Taking Back Our Stolen History
Alfred McCoy Publishes his Ground-Breaking Study, ‘The Politics of Heroin: CIA Complicity in the Global Drug Trade, Afghanistan, Southeast Asia, Central America’.
Alfred McCoy Publishes his Ground-Breaking Study, ‘The Politics of Heroin: CIA Complicity in the Global Drug Trade, Afghanistan, Southeast Asia, Central America’.

Alfred McCoy Publishes his Ground-Breaking Study, ‘The Politics of Heroin: CIA Complicity in the Global Drug Trade, Afghanistan, Southeast Asia, Central America’.

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

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

The first book to prove CIA and U.S. government complicity in global drug trafficking, The Politics of Heroin includes meticulous documentation of dishonesty and dirty dealings at the highest levels from the Cold War until today. Maintaining a global perspective, this groundbreaking study details the mechanics of drug trafficking in Asia, Europe, the Middle East, and South and Central America. New chapters (in the May 2003 Revised Print)  detail U.S. involvement in the narcotics trade in Afghanistan and Pakistan before and after the fall of the Taliban, and how U.S. drug policy in Central America and Colombia has increased the global supply of illicit drugs.

Back Cover

“To an average American who witnesses the dismal spectacle of the narcotics traffic at the street level, it must seem inconceivable that the government could be implicated in the international drug trade. Unfortunately, American diplomats and CIA agents have been involved in the narcotics traffic at three levels: 1) coincidental complicity by allying with groups actively engaged in the drug traffic; 2) support of the traffic by covering up for known heroin traffickers and condoning their involvement; and 3) active engagement in the transport of opium and heroin. It is ironic, to say the least, that America’s heroin plague is of its own making.”

Twenty years of research have led to this revised and updated edition of Alfred W. McCoy’s classic, The politics of Heroin in Southeast Asia. In it, he concludes that, with global production and consumption of narcotics at record levels and heroin use in America on the rise, it is time to confront the failure of the U.S. government’s drug policy and to put an end to the CIA’s complicity in the narcotics trade, which since World War II has been an integral part of the agency’s efforts to maintain U.S. power abroad. A remarkable expose of official U.S. hypocrisy in its approaches to one of the world’s greatest social problems, The Politics of Heroin offers an analysis that is destined to influence the public debate on drugs for years to come.

Content (Includes 2003 Updated Version)

The book falls into four main parts. Following a preface that illuminates the fascinating story behind the story and a brief introduction on the history of heroin, the first part deals with the cross-Atlantic heroin trade from the 1940s through 1970s, with special emphasis on the Mafia and Marseille based Corsican syndicates. The second part, taking up some 300 out of 530 pages (not counting the notes), describes in great detail the development of the Asian opium trade from colonial times up to the end of the Vietnam War. In the third section McCoy critically reviews the U.S. wars on drug from Nixon to Clinton, while the fourth part specifically addresses the question of CIA involvement in drug trafficking in the context of covert warfare in Afghanistan and Nicaragua during the 1980s and 1990s.

Opium had become a major commodity in world trade before it was outlawed early in the 20th century as a result of increased medical awareness of addiction and a global temperance movement. Prohibition drove opium into an illicit economy eventually controlled by upland drug lords and urban crime syndicates. By the late 1990s, 180 million people, or 4.2 percent of the world’s adult population, were using illicit drugs worldwide, including 13.5 million for opiates, 14 million for cocaine, and 29 million for amphetamines. These figures, Alfred McCoy suggests, are the outcome of a long process of ill-fated political intervention, starting with the promotion of opium use in China and among the Chinese diaspora in Southeast Asia by European colonial powers. Britain fought two successful wars in 1839 and 1858 to force the Chinese empire to lift the ban on opium that had been in effect since 1729, while revenues from state-licensed opium dens contributed significantly to colonial finances. During and shortly after World War II, McCoy claims, the United States spoiled a unique opportunity to eliminate heroin addiction as a major social problem when the “radical pragmatism” of its intelligence agencies, the OSS and its successor, the CIA, enabled the “Sicilian American Mafia” and the Corsican underworld of Marseille to revive the international narcotics traffic. The alliance, directed against the Italian and French Communist parties, “put the Corsicans in a powerful enough position to establish Marseille as the postwar heroin capital of the Western world and” cemented “a long-term partnership with Mafia drug distributors” (p. 47).

Half way around the globe, in Burma, the CIA was guided by the same anti-Communist rationale when it provided support to Kuomintang (KMT) forces that had retreated from China into what would soon be known as the Golden Triangle. The KMT encouraged the production of opium and centralized its marketing, selling the opium primarily to a Thai police general and CIA client. The CIA, McCoy explains, had promoted the Thai-KMT partnership “to provide a secure rear area for the KMT” (p. 162). Later, the CIA used KMT troops as mercenaries in its secret operations in Laos, a country that was emerging as a main transshipment and production center for opium and heroin. In the 1950s, French intelligence and paramilitary agencies had secured the loyalty of poppy growing hill tribes in Laos against Communist infiltration by organizing the marketing of their crop. A decade later, the CIA adopted the same strategy, although not with the same degree of involvement, when its airline, Air America, began flying opium out of the hills for sale and refinement in facilities operated and controlled by “the CIA’s covert action assets” who, McCoy notes, “had become the leading heroin dealers in Laos” (p. 289). Similarly, the U.S. long tolerated the involvement of South Vietnamese political and military figures in the opium and heroin trade. This involvement went so far that “elements of the Vietnamese army managed much of the distribution and sale of heroin to GIs inside South Vietnam” (p. 229). McCoy sums up the role of U.S. agencies by stating that “American involvement had gone far beyond coincidental complicity; embassies covered up involvement by client governments, CIA contact airlines had carried opium, and individual CIA agents had winked at the opium traffic” (p. 383).

When U.S. troops withdrew from Vietnam, the Southeast Asian drugs followed and also found new markets in Europe after American pressure had “forced Turkey to eradicate its opium fields and France to close its heroin laboratories” (p. 388). McCoy concludes that Nixon’s war on drugs, while in the short term successful, merely resulted in an increased complexity of the global heroin trade.

The same mechanisms of localized suppression transforming into global stimulus, McCoy argues, could be observed in Latin America during the 1990s. Despite massive eradication efforts, the overall Andes coca harvest doubled, parallel to the introduction of poppy cultivation in Colombia which supplied 65 percent of the U.S. heroin market by 1999. Likewise, the pattern of CIA complicity, first exposed in Laos during the Vietnam War, repeated itself in Nicaragua with the support of cocaine trafficking Contras and in Afghanistan with opium trafficking mujaheddin. To attain its operational goals, McCoy notes, the CIA tolerated and concealed the drug dealing by its local assets.

Despite the seeming weight of the evidence, at the end of his book Alfred McCoy is hesitant to arrive at a definite judgment regarding the CIA’s responsibility for the global drug trade: “it is difficult to state unequivocally that the individual drug lords allied with the CIA did or did not shape the long-term trajectory of supply and demand within the vastness and complexity of the global drug traffic” (p. 529). However, what McCoy seems to suggest is that had the CIA adopted a rigorous anti-drugs policy and had the war on drugs focused more on demand reduction, then the drug problem could have been less severe by the year 2000.

McCoy described the role of the PepsiCo bottling plant in the drug processing. Adolfo Calero was an executive with the PepsiCo bottling plant in Nicaragua, and was identified in several congressional hearings as a known major drug trafficker. He worked with the National Security Council and the CIA in their war activities in Nicaragua. Statements given to me over the years by various deep-cover sourc­es clearly show that the PepsiCo and Coca-Cola companies, or their agents in foreign countries, were involved in the drug business. McCoy described the many people who testified in closed-door congressional hearings for the past twenty years, leaving no doubt that the CIA was primarily responsible for the drug crisis in the United States. He described the pressure put upon the media by the CIA to halt his book.

Assessment (by Klaus von Lampe)

At first glance this book might be mistaken for just another conspiracy theory which finds the U.S. government and its agencies behind every evil doing on the planet. But this impression could not be further from the truth. To begin with, “The Politics of Heroin: CIA complicity in the global drug trade” is the third, revised and expanded, edition of a true classic, “The Politics of Heroin in Southeast Asia”, that was first published in 1972. Moreover, Alfred McCoy, the author, is a diligent researcher who looks at the broad picture, carefully weighing the evidence and arriving at conclusions that are more cautious than the book title implies. Finally, the title of the book is misleading insofar as the role of the United States in general and the CIA in particular is not always at the center of the events that McCoy recounts.

“The Politics of Heroin”, the product of a remarkably adventurous research process, has been written in the tradition of a historiography that focuses on individual actors, often two antagonists pitted against each other, rather than on broad socio-economic structures and processes, although these aspects are not ignored. McCoy’s approach is convincing where he can rely on first hand information from the key players whose actions he describes, namely the veterans of French and American covert operations in Indochina. But the focus on individuals appears problematic where he has to draw on less reliable sources. The discussion of drug trafficking in the U.S., for example, is based on controversial official and journalistic sources and, by emphasizing the importance of particular notorious gangsters like Lucky Luciano and Meyer Lansky, displays a certain affinity to conventional imagery. In contrast, the chapters on the war on drugs and the CIA operations in Nicaragua and Afghanistan that have been written since the publication of the first edition reemphasize McCoy’s critical perspective, adding further insights while underscoring his scathing assessment of the nexus between drugs and politics.

Alfred W. McCoy

Alfred McCoy

Writing this book has been a long journey, from America to Asia and from youth to middle age. In 1971, then twenty-five and in my second year at Yale Graduate School, I set out on a trip around the world to study the politics of the global heroin trade. Somehow I survived the unanticipated adventures that followed and two years later I published The Politics of Heroin in Southeast Asia, a book that was more expose than explanation. Over the next fifteen years, I returned to Southeast Asia several times to research revisions to that first book and to gather materials for a second, entitled Drug Traffic, a study of heroin’s impact on crime and corruption in Australia. Finally, in the summer of 1990, I combined my own data on Southeast Asia with the research of others on Central America and South Asia to produce the present volume.

My work on the heroin trade began in the fall of 1970 as an outgrowth of a book I had edited on Laotian politics. Elisabeth Jakab, my editor at Harper & Row, suggested that I use my knowledge of Southeast Asian politics to write a book providing a historical perspective on the sudden spread of heroin addiction among American troops in South Vietnam. What began as a small project based on library research soon mushroomed into a much larger one after three more or less chance encounters.

During spring break, I took time off from research in Yale’s Sterling Memorial Library to conduct interviews in Paris with former French officers about the opium trade during their Indochina War of the early 1950s. My meeting with General Maurice Belleux, the former chief of French intelligence for Indochina, inadvertently revealed that the CIA was involved in the opium trade as their French counterparts had been before them. Receiving me in the offices of a helicopter company he now headed, Belleux responded to a broad question about opium by explaining in detail how his agency had controlled Indochina’s illicit drug trade and used it to finance clandestine operations against Communist guerrillas. The general added that “your CIA” had inherited his network of covert action allies when the French quit Vietnam in 1964. He suggested that a trip to Saigon would reveal that American intelligence was, like its earlier French counterpart, involved in the opium traffic. Other French veterans, notably the paratroop commander Colonel Roger Trinquier, confirmed both the general’s information and his suggestion.

It was not only General Belleux who convinced me that the Vietnam drug problem needed investigation. At a street demonstration in New Haven for Black Panther leader Bobby Seale, I met the beat poet Allen Ginsberg, who insisted that the CIA was deeply involved in the Southeast Asian opium trade. To back his claims and aid my research, he mailed me a carton containing years’ worth of unpublished dispatches from Time-Life correspondents that documented the involvement of America’s Asian allies in the opium traffic.

The third chance encounter was the most unlikely of all. At a society wedding in New York City for the sister of a former Columbia fraternity brother, I was astonished to hear a group of marine officers, guests of the groom, tell stories of North Vietnamese soldiers found dead with syringes in their arms on the slopes of Khe Sanh and Communist truck convoys rolling down the Ho Chi Minh trail in South Vietnam loaded with heroin for American troops.

After submitting overdue term papers to my tolerant Yale professors, Karl Pelzer and John Whitmore, I started for Southeast Asia in the summer of 1971. On the way, I stopped in Washington, D.C. to interview the legendary CIA operative Edward Lansdale, General Belleux’s successor in Saigon. Both Lansdale and his former CIA aide Lucien Conein received me in their modest suburban homes not far from the CIA’s Langley headquarters and told stories about drug trafficking in Saigon by the French, the Corsicans, and the intimates of President Ngo Dinh Diem. A former Saigon coup leader, General Nguyen Chanh Thi, now exiled to an apartment near Dupont Circle, confirmed the CIA stories and, more important, gave me introductions to some of his friends in South Vietnam. The Washington bureau of Dispatch News Service, a fledgling agency best known for its expose of the My Lai massacre, told me that one of its stringers, an Australian named John Everingham, was writing about CIA helicopters carrying opium in Laos.

How could I find him? Easy. Everingham was the only white man in Saigon who wore a blond ponytail and “Viet Cong-style black pajamas.”

During one of my last interviews in the States, I received the first of the death threats that accompanied this research. Moving west, I stopped at a restored nineteenth-century flour mill on the banks of a stream in Readyville, Tennessee. Its owner, a young man named Joe Flipse, had recently returned from volunteer service with tribal refugees in Laos. Over coffee at his kitchen table, he finished the interview by threatening to kill me if I sourced any information to him.

By the time I landed at Saigon’s Tan Son Nhut airport in July, I was armed with some introductions and an idea for a new way to ask controversial questions. Instead of working like a journalist tracking the visible signs of the current heroin trail, I would start my interviews with questions about opium use in the past-when it was legal and not at all controversial. Working forward to the present, I would compile information about the illicit traffic and individual involvement that would lead, slowly perhaps, to those who controlled the current trade. Instead of confronting the protectors and drug dealers with direct accusations, an unproductive and dangerous method, I would try oblique and apparently unrelated questions, seeking to confirm the profile I had built up from documents and other interviews. In short, I would use historical methods to probe the present.

During my first days in Saigon, General Thi’s introduction opened the door to the home of Colonel Pham Van Lieu, an influential leader of South Vietnam’s “third force” who had once commanded the country’s marines and national police. Over the next month, Lieu arranged meetings in his living room with senior Saigon officers who presented details and documentation about the role ~f senior government officials in the sale of heroin to U.S. troops.

A number of young Americans working in Saigon as stringers and researchers for the famous by-line reporters helped me check this information. Mark Lynch, now a Washington lawyer, gave me access to the files in Newsweek’s offices, where he worked as a researcher. A Cornell graduate student, D. Gareth Porter, was in Saigon working on current politics and shared information. A friend from Yale Graduate School, Tom Fox, now editor of the National Catholic Reporter, was then in Saigon stringing for The New York Times. One night he took me on a six-hour odyssey from the flashy neon bars at Saigon’s center to the tin-shed brothels at the fringe of Cholon’s sprawling shantytowns, rebuffing the advances of prostitutes and calling for heroin at every stop. For an outlay of twenty dollars, I returned to my hotel room with pockets bulging from vials of high-grade heroin worth maybe five thousand dollars on the street in New York. As I flushed the powder down the drain that night, I thought about trying it just once. I can recall raising a vial to my nose before hesitating and tipping it into the toilet.

During my last week in Saigon, I was walking up and down Tu Do Street at Saigon’s center looking for the Dispatch stringer when I spotted a tall white man in black pajamas striding down the other side of the street. I screamed out “Everingham, Everingham” above the roar of the rock music spilling from the bars and the revs of the Saigon-cowboy motorcycles. He paused. Over coffee, we agreed to meet at 5:00 P.M. two weeks later at the bar of the Constellation Hotel in Vientiane, Laos. Yes, he had been in tribal villages where CIA helicopters had flown out the opium. He could take me to those villages to see for myself. He was trying to get a start as a photographer and asked that I use his pictures in my book.

Two weeks later, I was sitting at the bar of the Constellation Hotel nursing a Coca-Cola when John Everingham walked in with Phin Manivong, our young Lao interpreter. Next day at dawn, we took a taxi out of Vientiane, hitched a ride on a USAID highway truck north for most of the day, and then started hiking up a steep path that climbed from road’s edge into the hills. By nightfall we were sleeping in a Yao hill tribe village near the peak of a mile-high mountain. After a few days spent watching the women plant opium in the valleys around the village, we traveled north through mist-shrouded mountains with the look of ancient Chinese scroll paintings to Long Pot village, a Hmong settlement at the edge of the battle lines. Approaching just before dark, we were escorted to the house of Ger Su Yang, the local Hmong leader who held the post of district officer.

Over a dinner of pig fat and sticky rice, Ger Su Yang asked Everingham, through our interpreter, what we were doing in his village. Knowing the Hmong leader from earlier visits, Everingham was frank and told him that I was writing a book on opium. For a man who did not read a daily newspaper, Ger Su Yang proposed a bargain that showed a keen sense of media management. He would provide armed men to escort us anywhere in his district and would allow us to ask anything we wanted about the opium. If he did that, could I get an article in a Washington newspaper reporting that the CLA had broken its promise? For ten years, he explained, the men of his village had died fighting in the CLA’s army until only the fourteen-year-old boys were left. When he refused to send these boys to die, the CIA had stopped the rice airdrops that fed his village of women and children. After six months the children were visibly weak from hunger. Once the Americans in Washington knew about his situation, surely, said Ger Su Yang, they would send the rice. I promised.

Over the next five days, we conducted our opium survey, door-to-door, at every house in the village. Do you grow opium? Yes. After the harvest, how do you market the opium? We take it over to that hill, and the American helicopters come with Hmong soldiers who buy the opium and take it away in the helicopters.

We also learned that we were being watched. A Hmong captain in the CIA’s Secret Army was radioing reports to the agency’s secret base at Long Tieng. On our fourth day in Long Pot, a helicopter marked “Air America,” the CIA’s airline, spotted us on a nearby hill as it took off from the village. It hovered just above our heads, pilot and copilot staring for a long minute before flying off. On the f~fth day, we were hiking to the next village with an escort of f~ve Hmong armed with carbines when a shot rang out. The escort went ahead to the next ridge and waited momentarily before motioning for us to proceed. As we slipped down the face of that slope wet from the monsoon rains, several automatic weapons opened up from the next ridge, spraying the hillside with bullets. We fell back into a small hollow. While our escorts gave us a covering f~re, we slithered on our bellies through the elephant grass to get away. Overweight and out of shape from months in Sterling Memorial Library, I rose to my knees. Everingham slammed my face into the mud. Somehow we all made it to safety behind the ridge and assembled, laughing at our luck to escape from the “Communist guerrillas” who we assumed were the authors of our ambush.

The next day, as we were interviewing in a nearby village, a tribesman whispered to our interpreter that it had not been the Communists. We had been ambushed by the Hmong soldiers of General yang Pao, commander of the CIA’s Secret Army. The next morning, we cut short our research and fled down the path toward the highway, later hitching a ride on a truck heading north, not south for Vientiane, fearful of another ambush. An hour later, we came to a junction where a U.S. army major was supervising a helicopter ferrying Royal Lao troop detachments into the Communist zone. Worried about what might be waiting for us on the road south to Vientiane, I decided to lie. I told the major that I was an adviser to the U.S. embassy on tribal matters and needed to borrow his helicopter for an urgent trip to Vientiane. He was going back to the capital anyway and would give us a lift. When we landed at the outskirts of the city later that afternoon, two unshaven Americans approached us with light machine guns slung over their shoulders. They demanded that we go with them, claiming that they were U.S. embassy security officers. We refused and took a taxi instead.


Mr. McCoy participated in Causes and Cures: National Teleconference on the Narcotics Epidemic Saturday, November 9 1991, at Marble Collegiate Church in Manhattan. Here’s a transcript of an interview with Paul DeRienzo:

PD: How did you come to write The Politics of Heroin; CIA Complicity In The Global Drug Trade?

AM: In 1971 I was a graduate student doing Southeast Asian History at Yale University. An editor at Harper & Row, Elisabeth Jakab, read some articles in a volume I had edited about Laos, which made some general references to the opium trade in Laos.

She decided this would be a great idea for a book and asked me to do a background book on the heroin plague that was sweeping the forces then fighting in South Vietnam. We later learned that about one third of the United States combat forces in Vietnam, conservatively estimated, were heroin addicts.

I went to Paris and interviewed retired general Maurice Belleux, the former head of the French equivalent of the CIA, an organization called SDECE [Service de Documentation Exterieure et du Contre-Espionage]. In an amazing interview he told me that French military intelligence had financed all their covert operations from the control of the Indochina drug trade. [The French protected opium trafficking in Laos and northern Vietnam during the colonial war that raged from 1946 to the French defeat in 1954 at Dien Bien Phu.]

The French paratroopers fighting with hill tribes collected the opium and French aircraft would fly the opium down to Saigon and the Sino-Vietnamese mafia that was the instrument of French intelligence would then distribute the opium. The central bank accounts, the sharing of the profits, was all controlled by French military intelligence.

He concluded the interview by telling me that it was his information that the CIA had taken over the French assets and were pursuing something of the same policy.

So I went to Southeast Asia to follow up on that lead and that’s what took me into doing this whole book. It was basically pulling a thread and keep tucking at it and a veil masking the reality began to unravel.

PD: What was the CIA’s role in heroin trafficking in Southeast Asia?

AM: During the 40 years of the cold war, from the late 1940’s to this year, the CIA pursued a policy that I call radical pragmatism . Their mission was to stop communism and in pursuit of that mission they would ally with anyone and do anything to fight communism.

Since the 1920’s the League of Nations, the forerunner of the United Nations, and the United States have prohibited opium and cocaine products from legal sale. These products had already emerged as vast global commodities with very substantial production zones and large markets, large demand for those commodities both in the third world and the first.

The historic Asia opium zone stretches across 5,000 miles of Asian mainland from Turkey to Laos along the southern borders of the Soviet Union and the southern border of communist China. It just so happened that one of the key war zones in the cold war happened to lay astride the Asian opium zone.

During the long years of the cold war the CIA mounted major covert guerilla operations along the Soviet-Chinese border. The CIA recruited as allies people we now call drug lords for their operation against communist China in northeastern Burma in 1950, then from 1965 to 1975 [during the Vietnam war] their operation in northern Laos and throughout the decade of the 1980’s, the Afghan operation against Soviet forces in Afghanistan.

Powerful, upland political figures control the societies and economies in these regions and part of that panoply of power is the opium trade. The CIA extended the mantle of their alliance to these drug lords and in every case the drug lords used it to expand a small local trade in opium into a major source of supply for the world markets and the United States.

While they were allied with the United States these drug lords were absolutely immune to any kind of investigation. If you’re involved in any kind of illicit commodity trade, organized crime activity like drug trafficking, there is only one requisite for success, immunity, and the CIA gave them that. As long as they were allied with the CIA, the local police and then the DEA stayed away from the drug lords.

Finally, if there were any allegations about the involvement of their allies in the drug trade, the CIA would use their good offices to quash those allegations.

This meant that these drug lords, connected with the CIA, and protected by the CIA, were able to release periodic heroin surges, and [in Latin America] periodic cocaine surges. You can trace very precisely during the 40 years of the cold war, the upsurge in narcotics supply in the United States with covert operations.

PD: How does the CIA’s policies affect drug interdiction? I’ve spoken for example to former Drug Enforcement Administration officer Michael Levine, who has expressed anger that he was pulled off cases because he got too close to someone who, while being a big trafficker, was also an asset of the CIA.

AM: Mike Levine speaks from personal experience. In 1971 Mike Levine was in Southeast Asia operating in Thailand as an agent of the U.S. Drug Enforcement Administration [DEA]. At the same time I was conducting the investigation for the first edition of my book.

Mike Levine said that he wanted to go up country to Chiangmai, the heroin capital of Southeast Asia at that point, the finance and processing center and hub of an enterprise. He wanted to make some major seizures. Through a veiled series of cut outs in the U.S. embassy in Bangkok, instructions were passed to his superiors in the DEA, who told him he couldn’t go up and make the bust. He was pulled off the case.

He said it wasn’t until he read my book a number of years later that he understood the politics of what was going on and he realized why he had been pulled off. All of the upland drug lords that were producing the narcotic, the heroin, were in fact CIA assets. Now he understands it.

That is not just a single incident, so let’s go back to basics. What is the institutional relationship between the DEA an the CIA? The Federal Bureau of Narcotics [FBN] was established in 1930 as an instrument of the prohibition of narcotics, the only United States agency that had a covert action capacity with agents working undercover before World War II. During the war when the OSS [Office of Strategic Services] was established, which is the forerunner of the CIA, key personnel were transferred from the Federal Bureau of Narcotics to train the OSS officers in the clandestine arts.

That close institutional relationship between the DEA [direct descendant of the FBN] and the CIA continues up to the present day. The long time head of the Federal Bureau of Narcotics, a man named Harry Anslinger, who headed that bureau from 1930 until his retirement in 1962, was a militant anti-communist who spent a lot of his time in counter-intelligence operations. There’s a very close relationship between the two agencies.

During the cold war the main priority abroad for the United States government was anti-communism, and whenever the CIA mounted an operation, every other U.S. agency was subordinated to the CIA’s covert operations.

That meant that when the CIA was running one of its covert action wars in the drug zones of Asia, the DEA would stay away. For example, during the 1950’s the CIA had this ongoing alliance with the nationalist Chinese in northern Burma. Initially mounting invasions of China in 1950-51, later mounting surveillance along the border for a projected Chinese invasion of Southeast Asia. The DEA stayed out of Southeast Asia completely during that period and collected no intelligence about narcotics in deference to the CIA’s operation.

Let’s take two more examples that bring it right up to the present. [First] the Afghan operation: from 1979 to the present, the CIA’s largest operation anywhere in the world, was to support the Afghan resistance forces fighting the Soviet occupation in their country. The CIA worked through Pakistan military intelligence and worked with the Afghan guerilla groups who were close to Pakistan military intelligence.

In 1979 Pakistan had a small localized opium trade and produced no heroin whatsoever. Yet by 1981, according to U.S. Attorney General William French Smith, Pakistan had emerged as the world’s leading supplier of heroin. It became the supplier of 60% of U.S. heroin supply and it captured a comparable section of the European market. In Pakistan itself the results were even more disastrous.

In 1979 Pakistan had no heroin addicts, in 1980 Pakistan had 5,000 heroin addicts, and by 1985, according to official Pakistan government statistics, Pakistan had 1.2 million heroin addicts, the largest heroin addict population in the world.

Who were the manufacturers? They were all either military factions connected with Pakistan intelligence, CIA allies, or Afghan resistance groups connected with the CIA and Pakistan intelligence. In May of 1990, ten years after this began, the Washington Post finally ran a front page story saying high U.S. officials admit that Gulbuddin Hekmatyar [leader of the Hezbi-i Islami guerilla group], and other leaders of the Afghan resistance are leading heroin manufacturers.

This had been known for years, reported in the Pakistan press, indeed in 1980 reported in McClean’s magazine. In fact in 1980 a White House narcotics advisor, Dr. David Musto of Yale University, went on the record demanding that we not ally with Afghan guerilla groups that were involved in narcotics. His advice was ignored and he went public in an op-ed in the New York Times.

Another example: Let’s take the cocaine epidemic. In 1981 as cocaine began surging north into the United States, the DEA assigned an agent named Tomas Zepeda, in June 1981, to open up an office in Honduras. By 1983 Zepeda was collecting very good intelligence indicating that the Honduran military were taking bribes to let the aircraft through their country to come to the United States.

Zepeda was pulled out of Honduras and that office was closed by the DEA. They didn’t open another office in Honduras until 1987 because Honduras was a frontline country in the contra war. If Zepeda’s reports about involvement of the Honduran military had been acted upon, the DEA would have been forced to take action against the Honduran military officers who were working with the CIA to protect the contras.

In short, there was a conflict between the drug war and the cold war. Faced with the choice, the United States government chose the cold war over the drug war, sacrificing a key intelligence post for the DEA in Honduras.

The same thing happened in Afghanistan. During the 1980’s from the time that heroin trade started, there were 17 DEA agents based in Pakistan. They neither made nor participated in any major seizures or arrests. At a time when other police forces, particularly Scandinavian forces, made some major seizures and brought down a very major syndicate connected with former president Zia ul-Haq of Pakistan.

PD: What is the role of banking in the heroin trade? What, if any, are the connections to the Bank of Credit and Commerce International (BCCI) scandal.

AM: There have been three times in the past 15 years in which the CIA’s money transfer activities have surfaced. The first came in the late 1970’s when the Internal Revenue Service, the IRS, investigated a Nassau bank called the Castle Bank. It’s a very interesting bank. It was set up by a man named Paul Helliwell, a very senior CIA operative who had retired from the agency. He set up this bank and it grew into a Latin American network of banks. It was used by the CIA to launder money.

In essence, what appears to emerge from the investigation of the Castle Bank in the late 1970’s, was that the CIA did not want to move operational funds for covert operations through normal banking channels, where they could be uncovered, either by the United States or abroad, where they could come to the knowledge of opponents of the agency.

They preferred to work through allied banks. Banks that were secure, that were a little bit loose in their accounting procedures. When the Castle Bank was uncovered, the IRS announced a major investigation of the bank’s money laundering activities. Suddenly the IRS cancelled the investigation and the Wall Street Journal was told by informed sources in the IRS that the CIA had blocked the investigation.

As soon as Castle Bank collapsed, a small merchant bank based in Australia, operating offshore between Australia and southeast Asia, suddenly mushroomed into a global network of banks, acquiring Latin American and European structures that had belonged to Castle Bank. This bank in Australia called the Nugan-Hand Bank began very quickly in the late 1970’s, to acquire a board of retired U.S. intelligence officials, either CIA or various military intelligence services.

The most prominent example, the former Director of Central Intelligence, William Colby, became the legal council of Nugan-Hand Bank. The bank was founded by Frank Nugan, an insecure and incompetent Australian lawyer, and by Michael John Hand, a man with a high school degree who had gone to Vietnam with the Green Berets. He had served in Laos in the 1960’s as a contract CIA operative, fighting with three of the people who became very prominent in the CIA’s privatized operations, Thomas Clines, Theodore Shackley and Richard Secord, all very big names in the Iran-Contra scandal.

Michael John Hand was the one who worked with William Colby as legal counsel. One of their big operations was to buy a former U.S. naval base in the Turks and Caicos islands in the Caribbean. Australian police investigators who examined that contract, drawn up by William Colby for Michael John Hand, concluded that the plausible explanation they could discover for that contract was to establish a way-station for cocaine smuggling between Colombia and the United States.

We do know the bank was pioneering in the smuggling of heroin between Southeast Asia and Australia. In the late 1970’s Australia had very strict banking laws, and anytime you got foreign exchange you had to account for it. The Nugan-Hand Bank helped Australian organized crime figures get their money overseas so they could buy heroin and ship the heroin back to Australia.

The Australian police investigators documented that Michael John Hand worked very closely with Australia’s top criminal drug traffickers to finance the first shipments, the pioneering shipments, of heroin to Australia from Southeast Asia.

In 1980 that bank went belly-up and it collapsed, Frank Nugan committed suicide, and then a really amazing event occurred. Thomas Clines, the former CIA chief of station from Laos, a man of great prominence in the Iran-Contra scandal, flew to Sydney, Australia and exfiltrated Michael John Hand, who disappeared in the United States and was never seen since.

Then we come to BCCI. Although we haven’t gotten to the bottom of it by any means, we haven’t even begun to ask the questions, much less get the answers. BCCI mushroomed in the 1980’s and seemed to serve as a similar conduit as Castle Bank and Nugan-Hand Bank. The Manchester Guardian published an expose saying that the CIA paid its operations in the United Kingdom through BCCI, and it’s known that the CIA paid the Afghan guerrillas, who were based in Pakistan, through BCCI.

There’s one rather large question that nobody is asking about BCCI. It’s a Pakistani bank, it booms during the 1980’s, in exactly the same period that Pakistan emerges as the world’s largest heroin center. We know the Pakistan military officers involved in the drug trade had their accounts with BCCI. There’s a three way relationship that really cries out, screams, demands, a congressional investigation.

The relationship between BCCI and the CIA operations in Afghanistan and Pakistan; how much money was the CIA moving through those accounts? Secondly, the relationship between the Pakistan military connected with that operation and BCCI. Thirdly, the relationship between the booming heroin trade of Pakistan and BCCI. I think what we’ll possibly discover is that the CIA was shipping its funds into Pakistan through BCCI, protecting BCCI thereby from serious investigations elsewhere in the world. That the Pakistan military were in fact banking their drug profits, moving their drug profits from the consuming country back to Pakistan though BCCI. In fact the boom in the Pakistan drug trade was financed by BCCI.The interrelationship between the Afghan resistance and the CIA and the Pakistan drug trade can all be seen through the medium of BCCI, the banker to both operations, the resistance and the drug trade.

PD: What are the alternatives to the drug war?

AM: In the 1980’s, indeed over the last 20 years, society has been given two choices in the drug war. The escalating repression against the drug trade by Presidents Nixon, Reagan and Bush while the media gave airtime and space to only one sustained critique.That critique put forth by the Drug Policy Foundation argues that the drug war wasn’t working and therefore we should pursue a policy of legalization. Simply turn the whole policy of repression on its head, instead of trying to wipe out the drug trade we legalize it.

Let me first of all review the drug war. Is it working? No it’s not. The current drug war budget is $11 billion, a very large amount of money. Of that $11 billion, 86% is devoted to the suppression of cocaine trafficking between the United States and Colombia and cocaine trafficking in the U.S. as well. However, while we’re devoting 86% of our drug war budget to cocaine, use of cocaine has gone up by 15 percent. Every single indicator shows cocaine addiction is rising at the same time we are fighting this drug war.

The White House is claiming victory in the drug war, William Bennet, the drug czar who retired several months ago, claimed a victory, President Bush has alluded to a victory in the drug war, and so has the current drug war czar, Mr. Bob Martinez. What they claim as a victory is a victory over casual drug use. Well let’s face it casual drug use doesn’t count, if some kid tries drugs and doesn’t like it that’s nice but that’s not the problem.

The problem is repeated use, and every single indicator says repeated use is up. The drug war is not working. It’s filling up our prisons. The prison population doubled under President Reagan, and we now have over 400 prisoners per 100,000 population versus 35 per 100,000 in Holland. We have the largest prison population per capita in the world and it’s going up. At the same time our heroin use is going up and our cocaine use is going up.

The reason why is because our effort in the drug war has been concentrated in interdicting the supply of drugs in the United States and over the last 20 years we have fought this drug war on a bilateral basis. The United States in 1972 went into Turkey and said “wipe out your opium trade” and in the 1980’s they went into Colombia and said “wipe out your cocaine processing industry”. In the early 1980’s the U.S. went into Bolivia and said “wipe out coca cultivation in the western part of your country”. This is bilateral interdiction, where the U.S. as a sovereign power deals with another sovereign state and applies pressure on that sovereign state to get action on drugs.

There is a misperception about the nature of heroin and cocaine. These are not petty vices, these are complex global commodity trades involving vast areas of production and enormous consumption. It’s a commodity comparable in every respect to coffee or tea.

When you bring down the baton of law enforcement on a complex global commodity trade something curious and something paradoxical, something almost magical happens. The genius of capitalism, its magic, its alchemy, transform the lead of repression into the gold of stimulus. Every time we apply repression upon narcotics production on this bilateral basis we stimulate production, and ultimately we stimulate consumption because of the law of supply and demand.

In 1972 President Richard Nixon wiped out the Turkish opium crop with his first drug war, the grandmother of drug wars. This grandmother of drug wars totally wiped out Turkish opium production, and for a while it disrupted the French connection between Turkey, which had supplied French labs in Marseille, which in turn supplied New York.

It looked like victory until you see what really happened. Turkey only grew 7% of the worlds opium. Across the 5,000 mile band of mountains from Turkey in the west to Laos in the east lay the rest of the worlds opium production, the other 93 percent.

Turkey had a shortfall of production, that meant there was a shortfall in supply of illicit opium. So the price went up as would always happen, short supply and the price goes up. That meant farmers elsewhere in the opium zone, from Iran, Afghanistan increased their production as happens every single time. The repression creates a shortfall in supply which raises price and then stimulates production everywhere around the world.

What then is the solution to the problem? Somewhere between the poles of repression and legalization there is an alternative strategy which I call regulation. I don’t think we should really fool ourselves to consider legalization. It’s politically impractical, it’s never going to happen.

If we legalize the drug we are not going to legalize it for kids, this is a country that just raised the drinking age for the socially acceptable drug, alcohol from 18 to 21. You give me the name right now of one legislator who is going to stand up and say “I favor crack for kids, vote for my bill,” nobody will ever introduce such a bill. Even if by some miracle you got a legalization bill it would exclude 21 year olds and it would mean that the big drug, crack cocaine would have 89% of its clientele excluded from legalization.

I favor regulation because if cocaine and heroin are commodities let’s deal with them as such. You don’t repress commodities, you regulate them. Accept the fact that there is no quick fix to this trade, it’s been around for 200 years as a major global commodity, as an illegal commodity it’s been around for 70 years and it’s likely to be around for another 70, maybe 200 years.

Recognizing that you then cancel your bilateral interdiction efforts and transfer your funds to the multilateral effort being run by the United Nations. The multilateral effort by the United Nations actually does reduce production slowly, painfully over a period of decades.

Ultimately we’re going to have to seek an amelioration, not a solution, on the streets. We’re going to have to address the complex of causes as to why people use drugs. That is where we have to concentrate our money.


Further Reading

  • Labrousse, Alain, The War Against Drugs and the Interests of Governments, in: D. Siegel et al. (eds.), Global Organized Crime: Trends and Developments, Dordrecht, The Netherlands: Kluwer Academic, 2003, 25-31
    Rapin, Ami-Jacques, Drugs in Laos, in: E. Viano et al. (eds.), Transnational Organized Crime: Myth, Power and Profit, Durham, NC: Carolina Academic Press, 2003, 133-144
  • Renard, Ronald D., The Mandalay Connection: Drugs in Myanmar/Burma, in: E. Viano et al. (eds.), Transnational Organized Crime: Myth, Power and Profit, Durham, NC: Carolina Academic Press, 2003, 119-132
  • Thoumi, Francisco E., The Role of the State, Social Institutions and Social Capital in Determining Competitive Advantage in Illegal Drugs in the Andes, Transnational Organized Crime, 5(1), 1999, 67-96