BRAZIL'S NEW DRUG HABIT

Complexo da Mare, sprawling over the flatlands behind Rio's sparkling
Guanabara Bay, has long been a desolate place. Over the years,
hundreds of thousands of poor people have flocked to the slum in
search of work and a better life. Few found either and, packed into
shanties, many of the most desperate residents turned to crime to make
a living. But in the past two years, Mare and other
favelas--collectively home to 17 percent of Rio's citizens--have
become killing fields. Teenagers armed with AK-47s, AR-15s, Walthers,
Uzis, hand grenades, even rocket launchers, shoot it out night after
night, destroying homes and shops and killing civilians. What has made
a tough neighborhood almost maniacally violent?

Cocaine. Mare has been divided up, organized by gangs trying to take
ad-vantage of a surge of drugs flowing into the country to serve a
growing clientele. On a quiet Saturday evening earlier this month,
police wearing bulletproof vests and carrying automatic weapons
descended on Mare. Their mission: to take back territory that the
government had virtually lost to rival drug gangs.

Brazil has a big new drug problem. Latin America's largest nation was
once relegated to the vaguely worrisome status of a "transit country,"
an entrepot on the great white way between the coca fields of the
Andes and connoisseurs in upmarket Miami or London. No longer. Drug
experts say domestic consumption--especially of cocaine--is growing,
whether snorted from dollar packets, papelotes, in the favelas or off
Waterford crystal in estates. The handsome proceeds from the trade are
corrupting legislators, and even tarnishing the prized economy. No
longer can Brazil blame only the ravenous appetites of gringos for
bolstering South America's drug industry; it now has to contend with
its own conspicuous consumption. "Ten years ago drugs were confined to
the major cities," says Argemiro Procopio, a professor at the
University of Brasilia. "Now they are everywhere."

No one knows how many Brazilians indulge in under-the-counter drugs,
but experts say there is no doubt that this restless, cosmopolitan
nation of 170 million people has acquired a palate for powder and
other world-class narcotics. Federal Police seized 4.7 metric tons of
cocaine last year--much of it, they believe, bound for the burgeoning
domestic market. Though that was less coke than the 6.8 metric tons
confiscated in 1999, police say the decrease shows only that smugglers
are becoming cleverer. "Unlike marijuana, cocaine is lucrative shipped
in small quantities, which makes it hard to detect," says Getulio
Bezerra, chief of the Federal Police drug division. "Transporters
learn quickly."

In the slums of So Paulo, favelados are consuming not just more coke,
but cheap derivatives, like crack and merla; even hashish has made its
debut in the streets, while in trend-conscious upper-class
neighborhoods, the international taste for synthetic drugs has caught
on. At Rio's most fashionable addresses, ecstasy is the party favor of
choice.

In a survey conducted among 1,900 middle-class kids in January, during
the giant Rock in Rio festival, 43 percent of youths said they had
tried drugs, and 16 percent admitted to experimenting with cocaine.

"Drugs never pass through a country without leaving their mark," says
Gen. Alberto Cardoso, a top military strategist who coordinates the
country's anti-drug campaign. That includes the financial sector.
Moroni Torgan, a congressman who ran the parliamentary narcotics
probe, reckons some $30 billion or more in drug money is being
decanted through Brazilian banks every year. Last year Kroll
Associates, a U.S. security company, was retained by an American bank
with offices in Brazil when a branch manager discovered that a single
client had moved $300 million in a year to the United States through
Uruguay--a windfall that only narcotics could explain. "Brazil has
become a convenient laundermat," says Eduardo Sampaio of Kroll. And
some of its politicians convenient tools. After a yearlong narcotics
inquest ended last December, congressional investigators called for
indictments of 827 suspects, ranging from drug thugs to frontmen for
money-laundering outfits. Three local legislators and a former
congressman are behind bars as a result. "The ostrich days are over,"
says Pedro Berwanger, former Federal Police chief of Rio. "We are
fighting a war here."

By far, the most devastating impact of the drugfest is a rise in
violent crime--not just a surge in muggings and armed robberies, but
lethal violence. In Rio, illegal-firearm seizures have nearly tripled
in a decade. Since 1985, Brazil's homicide rate has doubled to 26.7
deaths per 100,000 residents; the country now leads the world in
nonmilitary deaths by firearms per capita. The overall killing in Rio
has abated slightly in recent years. But hold the champagne. With 47.9
homicides per 100,000, Rio is still one of the most dangerous cities
on the planet--five times deadlier than New York City. Seventy percent
of the violence is credited to either getting or using drugs. So
commonplace is the violence of the drug culture, it has become popular
entertainment. The computer game Counter Strike, now in vogue, is a
typical cops-and-robbers showdown--except that the forces of good and
evil shoot it out in Rio's favelas.

Why has the plague finally reached Brazil? Globalization is one
reason. Brazil was always ripe for coca's conquest. While the country
produces little cocaine, it is a crucial supplier of precursor
chemicals, such as ether and acetone. Its sprawling rain forest to the
north is a perfect cloak for clandestine landing strips. Thanks to
Mercosur, the trade pact uniting Brazil, Argentina, Paraguay and
Uruguay, factory and farm goods are flowing freely over the southern
borders. So are drugs: "Narcosur," the cynics call it. "There are
parts of Brazilian territory that Brazil doesn't control," says
Procopio, of the University of Brasilia.

Ironically, the drug impresarios have also been drawn by the fruits of
Brazil's economic success: modern telecommunications, convenient
flight connections, plenty of ports--and electronic banking: First
World infrastructure with Third World policing. "As we open borders,
we also open the door to those who export and import drugs, weapons,
pirated merchandise and dirty cash," Acting U.S. Ambassador Cristobal
Orozco told a Brazilian audience last month. "If anything, the
criminals are ahead of the rest of us."

No one knows that better than the favelados. Felony and favelas have
always been closely associated, but drugs have ratcheted up the
caliber of violence. Twelve years ago, when Col. Rosemberg da Silva,
now commander of the 20th police district, faced his first hostage
crisis, the kidnappers were armed with a kitchen knife and a .38
revolver. Last year he found himself negotiating with six drug-gang
bandits, armed with 9mm and .45-caliber revolvers, hand grenades, two
.762-caliber assault rifles and enough ammunition for a four-hour gunfight.

This is not another tale of crime in the slums. "We are confronting
urban warfare," Rio Police Chief Wilton Ribeiro said recently. "This
is a guerrilla war for fractions of territory." Those fractions are
growing. Take Mare. Like a botched suture, Evanildo Alves Street cuts
a ragged gash through the wrong side of Rio. On one side sits Nova
Holanda, ruled by the Red Command, Brazil's oldest drug faction. On
the other lies Baixa do Sapateiro, where the rival Third Command
reigns. There is hardly a home, a shop, a church or a lamppost along
the street that does not bear the marks of their deadly contest for
territory and consumers. "Sometimes I feel like I'm living on the Gaza
Strip," says Luciano, a postman, who recently abandoned his home in a
bullet-pocked alley. "The difference is, no one hears about this one."

Hill by scruffy hill, the drug lords have made the favelas their
castles, and the poor their vassals. They have turned Rio into a
strategic distribution center for drugs and arms throughout the
country. Now and again, when the bloodletting gets too scandalous, the
police invade, often in a cloud of cordite. The bandits lie low, but
only until the overtaxed lawmen move on to other emergencies. Today
the massive police presence in Mare has cast a sudden aura of peace
over the slum. Like a Potemkin village, all seems right with the
world. But the locals know better. For two solid years they have lived
under siege.

A handful of favela youths serve as lookouts, drug packagers or
rifle-bearing soldiers. The leaders have women and money, and style
themselves as a combination of retailers, avengers and the pro bono
local court, rolled into one. Woe to the Alemo (German)--favela slang
for the enemy--who falls into their hands. There is no Geneva
Convention in Rio's alleys. Prisoners may be summarily executed in the
trunk of a car, or sliced up with cleavers and tossed into a ditch.
One of the favored methods of disposal is the "microwave": thrust the
victim into a stack of tires, douse him in gasoline and light a match.

Increasingly, Brazilians are discovering that the violence of the
favelas is spreading beyond the slums; stray bullets have claimed
lives and lowered property values in middle-class neighborhoods. As
they speed along expressways on their way to handsome homes in Barra
da Tijuca or to the international airport, commuters wonder whether
today is the day they'll be stopped at gunpoint by drug
bandits--moonlighting for extra cash.

In Brazil, like everywhere else, the demand for drugs begins not in
the poorhouse but in the penthouse. Glossy magazines revel in the
confessions of Rio's elite, who once turned to drugs for recreation or
for comfort against the rigors of celebrity. And the favelas always
obliged them. As a Rio socialite and former drug user once commented,
"I just snapped my fingers and cocaine came into my hands."

Rio Gov. Anthony Garotinho, an Evangelical Christian, is not amused.
"If you want peace, stop snorting coke!" he scolded the rich recently
on a radio talk show. Some of his exhortations may be sinking in. When
four students at a tony and famously liberal private school, Escola
Parque, were caught smoking pot on a school field trip recently, they
were expelled.

Some observers worry aloud over the "Colombianization" of Brazil. That
seems unlikely. The country has no ideology-steeped guerrillas, no
paramilitary thugs and no penchant for political assassination. Its
drug lords are altar boys compared with the Mexican and Colombian
hagiarchy. Last month, when reputed top Brazilian traficante
Fernandinho Beira-Mar staggered out of the Amazon jungle, injured and
famished, in the custody of the Colombian Army, he looked more like a
vagrant than one of the world's most-wanted criminals.

Weary of scandals and funerals, Brazilians have begun to fight back.
Lawmakers have passed severe penalties for money laundering and
weapons smuggling. The armed forces have bolstered their garrisons in
the Amazon rain forest, a growing drug smugglers' haven. Starting next
year they will get a boost from Sivam, a $1.4 billion radar
surveillance system designed to watch over Brazil's biggest blind spot.

Additionally, Rio is the centerpiece of the nationwide, $7.4 billion
drug-prevention program, run by General Cardoso. In the end, winning
will come down to containing the cocaine guerrilheiros of the favelas.
The program calls for 47 separate initiatives to restore order and a
modicum of public services--small-claims courts, sports facilities,
job training, health care--in communities that are accustomed to none
of that. The main objective is to combat drug-related violence, and
help its main victims, the young.

Meanwhile, to confront the nationwide drug problem, Roman Catholic
clergymen have launched a campaign--"Yes to Life, No to Drugs"-- in
8,000 parishes. In the tonier sections of Rio, intellectuals and
artists have donned white and marched along the beachfront for peace
in Rio's meanest streets. Viva Rio, a prestigious citizens' NGO, has
pitched in by creating a database to trace the international arms
brokers who run guns to the hillside outlaws.

Still, taking back the territory, and the people who have fallen under
the influence of drugs, won't be easy. Ask Col. Marcos Fazio Correa,
commander of the First military police battalion. When NEWSWEEK caught
up to him recently, he was stalking heavily armed Third Command thugs
along the muddy footpaths of Kerosene Hill, a vertiginous favela near
the heart of Rio. Sweating copiously in his 10 kilos of commando
tackle--a bulletproof vest, a Kenwood radio, a 9mm pistol and an
M-16--Fazio was also suffering from severe sleep deprivation.

As if the bands of teenagers trying to kill him were not headache
enough, Fazio also struggles against Brazil's lopsided history. "For
years the police were used to defend the state, not the people," he
says. "We are trying to change these values." After a pause, he adds,
"Security also means education, jobs, food on the table." He knows
that stemming the rising tide of drugs and violence will take more
than a few high-profile investigations and cracking heads in the
favelas. How long will it take? "How long did the cold war last?" he
answers.