TED Case Studies

Case Number: 437

Case Mnemonic: PeruCoca

Case Name: Peru, Coca Trade, and Environment

Peru, Coca Trade, and Environment



I. Identification

1. The Issue

Peru is the world's largest single source of coca leaves, providing about two-thirds of the total cocaine produced in the world. Coca cultivation is a centuries-old tradition practiced by the ancient Andean Inca Empire. The Incas used coca for religious and medicinal purposes. Today, the age-old tradition of coca cultivation has evolved into possible threats to the national securities of several nations in the Western Hemisphere. The production of coca now has ties to organized crime, guerilla insurgency movements, as well as the increase in drug addiction. For this reason the United States Government focused on combating coca production in Peru. Although processed cocaine originates in neighboring countries of Bolivia and Colombia, Peru is the first link on the cocaine production chain. Peru has faced a severe economic recession, hyperinflation, and a $24 million foreign debt for nearly a decade (Mendel, 115). In addition to economic instability, nearly 75 percent of Peru's population is underemployed or not employed at all (Mendel, 115). Due to the severe economic hardship of the nation, many of Peru's rural peasant farmers have turned to the most profitable cash crop in the Andes, coca production.

The rural cultivation of coca has become a serious ecological problem for the nation since rural peasants use the slash and burn technique to plant coca. Through this method, around 350,000 hectares of forest are being destroyed annually to support the coca plant (Hart 35). The result of this process leave no vegetative matter to stabilize or replenish the soils (Hart 35). The coca plant also extracts vital mineral deposits from the soil, thus destroying the possibility to rotate crops. Additionally, environment is threatened by the many chemicals used by coca growers in order to clear and maintain their fields and to transform coca leaf into coca paste. Large amounts of residue left from herbicides, fungicides, pesticides, and chemicals used to process coca leaves into paste, are discarded onto the ground and into nearby waterways (Hart 36).

The U.S. Government is attempting to assist Peru in its fight against cocaine, but many obstacles still remain. For example, in addition to the growth of rural coca production within the nation, Peru has faced nearly 20 years of civil disobedience by several Marxist insurgency movements. The Sendero Luminoso, or Shining Path, along with the Tupac Amaru Revolutionary Movement have used peasants to grow illegal coca plants in an effort to fund their guerilla armies (interview: Counselor Hart). The Marxist insurgency movements have additionally allied with such powerful narco-trafficking organizations as Colombia's Medellin Cocaine Cartel as well as the Cali Cocaine Cartel (interview: Counselor Hart). Due to the powerful alliance of the Shining Path, Tupac Amaru and Colombia's Cocaine Cartels, Peruvian police and military have been overwhelmed in their efforts to interdict coca.


2. Description



Peru is the chief supplier and producer of coca leaf. Most of Peru's harvested coca leaves are shipped to Bolivia and Colombia for further refinement into cocaine. Next, the cocaine is smuggled to the United States for sale on the street (Dept. Of Justice 50).

The practice of growing the coca plant has its early traditions in ancient Inca Empire. The Peruvian Incan Indians grew coca for medicinal purposes as well as for use in religious rituals in which respect was given for "Pacha Mama" or "God of Earth" (Menzel 117). The Incas practiced chewing coca leaves as a method of easing hunger, protection from cold in the high Andean altitudes and for creating a state of well-being (Menzel 117). It is assumed that up to 70 distinct folk medicines are based on one use or another of coca leaves and over 80 percent of the rural high-Andean population use the coca leaf for some form of healthcare purposes (Menzel 117).

An Andean woman giving a man Coca Leaves to chew(picture)


Cocaine began to attract addicts when it was introduced as a stimulant and cure-all during the latter part of the nineteenth century. Once introduced to the West it was considered to be a type of "miracle elixir". The first recorded introduction of coca to the West was by Angelo Mariani of Corsica, who brought the Peruvian shrub his native land (Inciardi 6). After importing tons of coca leaves to Corsica, Mariani produced an extract that he mixed with wine called "Vin Coca Mariani" (Inciardi 6). Vin Coca Mariani was an immediate success and was advertised as a magical beverage that would free the body from fatigue, create a lasting sense of well-being, and would cure depression. Vin Coca brought Mariani great wealth and fame in addition to a medal of achievement from Pope Leo XIII who used the drink as a source of relaxation in his years of retirement (Inciardi 6).

In 1884, cocaine was made widely available by large pharmaceutical firms such as Merck and Parke-Davis (Hart 7). With the drug's introduction, the attention shifted towards the alkaloid and its use in isolated form. As Maria Hart points out: "The extent of the interest in the drug was such that when coca leaf imports fell drastically for a time due to political instability (state of war between Peru and Chile), Parke-Davis" decided to create cocaine processing centers in Peru to avoid harvest problems as well as to save money from shipping costs (Hart 7-8).

In 1885, the success of Mariani's product reached America, and it was here that John Styth Pemberton of Atlanta, Georgia began to develop the famous American soft-drink Coca-Cola. Pemberton had been marketing Triplex Liver Pills, Globe of Flower Cough Syrup, and other curious medicines (Inciardi 6). Pemberton, drawing on the success of Angelo Mariani's Coca wine, developed a new product that he registered as French Wine Coca--Ideal Nerve and Tonic Stimulant (Inciardi 6). Pemberton's French Wine Coca was originally developed as a medicine, but in 1886 he added another ingredient thus turning it into a soft-drink. Pemberton named his new soft-drink "Coca-Cola" (Inciardi 6). Since Pemberton's version of Coca-Cola, the stimulant effects of Coca-Cola are mild and does not represent a national health concern. Today's Coca-Cola incorporates a "decocainized" extract of the coca leaf in one of its flavoring compounds. However, these extracts do not come from the species of coca native to the eastern Andes Mountains of South America (Erythroxylum coca Lam --street cocaine), but from "Trujillo coca" (Erythroxylum novogranatense var, truxillense). Truillo coca is a plant that is well adapted to the desert conditions found in coastal Peru (Inciardi 7).

With the introduction of coca to the west, there soon existed a period of attempting to find the ultimate wonder drug. People were looking for a new drug that prevented fatigue and healed the body. One cocaine researcher, Dr. Theodore Aschenbrandt of Germany administered pure cocaine to Bavarian soldiers during maneuvers in 1859 (Inciardi 7). Dr. Aschenbrandt noted the beneficial effects of cocaine, particularly its ability to suppress fatigue.

An additional cocaine researcher, the famous Viennese neurologist, Sigmund Freud was fascinated with the drug (Inciardi 7). Narcotics expert and University of Delaware professor James Inciardi cites Freud as using cocaine to ease his discomfort from fatigue and depression (Inciardi 7). Once satisfied with its effects, Freud considered cocaine to be a "magical drug" and offered it to a colleague who was suffering from a nervous disorder (Inciardi 7).

Today's society practices coca cultivation, first introduced by the Incas and has escalated its uses and effects. Peru, the chief cultivator of coca, faces political instability in addition to environmental degradation. Peruvian coca cultivation has had a negative effect on the environment due to the use of pesticides, slash and burn cultivation techniques, coca's extraction of nutrients from the soil, and the dumping of toxic precursor chemicals into Peruvian waterways.

The hazardous precursor chemical wastes have a parlous impact upon tropical eco-systems and on the human population. Peruvian ecological experts have discovered that many of the affected rivers are almost devoid of several species of plant and animal life as a result of chemical dumping (Hart 36). Precursor chemicals used in coca refinement include acetone, kerosene, ammonia, sulfuric acid, and potassium permanganate (interview: Kellerman, US AID). For example, the fauna and flora of the Huallaga region have decreased with hundreds of species having vanished before even being identified by scientists (interview: Counselor Hart). Evidence of the effect of deforestation became apparent in 1987, when torrential rains and floods caused major landslides, blocked roads, and impoverished and killed many lowland residents ( interview: Tom Kellerman, US AID).

In this case, Peruvian ecological researchers believe that about 200,000 hectares of forest were destroyed (interview : Kellerman, US AID). Ecological experts attribute Peru's annual flooding to "upland deforestation" (Hart 37). Upland deforestation causes flooding since the many trees once used to absorb rain water are removed. This caused rain water to pour downward into rivers in the Huallaga Valley. (interview: Kellerman, US AID). The result of the rain run-off caused mud slides in addition to severe flooding.

The practice of peasant farmers expanding coca crops increases the deforestation process. The majority of Peruvian peasant farmers do not legally own farmland and thus expand illegal crops into the tropical areas of the Andes. Peasant farmers turned to coca as their chief cash crop since it was in high demand by narco-trafficking groups and insurgents. The violent organizations of the Colombian Cali and Medellin cartels, in addition to Peru's Sendero Luminoso and Tupac Amaru Revolutionary Movement, used Peru's peasantry to grow coca to further their profits and to fund their war. Without agricultural enforcement by the Peruvian Government, the coca growers expanded their illegal crops throughout the Upper Huallaga Valley of Peru. There, the peasants engaged in "slash and burn" farming in which much of the Andes soil, wildlife, and forests were destroyed to make room for coca.

With the recent success of joint U.S.-Andean law enforcement and development cooperation, the power base of the narco-trafficking groups has declined as well as Peru's insurgency movements. Now, the U.S. Government is working with Peru to step up measures to eradicate coca crops as well as develop alternative sources of income for Peruvian peasants. The current bilateral strategy between the U.S. And Peru is a conglomeration of both military, law enforcement, and development assistance.

The development assistance, administered by the Agency for International Development has received great success. In 1996, the US AID/Peruvian Government project completed 83 community development activities (US AID: Alt. Devel. 2). This project alone served nearly 15,000 rural families with such services as potable water, drainage, new school classrooms, and health facilities (US AID: Alt. Devel. 2). Additionally the US AID program was responsible for providing over 3,500 land titles to peasant farmers. Farmers will now be able to purchase legitimate crops since they now have land to use as collateral when completing credit applications (US AID: Alt. Development 3). US AID's $250 million strategy envisions the elimination of illicit coca production in Peru within ten years (US AID: Alt. Development 2). The U.S./Peruvian alternative development program includes transport and energy infrastructure, basic social services (health, education, potable water), strengthened civil society (local governments and community organizations), environmental awareness and mitigation, agricultural production and marketing, and drug awareness programs (US AID: Alt. Development 3).

Embassy of Peru Counselor and Counter narcotics Representative, Maria Hart credits the success of the U.S.-Peruvian bilateral alternative development project to the fact that Peru stepped up its narcotics air interdiction measures as well as crushed its insurgencies (interview: Hart). For example, cocaine prices decreased because drug smuggling pilots charged "increased risk fees". In response to the significant increase in costs to smuggle cocaine to the United States, peasants could not afford to cultivate coca and started to abandon some coca harvesting areas (interview: Counselor Hart). Now, peasants are looking to other alternative crops that are the most profitable. US AID and the Peruvian Government are taking advantage of this shift from peasants supporting illegal coca crops to supporting legitimate cash crops. The U.S. Government is urging the Peruvian Government to provide peasants easy access to legitimate cash crops as maize, rice, coffee, legumes, and cacao.

Tupac Amaru Guerilla (MRTA) photo

The Peruvian Government authorizes farmers to legally cultivate about 14,000 kilograms for the purposes of chewing the leaves and for the consumption of coca-leaf tea (Hart 13). The chewing of the coca leaf is a traditional habit of the native population that is not incorporated in the society's western culture (Hart 13). Coca-leaf tea is used as a remedy for an upset stomach (interview: Hart). Since only a small part of coca is used for legal purposes, the Peruvian Government, together with the U.S. Government is working on alternative cash crops for peasants to use. The Peruvian Government is urging peasants to switch agricultural production from coca to coffee, cacao, legumes, rice, and corn in order to increase the licit economy and to generate income and employment (U.S. AID: Alt. Development Project 3).

With the 1992, capture of Shining Path leader Abimael Guzman, the Shining Path's leadership has become crippled. Peru's second insurgency movement, the Tupac Amaru Revolutionary Movement is in the process of being contained (interview: Hart). With the recent success of the ending the Tupac Amaru's (MRTA) hostage takeover of the Japanese Embassy in Lima, MRTA's credibility as a strong terrorist force has been destroyed. Both rebel groups used the peasants to harvest coca to fund their armies. Once the coca was farmed and harvested by the peasants, the insurgent groups of the Sendero Luminoso and MRTA would sell the coca to the Colombian drug trafficking cartels (the Medellin and Cali cartels). Now, with the decline of rebel activity, Peru's peasants are beginning to turn to the government for developmental assistance (interview: Kellerman, US AID).

The next challenge to the Peruvian Government is to step up interdiction operations in rivers and on the coastline. Narco traffickers are now trying to modify their smuggling methods since the U.S.- Peru alliance controls the skies. Peruvian President Alberto Fujimori recently visited the U.S. To discuss methods to step-up riverine interdiction. U.S. Officials are proposing that Peruvian security forces do the actual river interdiction, but the U.S. will coordinate intelligence and supply Peru with several river patrol boats outfitted with machine guns ( Krauss A,3:1).


3. Related Cases

Coca case
Colombia Coca case

Keyword Clusters

 (1): Trade Product  = Coca Leaf
  (2): Bio-Geography  = Tropical (Andes)
 (3): Domain  = South America
 (4)Environmental/Health Problem  = Deforestation, Pollution , AIDS

4. Draft Author: Lloyd R. Lewis III (May 29, 1997)

II. Legal Clusters


5. Discourse and Status: Agreement and in progress

The National Prevention and Drug Control Plan 1994-2000 approved through Supreme Decree #82-94-CM passed in September of 1994. This plan defines a strategy from an inter-sector perspective encompassing all aspects related to drug consumption and trafficking. Out of his agreement came the creation of the Commission for the Fight Against Drug Consumption-CONTRADROGAS (Legislative Decree #824). The CONTRADROGAS program is in the process of using Peru's public sector and International Cooperation Agencies in destroying drug production and consumption (CONTRADROGAS: Lima, Peru 1). The CONTRADROGAS program has the following functions:

a. To coordinate the multi-sector design to unify, manage, and evaluate the development of activities that will substitute coca leaf and other illegal crops, and those activities aimed at the prevention and eradication of drug consumption in Peru (CONTRADROGAS: 2).

b. To act as the liaison and counterpart of the Peruvian Government before foreign Governments and the international community in subjects related to illegal drugs, especially those subjects that refer to technical and financial cooperation (CONTRADROGAS: 2).

c. To coordinate with Governmental entities, the designation of the Developing Units in charge of programs and projects related to the reduction of the supply and demand of illicit drugs in the national territory (CONTRADROGAS: 2-3).

d. All other functions established in the Legislative Decree #824 as well as in the regulations(CONTRADROGAS: 3) .


6. Forum and Scope: Bilateral : Peru and the United States

The U.S. Government are the chief supporter of Peruvian Counter narcotics efforts. This support ranges from military assistance/training, intelligence, and investment in alternative development projects (interview: Hart).


7. Decision Breadth: 2: Peru and the United States

8. Legal Standing:

Peruvian Law Peruvian Supreme Decree #82-94-CM and Legislative
Decree # 824

III. Geographic Clusters

9. Geographic Locations
a. Geographic Domain: South America
b. Geographic Site: West South America
c. Geographic Impact: Peru

10. Sub-National Factors: No

11. Type of Habitat: Tropical

IV. Trade Clusters

12. Type of Measure: Regulatory ban[REGBAN] and Quota [QUOTA]

Peru allows about 14,000 kilograms of coca cultivation for domestic consumption. The domestic consumption authorized by the Peruvian Government is for the purposes of chewing the leaves and for the consumption of coca-leaf tea. The practice of chewing coca leaves is a traditional habit of the native population and is not incorporated in rest of the country. Although the practice of coca-leaf chewing is decreasing, about two-million rural Peruvians still chew coca leaves (Hart: 14). Additionally, Peru has increased its coca eradication operations in the Huallaga Valley. Peruvian police and military personnel are destroying hundreds hectares of coca crops annually in an effort to decrease coca production.


13. Direct v. Indirect Impacts: Indirect


14. Relation of Trade Measure to Environmental Impact

a. Directly Related to Product: No (Coca)
b. Indirectly Related to Product: No (Coca)
c. Not Related to Product: No
d. Related to Process: YES, Deforestation

15. Trade Product Identification: Coca

16. Economic Data:

Although cocaine cartels are not legitimate corporations and do not publish an annual report of their profits from exports, Peruvian narco traffickers are believed to make between $1 to $1.5 billion a year (Hart: 38). This profit from drug sales is about half of Peru's legal exports which are estimated at $2.5 billion (Hart: 38). Some analysts consider that coca leaf production alone does not generate economic profits, because of the huge dispersion of production. Around 30,000 families of coca peasants that work on day wages and 4,000 peasant owners--of which only 20 percent own more than 20 hectares--depend on coca leaf production (Hart: 39).

Peruvian Embassy Counselor Maria Hart points out:

The activities related to trafficking itself: the supply of inputs for the production of coca paste, the production of coca paste and the trafficking activities do generate economic profits. However, these profits are not significantly invested in Peru, except for further illegal activities. The traffickers prefer to launder profits in neighboring countries. Profits that remain in Peru are not directed towards the productive structure but to imports of manufactures with little investment in the provision of services (Hart 39).


17. Impact of Trade Restriction: Medium


18. Industry Sector: Pharmaceutical


19. Exporters and Importers: Peru, Bolivia,Colombia, and Mexico

V. Environment Clusters


20. Environmental Problem Type: Habitat Loss

Coca cultivation causes deforestation since many of the precursor chemicals are toxic and are dumped into rivers and streams. Peasants also practice "slash and burn" agriculture in which they burn hundreds of trees and destroy the forests wild life as well as eco-systems. Herbicides and pesticides are additional environmental concerns since they contaminate nearby waterways thus destroying plant and animal life. The coca plant itself, is a detriment to Peru's eco-system since the plant extracts nutrients from the soil and does not allow crop rotation since new replacement crops cannot survive where the coca extracted soil nutrients.

21. Name, Type, and Diversity of Species

Name: Coca
Type: Plant/Erytroxylaceae
Diversity: 96,500 metric tons of dry coca leaves on 135, 000


22. Resource Impact and Effect: Medium

23. Urgency and Lifetime: Medium and 100s of years

24. Substitutes: Alternative Development

Alternative development cash crops as rice, corn, coffee, legumes and cacao are being encouraged by the Peruvian Government as well as the United States. The alternative development plan includes rural infrastructure development as and government representation/protection.

VI. Other Factors


25. Culture: YES

The Peruvian Government allows 14,000 kilograms of coca for indigenous and medicinal purposes, such as coca leaf chewing and coca-tea. The reason for this exemption on coca production is based on the Peruvian Government's respect for its large Andean Inca population who have religious/traditional ties to coca.

26. Trans-Boundary Issues: No

27. Rights: No


28. Relevant Literature:

Hart, Maria Teresa. Counselor of the Peruvian Embassy.
Personal Interview. 29 May 1997.  
Hart, Maria Teresa. The U.S.-Peruvian Relationship on Drug Control.
Embassy of Peru: 1995.  

Inciardi, James A. The War On Drugs II: The Continuing Epic of
Heroin, Cocaine, Crack, Crime, AIDS, and Public Policy. London:
University of Delaware Press, 1992.

Kellerman, Tom. Personal Interview. Peruvian Alternative
Development Program. U.S. Agency for  International Development. 3
June 1997.
Krauss, Clifford. "Pentagon to Help Peru Stop Drug Traffic on
Jungle Rivers." New York Times  International 3 Feb. 1997: A,

Menzel, Sewall H. Fire in the Andes: U.S. Foreign Policy and
Cocaine Politics in Bolivia and Peru.  New York: University Press
of America, 1996.
Peru. Commission for the Fight Against Drug Consumption. National
Operational Plan for Alternative  Development, and for Prevention
and Rehabilitation. Lima, Peru: 1997.  
United States. Department of Justice. Drugs, Crime, and the Justice
System. Washington: GPO,  December 1992.
 -- U.S. AID. Alternative Development and Counter narcotics in
Peru. U.S. Embassy: Lima, Peru: April  1997.
 -- U.S. AID. Peruvian Alternative Development Project. Washington:
GPO, 1997.

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