AILING ANDEAN REGION POSES CHALLENGE TO U.S.

BOGOTA, Colombia - Communist insurgents fuse with the drug trade in
Colombia, threatening South America's longest-running democracy.
Peru's president flees to Japan after a decade of strong-arm rule.

In oil-rich Venezuela, a former coup plotter turned president rails
against free trade and U.S. "imperialism" while befriending Fidel
Castro.

Ecuador suffers a coup and a wrenching switch to the U.S. dollar as
its currency. Hugo Banzer, Bolivia's ex-dictator, is elected
president, then hands power peacefully to a successor after being
stricken by cancer.

The Andean region, playing host to a visit next week by Secretary of
State Colin Powell, has been going through turbulent times.

And while Peru and Ecuador seem to be settling down - and President
Hugo Chavez of Venezuela has proved less hostile than some feared to
U.S. interests - the Andean drug economy flourishes, and its
democracies remain fragile.

Colombia, whose 37-year guerrilla war is escalating because of rebel
funding from the cocaine trade, poses the greatest challenge to
Washington.

"It's not Saigon about to fall or anything like that," said Bernard
Aronson, a Latin America investments manager who was the State
Department's top official for the region during the first Bush
administration.

"But it's a serious country in crisis in a region in crisis, and that
requires the attention of the United States."

Powell, making his first trip to South America as secretary of state,
will attend a democracy summit of the Organization of American States
on Monday and Tuesday in Peru - where elected President Alejandro
Toledo took office in July, replacing the scandal-plagued
administration of exiled President Alberto Fujimori.

Powell then flies to Colombia, the world's leading cocaine-producing
nation and the main supplier of heroin to the United States.

Growing U.S. military aid and training in Colombia, and the use of
private drug war contractors, are prompting concern about an eventual
Vietnam-like entanglement.

A $1.3 billion package approved last year for Colombia is paying for
combat helicopters, crop-dusting planes and U.S. Green Beret
instructors for a massive effort to destroy jungle drug laboratories
and eradicate coca and poppy plantations - the crops used to make
cocaine and heroin.

Aronson, who remains in contact with U.S. officials, said he did not
predict any explicit switch by the Bush administration to a
guerrilla-fighting strategy or any direct U.S. troop role in the
Colombia's civil war.

But with U.S.-trained troops battling guerrilla units involved in the
drug trade, Aronson said claims that Washington is not providing
counterinsurgency aid are "largely a fig leaf."

The Bush administration has asked Congress for a $882 million
follow-up package for the Andes. The plan continues the existing
strategy in Colombia while providing more money to neighboring
countries which fear the U.S.-backed offensive will drive drugs,
guerrillas and refugees over their borders.

Military analysts give Colombia's rural-based insurgents little
chance of taking power. But peace talks launched by President Andres
Pastrana are making scant progress.

Meanwhile, rebel violence and kidnappings contribute spur capital
flight that dwarfs foreign aid. An exodus of about a million
Colombians in the past five years - 2.5 percent of the population -
has taken along with it many talented professionals.

Drugs are not the only way Colombia's woes are touching the United States.

American oil and mining companies have had their operations crippled
by rebel bombings. An influx of Colombians fleeing strife and
unemployment is changing the complexion of Latino communities in U.S.
cities including Miami and New York.

Suspecting that many intend to stay on illegally in the United
States, the U.S. Embassy in Bogota rejects up to 70 percent of the
roughly 1,400 tourist visa applicants it interviews each day, U.S.
Ambassador Anne Patterson said this week.

Political asylum claims from Colombians are also on the rise.

In return for drug war cooperation, Colombian officials are expected
to press Powell on curbing U.S. demand for drugs as well as trade and
immigration changes.

The Andean Trade Preferences Act, a U.S. law giving tariff
exemptions, expires in December, and all the Andean governments are
seeking to renew and expand it.

Colombia is lobbying for a change in U.S. law to allow Colombians
living illegally in the United States to remain while the country's
political turmoil continues.