WASHINGTON: RP NOW A DRUG SMUGGLER'S HAVEN

Calling the Philippines a "drug smuggler's paradise," the US State
Department said the illegal drug trade in the country has evolved into
a billion-dollar industry.

The Philippines also continues to experience an increase in foreign
organized criminal activities from China, Hong Kong and Taiwan, the
department said in its annual report on the worldwide illegal drug
trade.

The US Department of State's 2006 International Narcotics Control
Report, released this month, is a requirement of the US Congress.

It describes the efforts of countries to combat the illicit
trade.

According to its report on the Philippines, local rebel groups source
part of their funding from trafficking narcotics and arms, as well as
money laundering through alleged ties to organized crime.

The report also referred to the Philippines as a regional financial
center where most of the narcotics trafficking transiting through the
country is exchanged using letters of credit.

"There is little cash and negligible amounts of US dollars used in the
transactions, except for the small amounts of narcotics that make it
all the way to the United States for street sale. Drugs circulated
within the Philippines are usually exchanged for local currency," the
US report said.

While official Philippine government arrest and seizure statistics
reflect an overall decline in seizures - except in the case of
chemicals used for manufacturing illegal drugs - the State Department
said this may reflect an effort by the Philippine government at
providing more accurate statistical reporting to correct inflated
claims of previous years, rather than less success in curbing illegal
narcotics.

The Philippine government continues to develop a dedicated
counter-narcotics capability through the Philippine Drug Enforcement
Agency, established in 2002.

Based on the quantity of seizures in 2005, the US report said the
Philippines continued to be a leading producer of crystal
methamphetamine.

It also noted evidence indicating links between terrorist
organizations and drug trafficking.

Domestic production of crystal methamphetamine, locally known as
"shabu," exceeds demand, with most of the shabu-making smuggled into
or illegally diverted after importation into the Philippines from China.

The Philippines also serves as a transshipment point for
foreign-manufactured shabu to Australia, Canada, Japan, Korea and the
United States.

The US report also said Philippine authorities continue to encounter
difficulties stopping production because plantations are often in
areas inaccessible to vehicles or controlled by rebel groups.

The report noted that corruption and inefficiency among government
officials has also complicated eradication efforts.

The State Department added that ecstasy is also gaining popularity as
a recreational drug in the Philippines.

Philippine authorities report ecstasy use among young, prosperous
adults, particularly in bars and clubs. Anecdotal reports cite
increased availability, but police action did not increase in 2005.

A rise in the abuse and illicit conversion of ketamine hydrochloride
(ketamine) in the Philippines was also reported.

Ketamine, generally used as an animal tranquilizer, was classified as
a "dangerous drug" by the Philippine Dangerous Drugs Board in 2005,
but several illegal ketamine laboratories were dismantled even before
the reclassification.

"The major developments in 2005 were counter-narcotics policy changes,
especially the classification of ketamine as a dangerous drug and the
greater emphasis on precursor chemicals in counter-narcotics
strategy," the US report said.

The report also pointed that counter-narcotics law enforcement in the
Philippines is a high priority, but suffers from a lack of resources.

However, law enforcement efforts were considered effective within the
confines of their inadequate funding.

In 2005, the Philippine government claimed to have seized narcotics
worth approximately $85,323,555; arrested 15,268 people for drug
related offenses; and ultimately filed criminal charges in 10,241 drug
cases. These numbers are all down from previous years.

The State Department report also cited major evidentiary and
procedural obstacles in building effective narcotics cases.

Restrictions on the gathering of evidence hinder narcotics
investigations and prosecution.

Philippine laws regarding electronic surveillance and bank secrecy
regulations also constrain the ability of prosecutors to build
narcotics cases.

Throughout 2005, Philippine authorities linked drug trafficking
activities to terrorist organizations. The Abu Sayyaf, considered a
terrorist organization by Washington and the European Union, allegedly
runs a protection racket for foreign trafficking syndicates, the US
report said.

The Communist Party of the Philippines and its armed wing, the New
People's Army, allegedly receive payoffs for providing safe haven and
security for marijuana growers in the northern Philippines and collect
"revolutionary taxes" on the sale of drugs.

Philippine authorities dismantled seven clandestine methamphetamine
laboratories in 2005, down from 11 in 2004 and 2003.

The US report said this decline may reflect a diversion of operational
resources in the face of the government's new emphasis on ketamine.

The report noted that "corruption among the police, judiciary, and
elected officials continues to be a significant impediment to
Philippine law enforcement efforts."

"The Philippines is a narcotics source and transshipment country.
Illegal drugs enter the country through seaports, economic zones, and
airports. With over 36,200 kilometers of coastline and 7,000 islands,
the Philippine archipelago is a drug smuggler's paradise," the report
said.