PERU BATTLES THRIVING DRUG TRADE

LIMA, Peru--Surging cocaine production is rattling Peru after years
of relative calm, raising fears that the associated increase in
violence and corruption could derail one of the fastest-growing
economies in Latin America.

The cultivation of coca, and the capacity to make cocaine from it,
have been steadily rising in Peru, while neighboring Colombia has
been aggressively cracking down on production. Peruvian cocaine
exports, according to one study, have overtaken those from Colombia,
though Colombia remains the world's leader in cocaine production.

A recent attack on a military helicopter by a group tied to drug
runners has sharpened the debate over how to tackle Peru's rising
cocaine output. The attack followed several others in remote
coca-leaf growing areas that have left more than 50 military or
police personnel dead this year.

The lure of quick profits is tempting some officials in the capital.
A former adviser to a member of Congress was recently detained with
140 kilograms of cocaine, adding to concerns the political influence
of the traffickers is increasing.

On Sunday, pollster Ipsos-Apoyo released results of a survey that
showed 55% of Peruvians believe narcotics-traffickers and politicians
are closely linked, with the traffickers financing politicians, who
in turn return favors. The survey said that 72% believe the police
have been infiltrated by the traffickers, while 66% think the
judicial system has also been compromised. Fears are growing that
Peru could be headed in the same direction as Mexico, where thousands
have been killed as drug cartels seek to buy off or kill government
and security officials while fighting for lucrative trafficking routes.

In the 1980s, Peru exported mainly coca leaf to Colombia, where it
was processed and trafficked by Colombian cartels. Experts say the
Colombians have been replaced by Mexican cartels shipping out fully
processed cocaine from Peru, with some cash laundered locally through
foreign-exchange companies and real-estate deals.

"Today we are processors of cocaine. Mexican officials tell me there
are branches of the Mexican cartels in Peru," former President
Alejandro Toledo said in a recent broadcast interview.

Peru has banned in certain areas the use of kerosene, which is used
in manufacturing cocaine from coca leaf.

President Alan Garcia has pushed to crack down on money laundering,
much of which is tied to drug trafficking. And his administration has
promised increased spending for the military and police to undercut
the drug trafficking before it becomes economically or socially destabilizing.

A Peruvian antidrug agency called Devida has sought to carry out
specific measures to fight drug use. But an official said central
government funding promised for 2009 of some $50 million for the
program hasn't been disbursed. [Shifting Sources]

The amount is a pittance compared with the estimated $20 billion
annually that Peruvian cocaine fetches abroad.

Peru's Foreign Minister Jose Antonio Garcia Belaunde said he will
present to the United Nations this month a proposal to increase
international aid for nations fighting against drug trafficking. "The
most important thing is to give narcotics trafficking a priority in
Peru's foreign affairs and to increase cooperation," he said.

Many observers are skeptical. "There's no political will," said Jaime
Antezana, who has researched Peru's coca-leaf and cocaine production
for 14 years. He said the government's paltry antidrug budget is
concentrated in the coca-growing Apurimac-Ene River Valley, ignoring
that cocaine is being produced around the country. "Drug-trafficking
is a nationwide problem," he said.

The recent attacks against Peru's security forces have even raised
concerns about a resurgence of the Shining Path guerrilla group,
which has mutated from a 1980s-Maoist insurgency bent on overthrowing
the government to what analysts call armed protection for trafficking cartels.

"Peru must guard against a return to the days when terrorists and
insurgents, like the Shining Path, profited from drugs and crime,"
said the U.N. agency's director, Antonio Maria Costa.

Complicating matters is that coca production is legal in Peru, where
the coca leaf has been consumed for centuries. Experts note, however,
that only a tenth of the coca leaf produced is used domestically,
with the rest being transformed into cocaine. Possession of small
amounts of cocaine, and other drugs for personal use, is legal in Peru.