BOGOTA, COLOMBIA, AUG. 12 -- The killing by police of Gustavo de Jesus Gaviria, cousin and right-hand man of Medellin cocaine cartel leader Pablo Escobar, is the most significant blow to the traffickers' network since the December death of Gonzalo Rodriguez Gacha, according police officials.

Gaviria, 41, was killed in a raid by the Elite Corps of the National Police Saturday afternoon in his luxury Medellin apartment after a 15-minute shootout, according to a police bulletin. Newspaper accounts said high barriers enclosed the house, which had closed-circuit television surveillance and bullet-proof glass. In the assault, hand-grenade explosions punctuated the firing of automatic weapons.

Gaviria was wanted in the United States, where he was under indictment with Panamanian ex-strongman Manuel Antonio Noriega for exporting cocaine to the United States.

"Rodriguez Gacha was Escobar's partner, and Gaviria is his business manager and adviser," said a senior police official before Gaviria was killed, describing his importance in the cartel's operation. The official said Gaviria was one of the few people Escobar still trusted fully.

The cartel had declared a "unilateral, indefinite truce" with the government July 27, but police took up positions around Medellin Saturday night in anticipation of retaliation for the killing.

Escobar maintains a formidable terrorist infrastructure, with six men identified by police as running his hit squads, and his brother Roberto helping to manage the cartel. Roberto is generally believed to be the second in command, and Gaviria was said to be number three.

The killing of Gaviria, who U.S. and Colombian narcotics experts say ran the cartel's multi-billion dollar financial empire, is the first major blow against the traffickers since President Cesar Gaviria Trujillo (no relation) took office Tuesday vowing to fight trafficking "without concessions."

"The death of this criminal is one of the severest blows to the Medellin cocaine cartel since the National Police began its offensive against that narco-terrorist organization," said the police statement. He is the second person, after Rodriguez Gacha, on the U.S. government's list of 12 major traffickers to be killed.

Police said the raid was based on tips from informers. Police had offered $600,000 for information leading to his arrest or death, but they did not say immediately if anyone would collect the reward.

Gaviria's importance within the cartel grew, according to U.S. and Colombian experts, after Rodriguez Gacha was killed Dec. 15 and Escobar was forced to spend most of his time fleeing from the police.

Gaviria, who worked with Escobar since they began exporting cocaine in the mid-1970s, took over the management of exporting cocaine and finances, including paying the cartel's hit men, because he was less well known and had kept a lower profile, the experts said.

Escobar and Gaviria were arrested together in 1976 for transporting 12 pounds of cocaine hidden in the wheel of their car, but were freed shortly afterward.

In the late 1970s, the pair, who loved automoble racing, were frequently seen at tracks, financing and sometimes driving the best cars. Gaviria was implicated in Colombia in numerous murders.

According to Guy Gugliotta and Jeff Leen in the "Kings of Cocaine" book on the Medellin cartel, Escobar and Gaviria negotiated a deal with Noriega in 1982 to allow cocaine to be transshipped through Panama for a fee of $100,000 per load.

Citing Miami court documents, they say by the end of 1982 the two had moved 240 pounds of cocaine to Panama, and Noriega upped the price to $150,000 a load.