U.S. Department of State
1996 International Narcotics Control Strategy Report, March 1997

United States Department of State

Bureau for International Narcotics and Law Enforcement Affairs

EXECUTIVE SUMMARY

Next Steps

Though the drug trade is powerful, we have shown that it is far from invincible. It cannot exist independently of the governments in whose territories it operates. We will continue to attack the drug trade at four critical points: at the source, by eliminating drug crops; in processing, by destroying labs and disrupting the flow of the necessary processing chemicals; in the distribution system, by interdicting large drug shipments; and in its financial dealings, by interrupting drug money flows. It is most vulnerable at the crop cultivation and financial operations stages. We already have programs to eradicate crops. We will be making these more effective. But we need now also to strengthen our collective efforts against the illegal drug conglomerates' financial operations.

Cutting Off the Money Flow. The drug trade in effect operates a self-perpetuating wealth creation process that transforms a crude, common natural product into one of the world's most lucrative commodities. But this process can only function when fueled by a steady flow of drugs to generate the money the drug syndicates require to stay in business. And the trafficking organizations can only remain viable with ready access to the money necessary to buy and process the drugs. Since the drug trade, like a legitimate enterprise, partially finances future growth by borrowing against future earnings, every metric ton of drugs that does not make it to market represents a potential loss of tens of millions of dollars in essential revenue. At the same time, blocked revenues cannot be reinvested in new drug crops, arms, bribes and other vital requirements for survival. By cutting off one or both of these critical ingredients for long enough, we can weaken and perhaps eventually destroy today's drug syndicates.

When it comes to cashing in its profits, the drug trade is a prisoner of its success. To be useful, drug profits must eventually pass through legitimate international banking channels subject to government oversight. Like a tank rolling up to a drive-in teller, the huge profits that make drug trafficking so powerful would be hard for most banks to miss. These are not low profile transactions. Though we have seen a great improvement in the willingness of many governments to examine suspicious transactions, there are still too many countries where the drug trade can safely bank or invest its gains. We will work closely with governments bilaterally and through the Financial Action Task Force to improve oversight mechanisms, implement tougher money laundering laws, and develop means of quickly identifying, freezing, and seizing drug profits before they can be invested. We will also review further sanctions under the International Economic Emergency Powers Act to keep the drug trade from exploiting legitimate companies for criminal purposes. Drug trafficking may lose some of its appeal if there is nowhere to spend the profits.

We must therefore reduce and eventually eliminate illicit drug crops altogether. At the same time, we must improve cooperative law enforcement efforts to dismantle trafficking organizations, to control drug-essential chemicals, and to keep drugs from entering the pipeline. We must press for serious judicial reform to put and keep traffickers in jail, and, where appropriate, to extradite them to countries where they can receive an impartial trial. We must find better ways of targetting the drug trade's profits, while strengthening asset seizure laws and reducing bank secrecy. And we must develop profitable, legitimate alternatives to drug crops, while increasing drug awareness, education, and prevention activities.

Finally, all governments must recognize that international stability and national sovereignty will never be secure as long as the drug trade prospers. The drug trade survives by a strategy of "corrupt and divide". It needs a secure operating environment where a weak or venal government will let it raise its crops, refine and move its drugs to market, and shelter its profits. Its nightmare is a tight circle of committed governments that leave it no emergency haven for operations. So far it has not had to worry unduly; since even well-intentioned governments can be hobbled by corruption, particularly in times of economic and political instability.

A fundamental goal of our diplomatic strategy is to make democratic governments recognize that the drug trade threatens their national survival as greatly as any insurgent movement or external enemy. While the United States will continue to provide the international leadership and a large share of the resources to eliminate drugs, our democratic allies must also recognize that ultimately national self-interest alone must determine counternarcotics policy. For, in the end, it is not only the fate of one regime that is at stake; it is the future of democratic government itself.