THE OPPENHEIMER REPORT

TIME TO REVISE U.S. WAR ON DRUGS

The bloody social protests by coca growers and leftist labor unions that
toppled Bolivia's elected government last week should open a serious debate
in Washington -- whether it's time to rethink the U.S. war on drugs.

I'm not advocating the legalization of illicit drugs in America nor the
abandonment of U.S. drug interdiction efforts overseas.

But the death of up to 80 people in street protests last week and the
subsequent collapse of former President Gonzalo Sanchez de Lozada's elected
government raises questions about the wisdom of maintaining a U.S. policy
that demands the forced eradication of coca plantations without offering
equally attractive solutions to poverty-stricken peasants.

In an interview in his first hours of exile in the United States, Sanchez de
Lozada told me that Bolivia's illegal coca export industry generated an
estimated $500 million a year in its heyday in the late 1990s, while the
country's legal export income was about $1.5 billion.

But when Bolivia successfully eradicated most illegal coca fields and
cracked down on cocaine trafficking rings over the past four years, the
country's total income fell substantially. Despite promising efforts to
develop alternative crops such as hearts of palm, bananas and pineapple,
Bolivia could never make up for its lost coca export income, he said.

''Bolivia has done a tremendous effort, but has paid a heavy price for it,''
the former president told me. ``Although coca was an illegal activity, it
amounted to a significant contribution to the economy.''

OTHERS SKEPTICAL

While Sanchez de Lozada still defends the U.S.-backed alternative crop
programs, which he said have succeeded in getting 60 percent of the peasants
in the coca-producing southern region of Chapare to grow legal crops, other
former Bolivian and U.S. officials are more skeptical.

The biggest mistake of current U.S. policy is its underlying assumption that
you can turn coca growers into hearts of palm farmers, they say. To begin
with, most coca growers are not farmers: most of them -- including their
leader, hard-line leftist Evo Morales -- are former miners from the
highlands who moved to the Chapare plains in the 1980s, lured by the easy
money of coca growing.

During the first half of the 20th century, Bolivia had been a major exporter
of silver, tin and other metals. When prices of precious metals collapsed in
the second half of the past century, tens of thousands of unemployed miners
moved from the mines near the cities of Oruro and Potosi to the plains of
the Chapare region to grow coca, which was then exported to Colombia.

By 1997, Bolivia was the world's largest coca exporter, producing 270 metric
tons a year.

PRODUCTION DROPPED

But by 2002, because of the U.S.-backed coca leaf eradication programs and
successful efforts by Peru to interdict passing drug planes, Bolivia's coca
production dropped to about 20 metric tons. Much of the coca growth business
moved to Colombia.

But the problem with Bolivia's U.S.-backed coca eradication policies was
that many of Bolivia's 50,000 families of coca growers, or cocaleros, who
were asked to shift from coca to legal crops could never see a benefit in
doing so: hearts of palm or banana crops yielded only 20 percent of the
profits of coca and demanded 10 times more work.

While growing coca is a simple procedure that basically demands planting a
seed and harvesting, hearts of palm or banana crops require fertilizers and
constant care.

POSSIBLE OPTIONS

Judging from what I heard from many experts, Washington may do better
promoting tourism and manufacturing investments -- rather than alternative
crops -- in Bolivia. It should consider giving Bolivian exporters of shoes,
textiles and other goods long-term preferential access to the U.S. market,
or call for an international Marshall Plan to help industrialize Bolivia,
before a new coca growers' revolt turns into the first narco-dictatorship of
the Americas.

Even the former U.S. ambassador to Bolivia, Manuel Rocha, who served there
from 2000 to 2002 and was applauded in Washington for meeting the ambitious
U.S. coca-eradication goals, told me this week that ``perhaps it's time to
take a fresh look at alternative development.''

''A private-sector approach may yield better results than the current
approach, which tries to turn former miners-turned-cocaleros into
independent farmers,'' Rocha said. ``Obviously, in many cases it's not
working.''