Even though there is unanimous consensus among policy analysts that a viable solution of the United States cocaine problems must involve both the supply and demand strategies, the content of this paper is considerably more modest in scope. It takes a critical view of the present supply reduction efforts in Columbia, Peru, and Bolivia, the three main cocaine producing countries, and urges to supplant the present disjointed policies with ones that could make considerable more progress toward resolving the Latin American cocaine production problem.

In the United States the cocaine import is still on the rise even though around 75 percent of the last several drug budgets have been devoted to supply reduction activity. The Bush administration's war on drugs called for an increase of $2.2 billion to launch a strategy which, with the exception of more arrests of users and a few isolated victories in Latin America, is essentially doing more of what already has been done with only marginal success during the last five years.

The objective of this paper is to formulate a Latin American supply reduction strategy which, for a given amount of United States intervention dollars, will be capable of creating a larger and more permanent reduction in cocaine supply than any of the currently enforced policies. To the chagrin of many Americans, unimaginative and poorly coordinated approaches to coca eradication, coca pit destruction, transport interdictions, and destruction of coca crystallization labs have failed to curb the domestic supply of cocaine. Yet, we have accumulated an enormous amount of knowledge on how cocaine is produced, shipped, and distributed. Tapping on this body of information, an attempt will be made to assign priorities of action in various segments of the industry in order to get the most out of our limited resources. Finding a more cost efficient supply reduction strategy will not put an end to America's cocaine epidemic, but it will certainly release funds for a more multidimensional attack on this pressing problem.

Maintenance of Pressure upon Columbian Cartels

In the vertical structure of cocaine production that stretches from Peruvian and Bolivian coca fields to the wholesaling markets in the United States, it would be fair to depict the Columbian cartels as being the dominant link of the industry. They succeeded in forming a virtual monopsony in purchasing of coca paste and cocaine base in the lower levels of the structure and emerge as a strong monopoly in the final wholesaling stage of the industry. In addition to being not only the world's leading producers of cocaine hydro-chioride, Columbian drug lords are also responsible for eighty percent of all cocaine that reaches America's shores. It is estimated that in 1985 approximately 566 metric tons of cocaine hydrochloride have been refined by Columbian mafia and 80 percent of it ended up in the United States markets.1 While part of this final product was produced from coca leaf grown in Columbia, most of it was refined from coca paste or cocaine base originating in Peru and Bolivia. The importance of the cartels in the vertical chain of cocaine production and distribution cannot be underestimated.

Despite its dominant role in the industry, the structure of the Columbian mafia can be characterized as a loosely knit coalition of families with many "nerve centers." As a result, the overall command and control is quite decentralized. The cartels do not have a hierarchical framework with well defined lines of authority and responsibility. And yet, any exertion of pressure upon the cartels' operations is met with collusive vindictiveness against the Columbian government or anybody else who chooses to oppose them.

The vast majority of cocaine smuggled into the United States comes from 10 to 20 regional cartels that are run and staffed only by Columbians.2 A typical cartel is headed by an individual who is usually well-known to the drug enforcement community. Typically members are blood relatives or life-long friends of the leaders, frequently people who grew up in the same village or the same area as the head of the organization. Many of the cartels are believed to have financial resources of several billion dollars and, by using some of the profits to provide health care and public housing, they have built up a considerable public support system for their illegal activities. Even though most of the drug lords manage independent trafficking and/or refining organizations, they frequently collaborate in specific smuggling ventures.3 Rank and file personnel, technicians and specialized equipment are switched around among the organizations as needs of specific operations dictate. Such cooperative arrangements not only promote efficient utilization of expensive capital but are also responsible for full employment of specialized human resources. Pablo Escobar Gavicia, Jorge Luis, Ochoa Vesquez and his two brothers, Juan David and Fabio, are some of the most successful and influential organizers of such collusive arrangements.4 So when it is mentioned in the literature that a Columbian cartel is responsible for 80 percent of the cocaine shipments to United States markets, the credit should actually accrue to several organizations that are in various cooperative agreements under the leadership of these such individuals.5 Collusion among cartels provides numerous benefits, such as, division of labor, full employment of specialized resources, full capacity of high-valued capital, wide selection of smuggling and processing equipment, and price control along the entire production chain.

Since the ultimate motivating factor behind collusion is maximization of profit, it also makes a great deal of sense to refine the cocaine in relatively large-sized laboratories in order to reap all the possible cost savings conveyed by economies of large scale production. Data on the size of laboratories are unavailable but can be approximated from captured refineries and the accompanying caches of precursor chemicals, and quantities of semifinished and finished final product.

A 1984 raid on one of the Medellin cartel's cocaine-refining complex on the Yari River netted 10 metric tons of cocaine and large quantities of valuable precursor chemicals. This single operation confiscated an amount equal to five percent of the cocaine entering the United States that year. In order to decrease the risk of large seizure, for several years the cartel refiners adjusted by dispersing into smaller labs. More recent intelligence indicates that processors have returned to large scale operations and located them on their home turf near Cali, Medellin and Bogota. A May 1990 raid, by the Columbian anti-narcotics police units near town of Puerto Triunfo, 75 miles south of Bogota, produced a yield of more than 3,000 pounds of cocaine.6

Also, in August, 1989, police raids exposed a concentration of large laboratories belonging to the Medellin mafia in an area of central Columbia called the Magdalena Medio. The labs produced some of their own precursor chemicals and had facilities to recycle chemicals already used in the production of cocaine.7 In addition to 1,200 kilos of cocaine, the raid netted 500,000 gallons of percursor chemicals which could have been used to produce an additional 125 metric tons of cocaine hydrochloride. The elaborate recycling equipment had the capacity to quadruple that amount to 500 metric tons of cocaine! 8 Such savings on percursor chemicals demonstrate an apparent need to refine cocaine on a large scale in order to keep the average cost per unit of final output at the lowest possible level.

Employment of trained personnel, intelligence gathering about governmental activity, and provision of security to protect highly valued final product provide additional evidence for the presence of large scale economies. It makes economic sense to distribute the cost of such high-priced inputs or activities over the highest possible output range. All of this seems to indicate that the larger is the laboratory's output, the lower is the cost per unit of final product. It is this relatively large output of the average refinery that makes the crystallization stage extremely attractive to search-and-destroy missions. Assuming that the average cost of any given raid is constant, higher seizure rate of the highly valued semi-processed or final product at the refinery operations level makes raids on them more cost effective than on any other vertical stage of production.

The principal weakness of the crystallization facility destruction approach is that its continuous pursuit may force the cartel to split the refining activities into more numerous and, thus, smaller capacity operations. But despite the Columbian government's year-long pressure on the indigenous cocaine mafia, there is no evidence of any massive refinery decentralization activity.

Reluctance to move out of Columbia and/or split up into smaller production units is most likely attributable to the loss of scale economies. Any down-scaling of refinery plants will force cartels to take a cut in profits and/or raise the wholesale prices in U.S. stagnant cocaine mark-ets, something that they are averse to doing. Also possible loss of pecuniary economies in either potassium permanganate and acetone purchasing, increase in security activity to guard more numerous but smaller refining units, abandonment of excellent geographic location for staging shipments to United States markets, re-establishing intelligence gathering facilities, and the overall network of already established business relationships are some of the other factors responsible for the absence of any massive relocation activity.

Since mid-August, 1989, when the Columbian government reinstated extradition to the U.S. and began exerting excessive pressure upon the cartels, major traffickers are in constant movement from one safe house to another. In addition to keeping their operations going, the other main goals of the traffickers at the present time are to avoid capture and to convince the government to abandon its campaign of arrest, extradition, and asset seizure. In order to accomplish these goals cartels are pursuing a campaign of terror to compel the government to negotiate with them. After bombings and murders of judges have failed to persuade the government to abandon its unremitting anti-narcotics campaign, the cocaine mafia began kidnapping and assassinating prominent Columbians. But despite peace offers from the Medellin cartel, there are strong indications that the highest levels of the government are committed to bringing the traffickers to justice.

It is important to observe that what was impossible to accomplish in a decade of concerted interdiction effort was at least momentarily achieved during the Colombian government 1989 summer crackdown on the Medellin and Cali cartels. According to the Custom Service and officials of other federal agencies, toward the end of the 1989 summer large air shipments of cocaine from Colombia to staging areas near the United States have slowed to a crawl.9 A huge Colombian government antidrug assault, resulting in waves of arrests and massive confiscation of cartel assets, apparently snarled the delivery network of planes, helicopters, pilots, mechanics, and fuel suppliers that the cartel depends on to ship large quantities of cocaine out of Colombia. The information was obtained from informants and electrical surveillance of staging areas in Mexico and off the southern coast of the United States. During this period Custom's agents continued to capture smugglers with twenty and thirty pound loads, but the large shipments that only Colombia's cartels were capable of moving appear to have dried up. Additional evidence for the slowdown of cocaine inflow was observed from the behavior of Miami wholesale prices which temporarily increased to $18,000/kg. from about $11,000 in less than a month. During the same period in San Diego the price also edged up from its $15,000/kg. level.10

This shortage of cocaine in the United States' wholesale markets turned out to be only a temporary phenomenon. Yet it offers support to the notions that sustained massive raids upon the cartel's laboratories and its basic infrastructure are not only cost-effective, but they also appear to be a more effective method of clogging the cocaine pipeline than concerted pressure on the cartel's transportation lines in the Caribbean basin and along United States borders.

Failure of Coca Eradication Policy

In addition to being cost-effective, maintenance of an aggressive posture on the cartels and their infrastructure has some other more important economic implications. Since cartels buy most of the unfinished cocaine products from numerous Bolivan and Peruvian sources, diminution of Columbian refinery capacity will not only decrease the demand for coca paste but for coca leaves as well. This means that continuous pressure on the refineries and the general cartel infrastructure will exert a negative effect on all the lower stages of production. From the political perspective, such approach is also a superior alternative to direct United States involvement in the destruction of coca. For example, United States army-supported Operation Blast Furnace in summer of 1986 was a technical success for three months, because it stopped all cocaine trade in Bolivia. However, segments of Bolivia's political groups severely criticized the government for inviting American forces. Most likely a leader with less stature than Victor Paz Estenssoro would not have survived the political fallout.11 The proposed policy will decrease pressure on local governments, because the compesinos will be pointing the accusatory finger for coca and coca paste demand decreases at the Columbian buyers rather than locally stationed American field agents.

Elimination of coca plants without any conscious coordination of pressure at the Columbian level of the industry has proven to be a huge disaster. It is difficult to say whether the United States overestimated its coca destructive capabilities or it underestimated the depth of Andean resistance to such policy. The Reagan administration and, to an almost similar degree, the present administration were simply overpowered by the compelling logic of coca eradication strategy. Elimination of coca fields in Bolivia and Peru meant elimination of cocaine refineries in Columbia, which in turn, meant huge decreases of cocaine supply in United States markets. According to this reasoning, a single massive blow at the first stage of cocaine production would have toppled the entire industry. Not surprisingly, since 1985 the core of United States drug control policy in Latin America consisted of eradication of coca plants. As Ann Wrobleski, Assistant Secretary of State for International Narcotics Matters and coordinator of the Reagan administration's international anti-drug effort, has indicated, "The primary policy focus is to stop the drugs at the source.. ..So we'veifocused our effort in the fields, in an effort to eradicate the plants before they are harvested.”12 This goal, however, proved to be elusive.

The problem of coca eradication strategy lies not in its logic but in its execution. One of the most formidable obstacles blocking the success of this approach is the sheer size of the area devoted to coca cultivation. It presently amounts to approximately half a million acres.13 While Bolivia and Peru are the primary coca producers, considerably smaller amounts are also grown in Columbia and few other South American countries. Despite steadfast State Department lobbying to expand eradications in the two main producing countries, throughout the entire decade coca output has continued to increase at an astounding rate. In Bolivia and Peru the number of hectares of coca cultivation from 1986 to 1990 have increased by 48 percent and 23 percent respectively.14 Notwithstanding record eradication rates of the last few years, the net amount of land devoted to coca growing is steadily expanding.

In order for coca eradication to become an effective supply reducing strategy, Wa*hington realized that it must be carried out on a large scale with massive aerial spraying. But also here huge obstacles blocked any progress. From a technical point of view, there is the problem of finding a suitable herbicide which does not damage the surrounding ecosystem. One proposed chemical is tebuthiuron, or "Spike". Tebuthiuron is not a defoliant but a herbicide designed to kill woody plants. In October, 1987 it was tested with five other herbicides on a small plot in Peru's Huallaga Valley. It effectively killed coca and was immediately approved by the Environmental Protection Agency. However, EPA warned that, since "Spike" is an extremely potent substance that will kill trees, shrubs and other forms of desirable vegetation, it should be kept out of lakes, ponds, and streams.15

When the United States Government tried to purchase "Spike" for spraying purposes from the Eli Lilly Company in 1988, the company refused to oblige, stating the need for further testing in order to study the health and environmental effects of the herbicide. Critics also claim that even when sprayed at higher elevations on land suited almost exclusively to coca production, the rains could wash the potentially destructive chemical into the more fertile valleys used for cultivation of food crops. According to them the Huallaga test was inadequate and too poorly planned to prove that "Spike" is harmless to the delicate tropical ecosystem.16 American drug officials are still optimistic that large-scale aerial spraying of coca herbicides will become a reality in a not too distant future. They think that environmental concerns are overblown, and that coca growers by eradication of jungle for expansion of coca cultivation tend to inflict far greater damage upon the local environment. The Peruvian and Bolivian governments, under heavy pressure from growers, have been reluctant to allow chemical eradication even to the point of passing laws against it.17

Since aerial eradications programs has been postponed for further testing, drug enforcement agencies have resorted to manual crop destruction. Manual eradication is slow and dangerous work, particularly in the Upper Huallaga Valley, an area some 200 miles long and 30-40 miles wide, on the eastern foothills of the Andes. The valley is the main coca producing area in Peru and is responsible for more than half of the coca raw material for the cocaine and crack consumed in the United States. Here manual eradication and raids against cocaine base labs in 1989 were hindered by more than seven months of suspended operations, because of escalation of violence by the Sendero Luminoso and Tupac Amaru guerillas.

Once American helicopters manned by U.S. civilian pilots were employed to ferry the CORAH teams with police guards to the work sites, eradication rate had increased considerably.18 However, stepped up rate of activity has been matched by a proportional rise in local resistance efforts. Last year in Upper Huallaga Valley alone police and military forces have suffered 152 casualties in 44 separate incidents. According to a State Department report, "The deterioration of the security situation in the Upper Huallaga Valley departments of Huanuco, San Martin and Ucayali will continue to be a determining factor in government anti-narcotics planning efforts and the U.S. narcotics assistance program.19

Peruvian and Bolivan farmers and their governments understand very well that any success in reduction of coca output will have an important economic, political, and social impact on their countries. Even though the cocaine industry is deeply entrenched in several Andean economies, its exact economic impact is difficult to measure. During the last decade it has become an important employer and presently is functioning as a safety valve for the Andean countries in providing jobs, income, and foreign exchange.20 Hundreds of thousands of South Americans are involved in the cultivation, processing and refining, transportation, and smuggling. Such illegal activity is almost indispensable for their economic survival. In Boliva, the smallest of the cocaine producing countries, one-fifth of the population is officially unemployed. By employing an estimated 350,000 to 400,000 people, approximately six percent of the population, coca production has been recognized, by far, as the country's most important business and its primary source of foreign exchange. Even in Peru coca growing has become an important source of employment. There is also a huge number of South Americans in licit occupations — bankers, lawyers, accountants, construction workers, car salesmen, hotel owners, etc. — who are direct beneficiaries of the industry's multiplier effect. For example, the inflow of narco dollars into Medellin in the mid-1980s provided considerable stimuli to the city's lagging industry's and decreased Medellin's unemployment rate from 17 percent in 1983 to 12 percent in 1987. Presently, repatriated cocaine dollars are equivalent to at least 25 percent of Peru's legal exports and fifty percent of Bolivia's. This support process is most advanced in Peru and Bolivia, which have performed poorly on nearly every economic front during the past decade.21

Because Columbia's economy is considerably larger than those of the other Andean nations, the economic impact of the cocaine industry upon its GNP and unemployment is noticeably less pronounced. However, certain entire regions in Columbia are heavily dependent on coca growing or on income generated from cocaine refining and trafficking.

If the essential reason for the resistance to coca destruction has economic implications, it is important to evaluate next the strength of the political infrastructure on which this resistance is based.

In Peru the political strength of coca farmers is essentially based on vigorous local organizational activity. According to Lee III, in the Upper Huallaga Valley, where over 90 percent of farm income can be traced to coca cultivation, growers operate through provincial and district self-defense fronts called Federaciones de Defensa de los Intereses del Pueblo. 22 The fronts essentially defend the farmers rights to cultivate coca and relies on mass demonstrations, roadblocks, and other mobilization tactics. The political activity has leftist leanings and organizations are infiltrated by Sendero Luminoso guerrillas who are now in control of various Huallaga Valley areas. They are well armed and frequently launch attacks against local police outposts. Sendero, through their strong opposition to coca eradication in general and to coca herbicide spraying in particular, has gained considerable support from the peasant population. A Sendero leaflet distributed to the farmers states "We repudiate and denounce the plan to eradicate coca plantations by using herbicides of high destructive power, such as "Spike", which not only destroy coca, flora, and fauna, but also threaten the lives of animals and humans throughout the Huallaga region."23 In 1988 similar pressure from other coca lobby sources have caused the Peruvian government to stop its herbicide testing program.

In Bolivia the growers are a much stronger regional and national political force than in Peru. According to Healy, it is a force to be reckoned with by the government in office.24 Since 1982, around 80,000 coca growing families from a total of Bolivia's rural population of 840,000 families, have persistently exercised their democratic labor rights to block many state efforts to control coca leaf production. They function through local union organizations and gain national influence by sending delegates to congresses where members have an opportunity to air grievances and elect representatives to the centralized offices of peasant power. Successful coca lobbying also encouraged the peasants to organize the Association National de Productores de Coca with representatives from all coca producing zones in La Paz, Santa Cruz, and Cochabamba regions. In contrast to Peru, Bolivian network of producers work within the democratic rules of the game and do not resort to any form of violent pressure tactics.25

Even though resistance to eradication policies in the two major producing countries is based on rather different institutional arrangements, it has been proven to be effective in preserving the will of the compesinos. Apparently in both countries the coca growing lobbyists have wide support and, despite U.S. persistent lobbying, coca production is still on the rise. Fear of massive peasant unrest have stopped the governments of Peru and Bolivia from implementing aggressive and effective coca crop control programs — especially aerial spraying of herbicides on Andean coca fields.

If coca-generated incomes are lost, farmers and peasants with limited choices for employment will greatly increase the pressure on their governments via strikes in Bolivia and political violence in Peru. Straight-forward coca destruction policy has not succeeded in the past and will not succeed in the future. Only those anti-coca policies that can provide reliable economic alternative and gain the support of the Andean farmers will eventually succeed. In order to make coca elimination an obtainable goal, United States policies must acquire a positive general tone and concentrate on strengthening of the legal economies rather than promoting corruption, weakening of the indigenous criminal justice systems, and a general economic malaise.

Coca Price and Crop Substitution Program

In the coca producing countries no other program could have more possibilities for cooperation and goodwill than a crop substitution program. Yet throughout the entire 1980's alternate crop approach was not a viable option because even relatively high-return crops, like cocoa and coffee, failed to compete with the profitability of coca. In Peru's Upper Huallaga Valley a coca producer's gross income in 1985 was ten times higher than that of a coffee grower and twenty-one times that of a rice farmer. Also field hands on coca farms were earning twice the income of those engaged in legal agricultural pursuits.26 High profits from coca cultivation is one of the most arduous obstacles that has to be overcome in order to make crop substitution program attractive to the expanding army of coca growers. In Chapare coca is harvested four times a year and the dried leaves are then sold for further processing in 100-pound units. Cultivation and transport costs are estimated to be approximately $30 per unit, and during the middle 1980's prices ranged from $200 to a peak price in 1985 of $800 per hundredweight.27 Given such price range, there were no magical crops that could approximate the economic value of coca. Yet throughout the entire decade continuous attempts have been made to establish the necessary infra-structure for cultivation of possible replacement crops.

In Bolivia AID is currently financing an eight year $26.5 million Chapare Region Development Project which is focused entirely on the Chapare and Cochabamba Valley regions.28 In addition to projects providing direct assistance to compesinos that have voluntary eradicated a portion of this coca, it is also involved in financing of agribusiness, the provision of agricultural credit, and assistance in strengthening of Bolivian agricultural service delivery organizations. Because the provision of direct assistance to farmers and communities is conditioned on voluntary eradication of coca crop, in 1988 less than 2,000 hectares have been eradicated. The high opportunity cost of legal crops has severely limited the target group of farmers with which AID can work. In light of such market realities, it is doubtful that a single crop or combination of crops can be developed to successfully compete with coca at current prices.

Since the 1989 Columbian summer offensive, the growers are no longer enjoying the high profit margins to which so many had been accustomed in the earlier years of the industry. Because of the increased anti-cartel activity in Columbia, the price varied throughout the year, sometimes radically, from $10 to $100 per hundredweight. Apparently steady maintenance of increased pressure against the Columbian drug lords can initiate a continuous decline in demand for Bolivian and Peruvian coca derivatives and their prices. Only if coca prices are lowered below the $30 level and permanently maintained around that range, will the farmers develop an incentive for the production of the currently less profitable licit crops.

Cost increases from past interdiction successes have forced many Bolivian lower stage producers to merge and establish around 25 vertically integrated operations. That means that even with a considerable Columbian demand decrease, demand for Bolivian coca and its derivatives still can be kept buoyant by the indigenous producers. Fortunately many of those operations are marginal and are frequently plagued by cash flow problems. Numerous producers reportedly fund up to 80 percent of their paste purchases from compesinos on credit and depend on Columbian cartels for wholesaling services.29 Since Bolivian traffickers are forced to rely on credit and, lacking market connections, are "fronting" the base/HCL products with the Columbians, the entire Bolivian cultivator/ producers chain is extremely vulnerable to stepped up Columbian government campaign and to any major seizures throughout the international processing/distribution chain.

Probability of success for alternate crop program in Peru is not as good in Bolivia. In Peru's Upper Huallaga Valley, AID has established a $27.5 million project to strengthen public sector agricultural support services.30 However, escalating civil war with Sendero Luminoso guerrillas and deterioration of security in the area has made it virtually impossible to continue many of the project's activities. In some parts of the region there are even indications that insurgents have organized coca leaf growers and paste producers in order to countermand the Columbian cartel monopsony prices.

The security problem in Peru is very difficult to deal with and it must be successfully addressed by the country's armed services. There are no quick panaceas that will help Peruvian coca growers make the transition to licit income sources. But just like in Bolivia, there is evidence of a significant downward trend in coca derivative prices, which roughly coincided with the Columbian August 1985 crackdown on the cartels. During 1988 and up to August 1989 the general price level was fairly stable, averaging around $350/kg for coca paste and $1,050/kg for cocaine base. Post-August 1985 prices have dropped significantly to around $180 and $850 respectively.31

Whether in Bolivia or Peru, it seems that efforts to provide alternative crop programs cannot succeed without a sustained anti-cartel campaign in Columbia that has a potential of driving coca prices below its critical $30 production cost level. President Virgilio Barco Vargas waged a courageous fight against the drug lords but it has been costly in Columbian lives and institutional instability. The country is incurring an additional $1 billion annual cost that involves army and police operations, loss of tourism and foreign investment, and cost of repairing numerous buildings bombed by the local drug traffickers.32 The Reagan administration systematically underfunded United States assistance programs in all Andean countries. During the 1980's America's aid to Columbia, on the average, amounted to less than $20 million annually. That was not enough to support an effective campaign against the Columbian multibillion drug industry.33

Bush administration's $65 million aid package, right after Columbia's declaration of total war on local cartels was more symbolic than useful. The contents of the package was not responsive to Columbia's requests. It did not contain the necessary equipment for the unconventional war against the narco-terrorists and consisted., mainly of conventional military paraphernalia. Apparently the Pentagon did not stock some of the requested accouterments in sufficient quantity, and other federal agencies could not respond without prior authorization from Congress.

For an effective campaign against the drug lords, the United States policy should be structured around provision of equipment suitable for unconventional war and monetary aid to strengthen Columbia's entire criminal justice system. Annual economic assistance package of $250 million, amount that is certainly within Washington's budgetary limits, would be enough to put the cartel on the defensive which, in turn, would impose the necessary deflationary pressure on coca prices. Only sustained pressure on Columbian narco mafia can give the crop substitution programs a chance to establish a foothold in the Andean region.

Conclusion

By now much has been written about supply reduction policies and many strategies have been tried with varying degree of success. During the earlier part of the 1980's, due to a combination of ignorance, inexperience, and fervent desire to extinguish the flames of a specific epidemic, practitioners developed a variety of "single-link" theories. They were convinced that if an important single link in the vertical production chain is obliterated, the entire supply side problem would be resolved.

At first it was believed that shipping and transportation were the "key" links to break. Practitioners of this school of thought failed miserably because Washington eventually found out that it simply does not have enough resources for simultaneous control of all the access routes to United States borders. Then coca eradication became the all important link. The logic of no coca, no cocaine made it an extremely tempting target but also this approach proved to be unsuccessful. Apparently, the largest obstacle to a straight eradication policy is the inability of the State Department to satisfy the most essential condition of success for this program — the support of the involved foreign governments. Whatever the vertical link one may choose, its destruction is just too simplistic of an approach for alleviation of a very complex problem.

Only by taking the profits out of coca cultivation can coca elimination become an achievable objective. One way to diminish coca's profits is through diminution of its market price. There is an inverse relationship between Columbian government pressure on the local drug lords and coca prices in Peru and Bolivia. The stronger is this pressure, the greater will be the decline in coca price. Consequently, it is time for United States to start providing meaningful and uninterrupted assistance to the Columbian government in its valiant struggle. against the cocaine barons. Through stepped up level of raids on crystallization laboratories and the cartel's general infrastructure, it is important to keep the Columbian traffickers off balance to such an extent that the equilibrium price of Bolivian and Peruvian coca is pushed below its production cost level. Only then will cocaine eradication and alternate crop programs become complimentary policy options.

Another reason for ineffectiveness of crop substitution approach throughout the 1980's can be traced to the limited scope of the programs. It is essential to expand the programs' potential through stepped up development assistance funding from the currently inadequate level. The approach must attract not only coca farmers but also other participants in the cocaine industry from outside the coca cultivation areas. The emphasis should be on establishing of commercial agricultural enterprises on a broad geographic scale. It is this need for massive economic involvement and extensive population movements that will require additional financial aid and investments.

An artificially induced coca market depression in conjunction with licit successful commercial agricultural activity will induce host governments to take more meaningful action in the control of coca cultivation and its derivatives. Coca producing countries are afflicted by a wide array of economic and political problems. They do not have the financial nor institutional capacity to deal with all of their problems simultaneously. The proposed policy is a harmonious approach to coca supply reduction that also has the capacity to take into account a number of other difficulties that are currently afflicting the Andean countries. It is not an isolated anti-narcotics effort that is too often seen as being incompatible with the resolution of other problems of similar priority in the cocaine producing countries. In the long run the proposed alternative to the cocaine supply reduction problem in Latin America will turn out to the cheaper than the current disjointed policies.

Julius Gylys is a professor of Economics at The University of Toledo, Toledo, Ohio 43606. (419) 537-2572.

Footnotes

1 International Narcotics Control Strategy Report (Washington, D.C.:U.S. Department of State Bureau of International Narcotics Matters), March 1, 1990, p.123.
2 Office of Technology Assessment, U.S. Congress, The Border War on Drugs, (U.S. Government Printing Office, Washington, D.C., 1987), p.25.
3 Hearing IV: Organized Crime and Cocaine Trafficking, The President's Commission on Organized Crime, Nov. 1984, pp. 152- 153.
4 "Brutal Cocaine Bosses Terrorize Columbia," The Miami Herald, Feb. 8, 1987, p.1.
5 Jill Smolowe, "The Drug Thugs," Time, March 7, 1988, p.30.
6 "Columbian Troops Raid Jungle Cocaine Factories,' Toledo Blade, May 20,1990, p.3.
7 International Narcotics Control Strategy Report, 1990, op. cit., p.123.
8 David Westrate, The Flow of Precursor Chemicals and Assault Weapons From The United States Into The Andean Nations, Hearing, Select Committee on Narcotics Abuse and Control House of Representatives, 101 Congress, Nov. 1, 1989, p.63.
9 New York Times, September 9, 1989, p.1.
10 Ibid.
11 Rensselaer W. Lee III, Drugs and Latin America: Economic And Political Import and U.S. Policy Options, Proceedings of a seminar held by the Congressional Research Service, April 26, 1989, p.126.
12 Joann Kawel, "Going to the Source," Report on the Americas, VXXII, No. 6, p.13.
13 Calculated from data found in International Narcotics Control Strategy Report, 1990, op. cit.
14 Ibid.
15 Kawell, op. cit., p.15.
16 Richard Stengel, 'To Spike or Not to Spike?," Time, June 27, 1988, p. 23.
17 Peter Kerr, "Two Recent Explosions Reflect Increase in Cocaine Labs," New York Times, March 25, 1987, p. 83
18 Kawell, op. cit., p.18; CORAH stands for Special Project for the Control and Eradication of Coca in Huallaga.
19 International Narcotics Control Strategy Report (Washington, D.C.: U.S. Department of State Bureau of International Narcotics Matters), March 1, 1989, p. 85.
20 Ftennselaer Lee III, Cocaine Production in the Andes, Hearing, Select Committee on Narcotics Abuse and Control, House of Representatives, 101 Congress, June 7, 1989, p. 91.
21 Lee III, Drugs and Latin America: Economic and Political Impact and U.S.Policy Options, op. cit. pp 119-120.
22 Rennselaer Lee III, "Dimensions of the South American Cocaine Industry," Journal of International Studies and World Affairs, Summer/Fall 1988, pp. 93-94.
23 Bases Huallaga, "Para Armado de 72 Horas," August, 1988, as quoted by Lee III, Journal of International Studies and World Affairs. op. cit.
24 Kevin Healy, "Coca, the State, and the Peasantry in Bolivia, 1982-1988," Journal of Interamerican Studies and World Affairs, Summer/Fall 1988, P. 109.
25 Ibid., p. 109-110.
26 Bruce Bagley, "The Political Economy of U.S.-Columbian Drug Traffic: A Rapporteur's Report," Institute of Interamerican Studies, University of Miami, Coral Gables, Fla., Feb. 7, 1988.
27 International Narcotics Control Strategy Report, 1990, op. cit., p. 111.
28 Frederick W. Schick, Cocaine Production In The Andes, pp. 85-86.
29 International Narcotics Control Strategy Report, 1990, p. 112.
30 Schieck, op. cit., p. 84.
31 International Narcotics Control Strategy Report, 1990, op. cit., p. 158.
32 New York Times, June 4, 1990, p. Cl.
33 Bruce Bagley, "Dateline Drug Wars: Columbia: The Wrong Strategy," Foreign Policy, No. 77, Winter, 89/90.