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entitled 'Drug Control: Efforts to Develop Alternatives to Cultivating 
Illicit Crops in Colombia Have Made Little Progress and Face Serious 
Obstacles' which was released on February 8, 2002. 

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United States General Accounting Office: 
GAO: 

Report to Congressional Requesters: 

February 2002: 

Drug Control: 

Efforts to Develop Alternatives to Cultivating Illicit Crops in Colombia
Have Made Little Progress and Face Serious Obstacles: 

GAO-02-291: 

Contents: 

Letter: 

Results in Brief: 

Background: 

Progress Requires Strong Host Government Commitment and Sustained U.S. 
Assistance: 

USAID Alternative Development Program in Colombia Is at an Early Stage: 

Alternative Development in Colombia Faces Significant Obstacles to 
Success: 

Conclusions: 

Recommendation for Executive Action: 

Matter for Congressional Consideration: 

Agency Comments and Our Evaluation: 

Scope and Methodology: 

Appendix I: USAID's Alternative Development Program in Bolivia: 

Early Alternative Development Projects Had Limited Accomplishments: 

Current Project Supports Bolivia's Forced and Voluntary Eradication 
Policies: 

Alternative Development Lessons Learned in Bolivia: 

Appendix II: USAID's Alternative Development Program in Peru: 

UHAD Project Accomplishments Were Limited: 

Strong Peruvian Government Support Increased Success of Second
Program: 

Alternative Development Lessons Learned in Peru: 


Appendix III: Comments from the Department of State: 

Appendix IV: Comments from the U.S. Agency for International
Development: 

Appendix V: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Acknowledgments: 

Tables: 

Table 1: Net Hectares of Coca Under Cultivation in Bolivia, Colombia, 
and Peru (Calendar Years 1996-2000): 

Table 2: Lessons Learned in Bolivia and Peru: 

Table 3: U.S. Support for Alternative Development Programs in Bolivia 
and Peru: 

Table 4: Summary of USAID Projects in Colombia as of September 30, 
2001: 

Figures: 


Figure 1: Elicit Drug Crop Areas in Bolivia, Colombia, and Peru: 

Figure 2: Elicit Drug-Growing Areas in Bolivia: 

Figure 3: Elicit Drug-Growing Areas in Peru: 

Abbreviations: 

ADP: Alternative Development Program: 

GAO: General Accounting Office: 

PEAH: Special Project for the Alta (or Upper) Huallaga: 

PNDA: Plan Nacional De Desarrollo Alternativo or the National Plan for 
Alternative Development: 

UHAD: Upper Huallaga Area Development: 

USAID: U.S. Agency for International Development: 

[End of section] 

United States General Accounting Office: 
Washington, DC 20548: 

February 8, 2002: 

The Honorable Jesse A. Helms: 
Ranking Minority Member: 
Committee on Foreign Relations: 
The Honorable Charles E. Grassley: 
Co-Chairman: 
Caucus on International Narcotics Control: 
The Honorable Mike DeWine: 
United States Senate: 

The United States has been providing counternarcotics assistance to 
countries in the Andean region since the early 1970s to help curb the 
supply of illicit drugs-—primarily cocaine-—entering the United 
States. As part of these efforts, the U.S. Agency for International 
Development (USAID) has provided assistance to help Bolivian and 
Peruvian growers of illicit crops find legal means of earning a 
living. In recent years, these activities—-termed alternative 
development[Footnote 1]-—together with U.S.supported interdiction and 
eradication programs have greatly reduced the amount of coca[Footnote 
2] grown in Bolivia and Peru. Meanwhile, coca cultivation and cocaine 
production have increased substantially in Colombia, making it the 
world's leader in both. 

Recognizing the seriousness of illegal drug activities in Colombia, 
the Colombian government, in October 1999, announced a $7.5 billion 
counternarcotics plan known as Plan Colombia.[Footnote 3] Among other 
things, Plan Colombia proposed to reduce the cultivation of coca and 
the processing and distribution of narcotics by 50 percent over 6 
years. To assist in this effort, in July 2000, the United States 
committed to providing about $1.3 billion to Colombia, other Andean 
countries, and U.S. agencies involved in drug interdiction and law 
enforcement, part of which was intended for alternative development. 
[Footnote 4] More recently, in January 2002, the Andean Counterdrug 
Initiative was passed, which provides $625 million for 
counternarcotics programs, including alternative development, in 
Andean countries.[Footnote 5] 

Although coca cultivation in Bolivia and Peru has been reduced in 
recent years,[Footnote 6] you expressed concern about whether the 
alternative development program in Colombia will achieve its 
objectives and contribute to reducing the production of illicit drugs 
there. Specifically, you asked that we determine (1) what lessons have 
been learned in providing alternative development assistance to 
Bolivia and Peru, especially any that may apply to Colombia; (2) what 
progress USAID has made with alternative development in Colombia; and 
(3) what obstacles must be overcome to facilitate alternative 
development in Colombia. To review the programs in Bolivia and Peru 
and the status of efforts and challenges in Colombia, we analyzed 
program documentation and met with cognizant U.S., host government, 
contractor, and nongovernmental organization officials in Washington, 
D.C.; Bolivia; Colombia; and Peru. To gain a firsthand view of program 
activities in Bolivia and Peru, we visited selected project sites and 
met with project beneficiaries in both countries. 

Results in Brief: 

Taken together, the lessons learned in Bolivia and Peru indicate that 
effective alternative development demands a strong host government 
commitment to a comprehensive array of counternarcotics measures and 
years of sustained U.S. assistance to support them. Chief among the 
specific lessons for Colombia are that progress requires host 
government control of drug-growing areas and an enduring political 
will to interdict drug trafficking and forcibly eradicate illicit 
crops as well as a carefully coordinated approach to executing these 
efforts. A lack of government control of project sites hampers access 
to beneficiaries; prevents monitoring for compliance with eradication 
agreements; and discourages commercial activity, investment, and 
public support. Without effective interdiction and eradication, 
illicit drug producers do not have the incentive to engage in legal 
economic activities. Poor coordination of alternative development, 
interdiction, and eradication activities limits the mutually 
reinforcing benefits of these actions. 

Alternative development efforts are at an early stage in Colombia. 
USAID began targeting Colombia's poppy-growing areas in 2000 and 
expanded its program to include coca-growing areas in 2001. Project 
activities in both areas have been limited to date, and most will not 
begin in earnest until 2002. As of September 30, 2001, USAID had spent 
only $5.6 million on alternative development programs in Colombia out 
of the $52.5 million provided for this purpose through fiscal year 
2001. By September 30, 2002, USAID expects cumulative expenditures on 
alternative development activities in Colombia to total about $31.8 
million, or about 61 percent of the funds currently available. 
Additional funds are provided for in the fiscal year 2002 Foreign 
Operations appropriation bill. 

USAID faces serious obstacles to achieving progress in Colombia, and 
the experiences in Bolivia and Peru strongly suggest that alternative 
development in Colombia will not succeed unless the obstacles are 
overcome. Among them, the Colombian government does not control many 
coca-growing areas, it has limited capacity to carry out sustained 
interdiction operations, and its ability to effectively coordinate 
eradication and alternative development activities remains uncertain.
Because of these serious obstacles, we are recommending that the USAID 
administrator update USAID's alternative development project plans and 
spending proposals for Colombia to take into account extreme 
difficulty in gaining access to the coca-growing regions. We also 
suggest that the Congress consider requiring that USAID demonstrate 
measurable progress in its current efforts to reduce coca cultivation 
in Colombia before any additional funding is provided for alternative 
development. 

In commenting on a draft of this report, USAID and State generally 
concurred with the report's observations and conclusions regarding the 
obstacles facing alternative development efforts in Colombia. USAID 
also generally concurred with our recommendation to the administrator 
and noted that it has initiated such a review. 

Background: 

Historically, Bolivia, Colombia, and Peru have been major drug-
producing countries. Together, they account for most of the coca 
cultivated worldwide and for the opium poppy used to produce most of 
the heroin seized on the east coast of the United States. Figure 1 
shows the areas in Bolivia, Colombia, and Peru where illicit drug 
crops are grown. 

Figure 1: Illicit Drug Crop Areas in Bolivia, Colombia, and Peru: 

[Refer to PDF for image: map of Bolivia, Colombia, and Peru] 

Depicted on the map are areas of opium poppy cultivation, and cocoa 
cultivation densities: 
Low; 
Medium; 
High. 

Source: Latin American Narcotics Cultivation and Production Estimates 
2000, U.S. government, p. 4. 

[End of figure] 

The United States has supported counternarcotics efforts in Bolivia and
Peru for nearly 30 years. USAID has implemented a series of alternative
development projects in the coca-producing regions of these countries, 
[Footnote 7] while the U.S. Drug Enforcement Administration and 
State's Bureau for International Narcotics and Law Enforcement have 
supported interdiction and voluntary and forced coca eradication 
programs. Due at least in part to these efforts, substantial 
reductions in coca cultivation were achieved in Bolivia and Peru 
during the mid-to-late 1990s. However, over the same period, coca 
cultivation in Colombia increased substantially, offsetting much of 
the decreases in Bolivia and Peru (see table 1). 

Table 1: Net Hectares of Coca Under Cultivation in Bolivia, Colombia, 
and Peru (Calendar Years 1996-2000): 

Country: Bolivia; 
1996: 48,100; 
1997: 45,800; 
1998: 38,000; 
1999: 21,800; 
2000: 14,600; 
Percentage change: (70%). 

Country: Colombia; 
1996: 67,200; 
1997: 79,500; 
1998: 101,800; 
1999: 122,500; 
2000: 136,200; 
Percentage change: 103%. 

Country: Peru; 
1996: 94,400; 
1997: 68,800; 
1998: 51,000; 
1999: 38,700; 
2000: 34,200; 
Percentage change: (64%). 

Country: Total; 
1996: 209,700; 
1997: 194,100; 
1998: 190,800; 
1999: 183,000; 
2000: 185,000; 
Percentage change: (12%). 

Source: Latin American Narcotics Cultivation and Production Estimates 
2000, U.S. government, p. 5. 

[End of table] 

Progress Requires Strong Host Government Commitment and Sustained U.S.
Assistance: 

Alternative development progress in Bolivia and Peru has required a 
lasting host government commitment to a broader set of 
counternarcotics measures and years of sustained U.S. assistance to 
support these efforts. More specifically, our analysis of project 
documentation, site visits, and discussions with U.S. and host 
government officials and project staff indicated that government 
control of drug-growing areas and project sites is essential for 
providing access to the targeted beneficiaries as well as security for 
project-related trade, commercial activity, and investment. It also 
enables the monitoring of compliance with voluntary eradication 
agreements. To promote and sustain coca cultivation reductions, the 
host government must have a strong commitment to carry out effective 
interdiction and eradication policies.[Footnote 8] Without 
interdiction and eradication as disincentives, growers are unlikely to 
abandon more lucrative and easily cultivated coca crops in favor of 
less profitable and harder to grow licit crops or to pursue legal 
employment. Further, alternative development, interdiction, and 
eradication efforts must be carefully coordinated to achieve mutually 
reinforcing benefits. 

Table 2 summarizes several of the key lessons learned in Bolivia and 
Peru. Descriptions of the programs in Bolivia and Peru and more 
detailed discussions of the lessons learned from them are in 
appendixes I and II, respectively. 

Table 2: Lessons Learned in Bolivia and Peru: 

Lesson: Government needs to control project sites; 
Bolivia: USAID’s Chapare Regional Development Project achieved little 
when the Bolivian government lost control of the project area to 
narcotics traffickers in 1983. After the government reestablished its 
presence in 1986, progress improved; 
Peru: USAID’s Upper Huallaga Area Development Project had very limited 
impact in the mid-1980s because terrorist violence from groups such as 
the Shining Path caused program staff and local residents to flee the 
project site. Successful Peruvian government anti-insurgency efforts 
enabled project activities to resume in the early 1990s. 

Lesson: Strong government commitment facilitates alternative 
development; 
Bolivia: Coca producer participation in USAID’s Counternarcotics 
Consolidation of Alternative Development Efforts Project increased 
substantially as a result of the Bolivian government’s forced manual 
eradication of nearly all the coca from Bolivia’s Chapare region in 
1998 and 1999; 
Peru: Coca grower participation in USAID’s Alternative Development 
Project greatly increased in the mid-1990s due to the Peruvian 
government’s policy of shooting down airplanes thought to be involved 
in narcotics trafficking. 

Lesson: Alternative development, interdiction, and eradication need to 
be coordinated; 
Bolivia: Poor coordination between U.S.-supported eradication efforts 
and USAID’s Counternarcotics Consolidation of Alternative Development 
Efforts Project in 1998 and 1999 created assistance gaps in Bolivia—
the eradication outpaced the assistance, leaving peasant farmers with 
bare fields and no immediate source of income. In 2000, USAID 
accelerated its alternative development activities to help close the 
gap and began making available emergency food assistance to cushion 
the loss of income resulting from eradication; 
Peru: Poor coordination between U.S.-supported eradication efforts and 
USAID’s Upper Huallaga Area Development Project led farmers to seek 
terrorists’ “protection.” In 2000, poor coordination between 
eradication and USAID’s Alternative Development Project provoked 
farmers to resent the project, which they associated with eradication. 
In 2000, USAID designed a “safety net” assistance program and began 
closely coordinating with U.S. embassy staff to ensure that emergency 
food and other assistance would be provided to growers whose crops are 
eradicated. 

Lesson: Monitoring compliance with voluntary eradication agreements is 
necessary; 
Bolivia: Community self-policing of compliance with eradication 
agreements in the Chapare region was not effective. In 1999, the 
Bolivian government determined that 65 percent of the communities 
participating in the voluntary eradication program had broken their 
agreements and were disqualified from receiving assistance; 
Peru: In 2001, State’s inspector general found that monitoring efforts 
in Peru were not specific enough to adequately link investments in 
alternative development with coca reductions. U.S. embassy officials 
are currently designing a system to better monitor eradication in 
specific areas. 

Lesson: Markets are needed; 
Bolivia: Since 1991, USAID’s Cochabamba Regional Development and 
Counternarcotics Consolidation of Alternative Development Efforts 
Project helped expand export markets and cultivate an adequate volume 
of export-quality produce, substantially increasing the volume and 
value of legal crops produced in the Chapare; 
Peru: Cultivating commercially viable crops under USAID’s current 
Alternative Development Project benefited Peruvian farmers after an 
early project failed to fully consider marketability. Further 
diversification is intended to improve food security for beneficiaries 
and stabilize their incomes, helping offset historically low prices 
for project-supported crops in recent years. 

Lesson: Public support is helpful; 
Bolivia: U.S. and Bolivian public relations efforts throughout the 
1990s helped build a public consensus in Bolivia that the production 
of coca and cocaine-—once thought to be an American problem—-was a 
matter of Bolivian national and economic interest, facilitating public 
support for forced eradication and alternative development efforts; 
Peru: Terrorism and violence in Peru in the 1990s helped convince many 
Peruvians that coca cultivation and narcotics trafficking were linked 
with the violence, helping create public support for eradication, 
interdiction, and alternative development efforts. 
	
Source: GAO analysis. 

[End of table] 

Alternative development progress in Bolivia and Peru has required 
years of sustained U.S. assistance. The United States has supported 
alternative development projects in these countries for two decades. 
Together with current and planned alternative projects in Bolivia and 
Peru, U.S. contributions to these programs total about $455 million. 
Other U.S. agencies have supported interdiction and eradication 
efforts in Bolivia and Peru for an even longer period—nearly three 
decades. In combination, these programs have helped achieve reductions 
in the amount of coca grown in these countries. Nonetheless, the host 
government agencies involved in these efforts continue to depend 
heavily on U.S. support. For example, according to USAID officials, 
the United States currently finances and indirectly oversees most of 
the Bolivian government's alternative development agencies in the 
Chapare region because the Bolivian government does not have the 
resources to do so on its own. Similarly, the United States provides 
60 to 70 percent of the total funding for the Peruvian alternative 
development agency, and USAID officials said that the Peruvian 
government would not be able to fund the agency's activities without 
U.S. support. Table 3 shows past and current U.S. funding for 
alternative development programs in Bolivia and Peru. 

Table 3: U.S. Support for Alternative Development Programs in Bolivia 
and Peru: 

Country: Bolivia; 
Prior programs[A]: $117 million; 
Current programs[B,C]: $112 million; 
Total: $229 million. 

Country: Peru; 
Prior programs[A]: $31 million; 
Current programs[B,C]: $195 million; 
Total: $226 million. 

Country: Total; 
Prior programs[A]: $148 million; 
Current programs[B,C]: $307 million; 
Total: $455 million. 

[A[ Prior programs in Bolivia and Peru spanned 1983-98 and 1981-94, 
respectively. 

[B] The current programs in Bolivia and Peru began in 1997 and 1995, 
respectively. 

[C] Current program figures are estimates. 

Source: USAID. 

[End of table] 

USAID Alternative Development Program in Colombia Is at an Early Stage: 

Alternative development efforts in Colombia are still at an early 
stage, and USAID will have difficulty spending all of the funds 
available for these activities. Initial USAID efforts in Colombia 
began in 2000 by focusing on promoting poppy eradication and 
strengthening the Colombian government's alternative development 
institution (PNDA).[Footnote 9] USAID's current program emphasizes 
alternative development efforts in the coca-growing regions of 
southern Colombia to complement other U.S.supported counternarcotics 
activities there. Alternative development activities in both poppy- 
and coca-growing areas are just beginning. As of September 30, 2001, 
USAID had spent only about $5.6 million, or 11 percent, of the $52.5 
million currently available. By September 30, 2002, USAID expects its 
cumulative actual expenditures to reach $31.8 million, or 61 percent, 
of the total available in fiscal year 2001. 

As part of its initial effort to support the eradication of 3,000 
hectares of poppy by the end of 2002,[Footnote 10] USAID awarded a $10 
million contract to Chemonics International, Inc., in June 2000. 
Chemonics' role was to assist PNDA in implementing poppy-related 
alternative development activities by promoting crop substitution, 
environmental improvements, and other development efforts in the poppy-
growing regions of Cauca, Huila, Tolima, and Narino.[Footnote 11] 

After funding for Plan Colombia was approved in July 2000, USAID began 
planning for alternative development in Colombia's coca-growing areas. 
These efforts were intended to complement the eradication and 
interdiction components of Plan Colombia's first phase-—the "push" 
into the Putumayo and Caqueta departments of southern Colombia where 
coca cultivation is most heavily concentrated. To quickly launch these 
efforts, USAID reallocated $1 million of the $10 million originally 
intended to support poppy eradication to fund projects aimed at 
strengthening PNDA's capacity to expand its activities in coca-growing 
areas. USAID's projects targeted PNDA's information technology, 
financial accountability, telecommunications systems, and public 
relations capabilities for improvement. 

In April 2001, using Plan Colombia funds, USAID awarded an
$87.5 million,[Footnote 12] 5-year contract to Chemonics to oversee, 
administer, and carry out alternative development activities in the 
coca-growing areas in the Putumayo and Caqueta departments. To date, 
USAID has programmed $42.5 million of this amount. Though it will work 
collaboratively in reviewing and approving alternative development 
projects, USAID (through Chemonics) will fund some projects and PNDA 
plans to fund others. In addition, USAID and Chemonics continue to 
support poppy eradication and institutional strengthening of PNDA. 

The overall alternative development approach in Colombia entails 
reaching agreements with communities to voluntarily eradicate illicit 
crops in exchange for help finding other income-producing 
opportunities and other assistance. The program is intended to provide 
incentives for small farmers (with 3 hectares or less of coca) to 
voluntarily eradicate their coca plants. In negotiating the community 
pacts, PNDA representatives met with groups of small farmers to obtain 
their commitment to voluntarily eradicate the illicit crops. After an 
eradication pact was signed, PNDA planned to provide the farmers with 
food crop seeds and plants or other immediate assistance. Once this 
assistance began, farmers were obliged to eradicate their illicit 
crops within 1 year. 

According to USAID officials, Colombian government officials recently 
stated that most of the coca cultivation covered by the pacts already 
agreed to should be voluntarily eradicated by the end of July 2002. 

As eradication progresses, farmers are to receive more comprehensive 
assistance from USAID. Initial efforts are focused on municipalities 
in the Putumayo, where USAID plans to support crop substitution and 
other income-generating activities by providing agricultural 
incentives, modern production and processing expertise, and credit and 
marketing assistance. USAID also plans to support environmental 
improvements through tree-growing programs in remote indigenous and 
tropical areas and training in pest control, forest management, and 
other areas. In addition, USAID plans to improve the social 
infrastructure in project areas by enhancing access to schools, health 
services, potable water, sewerage, and electricity. 

In August 2001, USAID reported that its goal is the voluntary 
eradication of 11,500 hectares of coca grown on small farms by the end 
of 2002, with the aim of eliminating a total of 30,000 hectares by 
2005. USAID also reported that approximately 33 community eradication 
pacts had been signed, which covered more than 37,000 hectares of coca 
in the Putumayo department.[Footnote 13] In its initial design plan, 
USAID also noted that sustainability will be measured in terms of 
permanent eradication of coca and the number of farm families 
permanently engaged in licit productive activities and not returning 
to coca cultivation.[Footnote 14] 

USAID alternative development project activities have been limited to 
date, and the pace is not expected to quicken significantly until 
2002. As illustrated in table 4, of the $10 million originally 
programmed to support poppy eradication and institutional 
strengthening of PNDA, USAID's actual expenditures were only about 
$1.3 million, or 13 percent, as of September 30, 2001. Of the $42.5 
million programmed from Plan Colombia funding, USAID's actual 
expenditures were only about $4.4 million, or 10 percent, as of the 
same date. Combined, actual expenditures were about $5.6 million, or 
about 11 percent, of the $52.5 million in total available program 
funds. USAID officials told us that they expect project activity to 
accelerate in 2002. They estimate that cumulative actual expenditures 
in 2002 will total about $31.8 million. 

Table 4: Summary of USAID Projects in Colombia as of September 30, 
2001: 

Initial poppy program (pre-Plan Colombia): 

Project emphasis: Crop substitution and income generation; 
Funds programmed[A]: $7,836,000; 
Projects planned: Number: 3; 
Projects planned: Value: $430,000; 
Projects approved: Number: 3; 
Projects approved: Value: $430,000; 
Actual expenditures[A,B]: $521,000. 
					
Project emphasis: Environmental improvements; 
Funds programmed[A]: $873,000; 
Projects planned: Number: 0; 
Projects planned: Value: $0; 
Projects approved: Number: 0; 
Projects approved: Value: $0; 
Actual expenditures[A,B]: $0. 
					
Project emphasis: Institutional strengthening[C]; 
Funds programmed[A]: $1,291,000; 
Projects planned: Number: 2; 
Projects planned: Value: $1,454,000; 
Projects approved: Number: 2; 
Projects approved: Value: $1,454,000; 
Actual expenditures[A,B]: $749,000. 
					
Subtotal (As a percentage of funds programmed): 
Funds programmed[A]: $10,000,000; 
Projects planned: Number: 5; 
Projects planned: Value: $1,884,000 (18.9%). 
Projects approved: Number: 5; 
Projects approved: Value: $1,884,000 (18.9%). 
Actual expenditures[A,B]: $1,270,000 (12.7%). 

Expanded coca and poppy program (Plan Colombia): 

Project emphasis: Crop substitution and income generation; 
Funds programmed[A]: $34,598,000; 
Projects planned: Number: 32; 
Projects planned: Value: $8,617,000; 
Projects approved: Number: 17; 
Projects approved: Value: $3,808,000; 
Actual expenditures[A,B]: $2,914,000. 
					
Project emphasis: Crop substitution and income generation (subset): 
(Coca); 
Projects planned: Number: (13); 
Projects planned: Value: ($3,099,000); 
Projects approved: Number: (13); 
Projects approved: Value: ($3,099,000). 

Project emphasis: Crop substitution and income generation (subset): 
(Poppy)	
Projects planned: Number: (19); 
Projects planned: Value: ($5,518,000); 
Projects approved: Number: (4); 
Projects approved: Value: ($709,000). 

Project emphasis: Environmental improvements; 
Funds programmed[A]: $2,482,000; 
Projects planned: Number: 8; 
Projects planned: Value: $423,000; 
Projects approved: Number: 6; 
Projects approved: Value: $343,000; 
Actual expenditures[A,B]: $225,000. 
					
Project emphasis: Institutional strengthening[C]; 
Funds programmed[A]: $2,825,000; 
Projects planned: Number: 20; 
Projects planned: Value: $2,032,000; 
Projects approved: Number: 15; 
Projects approved: Value: $1,376,000; 
Actual expenditures[A,B]: $1,161,000. 
				
Project emphasis: Social infrastructure development; 
Funds programmed[A]: $2,595,000; 
Projects planned: Number: 1; 
Projects planned: Value: $69,000; 
Projects approved: Number: 1; 
Projects approved: Value: $69,000; 
Actual expenditures[A,B]: $50,000. 
					
Subtotal (Percentage of funds programmed): 
Funds programmed[A]: $42,500,000; 
Projects planned: Number: 61; 
Projects planned: Value: $11,141,000 (26.5%); 
Projects approved: Number: 39; 
Projects approved: Value: $5,596,000 (13.3); 
Actual expenditures[A,B]: $4,350,000 (10.3%). 

Total (Percentage of funds programmed): 
Funds programmed[A]: $52,500,000; 
Projects planned: Number: 66; 
Projects planned: Value: $12,025,000 (22.9%);	
Projects approved: Number: 44; 
Projects approved: Value: $7,480,000 (12.3%); 
Actual expenditures[A,B]: $5,620,000 (10.7%). 
			
[A] Figures include USAID management and contractor administrative 
costs. 

[B] According to USAID officials, actual expenditures do not fully 
reflect progress since some subgrantees have begun activities but have 
not presented vouchers to USAID. 

[C] To date, most institutional strengthening projects have focused on 
PNDA; however, these figures also include some institutional 
strengthening projects aimed at local community organizations. 

Source: USAID. 

[End of table] 

While USAID expects increased project activities in 2002, these 
activities will continue to be limited when viewed in the context of 
the total funding that is likely to be available for them. The 
administration had requested an additional $60.5 million for such 
activities in fiscal year 2002, but the Congress reduced the overall 
administration request for its Andean Counternarcotics Initiative from 
$731 million to $625 million, a reduction that will likely result in 
less funding for alternative development. As noted, USAID officials 
expect cumulative actual expenditures for alternative development 
activities in Colombia to total about $31.8 million by September 30, 
2002-—about 61 percent of the amount appropriated through fiscal year 
2001. 

Alternative Development in Colombia Faces Significant Obstacles to 
Success: 

USAID faces a number of serious challenges in implementing a 
successful alternative development program in Colombia. USAID planning 
documents for Colombia acknowledge specific lessons learned in Bolivia 
and Peru and note that overcoming obstacles in Colombia will require 
long-term U.S. and Colombian commitments. The experiences in Bolivia 
and Peru demonstrate the need for: 

* host government control and security in project areas; 

* effective interdiction operations; and; 

* careful coordination of eradication, interdiction, and alternative 
development efforts. 

However, the Colombian government does not control large parts of the 
coca-growing areas, limiting its ability to carry out sustained 
interdiction operations, and the Colombian government's ability to 
effectively coordinate eradication and alternative development 
activities remains uncertain. 

Apart from these challenges, Colombia faces additional obstacles in 
implementing the alternative development program. Colombia has not 
devised a means to verify or ensure compliance by farmers 
participating in voluntary eradication programs, PNDA is weak and its 
funding for alternative development projects is not ensured, and 
project sites are in remote coca-growing areas where the soil quality 
and infrastructure are poor. 

Experiences in Bolivia and Peru Point to Obstacles in Colombia: 

The experiences in Bolivia and Peru indicate that the most critical 
obstacle Colombia faces is that the government does not control large 
parts of the Putumayo and Caqueta departments in southern Colombia 
where much of the coca is grown. This lack of security will seriously 
hamper PNDA's ability to develop the region's infrastructure, 
establish viable and reliable markets for licit products, and attract 
the private investment needed for long-term, income-generating 
development. Without government control of project sites, narcotics 
traffickers and guerrilla forces will continue to profit from illicit 
drug operations and impede legal economic activities generated by 
alternative development programs. 

USAID officials told us that armed groups have already intimidated 
some farmers and municipal leaders cooperating with the Colombian 
government. More recently, in September 2001, four employees of 
Colombian nongovernmental organizations working with PNDA in the 
Putumayo were kidnapped. According to USAID officials, two are 
confirmed murdered and the other two were released. As a result of 
these incidents, a number of nongovernmental organizations working 
with PNDA temporarily suspended their activities in the Putumayo in 
October 2001. 

While Colombia uses aerial spray operations to carry out an active 
eradication program, the government's lack of control over many coca-
growing areas limits its ability to carry out sustained ground-based 
interdiction operations—an essential component of the successful 
efforts in Bolivia and Peru. Colombian military and law enforcement 
units destroy some cocaine laboratories and seize narcotics and 
precursor chemicals during individual counternarcotics operations; 
however, they lack sufficient forces to maintain the permanent 
presence to sustain such operations on a day-to-day basis. Further 
complicating the problem is that a large land area ceded to one of the 
guerrilla groups is off limits to U.S. and Colombian agencies, but is 
reportedly an increasing source of coca and precursor supplies. 
[Footnote 15] Throughout these areas, insurgents and paramilitaries 
operate largely with impunity. The experiences in Bolivia and Peru 
showed that sustained interdiction operations are necessary to disrupt 
coca markets and thus produce declines in the prices of coca. Without 
these declines, alternative development efforts are not as effective. 

The Colombian government's ability to effectively coordinate 
eradication and alternative development activities remains uncertain. 
Careful coordination of these efforts was critical to their 
effectiveness in Bolivia and Peru. In December and February 2000, 
while conducting aerial eradication operations, the Colombian National 
Police accidentally sprayed approximately 600 to 700 hectares of an 
area where communities were negotiating pacts for participation in 
alternative development. Also, PNDA officials told us that eradication 
authorities had sprayed most of the Bolivar department, even though 
PNDA had targeted some communities in the department for participation 
in the alternative development program. This will likely complicate 
PNDA's relations with farmers in that region. According to USAID 
officials, PNDA representatives currently coordinate with the 
Colombian National Police by indicating on a map or from an airplane 
the areas in the Putumayo and Caqueta departments that are in the 
alternative development program and should not be sprayed[Footnote 16] 

Colombia Faces Additional Obstacles: 

Among the additional obstacles facing Colombia is the difficulty of 
verifying compliance with voluntary eradication pacts. The Colombian 
government has not determined how it will do so, and thus the 
reliability of the voluntary eradication pacts is uncertain. PNDA 
officials predict that it will be problematic and expensive to monitor 
compliance—a task complicated by the Colombian government's lack of 
control over project sites. Until a means of verifying compliance is 
devised, compliance will depend upon peer pressure within a given 
community to prevent individuals from breaking the community's 
eradication agreement with the government. 

Weak host-country institutions pose an additional problem in Colombia. 
USAID originally intended to work through the Colombian International 
Cooperation Agency as a host-country contracting agency for its 
alternative development projects. However, USAID officials told us 
they did not have confidence that the Colombian agency could account 
for the assistance in accordance with USAID requirements. USAID chose 
instead to contract with Chemonics to manage program resources, 
including procuring goods and services and awarding and managing 
grants. Chemonics is working on a day-to-day basis with PNDA-—the 
institution established by the Colombian government in 1995 to deal 
specifically with alternative development. As noted, USAID was 
required to focus its initial efforts on strengthening PNDA because 
the organization is institutionally weak. USAID officials said that 
PNDA may have difficulty effectively using the additional funding that 
it is projected to receive for alternative development projects. 

While PNDA may have trouble absorbing this additional funding, the 
institution will have difficulty carrying out its responsibilities 
without it. Yet funding for important components of PNDA's alternative 
development plans—from making infrastructure improvements to promoting 
licit crops and livestock—is not ensured. PNDA is supposed to provide 
immediate, short-term support to farmers cooperating in alternative 
development programs, bridging the gap between the signing of 
voluntary eradication agreements and receiving USAID assistance. 
Colombia developed these plans based on the expectation that it would 
receive about $300 million from European donors. However, little of 
that assistance has materialized to date. U.S. embassy officials told 
us that European donors are reluctant to participate in the program 
because, based on experiences in Bolivia and Peru, they associate it 
with the U.S.-supported forced eradication effort in Colombia. 

The poor quality of the soil and infrastructure and the remoteness of 
project sites in coca-growing areas are further obstacles. Unlike the 
poppy-growing areas in northern Colombia—-which have richer soils and 
better developed infrastructure and are closer to markets-—much of the 
coca-growing areas in southern Colombia have soils that are poorly 
suited for licit crops and a lack of basic infrastructure. According 
to USAID officials, these problems are more severe in the coca-growing 
areas of Colombia than they were in counterpart areas of Bolivia and 
Peru. Even when suitable crops are identified, the distances involved 
make it difficult to transport produce for further processing or to 
potential markets. For instance, a palmito (heart of palm) canning 
plant that the United Nations Drug Control Program built in the 
Putumayo department in the mid-1990s sat dormant for a number of years 
because the farmers growing the palm were too far away to transport 
their produce to the plant before it spoiled. The plant recently 
opened for test runs after finding farmers closer to the plant to grow 
the palm. 

Conclusions: 

Alternative development requires a long-term commitment and must be 
implemented with strong host-government support for sustained 
interdiction and eradication. The United States has provided 
alternative development assistance to Bolivia and Peru for nearly two 
decades, but little progress was made until the host government gained 
control of drug-growing areas and project sites, demonstrated a strong 
commitment to carry out effective interdiction and eradication 
policies, and carefully coordinated these efforts to achieve mutually 
reinforcing benefits. 

While each of these components is important, none is more so than 
government control of the project areas. Experience in Bolivia and 
Peru strongly suggests that voluntary coca eradication in Colombia is 
not likely to achieve hoped for reductions in coca cultivation until, 
at a minimum, the Colombian government can provide the security in the 
coca-growing regions that is essential for carrying out sustained 
interdiction and eradication operations, providing safe access to 
alternative development project sites, and attracting the private 
investment needed for long-term income-generating development. 

Considering the serious obstacles in Colombia that have impeded 
meaningful progress, USAID will have difficulty spending additional 
funds for alternative development over the next few years. Through 
fiscal year 2001, USAID has spent less than 11 percent of the $52.5 
million available for alternative development in Colombia and does not 
plan to complete expenditure of these funds until at least fiscal year 
2003. Nevertheless, USAID's alternative development program 
documentation for Colombia still calls for dramatic reductions in coca 
cultivation in fiscal year 2002 through widespread voluntary 
eradication of coca crops by farm families who want to take advantage 
of alternative development assistance. Yet, few projects have been 
undertaken by USAID in the coca-growing regions. 

Recommendation for Executive Action: 

Because USAID faces serious obstacles to achieving widespread 
voluntary coca eradication in Colombia, we recommend that the USAID 
administrator update USAID's project plans and spending proposals for 
coca elimination in Colombia to take into account the extreme 
difficulty in gaining access to the coca-growing regions to ensure 
that funds are used as effectively as possible. 

Matter for Congressional Consideration: 

Because of the serious obstacles impeding alternative development in 
Colombia, the Congress should consider requiring that USAID 
demonstrate measurable progress in its current efforts to reduce coca 
cultivation in Colombia before any additional funding is provided for 
alternative development. 

Agency Comments and Our Evaluation: 

USAID and State provided written comments on a draft of this report 
(see appendices. III and IV, respectively). Both generally concurred 
with the report's observations and conclusions. 

USAID noted that the report was thorough and accurate and emphasized 
that alternative development can only be implemented in coordination 
with complementary eradication and interdiction programs. USAID also 
generally concurred with our recommendation to the administrator to 
update its alternative development plans for Colombia and noted that 
it has already begun such a review as part of its normal performance 
management process. 

State said that the report was thoughtful and thorough and 
acknowledged the majority of our conclusions regarding the obstacles 
facing alternative development efforts in Colombia. State agreed with 
the report's overall conclusion that careful coordination among 
alternative development, interdiction, and eradication programs is 
essential. It also provided further explanation of its aerial 
eradication program and the difficulties it has encountered in 
Colombia, including additional information about the accidental 
spraying of an alternative development project area However, State 
said that it believes it is appropriate and constructive for the 
spraying of illicit coca to be conducted before alternative 
development programs are initiated in an area and suggested that the 
report implies a recommendation that aerial eradication and 
alternative development should not be conducted in the same location. 

We do not agree with State that the report implies such a
recommendation. In fact, we cite the need for coordinating alternative 
development with interdiction and eradication efforts as one of the 
chief requirements for success. 

Scope and Methodology: 

To determine the lessons learned in providing alternative development 
assistance to Bolivia and Peru, we interviewed cognizant officials and 
analyzed program documentation. Specifically, 

* In Washington, D.C., we interviewed officials in USAID's Office of 
South American Affairs and State's Bureau for International Narcotics 
and Law Enforcement. We also met with officials at the two major USAID 
contractors that provided alternative development services in Bolivia 
and Peru—Development Alternatives, Inc., and Winrock International, 
Inc. In addition, we reviewed USAID project design and evaluation 
documents, contractor performance reports, and program audits. From 
our analysis, we determined key goals and accomplishments for the 
alternative development programs in Bolivia and Peru. 

* In Bolivia and Peru, we interviewed USAID mission, U.S. embassy, 
host-government, and nongovernmental organization officials. We also 
made site visits to selected project sites and met with project 
beneficiaries in both countries. From our analysis, we identified 
critical elements that facilitated or impeded the alternative 
development efforts in these countries. 

To determine the current status of USAID's alternative development 
efforts in Colombia and the challenges faced there, we interviewed 
cognizant officials and reviewed program planning and financial 
documents. Specifically, 

* In Washington, D.C., we interviewed officials in USAID's Office of 
South American Affairs and State's Bureau for International Narcotics 
and Law Enforcement and analyzed USAID program plans and expenditure 
data to determine the progress of USAID's efforts in Colombia. 

* In Colombia, we interviewed USAID mission, U.S. embassy, United 
Nations Drug Control Program, and host-government officials, including 
the senior officers of PNDA—the Colombian alternative development 
institution. We also met with officials at Chemonics International, 
Inc.—the major USAID contractor for alternative development services 
in Colombia. In addition, we analyzed USAID, PNDA, and Chemonics 
project design documents and status reports. We compared the factors 
that impeded or facilitated alternative development in Bolivia and 
Peru with Colombia's situation to identify the critical challenges 
faced there. 

We performed our work from January through December 2001 in accordance 
with generally accepted government auditing standards. 

As agreed with your office, unless you publicly announce its contents 
earlier, we plan no further distribution of this report until 30 days 
from the date of this letter. At that time, we will send copies of 
this report to interested congressional committees, the secretary of 
state, and the administrator of USAID. Copies also will be made 
available to other interested parties upon request. 

If you or your staff have any questions concerning this report, please 
call me at (202) 5124268. An additional GAO contact and staff 
acknowledgments are listed in appendix V. 

Signed by: 

Jess T. Ford, Director: 
International Affairs and Trade: 

[End of section] 

Appendix I: USAID's Alternative Development Program in Bolivia: 

The United States has provided alternative development assistance to 
Bolivia for nearly two decades, but little progress was made until the 
Bolivian government controlled the project areas and demonstrated a 
strong commitment to coupling alternative development with other 
counternarcotics measures. The U.S. Agency for International 
Development (USAID) has funded four alternative development projects 
in Bolivia since 1983. The first three projects took place between 
1983 and 1998 at a cost of about $117 million. These projects sought 
to displace the coca-based economy in the Chapare[Footnote 17]-—
Bolivia's primary illicit coca-growing area (see figure 2). However, a 
lack of security and eradication in project areas hampered the 
program's achievements. The U.S. government also supported an 
unsuccessful Bolivian government program that paid farmers not to grow 
coca. USAID officials in Bolivia estimate that the Bolivian government 
used about $100 million in U.S. economic support funds to pay these 
compensation costs between 1987 and 1998. 

In contrast, strong Bolivian government support for eradication since 
1997 has resulted in greater success for USAID's fourth and current 
alternative development project—the Counternarcotics Consolidation of 
Alternative Development Efforts Project, currently estimated to cost 
$112 million. However, Bolivia faces challenges in implementing 
alternative development because the central government coalition is 
weakening, and as the national elections scheduled for 2002 approach, 
its commitment to eradication has become uncertain. 

Figure 2: Illicit Drug-Growing Areas in Bolivia: 

[Refer to PDF for image: map of Bolivia] 

Depicted on the map are areas of Cocoa Cultivation Density, as follows: 

Very high; 
High; 
Medium; 
Low. 

Source: Latin American Narcotics Cultivation and Production Estimates 
2000,U.S. government, p. 8. 

[End of figure] 

USAID officials have identified a number of lessons from its 
alternative development program in Bolivia, many of which are relevant 
to USAID's alternative development program in Colombia. For example, 
the success of its efforts in Bolivia depended on government control 
of the project areas and a secure environment, the political 
commitment of the Bolivian government to eradicate illicit coca, and 
coordination between eradication and alternative development efforts. 

Early Alternative Development Projects Had Limited Accomplishments: 

The three USAID projects implemented before 1997 sought to develop the 
Chapare and displace the coca economy there. They aimed to promote 
coca substitution and improve farmer productivity and land use; 
provide infrastructure, including roads, electricity, and potable 
water systems; and displace the coca economy by increasing farmer 
profitability, private investment, market access for project-supported 
crops, and legal employment opportunities. However, a lack of 
government control and eradication in the project area limited the 
projects' results. Nevertheless, according to USAID and Bolivian 
government officials, these projects helped lay the groundwork for 
better results from USAID's current alternative development project in 
Bolivia. 

In addition, in the late 1980s, the Bolivian government used cash 
provided by the United States to compensate farmers for not growing 
coca. Most observers consider this program a failure. 

Chapare Project: 

The Chapare Regional Development Project, implemented between 1983 and 
1992 at a cost of $22.5 million, was USAID's first alternative 
development effort in the Chapare. Project goals were to stimulate 
balanced economic growth and improve living standards through public 
and private sector participation, a diversified economic base, and 
more equitable income distribution. However, because the Bolivian 
government lost control of the Chapare to narcotics traffickers in 
1983, USAID limited project objectives primarily to coca substitution 
and redirected project resources to nearby valleys in an effort to 
stem the tide of immigration to the Chapare. 

Electrification Project: 

The Electrification for Sustainable Development Project was 
implemented between 1991 and 1996 at a cost of about $15 million. The 
project aimed to increase the number of people receiving electricity, 
expand the use of electricity for rural industry and export-related 
activities that would provide jobs and alleviate poverty, and improve 
the operational standards of rural electric distribution. 

The project erected power poles, laid power lines, and built an 
infrastructure that served 26,700 newly established electrical 
connections—about 78 percent over target—in the total project area, 
which extended well beyond the Chapare. While these benefits may have 
facilitated subsequent development activities, project design 
documents stated that the project by itself would likely have little 
impact on shifting labor from coca production to legal activities. 
Accordingly, USAID project evaluations do not cite any coca reductions 
resulting from this project. 

Cochabamba Project: 

The Cochabamba Regional Development Project was implemented between 
1991 and 1997 at a cost of $79.5 million. Whereas the Chapare project 
focused largely on crop substitution, the Cochabamba project was an 
"economy substitution" project. The goal was to increase investment, 
productivity, and employment in legal economic activities to help 
Bolivia transform its economy into a less coca-dependent one. A 
project evaluation found that the project improved product quality and 
handling, provided export incentives, and facilitated market 
identification and penetration.[Footnote 18] The project: 

* increased the area of legal crops under cultivation, crop yields, 
and crop exports-—for example, banana cultivation increased from about 
10,800 hectares in 1993 to more than 14,100 hectares in 1996, and 
annual banana yields were estimated to have increased several times; 

* achieved Bolivia's first exports of fresh produce—-about 3,000 
cartons of bananas were exported to Argentina weekly-—and total 
exports increased a reported 564 percent; and; 

* reportedly increased annual family income derived from project-
supported crops from $280 in 1993 to $520 in 1996. 

The project also increased the presence of nongovernmental 
organizations working in the Chapare, provided training to farmers, 
further developed the region's economic and social infrastructure, and 
encouraged private sector investment. 

Notwithstanding these efforts, the total hectares under coca 
cultivation in Bolivia decreased by less than 5 percent during the 
life of this project. A United Nations Drug Control Program official 
said that such projects did not result in significant net reductions 
in coca cultivation because the projects were not linked with a 
requirement to eradicate coca. 

In addition to USAID's efforts, between 1987 and 1998, the U.S. 
embassy's Narcotics Affairs Section funded a Bolivian program to pay 
individuals cash for not growing coca. The Bolivian National 
Directorate for Agricultural Reconversion paid $2,000 per hectare to 
peasant farmers who voluntarily reduced their coca plantings. The 
directorate's operating costs and the compensation paid to farmers 
came from U.S. cash transfers to Bolivia. U.S. officials in Bolivia 
estimated that the Bolivian government spent the equivalent of 
approximately $100 million. 

U.S. officials told us the program was poorly implemented and failed 
to produce net coca reductions. USAID officials told us that 
individuals were paid to not grow coca in particular areas, but they 
continued to cultivate coca in other areas, thus defeating the purpose 
of the program. In addition, two U.S. audits by the USAID inspector 
general found several material weaknesses in the program's management, 
including inadequate verification procedures and ineligible 
beneficiaries. 

Current Project Supports Bolivia's Forced and Voluntary Eradication 
Policies: 

USAID's current alternative development project in Bolivia focuses on 
the Bolivian government's forced eradication policies and has had 
greater success than its predecessors. However, future government 
policy is uncertain and could pose a threat to the project's progress. 

The Counternarcotics Consolidation of Alternative Development Efforts 
Project, USAID's fourth and latest alternative development project in 
Bolivia, started in 1998 as a 5-year effort, but USAID is planning to 
extend the project until 2005. Project funding, currently planned at 
$112 million, is expected to increase. USAID designed the project to 
support the Bolivian government's goal of forcibly eradicating all 
illegal coca in Bolivia by the end of 2002. Primarily, the project 
provides assistance to communities that have signed and abided by 
voluntary eradication agreements with the Bolivian government. 

In 1998 and 1999, the Bolivian government undertook an aggressive coca 
eradication campaign in the Chapare, which facilitated progress in 
alternative development. The Bolivian government eradication program 
reduced coca cultivation by 33 percent nationwide and reduced coca 
cultivation in the Chapare more than 90 percent by the end of 2000. 

The Bolivian government's forced eradication campaign has encouraged 
many former coca growers to seek alternative economic opportunities 
through the current USAID project. According to State reports, as of 
September 30, 2000, the volume of licit alternative development 
production leaving the Chapare totaled $67.3 million, a 15 percent 
increase above calendar year 1999's total of $58.2 million. The number 
of domestic agribusinesses purchasing Chapare crops or supplying 
agricultural inputs increased from 46 to 67. During 2000, the project 
gave 6,500 families technical and marketing assistance, up from 2,554 
families in 1997. According to the March 2001 quarterly report on 
project performance, the aggregate market value of coca leaf 
production in the Chapare was approximately $20 million, compared to 
the value of alternative crops, which contributed approximately $85 
million to the Bolivian economy.[Footnote 19] 

While achievements in the Chapare under USAID's current project have 
been considerable, U.S. and Bolivian officials have expressed concern 
that progress in alternative development may be threatened if the 
Bolivian government does not support continued eradication of illicit 
coca. According to State officials, the Bolivian government's 
governing coalition is now politically weak, and the future of the 
government's eradication policy is uncertain. Bolivia's vice president 
told us it would be politically impossible for the administration to 
repeat the 1998-1999 forced eradication campaign and that the 
government could be that aggressive only at the beginning of its 
administration. Bolivia's vice minister for alternative development 
told us that the weakening of the governing coalition and the upcoming 
national elections have politicized eradication. Individual members 
have moved to negotiate the government's eradication policy with coca 
producers, which he said has caused serious damage to ongoing 
eradication efforts. According to the vice minister, the alternative 
development program will suffer if coca eradication is seen as 
negotiable and avoidable. 

Alternative Development Lessons Learned in Bolivia: 

USAID officials have identified lessons from the agency's alternative 
development program in Bolivia, many of which are relevant to USAID's 
alternative development program in Colombia. For example, USAID 
learned that program success depended on government control of, and 
security in, the project area; commitment of the Bolivian government 
to eradicate illicit coca; and coordination with interdiction and 
eradication efforts. In addition, it learned that other factors, 
including a market-oriented strategy, beneficiary attitudes, 
coordinated public relations campaigns, and U.S. support for Bolivian 
government agencies have contributed to program progress in Bolivia. 

Government Needs to Control Project Sites: 

USAID's alternative development projects in Bolivia were limited by 
the lack of government control of the project site and insecurity from 
continued social strife. Early project documents describe the Chapare 
as a high-risk atmosphere, noting that during much of the first 
project (the Chapare Regional Development Program, 1983-1992), 
substantial areas of the Chapare were not accessible to the Bolivian 
government or project personnel for security reasons. The Bolivian 
government lost control of the project area between 1983 and 1986, and 
as a result, USAID redirected its alternative development efforts away 
from the Chapare for several years. A 1990 project evaluation reported 
that cocaine traffickers effectively ran the Chapare as a free-trade, 
free-fire zone for several years. After the Bolivian government 
regained control over the Chapare, USAID resumed activities there. 

However, in recent years, coca union members and other groups 
protesting government policies have blockaded roads through the 
project site, preventing alternative crops from reaching markets and 
jeopardizing much-needed private sector investment. According to 
USAID, these disturbances in the project area continue to adversely 
affect its alternative development strategy. The coca producers' 
political party is well organized, and coca union members have 
threatened alternative development project staff and participants. 
During blockades of the main Chapare access road in 2000, coca union 
members threatened to burn the alternative crops of association 
members. 

USAID's current Counternarcotics Consolidation of Alternative 
Development Efforts Project remains vulnerable to such social strife. 
According to an October 2000 cable from the USAID mission in Bolivia, 
social strife resulted in losses to Chapare producers of about $3 
million. Technical assistance was suspended and licit crop planting 
was delayed. Market linkages with Argentina and Chile, which had been 
difficult to establish, were damaged by Chapare producers' inability 
to comply with delivery contracts. Financial institutions considering 
investing or providing services in the Chapare backed out. The mission 
reported that the conditions required to achieve alternative 
development interim objectives had been seriously affected by the road 
blockages and civil unrest. USAID officials told us that without 
security and stability, it is unlikely that the Chapare can achieve 
any degree of self-sustainability. 

Strong Government Commitment Facilitates Alternative Development: 

Little progress was made in Bolivia until the host government 
undertook the aggressive eradication that has facilitated USAID's 
current alternative development project. According to State, by the 
end of 2000, only 600 hectares of land under illicit coca cultivation 
remained in the Chapare, rendering the area a commercially 
insignificant source of illicit coca. As a result of the 1998-1999 
eradication campaigns, more former coca growers are turning to 
alternative development activities to earn their living, and the value 
of licit crops under cultivation has increased significantly. The 
number of currently anticipated beneficiaries, about 7,300, is more 
than double original estimates. 

Alternative Development, Interdiction, and Eradication Need to Be 
Coordinated: 

According to State, USAID, and other U.S. government officials in 
Bolivia, alternative development, narcotics and precursor chemicals 
interdiction, and illicit crop eradication are interdependent and 
mutually reinforcing components of a successful counternarcotics 
strategy. Interdiction and eradication are shorter term in nature; 
alternative development efforts take longer to implement and show 
results, but they are important to sustaining gains made by 
interdiction and eradication. 

USAID's alternative development projects in Bolivia have been hindered 
by poor coordination between the U.S.-supported eradication effort and 
USAID's alternative development efforts. For example, a former USAID 
official told us that State and Drug Enforcement Administration 
officials often did not share information about the U.S.-supported 
counternarcotics operations with USAID. A 1991 USAID study on coca 
production in the Chapare concluded that there was too little 
coordination at both the policy and operations level among agencies 
charged with interdiction and development.[Footnote 20] The director 
of Bolivia's Alternative Development Regional Program, the USAID 
counterpart for alternative development, told us that until the end of 
1996, USAID and Bolivian alternative development agencies worked 
almost entirely apart from U.S. and Bolivian counternarcotics 
enforcement agencies. 

More recently, the rapid pace of the Bolivian government's eradication 
campaign has created gaps between eradication and alternative 
development assistance that can leave peasant farmers without 
livelihoods. The Bolivian plan has been to remove itself from the coca-
cocaine business by 2002. According to a U.S. embassy official in 
Bolivia, the schedule for the eradication process was compressed 
because the current government wanted to complete the effort before 
the 2002 presidential election. As a result, coordination between 
eradication and alternative development became very difficult. 
According to an embassy official, the Bolivian government was 
eradicating 1,000 hectares a month at the peak of the 1998-1999 
operation and there was no way alternative development could quickly 
replace the eradicated coca with crops. Accelerated eradication 
stressed the current project by dramatically multiplying the 
anticipated beneficiaries—from 3,500 to 7,300 people. State reported 
that the aggressive eradication program outpaced the alternative 
development program by a wide margin and that the Bolivian government 
would accelerate the alternative development project in the
Chapare in an effort to close the gap. 

Others Factors Affecting Alternative Development: 

A combination of other factors have contributed to the recent 
successes in Bolivia. These factors are less universal than those 
cited above, but nevertheless USAID officials in Bolivia noted them as 
lessons learned for future alternative development projects. 

Verification Is Necessary: 

According to USAID officials in Bolivia, community self-policing, or 
"peer pressure," has not been a reliable mechanism for enforcing 
voluntary eradication agreements. After the Bolivian government's cash 
compensation program was phased out, the government began providing 
infrastructure and other in-kind compensation to communities that 
abandoned coca. However, USAID officials question assumptions that 
legal producer associations can prevent all of their members from 
producing coca. USAID officials disagree with the basic peer-pressure 
premise of the program because there are no long-standing, close-knit 
communities in the Chapare but rather loosely associated settlements. 
In the summer of 1999, according to USAID officials, 65 percent of the 
communities participating in the government's voluntary eradication 
program were found to have some members who violated their coca 
eradication agreements, thus disqualifying the community from 
receiving government assistance. Suspension of assistance to an entire 
community or farmer group because a few members broke their 
compensation agreements has been counterproductive, according to 
USAID, because it hinders implementation of legal crop production and 
marketing activities and weakens alternative producer associations. 

Markets Are Needed: 

USAID officials in Bolivia found that alternative development projects 
were needed to incorporate market-oriented strategies and overcome 
numerous business-related challenges to provide economic benefits for 
participants. For example, although the success of the Chapare 
Regional Development Project—-USAID's first alternative development 
project in Bolivia-—depended on the economic viability of alternative 
crops adopted by farmers, a 1990 evaluation found that no studies of 
the markets for the proposed crop substitutes had been conducted. 
[Footnote 21] The evaluation also found that the Bolivian private 
sector was weak and cautious and did not fulfill the role envisioned 
by USAID in the project design. Furthermore, constraints on credit 
access were severe. The evaluation found that although coca production 
in the Chapare produced a huge inflow of cash, small farmers did not 
translate coca income into savings or productive assets. The 
subsequent alternative development project in Cochabamba was more 
market focused, but it also faced serious business challenges. For 
example, the most serious challenge in establishing export markets for 
project-supported crops was the inadequate volume and quality of the 
produce and difficulty shipping it quickly and delivering it in good 
condition on a consistent basis.[Footnote 22] 

The Consolidation of Alternative Development Efforts Project, which 
started in 1998 and is still under way, is almost entirely focused on 
leveraging the market-oriented activities of predecessor projects and 
improving farmer productivity, stimulating private sector investment, 
and facilitating market access. It also faces numerous business 
challenges, such as extremely poor road connections to domestic 
markets and markets in neighboring countries, a lack of refrigerated 
cargo trucks, and poor access to credit for Chapare farmers and 
entrepreneurs. 

Public Support Is Helpful: 

U.S. officials emphasized the importance of an effective public 
relations campaign for counternarcotics programs and alternative 
development in particular. In Bolivia, the U.S. embassy helped build a 
public consensus that production of coca and cocaine was a matter of 
Bolivian national interest, that the cocaine consumed by Bolivians 
came from the Chapare, and that narcotics trafficking was retarding 
the country's economic development. U.S. officials told us that public 
support was a necessary precondition for the Bolivian government's 
campaign of accelerated, forced eradication. U.S. embassy officials 
recently concluded, however, that U.S. support of the Bolivian 
government's public relations effort has overemphasized the cities and 
neglected the actual project area. To counter pro-coca and anti-
alternative development propaganda in the Chapare, the U.S. embassy 
public affairs section has begun an outreach effort to radio stations 
there. 

[End of section] 

Appendix II: USAID's Alternative Development Program in Peru: 

The United States has provided alternative development assistance to 
Peru for nearly two decades, but little progress was made until the 
Peruvian government controlled the project areas and demonstrated a 
strong commitment to a broader set of counternarcotics measures. The 
U.S. Agency for International Development (USAID) has funded two 
alternative development projects in Peru since 1981. The first 
alternative development project—the Upper Huallaga Area Development 
(UHAD) project—took place between 1981 and 1994 at a cost of about $31 
million. This project was designed to increase and diversify 
agricultural production in the coca-growing Upper Huallaga River 
Valley through agricultural assistance for alternative legal crops and 
improvements in roads and health and community services (see fig. 3). 
However, severe security constraints and a lack of marketing 
assistance limited its successes, and coca cultivation
increased during the project's lifetime. 

In contrast, several factors—-particularly a strong Peruvian 
government commitment to counternarcotics and improvements in security 
and civil governance—-have contributed to better results for the 
Alternative Development Program (ADP), USAID's second and current 
alternative development project in Peru. This project, which began in 
1995 and is currently estimated to cost about $195 million, has 
contributed to a 70 percent decline in hectares under coca 
cultivation. However, political uncertainty in Peru, as well as other 
issues, may affect future program accomplishments and sustainability. 

Figure 3: Illicit Drug-Growing Areas in Peru: 

[Refer to PDF for image: map of Peru] 

Depicted on the map are areas of Cocoa Cultivation Density, as follows: 

Very high; 
High; 
Medium; 
Low. 

Source: Latin American Narcotics Cultivation and Production Estimates 
2000, U.S. government, p. 14. 

[End of figure] 

USAID officials have identified various lessons learned from the two 
alternative development projects in Peru, many of which are relevant 
to USAID's alternative development program in Colombia. For example, 
the success of alternative development in Peru depended on security in 
program areas, the political commitment of the Peruvian government, 
and coordination with eradication and interdiction efforts. 

UHAD Project Accomplishments Were Limited: 

USAID implemented the UHAD project between August 1981 and June 1994 
at a cost of approximately $31.2 million. The U.S. and Peruvian 
governments developed the UHAD project as part of a joint 
counternarcotics strategy that called for coordination among 
interdiction, eradication, and alternative development efforts. The 
UHAD project was intended to support the government of Peru's 
alternative development objectives in the Huallaga Valley by 
strengthening local government and community participation in the 
alternative development process, improving the physical and social 
infrastructure, and promoting agricultural activities that would 
replace illicit crops. USAID originally limited project operations to 
the Upper Huallaga area, a high-jungle valley along the Huallaga River 
in the north-central part of Peru, but later expanded the program to 
the Central Huallaga Valley as well. 

The Special Project for the Alta (or Upper) Huallaga (PEAH), an entity 
of the Peruvian government, implemented the UHAD project with USAID 
support. During much of the UHAD project, armed subversive 
organizations-—the Shining Path and the Tupac Amaru Revolutionary 
Movement-—terrorized Peruvians and attacked national and local 
government and civilian and military targets, particularly in rural 
areas. Narcotics traffickers also contributed to the violence. By 
1986, PEAH had become the sole Peruvian government entity remaining in 
the Upper Huallaga Valley because of the deteriorating security 
situation. As a result, USAID severely reduced planned activities in 
the project's agricultural production component, including 
agricultural research, training, credit extension, and land titling. 
The project's focus on crop substitution and a lack of technical and 
marketing assistance for the alternative crops further limited the 
success of its agricultural component. 

USAID made some progress in the UHAD project's infrastructure 
component, with PEAH upgrading 765 kilometers of highways and 582 
kilometers of access roads that helped reduce travel and 
transportation costs and connected farmers to buyers of the area's 
agricultural products. However, terrorist activities prevented USAID 
from completing a major highway that was intended to connect project 
sites with Lima area markets as well as other infrastructure projects. 
Furthermore, the terrorists generally controlled the farmers' access 
roads. 

The community development component was, at times, the only 
functioning element of the UHAD project. Activities fostering local 
participation in the design and execution of small social 
infrastructure projects proved successful by exposing communities to 
democratic principles and requiring them to contribute financially to 
projects from which they benefited. However, this component required 
the tacit approval of the terrorists. PEAH was unable to develop good 
working relationships with the public agencies, local governments, and 
community-based organizations involved, and security problems resulted 
in the abrogation of many agreements between PEAH and these entities. 

In the end, evaluations of the UHAD project cited the lack of 
coordination between the Peruvian government's alternative development 
and eradication activities, as well as limited markets for the 
alternative crops that the project promoted, as factors that limited 
the project's success. During the early years of the project (1981 to 
1986), hectares under coca cultivation in the Upper Huallaga Valley 
increased fivefold from 12,000 hectares to 60,000 hectares. By 1990, 
these areas increased further to an estimated 70,000 to 90,000 
hectares. 

Strong Peruvian	Government Support Increased Success of Second Program: 

Using lessons learned from the UHAD project, USAID initiated the 
current ADP in 1995. ADP is more comprehensive than the UHAD project 
in terms of geographic coverage and program components. ADP seeks to 
improve employment and income opportunities from legal economic 
activities, access to basic social services, public participation in 
decision making, and public awareness of the problems from drug use 
and production in five coca-growing river valleys in Peru. The return 
of government control, security, and civil governance in program 
areas, as well as the Peruvian government's strong commitment to 
interdiction and eradication, have proved crucial in creating an 
environment conducive to alternative development. 

As of January 2001, USAID had spent $84.5 million for ADP; USAID 
estimates that ADP funding through 2003 will reach $194.5 million. 
[Footnote 23] ADP has made considerable progress in meeting its 
objectives and has contributed to significant drops in coca 
cultivation in Peru. The project's strategy is based on the hypothesis 
that the majority of residents in coca cultivation zones will 
voluntarily abandon coca if they are offered alternative licit sources 
of income, along with improved living conditions for their 
communities, and if narcotics trafficking is disrupted and laws are 
enforced. 

ADP emphasizes licit economic activities, local government 
strengthening, and economic and social infrastructure. The component 
involving licit economic activities offers assistance in the 
production, processing, and marketing of alternative licit crops; 
credit programs; and land titling programs. USAID has focused these 
activities on the rehabilitation of coffee and cacao cultivation 
because of their established markets and farmer familiarity with these 
crops. In its local government component, the project promotes efforts 
to strengthen local governments, increase public participation in 
decision making, raise social awareness of drug production and use, 
and develop communities. Finally, ADP includes activities to improve 
the economic infrastructure—for example, the rehabilitation and 
maintenance of roads and bridges and the provision of social services 
in program areas. Improved roads and bridges are intended to create a 
viable transportation network for licit economic activities, while 
social infrastructure components involve local communities in the 
selection, design, financing, construction, and maintenance of small 
infrastructure projects such as schools, potable water systems, health
posts, and minihydroelectric systems. 

With the return of government control, security, and civil governance 
in program areas in the early 1990s, as well as the Peruvian 
government's strong commitment to interdiction and eradication, ADP 
has been able to accomplish considerably more of its objectives than 
the earlier UHAD project. In conjunction with eradication and 
interdiction efforts, ADP contributed to a 70 percent net decrease in 
hectares under coca cultivation in Peru from 1995 (115,300 hectares) 
through 2000 (34,200 hectares). According to USAID, those areas 
receiving greater project investment witnessed greater voluntary 
abandonment of coca cultivation, as well as fewer plantings of new 
coca crops. 

During 1995-2000, ADP provided production and marketing support to 
more than 15,000 farmers growing nearly 32,000 hectares of licit 
crops, particularly coffee and cacao, according to USAID officials. 
During that period, more than 236 metric tons of licit crops, with a 
gross value exceeding $46 million, were produced in program areas. The 
project established a $10 million rural credit system, provided 
training in governance skills, and strengthened two municipal 
associations. 

Through its economic and social infrastructure component, ADP has 
rehabilitated 1,000 kilometers of roads and 46 bridges, stone-paved 21 
kilometers of roads, supported 136 engineering studies, piloted 1 
regional maintenance program, and provided 3 pools of heavy equipment. 
In addition, the project has supported about 1,000 small social 
infrastructure projects involving schools, potable water systems, 
health posts, minihydroelectric systems, and other community 
improvements. As a result, the percentage of households with access to 
basic services in program areas increased from 16 percent to 51 
percent. Finally, according to USAID, the percentage of the population 
recognizing drug production and consumption as damaging to society 
reached 94 percent. 

Alternative Development Lessons Learned in Peru: 

USAID officials identified various lessons learned from the UHAD 
project and ADP, many of which may apply to USAID's alternative 
development program in Colombia. For example, the success of its 
alternative development program in Peru depended on government control 
over and security on the project sites, the political commitment of 
the Peruvian government, and coordination with interdiction and 
eradication efforts. Other factors that affected alternative 
development in Peru included a system for verifying compliance with 
eradication agreements, a market-oriented program design, national 
consensus on the harm caused by drug production and consumption, and a 
viable road network. 

Government Needs to Control Project Areas: 

Lack of government control and security severely limited program 
implementation and accomplishments in the UHAD project by causing 
program implementers—agricultural advisers, researchers, and financial 
institutions—to withdraw and residents to flee from project areas. 
Terrorists murdered several land surveyors, mayors, and residents, 
thereby halting many of the project's activities. At one point, PEAH 
was the only Peruvian government institution in the Upper Huallaga 
Valley, after other government and private sector entities left due to 
the deteriorating security situation. 

In designing ADP, USAID officials acknowledged that ensuring security 
by reducing the presence of subversive and narcotics trafficker 
elements was a critical precondition for alternative development in 
program areas. Insecure areas were excluded from the program. The 
Peruvian government's success in combating terrorist groups and 
narcotics traffickers in the mid-1990s created a more secure and 
amenable environment for alternative development. The return of civil 
governance in program areas allowed USAID-supported activities to 
resume. 

Strong Government Commitment Facilitates Alternative Development: 

As the UHAD project was ending in the early 1990s, prospects for the 
success of alternative development in Peru were considered bleak, 
despite years of U.S. assistance. Coca cultivation had increased 
significantly during the 1980s. However, this changed when the 
Peruvian government committed to a strong counternarcotics agenda. In 
particular, the Peruvian Air Force conducted an aggressive 
interdiction campaign in which it shot down airplanes presumed to be 
involved in narcotics trafficking. This campaign disrupted the coca 
market, thereby encouraging coca growers to turn to alternative 
development programs. By targeting narcotics traffickers, rather than 
coca growers, the Peruvian government also limited resentment from 
farmers over the counternarcotics campaign, according to USAID and 
Peruvian officials. 

Recent political turmoil has created uncertainty about the future 
direction of the Peruvian government's counternarcotics policies and 
may affect future program accomplishments and sustainability. Peru's 
transitional government (November 2000 to July 2001) invited leaders 
of coca-growing syndicates to participate in formal roundtable policy 
discussions, raising concern among USAID officials and some ADP 
implementers that this would impart legitimacy to the syndicates and 
raise their political profile. In addition, Peru's current 
administration, which came to office on July 28, 2001, is still 
developing its national counternarcotics policy. 

Alternative Development, Interdiction, and Eradication Need to Be 
Coordinated: 

State and USAID officials in Peru emphasized that an effective 
counternarcotics strategy requires sustained interdiction, 
eradication, and alternative development. Interdiction and eradication 
disrupt the coca market, thereby creating market uncertainty and 
lowering prices for coca while encouraging coca farmers to consider 
alternative development programs. 

The three efforts are also complementary, but alternative development 
programs require longer timetables to achieve results than 
interdiction or eradication efforts. The cultivation and 
commercialization of alternative crops, development of community 
organizations, and improvement of social and economic infrastructures 
can take years to accomplish, but they have longer-lasting impacts on 
reducing coca cultivation. Department of State and USAID officials in 
Peru emphasized that coordination between eradication and alternative 
development is particularly important to ensure that eradication 
efforts do not interfere with alternative development activities and 
that families dependent on coca for their livelihood receive short-
term emergency assistance after an eradication campaign. 

According to USAID officials, the Peruvian government has conducted 
some coca eradication campaigns in the past without coordinating these 
actions with USAID, thereby jeopardizing ADP activities. Such forced 
eradication campaigns can cause problems for ADP by creating 
resentment among community residents. In the earlier UHAD project, 
resentment against eradication efforts worsened security concerns by 
alienating farmers, which encouraged them to seek "protection" from 
terrorist groups. 

Others Factors Affecting Alternative Development: 

As in Bolivia, a combination of other factors has affected progress in 
Peru. The factors cited by USAID officials in Peru are similar, but 
not identical, to those cited by officials in Bolivia and are useful 
as lessons learned for future alternative development projects. 

Verification Is Necessary: 

According to USAID and embassy officials in Peru, although the United 
States has monitored overall trends in coca reduction in Peru, there 
is currently no way to verify whether specific Peruvian communities 
participating in voluntary eradication agreements are actually 
complying with the agreements. In September 2001, State's inspector 
general found that monitoring efforts were not specific enough to 
establish an adequate link between investments in alternative 
development and coca reductions. Embassy officials, with input from 
USAID, are developing a monitoring system that addresses this concern. 
One component of the system the embassy is considering would involve a 
requirement for the Peruvian government to provide proof of compliance 
with eradication agreements before it could draw future alternative 
development funds. The system would likely employ the Peruvian 
Interior Ministry in plotting the relevant areas of farmland and 
monitoring the corresponding eradication efforts there. The United 
States would then verify the Peruvian government's monitoring efforts 
from the air. 

Markets Are Needed: 

Under the UHAD project, USAID emphasized agricultural production of 
certain crops. However, USAID did not conduct analyses or develop 
program strategies that fully considered the marketability of these 
particular crops. Without markets for the alternative crops they grew 
under the UHAD project, farmers derived little economic benefit from 
their efforts and investments. Based on this experience, USAID 
included a stronger market focus in the follow-on project. ADP 
originally focused on promoting the rehabilitation of key crops-—
coffee and cacao-—that had proven markets and that farmers 
traditionally cultivated, but then abandoned, in program areas. 
However, historically low market prices for these commodities have 
limited the economic benefits to farm families. 

ADP is now promoting economic diversification—the cultivation of 
multiple crops and raising of small farm animals—to stabilize the 
financial income and nutritional needs of farm families, while still 
promoting the cultivation of traditional crops (for example, coffee 
and cacao) whose prices are subject to market fluctuations. USAID also 
is emphasizing the need to develop niche markets for alternative 
development products and to involve the private sector under ADP. For 
example, USAID has successfully marketed coffee and cacao grown under 
ADP to Seattle's Best Coffee and M&M Mars Company. 

Public Support Is Helpful: 

U.S. and Peruvian officials acknowledged that, in the past, Peruvians 
considered coca cultivation, drug production, and narcotics 
trafficking to be U.S. rather than Peruvian problems. Consequently, 
the Peruvian public demonstrated relatively limited support for U.S.-
supported counternarcotics efforts, including alternative development.
However, the Peruvian public attitude toward drug production and 
trafficking changed as a result of the terrorism, violence, and social 
disruption caused by subversive groups—who were supported by narcotics 
traffickers—during the 1980s and early 1990s. With public support, the 
Peruvian government mounted aggressive counternarcotics and 
counterterrorist campaigns, while minimizing public opposition and 
resentment against these efforts by targeting narcotics traffickers 
rather than the coca farmers. 

Public support at a community level has also helped. According to 
USAID officials, the involvement of beneficiaries, local community 
groups, and municipalities in its alternative development programs was 
necessary to promote sustainability. Communities have a greater 
incentive to embrace and sustain alternative development activities if 
they are involved in the design, implementation, and funding of 
projects that raise the quality of life in their communities. Both the 
UHAD project and ADP included social infrastructure activities in 
which communities benefited from and contributed to alternative 
development-supported schools, water systems, and health posts. 

ADP, in particular, has promoted the development and strengthening of 
regional and local community groups such as municipal associations, 
producer associations, and credit groups to encourage local 
communities to take ownership of their projects and expose them to the 
democratic process. According to USAID, strengthening local 
organizations is particularly important in Peru because of the 
national government's highly centralized decision making and resource 
allocation processes. Under ADP, USAID requires local communities to 
prioritize their social service needs and contribute both financial 
and labor resources to the projects they choose. USAID also helped 
coffee and cacao farmers develop producer associations to assist them 
in marketing their crops. 

U.S. and Peruvian officials acknowledged that a viable rural road 
network is a precondition that encourages farmers to consider 
alternative economic activity and reduce their illicit crops 
voluntarily. Good roads allow farmers to obtain higher prices for 
their alternative crops by linking them to higher-paying nonlocal 
markets and by reducing transportation costs. In contrast, farmers can 
market coca leaves without roads by carrying coca leaves or coca paste 
out of their valleys or by having narcotics traffickers pick up the 
products from farms by airplane. 

Under the UHAD project, USAID had supported the completion of roads 
that would have linked Upper Huallaga Valley farmers to lucrative 
markets in Lima. However, a lack of security prevented their 
completion. Under ADP, USAID is supporting the rehabilitation and 
upgrading of important secondary rural roads and bridges in program 
areas. In some cases, USAID is supporting cobblestone paving of dirt 
roads, which also generates local employment in program areas. USAID 
is also supporting the formation of community-based road maintenance 
microenterprises. 

[End of section] 

Appendix III: Comments from the Department of State: 

United States Department of State: 
Chief Financial Officer: 
Washington, D.C. 20520-7427: 


Ms. Susan S. Westin: 
Managing Director: 
International Affairs and Trade: 
U.S. General Accounting Office: 
		
Dear Ms. Westin: 

We appreciate the opportunity to review your draft report, "Drug 
Control: Efforts to Develop Alternatives to Cultivating Illicit Crops 
in Colombia Have Made Little Progress and Face Serious Obstacles," GAO-
02-70, GAO Job Code 320016. 

The enclosed Department of State comments are provided for 
incorporation with this letter as an appendix to the final report.
If you have any questions concerning this response, please contact 
Than Christie, Bureau of International Narcotics and Law Enforcement 
Affairs, at 647-8727. 

Sincerely, 

Signed by: 

Larry J. Eisenhart: 
Acting: 

Enclosure: As stated. 

cc: GAO/IRT - Mr. Benjamin Nelson: 
State/OIG - Mr. Atkins: 
State/EAP - Mr. Short. 

[End of letter] 

Department of State Comments on GAO Draft Report "Drug Control: 
Efforts to Develop Alternatives to Cultivating Illicit Crops in 
Colombia Have Made Little Progress and Face Serious Obstacles,"
(GA0-02-291): 

The Department of State's Bureau for International Narcotics and Law 
Enforcement Affairs (INL) commends the GAO on a thoughtful and 
thorough report and acknowledges the majority of GAO's conclusions 
regarding the obstacles facing ongoing alternative development efforts 
in Colombia. The Department suggests that GAO make the following 
corrections to the draft report: 

In order to agree with the language of H.R. Conference Report 107-135, 
delete the text in footnote 16 on page 15 and insert: "The fiscal year 
2002 Foreign Operations Appropriations bill prohibits the use of funds 
to procure chemicals for aerial fumigation programs after six months 
from the date of enactment of the Act unless alternative
development programs have been developed in the departments in which 
aerial coca fumigation is planned and alternative development programs 
are in place in the departments in which aerial coca fumigation is 
being conducted. The bill also requires the Secretary of State, after 
consultation with the Administrator of the Environmental Protection
Agency, the Secretary of the Department of Agriculture, and the 
Director of the Centers for Disease Control and Prevention, if 
appropriate, to make determinations and report to Congress on various 
aspects of the aerial fumigation program, including the safety of the 
chemicals used in aerial fumigation operations." 

INL agrees with the GAO's conclusion that careful coordination between 
alternative development and aerial eradication programs is essential 
to the success of U.S. counternarcotics goals in Colombia. However, 
INL does not concur with the report's discussion of alleged spray 
damage to legal crops or the derivative recommendation that spraying 
and alternative development should not be conducted in the same 
location. 

To bolster its recommendation that alternative development and 
spraying should be coordinated, the GAO puts forward as supporting 
evidence (on page 15 of the draft report) that: 

"In December and February 2000, the Colombian National Police 
accidentally sprayed approximately 700 hectares of an alternative
development project site while conducting aerial eradication 
operations." 

While the potential exists for human or mechanical errors, INL goes to 
great lengths to prevent such occurrences. The decision to release the 
spray over a particular coca or opium poppy field is made by a highly 
skilled pilot, and all spray aircraft fly predetermined routes based 
on previous multispectral imaging of known cultivation areas. During 
each spray mission, the precise time and location at which the 
aircraft spray apparatus is opened and closed is automatically 
recorded by an onboard computer for later review. Subsequent 
reconnaissance flights and ground truth verification monitor the 
precision of the spray pilots and whether the illicit crops have been 
eradicated. 

On the GAO assertion that Colombian National Police (CNP) spray planes 
mistakenly sprayed 700 hectares of legal crops in two months in 2000, 
State would like to submit to GAO several relevant details. In 
December 2000, the CNP sprayed approximately 600 hectares of coca in a 
Kofanes indigenous reservation that was the subject of ongoing
alternative development discussions between the GOC and the Kofanes. 
Due to unfortunate miscommunication between PLANTE and the CNP, this 
territory had not been demarcated on CNP maps indicating areas where 
spraying should not occur. In light of this incident, the GOC entered 
into an agreement with the Kofanes to fund an approximately $1 million 
project entitled "Programa para el Desarrollo del Componente de 
Economia y Produccidn del Plan de Vida Kofan." This project includes 
activities to assist the Kofanes with subsistence agricultural 
production, soil use classification, and recovery of traditional 
indigenous crops. The U.S. Government is supporting this effort 
directly and indirectly with over $750,000 of funding. 

INL is aware of various unsupported assertions of growers who failed 
to make formal complaints to the relevant authorities. The Government 
of Colombia has authorized the aerial eradication of legal crops when 
they are interspersed with illicit crops so as to avoid detection of 
illegal activity (as was the case with the Kofanes coca). In fact, 
experience indicates that many complaints that legal crops have been 
sprayed are later found to be groundless due to the interspersing of 
licit crops with illicit crops. 

INL is mindful of and sensitive to the need to respond quickly to 
complaints that legal crops -- especially those tied to alternative 
development projects -- might have been sprayed in error. To this end, 
the Narcotics Affairs Section (NAS) of the U.S. Embassy in Bogotá has 
worked closely with the Government of Colombia's Direccion Nacional de 
Estupefacientes (national drug policy office) to create an expedited 
process to investigate any complaints and to compensate farmers if 
losses are incurred to genuinely legal crops. This process is now in 
place, enhancing the credibility and transparency of the spray program 
and reducing the chance that errors might contribute to a lack of 
trust between Colombia's rural farmers and their central government.
The GOA's draft report, on page 15, suggests that spraying may 
complicate efforts to promote licit alternative economic activity in 
coca producing areas: 

"Also, PNDA officials told us that eradication authorities had sprayed 
most of the Bolivar department, even though PNDA had targeted some
communities in the department for participation in the alternative 
development program. This will likely complicate PNDA's relations with 
farmers in that region." 

INL believes it is appropriate and constructive for spraying of 
illicit coca to be conducted before alternative development programs 
are initiated in an area. Indeed, it is often a prerequisite to local 
participation in and community members' support for alternative 
development projects. Alternative development efforts in Putumayo 
offer an excellent case in point. When alternative development 
opportunities were first offered to coca growers in Putumayo last 
year, there was little interest. The spray planes then arrived and 
demonstrated to growers that involuntary eradication of their coca 
crop would occur if they did not agree to eradicate manually. After 
parts of Putumayo were sprayed in December 2000, farmers began signing 
such pacts and interest in alternative development blossomed, with 
37,000 families ultimately signing on. 

INL suggests that the GAO report note the extensive efforts of Embassy 
Bogotá -- through the NAS and the U.S. Agency for International 
Development -- to promote and expand coordination and cooperation. 
Over the course of the past year, the NAS has consistently requested 
that the Government of Colombia, especially the office of the senior 
presidential advisor for Plan Colombia, provide the geocoordinates of 
its alternative development program areas. These coordinates have been 
and will continue to be used by spray pilots to ensure that spraying 
does not occur within pacted areas. The Embassy continues to engage the
office of the President's advisor for Plan Colombia matters to develop 
a comprehensive register of the location of the Government of 
Colombia's alternative development pacts. 

INL appreciates the opportunity to present these comments and would be 
pleased to elaborate further on any of the points made above. 

[End of section] 

Appendix IV: Comments from the U.S. Agency for International 
Development: 

USAID: 
U.S. Agency For	International Development: 
1300 Pennsylvania Avenue, NW: 
Washington, D.C. 20523: 

January 15, 2002: 

Mr. Jess Ford: 
Director: 
International Affairs and Trade: 
U.S. General Accounting Office: 
441 G Street, N.W. 
Washington, D.C. 20548: 

Dear Mr. Ford: 

I am pleased to provide the U.S. Agency for International 
Development's (USAID) formal response on the draft GAO report entitled 
"Drug Control: Efforts to Develop Alternatives to Cultivating Illicit 
Crops in Colombia Have Made Little Progress and Face Serious 
Obstacles" (December 2001). 

Overall, we find this report thorough and accurate. Its scope however 
is limited to the alternative development program -- one of three 
components of the drug crop eradication strategy in Colombia. Other 
components include eradication and interdiction programs. We believe 
that a complete picture of progress requires a comprehensive look at 
the combined impact of all components. When viewed from this 
perspective, progress has been quite significant given that the 
program is just beginning. We would like to provide information on the 
overall context of the Colombia alternative development program, 
describe its contribution to drug eradication successes achieved in 
2001, and outline current efforts which directly address your central 
recommendation. 

Democracy in Colombia is under threat. Three illegally armed groups 
are contesting a democratic state and each other. None of these groups 
promotes democratic ideals. The Department of State has designated all 
three as terrorist organizations. In recent years, these groups have 
gained increased control over the drug industry. Drug profits have 
become a major source of financing for their objectives. The on-going 
conflict is threatening to destabilize democratic rule in Colombia. 

Plan Colombia represents a courageous effort by the Colombian 
government to address a very difficult situation through democratic 
means. The US Government has determined that attacking drug 
production, processing, and trafficking provides an excellent way to 
promote our common interests with the Colombian Government. Over time, 
a reduction of drug related income will reduce the strength and 
influence of terrorist organizations. 

USAID is proud to be associated with US Government efforts to address 
a central foreign policy concern in the Western Hemisphere. Working in 
a high conflict zone is difficult and dangerous. As we learned over 
many years in Bolivia and Peru, success depends on determination, long-
term commitment, and the ability to learn and adjust to changing 
circumstances. USAID assistance programs in Colombia cover three broad 
areas: strengthening democratic institutions and human rights 
protection, providing temporary assistance to Colombian citizens who 
have been displaced by conflict, and working with farmers to develop 
alternatives to coca and poppy cultivation. 

As you point out, the alternative development program is less than a 
year old. The bulk of funding was provided less than 15 months ago and 
implementation began in 2001. Program start-up has been remarkably 
fast given limited institutional capacity, remoteness of program 
areas, and extreme security risks posed by illegal armed groups. At 
the time Plan Colombia was developed, we hoped that the peace process 
would reduce the level of rural violence. Unfortunately, progress in 
peace talks has been slower than anticipated and conflict in many 
rural areas has tended to increase rather than decrease. In the
department of Putumayo where alternative development activities are 
concentrated, USAID recorded nine serious security incidents involving 
alternative development workers between the months of August and 
October 2001 alone. Two Colombian alternative development workers were 
murdered by the FARC, others were temporarily kidnapped or threatened 
with death. In addition, several community leaders who were 
collaborating with coca reduction efforts were murdered. Security 
threats constrain many individuals on a daily basis. These incidents 
have significantly affected, but not stopped, implementation progress. 

Your report outlines several constraints affecting alternative 
development efforts in Colombia. USAID and other entities involved in 
planning and implementation have also identified these same 
constraints. USAID/Colombia Mission 

Director Ken Ellis most recently briefed congressional staff on these 
concerns in September 2001. 

Why did USAID continue program implementation if it was aware of the 
constraints identified? 

USAID has continued its efforts under difficult conditions,
because they are essential for achieving eradication goals. The 
alternative development program contributes to coca eradication by 
building the political support needed for aerial eradication efforts 
to take place. Unlike Peru and Bolivia, there is currently no 
significant manual eradication in Colombia. Manual eradication, 
whether forced or voluntary, requires government control of drug 
cultivation areas. Voluntary eradication only works when there is a 
direct credible threat of sanctions, such as forced eradication, in 
cases of non-compliance with eradication agreements. Given that armed 
groups control the areas of greatest coca concentration; manual 
eradication is not yet feasible on a large scale in Colombia. The 
Colombian government has therefore chosen to use aerial eradication as 
its primary means of achieving drug crop eradication. Approximately 
84,000 hectares of coca were sprayed in 2001. This level of impact is 
unprecedented in a new eradication program. The GOC and USAID-
supported alternative development activities have been essential in 
securing the political support that is necessary for aerial 
eradication to take place. Because of this, USAID-supported programs 
are critical to achieving significant eradication impact, and have 
been continued despite the difficulties encountered. A credible threat 
of eradication encourages participation in alternative development 
programs. Over the longer term, alternative development is important 
for sustaining drug eradication achievements. To the extent that farm 
families have greater income opportunities from licit sources, and 
that credible enforcement of anti-drug cultivation laws exists, they 
will be less likely to return to drug crop cultivation in the future. 

In sum, alternative development programs do not achieve drug crop 
reductions on their own. For this reason, USAID only implements 
alternative development in coordination with complementary eradication 
and enforcement programs and at the request of State/INL, which has 
the lead on drug crop eradication. It is difficult or impossible to 
disaggregate the contribution of one component to eradication 
achievements. We would therefore urge Congress to consider the 
combined effects of all drug control program components when making 
decisions on program funding. 

What is USAID doing to address your central recommendation? 

Your report recommends that USAID update its alternative development 
plans to "take into account the extreme difficulty of gaining access 
to the coca-growing regions to ensure that funds are used as 
effectively as possible." As part of our normal performance management 
process, we initiated such a review last fall. From October to 
December 2001, USAID undertook a detailed two and a half-month field 
study in Southern Colombia. This study involved extensive two-hour
interviews with 160 individuals representing all socio-economic groups 
in the region. This extensive analysis, conducted at significant 
personal risk to the participants and the analyst involved, provides 
the most detailed information on the situation available to date. As 
results became available last December, the USAID Mission in Bogotá 
initiated a discussion with the Government of Colombia on a series of 
modifications and adjustments to the alternative development program. 
We expect to phase in these adjustments over the course of the year.
These changes are also being factored into higher-level policy 
discussions with the Colombian government. Our goal is to ensure that 
alternative development programs not only continue to support 
eradication efforts, but also provide as much impact as possible in 
enabling rural farm families to stay away from, or transition out of, 
drug crop cultivation. An essential factor, which we do not control, 
is the state of conflict between armed groups and the threat posed by 
these groups on local communities. We are monitoring this situation 
closely to avoid placing undue risk on field staff. We will be pleased 
to provide interested congressional members and staff with detailed 
briefings and updates on our program as it evolves. 

Colombia matters to the United States. The situation there is not 
easy, but we believe that democracy is worth fighting for. We are 
committed to making a difference and hope we continue receiving the 
necessary Congressional support. 

Thank you for the opportunity to respond to the GAO draft report and 
for the courtesies extended by your staff in the conduct of this 
review. 

Sincerely, 

Signed by: 

John Marshall: 
Assistant Administrator: 
Bureau for Management: 

[End of section] 

Appendix V: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Albert H. Huntington, III (202) 512-4140. 

Acknowledgments: 

In addition to the individual named above, Dave Artadi, Mike Courts, 
Christian Hougen, Jason Venner, and Janey Cohen made key contributions 
to this report. 

[End of section] 

Footnotes: 

[1] Alternative development entails a broad range of development 
initiatives to generate legal employment alternatives, alleviate 
poverty, and spur investment and economic growth. Such efforts often 
involve substituting licit crops for illicit ones. However, they may 
also entail creating other employment opportunities, such as those 
provided by various types of agro-industry. Complementary measures may 
include improving infrastructure, providing social services, 
strengthening local governments, offering access to credit, and giving 
marketing and distribution assistance. 

[2] The leaves of the coca plant are used to produce cocaine. 

[3] Colombia has pledged to provide $4 billion to support the plan and 
called on the international community, including the United States, to 
provide the remaining $3.5 billion. 

[4] Title III, chapter 2, of the Emergency Supplemental Act, fiscal 
year 2000, as enacted in the Military Construction Appropriations Act 
(P.L. 106-246, 114 Stat. 571). 

[5] Title II of the fiscal year 2002 Foreign Operations appropriation 
bill (P.L. 107-115). 

[6] According to the Department of State, between 1996 and 2000, the 
net hectares (2.47 acres) under coca cultivation in Colombia increased 
by 69,000—-from 67,200 hectares in 1996 to 136,200 hectares in 2000—-
while the number of hectares under coca cultivation in Bolivia and 
Peru declined by 93,700—-from 142,500 to 48,800-—over the same period. 

[7] Since 1997, USAID has financed its alternative development 
programs—-including those in Bolivia, Colombia, and Peru—-with funds 
transferred from State's Bureau for International Narcotics and Law 
Enforcement. USAID previously funded its alternative development 
programs from its own agency budget for economic support. 

[8] We have reported on the importance of host country support in 
interdicting and eradicating illicit drugs and in exerting government 
control over narcotics-producing regions. See Drug Policy and 
Agriculture: U.S. Trade Impacts of Alternative Crops to Andean Coca 
[hyperlink, http://www.gao.gov/products/GAO/NSIAD-92-12], Oct. 28, 
1991; Drug Control: U.S.-Supported Efforts in Colombia and Bolivia 
[hyperlink, http://www.gao.gov/products/GAO/NSIAD-89-24], Nov. 1, 
1988; Drug Control: U.S. International Narcotics Control Activities 
[hyperlink, http://www.gao.gov/products/GAO/NSIAD-88-114], Mar. 1, 
1988; and Drug Control: International Narcotics Control Activities of 
the United States [hyperlink, 
http://www.gao.gov/products/GAO/NSIAD-87-72BR], Jan. 30, 1987. 

[9] PNDA is the Colombian government's acronym for Plan Nacional De 
Desarrollo Alternativo or the National Plan for Alternative 
Development. It is also referred to as PLANTE. 

[10] Prior alternative development projects in Colombia were primarily 
in the poppy-growing areas and administered in part by the United 
Nations Drug Control Program. 

[11] USAID reported in August 2001 that a cumulative total of 680 
hectares of poppy had been eliminated. 

[12] $11.2 million was set aside for USAID's operating expenses. 

[13] USAID/Colombia Quarterly Report, Aug. 22, 2001. 

[14] USAID/Colombia Alternative Development Design Document, November 
2000. 

[15] In 1998, in an effort to promote peace negotiations, the 
Colombian government granted a 16,200 square mile haven in southern 
Colombia to the largest insurgency group in the country-—the 
Revolutionary Armed Forces of Colombia. 

[16] The fiscal year 2002 Foreign Operations appropriation bill 
prohibits the use of funds to procure chemicals for aerial fumigation 
programs after 6 months from the date of the enactment of the act, 
unless alternative development programs have been developed in the 
departments in which aerial coca fumigation is planned and alternative 
development programs are in place in the departments in which aerial 
coca fumigation is being conducted. The bill also requires the 
secretary of state, after consultation with the administrator of the 
Environmental Protection Agency, the secretary of the Department of 
Agriculture, and the director of the Centers for Disease Control and 
Prevention, if appropriate, to make determinations and report to the 
Congress on various aspects of the aerial fumigation program, 
including the safety of the chemicals used in aerial fumigation 
operations. 

[17] Most of Bolivia's illegal coca has been grown in the Chapare, an 
area of approximately 2.5 million hectares located in the eastern 
foothills of the Andes in the department of Cochabamba. Responding to 
rising U.S. demand for cocaine and the ready supply of coca leaf and 
labor in the Chapare, Colombian cartels helped organize a large 
increase in coca production there. As a result, the Chapare's 
population grew dramatically (Bolivian government estimates suggest 
that the population may have peaked at 400,000 in 1981, from an 
estimated 25,000 in 1968), and coca cultivation likewise increased, 
peaking at about 40,000 hectares in 1989. 

[18] Chemonics International, Inc. Evaluation of the Marketing 
Component of the Cochabamba Regional Development Project (October 
1996). 

[19] CONCADE Quarterly Report, January-March 2001, Development 
Associates International. 

[20] Farmer Perspectives on the Economics and Sociology of Coca 
Production in the Chapare, Institute for Development Anthropology 
Working Paper Number 77 (January 1991). 

[21] Pragma Corporation, Evaluation of the Chapare Regional 
Development Project (November 1990). 

[22] Evaluation of the Marketing Component of the Cochabamba Regional 
Development Project (October 1996). 

[23] USAID has now extended ADP to 2006 and may extend the program 
further to 2008. USAID estimates that the ADP will require $140 
million during fiscal years 2002-2006. 

[End of section]