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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 
 
MANILA 00004568  002 OF 006 
 
 
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 
 
MANILA 00004568  003 OF 006 
 
 
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 
 
MANILA 00004568  004 OF 006 
 
 
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 
 
MANILA 00004568  005 OF 006 
 
 
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 
 
MANILA 00004568  006 OF 006 
 
 
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