ANTI-DRUG COOPERATION IN JEOPARDY, MEXICO TELLS U.S.

Diplomacy: Money-laundering sting by Americans angers officials. Probe has
damaged nation's trust, they say.

MEXICO CITY--Operation Casablanca, the biggest money-laundering
investigation in U.S. history, has so incensed Mexican officials that they
are now warning it will damage vital anti-drug cooperation with the
American government.

The diplomatic row has cast a pall over an operation that the Clinton
administration hailed as a success earlier this month.

The investigation, based in the Los Angeles suburb of Santa Fe Springs, has
led to more than 150 arrests and the indictment of three Mexican and four
Venezuelan banks accused of laundering drug money.

But Mexican officials have been infuriated by the discovery that U.S.
Customs operatives apparently carried out part of the sting investigation
here without their knowledge. The Mexicans are so upset that some officials
have even threatened to formally charge the American operatives and seek
their extradition.

"Our mutual confidence has been damaged. Our cooperation has been damaged,"
Foreign Minister Rosario Green told reporters Thursday. "Therefore we must
now sit down to talk and reestablish the terms of our cooperation."

Green said Mexico will demand that the U.S. government sign a "code of
conduct" that would prohibit any more such covert cross-border operations.

Mexico's cooperation in the anti-drug fight is considered vital because the
country is not only an important source of other drugs but also the biggest
conduit for cocaine entering the United States.

After Mexico filed a protest with the U.S. government last week, President
Clinton expressed regret that Mexican officials were not informed in
advance about Operation Casablanca. But his apology was clearly not enough
to put the matter to rest.

The Mexican irritation stems from two factors. The most serious is that
U.S. Customs agents or informants were apparently secretly working in
Mexico as part of their sting operation, which led to the indictment of 26
Mexican bankers.

Such an operation not only could violate Mexican laws but also touches
deep-seated fears in a country that lost half its territory to the U.S. in
the last century and remains wary of its powerful neighbor.

One senior Mexican official offered this argument to substantiate their
anger: What would American officials do if they discovered Mexican police
in Los Angeles carrying a shipment of cocaine to use in a Mexican sting
operation there?

"The Americans would say: 'Wait a minute, who authorized this operation in
the U.S.? You are committing a crime,' " said the official, speaking on
condition of anonymity.

Sting operations are legal in Mexico only if authorized by the attorney
general.

Mexican officials are also angry that they were left in the dark about the
U.S. investigation until it was announced in Washington.

Authorities here have come under fierce attack from opposition party
members who claim that officials meekly allowed a violation of Mexican
sovereignty.

In Washington, Justice Department officials said privately that the
operation had to be secret to protect the lives of U.S. agents.

Asked about Green's remarks on cooperation, U.S. Atty. Gen. Janet Reno said
the two governments have worked well together.

"I think we must all do everything that we can to focus on drug trafficking
and the damage it is doing to both nations and to take the appropriate
steps, based on our laws, that will bring these people to justice," she said.

An official at the Treasury Department, which oversees Customs, responding
to claims that agents may have violated Mexican laws, said: "We understand
their concerns, and we're looking at the situation."

Copyright Los Angeles Times

Checked-by: Richard Lake