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in some European cities have dropped to as low as $25,000-$35,000 per kilogram. According to our latest figures, that same kilogram would sell for about six times as much in New York City.

DEA intelligence reflects that some Iranian citizens, unable to move cash out of that country because of the currency regulations, have "converted" their cash to narcotics and have smuggled their assets out in that fashion. The profit motive has enticed numerous black, Hispanic, Italian, Iranian and other traffickers to enter the Southwest Asian heroin trade in the United States. Although at present this trade should best be characterized as fragmented, there are indications that in the future it will be dominated increasingly by cohesive criminal groups.

Over the past two years, there have been a rising number of seizures and resulting investigations. During 1977 and 1978, small quantities of Southwest Asian heroin appeared in the United States and were confined to the New York/ Washington, D.C. corridor. Since then, undercover purchases of Southwest Asian heroin also have been made in Chicago, Detroit, San Francisco and Los Angeles. DEA "Daily Enforcement Reports" document seizures of Southwest Asian heroin which were made both here in the United States and across Europe. For example, recently on the same day, two unrelated seizures each of three kilograms of exceptionally high purity Southwest Asian heroin were made in Texas and here in Washington, D.C. Seizures of heroin in this quantity and purity have not been experienced in several years.

It is important for DEA to be able to have an idea of the extent to which heroin from Southwest Asia is reaching the retail level here in this country. Consequently, in conjunction with State and local enforcement officials, the DEA New York District Office ran a special street-level buy operation to determine the extent of the retail heroin problem. New York was selected because we believe it to be a primary entry point for Southwest Asian heroin. The first phase of the operation, conducted this past summer in Harlem, found that the average retail purity was 3.0 percent. Based on the results of heroin signature examination, 42 percent of the exhibits collected in this phase were identified as being of the "European/Near Eastern" or "Middle Eastern" type heroin. In this project, these types of heroin are now being referred to as Southwest Asian, that is heroin converted from opium produced in Southwest Asia. The second phase of the operation, conducted in the fall on the Lower East Side, determined that 60 percent of the samples were of Southwest Asian origin. In this phase of the operation, the average purity of the heroin samples was 8.5 percent and some of the exhibits were as much as 20 percent pure.

HEROIN TRAFFICKING INITIATIVES

Given the magnitude of recent developments, the question then becomes, "What plans are there for coping with this new presence and accelerating problem?" Unfortunately, there are no easy answers.

The United States Government has developed initiatives to attack the Southwest Asian heroin problem. The Administration is making the Southwest Asian heroin effort a high priority and is coordinating efforts of the Departments of Justice, State, Treasury, Defense and Health, Education and Welfare.

The Department of State is seeking international cooperation, not only through contacts with individual nations, but also by raising the issue in international forums such as NATO. We are accelerating the enforcement activities of the U.S. Customs Service and DEA both in the United States and abroad. Additionally, New York, Philadelphia, Boston, Newark, Baltimore and Washington are being designated target cities where major efforts are needed most to fight the flow of Southwest Asian heroin. The State and local law enforcement agencies are being involved in the anti-heroin effort to the maximum extent. As you can see the Drug Enforcement Administration is involved in the forefront of this action plan.

On February 28, 1980, President Carter and Attorney General Civiletti hosted approximately 120 law enforcement officials including all State Attorneys General and several police chiefs and prosecutors. At this meeting, the five point program to discuss the threat of Southwest Asian heroin was discussed with these enforcement officials and their cooperation and participation were encouraged.

Both Attorney General Civiletti and I have met with the Italian Prime Minister and the Minister of the Interior of the Federal Republic of Germany to discuss mutual concerns regarding the Southwest Asian heroin problem. We intend

to continue to assist foreign law enforcement agencies with support services directed at identifying and immobilizing major drug trafficking networks.

In all cases, our preference is to work as close to the source as possible; but, in the case of Southwest Asia, that door has virtually been slammed shut. Consequently, we have accelerated our efforts as close to the source as we can getthrough our agents and country attaches stationed along the transshipment and destination corridor in Western Europe. Additionally, the State Department has approved a Special Agent position and an Intelligence Analyst position for Frankfurt, Germany, and an additional Special Agent position for Turkey.

DEA has recently established the Special Action Office/Southwest Asian Heroin. SAO/SWA, as this office is known, was established to meet the imposing threat of renewed heroin production, transshipment and trafficking in and from Europe, the Middle East and parts of Southwest Asia's opium producing countries. SAO/SWA will address this serious situation on both the European and North American continents in a coordinated, directed high-priority enforcement effort.

Specifically, the DEA Headquarters SAO/SWA program managers are working to insure that all priority investigations are coordinated and receive sufficient resources. These managers must evaluate all types of investigations and, when needed, shift resources from lower priority areas to significant cases that will have an impact on Southwest Asian heroin. In that same vein, they are making certain that field operations receive supplemental funding to continue and accelerate investigations that have a direct impact on Southwest Asian heroin. Another important facet of SAO/SWA is the intensifying of the State and local law enforcement officials' awareness of the potential and existing threat of Southwest Asian heroin in the major cities. We are enlisting their intelligence, scientific and enforcement resources for use in conjunction with the Federal effort. The DEA Office of Science and Technology is beginning a program to direct scientific data to State and local laboratories that will assist them with the identification of the components of heroin that originated from Southwest Asian opium.

The DEA Office of Intelligence is intensifying its field intelligence exchange among the various foreign, Federal, State and local participants to ensure that there is maximum development and distribution of available information regarding Southwest Asian heroin organizations and traffickers. Furthermore, in cooperation with the U.S. Customs Service, we are redirecting and intensifying the airport/port of entry program to provide better input to the U.S. Customs Service to obtain maximum efficiency from the "interdiction mode". We are developing specific trafficker/cargo profiles for each of the primary Southwest Asian heroin arrival locales.

All of these actions are designed to counter the increasing availability that could cause Southwest Asian heroin to reach epidemic proportions. I believe that, for the present, our initial measures will blunt to the best extent possible the Southwest Asian heroin threat.

Of course, while we accelerate our momentum against Southwest Asian heroin we must take care to ensure that our efforts to meet the challenge of increasing cocaine, dangerous drugs and marihuana trafficking are not diminished.

COCAINE

Cocaine continues to be widely abused and, according to all available indicators, its popularity is continuing. In 1979, DAWN emergency room mentions averaged 629 per quarter which is in sharp contrast to quarterly averages of 479, in 1978, 397 in 1977, and 312 in 1976. It is significant to note that these longrange increases are not limited to a few areas, but have been reported in the vast majority of cities from which data is available. Cocaine is readily available in pound quantities in just about every major metropolitan area. There has also been an increased demand for cocaine in Spain, Italy, France, West Germany and the United Kingdom.

NNICC estimates that in 1978, approximately 19-25 metric tons of cocaine were smuggled into the United States which was a five percent increase from 1977. The trend for 1979 is in the same direction.

Over the past several years, there has been no statistically significant change in the retail-level price/purity of cocaine. Within each DEA region, price has remained fairly stable; ranging from $1,200 to $3,100 per ounce (depending on the purity and the particular area). In and of itself, this stability indicates that traffickers have been able to consistently meet a rising demand for the drug.

Nearly all of the cocaine in the world is processed from leaves harvested from coca plants grown in Bolivia and Peru. There have been reports in recent years of expanded coca cultivation in these countries and possible expanded cultivation in Colombia. Over half the cocaine that reaches the United States is converted from coca paste to base and then to cocaine hydrochloride in Colombia, from where it is transshipped. The remainder comes directly from Peru, Bolivia and other South American countries. Colombia will probably remain the single most important smuggling point for cocaine imported into the United States.

MARIHUANA

Marihuana is an enforcement priority because of the extensive criminal organized networks involved in its distribution and because of the financial implications associated with its trafficking. Furthermore, our growing body of knowledge regarding the health hazards associated with marihuana use gives us cause for concern.

In 1978, approximately 10,700-16,400 metric tons of marihuana were imported into this country, generating a retail market worth $15-23 billion. The U.S. marihuana market has changed radically in recent years. The number of users has expanded and new sources areas have emerged. Prior to the mid-1970's, Mexico supplied almost all the marihuana consumed in the United States; the remainder was from Jamaica. The balance has swung, however, and now Colombia is the primary source country. This shift is most directly attributable to the success of the Mexican Government's marihuana eradication program. The herbicidal spraying of marihuana fields has reduced production.

I anticipate that the heavy sea and air trafficking of these illicit substances from Colombia will continue. As a result of the large volume of seizures made in the last several years, smugglers have modified their operations. We are seeing continued maritime smuggling not only around Florida, but also north along the Atlantic Coast and along the Gulf Coast. To a much lesser degree, but no less alarming, is the deployment of motherships from Colombia's Pacific coast to the U.S. West Coast.

Patterns in smuggling by air are also changing. The utilization of long-range aircraft is becoming a more distinct trend. Thus, other areas in the United States besides Florida and the Southeast Coast/Gulf Coast areas are beginning to feel the impact of drug trafficking.

Our greatest hope for control of the cocaine and marihuana problems rests in the drug source countries. I believe that crop eradication is one of the most effec tive methods of control. We need to help the Governments of Bolivia, Peru and Colombia turn off the faucets of cocaine and marihuana.

DANGEROUS DRUGS

Thus far this afternoon, I have addressed myself only to the changing heroin, cocaine and marihuana trafficking picture. The dangerous drug situation deserves attention. This facet of drug law enforcement needs to be handled differently however, because for the most part, the United States is its own source country. Although there is substantial clandestine manufacturing activity, most of these drug substances are already subject to control from manufacture through distribution via the mechanics of the Controlled Substances Act (CSA).

There are 20,000 drug products under CSA control. Each year over 20 billion dosage units of these products flow through the distribution chain, which consists of approximately 600.000 registrants. The vast majority of registrants, are practitioners: the balance are manufacturers and wholesalers.

Conservatively, we estimate that each year 250-300 million of the dosage units manufactured legally are diverted. The current value of street sales of diverted drugs is thought to be over $1 billion a year. This is easy to visualize when you consider, for example, a single dosage unit of Dilaudid (hydromorphone), which can be purchased retail for about 17 cents, can be resold on the street for up to $60. In addition to the profit motive, reduced heroin availability contributes to the demand for diverted drugs. Supplements are needed for nonexistent or poor quality heroin.

The CSA provides for a "closed" or controlled distribution system from manufacture to use. The system is designed to ensure that there is an adequate supply of controlled substances for legitimate medical, research and industrial needs, while at the same time reduce the diversion of drugs from legitimate channels into the illicit market.

Under the Controlled Substances Act, DEA has clear authority to monitor activities at the manufacturing/distribution levels. And, we have been very successful at reducing diversion at this level. It is at the retail level where 80 to 90 percent of all drug diversion occurs. Most commonly, this diversion is accomplished via indiscriminate prescribing, forged prescriptions, thefts and the illegal sale of drugs by registrants. Additionally, individuals who obtain prescriptions and controlled substances by feigning medical need or who obtain multiple prescriptions from different physicians are also responsible for division at the retail level. DEA statutory authority to regulate at the retail level is limited and, consequently, the primary responsibility for enforcement at this level has been left to the States. The general acceptance of this division of responsibility is demonstrated by the fact that 45 States and the District of Columbia have signed Memoranda of Understanding to that effect.

It has been and continues to be DEA's policy to support the States in their efforts to control retail diversion. This support takes many forms and includes both enforcement and nonenforcement initiatives.

DIVERSION INVESTIGATION UNITS

The most substantial state assistance effort has been the establishment of the Diversion Investigation Units DIU's. Through this program DEA acts as the catalyst to coordinate funding, manpower expertise, and various enforcement units into a cohesive state effort. DIU's are manned and managed by state authorities, although a DEA representative is assigned on a full-time basis for coordination and support. Our objective is to launch the participating state on a sound start by providing direct Federal funding and support and, ultimately, to have a state-sustained, permanent DIU-type program.

DIU's were initiated on a pilot basis by Texas, Michigan and Alabama in 1972. All three pilot States have endorsed the program and are funding their DIU's, as are California, Georgia, Illinois, Massachusetts, Nevada, New Hampshire, New Jersey, North Carolina, and Pennsylvania. DEA still is providing grants to Maine, Washington, Hawaii, Oklahoma, Utah, New Mexico, the District of Columbia, and the newest DIU, Arkansas. Thus far, only one State has declined to support the program at the conclusion of Federal funding. We anticipate that two additional units will be brought on board this fiscal year.

In response to the growing threat of retail diversion, six months ago DEA initiated Operation Script. This project supplements existing efforts and concentrates our resources toward specific retail problems. DEA's technical, investigative, intelligence and legal resources are being channeled to focus on high impact/high visibility investigations of 94 pre-selected targets in 24 cities. Operation goals include:

decreasing diversion at the retail level;

demonstrating the Federal Government's concern ;

increasing public and professional awareness of the diversion and abuse of legitimately manufactured controlled substances;

encouraging more states to take action against practitioner and pharmacy diversion;

demonstrating the need for and continuation of DIU's;

supporting possible FDA actions regarding the indications and use of controlled substances;

obtaining additional information which may be used in establishing or decreasing quotas and/or restricting imports of controlled substances.

Although thus far I have directed all my comments toward enforcement approaches to minimize retail-level diversion, a major thrust of our efforts are directed at non-enforcement initiatives. For example, DEA participates in four informal "working committees" which are designed to improve communication with health care professionals and the related industry.

PHARMACY THEFT PREVENTION

The Pharmacy Theft Prevention (PTP) project is a nonenforcement directed endeavor with proven results. Over the past two years, programs have been established in 18 cities. PTP is an approach wherein pharmacists, police, government and media work together in a joint community action effort directed at reducing pharmacy thefts. In this area, DEA's job is basic and inexpensive we are the catalyst that gets the community going. Statistics show that since the initiation of the program, pharmacy thefts increased nationwide, while thefts in PTP cities declined.

In addition to the above noted programs, DEA is developing a legislative proposal that will allow us to pursue new avenues. We are currently in the process of looking toward revisions of the Controlled Substances Act in order to enhance DEA's ability to combat retail diversion.

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I have discussed only several of our key program elements: those which have an impact on heroin availabiilty and those which effect the control of licit drugs. The other program elements are no less important. Rather than elaborate extensively on each of these operations, I have attached an appendix to my formal statement which details some of DEA's program goals and accomplishments.

For all our accomplishments, we still have tasks of considerable magnitude facing us. The potential of Southwest Asia to flood this country with high-quality heroin is very real. I believe that the five point program outlined earlier will represent a strong U.S. Government response.

Our Federal interagency cooperation is at a high level, and as a result, I believe we will see strong government programs in force. There is also an important role for the Congress as well.

PENALTIES

I think the penalty structure needs careful examination with an eye toward revision. The vast majority of illicit drug money comes from marihuana and cocaine. Yet, what penalties do marihuana traffickers face if convicted? At present, the maximum is five years, but the average sentence is three years. And over half the convicted marihuana traffickers do not go to prison at all. The Subcommittee on Criminal Justice has recommended doubling the penalty for large-scale marihuana traffickers, those who are moving 1,000 pounds or more. I strongly endorse that proposal.

BAIL

Another aspect of the problem we face for which there is legislative remedy is bail. I again recommend to the Congress that a procedure be implemented whereby a judge or magistrate would preside over a hearing in which the government would be afforded the opportunity to represent that the defendant was a threat to the community, or was likely to jeopardize a witness or evidence, or was likely to flee the jurisdiction of the court. With a procedure of this type in force, I believe that we would see a marked decline in the excessive number of fugitives we now carry on the books.

The present bail system is not a deterrent. Bail is merely another business expense and a ticket to freedom. We recently apprehended a DEA fugitive, Jimmy Chagra. At the time he fled the jurisdiction of the court, he had been convicted of conducting a continuing criminal enterprise and numerous drug trafficking violations. Although his bail had been set at $400,000-he took off. At the time of his re-arrest, Chagra had $186,000 in cash in his car.

Mr. Chairman, I realize that there is much to be done. We, in DEA, have a responsibility to minimize the impact of the Southwest Asian heroin problem. With respect to marihuana and cocaine, without control at the source, it is as though we are working with one hand tied behind our back. Nonetheless we will continue to direct our efforts at Class I & II violators. We need the support of the Congress and are available to assist you in whatever fashion may be required. Thank you for your interest and support of our mission.

APPENDIX

DOMESTIC ENFORCEMENT PROGRAM

In order to reduce the domestic supply of illicit drugs of abuse to a level with which our society and institutions can reasonably cope, this program encompasses: investigation and preparation for prosecution of major violators of controlled substances laws; cooperation with other Federal law enforcement agencies to fully immobilize drug traffickers through the prosecution of Federal drug offenses; and utilization of those State and local cooperative investigations which surface trafficking situations of interstate scope.

Anticipated accomplishments in fiscal year 1981:

Maintain recruitment and utilization of knowledgeable informants and the use of innovative undercover approaches.

Continue development of conspiracy cases and immobilization of major traffickers insulated from routine trafficking operations.

Continue the selective use of Mobile Task Forces combining the knowledge of DEA and other law enforcement organizations.

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