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Cablegate: Counternarcotics Strategy Report (Inscr) Part Ii:

VZCZCXRO8016
OO RUEHCHI RUEHCN RUEHDT RUEHHM
DE RUEHJA #3181/01 3200748
ZNR UUUUU ZZH
O 160748Z NOV 07
FM AMEMBASSY JAKARTA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 7077
INFO RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS PRIORITY
RUEHBY/AMEMBASSY CANBERRA 1578
RUEHKO/AMEMBASSY TOKYO 1124
RUEHWL/AMEMBASSY WELLINGTON 2022
RUEAWJB/DEPT OF JUSTICE WASHDC
RHMCSUU/FBI WASHINGTON DC
RHEHNSC/NSC WASHDC
RUEKJCS/SECDEF WASHDC
RHHJJPI/USPACOM HONOLULU HI
RUEABND/DEA HQ WASHDC

UNCLAS SECTION 01 OF 07 JAKARTA 003181

SIPDIS

SENSITIVE
SIPDIS

DEPT FOR EAP, EAP/MTS, INL, INL/AAE
DEA SINGAPORE FOR COUNTRY ATTACHE RUSSEL HOLSKE
NSC FOR EPHU

E.O. 12958: N/A
TAGS: PGOV KCRM SNAR AFIN PREL ID
SUBJECT: COUNTERNARCOTICS STRATEGY REPORT (INSCR) PART II:
MONEY LAUNDERING; FINANCIAL CRIMES

REF: A. STATE 137250
B. STATE 136787
C. STATE 136782
D. STATE 136780

1. (U) This message is Sensitive but Unclassified -- Please
handle accordingly.

2. (SBU) SUMMARY: Indonesia--the fourth largest country in
population in the world--has historically has not been
considered a major drug producing, consuming or transit
country. However, in recent years Indonesia has experienced
a major increase in the production, transshipment,
trafficking and consumption of narcotics. The executive
branch of the Indonesian government has made anti-corruption
efforts a major policy initiative along with
counter-terrorism and counternarcotics. Since 2002,
Indonesia has seen a significant increase in the number of
large-scale clandestine MDMA and methamphetamine laboratories
seized by Indonesian authorities.

3. SUMMARY (Cont'd): MDMA and methamphetamine production
syndicates exploit Indonesia's lax precursor chemical
controls and use corrupt means to operate with relative
impunity. These clandestine laboratories are capable of
producing multi-hundred kilogram quantities of amphetamine
type substances (ATS). However, in August 2006, there was a
highly successful police raid. In addition, regional drug
trafficking syndicates are exploiting Indonesia's 1.2 million
miles of coastline, lack of border and port security
resources, etc., for the transshipment of heroin and ATS.
Increases in narcotics production/trafficking have been
mirrored in drug abuse rates. These rates--specifically
intravenous drug use--combined with substandard health care,
rehabilitation and demand reduction programs has resulted in
a significant increase in HIV/AIDS infection. END SUMMARY

4. (SBU) Indonesian counter narcotics code is sufficiently
inclusive to enable police, prosecutors and the judiciary to
arrest, prosecute and adjudicate narcotics cases.
Nevertheless corruption in Indonesia is problematic. Among
the 161 countries ranked by Transparency International in
their Corruption Index, Indonesia was ranked 130th, making it
one of the most corrupt countries in the world. The level of
political corruption in Indonesia seriously limits the
effectiveness of all law enforcement, including narcotics law
enforcement and poses the most significant threat to the
country's counter drug strategy. However, the current INP
Chief Sutanto is committed to reducing corruption and illegal
activities by members of the police. Sutanto has made
significant progress in internal investigation reform, human
rights and governance of the organization. In 2006 over 4000
officers were disciplined for violations of the Code of
Ethics and Discipline Code with 230 officers being terminated
for ethics violations
alone. The INP leadership has been consistently improving,
with the integration of more modern law enforcement
management systems and procedures including anti-corruption
efforts.

5. (SBU) The Indonesian National Police (INP) participates in
several international donor-initiated training programs and
continues to commit increased resources to counter narcotics
efforts. The INP has received both specialized investigative
training and equipment, including vehicles, software, safety
and tactical equipment to support its efforts against crime
and drugs. INP efforts are firmly based on counter narcotics
legislation and international agreements. The INP relies
heavily on assistance from major international donors,
including the U.S. Indonesia is a party to the 1988 UN Drug
Convention.

-----------------
STATUS OF COUNTRY
-----------------

6. (SBU) In 2006 Indonesian authorities continued to seize

JAKARTA 00003181 002 OF 007


large-scale clandestine methamphetamine and MDMA
laboratories, suggesting that Indonesia is quickly becoming a
manufacturing site for narcotics. As recently as 2005,
Indonesia has been the second largest non-US importer of
pseudoephedrine. Lax and inadequate precursor chemical
controls combined with porous borders and endemic levels of
corruption continues to be a significant threat to
Indonesia's counter drug efforts.

7. (SBU) The Indonesian National Narcotics Board (BNN)
estimates that approximately 3.2 million people or, 1.5
percent of Indonesia's total population are drug abusers.
According to Indonesian National Police (INP) arrest data, in
2006, the INP conducted 14,105 narcotics investigations. All
major groups of illegal drugs are readily available in
Indonesia; methamphetamine, primarily in its form, MDMA, as
well as, heroin, marijuana and small user quantities of
cocaine.

8. (SBU) Based upon INP arrest data, marijuana is the most
commonly abused drug in Indonesia. During 2006, out of
14,105 narcotics investigations, 7,257 investigations were
for marijuana. During 2006, out of 14,105 narcotics
investigations, 7,257 investigations were for marijuana.
Similarly, during 2006, INP arrested 6,898 people were
arrested for marijuana consumption and 5,897 were arrested
from distribution.

9. (SBU) Methamphetamine is the second most commonly abused
drug in Indonesia. INP reports methamphetamine in Indonesia
is most often seized in its crystalline form. During 2006,
out of 14,105 narcotics investigations, 3,125 investigations
were for methamphetamine. Similarly, during 2006, INP
arrested 3,333 people for methamphetamine consumption and
1,712 were arrested for distribution.

10. (SBU) INP reports that heroin is the third most commonly
abused drug in Indonesia. Despite Indonesia's proximity to
the golden triangle, heroin from sources of supply in
Southwest Asia is the predominant type of heroin in Indonesia
and is increasingly abused and available throughout the
country. During 2006 INP conducted 2,143 heroin
investigations, during which 1,631 individuals were arrested
for consumption and 979 were arrested for distribution.

11. (SBU) MDMA is readily available throughout Indonesia and
is predominately consumed in nightclubs and discotheques.
Per INP, MDMA is the fourth most commonly abused drug in
Indonesia. During 2006, out of 14,105 narcotics
investigations, 1,548 investigations were for MDMA.
Similarly, during 2006, INP arrested 1,278 people were
arrested for methamphetamine consumption and 1,051 were
arrested for distribution.

-------------------------------------
COUNTRY ACTIONS AGAINST DRUGS IN 2006
-------------------------------------

12. (SBU) policy initiatives: The Indonesian counter
narcotics code is sufficiently inclusive to enable, police,
prosecutors and judiciary to arrest, prosecute and adjudicate
narcotics cases. Under Indonesian Laws No. 22/1997 on
narcotics and 5/1997 on psychotropic substances, the
Indonesian courts have sentenced approximately 57 drug
traffickers to death. The continued lack of modern
detection, enforcement and investigative methodologies and
technology, and pervasive corruption, are the greatest
obstacles to advancing Indonesia's anti-drug efforts.

13. (SBU) During 2006, the Government of Indonesia (GOI), via
the Indonesian National Narcotics Board (BNN), the government
agency responsible for the coordination of Indonesian counter
narcotics efforts, singed an Association of Southeast Asian
Nations (ASEAN) declaration stating Indonesia's commitment
for a "drug-free ASEAN 2015". "Drug-Free ASEAN 2015" is a
political commitment of the ASEAN member countries, of which
Indonesia is a member, in achieving a drug free condition by

JAKARTA 00003181 003 OF 007


the year 2015.

14. (SBU) According to BNN, the GOI has established new
policies and strategies, in a "goal oriented rolling Plan of
Action", consisting of stages covering 3 years for each
stage. These stages will continue until Indonesia reaches a
drug-free condition, hopefully by 2015. Specifically
Indonesia has established a National Drug Control Plan which
addresses the illicit drug supply and demand reduction. The
goals and targets for the GOI's drug control plan were
developed from the 1998 UNGRASS and ASEAN and China
Cooperative Operations in Response to Dangerous Drugs
(ACCORD) plan of action.

15. (SBU) The mission of Indonesia's National Drug Plan is
to: 1) To reduce illicit drug supply, trafficking and
production; 2) To reduce drug use among the Indonesian youth;
and 3) To minimize the harmful effects of drugs and drug use
in Indonesian society.

16. (SBU) The primary policy goals of Indonesia's National
Drug Plan are to: 1) To minimize the level of illness,
disease, injury and premature death associated with the use
of illicit drugs; 2) To minimize the level and impact of
drug-related crime and violence within the community; and 3)
To minimize the loss of productivity and other economic costs
associated with illicit drug use.

17. (SBU) In March 2007, lawmakers from Indonesia's House of
Representatives Commission III and the National Narcotics
Agency (BNN) proposed a new regulation, to be attached to the
national narcotics law which would allow for law enforcement
agencies to confiscate convicted drug traffickers assets to
fund Indonesia's drug trafficking eradication program. The
aim of the proposed regulation is to deny drug trafficking
networks of their assets. Under the new regulation assets
seized by the GOI would be used to rehabilitate impoverished
drug abusers and would serve to supplement the budget of the
BNN. The BNN receives approximately $30 million (USD) per
year from the state budget, far below $53 million (USD) the
agency requests for its yearly budget.

-----------------------------------------
ACCOMPLISHMENTS: LAW ENFORCEMENT EFFORTS
-----------------------------------------

18. (SBU) According to INP arrest data, prosecutions for drug
possession, trafficking and manufacturing have decreased in
to 14,105 cases in 2006 from 14,515 cases in 2005. Data
provided by the GOI seems to suggest that the increase noted
in 2005 where prosecutions for drug possession, trafficking
and manufacturing had quadrupled to 14,515 from 3,617 in
CY-2001 has stabilized in 2006.

19. (SBU) The BNN continues to strive to improve interagency
cooperation in drug enforcement, interdiction, and precursor
control. In 2005, under the auspices of BNN, the USG
sponsored PACOM JIATF West Joint Interagency Counter Drug
Operations Center (JIACDOC) was opened in Jakarta, Indonesia.
In 2006, the BNN had begun staffing and subsequently
utilizing the JIACDOC's facilities to improve coordination
and information exchange between various Indonesian law
enforcement agencies and supporting ongoing narcotics
investigations.

20. (SBU) The INP Narcotics and Organized Crime Directorate
continues to improve in its ability to investigate and
dismantle international drug trafficking syndicates, as well
as, cooperate with other international law enforcement
agencies. The Narcotics Directorate has become increasingly
active in the regional targeting conferences designed to
coordinate efforts against transnational drug and crime
organizations. In 2006, INP attended the Drug Enforcement
Conference (IDEC) held in Montreal, Canada. INP's Director
for Narcotics and Organized Crime was subsequently appointed
as the Chairman of the East Asia Regional IDEC Working Group.


JAKARTA 00003181 004 OF 007


----------
CORRUPTION
----------

21. (SBU) Indonesia has laws against official corruption and
an effective anti-corruption commission; but despite these
laws, corruption in Indonesia is endemic. As a matter of
government policy and practice, the GOI does not encourage or
facilitate the illicit production or distribution of drugs or
the laundering of proceeds from illegal transactions.

22. (SBU) Corruption of Indonesia's judiciary is pervasive
and poses a significant threat to the country's counter drug
strategy. Indonesian prosecutor's low wages encourage
official corruption and a low level of motivation. The
average salary of an Indonesian prosecutor with 30 years of
seniority is approximately $400 USD a month. Furthermore,
corrupt police and prosecutors abuse their authority in
illegal searches, as Indonesian courts do not exclude
evidence obtained without a warrant. Corrupt prosecutors are
suspected of carrying out investigations to elicit bribes
from suspects. Corruption within the police force has led to
corrupt officers in narcotics cases, asking for bribes, for a
reduction in charges, with the defense attorneys serving as
facilitators.

-----------------------
AGREEMENTS AND TREATIES
-----------------------

23. (SBU) Indonesia is a party to the 1988 UN Drug Convention
against The Illicit Traffic in Narcotic Drugs and
Psychotropic Substances. During January 2007, delegations
from the U.S. and Indonesia met in Jakarta for the initial
negotiations to develop a mutual legal assistance treaty
(MLAT) between the two countries. The delegations exchanged
information about their respective legal systems and mutual
legal assistance practices, and began drafting a text from
each of the proposals. Articles of the proposed MLAT
addressed prevention of crime, scope of assistance, the types
of evidence to be covered by the treaty, intellectual
property rights, dual criminality between the U.S. and
Indonesia, and delegation of central authorities in the U.S.
and Indonesia for MLAT related requests.

----------------------
CULTIVATION/PRODUCTION
----------------------

24. (SBU) The large-scale production of MDMA and
methamphetamine is one of the most significant drug
trafficking threats in Indonesia. Indonesian/Chinese
trafficking syndicates exploit Indonesia's lax precursor
chemical controls, weak law enforcement and political
corruption to establish large-scale clandestine MDMA and
methamphetamine laboratories capable of producing
multi-hundred kilogram quantities. These syndicates utilize
supply sources from the Peoples Republic of China (PRC) for
precursor chemicals and laboratory equipment. Production
syndicates rely upon chemists trained in the Netherlands for
the production of MDMA, as well as chemists form Taiwan and
Hong Kong for the production of crystal methamphetamine.

25. (SBU) Historically the production of MDMA and crystal
methamphetamine in Indonesia has never occurred in the same
laboratory. The common practice is separate production
syndicates that specialize in either MDMA or methamphetamine.
However, in the 2005, INP seized the world's first
combination clandestine MDMA/methamphetamine laboratory in
near Jakarta, Indonesia. This large-scale dual
MDMA/methamphetamine laboratory was the third largest
clandestine laboratory seized by law enforcement in the world
and was capable of producing thousand pound quantities.
Subsequent investigation revealed that the construction of
this clandestine laboratory was directed by Chinese organized
crime syndicates based in Hong Kong and mainland China. This
syndicate utilized chemists from Taiwan for the production of

JAKARTA 00003181 005 OF 007


methamphetamine and chemists from the Netherlands for the
production of MDMA.

26. (SBU) Marijuana is cultivated throughout Indonesia and
the equatorial climate of Sumatra allows for year round
growing and cultivation of marijuana. Large-scale (greater
than 20 hectares) marijuana cultivation occurs in the remote
and sparsely populated regions of the province, often in
mountainous topography. Regional marijuana cultivation
syndicates are believed to be exploiting INP's limitations by
locating cultivation sites in remote and high elevation
areas. There is no known cultivation of heroin or cocaine in
Indonesia.

---------------------
DRUG FLOW AND TRANSIT
---------------------

27. (SBU) The Indonesian National Police (INP) report that
the majority of heroin seized in Indonesia originates from
supply sources in Southwest Asia. The heroin trade in
Indonesia is predominantly controlled and directed by West
Africans; Nigerians. Heroin is smuggled by West African and
Nepalese trafficking organizations utilizing sources of
supply in Karachi, Pakistan and Kabul, Afghanistan. West
African and Nepalese couriers travel utilizing commercial air
carriers transiting Bangkok, Thailand, and India, en route to
Jakarta, Indonesia. In addition to heroin being trafficked
domestically in Indonesia, heroin is also transshipped from
Indonesia, by couriers traveling via commercial air carrier
to Europe, Japan and Australia.

28. (SBU) Historically, MDMA has been smuggled into Indonesia
from sources of supply in the Netherlands. However, in
recent years Indonesia is experiencing an increase in the
large-scale MDMA and methamphetamine production. The
large-scale production of MDMA and methamphetamine is one of
the most significant drug trafficking threats in Indonesia.
MDMA and methamphetamine produced in Indonesia is trafficked
both domestically and internationally. Since 2002,
Indonesian/Chinese MDMA and methamphetamine production
syndicates have established numerous large-scale clandestine
MDMA and methamphetamine laboratories capable of producing
multi hundred kilogram quantities, utilizing precursor
chemicals from the Peoples Republic of China (PRC). In
addition, MDMA and methamphetamine produced in the PRC is
smuggled to Indonesia by Chinese organized crime syndicates
based in Hong Kong, in multi hundred kilogram quantities by
sea. Specifically, Indonesian authorities cite that two of
the largest methamphetamine seizures
of 2006, 200 kilograms (February 2006) and 956 kilograms
(August 2006), originated from the PRC and were smuggled on
via maritime cargo and fishing vessels.

29. (SBU) INP reports that marijuana trafficking in Indonesia
is controlled by Indonesian trafficking syndicates based out
of Jakarta. The majority of marijuana cultivated in
Indonesia is consumed domestically and typically is not
trafficked on the international market. Although cocaine
seizures continue to occur in major Indonesian airports, the
market for cocaine in Indonesia is believed to be very small.

----------------
DEMAND REDUCTION
----------------

30. (SBU) The Government of Indonesia views drug abuse and
narcotics trafficking as a major long term threat to social,
Islamic and political stability. Government agencies
continue to promote anti-drug abuse and HIV/AIDS awareness
campaigns in throughout various media avenues. The
Indonesian National Narcotics Board (BNN) is responsible for
the development of Indonesia's demand reduction programs.
During 2006, BNN engaged in a large anti narcotics campaign
targeting a wide demographic of Indonesia's citizenry. No
statistics exist regarding the success of these anti drug
abuse programs.

JAKARTA 00003181 006 OF 007

------------------------------------
U.S. POLICY INITIATIVES AND PROGRAMS
------------------------------------

31. (SBU) Bilateral Cooperation: Indonesia and the United
States maintain excellent law enforcement cooperation in
narcotics cases. During 2006, the United States sent
hundreds of INP officers to training on a variety of
transnational crime topics. Furthermore, 120 Indonesian law
enforcement officers attended training at the International
Law Enforcement Academy (ILEA) in Bangkok. Similarly,
training and development initiatives by Department of State
INL funded DOJ ICITAP Indonesia Program, DEA, and PACOM JIATF
West has trained hundreds of law enforcement officers from a
variety of Indonesian government agencies. In 2006, DEA
provided training in the areas of drug intelligence analysis,
precursor chemical control, basic drug investigations and
airport narcotics interdiction. INP and BNN maintain
excellent relationships with the DEA regional office in
Singapore and continue to work closely with DEA in narcotics
investigations.

--------------
THE ROAD AHEAD
--------------

32. (SBU) In 2007 the U.S. will assist the BNN and its member
agencies further utilizing the resources and capabilities of
the Counter Drug Operations Center and Network. The U.S. will
further work with INP and BNN to standardize and computerize
the reporting methods related to narcotics investigations and
seizures; development of a drug intelligence database;
building an information network designed to connect to the
major provinces of Indonesia. This will permit Indonesian law
enforcement to contribute to, and access the database for
investigations. Similarly, the U.S. will work with INP and
BNN to further expand the scope and impact of narcotics
investigations targeting the large scale production of
methamphetamine and MDMA in Indonesia. The U.S. and Indonesia
will continue to cooperate closely on narcotics control.

------------------
STATISTICAL TABLES
------------------

33. (SBU) Recorded drug cases, including trafficking
throughout Indonesia:

2001: 3,013
2002: 3,544
2003: 3,729
2004: 7,753
2005: 20,023
2006: 14,105

Drugs Seized:

Heroin Cocaine Cannabis MDMA Meth.
(kg) (kg) (metric ton)(tablets) (kg)

2001 13.5 15.2 15.7 22,627 412.5
2002 19.0 8.3 59.8 68,324 46.2
2003 13.0 13.4 43.3 183,721 16.3
2004 12.7 6.32 50.4 251,072 28.4
2005 17.71 1.0 20.9 233,467 318.15
2006 11.9 1.12 111.17 466,907 1,241.2

2005 Marijuana Plants: 160,211
2006 Marijuana Plants: 1,019,307

----------------
CHEMICAL CONTROL
----------------

34. (SBU) Overview: The GOI, in an effort to more
effectively and efficiently control precursor chemicals and

JAKARTA 00003181 007 OF 007


pharmaceutical drugs, reorganized the Ministry of Trade and
Industry and the Ministry of Health. In 2004 the Ministry of
Trade became a separate agency from the Ministry of Trade and
Industry. Currently the Ministry of Trade is responsible for
licensing of non-pharmaceutical precursor chemical imports.
Similarly, in 2005, the Ministry of Health, assumed
responsibility for the management of pharmaceutical
precursor chemical licenses, from the National Agency for
Drug and Food Control (formerly known as Department of Drug
and Food Control under the Ministry of Health. While the
National Agency for Drug and Food Control now only controls
post-market or finished products of precursor chemicals.

35. (SBU) Ministry of Health and Ministry of Trade accept,
review, and approve precursor chemical import applications
for pharmaceuticals and non-pharmaceuticals. The import
applicants are categorized into Importer Producer (IP) and
Register Importer (RI) but more commonly identified as IT,
Importer Trader). All prospective applicants desiring to
import precursor chemical must submit a drug registration
application to obtain market authorization as IP or IT to the
respective ministries.

--------------------------------------------- -
IDENTIFICATION OF PRECURSOR CHEMICAL DIVERSION
--------------------------------------------- -

36. (SBU) The diversion and unregulated importation of
precursor chemicals remains a significant problem facing
Indonesia's counter drug efforts. To date, Indonesian
Authorities have been unsuccessful in controlling the
diversion of precursor chemicals and pharmaceuticals.
Numerous pharmaceutical and chemical corporations have large
operations throughout Indonesia. In June 2006, the
Indonesian National Police in cooperation with the Australian
Federal Police (AFP) identified more 380 kgs of
pseudoephedrine that had been diverted from PT Glaxo Wellcome
Indonesia, by a single trafficking syndicate based in Jakarta
and Sydney, Australia.

--------------------------------------------- ---
EPHEDRINE AND PSEUDOEPHEDRINE IMPORTS AND QUOTAS
--------------------------------------------- ---

37. (SBU) The International Narcotics Control Board (INCB)
lists Indonesia's quota for ephedrine imports as 12,339
kgs and 30,221 kgs for pseudoephedrine imports. According to
available data from the state agencies visited, import of
precursor chemicals pseudoephedrine and ephedrine to
Indonesia between Nov 04 and May 06 are as follows:

Chemical Quantity (kg)

EPHEDRINE

Quota, Nov 04-Mar 06 14,740.00
Quota, Apr-May 06 8,522.35
Total Quota, Nov 04-May 06 23,262.35

Import, Nov 04-Mar 06 -12,494.98
Import, Apr-May 06 -6,525.00
Total Imported, Nov 04-May 06 -19,019.98

Quota Balance as of May 06 4,242.37

PSEUDOEPHEDRINE

Quota, Nov 04-Mar 06 40,550.00
Quota, Apr-May 06 10,835.00
Total Quota, Nov 04-May 06 51,385.00

Import, Nov 04-Mar 06 -29,675.00
Import, Apr-May 06 -8,443.00
Total Imported, Nov 04-May 06 -38,118.00

Quota Balance as of May 06 13,267.00
HUME

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