until 1991.  We saw this happen.  And do you know what happened in direct response, which was fascinating and is the great prover that these efforts are well worth the expenditure?  Between 1986 and 1991, there was a 72 percent drop in cocaine use in this country.  Why?  Because it became very expensive and purity levels were dropping.  By the way, there was also a strong -- I forget where the question came from -- but a very strong demand reduction program, which it's again happening.  So yes.

Yes ma'am.

QUESTION:  About the Brazil you mentioned -- they should (inaudible) invest in the region.  Is there anything else that Brazil can be doing?  Do you expect something else? 

ASSISTANT SECRETARY CHARLES:  I'm missing the cornerstone of the question again.

QUESTION:  Do you expect something else from Brazil?

ASSISTANT SECRETARY CHARLES:  I think that we'd -- I mean, we have put some expectations that are sort of hard and fast in the document, but I think the short version is this --  I think regional cooperation is extremely important.  I think demand reduction is extremely important in a place like Brazil.  I think you have to be attentive to the national security aspects that attach to this.  I think Brazil is.  I think that they have initiated a number of law enforcement efforts that I think are likely to produce positive results.  But I think that there's room for improvement and what we've done is ticked through legal and policy changes that I think we think would be valuable.  

QUESTION:  Sir, before you go, one more crack at it.

 

ASSISTANT SECRETARY CHARLES:  Yes sir.  Go ahead.

QUESTION:  The heart of my question is what went wrong last year to produce that dramatic downturn in Afghanistan, or uptick in production in Afghanistan?  And what do you think needs to be done or will be done this year to try to turn it around?  We've seen General Abizaid talk about the need to put counternarcotics efforts right up there with counter-insurgency efforts at the military level.  You've seen the reports of spraying of crops --

ASSISTANT SECRETARY CHARLES:  Which are totally false.

QUESTION:  -- which are false.  Is it time to start doing that?  What needs to be done differently and what needs to be --

ASSISTANT SECRETARY CHARLES:  First of all, let me say this is a much longer discussion.  I'm happy to have it with you at length next week.  But the short version of this is that nothing has to have gone wrong for the natural forces of a post-conflict, very poor environment without corruption controls yet institutionalized, without all of that growing and harvest happened prior to the remarkable, miraculous election on October 9th, without violence, of President Karzai.  There has to be a seeding and a taking root of the institutions of democracy which is happening, which will in turn allow you to go after the bad guys and, by the way those they coerce.  To a large extent, the farmers are not only growing because they need to grow, but also because they're coerced with debt regimes and in other ways to try to feed that. 

You know, I just would note, too, that there are a lot of metrics I didn't put -- that are not in this report, that are very, very illustrative.  For example, INL has trained -- this Bureau and DOD has worked very closely with us and DOJ has worked with us.  We have trained 34,000 police in Afghanistan since about this time last year.  That is a remarkable change.  That is probably what helped, together with the ANA, to stabilize the October 9th elections.  We also have a president in President Karzai who is absolutely committed.  I see no chinks in the armor.  He is determined that this will not become the future of his country. 

So it is in those metrics that I -- and in those -- and in the reality which is that it takes time to get there.  You have an international commitment, you have a boosted domestic commitment, i.e., from the United States.  You have a reinforced, in December, commitment by President Karzai.  We just have to accelerate.  It's as if someone told you, "I want a house built in 24 hours.  Go."  Well, you've to lay the foundation, you've got to set up the walls, you've got to put a roof on, you've got to put stairs up, you don't have a second floor yet.  You've got to do everything. 

And that's what's happening there right now.  But an incredible turn of events, it is truly happening.  It took this country 13 years to go from a Declaration of Independence to a Constitution.  They're way beyond that and they're building from, you know, zero, in terms of their economy and their capabilities. 

So it is a moment of enormous risk, maybe even danger, but it is also a moment of extraordinary opportunity.  And I believe that the opportunity piece of it is not a fiction, it is absolutely clear.   It's being proved out by metrics.  And they will get there.  You just have to send the signals together with the resources that say this is the way we're going to go and this is the way the world's going to support you going and this over here is not the way."  By the way, aerial eradication is something he may choose to do, but that's his choice. 

Any other dying, pressing questions?  Okay.  Anybody who wants to contact us later certainly can.  Thank you.

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