When Evo Morales, a former coca farmer, became president of Bolivia in 2006, he promised to restore the thumb-shaped green leaf to the place of respect it enjoyed in Inca times. Farmers could legally grow more of it, and his government would build factories to churn out coca shampoo and toothpaste. He would fight drugs under a policy of "zero cocaine, but not zero coca."

Now Bolivia's coca production is up, according to the United Nations -- but so is its cocaine trade. Cocaine production is potentially up as much as 65%,...