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Tuesday, February 10, 2004

The Drug Wars. Part One: The CIA Finally Gets One Right! September 2000 Intelligence Report: "PLAN COLOMBIA May Not Work!"

ByJeremy Bigwood and James S. Henry

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uribeand_bushjpg.JPGUribe and Bush
As noted in Submerging Markets™' recent piece on Intelligence Failures, these are tough times indeed for the CIA and the other 13-14 members of the US intelligence community. Lest the CIA perceive that it gets no respect, however, we have recently surfaced one case where it may have done a much better job -- at least with respect to the Colombian cocaine trade, an arena where some cynics have occasionally accused the Agency of having first-hand experience. Even in this case, however, the Agency's foresight appears to have been largely wasted on its political bosses. Instead, the US Government has embarked on a really quite radical policy of increased intervention that is having profound consequences throughout Latin America.

The case in point is a September 2000 CIA Intelligence Report on "Plan Colombia," the multi-billion dollar drug eradication, counter-narcotics, and counterinsurgency program that was established since then by the Colombian Government, with the help of more than $3.13 billion of US military and economic aid – including $743 million this year alone, and up to $688 million for 2004, more than half of all US total aid to Latin America. Indeed, Colombia now ranks third in world among all US foreign aid recipients, behind only Israel and Egypt.

Clinton and Pastrana

This report, recently obtained by Submerging Markets™' Contributing Editor Jeremy Bigwood under a US Freedom of Information Act (FOIA) request, was prepared by the CIA’s DCI Crime and Narcotics Center for top members of the US government, including President Clinton’s National Security Council, the Secretary of Defense, and the US Drug Czar’s office. These officials and their successors under President Bush have always expressed great confidence in Plan Colombia’s ability to reduce coca production and curb cocaine trafficking, and also to help defeat narco-terrorism and bring peace, economic development, and social justice to Colombia, where an increasing proportion of the population -- up to 60 percent -- dwells in poverty.
This CIA document, "Plan Colombia’s Potential Impact on the Andean Cocaine Trade: An Examination
of Two Scenarios,"
raises serious doubts about all these expectations. It suggests that, even apart from its other harmful side-effects, Plan Colombia may actually just spread coca production and cocaine trafficking, as well as political instability and even guerilla activity, to other parts of Colombia, and to other Andean countries like Ecuador, Peru, Bolivia, and Venezuela.

That conclusion supports those critics who have long maintained that the supply of coca is very elastic, so that it defies any simple “supply-side” cures like eradication or interdiction. As the conservative magazine The Economist noted recently, there may well be a "balloon effect," with increased eradication in one area just expanding production elsewhere – especially in more remote, mountainous, and cloudier regions where crop spraying is harder, or in nearby countries where the police and military are weaker or even more corrupt.

Moreover, as this CIA study notes, wholesale coca eradication may just destroy large amounts of ordinary food crops like cassava, which are much less robust than coca. That, in turn, would alienate thousands of local farmers, creating new recruits for radical movements like the FARC, and helping to spread their influence to new regions of Colombia and other countries.

All told, the study indicates, it is hard to make Plan Colombia out to be anything less than a high-risk gamble with the future of the entire Andean region.


After decades of traditional law enforcement efforts, in the mid-1990s, partly because of US pressure, Colombia began experimenting with eradicating coca by spraying chemicals like Monsanto's "Round-Up" from small, US-provided OV-10 and Turbo Thrush" crop-duster" airplanes, protected by heavily-armed helicopters. The aerial spraying program has been the subject of law suits in both the US and Colombia because of its destruction of food crops, and its potential harm to the environment.roundup_jugs.gif

The CIA report examined two alternative scenarios for the effects of this eradication program. In the first scenario, it assumed that 50 percent of southern Colombia’s coca acreage would be eradicated by the year 2005. According to the report, this degree of eradication:

"(W)ould simply encourage substantial new cultivation elsewhere in Colombia. Farmers probably would be able to compensate for their losses by growing elsewhere in Colombia; therefore, only a limited number of growers in border areas would cross international boundaries to plant new fields."


The second scenario looked at the effects of a 80 percent reduction in coca acreage in southern Colombia:

"…(T)he 80-percent scenario would almost certainly lead to increased cultivation in neighboring countries as traffickers in Colombia faced the prospect of declines in potential cocaine production…..While Colombian traffickers likely will try to make up for declines in domestic production by increasing their importation of cocaine base from neighboring countries, especially Peru, they may choose instead to increase cocaine production outside of Colombia. Successful eradication and interdiction programs combined with Bogota’s aggressive extradition policy would create an increasingly hostile environment for the drug trade and induce many traffickers to take their business into neighboring countries. This would result in a further decentralization of the Andean cocaine trade, with multiple centers of cocaine production and an increasingly complex web of trafficking networks. [REDACTED WORD]

….Significant spillover of coca cultivation and drug trafficking from Colombia into neighboring countries is likely if Plan Colombia achieves levels of eradication approaching our 80-percent scenario…..Peru, and to some extent Bolivia, would face increased market pressures that probably would fuel a resurgence in coca cultivation. Already, Peru’s cocaine trade - dealt a significant blow by a potent combination of interdiction, eradication, and alternative development successes in the late 1990s - is showing signs of recovery; and Colombian traffickers are making increased use of Ecuadorian, Venezuelan, Brazilian, and Panamanian territory to reach the US and European cocaine markets. Although less likely, rising coca prices resulting from Colombian supply shortages could put at risk Bolivia’s significant accomplishment in dramatically reducing its illegal coca supply.”


This September 2000 CIA analysis appears to have been astonishingly accurate. Strictly speaking, of course, it was not really a “forecast” at all – it merely laid out two plausible “what if” scenarios, and didn’t choose between them. However, the potential negatives associated with the spillover effects in both cases should have been enough to put any policy maker on notice that they were playing with fire. Unfortunately, both the Clinton and Bush administrations ignored apparently overlooked, or ran roughshod over, this possiblity.

Indeed, as argued in more detail in our upcoming analysis of overall drug war history, over the long run, the long-run effects of US “supply-side” policies toward drug enforcement and coca eradication have been nothing short of disastrous, especially for the "producer" countries. There have already been several profoundly negative effects:

  • First, the dismantling of the Colombian cocaine cartel in the 1990s opened up coca farming and the entire cocaine industry to thousands of new independent coca growers, dozens of new cocaine producers and many new distributors. Ironically, this “success,” combined with a long-term exogenous reduction in the demand for cocaine that little to do with increased drug enforcement, combined to produce to a dramatic long-term fall in cocaine “street” prices in the US and Europe since the 1980s. This may be good news for cocaine users. But it is just the opposite of the effect we’d like to see, if the aim were really to discourage drug use.
  • colombia_05.jpg

  • Second, US policies helped to actually stimulate coca farming, diverting it from Peru and Bolivia to Colombia, which traditionally had focused on cocaine laboratories and left the production of leaves or “base” to its neighbors. In the late 1990s, this surge in coca farming, in turn, provided an enormous new source of income – by way of the taxes they levied on the farms, as well as direct trafficking -- for Colombia’s armed guerillas, led by the FARC on the left and the AUC on the right.
  • As the CIA predicted, Plan Colombia, backed by US funding and direct military assistance, is indeed encouraging coca farming to spread to other areas inside Colombia, as well as to neighboring countries like Ecuador, Venezuela, and Brazil, as well as back to Bolivia and Peru.
  • Even more important, the resulting militarization of the cocaine trade meant that what had formerly been mainly a law enforcement problem has now became a serious political and national security problem, involving not only for Colombia but all its neighbors. This is having a destabilizing political effects on the whole region. Among the key side-effects:
    • A growing civil war throughout Colombia over coca eradication, and ahumanitarian crisis that has already produced more than 2.6 million refugees.

    • A new populist government in Bolivia that derives a great deal of its momentum from the anti-eradication movement, and mounting pressures on Ecuador’s new populist government, led by Lucio Gutierrez;
    • The revival of left-wing guerillas and the reported appearance of the FARC in Peru; the internationalization of FARC activities in other Andean countries;
    • Growing tensions between Venezuela’s populist leader Chavez, the US, and Colombia, with several clashes recently reported between Venezuela's National Guard and Colombian forces.

    Given all this instability, it now appears likely that Plan Colombia’s “success” will depend on whether it is quickly folowed up by a Plan Ecuador, a Plan Peru, and a Plan Venezuela, and a Plan Bolivia. This is a recipe for endless civil wars, not for peace and the kind of economic development that is the only real solution to the "coca farming problem."

    Would that the senior national security advisors and drug czar bosses who are designed these cleve policy initiatives had paid a little more attention to their long-run effects, as well as to the lowly CIA analysts who seem to understand them. Where is "worst case" analysis when we really need it?


    ©SubmergingMarkets.Com, 2004. All rights reserved. Not for reproduction or other use with express consent.

    February 10, 2004 at 02:30 AM | Permalink | Comments (0) | TrackBack

    Monday, February 09, 2004

    Intelligence Failures -- A Proud Tradition?

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    kay.jpg It is not unusual for intelligence agencies in democratic countries to take the rap for foreign policy blunders, but these have been tough times indeed for the CIA, MI6, and the other leading members of the Western intelligence community. Following the Blix-ification of David A. Kay and the discrediting of Tony Blair’s famous “45 minutes,” US and UK politicians have been lining up like buzzards at a bus crash to demand explanations for how these agencies, whose annual budgets now exceed $50 billion, managed to overestimate Iraq’s WMDs, underestimate WMDs in Libya, Iran, and North Korea, and completely miss the role of Pakistan (and perhaps China) in franchising nuclear technology, all at once.

    Similar concerns are also being muttered in France, Germany, Israel, and Russia, whose agencies all reportedly reached similar conclusions about Saddam’s WMD stockpiles.

    Before this latest flurry, there was also the flap over NSA/MI6 spying on UN Security Council members, the bogus Niger uranium documents, the failure to track down Bin Laden, and, of course the mother of all intelligence failures, 9/ll.

    One might have hoped for slightly more accuracy from all these countries, at least with respect to Iraq. After all, Saddam did not acquire his WMDs from Pakistan. Except for Israel, it was these same countries, plus the US and the UK, that were largely responsible for providing him WMD technology in the first place.

    In any case, under acute pressure, President Bush has now courageously decided to appoint yet another Presidential Commission, one of a half dozen that he has created to shuttle fundamental policy issues to one side. And the nine-lived, unabashed George Tenet has even resorted to defending the CIA in public – a daunting task, given his track record. Evidently he must have indispensable knowledge of something, even if it is not WMDs or terrorism.

    What can we conclude from this fiasco, other than empty placebos like “try harder,” “get better sources,” or Tenet’s prosaic summary – “we were not completely right, but we were not completely wrong”?

    If such errors were randomly distributed, one would expect that these agencies would occasionally drop the ball. But their long-run track record actually reveals that such monumental intelligence failures are nothing new. Indeed, there seems to be a systematic bias toward producing them.


    On matters of signals intelligence, where it just comes down to, say, monitoring international wire transfers or Chinese conversations with Pakistani proliferators, presumably the errors have been less frequent – though even there, a variety of new commucations technologies are making the task much more difficult. And on the operations side, they may be good at the occasional “dirty trick," though there, of course, the track record is also filled with screwups.


    But the track record on what we might call “strategic insight” has been downright dreadful. As the following list shows, especially where the signals intelligence is weak and real political or economic insight is called for, our “intelligence” agencies seem to have missed almost every critical strategic turning point in recent history. Like the proverbial wiz kids, these folks are “very smart and (almost) always wrong.”

    Given this sorry track record, which the UK’s MI6 appears to have duplicated, we just may be tempted to agree with the UK’s Prime Minister Harold Macmillan, who once snapped, “Why don’t we just exchange secrets every week with (our enemies) , and skip all the fucking guesswork?”

    In the case of US agencies, in addition to the recent failures already cited , there was also:

  • 1. The 1998 bombings of the Chinese Embassy in Belgrade and the pharmaceutical plant in the Sudan;
  • 2. The failure to predict the acquisition of nuclear weapons by India and Pakistan in the 1990s;
  • 3. The failure to predict Iraq’s 1990 invasion of Kuwait;
  • 4. The failure to anticipate the rapid demise of Portuguese colonialism and South African apartheid, and the Soviet Union in the 1980s;
  • 5. The spurious “second missile gap” – the overestimation of Soviet nuclear weapons strength in the early 1980s;
  • 6. The famous October 1978 estimate by the Defense Intelligence Agency, three months before the Shah of Iran’s fall, that “the Shah is expected to remain actively in power over the next ten years;“
  • 7. Innumerable mispredictions with the prospects for Communist victory in Vietnam;
  • 8. The failure to anticipate that the Soviets would deploy nuclear weapons in Cuba in 1962;
  • 9. The notorious expectation that the Cuban masses would rise up to support the 1961 Bay of Pigs invasion;
  • 10. The spurious “first missile gap” in the late 1950s;
  • 11. The original WMD underestimate – the failure to predict the Soviet Union’s acquisition of nuclear weapons in the late 1940s.
  • December 1941’s Pearl Harbor doesn’t count, since there were no intelligence agencies around yet – one of the reasons for establishing them was to avoid such blunders.
  • At the risk of short-circuiting President Bush’s new Commission, let me suggest that much of the systematic bias toward such strategic blunders derives from deep-seated institutional problems. Among the key culprits:

    • The pool of talent that is attracted to careers in intelligence is pretty thin to begin with – Exhibt A being Sr. Tenet himself. My hunch is that if this fine fellow were forced to compete in the private sector, he would wind up as the Director of Competitive Strategy for a very small casino in Nevada. Over time, as the agencies have become larger and more bureaucratic, this problem has no doubt increased -- “intelligence analysis” has become reduced to lifeless, formulaic process, and those who rise to the top and survive are likely to be politically-astute bureaucrats, not creative analysts.
    • That diminishing talent pool has been scattered across more than a dozen warring bureacracies, including CIA, DIA, NSA, NIMC, and the various service intelligence units. This makes it even more difficult for any individual agency’s boss to stand up and resist political pressures.
    • The permeation of the community with “closed source” mythology. "Community" does indeed appear to be the wrong word here -- "den of back-biting snakes," "cat house," or "Dodge City" may be a bit closer to what we're dealing with here. As a representative of the (wonderfully harmonious and cooperative) journalistic (“open source’) approach to understanding the world, I’d love to see a footrace on any given issue between the agencies, with all their secret sources, and a handful of top flight investigative reporters.

    Unfortunately, these problems are unlikely to be solved by one or two commissions or Congressional investigations, or in just a few years. Even a very public firing of Tenet, while deeply gratifying to many people, would only be a superficial response. For the foreseeable future, the only real antidote may be to elect a new President with some real "carrying capacity," some real depth to his own understanding of foreign policy, and yet is also astute enough to realize that the country is ill-served by having the intelligence agencies become lap-dogs for his preconceived ideas.

    (For a helpful if dated history of the miserable track record of British and American intelligence agencies over the long haul, the interested reader is referred to Phillip Knightly, The Second Oldest Profession. (New York: W.W. Norton, 1986)).


    © James S. Henry, Submerging Markets, 2004. Not for reproduction or other use without express consent from the author.

    February 9, 2004 at 12:01 PM | Permalink | Comments (1) | TrackBack

    Sunday, February 01, 2004

    Third (and First) World Ferry Accidents – “Tragic Misfortunes” or Predictable Consequences?

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    News Flash! - Another Tragic Ferry Accident in the Congo! - Hundreds Missing!
    Ferry Accident on Zambezi Claims 18 Lives!
    Flash! - Ferry Mishap in Bangladesh, 300 Feared Dead!
    Evidently January 31st is not the best day of the year to take a ferry ride. This marks the 50th anniversary of one of the worst ferry disasters in the UK’s history – the 1953 sinking of the Princess Victoria, a British Rail car ferry that was caught out in unusually stormy seas in the Irish Sea, with the loss of 130 lives. And just today (1/31/2004), in northwest Congo, an overloaded ferry caught fire and sank on the Congo with the loss of at least 200 lives.
    Such ferry mishaps have long been a staple item of disaster news all over the globe. With few exceptions, most conventional media coverage presents them -- and of course all the damage done by mudslides, forest fires, and earthquakes as well -- as "tragic accidents," the almost-unavoidable byproducts of happenstantial factors like overcrowding, bad weather, crew mistakes, fires, and collisions that are (ala Les Liason Dangereux)"beyond our control."

    However, a closer look reveals that more systemic factors are also at work, not only in the Third World, but also in the First.


    The Staten Island Ferry, the US’ second most popular, is normally safe and reliable. It carries an average of 70,000 people back and forth each day to Manhattan. So New Yorkers were suitably shocked last October when the 3335-ton ferry plowed into the docks on Staten Island at 17 knots, killing 11 people and injuring at least 42.

    As a result, financially-strapped New York City has already been sued for more than $3 billion in damages, and has had to ask a court to invoke a maritime statute that may limit its liability to the value of the vessel -- a paltry $14.4 million.

    But this limitation could depend on where the blame is ultimately placed. Initially the City tried to place it entirely on individual crew members – for example, a possible medication-induced blackout by the pilot, the alleged absence of the ferry’s captain from the wheelhouse, and the possibility that other crew members may have been playing cards rather than keeping watch.

    However, since Federal prosecutors and the US Department of Transportation’s (DOT’s) National Transportation Safety Board have entered the investigation, it seems that other more systemic contributing factors are emerging. These include the Port Captain’s alleged failure to distribute and enforce safety rules, the absence of state-of-the-art navigational equipment and warning systems that are routinely used, for example, on Seattle’s ferries, and inadequate training programs for crew members. There also appears to be a general pattern of nepotism and corruption in the management of the entire Staten Island ferry system.

    While it is premature to reach final conclusions about the relative influence of these various factors, it is already clear that the "pure accident" theory of this event -- the worst accident in Staten Island Ferry history -- is inadequate.


    The residents of sub-Saharan Africa, as well as countries like Bangladesh, the Philippines, Indonesia, and China, are intimately familiar with all these pathologies. They must have marveled at the attention that was showered on the comparatively small Staten Island accident by the global media. After all, these countries routinely suffer ferry accidents that take hundreds and even thousands of lives.
    We’ve already noted the latest Congo River mishap. A cursory review of other accident reports shows that in 2003 alone, another Congo ferry “accident” claimed 163 lives, one in Bangladesh claimed “hundreds,” and there were others in Tanzania, Somalia, Zambia, and Burundi that took an average of fifty lives each. In 2002, yet another Bangladesh ferry “accident” claimed 300 lives, one in Indonesia took 60, and in Senegal, a ferry loaded with 1800 people, twice its capacity, flipped over, with no survivors. There have been literally hundreds of other such sinkings. The all-time record appears to have been a Philippines sinking in 1987 that claimed 4,341 lives – the greatest number of ocean fatalities in nautical history.

    Of course any one of these incidents, taken in isolation, may be understood as a “tragic mishap.” But from a slight distance, what is most striking is how repetitive they are – not only in terms of the specific countries involved, but also the very same locations in the rivers and oceans, the very same ferry owners, the same regulatory authorities, and in some cases even the same (salvaged) vessels.

    (Indeed, in the case of the Staten Island Ferry, the most recent 2003 incident had similar, though much less costly, precursors in 1998, 1992, 1978, and perhaps others.)

    All this suggests that, as is now coming to light in Staten Island, what we have here are not just random accidents and errors, but recurrent market and regulatory failures.

    In particular, the fact is that, especially (but not exclusively) in the developing world, ferry owners – whether public or private -- almost never face any substantial civil liabilities or criminal sanctions for such mishaps after the fact, and the safety and training regulations that they implement before the fact are often wanting. Furthermore, as in the case of New York City’s efforts to limit liability, lawsuits in these countries may not afford any adequate relief where ferries are state-owned. And pursuing them is also often beyond the means of the victims' families.

    Given this after-the-fact impunity, there is little incentive for ferry owners or managers to enforce restrictions against overcrowding, or to invest in adequate crew screening, training, and drug testing, as well as up-to-date navigational and safety equipment. New Yorkers, be warned….

    The implication is that unless such conditions change, those of us who relish a regular diet of “tragic ferry accidents,” especially from the Third World, are unlikely to be disappointed. “Oh, the horror…..”


    © James S. Henry, 2004. SubmergingMarkets.Com

    February 1, 2004 at 02:15 AM | Permalink | Comments (1) | TrackBack