U.S. VIEWS CANADA AS ALLY IN DRUG WAR

Foreign Affairs officials are denying news reports that say the United
States is considering adding Canada's name to a "blacklist" of major drug
trafficking and producing countries.

The idea of placing Canada on the list in order to shame it into taking a
more active role in combatting the drug trade was floated earlier this
summer, said Valerie Noftle, a Canadian foreign affairs spokeswoman. "It
was dismissed out of hand and that's where it now sits," Ms. Noftle said.

Gordon Giffin, U.S. ambassador to Canada, criticized an article in The
Globe and Mail on Saturday, which said Canada might soon be added to the
list of 28 countries deemed to be soft on drugs.

"I don't know where that article came from," he said in an interview
yesterday. "Canada has never been on that list and I have no reason to
believe that it will be on the list in the future. We have a strong
collaborative law enforcement effort in Canada and the United States, which
recognizes that we have a joint problem to deal with in terms of drug
trafficking. Our law enforcement agencies work quite closely together every
day."

Mr. Giffin telephoned Lloyd Axworthy, the Foreign Affairs Minister, to
deliver that message and to reassure him that Canada was not about to be
blacklisted. "At my level, I have no reason to believe that story's true,
and I think I would have more reason to know that than whoever the person
was that reporter was talking to," the ambassador said.

Ms. Noftle said middle managers in the United States State Department
suggested this spring that Canada's soft stance on drugs warranted it being
added to the list, along with countries like Cambodia, Columbia, Pakistan
and Thailand.

"It was handled at senior levels, both in our embassy in Washington and in
the department in Ottawa and it was, as far as we were concerned, settled
in early June."

The idea was dropped with no conditions attached.

There was no mention whatsoever of Canada in a February memorandum signed
by Bill Clinton, the United States president. The memorandum broke down the
list of drug dealing and producing countries into those that do and don't
co-operate with the 1988 United Nations convention against illicit drug
trafficking.

Of the 28 identified drug-infested countries, only Afghanistan and Burma
were deemed uncooperative and unworthy of presidential certification as
anti-narcotic crime fighters.

Ms. Noftle said that Mr. Axworthy and David Kilgour, Canada's secretary of
state, have both been very active in focusing international attention on
the drug trafficking problems.

"Canada has taken a lead in establishing a dialogue on drugs involving all
34 countries of the Western Hemisphere at the foreign minister's level."

Indeed, a yearly drug war update published by the U.S. Department of State
in February of 1999 praises Canada's efforts.

"The Government of Canada actively participates in international
anti-narcotics fora and continues to discourage the abuse of narcotics,"
Bureau for International Narcotics and Law Enforcement Affairs report states.

It goes on: "Canadian law enforcement officials co-operate closely with
their U.S. counterparts on narcotics investigations and interdiction efforts."

And while past reports criticized Canada for its lax money-laundering laws,
this year's update praises proposed legislation that will help to
discourage organized crime operations.

In May, the government introduced a bill requiring banks, lawyers and other
institutions handling large sums of money to report suspicious
transactions. Once passed, all financial institutions will be required to
report transactions of $10,000 or more in which small denominations are
changed to larger ones.

The bill, which will likely become law this fall, will also contain
measures to control the flow of large amounts of cash across the border.

There are, however, hints that the United States is unhappy with some
aspects of Canada's law enforcement performance.

The state department report singles out two major problem areas, Canada's
booming marijuana crop and weakly monitored ports, which allow Southeast
Asian heroin to enter North America, predominantly by sea containers. Major
ports of entry include Vancouver, Montreal and Halifax.

Marijuana is grown throughout the country, especially in Quebec and B.C.,
the report states.

"According to Canadian intelligence, marijuana cultivation in British
Columbia is a sophisticated $1-billion-a-year growth industry, with about
60% of the harvest being smuggled into the U.S."

The report also notes that B.C. marijuana is of such high strength and
quality that it is sometimes traded pound-for-pound with cocaine from the
United States.