U.S. GOVERNMENT PRINTING OFFICE

71–970 DTP WASHINGTON : 2001

COUNTERDRUG IMPLICATIONS OF THE UNITED

STATES LEAVING PANAMA

HEARING

BEFORE THE

SUBCOMMITTEE ON CRIMINAL JUSTICE,

DRUG POLICY, AND HUMAN RESOURCES

OF THE

COMMITTEE ON

GOVERNMENT REFORM

HOUSE OF REPRESENTATIVES

ONE HUNDRED SIXTH CONGRESS

SECOND SESSION

JUNE 9, 2000

Serial No. 106–217

Printed for the use of the Committee on Government Reform

(

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http://www.house.gov/reform

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Internet: bookstore.gpo.gov Phone: (202) 512–1800 Fax: (202) 512–2250

Mail: Stop SSOP, Washington, DC 20402–0001

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COMMITTEE ON GOVERNMENT REFORM

DAN BURTON, Indiana, Chairman

BENJAMIN A. GILMAN, New York

CONSTANCE A. MORELLA, Maryland

CHRISTOPHER SHAYS, Connecticut

ILEANA ROS-LEHTINEN, Florida

JOHN M. MCHUGH, New York

STEPHEN HORN, California

JOHN L. MICA, Florida

THOMAS M. DAVIS, Virginia

DAVID M. MCINTOSH, Indiana

MARK E. SOUDER, Indiana

JOE SCARBOROUGH, Florida

STEVEN C. LATOURETTE, Ohio

MARSHALL ‘‘MARK’’ SANFORD, South

Carolina

BOB BARR, Georgia

DAN MILLER, Florida

ASA HUTCHINSON, Arkansas

LEE TERRY, Nebraska

JUDY BIGGERT, Illinois

GREG WALDEN, Oregon

DOUG OSE, California

PAUL RYAN, Wisconsin

HELEN CHENOWETH-HAGE, Idaho

DAVID VITTER, Louisiana

HENRY A. WAXMAN, California

TOM LANTOS, California

ROBERT E. WISE, JR., West Virginia

MAJOR R. OWENS, New York

EDOLPHUS TOWNS, New York

PAUL E. KANJORSKI, Pennsylvania

PATSY T. MINK, Hawaii

CAROLYN B. MALONEY, New York

ELEANOR HOLMES NORTON, Washington,

DC

CHAKA FATTAH, Pennsylvania

ELIJAH E. CUMMINGS, Maryland

DENNIS J. KUCINICH, Ohio

ROD R. BLAGOJEVICH, Illinois

DANNY K. DAVIS, Illinois

JOHN F. TIERNEY, Massachusetts

JIM TURNER, Texas

THOMAS H. ALLEN, Maine

HAROLD E. FORD, JR., Tennessee

JANICE D. SCHAKOWSKY, Illinois

———

BERNARD SANDERS, Vermont

(Independent)

KEVIN BINGER, Staff Director

DANIEL R. MOLL, Deputy Staff Director

DAVID A. KASS, Deputy Counsel and Parliamentarian

LISA SMITH ARAFUNE, Chief Clerk

PHIL SCHILIRO, Minority Staff Director

SUBCOMMITTEE ON CRIMINAL JUSTICE, DRUG POLICY, AND HUMAN RESOURCES

JOHN L. MICA, Florida, Chairman

BOB BARR, Georgia

BENJAMIN A. GILMAN, New York

CHRISTOPHER SHAYS, Connecticut

ILEANA ROS-LEHTINEN, Florida

MARK E. SOUDER, Indiana

STEVEN C. LATOURETTE, Ohio

ASA HUTCHINSON, Arkansas

DOUG OSE, California

DAVID VITTER, Louisiana

PATSY T. MINK, Hawaii

EDOLPHUS TOWNS, New York

ELIJAH E. CUMMINGS, Maryland

DENNIS J. KUCINICH, Ohio

ROD R. BLAGOJEVICH, Illinois

JOHN F. TIERNEY, Massachusetts

JIM TURNER, Texas

JANICE D. SCHAKOWSKY, Illinois

EX OFFICIO

DAN BURTON, Indiana HENRY A. WAXMAN, California

SHARON PINKERTON, Staff Director and Chief Counsel

CARSON NIGHTWINE, Professional Staff Member

RYAN MCKEE, Clerk

MICHEAL YEAGER, Minority Senior Oversight Counsel

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C O N T E N T S

Page

Hearing held on June 9, 2000 ................................................................................. 1

Statement of:

Beers, Rand, Assistant Secretary, Bureau of International Narcotics, Department of State; Ana Maria Salazar, Drug Enforcement Policy and

Support, Department of Defense; and William Ledwith, Chief, International Operations, Drug Enforcement Administration, Department

of Justice ........................................................................................................ 90

Cabal, Professor Tomas, University of Panama ............................................. 179

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

Barr, Hon. Bob, a Representative in Congress from the State of Georgia,

Legislative Assembly Law No. 5, Republic of Panama .............................. 148

Beers, Rand, Assistant Secretary, Bureau of International Narcotics, Department of State, prepared statement of .................................................. 93

Cabal, Professor Tomas, University of Panama, prepared statement of ..... 185

Ledwith, William, Chief, International Operations, Drug Enforcement Administration, Department of Justice, prepared statement of .................... 114

Mica, Hon. John L., a Representative in Congress from the State of

Florida:

Followup questions and responses ........................................................... 153

Letter dated June 8, 2000 ........................................................................ 121

Prepared statement of ............................................................................... 6

Mink, Hon. Patsy T. Mink, a Representative in Congress from the State

of Hawaii, prepared statement of ................................................................ 9

Ose, Hon. Doug, a Representative in Congress from the State of California, followup questions and responses ........................................................ 150

Rohrabacher, Hon. Dana, a Representative in Congress from the State

of California:

January 16, 1997, memo ........................................................................... 83

Legislative Assembly Law No. 5 .............................................................. 14

Prepared statement of ............................................................................... 88

Salazar, Ana Maria, Drug Enforcement Policy and Support, Department

of Defense, prepared statement of ............................................................... 104

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COUNTERDRUG IMPLICATIONS OF THE

UNITED STATES LEAVING PANAMA

FRIDAY, JUNE 9, 2000

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON CRIMINAL JUSTICE, DRUG POLICY, AND HUMAN RESOURCES, COMMITTEE ON GOVERNMENT REFORM, Washington, DC.

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

2247, Rayburn House Office Building, Hon. John L. Mica (chairman of the subcommittee) presiding.

Present: Representatives Mica, Barr, Souder, Hutchinson, Ose,

Mink, and Schakowsky.

Also present: Representative Rohrabacher.

Staff present: Sharon Pinkerton, staff director; Charley Diaz,

congressional fellow; Carson Nightwine, professional staff member;

Ryan McKee, clerk; Lauren Perny and Brian Bobo, interns; Michael

Yaeger, minority senior oversight counsel; Sarah Despres, minority

counsel; Earley Green, minority assistant clerk; and Teresa Coufal,

minority staff assistant.

Mr. MICA. Good morning. I’d like to call this hearing of the

Criminal Justice, Drug Policy, and Human Resources Subcommittee to order.

This morning we’ll be conducting a hearing entitled, ‘‘Counterdrug Implications of the United States Leaving Panama.’’ We have two panels, and we’re going to go ahead and proceed with

the consent of the minority. We should be joined by other Members,

but we do have a full hearing so we want to keep this proceeding

moving.

The order of business will be opening statements, and I’ll start

with my opening statement. I’ll yield to other Members as they

come. And with the consent of the minority, we will leave the

record open for a period of 2 weeks for additional statements, information or background that may be submitted as part of this hearing record.

It’s been about 6 months since the United States military has left

Panama in accordance with the 1977 Carter-Torrijos Treaty. Today,

this subcommittee will examine some of the implications of that

move on our drug interdiction and eradication efforts in that region.

Located at the nexus of two oceans and two continents, the country of Panama holds a uniquely strategic importance in the free

flow of trade in the Western Hemisphere. Unfortunately, that trade

also has come to include the trafficking of contraband such as illeVerDate 11-MAY-2000 09:02 May 11, 2001 Jkt 000000 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 C:\DOCS\71970.TXT HGOVREF1 PsN: HGOVREF1
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gal drugs, illegal arms, black market goods, and also extensive

money laundering.

Over the years, a critical element of our international drug eradication and interdiction efforts has been our operations which have

been based in former United States bases in Panama. That all

came to a grinding halt last year with the turnover of the Panama

Canal. By the end of 1999, the United States had abandoned the

Panama Canal and the 360,000 acre Canal zone, as well as military property consisting of 70,000 acres and 5,600 buildings worth

an estimated $10 to $13 billion. Since the late 1980’s, these bases

have served as the cornerstone of the U.S. military’s counterdrug

effort in that region.

Today, the United States can no longer fly planes out of Howard

Air Force Base. Likewise, we can no longer base our ships at Rodman Naval Base. We can no longer coordinate our regional

counterdrug efforts out of Fort Sherman. Somehow I still don’t understand why this administration wasn’t able to foresee this predicament and develop contingency plans. I know we from the subcommittee have done everything possible to highlight what we

knew would be problems in this area with the close-down of those

bases. Instead, we find ourselves today playing a catch-up game,

and we have a long way to go to make up for the losses of these

bases and strategic forward operating anti-narcotics efforts.

Over a year ago, on May 1st, 1999, the United States ceased all

surveillance flights from Howard Air Force Base in Panama from

which the United States had flown more than 2,000 anti-narcotics

flights per year. Over the past 12 months, the United States has

signed 10-year agreements with Aruba, Curacao and Ecuador, and

most recently with El Salvador, to provide alternative staging

areas, known as forward operating locations [FOLs], for both our

military and law enforcement surveillance aircraft.

Two of the 10-year agreements have been ratified. The El Salvador agreement still lacks parliamentary approval. But, in fact,

we once operated out of just one base, and now the United States

may be forced to maintain and finance bases in four locations.

Also, we’re faced with mounting construction costs and operational costs for these forward operating locations at the new operating locations, and every time we have folks appear before the

subcommittee the estimates of cost of operating those bases climb.

Even more troubling, the date at which all four FOLs will be

fully operational keeps slipping. The most recent guess is that we

will not be fully operational until the year 2002. Meanwhile, drugladen boats and planes keep heading toward our shores undetected.

Each of these deadly craft carry death and destruction bound for

the U.S. streets and neighborhoods.

I hope to hear from today’s administration witnesses about our

latest cost estimates, the latest timeline for getting these FOLs

fully operational. I also want to know the likelihood that these four

FOLs will make up for the extensive coverage loss that we experienced with the shutdown of Howard, including a breakdown of coverage in the source zone and also the transit zone.

I chaired a similar hearing on Panama 1 year ago where we discussed the implications of losing Howard Air Force Base. At that

hearing I stated that, ‘‘hopefully, we can avoid a near-term gap

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with the damaging loss of critical coverage.’’ Obviously, this administration missed the mark. Unfortunately, the gap is now something we’re experiencing and it’s very real.

By SOUTHCOM’s own admission in a letter to the subcommittee

sent yesterday by Charles Wilhelm—and I invited him to testify

today. I hope the Members will take a look at this. But his words

are that we estimate our capability will continue to be approximately one-third of what it was in Panama. This is an incredible

gap. I think it’s one reason that we have drugs, particularly a resurgence of cocaine now, incredible quantities of heroin, pouring

into our shores.

Again, according to our own SOUTHCOM Commander, we are

two-thirds shy of what is needed. I understand that a majority of

this shortfall is in the critical source zone countries of Colombia,

producing 80 to 90 percent of the cocaine now, by the administration’s own estimates, and some 70 percent of the heroin on our

streets that’s seized, according to DEA estimates—Peru and also

Bolivia, and their efforts to eradicate the cocaine production are

now also being harmed we’ve learned from recent reports. These

are the very countries that need our support and need our help

right now. We must minimize the extent and duration of this gap

in coverage.

Instead of closing the gap, though, this administration reduced

the number of counterdrug flights by a staggering 68 percent from

1992 to 1999. Again, I refer to the document requested. I didn’t

conduct the study. GAO did, upon our request, citing a 68 percent

reduction in these anti-narcotics surveillance flights in the period

from 1992 to 1999.

I read in today’s New York Times that we have increases in drug

use, particularly cocaine, marijuana and other hard drugs of our

young people. I think the CDC—and we may ask them to come in

and testify now—but from 1991 to current, dramatic increases in

use. And again we have a reduction in our counternarcotics effort,

most effective tool for stemming these shipments.

The number of ship days also, according to this report, dropped

62 percent.

It is painfully clear that this counternarcotics effort is not a priority, top priority for this administration. And I don’t know why.

As we all know by now, a real shooting war, largely financed by

the illegal drug trade, is raging just south of Panama in the Republic of Colombia. In fact, you can’t have a meaningful discussion of

the drug situation in Panama without considering what is happening in Colombia.

I know the House has acted. I salute my colleagues in working

with me and the Speaker and others in trying to get the $1.6 billion passed and from the House to the Senate. It’s shameful that

the Senate, including the Republican leadership there, have not

acted on that measure. I want to make sure I put the blame on everybody today.

In the past there have been reports of significant Colombian

rebel activity in the Darien Province of southern Panama. Now

with the United States withdrawal from Panama and the recent

focus on Colombia, we have already witnessed an increase in narcoVerDate 11-MAY-2000 09:02 May 11, 2001 Jkt 000000 PO 00000 Frm 00007 Fmt 6633 Sfmt 6633 C:\DOCS\71970.TXT HGOVREF1 PsN: HGOVREF1
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terrorist incursions into Panama. With a weak and corrupt police

force, Panama is now ripe for takeover by narco-dealers.

At last year’s hearing, I voiced concern about the expanding

FARC guerilla presence in Panama. I warned that, absent an effective United States policy—and this is my quote a year ago—‘‘the

United States will be back in Panama at some point in the future,

and at great cost and sacrifice, to preserve the sanctity of the

Canal and protect our national interests.’’ 1 year later, my concern

about this deteriorating situation is even greater.

We’ll probably hear more about this, but I think everyone is focusing today on a report, and I honestly have not read the entire

report, only seen press accounts, this headline—and this happens

to be the Washington Times, but it’s in the Post and the New York

Times—‘‘With U.S. Gone Panama Is a Mecca for Drug Trafficking.’’ And we’ll hear more about that report.

From my perspective as chairman of the subcommittee, I don’t

think this administration has taken this threat seriously. How

could this administration turn its back totally on direct tenders

that captured key Panamanian court contracts at Colon? And the

administration officials, including General McCaffrey, have confirmed to me both publicly and privately that these were corrupt

tenders that allowed these contracts to go to Chinese interests and

zero out United States competitors.

Today, we have a complete lack of engagement by this administration and Panama, and the region is in turmoil. Colombia is in

chaos, Venezuela is thumbing its nose at the United States, and

the administration is undermining our best ally in the antinarcoterrorist effort, President Fujimori of Peru.

This complacency is jeopardizing stability in the region, and it is

also a threat to our national security. The threat to the region and

the Canal is real, and we need to address it.

In the aftermath of the United States efforts to apprehend the

Panamanian dictator Manuel Noriega in 1989—and just as a lesson

of history we went after him for being involved in drug dealing and

corruption—we insured that the corrupt Panamanian Defense

Force [PDF], was dissolved. In fact, we had their military dissolved

by that action. And Panama changed its constitution to prohibit a

standing military.

Now the security of that country is in the hands of the institutionally weak Panamanian National Police force. And if we’re to believe these reports, they’ve been very seriously corrupted and infested by narco-drug traffickers.

Experts contend that this modest, ill-equipped force does not

have the capacity to effectively monitor or guard the southern border with Colombia. In fact, despite President Clinton’s certification

of Panama last year, I have received troubling reports that drug

seizures in Panama dropped by some 80 percent in 1999 from 1998.

In Panama, we face serious challenges in the months and years

ahead, challenges that in fact will impact our ability to keep drugs,

illegal narcotics off our street and from our children. With the pullout of the United States military from Panama, it appears to me

we’ll only see more increases in drug trafficking, narcoterrorism, illegal arms smuggling and money laundering in Panama and also

throughout the region.

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Hopefully, today’s hearing will shed light on these issues and

help us address some of them squarely, collectively and in a bipartisan fashion and effectively. The citizens of the United States and

this hemisphere deserve no less.

In this region, if we recall from history, Teddy Roosevelt adopted

the policy of ‘‘walk softly and carry a big stick’’. Unfortunately, historians may record the Clinton foreign policy for this region at this

time as the ‘‘que pasa’’ era. And if you’re not familiar with Spanish,

que pasa is sort of a blase ‘‘what’s happening’’ for a literal interpretation. And we do need to find out what’s happening here today.

With those opening comments, I’m pleased to yield to the ranking member of our subcommittee, the distinguished lady from Hawaii, Mrs. Mink.

[The prepared statement of Hon. John L. Mica follows:]

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Mrs. MINK. I thank the chairman for yielding to me at this time.

I do hope that the intent of these hearings today is to really find

out what’s happening in terms of the impact of the United States

having no military base in Panama as a result of an agreement

made some years ago. While I think it’s useful to examine the situation of the pullout and what the impacts have been with respect

to the United States and the region, I do think that the discussions

about drug trafficking do not really lend any particular intelligence

to the discussion of this subject.

I think it’s quite obvious that with a pullout of our military bases

that we would lose a very important command post in our counterintelligence activities. I’ve always taken the viewpoint that it’s important for us to establish strong relationships and a sense of related responsibility toward the supply side of the various drugs from

this region.

But in looking at the whole picture it’s very important to understand that we have two sides to this issue, and that is demand and

supply. And while we want to bring considerable pressure on these

countries to perform better, it’s really our responsibility to make

the relationships work and to establish those counterintelligence

posts that are meaningful.

We knew we had to pull out of Panama, and I think if there is

a deficit of policy, it was not being able to establish on a much earlier timetable the replacement posts for the absence of the Howard

Air Force Base. And so my emphasis has always been, what do we

do here in the United States? What are we doing to curb demand?

I think that the Congress has a very large responsibility in this

area, and we have been focusing heavily on our side to strengthen

the law enforcement aspects of all the incursions of drugs coming

into United States and also understanding that part of the demand

policy is also what we do with respect to those who need treatment.

If we can’t do something about treatment of those who are addicted

to drugs, then we’re not really looking at the demand side.

So while I welcome this opportunity to discuss Panama today

and to look at the implications of the loss of our military base there

in Panama, I do think that a full view of this situation, rather than

simply a condemnation of administration policy, has to take the

balance, look and see what implications this means for our

strengthened resolve to do more within the United States on the

demand question.

Thank you, Mr. Chairman. I ask unanimous consent that my

statement be placed in the record.

Mr. MICA. Without objection, so ordered. Thank you.

[The prepared statement of Hon. Patsy T. Mink follows:]

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Mr. MICA. I’ll recognize the vice chairman of our panel, Mr. Barr,

the gentleman from Georgia, at this time.

Mr. BARR. Thank you, Mr. Chairman; and thank you for convening these two very distinguished panels today to continue what you

know must be a long-term, sustained focus on Panama and the surrounding problems in the Caribbean and South America.

This is not a problem, like many here in Washington, that somebody will focus on for 1 day of hearing and then everybody will go

back and do their other things and forget about it. That happens

far too often, and that’s why we find ourselves frequently in crisis

situations here in the Congress or facing crisis situations elsewhere.

You’ve taken a different tack, and I commend you for that. You

realize that the problems with regard to drug trafficking and

money laundering and narco-terrorist activity in Central America,

in Panama, in Colombia, and elsewhere is something that must be

attacked every single day of the year, year in and year out. And

the problems that we’re facing in Panama largely now are a result

of the vacuum created by the departure and turnover to Panama

of all military—all United States personnel and facilities and the

lack of planning by this administration to have alternatives such

as operational FOLs ready to go and to hit the ground running the

day after the turnover are very, very severe and continuing.

And while I do appreciate the steps that have been taken and I

recognize that these are not easy contracts to negotiate and to go

so in a manner that is respectful of taxpayer money. Previous hearings that we’ve had have indicated that things could have moved

much more quickly if they had been started much earlier as well.

But, be that as it may, there’s nothing we can do at this point

to make up for prior shortcomings. What we have to do is continue

to focus on the problems created by the vacuum when the United

States departed Panama lock, stock and barrel and to see if there

are some steps that can be taken both in the civilian sector with

regard to encouraging—and this might be something that we can

look at legislatively as well as look United States companies to become more active in Panama.

It also requires a look at the very distressful increase in the

Communist Chinese influence and interest in Panama.

As we all know, Panama has been, over the years, very, very courageous, more courageous than our country, as a matter of fact, in

recognizing the free people of China and in providing diplomatic

recognition to the Republic of China, not the Communist People’s

Republic of China. This has been a sore point for Beijing for many

years, and they have been mounting over the last few years a much

more sustained effort to switch allegiance, and I do hope and encourage the people of Panama to resist such entreaties.

But the Communist Chinese presence, which took a quantum

leap forward with what I believe was a very corrupted process of

negotiations, has given them a foothold through Hutchison

Whampoa on both ends of the Panama Canal which certainly we

anticipate that they will expand. There would be no reason for

them to be there if they didn’t plan on expanding, and that has

been the nature of Communist Chinese presence in other parts of

the world. This is something we do need to focus on.

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The administration is not—the President, in perhaps a Freudian

but probably very accurate slip of the tongue, a number of months

ago indicated that he seemed pleased with the Communist Chinese

presence there, and they would run the Canal properly. Many of

us up here, including, I know, you, Mr. Chairman, and certainly

myself and Mr. Rohrabacher and I suspect all members of this

panel, take a much different view. We are concerned about the increased Communist Chinese focus in Panama, just as we are concerned about the danger posed to the Panamanian people by incursions by narco-terrorists, by the FARC and ELN, in the southern

provinces of Panama where it borders on its neighbor to the south.

These are matters that do impact us, and they impact us in

many, many different ways, including the security of the Canal. If

commercial shippers do not believe that the security of the Canal

will be maintained long into the future and indefinitely into the future, if they foresee problems, then they are going to start looking

at alternatives. Once they start doing that, much of the revenue

currently derived by Panama from the Canal will start to dry up.

So that’s something that neither country certainly wants to see

happen.

I also hope, Mr. Chairman, that we can begin to focus on the

problem of the cleanup of the target ranges in Panama and the

testing ranges. As I understand it from talking with people both in

Panama who have traveled down there and experts, this matter

has not yet been resolved, and I think we could go a long way toward improving the climate for future negotiations and current negotiations between our two countries for a more cooperative physical presence down there if we can get this matter resolved as well.

So there are many, many facets to the problems that you are continuing to focus on, Mr. Chairman. I’ve just enumerated a few of

them. You have also.

I read the same press reports this morning of the intelligence estimate, the law enforcement officer estimate. This is very, very

troubling, although not terribly surprising. It, too, is the result of

lack of foresight by the administration in really laying the groundwork to address these problems that we all knew would crop up.

But, again, I hope that we can work and I anticipate we will continue to work with the administration to resolve these. Certainly

we would have preferred to see it done sooner rather than later,

but it is not too late. And you are playing, through your convening—through this hearing today and I know future hearings, Mr.

Chairman, playing a key role in that, and I thank you.

Mr. MICA. Thank the gentleman.

I’ll now recognize Mr. Ose from California.

Mr. OSE. Thank you, Mr. Chairman. I think I’ll pass on the opening statement.

Mr. MICA. Thank you.

The gentleman from Arkansas, Mr. Hutchinson.

Mr. HUTCHINSON. I pass and look forward to the witnesses’ testimony.

Mr. MICA. The gentleman on our panel, Mr. Souder from Indiana.

Mr. SOUDER. Pass.

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Mr. MICA. We’re also joined by a member of the International Relations Committee who’s taken an active interest in this hearing;

and, without objection, I’m pleased to recognize Mr. Rohrabacher

from California at this time.

Mr. ROHRABACHER. Thank you very much, Mr. Chairman.

As you know, I’ve had a very deep interest in Panama and in the

national security interest of our country that I believe are being

put at risk by some of our policies in Panama. And I want to thank

you for conducting this hearing on the national security threats

that are developing in the Panama Canal area which remains a

key strategic choke point for the Americas.

When I visited Panama last summer I was stunned by the complete absence of American security forces in what had been for

nearly a century America’s military outpost protecting our Nation’s

vulnerable southern flank. And I had been to Panama several

times during the Reagan years when I worked at the White House,

and those of us who visited Panama in the past realize how significant a military presence America had there and what role that

presence played in the stability and played for a positive factor in

Latin America and in that region.

Today, Communist China and transnational criminals are filling

the strategic vacuum created by the total withdrawal of the United

States of America from Panama. Major ports on both ends of the

Canal are now under the control of a Hong Kong-based Chinese

company, Hutchison Whampoa, which has close ties to the Communist Chinese Government and is partly owned by an entity

which is itself wholly owned by the Communist Chinese regime,

the China Resources Enterprises, which is also very well known as

a front for the Chinese military intelligence.

I am submitting for the record a copy of the Panamanian Government’s official open bid document, and it shows that American

companies initially outbid the Chinese companies for control of the

port facilities in both ends of the Panama Canal but were denied

the port contracts through what our State Department has called,

a highly irregular process.

[The information referred to follows:]

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Mr. ROHRABACHER. Please also include for the record the enclosed document that describes the relationship between Hutchison

Whampoa and its owner Li Ka-Shing and China Resources Enterprises to the Communist Chinese regime itself.

[The information referred to follows:]

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Mr. ROHRABACHER. It is not a coincidence that Taiwan, which is

under the threat of military attack by Beijing, has stopped shipping military supplies through the Panama Canal because of their

concern that all ships’ cargo manifests will be seen by Hutchison

Whampoa and reported to Beijing.

Equally troubling, since the removal of United States

counterdrug operations at Howard Air Force Base, there has been

a significant increase in the vast quantities of South American cocaine and heroin that transit through and around Panama.

And let me say to my colleague from Hawaii I certainly share her

commitment to trying to reshape America’s drug effort so it isn’t

totally aimed at enforcement and interdiction, but that does not

take away from the importance of these other efforts. But putting

treatment in the mix is a good idea. It’s an important element.

But when we take a look at what’s going on now as a result of

America pulling back from Panama and the weakening of our drug

enforcement mechanisms, it’s having a harrowing effect on American security and on the security and well-being and stability of

that part of the world.

The war in neighboring Colombia against well-armed narco-terrorist forces financed by laundered drug profits through Panama’s

banks is escalating and threatens to spread throughout the region.

Panama does not have an army, a navy or an air force.

The Panamanian Government and its National Police force are,

at best, unable to cope with the challenges they face; and the people of Panama understand that. They’re unable to cope for a number of reasons. There is incompetency and corruption charges, but

also it is a very small force, and it is a very small country. It

makes absolutely no sense for the United States Government to

pour billions of dollars into a counterdrug war into Colombia and

to deploy an increasing number of American soldiers there while

ceasing to seriously negotiate with Panama for a reinstatement of

American security advisers and, yes, even security forces and counternarcotics experts there in order to participate in a regional effort.

In all recent public opinion polls—and this is what makes it so

incredulous that this is happening—80 percent of the Panamanian

people support a continued United States security presence in their

vulnerable homeland. They want us there. The empty American

bases and total absence of American military presence in Panama—at America’s most important strategic point in this hemisphere. This is a glaring example of this administration’s callous

disregard for our country’s national security interests.

In Panama, the people want us there, but yet this administration

was unable to negotiate an agreement to permit us to have a military presence there. It’s a travesty. In fact, I would say it’s more.

It’s a sham when one says that we were honestly trying to negotiate so America could maintain some sort of a presence there in

Panama.

And those of us who, spent time in that part of the world, it’s

shocking to go and see now that there’s just no American troops,

no American military. What was an area where it was bustling

with Americans, we had presence, we were able to deter evil

forces—and I know that people don’t like to use the word ‘‘evil.’’ It

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maybe sounds a little bit too plebeian to use the word evil, but

there are evil forces in this world and America’s presence was able

to deter those forces from dominating this very small country of

Panama.

So this hearing is very important for our national security today

because we do have evil forces, countries and forces that hate the

United States that are involved with drug trafficking, forces that

would undermine our national security, and Panama needs America’s help, and it needs America’s presence. And I thank you for

holding this hearing.

[The prepared statement of Hon. Dana Rohrabacher follows:]

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Mr. MICA. I thank the gentleman for joining our panel this morning and for his comments.

We have already agreed to leave the record open, with consent

of the minority, for 2 weeks. Without objection. Also, I think the

material that the gentleman from California requested will be

made part of the record.

At this time, we have our first panel; and I’d like to recognize

our first panel: the Honorable Rand Beers, who is the Assistant

Secretary of the Bureau of International Narcotics for the Department of State; Ms. Ana Maria Salazar, she is the with the Department of Defense in charge of Drug Enforcement Policy and Support; and Mr. William Ledwith, and he is the Chief of International

Operations from the Drug Enforcement Administration.

I think they’ve all been before our panel before, and they’re familiar with the requirements of this investigations and oversight

panel.

If you would please stand and be sworn.

[Witnesses sworn.]

Mr. MICA. The witnesses answered in the affirmative.

I am pleased to welcome back today Mr. Rand Beers, who’s the

Assistant Secretary of State for the Bureau of International Narcotics. You’re recognized sir.

STATEMENTS OF RAND BEERS, ASSISTANT SECRETARY, BUREAU OF INTERNATIONAL NARCOTICS, DEPARTMENT OF

STATE; ANA MARIA SALAZAR, DRUG ENFORCEMENT POLICY

AND SUPPORT, DEPARTMENT OF DEFENSE; AND WILLIAM

LEDWITH, CHIEF, INTERNATIONAL OPERATIONS, DRUG ENFORCEMENT ADMINISTRATION, DEPARTMENT OF JUSTICE

Mr. BEERS. Thank you, Mr. Chairman and members of the Subcommittee on Criminal Justice—— Mr. MICA. I’m not sure if we can hear that. You might have to

pull that as close as you can.

Mr. BEERS. Is this better, sir?

Mr. MICA. Yes, go ahead.

Mr. BEERS. Thank you for this opportunity to speak today about

Panama and in particular the narcotics trafficking situation. Panama’s shared border with Colombia leaves it vulnerable to narcotics trafficking and to incursions into the Darien Province by guerrillas and narco-traffickers. It is arguably one of the most strategically located countries in the Western Hemisphere for drug trafficking and other organized criminal activities. Panama’s location

between South and North America, its long coastlines, border with

Colombia, the Canal and other factors make it a key staging areas

for drug shipments and insurgent unrest originating in Colombia.

It is crucial, therefore, that we remain committed to a partnership

that promotes security for both the United States and Panama.

Panama was certified as fully cooperating with the United States

on counternarcotics in 1999. While this country is not a significant

producer of drugs or precursor chemicals, due to its strategic location, advanced transportation infrastructure and financial development it serves as a crossroads for transnational crime, including

drug trafficking and money laundering. Panama’s long land border

and shared sea-lanes with Colombia and its extensive Caribbean

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and Pacific coastlines make land and sea interdictions a major

challenge. The Panama Canal, container seaports, the uncontrolled

Colon Free Zone and the beginning of the Pan American Highway,

an international hub airport and numerous uncontrolled airfields

create unlimited transportation opportunities for drug traffickers.

Accordingly, Panama has become a major transshipment point

for illicit drugs smuggled from Colombia into Panama by ‘‘go-fast’’

boats, by containers transported by maritime cargo vessels that

transit the Canal or off-load in Panama’s ports, by private and

commercial overland vehicles and aboard private and commercial

aircraft.

Colombian cocaine is, in turn, often stockpiled in Panama and repackaged for further shipment to the United States and Europe.

Panama is also extremely vulnerable to money laundering due to

its international banking sector, the Colon Free Zone, and the

United States-dollar-based economy.

Panama’s law enforcement agencies maintain good relations with

their United States counterparts and have demonstrated their willingness to cooperate on an interagency basis.

In 1999, the United States and Panama carried out four coordinated counterdrug operations. The Technical Judicial Police and

the Panamanian National Police also executed three major joint

interdiction operations along the Costa Rican border against alien

smugglers and drug traffickers. In fact, we had one just in the past

week.

At the request of the Moscoso Administration, the United States

and Panama began law enforcement bilateral discussions on November 23rd, 1999. This past Tuesday, June 6th, the Government

of Panama hosted the second round of law enforcement bilaterals.

The issues discussed included law enforcement, specifically drug

interdiction cooperation, alien smuggling, money laundering and

judicial reform. In addition to these issues, this particular round of

bilateral discussions was concluded with the signing of a Stolen Vehicle and Aircraft Treaty.

According to United States law enforcement and insurance agencies, Panama is an important destination for vehicles stolen from

the United States. Some of these vehicles are transported to Panama for the local market, while others are routed there for transshipment to Europe and elsewhere. Stolen vehicles are often used

by Colombia drug traffickers to transport drugs. This treaty for the

repatriation of stolen vehicles and aircraft illustrates Panama’s

commitment to building successful law enforcement and judicial institutions and enhancing bilateral cooperation beyond counternarcotics.

Panama continues to be a major drug transit country because of

its proximity to the world’s largest cocaine producer. The situation

in Colombia, therefore, is critical for the surrounding region. Colombia is increasingly threatened by well-armed and ruthless narcotics traffickers that are supported by guerillas and

paramilitaries. Not only is the Colombian Government unable to

exert effective control over thousands of square miles of its own

territory, but the border areas of neighboring countries are also put

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cotics and narcotics money are ever-present threats to the institutions and economies of the entire region.

The situation in Colombia also poses a considerable number of

direct threats to United States national security interests, including thousands of Americans killed by drugs and drug-related violence each year, losses to our economy from drug-related accidents,

inefficiency in the workplace and the social and human costs of

abuse and addiction.

After strained relations with the tainted Samper administration,

President Pastrana’s tenure and the proposed funding for Plan Colombia offer the United States and Panama a golden opportunity

to work with Colombia to confront such threats. Panama faces complex and daunting problems, not only those emanating from the Colombian crises but also others that are outgrowths of institutional

weaknesses in Panama.

Our challenge as a neighbor and a partner is to identify ways in

which we can assist Panama in resolving its narcotics-related and

other problems. At this moment, Panama is a partner who shares

our counternarcotics concerns and possesses the will to proceed

with the needed reforms, bilateral agreements and operations. I

look forward to working closely with the Congress as we continue

to address these critical issues.

Thank you very much.

Mr. MICA. Thank you. We’ll withhold questions until we’ve heard

from all three members of the panel.

[The prepared statement of Mr. Beers follows:]

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Mr. MICA. I’ll recognize next Ana Maria Salazar, who is with the

Department of Defense, Drug Enforcement Policy and Support.

You’re recognized.

Ms. SALAZAR. Thank you, Mr. Chairman. I’m pleased to have the

opportunity to testify once again before the subcommittee and to

provide an update on the status of our forward operating locations.

At this time, I would like to summarize my statement and submit a written statement for the record.

Mr. MICA. Without objection, your entire statement will be made

a part of the record. Please proceed.

Ms. SALAZAR. As you know, a year ago last month the runway

at Howard Air Force Base in Panama closed and the interagency

began conducting counterdrug flights on an expeditionary bases

from existing commercial facilities in Aruba, Curacao and the Ecuadorian military airfield in Manta. Since the last time I testified

a year ago on this issue, we have made important progress toward

replacing and enhancing our capabilities.

In November 1999, the Government of the United States and Ecuadorian Government signed a 10-year agreement for the use of

the Manta airfield to support interagency counterdrug missions

throughout the source zone, including Colombia, which supplies 90

percent of the cocaine shipped to the United States. The FOL at

Manta is now capable of 24-hour, 7-days-per-week, all-weather

flight operations. United States Navy P–3s are conducting Eastern

Pacific counterdrug detection and monitoring missions from this facility as we speak. The Manta airfield is suitable for United States

Customs Service P–3 operations, and the deployments are currently scheduled for this month. This fact alone will allow the

United States to increase the surveillance capability in the source

zone tremendously.

In March of this year, our government and the Kingdom of the

Netherlands signed a similar 10-year agreement for the critical

coverage of the northern source zone and Caribbean portions of the

transit zone.

The United States Customs Service has been flying from Aruba

since April 1999, and the Department of Defense has been operating with aircraft such as the F–16s, United States Navy P–3s and

E–2s, United States Air Force AWACS, as well as other Intelligence, Surveillance and Reconnaissance platforms from Curacao

since May of last year.

Shortly after initiating flight operations from the FOLs, the

interagency exceeded pre-Howard closure counterdrug detection

and monitoring on-station time by 15 percent. Furthermore, transit

zone detection increased by 50 percent; and maritime-related cocaine seizures climbed by over 500 percent.

Most recently, in March 2000, we signed a 10-year agreement

with the Government of El Salvador for the use of Comalapa Air

Base, which will support P–3 counterdrug flights in the Eastern

Pacific and Western Caribbean portion of the transit zone. This

agreement is pending ratification by the Salvadorian legislative assembly prior to initiating counterdrug operations.

Geographically, the El Salvador location optimizes the integrated

coverage of the three FOLs, minimizing overlaps while simultaneously extending the reach of airborne counterdrug missions to

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the northern region of the Eastern Pacific transit zone along the

west coast of Mexico.

Although progress has been made, important challenges still remain. The vast majority of D&M on-station hours were flown in

support of counterdrug transit zone missions, primarily in the Caribbean. In fact, source zone on-station time has decreased by 75

percent.

We need to increase our airborne D&M coverage over the source

zone to complement the Puerto Rican ROTHR, which has completed its testing phase and is now fully operational, providing unprecedented coverage over southern Colombia. Once full operational capability is established at each of the FOLs, the interagency will have significantly greater source and transit zone coverage than existed when counterdrug operations were flown out of

Howard Air Force Base.

I would like to briefly talk about some of the issues that you

have raised in regard to Panama.

I know that members of the subcommittee are concerned about

how and what effect illegal drug trade is having on Panama. From

DOD’s perspective and perhaps the interagency at large, we are

closely monitoring the situation, and we stand ready to assist Panama, as with any other country in the region, in support of that

country’s security concerns. We do not foresee, however, any

counterdrug requirement for an FOL-like presence in that country

at this point.

The El Salvador FOL meets or exceeds all Department requirements and optimizes the synergetic effect of the geographical situation of the three locations. A Panama site suboptimizes the FOL

architecture because its coverage—the region that it would be covering would overlap that provided by the other operating locations.

However, we are engaged with the Government of Panama in

counterdrug concerns. There have been ongoing bilateral discussions, as mentioned by Assistant Secretary Rand Beers; and

SOUTHCOM has participated in those efforts. However, until Panama signs a visiting forces agreement, an agreement that we have

in many countries around the hemisphere, it will be very difficult

for DOD to increase dramatically their support.

I would like to briefly talk about the Colombia supplemental.

Most of the required military construction funding for the FOLs is

currently contained in the fiscal year 2000 supplemental developed

to support Plan Colombia. From an execution perspective, the Department requires a funding as soon as possible, especially in the

case of the Manta FOL, which could go to contract as early as July.

President Pastrana has asked for international support to address an internal problem that has international dimensions fueled

in part by our country’s demand for cocaine. It is a long-time sense

that we should move forward on the Colombian supplemental, and

I hope that we can do so soon.

We cannot execute our congressional mandated mission to curb

the shipment of illegal drugs without the FOLs. The Department

of Defense along with our interagency partners has made important progress over the past year, and with the continued congressional support we hope to continue to do so in the future.

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I thank you for affording me the opportunity to speak to you in

regards to the FOLs and Panama; and, with that, I look forward

to answering your questions.

[The prepared statement of Ms. Salazar follows:]

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Mr. MICA. We will withhold questions until we’ve heard from our

final witness. And that witness is William Ledwith, Chief of International Operations for our Drug Enforcement Administration

under the Department of Justice. Welcome and you’re recognized

sir.

Mr. LEDWITH. Good morning, sir.

Mr. MICA. You might have to pull that up close. For some reason,

they’re not picking up over there.

Mr. LEDWITH. Good morning, sir.

Mr. Chairman and members of the subcommittee, I appreciate

the opportunity to appear before the subcommittee today on the

subject of Panama. My comments will be limited to an objective assessment of the law enforcement issues involving drug trafficking

and money laundering in and through the country of Panama. I

would like to again express my thanks to the subcommittee for

your continued support of the Drug Enforcement Administration

and for your overall support of drug law enforcement.

Today’s organized crime leaders are strong, sophisticated and extremely destructive. They have the capability of operating on a

global scale. They are callous individuals who send their surrogates

to direct the distribution of the drugs they ship to the United

States. These organizational leaders have at their disposal airplanes, boats, vehicles, radar, communications equipment, money

and weapons in quantities that rival the capabilities of some legitimate governments.

Panama is the most strategically located country in the Western

Hemisphere for drug trafficking and other transnational crime.

Panama’s location between South America and North America,

with its long coastlines, its border with Colombia, and the Panama

Canal make the country a key transit point for drug shipments

originating in Colombia for further shipment north.

Other factors which make Panama attractive to major drug traffickers are its weak law enforcement and public security institutions, its large and sophisticated international banking sector, the

Colon Free Zone and cargo container port facilities on both ends of

the Panama Canal.

Panama continues to be threatened by Colombian drug trafficking organizations that utilize containerized cargo, aircraft, maritime vessels and the Pan American Highway in order to transport

their illicit drugs through Panama.

In addition, these same drug trafficking organizations utilize the

Panamanian economy in order to launder their billions of dollars

in drug proceeds through the Colon Free Zone.

To combat this threat, the Government of Panama continues to

cooperate with DEA to investigate and prosecute these

transnational drug criminals.

In 1999, Panamanian agencies seized a significantly reduced

amount of cocaine and marijuana. This was principally due to

changing trafficking methods and Panamanian authorities’ lack of

resources and training to respond to these changes.

However, cocaine and heroin seizures in 2000 are on a pace to

exceed the record seizures made by Panamanian authorities in

1998. Panama continues to be a major financial and commercial

center, ideally positioned for illicit financial transactions and drug

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smuggling. Panama’s international banking center, a long-established tax haven, combined with the Colon Free Zone and a United

States-dollar-based economy, render Panama vulnerable to money

laundering.

The Colon Free Zone is second only to Hong Kong as the largest

free zone in the world and is the largest in the Western Hemisphere. The Colon Free Zone comprises over 161 acres of warehouses and showrooms which accommodate over 1,600 companies.

Operating as a free trade zone, the CFZ is an area where goods can

be imported and reexported without being subject to tariffs, quotas

or taxes. Therefore, importers throughout Latin America can purchase a wide variety of these products at a competitive price.

In addition, CFZ merchants will routinely accept third-party

checks, money orders, wire transfers and cash as payment for these

goods.

Illegal narcotic sales in the United States generate billions of dollars annually, most of it in cash. Efforts to legitimize or launder

this cash by the Colombian drug cartels are subject to detection because of intense scrutiny placed on large financial transactions by

United States banks and institutions. To avoid detection, the drug

cartels have developed a number of money laundering systems that

subvert financial transaction reporting requirements and manipulate facets of the economy unrelated to the traditional financial

services industry.

One such form of money laundering is known as the Black Market Peso Exchange. The Black Market Peso Exchange is a complex

system currently used by drug trafficking organizations to launder

billions of dollars of drug money each year. In addition, this financial scheme exploits the advantages of the CFZ, which serves as an

integral link in the Colombian money laundering chain.

The Black Market Peso Exchange is an underground financial

system used to evade reporting and recordkeeping requirements

mandated by the United States Bank Secrecy Act, as well as by Colombian foreign exchange and import laws and tariffs.

Money brokers, utilizing pesos, purchase United States dollars

from narcotics dealers in Colombia in exchange for Colombian

pesos. These United States dollars are sold to Colombian importers

in exchange for Colombian pesos. The United States dollars purchased by Colombian importers are used to pay for merchandise

bought in the CFZ. The purchased goods are shipped to Caribbean

or South American destinations, sometimes via even Europe or

Asia, then smuggled or otherwise fraudulently entered into Colombia.

The Colombian importer takes possession of his goods, having

avoided paying extensive Colombian import and exchange tariffs,

and they pay the peso broker for the items with Colombian pesos.

The peso broker, who has made his money charging both the cartels and the importers for his services, uses those new pesos to

begin the cycle once again.

These investigations are extremely complex and require cooperative law enforcement efforts between the United States and Panama. Although cooperation between the United States and Panama

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quiring prosecutors to satisfy an unusually high burden of proof

and to meet extremely difficult evidentiary standards.

Under Panamanian law, if a merchant demonstrates that transactions include real goods and that payment is at fair market

value, he is not engaged in money laundering. Thus, willful ignorance of the law is not a crime.

From the Panamanian perspective, criminal money laundering

takes place only when a person moves cash without a commensurate exchange of goods and the cash involved results from specific

drug transactions.

These legal loopholes continue to be exploited by money laundering organizations operating in the Colon Free Zone.

In conclusion, as the gateway to the Caribbean, Panama continues to provide a significant link between South American drug cartels and their ability to transport their poisons to the continental

United States. The country of Panama is singular in the opportunities it provides for traffickers, as well as the challenges it creates

for law enforcement authorities.

Over the past several years, the United States Government has

refocused a great deal of asset and enforcement initiatives along

the southwest border in order to address the threat posed by Mexican drug trafficking organizations and their alliance with Colombian drug cartels. While these initiatives have resulted in outstanding successes, we remain concerned about the increased drug

trafficking activity throughout the entire Panamanian and Caribbean regions. I can assure you that the DEA will, therefore, remain

diligent in our efforts to respond to any apparent shift in drug trafficking trends.

The use of Panama as a drug transit zone by Colombian drug

trafficking organizations, as well as a means of securing their narcotics proceeds, creates unique challenges to Panamanian United

States law enforcement authorities. We are dedicated to cooperative drug enforcement investigations with our Panamanian counterparts in order to address this threat.

Mr. Chairman, thank you for the opportunity to appear before

this subcommittee today. I sincerely appreciate the interest that

you and the subcommittee have shown in DEA’s counterdrug role

in Panama. At this time, I will be happy to answer any questions

you may have.

Mr. MICA. Thank you.

[The prepared statement of Mr. Ledwith follows:]

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Mr. MICA. I will start with some questions.

Again, from all the papers that have disclosed the existence of— I believe it is a Customs report that I had not seen—Mr. Beers,

have you seen the Customs report?

Mr. BEERS. Sir, I have it in my possession, and I looked briefly

at it, but I haven’t had a chance to read it closely.

Mr. MICA. How about you, Ms. Salazar?

Ms. SALAZAR. I have not seen that report, and I believe it was

not cleared through the Department of Defense.

Mr. MICA. Mr. Ledwith.

Mr. LEDWITH. I have not had a chance to review it yet, sir.

Mr. MICA. First of all, I am going to request from Customs a copy

of the report and, if necessary—hopefully, they will voluntarily provide it to the subcommittee. If not, I will consult with Chairman

Burton about subpoenaing the report.

The report—and again I only have the press reports of what it

says—there is a quote that intelligence sources indicate that Chinese and Russian organized crime factions are active in narcotics,

arms and illegal alien smuggling, utilizing Panama as a base of operations.

Are you aware of those activities, Mr. Ledwith?

Mr. LEDWITH. There is intelligence indicating that there is significant Chinese involvement in that part of the world, yes, sir.

Mr. MICA. The other part of this says—and again I have to quote

from this—says drug seizures by authorities in Panama declined by

80 percent last year from 1998 levels, and no major narcotics traffickers or money launderers were arrested.

Is this factual, Mr. Beers?

Mr. BEERS. Yes, sir. If you aggregate the cocaine, the marijuana

and the heroin seizures, that is an accurate statement, but it is

based entirely on the drop in the area of marijuana. Both cocaine

and heroin seizures went up. However, having said that, it is also

true that if you take 1998 as your base year everything went down.

Mr. MICA. I had invited General Wilhelm to come today, and he

wasn’t able to be with us, for scheduling reasons. He did submit

this letter, which I think the minority also has.

Without objection, Mrs. Mink, I would ask that it be made a part

of the record. Is that acceptable that we submit that? I think they

supplied you with a copy.

[The information referred to follows:]

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Mr. MICA. But in this letter, which will be part of the record, it

says, we estimate our capability will continue to be approximately

one-third of what it was in Panama.

Ms. Salazar, is that correct?

Ms. SALAZAR. From the perspective of what we are doing right

now and the coverage we are providing the source zone, I believe

it is correct.

Mr. MICA. I have held a number of closed-door meetings, not to

embarrass the administration, on trying to replace these forward

operating locations. It is critical that we get them in place.

We do have the now signed, I guess, 10-year agreements with the

two. For the record, will you tell us when you estimate they now

will be fully operational?

Ms. SALAZAR. Are we talking about the source zone, transit zone,

sir?

Mr. MICA. All of our capabilities, source zone and transit zone,

that we had when we had Panama fully operational.

Ms. SALAZAR. I am going to try to answer this question. The biggest problem we have right now is trying to increase our coverage

in the source zone. If you look at what we are doing in the transit

zone and what I said in my oral statement we have, in fact, better

coverage now than we had when we were flying out of Howard Air

Force Base.

Mr. MICA. One of the problems is this stuff is coming out at unprecedented quantities out of the source zone.

Ms. SALAZAR. You are absolutely correct, sir, and with Customs

initiating flights out of Manta this month—and I don’t want to give

you numbers because then I get quoted and these numbers change.

Mr. MICA. Well, they do, and we have been conducting these

hearings and we get sort of a revolving description of when we are

going to have full operational capability in place. So you are not

prepared—some of the documentation I think you have supplied to

us said 2002 is the latest estimate.

Ms. SALAZAR. When we are going to have most of the MILCON

construction done, when we are going to be able to have the

AWACS flying out of Manta, you are absolutely right, and it is

going to take about a year and a half to be able to do most of the

upgrades.

Mr. MICA. You did talk about what is going on in Manta. One

of the problems with Manta is the condition of that airstrip; is that

correct?

Ms. SALAZAR. That’s correct.

Mr. MICA. How much is it going to cost now to get it fully operational?

Ms. SALAZAR. It is going to cost—the total—I am going to give

you the total cost for the MILCON that we have requested for

Manta airport, which is $61.2 million, and that includes the barracks. That includes——

Mr. MICA. You described aircraft flying out of there, but I understand it is being remodeled and reconstructed to also support U– 2 aircraft; is that correct?

Ms. SALAZAR. U–2 aircrafts, I am not aware of that, sir. It would

be for AWACS.

Mr. MICA. I am sorry, AWACS?

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Ms. SALAZAR. Yes, that’s correct.

Mr. MICA. AWACS, and there are no AWACS flights out of there

now?

Ms. SALAZAR. Out of Manta, no, sir.

Mr. MICA. All right. The AWACS capability then will not be up

and running in that location until 2000?

Ms. SALAZAR. That’s correct.

Mr. MICA. Two?

Ms. SALAZAR. 2001. My advisors here tell me that the runway

itself will be available in the summer of 2001.

Mr. MICA. One of the problems we have is, of course, the U.S.

military doesn’t conduct any enforcement operations and is prohibited really from being an enforcement agent under the Constitution

and our laws, but what they do is provide surveillance information

to the source countries.

This GAO report which was provided to me recently says that

United States officials in Peru told us there has been little or no

United States airborne intelligence or surveillance of air traffic

routes between Peru and Bolivia since 1997. The United States

Ambassador to Peru warned in an October 1998, letter to the State

Department that the reduction in air support could have a serious

impact on the price of coca.

Mr. Ledwith, aren’t we seeing an increase in cocaine coming out

of this zone?

Mr. LEDWITH. If you take the zone as a whole, yes, sir, we are

seeing increased cocaine production.

Mr. MICA. For the first time, I was told by some officials that we

are seeing an increase again in Peru. Is that correct?

Mr. LEDWITH. There are reports of an increase beyond the previously achieved low, yes, sir.

Mr. MICA. If I ask, Ms. Salazar, these people in Peru who have

been our allies, or Bolivia or Colombia, if they are getting the same

level of information and intelligence for surveillance of drug trafficking production, etc., in those areas, what are they going to tell

me?

Ms. SALAZAR. Sir, they are probably going to tell you, at least

from the air surveillance aspect, that they are going to be receiving

increased information. As you know, the ROTHR Puerto Rico came

on board, and the importance of the ROTHR, at least for the Department of Defense and the role we play, is that you will have the

capability of being able to have—see what is going on in the way

of air flights in Peru, Colombia, Northern Brazil.

So in the short term they are probably going to tell you that they

are going to have more information in the way of air flights.

Mr. MICA. The ROTHR has been up for how long?

Ms. SALAZAR. It just came—there were still playing with it, but

it is formally and it has been in use for about, I would say, 3 weeks

now. I was—in fact, I was looking at the site a day and a half ago.

Mr. MICA. It’s too early to get any data from its effect, or about

its effectiveness?

Ms. SALAZAR. Well, sir, in fact, talking to our experts, they are

actually quite pleased with what they are seeing right now; and

they have, in fact, started to increase—providing the information to

source zone nations.

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Mr. MICA. Thank you.

Mrs. Mink.

Mrs. MINK. Thank you very much, Mr. Chairman.

From all of your statements and testimony, I gather that the

area coverage, in terms of the surveillance activities by the United

States, is greater than it was during the operation of Howard Air

Force Base. Is that correct?

Ms. SALAZAR. For the transit zone, the Caribbean zone, yes, it is.

Mrs. MINK. Could you explain exactly what that coverage is with

respect to the issue that we are discussing this morning about Panama and the drug trafficking through Panama? To what extent

does this transit coverage meet the problems that we are discussing this morning about Panama?

Ms. SALAZAR. OK. Madame, if you allow me to use this map you

will probably get a good sense as to each one—of the coverage that

will be provided by each one of the FOLs.

Panama would be that yellow spot that you see in the middle of

those bigger circles. As you can see, when you look at the FOL,

Aruba and Curacao, who is the green star, the amount of coverage

we are receiving right now, because where geographically you find

Aruba and Curacao is much larger than we were in Panama.

If you look at where the Salvador FOL—which hopefully will be

coming on board in the next couple of months and we will start

providing flights, we are going to have a larger coverage through

what is called the East Pac. And what does that mean for us? As

my colleagues from DEA will state, we have seen increased flow of

maritime tracks through East Pac; and, in fact, there has been a

pretty large interdiction of drugs through the East Pac. And because we are going to be having that—geographically, Salvador is

the higher Central American strait—we are going to be able to

have more coverage of the East Pac.

If you look down at the blue star, where the Manta FOL is, you

can see we have a deeper coverage of the source zone countries. It

is easier to get to Peru and southern Colombia, where, you know,

90 percent of the drugs that come to the United States are either

produced or cultivated.

If you look at the map, we have—our air platforms will have

easier access to get to that area; and, therefore, they will be spending less time in the transit zone. They will be using their time to

be on the source zone and being able to surveil from that area.

I don’t know if that explanation helps you, but once we have the

three DOL fully functioning we will, in fact, have a better coverage,

air surveillance coverage, than we had from Howard Air Force

Base.

Mrs. MINK. When do you expect that to be fully on board?

Ms. SALAZAR. We expect the missing part of the puzzle right now

is the fact that we can’t fly AWACS out of Manta.

Mrs. MINK. What is the reason for your inability to fly AWACS

out of Manta?

Ms. SALAZAR. The airfield doesn’t—can’t withstand an AWACS,

which is—— Mrs. MINK. Why can’t you fix the airfield?

Ms. SALAZAR. We are going to do that. In fact, the MILCON——

Mrs. MINK. Do you have funds to do it?

126

Ms. SALAZAR. We do not have funds. We requested the MILCON

in the Colombia supplemental, and we are hoping that once the Colombia supplemental has been approved we would be able to even

cut a contract.

Mrs. MINK. What is the current status of that supplemental?

Ms. SALAZAR. Right now, it is—I think it is ready to go to conference. I think they are trying to attach it to the MILCON bill.

My sense is, in regards to the MILCON discussions in the supplemental, there is no—there is no questions about it. It is just a matter of supplemental.

Mrs. MINK. How much are you requesting in that MILCON?

Ms. SALAZAR. We are requesting, for all the FOLs, $126 million.

Mrs. MINK. That is now stuck in the Senate? As I understand it,

we passed it in the House in the emergency supplemental?

Ms. SALAZAR. I believe that’s correct.

Mrs. MINK. And currently, as I understand it, that emergency

supplemental is not moving, so it has to await passage of the regular appropriations bill before you get funded?

Ms. SALAZAR. My colleague from the State Department was reminding me, there are two parts to it. We have the military part

of the supplemental and also the State Department part of it, and

our part of the supplemental would be attached to the MILCON.

I think they were going to initiate discussions in the next 2 or 3

weeks. I don’t—it would be very difficult for me to predict when

it——

Mrs. MINK. So assuming that you get the funding in late fall,

that would be the timeframe in which you could begin the reconstruction of the airfield, is that correct?

Ms. SALAZAR. That’s correct, and that’s why, when I stated that

the pavement would be ready to have AWACS flying out of Manta,

what I was mentioning—what I was referring to was that if we

started the—if we got the money sometime in July or August, most

of the repairs of that airfield would be done by the summer of the

year 2001. At that point, we would be able to fly out of Manta.

Mrs. MINK. Now, with the departure of our military base out of

Panama, what is the reality of having a visiting force agreement

in place with Panama to substitute for the absence of an actual

military base?

Ms. SALAZAR. It is—I think we are talking about two different

issues. If we have a visiting force agreement, it is an agreement

that we use in most countries to basically protect our people when

they are deployed. What does that mean? That there is just basic

rules and regulations as to what we can do in a country when we

are—when I say we, I am talking about DOD—what DOD personnel can do in any specific country when they do deployment, provide technical assistance and support.

We have been in conversations with the Government of Panama

for the last number of months. This agreement has not moved forward and DOD, as you can understand, would be very nervous in

increasing our activities and increasing our presence, increasing

our training deployments to Panama until we had a signed agreement.

127

Mrs. MINK. Now, if you had a visiting forces agreement, could

you do with that agreement some of the drug surveillance activities

that we had done previously at the base?

Ms. SALAZAR. No, that would be a different type of agreement.

As you know, with the forward operating locations, when you look

at that agreement it basically outlines the type of activities we

would perform from any specific airport and the types of assets we

would be using. Those are two different types of platforms.

At this point, we haven’t approached Panama or had any conversations with Panama to—in regards to having an FOL presence

because, as you see from the map, Panama at this point does not

help us graphically when you take into consideration that we will

probably be initiating flights out of Salvador in the near future.

Mrs. MINK. The news article that the chairman referred to this

morning from the Washington Times makes reference to Chinese

and Russian-organized crime groups. You, Mr. Ledwith, indicated

that the presence of the Chinese groups has increased in Panama.

Can you make a comment about the Russian-organized crime?

Mr. LEDWITH. Only in this realm, to say that there has been increasing evidence of a Russian-organized crime influence in that

part of the world, also, ma’am.

Mrs. MINK. When you speak of organized crime, this is drugsmuggling activities basically, since that is the focus of our attention in this committee?

Mr. LEDWITH. Our area of interest would, of course, be specifically drug trafficking.

Mr. BEERS. But it is broader than that, ma’am.

Mrs. MINK. Would you like to amplify on that, too?

Mr. BEERS. Russian-organized crime is a poly crime activity. It

involves both drugs, which is one of the basic reasons for their interest in that particular area of this hemisphere, but they are also

involved in laundering money out of Russia, in the movement of

counterfeit goods and counterfeit money and alien smuggling and

trafficking in women and children.

All of those are activities that Russian-organized crime has

sought to bring to this hemisphere and other locations around the

world. They are just spreading out.

Mrs. MINK. Have you reports or other documents that you can

make available to this committee with regard to that?

Mr. BEERS. There are intelligence documents, ma’am, and we can

ask the intelligence community to make those available.

Mrs. MINK. Thank you. Thank you, Mr. Chairman.

Mr. MICA. Thank you.

I would like to yield to our vice chairman. Could you yield to me

for just a second, Mr. Barr?

Mr. BARR. Certainly.

Mr. MICA. I just want to point out for the record, and there will

be a written record and if we submit this chart as testimony, part

of the testimony, that the circle shown to the subcommittee this

morning with a star indicating El Salvador is not in operation at

all and that we only have a fraction of the capability coming out

of Manta at this time and, again, no AWACS capability, just for the

record.

Mr. Barr, thank you.

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Mr. BARR. Thank you. If we could have a staff person turn that

so that both the witnesses and the Members could see it, I would

appreciate it.

Prior to our evacuation of Howard Air Force Base, Ms. Salazar,

it is correct, is it not, that we were flying some 2,000 counterdrug

flights per year out of Howard?

Ms. SALAZAR. That’s correct—I think it was actually more than

that. Yes, 2,000 including support missions.

Mr. BARR. OK. And it is true also, is it not, that the cost of operating Howard Air Force Base was approximately $75 million per

year?

Ms. SALAZAR. Approximately.

Mr. BARR. With all of these circles up here, how many

counterdrug flights are currently being operated?

Ms. SALAZAR. If you give me—we have that in, I believe, one of

my charts, but I will give that—if you give me a couple of minutes,

we will try to get that information to you right now.

Mr. BARR. OK. I think the chairman made a very, very good

point. I mean, this is a very pretty drawing and the circles are very

nice and the stars and so forth, but this is theoretical. I mean,

these areas are not being covered currently in the same manner as

the larger circle reflected coverage out of Howard Air Force Base.

What these circles reflect, I believe, is the theoretical coverage.

You can draw all the circles in the world that you want, but if you

don’t have planes up in the air they don’t really mean anything.

Ms. SALAZAR. Actually, sir, I am sorry. The map is somewhat

confusing. That larger circle that you see——

Mr. BARR. I don’t find it confusing.

Ms. SALAZAR. No, the larger circle that you see actually reflects

the AWACS, the capability of the AWACS.

Mr. BARR. But there are no AWACS.

Ms. SALAZAR. But there will be AWACS flying out of Manta.

Mr. BARR. So this is theoretical at this point.

Ms. SALAZAR. At this point, we don’t have AWACS flying out of

Manta.

Mr. BARR. Well, we don’t have AWACS flying out of any of these

areas.

Ms. SALAZAR. No, sir. We do actually have AWACS flying out of

Curacao.

Mr. BARR. How many are there down in Curacao today?

Ms. SALAZAR. Right now, today, I can’t give you details.

Mr. BARR. It is my information there are none down there today.

Ms. SALAZAR. There may not be one there today, sir, but we have

had the AWACS flying in the AOR; and, specifically, they have

been flying out of Curacao.

Mr. BARR. There are no AWACS that are permanently stationed

in any of these locations; that’s correct, isn’t it?

Ms. SALAZAR. Nor were there in Panama. The AWACS

normally——

Mr. BARR. There are none?

Ms. SALAZAR. No, but, sir, even when we had Howard Air Force

Base the AWACS were never permanently stationed out of Panama.

129

Mr. SOUDER. They were prior to them being transferred to

Kosovo, and so forth.

Ms. SALAZAR. No, no.

Mr. BARR. There are no AWACS down here on a regular basis.

Ms. SALAZAR. I would disagree, sir. We do have AWACS coverage

flying out of Curacao.

Mr. BARR. From time to time.

Ms. SALAZAR. We—as much as we had—when you have only one

AWACS—I mean, I think the issue here is we only have one

AWACS and at different points.

Mr. BARR. We only have one AWACS in our defense inventory?

Ms. SALAZAR. No, sir, we only have one AWACS that has been

assigned to this.

Mr. BARR. Therein lies the problem. A policy decision has been

made by President Clinton, or Secretary Cohen, I don’t know

which, not to make the AWACS available. We have AWACS.

Ms. SALAZAR. We do have.

Mr. BARR. They are just not assigned here.

Ms. SALAZAR. As you know, sir, throughout the years there has

been a reduction in a number of these assets, and a decision was

made by the Secretary that there were other missions around the

world that required—— Mr. BARR. We are well aware of these other so-called missions

around the world and how they are eating up our resources. That’s

why we don’t have them here.

Would any of you disagree with the estimates that I have seen

that the FARC in Colombia strength—what is the FARC strength

as far as you all know?

Mr. BEERS. Sir, my understanding is that it is between 10,000

and 15,000 armed individuals.

Mr. BARR. OK. Would any of you all have any reason to doubt

those figures?

Mr. LEDWITH. No, sir.

Mr. BARR. OK. By any measure, a fairly substantial presence.

Are you all familiar, I presume, to one extent or another, with

Panama law No. 5, organic law No. 5? Mr. Beers, I certainly know

you are very familiar with it.

Mr. BEERS. You are going to have to remind me what it says, sir.

Mr. BARR. Well, OK. Panama law No. 5 has been written about

extensively, both publicly as well as in United States Government

documents, because it is the framework that specifically provides

the powers for Hutchison Whampoa to control assignment of pilots

for ships transiting the Canal, to hire pilots for ships transiting the

Canal; to determine the order of ships going through the Canal.

None of you all are familiar with Panama law, organic law No.

5?

Mr. BEERS. No, sir.

Mr. LEDWITH. No, sir, not particularly so.

Mr. BARR. Mr. Chairman, I am speechless.

Mr. MICA. We want to make sure that’s included in the record,

that you are speechless.

Mr. BARR. I guess this is one reason why we see so little concern

on the part of the administration over Communist China’s presence

in Panama. The administration apparently is not even familiar

130

with the basic law of Panama that provides very significant powers

to Hutchison Whampoa that provide for the hiring, the assignment

of pilots for ships transiting the Canal, the order of line for ships

going into and out of the Canal.

Are you all familiar with the recent purchase by a Communist

Chinese bank of Marine Midland Bank, which is one of the major

banking institutions in Panama?

Mr. BEERS. Simply that it happened, sir.

Mr. BARR. Was this significant enough to hit the radar screen of

the U.S. Government, the administration?

Mr. BEERS. Sir, we are concerned about financial transactions in

Panama as a general issue because as several of us have indicated,

the issue of money laundering is a serious issue in Panama.

Mr. BARR. How about is there any specific concern with regard

to increased Communist Chinese presence and power in banking

and other financial institutions located in Panama?

Mr. BEERS. Sir, as a general matter, that’s, of course, something

that we pay attention to, look at——

Mr. BARR. Good.

Mr. BEERS [continuing]. And report upon.

Mr. BARR. I appreciate that.

Is this of concern to other agencies of the government, the increased Communist Chinese financial presence in Panama through

such things as the purchase of Marine Midland Bank? Is this of

concern to the Department of Defense?

Ms. SALAZAR. Sir, as you know, I am the Deputy Assistant Secretary of Defense for Drug Enforcement so I—although——

Mr. BARR. Does that include money laundering?

Ms. SALAZAR. Not necessarily. As you know, my role is detection—our role is detection and monitoring and providing support

through our DOD forces. However, when we do get requests for

training, we provide training and intelligence. But, generally, we

don’t participate in money laundering support—into money laundering support.

Mr. BARR. Mr. Ledwith, I know that you all’s agency is very concerned about and does very, very good work on attacking money

laundering. Are you concerned about the increased Communist

Chinese presence in financial institutions and power in Panama?

Mr. LEDWITH. Yes, sir, we are working in cooperation with our

colleagues in the Customs Service and the FBI we watch that very

closely.

Mr. BARR. You might want to share that concern with some other

agencies of our government.

Mr. LEDWITH. Yes, sir.

Mr. BARR. I might also state for the record, Mr. Chairman, and

encourage representatives from our government, too, look carefully

at Panama organic law No. 5 because it also provides contract

rights transfer authority for Hutchison Whampoa. In other words,

they can take the contract rights that they have through this very,

very long-term contract that they signed with the Panamanian

Government and transfer them to a third party, without restriction; and that would include transferring of their rights to other

components of the Communist Chinese Government, other corporaVerDate 11-MAY-2000 09:02 May 11, 2001 Jkt 000000 PO 00000 Frm 00134 Fmt 6633 Sfmt 6633 C:\DOCS\71970.TXT HGOVREF1 PsN: HGOVREF1
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tions controlled by different components of the Communist Chinese

hierarchy, and so on and so forth.

I have other areas, Mr. Chairman, but since there are other

Members will we have another round of questioning?

Mr. MICA. If time permits.

I will recognize Mr. Ose now.

Mr. BARR. Thank you.

Mr. OSE. Thank you, Mr. Chairman.

Mr. Ledwith, I am interested in a particular area and that is

from your base of knowledge, how much money do we spend addressing the issues of drug enforcement in this area? I mean, from

your Department’s——

Mr. LEDWITH. From DEA’s perspective, sir?

Mr. OSE. Yes.

Mr. LEDWITH. Limited to Panama or the region?

Mr. OSE. The region.

Mr. LEDWITH. Millions of dollars.

Mr. OSE. Tens of millions or $5 million?

Mr. LEDWITH. We would probably say tens of millions.

Mr. OSE. OK. Ms. Salazar, the same question, generally speaking.

Ms. SALAZAR. In this area I can give you some specific numbers,

and then we could come back with—I could give you some general

numbers and then come back in general.

Mr. OSE. Sure.

Ms. SALAZAR. This year we spent, in the whole FOL process,

which would include what we have spent in Manta and Aruba and

Curacao, I would say approximately $34 million. Now, you also

must add on, if we are talking about that—the region in general,

we have a very large and important program in Colombia that goes

to $60 million, $70 million, and we also have important programs

in Peru. So we are talking——

Mr. OSE. We are on the area of nine figures somewhere as it relates to your particular area?

Ms. SALAZAR. Probably.

Mr. OSE. Mr. Beers.

Mr. BEERS. Likewise. Hundreds of millions of dollars in the region.

Mr. OSE. The reason I ask that question is, having spent all of

this money, do we know who the individuals are behind the exportation of drugs to this country, the individuals? Not the cartel

names, not the cities from which it comes but the individuals?

Mr. LEDWITH. Yes, sir, we know many of them.

Mr. OSE. Say again?

Mr. LEDWITH. Yes, sir, I would say that we do know many of

them, yes, sir.

Mr. OSE. I would like to visit with you later about perhaps creating a list of such individuals.

Mr. LEDWITH. Yes, sir, I would be happy to do that.

Mr. OSE. I always find that shining a light on specific people,

kind of helping bring attention to their activities, is helpful.

I also want to go back to the question of the operating bases. As

I understand it, Ms. Salazar, as it relates to Howard Air Force

132

Base, we were running about 2,000 flights a year out of there; and

it was costing us around $75 million a year to operate that effort.

Ms. SALAZAR. I stand to be corrected. I was given the numbers

that Congressman Barr had asked for and, in fact, when we were

flying—as you know, Howard had a number of different types of

flights that took place. Some of them were counter drugs. Some of

them were support for the hemisphere. When you look at the

counterdrug flights, we were flying approximately 550—520 detection and monitoring missions per year.

This year, we have flown, up until now, 600 detection and monitoring flights. So, in fact, the number of flights has increased.

Mr. OSE. Is the $75 million number correct in terms of the general operating expenses?

Ms. SALAZAR. For Howard, yes, approximately.

Mr. OSE. For Howard?

Now we have got a number for these new forward operating locations in terms of capital expenditures. I think the number was

$126 million is the one you cited, investment in these airports.

Ms. SALAZAR. I am sorry, sir. What I am talking about, yes, it

is a capital investment in the next 2 years of being able to improve

the capabilities of the FOLs, which would include—— Mr. OSE. Would that be all three of them?

Ms. SALAZAR. That would include all three of them, 126—— Mr. OSE. This would be, for instance, airports like National Airport or Dulles or Sacramento International? I mean, that’s the comparable facility, if you will? You have private carriers coming in.

It is not like Howard Air Base in that it is strictly a military facility?

Ms. SALAZAR. Yes. Manta, although it is an Air Force facility, it

also has international flights flying out of it. So it is also an international airport, yes.

Mr. OSE. If I understand correctly, we have $126 million worth

of capital investment going into these three forward operating

bases. Do we have any feel for what the annual operating costs for

these three forward operating locations would be?

Ms. SALAZAR. OK. I am going to stand to be corrected one more time. It is $136 million when you include Salvador.

Mr. OSE. OK. So do we have a number for the estimated annual

operating expenses for the three forward operating locations?

Ms. SALAZAR. We are struggling with those numbers right now,

sir, in part because—there are a number of reasons. We initially

had anticipated $19 million to $18 million is the numbers that

General Wilhelm had provided us, but it looks like those numbers

are going to increase, and they are increasing based on the fact

that now we have not accounted for Salvador at the time we were

providing those numbers, and there are costs that we couldn’t anticipate when we were trying to predict as to what were the needs

in these different airports.

Mr. OSE. If you had to estimate presently, to the best of your knowledge, you are probably talking $100 million a year for operating expenses out of the three forward operating locations?

Ms. SALAZAR. $100 million? No. I would say 23—between 23

and—23 would be the lower end right now, what we are looking at. It could go higher than that, $23 million.

133

Mr. OSE. How do you reconcile the $75 million number at How- ard for 520 detection excursions with the $23 million at the three

bases on an annual basis?

Ms. SALAZAR. The $23 million—well, we—maybe you could repeat the question?

Mr. OSE. I asked earlier about what were the annual operating

costs for running the drug interdiction efforts at Howard.

Ms. SALAZAR. Right.

Mr. OSE. You told me $75 million.

Ms. SALAZAR. That’s correct.

Mr. OSE. That was generating about 520 excursions, if you will,

for detection purposes and the like. Now I am interested in what

the annual operating costs are estimated to be for the three forward operating locations that will replace Howard, and you have

told me the best estimate you have today is $23 million a year.

Now, the question I have is, if Howard was generating 520 detec- tion missions for $75 million a year, how is it that we are able, at

least year to date, just generically, to generate 600 detection missions from the three bases at $23 million a year? There just seems

to be a logical disconnection on a relative basis, and I am trying

to reconcile that.

Ms. SALAZAR. There is a couple—there are a couple of reasons.

On the one hand, when we were at Howard, we had a full base facility. When you look at how we are functioning out of Aruba, Curacao, Manta and Salvador, they are more on an expeditionary

basis, and they are not permanently there. So these are—the cost

in many ways would be—probably are going to be less because our

footprint is less.

Mr. OSE. Is the $75 million number that you previously gave me

the total operating expense at Howard?

Ms. SALAZAR. Total operating expense.

Mr. OSE. So not only the drug interdiction effort but the military

effort?

Ms. SALAZAR. Correct. Correct.

Mr. OSE. Let me go on to my next question then. I may want to

come back to that, if I have time.

Mr. Barr was very effective as it relates to the AWACS planes

not being in the region, and I see on your very clear picture the

circles for the P–3s. Now do we have P–3s in the area right now?

Ms. SALAZAR. Yes, we do, sir. We have P–3s flying out of Manta

and Aruba.

Mr. OSE. All right. How much in capital improvements do we

have to make to continue the operation of the P–3s in the area?

Ms. SALAZAR. Not much, because we are doing it already.

Mr. OSE. OK. So I guess, Mr. Chairman, that begs the question

why would we spend $126 million to improve an airport for an

AWACS that’s not there if we have got P–3s that are operating

there effectively now?

With that, I would yield back.

Mr. MICA. Thank you.

Mr. Souder.

Mr. SOUDER. I have a couple of different lines of questions.

Mr. Ledwith—— Mr. MICA. Mr. Souder, you are not picking up for some reason.

134

Mr. SOUDER. I am discouraged.

Mr. Ledwith, on the question of the Communist Chinese, have

you seen any involvement in money laundering related to narcotics

from many of their institutions?

Mr. LEDWITH. Sir, we have no definitive information that I could

put forward at this time, no, sir.

Mr. SOUDER. But clearly that means you are closely monitoring

because there is possible doubt?

Mr. LEDWITH. Because of the scope and complexity of money

laundering in general, and particularly in Panama, yes, sir, we are

watching it closely.

Mr. SOUDER. What we have seen in Panama predominantly is

Colombian heroin coming north. Have you seen any sign that they

also could get Asian heroin moving the other direction with their

presence in Central America?

Mr. LEDWITH. Are you referring to Asian heroin coming to the

United States from Panama?

Mr. SOUDER. The increasing presence of China.

Mr. LEDWITH. We have not seen any indications of that yet.

Mr. SOUDER. So to the degree you are watching it, you are mostly

watching to see if they become involved in South American events?

Mr. LEDWITH. Yes, sir. There are other issues that we are also

closely monitoring. China, for instance, is a source of much of the

ephedrine in the world that is utilized in making methamphetamine, which is a particular product available—— Mr. BEERS. From a broader perspective, sir, alien-smuggling is

an issue, the flow out of China, and Panama is an intermediate

destination.

Mr. SOUDER. But the DEA—zeroing in on narcotics, I understand

that the ephedrine would be coming from Asia. You say they are

involved in that. Any of you who want to answer?

Mr. LEDWITH. China is one of the major producers and exporters

of ephedrine, and clearly we have our eye on that particular element also, yes, sir.

Mr. SOUDER. So part of the reason for the investment, in fact, in

Central America could become to try to be involved in that precursor business in South Central America, theoretically?

Mr. LEDWITH. I cannot speak to what their ideas are, but certainly it is something that we are interested in and closely monitoring.

Mr. SOUDER. That is certainly not an illogical jump? In other

words, it is enough that you at least would want to watch it, because if they are one of the largest providers of the precursors, this

is the largest provider of narcotics, it would be totally unwise not

to be watching an increasing presence in that zone if there is going

to be some future linkup?

Mr. LEDWITH. You are absolutely correct, sir, and that’s why we

are watching it.

Mr. SOUDER. OK. Thank you. I can’t have Mr. Beers at a hearing

and not talk about Blackhawks for a second.

My favorite staffer on Colombia, John Mackey, was just showing

me some wonderful pictures of actual Blackhawks in Colombia

with the galvin 18 guns on one side, and I hope we can continue

to work to get the guns on the other side as well since it looks like

135

the first five helicopters that were damaged were damaged on the

side without the more powerful guns.

Which leads me to one of my frustrations that I am discouraged

on. I know all of you from multiple of these things. I think the biggest problem we are fighting right now in the anti-narcotics effort

is that there is a movement growing on both sides, right and left,

that somehow this is an unwinnable war and that we are all fighting hard to try, and disagreeing at times as to how to do it, but

we are in a real battle here, and this is part of my frustration on

these dates questions.

My generation is obsessed with Vietnam, that we are always behind and that we can argue whose fault it was or how we got into

this in the Panama Canal, but as a business guy I look at it as

somehow a critical path method wasn’t done here to realize the

date for having a final decision in Panama, was too late for us to

be able to, you know, replace the resources fast enough. That I

happen to believe, and I think many others are very concerned,

that there has been a stockpiling going on while we are in transition; and that while we are trying to figure out how to get our

AWACS there, I don’t disagree theoretically.

This may not, in the end, give us better coverage in the antidrug

effort. There are still other issues in the zone such as, say, the

Canal that happens to be very important in international trade.

That alone may be enough of an argument to have an FOL in Panama or some sort of a function there that may not be related to

narcotics at all. It is a big trade question, I mean, nominally related to narcotics.

I heard in Ms. Salazar’s testimony, that’s what we should have

been working on in mid-1998, if it takes us a year and a half, because there is plenty of blame to go around. I personally believe

that Plan Colombia and these Blackhawks should have been requested from us 4 years ago. I was fighting for over six

Blackhawks, and now we need 20’s and 40’s and 60’s down there.

But the truth is, Congress is moving at a snail’s pace right now,

too, and now that the administration has come forth, now we are

dinking around with whether we need the right helicopters, when

this money is going to come through, and then by the time we get

it there we are going to need more.

Furthermore, I read in Mr. Beers’ written testimony about an incursion into the Darien by the paramilitary’s six men, not much,

but this week an incursion of 70 armed rebels last week. If we, in

fact, do put a billion and a half into Colombia and that is mostly

oriented toward a push south-southwest, why isn’t it going to pour

right across that line? And how many police do they have to move

to the border there?

Mr. BEERS. A very limited number, sir.

Mr. SOUDER. And what is our strategy? Ms. Salazar said, I believe the exact quote was, we are closely monitoring the situation

and stand ready to assist Panama.

What does that mean, given the fact that if we do pass this bill,

take a year and a half probably to get all the stuff down there or

a year, we get it there, we start hammering them, what does this

mean? Are we going to wait until they are already in Panama and

then have to have another billion and a half supplemental?

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Ms. SALAZAR. And perhaps I did not—I didn’t fully detail with

you all the number of ongoing engagements SOUTHCOM has with

Panama at this point, but it is an engagement that is somewhat

limited to the fact that we won’t be able to increase our capability

of deploying people down there and increase our training and technical assistance to the Panamanians until we have this agreement

that we talked about earlier. But we do have—we do have an ongoing engagement.

SOUTHCOM has been working very closely with the Panamanians in developing their national security strategy. They also have

been helping and working with the Panamanians so that they develop a nationwide communication system for their forces. So we do

have something of—I am not going to say a presence but of an engagement with Panama.

And what I said is exactly right. I mean, we continue to monitor

this situation very closely and try to cooperate and work with the

Panamanians in so much as the Panamanians want it.

Mr. SOUDER. I have been involved in this subcommittee from the

time we took over Congress and have been down every year to

South America and even got lost in Santiago one night, that one

of the things that is frustrating here is that we wait, we get the

information, once we get the information we go through the process, and we get just enough to now be just slightly behind. And

something like this is the most tragic thing we are battling in the

streets and in our families, and it is not going down, it is getting

exacerbated—unless we can get ahead of the curve and try to anticipate what is going to happen next, rather than reacting to what

has happened, the charges against us are going to continue to be

true and undermine our support base to do anything about it.

Mr. BEERS. Thank you, sir. That is the intention of our effort, to

work with you on Plan Colombia to get ahead of the curve with sufficient resources, to be able to have a real opportunity to be effective, and we welcome your support and appreciate it.

Ms. SALAZAR. And the Department of Defense also shares your

concern and somewhat your frustration. We did not anticipate that

we were going to have to leave Panama, so we found ourself almost, from 1 day to another, in the situation where we had to start

negotiating with a number of countries agreements so we could

land, finding the resources so we could be able to deploy assets that

had not been deployed to these areas and basically finding ourselves seeking MILCON construction so we could be able to kind

of replace and enhance our capabilities that we had flying from

Panama. So, in many ways, the Department of Defense shares your

concerns and your frustrations.

Mr. SOUDER. Anything you want to say, Mr. Ledwith?

Mr. LEDWITH. Yes, sir. The Drug Enforcement Administration

looks forward to the passage of Plan Colombia, also. It is something

that is very, very needed, very timely; and I would like to see it

go forward.

Mr. SOUDER. Are you concerned that, if we pass it, it is just going

to overrun Panama and that we aren’t prepared to fight the Panama situation?

Mr. LEDWITH. We are concerned from a regional perspective

about what the displacement effect will be of all of those resources

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in Colombia. And, of course, Plan Colombia also has a regional

focus; and that is something we are watching very closely.

The situation in Ecuador, the situation in Venezuela, the situation in Panama, these are all areas that can be adversely impacted

by a displacement of either drug traffickers or guerrillas.

Mr. BEERS. But at this point in time, sir, in all fairness to your

point, the cultivation—— Mr. SOUDER. Right.

Mr. BEERS [continuing]. Which is the principal focus of Plan Colombia wouldn’t be expected to move in the direction of Panama.

It is too small, and it is in the wrong geographic area.

Mr. SOUDER. But that FARC is predominantly a protection

group. What they could do is much like what happened in Vietnam.

They go across to Cambodia, harbor themselves over there for

awhile, we destroy one season of the crops, they come back across.

Our guys can’t control that much land with the amount of money

we are giving them. That’s only a fraction of the cost.

Mr. BEERS. Remember, it is not seasonal, sir. The cocaine is not

seasonal.

Mr. SOUDER. Depending on what we use to destroy it.

Mr. BEERS. No. It is a perennial, not an annual. It is not like the

opium poppy. You grow a plant, and you continue to harvest it year

after year after year for about 15 to 18 years. So they have a startup requirement that’s 18 to 36 months to get started.

Mr. SOUDER. That’s assuming, of course, we have eradicated ev- erything, that we got control of the whole zone, which $1.9 billion

is not going to do.

Mr. BEERS. Yes.

Mr. SOUDER. But it is an important start. For example, we are

dealing with a stagnant bill. We need to continually look at that

for the Panama question, because I heard this week and last week

are new things that we hadn’t seen before. We suspect it might

happen, but that clearly we have a change in the dynamics of Peru.

We don’t know what the opposition is going to do. Are they going

to align with that? Are there going to be additional pressures

there? As we look at our package, we have to understand we have

to stay ahead of the curve, not just be reactive. Otherwise, we are

just throwing money away, wasting money.

Mr. MICA. Thank you, Mr. Souder.

Let me see—Mr. Rohrabacher.

Mr. ROHRABACHER. Thank you very much.

First of all, let me just restate for the record that I do agree with

Mrs. Mink about America’s drug program cannot be just focused on

interdiction. We have got to start trying to affect demand, which

also includes treatment. And until we do get demand under control,

we can’t expect only law enforcement to do the job. So first, before

I go into that, I want to identify with Mrs. Minks’ statement.

Let me also say that, in terms of the other end of this battle, I

have been very deeply disappointed in the administration, and especially in what the administration has been doing in relationship

to Panama, which I consider to be a frontline country in this whole

situation.

If we forget Panama, we do so at our own peril. Having looked

at what has been going on in Panama, I would say that the adminVerDate 11-MAY-2000 09:02 May 11, 2001 Jkt 000000 PO 00000 Frm 00141 Fmt 6633 Sfmt 6633 C:\DOCS\71970.TXT HGOVREF1 PsN: HGOVREF1
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istration has—at best—been incompetent. And trying to engage the

Panamanians in a way that would result in policies and in a reality

that is beneficial to the United States and protecting our interests.

Not only drug interests, but interests in terms of potential enemies

like Communist China.

First and foremost, let me ask you, the baseline that you are

using today, Ms. Salazar, you are suggesting that there are actually more flights now than when we had Howard Air Force Base.

Ms. SALAZAR. That’s correct.

Mr. ROHRABACHER. When we had Howard Air Force Base, as of

what year are you talking about? Are you talking about as of 2

years ago? What about 10 years ago? Were there more flights 10

years ago before the Clinton administration?

Ms. SALAZAR. I could get you those numbers.

I guess what I would have to clarify, if you are talking about

counterdrug flights or other types of support activities that the Department of Defense provided.

Mr. ROHRABACHER. If you could give me those numbers, would

it surprise you to know that there were dramatically more flights

10 years ago?

Ms. SALAZAR. Ten years ago? I don’t think there would have been

many—I believe—you know, I couldn’t speculate, because I am trying to understand the numbers and the way of the counterdrug

flights and the numbers that were increased.

Mr. ROHRABACHER. I have a chart in front of me here that suggests that at least the number of hours that were present in the

flights has gone from over 8,000—from about 8,000 to under 5,000

hours.

Mr. BEERS. Which is your base year, sir?

Mr. ROHRABACHER. This is—the baseline is 1992, before the Clinton administration.

Ms. SALAZAR. OK.

Mr. ROHRABACHER. It appears here, it is under 5,000—or around

5,000, I guess, but it was over 8,000. So you see a reduction of at

least maybe a third of the number of hours.

Ms. SALAZAR. Are you talking about a 1992 baseline, sir?

Mr. ROHRABACHER. Yes.

Ms. SALAZAR. I don’t know if you are aware, but there was a con- gressional mandate to cut approximately $300 million of the CTA

program, which I supervise, and a lot of that cut was reflected in

flight time and steaming hours. So the numbers are absolutely correct.

Mr. ROHRABACHER. OK. But the mandate wasn’t that you cut

this; it was to cut something, right?

Ms. SALAZAR. No, no. It was actually when you look at the——

Mr. ROHRABACHER. It was to cut the number of hours—the Congress mandated that we cut the number of hours for drug-related

flights?

Oh, that was when the Republicans came in, I guess.

Mr. OSE. Mr. Rohrabacher, I am curious. May I interject something?

Mr. ROHRABACHER. Yes.

Mr. OSE. The mandate on the $300 million, was that passed by

a Congress—what year was that passed——

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Mr. ROHRABACHER. Well, is it the 1992 Congress that you are

talking about mandated this?

Ms. SALAZAR. It was for the 1993 FYI; yes, FYI.

Mr. ROHRABACHER. So that was—— Mr. OSE. That would have been the Congress elected in 1992

then?

Mr. ROHRABACHER. Right.

Mr. OSE. Thank you.

Mr. ROHRABACHER. I seem to remember there was a shift in control of Congress somewhere around there.

Ms. SALAZAR. But, sir, beyond who was—— Mr. BEERS. There was a Congress elected in 1990.

Mr. ROHRABACHER. So you are saying the Democrat-controlled

Congress mandated that you shift—dramatically decrease the number of drug control flights in this area; is that right?

Ms. SALAZAR. There was a concern expressed by a GAO report

written in 1992 that the Department of Defense was spending way

too much money in detection and monitoring, in light of the capability of our law enforcement to perform end games and the capability of other countries to perform end games.

Mr. ROHRABACHER. So there is an excuse for them to want to

dramatically decrease it. So you are not using that year as a baseline. You are using some year after these dramatic cuts.

Ms. SALAZAR. Yes, 1998. The figure I gave you, 520.

Mr. ROHRABACHER. 1998 obviously; what were we in the process

of in 1998? We were in the process of moving out of Panama in

1998, were we not?

Ms. SALAZAR. No, sir, we were not. We left Panama in 1999.

Mr. ROHRABACHER. Right. We just left in 1 day?

Ms. SALAZAR. No, the decision to leave Panama, at least when we

were advised that we would be—when the decision was formally

made to leave Panama was in, I believe, October 1998, Randy? Yes.

Mr. ROHRABACHER. Let me just say there were negotiations.

Howard Air Force Base was closed in June 1999, of course, which

means I don’t think they just decided the day before they shut the

door. It seems to me there is probably an evolution of—especially

considering the terrific job that the administration did in negotiating to try to keep Howard Air Force Base, there is probably an understanding that Howard was going to actually shut its doors. So

the baseline you are using is a baseline when Howard was in transition to be closed.

Ms. SALAZAR. I would politely disagree, because the ratcheting

down of flights began, I believe, in January or February 1999.

Mr. ROHRABACHER. You are trying to tell us—the essence of your

testimony today is that we really didn’t need Howard after all.

Ms. SALAZAR. No, sir.

Mr. ROHRABACHER. Well, that is what you are saying. You have

all these circles here and saying look at the coverage we are getting

without Howard. You are trying to say, oh it was OK that the

administration—— Mrs. MINK. Will the gentleman yield? I don’t feel that is an appropriate interpretation. They are left with a situation where they

have to come up with an alternative, and this is the alternative

plan which they feel is adequate in meeting the coverage that HowVerDate 11-MAY-2000 09:02 May 11, 2001 Jkt 000000 PO 00000 Frm 00143 Fmt 6633 Sfmt 6633 C:\DOCS\71970.TXT HGOVREF1 PsN: HGOVREF1
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ard Air Force Base previously provided, but not because they didn’t

need Howard.

Mr. ROHRABACHER. OK, that is very fair, and one could conclude

that only if one believes that the administration was negotiating

seriously to keep Howard. And what I am trying to say or suggest,

and what my observation is, is that there was no serious negotiation, just like the administration hasn’t done anything to keep this

Chinese Communist-dominated company from controlling both ends

of the Canal. The administration also was not negotiating seriously

to try to keep an American military presence in Panama.

There is an intent that is going on here that is not on the surface, is what I am saying, and I am trying to get to that. It seems

to me by suggesting that, well, we really haven’t had any problem

because of this because now we have the coverage anyway, takes

away from an understanding of just how drastic a change has

taken place in Panama and what that has to do with our national

security and our efforts to combat drug shipments.

Ms. SALAZAR. If I could make two comments, at least from DOD’s

perspective and as a person who had to deal with the fact that we

were leaving Panama, we pretty much were under the impression,

and we were behaving as a Department, that we were going to be

in Panama until September 1998. And the reason why I tell you

this is that from at least our perspective, there was a sense or

there was a hope that we would be able to stay.

With that said, if I have sounded Pollyannaish and have given

you the sense that there aren’t challenges in our program, I apologize; there are huge challenges. And one of the biggest challenges

we have right now is being able to increase our capability of doing

surveillance over the source zone which is the area, as you know,

we need to place most of our resources, because that is the area

where most of the drugs that come to the United States come from.

So I am not trying to be Pollyannaish, but kind of paraphrasing

what Congresswoman Mink was saying, we woke up, we had the

situation, and I believe within a year the Department of Defense

has been able to react.

Mr. ROHRABACHER. You try to make the best out of a bad situation, and I guess what I am suggesting is this administration created the bad situation. This administration, through either incompetence or whatever their motive was, has overseen a total withdrawal of the United States from Panama. There are evil forces in

this world, forces that are enemies of the United States, forces that

don’t like democracy, whether they are gangsters or drug lords or

Communist Chinese who may hate us for whatever reason, that

would like to control and dominate the strategic country of Panama. The Panamanian people know that. They wanted us to stay.

Polls indicate that 80 percent of them wanted us to reach an agreement; yet this administration wasn’t able to do so.

That is the reason why I am expressing, anyway, here to express

doubts about what the administration has done and to applaud the

chairman for focusing on this, because it affects our drug efforts,

but it affects our national security in so many ways.

Mr. MICA. We appreciate the gentleman joining the panel. I do

want to give our ranking member an opportunity for another question. I think Mr. Barr had a question, if we could proceed.

141

Mrs. MINK. Our visitor on the committee has riled my adrenaline, because I don’t think that his conclusions are really fair to the

administration. It is true that the negotiations failed, but as the explanations have been given to this committee, formally and informally, I believe that the negotiations were being conducted very aggressively and seriously. It was the interposition of political circumstances within Panama, as I understand, the elections and so

forth, that caused the failure of the negotiations to finalize an

agreement where we could stay in some form or another; perhaps

not the full base, but at least for our drug surveillance requirements.

I have said in my previous comments on this that I was very disappointed that the negotiations failed, and I would have hoped that

they could have been successful. But to say that the administration

itself caused this to happen, I think is a complete misanalysis of

the circumstances that we find ourselves in.

Having said that, I join the chairman of this committee in urging

the administration now to do everything they can to provide the

United States with the equal resources that we lost when we lost

Panama. That is the sentiment that both the chairman and I

share, that we have to develop an aggressive policy that will give

the United States the same kind of capacity to obtain intelligence

on the drug movement and to do the interdiction that is required

in order to curtail traffic in our own country.

We can’t interpose our wishes upon an independent country. We

don’t own them. We can’t dictate policies to an independent country. Some on this committee would probably wish that we could,

but we can’t. The reality is we can’t. Therefore, we have to come

up with a substitute policy.

If the majority feels as strongly as they have indicated today,

they should get to work on the other side of the Hill and make that

money available to the administration so that they can do the repairs and put the AWACS operations into full effect so we can have

the surveillance of source as well as transit.

This is an area of enormous concern to the minority, and we join

the majority in expressing them. We may have different emphasis

on where we would like to see our efforts. Many of us on our side

are so frustrated that we can’t get enough funding and attention

on the treatment end, so we continue to go to the floor and try to

urge that point of view. I believe it probably will be done again

shortly.

I think this it is an area which we should minimize, this countrybashing. I don’t see any point in bashing Panama at this point and

its political leadership, and this leads me to my final question.

We talk about all this name calling about the local Panamanian

law enforcement efforts. To what extent are we able to work with

the law enforcement agencies that exist there? What are we doing

to help them meet the challenge and are we meeting with any success at all? Anybody on the panel?

Mr. LEDWITH. I would be happy to respond to that, Madam Congresswoman. We have a very good working relationship with the

Panamanian authorities. We have eight agents stationed in Panama. Due to congressional increases, we hope to increase that in

142

the upcoming year to maybe 10 agents. We have a good, strong,

working relationship with them.

Yes, there are problems, there are a lack of resources, and they

are almost overwhelmed with the scope of the problem. But, yes,

we are able to work with them, and we will continue to do so.

Mrs. MINK. Is there any indication that they resent or reject our

efforts to support and supplement their own internal law enforcement activities with respect to the drug issue?

Mr. LEDWITH. As to drug interdiction, no. As to money laundering, it is a somewhat different subject.

Mrs. MINK. So in that area they do resist our interventions?

Mr. BEERS. It isn’t so much that they resist them. They have

taken our assistance and our training. The issue is that they

haven’t completely created the legal framework that makes it effective.

As Mr. Ledwith said earlier, the only predicate at this point in

time for their money laundering legislation is drug trafficking. It

would be a much more effective regime if the implementation or

the law were broader based so we could do that. But we have been

training their financial intelligence unit, we have been working

with them. They have not made the prosecutions off of this unit yet

that we would like to see them make, and that is something we

have talked with them as recently as this week about. So it is an

ongoing issue of concern.

Mrs. MINK. What about the free trade zone? What efforts are we

making there to meet the problems that all of you have cited with

reference to the free trade zone?

Mr. LEDWITH. Well, if I may, I would like to echo my colleagues’

remarks. I wouldn’t characterize it resisting our efforts. I would

categorize it as a legal entanglement. The Colon Free Zone is of

such paramount economic interest to Colombia and is a source of

such revenue, changes in the laws of Panama that would enable

more effective investigations and prosecutions of money laundering

are economically difficult. There are a variety of interests at play.

Mrs. MINK. Well, that is no different now than it was before we

lost the air base. I mean, that is not a new development, is it?

Mr. LEDWITH. I think you would be accurate in representing that

it is not a new development. The Colon Free Zone has been there

for some time.

Mrs. MINK. No, I am talking about the money laundering.

Mr. BEERS. Right. No, it has been an ongoing concern. I have

been involved in this situation for 10 years.

Mr. LEDWITH. It has been a concern for many years.

Mrs. MINK. So it is sort of the situation and frustrations that we

express when we discuss the internal difficulties we have with

Mexico.

Mr. LEDWITH. Anytime——

Mrs. MINK. There is a very close correlation in what we would

like to see happen and the difficulties because of their internal

legal system, their laws and so forth.

Mr. BEERS. As well as economic interests, yes, ma’am.

Mrs. MINK. Thank you, Mr. Chairman.

143

Mr. MICA. Mr. Ledwith, you said you hadn’t seen this report that

says that there are more serious problems arising from corruption

of law enforcement and other agencies within Panama.

Mr. LEDWITH. I now have a copy of it, sir. I haven’t had a chance

to read it yet.

Mr. BEERS. Sir, I skimmed it, and I have tried to understand

how one could draw from that to say that this is something that

has happened, as Mrs. Mink has said, something that has happened in the very recent past. It seems to me to describe a situation that has been there for as long as I have looked at Panama

as an area of concern.

Mr. MICA. I will look at the report. I have not seen a copy of it.

We will get back with you after we have reviewed that and see how

dramatically the situation has changed.

Mr. Barr.

Mr. BARR. Thank you, Mr. Chairman.

Going back to our map over here, Ms. Salazar, given that there

had been some 2,000 counterdrug flights per year, what mix of

flights would you have to have out of these three potential locations

in order to reach that level of 2,000 counterdrug flights per year?

Ms. SALAZAR. I misstated that number. There were 2,000 flights

leaving Panama at the time, but of those 2,000 flights, at least in

the year, base year that I am talking about, 1998, there was 520.

As of right now, we have 600 flights that have been flying out of

the FOLs. Most of those flights—— Mr. BARR. You are confusing me. The figure of 2,000 counterdrug

flights is yours.

Ms. SALAZAR. Sir, I am sorry. I misstated. It wasn’t 2,000

counterdrug flights.

Mr. BARR. I don’t mean today. This has been your consistent position. You stated in sworn testimony on May 4, 1999, before this

committee, you used that figure as well. Forgive me, but I suspect

what we are hearing is a typical Clintonism. In an effort to make

us believe through smoke and mirrors that there is really even

more drug flights going on now than there were before, you are trying to now change the definition of what a counterdrug flight is.

I don’t buy that. I mean, you used, have used for over a year

now, the figure of 2,000 counterdrug flights per year. That is a

quote from your sworn testimony. And now you are telling me, oh,

there really weren’t 2,000 counterdrug flights, there were only 500,

and therefore all of a sudden, hey, it is magic, there is more now

than there were before.

Ms. SALAZAR. Sir, if my testimony says 2,000 counterdrug flights,

I apologize. That number is wrong. And I don’t question you, it

may be in my testimony. I should not have said that.

Mr. BARR. Can somebody take these documents to the witness,

please?

This was your sworn testimony in May 1999. We rely on you-all’s

testimony. When you all come up here and take an oath and swear

to give us correct information, we would like to be able to rely on

it, and our staff relies on it. And when they prepare information

for us, whether it is going on a foreign CODEL, such as the ones

that Mr. Souder mentioned he is going on, whether it is for our

work up here to perform our job on behalf of the American people

144

and to legislate and to appropriate and to conduct oversight, we

have I think a right to rely on sworn testimony from administration witnesses.

Now, when an administration witness comes up here, as you did

in May 1999, and gives us, both in written testimony and in sworn

oral testimony, that there were over 2,000 counterdrug flights per

year originating from Howard Air Force Base, I am inclined to believe you. Now you are telling me, you are trying to play games

and say oh, that doesn’t really mean 2,000, and I apologize, maybe

I misspoke. I don’t think you misspoke. I think that there were in

fact over 2,000 counterdrug flights originating from Howard.

Ms. SALAZAR. When I spoke 2,000 counterdrug flights, we were

talking about flights that included resupplying, bringing in equipment, bringing in individuals and probably involved in some of

those numbers were flights that did not necessarily have the

counterdrug nexus. If you wish, I can bring you concrete numbers

as to the types of flights that we were doing out of Howard Air

Force Base prior to its closure and what we are doing right now.

When I spoke of the 520 flights, I am talking specifically of 520

detection and monitoring flights. That is, those flights that specifically took off from either Aruba-Curacao or one of the FOLs and

did surveillance over any specific region. Of those detection and

monitoring flights, specific detection and monitoring flights, we did

520 in the base year 1998, and this year we did 600 of those

flights, detection and monitoring.

Mr. BARR. So your position now is, just by coincidence, when we

are up here trying to get to the bottom of some things here and

to find out why we don’t have the same capability that we had

under Howard, you are now trying to convince us that even without further work on any of these bases, these FOLs, even without

any AWACS, that you expect us to believe that the air coverage for

this region is now even better than it was when we had Howard

and were operating out of Howard?

Ms. SALAZAR. Sir, the big difference between the types of flights

that are taking place——

Mr. BARR. Are you trying to with a straight face convince us that

the situation is now even better than it was when we had Howard?

Ms. SALAZAR. No, sir; I am trying to give you the facts.

Mr. BARR. You are telling me that according to your now new

definition of what a counterdrug flight is, that there are more

counterdrug flights now than there were when we had Howard?

Ms. SALAZAR. The difference between the activities or the flights

taking place when we had Howard and now is the AWACS. All the

other assets are flying in the region. They are either flying Aruba/

Curacao——

Mr. BARR. What AWACS? There aren’t any AWACS down there.

Ms. SALAZAR. Sir, we have right now, this year alone, we were

provided an AWACS, and it flew—16 percent of the number of

flights I provide you were AWACS.

Mr. BARR. Over 300?

Ms. SALAZAR. Over 300? Are we talking about the number of

AWACS?

Mr. BARR. No, the number of flights.

Ms. SALAZAR. No, sir, I am——

145

Mr. BARR. I thought you said there were something over 500

flights?

Ms. SALAZAR. 600 flights. Of those 600 hundred flights, 16 percent of those flights were AWACS related.

Mr. BARR. That is what I am saying.

Ms. SALAZAR. Sixteen percent. One, six.

Mr. BARR. I thought you said 60.

Ms. SALAZAR. No, I apologize. Sixteen.

Mr. BARR. I now realize we can’t take anything for granted. You

didn’t say AWACS flights, you said AWACS related.

Mr. SALAZAR. They are AWACS. AWACS flights. I can give you

the breakdown of the number of flights that the P–3s did, the number of flights the Citations did, the number of Double Eagle packets.

Mr. BARR. But those 600-something flights are counterdrug

flights?

Mr. SALAZAR. That is correct, sir.

Mr. BARR. And you are trying to have us believe—— Mr. SALAZAR. Sir, they are detection and monitoring flights.

Those are not flights where we were moving people around, where

we were moving equipment. These are 600 bona fide surveillance

flights.

Mr. BARR. I don’t know what you mean by bona fide anymore.

Maybe we have to go back to basics. What does a counterdrug

flight mean?

Mr. SALAZAR. A counterdrug flight, the flights that I pay for, that

they use my funding for, has to have a counterdrug nexus.

Mr. BARR. What is a counterdrug nexus?

Mr. SALAZAR. It could be that they were moving people around,

that they were trying to transport people from one place to another. It could be transporting equipment. It could be ISR, which

is different than detection and monitoring flights. So when you

take all these different types of counterdrug flights, what I am telling you right now is the detection and monitoring, the flights that

we perform to be able to do the surveillance, was 600.

Mr. BARR. So detection and monitoring flights would be a subcategory of a counterdrug flight?

Mr. SALAZAR. That is correct, sir.

Mr. BARR. And when you use the figures for here, which are you

using?

Mr. SALAZAR. The figures I am using for here are detection and

monitoring.

Mr. BARR. So I go back. Your testimony today is you are trying

to convince us that despite what seem to be glaring problems here

in getting sufficient planes in the air and down there, that the situation is actually better today because you have more detection and

monitoring flights in the air than we did previously with Howard?

Mr. SALAZAR. I am not—if you believe—if that is what is understood from my testimony, then I am going to give a caveat. We acknowledge most of those flights took place, those detection and

monitoring flights, took place in the transit zone. What I am trying

to say is that is the biggest challenge we have right now. We need

to be able to take those 600 flights and start increasing the number

of flights in the source zone.

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So I am not—I am acknowledging—— Mr. BARR. What zone do we have here?

Mr. SALAZAR. Both.

Mr. BARR. Other than the twilight zone, I think.

Ms. SALAZAR. No, sir.

Mr. BARR. Where is the transit zone?

Mr. SALAZAR. If you look at the blue star and the circle around

the blue star, we would classify that as the transit zone. Excuse

me, excuse me, the source zone. The star, the green star—I would

say above the green star, that would be the transit zone, all the

Caribbean region and the east-Pac region. What I am trying to say,

each one of those circles doesn’t necessarily encompass one region,

the transit zone or the source zone regions.

Mr. BARR. When we heard from you earlier, when we talked

about the number of counterdrug flights per year originating from

Howard, did that include both source zone and transit zone also?

Mr. SALAZAR. Yes. The 2,000 flights, yes.

Mr. SOUDER. What about the 540?

Mr. SALAZAR. The 520, that would include both transit zone and

source zone. Sir, I am acknowledging here we have a problem. Most

of those flights have been in the transit zone. The priority of this

administration has been to get those flights into the source zone

where they need to be.

Mr. BARR. These figures may not mean an awful lot.

Mr. SALAZAR. They mean there has been great effort—— Mr. BARR. You really have to go beyond simply whether it is

2,000 or 500 or 600 and look at precisely what kind of flight it was.

Mr. SALAZAR. I agree.

Mr. BARR. And precisely what area it covered.

Mr. SALAZAR. I agree.

Mr. BARR. Somebody take that off then, because it is absolutely

meaningless and I don’t want it to confuse the issue.

Looking at the particular airfields at the FOLs, it is correct, is

it not, that these are civilian airfields?

Mr. SALAZAR. No. The Manta is an Air Force Base that does also

have a runway that has international flights. The Salvador is also

an Air Force Base, but also it is right next to an international airport.

Mr. BARR. What about Aruba/Curacao?

Mr. SALAZAR. Aruba/Curacao are international airports.

Mr. BARR. So you all have a problem. Obviously, one problem is

security and having nonmilitary personnel spotters who could very

easily spot what aircraft is coming and going, and when.

Mr. SALAZAR. And that, unfortunately, has been the case even

when we were in Panama. The issue of the spotter was an issue

we had to constantly battle with. I guess the advantage, if there

is an advantage in this, is that having three airports or four airports where we are flying out of, it just makes it somewhat more

difficult for the traffickers to predict at what point we are going to

be flying an AWACS or P–3 in any given area or region. But when

we were in Panama, the spotters—— Mr. BARR. You wouldn’t say it is an insurmountable burden for

them, though, certainly? You wouldn’t say it is an insurmountable

problem for the drug traffickers, given they have billions of dollars?

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Mr. SALAZAR. They have a lot of resources. Even when we were

at Howard, we had to deal with this problem.

Mr. BARR. Could I, Mr. Chairman, I would like to introduce into

the record a document entitled Legislative Assembly Law No. 5 of

January 16, 1997, from the Republic of Panama.

Mr. MICA. Without objection, so ordered.

[The information referred to follows:]

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Mr. BARR. Is the GAO report to which our colleague Mr. Rohrabacher referred to, is that a part of the record also from December

1999, the GAO record?

Mr. MICA. It has been made a part of the record in the past. We

did a hearing specifically on that report. We will refer to that for

that.

Mr. BARR. Thank you very much, Mr. Chairman.

Mr. MICA. Thank you. Mr. Ose.

Mr. OSE. Thank you, Mr. Chairman. I want to go back, if I

may——

Mr. MICA. We are going to have a vote shortly, and I would like

to try to get our witness up, so maybe we could divide the time up

remaining.

Mr. OSE. I will submit my questions in writing, Mr. Chairman.

[The information referred to follows:]

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Mr. MICA. Mr. Souder.

Mr. SOUDER. I have one brief comment I want to make.

Mr. SALAZAR. I understand that the Coast Guard is very worried

about the increase in gas prices, at we have some in the supplemental, but they are saying they could be down as low as 10 percent of their coverage in the transit zone. So we also have to be

looking at mixed resources.

I would like to request for the record an ‘‘apples to apples,’’ so

that we can look back on this hearing and try to see this, possibly

using the definition, because I have a different concern, slightly,

than Mr. Barr had. Now I feel kind of duped by the 2,000, because

I thought the 2,000 were flights that were tracking, which may

mean we had a more significant drop earlier.

What I would like to see, given the specifics of the definition, a

1990, a 1995, a 1998——

Mr. MICA. Mr. Souder, it is very difficult. We have been round

and round and they have changed the definitions. There were in

fact 15,000 flights taking off annually from Howard Air Force Base.

Some of those were military, some might have had a drug nexus,

some might have been delivering personnel. We have been behind

closed doors and tried to sort this out. We have gotten different

definitions and evaluations. I would be glad to again look at your

request. We can go back and sit down. But the terms have

changed, the definitions have changed, and you are not going to get

a straight answer.

Mr. SOUDER. I would like to know what the witness’s statement

of 2,000 constituted, and then I would like to have that compared

by the Department of Defense to before and afterwards, apples to

apples, because right now you have shaken the confidence of our

ability to measure, because when we were told, it was counterdrugs; and now we are hearing it was shuttling around in 1998.

Part of our concerns in 1998 were we were already cranking down

from 1995, and 1995 was arguably maybe starting to go back up,

but from 1990. So we are really comparing things here that the

base years are important and we need a little bit of a pattern of

a definition.

Mr. MICA. We will request that information.

Mr. SOUDER. We would really like surveillance and detection

flights, 1990, 1992, 1995 and 1998. That is really the critical thing.

If we are going to go out 600, I would like to see some years before

Clinton, and source zone emphasis.

Mr. MICA. Briefly, Mr. Rohrabacher.

Mr. ROHRABACHER. I know we have a vote, so let me just state

for the record that Mr. McNamara, who was a negotiator for this

administration with the Panamanian Government, testified before

the committee on which I sit, International Relations Committee,

that there was a need and that the administration determined a

need for a 2-year cooling off period; in other words, for a closure

of all America’s military presence in Panama for a 2-year period before we would then start negotiations, serious negotiations, for an

American military presence. Which seemed to indicate that what

has been happening down there, the fact that you open your eyes

and there is now no Americans down there in order to have a posiVerDate 11-MAY-2000 09:02 May 11, 2001 Jkt 000000 PO 00000 Frm 00155 Fmt 6633 Sfmt 6633 C:\DOCS\71970.TXT HGOVREF1 PsN: HGOVREF1
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tive influence on Panama, was part of an actual policy, although

it hasn’t been stated.

What we have been discussing, of course, in this last little interchange about the 2,000 flights is simply what the definition of ‘‘is’’ is, and it keeps coming back over and over again with this administration, and we keep having to face questions like that.

Mr. MICA. Thank you. Well, we do have a vote. We will be submitting additional questions for the record to these witnesses. I appreciate their cooperation and testimony today. We will dismiss

them at this time.

[The information referred to follows:]

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Mr. MICA. What I am going to do is, since there is a vote, I think

we will recess until a quarter of one. At a quarter of one, we will

have Professor Thomas Cabal provide his testimony and hear from

our second panel. With that, we will excuse this panel.

The subcommittee stands in recess until a quarter of one.

[Recess.]

Mr. MICA. I would like to call the subcommittee back to order.

We should be joined by other Members. But I do want to call forth

our second panel so we can proceed.

Our second panel consists of Professor Tomas Cabal. He is with

the University of Panama. Welcome to our subcommittee. This is

an investigations and oversight subcommittee of Congress. We are

pleased to have you provide us with your oral testimony, and also

upon request through the Chair, we will be glad to submit lengthy

documents or information, reports in the record, or make reference

to them by request.

Also, this being an investigations and oversight subcommittee,

we do swear in our witnesses. If you would stand, please, to be

sworn.

[Witness sworn.]

Mr. MICA. The witness has answered in the affirmative. I am

pleased to welcome you at this time and also to recognize you for

your testimony and also thank you for being with us, for the

record. I understand it was somewhat difficult and straining circumstances on your coming, leaving Panama, to provide us testimony, and we do appreciate your willingness to come forward and

supply us with your background and point of view at this juncture.

Thank you.

STATEMENT OF PROFESSOR TOMAS CABAL, UNIVERSITY OF

PANAMA

Mr. CABAL. Thank you, Congressman Mica. I want to do two

things. I will submit my written testimony, as I will only cover part

of my statement—— Mr. MICA. Without objection, your entire statement will be made

part of the record. Please proceed.

Mr. CABAL. Right. And then, I will cover the areas having to do

with the Chinese presence in Panama.

I would also like to preface my statement by thanking Congressman Rohrabacher, Congressman Barr, Congressman Metcalf, for

their role in securing or making sure that I was present today at

this hearing. As you mentioned in your statement, it was very difficult. We still have very stringent libel laws in Panama, we call

them gag laws, introduced by the Noriega regime, precisely to persecute, prosecute and intimidate citizens and journalists just trying

to do our job. So again, thank you to your efforts that I am here

today.

I also would like to address some of the issues brought up by the

panel, because I think there is a lot of information that has not

been properly presented, and some of that information I think is

clearly misleading.

I have a background in engineering and my family has been involved in construction in the Panama Canal Zone for over 20 years.

We built many of these bases, the housing involved, and we also

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helped build a key facility that has been closed down, which is

Galata electronic listening post that operates on the Atlantic side.

If you will, Mr. Chairman, I will go directly into my testimony

and bring up some points that were brought up in the question and

answer period by some of the Congressmen.

The presence of Red China. In the last 5 years, powerful Chinese

companies have invested millions of dollars in Panama. Recently

the Hong Kong Shanghai Banking Corp. purchased the local

branch of the Chase Manhattan Bank. Cable and Wireless, an

English corporation with close ties to Hong Kong, owns Panama’s

phone company. Hong Kong and China export 25 percent of all the

goods purchased by the Colon Free Zone. Hutchison Whampoa, a

Hong Kong-based company that operates ports worldwide, won the

right to operate the ports of Balboa and Cristobal on the Pacific

and Atlantic entrances to the Panama Canal.

Experts disagree on the level of influence that the Chinese will

have in Panama, but congressional investigators and the National

Security Center note that the contract they signed allows them

abundant leeway in their operation of the port facilities. Hutchison

controls 50 percent of all stevedoring services in Hong Kong, a situation that lets them set container transport prices and may allow

them to undercut their competitors in Panama. Li Ka Shing,

Hutchinson’s chairman, is a key advisor to the Chinese leadership

in Beijing.

Some experts believe that Hutchison will be able to affect canal

operations and that they could impede the normal flow of vessels,

a contention disputed by the Panama Canal authorities, who insists that only they can determine the level of expediency in canal

traffic.

With America’s retreat from Panama, the Red Chinese are quickly filling the power vacuum. Companies identified by the Cox report as participating in industrial espionage or the purchase of restricted technology are active in Panama.

COSCO, the Chinese shipping company that services the People’s

Liberation Army, sends 300 ships every year through the Panama

Canal. They are investing heavily in Panama and have just started

a new service from China to Europe via the canal. Other Chinese

companies will take advantage of the modernization of the Panama

railroad, while others will be bidding the operation at Howard Air

Force Base, investments that could put them in a commanding position in Panama. The presence of Red Chinese companies may tilt

the diplomatic balance in favor of Beijing.

Currently, Panama maintains diplomatic relations with Taiwan,

but as the Bahamian Government just proved, a $40 million investment by Hutchison Whampoa in port facilities led to a switch in

its diplomatic allegiance from Taipei to Beijing.

Continued investment by Chinese corporations could greatly diminish the ability of the United States to influence events in Panama. The Chinese community is already very influential, and with

the support of Chinese companies and investments this influence

could increase. The Government of Panama wants foreign investment, but as a recent poll shows, 81 percent of the population

would welcome the return of the United States and would support

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a limited American military presence to aid the country in its war

on drugs and to secure the Colombian border.

The key to any negotiations that would bring back American

military forces to Panama is a fair economic arrangement between

both countries. The United States still has an opportunity to influence events in Panama through investment and foreign aid. Panama needs $100 million to fully implement a national security plan

that would protect the Colombian border and limit the activities of

international drug traffickers.

As part of the aid package to Colombia, the Congress only included $8 million in aid to Panama. The Panamanian Government

needs to purchase helicopters, patrol boats, aircraft, radar and communication equipment, and it needs to improve the training and

equipment provided to the border police. A naval base to patrol the

Atlantic companies must be constructed, while radar coverage must

be extended to cover the Pacific area and the Colombian border.

On the Pacific side, the United States Coast Guard could be instrumental in reopening Rodman Naval Station, a modern naval

facility located near the entrance to the Panama Canal. The Coast

Guard could also be instrumental in helping the National Maritime

Service improve its interdiction ability in Panamanian territorial

waters. American corporations could become key players in the bid

to transfer Howard Air Force Base into an international air cargo

facility that would take advantage of its proximity to the canal and

the Colon Free Zone to ship goods all over the world. Tax incentives and export-import funding could help American companies invest in Panama if Washington and the Congress decided that Panama is still an important strategic partner for the United States.

American companies ship more than 140 million tons of cargo

through the Panama Canal every year. The canal is still very important to American commerce and to American prosperity. Many

experts agree that a new strategic partnership between Panama

and the United States is the key to the operation of a safe and efficient international waterway that is a marvel of modern engineering and Yankee ingenuity. Many people in the United States and

Panama would like the two countries to reestablish a strategic

partnership, then, to enhance canal security and to protect both nations from the threat of international drug traffickers.

Organizations like the Center for Security Studies, the Conservative Caucus, and the National Security Center have been instrumental in getting the issues before public opinion in Panama and

in the United States.

Let us hope that the elected representatives of the people in the

U.S. Congress examine the facts and work toward reestablishing a

strategic alliance that will enhance the security of both countries.

On the issue of drug interdiction flights, you mentioned, and we

heard today, all types of figures being bandied about. The figures

start at 20,000. Those were the flights coming out of Howard Air

Force Base.

Howard Air Force Base has the longest runway and the best infrastructure of any facility of its kind south of the Rio Grande. The

United States does not have and will not have in the near future

a facility such as Howard Air Force Base.

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Another element that I notice was not fully analyzed this morning has to do with what intelligence experts call real-time information. The antidrug center that operated at Howard Air Force Base

had a budget of $238 million a year. This amount of money was

expended because you had the air crews living and working out of

Panama on a rotation basis, the aircraft were serviced and maintained, they were fueled. The facility also had top-of-the-line computers and communications facilities that tied in to the Galata Island communications facility, so that when the AWACS and the P– 3 Orions were operating, this information could be fed and coordinated with other regional radar coverage. The United States provided the Governments of Colombia, Peru and Venezuela with

radar coverage that allows them to monitor and to intercept suspicious drug flights.

One of the outcomes of the operation of the antidrug center at

Howard Air Force Base and real-time information getting promptly

to law enforcement and to military groups in the region, was that

the drug interdiction, the aerial drug interdiction effort, was very

successful. From 1995 to 1998, 38 aircraft were shot down in the

region. Drug planes were shot down, most of them by the Peruvian

Air Force that has been very aggressive. The Peruvian philosophy

is if you do not hail an order to land the aircraft, you are shot

down.

The Colombians have a little different variety. They pursue the

aircraft and try to force it to land, rather than shoot it. But recently they too have resorted to the effort at shooting down, and

recently a suspected drug plane was shot down on Colombian territory. So that in itself accounted for a substantial increase in the

price of coca in the region producing the cocaine.

The other aspect that I think was not fully addressed, and you

can look at it, if one of the staffers would be kind enough to put

the circle there again to look at it, it is the fact that Panama is

a strategic center because of its very close proximity to the countries producing cocaine. Here you have extended coverage. Yes, you

might extend the coverage, but you are not that close.

It means we haven’t heard any figures pertaining to the cost of

fuel, which in my estimate, will skyrocket because of the increased

distances that the aircraft will have to fly. The distances also mean

that the aircraft will not be able to be in the air for longer periods

of time. And Howard Air Force Base is a key element to that because of its proximity to the regions that are producing these drugs

that are inundating the streets and cities of the United States.

Another element that I think fits and has not been fully disclosed

to this subcommittee is the fact that along with drug interdiction,

you have facilities in Panama like at Fort Sherman where training

could be enhanced, not only for Panamanian border police, but for

regional armies, that can train in the counterinsurgency and the

jungle training so needed in areas such as this.

In the Darien province which was mentioned this morning, we

share a very heavy jungle terrain, tropical rainforest border, 225

kilometers with Colombia, which is now becoming a haven for the

FARC guerrillas. Over the last 2 weeks, more than 1,000 Colombian citizens have fled the fighting between the paramilitary, the

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nian territory. This last week there were two or three incidents of

groups of armed Colombians coming into Panamanian territory in

areas where the Panamanian police simply can’t do the job.

Panama’s national air service has one helicopter operational and

three small fixed-wing aircraft to patrol the Colombian border. The

maritime service does not really have the equipment or the capacity or the infrastructure to patrol both the Atlantic Coast and the

Pacific area which, because we have no radar coverage out of Howard anymore, that area is completely open. There is no radar coverage in this area.

Now, whether this administration is going to provide radar coverage in the so-called eastern region, again, remains to be seen.

But the way this thing works is you have regional radar coverage,

and then in each individual producing country, you have smaller

mobile radars that are operated by the local military with the support and training of American personnel.

As you know, Mr. Chairman, there are now close to 300 military

advisers in Colombia trying to get the antinarcotics battalion fully

operational, trying to get Plan Colombia off the ground. In Plan Colombia, this Congress intends to spend, what, something like $1.6

billion to try to help the Pastrana administration win its war

against drug traffickers and Colombian subversives. All they have

to do, Mr. Chairman, is cross the border, and it is time out. They

simply cross the border and they will escape the Blackhawks or the

Hueys you give them or the new battalions they train. They will

simply cross over into Panamanian territory and hide out like they

have done for the last 10 years.

Arms smuggling. There is an ongoing route that begins in the

Middle East with Libyan arms trafficker, East European arms traffickers. The weapons are shipped basically to Honduras and Nicaragua, and then from then on by land and sea they are shipped

into Panama and on to the Colombian subversives. This is one of

the fallouts from the paramilitary and the left wing guerrillas in

the Caribbean area of Uraba province, which the Colombian province of Uraba borders the Panamanian territory, is that both the

right wing and the left wing need the access to the Caribbean Sea

to get their weapons in and to ship their drugs out.

Colombian guerrillas and paramilitary profit about $600 million

a year in the sale and export of drugs. They have moved from simply protecting and taxing the campasinos, the farmers that grow

the drugs, into overall commercialization, refinement. And, of

course, as you know the FARC guerrillas now control free territory

the size of Switzerland, in which laboratories are now operational,

in which cultivation is now taking place. That is why the figures

that were presented here by the DEA representative have skyrocketed.

In the last year, Colombian drug production has risen by about

25 percent. That means a rise from around 450 tons of cocaine produced in 1998 to between 520 and maybe as much as 650 tons of

cocaine.

Heroin is also rising in the areas occupied by the guerrillas. The

estimates by experts is anywhere between 7 and 10 tons of highgrade heroin are now flowing into the United States, almost singlehandedly from the Republic of Colombia, between 7 and 10 tons.

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This transit goes through Panama. The figures we have is about

300 tons of cocaine and maybe 2 to 4 tons of heroin are shipped

through Panama every year into the United States.

So I guess the administration can argue on the values of how

much they are going to have to spend on these forward operation

locations and whatnot, but the fact is that real on-the-ground intelligence, real human resources being utilized close to where the action is occurring, is certainly much more effective.

There are issues, of course of politics and Panamanian sovereignty, which the chairman there addressed. But, overall, the

American military presence was a welcome presence. Eighty-one

percent of the Panamanian people want Uncle Sam to come back.

They are not saying, ‘‘Gringo go home,’’ they are saying, ‘‘Gringo,

come on down.’’ Why? Because the American military presence, the infrastructure and the jobs that they generated signify some $300

to $400 million in the local economy.

The Panamanian economy is today in a severe economic recession because high-paying workers have lost some 20,000 jobs.

There are about 100,000 Panamanians that depended in one way

or another from the American military presence. That is gone. This

money fueled the economy, and we in Panama were not prepared.

The government was not prepared to make that transition.

[The prepared statement of Mr. Cabal follows:]

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Mr. MICA. As you can hear, the buzzer has gone off for a vote.

We want to have some time for questions, we have about 10 minutes for questions. I wanted to ask a couple, and we appreciate

again your testimony and your coming before us today.

First of all, how would you estimate since the closure of Howard

Air Force Base last May, a year ago, what would you estimate the

amount of increased transit of cocaine and heroin to be through

Panama?

Mr. CABAL. I would estimate that the figures in 1998 were 100

to 200 tons, 100 tons of cocaine and about 2 tons of heroin.

Mr. MICA. Additional.

Mr. CABAL. In addition; yes, sir. As you know, the heroin trade

is 95 percent by human mules, people that swallow, so the authorities have uncovered in the last year several what we call defecation

houses. These are small houses or apartments in which the drug

runner brings his cargo, defecates it, they clean it up and they give

it to somebody else, who swallows it and on to the United States.

Mr. MICA. Coming out of Colombia?

Mr. CABAL. What they do is disguise the origin of the traveler.

It is one thing, if you come out of Colombia, you go into Miami or

fly into L.A., New York, or Houston, you are certainly going to be

looked over very carefully. But if you come out of Panama, they are

not as rigorous.

Mr. MICA. You also described a disruption along the border and

you said 1,000, was that Panamanians?

Mr. CABAL. No, these are Colombian citizens—— Mr. MICA. That fled into Panama.

Mr. CABAL. Yes, they are there currently hiding. What happens

is the paramilitaries, the left and the right are fighting over control

of the Caribbean, the access to the Caribbean, so they can ship

their drugs and receive their weapons.

Mr. MICA. I also appreciate your testimony. I think you said

about $8 million is earmarked for Panama and some of the other

surrounding countries.

Mr. CABAL. Yes. The original request was for $30 million, and the Congress allocated $8, and that is simply not going to get the

job done.

Mr. MICA. I think you raise a good point about this spreading as

we put pressure on Colombia and Panama. I think you cited very

graphically, you just step across the border and you are scot-free

from the Blackhawks and others. Again, we appreciate your testimony and your insight. Again, you’re risking some of your personal

well-being coming here today.

I want to yield at this time to Mr. Rohrabacher.

Mr. ROHRABACHER. Thank you very much. Mr. Chairman, again,

thank you very much for holding this hearing. I think that the

drug issue overlaps into other areas of national security. And I am

on the International Relations Committee and have spent considerable time on the other implications, but this is important in a number of areas and a number of levels.

You mentioned that 81 percent of the people down in Panama

would like to see—— Mr. CABAL. That is the most recent CID-Gallop poll published in

the local paper, 81 percent.

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Mr. ROHRABACHER. Which indicates that the Americans were

having a positive influence, not just for military security.

Mr. CABAL. Economic. We are in a severe recession as we speak, because $354 million is no longer circulating in the economy.

Mr. ROHRABACHER. While we were there, we were playing a dominant role in Panama. People don’t necessarily want us to dominate

Panama, but our presence was a positive role. That influence that

we had, and have now, just left. That void is being filled by—— Mr. CABAL. The Red Chinese, for example, have taken over the

Russian listening stations in Lourdes in Cuba. The Chinese are

now operating electronic eavesdropping stations that allows them

to monitor Federal, military and commercial.

Mr. ROHRABACHER. They are involved in your banking system.

Mr. COBLE. Yes, they just bought out Marine Midland, which

was mentioned by Congressman Barr, and they now just bought

out Chase Manhattan, which is the second oldest bank in the Republic of Panama, right after Banco Nationale.

Mr. ROHRABACHER. And, as well, a company that controls both

ends of the Panama Canal.

Mr. CABAL. And the phone company. Cable and Wireless has substantial amounts of Chinese money behind it.

Mr. ROHRABACHER. So the United States has walked away from

one of the most strategic areas in this hemisphere, where both of

the continents come together, both the oceans come together,

walked away from people who liked us and wanted us to be there,

and we are letting the presence be filled by Communist Chinese

and by drug lords and gangsters.

Mr. CABAL. Russian gangsters who are now active in the Colon

Free Zone. The Chinese triads. Panama has an extensive Chinese

community that is the prey of the triads. They are involved in prostitution, illegal gambling, and illegal alien smuggling.

Mr. ROHRABACHER. One last question. Is illegal alien smuggling

still going on?

Mr. CABAL. It has actually increased, Congressman.

Mr. ROHRABACHER. This is very disturbing. What is happening in

Fort Sherman now? You mentioned what was going on before.

What is happening now at Fort Sherman?

Mr. CABAL. Nothing. The facility is up for sale, for lease. There

is talk of ecological development. But the runway is not being used,

the building is not being used, and certainly the Panamanian border police is ill-equipped, ill-trained, and they need all the help

they can get. They are a unique world-class facility that could be

used by the Panamanians, that could be used by the Americans.

The same with Rodman Naval Station. For example, the Coast

Guard could be working there to help the interdiction in the Pacific

area.

They could also help the Panamanians build a Naval base on the

Atlantic side to stop the flow of drugs through the Caribbean.

Mr. ROHRABACHER. With the United States withdrawing from

the role that it has played in Panama for so many years and stepping up of other forces as we have talked about, what kind of pressure is that putting on elected officials in Panama? Can you really

blame them when the United States is not offering that anchor of

stability and integrity that we did in the past?

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Mr. CABAL. Certainly it is a substantial issue. The gentleman

from the DEA clearly explained peso brokering. The Colon Free

Zone does about $11 billion of business a year, $5 and $5, import/

export, $5, $6. That in an economy that barely reaches $8 billion.

So it is very, very important.

What it does, the Colon Free Zone is an area where money laundering is occurring, about $3 billion every year, about half through

the peso brokering mechanism explained before.

The other money laundering occurs in the banking area; and one

thing the Panamanian Government, and the governments before

this administration, have to take a hard look at their political commitment to put an end to money laundering. Bank secrecy laws,

the Colon Free Zone, I mean, you have to have a commitment.

Panama does have one of the few financial investigative units,

but they need money, they need training, they need specialists,

they need communications. But there has to be a clear political

commitment from the Panamanian Government to put an end to

money laundering, and I don’t see that happening. As long as that

doesn’t happen, it is going to go on.

Mr. ROHRABACHER. Mr. Chairman, let me note it is very difficult

for a small country like Panama that’s very vulnerable to powerful

outside interests, it is very hard for those government officials to

make that commitment when the United States basically has surrendered and run away and left the playing field to tyrants, to

gangsters, to people who are antithetical to everything that we believe in.

Mr. CABAL. Congressman, there is a grave question regarding political contributions, where this cash is coming from and who it is

getting elected.

Mr. ROHRABACHER. Thank you very much. Thank you, Mr. Chairman.

Mr. MICA. I want to thank you, Professor, for being with us today

and, again, for offering your insight. You certainly have a very

great knowledge of what is going on in Panama; and your experience in economics, I think, sheds a great deal of light for this subcommittee on the money involved, the trafficking involved and the

influences that may be, in fact, corrupting Panama, and also the

difficulty we have incurred since we have lost our forward operating locations at that point.

Mr. CABAL. Yes.

Mr. MICA. I know that other members had questions. Unfortunately, I am going to have to adjourn the hearing at this time, but

we will be submitting additional questions to you for the record.

Mr. CABAL. I have a very good working relationship with the

Congressman and his assistant. We are in constant contact. We

have e-mail.

Mr. MICA. We may have additional questions from members of

our panel. So we would like to make them part of the hearing.

Again, we thank you for your contributions today and for your

appearing as a witness.

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There being no further business before the Subcommittee on

Criminal Justice, Drug Policy, and Human Resources at this time,

this meeting is adjourned.

[Whereupon, at 1:15 p.m., the subcommittee was adjourned.]

[Additional information submitted for the hearing record follows:]

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