Cablegate: Philippines 2006-2007 International Narcotics

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OO RUEHCHI RUEHDT RUEHHM
DE RUEHML #4568/01 3070800
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O 030800Z NOV 06
FM AMEMBASSY MANILA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 3749
INFO RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS
RHHMUNB/JIATF WEST//DEA REP/J2//
RHHMUNA/CDRUSPACOM HONOLULU HI
RUEABND/DEA WASHDC
RUEAWJB/DEPT OF JUSTICE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS SECTION 01 OF 06 MANILA 004568

SIPDIS

SIPDIS

STATE FOR INL, EAP/MTS, INR/TNC
JUSTICE FOR OIA, AFMLS, AND NDDS
TREASURY FOR FINCEN
DEA FOR OILS AND OFFICE OF DIVERSION CONTROL

E.O. 12958: N/A
TAGS: SNAR PGOV RP
SUBJECT: PHILIPPINES 2006-2007 INTERNATIONAL NARCOTICS
CONTROL STRATEGY REPORT (INCSR) PART I, DRUGS AND CHEMICAL
CONTROL

REF: STATE 155088

1. The following text is keyed to questions posed in the
2006-2007 International Narcotics Control Strategy Report,
Part I, Drugs and Chemical Control (ref).

I. SUMMARY

2. Philippine law enforcement authorities continued to focus
efforts on disrupting major trafficking organizations and
dismantling large clandestine drug labs. The Government of
the Philippines (GRP) reports that arrests and seizures
declined in 2006, attributable to its strategy of focusing on
key traffickers and producers rather than a larger number of
less important targets. The Philippine government continues
to build the capacity of the Philippine Drug Enforcement
Agency (PDEA), established by the GRP in 2002, and its first
55 agents are scheduled to graduate in early 2007 from the
PDEA Academy. Based on the quantity of seizures in 2006, the
Philippines continues to be a producer of crystal
methamphetamine. There is evidence that terrorist
organizations use drug trafficking to fund their illicit
activities. Philippine National Police (PNP) and Philippine
Air Force officials express a desire to eradicate marijuana
cultivation, but lack fuel for helicopters necessary to
access remote sites in the mountains of Luzon and Mindanao.

3. The Philippines is a party to the 1988 UN Drug
Convention.

II. STATUS OF COUNTRY

4. Because of continued aggressive efforts to seize
clandestine drug labs in Metro Manila, the supply of crystal
methamphetamine, locally known as "shabu," has decreased.
The Philippine Dangerous Drug Board reports that the current
price of "shabu" has more than doubled since 2005. However,
drug agents directly involved in narcotics investigations
believe that methamphetamine production has moved to the
provinces. They report methamphetamine can still be obtained
at near 2005 prices in many areas; even less in areas where
labs are located, such as central Mindanao.

5. Most of the precursor chemicals are smuggled into the
Philippines (or illegally diverted after legal importation),
from the People's Republic of China (PRC), including Hong
Kong. However, ephedrine is also smuggled from India. There
are seven identified transnational drug syndicates in the
country. At least five foreign major drug lords from the PRC
and Taiwan are in each group. The Philippines is a
transshipment point for further export of methamphetamine of
foreign manufacture to Australia, Canada, Japan, Korea, and
the U.S. (including Guam and Saipan). According to law
enforcement officials, intelligence exists indicating that
other transnational drug groups may be planning to establish
methamphetamine producing laboratories in the country.

6. Dealers sell methamphetamine in crystal form for smoking
("shabu"). No production or distribution of methamphetamine
in tablet form ("yaba") has been reported in the Philippines.
Producers typically make methamphetamine in clandestine labs
through a hydrogenation process that uses palladium and
hydrogen gas to refine the liquid chlorephedrine mixture into
crystal form. However, an August 2006 clandestine lab
seizure in Quezon Province, east of Metro Manila, showed that
clandestine laboratory operators are also using another
production variation using red phosphorous.

7. The Philippines produces, consumes, and exports
marijuana. According to law enforcement sources, the
shortage of shabu has increased the demand for marijuana,
resulting in higher market prices. Marijuana grows naturally
in mountainous areas inaccessible to vehicles. Philippine
authorities continue to encounter difficulties stemming
production. Although Philippine National Police and
Philippine Air Force officials express a desire to eradicate
marijuana cultivation, they lack fuel for helicopters
necessary to access remote sites in the mountains of Luzon
and Mindanao. Generally, insurgent groups, such as the New
People's Army (NPA), control and protect most marijuana

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plantation sites. Most of the marijuana produced in the
Philippines is for local consumption, with the remainder
smuggled to Australia, Japan, Malaysia, and Taiwan.

8. Methyl-dioxy-methamphetamine (MDMA), commonly known as
ecstasy, is slowly gaining popularity among the affluent
members of the Philippine society, mainly in exclusive bars
and clubs. There appeared to be no significant change in
availability in 2006 and enforcement efforts remained
constant. Since 2001, a total of 10,275 ecstasy tablets were
seized.

9. The Philippine Dangerous Drug Board classified Ketamine
as a "dangerous drug" on October 1, 2005. Ketamine, legally
imported for use as a veterinary anesthetic, is converted to
the illicit crystal form from its legal liquid form in the
Philippines and exported to other countries in the region.
There is little or no market for Ketamine in the Philippines.
Since 2003, five Ketamine processing facilities have been
seized in Metro Manila. This year, Philippine authorities
seized approximately 10 kilograms of Ketamine destined for
Taiwan at Manila International Airport, validating reports of
drug traffickers using the Philippines for Ketamine
conversion. A total of 28 kilograms of Ketamine were seized
in 2006.

III. COUNTRY ACTIONS AGAINST DRUGS

A. POLICY INITIATIVES

10. The administration of President Gloria Macapagal Arroyo
continues to concentrate on the full and sustained
implementation of counter-narcotics legislation and the
development of the Philippine Drug Enforcement Administration
(PDEA) as the lead counter-narcotics agency.

11. In 2002, President Arroyo created by executive order the
Philippine National Police's (PNP) Anti-Illegal Drugs Special
Operations Task Force (AIDSOTF). The AIDSOTF mission is to
maintain law enforcement pressure on narcotics trafficking
while PDEA becomes fully functional by 2007. In 2006, PDEA
began training its first academy class, which will provide
approximately 55 new newly-trained recruits as PDEA agents.

12. The GRP has developed and is implementing a
counter-narcotics master plan known as the National Anti-Drug
Strategy (NADS). The NADS is executed by the National
Anti-Drug Program of Action (NADPA) and contains provisions
for counter-narcotics law enforcement, drug treatment and
prevention, and internal cooperation in counter-narcotics,
all of which are objectives of the 1988 UN Drug Convention.
In 2006, cities, towns, and barangays (neighborhoods)
continued to utilize anti-drug law enforcement councils, as
mandated by NADPA, to heighten community awareness.

13. An executive order requiring the Armed Forces of the
Philippines (AFP), Philippine National Police (PNP), and
Philippine Coast Guard (PCG) to partner with PDEA in the
Maritime Drug Enforcement Coordination Center (MDECC) project
was submitted to the Office of the President in February 2006
but has yet to be signed. The PNP Maritime Group, PDEA,
Philippine Coast Guard, AFP Navy, and National Intelligence
Coordinating Agency have nonetheless voluntarily assigned
personnel to the MDECC at PDEA headquarters in Quezon City,
but the outstations in Zamboanga and Poro Point have only
PDEA officers assigned. The AFP has yet to assign any
personnel to the MDECC, despite the fact that the Poro Point
and Zamboanga facilities are located on Philippine Navy
stations.

B. LAW ENFORCEMENT EFFORTS

14. Counter-narcotics law enforcement remains a high
priority of the GRP, but lack of resources continues to
hinder operations. However, law enforcement efforts are
relatively effective given inadequate funding. PDEA
officials believe ILEA and JIATF-West training for law
enforcement and military personnel have helped make
interdiction operations more efficient and effective. GRP
law enforcement agencies continued to target major

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traffickers and clandestine drug labs in 2006, instead of
going after a larger number of less important targets, as was
the practice before 2005. Significant successes included the
disruption by PNP's AIDSOTF of a flourishing drug market in a
predominantly Muslim neighborhood in Pasig City (which
operated within yards of the city hall and police station),
and the seizure by the National Bureau of Investigation of a
"shabu" laboratory being serviced by fishing vessels in the
area of Dingalang, in Aurora Province.

15. Current Philippine laws regarding electronic
surveillance and bank secrecy restrict Philippine enforcement
agencies from using electronic surveillance and obtaining
bank information on suspected drug lords. The 1965
anti-Wiretapping Act prohibits the use of wiretapping as well
as consensual monitoring of conversations and interrogations
as evidence in court. Additionally, there are no provisions
to seal court records to protect confidential sources and
methods. Most drug busts are results of information from
disgruntled insiders who voluntarily give leads to the
Philippine authorities.

16. The most crippling operational weakness of PDEA is the
lack of a functioning laboratory. Dismissals, arrests, and
resignations have robbed the laboratory of experienced staff.
In addition, the lab is inadequate and lacks basic
equipment. Lab chemists can only perform field tests,
normally conducted by arresting officers at a crime scene in
the US. The Japanese International Cooperation Agency has
donated a sophisticated gas chromatograph mass spectrometer
scanner to PDEA, but PDEA uses the device for training and
research, rather than evidence analysis. In addition, the
lack of a functioning lab means there is no adequate storage
facility for evidence.

17. Pervasive problems in the law enforcement and criminal
justice system such as corruption, low morale, inadequate
salaries, and lack of cooperation between police and
prosecutors also hamper narcotic prosecutions. The slow
process of prosecuting narcotics cases not only demoralizes
law enforcement personnel but also permits drug dealers to
continue their drug business while awaiting court dates. By
the time a case gets to trial, witnesses often have
disappeared or been persuaded through extortion or bribery to
change their testimony. The Comprehensive Dangerous Drug Act
prohibits plea-bargaining in exchange for testimony, once
they have been charged. There is therefore no incentive for
a defendant to plead guilty and offer testimony against
superiors in the drug trafficking organization, thus stifling
investigations.

18. A severe lack of experienced investigators in PDEA
further inhibits investigations. PNP detectives had been
seconded to PDEA since its inception in 2002. In 2006,
however, they began to return to PNP, as the formal de-link
of PNP and PDEA approaches in 2007.

19. The Philippines has a long history of
insurgent/terrorist involvement in drug trafficking activity.
The communist New People's Army (NPA) has reportedly been
involved in large-scale marijuana cultivation in the
Cordilleras Region of Northern Luzon since the mid-1980's.
The NPA has generated funding from the drug trade from a
variety of means, including extortion of traffickers in the
form of a "revolutionary" tax for providing security of
marijuana plantation, and direct participation in marijuana
cultivation, processing, and operations. Current information
from PNP and AFP sources indicates that NPA involvement in
the marijuana trade continues in North Luzon and Southern
Mindanao.

20. The terrorist Abu Sayyaf Group (ASG) is linked to drug
trafficking activity. PNP officials believe elements of the
ASG are engaged in providing security for marijuana
cultivation, protection for drug trafficking organization
(DTO) operations, and local drug distribution operations,
particularly in Jolo and Tawi-Tawi. Recent information from
Philippine police and military officials suggests that the
ASG continues to provide protection for major drug
trafficking groups operating in the Sulu Archipelago as well

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as local drug trafficking activity, in exchange for cash
payments that help fund their own operations.

21. In July 2005, the DEA Manila Country Office and Joint
Inter-Agency Task Force-West (JIATF-W) developed a network of
information fusion centers in the Philippines. The primary
facility, the Maritime Drug Enforcement Coordination Center
(MDECC) is located at PDEA Headquarters in Metro Manila.
There are two satellite centers, called Maritime Information
Coordination Centers (MICCs): one is located at the
headquarters of the Naval Forces Western Mindanao, Zamboanga
Del Sur (Southern Mindanao) and another at Poro Point, San
Fernando, La Union (Northern Luzon). These centers gather
information about maritime drug trafficking and other forms
of smuggling, and provide actionable target information that
law enforcement agencies can use to investigate and prosecute
drug trafficking organizations. Officers from the Philippine
Navy, Coast Guard, PNP-Maritime Group, and PDEA staff these
facilities.

22. The Philippine authorities dismantled three clandestine
methamphetamine mega-laboratories and one warehouse in 2006,
compared to seven smaller laboratories in 2005. A mega-lab
is defined as a clandestine laboratory capable of producing
1,000 kilograms or more in one production cycle. GRP law
enforcement officials cite three factors behind the existence
of domestic labs:

a. The simplicity of the process in which ephedrine can be
converted into methamphetamine on a near one-to-one
conversion ratio;

b. The crackdown on drug production facilities in other
methamphetamine-producing countries in the region;

c. The relative ease, increased profit, and lesser danger of
importing precursor chemicals for methamphetamine production
(ephedrine/pseudoephedrine), compared to importing the
finished product.

23. PDEA reports that in 2006, authorities seized 1,436
kilograms of methamphetamine, which they valued at
US$143,518,183 (at US$100 per gram), 27.89 kilograms of
Ketamine, which they valued at US$2,789,328 (at US$100 per
gram), and 11,675 kilograms of marijuana leaves, which they
valued at US$5,837,684 (at US$0.50 per gram). Philippine
authorities claimed to have seized total narcotics worth
approximately U$158,092,142, arrested 8,616 people for drug
related offenses, and filed 3,834 criminal cases for drug
crimes in 2006. By comparison, 15,268 individuals were
arrested in 2005, but most of these were lower level
offenders. Data on convictions was not available. PRC- and
Taiwan-based traffickers remain the most influential foreign
groups operating in the Philippines. Philippine authorities
had previously reduced transnational drug syndicates in the
country from 181 to 156; in 2006, they disrupted the
operations of two additional drug syndicates.

C. CORRUPTION

24. Corruption among the police, judiciary, and elected
officials continues to be a significant impediment to
Philippine law enforcement efforts. The GRP has criminalized
public corruption in narcotic law enforcement through its
Dangerous Drug Act (DDA), which clearly prohibits GRP
officials from laundering proceeds of illegal drug actions.
Four PDEA employees were arrested in 2006 for the theft of
seven kilograms of seized methamphetamine from PDEA
headquarters. These personnel have been detained and charges
have been filed against them. Ten PDEA and PNP AIDSOTF
officers were arrested in October 2006 for conducting illegal
(warrantless) drug raids, and for kidnapping the subjects of
those raids. Both the PNP and PDEA have begun internal
policing for corruption. There are also indications that
drug money may be funding illicit aspects of provincial and
local political campaigns, such as vote buying, bribery of
election officials, ballot theft, and voter intimidation.

25. As a matter of government policy, the Philippines does
not encourage or facilitate illicit production or

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distribution of narcotic or psychotropic drug or other
controlled substances, or the laundering of proceeds from
illegal drug transactions.

26. No known senior official of the GRP engages in,
encourages, or facilitates the illicit production or
distribution of narcotic or psychotropic drug or other
controlled substances, or the laundering of proceeds from
illegal drug transactions.

D. AGREEMENTS AND TREATIES

27. The Philippines is a party to the 1988 UN Drug
Convention, as well as to the 1971 UN Convention on
Psychotropic Substances, the 1961 UN Single Convention on
Narcotic Drugs, and the 1972 Protocol Amending the Single
Convention. The Philippines is a party to the UN Convention
against Transnational Organized Crime and its protocols
against trafficking in persons and migrants smuggling. The
U.S. and the GRP continue to cooperate in law enforcement
matters through a bilateral extradition treaty and Mutaual
Legal Assistance Treaty. The Philippines has signed the UN
Convention Against Corruption.

E. CULTIVATION/PRODUCTION

28. There are at least 120 marijuana cultivation sites
spread throughout the mountainous areas of nine regions of
the Philippines. In 2006, Philippine law enforcement
performed 36 marijuana eradication operations. Using manual
techniques to eradicate marijuana, government entities claim
to have successfully uprooted and destroyed 564,562 plants
and seedlings in 2006 compared to 9,677,852 plants and
seedlings in 2005. They also confiscated 103 kilograms of
seeds in 2006 compared to 264 kilograms of seeds in 2005.

29. The PNP Special Action Force (SAF, an air-mobile,
anti-insurgency police unit, approximately brigade strength),
have been ordered by President Arroyo to deploy from their
headquarters in Bicutan, Metro Manila, to several rural areas
troubled by NPA cadres. In advance of the deployment, a
senior SAF officer approached DEA Manila and offered to use
SAF personnel in the mountainous regions to eradicate
marijuana, with the goal of disrupting NPA financing. The
officer requested DEA assistance in obtaining and providing
overhead imagery of the marijuana cultivation sites in
several provinces, and in securing fuel for Philippine Air
Force (PAF) helicopters that would be used to carry the
troops to the remote marijuana fields. In a separate
conversation, a senior PAF officer informed DEA Manila that
the PAF would readily support marijuana eradication
operations with PAF helicopters, but they lacked fuel for the
missions. DEA Manila informed these officers that it would
raise the issue with appropriate USG agencies.

F. DRUG FLOW/TRANSIT

30. The Philippines is a narcotics source and transshipment
country. Illegal drugs enter the country through seaports,
economic zones, and airports. The Philippines has over
36,200 kilometers of coastlines and 7,000 islands. Vast
stretches of the Philippine coast are virtually unpatrolled
and sparsely inhabited. Traffickers use shipping containers,
fishing boats, and cargo ships (which off-load to smaller
boats) to transport multi-hundred kilogram quantities of
methamphetamine and precursor chemicals. AFP and law
enforcement marine interdiction efforts are hamstrung by
deficits in equipment, training, and intelligence sharing.
The Philippines is also a transshipment point for further
export of crystal methamphetamine to Japan, Australia,
Canada, Korea, and the U.S. (including Guam and Saipan).
Commercial air carriers and express mail services remain the
primary means of shipment to Guam and to the mainland U.S.,
with a typical shipment size of one to four kilograms. There
has been no notable increase or decrease in transshipment
activities in 2006.

G. DOMESTIC PROGRAMS/DEMAND REDUCTION

31. The Comprehensive Dangerous Drug Act of 2002 includes

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provisions that mandate drug abuse education in schools, the
establishment of provincial drug education centers,
development of drug-free workplace programs, and other demand
reduction classes. Abusers who voluntarily enroll in
treatment and rehabilitation centers are exempt from
prosecution for illegal drug use. Statistics from
rehabilitation centers will be submitted later.

IV. U.S. POLICY INITIATIVES AND PROGRAMS.

A. U.S. POLICY INITIATIVES

32. The USG's main counter-narcotics policy goals in the
Philippines are to:

a. Work with local counterparts to provide an effective
response to counter the burgeoning clandestine production of
methamphetamine;

b. Cooperate with local authorities to prevent the
Philippines from being used as a transit point by trafficking
organizations affecting U.S.;

c. Promote the development of PDEA as the focus for
effective counter-narcotics enforcement effort in the
Philippines;

d. Provide ILEA, JIATF-West, and other drug-related training
for law enforcement and military personnel;

e. Develop an improved statutory framework for control of
drug and precursor chemicals.

B. BILATERAL COOPERATION

33. The U.S. assists the Philippine counter-narcotics
efforts with training, intelligence gathering and fusion, and
infrastructure development.

C. ROAD AHEAD:

34. The USG plans to continue work with the GRP to promote
law-enforcement institution building and encourage
anti-corruption mechanism via JIATF-West presence as well as
ongoing programs funded by the Department of State (INL and
S/CT, and USAID). Strengthening the bilateral
counter-narcotics relationship serves the national interest
of both the U.S. and the Philippines.

V. STATISTICAL TABLES

35. The Philippines is not a "Majors List" country.

VI. CHEMICAL CONTROL ISSUES

36. As per INL instructions, this new section to be
submitted septel at a later time.
KENNEY

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