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OO RUEHRG
DE RUEHBR #2465/01 3261116
ZNR UUUUU ZZH
O 221116Z NOV 06
FM AMEMBASSY BRASILIA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 7458
RUEAWJA/DEPT OF JUSTICE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
INFO RUEHRI/AMCONSUL RIO DE JANEIRO 3391
RUEHSO/AMCONSUL SAO PAULO 8673
RUEHRG/AMCONSUL RECIFE 5904
RUEABND/DEA HQS WASHDC

UNCLAS SECTION 01 OF 06 BRASILIA 002465 
 
SIPDIS 
 
SIPDIS 
 
DEPT FOR INL, WHA/BSC 
DEPT PLEASE PASS TO AID:  AA/LAC AND LAC/SAM 
JUSTICE FOR OIA, AFMLS, NDDS 
TREASURY FOR FINCEN 
DEA FOR OILS AND OFFICE OF DIVERSION CONTROL 
 
E.O.  12958: N/A 
TAGS: SNAR EFIN KSEP BR
SUBJECT:  BRAZIL 2006 INTERNATIONAL NARCOTICS CONTROL STRATEGY 
REPORT (INCSR) 
 
REF:  STATE 177294 
 
¶1.  Following is Brazil's 2006 INCSR. As requested in reftel, the 
money laundering portion of the INCSR will be submitted separately. 
 
BRAZIL 
 
---------- 
¶I. SUMMARY 
---------- 
 
¶2.  The Brazilian Federal police (DPF) had a number of successes 
this past year against foreign narcotrafficking organizations 
operating within Brazilian territory, the biggest of which included 
the arrest of a kingpin target in Sao Paulo and the confiscation of 
millions of dollars of assets in a number of countries.  Inroads are 
also starting to be made against Mexican and Colombian groups 
involved in sending heroin to the U.S.  Attention is also now being 
given to groups that illegally sell prescription drugs via the 
internet.  The DPF appears to be placing a higher priority on 
interdiction capabilities along the Bolivian border, where there has 
been a noticeable increase in the amount of cocaine paste that has 
been seized over the last year.  It is believed that the amounts 
will continue to grow due to an increase in coca leaf production. 
 
¶3.  Brazil is a major transit country for illicit drugs shipped to 
Europe and, to a lesser extent, to the United States. Brazil 
continues to cooperate with its South American neighbors in an 
attempt to control the remote and expansive border areas where 
illicit drugs are transported.  Brazil is a signatory of various 
counternarcotics agreements and treaties, including the 1988 UN Drug 
Convention, the 1995 bilateral U.S.-Brazil counternarcotics 
agreement, and the annual Memorandum of Understanding (MOU) with the 
U.S. 
 
--------------------- 
II. STATUS OF COUNTRY 
--------------------- 
 
¶4.  While not a significant drug-producing country, Brazil is a 
conduit for cocaine base and cocaine HCL moving from source 
countries to Europe, the Middle East and Brazilian urban centers, as 
well as a conduit for smaller amounts of heroin moving from source 
countries to the U.S. and Europe.   Cocaine and marijuana is used 
among youths in the country's cities, particularly Sao Paulo and Rio 
de Janeiro.  Powerful and heavily-armed organized drug gangs, 
located principally in Rio de Janeiro and Sao Paulo, are involved in 
narcotics related arms trafficking. 
 
------------------------------------------ 
III. COUNTRY ACTIONS AGAINST DRUGS IN 2006 
------------------------------------------ 
 
POLICY INITIATIVES 
 
¶5.  Brazil has undertaken various bilateral and multilateral efforts 
to meet all objectives of the 1988 UN Drug Convention, has 
implemented adequate legal law enforcement measures, and achieved 
significant progress in the fight against illegal drugs. 
 
¶6. In 2005, the GOB drafted a bill to update its anti-money 
laundering legislation.  If passed, this bill, which has not yet 
been presented to Congress, would facilitate greater law enforcement 
access to financial and banking records during investigations, 
criminalize illicit enrichment, allow administrative freezing of 
assets, and facilitate prosecutions of money laundering cases by 
amending the legal definition of money laundering and making it an 
autonomous offense.  The draft law also allows the Brazilian 
Government's interagency financial crimes investigations unit (COAF) 
to receive suspicious transaction reports directly from obligated 
entities, without their first having to pass through the supervisory 
bodies such as the Central Bank.  COAF would also be able to request 
additional information directly from the reporting entities. COAF 
includes representatives from regulatory and law enforcement 
agencies, including the Central Bank and Federal Police. COAF 
regulates those financial sectors not already under the jurisdiction 
of another supervising entity. 
Brazil has established systems for identifying, tracing, freezing, 
seizing, and forfeiting narcotics-related assets.  COAF and the 
Ministry of Justice manage these systems jointly. Police authorities 
 
BRASILIA 00002465  002 OF 006 
 
 
and the customs and revenue services are responsible for tracing and 
seizing assets, and have adequate police powers and resources to 
perform such activities.  The GOB planned to introduce in 2006 a 
computerized registry of all seized assets to improve tracking and 
disbursal.  The judicial system has the authority to forfeit seized 
assets, and Brazilian law permits the sharing of forfeited assets 
with other countries. 
 
¶7.  Brazil's first line of defense against drug smuggling commences 
at the heavily transited border crossings that it shares with a 
number of Latin American countries.  Narcotraffickers also exploit 
the expansive border in areas where Brazilian law enforcement only 
has a minimal presence.  In order to more effectively combat 
trans-border trafficking organizations, Brazil is cooperating 
closely with its' neighbors by establishing joint intelligence 
centers (JIC) in strategic border towns.  The JIC in Tabatinga near 
Brazil's northern border with Colombia has been in operation for 
four years and is staffed by the Brazilian Federal Police along with 
Peruvian and Colombian National Police representatives. 
 
The newest JIC is located near the Brazilian/ Bolivian/ Peruvian 
border in the Brazilian town of Epitaciolandia.  The JIC operates 
out of the Federal Police offices and is staffed by Brazilian DPF 
and a Bolivian law enforcement representative.   Peru and Brazil are 
now connected by a new highway that opened in 2006 thus providing a 
much-needed outlet for Brazilian agricultural exports to the Far 
East.  The DPF believe that traffickers will undoubtedly try to take 
advantage of the heavy flow of tractor-trailers and containers 
across the border. 
 
The JIC in the southern tri-border area at Foz do Iguazu is inching 
closer to becoming reality.  The Foz JIC is one of the principal 
topics to be discussed at the three plus one meeting (between the 
governments of Brazil, Argentina, Paraguay, and the U.S.) scheduled 
for December 2006 in Buenos Aires. 
 
¶8.    Brazil's Unified Public Safety System (SUSP), which was 
created in 2003, is now fully functional and showing results.  SUSP, 
which is administered by SENASP (Brazil's national public safety 
secretariat), is a national system to integrate diverse state civil 
 
SIPDIS 
and military police forces.  Collaboration between SENASP and the 
USG/NAS was very good in 2006.  A number of courses, to include 
crisis management, training for counter-drug SWAT teams and training 
for dog handlers, were sponsored by NAS and hosted by SENASP for 
state law enforcement officials from throughout Brazil. 
 
--------------- 
ACCOMPLISHMENTS 
--------------- 
 
¶9.  In 2006, the GOB exercised a regional counternarcotics 
leadership role.  The Federal Police play a major role in "Operation 
Seis Fronteras."  The main objective of this operation is the 
disruption of the illegal flow of precursor chemicals in the region. 
 The GOB continued its support of "Operation Alliance" with 
Brazilian and Paraguayan counterdrug interdiction forces in the 
Paraguayan-Brazilian border area. 
 
------------------------------ 
ILLICIT CULTIVATION/PRODUCTION 
------------------------------ 
 
¶10.  With the exception of some cannabis grown primarily for 
domestic consumption in the interior of the northeast region, there 
is no evidence of significant cultivation or production of illicit 
drugs in Brazil.  Drugs for domestic consumption or transshipment 
originate in Colombia, Paraguay, or Bolivia. 
 
------------ 
DISTRIBUTION 
------------ 
 
¶11.  As a result of improved intelligence capabilities, the 
Brazilian Federal Police have enjoyed increased success against 
international trafficking organizations that transship cocaine and 
heroin to Europe, Africa, and the Middle East.  The distribution of 
drugs in Brazilian cities is carried out by domestic networks that 
operate in the major urban areas of the country. 
 
----------------------------- 
 
BRASILIA 00002465  003 OF 006 
 
 
SALE, TRANSPORT AND FINANCING 
----------------------------- 
 
¶12.  Cocaine from Bolivia is primarily destined for domestic 
consumption within Brazil, as is the case for marijuana smuggled in 
from Paraguay.  Organized groups based in Sao Paulo and Rio de 
Janeiro arrange for the transport of the contraband through contacts 
in the border areas. The drugs are purchased from criminal 
organizations that operate on the other side of the borders. 
Proceeds from the sale of narcotics are used to purchase weapons and 
to strengthen the groups' control over the slums (favelas) of Rio 
and Sao Paulo. 
 
------------- 
ASSET SEIZURE 
------------- 
 
¶13.  Many assets, particularly motor vehicles, are seized during 
narcotics raids and put into immediate use by the Federal Police 
under a March 1999 Executive Decree.  Other assets are auctioned and 
proceeds distributed based on court decisions.  Federal Police 
records show that 2 airplanes, 634 motor vehicles, 58 motorcycles, 
13 boats, 146 firearms, and 1,116 cell phones were seized in 2005 
(2006 totals not yet available). 
 
----------- 
EXTRADITION 
----------- 
 
¶14.  According to the Brazilian Constitution, no Brazilian shall be 
extradited, except naturalized Brazilians in the case of a common 
crime committed before naturalization or in cases where there is 
sufficient evidence of participation in the illicit traffic of 
narcotics and related drugs. Brazil cooperates with other countries 
in the extradition of non-Brazilian nationals accused of 
narcotics-related crimes.  Brazil and the U.S. are parties to a 
bilateral extradition treaty signed in 1961.  No extraditions have 
been carried out in 2006.  Four extraditions were carried out during 
2005, none in 2004 and three extraditions from Brazil to the U.S. in 
2003, one of which was narcotics-related. 
 
¶15.  There are no pending narcotics-related extradition cases of 
non-Brazilian citizens.  There are currently two non-Brazilian 
citizens (both AMCITS) that are incarcerated in Brazil and awaiting 
extradition to the U.S., one for financial fraud and the other on 
organized crime charges. 
 
-------------------------------- 
MUTUAL LEGAL ASSISTANCE/TRAINING 
-------------------------------- 
 
¶16.  During 2006, various USG agencies and sections, including NAS, 
Public Diplomacy, ECON, DHS, DEA, FBI, USSS and others have provided 
training throughout Brazil in a wide variety of law enforcement 
areas, including combating money laundering, airport interdiction, 
community policing, container security, Counter-Drug SWAT operations 
and demand reduction programs. 
 
¶17.   Brazilian Law Enforcement also eagerly accepted opportunities 
to attend training programs in the United States.   Money 
laundering, Prevention Seminars, and the F.B.I. academy were some of 
the more notable areas of interest. 
 
--------------------------------------- 
LAW ENFORCEMENT AND TRANSIT COOPERATION 
--------------------------------------- 
 
¶18.  The Brazilian Federal Police (DPF) maintain excellent relations 
with their counterparts in neighboring countries as well as U.S. law 
enforcement.  They are willing to share information as well as 
participate in joint operations. 
 
¶19.  Brazil cooperates with authorities in neighboring countries, 
particularly Colombia, Peru, and Bolivia, to enhance regional 
counternarcotic efforts.  Coordinated Intelligence Centers are 
functioning or soon will be functioning on the borders with 
Colombia, Bolivia, Paraguay, and Argentina.  Each has or will have 
law enforcement representatives from each respective country. Brazil 
also actively participates in operations with their neighbors in 
controlling pre-cursor chemicals.  Brazil currently has Federal 
 
BRASILIA 00002465  004 OF 006 
 
 
Police Attaches in Argentina and Paraguay and looks to expand the 
number of Attache positions to other countries in the future. 
 
---------------- 
DEMAND REDUCTION 
---------------- 
 
¶20.  The National Anti-Drug Secretariat (SENAD), located within the 
Presidency's Institutional Security Office, is charged with 
oversight of demand reduction and treatment programs.  Some of the 
larger NAS supported programs include a nationwide 800 number for 
counseling, a nationwide DARE program (Brazil has the largest DARE 
program outside of the U.S.) and a national household survey of drug 
use among teens.  SENAD also supports drug councils that are located 
in each of the state capitals.  These councils coordinate treatment 
and demand reduction programs throughout their respective states. 
 
----------------------- 
LAW ENFORCEMENT EFFORTS 
----------------------- 
 
¶21.  In 2006, the Federal Police seized 11.5 metric tons of cocaine 
HCl and 144 kilograms of crack.  Marijuana (cannabis) seizures 
totaled 135.0 metric tons in 2006.  These numbers are incomplete, 
since only those of the Federal Police, and not those of local 
police forces, are reported on a national basis.  Federal Police 
sources estimate they record perhaps 75 percent of seizures and 
detentions. 
 
---------- 
CORRUPTION 
---------- 
 
¶22.  As a matter of government policy, Brazil does not condone, 
encourage, or facilitate production, shipment, or distribution of 
illicit drugs or laundering of drug money.  The Federal Police have 
carried out a number of high profile investigations of public 
officials and State Police involved in money laundering and/or 
narco-trafficking.  The fight against corruption remains a high 
priority for Brazilian law enforcement. 
 
----------------------- 
AGREEMENTS AND TREATIES 
----------------------- 
 
¶23.  Brazil became a party to the 1988 UN Drug Convention in 1991. 
Bilateral agreements based on the 1988 convention form the basis for 
counternarcotics cooperation between the U.S. and Brazil.  Brazil 
also has a number of narcotics control agreements with its South 
American neighbors, several European countries, and South Africa. 
Brazil cooperates bilaterally with other countries and participates 
in the UN Drug Control Program (UNDCP) and the Organization of 
American States/Anti-drug Abuse Control Commission (OAS/CICAD). 
 
----------------- 
DRUG FLOW/TRANSIT 
----------------- 
 
¶24.  Marijuana from Paraguay and cocaine from Bolivia are smuggled 
into Brazil across remote border areas and are destined primarily 
for domestic consumption.  Higher quality cocaine from Colombia for 
export to Europe, the Middle East, and Africa enters by boat and is 
placed in ships departing from Brazil's northeastern ports. 
Traffickers have reduced the number of long flights over Brazilian 
territory due to Brazil's introduction of a lethal-force air 
interdiction program in 2004.  However, traffickers still make the 
short flight over Brazil en route to Venezuela and Suriname. 
Colombian cocaine smuggled out of Brazil's southern ports is first 
flown to Paraguay and then transported across the border. 
 
----------------------- 
U.S. POLICY INITIATIVES 
----------------------- 
 
¶25.  U.S. counternarcotics policy in Brazil focuses on liaison with 
and assistance to Brazilian authorities in identifying and 
dismantling international narcotics trafficking organizations, 
reducing money laundering and increasing awareness of the dangers of 
drug abuse and drug trafficking and related issues such as organized 
crime and arms trafficking.  Assisting Brazil to develop a strong 
 
BRASILIA 00002465  005 OF 006 
 
 
legal structure for narcotics and money laundering control and 
enhancing cooperation at the policy level are key goals.  Bilateral 
agreements provide for cooperation between U.S. agencies, the 
National Anti-drug Secretariat and the Ministry of Justice. 
 
--------------------- 
BILATERAL COOPERATION 
--------------------- 
 
¶26.  In accordance with the bilateral U.S.-Brazil letter of 
agreement (LOA) on counternarcotics, bilateral programs that took 
place in 2006 included:  support of the northern border interdiction 
operation COBRA and the joint intelligence center located in 
Tabatinga; the establishment of the joint intelligence center on the 
Bolivian border; and training courses in airport interdiction and 
container security to name but a few.  Prevention and treatment 
assistance included support for DARE and the toll free drug 
counseling/information hotline as well as an ongoing national 
household survey of drug usage.  Brazil and the U.S. are seeking to 
meet all goals set forth in the bilateral LOA. 
 
¶27.  Through the LOA, in 2006, the USG worked closely with the 
Federal Police, SENASP, and SENAD.  Various operations, such as the 
annual Operation Alianza (Brazil, Paraguay) that involved marijuana 
eradication/interdiction, Operation Seis Fronteras and operation 
Twin Oceans were supported with LOA funds.  With SENASP, the USG 
worked with local state and military police forces throughout Brazil 
to ensure such forces had basic law enforcement equipment and 
training.  Seminars and courses for State police representatives 
from throughout Brazil consisted of SWAT training for anti-narcotics 
police, in service training for drug dogs and their handlers, and 
crisis management.  These courses, held in Rio de Janeiro, will also 
assist the Brazilian authorities with security preparations for the 
2007 Pan American games. 
 
¶28.  Brazil continues to be actively involved in IDEC.  Worldwide 
conferences are held annually, and sub-regional conferences are held 
approximately six months after the general conference.  These 
conferences, sponsored and supported by DEA, bring law enforcement 
leaders from Western Hemisphere countries together to discuss the 
counterdrug situations in their respective countries and to 
formulate regional responses to the problems they face.  Brazil is a 
member of the Andean and Southern Cone Working Groups. 
 
¶29.  In 2006, Brazil participated in Operation Seis Fronteras (Six 
Borders) Phase VIII that was held in Buenos Aires.  Operation Seis 
Fronteras is a DEA-sponsored international chemical enforcement 
initiative, which targets the movement and diversion of chemicals 
used in the production of cocaine and heroin in South America. 
 
¶30.  Bilateral cooperation between the Narcotics Affairs Section and 
its' three principal Brazilian partners continued to be excellent 
during 2006.  Wide-ranging anti-narcotics programs involving a 
number of USG Agencies were successfully carried out. 
 
-------------- 
THE ROAD AHEAD 
-------------- 
 
¶31.  While 2006 proved to be a very productive year for Brazilian 
Federal Police in their fight against narcotrafficking 
organizations, there still remains a daunting challenge ahead for 
Brazilian law enforcement.  Increased attention must be given to the 
expansive land border regions to stem the rise of cocaine being 
smuggled into Brazil.  Improving control of Brazil's immense land 
borders became a significant political issue in the 2006 
presidential race, and appears likely to remain in the public eye. 
The Federal Police have started to focus their efforts at major 
border crossings.  The amount of heroin interdicted last year showed 
that Brazil is increasingly being utilized as a trans-shipment route 
to the U.S.  Plans to beef up airport interdiction efforts and 
target international trafficking networks should show positive 
results over the next year. 
 
------------------ 
Statistical tables 
------------------ 
 
¶32.  Calendar year         2006         2005       2004 
 
 
BRASILIA 00002465  006 OF 006 
 
 
Coca 
   Eradication (mt)          -             -          - 
   Cocaine seizures (mt)   11.5         15.8        7.7 
   Crack cocaine (mt)        .14          .13        .12 
 
Cannabis 
   Eradication*               .92        1.54        .69 
   Marijuana seizures (mt) 135.0       146.6      149.2 
 
* .92 million plants destroyed.  Conversion to metric tons not 
given. 
 
Heroin                      57 kgs 
 
Arrests                    2,042        2,298      1,853 
 
 
Note:  All figures shown are those provided by the Federal Police 
and do not include the activities of state, local and highway 
police.  No surveys were conducted; market for cannabis is 
domestic. 
 
-------------------------- 
PRECURSOR CHEMICAL CONTROL 
-------------------------- 
 
¶33.  The GOB's Justice Ministry issued a decree, Portaria 
Ministerial No 1.274-MJ, in August 2004 to prevent the manufacture 
of illegal drugs; this regulation made Brazil's law pertaining to 
chemical control arguably the most stringent in South America.  The 
decree established the control of 146 chemical substances that can 
be utilized in the production of drugs; Brazil previously controlled 
12 chemical substances.   All companies that handle, import, export, 
manufacture, or distribute any of these 146 substances must be 
registered with the Brazilian Federal Police.  There are 
approximately 25,000 companies, which handle controlled chemicals, 
registered with the Brazilian Federal Police. These registered 
companies are required to send a monthly report to the Brazilian 
Federal Police of their usage, purchases, sales, and inventory of 
any of these 146 substances that they handle.  Any person or company 
that is involved in the purchase, transportation, or use of these 
products must have a certificate of approval of operation, real 
estate registry, certificate, or special license; which are issued 
by the Brazilian Federal Police.  Companies that handle the 22 
substances in List I, commonly referred to as precursors, of the 
aforementioned decree are also regulated by Brazil's National 
Sanitary Vigilance Agency (ANVISA). 
 
¶34.  The GOB has fulfilled the 1988 UN drug convention goals 
relating to chemicals and is a party to international agreements on 
a method for maintaining records of transactions of an established 
list of precursor and essential chemicals.  The GOB participates in 
and supports multilateral chemical control initiatives.  The 
Brazilian Federal Police have agreed to work with the DEA to perform 
a study on the use within Brazil and the exportation of Acetic 
Anhydride from Brazil; this is in conjunction with Operation Topaz. 
The Brazilian Federal Police respond to the DEA's Multilateral 
Chemical Reporting Notifications (Pre-notifications of exports of 
controlled chemicals) in a timely fashion.  The Brazilian Federal 
Police make records relating to chemical transactions available to 
USG law enforcement officials when requested.  In summary, the GOB 
is interested and proactive in chemical control. 
 
CHICOLA