DRUG CASH KEEPS POOR FARMERS AFLOAT

Colombians Struggle To End Their Dependence, Despite U.S. Incentives

DELICIAS, Colombia - In all his 75 years, Vicente Yalanda Tombe has never
seen a dose of heroin and has no idea how or why a person might use it.

People have told him that the quarter-acre of purple and red opium poppies
growing in his mountainside garden is capable of doing bad things to a lot
of people. So he and hundreds of his fellow Guambiano Indians in Colombia's
southern highlands agreed earlier this year to uproot their chief cash crop
and try growing something different.

If only it were that easy, Mr. Tombe said.

This is the fourth time since 1997 that the Guambianos have tried to end
their economic dependence on opium, the crop that provides the base
ingredient of heroin. In all previous attempts, however, they have failed.

"That little patch brings us more money than everything else combined that
our land can give us in legal income," Mr. Tombe explained as he pointed to
his opium crop. "Nothing else pays enough to sustain my family."

Throughout the Western Hemisphere, tens of thousands of individuals find
themselves in much the same situation as Mr. Tombe and the Guambianos,
according to U.S. and Latin American government statistics. Their children
and schools may be drug-free; their streets might be safe from the violence
and evils of the drug trade. And yet they find themselves hooked ? not on
drugs, but on the money that the drug trade provides.

The drug economy is thriving because of their desperation, said Roberto
Steiner, a Colombian economist and specialist in the economic effects of
drug trafficking. He listed poverty and lack of economic opportunity as the
top factors contributing to the decision of farmers and smugglers to
abandon their legal livelihoods and join the underworld of the drug trade.

Without their willingness to work cheaply and put their lives at risk for
the sake of a few extra dollars, the drug trade would not be the serious
international problem that it is today, he and other drug-economy
specialists said.

Top U.S. officials concur, noting that with 150 million people in Latin
America surviving on less than $2 per day, there is a seemingly endless
supply of people who will risk everything for the chance to improve their
lives through the drug trade. Attacking drug labs and jailing American
pushers will not solve the problem, they say, unless something is done to
ease the poverty that is driving so many people to begin cultivating or
smuggling the drugs that are sold on U.S. streets.

In early May, Secretary of State Colin Powell called for a realignment of
U.S. counternarcotics policy in the Andean region "not just to focus on
narco-trafficking in Colombia but to see the problem as a regional problem
and to invest in human-rights activities, to invest in infrastructure
development, to invest in economic opportunities that will encourage people
to move away from narco-trafficking, and to see this problem as a regional
problem and not just a simple problem of narco-traffickers in Colombia alone."

He and other top officials from around the region are looking for a lasting
solution to a problem that has confounded governments for decades. In the
past, U.S. officials have tried naval and land blockades to keep drugs away
from American borders. When that approach failed, they went to the
drug-trafficking heartland of Colombia and, working with Colombian police,
smashed the cartels that once dominated the trade.

Crop substitution

They tried various forms of crop substitution and
infrastructure-development programs in areas where farmers are most
vulnerable to the temptations of drug-crop cultivation. In countries such
as Peru and Bolivia, those programs have shown positive short-term results.
But in Colombia, the problem seems only to be getting worse.

Two years ago, the United States agreed to support a carrot-and-stick
solution. With more than $1.3 billion in funding, Washington launched a
program to send military helicopters, equipment, and trainers to forcibly
eradicate drug crops and help Colombia's army and police combat the
insurgents who now protect the drug trade.

The U.S. aid is part of a $7.5 billion package, known as Plan Colombia,
which Colombian President Andres Pastrana designed to provide good-paying
jobs and substitute crops to keep poorer Colombians from being lured back
to the easy money of drug-crop cultivation.

It is too early to determine whether this multiyear program will succeed.
It is, however, running into opposition from critics who say the solution
lies elsewhere. Neighboring countries complain that the plan threatens to
send guerrillas and drug cultivators across the border. Environmentalists
say the eradication program uses chemicals harmful to plant and animal
life. In the United States, many critics complain that the plan is doing
nothing to address the demand for drugs by American consumers.

As long as demand remains, the drug problem will not go away, those critics
say. Others say the simplest solution is to decriminalize drugs altogether.

The challenges to the kind of approach advocated by Mr. Powell are
tremendous and complex. Those closest to the problem say it will not be
enough simply to nudge coca and opium farmers into crop-substitution programs.

"Nothing else can compete. We've tried alternatives: onions, potatoes,
fruits of all kinds," said Segundo Monta=F1o, vice governor of the
Guambiano tribal council that issued an edict in January for all Guambianos
to uproot their opium crops. "Before, when there wasn't any illicit
cultivation, everyone got along fine. But that's not enough anymore."

Financial incentive is what drives people like Mr. Tombe to take great
risks and continue growing drug crops even though the Colombian government
has threatened to throw them in jail and send troops to eradicate their
crops. For the sake of a few extra dollars, Colombians young and old are
risking lengthy prison terms and ruined lives to smuggle drugs out of the
country in suitcases, wheelchairs, dolls, coffins, military aircraft, and
even a presidential plane, to name but a few of the methods used.

Across the Caribbean, Mexico, and Central America, hordes of poor people
are strapping drugs onto their bodies or agreeing to swallow condoms filled
with drugs for the daily assault on U.S. ports of entry. Getting caught
means certain jail time, but getting away with it means a ticket out of
poverty.

For many, the equation is a no-brainer.

Legitimate trade hurt

In Colombia, the influx of narco-dollars and contraband goods used to
launder drug profits is wreaking havoc on the nation's financial system,
altering the value of the national currency and putting billions of dollars
worth of legitimate commerce and investments at risk, said Armando
Montenegro, president of the National Association of Financial Institutions
in Bogota.

"The effects of the drug trade on Colombia have been enormous," he said.
"It corrupts the politicians, the judiciary, the law enforcement apparatus.
It funds the guerrillas and paramilitaries.

"Drug trafficking has caused violence to go up, with murders, kidnapping
and other types of extortion," he added. "And when violence goes up,
investment goes down."

U.S. and Colombian military officials say that drug profits are providing
the principal source of funding for the nation's two largest insurgent
groups, the Marxist Revolutionary Armed Forces of Colombia, or FARC, and
their arch-foes, the paramilitary United Self-Defense Forces of Colombia.
In turn, the U.S. and Colombian governments now earmark billions of dollars
in military expenditures to combat insurgent groups protecting the drug trade.

FARC leaders say they are fighting to oust the government and establish a
socialist state. The paramilitaries say their primary goal is to stop the
FARC and smaller leftist groups from gaining power. Both groups say drug
income helps fund their military activities.

Due largely to drug income, the FARC today has the financial resources to
recruit and equip its fighters at unprecedented levels, having grown from a
force of about 8,000 guerrillas in 1995 to 17,000 today. The paramilitaries
have grown from about 4,000 to 8,000 today, according to diplomats and
military analysts.

Flush with cash, both groups are paying top dollar to import weapons, using
neighboring countries as conduits. Corruption and security problems are
growing for Colombia's neighbors. The government in neighboring Peru
collapsed last year after top officials were implicated in a smuggling
operation that delivered more than 10,000 AK-47 assault rifles to the FARC.

Huge profits

Within Colombia, the drug trade has become so lucrative that insurgent
forces are fighting directly with each other for control of the turf where
drug production is most widespread, said Brig. Gen. Mario Montoya,
commander of a U.S.-funded eradication program in southern Colombia.

The traditional notions of a Marxist guerrilla group fighting against the
oppression of the poor no longer apply to Colombia's groups, he said. This
is business.

"They're not here to defend anything or anybody. They are here to traffic
in drugs, because drug commerce is all they have here. There isn't anything
else," Gen. Montoya said.

Often caught in the middle are the peasant farmers like Mr. Tombe, who
occasionally are visited by members of the FARC and required to pay "war
taxes" for the right to continue growing drug crops.

"We're not getting rich off this," said Octavio Rodriguez, a coca farmer in
the southern province of Caqueta. "We don't grow coca because we want to.
The state has abandoned us. It is the state that left us without the
ability to survive growing legal crops that we can sell at fair prices."

Even though a two-acre plot planted with coca can produce more than $10,000
worth of refined cocaine, farmers like Mr. Rodriguez are lucky if they earn
more than $250 for each three-month harvesting cycle, Gen. Montoya said.
Even at that low level, the payoff is higher than what the average peasant
farmer can earn off legal crops.

The government agency responsible for administering crop-substitution
funds, known as Plante, has had a checkered history of successes and
high-profile embarrassments with its anti-drug efforts. Under Plante
sponsorship, the Guambianos hosted a huge gathering of diplomats and
government leaders in 1997 to kick off their landmark opium-substitution
program.

A year later, tribal members turned guns on each other as Plante funding
dried up, and ex-opium farmers were left with no way of making money. Many
returned to opium cultivation, Mr. Monta=F1o said, although they are trying
again to go straight.

Last November, Plante suffered its most embarrassing moment when a young
man named Andres Felipe Lafourie Restrepo, 19, was arrested at the Miami
International Airport carrying seven pounds of pure heroin. He is the son
of Maria Ines Restrepo, the director of Plante, and is now serving a
five-year prison sentence in Florida.

Widespread effects

The economic problems posed by the drug trade extend far beyond the
cultivation fields, touching virtually every sector of Colombian society,
said Mr. Montenegro of the National Association of Financial Institutions.
Drug money is so thoroughly interwoven with legitimate commerce it is
difficult, if not impossible, to distinguish between the two, he said.

U.S. and Colombian law enforcement officials say the principal culprit is a
money-laundering network known as the Black Market Peso Exchange, or BMPE.

In the northern port city of Maicao, local customs chief Manuel Pi=F1eda
explained how the BMPE integrates the drug economy with the world of
legitimate commerce. Once the money from streetside drug sales is collected
in the United States, money managers working for trafficking groups comb
the country, contacting retail outlets, wholesalers, or anyone involved in
selling goods who will not question the source of the money used in the sale.

Those goods are shipped to warehousing centers such as Panama's Colon Free
Zone or similar import-export zones in Aruba or Curacao. Then they are
re-shipped to merchants in northern Colombian ports such as Maicao, Mr.
Pi=F1eda explained.

Another method is simply to smuggle bulk cash out of the United States to
countries such as Haiti, the Dominican Republic and Mexico, U.S. Customs
Service officials said. From those countries, the cash is sent by human
courier to Panama, where it is used for large purchases of consumer goods
that can be sent directly to Colombia.

A senior Haitian official said that on one flight bound for Panama last
year, police seized $1.6 million from 10 Haitian women who had the cash
stuffed in their underwear. One of those women, Rosaline Benoit, 28, was
arrested with $170,000 stuffed in her girdle.

"I am a legitimate businesswoman," she insisted in an interview at the Fort
Nationale women's prison in Port-au-Prince. "I used to use bank transfers,
but it wasted too much time."

Before she was arrested, Ms. Benoit said, she traveled to Panama several
times a year, using cash to purchase perfumes and jewelry from merchants in
Colon. She said that she always filed a cash-declaration form with
Panamanian customs, and that she hid her money in her girdle for fear of
being robbed on the highway between Panama City and Colon. She remains in
prison, awaiting trial.

In Maicao, stores and shops are loaded to the ceilings with low-priced
appliances, textiles, and crates of cigarettes and liquors ? almost all of
which come from the Colon Free Zone, Mr. Pi=F1eda said.

"My personal opinion is that all this is pure money-laundering," he said.
But every time the Colombian customs service tries to shut down businesses
or impose taxes to limit money laundering, violent protests erupt.

Actions defended

Francisca Sierra, an outspoken Maicao merchant, said her community has a
long history of trading throughout the Caribbean. She said it is hard to
believe that a toaster or a bottle of whiskey could be used as a tool for
drug traffickers.

"We are not drug traffickers!" she said. "It's the government that is
attacking us, and we don't want to be linked to drug traffickers. We've
been involved in this business for 500 years. We were here doing business
long before there were any narcos in this country."

Alvaro Iguaran, an attorney representing the merchants of Maicao, said a
government crackdown on the contraband trade has virtually shut down the
economy of northern Colombia. Residents are threatening more violence, and
if economic conditions continue to deteriorate, they could begin turning to
guerrilla groups for protection from the government.

"Maicao is turning into a time bomb," he warned.

Elsewhere in Colombia, black-market merchants are selling contraband items
at a fraction of the retail price. The contraband trade has flooded the
consumer market with billions of dollars worth of goods, priced so cheaply
that legitimate commercial dealers cannot compete.

"So the legitimate stores are going out of business," driven out by
contraband sellers helping to launder drug money, said Mr. Montenegro.

Once their drug cash is repatriated and "washed" of its illegal taint, the
trafficking organizations are free to use it for all kinds of activities,
legal and illegal. Part of it is reinvested in U.S. businesses,
international stocks and bonds or anywhere else where the traffickers can
receive a favorable rate of return.

Some of that money is handed over to compradores, or buyers, the people who
travel around the Colombian countryside each month, purchasing the raw
opium and coca base that people like Mr. Tombe and Mr. Rodriguez produce on
their small farms.

Once the farmers are paid, they can begin planting and harvesting new drug
crops for the following season. And with each new sprout that peeks out
from Colombian soil, the drug economy is born anew.