[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]


 
 TRANSNATIONAL DRUG ENTERPRISES: THREATS TO GLOBAL STABILITY AND U.S. 
 NATIONAL SECURITY FROM SOUTHWEST ASIA, LATIN AMERICA, AND WEST AFRICA 

=======================================================================

                                HEARING

                               before the

                   SUBCOMMITTEE ON NATIONAL SECURITY
                          AND FOREIGN AFFAIRS

                                 of the

                         COMMITTEE ON OVERSIGHT
                         AND GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                               __________

                            OCTOBER 1, 2009

                               __________

                           Serial No. 111-61

                               __________

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              COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

                   EDOLPHUS TOWNS, New York, Chairman
PAUL E. KANJORSKI, Pennsylvania      DARRELL E. ISSA, California
CAROLYN B. MALONEY, New York         DAN BURTON, Indiana
ELIJAH E. CUMMINGS, Maryland         JOHN L. MICA, Florida
DENNIS J. KUCINICH, Ohio             MARK E. SOUDER, Indiana
JOHN F. TIERNEY, Massachusetts       JOHN J. DUNCAN, Jr., Tennessee
WM. LACY CLAY, Missouri              MICHAEL R. TURNER, Ohio
DIANE E. WATSON, California          LYNN A. WESTMORELAND, Georgia
STEPHEN F. LYNCH, Massachusetts      PATRICK T. McHENRY, North Carolina
JIM COOPER, Tennessee                BRIAN P. BILBRAY, California
GERRY E. CONNOLLY, Virginia          JIM JORDAN, Ohio
MIKE QUIGLEY, Illinois               JEFF FLAKE, Arizona
MARCY KAPTUR, Ohio                   JEFF FORTENBERRY, Nebraska
ELEANOR HOLMES NORTON, District of   JASON CHAFFETZ, Utah
    Columbia                         AARON SCHOCK, Illinois
PATRICK J. KENNEDY, Rhode Island     BLAINE LUETKEMEYER, Missouri
DANNY K. DAVIS, Illinois
CHRIS VAN HOLLEN, Maryland
HENRY CUELLAR, Texas
PAUL W. HODES, New Hampshire
CHRISTOPHER S. MURPHY, Connecticut
PETER WELCH, Vermont
BILL FOSTER, Illinois
JACKIE SPEIER, California
STEVE DRIEHAUS, Ohio
------ ------

                      Ron Stroman, Staff Director
                Michael McCarthy, Deputy Staff Director
                      Carla Hultberg, Chief Clerk
                  Larry Brady, Minority Staff Director

         Subcommittee on National Security and Foreign Affairs

                JOHN F. TIERNEY, Massachusetts, Chairman
CAROLYN B. MALONEY, New York         JEFF FLAKE, Arizona
PATRICK J. KENNEDY, Rhode Island     DAN BURTON, Indiana
CHRIS VAN HOLLEN, Maryland           JOHN L. MICA, Florida
PAUL W. HODES, New Hampshire         JOHN J. DUNCAN, Jr., Tennessee
CHRISTOPHER S. MURPHY, Connecticut   MICHAEL R. TURNER, Ohio
PETER WELCH, Vermont                 LYNN A. WESTMORELAND, Georgia
BILL FOSTER, Illinois                PATRICK T. McHENRY, North Carolina
STEVE DRIEHAUS, Ohio                 JIM JORDAN, Ohio
STEPHEN F. LYNCH, Massachusetts      JEFF FORTENBERRY, Nebraska
HENRY CUELLAR, Texas                 BLAINE LUETKEMEYER, Missouri
MIKE QUIGLEY, Illinois
                     Andrew Wright, Staff Director

















                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on October 1, 2009..................................     1
Statement of:
    Olson, Eric L., senior advisor, security initiative, Mexico 
      Institute, Woodrow Wilson International Center for 
      Scholars; David Mansfield, research fellow, Carr Center for 
      Human Rights, John F. Kennedy School of Government, Harvard 
      University; Douglas Farah, senior fellow, International 
      Assessment and Strategy Center; and Vanda Felbab-Brown, 
      fellow, 21st Century Defense Initiative, Brookings 
      Institute..................................................     4
        Farah, Douglas...........................................    32
        Felbab-Brown, Vanda,.....................................    50
        Mansfield, David.........................................    16
        Olson, Eric L............................................     4
Letters, statements, etc., submitted for the record by:
    Farah, Douglas, senior fellow, International Assessment and 
      Strategy Center, prepared statement of.....................    35
    Felbab-Brown, Vanda, fellow, 21st Century Defense Initiative, 
      Brookings Institute, prepared statement of.................    52
    Mansfield, David, research fellow, Carr Center for Human 
      Rights, John F. Kennedy School of Government, Harvard 
      University, prepared statement of..........................    18
    Olson, Eric L., senior advisor, security initiative, Mexico 
      Institute, Woodrow Wilson International Center for 
      Scholars, prepared statement of............................     7


 TRANSNATIONAL DRUG ENTERPRISES: THREATS TO GLOBAL STABILITY AND U.S. 
 NATIONAL SECURITY FROM SOUTHWEST ASIA, LATIN AMERICA, AND WEST AFRICA

                              ----------                              


                       THURSDAY, OCTOBER 1, 2009

                  House of Representatives,
     Subcommittee on National Security and Foreign 
                                           Affairs,
              Committee on Oversight and Government Reform,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 10 a.m., in 
room 2154, Rayburn House Office Building, Hon. John F. Tierney 
(chairman of the subcommittee) presiding.
    Present: Representatives Tierney, Flake, Murphy, Welch, 
Quigley, and Luetkemeyer.
    Staff present: Adam Hodge, deputy press secretary, full 
committee; Andy Wright, staff director; Elliot Gillerman, 
clerk; Talia Dubovi, counsel; Brendan Culley and Steven Gale, 
fellows; Rachel Charlesworth and Jesse Schwartz, interns; Adam 
Fromm, minority chief clerk and Member liaison, Mitchell 
Kominsky, minority counsel; Christopher Bright, minority senior 
professional staff member; and Glenn Sanders, minority Defense 
fellow.
    Mr. Tierney. Good morning. A quorum now being present, the 
Subcommittee on National Security and Foreign Affairs' hearing 
entitled, ``Transnational Drug Enterprises: Threats to Global 
Stability and U.S. National Security from Southwest Asia, Latin 
America, and West Africa,'' will come to order.
    I ask unanimous consent that only the chairman and ranking 
member of the subcommittee be allowed to make opening 
statements. Without objection, that is so ordered.
    I ask unanimous consent that the hearing record be kept 
open for 5 business days so that all members of the 
subcommittee will be allowed to submit a written statement for 
the record. Without objection, that is so ordered.
    Today, the Subcommittee on National Security and Foreign 
Affairs turns its attention to a longstanding and growing 
threat to U.S. national security, the transnational illicit 
drug trade.
    Illicit drugs from Mexico, Latin America, and the Caribbean 
are no strangers to our shores. The issue of illicit drugs is 
also no stranger to this House and Congress. In March of this 
year, we held a hearing on Money, Guns, and Drugs to examine 
whether U.S. inputs were fueling drug-related violence on the 
U.S.-Mexico border. This subcommittee has also held numerous 
hearings on Afghanistan, producer of 95 percent of the world's 
poppy crop that forms the basis of the heroin trade.
    Today's hearing builds on that record. It raises a central 
question about the relationship between the global illicit drug 
enterprises and their collective threat to our national 
security. The United States has had a geographic or country-
specific drug control strategy ranging widely from the Balkan 
States of Eastern Europe to Colombia, Guatemala and Mexico, and 
more recently to West Africa. While each country's conditions 
dictate a unique drug control strategy, today's hearing 
examines some of the underlying trends and the related 
implications for U.S. national security.
    There is compelling evidence that illicit drugs create 
enormous financial power that allows traffickers to corrode 
government institutions. Bribes undermine confidence in the 
very institutions we rely on to protect us as corruption 
reaches judges, prosecutors, police, and correctional officers. 
When bribes fail, traffickers use ruthless violence and 
unrelenting intimidation to expand their illegal enterprises.
    Over time, bribes, violence, and intimidation take their 
toll, especially in weak states. The net effect of these 
assaults is to undermine a nation's rule of law, cripple its 
civic institutions, and reinforce the public's view that 
government is ineffective. The downward spiral of drug money, 
violence, and intimidation, once it has begun, is difficult to 
reverse in weak states.
    But this is just half the story. With a degraded or 
weakened rule of law environment, non-drug actors from the 
criminal world and their transnational counterparts step in and 
further exploit an already unstable situation. While drug 
trafficking may be the most lucrative component of 
transnational crime, it is hardly the only line of business. 
Money laundering, weapons trafficking, commercial espionage, 
human trafficking, smuggling, and piracy all flourish alongside 
illicit drug enterprises. Further declines in the rule of law, 
public confidence, and national governance are the consequence.
    The magnitude of money from illicit drugs probably cannot 
be underestimated. The United Nations Office on Drugs and 
Crimes estimates that the global proceeds from illicit drugs 
range between $100 billion to more than $1 trillion per year. 
Illicit drug money flows have been estimated to be the largest 
segment of the Afghan GDP, just over 50 percent in 2007. In 
West Africa's Guinea-Bissau, it has been reported that drugs 
and drug-related money is the single biggest slice of their 
gross domestic product, and growing.
    Drug trafficking, wherever it thrives, presents a serious 
threat to the national sovereignty of the afflicted state. But 
it is the intersection of drugs with other illegal 
transnational threats, especially terrorism, that makes it so 
treacherous. This so-called drug-terror nexus links the 
monetary proceeds from drugs with filling the coffers of 
terrorist organizations like the FARC in Colombia, the Taliban 
in Afghanistan, and Al Qaeda in the Islamic Maghreb.
    According to the latest U.S. intelligence, terrorist groups 
in more than a dozen countries across three continents are 
significantly bankrolled by illicit drug moneys. According to 
the Drug Enforcement Administration, 19 of the 43 groups the 
United States designated as Foreign Terrorist Organizations in 
2007 were involved in the drug trade or other criminal 
activities.
    In addition, drug trafficking organizations' efforts to 
weaken or topple local governments significantly undermines our 
ability to achieve vital diplomatic, development, and economic 
assistance goals overseas. Threats from these groups not only 
test state stability, but also undermine the goals of regional 
political bodies like the Organization of American States and 
boldly challenge international institutions like the United 
Nations.
    At today's hearing we will learn from experts about the 
linkages between illicit drugs, weak states, and the U.S. 
national security in the context of Latin America, Afghanistan, 
and West Africa. The subcommittee plans to hold a second 
hearing with the relevant government agencies and departments 
to examine the U.S. national drug control strategy and the 
planned use of the nearly $15 billion that has been requested 
for that purpose this year.
    With that, I turn to Mr. Flake for his opening remarks.
    Mr. Flake. I thank the chairman. He made the point that it 
is the intersection of drugs and money that it garners for 
terrorist activities and other things that are most concerning 
to us. I am particularly interested in illicit drugs in Mexico 
affecting the border region like Arizona--I am sure Mr. Olson 
will have some things to say about that--and also the situation 
in Afghanistan, obviously, with narcoterrorism there.
    So I welcome the witnesses. Thank you for taking the time 
to come here, and look forward to the hearing.
    Mr. Tierney. Thank you.
    This morning we will receive testimony from the witnesses, 
but before they begin, I would just like to give a brief 
introduction of each, starting from my left.
    Mr. Eric Olson serves as a senior advisor on security at 
the Mexico Institute of the Woodrow Wilson International Center 
for Scholars. He has specialized in the America's region, but 
he has also worked on human rights issues in Africa, Asia, and 
the Middle East. From 2006 to 2007, he served as a senior 
specialist at the Organization of American States, and from 
2002 to 2006 as Amnesty International's Advocacy Director for 
the Americas. He holds an M.A. from American University.
    Mr. David Mansfield is a fellow with the Carr Center for 
Human Rights at Harvard University's Kennedy School of 
Government. He also works as an independent consultant for a 
range of organizations, including the United Kingdom 
Government, the World Bank, and various non-governmental 
organizations on policy and operational issues with regard to 
illicit drugs in Afghanistan and on alternative livelihoods. He 
has previously worked on overseas drug and development issues 
in each of the major drug producing regions in South and 
Southeast Asia and Latin America.
    Mr. Douglas Farah is a senior fellow at the International 
Assessment and Strategy Center. In 2004, he worked for 9 months 
with the Consortium for the Study of Intelligence, studying 
armed groups and intelligence reform. For the two decades 
before that, he was a foreign correspondence and investigative 
reporter for the Washington Post and other publications 
covering Latin America and West Africa. From 2000 to 2004, he 
was the Washington Post West African bureau chief based in the 
Ivory Coast. He holds a B.A. and a B.S. from the University of 
Kansas.
    Dr. Vanda Felbab-Brown serves as a fellow at the 21st 
Century Defense Initiative at the Brookings Institution, where 
she specializes in the interactions between illicit economies 
and military conflict. Dr. Felbab-Brown also serves as an 
adjunct professor in the Security Studies Program at Georgetown 
University's Walsh School of Foreign Service, where she was an 
Assistant Professor prior to assuming her current position at 
Brookings. She holds a B.A. from Harvard University and a Ph.D. 
from the Massachusetts Institute of Technology.
    So I want to thank all of you for bringing your substantial 
credentials and your experience here before the committee 
today. It is the policy of the committee to swear witnesses in 
before they testify, so I ask that you please stand and raise 
your right hands.
    [Witnesses sworn.]
    Mr. Tierney. I ask that the record reflect that all of the 
witnesses answered in the affirmative.
    As I mentioned to you before the hearing, your written 
remarks will be placed in the record, and I will share with Mr. 
Flake that I read the remarks, as you have, and I think, if 
they were to give them here today, it would be about 35 minutes 
each. So I have asked everybody to condense that as close to 5 
minutes as possible, and then we will have some questions and 
answers from our members of the panel here.
    So, Mr. Olson, can we begin with you, please?

     STATEMENTS OF ERIC L. OLSON, SENIOR ADVISOR, SECURITY 
  INITIATIVE, MEXICO INSTITUTE, WOODROW WILSON INTERNATIONAL 
  CENTER FOR SCHOLARS; DAVID MANSFIELD, RESEARCH FELLOW, CARR 
CENTER FOR HUMAN RIGHTS, JOHN F. KENNEDY SCHOOL OF GOVERNMENT, 
HARVARD UNIVERSITY; DOUGLAS FARAH, SENIOR FELLOW, INTERNATIONAL 
ASSESSMENT AND STRATEGY CENTER; AND VANDA FELBAB-BROWN, FELLOW, 
      21ST CENTURY DEFENSE INITIATIVE, BROOKINGS INSTITUTE

                   STATEMENT OF ERIC L. OLSON

    Mr. Olson. Thank you, Chairman Tierney and Ranking Member 
Flake. It is my pleasure to appear before you today and the 
distinguished members of the subcommittee on behalf of the 
Mexico Institute at the Woodrow Wilson International Center for 
Scholars.
    Established by an act of Congress in 1968, the Wilson 
Center is our Nation's official living memorial to President 
Woodrow Wilson. As both a distinguished scholar, the only 
American President with a Ph.D., and a national leader, 
President Wilson felt strongly that the scholar and the 
policymaker were ``engaged in a common enterprise.'' I hope I 
can represent successfully President Wilson's vision of 
bringing together the scholarly and the policy dimensions 
today.
    As you have noted already, the tragic and disturbing 
headlines about drug violence in Mexico have horrified and 
alarmed Americans about what is happening to our neighbor and 
strategic partner to the south. It raises real questions about 
the safety of Americans traveling and for the safety and 
security of the United States. And given the proximity of the 
violence, the fact that it spills into the United States, and 
that organized crime groups in Latin America have formed 
strategic partnerships with organized crime in the United 
States, the decision to hold this hearing is not only timely, 
but essential.
    In the brief time that I have, I would like to talk about 
three things: the dimension of the problem of organized crime 
and transnational drug trafficking in Latin America, why and 
how organized crime is able to take root and prosper in the 
region, and, finally, a policy framework the United States and 
governments of Latin America may want to consider in addressing 
this problem.
    First let me describe the problem a bit. We know that the 
United States is still the world's largest market for illegal 
drugs. This enormously lucrative market results in roughly $35 
billion, give or take a billion, in illegal proceeds laundered 
back to Mexico and Colombia every year. Profit margins are so 
large, in fact, that according to some drug traffickers they 
can lose three out of four loads of cocaine and still turn a 
profit. Beyond that, it is not profitable. If we were to take 
this as fact, it would mean that drug traffickers could lose 75 
percent of their inventory and still turn a profit. Imagine if 
Ford or GM could do the same.
    According to the 2009 International Narcotics Control 
Strategy Report, all cocaine originates in the Andean countries 
of Colombia, Bolivia, and Peru. In 2008, the Interagency 
Assessment of Cocaine Movement estimated that between 500 and 
700 metric tons of cocaine departed South America headed to the 
United States, slightly less than was coming up in 2007.
    While there are many different ways cocaine is moved from 
the Andes to the United States, one method is to employ small 
private planes to move the loads from Colombia to Central 
America, where bundles are either dumped in the sea and 
retrieved or planes land or are purposely crashed on tiny 
landing strips in remote areas. Whatever the exact route, 
roughly 90 percent of cocaine entering the U.S. transits 
through Mexico.
    In Mexico, there are at least five major drug trafficking 
organizations, many more splinter groups that are defending 
their territories, competing with one another, trying to set up 
new routes. Some of the recent violence that we have seen in 
the press is the result of intra-organizational and inter-
organizational conflicts and competition, as we see second tier 
lieutenants, spinoff organizations, and cartels competing with 
each other as the heads or kingpins of a rival group are 
arrested or assassinated. So there is a lot of inter-
organizational and intra-organizational violence.
    A third source of the violence is what one could expect 
when the government aggressively pursues them and the cartels, 
the trafficking organizations fight back, and that is, of 
course, understandable.
    In Colombia, where there has been a major weakening of the 
armed guerilla movements, both the FARC and ELN, there is 
evidence that both continue to be engaged in drug-related 
activity. Likewise, the disbanding of the umbrella structure of 
paramilitary forces--this is the paramilitary demobilization 
that President Uribe undertook--has atomized the fighting 
forces. But there are new alliances being formed between local 
commanders, demobilized forces, and drug traffickers. In some 
instances, the FARC is joining with a paramilitary and ex-
paramilitary to continue trafficking.
    Sadly, despite the formal dismantling of the AUC and the 
weakening of the guerrilla groups, Colombia still remains the 
largest cultivator of the coca bush in the hemisphere. 
Organized crime has been quite agile in establishing new 
alliances that fit their business model, and they could care 
less about anyone's particular ideological persuasion, whether 
communist, leftist, anticommunist, or capitalist. To paraphrase 
Michael Corleone, it is not ideological, it is strictly 
business.
    Finally, it is important to point out that organized crime 
in Latin America is not limited to drug trafficking, but 
involves trafficking in other goods, such as pirated and 
counterfeit products, autos and auto parts, and cigarettes, to 
name a few, as well as illegal activities such as kidnapping, 
human trafficking, and even ``legitimate'' or quasi-legitimate 
businesses and enterprises. In many instances--and this is 
important--the same organizations that traffic in illegal drugs 
also traffic in products such as weapons or people, or engage 
in apparently legitimate businesses like real estate and 
construction.
    Bottom line, there is a two-way flow of trafficked goods, 
money, and humans. Drugs and other pirated goods and human 
trafficking move north, while money, possibly half of it in 
cash, weapons, autos, auto parts, cigarettes move south.
    Now, let me say a little bit in the time that is remaining.
    Mr. Tierney. Mr. Olson, you know what I am going to 
suggest? Because, having read yours, I know you have some good 
suggestions on where to go with this--we will ask that question 
when the round comes in, as to where do we go from here. I 
think you have laid a great groundwork for why we need to 
attend to this problem.
    Mr. Olson. OK. Sure.
    Mr. Tierney. And then if it is fine with you, we will, on 
the question and answer period, get to your suggestions for a 
strategy going forward.
    Mr. Olson. All right. Good.
    Mr. Tierney. Thank you, sir.
    [The prepared statement of Mr. Olson follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Tierney. Mr. Mansfield.

                  STATEMENT OF DAVID MANSFIELD

    Mr. Mansfield. Thank you, Chairman and Ranking Member 
Flake. You will have to forgive me, this is a bit of a novelty 
for me in the sense that I find myself in unusual surroundings. 
I have spent the last 18 years essentially looking at drugs 
from a rural development perspective. I am far more used to the 
company of opium farmers and traders in Afghanistan.
    Mr. Tierney. Well, I hope you find our company almost as 
good. Could I ask you just to put the mic a little bit more 
directly in front of your mouth?
    Mr. Mansfield. Sure.
    Mr. Tierney. I think that will be helpful. Thank you. Thank 
you.
    Mr. Mansfield. For me, it is clear illicit drugs thrive in 
marginal areas. These are areas that are marginal economically, 
politically, environmentally. They are areas that are often in 
conflict with what is essentially a weak state. That conflict 
can be ethnic, military, and the cultivation takes place in 
disputed territory, borderlands.
    Attempts to address drug production have often involved the 
government actually penetrating these marginal areas, 
establishing state presence in all its functions, not just 
security apparatus, and to provide support to the provision of 
public goods, roads, education, and health, and create an 
environment for the private sector to work. In Pakistan, this 
process saw cultivation move from one area to another as the 
state extended its writ into these areas, from Brunair to 
Gaduna Mazi to Deer to Bijour Mamand. This process has also 
been successful in Southeast Asia.
    For me, given my background of 12 years in Afghanistan, 
Afghanistan is the anomaly. In Afghanistan, the bulk of drugs 
are grown in areas that are accessible, not remote; it is not 
the borderlands. These areas have irrigation, fertile soils, 
and in many cases the cultivation takes place right next to 
provincial centers. In Afghanistan, it is not, as in other 
countries, a weak state trying to penetrate marginal areas, but 
a marginal state trying to move beyond its provincial centers.
    In Afghanistan, the impact illegal drugs have on U.S. 
national security interests are clear, given U.S. strategic 
interests in Afghanistan and Pakistan, the presence of U.S. 
troops, and the considerable investment the United States has 
made in governance and security and development in the area. 
But the question is how to respond and how to respond in a way 
that does not worsen the situation. For example, there is no 
doubt that drugs are ``fueling the insurgency.''
    But this is not as clear cut as much as the current 
narrative and analysis in the media often suggests. Much of the 
current discussion focuses on the Taliban and drugs, and the 
funds that they own from the illegal drugs trade. Estimates 
range from $70 to $500 million, suggesting there are some 
calculation issues there. And there are claims of centralized 
taxation systems around opium.
    What I feel is this discussion neglects the decentralized 
nature of the Taliban; the fact that there is no single 
insurgency, but a disparate collection of insurgent groups; 
and, fundamentally, it neglects that in the south of the 
country there is a widespread view that, whether right or 
wrong, it is corrupt government officials that are more 
involved in the drugs trade than the Taliban or groups 
associated with them. In this case, we have to question how 
much of the insurgency is a reaction to government. After all, 
people expect insurgents to fund themselves in whatever way 
possible; theft, kidnap, drugs. But they don't expect their 
government to do so, or those in government to do so.
    The policy response to the current narrative on the Taliban 
and drugs funding is to prioritize those traffickers with links 
to insurgent groups. But does this not potentially increase the 
market power of those corrupt officials involved in the drugs 
trade? If so, it seems it would do little to reduce the flow of 
drugs from Afghanistan and actually reduce the legitimacy of 
the government of Afghanistan in the eyes of the people.
    A further example of policy that can potentially exacerbate 
the impact of illicit drugs is that of eradication. There have, 
in the past, been a push for aggressive eradication, and these 
calls persist. They may even increase if cultivation increases 
in the 2009-2010 growing season, which seems probable. I 
believe eradication and the threat of it can play a catalytic 
role in areas where farmers have viable alternatives. I have 
seen it work in districts around provincial centers in the east 
and the north of the country.
    But where farmers don't have alternatives--and there are 
many areas--due to the resource base that they have or 
insecurity, alternatives simply don't exist. In these areas, 
eradication leads to economic problems and, in consequence, 
growing insecurity and provides an entry point for insurgent 
groups. In these areas, development investments are the 
priority. And we have to recognize a level of opium cultivation 
is a reality for some time to come.
    Ultimately, there is a need to see illicit drugs in 
context. We need to recognize the threat they pose, but we need 
to ensure that the response does not exacerbate that. Thank 
you.
    [The prepared statement of Mr. Mansfield follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Tierney. Thank you. That was well done. Even if you saw 
that the trap door didn't open on Mr. Olson, you still managed 
to finish in 5 minutes, so we appreciate that.
    Mr. Farah, please.

                   STATEMENT OF DOUGLAS FARAH

    Mr. Farah. Chairman Tierney and Ranking Member Flake, thank 
you for the opportunity to talk about something that I do 
believe is a true national security threat to the United 
States, Latin America, and West Africa.
    What we are seeing in globalization is the development of 
flexible criminal and terrorist pipelines, where key 
facilitators are vital to the operations of both sets of actors 
and they are highly adaptable and forward-thinking. These 
pipelines or recombinant chains of actors and commodities now 
have the ability to move illicit goods around the globe to 
wherever the environment is most tolerant. The most lucrative 
commodities, as noted, are cocaine and heroin, but they are the 
same pipelines that serve weapons traffickers, human smugglers, 
fraud and contraband.
    While the cocaine from the Andean region traditionally 
moved through Central America, Mexico, and the Caribbean, West 
Africa has been a new and extremely challenging part of the 
distribution network. The growth of transcontinental drug 
trafficking structures in recent years, with the capacity to 
project their operations from Latin America to West Africa, is 
a sobering reminder of the wealth and creativity of these 
structures and their ability to coopt already weak and failing 
states.
    There are several causes of concern for the United States 
in the emerging cocaine nexus. The first is the presence of 
Mexican drug trafficking organizations, particularly the 
Sinaloa cartel in West Africa. The second is the presence of 
the FARC there. The FARC in the past decade has morphed into 
one of the world's largest cocaine trafficking syndicates, and 
both the United States and the European Union have designated 
it a terrorist organization.
    The presence of the Mexican organizations and the FARC in 
West Africa and that cocaine pipeline mean that these groups 
can repatriate their profits even if the United States were to 
make significant progress in reducing the flow of drugs across 
its own southern border. The market for the drugs may change, 
but the beneficiaries of these illicit gains largely remain in 
Mexico, Colombia, and in our hemisphere.
    While the FARC has suffered a series of defeats in the past 
18 months, its ability to move cocaine to the U.S. market has 
been severely curtailed. But with the tolerance, if not 
complicity, of the Venezuelan government, the FARC has managed 
to significantly reroute its movements from Venezuela to West 
Africa, with destinations such as Guinea-Bissau, Guinea-
Conakry, Sierra Leone, Liberia, and Ghana.
    Another important point is that ungoverned spaces of West 
Africa are providing a meeting ground for criminal and 
terrorist groups to make new alliances. What I have observed in 
more than two decades of dealing with drug trafficking 
transnational and criminal organizations is that when they are 
able to meet in neutral territory, they often form alliances 
that would not be possible under other circumstances.
    Already in Guinea-Bissau, Guinea-Conakry, Ghana, and Sierra 
Leone, we are seeing members of Mexican, Colombian, Venezuelan, 
Surinamese, and European organizations operating in the same 
territory and plugging into the same pipeline, often 
commingling with the Lebanese crime syndicates that control the 
contraband and blood diamond trade.
    Just as the blood diamond trade allowed groups like the 
Revolutionary United Front in Sierra Leone to purchase advanced 
weapons to become a more legal force, the influx of cocaine 
cash will allow the criminal and militia groups in the region 
to acquire more sophisticated weapons, trainings, and 
communications. At the same time, the weak host states have 
severely limited ability to confront these groups.
    As noted the U.N. Office of Drugs and Crime conservatively 
estimates that 40 to 50 tons of cocaine, with an estimated 
value of $1.8 billion, passed through West Africa in 2007 and 
this trade is growing rapidly. The Pentagon's Africa Command 
and other intelligence services estimate the amount of cocaine 
transiting West Africa to be at least five times that estimate.
    Using U.N. figures, the only legal export from the region 
that would surpass the value of cocaine is coca from the Ivory 
Coast. If the higher numbers are used, cocaine could dwarf the 
legal exports of all the region combined and be worth more than 
the GDP of several of the region's nations.
    None of this is happening in a vacuum. The changes across 
the globe have been swift and dramatic in recent years, with 
the number of failed states growing from 11 in 1996 to close to 
30 today. More than half of those, 18, are in Sub-Saharan 
Africa. This trend is important because these growing areas 
that are either stateless or governed by states that are in 
practice functioning criminal enterprises give rise to hybrid 
organizations that make the traditional distinctions between 
terrorism and organized crime, particularly drug trafficking, 
meaningless.
    One of the reasons for the dismal state of governance in 
West Africa is that since the 1990's the region has suffered a 
series of conflicts centered on natural resources, such as 
diamonds, timber, oil, and gold. These resources, while 
valuable, pale in comparison to the money the cocaine trade 
generates. For example, at the height of the blood diamond 
trade in Sierra Leone and Liberia, the total value of diamonds 
being smuggled out was less than $200 million. The potential to 
fuel conflicts over the cocaine pipeline, the most lucrative 
commodity so far, and one whose profits are several order of 
magnitudes larger than diamonds, is truly frightening.
    There is a broader potential danger that must be kept in 
mind as we assess the emerging trends in West Africa. I 
mentioned hybrid criminal organizations such as the FARC. In 
West Africa, it is Hezbollah, the Lebanese-based Shia Muslim 
organization that has long maintained an operational presence 
on the ground and has a significant role in the blood diamond 
trade and other illicit activities. It is inevitable that these 
organizations and the drug trafficking groups will encounter 
each other and mutually benefit because each has something the 
other one wants.
    More worrisome on our hemisphere is evidence of Hugo 
Chavez's direct support for Hezbollah, including the June 18, 
2008 OFAC designations of two senior Venezuelan citizens, 
including a senior diplomat, as Hezbollah supporters. Given 
Iran's ties to Hezbollah and Venezuela, Hezbollah's ties to 
Iran and the FARC, and the FARC's history of building alliances 
with those groups, and the presence of Hezbollah and other 
armed Islamist groups in Latin America and West Africa, it 
would be dangerous to dismiss the possibility of an alliance of 
these actors. The histories of these groups indicate that they 
will take advantage of the corrupt and weak states in West 
Africa to get to know each other, work together, learn from 
each other, and exploit areas of mutual interest. 
Unfortunately, the primary area of mutual interest is a hatred 
of the United States.
    And I will leave it there.
    [The prepared statement of Mr. Farah follows:]

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    Mr. Tierney. Thank you, sir. Thank you very much for those 
remarks.
    Doctor.

                STATEMENT OF VANDA FELBAB-BROWN

    Ms. Felbab-Brown. Mr. Chairman, members of the committee, I 
am honored to have this opportunity to address the committee on 
this important issue. I will focus my comments on some general 
dynamics of the drug conflict nexus and then provide a 
comparative assessment of the significance of these 
manifestations of the drug conflict nexus to U.S. national 
security. And, if time permits, I will conclude with some 
recommendations for U.S. policy.
    The penetration of illicit economies by terrorist or 
insurgent groups provides an especially potent threat to states 
and regional stability, since, unlike crime organizations, 
belligerent groups usually tend to have bigger goals, including 
to completely eliminate the existing state's presence in 
particular locales or countries.
    Illicit economies provide for belligerent groups the 
opportunity to increase their power along multiple dimensions, 
not simply in terms of financial profits. Financial profits are 
very important because with increased financial profits 
belligerent groups can increase their fighting capabilities, 
hire a greater number of better paid combatants, buy better 
weapons, and simplify their logistical and supply chains; all 
critical for the conduct of violent opposition to a state.
    But crucially and frequently neglected in policy 
considerations, belligerents who participate in illicit 
economies frequently also obtain what I call political capital, 
namely, legitimacy with and support from local populations who 
are dependent on the illicit economy for basic livelihood. And 
they obtain this political capital by protecting the 
populations from government efforts to repress the illicit 
economy in the absence of legal livelihoods.
    They also provide a variety of other protection and 
regulatory services. With this political capital and the 
ability to provide these regulatory services and protection 
services, they have the capacity to transform themselves from 
mere violent actors to violent actors that take on the 
functions of a protostate.
    Although the political capital that belligerents obtain is 
frequently very thin, it is nonetheless sufficient to motivate 
the population not to provide intelligence on the belligerents 
to government, and this is critical. Such human actionable 
intelligence is critical for the success of counterinsurgency 
and counterterrorism efforts, as well as for the effectiveness 
of law enforcement.
    Several factors influence the size of the political 
capital, but, in a nutshell, it is strongest in areas where the 
country is poor, the illicit economy is labor intensive and, 
hence, can provide employment opportunity for hundreds of 
thousands, if not millions, of people, thuggish traffickers are 
present, and the government is suppressing the illicit economy 
in the absence of legal livelihoods.
    Policies that focus on degrading the belligerents' physical 
resource, such as stopping their financial flows, are 
frequently ineffective because it is extraordinarily difficult 
to attempt to bankrupt belligerent groups through eradication 
or interdiction measures. Yet, they are also counterproductive 
if they target the wider population dependent on the illicit 
economy.
    Counternarcotics policies need to be weighed very carefully 
with a clear eye toward the counterinsurgency and 
counterterrorism implications. Seemingly quick fixes, such as 
blanket eradication, in the absence of alternative livelihoods, 
but only strengthen the insurgency, not accomplish the goal of 
bankrupting the insurgency, while compromised state building 
and ultimately counternarcotics efforts themselves.
    Nowhere is the nexus of drugs and insurgency so vital and 
so counterproductive for U.S. national primary security 
interests as is in Afghanistan. We have already heard that 
drugs are fueling the Taliban. They are also corrupting the 
government and undermining the legitimacy of the Afghan 
government. But the seriousness of the threat and the strategic 
importance of the stakes do not necessarily imply that 
aggressive counternarcotics suppression policies in Afghanistan 
today are inappropriate policies. Indeed, premature eradication 
will only make matters worse, as it has already. So the Obama 
administration's new policy for counternarcotics in Afghanistan 
gives hope that the deficiency of the existing policies will be 
redressed.
    Moreover, success in suppressing poppy in Afghanistan may 
well increase threats to your security in other ways. Given the 
persistent global demand and, in fact, increasing global demand 
for opiates, the illicit economy will simply shift elsewhere. 
There is a very good chance and a worrisome chance that poppy 
will shift back to Pakistan to the areas that Mr. Mansfield 
already mentioned, but also possibly to Kashmir and even parts 
of Punjab.
    In that case, Jihadi groups of the greatest danger would 
not only have the capacity to increase their profits, but, most 
dangerously, increase their political capital. Right now, all 
they can afford the local populations is ideological succor. If 
the poppy economy shifts to Pakistan, they will be able to 
provide real-time benefits and greatly strengthen the struggle 
against the state.
    Thank you.
    [The prepared statement of Ms. Felbab-Brown follows:]

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    Mr. Tierney. Thank you very much.
    We definitely want to get into all the other things that 
were in your written remarks, and, if we don't by the end, we 
are going to give you an opportunity to go back and cover 
anything that you think we should have questioned about and may 
not have hit on.
    Now, we are going into a section of the hearing where we 
will do 5 minutes of questioning per Member. Since there are 
only about five or six of us here, I think we may do several 
rounds on that, if it is OK with the witnesses.
    Let me start by noting, Mr. Olson, you indicate that these 
people can lose 75 percent of all their inventory and still 
report a significant profit.
    Dr. Felbab-Brown, you say that there is not a single case 
where eradication has ever bankrupted a belligerent into 
defeat, and that attempts to turn off income through other 
systems are highly intelligence and resource intensive.
    Mr. Farah, you talk about revenue from drugs far exceeding 
natural resources like that from diamonds and timber and 
things, and indicated that in Colombia it went from 95 percent 
of the coca produced to 54 percent, but that just meant that 
Peru and Bolivia picked up.
    So we seem to have this cyclical thing going here. How are 
we going to take the profit out of this? Nobody mentioned what 
I think is the 800 pound guerilla in the room, which is 
decriminalization or legalization of this, just take the profit 
out of this thing. How do we take the profit out of this 
enterprise if we are not going to do that?
    And I will just start with whoever wants to go first on 
that. Doctor.
    Ms. Felbab-Brown. Mr. Chairman, it is absolutely critical 
that we address global demand for narcotics. This has been the 
most under-emphasized component of U.S. counternarcotics policy 
for many decades. Although nominally it is on the books, it is 
always the most under-resourced, least privileged policy; this 
applies to both treatment and prevention. The Obama 
administration has committed itself to addressing demand a key 
priority. We have yet not seen it in the current budget, but 
perhaps as the next budget will be drafted the shift in 
balances will take place.
    It is also vital that we help other countries around the 
world address demand. Our supply side policies, as important as 
they are, and there is a definite role for law enforcement, 
including for eradication if it is sequenced well, must also 
focus much more on global demand and demand increases. In fact, 
we have seen many new markets emerging, perhaps not as high as 
the U.S. market, but are nonetheless very significant--Russia, 
China is back, Brazil, other parts of Asia--and yet our supply 
side policies do very little, if nothing, on helping countries 
growing demand.
    Mr. Tierney. I guess I hear what you are saying, but it 
gets me back to my question. Demand reduction would probably 
take a significant amount of time, it is not going to happen 
overnight, certainly not in a couple years. Our supply side 
policies have been fairly ineffective, and they are effective 
incidentally, case-by-case, but certainly they haven't reduced 
the amount of drugs on the street and the amount being 
produced. As you said, there are new areas developing all the 
time, whether it is Russia or Brazil or somewhere else. So I go 
back to my question. How do we really and dramatically take the 
profit out of this to make a serious impact?
    Mr. Farah.
    Mr. Farah. Well, I do think that we have a 40 year or 
longer record in the war on drugs, and I spent 25 years 
covering it fairly closely, and every new strategy that comes 
along has some success and then eventually the traffickers are 
able to adapt around it or fairly quickly. I am not sure that 
the country is ready for a debate on decriminalization and 
other aspects, but I think it is clear, if you look at--I mean, 
the fact is, as Eric said, you can lose 75 percent or you can 
move your coke from Latin America to Africa, and then north, 
indicates that the profit margins are huge.
    So I do think we have to come at it I think, as Vanda said, 
when we reduced our oil consumption by 3 or 4 percent, the 
price of oil dropped from $140, $150 a barrel to $40 a barrel. 
And I am not sure, when you are getting at decriminalization or 
other things, that is any more quick, any quicker a solution 
than focusing very heavily on the consumption side, because 
that is clearly the way, if you are selling less, you are going 
to lose less money.
    One could debate decriminalization, but I think it would be 
a long and drawn out debate in the country right now. I don't 
think there is any consensus on which way to go on that. So I 
would second what Vanda said about the need to really focus on 
the use reduction, because that is what is going to make them 
able to sell less and give them less money. It is the quickest 
thing we can do efficiently now.
    Mr. Tierney. Mr. Olson.
    Mr. Olson. Well, the Woodrow Wilson Center hasn't taken a 
position or wouldn't take a position on decriminalization or 
legalization or harm reduction. I do note that three countries, 
three major countries in Latin America now are experimenting, 
if you will, with the idea of decriminalization. Argentina, 
Chile, and Mexico have recently taken steps that dramatically 
reduce criminal penalties. We will see if that helps in any 
way. All those countries, especially Mexico, have a growing 
consumption problem, so if that is what it takes--personally, I 
think it has to be a combination of efforts.
    There is no magic bullet here. I think Doug was right. We 
try new things, they work for a little while, then they fall 
apart. I think having a consistent multi-dimensional, multi-
faceted approach that looks at decriminalization as an option, 
but also looks at raising the cost of doing business for 
traffickers and does some things in terms of international 
cooperation--I don't think any of them by themselves will solve 
this problem, but we have to hit them on all fronts, if you 
will, and that is, I think, the best we can hope for.
    Mr. Tierney. Thank you.
    Mr. Flake.
    Mr. Flake. Thank you and thank you to all the witnesses.
    Mr. Olson, you mentioned the inter- and intra-party cartel 
battle that is going on in Mexico, and certainly we have seen 
that going on for a while. Has that caused a realignment yet of 
these cartels? Have we seen much change? We are often told in 
Arizona that we haven't seen really a spike in violence; this 
is a necessary thing because Calderon has finally gone after 
the cartels. Have you seen an improvement between Mexico's 
ability, the government's ability to control these cartels 
given what has gone on over the past several months?
    Mr. Olson. You know, I think the Mexican government is 
doing some things well. I was there a little over a month ago 
and they are clearly investing a lot in building a national 
police force that is modern, strong, professional, and capable. 
There are aspects of their policy that are lagging behind, and 
what has happened in, say, particularly the case of Ciudad 
Juarez, right on the U.S.-Texas border, El Paso, is that you 
have had the military and police move in and somewhat scatter 
the Juarez cartel to other parts south, and then as that 
happens, the Sinaloa cartel in particular has tried to take 
advantage of a weakened Juarez cartel. So what we have seen 
over the last 6 months is a spike in violence, then a decline 
in violence as the Juarez cartel was scattered, and now an 
upward tick, a quite serious upward tick in violence.
    So, you know, I don't think we have seen the end of it yet. 
They haven't gotten to somewhere where the cartels themselves 
are so weakened that they can't carry out incredibly violent 
operations. There are exceptions like the Familia Michoacana, 
which is another animal altogether, but cartels in general 
don't like to engage in this outrageous violence; they are more 
interested in the business aspect of it. But they do, I think, 
engage in that kind of violence when they are competing for 
territory and routes amongst themselves.
    Mr. Flake. Thank you.
    Mr. Mansfield, you mentioned, in Afghanistan, that the 
marginal state is, I guess is how you put it, moving beyond its 
boundaries, suggesting that some of these drug organizations 
have had free reign up to now. What is the effect of having a 
policy of eradication for a while? We seem to have backed off 
from that now; will likely be back to it a while later. What 
does that for the long term and is that--obviously, it seems to 
be problematic if we can't decide on a policy.
    You and others have mentioned that there are other products 
that can be produced economically, but we have not really seen 
that, whether it is pomegranate or whatever else. The 
government certainly hasn't pursued a policy that would replace 
those crops. I guess I am wondering what is the net effect of 
moving toward an eradication policy and then backing away from 
it and then possibly back to it again?
    Mr. Mansfield. Thank you. I think the debate on eradication 
is often a little simplistic, and I do see this pendulum swing 
that is taking place, and I have some reservations about it. I 
think too often we neglect the fact that there are areas in 
Afghanistan that do have viable alternatives, where--I can cite 
them, introduce you to farmers who have moved out of poppy 
cultivation. They weren't dependent on it; they have a range of 
other crops they can produce. They are near the provincial 
center; they have markets for their crops. They are growing 
maybe five crops on one unit of land instead of opium poppy.
    And if you look at the net returns on those crops, they are 
more attractive than opium poppy. Opium poppy is incredibly 
labor intensive. Once you start importing labor to grow this 
crop, it cuts your profit margins. These other crops, five 
crops for one is attractive, one unit of land rotated. Some of 
them have multiple harvests; gives you a steady income flow. 
They give you different season, different harvest at different 
points; again, steady income flow. And because there is a 
market, traders are turning up at the farm gate and they are 
buying them; they are reducing the transaction costs of moving 
goods to market, they are reducing the transportation costs, 
not unlike opium used to be in these areas.
    So where you have the kind of security governance and 
economic growth taking place, farmers are moving out and, as a 
consequence of growing other crops, they free up their labor. 
These aren't as labor intensive as opium poppy. So then members 
of the family go off and work in the city. So the combination 
of the inter-cropping, multiple crops, and then, subsequently, 
the labor means that the returns are higher than poppy. So in 
those areas the threat of eradication or eradication is 
credible and it actually acts as a catalyst.
    The problem has been that we have had too much of an idea 
of a comprehensive eradication; let's eradicate everyone, let's 
wipe out all the poppy in Nangahar, all the poppy in 
Afghanistan. Now, some areas can cope, they can actually 
thrive. Some areas do not cope because they just don't have 
those facilities; they are not near the markets, they are 
inaccessible, they are remote. Every time they travel down the 
road, they are asked for bakshish, they are asked for a bribe 
from the police moving their tomatoes to market.
    Mr. Flake. So you are not opposed to eradication 
specifically, in certain areas or as part of the program, but 
not as just a general policy.
    Mr. Mansfield. No. For me, I have written on this many 
times. It is under what conditions it works and under what 
conditions it is counterproductive. The danger I think we have 
is there is a real potential for poppy cultivation to go up 
this year, as a function of a whole range of different things. 
The price of wheat and poppy is significantly changed. Over the 
last 2 years, wheat has actually been an attractive crop 
because the global wheat price was so high, and opium price has 
been low. It has made more sense in many areas to grow wheat on 
your land, because you get more wheat from doing that, than to 
grow opium poppy on your land. The terms of trade were 
different. That has changed now. We are back to a situation 
where opium poppy is once again attractive. So that factor is 
in place, meaning people will go back to poppy in many areas.
    The other side is the politics. Certain Governors will be 
rewarded or punished in relation to the election; they will be 
moved on, as they say, to a better place or worse; and they 
have been quite active in reducing poppy. So the politics is 
shifting, the economics is shifting, and there is a danger that 
because there is a perception that there is no eradication this 
year, that gets blamed for this shift. That shift was set in 
place some time ago.
    So then we end up with more poppy, it is due to the fact 
there is no eradication, we need aggressive eradication again. 
So it comes around again. And I think we need to stop dealing 
with poppy farmers as if they were a homogenous entity. I am 
sure wheat farmers in the United States are not a homogenous 
entity; some have small land, some have large land, some have 
combines. It is too simplistic, some of this discussion.
    Mr. Flake. Thank you.
    Mr. Tierney. Mr. Quigley, you are recognized for 5 minutes.
    Mr. Quigley. Thank you, Mr. Chairman.
    The gentleman from Arizona touched on the issues in Mexico, 
but it is something that is interesting in reading your written 
testimony and, Mr. Mansfield, some of your oral testimony. It 
is often described as a weak state issue. While not a world 
power, clearly, as compared to the other countries we are 
talking about, Mexico is much different. What does it suggest, 
as it relates to an issue of whether or not we are dealing with 
weak powers here, that Mexico seems to thrive so much?
    Mr. Olson. I am sorry----
    Mr. Quigley. I don't think Mexico can be described as a 
weak state as compared to the others, yet it seems to thrive in 
much the same way. What am I missing or what can we learn from 
that?
    Mr. Olson. Well, I think you are absolutely right, you 
can't overgeneralize. You can't compare Mexico to Haiti, for 
instance, or Mexico to Honduras. Mexico is much wealthier, and 
has great resources. The issue in Mexico, however, is that it 
is a much more complex problem. You have, for instance, in the 
case of Mexico, a federal police force that is roughly 30,000 
persons, and they have authority or control over about 8 
percent of the crime. The vast majority of the crime happens at 
the local level, and these organized crime groups will operate 
at the local level; and the local police, the state, municipal 
police, especially in states like Chihuahua, are ineffective, 
are weak, basically.
    So I am not making a broad generalization about weakness of 
the Mexican state, it is more the fact that in particular areas 
of the government, of the country, in particular states, in 
particular localities, organized crime has found a foothold and 
has been able to penetrate the municipal governments, even the 
state governments in a way that it can't probably at a federal 
level, and that has allowed that cancer, if you will, to grow 
and expand over a period of time.
    I would never say that Mexico, as a whole, is at risk of 
failure or is a particular weak state, but certainly at 
localities it is, and that is what they are battling with right 
now.
    Mr. Quigley. Doctor.
    Ms. Felbab-Brown. To followup Mr. Olson's comments, Mexico 
is also a democratizing state and in many ways an under-
institutionalized state. Law enforcement apparatus, for 
example, is deeply flawed in Mexico. And although Mexico is 
finally taking important policy reforms, in fact, Mexico has 
attempted to undertake these policy reforms at least since the 
late 1980's to little effect, and though there are some 
encouraging signs today, Mexico is still really struggling in 
the provision of public safety and law enforcement, not simply 
in relationship to organized crime, although that is absolutely 
vital, but also with respect to street crime. And as long as 
Mexico's police forces cannot assure its citizens that safety 
and governance presence will be effective, susceptibility to 
mobilization by armed actors, by crime groups will be high.
    Mexico is unaltered, in many ways, from the discussion that 
we were having because the major aspect of the illegal economy 
is not labor intensive, it is mainly trafficking, and that, 
fortunately, greatly limits the power that crime groups can 
acquire in Mexico, along with the very high brutality. Yet, at 
the same time, the cartels' ability to penetrate informal 
economies in Mexico--sales of DVDs that Eric mentioned, for 
example--allows them still to function as providers of both 
employment, as well as at least minimal security in the absence 
of the state.
    We also have to realize that despite Mexico's status as at 
least a middle income country and impressive wealth, at least 
40 percent of its population still exists in condition of 
poverty that is actually increasing. Many of these marginalized 
people, both in rural areas as well as in urban settings, have 
access to only minimum public goods provided by the state.
    So it is vital that Mexico reconceptualizes its approach to 
the cartels from thinking about them simply as NARCO-drug 
enterprises that can be eliminated through limited interdiction 
actions toward thinking about them as much more than that, for 
providing these various social functions for the populations 
and, hence, try to develop socioeconomic component of the 
policies in addition to interdiction, in addition to police 
reform, in addition to intelligence capacity building, to sever 
the link between the population and the cartels. Then 
intelligence flows will improve greatly and the effectiveness 
of law enforcement will be far greater than we have seen so 
far.
    Mr. Quigley. Thank you, Mr. Chairman.
    Mr. Tierney. Thank you, Mr. Quigley.
    The gentleman from Missouri, Mr. Luetkemeyer.
    Mr. Luetkemeyer. Thank you, Mr. Chairman.
    I am very interested in Mr. Mansfield's comments from the 
standpoint that my State and my area where I come from just 
sent over the second group of National Guardsmen to work with 
the Afghan farmers to try and train them on how to grow other 
crops other than poppy, so it would appear to me that if 
Afghanistan, if I am not mistaken, is 95 percent of the world's 
heroin come from there, is that right? So if we could do 
something there to transfer them from growing that to other 
beneficial crops.
    It seems to me that in order to be able to grow beneficial 
crops, they have to have viable markets for the products that 
they sell, and I was interested in your remarks there when you 
said something about that, that they were trying to do that and 
it was based on profit whether they actually did it or not. So 
I assume from that, as well--I am kind of rambling here, but I 
want to try and get in enough questions here that I can get my 
5 minutes in.
    But it would appear that the farmers actually grow their 
own crops, that they are not grown by the drug folks 
themselves, and then they sell the crop, I guess, to the drug 
folks, is that correct? And then if they own their own crop, 
they can make the decision what to grow. So I assume from that, 
then, that the drug folks actually don't grow the crops 
themselves.
    So if you could just kind of elaborate on the ability of us 
to impact the growth of something besides poppies over there, 
as well as just sort of a little quick primer on how the drug 
trade actually operates over there, if you would, please.
    Mr. Mansfield. I should have brought my neshtar and rumbai 
to explain the opium poppy cultivation process, but I suspect I 
wouldn't be here, I might be in some kind of prison if I tried 
to enter the country with that.
    Again, we need to be clear on what farming looks like in 
Afghanistan. We have a picture here of a farmer standing within 
his poppy field, but what we don't see there is also the area 
of land that is grown with wheat, which he needs to consume. We 
don't see his family plot of vegetables that they grow to feed 
the family. Some might be sold, depending on circumstance.
    So it is this particular narrative of the poppy farmer we 
see. Most farmers in Afghanistan grow a range of different 
crops, and it is a question of the distribution of crops that 
they grow, the proportion of land that would be poppy. So part 
of this is about raising the risks associated with poppy and 
reducing the risks associated with engaging in an illegal 
economy. Many of the goods they produce simply don't have a 
market; they grow them to consume. And when they try and take 
them to market, if they are in a remote area, they get hit with 
checkpoints asking for money. In some cases we have had 
commanders, officials of the government commandeering that 
crop, buying it at a low price.
    Mr. Luetkemeyer. If I could interrupt just for a second. Is 
there an effort to try and develop these markets, though, so 
that if they produce a crop in excess? Could there be an 
incentive for them to produce more and therefore change over 
from poppy crops? And I guess the second part of the question 
is is it realistic to believe that we can eradicate poppy 
growing in that area or is that just a pipe dream?
    Mr. Mansfield. Sure, there are a lot of investments in 
this, but the question is: where does the market lie? The 
market of Kabul, the market of Jalalabad, they are big. But the 
markets of Lashkigar and Helmand are limited. If you are 
growing poppy, if you are growing a range of different crops in 
Helmand, you are not selling it in Lashkigar.
    Mr. Luetkemeyer. Is there an effort, though, to increase 
these markets or develop markets for these folks so that there 
is an incentive to do that?
    Mr. Mansfield. Part of it is there are those efforts, but 
part of it is the security environment. If I can't get down the 
road--I have farmers who grow onion in Nawa who we have been 
interviewing for a number of years. It is very near Lashkigar, 
but they know the market for onions in Lashkigar is limited; 
Kandahar is the real market. But he knows that if he moves his 
onions to Kandahar, he has 14 checkpoints along that road who 
are going to ask for money. He knows that the hauler who moves 
that crop wants extra money because it is a dangerous road to 
drive down. So the markets don't function.
    And the great thing about opium poppy for these farmers is 
it functions. I don't have to take the physical risk of 
traveling down the road and I don't have to take the economic 
risk of getting to market and being a price taker and finding 
that I can't sell my onion at a profit. I have farmers who 
basically have grown onion, realize they can't make a profit, 
have basically taken what they need, offer the fellow villagers 
what they need, and then left the rest to rot.
    So one issue is the security side. On the market side, as I 
say, you have finite markets, size of markets, so one of the 
big questions is the issue of local procurement. How do we 
stimulate the market? We keep looking for export markets, these 
miracle crops; pomegranates, apricots, saffron, mint, one thing 
after another. Most of those crops have foreign markets.
    But actually there is a foreign market within Afghanistan, 
which is the international community. Actually stimulating the 
market for legal goods by us, the international community, 
buying more local produce would be a major advantage. I think 
also not only economically, but politically the whole issue of 
we eat the same food. I mean, I have sat in some PRTs, one in 
Orzgo, and you are constantly thinking where is the market for 
the goods. They grow fantastic apricots and almonds and these 
other things. Where is the market? We have to get it to 
Kandahar. The road is dangerous; they have just sort of got rid 
of the highway police. Instead of robbing people officially, 
they are now robbing people unofficially. So where is the 
market? The PRT. We sat among 6,000 soldiers. We are part of 
that market.
    Mr. Luetkemeyer. Thank you.
    Thank you, Mr. Chairman.
    Mr. Tierney. Thank you, sir.
    Gentleman from Vermont, Mr. Welch.
    Mr. Welch. Thank you, Mr. Chairman.
    Mr. Olson, what factors, in your view, are at play in 
spurring the big rapid growth of cocaine in West Africa?
    Mr. Olson. I probably should defer here to Doug.
    Mr. Welch. Well, we will defer to Doug if you want us to .
    Mr. Farah. The factors in Mexican trafficking moving their 
product to West Africa, sir?
    Mr. Welch. Right.
    Mr. Farah. Well, part of it is that U.S. interdiction 
efforts have been very good. It is harder for the Colombians to 
get their product from Colombia through Central America to 
Mexico. And I think the opening of the Venezuelan avenue for 
moving products from Colombia via Venezuela to the west or to 
the east is now much more attractive than it was before, 
particularly the FARC with its relationship with Chavez, is 
able to take advantage of that, as are the Bolivians. What you 
saw for many years was that the Bolivian traffickers growing 
coca were not allowed to produce ACL, the final product, 
because the Colombians wanted that for themselves. They are no 
longer able to control the Bolivians or the Peruvians.
    Mr. Olson. If I might, I would add a couple more things.
    Mr. Welch. Yes, go ahead.
    Mr. Olson. Which is when we saw a spike in trafficking to 
Europe through West Africa, it also coincided with a very 
favorable exchange rate in Europe. In other words, by exporting 
and as the exchange rate improved for the consumer. In other 
words, it got cheaper, consumption went way up. So it is a 
market and they move in that direction. Then the possibility of 
shipping it to Europe opened up, as Mr. Farah said, because 
Western Africa was a very weak open area that they could 
exploit as a transshipment.
    Mr. Farah. One final thing is that Brazil has become a very 
big market and a lot of the Bolivian and other stuff moves 
through Brazil to the Portuguese speaking parts of West Africa, 
where they have a language advantage, particularly Guinea 
Bissau and Angola. So you have a language--and if you look 
geographically, they are quite close. Brazil has become a very 
large consumption market and the Bolivians and Peruvians find 
it much easier, in some cases, to go through Brazil out to West 
Africa, where, again, the Brazilian ability with language 
particularly is a very useful thing to have.
    Mr. Welch. OK. Are there links that have been established 
between some of the terrorist organizations and Africa, Al 
Qaeda and the Islamic Maghreb in criminal drug trafficking 
elements?
    Mr. Farah. I think what you are seeing in terms of the 
small shipments that move toward the Tuareg smuggling networks 
and things from West Africa through the transit hill region, 
going up north, is that you are seeing an increasing amount of 
small cocaine shipments, but not the major shipments going 
through that route. And what you see is the Tuaregs and other 
groups that will have to have a relationship with Al Qaeda and 
Islamic Maghreb now buying a lot of Chinese weapons with that 
money, so they are much better armed and they are much more 
lethal than they were before, which can rebound to the benefit 
of Al Qaeda and Islamic Maghreb.
    But sort of official ties, I don't think we have seen that 
yet. I think that you are seeing 1 and 2 and 3 kilo loads 
moving that way; they still prefer cigarettes, gasoline, other 
things that they can smuggle, they know how to smuggle. But I 
think the potential you are in an ungoverned space, where 
groups will need the same facilitation with their product, I 
don't think it is irrational to assume that will at some point 
take place.
    Mr. Welch. Thank you.
    Doctor.
    Ms. Felbab-Brown. Thank you for the question. It brings 
into focus the larger issue of how terrorist groups, 
belligerent groups penetrate illicit economies, and we 
frequently fall into the idea that the illicit economy becomes 
altogether captured or dominates by the belligerent group. Take 
for example Al Qaeda and Islamic Maghreb and some of the known 
participation in the Moroccan drug trade. Well, it is true, but 
it would be incorrect to imagine that the entire Moroccan 
marijuana hashish trade is dominated by Al Qaeda and Islamic 
Maghreb. In fact, I would posit that their size of the trade is 
very small.
    Similarly, in Afghanistan, although the Taliban is 
profiting and benefiting in multiple ways, very many other 
actors also participate in the drug trade, and it is far from 
the province of the Taliban. In Colombia, yes, the FARC is part 
of the drug trade, as is the ELN, but to a much larger extent 
former paramilitary groups that in many cases were essentially 
identical to drug trafficking groups dominated the trade more, 
and there still today are very many independent traffickers and 
independent trading organizations.
    In fact, it would be very rare and quite unusual for a 
belligerent group to have the capacity to completely dominate 
the entire illicit economy, especially in the case of extensive 
labor intensive economies.
    The flip side of that is the belligerent groups rarely rely 
on simply one illicit economy for their funding. The case of 
Taliban, FARC, many others, Al Qaeda, are certainly prominent, 
where they have highly diversified portfolios with much money 
coming from ordinary fundraising, from donations, from 
participation in other illicit economies, from taxation of 
legal products in areas where they function; and it is this 
diversification and multiple sources and the ease with which 
they can move from one funding to another that makes efforts to 
suppress the money by targeting the illicit economy or by 
trying to undertake antimoney laundering measures so very 
difficult.
    Mr. Tierney. Thank you very much.
    Thank you, Mr. Welch.
    Mr. Murphy, you are recognized for 5 minutes.
    Mr. Murphy. Thank you very much, Mr. Chairman. Those 
buzzers indicate that we have votes on the floor, so I will be 
brief, but I wanted to followup on Mr. Welch's line of 
questioning.
    To Mr. Farah, specifically to the issue of Hezbollah's 
presence in West Africa. In your testimony you spend a decent 
amount of time talking about their presence there, the amount 
of money moving from West Africa back to the Middle East, and I 
just want to sort of ask the question that Mr. Welch asked 
specific to Hezbollah. What are the prospects, moving forward, 
for there to be a greater degree of reliance potentially in 
West Africa upon the drug trade to potentially add to the money 
going back. So let me just ask that question. What do you see 
as the current nexus between Hezbollah specifically and the 
growing drug trade in West Africa and what do we worry about in 
terms of trends going forward?
    Mr. Farah. Well, I think that is a very important question 
to which I don't think we actually know the answer. Hezbollah 
is on the ground there, but let's say the blood diamond dealers 
that I dealt with there, they weren't organically Hezbollah. 
Hezbollah would tax them and take part of their money, as I 
believe the same is true in tri-border area in Latin America 
and other parts. Hezbollah doesn't run the trade; Hezbollah 
profits mightily from the trade by the taxation ability in 
providing protection, but they are not organically linked to 
Hezbollah.
    I think that as the Colombian and Brazilian and other 
organizations move into West Africa, they are either going to 
have to cut a deal with the traditional Lebanese crime families 
that dominate or it is going to get very bloody, and it has not 
gotten bloody, which to me indicates--if you have product that 
you want to move from West Africa to Europe, you almost have to 
go through the Lebanese networks, because that is the pipeline 
that exists and they know how to move stuff.
    When Al Qaeda wanted to move its diamond profits, it didn't 
set up its own thing in West Africa, it went to the Hezbollah 
network and moved diamonds that way. And I think that is what 
is happening with the drug trade. I think it is going to 
strengthen the Hezbollah folks because they are going to profit 
from providing protection and movement for those particular 
products. Whether that becomes organically linked to Hezbollah, 
I doubt it will because that is not the way Hezbollah tends to 
operate, but I think that it will strengthen all the criminal 
networks because cocaine is a product that is useful to the 
pipeline and the pipeline is useful to cocaine traffickers, so 
there is a symbiosis that has to take place; and if it doesn't 
get really bloody, which it hasn't, then I would say that 
indicates a level of cooperation that is growing.
    Mr. Murphy. Then let me ask this followup, which is part of 
the comments, especially from Dr. Felbab-Brown, was about the 
fact that even if we were to do something to try to prevent a 
growing reliance or a growing connection between the drug trade 
and terrorist networks--I am probably oversimplifying what you 
said, but that it may not matter because they will be able to 
go other places.
    So my question is to the extent that we do have a worry 
that the networks become much more interdependent and 
interlinked, what are our strategies as a Nation to try to 
prevent--I mean, we obviously want to do something about drug 
trafficking on its own, but what are our strategies that we 
take to try to prevent those connections from being made in the 
future relative to Hezbollah or relative to other operations in 
Africa specifically?
    Mr. Farah. Well, I think it is very difficult because as we 
have all said, you have pipelines that will move almost any 
given product you put into it from one point to another, be it 
human trafficking, drugs, weapons, or money moving either way; 
and Hezbollah, particularly in West Africa, has perfected the 
art of bringing down all kinds of illicit stuff into the region 
to sell that would normally be licit, but they move it in 
illicit fashions.
    So I think our strategy has been largely fairly simplistic. 
I think we have been looking at drug trafficking, terrorists, 
sort of organized crime as different entities and not at the 
overlap and interconnectedness of it. I think our presence on 
the ground in places like West Africa is so slim that we are 
really flying blind there.
    I think that our ability and I say in my testimony--at the 
end of the day, our only real option, is twofold: One is to 
develop vetted units that can work on the ground there with the 
Colombians, the Brazilians and the other thing is to get Europe 
to engage much more robustly, because, it is their market that 
is being penetrated by the drugs. They have the long history 
and they know--I have dealt with the Belgians extensively on 
this--the Lebanese criminal networks very well, much better 
than we will ever know.
    The French know the criminal networks that go into France. 
And yet they also are viewing this in sort of piecemeal 
fashion. So the Europeans will have to engage in a much more 
robust fashion to look at how these groups overlap, because 
they know these groups much better than we do and than we will 
in the next 20 years.
    Ms. Felbab-Brown. If I can add. It is very important that 
we seek to prevent dangerous belligerent groups from 
penetrating illicit economies, and we have to ask ourselves in 
each case several questions: What illicit economies do they 
have access to? Do they have accessible labor intensive illicit 
economies? And this is especially where we should try to 
prevent them from accessing, because if they do so they get 
much more than money, they get support from the population. 
This has not yet happened in the case of West Africa, where the 
trade is mainly traffic, not labor intensive; it is not 
cultivation. And we should make an effort to see that 
cultivation doesn't relocate there, for example.
    The second question we need to ask, if our goal is to dry 
up the money by targeting the illicit economy, is that likely 
going to switch the belligerent group to try to develop another 
illicit economy or penetrate another illicit economy that might 
be ultimately even more harmful for our interest? The case of 
FARC is important. While I do not believe that eradication did 
decrease ultimately in the long term financial resources of the 
FARC, although the FARC is beaten, I think it is largely 
irrespective or despite eradication.
    At least for a while we have seen decreases in cultivation 
and limits on funding. And one of the resulting effects was 
that the FARC has tried to acquire enriched uranium or uranium, 
I should say, as a way to resell and make money. This is an 
illicit economy far more dangerous to the United States than 
the continuing cultivation of coca.
    And the third question we need to ask in policy is if we 
suppress the illicit economy, where is it going to shift? If we 
suppress poppy in Afghanistan, are we going to sell wholesale 
transfer to Pakistan and going to set up even more dangerous 
problem for U.S. national security interests?
    Mr. Tierney. Thank you very much. I want to thank all of 
our witnesses. It is very untimely to have these floor votes at 
this particular point. We don't have control over that, 
although I wish we did. I am going to ask you this. Mr. Flake 
and others have hearings that, if we were going to go straight 
through, we would be able to finish on that, but given the fact 
that these votes are going to take a half hour or more, maybe 
45 minutes or an hour, they have other classified briefings 
they have to go to. May we submit to you some questions that we 
didn't get to today in this hearing and give you homework, if 
you don't mind, to submit back?
    I do want to explore some of the priorities. We talked 
about strategies of reducing demand, of eradication or 
disruption in some areas, and resolving underlying economic 
factors, governance and all those issues. I want to ask is 
there a priority for that? Is one approach more important than 
another?
    I want to talk more about Mr. Mansfield's response to 
illicit drugs in Afghanistan when they think the government may 
be as involved as other parties; the prospects of what is going 
on in Venezuela, can we get Venezuela's cooperation with our 
country as opposed to the FARC and others? What is happening in 
Guinea Bissau on that basis, how failed is that; and, what is 
the role of human intelligence?
    I know that is a serious matter. Are we farming the same 
problems there in terms of language and other setbacks that we 
have in other areas; and how do we engage the international 
community. Doctor, you mentioned India in some of your remarks. 
Why aren't they more engaged or are they engaged? What is their 
role there? The Belgians and others too?
    So, with your permission, we will submit those records and 
ask for any other comments you want to make on what we ought to 
be doing on that. As I said, we have another hearing coming up 
with government agency witnesses and we would love to be able 
to have that information to get their response to it.
    Can I just say thank you for coming in and for giving us 
your expertise and taking your time and energy, as well, to do 
that? We appreciate it a great deal. Thank you.
    [Whereupon, at 11:20 a.m., the subcommittee was adjourned.]
    [Additional information submitted for the hearing record 
follows:]

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