The CIA and Drugs

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  2005 from American-Buddha Website            
  “No one knows what is really going on. If they ever did, it would make Watergate look like Alice in Wonderland.” LESTER COLEMAN ex U.S. Defence Intelligence Agency
“It is ironic, to say the least, that America’s heroin plague is of its own making.” FRED W. McCOY

Under the guises of national security, patriotism and protecting democracy, normal boundaries of ethics and morality have been consistently transcended by the Central Intelligence Agency in its ideological war of defeating communism.   The Agency has resorted to any means it considers necessary, and allied itself with any person or group it considers necessary, to help it achieve its ends.   As ex-CIA agent Victor Marchetti put it: “The Agency would hire Satan himself as an agent if he could help guarantee the national security.” The United States government has willingly made drug networks an essential ally in the covert expansion of American influence abroad.   Despite the government’s supposedly vociferous anti-drugs policy, senior U.S. diplomats and CIA agents have actively engaged in the production and transport of narcotics worldwide. The CIA’s enormous role in the global drugs trade provides one of the murkier narratives of the Agency’s sordid history.   As will be shown, the trail of corruption leads to the highest levels of successive Washington administrations, right to the front doors of Presidents, Nixon Carter Reagan Bush Clinton The CIA has also brought its methodology home to the inner city ghettos in the United States, victimizing American citizens as badly as any foreigners.   In fact, at two critical junctures after World War II – the late 1940s and the late 1970s – when America’s heroin supply and addict population began to ebb, the CIA’s covert narcotics operations generated a sudden surge of heroin that soon revived the U.S. drug trade….

Intelligence agencies and crime syndicates share much in common; both maintain large organizations capable of carrying out covert operations without fear of detection and there has developed a natural affinity between the two. For example, when the CIA needed a legion of thugs to break the 1950 Communist dock strike in Marseilles, it turned to the city’s Corsican crime gangs.   When the Agency attempted to assassinate Fidel Castro in the 1960s, it employed American Mafia syndicates.

The CIA’s involvement with the international drugs trade can be traced back to the Agency’s covert operations in the Far East, Latin America and Europe in the early stages of the Cold War.   CIA operatives directly assisted underworld narcotics traffickers in these areas, aligning together in a fight against Communism and the left.   The CIA has allied itself with heroin merchants in Laos, Chinese opium dealers in Burma, military drug lords in Thailand and Panama, Colombian cocaine cartels in Nicaragua and Costa Rica, and guerrilla opium armies in Afghanistan….

The CIA’s alliance with the drug lords in the late 1940s came at a time when the global opium trade was at its lowest ebb in nearly two centuries.   World War II had disrupted international shipping and imposed tight waterfront security that made smuggling of heroin into the United States virtually impossible. Heroin supplies were small and international crime syndicates were in disarray. America’s addict population plummeted from 200,000 in 1924 to a mere 20,000 in 1945.   The possibility existed that heroin addiction might eventually disappear as a major social problem in the United States.   However, the CIA and its wartime predecessor, the OSS (Office of Strategic Studies), created a situation that made it possible for the Sicilian-American Mafia and the Corsican underworld to revive the international narcotics traffic.

Europe was America’s most important political battleground at that time. Determined to restrict the influence of the left in Western Europe, the CIA intervened covertly in the internal politics of Italy and France. In Sicily the OSS allied with the Mafia to assist the Allied forces in their 1943 invasion of the island.   After taking control of Sicily, the U.S. army returned favors to the Mafia by appointing Don Calogero Vizzini (the leader of the Sicilian Mafia) mayor of Villalba.   Genco Russo (Calogero’s successor as Sicily’s Mafia boss) was appointed mayor of Mussumeli. Under the command of Colonel Charles Poletti, the former lieutenant governor of New York, the Allied Military Government selected Mafiosi as mayors in many towns across western Sicily. Within five years the, Mafia controlled politics in Sicily.   As Italian politics drifted to the left in 1943-1944, the alliance between American intelligence and the Mafia was maintained to check the growing strength of the Italian Communist Party in Sicily, Don Calogero rendered services to Washington’s anti-Communist efforts by breaking up left-wing political rallies.   On September 16th 1944, for example, a Communist rally ended abruptly in a hail of gunfire as Don Calogero’s men fired into the crowd and wounded 19 spectators.

In 1946, American military intelligence made an enormous gift to the. Mafia – they released SalvatoreLuckyLuciano from prison in New York and deported him to Italy, thereby freeing one of the criminal talents of his generation to rebuild the heroin trade. Luciano was the man who had, almost single-handedly, built the Mafia into the most powerful criminal syndicate in the United States.   Within two years after Luciano’s return to Italy, the U.S. government deported more than 100 more Mafiosi.

With the help of these people and his old friend Don Calogero, Luciano was able to quickly build an international narcotics syndicate. For more than a decade, this syndicate moved morphine base from the Middle East to Europe, transformed it into heroin, and then exported it in substantial quantities to the United States – all without suffering a major arrest or seizure.   The organization’s comprehensive distribution network within the United States helped raise the number of addicts from an estimated 20,000 at the close of World War II to 60,000 in 1952 and to 150,000 by 1965.   Luciano became a millionaire many times over.
    Mafia leader Charles “Lucky” Luciano (standing, right),
after his deportation to Italy by the U.S.

From 1948 to 1950, the CIA allied itself with the Corsican underworld in its fight against the French Communist Party (then the largest political party in France) for control over the strategic Mediterranean port of Marseilles.   At this time the Sicilian Mafia were relying on Marseilles’ Corsican syndicates for their drug supplies.

The Corsican syndicates gained political power and control of the waterfront as a result of their involvement with the CIA in strike-breaking activities: in early November 1947, a series of wildcat strikes and demonstrations broke out in Marseilles over poor wages and skyrocketing food prices, which were leading to widespread starvation.   Spontaneous strikes closed down factories, mines and railway yards throughout the country and by late November, three million workers were on strike and the French economy was almost paralyzed.

Working through the American Federation of Labor (AFL), which was operating its own secret networks throughout Europe, the CIA began sending some $2 million a year to anti-Communist labour leaders and engineered the first split in post-war European labour by channeling clandestine funds to the Socialist leader Leon Johaux, who then led his anti-Communist union, Force Ouvrriere, out of an alliance with the Communists.

It may seem out of character for the CIA to be backing anything so far left as the Socialist Party.   However, at the time there were only three major political parties in France – Socialist, Communist and Gaullist. While General de Gaulle was too independent for Washington’s tastes, Socialist leaders were rapidly losing political ground to the Communists and thus were willing to collaborate with the CIA.   Agency payments of $1 million to the Socialist Party guaranteed them a strong electoral base in the labour movement and gave its leaders the political strength to lead the attack on strikers.

While Marseilles Socialist leader Gastron Defferre called for an anti-Communist crusade from the floor of the National Assembly, Socialist Minister of the Interior Jules Moch directed massive police actions against striking workers. With the advice and support of the U.S. military attaché in Paris, Moch called-up 80,000 reserves and mobilized 200,000 troops to battle the strikers.   Police units attacked picket lines with unrestrained violence, while Communist municipal councilors were severely beaten up in Marseilles City Hall by members of the Mafia gang led by the Guerini brothers.

The CIA also sent agents and a psychological warfare team to Marseilles, where they dealt directly with Corsican syndicate leaders through the Guerini brothers. The Agency supplied arms and money to the Corsican gangs for harassment of union officials and assaults on Communist picket lines, murdering a number of strikers in the process.   The CIA psychological warfare team prepared pamphlets, radio broadcasts and posters aimed at discouraging workers from continuing the strike.   At one point the American government threatened to ship 65,000 sacks of flour meant for the hungry city back to the U.S. unless the dockers unloaded them immediately. Faced with the overwhelming onslaught of violence and hunger, Marseilles’s workers abandoned the strike after less than a month, along with their comrades in the rest of France.   The Guerinis gained enough power and status from their role in smashing the strike to emerge as the new leaders of the Corsican underworld in Marseilles.
    Barthelemy Guerini, the Marseilles Mafia leader who fought the Communist Party with the support of the CIA. He was sentenced to twenty years for a milieu murder in 1970.
When more strikes broke out in Marseilles in 1950, the CIA channeled £2 million of covert funds to scab labourers from Italy and a crew of local Corsican criminals led by Pierre Ferri-Pisani to work the docks, unloading shipments of U.S. weapons.   In addition, the Guerini’s gangsters were assigned the job of assaulting Communist pickets to allow troops and scabs onto the docks.

By supplying the Corsican syndicates with money and support, the CIA broke the last barrier to unrestricted Corsican heroin smuggling operations in Marseilles. The Corsicans used their control over the port to turn it into the heroin capital of Europe and to dominate the export of heroin to the U.S. market.   Gaston Defferre and the Socialist Party emerged victorious following the weakening of the Communist Party and the Socialists maintained a political reign over the Marseilles municipal government that lasted a quarter of a century.

Throughout this period, the Guerinis maintained a close relationship with the party, acting as bodyguards and campaign workers for Socialist candidates.   The Corsicans also enjoyed political protection from France’s intelligence service, the SDECE, which allowed their heroin laboratories to operate undisturbed for nearly 20 years.

Simultaneously to its activities in Europe, the CIA ran a series of covert operations in Southeast Asia along the Chinese border, which was instrumental in the creation of the “Golden Triangle” heroin complex.

The outbreak of the Korean War in 1950 established the CIA’s jurisdiction in the Far East and for the next quarter century covert paramilitary operations were the major Agency activity in the area.   Since these demanded alliances with powerful warlords or tribal leaders who traditionally dealt in drugs, the Agency enmeshed its covert operations with the region’s opium traffic.

When Mao Tse-tung’s peasant armies captured Shanghai after World War II, they drove China’s heroin traffickers out of the country.   The new Communist regime then began a massive detoxification program to combat its addict population, estimated at 40 million, the largest in the world. Communist cadres identified addicts and sent them to local drug clinics; persistent addicts were dispatched to labour camps. Through the process of land reform, extensive poppy fields were reclaimed for food production and further opium cultivation was banned.   The People’s Liberation Army began patrolling the Chinese border to prevent an expected counter-attack by CIA-supported Nationalist Chinese troops and China’s drug trade virtually ceased.

In contrast to such anti-drug activities by the Communists, the CIA and the U.S. Agency for International Development (USAID) supplied the region’s opium and heroin dealers with arms, ammunition, transportation of food supplies, buildings and “humanitarian aid”, in exchange for mercenary forces or political leverage.   These dealers included the Kuomintang (KMT or Nationalist Chinese) on the Chinese border, Hmong tribesmen in Laos led by narcotics trafficker Vang Pao, and various political factions in South Vietnam and Burma.
    Opium trafficker General Vang Pao, commander of the
CIA’s Secret Army in Laos from 1960 to 1975.

CIA support often included active participation in the collection, manufacture and transport of opium and heroin.   CIA activities in Burma helped transform the Shan States from a relatively minor poppy-cultivating area into the largest opium-growing region in the world, while the CIA helped install a 12,000-strong opium army in the mountains of northern Burma.

As part of its covert operations against Communist China, the CIA established a large cover structure on Taiwan known as Western Enterprises. This, and one of the Agency’s airlines, Civil Air Transport, provided cover for the CIA to drop teams of Chinese Nationalist soldiers on mainland China, to contact dissidents and build a viable resistance to Mao Tse-tung‘s government.   Commandos were also sent in via small boats from the offshore island of Quemoy.

The CIA planned a covert invasion of China, and organized several thousand troops led by General Li Mi, who were joined by a further 8,000 recruits from the indigenous hill tribes in Burma and 1,000 crack KMT troops shipped in by the Agency from Taiwan. The CIA’s airlines began regular shuttle flights to bases and camps in Burma, using Thai airstrips for refueling and re-supplying.

In August 1952, this army invaded Yunnan Province in China, predicting that the peasants would rise up in support of them.   But this did not happen and the invaders were driven out. General Li Mi gave up attempts to defeat China, established a quasi-independent state in Burma and became involved in running the lucrative opium trade, aided in this by General Phao Siyanan of the Thai Police, one of the CIA’s most important agents in Southeast Asia.

Over the next decade, Burma’s Shan states were transformed into the world’s largest opium producer.   The CIA’s alliance with the opium armies in the Burma-Thai borderlands lasted for a decade. The Agency delivered arms to their forces in Burma and then loaded opium aboard Civil Air Transport planes for the return flight to Bangkok. Infiltration routes for CIA commando teams into Southern China were also used as drug smuggling routes for traffickers in Burma and Thailand.   The Agency maintained five secret training camps and two key listening posts in the Shan states, protected by drug smuggling KMT troops and local tribesmen.

The rationale behind the CIA’s support for drug traffickers in the region was best summed up by General Tuan Shi-wen, a veteran of the Agency’s covert war in Burma: “We have to continue to fight the evil of Communism and to fight you must have an army, and an army must have guns, and to buy guns you must have money. In these mountains, the only money is opium.” General Tuan Shi-wen, commander of the Nationalist Chinese
Fifth Army at his headquarters on the Thai-Burma border.

The CIA, via its Sea Supply Company, threw its full support behind General Phao, making him the strongest man in Thailand.   In exchange, Phao allowed the Agency to develop two Thai paramilitary organizations, the Police Aerial Reconnaissance Unit and the Border Patrol Police (BPP).   To manage the training and equipping of the BPP, the CIA brought in Paul Helliwell, one of their specialists on forming front companies and laundering funds for “black” operations, to set up a cover organization operating out of Miami.

By 1953, the CIA had supplied General Phao with $35 million of naval vessels, arms, armored vehicles, communications equipment and aircraft, and the Agency had 275 agents working with Phao’s police. Phao became Thailand’s most ardent anti-Communist and it appears that his major task was to support the KMT’s political aims in Thailand and its guerrilla units in Burma.   Phao protected KMT supply shipments, marketed their opium and helped to generate support for the KMT among Thailand’s overseas Chinese community, the richest in Asia.

U.S. Ambassador William Donovan, founder of the OSS and senior adviser to the CIA, hailed Phao’s police state as, “the free world’s strongest bastion in Southeast Asia.” By 1955, Phao’s National Police Department (TNPD) had become the largest opium-trafficking syndicate in the country and was intimately involved in every phase of the narcotics trade.   The level of corruption was remarkable, even by Thai standards. Police border guards escorted the KMT opium caravans from the Thai-Burma border to police warehouses in Chiangmai. From there, police guards brought it to Bangkok by train or police aircraft. Then it was loaded onto civilian coastal vessels and escorted by the maritime police to a mid-ocean rendezvous with freighters bound for Hong Kong or Singapore.

The military elite that ruled the country grew immensely wealthy from their drug monopoly and from ties to the CIA. Much of this drug smuggling network remains very active today, and maintains its close links with Thailand’s military and paramilitary circles.   The historical roots of the CIA’s secret supply network for the Nicaraguan Contras in the 1980s lie with the Agency’s paramilitary programs with the KMT and the BPP in Southeast Asia.   These covert operations provided the Agency with considerable experience in the management of secret wars and drug running.

The CIA’s airlines, amongst them Civil Air Transport (later Air America) and Air Asia, along with the Agency’s holding company, the Pacific Corporation, provided air support for many of the drug operations in the Far East.

In Laos, the CIA hoped to defeat the left-wing Pathet Lao and North Vietnamese.   For that purpose it supplied guns, money and training to the Hmong tribe, the part of the Laotian population most eager to fight for the Agency (most were anti-Communist monarchists.) The Hmong’s primary cash crop was opium and the CIA provided unmarked Air America UH-1 H helicopters to collect opium for the Hmong commander General Vang Pao from his scattered highland villages and transport it to distribution centers at Long Tieng and Vientiane.   The processed heroin was ultimately bound for American GI addicts in Vietnam.
    A Yao tribeswoman in the mountains of northern Laos,
preparing a hillside for opium planting in 1971.

General Vang Pao organized sabotage forays into China for the CIA and sold Burmese opium to another CIA protégé, General Phoumi Nosavan, political leader of the Laotian right-wing.   The economic alliance between Phoumi and the Hmong opened up a new trading pattern that supplied increasingly significant quantities of Burmese opium for the flourishing Laotian heroin laboratories.

Phoumi had come to power in 1958 when an unexpected electoral victory by the Pathet Lao movement panicked the U.S. Fearing that Laos might eventually turn Communist, the CIA financed the formation of a right-wing coalition, while the State Department plunged the government into a fiscal crisis by cutting off all aid.   Little more than three months after the elections, Prime Minister Souvanna Phouma and his neutralist government resigned. A new right-wing government took control, declaring: “We are anti-Communists.” The State Department provided funds of $3 million a month to the new government.   Backed by the CIA, Phoumi became a cabinet minister and a general, and with his personal CIA agent always by his side, plotted coups, rigged elections and helped the CIA build up its Secret Army in Laos (see later).

In July 1962, the United States and the Soviet Union signed the Geneva Agreements on Laos, theoretically terminating their military operations in that chaotic region. Although American Green Berets and military advisers were withdrawn by October as specified, the CIA devised a number of deceptions to continue its covert activities.   All of the CIA operatives moved to adjacent areas of Thailand but returned almost every day by helicopter or plane to direct guerrilla operations.   Civilian personnel (not covered by the Geneva Agreements) were recruited for clandestine operations. In December 1962, for example, CIA agent Edgar Buell trained Hmong guerrillas in demolition techniques and directed the dynamiting of six bridges and twelve mountain passes near Ban Ban.   The U.S. Embassy declared that Air America flights to Hmong villages, which carried armaments as well as refugee supplies, were “humanitarian aid” and as such were exempted from the Geneva Agreements.

The Agency’s paramilitary training programs in Laos developed into a covert war of unprecedented scale against the Pathet Lao in the northeast of the country, while providing bases for bombing raids against North Vietnam on the northwestern border. The CIA recruited and trained a private army of over 30,000 Hmong and other Laotian tribesmen.   This group was known as L’Armee Clandestine (Secret Army). 40 or 50 CIA officers ran this operation, later aided by 20,000 Thai mercenaries at a cost of some $300 million a year.

The CIA’s Secret Army went on the rampage throughout northern Laos, attacking Pathet Lao villages and expanding Hmong commando operations into bordering provinces. As each village was captured, the inhabitants were put to work building crude landing strips, usually 500 to 800 feet long, to receive Air America’s “refugee” supplies.   These landing strips were then used by Air America to fly Hmong opium to markets in Long Tieng and Vientiane.   Vang Pao’s CIA counterpart Tony Poe later revealed that Vang Pao flew heroin across southern Laos into central Vietnam, where, “the number two guy to President Thieu would receive it.”

Hmong militia of the CIA’s Secret Army on patrol in northern Laos.
  George Cosgrove, organizer of the CIA’s Secret Army, directs Air America cargo
planes parachuting supplies to Hmong soldiers in the mountains of northern Laos, 1971.

It was during this period that several key Agency players in the weapons supply network to the Nicaraguan Contras in the 1980s developed their skills in drug running and secret war management.   CIA chief of station Ted Shackley exercised overall command over the Agency’s covert operations in Laos. (He later managed Operation Phoenix, the CIA’s mass murder “pacification” program in Vietnam).   Shackley’s CIA deputy in Laos, Tom Clines, managed ground support activities for the war, and U.S. Air Force liaison Richard Secord, then a lieutenant colonel, supplied most of the aircraft for Air America and other CIA proprietary airlines.

Shackley, Clines and Secord, together with Robert Jantzen, the CIA’s station chief in Thailand and CIA officer Edwin Wilson, were cited in the late 1970s in the Nugan Hand Bank scandal in Australia, which was found to be heavily involved in drug trafficking between Thailand and Australia, as well as money laundering and illegal weapons deals.
    CIA agent Theodore Shackley
CIA agent Thomas Clines

Air logistics for the Laos opium trade were further improved in 1967 when the CIA and USAID gave Vang Pao financial assistance in forming his own private airline, Xieng Khouang Air Transport.   This airline flew additional cargoes of opium and heroin between Long Tieng and Vientiane.

The CIA’s covert action assets were the leading heroin dealers in Laos: General Ouane Rattikone, commander-in-chief of the Royal Laotian Army (the only army in the world, except for the U.S. Army, that was entirely funded by the U.S. government) owned one heroin laboratory, while another Laotian heroin laboratory at Nam Keung was protected by Major Chao La, commander of Yao mercenary troops for the CIA in north-western Laos.   Laos’ leading heroin manufacturer, General Ouane Rattikone (centre),
being decorated by King Savang Vatthana
on his retirement in June 1971.
  The trademark for Double U-O heroin brand, manufactured at Rattikone’s Laos
laboratory for sale to U.S. troops serving in South Vietnam during the 1970s.

As the war against the Pathet Lao progressed, Hmong losses were enormous.   Many Hmong villagers had to endure repeated and long forced marches, which produced fatalities of up to a third, and most of the Hmong lost their desire to continue fighting for Vang Pao. They resented his flamboyant excesses such as personally executing his own soldiers, stealing from the military payroll and his willingness to take heavy casualties.

The more highly motivated Pathet Lao guerrillas finally took control of the country in May 1975, leading to the formation of the People’s Democratic Republic of Laos. Vang Pao fled to Thailand, from where he was escorted to Missoula, Montana – the hometown of his CIA case officer, Jerry Daniels.   Here, Vang Pao paid over half a million dollars for a cattle ranch, hog farm and two large homes.

By the end of the year, over 30,000 Hmong refugees had fled across the border into Thailand, the first wave of a mass exodus that would peak at 3,000 a month by 1979.   General Vang Pao’s comment was: “War is difficult, peace is hell.” At the same time as it was launching sabotage and guerrilla attacks against the Communist North Vietnamese, the CIA sent Colonel Edward Lansdale to South Vietnam to help install the right-wing regime of Ngo Dinh Diem.   This was one of the CIA’s most successful operations.

In late 1969, the Agency ‘s various covert action clients in Southeast Asia opened a network of heroin laboratories in the area, stretching from southern Yunnan Province in China to neighboring Burma’s Shan States, northern Thailand and northern Laos. This region was commonly known as the “Golden Triangle” to opium and heroin traffickers, and the new laboratories began to export high-grade no. 4 heroin to U.S. troops fighting in Vietnam.   Within two years, army medical officers estimated that 10 to 15%, or 25,000 to 37,000 of U.S. soldiers were regular heroin users.

At the same time, both the American Mafia and Marseilles’s Corsican syndicates were looking for new sources of heroin and morphine base and moved to Saigon when they saw that the Vietnam war had opened up a new market for them among American GIs.   The CIA’s Senior Liaison Office, under the command of Edward Lansdale, worked closely with South Vietnamese Premier Nguyen Cao Ky’s administration during the war, and Ky was heavily involved in narcotics trafficking.   One of Ky’s strongest supporters in the air force, Colonel Phan Phung Tien, was close to many Corsican gangsters and was implicated in the smuggling of drugs between Laos and Vietnam.
    Colonel Edward 0. Lansdale, leading CIA operative during the Agency’s drug trafficking activities in Southeast Asia.

However, despite knowing that the Corsicans were heavily involved in the drugs traffic, Lansdale took no action against them but instead arranged a “truce” in which he agreed to turn a blind eye to their activities in order to avoid embarrassment to Premier Ky and the South Vietnamese government, which Washington was supporting in its war against the Communists in the North.

Even when the U.S. Army’s Criminal Investigation Division (CID) gathered detailed information on the South Vietnamese government’s involvement in trafficking heroin to American GIs, rather than acting on the information, the Nixon administration and the U.S. military command did their best to deny both the charges and the scale of the GI heroin epidemic, and to shield the South Vietnamese government from criticism.
    South Vietnamese Prime Minister Ngo Dinhm Diem (left) meets
with General La Van Vien, Saigon’s leading opium trafficker.

Before long, the U.S. military command in Vietnam was discharging between 1,000 and 2,000 GI addicts a month.   They were flown back to the United States and discharged almost immediately. Virtually none of them were given any follow-up treatment; many returned to their hometowns as confirmed addicts and afflicted their communities with the heroin plague.   A large percentage of these were white middle-class communities that had previously always been free from heroin addiction.   In June 1971, one specialist noted: “Each addict makes at least four more. He cannot bear his habit alone and is sure to seek recruits, even if he is not himself the pusher. This is the emergency we now face.” Many of the discharged GIs returned to Vietnam to set themselves up in the drugs trade, recruiting active-duty soldiers going home as couriers, and using local GIs to ship heroin to the U.S. through the army and air-force postal system. A vial of heroin in Vietnam cost only $2; back in the U.S. it sold for $100.

In a 1970 report, the U.S. Bureau of Narcotics concluded that Burma, Laos and Thailand together had become the source of more than half the world’s illicit supply of opium.   There is little doubt that the ClA’s support for the traffickers in these countries was responsible for this massive growth in the drug trade. U.S. officials turned a blind eye to the region’s governments’ involvement in the opium traffic, while the CIA itself was actively involved, supplying modern aircraft to replace mules, naval vessels to replace sampans, and providing access to international transport for the opium traders and commercial contacts to facilitate the marketing of the drugs.

After the withdrawal of American troops from Vietnam in 1975, the Corsican and Chinese syndicates started shipping Laotian heroin directly to the United States, capturing one third of the American narcotics market.   Heroin was following the GIs home.
    Shan state army soldier, a Burmese group active
in the opium trade, at their camp in Man Pi.

Meanwhile, the heroin networks in Vietnam compensated for the loss of their American clientele by distributing drugs to the legions of unemployed youth, prostitutes and street dealers that comprised Saigon’s U.S. camp-generated economy.   As South Vietnam fell into a crisis of government corruption and economic collapse, a report by the CIA’s Saigon station concluded: “If President Thieu continues to govern with the support of corrupt and incompetent men, it will be difficult for South Vietnam to win the struggle against the Communists.” Instead of pressing Thieu for reforms, the CIA station chief Thomas Polger suppressed the information.

By the time the North Vietnamese captured Saigon in March 1975, they found the city of four million included 300,000 unemployed, 150,000 heroin addicts and 130,000 prostitutes. Within months, the new Communist regime established the New Youth College, a residential drug centre with 1,200 beds and a yearlong treatment program that established an 80% cure rate among the addicts.

In October 1977, a military coup in Thailand brought General Kriangsak Chamanan to power as prime minister.   Kriangsak quickly abandoned the previous government’s anti-drugs policy, stating: “There appears to be a conflict between our campaign against narcotics and our campaign against the Communists”, and he helped to supply the CIA’s Kuomintang opium armies in northern Thailand with arms and money, in return for their drugs.

Seeking to show the American public that its allies were no longer active in the narcotics industry, the CIA arranged a public ceremony in March 1972, at which General Kriangsak arranged the burning of the KMT’s “last 26 tons of opium” for the U.S. government.   Parading before U.S. television cameras, the KMT’s commander, General Li Wen-huan and his troops delivered a hundred mules laden with “opium” and publicly renounced the drug trade.   The Thai military soaked the packs with petrol and set them on fire. With covert funding from the CIA, the Thai military paid the KMT general $1 850,000 for this act.   The U.S. State Department proclaimed that, “this quantity of opium, if refined into heroin, could have supplied half the U.S. market for one year.” As it turned out, the opium pyre was neither the KMT’s last shipment, nor entirely opium at all.   Only 5 of the 26 tons had been opium and the balance was fodder, plant matter and chemicals. Kriangsak and the Thai military command maintained the fiction that their troops had now retired from the opium trade, papering over General Li’s long-time links to the CIA, while Li continued with his narcotics activities as actively as ever.
    A tribeswoman collecting opium during the
1898 harvest in the southern Shan states.

Opium warlords such as Khun Sa came to dominate the narcotics trade in Thailand in the 1980s.   When the Thai government bowed to public pressure and launched a military assault on Khun Sa’s base at Ban Hin Taek near the Burmese border in January 1982, they found the site contained a hundred-bed hospital, a brothel, luxurious villas with swimming pools, a vacation house for General Kriangsak and seven heroin refineries.   The Thai border patrol police had maintained an outpost only a mile from Khun Sa’s camp for the past four years but had never disturbed the nearby heroin laboratories.   General Kriangsak was the minister responsible during this time.

Despite heavy casualties, Khun Sa’s forces retreated across the border into Burma, where he quickly re-established the heroin laboratories that allowed him to control 70% of Burma’s opium trade. Today Khun Sa, armed by the CIA, trained by the KMT and protected by the Burmese government, is probably the world’s most powerful drug lord.   He commands an army of some 4,000 men armed with M16 rifles and .50 calibre machine guns. In one harvest he transports enough opium and heroin to supply the entire annual requirements of America’s illicit drug markets.
    Khun Sa, Burma’s leading opium warlord and heroin manufacturer, in
his headquarters at Mongmai near the Thai border, February 1989.
THE AFGHAN CONNECTION “You can say the Afghan rebels made their money off the sale of opium. There’s no doubt about it. The rebels keep their cause going through the sale of opium.
-DAVID MELOCIK, DEA Congressional Affairs Liaison During the mid 1970s, the temporary success of some Drug Enforcement Agency (DEA) operations in Turkey, Thailand and Mexico reduced the heroin flow into the United States and cut the number of American addicts by more than a half.   However, the CIA’s covert warfare operation in Afghanistan then transformed southern Asia from a self-contained opium zone into a major supplier of heroin for the world market.

When President Carter reacted to the Soviet invasion of Afghanistan in December 1979 by shipping arms to the mujahedin guerrillas, Dr. David Musto of the White House Strategy Council on Drug Abuse warned: “We were going into Afghanistan to support the opium growers in their rebellion against the Soviets. Shouldn’t we try to avoid what we had done in Laos?… Are we erring in befriending these tribes as we did in Laos, when Air America, chartered by the Central Intelligence Agency, helped transport crude opium from certain tribal areas? Shouldn’t we try to pay the growers if they will eradicate their opium production?” As heroin from Afghanistan and Pakistan suddenly poured into America throughout 1979, Musto told the White House: “On the streets, this drug is more potent, cheaper and more available than at any time in the last twenty years,” and he warned: “This crisis is bound to worsen.” But Dr. Musto’s warnings fell on deaf ears .

The DEA confirmed Mustos’s worst fears with reports of a rash of cases involving the movement of Middle Eastern heroin: Philadelphia and Washington DC both reported an increase of 25% in overdose deaths during the year, and the nation’s addict population doubled in three years. And as supply surged, wholesale prices in Europe fell and purity rose to a new high.   With ample supplies of opium and morphine, Marseilles’s Corsican syndicates were co-operating with the Sicilian Mafia to open a new network of heroin laboratories in Europe, which then exported heroin to the United States.

There was worse to come, as heroin exports from Afghanistan and Pakistan continued to increase. Afghanistan’s opium production leaped from about 100 tons in 1971 to 300 tons in 1982 and to 575 tons the following year.   Street sales of narcotics in the United States rose by 22% in 1980, while cocaine supply jumped a remarkable 57% to 44 tons, worth $29 billion.

Then came crack cocaine, which reached pandemic proportions in America by the mid-1980s. World opium production tripled from an estimated 1,600 tons in 1982 to 4,700 in 1990.   A DEA expert stated in June 1990: “It is the tip of the iceberg.” How did this catastrophe occur?   During the Nixon administration, the CIA, along with the Iranian secret police SAVAK, attempted to destabilize the Afghan government of Hafizullah Amin, which for decades had been allied with the Soviet Union.   The CIA trained and armed a 5,000-strong army in Pansher valley, north of the capital Kabul. By December 1979, the encroaching threat of the CIA-backed forces and months of fighting between rival Communist factions meant that the collapse of the Afghan government seemed imminent. The Soviet Union sent troops into the country to support its ally, occupying Kabul and installing a more pliable Afghan Communist as president.

Jimmy Carter reacted with ill-concealed rage, denounced Soviet leader Leonid Brezhnev, imposed a series of economic sanctions against Moscow and mobilized covert military aid for the mujahedin guerrillas.   Egypt, Pakistan and China all agreed to help, while Saudi Arabia contributed $25 million.   Within weeks, massive arms shipments began – hand-held missiles and anti-tank weapons from China, Kalashnikov assault rifles from Egypt, munitions from Saudi Arabia and a variety of U.S. weapons from the CIA, including Stinger missiles. The CIA’s operation in Afghanistan was the second largest covert war in its 40-year history.   Only its secret war in Laos was bigger and more expensive.

When the failure of the monsoon rains for two consecutive years reduced the Golden Triangle’s opium production to a record low in 1980, a network of heroin laboratories opened along the Afghan-Pakistan border to service the global markets opened by the drought in Southeast Asia.   Pakistan’s opium production soared to 800 tons, dominating the European market. Pressured by the United States, an important ally, Pakistan’s military regime under General Zia ul-Haq imposed an erratic drug suppression effort that drove the country’s opium production down to its more normal level of 100-200 tons.   Afghanistan’s mujahedin guerrillas correspondingly expanded production in their zones and shipped the raw opium to the Afghan-Pakistan border refineries for processing into heroin.

Soon after President Reagan took office in 1981, the White House offered a $3 billion program of military aid to General Zia’s harsh Islamic fundamentalist dictatorship in Pakistan and Zia’s military quickly assumed a dominant role in supplying arms to the mujahedin.   The CIA worked closely with Pakistan’s Inter Service Intelligence (ISI), which the Agency helped build into a powerful covert operations unit and the strong arm of Zia’s martial-law regime.

  Pakistani dictator Zia ul-Haq, aided by the CIA in his narcotics trafficking.

During the ten years of CIA support for the mujahedin resistance against the Soviet occupation of Afghanistan, the U.S. government was silent about the involvement in the heroin traffic of leading Afghan guerrillas and the Pakistan military.   In particular, the CIA allied with Gulbuddin Hekmatyar, leader of the small mujahedin Hezbi-i Islami group, and over the next decade the Agency gave Hekmatyar more than half its covert aid, building the Hezbi-i Islami into the largest guerrilla force in the country.   Hekmatyar also used the Agency’s arms, logistics and support to become the region’s largest drug lord. Within a year, the surge of his heroin production had captured over 60% of the American market, breaking the long drug drought and raising America’s addict population to its previous peak.

An Islamic militant, the brutal and corrupt Hekmatyar had founded the Muslim Brotherhood in the early 1970s, when his activities included dispatching followers to throw vials of acid into the faces of women students who refused to wear veils.   Hekmatyar allied himself with Pakistan’s Jamaat-i Islami (Party of Islam), a fundamentalist and quasi-fascist Muslim group with many members inside the Pakistani officer corps.
    Afghan resistance leader Gulbuddin Hakmatyar (centre), chief
beneficiary of CIA arms and the country’s largest heroin trafficker.

With generous American aid of $3 billion officially (and a further $2 billion covertly for the military), Pakistan allowed the CIA to conduct its secret war in Afghanistan without restraint.   Along the border, the Agency ran training camps for the mujahedin, and in Pakistan’s capital, Islamabad, the CIA maintained one of its largest foreign stations to direct the war. General Zia allowed the CIA to open an electronic intelligence station facing the Soviet Union in northern Pakistan and permitted U.S. spy flights over the Indian Ocean from his air bases near the Persian Gulf.

From the outset of the covert war in 1979, other mujahedin leaders complained that Hekmatyar’s Hezbi-i Islami followers were using violence to take control of rival resistance groups.   Pakistan’s ISI gave Hekmatyar a free hand to rule the Afghan refugee camps around Peshawar and he used it to run a reign of terror.

As the mujahedin used their new CIA munitions to capture prime agricultural areas inside Afghanistan during the early 1980s, the guerrillas ordered their peasant supporters to grow poppies, thereby doubling the country’s opium harvest in a year.   The mujahedin sold the opium to heroin refiners in Pakistan who operated under the protection of General Fazie Huq, governor of the North-West Frontier province, and an intimate of General Zia. Fazle Huq was to accumulate a powerful fortune from this, estimated at several billion dollars.
    Casualty of the Afghan war – a three-week-old baby whose right leg was severed by a shell.

By 1988, there were an estimated 100 to 200 heroin refineries in the province’s Khyber district alone. Pakistan Army trucks arriving with CIA arms from Karachi often returned loaded with heroin – protected from police search by ISI papers.   Both European and Pakistani police were to later report that all investigations of the province’s major heroin syndicates, “had been aborted at the highest level.” Further south, in Pakistan’s Baluchistan province, Hekmatyar himself controlled six heroin refineries that processed the large opium harvest from Afghanistan’s fertile Helmand valley.

The heroin boom under General Zia was so large and uncontrolled that drug abuse swept Pakistan in the early 1980s.   The number of addicts went from a few hundred to more than 1.3 million within three years, one of the world’s largest addict populations. Instead of prospering with a bonanza of U.S. aid following the 1979 Soviet invasion, Pakistan was – and still is – destabilized by the immense drug and arms traffic.   Throughout this, some 17 DEA agents sat in the U.S. embassy at Islamabad without making a major arrest or seizure – they recognized the potential embarrassment of exposing CIA operatives, even though they were major drug lords.

The blatant official corruption continued until August 1988 when General Zia’s death in an air crash brought an eventual restoration of civilian rule. The U.S. State Department paid tribute to Zia as, “a strong supporter of anti-narcotics activities in Pakistan.” By 1989, the CIA’s complicity in global narcotics traffic had allowed world opium production to multiply fourfold to 4,200 tons a year.   Significantly, three quarters of this came from Southeast Asia where the Agency had worked with the region’s drug lords for 24 years. Most of the balance came from southern Asian opium hills and heroin laboratories controlled by the CIA’s Afghan guerrilla clients.   Just as CIA support for KMT forces had increased Burma’s opium crops in the 1950s, so the Agency’s aid to the mujahedin guerrillas expanded opium production in Afghanistan and linked Pakistan’s nearby heroin laboratories to the world market.

After a decade as the sites of major CIA covert operations, Burma and Afghanistan ranked respectively the world’s largest and second largest suppliers of illicit heroin in 1989.   Today, the “Golden Crescent”, as the opium growing regions in Afghanistan, Iran and Pakistan are called, accounts for 75% of all the heroin in Western Europe and 50% of the heroin in the U.S.   A Reagan administration official bluntly stated in 1988: “We’re not going to let a little thing like drugs get in the way of the political situation. And when the Soviets leave and there’s no money in the country, it’s not going to be a priority to disrupt the drug trade.” The withdrawal of Soviet troops from Afghanistan in February 1989 resulted in savage fighting between rival mujahedin commanders for the country’s prime opium land.   When one of Hekmatyar’s commanders slaughtered thirty members of another mujahedin group, the atrocity inspired the president of the new Afghan interim government to denounce Hekmatyar, his own foreign minister, as “a criminal and a terrorist.”

The CIA continued to supply arms to Hekmatyar even after the Soviet withdrawal and the Agency’s operations turned the country into a breeding ground for terrorism.   Some 20 training camps sprang up in eastern Afghanistan, mainly in areas under Hekmatyar’s Hezb-i-lslami control, teaching such skills as demolitions and assassinations. Many of the participants in the 1993 bombing of the World Trade Centre had combat experience with Hekmatyar’s troops.   Ramzi Anmed Youssef, convicted in New York of plotting to blow up eleven U.S. airliners over the Pacific, bragged of receiving training in terrorist tactics from the Agency’s Afghan bases.

The infighting between the mujahedin over gaining control of the heroin-producing regions paved the way for the rise of the Taliban, a militant Islamic sect whose fanaticism makes the mujahedin appear almost progressive by comparison. Most of the Taliban came from Pashtun villages in the south of Afghanistan and many spent years in Madrassahs (religious schools) in the refugee camps of Pakistan being trained as mujahedin.   Led by Mohammed Omar Akhund, the Taliban viewed the mujahedin as having betrayed their country by deviating from Islam. They even considered the regime in Iran (from the rival Shi’ite branch of Islam) as dangerously liberal and modernizing.

From the outset, the CIA and Pakistan’s ISI developed close contacts with the Taliban.   In May 1996, two senior Taliban leaders attended a conference in Washington run by Senator Hank Brown, while senior U.S. diplomats, including Robin Raphael, the Assistant Secretary of State for Asian affairs, regularly traveled to Taliban headquarters. ISI officers aided and flew Taliban planes in their raids on Kabul, which fell to the Taliban militias in September 1996.   On that day, State Department spokesman Glyn Davies touted them as, “the group that might finally bring stability to Afghanistan.” John Holtzman, the CIA’s station chief in Pakistan, planned to visit Kabul a matter of days later, when the Clinton administration realized that an image of Washington embracing ultra fundamentalists could be a disaster with American female voters.   The visit was postponed.   Of the UN’s 185 members, Pakistan alone rushed to recognize the Taliban government.   John Holtzman told reporters: “The Taliban can play a useful role in ending Afghanistan’s long civil war by providing a strong central government.”   Well-armed Taliban fighters shortly after the capture of Kabul.
  The ruined city of Kabul.
The strong central government that the Taliban provided was a virulent fundamentalism with no parallel in the world.   People were forced at gunpoint to attend the mosque. Women were barred from education and from work. Men were ordered to grow beards. Television, music, sports and even kite-flying were banned. The Taliban snatched music cassettes from cars and smashed them with rocks by the roadside. Women caught exposing an inch of skin in public were beaten with baseball bats.

Washington’s motives in aiding the Taliban were, as ever, related to U.S. financial interests in the region.   The U.S. firm Unocal and the Saudi group Delta Oil had reached an agreement with the former Soviet republic Turkmenistan for a multi-billion dollar natural gas pipeline which would go through Afghanistan into Pakistan.   A friendly Taliban government would ensure the project’s feasibility and security – and also help prevent the creation of a similar pipeline proposed by Pakistan and Iran. Indeed, this may have been the largest single factor behind the U.S. government’s acceptance and continued funding of the Taliban, which has helped them achieve military success across the whole country.

U.S. officials claim that the Taliban will take a hard line on narcotics trafficking, yet to date the Taliban have done nothing to curtail the country’s lucrative opium trade, which brings in hard cash and foreign exchange. As fundamentalist Muslims, the Taliban theoretically oppose all forms of intoxication, including opium smoking, but in order to protect their support base they have refused to declare a ban on poppy cultivation and opium trafficking.   In fact the UN estimated an increase in poppy cultivation and yield in the 1995-6 growing season – when the Taliban held 95% of the area under cultivation – compared to the previous year.
THE CENTRAL AMERICAN CONNECTION “On the basis of this evidence, it is clear that individuals who provided support for the Contras were involved in drug trafficking, the supply network of the Contras was used by drug trafficking organizations and elements of the Contras themselves knowingly received financial and material assistance from drug traffickers.”
-SENATE FOREIGN RELATIONS SUBCOMMITTEE ON TERRORISM, NARCOTICS AND INTERNATIONAL OPERATIONS Panamanian dictator Manuel Noriega was supported by Reagan, Bush and the CIA, even though they knew he was heavily involved in cocaine trafficking.

The Nicaraguan revolution in 1979 provided the focus of the CIA’s covert paramilitary operations in the region, which centered around an arms and drugs trafficking conspiracy involving Panama, Nicaragua, Honduras and Costa Rica.

Manuel Antonio Noriega‘s relationship with the United States began in 1955 when, at the age of 19, he joined the Panama Socialist Party and began informing on its operations to U.S. intelligence.   In 1962, Noriega joined the National Guard and was made chief of transit police by Major Omar Torrijos Herrera, who was on the payroll of the CIA.   Torrijos was also working for the Agency in monitoring the potential threat of Communist influence among banana growers in Puerto Armuelles and Bocas del Toro. These plantations were owned by the United Fruit Company, a powerful American corporation that was also a CIA front.

In 1967, the CIA sent Noriega to study intelligence and counter-intelligence at Fort Gulick in Panama, followed by psychological operations at Fort Bragg in September 1967, and military intelligence training at the notorious School of Americas at Fort Benning in Georgia.

After the October 1968 coup which overthrew President Arnulfo Arias and brought Torrijos to power in Panama, Noriega was promoted to lieutenant colonel and made head of the country’s military intelligence (G-2), which he transformed into a sophisticated national spy service.   In mid-1970, Noriega became a member of the Counterintelligence and Counterespionage Organisation, an international network of intelligence agencies.

Over the years, the CIA paid Noriega more than $11 million. The money was virtually unaccountable in the CIA’s budget. It was officially justified as “support for institutional co-operation” but in fact it was a slush fund turned over to Noriega to do with as he desired. Torrijos and Noriega commenced a lucrative covert arms network in Panama, with the blessing and support of the CIA. Factions involved in virtually every world conflict operated out of the country.   Israel was chief amongst them, selling their arms first to Somoza, then to the Guatemalan military dictatorship and later to the Contras.

U.S. officials had hard evidence of Noriega’s extensive links to drug trafficking and human rights violations as early as 1971, yet every administration from Nixon’s onwards ignored the evidence and condoned his activities.   Noriega was heavily involved in the tidal wave of Colombian cocaine sweeping into America.   The Medellin drug cartel (a highly-organized consortium of Colombian cocaine brokers with an annual income estimated at $8 billion) paid Noriega vast sums of money for allowing them access to secure airstrips and aircraft in Panama, for making certain that customs and immigration officials asked no questions, for laundering drug profits through Panamanian banks, and for allowing wanted traffickers to remain in the country.

Washington’s desire to negotiate a new Panama Canal Treaty led to a long honeymoon between the U.S. and Panama. To a great extent, the vote in Congress on the Panama Canal Treaty was perceived as a referendum on drug dealing.   A former Senate intelligence Committee member recalled from that period: “We had a very complete picture. We knew about the drug problem. And the Panamanians knew we knew it. Once we ratified the Treaty, the Panamanians got the word that the United States was open for the drug business.” Another U.S. official said at the time: “We had drugs – and Noriega – all over the place.” On December 8th 1976, Noriega traveled to Washington D.C. where he first made the acquaintance of George Bush, the Director of the CIA.   When Bush left this position the following year, he sent a letter to Noriega, thanking him for his assistance. Another contact between the two came when Bush became Vice President.   Noriega sent a letter of congratulations and Bush sent a reply (dated December 23rd 1980) saying: “Thanks for the great congratulatory message,” and: “I hope our paths will cross again.” Noriega thrived as never before under the Carter administration.   He provided a haven in Panama for the Shah of Iran while Carter was seeking the release of the American hostages held in Iran, and when the Sandinistas took over Nicaragua in 1979, Noriega provided the CIA with the most regular and reliable intelligence about them.   Torrijos too was involved in (futile) efforts to preserve Somoza’s National Guard as a counterbalance to total Sandinista control of the country.

If Carter needed Noriega as a friend in Panama to smooth the way to a Panama Canal Treaty, Reagan (who strongly opposed that treaty) needed him to support the anti-Sandinista cause. The destruction of the Nicaraguan government became the highest priority of Washington. The original plan to launch the covert war against the Nicaraguan government was drafted by George Bush’s long-time friend, former CIA officer Donald Gregg.

Gregg oversaw the operation through his trusted friend Felix Rodriguez (alias Max Gomez), an anti-Communist Cuban-American CIA operative and a former CIA security adviser to Bolivia.   (In 1967 Rodriguez was the head of the CIA-backed Bolivian troops who captured and killed Che Guevara, the Cuban revolutionary leader).
    President Reagan with his National Security advisers in the White House Situation Room, 1985.
Left to right: Secretary of Defence Caspar Weinberger, Vice President George Bush,
the President, Secretary of State George Shultz, CIA Director William Casey and White
House Chief of Staff Donald Regan.

The official $4.6 million budget from the National Security Council for the anti-Sandinista operation was supplemented by another $25 million from the Pentagon and CIA; much of that went to a secret organization presided over by George Bush, named the Crisis Management Centre, which was staffed by a platoon of military special operations officers.   George Bush’s office was the central command post for the whole operation.

CIA Director William Casey found a way to take action against the Sandinistas with the help of the Argentineans. The CIA had extremely close relations with the fascist junta generals who ruled Argentina (the Agency had helped set up the country’s military intelligence).   Argentina began training about a thousand men, mostly former Somozan National Guards, into an anti-Sandinista paramilitary army, north of the Nicaraguan border in Honduras. These were the forces who would become known as the Contras.

Argentina appointed its military intelligence chief as ambassador to Panama to co-ordinate the operation. Argentine military intelligence officials were also assigned to Miami to organize training camps for Contra guerrillas, in particular the far-right Alpha 66 and Omega 7.   In each of the countries where they set up training units for the Contras, the Argentine advisers encouraged the use of violence and political assassinations.

Leonardo Sanchez Reisse, a leading member of the Argentine intelligence unit known as Battalion 61, was put in charge of financing the Florida forces and, “buying special equipment that could not be acquired through normal channels.” Reisse recruited, amongst others, two key anti-Communist Cubans into the Argentine training apparatus: Jose Suarez, who became a hit man for the Colombian cocaine Mafia, and Felix Rodriguez.

Meanwhile the overthrow of Honduran President Melgar in a “cocaine coup” in 1978, which brought General Paz Garcia to power, paved the way for an alliance of the military, the drug lords and the CIA to support the Contras from bases in Honduras.   The key financier behind the coup was Juan Ramon Matta Ballesteros, known as “chief of the Honduran Mafia.”

Jimmy Carter‘s administration chose to overlook its knowledge of Matta’s major role in human rights abuses and the importation of half a billion dollars’ worth of cocaine into the United States each year because he supported the struggle against the Sandinistas. U.S. economic assistance to Honduras tripled from 1978 to 1980, making it the largest recipient of American foreign aid in Central America.   In March 1980, President Carter even hosted General Paz at the White House.

The CIA relied totally on the cocaine-trafficking military of Honduras to back its plans to overthrow the Sandinistas.   For the following three years, Matta and Paz worked hand in hand with the army to build Honduras up as an even larger cocaine trafficking centre.
“The fact is, if you want to go into the subversion business, collect
intelligence and move arms, you deal with drug movers.”
– GENERAL PAUL F. GORMAN summing up the rationale for
the CIA’s choice of alliances in Central America.
“I believed in the Contras war at first. But about 1982, the gun running
and the drug running blurred together and the war eventually became a business.
I ended up running drugs on behalf of the U.S. government. Period.”
– ROBERT PLUMLEE, Contra re-supply pilot
With the help of the CIA, Contra forces dealt drugs and used the profits to enrich themselves and to buy arms.

In the wake of revelations of massacres and other atrocities carried out by the Contras against Nicaraguan civilians, the U.S. Congress passed the Boland Amendment in December 1982, which officially prohibited the CIA from engaging in actions to overthrow the Nicaraguan government.   Thus, the use of covert drug money to help the Contras’ funding problems took on an even greater appeal to the United States. This was in complete contradiction to President Reagan’s much-vaunted anti-drug posturing for the American public’s benefit.

By this time, CIA payments to Manuel Noriega had risen to $200,000 a year. Noriega contributed $100,000 to Contra leaders based in Costa Rica, set up a front to establish an airfield in Costa Rica for supplying the Contras and supplied pilots to smuggle weapons to the Contras.   The Panamanian air cargo company Aviones de Panama, run by three of Noriega’s personal pilots, Cesar Rodriguez, Floyd Carton and Enrique Pretelt, flew weapons from Panama to bases in Costa Rica for Contra operations on the Southern Front.   They dropped off the guns at Costa Rica, refueled, and flew on to U.S. bases in South Florida, loaded with cocaine and under the protection of the CIA.

Noriega also helped train Contra units in Panama, and tried, at the CIA’s urging, to persuade Southern Front Contra leader Eden Pastora to unite with the FDN Contras, the main Contra force which was owned and operated by the CIA.

DEA attaché Thomas Telles met with Noriega to arrange Panama’s assistance in large scale undercover money-laundering front operations to disguise the financing of the Contras.   Panama, a tax haven with one of the Western Hemisphere’s tightest bank secrecy laws, was a favored spot to stash illicit drug profits.
    “I smuggled my share of illegal substances, but I also smuggled
my share of weapons to the Contras in exchange, with the full
knowledge and support of the DEA and the CIA.”
– GARY BETZNER Contra re-supply pilot
In Honduras, Matta’s airline SETCO- provided air transport for the Honduran-based FDN Contras.   By 1984, the airline had become the Contra group’s chief mover of supplies, personnel and narcotics. The FDN paid for these services through bank accounts established by Lt. Col. Oliver North of the National Security Council.

In 1981, two CIA-backed Nicaraguans – Norwin Meneses (nicknamed El Rey de Ia Droga, “the King of Drugs”, who had close ties to the Colombian cartels) and Danilo Blandon (a Somoza supporter who fled to America when the dictator’s regime was overthrown by the Sandinistas) flew to Honduras to meet Colonel Enrique Bermudez, the officer in charge of the FDN Contras.   There, they planned how they could use the Contras’ drug operations to raise funds. Blandon returned to Los Angeles and began selling cocaine to Ricky “Freeway” Ross, a 22-year-old street dealer with ties to the Crips street gang in Los Angeles.

The two Nicaraguans received regular shipments of 200-400 kilos of cocaine from the Contras. Blandon sold Ross 100 kilos a week, which Ross brewed into crack in restaurant-sized vats and moved $2-3 million worth daily. The profits flowed to the Contras via a bank chain in Florida.   At the same time, Meneses supplied cocaine to street gangs in the San Fransisco Bay area.

Because the Nicaraguans’ prices were well below normal costs, Ross quickly became a major dealer with broad influence over the spread of crack in Los Angeles. Blandon was selling so much crack that after his arrest, the federal prosecutor, L.J. O’Neale, said it was “off the scale” of mandatory sentencing guidelines.   Blandon was described as “the biggest Nicaraguan cocaine dealer in the United States,” while Ross was widely considered to be the first crack-dealing millionaire to rise from the streets of South Central Los Angeles.   Together, Blandon and Ross created a tidal wave of crack that swept into low-income American neighborhoods in the mid-1980s.   The black community was ravaged by a drug crisis of historic proportions, resulting in “crack” babies, record drug overdoses, unprecedented numbers of black male youth incarcerations, a rise in AIDS and numerous other afflictions.
    CIA-backed Nicaraguan drug traffickers (left to right):
Danilo Blandon, Norwin Meneses and Rick Ross.
  Enrique Bermudez, CIA-funded Contra leader.

Largely due to the CIA’s efforts, Latin American cocaine exports to the United States escalated to sales of $29 billion during the 1980s.   Jack Blum, special counsel to the Subcommittee on Terrorism, Narcotics and International Operations to the Senate Foreign Relations Committee investigating the CIA’s links to Contra crack smuggling, testified in October 1996: “We had addictions and problems in the mid 80s and into the early 90s in school-yards across America. It didn’t matter what color you were, where you were from, what your national origin was. The problem became more acute in the African American community because the definition of a problem addict in America is an addict who runs out of money. And if you run out of money quickly, you become involved in the drug trade. You become a visible social problem. And you get on the screen. In fact, the stockbrokers, the entertainers, the lawyers who used cocaine escaped that attention, but their lives were ruined too. Perhaps not financially.” The racist nature of the crack epidemic meant that the black community was afflicted the worst.   The lingering effects of the epidemic can be seen today, where, for instance, in Los Angeles County alone, there are more than 70,000 children in foster care for drug-related reasons. In Washington DC, out of the thousands of cases of neglected and abused children removed from homes, 90% involved crack mothers.
    The flood of cheap crack into America in the 1980s
changed the drug scene and wreaked social havoc.

For over five years, part of the profits made from the drugs that Meneses and Blandon sold to Ross, were used to buy further weapons and equipment for the Contras.   Meneses visited Contra camps numerous times and sent people to Honduras to work for them. When the scandal of the affair broke out, the CIA initially insisted that Meneses was not a key player in the Contra war and denied it knew anything about his involvement with drugs. After being instructed to conduct a search, the Agency admitted that it had records going back to 1984 implicating Meneses in drug trafficking.

Ross was sentenced to ten years on cocaine charges in 1991. He served only five, after testifying against corrupt DEA agents.   Blandon pleaded guilty in 1992 to distributing cocaine for Meneses and selling it to Ross. At his trial, the judge banned evidence of Blandon’s CIA connections and ordered it to be sealed at the prosecution’s request.   Money-laundering charges against Blandon were dropped at federal request.   The DEA sprung Blandon from jail and gave him $166,000 to become an informant for them. Blandon earned an additional $45,000 from the DEA for entrapping his former customer Ross, who was convicted of conspiracy to distribute cocaine in 1996.

It should be stressed that the Blandon-Meneses ring was part of a very much larger picture. Significantly, many of the CIA’s agents in the Contra war had substantial experience in the Agency’s secret war in Laos – they applied those same methods to the fight against Nicaragua by making alliances with local narcotics traffickers.   When Oliver North formed his covert network to fund the Contras after the aid cut-off, he brought in Major General Richard V. Secord, U.S. air force liaison for the CIA, to establish a clandestine arms supply operation.   (Secord had been in charge of supplying most of the aircraft for the CIA’s covert operations in Laos. Secord, in turn, recruited Thomas Clines, who had been deputy in command of CIA operations in Laos).
    Lt. Col. Oliver North, who set up drugs and arms smuggling rackets to fund the Contras.
North’s notebooks contain numerous references to Contra-related drug trafficking,
including a July 12th 1985 entry: “$14 million to finance [arms] came from drugs.”

Oliver North did business with a range of major drug traffickers.   Felix Rodriguez’ business partner, the international arms dealer Gerard Latchinian, together with former Honduran military commander General Jose Bueso, were arrested when FBI agents seized 763 pounds of cocaine worth $10 million, at a remote airstrip in southern Florida.   The purpose of the drug shipment was to finance a coup and assassination plot against the elected president of Honduras, Roberto Suazo Cordova, and to reinstate General Gustavo Alvarez Martinez, Bueso’s former boss and patron of the Contras.   Despite being implicated in death squad killings from his days as head of the police and army, Alvarez had led a comfortable life in the United States, where he worked as a consultant to the Pentagon.   He was awarded the Legion of Merit by the President, the highest award that can be presented to a foreign military officer. General Bueso and Latchinian were eventually convicted on murder-for-hire conspiracy charges.   The Justice Department called this plot to assassinate a foreign head of state, “the most significant case of narco-terrorism yet discovered.” Yet Oliver North and U.S. General Paul Gorman both testified on Bueso’s behalf and requested that the U.S. Department of Justice grant leniency, on the grounds that Bueso had been a “valuable ally to the United States” in aiding the Contras.   Both Bueso and Latchinia are still serving prison sentences in the U.S. They have never been questioned regarding their activities for the CIA.

North also employed the drug-linked arms dealer Manucher Ghorbanifar, an ex-Iranian intelligence (SAVAK) agent who had offered to swap intelligence on Iran for protection of his drug smuggling activities. Thus, Ghorbanifar’s drug deals continued, supervised by only a handful of NSC, CIA and Pentagon aides.   Ghorbanifar arranged weapons deals with Iran for North, including the sale of at least five HAWK and TOW missile shipments in 1985-6.   These secret missile deals formed part of the arms-for-hostages swaps with Iran and violated the Arms Export Control Act.
    Manucher Ghorbanifar, Iranian and Mossad operative, and a key
player in Oliver North’s cocaine and arms smuggling network.

Ramon Milian Rodriguez, an accountant for the Medellin drugs cartel, testified before the U.S. Senate Narcotics and Terrorism Subcommittee that he personally funded nearly $10 million from the cartel to the Contras, the money delivered in installments through couriers selected by the CIA’s Felix Rodriguez.   In turn, Rodriguez disclosed that he paid Manuel Noriega $4-10 million per month for protection of drug and money shipments from Colombia.   From 1979 to 1983, the payments to Noriega totaled $320 to $350 million. Noriega had a deal with U.S. officials that one per cent of the gross income from his drug deals was set aside to buy additional weapons for the Contras.

On March 23rd 1984, a U.S. government-owned DC-3 cargo plane crashed in Costa Rica near a ranch owned by one John Hull.   This led to the disclosure that Hull, a CIA liaison in Costa Rica, was allowing his property to be used for airdrops of weapons organized by Oliver North for the Contras. The pilot of the plane, Teofilo Watson, who was killed in the crash, was a member of Floyd Carlton’s smuggling operation.   Oliver North’s diary itself notes that Contra supply planes were, “being used for drug runs into the U.S. from Hull’s ranch.” On a weekly basis, the CIA obtained army truck loads of cocaine directly from the Medellin cartel in Colombia, which they flew north to Costa Rica.   John Hull was paid by the CIA for allowing his airstrips to be used as a refueling stop, before the drugs were flown on to the United States. In exchange, the drug traffickers paid user fees and made payoffs to the Contras. At the direction of North, Hull received a stipend of $10,000 per month from the Contra command in Honduras.   On the return trips from southern Florida, the pilots brought plane loads of weapons back for the Contras.

Hull himself publicly admitted: “The CIA was fully aware the Contras were involved in drug smuggling.” When Hull’s activities became the subject of a criminal fraud investigation by the U.S. Attorney for the Southern District of Florida, U.S. officials in Central America did their best to protect him from arrest.   To date, nothing has happened with the case, but the Justice Department maintains that the investigation is still ongoing.

John Hull and CIA agent Felipe Vidal were also charged with first degree murder by Costa Rican prosecutors, who found evidence that they had engineered the 1984 terrorist bombing of a news conference at a Contra camp at La Penca, just inside Nicaragua. The bombing killed three journalists and seriously wounded two dozen more.   The CIA tried to blame the attack on the Sandinistas.   After jumping bail from Costa Rica, John Hull found sanctuary in the United States, the country professing “zero tolerance” for drug smugglers, where he remains a free man. All attempts by Costa Rica to extradite him have failed.
    John Hull, cocaine smuggler and CIA operative.
In July 1984, the CIA attempted to link the Nicaraguan government to the drug trade.   The Agency installed a hidden camera in a C-130 cargo plane owned by AdlerBarrySeal, a convicted American drug dealer turned informant, who worked closely with Vice President Bush’s “anti-drug” task force in Washington and who managed the Colombian cartels’ drug shipments into the United States.

Seal took a famous blurry photograph, which purported to show himself with a high-ranking Sandinista official named Federico Vaughan and a Colombian drug baron unloading bags of cocaine at an airstrip in Nicaragua.   The photograph was leaked to the press and was immediately given massive coverage by all the major papers, radio stations and TV networks.   President Reagan displayed the photo in a nationally televised speech in March 1986, as proof that the Sandinistas were involved in drug running and terrorism.
    Barry Seal’s famous fuzzy photograph.
But the media showed much less interest when Congressman William Hughes, chair of the House Judiciary Subcommittee on Crime, disclosed evidence that the entire Sandinista connection was a U.S. intelligence fabrication. Federico Vaughan turned out to have been a CIA agent all along.   DEA officials also testified that Oliver North had suggested to them that the $1.5 million in drug money carried aboard Seal’s plane be provided to the Contras.

In mid-1985, Hugo Spadafora, the former Panamanian Minister of Health, who had been working with the Contra rebels in Costa Rica, met with DEA agents to denounce Noriega’s drug dealings, and he turned over evidence implicating Noriega in the drug trade.   Spadafora was brutally tortured and murdered on September 15th 1985, having last been seen in the custody of the Panamanian Defence Forces.   An investigation conducted by the Organization of American States (OAS) implicated the Panamanian government in the murder but the U.S. State Department resolutely refused to pursue the case. The CIA station chief in San Jose, Costa Rica, Joe Fernandez, assisted in covering up Noriega’s role in the crime.

At a meeting with General Poindexter, Noriega was then initiated into a CIA plan to invade Nicaragua.   All of Central America – Guatemala, Costa Rica, El Salvador, Honduras and Panama – was knit together into an anti-Nicaraguan alliance. The CIA plan was to split the country in two, east to west, attacking from the north through Honduras and from the south through Costa Rica, and capturing Managua by Christmas.   U.S. ground forces could not become directly involved in any such war without violating American law and inviting massive domestic and worldwide protests. But Panama could assist the Contras in an invasion, much as the Argentineans had helped to train the Contras in early 1981.   However, Noriega responded that it would be impossible for Panama to become involved in such a major overt operation. Poindexter responded by threatening both Noriega specifically and Panama in general.

From August 1985 to September 1986, Noriega repeatedly received emissaries from Oliver North requesting his help. North wanted Panamanian commandos to join up with the Contras to assist in acts of sabotage within Nicaragua, and Noriega was told: “Money is no object.” Noriega met North and Major General Richard Secord at the Victoria Hotel in London to discuss further sabotage against Nicaraguan economic targets, including an oil refinery, an airport and the electric and telephone systems.

Ed Dearborn, CIA veteran of the Congo, set out a battle plan incorporating Helio-Couriers, helicopters and C-47’s to provide air support for the Contras. He flew back and forth to the U.S., scrounging aircraft, which were then smuggled back to Honduras.   Dearborn met with General John Singlaub, whose World Anti-Communism League was raising funds for the Contras.   Singlaub made Dearborn his Air Operations Adviser while General Secord set about building up a separate operation that would fly out of Ilopango Air Force Base in El Salvador. Fat profits were made in these arms deals, although only a fraction ever reached the Contras.

The whole scheme was wrecked when the Sandinistas downed one of the CIA’s C-130 aircraft making a secret supply drop over Nicaragua in October 1986. (This was the same plane used in Barry Seal’s attempted framing of the Sandinistas two years previously).   Among the documents found on board the crashed plane were the Air America’s operator’s manual and a roster with the names and addresses of every ex-member of the CIA who had joined the Air America Club. The pilot and co-pilot both died in the crash but the Sandinistas captured and jailed the third occupant, CIA agent Eugene Hasenfus.   The U.S. government denied all involvement in the airdrop, claiming that the whole thing was planned, financed and executed by a group of “freedom-loving patriots.”   The real truth was that it was an operation financed and sanctioned by the highest levels of the White House.
    Robert Gates was the CIA’s Deputy Director for Intelligence during the Contra war.
At Gates’ confirmation hearing as CIA chief, one of his own staff testified: “Mr. Gates’
role was to corrupt the process and the ethics of intelligence.”

On July 15th 1987, Jose Morales, a convicted Colombian drug smuggler based in Miami, testified before the U.S. Senate Subcommittee on Terrorism and Narcotics that in 1983 he was introduced to Contra leaders and CIA operatives Popo Chamorro, Octaviano Cesar and Marcus Aguado.   They wanted Morales to provide them with weapons and financial help, and in exchange they offered to use their connections with the CIA to help drop Morales’ indictment for narcotics smuggling. Morales entered into an agreement with these men to bring guns down to Central America for the Contras and fly cocaine back to the U.S.   The drugs would be sold in the U.S. and the money would go to the Contras.

Morales and his pilots made several flights between 1984 and 1985, flying weapons from Florida to Ilopango in El Salvador, and then to Costa Rica. Morales contributed $250,000 on a quarterly basis to Contra leaders; in return, the CIA assisted Morales in smuggling thousands of pounds of cocaine into the United States through Costa Rica.   Morales testified: “This was no rogue operation. The CIA, the State Department and the White House knew all about it.” One form of assistance given by the CIA to the traffickers was intelligence information to help them avoid detection when entering the United States. Morales was assured by the Agency that his phone lines would not be monitored by the DEA, and he was provided with information on air traffic patterns and clearances for military planes.   Michael Tolilver disclosed that he was allowed to use a U.S. military installation, Homestead Air Base near Miami, to smuggle drugs into the United States.   An FBI informant, the wife of a Colombian drug trafficker, testified that a federal judge, a U.S. Customs official and an air traffic controller in Miami were taking bribes from the drug dealers.

The liaison between Jose Morales and the CIA-backed Contras in Costa Rica was Fablo Ernesto Carrasco, who worked for cartel kingpin Jose Rafael Abello, the man labeled by the FBI as, “the most dangerous cartel leader ever to be extradited to the United States.” In 1990, Carrasco agreed to testify against his former boss Abello, in exchange for immunity from prosecution on his own drug trafficking charges.   Under oath, Carrasco described in startling detail how in the autumn of 1984, Contra leaders directed Morales to land cocaine-filled planes at public airports in south Florida, assuring him that the flights would be “protected.”   On one of the flights to North Miami’s bustling Opa-Locka airport, Carrasco’s plane landed in the late afternoon and taxied to a hangar where more than 400 kilos of cocaine packed in military-style duffel bags were unloaded on the tarmac in plain view of federal agents.

When the DEA needed aircraft and pilots to track narcotics smugglers in Florida, it turned to a top secret CIA aviation unit called Seaspray. Created in 1981, Seaspray provided covert transportation of men and material for CIA and military operations.   Among those who worked directly for or with Seaspray were, Richard Secord (who oversaw the Contra supply operation for Oliver North) Richard Gadd (who organized the Contras’ airlift in the field) Wallace Sawyer Jr. (who piloted one of the Contra supply planes) It almost beggars belief that the operatives supposedly helping the fight against the drug smugglers should be those very same people intricately involved with assisting the drugs trade in the first place.

It is also notable that during this period of Contra drug smuggling into southern Florida, which was allowed to proceed by various U.S. agencies without any attempt at investigation or arrest, the head of the South Florida Drug Task Force was one George Bush.   The stated purpose of the Task Force was specifically to keep drugs out of south Florida – an objective it spectacularly failed to achieve.   This was not surprising considering the intricate involvement in the Contra drugs rackets of both Bush and his family (see later).

An important role in the CIA’s Central American drug smuggling network was played by the Miami-based anti-Communist Cuban exiles who had been trained by the Agency for the Bay of Pigs invasion of Cuba.   They greatly expanded the narcotics distribution and money laundering in Miami and also helped train Contras under John Hull’s command.

The Cuban drugs network had been set up In October 1972, when CIA Director Richard Helms sent several “former CIA assets” to the federal Bureau of Narcotics and Dangerous Drugs (BNDD) to, “obtain strategic and operational intelligence on Cuban drug smuggling in the Caribbean.” The CIA assistance was channeled to a new BNDD intelligence office established under Lucien Conein, a veteran CIA covert operations specialist who boasted of the trust he enjoyed in the Corsican underworld.   By the end of 1974, Conein’s Miami operation, known as DEACON 1, had not contributed to the bust of a single drug ring. But an official review of DEACON 1 indicated that it had sanctioned drug smuggling by its own agents, while its principal agent was said to be “reporting on civic and political groups” as well as supervising other agents.

Four of Conein’s assets were the Bay of Pigs veterans, Carlos Hernandez Rumbaut Ricardo Morales Alvero Cruz Guillermo Tabraue, …who, despite their records for long-time drug trafficking, terrorism and murder, were allowed to continue extensive drug smuggling into the United States while enjoying near-immunity from prosecution.   According to charges filed in 1986, Tarbraue’s syndicate earned $79 million from importing narcotics into the U.S. between 1976 and 1987, while given protection from the deputy police chief of Key West and various Miami police officers.   When prosecutors learned, to their amazement, that Tabraue had begun trafficking under government protection, the judge declared a mistrial.

Another CIA-trained Cuban exile, Frank Castro, helped found a new terrorist front in 1976, which united the most extreme Cuban exile organizations. Known as CORU, it unleashed a wave of bombings, kidnappings and assassinations throughout the Americas in the late 1970s.   CORU was set up with the active support of the CIA and the acquiescence of the FBI in order to, “punish Fidel Castro for his Angola policy without directly implicating the United States government.” One Miami police veteran reported: “The basic signal was: go ahead and do what you want outside the United States.” The Director of the CIA at the time of CORU’s founding was George Bush.

CORU was responsible for the October 1976 explosion of a Cuban passenger jet (which killed all 73 passengers) and fifty other bombings in, Miami New York Venezuela Panama Mexico Argentina, …in the first ten months of its existence.   One of CORU’s leading organizers told an interviewer in 1977: “We use the tactics that we learned from the CIA because we were trained to do everything. We were trained to set off a bomb, we were trained to kill.” Years later, Ricardo Morales himself took credit for the airline bombing, saying he planned it at the CIA’s instigation.   Venezuelan authorities investigating the plane bombing arrested amongst others, Luis Posada, a long-time agent of the CIA. Posada also had materials in his possession linking him to the assassination of former Chilean ambassador Orlando Letelier in Washington DC a month earlier, although the FBI suppressed the evidence.

Financing for CORU operations came from WFC, a Florida-based financial conglomerate and drug-trafficking front led by CIA-trained Bay of Pigs veteran Guillermo Hemandez Cartaya.   An unpublished congressional staff study of WFC found that it encompassed, “a large body of criminal activity, including aspects of political corruption, gun running as well as narcotics trafficking on an international level.” Five of CORU’s founders, including Frank Castro, later joined the Contras.   Castro was instrumental in bringing together the Contras’ intelligence, terrorist and criminal forces, and was involved with some of the biggest cocaine smuggling rings of the decade.

Frank Castro also joined with drug kingpin and graduate of the Alvero Cruz network, Jose Antonio Fernandez, whose smuggling organization included a host of CIA veterans from the Bay of Pigs era. According to a DEA report, two of the ex-CIA agents in the Fernandez organization conspired in 1979 to import drugs with Gustavo Villoldo, a Cuban-born CIA officer.   Four years later, Vice President Bush’s national security advisor Donald Gregg sent Villoldo to advise the Contras on military strategy.

Members of George Bush’s family were also implicated in the Contra supply network.   Prescott Bush Jr., the Vice President’s brother, and Robert McCauley, a close friend of George Bush and CIA Director William Casey, founded a shadowy “disaster relief” organization called AmeriCares, a CIA front working with Oliver North’s network, which flew shipments of “humanitarian aid” to the Contra organization run by Mario Calero, brother of Adolfo Calero.   George Bush had extensive links with the ex-CIA Cubans in Miami. His son Jeb, a Miami resident, became his father’s personal representative in the Miami Cuban community and sometimes hosted his father’s frequent Republican fundraisers in the city.

Meanwhile, back in Central America, Manuel Noriega was given hundreds of thousands of dollars by the CIA to pass on to Contra leader Eden Pastora, whose so-called Sandino Revolutionary Front (FRS) was provided with financial support, aircraft and pilot training by Jose Morales, in return for their aid in transporting narcotics from South America to sites in Costa Rica and Nicaragua for later transport to the United States.

Eden Pastora, the notorious cocaine trafficker known as Commander Zero, was described as a “barracuda” by Admiral Bobby Inman (Deputy Director of the CIA) and as an “animal” by Duane Clarridge of the CIA’s Directorate of Operations.   The very first effort by Pastora’s new air force, supplied by the CIA, was to blow up the civilian Augusto Cesar Sandino Airport in Managua on September 8th 1986, using a twin-engine Cessna light aircraft with a 500-pound bomb strapped under each wing. The airport normally would have had two anti-aircraft guns in place, but reports of the bombing raid had been leaked to the Sandinistas and that morning they had increased the number of anti-aircraft guns to seventeen.   The Contras’ plane was shot down and crashed into the control tower and the terminal building. The pilot of the plane had the name and phone number of a CIA operator from the U.S. Embassy in Costa Rica in his pocket, and other papers, which were identified as authentic CIA documents.

Two U.S. Senators, Democrat Gary Hart and Republican William Cohen, were due to land at the airport in an Air Force C-140 for a fact-finding tour of Nicaragua.   Their plane circled for about 45 minutes before it was re-routed to Honduras. Had the senators arrived at the airport on time, they would probably have been killed by the CIA’s cohorts. The VIP room where the senators were due to have given their press conference was destroyed by the blast.   Angrily facing the CIA station chief in Managua the following day, the senators were told by the station chief: “It was intended to show that the Contras were serious and could strike at the capital.”

Senators Gary Hart and William Cohen,
who might have been killed as a result of
CIA-backed Contra terrorism
if their plane had landed on schedule at the Managua airport.
The State Department used four companies owned and operated by known narcotics traffickers to supply the Contras.   These companies were: SETCO Air, a company established by Ramon Matta Ballesteros (the Honduran cocaine trafficker) DIASCA, a Miami-based air company used as the headquarters of convicted drug traffickers Alfredo Caballero and Floyd Carlton Frigorificos de Puntarennas, a firm operated by Cuban-American drug traffickers who were also CIA operatives Vortex, an air service partly owned by drug trafficker Michael Palmer The State Department paid over $800,000 to these four companies between January and August 1986.   After one of their planes was forced down in Florida, on September 23rd 1985, with 900 pounds of cocaine, Floyd Carlton and Alfredo Caballero were indicted and eventually convicted of smuggling narcotics into the United states and laundering $2.6 million in drug proceeds. Carton got nine years. Caballero was sentenced to only five years’ probation.   This case led to the 1988 indictment in Miami of Manuel Noriega for drug trafficking.

Throughout the whole Contra campaign, the Reagan administration was fully aware of their operations’ drug connection.   In August 1987, the CIA’s Central American Task Force chief confessed: “With respect to drug trafficking by the resistance forces… it is not a couple of people. It is a lot of people… We knew that everybody around Pastora was involved in cocaine. His staff and friends indicated they were drug smugglers or involved in drug smuggling.” Only ten months previously, Congress had lifted the ban on aid for the Contras in order to prevent them being decimated, and had approved a further $100 million in funds on top of two payments of $13 million and $27 million in “humanitarian aid.”   Former National Security Council official Norman Bailey testified: “Clear and incontrovertible evidence was, at best, ignored and at worst, hidden and denied by many different agencies and departments of the government of the United States in such a way as to provide cover and protection for Noriega’s drug smuggling activities.” The House Foreign Affairs Committee reported: “Corruption continues to be one of the biggest obstacles to effective anti-narcotics action in Panama… This corruption is endemic and institutionalized… High-ranking military officers are involved in protection or actual [drug] trafficking themselves.” None of these allegations apparently made any impression on Vice President Bush, coordinator of the Reagan administration’s War on Drugs.   Bush’s top drug aide, Admiral Daniel Murphy, declared: “I never saw any intelligence suggesting General Noriega’s involvement in the drug trade. In fact, we always held up Panama as the model in terms of co-operation with the United States in the war on drugs.” Nonetheless, by the late 1980s, in spite of Washington’s official denials, Noriega’s widely known involvement in drug trafficking and corruption was becoming an increasing liability.   When the Iran-Contra scandal blew up and the whole White House program of covert support for the Contras came crashing down, Noriega suddenly became expendable. Panama was becoming less important to Washington as a transit point for supplies to the Contras because the CIA was sending covert military supplies via Ilopango Air Force Base in El Salvador.   Noriega’s shady pursuits were now interpreted as a security threat to the U.S.

In June 1987, a top Panamanian Defence Force officer, Colonel Roberto Diaz Herrera, publicly denounced the abuses of the Noriega regime. The dramatic accusations triggered massive demonstrations by thousands of Noriega’s opponents and spurred the formation of an opposition coalition, the National Civic Crusade.   The military used repressive measures in crushing the protests, but the prospect of future political turmoil in Panama, and the fear of a left-wing party taking control of Panama, finally prompted Washington’s campaign to oust Noriega from power.

The U.S. tried many ways to achieve this, firstly threatening Noriega with indictment on drug trafficking charges.   Negotiations were held in which the U.S. government agreed to dismiss the indictment if Noriega would step down from power. Noriega refused and on December 21st 1989, some 24,000 American troops invaded the country and ousted Noriega.   The invasion was launched with the full knowledge that “We are going to hurt people,” as Colin Powell, chair of the Joints Chief of Staff put it. The bombing devastated residential areas, killed or injured thousands of civilians and forced thousands more into homelessness.

For example, El Chorrillo, a residential community of some 20,000 inhabitants, was attacked by U.S. troops who indiscriminately bombed entire blocks of civilian housing. Wood-frame and plaster houses were machine-gunned as the people slept in their beds. Many who ran out trying to flee from the bombardment died in the streets, run over by tanks or machine-gunned by U.S. forces.   Others were burned to death in their homes. There were bodies in the streets for nearly a week afterwards.   The Red Cross was not permitted to recover bodies of either the wounded or the dead to transport them to the hospitals or the morgue. U.S. troops also opened fire on the ambulances.   An estimated 2,000 to 4,000 died that night in El Chorrillo, yet the massive civilian casualties caused by the invasion were covered up by a compliant U.S. media.
    Residential neighborhood El Chorrillo after the U.S. invasion of Panama. The US indictment of Noriega was largely a public relations stunt designed to disguise Washington’s involvement with the dictator and his shady activities.

Noriega was brought back to Miami to face charges of conspiring to smuggle cocaine into the United States – a publicity stunt that had no long-term impact on the U.S. domestic drug problem.   Meanwhile Oliver North, a traitor to the Constitution and a liar to Congress over the Iran-Contra affair, went scot-free and in certain U.S. circles was accorded the status of folk hero.

In July 1989, Oliver North, Major General Richard Secord, U.S. National Security Adviser John Poindexter, U.S. ambassador to Costa Rica Lewis Tambs, CIA station chief Joseph Fernandez and other Contra-gate figures were barred from Costa Rica, on the orders of President Oscar Arias, who acted on recommendations from a Costa Rican congressional commission investigating drug trafficking.   The commission concluded that the Contra re-supply network in Costa Rica, which North coordinated from the White House, doubled as a drug smuggling operation.

The CIA’s covert drug operations in Central America in the 1980s was not an anomaly but part of a long-standing pattern of intelligence alliances and official corruption. It is a pattern that shows no sign of abating and there is no more flagrant example today than Guatemala, where U.S. backing for a corrupt and brutal military has fostered a booming drug market.

The centre of drug corruption in Guatemala is the military, which governed directly from 1954 until 1984 and continues under the civilian rule of President Cerezo to exercise predominant political influence.   Top officers of the G-2 military intelligence unit and the brother of President Cerezo have all been implicated in major cocaine smuggling rings.   The United States has responded to this by increasing its support to the military to, “ensure stability and combat growing drug trafficking.” Human rights observers charge that the military’s support for aerial spraying of herbicides over guerrilla-held territory, ostensibly to eradicate opium poppies, is yet another tactic in the ten-year-old counterinsurgency war against the left-wing guerrillas – a means of denying them food supplies.   As one former top Guatemalan official explained: “The drug issue is the perfect way of maintaining aid to the army” in its war against subversion. Far from benefiting the country, the results of U.S. military aid are growing drug problems and worsening human rights abuses.   The Guatemalan military has been responsible for massive brutality, including 100,000 deaths and 40,000 disappearances. No action has ever been taken against military officers implicated in death squads, which target human political activists and human rights workers.

Further details of the Agency’s covert operations in Guatemala are covered in: The CIA In Guatemala.

The Clinton administration did not instigate any alteration in U.S. policies on drug trafficking in Central America.   In fact Clinton was up to his neck in the Contra cocaine and gunrunning rackets. A small dirt airstrip at Mena, Arkansas, was a major U.S. landing site for the Contra drugs and arms network, handling a night flight without lights every five minutes at the height of the activities.   Bill Clinton was governor of the state at the time and allegedly protected the operation, blocking investigations by local prosecutors into the illegal activities there.

Clinton honored prominent Contras like Adolfo Calero and his brother Mario, as well as Contra supporter Major General John Singlaub with “Arkansas Traveler” awards.   Lloyd Bensen, the Texas Democrat senator who strongly supported the Contras, was appointed Treasury Secretary by Clinton.   Clinton also employed, in the Arkansas Development and Finance Administration, a Contra supporter named Larry Nichols. (It was Nichols who exposed Clinton’s affair with Jennifer Flowers during a court case following Nichols’ dismissal from his job.)   Clinton was well known for sending his state’s National Guard to Honduras for training in what amounted to Contra-supporting activities.   Clinton’s brother – who was convicted of cocaine possession – was also involved as an associate of Barry Seal, a major organizer of the Contra supply network and pilot for the Medellin cocaine cartel.

An investigation by the Washington Report concluded: “There is ample evidence that Bush, Clinton, Pryor, [Democratic Senator for Arkansas, David Pryor] and Bumpers [Democratic Senator for Arkansas, Dale Bumpers], various U.S. attorneys, Arkansas state officials and Arkansas financial institutions knew plenty about the illegal activities at Mena but permitted these to proceed.” Amongst the various pardons for convicted cocaine traffickers and money launderers issued by Clinton two hours before handing over power in 2001 was a pardon for Harvey Weinig, who had been jailed for laundering $19 million for the Cali drug cartel.

One of the CIA’s Air America employees involved in the Contra supply network was Terry Reed (an army intelligence officer during Vietnam), who refitted planes and trained Contra pilots at the Mena airstrip in Arkansas.   The chief smuggler involved in running guns to the Contras and bringing drugs back to the U.S. via Mena was Barry Seal. As Arkansas Governor, Clinton did nothing to shut down Seal’s known drug flights into Mena; in fact, the future president and his cronies benefited from the laundering of drug funds through Arkansas financial institutions.

In 1982, Reed became involved with Oliver North, who asked Reed to allow a small plane he owned to be “stolen” in a faked “theft”, so that it could be used for the covert Contra network.   This scam of North’s, named Operation Donation, enabled him to circumvent the Congressional ban on aid to the Contras, whilst plane and boat owners would claim the insurance money and lose nothing themselves.

In mid-1986, the CIA offered Reed a business opportunity in Mexico in exchange for further help in providing cover for a Mexican leg of the Contra cocaine smuggling operation. However, several months later Reed began to get cold feet when the CIA plane was shot down over Nicaragua, killing his friend William Cooper, and leading to the capture of Eugene Hasenfus by the Sandinistas (the event which sparked off the Iran-Contra investigation).   Reed’s bosses, including Felix Rodriguez, were not pleased by his refusal to continue his work in Mexico.   Reed’s “stolen” plane from five years ago was secretly returned to its hangar, just as a passing private investigator (who happened to be a friend of Bill Clinton) was walking past, while the wind conveniently happened to blow the door open, revealing the plane.

Reed soon found himself in an Arkansas court, along with his wife, charged with insurance fraud. Reed and the Public Defenders appointed to his case suffered an unusual series of violent incidents, including break-ins, the firebombing of a car belonging to his lawyer’s daughter and an apparently deliberate hit-and-run attack when one of the Defenders’ cars was rammed.

Reed claimed that George Bush’s sons, Jeb and Neil, had a direct involvement with the Medellin cocaine cartel.   Eventually in 1988, Reed was acquitted, perhaps because he had expressed his wish to subpoena Oliver North and Felix Rodriguez. The judge concluded that the private investigator and Buddy Young, the Arkansas State official involved in the prosecution, both had a “reckless disregard for the truth.”   Buddy Young was Bill Clinton’s state security chief. Vital evidence supporting Reed’s claims was withheld by Clinton’s camp for a year after it should have been handed over to the court.   Reed is currently prosecuting the Arkansas officials – including Buddy Young – who tried to frame him.

Well out of the glare of public scrutiny, leading banks have sinister connections with organized crime and the intelligence community.   Some of the largest and most respectable banks happily turn a blind-eye to their clients’ covert drug activities and earn massive commissions from laundering dirty money.

Of a massive $6 trillion that annually circulates around the world’s financial markets, one quarter – $1.5 trillion – is illicit, and a third of this, $500 billion, relates to the narcotics trade. More money is spent globally on dope than food. $200 billion of narcotics are shipped to the U.S. each year, roughly one third of the total annual import bill.   Recent forensic testing carried out randomly throughout the United States revealed that virtually every single banknote contained microscopic traces of cocaine.

The CIA needs “black” funds to finance covert operations that cannot be funded by official or legal channels.   Arms and military hardware are happily exchanged for narcotics, which are in turn peddled for money that is used to finance further black operations. This approach to money raising on the part of the intelligence services reveals a long history of entanglements with the Mafia.   The exposures of the BCCI and Nugan Hand Bank led to spectacular revelations of how the CIA uses the international financial community to finance its murky covert operations…      

One of the earliest revelations of the CIA’s involvement with laundering drug money came with the collapse of the Nugan Hand Bank.   One of the founding partners of the bank, Michael Jon Hand, was a Green Beret who served with the CIA for two years, fighting with Hmong guerrillas in northern Laos. It was here that he acquired the expertise in narcotics that he later applied to building the bank.

Hand moved to Sydney in 1967, where he became involved in selling real estate to Americans serving in Southeast Asia. He maintained many of his CIA contacts; 19 of the 71 shareholders of his company Australasian and Pacific Holdings Ltd. were employees of the CIA’s Air America and Continental Air Services.

In Sydney, Hand met Frank Nugan, a solicitor and businessman whose family ran a fruit-packing business near Griffith in New South Wales, a district famous for its drug crops and gang murders.   The two set up Nugan Hand Ltd. in 1973, through a gross financial fraud. With only $80 in the company’s bank account and just $5 in paid-up capital, Frank Nugan wrote his own company a personal cheque for $980,000 to purchase 490,000 shares of its stock.   He then covered his massive overdraft by writing himself a company cheque for the same amount. Through this accounting fraud, Nugan could claim that the company’s paid-up capital was a million dollars.

The Nugan Hand Bank offered tax-free deposits, the highest interest rates and secrecy, and its specialty was money laundering, at 22 cents on the dollar.   Over the next six years, the bank grew at a remarkable rate by providing a bridge between larger, legitimate banks and a shadowy web of organized crime, illegal money laundering and covert intelligence operations.
    Frank Nugan and Michael Jon Hand, whose death and disappearance exposed the CIA’s involvement in the drug laundry profession.
Nugan Hand was a sham throughout its existence, courting depositors for cash and moving money from branch to branch to conceal the fact that the bank simply had no assets behind it.   The bank issued lavish promotional brochures describing itself as, “part of the Nugan Hand Group with assets exceeding US $20,000,000 and turnover exceeding US $1,000,000,000 per annum.” Over the next few years, the bank divided into two almost separate companies: the Sydney-based Nugan Hand Ltd under Frank Nugan’s control (which concentrated on tax fraud and money laundering) and the international branches of the Nugan Hand Bank, later registered as a Cayman Islands corporation, largely managed by Michael Hand. Hand took on as a third partner one MauriceBernieHoughton, a Texan who had worked for the CIA in Southeast Asia during the Vietnam War. The Hand-Houghton partnership led the bank’s international division in the fields of drug finance, arms trading and support work for CIA covert operations.

In the mid-1970s, Nugan Hand was involved in financing deals for covert CIA arms shipments to South Africa. Houghton arranged these shipments with the assistance of CIA agent Edwin Wilson, then working for Task Force 157, a covert action arm of the Office of Naval Intelligence (ONI).   Under the cover of Task Force 157, Wilson placed an order for 10 million rounds of ammunition, 3,000 weapons including machine guns, M-1s, and carbines. With an end-user’s certificate showing Wilson’s cover company, World Marine Inc. in Washington, as the purchaser, the arms left the United States from Boston for southern Africa in three separate shipments.

Nugan Hand Bank was the conduit through which the secret team formed by Shackley, Wilson, Clines, Secord and Co. funneled the massive fortune generated by General Vang Pao‘s heroin pipeline.   The money was used to finance covert paramilitary operations such as the supply of the Contras.   A central figure in the handling of Vang Pao’s drug profits was former naval officer Richard L. Armitage, whose official duty in Thailand was “special consultant” to the Pentagon.   However, Armitage actually functioned as a “bursar”, overseeing the transfer of Vang Pao’s heroin profits to Shackley’s Nugan Hand account in Tehran. From late 1973 until the ultimate withdrawal of U.S. forces from Indochina in April 1975, money was smuggled out of Vietnam in large suitcases by Secord and Clines, and deposited in a secret Nugan Hand account in Australia.   Armitage later became Assistant Secretary of Defence for International Security Affairs.

With the aid of Nugan Hand, Wilson also supplied Libya with thousands of CIA-designed cluster bomb timers and more than 21 tons of Composition CA, the most powerful non-nuclear explosive in America’s arsenal.

In March 1976, Michael Hand returned to the bank’s Sydney headquarters and concentrated on dealing with Australia’s leading heroin smugglers.   After nearly 50 years without a serious narcotics problem, Australia suffered increasing addictions in the late 1970s, as the Sydney criminal syndicates organized regular heroin shipments from Southeast Asia’s Golden Triangle.

At the centre of the Golden Triangle drug trade was the branch of Nugan Hand Bank in Chiang Mai, Thailand. Connected to the bank’s Chiang Mai office by an interconnecting door was the DEA’s local office, premises that were also shared by the CIA.   Branch manager Neil Evans later revealed: “I was never under any illusion at any time that I was to go over there for any other purpose but to seek drug money,” and that he had seen “millions of dollars smuggled through the branch, all of it CIA money.” Michael Hand told Evans that the bank was to become the CIA’s paymaster, “for disbursement of funds anywhere in the world on behalf of the CIA and also for the taking of money on behalf of the CIA.” The office closed in July 1977. In the brief period of its existence, Evans claimed to have secured $3 million in narcotics money.

After two years of active money laundering through Hong Kong, Nugan Hand Bank became known in the underworld as a reliable money mover. Hand made cash transfers to Hong Kong for Murray Riley (a former Sydney constable and a close patron of Australia’s criminal underworld).   After each transfer, one of Riley’s underlings would call at Nugan Hand’s Hong Kong office to pick up the money, later using the cash to take delivery of a heroin shipment.   Through this procedure, Nugan Hand handled $4.3 million in identifiable drug money for 26 known dealers between 1976 and 1980.

Hand developed a global network of twelve branches that covered Asia, Africa and the Americas. Some of the most famous names in U.S. national security circles joined the bank as associates or employees.   For example, Admiral Earl Yates, retired chief strategist for the U.S. Pacific Command, served as president of Nugan Hand Bank.   Other senior appointments included: General LeRoy Manor (former Pentagon counterinsurgency specialist and chief of staff of the U.S. Pacific Command – manager of the bank’s Manila branch) General Edwin Black (former OSS officer and commander of U.S. forces in Thailand – president of Nugan Hand lnc., Hawaii) Walter McDonald (retired CIA Deputy Director for Economic Research – bank executive) Dale Holmgren (former chairman of the CIA’s Civil Air Transport – manager of the bank’s Taiwan branch) William Colby (ex-CIA Director – Nugan Hand’s legal counsel) Patry Loomis (a CIA officer who helped Edwin Wilson recruit a team of Green Berets to train Libyan forces)   “The significance of Miami is the drug syndicate. That’s the base… All the people that I hired from the Agency to terminate other people, are there. They get involved in this biggest drug scandal going, which is whitewashed. Who is the guy behind the scandal? Clines. Who’s the boss of Clines? Shackley. Where do they come from? Laos. Where did the money come from? Nugan Hand. The whole goddamned thing has been moved down there… Before that, in Asia, the pilot of the plane was Dick Secord, a captain in the Air Force. What was on the plane? Gold! Ten million bucks at a time, in gold. He was going to the Golden Triangle to pay off the warlords, the drug lords. Now what do you do with all the opium? You reinvest it in your own operations. Where? Thailand. You pay it to Alice Springs. Billions of dollars. Not millions. Billions of dollars.” -FRANK TERPIL, Ed Wilson’s former business partner and ex-CIA operative.

After retiring from the CIA, Colonel Paul Helliwell, the founder of such Agency fronts as Air America and Sea Supply Inc. (which shipped vast quantities of arms to the opium-growing Kuomintang forces in Burma) opened a law office in Miami and formed Castle Bank offshore in nearby Nassau.   Castle Bank operated as a laundry for both CIA and organized crime funds. In addition, an investment firm for which Helliwell was counsel mingled CIA funds with dirty money from Philippine dictator Ferdinand Marcos.

In 1973, an investigation by the Internal Revenue Service (IRS) found that the 308 Castle Bank customers had moved $250 million to foreign numbered accounts.   Depositors included Playboy publisher Hugh Hefner, Penthouse publisher Robert Guccione and some major organized crime figures – Morris Dalitz, Morris Kleinman and Samuel Tucker.   Elated by the discovery, the IRS formed Project Haven to make, “the single biggest tax-evasion strike in IRS history.” Then suddenly the IRS announced that it was dropping the investigation because of “legal problems.”   An investigation by the Wall Street Journal revealed that, “pressure from the Central Intelligence Agency caused the Justice Department to drop what could have been the biggest tax evasion case of all time.” The CIA warned that “national security” would be endangered because it was using Castle Bank for the funding of clandestine operations against Cuba and other countries in Latin America and the Far East.   By the time Helliwell died from emphysema on Christmas Eve 1976, Castle Bank had been liquidated.

Simultaneously with the closure of Castle Bank, came the sudden rise of Nugan Hand’s formal banking operations in the nearby Cayman Islands. Retired CIA officers associated with Castle Bank were recruited by Nugan Hand, which took over the role of shifting money for various CIA covert operations around the globe.

As a Washington grand jury started to gather incriminating evidence in early 1979 about Ed Wilson’s illegal arms sales, Wilson shifted his operations to London and Libya to avoid arrest. He was in deep trouble in Tripoli for his failure to deliver $22 million worth of American-made M-16 automatic rifles (whose export to Libya was then banned under U.S. law).   Wilson, Bernie Houghton and the CIA’s Tom Clines discussed ways of using Nugan Hand Bank to float a $22 million loan to finance the delivery.

The Nugan family’s produce company was also in deep trouble.   It was being investigated for fraud; leading commercial banks were warning customers of the bank’s alleged drug dealings; and the auditors were refusing to approve the books at several branches. An independent audit of the Nugan family’s fruit packing business in Griffith turned up accounts in the names of local drug dealers and evidence of corporate fraud.   When minority shareholders mounted a challenge to the Nugan family’s management, Frank Nugan and his brother Ken hired one of Sydney’s leading crime figures, retired police detective Frederick Krahe, who filled the annual meeting with a legion of crooks, each armed with a single share of stock, to force approval of the company’s stocks.

But this effort backfired when state Attorney-General Frank Walker ordered a full enquiry of the episode.   There was a run on Nugan Hand Bank offices in Sydney that took out about 30% of total deposits. A month later, an opposition leader speaking on the floor of the state parliament accused the Nugan fruit company of drug dealing.   Frightened by the investigations, Frank Nugan began stealing from the bank accounts to fund the legal and public relations battle for the family’s fruit business. Over the next two years, he stole $1.8 million, an amount sufficient to destabilize the bank’s shaky finances.

The state Corporate Affairs Commission issued warrants for the arrest of Frank and Ken Nugan on fraud charges in May 1978.   Nugan promptly called a meeting of Sydney staff and ordered them to clean up the bank’s business by passing the, “illegitimate clients off to other banks” and refusing “illegal transactions in the future.” On January 27th 1980, Australian police found the body of Frank Nugan, with a bullet hole in his head, in a Mercedes parked by the side of a country road, 100 miles west of Sydney.   Nugan was still holding the rifle he had apparently used to shoot himself in the head.   He was also holding a bible that contained an embarrassing list of names, including, ex-CIA Director William Colby Bob Wilson (the House Armed Services Committee’s ranking Republican) several known narcotics traffickers, politicians and businessmen Beside each name were listed amounts running into five and six numbers.   Following public outrage, the U.S. Senate began an investigation into Nugan Hand’s operations.

After hearing of Nugan’s suicide, Bernie Houghton rang his branch office in Saudi Arabia and ordered his staff to bail out. Leaving a detachment of U.S. Army troops to guard the office against angry American depositors, Houghton’s staff left the country on the earliest available flight.   Houghton called at Ed Wilson’s Geneva office on the day of Nugan’s death and left a briefcase with bank documents for safekeeping. Several months later, one eyewitness recalled watching while CIA agent Tom Clines went through the briefcase at Wilson’s office and removed one sheet of paper with his own name on it.   When General Richard Secord’s name was mentioned during the search, Clines said: “We’ve got to keep Dick’s name out of this.” Two days after Nugan’s death, Michael Hand went to the bank’s offices at Sydney and told the directors that if they did not co-operate with him in the administration of the Nugan Hand Group, dissatisfied clients would cause them all, “to finish up with lead boots… concrete shoes,” and they would be liable to find their “wives being delivered to [them] in pieces.” Assisted by the duly co-operative staff and the dutiful Admiral Earl Yates, Hand and Houghton led a systematic destruction of the bank’s records.

Over the next four months, funds disappeared from bank branches around the world, until losses reached about $25 million – a substantial sum at the time. Finally, on April 17th 1980, Michael Hand announced that the bank was insolvent and asked the court to appoint liquidators.

With bank records destroyed and assets stripped, Houghton and Hand fled from Australia. As investigators began searching for bank records, Hand went into hiding around Sydney. The CIA’s Tom Clines flew escorted Houghton to Acapulco.   Hand, using an Australian passport under an assumed name, flew to Fiji and Vancouver, escorted by James Spencer, an ex-Green beret who had served in the CIA’s Laos operation with him. Hand crossed the border from Canada into America, where he disappeared.

On October 14th 1980, two sports divers found the corpse of a man in 25 feet of water in Eccleston Lake in Britain. The head was crushed and both hands were missing because the murderers had tried to make identification impossible.   However, they had overlooked the man’s unusual necklace and within days the British police identified him as the New Zealander, Martin Johnstone, one of Nugan Hand’s drug clients. Johnstone was a member of the so-called “Mr. Asia Drug Connection,” primarily based in New Zealand and Australia, which shipped large quantities of heroin from the Golden Triangle worldwide.   Johnstone had been in charge of supplying Mr. Asia’s British market with heroin by way of Singapore.

The police traced and arrested the killer, New Zealander Andrew Maher, and the man who ordered the murder, Alexander James Sinclair, one of the top figures in the Mr. Asia organization. Sinclair had suspected Johnstone was trying to make a deal with the police investigation of Nugan Hand’s drug money laundering, and decided to shut him up before he had a chance to speak.

Sinclair was sentenced to life imprisonment and sent to Parkhurst Prison on the Isle of Wight.   In July 1983, Sinclair began talking about his intelligence connections and how laundered money from drug sales was used by the CIA for arms purchases. The Australian Royal Commission investigating Nugan Hand called for the extradition of Sinclair, but the British authorities refused. On August 17th 1983, Sinclair conveniently died as he was walking to lunch in Parkhurst Prison.   It was said that he collapsed but no official cause of death was offered. He was 39 years old.

Edwin Wilson and his former CIA superiors turned business partners, Theodore Shackley and Thomas Clines, made headlines when it was revealed that amongst the covert operations for which the three had used the bank to channel funds, was the destabilization of the Australian Labour government in 1975 (see The CIA In Australia).

Wilson was eventually convicted by an Australian court in 1982 for illegal arms sales to Libya and sentenced to life imprisonment. The same year, Thomas Clines was indicted on charges of defrauding the U.S. government of $8 million for the shipment of arms to Egypt by one of his companies, EATSCO.   The federal prosecutor, Lawrence Barcella, had evidence that Clines was simply the front man in a criminal conspiracy.

Several witnesses were ready to testify that Wilson had loaned Clines $500,000 to set up EATSCO as a company controlled by four partners: Clines Shackley Major General Richard Secord (then Assistant Secretary of Defence responsible for military aid to Egypt) Erich von Marbod (deputy Director of the Pentagon’s Defence Security Assistance Agency) Instead of pressing on with the indictment to force full revelations, another federal prosecutor allowed Clines to admit his individual guilt, pay a $10,000 fine and return $3 million in stolen funds.   Denying any involvement, General Secord resigned from the Pentagon with his pension intact.

Although a great deal is still unknown about the activities of both Wilson and Nugan Hand, there is enough information on record to comprehensively show that the CIA’s banking activities routinely involve laundering money for arms and drug dealing, and tax fraud. Whatever has yet to be revealed, Nugan Hand Bank was certainly two things: an employer of many CIA agents and heavily involved in narcotics trafficking.   The Agency’s operatives involved in this scandal came from the highest positions of power in the CIA and had all held practical experience in the CIA’s covert drug running operations elsewhere in the world.      
  “It wasn’t just that BCCI was rumoured to be bad. It was that professional
investigators in the Agency had hard evidence that they were bad, and
bad in a big way, and nobody did anything about it.”
As well as having a role in the Iraq weapons affair, the Bank for Credit and Commerce International – BCCI (once described as “The Bank for Crooks and Criminals International” by former CIA Director Robert Gates) was one of the major money-laundering operations for the Colombian drug cartels.

BCCI collapsed in July 1991 with estimated debts of over $10 billion.   It operated as a corrupt organization throughout its 19-year history. It systematically falsified its records and knowingly laundered the illegal income of drug dealers and other criminals, and it paid bribes and kickbacks to public officials in many countries.

BCCI was founded in Pakistan by Agha Hassan Abedi in 1972.   It had branches in more than 70 countries but the bank’s main office was in London. BCCI also had major centers in the Cayman Islands and Luxembourg, where banking regulations are virtually non-existent. Here it utilized its operations to move money around the world for arms deals and intelligence operations, through a convoluted web of accounts and shell companies designed to camouflage the transactions.   The BCCI people in all of the countries in which it operated were on a first-name basis with the prime ministers, presidents and finance ministers in these countries, and even their wives and mistresses.   A close friend of Agha Hassan Abedi, was former President Jimmy Carter.
    Agha Hasan Abedi, president of BCCI, at his London office.

The CIA had accounts at BCCI branches around the world, including more than 40 separate accounts at First American Bankshares in Washington.   The First American network had been secretly acquired by BCCI with the help of Sheikh Kamal Adham, the founder of Saudi Arabia’s intelligence services, together with Richard Helms and Clark Clifford (“retired” from the CIA but still connected to senior members of the U.S. intelligence community).

BCCI helped finance the Reagan administration’s arming of the Contras in Nicaragua, in defiance of the congressional ban on U.S. military assistance to them.   William Casey, Director of the CIA, met every few months with Agha Hassan Abedi in the 1980s, to discuss the use of CIA accounts to finance the Contras and the mujahedin in Afghanistan, and to bribe General Noriega. At BCCI’s Panama City branch, Noriega deposited $33 million, much of which came from the CIA and other U.S. intelligence agencies.   George Bush’s sons George Jr. and Jeb were also tied to BCCI.

During the 1980s, the U.S. secretly provided the mujahedin with more than $2 billion, making it the biggest U.S. covert operation since World War II.   Investigators found a cheque to Pakistan’s President Zia from BCCI for 40 million rupees ($2 million) – a not-too subtle BCCI effort to curry favour with Zia in 1986 at the height of the CIA’s Afghan operation.   Retired senior Pakistani intelligence officials were employed by Attock Oil and International Travel Corporation, companies connected to BCCI. The father of Amjad Awan of BCCI-Miami, who managed Manuel Noriega’s accounts, was a former head of Pakistan’s ISI intelligence agency. BCCI shareholder Prince Turki working closely with ISI, distributed more than $1 billion in Saudi funds to the mujahedin in the 1980s.

As well as dealing with the CIA, BCCI maintained accounts used in illicit arms-running networks for, Israel’s Mossad Britain’s MI6 France’s DGSE Pakistan’s ISI the security services of Switzerland, Libya, Iran and Saudi Arabia In Asia, BCCI’s clients included the world’s biggest heroin dealer Khun Sa.   BCCI officers met with and opened accounts for such major Colombian drug cartel leaders as Pablo Escobar, Jorge Luis Ochoa and Jose Gonzalo Rodriguez Gacha.   In Florida, the bank handled accounts for some 200 drug traffickers and tax evaders. In all, according to estimates by U.S. investigators, the bank laundered nearly $1 billion in Colombian drug profits.

BCCI’s customers also included the notorious Abu Nidal terrorist organization (whose Fatah Revolutionary Council had a $60 million account at London’s Sloane Street branch) and the Iranian-backed Hezbollah terrorist group.   The arms dealer and drug merchant Manucher Ghorbanifar and the multimillionaire Saudi businessman Adnan Khashoggi used BCCI extensively to finance weapons deals with Iran on behalf of the covert arms network set up by Oliver North and Richard Secord.   In one 1986 arms deal with Iran, BCCI moved $10 million back-and-forth from the Credit Suisse Bank four times. The transactions mysteriously produced £40 million of sale, and therefore additional profit.

Oliver North also used a BCCI account called Devon Island for covert arms deals.

The CIA also relied on the Saudi government to fund, through secret BCCI accounts, the Contras and other anti-Communist groups such as UNITA in Angola. Saudi Arabia’s secret contributions to the Contras were estimated by congressional investigators to be $32 million in 1984-5.   The NSC also maintained accounts with BCCI, which were used to support the Contras.

The bank ran its own global intelligence network known as the “black network”, employing an estimated 1,500 trained operatives. Based in Karachi, this network of hand picked individuals underwent a one-year training course in psychological warfare, spying techniques and the use of firearms.

BCCI played a role in the “October Surprise,” a secret deal made in 1980 between the Reagan-Bush campaign manager William Casey and Iran’s Ayatollah Khomeini to undercut President Carter’s re-election campaign.   According to the deal, the release of U.S. hostages held by Iran would be delayed until after the November 1980 election. Iran, in return, would receive U.S. arms via Israel after Reagan was sworn in as president.   A large volume of U.S. arms was subsequently shipped to Iran through Israel after Reagan’s inauguration in January 1981.

BCCI perpetrated the world’s biggest banking fraud, with an estimated $200 billion involved in money laundering networks worldwide. BCCI officials were arrested and convicted in Britain for laundering drug money in 1988. For years previously, U.K. Customs officers had passed on details of BCCI accounts being used to launder drug money to the intelligence services, yet the information was not acted upon.

Acting CIA Director Richard Kerr told Congress in 1986 that the Agency was well aware that BCCI, “was involved in illegal activities such as money-laundering, narcotics and terrorism.”       THE MIAMI NARCO-BANKING NETWORK

In 1979, the Nugan Hand Bank took as its president Donald Beazley, then president of the Great America Bank of Miami, which was indicted in 1982 for its cocaine-laundering operations.   When Nugan Hand collapsed in 1980, Beazley moved on to become president of the City National Bank of Miami. The bank’s new owner was Alberto Duque, a Colombian wheeler-dealer who also became involved with George Bush’s son Jeb in the construction of a downtown Miami high-rise.

Scandals constantly surrounded the bank.   In 1982, Duque’s former New York partner, Eduardo Orozco, was arrested and convicted of running the largest money laundering operation ever uncovered in the U.S. Most of the funds were deposited with the CIA-linked exchange firm Deak Perera. In 1986, Duque was found guilty on 60 counts of fraud and conspiracy.

Throughout the years, the Miami narco-banking network enjoyed considerable political clout with both U.S. political parties. In the 1950s and 60s, Kuomintang money from Thailand and Burma came via Hong Kong to be laundered through south Florida property firms.   The Somozas and other South American dictators bought Well out of the glare of public scrutiny, leading banks have sinister connections with up Miami mansions and filled up local banks. One Florida real estate agent estimated that of all foreign purchases in 1979, only 20% were the product of legitimate money.

The drug laundry World Finance Corporation that helped finance CORU in the 1970s had high-level connections to both the Democratic Party in Georgia and Washington (when Carter was president) and also to the Miami circles of the Republicans under Nixon.

Northside Bank of Miami was owned by Gilberto Rodriguez Orejuela of the Cali drugs cartel.   The Popular Bank and Trust Company, which was owned by deposed Nicaraguan dictator Anastasio Somoza until his death in 1980, was used by the State department to transmit funds to the Contras.

Back in his days as Vice President, George Bush intervened with federal regulators in a corrupt Florida Savings and Loans scam that close friends, his sons Jeb and Neil, and a handful of Mafia associates were systematically plundering. This operation eventually went bust with losses of $700 million.   In another Savings and Loans bust that cost $200 million in a shady land deal, the money disappeared via Du Pont’s St. Joe Paper Co. Jersey, one of the Channel Islands.   It is now believed that the looted funds were used by the CIA to procure weapons for Iraq. A central figure in the Savings and Loans fraud was Walter Mischer, a long-time acquaintance of George Bush.   Mischer was closely connected to the New Orleans Marcello family, one of the most powerful Mafia clans in the country.

The Washington DC-based Palmer National Bank was established by Herman Beebe, the so-called godfather of the Florida Savings and Loans scandals, associate of the Louisiana mob, and business associate of Walter Mischer.   Palmer National Bank’s board included, Stefan Halper (a member of the Nixon White House and son-in-law of Ray Cline, formerly Deputy Director of Intelligence at the CIA) Frederick Malek (Nixon’s White House personnel chief and the Bush-Quayle campaign manager) William Kilberg (member of the Reagan-Bush transition team) John Knebel (President Ford’s Secretary of Agriculture) Palmer National’s clients included the National Endowment for the Preservation of Liberty (NEPL) who provided $10 million to Oliver North’s covert networks to Nicaragua and Iran.   This operation was the brainchild of the CIA’s William Casey.

One disturbing consideration of the CIA’s covert drug operations is that the introduction of narcotics into black areas of American cities was deliberate.   Just as the Agency distributed LSD in the 1950s and 60s (which helped to reduce the effectiveness of the anti-establishment youth movement at a time of great domestic social unrest), so heroin from Southeast Asia flooded black communities at the height of the urban rebellions of the late 1960s.   Similarly, the epidemic of crack cocaine in America’s inner cities in the 1980s helped to crush any potentially effective movements among the nation’s angry, disenfranchised blacks.

There is no evidence that the CIA supervised the distribution of crack cocaine to the black community as a matter of policy. Nonetheless, the effects of the drug blight – the blunting of social protest, an excuse to imprison hundreds of thousands of young black men for whom there are no jobs – have certainly been tolerated and appreciated by U.S. officials.   During a demonstration by 2,000 Los Angeles blacks to protest about the CIA’s involvement in importing Contra crack cocaine into the U.S., Maxine Waters, a congresswoman representing LA’s South Central district, one of the areas worst hit by the crack epidemic, declared: “People in high places were winking and our children were dying.”

The racist nature of the “drug war”: Congresswoman Maxine Waters
charged that drug laws “are prosecuted in a discriminatory way which
disproportionately impacts African American males.”

There is another hidden agenda to the “War on Drugs” – an opportunity to attack domestic political dissenters and to divert attention from more pressing social problems.   By lumping all drugs together as an evil threat (conveniently ignoring tobacco and alcohol, which are responsible for more deaths annually than all the banned narcotics combined), the justification is laid down for a clampdown on civil liberties and the passing of draconian laws.   Electronic surveillance, agent infiltration and “sting” operations were increased greatly during the course of the anti-drugs campaigns introduced by Nixon and Reagan.

The political uses of a “drug war” were summed up back in 1975 by Dr Louis West, who headed covert experiments with LSD and other mind control programs for the CIA: “The role of drugs in the exercise of political control is coming under increasing discussion. Control can be imposed either through prohibition or supply. The total or partial prohibition of drugs gives government leverage for other types of control. An example would be the selective application of drug laws against selected components of the population, such as minority groups or political organizations.”

“The drug war is always the pretext for something else.
It is basically a technique for controlling dangerous populations
internal to the country and doesn’t have much to do with drugs.”
In 1981, Congress modified the Posse Comitas Act of 1878 to explicitly allow military support for anti-drug efforts.   The new legislation permitted the Pentagon to provide information, equipment, facilities and training to domestic law enforcement agencies worldwide.   At the same time, the Justice Department’s Office of Legal Counsel issued a secret opinion that U.S. military personnel can apprehend accused drug traffickers abroad – a power they do not have in the U.S. Even more ominously, the U.S. military can act without host country consent.

The Anti-Drug Abuse Act of that year called for a substantial increase in military aid to those countries involved in U.S. “anti-drug” programs and exempted Colombia from a 1974 Foreign Assistance Act ban on aid to foreign police.   It authorized $15 million worth of military equipment for Colombia, supposedly allocated for counter-narcotics but which was in fact diverted to fund counterinsurgency programs against the left.

And in the summer of 1989, President Bush signed a secret directive calling for stepped-up involvement by the Pentagon and intelligence agencies in the “anti-drug” effort in Latin America. This was justified by the claim that drug enforcement and suppression of left-wing political movements amount to the same thing – a policy of utter hypocrisy.

The results of America’s drug war are plain to see.   For example, in Colombia, on August 18th 1991, members of the army’s counterinsurgency XIII Brigade burst into the home of political activist Antonio Palacios Urrea, murdered him and three of his children, and tortured other family members. U.S. military documents leaked to Amnesty International confirmed that counter-narcotics funding was going to this unit.   U.S. Defence Department documents showed that all but one of the Colombian Army brigades implicated in massive human rights violations turned out to have received U.S. aid.   Further U.S. and Colombian military documents showed that in 1991, the CIA was directly involved in helping design and fund 41 clandestine intelligence networks for the Colombian Defence Ministry. According to a classified ministry order, the networks’ only function was to target “leftist subversion.”

The papers also showed that the Clinton administration knew of the violations and repeatedly told Congress and the public that it was not funding and arming units implicated in atrocities.   Colonel Warren D. Hall, head of Clinton’s anti-drug crusade, admitted in an internal memo: “The light infantry skills U.S. Special Forces teach during counter-drug deployments… may be used in counterinsurgency operations, during which human rights violations might occur… It is unrealistic to expect the military to limit use of [U.S. supplied] equipment to operations against narco-traffickers.” According to Javier Giraldo, a Jesuit priest and founder of Colombia’s Inter-Congregational Commission for Justice and Peace: “A vast network of armed civilians began to replace soldiers and policemen who could be easily identified. Because of this, witnesses and victims of crimes are unsure of the exact identity of the individuals responsible for committing them… At the same time, members of the army and police began to conceal their identities, frequently wearing civilian clothes and hoods, to drive unmarked cars and to take their victims to clandestine torture centers, all in order to forego legal formalities in arrest. What has frequently followed these abductions is intimidation or torture, disappearances and murder.” U.S. Green Berets continue to train the Colombian army in illegal paramilitary operations.   The Clinton administration escalated aid to the Colombian military to record levels, while insisting that this assistance was for counter-narcotics. More than $600 million will be used for drugs interdiction programs, including equipment and training for three elite counter-narcotics battalions, and the construction of radar bases and intelligence networks.   Thirty hi-tech UH-60 Blackhawk and 33 Huey helicopters will be lent.

Some 20,000 civilians have been murdered by the Colombian military since 1986.
    Members of Colombia’s elite counterinsurgency unit.
Colombia is just one of many countries involved in global narcotics trafficking today, with the full knowledge and consent of Washington.   In late October 1996, President Clinton sent General Barry McCaffrey to Peru to meet Vladimiro Montesinos, the head of the National Intelligence Service (appropriately acronymed SIN) and praised him as, “an outstanding and knowledgeable strategist.” Montesinos had extensive links to the CIA and to international drug traffickers, as well as a history of human rights abuses, including disappearances of his political opponents, torture and executions.   During the 1970s, Montesinos became the lawyer-of-choice for Peru’s drug kingpins. More than 300 military personnel under his control have been investigated or charged in connection with drugs since 1990.

Regional commanders overseeing clandestine airstrips in Peru receive $10,000 payment per shipment of drugs, which are loaded by soldiers onto planes bound for Colombia. The airstrip from which Montesinos’ drug cargoes were flown to Colombia was only a few kilometers from a counterinsurgency base in the upper Huallaga Valley.   McCaffrey’s visit to bestow Washington’s seal of approval on Montesinos was preceded by a personal letter from President Clinton praising Peru’s human rights record and its, “admirable progress in the war on drugs.” Such is the deceitful nature of Washington’s anti-drugs campaign.

The United States has now legalized the political objectives of its illicit covert operations by disguising them as anti-drug campaigns. The propaganda machine of the military and intelligence forces, together with a compliant media, have effectively tarnished liberal and left wing movements worldwide and domestically as having links with drugs, in order to justify the repression of them.   A pretext has been laid down for an increase in the training of foreign security forces by U.S. military advisers, and for further clampdowns on immigrants into the U.S.

The implications for civil liberties are ominous.   Even Secretary of Defence Caspar Weinberger spoke out against military involvement in the drug war: “Reliance on military forces to accomplish civilian tasks is detrimental to both military readiness and the democratic process.” Given the vast scale of corruption in Latin American military organizations, Washington’s strategy of further militarizing these societies is hopelessly counter-productive, not only for controlling drugs but also for fostering peace and democracy.

The military crusade has a further public relations purpose. With the collapse of the Soviet Union, the Pentagon has faced its greatest fear -having no enemy. Given increased calls to cut the military budget and to reinvest in peace dividends domestically, a new rationale has to be found to justify the security forces’ existence and funding. Thus, drug lords have replaced Communists as the great scourge of America.

While seeking to justify a giant increase in the CIA budget in September 1984, Secretary of State George Shultz espoused some of the most blatant lies ever put before Congress: “The complicity of Communist governments in the drug trade is part of a larger pattern of international lawlessness by Communist nations that… also includes support for international terrorism and other forms of organized violence against legitimate governments… Money from drug smuggling supports terrorism. Terrorists provide assistance to drug traffickers.” On that basis, who exactly are the terrorists and who are the victims?
“In the 1980s all of us could count the number of people dead on the
streets of America as a result of the drug problem. You couldn’t find
me a single person in America who had died as a result of an attack
by a Sandinista inside our borders.”
– JACK BLUM, special counsel to the subcommittee
investigating the CIA-Contra drugs scandal

Many governments’ intelligence services have close relations with major narcotics traffickers.   But instead of reducing or repressing drug supply, most security agencies operate by protecting favored dealers and eliminating their rivals; the result is an inevitable increase in drug trafficking.   As special counsel Jack Blum put it: “The problem is, if you go to bed with dogs, you get up with fleas. If you empower criminals because empowering them happens to be helpful at the time, the criminals are sure to turn on you next.” By adopting a policy of accepting any effective ally in the war against Communism, the CIA has, over decades, actively helped many of the world’s leading drug lords, and has restrained other agencies from dealing with the drugs trade.   America’s drug epidemics have been fuelled by narcotics supplied from areas of major CIA operations, while periods of reduced heroin use have coincided with the absence of CIA activity.   These facts speak for themselves and provide some of the most damning evidence of the repugnant morality of America’s intelligence services, the system that they serve, and their undermining of the democratic process. It is critical to note that support for drug trafficking is sanctioned and sustained by the highest levels of U.S. officialdom.   It is not just the CIA but the entire U.S. foreign policy apparatus, including, all branches of the military the NSA the State Department, …that are complicit in drug trafficking as an essential part of the Agency’s covert operations.
    University students protest in Washington over CIA-Contra-crack links.
Repressive drug strategies that have been introduced by successive U.S. administrations throughout the 20th Century have, without exception, ended in failure.   So long as there is a market for drugs in the First World, the Third World will find ways of supplying it.   America’s heroin suppliers have responded to any attempts at local law enforcement by shifting their supplies from one country to another, remaining one step ahead of U.S. narcotics agents, while increasing their smuggling routes and often expanding, rather than reducing their drugs production and distribution.   If cocaine supplies slacken in one country, heroin exporters in other countries stand ready to fill any void in the market. For example, the eradication of Turkey’s opium crops in the early 1970s raised the world market price and encouraged increased production by poppy farmers in Afghanistan and Burma.

Unless the socio-economic conditions that foster drug abuse are tackled – which includes the economic policies of free market capitalism – the drug problem will never be solved.   Military repression fails to take into account the fact that the cultivation of crops essential to illegal drug production is propelled by global economic policies that have relegated developing nations to producing goods for the developed world, and away from producing food for their own populations.   Millions of peasants, indeed entire national economies, depend on the drug industry. Quick-cash crops like coca leaves, opium and hashish are by far the most profitable means of sustaining a living for hill farmers in poppy-growing regions of the Third World.

Quite apart from the fact that the CIA aids and abets major narcotics traffickers worldwide, the U.S. sells to the drug-growing countries the chemicals necessary to produce the drugs, and many of the weapons, such as M-16 assault rifles, with which the drug cartels arm themselves.   U.S. financial institutions also benefit from the large quantities of drug money that are channeled through them and allowed to be invested in the economy.
    U.S. economic policy targets peasant growers, not social conditions.
Washington’s domestic drug policies ignore the social conditions that are the root cause of drug abuse.   During the 1980s, Charles Rangel, chair of the House Select Committee on Narcotics Abuse and Control observed: “In the United States today there has emerged a new marginal class of Americans – fellow citizens living at the fringe of the economic and social mainstream of our society. These are the people who no longer share in the hope of the American dream. Increasingly, they have no stake in the civic culture and conventional values that bind us together as one nation…. One in five Americans is now part of this marginal class. The annual cost to our economy borders on $300 billion… One in five Americans was out of a job at some point during the past year. One in ten Americans is living on food stamps. One in seven children in the United States is living on welfare.” The recent explosion in these numbers precisely parallels the increased use in narcotics and the accompanying proliferation of drug-related violence – a fact conveniently ignored by politicians who would rather see the blame pinned on the victims of the policies that have caused the problem in the first place.   While intoning “Just Say No [to drugs],” President Reagan slashed spending for social programs, aid to the inner cities and other policies which would have improved conditions for the nation’s poorest.

Under Reagan and Bush, 70% of the federal drug budget was aimed at law enforcement while only 30% was focused on education, prevention and treatment. Under Clinton, two thirds of the budget was still focused on law enforcement.

America’s experience of alcohol prohibition in the 1930s only served to drive the market into the hands of crime syndicates, which correspondingly thrived as never before.   The very illegality of drugs such as opium allows their trade far greater profits than any other commodity, producing enormous incomes for criminal networks, with which they can purchase enough protection – politically and militarily – to survive any attempt at suppression.

Many senior academics, drug experts and politicians worldwide, including several U.S. congressional representatives, support a radical alternative to the current policy of repression – legalization. In one stroke of the politician’s pen, drug use, like alcohol or tobacco, would become a matter of individual choice; the spread of drug-related street crime would recede and the crack gangs would lose their markets.

However, there may be problems with legalization, or partial legalization, of drugs, which cannot at present be accurately judged.   If half of America’s crack users are under 21, a limited legalization might well expand drug abuse among teenagers, while adult addicts could survive by buying limitless quantities of legal drugs and marking them up for resale to teenagers. The police would have no control over a market mechanism that could spread abuse and addiction to unseen levels.

Many scholars propose an unexplored alternative – regulation.   This could be applied in five specific areas: preventive education and curative treatment over a period of several years, to levels where adequate treatment facilities are available for those who need them;
  funding for programs to rebuild broken communities that breed despair, escapism and crime;
  short-term efforts aimed at reducing, but not eliminating drug imports;
  increased co-operation with United Nations narcotics agencies to gradually reduce global drug supply; and
  ending the government’s complicity in the drugs trade and providing adequate control over CIA covert operations to bar future Agency alliances with powerful drug lords. Unless such policies are applied with some urgency, the real war on drugs will never be won.

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