Drug Control: Efforts to Develop Alternatives to Cultivating Illicit Crops in Colombia Have Made Little Progress and Face Serious Obstacles
Published: 2002-02-08T00:00:00

Fast Facts:

Highlights:
section_title: What GAO Found
paragraphs: Since the early 1970's, the U.S. Agency for International Development (USAID) has helped Bolivian and Peruvian growers of illicit crops find legal ways to earn a living. The experiences in Bolivia and Peru indicate that effective alternative development demands a strong host government commitment to a comprehensive array of counternarcotics measures and years of sustained U.S. assistance. Chief among the specific lessons for Colombia are that progress requires host government control of drug-growing areas and a political will to interdict drug trafficking and forcibly eradicate illicit crops as well as a carefully coordinated approach to these efforts. USAID began targeting Colombia's poppy-growing areas in 2000 and expanded its program to include coca-growing areas in 2001, but most activities will not begin in earnest until 2002. The experiences in Bolivia and Peru suggest that alternative development in Colombia will not be successful unless the Colombian government controls coca-growing areas, has the capacity to carry out sustained interdiction operations, and the ability to effectively coordinate eradication and alternative development activities.

section_title: Letter
paragraphs: The United States has been providing counternarcotics assistance to countries in the Andean region since the early 1970s to help curb the supply of illicit drugs—primarily cocaine—entering the United States. As part of these efforts, the U.S. Agency for International Development (USAID) has provided assistance to help Bolivian and Peruvian growers of illicit crops find legal means of earning a living. In recent years, these activities—termed alternative development—together with U.S.- supported interdiction and eradication programs have greatly reduced the amount of coca grown in Bolivia and Peru. Meanwhile, coca cultivation and cocaine production have increased substantially in Colombia, making it the world’s leader in both.
Recognizing the seriousness of illegal drug activities in Colombia, the Colombian government, in October 1999, announced a $7.5 billion counternarcotics plan known as Plan Colombia. Among other things, Plan Colombia proposed to reduce the cultivation of coca and the processing and distribution of narcotics by 50 percent over 6 years. To assist in this effort, in July 2000, the United States committed to providing about $1.3 billion to Colombia, other Andean countries, and U.S. agencies involved in drug interdiction and law enforcement, part of which was intended for alternative development. More recently, in January 2002, the  Andean Counterdrug Initiative was passed, which provides $625 million  for counternarcotics programs, including alternative development, in  Andean countries.
Although coca cultivation in Bolivia and Peru has been reduced in recent  years, you expressed concern about whether the alternative development  program in Colombia will achieve its objectives and contribute to reducing  the production of illicit drugs there. Specifically, you asked that we  determine (1) what lessons have been learned in providing alternative  development assistance to Bolivia and Peru, especially any that may apply  to Colombia; (2) what progress USAID has made with alternative  development in Colombia; and (3) what obstacles must be overcome to  facilitate alternative development in Colombia. To review the programs in  Bolivia and Peru and the status of efforts and challenges in Colombia, we  analyzed program documentation and met with cognizant U.S., host  government, contractor, and nongovernmental organization officials in  Washington, D.C.; Bolivia; Colombia; and Peru. To gain a firsthand view of  program activities in Bolivia and Peru, we visited selected project sites and  met with project beneficiaries in both countries.
subsections: section_title: Background
paragraphs: Historically, Bolivia, Colombia, and Peru have been major drug-producing  countries. Together, they account for most of the coca cultivated  worldwide and for the opium poppy used to produce most of the heroin  seized on the east coast of the United States. Figure 1 shows the areas in  Bolivia, Colombia, and Peru where illicit drug crops are grown.
The United States has supported counternarcotics efforts in Bolivia and  Peru for nearly 30 years. USAID has implemented a series of alternative  development projects in the coca-producing regions of these countries,while the U.S. Drug Enforcement Administration and State’s Bureau for  International Narcotics and Law Enforcement have supported interdiction  and voluntary and forced coca eradication programs. Due at least in part  to these efforts, substantial reductions in coca cultivation were achieved  in Bolivia and Peru during the mid-to-late 1990s. However, over the same  period, coca cultivation in Colombia increased substantially, offsetting  much of the decreases in Bolivia and Peru (see table 1).
section_title: Progress Requires Strong Host Government Commitment and Sustained U.S. Assistance
paragraphs: Alternative development progress in Bolivia and Peru has required a  lasting host government commitment to a broader set of counternarcotics  measures and years of sustained U.S. assistance to support these efforts.  More specifically, our analysis of project documentation, site visits, and  discussions with U.S. and host government officials and project staff  indicated that government control of drug-growing areas and project sites  is essential for providing access to the targeted beneficiaries as well as  security for project-related trade, commercial activity, and investment. It  also enables the monitoring of compliance with voluntary eradication  agreements. To promote and sustain coca cultivation reductions, the host  government must have a strong commitment to carry out effective  interdiction and eradication policies. Without interdiction and eradication  as disincentives, growers are unlikely to abandon more lucrative and  easily cultivated coca crops in favor of less profitable and harder to grow  licit crops or to pursue legal employment. Further, alternative  development, interdiction, and eradication efforts must be carefully  coordinated to achieve mutually reinforcing benefits.
Table 2 summarizes several of the key lessons learned in Bolivia and Peru.  Descriptions of the programs in Bolivia and Peru and more detailed  discussions of the lessons learned from them are in appendixes I and II,  respectively.
Alternative development progress in Bolivia and Peru has required years  of sustained U.S. assistance. The United States has supported alternative  development projects in these countries for two decades. Together with  current and planned alternative projects in Bolivia and Peru, U.S.  contributions to these programs total about $455 million. Other U.S.  agencies have supported interdiction and eradication efforts in Bolivia and  Peru for an even longer period—nearly three decades. In combination,  these programs have helped achieve reductions in the amount of coca  grown in these countries. Nonetheless, the host government agencies  involved in these efforts continue to depend heavily on U.S. support. For  example, according to USAID officials, the United States currently  finances and indirectly oversees most of the Bolivian government’s  alternative development agencies in the Chapare region because the  Bolivian government does not have the resources to do so on its own.  Similarly, the United States provides 60 to 70 percent of the total funding  for the Peruvian alternative development agency, and USAID officials said  that the Peruvian government would not be able to fund the agency’s  activities without U.S. support. Table 3 shows past and current U.S.  funding for alternative development programs in Bolivia and Peru.
section_title: USAID Alternative Development Program in Colombia Is at an Early Stage
paragraphs: Alternative development efforts in Colombia are still at an early stage, and  USAID will have difficulty spending all of the funds available for these  activities. Initial USAID efforts in Colombia began in 2000 by focusing on  promoting poppy eradication and strengthening the Colombian  government’s alternative development institution (PNDA). USAID’s  current program emphasizes alternative development efforts in the coca- growing regions of southern Colombia to complement other U.S.- supported counternarcotics activities there. Alternative development  activities in both poppy- and coca-growing areas are just beginning. As of  September 30, 2001, USAID had spent only about $5.6 million, or  11 percent, of the $52.5 million currently available. By September 30, 2002,  USAID expects its cumulative actual expenditures to reach $31.8 million,  or 61 percent, of the total available in fiscal year 2001.
As part of its initial effort to support the eradication of 3,000 hectares of  poppy by the end of 2002, USAID awarded a $10 million contract to  Chemonics International, Inc., in June 2000. Chemonics’ role was to assist  PNDA in implementing poppy-related alternative development activities by  promoting crop substitution, environmental improvements, and other  development efforts in the poppy-growing regions of Cauca, Huila, Tolima,  and Narino.
After funding for Plan Colombia was approved in July 2000, USAID began  planning for alternative development in Colombia’s coca-growing areas.  These efforts were intended to complement the eradication and  interdiction components of Plan Colombia’s first phase—the “push” into  the Putumayo and Caqueta departments of southern Colombia where coca  cultivation is most heavily concentrated. To quickly launch these efforts,  USAID reallocated $1 million of the $10 million originally intended to  support poppy eradication to fund projects aimed at strengthening PNDA’s  capacity to expand its activities in coca-growing areas. USAID’s projects  targeted PNDA’s information technology, financial accountability,  telecommunications systems, and public relations capabilities for  improvement.
In April 2001, using Plan Colombia funds, USAID awarded an  $87.5 million, 5-year contract to Chemonics to oversee, administer, and  carry out alternative development activities in the coca-growing areas in  the Putumayo and Caqueta departments. To date, USAID has programmed  $42.5 million of this amount. Though it will work collaboratively in  reviewing and approving alternative development projects, USAID  (through Chemonics) will fund some projects and PNDA plans to fund  others. In addition, USAID and Chemonics continue to support poppy  eradication and institutional strengthening of PNDA.
The overall alternative development approach in Colombia entails  reaching agreements with communities to voluntarily eradicate illicit  crops in exchange for help finding other income-producing opportunities  and other assistance. The program is intended to provide incentives for  small farmers (with 3 hectares or less of coca) to voluntarily eradicate  their coca plants. In negotiating the community pacts, PNDA  representatives met with groups of small farmers to obtain their  commitment to voluntarily eradicate the illicit crops. After an eradication  pact was signed, PNDA planned to provide the farmers with food crop  seeds and plants or other immediate assistance. Once this assistance  began, farmers were obliged to eradicate their illicit crops within 1 year.
According to USAID officials, Colombian government officials recently  stated that most of the coca cultivation covered by the pacts already  agreed to should be voluntarily eradicated by the end of July 2002.
As eradication progresses, farmers are to receive more comprehensive  assistance from USAID. Initial efforts are focused on municipalities in the  Putumayo, where USAID plans to support crop substitution and other  income-generating activities by providing agricultural incentives, modern  production and processing expertise, and credit and marketing assistance.  USAID also plans to support environmental improvements through tree- growing programs in remote indigenous and tropical areas and training in  pest control, forest management, and other areas. In addition, USAID  plans to improve the social infrastructure in project areas by enhancing  access to schools, health services, potable water, sewerage, and  electricity.
In August 2001, USAID reported that its goal is the voluntary eradication of  11,500 hectares of coca grown on small farms by the end of 2002, with the  aim of eliminating a total of 30,000 hectares by 2005. USAID also reported  that approximately 33 community eradication pacts had been signed,  which covered more than 37,000 hectares of coca in the Putumayo  department. In its initial design plan, USAID also noted that sustainability  will be measured in terms of permanent eradication of coca and the  number of farm families permanently engaged in licit productive activities  and not returning to coca cultivation.
USAID alternative development project activities have been limited to  date, and the pace is not expected to quicken significantly until 2002. As  illustrated in table 4, of the $10 million originally programmed to support  poppy eradication and institutional strengthening of PNDA, USAID’s  actual expenditures were only about $1.3 million, or 13 percent, as of  September 30, 2001. Of the $42.5 million programmed from Plan Colombia  funding, USAID’s actual expenditures were only about $4.4 million, or  10 percent, as of the same date. Combined, actual expenditures were  about $5.6 million, or about 11 percent, of the $52.5 million in total  available program funds. USAID officials told us that they expect project  activity to accelerate in 2002. They estimate that cumulative actual  expenditures in 2002 will total about $31.8 million.
While USAID expects increased project activities in 2002, these activities  will continue to be limited when viewed in the context of the total funding  that is likely to be available for them. The administration had requested an  additional $60.5 million for such activities in fiscal year 2002, but the  Congress reduced the overall administration request for its Andean  Counternarcotics Initiative from $731 million to $625 million, a reduction  that will likely result in less funding for alternative development. As noted,  USAID officials expect cumulative actual expenditures for alternative  development activities in Colombia to total about $31.8 million by  September 30, 2002—about 61 percent of the amount appropriated  through fiscal year 2001.
section_title: Alternative Development in Colombia Faces Significant Obstacles to Success
paragraphs: USAID faces a number of serious challenges in implementing a successful  alternative development program in Colombia. USAID planning  documents for Colombia acknowledge specific lessons learned in Bolivia  and Peru and note that overcoming obstacles in Colombia will require  long-term U.S. and Colombian commitments. The experiences in Bolivia  and Peru demonstrate the need for host government control and security in project areas; effective interdiction operations; and careful coordination of eradication, interdiction, and alternative  development efforts.
However, the Colombian government does not control large parts of the  coca-growing areas, limiting its ability to carry out sustained interdiction  operations, and the Colombian government’s ability to effectively  coordinate eradication and alternative development activities remains  uncertain.
Apart from these challenges, Colombia faces additional obstacles in  implementing the alternative development program. Colombia has not  devised a means to verify or ensure compliance by farmers participating in  voluntary eradication programs, PNDA is weak and its funding for  alternative development projects is not ensured, and project sites are in  remote coca-growing areas where the soil quality and infrastructure are  poor.
subsections: section_title: Experiences in Bolivia and Peru Point to Obstacles in Colombia
paragraphs: The experiences in Bolivia and Peru indicate that the most critical  obstacle Colombia faces is that the government does not control large  parts of the Putumayo and Caqueta departments in southern Colombia  where much of the coca is grown. This lack of security will seriously  hamper PNDA’s ability to develop the region’s infrastructure, establish  viable and reliable markets for licit products, and attract the private  investment needed for long-term, income-generating development.  Without government control of project sites, narcotics traffickers and  guerrilla forces will continue to profit from illicit drug operations and  impede legal economic activities generated by alternative development  programs.
USAID officials told us that armed groups have already intimidated some  farmers and municipal leaders cooperating with the Colombian  government. More recently, in September 2001, four employees of  Colombian nongovernmental organizations working with PNDA in the  Putumayo were kidnapped. According to USAID officials, two are  confirmed murdered and the other two were released. As a result of these  incidents, a number of nongovernmental organizations working with  PNDA temporarily suspended their activities in the Putumayo in October  2001.
While Colombia uses aerial spray operations to carry out an active  eradication program, the government’s lack of control over many coca- growing areas limits its ability to carry out sustained ground-based  interdiction operations—an essential component of the successful efforts  in Bolivia and Peru. Colombian military and law enforcement units destroy  some cocaine laboratories and seize narcotics and precursor chemicals  during individual counternarcotics operations; however, they lack  sufficient forces to maintain the permanent presence to sustain such  operations on a day-to-day basis. Further complicating the problem is that  a large land area ceded to one of the guerilla groups is off limits to U.S.  and Colombian agencies, but is reportedly an increasing source of coca  and precursor supplies. Throughout these areas, insurgents and  paramilitaries operate largely with impunity. The experiences in Bolivia  and Peru showed that sustained interdiction operations are necessary to  disrupt coca markets and thus produce declines in the prices of coca.  Without these declines, alternative development efforts are not as  effective.
The Colombian government’s ability to effectively coordinate eradication  and alternative development activities remains uncertain. Careful  coordination of these efforts was critical to their effectiveness in Bolivia  and Peru. In December and February 2000, while conducting aerial  eradication operations, the Colombian National Police accidentally  sprayed approximately 600 to 700 hectares of an area where communities  were negotiating pacts for participation in alternative development. Also,  PNDA officials told us that eradication authorities had sprayed most of the  Bolivar department, even though PNDA had targeted some communities in  the department for participation in the alternative development program.  This will likely complicate PNDA’s relations with farmers in that region.  According to USAID officials, PNDA representatives currently coordinate  with the Colombian National Police by indicating on a map or from an  airplane the areas in the Putumayo and Caqueta departments that are in  the alternative development program and should not be sprayed.
section_title: Colombia Faces Additional Obstacles
paragraphs: Among the additional obstacles facing Colombia is the difficulty of  verifying compliance with voluntary eradication pacts. The Colombian  government has not determined how it will do so, and thus the reliability  of the voluntary eradication pacts is uncertain. PNDA officials predict that  it will be problematic and expensive to monitor compliance—a task  complicated by the Colombian government’s lack of control over project  sites. Until a means of verifying compliance is devised, compliance will  depend upon peer pressure within a given community to prevent  individuals from breaking the community’s eradication agreement with the  government.
Weak host-country institutions pose an additional problem in Colombia.  USAID originally intended to work through the Colombian International  Cooperation Agency as a host-country contracting agency for its  alternative development projects. However, USAID officials told us they  did not have confidence that the Colombian agency could account for the  assistance in accordance with USAID requirements. USAID chose instead  to contract with Chemonics to manage program resources, including  procuring goods and services and awarding and managing grants.  Chemonics is working on a day-to-day basis with PNDA—the institution  established by the Colombian government in 1995 to deal specifically with  alternative development. As noted, USAID was required to focus its initial  efforts on strengthening PNDA because the organization is institutionally  weak. USAID officials said that PNDA may have difficulty effectively using  the additional funding that it is projected to receive for alternative  development projects.
While PNDA may have trouble absorbing this additional funding, the  institution will have difficulty carrying out its responsibilities without it.  Yet funding for important components of PNDA’s alternative development  plans—from making infrastructure improvements to promoting licit crops  and livestock—is not ensured. PNDA is supposed to provide immediate,  short-term support to farmers cooperating in alternative development  programs, bridging the gap between the signing of voluntary eradication  agreements and receiving USAID assistance. Colombia developed these  plans based on the expectation that it would receive about $300 million  from European donors. However, little of that assistance has materialized  to date. U.S. embassy officials told us that European donors are reluctant  to participate in the program because, based on experiences in Bolivia and  Peru, they associate it with the U.S.-supported forced eradication effort in  Colombia.
The poor quality of the soil and infrastructure and the remoteness of  project sites in coca-growing areas are further obstacles. Unlike the  poppy-growing areas in northern Colombia—which have richer soils and  better developed infrastructure and are closer to markets—much of the  coca-growing areas in southern Colombia have soils that are poorly suited  for licit crops and a lack of basic infrastructure. According to USAID  officials, these problems are more severe in the coca-growing areas of  Colombia than they were in counterpart areas of Bolivia and Peru. Even  when suitable crops are identified, the distances involved make it difficult  to transport produce for further processing or to potential markets. For  instance, a palmito (heart of palm) canning plant that the United Nations  Drug Control Program built in the Putumayo department in the mid-1990s  sat dormant for a number of years because the farmers growing the palm  were too far away to transport their produce to the plant before it spoiled.  The plant recently opened for test runs after finding farmers closer to the  plant to grow the palm.
section_title: Conclusions
paragraphs: Alternative development requires a long-term commitment and must be  implemented with strong host-government support for sustained  interdiction and eradication.  The United States has provided alternative  development assistance to Bolivia and Peru for nearly two decades, but  little progress was made until the host government gained control of drug- growing areas and project sites, demonstrated a strong commitment to  carry out effective interdiction and eradication policies, and carefully  coordinated these efforts to achieve mutually reinforcing benefits.
While each of these components is important, none is more so than  government control of the project areas.  Experience in Bolivia and Peru  strongly suggests that voluntary coca eradication in Colombia is not likely  to achieve hoped for reductions in coca cultivation until, at a minimum,  the Colombian government can provide the security in the coca-growing  regions that is essential for carrying out sustained interdiction and  eradication operations, providing safe access to alternative development  project sites, and attracting the private investment needed for long-term  income-generating development.
Considering the serious obstacles in Colombia that have impeded  meaningful progress, USAID will have difficulty spending additional funds  for alternative development over the next few years.  Through fiscal year  2001, USAID has spent less than 11 percent of the $52.5 million available  for alternative development in Colombia and does not plan to complete  expenditure of these funds until at least fiscal year 2003.  Nevertheless,  USAID’s alternative development program documentation for Colombia  still calls for dramatic reductions in coca cultivation in fiscal year 2002  through widespread voluntary eradication of coca crops by farm families  who want to take advantage of alternative development assistance.  Yet,  few projects have been undertaken by USAID in the coca-growing regions.
section_title: Recommendation for Executive Action
paragraphs: Because USAID faces serious obstacles to achieving widespread voluntary  coca eradication in Colombia, we recommend that the USAID  administrator update USAID’s project plans and spending proposals for  coca elimination in Colombia to take into account the extreme difficulty in  gaining access to the coca-growing regions to ensure that funds are used  as effectively as possible.
section_title: Matter for Congressional Consideration
paragraphs: Because of the serious obstacles impeding alternative development in  Colombia, the Congress should consider requiring that USAID  demonstrate measurable progress in its current efforts to reduce coca  cultivation in Colombia before any additional funding is provided for  alternative development.
section_title: Agency Comments and Our Evaluation
paragraphs: USAID and State provided written comments on a draft of this report (see  apps. III and IV, respectively).  Both generally concurred with the report’s  observations and conclusions.
USAID noted that the report was thorough and accurate and emphasized  that alternative development can only be implemented in coordination  with complementary eradication and interdiction programs.  USAID also  generally concurred with our recommendation to the administrator to  update its alternative development plans for Colombia and noted that it  has already begun such a review as part of its normal performance  management process.
State said that the report was thoughtful and thorough and acknowledged  the majority of our conclusions regarding the obstacles facing alternative  development efforts in Colombia.  State agreed with the report’s overall  conclusion that careful coordination among alternative development,  interdiction, and eradication programs is essential.  It also provided  further explanation of its aerial eradication program and the difficulties it  has encountered in Colombia, including additional information about the  accidental spraying of an alternative development project area.  However,  State said that it believes it is appropriate and constructive for the  spraying of illicit coca to be conducted before alternative development  programs are initiated in an area and suggested that the report implies a  recommendation that aerial eradication and alternative development  should not be conducted in the same location.
We do not agree with State that the report implies such a  recommendation.  In fact, we cite the need for coordinating alternative  development with interdiction and eradication efforts as one of the chief  requirements for success.
section_title: Scope and Methodology
paragraphs: To determine the lessons learned in providing alternative development  assistance to Bolivia and Peru, we interviewed cognizant officials and  analyzed program documentation. Specifically,  In Washington, D.C., we interviewed officials in USAID’s Office of South  American Affairs and State’s Bureau for International Narcotics and Law  Enforcement. We also met with officials at the two major USAID  contractors that provided alternative development services in Bolivia and  Peru—Development Alternatives, Inc., and Winrock International, Inc. In  addition, we reviewed USAID project design and evaluation documents,  contractor performance reports, and program audits. From our analysis,  we determined key goals and accomplishments for the alternative  development programs in Bolivia and Peru.  In Bolivia and Peru, we interviewed USAID mission, U.S. embassy, host- government, and nongovernmental organization officials. We also made  site visits to selected project sites and met with project beneficiaries in  both countries. From our analysis, we identified critical elements that  facilitated or impeded the alternative development efforts in these  countries.
To determine the current status of USAID’s alternative development  efforts in Colombia and the challenges faced there, we interviewed  cognizant officials and reviewed program planning and financial  documents. Specifically,  In Washington, D.C., we interviewed officials in USAID’s Office of South  American Affairs and State’s Bureau for International Narcotics and Law  Enforcement and analyzed USAID program plans and expenditure data to  determine the progress of USAID’s efforts in Colombia.  In Colombia, we interviewed USAID mission, U.S. embassy, United  Nations Drug Control Program, and host-government officials, including  the senior officers of PNDA—the Colombian alternative development  institution. We also met with officials at Chemonics International, Inc.—  the major USAID contractor for alternative development services in  Colombia. In addition, we analyzed USAID, PNDA, and Chemonics project  design documents and status reports. We compared the factors that  impeded or facilitated alternative development in Bolivia and Peru with  Colombia’s situation to identify the critical challenges faced there.
We performed our work from January through December 2001 in  accordance with generally accepted government auditing standards.
As agreed with your office, unless you publicly announce its contents  earlier, we plan no further distribution of this report until 30 days from the  date of this letter.  At that time, we will send copies of this report to  interested congressional committees, the secretary of state, and the  administrator of USAID. Copies also will be made available to other  interested parties upon request.
If you or your staff have any questions concerning this report, please call  me at (202) 512-4268. An additional GAO contact and staff  acknowledgments are listed in appendix V.
section_title: Appendix I: USAID’s Alternative Development Program in Bolivia
paragraphs: The United States has provided alternative development assistance to  Bolivia for nearly two decades, but little progress was made until the  Bolivian government controlled the project areas and demonstrated a  strong commitment to coupling alternative development with other  counternarcotics measures. The U.S. Agency for International  Development (USAID) has funded four alternative development projects  in Bolivia since 1983. The first three projects took place between 1983 and  1998 at a cost of about $117 million. These projects sought to displace the  coca-based economy in the Chapare—Bolivia’s primary illicit coca- growing area (see fig. 2). However, a lack of security and eradication in  project areas hampered the program’s achievements. The U.S. government  also supported an unsuccessful Bolivian government program that paid  farmers not to grow coca. USAID officials in Bolivia estimate that the  Bolivian government used about $100 million in U.S. economic support  funds to pay these compensation costs between 1987 and 1998.
In contrast, strong Bolivian government support for eradication since 1997  has resulted in greater success for USAID’s fourth and current alternative  development project—the Counternarcotics Consolidation of Alternative  Development Efforts Project, currently estimated to cost $112 million.  However, Bolivia faces challenges in implementing alternative  development because the central government coalition is weakening, and  as the national elections scheduled for 2002 approach, its commitment to  eradication has become uncertain.
USAID officials have identified a number of lessons from its alternative  development program in Bolivia, many of which are relevant to USAID’s  alternative development program in Colombia. For example, the success  of its efforts in Bolivia depended on government control of the project  areas and a secure environment, the political commitment of the Bolivian  government to eradicate illicit coca, and coordination between eradication  and alternative development efforts.
subsections: section_title: Early Alternative Development Projects Had Limited Accomplishments
paragraphs: The three USAID projects implemented before 1997 sought to develop the  Chapare and displace the coca economy there. They aimed to promote  coca substitution and improve farmer productivity and land use; provide  infrastructure, including roads, electricity, and potable water systems; and  displace the coca economy by increasing farmer profitability, private  investment, market access for project-supported crops, and legal  employment opportunities. However, a lack of government control and  eradication in the project area limited the projects’ results. Nevertheless,  according to USAID and Bolivian government officials, these projects  helped lay the groundwork for better results from USAID’s current  alternative development project in Bolivia.
In addition, in the late 1980s, the Bolivian government used cash provided  by the United States to compensate farmers for not growing coca. Most  observers consider this program a failure.
subsections: section_title: Chapare Project
paragraphs: The Chapare Regional Development Project, implemented between 1983  and 1992 at a cost of $22.5 million, was USAID’s first alternative  development effort in the Chapare. Project goals were to stimulate  balanced economic growth and improve living standards through public  and private sector participation, a diversified economic base, and more  equitable income distribution. However, because the Bolivian government  lost control of the Chapare to narcotics traffickers in 1983, USAID limited  project objectives primarily to coca substitution and redirected project  resources to nearby valleys in an effort to stem the tide of immigration to  the Chapare.
section_title: Electrification Project
paragraphs: The Electrification for Sustainable Development Project was implemented  between 1991 and 1996 at a cost of about $15 million. The project aimed to  increase the number of people receiving electricity, expand the use of  electricity for rural industry and export-related activities that would  provide jobs and alleviate poverty, and improve the operational standards  of rural electric distribution.
The project erected power poles, laid power lines, and built an  infrastructure that served 26,700 newly established electrical  connections—about 78 percent over target—in the total project area,  which extended well beyond the Chapare. While these benefits may have  facilitated subsequent development activities, project design documents  stated that the project by itself would likely have little impact on shifting  labor from coca production to legal activities. Accordingly, USAID project  evaluations do not cite any coca reductions resulting from this project.
section_title: Cochabamba Project
paragraphs: The Cochabamba Regional Development Project was implemented  between 1991 and 1997 at a cost of $79.5 million. Whereas the Chapare  project focused largely on crop substitution, the Cochabamba project was  an “economy substitution” project. The goal was to increase investment,  productivity, and employment in legal economic activities to help Bolivia  transform its economy into a less coca-dependent one. A project  evaluation found that the project improved product quality and handling,  provided export incentives, and facilitated market identification and  penetration. The project  increased the area of legal crops under cultivation, crop yields, and crop  exports—for example, banana cultivation increased from about 10,800  hectares in 1993 to more than 14,100 hectares in 1996, and annual banana  yields were estimated to have increased several times; achieved Bolivia’s first exports of fresh produce—about 3,000 cartons of  bananas were exported to Argentina weekly—and total exports increased  a reported 564 percent; and  reportedly increased annual family income derived from project-supported  crops from $280 in 1993 to $520 in 1996.
The project also increased the presence of nongovernmental organizations  working in the Chapare, provided training to farmers, further developed  the region’s economic and social infrastructure, and encouraged private  sector investment.
Notwithstanding these efforts, the total hectares under coca cultivation in  Bolivia decreased by less than 5 percent during the life of this project. A  United Nations Drug Control Program official said that such projects did  not result in significant net reductions in coca cultivation because the  projects were not linked with a requirement to eradicate coca.
section_title: Cash Compensation Program
paragraphs: In addition to USAID’s efforts, between 1987 and 1998, the U.S. embassy’s  Narcotics Affairs Section funded a Bolivian program to pay individuals  cash for not growing coca. The Bolivian National Directorate for  Agricultural Reconversion paid $2,000 per hectare to peasant farmers who  voluntarily reduced their coca plantings. The directorate’s operating costs  and the compensation paid to farmers came from U.S. cash transfers to  Bolivia. U.S. officials in Bolivia estimated that the Bolivian government  spent the equivalent of approximately $100 million.
U.S. officials told us the program was poorly implemented and failed to  produce net coca reductions. USAID officials told us that individuals were  paid to not grow coca in particular areas, but they continued to cultivate  coca in other areas, thus defeating the purpose of the program. In addition,  two U.S. audits by the USAID inspector general found several material  weaknesses in the program’s management, including inadequate  verification procedures and ineligible beneficiaries.
section_title: Current Project Supports Bolivia’s Forced and Voluntary Eradication Policies
paragraphs: USAID’s current alternative development project in Bolivia focuses on the  Bolivian government’s forced eradication policies and has had greater  success than its predecessors. However, future government policy is  uncertain and could pose a threat to the project’s progress.
The Counternarcotics Consolidation of Alternative Development Efforts  Project, USAID’s fourth and latest alternative development project in  Bolivia, started in 1998 as a 5-year effort, but USAID is planning to extend  the project until 2005. Project funding, currently planned at $112 million, is  expected to increase. USAID designed the project to support the Bolivian  government’s goal of forcibly eradicating all illegal coca in Bolivia by the  end of 2002. Primarily, the project provides assistance to communities that  have signed and abided by voluntary eradication agreements with the  Bolivian government.
In 1998 and 1999, the Bolivian government undertook an aggressive coca  eradication campaign in the Chapare, which facilitated progress in  alternative development. The Bolivian government eradication program  reduced coca cultivation by 33 percent nationwide and reduced coca  cultivation in the Chapare more than 90 percent by the end of 2000.
The Bolivian government’s forced eradication campaign has encouraged  many former coca growers to seek alternative economic opportunities  through the current USAID project. According to State reports, as of  September 30, 2000, the volume of licit alternative development  production leaving the Chapare totaled $67.3 million, a 15 percent increase  above calendar year 1999’s total of $58.2 million. The number of domestic  agribusinesses purchasing Chapare crops or supplying agricultural inputs  increased from 46 to 67. During 2000, the project gave 6,500 families  technical and marketing assistance, up from 2,554 families in 1997.  According to the March 2001 quarterly report on project performance, the  aggregate market value of coca leaf production in the Chapare was  approximately $20 million, compared to the value of alternative crops,  which contributed approximately $85 million to the Bolivian economy.
While achievements in the Chapare under USAID’s current project have  been considerable, U.S. and Bolivian officials have expressed concern that  progress in alternative development may be threatened if the Bolivian  government does not support continued eradication of illicit coca.  According to State officials, the Bolivian government’s governing coalition  is now politically weak, and the future of the government’s eradication  policy is uncertain. Bolivia’s vice president told us it would be politically  impossible for the administration to repeat the 1998–1999 forced  eradication campaign and that the government could be that aggressive  only at the beginning of its administration. Bolivia’s vice minister for  alternative development told us that the weakening of the governing  coalition and the upcoming national elections have politicized eradication.  Individual members have moved to negotiate the government’s eradication  policy with coca producers, which he said has caused serious damage to  ongoing eradication efforts. According to the vice minister, the alternative  development program will suffer if coca eradication is seen as negotiable  and avoidable.
section_title: Alternative Development Lessons Learned in Bolivia
paragraphs: USAID officials have identified lessons from the agency’s alternative  development program in Bolivia, many of which are relevant to USAID’s  alternative development program in Colombia. For example, USAID  learned that program success depended on government control of, and  security in, the project area; commitment of the Bolivian government to  eradicate illicit coca; and coordination with interdiction and eradication  efforts. In addition, it learned that other factors, including a market- oriented strategy, beneficiary attitudes, coordinated public relations  campaigns, and U.S. support for Bolivian government agencies have  contributed to program progress in Bolivia.
subsections: section_title: Government Needs to Control Project Sites
paragraphs: USAID’s alternative development projects in Bolivia were limited by the  lack of government control of the project site and insecurity from  continued social strife. Early project documents describe the Chapare as a  high-risk atmosphere, noting that during much of the first project (the  Chapare Regional Development Program, 1983–1992), substantial areas of  the Chapare were not accessible to the Bolivian government or project  personnel for security reasons. The Bolivian government lost control of  the project area between 1983 and 1986, and as a result, USAID redirected  its alternative development efforts away from the Chapare for several  years. A 1990 project evaluation reported that cocaine traffickers  effectively ran the Chapare as a free-trade, free-fire zone for several years.  After the Bolivian government regained control over the Chapare, USAID  resumed activities there.
However, in recent years, coca union members and other groups  protesting government policies have blockaded roads through the project  site, preventing alternative crops from reaching markets and jeopardizing  much-needed private sector investment. According to USAID, these  disturbances in the project area continue to adversely affect its alternative  development strategy. The coca producers’ political party is well  organized, and coca union members have threatened alternative  development project staff and participants. During blockades of the main  Chapare access road in 2000, coca union members threatened to burn the  alternative crops of association members.
USAID’s current Counternarcotics Consolidation of Alternative  Development Efforts Project remains vulnerable to such social strife.  According to an October 2000 cable from the USAID mission in Bolivia,  social strife resulted in losses to Chapare producers of about $3 million.  Technical assistance was suspended and licit crop planting was delayed.  Market linkages with Argentina and Chile, which had been difficult to  establish, were damaged by Chapare producers’ inability to comply with  delivery contracts. Financial institutions considering investing or  providing services in the Chapare backed out. The mission reported that  the conditions required to achieve alternative development interim  objectives had been seriously affected by the road blockages and civil  unrest. USAID officials told us that without security and stability, it is  unlikely that the Chapare can achieve any degree of self-sustainability.
section_title: Strong Government Commitment Facilitates Alternative Development
paragraphs: Little progress was made in Bolivia until the host government undertook  the aggressive eradication that has facilitated USAID’s current alternative  development project. According to State, by the end of 2000, only 600  hectares of land under illicit coca cultivation remained in the Chapare,  rendering the area a commercially insignificant source of illicit coca. As a  result of the 1998–1999 eradication campaigns, more former coca growers  are turning to alternative development activities to earn their living, and  the value of licit crops under cultivation has increased significantly. The  number of currently anticipated beneficiaries, about 7,300, is more than  double original estimates.
section_title: Alternative Development, Interdiction, and Eradication Need to Be Coordinated
paragraphs: According to State, USAID, and other U.S. government officials in Bolivia,  alternative development, narcotics and precursor chemicals interdiction,  and illicit crop eradication are interdependent and mutually reinforcing  components of a successful counternarcotics strategy. Interdiction and  eradication are shorter term in nature; alternative development efforts  take longer to implement and show results, but they are important to  sustaining gains made by interdiction and eradication.
USAID’s alternative development projects in Bolivia have been hindered  by poor coordination between the U.S.-supported eradication effort and  USAID’s alternative development efforts. For example, a former USAID  official told us that State and Drug Enforcement Administration officials  often did not share information about the U.S.-supported counternarcotics  operations with USAID. A 1991 USAID study on coca production in the  Chapare concluded that there was too little coordination at both the policy  and operations level among agencies charged with interdiction and  development. The director of Bolivia’s Alternative Development Regional  Program, the USAID counterpart for alternative development, told us that  until the end of 1996, USAID and Bolivian alternative development  agencies worked almost entirely apart from U.S. and Bolivian  counternarcotics enforcement agencies.
More recently, the rapid pace of the Bolivian government’s eradication  campaign has created gaps between eradication and alternative  development assistance that can leave peasant farmers without  livelihoods. The Bolivian plan has been to remove itself from the coca- cocaine business by 2002. According to a U.S. embassy official in Bolivia,  the schedule for the eradication process was compressed because the  current government wanted to complete the effort before the 2002  presidential election. As a result, coordination between eradication and  alternative development became very difficult. According to an embassy  official, the Bolivian government was eradicating 1,000 hectares a month  at the peak of the 1998–1999 operation and there was no way alternative  development could quickly replace the eradicated coca with crops.  Accelerated eradication stressed the current project by dramatically  multiplying the anticipated beneficiaries—from 3,500 to 7,300 people.  State reported that the aggressive eradication program outpaced the  alternative development program by a wide margin and that the Bolivian  government would accelerate the alternative development project in the  Chapare in an effort to close the gap.
section_title: Others Factors Affecting Alternative Development
paragraphs: A combination of other factors have contributed to the recent successes in  Bolivia. These factors are less universal than those cited above, but  nevertheless USAID officials in Bolivia noted them as lessons learned for  future alternative development projects.
subsections: section_title: Verification Is Necessary
paragraphs: According to USAID officials in Bolivia, community self-policing, or “peer  pressure,” has not been a reliable mechanism for enforcing voluntary  eradication agreements. After the Bolivian government’s cash  compensation program was phased out, the government began providing  infrastructure and other in-kind compensation to communities that  abandoned coca. However, USAID officials question assumptions that  legal producer associations can prevent all of their members from  producing coca. USAID officials disagree with the basic peer-pressure  premise of the program because there are no long-standing, close-knit  communities in the Chapare but rather loosely associated settlements. In  the summer of 1999, according to USAID officials, 65 percent of the  communities participating in the government’s voluntary eradication  program were found to have some members who violated their coca  eradication agreements, thus disqualifying the community from receiving  government assistance. Suspension of assistance to an entire community  or farmer group because a few members broke their compensation  agreements has been counterproductive, according to USAID, because it  hinders implementation of legal crop production and marketing activities  and weakens alternative producer associations.
section_title: Markets Are Needed
paragraphs: USAID officials in Bolivia found that alternative development projects  were needed to incorporate market-oriented strategies and overcome  numerous business-related challenges to provide economic benefits for  participants. For example, although the success of the Chapare Regional  Development Project—USAID’s first alternative development project in  Bolivia—depended on the economic viability of alternative crops adopted  by farmers, a 1990 evaluation found that no studies of the markets for the  proposed crop substitutes had been conducted. The evaluation also  found that the Bolivian private sector was weak and cautious and did not  fulfill the role envisioned by USAID in the project design. Furthermore,  constraints on credit access were severe. The evaluation found that  although coca production in the Chapare produced a huge inflow of cash,  small farmers did not translate coca income into savings or productive  assets. The subsequent alternative development project in Cochabamba  was more market focused, but it also faced serious business challenges.  For example, the most serious challenge in establishing export markets for  project-supported crops was the inadequate volume and quality of the  produce and difficulty shipping it quickly and delivering it in good  condition on a consistent basis.
The Consolidation of Alternative Development Efforts Project, which  started in 1998 and is still under way, is almost entirely focused on  leveraging the market-oriented activities of predecessor projects and  improving farmer productivity, stimulating private sector investment, and  facilitating market access. It also faces numerous business challenges,  such as extremely poor road connections to domestic markets and  markets in neighboring countries, a lack of refrigerated cargo trucks, and  poor access to credit for Chapare farmers and entrepreneurs.
section_title: Public Support Is Helpful
paragraphs: U.S. officials emphasized the importance of an effective public relations  campaign for counternarcotics programs and alternative development in  particular. In Bolivia, the U.S. embassy helped build a public consensus  that production of coca and cocaine was a matter of Bolivian national  interest, that the cocaine consumed by Bolivians came from the Chapare,  and that narcotics trafficking was retarding the country’s economic  development. U.S. officials told us that public support was a necessary  precondition for the Bolivian government’s campaign of accelerated,  forced eradication. U.S. embassy officials recently concluded, however,  that U.S. support of the Bolivian government’s public relations effort has  overemphasized the cities and neglected the actual project area. To  counter pro-coca and antialternative development propaganda in the  Chapare, the U.S. embassy public affairs section has begun an outreach  effort to radio stations there.
section_title: Appendix II: USAID’s Alternative Development Program in Peru
paragraphs: The United States has provided alternative development assistance to Peru  for nearly two decades, but little progress was made until the Peruvian  government controlled the project areas and demonstrated a strong  commitment to a broader set of counternarcotics measures. The U.S.  Agency for International Development (USAID) has funded two alternative  development projects in Peru since 1981. The first alternative development  project—the Upper Huallaga Area Development (UHAD) project—took  place between 1981 and 1994 at a cost of about $31 million. This project  was designed to increase and diversify agricultural production in the coca- growing Upper Huallaga River Valley through agricultural assistance for  alternative legal crops and improvements in roads and health and  community services (see fig. 3). However, severe security constraints and  a lack of marketing assistance limited its successes, and coca cultivation  increased during the project’s lifetime.
In contrast, several factors—particularly a strong Peruvian government  commitment to counternarcotics and improvements in security and civil  governance—have contributed to better results for the Alternative  Development Program (ADP), USAID’s second and current alternative  development project in Peru. This project, which began in 1995 and is  currently estimated to cost about $195 million, has contributed to a 70  percent decline in hectares under coca cultivation. However, political  uncertainty in Peru, as well as other issues, may affect future program  accomplishments and sustainability.
USAID officials have identified various lessons learned from the two  alternative development projects in Peru, many of which are relevant to  USAID’s alternative development program in Colombia. For example, the  success of alternative development in Peru depended on security in  program areas, the political commitment of the Peruvian government, and  coordination with eradication and interdiction efforts.
subsections: section_title: UHAD Project Accomplishments Were Limited
paragraphs: USAID implemented the UHAD project between August 1981 and June  1994 at a cost of approximately $31.2 million. The U.S. and Peruvian  governments developed the UHAD project as part of a joint  counternarcotics strategy that called for coordination among interdiction,  eradication, and alternative development efforts. The UHAD project was  intended to support the government of Peru’s alternative development  objectives in the Huallaga Valley by strengthening local government and  community participation in the alternative development process,  improving the physical and social infrastructure, and promoting  agricultural activities that would replace illicit crops. USAID originally  limited project operations to the Upper Huallaga area, a high-jungle valley  along the Huallaga River in the north-central part of Peru, but later  expanded the program to the Central Huallaga Valley as well.
The Special Project for the Alta (or Upper) Huallaga (PEAH), an entity of  the Peruvian government, implemented the UHAD project with USAID  support. During much of the UHAD project, armed subversive  organizations—the Shining Path and the Tupac Amaru Revolutionary  Movement—terrorized Peruvians and attacked national and local  government and civilian and military targets, particularly in rural areas.  Narcotics traffickers also contributed to the violence. By 1986, PEAH had  become the sole Peruvian government entity remaining in the Upper  Huallaga Valley because of the deteriorating security situation. As a result,  USAID severely reduced planned activities in the project’s agricultural  production component, including agricultural research, training, credit  extension, and land titling. The project’s focus on crop substitution and a  lack of technical and marketing assistance for the alternative crops further  limited the success of its agricultural component.
USAID made some progress in the UHAD project’s infrastructure  component, with PEAH upgrading 765 kilometers of highways and 582  kilometers of access roads that helped reduce travel and transportation  costs and connected farmers to buyers of the area’s agricultural products.  However, terrorist activities prevented USAID from completing a major  highway that was intended to connect project sites with Lima area  markets as well as other infrastructure projects. Furthermore, the  terrorists generally controlled the farmers’ access roads.
The community development component was, at times, the only  functioning element of the UHAD project. Activities fostering local  participation in the design and execution of small social infrastructure  projects proved successful by exposing communities to democratic  principles and requiring them to contribute financially to projects from  which they benefited. However, this component required the tacit  approval of the terrorists. PEAH was unable to develop good working  relationships with the public agencies, local governments, and community- based organizations involved, and security problems resulted in the  abrogation of many agreements between PEAH and these entities.
In the end, evaluations of the UHAD project cited the lack of coordination  between the Peruvian government’s alternative development and  eradication activities, as well as limited markets for the alternative crops  that the project promoted, as factors that limited the project’s success.  During the early years of the project (1981 to 1986), hectares under coca  cultivation in the Upper Huallaga Valley increased fivefold from 12,000  hectares to 60,000 hectares. By 1990, these areas increased further to an  estimated 70,000 to 90,000 hectares.
section_title: Strong Peruvian Government Support Increased Success of Second Program
paragraphs: Using lessons learned from the UHAD project, USAID initiated the current  ADP in 1995. ADP is more comprehensive than the UHAD project in terms  of geographic coverage and program components. ADP seeks to improve  employment and income opportunities from legal economic activities,  access to basic social services, public participation in decision making,  and public awareness of the problems from drug use and production in  five coca-growing river valleys in Peru. The return of government control,  security, and civil governance in program areas, as well as the Peruvian  government’s strong commitment to interdiction and eradication, have  proved crucial in creating an environment conducive to alternative  development.
As of January 2001, USAID had spent $84.5 million for ADP; USAID  estimates that ADP funding through 2003 will reach $194.5 million. ADP  has made considerable progress in meeting its objectives and has  contributed to significant drops in coca cultivation in Peru. The project’s  strategy is based on the hypothesis that the majority of residents in coca  cultivation zones will voluntarily abandon coca if they are offered  alternative licit sources of income, along with improved living conditions  for their communities, and if narcotics trafficking is disrupted and laws are  enforced.
ADP emphasizes licit economic activities, local government strengthening,  and economic and social infrastructure. The component involving licit  economic activities offers assistance in the production, processing, and  marketing of alternative licit crops; credit programs; and land titling  programs. USAID has focused these activities on the rehabilitation of  coffee and cacao cultivation because of their established markets and  farmer familiarity with these crops. In its local government component,  the project promotes efforts to strengthen local governments, increase  public participation in decision making, raise social awareness of drug  production and use, and develop communities. Finally, ADP includes  activities to improve the economic infrastructure—for example, the  rehabilitation and maintenance of roads and bridges and the provision of  social services in program areas. Improved roads and bridges are intended  to create a viable transportation network for licit economic activities,  while social infrastructure components involve local communities in the  selection, design, financing, construction, and maintenance of small  infrastructure projects such as schools, potable water systems, health  posts, and minihydroelectric systems.
With the return of government control, security, and civil governance in  program areas in the early 1990s, as well as the Peruvian government’s  strong commitment to interdiction and eradication, ADP has been able to  accomplish considerably more of its objectives than the earlier UHAD  project. In conjunction with eradication and interdiction efforts, ADP  contributed to a 70 percent net decrease in hectares under coca cultivation  in Peru from 1995 (115,300 hectares) through 2000 (34,200 hectares).  According to USAID, those areas receiving greater project investment  witnessed greater voluntary abandonment of coca cultivation, as well as  fewer plantings of new coca crops.
During 1995-2000, ADP provided production and marketing support to  more than 15,000 farmers growing nearly 32,000 hectares of licit crops,  particularly coffee and cacao, according to USAID officials. During that  period, more than 236 metric tons of licit crops, with a gross value  exceeding $46 million, were produced in program areas. The project  established a $10 million rural credit system, provided training in  governance skills, and strengthened two municipal associations.
Through its economic and social infrastructure component, ADP has  rehabilitated 1,000 kilometers of roads and 46 bridges, stone-paved 21  kilometers of roads, supported 136 engineering studies, piloted 1 regional  maintenance program, and provided 3 pools of heavy equipment. In  addition, the project has supported about 1,000 small social infrastructure  projects involving schools, potable water systems, health posts,  minihydroelectric systems, and other community improvements. As a  result, the percentage of households with access to basic services in  program areas increased from 16 percent to 51 percent. Finally, according  to USAID, the percentage of the population recognizing drug production  and consumption as damaging to society reached 94 percent.
section_title: Alternative Development Lessons Learned in Peru
paragraphs: USAID officials identified various lessons learned from the UHAD project  and ADP, many of which may apply to USAID’s alternative development  program in Colombia. For example, the success of its alternative  development program in Peru depended on government control over and  security on the project sites, the political commitment of the Peruvian  government, and coordination with interdiction and eradication efforts.  Other factors that affected alternative development in Peru included a  system for verifying compliance with eradication agreements, a market- oriented program design, national consensus on the harm caused by drug  production and consumption, and a viable road network.
subsections: section_title: Government Needs to Control Project Areas
paragraphs: Lack of government control and security severely limited program  implementation and accomplishments in the UHAD project by causing  program implementers—agricultural advisers, researchers, and financial  institutions—to withdraw and residents to flee from project areas.  Terrorists murdered several land surveyors, mayors, and residents,  thereby halting many of the project’s activities. At one point, PEAH was  the only Peruvian government institution in the Upper Huallaga Valley,  after other government and private sector entities left due to the  deteriorating security situation.
In designing ADP, USAID officials acknowledged that ensuring security by  reducing the presence of subversive and narcotics trafficker elements was  a critical precondition for alternative development in program areas.  Insecure areas were excluded from the program. The Peruvian  government’s success in combating terrorist groups and narcotics  traffickers in the mid-1990s created a more secure and amenable  environment for alternative development. The return of civil governance in  program areas allowed USAID-supported activities to resume.
section_title: Strong Government Commitment Facilitates Alternative Development
paragraphs: As the UHAD project was ending in the early 1990s, prospects for the  success of alternative development in Peru were considered bleak, despite  years of U.S. assistance. Coca cultivation had increased significantly  during the 1980s. However, this changed when the Peruvian government  committed to a strong counternarcotics agenda. In particular, the Peruvian  Air Force conducted an aggressive interdiction campaign in which it shot  down airplanes presumed to be involved in narcotics trafficking. This  campaign disrupted the coca market, thereby encouraging coca growers to  turn to alternative development programs. By targeting narcotics  traffickers, rather than coca growers, the Peruvian government also  limited resentment from farmers over the counternarcotics campaign,  according to USAID and Peruvian officials.
Recent political turmoil has created uncertainty about the future direction  of the Peruvian government’s counternarcotics policies and may affect  future program accomplishments and sustainability. Peru’s transitional  government (November 2000 to July 2001) invited leaders of coca-growing  syndicates to participate in formal roundtable policy discussions, raising  concern among USAID officials and some ADP implementers that this  would impart legitimacy to the syndicates and raise their political profile.  In addition, Peru’s current administration, which came to office on July 28,  2001, is still developing its national counternarcotics policy.
section_title: Alternative Development, Interdiction, and Eradication Need to Be Coordinated
paragraphs: State and USAID officials in Peru emphasized that an effective  counternarcotics strategy requires sustained interdiction, eradication, and  alternative development. Interdiction and eradication disrupt the coca  market, thereby creating market uncertainty and lowering prices for coca  while encouraging coca farmers to consider alternative development  programs.
The three efforts are also complementary, but alternative development  programs require longer timetables to achieve results than interdiction or  eradication efforts. The cultivation and commercialization of alternative  crops, development of community organizations, and improvement of  social and economic infrastructures can take years to accomplish, but they  have longer-lasting impacts on reducing coca cultivation. Department of  State and USAID officials in Peru emphasized that coordination between  eradication and alternative development is particularly important to  ensure that eradication efforts do not interfere with alternative  development activities and that families dependent on coca for their  livelihood receive short-term emergency assistance after an eradication  campaign.
According to USAID officials, the Peruvian government has conducted  some coca eradication campaigns in the past without coordinating these  actions with USAID, thereby jeopardizing ADP activities. Such forced  eradication campaigns can cause problems for ADP by creating  resentment among community residents. In the earlier UHAD project,  resentment against eradication efforts worsened security concerns by  alienating farmers, which encouraged them to seek “protection” from  terrorist groups.
section_title: Others Factors Affecting Alternative Development
paragraphs: As in Bolivia, a combination of other factors has affected progress in Peru.  The factors cited by USAID officials in Peru are similar, but not identical,  to those cited by officials in Bolivia and are useful as lessons learned for  future alternative development projects.
subsections: section_title: Verification Is Necessary
paragraphs: According to USAID and embassy officials in Peru, although the United  States has monitored overall trends in coca reduction in Peru, there is  currently no way to verify whether specific Peruvian communities  participating in voluntary eradication agreements are actually complying  with the agreements. In September 2001, State’s inspector general found  that monitoring efforts were not specific enough to establish an adequate  link between investments in alternative development and coca reductions.  Embassy officials, with input from USAID, are developing a monitoring  system that addresses this concern. One component of the system the  embassy is considering would involve a requirement for the Peruvian  government to provide proof of compliance with eradication agreements  before it could draw future alternative development funds. The system  would likely employ the Peruvian Interior Ministry in plotting the relevant  areas of farmland and monitoring the corresponding eradication efforts  there. The United States would then verify the Peruvian government’s  monitoring efforts from the air.
section_title: Markets Are Needed
paragraphs: Under the UHAD project, USAID emphasized agricultural production of  certain crops. However, USAID did not conduct analyses or develop  program strategies that fully considered the marketability of these  particular crops. Without markets for the alternative crops they grew  under the UHAD project, farmers derived little economic benefit from  their efforts and investments. Based on this experience, USAID included a  stronger market focus in the follow-on project. ADP originally focused on  promoting the rehabilitation of key crops—coffee and cacao—that had  proven markets and that farmers traditionally cultivated, but then  abandoned, in program areas. However, historically low market prices for  these commodities have limited the economic benefits to farm families.
ADP is now promoting economic diversification—the cultivation of  multiple crops and raising of small farm animals—to stabilize the financial  income and nutritional needs of farm families, while still promoting the  cultivation of traditional crops (for example, coffee and cacao) whose  prices are subject to market fluctuations. USAID also is emphasizing the  need to develop niche markets for alternative development products and  to involve the private sector under ADP. For example, USAID has  successfully marketed coffee and cacao grown under ADP to Seattle’s Best  Coffee and M&M Mars Company.
section_title: Public Support Is Helpful
paragraphs: U.S. and Peruvian officials acknowledged that, in the past, Peruvians  considered coca cultivation, drug production, and narcotics trafficking to  be U.S. rather than Peruvian problems. Consequently, the Peruvian public  demonstrated relatively limited support for U.S.-supported  counternarcotics efforts, including alternative development.
However, the Peruvian public attitude toward drug production and  trafficking changed as a result of the terrorism, violence, and social  disruption caused by subversive groups—who were supported by  narcotics traffickers—during the 1980s and early 1990s. With public  support, the Peruvian government mounted aggressive counternarcotics  and counterterrorist campaigns, while minimizing public opposition and  resentment against these efforts by targeting narcotics traffickers rather  than the coca farmers.
Public support at a community level has also helped. According to USAID  officials, the involvement of beneficiaries, local community groups, and  municipalities in its alternative development programs was necessary to  promote sustainability. Communities have a greater incentive to embrace  and sustain alternative development activities if they are involved in the  design, implementation, and funding of projects that raise the quality of  life in their communities. Both the UHAD project and ADP included social  infrastructure activities in which communities benefited from and  contributed to alternative development-supported schools, water systems,  and health posts.
ADP, in particular, has promoted the development and strengthening of  regional and local community groups such as municipal associations,  producer associations, and credit groups to encourage local communities  to take ownership of their projects and expose them to the democratic  process. According to USAID, strengthening local organizations is  particularly important in Peru because of the national government’s highly  centralized decision making and resource allocation processes. Under  ADP, USAID requires local communities to prioritize their social service  needs and contribute both financial and labor resources to the projects  they choose. USAID also helped coffee and cacao farmers develop  producer associations to assist them in marketing their crops.
section_title: Viable Roads
paragraphs: U.S. and Peruvian officials acknowledged that a viable rural road network  is a precondition that encourages farmers to consider alternative  economic activity and reduce their illicit crops voluntarily. Good roads  allow farmers to obtain higher prices for their alternative crops by linking  them to higher-paying nonlocal markets and by reducing transportation  costs. In contrast, farmers can market coca leaves without roads by  carrying coca leaves or coca paste out of their valleys or by having  narcotics traffickers pick up the products from farms by airplane.
Under the UHAD project, USAID had supported the completion of roads  that would have linked Upper Huallaga Valley farmers to lucrative markets  in Lima. However, a lack of security prevented their completion. Under  ADP, USAID is supporting the rehabilitation and upgrading of important  secondary rural roads and bridges in program areas. In some cases, USAID  is supporting cobblestone paving of dirt roads, which also generates local  employment in program areas. USAID is also supporting the formation of  community-based road maintenance microenterprises.
section_title: Appendix V: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Acknowledgments
paragraphs: In addition to the individual named above, Dave Artadi, Mike Courts,  Christian Hougen, Jason Venner, and Janey Cohen made key contributions  to this report.