INTELLIGENCE AUTHORIZATION ACT FOR FISCAL YEAR 1999 (House of Representatives - May 07, 1998)

A Tangled Web: A History of CIA Complicity in Drug International Trafficking

Institute for Policy Studies

WORLD WAR II

The Office of Strategic Services (OSS) and the Office of Naval Intelligence (ONI), the CIA's parent and sister organizations, cultivate relations with the leaders of the Italian Mafia, recruiting heavily from the New York and Chicago underworlds, whose members, including Charles `Lucky' Luciano, Meyer Lansky, Joe Adonis, and Frank Costello, help the agencies keep in touch with Sicilian Mafia leaders exiled by Italian dictator Benito Mussolini. Domestically, the aim is to prevent sabotage on East Coast ports, while in Italy the goal is to gain intelligence on Sicily prior to the allied invasions and to suppress the burgeoning Italian Communist Party. Imprisoned in New York, Luciano earns a pardon for his wartime service and is deported to Italy, where he proceeds to build his heroin empire, first by diverting supplies from the legal market, before developing connections in Lebanon and Turkey that supply morphine base to labs in Sicily. The OSS and ONI also work closely with Chinese gangsters who control vast supplies of opium, morphine and heroin, helping to establish the third pillar of the post-world War II heroin trade in the Golden Triangle, the border region of Thailand, Burma, Laos and China's Yunnan Province.

1947

In its first year of existence, the CIA continues U.S. intelligence community's anti-communist drive. Agency operatives help the Mafia seize total power in Sicily and it sends money to heroin-smuggling Corsican mobsters in Marseille to assist in their battle with Communist unions for control of the city's docks. By 1951, Luciano and the Corsicans have pooled their resources, giving rise to the notorious `French Connection' which would dominate the world heroin trade until the early 1970s. The CIA also recruits members of organized crime gangs in Japan to help ensure that the country stays in the non-communist world. Several years later, the Japanese Yakuza emerges as a major source of methamphetamine in Hawaii.

1949

Chinese Communist revolution causes collapse of drug empire allied with U.S. intelligence community, but a new one quickly emerges under the command of Nationalist (KMT) General Li Mi, who flees Yunnan into eastern Burma. Seeking to rekindle anticommunist resistance in China, the CIA provides arms, ammunition and other supplies to the KMT. After being repelled from China with heavy losses, the KMT settles down with local population and organizes and expands the opium trade from Burma and Northern Thailand. By 1972, the KMT controls 80 percent of the Golden Triangle's opium trade.

1950

The CIA launches Project Bluebird to determine whether certain drugs might improve its interrogation methods. This eventually leads CIA head Allen Dulles, in April 1953, to institute a program for `covert use of biological and chemical materials' as part of the agency's continuing efforts to control behavior. With benign names such as Project Artichoke and Project Chatter, these projects continue through the 1960s, with hundreds of unwitting test subjects given various drugs, including LSD.

1960

In support of the U.S. war in Vietnam, the CIA renews old and cultivates new relations with Laotian, Burmese and Thai drug merchants, as well as corrupt military and political leaders in Southeast Asia. Despite the dramatic rise of heroin production, the agency's relations with these figures attracts little attention until the early 1970s.

1967

Manuel Antonio Noriega goes on the CIA payroll. First recruited by the U.S. Defense Intelligence Agency in 1959, Noriega becomes an invaluable asset for the CIA when he takes charge of Panama's intelligence service after the 1968 military coup, providing services for U.S. covert operations and facilitating the use of Panama as the center of U.S. intelligence gathering in Latin America. In 1976, CIA Director George Bush pays Noriega $110,000 for his services, even though as early as 1971 U.S. officials agents had evidence that he was deeply involved in drug trafficking. Although the Carter administration suspends payments to Noriega, he returns to the U.S. payroll when President Reagan takes office in 1981. The general is rewarded handsomely for his services in support of Contras forces in Nicaragua during the 1980s, collecting $200,000 from the CIA in 1986 alone.

MAY 1970

A Christian Science Monitor correspondent reports that the CIA `is cognizant of, if not party to, the extensive movement of opium out of Laos,' quoting one charter pilot who claims that `opium shipments get special CIA clearance and monitoring on their flights southward out of the country.' At the time, some 30,000 U.S. service men in Vietnam are addicted to heroin.

1972

The full story of how Cold War politics and U.S. covert operations fueled a heroin boom in the Golden Triangle breaks when Yale University doctoral student Alfred McCoy publishes his ground-breaking study, The Politics of Heroin in Southeast Asia. The CIA attempts to quash the book.

1973

Thai national Puttapron Khramkhruan is arrested in connection with the seizure of 59 pounds of opium in Chicago. A CIA informant on narcotics trafficking in northern Thailand, he claims that agency had full knowledge

of his actions. According to the U.S. Justice Department, the CIA quashed the case because it may `prove embarrassing because of Mr. Khramkhruans's involvement with CIA activities in Thailand, Burma, and elsewhere.'

JUNE 1975

Mexican police, assisted by U.S. drug agents, arrest Alberto Sicilia Falcon, whose Tijuana-based operation was reportedly generating $3.6 million a week from the sale of cocaine and marijuana in the United States. The Cuban exile claims he was a CIA protege, trained as part of the agency's anti-Castro efforts, and in exchange for his help in moving weapons to certain groups in Central America, the CIA facilitated his movement of drugs. In 1974, Sicilia's top aide, Jose Egozi, a CIA-trained intelligence officer and Bay of Pigs veteran, reportedly lined up agency support for a right-wing plot to overthrow the Portuguese government. Among the top Mexican politicians, law enforcement and intelligence officials from whom Sicilia enjoyed support was Miguel Nazar Haro, head of the Direccion Federal de Seguridad (DFS), who the CIA admits was its `most important source in Mexico and Central America.' When Nazar was linked to a multi-million-dollar stolen car ring several years later, the CIA intervenes to prevent his indictment in the United States.

APRIL 1978

Soviet-backed coup in Afghanistan sets stage for explosive growth in Southwest Asian heroin trade. New Marxist regime undertakes vigorous anti-narcotics campaign aimed at suppressing poppy production, triggering a revolt by semi-autonomous tribal groups that traditionally raised opium for export. The CIA-supported rebel Mujahedeen begins expanding production to finance their insurgency. Between 1982 and 1989, during which time the CIA ships billions of dollars in weapons and other aid to guerrilla forces, annual opium production in Afghanistan increases to about 800 tons from 250 tons. By 1986, the State Department admits that Afghanistan is `probably the world's largest producer of opium for export' and `the poppy source for a majority of the Southwest Asian heroin found in the United States.' U.S. officials, however, fail to take action to curb production. Their silence not only serves to maintain public support for the Mujahedeen, it also smooths relations with Pakistan, whose leaders, deeply implicated in the heroin trade, help channel CIA support to the Afghan rebels.

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JUNE 1980

Despite advance knowledge, the CIA fails to halt members of the Bolivian militaries, aide by the Argentine counterparts, from staging the so-called `Cocaine Coup,' according to former DEA agent Michael Levine. In fact, the 25-year DEA veteran maintains the agency actively abetted cocaine trafficking in Bolivia, where government official who sought to combat traffickers faced `torture and death at the hands of CIA-sponsored paramilitary terrorists under the command of fugitive Nazi war criminal (also protected by the CIA) Klaus Barbie.

FEBRUARY 1985

DEA agent Enrique `Kiki' Camerena is kidnapped and murder in Mexico. DEA, FBI and U.S. Customs Service investigators accuse the CIA of stonewalling during their investigation. U.S. authorities claim the CIA is more interested in protecting its assets, including top drug trafficker and kidnapping principal Miguel Angel Felix Gallardo. (In 1982, the DEA learned that Felix Gallardo was moving $20 million a month through a single Bank of America account, but it could not get the CIA to cooperate with its investigation.) Felix Gallardo's main partner is Honduran drug lord Juan Ramon Matta Ballesteros, who began amassing his $2-billion fortune as a cocaine supplier to Alberto Sicilia Falcon. (see June 1985) Matta's air transport firm, SETCO, receives $186,000 from the U.S. State Department to fly `humanitarian supplies' to the Nicaraguan Contras from 1983 to 1985. Accusations that the CIA protected some of Mexico's leading drug traffickers in exchange for their financial support of the Contras are leveled by government witnesses at the trials of Camarena's accused killers.

JANUARY 1988

Deciding that he has outlived his usefulness to the Contra cause, the Reagan Administration approves an indictment of Noriega on drug charges. By this time, U.S. Senate investigators had found that `the United States had received substantial information about criminal involvement of top Panamanian officials for nearly twenty years and done little to respond.'

APRIL 1989

The Senate Subcommittee on Terrorism, Narcotics and International Communications, headed by Sen. John Kerry of Massachusetts, issues its 1,166-page report on drug corruption in Central America and the Caribbean. The subcommittee found that `there was substantial evidence of drug smuggling through the war zone on the part of individuals Contras, Contra suppliers, Contra pilots, mercenaries who worked with the Contras supporters throughout the region.' U.S. officials, the subcommittee said, `failed to address the drug issue for fear of jeopardizing the war efforts against Nicaragua.' The investigation also reveals that some `senior policy makers' believed that the use of drug money was `a perfect solution to the Contras' funding problems.'

JANUARY 1993

Honduran businessman Eugenio Molina Osorio is arrested in Lubbock Texas for supplying $90,000 worth of cocaine to DEA agents. Molina told judge he is working for CIA to whom he provides political intelligence. Shortly after, a letter from CIA headquarters is sent to the judge, and the case is dismissed. `I guess we're all aware that they [the CIA] do business in a different way than everybody else,' the judge notes. Molina later admits his drug involvement was not a CIA operation, explaining that the agency protected him because of his value as a source for political intelligence in Honduras.

NOVEMBER 1996

Former head of the Venezuelan National Guard and CIA operative Gen. Ramon Gullien Davila is indicted in Miami on charges of smuggling as much as 22 tons of cocaine into the United States. More than a ton of cocaine was shipped into the country with the CIA's approval as part of an undercover program aimed at catching drug smugglers, an operation kept secret from other U.S. agencies.









