Peru - Drugs

There are important Lima narcotics mini-cartels, but other than Peru's coca leaf and paste industry, drugs in Peru remain largely a foreign enterprise.

During 2001 evidence of an increase in the production of coca emerged. During 2001, despite the eradication of 6,400 hectares of coca fields, the size of Peru’s coca crop remained stable, covering 34,000 hectares, a decrease of only 200 hectares from the crop size in 2000. During 2002, Peru’s coca crop increased 7.6% to 36,600 hectares, despite the eradication of 7,200 hectares. During 2003, Peru’s coca crop decreased 14.9% to 31,150 hectares. In 2004, Peru’s coca crop remained around 30,000 hectares. In 2005, Peru’s goal was to eradicate 11,000 hectares.

The recent increase in Peru’s coca crop is attributable to a shift in production from Colombia to Peru due to the Colombian government’s increased eradication of drug crops, and to the decrease in the price of suitable substitute crops for Peruvian farmers, such as coffee, to levels below the cost of production. In addition, Peru’s aerial interdiction program was suspended in 2001 after a US missionary and her infant daughter were killed when their aircraft was mistaken for a drug cartel flight and shot down over the Amazon River. US officials have acknowledged the effect on Peru of Colombia’s increased drug eradication efforts and tripled anti-drug aid for Peru in 2002 to US$156 million. In 2003, U.S. anti-drug aid for Peru was US$128 million and in 2004, U.S. anti-drug aid for Peru was US$116 million.

In April 2003, the government agreed with coca growers to suspend its forced eradication of coca crops. This was in response to protests by coca farmers, claiming that private organizations that run anti-coca programs absorb aid money provided by USAID and that crop substitution programs offered them inadequate substitutes. The government agreed with coca growers to a joint, gradual, sustainable reduction of coca crops, with the goal of reducing coca crops to the level needed for traditional production. In May 2004, there was a protest march in Lima of 1000 coca growers for the full legalization of coca growers, the release of the imprisoned coca grower leader, Nelson Palomino, and the disbandment of the national drug agency, Devida. The protest march ended peaceably.

Since 2012 Peru has topped the charts as the number one cocaine producer. This is the “balloon effect” - officials crack down on one drug producing area, which is never eliminated but squeezed into another location. This is what occurred in 2012, when the US War on Drugs led to extreme measures in Colombia. US-funded planes sprayed coca fields with weed killer, leading to more promising numbers in Colombia but a booming industry in Peru.

Peru remained the world’s top producer of cocaine and was the second-largest cultivator of coca, with an estimated 46,500 hectares (ha) under cultivation as of 2014, the most recent year for which data is available. The majority of cocaine produced in Peru goes to South American countries for domestic consumption, or for onward shipment to Europe, the United States, East Asia, Mexico, and Africa via private and commercial aircraft and land and maritime conveyances. Peru is a major importer of precursor chemicals used for cocaine production.

President Ollanta Humala’s administration has dedicated substantial resources to implement Peru’s 2012-2016 counternarcotics strategy. This document, prepared in 2012, originally set the 2015 eradication goal at 26,000 ha; however, late in 2014, President Humala increased the goal by more than 34 percent to 35,000 ha. The terrorist group Sendero Luminoso (SL or Shining Path), operating in the Valley of the Rivers Apurimac, Ene, and Mantaro (VRAEM) region, continued to rely on drug trafficking for funding and wounded two and killed eight Peruvian security personnel during counternarcotics operations in 2015.

Domestic consumption of illicit drugs is growing, particularly in mid-sized cities east of the Andes where much of the drug production occurs and in coastal transit cities where most of Peru’s population lives. The number of treatment centers falls short of what is needed to treat the estimated 32,000 to 60,000 people addicted to cocaine, and the larger number of marijuana users. Abuse of the low-priced and highly addictive coca paste is also increasing.

The Peruvian government’s counternarcotics strategy includes ambitious goals for eradication, interdiction, and alternative development, and addresses associated issues such as the control of precursor chemicals, organized crime, money laundering, and the rule of law. The Humala administration increased its counternarcotics budget from $145 million in 2012 to more than $165 million in 2014, and is projected to spend $184 million in 2015. In 2014, Peru more than doubled its 2013 contribution towards eradication and concomitant aviation support, effectively nationalizing a program historically funded by the United States, and increased its 2015 contribution to $36.6 million.

To counteract the use of private aircraft transporting drugs, the police and armed forces continued to target clandestine runways for destruction, destroying 277 throughout the country in 2015, compared to 263 in 2014. Law enforcement operations resulted in the seizure of approximately 15 aircraft. On August 29, Peru adopted a law that allows for the aerial interdiction of civil aircraft believed to be transporting drugs. Both U.S and international law prohibit using lethal force against civil aircraft, regardless of whether the aircraft is being used for drug trafficking.

The Public Ministry, Peruvian National Police (PNP), and Judiciary provide limited training on the New Criminal Procedure Code (NCPC), which transitions the legal system from an inquisitorial to an accusatory system. The number of judicial districts operating under the NCPC increased from 23 in 2014 to 27 in 2015, out of a total of 33. None, however, operate exclusively under the new system. Implementation for the six remaining districts, initially expected by April 2016, will likely be delayed to 2017. The United States continues to assist Peru’s NCPC transition through a training program administered by the American Bar Association – Rule of Law Initiative, which has trained more than 3,500 judicial authorities since 2012.

The U.S. government estimates that 46,500 ha of coca were under cultivation in Peru in 2014, a 22 percent decrease from the 2013 estimate of 59,500 ha. The United Nations, using a different methodology, estimated 42,900 ha of cultivation in 2014, a 13.9 percent decrease from its 2013 estimate of 49,800 ha. The U.S. government’s 2014 estimate for potential pure cocaine production was 285 metric tons (MT).

Approximately 45-50 percent of cocaine departing Peru is believed to move via small aircraft to Bolivia. In early 2015, a decline in this type of flight activity was observed in the tri-river area of the VRAEM, likely due to increased military and police activity, aggressive destruction of clandestine airstrips, and the installation of radar in Puerto Maldonado, Madre De Dios Department along the Bolivian border. Air bridge activity has now been noted in the Rio Alto Picha and Rio Urubamba areas, likely due to the disruption of established routes, and trafficking organizations are moving large amounts of cocaine base and cocaine hydrochloride overland to clandestine airfields east of the Andes. From January through August 2015, the U.S. Drug Enforcement Administration documented 310 air-bridge flights, which could account for approximately 95 MT of cocaine.

Peruvian, Colombian, and, increasingly, Mexican traffickers maintain sophisticated networks to ship cocaine to Europe, East Asia, Mexico, the Caribbean, the United States, and other Western Hemisphere countries. Peru and the United States exercise maritime operational procedures that enable U.S. authorities to board Peruvian flagged vessels in international waters. In joint investigations with U.S. law enforcement, DIREJANDRO identified and disrupted major international cocaine trafficking organizations using maritime and air conveyances to ship cocaine for export.

While most of the Peruvian drug outfits were controlled by local clans, members of Mexican cartels work in Peru to collect the drugs. By 2009 the increasing demand from Mexican drug cartels for south american cocaine to ship to the USA caused Peruvian drug organizationsto fight each other to supply that demand.

Fernando Zevallos Gonzales, currently imprisoned in Peru, had been a major figure in Peruvian narcotics trafficking activities since 1980. Called the "Al Capone of Peru", he appeared to be the only enterprise of sufficient scale to warrant the term "cartel". The key to Zevallos's success was that his passenger planes, starting with single-engine aircraft in the 1980's, then graduating to Boeing 737's, also ferried cargoes of cocaine, to London and Miami, among other places. Zevallos went from being a small drug courier to building links with the Colombian and Mexican cartels that provided much of the cocaine smuggled into the United States.

On June 1, 2004, President Bush named Fernando Zevallos Gonzales as a significant foreign narcotics trafficker pursuant to the Kingpin Act. At the same time, OFAC blocked, pending investigation, six companies and six individuals, including the Peruvian airline Aerocontinente S.A. On November 10, 2004, OFAC formally designated Aerocontinente S.A., which subsequently changed its name to Nuevo Continente S.A. Finally, on July 27, 2007, Fernando Zevallos Gonzales was indicted on money laundering and multiple violations of the Kingpin Act in the Southern District of Florida.

Despite Fernando Zevallos Gonzales's imprisonment, the OFAC sanctions investigation found that his financial network has continued to function under the leadership of key family members and close business associates. Key Fernando Zevallos family members designated today include his sisters Lupe Maritza Zevallos Gonzales, Sara Marilyn Zevallos Gonzales, Maria del Rosario Zevallos Gonzales, and Milagros Angelina Zevallos Gonzales; his brother Winston Ricardo Zevallos Gonzales; and his mother, Sara Maria Gonzales Garbancho de Zevallos. Key business associates designated today are Maximo Zadi Desme Hurtado, John Ivan Mejia Magnani, Ricardo Hernandez San Martin, Jose Manuel Mejia Regalado, Enrique Canaval Landazuri, Luis Miguel Carrillo Rodriguez, Percy Dangello Aranibar Castellanos, and Jorge Portilla Barraza.

The financial network principally consists of aviation and travel companies in Peru, including four air transportation service companies - Aviandina S.A.C., Lasa Peru S.A.C., Vuela Peru S.A.C, and Transportes Aereos Unidos Selva Amazonica S.A.; three travel agencies - Peru Global Tours S.A.C., Oriente Tours S.R.L., and Representaciones Oriente Tours S.R.L. In addition, two aviation cleaning service companies - Lucero Import S.A.C. and Peru Total Market E.I.R.L., and two printing press companies - Editora Transparencia S.A. and Empresa Editora Continente Press S.A. were designated. Finally, the OFAC investigation targeted key offshore companies in Panama -Bellosom Enterprise Inc. and Blissey Panama Inc. and the British Virgin Islands - La Crosse Group Inc. that supported the Fernando Zevallos financial network.

Drugs is seen as a real problem by few, and many still delude themselves into believing that coca leaf is the only thing keeping the peruvian economy afloat. There are honest men of considerable influence in senior positions throughout the government who share a counter-drug agenda. There is also a growing group of mid-level officers concerned about the deterioration of their police and military units. All these see the mid- and long-term risk narcotics represents to Peru.