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Cablegate: Peru Fy 2007-2008 Certification Report Card

VZCZCXYZ0012
RR RUEHWEB

DE RUEHPE #0979/01 1581647
ZNR UUUUU ZZH
R 061647Z JUN 08
FM AMEMBASSY LIMA
TO SECSTATE WASHDC 8769

UNCLAS LIMA 000979

SENSITIVE
SIPDIS

STATE FOR INL/LP
AND INL/PC

E.O. 12958: N/A
TAGS: SNAR KCRM ASEC PREL PE
SUBJECT: PERU FY 2007-2008 CERTIFICATION REPORT CARD

REF: (A) SECSTATE 00029120 (B) LIMA 358

1. (SBU) Working relationships and cooperation between the
Government of Peru (GOP) and the U.S. Government agencies
responsible for implementation of counter-narcotics (CN)
policies continue at an all time high. The Narcotics Affairs
Section (NAS), Drug Enforcement Administration (DEA), U.S.
Agency for International Development (USAID) as well as other
USG agencies in Peru have near unfettered access to the
highest levels of the Ministry of Interior, DEVIDA, Public
Ministry and the Peruvian National Police (PNP). Per REFTEL
B, the FY 2007-2008 Certification Demarche was presented to
the Ministry of Foreign Affairs, Directorate for Drug
Control, on 22 February 2008. The following are specific
benchmarks presented to the Government of Peru and the
actions taken in each area to date:

A. Coca and opium poppy reduction:

1) The USG asked the GOP to reduce illegal coca cultivation
in Peru through continued programmed eradication, steadily
reducing hard-core areas and coca expansion zones, and to
continue eradication at the same or better rate than in 2007,
taking into consideration reduced assistance resources
available from the United States.

----- Peru's eradication efforts are currently close to 30
percent above last year and should succeed in converting the
San Martin Department, part of the Upper Huallaga Valley,
into a &coca insignificant8 zone. The 2008 eradication
plan aims to consolidate Alternative Development efforts in
Tocache as well as assisting USAID with the establishment of
a new AD Program in the Aucayacu area. With the exception of
about 500 hectares in one sub-region, programmed to be
eradicated in the next 45 days, the only coca existing in the
area will be small, scattered fields, unattractive for
narco-trafficking. In the coming two months, operations will
commence in the southern UHV in a hard production zone,
opening the door for development activity and sustained coca
reduction.

2) The USG asked the GOP to make every effort to fulfill its
commitment to cause a net reduction in coca cultivation in
FY-2008, including eradicating at least 8,000 hectares.

----- Peru's circa 1000 USD per hectare coca eradication
program is considered to be highly cost effective. Funding
constraints mean Peru can still only concentrate resources on
about 20-33 percent of the total coca in existence, however.
Despite success in sharply reducing the number of hectares
under coca cultivation in the Upper Huallaga Valley (from
4,000 hct down to the 500 hct programmed for eradication in
the next month), some expansion is occurring in other areas.
However, Peru is stabilizing coca crops overall.
In CY2007, Peru exceeded its programmed eradication goal of
10,000 hct by over 1,000 hct. In CY2008, at the current rate
of eradication, the 8,000 hct goal with budgeted funds should
be reached or surpassed.

3) The USG asked the GOP to continue efforts to locate opium
poppy cultivation and eradicate all poppy found.

----- In 2005, CADA prepared a map of potential poppy growing
areas. However, since the PNP has not approved CADA civilian
employees to participate in operations to detect and destroy
poppy plants, no spectral signatures have been documented to
be able to detect poppy through satellite imagery. Since
January 2008, the PNP located and destroyed approximately
750,000 poppy plants and one morphine processing laboratory.


B. Police Counter-Narcotics Enforcement

1) The USG asked the GOP continue to graduate at least 1000
new counter-narcotics police through the PNP Basic Training
Academies, to provide security for eradication of illegal
coca and to carry out interdiction operations. Their
efforts contribute to disrupting cocaine HCl and cocaine-
base as well as opium latex trafficking. This will
require a commitment to fund and maintain the viability of
these new officers to guarantee police presence and
operational success in the future.

-----There are currently three PNP Basic Training Academies
for the Peruvian narcotics police, DIRANDRO, located in the
coca-growing regions east of the Andes: a fourth is being
added in 2009. In March 2007, 727 new drug police graduated
from these academies, their December 2006 graduation having
been delayed. In December 2007, 820 more DIRANDRO police
graduated, who went on to finish operational training for 4
months into 2008. The annual training cycle is now
established: there are currently 750 trainees registered at
the three ETS-PNP schools who will be assigned upon
graduation to CN bases for three years. In February 2008,
758 students from remote and rural communities located in the
Huallaga and Apurimac/Ene Valleys (VRAE) were enrolled in the
police pre-academies to qualify for entry into one of the
four Basic Training Academies. Approximately 1800 new
narcotics police are already part of DIRANDRO operational
units conducting aggressive interdiction and eradication
security support operations.

2) The USG asked the GOP to attempt to lower the price of
illicit coca leaf and maintain the lower value through
repeated
interdiction, simultaneously raising the price of illegal
precursor chemicals through increased seizures in the drug
source zones.

--- The market laws of supply and demand do not always apply
when dealing with criminal mafias. However, the PNP has been
able to achieve some success in the strategy of reducing the
value of illegal coca and raising the price of precursor
chemicals through sustained interdiction. In the VRAE, where
police interdiction has been more aggressive, the price of an
arroba of coca (11.5 kilos)has shown some decrease (by 5-10
soles to s/75, or 27 USD) and the price of precursor
chemicals has more than doubled. The increased presence of
police officers in the region has also contributed to an
heightened risk to narco-traffickers of being arrested and
losing leaf and chemicals. In areas where eradication and
interdiction are non-existent such as the Monzon Valley, the
price of coca leaf has risen more than 100 percent in the
past year. An arroba of coca leaf was 22 USD in April 2007,
but had risen to 45.5 USD by April 2008 as drug mafias pumped
money into the production effort.

3) The USG asked the GOP to increase the seizures of illicit
drugs and
precursor chemicals in the production area by 10 percent
above the FY 07 total.

----- To date, DIRANDRO personnel have conducted
approximately 4116 drug interdiction missions, destroyed 390
cocaine base and 10 HCL producing laboratories, seized more
than 4,700 kilos of HCL, 2,652 kilos of cocaine base, 7.9
kilos of opium latex, 719 kilos of marijuana, and
approximately 169,000 kilos of precursor chemicals that
prevented the production of approximately 8.3 metric tons of
cocaine. This represents an increase of approximately 22.5
percent of cocaine production averted.

C. International narco-trafficking organizations:

1) The USG asked the GOP to focus investigative and
intelligence
resources on discovering and destroying attempts by major
international trafficking organizations to operate or
become established in Peru.

----- Drug trafficking investigations indicate that Peruvian
drug trafficking organizations (DTO) are maintaining their
role as transportation support for cocaine HCL and base
products. Their efforts appear to be coordinated with
Mexican and Colombian drug trafficking organizations who are
orchestrating the routes and destination of these cross-sea
and overland shipments. The PNP, with US law enforcement
assistance, has developed investigations against drug
traffickers having interconnected organizational relations
with Sendero Luminoso (SL) to continue the flow of coca leaf
and cocaine products transported from the Monzon, UHV and the
VRAE.

Peru's law enforcement efforts continue to achieve limited
success against DTOs including those related to Fernando
Zevallos Gonzales and Adrian Velarde-Huamani. Through
continued investigations and drug intelligence, additional
drug and money laundering charges are being effected against
these organizations as well as seizures of assets.

D. Airports and seaports:

1) The USG asked the GOP to maintain its drug interdiction
capabilities in Peru's Callao and Paita seaports through
maritime shipping container inspection programs, including
the National Cargo Manifest Review Unit, to adequately staff
container scanners, and to maintain the cargo inspection
canine teams in Callao and Paita as well as at Lima's
international airport. The goal is an increase of 10
percent in the quantities of drugs seized by Peruvian
Coast Guard, Customs and Police units to substantially
diminish the exploitation of Peru's ports and coastline by
narco-traffickers.

----- The GOP maintains tight control over cargo and
passengers by using high technology equipment and trained
dogs to search for and detect drugs passing through Peru's
air and seaports. Using ION scanners, body scanners,
canines, container scanners and specialized tactics and
procedures, the Joint Task Force, consisting of SUNAT
(Peruvian Customs) and the PNP made over 700 arrests and
seized more than 7.8 metric tons of cocaine HCL and base at
Jorge Chavez International Airport in Lima and the Ports of
Callao and Paita this year alone (2008). At the Ports of
Callao, Salaverry, Chimbote and Paita, SUNAT continues to
closely review containerized cargo through its Manifest
Review Unit (MRU), electronically inspecting more than
180,000 sea-going containers between January and April 2008.
SUNAT created a specialized Dive Team to conduct under-hull
inspections of suspect vessels in port and barges on the
inland waterways. SUNAT has also recently intensified its
efforts to detect illicit currency being used for drug
trafficking, resulting in several significant seizures
totaling approximately one million USD.

E. Money laundering:

1) The USG asked the GOP to use recent legislation
authorities to develop and implement a national anti-money
laundering
strategy, including prosecution of those involved in
laundering money. The strategy should identify functional
and legal causes for delays in prosecutions and initiate
actions to remove such barriers.

---- Money laundering remains a serious problem in Peru. The
Peruvian Congress passed an Asset Forfeiture Law in July
2007. Congress subsequently modified the law and ratified its
constitutionality in March 2008. The Ministry of Justice has
undertaken a media campaign to educate the public about how
the law will be used to attack organized crime, and is
developing a strategy to train police, prosecutors and judges
who will be involved in money laundering prosecutions. A
national study on money laundering activities in Peru and
prosecution efforts is underway. The Financial Intelligence
Unit (UIF) has implemented an anti-money laundering strategy
to generate financial intelligence to detect money laundering
crimes. The UIF reported that it had detected 1,554
suspicious operations in 2007 and 108 this year (the latest
statistics). Judicial authorities launched twelve formal
investigations for money laundering in 2007 and eight in the
first quarter of this year. Recent investigations implicate
money exchange houses, offshore and straw corporations, wire
transfers, and investment of drug money into existing
legitimate companies. The complexity of such investigations
require substantial manpower and resource commitments: while
there has been improved cooperation between the police,
prosecutors and tax authorities, Peru,s burdensome legal
system and institutional disaccord has impeded aggressive
prosecutions of money laundering organizations to date.

2) The USG asked the GOP to implement asset forfeiture
legislation to increase seizures of narco-assets, and
establish
mechanisms to convert them to use for counter-narcotics and
other law enforcement efforts.

---- The Ministry of Justice is designated as the lead agency
in implementing the Asset Forfeiture Law. The Ministry has
revised the law's implementing regulations and has undertaken
a media campaign to educate the Peruvian public about the law
and how it will be used to attack organized crime. The
Ministry is also in the process of developing a strategy to
implement the law and to provide training to police,
prosecutors and judges who will be involved in asset
forfeiture prosecutions. The law received final approval, in
terms of constitutionality, from the Peruvian Congress in
April 2008. Although no cases have been prosecuted to date,
it is anticipated that a number of cases will be brought
forward in the next several months. The GOP is also
undertaking a national money laundering study that will look
at current money laundering activities in Peru and the GOP's
efforts to prosecute money launderers. The study will
provide recommendations to GOP entities on how to facilitate
money laundering investigations and prosecutions.

F. Precursor chemical control:

1) The USG asked the GOP to take significant steps to stop the
diversion of precursor chemicals for drug manufacture
including adding legislative language outlawing certain
precursor chemicals.

-----The GOP has made slight progress in developing the
chemical control registry which is at the heart of the
Chemical Precursor Control Law passed by the Peruvian
Congress in 2004. It has taken the GOP three years to
develop the implementing regulations and another year for the
Ministry of Production and SUNAT, the Peruvian IRS, to reach
agreement on developing the software needed to create the
registry which will be used by law enforcement entities to
track commerce in precursor chemicals and undertake
enforcement actions nationwide. It will be another 12-15
months before the registry is online for users.

G. Extraditions:

1) The USG asked the GOP to provide cooperation, bilaterally
and
multilaterally, if/when extradition requests are filed
regardless of nationality.

-----The U.S. and Peru are parties to an Extradition Treaty
that entered into force in 2003. Among the eight U.S.
extradition and provisional arrests still pending, six are
related to narco-trafficking. In 2008, there were three new
extradition requests presented for two Peruvians and one
Colombian for narcotics trafficking. These prospective
extradites are not subject to any criminal charges under
Peruvian law and are currently being processed for
extradition hearings. Normally, Peruvian law requires an
individual to serve his/her sentence in Peru before being
eligible for extradition; consequently, no Peruvians have
been extradited to the United States. These recent request
will provide the GOP with an excellent opportunity to
demonstrate its cooperation on this issue.

H. Demand reduction:

1) The USG asked the GOP to expand its efforts to reduce drug
abuse among the Peruvian population by intensifying their
activities to educate the Peruvian public about narco-
trafficking's threat to society and democratic
institutions in Peru through an active public awareness
campaign and education efforts nationwide, especially
among the most vulnerable members of society.

For the first time, in 2007 Peru,s Anti-Drug agency DEVIDA
received substantial government funding of over 3 million USD
to implement strategies, demand reduction and prevention
activities, media outreach and training programs in
conjunction with relevant ministries. A December study
conducted by DEVIDA in the drug-producing regions showed that
the public there is now well aware of the threat of
narco-trafficking. The responses of the 1,600 people
interviewed revealed a much stronger understanding of and
support for counter-narcotics programs: over 63 percent
acknowledged that most coca goes to narcotics production and
over 41 percent indicated they favored eradicating all coca
beyond that used by the legal market; almost 29 percent were
in favor of eradicating all coca. DEVIDA,s regional
anti-drug education programs reached 100,000 school students.
DEVIDA also implemented a Rapid Impact Plan (funded at 3
million USD) with the Ministry of Health for demand
reduction.

I. Supply reduction:

1) The USG asked the GOP to establish and employ
reciprocal maritime operational procedures with the USG to
expedite communications and decisive interdiction action
between
our respective maritime operations centers.

-----This issue is being considered by the Ministry of
Foreign Affairs (MFA) and monitored closely by several
sections within the U.S. Mission in Peru. The Peruvian Navy
and Coast Guard have advanced this agreement within the GOP
and have express support in principle for such an agreement.

J. Alternative development:

1) The USG asked the GOP to take a leadership role in
furthering post-eradication alternative development efforts.

-----The GOP has been a strong advocate for post-eradication
alternative development, taking a very public leadership role
both in Peru and on the international scene. DEVIDA
presented the post-eradication alternative development model
at the Inter-America Drug Abuse Control Convention (CICAD)
meeting in early 2008, and Peru has since been named
President of the CICAD Experts Group on Alternative
Development. This new role for Peru will facilitate the
sharing of post-eradication alternative development
experiences with other countries in the region and the world
that struggle with making eradication efforts sustainable.

2) The USG asked the GOP to increase its investment in
economic
infrastructure in the coca growing valleys to facilitate
greater market access for alternative development
products.

-----For the first time in history, the GOP has dedicated
significant budgetary resources specifically to
counter-narcotics efforts through the Rapid Impact Plan. The
Rapid Impact Plan effort is led by DEVIDA, and has resulted
in increased funding for activities and infrastructure in
coca-growing areas, which will be implemented by more than 15
government entities under DEVIDA's coordination. Funding in
2008's Plan amounted to S/35,000,000 (12,411,348 USD), a
significant portion of which is for economic infrastructure,
which will directly impact market access for alternative
development products.
MCKINLEY

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