BRAZIL: BRAZIL'S EMERGING MARKET: CRACK

Hampered in the U.S., Drug Traffickers Find a Replacement; Skeletal
'Zombies' Rule Sao Paulo's Cracolandia After Dark.

SAO PAULO, Brazil--A crack cocaine outbreak reminiscent of the one
that devastated U.S. inner cities in the 1980s is starting to take
hold in this South American nation, as drug traffickers facing more
difficulty selling into the U.S. are pioneering markets elsewhere.

In Sao Paulo, Brazil's biggest city, what to do about the hundreds of
zombielike addicts who by night wander a downtown no man's land known
as Cracolandia, or Crackland, has become a key issue for local
elections this year. But mayors from Rio de Janeiro to outposts in
the Amazon lament that dangerous cracklands are sprouting in their
cities as well.

Underscoring the difficulty of a controversial bid to remove crack
use from Sao Paulo's downtown, police units Friday descended on
dozens of users who had returned overnight to a desolate city block
that had been cleared in a previous raid. Among the arrests: a
15-year-old boy carrying 1,500 crack "rocks," cash and cellphones.

Rio's mayor said this month he would create a special crack police
that could be deployed to the hardest-hit slums. In December,
President Dilma Rousseff said the nation will spend around $2.5
billion by 2014 to combat crack nationwide.

Brazil illustrates a global trend. Cocaine traffickers are
successfully exploring new markets to offset steep declines in U.S.
cocaine use in recent years. Though the U.S. is still the world's
biggest cocaine market, its share is shrinking as the result of
greater domestic spending on prevention, stronger enforcement, and
users switching to other drugs, authorities say.

As the illegal cocaine business recalibrates to U.S. progress in
fighting it, cocaine production is migrating from Colombia, a close
U.S. ally in combating drugs, to Peru and Bolivia, where populist
leaders have less interest in combating it. As much as 80% of cocaine
in Brazil comes from Bolivia, Brazilian police say. Brazil's national
police now works closely with the U.S. Drug Enforcement
Administration agents to develop strategies for slowing the flows.

Users in the U.S. consumed some 165 metric tons of cocaine in 2008,
down from 267 metric tons in 1998. Traffickers offset these declines
mainly by expanding markets in Western and Central Europe, where
cocaine use grew to 126 metric tons in 2008 compared to 63 metric tons in 1998.

Traffickers are reaching increasingly down to emerging-market
countries such as Brazil, Argentina and Uruguay, where consumption is
also rising. In the case of Brazil, the country has doubled as a
transit route to the growing markets of Europe, adding to the
quantities of cocaine moving through the country.

Brazil's 900,000 cocaine users makes the country one of the world's
biggest markets for the drug. For dealers, the profits are smaller,
but the risk of prosecution and jail is also much lower than in the
U.S., experts say.

"Drug-trafficking organizations seek the path of least resistance,
and Brazil is becoming a replacement market," said Bo Mathiasen, a
senior United Nations drug official based in Brasilia.

U.N. drug officials say the most recent trend is a push to ship
cocaine east to a growing population of users in South Africa, as
well as west from Bolivia, through Chile and on to potential growth
markets in Australia and New Zealand, said Mr. Mathiasen.

The rise of crack is an ominous development in the trend. Powerfully
addictive and sold in cheap nuggets to users who can't afford
powdered cocaine, crack's inroads may stress creaky public-health
systems and exacerbate already-high crime rates in Brazilian cities,
experts say. In Sao Paulo, robberies are up near Cracolandia.

Dealers in Rio, which will host the 2014 soccer World Cup finals,
appeared to be trying to tap Brazil's love of the game to market
their wares. Police raiding a favela, or shantytown, in Rio on Jan.
11 confiscated crack rocks in packaging emblazoned with the face of
Ronaldinho, one of Brazil's most prominent stars.

Studies conducted in the U.S. linked crack use with rises in violent
crime and HIV infection in U.S. cities such as Washington and New
York in the 1980s. U.S. crack use declined sharply in the 1990s, and
a debate remains as to whether law enforcement caused it to fall, or
whether the brutal toll crack takes on its users led the epidemic to
burn itself out.

To be sure, crack cocaine has been in Brazil for years, and the
rundown blocks around Sao Paulo's Victorian-era Luz train
terminal--the area now called Cracolandia--have been a skid row for
longer. But by all accounts, both the local population of users and
the supply of crack are exploding.

Before the military police moved in, radio traffic reports
occasionally noted when throngs of crack users were overflowing into
nearby thoroughfares and blocking transit. Nearby shop owners rue the
garbage strewn on most street corners, a sign of users sifting for
something to eat or sell.

"They are people who are dying on their feet, like zombies," says
Angelo Jose Odines, an underwear wholesaler in the area for four
decades who doesn't plan to move. "The key is leaving this district
before nightfall."

On a recent night, mobs of skeletal figures ambled in darkened
streets. Some draped filthy blankets over their shoulders or heads in
the drizzly chill. They swarmed when a dealer arrived. Flames flared
from crack pipes in the darkness. Police cars patrolled slowly but
didn't intervene.

The experience of Washington Pereira Ramos, a rail-thin 40-year-old
user with sunken cheeks, underscores crack's pull. He said he usually
spends several days awake using the drug, stopping to beg for the $2
he requires for a hit. When he sleeps, he does it for a day straight
under a highway overpass. He eats from the garbage, or an occasional
soup served at a church, to save all his centavos for crack.

"Crack is like my wife, and I've loved it since my first taste," Mr.
Ramos said.

A campaign to clear Cracolandia began on Jan. 3. Police arrested
dozens and recovered large quantities of crack. Workers demolished
some buildings used as crack dens and bricked in others. But critics
note that Mr. Ramos and other users simply spread out along the edges
of the operation. The simple reason is they have nowhere to go: Most
treatment centers are full, and others are yet to be built. Dealers,
many of whom are users themselves, arrive to make sales unimpeded.

The "pyrotechnic" intervention only "dispersed groups of homeless,"
Marta Suplicy, a former Sao Paulo mayor from Ms. Rousseff's Workers
Party, wrote in a major Sao Paulo daily newspaper earlier this month.
Analysts say the drug issue will feature in this year's Sao Paulo
mayoral race--a key test for parties ahead of the 2014 national election.

Activists for the poor and homeless have blasted heavier policing as
inadequate for dealing with the problem if treatment for addicts
isn't part of the mix. Police officials defend their action as the
beginning of a long-term effort to provide security. Officials note
that more treatment centers are due to come online soon and that a
police presence must be part of any solution.

Some local business owners suggested police action had more to do
with real-estate speculation than stopping drug use. The crack
problem is simply being relocated to make way for development plans
around the train station, says Gilson Vieira da Silva, who runs a
business selling used computers a few blocks from the crack center.

Inside the Hotel Imperial, one of a string of downtown establishments
notorious for crack-related prostitution, the burned odor of crack
smoke hung in the air. A group of young men with gold chains and
gelled hair hanging around the front desk said business was as usual.

At Cristolandia, a crack outreach center set up by an evangelical
church, business is booming. The group has opened three new centers
in the past year, says Jose Roberto Souza, who manages the operation.

"Because the drug epidemic is so new, people aren't ready for dealing
with crack addicts, which is a whole different game from dealing with
people hooked on other drugs," he said.