CHIMORE, BOLIVIA -- A Vietnam-era helicopter chugged slowly down over a steamy rain forest, unloading U.S. drug agent Michael Perez and a U.S.-Bolivian team for their morning mission: a grueling hike through thick underbrush and snake-infested streams to search for primitive drug "factories" concealed in the surrounding jungle. For months, Drug Enforcement Administration agents like Perez -- clad in battle fatigues and armed with AR15 assault rifles -- have carried out dozens of similar missions here in the face of hostile peasants and mounting death threats. "This is a perfect textbook example of guerrilla warfare," said Perez, 31, a New York City-based DEA agent serving his second tour in this remote region of central Bolivia. "You never know who's who -- who's a good guy and who's a bad guy." Such is the murky conflict here in Bolivia's Chapare -- a New Jersey-size tropical valley that has become a front-line battle zone in America's war on drugs. Over the past year, teams of DEA agents have been dispatched here to wage an aggressive paramilitary campaign designed to break up the Chapare's coca-based economy and put a crimp in the booming Bolivian drug trade. Officially, the DEA agents are here as "advisers" to the Leopards, Bolivia's U.S.-trained antinarcotics militia. In fact, the agents -- about 30 at a time, although the exact number is classified -- have moved to the front lines. They serve as the Leopards' de facto commanders, blowing up airstrips, raiding jungle laboratories, searching village markets and burning primitive factories -- barrels and sticks around small ditches where local farmers mash coca leaves and kerosene into gooey paste, the first step in the production of white powder cocaine. Although no DEA personnel have been injured, they have had several close calls. Twice, agents have been surrounded by machete-wielding peasants. "It's only a matter of time before we're going to be shot at," Perez said. These missions are part of a larger South American operation, code-named Snowcap, and represent a significant, if virtually unnoticed, escalation in DEA's overseas role. They are also an increasingly crucial element in U.S. antidrug strategy. Frustrated over efforts to halt drugs at the border or dry up demand at home, some U.S. officials argue that the future of the nation's drug war lies here, at the source, where the long trail that brings cocaine to the streets of U.S. cities begins. "In my view, this is about the only opportunity we have to make significant progress in the short term," said David Westrate, assistant DEA administrator for operations. "If you look at everything else -- say {drug} prevention and education -- is it realistic to expect dramatic progress on that front for four or five years? Or interdiction? Traffickers can always shift what they're doing . . . . The one fruitful area is at the source." Since Snowcap operations began here early last year, about 100 DEA agents have been flown into this region on a rotating basis. Six-man teams of U.S. Border Patrol agents have been dispatched to set up roadblocks on local roads. U.S. Special Forces are here, too, training the Leopards at this military-style base camp in the techniques of jungle warfare. More than 2,400 coca-mashing sites have been burned, 4,400 gallons of drug-making chemicals have been confiscated and more than 1,000 traffickers have been arrested. About 75,000 pounds of coca leaves and 21,000 pounds of coca paste have been destroyed -- evidence, DEA officials assert, that they are hitting local drug traffickers hard. Yet by all accounts, these maneuvers have put no serious dent in the Chapare's coca traffic. The price of coca leaves dipped last spring to 20 cents per pound, but later rebounded to more than three times that. Many DEA raids have gone sour, undermined by widespread peasant resistance, faulty intelligence and endemic corruption among Bolivia's military and police. "There's a fundamental mismatch here. You've got street cops from Cincinnati trying to fight a war in the jungle," said U.S. Ambassador Robert S. Gelbard, one of several American officials who expressed disappointment over the DEA's efforts. "We have to take a really fresh look at what we're doing." The heart of the struggle is economic, not military, according to most U.S. officials interviewed. Over the past decade, the population of this region has exploded as tens of thousands of unemployed workers and hard-pressed farmers flocked here to cash in on a coca boom fueled by U.S. demand for cocaine. From a population of less than 150,000 in the 1970s, the Chapare has grown to about 300,000 campesinos, or peasants -- 90 percent of whom grow, process or market enough coca leaves to supply about one-third of the U.S. cocaine market. "The best way to equate this is to the old Gold Rush days," said Steve Casteel, staff coordinator for Snowcap. "When they shut down the {tin} mines, by word of mouth people have been told if you want to make a living, the gold lies in the Chapare. So they've been coming in by the droves." In July 1986, when the coca trade was raging out of control here, Bolivian President Victor Paz Estenssoro asked for U.S. help, and 170 U.S. soldiers arrived to launch Operation Blast Furnace. For the next four months, traffickers and peasants fled the area and the price of coca leaves plummeted. But when political opposition to the American presence mounted, the U.S. troops departed and coca trade flourished anew. Snowcap is partly an effort to duplicate Blast Furnace without riling political sensitivities in Bolivia, U.S. officials said. No public announcement of the program was ever made, and even today, some elements of Snowcap -- including its overall cost and the number of agents involved -- remain classified. Nevertheless, a similar pattern seems evident. Peasant opposition to DEA activities has been increasing rapidly, fed by a relentless trafficker-financed propaganda campaign depicting the DEA as an oppressor of the Bolivian people. When DEA agents like Perez venture forth from the Leopards' base camp here, campesinos living in nearby villages switch on shortwave radios, alerting local drug traffickers to the agents' moves. The drug traffickers "know everything we're doing," said John Baker, a DEA agent from Austin, Tex. "They know when we leave. They know when we come back. They've got people working for them right in this camp." Even more daunting is pervasive corruption within Bolivia's military and police. Last October, the chief of the army's largest regiment and four of his top officers were dishonorably discharged after they were found to be protecting a clandestine Chapare airstrip used by traffickers. Sources here say Bolivian navy boats regularly smuggle coca paste from the Chapare to laboratories in the Beni flatlands north of here. Then there is the perennial problem of the Leopards, officially known as the Rural Mobile Patrol Unit, a 550-member antinarcotics police unit created with U.S. funding in 1983. The Leopards were once touted by U.S. officials as a model for Latin America. Today, about half of the Leopard commanders are suspected of taking cash payoffs from drug traffickers, DEA agents said. "Every week, two or three airplanes leave {the Chapare} carrying drugs and with the protection of {Leopard} officers in charge who just look the other way," said Jorge Alderrete, Interior Ministry undersecretary for drug enforcement, who oversees the Leopards. "When a plane lands at a clandestine airstrip for 15 minutes and takes off again, an officer will receive $10,000 to $15,000, depending on the amount of drugs." The corruption presents DEA with a touchy logistics problem. The former Leopard commander here at Chimore, chief base camp in the Chapare, was discovered three times at roadblocks last summer carrying more than $100,000 in cash, sources said. Now when agents such as Perez and Baker huddle over maps to plot the next day's raid, they are careful not to let their Leopard counterparts know any details ahead of time. "If they start asking a lot of specific questions, like when are we going and where, that's the tipoff," Perez explained. "A lot of times we'll just lie to them." The problem of corruption underscores the most salient fact about Bolivia's antidrug efforts. This country, South America's poorest with a per capita income of about $500, is economically hooked on coca. Illegal coca exports are estimated to generate about $600 million a year in revenues, more than all of Bolivia's legal exports combined. During the past five years, the Bolivian economy has been battered beyond recognition -- first by hyperinflation (more than 24,000 percent in 1985), then by a Draconian government-engineered deflation that pushed unemployment over 20 percent. Bolivia's economic "safety net" through this whirlwind has been a thriving underground economy entirely sustained by the coca trade. "It's like a cushion that's preventing a social explosion," said Herbert Muller, former director of Bolivia's central bank. "I look outside my window sometimes and wonder, why are people not killing each other? There is only one answer." Over the past year, U.S. officials here said, they have been buoyed by the commitment of Paz Estenssoro's government to attack the problem. Last summer, the Bolivian Congress passed a law that for the first time would ban coca growing in the Chapare, although the effective date was put off for several years and a crop elsewhere will be permitted for "traditional" religious rites and medicinal uses. In addition, a program to pay farmers to destroy their coca crops -- until recently, partly funded by the U.S. government -- has made some progress. About 6,160 acres of coca plants have been reported destroyed since September 1987 -- barely 6 percent of the official U.S. estimate of Bolivia's coca crop, but more than had been eradicated before. "There are indications that we're beginning to make a real impact," said Gelbard, the U.S. ambassador. "Theoretically, what we are doing should work." But in the eyes of some officials here, these steps are years away from making any difference. In recent months, eradication has slowed. For every coca plant destroyed, new coca seedlings are planted elsewhere, and total acreage appears to be increasing slightly. "When they're reducing on one side, they're planting on the other," said an official of DIRECO, the new government agency set up to run the eradication program. "The farmers are not stupid. Most of the crops they destroyed were too old to be productive," charged Filemon Escobar, a veteran trade union activist. "Mostly, the whole thing has been a joke. We've been pulling your leg." Escobar is an example of how the coca trade has permeated every level of the economy. He is not a drug trafficker, but one of this country's best-known labor leaders, a top official of the Central Obrero Boliviano, the main workers union, which represents rural "syndicates" that include coca farmers. Over the past year, Escobar and other labor leaders have taken up the cause of the growers, organizing mass demonstrations against the new coca law. Thousands of coca farmers have marched through the streets of La Paz shouting pro-coca slogans. "We say no to the law!" Escobar shouted during an interview. "We don't accept it. This is called civil disobedience. We are not going to eradicate one plant of coca!" A propaganda effort has fed such resistance. Last summer, after 13 peasants died in a clash with Leopard troops near here, Escobar's union took out newspaper ads accusing the DEA of fomenting a "massacre." Local newspapers have also accused the DEA of running secret Bolivian drug laboratories to finance the Nicaraguan contras, a charge U.S. officials say is "nonsense" planted by traffickers. The depth of anti-U.S. sentiment was clearly evident during a recent tour of this region, a tropical highland valley of thatched huts, towering banana trees and rolling fields of sturdy green coca plants. Dozens of farmers could be seen drying coca leaves in the sun, in some cases right off the main two-lane road used by DEA agents to reach this camp. "The Americans are like invaders," said Fortunato Tercero, a 64-year-old farmer, as he stood barefoot in a field of coca plants outside the village of Villa Tunari. "They are coming in here and doing what they want in a country that is not theirs." At a nearby village market, a group of young men guarded canvas sacks stuffed with coca leaves, waiting for local traffickers to drive up and buy them. A few feet away, a woman sitting in front of a fruit stand angrily shook her fist when asked about the Americans. "The DEA comes in here every week and searches for drugs," she said bitterly. "There is one -- we call him Rambo -- I'd like to kill him." For most of these farmers, the government's offer to pay nearly $5,000 for the destruction of one acre of coca is not even tempting. At current prices, coca remains two to three times as profitable as alternative crops such as macadamia nuts or pineapples. Tercero is a good example of the problem. He began growing coca about three years ago, when his bananas were doing poorly and the local bank refused him a loan to buy some pigs. "The only way was to grow coca," he said. "It's the only way to survive."