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90–052 DTP 2003

S. HRG. 108–173

NARCO–TERRORISM: INTERNATIONAL DRUG TRAFFICKING AND TERRORISM—A DANGEROUS MIX

HEARING

BEFORE THE

COMMITTEE ON THE JUDICIARY 

UNITED STATES SENATE

ONE HUNDRED EIGHTH CONGRESS

FIRST SESSION

MAY 20, 2003

Serial No. J–108–12

Printed for the use of the Committee on the Judiciary

(

(II)

COMMITTEE ON THE JUDICIARY 

ORRIN G. HATCH, Utah, Chairman 

CHARLES E. GRASSLEY, Iowa 

ARLEN SPECTER, Pennsylvania 

JON KYL, Arizona 

MIKE DEWINE, Ohio 

JEFF SESSIONS, Alabama 

LINDSEY O. GRAHAM, South Carolina 

LARRY E. CRAIG, Idaho 

SAXBY CHAMBLISS, Georgia 

JOHN CORNYN, Texas 

PATRICK J. LEAHY, Vermont 

EDWARD M. KENNEDY, Massachusetts 

JOSEPH R. BIDEN, JR., Delaware 

HERBERT KOHL, Wisconsin 

DIANNE FEINSTEIN, California 

RUSSELL D. FEINGOLD, Wisconsin 

CHARLES E. SCHUMER, New York 

RICHARD J. DURBIN, Illinois 

JOHN EDWARDS, North Carolina 

BRUCE ARTIM, Chief Counsel and Staff Director 

BRUCE A. COHEN, Democratic Chief Counsel and Staff Director 

(III)

C O N T E N T S 

STATEMENTS OF COMMITTEE MEMBERS 

Page

Biden, Hon. Joseph R., Jr., a U.S. Senator from the State of Delaware ............. 3

Hatch, Hon. Orrin G. a U.S. Senator from the State of Utah ............................. 1

prepared statement .......................................................................................... 72

Kyl, Hon. Jon, a U.S. Senator from the State of Arizona .................................... 6

Leahy, Hon. Patrick J., a U.S. Senator from the State of Vermont, prepared 

statement .............................................................................................................. 85

WITNESSES 

Casteel, Steven W., Assistant Administrator for Intelligence, Drug Enforcement Administration, Washington, D.C. ............................................................ 7

Clark, John P., Interim Director, Office of Investigations, Bureau of Immigration and Customs Enforcement, Department of Homeland Security, Washington, D.C. ........................................................................................................... 14

Johnson, Larry C., Managing Director, Berg Associates, Washington, D.C. ...... 32

Lee, Rensselaer W., President, Global Advisory Services, McLean, Virginia ..... 30

McCarthy, Deborah, Deputy Assistant Secretary, International Narcotics and 

Law Enforcement Affairs, Department of State, Washington, D.C. ................ 12

McCraw, Steven C., Assistant Director, Office of Intelligence, Federal Bureau 

of Investigation, Washington, D.C. ..................................................................... 10

Perl, Raphael, Specialist in International Affairs, Congressional Research 

Service, Library of Congress, Washington, D.C. ................................................ 28

QUESTION AND ANSWER 

Response of Steven C. McCraw to a question submitted by Senators Biden 

and Hatch ............................................................................................................. 45

SUBMISSIONS FOR THE RECORD 

Casteel, Steven W., Assistant Administrator for Intelligence, Drug Enforcement Administration, Washington, D.C., prepared statement ......................... 47

Clark, John P., Interim Director, Office of Investigations, Bureau of Immigration and Customs Enforcement, Department of Homeland Security, Washington, D.C., prepared statement ....................................................................... 64

Johnson, Larry C., Managing Director, Berg Associates, Washington, D.C., 

prepared statement .............................................................................................. 75

Lee, Rensselaer W., President, Global Advisory Services, McLean, Virginia, 

prepared statement .............................................................................................. 87

McCarthy, Deborah, Deputy Assistant Secretary, International Narcotics and 

Law Enforcement Affairs, Department of State, Washington, D.C., prepared 

statement .............................................................................................................. 92

McCraw, Steven C., Assistant Director, Office of Intelligence, Federal Bureau 

of Investigation, Washington, D.C., prepared statement .................................. 103

Perl, Raphael, Specialist in International Affairs, Congressional Research 

Service, Library of Congress, Washington, D.C., prepared statement ............ 107

(1)

NARCO–TERRORISM: INTERNATIONAL DRUG 

TRAFFICKING AND TERRORISM—A DANGEROUS MIX 

TUESDAY, MAY 20, 2003 

UNITED STATES SENATE, 

COMMITTEE ON THE JUDICIARY, 

Washington, DC. 

The Committee met, pursuant to notice, at 10:02 a.m., in room 

SD–226, Dirksen Senate Office Building, Hon. Orrin G. Hatch, 

Chairman of the Committee, presiding. 

Present: Senators Hatch, Kyl, Sessions, Cornyn, Biden, and Feinstein. 

OPENING STATEMENT OF HON. ORRIN G. HATCH, A U.S. 

SENATOR FROM THE STATE OF UTAH 

Chairman HATCH. Good morning. I want to welcome everyone to 

this important hearing to examine the issue of narco-terrorism. 

The problems of terrorism, drugs and international organized 

crime pose new and significant challenges to our country. As everyone knows, these problems occur across our borders and are less 

and less subject to control by nation states. Terrorists around the 

world and in every region appear to be increasing their involvement in the trafficking of illegal drugs, primarily as a source of financing for their terrorist operations. 

Narco-terrorists participate directly or indirectly in the cultivation, manufacture, transportation and/or distribution of controlled 

substances. Several terrorist groups provide security for drug traffickers transporting their products through territories under the 

control of terrorist organizations or their supporters. No matter 

what form it takes or the level of involvement in drug trafficking, 

several significant terrorist groups are reported to be relying on 

drug money as one of several significant funding sources. 

In the mid–1990’s, I became concerned about the nexus forming 

between international organized crime, political movements and 

terrorism arising out of certain ungovernable areas of the world. 

Senator Biden and others, of course, have equally participated in 

this concern. 

Terrorist organizations developed relationships with illicit narcotics traffickers. In areas such as Afghanistan, a fundamentalist 

regime became wholly dependant on opium production at the time 

it became the host of Osama bin Laden and Al–Qaeda. In other 

parts of the world, such as Colombia, the connection was made 

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through international organized crime, activities which are inconsistent with the ideological basis for terrorist activities. 

Today, United States and coalition forces have successfully removed the Taliban from power, but we have not succeeded in stabilizing Afghanistan. Our policy is to support President Karzai, but 

his Tajik-dominated government has alienated the majority of the 

Pashtun population, who live in most of the opium-producing areas 

of Afghanistan. This alienation of the Pashtuns has led to instability in Afghanistan that has resulted in fundamentalist and Al–

Qaeda resistance to U.S. forces and an increase in opium production. 

The Bush administration recognizes that the situation in Afghanistan remains unresolved, and I urge the administration to maintain its commitment to the future of Afghanistan, if we are to root 

out Al–Qaeda and begin to reduce the opium production there. 

The reach of narco-terrorism extends across the globe to other 

areas in Asia, the Middle East and Latin America. In South America, the narco-terrorist threat is well-documented, including terrorist organizations such as the Revolutionary Armed Forces of Colombia, or FARC; the National Liberation Army, or ELN; and the 

United Self–Defense Groups of Colombia, or AUC. 

Terrorist groups in Colombia rely on cocaine trafficking, transportation and storage of cocaine and marijuana, as well as taxing 

traffickers and cocaine laboratories in order to support their civil 

war, terrorist attacks and, of course, the hostage-taking of Americans, among others. 

The connection between Middle Eastern terrorist groups such as 

Hizballah and Hamas, and Latin American drug trafficking has 

been reported in the Tri–Border area of Argentina, Brazil and 

Paraguay, which has long been characterized as a regional hub for 

radical Islamic groups which engage in arms and drug trafficking, 

contraband smuggling, money laundering and movement of pirated 

goods. 

I would note that in a recent arrest reported just last week, the 

cousin of extremist Assad Ahmad Barakat, head of Hizballah in the 

Tri–Border area, was arrested in Paraguay with 2.3 kilograms of 

cocaine powder which he intended to sell in Syria to benefit the 

Hizballah terrorist organization. The cousin was reportedly a mule 

hired by Barakat as part of the narco-terrorist financing operations 

needed to support Barakat and Hizballah. 

I want to commend the administration for its continuing efforts 

to fight narco-terrorism worldwide. Using tools provided in the PATRIOT Act, particularly those involving money laundering and intelligence-gathering, the Bush administration has demonstrated its 

commitment to fighting not only terrorists, but individuals and organizations which provide critical financing to terrorist groups. 

We should make no mistake about it: the impact of global narcoterrorism on our own communities is significant. In the District of 

Columbia, in November 2002, 3 separate indictments were announced charging 11 members of the FARC with the murder of 3 

individuals, hostage-taking and drug trafficking involving the distribution of cocaine bound for the United States. 

In Houston, Texas, in November 2002, four members of the 

United Self–Defense Groups of Colombia, the AUC, were caught 

3

trying to exchange $25 million of cash and cocaine for weapons, 

such as shoulder-fired anti-aircraft missiles, 53 million rounds of 

ammunition, 9,000 rifles, rocket-propelled grenade launchers, along 

with almost 300,000 grenades to be used by AUC operatives. 

In San Diego, California, in November 2002, two Pakistani nationals and one United States citizen were charged with attempting 

to exchange 600 kilograms of heroin and 5 metric tons of hashish 

for cash and four anti-aircraft missiles to supply to the Taliban and 

Al–Qaeda associates. 

Recently, in April 2003, the FBI and DEA disrupted a major Afghanistan–Pakistani heroin smuggling operation with the arrest of 

16 individuals, in which heroin was being shipped to the United 

States, profits from the sale of heroin were laundered through Afghan and Pakistani-owned businesses in the United States, and 

then sent back to finance terrorists. 

If we really want to win the war against terrorism, we need to 

continue and expand our commitment to cutting off all sources of 

terrorism financing, including drug trafficking. By doing so, we will 

not only cut off an important source of funding for terrorists, but 

we will reduce the amount of illegal drugs that poison our communities. 

So I look forward to hearing from the experts we have called before the Committee today, today’s witnesses. 

Now, I want to turn it over to Senator Biden, who is serving as 

the ranking minority member, for his opening remarks. In particular, he and Senator Kyl are great assets to this Committee, especially in the area of terrorism, and narco-terrorism at that. 

So, Senator Biden, we will turn to you. 

STATEMENT OF HON. JOSEPH R. BIDEN, JR., A U.S. SENATOR 

FROM THE STATE OF DELAWARE 

Senator BIDEN. Thank you, Mr. Chairman, and thank you for the 

nice compliment. The truth is when Steve Casteel and I started in 

this business, there used to be an ad, ‘‘This ain’t your father’s Oldsmobile.’’ This is not your father’s Oldsmobile anymore. I have been 

doing this for 30 years. I have been doing it as long as anyone in 

here, including the panel, and I have spent a considerable portion 

of my life trying to figure out how to deal with the drug problem 

and international drug trafficking. 

This has morphed into a very different arena now and we have 

not yet adjusted, in my view. That is not a criticism; it is an observation. We have not fully adjusted to the changes that have taken 

place, nor in a sense is it reasonable to expect we would have fully 

adjusted by now. 

Without going through, which I was going to do—I will ask unanimous consent that my entire statement be placed in the record, 

Mr. Chairman, and I will just speak to parts of it. 

Chairman HATCH. Without objection. 

Senator BIDEN. Without cataloguing, as you did very well, the recent arrests, including 16 Afghans and Pakistani nationals arrested 

in New York on drug charges, their drug ring was linked to Al–

Qaeda and the Taliban. We know what is going on. 

Since September 11, we have been focused on counter-terrorism, 

and rightly so, but we have got to see and respond to the big picVerDate 0ct 09 2002 11:51 Oct 30, 2003 Jkt 090052 PO 00000 Frm 00007 Fmt 6633 Sfmt 6633 S:\GPO\HEARINGS\90052.TXT SJUD4 PsN: CMORC
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ture here and it is going to take a while to get this right. I want 

to be realistic about homeland security and if we take our eye off 

the ball, we are going to find ourselves with a problem. 

We have to make sure our security priorities don’t undermine 

our existing law enforcement efforts, which they are doing right 

now unintentionally. They must go hand in hand. I have been worried for some time that the increased focus that we have on homeland security has lost sight of what is really happening on our 

streets, and in drug trafficking in particular. 

If you look at the anti-drug initiatives that are part of the war 

on terrorism and understand that, I think we come up with a 

slightly different matrix than we now have. The administration’s 

record here is somewhat mixed, in my view. It is doing a pretty 

good job on Colombia and it is doing a horrible job—and I want to 

make it clear, a horrible job—in Afghanistan. 

At home here, it has repeatedly proposed slashing or eliminating 

law enforcement programs with track records that reduce crime. 

The FBI has been forced to shift hundreds of agents away from 

counter-narcotics work which they were involved in, forcing the 

DEA to do more without sufficient funding, in my view, to do their 

job. 

Moreover, the administration has left the top anti-narcotics position at the State Department vacant since September. It has yet 

to even nominate a replacement. We have to be able to walk and 

chew gum at the same time here, and we can’t separate fighting 

terrorism from fighting drug trafficking, given the considerable and 

increasing linkage between the two. 

Let me just mention two areas that I have already mentioned, 

but expand slightly. 

Afghanistan: the connection between the warlords, drugs and terror is as clear as a bell. A lot of us here have talked about it. I 

have written reports about it. We have gone to the area and visited 

it. We even passed a $1 billion aid package here for Karzai last 

year for security, not one penny of which has been spent. There has 

been no extension of the security force beyond Kabul. 

The National Security Adviser has said to me personally and indicated to me generally that we have stability in Afghanistan and, 

quote, ‘‘the warlords are in charge.’’ When I indicated that, in 

Harat, you had a guy named Ismael Kahn, a warlord, running the 

show, she said, yes, there is some stability. There is stability all 

right. Everybody is back in business. 

When I was there a year ago January and spent time with 

Karzai, the opium production was way down. We all said, sitting 

here, we are not going to let this erupt again, we are not going to 

let this happen again, this is not going to become the single largest 

opium producer in the world. In a short 2 years, it is once again 

the single largest opium producer in the world. The fact of the matter is you can’t stop opium production when the warlords control 

the region and when, in fact, we don’t expand security beyond 

Kabul. 

Last year, Afghanistan produced 3,400 tons of opium. That is 

more than 18 times the amount produced during the last year the 

Taliban was in charge. The value of the harvest to growers and 

traffickers was $2.5 billion, more than double the entire amount of 

5

foreign aid given to Afghanistan by all nations in the world in the 

year 2002. 

It was the power vacuum created by warlords and drug traffickers that enabled the Taliban and Al–Qaeda to turn Afghanistan 

into an international swamp, as the President called it, the first 

time, and now we are back in the same situation again. 

In December, President Bush signed the Afghan Freedom Support Act, which authorizes $1 billion to expand international peacekeeping outside of Kabul to the rest of the country. To date, the 

President has not asked for one dime of that money to be spent. 

I sincerely urge the President and plead with him to seek to expand that force and to spend some of that money. 

In Colombia, the record is a little bit better. The effort has been 

consistent. The problem is, in a sense, even more intractable than 

it is in Afghanistan. All of us here have been to Colombia a number 

of times. We have witnessed the operations, we have met with the 

Colombians. We understand the FARC, ELN and AUC, and how 

they have gone from being facilitators to wholly-owned subsidiaries 

now. They are doing the job, and doing it very well. 

According to recent estimates, 90 percent of the cocaine consumed in the United States and 75 percent of the heroin used on 

the East Coast comes from Colombia. And, boy, it is pure, as we 

all know. 

I remember when you and I got here, Mr. Casteel, we were worried about brown heroin from Mexico. God give me back brown heroin, 6-percent purity. I can go on Aramingo Avenue in Philadelphia 

and pick it up at 90-percent purity. You can now smoke it. You can 

now get young girls who are 13 years old, who would no more put 

a needle in their arm than fly—you can get them to smoke cocaine, 

just like the crack epidemic started. 

The United States has remained engaged in Colombia and it is 

a very difficult problem, and I credit the administration for its efforts there. But the point I want to make is this: you all are in an 

almost—how can I say it—almost impossible situation. 

As we put together these pieces for homeland security and dealing with international terrorism, we have had to move a lot of 

pieces and there is bound to be some dislocation in the movement. 

But what concerns me is, with a 40-percent reduction in funding 

for law enforcement locally in next year’s proposed budget, with 

moving 567 strike force and narcotics-related FBI agents out of 

that area, without significantly increasing for DEA a commensurate number of people, without putting security in Afghanistan, 

which is a very different way and place and ability to eradicate 

crops there than it is in the Amazon, we are missing real opportunities and creating problems that were pointed out by the Chairman. 

I will end by suggesting that you will be able to have all the terror, as the sophisticated terror operations, from Al–Qaeda on, fully 

funded with money left over for vacations by the profit from narcotics and international narcotics trade now being controlled by terrorist organizations. 

So to suggest that we can deal with terror and not deal equally 

with as much emphasis and effort and resources with international 

6

drug trafficking, I think is a glaring, glaring mistake. Afghanistan 

is, to me, the most significant case in point. 

And I might add I am fully aware of what you all tell me that 

80 percent of the opium produced—by the way, they are moving 

the labs back from Pakistan now into Afghanistan because it is a 

secure area. There is nobody to crack down, nobody to crack down 

in most of these areas. At least in Pakistan, they are worried a little bit about the government, a little bit about the government. So 

you know things are really doing well when they are moving the 

labs back from Pakistan across the border into Afghanistan. 

Eighty percent of it goes to Europe, I understand. Drugs are like 

oil; they are fungible, and that means it increases our problem 

commensurately with the fact that all the heroin supply for Europe 

is coming out of Afghanistan now. 

I hope you all are willing to accept more money. I hope you all 

are going to be honest enough to tell us what your shortfall is. I 

hope you are going to be willing to tell us and not give us the malarkey that you can do more with less, because you know you can’t 

and you haven’t. And so I hope we have some candor here because 

this is a big, big deal. 

I yield the floor. 

Chairman HATCH. Well, thank you, Senator. 

We will turn to Senator Kyl. 

STATEMENT OF HON. JON KYL, A U.S. SENATOR FROM THE 

STATE OF ARIZONA 

Senator KYL. Thank you, Mr. Chairman. This hearing builds on 

one that Senator Feinstein held in the Terrorism Subcommittee 

last year. That hearing focused on illegal drugs and their link to 

terrorism in two parts of the world, Afghanistan and Colombia. As 

that hearing showed and as this hearing will confirm, there is a 

growing and significant link between international drug traffickers 

and terrorism. 

Several terrorist groups benefit directly or indirectly from drug 

trafficking activities. The form of such relationships varies among 

the groups and areas in the world. Some terrorist groups are directly involved in the trafficking of illegal drugs, some are indirectly involved as a financing mechanism by providing security for 

or taxing of traffickers who transport drugs through areas controlled by the terrorist groups. And some terrorist groups support 

cultivation of illegal drugs, such as coca or opium, as a financing 

mechanism. 

There are many examples. Indeed, as Chairman Hatch has mentioned, the narco-terrorism connection was underscored by a November 2002 arrest in San Diego of two Pakistanis and one U.S. 

citizen for attempting to exchange 600 kilograms of heroin and 5 

metric tons of hashish for cash and 4 Stinger anti-aircraft missiles 

to supply Al–Qaeda associates. 

We have a very distinguished panel of witnesses here today, Mr. 

Chairman, and I look forward to their testimony about the connection between terrorists and international drug traffickers. 

Chairman HATCH. Well, thank you, Senator. 

Senator Cornyn, do you care to make any remarks? 

Senator CORNYN. Thank you, Mr. Chairman. I will pass. 

7

Chairman HATCH. Thank you. 

Senator Sessions, do you care to make any comments? 

Senator SESSIONS. No, thank you, Mr. Chairman. 

Chairman HATCH. Well, we will begin with our panel. We are delighted to have these tremendous leaders here with us today. 

Mr. STEVE W. Casteel is the Assistant Administrator for Intelligence at the Drug Enforcement Administration here in Washington. 

Mr. Steve McCraw, we welcome you here again, Assistant Director of the Office of Intelligence at the Federal Bureau of Investigation. 

Ms. Deborah McCarthy is Deputy Assistant Secretary of State in 

the Bureau of International Narcotics and Law Enforcement Affairs at the Department of State. Mr. John P. Clark is the Interim 

Director of the Office of Investigations in the Bureau of Immigration and Customs Enforcement in the Department of Homeland Security. 

So we are happy to have all of you here and we will begin with 

you, Mr. Casteel. 

STATEMENT OF STEVEN W. CASTEEL, ASSISTANT ADMINISTRATOR FOR INTELLIGENCE, DRUG ENFORCEMENT ADMINISTRATION, WASHINGTON, D.C. 

Mr. CASTEEL. Thank you, Mr. Chairman. Chairman Hatch, Senator Biden, Senator Kyl, Senator Sessions, good to see you again, 

and obviously last but not least, Senator Cornyn. It is a pleasure 

to be with you today to discuss a very important issue and to represent the Drug Enforcement Administration as the Assistant Administrator of Intelligence. 

Prior to September 11, 2001, the law enforcement community 

typically addressed drug trafficking and terrorist activities as separate issues. In the wake of the terrorist attacks in New York City, 

Washington, D.C., and Pennsylvania, these two criminal activities 

are virtually intertwined. For DEA, investigating the link between 

drugs and terrorism has taken on a renewed importance. 

Throughout history, a broad spectrum of the criminal element, 

from drug traffickers to arms dealers to terrorists, have used their 

respective power and profits in order to instill the fear and corruption required to shield them from the law. 

Whether a group is committing terrorist acts, drug trafficking or 

laundering money, the one constant to remember is that they are 

all forms of organized crime. The links between various aspects of 

the criminal world are evident because those who use illicit activities to further or fund their lifestyle, cause or fortune often interact 

with others involved in related illicit activities. 

For example, organizations that launder money for drug traffickers often utilize their existing infrastructure to launder money 

for arms traffickers, terrorists and other types of criminals. The 

link between drugs and terrorism is not a new phenomenon. 

Globalization has dramatically changed the face of both legitimate and illegitimate enterprise. Criminals, by exploiting advances 

in technology, finance, communications and transportation in pursuit of their illegal endeavors, have become what we now call criminal entrepreneurs. Perhaps the most alarming aspect of this entreVerDate 0ct 09 2002 11:51 Oct 30, 2003 Jkt 090052 PO 00000 Frm 00011 Fmt 6633 Sfmt 6633 S:\GPO\HEARINGS\90052.TXT SJUD4 PsN: CMORC
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preneurial style of crime is the intricate manner in which drugs 

and terrorism may be intermingled. 

The DEA does not specifically target terrorists or terrorist organizations. DEA’s mission is and remains to investigate and prosecute drug traffickers and drug trafficking organizations. However, 

some of the individuals and/or organizations targeted by DEA may 

become involved in terrorist activities. In fact, 39 percent of the 

State Department’s current list of designated foreign terrorist organizations have some degree of connection to drug activity. 

If the Committee would look to the right there, you will see two 

charts outlining that fact. The first chart lists the 36 foreign terrorist organizations currently listed by our State Department. 

Those highlighted in red, those 14 organizations, we believe have 

some link and ties. Often, when we talk about narco-terrorism, we 

think of Latin America, too. And if you look at the second chart, 

you will see that the global spectrum covered by these organizations is worldwide. 

One does not have to go to the Middle East, however, to find active terrorist groups. They exist right in our hemisphere a mere 

three hours’ flight from Miami. The U.S. State Department has officially designated the ELN, the FARC and the AUC as foreign terrorist organizations. Based in Colombia, these groups were responsible for some 3,500 murders in 2002 alone. 

As in years past, Colombia endured more kidnappings last year 

than any other country in the world, roughly around 3,000. Overall, the ELN, FARC and AUC all benefit and derive some organizational proceeds from the drug trade, as well as illegal activities 

such as kidnapping, extortion and robbery. 

DEA reporting indicates that persons affiliated with the AUC, 

and to a lesser extent the FARC, are now working with Mexican 

and Central American trafficking organizations to facilitate cocaine 

transshipment throughout the region. Consistent with these reports, a Government of Mexico official recently stated that members of the AUC and FARC are carrying out drug trafficking activities in Mexico. 

There have been numerous instances of drugs-for-weapons exchanges occurring in the region, particularly in Central America. 

Drugs are almost becoming the universal currency of organized 

crime. 

As you see in a chart that has been placed up there now, this 

is all too often an occurrence in Central America. A plane will land, 

offload a large amount of cocaine. They will throw on a load of guns 

and back south it heads. Fortunately, this plane didn’t make it off 

the ground. 

The ELN, FARC and AUC are not the only terrorist groups in 

our hemisphere. As you heard before, the Tri–Border area of Paraguay, Argentina and Brazil is a Hizballah and the Islamic Resistance Movement, known as Hamas, action area. DEA intelligence 

indicates that they generate a significant income by controlling the 

sale of various types of contraband in these areas, including drugs, 

liquor, cigarettes, weapons and forged documents. Our intelligence 

suggests that large sums of these earnings from these illegal activities go in support of the operatives’ respective organizations in Lebanon. 

9

Although not in our hemisphere, but of great concern to our National interest, Afghanistan continues to be a major source-producing country, producing approximately 59 percent of the world’s 

supply of opium in 2002. In January 2003, DEA officially reopened 

its Kabul office, which is staffed by two full-time special agents. 

With a presence north and south of the Afghan border, through 

offices in Uzbekistan and Pakistan, the DEA continues to work 

closely with its counterparts to collect intelligence pertaining to 

clandestine laboratories, drug stockpiles, trafficking routes and 

major regional drug targets. 

Afghanistan’s neighbors in the Central Asian states may also be 

candidates for exploitation by these traffickers. Drug trafficking 

groups could potentially utilize their existing networks within the 

region to move to market precursor chemicals and other things to 

be used in the drug trade. Presently, the situation is fluid and constantly changing. Until the situation in Afghanistan stabilizes, the 

future of drug cultivation and production within that country or 

within that region itself remains uncertain. 

Southeast Asia also faces similar obstacles in confronting the 

myriad and terrorist organizations who continue to challenge established governments. The United Wa Army, the largest heroin and 

methamphetamine trafficking group in the area, operates with virtual autonomy, a government within a government, primarily funded by drug activities. The overwhelming majority of both heroin 

and methamphetamine refineries currently are located in Burma 

and areas controlled by the Wa or indirectly in areas controlled by 

traffickers paying fees to the Wa. 

The terrorist attacks carried out on our Nation on September 11, 

2001, graphically illustrate the need to starve the financial base of 

every terrorist organization and deprive them of the drug revenue 

that is used to fund acts of terrorism. Tracking and intercepting 

the unlawful flow of drug money is an important tool in identifying 

and dismantling international drug trafficking organizations and 

their ties to terrorism. 

Domestically, one major DEA effort that highlights the importance of targeting financial networks to the Middle East is Operation Mountain Express III. This investigation, which targeted 

pseudoephedrine suppliers from Mexican methamphetamine super 

labs, revealed that proceeds from the sale of Canadian 

pseudoephedrine are being funneled through the traditional hawala 

underground banking network to individuals in the Middle East. 

The last chart you will see there somewhat illustrates that fact. 

What we have is major labs operating on our West Coast controlled 

by Mexican organized crime groups. The source or precursor chemical for that is pseudoephedrine which is produced in Canada, 

moves across our borders mainly to Chicago and Detroit, on then 

to Las Vegas and Phoenix, and then ultimately to the big labs. 

From a law enforcement perspective, what I find interesting here 

is the way we were seizing these pseudoephedrine tablets. As you 

see the pictures moving across, when we first started having this 

problem, we were seizing all these little bottles of pseudoephedrine, 

very small bottles, case after case. Then we started seizing bigger 

bottles and bigger bottles, and now as you can see at the end, we 

10

are seizing kegs of this product, which shows the need for it and 

the profitability to be addressed by it. 

In recent years, U.S. law enforcement has moved toward a community policing model. You hear that all the time in the United 

States, community policing, community policing. Internationally, 

law enforcement has adopted what we call the transnational policing approach. The DEA is positioned to support this model because 

it maintains 79 offices in 58 countries. These offices support DEA 

domestic investigations through foreign liaison, training of host 

country officials, bilateral investigations and intelligence-sharing. 

Foreign operations enable DEA to share intelligence and coordinate 

and develop a worldwide drug strategy, in cooperation with our 

host countries. 

In conclusion, Mr. Chairman, the events of September 11 have 

brought a new focus on an old problem, narco-terrorism. These 

events have forever changed the world and have demonstrated that 

even the most powerful Nation is vulnerable to acts of terrorism. 

In attempting to combat this threat, the link between drugs and 

terrorism has come to the fore. Whether it is a state, such as the 

formerly Taliban-controlled Afghanistan, or a narco-terrorist organization such as the FARC, the nexus between drugs and terrorism 

is perilously evident. DEA, though a single-mission agency, is committed to our National security through a myriad of cooperative 

international and domestic enforcement initiatives and programs. 

Once again, I thank the Committee for the opportunity to share 

my insights relative to DEA’s role in this critically important and 

I will also be happy to respond to any questions the Committee 

may have. 

Thank you, Mr. Chairman. 

[The prepared statement of Mr. Casteel appears as a submission 

for the record.] 

Senator KYL. [Presiding]. Thank you very much, Mr. Casteel. 

Let me just note that Senator Leahy’s and Senator Grassley’s 

statements will be put in the record, without objection, and we will 

leave the record open for one week. 

Mr. McCraw. 

STATEMENT OF STEVEN C. MCCRAW, ASSISTANT DIRECTOR, 

OFFICE OF INTELLIGENCE, FEDERAL BUREAU OF INVESTIGATION, WASHINGTON, D.C. 

Mr. MCCRAW. Thank you, Senator Kyl. With your permission, I 

would like to respectfully request that my written testimony be 

submitted to the record. 

Senator KYL. Without objection, so ordered. 

Mr. MCCRAW. Also, with your permission, I would like to depart 

a little bit from my written testimony and talk to you a little bit 

about this serious problem. 

Before I began, I want to take this opportunity on behalf of every 

FBI man and woman to publicly thank the members of this Committee, even though Chairman Hatch is not here at this time, for 

your tremendous support, and Senator Biden, Senator Sessions and 

Senator Cornyn, to the FBI. We are now able to modernize our information technology system. We are having agents increased in 

11

terms of combatting terrorism analysts, and also some support professionals, and we very much appreciate it. 

Secondly, I would like to divert just a little bit of time to talk 

about what is the most significant threat as we see it right now. 

Clearly, it is Al–Qaeda. Also, there are other Islamic extremist 

groups. The FBI, along with our State, local and Federal partners, 

have identified hundreds of Islamic extremists and Sunni extremists tied to Al–Qaeda, tied to terrorists. 

The concentrations continue to be Eastern Seaboard, Western 

Seaboard and Southwest, in your part of the country, Senator 

Cornyn. And it is these threats that certainly keep all of us up late 

at night and up early in the morning. Clearly, the sleeper cells constitute our greatest threat. Those are the ones that sneak into this 

country. They capitalize on our porous borders, our free and open 

democracy that we cherish so much as Americans. Once in, they 

avoid police scrutiny. That is the trade craft; that is what they do, 

for good reason. Clearly, the 19 hijackers exhibited this and we 

have seen this like type of action throughout the world recently. 

We cannot afford to just focus on Al–Qaeda. We can’t afford to 

focus on certainly the Islamic extremists. There is Hizballah, there 

is Hamas. There are even domestic terrorist organizations that still 

constitute a threat to this Nation. 

I think Senator Biden’s point was right on target that, to paraphrase, independently each of these terrorism and narcotics trafficking groups constitutes significant threats to our country. Together, it grows the threat. Clearly, as we put additional pressure, 

which the U.S. Government has, on nations for supporting and harboring terrorism, they are going to seek other ways of funding. And 

I can’t think of a more lucrative way right now than drug trafficking, and it is there. There is no question about it. 

There is no way that we can extract crime from terrorism. They 

are inextricably linked, which is one of the things I noted in my 

testimony. You recognized this back in the year 2000 when we 

talked about the convergence of international crime and terrorism. 

They depend upon it, and there is a myriad of violations. I mean, 

it is like reading a RICO indictment, from white collar crime, to 

burglary, to robbery, to homicide, to smuggling, counterfeiting and 

drug trafficking, which is the focus of this testimony today; credit 

card fraud, white collar crime fraud. 

Mr. Casteel made a great point with the pseudoephedrine, and 

a lot of this diversion is happening with some of the groups that 

are associated with Hamas and Al–Qaeda and other Islamic extremists in the U.S. They are diverting this pseudoephedrine specifically to the drug trafficking market, it being a precursor to 

methamphetamine. That clearly is a problem. 

Again, additional funds, and these funds that they generate are 

used for two reasons, either direct support in terms of funding of 

operations, and certainly there is that facilitation model. When we 

see a lot of convergence and overlap between the criminal world 

and the terrorist world, unfortunately often—or I will say fortunately, we will take down investigations, some would argue prematurely. 

But there is a new paradigm and we can’t afford—you know, unlike baseball where batting .700 will put you in the Hall of Fame, 

12

what we are faced with today, the intelligence community, the law 

enforcement community and the FBI together—it only takes one 

act of terrorism and there is a failure, and we can’t afford that. 

So you will notice in a lot of our investigations that we will take 

down things that normally we might let continue on for a period 

of time to identify and be able to conclusively tell you that those 

links exist. The San Diego case is a perfect example that the Chairman spoke of earlier. 

Thank you. I look forward to answering any questions that you 

might have and I appreciate the opportunity to be here today. 

[The prepared statement of Mr. McCraw appears as a submission 

for the record.] 

Senator KYL. Thank you very much, Mr. McCraw. I also want to 

make sure that we will have some time later to get into a little bit 

more detail, to the extent you can, on that last case. I think that 

will be very important for people to understand. 

Mr. MCCRAW. Yes, sir. 

Senator KYL. Ms. McCarthy. 

STATEMENT OF DEBORAH MCCARTHY, DEPUTY ASSISTANT 

SECRETARY, INTERNATIONAL NARCOTICS AND LAW ENFORCEMENT AFFAIRS, DEPARTMENT OF STATE, WASHINGTON, D.C. 

Ms. MCCARTHY. Thank you, Mr. Chairman, members of the Committee. Thank you for the opportunity to speak today on behalf of 

the State Department. I am accompanied today by Mr. William 

Pope, the Principal Deputy Coordinator of the State Department’s 

Office of Counter–Terrorism. I am going to request that my written 

statement be included in the record and I am going to do some extracts from it today. 

As you know, well before September 11 the INL office of the 

State Department has been working to combat narcotics production, trafficking, international money laundering, cyber crimes and 

theft of intellectual property rights. For fiscal year 2003, Congress 

appropriated INL more than $900 million to advance these objectives. S/CT has the lead in the Department for coordinating our activities in the war on terrorism. INL supports these efforts through 

counter-narcotics activities, anti-money laundering and crime control activities. 

To counter the increasing linkage and overlap among terrorist, 

drug and other criminal groups, INL has begun integrating 

counter-narcotics and anti-crime programs. We do this through initiatives to build up law enforcement and justice systems in key foreign countries. In other words, we also help other countries develop 

their border control enforcement. 

The terrorist interdiction program developed by S/CT installed 

powerful computer databases at airports and other ports of entry 

in friendly countries to enable immigration officials to cross-check 

passports and visas of arriving persons. We also work to develop 

stronger international law enforcement and financial regulation 

standards. We also have programs to fight corruption which are 

also part of our anti-crime efforts. 

The sources of funds may vary between terrorists and other 

criminals and drug traffickers, but the methods used by terrorists 

13

and drug traffickers to transfer funds are similar. Illicit finances 

are of special concern and we have focused a number of activities 

against the programs that they use. 

In the past, state sponsors provided funding for terrorists. In recent years, however, as state sponsorship of terrorism has come 

under increased scrutiny, terrorist groups have looked increasingly 

at drug trafficking and other criminal activities as sources of revenue. 

Fighting money laundering and terrorist financing, which we engage in, provides a particularly clear example of the need for interagency and international cooperation across crime-fighting and 

counter-terrorism disciplines. This is not to say that fighting crime 

and fighting terrorism are synonymous. There are important areas 

in law, policy, diplomacy and program management where the two 

must be treated separately. Law enforcement is one key tool among 

several in counter-terrorism. 

In Colombia, however, the links between drugs and terrorism are 

of particular concern. Since the date of our previous testimony, a 

good deal has changed. A new president has come in, setting Colombia firmly on the course of strengthening its military and police 

forces to defeat the narco-terrorist threat. 

In Colombia, we have mentioned the three main groups that receive revenue from narcotics cultivation, taxation and distribution. 

They provide at least half the funding that the FARC and the AUC 

rely on. We estimate that the ELN derives less of its support from 

drug trafficking. 

Drug money facilitates terrorist operations. As the FARC has expanded urban operations, they may also be reaching out to international terrorists and additional technical expertise. The ongoing 

trial of the alleged IRA operatives arrested in Colombia in 2001 is 

but one example. 

I will not go into the details of the various groups, as I think 

most people are familiar with them. I want to mention also that 

this Andean-produced cocaine and heroin passes through Central 

America, the Caribbean and Mexico, and we have noted the connection between the groups that pass the drugs. 

The situation in Afghanistan, of course, is of note. We have 

ample evidence that the Taliban condoned and profited from the 

drug trade when it was in power. Since the Taliban was forced 

from power, we have seen reports that they and other groups seeking to undermine the regime of President Karzai used drug trafficking to arm their militia and mount operations against the government. Two other groups are worth mentioning, the Peruvian 

terrorist group Shining Path and, in addition, the Islamic Movement of Uzbekistan. 

In addition to trying to curtail the flow of funds to terrorists from 

drug trafficking, we also have a number of other programs; as I 

mentioned, comprehensive anti-money laundering and counter-terrorist financing programs, but we also try to empower our allies to 

detect, prevent, disrupt, prosecute and seize the financial assets. 

We now recognize the close relationship between money laundering and terrorist financing, as noted in our recent INCSR. We 

note also that we train people in a number of law enforcement 

14

areas to increase our capability to prosecute and apprehend and investigate the cases. 

INL works closely with a number of multilateral agencies, and 

in particular we have some new initiatives within the group of G–

8 countries, which I refer to a little bit more in my testimony. 

Thank you. 

[The prepared statement of Ms. McCarthy appears as a submission for the record.] 

Senator KYL. Thank you, Ms. McCarthy. 

Finally, Mr. Clark. 

STATEMENT OF JOHN P. CLARK, INTERIM DIRECTOR, OFFICE 

OF INVESTIGATIONS, BUREAU OF IMMIGRATION AND CUSTOMS ENFORCEMENT, DEPARTMENT OF HOMELAND SECURITY, WASHINGTON, D.C. 

Mr. CLARK. Good morning, Mr. Chairman, distinguished members of the Committee. It is a pleasure and privilege to be here 

today to discuss the efforts undertaken by the Bureau of Immigration and Customs Enforcement, BICE, in its role in investigating 

international drug smuggling and money laundering as it relates to 

narco-terrorism. 

Prior to beginning my specific testimony, I would like to take 

some time to provide background on our new bureau. 

With the creation of the new Department of Homeland Security, 

the investigative and intelligence functions of the former U.S. Customs and Immigration and Naturalization Service have been 

merged to form the Bureau of Immigration and Customs Enforcement under the Department of Homeland Security. In addition, the 

bureau includes the Air and Marine Interdiction Division, the detention and removal program, and the Federal Protective Service. 

BICE utilizes the broad legal authorities of its legacy components 

to investigate and enforce violations of the law as they did previously, and under BICE will continue to protect the United States 

and its citizens from the dangers posed by criminal organizations, 

including those linked to narcotics trafficking and terrorism. 

BICE has the authority to investigate numerous violations, including violations of immigration law, export laws, money laundering, smuggling, fraud and cyber crimes, including child pornography. BICE investigations have led to the identification, penetration and prosecution of individuals and groups who are identified 

as being members of or linked to designated terrorist organizations 

such as the FARC and the AUC. 

Furthermore, BICE, with its formidable money laundering and 

counter-narcotics programs and initiatives, has disrupted and dismantled narcotics smuggling organizations and the financial mechanisms utilized to launder their criminal proceeds. 

It is one of our top priorities to identify, investigate and dismantle the criminal organizations that specialize in the transportation and smuggling of contraband and illegal aliens. The title of 

this hearing today, ‘‘Narco–Terrorism: International Drug Trafficking and Terrorism—A Dangerous Mix,’’ is, in essence, the challenge faced by BICE agents on a daily basis. 

The transportation organization that is paid to smuggle cocaine 

today may very well be contracted to smuggle instruments of terror 

15

or terrorists tomorrow. It is clearly evident that the illicit narcotics 

trade generates enormous profits for criminal organizations. These 

organizations thrive on their ability to amass huge sums of money. 

BICE utilizes a multi-pronged approach to investigate these organizations. In an effort to disrupt and dismantle these organizations, BICE focuses not only on the inbound smuggling of contraband, but also the outbound flow of criminal proceeds. 

BICE’s authority to conduct financial investigations has been derived from a variety of laws. BICE began conducting financial investigations after the enactment of the Bank Secrecy Act, the BSA, 

in 1970, and expanded their investigations with the enactment of 

the 1986 Money Laundering Control Act, the Anti–Drug Abuse Act 

of 1988, and the 2001 PATRIOT Act. 

In addition, various memoranda of understanding between the 

Secretary of the Treasury, the Attorney General and the Postmaster General have been executed regarding the conduct of money 

laundering investigations. These MOUs delineate the specific unlawful activity and investigative authorities in which BICE has jurisdiction. 

Since its inception, BICE has had the authority to enforce antismuggling statutes, to include 18 USC 545. This authority allows 

BICE the ability to investigate the unlawful importation of any 

contraband. With Title 21 cross-designation, BICE has been authorized by the Department of Justice, and more specifically the 

Drug Enforcement Administration, to investigate narcotics smuggling organizations. 

Enforcement of Title 8 of the U.S. Code allows BICE to target individuals or groups of individuals who are attempting to or have 

entered the United States for illicit purposes. These authorities, 

combined with our broad border search authority, place BICE in an 

ideal position to fully investigate smuggling of contraband and humans by sophisticated smuggling organizations, while also targeting the financial mechanisms utilized by these elements to launder their illegal proceeds. 

One such laundering mechanism is the Black Market Peso Exchange, BMPE, a trade-based money laundering system. The Exchange allows drug traffickers to transfer their U.S. profits from 

dollars to pesos without moving cash across borders. 

BICE has an ongoing, aggressive investigative approach concerning the BMPE which includes utilizing investigative techniques 

such as undercover investigations, Title 3 wire intercepts, intelligence-gathering, international coordination and training of our 

international law enforcement counterparts. 

BICE undercover operations directed at the peso brokering system have resulted in the seizure of more than $800 million in cash 

and monetary instruments over the last 8 years. Undercover investigations conducted by BICE have targeted hundreds of Colombian 

brokers, accounts and domestic money laundering and drug trafficking cells operating in U.S. cities, Central and South America, 

as well as Europe and Asia. 

A few case examples: Operation Wire Cutter was a major joint 

money laundering investigation conducted by BICE, the Drug Enforcement Administration, personnel assigned to the U.S. Embassy 

in Bogota, Colombia, and Colombian law enforcement authorities 

16

that targeted high-level Colombian drug trafficking organizations 

and their cells. 

The primary defendants in Operation Wire Cutter were eight 

senior money brokers located in Bogota, Colombia. Each of these 

money brokers had distinct organizations that provided money 

laundering services to several drug cartels on a contract basis. Subsequently, undercover BICE agents picked up drug money from 

operatives of the money brokers in New York, Miami, Chicago, Los 

Angeles and San Juan, Puerto Rico. 

At the same time, the Colombian authorities conducted a parallel 

investigation on the BMPE money brokers and their associates in 

Colombia. Operation Wire Cutter marked the first time that U.S. 

authorities were able to combine undercover pickups of drug proceeds in this country with the investigative efforts by Colombian 

authorities to target BMPE money brokers. 

Operation Wire Cutter resulted in the arrest of 37 individuals, 

29 in the U.S., 8 in Colombia. U.S. authorities also seized more 

than $8 million, as well as 400 kilograms of cocaine, 100 kilograms 

of marijuana, and 6.5 kilograms of heroin. To date, five money brokers in Colombia have been extradited to the United States. This 

represents the first time that a money broker has been extradited 

from Colombia to the United States. 

As I mentioned previously, the transportation organization that 

is paid to smuggle cocaine today may very well be contracted to 

smuggle instruments of terror tomorrow. By using internal conspiracies, criminals utilize corrupt personnel within the seaport and 

airport environments to introduce contraband or implements of terrorism into otherwise legitimate cargo or conveyances, and to remove it prior to examination by the Bureau of Customs and Border 

Protection. 

In an ongoing investigation targeting internal conspiracies at one 

major U.S. seaport alone, BICE special agents have uncovered the 

endemic practice of contraband being removed from international 

cargo prior to the entry process. Utilizing a variety of investigative 

techniques, including undercover operations and controlled deliveries to successfully infiltrate the internal conspirators, hundreds 

of individuals have been arrested and convicted, thousands of 

pounds of cocaine have been seized, and hundreds of pounds of heroin as well. 

Another significant internal conspiracy investigation conducted 

by BICE agents in conjunction with the Drug Enforcement Administration was Operation Ramp Rats. Ramp Rats targeted corrupt 

employees working at Miami International Airport and resulted in 

more than 70 indictments and arrests. Thirty of those arrested 

were employees of a major domestic airline. Those arrested in this 

investigation were charged with various violations of Federal narcotics laws, such as conspiracy to import cocaine into the United 

States and conspiracy to possess cocaine. 

Both of these investigations have targeted corrupt employees in 

the transportation industry, resulting in the facilitation of smuggling schemes used by criminal organizations. BICE is aggressively 

implementing programs to address these weaknesses that include 

the assignment of additional investigative personnel, the utilization 

17

of improving technology, and the combination of various law enforcement and security components to counter these threats. 

Recently, BICE drug trafficking and money laundering investigations have highlighted the link between drug trafficking and terrorist organizations. An adjunct of these investigations is the link 

between the drug trafficking organizations and Colombia’s illegal 

armies. 

In October 2002, BICE arrested Libardo Ernesto Florez Gomez 

after he arrived at Miami International Airport. Upon arrival, he 

declared over $180,000 in U.S. currency. A subsequent secondary 

examination revealed multiple financial records, blank pre-signed 

checks, a DEA seizure letter, and a document that alleges his links 

to the FARC. Florez Gomez admitted that the funds declared were 

not his. On April 4 of this year, 2003, Florez Gomez pled guilty to 

one count of 18 USC 1960 for his involvement in operating an unlicensed money transmitting business and is currently awaiting sentencing. 

Currently, BICE is participating in a highly successful joint organized crime drug enforcement task force with the Drug Enforcement Administration and the Federal Bureau of Investigation that 

is targeting the maritime transportation of multi-ton shipments of 

cocaine belonging to the Colombian drug cartels. 

This investigation has led to indictments against several ostensibly high-ranking members of the AUC. These individuals were indicted for involvement in the maritime transportation of over 12 

tons of cocaine. As a result of the investigation, a direct link between drug trafficking and known terrorist organizations has been 

established. Narco-terrorism will continue to be a top priority of 

BICE. 

In conclusion, I would like to thank the distinguished members 

of this Committee for the opportunity to speak before you today 

and will be glad to address any questions you may have. 

[The prepared statement of Mr. Clark appears as a submission 

for the record.] 

Senator KYL. Thank you very much, Mr. Clark. 

One of the common threads throughout your testimony suggest 

to me a question about sharing of information not only among the 

Federal agencies, but also with local authorities. 

Mr. McCraw, I wanted to ask you this question. Would it be your 

view that there are at least possibly some legislative changes needed to provide more information to State and local officials, particularly information gathered through grand jury investigations? Do 

you have any comment on that? 

Mr. MCCRAW. Well, Senator, I have to get back in terms of specifics before I wax on about what we need or don’t need. However, 

it is a topic near and dear to my heart, and the Director’s as well, 

as to how much information we can push out because the army out 

there is the State and locals. I mean, it is their job. They have got 

the public safety mission right up on the front lines. 

To the extent that we can use whatever we can in terms of statutory authorities—and, frankly, the PATRIOT Act has helped 

much—and also to get key individuals within the local law enforcement community their security clearances because some of this inVerDate 0ct 09 2002 11:51 Oct 30, 2003 Jkt 090052 PO 00000 Frm 00021 Fmt 6633 Sfmt 6633 S:\GPO\HEARINGS\90052.TXT SJUD4 PsN: CMORC
18

formation, as you well know, is classified for good reason—yet, no 

longer can they work in a vacuum. 

I mean, there is information that happens overseas that affects 

the chief of police in Tucson, the chief of police in San Antonio, and 

they need that information. We are involved in a number of information-sharing initiatives right now where we can use technology 

to push information to them, as well as to our intelligence community partners. 

Senator KYL. Would you do me a favor? If you could communicate with others in the Bureau or with the Department of Justice 

to get an answer to that question, I would appreciate getting that 

for the record. 

Mr. MCCRAW. Yes. 

Senator KYL. But just to the rest of you now, are there any other 

issues with respect to information-sharing that you think is important to bring to the attention of the Committee? 

Yes, sir, Mr. Casteel. 

Mr. CASTEEL. It is interesting. Information-sharing has become 

my life for the last 3 years, so I would like to comment on a couple 

of things, if I could. 

Number one, when we talk about intelligence and when I speak 

before the intelligence subcommittees, I often point out in the back 

of the room our seal doesn’t appear there. We are not part of the 

IC world and so we look at intelligence a little bit differently. We 

think there are two models for intelligence. One is the IC model, 

but one is a law enforcement model, and they are two different 

things. When you talk to the local chiefs of police, they may not understand the IC world, but they recognize what they want and 

what they need. 

To sum up the two models in two words perhaps, the IC model 

is based on getting to know something. The law enforcement model 

is based on being able to do something with that information. So 

I do see at times from a law enforcement perspective a concern that 

we are going down this IC road model for the development of intelligence-sharing and that may not be the correct road to go down. 

We need to recognize who the customer is and what they want. 

The second thing within intelligence is within our model you 

have the first responder. And you have heard that term used a lot, 

‘‘first responder.’’ Well, they have an important role also in intelligence. Unlike the IC world, in law enforcement we have no collectors. Our collectors are those first responders out there every day 

of the week collecting information, and information is of value. 

We just recently closed one of our offices in Pakistan, not because 

of something we received from the IC community, but two local police officers there catching the people stepping off the distance to 

our front door to plant the bomb. The first responder has a role 

here. 

As we are looking at this, we are also putting a tremendous 

amount of money into technology, data-mining, terms like that. We 

have to remember there are two other parts to this. Technology is 

one answer, but the first responders need to be trained. They need 

to recognize what they do for a living is important for intelligence. 

You need more analysts on the other end to look at that intelligence. 

19

And last but not least, I have been a policeman for over 30 years. 

I only do what benefits me. If I don’t get information back, then 

as a police officer I am not going to want to be part of this system. 

So I do think we do need to look at that. 

Last but not least, Lord knows we have made enough mistakes 

in the drug arena when it comes to information-sharing. But over 

30 years, we have tried to overcome many of these mistakes and 

I think we have learned a lot. I think we have learned a lot that 

would make a good template. Rather than reinvent a lot of things, 

move that template over into the terrorist arena. 

I go to meetings and I hear people say, you know, we need to be 

able to give more tactical information to the State and locals. Well, 

we have done that. We have got EPIC that has been there for 28 

years, getting tactical information to that police officer on the side 

of the road halfway between Omaha and Lincoln at three o’clock 

in the morning. 

I hear them say the military and law enforcement have to be 

commingled in their information-sharing better so they both can 

take action. We do that already in JATF East, now called JATF 

South, where information from law enforcement overseas is given 

to the military, who takes action that leads to evidence that we put 

back in our court system. So that model is very important, sir. 

Thank you. 

Senator KYL. Any other comments on that? 

Go ahead, Ms. McCarthy. 

Ms. MCCARTHY. I just want to make one comment that without 

the cooperation that we get among other law enforcement agencies, 

INL could not do its work, and I will point to the eradication effort 

in Colombia. To send the planes out to get the crops, we have to 

work with agencies to find out where the crops are. But also more 

importantly, we have to work with other agencies to get the information to find out where the guerrillas are so our planes don’t go 

out and get shot down and it results in more hostages. 

Senator KYL. Thank you. 

Mr. Clark. 

Mr. CLARK. This is the fifth week of five very long weeks in my 

life, having just reported up here from Miami. On a good note, I 

would say, though, that there are positive improvements in terms 

of information-sharing, first, on the Federal level. 

In the five weeks I have been here, I have had the opportunity 

to sit down with representatives from both the Drug Enforcement 

Administration as well as the FBI, and we are working on improving our coordination and intelligence-sharing in many aspects. 

On a State and local level, first responder level, in my previous 

life I was the special agent in charge for customs investigations in 

Miami. I know we are taking very positive steps in terms of working with the first responders. We have a blue lightening operations 

center down in Miami which has always incorporated State and 

locals. It works under the HIDTA, High Intensity Drug Trafficking 

Area intelligence center. 

We have incorporated that operation now to work on operations 

at our borders that address terrorist threats, as well as drug trafficking. Through that operation, we are able to share a lot of information that is not classified with the State and locals to give them 

20

a sense of ownership of what we are doing and enlist their assistance in helping us at the borders. So there are some positive improvements along those lines. 

Senator KYL. Well, you can see that is an emphasis of ours and 

we just need to have you identify any institutional or legal impediments to that sharing if they exist. 

Senator Biden. 

Senator BIDEN. Thank you very much, Mr. Chairman. 

I want to focus on three areas to just sort of give you a headsup here. One is what our targeting priorities are. Two is what 

knowledge and detail we have about the impact of actual funds in 

the hands of terrorist organizations. And, three, the allocation of 

our resources domestically, the Federal budget, how we allocate 

those resources and whether we could do it better. 

Now, I, like all of you and the Chairman, have spent a great deal 

of time dealing with the Andes, and Colombia in particular. But I 

want to make a point here. The very existence of that democracy 

is at stake and whether or not it becomes a narco state or whether 

or not it is able to gain control. That is consequential to us shortterm and long-term, but it is not nearly as consequential to us as 

whether or not Al–Qaeda has an extra $200 million to spend. 

None of you has talked about priorities here. We talk about terror like all terrorists are created equal. All terrorists are not an 

equal threat to us. Nobody from the AUC is attacking directly the 

United States of America. We spend hundreds of millions of dollars 

aiding and assisting the Colombian government to deal with the 

AUC. We have trained their military. We have trained them explicitly to try to deal with the internal problems of the Colombian military. 

If we took all the money we were spending in Colombia and if 

we spent it all we could cut off all narcotics funding to Al–Qaeda, 

the American people in a heartbeat would say stop it all for everything else and take care of Al–Qaeda. My dad, who just died, used 

to say if everything is equally important to you, nothing is important to you. The reason I wrote the drug czar law in the first place 

was we didn’t prioritize. 

My question to you is this: from each of your different perspectives, how are you charged? What is your number one priority? 

What terror organization, not generically—and if it is generic, then 

I think we have a serious problem. What is the bulk of your focus? 

Some of us are beating the living devil out of, with good reason, 

the Saudis for not having cut off quickly enough, directly enough 

and profoundly enough, not having changed their banking system, 

not having used their authority to get their billionaire cousins to 

stop funding indirectly and directly Al–Qaeda and their madrases. 

What good does that do? We are risking, with good reason, a relationship that has profound consequences for us, including whether these lights go on or not and how much it costs to turn them 

on. In fact, the amount of money that Al–Qaeda may be getting 

through Afghanistan alone may make up for all the lost revenue. 

I don’t know. It may. 

So my question to you is, starting with the State Department—

and my first question for you, Ms. McCarthy, is why don’t you have 

a boss? I am not being facetious. What is the reason, what is the 

21

inside skinny? Why have we not had this as a priority? Why don’t 

you have somebody running the show there? That is my first question. 

Ms. MCCARTHY. I believe we should have some information on 

that very soon, Senator. 

Senator BIDEN. That is kind of an unfair question to ask you, actually. 

Ms. MCCARTHY. We would be happy to have a boss. 

Senator BIDEN. I should withdraw the question. There is no way 

you would know. It is above your pay grade, and mine maybe as 

well. But it is a reflection, in my view, of the lack of it being a priority. 

Number two, do you have a priority list internally as to where 

the focus should be in this nexus between terrorist organizations 

and drug trafficking? The State Department first. 

Ms. MCCARTHY. For the INL bureau, our top priority continues 

to be the Andean region and counter-narcotics activities there. Approximately 80.9 percent of our 2003 funds go to that area, Panama, and a couple of other countries. 

Our crime programs, which include money laundering and others, on which we work with a priority list of countries who have 

been designated as of special significance, accounts for a very small 

portion of our budget. So in terms of what INL does, again, to build 

up law enforcement, build up capacities, as opposed to going after 

groups specifically—it continues to be the Western Hemisphere, 

and particularly the Andean Ridge. 

Senator BIDEN. Now, I want to make it clear we urge you to do 

that, so I am not being critical. We, the Congress, and past administrations and this one have had that as a focus. But I just want 

to make the point that 81 percent of all your effort, money and 

funding has nothing to do with the organizations that create the 

greatest immediate threat to the citizens of the United States of 

America here and abroad—nothing, zero, nothing to do with it. 

Now, let me ask the question of each of you. DEA? 

Mr. CASTEEL. We have both, I would say, Senator, long-term and 

short-term goals here. Let’s talk about short term because I think 

it addresses your question better than others. 

Obviously, as you said in your opening remarks, we have focused 

on Latin America for a long time because that is where the majority of actual drug availability on the street comes from. 

Senator BIDEN. It still does. 

Mr. CASTEEL. But I want to assure you that we are not just focusing simply on that in the short term, and let me give you two 

examples. One month after 9/11 occurred, we held a meeting in 

Turkey and we brought together almost 30 countries of the world 

to address what we called Operation Containment. 

We recognized that Afghanistan is a bit like holding sand in the 

palm of your hand; the tighter you squeeze, the more it kind of gets 

out through your fingers. 

Senator BIDEN. I disagree with that metaphor, if I understand it. 

Mr. CASTEEL. What I mean by that is if you just focus on that 

one country and say, okay, we are going to fix everything in Afghanistan, and think you can build a perimeter around it and fix 

the drug problem there, I think you are wrong. 

22

I go back again to your opening remarks. You and I were around 

when Nixon coined the phrase ‘‘war on drugs,’’ and the first approach was build big borders around the United States and that 

was how we were going to solve it. With Afghanistan, yes, you have 

to create a capability within that country to address that problem, 

but then you build rings around it, fences around it. That was the 

goal of Operation Containment. We brought groups together, countries with equal concerns, and we have had some degree of success 

building these rings, these fences, around Afghanistan. 

Senator BIDEN. Give me an example of success because I see 

none. 

Mr. CASTEEL. We seized 1.2 tons of heroin crossing the border in 

Turkey at three o’clock in the morning at a small border checkpoint. 

Senator BIDEN. Well, you have done that before. You have scores 

of examples of that. 

Mr. CASTEEL. We identified a group there that we didn’t know 

about before, a group that had connections to other interests in the 

region. 

Senator BIDEN. This is not a general little deal here. What other 

interest in the region? 

Mr. CASTEEL. It was a group that we had found that were now 

moving their heroin laboratories into that region of Turkey to 

produce large amounts. We seized that. That led to the— 

Senator BIDEN. Was that group connected in any way—this is 

about terror, this hearing in particular, not just drugs generically, 

but terror. Was that group connected in any way with Al–Qaeda, 

the Taliban or any other terrorist organization, as we define here? 

You could argue that every international drug cartel is a terrorist organization. What my folks back home mean by terrorists 

is people who load planes up and crash them into buildings. What 

they mean is people are getting money to go out and buy highlyenriched uranium to try to build a bomb. They mean people who 

are going to go out and build a dirty bomb. They mean people who 

are going to go purchase botulism. They mean people who are going 

to go out and do those bad things that Governor Ridge talks about 

all the time and we worry a great deal about. So let’s get it real 

straight what I am asking about here and what the focus of this 

hearing is, at least for this Senator. 

What is the connection between these trafficking organizations 

you are interdicting—and you are doing a good job at interdicting 

them—and the organizations that are the ones that are going to 

use weapons of mass destruction and/or catastrophic actions to 

cause significant numbers of deaths in the United States and 

Americans abroad? That is what this is about. 

Now, please tell me whether or not the interdiction you had on 

the Turkish border or the movement of laboratories into Turkey 

which I mentioned in my opening statement—whether or not that 

has any direct relationship with the funding of terrorist organizations who are seeking to create significant numbers of American 

deaths as a consequence of their actions. If you don’t know, that 

is okay. 

Mr. CASTEEL. I don’t know other than to say that opium originated in Afghanistan. The people who are controlling it AfghaniVerDate 0ct 09 2002 11:51 Oct 30, 2003 Jkt 090052 PO 00000 Frm 00026 Fmt 6633 Sfmt 6633 S:\GPO\HEARINGS\90052.TXT SJUD4 PsN: CMORC
23

stan are one of two groups, the tribal organized crime groups that 

have existed there that have a relationship with the Taliban or the 

Taliban. So, indirectly, it all goes back there. 

Let me give you another example, though, that might be a little 

closer to the point about prioritizing the targeting efforts toward 

terrorism. Last week, I was in Australia. I was sitting in Australia 

with five other nations of the world, to include the UK, Canada and 

the Australian Federal Police. 

What we did there was to begin a targeting process to identify 

drug trafficking organizations that affect each and every one of our 

countries. Now, DEA was the only agency sitting there at the time 

that doesn’t have terrorist responsibilities. If you are in Australia, 

the Australian Federal Police has a priority on that. If you are in 

Canada, the RCMP has a priority on that. If you are in the UK, 

the same thing. 

As we sat down and started to approach these priorities, obviously those other countries represented there put terrorism as their 

number one reason for wanting to target these. So there are processes going on. This transnational policing approach requires this 

type of collaboration and partnership. 

Senator BIDEN. I agree with you. 

Mr. CASTEEL. So there are targeting approaches going on within 

DEA that tie to terrorism. 

Senator BIDEN. Let me give you a specific example, and I don’t 

want to get any of your agents in trouble. For 30 years, as I traveled to countries, as you probably know, I find your agents and I 

sit with them. This has been a passion of mine for my entire career. 

Sitting at Bagram Air Force Base and dealing with your agents, 

there are no stovepipes there anymore and so you have a DEA 

agent sitting next to an FBI agent, sitting next to a CIA agent, sitting next to Defense Intelligence Agency personnel, sitting next to 

the commander of special operations all around a big table. 

Your guys were telling me exactly what was going to happen. 

They laid it out. Unless we established security in the provinces, 

the mayor of Kabul can’t do a damn thing. There is nothing Karzai 

can do to follow up his edicts—zero. We have 8,000 forces there no 

longer pursuing with the same—well, officially no longer pursuing 

the Taliban and Al–Qaeda in the same way we did before, but not 

out in the countryside. We have 200 forces out in the countryside 

in these—what we were going to call them? What were these 

things called, instead of expanding? 

Come on, somebody on the staff. There is a name for it. There 

is a great little acronym for these forces that were going to go out 

for reconstruction in the countryside. So you go out to build a dam 

and we were going to provide ‘‘x’’ number of military to go with the 

agency building the new sewer system or whatever. It has a name 

and I am amazed my staff doesn’t know it. I am amazed I don’t 

know it. 

But having said that, we have got 200 folks out in the field in 

uniform. Now, your guys told me, hey, Joe, do you think we are 

going to be able to stop poppy production on a grand scale if we 

cannot secure the region? 

24

Karzai sends out an edict and what happens? Ismael Kahn says, 

yes, okay, the mayor had something to say; I don’t know what it 

was. The Pashtun, which he is part of, say, oh. He has no authority, no authority. 

What bothers me about your collective testimony, not any of you 

individually, is everybody knows that is for sure one of the revenue 

streams for the Taliban, particularly in the Pashtun area, and in 

turn Al–Qaeda, although we don’t know for certain. None of you 

know enough to tell me. The intelligence community doesn’t know 

enough to tell me. We don’t know even what we don’t know. So my 

frustration, as you can tell, is not with any one of you; it is our allocation of resources and the prioritization. 

Mr. Clark, you have been here for five weeks. You have done a 

great job and you are going to do a wonderful job because you did 

a hell of a job in Miami. You have got your hands full with this 

new outfit. It has sprawling jurisdiction. 

But you never once mentioned, not once, the only thing that concerns Americans right now, any terrorist organization that is likely 

to send in the phone call taking credit for a bus stop in Buffalo, 

a building in Wilmington, Delaware, a tower in Chicago, a discotheque in San Francisco or anywhere else. 

I am not picking on you; I really am not. But I am trying to point 

out that we don’t have our act together yet. We do not have our 

act together yet and it is worrisome. So at some point maybe we 

should have a classified hearing with the intelligence agencies, and 

you included, to tell us what you actually know about following the 

dollar from the time the farmer plants the poppy in Afghanistan 

or anywhere else to the moment that a bank account is opening in 

a cell that is an Al–Qaeda cell in Riyadh or in Islamabad or in New 

York City, and the extent that we can follow the dollar, if we can. 

That is the part we don’t know. 

The Chairman is back and I will come with a second round. Well, 

I guess I won’t come back. I will just state that I really think we 

are misallocating our resources here. I do not think that we have 

sufficient information, and it is understandable, about the direct 

link between the actual production and the actual processing of, in 

this case heroin, but it could be other drugs as well, and the bank 

account of Al–Qaeda. 

Ms. MCCARTHY. Senator, I know you are focused on the money 

lead and that is an excellent question. I just wanted to add a piece 

of information. I think you were referring to what are called the 

provisional regional teams. 

Senator BIDEN. Thank you. Provisional regional teams. I love 

that. 

Ms. MCCARTHY. Well, we have some monies. INL has a small effort in Afghanistan that is $60 million for 2003 basically to boost 

capacity of the police and law enforcement. But, in general, all 

those operating over there—there is the acceptance that security in 

the countryside and, as I said, as a corollary stopping the flow of 

drug money to the warlords, is the top priority. 

Senator BIDEN. Yes, and unfortunately you don’t have any ability 

to do it yet. Maybe we are going to have a little epiphany here—

not you all—and we are going to see the light and figure out that 

there is no way. It is a little bit like saying that we are going to 

25

stop—well, anyway, I am taking too long, but it is something we 

want to work with you on. But we really have to get to the directors of each of your departments to be able to—yes, Mr. McCraw. 

Mr. MCCRAW. Senator, if you don’t mind, just quickly to underscore, I think, the importance of what you said in terms of 

prioritization, as I testified earlier, there is no question that Al–

Qaeda is the greatest threat; there is no question, and Islamic extremists which have really morphed into that Al–Qaeda threat. We 

talked a little bit about Hizballah, Hamas, and we can work our 

way down the chain. All of them have the potential to raise to a 

threat, but right now, without question, the Director has named 

the priorities. The priority is international terrorism, and in that 

Al–Qaeda is number one. 

With your permission, with Congress’ support, we have diverted 

substantial criminal resources to divert because there is one guiding principle here. No lead, no matter how obnoxious—not obnoxious, excuse me; we are getting close here—seemingly absurd, will 

go uncovered. We have to address everyone. 

And the way we address it is rather than following the seed and 

the poppy back, we look at the enterprise itself. So when we find 

trafficking in it, we exploit that like we did in San Diego or with 

DEA in New York. If we find that it is immigration violations, we 

work with our colleagues in BICE. It doesn’t matter what the violation is. We know what their ultimate goal is and we will use any 

violation and any tool that we can take out of the toolbox that the 

Congress and the Constitution have provided us to disrupt that activity, because the name of the game is prevention and that is 

clearly the priority of the FBI, and I would submit the intelligence 

community as well. 

I would like to say something publicly. DEA has been a tremendous support to the FBI not just in joint investigations, but actually Steve himself called me on 9/11 and gave us analysts and 

agents to help out in this particular fight. 

Senator BIDEN. I am absolutely confident of that. That is why I 

am so happy we didn’t let you merge, which you all wanted to do 

and I was able to help stop. 

[Laughter.] 

Senator BIDEN. Let me ask one last question, Mr. Chairman, and 

I won’t ask any more. 

Steve, eradication. Doesn’t the circumstance in Afghanistan lend 

itself geographically, the topography, to the ability to eradicate 

more easily than it did even in Mexico in the 1970’s, and clearly 

in Colombia? 

As an adjunct to that, the Taliban did a pretty good job. They 

shut the sucker down, they shut it down. So it is kind of interesting that they could shut it down. We are not looking for a pure 

democracy in Afghanistan. We are not following Karzai with the 

American Civil Liberties Union behind him. 

It seems to me we should be able to be mildly more effective in 

Afghanistan than we have been, or am I missing something here? 

Mr. CASTEEL. Well, obviously, the Taliban had a little more freedom, as did the Communist Party in China when they took over. 

If you remember, they had a tremendous opium problem and in 3 

years it was gone. When you execute people and chop people’s arms 

26

off and things like that, they play a little different game that we 

have. 

Senator BIDEN. By the way, this is still an Islamic state. Karzai 

still has the ability under the law to do similar things. He just 

doesn’t have any means of enforcing it. 

Mr. CASTEEL. The issue of eradication has been discussed often, 

especially with our British colleagues. I think you spoke earlier 

about the importance to Europe of this, 90 percent of their heroin 

coming from that point. I think it is just one tool in your tool belt 

that you use. 

You and I have been around long enough that everybody walks 

in with that one McDonald’s answer for everything. I just think as 

long as you consider eradication as one of your tools—and by the 

way, it works in places. Peru and Bolivia are perfect examples of 

how eradication can work when it is tooled together with several 

other issues at the same time. 

Senator BIDEN. Thank you, Mr. Chairman. I appreciate your indulgence. 

Senator KYL. Thank you, Senator Biden. 

Mr. McCraw, I wanted time and I will make this the last question, but I would like to take a little time to the extent that you 

might be able to expand on your testimony, notwithstanding the 

fact that both of these matters are, I believe, are still understand 

investigation, to tell us all that you can about the arrest of the 16 

Afghan and Pakistani subjects possibly linked to the Al–Qaeda and 

the Taliban that you referred to in your testimony, and also the arrest and prosecution in San Diego of the individuals who were, as 

I referred to in my opening statement, caught trading heroin and 

hashish for cash and Stinger anti-aircraft missiles. 

Mr. MCCRAW. Yes, sir, and thank you for phrasing it that way 

so I can still within the four corners of the indictment. The major 

case 190, the Crown Prince investigation, actually started as a result of criminal violations being worked, and then it branched out 

to where we were able to see a number of different FBI cases converging in New York, and then soon later DEA cases converging in 

New York. 

They indicted the 16 Afghan and Pakistani subjects in this particular case. We can make that clear distinction. We know that the 

money and the crimes they had been involved had been funneled 

back and they were funneling money back through Pakistan into 

Afghanistan. 

The degree in terms of the links—clearly, there were some associations, and I am reluctant to go into detail. There were associations there. Sometimes, when you take investigations down at certain points, you aren’t able to establish, without question, certain 

links over the course of the forthcoming trials we may bring to 

bear. But clearly there was a concern. 

I guess it can be used certainly as a model to illustrate your concern, Senator, Senator Biden’s and the Chairman’s concerns about 

the problems with drugs and the funding that they can provide to 

support and also facilitate drug trafficking or terrorist activities. 

The San Diego case was purely a drug case when it started. An 

undercover agent in San Diego working on the drug squad develVerDate 0ct 09 2002 11:51 Oct 30, 2003 Jkt 090052 PO 00000 Frm 00030 Fmt 6633 Sfmt 6633 S:\GPO\HEARINGS\90052.TXT SJUD4 PsN: CMORC
27

oped a source who developed a subject and was negotiating in 

terms of the purchase of heroin and later hashish. 

During the course of this, some links were established that 

looked like there was some association. Again, many of these 

groups use different criminal organizations. Terrorist groups share 

those, so there were some links and it morphed into a counter-terrorism investigation before it was all over with, using drug, criminal and counter-terrorism resources. 

The most disturbing part of that is when the undercover agent 

was overseas in Hong Kong negotiating for these 5 metric tons of 

hashish and 600 kilograms of heroin—during the course of it, unsolicited, they said, hey, you know, we would like to have—paraphrasing here, we would like to have four Stinger missiles that we 

intend to provide to others that we suspect will be used for shooting down U.S. airplanes. That was in the indictment. 

I really can’t go further in terms of discussions, but certainly if 

that doesn’t send a chill down everybody’s back in this room, I 

don’t know what will. Obviously, we took the case down. I mean, 

you could argue that we should have kept it going, but the fact that 

they were going to get the four Stingers from us doesn’t mean they 

weren’t looking for four Stinger missiles. And we couldn’t risk that 

opportunity or that threat and we did take it down. As you know, 

it is pending trial at this point in time and we have been able to 

work with the People’s Republic of China or Hong Kong to have 

them extradited to the U.S. 

Senator KYL. Where will that trial be held? 

Mr. MCCRAW. San Diego, sir. 

Senator KYL. Okay, and the timing on that is? 

Mr. MCCRAW. I couldn’t give you an exact time. I can get back 

to you, Senator. 

Senator KYL. Okay. Well, this is the kind of thing obviously we 

will want to follow, and it causes me to make a final point. If any 

of you would like to comment on this, fine. Otherwise, we can move 

on to the next panel. 

One of the things that we have had a little trouble grappling 

with here in the Congress in trying to write laws or amend laws 

is an understanding that the kind of people that we are dealing 

with now are unlike past organizations or state sponsors of terror. 

And the point you just made, Mr. McCraw, I think, ties into this 

very well. 

You don’t have necessarily representatives of other nations engaged in this activity, though that does happen. You don’t necessarily have members of an explicit terrorist organization, like a 

Hizballah, for example, which is relatively close-knit, although that 

happens. 

Frequently, you have people who are Islamic jihadists, simply 

people associated with a cause that don’t necessarily belong to any 

organization, as we in the West tend to think of belonging to an 

organization. They simply belong to a movement and they may be 

associated with or have dealings with people that we call Al–

Qaeda. They may themselves be Al–Qaeda at one time or another, 

but they may simply be acting out this hatred toward the United 

States and not really affiliate with any particular organization, per 

se. 

28

They may also be dealing with criminal enterprises, as you note, 

to accomplish their goals, trafficking in drugs, money laundering 

and the sort, or they may be doing this again as individuals. So 

when we write laws that tend to try to categorize things, we get 

into trouble, and we need to always be cognizant in writing these 

laws to understand the new nature of the threat which is amorphous, undefinable frequently, people moving in and out of organizations, in and out of criminal enterprises, lots of different cut-outs, 

and therefore needing a different kind of description frequently in 

order for us to be able to satisfy the requirements of the law in 

many cases. 

That is something we have become aware of and we haven’t really mastered the notion in all of what we are doing. We recently 

passed out of the Senate an amendment to the FISA law that recognizes that fact and attempts to deal with the lone wolf terrorist 

or the terrorist that may or may not be associated with an organization, but at least at the time we are trying to get the warrant 

we don’t know for sure. So that was at least one recognition of that 

problem, but there are clearly others, too. 

Any comments on that particular point before we move on? Any 

disagreement with it? 

Mr. MCCRAW. Absolutely not. I fully agree with you, Senator. 

Senator KYL. Okay, great. Well, we appreciate your comments 

here. We are going to leave the record open one week for members 

to submit questions to you or for you to provide any other information to us. But don’t stand on that formality. If there are other 

things that you think would be beneficial to the Committee, I 

would like to ask you to get them to us. 

The Subcommittee on Technology and Terrorism, which I Chair, 

will be having a couple of hearings soon, one of which will be on 

money laundering, and we will try to get your ideas on those subjects as well. 

We thank you very much for being with us this morning. With 

that, I will excuse this panel and we will move to the next panel. 

The next panel will consist of Mr. Raphael Perl, specialist in 

international affairs at the Congressional Research Service here at 

the Library of Congress; Mr. Rensselaer W. Lee, President of Global Advisory Services, in McLean, Virginia; and Mr. Larry Johnson, 

Managing Director of Berg Associates, in Washington, D.C. We 

welcome all of you to this hearing, as well. 

I think the order we will do it in is Mr. Perl, then Mr. Lee, and 

then Mr. Johnson, if that is all right with the three of you. So as 

soon as we get settled down here, I will call upon you. 

We were anticipating the possibility of a vote, but now it appears 

that we won’t be interrupted. We may need to conclude by noon, 

but I think we should be able to do that, especially if I am not 

joined by others here at the dais. 

Mr. Perl, why don’t you begin? Thank you. 

STATEMENT OF RAPHAEL PERL, SPECIALIST IN INTERNATIONAL AFFAIRS, CONGRESSIONAL RESEARCH SERVICE, 

LIBRARY OF CONGRESS, WASHINGTON, D.C. 

Mr. PERL. Thank you, Mr. Chairman. I would like to ask that my 

written remarks be submitted for the record. 

29

Although their objectives differ with drug traffickers seeking 

profits and terrorists seeking political aims, both thrive on instability. Instability provides fertile ground for their ongoing operations and expansion. The combined threat and activities of drugtrafficking and terrorist organizations pose an escalating danger to 

societies worldwide. 

Even in instances where groups do not actively cooperate together, the synergy of their separate operations and shared efforts 

at destabilization pose an increasing threat. Whether by design or 

happenstance, each group serves as a force multiplier for the other, 

and many experts view as imperative that these threats be addressed together, not separately. 

There are many similarities between drug-trafficking and terrorist groups. As we have heard today, both operate 

transnationally, benefitting from trends associated with 

globalization and an open, deregulated environment. Both thrive in 

regions and areas without effective government control, where the 

line between the criminal world, the drug-trafficking world and the 

terrorist world is becoming increasingly difficult to draw. 

Both exploit porous U.S. borders and seek loopholes in immigration controls. Both rely on the services of the criminal underworld. 

Both target civilian populations, one with indiscriminate killings, 

the other with drugs. And both target youth, either for recruitment 

into drug use or into terrorist cells. Approximately one-third of the 

groups on the State Department’s Foreign Terrorist Organization 

list have reported drug-trafficking links. 

It is also worthy to note that at least four of the seven nations 

on the State Department’s Sponsors of Terrorism list have some 

history of condoning or supporting drug trafficking—Syria, Iran, 

Cuba and North Korea. However, as overt State support of terrorism has decreased, it seems that, increasingly, terrorist organizations must fend for themselves. The drug trade provides an attractive source of income. 

The involvement of terrorist groups in the drug trade, and vice 

versa, presents both challenges and opportunities for policymakers. 

One challenge is the tradeoff where counter-terrorism priorities 

overshadow counter-drug agendas. Could situations arise where 

giving priority to anti-terrorism goals detracts from the effectiveness of anti-drug efforts deemed important to the national interest? 

A second challenge relates to the fact that not all drugs produced 

or trafficked by terrorist groups are destined for the United States. 

If our drug enforcement community increasingly focuses on interdicting drugs not designed for the United States, does this reduce 

the resources available to keep foreign drugs off the streets of our 

cities? 

A third challenge is how the priorities of counter-drugs and 

counter-terrorism can be reconciled, as is the case in Afghanistan 

today. And many observers also cite a fourth challenge, a need to 

reverse a longstanding erosion of America’s ability to conduct diplomacy abroad largely as a result of budgetary limitations. Arguably, 

investing in diplomacy may help to deal with these problems and 

may prove far less expensive in the long run. 

The challenges posed to the United States and the world by the 

combined threat of drug traffickers and terrorist groups are formiVerDate 0ct 09 2002 11:51 Oct 30, 2003 Jkt 090052 PO 00000 Frm 00033 Fmt 6633 Sfmt 6633 S:\GPO\HEARINGS\90052.TXT SJUD4 PsN: CMORC
30

dable. But with challenges come opportunities. When terrorists engage in the drug trade, they become increasingly vulnerable to law 

enforcement activity. Drug-trafficking organizations and terrorist 

organizations share many characteristics and many of the same 

criminal structures for support. If we effectively combat one, it 

helps battle the other. 

To conclude, Mr. Chairman, an effective campaign against these 

combined threats may indeed make the world safer and more secure. By according recognition and policy focus to the combined 

threat of drug trafficking and terrorist, we may be better able to 

devise cohesive strategies to deal with these threats in an effective 

and holistic manner. 

Mr. Chairman, this concludes my formal remarks. I welcome 

your questions and comments, and there are also a number of concerns that I would be happy to share with you during the question 

and answer period. 

[The prepared statement of Mr. Perl appears as a submission for 

the record.] 

Senator KYL. Thank you very much. I just mentioned to Senator 

Biden that you raise a very interesting perspective on this. The 

more we are able to separate the terrorists from states, from nations, the more difficult it is for them to finance their operations. 

They then have to turn to things like drug trafficking, at which 

point we now have two different ways of going after them from a 

law enforcement perspective. They become more vulnerable to our 

enforcement, which I think is an excellent point. I hadn’t quite 

thought about it that way in the past. 

Dr. Lee. 

STATEMENT OF RENSSELAER W. LEE, PRESIDENT, GLOBAL 

ADVISORY SERVICES, MCLEAN, VIRGINIA 

Mr. LEE. Thank you, Senator Kyl, Senator Biden. 

In recent years, we have seen a recognizable convergence between the lawless swamps of drug trafficking and international terrorism. These areas of overlap or intersection between these worlds 

are summed up in the concept of narco-terrorism. 

This concept has the positive policy connotation that fighting 

drugs will significantly cut into the revenues of terrorist groups, 

cripple their operations, and help stabilize conflict-torn states and 

regions. Yet, we must also recognize the limitations of counter-narcotics as a tool for combatting terrorism. 

Experience and logic suggests that drug-dealing and terrorism 

are really different phenomena requiring different solutions. I have 

made a number of points to this effect in my prepared testimony 

which I would like to have submitted for the record and I will try 

to summarize these points here. 

Motives, for example, are a distinguishing characteristic. Professional drug criminals are typically concerned with amassing vast 

wealth, concealing the fruits of their crimes, and avoiding prosecution. Terrorists’ aims are preeminently non-financial, gaining political influence or legitimacy, overthrowing a government, or fulfilling a radical religious vision. 

Sometimes, the interests of terrorists and criminals coincide, but 

sometimes they are very much at odds. On occasion, governments 

31

have sought, wisely or unwisely, to leverage these points of conflict 

to advance the fight against domestic or international terrorist 

threats. We have seen some overtones of this, unfortunately, in Colombia and Afghanistan. 

Drugs figure more prominently—this is the second point—drugs 

figure more prominently in the fundraising strategies of some terrorist groups than others. I think if we could construct a typology 

of such groups, we might see that certain actors, like the Revolutionary Armed Forces of Colombia, the FARC, and Peru’s resurgent 

Shining Path guerrillas, earn fairly significant revenues from taxing or selling illicit drugs. 

But the dangerous Middle Eastern terrorists like Al–Qaeda, 

Hizballah and Hamas traditionally have relied largely on donations 

from wealthy Arab contributors, sometimes funneled through Islamic charities, and in the case of Hamas and Hizballah on infusions of money and weapons from sympathetic states. And this 

means that whatever we can accomplish on the international drug 

front, however valuable, may not do much to constrain the activities of certain lethal terrorist entities. 

Even if we could cut substantially the narcotics revenues of a 

group such as the FARC, its response might be simply to expand 

into new criminal lines or to extract more revenues from tried-andtrue ones such as extortion, kidnapping and hijacking, inflicting 

even more terrorism and misery on the Colombian population. 

A broader lesson here, I think, is that efforts to disrupt terror financing, while useful, are not an adequate substitute for targeting 

the terrorist organizations, per se, their core leadership, their ideology, their recruitment stratagems. 

The imperatives of fighting drugs are not the same as the imperatives of fighting terror—and this is my last major point—and 

might even conflict with them at some points. For example, in Afghanistan, the world’s largest opium-producing nation, drug control 

has tended to take a back seat to the counter-agenda, which has 

included overthrowing the Taliban, rooting out pockets of Al–Qaeda 

and Taliban resistance, and creating, or you might say cobbling together some kind of a viable anti–Taliban governing coalition. 

Emphasis has been on consensus-building, and alliances have 

been struck and compromises formed with some possibly unsavory 

political forces that have a reputed history of involvement with the 

drug trade. And certainly the U.S. military—at least this is my impression—has not seen as its principal mission destroying drug 

crops, opium storehouses, or heroin labs, or going after heroin kingpins and their political sponsors. 

In Colombia, where counter-narcotics ranks as a higher priority, 

some of the drug control measures that we are funding such as the 

aerial spraying of illicit crops are controversial. Some people believe that they are intrinsically anti-popular and that these measures complicate, in fact, the task of winning rural adherence in the 

struggle against insurgency. Possibly, our drug control strategies 

could be fine-tuned to be a little bit more people-friendly, to focus 

more on hearts and minds approaches toward inhabitants of contested rural areas in Colombia. 

A final point. It is frequently argued, and I think I heard it argued today, that narcotics trafficking itself is a form of terrorism 

32

directly against the United States of America. Indeed, drugs impose a huge cost upon our society. I think the figure used by the 

drug czar is something upwards of $160 billion a year. 

But let’s not forget that the intent of the perpetrators is usually 

to make a profit and not to inflict necessarily harm on U.S. nationals or institutions. Also, unlike the victims of the 9/11 attacks and 

other terror atrocities around the world, the victimized drug consumers have a choice, which is not to buy and use illicit substances. 

Thank you very much. 

[The prepared statement of Mr. Lee appears as a submission for 

the record.] 

Senator KYL. Thank you, Dr. Lee. 

Now, Larry C. Johnson. 

STATEMENT OF LARRY C. JOHNSON, MANAGING DIRECTOR, 

BERG ASSOCIATES, WASHINGTON, D.C. 

Mr. JOHNSON. I appreciate the chance to appear before this Committee, and ask that my written statement be included in the 

record. 

By way of background, I come at this really from three different 

angles. I started off in the Central Intelligence Agency. In part, I 

guess you can blame Senator Hatch for that; he wrote one of the 

letters of recommendation. I then moved to the State Department 

and worked in the Office of Counter–Terrorism, and then since 

leaving that office I have been involved with scripting exercises for 

the special operations community in the field of counter-terrorism. 

At my current company, though, we are involved with money laundering investigations and do work for several Department of Justice entities. We handle a lot of the financial analysis. 

The bottom line with the link between terrorism and narcotics is 

it is all about the money and there is no other aspect to it. It is 

about the money. And as in terrorism, I believe if you follow the 

money you can break its back. I want to show you a couple of 

charts and graphs to illustrate this. 

Prior to 1991, we did not see significant amounts of terrorist 

funding coming from narcotics activity. It was the conventional 

State sponsorship. But if you look at 1991, and particularly the red, 

that shows Marxist–Leninist groups. 

When the Soviet Union collapsed—and I am not one that subscribes to the fact that the Soviets funded all terrorism, but the Soviets were a significant source of funding for other regimes that 

were sponsors, particularly Libya, Iraq and Cuba, in particular. 

When the Soviet Union collapsed, look at what happens to the 

Marxist–Leninist groups; within 3 to 4 years, it is in half. That 

speaks to the point that, without money, these terrorist groups cannot operate and they are confronted with a choice of either coming 

up with an alternative source or going out of business. 

What happened in the case of particularly the FARC and the 

ELN and the Kurdish Workers Party in Turkey—the PKK in the 

early 1990’s was the most active terrorist group in the world, more 

active actually than the FARC and the ELN. What happened is 

those three groups then moved into narcotics trafficking. 

33

Now, one of the points that Senator Biden made earlier—and I 

have a personal anecdote to illustrate it. I sat in on a meeting out 

at the counter-narcotics center after Ambassador Busby had left 

Colombia. I had worked for him when he was the coordinator for 

counter-terrorism. We met with one of the senior analysts who had 

actually been a former branch-mate of mine when I was at the 

CIA, and there was a heated debate over were the FARC and the 

ELN involved with narcotics trafficking. 

The intelligence community’s position was it was not occurring, 

it was nonsense. Ambassador Busby was about ready to pull out 

his hair, saying what are you talking about; of course, it is true. 

At that time, I didn’t understand the disconnect. It was only when 

my two partners—one was the former chief of the International Office for DEA, Bobby Nievas, and John Moynihan—that we joined 

up that I came to understand what had happened. 

The DEA-6s, those law enforcement intelligence reports that are 

used internally for DEA and are never generated as intelligence reports, detailed names, events, dates, places, and it was clear the 

connection. The problem was the intelligence community wasn’t 

seeing it then and still isn’t seeing it today, so they live in the 

dark. Unfortunately, the rule in the intelligence community is if it 

is not in black and white and on paper, it doesn’t exist. 

Let me take you, then, to— 

Senator BIDEN. Mr. Johnson, let me ask a question. 

Mr. JOHNSON. Yes, sir. 

Senator BIDEN. You are saying today, if, in fact, the DEA in Afghanistan had clear, direct evidence of a connection between the 

poppy being grown in the Pashtun area, the profits going directly 

to Al–Qaeda, that would not be on the CIA’s radar screen, other 

than if they got it themselves? 

Mr. JOHNSON. Yes, sir, that is correct. That is my understanding. 

I have learned this: DEA is our best intelligence organization in 

the U.S. Government because they have better human sources. The 

problem is they are their own worst enemy; they don’t realize what 

they have. I think the Committee may be aware of some other technical things that were developed at DEA—it took the FBI 4 years 

to come around to use them—that have been integral in the battle 

against terrorism. 

The next chart illustrates the activities of international terrorism, and I think it is important that we put the facts on the 

table of what is going on. Last year, in 2002, India and Colombia 

accounted for over 60 percent of the international terrorist attacks. 

In fact, India alone accounted for one out of every three international terrorist attacks. Yet, when we talk about terrorism, India 

doesn’t even appear; we ignore it. 

Senator BIDEN. When you say attacks, you mean they were attacked? 

Mr. JOHNSON. Yes, they were attacked. 

Senator BIDEN. In their country? 

Mr. JOHNSON. Yes, attacks that took place in their country, in 

the Kashmir region, and the groups carrying out these attacks 

were training in Afghanistan in the Al–Qaeda camps. These groups 

have received direct funding and support from renegade elements 

of the Pakistani ISI, the intelligence service. And at least some eleVerDate 0ct 09 2002 11:51 Oct 30, 2003 Jkt 090052 PO 00000 Frm 00037 Fmt 6633 Sfmt 6633 S:\GPO\HEARINGS\90052.TXT SJUD4 PsN: CMORC
34

ments in Pakistan have allowed those groups to continue, pass 

through Pakistan and operate in the Kashmir region. 

And not only the attacks, but if you look at the deaths last year 

and if you ask the average American where did most of the casualties occur in terrorism, they would say, well, it was Israel. Wrong. 

More people died from terrorist attacks in India than in Israel, and 

almost as many were wounded in India and in Israel. 

Now, you say, well, what is the relevance of this? The relevance 

of this is highlighted and you see the two reds, India and Pakistan. 

Now, let’s look at the INCSR. Where are the areas of greatest either heroin production or opium production or cocaine production? 

India doesn’t appear, but bordering it on either side we see 

Burma and Afghanistan, and then Colombia shows up as the primary producer of cocaine. This is not coincidence. The fact that you 

have the drug trafficking activities both from production and distribution in the same areas of the world where these groups that 

either Marxist–Leninist or Islamic is no coincidence. And that goes 

to the heart of your point that we need to get after this. 

Let me wrap up with just one thing on the money laundering 

front and bring it down in terms of a case that we are working on 

in support of the Department of Justice. There is a movement of 

money, checks written on U.S. banks that are coming out of the 

United States, and this goes directly to a group that has links to 

Al–Qaeda and it is an active case right now. 

Those checks come out of the United States, they go into a country over in the Middle East area, to leave it vague enough for now. 

Those checks are then deposited in a foreign bank. Those checks 

then— 

Senator BIDEN. Start again, please. 

Mr. JOHNSON. Okay. Checks in the United States written on a 

U.S. bank, individual checks, and the way we came across this is 

we found a bulk transaction of $18,000, roughly, and when we 

broke it out, the average check amount was something like $21. 

And you are thinking who is writing a $21 check and sending it 

over to the Middle East and Europe? 

What was happening was they write the checks here. Those 

checks would be taken overseas and they would be deposited in a 

foreign bank. The foreign bank then would credit an account, but 

would literally bundle the checks together and send them back, 

what is called a cash letter agreement. 

When those checks arrive in the United States at the correspondent bank, the bank takes them, stamps them, gets them deposited, and it is back in the system. They avoid the reporting requirements that you would normally see with wire transfers. 

Senator BIDEN. Because they are coming back? 

Mr. JOHNSON. Yes, yes. You know, these folks are very creative 

and entrepreneurial. I will just close with that and then we will entertain any questions. 

[The prepared statement of Mr. Johnson appears as a submission 

for the record.] 

Senator KYL. Thank you very much. 

We have been joined by Senator Feinstein. Senator Biden, would 

it be all right if I turned to Senator Feinstein first? 

Senator BIDEN. Yes. 

35

Senator KYL. Let me just say that in about two minutes I am 

going to have to leave, but I am happy to turn the gavel over to 

Senator Biden and for he and Senator Feinstein to close the hearing. I am sorry that I will have to leave at that time. 

Senator Feinstein. 

Senator FEINSTEIN. Thanks very much, Senator Kyl. 

If I understand this correctly—and I am sorry I missed the first 

panel—59 percent of the world’s heroin is produced in Afghanistan. 

None up to this point has been eradicated, and I guess what I want 

my colleagues to know is, in briefings, we have been shown actual 

places where this poppy has been stockpiled. And I have asked 

questions and I have been assured that the military was going to 

destroy those stockpiles. 

Now, if what has been heard today is correct, it indicates that 

I wasn’t told the truth and I am very concerned about that. It 

seems to me if we can’t destroy stockpiles and fields in countries 

we occupy, how is there ever a chance to approach this problem on 

the supply side at all? 

I would be curious if any of the panelists have any comments on 

this because I find it beyond surprising, really shocking. So much 

has been made by Government spots on how narcotics is connected 

to terrorism. We are in a global war on terror. We occupy a country 

which is a principal producer of hard narcotics and yet we have 

done nothing to stop that production. 

Mr. PERL. Senator, I would defer to Dr. Lee on that. He has written what I would consider to be the authoritative study on the drug 

trade in Afghanistan. 

Mr. LEE. Thank you very much. That is very kind of you, Raphael. 

I think that there has been a tendency on the part of our Government and the administration to try to distinguish short-term and 

long-term objectives. Today, Afghanistan is demonstrably the 

world’s largest opium producer, producing last year—about 75 percent of the world supply of opium comes from Afghanistan. I think 

there is going to be another record harvest this year. 

The problem is that we are still fighting a war against terrorism 

in Afghanistan, and in order to fight this war against terrorism—

and I think the thinking goes both to some extent in Washington 

and in Kabul—we have to build alliances. To build these alliances, 

unfortunately we have had to make some arrangements and compromises with people that frankly may have some history of involvement with the drug trade and may be even possibly currently 

protecting the drug trade. 

This is a tragic situation, and it is a tragic situation because 

even given these consensus-building imperatives in the fight 

against terrorism, it is inconceivable that Afghanistan can ever develop as a nation state without getting a handle on this opium 

problem. 

On the other hand, you can see that you are talking about 75 

percent of the world’s opium, you know, and much of the rural population and much of the Afghan economy tied up in this business. 

This has to be done in a very careful manner. 

Senator FEINSTEIN. Well, if I might just have a little bit of a discourse with you on this, if we don’t do it now, it is never going to 

36

be done. We know the Taliban are going to try to come back. We 

know that this is a prime source of funding for them. If we don’t 

make some other arrangements with these warlords, even if it is 

to pay them a stipend not to produce while you cement a more permanent form of government and security system, I think it is all 

lost. 

You know, I think it is real hypocrisy. I don’t know how we can 

go in there and talk about quelling the supply and be in control 

and do nothing to deter what you said this year will be a bumper 

crop. I think it is shameful. 

Mr. LEE. Well, I think it is shameful, but I think that it is an 

extremely difficult situation. We need, for example, to find ways of 

supporting these farmers whose opium we must necessarily eradicate. We don’t have really much of any kind of a program in Afghanistan; small programs, yes, but it is going to have to be a very 

large-scale, very expensive effort. And above all, we have to make 

a commitment to that country; we have to make a commitment to 

the political and economic reconstruction. Our attention has been 

diverted elsewhere, in Iraq and other places. 

Senator FEINSTEIN. There are tens of millions of dollars being 

spent in Afghanistan in all kinds of different ways. It seems to me 

that if you have to give somebody, if you will pardon the expression, a stipend not to produce to be able to support their families 

for a given period of time and have that arrangement, that is 

money well spent, as opposed to allowing them to produce it so that 

you have a kilo, which is $300, which becomes $100,000 by the 

time it comes on the market. This money goes back to fund others 

in the community that would do us harm. 

So I am happy to have heard this because I am going to do something about it in the Intelligence Committee, because we have been 

given, I think, information that is contrary to what I have heard 

here this morning. 

Thanks, Senator Biden. 

Mr. PERL. Senator, you raise a very interesting point and it relates to the whole issue of when you have a merger between drugtrafficking groups and terrorist groups where one has political ideology and one has financial profit as the motivation—when you 

have the overlap, it becomes increasingly difficult to find political 

solutions as the two groups merge because the drug trade becomes 

more and more entrenched. 

So with many groups, even if we could come to a political solution with many groups that are today terrorist groups, because of 

their involvement in the drug trade and because there is very little 

incentive for them to end their terrorist activities because it facilitates the drug trade to which they become addicted to, it no longer 

becomes a political issue. 

Mr. LEE. Senator, just one more point. We have to remember also 

that the Taliban in its last years eradicated opium, and in so doing 

it created many enemies within Afghanistan among people who 

were very much involved in opium and heroin trafficking. 

So we had to make an initial choice. Getting rid of the Taliban 

was the major objective and to the extent that that in a way is still 

going on, we find ourselves saddled, unfortunately, with— 

Senator FEINSTEIN. You are saying we chose drugs. 

37

Mr. LEE. Well, I didn’t choose drugs. 

Senator FEINSTEIN. No, you didn’t say that, but that is clearly 

the implication. 

Mr. LEE. Yes. Well, I think that not enough has been done on 

the drug front and I think not enough attention has been devoted 

to the entire Afghanistan political and economic reconstruction 

issue. 

Senator FEINSTEIN. Thank you. 

Senator BIDEN [PRESIDING]. Thank you, Senator. I share your 

frustration. You fortunately didn’t have to hear what I had to say 

about this earlier. I want to reiterate two points. 

One is all that is happening in Afghanistan is operating under 

the umbrella of an absolute failed policy politically, economically, 

strategically, in every way. We are about to fundamentally lose Afghanistan in a way that will not be able to be retrieved because 

as my visits there have indicated, next time when the swamp fills 

up in 2, 3, 4, 5 years, we will not have the Northern Alliance to 

march with us next time. We will not have the Alliance that did 

most of the fighting next time. 

Let’s get something straight here, because I agree with Mr. Perl’s 

comments. Dr. Lee, you have done the definitive work here. We 

made a judgment. The President announced in a detail a policy toward Afghanistan within 3 months after, quote, ‘‘our victory.’’ He 

called for a Marshall Plan. We had a group of donor nations. No 

Senator or Congressman used that term. The President of the 

United States of America said he was initiating a Marshall Plan. 

He sent his Secretary of State to Tokyo to meet with the donor 

nations. There were pledges made far less than we anticipated, but 

the cost in a report that I wrote then was a minimum of $19 billion 

was going to be the cost, a minimum number. Everybody signed on 

to that number as a minimum cost for political, economic and other 

reconstruction to take place in that country. 

There was a great debate that took place between Cheney and 

Rumsfeld on one side and the Secretary of State on the other, and 

the issue was again a report we wrote in the Foreign Relations 

Committee calling for the expansion of ISAF. Messrs. Rumsfeld 

and Cheney won that fight. The State Department vehemently opposed the position taken by the Defense Department that we 

should not expand ISAF. I personally met with the British one-star 

running the operation for ISAF. In fact, everyone told us that if we 

did not expand, Europe was not going to do that; it would not be 

involved, they could not. 

There was a fundamental shift in policy that took place about 2 

months later, when it was clear that we decided that stability 

would be gained through the warlords. That is how it would occur. 

There would no expansion of ISAF. And guess what? With that, 

you had the donor nations drop off, including us, in terms of the 

funding. There is no Marshall Plan. There is not even a mini-plan 

going on in Afghanistan right now. 

And now we are given this bizarre reasoning coming from the 

President that the reason why we can’t spend money more rapidly 

is we can’t get out in the field because there is no security. That 

is the rationale now; there is no security. so we come up with this 

stupid acronym, whatever the heck it is called, these forces that 

38

are going to go out, provincial reconstruction terms. Mr. Karzai 

was chastened before our Committee by the administration to say 

that is all he needed, when he know he needed a lot more. 

So the bottom line is why is anybody surprised? There is no significant money internationally for reconstruction. There is no security beyond Kabul. We now have American forces guarding Mr. 

Karzai. We are his bodyguards now. We can’t even put together 

and train for them, which was the plan of this Afghan army of 

70,000, his own bodyguards. This is a disaster. 

Anyone who thinks that one of the logical outcomes of this is not 

going to be a significant increase in drug production, why wouldn’t 

there be? Why would there not be? In fairness, I think, Dr. Lee, 

you are correct. Once you decide you are not going to expand 

through NATO and the United States another 100,000 forces or 

50,000 forces, taking care to secure the rest of the country, then 

you have to make a judgment. 

You make a trade, and the trade is trade in drugs. We want to 

focus on Al–Qaeda and it may not be as bad a deal as it appears 

if one question were able to be answered, and this is my question, 

and that is if there is no real nexus between the profits from the 

drug trade and the financing of Al–Qaeda and their operations 

worldwide, then, okay, not as big a downside as it could be. 

But if there is that nexus that it is an alternative funding source 

of consequence for Al–Qaeda, then the Faustian bargain we made 

with the warlords has produced the exact opposite of what we intended. What was the deal? What did the administration say? Why 

did they make the bargain with the warlords? To secure the region, 

because guess what? I keep picking Ismael Kahn, but he is one of 

the most powerful. 

Ismael Kahn doesn’t like Al–Qaeda. Therefore, that is okay. If he 

doesn’t like Al–Qaeda, we don’t care about western Afghanistan. 

That is the truth; the administration doesn’t give a damn about it. 

We don’t care about it. So as long as Al–Qaeda is not able to play 

in that part of Afghanistan, what difference does it make? 

But the irony will be if the drug flows which come out of western 

Afghanistan and southern Afghanistan with the Pashtun are ending up in the pockets of Al–Qaeda, funding their ability to purchase 

a little ball of enriched plutonium from Korea as they begin their 

plutonium factory, then that Faustian bargain is going to take us 

all to hell. 

I think it is a travesty, an absolute travesty, and to fly-speck it 

as to whether or not we can now provide incentives or not provide 

incentives and, with all due respect, even take out the warehouses—I sat there in Afghanistan and there was talk about the 

plan that we were going to provide alternatives for these farmers 

and there was an urgency. Everybody knew if we did not get them 

money right away so they could eat and live, they would be growing that pretty little poppy. There is no other choice; there is nothing else. 

So I apologize for my frustration, but, Doctor, your reports are 

important. The one thing I have got to know for me personally, and 

you may be able to answer it, is how direct is the nexus. Where 

is the poppy being grown, the bulk of it? My understanding is it 

39

is nationwide, but the bulk of it is in the control of the Pashtun. 

I may be wrong. I don’t know. 

Who controls most of it—that is my first question—the actual 

growing of the poppy, what parts of the country, and on whose 

watch is it happening? 

Mr. LEE. Well, let me try to answer that question and it is very 

difficult because I never got a sense of who actually was in control 

in what areas. But my sense is that most of the poppy production 

in Afghanistan is grown in areas under the control of political 

groups and forces, warlords who are more or less affiliated with 

what passes for a central government in Kabul. 

There is not a situation that I could see that you describe in 

which the remnants of Al–Qaeda are systematically extracting revenues from parts of the opium trade somewhere in the country. In 

fact, my impression has always been that even under the Taliban, 

the Taliban was successful in taxing the opium crop, but they were 

far less successful in actually being able to extract money from 

these clannish tribal trafficking groups that have quite a lot of 

power and weapons to back up this power. 

Senator BIDEN. I agree that is factually correct. The question is 

has that changed now, because that was not narco-terror trafficking then. Because it was not the case, you had a lot of money 

coming out of Saudi Arabia and other places funding the camps, 

funding the rest of it, and there was a counterintuitive instinct. 

Mr. LEE. That is absolutely correct that traditionally Al–Qaeda 

has gotten its money from donations, primarily. Has it changed? 

Maybe, because some of our efforts to cut the flow of terrorist financing, centralized financing arrangements of Al–Qaeda, might 

have pushed the organization more into a state of dependence on 

the drug trade. But I can’t tell you for sure whether that is true 

or not. 

Senator BIDEN. Neither can I. 

I will yield to you, Mr. Johnson, in just a second. 

The whole purpose of this hearing, as I understood it, is not 

merely to delineate what we know in the International Drug Caucus and in the Crime Subcommittee of the Judiciary Committee, 

where we spend all our time talking about the drug problem. 

This was about drug-trafficking organizations which, as one of 

you said, are all about finances, money, big houses, fast boats, and 

lifestyles, merging with ideological organizations that use terror as 

the method to impose their ideology. That is the $64 question here. 

Ironically, we haven’t gotten anything that has spoken to that specifically yet. 

We know it is occurring with the FARC, we know it is occurring 

with the AUC, the paramilitaries. We know it is occurring with the 

ELN. They have become self-financing mechanisms. None of those 

three organizations have chosen Americans, other than through 

kidnapping, as targets. Their ideology does not call for the destruction of the Western Culture and/or the United States of America. 

So our focus is supposed to be, I hope, on that one organization 

and its ancillary organizations that have as their objective killing 

Americans wherever they find them, with as big a payoff as they 

can get. And the question is are those organizations now finding 

their revenue stream in having partnered with, or to use the 

40

phrase you used, Mr. Perl, merged with traditional drug-trafficking 

organizations, whether they be tribal in nature or ideological in nature. 

I have not seen a shred of evidence yet, although I don’t doubt 

it—I mean, intuitively it would seem that it is happening—whether 

or not the funding, these billions of dollars that are made, or the 

hundreds of millions that are made, is going into the pockets of terrorist organizations now who have as their number one enemy the 

United States of America. That is the question I am looking for an 

answer to. That is the question I think has to be answered because 

it radically changes the degree to which I focus my attention on the 

issue. 

Does anybody want to comment on that? 

Mr. JOHNSON. Well, I would encourage you not to divert your attention because I think we were sitting in the second row as sort 

of the ‘‘amen’’ corner when you were speaking earlier. 

There are elements in which money that will originate out of 

drug trafficking, not necessarily drug production but drug sales, is 

working its way back through the system. In terms of Al–Qaeda’s 

overall reliance on the financing, I think you make the correct distinction that unlike the Marxist groups in Colombia where they 

don’t have an institutional sakat, an institutional charitable giving 

system that backs them up, they also have not gotten into the 

same kinds of front businesses. 

We have seen with Al–Qaeda that they will send operatives into 

areas and actually set them up in furniture manufacturing and 

fishing. We have also seen the Al–Qaeda organization move into 

areas such as commodities. They deal with contraband and counterfeit merchandise that passes through Dubai and then on up into 

areas of Iraq and Iran and Afghanistan. 

So they are not relying on one source, but I think you put your 

finger on it that by recreating the infrastructure in Afghanistan 

where opium production can proceed almost unchecked, where the 

links still exist between those opium-producing organizations and 

Russian organized crime, which is another vehicle for moving it, it 

creates the potential that if we have continued success in shutting 

down these other avenues, then they have something to turn to 

that can create significant problems. 

That is why the one message I have that I heard last week in 

Kansas City—I was an organized crime drug enforcement task 

force and an FBI guy came up to me and he said this insane focus 

on terrorism is ridiculous, he said, because we are getting people 

telling us that, oh, you know, drugs is old news and terrorism is 

the hot item. 

But when you sit down and look at the actual loss of life in the 

United States, we lose far more people to drug use than we do to 

terrorism. So we shouldn’t make it an either/or because the tools 

to combat one are as effective in combatting the other and it is not 

that you have to do necessarily anything different. 

Senator BIDEN. Yes, Mr. Perl. 

Mr. PERL. My analysis reveals that I do not see a trend of the 

organizations merging. I see a trend of the activities merging and 

this concerns me because I know of terrorist organizations— 

Senator BIDEN. Tell us what you mean by the activities merging. 

41

Mr. PERL. Terrorist groups engage in drug-trafficking activity, 

and the concern here is that I do know of terrorist groups that 

have negotiated and decided that they will cease to commit terrorist acts and be involved in terrorism. But I know of no narcotics 

organization that has agreed to stop trafficking in drugs voluntarily. 

This raises the possibility that we see a phenomenon here where 

terrorism will continue to perpetuate itself at a greater rate in the 

future than in the past because of the involvement of terrorist organizations in drug-trafficking activity. 

Senator BIDEN. I couldn’t agree with you more, and I hope several of you know me well enough or at least know my predisposition about this drug issue that I don’t have to spend a lot of time 

prefacing my remarks here and explaining the context. 

There is no doubt in my mind—and I will not keep you beyond 

this—that you are, as a matter of principle, correct that there are 

some terrorist organizations or ideologically constructed organizations who have used terror as an instrument for their political ends 

that have, in fact, gone out of business. They have been politically 

negotiated out of business. I know of no drug organization that has 

gone out of business other than being crushed. 

Your generic point that the merger of the two—even once they 

abandon their ideological objective, they are still in the business of 

liking the fast boats and the big cars. They are not going to go out 

business. I understand that. 

I have a myopic focus at the moment on Al–Qaeda, not at the 

expense, Larry, of focusing on domestic—I am the guy calling for 

significantly more domestic investment on traditional law enforcement efforts relating to drugs, organized crime and the like. 

By the way, the guy who is going to run up against the terrorist 

on the streets of Washington, D.C., is going to be a D.C. cop. It is 

not going to be a special forces guy with night vision goggles on. 

Mr. JOHNSON. Right. 

Senator BIDEN. And so I have no illusions about it and so I want 

to make it clear that I think we have misallocated the money we 

are spending, but I also think we have failed to prioritize. 

You said something, Dr. Lee, and you have been fastidious, and 

I respect it, in not getting into the politics of any of this. But you 

said something, and I don’t know whether it slipped or it was intended, that our attention has been diverted to Iraq. Our attention 

has also been diverted, in part, away from Al–Qaeda. No one has 

forgotten it; it has not exclusively moved. 

But the point is the idea of the terrorist groups that are likely 

to cause the most economic as well as physical damage to the 

United States of America and its citizens do not have any possibility, in my view, any more than a drug-trafficking organization, 

to negotiate themselves out of existence. The political end of Al–

Qaeda is totally incompatible with our ability to continue as the 

nation state we are with our Western democracy. So my concern 

here is if that marriage took place, that merger were to take 

place—and I don’t know that it has—then it seems to me that our 

focus on the drug effort should prioritize that aspect of the drug 

trade. 

42

When I wrote the drug czar law, the purpose was do we focus 

on methamphetamine this year more than we focus on cocaine, do 

we focus more on cocaine than we do on heroin. We can’t do it all 

at once. We can’t spend equal amounts of resources on it all, and 

it varies. These are entrepreneurial folks; they decide. 

When I wrote a report 5 years ago saying the biggest producer 

of heroin was soon going to be Colombia, everybody said what are 

you talking about? All you have got to do is think. They are looking 

for product, product. It is no different than selling soap. They are 

looking for product. And what is the product they diversified to? 

Heroin. There was no heroin, Larry, coming out of the Andean region. 

I think we need some harder data in order to make priority judgments about the extent to which there is a fundamentalist Islamic/

terrorist nexus with drug trafficking. That is the key because if 

that is to be established and if we are unwilling in this or future 

administrations to spend the resources necessary to cover all the 

bases, then guys like me are left in a position of deciding how to 

best spend the limited resources. I know you understand it. 

You know, I used to have a friend named Bob Gold. God love 

him, he passed away. Bob was a street-smart guy. Sometimes, 

though, because he didn’t know a specific thing, I would say, Bob, 

do you understand? And he would look at me and he would say, 

Joe, I not only understand, I overstand. I am sure you overstand 

the point I am making here. I hope you think, whether I am right 

or wrong, it is a legitimate point that we able to prioritize our 

funding. 

I will conclude, and I will give each of you an opportunity to 

make a closing statement, by saying this. I really think, Larry, we 

are making a serious mistake to think that we can take 567 FBI 

agents in violent crime task forces, FBI agents who work coordinated with DEA, move them out of that business as if it separable 

into counter-terrorism, not increase their total numbers at the FBI, 

have a 1-percent increase in DEA’s budget, reduce local law enforcement total Federal funding by over 40 percent, and say that 

because we are going to spend $43 billion on homeland defense we 

are actually increasing our security. I don’t get that, I do not get 

that. 

Is that to say the $43 billion is not being wisely spent? No. It 

is to say that spending that $43 billion, if we ever get that far over 

this period of time, and eliminating or shifting these other priorities is counterproductive. 

I think there is much too narrow a definition of national security 

being engaged in here, and I think we are leaving a lot of our 

friends, the guys you have worked with before, whether it is at the 

CIA, whether it is at the DEA, whether it is at the FBI, in a very 

tenuous position. 

And I want to tell you you are the only one who said it, and you 

are a former CIA guy and you know my record with the CIA. 

Mr. JOHNSON. Sure. 

Senator BIDEN. The DEA on this issue is by far and away the 

best resource asset we have. 

Mr. JOHNSON. Right. 

43

Senator BIDEN. It is almost like we are compartmentalizing this 

again. 

Mr. JOHNSON. And we still don’t use it. 

Senator BIDEN. And we still don’t use it. 

I would invite each of you—you have been so kind to spend this 

long—to make any comment you would make, if you have any, on 

any aspect of what you have testified to or what I have said or anyone else has said because your insights at this point are needed. 

Mr. Perl, do you have anything you would like to say? 

Mr. PERL. I have two thoughts. One thought relates to the issue 

of prioritization that you have talked about here in the hearing 

today and emphasized. One thing that struck me sitting in the audience when I looked at the first panel was that we had four people 

from four different organizations talking about the same issue, but 

they had different priorities. 

That, in my mind, raises the issue that we do have a national 

strategy for combatting terrorism that came out in February of this 

year and we have a national drug control strategy. But if indeed 

these two problems are becoming increasingly intertwined, perhaps 

we need an integrated strategy or sub-strategy as to how to approach them more effectively, to get all these different organizations better reading from the same sheet of music. 

Very frequently when strategies are devised, they are devised by 

people within the administration, but from different agencies, with 

different interests and institutional goals to pursue. So I would 

offer as a suggestion to consider the option of having an independent organization, something like the National Research Council, look at how to deal with this issue in an effective manner, how 

to prioritize the resources, and what a strategy might look at. That 

is one issue. 

Senator BIDEN. Good suggestion. Thank you. 

Dr. Lee. 

Mr. LEE. Well, I certainly share your concern about the lack of 

adequate information on the connections between Islamic terrorism 

and drug-dealing. I think there should be an intelligence priority. 

I think that we need to have more intelligence operatives, DEA 

people out in the field collecting this information. We need to have 

more information-sharing between DEA and the CIA to build this 

picture and I hope that this will be done. 

Senator BIDEN. Thank you. 

Mr. JOHNSON. I am in violent agreement with you and I will just 

leave it at that. 

Senator BIDEN. Well, one of the things that is coming out of this 

for me—and because we didn’t have the answer to the question of 

the nexus, please do not think that I don’t understand the value 

of the testimony across the board we have gotten today. It has been 

very valuable. 

What it has focused for me, though, is, more than I had focused 

on it before coming into this hearing is I am going to ask my staff, 

and hopefully with the concurrence of the Chairman—maybe he 

will join me or I will join him—for us to be able to draft very concise, precise questions about the status of the analysis within the 

administration, wherever it may lay, as to this nexus between fundamental Islam and narco-trafficking, because that is the question 

44

we have to get answered first before we can make any judgments, 

at least in my view, before we can adequately prioritize. 

A woman who has been deeply involved in this has been Senator 

Feinstein. She rightly points out that she is dismayed by the failure of the military to destroy stockpiled opium where they know it 

exists. That in and of itself is worthwhile because that opium goes 

out to the world and pollutes the world and kills, as you said, 

Larry, more people than an airplane crashing into the Trade Towers, which was horrible. But that does not answer the question. 

That all by itself is a worthwhile thing to do. 

My criticism of Afghanistan and our policy has been consistent, 

and maybe I have been consistently wrong, but I don’t think so because I have been trying to work inside the administration and do 

it quietly. Now, I am trying to scream and make a mess of it so 

hopefully something happens. 

But the truth of the matter is none of that will give me the answer, were I making those decisions, on how to prioritize my assets 

to deal with what is the number one, overriding, overarching shortterm concern for the American people, and that is fundamental Islamic organizations who have us as a target. 

As bad as the FARC is, as bad as even Hamas is, by the way, 

and Hizballah—they are the first team—so far they have not been 

taking flight lessons to figure out how to get to the Sears building. 

I have no illusions about how, quote, ‘‘evil’’ their intent is, but I 

want to concentrate on the guy coming at me now. I want to concentrate on the guy that has me in his cross-hairs now. We know 

of at least one outfit that has us in its cross-hairs. 

So I hope our staffs can work together. It is presumptuous of me 

to do this. I am getting back into a bad habit of acting like I am 

the Chairman or Ranking Member, but thank God I am not. But 

maybe we can work together to come up with that. 

I have a couple of questions—I will not trespass any more on 

your time right now, but a couple of questions in writing, and you 

can take your time. I mean, there is no urgency. In a week or ten 

days, get it back to us, but I would like to have it for the record 

on things we have not gone into. 

I can’t tell you how much I appreciate your work here and your 

willingness to take the time, and as corny as it sounds, your patriotism in feeling obliged as a responsibility to be engaged in this effort. I thank you all. I look forward to talking to you some more, 

Larry, about some of this domestic allocation. 

Thank you all very much. We are adjourned. 

[Whereupon, at 12:35 p.m., the Committee was adjourned.] 

[Question and answer and submissions for the record follow.]

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