Date: Thu, 15 May 1997 13:18:48 +0100
From: Joćo Paulo Monteiro <jpmonteiro-AT-mail.telepac.pt>
Subject: M-I: CIA and drug trafic (fwd)


This page is reproduced here from Paul DeRienzo's home page--with
permission

                         Read McCoy's book. You can purchase
               The Politics of Heroin; CIA Complicity In The Global Drug
Trade 
                     online from Amazon.com books by clicking here.

                        Interview with Alfred McCoy

                              November 9, 1991
                              by Paul DeRienzo

Alfred W. McCoy is professor of Southeast Asian History at the
University of Wisconsin,
Madison. Educated at Columbia and Yale, he has spent the past twenty
years writing about
Southeast Asian history and politics. Mr. McCoy participated in Causes
and Cures: National
Teleconference on the Narcotics Epidemic Saturday, November 9 1991, at
Marble Collegiate
Church in Manhattan. 

PD: How did you come to write The Politics of Heroin; CIA Complicity In
The Global Drug
Trade? 

AM: In 1971 I was a graduate student doing Southeast Asian History at
Yale University. An
editor at Harper & Row, Elisabeth Jakab, read some articles in a volume
I had edited about
Laos, which made some general references to the opium trade in Laos. 

She decided this would be a great idea for a book and asked me to do a
background book on the
heroin plague that was sweeping the forces then fighting in South
Vietnam. We later learned that
about one third of the United States combat forces in Vietnam,
conservatively estimated, were
heroin addicts. 

I went to Paris and interviewed retired general Maurice Belleux, the
former head of the French
equivalent of the CIA, an organization called SDECE [Service de
Documentation Exterieure et
du Contre-Espionage]. In an amazing interview he told me that French
military intelligence had
financed all their covert operations from the control of the Indochina
drug trade. [The French
protected opium trafficking in Laos and northern Vietnam during the
colonial war that raged from
1946 to the French defeat in 1954 at Dien Bien Phu.] 

The French paratroopers fighting with hill tribes collected the opium
and French aircraft would fly
the opium down to Saigon and the Sino-Vietnamese mafia that was the
instrument of French
intelligence would then distribute the opium. The central bank accounts,
the sharing of the
profits, was all controlled by French military intelligence. 

He concluded the interview by telling me that it was his information
that the CIA had taken over the
French assets and were pursuing something of the same policy. 

So I went to Southeast Asia to follow up on that lead and that's what
took me into doing this whole
book. It was basically pulling a thread and keep tucking at it and a
veil masking the reality began to
unravel. 

PD: What was the CIA's role in heroin trafficking in Southeast Asia? 

AM: During the 40 years of the cold war, from the late 1940's to this
year, the CIA pursued a
policy that I call radical pragmatism . Their mission was to stop
communism and in pursuit of that
mission they would ally with anyone and do anything to fight communism. 

Since the 1920's the League of Nations, the forerunner of the United
Nations, and the United
States have prohibited opium and cocaine products from legal sale. These
products had already
emerged as vast global commodities with very substantial production
zones and large markets, large
demand for those commodities both in the third world and the first. 

The historic Asia opium zone stretches across 5,000 miles of Asian
mainland from Turkey to Laos
along the southern borders of the Soviet Union and the southern border
of communist China. It just
so happened that one of the key war zones in the cold war happened to
lay astride the Asian
opium zone. 

During the long years of the cold war the CIA mounted major covert
guerilla operations along the
Soviet-Chinese border. The CIA recruited as allies people we now call
drug lords for their
operation against communist China in northeastern Burma in 1950, then
from 1965 to 1975 [during
the Vietnam war] their operation in northern Laos and throughout the
decade of the 1980's, the
Afghan operation against Soviet forces in Afghanistan. 

                                 Powerful, upland political figures
control the societies
                                 and economies in these regions and part
of that panoply
                                 of power is the opium trade. The CIA
extended the
                                 mantle of their alliance to these drug
lords and in every
                                 case the drug lords used it to expand a
small local trade
                                 in opium into a major source of supply
for the world
                                 markets and the United States. 

                                 While they were allied with the United
States these
                                 drug lords were absolutely immune to
any kind of
                                 investigation. If you're involved in
any kind of illicit
                                 commodity trade, organized crime
activity like drug
                                 trafficking, there is only one
requisite for success,
                                 immunity, and the CIA gave them that.
As long as they
                                 were allied with the CIA, the local
police and then the
DEA stayed away from the drug lords. 

Finally, if there were any allegations about the involvement of their
allies in the drug trade, the CIA
would use their good offices to quash those allegations. 

This meant that these drug lords, connected with the CIA, and protected
by the CIA, were able to
release periodic heroin surges, and [in Latin America] periodic cocaine
surges. You can trace very
precisely during the 40 years of the cold war, the upsurge in narcotics
supply in the United States
with covert operations. 

PD: How does the CIA's policies affect drug interdiction? I've spoken
for example to former Drug
Enforcement Administration officer Michael Levine, who has expressed
anger that he was
pulled off cases because he got too close to someone who, while being a
big trafficker, was also an
asset of the CIA. 

AM: Mike Levine speaks from personal experience. In 1971 Mike Levine was
in Southeast
Asia operating in Thailand as an agent of the U.S. Drug Enforcement
Administration [DEA]. At the
same time I was conducting the investigation for the first edition of my
book. 

Mike Levine said that he wanted to go up country to Chiangmai, the
heroin capital of
Southeast Asia at that point, the finance and processing center and hub
of an enterprise. He wanted
to make some major seizures. Through a veiled series of cut outs in the
U.S. embassy in Bangkok,
instructions were passed to his superiors in the DEA, who told him he
couldn't go up and make the
bust. He was pulled off the case. 

He said it wasn't until he read my book a number of years
later that he understood the politics of what was going on
and he realized why he had been pulled off. All of the
upland drug lords that were producing the narcotic, the
heroin, were in fact CIA assets. Now he understands it. 

That is not just a single incident, so let's go back to basics.
What is the institutional relationship between the DEA
an the CIA? The Federal Bureau of Narcotics [FBN]
was established in 1930 as an instrument of the prohibition
of narcotics, the only United States agency that had a
covert action capacity with agents working undercover
before World War II. During the war when the OSS
[Office of Strategic Services] was established, which is
the forerunner of the CIA, key personnel were transferred from the
Federal Bureau of Narcotics
to train the OSS officers in the clandestine arts. 

That close institutional relationship between the DEA [direct descendant
of the FBN] and the CIA
continues up to the present day. The long time head of the Federal
Bureau of Narcotics, a man
named Harry Anslinger, who headed that bureau from 1930 until his
retirement in 1962, was a
militant anti-communist who spent a lot of his time in
counter-intelligence operations. There's a very
close relationship between the two agencies. 

During the cold war the main priority abroad for the United States
government was
anti-communism, and whenever theCIA mounted an operation, every other
U.S. agency was
subordinated to the CIA's covert operations. 

That meant that when the CIA was running one of its covert action wars
in the drug zones of Asia,
the DEA would stay away. For example, during the 1950's the CIA had this
ongoing alliance with
the nationalist Chinese in northern Burma. Initially mounting invasions
of China in 1950-51, later
mounting surveillance along the border for a projected Chinese invasion
of Southeast Asia. The
DEA stayed out of Southeast Asia completely during that period and
collected no intelligence about
narcotics in deference to the CIA's operation. 

Let's take two more examples that bring it right up to the present.
[First] the Afghan operation:
from 1979 to the present, the CIA's largest operation anywhere in the
world, was to support the
Afghan resistance forces fighting the Soviet occupation in their
country. The CIA worked through
Pakistan military intelligence and worked with the Afghan guerilla
groups who were close to
Pakistan military intelligence. 

                                           In 1979 Pakistan had a small
localized
                                           opium trade and produced no
heroin
                                           whatsoever. Yet by 1981,
according to
                                           U.S. Attorney General William
French
                                           Smith, Pakistan had emerged
as the
                                           world's leading supplier of
heroin. It
                                           became the supplier of 60% of
U.S. heroin
                                           supply and it captured a
comparable
                                           section of the European
market. In
                                           Pakistan itself the results
were even more
                                           disastrous. 

                                           In 1979 Pakistan had no
heroin addicts, in
1980 Pakistan had 5,000 heroin addicts, and by 1985, according to
official Pakistan government
statistics, Pakistan had 1.2 million heroin addicts, the largest heroin
addict population in the
world. 

Who were the manufacturers? They were all either military factions
connected with Pakistan
intelligence, CIA allies, or Afghan resistance groups connected with the
CIA and Pakistan
intelligence. In May of 1990, ten years after this began, the Washington
Post finally ran a front
page story saying high U.S. officials admit that Gulbuddin Hekmatyar
[leader of the Hezbi-i
Islami guerilla group], and other leaders of the Afghan resistance are
leading heroin manufacturers. 

This had been known for years, reported in the Pakistan press, indeed in
1980 reported in
McClean's magazine. In fact in 1980 a White House narcotics advisor, Dr.
David Musto of
Yale University, went on the record demanding that we not ally with
Afghan guerilla groups that
were involved in narcotics. His advice was ignored and he went public in
an op-ed in the New York
Times. 

Another example: Let's take the cocaine epidemic. In 1981 as cocaine
began surging north into the
United States, the DEA assigned an agent named Tomas Zepeda, in June
1981, to open up an
office in Honduras. By 1983 Zepeda was collecting very good intelligence
indicating that the
Honduran military were taking bribes to let the aircraft through their
country to come to the United
States. 

Zepeda was pulled out of Honduras and that office was closed by the DEA.
They didn't open
another office in Honduras until 1987 because Honduras was a frontline
country in the contra war.
If Zepeda's reports about involvement of the Honduran military had been
acted upon, the DEA
would have been forced to take action against the Honduran military
officers who were working
with the CIA to protect the contras. 

In short, there was a conflict between the drug war and the cold war.
Faced with the choice, the
United States government chose the cold war over the drug war,
sacrificing a key intelligence post
for the DEA in Honduras. 

The same thing happened in Afghanistan. During the
1980's from the time that heroin trade started, there
were 17 DEA agents based in Pakistan. They neither
made nor participated in any major seizures or arrests.
At a time when other police forces, particularly
Scandinavian forces, made some major seizures and
brought down a very major syndicate connected with
former president Zia ul-Haq of Pakistan. 

PD: What is the role of banking in the heroin trade?
What, if any, are the connections to the Bank of
Credit and Commerce International (BCCI)
scandal. 

AM: There have been three times in the past 15
years in which the CIA's money transfer activities have surfaced. The
first came in the late 1970's
when the Internal Revenue Service, the IRS, investigated a Nassau bank
called the Castle
Bank. It's a very interesting bank. It was set up by a man named Paul
Helliwell, a very senior CIA
operative who had retired from the agency. He set up this bank and it
grew into a Latin American
network of banks. It was used by the CIA to launder money. 

In essence, what appears to emerge from the investigation of the Castle
Bank in the late 1970's,
was that the CIA did not want to move operational funds for covert
operations through
normal banking channels, where they could be uncovered, either by the
United States or abroad,
where they could come to the knowledge of opponents of the agency. 

They preferred to work through allied banks. Banks that were secure,
that were a little bit loose in
their accounting procedures. When the Castle Bank was uncovered, the IRS
announced a major
investigation of the bank's money laundering activities. Suddenly the
IRS cancelled the investigation
and the Wall Street Journal was told by informed sources in the IRS that
the CIA had blocked
the investigation. 

As soon as Castle Bank collapsed, a small merchant bank based in
Australia, operating offshore
between Australia and southeast Asia, suddenly mushroomed into a global
network of banks,
acquiring Latin American and European structures that had belonged to
Castle Bank. This bank in
Australia called the Nugan-Hand Bank began very quickly in the late
1970's, to acquire a board
of retired U.S. intelligence officials, either CIA or various military
intelligence services. 

                          The most prominent example, the former
Director of Central
                          Intelligence, William Colby, became the legal
council of
                          Nugan-Hand Bank. The bank was founded by Frank
Nugan,
                          an insecure and incompetent Australian lawyer,
and by Michael
                          John Hand, a man with a high school degree who
had gone to
                          Vietnam with the Green Berets. He had served
in Laos in the
                          1960's as a contract CIA operative, fighting
with three of the
                          people who became very prominent in the CIA's
privatized
                          operations, Thomas Clines, Theodore Shackley
and Richard
Secord, all very big names in the Iran-Contra scandal. 

Michael John Hand was the one who worked with William Colby as legal
counsel. One of their
big operations was to buy a former U.S. naval base in the Turks and
Caicos islands in the
Caribbean. Australian police investigators who examined that contract,
drawn up by William
Colby for Michael John Hand, concluded that the plausible explanation
they could discover for
that contract was to establish a way-station for cocaine smuggling
between Colombia and the
United States. 

We do know the bank was pioneering in the smuggling of heroin between
Southeast Asia and
Australia. In the late 1970's Australia had very strict banking laws,
and anytime you got foreign
exchange you had to account for it. The Nugan-Hand Bank helped
Australian organized crime
figures get their money overseas so they could buy heroin and ship the
heroin back to Australia. 

The Australian police investigators documented that Michael John Hand
worked very closely with
Australia's top criminal drug traffickers to finance the first
shipments, the pioneering shipments, of
heroin to Australia from Southeast Asia. 

In 1980 that bank went belly-up and it collapsed, Frank Nugan committed
suicide, and then a
really amazing event occurred. Thomas Clines, the former CIA chief of
station from Laos, a man
of great prominence in the Iran-Contra scandal, flew to Sydney,
Australia and exfiltrated
Michael John Hand, who disappeared in the United States and was never
seen since. 

Then we come to BCCI. Although we haven't gotten to the bottom of it by
any means, we haven't
even begun to ask the questions, much less get the answers. BCCI
mushroomed in the 1980's and
seemed to serve as a similar conduit as Castle Bank and Nugan-Hand Bank.
The Manchester
Guardian published an expose saying that the CIA paid its operations in
the United Kingdom
through BCCI, and it's known that the CIA paid the Afghan guerrillas,
who were based in Pakistan,
through BCCI. 

There's one rather large question that nobody is asking about BCCI. It's
a Pakistani bank, it booms
during the 1980's, in exactly the same period that Pakistan emerges as
the world's largest
heroin center. We know the Pakistan military officers involved in the
drug trade had their accounts
with BCCI. There's a three way relationship that really cries out,
screams, demands, a
congressional investigation. 

The relationship between BCCI and the CIA operations in Afghanistan and
Pakistan; how much
money was the CIA moving through those accounts? Secondly, the
relationship between the
Pakistan military connected with that operation and BCCI. Thirdly, the
relationship between the
booming heroin trade of Pakistan and BCCI. I think what we'll possibly
discover is that the CIA
was shipping its funds into Pakistan through BCCI, protecting BCCI
thereby from serious
investigations elsewhere in the world. That the Pakistan military were
in fact banking their drug
profits, moving their drug profits from the consuming country back to
Pakistan though BCCI. In fact
the boom in the Pakistan drug trade was financed by BCCI.The
interrelationship between the
Afghan resistance and the CIA and the Pakistan drug trade can all be
seen through the medium of
BCCI, the banker to both operations, the resistance and the drug trade. 

PD: What are the alternatives to the drug war? 

AM: In the 1980's, indeed over the last 20 years, society has been given
two choices in the drug
war. The escalating repression against the drug trade by Presidents
Nixon, Reagan and Bush while
the media gave airtime and space to only one sustained critique.That
critique put forth by the Drug
Policy Foundation argues that the drug war wasn't working and therefore
we should pursue a
policy of legalization. Simply turn the whole policy of repression on
its head, instead of trying to
wipe out the drug trade we legalize it. 

Let me first of all review the drug war. Is it working? No it's not. The
current drug war budget is
$11 billion, a very large amount of money. Of that $11 billion, 86% is
devoted to the suppression of
cocaine trafficking between the United States and Colombia and cocaine
trafficking in the U.S. as
well. However, while we're devoting 86% of our drug war budget to
cocaine, use of cocaine has
gone up by 15 percent. Every single indicator shows cocaine addiction is
rising at the same time
we are fighting this drug war. 

The White House is claiming victory in the drug war, William Bennet, the
drug czar who retired
several months ago, claimed a victory, President Bush has alluded to a
victory in the drug war,
and so has the current drug war czar, Mr. Bob Martinez. What they claim
as a victory is a
victory over casual drug use. Well let's face it casual drug use doesn't
count, if some kid tries
drugs and doesn't like it that's nice but that's not the problem. 

The problem is repeated use, and every single indicator says repeated
use is up. The drug war is
not working. It's filling up our prisons. The prison population doubled
under President Reagan,
and we now have over 400 prisoners per 100,000 population versus 35 per
100,000 in Holland.
We have the largest prison population per capita in the world and it's
going up. At the same
time our heroin use is going up and our cocaine use is going up. 

The reason why is because our effort in the drug war has been
concentrated in interdicting the
supply of drugs in the United States and over the last 20 years we have
fought this drug war on a
bilateral basis. The United States in 1972 went into Turkey and said
"wipe out your opium trade"
and in the 1980's they went into Colombia and said "wipe out your
cocaine processing industry". In
the early 1980's the U.S. went into Bolivia and said "wipe out coca
cultivation in the western part of
your country". This is bilateral interdiction, where the U.S. as a
sovereign power deals with
another sovereign state and applies pressure on that sovereign state to
get action on drugs. 

There is a misperception about the nature of heroin and cocaine. These
are not petty vices, these
are complex global commodity trades involving vast areas of production
and enormous
consumption. It's a commodity comparable in every respect to coffee or
tea. 

When you bring down the baton of law enforcement on a complex global
commodity trade
something curious and something paradoxical, something almost magical
happens. The genius of
capitalism, its magic, its alchemy, transform the lead of repression
into the gold of stimulus.
Every time we apply repression upon narcotics production on this
bilateral basis we stimulate
production, and ultimately we stimulate consumption because of the law
of supply and demand. 

In 1972 President Richard Nixon wiped out the Turkish opium crop with
his first drug war,
the grandmother of drug wars. This grandmother of drug wars totally
wiped out Turkish opium
production, and for a while it disrupted the French connection between
Turkey, which had supplied
French labs in Marseille, which in turn supplied New York. 

It looked like victory until you see what really happened. Turkey only
grew 7% of the worlds
opium. Across the 5,000 mile band of mountains from Turkey in the west
to Laos in the east lay the
rest of the worlds opium production, the other 93 percent. 

Turkey had a shortfall of production, that meant there was a shortfall
in supply of illicit opium. So
the price went up as would always happen, short supply and the price
goes up. That meant farmers
elsewhere in the opium zone, from Iran, Afghanistan increased their
production as happens every
single time. The repression creates a shortfall in supply which raises
price and then stimulates
production everywhere around the world. 

                                              What then is the solution
to the
                                              problem? Somewhere between
the
                                              poles of repression and
legalization
                                              there is an alternative
strategy which
                                              I call regulation. I don't
think we
                                              should really fool
ourselves to
                                              consider legalization.
It's politically
                                              impractical, it's never
going to
                                              happen. 

If we legalize the drug we are not going to legalize it for kids, this
is a country that just raised the
drinking age for the socially acceptable drug, alcohol from 18 to 21.
You give me the name right
now of one legislator who is going to stand up and say "I favor crack
for kids, vote for my bill,"
nobody will ever introduce such a bill. Even if by some miracle you got
a legalization bill it would
exclude 21 year olds and it would mean that the big drug, crack cocaine
would have 89% of its
clientele excluded from legalization. 

I favor regulation because if cocaine and heroin are commodities let's
deal with them as
such. You don't repress commodities, you regulate them. Accept the fact
that there is no quick
fix to this trade, it's been around for 200 years as a major global
commodity, as an illegal
commodity it's been around for 70 years and it's likely to be around for
another 70, maybe 200
years. 

Recognizing that you then cancel your bilateral interdiction efforts and
transfer your funds to
the multilateral effort being run by the United Nations. The
multilateral effort by the United
Nations actually does reduce production slowly, painfully over a period
of decades. 

Ultimately we're going to have to seek an amelioration, not a solution,
on the streets. We're going to
have to address the complex of causes as to why people use drugs. That
is where we have to
concentrate our money.




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