oversight

Drug Control: U.S. Heroin Control Efforts in Southwest Asia and the Former Soviet Union

Published by the Government Accountability Office on 1997-05-09.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                     United States General Accounting Office

GAO                  Briefing Report to the Chairman, Caucus
                     on International Narcotics Control,
                     U.S. Senate


May 1997
                     DRUG CONTROL
                     U.S. Heroin Control
                     Efforts in Southwest
                     Asia and the Former
                     Soviet Union




GAO/NSIAD-97-148BR
             United States
GAO          General Accounting Office
             Washington, D.C. 20548

             National Security and
             International Affairs Division

             B-276822

             May 9, 1997

             The Honorable Charles E. Grassley
             Chairman, Caucus on International
               Narcotics Control
             United States Senate

             Dear Mr. Chairman:

             In response to your request, this report provides information on (1) the
             extent of the opium and heroin production threat in Southwest Asia,
             Russia, and the Central Asian Republics1 and the immediate threat to the
             United States, (2) efforts by the United States to address this threat, and
             (3) the obstacles to counternarcotics strategies and programs in these
             regions. You also expressed interest in the status of efforts to control the
             diversion of opium produced in India for use by U.S. pharmaceutical
             companies. This report summarizes information we provided to your staff
             on April 22, 1997.


             Heroin is the second most dangerous drug threat to the United States
Background   behind cocaine. According to the 1997 National Drug Control Strategy,
             there are about 600,000 heroin addicts in the United States. Heroin use is
             not as prevalent among young people as marijuana or cocaine, but
             growing numbers of teenagers and young adults are experimenting with
             the drug. Moreover, the number of heroin-related emergency room
             admissions has more than doubled during the 1990s, from 34,000 in 1990 to
             76,023 in 1995. Opium poppy, the plant from which opium is derived and
             then processed into heroin, is grown primarily in three regions of the
             world—Southeast Asia, Southwest Asia, and Latin America. Heroin is
             transported to the U.S. market through a global array of trafficking
             networks and a diverse set of criminal organizations.

             In addition to illicit opium poppy cultivation resulting in heroin
             production, several countries legally produce opium for medical purposes.
             The United States attempts to assure a flow of reasonably priced opium to
             meet U.S. national medical needs and to limit the number of nations
             involved in the trade through import permits issued to U.S. pharmaceutical
             companies. India is the world’s largest producer of licit opium for use in
             pharmaceutical products (849 metric tons (MT) during the 1995-96 crop

             1
             For the purposes of this report, Southwest Asia includes Afghanistan, Pakistan, India, and Iran. The
             Central Asian Republics are defined as Kazakstan, Kyrgyzstan, Tajikistan, Turkmenistan, and
             Uzbekistan.



             Page 1                                                         GAO/NSIAD-97-148BR Drug Control
                       B-276822




                       year) and is the source of most of the processed opium gum imported by
                       U.S. pharmaceutical companies. U.S. manufacturers value the high
                       alkaloid content of Indian opium gum for production of drugs like the
                       painkiller oxycodone.


                       Our review indicated the following:
Results in Brief
                   •   Despite a significant increase in Southwest Asian opium poppy cultivation
                       and production from 1987 to 1996,2 Southwest Asian heroin is not
                       presently a major threat to the United States, according to the U.S. Drug
                       Enforcement Administration.
                   •   Russia and the Central Asian Republics of the former Soviet Union have
                       not been classified as major opium producers, but Southwest Asian opium
                       and heroin trafficking routes have expanded in the region.
                   •   Except for Pakistan, the United States has provided very limited drug
                       control assistance to Southwest Asia, Russia, and the Central Asian
                       Republics.
                   •   The primary obstacles to drug control efforts are the lack of government
                       control of opium poppy cultivation areas in Southwest Asia and the lack of
                       resources and institutional capability in Russia and the Central Asian
                       Republics.
                   •   India’s inability to control diversion of its licit opium crop continues to be
                       a drug control concern, according to the Department of State and the Drug
                       Enforcement Administration.


                       U.S. distribution of heroin from Southwest Asia is limited mainly to
Extent of Heroin       Southwest Asian ethnic areas in a few large urban centers. As we reported
Threat                 in March 1996,3 Southeast Asia, primarily Burma, still supplies much of the
                       heroin consumed in the United States. In addition, South American
                       produced heroin is readily available in several major U.S. markets. While
                       some Southwest Asia heroin is sold in the United States, the vast bulk of
                       the heroin produced in Southwest Asia is destined for the European
                       market due to the easier accessibility and established trafficking routes
                       between the two regions.


                       2
                        Most of the increase was due to expansion in Afghanistan, where opium poppy cultivation doubled
                       from 18,500 hectares to 37,950 hectares from 1987 to 1996 and opium production tripled from 415 MTs
                       to 1,230 MTs from 1990 to 1996. Afghanistan’s opium production output of 1,230 MTs was second only
                       to Burma’s 2,560 MTs worldwide in 1996.
                       3
                         Drug Control: U.S. Heroin Program Encounters Many Obstacles in Southeast Asia (GAO/NSIAD-96-83,
                       Mar. 1, 1996).



                       Page 2                                                       GAO/NSIAD-97-148BR Drug Control
                        B-276822




                        The State Department has reported under the U.S. drug certification
                        process4 that no region of the former Soviet Union has exceeded the
                        threshold of 1,000 or more hectares of illicit opium cultivated or harvested
                        during a year needed to qualify as a major opium producer. However, U.S.
                        officials have made only limited attempts to determine the amount of
                        cultivation occurring in the region. In addition, U.S. counternarcotics
                        officials have reported that since the fall of the former Soviet Union,
                        Russian and other ethnic-based Central Asian organized crime groups have
                        expanded drug trafficking routes for Southwest Asian opiate products by
                        taking advantage of the lack of border controls and ill-equipped and
                        insufficiently trained national law enforcement authorities throughout this
                        region.


                        The United States has focused most of its efforts to address the drug
The United States Has   threat in Southwest Asia on Pakistan because the government there has
a Limited Drug          had the most conducive atmosphere to accept drug control assistance.
Assistance Program      From fiscal year 1990 to 1996, the Department of State spent about
                        $24 million to support drug control efforts, including development of
                        Pakistani law enforcement capability and opium poppy crop elimination,
                        and for demand reduction. The Drug Enforcement Administration (DEA)
                        maintains a presence in Pakistan to assist the development of law
                        enforcement institutions and the dismantling of drug trafficking groups
                        and their processing centers, and to provide regional coverage of
                        Afghanistan and the Central Asian Republics.

                        The United States does not have a direct counternarcotics program in
                        Afghanistan due to the lack of a central government caused by an ongoing
                        civil war. However, the Department of State provides limited assistance
                        through donations to the activities of the United Nations Drug Control
                        Program (UNDCP) and support for crop control and demand reduction
                        projects from its mission in Islamabad, Pakistan. During fiscal years
                        1990-96, the Department of State provided $942,000 for its crop control


                        4
                         Section 490 of the Foreign Assistance Act of 1961, as amended, requires withholding of bilateral
                        foreign assistance and opposition to multilateral assistance to major illicit drug-producing countries
                        and major drug transit countries. These provisions will not apply in cases in which, under section
                        490(b), the President determines and certifies to Congress that either (1) the country has cooperated
                        fully during the previous year with the United States or has taken adequate steps on its own to achieve
                        compliance with the goals and objectives established by the 1988 United Nations Convention Against
                        Illicit Traffic in Narcotic Drugs and Psychotropic Substances or (2) vital national interests of the
                        United States require support for such assistance. The act provides further, that if the country is a licit
                        producer of opium, the President may only make the certification if the President determines that the
                        country (1) maintains licit production and stockpiles at levels no higher than those consistent with licit
                        market demand and (2) has taken adequate steps to prevent significant diversion of its licit cultivation
                        and production into illicit markets and to prevent illicit cultivation and production.



                        Page 3                                                           GAO/NSIAD-97-148BR Drug Control
                         B-276822




                         projects implemented by non-governmental organizations in Afghanistan
                         and earmarked $2.6 million for UNDCP activities. In India, the Department
                         of State has a limited assistance program supporting law enforcement
                         training and information sharing, providing equipment, and improving
                         diversion controls on precursor chemicals that can be used to
                         manufacture illicit narcotics and licit opium production. According to the
                         Department of State, the United States does not provide counternarcotics
                         assistance to Iran due to the lack of bilateral relations between the two
                         countries and has decertified Iran for cooperation on drug control since
                         1987.

                         Direct State Department counternarcotics assistance programs began in
                         Russia during fiscal year 1994, and funding for the Central Asian Republics
                         was started during fiscal year 1996. From fiscal year 1994 to 1996, the
                         Department of State provided about $1.1 million to these countries to
                         support establishment and strengthening of host government institutions,
                         law enforcement training, and provision of equipment, such as handcuffs,
                         forensic and drug testing kits, vehicles, fuel, and communications gear.
                         The U.S. counternarcotics presence is limited to a recently opened law
                         enforcement section and a DEA attache office at the U.S. embassy in
                         Moscow. In the Central Asian Republics, the Department of State relies on
                         various officials at its posts for counternarcotics reporting, and DEA
                         provides regional coverage from its attache offices in Pakistan.


                         Drug control efforts supported by the United States and other donors face
Major Obstacles in the   significant obstacles in Southwest Asia, Russia, and the Central Asian
Region                   Republics. According to U.S. counternarcotics officials, the primary
                         obstacle to addressing the heroin threat from Southwest Asia is the lack of
                         a central government in Afghanistan. Further, while the Taliban militia
                         control most of the country and over 90 percent of the opium cultivation
                         areas, its drug control commitment is suspect, and there are no national
                         law enforcement authorities that could implement an effective program.
                         According to the Department of State, U.S. assistance in Pakistan has
                         increased that nation’s law enforcement capability and facilitated
                         eradication efforts. However, lack of government control of key opium
                         poppy cultivation and processing areas and corruption have hampered
                         progress. Department of State and DEA officials told us that there are
                         numerous obstacles in Russia and the Central Asian Republics, including
                         lack of national counternarcotics plans, law enforcement institutions with
                         limited training and funding, poorly policed borders, and corruption
                         facilitated by the entrenched presence of Russian organized crime. While



                         Page 4                                        GAO/NSIAD-97-148BR Drug Control
                        B-276822




                        the United States and other donors have begun implementing drug control
                        programs in the former Soviet Union to address these issues, these efforts
                        are still in their nascent stages.


                        While the government of India has imposed controls in recent years that
Status of India’s       have enhanced its ability to prevent diversion, the government agency
Efforts to Control      responsible for monitoring the licit crop is understaffed and cannot
Licit Opium Diversion   provide effective oversight over all of the licit opium crop. Furthermore,
                        farmers can easily exceed the minimum opium yield required to retain a
                        government license. They may sell the additional production to the
                        government or choose to divert the excess into the illegal market. Farmers
                        have strong financial incentives to divert excess portions of their licit
                        crops since they can obtain substantially better prices for opium offered
                        on the unofficial market as compared to the government rate. The
                        government of India estimates that only small amounts of licit opium are
                        diverted annually into illicit channels, but U.S. counternarcotics officials
                        told us that the amount diverted may be as high as 20 percent. India has
                        not allowed the United States to participate in a joint opium crop yield
                        survey, so future agreement on the amount diverted is unlikely. However,
                        U.S. officials told us that most of the diverted opium is consumed by
                        addicts in India and the surrounding region and does not constitute a
                        direct threat to the United States.

                        Further information about regional opium production and trafficking
                        threats, U.S. drug control efforts, obstacles to U.S. efforts, and issues
                        associated with India’s attempts to control licit opium diversion are
                        contained in briefing sections I, II, III, and IV, respectively.


                        In commenting orally on a draft of this report, the Department of State,
Agency Comments         DEA, and ONDCP advised us that they generally agreed with the information
                        presented and that they had no substantive comments. The Department of
                        State and DEA provided some suggested technical corrections and we
                        incorporated them in the text where appropriate.


                        We obtained information on the opium production and trafficking threat in
Scope and               Southwest Asia, Russia, and the Central Asian Republics from intelligence
Methodology             assessments compiled by DEA and U.S. intelligence agencies. Opium poppy
                        cultivation and production statistics in Southwest Asia for the period
                        1987-96 were derived from the Department of State’s International



                        Page 5                                          GAO/NSIAD-97-148BR Drug Control
B-276822




Narcotics Control Strategy Report issued in March 1997. These figures
represent the best available U.S. estimates on the cultivation and
production threat. To obtain information on the Southwest Asian heroin
threat to the United States, we reviewed DEA and Office of National Drug
Control Policy (ONDCP) reports on the prevalence of heroin from this
region in the U.S. market and discussed this data with appropriate agency
officials.

We identified U.S. drug control efforts and obstacles to their
implementation in Southwest Asia, Russia, and Central Asia by reviewing
planning and program documents, including cables, correspondence, and
official reports from the Department of State, DEA, and ONDCP and
supplemented this information in discussions with agency officials. We
obtained funding information on State Department efforts by reviewing
budget documents and verifying amounts with officials responsible for
individual country programs. In addition, we gathered data and held
discussions with agency officials on the status of counternarcotics efforts
conducted by governments of heroin-producing and trafficking countries
in Southwest Asia, Russia, and the Central Asian Republics. We also
reviewed UNDCP documents on its ongoing and proposed drug control
activities in Southwest Asia and the Central Asian Republics and identified
U.S. funding earmarked to support these efforts during fiscal years
1990-96.

We gathered information on issues associated with India’s attempts to
control diversion of its licit opium crop from official reports issued by the
Department of State and DEA and supplemented the information with
interviews of appropriate officials at these agencies.

We conducted our review from November 1996 through April 1997 in
accordance with generally accepted government auditing standards.


As agreed with your office, unless you publicly announce its contents
earlier, we plan no further distribution of this report until 30 days after its
issue date. At that time, we will send copies to the Secretary of State; the
Administrator, DEA; the Director, ONDCP; and interested congressional
committees. We will make copies available to other interested parties
upon request.




Page 6                                           GAO/NSIAD-97-148BR Drug Control
B-276822




The major contributors to this report were Louis Zanardi and Daniel
Tikvart. If you or your staff have any questions concerning this report,
please call me on (202) 512-4268.

Sincerely yours,




Jess T. Ford, Associate Director
International Relations and Trade Issues




Page 7                                         GAO/NSIAD-97-148BR Drug Control
Contents



Letter                                                                                              1


Briefing Section I                                                                                 10
                         Southwest Asian Herion in the United States                               10
Heroin Threat            Worldwide Illicit Opium Production by Country, 1987-96                    12
                         Southwest Asian Illicit Poppy Cultivation, 1987-96                        14
                         Southwest Asian Illicit Opium Production, 1987-96                         16
                         Russia and the Central Asian Republics                                    18
                         Russia and the Central Asian Republics (cont.)                            20

Briefing Section II                                                                                22
                         U.S. International Heroin Control Strategy Objectives                     22
U.S. Drug Control        Afghanistan                                                               24
Efforts in the Region    Pakistan                                                                  26
                         India                                                                     30
                         Iran                                                                      32
                         Russia and the Central Asian Republics                                    34
                         U.S. Drug Control Expenditures in Russia and the Central Asian            36
                            Republics, Fiscal Years 1994-96

Briefing Section III                                                                               38
                         Afghanistan                                                               38
Impediments to U.S.      Pakistan                                                                  40
Drug Control Efforts     Russia and the Central Asian Republics                                    42

Briefing Section IV                                                                                44
                         Background                                                                44
Controlling Diversion    Diversion Issues                                                          46
of India’s Licit Opium   India’s Efforts to Control Licit Opium Diversion                          48
                         India’s Efforts to Control Licit Opium Diversion (cont.)                  50
Production

                         Abbreviations

                         AA         acetic anhydride
                         ANF        Anti-Narcotics Force
                         CBN        Central Bureau of Narcotics
                         DEA        Drug Enforcement Administration
                         MT         metric ton
                         ONDCP      Office of National Drug Control Policy
                         UNDCP      United Nations Drug Control Program


                         Page 8                                        GAO/NSIAD-97-148BR Drug Control
Page 9   GAO/NSIAD-97-148BR Drug Control
Briefing Section I

Heroin Threat




      GAO Southwest Asian Heroin in the United States


                 U.S. analysts do not believe heroin from this region is increasingly
                 available in the United States.

                 Distribution is limited to Southwest Asian ethnic communities in a few
                 large U.S. urban centers.

                 Southwest Asian heroin is less pure, and thus less competitive in the
                 U.S. market, than heroin from Colombia or Southeast Asia.

                 U.S. heroin seizure data for 1995 is not a direct indicator of the amount
                 of Southwest Asian heroin available in the U.S. market.




                                   According to the Drug Enforcement Administration (DEA), Southwest Asia
                                   is presently not a major source of heroin in the United States. Most of the
                                   heroin produced in Southwest Asia is destined for consumption regionally
                                   or in the European market due to the easier accessibility and established
                                   trafficking routes between the two regions. DEA reports that the
                                   distribution of Southwest Asian heroin arriving in the United States is
                                   limited to large urban centers with significant Southwest Asian ethnic
                                   populations, including Chicago, Detroit, Los Angeles, and New York City.



                                   Page 10                                       GAO/NSIAD-97-148BR Drug Control
Briefing Section I
Heroin Threat




Furthermore, according to DEA, the low purity of Southwest Asian heroin
limits its competitiveness with heroin from Colombia and Southeast Asia.
In 1995, average retail purity levels for Southwest Asian heroin
(35 percent) lagged behind regional averages for Southeast Asia
(45 percent) and especially South America (56 percent). Higher purity
levels allow users to injest heroin through nasal inhalation rather than
injections using hypodermic syringes. Inhalation is easier than injection
and users avoid contracting the diseases associated with using needles.

Although there was an increase in the proportion of Southwest Asian
heroin in the total net weight of heroin seized in the United States from
1994 to 1995 (up from 6 percent in 1994 to 16 percent in 1995), DEA
reported that this rise did not reflect a greater availability of heroin from
this region in the U.S. market. DEA officials explained that 1995 data
included one large seizure that skewed 1995 results. Excluding this
seizure, Southwest Asian heroin represented about 6 percent of the total
net weight of U.S. heroin seizures, the same amount as in 1994.




Page 11                                         GAO/NSIAD-97-148BR Drug Control
                            Briefing Section I
                            Heroin Threat




GAO       Worldwide Illicit Opium Production by Country,
          1987-96
Metric tons
5,000
4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
 500
   0
   1987       1988   1989      1990        1991     1992    1993       1994       1995       1996
                                               Years

                            Burma      Afghanistan   Other countries




                            Page 12                                           GAO/NSIAD-97-148BR Drug Control
Briefing Section I
Heroin Threat




In 1996, worldwide illicit opium production reached the record level of
about 4,300 metric tons (MT), according to the Department of State. Most
of this production occurred in two countries—Burma and Afghanistan.
Burma accounted for about 60 percent of worldwide production, or
2,560 MTs; Afghanistan produced almost 30 percent, or 1,230 MTs. Other
countries such as Laos, Vietnam, Pakistan, Colombia, Mexico, and India
produced the remaining amount. Moreover, United Nations Drug Control
Program (UNDCP) figures, derived from an on-the-ground survey, indicated
that opium production in Afghanistan for 1996 exceeded 2,000 MTs.
Specifically, the survey indicated that between 55,000 and 58,000 hectares
of opium poppy were under cultivation and could yield between 2,200 and
2,300 MTs of opium.




Page 13                                       GAO/NSIAD-97-148BR Drug Control
                        Briefing Section I
                        Heroin Threat




GAO Southwest Asian Illicit Poppy Cultivation, 1987-96



   Hectares
   60,000

   50,000

   40,000

   30,000

   20,000

   10,000

       0
              87   88   89        90         91     92     93      94   95    96
                                               Years

                             Afghanistan        Pakistan   India




                        Overall illicit poppy cultivation increased significantly from 1987 to 1996 in
                        Southwest Asia. Most of the increase was due to an expansion of
                        cultivation in Afghanistan. In 1996, farmers in Afghanistan cultivated
                        37,950 hectares of poppy, making it the world’s second largest grower
                        behind Burma, which cultivated 163,100 hectares according to the
                        Department of State. Afghanistan’s cultivation expanded rapidly from 1990
                        to 1996, more than tripling during that period.




                        Page 14                                         GAO/NSIAD-97-148BR Drug Control
Briefing Section I
Heroin Threat




During the same time frame, illicit opium poppy cultivation in Pakistan
remained stable until 1996, when there was a 51-percent decrease from
1995. U.S. officials attributed the decline to poor weather, decreases in
regional opium prices, and the success of alternative development projects
in the area. With regard to the alternative development projects, U.S.
officials told us that they had not conducted overall evaluations of their
impact, but cultivation decreases in regions of U.S. project assistance were
most dramatic. However, according to DEA, regional opium prices are now
at their highest levels in recent years and DEA officials believe that
Pakistan’s overall illicit opium production will increase to previous levels.

Illicit poppy cultivation also occurred in India and Iran. India had about
3,100 hectares of illicit poppy under cultivation in 1996—down from the
4,750 hectares reported in 1995. Due to the lack of diplomatic relations
between the United States and Iran, illicit cultivation in Iran was difficult
to confirm. However, the Department of State reported that in 1993, when
the last U.S. assessment of a portion of Iran was conducted, there were
approximately 3,500 hectares of illicit poppy under cultivation that could
yield between 35 and 70 MTs of opium production.




Page 15                                        GAO/NSIAD-97-148BR Drug Control
                            Briefing Section I
                            Heroin Threat




GAO       Southwest Asian Illicit Opium Production, 1987-96


Metric tons
1,800

1,600
                                                                                1,482
1,400                                                                                    1,352
                                                                        1,200
1,200

1,000           955
          805                                          815      825
 800                  715                    750

                                  580
 600

 400

 200

   0
          87    88    89           90        91            92    93      94      95       96
                                                   Years

                                Afghanistan         Pakistan    India




                            Page 16                                             GAO/NSIAD-97-148BR Drug Control
Briefing Section I
Heroin Threat




Southwest Asian opium production closely tracked opium poppy
cultivation statistics. For example, Afghanistan’s opium production, like
poppy cultivation, has almost tripled since 1990, and Pakistan’s 1996
opium production has declined by 52 percent from the 1995 level. In
addition, there was more Afghan opium being processed at Afghan
laboratories instead of in Pakistan. According to DEA, Pakistani opium
production should rebound to previous levels and could possibly exceed
the 140 to 160 MT level. While India’s illicit opium and heroin production
capability was small in comparison to Afghanistan’s and Pakistan’s, it was
a major international manufacturer (40,000 MTs annually) of acetic
anhydride (AA), a key chemical needed to convert opium into heroin.
According to DEA, a substantial portion of diverted worldwide AA supplies
originated in India. Drug traffickers smuggled undetermined amounts of AA
to heroin processing sites in both Southeast and Southwest Asia.
According to the State Department and DEA, controls implemented by the
government of India in 1993 have reduced AA availability for illicit
purposes. Data on Iran’s illicit opium production is difficult to obtain. The
Department of State reported that in 1987, Iran may have produced 300
MTs of opium. In 1993, based on limited information, the official U.S.
assessment estimated that Iranian production ranged from 35 to 70 MTs per
year.




Page 17                                        GAO/NSIAD-97-148BR Drug Control
                      Briefing Section I
                      Heroin Threat




GAO   Russia and the Central Asian Republics


      Russia and the Central Asian Republics are not classified as major
      cultivators or opium producers.

      Since the breakup of the Soviet Union, drug trafficking for Southwest
      Asian heroin through the Central Asian Republics and Russia has
      increased.

      Most of the Southwest Asian heroin transiting the Central Asian
      Republics and Russia is destined for Europe.




                      Page 18                               GAO/NSIAD-97-148BR Drug Control
Briefing Section I
Heroin Threat




U.S. officials do not know the exact extent of opium poppy cultivation in
Russia and the Central Asian Republics because there have been only
limited attempts to survey suspected cultivation areas. While cultivation
areas exist, the U.S. government has not classified countries in this region
as major poppy cultivators or opium producers.1 U.S. officials also told us
that most of the poppy cultivated is harvested in the form of crushed
poppy straw and is consumed locally.

Since the breakup of the Soviet Union, Southwest Asian drug traffickers
have increased their use of transit routes through the Central Asian
Republics and Russia as a supplement to traditional routes through the
Balkans and the Mediterranean, according to DEA reporting. Most of the
heroin transiting the Central Asian Republics and Russia is destined for
consumers in European markets, but local consumption is also increasing.
According to DEA, Europe is the traditional market for Southwest Asian
heroin due to its easier accessibility and the existence of established drug
trafficking networks.

Heroin is not used in large quantities by opiate abusers in Russia and the
Central Asian Republics. However, U.S. counternarcotics and government
officials in the region believe that heroin abuser populations are likely to
expand and create more demand for illicit drugs in these countries as
opium, heroin, and other illicit drugs become more readily available.




1
 In terms of opium production, the United States defines a major illicit drug producing country as one
in which 1,000 hectares or more of illicit opium poppy is cultivated or harvested during a year. To date,
the United States has not identified amounts that meet or exceed this threshold of cultivation in these
countries.



Page 19                                                         GAO/NSIAD-97-148BR Drug Control
                       Briefing Section I
                       Heroin Threat




GAO Russia and the Central Asian Republics (cont.)


      Russian and other ethnic-based organized crime groups move illicit
      drugs throughout the former Soviet Union.

      Drug trafficking and other illegal activities supported by Russian
      organized crime threaten financial institutions and increase capital
      flight from the former Soviet Union.




                       Page 20                               GAO/NSIAD-97-148BR Drug Control
Briefing Section I
Heroin Threat




Russian organized crime groups and their counterparts in the Central
Asian Republics have been moving a variety of illicit drugs, including
opium, opium poppy straw, and heroin, throughout the former Soviet
Union. According to DEA, drug trafficking was one of many illegal
enterprises managed by these crime groups: others involved racketeering,
prostitution, extortion, moving stolen property, weapons and alien
smuggling, and money laundering.

According to DEA, Russian organized crime money laundering from drug
trafficking and other illegal activities has been corrupting Russian and
Central Asian governmental and financial institutions and increasing
capital flight from these countries. In 1995, for example, approximately
25 percent of the commercial banks in Moscow was reported by DEA to be
controlled by organized crime. Corruption among law enforcement
authorities in Russia and the Central Asian Republics supported by
organized crime has also been growing. For example, in some Central
Asian countries, extremely low pay for border guards has fostered
susceptibility to payoffs from drug traffickers. Moreover, a 1996 law
enforcement report indicated that Russian citizens have been increasing
their monetary deposits in financial institutions and investments outside of
Russia both as an alternative source for laundering illegal proceeds and
because legitimate Russian citizens lacked faith in the financial system.




Page 21                                       GAO/NSIAD-97-148BR Drug Control
Briefing Section II

U.S. Drug Control Efforts in the Region




      GAO             U.S. International Heroin Control Strategy
                      Objectives

                  Strengthen international cooperation against drug traffickers.

                  Assist source and transit countries in developing comprehensive
                  counternarcotics policies.

                  Implement law enforcement efforts aimed at disrupting and destroying
                  drug trafficking organizations.

                  Use the drug certification process to promote effective
                  counternarcotics activities in heroin producing and trafficking nations.

                  Focus on countries and regions posing the most direct threat to the
                  United States.

                  Promote the UNDCP's efforts in countries where U.S. bilateral
                  influence is limited.




                                   Page 22                                GAO/NSIAD-97-148BR Drug Control
Briefing Section II
U.S. Drug Control Efforts in the Region




U.S. international heroin control strategy objectives include strengthening
international cooperation for efforts against drug traffickers, assisting
source and transit countries in developing comprehensive
counternarcotics policies, implementing law enforcement efforts aimed at
disrupting and destroying drug trafficking organizations, using the drug
certification process to promote effective counternarcotics activities in
heroin producing and trafficking nations, and promoting multilateral
efforts such as those of UNDCP in countries where U.S. bilateral influence is
limited. The United States pursues these objectives in a variety of
countries and regions where opium and heroin are produced and
trafficked. U.S. heroin control efforts are greater in countries where the
United States has a cooperative relationship and where the host
government has the resources and ability to control production and
trafficking areas. In Southwest Asia, the U.S. ability to achieve these
objectives is limited by the lack of host government control of areas where
opium poppy cultivation and heroin processing and trafficking occurs. In
Russia and the Central Asian Republics, host governments lack
counternarcotics resources and capability and have sought U.S.
counternarcotics assistance and cooperation on drug control.




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                        U.S. Drug Control Efforts in the Region




GAO Afghanistan


 The United States does not have a direct counternarcotics program there.

 The United States decertified Afghanistan from 1987 to 1992 and from 1995 to
 1997 for not cooperating in drug control efforts.

 From fiscal year 1990 to fiscal year 1996, the Department of State provided
 $947,000 through the U.S. mission in Pakistan to support small crop control
 projects run by non-governmental organizations.

 DEA provides regional coverage of Afghanistan from its offices in Pakistan.

 From fiscal year 1990 to fiscal year 1996, the United States earmarked $2.6
 million to support UNDCP projects in Afghanistan.




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U.S. Drug Control Efforts in the Region




Because Afghanistan lacks a central government, the United States, in
1996, did not have an active program with that country directed toward
controlling illicit opium poppy cultivation or opium and heroin trafficking.
In fact, the United States decertified Afghanistan for not cooperating in
counternarcotics activities from 1987 to 1992 and from 1995 to 1997. The
1997 decertification decision was based on Afghanistan’s large amount of
opium poppy cultivation (37,950 hectares in 1996) and its lack of law
enforcement action against drug trafficking activity.

Without a diplomatic presence in Afghanistan, the United States carries
out its drug control efforts through the Narcotics Affairs Section at the
U.S. mission in Islamabad, Pakistan. During fiscal years 1990-96, the
Department of State provided $947,000 for (1) opium poppy crop control
and demand reduction projects run by nongovernmental organizations and
(2) a limited amount of law enforcement training. The scope of these
projects has been small in comparison to the rapid expansion of opium
production in part because Afghanistan has no central government and the
United States has concerns about the strength of the Taliban commitment
to illicit opium crop reduction. The intent of these programs has been to
keep the United States involved in drug control activities and to create a
foundation for establishing a bilateral program in the future. In lieu of a
larger U.S. effort, the United States is encouraging its European allies that
are more directly affected by Afghanistan’s opium production to increase
their counternarcotics efforts.

After the Soviet Union invaded Afghanistan in 1979, DEA closed its office in
Kabul, the capital of Afghanistan, but continued to collect intelligence on
drug trafficking activities in Afghanistan from its offices in Pakistan.
According to DEA officials, the lack of a central Afghani government and
national law enforcement elements makes it difficult to gather drug
trafficking information.

In addition to direct assistance, from fiscal year 1990 to 1996, the United
States provided about $2.6 million of earmarked funds to UNDCP
counternarcotics institution building and opium supply reduction activities
in Afghanistan. UNDCP is preparing to begin a 4-year, $16-million project
focused on institution building, poppy crop and demand reduction, and a
drug control monitoring system. The State Department has donated
$1.6 million to support this project.




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GAO   Pakistan


      The Department of State provided $24.35 million from Fiscal Year
      1990 to 1996 for drug control programs. The Fiscal Year 1997
      program of $2.5 million supports

       law enforcement,
       crop reduction, and
       demand reduction.


      DEA supports development of Pakistani law enforcement institutions
      and works with its counterparts to dismantle drug trafficking
      organizations.




                      Between fiscal year 1990 and 1996, Pakistan was the main focus of U.S.
                      counternarcotics efforts in Southwest Asia. During the period, the
                      Department of State provided $24.35 million to support three primary
                      programs: (1) development of law enforcement institutions,
                      (2) elimination of opium poppy crops, and (3) reduction of Pakistani
                      demand. During fiscal year 1996, the State Department provided
                      $2.5 million for these programs ($1.23 million for law enforcement
                      support, $640,000 for illicit crop control, and $630,000 for administrative



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U.S. Drug Control Efforts in the Region




support) and directed its effort through the Narcotics Affairs Section at
the U.S. embassy in Islamabad with a staff of 3 Americans (2 direct hire
staff in Islamabad and 1 personal service contract staff in Peshawar) and
13 foreign service nationals. In addition, DEA’s 16-member staff worked
with the Pakistani government to arrest the heads of major trafficking
organizations, shared counternarcotics intelligence with the Pakistani
police, and provided law enforcement training. DEA’s regional office also
had responsibility for drug control efforts in Afghanistan and the Central
Asian Republics.

U.S. assistance for Pakistani law enforcement authorities primarily
supported the Anti-Narcotics Force (ANF), but also included Customs, the
Frontier Corps, and the Coast Guard. The fiscal year 1996 law enforcement
support program consisted of training and provision of equipment such as
communications gear and vehicles. According to the Department of State,
this assistance increased the professionalism of host nation drug
enforcement agencies and is expected to enable ANF and Pakistani
Customs to expand their operations by opening offices and raising staffing
levels.2

Pakistan bans opium poppy cultivation and supports eradication efforts in
areas under firm government control. The United States supported
Pakistani efforts to extend the ban and eradication campaigns to
hard-to-reach regions of the Northwest Frontier Province by providing
road construction, crop substitution, and developmental assistance. Road
construction in poppy growing areas increased the ability of Pakistani law
enforcement to conduct eradication efforts and pursue destruction of
heroin-processing laboratories. To assist farmers in developing alternative
crops, the program provided agricultural supplies such as farm equipment
and seeds, technical expertise, electrification, and water supplies. State
Department officials told us that other factors also contributed to
Pakistan’s production decline in 1996, including heavy opium poppy
cultivation in Afghanistan that depressed opium prices in Pakistan and
increased the economic viability of alternative crops such as wheat and
tomatoes. Despite this decline, Pakistani opium production should
rebound to previous levels and could possibly exceed the 140- to 160-MT
level according to DEA.

The United States also supported a demand reduction project that has a
goal of reducing Pakistan’s population of 1.5 million heroin addicts.

2
 In 1996, the State Department offered to lease six UH-1H helicopters at no cost to ANF to assist
interdiction efforts against drug trafficking caravans. The government of Pakistan did not respond,
however, and the helicopters were ultimately reassigned for use elsewhere.



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U.S. Drug Control Efforts in the Region




According to the State Department, the U.S. program bolstered ANF
projects to increase public awareness of the dangers of abusing illicit
drugs. However, no formal evaluations of project impact have been
performed.




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U.S. Drug Control Efforts in the Region




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                       U.S. Drug Control Efforts in the Region




GAO   India


      From 1990 to 1996, the Department of State provided $245,000 for
      India's drug control efforts.

      DEA has a small presence in India.

      The United States is encouraging the government of India to devote
      more resources to its drug control activities, particularly those relating
      to the prevention of diversion of chemicals used by the illicit drug trade.

      India has consistently received full certification for cooperation on drug
      control issues with the United States.




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U.S. Drug Control Efforts in the Region




From 1990 to 1996, the Department of State provided $245,000 to support
law enforcement training and to enhance diversion controls on licit opium
production. DEA maintains a small presence in India and facilitates
counternarcotics investigations and training. The United States is
encouraging the government of India to invest more resources in its
counternarcotics police and control of precursor chemicals that can be
used to manufacture illicit narcotics and to update its asset seizure, asset
forfeiture, and money laundering laws. India has consistently received full
certification for cooperation on drug control issues with the United States.




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                       U.S. Drug Control Efforts in the Region




GAO   Iran


      Is a major transit country for opiate products leaving Afghanistan and
      Pakistan, but has low levels of cultivation and production compared to
      regional neighbors.

      Has no diplomatic relations with the United States; it has been
      decertified for drug control cooperation since 1987.

      Other countries report Iran is taking some action to control drug
      trafficking. However, reports suggest that corruption is a factor in
      Iran's interdiction program according to DEA.




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U.S. Drug Control Efforts in the Region




Iran is a major transit country for illicit opiate products moving from
Pakistan and Afghanistan to processing sites in Turkey and drug
consumers in Europe and the United States. In 1993, when the last U.S.
assessment of poppy cultivation in a limited area in Iran occurred, there
were an estimated 3,500 hectares under cultivation that could produce
between 35 MTs and 70 MTs of opium—small amounts compared to those of
Afghanistan and Pakistan.

The United States does not maintain diplomatic relations with Iran and has
decertified Iran for counternarcotics cooperation since 1987. The lack of
bilateral relations restricts the amount of information the United States
has about Iranian opiate control efforts and thus makes it difficult to
estimate the size of Iran’s opium poppy crop or assess Iran’s efforts to
interdict drug trafficking.

The government of Iran has ratified the 1988 U.N. drug control convention3
and claims it engages in a variety of counternarcotics efforts, including
control of opium poppy cultivation and interdiction of drugs. According to
the State Department, other countries have reported that Iranian opium
poppy cultivation has declined in response to the increasing availability of
opium from Afghanistan and that Iranian law enforcement authorities with
counternarcotics responsibilities have made large seizures of heroin and
opium. Iran participates in an agreement with Pakistan and UNDCP to
control drug trafficking in the region.




3
 The 1988 United Nations Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic
Substances seeks international consensus on criminalizing the production of and trafficking in illicit
drugs. The convention provides the legal framework for countries to legislate controls and to
cooperate with each other on drug control issues.



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                     U.S. Drug Control Efforts in the Region




GAO Russia and the Central Asian Republics


     The United States provides counternarcotics support in the following
     areas:

       establishment and strengthening of host government institutions
       through law enforcement training and provision of equipment;

       implementation of U.N. drug conventions, including legislative
       assistance, money laundering regulations, and chemical control
       programs;

       demand reduction training; and

       contributions to UNDCP to assess counternarcotics needs and
       establish drug control institutions.




                     U.S. counternarcotics efforts in Russia and the Central Asian Republics
                     are designed to address the basic drug control needs of countries
                     emerging from the influence of the former Soviet Union. According to U.S.
                     drug control officials, countries in this region are willing to cooperate on
                     drug control issues but generally lack the means to implement effective
                     programs without assistance. U.S. drug control objectives in the region
                     include (1) establishing and strengthening law enforcement institutions,
                     (2) implementing U.N. drug control conventions and other legislative and



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U.S. Drug Control Efforts in the Region




regulatory mechanisms necessary for effective drug control efforts,
(3) increasing awareness of drug abuse and supporting the development of
demand reduction programs, and (4) encouraging other donors such as
UNDCP to increase their drug control activities.


Most of the direct U.S. counternarcotics funding that these countries
receive supports law enforcement training and provision of equipment
such as handcuffs, forensic and drug testing kits, and communications
gear. National law enforcement authorities generally lack adequate
resources to control borders, make arrests, or conduct investigations,
according to U.S. drug control officials and reports.

The U.S. government has encouraged countries in the region to accede to
U.N. drug control conventions and has provided advice on how to design
essential drug control legislation and national drug control strategies that
would bring them into compliance. Kazakstan is not yet a party to the 1988
U.N. drug control convention. However, according to the State
Department, Kyrgyzstan, Tajikistan, Turkmenistan, Uzbekistan, and Russia
have acceded to U.N. conventions but must pass legislation to fully
implement them.

The United States has supported UNDCP drug control efforts in the region
through earmarked contributions. UNDCP has provided technical assistance
in implementing national drug control policies, strategies, and legislation,
and enhancing cooperation between countries in the region. In 1996, the
five Central Asian Republics and UNDCP signed a memorandum of
understanding designed to enhance drug control cooperation between
these countries.




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                     U.S. Drug Control Efforts in the Region




GAO   U.S. Drug Control Expenditures in Russia and the
      Central Asian Republics, Fiscal Years 1994-96


      Country                              U.S. Expenditures

      Russia                               $ 780,000
      Kazakstan                                100,000

      Kyrgyzstan                                 50,000
      Tajikistan                                 15,000
      Turkmenistan                                81,000
      Uzbekistan                                100,000
      Total                                $ 1,126,000




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U.S. Drug Control Efforts in the Region




U.S. drug control programs in the region are new and small in scope
relative to those in drug producing and transit regions where the United
States has traditionally supplied assistance. Between fiscal year 1994 and
1996, the State Department provided about $1.1 million in direct support
and earmarked about $1.45 million for UNDCP activities during fiscal years
1993-96. About $800,000 of the direct assistance went to Russia beginning
in fiscal year 1994; the remainder was divided among the five Central
Asian Republics. The United States also provided training and technical
assistance to law enforcement institutions in Russia and the Central Asian
Republics with Freedom Support Act funds. According to Department of
State officials, in fiscal year 1996, approximately $3.7 million of Freedom
Support Act funding enabled counternarcotics-related training designed to
address illicit drug trafficking, organized crime, and illegal money
laundering activities.

U.S. drug control staffing in Russia and the Central Asian Republics is also
limited. In 1995, the State Department opened a law enforcement section
that had drug control responsibilities at the U.S. embassy in Moscow with
one U.S. staff. In 1996, DEA opened a one-person attache office. Neither
agency has a direct drug control presence in the Central Asian Republics,
although the State Department tasks embassy officials at its various posts
with periodic reporting and delivery of assistance, and DEA provides
regional coverage from Pakistan.




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Impediments to U.S. Drug Control Efforts




      GAO              Afghanistan


                   Country lacks a central government that can control poppy cultivation
                   areas and implement drug control programs.

                   The Taliban and other Afghan factions appear to profit from the illegal
                   drug trade.

                   Afghanistan's opium farmers lack alternative income sources.




                                   A major obstacle to progress in controlling the illicit drug industry in
                                   Afghanistan is the lack of a central government committed to controlling
                                   opium poppy cultivation areas and implementing drug control programs.
                                   According to State Department officials, no national law enforcement
                                   authority exists. While the Taliban militia controls approximately
                                   two-thirds of the country, including Kabul, its commitment to drug control
                                   is unclear. According to DEA, the Taliban militia have punished traffickers
                                   and destroyed opium poppy crops during its drive to consolidate control.



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However, DEA and the State Department also report that Taliban
commanders have allowed farmers to continue to cultivate poppy and
produce opium. The Department of State and DEA have reported that the
Taliban and other factions tax opium poppy and other agricultural
products in areas they govern. As the Taliban and other factions continue
to vie for control of the country, drug control remains a low priority in
Afghanistan.

An additional obstacle to drug control programs in Afghanistan is the lack
of alternative sources of income for farmers living in poppy cultivation
areas. The Soviet invasion in the 1980s and the continuing civil war
devastated the local economy and infrastructure in poppy cultivation
areas. Opium production increased dramatically in the early 1990s as the
population, including returning Afghan refugees, found it difficult to
market traditional food crops and turned to poppy cultivation to
supplement their incomes. According to a Department of State official,
even if a strong central government is established, substantial outside
donor assistance for reconstructing the economy and implementing
alternative development programs would be required to achieve long-term
success in reducing the opium poppy crop and addressing recent increases
in heroin processing activity.




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                       Impediments to U.S. Drug Control Efforts




GAO   Pakistan


      The government of Pakistan does not exercise direct control over the
      Northwest Frontier Province, where most opium production occurs.

      Pakistani law enforcement efforts continue to be impeded by lack of
      initiative against major traffickers.

      Corruption significantly affects drug control efforts.

      Pakistan's government moves slowly on drug control issues.




                       The most significant barrier to drug control in Pakistan is that the
                       Pakistani government does not control the Northwest Frontier Province,
                       where most opium production occurs. Local tribal groups were given
                       control when the area was divided upon the British departure from the
                       region, and the government is reluctant to interfere with their rule and
                       illegal drug processing and trafficking activities, fearing a civil war. As a
                       result, few raids have been mounted against heroin processing
                       laboratories. Although thousands of drug trafficking arrests and drug



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Impediments to U.S. Drug Control Efforts




seizures are made annually, most arrests involve low-level traffickers.
Furthermore, convictions for drug trafficking offenses are often difficult to
obtain in the Pakistani courts. According to a 1996 law enforcement
report, Pakistani law enforcement officials displayed little initiative in
pursuing major traffickers and were hampered by lack of wiretap
authority in building their cases against traffickers. As a result, DEA efforts
to obtain the arrest of major traffickers are often impeded.

The ANF has encountered numerous obstacles since it was created in 1994
to replace the Pakistan Narcotics Control Board. The Pakistan Narcotics
Control Board was responsible for drug enforcement but was disbanded
due to lack of accomplishments and the prevalence of corruption within
the organization. According to the State Department, the ANF’s
performance has been hampered by insufficient funding, inadequate
staffing, and leadership turnover. For example, in 1996, ANF staff numbered
less than 1,000 and the majority of them lacked adequate law enforcement
experience.

Another impediment to effective drug control is corruption within the law
enforcement community. According to DEA, law enforcement and
prosecutorial systems have been subverted by wealthy and politically
influential drug traffickers. The poor pay that Pakistani law enforcement
officials earn increases their susceptibility to corruption. In 1996, the State
Department reported that senior ANF officials were responsible for
perpetrating a 2-ton opium seizure that was a hoax. Finally, the Pakistani
counternarcotics police lack a bureaucratic system for identifying,
investigating, and recommending action against corrupt officers despite
problems with corruption in its predecessor organization.

Pakistan’s slow executive, legislative, and judicial processes impede drug
control efforts as well. For example, Pakistan’s national 5-year
counternarcotics plan developed in 1995 has not yet been approved.
According to the State Department, Pakistan’s parliament has delayed final
passage of a comprehensive counternarcotics law and has not passed
legislation that would criminalize money laundering. In addition, the slow
pace of Pakistan’s judicial process delays prosecution and sentencing of
drug traffickers and limits the number of extraditions of major traffickers.
For example, a State Department report notes that a verdict has yet to be
announced in the case of one major trafficker 3 years after the end of the
trial.




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                      Impediments to U.S. Drug Control Efforts




GAO   Russia and the Central Asian Republics


      Countries lack comprehensive national drug control policies,
      strategies, and legislation.

      Counternarcotics police forces are deficient in training, equipment, and
      general funding support.

      Corruption impedes law enforcement effectiveness.




                      In 1996, Russia and the Central Asian Republics faced a number of
                      significant obstacles to implementing drug control programs. First,
                      comprehensive national drug control policies, strategies, and legislation
                      either did not exist or were not yet fully developed. For example,
                      Kazakstan, Krygyzstan, Turkmenistan, and Uzbekistan were still devising
                      national drug control strategies. The State Department reported that
                      Krygyzstan did not have laws that covered asset seizure or money
                      laundering, and Uzbekistan did not have effective money laundering



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Impediments to U.S. Drug Control Efforts




legislation or asset seizure regulations. Russia still lacks adequate money
laundering laws and regulations.

Moreover, counternarcotics police forces have not received sufficient
training, equipment, and general funding support, which impeded their
ability to combat drug production and trafficking. For example, the State
Department reported that in 1996, the President of Kyrgyzstan ordered a
30-percent cut in manpower in government agencies, including the lead
drug control agency. In Kazakstan and Tajikistan, budget and/or fuel
shortfalls severely hampered poppy eradication efforts. Also, Uzbekistan
did not have a sufficient counternarcotics police force, and customs
officials at border checkpoints lacked training in detecting drug
smugglers.

In addition, corruption has impeded law enforcement effectiveness at all
levels. For example, the State Department reported that while the United
States had no reports of high-level government officials involved in the
drug trade in Russia, many observers believed that most political parties
receive support from Russian organized crime groups, some of which are
involved in narcotics trafficking. At the working level, border control
officials in the region generally received low salaries and were susceptible
to bribes. In addition, there were allegations of direct participation by law
enforcement authorities in the drug trade according to the State
Department. For example, in Tajikistan, Tajik and Russian border guards
were alleged to have been involved in trafficking drugs. Also, in
Kyrgyzstan, the State Department reported that seized drugs may have
been resold by law enforcement personnel.




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Controlling Diversion of India’s Licit Opium
Production



      GAO             Background


                  India is the world's largest producer of licit opium for use in
                  pharmaceuticals.

                  The government of India controls the amount of licit opium produced
                  by licensing farmers.

                  The U.S. "80/20 rule" specifies that at least 80 percent of licit opium
                  imported into the United States must come from India and Turkey.

                  The rule attempts to limit the number of nations involved in the trade
                  and assure a flow of reasonably priced opium to meet U.S. medical
                  needs.




                                   India is the world’s largest producer of licit opium for use in
                                   pharmaceutical products (849 MTs during the 1995-96 crop year) and is the
                                   only country that still produces opium gum for export, according to the
                                   Department of State. Opium gum is valued highly by pharmaceutical
                                   companies for its high alkaloid content needed in manufacturing drugs
                                   like the painkiller oxycodone. The government of India licenses farmers to
                                   cultivate poppy and produce opium in specified areas. Approximately
                                   78,000 farmers were licensed in the 1995-96 crop year. To retain a license,



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Controlling Diversion of India’s Licit Opium
Production




a farmer had to produce a minimum of 46 kilograms of opium per hectare
of poppy cultivation. After production was completed, the government of
India paid farmers about $10 per kilogram of opium produced.

To ensure a flow of reasonably priced opium that meets U.S. national
medical needs and to limit the number of nations involved in the licit
opium trade, the United States implemented the “80/20 rule” in 1981. The
“80/20” rule (21 C.F.R. 1312.13) provides that at least 80 percent of licit
opium imported into the United States must have as its original source
India and Turkey; not more than 20 percent can have as its original source
Australia, Hungary, Poland, France, and the former Yugoslavia. According
to U.S. officials, India is the primary supplier of licit opium to the United
States because India is the only country in the world that produces licit
opium gum—a form of opium containing essential chemicals needed by
U.S. pharmaceutical companies. Other countries, such as Turkey, produce
licit opium in the form of concentrate of poppy straw that does not have a
high level of certain alkaloids that U.S. drug manufacturers seek.




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                       Controlling Diversion of India’s Licit Opium
                       Production




GAO   Diversion Issues


      Diversion of licit opium into illegal channels occurs, but the actual
      amount is difficult to confirm.

      Most of the diverted opium is consumed in India and the surrounding
      region due to the large number of addicts located there.

      Financial incentives for farmers to divert licit opium are strong.

      Lack of accountability over opium stockpiles created shortfalls in filling
      contracts in 1994 and 1995.




                       The government of India acknowledges that there have been diversions of
                       licit opium into illegal channels but at the low annual levels of about
                       5 percent. However, U.S. counternarcotics officials believe that 15 to
                       20 percent of the licit crop may have been diverted. The United States has
                       not accepted India’s lower estimates because it has not directly
                       participated in surveys of the opium crop with the Indian government.
                       While Indian agricultural scientists had worked with U.S. counterparts to
                       design a 1996 survey, the Indian government did not allow direct U.S.



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Controlling Diversion of India’s Licit Opium
Production




participation. Significantly, U.S. officials told us that most of the diverted
opium crop was consumed by the large number of addicts in India and the
surrounding region.

In 1996, incentives for farmers to divert licit opium remained strong since
farmers could achieve yields over the minimum requirement, and
unofficial prices were significantly higher than the government rate. Last
year, the Indian government offered the opium farmer about $10 for each
kilogram of opium produced for yields up to 60 kilograms per hectare and
increased payment to $17 per kilogram for yields over this threshold.
However, the unofficial price for opium was $200 per kilogram. According
to U.S. counternarcotics officials, Indian opium farmers can easily achieve
yields above the minimum requirement and therefore have strong financial
incentives to divert portions of their excess crop to the unofficial market.

India’s lack of accountability over its legal opium stockpile became
evident when India experienced shortfalls in meeting contracts with U.S.
and other international pharmaceutical companies in 1994 and 1995. An
inventory in 1994 showed that there was a shortfall of over 300 MTs in
India’s licit opium stockpiles. According to State Department and DEA
reports, the shortfalls occurred because of the Indian government’s failure
over a 14-year period to reconcile inventory records with on-hand stocks
and because of evaporation and wastage of stock due to poor storage and
handling techniques. Although no studies were done to validate the
evaporation explanation, DEA officials told us that they believe only a small
amount of this shortfall may have been diverted. They noted that there
was no evidence of a substantial increase in the supply of illicit opium or
heroin available in India during this time frame. In 1995, shortages in
meeting demand continued, while orders in 1996 were just met despite an
increase in authorized cultivation. According to the Department of State,
the stockpile depletion and inability to meet current demand are expected
to restrict the amount of potential diversion for the short term until
stockpiles are reestablished.




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                      Controlling Diversion of India’s Licit Opium
                      Production




GAO   India's Efforts to Control Licit Opium Diversion


      According to U.S. counternarcotics officials, India has taken the
      following steps to improve diversion control efforts:

      raising the minimum yield for licensed opium farmers to ensure that
      only the most productive ones participate;
      delicensing farmers for failing to meet minimum yields (26,739 farmers
      faced the risk of delicensing in 1996);
      reducing the allowable cultivation amount to 200 hectares in Uttar
      Pradesh, a state where significant diversion was occurring; and
      deploying paramilitary and police personnel at vulnerable points during
      harvesting operations to prevent diversion.




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Controlling Diversion of India’s Licit Opium
Production




The government of India has taken some steps to improve its ability to
control diversion of legal opium during the last several years. For example,
over the past 5 years, the government of India has raised the minimum
yield for licensed opium farmers to ensure that only the most productive
ones participate. By increasing the yield requirement, the government of
India is able to force farmers to deliver more of their crop, reducing the
opportunity for diversion. According to the State Department, the
minimum yield for the 1996-97 crop year will be increased from 46 to
48 kilograms per hectare for most growing areas. Farmers who fail to meet
minimum yields face the risk of losing their licenses. The yield
requirement’s effectiveness is dependent on enforcing the relicensing
procedure. According to DEA, in 1996, 26,739 farmers who failed to meet
the minimum yield during the 1995-96 growing season were allowed to
continue growing opium poppies, under the condition that farmers who
again failed to meet the minimum yield for the 1996-97 season would be
permanently delicensed. Further, in 1995, in Uttar Pradesh, a state where
significant diversion was occurring, the government reduced the allowable
cultivation amount to 200 hectares. To lower the chances of diversion
during harvesting operations, paramilitary and police personnel are
deployed at vulnerable points. U.S. counternarcotics officials told us that
the Indian government has increased controls over its opium stockpile by
improving (1) the reliability of its inventories, (2) the security conditions
at its storage facilities to prevent theft and evaporation loss, and (3) the
security at processing facilities through monitoring equipment provided by
the Department of State.




Page 49                                        GAO/NSIAD-97-148BR Drug Control
                    Briefing Section IV
                    Controlling Diversion of India’s Licit Opium
                    Production




GAO   India's Efforts to Control Licit Opium Diversion
      (cont.)
      India's Central Bureau of Narcotics (CBN) has responsibility for
      monitoring the licit crop and preventing diversion. However, CBN is
      understaffed and can only provide oversight for a small percentage of
      the crop.

      The government designates village headmen, usually the most
      productive opium farmers in the local community, to be responsible for
      distributing licenses and ensuring that no farmers have overplanted
      and that minimum yields are met. However, corrupt headmen and
      CBN officials can be paid to ignore low yields or overplanting.




                    During 1996, the Indian government monitored the production process by
                    measuring fields and performing periodic crop inspections by local village
                    officials and CBN agents. The government designated village headmen,
                    usually the most productive opium farmers in the local community, to
                    license farmers, to ensure that farmers did not overplant, and to confirm
                    that minimum yields were met.




                    Page 50                                        GAO/NSIAD-97-148BR Drug Control
           Briefing Section IV
           Controlling Diversion of India’s Licit Opium
           Production




           However, inherent weaknesses made it difficult to prevent some diversion
           from occurring. According to DEA, farmers avoided monitoring by
           extending their legal fields by several rows or cultivating poppy on
           unregistered land. U.S. estimates of diversion from licensed fields include
           overplanting based on spot checks conducted by DEA and information
           obtained from the CBN, although this practice is not as prevalent as farmers
           who misrepresent their opium production yields. As previously discussed,
           the State Department estimates that India also had about 3,100 hectares of
           illicit opium poppy cultivation in 1996 grown by unlicensed farmers. In
           addition, licit opium farmers paid village headmen and CBN officials to
           ignore overplanting. Farmers unable to meet minimum yield requirements
           obtained waivers from corrupt officials, claiming weather and pest
           damage, and thus were able to retain their licenses. Further, while CBN had
           monitoring responsibilities, it was understaffed and only able to monitor a
           small percentage of the crop.




(711242)   Page 51                                        GAO/NSIAD-97-148BR Drug Control
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