15

Warlords, Barons and Laundrymen

Not all the world’s opium trade is illicit. There is of course a legal market for opium and its alkaloids for pharmaceutical use. Present day licit production varies with projected sales, stocks and the international supply and demand situation. In line with UN Conventions, only enough crops are grown from one season to the next to meet current demand.

The main producer and only country in which the growing of opium poppies for their actual raw opium gum is still legal today is India. The centres for poppy farming are the states of Rajasthan, Madhya Pradesh and Uttar Pradesh: in all, approximately 13,000 hectares are dedicated to poppies and there are about 100,000 farmers in the licensed opium farming system which is carried out under strict government control. Most processing is carried out at the Government Opium and Alkaloid Factories in Ghazipur, the methods being essentially the same as they were two centuries ago.

Liquid opium is delivered to the factories, weighed, taken into the sunlight and poured into wooden trays, more than 12,000 of which are spread out at any one time under the hot sun during the processing months after the harvest. Each tray is stirred thrice daily to prevent crusting and encourage evaporation which continues until the opium has only a 10 per cent water content when it is formed into cakes on a press, the initials GEO being stamped in them as a quality mark. In this state, as a raw opium gum, it is exported to international pharmaceutical companies for the extraction of morphine or codeine, earning India approximately $15 million annually. An estimated 45 per cent of the world’s legitimate morphine requirement comes from Indian opium.

Other countries which grow licit opium poppies produce alkaloids from poppy straw which is less labour intensive and therefore more secure. Tasmania supplies about 40 per cent of world requirement with Turkey, France and Spain also producing alkaloids from poppy straw. The Australian industry was first started during the Second World War, research centring on Janos Kabay’s process. A pilot production programme was begun in Tasmania in 1964, the first season of commercial production beginning in 1970. Today, there are on average 600 farmers cultivating about 6000 hectares of poppies annually, the poppies complementing other crops in a rotation cycle. The farmers have developed new sowing techniques and a highly mechanised harvesting process making the Tasmanian industry the most efficient and highest yielding in the world.

Strict controls are maintained. A poppy crop can only be grown by a farmer contracted to one of the two alkaloid manufacturing companies in Tasmania and who must be licensed by the Tasmanian government, the licence being annually renewable and not transferable. Every farmer is security cleared by the police and all fields are regularly inspected before sowing to ensure a minimal security risk. It is even illegal to enter a poppy field.

Where legitimate production is not as highly mechanised, such as in parts of Turkey, poppy farmers leave the pods to desiccate on the stem then harvest them by snapping off each head by hand. These are then sliced horizontally to allow for seed collection for oil extraction or subsequent sowing. Needless to say, this activity is carried out under the supervision of armed guards.

However, the greatest opiate trade today continues to be the illegal one and, during the last thirty years, opiate use has become a global problem, the number of heroin addicts continually increasing, the demand on the street promoting an escalation of poppy growing, heroin manufacture and trafficking, with the political or economic instability of many opium producing countries making effective control measures well nigh impossible.

In May 1995, Giorgio Giacomelli, the Executive Director of the UN International Drug Programme, estimated that there were 40–50 million drug addicts world-wide and that there was an even more worrying distinct trend of addiction spreading from rich to poor nations which are less equipped to tackle the problem.

From the 1930s, illicit world opium production continued to fall steadily, only to rise from around 1970: in 1934, world output stood at 8000 tons, in 1970 it was 1000 tons but by 1993 it was 4200 metric tonnes. Production decreased to 3409 in 1994, due primarily to drought in South-east Asia. The Golden Triangle and Golden Crescent are still the main illicit opium sources although other areas are moving into the trade with higher production targets being expected in the foreseeable future. According to statistics contained in the International Narcotics Control Strategy Report of 1994, Burma produced 2030 tonnes of opium, about 60 per cent of illicit world production, Afghanistan holding 28 per cent of the market at 950 tonnes. Other players were Pakistan with 5 per cent of global output, Laos 2.5 per cent, India 2.4 per cent and Mexico with 2 per cent: output figures for Colombia and Iran, however, are not included and would, if known, greatly alter the statistics. Satellite image-based assessment by the USA of opium poppy fields in Burma put the estimated 1995 harvest at 2500 tonnes. Of course, such figures are to a degree a matter of guesswork, liable to fluctuation from year to year as new areas come into production and growing conditions change.

South-east Asia is, therefore, still the largest illicit producer, a situation unlikely to change in coming years. Furthermore, opium continues to play a part in the traditional way of life throughout the region, as it has done for centuries, being an important medicine as well as a social pastime: up to 400 tonnes of opium are used by hill tribesmen annually although elsewhere heroin is now more common, with drastic results. It is estimated there are over 80,000 heroin addicts in metropolitan Bangkok alone.

Many means of eradication have been tried. Military action has proven unsuccessful. Crop substitution programmes are evaded by the farmers merely shifting their poppy fields. Plants sprayed with herbicide can sometimes be washed clean and fields are camouflaged with other crops which, if effective, not only fool air reconnaissance aircraft but confuse satellite imaging. The arrest of key personnel in the trade is ineffectual because they are soon replaced by others.

Crop eradication can conceal ulterior motives. In 1986, the Burmese government started using a herbicide, a compound of the controversially dangerous Agent Orange defoliant used by the Americans during the Vietnam War. This was sprayed from aircraft, contaminating water supplies and damaging crops other than poppies, and it was done without warning as to the possible side-effects to health caused by the chemical. The government was using it as a weapon against minority tribes as much as the opium trade, destroying the livelihoods and health of peasant farmers in a form of ethnic social cleansing.

The only way to counter poppy growing is through massive social, political and economic change in the Golden Triangle and surrounding states: the chances of this are slim indeed. The American government was so dismayed by the bloody suppression of the pro-democracy movement in Burma in 1988, it suspended aid, including $7 million for an anti-narcotics programme. Since then, Burma presents Washington with a frustrating dilemma. The Americans want to halt Burmese heroin but do not want to associate with the repressive military junta, known as the State Law and Order Restoration Council (SLORC). The junta jails political opponents, forces peasants into unpaid labour and kept the country’s most popular political figure, the Nobel Peace Prize-winning writer, Aung San Suu Kyi, under house arrest from 1989 until her release in July 1995. Yet some US foreign policy experts now question how long Burma can be left to its own devices in the light of its heroin trade.

The UN has started a modest programme in Burma to help build roads and provide alternative crops, but the amount of aid needed to get results is not likely to materialise until there is better political rapprochement between SLORC and the international community. In September 1994, SLORC announced an 11-year Master Plan for the Development of Border Areas and National Races but the US State Department has commented that economic development remains ‘largely in the planning stage and there have been no results as yet in the counter-narcotics aspect’.

Burma has over 160,000 hectares of land dedicated to the agriculture of poppies, virtually all of it in the Golden Triangle and much of it under the control of insurgents who buy the harvest for their own heroin factories along the Thai or Chinese borders. The main controllers today are the Wa tribal groups on Burma’s border with Yunnan, the ethnic Chinese in the Kokang district of the Shan states and, until very recently, Khun Sa’s followers, now referred to as the Mong Tai Army (MTA), a name adopted in 1987, formed by the merger of the SUA and the Tai-Land Revolutionary Army (TRA): Mong Tai Army means the Army of the Tai (or Shan) Land. Such organisations not only manage production but also operate trafficking rings to internationally transport their heroin, even taking an active part in wholesale distribution in the USA. Most, but not all of these rings, are run in collaboration with Chiu Chau Triad groups but some are independent organisations with their own autonomous infrastructure.

In March 1990, the US Attorney-General filed an indictment against Khun Sa for heroin importation into the USA. The indictment accused Khun Sa of being New York City’s primary supplier. The filing of the papers was little more than good public relations for, unlike American action against General Noriega in Panama, the capture of Khun Sa would rely upon Burmese government co-operation: Burma has warned it would not tolerate any violation of its sovereignty in an attempt to seize him.

Khun Sa, now in his 60s, has until recently run a mini-state within a state, being regarded by some as a head of government. He established schools and hospitals and built a textile works, a mushroom farm and a gemstone-cutting factory near his base at Ho Mong, thirty kilometres from the Thai border, bringing in street lighting, telephones, hi-fis and electrical goods and beginning a hydro-electric dam project. He did not deny poppies were the main local crop but, in recent years, he preferred to declare he did not produce heroin himself, merely taxing those who did in order to fund the Shan nationalist cause. Other income derived from taxes levied on contraband, jade, precious stones, teak and cattle. Allegedly, personal enrichment was not Khun Sa’s aim.

The Mong Tai Army, at its height possibly 20,000 strong and one of Asia’s biggest tribal armies, was as well equipped as the Burmese state militia. No doubt aware of the harm opiates can do to an army, Khun Sa dealt mercilessly with addicts in his ranks. A first offence had the offender left in an 18-foot well for 10 days’ withdrawal: a second offence was punished with death by a blow to the back of the neck.

A charismatic figure, Khun Sa has over the years invited overseas journalists, even politicians, to Ho Mong where he portrayed himself as a clean-living man who chain-smoked 555 brand cigarettes, had a penchant for a good cognac and declared his only other vice was women. Unlike Big-eared Tu, for example, he has been astute enough not to sample his own wares. He is also a collector of and said to be an authority on rare South-east Asian orchids. At the lunar new year festival in 1993, he performed karaoke songs to his troops, flanked by – it is said – a young woman crooner and a red-lipped transvestite. At a dance later that day his second-in-command, a veteran KMT soldier called General Sao Hpalang, known as General Thunder by the troops, waltzed with the young woman. On the same day, the Shan State Restoration Council declared independence from Burma, electing Khun Sa its president.

Prompted by such declarations, the Burmese government has made some attempt to either militarily crush or politically buy off separatists. In 1989 the Burmese military junta signed peace agreements which effectively allowed some hostile ethnic minorities, particularly the Wa, to trade in narcotics as long as they kept politically inactive and recognised governmental authority. The Burmese provided rice, medical care and money, allowing rebel leaders the freedom to engage in heroin production and trafficking. A main beneficiary of this situation was the warlord, Lo Hsing-han, Khun Sa’s long-standing arch-rival for control of the opium trade.

Born in 1934 in Kokang state Lo Hsing-han, with his brother, Lo Hsing-min, was the most powerful opium warlord during the late 1960s and early 1970s especially when Khun Sa was in prison, having also started his opium career in the KKY. Lo’s position reduced after the American withdrawal from Vietnam due to his failure to use the boom years of the war to build links with overseas traffickers and extend his distribution network. In the face of this decline, Khun Sa started to become dominant once more. Lo was arrested in Thailand in 1973, extradited to Burma and sentenced to life imprisonment. However, in 1980, his sentence was commuted by Burmese President Ne Win – there were rumours of a substantial pay-off – and he was given troops and arms by the Burmese in the hope he would slow down the expansion of Khun Sa and other groups. With such backing, Lo started to gain power again. Today, as well as his involvement in drugs, he is reported to be substantially investing in several Rangoon hotels.

In response to international criticism SLORC, which promotes compliant narcotics-dealing tribal chiefs as ‘national leaders’, has insisted its policy is merely giving the tribes – especially the Wa – time to establish other cash crops to replace opium poppies. A SLORC spokesman stated in May 1995, ‘the national leaders have given us pledges that they will try to stop (growing poppies) in six to ten years time. They need time to switch to other crops otherwise they will starve’. Experts point out the Wa tribe have probably become the main producers of opium in recent years, also increasing their heroin production along the Chinese border and on the periphery of Khun Sa’s territory at his expense, leading to fighting between the Wa and the MTA. Other developments in 1995 had the Karen rebels’ headquarters captured with other insurgent groups considering making peace on similarly flexible political and economic terms. The sincerity of their pledges to halt opium growing remains to be seen.

SLORC has argued that if the Americans really wanted to stop Khun Sa’s activities, it would have to provide military support: the American response pointed out that of the thirty-two aircraft and helicopters supplied by them in the 1980s for anti-narcotic operations not one had ever been used against Khun Sa. Rumour has it there were occasional deals struck between him and the Burmese government. For example, in October 1988, it was alleged the MTA was offered a free hand in its heroin business in exchange for anti-Communist support and the safe passage of government-felled teak being sold to Thailand. It is also thought that Khun Sa for long bought off local army commanders in exchange for being left alone to get on with his drug trading.

The rise to power again of Lo Hsing-han and his brother led to speculation that the Burmese, in supporting the Los, were becoming willing to capture Khun Sa in exchange for foreign aid and an end to criticism of its human rights record and socio-political policies: from late 1993, the tide started to turn against Khun Sa as Burmese forces began to launch a sustained offensive against him.

Thailand, long censured for its toleration of heroin producers, also began to take steps against Khun Sa who, in 1994, proposed the Shan states become a province of Thailand. This proposition was rejected and Khun Sa rebuffed by the Thai authorities although MTA troops have frequently been permitted to escape into Thailand to avoid Burmese forces. Under heavy American pressure, Thailand finally sent troops to seal off infiltration routes to and from Burma, closing a new road which Khun Sa had been using for supplies, although Thai authorities permitted mule caravans to use jungle paths for, as they put it, humanitarian reasons. Yet the border turned out to be more permeable than expected and Khun Sa’s guile under-estimated. To escape the Thai forces, he moved groups of 600 and 800 men through Thailand on chartered tourists buses in March 1995. According to Burmese intelligence sources, Khun Sa’s men made substantial cash payments, of $26,000 on one occasion, to Thai border police to ensure passage. However, this situation created trouble for Khun Sa by making him once more reliant upon mountain trails and reports indicated even rice was in short supply amongst his men.

Some DEA/Thai joint operations were successful and many of Khun Sa’s traffickers were arrested in northern Thailand including, in 1993, Lin Chien-pang, a close associate of Khun Sa who was captured and extradited to the USA. At the beginning of 1995, ten of Khun Sa’s senior aides were apprehended in northern Thailand.

The Burmese authorities knew any attempt to crush Khun Sa generated good publicity: in May 1995, they gave foreign journalists a junket in the Bakyan Mountains, displaying a captured Khun Sa base taken the month before and plugging their anti-narcotics image. In order to impress American public opinion, the Burmese military have reverted to referring to Khun Sa’s army as the ‘Loimaw bandits’, a name by which they were known in their early days in the 1960s.

Khun Sa seems to have fallen victim to a mixture of international pressure, military attack, the growing strength of rivals – especially the Wa faction – and defections from his ranks. Whereas at some times in the past, Khun Sa and his family were to be seen in Bangkok and Chiang Mai, in recent times Khun Sa has hardly dared stray from his jungle headquarters. In June 1995, there was even a mutinous mass departure of several thousand of his fighters led by young Shan nationalists who complained he was more committed to the drug trade than Shan independence.

In November 1995, as the Burmese military inexorably advanced on him, Khun Sa announced his retirement from all positions in the Shan state following the mutiny and other large scale defections, reported to total up to 6000 men: he stated he had lost heart, presumably in the national cause rather than opium production. He said he wanted to retire to tend his chickens. Observers believe that Khun Sa had few options left other than to reach an agreement with the Burmese government.

At the beginning of January 1996, Khun Sa surrendered to Burmese government forces at Ho Mong. He was said to have welcomed senior Burmese military officers with a party which lasted throughout the night. Burmese troops occupied Ho Mong without a fight and Khun Sa’s forces began handing over their bases in the mountains to Burmese troops.

The situation is, as ever, confused and Khun Sa’s future uncertain. Many believe he is seeking a deal with the Burmese government to turn his fighters into a government militia. Some disaffected Mong Tai Army members who fled to Thailand say they believe Khun Sa had cut a deal with the authorities before his surrender in return for an amnesty, in which case he might be allowed to ‘retire’ and live peacefully for the rest of his life.

Whatever happens, it seems unlikely Burma will turn Khun Sa over to the USA which has requested his extradition and announced a $2 million reward for information leading to his arrest and conviction. The Burmese government declare he will be put on trial in Rangoon and dealt with according to their law. This decision for a local trial may not be a mere flexing of political muscle and a statement of sovereignty: many observers believe such a decision has been reached because the Burmese authorities are frightened of what Khun Sa might tell the Americans of their narcotics involvement.

If tried and convicted in Burma, Khun Sa could face a mandatory death sentence but in this predominantly Buddhist nation it would most likely be commuted. With the country’s periodic amnesties and further time off for good behaviour, Khun Sa could still end his days a free man. It is even conceivable that the world has not seen the last of Khun Sa: he has been down before and made a comeback against long odds.

Khun Sa’s political downfall, therefore, has not affected the flow of opium out of the Golden Triangle. As he predicted to the Bangkok Post after his retirement in November 1995, ‘Opium production will continue with or without me.’ American fears of a deal between Khun Sa and the Burmese government now seem validated and could lead to substantially increased poppy cultivation. Any power vacuum left by Khun Sa will soon be filled for, although as a drug lord, he may have had the highest international profile, there are many other players on the scene. Lo Hsing-han may seize the day. The Kokang group which has allied itself to him, an alliance which dominated the opium market in 1992 when Khun Sa was said to be temporarily starved of cash, is also well positioned to succeed him. Others such as Lin Mingxian, the powerful former Red Guard and one-time Burmese Communist Party commander and the Wei brothers, former colleagues of Khun Sa who operate with the Wa and are now said to be the region’s biggest dealers, wait in the wings.

Matters are further complicated because whatever the government of Burma has said, or whichever faction is dominant, it also seems the government itself is substantially connected to the heroin trade and that poppies are now also being grown in areas controlled by the Burmese military. A recent billion dollars’ worth of arms purchased from China is alleged to have been paid for from heroin profits. As a spin-off from this deal, Chinese entrepreneurs have been allowed into the country where they are investing heavily in property, the tourist trade and the timber industry.

Whoever is in control, heroin continues to transit through Burma to Thailand which, although it remains the primary route to world markets, is losing some of its trade to India, Bangladesh, Malaysia and, more importantly, China. Heroin is now going overland to Hong Kong or other Chinese seaports whence it goes to Taiwan for onward shipment to the USA, the route begun in 1989 by Lo Hsing-han. The newest routes are through Laos, Cambodia and, once more, Vietnam, partly operating along sections of the legendary Ho Chi Minh trail set up by the Vietcong to supply their troops during the Vietnam War.

The situation in South-east Asia is always, to a greater or lesser degree, in a state of turmoil and change. In Laos, which has a huge area of land under poppies, senior government and military officials remain corrupt and profit substantially from opium despite some reduction in poppy cultivation due to a crop substitution project funded by the US State Department and the United Nations International Drug Control Program: unfavourable weather conditions in 1993–94 somewhat aided the situation by destroying much of the poppy crop. Large scale eradication programmes are, however, side-stepped for fear of political unrest from hill tribes. Since UN troops pulled out from Cambodia in 1993, senior members of the government there are rumoured to have built up strong ties with international drug smugglers, Cambodia developing into such a major drug trafficking centre that law enforcement agents are starting to wryly refer to the country as ‘Medellin on the Mekong’, a tongue-in-cheek comparison with the Colombian cocaine city of Medellin.

In northern Thailand, although traditional hill tribal poppy farmers have been joined by commercial growers financed by heroin traffickers, there has been a reduction in poppy acreage to half that of the mid-1980s. Yet Thailand remains the key conduit for drugs. It has also become the major destination of ‘brat packers’ – young, poor, Western travellers, the modern descendants of the Sixties hippies. These itinerants gather around such places as Khao San Road in Bangkok or Haad Rin on the island of Kho Phan Gan off the south coast, where they party, dance, engage in moon raves (night-time naked orgies which have become internationally famous amongst brat cognoscenti), snort, smoke and shoot anything from heroin to designer drugs and generally live self-indulgent existences. To finance their life-style, some are tempted to try smuggling. Of the 1200 foreigners in Thailand’s gaols, over 900 are held on trafficking charges.

Not only brat packers head for the country. In northern Thailand, mainstream tourism has become established, with hotels and excursions blossoming in what even tourist brochures refer to as the Golden Triangle, using the name for just the small area up against the borders with Laos and Burma which they describe as ‘an exotic, colourful region of jungle-clad hills, mighty rivers, magnificent temples and fascinating hill tribe villages with some of the best shopping in Thailand.’

It was hoped Thailand’s rapid economic growth in the late 1980s would have discouraged the heroin trade but the new infrastructure has only proved to serve it and some high-level corruption continues. A Thai general, Thanat Phaktiphat, has been accused of being involved in trafficking and plotting to import heroin into the USA in recent years. He was arrested in transit through Kai Tak airport, Hong Kong, in December 1993 with two empty suitcases which, it was alleged, he was using to collect $4 million in narcotics earnings. He lost his third attempt to prevent his extradition from Hong Kong in May 1995. Another twist occurred in July 1995 when the Chart Thai Party, the largest group in the former opposition, was victorious in the elections and formed a coalition government. The Americans, who have for years been accusing the Thai opposition parties of involvement in the narcotics trade, have found them in power. Members of the new government include Narong Wongwan and Vatana Asavahme, both accused by Washington of having links with drug trafficking.

The use of Vietnam as a transit nation is under way again and it looks as though the country is set once more to become an important route out of the Golden Triangle. It is feared international organised crime syndicates are targeting and exploiting the new open economy and relaxed frontier controls. In northern Vietnam, in the border trading area of Lang Son, just a few kilometres from China, trade in general and contraband in particular have soared since late 1992. Heroin is increasingly moved through the region en route from the Golden Triangle and China to ports such as Haiphong and Danang, thence out to international markets.

Along the Sino-Vietnam border, special Vietnamese police teams working with the military and customs officers patrol the all-but impenetrable jungle, often for days at a time, attempting to close supply routes but without any major success: in the environs of Lang Son, heroin addiction is rapidly growing, some addicts being of primary school age.

A report released in March 1995 by the Vietnam National Drug Control Programme, claims a national opiate addict population of 170,000, many long-term users amongst the poppy-growing hill tribes. Officials claim there are no heroin processing plants in Vietnam but that is immaterial. The rise in smuggling alone will feed the growing domestic market in Hanoi and Ho Chi Minh City where, in 1994, 2750 opium den landlords were arrested and where a rise in heroin injection is rapidly spreading AIDS. To combat the mounting threat, death sentences are being handed out to traffickers, customs manning levels are being greatly increased, officers are being trained in Britain with the latest American detection equipment on order: for the first time, Vietnam is to have sniffer dogs.

Not only the Vietnamese are worried: so is the DEA. It has acknowledged all the ingredients are in place for smugglers to take full advantage of the situation to develop new routes. In 1995, the US government placed Vietnam on the list of twenty-nine countries which now serve as major conduits for drugs destined for North America. The DEA also records poppies being grown commercially in the Son La province of Vietnam, between China and Laos, although the quantity of opium produced is unknown.

Developments such as these pose a potential problem for narcotics agencies, for, if they do reduce opium in the Golden Triangle, production may shift to Vietnam or to another, even less approachable country such as North Korea. As long as the Golden Triangle exists, opium and heroin are at least somewhat contained.

Another twist in the story concerns China. When the Communists took over, Mao Zedong wiped out opium and addiction. China was clean for the better part of forty years with only pharmaceutical opium being produced. Now that has changed.

It is estimated illicit poppies are farmed in about sixteen provinces, mainly for domestic consumption but increasingly for export, to such an extent that China is now deemed to be a major producer, perhaps as important as Laos, but its output is unquantifiable. Although the Chinese government refutes it, substantial poppy production is going on and increasing in Yunnan province (the farmers related to the hill tribes of Burma and Laos) whilst, in as diverse an area as Inner Mongolia, the authorities found and destroyed six million poppy plants in 1991. Heroin is readily available in Yunnan and the Beijing government admits it has a problem there: 2.85 tonnes of heroin were seized in Yunnan in 1994. In May 1995, the Chinese government and the UN Drug Control Programme signed an agreement for a $2.9 million project to fight drug trafficking in Yunnan. The three-year plan is to improve the capacity of enforcement authorities by providing specialised training and equipment.

Heroin use is increasing at an alarming rate throughout China. According to the International Narcotics Control Board, Kunming (the capital of Yunnan) has an addict population of around 100,000. Recent economic reforms in China have given peasants money which some have invested in opium, whilst spare cash in the pockets of the young has fuelled the drugs trade, which in turn has caused crime figures to soar. For the infrequently or un-employed – of which China has an estimated 300 million – drugs are a release from boredom. The state’s reaction is draconian. Despite pressures to set up American-style heroin clinics, the government regards addiction as a crime and arrested addicts are forced to withdraw alone, in prison cells. The army is used to attack dealers and even their home villages, with not infrequent success. A raid in the summer of 1994 upon one Yunnan village netted a reputed staggering $500 million’s worth of No. 4 heroin. Traffickers, producers or retailers are shot after a show trial, frequently at public executions stage-managed in football stadia or market-places: possession of 50 grams of heroin automatically carries the death penalty.

China executed over 100 drug traffickers in 1993, in recognition of international drug reduction day celebrations. Shenzhen, the special economic zone city just over the border from Hong Kong, is currently a base for Chiu Chau heroin, banking and money laundering operations. Here, 40 per cent of criminals are drug addicts. In the spring of 1995, 126 drug syndicates were discovered in the city: 1910 drug addicts were arrested, those not considered criminals being taken for three-month compulsory rehabilitation, chronic cases being further subjected to re-education camps for up to three years. A three-day crackdown in Guangdong province at the end of April 1995 led to the arrest of 1200 dealers, with 400 drug dens being destroyed and about 10,000 addicts being rounded up. A month later, fifty-one traffickers were publicly denounced at a series of rallies and paraded in front of crowds before being shot by firing squad.

Regardless of these measures, addiction grows unabated, critics of economic reform loud in their condemnation, stating liberalisation has allowed heroin in and quoting a Chinese proverb: if you open the window, sunlight comes in but so do mosquitoes and evil spirits.

Concerned at the South-east Asian situation, Beijing hosted a conference in May 1995 with representatives from China, Thailand, Burma, Laos, Cambodia and Vietnam, to draw up their first co-operative strategy to curb the drug trade. A three-year action plan was tabled, aimed at reducing drug demand, promoting alternative development for drug-producing regions and strengthening law enforcement. In a post-conference declaration, the six nations agreed the situation required immediate attention and acknowledged no country could solve the problem alone. The plan, expected to cost $10 million, including seeking a 75 per cent aid package from international sources.

Despite governmental concern, some official factions in China are involved in their own shady dealings: the PLA, for example, have invested tens of millions of dollars in Hong Kong property, some of it proceeds from foreign arms-for-drugs deals, having used the collapsed Bank for Credit and Commerce International (BCCI) for many of their transactions. They now use other Chinese banks with overseas offices or branches in tax havens around the world, such as the Cayman Islands.

Hong Kong is still a major heroin port, heroin arriving by sea from the Golden Triangle. In March 1994 police, acting on a tip-off, seized 67 kilograms of Double UOGlobe heroin in 96 blocks, wrapped in nylon, waxed paper and plastic and hidden on the sea floor south of Lamma Island: many recent seizures world-wide have been of heavily compressed blocks of powder. In the same year, the Royal Hong Kong Police and Customs and Excise Department discovered a total of 446 kilograms of heroin. Despite maritime smuggling, well over 50 per cent of heroin now comes overland from the Golden Triangle by way of Yunnan and Guangxi provinces and the cities of Guangzhou and Shenzhen. The Hong Kong–Chinese frontier being essentially open, smugglers use the huge daily cross-border traffic of pedestrians, train passengers and vehicles to hide couriers who carry heroin in body belts and baggage from stockpiles maintained in Shenzhen. Rarely, commercial cargo flights are used.

Double UOGlobe heroin is the most common brand brought into Hong Kong but, just as Hong Kong is famous for its fake watches, computer software and designer clothes, so is it for heroin. Some heroin cutting mills and packing houses, often located in the northern New Territories near the Chinese border, have been importing Double UOGlobe product, adulterating it to 50 per cent purity with rice powder, caffeine, antipyrine or talc, recompressing it in hydraulic presses, repackaging it in fake Double UOGlobe labels and sending it on as the genuine 100 per cent pure article. In 1994, twenty heroin manufacturing or cutting centres in Hong Kong were neutralised with thirty-eight drugs syndicates being closed down. Not only traffickers are involved in opium and heroin: as throughout its history, drugs remain an important commodity in Hong Kong’s free market-place and it has been suggested that several otherwise legitimate Chinese multimillionaires have substantially invested in narcotics.

Heroin use within Hong Kong has soared since the spring of 1994, purity at street level decreasing from 41.3 per cent in 1993 to 23 per cent in 1994, whilst the street price rose from HK$322 to HK$463 per gram. Over 93 per cent of the addict population consumes heroin, No. 4 heroin the most widely used, with most addicts smoking rather than injecting it: No. 3 smoking heroin is now almost non-existent. Only a very few elderly traditional opium smokers remain: the author was offered a block of fifty-year-old opium with an antique opium pipe in nearby Macau in May 1995, the vendor, a man in his eighties, still referring to it as nga pin. In 1994 there was just one arrest in Hong Kong for keeping an opium divan.

A major concern in Hong Kong is the growing number of school-age heroin addicts; 15-year-old girls and even 10-year-old boys are coming to the notice of clinics, one 10-year-old telling a social worker ‘I feel happy on heroin.’ This ‘happiness’ may be somewhat dented if, in 1997 when Hong Kong reverts to Chinese sovereignty, the authoritarian measures applied by Beijing are brought to bear.

Hong Kong street dealers and addicts, perhaps because they have such a long history of opiate use, are most artful in their methods of doing business. Heroin is sold either in plastic packets of between 1 gram and 1 ounce, in either powder or rock form, in 2-gram Po Chai (Chinese traditional medicine) bottles or as single doses in ‘straws’. A ‘straw’ is a 2-centimetre long piece of plastic drinking straw, filled with heroin and heat sealed at each end. It may be carried either under the tongue, in the cheek or in the hand, held between thumb and middle finger. At the approach of a police officer, it can be flicked up to 10 metres away. Few addicts are caught in possession in the street unless they are exceedingly careless.

Most Golden Triangle heroin is intended for Western markets. Demand in Asia – not including China, which has a huge potential addict population – is not expected to increase significantly. Cultural or economic barriers to drug use exist in some countries, whilst others have reached a peak. In places, heroin is not the preferred drug: for example, in Japan, which has the economic potential to increase heroin use, addicts prefer to use stimulants.

Chiu Chau syndicates still control the majority of the trade but other groups, such as the Hokkien Chinese, also move Golden Triangle drugs, often through Taiwan where there are also excellent money laundering facilities. The Triads, who continue to hold a near-monopoly over international shipments from South-east Asia and control sizeable wholesale distribution networks in the West, are relocating out of Hong Kong in readiness for the 1997 hand-over of sovereignty. As well as moving to London, the European Union and to the USA, they are building up a presence in Australia and Canada. Organised Chinese gangs exist in Sydney, Toronto, Vancouver, San Francisco, Los Angeles, New York, London, Manchester, Amsterdam, Rome, Paris and in places where a Chinese ethnic presence is not traditional, such as the German cities of Frankfurt, Stuttgart, Munich, Cologne and Berlin.

In a potentially alarming development, Chinese gangs have moved to Italy, often using Chinese restaurants as fronts for heroin trafficking. In Rome alone, there are over 400 Chinese restaurants, whereas only a handful existed in 1990. The Italian police are worried about how the Triads and the Mafia may co-exist for, although there has so far been some co-operation between them, the police fear gang warfare if the Triads try to rival Mafia drug interests.

Triad contacts with organised crime syndicates in Australia have existed since the early 1970s when they started importing heroin. By 1994 an evaluation by Australian law enforcement agencies showed 85–90 per cent of heroin entering Australia was owned by Chinese groups associated with organised crime in Hong Kong and China: the same gangs also linked to other groups operating in Vietnam, the Lebanon, Italy, Turkey, Romania and New Zealand. The Chinese are often vital links in the communications network of international organised crime. In Australia, they are allied to motorcycle gangs who are major heroin distributors, thus following a pattern, for Hell’s Angels motorcycle gangs, found in seventeen countries, are frequently related to international crime.

Wealthy expatriate Chinese (some of them members of, or related by business to, Triad societies) also run world-wide smuggling networks. On the surface they may be involved in hotels, banks, tourism and manufacturing but a percentage of their profits is invested in trawlers and tramp steamers which carry heroin and illegal immigrants to the West and stolen luxury cars into China. In 1992, more than 100,000 Chinese were smuggled into the USA alone and the trade continues to grow.

Although it is known the Yakuza bankroll bulk shipments of drugs to Western markets, the extent of their involvement in present day international drug trafficking is hard to assess. They are virtually impenetrable and, given their organisational skills and financial prowess, not to say the cover Japanese world trade can afford them, almost impossible to combat.

The Golden Triangle producers and traffickers do not, of course, have it all to themselves. There are other players involved.

Afghanistan is the second largest illicit opium producer and in recent years there has been an increase in the numbers of poppy farmers, refugees returning after the Russian withdrawal growing poppies as a quick and easy cash crop with which to rebuild their country and set themselves up. In some parts of the country the Russians destroyed irrigation systems so poppies have been an ideal crop because they do not need irrigation.

The year 1994 saw a 38 per cent increase over the 1993 production estimate and a bumper harvest of poppies, most of which are grown in Nangarhar Province and the Helmand Valley where poppies have traditionally been raised and poppy head medicine commonly used for stomach ailments. There are approximately 250,000 opium smokers in Afghanistan, with a swelling number of heroin smokers, but most opium is sold for processing into morphine base or heroin over the Pakistan border, or converted into morphine base locally and transported through the Central Asian republics to Europe. Former Mujaheddin fighters and their one-time Communist enemies are now doing a brisk business together by selling arms – either left behind after the Russian withdrawal from Afghanistan or specifically purchased as military surplus from Russia – for drugs which they then market into the international trade.

Neighbouring Pakistan is in some ways the Thailand of western Asia for it is a producer, a processor and a transit country. The price it pays is similar to that of Thailand, too: Pakistan has well over 1.5 million heroin addicts at a minimum estimate. A government ban exists on poppy farming and some crop eradication has occurred, but traffickers have no problem persuading smallholding peasant farmers to break the laws when they can earn ten times as much from poppies as they can from fruit, vegetables or tobacco. Most Golden Crescent heroin is refined in Pakistan in the lawless areas of the North-West Frontier Province where central government rule is still usurped by local tribal chieftains. To attempt to combat the problem, the government offers incentives to compliant chieftains but compliance is usually ignored once the incentive is taken: the drug traders can out-bid and out-bribe the authorities and corruption amongst even senior local officials is rife. There has even been reported a heroin factory inside a United Nations managed refugee camp in the Khyber Pass.

Pakistani drug barons, based in Karachi or Lahore, finance export consignments and act as middlemen for international crime syndicates, their couriers often illiterate Pakistanis who are dispensable. For the courier, who is often ignorant of the penalties he may face, arrest can mean years in a foreign gaol or even the death penalty in certain countries. So brazen are some Pakistani barons, they export heroin or morphine base in loads as large as a ton in weight, shipping through the Suez Canal to Turkey, Turkish-controlled Cyprus and other Mediterranean countries, with some going via Mauritius and Madagascar.

There is another danger from the heroin trade in Pakistan: the country is on the verge of becoming so powerful as a heroin producer, refiner and trader that it threatens to destabilise an already insecure political and geographical region. For this reason, intense international pressure is being put on Pakistan to stamp out the heroin trade and enforce existing laws, seven or eight Pakistani narco-barons allegedly being secretly extradited to the USA over the winter of 1994—95.

Even in India, where the opium industry has for many years been well regulated, licit opium is being diverted into the illegal market and illicit opium produced. According to some estimates, up to 30 per cent of the legal product may be ‘disappearing’, caused by corruption amongst lower-paid officials who aid poppy farmers in selling to traffickers. The incentives for the farmer are tempting for he can earn up to forty times more from traffickers than from government buyers. Most of the illegal growing is done in the north-eastern state of Arunachal Pradesh and those bordering Burma, where the opium may be taken over the frontier. In the same area of India, pro-independence guerrillas of the National Socialist Council of Nagaland traffic in heroin along the Burmese border: indeed, it seems as if all the separatist groups in India and Sri Lanka are establishing common trafficking networks to raise finance.

Although India clamped down on any domestic use of opium forty years ago, there remain a small number of opium addicts in the rural north who are provided with supplies by the government. They do not pose a problem: what does is the increasing rate of heroin manufacture in India. According to suppressed official reports, India has anything between one and five million heroin addicts. The native product is No. 3 heroin made in primitive, mobile laboratories. Some is exported to Bangladesh and Nepal, where addiction rates are rising, but most exportation is handled by Muslim middlemen in Bombay or New Delhi who deal in heroin from Pakistan, Afghanistan and Burma. Drugs not only pass through in transit but are warehoused in enclaves such as the Muslim quarter of Old Delhi where up to 500 kilograms are held at any one time, waiting to be couriered out.

The last of the Golden Crescent ‘opium states’ is Iran. Reliable information is hard to come by: the official line is Iran is opium-free. Certainly, poppy farming was officially banned in 1980 but it continues close to the frontiers with Pakistan and Afghanistan and, according to American intelligence, in the Kurdish areas on the Turkish border where morphine base and heroin laboratories exist, the revenue aiding the Kurdish separatist movement. Inside Iran, there are thought to be about two million heroin addicts, the worsening economic and social climate and repressive government policies claimed as underlying reasons. Iran, along with Burma, Afghanistan, Syria and Nigeria, was listed in March 1995 as being ‘uncertified’ by the USA. This means these countries are not deemed by the USA to be making serious efforts to tackle narcotics, resulting in USA opposition to all but humanitarian aid intended for them from such international agencies as the World Bank. Some believe certification arbitrary. President Hashemi Rafsanjani of Iran has criticised the certification as politically motivated: certainly, Iran has been attempting to halt opiate traffic from the Golden Crescent.

Outside the two ‘golden’ opium areas, there are also other countries engaged in opiates. In 1991, it was estimated over 3000 hectares of land in Lebanon were used for poppy cultivation, producing 34 tonnes of opium. Lebanon has been cited as the best example of what has become known as ‘narco-terrorism’, the use of drug trafficking to further the objectives of governments and terrorist organisations. However, from such a definition it is obvious this is not a new phenomena: one is reminded of pre-war Japanese drug involvement in China and CIA use of drugs in South-east Asia, not to mention the Shan states groups who use opium to fund themselves. There have long been connections between international drug traffickers and international terrorists but over the last few decades they have become significantly interdependent.

Heroin has become a terrorist currency and this is especially true in the purchase of arms. Some governments or terror groups also use drugs to undermine their enemies, which for many has often been the USA, accepting they demoralise a nation and introduce criminal activity to society. Terrorists, seeking to cause chaos and disorder, have seen drugs as a powerful strategic weapon.

There had traditionally been a drug trade in the Lebanon: it is famous for growing a particularly potent hashish known by dope-heads as Lebanese Gold, which was marketed especially in the Near East. In the 1960s, some of the religious and political factions in Lebanon began to earn large sums of money from hashish. As internecine tension rose in the 1970s, hashish production mushroomed, the drug farmed in the Bekaa Valley. When the Lebanese civil war commenced in 1975, the country’s economy was devastated, drugs becoming its mainstay.

As the fighting escalated hashish, which was sold comparatively cheaply, failed to earn sufficient foreign currency so, in 1982, Turkish poppy growers were brought in to the Bekaa Valley. Under their guidance, poppies were raised and heroin produced. Weight for weight, opiates were at least ten times more profitable than hashish. The trade expanded until it embraced all the fighting factions, much of the conflict centring on the control of narcotics – not just the poppy fields but also the roads, ports and airstrips from which drugs could be shipped.

Heroin (and, to a lesser extent, hashish) also financed troops and armaments. An indication of its relevance to terrorist organisations may be gained from the intelligence that, as early as 1982, it was estimated the Palestine Liberation Organisation (PLO) earned $300 million from the narcotics trade, three times what it was given in political subsidy by friendly Arab regimes.

In 1975, Syrian forces seized the Bekaa Valley and began to extort money from the drug merchants, corruption in the Syrian occupation forces aiding hashish and poppy cultivation and heroin manufacture from which Syria took a large cut of the profits. Ties were established by highly placed Syrian officials with the Sicilian Mafia who, it is believed, administered some Syrian trafficking operations.

There were possibly up to 100 mobile heroin laboratories in the Bekaa Valley in 1991, with more sophisticated, permanent facilities existing over the Syrian border. Although, the next year, production was negligible due to poor weather substantially damaging the poppy crop, it was thought by DEA analysts at the time that it could return to normal in 1993. This did not happen. It now appears most poppy crops have been eradicated, the cultivation of poppies limited and local production considerably reduced. With the ending of the civil war, however, the Lebanon has assumed its traditional role as a trafficking hub, with new dealer networks quickly establishing themselves. Imported morphine is refined into heroin whilst Russian operators and Sicilian mafiosi use Lebanese ports to export drugs and launder related earnings. It has also been alleged that several Lebanese parliamentary deputies and government officials are involved in the business.

Future poppy production in the Lebanon relies on how long peace there lasts and how effectively the economy is rebuilt. Yet poppy growing in the region is not restricted to Lebanon for it is going on in the Gaza Strip where Palestinians, displaced by Israeli politics and lacking any substantial form of local industry, regard it as a viable means of income. Palestinian police seized opium to the value of $1.5 million in just a few days of raids in 1994.

It has been suggested narcotics were to blame for the bombing of Pan Am flight 103 in December 1988 over Lockerbie, in Scotland, when 259 passengers and 11 people on the ground were killed. The official view of the American and British governments is that the blame lies with Libya but it is now thought by many observers that the bombing was carried out in retaliation for the shooting down of an Iranian Airbus five months previously by an American warship. It is believed that Iran put out a $10 million contract for the bringing down of an American aircraft and it has been alleged that this was accepted by Ahmed Jibril, head of the Popular Front for the Liberation of Palestine (PFLP).

The suggested scenario is that the CIA was trying to gain influence with Middle East power-brokers, such as PFLP and Hezbollah, to obtain a bargaining advantage in freeing Western hostages in Lebanon. The terrorist groups relied on cash raised through trafficking and they were involved in heroin production in the Bekaa Valley. The DEA and other intelligence agencies were impotent to act against the heroin producers, left merely to monitor the situation. As part of their influence-building strategy, the CIA was covertly permitting – even aiding – specified trafficking shipments (known as ‘controlled runs’) from the Middle East to the USA. At the same time, it is suggested the CIA was using these controlled runs as part of a ‘sting’ operation to identify and apprehend big-time, American-based narcotics importers.

Couriers carried heroin through airport security as part of these controlled runs, being allowed through without let or hindrance. It is suggested Ahmed Jibril saw this as a means of not only earning risk-free drugs money but also of getting a bomb on an American aircraft. If a bomb could be placed in a container used on a controlled run, it would go undetected through security checks and on to the aircraft. A young Lebanese courier, Khaled Jaafar, is said to have taken a Toshiba radio-cassette player on board flight 103, thinking it contained heroin: instead, the Toshiba was the bomb.

More recently, drugs are being used in the buying of favours against Iraq which is itself now dealing in heroin to keep its currency afloat in the face of UN sanctions. Western intelligence agencies (particularly the CIA) are reputed to be purchasing Arab anti-Iraqi attitudes either with hard cash or by turning a blind eye to narcotics smuggling. It is even suggested the CIA has reverted to its South-east Asian practices of the 1960s and is itself dealing in heroin as a part of its Middle East strategy.

This stratagem is not restricted to the Americans: drugs featured in the game plan of the former Communist bloc as well. As late as 1979, the Soviet Military Encyclopaedia provided a list of measures to be used to promote Soviet foreign policy objectives: it included the use of poisons and narcotics. Reports appeared in 1990 showing how East Germany’s premier, Erich Honecker, had encouraged trafficking for twenty years as his contribution towards the Soviet undermining of NATO, his government assisting in the laundering of drug and terrorist money.

Bulgaria was similarly active in the narcotics trade, its geographic position making it an ideal transit centre between Asia and Europe. As early as the 1950s, it had put in place money laundering capabilities, providing a safe haven for criminals who deposited foreign currency in Bulgarian banks. A decade later, Bulgaria was making a profit from imported Turkish morphine base and heroin which was transhipped to the rest of Europe. Then it started to deal in arms. By the early 1970s, the Bulgarian secret service (the KDS) was purchasing drugs from the Palestinians and Middle Eastern terrorists in exchange for weapons. The drugs were sent on to Europe and the USA. Money earned from the transactions was laundered through Swiss banks and subsequently used to buy arms for international – especially Middle Eastern – terrorist organisations.

The transactions were processed by Kintex, a Bulgarian state-owned export company formed in 1968 and fully staffed by KDS operatives. Kintex acted as a middleman, providing cover for criminal associates and linking itself to Lebanese traffickers, the Sicilian Mafia and bent Swiss bankers. By 1980, the trade was worth several billion dollars per annum to Bulgaria.

Kintex also directly financed heroin processing. When Italian police discovered a Mafia-owned heroin laboratory in the Sicilian province of Trapani in the early 1980s, they found it was fitted out with Bulgarian equipment. The annual production of this one plant was said to be 4.5 tonnes of No. 4 heroin. By 1985, another fifteen Bulgarian-backed heroin refineries were unearthed in Italy.

The CIA compiled a dossier on Kintex’s activities and, in January 1983, the US government made an official complaint to the Bulgarians, attacking them for their involvement in narcotics and terror. Under US pressure, Kintex was closed down but within months another Bulgarian state-owned company, Globus, took up where Kintex left off: Kintex, today renamed KoKintex (the o being shaped like the cross-hairs in a telescopic gunsight) is suspected of being a major illegal arms dealing company.

The passing of Communism has not led to the eradication of the drugs trade in former Eastern bloc nations. There is a new storm blowing over the horizon. The CIS, the former USSR, has been an opium producer for decades but, because of the hermetically sealed Communist borders, the trade was contained. Between 1986 and 1991, Soviet authorities conducted regular poppy field eradication programmes. Thousands of hectares were destroyed with many arrests and the confiscation of drugs, weapons and money but in the political turmoil since the end of Communist rule, inter-republican co-operation has all but ceased whilst former law enforcement agencies have virtually collapsed.

The main CIS poppy-growing regions are the Central Asian republics of Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, Azerbaijan and Uzbekistan where cultivation has been going on for centuries. To date, it seems the opium has not been refined into heroin on a large scale but it surely will be. In January 1992, Kazakhstan declared its intention to legalise poppy farming. Although it later rescinded the decision, Kazakhstan indicated what might happen in such republics which are eager for hard currencies to build up trade or finance separatist armies.

If these republics do start large-scale opium production, much will enter the illicit world market, for Afghanistan heroin travels through the region where local clans and criminal groups are already fighting to control the routes. Central Asian republics also produce large quantities of cannabis which is already smuggled to the West: heroin could easily join this less pernicious drug. In the days of the French Connection, it was Armenian nationals who facilitated the purchase of morphine base from Turkey. They were close at hand for Armenia lies on the borders of Turkey and Iran. Today, Armenians continue to broker and transport morphine and heroin originating in the Middle East and the Golden Crescent out to the West. Morphine base is sent to refineries in Lebanon with heroin going to Turkey and on to the rest of Europe. Within Armenian society, Mafia-style practices have become institutionalised with nationalist fighters using drugs as a finance source. Pessimistic – but realistic – Western intelligence agencies sardonically call all of this region the ‘New Colombia.’

During the decades of Communism, whilst alcoholism was of serious social concern in the USSR, drug addiction was not such a problem but now opiate abuse, especially heroin, is on the increase, particularly in Russia where there is a growing problem amongst young adults and in the lower ranks of the armed forces. A massacre in Chechnya in 1995 was reportedly committed by Russian troops high on drugs.

In Russia as elsewhere in the CIS, Mafia-style gangs are proliferating and exploiting economic and social instabilities. These hoodlums, commonly referred to as the ‘Russian Mafia’, mostly exist in ethnically orientated groups dating back to the last century when they operated as either bandit gangs or politically motivated anti-Tsarist partisans. Today, they contain not only hardened criminals but substantial elements of the former KGB, men with expert knowledge of undercover and underworld operations who have turned from being secret policemen into secretive, ruthless and highly organised national and international mobsters.

The hard-core of these gangsters emanate from Chechnya and it is said that as Sicily is to Italy so Chechnya is to the CIS. There is a rumour circulating amongst international drug enforcement officers to the effect that the UN have avoided becoming involved in a humanitarian role in the Chechnya conflict because there is tacit agreement not to criticise Russian military behaviour there because the conflict affords a fine opportunity to hit at the heart of CIS gangsterism.

With links to heroin producers and organised crime in Europe and the USA, these Russian gangs deal in narcotics, distributing throughout Europe and exporting heroin from South-east Asia to North America, using increased tourism and the post-Communist relaxation of travel rules as cover. At their present rate of expansion, Russian gangsters are anticipated to become one of the world’s leading drug (and weapons) suppliers by the year 2000, if not before.

Gangsters are not solely involved for heroin in former Eastern bloc countries is not just made in criminal-owned factories. Some pharmaceutical companies, bereft of state subsidies and facing the open market with inefficient or out-dated factories, are thought to have begun their own heroin production.

The political liberation of Eastern Europe, the restructuring of police and security services and political turmoil in the region has been a boon to ethnic organised crime groups who are developing new routes between the old East and the West. It is thought they are encouraging poppy growing in areas such as the Elbasan province of Albania. Indeed, Albanians are following the example of their Bulgarian neighbours, generating foreign currency by transporting heroin through their country whilst also buying morphine base from Afghanistan, Iran, Syria and Turkey and manufacturing heroin in Albania. They also traded arms and fuel to the protagonists in the Yugoslavian civil war, investing the profits in drugs. In the former Yugoslavia, where poppies used to be farmed under licence, warring factions were preparing to use opium as a means of financing their struggles but the conflict ended before the means of income was developed. This is not to say opium may not appear in the future as a source of finance in the war-torn countryside and it follows, as other states slide toward separatism, they too may turn to narcotics for funding. In neighbouring Macedonia, an opium producer in the 1920s and 1930s, poppy cultivation is once more prevalent with heroin laboratories appearing to process the harvest.

Not only post-Communist ethnic nationalist movements deal in drugs in Europe. The Basque separatists (ETA) in Spain, the IRA and Loyalist paramilitary groups in Northern Ireland have all claimed to be engaged in political wars but they have all used drug dealing to finance arms purchases. The IRA have known links to Irish-American gangs and have worked in collaboration with them in drug dealing and other rackets whilst Loyalist units have gained funds from drug dealing despite their quasi-social role as moralists who knee-cap or kill members of their community who are involved in peddling.

The Turkish ban of 1972 ended that country’s role as a major opium source but it has since played upon its geographical position to become an important processing and transit centre for Golden Crescent products. Heroin refineries near Istanbul and in south-eastern Turkey receive morphine base from Afghanistan by truck via Tajikistan, Azerbaijan and Georgia, about 65 per cent of the heroin being re-exported by road to Europe, much of it in bonded trucks covered by Transport International Routier (TIR) regulations and not subjected to customs inspection. The TIR system is an international agreement, the signatories to which ease cross-border transportation by removing as much bureaucracy as possible. Once vehicles have been cleared by customs at the start of a journey, they are not inspected again until reaching their destination. This plays into traffickers’ hands, especially if the journey commences where controls are lax or officials corrupt.

The trail taken from Turkey is called the Balkan Route which goes to Western Europe by way of Bulgaria, Romania, Hungary and the Czech and Slovak Republics. A southern leg goes through Cyprus (where heroin is also refined), Greece and Albania, thence by sea to Italy from the ports of Durres and Vlore: the seepage of heroin across the Adriatic is extensive. More than 75 per cent of heroin seized in Europe comes along the Balkan Route which is dominated by Turkish and Turkish Cypriot traffickers in league with criminal gangs based in Sofia, Tirana and Bucharest where law and order has broken down.

Italy, Germany and Spain each have an addict population of over 100,000, a per capita rate higher than the USA. In Italy, despite recent successful law enforcement initiatives against them, the Mafia is still active but their involvement in narcotics is reduced, at least as far as the Sicilians are concerned. Other criminal syndicate groups, especially the Calabrian Ndrangheta and the Sacra Corona Unita from Puglia, are becoming more active. The Ndrangheta have expanded internationally, particularly amongst Italian communities in Australia, while the Sacra Corona Unita gains influence in the Balkans where it co-operates with Albanians and Macedonians, trafficking not only in narcotics but also in illegal Eastern European immigrants and arms. As a result of this increased activity, Milan has become a seminal European money laundering centre.

Most of the heroin entering Italy is smuggled by Albanians and Macedonians, street pushing in Italy and surrounding countries being increasingly conducted by black Africans or illegal Chinese immigrants, members of the criminal labour market now existing in Europe. Italy, in particular, is having a huge problem with Chinese illegal immigrants: it is estimated there are over 100,000 in the country, transported in by Albanians from Bucharest, the base of a Triad society which deals in people. Latin American heroin trafficking organisations are also making their presence felt in Europe, especially Colombians in Rome and Madrid: having studied the market in the early 1990s, they are now exporting to Europe in substantial and increasing quantities.

A large percentage of the heroin coming into Germany arrives via the northern Balkan Route and is primarily handled by Chechens. The Netherlands, in particular Amsterdam, is still the drugs centre for Europe and a prime transit point for heroin from both the Golden Triangle and Crescent heading for European and American markets. Many dealers collect their supplies from the Netherlands: in April 1995, 90 kilograms of heroin worth £12 million were found in London under the false floor of a horse-box towed by a Dutch-registered vehicle. Even Switzerland, usually thought of as staid to the point of banality, is not exempt. Parts of Zurich are becoming notorious for attracting large numbers of addicts from all over Europe, catered to by over 100 gun-toting Lebanese and Kosovar Albanian pushers who deal in full view of the police.

France remains a heroin transit nation and is a main consumer with a serious urban addict problem. Distribution is still handled by traditional French organised crime syndicates which continue to process some heroin around Marseilles: as has long been the case, there are still heroin refining laboratories hidden in the rural south of France. Trafficking across the Straits of Gibraltar from Morocco has recently increased with heroin and cocaine beginning to take the place of hashish, drugs shipments entering through Gibraltar and along the adjacent Spanish coast. At least 100 rubber and fibreglass speedboats, costing £30,000 each, with engines capable of 50 knots and berthed at Gibraltar, regularly traverse the straits to Africa: more are harbouring in Spain. In July 1995, the Royal Gibraltar Police confiscated fifty vessels believed to have been used by drug smugglers. Gibraltar, with the rest of Spain, is also becoming a drug-dealing and money laundering centre.

Heroin in Britain mostly originates from the Golden Crescent. In 1993, 52 per cent came via Turkey and Cyprus, 12 per cent from Pakistan, with the remainder arriving via India, the Lebanon, the Netherlands, Nigeria, Ghana and Poland. Only about 1 per cent of heroin was from the Golden Triangle. Today, however, Colombian herion importation would considerably distort this analysis. Turkish and Cypriot dealers play an important role, sending most of their consignments by lorry disguised in general cargo or concealed in the vehicle’s body or chassis, often within ‘traps’ built into the vehicle, those constructed inside fuel tanks being the most reported. Their involvement is central: in London, one of the members of the prominent Turkish Cypriot Arif family has served a nine-year sentence for his role in an £8.5 million drug smuggling operation.

In 1993, 200 kilograms of heroin were found at Dover, hidden in a truck carrying tomatoes whilst a year later, heroin worth £9 million was detected in a lorry carrying a load of Mars bars. The total heroin seizure haul in Britain for 1994 was 620 kilograms but, in 1995, seizures virtually doubled to 1200 kilograms worth £150 million. In September 1995, three heroin hauls were seized in one week, worth a total value of £35 million. It is an indication of the profligacy of heroin in Britain today and makes one wonder how much gets through undetected: official figures state probably only 10 per cent of imported heroin is seized. It seems, furthermore, that smuggling into Britain will increase for heroin is coming through the Channel Tunnel with almost daily seizures, this conduit presumably set to play an increasing part in the future.

The street prices for heroin in Britain in 1995 were about £80 a gram or £10 for a one-twelfth to one-sixteenth of a gram fix but have more recently fallen to as low as £40 a gram in some parts of the country. The profit margin is massive. A kilogram of heroin in Pakistan costs approximately £1500 but the British distributor pays £27,000 per kilogram before cutting. After cutting, it is worth approximately £140,000. Prices are not the only factor to fluctuate. In 1992, British heroin was 45 per cent pure but it is now reduced to 35 per cent which means even greater distributor profits.

Since 1985, there had been some decline in heroin addiction in Britain, perhaps due to government advertising and the AIDS epidemic, but it is beginning to rise again. One place where addiction has soared is Jersey, in the Channel Islands. As an offshore tax haven, Jersey is attractive to dealers for there is more disposable income than in mainland Britain: addicts, therefore, have to pay three times the usual British street price. Addict numbers registered for detoxification have risen from 15 in 1993 to 60 in 1994 whilst there are estimated to be 400 addicts in all on the tiny island. They are supplied from England by either couriers or mail. An interesting aspect of the growth is that it is amongst young professionals not just transient youths. The usual factors claimed to lead to addiction – of social degradation or poverty – are absent: Jersey has no unemployment, no poor housing, no student population and no ethnic groups. The cause of growth in addiction is due to cultural causes rather than traditional need.

Europe has become a trafficker’s paradise. With national barriers being opened, not only have easy trade and tourism been facilitated but so too has every crime from the amateur bootlegging of alcohol to computer fraud, terrorism and drug running. Traffickers are making full use of this convenience, as is indicated by the fact that of British heroin seizures made in 1993, over 55 per cent were from EU countries. The figure for 1995 is expected to be around or even above 70 per cent.

Whilst First World countries are the primary destinations of heroin, practically every country is somehow involved in the game. With extensive government corruption and organised crime, Nigeria is notorious as the nerve centre of Africa’s drug trade: consequently, it has the highest heroin addiction rate in the continent. Corruption is, in fact, so endemic it has prompted an American Congressman to declare, ‘We gave some sniffer dogs to Nigerian customs, but it’s a poisoned chalice. Dogs cannot be corrupted. They are a permanent danger for any custom authorities any time a minister’s wife walks near them.’ Mostly established in Lagos, Nigerian trafficking gangs, which are often tribally based, import from both ‘golden’ regions, re-exporting to Europe and the USA where Nigerians control a number of urban distribution networks, their methods of smuggling being highly adaptable to prevalent enforcement strategies. Whilst a decade ago, Nigerian nationals were frequently couriers, today they are less likely to be involved as smugglers: the world’s anti-narcotics agencies have come to recognise them. Now they employ other black West Africans, white and black South Africans, Europeans and Americans, who usually transport small amounts on intercontinental passenger flights, carrying them by ingestion. Ghana is a particularly popular source of smuggling mules for Nigerian gangs: there is no shortage of volunteers for a trip earns the mule US$2000, forty times the national average monthly wage. Often, the mule/trafficker contract is more than financial by involving a witch-doctor’s ceremony in which the mule swears not to disclose his employer who, in turn, guarantees to look after the mule’s family if he is caught. The modus operandum involves the old trick of flooding flights with couriers, accepting customs officers will be over-stretched, apprehending one or two whilst the rest escape detection. A newer development by Nigerian gangs is the transportation of large amounts concealed in commercial maritime cargoes.

Other African countries which are transit stations include Chad, Zambia, Ethiopia, Ghana, Kenya, Senegal, Egypt and Liberia, enforcement of drug legislation being lax in most because of budgetary restraints and corruption. In some countries, such as Zambia, poor Africans obtain passports which they then sell to Nigerian smugglers. This scam is now on the increase in South Africa where the lifting of post-apartheid sanctions is opening the country up as both a possible transit point and a potential heroin market: the squalid, crowded townships of South Africa, already governed by criminal gangs, is a market almost begging for exploitation. Indeed, heroin is already appearing in the townships where it is nicknamed ‘flower’: pushers selling it disguise it in small bunches of blossoms displayed on roadside stalls or on offer in the shebeens or beer halls.

In most African nations, corruption is rampant with officials deeply involved in the drugs trade: in some instances, even governments have been accused of dealing. A Zambian minister had to resign in 1994 following allegations of drug trafficking whilst substantial South American drug money investments have been placed in Equatorial Guinea, a member of a South American cartel (on the DEA wanted list since 1993) travelling on a diplomatic passport issued by the Guinean government. The son of the president was accused of trafficking and expelled from France in 1990, only to be caught a year later in Miami with a suitcase containing US$10 million.

South America, more often associated with cocaine, also increasingly grows poppies and produces heroin. By 1992, Colombia had 20,000 hectares of land cleared for poppies: the year before, it had less than 2000. This places Colombia third behind Burma and Laos in land acreage available for poppy farming. The Colombian climate is ideal for poppies and it is possible to grow three (even four) crops per annum: in the ‘golden’ regions, only one can be obtained.

The Colombian opium industry is being run with all the efficiency of the cocaine industry. Traffickers provide peasant farmers with seed and train them to collect opium. When the business began the farmers, unsure of the financial return, grew poppies alongside maize, onions or potatoes: partly, they were hedging their bets and partly they were camouflaging their crops but now many exclusively raise poppies.

Colombian opium gum yields are not yet as good as Asian because, although the plants produce more pods, these are small and the farmers are not yet experienced in scoring and gum collection. In time, of course, this will change and seems immune government intervention. Aerial spraying with herbicides is difficult because of the hilly terrain in which the farmers live, where the weather is frequently too dangerous for flying. When spraying is successful, the farmers merely dig up the crop and replant: they can afford to be so wasteful with three annual harvests. Aircraft also come under fire from traffickers and bandits who extort protection money from poppy farmers, grow their own crops of poppies and, in some places, process opium into morphine base with a percentage of poppy cultivation conducted under the auspices of guerrillas of the Communist Colombian Revolutionary Armed Forces and the National Liberation Army.

The first Colombian heroin laboratory was found in 1992. It was not producing a high quantity of heroin but the operators had been trained by heroin chemists from Asia. Colombian heroin production is now increasing and is starting to impact itself upon world markets.

Many of the Colombian traffickers are small-time operators – there are estimated to be 3000 independent drug trafficking groups operating in Colombia – who have worked with cocaine in the past, but they are being increasingly financed and organised or absorbed by the Cali and, to a much lesser extent, Medellin cartels, consortia of drug barons who, though famous for cocaine, are now heavily involved in the highly lucrative heroin business.

The Medellin cartel – based in the city of Medellin and formerly run by the infamous Pablo Escobar who was killed by the Colombian security police in December 1993 – is in decline but the Cali cartel, which is far more powerful and wealthy than Escobar’s organisation ever was, is in the ascendant. The Cali cartel, with brothers Gilberto (who was arrested in June 1995) and Miguel Rodriguez-Orejuela as two of its major figures, ‘owns’ large numbers of judges, police, military personnel and politicians. Some members of the ruling Liberal Party came under criticism in 1994 for allegedly taking money from the Cali cartel to finance their election campaign and it has been alleged that the Colombian government has secretly negotiated the arrests of certain drug barons to appease the USA, which only ‘conditionally certified’ Colombia as a combatant nation in the war on drugs in March 1995. A number of drug barons had already stated privately that they were prepared to accept short gaol sentences on the condition, upon release, they could retain their wealth: Gilberto Rodriguez-Orejuela, if convicted, is likely to serve not more than nine years in prison. The Cali cartel handles 80 per cent of the world’s cocaine, with strongly established links to the American Mafia and other criminal organisations. One group within the Cali cartel controls large tracts of opium farms. It requires no crystal ball to see how their involvement in heroin will develop. South American heroin is starting to capture a large part of the US and European markets. Cocaine distribution and smuggling networks are already in place to handle heroin and Colombia is set to become a significant world heroin source.

Other South and Central American countries are sure to jump on the heroin bandwagon. Although American government-aided eradication projects wiped the poppy out of Guatemala in 1992, cultivation is underway again in remote, narrow valleys beyond the reach of crop-spraying aircraft, under the guidance of Mexican criminals who are behind the resurgence of Guatemalan cultivation. Venezuela, Peru, Brazil and Ecuador also seem likely to increase their numbers of opium poppies.

Many countries in Central America and the Caribbean – even those where poppies are not grown – are involved in the trade: there are now so many drugs in the region’s countries they are collectively classified by customs agencies as a ‘source country’ in their own right. Belize was infiltrated by drug dealers within a decade of independence from Britain whilst Puerto Rico has become a major gateway for drugs entering the USA, San Juan having developed into a hub of trafficking, money laundering and dubious South American investments: in April 1995, the FBI busted a ring which had invested US$80 million of drugs-related money primarily in the tourist industry.

Cuba’s involvement in drugs (primarily cocaine) goes back many years, originating in the government’s ideology. From early on, it was Castro’s policy to aid and abet traffickers in order to subvert American society, finance arms and bankroll Latin American revolutionaries. From around 1975 onwards, Cuba commenced the systematic exploitation of any chink it could see in the American armour, narcotics forming a conspicuous part of Cuban policy. An alliance was made in 1975 with the Colombian drug cartels whereby Cuba would turn a blind eye to vessels carrying drugs through her territorial waters, would furnish refuelling services and provide a flag of convenience if required. Aircraft were similarly catered for. Needless to say, these services had to be paid for in hard currency. Instances also occurred where cocaine was refined at Cuban military bases, protected by military security. Today, Cuban trafficking groups are involved in money laundering and drug trafficking in Colombia, the Dominican Republic, Cuba and Haiti, with heroin being discovered in containers of flowers and being run by Dominican nationals.

The Sandinista regime, which took power in Nicaragua in 1979, ran a drugs-for-arms business which also obtained much needed hard currency, particularly US dollars. They were not alone. The CIA used narcotics sales as one means of obtaining financial support for the right-wing, anti-Sandinista Contras, this forming a substantial part of US covert operations in Central America. The part of the CIA in such American overseas policy decisions was more than adequately summed up by one of the world’s most successful money launderers who observed in 1987, in respect of the Nicaraguan affair, that drug barons outside the USA were immensely powerful and influential. He stated that if the CIA wanted to meddle in the affairs of foreign nations there was no way they could do so without meeting – and probably associating – with drug dealers and their masters.

Mexico, which at present has a low but growing addict population, is central to much of the region’s heroin. This is despite extensive enforcement and crop eradication, the result of which has driven poppy cultivation largely out of the mountains of the Sierra Madre and into the south-west of the country where, due to the weather and new farming methods, more than one annual crop is possible. Most Mexican heroin is ‘black tar’ heroin which is quick and easy to make, being manufactured directly from raw opium in small, mobile refining units which travel with the farmers as they harvest their crop. The product is on its way to the USA within several days. Such heroin is usually injected and can have a consistency as sticky as roofing tar or be hard like coal. It is most frequently sold by the ‘piece’ (a Mexican ounce) which weighs 25 grams. It may also be sold in a brown, powdered form known as ‘Mexican brown’ or ‘Bugger’.

In the last decade, Mexico has become the major entry point for drugs into the USA. The traffic earns an estimated $30 billion a year in foreign exchange for Mexico: it could not achieve this without help from well-placed officials. Corruption has shifted from local police (who are often accused of trafficking) to the highest echelons of government, with charges of complicity between drug kingpins and top government officials being made nation-wide. The charges and their associated scandals may involve more than money for narcotic connections have been alleged in several high-profile murders. To address this situation, one of the conditions set by Washington on a $20 billion aid package granted to Mexico in 1994 was an improvement in co-operation on anti-narcotics matters.

The drug syndicates in Mexico are a loose amalgamation of drug lords and their families known as ‘the Mexican federation’ which has, since 1990, gone from being relatively small and unsophisticated to turning Mexico’s drug trade into one to rival Colombia’s. The federation has liaisons with Colombian cartels who often fly consignments into Mexico with the Mexicans transporting them across the American border.

Mexican smuggling over this long frontier is sometimes conducted in body bags worn by the thousands of illegal immigrants and migrant workers who cross for the bright lights of the USA. Traffickers buy their services with money and work permits or US resident documents.

Yet the main method of smuggling today is by vehicle. The Mexicans usually use quite crude methods, simply stuffing the drugs into the boot of cars then relying on a combination of speed, ‘scattershot runs’ (the blitzing of border posts, sending eight or ten vehicles through at a time, betting the US customs will search at most one vehicle in the convoy) and sheer bravado for success. So vast is the problem, the DEA maintain a major regional office in El Paso, close to the Mexican border, agents working here calling themselves ‘border rats’. They co-ordinate intelligence and monitor the border crossing where the highway from Mexico, US Interstate 25, begins. This is known by enforcement agents as ‘Heroin Highway’ for it is a major transport route. At Albuquerque, New Mexico, it meets US Interstate 40, the trunk road from Los Angeles to North Carolina, branching at Knoxville, Tennessee, into US 81, which goes to Washington and New York. Inevitably, US 40 is a heroin pipeline. It is also, by coincidence, part of the old Route 66 and lends some pertinent credence to the blues/rock standard, (Get Your Kicks On) Route 66, written by B. Troup and made famous by the Rolling Stones on one of their early albums, the refrain of which invites the listener to ‘get hip’, have a kick and take a trip to California on that particular highway.

America remains, at least in the minds of much of the public, the main destination for heroin whatever its source. According to DEA analysis under the Heroin Signature Program, the heroin on the streets of the USA in 1994 came from all over the world: 57% was of Golden Triangle origin, 32% South American, 6% Golden Crescent and 5% Mexican. The relatively high percentage for South American heroin, however, partly arises from the large numbers of seizures made at Miami and New York airports due to the high numbers of couriers apprehended bringing in South American heroin. Average purity in 1994 was 40%, much higher than the figure of 7% prevalent in the early 1980s. Very recent studies suggest 60% of heroin in the USA may now be coming from Burma and that, after years of heroin being second to cocaine as ‘the drug of choice’, it is now making all the running.

Much heroin is imported by Chinese traffickers, the bulk of their Golden Triangle produce entering the country along the eastern seaboard, where New York City is by far the largest importation and distribution hub, or via the west coast. From ports such as Seattle, San Francisco and Vancouver Chinese societies, their couriers often crew members on container ships, with heroin also being smuggled in imported vehicles, divert the drug through Canada to a distribution hub in Toronto. Golden Crescent heroin is mostly smuggled through north-eastern seaports and distributed down the east coast and in the mid-west. It is primarily brought in by Pakistanis although Afghans, Israelis, Iranians, Albanians, Lebanese and Turks also participate. Mexican heroin is usually only to be found in the west, mid- and southwest.

South American heroin is rapidly increasing in availability, especially in north-eastern cities and along the east coast where it had the highest purity of any source in 1994. Such high purity is essential as the Colombian traffickers seek to build up a clientele and maintain user loyalty in the fiercely competitive market. To establish themselves, Colombian traffickers are known to be using a variety of tactics such as offering free samples to potential distributors, persuading established cocaine distributors to purchase and sell heroin as a condition of doing business and undercutting competitors’ prices in some cities in an effort to win over business.

The heroin trade is superbly organised: if such acumen was applied to some legitimate produce, it could increase profits severalfold. The Mafia are no longer dominant in the trade as they were and street peddling is more likely to be conducted by gangs or groups organised on ethnic or racial grounds who cater for their own racial or socio-economic peers.

The smashing of the Mafia was a major law enforcement coup involving the co-operation of a number of state police forces in collaboration with the FBI and the DEA. In 1970, the US government had passed the Racketeer Influenced and Corrupt Organisations legislation, otherwise known as the RICO statute. Originally designed to provide prosecutors with a weapon against organised crime, infiltration of labour unions and businesses, it was realised it could be as effectively used to combat the entire structure of organised crime. To accommodate this, the FBI was remodelled in 1980 to strike at the Mafia. The enforcement agencies targeted, amongst other things, the Mafia heroin distribution system. Thirty-nine mafiosi were indicted for narcotics offences and related racketeering crimes. The bugging of the home of Paul Castellano provided more intelligence. Castellano, the notorious godfather of the Gambino Mafia ‘family’, the most powerful criminal organisation in the USA and the Mafia capo di tutti i capi (the Boss of all the Bosses or, literally, head of all heads), had in fact specifically forbidden narcotics dealings in the early 1980s, stating anyone in his family who handled drugs would be ‘whacked’, a quaint euphemism meaning murdered. He was himself whacked by Mafia opponents in December 1985, certain members of his family having made – and going on to make – enormous profits out of heroin dealing. With successes throughout the 1980s, the 1988 arrest of 200 Mafia traffickers in Sicily and the USA along with Giuseppe (Joe) Gambino, a key player in the Sicilian Connection, and, in 1989, the apprehension of John Gotti, the new Gambino family capo, much of the Mafia’s infrastructure and power was destroyed.

Created in 1983, the President’s Commission on Organised Crime studied the problem of syndicated racketeering in the USA and came to the conclusion it was in a stage of metamorphosis and that the Mafia was not alone: Puerto Rican, Dominican, Mexican and Jamaican criminal syndicates were also at work on the drug scene, in addition to African–American street gangs. And they were, if anything, more dangerous than the Mafia: the Italian Mob was not generally violent outside its own close-knit society but the other ethnic gangsters were and are prone to more widespread violence, particularly in metropolitan environments. Today, the Mafia may be somewhat suppressed but the other groupings continue.

A new development, which has appeared since 1993, is the emergence of independent traffickers using established routes and distribution networks. Some are from ethnic backgrounds already involved – such as Pakistanis or Nigerians – but others are new to the game, such as Russians who are now moving world-wide.

Regardless of who is dealing, the retail structure remains more or less static. Heroin is sold at street level by the gram or fractions of a gram. In both Britain and the USA, a single package is known as a ‘deal’. It usually comes in a small paper envelope about the size of a large postage stamp although it may also be sold in cellophane or small plastic bags called ‘baggies’. For most of America’s estimated 600,000 addicts, intravenous injection is the means of taking a dose although snorting has become more widespread because addicts fear needle contamination and the concomitant risk of hepatitis or AIDS. Snorters tend to use more heroin than ‘fixers’ (injectors) and a number, in common with fixers, also use cocaine: conversely, crack cocaine users may take heroin to extend cocaine-induced euphoria and lessen the depression caused when the effects of crack start to wear off.

As already indicated, heroin is an immensely profitable enterprise: indeed, it is the most profitable enterprise ever invented. Yet, like any commodity, it has its price fluctuations, supply and demand criteria, market forces, surfeits and paucities. Price controls are affected by dealer profit margins, processing and trafficking costs, losses due to seizure or theft along the distribution chain. An indication of pricing structures may be drawn from the cost in US dollars of Golden Triangle produce in 1993, as published by the DEA in September, 1993:

• raw opium at source in the Shan states: $66–75 per kilogram

• morphine base in Chiang Mai, Thailand: $900–1000 per kilogram

• heroin hydrochloride, Chiang Mai, 70–90 per cent purity: $2900–3200 per kilogram

• heroin in Bangkok, 70–90 per cent purity: $6000–10,000 per kilogram

• heroin, wholesale in the USA, 70–90 per cent purity: $90,000–250,000 per kilogram

• heroin at dealer level in the USA, 30–60 per cent purity (after cutting): $5500–12,000 per ounce (one kilogram when cut and sold by the ounce realised $340,000–745,000)

• heroin at street salesman/pusher level in the USA, 34 per cent purity: $400–600 per gram (one kilogram when cut and sold by the gram realised $940,000–1,400,000).

In the same year in the USA, Golden Crescent heroin (56 per cent pure) fetched $200–500 per gram with Mexican black tar (26 per cent pure) selling for $100–500 per gram.

From whatever source it comes, heroin is cut, which obviously increases profit margins. The list of substances used for cutting today is long and includes glucose powder, chalk dust, icing or powdered sugar, quinine, caffeine, talcum powder, rice powder and flour. The cutting brings about a risk known to early opiate users: the addict cannot judge the purity of his purchase and may be allergic to the cutting substance in his bloodstream. As addicts expect their heroin to be cut, deaths may occur from overdosing: in Britain in 1994, a number of addicts were killed when they purchased only slightly cut supplies.

Such massive profits generate huge sums of illicit money which has to be ‘laundered’ – that is, passed through legitimate channels so its source becomes disguised. The amount of ‘dirty’ money circulating in the world is so vast as to be an alternative economy which is the third largest in the world after currency dealing and oil. Just as there are official petro-dollars, so might there be unofficial dope-dollars. Estimates of the annual size of the drugs-related dirty money market vary upwards from $500 billion. Over $350 billion was laundered through the USA in 1995.

To the common man, such sums are, as the American axiom puts it, telephone numbers. To set it into context, the global drugs financial market exceeds the gross national product (GNP) of 90 per cent of UN member countries and three of the Cali cartel hierarchy are said to be the wealthiest men in the world apart from King Fahd of Saudi Arabia and the Sultan of Brunei.

Money laundering is essential for a number of reasons. Attention needs to be diverted from the source of the money to place it beyond the reach of asset seizure by enforcement agencies. It needs to be ‘washed’ so it might be invested in legitimate business ventures and it needs to be hidden so it might be used to fund further illegitimate business, such as reinvestment in drugs.

The laundrymen are highly efficient and expert accountants, bankers, lawyers or businessmen, usually from a professional background or with considerable business experience and usually without a criminal past. These laundrymen contract out their services at a commission rate which varies between 4 and 20 per cent of the gross sum laundered: it is also common for an up-front fee to be levied, of around £25,000 for every £1 million.

The laundromat is a three-phase operation. The first, known as ‘placement’, is the hardest and involves getting the money into the financial system. Usually, placement is achieved by making comparatively small cash deposits in a wide range of banks, often in a number of different international locations so as not to arouse suspicion, and by purchasing bankers’ drafts, bonds, cheques or travellers’ cheques with cash. Each operative is known as a ‘smurf’, a term invented by Florida investigators. The diversification process is known as ‘smurfing’ because one needs an army of ‘little people’ to carry it out – like the cartoon characters, the Smurfs.

The drugs trade is cash intensive: most transactions from farmer through to addict are conducted in cash. Some money is ‘pre-washed’ by passing it through the international art, antiques and antiquities trade, travel agencies, gold dealerships (especially in the Far East and South Africa) and general import/export firms.

Fronts, both legitimate firms and shell companies, are used to transfer money between banks. They are, in effect, underground banks themselves. Dirty money is paid into one and, within hours of it being banked, it is available anywhere else in the world. Although commodity markets are enlisted as laundries, their huge hourly international cash flows providing a very good cover, shell companies are more commonly used, providing imaginary services or selling imaginary merchandise. Ready cash is also transported in bulk by traffickers and there are couriers in the business who never carry heroin but cash. The amount of cash involved can be staggering. In February 1995, a couple was arrested by Spanish police near Marbella following a routine drugs enquiry. Their apartment was found to contain over £50 million’s worth of foreign currency in sacks.

The second phase is called ‘layering’, which creates a confusing banking paper-chase. Once in the world banking system, the small deposits are shifted from bank to bank and country to country, stopping in each only a little while to avoid detection and sometimes being consolidated on the way.

The last phase is ‘integration’, by which the now heavily disguised money is returned to the legitimate world by investment in legal businesses, property, stocks and bonds. The money is now laundered. The size of the laundry business may be guessed at when one considers it has been estimated that at least 25 per cent of all Hong Kong commercial property investment is based in part or totally upon laundered finance.

Drugs enforcement agencies have long been aware one of the most effective ways to attack traffickers and producers is to hit them in their wallets and a variety of measures have been established.

The US RICO statute, by which courts could confiscate assets acquired through criminal activity, was effective but had a number of loopholes which were addressed in 1986 by the Money Laundering Control Act, which made money laundering a federal offence when carried out in conjunction with other illegal activities. Even this was not legally water-tight so, in 1990, the Depository Institution Money Laundering Amendment Act was ratified, placing the responsibility of reporting laundering transactions on banks’ directors. A transaction reporting system was also introduced whereby cash deals exceeding $10,000 have to be notified.

The laws, allied to the DEA Kingpin strategy, produced results. In just one fiscal year (1992), the DEA seized assets within the USA to the value of $857.3 million: overseas, it aided in confiscating another $53.4 million.

In Britain, the Drugs Trafficking Offences Act of 1986 provides for the freezing of assets with confiscation upon conviction. As the act makes it an offence to aid and abet a trafficker, it is also illegal to handle, hold, invest or otherwise dispose of drug-related money. Nevertheless, the law is not as strong as its American equivalent because of the complexities involved in tracing and liquidating drug dealers’ assets and the inadequate expertise of British enforcement agencies. There is also a flaw in the system for British bank officials only have to report cash transactions if they are considered ‘suspicious’ which depends too much on personal integrity and is open to wide interpretation. Of 4500 seizures made to 1994, involving over £42 million, less than £14 million was actually confiscated. Another anomaly is that, in America, all seizures are ploughed back into anti-narcotics work whilst in Britain any money gained is merely added to the general exchequer, reducing law enforcement agents’ morale and incentive. The final move in Britain is the Criminal Justice (International Co-operation) Act (1991) which has given customs officers the power to seize cash from travellers suspected of trafficking.

A good many other countries have followed America’s example. Australia introduced money laundering and conspiracy legislation in 1987. Hong Kong, the origin of so much heroin and the world’s densest banking district, has its Drug Trafficking (Recovery of Proceeds) Ordinance (1989). Since the introduction of this ordinance, assets totalling over HK$16 million have been confiscated from local drug traffickers in Hong Kong, with a further HK$185 million owned by them being sequestered from overseas sources with international co-operation. Thailand, Malaysia, Singapore, South Korea, Japan and most European Union countries have followed suit with similar legislation although the efficacy of it has yet to be thoroughly tested over time and there are sure to be weaknesses.

The Declaration of Basle, signed in 1988, is a commitment by the central banks of a dozen major industrial countries to identify money laundering and laundrymen. The same year, the Vienna Convention organised by the United Nations proposed money laundering become an internationally indictable and extraditable crime. Eighty countries, but less than half the UN member states, agreed in principle but the Convention was a repetition of history. Just as had occurred when international moves were being made against opium, a number refused to sign and, by 1992, only four had actually put their signatures to the paperwork. Countries with interests in particularly secretive or offshore banking chose not to take part. Amongst these were Liechtenstein, the Cayman Islands, Luxembourg and the Dutch Antilles (all offshore banking bases), along with Panama (also filled with offshore banks and an important cocaine and potential future major heroin transit point), Uruguay, Pakistan (a major producer), Russia, Hungary and Bulgaria (all transit route countries or involved in money laundering).

Laundry legislation is easily evaded. When the Colombian authorities put a 10 per cent tax on imported cash, the cartels merely shifted their banking operations to Venezuela: when Venezuela brought in controls, banking was moved to Argentina. As throughout the history of opium, when one door closes, the traffickers open another.

Another means of washing ‘dirty’ money is to use non-bank-based services, such as money-changers, money transfer organisations like American Express or Western Union, credit-card firms and cheque-encashing companies. The former are much used by traffickers in Mexico, both Mexican and foreign. In every town along the US border there are casas de cambio – currency exchange companies. Like Mexican banks, they keep no records, Mexico has no cash transfer controls, no laws aimed at illegal profit-making and no asset seizure legislation. In short, Mexico is a laundryman’s paradise. A money laundering scheme uncovered by US Customs agents and the Department of Justice in late 1993 may implicate certain officials in the Mexican Attorney-General’s office. The Mexican cartels’ influence has spread to the total economy of the nation. Drug barons are using the country’s booming tourist industry to launder profits, a development of the laundry business which is growing fast across the world. Billions of dollars are laundered per annum by investing huge sums in beach resorts, financial markets, shopping malls and other commercial enterprises such as Punta Diamante, a resort in the Mexican state of Guerrero which many investigators believe is financed with drug money. The former Dutch colony of Aruba, a Caribbean island resort, is said to be entirely funded and owned by Sicilian mafia interests. Through such legitimate investments, the barons have become integrated into the fabric of society.

A favourite method of cleaning money is by passing it through a casino where it is impossible to prove how much cash a croupier handles during a gaming session. This method was much favoured by the Mafia who had and, to some extent, retain an interest in Las Vegas. Nevada’s casinos still being exempt from Federal Currency Transaction reporting makes them very valuable laundries. Although Vegas is still a favourite spot, Macau is even more so. Only 45 miles from Hong Kong and served by high-speed ferries every fifteen minutes, it is an ideal laundromat for over 80 per cent of its revenue comes from a massive gambling monopoly providing superb money-cleaning facilities. It is said up to $2 billion may be laundered monthly. In addition, there is a small but very active Russian gangster element now operating in the enclave. Quite what will happen here in 1997 and 1999, when Hong Kong and Macau respectively revert to Chinese sovereignty, remains to be seen.

Throughout the world, banks claim they have an obligatory client confidentiality responsibility. In truth, they have not. Many countries have removed it. However, lawyer/client confidentiality has not been addressed and civil liberties groups are against the undermining of this right. Therefore, lawyers often hold funds for their trafficker clients, hiding them under the cloak of privileged information.

Laundrymen are always on the look-out for private bankers, secretive financial institutions, countries which turn a blind eye to financial transaction or which might even encourage the importation of ‘dirty’ money. The former Yugoslavia, for example, contains a number of private banks which offer higher than average interest rates on hard currency deposits. A number of these are secretively owned by prominent Serbian politicians who used profits from laundered heroin money to fund the war against the Bosnian Muslims who, without such financial backing, were comparatively ill-equipped. The private banks laundered their money through shell companies in Austria, regardless of the UN-imposed sanctions against Serbia: with sanctions lifted it will no doubt be business as usual.

Provision exists in Pakistan to hit heroin traders hard. The Forfeiture of Assets Act (1985) allows for confiscation of property and money. However, banks in Pakistan readily take in huge deposits without question, the financial sector protected by a presidential decree (instigated by President Zia) guaranteeing secrecy. Billions of dollars have flowed through Pakistan since the decree with an underground, highly secretive private bank network existing with ‘offices’ in Kashmir, the Punjab and London which handles heroin finances coming out of Pakistan.

Former Eastern bloc countries, where hard currency is much sought after, are also now awash with dirty money. Banks, ungoverned by restrictions, readily accept foreign currency without demur. Colombian and Turkish drug barons frequently bank in Bucharest and Sofia, though where the latter is concerned, this is of course not new.

American criticism of international banking is loud and pointed. The US State Department has openly attacked the Bahamas for laundering cocaine and marijuana money, Panama for cocaine finances and Hong Kong for being the Pacific Rim centre of Golden Triangle heroin profit washing. Yet, despite their indignation, the USA does not have a squeaky clean record in this field of activity. The CIA has admitted involvement with a money laundry known as the Shakarchi Trading Company which had handled both Kintex and Globus transactions as well as acting for the Mafia in Sicily. The owner of the company, Mohammed Shakarchi, declared his firm had cleaned $25 million for the CIA between 1981 and 1988, which was used to support Mujaheddin insurgents fighting the Russian occupation army in Afghanistan.

The advantage in this terrible global game lies with the criminal. Just as the traffickers and dealers, the drug barons and smugglers manage to stay one step ahead of the enforcement officers chasing them, so do the laundrymen. They will always find a friendly bank, a compliant accountant, an underpaid official or a receptive lawyer to assist them, for their business is driven by greed, the most difficult of the seven deadly sins to exterminate.