Pubdate: Sat, 23 Sep 2000 Source: Miami Herald (FL) Copyright: 2000 The Miami Herald Contact: One Herald Plaza, Miami FL 33132-1693 Fax: (305) 376-8950 Website: http://www.herald.com/ Forum: http://krwebx.infi.net/webxmulti/cgi-bin/WebX?mherald Author: Kevin G. Hall Note: This article was supplemented with material from the Associated Press DRUG WAR ALLEGATIONS IN PERU EMBARRASS WASHINGTON LIMA, Peru -- American officials who earlier this year hailed Peru as America's best ally in the drug war are having second thoughts amid mounting allegations that the country's top intelligence official and some high-ranking military officers were fighting for the wrong side. U.S. officials are concerned that the charges, along with Peru's imperiled democracy, may weaken U.S. anti-drug efforts in the Andean region. Nearly all of the world's coca leaves, the key ingredient in cocaine, are grown in Peru and neighboring Colombia and Bolivia. Peru was acclaimed as a success for reducing the amount of land in coca production from 319,000 acres in 1992 to 96,000 acres last year. But new reports suggest that Peru and its disgraced spy chief, Vladimiro Montesinos, may have been less loyal to the drug fight than U.S. policymakers thought. They allege that high-level military and intelligence officials had ties to illegal arms and drug trafficking. Retired Peruvian intelligence officer Francisco Loayza, a former mentor to Montesinos, said Friday that the spy chief considers the drug trade an important revenue source for Peru. "Once Montesinos told me the world economy was becoming narco-ized and Peru had to better its economic situation," said Loayza, who retired from the intelligence agency in 1989, before Montesinos became the power behind Peru's president. Montesinos is also at the center of Peru's political meltdown. After a videotape this month showed him allegedly bribing a lawmaker to join the government's coalition in congress, President Alberto Fujimori said he would hold new presidential elections and step down in July 2001. The tape followed reports that Montesinos and top military personnel either participated in or covered up the sale of AK-47 automatic rifles from Jordan to anti-government guerrillas in Colombia. The revelations about Montesinos' dealings are an embarrassment to Washington. Peru's anti-drug efforts were cited as the reason the Clinton administration recognized President Fujimori's third term, even though election observers and opposition candidate Alejandro Toledo boycotted the voting in May, alleging it was unfair. "I think the Pandora's box has been opened, and more and more is going to come out about high-level corruption in the Fujimori administration," said Coletta Youngers, a senior associate with the Washington Office on Latin America, a liberal think tank. "That is going to create a problem for drug warriors on Capitol Hill." Meanwhile, Fujimori's government sent the Congress urgent legislation Friday to disband the now-disgraced National Intelligence Service, the spy agency headed by Montesinos. The move was contained in legislation that called for scrapping the nationwide network of agents and informants within a 15-day period of its passage. The Congress, where Fujimori supporters hold a majority, was expected to quickly consider the measure. A copy of the proposal praised the agency, known by its Spanish acronym SIN, for helping defeat leftist insurgencies and keeping the peace with regional neighbors. It called for a commission made up of the country's prime minister and interior and defense ministries to oversee the dismantling of the agency, which it said would bring cost-cutting "benefits." Montesinos' name was not mentioned in the document. - --- MAP posted-by: Richard Lake