Intelligence on drug trade fell short

Federal agencies' problems with Mexico surveillance led to confusion,
infighting

BY TIM GOLDEN
New York Times

MEXICO CITY Early last year, a handful of senior U.S. officials in
Washington
received an alarming secret intelligence report on Mexico. It was, on
its face, the sort
of document that can force policy makers to change the way they think about a
country or a region, officials said.

In a matter of weeks, the National Security Agency reported, Mexican drug
traffickers
had laundered some $6 billion in illicit profits through their country's
financial
system. The spy agency based its conclusion on an elaborate surveillance of
the
contacts between drug gangs and their business associates.

Almost immediately, State Department officials delivered an angry protest to
the
Mexican ambassador over the apparently vast breach in his country's defenses
against
drug trafficking.

Then U.S. officials' outrage gave way to chagrin.

A flood of dollars

The agency, they realized, was asserting that Mexico had taken in a flood of
dollars
nearly equal to its entire foreign investment that year without any
discernible impact
on its economy. ``It just couldn't have happened,'' one official said. And he
added,
``You have to ask: `Which reports am I supposed to believe?' ''

An examination by the New York Times, based on scores of interviews and a
review
of classified documents, indicates that the agency's discredited
assessment was by no
means an isolated lapse in the annals of U.S. intelligence on drugs and
corruption in
Mexico.

Rather, as the United States weighed momentous decisions about Mexico in
the 1990s
from the North American Free Trade Agreement to the $12.5 billion bailout
of the
Mexican economy after a currency crisis U.S. policy makers were blindsided
by some
important developments, misinformed about others, and inattentive to many
more.

Law enforcement crisis

After insisting for years that Mexican corruption was an old affliction being
cured by a
new generation of political leaders, senior U.S. officials have begun to
acknowledge
that the growing power and influence of Mexico's drug traffickers have led to
a law
enforcement crisis so deep that it threatens the stability of a country that
shares almost
2,000 miles of border with the United States.

Yet a good deal of the information upon which that conclusion is based had
languished in the files of U.S. law enforcement agents and intelligence
officers for
years, officials said. Only rarely did such intelligence command the time of
senior
policy makers. Even less frequently did it prompt them to take any action.

``A lot of this information has been out there, in the bowels of the system,''
said
Donald Ferrarone, who, before his recent retirement as head of the Drug
Enforcement
Administration's field office in Houston, oversaw investigations that dealt
closely
with the political protection of Mexican drug traffickers. ``But it has been
ignored,
because people don't want to believe it, the extent and degree of corruption.''

Wholesale reorganization

In recent weeks, senior Clinton administration officials have begun to plot a
wholesale reorganization of the federal government's drugintelligence
apparatus.
Officials said the overhaul will seek to pool some information that is now
tightly held
by different agencies, disseminate important material more quickly, and thin
out a
vast intelligence bureaucracy in which different offices perform similar work.

Many officials argued that the failures of U.S. intelligence on Mexico were
even
deeper and more serious than policy makers had acknowledged.

Law enforcement agents who worked in or on Mexico while former President
Carlos
Salinas de Gortari was a prized ally of the United States said they were often
discouraged by political pressure to keep the drug issue from jeopardizing
improvements in the economic relationship between the two countries. At
crucial
moments, they asserted, intelligence struggled with policy and policy won.

Published Friday, July 11, 1997, in the San Jose Mercury News