Barry R. Mccaffrey has been Director of the office of National Drug Control Policy since February 1996. In this capacity he serves as the President's Chief Drug Policy Spokesman. He is also a member of the National Security Council.

Hmm.

AND THEN, HE DISAPPEARED.

Hm-hmm.

WHAT WAS YOUR REACTION WHEN YOU FOUND OUT HE'D BEEN ARRESTED?

Well, I think the Mexicans were simply overwhelmed. They were in enormous shock. Here they've got a guy who, inside the Armed Forces, had made the biggest drug bust in their history, who had a reputation of aggressive field combat behavior against these narco traffickers and it turns out, allegedly, that he's a mole for one drug gang against others. So I think the Mexican authorities, the president and the Minister of Defense were really overwhelmed by it.

YOU PUBLICLY VOUCHED FOR HIS INTEGRITY.

Well, of course, I don't publicly vouch for anybody's integrity. What I do is deal with the representatives of foreign powers and it was our view then, based on our own intelligence, that he was what the Mexicans thought he was-- was an honest, hard-driving field operative, who they brought up into their senior ranks and who turned out to be a crook, allegedly.

AND JUST TODAY, ANOTHER GENERAL WAS ARRESTED.

I think what Mexico is facing is the twin assaults of violence and corruption against their institution of democracy. It's fueled by, we think, as much as six billion dollars in the corrupting influence of drug money, which comes out of the United States. So they've got an incredibly difficult task ahead of them. Hundreds of their police officers are involved , prosecutors are murdered, major assassinations are unsolved and they're in a fight for their lives.

AND HOW HIGH UP DOES THIS CORRUPTION GO?

Well, it's our own view that -- that the capability to assault these institutions of democracy is enormous. I mean, you're talking about a country that's trying to move to a multi-party democracy, that's trying to create a modern integrated economy, a NAFTA economy, that's trying to create institutions of government adequate for the super-modern state they're trying to construct. So I think they and others are vulnerable to drug corruption and violence.

WHILE THEY'RE IN THE MIDST OF THEIR WORST ECONOMIC CRISIS IN SEVENTY YEARS?

Yeah. And thank God they're doing better. They're moving forward. They've become, as you're aware, our third biggest economic trading partner. They're about to become our second biggest economic trading partner. So there's a lot of good happening in Mexico, but it's taking place in almost a revolutionary environment of change, and it's taking place under the impact of international drug crimes.

GIVE US AN IDEA IN SCALE OF HOW IMPORTANT THE MEXICAN DRUG CARTELS ARE IN THE WORLD NARCOTICS TRADE NOW?

Well, I think this is a growth industry around the world. You know, the United States is spending $49 billion a year on illegal drugs; and so -- we don't have all the drug addicts in the world; but we've got too much money that we're spending on drugs. And what we're seeing is that in many cases the principle source of illegal enrichment for Nigerians, Dominicans, Colombians, Mexicans and, indeed, our own domestic criminal organizations, comes from the drug trade.

MY UNDERSTANDING, IS THAT RECENTLY THERE HAVE BEEN ASSESSMENTS THE MEXICAN CARTELS HAVE ECLIPSED THE COLOMBIANS -- THAT THEY'RE NOW THE MOST IMPORTANT DRUG ORGANIZATION THAT WE HAVE TO DEAL WITH.

I'm not sure how we'd make that judgment except I'm sure that international crime is a fundamental threat to the American people and that includes Nigerian, Dominican, Colombian and Mexican criminals as well as our own internal criminal threat.

CAN YOU GIVE US SOME PERSPECTIVE ON THE --DOCUMENTS AND PUBLICITY THAT HAS SURFACED RECENTLY ABOUT THE LINKS BETWEEN MEXICO'S FORMER FIRST FAMILY, THE SALINAS FAMILY, AND INTERNATIONAL NARCOTICS TRAFFICKING?

Well, I think all these things need to be investigated. I think, again, there's a lot of illegal money and its corrupting influence is enormous. We need to investigate all these things. There's no sense in speculating on -- on ongoing cases. I think it's a severe threat to Mexico. And I think that's why President Zedillo has said it's the number one security threat in his country.

IN THE LAST COUPLE OF YEARS, VARIOUS MAJOR U.S. FINANCIAL INSTITUTIONS HAVE TURNED UP IN THESE INVESTIGATIONS. AMERICAN EXPRESS BANK WAS CONVICTED OR THEIR BANK OFFICER WAS SENT TO JAIL ALONG WITH HIS ASSISTANT. IN A RECENT CASE IN HOUSTON, A TEXAS COMMERCE BANK WAS INVOLVED IN TAKING NINE MILLION DOLLARS IN TWENTY DOLLAR BILLS IN SUITCASES.

Yeah, yeah.

AND THE SOUTHERN DISTRICT OF NEW YORK IS INVOLVED IN A MAJOR INVESTIGATION OF ONE OF OUR LARGEST BANKS, CITIBANK.

Hm-hmm.

WHAT DOES THESE EVENTS SAY ABOUT THE INVOLVEMENT OF U.S. FINANCIAL INSTITUTIONS IN ALL OF THIS?

Forty-nine billion dollars a year comes out of American pockets and it has to end up in international criminal pockets. And so, as you do that, you have to move it through financial institutions, whether they're tiny ones, casas des cambios in New York City or Los Angeles or through wire mail fraud or cyber money or whatever. So one of the best things we think, over time, that the Department of Treasury and our agency task force called Financial Enforcement Center is doing, is that we're going to drive it out of the U.S. banking industry. But right now, it's American money and it's got to go into international criminal pockets. And so, money laundering in New York City, Los Angeles, Texas, and in southern Florida remains a major challenge to our own law enforcement.

YOU KNOW, THERE'S A CERTAIN LEVEL OF CYNICISM ABOUT ALL THE PRONOUNCEMENTS, YOURS INCLUDED, ABOUT WHAT TO DO WITH MEXICO. WE SEE THE INVESTIGATIONS -- WE WERE JUST WITH THE SWISS, WHO TELL US THAT THEY BELIEVE THAT RAUL SALINAS'S MONEY IS IN A LARGE PART DRUG MONEY, THAT THE CORRUPTION IN MEXICO FROM THEIR POINT OF VIEW IS BEYOND THEIR IMAGINATION, BECAUSE THEY'RE NOT USED TO IT, THEY'VE NOT BEEN NEIGHBORS OF THE MEXICANS. AND DEA ADMINISTRATOR CONSTANTINE SAID THE OTHER DAY: WE CAN'T TRUST ANY MEXICAN LAW ENFORCEMENT AGENCY.

Hm-hmm.

WHAT DOES THE FUTURE HOLD IN THIS KIND OF SITUATION?

Well, certainly, the future holds 94 million Mexicans living on a largely undefended southern border -- it will soon be our second biggest trading partner. In 25 years, Mexico will be the biggest Spanish speaking nation on the face of the earth and the United States will be the second biggest. So those realities aren't going to change. And what many of us believe we need to do is work in partnership with a system that's trying to create a modern multi-party democracy, a modern economy and a law-abiding nation. And we really have no option to defend the American people except by partnership with our neighbors.

AGREED, BUT YOU SAY PARTNERSHIP. WITH WHOM, THOUGH, AND WHO DO WE TRUST IN THE MEXICAN GOVERNMENT?

Well, we look at the Gallup polls inside Mexico. The Mexican people are outraged about drug abuse. They're enormously fearful of it. Most Mexicans aren't involved with drugs. They have a far lower drug abuse rate than America does. This problem in their country of the massive murders of corruption, in some ways, is being fueled by U.S. money and they want something done about it. So we see an increased sense of confidence in their own president and their own Minister of Defense and their own Attorney General when they took this decisive action. I think we're going to have to work with the people who are running Mexico as long as we think they're serious and honest and co-operative.

THERE ARE THOSE WHO SAY, THOUGH----WE'VE HEARD ALL THIS BEFORE FROM THE U.S. GOVERNMENT. RECENTLY, THERE WAS AN ARTICLE IN A MEXICAN NEWSPAPER WHERE THEY PUBLISHED THE TRANSCRIPT OF A CONVERSATION BETWEEN AN ATTORNEY FOR THE SALINAS FAMILY AND A MEXICAN PROSECUTOR IN WHICH THAT ATTORNEY STATED THAT PRESIDENT ZEDILLO HAD RECEIVED $40 MILLION FROM A MAN WHO IS NOW A FUGITIVE FOR BANK FRAUD AND IS CONSIDERED TO BE ONE OF THE MAIN MONEY LAUNDERERS FOR THE DRUG CARTELS.

Yeah.

SO IS THERE ANYONE REALLY THAT YOU'RE DEALING WITH IN MEXICO THAT YOU HAVE CONFIDENCE IN?

Well, I really have confidence that 265 million Americans have a major drug problem with almost four million addicts doing 70 billion dollars of damage a year and it's killing 16,000 Americans a year. This is a tremendous threat to our own people and I'm persuaded that we have to work in partnership not only with Mexico, but also Thailand, Peru, Bolivia, the other drug source and transit countries, as effectively as we can to protect our own people.

EVEN IF THEY'RE DESIGNATED DRUGS AND YOUR COUNTERPART IN MEXICO TURNS OUT TO BE, IF YOU WILL, ON THE TAKE FROM THE CARTEL?

Is the option to only work with the Swiss? I mean, we have the reality of a southern neighbor with an honest, decent culture and people, who are under assault by the violence and corruption of international drug crime. And in our judgment -- if you want to defend the American people, you do it in a partnership. We can't build a high wall between us and Mexico. They're part of our future. We're going to work this out together, one way or the another.

I'M NOT GOING TO GET YOU, OBVIOUSLY, TO COMMENT ON THE SALINAS' CASES AND THE PENDING INVESTIGATIONS AND -- AND SO ON. BUT SOURCES IN MEXICO -- WE'VE SPENT QUITE A BIT OF TIME THERE -- AND SOURCES IN THE UNITED STATES TELL US THAT THERE ARE DISCUSSIONS GOING ON ABOUT REPLACING THE DRUG ENFORCEMENT ADMINISTRATION AS THE LEAD AGENCY ON THE GROUND IN MEXICO.

Well, I mean, thank God for the DEA. Look, we've got seven thousand men and women of the DEA world-wide. They're in ninety countries of the world. They're the lead federal law enforcement agency to confront this problem. They do magnificent work under tremendously dangerous circumstances. And administrator Constantine is an absolute national asset to stay engaged in foreign crime. So we've got great confidence in the DEA.

THERE ARE NO DISCUSSIONS GOING ON IN THE U.S. GOVERNMENT OR WITH THE MEXICAN GOVERNMENT ABOUT REPLACING THE DEA ON THE GROUND IN MEXICO?

We have enormous confidence in the Drug Enforcement Administration in administrator Constantine. The guy has 33 years of integrity and experience as a New York State patrolman so -- I think he's going to be, and men and women of the DEA are going to be, an important part of defending America.

NO, BUT I MEAN THEY'RE GOING TO STAY ON THE GROUND IN MEXICO? ANY OF THE AGENTS INSIDE ---

I am absolutely confident that as we look toward defending our own air, land and sea borders and working in partnership with foreign governments, the DEA is going to be a tremendous tool as part of that process.

I THINK I ALSO HEAR FROM YOU THAT THE PROBLEM IN MEXICO ISN'T JUST A MEXICAN PROBLEM; IT'S A PROBLEM OF THE CONSUMPTION -- WHAT THEY'RE SAYING -- IS THAT PART OF THE PROBLEM IS CONSUMPTION HERE IN THE UNITED STATES.

Thailand, it took 25 years and, thank God, they've managed to reduce drug addiction and drug production to a minimal problem compared to their neighbors. And it was by hard work and a generation of purposeful effort on the problem, and I think Mexico feels the same way. Drug abuse in Miami isn't as bad as drug abuse in Rio. Drug abuse in Caracas is a tremendous problem. So I just say look, all of us have our families, our children, and our work environment, and are at risk from drugs. We're going to have to understand that, too. America is a drug-producing nation: methane, amphetamines, marijuana. We're also a drug-consuming nation, and we're finding that problem world-wide. Everyone's at risk.

ONE THING I JUST MENTIONED. AT THE BEGINNING, YOU INDICATED THAT OUR OWN INTELLIGENCE HAD IN A SENSE VETTED GENERAL GUTIERREZ.

Oh no, we don't vet people. We've got 350 million Latin Americans we're dealing with. What our judgment was: If the Mexicans selected General Gutierrez Rebollo and he turned out allegedly to be a mole for another criminal gang --

I KNOW, BUT AT THE TIME, YOU WENT PUBLIC, AND SAID HE WAS A MAN OF INTEGRITY -- PATRIOTIC.

At the time, we thought that his selection by the Mexicans was -- was what they thought it was.

YOU WEREN'T DISCOURAGED BY THE DISMISSAL OF ANTONIO LOZANO AND HIS DEPUTIES AND THE PEOPLE WORKING WITH HIM?

We need to understand the reality of corruption and violence caused by international drug crimes. We watched the evidence that seems to implicate the president of Colombia and his former Minister of Defense, Botaro, who is now in prison for drug smuggling. We are fully aware that these incredible amounts of money are corrosive in their impact on democracy and it's something we're going to have to work at over time, in partnership with these foreign nations.

SO BASED ON WHAT YOU KNOW, IT DOESN'T SURPRISE YOU THAT, FOR INSTANCE, RAUL SALINAS WOULD HAVE BEEN INVOLVED IN DRUG MONEY OR, THAT IN FACT, THE GOVERNMENT OF MEXICO TODAY IS INVOLVED AT HIGH LEVELS?

What I think is that the Mexican people are appalled by the consequences of international drug crimes in their country. They fear drug abuse in their families. They want it out. They see a lot of it as U.S. money causing it and they want to work in co-operation with the Americans.

SOME HIGH OFFICIALS WHO'VE RECENTLY LEFT THE DEA WITH WHOM WE HAVE BEEN ON CAMERA SAY THAT THERE ARE TWO BASIC PROBLEMS IN THE U.S. GOVERNMENT'S PRESENTATION OF THE PROBLEM. ONE IS THE FAITH THAT WE HAVE GIVEN THE MEXICAN ARMY, THEY BELIEVE THAT IT WILL BECOME A DISASTER IN THE END.

Well, you know, do they have another idea for another army, for another police force? The reality is that the 94 million Mexicans to our south are struggling against international crime, and are struggling against drug abuse in their own society, and we have watched as that army has destroyed more drugs than any other nation on the face of the earth. Of course, it's attacked by corruption and violence also; but in the context of Mexico today, they're fighting for their freedom and their army is part of that struggle.

AS A VETERAN, YOU HAVE CONFIDENCE IN THEIR ARMY?

Well, I think Mexico has a tremendous challenge to its society. They're going to use the tools at hand, they're going to try and make sure their future is--

BUT I'M ASKING YOU AS A MILITARY OFFICER, YOU KNOW...

I'm answering. As a military officer, it is my own viewpoint that Mexico is fighting for its survival and they're going to use the tools at hand and one of them has been the Mexican Armed Forces which, again, has 20,000 troops in the field right now trying to eradicate opium, trying to eradicate marijuana. They're fighting for their lives.

AND FINALLY, WHAT THESE FORMER AGENTS AND OFFICIALS SAY IS THAT WHAT THE UNITED STATES HAS TO REALIZE IS THAT CORRUPTION IS SO ENDEMIC IN MEXICO, THAT THERE IS NO WAY THAT THEY ARE GOING TO BE ABLE TO GET A HANDLE ON THIS UNLESS WE GO DOWN THERE AND HELP THEM.

Well, of course, we are going to help them. We're going to work in partnership and that's really the whole point of the discussion, isn't it? We're going to try and work with their Armed Forces, with their police, with their prosecutors. We're going to share intelligence. We're going to extradite people who flee justice in the other country. We're going to co-operate and trying to interdict drug flights out of Colombia. I couldn't agree more. We're going to have to work together over the next decade to protect both the people of the United States and Mexico.

AND YOU DON'T SENSE A BACKLASH NOW IN MEXICO AGAINST THE UNITED STATES IN THE AFTERMATH OF THE CERTIFICATION BATTLE AND THE AFTERMATH OF --

Oh, yeah. I think there's a tremendous sensitivity on the part of Mexico. It's a proud nation, a proud people. 1847 is just yesterday. They're a nation that suffered at the hands of foreigners, the French, the Americans and others and they're determined to protect their own sovereignty. And I think it's appropriate for us to take that into account just as we have enormous respect for the sovereignty of our other allies, of Canada, of France, of Great Britain.