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TRANSNATIONAL DRUG ENTERPRISES: THREATS

TO GLOBAL STABILITY AND U.S. NATIONAL SECURITY FROM SOUTHWEST ASIA, LATIN AMERICA, AND WEST AFRICA

HEARING

BEFORE THE

SUBCOMMITTEE ON NATIONAL SECURITY

AND FOREIGN AFFAIRS

OF THE

COMMITTEE ON OVERSIGHT

AND GOVERNMENT REFORM

HOUSE OF REPRESENTATIVES

ONE HUNDRED ELEVENTH CONGRESS

FIRST SESSION

OCTOBER 1, 2009

Serial No. 111–61

Printed for the use of the Committee on Oversight and Government Reform

(

Available via the World Wide Web: http://www.gpoaccess.gov/congress/index.html

http://www.house.gov/reform

(II)

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

EDOLPHUS TOWNS, New York, Chairman

PAUL E. KANJORSKI, Pennsylvania

CAROLYN B. MALONEY, New York

ELIJAH E. CUMMINGS, Maryland

DENNIS J. KUCINICH, Ohio

JOHN F. TIERNEY, Massachusetts

WM. LACY CLAY, Missouri

DIANE E. WATSON, California

STEPHEN F. LYNCH, Massachusetts

JIM COOPER, Tennessee

GERRY E. CONNOLLY, Virginia

MIKE QUIGLEY, Illinois

MARCY KAPTUR, Ohio

ELEANOR HOLMES NORTON, District of

Columbia

PATRICK J. KENNEDY, Rhode Island

DANNY K. DAVIS, Illinois

CHRIS VAN HOLLEN, Maryland

HENRY CUELLAR, Texas

PAUL W. HODES, New Hampshire

CHRISTOPHER S. MURPHY, Connecticut

PETER WELCH, Vermont

BILL FOSTER, Illinois

JACKIE SPEIER, California

STEVE DRIEHAUS, Ohio

——— ———

DARRELL E. ISSA, California

DAN BURTON, Indiana

JOHN L. MICA, Florida

MARK E. SOUDER, Indiana

JOHN J. DUNCAN, JR., Tennessee

MICHAEL R. TURNER, Ohio

LYNN A. WESTMORELAND, Georgia

PATRICK T. MCHENRY, North Carolina

BRIAN P. BILBRAY, California

JIM JORDAN, Ohio

JEFF FLAKE, Arizona

JEFF FORTENBERRY, Nebraska

JASON CHAFFETZ, Utah

AARON SCHOCK, Illinois

BLAINE LUETKEMEYER, Missouri

RON STROMAN, Staff Director

MICHAEL MCCARTHY, Deputy Staff Director

CARLA HULTBERG, Chief Clerk

LARRY BRADY, Minority Staff Director

SUBCOMMITTEE ON NATIONAL SECURITY AND FOREIGN AFFAIRS

JOHN F. TIERNEY, Massachusetts, Chairman

CAROLYN B. MALONEY, New York

PATRICK J. KENNEDY, Rhode Island

CHRIS VAN HOLLEN, Maryland

PAUL W. HODES, New Hampshire

CHRISTOPHER S. MURPHY, Connecticut

PETER WELCH, Vermont

BILL FOSTER, Illinois

STEVE DRIEHAUS, Ohio

STEPHEN F. LYNCH, Massachusetts

HENRY CUELLAR, Texas

MIKE QUIGLEY, Illinois

JEFF FLAKE, Arizona

DAN BURTON, Indiana

JOHN L. MICA, Florida

JOHN J. DUNCAN, JR., Tennessee

MICHAEL R. TURNER, Ohio

LYNN A. WESTMORELAND, Georgia

PATRICK T. MCHENRY, North Carolina

JIM JORDAN, Ohio

JEFF FORTENBERRY, Nebraska

BLAINE LUETKEMEYER, Missouri

ANDREW WRIGHT, Staff Director

(III)

C O N T E N T S

Page

Hearing held on October 1, 2009 ............................................................................ 1

Statement of:

Olson, Eric L., senior advisor, security initiative, Mexico Institute, Woodrow Wilson International Center for Scholars; David Mansfield, research fellow, Carr Center for Human Rights, John F. Kennedy School

of Government, Harvard University; Douglas Farah, senior fellow,

International Assessment and Strategy Center; and Vanda Felbab–

Brown, fellow, 21st Century Defense Initiative, Brookings Institute ...... 4

Farah, Douglas .......................................................................................... 32

Felbab–Brown, Vanda, .............................................................................. 50

Mansfield, David ....................................................................................... 16

Olson, Eric L. ............................................................................................. 4

Letters, statements, etc., submitted for the record by:

Farah, Douglas, senior fellow, International Assessment and Strategy

Center, prepared statement of ..................................................................... 35

Felbab–Brown, Vanda, fellow, 21st Century Defense Initiative, Brookings

Institute, prepared statement of .................................................................. 52

Mansfield, David, research fellow, Carr Center for Human Rights, John

F. Kennedy School of Government, Harvard University, prepared statement of ........................................................................................................... 18

Olson, Eric L., senior advisor, security initiative, Mexico Institute, Woodrow Wilson International Center for Scholars, prepared statement of .... 7

(1)

TRANSNATIONAL DRUG ENTERPRISES:

THREATS TO GLOBAL STABILITY AND U.S.

NATIONAL SECURITY FROM SOUTHWEST

ASIA, LATIN AMERICA, AND WEST AFRICA

THURSDAY, OCTOBER 1, 2009

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON NATIONAL SECURITY AND FOREIGN

AFFAIRS,

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM,

Washington, DC.

The subcommittee met, pursuant to notice, at 10 a.m., in room

2154, Rayburn House Office Building, Hon. John F. Tierney (chairman of the subcommittee) presiding.

Present: Representatives Tierney, Flake, Murphy, Welch,

Quigley, and Luetkemeyer.

Staff present: Adam Hodge, deputy press secretary, full committee; Andy Wright, staff director; Elliot Gillerman, clerk; Talia

Dubovi, counsel; Brendan Culley and Steven Gale, fellows; Rachel

Charlesworth and Jesse Schwartz, interns; Adam Fromm, minority

chief clerk and Member liaison, Mitchell Kominsky, minority counsel; Christopher Bright, minority senior professional staff member;

and Glenn Sanders, minority Defense fellow.

Mr. TIERNEY. Good morning. A quorum now being present, the

Subcommittee on National Security and Foreign Affairs’ hearing

entitled, ‘‘Transnational Drug Enterprises: Threats to Global Stability and U.S. National Security from Southwest Asia, Latin

America, and West Africa,’’ will come to order.

I ask unanimous consent that only the chairman and ranking

member of the subcommittee be allowed to make opening statements. Without objection, that is so ordered.

I ask unanimous consent that the hearing record be kept open

for 5 business days so that all members of the subcommittee will

be allowed to submit a written statement for the record. Without

objection, that is so ordered.

Today, the Subcommittee on National Security and Foreign Affairs turns its attention to a longstanding and growing threat to

U.S. national security, the transnational illicit drug trade.

Illicit drugs from Mexico, Latin America, and the Caribbean are

no strangers to our shores. The issue of illicit drugs is also no

stranger to this House and Congress. In March of this year, we

held a hearing on Money, Guns, and Drugs to examine whether

U.S. inputs were fueling drug-related violence on the U.S.-Mexico

border. This subcommittee has also held numerous hearings on AfVerDate 11-MAY-2000 16:19 Sep 09, 2010 Jkt 000000 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 U:\DOCS\57624.TXT KATIE PsN: KATIE
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ghanistan, producer of 95 percent of the world’s poppy crop that

forms the basis of the heroin trade.

Today’s hearing builds on that record. It raises a central question

about the relationship between the global illicit drug enterprises

and their collective threat to our national security. The United

States has had a geographic or country-specific drug control strategy ranging widely from the Balkan States of Eastern Europe to

Colombia, Guatemala and Mexico, and more recently to West Africa. While each country’s conditions dictate a unique drug control

strategy, today’s hearing examines some of the underlying trends

and the related implications for U.S. national security.

There is compelling evidence that illicit drugs create enormous financial power that allows traffickers to corrode government institutions. Bribes undermine confidence in the very institutions we rely

on to protect us as corruption reaches judges, prosecutors, police,

and correctional officers. When bribes fail, traffickers use ruthless

violence and unrelenting intimidation to expand their illegal enterprises.

Over time, bribes, violence, and intimidation take their toll, especially in weak states. The net effect of these assaults is to undermine a nation’s rule of law, cripple its civic institutions, and reinforce the public’s view that government is ineffective. The downward spiral of drug money, violence, and intimidation, once it has

begun, is difficult to reverse in weak states.

But this is just half the story. With a degraded or weakened rule

of law environment, non-drug actors from the criminal world and

their transnational counterparts step in and further exploit an already unstable situation. While drug trafficking may be the most

lucrative component of transnational crime, it is hardly the only

line of business. Money laundering, weapons trafficking, commercial espionage, human trafficking, smuggling, and piracy all flourish alongside illicit drug enterprises. Further declines in the rule

of law, public confidence, and national governance are the consequence.

The magnitude of money from illicit drugs probably cannot be

underestimated. The United Nations Office on Drugs and Crimes

estimates that the global proceeds from illicit drugs range between

$100 billion to more than $1 trillion per year. Illicit drug money

flows have been estimated to be the largest segment of the Afghan

GDP, just over 50 percent in 2007. In West Africa’s Guinea-Bissau,

it has been reported that drugs and drug-related money is the single biggest slice of their gross domestic product, and growing.

Drug trafficking, wherever it thrives, presents a serious threat to

the national sovereignty of the afflicted state. But it is the intersection of drugs with other illegal transnational threats, especially terrorism, that makes it so treacherous. This so-called drug-terror

nexus links the monetary proceeds from drugs with filling the coffers of terrorist organizations like the FARC in Colombia, the

Taliban in Afghanistan, and Al Qaeda in the Islamic Maghreb.

According to the latest U.S. intelligence, terrorist groups in more

than a dozen countries across three continents are significantly

bankrolled by illicit drug moneys. According to the Drug Enforcement Administration, 19 of the 43 groups the United States desVerDate 11-MAY-2000 16:19 Sep 09, 2010 Jkt 000000 PO 00000 Frm 00006 Fmt 6633 Sfmt 6633 U:\DOCS\57624.TXT KATIE PsN: KATIE
3

ignated as Foreign Terrorist Organizations in 2007 were involved

in the drug trade or other criminal activities.

In addition, drug trafficking organizations’ efforts to weaken or

topple local governments significantly undermines our ability to

achieve vital diplomatic, development, and economic assistance

goals overseas. Threats from these groups not only test state stability, but also undermine the goals of regional political bodies like

the Organization of American States and boldly challenge international institutions like the United Nations.

At today’s hearing we will learn from experts about the linkages

between illicit drugs, weak states, and the U.S. national security

in the context of Latin America, Afghanistan, and West Africa. The

subcommittee plans to hold a second hearing with the relevant government agencies and departments to examine the U.S. national

drug control strategy and the planned use of the nearly $15 billion

that has been requested for that purpose this year.

With that, I turn to Mr. Flake for his opening remarks.

Mr. FLAKE. I thank the chairman. He made the point that it is

the intersection of drugs and money that it garners for terrorist activities and other things that are most concerning to us. I am particularly interested in illicit drugs in Mexico affecting the border

region like Arizona—I am sure Mr. Olson will have some things to

say about that—and also the situation in Afghanistan, obviously,

with narcoterrorism there.

So I welcome the witnesses. Thank you for taking the time to

come here, and look forward to the hearing.

Mr. TIERNEY. Thank you.

This morning we will receive testimony from the witnesses, but

before they begin, I would just like to give a brief introduction of

each, starting from my left.

Mr. Eric Olson serves as a senior advisor on security at the Mexico Institute of the Woodrow Wilson International Center for Scholars. He has specialized in the America’s region, but he has also

worked on human rights issues in Africa, Asia, and the Middle

East. From 2006 to 2007, he served as a senior specialist at the Organization of American States, and from 2002 to 2006 as Amnesty

International’s Advocacy Director for the Americas. He holds an

M.A. from American University.

Mr. David Mansfield is a fellow with the Carr Center for Human

Rights at Harvard University’s Kennedy School of Government. He

also works as an independent consultant for a range of organizations, including the United Kingdom Government, the World Bank,

and various non-governmental organizations on policy and operational issues with regard to illicit drugs in Afghanistan and on alternative livelihoods. He has previously worked on overseas drug

and development issues in each of the major drug producing regions in South and Southeast Asia and Latin America.

Mr. Douglas Farah is a senior fellow at the International Assessment and Strategy Center. In 2004, he worked for 9 months with

the Consortium for the Study of Intelligence, studying armed

groups and intelligence reform. For the two decades before that, he

was a foreign correspondence and investigative reporter for the

Washington Post and other publications covering Latin America

and West Africa. From 2000 to 2004, he was the Washington Post

4

West African bureau chief based in the Ivory Coast. He holds a

B.A. and a B.S. from the University of Kansas.

Dr. Vanda Felbab-Brown serves as a fellow at the 21st Century

Defense Initiative at the Brookings Institution, where she specializes in the interactions between illicit economies and military conflict. Dr. Felbab-Brown also serves as an adjunct professor in the

Security Studies Program at Georgetown University’s Walsh School

of Foreign Service, where she was an Assistant Professor prior to

assuming her current position at Brookings. She holds a B.A. from

Harvard University and a Ph.D. from the Massachusetts Institute

of Technology.

So I want to thank all of you for bringing your substantial credentials and your experience here before the committee today. It is

the policy of the committee to swear witnesses in before they testify, so I ask that you please stand and raise your right hands.

[Witnesses sworn.]

Mr. TIERNEY. I ask that the record reflect that all of the witnesses answered in the affirmative.

As I mentioned to you before the hearing, your written remarks

will be placed in the record, and I will share with Mr. Flake that

I read the remarks, as you have, and I think, if they were to give

them here today, it would be about 35 minutes each. So I have

asked everybody to condense that as close to 5 minutes as possible,

and then we will have some questions and answers from our members of the panel here.

So, Mr. Olson, can we begin with you, please?

STATEMENTS OF ERIC L. OLSON, SENIOR ADVISOR, SECURITY

INITIATIVE, MEXICO INSTITUTE, WOODROW WILSON INTERNATIONAL CENTER FOR SCHOLARS; DAVID MANSFIELD, RESEARCH FELLOW, CARR CENTER FOR HUMAN RIGHTS, JOHN

F. KENNEDY SCHOOL OF GOVERNMENT, HARVARD UNIVERSITY; DOUGLAS FARAH, SENIOR FELLOW, INTERNATIONAL

ASSESSMENT AND STRATEGY CENTER; AND VANDA FELBAB–

BROWN, FELLOW, 21ST CENTURY DEFENSE INITIATIVE,

BROOKINGS INSTITUTE

STATEMENT OF ERIC L. OLSON

Mr. OLSON. Thank you, Chairman Tierney and Ranking Member

Flake. It is my pleasure to appear before you today and the distinguished members of the subcommittee on behalf of the Mexico Institute at the Woodrow Wilson International Center for Scholars.

Established by an act of Congress in 1968, the Wilson Center is

our Nation’s official living memorial to President Woodrow Wilson.

As both a distinguished scholar, the only American President with

a Ph.D., and a national leader, President Wilson felt strongly that

the scholar and the policymaker were ‘‘engaged in a common enterprise.’’ I hope I can represent successfully President Wilson’s vision

of bringing together the scholarly and the policy dimensions today.

As you have noted already, the tragic and disturbing headlines

about drug violence in Mexico have horrified and alarmed Americans about what is happening to our neighbor and strategic partner

to the south. It raises real questions about the safety of Americans

traveling and for the safety and security of the United States. And

5

given the proximity of the violence, the fact that it spills into the

United States, and that organized crime groups in Latin America

have formed strategic partnerships with organized crime in the

United States, the decision to hold this hearing is not only timely,

but essential.

In the brief time that I have, I would like to talk about three

things: the dimension of the problem of organized crime and

transnational drug trafficking in Latin America, why and how organized crime is able to take root and prosper in the region, and,

finally, a policy framework the United States and governments of

Latin America may want to consider in addressing this problem.

First let me describe the problem a bit. We know that the United

States is still the world’s largest market for illegal drugs. This

enormously lucrative market results in roughly $35 billion, give or

take a billion, in illegal proceeds laundered back to Mexico and Colombia every year. Profit margins are so large, in fact, that according to some drug traffickers they can lose three out of four loads

of cocaine and still turn a profit. Beyond that, it is not profitable.

If we were to take this as fact, it would mean that drug traffickers

could lose 75 percent of their inventory and still turn a profit.

Imagine if Ford or GM could do the same.

According to the 2009 International Narcotics Control Strategy

Report, all cocaine originates in the Andean countries of Colombia,

Bolivia, and Peru. In 2008, the Interagency Assessment of Cocaine

Movement estimated that between 500 and 700 metric tons of cocaine departed South America headed to the United States, slightly

less than was coming up in 2007.

While there are many different ways cocaine is moved from the

Andes to the United States, one method is to employ small private

planes to move the loads from Colombia to Central America, where

bundles are either dumped in the sea and retrieved or planes land

or are purposely crashed on tiny landing strips in remote areas.

Whatever the exact route, roughly 90 percent of cocaine entering

the U.S. transits through Mexico.

In Mexico, there are at least five major drug trafficking organizations, many more splinter groups that are defending their territories, competing with one another, trying to set up new routes.

Some of the recent violence that we have seen in the press is the

result of intra-organizational and inter-organizational conflicts and

competition, as we see second tier lieutenants, spinoff organizations, and cartels competing with each other as the heads or kingpins of a rival group are arrested or assassinated. So there is a lot

of inter-organizational and intra-organizational violence.

A third source of the violence is what one could expect when the

government aggressively pursues them and the cartels, the trafficking organizations fight back, and that is, of course, understandable.

In Colombia, where there has been a major weakening of the

armed guerilla movements, both the FARC and ELN, there is evidence that both continue to be engaged in drug-related activity.

Likewise, the disbanding of the umbrella structure of paramilitary

forces—this is the paramilitary demobilization that President Uribe

undertook—has atomized the fighting forces. But there are new alliances being formed between local commanders, demobilized

6

forces, and drug traffickers. In some instances, the FARC is joining

with a paramilitary and ex-paramilitary to continue trafficking.

Sadly, despite the formal dismantling of the AUC and the weakening of the guerrilla groups, Colombia still remains the largest

cultivator of the coca bush in the hemisphere. Organized crime has

been quite agile in establishing new alliances that fit their business

model, and they could care less about anyone’s particular ideological persuasion, whether communist, leftist, anticommunist, or capitalist. To paraphrase Michael Corleone, it is not ideological, it is

strictly business.

Finally, it is important to point out that organized crime in Latin

America is not limited to drug trafficking, but involves trafficking

in other goods, such as pirated and counterfeit products, autos and

auto parts, and cigarettes, to name a few, as well as illegal activities such as kidnapping, human trafficking, and even ‘‘legitimate’’

or quasi-legitimate businesses and enterprises. In many instances—and this is important—the same organizations that traffic

in illegal drugs also traffic in products such as weapons or people,

or engage in apparently legitimate businesses like real estate and

construction.

Bottom line, there is a two-way flow of trafficked goods, money,

and humans. Drugs and other pirated goods and human trafficking

move north, while money, possibly half of it in cash, weapons,

autos, auto parts, cigarettes move south.

Now, let me say a little bit in the time that is remaining.

Mr. TIERNEY. Mr. Olson, you know what I am going to suggest?

Because, having read yours, I know you have some good suggestions on where to go with this—we will ask that question when the

round comes in, as to where do we go from here. I think you have

laid a great groundwork for why we need to attend to this problem.

Mr. OLSON. OK. Sure.

Mr. TIERNEY. And then if it is fine with you, we will, on the question and answer period, get to your suggestions for a strategy going

forward.

Mr. OLSON. All right. Good.

Mr. TIERNEY. Thank you, sir.

[The prepared statement of Mr. Olson follows:]

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Mr. TIERNEY. Mr. Mansfield.

STATEMENT OF DAVID MANSFIELD

Mr. MANSFIELD. Thank you, Chairman and Ranking Member

Flake. You will have to forgive me, this is a bit of a novelty for me

in the sense that I find myself in unusual surroundings. I have

spent the last 18 years essentially looking at drugs from a rural

development perspective. I am far more used to the company of

opium farmers and traders in Afghanistan.

Mr. TIERNEY. Well, I hope you find our company almost as good.

Could I ask you just to put the mic a little bit more directly in front

of your mouth?

Mr. MANSFIELD. Sure.

Mr. TIERNEY. I think that will be helpful. Thank you. Thank you.

Mr. MANSFIELD. For me, it is clear illicit drugs thrive in marginal areas. These are areas that are marginal economically, politically, environmentally. They are areas that are often in conflict

with what is essentially a weak state. That conflict can be ethnic,

military, and the cultivation takes place in disputed territory, borderlands.

Attempts to address drug production have often involved the government actually penetrating these marginal areas, establishing

state presence in all its functions, not just security apparatus, and

to provide support to the provision of public goods, roads, education, and health, and create an environment for the private sector to work. In Pakistan, this process saw cultivation move from

one area to another as the state extended its writ into these areas,

from Brunair to Gaduna Mazi to Deer to Bijour Mamand. This

process has also been successful in Southeast Asia.

For me, given my background of 12 years in Afghanistan, Afghanistan is the anomaly. In Afghanistan, the bulk of drugs are

grown in areas that are accessible, not remote; it is not the borderlands. These areas have irrigation, fertile soils, and in many cases

the cultivation takes place right next to provincial centers. In Afghanistan, it is not, as in other countries, a weak state trying to

penetrate marginal areas, but a marginal state trying to move beyond its provincial centers.

In Afghanistan, the impact illegal drugs have on U.S. national

security interests are clear, given U.S. strategic interests in Afghanistan and Pakistan, the presence of U.S. troops, and the considerable investment the United States has made in governance

and security and development in the area. But the question is how

to respond and how to respond in a way that does not worsen the

situation. For example, there is no doubt that drugs are ‘‘fueling

the insurgency.’’

But this is not as clear cut as much as the current narrative and

analysis in the media often suggests. Much of the current discussion focuses on the Taliban and drugs, and the funds that they own

from the illegal drugs trade. Estimates range from $70 to $500 million, suggesting there are some calculation issues there. And there

are claims of centralized taxation systems around opium.

What I feel is this discussion neglects the decentralized nature

of the Taliban; the fact that there is no single insurgency, but a

disparate collection of insurgent groups; and, fundamentally, it neVerDate 11-MAY-2000 16:19 Sep 09, 2010 Jkt 000000 PO 00000 Frm 00020 Fmt 6633 Sfmt 6633 U:\DOCS\57624.TXT KATIE PsN: KATIE
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glects that in the south of the country there is a widespread view

that, whether right or wrong, it is corrupt government officials that

are more involved in the drugs trade than the Taliban or groups

associated with them. In this case, we have to question how much

of the insurgency is a reaction to government. After all, people expect insurgents to fund themselves in whatever way possible; theft,

kidnap, drugs. But they don’t expect their government to do so, or

those in government to do so.

The policy response to the current narrative on the Taliban and

drugs funding is to prioritize those traffickers with links to insurgent groups. But does this not potentially increase the market

power of those corrupt officials involved in the drugs trade? If so,

it seems it would do little to reduce the flow of drugs from Afghanistan and actually reduce the legitimacy of the government of Afghanistan in the eyes of the people.

A further example of policy that can potentially exacerbate the

impact of illicit drugs is that of eradication. There have, in the

past, been a push for aggressive eradication, and these calls persist. They may even increase if cultivation increases in the 2009–

2010 growing season, which seems probable. I believe eradication

and the threat of it can play a catalytic role in areas where farmers

have viable alternatives. I have seen it work in districts around

provincial centers in the east and the north of the country.

But where farmers don’t have alternatives—and there are many

areas—due to the resource base that they have or insecurity, alternatives simply don’t exist. In these areas, eradication leads to economic problems and, in consequence, growing insecurity and provides an entry point for insurgent groups. In these areas, development investments are the priority. And we have to recognize a

level of opium cultivation is a reality for some time to come.

Ultimately, there is a need to see illicit drugs in context. We

need to recognize the threat they pose, but we need to ensure that

the response does not exacerbate that. Thank you.

[The prepared statement of Mr. Mansfield follows:]

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Mr. TIERNEY. Thank you. That was well done. Even if you saw

that the trap door didn’t open on Mr. Olson, you still managed to

finish in 5 minutes, so we appreciate that.

Mr. Farah, please.

STATEMENT OF DOUGLAS FARAH

Mr. FARAH. Chairman Tierney and Ranking Member Flake,

thank you for the opportunity to talk about something that I do believe is a true national security threat to the United States, Latin

America, and West Africa.

What we are seeing in globalization is the development of flexible

criminal and terrorist pipelines, where key facilitators are vital to

the operations of both sets of actors and they are highly adaptable

and forward-thinking. These pipelines or recombinant chains of actors and commodities now have the ability to move illicit goods

around the globe to wherever the environment is most tolerant.

The most lucrative commodities, as noted, are cocaine and heroin,

but they are the same pipelines that serve weapons traffickers,

human smugglers, fraud and contraband.

While the cocaine from the Andean region traditionally moved

through Central America, Mexico, and the Caribbean, West Africa

has been a new and extremely challenging part of the distribution

network. The growth of transcontinental drug trafficking structures

in recent years, with the capacity to project their operations from

Latin America to West Africa, is a sobering reminder of the wealth

and creativity of these structures and their ability to coopt already

weak and failing states.

There are several causes of concern for the United States in the

emerging cocaine nexus. The first is the presence of Mexican drug

trafficking organizations, particularly the Sinaloa cartel in West

Africa. The second is the presence of the FARC there. The FARC

in the past decade has morphed into one of the world’s largest cocaine trafficking syndicates, and both the United States and the

European Union have designated it a terrorist organization.

The presence of the Mexican organizations and the FARC in

West Africa and that cocaine pipeline mean that these groups can

repatriate their profits even if the United States were to make significant progress in reducing the flow of drugs across its own

southern border. The market for the drugs may change, but the

beneficiaries of these illicit gains largely remain in Mexico, Colombia, and in our hemisphere.

While the FARC has suffered a series of defeats in the past 18

months, its ability to move cocaine to the U.S. market has been severely curtailed. But with the tolerance, if not complicity, of the

Venezuelan government, the FARC has managed to significantly

reroute its movements from Venezuela to West Africa, with destinations such as Guinea-Bissau, Guinea-Conakry, Sierra Leone,

Liberia, and Ghana.

Another important point is that ungoverned spaces of West Africa are providing a meeting ground for criminal and terrorist groups

to make new alliances. What I have observed in more than two decades of dealing with drug trafficking transnational and criminal organizations is that when they are able to meet in neutral territory,

33

they often form alliances that would not be possible under other

circumstances.

Already in Guinea-Bissau, Guinea-Conakry, Ghana, and Sierra

Leone, we are seeing members of Mexican, Colombian, Venezuelan,

Surinamese, and European organizations operating in the same

territory and plugging into the same pipeline, often commingling

with the Lebanese crime syndicates that control the contraband

and blood diamond trade.

Just as the blood diamond trade allowed groups like the Revolutionary United Front in Sierra Leone to purchase advanced weapons to become a more legal force, the influx of cocaine cash will

allow the criminal and militia groups in the region to acquire more

sophisticated weapons, trainings, and communications. At the same

time, the weak host states have severely limited ability to confront

these groups.

As noted the U.N. Office of Drugs and Crime conservatively esti- mates that 40 to 50 tons of cocaine, with an estimated value of $1.8

billion, passed through West Africa in 2007 and this trade is growing rapidly. The Pentagon’s Africa Command and other intelligence

services estimate the amount of cocaine transiting West Africa to

be at least five times that estimate.

Using U.N. figures, the only legal export from the region that

would surpass the value of cocaine is coca from the Ivory Coast. If

the higher numbers are used, cocaine could dwarf the legal exports

of all the region combined and be worth more than the GDP of several of the region’s nations.

None of this is happening in a vacuum. The changes across the

globe have been swift and dramatic in recent years, with the number of failed states growing from 11 in 1996 to close to 30 today.

More than half of those, 18, are in Sub-Saharan Africa. This trend

is important because these growing areas that are either stateless

or governed by states that are in practice functioning criminal enterprises give rise to hybrid organizations that make the traditional distinctions between terrorism and organized crime, particularly drug trafficking, meaningless.

One of the reasons for the dismal state of governance in West Africa is that since the 1990’s the region has suffered a series of conflicts centered on natural resources, such as diamonds, timber, oil,

and gold. These resources, while valuable, pale in comparison to

the money the cocaine trade generates. For example, at the height

of the blood diamond trade in Sierra Leone and Liberia, the total

value of diamonds being smuggled out was less than $200 million.

The potential to fuel conflicts over the cocaine pipeline, the most

lucrative commodity so far, and one whose profits are several order

of magnitudes larger than diamonds, is truly frightening.

There is a broader potential danger that must be kept in mind

as we assess the emerging trends in West Africa. I mentioned hybrid criminal organizations such as the FARC. In West Africa, it

is Hezbollah, the Lebanese-based Shia Muslim organization that

has long maintained an operational presence on the ground and

has a significant role in the blood diamond trade and other illicit

activities. It is inevitable that these organizations and the drug

trafficking groups will encounter each other and mutually benefit

because each has something the other one wants.

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More worrisome on our hemisphere is evidence of Hugo Chavez’s

direct support for Hezbollah, including the June 18, 2008 OFAC

designations of two senior Venezuelan citizens, including a senior

diplomat, as Hezbollah supporters. Given Iran’s ties to Hezbollah

and Venezuela, Hezbollah’s ties to Iran and the FARC, and the

FARC’s history of building alliances with those groups, and the

presence of Hezbollah and other armed Islamist groups in Latin

America and West Africa, it would be dangerous to dismiss the possibility of an alliance of these actors. The histories of these groups

indicate that they will take advantage of the corrupt and weak

states in West Africa to get to know each other, work together,

learn from each other, and exploit areas of mutual interest. Unfortunately, the primary area of mutual interest is a hatred of the

United States.

And I will leave it there.

[The prepared statement of Mr. Farah follows:]

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Mr. TIERNEY. Thank you, sir. Thank you very much for those remarks.

Doctor.

STATEMENT OF VANDA FELBAB–BROWN

Ms. FELBAB-BROWN. Mr. Chairman, members of the committee,

I am honored to have this opportunity to address the committee on

this important issue. I will focus my comments on some general dynamics of the drug conflict nexus and then provide a comparative

assessment of the significance of these manifestations of the drug

conflict nexus to U.S. national security. And, if time permits, I will

conclude with some recommendations for U.S. policy.

The penetration of illicit economies by terrorist or insurgent

groups provides an especially potent threat to states and regional

stability, since, unlike crime organizations, belligerent groups usually tend to have bigger goals, including to completely eliminate the

existing state’s presence in particular locales or countries.

Illicit economies provide for belligerent groups the opportunity to

increase their power along multiple dimensions, not simply in

terms of financial profits. Financial profits are very important because with increased financial profits belligerent groups can increase their fighting capabilities, hire a greater number of better

paid combatants, buy better weapons, and simplify their logistical

and supply chains; all critical for the conduct of violent opposition

to a state.

But crucially and frequently neglected in policy considerations,

belligerents who participate in illicit economies frequently also obtain what I call political capital, namely, legitimacy with and support from local populations who are dependent on the illicit economy for basic livelihood. And they obtain this political capital by

protecting the populations from government efforts to repress the

illicit economy in the absence of legal livelihoods.

They also provide a variety of other protection and regulatory

services. With this political capital and the ability to provide these

regulatory services and protection services, they have the capacity

to transform themselves from mere violent actors to violent actors

that take on the functions of a protostate.

Although the political capital that belligerents obtain is frequently very thin, it is nonetheless sufficient to motivate the population not to provide intelligence on the belligerents to government,

and this is critical. Such human actionable intelligence is critical

for the success of counterinsurgency and counterterrorism efforts,

as well as for the effectiveness of law enforcement.

Several factors influence the size of the political capital, but, in

a nutshell, it is strongest in areas where the country is poor, the

illicit economy is labor intensive and, hence, can provide employment opportunity for hundreds of thousands, if not millions, of people, thuggish traffickers are present, and the government is suppressing the illicit economy in the absence of legal livelihoods.

Policies that focus on degrading the belligerents’ physical resource, such as stopping their financial flows, are frequently ineffective because it is extraordinarily difficult to attempt to bankrupt

belligerent groups through eradication or interdiction measures.

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Yet, they are also counterproductive if they target the wider population dependent on the illicit economy.

Counternarcotics policies need to be weighed very carefully with

a clear eye toward the counterinsurgency and counterterrorism implications. Seemingly quick fixes, such as blanket eradication, in

the absence of alternative livelihoods, but only strengthen the insurgency, not accomplish the goal of bankrupting the insurgency,

while compromised state building and ultimately counternarcotics

efforts themselves.

Nowhere is the nexus of drugs and insurgency so vital and so

counterproductive for U.S. national primary security interests as is

in Afghanistan. We have already heard that drugs are fueling the

Taliban. They are also corrupting the government and undermining

the legitimacy of the Afghan government. But the seriousness of

the threat and the strategic importance of the stakes do not necessarily imply that aggressive counternarcotics suppression policies

in Afghanistan today are inappropriate policies. Indeed, premature

eradication will only make matters worse, as it has already. So the

Obama administration’s new policy for counternarcotics in Afghanistan gives hope that the deficiency of the existing policies will be

redressed.

Moreover, success in suppressing poppy in Afghanistan may well

increase threats to your security in other ways. Given the persistent global demand and, in fact, increasing global demand for opiates, the illicit economy will simply shift elsewhere. There is a very

good chance and a worrisome chance that poppy will shift back to

Pakistan to the areas that Mr. Mansfield already mentioned, but

also possibly to Kashmir and even parts of Punjab.

In that case, Jihadi groups of the greatest danger would not only

have the capacity to increase their profits, but, most dangerously,

increase their political capital. Right now, all they can afford the

local populations is ideological succor. If the poppy economy shifts

to Pakistan, they will be able to provide real-time benefits and

greatly strengthen the struggle against the state.

Thank you.

[The prepared statement of Ms. Felbab-Brown follows:]

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Mr. TIERNEY. Thank you very much.

We definitely want to get into all the other things that were in

your written remarks, and, if we don’t by the end, we are going to

give you an opportunity to go back and cover anything that you

think we should have questioned about and may not have hit on.

Now, we are going into a section of the hearing where we will

do 5 minutes of questioning per Member. Since there are only

about five or six of us here, I think we may do several rounds on

that, if it is OK with the witnesses.

Let me start by noting, Mr. Olson, you indicate that these people

can lose 75 percent of all their inventory and still report a significant profit.

Dr. Felbab-Brown, you say that there is not a single case where

eradication has ever bankrupted a belligerent into defeat, and that

attempts to turn off income through other systems are highly intelligence and resource intensive.

Mr. Farah, you talk about revenue from drugs far exceeding natural resources like that from diamonds and timber and things, and

indicated that in Colombia it went from 95 percent of the coca produced to 54 percent, but that just meant that Peru and Bolivia

picked up.

So we seem to have this cyclical thing going here. How are we

going to take the profit out of this? Nobody mentioned what I think

is the 800 pound guerilla in the room, which is decriminalization

or legalization of this, just take the profit out of this thing. How

do we take the profit out of this enterprise if we are not going to

do that?

And I will just start with whoever wants to go first on that. Doctor.

Ms. FELBAB-BROWN. Mr. Chairman, it is absolutely critical that

we address global demand for narcotics. This has been the most

under-emphasized component of U.S. counternarcotics policy for

many decades. Although nominally it is on the books, it is always

the most under-resourced, least privileged policy; this applies to

both treatment and prevention. The Obama administration has

committed itself to addressing demand a key priority. We have yet

not seen it in the current budget, but perhaps as the next budget

will be drafted the shift in balances will take place.

It is also vital that we help other countries around the world address demand. Our supply side policies, as important as they are,

and there is a definite role for law enforcement, including for eradication if it is sequenced well, must also focus much more on global

demand and demand increases. In fact, we have seen many new

markets emerging, perhaps not as high as the U.S. market, but are

nonetheless very significant—Russia, China is back, Brazil, other

parts of Asia—and yet our supply side policies do very little, if

nothing, on helping countries growing demand.

Mr. TIERNEY. I guess I hear what you are saying, but it gets me

back to my question. Demand reduction would probably take a significant amount of time, it is not going to happen overnight, certainly not in a couple years. Our supply side policies have been

fairly ineffective, and they are effective incidentally, case-by-case,

but certainly they haven’t reduced the amount of drugs on the

street and the amount being produced. As you said, there are new

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areas developing all the time, whether it is Russia or Brazil or

somewhere else. So I go back to my question. How do we really and

dramatically take the profit out of this to make a serious impact?

Mr. Farah.

Mr. FARAH. Well, I do think that we have a 40 year or longer

record in the war on drugs, and I spent 25 years covering it fairly

closely, and every new strategy that comes along has some success

and then eventually the traffickers are able to adapt around it or

fairly quickly. I am not sure that the country is ready for a debate

on decriminalization and other aspects, but I think it is clear, if

you look at—I mean, the fact is, as Eric said, you can lose 75 percent or you can move your coke from Latin America to Africa, and

then north, indicates that the profit margins are huge.

So I do think we have to come at it I think, as Vanda said, when

we reduced our oil consumption by 3 or 4 percent, the price of oil

dropped from $140, $150 a barrel to $40 a barrel. And I am not

sure, when you are getting at decriminalization or other things,

that is any more quick, any quicker a solution than focusing very

heavily on the consumption side, because that is clearly the way,

if you are selling less, you are going to lose less money.

One could debate decriminalization, but I think it would be a

long and drawn out debate in the country right now. I don’t think

there is any consensus on which way to go on that. So I would second what Vanda said about the need to really focus on the use reduction, because that is what is going to make them able to sell

less and give them less money. It is the quickest thing we can do

efficiently now.

Mr. TIERNEY. Mr. Olson.

Mr. OLSON. Well, the Woodrow Wilson Center hasn’t taken a position or wouldn’t take a position on decriminalization or legalization or harm reduction. I do note that three countries, three major

countries in Latin America now are experimenting, if you will, with

the idea of decriminalization. Argentina, Chile, and Mexico have

recently taken steps that dramatically reduce criminal penalties.

We will see if that helps in any way. All those countries, especially

Mexico, have a growing consumption problem, so if that is what it

takes—personally, I think it has to be a combination of efforts.

There is no magic bullet here. I think Doug was right. We try

new things, they work for a little while, then they fall apart. I

think having a consistent multi-dimensional, multi-faceted approach that looks at decriminalization as an option, but also looks

at raising the cost of doing business for traffickers and does some

things in terms of international cooperation—I don’t think any of

them by themselves will solve this problem, but we have to hit

them on all fronts, if you will, and that is, I think, the best we can

hope for.

Mr. TIERNEY. Thank you.

Mr. Flake.

Mr. FLAKE. Thank you and thank you to all the witnesses.

Mr. Olson, you mentioned the inter- and intra-party cartel battle

that is going on in Mexico, and certainly we have seen that going

on for a while. Has that caused a realignment yet of these cartels?

Have we seen much change? We are often told in Arizona that we

haven’t seen really a spike in violence; this is a necessary thing beVerDate 11-MAY-2000 16:19 Sep 09, 2010 Jkt 000000 PO 00000 Frm 00065 Fmt 6633 Sfmt 6633 U:\DOCS\57624.TXT KATIE PsN: KATIE
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cause Calderon has finally gone after the cartels. Have you seen an

improvement between Mexico’s ability, the government’s ability to

control these cartels given what has gone on over the past several

months?

Mr. OLSON. You know, I think the Mexican government is doing

some things well. I was there a little over a month ago and they

are clearly investing a lot in building a national police force that

is modern, strong, professional, and capable. There are aspects of

their policy that are lagging behind, and what has happened in,

say, particularly the case of Ciudad Juarez, right on the U.S.-Texas

border, El Paso, is that you have had the military and police move

in and somewhat scatter the Juarez cartel to other parts south,

and then as that happens, the Sinaloa cartel in particular has tried

to take advantage of a weakened Juarez cartel. So what we have

seen over the last 6 months is a spike in violence, then a decline

in violence as the Juarez cartel was scattered, and now an upward

tick, a quite serious upward tick in violence.

So, you know, I don’t think we have seen the end of it yet. They

haven’t gotten to somewhere where the cartels themselves are so

weakened that they can’t carry out incredibly violent operations.

There are exceptions like the Familia Michoacana, which is another animal altogether, but cartels in general don’t like to engage

in this outrageous violence; they are more interested in the business aspect of it. But they do, I think, engage in that kind of violence when they are competing for territory and routes amongst

themselves.

Mr. FLAKE. Thank you.

Mr. Mansfield, you mentioned, in Afghanistan, that the marginal

state is, I guess is how you put it, moving beyond its boundaries,

suggesting that some of these drug organizations have had free

reign up to now. What is the effect of having a policy of eradication

for a while? We seem to have backed off from that now; will likely

be back to it a while later. What does that for the long term and

is that—obviously, it seems to be problematic if we can’t decide on

a policy.

You and others have mentioned that there are other products

that can be produced economically, but we have not really seen

that, whether it is pomegranate or whatever else. The government

certainly hasn’t pursued a policy that would replace those crops. I

guess I am wondering what is the net effect of moving toward an

eradication policy and then backing away from it and then possibly

back to it again?

Mr. MANSFIELD. Thank you. I think the debate on eradication is

often a little simplistic, and I do see this pendulum swing that is

taking place, and I have some reservations about it. I think too

often we neglect the fact that there are areas in Afghanistan that

do have viable alternatives, where—I can cite them, introduce you

to farmers who have moved out of poppy cultivation. They weren’t

dependent on it; they have a range of other crops they can produce.

They are near the provincial center; they have markets for their

crops. They are growing maybe five crops on one unit of land instead of opium poppy.

And if you look at the net returns on those crops, they are more

attractive than opium poppy. Opium poppy is incredibly labor inVerDate 11-MAY-2000 16:19 Sep 09, 2010 Jkt 000000 PO 00000 Frm 00066 Fmt 6633 Sfmt 6633 U:\DOCS\57624.TXT KATIE PsN: KATIE
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tensive. Once you start importing labor to grow this crop, it cuts

your profit margins. These other crops, five crops for one is attractive, one unit of land rotated. Some of them have multiple harvests;

gives you a steady income flow. They give you different season, different harvest at different points; again, steady income flow. And

because there is a market, traders are turning up at the farm gate

and they are buying them; they are reducing the transaction costs

of moving goods to market, they are reducing the transportation

costs, not unlike opium used to be in these areas.

So where you have the kind of security governance and economic

growth taking place, farmers are moving out and, as a consequence

of growing other crops, they free up their labor. These aren’t as

labor intensive as opium poppy. So then members of the family go

off and work in the city. So the combination of the inter-cropping,

multiple crops, and then, subsequently, the labor means that the

returns are higher than poppy. So in those areas the threat of

eradication or eradication is credible and it actually acts as a catalyst.

The problem has been that we have had too much of an idea of

a comprehensive eradication; let’s eradicate everyone, let’s wipe out

all the poppy in Nangahar, all the poppy in Afghanistan. Now,

some areas can cope, they can actually thrive. Some areas do not

cope because they just don’t have those facilities; they are not near

the markets, they are inaccessible, they are remote. Every time

they travel down the road, they are asked for bakshish, they are

asked for a bribe from the police moving their tomatoes to market.

Mr. FLAKE. So you are not opposed to eradication specifically, in

certain areas or as part of the program, but not as just a general

policy.

Mr. MANSFIELD. No. For me, I have written on this many times.

It is under what conditions it works and under what conditions it

is counterproductive. The danger I think we have is there is a real

potential for poppy cultivation to go up this year, as a function of

a whole range of different things. The price of wheat and poppy is

significantly changed. Over the last 2 years, wheat has actually

been an attractive crop because the global wheat price was so high,

and opium price has been low. It has made more sense in many

areas to grow wheat on your land, because you get more wheat

from doing that, than to grow opium poppy on your land. The

terms of trade were different. That has changed now. We are back

to a situation where opium poppy is once again attractive. So that

factor is in place, meaning people will go back to poppy in many

areas.

The other side is the politics. Certain Governors will be rewarded

or punished in relation to the election; they will be moved on, as

they say, to a better place or worse; and they have been quite active in reducing poppy. So the politics is shifting, the economics is

shifting, and there is a danger that because there is a perception

that there is no eradication this year, that gets blamed for this

shift. That shift was set in place some time ago.

So then we end up with more poppy, it is due to the fact there

is no eradication, we need aggressive eradication again. So it comes

around again. And I think we need to stop dealing with poppy

farmers as if they were a homogenous entity. I am sure wheat

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farmers in the United States are not a homogenous entity; some

have small land, some have large land, some have combines. It is

too simplistic, some of this discussion.

Mr. FLAKE. Thank you.

Mr. TIERNEY. Mr. Quigley, you are recognized for 5 minutes.

Mr. QUIGLEY. Thank you, Mr. Chairman.

The gentleman from Arizona touched on the issues in Mexico,

but it is something that is interesting in reading your written testimony and, Mr. Mansfield, some of your oral testimony. It is often

described as a weak state issue. While not a world power, clearly,

as compared to the other countries we are talking about, Mexico is

much different. What does it suggest, as it relates to an issue of

whether or not we are dealing with weak powers here, that Mexico

seems to thrive so much?

Mr. OLSON. I am sorry——

Mr. QUIGLEY. I don’t think Mexico can be described as a weak

state as compared to the others, yet it seems to thrive in much the

same way. What am I missing or what can we learn from that?

Mr. OLSON. Well, I think you are absolutely right, you can’t overgeneralize. You can’t compare Mexico to Haiti, for instance, or Mexico to Honduras. Mexico is much wealthier, and has great resources. The issue in Mexico, however, is that it is a much more

complex problem. You have, for instance, in the case of Mexico, a

federal police force that is roughly 30,000 persons, and they have

authority or control over about 8 percent of the crime. The vast majority of the crime happens at the local level, and these organized

crime groups will operate at the local level; and the local police, the

state, municipal police, especially in states like Chihuahua, are ineffective, are weak, basically.

So I am not making a broad generalization about weakness of

the Mexican state, it is more the fact that in particular areas of

the government, of the country, in particular states, in particular

localities, organized crime has found a foothold and has been able

to penetrate the municipal governments, even the state governments in a way that it can’t probably at a federal level, and that

has allowed that cancer, if you will, to grow and expand over a period of time.

I would never say that Mexico, as a whole, is at risk of failure

or is a particular weak state, but certainly at localities it is, and

that is what they are battling with right now.

Mr. QUIGLEY. Doctor.

Ms. FELBAB-BROWN. To followup Mr. Olson’s comments, Mexico

is also a democratizing state and in many ways an under-institutionalized state. Law enforcement apparatus, for example, is deeply

flawed in Mexico. And although Mexico is finally taking important

policy reforms, in fact, Mexico has attempted to undertake these

policy reforms at least since the late 1980’s to little effect, and

though there are some encouraging signs today, Mexico is still really struggling in the provision of public safety and law enforcement,

not simply in relationship to organized crime, although that is absolutely vital, but also with respect to street crime. And as long as

Mexico’s police forces cannot assure its citizens that safety and governance presence will be effective, susceptibility to mobilization by

armed actors, by crime groups will be high.

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Mexico is unaltered, in many ways, from the discussion that we

were having because the major aspect of the illegal economy is not

labor intensive, it is mainly trafficking, and that, fortunately,

greatly limits the power that crime groups can acquire in Mexico,

along with the very high brutality. Yet, at the same time, the cartels’ ability to penetrate informal economies in Mexico—sales of

DVDs that Eric mentioned, for example—allows them still to function as providers of both employment, as well as at least minimal

security in the absence of the state.

We also have to realize that despite Mexico’s status as at least

a middle income country and impressive wealth, at least 40 percent

of its population still exists in condition of poverty that is actually

increasing. Many of these marginalized people, both in rural areas

as well as in urban settings, have access to only minimum public

goods provided by the state.

So it is vital that Mexico reconceptualizes its approach to the cartels from thinking about them simply as NARCO-drug enterprises

that can be eliminated through limited interdiction actions toward

thinking about them as much more than that, for providing these

various social functions for the populations and, hence, try to develop socioeconomic component of the policies in addition to interdiction, in addition to police reform, in addition to intelligence capacity building, to sever the link between the population and the

cartels. Then intelligence flows will improve greatly and the effectiveness of law enforcement will be far greater than we have seen

so far.

Mr. QUIGLEY. Thank you, Mr. Chairman.

Mr. TIERNEY. Thank you, Mr. Quigley.

The gentleman from Missouri, Mr. Luetkemeyer.

Mr. LUETKEMEYER. Thank you, Mr. Chairman.

I am very interested in Mr. Mansfield’s comments from the

standpoint that my State and my area where I come from just sent

over the second group of National Guardsmen to work with the Afghan farmers to try and train them on how to grow other crops

other than poppy, so it would appear to me that if Afghanistan, if

I am not mistaken, is 95 percent of the world’s heroin come from

there, is that right? So if we could do something there to transfer

them from growing that to other beneficial crops.

It seems to me that in order to be able to grow beneficial crops,

they have to have viable markets for the products that they sell,

and I was interested in your remarks there when you said something about that, that they were trying to do that and it was based

on profit whether they actually did it or not. So I assume from

that, as well—I am kind of rambling here, but I want to try and

get in enough questions here that I can get my 5 minutes in.

But it would appear that the farmers actually grow their own

crops, that they are not grown by the drug folks themselves, and

then they sell the crop, I guess, to the drug folks, is that correct?

And then if they own their own crop, they can make the decision

what to grow. So I assume from that, then, that the drug folks actually don’t grow the crops themselves.

So if you could just kind of elaborate on the ability of us to impact the growth of something besides poppies over there, as well

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as just sort of a little quick primer on how the drug trade actually

operates over there, if you would, please.

Mr. MANSFIELD. I should have brought my neshtar and rumbai

to explain the opium poppy cultivation process, but I suspect I

wouldn’t be here, I might be in some kind of prison if I tried to

enter the country with that.

Again, we need to be clear on what farming looks like in Afghanistan. We have a picture here of a farmer standing within his

poppy field, but what we don’t see there is also the area of land

that is grown with wheat, which he needs to consume. We don’t see

his family plot of vegetables that they grow to feed the family.

Some might be sold, depending on circumstance.

So it is this particular narrative of the poppy farmer we see.

Most farmers in Afghanistan grow a range of different crops, and

it is a question of the distribution of crops that they grow, the proportion of land that would be poppy. So part of this is about raising

the risks associated with poppy and reducing the risks associated

with engaging in an illegal economy. Many of the goods they

produce simply don’t have a market; they grow them to consume.

And when they try and take them to market, if they are in a remote area, they get hit with checkpoints asking for money. In some

cases we have had commanders, officials of the government commandeering that crop, buying it at a low price.

Mr. LUETKEMEYER. If I could interrupt just for a second. Is there

an effort to try and develop these markets, though, so that if they

produce a crop in excess? Could there be an incentive for them to

produce more and therefore change over from poppy crops? And I

guess the second part of the question is is it realistic to believe that

we can eradicate poppy growing in that area or is that just a pipe

dream?

Mr. MANSFIELD. Sure, there are a lot of investments in this, but

the question is: where does the market lie? The market of Kabul,

the market of Jalalabad, they are big. But the markets of

Lashkigar and Helmand are limited. If you are growing poppy, if

you are growing a range of different crops in Helmand, you are not

selling it in Lashkigar.

Mr. LUETKEMEYER. Is there an effort, though, to increase these

markets or develop markets for these folks so that there is an incentive to do that?

Mr. MANSFIELD. Part of it is there are those efforts, but part of

it is the security environment. If I can’t get down the road—I have

farmers who grow onion in Nawa who we have been interviewing

for a number of years. It is very near Lashkigar, but they know the

market for onions in Lashkigar is limited; Kandahar is the real

market. But he knows that if he moves his onions to Kandahar, he

has 14 checkpoints along that road who are going to ask for money.

He knows that the hauler who moves that crop wants extra money

because it is a dangerous road to drive down. So the markets don’t

function.

And the great thing about opium poppy for these farmers is it

functions. I don’t have to take the physical risk of traveling down

the road and I don’t have to take the economic risk of getting to

market and being a price taker and finding that I can’t sell my

onion at a profit. I have farmers who basically have grown onion,

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realize they can’t make a profit, have basically taken what they

need, offer the fellow villagers what they need, and then left the

rest to rot.

So one issue is the security side. On the market side, as I say,

you have finite markets, size of markets, so one of the big questions is the issue of local procurement. How do we stimulate the

market? We keep looking for export markets, these miracle crops;

pomegranates, apricots, saffron, mint, one thing after another.

Most of those crops have foreign markets.

But actually there is a foreign market within Afghanistan, which

is the international community. Actually stimulating the market

for legal goods by us, the international community, buying more

local produce would be a major advantage. I think also not only

economically, but politically the whole issue of we eat the same

food. I mean, I have sat in some PRTs, one in Orzgo, and you are

constantly thinking where is the market for the goods. They grow

fantastic apricots and almonds and these other things. Where is

the market? We have to get it to Kandahar. The road is dangerous;

they have just sort of got rid of the highway police. Instead of robbing people officially, they are now robbing people unofficially. So

where is the market? The PRT. We sat among 6,000 soldiers. We

are part of that market.

Mr. LUETKEMEYER. Thank you.

Thank you, Mr. Chairman.

Mr. TIERNEY. Thank you, sir.

Gentleman from Vermont, Mr. Welch.

Mr. WELCH. Thank you, Mr. Chairman.

Mr. Olson, what factors, in your view, are at play in spurring the

big rapid growth of cocaine in West Africa?

Mr. OLSON. I probably should defer here to Doug.

Mr. WELCH. Well, we will defer to Doug if you want us to .

Mr. FARAH. The factors in Mexican trafficking moving their product to West Africa, sir?

Mr. WELCH. Right.

Mr. FARAH. Well, part of it is that U.S. interdiction efforts have

been very good. It is harder for the Colombians to get their product

from Colombia through Central America to Mexico. And I think the

opening of the Venezuelan avenue for moving products from Colombia via Venezuela to the west or to the east is now much more attractive than it was before, particularly the FARC with its relationship with Chavez, is able to take advantage of that, as are the Bolivians. What you saw for many years was that the Bolivian traffickers growing coca were not allowed to produce ACL, the final

product, because the Colombians wanted that for themselves. They

are no longer able to control the Bolivians or the Peruvians.

Mr. OLSON. If I might, I would add a couple more things.

Mr. WELCH. Yes, go ahead.

Mr. OLSON. Which is when we saw a spike in trafficking to Europe through West Africa, it also coincided with a very favorable

exchange rate in Europe. In other words, by exporting and as the

exchange rate improved for the consumer. In other words, it got

cheaper, consumption went way up. So it is a market and they

move in that direction. Then the possibility of shipping it to Europe

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opened up, as Mr. Farah said, because Western Africa was a very

weak open area that they could exploit as a transshipment.

Mr. FARAH. One final thing is that Brazil has become a very big

market and a lot of the Bolivian and other stuff moves through

Brazil to the Portuguese speaking parts of West Africa, where they

have a language advantage, particularly Guinea Bissau and Angola. So you have a language—and if you look geographically, they

are quite close. Brazil has become a very large consumption market

and the Bolivians and Peruvians find it much easier, in some cases,

to go through Brazil out to West Africa, where, again, the Brazilian

ability with language particularly is a very useful thing to have.

Mr. WELCH. OK. Are there links that have been established between some of the terrorist organizations and Africa, Al Qaeda and

the Islamic Maghreb in criminal drug trafficking elements?

Mr. FARAH. I think what you are seeing in terms of the small

shipments that move toward the Tuareg smuggling networks and

things from West Africa through the transit hill region, going up

north, is that you are seeing an increasing amount of small cocaine

shipments, but not the major shipments going through that route.

And what you see is the Tuaregs and other groups that will have

to have a relationship with Al Qaeda and Islamic Maghreb now

buying a lot of Chinese weapons with that money, so they are

much better armed and they are much more lethal than they were

before, which can rebound to the benefit of Al Qaeda and Islamic

Maghreb.

But sort of official ties, I don’t think we have seen that yet. I

think that you are seeing 1 and 2 and 3 kilo loads moving that

way; they still prefer cigarettes, gasoline, other things that they

can smuggle, they know how to smuggle. But I think the potential

you are in an ungoverned space, where groups will need the same

facilitation with their product, I don’t think it is irrational to assume that will at some point take place.

Mr. WELCH. Thank you.

Doctor.

Ms. FELBAB-BROWN. Thank you for the question. It brings into

focus the larger issue of how terrorist groups, belligerent groups

penetrate illicit economies, and we frequently fall into the idea that

the illicit economy becomes altogether captured or dominates by

the belligerent group. Take for example Al Qaeda and Islamic

Maghreb and some of the known participation in the Moroccan

drug trade. Well, it is true, but it would be incorrect to imagine

that the entire Moroccan marijuana hashish trade is dominated by

Al Qaeda and Islamic Maghreb. In fact, I would posit that their

size of the trade is very small.

Similarly, in Afghanistan, although the Taliban is profiting and

benefiting in multiple ways, very many other actors also participate in the drug trade, and it is far from the province of the

Taliban. In Colombia, yes, the FARC is part of the drug trade, as

is the ELN, but to a much larger extent former paramilitary groups

that in many cases were essentially identical to drug trafficking

groups dominated the trade more, and there still today are very

many independent traffickers and independent trading organizations.

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In fact, it would be very rare and quite unusual for a belligerent

group to have the capacity to completely dominate the entire illicit

economy, especially in the case of extensive labor intensive economies.

The flip side of that is the belligerent groups rarely rely on simply one illicit economy for their funding. The case of Taliban,

FARC, many others, Al Qaeda, are certainly prominent, where they

have highly diversified portfolios with much money coming from ordinary fundraising, from donations, from participation in other illicit economies, from taxation of legal products in areas where they

function; and it is this diversification and multiple sources and the

ease with which they can move from one funding to another that

makes efforts to suppress the money by targeting the illicit economy or by trying to undertake antimoney laundering measures so

very difficult.

Mr. TIERNEY. Thank you very much.

Thank you, Mr. Welch.

Mr. Murphy, you are recognized for 5 minutes.

Mr. MURPHY. Thank you very much, Mr. Chairman. Those buzzers indicate that we have votes on the floor, so I will be brief, but

I wanted to followup on Mr. Welch’s line of questioning.

To Mr. Farah, specifically to the issue of Hezbollah’s presence in

West Africa. In your testimony you spend a decent amount of time

talking about their presence there, the amount of money moving

from West Africa back to the Middle East, and I just want to sort

of ask the question that Mr. Welch asked specific to Hezbollah.

What are the prospects, moving forward, for there to be a greater

degree of reliance potentially in West Africa upon the drug trade

to potentially add to the money going back. So let me just ask that

question. What do you see as the current nexus between Hezbollah

specifically and the growing drug trade in West Africa and what do

we worry about in terms of trends going forward?

Mr. FARAH. Well, I think that is a very important question to

which I don’t think we actually know the answer. Hezbollah is on

the ground there, but let’s say the blood diamond dealers that I

dealt with there, they weren’t organically Hezbollah. Hezbollah

would tax them and take part of their money, as I believe the same

is true in tri-border area in Latin America and other parts.

Hezbollah doesn’t run the trade; Hezbollah profits mightily from

the trade by the taxation ability in providing protection, but they

are not organically linked to Hezbollah.

I think that as the Colombian and Brazilian and other organizations move into West Africa, they are either going to have to cut

a deal with the traditional Lebanese crime families that dominate

or it is going to get very bloody, and it has not gotten bloody, which

to me indicates—if you have product that you want to move from

West Africa to Europe, you almost have to go through the Lebanese

networks, because that is the pipeline that exists and they know

how to move stuff.

When Al Qaeda wanted to move its diamond profits, it didn’t set

up its own thing in West Africa, it went to the Hezbollah network

and moved diamonds that way. And I think that is what is happening with the drug trade. I think it is going to strengthen the

Hezbollah folks because they are going to profit from providing proVerDate 11-MAY-2000 16:19 Sep 09, 2010 Jkt 000000 PO 00000 Frm 00073 Fmt 6633 Sfmt 6633 U:\DOCS\57624.TXT KATIE PsN: KATIE
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tection and movement for those particular products. Whether that

becomes organically linked to Hezbollah, I doubt it will because

that is not the way Hezbollah tends to operate, but I think that it

will strengthen all the criminal networks because cocaine is a product that is useful to the pipeline and the pipeline is useful to cocaine traffickers, so there is a symbiosis that has to take place; and

if it doesn’t get really bloody, which it hasn’t, then I would say that

indicates a level of cooperation that is growing.

Mr. MURPHY. Then let me ask this followup, which is part of the

comments, especially from Dr. Felbab-Brown, was about the fact

that even if we were to do something to try to prevent a growing

reliance or a growing connection between the drug trade and terrorist networks—I am probably oversimplifying what you said, but

that it may not matter because they will be able to go other places.

So my question is to the extent that we do have a worry that the

networks become much more interdependent and interlinked, what

are our strategies as a Nation to try to prevent—I mean, we obviously want to do something about drug trafficking on its own, but

what are our strategies that we take to try to prevent those connections from being made in the future relative to Hezbollah or relative to other operations in Africa specifically?

Mr. FARAH. Well, I think it is very difficult because as we have

all said, you have pipelines that will move almost any given product you put into it from one point to another, be it human trafficking, drugs, weapons, or money moving either way; and Hezbollah,

particularly in West Africa, has perfected the art of bringing down

all kinds of illicit stuff into the region to sell that would normally

be licit, but they move it in illicit fashions.

So I think our strategy has been largely fairly simplistic. I think

we have been looking at drug trafficking, terrorists, sort of organized crime as different entities and not at the overlap and interconnectedness of it. I think our presence on the ground in places

like West Africa is so slim that we are really flying blind there.

I think that our ability and I say in my testimony—at the end

of the day, our only real option, is twofold: One is to develop vetted

units that can work on the ground there with the Colombians, the

Brazilians and the other thing is to get Europe to engage much

more robustly, because, it is their market that is being penetrated

by the drugs. They have the long history and they know—I have

dealt with the Belgians extensively on this—the Lebanese criminal

networks very well, much better than we will ever know.

The French know the criminal networks that go into France. And

yet they also are viewing this in sort of piecemeal fashion. So the

Europeans will have to engage in a much more robust fashion to

look at how these groups overlap, because they know these groups

much better than we do and than we will in the next 20 years.

Ms. FELBAB-BROWN. If I can add. It is very important that we

seek to prevent dangerous belligerent groups from penetrating illicit economies, and we have to ask ourselves in each case several

questions: What illicit economies do they have access to? Do they

have accessible labor intensive illicit economies? And this is especially where we should try to prevent them from accessing, because

if they do so they get much more than money, they get support

from the population. This has not yet happened in the case of West

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Africa, where the trade is mainly traffic, not labor intensive; it is

not cultivation. And we should make an effort to see that cultivation doesn’t relocate there, for example.

The second question we need to ask, if our goal is to dry up the

money by targeting the illicit economy, is that likely going to

switch the belligerent group to try to develop another illicit economy or penetrate another illicit economy that might be ultimately

even more harmful for our interest? The case of FARC is important. While I do not believe that eradication did decrease ultimately in the long term financial resources of the FARC, although

the FARC is beaten, I think it is largely irrespective or despite

eradication.

At least for a while we have seen decreases in cultivation and

limits on funding. And one of the resulting effects was that the

FARC has tried to acquire enriched uranium or uranium, I should

say, as a way to resell and make money. This is an illicit economy

far more dangerous to the United States than the continuing cultivation of coca.

And the third question we need to ask in policy is if we suppress

the illicit economy, where is it going to shift? If we suppress poppy

in Afghanistan, are we going to sell wholesale transfer to Pakistan

and going to set up even more dangerous problem for U.S. national

security interests?

Mr. TIERNEY. Thank you very much. I want to thank all of our

witnesses. It is very untimely to have these floor votes at this particular point. We don’t have control over that, although I wish we

did. I am going to ask you this. Mr. Flake and others have hearings

that, if we were going to go straight through, we would be able to

finish on that, but given the fact that these votes are going to take

a half hour or more, maybe 45 minutes or an hour, they have other

classified briefings they have to go to. May we submit to you some

questions that we didn’t get to today in this hearing and give you

homework, if you don’t mind, to submit back?

I do want to explore some of the priorities. We talked about

strategies of reducing demand, of eradication or disruption in some

areas, and resolving underlying economic factors, governance and

all those issues. I want to ask is there a priority for that? Is one

approach more important than another?

I want to talk more about Mr. Mansfield’s response to illicit

drugs in Afghanistan when they think the government may be as

involved as other parties; the prospects of what is going on in Venezuela, can we get Venezuela’s cooperation with our country as opposed to the FARC and others? What is happening in Guinea

Bissau on that basis, how failed is that; and, what is the role of

human intelligence?

I know that is a serious matter. Are we farming the same problems there in terms of language and other setbacks that we have

in other areas; and how do we engage the international community.

Doctor, you mentioned India in some of your remarks. Why aren’t

they more engaged or are they engaged? What is their role there?

The Belgians and others too?

So, with your permission, we will submit those records and ask

for any other comments you want to make on what we ought to be

doing on that. As I said, we have another hearing coming up with

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government agency witnesses and we would love to be able to have

that information to get their response to it.

Can I just say thank you for coming in and for giving us your

expertise and taking your time and energy, as well, to do that? We

appreciate it a great deal. Thank you.

[Whereupon, at 11:20 a.m., the subcommittee was adjourned.]

[Additional information submitted for the hearing record follows:]

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