GUAYAQUIL, ECUADOR -- This port on the Pacific coast of South America has become a key money-laundering center and transshipment point for Colombia's cocaine cartels, according to Ecuadoran and foreign narcotics experts.
Ecuador has been virtually ignored in the Bush administration's "Andean strategy" to combat the flow of cocaine to the United States, receiving a small fraction of the aid provided to Bolivia, Peru and Colombia.
But officials say Ecuador's location -- wedged between Peru and Colombia -- makes it a factor in the cocaine trade. Its traditional tranquillity, ill-trained and ill-equipped police force, bank-secrecy laws, and this large Pacific coast port customarily open to smuggling also make it an attractive place for drug traffickers.
The officials say drug money, cocaine and chemicals used to produce it have moved through Ecuador for several years. But the pace has quickened in the last year because of the crackdown on the Medellin cartel in Colombia and the U.S. invasion of Panama -- making money laundering there more difficult.
The center of the drug activity is this humid, bustling port city of 1.6 million people, Ecuador's largest city, 180 miles southwest of Quito, the capital, which sits in the Andes at 9,500 feet above sea level.
Ecuador's population of 10 million relies on oil for about half of export earnings. Bananas, shrimp and cacao make up most of the rest of the earnings in the generally stagnant economy.
"Since the Colombian crackdown, we have seen a significant increase in just about every aspect of trafficking and money laundering here," said a U.S. narcotics expert based in Guayaquil. "There are significant quantities of cocaine moving out of here because it is one of the best ports on the Pacific coast in South America, and services not just North America, but Europe, Asia and the Middle East."
Law enforcement officials estimate that roughly 30 to 40 metric tons of cocaine moved through Guayaquil last year. The figure is expected to be higher this year as the traditional routes have closed down and the cartels move their operations away from the Caribbean coast, where radar surveillance makes transport more difficult.
Most of the cocaine is shipped in containers with such legitimate products as shrimp, cacao and bananas, according to Col. Gustavo Gallegos, head of the Ecuadoran anti-narcotics police.
The drug trade "is like mud," said a local law enforcement officer. "You squeeze a handful of it and think you are holding it, but it just oozes through your fingers."
One of the main problems facing the Ecuadoran government is the lack of laws making activities related to drug trafficking illegal. With strict bank-secrecy laws, the government cannot demand records or trace transactions in schemes to obscure the earnings from drug sales.
"Why are we not doing more? Because that type of business is not illegal," said Fernando Guerrero, superintendent of banks, in an interview in Quito. "We have no controls. Personally, I can be sued just for discussing the topic."
Guerrero caused an uproar in May when he publicly reported that two banks, which he did not name, were heavily involved in laundering traffickers' money.
Further, "there is no specific legislation to regulate the traffic of precursor chemicals" used in refining the drug, said police chief Gallegos. "We exercise what control we can, but they still evade us."
President Rodrigo Borja, who sent congress a tough anti-narcotics bill that later was watered down by the legislators before passage in early August, said in an interview in Quito that he was worried by the trends. He said that his bill, in its original form, addressed many of the current institutional weaknesses and he was studying whether to sign the one approved by congress or to fight for modifications. He insisted, however, that Ecuador, because it does not produce coca, sees the drug problem more from the point of view of "a spectator than a protagonist."
"Seeing what has happened in other countries, we feel obligated to be alert to fight any manifestation of drug trafficking," Borja said. "We have at times captured chemicals, and our airspace has been used at times for clandestine flights of the mafia. Our fight against these manifestations is implacable because we believe we should do it now before it is too late."
Even if the political will and laws are there, Ecuador remains poorly equipped to deal with the increased drug traffic, according to diplomats and government officials. The military remains focused on its traditional enemy, Peru -- with which Ecuador has a longstanding border dispute -- and has few resources to combat internal threats.
Adrian Bonilla and Alexei Paez, two investigators at the Latin American Faculty of Social Sciences, who have studied the impact of narcotics on Ecuador for several years, said in a joint interview that there are 20 to 30 groups involved in trafficking chemicals.
They said that while the economy grew by about 2 percent in 1989, the chemical industry boomed by 29 percent. They said their studies show that Ecuador could have legitimate use for only 20 to 30 percent of the chemicals it imported.
The investigators said Ecuador has 33 banks, a high figure for a country with little commercial activity. They estimated that about $400 million in drug money was laundered through them in 1989. Other banking officials said that figure was roughly in line with their own estimates.
Another manifestation of the drug traffickers' presence that worries officials is the sudden purchase of vast tracts of Ecuador's best agricultural land by Colombians, mainly in areas around the towns of Santo Domingo de los Colorados, west of Quito, and Cayambe, to the north.
"We are talking about tens of thousands of hectares of land," said Paez. "It is our best land, and close to the marketplace."
A businessman said he had several friends who had sold land to Colombians in the last year. "They paid from 30 percent to 100 percent more than the market value, and they paid in dollars or a dollar check, in one lump sum. The price was too good to turn down."
Guayaquil, with broad, dirty streets lined with palms, modern banks and businesses crowded between aging buildings with crumbling colonial facades, was founded where two rivers flow into the Pacific. More than 70 percent of Ecuador's trade passes through the port.
The port was long isolated from the capital, and regional tensions have festered for centuries. Its location and the neglect by central authorities have allowed Guayaquil to flourish as a smuggling haven.
"You can buy your way through with anything," said a senior banking official here. This city "is very capitalistic, where anything to make a buck is okay."
"There was already a very good smuggling network set up, run by families," said a local official. "They smuggle everything through here. Cocaine is just another product to be plugged into the pipeline."
Although the official port now is more controlled than in the past, narcotics experts say there are at least 20 "unofficial" ports along the river estuaries that have no controls.
"Guayaquil is wide open," said a European expert.
After being unloaded at the ports, chemicals often have their labels switched and then are trucked overland by several routes to Ecuador's northeastern border with Colombia. The barrels are then loaded onto barges and floated to Colombian laboratories on rivers, officials said.
In addition, coca paste is being refined into cocaine on the Peruvian-Ecuadoran border, then moved by small boats to the port, the officials said.
Officials at the Foreign Ministry said Ecuador has been asking the United States and Europe for more help, before the traffickers and the violence that accompanies them make greater inroads.
Asked if he had received an answer to the request for help, President Borja said, "Not yet."