IN PERU, FARMERS ARE ONCE AGAIN PLANTING COCA

Traffickers' Ingenuity Stimulates Production / 'Drug Control Situation Is
Deteriorating'

PALMAPAMPA, Peru -- The days when drug dealers flew freely in and out of
this little tropical town in the Apurimac Valley with thick wads of cash
ended four years ago, after President Alberto Fujimori ordered the armed
forces to shoot down planes suspected of trafficking.

Once the "air bridge" was broken, the demand for coca leaf plummeted, and
the price dropped by more than 60 percent from April 1995 to August 1995.
Farmers began abandoning coca growing, giving U.S. and Peruvian officials
the chance to teach them how to grow legitimate crops like premium coffee
and cacao, and build roads to take their new produce to market.

But the price of coca leaf has shot back up over the last year -- two-thirds
of the way to its 1995 highs. The reason, officials say, is that traffickers
have found ways to reopen some air routes and to replace others with river,
road and sea channels, making coca profitable once again.

The change underscores the cyclical nature of a drug war in Peru that is
unavoidably tied to the appetite for cocaine in America and Europe and to
the impossibility of choking all the trafficking routes that shift nimbly
through South American countries.

Developments in nearby countries, whether they are gains or setbacks for the
drug trade, have opened the way for a resurgence of trafficking in Peru,
with smugglers testing the limits of the resources that the United States
and regional governments can deploy in a vast shell game that spans the
continent.

Four years after Peru had seemingly demolished its reputation as the world's
biggest producer of coca leaf, the hillsides here are again teeming with
newly pruned coca fields and with workers, as young as 5, picking them
within sight of the Peruvian police. Local authorities now speak of
Peruvian, Colombian and Brazilian traffickers plying rivers and traveling
jungle paths on mules to avoid the police.

"In Peru, the drug control situation is deteriorating," General Barry
McCaffrey, director of the Office of National Drug Control Policy, told a
House subcommittee in August. "Peruvian coca prices have been rising since
March 1998, making alternative development and eradication more difficult.
Some farmers are returning to abandoned fields, and the central growing
areas are rejuvenating."

"Clearly," he said, "rebounding cultivation in Peru would be a setback to
U.S. interests."

McCaffrey's remarks received little notice in the United States, buried as
they were within long testimony on the worsening drug and security situation
in Colombia and his urgings for more United States aid there. But they got
banner headlines in Peru and brought a heated reaction from Mr. Fujimori,
who criticized the United States for not doing enough to con-trol domestic
consumption of illegal drugs.

The brief dispute came as a rare exception to years of praise from U.S.
officials, who have trumpeted Peru as a success story for driving most
cocaine trafficking from its borders. But that slack in the trafficking was
quickly taken up by smugglers in other countries. With the air bridge down,
the Colombians began growing more of the crop for themselves, and Colombia
replaced Peru as the first producer of coca leaf.

After Mr. Fujimori made his threat, the Peruvian air force shot down about
25 planes it suspected of being used by traffickers and forced down many more.

At the same time, Peru began an aggressive eradication effort, reducing the
total coca acreage in the country by 56 percent - from 287,500 acres
(116,436 hectares) to 125,000 acres AC from 1995 to 1998, CIA satellite
intelligence photography shows. Peru is continuing its eradication pace,
nearly reaching its goal of destroying 20,000 more acres this year.

U.S. and Peruvian officials say the steep increase in coca prices is the
result of several developments. Drug use in Peru itself is rising, offering
a more lucrative local market. As Bolivia makes headway in eradicating its
coca fields, demand to replace Bolivian leaves for local consumption and
shipment to Europe is growing.

At the same time, the fighting between rebels and the government in Colombia
may be interrupting shipments from fields there.

But more than anything else, analysts say, the prices are going up here
because international traffickers have again found ways to get their coca
crop out of the country.

New Peruvian organizations are shipping cocaine to Europe, where street
prices are often twice as high as in the United States, lawenforcement
officials say.

There are reports of increased trafficking of unrefined coca base and
cocaine up the coastal Pan-American Highway, Central America's
transportation artery, to Colombian-controlled laboratories in Ecuador, and
eventual shipment to Colombia and finally to the United States.

Several organizations are reportedly moving drugs by road south to Chile and
then by container ship to Europe and the United States.

Juan Gil, the executive secretary of Contradrogas, the main civilian
anti-drug agency in Peru, said traffickers were also resuming some flights.

Mr. Gil said Peru was pressing the Clinton administration to resume the
AWACS and P-3 Orion surveillance flights that helped the Peruvian Air Force
intercept smuggling planes. The flights were halted in May 1998 to increase
aerial spying over Colombia as more trafficking of drugs shifted to that
country.

After months of pleading by the U.S. Embassy in Lima, the Clinton
administration says it will resume P-3 flights over Peru later in August.

"Of course we're worried," Mr. Gil said. "The basis of our program is
bringing the price of coca down so legitimate crops can compete."

PERUVIAN POLICE officials say their guard was left down when El Nino hit
last year, forcing the security forces to transfer helicopters and planes
used in antidrug operations to the flooded Pacific coast for emergency aid duty.

At the same time, U.S. officials said, the Peruvian military sent some
planes to the border with Ecuador when tensions between the countries rose.

"I'm concerned," said Captain Vicente Rossi Malaga, commander of the
Peruvian National Police in the Apurimac Valley. "We took their plane
routes, but now they use boats, mules and people willing to carry the stuff
10 to 15 days in the jungle. We need helicopters, boats and more people."

Still, U.S. and Peruvian officials said, the amount of cocaine moving out of
Peru into international markets is nowhere near the levels reached in 1995.
But several said that if they could not drive the price down in the next
year, trafficking would almost certainly creep up to past levels. They noted
that in some areas, fields that had been abandoned were now in use again and
peasants flush with cash were increasing yields with herbicides and fertilizers.

The Peruvians have stepped up their interdiction efforts, which lagged badly
in 1998, with seizures this year already exceeding last year's totals
largely because of several large seizures in ports in recent months.

Meanwhile, the United States is increasing anti-drug aid, from $56.3 million
in 1998 to $87 million in 1999. The aid includes more U.S. training of
Peruvian customs officials and navy personnel patrolling suspected Amazon
River trafficking routes.