HaCKeRz Kr0nlcKLeZ 1/HaCKeRz Kr0nlcKLeZ.iso/drugs/andean.coca.trade

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From: [e-mail] (Sergio Rivera)
Newsgroups: alt.drugs
Subject: Economics for sustainable development
Date: Tue, 08 Nov 94 00:12:13 LCL
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                 Economics for Sustainable Development
                             December 1992

HEADLINE: Andean coca trade
BYLINE: By Brian Keeley

   Drugs are one of the largest problems facing the developed countries
today. Many of the developed nation have declared a ''social'' war on
illegal drugs. There has been*a*the US, Europe, and Japan are the major
consumers of cocaine, a powerful stimulant derived from the coca plant.
The past twenty years has shown a massive influx of cocaine filling our
streets. Cocaine has been called by many white gold, with regard to its
low mass per dollar value. Furthermore selling cocaine is quite
profitable and has become an attractive alternative to legitimate work
not only in our cities but throughout the producing nations. While in our
society this is a sociological problem, many people in the Andean nation
depend on income it produces.

   Coca has become the largest and most profitable cash crop in these
countries. According to 1988 estimates of production the big three
countries, Peru, Bolivia, and Colombia, produced (in finished product)
273 tons, 173 tons, and 53 tons respectively. (Eisner) These exports add
up to an astonishing 35 % of the nations Gross National Product (GNP),
thus it is clear that the drug trade has a major role in these countries
economic systems (Randall).

THE MARKET

   Coca is grown in the Upper Huallaga Valley in Peru and in Chapare,
Bolivia. The warm, moist climate is perfectly suited for the plant. Once
the leaf in harvested it is mixed with kerosene and ash and stomped, very
labor intensive, into a paste. This process usually takes place where the
leaf is grown. Since the paste is more concentrated it brings a higher
price.

   Planes land daily in these concentrated producing regions to buy the
paste. The planes then fly to Colombia where the paste is refined in
hidden jungle labs. (Kawell, p. 36)

   Since the majority of farmers are paid in dollars, secondary markets
have developed. Colombian's primarily coordinate activities at this
level. Many farmers are fearful of the Colombians passing counterfeit
dollars. This has led to informal currency exchanges. Brokers, usually
Colombians, arrive at the runways and await the planes. They wait to buy
dollars, carrying suitcases full of intis and pocket calculators. While
the exchange is not optimal many farmers prefer this market rather*than*
travelling to a bank in town.

   The dollars then are sold on Oco~a street in Lima, for a slight markup
to the many importers and smugglers. It is estimated that $ 3 million
exchanges hands every day in Oco~a street market. The level of incoming
dollars directly effect foreign exchange and the price of imported,
American goods. (Kawell, p. 36)

Problems with Stopping the Production.

   An estimated 600,000 people live directly off cocaine production in
Andean Nations. This include 450,000 coca growers and about 150,000
employed in making the paste. (Kawell, p. 35)

   Manual eradication, promoted by the US, is a slow laborious process
that is often met with violent opposition. The woody coca plant must be
dug up as it roots are too strong to be pulled. Created in 1983 in Peru,
CORAH (Special Project for the Control and Eradication of Coca in the
Upper Huallaga) was initially very successful in it pursuits. The 462 man
team has seen a major decline in its effectiveness, dropping to 355
hectares (2.5 acres) as compared to 2,575 the previous year. The reason
for this remarkable drop was due to security concerns, namely from
guerrillas and traffickers.

   Thirty CORAH workers have died since the program has begun. Workers
are now escorted by US helicopters and police guards. This greatly
increases the likelihood of US personnel directly engaging opposition.
The State Department has denied any*altercations. (Kawell, p. 14)

   Secondly*by forcibly forbidding the cultivation of coca, the
government pits itself not only against the formidable forces of the
wealthy traffickers but against its own people. As protection against
the police many growers have welcomed in guerilla groups who protect them
and their crops. This undermines the support for the government while
strengthening the antigovernment forces further forcing peasants to join
the informal sector where tax revenue can not be captured. The informal
sector includes other jobs associated with cocaine production. (Kawell,
p. 16)

   Another problem lies in the different social values between the US and
these countries. For many people growing coca is a way of life and they
see nothing wrong with it. They feel that their governments have been
bullied into the position of being forced into action against them by the
US. They believe that what they are doing is not wrong. Coca is very much
a part of their culture and they have no problems with it. It commonly
used medicinally to alleviate the symptoms of altitude sickness. In fact
coca tea is found through out Peru and Bolivia and served in hotels and
restaurants. The Bolivian Ambassador from the US says, ''You could find
some in the Embassy.'' (Eisner)

   ''Here it is a necessity to avoid the hunger; you could not work
without chewing the leaf,'' says one farmer. The leaf, since the active
ingredient has not been extracted and concentrated, is less powerful.
In their society coca is part of everyday life not an evil or a problem,
just a way of getting through the day and earning a living.

   ''We have nothing, sir. Do you think we are bad or that we are to
blame? We try to sell coca just to survive, not to become rich. Look at
us,'' says another peasant farmer hauling three 50 pound bags of leaf to
the market. She continues, ''It costs us more to grow the coca then it is
selling for.'' (Eisner)

   A merchant in the local coca co-op, where coca leaves are sold argues,
''But there are no addicts. We chew the leaf, but no one knows what
cocaine looks like. And they would not take drugs - the family is
everything; they would be ashamed.'' Finally above his head in the local
coca market is a poster which I believe summarizes their views very well,
in fact it is the motto of the coca growers: ''Coca: presently the food
of the poor; the bad use of the coca leaf is poisonous for the Yankee.''

   All these quotes lead to the issue that the people of the nations have
been saying all along. Many Latin American countries believe that the
United States policy is*to enforcement oriented and isn't designed to
cope with the economic and social repercussions of its enforcement
effort.

Problems with Implementation of Policy

   According to Rensselaer W. Lee, head of the Global Advisor Services, a
consulting firm working on the narcotics issues, ''When you wipe out a
peasant's coca field and leave him with no reasonable economic
alternatives, he's faced with some rather stark choices -- emigration
out of the region or joining a revolutionary movement.'' (Farnsworth)
Forcing many farmers out of the booming coca industry into the
unemployment lines creates greater civil unrest and aids the leftist
guerilla insurgency that is spreading over the Andean nations. All of
which lead to further instability in the region which discourages foreign
investment.

   A specific example of how policies with good intentions can back-fired
leading to further problems is a 1988 Bolivian Law which on paper
satisfied most of the demands of the Reagan administration. This crop
substitution program allow some legal cultivation of existing plots of
coca. But when 10 per cent of his field has been replaced with fruit,
corn, or nut trees the farmer is eligible for a one time payment of
$ 2000 per hectare and can receive credits and community development
funds. But according to a US official monitoring the success of the
program less than 50 per cent of the goal of 12,000 acres has been
accomplished. According to Edmundo Deladillo Probieri, who runs the
cooperative coca market, ''Everyone has taken the $ 2,000 and planted
more coca elsewhere.'' (Eisner)

   This policy leads to an increase in the deforestation. Farmers will
have to clear new land, via slash and burn techniques, for their crops.
Furthermore, despite the $ 100 million in additional funding for crop
conversion, a US aerial crop estimate is expected to show there is more
coca cultivation this year than last. (Farnsworth)

   Another problem that exists is one that economists call the
fungibility problem. This theory says that it is very difficult to
effectively target needy groups, that is*gets the funds to who*they are
intended. This is a major problem in the coca nations. Despite eight
years of alternative development efforts financed by the US, positive
results have been negligible. The Agency for International Development
(AID) calculates that theirs programs -- run through the Bolivian
Government -- are reaching less than one per cent of the families they
are intended to reach. (Farthing, p. 2) According to Farthing 85 % of US
economic assistance goes to support the nations balance of payments
(BOP), which helps the country restructure its foreign debt and attract
foreign investors.

The Shining Path

   The Shining Path, also known as, Sendero Luminoso is a militant Maoist
guerilla group operating primarily in Peru. In the face of apparent
exhaustion of normal politics, a significant minority of Peruvians have
turned to the revolutionary violence of Sendero Luminoso. The Path
received a reputation for brutality and dogmatic*authoritarianism. The
party's leader, Abimael Guzman, ''the fourth sword of Marxism'' has
become the country's dominant political figure. (Smith, p. 88)

   Beginning in 1980 the Path began a guerilla war whose aim was nothing
less then a seizure of power and to implant a Maoist-style Communist
government. After 11 years the insurgency has spread across the Andean
region, into the coca-growing regions of the eastern slope, and solidly
entrenched itself in the capital. With its 'pueblos jovenes'
(shantytowns) riddled by ''red zones'' where Sendero has a stronger
presence than the authorities. With continuous power blackouts, constant
bombings and attacks, violent strikes and demonstrations, Lima is taking
the pre-revolutionary aspect of Buenos Aires in the mid-1970's or San
Salvador in the late 1970's (Smith, p. 89).

   In 1978, Gen Francisco Morales Bermudez decided to prohibit coca
cultivation in the Upper Huallaga valley and ordered that coca growers
be prosecuted. Residents had to face continual attacks from specialized
antidrug police force on one hand, and the traffickers band of hired
guns,*known as 'sicarios,' on the other. The 'sicarios' made sure that
coca production levels would remain unchanged. Because coca buyers
generally advance payment to the growers before delivery, farmers must
protect their crops from the police or else face the*gun men.

   The level of violence in the area became incredible high. It was not
the local police who set off this violence, for bribes and lack of
resources will take care of them. It was the 'sicarios' who would tell
the farmers how many kilos of coca they must sell, who mercilessly do
away with intransigent or ambitious officials, who appear at any place
at any time to settle scores. (Gonzalez, p. 22)

   It was the actions of the Peruvian government, in the early 80's,
escalating eradication attempts driving the farmers to seek the
protection of Tupac Amaru Revolutionary Movement (MRTA) or in other parts
of the country the Shining Path. The Shining Path began organizing in
areas where the MRTA didn't exist. It was their show of force that
impressed the people; as one farmer Lucas Cachay explains:

   The narcos [coca-traffickers] often claim that the price of coca is
   low because of overproduction. They [the farmers] know that's not
   true, but they have no one to protect them. That is what Sendero
   [the Path] offers: protection. Besides, in this region, since the
   *there is a lot of money, there is alcohol, parting, violence ...
   Sendero puts an end to all that and puts everyone to work. And they
   close the discotheques, the brothels, they kill the homosexuals and
   they send the prostitutes packing. (Gonzalez, p. 23)

   Initially the narcos and Sendero were mutually beneficial to each
other, as Sendero's purpose was to destroy the control of the MRTA. The
MRTA had been accused of cutting deals with the traffickers on the price
of coca leaf and paste. As one official says:

   ''It is true the narcos attacked the producers' organizations, but
that was only the beginning..*Later on they reached some accord with the
leaders, and even gave them guns. Once Sendero became strong enough, they
[Sendero] turned on the traffickers and claimed the right to fix the
price of coca.'' (Gonzalez p. 23) Once the narcos caught on*the began
once again backing MRTA, and in some places allowed the Sendero to move
to keep the*Police at bay.

   By the end of 1986, Sendero was moving around freely*with in heavily
armed groups of more than 30 men. They called out to residents of towns
to hear their gripes, judging the local authorities, in some cases
killing 'sicarios,' and finally ''electing'' leaders. Through a series of
mini-wars and ambushes the Sendero, allied with the narcos, won control
in town after town, becoming the 'de facto' government in the Upper
Huallaga Valley.

   The guerilla's act as a militant producers union and buffer against
both the antidrug police, who attempt to take away farmers means of
survival, as well as against the narcos who attempt to pay undervalued
prices for coca. For their part the Sendero collect taxes on the coca
produced. The ''taxes'' collected on the $ 600 to $ 800 million which
circulates annually in the valley amounts to $ 30 to $ 40 million, far
more than any other political organization in Peru. (Gonzalez, p. 24)

   Abimael Guzman was recently arrested in Lima in late September of
1992. He was forced out of hiding and into the lower valley of the
capital of Lima by chronic psoriasis aggravated by the dry mountain air.
In his apartment with him were his two highest lieutenants and second in
command. Authorities also found data on computer disks about an upcoming
October offensive on Lima. Also 200 more suspected Senderistas were
rounded up.

   Supporters say that is not the man that is ultimately important, but
what he stood for. The so called ''Gonzalo Thought'' will be remain for
years. He attempted to create a collective brain, much like insects in
his followers. ''The individual becomes an instrument and nothing more.''
Guzman objective was simple: to destroy capitalistic society through
violence -- ''crossing a river of blood,'' he called it -- then to build
a new communist democracy. (Newsweek, Sept. 28 1992)

The Cartels

   The drug lords of the*nations are indeed very powerful people. These
drug bosses wield significant power over the people, institutions, and
business in the cocaine producing countries. Their business is
intertwined in local society and has corrupted local government. As
already mentioned8the people of the area do not believe that they are
doing any wrong. Their close association with the people has created a
loyalty to these cartels heads and their*understudies. Without knowledge
of economics, peasants understand that disrupting the trade would mean a
loss of income for either themselves or their close associations. So they
protect them in many instances.

   General Miguel Maza Marquez, head of the Directorate for
Administrative Security, head of the Colombian equivalent of the FBI
has made the capture of the cartel bosses his personal fight. He says,
''Initially, it was impossible to catch these guys. If a helicopter goes
out, they have some little guy in the control tower. If we send people to
catch them, they have an informant on the ground. It's really a question
of organizing it. You have to destroy the infrastructure.'' (Eisner)
Through this feeling of locality, though financially motivated, the
cartels have attained a certain level of padding. This padding then gives
them a degree of protection against the authorities.

   According to an authenticated tape provided to Newsday magazine drug
boss Rodriquez Gacha argues ''Why should we leave? We have the support of
the people, who love us.'' This quote I think illustrates the feeling of
frustration many law enforcement officers feel. On one side they are
being pressured by the US government via the local governments to clean
up their countries. On the other hand they are servants of the people. If
the people earn their living from the trade and do in fact ''love'' the
drug czars then they are indeed torn.

   The Cartels power is derived from their control on all facets of coke
production as well as the number of people employed, directly or
otherwise. They created the markets where the peasants sell their Coca
leaves. They employ the chemical engineers that turn the leaf in the
finished product, which requires significant chemicals resources
ironically imported from the US. They also employ the pilots, ship
captains, truckers, and drivers*which transport the product illegally
impaling significant risk. They also have men in customs, and other
law enforcement agencies which facilitate the importation of the product.
Then there are the major dealers who are mouthpieces for the cartels
overseas. These are very trusted men, and subsequently well paid as they
often have the most dangerous job. The final aspect involves white collar
criminals whose job it is to*lander the money.
*
QUOTE

   Commonly, the group of bosses, the Cartel, are from the same town and
subsequently are know by that town's name. There are presently two major
cartels the need to be addressed: the now fading Medellin cartel, and the
in power Cali Cartel.

The Medellin Cartel

   The Medellin cartel, prominent through out the 70's and 80's
controlled, ''80 per cent of the cocaine entering the United States''
according to Scott MacDonald, former senior international economist at
American Security Bank. According to Mr. Lee, a narcotics consultant,
10-12 billion dollars was made in coke trafficking in 1988.

   This amount of income and wealth is difficult for us to get a grasp
on. In 1984 Pablo Escobar, Jorge Ochoa and other drug lords had been
expelled from the country after the assignation of a Colombian anti-drug
leader, Lara Bonilla. Wanting to return to Colombia they offered to
inject massive amount of money into the local economies. According to
MacDonald, ''the2capos (Italian for boss) would inject $ 3 billion
annually into the economy, dismantle the cocaine factories and
clandestine airstrips, and help rehabilitate addicts.'' With all the
economic and moral benefits associated with the deal; the waning power
of the cartels, destructions of the production capital, creation of many
jobs for Colombia, and the influx of massive amounts of capital in the
economy the Betancur administration would not make deals with known drug
dealers.

   The fall of the Medellin cartel can be attributed to many things.
Medellin's drug power has been shattered by its long and vicious war on
the Colombian government. A 22-month counterattack by the authorities has
killed drug boss Jose Gonzalo Rodriguez Gacha, forced the surrender of
his fellow cocaine barons, the brothers Jorge, Juan David and Fabio
Ochoa, destroyed dozens of labs and airstrips and scattered lesser capos
abroad. In the most stunning blow yet to the cartel, Medellin chief Pablo
Escobar Gaviria surrendered last week under a plea-bargaining program
that promises he will not be extradited to stand trial in the US.

   The above income figure coupled with recent developments, the
emergence of the Cali cartel to prominence, the subsequent conditional
surrender of Medellin bosses Pablo Escobar and Jorge Ochoa to Colombian
officials, indicates a misleading victory for US enforcement officers.

    First of all* there is a growing feeling among United States
officials that the cartels heads are tiring of the pressure and pursuit
and want to settle down. Escobar prior to his surrender, plea-bargained
for trial in Colombia. This is significant in a number of ways. First of
all* by being tried in Colombia for all his crimes he can not be tried in
the US for the same crimes. US officials call this avoiding double
jeopardy.

   Second of all, given his significant financial resources and the level
of corruption that exists in the government he will be acquitted. Thus a
free man he may spent his money, undoubtably in secure Swiss accounts,
anyway he wishes. According to a source inside the Cartels, ''They
consider themselves businessmen [who, however] are fighting for survival
against [government] repression.'' ''Basically all they want to do is
enjoy the money that they have made'', says another businessman in
Medellin. (Eisner)

The Cali Cartel

   The Cali combine produces 70 % of the coke reaching the US today,
according to the DEA, and 90 % of the drug sold in Europe. The Cali
godfathers have a virtual lock on the global wholesale market in the
most lucrative commodity ever conceived by organized crime. The cartel
is the best and brightest of the modern underworld: professional,
intelligent, efficient, imaginative and nearly impenetrable. Says Robert
Bonner, administrator of the DEA: ''The Cali cartel is the most powerful
criminal organization in the world. No drug organization rivals them
today or perhaps any time in history.'' (Washington)

   While the Medellin cartel exemplified the brute force approach, the
Cali are extremely cool and calculating. By means of legitimate business
ventures, the Cali2capos have forged contacts with key people in
business, politics, the law and the press. ''Cali gangs will kill if they
have to,'' says Robert Bryden, head of the DEA in New York. ''But they
prefer to use a lawyer.''

   Recently as many as twelve bankers, who handled the money laundering
for the Cali have been arrested. While charges are pending, I am sure
more information is forthcoming.

Effect of the Coca Trade on the Environment.

   The coca trade has had various detrimental effects the environment in
the Andean region. The degradation comes from a number of sources; the
farmers cutting down virgin forest to hide their coca filed from the
antidrug police, the lack of proper disposal of chemicals used at various
point in the production process, the runways cut out of the forest for
the planes, the toxic run-off created by rainwater running over
improperly fertilized land, and by the herbicide the US has dropped on
coca fields.

   The local governments do not give high regard to the environmental
concerns of the area. These concerns do and should effect the policy
undertaken by the US, World Bank, and the International Monetary Fund
(IMF). We can not promote a program that has sever2 detrimental effects2
another nations environment.

Possible Solutions

   One solution that exists would be to decriminalize drug use and trade.
While an entire term paper can and has been written on the effect of the
legalization of drugs I have neither the time or space to fully discuss
it, so I will attempt to give a quick rundown of the involved issues.

   Global drug legalization would allow these producing countries to
incorporate the informal sectors created by the coca dollars as well as
the trade itself to be incorporated into the economy. This would yield
significant tax revenues by the producing countries. Also this would end
the enormous profits made by the traffickers, reducing their role in the
country to next to nothing. Legal coca production would also benefit the
farmers who receive a more equitable share of the profits than before.
The guerilla groups also would suffer since the farmers no longer have a
need for their services. Legalization then would lead to increased
economic growth in these nations, give the government more resources with
which to develop the economy into a modern one, and it would also create
political stability by reducing the role of the traffickers, smugglers,
and guerilla groups. (Henderson)

   Arguments against legalization are fairly obvious*the further decay of
morals and deteriorating emphasis on family values.
@
Herbicides

   The US government has been searching for a ''magic bullet'' in its war
against coca production. Officials hope that a type of herbicide can be
developed to allow massive eradication by air, thereby avoiding
confrontations and increase the overall success rate.

   Various chemicals have been tested but coca is a very sturdy plant
that in many cases grows back stronger after being treated with
defoliants.

   Government experiments with 2,4-D a defoliant have lead to massive
protests by growers and scientists concerned about the possible
environmental damage. The Bolivian press reported that the US had been
using Agent Orange, a mixture of 2,4-D and 2,4,5-T, which further fueled
local rage. (Kawell, p. 18)

   In 1985 the US began experimenting with a new herbicide produced by
Dow Chemical, called Garlon-4. Used with limited success Dow refused to
sell the US government more of the herbicide unless it was granted
indemnity from damage suits that may occur. (Dow produced Agent Orange
and still faces suits)

   Later in 1987 a new herbicide by Eli Lilly called Spike was shown to
be very effective in destroying the woody coca plant. Lilly soon refused
to sell more as the EPA label Spike as ''an active herbicide that will
kill trees, shrubs, and other forms of desirable vegetation'' and should
be ''kept out of lakes ponds, and streams.'' The criticism of its use, as
before, from environmentalists forced Lilly to make its decision. They
argued that the test period had been too short and the herbicide may harm
the delicate tropical ecosystem. (Kawell, p. 19)

   Recently a killer fungus, 'fusarium oxysporum', has without US
intervention attacked coca plants and turned half of the Upper Huallaga
Valley acres into dried up stumps. (Marx, July 4, 1992) The effects of
this fungus will have on the level of leaf production is yet unknown. It
is also unknown whether or not this fungus can be effectively treated by
the farmers. If not this fungus offers an environmentally friendly
herbicide, contrasted to those discussed above.

Weaning the Economy away for Coca-dependency

   The developed countries wish to find alternative exports for the
countries of the Andean nations both to give them a sound economic
infrastructure from which to build on and to alleviated the problems
associated with cocaine. At the current time 46 kilos of fragile bananas
often hauled many miles by bike receives $ 2 at he market while the same
amount of dried coca leaf earns $ 52. (Farthing p. 2)

   In addition to the absence of a substitutable cash crop, there is a
lack of a credit market. The US makes some credit available at the rate
of 13 %, which seems reasonable. The loan is paid in the highly unstable
Bolivian currency, and must be paid back in dollars. The real interest
rate, including inflation (previously <10,000 %, now around 22 % (1990))
is around 30 %. (Farthing p. 3)

   Technical assistance, necessary to the development of better
agricultural practices and ultimately output is non existent. There are
only 9 agronomists, for the 40,000 farmers in Bolivia.

   Another problem that I feel is readily apparent from the reaction of
other smaller nations when the US steps in to ''help'', is the
imperialistic nature of the policies pursued. The development plans
are conceived without participation by the nations involved, and are
designed and directed by specialists far from the area. (Farthing P.3)

   The effect the supply of coca-dollars have on the Bolivian foreign
exchange rate is incredible. ''Every time there's a big anti-drug
operation the dollar goes up and everything gets more expensive,'' says
Susanna Rance a researcher in La Paz. ''Many people breath a sigh of
relief when the operations are over and things get back to normal.''
(Kawell, P.37)

   ''There are to many people chasing too few legitimate forms of
employment to guarantee a living wage to all. The United States must
provide an incentive to these individuals to stop producing drugs.'' Tom
Campbell, US Senator of California.

   According to former Secretary of State George Schultz there are two
main areas of concern in solving the existing problems in the Andean
Nations. Restoring growth in these nations is of primary concern. Next
Schultz points out that restoring the credit worthiness and external
financial balance is also essential to the continued development of these
nations. ''These areas must be made attractive to foreign investors'', he
says. ''Until the violence in the Andean region is decreased
substantially, I feel that foreign investors will shy away from investing
in Peru, Colombia, and Bolivia.''

   In response, President Bush has announced trade concessions, expanded
agricultural development assistance and other measures designed to assist
the cocaine producing nations of Colombia, Bolivia, and Peru. These
measure will abolish duties on 67 products sold in the US (Farnsworth)

   President Bush has announced that his ultimate goal is a free trade
zone for the entire hemisphere. Such a zone all ready exists in Canada,
and is rapidly moving toward one with Mexico. Until the effects of the
this possibility are studied Bush has asked Congress to grant a tariff
preference for the involved countries. This is based on an all ready
existing program of special trade privileges that the US grants to 130
developing countries. Examples of these privileges are lower tariffs,
exceptions to quotas, and access to protected markets.

Philanthropy aside, how much is enough?

   ''Fighting drugs is a goal we all share, but we cannot and should not
sacrifice our own farmers in the process.'' -- US Senator Dale Bumper of
Arkansas.

   The US government in the 1950's created a agency to help the
undeveloped*nations. AID, Agency for International Development, had lofty
goals to create economic and political stability.

   Speaking about a 120 million dollar research grant to study growing of
soybeans in South America, Brazil specifically, US Senator Dale Bumpers
feels, ''Each year AID, fully sponsored by the US government, donates
tens of millions of dollars to research. Under the AID auspices, tax
money was subsidizing research, seminars, and production practices aimed
at improving other countries' export crops. In essence the US farmers
were watching their hard earned tax dollars go to support the
competition.'' Brazil is all ready the second largest exporter of
soybeans. In attempting to help other economies grow, American farmers
are being hurt by their tax dollars.

Conclusion

   The US must take a long hard look at its drug policy toward the Andean
nations and see exactly what effects it policies are having on the
countries political and economic systems. I believe that current policy
both on the part of the US and local governments is not sufficiently
committed to the cause. If the problem is to be tackled greater attention
must be given to the needs and concerns of those involved (local level)
and greater resources must be allocated. As it stands now the US policy,
seems to the people to be imperialistic and is creating a growing
dissatisfaction with the local democracies.

   The US believes that the coca problem is most easily solved by supply
side action, that is controlling the supply of the drug leaving the
producing country. While this seems easier than directly attacking the
drug lords, or decreasing demand in the domestic market,
this policy places farmers in a precarious position.

   It will be interesting to see what president elect Bill Clinton will
do in these areas. Many believe that he is, or will attempt to show, that
he is even more anti-communist than the preceding administrations. If
this is the case*he may put larger numbers of US personnel in the area.
Possibly further enraging the anti-American forces. Unless something
positive is done the possibility of war will continue to exist, as
millions of people aren't going to give up the lucrative trade without a
fight.

   While there doesn't seem to be a clear cut solutions to any of the
problems raised in this paper. Many Americans can not even agree if a
problem exists. If a problem is be solved people need to work together
in achieving it. A single group of people without the support of the
world, can not successfully attempt to change the undeveloped world
without having a conflict of interest.

Bibliography

Andreas, Peter and Youngers, Coletta. '''Busting' The Andean Cocaine
Industry: America's Counterproductive War on Drugs.'' 'World Policy
Journal'; Summer 1989 v 6 n 3, page 529. Article offered alot*of
information on the actual effects of US policy in the Andean Nations.

Bumpers, Dale and Cambell, Tom; ''South America and Trade'', Ganett News
Service, April 8, 1990, Sunday, American Forum. Presents possible effects
of lifting present quotas on Andean exports, thereby increasing the
profitability of growing legitimate crops. The article also takes into
account the possible effects on the American farmer who may suffer from
the increase in supply in the world market. Both Bumpers and Cambell
believe that an increase in supply will not effect the American farmer,
due to the tiny increase in supply. In fact they cite the Florida
governor who supports the legislation and believes that an increase in
South American citrus wouldn't have an effect on his people.

Eisner, Peter; ''The Producers''; 'Newsday', December 17, 1989. Page 6.
This article illustrates the ''trickle down'' effect of narco-dollars
from a micro-economic point of view. Interviews several small coca
farmers attempting to feed their families from the income earned by
harvest coca leaves. Points out how a 1988 Bolivian law designed to
substitute coca growing for legitimate crops has backfired and
consequently subsidized the destruction of more natural resources.

Farnsworth, Clyde H, ''Bush Presents Plan to Help Andean Nations Grow
Non-Coca Crops'', 'The New York Times', July 24, 1990, Tuesday Late
Edition - Final, Section A; Page 6, Column 1; Foreign Desk,@Detailed
account of President Bush's plans to fight the Andean drug war by
promoting legitimate Andean crops. Includes reactions by the various
governments as to the effectiveness of these polices. The Andean
governments contend the belief that the US is too enforcement
oriented, while ignoring our own countries demand, that actually drives
the market.

Farrell, Nicholas, ''The Shining Path to Destruction'', The Spectator,
April 14 1990, page 14. Offer historical account the Shining Path and
what they future may bring.

Farthing, Linda, ''Bolivian Farmers Hurt by US Anti-Drug Program'', 'San
Francisco Chronicle', August 11, 1992, page A8. Croniccals from a local's
perspective the effects the drug war are having.

Federal News Service, February 4, 1992, 'Hearing of the Terrorism,
Narcotics, and International Operations Subcommittee of the Senate
Foreign Relations Committee: The Andean Initiative.' Congressional
hearing involving the people in the US Government that set the policies
in the Andean region. A lengthy article that discusses many possibilities
to stimulate the legitimate Andean economy including: opening up of the
countries for foreign investment, free trade in the western hemisphere,
and debt for nature swaps.

Fidler, Stephen; ''Colombia: Rule of the market and the gun.''; The
Financial Times Limited; December 6, 1991, Page 31. A current article,
after the Escobar and Ocho surrender, on the possibility of new found
confidence for investors in the Colombian economy. This increase in
confidence is due in large part to the reduction in narco-terrorism,
the economies diversification away from coffee, and a great degree of
political stability.

'Foreign Policy Bulletin'; ''The Andean Strategy to control Cocaine'';
July 1, 1990, Vol.1, number 1, page 71. Short article on current
governmental actions taken to deal with the cocaine trade.

Gonzalez, Raul, ''Coca's Shining Path'', Report on the Americas, Vol.
22, N. 6, March 6, 1989, page 23. Details the accounts of the Shining
Path, who they are and what they stand for.

Henderdon, David R.. ''A humane economist's case for drug legalization'',
'University of California at Davis Law Review', Vol. 24, page 655.

Heritage Foundation Reports, ''A US Role In Chile's Democratic and
Economic Reforms.'', June 20, 1991, Backgrounder; No.  837. Gives a
detailed history of Chile's past, present and future attempts to promote
economic growth and limit the influence of the drug lords. Included is
discussion of possible free trade agreement and the initiation of a fund
that will help governments such as Chile grow legitimate crops as
substitutes for coca.

Kawell, Jo Ann, ''Under the Flag of Law Enforcement'', 'Report on the
Americas', Vol. 22, N. 6, March 6, 1989, Page 25.

Kawell, Jo Ann, ''The Addicted Economies'', 'Report on the Americas,
Vol. 22, N. 6, March 6, 1989, Page 33.

Kawell, Jo Ann, ''Going to the Source'', 'Report on the Americas', Vol.
22, N. 6, March 6 1989, Page 12.

 * The above three are all excellent works. They each take the cocaine
trade from a different perspective and show what effects it has had on
law enforcement, the economies, and the people.

Lee, Renssalaer W; 'The White Labyrinth: Cocaine and Political Power';
Transaction Publishers, Newbrunswick USA, c1989. Contains, in depth,
discussions of the drug trade. The book also discusses the involvement of
government in the drug trade and the massive level of corruption which
exists in an economy driven by trade in illicit material.

MacDonald, Scott and Hughes, Jane and Bott, Uwe; 'Latin American Debt in
the 1990s: Lessons from the Past and Forecasts for the Future'; Praeger
Publishers; New York, New York; c1991. Discusses possible solutions to
the massive debt crisis that plagues the Andean nations. Included is
possible solutions some which have been tried and failed, others which have not yet been tested.

MacDonald, Scott B.; 'Dancing on a Volcano: The Latin American Drug
Trade'; Praeger Publishers New York, New York; c1988. Contains, in depth,
discussions of the drug trade.

Marx, Gary; ''Life Sentence: Monica de Greiff survived the threats, but
the Medellin Cartel issues few reprieves.''; The Chicago Tribune Company;
August 30, 1991; North Sports Final Edition; Tempo; Page 1; Zone : CN.
First hand account of the how Andean cartels effect life in the region.
Details the flee of the former justice minister, Monica de Greiff, from
Colombia. She carried out the war on drugs for the US until she was
forced to leave the country due to murderous threats. She now lives with
a price on her head and the US is turning its back.

Morales, Edmundo; ''Cocaine: White Gold Rush in Peru''; University of
Arizona Press; Tucson, Arizona; c1989. Discusses the explosion of the
coca plant as a cash crop in Peru.

Rand, Jason; Ftp'd form UCSU/ esf, 'Andean Cocaine Trade'@Thorough paper
on the subject, provides detailed history of involved nations. As well as
illustrating just how intertwined the coca trade is with society in this
nations.

Scott, Peter Dale and Marshall, Jonathon; 'Cocaine Politics: Drugs,
Armies and the CIA in Central America'; University of California Press;
Berkeley and Los Angeles, California; c1991. Discusses the American
involvement in the war on drugs and in the politics in those nations.
Though not directly related to this paper the book shows just how US has
dealt with economically inferior nations in the past and will shed light
on the involvement in South America.

Shultz, George: 'Beyond the Debt Problem: The Path to Prosperity in Latin
America'; Statement to the OAS; February, 1986. Dated yet still
informational article on American policies in the area. Includes many
facts and figures about America's foreign aid policy in Latin America.

Smith, Philip, ''Grappling with the Shining Path'', 'New Politics',
Winter 1992, page 87. Detailed article about the Shining Path, its
leader, and the goals and traditions of the group.

'University of California at Davis Law Review', ''In Opposition to Drug
Legalization'', Vol. 24, page 637.

'Washington Quarterly', Fall 1985
, ''High politics: Drugs across
borders''; Vol. 8, No.  4; Page 85, International Drug Trafficking and US
Foreign Policy.

Washington, Elaine Shannon. ''The New Kings of Coke'', Time Magazine
Inc., July 1, 1991, page 21. Details the shift in power of the Andean
drug lords with the capture of Pablo Escobar, from the Medellin cartel to
the Cali Cartel. Experts believe this crime family wields more power and
wealth then the much publicized Sicilian Mafia. Furthermore, it
illustrates just how much coke around the world they do distribute as
well as how the do it, and what is being attempted to stop it.

Watson, Russell and Larmer, Brook, ''It's your Turn to Lose'',
'Newsweek', September 28, 1992, page 29. Ask the question of what the
Shining Path@ wil l do with the leader jailed.