[House Hearing, 106 Congress] [From the U.S. Government Publishing Office] COUNTERDRUG IMPLICATIONS OF THE UNITED STATES LEAVING PANAMA ======================================================================= HEARING before the SUBCOMMITTEE ON CRIMINAL JUSTICE, DRUG POLICY, AND HUMAN RESOURCES of the COMMITTEE ON GOVERNMENT REFORM HOUSE OF REPRESENTATIVES ONE HUNDRED SIXTH CONGRESS SECOND SESSION __________ JUNE 9, 2000 __________ Serial No. 106-217 __________ Printed for the use of the Committee on Government Reform Available via the World Wide Web: http://www.gpo.gov/congress/house http://www.house.gov/reform ______ U.S. GOVERNMENT PRINTING OFFICE 71-970 DTP WASHINGTON : 2001 _______________________________________________________________________ For sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: (202) 512-1800 Fax: (202) 512-2250 Mail: Stop SSOP, Washington, DC 20402-0001 COMMITTEE ON GOVERNMENT REFORM DAN BURTON, Indiana, Chairman BENJAMIN A. GILMAN, New York HENRY A. WAXMAN, California CONSTANCE A. MORELLA, Maryland TOM LANTOS, California CHRISTOPHER SHAYS, Connecticut ROBERT E. WISE, Jr., West Virginia ILEANA ROS-LEHTINEN, Florida MAJOR R. OWENS, New York JOHN M. McHUGH, New York EDOLPHUS TOWNS, New York STEPHEN HORN, California PAUL E. KANJORSKI, Pennsylvania JOHN L. MICA, Florida PATSY T. MINK, Hawaii THOMAS M. DAVIS, Virginia CAROLYN B. MALONEY, New York DAVID M. McINTOSH, Indiana ELEANOR HOLMES NORTON, Washington, MARK E. SOUDER, Indiana DC JOE SCARBOROUGH, Florida CHAKA FATTAH, Pennsylvania STEVEN C. LaTOURETTE, Ohio ELIJAH E. CUMMINGS, Maryland MARSHALL ``MARK'' SANFORD, South DENNIS J. KUCINICH, Ohio Carolina ROD R. BLAGOJEVICH, Illinois BOB BARR, Georgia DANNY K. DAVIS, Illinois DAN MILLER, Florida JOHN F. TIERNEY, Massachusetts ASA HUTCHINSON, Arkansas JIM TURNER, Texas LEE TERRY, Nebraska THOMAS H. ALLEN, Maine JUDY BIGGERT, Illinois HAROLD E. FORD, Jr., Tennessee GREG WALDEN, Oregon JANICE D. SCHAKOWSKY, Illinois DOUG OSE, California ------ PAUL RYAN, Wisconsin BERNARD SANDERS, Vermont HELEN CHENOWETH-HAGE, Idaho (Independent) DAVID VITTER, Louisiana Kevin Binger, Staff Director Daniel R. Moll, Deputy Staff Director David A. Kass, Deputy Counsel and Parliamentarian Lisa Smith Arafune, Chief Clerk Phil Schiliro, Minority Staff Director ------ Subcommittee on Criminal Justice, Drug Policy, and Human Resources JOHN L. MICA, Florida, Chairman BOB BARR, Georgia PATSY T. MINK, Hawaii BENJAMIN A. GILMAN, New York EDOLPHUS TOWNS, New York CHRISTOPHER SHAYS, Connecticut ELIJAH E. CUMMINGS, Maryland ILEANA ROS-LEHTINEN, Florida DENNIS J. KUCINICH, Ohio MARK E. SOUDER, Indiana ROD R. BLAGOJEVICH, Illinois STEVEN C. LaTOURETTE, Ohio JOHN F. TIERNEY, Massachusetts ASA HUTCHINSON, Arkansas JIM TURNER, Texas DOUG OSE, California JANICE D. SCHAKOWSKY, Illinois DAVID VITTER, Louisiana Ex Officio DAN BURTON, Indiana HENRY A. WAXMAN, California Sharon Pinkerton, Staff Director and Chief Counsel Carson Nightwine, Professional Staff Member Ryan McKee, Clerk Micheal Yeager, Minority Senior Oversight Counsel C O N T E N T S ---------- Page Hearing held on June 9, 2000..................................... 1 Statement of: Beers, Rand, Assistant Secretary, Bureau of International Narcotics, Department of State; Ana Maria Salazar, Drug Enforcement Policy and Support, Department of Defense; and William Ledwith, Chief, International Operations, Drug Enforcement Administration, Department of Justice.......... 90 Cabal, Professor Tomas, University of Panama................. 179 Letters, statements, etc., submitted for the record by: Barr, Hon. Bob, a Representative in Congress from the State of Georgia, Legislative Assembly Law No. 5, Republic of Panama..................................................... 148 Beers, Rand, Assistant Secretary, Bureau of International Narcotics, Department of State, prepared statement of...... 93 Cabal, Professor Tomas, University of Panama, prepared statement of............................................... 185 Ledwith, William, Chief, International Operations, Drug Enforcement Administration, Department of Justice, prepared statement of............................................... 114 Mica, Hon. John L., a Representative in Congress from the State of Florida: Followup questions and responses......................... 153 Letter dated June 8, 2000................................ 121 Prepared statement of.................................... 6 Mink, Hon. Patsy T. Mink, a Representative in Congress from the State of Hawaii, prepared statement of................. 9 Ose, Hon. Doug, a Representative in Congress from the State of California, followup questions and responses............ 150 Rohrabacher, Hon. Dana, a Representative in Congress from the State of California: January 16, 1997, memo................................... 83 Legislative Assembly Law No. 5........................... 14 Prepared statement of.................................... 88 Salazar, Ana Maria, Drug Enforcement Policy and Support, Department of Defense, prepared statement of............... 104 COUNTERDRUG IMPLICATIONS OF THE UNITED STATES LEAVING PANAMA ---------- FRIDAY, JUNE 9, 2000 House of Representatives, Subcommittee on Criminal Justice, Drug Policy, and Human Resources, Committee on Government Reform, Washington, DC. The subcommittee met, pursuant to notice, at 10 a.m., in room 2247, Rayburn House Office Building, Hon. John L. Mica (chairman of the subcommittee) presiding. Present: Representatives Mica, Barr, Souder, Hutchinson, Ose, Mink, and Schakowsky. Also present: Representative Rohrabacher. Staff present: Sharon Pinkerton, staff director; Charley Diaz, congressional fellow; Carson Nightwine, professional staff member; Ryan McKee, clerk; Lauren Perny and Brian Bobo, interns; Michael Yaeger, minority senior oversight counsel; Sarah Despres, minority counsel; Earley Green, minority assistant clerk; and Teresa Coufal, minority staff assistant. Mr. Mica. Good morning. I'd like to call this hearing of the Criminal Justice, Drug Policy, and Human Resources Subcommittee to order. This morning we'll be conducting a hearing entitled, ``Counterdrug Implications of the United States Leaving Panama.'' We have two panels, and we're going to go ahead and proceed with the consent of the minority. We should be joined by other Members, but we do have a full hearing so we want to keep this proceeding moving. The order of business will be opening statements, and I'll start with my opening statement. I'll yield to other Members as they come. And with the consent of the minority, we will leave the record open for a period of 2 weeks for additional statements, information or background that may be submitted as part of this hearing record. It's been about 6 months since the United States military has left Panama in accordance with the 1977 Carter-Torrijos Treaty. Today, this subcommittee will examine some of the implications of that move on our drug interdiction and eradication efforts in that region. Located at the nexus of two oceans and two continents, the country of Panama holds a uniquely strategic importance in the free flow of trade in the Western Hemisphere. Unfortunately, that trade also has come to include the trafficking of contraband such as illegal drugs, illegal arms, black market goods, and also extensive money laundering. Over the years, a critical element of our international drug eradication and interdiction efforts has been our operations which have been based in former United States bases in Panama. That all came to a grinding halt last year with the turnover of the Panama Canal. By the end of 1999, the United States had abandoned the Panama Canal and the 360,000 acre Canal zone, as well as military property consisting of 70,000 acres and 5,600 buildings worth an estimated $10 to $13 billion. Since the late 1980's, these bases have served as the cornerstone of the U.S. military's counterdrug effort in that region. Today, the United States can no longer fly planes out of Howard Air Force Base. Likewise, we can no longer base our ships at Rodman Naval Base. We can no longer coordinate our regional counterdrug efforts out of Fort Sherman. Somehow I still don't understand why this administration wasn't able to foresee this predicament and develop contingency plans. I know we from the subcommittee have done everything possible to highlight what we knew would be problems in this area with the close-down of those bases. Instead, we find ourselves today playing a catch-up game, and we have a long way to go to make up for the losses of these bases and strategic forward operating anti-narcotics efforts. Over a year ago, on May 1st, 1999, the United States ceased all surveillance flights from Howard Air Force Base in Panama from which the United States had flown more than 2,000 anti- narcotics flights per year. Over the past 12 months, the United States has signed 10-year agreements with Aruba, Curacao and Ecuador, and most recently with El Salvador, to provide alternative staging areas, known as forward operating locations [FOLs], for both our military and law enforcement surveillance aircraft. Two of the 10-year agreements have been ratified. The El Salvador agreement still lacks parliamentary approval. But, in fact, we once operated out of just one base, and now the United States may be forced to maintain and finance bases in four locations. Also, we're faced with mounting construction costs and operational costs for these forward operating locations at the new operating locations, and every time we have folks appear before the subcommittee the estimates of cost of operating those bases climb. Even more troubling, the date at which all four FOLs will be fully operational keeps slipping. The most recent guess is that we will not be fully operational until the year 2002. Meanwhile, drug-laden boats and planes keep heading toward our shores undetected. Each of these deadly craft carry death and destruction bound for the U.S. streets and neighborhoods. I hope to hear from today's administration witnesses about our latest cost estimates, the latest timeline for getting these FOLs fully operational. I also want to know the likelihood that these four FOLs will make up for the extensive coverage loss that we experienced with the shutdown of Howard, including a breakdown of coverage in the source zone and also the transit zone. I chaired a similar hearing on Panama 1 year ago where we discussed the implications of losing Howard Air Force Base. At that hearing I stated that, ``hopefully, we can avoid a near- term gap with the damaging loss of critical coverage.'' Obviously, this administration missed the mark. Unfortunately, the gap is now something we're experiencing and it's very real. By SOUTHCOM's own admission in a letter to the subcommittee sent yesterday by Charles Wilhelm--and I invited him to testify today. I hope the Members will take a look at this. But his words are that we estimate our capability will continue to be approximately one-third of what it was in Panama. This is an incredible gap. I think it's one reason that we have drugs, particularly a resurgence of cocaine now, incredible quantities of heroin, pouring into our shores. Again, according to our own SOUTHCOM Commander, we are two- thirds shy of what is needed. I understand that a majority of this shortfall is in the critical source zone countries of Colombia, producing 80 to 90 percent of the cocaine now, by the administration's own estimates, and some 70 percent of the heroin on our streets that's seized, according to DEA estimates--Peru and also Bolivia, and their efforts to eradicate the cocaine production are now also being harmed we've learned from recent reports. These are the very countries that need our support and need our help right now. We must minimize the extent and duration of this gap in coverage. Instead of closing the gap, though, this administration reduced the number of counterdrug flights by a staggering 68 percent from 1992 to 1999. Again, I refer to the document requested. I didn't conduct the study. GAO did, upon our request, citing a 68 percent reduction in these anti-narcotics surveillance flights in the period from 1992 to 1999. I read in today's New York Times that we have increases in drug use, particularly cocaine, marijuana and other hard drugs of our young people. I think the CDC--and we may ask them to come in and testify now--but from 1991 to current, dramatic increases in use. And again we have a reduction in our counternarcotics effort, most effective tool for stemming these shipments. The number of ship days also, according to this report, dropped 62 percent. It is painfully clear that this counternarcotics effort is not a priority, top priority for this administration. And I don't know why. As we all know by now, a real shooting war, largely financed by the illegal drug trade, is raging just south of Panama in the Republic of Colombia. In fact, you can't have a meaningful discussion of the drug situation in Panama without considering what is happening in Colombia. I know the House has acted. I salute my colleagues in working with me and the Speaker and others in trying to get the $1.6 billion passed and from the House to the Senate. It's shameful that the Senate, including the Republican leadership there, have not acted on that measure. I want to make sure I put the blame on everybody today. In the past there have been reports of significant Colombian rebel activity in the Darien Province of southern Panama. Now with the United States withdrawal from Panama and the recent focus on Colombia, we have already witnessed an increase in narco-terrorist incursions into Panama. With a weak and corrupt police force, Panama is now ripe for takeover by narco-dealers. At last year's hearing, I voiced concern about the expanding FARC guerilla presence in Panama. I warned that, absent an effective United States policy--and this is my quote a year ago--``the United States will be back in Panama at some point in the future, and at great cost and sacrifice, to preserve the sanctity of the Canal and protect our national interests.'' 1 year later, my concern about this deteriorating situation is even greater. We'll probably hear more about this, but I think everyone is focusing today on a report, and I honestly have not read the entire report, only seen press accounts, this headline--and this happens to be the Washington Times, but it's in the Post and the New York Times--``With U.S. Gone Panama Is a Mecca for Drug Trafficking.'' And we'll hear more about that report. From my perspective as chairman of the subcommittee, I don't think this administration has taken this threat seriously. How could this administration turn its back totally on direct tenders that captured key Panamanian court contracts at Colon? And the administration officials, including General McCaffrey, have confirmed to me both publicly and privately that these were corrupt tenders that allowed these contracts to go to Chinese interests and zero out United States competitors. Today, we have a complete lack of engagement by this administration and Panama, and the region is in turmoil. Colombia is in chaos, Venezuela is thumbing its nose at the United States, and the administration is undermining our best ally in the anti-narcoterrorist effort, President Fujimori of Peru. This complacency is jeopardizing stability in the region, and it is also a threat to our national security. The threat to the region and the Canal is real, and we need to address it. In the aftermath of the United States efforts to apprehend the Panamanian dictator Manuel Noriega in 1989--and just as a lesson of history we went after him for being involved in drug dealing and corruption--we insured that the corrupt Panamanian Defense Force [PDF], was dissolved. In fact, we had their military dissolved by that action. And Panama changed its constitution to prohibit a standing military. Now the security of that country is in the hands of the institutionally weak Panamanian National Police force. And if we're to believe these reports, they've been very seriously corrupted and infested by narco-drug traffickers. Experts contend that this modest, ill-equipped force does not have the capacity to effectively monitor or guard the southern border with Colombia. In fact, despite President Clinton's certification of Panama last year, I have received troubling reports that drug seizures in Panama dropped by some 80 percent in 1999 from 1998. In Panama, we face serious challenges in the months and years ahead, challenges that in fact will impact our ability to keep drugs, illegal narcotics off our street and from our children. With the pullout of the United States military from Panama, it appears to me we'll only see more increases in drug trafficking, narcoterrorism, illegal arms smuggling and money laundering in Panama and also throughout the region. Hopefully, today's hearing will shed light on these issues and help us address some of them squarely, collectively and in a bipartisan fashion and effectively. The citizens of the United States and this hemisphere deserve no less. In this region, if we recall from history, Teddy Roosevelt adopted the policy of ``walk softly and carry a big stick''. Unfortunately, historians may record the Clinton foreign policy for this region at this time as the ``que pasa'' era. And if you're not familiar with Spanish, que pasa is sort of a blase ``what's happening'' for a literal interpretation. And we do need to find out what's happening here today. With those opening comments, I'm pleased to yield to the ranking member of our subcommittee, the distinguished lady from Hawaii, Mrs. Mink. [The prepared statement of Hon. John L. Mica follows:] [GRAPHIC] [TIFF OMITTED] T1970.001 [GRAPHIC] [TIFF OMITTED] T1970.002 Mrs. Mink. I thank the chairman for yielding to me at this time. I do hope that the intent of these hearings today is to really find out what's happening in terms of the impact of the United States having no military base in Panama as a result of an agreement made some years ago. While I think it's useful to examine the situation of the pullout and what the impacts have been with respect to the United States and the region, I do think that the discussions about drug trafficking do not really lend any particular intelligence to the discussion of this subject. I think it's quite obvious that with a pullout of our military bases that we would lose a very important command post in our counterintelligence activities. I've always taken the viewpoint that it's important for us to establish strong relationships and a sense of related responsibility toward the supply side of the various drugs from this region. But in looking at the whole picture it's very important to understand that we have two sides to this issue, and that is demand and supply. And while we want to bring considerable pressure on these countries to perform better, it's really our responsibility to make the relationships work and to establish those counterintelligence posts that are meaningful. We knew we had to pull out of Panama, and I think if there is a deficit of policy, it was not being able to establish on a much earlier timetable the replacement posts for the absence of the Howard Air Force Base. And so my emphasis has always been, what do we do here in the United States? What are we doing to curb demand? I think that the Congress has a very large responsibility in this area, and we have been focusing heavily on our side to strengthen the law enforcement aspects of all the incursions of drugs coming into United States and also understanding that part of the demand policy is also what we do with respect to those who need treatment. If we can't do something about treatment of those who are addicted to drugs, then we're not really looking at the demand side. So while I welcome this opportunity to discuss Panama today and to look at the implications of the loss of our military base there in Panama, I do think that a full view of this situation, rather than simply a condemnation of administration policy, has to take the balance, look and see what implications this means for our strengthened resolve to do more within the United States on the demand question. Thank you, Mr. Chairman. I ask unanimous consent that my statement be placed in the record. Mr. Mica. Without objection, so ordered. Thank you. [The prepared statement of Hon. Patsy T. Mink follows:] [GRAPHIC] [TIFF OMITTED] T1970.003 [GRAPHIC] [TIFF OMITTED] T1970.004 Mr. Mica. I'll recognize the vice chairman of our panel, Mr. Barr, the gentleman from Georgia, at this time. Mr. Barr. Thank you, Mr. Chairman; and thank you for convening these two very distinguished panels today to continue what you know must be a long-term, sustained focus on Panama and the surrounding problems in the Caribbean and South America. This is not a problem, like many here in Washington, that somebody will focus on for 1 day of hearing and then everybody will go back and do their other things and forget about it. That happens far too often, and that's why we find ourselves frequently in crisis situations here in the Congress or facing crisis situations elsewhere. You've taken a different tack, and I commend you for that. You realize that the problems with regard to drug trafficking and money laundering and narco-terrorist activity in Central America, in Panama, in Colombia, and elsewhere is something that must be attacked every single day of the year, year in and year out. And the problems that we're facing in Panama largely now are a result of the vacuum created by the departure and turnover to Panama of all military--all United States personnel and facilities and the lack of planning by this administration to have alternatives such as operational FOLs ready to go and to hit the ground running the day after the turnover are very, very severe and continuing. And while I do appreciate the steps that have been taken and I recognize that these are not easy contracts to negotiate and to go so in a manner that is respectful of taxpayer money. Previous hearings that we've had have indicated that things could have moved much more quickly if they had been started much earlier as well. But, be that as it may, there's nothing we can do at this point to make up for prior shortcomings. What we have to do is continue to focus on the problems created by the vacuum when the United States departed Panama lock, stock and barrel and to see if there are some steps that can be taken both in the civilian sector with regard to encouraging--and this might be something that we can look at legislatively as well as look United States companies to become more active in Panama. It also requires a look at the very distressful increase in the Communist Chinese influence and interest in Panama. As we all know, Panama has been, over the years, very, very courageous, more courageous than our country, as a matter of fact, in recognizing the free people of China and in providing diplomatic recognition to the Republic of China, not the Communist People's Republic of China. This has been a sore point for Beijing for many years, and they have been mounting over the last few years a much more sustained effort to switch allegiance, and I do hope and encourage the people of Panama to resist such entreaties. But the Communist Chinese presence, which took a quantum leap forward with what I believe was a very corrupted process of negotiations, has given them a foothold through Hutchison Whampoa on both ends of the Panama Canal which certainly we anticipate that they will expand. There would be no reason for them to be there if they didn't plan on expanding, and that has been the nature of Communist Chinese presence in other parts of the world. This is something we do need to focus on. The administration is not--the President, in perhaps a Freudian but probably very accurate slip of the tongue, a number of months ago indicated that he seemed pleased with the Communist Chinese presence there, and they would run the Canal properly. Many of us up here, including, I know, you, Mr. Chairman, and certainly myself and Mr. Rohrabacher and I suspect all members of this panel, take a much different view. We are concerned about the increased Communist Chinese focus in Panama, just as we are concerned about the danger posed to the Panamanian people by incursions by narco-terrorists, by the FARC and ELN, in the southern provinces of Panama where it borders on its neighbor to the south. These are matters that do impact us, and they impact us in many, many different ways, including the security of the Canal. If commercial shippers do not believe that the security of the Canal will be maintained long into the future and indefinitely into the future, if they foresee problems, then they are going to start looking at alternatives. Once they start doing that, much of the revenue currently derived by Panama from the Canal will start to dry up. So that's something that neither country certainly wants to see happen. I also hope, Mr. Chairman, that we can begin to focus on the problem of the cleanup of the target ranges in Panama and the testing ranges. As I understand it from talking with people both in Panama who have traveled down there and experts, this matter has not yet been resolved, and I think we could go a long way toward improving the climate for future negotiations and current negotiations between our two countries for a more cooperative physical presence down there if we can get this matter resolved as well. So there are many, many facets to the problems that you are continuing to focus on, Mr. Chairman. I've just enumerated a few of them. You have also. I read the same press reports this morning of the intelligence estimate, the law enforcement officer estimate. This is very, very troubling, although not terribly surprising. It, too, is the result of lack of foresight by the administration in really laying the groundwork to address these problems that we all knew would crop up. But, again, I hope that we can work and I anticipate we will continue to work with the administration to resolve these. Certainly we would have preferred to see it done sooner rather than later, but it is not too late. And you are playing, through your convening--through this hearing today and I know future hearings, Mr. Chairman, playing a key role in that, and I thank you. Mr. Mica. Thank the gentleman. I'll now recognize Mr. Ose from California. Mr. Ose. Thank you, Mr. Chairman. I think I'll pass on the opening statement. Mr. Mica. Thank you. The gentleman from Arkansas, Mr. Hutchinson. Mr. Hutchinson. I pass and look forward to the witnesses' testimony. Mr. Mica. The gentleman on our panel, Mr. Souder from Indiana. Mr. Souder. Pass. Mr. Mica. We're also joined by a member of the International Relations Committee who's taken an active interest in this hearing; and, without objection, I'm pleased to recognize Mr. Rohrabacher from California at this time. Mr. Rohrabacher. Thank you very much, Mr. Chairman. As you know, I've had a very deep interest in Panama and in the national security interest of our country that I believe are being put at risk by some of our policies in Panama. And I want to thank you for conducting this hearing on the national security threats that are developing in the Panama Canal area which remains a key strategic choke point for the Americas. When I visited Panama last summer I was stunned by the complete absence of American security forces in what had been for nearly a century America's military outpost protecting our Nation's vulnerable southern flank. And I had been to Panama several times during the Reagan years when I worked at the White House, and those of us who visited Panama in the past realize how significant a military presence America had there and what role that presence played in the stability and played for a positive factor in Latin America and in that region. Today, Communist China and transnational criminals are filling the strategic vacuum created by the total withdrawal of the United States of America from Panama. Major ports on both ends of the Canal are now under the control of a Hong Kong- based Chinese company, Hutchison Whampoa, which has close ties to the Communist Chinese Government and is partly owned by an entity which is itself wholly owned by the Communist Chinese regime, the China Resources Enterprises, which is also very well known as a front for the Chinese military intelligence. I am submitting for the record a copy of the Panamanian Government's official open bid document, and it shows that American companies initially outbid the Chinese companies for control of the port facilities in both ends of the Panama Canal but were denied the port contracts through what our State Department has called, a highly irregular process. [The information referred to follows:] [GRAPHIC] [TIFF OMITTED] T1970.005 [GRAPHIC] [TIFF OMITTED] T1970.006 [GRAPHIC] [TIFF OMITTED] T1970.007 [GRAPHIC] [TIFF OMITTED] T1970.008 [GRAPHIC] [TIFF OMITTED] T1970.009 [GRAPHIC] [TIFF OMITTED] T1970.010 [GRAPHIC] [TIFF OMITTED] T1970.011 [GRAPHIC] [TIFF OMITTED] T1970.012 [GRAPHIC] [TIFF OMITTED] T1970.013 [GRAPHIC] [TIFF OMITTED] T1970.014 [GRAPHIC] [TIFF OMITTED] T1970.015 [GRAPHIC] [TIFF OMITTED] T1970.016 [GRAPHIC] [TIFF OMITTED] T1970.017 [GRAPHIC] [TIFF OMITTED] T1970.018 [GRAPHIC] [TIFF OMITTED] T1970.019 [GRAPHIC] [TIFF OMITTED] T1970.020 [GRAPHIC] [TIFF OMITTED] T1970.021 [GRAPHIC] [TIFF OMITTED] T1970.022 [GRAPHIC] [TIFF OMITTED] T1970.023 [GRAPHIC] [TIFF OMITTED] T1970.024 [GRAPHIC] [TIFF OMITTED] T1970.025 [GRAPHIC] [TIFF OMITTED] T1970.026 [GRAPHIC] [TIFF OMITTED] T1970.027 [GRAPHIC] [TIFF OMITTED] T1970.028 [GRAPHIC] [TIFF OMITTED] T1970.029 [GRAPHIC] [TIFF OMITTED] T1970.030 [GRAPHIC] [TIFF OMITTED] T1970.031 [GRAPHIC] [TIFF OMITTED] T1970.032 [GRAPHIC] [TIFF OMITTED] T1970.033 [GRAPHIC] [TIFF OMITTED] T1970.034 [GRAPHIC] [TIFF OMITTED] T1970.035 [GRAPHIC] [TIFF OMITTED] T1970.036 [GRAPHIC] [TIFF OMITTED] T1970.037 [GRAPHIC] [TIFF OMITTED] T1970.038 [GRAPHIC] [TIFF OMITTED] T1970.039 [GRAPHIC] [TIFF OMITTED] T1970.040 [GRAPHIC] [TIFF OMITTED] T1970.041 [GRAPHIC] [TIFF OMITTED] T1970.042 [GRAPHIC] [TIFF OMITTED] T1970.043 [GRAPHIC] [TIFF OMITTED] T1970.044 [GRAPHIC] [TIFF OMITTED] T1970.045 [GRAPHIC] [TIFF OMITTED] T1970.046 [GRAPHIC] [TIFF OMITTED] T1970.047 [GRAPHIC] [TIFF OMITTED] T1970.048 [GRAPHIC] [TIFF OMITTED] T1970.049 [GRAPHIC] [TIFF OMITTED] T1970.050 [GRAPHIC] [TIFF OMITTED] T1970.051 [GRAPHIC] [TIFF OMITTED] T1970.052 [GRAPHIC] [TIFF OMITTED] T1970.053 [GRAPHIC] [TIFF OMITTED] T1970.054 [GRAPHIC] [TIFF OMITTED] T1970.055 [GRAPHIC] [TIFF OMITTED] T1970.056 [GRAPHIC] [TIFF OMITTED] T1970.057 [GRAPHIC] [TIFF OMITTED] T1970.058 [GRAPHIC] [TIFF OMITTED] T1970.059 [GRAPHIC] [TIFF OMITTED] T1970.060 [GRAPHIC] [TIFF OMITTED] T1970.061 [GRAPHIC] [TIFF OMITTED] T1970.062 [GRAPHIC] [TIFF OMITTED] T1970.063 [GRAPHIC] [TIFF OMITTED] T1970.064 [GRAPHIC] [TIFF OMITTED] T1970.065 [GRAPHIC] [TIFF OMITTED] T1970.066 [GRAPHIC] [TIFF OMITTED] T1970.067 [GRAPHIC] [TIFF OMITTED] T1970.068 [GRAPHIC] [TIFF OMITTED] T1970.069 [GRAPHIC] [TIFF OMITTED] T1970.070 [GRAPHIC] [TIFF OMITTED] T1970.071 [GRAPHIC] [TIFF OMITTED] T1970.072 Mr. Rohrabacher. Please also include for the record the enclosed document that describes the relationship between Hutchison Whampoa and its owner Li Ka-Shing and China Resources Enterprises to the Communist Chinese regime itself. [The information referred to follows:] [GRAPHIC] [TIFF OMITTED] T1970.073 [GRAPHIC] [TIFF OMITTED] T1970.074 [GRAPHIC] [TIFF OMITTED] T1970.075 Mr. Rohrabacher. It is not a coincidence that Taiwan, which is under the threat of military attack by Beijing, has stopped shipping military supplies through the Panama Canal because of their concern that all ships' cargo manifests will be seen by Hutchison Whampoa and reported to Beijing. Equally troubling, since the removal of United States counterdrug operations at Howard Air Force Base, there has been a significant increase in the vast quantities of South American cocaine and heroin that transit through and around Panama. And let me say to my colleague from Hawaii I certainly share her commitment to trying to reshape America's drug effort so it isn't totally aimed at enforcement and interdiction, but that does not take away from the importance of these other efforts. But putting treatment in the mix is a good idea. It's an important element. But when we take a look at what's going on now as a result of America pulling back from Panama and the weakening of our drug enforcement mechanisms, it's having a harrowing effect on American security and on the security and well-being and stability of that part of the world. The war in neighboring Colombia against well-armed narco- terrorist forces financed by laundered drug profits through Panama's banks is escalating and threatens to spread throughout the region. Panama does not have an army, a navy or an air force. The Panamanian Government and its National Police force are, at best, unable to cope with the challenges they face; and the people of Panama understand that. They're unable to cope for a number of reasons. There is incompetency and corruption charges, but also it is a very small force, and it is a very small country. It makes absolutely no sense for the United States Government to pour billions of dollars into a counterdrug war into Colombia and to deploy an increasing number of American soldiers there while ceasing to seriously negotiate with Panama for a reinstatement of American security advisers and, yes, even security forces and counternarcotics experts there in order to participate in a regional effort. In all recent public opinion polls--and this is what makes it so incredulous that this is happening--80 percent of the Panamanian people support a continued United States security presence in their vulnerable homeland. They want us there. The empty American bases and total absence of American military presence in Panama--at America's most important strategic point in this hemisphere. This is a glaring example of this administration's callous disregard for our country's national security interests. In Panama, the people want us there, but yet this administration was unable to negotiate an agreement to permit us to have a military presence there. It's a travesty. In fact, I would say it's more. It's a sham when one says that we were honestly trying to negotiate so America could maintain some sort of a presence there in Panama. And those of us who, spent time in that part of the world, it's shocking to go and see now that there's just no American troops, no American military. What was an area where it was bustling with Americans, we had presence, we were able to deter evil forces--and I know that people don't like to use the word ``evil.'' It maybe sounds a little bit too plebeian to use the word evil, but there are evil forces in this world and America's presence was able to deter those forces from dominating this very small country of Panama. So this hearing is very important for our national security today because we do have evil forces, countries and forces that hate the United States that are involved with drug trafficking, forces that would undermine our national security, and Panama needs America's help, and it needs America's presence. And I thank you for holding this hearing. [The prepared statement of Hon. Dana Rohrabacher follows:] [GRAPHIC] [TIFF OMITTED] T1970.076 [GRAPHIC] [TIFF OMITTED] T1970.077 Mr. Mica. I thank the gentleman for joining our panel this morning and for his comments. We have already agreed to leave the record open, with consent of the minority, for 2 weeks. Without objection. Also, I think the material that the gentleman from California requested will be made part of the record. At this time, we have our first panel; and I'd like to recognize our first panel: the Honorable Rand Beers, who is the Assistant Secretary of the Bureau of International Narcotics for the Department of State; Ms. Ana Maria Salazar, she is the with the Department of Defense in charge of Drug Enforcement Policy and Support; and Mr. William Ledwith, and he is the Chief of International Operations from the Drug Enforcement Administration. I think they've all been before our panel before, and they're familiar with the requirements of this investigations and oversight panel. If you would please stand and be sworn. [Witnesses sworn.] Mr. Mica. The witnesses answered in the affirmative. I am pleased to welcome back today Mr. Rand Beers, who's the Assistant Secretary of State for the Bureau of International Narcotics. You're recognized sir. STATEMENTS OF RAND BEERS, ASSISTANT SECRETARY, BUREAU OF INTERNATIONAL NARCOTICS, DEPARTMENT OF STATE; ANA MARIA SALAZAR, DRUG ENFORCEMENT POLICY AND SUPPORT, DEPARTMENT OF DEFENSE; AND WILLIAM LEDWITH, CHIEF, INTERNATIONAL OPERATIONS, DRUG ENFORCEMENT ADMINISTRATION, DEPARTMENT OF JUSTICE Mr. Beers. Thank you, Mr. Chairman and members of the Subcommittee on Criminal Justice---- Mr. Mica. I'm not sure if we can hear that. You might have to pull that as close as you can. Mr. Beers. Is this better, sir? Mr. Mica. Yes, go ahead. Mr. Beers. Thank you for this opportunity to speak today about Panama and in particular the narcotics trafficking situation. Panama's shared border with Colombia leaves it vulnerable to narcotics trafficking and to incursions into the Darien Province by guerrillas and narco-traffickers. It is arguably one of the most strategically located countries in the Western Hemisphere for drug trafficking and other organized criminal activities. Panama's location between South and North America, its long coastlines, border with Colombia, the Canal and other factors make it a key staging areas for drug shipments and insurgent unrest originating in Colombia. It is crucial, therefore, that we remain committed to a partnership that promotes security for both the United States and Panama. Panama was certified as fully cooperating with the United States on counternarcotics in 1999. While this country is not a significant producer of drugs or precursor chemicals, due to its strategic location, advanced transportation infrastructure and financial development it serves as a crossroads for transnational crime, including drug trafficking and money laundering. Panama's long land border and shared sea-lanes with Colombia and its extensive Caribbean and Pacific coastlines make land and sea interdictions a major challenge. The Panama Canal, container seaports, the uncontrolled Colon Free Zone and the beginning of the Pan American Highway, an international hub airport and numerous uncontrolled airfields create unlimited transportation opportunities for drug traffickers. Accordingly, Panama has become a major transshipment point for illicit drugs smuggled from Colombia into Panama by ``go- fast'' boats, by containers transported by maritime cargo vessels that transit the Canal or off-load in Panama's ports, by private and commercial overland vehicles and aboard private and commercial aircraft. Colombian cocaine is, in turn, often stockpiled in Panama and repackaged for further shipment to the United States and Europe. Panama is also extremely vulnerable to money laundering due to its international banking sector, the Colon Free Zone, and the United States-dollar-based economy. Panama's law enforcement agencies maintain good relations with their United States counterparts and have demonstrated their willingness to cooperate on an interagency basis. In 1999, the United States and Panama carried out four coordinated counterdrug operations. The Technical Judicial Police and the Panamanian National Police also executed three major joint interdiction operations along the Costa Rican border against alien smugglers and drug traffickers. In fact, we had one just in the past week. At the request of the Moscoso Administration, the United States and Panama began law enforcement bilateral discussions on November 23rd, 1999. This past Tuesday, June 6th, the Government of Panama hosted the second round of law enforcement bilaterals. The issues discussed included law enforcement, specifically drug interdiction cooperation, alien smuggling, money laundering and judicial reform. In addition to these issues, this particular round of bilateral discussions was concluded with the signing of a Stolen Vehicle and Aircraft Treaty. According to United States law enforcement and insurance agencies, Panama is an important destination for vehicles stolen from the United States. Some of these vehicles are transported to Panama for the local market, while others are routed there for transshipment to Europe and elsewhere. Stolen vehicles are often used by Colombia drug traffickers to transport drugs. This treaty for the repatriation of stolen vehicles and aircraft illustrates Panama's commitment to building successful law enforcement and judicial institutions and enhancing bilateral cooperation beyond counternarcotics. Panama continues to be a major drug transit country because of its proximity to the world's largest cocaine producer. The situation in Colombia, therefore, is critical for the surrounding region. Colombia is increasingly threatened by well-armed and ruthless narcotics traffickers that are supported by guerillas and paramilitaries. Not only is the Colombian Government unable to exert effective control over thousands of square miles of its own territory, but the border areas of neighboring countries are also put at risk by the instability and violence. The corrosive powers of narcotics and narcotics money are ever-present threats to the institutions and economies of the entire region. The situation in Colombia also poses a considerable number of direct threats to United States national security interests, including thousands of Americans killed by drugs and drug- related violence each year, losses to our economy from drug- related accidents, inefficiency in the workplace and the social and human costs of abuse and addiction. After strained relations with the tainted Samper administration, President Pastrana's tenure and the proposed funding for Plan Colombia offer the United States and Panama a golden opportunity to work with Colombia to confront such threats. Panama faces complex and daunting problems, not only those emanating from the Colombian crises but also others that are outgrowths of institutional weaknesses in Panama. Our challenge as a neighbor and a partner is to identify ways in which we can assist Panama in resolving its narcotics- related and other problems. At this moment, Panama is a partner who shares our counternarcotics concerns and possesses the will to proceed with the needed reforms, bilateral agreements and operations. I look forward to working closely with the Congress as we continue to address these critical issues. Thank you very much. Mr. Mica. Thank you. We'll withhold questions until we've heard from all three members of the panel. [The prepared statement of Mr. Beers follows:] [GRAPHIC] [TIFF OMITTED] T1970.078 [GRAPHIC] [TIFF OMITTED] T1970.079 [GRAPHIC] [TIFF OMITTED] T1970.080 [GRAPHIC] [TIFF OMITTED] T1970.081 [GRAPHIC] [TIFF OMITTED] T1970.082 [GRAPHIC] [TIFF OMITTED] T1970.083 [GRAPHIC] [TIFF OMITTED] T1970.084 [GRAPHIC] [TIFF OMITTED] T1970.085 Mr. Mica. I'll recognize next Ana Maria Salazar, who is with the Department of Defense, Drug Enforcement Policy and Support. You're recognized. Ms. Salazar. Thank you, Mr. Chairman. I'm pleased to have the opportunity to testify once again before the subcommittee and to provide an update on the status of our forward operating locations. At this time, I would like to summarize my statement and submit a written statement for the record. Mr. Mica. Without objection, your entire statement will be made a part of the record. Please proceed. Ms. Salazar. As you know, a year ago last month the runway at Howard Air Force Base in Panama closed and the interagency began conducting counterdrug flights on an expeditionary bases from existing commercial facilities in Aruba, Curacao and the Ecuadorian military airfield in Manta. Since the last time I testified a year ago on this issue, we have made important progress toward replacing and enhancing our capabilities. In November 1999, the Government of the United States and Ecuadorian Government signed a 10-year agreement for the use of the Manta airfield to support interagency counterdrug missions throughout the source zone, including Colombia, which supplies 90 percent of the cocaine shipped to the United States. The FOL at Manta is now capable of 24-hour, 7-days-per-week, all- weather flight operations. United States Navy P-3s are conducting Eastern Pacific counterdrug detection and monitoring missions from this facility as we speak. The Manta airfield is suitable for United States Customs Service P-3 operations, and the deployments are currently scheduled for this month. This fact alone will allow the United States to increase the surveillance capability in the source zone tremendously. In March of this year, our government and the Kingdom of the Netherlands signed a similar 10-year agreement for the critical coverage of the northern source zone and Caribbean portions of the transit zone. The United States Customs Service has been flying from Aruba since April 1999, and the Department of Defense has been operating with aircraft such as the F-16s, United States Navy P-3s and E-2s, United States Air Force AWACS, as well as other Intelligence, Surveillance and Reconnaissance platforms from Curacao since May of last year. Shortly after initiating flight operations from the FOLs, the interagency exceeded pre-Howard closure counterdrug detection and monitoring on-station time by 15 percent. Furthermore, transit zone detection increased by 50 percent; and maritime-related cocaine seizures climbed by over 500 percent. Most recently, in March 2000, we signed a 10-year agreement with the Government of El Salvador for the use of Comalapa Air Base, which will support P-3 counterdrug flights in the Eastern Pacific and Western Caribbean portion of the transit zone. This agreement is pending ratification by the Salvadorian legislative assembly prior to initiating counterdrug operations. Geographically, the El Salvador location optimizes the integrated coverage of the three FOLs, minimizing overlaps while simultaneously extending the reach of airborne counterdrug missions to the northern region of the Eastern Pacific transit zone along the west coast of Mexico. Although progress has been made, important challenges still remain. The vast majority of D&M on-station hours were flown in support of counterdrug transit zone missions, primarily in the Caribbean. In fact, source zone on-station time has decreased by 75 percent. We need to increase our airborne D&M coverage over the source zone to complement the Puerto Rican ROTHR, which has completed its testing phase and is now fully operational, providing unprecedented coverage over southern Colombia. Once full operational capability is established at each of the FOLs, the interagency will have significantly greater source and transit zone coverage than existed when counterdrug operations were flown out of Howard Air Force Base. I would like to briefly talk about some of the issues that you have raised in regard to Panama. I know that members of the subcommittee are concerned about how and what effect illegal drug trade is having on Panama. From DOD's perspective and perhaps the interagency at large, we are closely monitoring the situation, and we stand ready to assist Panama, as with any other country in the region, in support of that country's security concerns. We do not foresee, however, any counterdrug requirement for an FOL-like presence in that country at this point. The El Salvador FOL meets or exceeds all Department requirements and optimizes the synergetic effect of the geographical situation of the three locations. A Panama site suboptimizes the FOL architecture because its coverage--the region that it would be covering would overlap that provided by the other operating locations. However, we are engaged with the Government of Panama in counterdrug concerns. There have been ongoing bilateral discussions, as mentioned by Assistant Secretary Rand Beers; and SOUTHCOM has participated in those efforts. However, until Panama signs a visiting forces agreement, an agreement that we have in many countries around the hemisphere, it will be very difficult for DOD to increase dramatically their support. I would like to briefly talk about the Colombia supplemental. Most of the required military construction funding for the FOLs is currently contained in the fiscal year 2000 supplemental developed to support Plan Colombia. From an execution perspective, the Department requires a funding as soon as possible, especially in the case of the Manta FOL, which could go to contract as early as July. President Pastrana has asked for international support to address an internal problem that has international dimensions fueled in part by our country's demand for cocaine. It is a long-time sense that we should move forward on the Colombian supplemental, and I hope that we can do so soon. We cannot execute our congressional mandated mission to curb the shipment of illegal drugs without the FOLs. The Department of Defense along with our interagency partners has made important progress over the past year, and with the continued congressional support we hope to continue to do so in the future. I thank you for affording me the opportunity to speak to you in regards to the FOLs and Panama; and, with that, I look forward to answering your questions. [The prepared statement of Ms. Salazar follows:] [GRAPHIC] [TIFF OMITTED] T1970.086 [GRAPHIC] [TIFF OMITTED] T1970.087 [GRAPHIC] [TIFF OMITTED] T1970.088 [GRAPHIC] [TIFF OMITTED] T1970.089 [GRAPHIC] [TIFF OMITTED] T1970.090 [GRAPHIC] [TIFF OMITTED] T1970.091 [GRAPHIC] [TIFF OMITTED] T1970.092 Mr. Mica. We will withhold questions until we've heard from our final witness. And that witness is William Ledwith, Chief of International Operations for our Drug Enforcement Administration under the Department of Justice. Welcome and you're recognized sir. Mr. Ledwith. Good morning, sir. Mr. Mica. You might have to pull that up close. For some reason, they're not picking up over there. Mr. Ledwith. Good morning, sir. Mr. Chairman and members of the subcommittee, I appreciate the opportunity to appear before the subcommittee today on the subject of Panama. My comments will be limited to an objective assessment of the law enforcement issues involving drug trafficking and money laundering in and through the country of Panama. I would like to again express my thanks to the subcommittee for your continued support of the Drug Enforcement Administration and for your overall support of drug law enforcement. Today's organized crime leaders are strong, sophisticated and extremely destructive. They have the capability of operating on a global scale. They are callous individuals who send their surrogates to direct the distribution of the drugs they ship to the United States. These organizational leaders have at their disposal airplanes, boats, vehicles, radar, communications equipment, money and weapons in quantities that rival the capabilities of some legitimate governments. Panama is the most strategically located country in the Western Hemisphere for drug trafficking and other transnational crime. Panama's location between South America and North America, with its long coastlines, its border with Colombia, and the Panama Canal make the country a key transit point for drug shipments originating in Colombia for further shipment north. Other factors which make Panama attractive to major drug traffickers are its weak law enforcement and public security institutions, its large and sophisticated international banking sector, the Colon Free Zone and cargo container port facilities on both ends of the Panama Canal. Panama continues to be threatened by Colombian drug trafficking organizations that utilize containerized cargo, aircraft, maritime vessels and the Pan American Highway in order to transport their illicit drugs through Panama. In addition, these same drug trafficking organizations utilize the Panamanian economy in order to launder their billions of dollars in drug proceeds through the Colon Free Zone. To combat this threat, the Government of Panama continues to cooperate with DEA to investigate and prosecute these transnational drug criminals. In 1999, Panamanian agencies seized a significantly reduced amount of cocaine and marijuana. This was principally due to changing trafficking methods and Panamanian authorities' lack of resources and training to respond to these changes. However, cocaine and heroin seizures in 2000 are on a pace to exceed the record seizures made by Panamanian authorities in 1998. Panama continues to be a major financial and commercial center, ideally positioned for illicit financial transactions and drug smuggling. Panama's international banking center, a long-established tax haven, combined with the Colon Free Zone and a United States-dollar-based economy, render Panama vulnerable to money laundering. The Colon Free Zone is second only to Hong Kong as the largest free zone in the world and is the largest in the Western Hemisphere. The Colon Free Zone comprises over 161 acres of warehouses and showrooms which accommodate over 1,600 companies. Operating as a free trade zone, the CFZ is an area where goods can be imported and reexported without being subject to tariffs, quotas or taxes. Therefore, importers throughout Latin America can purchase a wide variety of these products at a competitive price. In addition, CFZ merchants will routinely accept third- party checks, money orders, wire transfers and cash as payment for these goods. Illegal narcotic sales in the United States generate billions of dollars annually, most of it in cash. Efforts to legitimize or launder this cash by the Colombian drug cartels are subject to detection because of intense scrutiny placed on large financial transactions by United States banks and institutions. To avoid detection, the drug cartels have developed a number of money laundering systems that subvert financial transaction reporting requirements and manipulate facets of the economy unrelated to the traditional financial services industry. One such form of money laundering is known as the Black Market Peso Exchange. The Black Market Peso Exchange is a complex system currently used by drug trafficking organizations to launder billions of dollars of drug money each year. In addition, this financial scheme exploits the advantages of the CFZ, which serves as an integral link in the Colombian money laundering chain. The Black Market Peso Exchange is an underground financial system used to evade reporting and recordkeeping requirements mandated by the United States Bank Secrecy Act, as well as by Colombian foreign exchange and import laws and tariffs. Money brokers, utilizing pesos, purchase United States dollars from narcotics dealers in Colombia in exchange for Colombian pesos. These United States dollars are sold to Colombian importers in exchange for Colombian pesos. The United States dollars purchased by Colombian importers are used to pay for merchandise bought in the CFZ. The purchased goods are shipped to Caribbean or South American destinations, sometimes via even Europe or Asia, then smuggled or otherwise fraudulently entered into Colombia. The Colombian importer takes possession of his goods, having avoided paying extensive Colombian import and exchange tariffs, and they pay the peso broker for the items with Colombian pesos. The peso broker, who has made his money charging both the cartels and the importers for his services, uses those new pesos to begin the cycle once again. These investigations are extremely complex and require cooperative law enforcement efforts between the United States and Panama. Although cooperation between the United States and Panama on money laundering investigations has improved, the pursuit of such investigations remains constrained by Panamanian laws requiring prosecutors to satisfy an unusually high burden of proof and to meet extremely difficult evidentiary standards. Under Panamanian law, if a merchant demonstrates that transactions include real goods and that payment is at fair market value, he is not engaged in money laundering. Thus, willful ignorance of the law is not a crime. From the Panamanian perspective, criminal money laundering takes place only when a person moves cash without a commensurate exchange of goods and the cash involved results from specific drug transactions. These legal loopholes continue to be exploited by money laundering organizations operating in the Colon Free Zone. In conclusion, as the gateway to the Caribbean, Panama continues to provide a significant link between South American drug cartels and their ability to transport their poisons to the continental United States. The country of Panama is singular in the opportunities it provides for traffickers, as well as the challenges it creates for law enforcement authorities. Over the past several years, the United States Government has refocused a great deal of asset and enforcement initiatives along the southwest border in order to address the threat posed by Mexican drug trafficking organizations and their alliance with Colombian drug cartels. While these initiatives have resulted in outstanding successes, we remain concerned about the increased drug trafficking activity throughout the entire Panamanian and Caribbean regions. I can assure you that the DEA will, therefore, remain diligent in our efforts to respond to any apparent shift in drug trafficking trends. The use of Panama as a drug transit zone by Colombian drug trafficking organizations, as well as a means of securing their narcotics proceeds, creates unique challenges to Panamanian United States law enforcement authorities. We are dedicated to cooperative drug enforcement investigations with our Panamanian counterparts in order to address this threat. Mr. Chairman, thank you for the opportunity to appear before this subcommittee today. I sincerely appreciate the interest that you and the subcommittee have shown in DEA's counterdrug role in Panama. At this time, I will be happy to answer any questions you may have. Mr. Mica. Thank you. [The prepared statement of Mr. Ledwith follows:] [GRAPHIC] [TIFF OMITTED] T1970.093 [GRAPHIC] [TIFF OMITTED] T1970.094 [GRAPHIC] [TIFF OMITTED] T1970.095 [GRAPHIC] [TIFF OMITTED] T1970.096 [GRAPHIC] [TIFF OMITTED] T1970.097 [GRAPHIC] [TIFF OMITTED] T1970.098 Mr. Mica. I will start with some questions. Again, from all the papers that have disclosed the existence of--I believe it is a Customs report that I had not seen--Mr. Beers, have you seen the Customs report? Mr. Beers. Sir, I have it in my possession, and I looked briefly at it, but I haven't had a chance to read it closely. Mr. Mica. How about you, Ms. Salazar? Ms. Salazar. I have not seen that report, and I believe it was not cleared through the Department of Defense. Mr. Mica. Mr. Ledwith. Mr. Ledwith. I have not had a chance to review it yet, sir. Mr. Mica. First of all, I am going to request from Customs a copy of the report and, if necessary--hopefully, they will voluntarily provide it to the subcommittee. If not, I will consult with Chairman Burton about subpoenaing the report. The report--and again I only have the press reports of what it says--there is a quote that intelligence sources indicate that Chinese and Russian organized crime factions are active in narcotics, arms and illegal alien smuggling, utilizing Panama as a base of operations. Are you aware of those activities, Mr. Ledwith? Mr. Ledwith. There is intelligence indicating that there is significant Chinese involvement in that part of the world, yes, sir. Mr. Mica. The other part of this says--and again I have to quote from this--says drug seizures by authorities in Panama declined by 80 percent last year from 1998 levels, and no major narcotics traffickers or money launderers were arrested. Is this factual, Mr. Beers? Mr. Beers. Yes, sir. If you aggregate the cocaine, the marijuana and the heroin seizures, that is an accurate statement, but it is based entirely on the drop in the area of marijuana. Both cocaine and heroin seizures went up. However, having said that, it is also true that if you take 1998 as your base year everything went down. Mr. Mica. I had invited General Wilhelm to come today, and he wasn't able to be with us, for scheduling reasons. He did submit this letter, which I think the minority also has. Without objection, Mrs. Mink, I would ask that it be made a part of the record. Is that acceptable that we submit that? I think they supplied you with a copy. [The information referred to follows:] [GRAPHIC] [TIFF OMITTED] T1970.099 [GRAPHIC] [TIFF OMITTED] T1970.100 Mr. Mica. But in this letter, which will be part of the record, it says, we estimate our capability will continue to be approximately one-third of what it was in Panama. Ms. Salazar, is that correct? Ms. Salazar. From the perspective of what we are doing right now and the coverage we are providing the source zone, I believe it is correct. Mr. Mica. I have held a number of closed-door meetings, not to embarrass the administration, on trying to replace these forward operating locations. It is critical that we get them in place. We do have the now signed, I guess, 10-year agreements with the two. For the record, will you tell us when you estimate they now will be fully operational? Ms. Salazar. Are we talking about the source zone, transit zone, sir? Mr. Mica. All of our capabilities, source zone and transit zone, that we had when we had Panama fully operational. Ms. Salazar. I am going to try to answer this question. The biggest problem we have right now is trying to increase our coverage in the source zone. If you look at what we are doing in the transit zone and what I said in my oral statement we have, in fact, better coverage now than we had when we were flying out of Howard Air Force Base. Mr. Mica. One of the problems is this stuff is coming out at unprecedented quantities out of the source zone. Ms. Salazar. You are absolutely correct, sir, and with Customs initiating flights out of Manta this month--and I don't want to give you numbers because then I get quoted and these numbers change. Mr. Mica. Well, they do, and we have been conducting these hearings and we get sort of a revolving description of when we are going to have full operational capability in place. So you are not prepared--some of the documentation I think you have supplied to us said 2002 is the latest estimate. Ms. Salazar. When we are going to have most of the MILCON construction done, when we are going to be able to have the AWACS flying out of Manta, you are absolutely right, and it is going to take about a year and a half to be able to do most of the upgrades. Mr. Mica. You did talk about what is going on in Manta. One of the problems with Manta is the condition of that airstrip; is that correct? Ms. Salazar. That's correct. Mr. Mica. How much is it going to cost now to get it fully operational? Ms. Salazar. It is going to cost--the total--I am going to give you the total cost for the MILCON that we have requested for Manta airport, which is $61.2 million, and that includes the barracks. That includes---- Mr. Mica. You described aircraft flying out of there, but I understand it is being remodeled and reconstructed to also support U-2 aircraft; is that correct? Ms. Salazar. U-2 aircrafts, I am not aware of that, sir. It would be for AWACS. Mr. Mica. I am sorry, AWACS? Ms. Salazar. Yes, that's correct. Mr. Mica. AWACS, and there are no AWACS flights out of there now? Ms. Salazar. Out of Manta, no, sir. Mr. Mica. All right. The AWACS capability then will not be up and running in that location until 2000? Ms. Salazar. That's correct. Mr. Mica. Two? Ms. Salazar. 2001. My advisors here tell me that the runway itself will be available in the summer of 2001. Mr. Mica. One of the problems we have is, of course, the U.S. military doesn't conduct any enforcement operations and is prohibited really from being an enforcement agent under the Constitution and our laws, but what they do is provide surveillance information to the source countries. This GAO report which was provided to me recently says that United States officials in Peru told us there has been little or no United States airborne intelligence or surveillance of air traffic routes between Peru and Bolivia since 1997. The United States Ambassador to Peru warned in an October 1998, letter to the State Department that the reduction in air support could have a serious impact on the price of coca. Mr. Ledwith, aren't we seeing an increase in cocaine coming out of this zone? Mr. Ledwith. If you take the zone as a whole, yes, sir, we are seeing increased cocaine production. Mr. Mica. For the first time, I was told by some officials that we are seeing an increase again in Peru. Is that correct? Mr. Ledwith. There are reports of an increase beyond the previously achieved low, yes, sir. Mr. Mica. If I ask, Ms. Salazar, these people in Peru who have been our allies, or Bolivia or Colombia, if they are getting the same level of information and intelligence for surveillance of drug trafficking production, etc., in those areas, what are they going to tell me? Ms. Salazar. Sir, they are probably going to tell you, at least from the air surveillance aspect, that they are going to be receiving increased information. As you know, the ROTHR Puerto Rico came on board, and the importance of the ROTHR, at least for the Department of Defense and the role we play, is that you will have the capability of being able to have--see what is going on in the way of air flights in Peru, Colombia, Northern Brazil. So in the short term they are probably going to tell you that they are going to have more information in the way of air flights. Mr. Mica. The ROTHR has been up for how long? Ms. Salazar. It just came--there were still playing with it, but it is formally and it has been in use for about, I would say, 3 weeks now. I was--in fact, I was looking at the site a day and a half ago. Mr. Mica. It's too early to get any data from its effect, or about its effectiveness? Ms. Salazar. Well, sir, in fact, talking to our experts, they are actually quite pleased with what they are seeing right now; and they have, in fact, started to increase--providing the information to source zone nations. Mr. Mica. Thank you. Mrs. Mink. Mrs. Mink. Thank you very much, Mr. Chairman. From all of your statements and testimony, I gather that the area coverage, in terms of the surveillance activities by the United States, is greater than it was during the operation of Howard Air Force Base. Is that correct? Ms. Salazar. For the transit zone, the Caribbean zone, yes, it is. Mrs. Mink. Could you explain exactly what that coverage is with respect to the issue that we are discussing this morning about Panama and the drug trafficking through Panama? To what extent does this transit coverage meet the problems that we are discussing this morning about Panama? Ms. Salazar. OK. Madame, if you allow me to use this map you will probably get a good sense as to each one--of the coverage that will be provided by each one of the FOLs. Panama would be that yellow spot that you see in the middle of those bigger circles. As you can see, when you look at the FOL, Aruba and Curacao, who is the green star, the amount of coverage we are receiving right now, because where geographically you find Aruba and Curacao is much larger than we were in Panama. If you look at where the Salvador FOL--which hopefully will be coming on board in the next couple of months and we will start providing flights, we are going to have a larger coverage through what is called the East Pac. And what does that mean for us? As my colleagues from DEA will state, we have seen increased flow of maritime tracks through East Pac; and, in fact, there has been a pretty large interdiction of drugs through the East Pac. And because we are going to be having that--geographically, Salvador is the higher Central American strait--we are going to be able to have more coverage of the East Pac. If you look down at the blue star, where the Manta FOL is, you can see we have a deeper coverage of the source zone countries. It is easier to get to Peru and southern Colombia, where, you know, 90 percent of the drugs that come to the United States are either produced or cultivated. If you look at the map, we have--our air platforms will have easier access to get to that area; and, therefore, they will be spending less time in the transit zone. They will be using their time to be on the source zone and being able to surveil from that area. I don't know if that explanation helps you, but once we have the three DOL fully functioning we will, in fact, have a better coverage, air surveillance coverage, than we had from Howard Air Force Base. Mrs. Mink. When do you expect that to be fully on board? Ms. Salazar. We expect the missing part of the puzzle right now is the fact that we can't fly AWACS out of Manta. Mrs. Mink. What is the reason for your inability to fly AWACS out of Manta? Ms. Salazar. The airfield doesn't--can't withstand an AWACS, which is---- Mrs. Mink. Why can't you fix the airfield? Ms. Salazar. We are going to do that. In fact, the MILCON-- -- Mrs. Mink. Do you have funds to do it? Ms. Salazar. We do not have funds. We requested the MILCON in the Colombia supplemental, and we are hoping that once the Colombia supplemental has been approved we would be able to even cut a contract. Mrs. Mink. What is the current status of that supplemental? Ms. Salazar. Right now, it is--I think it is ready to go to conference. I think they are trying to attach it to the MILCON bill. My sense is, in regards to the MILCON discussions in the supplemental, there is no--there is no questions about it. It is just a matter of supplemental. Mrs. Mink. How much are you requesting in that MILCON? Ms. Salazar. We are requesting, for all the FOLs, $126 million. Mrs. Mink. That is now stuck in the Senate? As I understand it, we passed it in the House in the emergency supplemental? Ms. Salazar. I believe that's correct. Mrs. Mink. And currently, as I understand it, that emergency supplemental is not moving, so it has to await passage of the regular appropriations bill before you get funded? Ms. Salazar. My colleague from the State Department was reminding me, there are two parts to it. We have the military part of the supplemental and also the State Department part of it, and our part of the supplemental would be attached to the MILCON. I think they were going to initiate discussions in the next 2 or 3 weeks. I don't--it would be very difficult for me to predict when it---- Mrs. Mink. So assuming that you get the funding in late fall, that would be the timeframe in which you could begin the reconstruction of the airfield, is that correct? Ms. Salazar. That's correct, and that's why, when I stated that the pavement would be ready to have AWACS flying out of Manta, what I was mentioning--what I was referring to was that if we started the--if we got the money sometime in July or August, most of the repairs of that airfield would be done by the summer of the year 2001. At that point, we would be able to fly out of Manta. Mrs. Mink. Now, with the departure of our military base out of Panama, what is the reality of having a visiting force agreement in place with Panama to substitute for the absence of an actual military base? Ms. Salazar. It is--I think we are talking about two different issues. If we have a visiting force agreement, it is an agreement that we use in most countries to basically protect our people when they are deployed. What does that mean? That there is just basic rules and regulations as to what we can do in a country when we are--when I say we, I am talking about DOD--what DOD personnel can do in any specific country when they do deployment, provide technical assistance and support. We have been in conversations with the Government of Panama for the last number of months. This agreement has not moved forward and DOD, as you can understand, would be very nervous in increasing our activities and increasing our presence, increasing our training deployments to Panama until we had a signed agreement. Mrs. Mink. Now, if you had a visiting forces agreement, could you do with that agreement some of the drug surveillance activities that we had done previously at the base? Ms. Salazar. No, that would be a different type of agreement. As you know, with the forward operating locations, when you look at that agreement it basically outlines the type of activities we would perform from any specific airport and the types of assets we would be using. Those are two different types of platforms. At this point, we haven't approached Panama or had any conversations with Panama to--in regards to having an FOL presence because, as you see from the map, Panama at this point does not help us graphically when you take into consideration that we will probably be initiating flights out of Salvador in the near future. Mrs. Mink. The news article that the chairman referred to this morning from the Washington Times makes reference to Chinese and Russian-organized crime groups. You, Mr. Ledwith, indicated that the presence of the Chinese groups has increased in Panama. Can you make a comment about the Russian-organized crime? Mr. Ledwith. Only in this realm, to say that there has been increasing evidence of a Russian-organized crime influence in that part of the world, also, ma'am. Mrs. Mink. When you speak of organized crime, this is drug- smuggling activities basically, since that is the focus of our attention in this committee? Mr. Ledwith. Our area of interest would, of course, be specifically drug trafficking. Mr. Beers. But it is broader than that, ma'am. Mrs. Mink. Would you like to amplify on that, too? Mr. Beers. Russian-organized crime is a poly crime activity. It involves both drugs, which is one of the basic reasons for their interest in that particular area of this hemisphere, but they are also involved in laundering money out of Russia, in the movement of counterfeit goods and counterfeit money and alien smuggling and trafficking in women and children. All of those are activities that Russian-organized crime has sought to bring to this hemisphere and other locations around the world. They are just spreading out. Mrs. Mink. Have you reports or other documents that you can make available to this committee with regard to that? Mr. Beers. There are intelligence documents, ma'am, and we can ask the intelligence community to make those available. Mrs. Mink. Thank you. Thank you, Mr. Chairman. Mr. Mica. Thank you. I would like to yield to our vice chairman. Could you yield to me for just a second, Mr. Barr? Mr. Barr. Certainly. Mr. Mica. I just want to point out for the record, and there will be a written record and if we submit this chart as testimony, part of the testimony, that the circle shown to the subcommittee this morning with a star indicating El Salvador is not in operation at all and that we only have a fraction of the capability coming out of Manta at this time and, again, no AWACS capability, just for the record. Mr. Barr, thank you. Mr. Barr. Thank you. If we could have a staff person turn that so that both the witnesses and the Members could see it, I would appreciate it. Prior to our evacuation of Howard Air Force Base, Ms. Salazar, it is correct, is it not, that we were flying some 2,000 counterdrug flights per year out of Howard? Ms. Salazar. That's correct--I think it was actually more than that. Yes, 2,000 including support missions. Mr. Barr. OK. And it is true also, is it not, that the cost of operating Howard Air Force Base was approximately $75 million per year? Ms. Salazar. Approximately. Mr. Barr. With all of these circles up here, how many counterdrug flights are currently being operated? Ms. Salazar. If you give me--we have that in, I believe, one of my charts, but I will give that--if you give me a couple of minutes, we will try to get that information to you right now. Mr. Barr. OK. I think the chairman made a very, very good point. I mean, this is a very pretty drawing and the circles are very nice and the stars and so forth, but this is theoretical. I mean, these areas are not being covered currently in the same manner as the larger circle reflected coverage out of Howard Air Force Base. What these circles reflect, I believe, is the theoretical coverage. You can draw all the circles in the world that you want, but if you don't have planes up in the air they don't really mean anything. Ms. Salazar. Actually, sir, I am sorry. The map is somewhat confusing. That larger circle that you see---- Mr. Barr. I don't find it confusing. Ms. Salazar. No, the larger circle that you see actually reflects the AWACS, the capability of the AWACS. Mr. Barr. But there are no AWACS. Ms. Salazar. But there will be AWACS flying out of Manta. Mr. Barr. So this is theoretical at this point. Ms. Salazar. At this point, we don't have AWACS flying out of Manta. Mr. Barr. Well, we don't have AWACS flying out of any of these areas. Ms. Salazar. No, sir. We do actually have AWACS flying out of Curacao. Mr. Barr. How many are there down in Curacao today? Ms. Salazar. Right now, today, I can't give you details. Mr. Barr. It is my information there are none down there today. Ms. Salazar. There may not be one there today, sir, but we have had the AWACS flying in the AOR; and, specifically, they have been flying out of Curacao. Mr. Barr. There are no AWACS that are permanently stationed in any of these locations; that's correct, isn't it? Ms. Salazar. Nor were there in Panama. The AWACS normally-- -- Mr. Barr. There are none? Ms. Salazar. No, but, sir, even when we had Howard Air Force Base the AWACS were never permanently stationed out of Panama. Mr. Souder. They were prior to them being transferred to Kosovo, and so forth. Ms. Salazar. No, no. Mr. Barr. There are no AWACS down here on a regular basis. Ms. Salazar. I would disagree, sir. We do have AWACS coverage flying out of Curacao. Mr. Barr. From time to time. Ms. Salazar. We--as much as we had--when you have only one AWACS--I mean, I think the issue here is we only have one AWACS and at different points. Mr. Barr. We only have one AWACS in our defense inventory? Ms. Salazar. No, sir, we only have one AWACS that has been assigned to this. Mr. Barr. Therein lies the problem. A policy decision has been made by President Clinton, or Secretary Cohen, I don't know which, not to make the AWACS available. We have AWACS. Ms. Salazar. We do have. Mr. Barr. They are just not assigned here. Ms. Salazar. As you know, sir, throughout the years there has been a reduction in a number of these assets, and a decision was made by the Secretary that there were other missions around the world that required---- Mr. Barr. We are well aware of these other so-called missions around the world and how they are eating up our resources. That's why we don't have them here. Would any of you disagree with the estimates that I have seen that the FARC in Colombia strength--what is the FARC strength as far as you all know? Mr. Beers. Sir, my understanding is that it is between 10,000 and 15,000 armed individuals. Mr. Barr. OK. Would any of you all have any reason to doubt those figures? Mr. Ledwith. No, sir. Mr. Barr. OK. By any measure, a fairly substantial presence. Are you all familiar, I presume, to one extent or another, with Panama law No. 5, organic law No. 5? Mr. Beers, I certainly know you are very familiar with it. Mr. Beers. You are going to have to remind me what it says, sir. Mr. Barr. Well, OK. Panama law No. 5 has been written about extensively, both publicly as well as in United States Government documents, because it is the framework that specifically provides the powers for Hutchison Whampoa to control assignment of pilots for ships transiting the Canal, to hire pilots for ships transiting the Canal; to determine the order of ships going through the Canal. None of you all are familiar with Panama law, organic law No. 5? Mr. Beers. No, sir. Mr. Ledwith. No, sir, not particularly so. Mr. Barr. Mr. Chairman, I am speechless. Mr. Mica. We want to make sure that's included in the record, that you are speechless. Mr. Barr. I guess this is one reason why we see so little concern on the part of the administration over Communist China's presence in Panama. The administration apparently is not even familiar with the basic law of Panama that provides very significant powers to Hutchison Whampoa that provide for the hiring, the assignment of pilots for ships transiting the Canal, the order of line for ships going into and out of the Canal. Are you all familiar with the recent purchase by a Communist Chinese bank of Marine Midland Bank, which is one of the major banking institutions in Panama? Mr. Beers. Simply that it happened, sir. Mr. Barr. Was this significant enough to hit the radar screen of the U.S. Government, the administration? Mr. Beers. Sir, we are concerned about financial transactions in Panama as a general issue because as several of us have indicated, the issue of money laundering is a serious issue in Panama. Mr. Barr. How about is there any specific concern with regard to increased Communist Chinese presence and power in banking and other financial institutions located in Panama? Mr. Beers. Sir, as a general matter, that's, of course, something that we pay attention to, look at---- Mr. Barr. Good. Mr. Beers [continuing]. And report upon. Mr. Barr. I appreciate that. Is this of concern to other agencies of the government, the increased Communist Chinese financial presence in Panama through such things as the purchase of Marine Midland Bank? Is this of concern to the Department of Defense? Ms. Salazar. Sir, as you know, I am the Deputy Assistant Secretary of Defense for Drug Enforcement so I--although---- Mr. Barr. Does that include money laundering? Ms. Salazar. Not necessarily. As you know, my role is detection--our role is detection and monitoring and providing support through our DOD forces. However, when we do get requests for training, we provide training and intelligence. But, generally, we don't participate in money laundering support--into money laundering support. Mr. Barr. Mr. Ledwith, I know that you all's agency is very concerned about and does very, very good work on attacking money laundering. Are you concerned about the increased Communist Chinese presence in financial institutions and power in Panama? Mr. Ledwith. Yes, sir, we are working in cooperation with our colleagues in the Customs Service and the FBI we watch that very closely. Mr. Barr. You might want to share that concern with some other agencies of our government. Mr. Ledwith. Yes, sir. Mr. Barr. I might also state for the record, Mr. Chairman, and encourage representatives from our government, too, look carefully at Panama organic law No. 5 because it also provides contract rights transfer authority for Hutchison Whampoa. In other words, they can take the contract rights that they have through this very, very long-term contract that they signed with the Panamanian Government and transfer them to a third party, without restriction; and that would include transferring of their rights to other components of the Communist Chinese Government, other corporations controlled by different components of the Communist Chinese hierarchy, and so on and so forth. I have other areas, Mr. Chairman, but since there are other Members will we have another round of questioning? Mr. Mica. If time permits. I will recognize Mr. Ose now. Mr. Barr. Thank you. Mr. Ose. Thank you, Mr. Chairman. Mr. Ledwith, I am interested in a particular area and that is from your base of knowledge, how much money do we spend addressing the issues of drug enforcement in this area? I mean, from your Department's---- Mr. Ledwith. From DEA's perspective, sir? Mr. Ose. Yes. Mr. Ledwith. Limited to Panama or the region? Mr. Ose. The region. Mr. Ledwith. Millions of dollars. Mr. Ose. Tens of millions or $5 million? Mr. Ledwith. We would probably say tens of millions. Mr. Ose. OK. Ms. Salazar, the same question, generally speaking. Ms. Salazar. In this area I can give you some specific numbers, and then we could come back with--I could give you some general numbers and then come back in general. Mr. Ose. Sure. Ms. Salazar. This year we spent, in the whole FOL process, which would include what we have spent in Manta and Aruba and Curacao, I would say approximately $34 million. Now, you also must add on, if we are talking about that--the region in general, we have a very large and important program in Colombia that goes to $60 million, $70 million, and we also have important programs in Peru. So we are talking---- Mr. Ose. We are on the area of nine figures somewhere as it relates to your particular area? Ms. Salazar. Probably. Mr. Ose. Mr. Beers. Mr. Beers. Likewise. Hundreds of millions of dollars in the region. Mr. Ose. The reason I ask that question is, having spent all of this money, do we know who the individuals are behind the exportation of drugs to this country, the individuals? Not the cartel names, not the cities from which it comes but the individuals? Mr. Ledwith. Yes, sir, we know many of them. Mr. Ose. Say again? Mr. Ledwith. Yes, sir, I would say that we do know many of them, yes, sir. Mr. Ose. I would like to visit with you later about perhaps creating a list of such individuals. Mr. Ledwith. Yes, sir, I would be happy to do that. Mr. Ose. I always find that shining a light on specific people, kind of helping bring attention to their activities, is helpful. I also want to go back to the question of the operating bases. As I understand it, Ms. Salazar, as it relates to Howard Air Force Base, we were running about 2,000 flights a year out of there; and it was costing us around $75 million a year to operate that effort. Ms. Salazar. I stand to be corrected. I was given the numbers that Congressman Barr had asked for and, in fact, when we were flying--as you know, Howard had a number of different types of flights that took place. Some of them were counter drugs. Some of them were support for the hemisphere. When you look at the counterdrug flights, we were flying approximately 550--520 detection and monitoring missions per year. This year, we have flown, up until now, 600 detection and monitoring flights. So, in fact, the number of flights has increased. Mr. Ose. Is the $75 million number correct in terms of the general operating expenses? Ms. Salazar. For Howard, yes, approximately. Mr. Ose. For Howard? Now we have got a number for these new forward operating locations in terms of capital expenditures. I think the number was $126 million is the one you cited, investment in these airports. Ms. Salazar. I am sorry, sir. What I am talking about, yes, it is a capital investment in the next 2 years of being able to improve the capabilities of the FOLs, which would include---- Mr. Ose. Would that be all three of them? Ms. Salazar. That would include all three of them, 126---- Mr. Ose. This would be, for instance, airports like National Airport or Dulles or Sacramento International? I mean, that's the comparable facility, if you will? You have private carriers coming in. It is not like Howard Air Base in that it is strictly a military facility? Ms. Salazar. Yes. Manta, although it is an Air Force facility, it also has international flights flying out of it. So it is also an international airport, yes. Mr. Ose. If I understand correctly, we have $126 million worth of capital investment going into these three forward operating bases. Do we have any feel for what the annual operating costs for these three forward operating locations would be? Ms. Salazar. OK. I am going to stand to be corrected one more time. It is $136 million when you include Salvador. Mr. Ose. OK. So do we have a number for the estimated annual operating expenses for the three forward operating locations? Ms. Salazar. We are struggling with those numbers right now, sir, in part because--there are a number of reasons. We initially had anticipated $19 million to $18 million is the numbers that General Wilhelm had provided us, but it looks like those numbers are going to increase, and they are increasing based on the fact that now we have not accounted for Salvador at the time we were providing those numbers, and there are costs that we couldn't anticipate when we were trying to predict as to what were the needs in these different airports. Mr. Ose. If you had to estimate presently, to the best of your knowledge, you are probably talking $100 million a year for operating expenses out of the three forward operating locations? Ms. Salazar. $100 million? No. I would say 23--between 23 and--23 would be the lower end right now, what we are looking at. It could go higher than that, $23 million. Mr. Ose. How do you reconcile the $75 million number at Howard for 520 detection excursions with the $23 million at the three bases on an annual basis? Ms. Salazar. The $23 million--well, we--maybe you could repeat the question? Mr. Ose. I asked earlier about what were the annual operating costs for running the drug interdiction efforts at Howard. Ms. Salazar. Right. Mr. Ose. You told me $75 million. Ms. Salazar. That's correct. Mr. Ose. That was generating about 520 excursions, if you will, for detection purposes and the like. Now I am interested in what the annual operating costs are estimated to be for the three forward operating locations that will replace Howard, and you have told me the best estimate you have today is $23 million a year. Now, the question I have is, if Howard was generating 520 detection missions for $75 million a year, how is it that we are able, at least year to date, just generically, to generate 600 detection missions from the three bases at $23 million a year? There just seems to be a logical disconnection on a relative basis, and I am trying to reconcile that. Ms. Salazar. There is a couple--there are a couple of reasons. On the one hand, when we were at Howard, we had a full base facility. When you look at how we are functioning out of Aruba, Curacao, Manta and Salvador, they are more on an expeditionary basis, and they are not permanently there. So these are--the cost in many ways would be--probably are going to be less because our footprint is less. Mr. Ose. Is the $75 million number that you previously gave me the total operating expense at Howard? Ms. Salazar. Total operating expense. Mr. Ose. So not only the drug interdiction effort but the military effort? Ms. Salazar. Correct. Correct. Mr. Ose. Let me go on to my next question then. I may want to come back to that, if I have time. Mr. Barr was very effective as it relates to the AWACS planes not being in the region, and I see on your very clear picture the circles for the P-3s. Now do we have P-3s in the area right now? Ms. Salazar. Yes, we do, sir. We have P-3s flying out of Manta and Aruba. Mr. Ose. All right. How much in capital improvements do we have to make to continue the operation of the P-3s in the area? Ms. Salazar. Not much, because we are doing it already. Mr. Ose. OK. So I guess, Mr. Chairman, that begs the question why would we spend $126 million to improve an airport for an AWACS that's not there if we have got P-3s that are operating there effectively now? With that, I would yield back. Mr. Mica. Thank you. Mr. Souder. Mr. Souder. I have a couple of different lines of questions. Mr. Ledwith---- Mr. Mica. Mr. Souder, you are not picking up for some reason. Mr. Souder. I am discouraged. Mr. Ledwith, on the question of the Communist Chinese, have you seen any involvement in money laundering related to narcotics from many of their institutions? Mr. Ledwith. Sir, we have no definitive information that I could put forward at this time, no, sir. Mr. Souder. But clearly that means you are closely monitoring because there is possible doubt? Mr. Ledwith. Because of the scope and complexity of money laundering in general, and particularly in Panama, yes, sir, we are watching it closely. Mr. Souder. What we have seen in Panama predominantly is Colombian heroin coming north. Have you seen any sign that they also could get Asian heroin moving the other direction with their presence in Central America? Mr. Ledwith. Are you referring to Asian heroin coming to the United States from Panama? Mr. Souder. The increasing presence of China. Mr. Ledwith. We have not seen any indications of that yet. Mr. Souder. So to the degree you are watching it, you are mostly watching to see if they become involved in South American events? Mr. Ledwith. Yes, sir. There are other issues that we are also closely monitoring. China, for instance, is a source of much of the ephedrine in the world that is utilized in making methamphetamine, which is a particular product available---- Mr. Beers. From a broader perspective, sir, alien-smuggling is an issue, the flow out of China, and Panama is an intermediate destination. Mr. Souder. But the DEA--zeroing in on narcotics, I understand that the ephedrine would be coming from Asia. You say they are involved in that. Any of you who want to answer? Mr. Ledwith. China is one of the major producers and exporters of ephedrine, and clearly we have our eye on that particular element also, yes, sir. Mr. Souder. So part of the reason for the investment, in fact, in Central America could become to try to be involved in that precursor business in South Central America, theoretically? Mr. Ledwith. I cannot speak to what their ideas are, but certainly it is something that we are interested in and closely monitoring. Mr. Souder. That is certainly not an illogical jump? In other words, it is enough that you at least would want to watch it, because if they are one of the largest providers of the precursors, this is the largest provider of narcotics, it would be totally unwise not to be watching an increasing presence in that zone if there is going to be some future linkup? Mr. Ledwith. You are absolutely correct, sir, and that's why we are watching it. Mr. Souder. OK. Thank you. I can't have Mr. Beers at a hearing and not talk about Blackhawks for a second. My favorite staffer on Colombia, John Mackey, was just showing me some wonderful pictures of actual Blackhawks in Colombia with the galvin 18 guns on one side, and I hope we can continue to work to get the guns on the other side as well since it looks like the first five helicopters that were damaged were damaged on the side without the more powerful guns. Which leads me to one of my frustrations that I am discouraged on. I know all of you from multiple of these things. I think the biggest problem we are fighting right now in the anti-narcotics effort is that there is a movement growing on both sides, right and left, that somehow this is an unwinnable war and that we are all fighting hard to try, and disagreeing at times as to how to do it, but we are in a real battle here, and this is part of my frustration on these dates questions. My generation is obsessed with Vietnam, that we are always behind and that we can argue whose fault it was or how we got into this in the Panama Canal, but as a business guy I look at it as somehow a critical path method wasn't done here to realize the date for having a final decision in Panama, was too late for us to be able to, you know, replace the resources fast enough. That I happen to believe, and I think many others are very concerned, that there has been a stockpiling going on while we are in transition; and that while we are trying to figure out how to get our AWACS there, I don't disagree theoretically. This may not, in the end, give us better coverage in the antidrug effort. There are still other issues in the zone such as, say, the Canal that happens to be very important in international trade. That alone may be enough of an argument to have an FOL in Panama or some sort of a function there that may not be related to narcotics at all. It is a big trade question, I mean, nominally related to narcotics. I heard in Ms. Salazar's testimony, that's what we should have been working on in mid-1998, if it takes us a year and a half, because there is plenty of blame to go around. I personally believe that Plan Colombia and these Blackhawks should have been requested from us 4 years ago. I was fighting for over six Blackhawks, and now we need 20's and 40's and 60's down there. But the truth is, Congress is moving at a snail's pace right now, too, and now that the administration has come forth, now we are dinking around with whether we need the right helicopters, when this money is going to come through, and then by the time we get it there we are going to need more. Furthermore, I read in Mr. Beers' written testimony about an incursion into the Darien by the paramilitary's six men, not much, but this week an incursion of 70 armed rebels last week. If we, in fact, do put a billion and a half into Colombia and that is mostly oriented toward a push south-southwest, why isn't it going to pour right across that line? And how many police do they have to move to the border there? Mr. Beers. A very limited number, sir. Mr. Souder. And what is our strategy? Ms. Salazar said, I believe the exact quote was, we are closely monitoring the situation and stand ready to assist Panama. What does that mean, given the fact that if we do pass this bill, take a year and a half probably to get all the stuff down there or a year, we get it there, we start hammering them, what does this mean? Are we going to wait until they are already in Panama and then have to have another billion and a half supplemental? Ms. Salazar. And perhaps I did not--I didn't fully detail with you all the number of ongoing engagements SOUTHCOM has with Panama at this point, but it is an engagement that is somewhat limited to the fact that we won't be able to increase our capability of deploying people down there and increase our training and technical assistance to the Panamanians until we have this agreement that we talked about earlier. But we do have--we do have an ongoing engagement. SOUTHCOM has been working very closely with the Panamanians in developing their national security strategy. They also have been helping and working with the Panamanians so that they develop a nationwide communication system for their forces. So we do have something of--I am not going to say a presence but of an engagement with Panama. And what I said is exactly right. I mean, we continue to monitor this situation very closely and try to cooperate and work with the Panamanians in so much as the Panamanians want it. Mr. Souder. I have been involved in this subcommittee from the time we took over Congress and have been down every year to South America and even got lost in Santiago one night, that one of the things that is frustrating here is that we wait, we get the information, once we get the information we go through the process, and we get just enough to now be just slightly behind. And something like this is the most tragic thing we are battling in the streets and in our families, and it is not going down, it is getting exacerbated--unless we can get ahead of the curve and try to anticipate what is going to happen next, rather than reacting to what has happened, the charges against us are going to continue to be true and undermine our support base to do anything about it. Mr. Beers. Thank you, sir. That is the intention of our effort, to work with you on Plan Colombia to get ahead of the curve with sufficient resources, to be able to have a real opportunity to be effective, and we welcome your support and appreciate it. Ms. Salazar. And the Department of Defense also shares your concern and somewhat your frustration. We did not anticipate that we were going to have to leave Panama, so we found ourself almost, from 1 day to another, in the situation where we had to start negotiating with a number of countries agreements so we could land, finding the resources so we could be able to deploy assets that had not been deployed to these areas and basically finding ourselves seeking MILCON construction so we could be able to kind of replace and enhance our capabilities that we had flying from Panama. So, in many ways, the Department of Defense shares your concerns and your frustrations. Mr. Souder. Anything you want to say, Mr. Ledwith? Mr. Ledwith. Yes, sir. The Drug Enforcement Administration looks forward to the passage of Plan Colombia, also. It is something that is very, very needed, very timely; and I would like to see it go forward. Mr. Souder. Are you concerned that, if we pass it, it is just going to overrun Panama and that we aren't prepared to fight the Panama situation? Mr. Ledwith. We are concerned from a regional perspective about what the displacement effect will be of all of those resources in Colombia. And, of course, Plan Colombia also has a regional focus; and that is something we are watching very closely. The situation in Ecuador, the situation in Venezuela, the situation in Panama, these are all areas that can be adversely impacted by a displacement of either drug traffickers or guerrillas. Mr. Beers. But at this point in time, sir, in all fairness to your point, the cultivation---- Mr. Souder. Right. Mr. Beers [continuing]. Which is the principal focus of Plan Colombia wouldn't be expected to move in the direction of Panama. It is too small, and it is in the wrong geographic area. Mr. Souder. But that FARC is predominantly a protection group. What they could do is much like what happened in Vietnam. They go across to Cambodia, harbor themselves over there for awhile, we destroy one season of the crops, they come back across. Our guys can't control that much land with the amount of money we are giving them. That's only a fraction of the cost. Mr. Beers. Remember, it is not seasonal, sir. The cocaine is not seasonal. Mr. Souder. Depending on what we use to destroy it. Mr. Beers. No. It is a perennial, not an annual. It is not like the opium poppy. You grow a plant, and you continue to harvest it year after year after year for about 15 to 18 years. So they have a startup requirement that's 18 to 36 months to get started. Mr. Souder. That's assuming, of course, we have eradicated everything, that we got control of the whole zone, which $1.9 billion is not going to do. Mr. Beers. Yes. Mr. Souder. But it is an important start. For example, we are dealing with a stagnant bill. We need to continually look at that for the Panama question, because I heard this week and last week are new things that we hadn't seen before. We suspect it might happen, but that clearly we have a change in the dynamics of Peru. We don't know what the opposition is going to do. Are they going to align with that? Are there going to be additional pressures there? As we look at our package, we have to understand we have to stay ahead of the curve, not just be reactive. Otherwise, we are just throwing money away, wasting money. Mr. Mica. Thank you, Mr. Souder. Let me see--Mr. Rohrabacher. Mr. Rohrabacher. Thank you very much. First of all, let me just restate for the record that I do agree with Mrs. Mink about America's drug program cannot be just focused on interdiction. We have got to start trying to affect demand, which also includes treatment. And until we do get demand under control, we can't expect only law enforcement to do the job. So first, before I go into that, I want to identify with Mrs. Minks' statement. Let me also say that, in terms of the other end of this battle, I have been very deeply disappointed in the administration, and especially in what the administration has been doing in relationship to Panama, which I consider to be a frontline country in this whole situation. If we forget Panama, we do so at our own peril. Having looked at what has been going on in Panama, I would say that the administration has--at best--been incompetent. And trying to engage the Panamanians in a way that would result in policies and in a reality that is beneficial to the United States and protecting our interests. Not only drug interests, but interests in terms of potential enemies like Communist China. First and foremost, let me ask you, the baseline that you are using today, Ms. Salazar, you are suggesting that there are actually more flights now than when we had Howard Air Force Base. Ms. Salazar. That's correct. Mr. Rohrabacher. When we had Howard Air Force Base, as of what year are you talking about? Are you talking about as of 2 years ago? What about 10 years ago? Were there more flights 10 years ago before the Clinton administration? Ms. Salazar. I could get you those numbers. I guess what I would have to clarify, if you are talking about counterdrug flights or other types of support activities that the Department of Defense provided. Mr. Rohrabacher. If you could give me those numbers, would it surprise you to know that there were dramatically more flights 10 years ago? Ms. Salazar. Ten years ago? I don't think there would have been many--I believe--you know, I couldn't speculate, because I am trying to understand the numbers and the way of the counterdrug flights and the numbers that were increased. Mr. Rohrabacher. I have a chart in front of me here that suggests that at least the number of hours that were present in the flights has gone from over 8,000--from about 8,000 to under 5,000 hours. Mr. Beers. Which is your base year, sir? Mr. Rohrabacher. This is--the baseline is 1992, before the Clinton administration. Ms. Salazar. OK. Mr. Rohrabacher. It appears here, it is under 5,000--or around 5,000, I guess, but it was over 8,000. So you see a reduction of at least maybe a third of the number of hours. Ms. Salazar. Are you talking about a 1992 baseline, sir? Mr. Rohrabacher. Yes. Ms. Salazar. I don't know if you are aware, but there was a congressional mandate to cut approximately $300 million of the CTA program, which I supervise, and a lot of that cut was reflected in flight time and steaming hours. So the numbers are absolutely correct. Mr. Rohrabacher. OK. But the mandate wasn't that you cut this; it was to cut something, right? Ms. Salazar. No, no. It was actually when you look at the-- -- Mr. Rohrabacher. It was to cut the number of hours--the Congress mandated that we cut the number of hours for drug- related flights? Oh, that was when the Republicans came in, I guess. Mr. Ose. Mr. Rohrabacher, I am curious. May I interject something? Mr. Rohrabacher. Yes. Mr. Ose. The mandate on the $300 million, was that passed by a Congress--what year was that passed---- Mr. Rohrabacher. Well, is it the 1992 Congress that you are talking about mandated this? Ms. Salazar. It was for the 1993 FYI; yes, FYI. Mr. Rohrabacher. So that was---- Mr. Ose. That would have been the Congress elected in 1992 then? Mr. Rohrabacher. Right. Mr. Ose. Thank you. Mr. Rohrabacher. I seem to remember there was a shift in control of Congress somewhere around there. Ms. Salazar. But, sir, beyond who was---- Mr. Beers. There was a Congress elected in 1990. Mr. Rohrabacher. So you are saying the Democrat-controlled Congress mandated that you shift--dramatically decrease the number of drug control flights in this area; is that right? Ms. Salazar. There was a concern expressed by a GAO report written in 1992 that the Department of Defense was spending way too much money in detection and monitoring, in light of the capability of our law enforcement to perform end games and the capability of other countries to perform end games. Mr. Rohrabacher. So there is an excuse for them to want to dramatically decrease it. So you are not using that year as a baseline. You are using some year after these dramatic cuts. Ms. Salazar. Yes, 1998. The figure I gave you, 520. Mr. Rohrabacher. 1998 obviously; what were we in the process of in 1998? We were in the process of moving out of Panama in 1998, were we not? Ms. Salazar. No, sir, we were not. We left Panama in 1999. Mr. Rohrabacher. Right. We just left in 1 day? Ms. Salazar. No, the decision to leave Panama, at least when we were advised that we would be--when the decision was formally made to leave Panama was in, I believe, October 1998, Randy? Yes. Mr. Rohrabacher. Let me just say there were negotiations. Howard Air Force Base was closed in June 1999, of course, which means I don't think they just decided the day before they shut the door. It seems to me there is probably an evolution of-- especially considering the terrific job that the administration did in negotiating to try to keep Howard Air Force Base, there is probably an understanding that Howard was going to actually shut its doors. So the baseline you are using is a baseline when Howard was in transition to be closed. Ms. Salazar. I would politely disagree, because the ratcheting down of flights began, I believe, in January or February 1999. Mr. Rohrabacher. You are trying to tell us--the essence of your testimony today is that we really didn't need Howard after all. Ms. Salazar. No, sir. Mr. Rohrabacher. Well, that is what you are saying. You have all these circles here and saying look at the coverage we are getting without Howard. You are trying to say, oh it was OK that the administration---- Mrs. Mink. Will the gentleman yield? I don't feel that is an appropriate interpretation. They are left with a situation where they have to come up with an alternative, and this is the alternative plan which they feel is adequate in meeting the coverage that Howard Air Force Base previously provided, but not because they didn't need Howard. Mr. Rohrabacher. OK, that is very fair, and one could conclude that only if one believes that the administration was negotiating seriously to keep Howard. And what I am trying to say or suggest, and what my observation is, is that there was no serious negotiation, just like the administration hasn't done anything to keep this Chinese Communist-dominated company from controlling both ends of the Canal. The administration also was not negotiating seriously to try to keep an American military presence in Panama. There is an intent that is going on here that is not on the surface, is what I am saying, and I am trying to get to that. It seems to me by suggesting that, well, we really haven't had any problem because of this because now we have the coverage anyway, takes away from an understanding of just how drastic a change has taken place in Panama and what that has to do with our national security and our efforts to combat drug shipments. Ms. Salazar. If I could make two comments, at least from DOD's perspective and as a person who had to deal with the fact that we were leaving Panama, we pretty much were under the impression, and we were behaving as a Department, that we were going to be in Panama until September 1998. And the reason why I tell you this is that from at least our perspective, there was a sense or there was a hope that we would be able to stay. With that said, if I have sounded Pollyannaish and have given you the sense that there aren't challenges in our program, I apologize; there are huge challenges. And one of the biggest challenges we have right now is being able to increase our capability of doing surveillance over the source zone which is the area, as you know, we need to place most of our resources, because that is the area where most of the drugs that come to the United States come from. So I am not trying to be Pollyannaish, but kind of paraphrasing what Congresswoman Mink was saying, we woke up, we had the situation, and I believe within a year the Department of Defense has been able to react. Mr. Rohrabacher. You try to make the best out of a bad situation, and I guess what I am suggesting is this administration created the bad situation. This administration, through either incompetence or whatever their motive was, has overseen a total withdrawal of the United States from Panama. There are evil forces in this world, forces that are enemies of the United States, forces that don't like democracy, whether they are gangsters or drug lords or Communist Chinese who may hate us for whatever reason, that would like to control and dominate the strategic country of Panama. The Panamanian people know that. They wanted us to stay. Polls indicate that 80 percent of them wanted us to reach an agreement; yet this administration wasn't able to do so. That is the reason why I am expressing, anyway, here to express doubts about what the administration has done and to applaud the chairman for focusing on this, because it affects our drug efforts, but it affects our national security in so many ways. Mr. Mica. We appreciate the gentleman joining the panel. I do want to give our ranking member an opportunity for another question. I think Mr. Barr had a question, if we could proceed. Mrs. Mink. Our visitor on the committee has riled my adrenaline, because I don't think that his conclusions are really fair to the administration. It is true that the negotiations failed, but as the explanations have been given to this committee, formally and informally, I believe that the negotiations were being conducted very aggressively and seriously. It was the interposition of political circumstances within Panama, as I understand, the elections and so forth, that caused the failure of the negotiations to finalize an agreement where we could stay in some form or another; perhaps not the full base, but at least for our drug surveillance requirements. I have said in my previous comments on this that I was very disappointed that the negotiations failed, and I would have hoped that they could have been successful. But to say that the administration itself caused this to happen, I think is a complete misanalysis of the circumstances that we find ourselves in. Having said that, I join the chairman of this committee in urging the administration now to do everything they can to provide the United States with the equal resources that we lost when we lost Panama. That is the sentiment that both the chairman and I share, that we have to develop an aggressive policy that will give the United States the same kind of capacity to obtain intelligence on the drug movement and to do the interdiction that is required in order to curtail traffic in our own country. We can't interpose our wishes upon an independent country. We don't own them. We can't dictate policies to an independent country. Some on this committee would probably wish that we could, but we can't. The reality is we can't. Therefore, we have to come up with a substitute policy. If the majority feels as strongly as they have indicated today, they should get to work on the other side of the Hill and make that money available to the administration so that they can do the repairs and put the AWACS operations into full effect so we can have the surveillance of source as well as transit. This is an area of enormous concern to the minority, and we join the majority in expressing them. We may have different emphasis on where we would like to see our efforts. Many of us on our side are so frustrated that we can't get enough funding and attention on the treatment end, so we continue to go to the floor and try to urge that point of view. I believe it probably will be done again shortly. I think this it is an area which we should minimize, this country-bashing. I don't see any point in bashing Panama at this point and its political leadership, and this leads me to my final question. We talk about all this name calling about the local Panamanian law enforcement efforts. To what extent are we able to work with the law enforcement agencies that exist there? What are we doing to help them meet the challenge and are we meeting with any success at all? Anybody on the panel? Mr. Ledwith. I would be happy to respond to that, Madam Congresswoman. We have a very good working relationship with the Panamanian authorities. We have eight agents stationed in Panama. Due to congressional increases, we hope to increase that in the upcoming year to maybe 10 agents. We have a good, strong, working relationship with them. Yes, there are problems, there are a lack of resources, and they are almost overwhelmed with the scope of the problem. But, yes, we are able to work with them, and we will continue to do so. Mrs. Mink. Is there any indication that they resent or reject our efforts to support and supplement their own internal law enforcement activities with respect to the drug issue? Mr. Ledwith. As to drug interdiction, no. As to money laundering, it is a somewhat different subject. Mrs. Mink. So in that area they do resist our interventions? Mr. Beers. It isn't so much that they resist them. They have taken our assistance and our training. The issue is that they haven't completely created the legal framework that makes it effective. As Mr. Ledwith said earlier, the only predicate at this point in time for their money laundering legislation is drug trafficking. It would be a much more effective regime if the implementation or the law were broader based so we could do that. But we have been training their financial intelligence unit, we have been working with them. They have not made the prosecutions off of this unit yet that we would like to see them make, and that is something we have talked with them as recently as this week about. So it is an ongoing issue of concern. Mrs. Mink. What about the free trade zone? What efforts are we making there to meet the problems that all of you have cited with reference to the free trade zone? Mr. Ledwith. Well, if I may, I would like to echo my colleagues' remarks. I wouldn't characterize it resisting our efforts. I would categorize it as a legal entanglement. The Colon Free Zone is of such paramount economic interest to Colombia and is a source of such revenue, changes in the laws of Panama that would enable more effective investigations and prosecutions of money laundering are economically difficult. There are a variety of interests at play. Mrs. Mink. Well, that is no different now than it was before we lost the air base. I mean, that is not a new development, is it? Mr. Ledwith. I think you would be accurate in representing that it is not a new development. The Colon Free Zone has been there for some time. Mrs. Mink. No, I am talking about the money laundering. Mr. Beers. Right. No, it has been an ongoing concern. I have been involved in this situation for 10 years. Mr. Ledwith. It has been a concern for many years. Mrs. Mink. So it is sort of the situation and frustrations that we express when we discuss the internal difficulties we have with Mexico. Mr. Ledwith. Anytime---- Mrs. Mink. There is a very close correlation in what we would like to see happen and the difficulties because of their internal legal system, their laws and so forth. Mr. Beers. As well as economic interests, yes, ma'am. Mrs. Mink. Thank you, Mr. Chairman. Mr. Mica. Mr. Ledwith, you said you hadn't seen this report that says that there are more serious problems arising from corruption of law enforcement and other agencies within Panama. Mr. Ledwith. I now have a copy of it, sir. I haven't had a chance to read it yet. Mr. Beers. Sir, I skimmed it, and I have tried to understand how one could draw from that to say that this is something that has happened, as Mrs. Mink has said, something that has happened in the very recent past. It seems to me to describe a situation that has been there for as long as I have looked at Panama as an area of concern. Mr. Mica. I will look at the report. I have not seen a copy of it. We will get back with you after we have reviewed that and see how dramatically the situation has changed. Mr. Barr. Mr. Barr. Thank you, Mr. Chairman. Going back to our map over here, Ms. Salazar, given that there had been some 2,000 counterdrug flights per year, what mix of flights would you have to have out of these three potential locations in order to reach that level of 2,000 counterdrug flights per year? Ms. Salazar. I misstated that number. There were 2,000 flights leaving Panama at the time, but of those 2,000 flights, at least in the year, base year that I am talking about, 1998, there was 520. As of right now, we have 600 flights that have been flying out of the FOLs. Most of those flights---- Mr. Barr. You are confusing me. The figure of 2,000 counterdrug flights is yours. Ms. Salazar. Sir, I am sorry. I misstated. It wasn't 2,000 counterdrug flights. Mr. Barr. I don't mean today. This has been your consistent position. You stated in sworn testimony on May 4, 1999, before this committee, you used that figure as well. Forgive me, but I suspect what we are hearing is a typical Clintonism. In an effort to make us believe through smoke and mirrors that there is really even more drug flights going on now than there were before, you are trying to now change the definition of what a counterdrug flight is. I don't buy that. I mean, you used, have used for over a year now, the figure of 2,000 counterdrug flights per year. That is a quote from your sworn testimony. And now you are telling me, oh, there really weren't 2,000 counterdrug flights, there were only 500, and therefore all of a sudden, hey, it is magic, there is more now than there were before. Ms. Salazar. Sir, if my testimony says 2,000 counterdrug flights, I apologize. That number is wrong. And I don't question you, it may be in my testimony. I should not have said that. Mr. Barr. Can somebody take these documents to the witness, please? This was your sworn testimony in May 1999. We rely on you- all's testimony. When you all come up here and take an oath and swear to give us correct information, we would like to be able to rely on it, and our staff relies on it. And when they prepare information for us, whether it is going on a foreign CODEL, such as the ones that Mr. Souder mentioned he is going on, whether it is for our work up here to perform our job on behalf of the American people and to legislate and to appropriate and to conduct oversight, we have I think a right to rely on sworn testimony from administration witnesses. Now, when an administration witness comes up here, as you did in May 1999, and gives us, both in written testimony and in sworn oral testimony, that there were over 2,000 counterdrug flights per year originating from Howard Air Force Base, I am inclined to believe you. Now you are telling me, you are trying to play games and say oh, that doesn't really mean 2,000, and I apologize, maybe I misspoke. I don't think you misspoke. I think that there were in fact over 2,000 counterdrug flights originating from Howard. Ms. Salazar. When I spoke 2,000 counterdrug flights, we were talking about flights that included resupplying, bringing in equipment, bringing in individuals and probably involved in some of those numbers were flights that did not necessarily have the counterdrug nexus. If you wish, I can bring you concrete numbers as to the types of flights that we were doing out of Howard Air Force Base prior to its closure and what we are doing right now. When I spoke of the 520 flights, I am talking specifically of 520 detection and monitoring flights. That is, those flights that specifically took off from either Aruba-Curacao or one of the FOLs and did surveillance over any specific region. Of those detection and monitoring flights, specific detection and monitoring flights, we did 520 in the base year 1998, and this year we did 600 of those flights, detection and monitoring. Mr. Barr. So your position now is, just by coincidence, when we are up here trying to get to the bottom of some things here and to find out why we don't have the same capability that we had under Howard, you are now trying to convince us that even without further work on any of these bases, these FOLs, even without any AWACS, that you expect us to believe that the air coverage for this region is now even better than it was when we had Howard and were operating out of Howard? Ms. Salazar. Sir, the big difference between the types of flights that are taking place---- Mr. Barr. Are you trying to with a straight face convince us that the situation is now even better than it was when we had Howard? Ms. Salazar. No, sir; I am trying to give you the facts. Mr. Barr. You are telling me that according to your now new definition of what a counterdrug flight is, that there are more counterdrug flights now than there were when we had Howard? Ms. Salazar. The difference between the activities or the flights taking place when we had Howard and now is the AWACS. All the other assets are flying in the region. They are either flying Aruba/Curacao---- Mr. Barr. What AWACS? There aren't any AWACS down there. Ms. Salazar. Sir, we have right now, this year alone, we were provided an AWACS, and it flew--16 percent of the number of flights I provide you were AWACS. Mr. Barr. Over 300? Ms. Salazar. Over 300? Are we talking about the number of AWACS? Mr. Barr. No, the number of flights. Ms. Salazar. No, sir, I am---- Mr. Barr. I thought you said there were something over 500 flights? Ms. Salazar. 600 flights. Of those 600 hundred flights, 16 percent of those flights were AWACS related. Mr. Barr. That is what I am saying. Ms. Salazar. Sixteen percent. One, six. Mr. Barr. I thought you said 60. Ms. Salazar. No, I apologize. Sixteen. Mr. Barr. I now realize we can't take anything for granted. You didn't say AWACS flights, you said AWACS related. Mr. Salazar. They are AWACS. AWACS flights. I can give you the breakdown of the number of flights that the P-3s did, the number of flights the Citations did, the number of Double Eagle packets. Mr. Barr. But those 600-something flights are counterdrug flights? Mr. Salazar. That is correct, sir. Mr. Barr. And you are trying to have us believe---- Mr. Salazar. Sir, they are detection and monitoring flights. Those are not flights where we were moving people around, where we were moving equipment. These are 600 bona fide surveillance flights. Mr. Barr. I don't know what you mean by bona fide anymore. Maybe we have to go back to basics. What does a counterdrug flight mean? Mr. Salazar. A counterdrug flight, the flights that I pay for, that they use my funding for, has to have a counterdrug nexus. Mr. Barr. What is a counterdrug nexus? Mr. Salazar. It could be that they were moving people around, that they were trying to transport people from one place to another. It could be transporting equipment. It could be ISR, which is different than detection and monitoring flights. So when you take all these different types of counterdrug flights, what I am telling you right now is the detection and monitoring, the flights that we perform to be able to do the surveillance, was 600. Mr. Barr. So detection and monitoring flights would be a subcategory of a counterdrug flight? Mr. Salazar. That is correct, sir. Mr. Barr. And when you use the figures for here, which are you using? Mr. Salazar. The figures I am using for here are detection and monitoring. Mr. Barr. So I go back. Your testimony today is you are trying to convince us that despite what seem to be glaring problems here in getting sufficient planes in the air and down there, that the situation is actually better today because you have more detection and monitoring flights in the air than we did previously with Howard? Mr. Salazar. I am not--if you believe--if that is what is understood from my testimony, then I am going to give a caveat. We acknowledge most of those flights took place, those detection and monitoring flights, took place in the transit zone. What I am trying to say is that is the biggest challenge we have right now. We need to be able to take those 600 flights and start increasing the number of flights in the source zone. So I am not--I am acknowledging---- Mr. Barr. What zone do we have here? Mr. Salazar. Both. Mr. Barr. Other than the twilight zone, I think. Ms. Salazar. No, sir. Mr. Barr. Where is the transit zone? Mr. Salazar. If you look at the blue star and the circle around the blue star, we would classify that as the transit zone. Excuse me, excuse me, the source zone. The star, the green star--I would say above the green star, that would be the transit zone, all the Caribbean region and the east-Pac region. What I am trying to say, each one of those circles doesn't necessarily encompass one region, the transit zone or the source zone regions. Mr. Barr. When we heard from you earlier, when we talked about the number of counterdrug flights per year originating from Howard, did that include both source zone and transit zone also? Mr. Salazar. Yes. The 2,000 flights, yes. Mr. Souder. What about the 540? Mr. Salazar. The 520, that would include both transit zone and source zone. Sir, I am acknowledging here we have a problem. Most of those flights have been in the transit zone. The priority of this administration has been to get those flights into the source zone where they need to be. Mr. Barr. These figures may not mean an awful lot. Mr. Salazar. They mean there has been great effort---- Mr. Barr. You really have to go beyond simply whether it is 2,000 or 500 or 600 and look at precisely what kind of flight it was. Mr. Salazar. I agree. Mr. Barr. And precisely what area it covered. Mr. Salazar. I agree. Mr. Barr. Somebody take that off then, because it is absolutely meaningless and I don't want it to confuse the issue. Looking at the particular airfields at the FOLs, it is correct, is it not, that these are civilian airfields? Mr. Salazar. No. The Manta is an Air Force Base that does also have a runway that has international flights. The Salvador is also an Air Force Base, but also it is right next to an international airport. Mr. Barr. What about Aruba/Curacao? Mr. Salazar. Aruba/Curacao are international airports. Mr. Barr. So you all have a problem. Obviously, one problem is security and having nonmilitary personnel spotters who could very easily spot what aircraft is coming and going, and when. Mr. Salazar. And that, unfortunately, has been the case even when we were in Panama. The issue of the spotter was an issue we had to constantly battle with. I guess the advantage, if there is an advantage in this, is that having three airports or four airports where we are flying out of, it just makes it somewhat more difficult for the traffickers to predict at what point we are going to be flying an AWACS or P-3 in any given area or region. But when we were in Panama, the spotters---- Mr. Barr. You wouldn't say it is an insurmountable burden for them, though, certainly? You wouldn't say it is an insurmountable problem for the drug traffickers, given they have billions of dollars? Mr. Salazar. They have a lot of resources. Even when we were at Howard, we had to deal with this problem. Mr. Barr. Could I, Mr. Chairman, I would like to introduce into the record a document entitled Legislative Assembly Law No. 5 of January 16, 1997, from the Republic of Panama. Mr. Mica. Without objection, so ordered. [The information referred to follows:] [GRAPHIC] [TIFF OMITTED] T1970.101 Mr. Barr. Is the GAO report to which our colleague Mr. Rohrabacher referred to, is that a part of the record also from December 1999, the GAO record? Mr. Mica. It has been made a part of the record in the past. We did a hearing specifically on that report. We will refer to that for that. Mr. Barr. Thank you very much, Mr. Chairman. Mr. Mica. Thank you. Mr. Ose. Mr. Ose. Thank you, Mr. Chairman. I want to go back, if I may---- Mr. Mica. We are going to have a vote shortly, and I would like to try to get our witness up, so maybe we could divide the time up remaining. Mr. Ose. I will submit my questions in writing, Mr. Chairman. [The information referred to follows:] [GRAPHIC] [TIFF OMITTED] T1970.102 Mr. Mica. Mr. Souder. Mr. Souder. I have one brief comment I want to make. Mr. Salazar. I understand that the Coast Guard is very worried about the increase in gas prices, at we have some in the supplemental, but they are saying they could be down as low as 10 percent of their coverage in the transit zone. So we also have to be looking at mixed resources. I would like to request for the record an ``apples to apples,'' so that we can look back on this hearing and try to see this, possibly using the definition, because I have a different concern, slightly, than Mr. Barr had. Now I feel kind of duped by the 2,000, because I thought the 2,000 were flights that were tracking, which may mean we had a more significant drop earlier. What I would like to see, given the specifics of the definition, a 1990, a 1995, a 1998---- Mr. Mica. Mr. Souder, it is very difficult. We have been round and round and they have changed the definitions. There were in fact 15,000 flights taking off annually from Howard Air Force Base. Some of those were military, some might have had a drug nexus, some might have been delivering personnel. We have been behind closed doors and tried to sort this out. We have gotten different definitions and evaluations. I would be glad to again look at your request. We can go back and sit down. But the terms have changed, the definitions have changed, and you are not going to get a straight answer. Mr. Souder. I would like to know what the witness's statement of 2,000 constituted, and then I would like to have that compared by the Department of Defense to before and afterwards, apples to apples, because right now you have shaken the confidence of our ability to measure, because when we were told, it was counter-drugs; and now we are hearing it was shuttling around in 1998. Part of our concerns in 1998 were we were already cranking down from 1995, and 1995 was arguably maybe starting to go back up, but from 1990. So we are really comparing things here that the base years are important and we need a little bit of a pattern of a definition. Mr. Mica. We will request that information. Mr. Souder. We would really like surveillance and detection flights, 1990, 1992, 1995 and 1998. That is really the critical thing. If we are going to go out 600, I would like to see some years before Clinton, and source zone emphasis. Mr. Mica. Briefly, Mr. Rohrabacher. Mr. Rohrabacher. I know we have a vote, so let me just state for the record that Mr. McNamara, who was a negotiator for this administration with the Panamanian Government, testified before the committee on which I sit, International Relations Committee, that there was a need and that the administration determined a need for a 2-year cooling off period; in other words, for a closure of all America's military presence in Panama for a 2-year period before we would then start negotiations, serious negotiations, for an American military presence. Which seemed to indicate that what has been happening down there, the fact that you open your eyes and there is now no Americans down there in order to have a positive influence on Panama, was part of an actual policy, although it hasn't been stated. What we have been discussing, of course, in this last little interchange about the 2,000 flights is simply what the definition of ``is'' is, and it keeps coming back over and over again with this administration, and we keep having to face questions like that. Mr. Mica. Thank you. Well, we do have a vote. We will be submitting additional questions for the record to these witnesses. I appreciate their cooperation and testimony today. We will dismiss them at this time. [The information referred to follows:] [GRAPHIC] [TIFF OMITTED] T1970.103 [GRAPHIC] [TIFF OMITTED] T1970.104 [GRAPHIC] [TIFF OMITTED] T1970.105 [GRAPHIC] [TIFF OMITTED] T1970.106 [GRAPHIC] [TIFF OMITTED] T1970.107 [GRAPHIC] [TIFF OMITTED] T1970.108 [GRAPHIC] [TIFF OMITTED] T1970.109 [GRAPHIC] [TIFF OMITTED] T1970.110 [GRAPHIC] [TIFF OMITTED] T1970.111 [GRAPHIC] [TIFF OMITTED] T1970.112 [GRAPHIC] [TIFF OMITTED] T1970.113 [GRAPHIC] [TIFF OMITTED] T1970.114 [GRAPHIC] [TIFF OMITTED] T1970.115 [GRAPHIC] [TIFF OMITTED] T1970.116 [GRAPHIC] [TIFF OMITTED] T1970.117 [GRAPHIC] [TIFF OMITTED] T1970.118 [GRAPHIC] [TIFF OMITTED] T1970.119 [GRAPHIC] [TIFF OMITTED] T1970.120 [GRAPHIC] [TIFF OMITTED] T1970.121 [GRAPHIC] [TIFF OMITTED] T1970.122 [GRAPHIC] [TIFF OMITTED] T1970.123 [GRAPHIC] [TIFF OMITTED] T1970.124 [GRAPHIC] [TIFF OMITTED] T1970.125 [GRAPHIC] [TIFF OMITTED] T1970.126 [GRAPHIC] [TIFF OMITTED] T1970.127 [GRAPHIC] [TIFF OMITTED] T1970.128 Mr. Mica. What I am going to do is, since there is a vote, I think we will recess until a quarter of one. At a quarter of one, we will have Professor Thomas Cabal provide his testimony and hear from our second panel. With that, we will excuse this panel. The subcommittee stands in recess until a quarter of one. [Recess.] Mr. Mica. I would like to call the subcommittee back to order. We should be joined by other Members. But I do want to call forth our second panel so we can proceed. Our second panel consists of Professor Tomas Cabal. He is with the University of Panama. Welcome to our subcommittee. This is an investigations and oversight subcommittee of Congress. We are pleased to have you provide us with your oral testimony, and also upon request through the Chair, we will be glad to submit lengthy documents or information, reports in the record, or make reference to them by request. Also, this being an investigations and oversight subcommittee, we do swear in our witnesses. If you would stand, please, to be sworn. [Witness sworn.] Mr. Mica. The witness has answered in the affirmative. I am pleased to welcome you at this time and also to recognize you for your testimony and also thank you for being with us, for the record. I understand it was somewhat difficult and straining circumstances on your coming, leaving Panama, to provide us testimony, and we do appreciate your willingness to come forward and supply us with your background and point of view at this juncture. Thank you. STATEMENT OF PROFESSOR TOMAS CABAL, UNIVERSITY OF PANAMA Mr. Cabal. Thank you, Congressman Mica. I want to do two things. I will submit my written testimony, as I will only cover part of my statement---- Mr. Mica. Without objection, your entire statement will be made part of the record. Please proceed. Mr. Cabal. Right. And then, I will cover the areas having to do with the Chinese presence in Panama. I would also like to preface my statement by thanking Congressman Rohrabacher, Congressman Barr, Congressman Metcalf, for their role in securing or making sure that I was present today at this hearing. As you mentioned in your statement, it was very difficult. We still have very stringent libel laws in Panama, we call them gag laws, introduced by the Noriega regime, precisely to persecute, prosecute and intimidate citizens and journalists just trying to do our job. So again, thank you to your efforts that I am here today. I also would like to address some of the issues brought up by the panel, because I think there is a lot of information that has not been properly presented, and some of that information I think is clearly misleading. I have a background in engineering and my family has been involved in construction in the Panama Canal Zone for over 20 years. We built many of these bases, the housing involved, and we also helped build a key facility that has been closed down, which is Galata electronic listening post that operates on the Atlantic side. If you will, Mr. Chairman, I will go directly into my testimony and bring up some points that were brought up in the question and answer period by some of the Congressmen. The presence of Red China. In the last 5 years, powerful Chinese companies have invested millions of dollars in Panama. Recently the Hong Kong Shanghai Banking Corp. purchased the local branch of the Chase Manhattan Bank. Cable and Wireless, an English corporation with close ties to Hong Kong, owns Panama's phone company. Hong Kong and China export 25 percent of all the goods purchased by the Colon Free Zone. Hutchison Whampoa, a Hong Kong-based company that operates ports worldwide, won the right to operate the ports of Balboa and Cristobal on the Pacific and Atlantic entrances to the Panama Canal. Experts disagree on the level of influence that the Chinese will have in Panama, but congressional investigators and the National Security Center note that the contract they signed allows them abundant leeway in their operation of the port facilities. Hutchison controls 50 percent of all stevedoring services in Hong Kong, a situation that lets them set container transport prices and may allow them to undercut their competitors in Panama. Li Ka Shing, Hutchinson's chairman, is a key advisor to the Chinese leadership in Beijing. Some experts believe that Hutchison will be able to affect canal operations and that they could impede the normal flow of vessels, a contention disputed by the Panama Canal authorities, who insists that only they can determine the level of expediency in canal traffic. With America's retreat from Panama, the Red Chinese are quickly filling the power vacuum. Companies identified by the Cox report as participating in industrial espionage or the purchase of restricted technology are active in Panama. COSCO, the Chinese shipping company that services the People's Liberation Army, sends 300 ships every year through the Panama Canal. They are investing heavily in Panama and have just started a new service from China to Europe via the canal. Other Chinese companies will take advantage of the modernization of the Panama railroad, while others will be bidding the operation at Howard Air Force Base, investments that could put them in a commanding position in Panama. The presence of Red Chinese companies may tilt the diplomatic balance in favor of Beijing. Currently, Panama maintains diplomatic relations with Taiwan, but as the Bahamian Government just proved, a $40 million investment by Hutchison Whampoa in port facilities led to a switch in its diplomatic allegiance from Taipei to Beijing. Continued investment by Chinese corporations could greatly diminish the ability of the United States to influence events in Panama. The Chinese community is already very influential, and with the support of Chinese companies and investments this influence could increase. The Government of Panama wants foreign investment, but as a recent poll shows, 81 percent of the population would welcome the return of the United States and would support a limited American military presence to aid the country in its war on drugs and to secure the Colombian border. The key to any negotiations that would bring back American military forces to Panama is a fair economic arrangement between both countries. The United States still has an opportunity to influence events in Panama through investment and foreign aid. Panama needs $100 million to fully implement a national security plan that would protect the Colombian border and limit the activities of international drug traffickers. As part of the aid package to Colombia, the Congress only included $8 million in aid to Panama. The Panamanian Government needs to purchase helicopters, patrol boats, aircraft, radar and communication equipment, and it needs to improve the training and equipment provided to the border police. A naval base to patrol the Atlantic companies must be constructed, while radar coverage must be extended to cover the Pacific area and the Colombian border. On the Pacific side, the United States Coast Guard could be instrumental in reopening Rodman Naval Station, a modern naval facility located near the entrance to the Panama Canal. The Coast Guard could also be instrumental in helping the National Maritime Service improve its interdiction ability in Panamanian territorial waters. American corporations could become key players in the bid to transfer Howard Air Force Base into an international air cargo facility that would take advantage of its proximity to the canal and the Colon Free Zone to ship goods all over the world. Tax incentives and export-import funding could help American companies invest in Panama if Washington and the Congress decided that Panama is still an important strategic partner for the United States. American companies ship more than 140 million tons of cargo through the Panama Canal every year. The canal is still very important to American commerce and to American prosperity. Many experts agree that a new strategic partnership between Panama and the United States is the key to the operation of a safe and efficient international waterway that is a marvel of modern engineering and Yankee ingenuity. Many people in the United States and Panama would like the two countries to reestablish a strategic partnership, then, to enhance canal security and to protect both nations from the threat of international drug traffickers. Organizations like the Center for Security Studies, the Conservative Caucus, and the National Security Center have been instrumental in getting the issues before public opinion in Panama and in the United States. Let us hope that the elected representatives of the people in the U.S. Congress examine the facts and work toward reestablishing a strategic alliance that will enhance the security of both countries. On the issue of drug interdiction flights, you mentioned, and we heard today, all types of figures being bandied about. The figures start at 20,000. Those were the flights coming out of Howard Air Force Base. Howard Air Force Base has the longest runway and the best infrastructure of any facility of its kind south of the Rio Grande. The United States does not have and will not have in the near future a facility such as Howard Air Force Base. Another element that I notice was not fully analyzed this morning has to do with what intelligence experts call real-time information. The antidrug center that operated at Howard Air Force Base had a budget of $238 million a year. This amount of money was expended because you had the air crews living and working out of Panama on a rotation basis, the aircraft were serviced and maintained, they were fueled. The facility also had top-of-the-line computers and communications facilities that tied in to the Galata Island communications facility, so that when the AWACS and the P-3 Orions were operating, this information could be fed and coordinated with other regional radar coverage. The United States provided the Governments of Colombia, Peru and Venezuela with radar coverage that allows them to monitor and to intercept suspicious drug flights. One of the outcomes of the operation of the antidrug center at Howard Air Force Base and real-time information getting promptly to law enforcement and to military groups in the region, was that the drug interdiction, the aerial drug interdiction effort, was very successful. From 1995 to 1998, 38 aircraft were shot down in the region. Drug planes were shot down, most of them by the Peruvian Air Force that has been very aggressive. The Peruvian philosophy is if you do not hail an order to land the aircraft, you are shot down. The Colombians have a little different variety. They pursue the aircraft and try to force it to land, rather than shoot it. But recently they too have resorted to the effort at shooting down, and recently a suspected drug plane was shot down on Colombian territory. So that in itself accounted for a substantial increase in the price of coca in the region producing the cocaine. The other aspect that I think was not fully addressed, and you can look at it, if one of the staffers would be kind enough to put the circle there again to look at it, it is the fact that Panama is a strategic center because of its very close proximity to the countries producing cocaine. Here you have extended coverage. Yes, you might extend the coverage, but you are not that close. It means we haven't heard any figures pertaining to the cost of fuel, which in my estimate, will skyrocket because of the increased distances that the aircraft will have to fly. The distances also mean that the aircraft will not be able to be in the air for longer periods of time. And Howard Air Force Base is a key element to that because of its proximity to the regions that are producing these drugs that are inundating the streets and cities of the United States. Another element that I think fits and has not been fully disclosed to this subcommittee is the fact that along with drug interdiction, you have facilities in Panama like at Fort Sherman where training could be enhanced, not only for Panamanian border police, but for regional armies, that can train in the counterinsurgency and the jungle training so needed in areas such as this. In the Darien province which was mentioned this morning, we share a very heavy jungle terrain, tropical rainforest border, 225 kilometers with Colombia, which is now becoming a haven for the FARC guerrillas. Over the last 2 weeks, more than 1,000 Colombian citizens have fled the fighting between the paramilitary, the Colombian Army and the FARC guerrillas and are now in Panamanian territory. This last week there were two or three incidents of groups of armed Colombians coming into Panamanian territory in areas where the Panamanian police simply can't do the job. Panama's national air service has one helicopter operational and three small fixed-wing aircraft to patrol the Colombian border. The maritime service does not really have the equipment or the capacity or the infrastructure to patrol both the Atlantic Coast and the Pacific area which, because we have no radar coverage out of Howard anymore, that area is completely open. There is no radar coverage in this area. Now, whether this administration is going to provide radar coverage in the so-called eastern region, again, remains to be seen. But the way this thing works is you have regional radar coverage, and then in each individual producing country, you have smaller mobile radars that are operated by the local military with the support and training of American personnel. As you know, Mr. Chairman, there are now close to 300 military advisers in Colombia trying to get the antinarcotics battalion fully operational, trying to get Plan Colombia off the ground. In Plan Colombia, this Congress intends to spend, what, something like $1.6 billion to try to help the Pastrana administration win its war against drug traffickers and Colombian subversives. All they have to do, Mr. Chairman, is cross the border, and it is time out. They simply cross the border and they will escape the Blackhawks or the Hueys you give them or the new battalions they train. They will simply cross over into Panamanian territory and hide out like they have done for the last 10 years. Arms smuggling. There is an ongoing route that begins in the Middle East with Libyan arms trafficker, East European arms traffickers. The weapons are shipped basically to Honduras and Nicaragua, and then from then on by land and sea they are shipped into Panama and on to the Colombian subversives. This is one of the fallouts from the paramilitary and the left wing guerrillas in the Caribbean area of Uraba province, which the Colombian province of Uraba borders the Panamanian territory, is that both the right wing and the left wing need the access to the Caribbean Sea to get their weapons in and to ship their drugs out. Colombian guerrillas and paramilitary profit about $600 million a year in the sale and export of drugs. They have moved from simply protecting and taxing the campasinos, the farmers that grow the drugs, into overall commercialization, refinement. And, of course, as you know the FARC guerrillas now control free territory the size of Switzerland, in which laboratories are now operational, in which cultivation is now taking place. That is why the figures that were presented here by the DEA representative have skyrocketed. In the last year, Colombian drug production has risen by about 25 percent. That means a rise from around 450 tons of cocaine produced in 1998 to between 520 and maybe as much as 650 tons of cocaine. Heroin is also rising in the areas occupied by the guerrillas. The estimates by experts is anywhere between 7 and 10 tons of high-grade heroin are now flowing into the United States, almost single-handedly from the Republic of Colombia, between 7 and 10 tons. This transit goes through Panama. The figures we have is about 300 tons of cocaine and maybe 2 to 4 tons of heroin are shipped through Panama every year into the United States. So I guess the administration can argue on the values of how much they are going to have to spend on these forward operation locations and whatnot, but the fact is that real on- the-ground intelligence, real human resources being utilized close to where the action is occurring, is certainly much more effective. There are issues, of course of politics and Panamanian sovereignty, which the chairman there addressed. But, overall, the American military presence was a welcome presence. Eighty- one percent of the Panamanian people want Uncle Sam to come back. They are not saying, ``Gringo go home,'' they are saying, ``Gringo, come on down.'' Why? Because the American military presence, the infrastructure and the jobs that they generated signify some $300 to $400 million in the local economy. The Panamanian economy is today in a severe economic recession because high-paying workers have lost some 20,000 jobs. There are about 100,000 Panamanians that depended in one way or another from the American military presence. That is gone. This money fueled the economy, and we in Panama were not prepared. The government was not prepared to make that transition. [The prepared statement of Mr. Cabal follows:] [GRAPHIC] [TIFF OMITTED] T1970.129 [GRAPHIC] [TIFF OMITTED] T1970.130 [GRAPHIC] [TIFF OMITTED] T1970.131 [GRAPHIC] [TIFF OMITTED] T1970.132 [GRAPHIC] [TIFF OMITTED] T1970.133 [GRAPHIC] [TIFF OMITTED] T1970.134 [GRAPHIC] [TIFF OMITTED] T1970.135 Mr. Mica. As you can hear, the buzzer has gone off for a vote. We want to have some time for questions, we have about 10 minutes for questions. I wanted to ask a couple, and we appreciate again your testimony and your coming before us today. First of all, how would you estimate since the closure of Howard Air Force Base last May, a year ago, what would you estimate the amount of increased transit of cocaine and heroin to be through Panama? Mr. Cabal. I would estimate that the figures in 1998 were 100 to 200 tons, 100 tons of cocaine and about 2 tons of heroin. Mr. Mica. Additional. Mr. Cabal. In addition; yes, sir. As you know, the heroin trade is 95 percent by human mules, people that swallow, so the authorities have uncovered in the last year several what we call defecation houses. These are small houses or apartments in which the drug runner brings his cargo, defecates it, they clean it up and they give it to somebody else, who swallows it and on to the United States. Mr. Mica. Coming out of Colombia? Mr. Cabal. What they do is disguise the origin of the traveler. It is one thing, if you come out of Colombia, you go into Miami or fly into L.A., New York, or Houston, you are certainly going to be looked over very carefully. But if you come out of Panama, they are not as rigorous. Mr. Mica. You also described a disruption along the border and you said 1,000, was that Panamanians? Mr. Cabal. No, these are Colombian citizens---- Mr. Mica. That fled into Panama. Mr. Cabal. Yes, they are there currently hiding. What happens is the paramilitaries, the left and the right are fighting over control of the Caribbean, the access to the Caribbean, so they can ship their drugs and receive their weapons. Mr. Mica. I also appreciate your testimony. I think you said about $8 million is earmarked for Panama and some of the other surrounding countries. Mr. Cabal. Yes. The original request was for $30 million, and the Congress allocated $8, and that is simply not going to get the job done. Mr. Mica. I think you raise a good point about this spreading as we put pressure on Colombia and Panama. I think you cited very graphically, you just step across the border and you are scot-free from the Blackhawks and others. Again, we appreciate your testimony and your insight. Again, you're risking some of your personal well-being coming here today. I want to yield at this time to Mr. Rohrabacher. Mr. Rohrabacher. Thank you very much. Mr. Chairman, again, thank you very much for holding this hearing. I think that the drug issue overlaps into other areas of national security. And I am on the International Relations Committee and have spent considerable time on the other implications, but this is important in a number of areas and a number of levels. You mentioned that 81 percent of the people down in Panama would like to see---- Mr. Cabal. That is the most recent CID-Gallop poll published in the local paper, 81 percent. Mr. Rohrabacher. Which indicates that the Americans were having a positive influence, not just for military security. Mr. Cabal. Economic. We are in a severe recession as we speak, because $354 million is no longer circulating in the economy. Mr. Rohrabacher. While we were there, we were playing a dominant role in Panama. People don't necessarily want us to dominate Panama, but our presence was a positive role. That influence that we had, and have now, just left. That void is being filled by---- Mr. Cabal. The Red Chinese, for example, have taken over the Russian listening stations in Lourdes in Cuba. The Chinese are now operating electronic eavesdropping stations that allows them to monitor Federal, military and commercial. Mr. Rohrabacher. They are involved in your banking system. Mr. Coble. Yes, they just bought out Marine Midland, which was mentioned by Congressman Barr, and they now just bought out Chase Manhattan, which is the second oldest bank in the Republic of Panama, right after Banco Nationale. Mr. Rohrabacher. And, as well, a company that controls both ends of the Panama Canal. Mr. Cabal. And the phone company. Cable and Wireless has substantial amounts of Chinese money behind it. Mr. Rohrabacher. So the United States has walked away from one of the most strategic areas in this hemisphere, where both of the continents come together, both the oceans come together, walked away from people who liked us and wanted us to be there, and we are letting the presence be filled by Communist Chinese and by drug lords and gangsters. Mr. Cabal. Russian gangsters who are now active in the Colon Free Zone. The Chinese triads. Panama has an extensive Chinese community that is the prey of the triads. They are involved in prostitution, illegal gambling, and illegal alien smuggling. Mr. Rohrabacher. One last question. Is illegal alien smuggling still going on? Mr. Cabal. It has actually increased, Congressman. Mr. Rohrabacher. This is very disturbing. What is happening in Fort Sherman now? You mentioned what was going on before. What is happening now at Fort Sherman? Mr. Cabal. Nothing. The facility is up for sale, for lease. There is talk of ecological development. But the runway is not being used, the building is not being used, and certainly the Panamanian border police is ill-equipped, ill-trained, and they need all the help they can get. They are a unique world-class facility that could be used by the Panamanians, that could be used by the Americans. The same with Rodman Naval Station. For example, the Coast Guard could be working there to help the interdiction in the Pacific area. They could also help the Panamanians build a Naval base on the Atlantic side to stop the flow of drugs through the Caribbean. Mr. Rohrabacher. With the United States withdrawing from the role that it has played in Panama for so many years and stepping up of other forces as we have talked about, what kind of pressure is that putting on elected officials in Panama? Can you really blame them when the United States is not offering that anchor of stability and integrity that we did in the past? Mr. Cabal. Certainly it is a substantial issue. The gentleman from the DEA clearly explained peso brokering. The Colon Free Zone does about $11 billion of business a year, $5 and $5, import/export, $5, $6. That in an economy that barely reaches $8 billion. So it is very, very important. What it does, the Colon Free Zone is an area where money laundering is occurring, about $3 billion every year, about half through the peso brokering mechanism explained before. The other money laundering occurs in the banking area; and one thing the Panamanian Government, and the governments before this administration, have to take a hard look at their political commitment to put an end to money laundering. Bank secrecy laws, the Colon Free Zone, I mean, you have to have a commitment. Panama does have one of the few financial investigative units, but they need money, they need training, they need specialists, they need communications. But there has to be a clear political commitment from the Panamanian Government to put an end to money laundering, and I don't see that happening. As long as that doesn't happen, it is going to go on. Mr. Rohrabacher. Mr. Chairman, let me note it is very difficult for a small country like Panama that's very vulnerable to powerful outside interests, it is very hard for those government officials to make that commitment when the United States basically has surrendered and run away and left the playing field to tyrants, to gangsters, to people who are antithetical to everything that we believe in. Mr. Cabal. Congressman, there is a grave question regarding political contributions, where this cash is coming from and who it is getting elected. Mr. Rohrabacher. Thank you very much. Thank you, Mr. Chairman. Mr. Mica. I want to thank you, Professor, for being with us today and, again, for offering your insight. You certainly have a very great knowledge of what is going on in Panama; and your experience in economics, I think, sheds a great deal of light for this subcommittee on the money involved, the trafficking involved and the influences that may be, in fact, corrupting Panama, and also the difficulty we have incurred since we have lost our forward operating locations at that point. Mr. Cabal. Yes. Mr. Mica. I know that other members had questions. Unfortunately, I am going to have to adjourn the hearing at this time, but we will be submitting additional questions to you for the record. Mr. Cabal. I have a very good working relationship with the Congressman and his assistant. We are in constant contact. We have e-mail. Mr. Mica. We may have additional questions from members of our panel. So we would like to make them part of the hearing. Again, we thank you for your contributions today and for your appearing as a witness. There being no further business before the Subcommittee on Criminal Justice, Drug Policy, and Human Resources at this time, this meeting is adjourned. [Whereupon, at 1:15 p.m., the subcommittee was adjourned.] [Additional information submitted for the hearing record follows:] [GRAPHIC] [TIFF OMITTED] T1970.136 [GRAPHIC] [TIFF OMITTED] T1970.137 [GRAPHIC] [TIFF OMITTED] T1970.138 [GRAPHIC] [TIFF OMITTED] T1970.139 [GRAPHIC] [TIFF OMITTED] T1970.140 [GRAPHIC] [TIFF OMITTED] T1970.141 [GRAPHIC] [TIFF OMITTED] T1970.142 [GRAPHIC] [TIFF OMITTED] T1970.143 [GRAPHIC] [TIFF OMITTED] T1970.144 [GRAPHIC] [TIFF OMITTED] T1970.145 [GRAPHIC] [TIFF OMITTED] T1970.146 -