CONGRESS SEEKS WIDE SANCTIONS FOR DRUG TRADE

WASHINGTON -- Congress is close to forcing a major expansion of economic
sanctions against international narcotics traffickers and the businesses
that work with them.

Legislation to impose such sanctions on drug criminals throughout the world
passed the Senate easily late last month. Administration officials said
that, after initially opposing the measures on practical and foreign policy
grounds, they have now begun to work with legislators to fashion a bill
that both the House and the President could support. The sanctions have won
some support among businessmen and government officials in Colombia, where
the United States has imposed them by executive order. But the legislation
to extend them worldwide is being strongly opposed by the Government of
Mexico and a few of that country's biggest companies.

"The Mexican Government has repeatedly expressed profound concern about the
negative consequences that may arise from the implementation of such a
proposal," Mexico's Ambassador to Washington, J. Reyes Heroles, wrote on
July 27 in a confidential letter to the White House drug-policy director,
Gen. Barry R. McCaffrey.

The sanctions would bar drug traffickers and their associates from doing
business in the United States, cut off their access to American banks and
freeze any assets they may have deposited here. American firms that
continue to work with companies linked to the traffickers would be subject
to civil and criminal prosecution.

President Clinton first levied such penalties in 1995 against the four main
leaders of Colombia's Cali drug cartel. In a subsequent letter to Congress,
he promised, "I shall continue to exercise the powers at my disposal to
apply economic sanctions against significant foreign narcotics traffickers
and their violent and corrupting activities as long as these measures are
appropriate."

Since then, the Treasury Department, which administers the sanctions, has
built a list of almost 500 relatives, associates and mostly Colombian
companies linked to the traffickers. More than two dozen of those companies
have ended up liquidating their assets, officials said, while others have
had to reorganize or change their names.

But Clinton Administration officials have hesitated almost from the start
of the program to extend it to drug criminals in other countries, and
particularly to those in Mexico.

In part, their concerns have been practical: Before acting against the Cali
cartel, United States officials had been able to analyze reams of the
group's secret business records that had been seized in raids by Colombian
police teams backed by the Drug Enforcement Administration and the C.I.A.

By contrast, the most powerful Mexican drug gangs are believed to have
hidden their wealth in mazes of front companies, aliases and associates
that the American authorities have not yet been able to penetrate. One
C.I.A. effort to dig into the possible drug connections of one of Mexico's
most prominent business dynasties ended after an agent in Mexico was
threatened while trying to search public records, officials said.

More importantly, perhaps, some senior Administration officials have also
worried about the political and economic impact that the sanctions might
have on a country that is the United States' second-most-important trading
partner after Canada, officials said.

"There are parts of this Government that are very nervous about doing
anything like this with Mexico," one senior State Department official said.
"There is no question that it will raise the tension level some, and there
are always some people who think it may undermine confidence in the economy."

If finally approved, the legislation that passed the Senate on July 21 and
a similar bill pending in the House would essentially force the
Administration to do what it has done with Colombia on a global scale.

By Jan. 1, 2000, and by every year thereafter, the legislation would
require the Secretary of the Treasury to submit a list of major
international drug traffickers after consulting with the C.I.A. and the
Departments of Justice, Defense and State.

That list would then be vetted by the White House drug-policy director and
sent to the President. By March 1, the President would have to produce a
final list of traffickers to be sanctioned, as well as a report to Congress
explaining his reasons if he has decided to leave off any of the accused
traffickers suggested by his aides.

The legislation would freeze the assets of the traffickers and of any
companies that they may partly own or control and prohibit American
businesses from working with them. It would also cover the American assets
of any person or company that aids a trafficker's illicit activities.

As a practical matter, the annual publication of such lists would probably
only be the start of a process of investigation, congressional and
Administration officials said.

The Treasury Department's Office of Foreign Assets Control now has only
about six or eight officials assigned full-time to implementing the
sanctions. Even if new funds are appropriated to pay for the collection of
intelligence on the traffickers' business assets and associates, it could
take years to develop evidence strong enough to withstand a challenge in court.

So far, there have been very few such challenges from Colombia. Two of the
teen-age daughters of the Cali cartel chiefs, both of them American
citizens, fought successfully to be struck from the list of the
traffickers' known associates. About 10 others have been removed from the
list after severing their ties to the cartel or establishing their
innocence, officials said.

A Colombian official who discussed the sanctions on the condition that he
not be identified said that although the Government of President Andres
Pastrana supported the American sanctions, it was eager to be more involved
in drawing up lists of the traffickers' associates so as to insure that
innocent businesses were not hurt by being linked to drug trafficking.
Mexican officials and businessmen said they were fighting the legislation
in part on similar grounds.

"If you're a legitimate company and you're targeted, you should have a way
to defend yourself before you get on the list," said Luis Calvillo, a
spokesman for one of Mexico's biggest international transportation
companies, Transportacion Maitima Mexicana, or T.M.M..

Both T.M.M. and the Mexican Embassy in Washington have been campaigning
strongly for detailed amendments to the legislation, with lobbyists for
T.M.M. working to organize a coalition of like-minded American businesses.
The Mexican firm, one of Latin America's largest shipping companies, has
complained that it has been unfairly linked to drug trafficking by United
States intelligence documents in the past.

In interviews, two Republican sponsors of the sanctions legislation,
Senator Paul D. Coverdell of Georgia and Representative Porter J. Goss of
Florida, said they would readily consider changes to strengthen the
safeguards for law-abiding companies. They added that they were confident
that the legislation now has enough bipartisan support to win approval.

"We have suggested for a long time that this be used," said Goss, who, like
Coverdell, will likely be among the legislators who reconcile the Senate
and House bills. "The Administration would go a little way but they didn't
want to go too far. We got tired of waiting for them."