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Excerpts from Crossing the Rubicon: The Decline of the American Empire at the End of the Age of Oil
Published in 2004 / Chapter 3
The CIA Is Wall Street, And Drug Money Is King
by Michael C. Ruppert
The smoking gun
As the national controversy raged over the Gary Webb stories from 1996 through 1998, pieces of evidence started to leak into the public domain. One piece, a 1981 letter from from then US Attorney General William French Smith to Director of Central Intelligence (DCI) Bill Casey, summarized the results of a long negotiation process that changed the CIA’s obligations under the law when people who worked for it were caught dealing drugs.
It had previously been a requirement under Title 18 of the US Code that, whenever a manager or department of the executive branch discovered that an employee was breaking the law, an immediate notification to the US Department of Justice or one of its enforcement agencies had to be made. In 1981, at the start of the Contra War the CIA had a problem. It knew that the coming covert operations were going to witness a dramatic explosion in the volume of cocaine entering the States. It needed not only a cover for itself but also a legal way to circumvent what was sure to be a deluge of reports (which did occur) about US government personnel or contractors who were moving drugs.
In a two-stage negotiation process, the CIA and the Department of Justice first made an arbitrary decision that anyone who worked for the CIA (whether a full-time employee or contractor or employee of a CIA proprietary company) who did not hold “officer” rank within the agency was deemed not to be an employee. In the next stage, it was decided that “no formal requirement” for the reporting of violations of drug laws was going to be required under the newly reached memorandum of understanding.
Proof of this surfaced when a copy of the letter formalizing the agreement was sent anonymously to the office of Congresswoman Maxine Waters when she was still championing the issue. A key sentence in the letter said, “In light of these provisions, and in view of the fine cooperation the Drug Enforcement Administration has received from the CIA, no formal requirement regarding the reporting of narcotics violations has been included in these procedures.” With the stroke of a pen the CIA had been absolved from turning in its employees, its contractors, and the employees of its proprietary companies who were soon to be found smuggling cocaine, hand over fist, and airplane over cargo ship.
A copy of this letter was inserted in the CIA’s final inspector general (IG) report in October 1998, long after the nation had forgotten the issue and become lost in Monika Lewisky’s dress.
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The smoking airplanes
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In the 1980s and the 1990s the Central Intelligence Agency schemed to move a number of large C-130 Hercules transports from US government ownership into the hands of private contractors so that some of them could be used for covert operations that were “deniable” by the Agency. The C-130 is a military aircraft, and it is banned from export without State Department certifications. Under the CIA plan, some 28 of the giant transports were moved from the Department of Defense into the hands of the US Forest Service. From there, ostensibly for the humanitarian purpose of fighting forest fires, they were again transferred into the hands of private contractors, many of whom were later revealed to have CIA connections or contracts, or established relationships with CIA proprietaries.
The scheme started to come unraveled as a number of investigators, including Vietnam veteran Gary Eitel, himself a pilot, began turning up documents in court cases showing links to the Agency. The cases were extremely well covered by mainstream press; they prompted stories in the AP and a large series in the Riverside Press Enterprise by veteran reporter Dave Hendricks. The problem was that many of the C-130s kept turning up in such remote locations as Panama, Mexico, Colombia, Angola, and the Middle East. In many cases, when they were examined, they were carrying anything but fire retardant. In fact, one of the C-130s, connected to CIA affiliate T&G Aviation of Arizona, was seized in 1994 with a billion dollars worth of cocaine on board. Eitel’s investigation had established a connection between T&G, operated by Woody Grantham, and another company called Trans Latin Air.
The Trans Latin Air investigation led to an investigation of Aero Postale de Mexico. In April of 1998 stories in the Mexican paper La Reforma reported that the Mexican Attorney General had indicted three officials of the private freight hauling company Aero Postale de Mexico which routinely delivered mail and other goods throughout Latin and Central America on charges that they had provided aircraft to the drug cartel headed by the Arellano Felix brothers. That investigation had commenced in 1997, and Aero Postale planes were reportedly hauling multi-thousand kilo loads of cocaine during the period. One of the C-130s was impounded at the Mexico City airport. Purchase of the aircraft was financed by the Mexican banker Carlos Cabal, who was assured repayment of the loans by the US Import-Export Bank. It is impossible to believe CIA would not have noticed such a transaction. T&G sold the planes to Aero Postale in 1993 at the same time he sold the planes to Trans Latin Air.
Records of the massive cocaine bust, though suppressed by the major media, did get introduced into evidence in a major drug prosecution in Chicago that same year.
The heat had started to fall on the Forest Service five years earlier when the planes first started getting caught with drugs aboard during Contra support operations. The Forest Service had their lawyers evaluate the situation in the perennial government game of CYA. As a result, one of the most chilling documents to ever reveal the depth of government cynicism emerged into public light. A 1989 memo (below) from a Forest Service lawyer to Associate Chief George Leonard concluded, “Apparently, DoD [the Pentagon, CIA’s name never appears on documents like this] thinks that by having the Forest Service as the intermediary, if any future aircraft are used in drug smuggling, the Forest Service and not the DoD will suffer the adverse publicity.”
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The smoking Inspector General report
I could fill this book with excerpts from the CIA IG report, written by Frederick P. Hitz and released on October 8, 1988 – the same day that the impeachment of Bill Clinton began in the House. To demonstrate what kind of material is in that report, I will include just three brief quotations. The number in front of each paragraph refers to its location in the IG report.
490. On March 25, 1987, CIA questioned [Moises] Nunez about narcotics trafficking allegations against him. Nunez revealed that since 1985, he had engaged in a clandestine relationship with the National Security Council (NSC).
Nunez refused to elaborate on the nature of these actions, but indicated it was difficult to answer questions relating to his involvement in narcotics trafficking because of specific tasks he had performed at the direction of the NSC. Nunez refused to identify the NSC officials with whom he had been involved. [Note: Oliver North was the NSC point man for all Contra support activities.]
491. Headquarters cabled in April in 1987 that a decision had been made to “debrief” Nunez regarding the revelations he had made. The next day however, a Headquarters cable stated that “Headquarters had decided against… debriefing Nunez.”
The cable offered no explanation for the decision.
Another key passage discussing a Honduran airline documented to be moving as much as four tons of cocaine a month found that:
816. SETCO was chosen by NHAO [Nicaraguan Humanitarian Assistance Office, at the time coordinated by former National Security staffer, Elliot Abrams] to transport goods on behalf of the Contras from late 1985 through mid-1986. According to testimony by FDN leader Adolfo Calero before the Iran-Contra committees, SETCO received funds for Contra supply operations from the bank accounts that were established by Oliver North.
And finally, the CIA acknowledged in its IG report that it had withheld information about drug trafficking operations involved in the Contra effort from Congress, at the same time revealing that:
1074. The analyst who drafted a Memorandum for Vice President Bush in April 1986 that related to potential Contras’ involvement in drug trafficking recalls that OGI analysts who worked on counternartcotics issues were not aware of those reports at the time – October to December 1984 – that they were first disseminated inside and outside the Agency. However, she says that CATF [Central American Task Force] Chief [Alan] Fiers did make the reporting available to her in April 1986, stipulating that it could be used only for the Memorandum she was preparing for Vice President Bush.
1084. 1986 Memorandum for Vice President Bush. On April 6, 1986, a Memorandum entitled, “Contra Involvement in Drug Trafficking” was prepared by CIA at the request of Vice President Bush. The Memorandum provided a summary of information that had been received in late 1984 regarding the alleged agreement between Southern Front Contra leader Eden Pastora’s associates and Miami-based drug trafficker Jorge Morales. Morales reportedly had offered financial and aircraft support for the Contras in exchange for FRS pilots to “transship” Colombian cocaine to the United States. CIA disseminated this memorandum only to the Vice President.
The importance of this revelation is that it had been the official position of then Vice President Bush that he had no hands-on relationship with the Contras, was out of the loop, and knew nothing. That’s the position he took with the press, with Congress, and with the American people.
[G ~ Also consider Papa Bush was Director of the CIA before he became VP.]
The smoking history
The CIA has been dealing drugs since before it was the CIA; already in its first days, as the OSS during World War II it was facilitating and managing the trade, and directing its criminal proceeds to the places of its master’s choosing. for additional reading on the subject I recommend three excellent books The Politics of Heroin: CIA Complicity in the Global Drug Trade by Alfred McCoy, 1991, Cocaine Politics: Drugs, Armies, and the CIA in Central America, Updated Edition by Peter Dale Scott, 1991, and Powderburns: Cocaine, Contras & the Drug War by Celerino Castillo, 1994. The use of the drug trade to secure economic advantage for an imperialist nations is at least as old as the British East India Company’s first smuggling of opium into China in the late 1600s (the defense of that British practice, Scott points out, was John Stuart Mill’s motivation for writing the tract “On Liberty”). They did that for 300 years. When something works that well, the ruling elites rarely let go of it.
An interesting end came to the investigation arising out of the Gary Webb stories that (re)started all the controversy about the CIA and drugs. Frederick P. Hitz, the CIA inspector general who oversaw the report’s production, retired immediately afterward in March 1998. A graduate of the Harvard School of Law, Hitz was rewarded with a teaching post at Princeton University funded by Goldman Sacs. His retirement, seven months before a declassified version of the report was made public, was celebrated with an entry in the Congressional Record.
One question remains. Aside from the fact that from Afghanistan, to Pakistan, to Kazakhstan, to Colombia, oil and drugs always turn up in the same place, has there ever been any evidence connecting the oil industry to drugs directly? And what does that have to do with 9/11?
Afghanistan and opium post 9/11
In this context it is not surprising that the US completed its invasion of Afghanistan in November of 2001 in the middle of the opium planting season. Among the first things the US forces and CIA did was to liberate a number of known opium warlords who, they said, would assist US forces. Opium farmers rejoiced and, amidst reports that they were encouraged to do so, began planting massive opium crops. In December, former CIA asset and opium warlord Ayub Afridi was released from prison and recruited by the CIA to unify local leaders against the Taliban.
When the harvest of June 2002 came, Afghanistan had again become the world’s largest producer of the opium poppy and the world’s largest heroin supplier. From a paltry 180 tons under the Taliban in 2001, according to the UN, the estimated 2002 harvest, under CIA protection, was close to 3,700 tons. By March of 2003, World Bank President James Wolfensohn was reporting record levels of opium production and that drugs were a bigger earner for Afghanistan than foreign aid.
The 2003 crop set new records, coming in at almost 4,000 tons. And experts warned that the June, 2004 harvest might be 50 percent larger than that of 2003. In November of 2003, Reuters reported that Afghan opium cultivation was 36 times higher than under the last year of Taliban rule.
When I learned in early 2001 that the Taliban had destroyed Afghanistan’s opium crop, I wrote that it was a form of economic warfare that might take a whole lot of money out of the world’s banking system and its cooked books. There is always a lag between planting, harvesting, and the cash flows that show up as the heroin moves from farm, to laboratory, through several layers of wholesaling to the streets. The positive cash flow generated by Afghanistan’s first post-Taliban harvest would not have started to hit the banking system for maybe six to eight months after June of 2002. In the late summer and fall of 2002 the Dow Jones had sunk to nearly 7,200. As this book is written, and even as American jobs are disappearing, corporate profits and so-called “non-job” recovery have seen the Dow again at 10,000 based upon massive consumer spending which is financed by credit that must be serviced with fractional amounts of cash by the lending agencies. The unprecedented 2004 harvest might be connected with the fact that it is an election year.
I don’t mean to offer drugs as a complete explanation for the so-called economic recovery. But it helps to remember Occam’s Razor.
Thus ends the Unholy Trinity series.
[Jump to Part One / Part Two]
Get the full story – get a copy of Crossing the Rubicon: The Decline of the American Empire at the End of the Age of Oil now.
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“They did that for 300 years. When something works that well,
the ruling elites rarely let go of it.”
Powerful stuff from Marc Faber. He doesn’t see collapse but he clearly sees and understands much of the stupidity governing markets now. Good video. – MCR
This resonates more with me than Marc Faber’s outlook but Faber has it right on the reset, which I am expecting this year. – MCR
As Financial Sense recently wrote, we are leaving the debt supercycle phase. The money presses have passed the point of diminishing marginal returns. – MCR
Brilliant as usual. What stuck with me was that Mish clearly sees what I see, that brutal austerity measures are going to backfire big time. – MCR
A percentage that high borders on disorderly default. I don’t have a lot of hope for consensus on it. – MCR
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Published in 2004 / Chapter 3
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