influencing coca reduction initiatives t

FactorsInfluencing

CocaReductionInitiatives 2

T he Andean region is complex in its geology, ecology, andcultural history. This complexity precludes simple orbroadly applicable coca substitution strategies. Success-ful, cooperative, counternarcotics efforts among the

United States and Andean countries require careful considerationof all of these factors. This chapter examines the biophysical,cultural, socio-political, and economic conditions that may affectthe success of efforts to reduce coca cultivation in Bolivia, Peru,and Colombia.

GEOECOLOGY OF THE NORTHERNAND CENTRAL ANDES

Clear understanding of the biological and physical environ-ments in the Andean region is critical for appropriate design ofprojects to eradicate or offer alternatives to coca. The naturalenvironmental diversity of Bolivia, Peru, and Colombia resultslargely from the abrupt altitude changes in the Andes mountainsystem (2). There is a vertical succession of ecozones, rangingfrom rainforest and desert at the lowest levels to mountain tundra,snow, and ice at the highest (104). The enormous latitudinal span(approximately from 10 degrees north to 40 degrees south alongthe western edge of South America) and longitudinal breadth(approximately between 80 degrees west and 60 degrees west)also make for considerable variations in climate, soil, vegetation,and land-use (104). Thus, the local and regional diversity ofbiophysical environments requires that any project be site-specific (2).

35

36 I Alternative Coca Reduction Strategies in the Andean Region

I Andean Geography and GeologyThe Andean cordillera (mountain range) di-

vides the South American continent into Atlanticand Pacific drainage systems and is part of a greatband of active crustal uplift that circles the PacificOcean. The Andes are among the youngestmountains on Earth, and consequently, soils aregenerally shallow, stony, and undifferentiated(104). Extensive volcanic and earthquake activityhas characterized the region’s geologic history,and this activity continues today (84). Anytechnologies dependent on the land’s surficialcharacteristics---g. g., road-building or soil identi-fication and use-must deal with the geologicvariability, as well as the instability of the areadue to ongoing mountain-building (2).

The Andean cordillera is made up of manyinterwoven ranges, which include high intermon-tane plateaus, basins, and valleys. Colombia,Peru, and Bolivia are located within the Northernand Central Andean ranges (figure 2-l).

The Northern Andes extend from coastal Vene-zuela and Colombia to northern Peru and containseveral broad ecosystems falling into four altitu-dinal belts, the highest and coldest of which risesto 4,500 meters above sea level (masl). TheNorthern Andes subregion is distinguished fromthe rest of the region by higher relative humidityand greater climatic symmetry between the east-ern and western flanks of the range (2).

The three main warm ecosystems of the North-ern subregion are the upper montaña (mountain)slopes, the intermediate-level coffee belt, and thefoothills. The upper montaña slopes, with theirvast, dense forests, have experienced little ad-verse human impact. However, in some areas,deforestation may have contributed to increasedstream flow and erosion. Precipitation is heavy,averaging 4,000 mm per year, and physical andchemical weathering and erosion can be intense.The coffee belt, immediately below the upper

montaña, has been profoundly modified by coffeeplantation agriculture. The best coffee soils aredeveloped on volcanic ash, which is sensitive toerosion. The low Andean foothills are relativelyhumid with annual rainfall of at least 2,000 mmand a mean annual temperature of at least 24degrees C. Low-productivity, lateritic soil coversmuch of the area, particularly in cleared fieldswhere maize, manioc (yuca), plantain, and cocoaare cultivated.

The Central Andes extend from northern Peruto the Antofagasta Province in Chile and Cat-amarca Province in Argentina. They are charac-terized by a succession of agricultural zones withvaried climatic conditions along the mountains’flanks and by large, high-altitude plateaus above3,500 masl, which do not occur in the NorthernAndes. Variously called puna or altiplano, theseplateaus, separated and surrounded by highermountains, were the heartland of the pre-Columbian Andean empire (2).

The soil fertility of the northern altiplanogenerally is good (147). The western CentralAndean ranges are relatively arid with desert-likesoils, whereas the eastern ranges are more humidand have more diverse soils (26). The easternslopes of the Central Andes in many ways aresimilar to the wet forests of the Northern Andes.Unlike the Northern Andes, however, theseslopes have a dry season (2).

The altiplano and páramo (heathland) arebroken by river valleys. Cutting deep into thelofty plateaus, these valleys descend 2,000 to3,000 meters, often in a few tens of kilometers,and create areas of highly distinctive relief,climate, habitat, and agricultural uses. The upperends of the valleys merge with the high plateaus.Their middle slopes and alluvial plains aretemperate, referred to as kichwa by indigenousAndean peoples. Lower parts of the valleys, the

2—Factors Influencing Coca Reduction Initiatives

@w Inz< I

Figure 2-l-Generalized Geographic Map of Andean Coca-Producing Countries

.

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Guajira R e g i o n@

-flCartagena &

W / ~ Magdalena River

Cauca River ,

Region

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OrinocoCOLOMBIA River K

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River

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Huallaga -- ‘”~;WX#o, ,Region L

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Chapare Region

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Region

SOURCE: Office of Technology Assessment, 1993.


yungas, can be wet or hot and dry as a result ofrain-shadow. l

Unlike regions of gentle topography (e.g., thecentral United States or Amazon basin), whereregional climatic variation can be determinedfrom a few widely spaced measurements, regionswith extreme topographic and climatic features(e.g., the Andean cordillera) make regional pro-jections difficult (2). For example, while airtemperature generally decreases with increasingaltitude, variability of mountain topography canproduce much lower-than-expected air tempera-tures at any altitude.

Some general climatic patterns, however, arediscernible in the Andes. For example, withincreasing distance south of the equator theseasonality of precipitation increases, whereasthe total annual amount generally decreases.Humidity commonly increases with increasingaltitude, but only to some intermediate altitude(e.g., approximately 1,000 masl on the easternslope of the Ecuadoran Andes at the equator)above which it declines (92). The variability ofmountain terrain also affects precipitation, suchthat conditions of extreme wetness and ariditymay exist in close proximity. Annual tempera-tures in upper reaches of many Andean valleysmay average 8 degrees C with frequent nocturnalfrosts, whereas lower levels may average as highas 24 degrees C, with no frost. Related to thistemperature gradient is a pattern of greaterrainfall at the valley heads, and less rain at loweraltitudes, resulting in part from mountain rain-shadow effect (2).

The weather patterns of the Andean cordilleraand Amazon basin in general reflect movementsof high and low-pressure “cells’ associated withthe Intertropical Convergence Zone, a low-pressure trough that moves further north andsouth on a seasonal basis. Precipitation is high

throughout the year in the highlands and on thecoast in the Northern Andes. South of centralEcuador, at about the latitude of Guayaquil,coastal aridity increases, culminating in the Ata-cama desert of northern Chile. In the CentralAndes, highland precipitation is seasonal, andamounts are approximately one-half those meas-ured in the northern Andes. The aridity of theCentral Andean coastal zone is the result of thedrying effect of the cold Pacific Humboldtcurrent, and the southern Pacific high-pressurecell (59). Much of the southern portion of theCentral Andes in Bolivia is also arid. The dryseason causes soil moisture deficits and dimin-ished stream flow for a part of each year.

9 Andean Agroecosystems2

At the regional or macroscale level, vegetationpatterns in the Northern and Central Andes tendto reflect climatic zones determined by latitudeand altitude. At the local or mesoscale level,however, this correspondence becomes less pre-cise, as local variations in soil type, slope,drainage, climate, and human intervention comeinto play.

Most of the Northern Andes can support lushvegetation because of the high humidity andrelatively high temperatures. Tropical rainforestsand other types of evergreen and deciduousforests dominate this subregion, with consider-able symmetry of vegetation types on the easternand western flanks of the mountains. The lowestslopes support agriculture year-round, producing,for example, bananas, yuca, and cocoa.

Aridity reduces vegetation growth and agricul-tural options in some areas of the Central Andes.The Atacama desert region of the coastal plain,for example, is one of the driest places on Earth.However, the lower valley floors of the CentralAndean western ranges, and the lands at the foot

1 Rain-shadow occurs when moist easterly winds lose their moisture as they pass over the him cool peaks and plateaus. & the air descendsfrom the punu orpdranw, the temperature rises and its moisture-bearing capacity increases, resulting in a desert condition below 1,500 maslin most interior valleys of the Andes (2).

z Agmecosystem is a term used to describe mtural ecosystems modifkd by human agricultural activities (2).

2—Factors Influencing Coca Reduction Initiatives I 39

of the mountain slopes, along the coast, aredensely populated and support intensive, high-yield cultivation of cash crops including maize,rice, cotton, tobacco, garden vegetables, peppers,sugar cane, and fruit trees. Irrigation water isprovided by the numerous streams that drain thewestern slopes. The eastern slopes of the centralAndes have vegetation types similar to that of thenorthern Andes (2).

A significant portion of the Andean populationlives within the Central Andes’ eastern valleysystems and altiplano. Settlements and farmingare concentrated toward the upper end of theinter-Andean valleys for several reasons: the

primary subsistence crops are acclimatized tothese altitudes; drought and frost are less commonthan in the lower and upper aptitudinal extremes;and access to the grazing lands of the puna andpáramo is relatively easy (31).

ANDEAN AGRICULTURAL PRODUCTION

Humans first altered the Andean landscapesome 12,000 to 15,000 years ago as hunters andgatherers (146). By 3,000 to 4,000 years ago, theoriginal nomadic, hunting and gathering way oflife had been supplanted by a village-basedagro-pastoral economy (95). Pre-Columbian agri-cultural productivity was achieved largelythrough specialized adaptation of food crops tothe myriad of local microenvironment. Indige-nous farmers planted numerous varieties of eachcrop in a single field, or in neighboring fields, sothat if one variety performed poorly, severalothers might provide an adequate yield (42).Virtually all productive land was used for cropproduction. These two strategies led to a suffi-ciency of food supplies throughout the Andeanhighlands.

From the onset of human occupation, thevaried Andean environments led to vertical ar-rangements of settlements, production regimes,migrations, and political organizations. Patternsof verticality derive from the classiffication ofdifferent agricultural zones, based on their cli-matic conditions (31,32,107,145). For example,

the inhabitants of the Uchucmarca valley inNorthern Peru recognize seven agro-climaticunits that are distinguished according to altitude,moisture, temperature, vegetation, land tenure,crop assemblages, and agricultural technologies(31,32).

The Spanish conquest of the Andean regionproduced severe dislocations in the indigenouspattern of resource exploitation. The arrivingSpanish found a highland Andean agriculturalcomplex that focused on the intensive hoe culti-vation of maize, squash, beans, and hot peppers(chiles). Fiber was secured from the cabuya,cultivated on the drier leeward sides of themountain valleys, and from American cotton,cultivated in the lowlands, along with coca andsweet manioc (21). The principal root crop wasthe small Andean potato.

The Spanish developed urban centers andintroduced exotic plants and animals in theNorthern and Central Andes. Forced clustering ofthe semi-dispersed indigenous settlement pat-terns, exploitation of the large resident laborforce, and establishment of the Iberian grazingethic also followed. Large landed estates (hacien-das) were developed in the altiplano belt foranimal husbandry. In the hot, humid yungas, landclearing was facilitated by the introduction of irontools, and maize, sugar-cane, and pigs were raisedfor urban markets (2).

Displacement of indigenous people to mar-ginal lands that began in the colonial periodcontinued under subsequent regimes. Invariably,the best lands of the region (e.g., flat, fertile valleybottomlands) were claimed by the existent rulers,and often were designated pasture for livestock.Many indigenous people who had lived on theselands were forced to move to remote, inhospitab-le, forested slopes. Others were reduced tolandless laborers, or colonas, on the haciendas.Thus, throughout the Northern Andes, the logicalspatial relationships of agricultural productionwere reversed. The broad, level bottom lands sosuitable to the cultivation of staple foodstuffswere given over to pasture and meat production,


or commercial crops such as sugar cane destined

for foreign markets. Highland plots, more suitableas pasture or forest, were cultivated, with conse-quential damage to the natural vegetation. Har-vests were meager and had to be transported, onthe back of either man or beast, to distant urbanmarkets (43).

Competition for land between haciendas andpeasant communities became a common andsometimes violent feature of rural society in theCentral Andes. The concentration of land owner-ship, uneven population distribution and land-use, feudal subjugation of many peasants, and riseof a large pool of displaced, landless peasantscreated a legacy of inequality that still prevails inthe region (19,61,141). The dichotomy betweenthe urban dweller, or civil servant of Spanishdescent, and the rural Indian peasant-betweenthe lowland centers of power and the powerlessinhabitants of the eastern Andean slopes—persists, with significant implications for anyattempts to alter agricultural practices in coca-producing regions (2).

In more recent times, the so-called “greenrevolution” has had mixed blessings. For in-stance, production of some crops (e.g., banana,rice, and maize) and of poultry has increaseddramatically in the Andean region (16,78,82).However, this increased agricultural productionoccurred among the large landowners of theregion, with few benefits accruing to the impover-ished subsistence sector (43).

A significant modern-era land-use change hasbeen the opening of eastern lowland regions in theNorthern Andes for agricultural use. For centu-ries, fear of disease and reluctance to leave thesecure highland social structure deterred high-lander settlement of lowlands. With their worsen-ing economic plight in modern times, however, anever-increasing number of highland Indians aremoving eastward along every major river valley(46). In spite of endemic shortages of good roads,legally recognized land titles, credit, education,electricity, and modern health and sanitationservices, highlander colonization of the Orinoco

and Amazon basins serves the interests of theindividuals and nations involved and can beexpected to continue (43).

Today, the basic pattern of Pre-Columbian landuse and agricultural practices, as modified by theSpanish, remains more or less intact in the CentralAndes. Commercial agriculture tends to be con-centrated in flat, lowland areas, at least in part dueto high transportation costs and difficulties apply-ing mechanization to farmin g on valley andmountain slopes. This mitigates in favor ofmountain crops that are hand-cultivated, easilyharvested, and easily transported with low spoil-age, one example being coca.

COCA-PRODUCING ECOSYSTEMSPotentially, 10 to 20 percent of the Andes

mountain range (7,250 kilometers in length) issuitable for coca production, and these areas areconcentrated in an aptitudinal belt from sea levelto about 2,000 mad, extending from Colombia toBolivia. Coca grows best at temperatures averag-ing above 15 degrees C, with high precipitation,but does not require evenly distributed rainfall.Coca can be grown in a wide variety of soils, butis sensitive to poor drainage and intolerant of frostor drought. In addition, a wide range of soil pHlevels can be tolerated by coca (i.e., E.coca var.coca, the most important source of cocaine, willtolerate pH levels as low as 4.3 and as high as 8.0(54)).

Coca cultivation is concentrated in and alongdeep valleys that cut into the eastern slopes of theNorthern and Central Andes, and coca is the mostimportant agricultural product of the hot, oftendry lower reaches of the yungas (31). Other warmecosystems with a potential for coca growth arefound between sea level and 2,200 masl in thenorthern Andes, which are characterized by asub-Andean or tropical montaña at higher limitsand wet forest at lower levels. These regions areheavily populated, particularly in the “coffeebelt” (2).

Coca bushes are stripped of their leaves up tosix times a year, and the leaves are then dried and

——

transported to the highlands by porters, packanimals, or trucks. Some highland communitiescontrol territory in the coca-producing valleys,and may establish satellite communities there.Several times each year, they journey to thesefields to tend their coca, or to work as laborers inthe fields of relatives and fellow villagers (107).

Much of the land involved in coca productionis sloping, and its suitability for other agriculturaluses will depend on factors such as slope steep-ness, soil type, and water availability. Waterquality problems now exist in some Andeanwatersheds, largely as a result of dischargesassociated with mining and agricultural activities,and high rates of natural erosion from the region’sgeologic Instability and climatic variability (102,114).The extent to which new agricultural practicesmay contribute to these water quality problemscan only be determined by basin-specific moni-toring programs in the affected watersheds (2).

9 Environmental Impacts ofCoca Cultivation and Processing

The adverse environmental consequences ofcoca cultivation and processing often are cited asa problem in the Andean nations (14,53). Becausemost data are anecdotal, and on-site research isproblematic, the degree of environmental damagethat directly or indirectly can be attributed to cocacultivation and cocaine processing remains unde-

termined. However, the few available informa-tion sources point to significant differences be-tween damage from coca cultivation and cocaineprocessing.

COCA CULTIVATIONLittle is known about the role of coca in the

ecology of the Andean rainforest, or about theenvironmental impacts of coca cultivation. Im-pacts are likely to differ from one growing area toanother, given variations in ecology, culture, andcultivation practices. Today, no formal compara-tive study exists of even the most notablecoca-growing regions (i.e., the Alto Huallaga of


x

Terracing is a traditional, more environmentallybenign means of growing coca still practiced mostnotably in the Bolivian Yungas.

Peru and the Chapare of Bolivia). Despite thislack of information, three factors seem key todetermining g coca cultivation’s environmental im-pact: geographic area, types of external inputs andfrequency and intensity of their use, and cultiva-

tion practices.

Experts argue that deforestation is the mostvisible damage caused by coca cultivation. Someolder coca production regions (e.g., the Yungas,Bolivia) continue to produce coca along well-constructed terraces that reduce soil erosionpotential. However, these practices are not em-ployed in the newer coca-growing regions. In

many areas coca is grown on unterraced plotswith no barrier to soil loss from heavy rains.Migrants to these regions may use slash-and-burnpractices to clear forested areas. Between theearly 1970s and the late 1980s, an estimated700,000 hectares (about 2,700 square miles) ofAmazon rainforest were deforested as a directorindirect result of coca cultivation (53).

The potential consequences of deforestationassociated with coca cultivation are numerous.Habitat loss and decreased species diversity areoften a direct result of destruction of tropical


forest. In addition, the rise in soil temperaturesand decrease in organic matter and soil nutrients,resulting from slash-and-burn practices, can makethe area hostile to revegetation. In the AltoHuallaga in Peru, tropical forest burning causesextensive air pollution, and smoke layers havebeen observed covering the valley in August andSeptember (14).

The most devastating effect of deforestation inthe Andean region maybe extensive soil erosion.Clearing tropical forest areas for agriculturalexpansion without investing in soil conservationcan severely disrupt biological productivity andstart a self-reinforcing cycle of degradation. Forexample, soil erosion reduces soil fertility, whichin turn can reduce growth of cover plants, leadingto more soil erosion and to rapid depletion ofdiversity as the site becomes suitable for fewerspecies.

The cultivation practices, tillage and weedcontrol, can increase the potential for soil erosion.Tillage loosens the soil and leads easily toerosion. Whether coca seeds or seedlings areplanted, the soil remains largely unprotected fromheavy rains. Furthermore, the soil around the cocaplants is weeded regularly to reduce competitionfor the minimal nutrients available. These prac-tices leave the soil in coca plots almost continu-ally bare during the production years, and theresults are increased soil temperatures, reduceddevelopment of soil microbial populations, andlong-term exposure of the soil to wind and rainerosion. Finally, the leaves of the coca plant arestripped periodically (e.g., three to six times peryear), thereby removing whatever protection thecanopy might offer.

As a result of soil erosion, sediment-ladenrunoff may flood lowlands, overcome the nutrienttrapping capability of wetlands, and damageassociated aquatic systems by smothering bottomcommunities and decreasing oxygen availabilityto other organisms. Floods, avalanches, andlandslides have been attributed to the increasedsoil erosion found in the coca-growing areas ofthe Andean foothills. Exceptionally heavy rain-

Table 2-1—Pesticides Commonly Used inCoca Production

Common name Trade name Percent used

Carbaryl . . . . . . . . . . . Sevin 70%Metamidophos . . . . . . Monitor 15Decamitrina. . . . . . . . . Decls 10Monocrotophos . . . . . . Azodrin 5

SOURCE: J. Antognini, Research Leader, Tropical science and Re-search Lab, U.S. Department of Agriculture, “Remarks,” U.S. Library ofCongress, Congressional Research Service, Cocaine Pruduction,Eradication and the Environment: Policy, Impact and Options Hearing,February 14,1990 (Washington, DC: U.S. Government Printing Office,1990), p. 3.

Table 2-2—Dimensions of Pollution from CocaProcessing in the Alto Huallaga Valleya

QuantityMaterial (in millions)

Acetone . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4 ICarbide . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2 kgKerosene . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 IQuicklime . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 kgSulphuric Add . . . . . . . . . . . . . . . . . . . . . . . 32 1Toilet paper . . . . . . . . . . . . . . . . . . . . . . . . . . 16 kgToluene . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4 I

a Based on estimated quantities of these substances in Alto HuallagaValley rivers and streams in 1986.

SOURCE: M. Buenaventura, “Victims of the Drug Trade,” U.S. Libraryof Congress, Congressional Research Service (CRS), Cocaine Pro-duction, Eradication, and the Environment: Policy, Impact, and Options,February 14, 1990 (Washington, DC: U.S. Government Printing Office,1990), pp. 143-146.

fall in November 1987 caused devastating land-slides killing animals and people as well asruining roads, villages, and productive land through-out coca-growing regions (14).

Pesticides and fertilizers used in coca cultiva-tion may cause environmental and health prob-lems as well. Synthetic pyrethroids, carbaryl, andparaquat area few of the pesticides used to controlinsects and weeds in coca fields (135) (table 2-l).Some of these chemicals are known to be mobilein soils, thus increasing the potential for contamina-tion of groundwater resources. Pesticides ad-sorbed on soil particles may be carried to nearbyaquatic systems during heavy rains common inmany production regions. Similarly, nitrate fromfertilizers is highly mobile in the soil and that not


Table 2-3--Cocaine Processing Chemicals and Potential Environmental Effects

Chemicals Characteristics

Carbide compounds b

Kerosene ●

●

Sulphuric acid (H2SO4) ●

●

●

●

Toluene (C7H8) ●

●

Highly toxic to organic tissue, can raise water’s pH to toxic levels.

Oily liquid, pungent odor.Only moderately toxic to living organisms, but if present in surface water for along time can produce chronic adverse effects in amphibians and fish.Problems may arise from inhalation or ingestion.Reduces dissolved oxygen levels in the water.

Highly corrosive, toxic, oily liquid.Extremely harmful to organic tissue.Dissolves easily in water.Fish and plants may suffer from acute sulfuric acid poisoning.

Highly soluble in water and very toxic.Harmful to fish and amphibians.

SOURCE: M. Buenaventura, “Victims of the Drug Trade,” U.S. Library of Congress, Congressional Research Service, Cocaine Production,Eradication, and the Environment: Policy, Impact, and Options Hearing, Feb. 14, 1990 (Washington, DC: U.S. Government Printing Office, 1990),pp. 143-148.

taken up by vegetation may leach to groundwateror be transported to nearby surface waters muchthe same as pesticides. Agrichemical contaminat-ion of water resources can lead to adverse effectson human, plant, and animal health (136).

Evidence suggests that coca production canlead to serious erosion problems and reduce landproductivity. However, data comparing the envi-ronmental impacts of coca production with thoseof other crops are lacking. The environments inwhich coca is produced may be just as easilydamaged, or perhaps more so, from legitimateagricultural activities that are as likely to involvedeforestation, heavy tillage, and extensive agrichem-ical inputs (135). Coca is a perennial shrub andonce planted can provide some soil stabilizationduring its productive life (10 to 18 years), annualgrains on the other hand would result in tillageand harvest once a year. In this comparison, cocamay be more conserving of resources.

COCA PROCESSINGAlthough little concrete data exist illustrating

the damage caused by coca processing, it is clearthat the chemicals used to process coca leavesinto coca paste and, later, cocaine can haveconsiderable adverse impacts on the Andeanenvironment. Data gathering alone poses some

problem because some of the items used inprocessing also have legitimate uses (e.g., kero-sene, toilet paper, lime) (table 2-2). Estimatesmay be based on overall consumption under theassumption that the items are purchased for illegalpurposes although clearly for some items this maynot be the case. In any case, coca and cocaineprocessing methods employ a variety of toxicchemicals (e.g., toluene, sulfuric acid) that, ifreleased in sufficient quantities, could harm theimmediate surroundings and ecosystems far re-moved from the processing site (table 2-3).

In the first phase of coca processing, the driedleaves are soaked in a solution of sulfuric acid andwater. The resulting acid fluid, which nowcontains the alkaloids (one of which is cocaine)from the leaves, is decanted and mixed with a

chemical base (e.g., lime or sodium carbonate) toneutralize the acid, and finally with an organicsolvent (kerosene). The mixing is repeated, asneeded, until the solutions have yielded anexpected amount of coca paste. In the process,thousands of gallons of polluted water may bedumped onto the land or into nearby rivers andstreams (105). Thus, primary processing chemi-cals may contaminate soil and ground- andsurface water supplies (53). Such contaminationalso has taken place in the course of enforcement


Table 2-4--lnputs Required to Preparea Kilogram of Coca Paste

Material Quantity Price ($U.S.)

Coca leaves . . . . . . . . . . . 150-170 kg $100.00Kerosene . . . . . . . . . . . . . . 26.5 I 7.00Lime . . . . . . . . . . . . . . . . . . 8 kg 1.50Sodium carbonate . . . . . . 1 kg 4.00Sulfuric acid . . . . . . . . . . . 5 kg 10.00Water . . . . . . . . . . . . . . . . . 1,300 I —

Total cost . . . . . . . . . . . 122.50

SOURCE: R. Henkel, “The Cocaine problem,” Bolivia After HyperInflation: The Restructuring of the Bolivian Economy (Tempe, AZ:Arizona State University, Center for Latin American Studies, 1990).Author's note: Data provided by informants familiar with the cocaineindustry in the Chapare region, August 1989.

efforts, when coca processing chemicals some-times have been dumped on the ground and intonearby waterways.

Although there is no accurate account of the

amount of dumping, estimates have been madebased on the amount of chemicals needed toprocess a kilogram of coca paste (table 2-4).Further estimates have been made for the amount

of chemicals used throughout the processingchain to transform coca leaf into cocaine hydro-chloride (table 2-5). While these figures are notlikely to illustrate the degree of the problemadequately, they help to identify areas of concern.

CONCLUSIONAlthough little documentation of environmental

degradation caused by coca cultivation and proc-essing exists, it is clear that these activities havesignificant potential to damage the Andean envi-ronment. Deforestation and soil erosion are two ofthe most notable effects of coca cultivation,whereas chemical contamination of soils and

surface and groundwater seem likely results ofcoca-processing. Human and wildlife populationsin coca growing and processing areas may sufferthe consequences of these environmental imp-a c t s .

Concrete data on the degree of contaminationfrom processing activities is needed to determinethe level of risk to human and wildlife popula-tions. A comprehensive assessment of the envi-ronmental damage caused by coca cultivation andprocessing in the Andean countries could identifythe relative environmental risks from both activi-ties. Although recent efforts in Bolivia havesought to identify the impacts of processingactivities on terrestrial resources (largely soils),additional effort is needed to quantify overallecological impacts. National support for cocareduction might increase if coca cultivation andprocessing-related activities are shown to beadversely affecting the Andean resources andthus reducing alternative development options.

When compared with the destructive practicesof some other agricultural and nonagriculturalindustries in the Andes, however, the potentialquantity of land degradation and pollution attrib-utable cocaine industry becomes somewhat lessstriking. The destructive land-use practices ob-served among coca growers could occur in thecase of any other “booming” export crop, andlikely stem more so from the social and economicmarginalization of coca growers than the illegalstatus of their livelihood (108).

TRADITIONAL ROLES ANDUSES OF COCA LEAF

Ritual importance of coca leaf in traditional

religious and social activities, and traditional andmainstream medical and therapeutic applicationsare concerns of some sectors of the Andeanpopulation. Chewing unprocessed coca leaveshas long been a pervasive Andean cultural tradi-tion. Generally, a dry leaf of cultivated cocacontains less than one percent of the alkaloidcocaine. 3 Thus, although related, cocaine hydro-chloride and raw coca leaf are unique substanceswhose pharmacological and cultural uses differsignificantly.

3 Amazonian coca contains less than 0.5 percent of the alkaloid cocaine; chemical analysis showed the cocaine conkmt in “HuAnaco’ or“Bolivian” COCA the principle source of the world’s cocaine, to vary from 0.23 to 0.93 percent (1 12).


Table 2-5-Estimated Quantity of Chemicals Used to Process Coca Leaf IntoCocaine Hydrochloride in 1990

Low/High

Processing stage Inputs (in millions) Regionwide Bolivia Colombia Peru

Coca leaf to coca paste Kerosene (/) 567/776 108/31 7 --/45.8 —/41 3Sodium bicarbonate (kg) 1.2/1 .64 0.23/0.67 -/0.1 o —/0.87Ammonia (/) 5.56/7.62 1 ,06/3.12 - /0 .45 —/4.05

Coca paste to coca base Sulfuric acid (/) 9.94/13.6 1 .90/5 .57 - /0 .80 —/7.24Potassium permanganate (kg) 0.24/0.32 0.05/0/13 -/0.02 —/0.1 7

Coca base to cocaine HCI Ethyl ether (/) 15.8/21 .7 1.06/3.1 2 13.6/1 7.4 —/1 .16Acetone (l) 7.89/10,8 0.53/1 .56 6.78/8.69 —/0.01

SOURCE: U.S. Department of State, Bureau of International Narcotics Matters, Narcotics: The Environmental Consequences (Washington, DC:Department of State, 1991).

Many indigenous Andeans chew coca on adaily basis as a mild stimulant to allay fatigue andhunger, and coca leaves are used by indigenousand non-indigenous people for medicinal pur-poses. Coca leaves are also an important part ofofferings made in cultural and religious ritualsand are a critical element of traditional Andeanpatterns of production and exchange betweenhighlands and lowlands. Community and politicalsolidarity were long maintained through theseexchanges.

The desire for products of the montaña,particularly coca, is a longstanding, basic part ofAndean culture, and so the commercial tiessurvived the fall of empires (1 15).

I History of Coca Leaf in Andean SocietyThe earliest archaeological evidence of coca

use, found in southwestern Ecuador, dates fromabout 2100 BC (uncorrected radiocarbon dating)(112). Different coca leaf varieties and associatechewing paraphernalia from succeeding centurieshave been excavated in such widely spread areasas Northern Chile and Costa Rica (112). Prior toEuropean settlement, major areas in Peru, fromthe north coastal subtropical desert zone to thesouthern coca-producing areas of Sonqo, werecoca production zones for the Inca state (30, 107).In Inca times, coca was a sacred plant. The Incasymbolically associated coca with the color

green, itself evocative of the rainy season, spiritsof the dead, love amulets, and in general, withsupernatural forces (151). This symbolic contextof fertility, outside forces, and the divine realmcontinues to have significance in contemporaryritual coca use (116).

Although initially opposed by colonial clergy,coca chewing in the indigenous population spreadeven further during the first years of Spanishoccupation (125,126). Wherever coca productionbrought significant revenue, as in Bolivia andPeru, attempts at suppression gradually wereabandoned (22). Evidence suggests coca con-sumption was encouraged by mining interests tohelp miners withstand harsh working conditionsin high-altitude silver and tin mines (101, 116).The transformation of coca into a commodity

during the colonial period represented a clear

break with the indigenous pattern, and has paral-lels with the current crisis (116).

9 Ritual and Medicinal UsesTraditional coca chewing is not an isolated or

relic phenomenon (table 2-6). Coca is the focalelement in all traditional religious rituals sur-rounding interaction between human s and super-

natural forces, such as supplication and divina-tion. It is employed for religious purposes by theQuechua-speaking peoples of the Peruvian Andesand the Aymara of Bolivia, as well as the


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Traditional coca use by Andean miners has persistedsince colonial times. Here, a Bolivian miner chewscoca, indicated by the bulge in her cheek, whileworking,

Tukanoans of the Colombian Amazon, whoinhabit the Vaupés, Caquetá, and Paraná riverregions (1 16). Even those who do not chew cocaon a daily basis use it periodically in rituals. Forinstance, most native Andeans believe that certainactivities, such as sowing and harvesting, requireritual offerings of coca be made to those lendingtheir labor (122).

Apart from its religious significance, coca isalmost universally regarded by indigenous peo-ples as a food, and native explanations of thecoca’s value are grounded in physiological ratherthan cultural factors (97). The persistence of thecoca habit can be understood if it has been criticalfor the adaptation and survival of native Andeansunder high altitude conditions (29). When West-ern scientists began studying coca at the turn ofthe century, they focused on cocaine hydrochlo-ride. The applicability of unprocessed coca leaf asa modern pharmaceutical product was not pur-sued and, following the abolition of cocaine, cocaleaf was not available for scientific investigation

in the United States and Europe (112). Neverthe-less, the utility of traditional coca consumptionfor Andean populations cannot be ignored. Threephysiological benefits of coca use (for relief fromaltitude sickness, as a remedy to vitamin deficien-cies, and in conserving body heat), are specifi-cally appropriate to Andeans who must endure thestresses of high-altitude labor and a low-proteindiet (29,64,101). Evidence does not supportclaims that long-term traditional use is harmful(86). Rather, the multiple advantages of coca useindicate that it has a strong positive role inAndean health (box 6-A) (1 12,116).

A much higher percentage of the Bolivianpopulation regularly consumes the unprocessedcoca leaf for daily sustenance than is involved inthe illegal production, transport, marketing, proc-essing, and trafficking of the coca leaf and itsderivatives. Coca leaf is used by eighty-sevenpercent of the inhabitants in the small towns andrural communities of Bolivia for some 40 differ-ent health remedies (76). Between 11/2 and 2rnillion people chew coca in Bolivia alone (34,76).Similar, or greater figures also apply to Peru.4

1 Traditional Patterns of Coca LeafProduction and Distribution

In traditional Andean society, coca is critical tothe smooth functioning of daily interaction andritual affirmation of kin group exchanges. Mostcoca chewing takes place within the daily routineand is carried out according to a specific ritualpattern (3,125). A coca exchange will seal a socialcontract, whether it be an agreement to share labor(anyi), a marriage contract, or acceptance of apolitical office (3,22). Coca also is used as wagesor payment for services outside of anyi in place ofless stable Andean currencies (23,35).

Production of coca is intricately linked to thewider pattern of Andean agricultural subsistencethat depends on interregional trade networks that

4 There is comparatively less available information on the extent of contemporary use of coca leaf among Andean peoples of Colombiaand the Amazonian regions (1 16).


Ritual●

●

●

Box 2-A–Traditional Use of Coca Leaf

Religious and Medicinal ImportanceDivirwtjom As part of the oomplex of beliefs surrounding its power to see and communicate with thesupernatural, and its association with the realms of ancestral and spiritual forces, oocais used by divinersto M“ng divine knowledge to the oornnwnities they serve. Throughout the Andes today, coca cmtinues tobe a major rrwdium for divination, sought by indigens and non-indigens.Su@&WorE Cooais used asanofferingtopropitiate supernatural foroes, andtoensure agricultural andanimal fertility and personal well-being; it is also ritually offered during marriage negotiations, and to thedead at burial.Tradltiomdmedkina Coca use is integral to practices of traditional healers and herbalists throughout theArtdean and Amazonian regions. Though they praotioe nonconventional (non-Vktern) medicine,traditional heaJers and herbalists do not operate within the indigenous sphere alone.

Widespread Therapeutic Importance●

●

●

●

A)esfhetidanfkepfkz Indigens and non%digens apply oooatopicalfy asalocal anesthetic; oooaalso hasantiseptic quatities. The cocaine alkaloid has been shown to exert a powerful bactericidal aotion ongram-negative and coccus organisms.CumWe/’pmverXatlve reme@ Coca tea consurrwd by indigenous and non-indigenous Andean people,alleviates the symptoms of altitude sickness; combats the effects of hypoglycemia; and helps preventvarious lung aknents (an attribute of particular significance to the mining population). For example,chewing coca leaves is believed to limit inhalation of silioates that cause silicosis.MXary s@ement Coca leaves contain vitamin A and significant amounts of B1, B2, and C; they alsocontain calaum, iron, and phosphows, in either the leaves or the calcium oarbonate customdytaken withthe leaves. Leaf chewing helps alleviate nutritional deficiencies ofadiet consisting principdlyofpotatoes.Stimulant Coca gives energy for W* reduces physical discomfort and fatigue, alleviates hunger,sharpens mental prooesses, and, at high altitudes, helps the chewer keep warm.

SOURCE: Adapted from M.E. Reeve, ‘Wditionai Rolea and Uses of Coca L@ in Andearr Sooidy,” contractor report prepared for theOffice of Tochnoiogy /k%saasrno@ Jdy 1991.

move food and coca between distinct ecological involved inmost of the Peruvian market economyzones. Exploitation of distinct zones, called‘‘verticality, “ is a critical concept symbolicallyand in terms of subsistence strategies (107). Fromprehistoric times, coca has been the major cropgrown by Andean peoples in the lowest of theprinciple ecological zones, and trade of coca forhighland goods has bound communities and kingroups across the zones. Studies of modemAndean subsistence strategies demonstrate thatthis pattern has been preserved.

The exchange of coca and food is an ancientstrategy and coca traders were a nexus of theregional integration promoted by this lowland/highland exchange (35,38). Even prior to thecocaine boom, coca was the largest trade item

(125). Peoples participated in this market if for noother reason than for the coca needed to obtainagricultural labor. Additionally, outside of themarkets, an active trade in coca has traditionallybeen part of the household activity of temporarymigrants to the lowlands. Highland Quechua andAymara households each year traveled to thelowlands with their products (meat, livestock,cereals, and produce) and traded them for cocaand other tropical products. The informal marketsector traditionally has been of significance interms of promoting regional integration and instimulating small-scale production of an agricul-tural SU@US (72,99).


However, operation within this traditionalpattern is now a risky business largely because ofthe emergence of a black market for coca leaves,with which traditional users must compete (3). InPeru, for instance, coca transported in greaterquantity than is necessary for immediate personaluse is subject to confiscation. As the number oftraditional commercial traders has Dimininished,subsistence agriculturalists have increased theirtrips, perhaps to move smaller quantities of cocaleaves at a time or to take advantage of theopportunities for wage labor (105). Other tradi-tional users find they must make do with fewersupplies of coca leaf, and use substitutes, makingproper performance of ritual obligations moredifficult (1 16).

1 Cultural Ramifications ofIllegal Coca Trade

The persistence of coca chewing in AndeanBolivia and Peru is linked most closely to culturalcontinuity, and follows the linguistic patterns ofQuechua and Aymara (30). However, as eco-nomic pressures have provoked increased frag-mentation of land holdings, temporary or perma-nent migration to coastal and tropical forest areas,and delocalization of food production and distri-bution, individuals are cut off from the traditionalwork and life patterns of their natal community(ayllu) and face a “crisis of the traditionalideology” (116). While poverty and migrationlikely will continue to disrupt rural, indigenousAndean communities, the international cocaineindustry has been instrumental in corrupting thetraditional role of coca.

In the cocaine trade, wage laborers are paidmore often in pasta básica (coca paste) thanmoney or unprocessed leaf. Pasta básica is anintermediate, unrefined coca derivative that ishighly addictive. It contains numerous chemicalimpurities accumulated during cultivation andprocessing (e.g., pesticides, kerosene, sulphuricacid), and is presumed to have serious healtheffects (75). The practice of smoking pitillos,

More than just impure cocaine, pasta básica de cocaínais cheap, widely available, and highly addictive,attributes which underscore its potential to be asignificant public health problem in coca-producingcountries,

coca paste mixed into tobacco cigarettes, hasspread among urban and rural youth, and acrosseconomic boundaries (85,86,94). Another healthrisk of the cocaine trade, which has affected poor,teenage male peasants in particular, is caused bythe process of making pasta básica. Thousands ofunemployed youth seek work as pisadores, thosewho stomp the coca leaves in a chemical soup.Exposure to pasta básica processing chemicalsover the numerous hours required for paste-making causes damage to pisadores’ feet and maypose other, as yet unknown, health risks (75).

1 Cultural and Economic Implicationsfor Coca Reduction

A recent study in Bolivia found that amongtraditional agriculturalists and miners, 13 percentsaid their productivity would decrease withoutcoca, and 16 percent said they would fall ill (39).Laboratory testing of the effect of coca chewingon individuals indicate that there is no significantdifference in actual work efficiency, but that itmay slightly increase endurance in work perform-ance, acting much like caffeine and ampheta-mines to produce central body stimulation (72).Still, further restrictions on the availability ofcoca leaf for traditional use could, at the veryleast, increase the difficulty of traditional Andean


cultures to fulfill ritual religious and socialactivities. Furthermore, 40 percent of the Bolivi-ans studied believed that “people would rebel insome way or another” (39).

Indeed, coca leaf has become an importantfocal symbol in the indigenous struggle forself-determination, a significant political move-ment already active in Bolivia. The ongoing effortfor cultural equity by indigenous Bolivians oftenincludes support for or approval of traditional useof coca leaf; concurrently, the Bolivian peasantryhave used what political power and organizationthey have as a means of fighting coca eradicationefforts and bans on coca cultivation (76).

In addition to cultural factors, economic andpolitical factors need to be carefully considered inevaluation of any action which would alter thecurrent situation. Unless illegal demand is re-moved, regulation of legal coca cultivation andtrade likely will be too great a challenge for theAndean countries. Restrictions on all coca-relatedactivity then will likely continue, to the detrimentof traditional users (116).

SOCIAL, ECONOMIC, AND POLITICALASPECTS OF COCA CULTIVATION

Bolivia and Peru share the distinction of beingthe world’s leading producers of coca leaf, acondition spurred in both countries by long-termsocial inequality, and political and economicunrest. Over time, the appeal of coca leaf cultiva-tion was heightened by national agriculturalpolicies that promoted agricultural production foroften unstable international markets while dis-couraging production for domestic markets. Smallfarmers in Bolivia and Peru, who grow the bulk ofnationally consumed food products, were particu-larly hurt by agricultural and rural developmentpolicies.

In contrast, Colombia’s involvement in thecocaine industry mostly has been confined tococaine processing and international trafficking.Numerous aspects of Colombia’s history contrib-

uted to creating an enormous advantage forenterprising Colombian criminals in these activi-ties, and Colombia’s narcotics traffickers remainthe industry’s chief beneficiaries.

How all these problems are linked might bestbe understood by briefly examining some of thesocial, political, and economic developments inBolivia, Peru, and Colombia that have motivatedinvolvement in the cocaine industry most di-rectly. For Bolivia and Peru these developmentswill be discussed mainly in the context ofsettlement in the Chapare and the Alto Huallagaregions.

E BoliviaThe development of coca activity is very much

within the framework of the political and eco-nomic history of Bolivia (5). Stagnation ofCochabamba’s upland valley agricultural econ-omy is a development problem and periodicsource of crisis that dates from Bolivia’s colonialperiod.

Within the colonial economy, agricultural areassupplied mining and administrative centers withfood and fiber (109). Then, as now, smallholdingfarmers frequently undercut large estates, becausethey did not attach a value to their own labor, andcould sell their produce at prices the large estatescould not match profitably. In fact, large estatescould only count on making money in droughtyears, when smallholders were obliged to con-sume most of what they grew. Because theirlandholdings were small and located in the leastfavorable areas for agriculture, many smallhold-ers could not support themselves from farming,despite the fact that they dominated the marketsfor agricultural products in most years. As aresult, smallholding farmers became heavily de-pendent on off-farm sources of income early inBolivian history (91).

This social context effectively discouragedinvestment in agriculture and contributed toworsening imbalance between the agricultural


and mining sectors of the economy. 5 For largelandowners, their estates were essentially collat-eral for investment in other economic activities.For smallholders, revenues not immediately con-sumed were also invested in off-farm activities.Economic opportunities were not plentiful, how-ever, and worried government officials constantlysought ways to bring new life to the agriculturaleconomy through development schemes.

The imbalance between the agricultural andmining sectors was exacerbated by several eventsduring the 20th century. With completion of therailroad linking Cochabamba with ports on thePacific coast in 1917, centers of craft productioncould no longer compete with manufacturedimports, and many had to seek employment in themines. Large estates contracted labor on behalf ofmines, frequently obliging part of their residentpeasant population to work there. The relation-ship with the mines was strongly influenced byinternational ore prices. During periods of highore prices, the agricultural areas of central Boliviaexported large numbers of people to the miningcenters, and then reabsorbed many of them whenore prices declined (48,73).

NATIONAL AGRICULTURAL POLICY AFTER 1952

The problems faced by agricultural areas deep-ened in 1953 when the Movimiento NacionalistaRevolucionario government enacted agrarian re-forms that substantially redistributed land in theupland areas and released peasants from thepolitical domination of large estates. The reformsdid not address productivity of peasant labor; infact, although more rural people had land, theconditions for earning a living on that land wereas unfavorable as before, owing to the absence ofgovernment policies to assist smallholders.

Conversely, land concentration reoccurred as aconsequence of economic growth in the new

export agricultural sector (140). Larger landholders in the eastern lowland areas of Bolivia,such as the Santa Cruz department, were encour-aged and financed to expand and modernize acommercial and largely export agriculture indus-try. Bolivia was the world’s largest recipient ofU.S. foreign assistance under the Point Fourprogram during the 1950s (77). Economic devel-opment policy focused on expanding the exportenclave and landowners in lowland areas wereprovided with large amounts of foreign assistancefor transforming their estates into modern comm-ercial agricultural enterprises. Much of theeconomic growth experienced in the lowlandsfollowing the agrarian reform was based on theavailability of migrant labor from upland areas(109).

The impact of the growing commercial agricul-tural export sector on rural smallholders in areassuch as the Cochabamba department was torecreate the economic imbalance that had charac-terized their relationship with the mining indus-try. Agrarian reform and the growth of thecommercial agricultural export sector did little toimprove livelihoods for small farmers and re-sulted in large numbers of people migrating toseek employment in cities. This movement con-tinues to swell Bolivia’s urban population (87,1 11).

CAUSES OF EXPANDING COCAPRODUCTION IN BOLIVIA

By the mid-1970s, but before the rapid expan-sion of coca production, at least 90 percent ofrural families in areas of central and southernBolivia earned at least half of their income fromoff-farm sources (120). Peasant families, fromtheir bases in rural upland areas, maintainedcontacts in multiple migratory destinations, andrapidly changed their migration patterns in re-sponse to changing opportunities and risks (87,109).

s This discussion refers generically to the mining economy or the nu”ning sector. From the beginning of the colonial period through most

of the 19th century the mining industry revolved around silver, but beginning in the last quarter of the 19th century, tin grew in importanceand became Bolivia’s major mineral expofl. Tin dominated the mining industry until 1985, with the crash in international tin prices and the

bankruptcy of the London Metal Exchange (1 10).


In 1974, international cotton prices collapsed,and cotton producers, who had received substan-tial national and international assistance in pre-ceding years, found themselves overcommitted toa failing venture. Some continued to be recipientsof national support for alternate crops, and someapparently became involved in coca leaf produc-tion (20). International financial connections,physical infrastructure, and access to national andinternational agricultural development assistancefacilitated involvement in narcotics by somemembers of the agricultural elite at this time (76).Following investment by members of the nationalentrepreneurial classes, coca leaf production in-creased exponentially, with most of the growthtaking place in the Chapare area of the Coch-abamba department (109).

When a series of natural and economic disas-ters dramatically worsened the conditions of rurallife during the 1980s, and coca-leaf productionrose in response to increasing international de-mand for cocaine, the nearby Chapare area wasincorporated into the migratory strategies ofmany rural families (table 2-7). Three factorsbrought about a dramatic deterioration in theliving conditions of rural families during the1980s:

●

●

A severe drought began in 1983 and contin-ued through the 1980s in much of central andsouthern Bolivia, pushing thousands of small-holders “over the edge” in terms of theirability to earn a living through agriculture.Thousands of families left their homespermanently, and thousands more have ei-ther begun to migrate seasonally or have hadto increase the amount of time they mustspend away from home to provide for familyneeds. Impoverished rural people in thesemiarid upland valleys of the Cochabambadepartment migrated to the nearby Chapareregion and became involved in coca grow-ing.International tin prices collapsed in 1985when the London Metal Exchange stopped

Table 2-7—Reasons for MigrationCited by Chapare Farmers

Reason cited Number of Percentrespondents of total

Lack of land . . . . . . . . . . . 74 42%Seeking employment . . . . 39 22Increase income . . . . . . . . 33 19Traveled with family. . . . . 17 10Other reasons . . . . . . . . . 13 7

Total . . . . . . . . . . . . . . . 176 100

SOURCE: M. Painter and E. Badoya, Socioeconomic Issues in Agricul-tural Settlement andf Production in Bolivia’s Chapare Region, WorkingPaper No. 70 (Binghamton, NY: Institute for Development Anthropol-ogy, 1991 b).

●

trading. Some 27,000 mine workers losttheir jobs between August 1985 and August1986. The Banco Central de Bolivia esti-mated the unemployment rate to be 20percent by the end of 1985, largely becauseof the layoff of mine workers. According tothe Central Obrera Boliviana, the nationaltrade union movement, the figure approached30 percent by the end of 1986 (45). Theimpact of the mining collapse on familiesnot directly employed by the mining indus-try but dependent on it has not been meas-ured. Many families migrated to urban areas,particularly Cochabamba and La Paz. FromCochabamba, many, unable to find work inthe city, went to the Chapare.Finally, this was a time of general financialcollapse. Since the 1970s, different gover-nment administrations had relied on externalloans and expanding export production, tofinance domestic budget deficits and unpro-ductive government spending (134,149). Ul-timately, Bolivia was unable to make pay-ments on its substantial foreign debt. Inaddition, in 1983, the government unlinkedthe exchange rate of the Bolivian peso fromthe U.S. dollar. The effects of this dezdolar-ización on the already weakened Bolivianeconomy were disastrous; the annual infla-tion rate exceeded 14,000 percent at its peakin 1984. Since only those with access to U.S.


dollars enjoyed any financial protection,many people turned to producing or process-ing coca leaf as a way to earn hard currency(109).

Official estimates of coca leaf production showa gradual increase from 1963, when productionwas approximately 4,800 metric tons, and 1975,when it reached 11,800 metric tons. By 1988,coca leaf production was officially estimated at147,608.3 metric tons (51).

CURRENT MACROECONOMIC TRENDSBolivia has a primary export-oriented economy

that currently is following a fairly coherent set ofeconomic rules (5). The severe political andeconomic instability experienced by Bolivia from1978 to 1985 led to rethikn ing of the overalleconomic strategy (44). A drastic stabilizationprogram, implemented by the newly inauguratedPaz Estensoro administration in August of 1985,reduced inflation to 60 percent, limited publicspending, increased tax revenues, and brought thefiscal deficit under control (134,149).

Gross domestic product (GDP) growth re-mained slow throughout the 1980s vis-a-vispopulation growth, with negative GDP ratesoccurring between 1980 and 1986, and very slowgrowth to date. Inflation averaged about 18percent from 1987 to 1990 (144,149). Further-more, increasing absolute poverty and sluggishprivate investment growth continue to plague theeconomy, although the Bolivian Government hastaken some recent policy steps to promote foreigninvestment (5).

Bolivia has been negotiating its debt since1986, and had managed to reduce its level ofoutstanding debt to about 79 percent of GDP (or$3,504 million) by the end of 1990 (149). It hasmanaged to retire most of its commercial debt,and newly contracted debt is being held bybilateral and multilateral official creditors underconcessionary terms. Thus, the maturity profile ofBolivia’s external debt has improved signifi-cantly (149). Despite these considerable improvem-

ents, Bolivia’s debt burden remains high rela-tive to GDP and exports, and the country hasalmost no prospects of becoming credit worthyfor commercial bank lending for some time tocome (5).

CURRENT SOCIOPOLITICAL CLIMATEDespite severe economic problems, Bolivians

have enjoyed uninterrupted, democratic, civiliangovernment rule for the last 10 years. Amongststronger political candidates, a trend towardcoalition building and negotiations has emergedin response to the repeated need for run-offs inpast elections. Thus, Bolivia is governed mostrecently, by a coalition government comprisingthe centrist and conservative parties (Movimientode la Izquierda Revolucionaria and Acción De-mocratica Nacional, respectively) through anarrangement called the ‘‘Acuerdo Patriotic”(74).

Nevertheless, Bolivia holds the world recordfor most government turnovers via coup d’etat(76). The recent transition to democraticallyelected civilian rule was slow, and remainstenuous in spite of the smooth succession ofelections in the 1980s. Prolonged economicinstability has weakened government institutionslike the judiciary and law enforcement agencies,opening the way for corruption by narcoticsinterests. Moreover, there have been disturbingsigns of decay. At least half of the eligibleelectorate is turning away from participation atthe ballot box, perhaps due to disillusionmentwith the regressive impact of public policies.Some 80 percent of the population is below thepoverty line (74). And, although Bolivia has hada relatively strong human rights record since1982, there have been moments when the systemseems to revert back to military repression (143).

Even under democratic rule, the military con-tinues to wield influence and protect its relativeprivileges. One legacy of the most recent era ofmilitary rule, lasting from 1964 to 1977, is theoften drug-related corruption and fraud foundthroughout the armed forces. Repressive state


behavior, coupled with the military’s record ofpolitical intervention, suggests the potential forsubverting democracy via the ‘militarization’ ofU.S. counternarcotics policy in the Andes (74).

Some argue that the Bolivian political systemlacks the institutional ability to develop effectivelinks between public and private sectors, and thatparty activists and government officials divertscarce resources and benefits to themselves,friends, and associates (96). In addition, socialclass and ethnic discrimination place seriousconstraints on possibilities for broad-based socio-economic development (74,87).

Close to 50 percent of Bolivia’s populationcontinues to reside in rural areas, and to derivesignificant income and food from agriculture(87,1 13). The peasant sector is responsible for 70percent of Bolivia’s national agricultural produc-tion, despite adverse and discriminatory publicpolicies for marketing, credit, investment, trans-port, export, and rural education (87,103). Inexchange for providing cheap food, tax revenues,and a significant part of the labor for lowlandcommercial agriculture, construction, trade, andcommerce, peasant families receive poor hous-ing, negligible health services, meager educa-tional opportunities, rustic transport infrastruc-ture, and almost no effective state assistance forimproving their farm operations. Indigenous leaderVictor Hugo Cardenas called this structural ine-quality “internal colonialism” (74).

The social and political inequities in Boliviacreate inherent difficulties for state-led ruraldevelopment. For example, elite groups whoseinfluence often extends to banks, public officials,political parties, foreign aid support, and themedia, may monopolize public and private re-sources earmarked for agricultural production(60). Thus, in the inter-class competition betweenrural large- and smallholders for resources, therural elite tend to have the advantage irrespectiveof the apparent orientation of the national politi-cal regime (74).

An elite minority has also benefited disproportion-ately from public investments in rural infrastruc-

ture, agroindustry, technological improvements,and farm price subsidies (150). Figures for the1970s show that only 5 percent of the subsistencepeasant population had access to formal agricul-tural credit (63). A 1990 Ministry of Agricultureand Peasant Affairs report implied the peasantryhad access to only 4 percent of the formalinstitutional credit available for agricultural pro-duction (103).

BOLIVIA’S RURAL SINDICATOSThe rural peasant labor unions, or sindicatos

have waged the only serious challenge against theprevailing policy environment and entrenchednational and regional power structure. The sindi-catos were organized after the takeover andtransfer of lands following the 1952 agrarianreforms (1,49). Subsequently, they have func-tioned as community development organizationswith local, sub-regional (centrales), regional(federaciones), and national levels with officesand elected leaders (74).

The peasant sindicato movement has obligedthe government and international interests to takecoca-leaf growers concerns into account. Becausethey have been represented through the unionmovement, coca growers in Bolivia have repeat-edly rejected efforts to organize insurgences inthe Chapare. This situation contrasts sharply withthat of Peru’s Alto Huallaga coca-growing region,where violence is much more prevalent (74,109).

The implication of the contrast between Peruand Bolivia in this regard is, whether motivatedby neo-liberal economic ideology or concernsabout the political orientation of the sindicatomovement, efforts to repress the unions or findways around their participation in developmentplanning and implementation are badly mis-placed. They have been shown to be attuned to theneeds of coca producers and, indeed, they haveproposed alternative development programs (74).

It is misleading, however, to assume thatsindicatos are a completely sufficient substitutefor true political empowerment. Without locallyelected, controlled, and accountable central gov-


Bolivian sindicatos help organize rural communitiesand voice peasants’ political and economic concernsat local, regional, and national levels. This bannerfrom a Cochabarnba peasant federation depicts afarmer chained to a coca bush.

ernment institutions, the Bolivian peasant popula-tion will continue to be dependent on grassrootand nongoverment organizations for their politi-cal voice, and will remain locked out of thecentral government power structure (87). Oppor-tunities exist for including grassroots social andpolitical organizations in development projects(109). Such involvement likely would strengthenthe political and institutional influence of ruraldwellers and would further their efforts to securethe political and social justice, equality, andstability they need to overcome the historic,economic roots of involvement in the narcoticsindustry.

I PeruRecent migration to the Alto Huallaga is only

a chapter in a long history of economicallyinduced migrations by Peru’s rural peasants.Colonization of the Peruvian Amazon basinbegan in the 19th century, spumed by increasingrubber exploitation (105). Air transportation tojungle cities, and inland road construction weremajor contributing factors in the 20th century.Meanwhile, expansion of the hacienda systemconcentrated land ownership, consigning peas-ants to more marginal lands (9). The upper jungleareas of the Peruvian Andes, such as the AltoHuallaga, were almost exclusively the property ofdescendants of Spanish settlers, and not until latein the 20th century would social and demographictransformations push the peasant population intothese areas (105).

MIGRATION AND ALTO HUALLAGA SETTLEMENTThe economic need to migrate was caused

primarily by rapid population growth beginningin the 1940s. When a road through Huánuco,Tingo María, and Pucallpa was opened the samedecade, migration increased from the centralhighlands to the Huallaga area (109). Somecommercial estates, including large tea and coffeeplantations, were established in the Alto Hual-laga, and the central highland departments ofHuánuco and Junín became regular suppliers ofcheap, seasonal wage labor. Labor-force sizedepended on foreign exchange earnings: wheninternational prices rose, plantation managerscontracted a large number of wage earners; whenprices fell, they did not (24). In spite of these earlydevelopments, however, most rainforest areas onthe Andes’ eastern slopes would remain onlysparsely populated until the 1970s (105).

The combined effects of high populationgrowth rates throughout Peru, and long-standingpolitical and economic marginalization of thehighlands, also led to surges in urban migration.In the 1960s and 1970s, the highland populationincreased by 20 percent (from 5 to 6 million) and


the coastal population increased by 120 percent(from 3,859,000 to 8,513,000). Peruvian peasantfarmers, often dependent on outside income forsubsistence needs, migrated to the coast tosupplement income between growing and harvestseasons. It was in response to the unprecedentedburden on coastal city resources that the PeruvianGovernment introduced policies to redirect mi-gration to the less populous Eastern Andean range(105).

The military regime that took power in 1968(1968-75) restructured property ownership inmost economic and social sectors (100). It alsolaunched radical agrarian reforms, includingplanned settlement campaigns (25,37,98) andagricultural production cooperatives, some in-volving the country’s most productive land.Nevertheless, reform did not increase most of therural population’s standard of living substantiallyand, in not incorporating producers outside theboundaries of project areas, it excluded manymigrants (25). In the end, even more landless ruralresidents migrated to urban areas, and by 1972,45percent of Lima’s population consisted of mi-grants (105).

A 1973 study of agriculturalists settled in AltoHuallaga from upland areas in the Tingo Maria,Tocache, and Campanilla regions found that 42percent had migrated because of acute shortagesof land at home, whereas another 26 percent hadmoved because of the lack of work. Thus, 68percent of migrants to the region relocatedbecause they could not earn a living at home (40).However, expectations that frontier colonizationcould solve urban economic and social problemswere dashed by the lack of long-term funding,management and guidance, and rampant resourcedestruction (105). Funds were spent primarily onnonagricultural development, such as urbaniza-tion and service sector activity. Most migrantswere unfamiliar with the local ecology, appropri-ate crops, and farming methods, and were left to

The shortage of transport infrastructure in most ruralAndean and tropical forest regions mitigates in favorof low-tech, low-weight, high-value crops like coca,Local transport of goods still is largely by porters orbeasts of burden.

market expansion, or irrigation and farmingtechniques improvement.

Settlers were economically debilitated by un-derdevelopment and underproduction. The AltoHuallaga continued to be characterized by lowproductivity of food crops and minimal use ofmodern inputs such as fertilizers (109). Thisplaced farmers at a disadvantage relative to thosefrom other tropical valleys. New roads wereneeded, not to export a bounty of new agriculturalproducts to the rest of the country, but to importfood (105).

The profitability of legal crops declined through-out Peru in the 1970s. Agricultural trade wasincreasingly unfavorable, in part due to interna-

depend on advice of equally inexperienced au- tional lending policies (e.g., removal of subsidiesthorities (105). Finally, little money went into allowing markets to reflect real demand andaddressing key agricultural problems such as supply)(7). Most significantly, production input


costs for agricultural crops severely outweighedtheir market value. Government-instituted coop-eratives in the Alto Huallaga, such as the tea andcoffee plantations, began disbanding as partici-pants took up coca cultivation. The resulting laborshortage for legitimate agriculture further debili-tated the cooperatives and their regions, assuringtheir demise (109).

The democratic era succeeding the militaryregimes was based on a new constitution draftedby a constituent assembly popularly elected in1978. Illiterates (about 40 percent of the popula-tion in 1960) were granted voting rights for thefirst time in 1980. Unfortunately, the 1980s werealso marked by the inability of Peru’s leaders tocope with the international debt crisis, resulting inthe nation’s economy spiraling downward.

Under the democratic administration, frontiersettlement and tropical forest agricultural produc-tion continued to receive the most attention, to theneglect of resource distribution and agrariandevelopment in other regions of the country.6 Aconservative alliance in the Peruvian Congressblocked all reformist measures for the ruralhighlands proposed in the legislative chamber(109). Longstanding economic policies that didnot favor small farmers (e.g., subsidized foodimports, maintaining low urban food prices)continued, while the economic crises of 1981 and1983 increased disparities between agriculturalprices and input costs (127). Agricultural policiesin the last decade were oriented toward supplyingurban areas and have led to deteriorating terms oftrade (6). For example, overall production costsincreased 2.7 times more than agricultural pricesin the Alto Huallaga (10). It was also a period ofincreasing indebtedness.

Loans from the World Bank, InterAmericanDevelopment Bank, and the U.S. Agency forInternational Development (AID) financed roads

and provided credit for tenant farmers. However,while the government sought a road system thatwould open the maximum amount of land tosettlement (27,109), road construction was notaccompanied by economic measures or agricul-tural policies favoring small producers (142).Economic constraints continue to pose funda-mental obstacles to Peru’s agricultural develop-ment. Long-term economic investments in Peruremain extremely rare, and most come in the formof high interest loans. Without adequate andaccessible markets, legal agricultural productionis poorly rewarded, particularly in a coca-industryinflated economy. Local banks impose highinterest rates that can easily place farmers in debt,forcing them to sell their land and join the migrantlabor and squatter populations. Inability to investin production improvement (e.g., agrichemicals,irrigation) feeds the cycle of economic decline formost farmers of legal crops, further aggravatingtheir debtor status (105).

Economic Developments of the Late-1980s

Peru’s GDP per capita declined throughout the1980s, with an increasing number of Peruviansliving in absolute poverty. An unconventionaleconomic strategy was undertaken by the Peru-vian Government, between 1985 and 1990, toredistribute income to poorer segments of thepopulation. The Garcia Administration attemptedto implement recovery by expanding aggregatedemand, instituting price controls, increasing thebudget deficit, and deferring external debt serv-ice. Domestic supply was expected to expand,while consumption would be fueled by increasingreal wages, direct subsidy programs, temporaryemployment-generating public works in marginalareas, and transfer of disposable income from thepublic to the private sector. The latter wasexpected to be accomplished through tax reduc-

6 Resettlement of poor peasants in remote tropical areas of Third World countries often seems to be politically preferable to redistributionof existing agricultural lands. This is because such colonization programs do not threaten politically powerful landowners or other rural elites.It gives the false impression of a “positive sum game. ” To the exteng nevertheless, that the cleared tropical land ultimately cannot sustain thecolonist population this positive “sum” is a politicaI illusion (93).


tion and freezing public sector prices and tariffs,and deferring external debt payments. Use ofslack capacity would be guaranteed by closing thedomestic market to imported competing goods(88).

The experiment resulted in the most severeeconomic crisis ever experienced in Peruvianhistory (5). Peru began to accumulate debt arrearswith multilateral financial institutions, and in1989 its total external debt was about 104 percentof GDP (or $19,156 million) (88,90). The accruedinterest obligations on public foreign debt repre-sented about 8 percent of GDP, which was morethan tax revenues in 1989 (5.2 percent) (90).

Coca production expanded considerably amidworsening economic conditions in the 1980s. Infact, the coca economy softened the most pro-found economic and employment crisis in thenation’s republican history (109). Coca dollarsprovide hard currency to finance desperatelyneeded imports and as foreign exchange reserveshave been depleted major banks have adopted atolerant attitude toward coca dollars. The cocaeconomy continues to increase in direct propor-tion to the decline of the legal economy (90).

Current Macroeconomic TrendsThe Fujimori Administration (1990-) has

used various strategies to stabilize the Peruvianeconomy following the years of hyperinflation,real income declines, and budget deficit in-creases. New legislation has fostered privateinvestment in different economic sectors and thebasic economic agenda of the Fujimori Adminis-tration has been a return to orthodox economicmanagement and full participation in the worldfinancial community. A‘ ‘shock treatment’ stabi-lization program and several other policy meas-ures were launched to fulfill these goals, theimmediate objective being to stop inflation (5).Although hyperinflation indeed was halted, asecond result has been further, severe deteriora-tion of Peruvian standard of living (83). Theeconomic crisis has also taken a heavy social tollon Peru, sharpening perceptions of ethnic and

regional discrimination in an already dividednation, and weakening institutional performance.

When President Fujimori took office, at leasttwo-thirds of the foreign debt was in arrears (5).The stabilization programs and the various re-forms implemented to reorder the country’sfinancia1 situation allowed Peru to start servicingits debt to the multilateral organizations (83).During most of 1990-91, these payments were inthe range of U.S. $40 to $60 million a month(loo).

The Fujimori Administration slashed govern-ment expenditures to gain resources for debtpayments. For example, large government out-lays for subsidies were halted, freeing prices onfoods, medicine, and other staples. In early 1991,Fujimori’s finance minister launched a widerarray of free-market measures. These includedprivatization plans for about 30 state companies;the application of free-market rules to the re-formed sector of Peruvian agriculture; the adop-tion of a unified, floating exchange rate; thereduction of import tariffs to an average of 17percent; and the removal of most nontariff tradebarriers (100).

Fujimori’s stabilization program exacted aheavy toll on the majority of Peru’s alreadystruggling citizens, and no major social emer-gency programs to ameliorate the harmful eco-nomic and social consequences were applied.Social costs of “Fujishock,” as the program wascalled, included increases in the already signifi-cant numbers of citizens suffering from criticalpoverty (specified as a per capita income below$15.50/men@ and chronic malnourishment (36).

In light of Peru’s historically violent andunstable political situation, private investment inPeru has grown slowly (71,128). A Special SenateCommittee report estimated that losses of freedcapital and physical infrastructure related toviolence during the period 1980-88 totaled aboutU.S. $45 billion (67). Although investment hasnot stopped altogether, its focus has changed inways that are not conducive to strong economicdevelopment. Current investment projects con-

centrate on: 1) risk-averse activities, such as realestate investments, which have partly replacedinvestments in transportation equipment and in-dustrial machinery, and 2) new investments inmicro-level enterprises, or in small-scale informalsector operations, where overhead costs are low(68).

In practice, Fujimori’s economic policies arestill undermined by continuing poverty, politicalconcerns, and an uncertain business environment.Even the most adventurous entrepreneurs havehad good reason not to undertake productiveinvestment in Peru. Economic balance andgrowth simply may not be achievable in themedium term if the country’s political situationdoes not stabilize.

2—Factors Influencing Coca Reduction Initiatives

CURRENT POLITICAL CLIMATEMuch of the Peruvian populace has been

skeptical as to the importance of counternarcoticsefforts relative to other domestic crises. In givingprecedence to domestic concerns other than thecoca industry, the Peruvian Government long hasabided with the public sentiment. In opinionpolls, the economy consistently is cited as thenumber one problem, and subversion historicallyhas been the second; drugs were cited as aprincipal problem by no more than 5 percent of a1990 Lima sample. Most Peruvians do notconsider the drug industry politically advanta-geous for Peru; however, while the majoritysupport the principle of fighting drugs, fewbelieve that Peru should assume major costs in theeffort. Those groups that would be affected mostby counternarcotics initiatives hold similar be-liefs (100).

Peru’s peasant coca producers naturally areleery of counternarcotics efforts. Many peasantleaders have criticized the Fujimori governmentfor failing to consult them on past bilateralcounternarcotics agreements, and for bypassingPeru’s regional governments, institutions in whichproducer organizations would have official par-ticipation (100). The coca producers contend thatthey have resorted to coca cultivation only

Peru’s security forces, like its civilians, are moreconcerned with chronic political and economic woesthan with the drug war. Often poorly paid, securitypersonnel in Peru, Bolivia, and Colombia also areparticularly vulnerable to corruption by narcoticsdollars.

because no market exists for other crops, andrepeatedly stress that their existence is due todemand for cocaine by consuming countries.

Guerrilla movements have had an especiallystrong presence in Peru’s coca-producing areas,primarily the Alto Huallaga Valley. SenderoLuminoso historically has been active in thesouthern sector of the Valley, while the Movim-iento Revolucionario Túpac Arnuru (Tupac AmaruRevolutionary Movement, MRTA) has been vig-orous to the north. Sendero is said to havereceived an estimated $20 to $100 million annu-ally in fees (cupos) levied on peasant cocaproducers and drug traffickers (69). Both guerrillaorganizations remained powerful in these areasduring 1991, thus making on-the-ground counter-narcotics initiatives extremely hazardous (e.g., inrecent years, 10 workers on the AID/Alto Hual-laga Development Project have been killed)(100). No coca was eradicated in Peru in 1990 or1991, and U.S. and Peruvian efforts at alternativedevelopment were not initiated in 1991. Despitethe recent capture of numerous Sendero a n dMRTA leaders, the extensive war chest and

331-054 - 93 - 3


Box 2-B–The Fujimori Presidency and the April 1992 Coup

Peru’s political history is characterized by successions of constitutional and de facforegimes (alternating ruleabout every 5 to 12 years). Historians tell us, however, that the differences among past regimes are nominal; bothhave been dominated by oligarchical families whose primary concern was exclusion of competitors anddisadvantaged sectors from political and economic power. By his actions in April of 1992, Alberto Fujimori seemsto have futfilled a pattern prescribed by history. After more than a decade of democracy, which included hiselectionas president in 1990, Fujimori has instated a government of his own design.

The openness and competitiveness displayed sometimes in Peru’s political system were evident in the 1990election to the presidency of Fujimori, a political unknown until a mere 2 months before balloting. Despite winningthe presidency in good part through denouncement of the opposition’s proposed economic “shock treatme~”Fujimori immediately implemented what many analysts consider an equally draconian economic stabilizationprogram. Fujimori shifted toward a more radical program upon recognizing the need to restore good relations withthe international finandal community, whom his predecessor had alienated. To open negotiations with theInternational Monetary Fund (IMF) and the Wxld Bank Peru had to begin to repay its outstanding debt.

Fujimori’s economic reforms ended hyperinflation and renewed prospects for Peru’s economic recovery, butalso resulted in a severe recession. Given this trade-off, a key concern was the length of time Peruvians wouldgrant Fujimori to achieve economic revival. Critics believe he sought to ensure his government’s survival throughcourting the military, in particular the army, the service that traditionally launches coups in Peru. Upon hisinauguration, for example, Fujim” had named an active-duty army general as minister of the interior, and restoredarmy power over the national police. This military alliance was cemented when Fujimori took control of Peru, onApril 6,1992, by dissolving the Peruvian Congress and suspending the Constitution. His pledge to reinstate fulldemocracy after the constitutional reforms-to be arrived at some future date-was approved by popular vote.

Democratic leaders in this hemisphere, and elsewhere, decried the act as an aufoga’pe(self coup). Ensuingevents received extensive and negative coverage from the international media: arrests of opposition leaders andjournalists, resignations of key Cabinet members, censorship of radio and press reports, and placement of troopsthroughout Lima. The United States, Germany, Spain and, eventually Canada and Japan, suspended most aidto the Peruvian Government, and the Organization of American States (OAS) issued a stern statement ofdisapproval.

armaments believed to held by the Sendero widespread. Salaries in the Peruvian militaryLuminoso in particular, could continue to hamperdevelopment efforts in the Huallaga for years tocome.

For various reasons, Peru’s security forceshistorically have been unenthusiastic about coun-ternarcotics initiatives. Military officers arguethat such initiatives impede their more pressingcounterinsurgency demands. Many claim thatresentful coca-growers likely would side withinsurgents, as would the drug tmfllckers, thuscreating three enemies (100). Finally, in thecontext of dire fiscal conditions, tolerance of andparticipation in drug-related corruption have been

often are extremely low and, thus, drug money istempting. According to some estimates, the ma-jority of drug-trafficking flights depart hornofficial aiports. Not only have security forcesfailed to obstruct traffickers-in some cases theyactively have obstructed counternarcotics efforts.Military personnel have shot at helicopters onanti-drug missions, and some believe that govern-ment authorities were behind the assassination ofWalter Tocas, one of the few coca-growers’leaders to support the May 1991 Anti-NarcoticsAgreement (100).

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2—Factors Influencing Coca Reduction Initiatives 161

However, from the outset of his takeover, Fujimori argued the necessity. In misaddress to the Peruvian publicApril 5,1992, he claimed that thus far in his term as President, his efforts to revive the economy and to fight SenderuLurninoso and the drug trade had been repeatedly undermined by the courts and Peruvian Congress, and thatcorruption throughout the judiaal and political system was to blame. The poor performance of Fujimori’s Carnbio7990 party in the congressional elections had left him with Iittte party support in the Peruvian legislature. Thepresident was put at odds with the congressional representation from his primary opponents, the APRA and

FREDEMO parties, whom he blamed thereafter for policy deadlocks.

Although the future of democracy in Peru remains uncertain, the status of Fujimori’sgovernment has evolvedconsiderably. Initially, Fujimori would not set dates for presentation of political reforms to Peruvian voters, butincreasing international pressure prompted him to accelerate his schedule for the reinstitution of democracy.Instead of first holding a vote on public opinion of his rule by decree, he announced that a plebisate on creationof a constituent assembly would be held. The elected “Democratic Constituent Congress,” of which Fujimori’ssupporters now hold 43 of 80 seats, is tasked with reforming Peru’s now-defunct 1979 constitution.

Fujimori’s rapid restoration of some democratic processes has been attributed to concerns about theeconomic consequences of losing international approval. With much of the government’s economic assistanceinitially cut off, Peru’s ability to secure future ioans from the Wrld Bank, the IMF, or the Inter-AmericanDevelopment Bank was questionable. Not only would this loss of support jeopardize Peru’s present and futureprograms for debt payme~ but would delay indefinitely Peru’s economic revival.

At any rate, the capture of Sendero leader Abimael Guzman in September 1992, the election of theconstituent assembly in November 1992, and continued support from Peru’s populace seem to have earnedFujimori tolerance from the international community. Despite concern amongst human rights officials that theleadership of Fujimori’s security forces will become abusive in their zeal to root wt Sendero corroborators (e.g.,since April 1992, disappearances and paramilitary actitity have increased), the OAS has reestablished relationswith the Fujimori government, as have the United States and other foreign countries.SOURCES: Adapted from C.J. Doherty, “Lawmakers Support Decision to Halt Funding for Peru,” Congress/ona/ C)uarter/y, 50(15)961,1992; “Peru and its Neighbors,” The I%mon@ 323~60):44, 1992; “Getting &vay with It” The Economk?? 323(7755):44, 1992;Federation of American Scientists (FAS), 77M Serrdem File (Washington, D.C.: FAS Fund’s Project for Peru, 1992); G. Gorritl, “MouseTrap,” The New Republic, 206(18):14-15, 1992; L. Hockstader, “Peruvian President Takes Case to OAS,” The Washh?gtorr Poet May 18,1992, p. A12; C. McClintock “Opportunities and Constrainta to Source Reduction of Coca: the Peruvian Sodopofitical Conte~” contractorreport prepared for the Office of Ttinology Assessme~ Aprfl 1992; Reuters News Service, ‘Troop Surround Congress and Lima,” ZheNew York firms, April 7,1992, p. Al; Reuters Newa Servke, “Peruvian President Schedules New Vote,” The Washington Posfj July 29,1992, p. A24; L. Robinson, “No Holds Barred,” US. News and 146ddl?eporfj 113(12):49-50, 1992.

CONCLUSION with similar urgency to the cocaine industry’sIn 1992, Peru experienced tremendous changes

in its social and political situation (see box 2-B).In April 1992, President Alberto Fujimori, withsupport of the army and police, suspended thePeruvian Constitution and disbanded the Con-gress in a “psuedo-coup.” Additionally, onSeptember 12, 1992, Peruvian Police captured theSendero Luminoso’s founder and leader AbimaelGuzman. With Guzman’s imprisonment, Fujimorimay succeed in ending what was believed to be anunstoppable campaign for control of Peru. Whetheror not the new Fujimori government will respond

equally threatening advance, remains to be seen.

9 ColombiaCoca leaf production and consumption in

Colombia has not been widespread. Historically,coca use was confined to traditional leaf chewing,mostly by Inca-descended peasants of the south-ern region, where it was produced 1egaUy until1947 (12). Coca production was banned follow-ing lengthy public debate about coca’s allegedlong-term negative health effects and the role itplayed in promoting exploitation of Indians by


landlords. Coca production was not a public issueagain until the late 1970s, when it reappeared insignificant quantities, only after development ofa cocaine manufacturing industry based on cocaleaf imported from Peru and Bolivia (129).

Now, however, Colombian criminal organiza-tions are involved in virtually every aspect of thenarcotics trade, from drug plantations and labora-tories in Colombia and other South Americancountries, to smuggling operations and distribu-tion networks at wholesale and street levels in theUnited States, Canada, and Europe. The entirespectrum of drug exports (marijuana, cocaine,quaaludes, opium) brings nearly U.S. $2.5 to $3billion a year in profits to Colombia; drugs nowrank along with coffee ($2 to $2.5 billion) as thecountry’s principle foreign exchange earner (18).The Medellin and Cali drug trafficking organiza-tions (“cartels”) control the bulk of the Andeanregion’s cocaine traffic. They have used theirwealth since the mid-1970s to organize privatemilitias, purchase sophisticated weapons, andbribe, intimidate, and terrorize the Colombianjustice and political systems. Their money, fire-power, and influence have enabled them toseriously impede the evolution of the Colombiangovernment’s counternarcotics program in thelast decade.

GROWTH OF THE ILLEGAL DRUG INDUSTRYDeveloping appropriate counternarcotics pol-

icy in Colombia requires an understanding of whycocaine manufacturing, and the illegal drugindustry in general, has developed there. Whilenot a completely sufficient explanation, an impor-tant factor behind Colombia’s “internationaladvantage” in the illegal narcotics industry is thatstate presence traditionally has been weak. TheColombian Government at times has been unableto control significant areas of the country orenforce its laws, and has been vulnerable tomanipulation by interest groups (129).

Like those of its Andean neighbors, Colom-bia’s history is fraught with social and politicalinequality and instability. Agrarian reform failed

in the early 1970s, largely due to the undermininginfluence of powerful landed and agro-exportinterests. Urban reform failed because of theintense opposition of real estate, urban construc-tion, and financial interests. The upper ranks ofthe educational system remained essentiallyclosed and elitist despite repeated “reforms”during the 1960s and 1970s. As land, capital, andcredit became more concentrated, and the gapbetween the rich and poor grew larger, so did thegap between written laws and socially acceptablebehavior (17).

Outward signs of Colombia’s weakening statewere numerous, evidenced by the growing infor-mal economy, and widespread predatory eco-nomic behavior and violence. As its economygrew more complex and segmented, the Colom-bian state took up an increasing number offunctions that it performed less and less effec-tively. Many laws were disregarded, governmentbureaucracies became inefficient and increas-ingly unaccountable and unresponsive to thecitizenry, and private and public sector corruptiongrew. As the underground economy expanded,the legitimacy of the regime declined. Drug-related violence and corruption have further

ed the integrity of already weak institu-undermintions such as the court system, the police, thecustoms service, and the military (129).

CURRENT ECONOMIC CLIMATEThe Colombian Government has maintained a

resilient and stable economy despite numerousdifficulties. Urbanization and income diversifica-tion have increased. Colombia did not borrowheavily during the 1970s and, thus, avoided thedebt crises that plagued the rest of Latin America(129). With annual GDP growth averaging 3.3percent from 1981 to 1991, Colombia was alsothe only country in the region that did not have ayear of declining GDP during the 1980s (148).Inflation climbed to 28 percent in 1988 (up from20 percent in 1984), but dropped to 26 percent in1990 (47).


Despite positive growth overall, social indica-tors point to a continuing problem of poverty andlack of opportunity for a large part of thepopulation (47). Colombia’s economy is charac-terized by a high concentration of income andwealth, associated primarily with political privi-lege and power, and foreign sector booms.Neither innovative entrepreneurship nor accumu-lation of savings are associated with most privatewealth, and property rights are weak (131).

THE COLOMBIAN COCAINE ECONOMYDrug money’s presence and corrupting influ-

ence reverberates through the Colombian econ-omy. To estimate the economic impact of thecocaine industry on Colombia and the possibili-ties for substitution, it is necessary first todetermine the order of magnitude of the industry.This requires estimation of domestic consump-tion and prices, prices of the imported coca pasteand chemical products needed to refine cocaine,wholesale export prices, the amounts of theproduct which are lost to interdiction, and otherrelated factors. The estimation of the ColombianGDP generated by the industry is even morecomplex because it requires information aboutvalue added, and about the income generatedoutside the country by the Colombian illegalenterprises. While the data to make these esti-mates can be found, a consensus exists amongstAndean and U.S. experts that they are oftenextremely weak and inaccurate (129).

Cocaine Economy Data

Although estimates of the size of the cocaineeconomy vary widely, some trends are apparent.The U.S. wholesale price of cocaine is declining,and the amount produced is increasing. This trendpersisted in spite of interdiction and eradicationefforts undertaken during the 1980s. In the early

1980s the price of cocaine was high relative torisks involved in the business, so that the incen-tives to increase output were strong even as pricesdeclined. In this sense, the cocaine output expan-sion of the 1980s was demand driven (129).

The estimated value of cocaine exports, rangebetween approximately U.S. $1.2 billion to $5billion depending on the year or source of theestimate. Since Colombian official non-factorservice exports fluctuated between the U.S. $4 to$5 billion range, cocaine exports were obviously“large” relative to legitimate exports. However,this does not necessarily mean that the cocainerevenues are brought back to the Colombianeconomy, and it does not measure the impact ofthe cocaine industry on the economy (129).Rather, cocaine revenue commonly is investedoutside of Colombia, enters the black market, oris invested in domestic ventures that provide littlebenefit to the Colombian people (66).

Consequences of Drug Industry GrowthWhile the cocaine industry’s impact on Colom-

bia’s formal economy cannot be measured accu-rately, the cocaine industry has had a negativeimpact on the country's welfare, as well as on itseconomic growth (129).7

First, the cocaine boom of the 1980s has madeit increasingly difficult to maintain macroeco-nomic stability. The drug industry acted as acatalyst to growth of the underground economy,which has become relatively large and impossibleto track (132). As the government loses informa-tion about real exports and imports, capital flows,and investment, the planning and implementationof economic policies becomes formidable (129).

Second, Colombia’s growth record was sign&cantly better in the pre-cocaine era than it is in thepost-cocaine era. Investment has been distorted asnarcotics businessmen choose investments that

7 Colombia may have escaped the debt crisis because of the revenues from cocaine exports. However, the history of the rest of Latin Americashows that no relationship exists between a primary resource export boom and the ability to avoid a foreign sector crisis. For instance, all thecountries of the region that experienced the oil boom during the 1970s also experienced a debt crisis in the 1980s, in spite of the fact that theoil boom was larger relative to the size of their economies tban the illegal drug boom experienced by Colombia during the same period (129).


can be used to launder capital and that have a fastturnover, over those that can produce high,long-term yields (132). The increased violencethat accompanies the drug industry also imposesa burden on the rest of the economy as securityexpenses increase in other business activities,lowering their overall productivity.

Third, the large size of the drug industry hasproduced a struggle for the control of the country,between old monied elite and the newly emergingdrug capitalists. Many elite, though attracted bythe capital and foreign exchange that drugsgenerate, nevertheless do not accept drug busi-nessmen as peers (11,124). This conflict also hasbeen at the core of drug-related violence, and isreflected in government policies that have beenpredominantly reactive-responding to either ex-ternal forces (U.S. pressure) or to the assassina-tion of national political figures by the druggroups (129).

Fourth, direct employment in coca growingand cocaine production has been unimportantrelative to the size of the labor force of the countryand, thus, employment is not among the mainimpacts studied. Instead, most employment gen-erated is believed to be in the “security” branch(e.g., bodyguards, paid assassins, paramilitary),which if anything, has a negative contribution toGDP (129).

Real Estate Construction andRural Land Investment

Two areas of the domestic economy heavilyinfiltrated by narcotics investors are real estateand construction. Few sources of nonhousingmortgage funds exist in Colombia; therefore, asubstantial proportion of commercial and indus-trial construction is financed by the informalcapital market, short-term bank loans, or personalresources. In recent years, particularly from 1985on, the amount of new construction financed bymortgage institutions, and the amount of newconstruction measured by the amount of area forwhich building permits were issued have deviatedmarkedly. In the absence of formal funding, much

The climate for foreign and domestic investment inColombia is severely undermined by drug- and guerilla-related violence. The personnel and property ofimportant state and private industries increasinglyhave been targets of political terrorism.

of the new construction in Colombia is attributedto narcotics businessmen, whose investments areestimated at approximately $1 billion a year (65).

Narcotics businessmen have invested heavilyin urban real estate and construction and realestate and cattle holdings in certain rural areas ofColombia, particularly in the middle Magdalenavalley, the Urabá area in Antioquia and theneighboring Córdoba department, and in theeastern piedmont and prairies. These regions havebeen settled recently, and frequently have landproperty rights that are still in question (119).Furthermore, they were regions of significantguerrilla activity before narcotics investors movedin (123). Narcotics investors have appropriatedtheir own dairy and cattle plantations, as well asprivate paramilitary security forces which com-pete with local guerrilla forces for the rights to“protect” area estates (131).

———


The involvement of narcotics businessmen inthese regions has had a technologically moderniz-ing but socially backward effect (129). Theirresources have allowed them to increase thecapital intensity of production processes, andintroduce new technologies for increasing pro-ductivity in beef and dairy. Simultaneously, theparamilitary groups have discouraged politicalparticipation among local peasants. Violent landcounter-reform has led to increased land concen-tration, even in areas chosen for official landreform programs. Ironically, rural wages haveincreased in those areas, perhaps as a result of thehigher productivity, and the emigration of ruralworkers pressed by the increased violence (123).

INCREASING NARCOTICS-RELATEDVIOLENCE IN THE 1980s

The narcotics trafficking organizations broughturban and rural violence in Colombia to newheights in the late 1970s and throughout the1980s, in the form of brutal assaults on the state,guerrilla action, and conflicts between rival drugorg anizations. Authorities responded with stepped-up military and police repression, which oftenserved only to intensify the country’s spirallingviolence, multiply human rights abuses, andthreaten further the stability of Colombia’s demo-cratic regime. In the ensuing cycles of govern-ment crack-downs, narcotics-related terrorist re-taliations, and uneasy truces, Colombian leader-ship repeatedly nurtured and then abdicated theircountry’s role as the frontline in Washington’s‘‘war’ on drugs.

Included in the U.S.-supported counternar-cotics effort, along with militarization and eradi-cation (see Chapter 3), was a bilateral treaty forextradition of nationals directly between Colom-bia and the United States. The rationale was thatsuch a treaty would deter drug lords, reducenarcotics trafficking, improve bilateraI relations,and alleviate the Colombian legal process fromthe burden of mounting drug-related offenses.Implicit in the agreement, however, was the U.S.Government’s lack of confidence in the Colom-

bian justice system. Nevertheless, the Treaty ofExtradition was sanctioned in Colombia in No-vember 1980, and ratified by the United States inlate 1981 (17).

When the Betancur Administration took officein 1982, it refused to honor the extradition treaty,preferring to try Colombian traffickers in Colom-bian courts (41). Nevertheless, when successfulpolice interdiction efforts against the Medellin“cartel’ prompted the assassination of Betan-cur’s Justice Minister in April 1984, the Presidentsigned an extradition order for Medellin leader,Carlos Lehder (17).

Betancur further invoked state-of-siege powersin 1984, announcing a ‘‘war without quarter,’which led to an unprecedented number of arrests,raids, and seizures. The success of these prelimi-nary efforts, however, seemed to confirm U.S.Government officials’ suspicions that Colombianauthorities had more information about drugsmugglers’ operations than they routinely actedupon (17). Major “cartel’ figures avoided thecrackdown by fleeing Colombia. Several subse-quently offered to negotiate a truce with theColombian Government, conditional upon theirexemption from extradition. Rather than bargain,President Betancur escalated the war. With U.S.Government backing, the Colombian Govern-ment extradited 10 Colombians, stepped uperadication programs, and seized more illegaldrugs than all previous administrations combined(41).

The campaign was costly, however, for contin-uing violence between 1981 and 1986, resulted inthe murder of more than 50 Colombian judges. Itis widely believed in Colombia that the Medellin“cartel” paid guerrillas to seize the Palace ofJustice in November 1985. The struggle ended inthe deaths of 17 Colombian Supreme Courtjustices, all the guerrillas involved, and numerousmilitary and police personnel (41).

Not long after President Barco took office, in1986, a massive wave of army and police raidsyielded almost 800 arrests, including three traf-fickers targeted for extradition. In February 1987,


the government captured and extradited Medellinkingpin Carlos Lehder. Despite the fanfare sur-rounding Ledher’s capture and extradition, theflow of cocaine from Colombia and the wave ofdrug-related violence in the country were notstemmed. Furthermore, during the same period,eight of nine Colombian guerrilla groups brokethe truces they had negotiated with the precedingadministration, and, thus, began a new cycle ofviolent retaliation from the guerrilla and drugorganizations (17,41).

The “cartels” mounted an all-out war againstextradition, in which they aimed at governmentofficials and judges, in particular. After Medellinassassins killed the Colombian Attorney General,in 1988, the Colombian President institutedstate-of-siege measures, built up police forces,and appointed 5,000 new judges and assistants.More violence followed, including the assassina-tion, in 1989, of Liberal politician and 1990presidential candidate Senator Carlos Galán. Be-tween August 1989 and January 1990,263 bombswere set off throughout Colombia, killing 209people, and in late 1989 and early 1990, theMedellin ‘‘cartel” began a kidnapping campaignaimed at the Colombian elite. Most of the 420police deaths in 1991 were related to counternar-cotics efforts or narcotics-related terrorism (17).

These nationwide terrorist attacks made appar-ent the narcotics traffickers’ ability to disruptnormal life throughout the country. In mid-December, members of the Colombian Congressattached a proposal for a national referendum onextradition to the Barco Administration’s consti-tutional reform bill. President Barco ultimatelywithdrew the constitutional reform package alto-gether, but continued to face pressure to end theviolence through talks with drug ‘‘cartel’ mem-bers. Barco denied involvement in any suchnegotiations and, in January 1990, ordered theextradition of another Colombian trafficker. How-ever, after January 1990, extradition efforts werereduced, and narcotics-related terrorism subsidednoticeably (17).

Colombia’s public infrastructure serves a greaterportion of its population than does Peru’s or Bolivia ’s.Recently, however, these services have beenthreatened by mismanagement and neglect: drought-induced electricity shortages in 1992 wreaked havocthroughout Colombia and heightened politicaltensions.

The extradition policy dilemma faced in the1980s is illustrative of two distinct facets com-prising Colombia’s narcotics problem: domesticviolence and terrorism on the one hand, andinternational trafficking on the other. The securityof the Colombian state most directly is threatenedby narcotics-related terrorism, not drug trafficki-ng (17). Barco’s forceful reaction to the wave ofviolence that led to the murder of Senator Galánwas motivated by the need to defend state securityfrom a clear and present danger. Narcotics-relatedterrorism was viewed as an urgent Colombianproblem that required an immediate response bythe government. The international narcotics busi-ness, in contrast, was seen as a broader and morecomplicated problem that could not be solvedquickly nor unilaterally by Colombian authoritiesand policy actions (17). Under the current admin-


istration a new constitution, ratified in 1991,again halted extraditions.

CURRENT POLITICAL CLIMATEStrengthening and redefining the role of the

state in Colombian society is a prerequisite forsuccess of any narcotics-control policy. Onesignificant step begun by the previous administrat-ion (Barco 1986-1990) and continued by thecurrent one, was the institution of constitutionalreform, which included strengthening the judici-ary system and reforming the legal system. TheGaviria Administration also focused its efforts onaccelerating the opening of the economy toforeign trade and investment, and broadening thepolitical legitimacy and popular support of thestate. In August 1991, the maximum tariff formost imports was reduced to 23 percent. On manyother items, tariffs were reduced to zero, severelyundermining g Colombia’s once thriving contra-band trade (17).

However, the economic aperatura (opening)has not been problem-free: interest rates havestayed high and the process has encouraged there-entry of drug money. Another tax reform,granting amnesty to those who had illegallyacquired assets and who had income abroad, wasimplemented in late 1991, to complement theelimination of the exchange control system (129).Foreign exchange reserves in 1991 alone grew byalmost U.S. $2 billion, of which 60 percent isbelieved to be drug money (17).

Since the Gaviria Administration took office inAugust 1990, the dynamics of the drug problemin Colombia once more have come full circle. Fora time, the narcotics-related terrorism of the late1980s subsided, and many major figures of theMedellin “cartel” were in jail. Of the country’sprinciple guerrilla groups, all but two had negoti-ated peace treaties with the government and wereactively engaged in legal political activities.However, in mid-1992, widespread guerrilla andnarcotics-related violence resumed. To the cha-grin of the Colombian government, their mostprominent state prisoner, Medellin drug leader

Pablo Escobar, escaped. Terrorist attacks in ruraland urban areas by Colombian guerrilla groupshad been on the rise, and Escobar’s escapecoincided with a resurgence of narcotics-relatedterrorism. In November, 1992, the ColombianGovernment instituted a W-day state of emer-gency (55).

CONCLUSIONThe Colombian President proposed steps at the

Cartagena II Drug Summit, held in San Antonioin early 1992, to improve international coopera-tion to halt the flow of precursor chemicals forcocaine processing, control arms trafficking, curbinternational money laundering of drug profits,and improve judicial and law enforcement coop-eration in the area of counternarcotics intelligencegathering and evidence sharing. Additionally, theColombian Government has made efforts to de-mocratize, and in general, to promote an economyin which profits are not associated with privilegeand predatory capitalism. Unfortunately, reformsof this nature bear fruits in the medium and longterm, and face many obstacles in the short run. Asin Bolivia, entrenched economic and politicalgroups that benefit from the current conditionswill oppose any significant changes. Cooperationin foreign trade, economic assistance, and severaltypes of technical assistance are needed (17).

Many Colombians believe that the influence ofColombia’s drug “cartels” has continued tospread through the economic and political sys-tems; and recent events like Escobar’s escapesuggest that drug trafficking activities continuelargely unchecked in Colombia. When theseproblems are set in the context of Colombia’sreduced economic growth, trend toward decliningeconomic productivity, continuing widespreadrural poverty, and infrastructural bottlenecks tothe expansion of legal export agriculture, it isclear the Colombian Government and citizensface serious threats to social and political stabilityin the 1990s. Colombia remains one of the mostviolent countries in the hemisphere (e.g., murderis the leading cause of death in males aged 15 to


44, and overall second leading cause for allColombians) and there has been no overallreduction in the number of Colombians killed inpolitical and criminal violence (17,18).

Finally, the illegal drug industry in Colombiahas continued to diversify. Although illegal drugcultivation in Colombia is not an especiallyprofitable business, social and political factors,not economic imperatives, constitute the mainimpediments to the implementation of government-sponsored alternative development strategies. Theconditions in some areas, such as the impover-ished and badly neglected Southern Cauca re-gions, where marijuana is grown, add increasingurgency to the search for alternative developmentoptions for Colombia’s rural poor.

Until viable economic alternatives are createdfor the poorer peasantry in rural areas, cocacultivation and, now, the opium poppy trade arelikely to spread, bringing with them increasinglevels of violence and corruption. Furthermore,most of the opium fields are believed to be inareas under the influence of the guerrillas groupswith which the government has yet to negotiatepeace. Partly because of the growing heroinindustry, many observers doubt that peace talkswill be successful soon. Even if a peace treaty isnegotiated, a high risk exists that many factions ofthe two rebel groups could continue fighting asbandits or terrorists, using funds derived fromtheir links in the heroin trade (17).

THE COCA ECONOMYNowhere, perhaps, is the social and economic

importance of the coca industry more significantthan at the local supply, or micro-level. Small-scale coca growers and coca-leaf processors andtraffickers are the trade’s principal dependents.Predictably, they remain at the bottom of theillegal industry’s pay scale, and they are the leastwell represented actors in supply reduction ef-

forts. Many international narcotics policymakerssuggest that if the monetary value of coca couldbe sufficiently diminished, coca growers wouldvoluntarily leave the coca trade for alternativecrops (135). This overlooks many, less-directcircumstances that are promoting and perpetuat-ing coca cultivation. The size and impor-tance of the coca economy among small-scale in-dustry-related producers, processors, and trans-porters clearly determine opportunities and con-straints to source reduction at the microeconomiclevel.

# Difficulties Establishing theSize of the Coca Economy

Gathering agricultural data for any crop in theAndean region is difficult for a variety of reasons,including: 1) diversified geography and topogra-phy, 2) variation in types of agricultural units,agricultural farming systems, and productivitylevels, 3) wide dispersion of agricultural units,and 4) inadequate funding and personnel todevelop official agricultural data. The remotenature of production regions, their inaccessibility,and dangerous trafficker or guerrilla presencefurther compound data gathering problems (5).

Establishing annual coca industry price esti-mates is hampered by frequent market priceadjustments at the macro-economic level, andbecause the coca industry is so segmented, pricevariation often can be traced to a regional level aswell. Variation may depend on a industry partici-pants’ “business connections.” For example,growers, processors, or transporters from uncon-nected or unestablished regions likely will re-ceive lower prices.8 Thus, to arrive at a reasonablyaccurate price estimate, researchers would berequired first to pool the prices posted frominnumerable markets, and then to adjust theseprices relative to the size of each particular marketsegment (131).

s An example of region- ar4 even, individual-spezific price variation found in Perw results from Sendero Lti”noso’s use of quotas. meSendero charges quotas from transporters and peasant growem according to various criteria. The quotas in Sendero<ontrolled regions, havea direct adverse impact on the incomes of local producers, as well as an adverse, albeit indirect impact on load market prices (15).


Estimates of the size of the coca economy alsovary with different assumptions regarding yield,geographical scope, number of hectares involved,different prices at different stages and, in particu-lar, overall inaccurate knowledge about the un-derground “industry.” This latter factor forcesanalysts to make arbitrary assumptions whichmay or may not reflect the changing reality of thecocaine industry (5). Researchers have laboredsince the early 1980s to calculate and report thesize of the population employed and/or estimatethe value of coca earnings by participants in thevarious stages of its cultivation and transforma-tion. These numbers vary over years and acrosssurveys. It is enormously difficult to collectaccurate information for such figures.

1 Importance of Coca Production atthe Macroeconomic Level

A former Finance Minister of Bolivia statedthat if the narcotics industry were to disappearovernight, the result would be rampant violenceand unemployment. Indeed, as a relatively stablesource of income and employment, the cocaineindustry has cushioned the blow of poverty formany in the Andes. The cocaine industry pro-vided work for between 750,000 and 1.1 millionpeople in Bolivia, Peru, and Colombia accordingto some 1988 employment estimates (58).

The cocaine industry comprises a large assort-ment of workers, who have assumed a variety ofoccupational and socio-economic niches. Thethree principal categories of the locally employedare:

●

●

Those involved in coca cultivation, whetheras plantation and land owners, farmers andtheir families, migrant laborers, or fertilizerand pesticide merchants;Those involved in coca paste and cocaineprocessing, such as laboratory owners, theirhired “chemists,” pit laborers, and armedguards, and those who trade in leaf-processing and paste-processing materialsand chemical ingredients;

Table 2-8-Percentage of the Mid-1990 WholesaleValue of a Kilogram of Cocaine Received

at Successive Stages of Activity

Stage Bolivia Colombia Peru

Coca leaf . . . . . . . . . . . . . . .43%0NAa

1.80%Coca paste . . . . . . . . . . . . 2.12 NA 2.01Cocaine base . . . . . . . . . . 3.29 3.29 2.53Cocaine hydrochloride .. .10.70 5.80 19.50

Miami wholesale levelcocaine hydrochloride{U.S. $20,500/kg) . . . . . . . 100% 1 00% 100%

a Colombian organizations or cooperative ventures process cocaleaves directly into cocaine base. Leaves are not usually soldseparately.

SOURCE: Adapted from U.S. Department of Justice, Drug Enforce-ment Administration, “From the Source to the Street: Mid-1990 Pricesfor Cannabis, Cocaine, and Heroin--Special Report,” IntelligenceTrends (Washington, DC: U.S. Department of Justice, 1990).

● Participants in the transport of coca, process-ing ingredients, and paste and cocaine,including local manufacturers, suppliers,traders, and haulers, international dealersand associated transport vehicle and smallaircraft owners and operators, airfield secu-rity guards, bribed government abettors, anddirectly and indirectly employed legal andfinancial advisers (75).

No more than 1 or 2 percent of the fina1 cocarevenue is enjoyed by coca growers. Instead,coca-product prices increase substantially at eachmarketing stage, with value added more so for therisk involved than for actual processing or trans-portation costs (131). In producing the smallestproportion of raw coca, but refining and transport-ing the highest proportion of cocaine bound forthe United States and elsewhere, Colombianshistorically have obtained the lion’s share of theillegal drug profits (table 2-8) (129).

Some trafficker networks establish close tieswith coca growers in specific regions, and providethem with seeds, tools, suppliers’ credits, andother forms of assistance that obligate the farmersto sell their crops exclusively to the traffickerssponsoring them. The traffickers use these patron-client relations to wield considerable social and


political control in some coca-growing regions.Like the insurgent groups with whom they maycompete in Colombia and Peru, traffickers areable to limit the state’s ability to execute alterna-tive development projects in coca growing areas.The traffickers have brought jobs and higherincome to otherwise impoverished zones of someColombian and Peruvian rural communities long-neglected by the government. As a result, traffick-ers in some of these areas commonly are shelteredand protected from police and other authorities(17).

SIZE OF THE COCA-COCAINE INDUSTRYConservative employment estimates in early

1990 for Peru’s illegal coca industry (based on asurvey of 60,000 families) suggested that 200,000people, or 3 percent of the total population ofPeru, may be directly employed by coca activities(50). The figure would be higher if indirectemployment were considered (6). In Bolivia, anestimated 120,000 people labored in the drugindustry in 1990, or about 1.7 percent of the totalpopulation (50). However, a wide range ofestimates are available concerning most aspectsof the coca economy’s size and value (table 2-9).Given Peru’s and Bolivia’s cocaine industryemployment estimates, the number of Colom-bian’s employed is negligible, an arbitrary esti-mate being about 50,000, or no more than 0.2percent of Colombia’s total population (130).Nevertheless, the U.S. Department of State esti-mates suggest that there were 40,100 hectares ofcoca in Colombia in 1990; this represents 18.8percent of the total area cultivated in the Andeancountries. Colombia produces about 13.7 percentof the coca leaf volume, a share that has beenincreasing continuously during the last decade(129).

EARNINGS AT THE MICRO-ECONOMIC LEVELAlthough information on coca farmers’ earn-

ings are scattered and commonly anecdotal, thecontrasts between annual income from illegalcoca production and any other source of income

Table 2-9--Range of Estimates of the Importance ofCoca in Bolivia (1989) and Peru (1988)

Bolivia Peru

Coca production value(millions $U.S.) . . . . . . . . . 313-2,300 869-3,000Coca exports(millions $U.S.) . . . . . . . . . 132-850 688-2,100Total income(millions $U.S.) . . . . . . . . . 246-442 743-1,200Total employment(thousands) . . . . . . . . . . . . 207-463 145-700Area of coca production(hectares) . . . . . . . . . . . . . 35,000-55,400 115,530-166,500

Share of coca economy relative to legitimate’ (percent)

GDP . . . . . . . . . . . . . . . . . . 6-19% 2-11%Exports . . . . . . . . . . . . . . . 15-98 14-78External debt ., . . . . . . . . 7-25 3-18

a For Bolivia: totals for 1989 were GDP, U. S.$4,494 million; exports,U. S.$868 million (includes goods and services); and total externaldebt, U. S.$3,420.2 million. For Peru: totals for 1988 were GDP, U.S.$28,200 million; exports, U.S.$16,494 million; and external debt,U. S.$2,691 million.

SOURCES: Adapted from E. Alvarez, “Opportunities and Constraintsto Reduce Coca Production: The Macroeconomic Context in Boliviaand Peru,” contractor report prepared for the Office of TechnologyAssessment, March 1992; R. Henkel, “The Cocaine Problem,” BoliviaAfter Hyper Inflation: The Restructuring of the Bolivian Economy(Tempe, AZ: Arizona State University, Canter for Latin AmericanStudies, 1990); R. Henkel, “Coca Cultivation, Cocaine Production, andPeasants in Bolivia,” presented at the annual meeting of the Associa-tion of American Anthropologist, Washington, DC, November 1989;U.S. Department of State, Bureau of International Narcotics Matters,International Narcotics Control Strategy Report (Washington, DC: U.S.Department of State, 1991).

are marked. AID estimated in 1989 that $375million in coca profits went to small-scale culti-vators, paste producers, and wage laborers, whereaslegal crops brought in no more than $50 million(89). U.S. Government sources report that coca-leaf prices remained fairly stable, at an average of

$3 to $4/kilogram, throughout the 1980s (89).While an average Bolivian worker’s income wasapproximately U.S. $600 a year, a Chapare cocafarmer’s earnings were up to U.S. $5,500 a year(28).

The earning opportunities for migrant and daylaborers are also impressive. For example, in Perumigrant farmers were earning U.S. $16 a daypicking coca, whereas rice field laborers collectedonly $3 a day (133). Similar disparities also occur

—


in urban wages. For instance, in 1986, a seasonalcoca plantation worker in Monson or Uchiza,Peru, might earn a daily minimum wage of U.S.$2 or $3, respectively, in addition to room andboard. These wages were significantly higherthan the U.S.$1.60 daily minimum wage paid tothe unskilled industrial laborers in Lima (106).Figures in 1989 were reported as follows: daylaborers could expect about U.S. $12 a day

($3,600/year); and cultivators/owners a gross ofU.S. $3900/hectare a year. On average, cocalaborers could earn from 2.5 to 8 times more thanother laborers; and coca farmers and coca fieldowners, from 3 to 11 times more than their lawabiding counterparts (89). Although coca produc-tion employs a predominantly unskilled class oflaborers, they may receive 20 times more thanpublic employees, and 3 to 5 times what theywould earn in their home departments (50).

Information on wages is sketchier for small-time participants in other sectors of the coca andcoca-product industry. Nevertheless, the follow-ing breakdown of the highly lucrative kerosenetrade in Bolivia illustrates the increase of value asit enters the black market. In 1985, a 5-liter dailyration of kerosene was routinely resold on theblack market for about 20 times its original value.In the Chapare, its black market price could againdouble or triple (75). Meanwhile, the salary forpaste transport was usually U.S. $2.00 per arroba(approximately 11 1/2 kilograms), resulting in anaverage day’s earnings of about U.S. $8, anamount 500 percent greater than the average$1.60 minimum wage for a Lima laborer (106).

CONCLUSIONAs sociocultural, political, and economic cir-

cumstances in the Andean region suggest, differ-ing U.S. and Andean interests that have longhindered cooperation on the drug front are notlikely to be resolved soon. Bilateral cooperationon anti-drug policies is hinged less on straight-forward agreement than on rhetoric, tension, andprotracted negotiation (100).

Coca generates high incomes because it isillegal, (i.e., the market has to pay a premium tothe producers involved for the risk associatedwith it). Coca-leaf products, in addition, are highvalue/low volume commodities that cover hightransportation costs particularly where transpor-tation is primitive. Legal crops cannot commanda comparable premium under these conditions.Thus, coca has been incorporated as part of aportfolio of crops, in which it is the chief cashcrop (5).

Because of the coca economy’s size, it may notbe realistic to believe that alternative crops will beenough to substitute for coca in the short or eventhe medium run. Coca remains the best alternativefor many farmers and, if its price declines,growers always have the option of simply leavingthe leaves on the bush until the price improves.Interdiction activities have helped lower the priceof coca in the past, but without adequate demandcontrol, industry participants are assured thathigher prices eventually will return (4).

Other important considerations for long-termcoca substitution include:

●

●

Creating secure economic opportunities—Growers already obtain the smallest piece ofthe cocaine industry pie. While artificiallycreated coca-price declines such as thosecreated by interdiction activities cause somegrowers to find other sources of income tooffset their losses (coca paste and baseprocessing, in some cases), they do notprovide long term solutions. The need todiversify agricultural activity is recognizedby growers (5). Crop substitution and alter-native development may not have to replacecoca income on a dollar-for-dollar basis, ifthey create a safer and more stable social andeconomic environment.Diminishing comparative advantage—TheBolivian, or Huánuco, variety of coca has ahigh cocaine alkaloid content and growssuccessfully in the Chapare and Alto Hual-laga. However, features that further contrib-


In a seemingly timeless tradition, young, unemployedmen migrate to the Bolivian Chapare to find work inthe coca trade.

●

ute to the ‘‘comparative advantage’ ofproducing coca in these areas are twofold: 1)their ecological conditions, and 2) theirremoteness. The latter, creates difficultiesfirst for policing illegal activity and secondfor profitability of other livelihoods. Al-though it would be undeniably useful to drugtraffickers, developing and improving trans-portation infrastructure in the Chapare andAlto Huallaga areas would, in particular,improve the profit potential of alternativecrops and resources vis-á-vis coca by facili-tating their internal and external movementand marketability.Reinforcing the role of the state—In general,strengthening the state’s presence and role inproducing public goods and services wouldcontribute to alternative development. Thereare a number of things the Andean countriescan do to increase the standard of living ofagricultural producers that the coca industrydoes not. The national government, throughhelp from the international community, could

●

provide potable water, access to basic healthcare, electricity, and better schools. Theseare basic preconditions for almost any typeof successful economic development.Fostering equity and political stability--Alternative development strategies that tar-get populations at the bottom of the scale ofincome distribution need to be applied to theagricultural sectors of Bolivia, Peru, andColombia. The neglected rural peasant pop-ulations long have been a major target groupfor the guerrilla organizations’ membershipexpansion, as well as being primary illegaldrug cultivators. Increased stability in theAndean states likely will require improvem-ents in the standard of living of ruralpopulations.

The U.S. and Andean Governments havediffered with respect to the correct ratio of“sticks” (repression of drug production andtrafficking) to “carrots’ (economic support anddevelopment assistance). Drug policymakers acrossthe board have thus far been unable to fashion arealistic, consensus-based, multilateral, long-term approach to address demand and supplysides of the drug equation effectively. Althoughdifficult, no other approach is likely to offeranything but temporary and partial victories onspecific battle fronts in an overall failing effort.Profound changes are probably needed in theeconomic and social structure and public policyof the United States and Latin America, yet thesechanges are unlikely to be achieved quickly andcheaply, and certainly not by law enforcementand military tactics alone (17).

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