The Evolution of Transnational Organized Crime in Peru

posted by R. Evan Ellis on May 12, 2017 - 2:56pm

This report was originally published in Latin America Goes Global, May 4, 2017.

In March 2017, Carmen Masais, head of Peru’s counterdrug organization DEVIDA, reported that the nation had 55,000 hectares of coca under cultivation, an amount higher than that estimated by the U.S., and more than 36% greater than that calculated by the United Nations Office on Drugs and Crime.

In its first year in office, the government of Pedro Pablo Kuczynski in Peru has wrestled with damage from floods of historic proportionin the country’s north coast, the political costs of the Odebrecht scandal, and depressed minerals prices in a country whose economy centers on mining, while working with a Congress in which 73 of the 130 seats are occupied by the opposition party Fuerza Popular. It is thus understandable, as I discovered during a research trip to Peru in late April 2017, that many Peruvians feel the government has not made progress on important challenges facing the nation.

During my visit, among the people I spoke with, I found broad respect for the caliber of people that Kuczynski has appointed to his government, particularly his Minister of Foreign Affairs Ricardo Luna, and his Minister of the Interior Carlos Basombrío. The latter is widely regarded as a man of integrity, although his dismissal of a significant portion of the leadership of the Peruvian National Police under his command at the beginning of his term has created controversy.

Such high regard notwithstanding, a significant number of those with whom I spoke felt that, between the Kuczynski government’s management of the impact of the floods and other matters, his administration has not yet focused as much attention as needed on the challenge of organized crime. In particular, narco-trafficking, illegal mining and logging, and associated criminal activities have evolved in troubling ways during President Kuczynski’ s first year in office, presenting challenges for both Peru and the region. While there have been notable developments and advances by the Kuczynski government there are ways in which the United States can support his government in the fight against transnational organized crime in Peru.

New patterns of organized crime in Peru

With respect to narco-trafficking, coca cultivation continues to spread from traditional areas such as the Apurimac, Ene and Mantaro river valleys (VRAEM) to other parts of the country, from the Peruvian side of the Putumayo river defining the country’s northern border with Colombia, to the department of Puno in the southeast. Although at lower altitudes, coca plants generally do not yield as much of the alkaloids necessary to make cocaine, the lower productivity is reportedly compensated for by lesser government attention in the newer growing areas, as well as logistical and other incentives to produce there.

South of the Putumayo river, coca growing is largely a spillover from the explosion of coca under cultivation in neighboring Colombia with the cessation of aerial spraying there in May 2015. Indeed, the chemicals used to process the coca in Peru are reportedly brought across the river where they are abundant due to demand from the narcotics industry in neighboring Colombia. Dissident and former guerrillas from the Fuerzas Armadas Revolucionarios de Colombia (FARC) have also reportedly crossed over to the Peruvian side of the Putumayo River, where they participate not only in narco-trafficking, but also illegal mining and other activities.

In the northeast of Peru, Cabalococha and the surrounding province of Mariscal Ramón Castilla is said to have become a hub for coca growing, synthetic drug production, and other illicit activities, based on its location at the triple frontier between Peru, Colombia and Brazil. The area derives its value not only from the remoteness and intersection of national boundaries—which complicates state control—but also from its position along the Amazon river, the principle route for moving both licit and illicit goods from the Peruvian to the Brazilian Amazon.

Coca plantations have also been discovered further to the south in Huánuco and Pasco. Although the current head of DEVIDA, Carmen Masais announced plans during her previous period in office to expand manual eradication activities in the VRAEM—as her organization had done with success in the Upper Huallaga Valley—such expanded efforts have not yet occurred.

These areas are the principal source zones for the cocaine shipped north by river to Iquitos, then through the triple frontier into Brazil. Nonetheless, Peruvian security experts another portion of the cocaine from this area may also be moved due east, via the swampy tributaries of the Amazon basin, directly into Brazil.

While the use of small aircraft to fly cocaine out of the VRAEM has received attention, since October 2016 efforts by the Peruvian government against airstrips to transport cocaine out of the VRAEM have reportedly led narco-traffickers to change strategy, moving the drugs to alternative areas, including the Urubamba valley, just to the east, and possibly, to the north, to the Palcazu river valley to be loaded into planes. Those I spoke to in Peru disagreed on the degree to which narco-flights were flying directly from such areas into Brazil, noting the efficacy of Brazil’s CINDACTA system of radars to identify planes penetrating its airspace. Some suggested that such flights were occurring, but that the planes were actually airdropping packets of drugs close to the border for pick-up by counterparts on the ground. Others argued that the majority of narco-flights from this area head to Bolivia, which is much less controlled until such time as the Bolivian government brings its anticipated new radars in line.

Colleagues with whom I spoke indicated that a portion of the drugs from the previously mentioned central regions is also smuggled overland via individuals on foot (mochileros) and in clandestine compartments of vehicles driving overland to Peru’s Pacific coast ports. Callao, Peru’s main commercial port, reportedly continues the most important port for the export drugs and other illicit substances. Other ports in the north, however, including Paita and Tumbes, as well as Ica in the south, are also reportedly important nodes for shipping drugs out of the country.

In addition to the production, transformation and movement of cocaine, heroin poppies are reportedly grown in the highlands of Cajamarca.   Both heroin and cocaine are smuggled across the border to the Ecuadoran province of Loja; the underground, criminal economy can be seen in the luxury cars and homes that have begun to appear in poor provinces.

To the south, the Peruvian department of Madre de Dios is arguably the core of the country’s growing illegal mining sector. Nonetheless, illegal mining is occurring throughout the country in areas even more diverse than those used to grow coca. Key illegal mining areas outside Madre de Dios reportedly include the neighboring departments of Junin and Cusco, as well as parts of the low jungle in Ucayali, Huánuco, and along the border with Colombia.

The processes and dynamics of each illegal mining region reportedly are different, with the mining activities of the jungle lowlands reportedly concentrating on the extraction and local processing of gold, while a broader array of minerals are extracted in the mountainous areas, with part of the ore often shipped elsewhere for further processing. In all of the illegal mining areas, however, the criminal activities have attracted a variety of foreigners, including Brazilians, Chinese, and Serbians, among others. The activity has also attracted illicit supporting industries including prostitution, as well as shops to supply the miners with food and supplies.

Beyond the areas discussed in the previous paragraphs, perhaps the most significant growth in Peru’s criminal economy has occurred in the province of Puno, on the nation’s southeastern border with Bolivia. There, both coca growing and illegal mining have become widespread; and like Loja Ecuador, the new sources of illegal wealth can be seen in recent arrival of luxury homes and cars, difficult to explain based on the limited legitimate economic activities in the isolated department. Puno has also reportedly become much more insecure than before, and has only a limited police or state presence.

Most of the coca produced in Puno is reportedly shipped across the border to Bolivia, including some sent there in intermediate form for further processing, since controls on precursor chemicals in Bolivia are reportedly less stringent than those in Peru. Similarly, because Bolivian mines reportedly have weaker accounting controls that their Peruvian counterparts, they are often used to launder illegal mining products from Peru.

Groups in Peru’s criminal economy

The paradox of organized crime in Peru is that, given the amount of illicit activities in the country, transnational organized crime in the country is remarkably disorganized. From the supply of precursor chemicals for drug production, to the harvesting of coca and the production and transport of cocaine, to the illegal mining sector, the country is populated by a large number of seemingly nameless “family clans,” collaborating and occasionally competing in a complex criminal economy. This atomized structure makes illicit groups and their activities particularly hard to attack, because few of these groups control any significant portion of production, transport, precursor chemical sourcing, or other illicit activities; if authorities act against them, nearby rivals are generally available to replace them. An example of this problem occurred in May 2016 in Callao, where the Peruvian military intervened to restore order, and in May 2016, succeeded in capturing Caracol, one of the gang leaders in the zone. Less than two years after his arrest, criminal activities and insecurity in Callao continue at levels comparable to that before.

The terrorist group Sendero Luminoso was once a key part of Peru’s criminal economy, beginning a bloody civil war in 1980 in Ayacucho that led to some 69,000 deaths on all sides. Although at its high point in the 1990s, Sendero Luminoso had as many as 10,000 armed combatants, it currently has been reduced to no more than 120 to 150 (although its numbers are greater when family members, collaborators and sympathizers are included).

The 2012 capture of Artemio, leader of the Sendero Luminoso faction in the upper Huallaga valley, and the subsequent decimation of his group, left the Quispe Palomino clan, concentrated in the VRAEM in the inaccessible mountainous area of Vizcatán, as the principal remnant of the group. From Vizcatán, Sendero Luminoso reportedly continues to extort the family clans growing and transporting coca in the area, particularly those south of Peru’s principal military base in the region at Pichari. They also occasionally shoot at or attempt to ambush Peruvian military personnel conducting patrols from one of the 64 military bases located in the VRAEM.

With respect to drugs, most of those exported from Peru are believed to go to Europe, Brazil, other countries of the Southern Cone, and Asia, with only about 10% destined for the United States.

The response of the Peruvian state

While the Peruvian government under President Kuczynski continues its operation against the transnational organized crime threats in its territory, there is a general consensus among the Peruvian security sector experts that—in the midst of numerous other challenges demanding the president’s time—the government has not truly focused on the problem. Indeed, as of the beginning of May, the government had still not completed its national security plan, indicating its policy distractions when it comes to confronting organized crime.

With respect to its general posture toward organized crime, the Kuczynski government also appears to have de-emphasized the elite groups such as the famous “Wolf Brigade” its associated military organization Comando de Inteligencia y Operaciones Especiales Conjuntas CIOEC and police organization División de Investigaciones Especiales (DIVINESP).

With respect to intelligence, the Kuczynski government has taken steps to reintegrate the national civilian intelligence organization Dirección Nacional de Inteligencia (DINI) in the fight against organized crime, following the scandal over DINI’s collection of intelligence on political rivals at the end of the previous administration. While Kuczynski’s appointment of Guillermo Fajardoto head DINI suggests a commitment to continue to use the organization as part of Peru’s national security system, the Peruvian security experts with who I spoke with argued that the president has not yet given strong signals regarding the size or nature of the role DINI will play.

Peru’s government also continues to have difficulty in acquiring or maintaining operational equipment that could help control illicit trafficking through the country, including scanners for the nation’s principal ports and highways. Although a small number of scanners had been acquired for the ports of Callao and Salaverry, they reportedly experience frequent unexplained mechanical failures, leaving those ports and the rest without an effective capacity to detect drugs and other contraband the majority of the time.

With respect to interdiction, the government has acquired new Korean KT-1P aircraft that may be used as interceptors against drug flights. The acquisition includes assistance to assemble the aircraft locally, but the government has not completed the acquisition of radars to make those interceptors effective. The U.S. has also been reluctant to approve the supply of U.S.-made components important to the system.   The concern stems from the possibility that the system could result in the accidental shootdown of a civilian aircraft, as occurred previously, in 1992.

On the other hand, the Peruvian government has had notable success with the “Mobile State” program, which brings a multiplicity of state services by riverboat (PIAS) to remote jungle areas, from providing citizens identification cards and registering them in social services programs, to medical services and automatic teller machines. To date four such boats have been deployed, mostly in the jungle rivers in the north of the country. Four more are reportedly in construction, with a total of 12 planned. In addition, a PIAS was also transported in pieces to Lake Titicaca in the south, where it was assembled to provide services there, due to be deployed toward the end of 2017.

An additional success has been Peru’s Financial Intelligence Unit (FIU), under the nation’s banking supervisory organization. The organization is at the forefront in the pursuit of the illicit earnings of narco-traffickers, illegal mining, and other criminal groups in the country. Its effectiveness is bolstered by legislative decree 1249, passed in late 2016 and a series of reforms that have strengthened government oversight of the country’s financial system. The FIU reportedly has one of Peru’s stronger systems for the selection and monitoring of personnel to prevent corruption and compromise, and has strong relations with the U.S. Treasury Financial Intelligence Center (FINCEN) and counterpart FIUs throughout the region. Peru’s FIU is also a member in good standing of the Edgemont Group of FIUs, and is well regarded by the peer supervisory organization GAFILAT, with which it is due to complete a major mutual review in 2018.


The understandable but unsustainable delay in the Kuczynski government’s focus on the fight against transnational organized crime in Peru, combined with the delay in the United States in appointing mid-level policy officials for Latin America (including the Assistant Secretary of State and Deputy Assistant Secretary for Defense for the region), presents an opportunity for both sides to look at ways to collaborate with a different set of options than those limiting collaboration between the prior U.S. and Peruvian governments.

While the U.S. may not necessarily have significant additional resources to support Peru in its efforts against drugs, it should strongly consider eliminating policies that hamper the current relationship. This should include lifting de facto restrictions on collaboration in the area of aerial interdiction; such a change would help Peru assert control over its airspace and minimize the possibility of accidents.

The U.S. should also expand work with Peru in currently successful, high-payoff areas such as collaborating against financial crime and supporting the training and professional military education for Peruvian military and law enforcement officials.

The U.S. should further increase intelligence and law enforcement collaboration with Peru against organized crime. Such assistance should include limited material support, such as the provisioning of scanners, where desired by Peru.

The transnational crime challenge in Peru affects, and is affected by, its neighbors.   The demand for coca and cocaine in Brazil, the impact on Peru of weak controls against coca and illegal mining in Bolivia, and the peace agreement in Colombia all point to how the transnational organized crime problem in Peru affects, and is affected by, its neighbors. Given the transnational nature of these criminal activities the U.S. should facilitate collaboration on such issues, wherever possible, within the framework of the Organization of American States and other instruments of the InterAmerican system.

Just as Peru historically served as the linchpin of the Inca Empire, and the Spanish colonial system in an important part of South America, today it plays a strategically important role in the stability and prosperity of the region. As such, it is in the interest of the U.S. to help the Kuczynski administration succeed, as an ally of the rule of law and good governance, in its struggle against organized crime.