2003 International Narcotics Control Strategy Report

1:30 P.M. EST

Real Audio of Briefing

MR. PRINCE: Good afternoon, and welcome to the Foreign Press Center. Welcome, also, to viewers who are watching us on the American Embassy Television Network.

We are pleased to present a briefing today on the International Narcotics Control Strategy Report. Our briefer is Robert Charles, Assistant Secretary of State for International Narcotics and Law Enforcement Affairs.

Assistant Secretary Charles.

ASSISTANT SECRETARY CHARLES: Thank you, Dale, and thank you everyone here. What I'm going to try to do is shorten my remarks a bit so that we have plenty of time for questions and answer, but give you a little bit of background on what we call the INCSR.

This report, as you probably know, is released just once a year. It is a full-blown assessment, the annual report to the United States Congress of the narcotics performance of all the countries to which the United States INL Bureau at the State Department provides assistance over the last two fiscal years.

It focuses generally attention on what we call the major drug producing and drug transit countries. It also focuses on major money laundering countries and major precursor chemical countries.

This year, we have also given special attention -- there are two volumes to this report -- to the terrorist financing component of the money laundering assessment, which is mentioned here in the -- it's actually -- it's an entire volume unto itself.

A couple of other historical marks, if I may, this is the 18th report of this kind. The first was quite short in the vicinity of 350 pages. This one is up in the range of 1,000 pages and it is a response to our Foreign Assistance Act requirements, again, imposed by the United States Congress.

As we announced from this podium last year, there has been a strong degree of counternarcotics cooperation by the governments of many in this hemisphere, and in fact, worldwide, particularly, Colombia, Bolivia and Peru, which have reduced global coca crops last year by eight percent, that is in 2002 by eight percent. This year, we will go through a number of statistics that give you a baseline, but it's also true that we have not -- we don't have the final numbers yet from Colombia in terms of the coca estimates. They will be out very shortly.

The Colombian administration of President Alvaro Uribe has recognized the clear-cut links between illegal drugs and terrorism that in that country have been so important and has imposed a zero tolerance policy against illicit crops.

The Colombian National Police reported a third consecutive record year in coca eradication, spraying more than 127,000 hectares, and the U.S.-supported alternative development programs are now well established and are solidifying gains in a number of areas by providing legal livelihoods to growers who choose not to invest in coca or opium poppy. In fact, this year in Colombia we have in the range of 630 substantial new social infrastructure projects underway with President Uribe ranging broadly from potable water projects and health projects to education projects and again, a number of details are in the, what we call the INCSR.

There is a genuine political will to support both economic incentives and a comprehensive law enforcement program, and in my view, that brings us to a point, not only in Colombia and in places like Mexico, but across this hemisphere to what I believe is a tipping point. The concept of a tipping point, we can talk more about it in Q's and A's, but my view is that we are at a special moment in time in which the progress recorded puts us at a genuine tipping point where if we apply substantial effort over the next 18 to 24 months, we will see movement, not only in the direction of rule of law being established and institutionalized in a lot of places where it hasn't been previously, but on coca, on opium poppy and in a number of other areas, we will see significant progress toward a hemisphere in which these are not the kinds of problems that they are, or have been over the last decade.

President Uribe's rule of law initiatives, including the Colombian National Police Reinsertion Program, contributed to major improvements in security for the average Colombia citizen in 2002, and over the last year, they have actually reasserted their presence in 158 municipalities that lacked any legal civilian protection in January of 2002.

A number of other advances, I can save till Q&A. But another example of the Government of Colombia's political will to fight narcoterrorism: Colombia extradited 67 drug-related fugitives to the United States during 2003, a 70 percent increase from the previous year.

Reduction of coca cultivation and lawlessness in Colombia has not led, thus far -- and this is a very important point -- to significant new cultivation elsewhere in the hemisphere. In fact, taken together, coca cultivation in other traditional growing countries of Peru and Bolivia, in particular, decreased modestly in 2003 from an estimated 61,000 hectares in 2002, to 59,600 hectares in 2003. A number of other numbers I will go into if asked, but, in short, we have a lot of evidence that this notion that people often found so disturbing, the balloon effect across the hemisphere, is not really taking shape. And we have to press the gains so that it doesn't take shape.

What does that mean? It means that in Peru this year, we had a reduction in overall hectarage of about 17 percent -- between 15 and 17 percent. In Bolivia, in the Chapare, we had a reduction in hectarage of about 15 percent, all again in the area of coca.

There was an uptick in the Yungas. That's in, again, in Bolivia, and that was in the range of 26 percent, so that net/net in Bolivia, you had some slippage, but you also had net/net if you include Bolivia and Peru. You had a net gain, a modest net gain. What you did not see is a dramatic reflection of the -- any sort of counterbalancing increase against the progress that's been made in Colombia.

So, again, those three coca-producing countries, very important, I think, to note that there is significant progress. We can talk about law enforcement, we can talk about judicial capacity building, alternative development, a number of other progress areas. But I think it's very important on the eradication front to see that progress is really being made.

The main heroin threat comes in the United States from opium poppy cultivation in Colombia and Mexico. Although between them Colombia and Mexico account for only about 4 to 6 percent of the world's estimated production, the bulk of heroin entering the United States originates in those two countries. West of the Mississippi, we get about 30 to 40 percent of the heroin from Mexico. East of the Mississippi, we get about 56 to 70 percent of the heroin coming out of Colombia.

Again, the Government of Colombia pursued opium poppy eradication vigorously in 2003. Colombian law enforcement and alternative development programs eradicated more than 3,000 hectares of poppy, or 78 percent of the 2002 estimated crop. About two-to-one, the ratio was spray elimination versus manual. And, again, I can give you those numbers, if you'd like them.

The 2003 cultivation and production data are not yet available for Colombia, but we expect to keep the crop in check. In fact, in 2002, there were an estimated -- and these are important numbers -- an estimated 4,900 hectares of opium poppy under cultivation in Colombia, down from 6,540 in 2001.

What does that mean? It means that the notion, the endgame, the notion that in this hemisphere you can create deterrence by effectively eradicating is really working. You've jumped down by -- from 4,900 to -- from 6,500 down to 4,900 in a year, and we look for progress again this year.

What I think we're seeing is that the strategy, the endgame in which you work, again, both to eliminate the coca production and all of the health and violence and other consequences that attach to cocaine and opium production, you improve the alternative development options and their access, and you simultaneously deter by raising risks and costs, you deter further investment in -- by the traffickers in the coca and opium.

Mexican authorities sustained an intensive anti-drug effort throughout 2003, including robust eradication of opium crops, sustaining net reductions achieved over the past several years. Mexican police and military units seized large amounts of heroin, opium gum and other drugs and captured several major drug cartel figures.

The other 90 plus percent of the world's estimated opium gum production takes place, as most know, in Afghanistan and Burma, with Afghanistan accounting for nearly 80 percent of that figure.

In Afghanistan, poppy eradication is physically difficult for the young government. I was just there in Kabul about two weeks ago. The conviction is very strong to make a difference on both the counternarcotics and counterterrorism pieces. We are evolving, as they are evolving, from the environment in which they were strictly focused on the war and on counterterrorism to an environment in which counternarcotics, including eradication, becomes the -- one of the two primary missions, in terms of security.

It is a big country. There is a lot to be done. And I can roll out further, if you'd like, the strategy on Afghanistan. During the last year -- just high points, again, to be noted -- there was a substantial expansion, as most know, of heroine poppy growing. The growing regions jumped from 28 to 32, last year. The preceding year, there were 24 growing regions. The total crop estimate was at about 61,000 hectares, or nearly twice the previous year.

That having been said, it is also true, and most people forget, that 92 percent of the actual cultivation or of the agricultural land -- not just the land, but the land which is actually under cultivation, is not heroin poppy. It is crops like wheat and barley and corn, and there is a reason for that, and that is that they need the food.

So there is a market there. The overall take is probably about half, dollar for dollar, hectare for hectare of what you would you get with heroin. But there are other things that I think move us in the direction of progress there.

And I think the one thing to note that is most redeeming is that not only is Great Britain and the United States and a number of others -- not only are we dedicated to support and help, but the Afghan Government itself, President Karzai and a number of the provincial leaders, are really dedicated to the proposition that this does not work for them over the long haul. You cannot build a castle on sand, and you cannot build a lasting democracy on a heroin economy. And they know that. And they are pushing in that direction.

I was also gratified, frankly, having been on the ground with the idea that, that there is a real conviction that the moral temper, if you will, really tips against this, that the mullahs and a number of others have made it clear that, for other reasons that are outside the economy, that this is not where they see their future. So again, more on that if asked.

Burma remains the world's second leading producer of opium poppy and a leading trafficker in amphetamines or amphetamine-type substances. We -- under U.S. law, direct counternarcotics assistance to Burma has been suspended since 1988, when the military regime began its suppression of the pro-democracy movement.

But the U.S. has indirectly supported international counternarcotics efforts through the United Nations offices of drugs and crime. Burma has reduced poppy production modestly this past year, but remains far from demonstrating, in my view, a counternarcotics commitment that would confront major traffickers, prosecute trafficking organizations, including those with significant political influence, and get itself out of the drug trafficking business.

In general, 2003 was also a good year for interdiction. Colombian and Bolivian antinarcotics forces had record years for the destruction of laboratories and seizures of cocaine. We recently initiated, the Colombians reintroduced the Airbridge Denial Program with U.S. assistance in August of 2003 resulting already in the capture or destruction of seven aircraft, the last in the last four months of the year.

The Bolivians more than doubled their interdiction effort, as measured in seizures. The Peruvian Government also identified and dismantled several narcotrafficking organizations responsible for both cocaine shipments to the United States and Europe markets, and the Mexican authorities seized over 2,000 metric tons of marijuana, for example, in 2003.

There have been many gains in Mexico. And I, again, will not detail them all here, but aside from counternarcotics accomplishments, Mexico made strong rule of law and judicial reform progress in 2003. Mexican authorities continued to make inroads against major criminal organizations. The Fox Administration continued its sweeping reform efforts within the criminal justice sector, including a major reorganization of the Office of the Attorney General to more aggressively respond to transnational organized crime.

The new Federal Investigations Agency, which replaced the former Federal Judicial Police, actively pursued organized crime and there are a number of other factors, leading, I think, to a very positive view of the high and mutually supporting law enforcement cooperation we have with Mexico.

In Canada, the United States and Canada, as many know, have a strong, cooperative law enforcement relationship. And that cooperation covers a broad array of issues including close coordination on border control and counternarcotics. Nonetheless, the President's certification report in September of 2003 noted concerns about both drugs and precursor chemicals entering the United States from Canada.

We are particularly concerned about the large quantities of pseudoephedrine that is diverted from Canada, which, in turn, fuels the production of methamphetamines in the United States. There is progress on that count, also, this year, and not only the passage of laws, but the movement toward regulations, which actually implement those laws.

The smuggling of high potency hydroponic marijuana, particularly British Columbia, is a significant second big area of concern.

In Guatemala in 2003 there are signs again of progress. Last year had its ups and downs, but in 2003, over nine metric tons of cocaine were seized by Guatemalan authorities. The drugs, which were previously seized and not destroyed were, in fact, destroyed in a number of the warehouses. Former government officials involved in the drug trade were actively investigated and new legislation on money laundering and asset seizure was being implemented.

Looking ahead, what we believe we are seeing is political will and a high level of cooperation by the new Guatemalan Government.

Finally, in the area of financial crimes, let me say while money laundering remains the primary section of the INCSR, this year's report also increased its concentration, as I mentioned earlier, on terrorist financing.

The reasons for this are two-fold: first, terrorists and their supporters often employ the same methods and exploit the same financial systems as money launderers; second, the tools used to combat terrorist financing are in many ways similar to the means used to deter money laundering.

So in the past year, the United States Government in cooperation with partner countries and multilateral organizations made, again, significant progress towards strengthening financial systems. We worked to train about 100 countries in financial monitoring capabilities to tackle both money launderers and financiers of terrorism. And the INCSR, which I ask you to take a look at in that category, if you're interested, has literally hundreds of pages on the details, country by country.

Finally, the United States was an active participant in the 31-member Financial Action Task Force, whose efforts led to the removal of eight countries from the Non-Cooperative Countries and Territories list. And there is again, significant, I can roll it out in Q's and A's, but significant movement in the area of money laundering and, I think, significant advancement.

I think what I will do is clip the rest of these comments and just move straight to Q's and A's, because I know people have a lot on their mind.

MR. PRINCE: Thank you very much. As always, I ask the journalists to identify themselves with their name and organization. Let's go back here to the fourth row there. Yes, the lady in the blue jacket.

QUESTION: Maria Elena Matheus, El Universal, Venezuela.

The report reflects the excellent cooperation between the United States and the Venezuelan authorities regarding the actions against drugs in 2003. But recent events in Venezuela and the attitude of Venezuela, of the Venezuelan President -- doesn't that reveal that the willpower of the government to continue this excellent cooperation could be thwarted or jeopardized? How do you feel that? How do you see that?

ASSISTANT SECRETARY CHARLES: An excellent question and Venezuela does have a large section in the INCSR this year.

There is no doubt that more and better cooperation with Venezuela would be valuable for the entire region, not just for Venezuela. And we do increasingly think regionally.

Let me offer a couple of thoughts. Cocaine seizures climbed dramatically this last year. In Venezuela there is a strong cooperation level between, on the interdiction front between law enforcement organizations. In fact, this year, there were 32 metric tons seized -- of cocaine seized in Venezuela.

Now, in context, that might seem like very little since rough estimates are that maybe more than 100 metric tons run through the country, it may even be upwards to 250 metric tons.

Is there more room there for cooperation? Certainly. But let me say that operationally, at the operational level, what we witnessed is that while there's room for a great deal more cooperation, we are actually seeing a fairly high degree of cooperation in the ports and in some of the locations where it matters most.

MR. PRINCE: Yes, right here in the front, please.

QUESTION: Yes, Maria Peña from EFE News Services from Spain.

Just one clarification question: How many countries in total were subjected to the certification report, number one, and number two, if we're winning the war on drugs on an international level, is that -- does that go also for reducing demand in the U.S.?

ASSISTANT SECRETARY CHARLES: Excellent questions again. And let me, I think maybe I made a mistake in the front end. Let me clarify. This is not -- as of a year ago, when the INCSR was released, you would also have certification decisions rendered.

Under the new statute in 2002, first under appropriations language, and then in an authorization statute, the -- I don't recall the name of the authorization statute, but in short, what they did is they divided the two processes so that now, the INCSR provides all of the data up to this point in time and a status, if you will, of the last year. But the decision rendered on certification doesn't come until September 15th, so they are now divided.

In terms of the impact -- let me jump ahead to your consumption question. Winning the drug war is a funny phrase. I tell people to keep their expectations in check, because there is no such thing as eliminating drugs from this hemisphere, or probably from any given country.

We, what we aspire to do is to bring drug production and transshipment, as well as drug consumption down to a level in which, or at which, it is manageable. We will never eliminate crime from Los Angeles, or from New York or from Washington, but we can get it down, collectively, to a level where it is genuinely manageable. And we're talking about a proportionate change -- a dramatic, proportionate change.

And when I say that within 18 to 24 months I would like to see and I think we are on track to see dramatic tipping point change in Colombia and Mexico, across the hemisphere, I do mean that it will ultimately -- hopefully it will ultimately be measured in consumption both in those countries and even more importantly, right here.

We do see changes. There are three baseline studies in consumption that are released every year. I don't happen to have them with me here, but they do show movement in the right direction. And if you look back historically at what is possible, when we have prevented the balloon effect from taking root, when we have worked hard regionally, when we have worked together in the inter-agency process in this country, we have actually seen dramatic declines in -- to use cocaine as one example, cocaine use, but across the field. For example, between 1985 and 1991, there was a 72 percent reduction in cocaine when we did these things right.

So what I see is, we're at a tipping point, regionally and hemispherically toward that kind of end game again -- what the exact numbers will be, I can't say.

QUESTION: But how many countries altogether?

ASSISTANT SECRETARY CHARLES: What they -- we have -- the INCSR itself, the INCSR covers roughly 195 countries, all of them in fairly substantial detail.

MR. PRINCE: Let's go to the middle here, the gentleman in black.

QUESTION: Thank you. My name is Fernando Canzian. I work for a Brazilian newspaper, Folha de São Paulo.

Despite the optimism, the mild optimism that I read in the report about Brazil and the cooperation between the authorities in the U.S. and Brazilians, you -- the Department of State says that there is emergent -- the money laundering in Brazil is an emergent issue. I'd like to let you elaborate on that. What's the main problem? Is that related to terrorism? Thank you.

ASSISTANT SECRETARY CHARLES: Thank you. The big picture is that when we talk about money laundering today, you cannot help but also talk about terrorist financing.

Generally, before I go specifically to Brazil, you have bank transfers and bank-to-bank, institution-to-institution transfers. In 2002, we tackled about $125 million worth of those transfers or accounts that governed those transfers. Last year, because of the success in the preceding year, we got out about $15 million more of those transfers.

When you win against the money launderers and in terrorist financing, it moves those who traffic in value to the next level down, if you will, of ease. And the next level down is alternative remittances, what often are called “hawala,” which are an informal transiting of a value, commodities exchange in particular, things that are holding their value easily like gold or diamonds and are easy to transship, and you move into things like invoice manipulation in a non-transparent trade world, and finally into things like drugs, because they have high profit margin.

Brazil, like other countries in this hemisphere is wrestling with having, number one, the laws in place to be able to tackle money laundering and the terrorist financing component of money laundering; two, to be able to get the institutional traction to be able to implement those laws; and finally, three, to be able to take it to the next level and create enough momentum or deterrence that people begin not to traffic or to -- not to money launder through Brazil.

There is no country in this hemisphere, I daresay, which doesn't have to wrestle in some way with money laundering. But the idea is to be able to seal the holes and to be able to more effectively prevent the shifting of value by those who do so for either terrorist or criminal reasons.

MR. PRINCE: Let's go back to the middle, to Sonia.

QUESTION: Thank you. Sonia Schott, Globovision, Venezuela.

Going back to Venezuela, you consider that Venezuela improve its cooperation with the U.S. Government until in this report they say that the corruption remains and major issue. And here that there have been some accusations that the current administration has turned a blind -- blind eyes to such activities as drug trafficking and production and money laundering. Could you be more specific on that? Could you elaborate more on that? Thank you.

ASSISTANT SECRETARY CHARLES: Thank you. I think both of those statements are true. More attention does have to be directed to anticorruption efforts and does have to be directed to rooting out -- to institutionalizing the effort to track and to prosecute drug traffickers.

Governments, we often refer to them cohesively, as if they're all one thing. Neither this government, nor any other government is all one thing. What I was trying to highlight is that in this last year we had very good progress on the law enforcement front, operationally working with -- and the DEA, also, and others work directly with law enforcement there.

It is also the case that I think we need to be more focused on making sure that there is transparency and an ability to recognize that corruption is a continuing issue and drug trafficking is a continuing threat, both to Venezuela and through Venezuela to other locations including the United States.

MR. PRINCE: Let's come up here to the middle.

QUESTION: Todd Hurman, the Globe and Mail from Canada.

The report says that the Canadian Government estimates through the RCMP [Royal Canadian Mounted Police] that 800 metric tons of cannabis are being produced annually. How much do you think is actually being produced through the USG? They, they think it's a lot higher. Can you give any indication of how much it is?

And secondly, what is the United States' concern with Canada's relaxation of its drug laws, specifically with marijuana use? Thank you.

ASSISTANT SECRETARY CHARLES: Well, on the numbers and the estimates, I think the book itself will contain -- contains a number of assessment -- contains the actual assessments under -- U.S. Government assessments of how much was produced, and it's an enormous volume in British Columbia.

If your question, the first part of the question is, is it directed to the U.S. market, is that the core of it?

QUESTION: In this report here it says --

ASSISTANT SECRETARY CHARLES: Yeah.

QUESTION: It's only 800 metric tons. The U.S. Government thinks it is higher, but it doesn't actually state a specific number in the Canadian section. And I was just wondering if there was a more specific number that the United States Government has in mind as opposed to the Canadian estimates.

ASSISTANT SECRETARY CHARLES: Let me get, I think, I think there -- I think it's an inter-agency assessment, but what I will do and what I want to be sure staff does is afterwards, we will get you as close a number to the U.S. estimate as we can because I think that's an important question.

In terms of the impact and the concern for the studying of reduction of criminal penalties, it's hard for me to know where to begin.

Marijuana has many components. Cannabis has many components, which, ultimately, you know, everything from being addictive in its own right to being an entryway drug for many of the drugs that we find in this country that are used afterwards. It is a narcotic. It is a Schedule I substance, it is something that we have closely correlated to everything from crime to health concerns.

We could have an all-day discussion about the health effects, the crime impacts and a number of the effects from marijuana. It is taken very seriously by this country. I think in the future -- and I think maybe this is one of the things this report portends -- you will see increased attention to it.

The notion of reducing penalties for something, which has so many harms directly associated with it is really, I think, what gives pause to people. And I, again, we could list a litany of them. In my former life I did a lot of economics research, and one of the things I will say is that it was remarkable to me to see open-ended statements without factual basis that related to cannabis, THC, and not to see either the impacts on addiction or the impacts on everything from traffic accidents and DAWN [the U.S. Department of Health and Human Services’Drug Abuse Warning Network] data to poly-drug use and range even more broadly to things like HIV and AIDS, where clearly the use of the cannabis substances or the THC administered substances did reduce the immunities, which, in turn, obviously had a health impact.

So, I mean, there a many, many reasons why it is a Schedule I substance, but I think the cornerstone that I would want to leave you with is that is taken very seriously by this government and will continue to be so and will be continued to be treated that way by the INCSR.

QUESTION: Do you think it's detrimental though, to the overall war on drugs themselves?

ASSISTANT SECRETARY CHARLES: Do I think what is detrimental?

QUESTION: Canada's recent stance on the marijuana. Do you think it's overall -- is it detrimental to the overall impact? You talk about the benefits through Colombia and Mexico, but you think Canada's position is actually having an adverse effect?

ASSISTANT SECRETARY CHARLES: I think that any government, which does not take seriously, and I think, or in this case, take more seriously, the production and transshipment of a Schedule I narcotic is going to face for themselves, as well as for others, serious follow-on questions. And one of the things I found most intriguing about the report released, I think, on December 12th by the Canadian parliament was that on the one hand, it reviewed the reduction of the criminal penalties. On the other hand, it noted at some, almost labored length, that it was important to teach people not to use this drug. In other words, prevention, and keeping kids, in particular, from the initiating phase was important.

We know that on balance, and I think these are the numbers that were used by CASA, the Colombia University organization [National Center on Addiction and Substance Abuse at Columbia University], I think that of every eight who start to use, one becomes either addicted or -- there are a range of numbers which, I think, support the notion that marijuana is a very serious drug and if you diminish your attention to it, if you treat it as insignificant or as insufficiently significant, then what you will do is you will not only open up enormous cost differentials to your own government morally, but also, more importantly, fiscally, as treatment and other things become important, but you open the doors, also, to other drug use. And I think it's a matter, really, of objective assessment of those places historically who have tried it and where they have led.

I will say that, although it's not part of my official government duties, in my past life, there was a robust economic study that was done -- it had no morality discussed in it, no politics discussed in it -- it was pure economics, and it showed that if you trundle down this path, ultimately it is a dead-end street and it will financially, fiscally hurt any government that goes there.

MR. PRINCE: Yes, right here please.

QUESTION: Thank you. Javier Garza from El Heraldo in Mexico.

A couple of things: I see that the report's giving very high marks to the Mexican Government for their efforts in everything from seizure to, you know, cleaning up the criminal justice institutions. Last week the Human Rights Report raised serious questions about corruption in Mexican police forces. That doesn't seem to be very much, very stressed in this report. So my question is, you know, how do we balance that, how do we square that, and if corruption is the main concern for the United States right now in Mexico's ability to fight the war on drugs?

And on the other hand, what's the level of concern that the United States has on the rise of inter-cartel violence and executions that have been going on for the past year?

ASSISTANT SECRETARY CHARLES: A good point. Let me start with human rights. Nothing in this report should be interpreted as diminishing a strong belief that human rights are critical and that law enforcement efforts are fully consistent with human rights.

Myself, personally, I worked for some period in India on human rights. You can't -- I feel very strongly about human rights and their importance. I also believe, however, that rooting out corruption and tackling the cartels is fully consistent with respect for human rights, and I think that is purely a matter of continuing to do it and hopefully doing it consistently in a way that does not diminish human rights.

Let me also say that I think a case could be made that what the cartels do when they victimize entire communities, when they victimize a society that was not previously affected and infected by the cartels, is actually an affront to basic human rights itself. That drug abuse and all the violence that attends it actually does impinge upon human rights.

But please, don't interpret anything in this report, and I don't think there is a basis for it, as diminishing the interest in or concern for human rights.

The report, by the way, went to publication before last week, so wouldn't have had an opportunity to address that.

The other thing that I would say is that inter-cartel or intra- or inter-cartel violence is only one more, in a sense, flare, or a warning sign that we have to all work, both of us work aggressively together to get this violence out of the system.

I would note that there has been progress that I did not allude to in Mexico that is worth mentioning. Extradition, for example, is a place where not only can we improve more, but last year there were a record 31 fugitives to the United States, up from 25 the preceding year, extradited. There were, and I won't go through all the numbers, but they're in there for you, substantial upticks in the interdiction front and in other elements.

One of the most important pieces is that the training of law enforcement personnel we are working very closely together on, and of course, that captures both the need to properly and effectively tackle large criminal organizations, but also to do so in a way that respects human rights. And I think all over the globe where we have worked together with people to -- I stress both together -- you've seen -- essentially over time you've seen good results.

MR. PRINCE: Let's go back here to the lady from Algeria.

QUESTION: Thank you. Leila Benradja, News Agency of Algeria.

So in the report about drug, Algeria is not in the list of the country of Middle East and Africa. It is -- is it bad or good?

ASSISTANT SECRETARY CHARLES: There are two different components to this report, and one focuses on drugs and the other focuses, as I mentioned earlier, that is to say, one focuses on major illicit -- excuse me -- drug-producing and transshipping countries or chemical transshipment countries. The other focus is on money laundering.

In both instances, but let's start with money laundering, there is a floor, there's no ceiling, but there's a floor on information. If there is not sufficient information in a credible way to support, or institutional recorded statistics to support a conclusion, then there isn't a conclusion drawn.

So I would say to you that one of the issues is the smallness of the banking sector, for example, which is involved in that one.

On precursor chemicals, again, Algeria, I think partly because of the factual basis, but I would have to go back and look again, did not make the list of those that were major precursor chemical source countries.

And on illicit drug producing and transshipping countries, again, one of the things you have to focus on is, this is a majors discussion. This is trying -- and there are components to the statue. For example, it's hectarage at 1,000 hectares for coca or for heroin. It is also the fact that under that statute, one of the things we're looking at is the destination point for the drugs, and the United States being a destination point for the drugs. So I think it -- simply that Algeria slipped through, but I will go back and look specifically, and if you'd like to circle back, I can tell you what information we have and maybe be able to take it a step further for you there.

MR. PRINCE: Let's come here, to the middle of the third row, please.

QUESTION: Ivan Lebedev, the Russian news agency, TASS, a couple of questions on Afghanistan. What are the main drug trafficking transit routes coming out from Afghanistan? And are you satisfied with the efforts of their neighboring countries to stop drug shipments through their territories from Afghanistan?

Is it possible it's all taking in the account the porous borders of Afghanistan? And specifically, can you comment on the efforts in this direction by the former Soviet Republics of the Central Asia?

And you explained why it's practically impossible right now to stop opium poppy cultivation in Afghanistan. And it's quite understandable. But do you think it's possible to maybe -- to enforce the border patrol around Afghanistan right now? Is it part of your strategy on Afghanistan, as you said?

ASSISTANT SECRETARY CHARLES: An excellent question, one that leads to a long answer, but I'm going to try to make it as short as possible.

Two questions: Transshipment routes. There are basically three big transshipment routes: One is up through the Balkans, one is through Central Asia and one is to the south.

Second question relative to the ways to enforce the border and the former Soviet Republics and what they are doing: The Central Asian republics, in many respects, are victimized by what is transpiring in Afghanistan, and together with Pakistan, have to continue to do several things in order to protect themselves, and in order, ultimately, to help, not only contain, but eventually to roll back the incursion that occurs, as a result of heroin-trafficking organizations.

The first is, they have to work on law enforcement capacity building. There simply isn't enough capacity in a lot of these countries, and we are working with a number of them to try to do that.

Secondly, they have to take the corruption signals very seriously. No country benefits from having corruption take root in government institutions, and various ones of those countries have struggled and are struggling now with that issue.

Third, there has to be a sense of, I think, individual but also regional awareness about how severe the potential threat is.

Right now in Afghanistan, the heroin organizations, those who profit chiefly from the heroin transshipment are not institutionalized. They are not cartels. They are, chiefly, several warlords, who are, if you will, very robust nodes of wealth, and I think, in particular, of Noorzai and Juma Khan and those that are known to others in this room probably.

Those are where the great wealth that's associated with this incipient market go. The farmer makes about a dollar for every unit of heroine that, on the streets of Paris or New York, sells for about $100. So the farmer makes very little in this overall equation. The farmer is trying to survive right now. And you're in a post-war environment, in a transition, hopefully, to an economy that can support itself, again, you know, in a way on legitimate crops.

But it's not just an eradication and alternative livelihoods issue, although, again, as I mentioned in the opening, 92 percent of the Afghan agricultural sector is actually not poppies. That's quite encouraging. It is the fact that we have to do these things all at the same time. We must eradicate and send signals that there is great risk associated with this market.

What do I mean by risk? I mean, not only law enforcement risks, but you might lose your crop. It's also the case that we have to work on the alternative livelihoods. We have to work to make sure there is an income stream for people in a legitimate area where they can get their product to market -- wheat, again, barley, corn, but a number of other potential market outgrowths.

We have to work on interdiction. That means both in the country, tackling the labs and tackling and taking down the stock -- the storehouses or the stockpiles. But also on the border, strengthening the border in Pakistan, strengthening the border in each of the border-states, and I think, I guess -- and, of course, building judicial capacity.

Right now, Afghanistan has a very hard time grabbing and bringing back traffickers or those associated with trafficking because they don't have -- they don't have judges, they don't have prosecutors in large numbers, they don't have courtrooms, they don't have prisons.

So judicial capacity building is critical.

At the same time, that same, if you will, "capture mechanism," needs to also be in place in the surrounding states. And I think that we can do more. We must do more.

I am working closely with DEA [Drug Enforcement Administration] to reinforce their efforts to do more. Regionally, this is a terribly important part of the world not only because it affects all the young people and all the populations that -- through which the heroin flows, and not only because it has a destructive and criminal aspect to it and a corrupting influence on the governments, but because heroin dollars fund terrorism.

And we know of at least four terrorist or extremist groups that are active in Afghanistan. And they have the ability to project outwards and for all those reasons, it is something that not only the Europeans and Russia, but -- and those who are former republics of the Soviet Union, but also the United States needs to tackle with vigor. And we are doing that.

MR. PRINCE: Do you have time for one more?

ASSISTANT SECRETARY CHARLES: Yes.

MR. PRINCE: Right here in the second row, please.

QUESTION: Thanks.

ASSISTANT SECRETARY CHARLES: I'll get you over here.

QUESTION: Khalid Hasan, Daily Times, Pakistan.

My question also relates to Afghanistan. The only thing, the only praiseworthy thing, which the Taliban did was, they eradicated the cultivation of the poppy almost 100 percent.

How does one explain that a government which was practically put in place and power in Afghanistan by the United States, it should have permitted the revival of the heroin -- of the poppy cultivation is such a massive way? It's very difficult to understand in a matter of a few years. So who has been negligent in this? Who should take responsibility?

And number two, where are, what route does this take, this trade? And where are the heroin factories? Where is heroin made, poppy transformed into heroin and what is the U.S. doing about that?

ASSISTANT SECRETARY CHARLES: Let me parse through that first question first because it's a very important one and I think it has two, at least two components to it.

Let me talk first about the period of time where the Taliban, as you suggest, eradicated all of the -- the poppy.

Actually, they didn't eradicate all of the poppy. What they did is, they imposed through fear and decree the idea that it would not be grown. And one argues, I think, effectively, the argument can be made; the price at that time was so low that the ability -- that essentially what they did was equivalent to what the Hunt brothers did in silver. What they did is, they cornered the market.

They were able to shut down and hold in warehouses, large quantities of the heroin and the opium gum. And as they did that, and you can see -- it's very clear on the UNODC [United Nations Office on Drugs and Crime] price charts that as they did that, the spike in price dramatically increased because they essentially turned off the faucet for a time, and were able, then, to profit at a much higher rate when they gradually released it back into the market.

So I do not accept the notion that they eradicated poppy. They did not eradicate poppy.

Go ahead. Sure.

QUESTION: Are you saying that the Taliban actually were trading in heroin? I never heard that before.

ASSISTANT SECRETARY CHARLES: I think it is a well, at least accepted, point of view that what they did is they stockpiled great quantities and that they did that for a reason. And in fact, there are a number of official documents, not just this one, that make that point.

The second thing I would like to say is that it's not an -- I don't believe that it is fair to describe anyone, including the Karzai Government or this Government as negligent in tackling this issue. I think that we have gone from one leg of an Olympic relay race to the next leg.

The first leg was trying to free a people from the grip of terrorists and those who were, frankly, the control, the Taliban government. That was a war-fighting period. That was period during which the primary objective was counterterrorism; the primary objective was providing the opportunity for a free and democratic Afghanistan to grow up. The primary objective, bar none, was to bring freedom back to a people from whom it had been taken.

That having been the case, we are now at leg two of that Olympic relay race, and that is the leg, which requires us to treat both counternarcotics and counterterrorism as equally important. Why? Because in the short run, we have to find and prosecute the terrorists.

In the longer run, we also have to be able to take the heroin economy out of a ringed heroin -- out of the Afghan economy. And there are many ways -- unlike many people, I actually am an optimist on this. I tend to the view that we overstate, not the problem, the problem is very significant; but we overstate the profit margins, for example, of farmers, the institutionalization, the level of coercion at the moment.

In 18 to 24 months, if we're still sitting here and talking about the same numbers, and there is no deterrent to growing poppy and there is no judicial capacity, and it's not being prosecuted, and we're not moving forward, we will have a very serious and sober discussion about, in my view, not making progress.

But right now, I don't think there's negligence. I think instead, what you're seeing is the natural transition from a highly unstable environment in which security in the field was difficult and alternative livelihoods and NGOs and all the others, the international contributors, had not yet gotten their money there; there was not -- the supplemental was not passed by our Congress, there are many pieces that had to come together.

Why am I an optimist? Not because I tend to actually in many things to be more realist than anything else, but I am an optimist because I see these pieces coming together. I see a government. I sat down with President Karzai about two and a half weeks ago and I was amazed in front of his cabinet, the level of conviction that he showed about getting directly at this problem. So I am encouraged by the international community. We are working more aggressively with Great Britain. We are working with the Germans to train police. I have seven police academies coming off the ground right now. Together we are supporting the Karzai Government in producing those academies.

We have five done already. There are two more coming. Each one of them has a capacity of 1,250 for police training. We expect to have 20,000 police trained by June. Minister Jalali has been extraordinary in his leadership. He has been absolutely unremitting in his dedication to making the mix work between border police, highway police, basic police, to make the elections safe and also to make sure that democracy takes root.

So I am an optimist and I do not see in this reasons for either mutual recrimination or some sense of disparagement. Instead, I see in this a moment in time, another tipping point, if you will.

Yes, I promised I'd take this one.

QUESTION: Dubravka Savic, Belgrade Daily, Vecernje Novosti.

Despite the great international presence in the province of Kosovo, the problems with the drug trafficking are great in that province and of great concern, not only for region, for Europe as a whole.

Do you think that enough was done by the international community to face the problem? And what are the specific measures that should be done to face the problem in Kosovo and Balkans as a whole?

ASSISTANT SECRETARY CHARLES: Yes. I think a great deal more can be done.

Kosovo has a special place for this Bureau and for me because we were very deeply involved in training the police in Kosovo. And security is obviously the first step in the direction of being able to do all those other things that you do once you get the environment secure.

I believe more can be done, and frankly, across the entire region. I think that, again, one of the things we have to do as an international community is to recognize how important and how interrelated things like narcotics, counterterrorism, security are.

We could spend another half day probably parsing out the linkages between financing, for example, of terrorists, and destabilizing groups from there all the way east and frankly, north and south as well, terrorist groups, which draw their resources to some degree or another from narcotics as well as other things.

But I guess the short answer to your question is I think we can do more. That is an area that crosses my desk every day. I focus and I expect to be over there at some point in the not too distant future.

One of the things we tend to forget is as we're stabilizing a place how important it is to the maintenance of its long-term stability that narcotics also be wrung out of that environment because narcotics are a high profit margin way to transit in value, which can benefit and often does benefit terrorists and extremist organizations. So, a good question.

MR. PRINCE: Thank you very much.

ASSISTANT SECRETARY CHARLES:Thank you.