[Federal Register Volume 64, Number 44 (Monday, March 8, 1999)]
[Presidential Documents]
[Pages 11319-11343]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-5668]



[[Page 11317]]

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Part XIII





The President





_______________________________________________________________________



Presidential Determination No. 99-15 of February 26, 1999--
Certification for Major Illicit Drug Producing and Drug Transit 
Countries
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                         Presidential Documents 
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  Federal Register / Vol. 64, No. 44 / Monday, March 8, 1999 / 
Presidential Documents  

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 Title 3--
 The President

[[Page 11319]]

                Presidential Determination No. 99-15 of February 26, 
                1999

                
Certification for Major Illicit Drug Producing 
                and
                Drug Transit Countries

                Memorandum for the Secretary of State

                By virtue of the authority vested in me by section 
                490(b)(1)(A) of the Foreign Assistance Act of 1961, as 
                amended (``the Act''), I hereby determine and certify 
                that the following major illicit drug producing and/or 
                major illicit drug transit countries/dependent 
                territories have cooperated fully with the United 
                States, or have taken adequate steps on their own, to 
                achieve full compliance with the goals and objectives 
                of the 1988 United Nations Convention Against Illicit 
                Traffic in Narcotic Drugs and Psychotropic Substances:

                    LAruba, The Bahamas, Belize, Bolivia, Brazil, 
                China, Colombia, Dominican Republic, Ecuador, 
                Guatemala, Hong Kong, India, Jamaica, Laos, Mexico, 
                Pakistan, Panama, Peru, Taiwan, Thailand, Venezuela, 
                and Vietnam.

                By virtue of the authority vested in me by section 
                490(b)(1)(B) of the Act, I hereby determine that it is 
                in the vital national interests of the United States to 
                certify the following major illicit drug producing and/
                or major illicit drug transit countries:

                    LCambodia, Haiti, Nigeria, and Paraguay.

                Analysis of the relevant U.S. vital national interests, 
                as required under section 490(b)(3) of the Act, is 
                attached.

                I have determined that the following major illicit drug 
                producing and/or major illicit drug transit countries 
                do not meet the standards set forth in section 490(b) 
                for certification:

                    LAfghanistan, Burma.

                In making these determinations, I have considered the 
                factors set forth in section 490 of the Act. Given that 
                the performance of each of these countries/dependent 
                territories has differed, I have attached an 
                explanatory statement for each of the countries/
                dependent territories subject to this determination.

                You are hereby authorized and directed to report this 
                determination to the Congress immediately and to 
                publish it in the Federal Register.

                    (Presidential Sig.)

                THE WHITE HOUSE,

                    Washington, February 26, 1999.

[[Page 11320]]

                STATEMENTS OF EXPLANATION

                Afghanistan

                    According to U.S. Government (USG) estimates, 
                Afghanistan continued to be the world's second largest 
                producer of opium poppy in 1998. Poppy cultivation and 
                opium gum production increased by seven percent in 
                1998, despite poor weather, resulting in an estimated 
                1,350 metric tons (mts) of opium gum production. 
                Afghanistan is a party to the 1988 UN Drug Convention, 
                but neither of the warring political factions (Taliban 
                nor Northern Alliance) took steps to demonstrate that 
                they take Afghanistan's obligations under the 
                Convention seriously. Aside from Taliban authorities 
                burning a reported one ton of opiates in Jalalabad in 
                June, there is no evidence to indicate that any action 
                was taken by any faction to discourage poppy 
                cultivation, destroy morphine or heroin laboratories, 
                or arrest and prosecute narcotics traffickers. Numerous 
                reports indicated that members of all factions at all 
                levels continued to profit from the drug trade. UN Drug 
                Control Program (UNDCP) initiatives made very slow 
                progress, while a USG-funded non-governmental 
                organization (NGO) program achieved many of its 
                alternative development goals.
                    By the end of the year, the Taliban faction 
                controlled over 80 percent of Afghan territory and 96 
                percent of Afghanistan's opium-growing areas. The 
                Taliban's inaction and lack of political will, as well 
                as substantial drug trade involvement on the part of 
                some local Taliban authorities, also impede meaningful 
                counter-narcotics progress.
                    The Taliban condemned illicit drug cultivation, 
                production, trafficking and use in 1997. However, there 
                is no evidence that Taliban authorities took action in 
                1998 to decrease poppy cultivation, to arrest and 
                prosecute major narcotics traffickers, to interdict 
                large shipments of illicit drugs or precursor 
                chemicals, or to eliminate opiate processing 
                laboratories anywhere in Afghanistan. Opium is 
                Afghanistan's largest cash crop and, by many estimates, 
                narcotics remain a significant and perhaps the largest 
                source of income. Some Taliban authorities reportedly 
                benefit financially from the trade and provide 
                protection to heroin laboratories. There are numerous 
                reports of drug traffickers operating in Taliban 
                territory with the consent or involvement of some 
                Taliban officials.
                    In 1998, poppy cultivation increased and spread to 
                new areas. In an unverified policy statement published 
                by the Taliban's High Commission for Drug Control on 
                September 10, 1998, which appears to contradict the 
                Taliban's November 1997 commitment to UNDCP, the 
                Taliban indicated that they would not support a 
                strategy of forced eradication if farmers who 
                benefitted from alternative development failed to 
                comply with the requirement to abandon poppy 
                cultivation.
                    A USG-sponsored poppy eradication/alternative 
                development program in Helmand Province through Mercy 
                Corps International (MCI), an American NGO, continued 
                this year. It was originally funded in 1997 for 
                $772,000 and expanded in FY 99 to $1.04 million. It is 
                the only poppy reduction project being implemented by 
                an NGO in Afghanistan. MCI accomplished all but one of 
                its objectives during the year. The one objective not 
                accomplished--delivery of fruit trees to farmers--was 
                not met due to rainy weather. The trees were held for 
                the next planting season.
                    The USG strongly supports the UN Special Mission to 
                Afghanistan and its efforts to achieve peace and 
                facilitate the development of a broad-based government 
                that respects international norms of behavior on 
                narcotics, terrorism and human rights. The Afghan 
                Support Group (ASG) of major donors to Afghanistan met 
                twice during the year. At the meeting in Tokyo in 
                December, the ASG endorsed the principle that counter-
                narcotics is a cross-cutting issue and should be 
                integrated wherever possible with other programs in 
                Afghanistan. UNDCP agreed to include gender and human 
                rights components in its counter-narcotics programs 
                wherever appropriate.

[[Page 11321]]

                    Denial of certification does not cut off USG 
                counter-narcotics assistance and would thus have 
                minimal effect in terms of implementation of this 
                policy. Continuation of large-scale opium cultivation 
                and trafficking in Afghanistan, plus the failure of the 
                authorities to initiate law enforcement actions, 
                preclude a determination that Afghanistan has taken 
                adequate steps on its own or that it has sufficiently 
                cooperated with USG counter-narcotics efforts to meet 
                the goals and objectives of the 1988 UN Drug 
                Convention, to which Afghanistan is a party.
                Aruba

                    Aruba is a staging area for international narcotics 
                trafficking organizations, which transship cocaine from 
                Colombia, Venezuela, and Suriname to Europe and the 
                United States. Drug traffickers are attracted to Aruba 
                by its key position near the Venezuelan and Colombian 
                coasts, its efficient infrastructure, its excellent air 
                and sea links to South America, Europe, Puerto Rico, 
                and other Caribbean locations, and its reputation for 
                relatively light prison sentences and good prison 
                conditions.
                    Aruba, the nearby Netherlands Antilles, and the 
                Netherlands comprise the three parts of the Kingdom of 
                the Netherlands. Since 1986, Aruba has had autonomy 
                over its internal affairs and independent decision-
                making ability in a number of counter-narcotics areas. 
                The Government of the Netherlands (GON) is responsible 
                for the defense and foreign affairs of Aruba, and 
                assists the Government of Aruba (GOA) in its efforts to 
                combat narcotics trafficking. Aruba is a participant in 
                a joint Netherlands-Netherlands Antilles-Aruba Coast 
                Guard, which has anti-drug responsibilities. Although 
                the Netherlands is a party to the 1988 UN Drug 
                Convention, the other two parts of the Kingdom are not 
                covered by the Convention.
                    In late 1998, Aruba passed an international asset 
                seizure law, the final legislative prerequisite to 
                requesting that the Kingdom of the Netherlands extend 
                the 1988 UN Drug Convention to Aruba. In December, 
                Aruba formally requested that extension, which is 
                expected during 1999.
                    During 1998, the GOA continued to cooperate fully 
                with the USG on counter-narcotics goals and objectives. 
                Three Aruba nationals believed to be major drug 
                traffickers and money launderers were extradited to the 
                United States and are now awaiting trial. They include 
                two members of the Mansur family, one of the richest 
                and most powerful in Aruba, who are accused of 
                belonging to a large network that laundered some $40 
                million for Colombian drug traffickers operating in the 
                United States. These extraditions were the first under 
                a 1997 law permitting the extradition of Aruba 
                nationals.
                    Aruba law enforcement agencies, including the Aruba 
                Police and Customs, have a good working relationship 
                with USG law enforcement agencies. They cooperate with 
                the DEA on joint investigations and with the U.S. Coast 
                Guard on maritime law enforcement searches and 
                interdictions. Joint USG-GOA efforts contributed to an 
                increase in the number of arrests in 1998 of drug 
                couriers transiting Aruba. A proposed U.S.-Kingdom of 
                the Netherlands maritime drug enforcement agreement, 
                pertaining to the Caribbean, is currently under 
                negotiation.
                The Bahamas

                    The Bahamas is a major transit point for South 
                American cocaine and Jamaican marijuana en route to the 
                United States. Very small amounts of cannabis are grown 
                on the islands for domestic consumption. The USG and 
                the Government of the Commonwealth of The Bahamas 
                (GCOB) continue to enjoy a productive and positive 
                counter-drug working relationship. The GCOB places a 
                high priority on combating drug transshipments through 
                its archipelago, and is moving decisively to combat 
                money laundering and other drug-related crimes. The 
                GCOB cooperates very closely with the USG on our 
                combined law enforcement effort, Operation Bahamas and 
                Turks

[[Page 11322]]

                and Caicos (OPBAT). The Bahamas was the first country 
                to ratify the 1988 UN Drug Convention, and the GCOB 
                continues to take steps to implement its provisions. 
                Following passage of strong anti-money laundering 
                legislation in 1996, Bahamian authorities are closely 
                monitoring bank compliance and investigating suspicious 
                financial transactions.
                    U.S. and Bahamian law enforcement officials worked 
                very closely throughout the year to respond to notable 
                increases in air and maritime transshipment incidents. 
                The GCOB is strongly emphasizing money laundering and 
                asset forfeiture investigations and prosecutions. The 
                GCOB also continued in 1998 to strengthen its judicial 
                system, with assistance from the USG. However, 
                unreliable jury pools and weaknesses in the drug laws 
                resulted in several major Bahamian drug dealers 
                avoiding conviction in 1998. Despite committed and 
                talented judicial leadership, The Bahamas needs to 
                improve the effectiveness of its court system in 
                securing convictions against major dealers and 
                organizations by strengthening its drug trafficking 
                laws and improving the prosecutorial capabilities of 
                the police prosecutors. The USG will continue to work 
                with the GCOB in this area, both bilaterally and 
                through regional training and assistance projects.
                    In December 1998, the Royal Bahamas Police Force 
                (RBPF) Drug Enforcement Unit arrested two police 
                officers from the RBPF Drug Canine Unit at Nassau 
                International Airport for allegedly working with a 
                cocaine trafficking ring. The GCOB needs to continue to 
                move decisively against corruption at Bahamian ports of 
                entry.
                Belize

                    Belize remains a significant narcotics transit 
                country. After taking office in August of 1998, the new 
                Government of Belize (GOB) made it clear it takes 
                seriously the problem of drug transit through its 
                territory, including the impact the trafficking 
                activity has on domestic crime. The new government has 
                created a national drug abuse council, which is in the 
                process of creating a comprehensive drug control 
                strategy. The Belize Police Force, the Belize Defense 
                Force and the rapid response force ``Dragon Unit'' will 
                remain important parts of the national drug control 
                strategy. Belize is party to the 1988 UN Drug 
                Convention and the GOB works closely with the USG in 
                the fight against narcotics trafficking and 
                transnational crime.
                    Upgrading training, professionalism and equipment 
                in the Belize Defense Force continues as the focus of 
                the USG/GOB counter-narcotics program to combat violent 
                crime and drug trafficking. With the completion of 
                training of the money-laundering unit staff, the USG/
                GOB effort is now focused on building and equipping a 
                Financial Investigations Unit to enforce money-
                laundering regulations. The GOB is energetic in its 
                unilateral efforts to reduce drug trafficking through 
                its borders and to combat associated crime. It is a 
                strong supporter of regional and cooperative counter-
                narcotics efforts.
                    Concern over corruption remains. The dismissals of 
                suspected corrupt police officials in 1998 and the new 
                government's efforts to rid itself of institutional 
                corruption appear to demonstrate the GOB's commitment. 
                Concerns were raised, however, by the government's 
                recent attempt to dismiss the Supreme Court's chief 
                justice over a case with political overtones.
                    Counter-narcotics efforts in Belize are hampered by 
                lack of manpower, training and equipment. The 
                relatively large expanse of uninhabited territory and 
                the thousands of coastal cays and inland waterways that 
                are used by traffickers as drop-off sites for drugs 
                contribute to the problem. Seizures in 1998 of just 
                under one metric ton of cocaine were significantly 
                lower than in 1997. Slightly more than 200,000 
                marijuana plants were eradicated.
                Boliva

                    Boliva retains is position as the world's second 
                largest producer of cocaine even though it has less 
                coca under cultivation than either Peru or Colombia.

[[Page 11323]]

                The cocaine industry in Bolivia is fragmented and 
                dominated by small to mid-level trafficking 
                organizations which manufacture, transport and 
                distribute cocaine base in hundred to multi-hundred 
                kilogram quantities per month. Successful law 
                enforcement efforts to prevent significant quantities 
                of chemicals utilized in processing coca leaf into 
                cocaine base and cocaine hydrochloride (HCL) from being 
                smuggled in from neighboring countries have negatively 
                impacted the quality of cocaine produced, with a 
                resulting decrease in marketability.
                    In an impressive show of resolve and political 
                will, the Government of Bolivia (GOB) achieved an 
                unprecedented level of coca eradication--a net 
                reduction of 17 percent, and a gross eradication level 
                of 11,621 hectares. Significant successes in increased 
                arrests of narcotics traffickers, as well as seizures 
                of cocaine, cocaine products and precursor chemicals, 
                were also realized.
                    The Banzer administration is the first to devise 
                and set forth a credible, formal strategy to eliminate 
                coca cultivation in Bolivia. Despite a shaky start last 
                spring and continuing violence against eradication and 
                counter-narcotics forces, the GOB showed its 
                determination to persevere with its five-year plan. USG 
                experts also credit 1998's success to the GOB's 
                abolition of direct compensation to coca growers, and 
                to devoting enough human resources to the eradication 
                and security effort. The Banzer administration's 
                embrace of alternative development has not only 
                provided farmers with licit, profitable alternatives to 
                growing coca, but has changed public opinion against 
                coca growing and cocaine production activities.
                    Three-fourths of Bolivia's judicial reform package 
                has been enacted, which should make the criminal 
                justice system faster, more transparent and accessible, 
                less politicized, and less corrupt. Currently being 
                debated in the legislature is the Code of Criminal 
                Procedure, the final part of the reform package. It 
                should include language that permits police to use 
                informants, controlled deliveries, undercover 
                operations, and other modern law enforcement tools. 
                Action on money laundering crime has been lacking, 
                although the GOB named a Director of the Financial 
                Investigations Unit of the Superintendency of Banks, 
                which is charged with enforcing the anti-money 
                laundering law.
                    If Bolivia is to realize its five-year goals, in 
                1999 the GOB should act to prevent new coca plantings 
                and continue eradication efforts in a sustained manner. 
                Other important objectives include initiation of 
                eradication operations, alternative development in the 
                Yungas, and prosecutions of those who plant new illicit 
                coca fields there and in the Chapare. The GOB should 
                also move forward to implement vigorously the law 
                criminalizing money laundering, and actively seek out, 
                investigate and prosecute public officials engaged in 
                corruption. Finally, if its efforts are to be fully 
                successful, the GOB should ensure that the new Code of 
                Criminal Procedures provides law enforcement 
                authorities with the tools they need to investigate and 
                prosecute narcotics offenders.
                Brazil

                    Brazil is a major transit country for cocaine 
                shipped by air, river, and maritime routes from 
                Bolivia, Peru, and Colombia to the United States and 
                Europe. Because of increased interdiction of trafficker 
                aircraft in Peru (along the Peru/Colombia air 
                corridor), traffickers have shifted illicit narcotics 
                flights into Brazilian air space. Brazil's vast and 
                sparsely populated Amazon region provides ample 
                opportunity for traffickers to transship drugs and 
                chemicals by air and riverine routes. A southern ``drug 
                route'' also exists along Brazil's borders with 
                Paraguay and Bolivia. While not a major drug 
                cultivation country, Brazil is a major producer of 
                precursor chemicals and synthetic drugs.
                    Several key legislative initiatives, including an 
                anti-money laundering law and legislation permitting 
                the military to interdict unauthorized civilian 
                aircraft (including those suspected of smuggling 
                narcotics), were passed

[[Page 11324]]

                by the Congress in 1998. A two-year-old omnibus 
                counter-narcotics bill remained pending in the Congress 
                at year's end. Brazil's major counter-narcotics policy 
                initiative was formation of the National Anti-Drug 
                Secretariat (SENAD) which will coordinate counter-
                narcotics efforts and activities nationwide.
                    Federal police continued their heightened 
                surveillance of the Amazon region, which resulted in 
                seizures of drugs, aircraft, boats and an assortment of 
                weapons. While seizures of cocaine in 1998 were about 
                the same as in 1997, and marijuana seizures were 
                slightly lower than in 1997, seizures in psychotropic 
                drugs increased tenfold over 1997 levels. Inadequate 
                staffing and resources continue to hamper activities of 
                the counter-narcotics unit of the Federal police.
                    Although Brazil does not extradite its own 
                citizens, the Government continues to cooperate with 
                the United States and other countries in the 
                extradition of individuals accused of narcotics-related 
                crimes.
                    Most of Brazil's demand reduction efforts are aimed 
                primarily at young people, who constitute the largest 
                group of drug users in the country. With the creation 
                of SENAD, the GOB will focus even more attention on 
                drug demand reduction, education, and treatment 
                programs. Over half of Brazil's 26 states conduct some 
                type of drug awareness program.
                    Top Brazilian counter-narcotics officials in SENAD 
                have expressed a strong interest in more active 
                cooperation and greater coordination with the United 
                States in narcotics law enforcement, including 
                interdiction activities.
                Burma

                    Burma continues to be the world's largest source of 
                illicit opium and heroin. There was, however, a 
                significant decline in production and cultivation from 
                1997 levels. The 1998 crop estimates indicate there 
                were 130,300 hectares of opium poppy cultivation, down 
                16 percent from 1997. The potential yield from this 
                crop is up to 1,750 metric tons of opium gum. This is 
                the lowest potential production figure in ten years and 
                a drop of 26 percent from 1997 figures. Most of this 
                crop decrease was due to weather; however, the 
                Government of Burma (GOB) did engage in opium crop 
                eradication efforts.
                    During 1998, seizures of methamphetamine tripled, 
                although opium and heroin seizures were below last 
                year's record levels. While there were cases of 
                interdiction and arrests for narcotics trafficking of 
                members of some tribal groups located outside the 
                protected tribal areas, the GOB has been unwilling or 
                unable to take on the most powerful groups directly. 
                Cease-fire agreements with insurgent tribal groups 
                dependent on the narcotics trade involve an implicit 
                tolerance of continued involvement in illicit narcotics 
                for varying periods of time. Given the scale of the 
                problem in Burma, and what would be necessary to bring 
                about lasting improvement, the GOB's efforts remain 
                inadequate.
                    There is reason to believe that money laundering in 
                Burma and the return of narcotics profits laundered 
                elsewhere are significant factors in the overall 
                Burmese economy, though the extent is impossible to 
                measure accurately. Political and economic constraints 
                on legal capital inflows magnify the importance of 
                narcotics-derived funds in the economy. An 
                underdeveloped banking system and lack of enforcement 
                against money laundering have created a business and 
                investment environment conducive to the use of drug-
                related proceeds in legitimate commerce. The GOB made 
                little if any effort against money laundering during 
                1998.
                    Despite some progress over the past year, the USG 
                remains concerned that Burma's counter-narcotics 
                efforts are in no way proportional to the extent of 
                narcotics cultivation and trafficking. Effective 
                toleration of money laundering by the GOB, failure to 
                turn over notorious traffickers under indictment in the 
                United States, and general lack of respect for the rule

[[Page 11325]]

                of law are also concerns. The United States remains 
                prepared to cooperate with Burma in international 
                efforts against narcotics, when the Burmese regime 
                presents a consistent pattern of cooperation in all 
                aspects of that effort.
                Cambodia

                    Throughout 1998, Cambodia was embroiled in internal 
                political strife and proactive counter-narcotics 
                efforts suffered. This failure is reflected in a 
                serious drop in the statistics for seizures and 
                narcotics arrests. Reports indicate that narcotics 
                traffickers, alien smugglers, and other criminals have 
                found refuge in Cambodia. Corruption and factionalism 
                among Cambodia's police are also a continuing problem--
                one police unit attacked another earlier this year in 
                an effort to intimidate the unit attacked. Cambodia is 
                not a major producer of narcotics or a center for 
                narcotics-derived money laundering, although reports 
                that narcotics proceeds are in fact laundered there 
                persist. The country's principal involvement in the 
                international narcotics trade is as a transit route for 
                Southeast Asian heroin intended for overseas markets, 
                including the United States. Marijuana is cultivated 
                for export and the authorities have had only marginal 
                success at stemming this flow, though Cambodian 
                marijuana is not thought to have a major effect on the 
                United States. Reports persist about the involvement by 
                some elements of the Royal Cambodian Armed Forces and 
                the national police in narcotics trafficking.
                    Outward cooperation by Cambodian police officials 
                with the DEA on specific requests is excellent. Senior 
                government officials consistently responded to requests 
                to make available persons wanted on U.S. arrest 
                warrants, including in narcotics cases. The Royal 
                Government of Cambodia (RGC) has established a National 
                Authority for Combating Drugs and a special drug 
                enforcement unit in the Ministry of Interior; however, 
                the effectiveness of these bodies has been limited by a 
                lack of resources and training, corruption at various 
                levels of the RGC, and the country's geographical 
                location adjacent to major narcotics producing areas.
                    In the latter part of 1998, competing factions in 
                Cambodia finally formed a coalition government, 
                resulting from elections. We believe that at this 
                crucial time, imposition of counter-narcotics sanctions 
                would undermine U.S. interests in democracy and 
                regional stability as well as limit anti-narcotics 
                efforts. The ability to provide strategically placed 
                U.S. aid at the appropriate time can help strengthen 
                Cambodian institutions, with the objective of promoting 
                greater official accountability and adherence to the 
                rule of law. Furthermore, it is in the U.S. interest 
                for Cambodia to contribute to the political and 
                economic stability of the region, which should be 
                furthered by Cambodia's anticipated accession to ASEAN 
                membership in 1999. Thus, on balance, the consequence 
                for the United States related to the counter-narcotics 
                setbacks are far outweighed by the risks of being 
                unable to support the new coalition government now in 
                place at this critical juncture.
                China

                    China continued to take strong and effective 
                measures to combat the use and trafficking of narcotic 
                drugs in 1998. China is a party to the 1988 UN Drug 
                Convention, as well as to the 1961 UN Single Convention 
                and its protocols, and the 1971 UN Convention on 
                Psychotropic Substances. The Chinese government is 
                committed to achieving the goals of the 1988 
                Convention, implementing several new initiatives to 
                strengthen its counter-narcotics efforts at all levels, 
                from apprehending and prosecuting traffickers to 
                counteracting drug addition and abuse.
                    Preliminary figures indicate that during 1998 
                Chinese police seized record amounts of heroin, other 
                illicit drugs, and precursor chemicals. The Chinese 
                government sponsored a nationwide education campaign 
                aimed primarily

[[Page 11326]]

                at reducing drug use by youth. Narcotics enforcement 
                cooperation between the United States and China 
                continued to expand in 1998, with increased levels of 
                training, professional exchanges, and tactical-level 
                enforcement cooperation. The United States and China 
                established a Joint Liaison Group on Law Enforcement 
                Cooperation, and are taking steps to further enhance 
                mutual legal assistance; in general, however, China's 
                response to U.S. requests could have been more 
                forthcoming. The DEA anticipates the assignment of 
                permanent staff for its new office in Beijing sometime 
                in 1999.
                    China is a major producer of precursor chemicals. 
                The ephedra plant, from which the precursor chemical 
                ephedrine is extracted, grows wild in northern China. 
                China produces and legally exports potassium 
                permanganate, which can be used in cocaine production. 
                The Chinese government vigilantly monitors precursor 
                chemical exports and has in place a system of pre-
                export notification. Yunnan, the province most directly 
                affected by China's growing drug problem, goes further 
                than the 22 chemicals on the 1988 Convention Watch List 
                by monitoring exports of 28 chemicals. According to 
                press reports, in the first ten months of 1998, Yunnan 
                provincial law enforcement authorities seized more than 
                300 metric tons of precursor chemicals destined for 
                illegal use, more than the amount confiscated 
                nationwide in all of 1997. China supports a law 
                enforcement program to increase interdiction in Yunnan 
                Province under the auspices of the UNDCP and funded by 
                the USG.
                    Although Chinese law prohibits laundering the 
                proceeds from illegal narcotics trafficking, China's 
                legal system and banking regulations generally have not 
                kept pace with the country's rapid economic 
                internationalization. Consequently, China is vulnerable 
                to possible exploitation by drug traffickers, 
                particularly from Burma, seeking to launder money.
                Colombia

                    Colombia developed a solid record of success in 
                meeting the 1998 certification criteria, with several 
                notable exceptions. A new counter-narcotics strategy, 
                developed by the incoming Pastrana administration 
                earlier in the year, establishes a solid platform to 
                frame efforts in the coming years. Such strategic 
                planning was almost totally lacking in Colombia before 
                then. The USG is working closely with the Government of 
                Colombia (GOC) to refine and improve that strategy. 
                Pastrana administration officials have been very 
                receptive to U.S. offers of advice and assistance, and 
                expressed a commitment in the Joint Alliance Against 
                Drugs, signed during President Pastrana's visit in 
                October 1998, to continue close cooperation as we 
                advance our joint counter-narcotics goals. This 
                willingness to cooperate closely is the greatest 
                difference between the current status of efforts in 
                Colombia and the checkered history of the last four 
                years. While political will is difficult to measure and 
                can only be tested by time, it appears that a corner 
                has been turned in Colombia that will allow for much 
                closer cooperation and greater results in the near 
                future.
                    The Colombian National Police (CNP), under the 
                leadership of General Rosso Jose Serrano, added to its 
                record of outstanding performance in counter-narcotics. 
                This year the CNP received more and better support from 
                the Colombian armed services, and joint operations in 
                southern Colombia began to show success. Such joint 
                operations will be an important factor in the future of 
                the program, given the increasing threat to counter-
                narcotics operations from heavily armed traffickers and 
                the guerrillas and paramilitaries who are involved in 
                many aspects of narcotics trafficking. For the third 
                straight year, record levels of illicit crops were 
                eradicated, although this eradication did not offset 
                the continuing expansion of cultivation by the 
                traffickers as part of their effort to concentrate the 
                entire drug industry within Colombia. The CNP also had 
                a strong year in terms of seizures and arrests of 
                important traffickers.

[[Page 11327]]

                    Another key criterion was fully met when the GOC 
                set up a successful program to register and regulate 
                privately owned aircraft in Colombia, which has the 
                effect of discouraging their use in narcotics 
                trafficking. The GOC has also begun to take action on 
                prison reform, a long-standing problem.
                    The biggest disappointment of 1998 was the 5-4 
                decision of the Colombian Constitutional Court in 
                August to uphold the new Colombian extradition law as 
                passed by Congress. The court rejected the claim 
                advanced and supported by both the Samper and Pastrana 
                administrations that procedural irregularities in the 
                congressional votes resulted in the passage of a law 
                which does not apply retroactively. The lack of 
                retroactivity in the law severely limits its 
                effectiveness. As a result, the law places the 
                imprisoned Cali cartel kingpins beyond the reach of 
                U.S. justice, at least with regard to crimes committed 
                before passage of the extradition law in December 1997.
                    The judicial system continues to be the weakest 
                link in Colombia's counter-narcotics performance. 1998 
                saw little progress in resolving the endemic problems 
                in a system that is plagued by corruption, incompetence 
                and inefficiency. Asset forfeiture laws and money-
                laundering laws are still not enforced to any 
                meaningful extent, and needed legislative reforms such 
                as stiffer prison sentences for narcotics trafficking 
                and establishment of legislation to deal with ongoing 
                criminal enterprises have not been advanced.
                    Overall, however, Colombian counter-narcotics 
                performance improved in 1998, and the arrival of the 
                new Pastrana administration gives grounds for optimism 
                about the future.
                Dominican Republic

                    The Dominican Republic is a major transshipment 
                point for drugs destined for the United States and 
                Europe. Traffickers smuggle narcotics from Colombia, 
                Venezuela, and Panama into Dominican territory by air 
                and sea, and from Haiti by land routes. The drugs are 
                then moved onward by air and sea to Puerto Rico and the 
                United States.
                    The Government of the Dominican Republic (GODR) 
                demonstrated strong counter-narcotics law enforcement 
                and interdiction efforts in 1998. The GODR continued to 
                cooperate fully with the USG on counter-narcotics goals 
                and objectives, including expanded cooperation under 
                the 1997 bilateral maritime interdiction agreement. 
                Cocaine and heroin seizures increased dramatically in 
                1998. The GODR initiated a new border patrol unit to 
                control the flow of drugs into the Dominican Republic 
                from Haiti. For the first time ever, the Dominican 
                Republic and Haiti cooperated on an anti-drug smuggling 
                border operation. The GODR and the USG signed an 
                agreement to establish a canine drug detection program 
                at Dominican airports and seaports. Despite recent 
                improvements, however, a weak judicial system continues 
                to hamper law enforcement efforts.
                    In 1998, the GODR enacted legislation repealing a 
                prohibition on the extradition of Dominican nationals 
                and explicitly authorizing the extradition of 
                nationals. The Dominican Republic subsequently 
                extradited one of its nationals to the United States in 
                1998. We will continue to urge the GODR to act on a 
                number of other U.S. extradition requests and to adopt 
                a National Counter-Narcotics Master Plan.
                Ecuador

                    Ecuador continues to be a major transit country for 
                the shipment of cocaine from Colombia to the United 
                States and Europe. Traffickers also use Ecuador for 
                money laundering of drug profits and to transit 
                precursor chemicals destined for Colombian drug labs. 
                Some poppy and coca fields have been found within 
                Ecuador, but there are no indications that significant 
                amounts of heroin or cocaine are produced.

[[Page 11328]]

                    Although lack of adequate governmental funding for 
                counter-narcotics programs and little interagency 
                coordination are weak points, the Government of Ecuador 
                (GOE) continued to demonstrate its cooperation and 
                willingness to work closely with the USG in countering 
                narcotics trafficking and transshipments, chemical 
                diversions, money laundering, and judicial corruption/
                inefficiency. The GOE has also stated its willingness 
                to improve bilateral cooperation in maritime 
                interdiction.
                    The GOE has increased the effectiveness of its 
                anti-narcotics activities by randomly deploying mobile 
                road interdiction teams along Ecuadorian highways, a 
                tactic which accounted for 40 percent of the drugs 
                seized by the police. Successes for the national police 
                included seizures of 42 kilograms of heroin and the 
                seizure of 7.6 tons of cocaine from the Fishing Vessel 
                DON CELSO. The GOE also deployed drug detector dogs at 
                airports; inaugurated a Joint Information Coordination 
                Center (JICC) in the major port city of Guayaquil; and 
                passed legislation to combat corruption and 
                inefficiency in the Customs Service. The Superintendent 
                of Banks indicated strong interest in creating a joint 
                task force to expedite interagency coordination in 
                pursuing financial investigation regarding control of 
                money laundering.
                    To improve the professionalism and efficiency of 
                its enforcement efforts, the GOE has created a judicial 
                police unit to foster closer coordination with 
                prosecutors. The GOE also plans to create a separate 
                anti-narcotics police unit within the judicial police 
                system to allow greater concentration of efforts in 
                this field.
                Guatemala

                    President Arzu has taken Guatemala well down the 
                road to reconciliation of its 36-year internal 
                struggle. His efforts are now focused on combating 
                violent crime, organized crime and other domestic 
                issues. He has fully cooperated with the United States 
                in combating counter-narcotics trafficking in Guatemala 
                and in the region.
                    Guatemala's location and scarce law enforcement 
                resources facilitate its continued use by traffickers 
                as a transshipment and storage point for cocaine 
                destined for the United States via Mexico. Along with 
                increased use of motor vehicle and container shipments, 
                there has been an increase in airdrops of illicit drugs 
                over Guatemalan territory for consolidation and 
                transshipment. With USG assistance, the Department of 
                Anti-Narcotics Police (DOAN) has stepped up training to 
                react to air shipments and efforts to develop air 
                interdiction capabilities. The expanding self-funded 
                port security program and the trained DOAN agents made 
                impressive seizures in the past year.
                    The consolidation of the National Civilian Police 
                (PNC) continues on track with full integration of the 
                DOAN. The USG-trained DOAN seized almost 10 metric tons 
                of cocaine in 1998. The drug prosecutor assistance 
                program maintained its 90 percent conviction rate, with 
                some traffickers receiving sentences of up to 20 years. 
                The new drug prosecutor's field office in 
                Quetzaltenango accounted for 110 successful 
                prosecutions in 1998.
                    Guatemala is a party to the 1988 UN Drug Convention 
                and most GOG law enforcement activities are fully 
                consistent with its goals and objectives. However, some 
                of the Convention's provisions have not been codified 
                into law and regulations, including provisions on 
                extradition and money laundering. President Arzu has 
                also been unsuccessful in gaining legislative support 
                for ratification of a full maritime counter-narcotics 
                agreement.
                    In 1998, the Government of Guatemala (GOG) began 
                implementation of its national drug policy, the anti-
                drug master plan, and national strategy which 
                incorporates both demand and supply reduction 
                objectives to be accomplished by specified ministries. 
                The GOG provided additional funding to plan 
                implementers to attack the alarming increase in drug 
                abuse docu

[[Page 11329]]

                mented last year. The GOG also took major steps in 
                implementing assets seizure and precursor chemicals 
                regulations.
                Haiti

                    Haiti in 1998 made significant progress in a number 
                of areas of counter-narcotics performance and 
                cooperation, but a political impasse spanning the 
                entire year precluded passage by Parliament of key 
                antidrug laws and other important steps. Resource 
                constraints--Haiti is the hemisphere's poorest 
                country--and the lack of an effective judiciary also 
                reduced the effectiveness of Haitian counter-narcotics 
                efforts. As a result, Haiti fell short of agreed-upon 
                counter-drug goals and cannot be certified as having 
                fully cooperated with the United States or on its own 
                to meet the goals and objectives of the 1988 UN Drug 
                Convention, to which Haiti is a party. However, the 
                vital national interests of the United States require 
                that foreign assistance continue to be provided to 
                Haiti.
                    Haiti is a significant transshipment point for 
                drugs, primarily cocaine, moving through the Caribbean 
                from South America to the United States. The increased 
                flow through Haiti is directly related to the success 
                of interdiction operations in other parts of the region 
                and the perception that the Government of Haiti (GOH) 
                is ill-prepared to respond.
                    The certification goals set, in consultation with 
                GOH, for 1998 were: to present to Parliament for 
                passage a set of anti-drug trafficking laws, including 
                money laundering and asset forfeiture, which were 
                drafted in 1997; to begin implementing the ``National 
                Master Plan for Combating Drugs in Haiti'' drafted in 
                1997; and to target at least one major international 
                narcotics organization for significant enforcement 
                action.
                    Haiti did not meet two of these three goals, 
                principally because of the prolonged political impasse 
                between the executive and legislative branches, funding 
                shortfalls, and insufficiencies in institutional 
                structures. The political stalemate prevented the 
                parliamenary ratification of a Prime Minister with 
                executive authority throughout 1998. This meant that, 
                in accordance with the constitution, no new 
                legislation, including the anti-drug laws and the 
                National Master Plan, could be presented to the 
                Parliament for enactment. (Indeed, the Parliament 
                failed to act even on legislation clearing the way for 
                significant new international loans, in which all 
                Haitian parties presumably had an interest.)

                    Although there was some implementation of elements 
                of the Master Plan, GOH efforts to investigate, arrest, 
                prosecute, or convict members of international drug 
                trafficking organizations were lacking. This lack of 
                success, however, must be understood in the broader 
                context of Haiti's pervasive poverty, its dysfunctional 
                judicial system, the still limited capabilities of the 
                four-year-old Haitian National Police (HNP), and the 
                inexperience and inadequacy of the two-year-old police 
                anti-narcotics unit (BLTS).
                    Although most of the specific goals set during the 
                year were not achieved, Haiti's performance and 
                cooperation with the United States improved 
                significantly in a number of key areas. Haiti signed a 
                Joint Information Coordination Center (JICC) agreement 
                with the United States. The entire staffs of the JICC 
                and BLTS were polygraphed. Under a DEA-mentored task 
                force concept, the flow of cocaine from Panama through 
                Port-au-Prince airport has been reduced. Port-au-
                Prince's seaport is now the target of periodic 
                inspections, including by U.S. Customs Service sniffer 
                dogs in November. The HNP has indicated it will 
                cooperate on the expulsion to the United States of 
                third country nationals who are the subjects of U.S. 
                indictments. The Haitian Coast Guard fully cooperated 
                with the USCG ``ship rider'' program, and is 
                increasingly demonstrating independent initiative at 
                sea. The HNP counter-narcotics unit increased the 
                quantity of drugs seized without direct USG assistance. 
                The GOH also initiated the first joint Haitian-
                Dominican drug monitoring effort at the Malpasse-Jimani 
                border crossing.

[[Page 11330]]

                    A vital national interests certification is 
                appropriate and necessary. A cutoff of U.S. bilateral 
                assistance mandated by denial of certification would 
                adversely affect vital U.S. national interests in 
                Haiti, including ending the ongoing political crisis, 
                promoting economic stability and democracy, and 
                stemming the flow of illegal drugs and migrants to the 
                United States.
                    Denial of certification would terminate USG 
                programs that provide critical support for Haiti's 
                fragile economy. Without external assistance and the 
                police mentoring that accompanies it, economic 
                stability and growth would be jeopardized, with 
                consequent renewed pressure on illegal immigration to 
                the United States.
                    USG and other international programs that go beyond 
                counter-narcotics assistance also address underlying 
                problems in the Haitian law enforcement and judicial 
                systems, especially endemic corruption and the lack of 
                a strong professional tradition, that contribute to a 
                weak anti-drug performance. A cutoff of USG programs 
                and the votes against multilateral development bank 
                funding would undermine USG efforts and reduce the 
                incentive for Haitian counter-narcotics entities to 
                improve that performance.
                    The risks posed to all of these U.S. interests by a 
                cutoff of bilateral assistance outweigh the risks posed 
                by Haiti's failure to cooperate fully with the USG or 
                to take adequate steps on its own to combat illicit 
                narcotics. Haiti's inability to fulfill key counter-
                narcotics commitments in 1998 precludes full 
                certification, but decertification would deny GOH many 
                of the desperately needed resources to make progress in 
                the counter-narcotics and other arenas.
                Hong Kong

                    Hong Kong traffickers continue to control large 
                portions of Southeast Asian narcotics traffic, 
                arranging both the financing and shipping of narcotics 
                through Asian ports. In 1998, none of the heroin 
                seizures in Hong Kong appeared destined for the U.S. 
                market. No major heroin seizures in the United States 
                had clearly transited Hong Kong. However, historical 
                precedent, geographic location, transportation 
                infrastructure, and trade activity suggest that Hong 
                Kong remains an important factor in heroin supply to 
                the United States.
                    Hong Kong uses a multi-pronged strategy in 
                combating drug trafficking and abuse, incorporating 
                legislation and law enforcement, treatment and 
                rehabilitation, preventive education and public 
                awareness, and international cooperation. Money 
                laundering, which often stems from drug trade proceeds, 
                is a serious issue for the Hong Kong authorities. The 
                Financial Action Task Force reviewed Hong Kong's 
                financial system in April 1998. Hong Kong played an 
                active role in reducing illicit trafficking of 
                narcotics and precursor chemicals, another major 
                concern, through its participation in the UN Commission 
                on Narcotic Drugs as part of the People's Republic of 
                China delegation. During 1998, a new extradition treaty 
                between the United States and Hong Kong entered into 
                force. Hong Kong also signed mutual legal assistance 
                agreements with several countries and, in December 
                1998, the United States ratified a Mutual Legal 
                Assistance Agreement and a Prisoner Transfer Agreement 
                with Hong Kong. Both agreements await legislative 
                approval in Hong Kong.
                    While trafficking and money laundering remain 
                issues for Hong Kong, the authorities of the Hong Kong 
                Special Administrative Region have launched serious 
                efforts in all areas of enforcement and have been 
                exemplary partners with the United States in the battle 
                against narcotics.
                India

                    India, an important producer both of licit and 
                illicit narcotics, is also a crossroads for 
                international narcotics trafficking. There was no USG 
                illicit

[[Page 11331]]

                poppy survey in India in 1998. Indian authorities 
                claimed there were less than 100 hectares of illicit 
                cultivation, but the last available USG surveys in 1996 
                and 1997 identified 3,100 and 2,000 hectares of illicit 
                opium poppy, respectively.
                    India's location between the two main sources of 
                illicit opium, Burma and Afghanistan, as well as its 
                relatively well-developed transportation 
                infrastructure, make it an ideal heroin transit point. 
                There was credible evidence of large amounts of Burmese 
                heroin being trafficked through India's northeastern 
                border with Burma. However, there is no evidence at 
                this time to indicate that opiates transshipped through 
                India reach the United States in significant amounts.
                    The Government of India (GOI) continues its 
                progress in controlling the production and export of 
                narcotics chemical precursors produced by India's large 
                chemical industry. The GOI controls restrict access to 
                acetic anhydride (AA), a chemical used to process opium 
                into heroin. Nevertheless, there were unauthorized 
                exports of essential chemical precursors and 
                methaqualone (mandrax), a popular drug in Africa. 
                Despite GOI precautions, in late 1998, there was 
                growing evidence of AA entering Burma via India's 
                porous Northeastern border for use in Burmese heroin 
                refining. The GOI has a cooperative relationship with 
                the DEA. However, there has been limited success in 
                prosecuting major narcotics offenders because of the 
                lack of enforcement funding and weaknesses in the 
                intelligence and judicial infrastructure.
                    In 1998, India took concrete steps to deter 
                trafficking and control chemicals. The GOI 
                systematically combatted illicit opium cultivation by 
                combining remote sensing information with raids and the 
                destruction of illicit crops. The Narcotics Control 
                Board (NCB) continues to monitor industry manufacture 
                and sales of controlled and precursor chemicals 
                carefully, resulting in a price rise of precursor 
                chemicals for illicit use. The NCB fully staffed three 
                new zonal offices opened in 1996 along the border with 
                Pakistan, and they are now fully operational. The zonal 
                office in Imphal, Manipur, is also being fully staffed 
                to add a greater enforcement presence in the northeast.
                    GOI counter-narcotics officials increased their 
                cooperation with drug liaison officers from countries 
                in Europe, the Middle East and Africa to undertake a 
                successful series of controlled delivery operations in 
                1998. These operations, many through parcel post, 
                resulted in the arrest of more than 18 persons and the 
                seizure of quantities of heroin, hashish, and 
                methaqualone. The GOI has created the position of Joint 
                Secretary for Narcotics in the Ministry of Finance 
                reporting directly to the Revenue Secretary in order to 
                tighten licit and illicit narcotics controls. This 
                position has also increased the flow of information to 
                Mini-Dublin Group countries and other bilateral and 
                multilateral donors. Finally, to decrease the backlog 
                of cases, the GOI continues to work with special state 
                courts for narcotics matters, and federal narcotics 
                enforcement officials continue to meet quarterly with 
                their state government counterparts to share 
                information and provide training. Federal efforts have 
                spurred the formation of specialized narcotics units in 
                state and metropolitan police agencies.
                    India is a party to the 1988 UN Drug Convention, 
                but has not yet enacted supporting legislation on money 
                laundering or asset seizure under civil law. This 
                supporting legislation is now being prepared for 
                resubmission to the Parliament. However, with the 
                cooperation of UNDCP, the GOI hosted a regional 
                conference on money laundering in New Delhi in March 
                1998. The conference focused on harmonizing regional 
                efforts to fight money laundering and brought together 
                experts from all over South Asia.
                    In order to build on this progress, the USG will 
                encourage GOI to take several important law enforcement 
                steps in 1999. India needs to increase seizures of 
                drugs sharply and to investigate and dismantle 
                smuggling rings. The GOI should give increased priority 
                to combating trafficking on the Indo/Burma border, 
                which may be at least five metric tons of heroin per

[[Page 11332]]

                year. The GOI should pass the amendments to the 
                Narcotic Drugs and Psychotropic Substances Act (NDPS) 
                of 1985, introduced into Parliament in August 1997, 
                which would modernize the criminal justice system.
                    India is the world's largest producer of licit 
                opiates for pharmaceutical use and the only producer of 
                licit gum opium. The GOI continues to tighten its 
                control over diversion of licit opium. However, some 
                opium continues to be diverted from the country's legal 
                production. The GOI estimates diversion at about 10 
                percent, although it may be as high as 30 percent. As a 
                licit producer of opium, India must meet an additional 
                certification requirement. In accordance with Section 
                490(c) of the Foreign Assistance Act, India may not be 
                certified unless it maintains licit production and 
                stockpiles at levels no higher than those consistent 
                with licit market demand and has taken adequate steps 
                to prevent significant diversion of its licit 
                cultivation and production into illicit markets and to 
                prevent illicit cultivation and production.
                    Production and stockpile of licit opium in India 
                has clearly not exceeded licit market demand. Indeed, 
                India's stockpile has been barely adequate for some 
                time and disastrous weather during the 1997-1998 poppy 
                growing season, combined with a cultivator's ``strike'' 
                which delayed planting, led to a 1998 harvest that is 
                one of the smallest on record: about 260 metric tons 
                (MT), well under even initial GOI estimates. To meet 
                domestic and international licit demand, the GOI now 
                concedes that it has been forced to ``completely 
                exhaust'' its licit opium stockpile, leaving no 
                carryover stock from 1998 whatsoever. This precarious 
                situation makes an adequate 1999 harvest extremely 
                important, and the USG is thus encouraging increased 
                licit production.
                    To meet India's share of anticipated world demand 
                for licit opium in 1999, and begin rebuilding domestic 
                stockpiles to about 750 MT, the GOI plans to produce a 
                licit opium harvest of at least 1300 MT in 1999, just 
                below the 1997 record harvest. To meet this goal, the 
                GOI has decided to reverse years of reductions in 
                acreage (to improve control of diversion) and to 
                sharply increase both the area under cultivation and 
                the number of licit opium cultivators. Acreage will be 
                increased by 32 percent; licit cultivators will more 
                than double.
                    In 1998, India took six important steps to increase 
                licit opium production to meet market demand and 
                rebuild the stockpile while curtailing the diversion of 
                licit opium. These steps included: (1) sharply raising 
                the number of hectares to be cultivated for the 1998-
                1999 poppy growing season; (2) retaining the highest-
                ever minimum qualifying yield at 52 kilograms/hectare 
                to discourage diversion from the licit crop; (3) 
                raising the prices paid to opium cultivators to 
                increase incentives for declaring and selling to GOI 
                all licit opium; (4) expanding licit opium diversion 
                controls to include re-surveys of plots after the 
                planted crop reaches a particular stage of growth to 
                ensure that the area under cultivation matches the 
                amount of land licensed; (5) destroying cultivation 
                more than five percent above the licensed amount with 
                the cultivator liable for prosecution; and (6) raising 
                licit opium diversion-related offenses by licensed 
                cultivators to the level of trafficking offenses, with 
                convictions resulting in 10 to 20 years imprisonment 
                and fines up to U.S. $6,000.
                    While these are important steps to curb diversion, 
                the USG believes even more must be done, given the 
                significant planned increase in hectarage and farmers. 
                The USG will work with the GOI to increase diversion 
                controls. Despite the assent of a high-ranking GOI 
                official in February 1998 to undertake a comprehensive 
                joint opium yield survey with the USG, the GOI has not 
                yet signed the necessary formal agreement. A joint 
                licit opium survey would provide a firmer scientific 
                basis for the GOI to set minimum qualifying yields 
                (MQY) for licit opium farmers. More realistic MQYs 
                would facilitate governmental controls on diversion and 
                forecasting the supply of licit opiates.

[[Page 11333]]

                Jamaica

                    Jamaica is a major transit point for South American 
                cocaine en route to the United States and is also the 
                largest Caribbean producer and exporter of marijuana. 
                During 1998, the Government of Jamaica (GOJ) made some 
                progress toward meeting the goals and objectives of the 
                1988 UN Drug Convention, to which it became a party in 
                1995. At regional meetings, GOJ officials actively 
                supported counter-drug initiatives. Bilateral counter-
                drug cooperation is good and improving, especially in 
                the area of maritime law enforcement. The U.S.-Jamaica 
                bilateral maritime agreement, proposed by the USG in 
                July 1995, came into force when Jamaica passed enabling 
                legislation in February 1998. Jamaican forces 
                participated in several combined operations under the 
                new agreement.
                    During 1998, the GOJ removed four persons to the 
                United States, three by extradition and one under a 
                waiver of extradition, compared to three removals in 
                1997. The USG and GOJ worked together to remove from 
                the list of pending extradition requests all non-active 
                cases, leaving 17 pending requests for which the United 
                States seeks early resolution.
                    GOJ's cannabis eradication during 1998 was down 
                only slightly from 1997, despite a lack of helicopter 
                and fixed wing air support. Marijuana and cocaine 
                seizures and drug-related arrests increased 
                significantly over 1997; hash oil seizures were down. 
                The GOJ made a valuable contribution to regional anti-
                drug efforts by assuming funding of operating costs of 
                the Caribbean Regional Drug Law Enforcement Training 
                Center, located near Kingston and built with USG 
                funding under a UNDCP project.
                    In 1998, the Lower House of Parliament passed 
                amendments to the existing anti-money laundering 
                legislation; Senate action is pending. If passed by the 
                Senate, the proposed amendments would raise the 
                threshold for mandatory transaction reporting from U.S. 
                $10,000 to U.S. $50,000 equivalent, but would also 
                introduce a new requirement that suspicious 
                transactions in any amount be reported. Further GOJ 
                action is required to bring its anti-money laundering 
                law in line with international standards, especially 
                extending the law to cover the laundering of the 
                proceeds of all serious crime.
                    Current Jamaican law requires the conviction of a 
                criminal drug defendant prior to commencing a 
                forfeiture action. The GOJ forfeited the house of a 
                convicted drug trafficker in 1998. However, Jamaica's 
                current asset forfeiture regime does not permit the GOJ 
                to take full advantage of the forfeiture mechanism to 
                augment the resources of its anti-drug agencies and 
                deprive criminals of the proceeds of their crime.
                    In 1998, the GOJ did not table in Parliament a 
                precursor and essential chemical control law, despite 
                stated commitments to do so for the last several years. 
                However, the GOJ has budgeted for implementation of 
                chemical controls, and the USG has already provided 
                training to Jamaican precursor chemical control 
                personnel. The GOJ did table in Parliament anti-
                corruption legislation, which is currently under 
                debate. Corruption, especially among members of the 
                security and law enforcement forces remains a serious 
                problem in Jamaica, and the GOJ should take stronger 
                action to prosecute corrupt individuals.
                    In 1998, the GOJ arrested 7,352 drug offenders, and 
                the Supreme Court reported 10,290 convictions of drug 
                offenders. However, even though GOJ counter-drug 
                cooperation with DEA continued to be good, no Jamaican 
                drug kingpins were arrested or convicted during 1998. 
                The GOJ has agreed to develop in the coming year, with 
                USG assistance, special units to target drug kingpins 
                and apprehend fugitives from justice.
                    The GOJ has in place a comprehensive national drug 
                control strategy which covers both supply and demand 
                reduction; the GOJ should add to its strategy specific 
                goals and objectives and measures of effectiveness. The 
                GOJ also should ratify the Inter-American Convention 
                against Corruption,

[[Page 11334]]

                and, as it mandates, put in place legislation that 
                requires financial disclosure by public officials. The 
                GOJ also needs to take stronger steps to strengthen 
                internal controls and investigate and prosecute corrupt 
                members of the security and law enforcement forces.
                    The USG will continue to provide technical 
                assistance, training, and equipment to the GOJ to help 
                strengthen its anti-drug, anti-money laundering and 
                anti-corruption laws and enforcement capabilities. In 
                addition, the USG will continue to assist the GOJ to 
                address port security problems identified in a 1997 
                comprehensive assessment.
                Laos

                    Laos remains the world's third largest producer of 
                illicit opium, trailing only Burma and Afghanistan. 
                However, because small-scale subsistence farmers, 
                without fertilizer, irrigation, or other agricultural 
                improvements grow opium, Lao yields average less than 
                half those found in neighboring Burma.
                    For the 1998 growing season, although opium 
                cultivation fell only seven percent, adverse weather 
                conditions, which also affected opium production in 
                Burma and Thailand, dramatically affected production 
                levels. The United States estimates Lao potential opium 
                production for 1998 at 140 metric tons, down 33 percent 
                from the previous year. Significant decreases in 
                production can also be attributed to lower productivity 
                per hectare due to crop substitution in project areas 
                funded by foreign donors. These areas continued to show 
                only low levels of opium cultivation, none of which was 
                for commercial distribution, but rather was restricted 
                to small amounts for local use.
                    In January 1998, a heroin laboratory was seized in 
                Bokeo province, the first such seizure this decade. In 
                July, the position of Chairman of the Lao National Drug 
                Commission was raised to ministerial rank. A DEA agent 
                was assigned to the U.S. Embassy in Vientiane for the 
                first time since 1975. Laos is not yet a party to the 
                1988 UN Drug Convention, but the government of Laos 
                (GOL) has set a goal of ratification by the year 2000.
                    Laos' location next to the world's largest producer 
                of opium and heroin (Burma), and its land borders with 
                countries that combine important opium markets and 
                ports on trade routes to Europe and the United States 
                (China, Thailand, Vietnam, and Cambodia), make it an 
                important route for drug trafficking. The GOL does what 
                it can to combat trafficking and has shown itself ready 
                to work very closely with the international donor 
                community to attack the socio-economic problems 
                underlying poppy cultivation in Laos. The GOL has 
                already opened four Drug Control Units, and is 
                determined to open one in each of the country's 
                provinces.
                Mexico

                    Mexico made significant counter-narcotics progress 
                in 1998. Building on presidential commitments made in 
                May 1997, the United States and Mexico developed a Bi-
                National Drug Strategy--released in February 1998--
                which identified sixteen areas for cooperation in 
                reducing the illicit consumption, production and 
                trafficking in drugs. Later in 1998, the two countries 
                developed Performance Measures of Effectiveness for the 
                Strategy to guide its implementation and to provide a 
                means of monitoring progress. The Measures were 
                formally adopted during President Clinton's trip to 
                Mexico in February 1999. The U.S.-Mexico High-Level 
                Contact Group on Narcotics Control (HLCG) and the 
                Senior Law Enforcement Plenary continued to serve as 
                the principal fora for coordination of bilateral 
                counter-narcotics cooperation.
                    USG agencies enjoy productive working relationships 
                with Government of Mexico (GOM) counterparts across a 
                broad range of counter-narcotics programs. The two 
                governments have established numerous mechanisms, both 
                formal and informal, to promote good communication and 
                coordination.

[[Page 11335]]

                    The most serious obstacles to both bilateral 
                counter-narcotics cooperation and the effectiveness of 
                Mexican agencies in combating the major drug cartels 
                relate to institutional weaknesses, such as lack of 
                adequate resources and training and widespread drug-
                related corruption. The GOM took a number of important 
                steps in 1998 to address these problems. For example, 
                for the first time ever, the Office of the Attorney 
                General (PGR) implemented an intensive screening 
                process for recruits to law enforcement as well as for 
                all personnel assigned to sensitive positions. This 
                level of screening will eventually be expanded to all 
                PGR personnel. These kinds of reforms, along with 
                bilateral training activities, are helping to build 
                confidence between USG and GOM authorities, resulting 
                in improved bilateral cooperation.
                    The GOM also took steps during 1998 to implement 
                important legislative reforms designed to enhance 
                efforts against drug trafficking and organized crime. 
                Among these steps were introduction of legislation 
                regulating seized property to allow for asset 
                forfeiture and sharing, streamlining the Mexican code 
                of criminal procedure to facilitate prosecution of drug 
                traffickers, and reducing the ability of employees 
                dismissed for corruption to be reinstated upon appeal. 
                In an effort to enhance professionalism and increase 
                capabilities, Mexican law enforcement and judicial 
                officials participated actively during 1998 in various 
                bilateral training programs designed to improve 
                management of evidence, electronic surveillance, asset 
                forfeiture, drug detection, and fraud investigation.
                    During 1998, Mexican authorities arrested numerous 
                drug traffickers, including Jesus and Luis Amezcua 
                (major methamphetamine traffickers wanted for 
                extradition to the United States), twenty members of 
                the Amado Carrillo Fuentes Organization (the Juarez 
                Cartel), the former military commander of Baja 
                California, and two Federal Judicial Police chiefs. 
                Notable convictions and sentences for drug-related 
                crimes in 1998 include former Drug Czar Army General 
                Gutierrez Rebollo (sentenced to almost 14 years for 
                offenses involving illegal possession and 
                transportation of firearms and abuse of authority), and 
                Ernesto ``Don Neto'' Fonseca Carrillo (sentenced on 
                drug charges to 11 years, in addition to time he is 
                serving for the 1985 murder of a DEA agent). Over 
                10,000 Mexican nationals and 255 foreign nationals were 
                arrested on drug-related charges.
                    On the basis of legislation and regulations adopted 
                in 1996-97, the GOM made progress last year in 
                detecting and prosecuting instances of money 
                laundering. The Financial Investigative Unit 
                established in 1997 in Mexico's Finance Ministry 
                continued to work closely with USG counterparts on 
                money laundering investigations, providing leads, 
                follow-up and access to witnesses. With informational 
                assistance and technical support from the USG, the GOM 
                increased seizures of drug traffickers' assets in 1998, 
                including a $250 million seizure of assets connected to 
                Alcides Ramon-Magana in Cancun. Mexico's first 
                successful prosecution for money laundering 
                demonstrated encouraging progress in 1998.
                    The GOM sustained its massive interdiction and 
                eradication programs throughout 1998. For example, 
                Mexican law enforcement and military personnel seized 
                22.6 metric tons of cocaine and over 1,000 metric tons 
                of marijuana. They eradicated for an entire growing 
                season approximately 9,500 hectares of opium poppy and 
                9,500 hectares of cannabis. The GOM continued 
                cooperation with the USG in interdicting drug shipments 
                throughout 1998. For example, during one major event, 
                the GOM seized three tons of cocaine from a trafficking 
                vessel forced to land by coordinated action by the U.S. 
                Coast Guard and the Mexican Navy. In addition, 
                bilateral cooperation in using U.S. air assets to 
                detect and monitor drug flights increased in 1998.
                    Both governments recognize that much remains to be 
                done to dismantle the major international drug cartels, 
                which pose such a serious threat to both nations. The 
                criminal organizations based in Mexico are well 
                financed and violent, placing Mexican law enforcement 
                and military personnel at grave risk. The persistent 
                corrupting influence of these groups is also an 
                important concern for the GOM.

[[Page 11336]]

                    President Zedillo has publicly underscored his 
                commitment to combat drug trafficking and to strengthen 
                Mexico's law enforcement institutions. He reaffirmed 
                this commitment to U.S. officials, including in a June 
                1998 meeting with President Clinton at the UN General 
                Assembly Special Session on Drugs. In February 1999, 
                the GOM announced a major public security initiative 
                which will significantly intensify the national anti-
                drug effort. Despite an austere budgetary situation, 
                President Zedillo has directed the GOM to invest up to 
                $500 million over the next three years on enhancements 
                to the nation's capabilities to interdict drug 
                shipments, to combat the major drug trafficking 
                organizations, and to counter the corrupting influences 
                that these organizations exert in both the public and 
                private sectors. the initiative also calls for a major 
                effort to address street crime and violence.
                    The USG and the GOM have carefully nurtured 
                positive working relationships, and the goodwill 
                resulting from those efforts will remain essential as 
                both Governments continue to confront the shared threat 
                of international drug trafficking.
                Nigeria

                    Nigeria has failed to fully meet the criteria for 
                cooperation with the United States on counter-narcotics 
                matters and has not taken adequate steps on its own to 
                meet the goals of the 1988 UN Drug Convention. The 
                vital national interests of the United States, however, 
                require that Nigeria be certified in order that 
                assistance, otherwise withheld, might be provided to 
                support the transition to democratic civilian rule and 
                the increased efforts to improve cooperation on 
                counter-narcotics and other crime evident during recent 
                months.
                    Nigeria remains the hub of African narcotics 
                trafficking. Nigerian criminal organizations operate 
                global narcotics trafficking networks. They control 
                sub-Saharan African drug markets, transport heroin from 
                Asia to Africa, Europe and the United States, and 
                transport cocaine from South America to Europe, Africa 
                and Asia. Nigerian smugglers are responsible for a 
                significant portion of the heroin used in the United 
                States. Marijuana, the only narcotic grown in Nigeria, 
                is exported to Europe and other African nations, but 
                has little impact on the United States.
                    Nigerian counter-narcotics efforts remain unfocused 
                and lacking in material support. New head of state 
                General Abubakar's strong public stand against 
                narcotics trafficking and other crimes was a welcome 
                change from past indifference, but has not yet resulted 
                in new policies or action. The Government of Nigeria 
                (GON) reaffirmed the existing bilateral basis for 
                extraditions, but had not yet concluded any 
                extraditions by the end of 1998. The 1995 National Drug 
                Strategy remains unimplemented; wage increases that 
                would have given law enforcement personnel a living 
                wage for the first time in more than a decade were 
                announced, but have not yet been implemented. Nigerian 
                law enforcement continues to suffer from lack of 
                material support, insufficient training, and widespread 
                corruption.
                    In 1998, there was some progress with the 
                interdiction of low level couriers, gradual 
                improvements in the capabilities of the National Drug 
                Law Enforcement Agency (NDLEA), and the intensification 
                of basic demand reduction efforts. The NDLEA made a 
                number of seizures from individual couriers, but no 
                major drug traffickers were prosecuted or convicted; 
                total heroin seizures decreased. The increasingly 
                sophisticated bulk and mail concealment methods of drug 
                traffickers are moving beyond the capabilities of 
                Nigerian law enforcement to detect them. The GON did 
                not share counter-narcotics intelligence with the USG. 
                A limited number of asset seizures were made, none 
                against major traffickers or money launderers, and no 
                asset seizures were prosecuted to conclusion. Nigeria 
                has only just begun to acknowledge the depth of its own 
                drug abuse problem. Demand reduction efforts have 
                intensified with the opening of anti-drug clubs at 
                Nigerian universities, and their endowment with anti-
                drug literature and videos. Most of these

[[Page 11337]]

                efforts, however, are nascent and are hindered by the 
                continuing misperception that drug abuse is a 
                ``foreign'' problem.
                    Nigerian money launderers operate sophisticated 
                global networks to repatriate illicit proceeds from 
                narcotics trafficking, financial fraud and other 
                crimes. Efforts to enforce the well-drafted money 
                laundering decree were uneven and superficial, and did 
                not result in any convictions or asset seizures that 
                were prosecuted to conclusion.
                    Nigeria is one of the most important countries in 
                Africa. What happens in Nigeria politically and 
                economically will, to a large degree, determine whether 
                there is stability and progress toward democracy and 
                economic reform in West Africa. If Nigeria's ongoing 
                transition fails, it could easily result in an 
                implosion of government and the collapse of the 
                economy, triggering a humanitarian disaster in Africa's 
                most populous country, with over 100 million people, 
                and a destabilizing exodus of Nigerians to neighboring 
                states. Such an upheaval could also disrupt the 
                movement of high-quality Nigerian oil, which accounts 
                for more than seven percent of total U.S. petroleum 
                imports.
                    If, on the other hand, Nigeria's transition 
                succeeds, it will be an example to all of Africa, and 
                has the potential to lead to economic growth and 
                greater transparency in government. Nigeria could 
                become an engine for growth in West Africa. A stable 
                and democratic Nigeria will permit greater cooperation 
                between law enforcement agencies, and the opportunity 
                to reduce the impact of Nigerian criminals who prey on 
                the American people.
                    The military's acceptance of its appropriate role 
                in a functioning democracy, and the new civilian 
                government's ability to govern, will be critically 
                impaired if Nigeria if deprived of the full range of 
                U.S. support. Building a political consensus and 
                meeting the challenges of a collapsing economy will 
                also depend in no small part on outside assistance and 
                expertise.
                    Denial of certification would block assistance the 
                new democratically-elected government will need to meet 
                these challenges, seriously damaging the prospects for 
                success of stable, transparent democracy in Nigeria. 
                U.S. vital national interests require providing 
                humanitarian, economic and security assistance to 
                Nigeria as well as counter-narcotics assistance from 
                all sources. The risk of not doing so now would 
                jeopardize not only Nigeria's transition to democracy, 
                but also Nigeria's attempts to reinvigorate its failing 
                economy and support for democracy and peacekeeping 
                throughout the region. Further, any new civilian 
                government's ability to work with the United States on 
                all issues, including counter-narcotics and other law 
                enforcement, will depend on its access to multilateral 
                lending and U.S. technical and economic assistance. The 
                risks posed by the cutoff of assistance clearly 
                outweigh the risks associated with GON's inadequate 
                counter-narcotics performance over the past year.
                Pakistan

                    In 1998, Pakistan advanced toward its goal to 
                eliminate opium poppy in the year 2000, by reducing 
                opium poppy cultivation by 26 percent. The atmosphere 
                for cooperation on drug control between Pakistan and 
                the United States also improved significantly. Pakistan 
                extradited two narcotics fugitives to the United 
                States, whereas none were extradited in 1997.
                    The Government of Pakistan (GOP) undertook an 
                unprecedented poppy eradication campaign in some of its 
                most inaccessible territory, which reduced cultivation 
                by 26 percent and production by 24 percent and 
                decreased the cultivation level to significantly below 
                that of 1996. Despite financial constraints, the GOP 
                ensured that wheat for planting alternative crops 
                arrived in poppy-growing areas in time for the October 
                planting, to forestall a return to poppy cultivation.
                    Narcotics seizures were down, with heroin seizures 
                down 48 percent. The GOP did, however, prevent the re-
                emergence of heroin/morphine labora

[[Page 11338]]

                tories in Pakistan, although some labs moved across the 
                border into still chaotic Afghanistan. In November, the 
                Prime Minister pledged to take steps to strengthen 
                Pakistan's law enforcement agencies, particularly the 
                Anti-Narcotics Force (ANF).
                    To meet law enforcement goals, a number of 
                important arrests were made in 1998, including three 
                individuals arrested in conjunction with heroin 
                shipments that exceeded 100 kilograms. The GOP also 
                arrested Faheem Babar, a major Lahore trafficker, whose 
                arrest led to the discovery of an important drug 
                trafficking organization operating with the alleged 
                collaboration of at least one mid-level government 
                official. Assets of drug traffickers totaling $5.8 
                million were frozen in 1998, and for the first time, a 
                High Court ruled in favor of forfeiture of the assets 
                to the government.
                    The GOP took several important steps to strengthen 
                law enforcement in 1998. The Control of Narcotics 
                Substances Act and the Anti-Narcotics Forces Act were 
                extended to the tribal areas of the Northwest Frontier 
                Province, a major drug trafficking area. For the first 
                time, Pakistan's anti-narcotics laws can be legally 
                enforced in Pakistan's tribal areas. The GOP also 
                approved cooperation with DEA for the establishment of 
                a special vetted unit within the ANF.
                    To meet extradition goals, the GOP extradited two 
                drug traffickers on the extradition list and arrested 
                three more. Many extradition requests remain 
                problematic, as neither DEA nor the GOP have addresses 
                for many extraditables within Pakistan. The GOP also 
                requested certification that the cases were still 
                pending in U.S. courts. To meet anti-corruption goals, 
                in 1998, ANF removed 70 corrupt officials from its 
                ranks.
                    Pakistan's counter-narcotics performance improved 
                in many aspects from last year's record. Independent of 
                USG assistance, the GOP took a number of steps on its 
                own to meet the goals and objectives of the 1988 UN 
                Drug Convention, including: extending the Control of 
                Narcotics Substances Act and the Anti-Narcotics Act to 
                tribal areas in the Northwest Frontier Province; 
                freezing significant drug trafficking assets; arresting 
                several major drug traffickers; and dismissing corrupt 
                counter-narcotics officials.
                    The GOP also actively and fully cooperated with the 
                USG beginning in April to meet a number of important 
                mutual counter-narcotics goals, including: an agreement 
                with DEA to establish the special vetted unit; 
                increased extraditions; arrests of some major drug 
                traffickers; and the location of illicit poppy fields 
                for the spring poppy eradication program.
                    The GOP should take immediate steps to improve its 
                performance in a number of areas, including: 
                significantly improved narcotics seizures; convictions 
                of major drug traffickers; closure of pending cases 
                against two prominent drug offenders, Sakhi Dost Jan 
                Notezai and Munawar Hussain Manj; concentration of law 
                enforcement resources in investigations, arrests, 
                prosecutions and convictions of drug kingpins; and 
                steps to enact and implement the narcotics-related 
                money laundering provisions of the Control of Narcotics 
                Substances Act and to approve formally the Drug Abuse 
                Control Master Plan.
                Panama

                    Panama is a major transit point for Colombian 
                cocaine and heroin en route to the United States. 
                Cocaine passes through Panamanaian territorial waters 
                concealed in fishing boats, ``go-fast'' boats and ocean 
                freighters. Some of it is offloaded on the Panamanian 
                coast and then transported by truck up the Pan American 
                highway bound for the United States, or carried by 
                couriers travelling by air to the United States and 
                Europe.
                    There is no evidence that any senior officials of 
                the Government of Panama (GOP) are involved in drug 
                smuggling. Nor does government policy encourage or 
                facilitate drug-related criminal activity. However, the 
                amount of drugs seized by Panama's neighbors to the 
                north on the Pan American highway

[[Page 11339]]

                suggests either inadequate inspections or corruption on 
                the part of GOP border officials. The judiciary, with 
                its traditional susceptibility to political influence 
                and threats, remains a concern because of plans for it 
                to assume control of the Judicial Technical Police, the 
                principal partner of USG counter-narcotics operations.
                    The GOP continued implementation of its national 
                counter-narcotics plan and its excellent cooperation 
                with USG counterparts in 1998. Collection of 
                information by the Financial Investigations and the 
                Financial Analysis Units also improved during 1998. 
                However, very little progress was made on bringing 
                cases to prosecution. Panama remained active in 
                international fora and associations targeting money 
                laundering including the Egmont Group, the Caribbean 
                Financial Action Task Force (CFATF), the Basel 
                Committee's Offshore Group of Bank Supervisors, and the 
                Commission Against Addiction and Illicit Drug 
                Trafficking (CICAD) of the Organization of American 
                States.
                    In 1998, GOP officials seized 11.771 metric tons of 
                cocaine and 22 kilos of heroin. Although the lack of 
                resources for counter-narcotics police remains a 
                problem, with USG assistance, the facilities and 
                equipment of the Panamanian National Maritime Service 
                have been upgraded, facilitating the highest level of 
                cooperation on maritime interdiction in the region. 
                Maritime operations included several shiprider 
                operations and numerous occasions of information 
                sharing and cooperation on maritime drug interdiction.
                    Highest priority in the coming year will be signing 
                a maritime counter-narcotics agreement, achieving 
                greater success in prosecuting money launderers, 
                expanding money laundering legislation to include the 
                profits of all crimes, and increasing interdiction 
                capabilities of the Panamanian counter-narcotics 
                police.
                Paraguay

                    Up to 40 metric tons of primarily Bolivian cocaine 
                are estimated to transit Paraguay annually, en route 
                through Argentina and Brazil to the United States, 
                Europe and Africa. Paraguay is also a source country 
                for high-quality marijuana. Significant money 
                laundering occurs, but it is unclear what portion is 
                drug-related.
                    In 1998, Paraguay signed a new bilateral 
                extradition treaty with the United States that includes 
                extradition of nationals. Modest improvements in 
                counter-narcotics performance were achieved after the 
                inauguration of the Cubas administration in August, 
                such as the seizure of 215 kilograms of cocaine (more 
                than the previous two years combined) and arrests of 
                numerous low-level narcotics traffickers.
                    However, the Government of Paraguay (GOP) failed to 
                accomplish the majority of the agreed-upon counter-
                narcotics goals for 1998 in a manner sufficient for 
                full certification. Paraguay did not implement its 
                national drug control strategy through effective 
                investigations leading to the arrest and prosecution of 
                major drug traffickers, corrupt officials and their 
                associates; drafted, but did not pass a revised anti-
                drug statute which includes provisions authorizing 
                controlled deliveries and undercover operations, and 
                criminalizes drug-related conspiracy; failed to 
                effectively implement the new money-laundering statute; 
                and failed to develop an effective anti-drug and 
                organized crime investigative and operational 
                capability for the tri-border area. In part, these 
                shortcomings stem from the country having been 
                distracted by the May elections and later by continued 
                political turmoil over the status of former Army 
                Commander, and unsuccessful 1996 coup plotter, Lino 
                Oviedo.
                    Denial of certification would, however, cut off 
                assistance programs designed to meet the priority USG 
                goal of strengthening Paraguay's democratic 
                institutions and civil-military relations. This would 
                reduce USG support for Paraguay's democracy at a time 
                when it is being tested by conflict

[[Page 11340]]

                between the executive branch and the legislative and 
                judicial branches, and calls by some Paraguayans for 
                extraconstitutional measures. Denial of certification 
                would also jeopardize ongoing cooperation and 
                assistance programs with the GOP against other key 
                areas such as intellectual property piracy and 
                terrorism. Moreover, vital national interests 
                certification would help promote the political will and 
                positive action against narcotics trafficking that we 
                continue to seek from the new Cubas administration.
                    The risks posed to the totality of U.S. interests 
                (i.e., promoting democracy, cooperation against 
                intellectual piracy and continued counter-terrorism 
                cooperation) by a cutoff of bilateral assistance 
                outweigh the risks posed by GOP's failure to cooperate 
                fully with the USG, or to take fully adequate steps to 
                combat narcotics on its own.
                    For 1999, Paraguayan counter-narcotics and anti-
                money laundering institutions need to be strengthened 
                and given independence from political institutions and 
                intrigue. With strong civilian leadership and 
                cooperation among the President, congress and the 
                courts, as well as adequate resources and legal 
                authorities, the GOP could achieve all of its stated 
                goals.
                Peru

                    Peru achieved a 26 percent decline in coca 
                cultivation in 1998, yielding a total reduction of 56 
                percent since 1995. Eradication of illegal coca 
                cultivation reached an all-time record of 7,825 
                hectares, nearly doubling the Government of Peru (GOP) 
                target goal of 4,000. In terms of hectarage, an 
                estimated 51,000 hectares of coca cultivation remains, 
                down from an estimated 115,300 hectares in 1995. In the 
                past two years, a strong law enforcement program 
                focused on trafficking organizations and transportation 
                infrastructure, combined with an efficient coca 
                eradication program, led to a collapse in coca leaf 
                prices. The reduction in coca leaf prices prompted 
                greater numbers of farmers to accept the economic 
                alternatives to coca offered by the USG-Peru 
                alternative development project, which continued to 
                expand in 1998. However, coca leaf prices began to rise 
                throughout Peru in August. This trend may reflect 
                multiple factors, including new transportation methods, 
                new markets for Peruvian drugs, natural market forces, 
                and possibly increased cocaine hydrochloride (HCl) 
                production in Peru.
                    As traffickers have adapted and developed new 
                smuggling methods on Peru's rivers, land borders and 
                maritime routes, Peruvian counter-narcotics agencies, 
                the Peruvian National Police (PNP) and the Peruvian 
                Coast Guard established several riverine counter-
                narcotics bases and increased resources for riverine 
                operations. Cooperating with U.S., Colombian and 
                Brazilian law enforcement personnel, PNP exchanged 
                counter-narcotics intelligence and participated in 
                joint law enforcement operations in the Amazonian tri-
                border area. The PNP, working in close cooperation with 
                U.S. and other Andean counter-narcotics agencies, also 
                pursued and arrested major drug trafficking 
                organizations with both U.S. and international cocaine 
                trafficking connections.
                    The successful ``airbridge denial'' program has 
                significantly shaped trafficking patterns in Peru and 
                has caused the traffickers to develop alternative 
                methods of transport to export drugs. While traffickers 
                continue to fly large quantities of coca products out 
                of Peru, particularly through Brazil, river and 
                overland routes are increasingly used as intermediate 
                steps in the export process. Overland routes, 
                particularly north into Ecuador and south into Chile 
                and Bolivia, are complementing maritime conveyance of 
                drugs through Peru's coastal ports. The GOP is 
                responding to the change by developing riverine and 
                other counter-narcotics transit control strategies, 
                using USG assistance and training.
                    In 1998, the joint USG-GOP alternative development 
                program operated in five valleys of Peru to strengthen 
                local governments, provide access to basic services and 
                promote licit economic activities, thereby establishing 
                the social and economic basis for the permanent 
                elimination of coca. A

[[Page 11341]]

                total of 239 communities have signed coca reduction 
                agreements to reduce coca by approximately 16,300 
                hectares over a five-year period. Two hundred more 
                agreements are expected to be signed by the end of 
                1998. Licit economic activities involving assistance 
                for more than 25,000 hectares of licit crops are 
                focused on rehabilitating coffee and cocao plantations 
                abandoned during the ``coca boom.'' One hundred thirty 
                kilometers of rural roads and four bridges have been 
                constructed. Other donors are expected to provide 
                additional resources for infrastructure development.
                    Donors participating in the November 1998 Peru 
                Consultative Group in Brussels described Peru as a 
                model of effective counter-narcotics policy, balancing 
                interdiction with alternative development and 
                demonstrating a willingness to make tough decisions 
                required to achieve sustained illicit coca reduction. 
                Of the $277 million for Peru's overall alternative 
                development and demand reduction programs, 
                approximately $127 million represents funding by non-
                USG donors. This support will enable the GOP to 
                undertake major programs in six new coca-producing 
                valleys.
                    Effective drug interdiction--especially 
                strengthening ``airbridge denial''--and law enforcement 
                remain the keys to maintaining coca leaf prices at 
                unprofitable levels. The USG expects that low coca leaf 
                prices will convince more farmers to abandon coca in 
                favor of new crops or economic activities. Meanwhile, 
                Peru's alternative development programs are designed to 
                provide long-term, sustainable alternative economic 
                opportunities which will discourage farmers from 
                returning to coca cultivation. The GOP will need to 
                increase security in areas still known for guerrilla 
                activity and undertake a strong counter-narcotics 
                effort to keep traffickers from interfering with 
                alternative development efforts. Internal drug 
                consumption is likely to increase, and the USG will 
                continue to support the GOP's efforts to counter this 
                growing problem.
                Taiwan

                    Given its role as a regional transportation/
                shipping hub in Asia, Taiwan is considered a 
                significant transit point for drugs affecting the 
                United States. Its geographical location also 
                facilitates Taiwan nationals' involvement in 
                international narcotics trafficking. Taiwan authorities 
                make every effort to restrict this role, however, and 
                routinely cooperate with U.S. enforcement activities.
                    Although Taiwan's aggressive domestic counter-
                narcotics program continued, with an increase of 19 
                percent in the number of new cases investigated and the 
                implementation of new counter-narcotics laws, the 
                amount of drugs seized and the number of prosecutions 
                in 1998 decreased substantially from 1997. Taiwan 
                cannot be a party to the 1988 UN Drug Convention 
                because it is not a UN member. Nevertheless, over the 
                last several years, Taiwan passed and implemented laws 
                unilaterally bringing it into compliance with the 
                Convention's goals and objectives. Taiwan also 
                continued to expand counter-narcotics cooperation with 
                U.S. law enforcement agencies through the American 
                Institute in Taiwan.
                    Taiwan is not a significant cultivator or producer 
                of illegal narcotics, but the illegal consumption of 
                both heroin and methamphetamine remains a serious 
                internal social problem. Amphetamines were produced in 
                Taiwan in the past, but aggressive police efforts in 
                1998 and shifting market forces within the drug trade 
                have forced producers to move their facilities to 
                Mainland China. About 68 percent of the methamphetamine 
                and 42 percent of the heroin seized on Taiwan during 
                the first eleven months of 1998 originated in Mainland 
                China.
                    Kaohsiung Harbor, the world's third busiest 
                container port, is a major center for shipping to and 
                from Southeast Asian ports. Monitoring this traffic for 
                smuggling is a difficult task. A significant percentage 
                of the nearly six million TEU (twenty foot equivalent 
                unit) shipping containers at Kaohsiung port last year 
                were ``in transit'' and, according to standard inter

[[Page 11342]]

                national practice, not subject to routine inspection by 
                Taiwan Customs. Of the nearly 3 million containers 
                legally entering and leaving Taiwan, Customs examined 
                approximately 2 percent--a percentage comparable to 
                that of other ports.
                Thailand

                    Throughout 1998, despite a serious domestic 
                methamphetamine abuse problem and deep government 
                budget cutbacks, Thailand continued its long tradition 
                of cooperation with the United States and the 
                international community in narcotics law enforcement 
                and drug control efforts. Thailand cemented its role as 
                a leader in regional drug control programs by co-
                establishing the International Law Enforcement Academy 
                (ILEA) with the United States in Bangkok. In 1998, 
                legal and judicial cooperation also became more 
                streamlined, additional defendants arrested in 1994's 
                Operation ``Tiger Trap'' were extradited to the United 
                States, and new cooperative law enforcement programs 
                were initiated. Extradition to the United States of 
                Thai citizens and residents who claim Thai citizenship 
                continued to expand.
                    The Royal Thai Government (RTG) has one of the most 
                effective narcotic crop control programs in the world. 
                USG analysts estimated that Thailand's opium production 
                in the 1998 growing season declined 36 percent to 16 
                metric tons. Cultivation decreased by 18 percent. 
                Reflecting trends of previous years, opium farmers 
                continue to cultivate smaller, more isolated fields and 
                engage in multiple cropping to avoid eradication. A 
                drought last year adversely affected the production of 
                all agricultural commodities, including opium. The 1999 
                eradication campaign was inaugurated in mid-November 
                1998. Concentrated efforts will be necessary to destroy 
                the poppy before it can be harvested. Activities 
                related to heroin production, such as the refining of 
                raw opium into morphine base, continued in northern 
                border areas where drug producers often combined heroin 
                operations with the manufacture of methamphetamine.
                    Thailand has yet to become a party to the 1988 UN 
                Drug Convention due to its lack of anti-money 
                laundering legislation. A draft bill is currently in a 
                legislative committee where differences over the types 
                of predicate crimes covered are being debated. The RTG 
                remains committed to the passage of a law with as broad 
                application as possible. Seizures and court actions 
                under the asset seizure law continued. In 1998, with 
                DEA support, the Thai Police established the first in a 
                series of specially trained narcotics law enforcement 
                units to target major trafficking groups. RTG programs 
                aimed at treatment, epidemiology of substance abuse, 
                and demand reduction were maintained and continue to be 
                effective.
                Venezuela

                    Venezuela is a major transit country for over 100 
                metric tons of cocaine shipped annually from South 
                America to the United States and Europe. Venezuela is 
                also a transit country for chemicals used in the 
                production of drugs in source countries. Venezuela is 
                not a significant producer of illegal drugs, but small-
                scale opium poppy cultivation occurs near the country's 
                border with Colombia.
                    In recent years, Venezuela's relatively vulnerable 
                financial institutions and other sectors of the 
                government have become targets for money laundering of 
                illegal drug profits. U.S. Customs Operation 
                ``Casablanca'' identified Venezuela as one of the 
                routes by which Colombian narco-traffickers launder 
                drug proceeds through Venezuelan banks. Following 
                arrests in May of Venezuelan bankers implicated in this 
                case, the Government of Venezuela (GOV) expressed 
                concern over the vulnerability of its financial sector 
                and indicated a willingness to cooperate with the USG 
                on follow-up investigations.
                    In 1998, Venezuela sustained its efforts to combat 
                narcotics trafficking and consumption. The National 
                Anti-Drug Commission was instrumental

[[Page 11343]]

                in coordinating better implementation of existing 
                legislation and lobbying for new, tougher counter-
                narcotics legislation.
                    Actions by the GOV to intensify counter-narcotics 
                efforts included: programs to implement a major reform 
                of the judicial system due to take effect in July 1999; 
                establishment of a central Financial Intelligence Unit; 
                adoption of a unified regulatory system for chemical 
                precursors; and passage of a new Customs law. 
                Regrettably, efforts to gain passage of a Comprehensive 
                Anti-Organized Crime bill were unsuccessful when the 
                senate failed to pass the bill before congress 
                adjourned for elections.
                    The Venezuelan military continued cooperation with 
                the USG in an aggressive campaign against small-scale 
                opium cultivation that occurs in the Sierra de Perija 
                area near Venezuela's northern border with Colombia. 
                Two eradication operations in this area conducted in 
                1998 reduced opium cultivation to less than 50 
                hectares.
                    In October 1998, the GOV moved to reorganize the 
                customs sector--a major element in controlling 
                narcotics smuggling through ports and airports. The 
                reform addresses all aspects of customs procedures and 
                is expected to result in better control measures.
                    Corruption in law enforcement and the judicial 
                system continues to be a major problem. The GOV's 
                judicial reform program is designed to reduce the 
                opportunities for corruption in the judicial sector. 
                Venezuela's new President, Hugo Chavez Frias, has 
                included fighting corruption and combating drug transit 
                as priorities for his new administration.
                Vietnam

                    Narcotics flow into Vietnam from drug-producing 
                areas in Burma, Thailand, Laos, and China along 
                Vietnam's long mountainous borders. Its location close 
                to the ``Golden Triangle'' renders Vietnam an important 
                transit route for heroin and more recently for 
                amphetamines. Drugs entering the country are used 
                locally and transshipped to other destinations. 
                Increased availability of heroin and methamphetamine 
                has fueled a sharp increase in domestic drug abuse.
                    Trafficking through Vietnam continued at a high 
                level in 1998, and may be increasing, but has been 
                accompanied by a steady increase in arrests. Constant 
                vigilance is necessary to assure corruption does not 
                make the problem worse. The country is poor and suffers 
                from a growing problem of trafficking, especially to 
                school-aged children. Within the constraints of its 
                limited resources, the Government of the Socialist 
                Republic of Vietnam (GOSRV) has endeavored to stem the 
                flow of narcotic drugs to its own population and to 
                work cooperatively with the world community, including 
                the United States, in the counter-narcotics effort.
                    Opium poppy cultivation appears to have declined in 
                1998, after an increase in 1997. In 1998, Vietnam began 
                staffing its Drug Control Committee secretariat and 
                approved a drug control action plan. Vietnam is highly 
                supportive of bilateral and international cooperation 
                to stem the flow of drugs into the country and 
                sponsored two international conferences in Hanoi during 
                the year. GOSRV also sent capable delegations to other 
                international conferences.
                    The USG and the GOSRV are expanding bilateral 
                cooperation, including negotiating a counter-narcotics 
                agreement and exchanging information on drug 
                trafficking cases. The DEA will open an office in Hanoi 
                in 1999.
                    Vietnam is a party to the 1988 UN Drug Convention, 
                as well as the 1961 UN Single Convention and its 1972 
                Protocol, and the 1971 UN Convention on Psychotropic 
                Substances.

[FR Doc. 99-5668
Filed 3-5-99; 8:45 am]
Billing code 4710-10-M