GUATEMALA CROSSED OFF LIST

WASHINGTON - President Bush dropped Guatemala from the roster of
allies in counternarcotics efforts Friday, concluding it had "failed
demonstrably" during 2002 to meet international drug control standards.

Guatemala and 22 other countries were graded on their counternarcotics
performances last year. It was the first time Guatemala had received a
failing grade, unlike Myanmar and Haiti.

Pervasive corruption was a principal reason for Guatemala's poor
rating.

"Police stole twice the quantity of drugs they officially seized,"
said Paul Simon, the State Department's top counternarcotics official.

Bush waived sanctions on national security grounds for both Guatemala
and Haiti.

"These two countries will receive assistance, notwithstanding their
counternarcotics performance," White House press secretary Ari
Fleischer said.

Simon said an aid cut for Guatemala only would lead to a further
deterioration of drug-fighting institutions. He said aid to Haiti will
be continued on humanitarian grounds.

Sanctions were continued against Myanmar, also known as Burma. Simon
said Myanmar took some useful steps but added that large-scale poppy
cultivation and opium production continued as did trafficking in
methamphetamine.

He said Haiti remains a major transshipment point for drugs, primarily
cocaine, moving from South America to the U.S. market.

In a memo to Secretary of State Colin Powell, Bush decried an increase
in illegal synthetic drugs entering the United States, especially
ecstasy from Europe. He said the Netherlands is a major production
center for ecstasy.

The president said Canada has become a primary source of
pseudoephedrine and is an increasing source of high-potency marijuana.

In Guatemala City, Foreign Minister Edgar Gutierrez criticized Bush's
decision. It could create "a bad atmosphere for business, investments
and the development of the financial and banking system," Gutierrez
said.