SUPPLYING THE US MARKET FOR ILLICIT DRUGS: A PRIMER

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP84S00558R000300110002-8
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 25
• Document Creation Date: December 22, 2016
• Document Release Date: November 8, 2010
• Sequence Number: 2
• Publication Date: May 1, 1983
• Content Type: REPORT

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,,~~ ;?F+rf Directorate of secret
_~ ?`?~ Intelligence
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Supplying the US Market for
Illicit Drugs: A Primer
Secret
G183-lOi I9
May ! 983
63i
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,;;~~;f,~~ Directorate of Secret
Illicit Drugs: A Primer
Supplying the US Market for
Chief, Strategic Narcotics Branch, OGI,
This paper was prepared in the Strategic Narcotics
Branch of the Office of Global Issues. Comments and
queries are welcome and may be addressed to the
This paper was coordinated with the Directorate of
Operations and the National Intelligence Council
Secret
G/ 83-IOl l9
May 1983
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~ecre[
Supplying the US Market for
Illicit Drugs: A Primer
Summary The gross revenues from illicit drug trafficking worldwide may be as much
/r~/c~rmation availah/e as $200 billion annually. As many as 41 million people in the United States
os ~I / M?rch 19s3 each year spend approximately $80 billion on heroin, cocaine, marijuana,
was used in this report.
and hashish.
The drugs entering US markets are produced primarily in Latin America,
Southwest Asia, and Southeast Asia:
? Latin America supplies all of the cocaine, over 90 percent of the
marijuana, and about one-third of the heroin sold in the United States.
Coca is grown mostly in Peru and Bolivia, but most of the cocaine is han-
dled by Colombian traffickers. Most of the marijuana consumed in the
United States is grown in Colombia. Opium, which is processed into
heroin, is grown in Mexico.
? Southwest Asia-the so-called Golden Crescent of Afghanistan, Paki-
stan, and Iran-is the world's leading opium-producing region and
supplies over 50 percent of the heroin used in the United States. Output,
especially in Pakistan, has fallen markedly during the past three years,
the result of low prices in the wake of the large 1979 harvest and poor
weather in 1981-82, but stockpiles have been ample to supply both US
and European markets.
? Southeast Asia-the Golden Triangle of Burma, Thailand, and Laos
supplies about 10 percent of the heroin used in the United States. Recent
military actions by the Thai Government along the Thai-Burmese border
have forced traffickers to relocate some processing laboratories and have
generally disrupted the activities of trafficking groups, although heroin
produced in the region continues to be available in local and Western
markets.
Despite attempts to eradicate crops and the more widespread attention
given to interdiction efforts along trafficking routes, the lure of large
profits is sufficient to ensure that traffickers seek and maintain alternate
sources and routes to supply US users:
? In drug-producing countries, the money earned by growers and traffick-
ers is substantial compared with the returns from alternative crops or
activities. For example, the average income for a Colombian farmer,
according to US Embassy reporting, is $63 per month; a farmer growing
marijuana earns an estimated $1,350 monthly.
Secret
G/ 83-10119
Ma~~ 19Rj
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? Collectively, the activities of growers and traffickers within these coun-
tries constitute a major source of revenue. The US Embassy in Bogota es-
timates that revenues from the drug trade in Colombia are equal to some
6 percent of that country's GNP. In Bolivia, illicit drug industry earnings
probably are equal to roughly one-fourth of GNP.
? The largest profits are earned by the traffickers closest to the retail
markets-principally the United States and Western Europe. Indeed, for
many of these traffickers the laundering of drug profits provides a
greater challenge than drug smuggling. Moreover, laundering activities
are a major source of income for some offshore banking centers.
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Jecret
Heroin
Marijuana
Major Drug-Producing Countries
Latin America/Caribbean
Southwest Asia
Middle East-North Africa
__- - --__
Southeast Asia
Drug-Processing Centers and Trafficking Routes
Latin America
Southwest Asia
Middle East
Southeast Asia
Economics of the Drug Trade
--- -- -_
Source Country Revenues
Trafficking Income
Laundering the Proceeds
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Supplying the US Market for
Illicit Drugs: A Primer
The l1S market for illicit drugs is large and lucrative.
We estimate, based on reports by the US Drug
Enforcement Administration (DEA), the National In-
stitute on Drug Abuse (NIDA), and sources in drug-
producing countries, that each year as much as $80
billion is spent by as many as 41 million people in the
United States to consume some 4 tons of heroin, 35 to
45 tons of cocaine, 10,000 to 14,000 tons of mari-
juana, and 200 tons of hashish.' Nearly all of these
products come from crops grown in foreign countries.
Although the cultivation of these crops is illegal in
most countries, such activity constitutes an important
part of the local economy. For the United States,
these drugs collectively represent the second most
valuable import commodity, after oil. This paper
describes the narcotics operations that supply the US
market, discusses the major growing regions of the
world, reviews the trafficking routes used to smuggle
drugs to the United States, and examines the profits
generated by narcotics activities.
Figure l
1981 US Heroin Consumption of
Four Tons Supplied b.':
South?ast :A~ia-~3
souu,c;i,a :~sia Ili
nt~~~~~~,-?~~
Heroi~,n
Some 4 tons of heroin were consumed in the United
States in 1981 by about 500,000 users, according to
estimates by the National Narcotics Intelligence Con-
sumer Committee (NNICC).2 Southwest Asia now
supplies about one-half of this heroin. Mexico, which
supplied 80 percent of the US heroin market during
the mid-1970s, now provides about one-third of US
supplies. The remainder comes from Southeast Asia.
' This t>aper only examines opium poppy, coca, Cannabis, and their
drug d~;rivatives: heroin, cocaine, marijuana, and hashish. The
synthetic drugs such as amphetamines, PCP, methamphetamine,
methalone, and Valium, over 95 percent of which are produced
domestically, are not addressedQ
The AINICC is composed of agencies concerned with drug
enforcement policy, treatment and research, and intelligence re-
sponsit~ilities. The committee is chaired by the Deputy Assistant
Administrator for Intelligence of the Drug Enforcement Adminis-
tration. Arepresentative from the CIA attends as an observer. ~
Past heroin trade patterns suggest that when efforts to
control opium production in one region are effective-
as in Turkey and, more recently, Mexico~r when
poor weather reduces the size of the opium crop-as
was the case in 1979-80 in Southeast Asia-supplies
in other areas are sufficient to sustain the flow of
heroin to US markets
MarUuana
The United States currently consumes 10,000 to
14,000 tons of marijuana, about 90 percent of which
is grown abroad. Colombia has been the main sup-
plier, providing about 80 percent of US requirements.
There are some signs that the US marijuana market
may be shrinking. Surveys conducted for the National
Institute on Drug Abuse (NIDA) reveal a gradual
decline in marijuana use among high school seniors.
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Figure 2
Heroin Supply to US From
Principal Foreign Sources, 1976-81
Mexico
Southeast :1sia
Southwest Asia
Cocaine
US drug consumers probably spend more on cocaine
than any other illicit drug, annually consuming 35 to
45 tons, according to NNICC estimates. The coca
leaf used to produce the illicit cocaine is grown
primarily in Bolivia and Peru. Colombian traffickers
oversee the refining process and smuggle the drug into
the United States. The indicators of cocaine abuse
monitored by the NIDAwerdose deaths, federal
arrests, and injuries treated in emergency rooms-
show steady growth rates.
Hashish
The Middle East and Southwest Asia supply the bulk
of the roughly 200 tons of hashish which the NNICC
estimates are consumed yearly in the United States.
Morocco, Lebanon, and Pakistan are major produc-
ers. DEA reporting suggests that hashish is more
popular in Western Europe, but reliable data on
hashish consumption are not available.
Figure 3
1981 US Marijuana Consumption
of 10,000-14,000 Tons Supplied by:
!~lcxia~-~
Jamaica-9
US ~)OIlleSlll'-9
Colombia-79
Major Drug-Producing Countries
Latin America/Caribbean
Latin America supplies all of the cocaine, most of the
marijuana, and roughly one-third of the heroin con-
sumed in the United States.
Mexico. The major poppy-growing areas in Mexico
have historically been located in the northern and
southern Sierra Madre Mountains where the combi-
nation of altitude and rainfall produces good crops. In
1977 about 80 percent of Mexico's opium was grown
in the tristate area of Chihuahua, Sinaloa, and
Durango. Although this area remains a major grow-
ing region, production in recent years has also in-
creased in the southern states of Guerrero, Oaxaca,
and Jalisco.
Production of Mexican opium peaked at 65 tons in
1975, according to US Embassy reports. The initia-
tion of an aerial herbicide spray eradication program
in late 1975 soon caused a drastic reduction in opium
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f''ihurc -I
US Marijuana Use During High
School Years
I'crc~~nt n(eradu;uinc ila.,
11111
Il;ne c~er a>ed
mariiuan;i
l~.cd mariiu;in^
in pre~irni~ scar
l,cd nwriiuun;i
in G~rc~inu~ 311
dac.
~,ni~, ~ I ti I)Illlti. A.iiinn.il In.lituic rd Unix Ahu.c_
tiluil: i! 11rue Ahu.e in Amane.i_ I`>'~-RI
procuction. We estimate
l .~d m;iriluan^
dail>
that output was about 16 tons in 1982 and that
prof uction will not increase in 1983.
Marijuana is grown throughout Mexico, with the
densest cultivation in the western mountains. Accord-
ing to NNICC estimates, some 300 to 500 tons
currently are exported to the United States, about
3 percent of US consumption
Gua~!emala. Although Guatemala is not yet a signifi-
cant opium-producing country, a number of poppy
fields were discovered in early 1981 by military forces
several miles from the Mexican border. These fields
appear to represent an effort by Mexican growers to
esca;~e the Mexican eradication campaign. Peasants
tending the fields told DEA representatives that seed
and technical assistance were provided by Mexican
traffickers who periodically inspected the progress of
the crops. Marijuana production is also on the rise,
according to DEA sources, with most fields located
near Guatemala's borders with Mexico.
Figure 5
1981 l~S Cocaine Consumption of 3~--I~
"Pons Supplied b~
I'cni and B~ili~ia ?~
C~~lomhia 7i
Costa Rica and Belize. A recent upsurge in marijua-
na production also has been reported by the US
Embassies in Costa Rica and Belize. No production
figures are available for Costa Rica, but production in
Belize is estimated to be as high as 200 tons per year
and rising. In both countries the increased output is
probably destined for the United States where prices
are substantially higher than those paid domestically.
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Jamaica. Jamaica is the largest producer of marijua-
na in the Caribbean-Central American region with 25X1
an annual crop of about 3,500 tons, according to an
estimate made by the US Embassy in Kingston.
Although marijuana is cultivated throughout the is-
land, there are two distinct growing regions. In the
interior highlands, farms are small with fields of less
than 1 hectare each. In the wetland areas, which
include the Great Morass Swamp on the west coast
and the Braes River region in southwest Jamaica,
hundreds of fields are planted in plantation-style
operations. Jamaica is also used as a transshipment
point for cocaine smuggled from Colombia to the
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Figure 6
United States: Increased Cocaine Use
Number of cmerecncc room treatments
- _ _ ---
la
Colombia. Colombia is a major supplier of marijuana
and an increasingly important producer of cocaine.'
approxi-
mately 2,200 hectares of marijuana were under culti-
vation in the Sierra Nevada de Santa Marta Moun-
tains and Serrania de Perija Mountains bordering
Venezuela during the April-September 1982 growing
season. This area yielded a crop of approximately
7,000 tons, 5,000 tons of which were probably export-
ed to the United States. We estimate that a second
crop of nearly equal size was harvested in March
1983. This region is responsible for about 80 percent
of Colombia's total marijuana production. The Gulf
of Uraba region and several smaller cultivation areas
account for the balance.
Coca cultivation in Colombia has increased dramati-
cally in the last three to five years. Thousands of new
fields are being cleared and planted in the remote
lowland jungle region of the southeast along streams
that are part of the Amazon River system. We
estimate, based on the number of known fields, that
the region probably has a potential to produce be-
tween 15 to 20 tons of cocaine-a potential that will
expand rapidly in the next five years as coca plants
mature and more fields are cleared and planted.?
Peru. Peru, along with Bolivia, is a major producer of
coca leaf. In 1981 the US Embassy in Lima estimated
that Peru produced 50,000 tons of coca leaf, of which
36,000 tons were available for illicit use. The principal
growing regions are located in the departments of
Cusco, Huanuco, and San Martin, with less cultiva-
tion in La Libertad, Ayacucho, Puno, and Cajamarca.
The potential growing area for coca in Peru, however,
is immense, stretching about 1,600 kilometers north
to south in a belt about 80 kilometers wide on the
eastern slopes of the Andes.5
Bolivia. During the last decade Bolivia has become a
major producer and exporter of illicit coca paste and
base.b The US Embassy in La Paz estimates that in
1981 over 60,000 tons of coca leaf were grown in the
Yungas and Chapare Regions. The Yungas, a rugged
mountainous region about 100 kilometers east of La
Paz, supplies most of the country's legitimate coca
needs, although some is undoubtedly siphoned off into
illicit channels. The Chapare is the primary producer
of illicit coca leaf with almost 95 percent of its
production destined for international markets.
Southwest Asia
The Golden Crescent-Afghanistan, Pakistan, and
Iran-is the world's largest producer of opium with
an estimated output, based on
' Roughly 500 tons of coca leaf are needed to produce one ton of
cocaine. Yields vary widely depending on soil conditions, rainfall,
elevation, and age of the plants. For instance, in the Chapare
Region of Bolivia, yields range from 850 kilograms per hectare to
5,000 kilograms per hectare with a median of 2,070 kilograms per
hectare. In the Yungas area the yield ranges from 260 kilograms
per hectare to 1,440 kilograms per hectare with a median of 710
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Figure 7
Merico: Poppy Cultivation Areas
eoune.n r.or...muwn ~.
not McnwrNr .W1lonlaiw.
Guadalajara
Houston
MEXICO
r"~ ,S1 * Veracrat.
\' r ,
~p~10A DZR .,
Acapulco' 3 ~ Oaxaca
US Embassy reports, of 675 to 925 tons
in 1982.' The bulk of this opium is consumed regional-
ly, but there is an ample supply remaining to supply
nearly all of the West European market and over one-
half of the US market with heroin.
Opium output in Southwest Asia has declined steadily
since 1979 when, according to our estimates, more
than 1,500 tons were produced. The greatest produc-
tion iiecline has occurred in Pakistan, where output
has fallen from 700 tons in 1979 to approximately 75
tons in 1982. We believe that production in Afghani-
stan amounts to some 200 to 250 tons, with 130 to 190
tons available for export to Pakistan and Iran. Iran
Guatemala
Honduras
_ Salvado-_
probably produces 400 to 600 tons of opium each 25X1
year. Despite the drop in regional production, large
stockpiles remain from earlier harvests, and these
stockpiles are sufficient to keep heroin flowing to
international markets.
Pakistan. Nearly all of Pakistan's opium is grown ir.
the North-West Frontier Province. A ban on cultiva-
tion in 1979 stopped opium production in the so-called
settled areas where government control is strong, but
cultivation continues where government control is
weak, especially in the largely autonomous tribal
areas along the Afghanistan border. The government
of Pakistan attributes the recent drop in opium pro-
duction to it~ ~a-cotics control program. Indeed, a few
Orluns
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 Fil;ure K
Jamaica: Marijuana Cultivation Areas
Alligator
Pond
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growers have been arrested and some fields eradi- who smuggle their opium into Pakistan where it is
Gated. However, we believe that market conditions sold or traded for weapons in the bazaars of Landi
and poor weather played a more important role. Kotal, Peshawar, and Dara.
According to US Embassy reporting, opium prices fell
from $200 per kilogram in 1978 to between $30 and
$50 per kilogram in 1982. After the current stocks are
drawn down and prices recover, we expect opium
output will increase.
aes~oyed fields or disrupted cropping patterns. Based
Hashish is also produced in Pakistan's remote tribal on these analyses plus reports on interviews of Afghan
regions. According to the NNICC, Pakistani produc- refugees, we assume that opium production in
tion is about 200 tons annually, at least half of which Afghanistan remains roughly the same as it was prior
is consumed locally. to the Soviet invasion
A/ghanistan. Accurate assessment of the opium trade Iran. Iran has long been one of the world's largest
in Afghanistan has been especially difficult since the producers and consumers of opium and its derivatives.
1979 Soviet invasion. The main producing areas The main producing areas are in the mountainous
historically have been in the eastern part of the
country, and the main growers are Pathan tribesmen
The military actions do not appear to have
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north-central and northwestern provinces. Because of
its lar;;e addict population-estimated by Iranian
narcotics officials in 1979 to be nearly 1 million-
Iran is very likely a net opium importer. It also figures
heavily in the trafficking of heroin from Southwest
Asia to Europe and the United States. Most of
Pakistan's and Afghanistan's opium exports go to
Iran; this allows Iran to export opium for sales to the
West through Turkey.g
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Figure 9
Colombia: Coca and Marijuana Cultivation Areas
Netherlands Antilles
Aruba (Neth.)
Bonaire
Curacao
WILLEMSTAD
*nU1T0
CARACAS
aound~ry npnwnhtbn u
not nscs~xrNr ~uthorllHir~.
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Figure 10
Bolivia: Coca Cultivation Areas
Brazil
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Figure 11
Peru: Coca Cultivation Areas
Boundary representation is
not necessarily authoritative.
0 200
Kilometers
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Figure 12
Golden Cresent: Poppy Cultivation Areas and Smuggling Routes
Tay Europe, Eastern editerrane~
~rnd the United Stat via Turkey ~-~`
t
*TEHRAN
Iraq) Ira n
ira4
Sat di Arabia
Neutral Zone 1._
Arabia ' ~
'Qua r
~ Poppy cultivation
~ts_ Smuggling route
0 300
Soviet Union
Middle East-North Africa
Lebanon. Long the world's major producer of hashish,
the continuing instability in Lebanon has seriously
disrupted production and trafficking. According to
NI\ ICC estimates, current production may be as low
as Si0 tons, down from an estimated 650 tons in 1980.
The Bekaa Valley has been the principal growing
are;i, and Beirut International Airport a main smug=
gling point. A more stable Lebanon may well revive
the country's hashish trade.
Morocco. Hashish production in Morocco was esti-
mated by the NNICC at 60 tons in 1980. It is not
certain whether traffickers have increased production
in response to lower output in Lebanon. Production is
Boundary npnpnUtbn is
not n~crrawrily autbwitatiw.
centered in the Rif mountain area of northern Moroc- 25X1
eo, where the central government exercises little ur nu
control.
Southeast Asia
The opium-growing areas of northern Burma, Thai-
land, and Laos-known as the Golden Triangle -
form the world's second-largest opium-producing
region after Southwest Asia. Drought in 1979 and
1980 kept opium production between 160 and 225
tons. Based on a combination of Embassy reporting
we estimate that output
climbed to roughly 600 tons in both the 1981 and
1982 crop seasons.
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Figure l3
Golden Triangle: Poppy Cultivation Areas
'`__ _j Major poppy cultivation
Minor poppy cultivation
India
China
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same as in 1981 but up substantially from the 12-ton
crop produced in 1980, a crop season marked by a
eas[ Asia. Opium output,
was about 500 tons in 1981, a
thr~:efold increase over the average annual output of
the previous two years. The main growing areas are
loc~ited in the Shan, Kayah, Kachin, and Karen
States. A large portion of these areas is controlled by
the Burmese Communist Party, which uses opium
sale;s to finance insurgent operations.
Thailand. The production of opium is dominated by
the tribes that populate the highlands of northern
Th~eiland, principally in Chiang Mai and Chiang Rai
Provinces. Production in 1982 is estimated,
to have been some 57 tons, up from
50 tons in 1981. Preliminary estimates for the 1983
crop indicate a drop in production to 31 to 37 tons, the
result of low rainfall during the crop season.~~
Laos. Opium cultivation is concentrated in central-
northern Laos. Poppyfields are small, averaging ap-
proximately one-sixth hectare each, and are clustered
around highland villages. Based on
US Embassy reports, we estimate
severe drought
Drug-Processing Centers and Trafficking Routes
Latin America
Heroin. Mexican opium is converted to heroin before
being smuggled into the United States. The main
laboratory sites, according to DEA sources, are lo-
cated in and around the city of Culiacan-which lies
adjacent to the main, tristate opium production cen-
ter-and the cities of Durango and Guadalajara.
Mexico's domestic highway system, which runs pre-
dominantly north-south, provides the main artery for
moving heroin north. Entry points along the US
border are so heavily used by legal travelers that a few
kilograms of heroin expertly concealed in vehicles are
difficult to detect. In addition, over 95 percent of the
US-Mexican border has no barricades, making smug-
gling fairly easy
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Cocaine. Colombian traffickers play the key role in
processing South American coca into cocaine hydro-
chloride and smuggling it to the United States. In-
deed, according to DEA and US Embassy reporting,
Colombian traffickers handle about 75 percent of the
cocaine used in the United States. Cocaine laborato-
ries that convert coca paste to cocaine hydrochloride
are generally located in or near the larger Colombian
cities, principally Bogota, Medellin, and Cali. Ether,
the primary chemical used in processing, is more
easily obtained in large quantities in these metropoli-
tan centers. Although Peruvian and Bolivian traffick-
ers are closer to the source of raw material, they
currently lack the international connections and orga-
nization necessary to challenge the Colombian mo-
nopoly in this trade.
In Bolivia, the coca collection sites are located in
Cochabamba, Santa Cruz, Montero, Trinidad, Villa
Tuneri, Shinahota, and Puerto Grether. From these
towns the coca paste or base is shipped out of Bolivia
via Iquitos, Peru; Leticia, Colombia; or Manaus,
Brazil to clandestine labs in Colombia. After the paste
has been processed, the cocaine hydrochloride is
packaged and forwarded to transshipment centers in
the Caribbean for distribution to US retailers
Peruvian coca products leave the country via ships,
private and commercial aircraft, cars, trucks, and
riverboats. The principal exit points are Callao, Jorge
Chavez International Airport in Lima, Iquitos Inter-
national Airport, and numerous locations along the
thousands of kilometers of Peru's unpatrolled border
and coastline.
Marijuana. Most Colombian marijuana is smuggled
by sea in so-called mother ship operations. Ships are
loaded off Colombia's north coast and deliver the
marijuana to predetermined locations along the south-
eastern US coast where small boats unload the mari-
juana and take it ashore.
Some Colombian and nearly all of the Jamaican
marijuana is smuggled by general aviation aircraft.
Small twin-engined aircraft with payloads of up to
500 kg are the rule in the Jamaican trade, while in the
Colombian trade there have been instances of large
twin-engined and four-engined aircraft flying loads of
up to 13 tons of marijuana as far north as South
Dakotal
In Mexico, according to DEA reports, major organi-
zations control all levels of trafficking from the
farmers growing the crop to "mules" who smuggle the
marijuana across the border. Marijuana is also sold
directly to US citizens in Mexico who fly it into the
United States or smuggle it in private cars and trucks.
Southwest Asia
Much of the Southwest Asian opium intended for
Western markets is smuggled through Iran into east-
ern Turkey. The Turks, with several decades of
experience in smuggling opiates, either refine the
opium into morphine base, which is then sent to
laboratories in Italy for further processing, or produce
heroin themselves in crude laboratories near the Irani-
an border. According to the NNICC, the bulk of the
opiates smuggled into Western Europe from Turkey
are transported over heavily traveled roads from
Istanbul through Bulgaria, Yugoslavia, and Austria
into West Germany and from Yugoslavia into Italy by
way of border-crossing points east of Trieste. Mor-
phine and heroin are also shipped into Greece from
Turkey and on to Italy by way of car ferry. Italian
refineries supply heroin to the northeastern United
States by way of commercial air and sea freight
Seizure data and field reporting by DEA indicate that
Pakistan has recently become a major heroin pro-
ducer. Within the past two years or so, wholesale
amounts of highly pure heroin from Pakistan have
entered the illicit international market. According to
statements by Pakistani authorities to US Govern-
ment representatives in November 1982, up to 30
heroin laboratories were operating in tribal regions of
the North-West Frontier Province, particularly
around the border town of Landi Kotal. Late in 1982,
the government of Pakistan put pressure on the tribal
leaders to end the laboratory operations. Embassy
reporting indicates that a few chemists surrendered
some of their hardware; however, no chemicals or
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heroin were confiscated. We believe that many if not
all of these laboratories remain operational. The US
Embassy in Islamabad estimates that some 300,000
opium users and about 50,000 heroin addicts consume
a significant portion of Pakistan's production. The
hero. n destined for foreign markets is carried aboard
comtercial air flights from Pakistan to Europe, the
Persian Gulf, and the United States.
Middle East
Has}tish occasionally is smuggled by the same organi-
zaticns that traffic Southwest Asian heroin. However,
because hashish is bulkier than heroin, it is more often
concealed in trucks or sea freight shipments. Accord-
ing to DEA sources and US Embassy reporting,
Lebanese hashish is shipped by sea to Italy and the
Net}terlands or to the United States via Cyprus.
Hashish smuggling from Morocco moves into Europe
via Spain. Information on hashish from Afghanistan
is sparse, but much of this hashish is probably smug-
gled into Pakistan to Lahore and Karachi where it is
moved with Pakistani hashish by air to European and
North American markets.
Southeast Asia
Nar~~otics produced in the Golden Triangle have
traditionally reached world markets by transiting
Thai land. Caravans carry opium from the principal
growing areas northern Burma and northern Thai-
land-to the refineries along the Thai-Burmese bor-
der. The growing areas and trafficking routes in
Thailand have traditionally been controlled by para-
military insurgent/trafficking organizations who pur-
chase the opium from the farmers and control its
distribution. The Shan United Army (SUA), the
largest of these groups, until recently controlled
70 percent of the Golden Triangle's opium trade,
purchasing opium in both Thailand and Burma and
converting much of it to heroin in refineries along the
Thai-Burmese border.`
Until recently, almost all of the narcotics processed
along the border were shipped to Bangkok and south-
ern "Thailand via trucks, tour buses, trains, and pri-
vately owned vehicles. Military actions in 1982 by the
The SUA purports [o be an ethnic insurgent army organized to
fight for a Shan tribal homeland in Burma. In reality, it is a private
army of brigands and narcotics traffickers under the leadership of a
Thai and Burmese against the SUA and the heroin
refineries in the border area caused these routes to
shift. An increasing amount of heroin produced at the
border now moves back into Burma to be smuggled
out along the unpoliced Tennaserim coast or through
Bangladesh. In addition, narcotics are increasingly
shipped by way of China to Hong Kong. Coastal
waters around the Malay Peninsula arc alsxt used by
traffickers to move drugs to Indonesia, Singapore,
Hong Kong, and other Asian ports. Amsterdam is
now the hub for heroin from Southeast Asia dcstincd25X1
for Europe, Canada, and the United States, although
these markets are also serviced by commercial air-
craft from Bangkok, Kuala Lumpur, and Pcnang.~
$200 billion, according to our estimate."
Each year as many as 41 million people in the United
States spend up to $80 billion on heroin, cocaine,
marijuana, and hashish. The money spent for drugs in
the United States helps support a worldwide illicit
industry with gross annual earnings of as much as
25X1
25X1
Source Country Revenues
The amount of money generated by the illicit drug
trade often equals a major share of the legitimate
GNP in producer countries. For example, the US
Embassy in La Paz estimates that in 1981 income
derived from the sale of coca leaf and its derivatives
may have been worth as much as $1.6 billion to the
Bolivian economy-roughly one-fourth of Bolivia's
legitimate GNP." According to the US Embassy in
Bogota, Colombian exports of marijuana, cocaine,
and methaqualone annually amount to some $2 bil-
lion, an amount equal to 7 percent of Colombia's
GNP from legitimate sources. Drugs arc thus Colum-
bia's most valuable export after coffee. The US 25X1
'? These estimates are based on the retail prices in major markets as
reported by DEA. Estimates do not include synthetic drugs ur
25X1
illegal drugs produced and consumed in the same cuuntn. The 25X1
figures cited are for 1981, the last year for which data were
available.
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Fi~urc 1-1
Golden Triangle: Smu~~;linfi Routes
Laskfo~ ~
Man-hpanf?
Major poppy cultivation
Minor poppy cultivation
~Louangphrabang
LAOS
VIENTIANE
~* ,.1
Thailand
Major smuggling route
Opium
Heroin/opium
Minor smuggling route
Opium
Heroin/opium
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secret
Err bassy in Kingston estimates that some 15 percent
of I he $1.5 billion earned by the sale of Jamaican
marijuana in the United States each year returns to
Jamaica where marijuana is the principal agricultural
export crop.
Although in many cases it is difficult to estimate the
amount of drug money that actually filters back into
the economy of a producer country, such revenues
clearly are of substantial benefit to many source
country economies. For example, the average mini-
mum wage for a Colombian farmer, according to US
Entbassy reporting, is $63 per month; a farmer grow-
ing marijuana earns $45 per day or $1,350 monthly.
Dayworkers in Bolivia's illicit coca fields can earn 150
to X00 pesos for an eight-hour shift, almost eight
times the rate for a day's work on a farm growing
legitimate crops. Studies by the Bolivian Government
show that acoca-growing family in the Chapare
Region can, under optimum conditions, earn $20,000
per year compared to the national average per capita
income of about $1,000. In Jamaica, ganja, as mari-
ju2.na is called locally, is a traditional crop. The
go~~ernment of Prime Minister Seaga is reluctant to
move against the growers and traffickers for fear of
disrttpting the island's rural economy and upsetting
thc~ regime's fragile political base. In northern Thai-
land an effort under the sponsorship of the King to
persuade opium producers to shift to other crops has
ha3 no noticeable impact on poppy cultivation be-
cailse of the low cash return from other agricultural
products compared to opium.
Trstfficking Income
Because of the tremendous price markup between the
farm and retail market, traffickers earn far larger
Burns than growers. For example, in Southwest Asia a
farmer will sell 10 kilograms of opium for about $400;
thi;~ amount can be processed into 1 kilogram of
90-percent pure heroin at a laboratory in Turkey and
sold by processors for some $8,000 to $15,000. When
smuggled into the United States and diluted, this
1 kilogram of heroin yields drugs worth some
$300,000 to $400,000 at the wholesale level and
roughly $1.5 million on US streets.'Z A similar price
'~ Tlie prices given here are for 1 kilogram of 90-percent pure heroin
or i.s equivalent. As purity decreases, volume of the merchandise
increases. The original 1 kilogram of 90-percent pure heroin makes
from 13 to 30 kilograms of street-level heroin which ranges from 3-
to 7-percent purity. Total sales of the 13 to 30 kilograms would
structure exists for cocaine where the farmer is paid
some $800 to $1,000 for one-half metric ton of coca
leaf in Bolivia that could represent 1 kilogram of pure
cocaine worth some $800,000 to street dealers in the
United States. Marijuana is sold by Colombian grow-
ers for $2 to $4 per pound. Smuggling that pound of
marijuana to the United States results in a retail price
of $500 to $800 per pound
Laundering the Proceeds
Disposing of cash generated by drug trafficking is in
many cases a greater burden for traffickers than drug
smuggling itself. The process of sanitizing or "laun-
dering" drug money so that it may be more easily
transported and used for a variety of purposes usually
begins with consolidation of the street take into bills
of larger denomination at numerous local banks. The
funds may then be smuggled out of the country
directly or deposited in a local bank for wire transfer
abroad. To evade currency controls in other countries
and tighter US surveillance of cash movements, drug
traffickers are increasingly turning to more unamven-
tional means of moving money. Their imports into the
United States, for example, may be overinvoiced by :t
cohort abroad with the surplus payment deposited in a
foreign bank account. Similarly, lateral transfers may
be used with a collaborator overseas depositing funds
in a local account in exchange for direct payment of
his bills in dollars by a trafficker in the United States.
Offshore banking centers throughout the world play a
major role in processing directly transferred drug
revenues. In these centers, funds are deposited in
secret accounts or in accounts of shell corporations
from which they are returned to the original deposi-
tors. According to DEA sources, the main flow of
funds financing the movement of heroin from South-
west Asia is through Italy, Sicily, and Switzerland.
Other DEA sources report that offshore banks in the
Caribbean are the main conduits for the drug trade
revenues in the Western Hemisphere. In Southwest
Asia, we believe Hong Kong is the most important
drug-money center
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 Figure 15
Narcotics Smuggling: Major Routes and Cultivation Areas
~ SIA frAAAiAt/
Lq SASlllf
Major Routes
Cocaine Marijuana
Hashish Opiates
Cultivation Areas
Coca ?Licit opium
Hashish ~,~ //licit opium
Marijuana
Financial "laundenng" center
Detroit
CAilgl'
United States
~~
Mexico
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Greenland
IDeni
Detxp6rk
United ~~rr `
trlrrnd J 16ilrgddnl ~aIter
Netr J
Id the US.
and fa~ope
~~ south ~~~
Africa lesomo
C.A.R. -Central Atncan Republic
F.R.G. -Federa~ Republic of Germany
G.D.R. -German Democratic Republic
P.D.R.Y.-aeop~,e s Democrat~r. Rep.,b'~c of Yemen
Y.A.R. -Yemen Arab Repubi~c
U.A.E.-lln~te0 Arab Emirates
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Western
Sahara
Mauritania
c,ce Meli Ni er
ve~ae Senegal 9
the GamDw as ppe
lt
V
o
Gomea-a~ssau Cuinea
a 6
n
h, ermet ,.
NKs
NAIh llmryr' Malaysia
s ~gaooR'
Indoq~ia .
/;J
Papua
New Guinea
m
sn~omon
Islands rwam
New
Zealand
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Secret
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