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### Viewing cable 05OTTAWA3636, INCSR PART I - CANADA

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
05OTTAWA3636 | 2005-12-09 21:34 | 2011-04-28 00:00 | UNCLASSIFIED | Embassy Ottawa

`

    This record is a partial extract of the original cable. The full text of the original cable is not available.

` `

    UNCLAS SECTION 01 OF 10 OTTAWA 003636

    SIPDIS

    DEPT FOR INL, WHA, CA
    JUSTICE FOR OIA, AFMLS, AND NDDS
    TREASURY FOR FINCEN
    DEA FOR OILS AND OFFICE OF DIVERSION CONTROL

    E.O. 12958: N/A
    TAGS: SNAR CA
    SUBJECT: INCSR PART I - CANADA

    REF: SECSTATE 209560

    ¶I.  Summary

    The Government of Canada (GoC) recognizes that substance
    abuse is a multi-faceted, well-entrenched health and social
    issue that affects a broad spectrum of Canadians.  While
    marijuana continues to be a significant problem,
    methamphetamine has re-emerged from previous popularity in
    the 1970s and its consumption level is increasing.  In 2005,
    the Government of Canada managed and responded to this
    situation by developing a major new policy initiative, by
    promulgating legislation and by expanding law enforcement
    cooperation and programs.  Health Canada developed and
    coordinated the "National Framework for Action to Reduce the
    Harms Associated with Alcohol and Other Drugs and Substances
    in Canada," the first edition of which was released in
    November 2005.  Canada's Renewed Drug Strategy, announced in
    May 2003, offers a comprehensive federal policy response to
    the harmful use of substances and includes programs
    addressing demand reduction, harm reduction, HIV/AIDS, Fetal
    Alcohol Spectrum Disorder, the relationship of homelessness
    and substance abuse, law enforcement, research, drug analysis
    and drug control legislation.

    Federal legislative developments saw the side-lining of
    legislation to decriminalize possession of small amounts of
    (while increasing the penalties on producers); the
    classification of six precursors to require stringent
    licensing and stiffer penalties for illicit use and a
    reclassification of methamphetamine into the highest category
    for sentencing considerations.

    The growth of organized crime groups is of continuing concern
    to Canadian law enforcement.  For example, in 2005, the RCMP
    identified 108 organized crime groups operating in British
    Columbia, doubling the 2003 figure.  The Criminal
    Intelligence Service Canada notes that organized crime either
    directly controls or indirectly influences all aspects of the
    illicit drug industry from cultivation to manufacturing and
    importation to distribution.  The U.S. Bureau of Alcohol,
    Tobacco, Firearms and Explosives attributes the recent
    increase in gun violence in Canada's larger urban areas
    (Toronto, Vancouver and Montreal) to organized crime gangs
    which are also involved in drug trafficking.  Recent arrests
    of 91 individuals in Toronto under Operations Bulldog and
    Flicker indicate that organized crime groups involved in
    narcotics trafficking used guns in furtherance of their
    activities to protect their illicit products and territories.
      Statistics Canada reports that, in 2004, 71 of the 172
    gun-related homicides were gang-related.

    Canada is party to three United Nations drug control
    agreements:  the 1988 Convention against Illicit Traffic in
    Narcotic Drugs and Psychotropic Substances, the 1961 Single
    Convention on Narcotic Drugs, as amended by the 1972 Protocol
    and the 1971 Convention on Psychotropic Substances.

    II.  Status of Country

    Canada is a significant narcotics-consuming country and
    remains a significant producer and transit country for
    precursor chemicals and over-the-counter pharmaceuticals used
    to produce illicit synthetic drugs.  Use of marijuana,
    MDMA/Ecstasy and methamphetamine continues to be of concern
    to the Government of Canada and remains the focus of many of
    the Government's 2005 efforts.  As of September 30, the total
    number (not weight of the seizures) of 2005 seizures at
    Canada's borders is running at a rate consistent with 2004
    end-of-year figures.  Calendar year 2004 saw 8,711 seizures
    (including cocaine, heroin, marijuana, opium, MDMA/Ecstasy
    and steroids)  while, as of September 30, there have been
    6,333.

    Canada is a source country to the United States for marijuana
    and MDMA/Ecstasy.  The Royal Canadian Mounted Police (RCMP)
    note, in their September 22 Strategic Intelligence Assessment
    "Drug Situation in Canada - 2004," that Canada was a source
    to Japan for MDMA, methamphetamine and marijuana.  The report
    states that Japanese authorities blame Japanese and Canadian
    criminal syndicates for creating a supply and demand
    relationship.

    The November 2004 Canadian Addiction Survey, the first major
    survey on substance abuse among Canadians since 1994,
    reported that the use of alcohol, cannabis and other drugs
    has increased in Canada over the past decade, with alcohol
    and cannabis continuing to be the most commonly used drugs.
    While cannabis use doubled from 7 percent to 14 percent, with
    youth between 15 and 24 comprising the most frequent users,
    rates of use of illegal drugs other than cannabis remain
    relatively low, with 2004 use levels at 3% or less.

    Approximately 80 percent of federal offenders -- those
    serving sentences of two years or more in federal
    penitentiaries -- have a history of alcohol or other drug
    problems, and more than half were under the influence of
    alcohol or other drugs when they committed the offense that
    led to their incarceration.

    Significant GoC action in 2005 includes increased regulation
    of and penalties for violation for methamphetamine.
    Reclassification from Schedule III to Schedule I requires not
    only tighter control but also increased maximum penalties.
    The GoC has passed legislation requiring increased standards
    for six pre-cursor chemicals.  These requirements will go
    into effect on January 31, 2006.  Recently passed legislation
    strengthens the Government's ability to seize assets from
    those convicted of financially benefiting from their illegal
    activities as well as enhancing cross-border intelligence
    sharing.

    Cooperative cross-border law enforcement efforts include
    major seizures of marijuana and MDMA/Ecstasy (Operations
    Sweet Tooth and Medicine Man).  Efforts continue to
    institutionalize the Integrated Border Enforcement Teams
    (IBET) and to expand cross-border law enforcement authority.

    The 2005 National Framework for Action to Reduce the Harms
    Associated with the Use of Alcohol and Other Drugs and
    Substances in Canada, which evolved from ten cross-country
    roundtables dealing with substance abuse in Canada, provides
    the policy response to this growing concern.  The Framework
    is meant to generate dialogue across jurisdictions, sectors
    and functions by articulating a vision, setting strategic
    priorities, defining and clarifying roles, providing a
    coordinating mechanism and providing funding.

    III.  Country Action Against Drugs in 2005

    Policy Initiatives:

    Health Canada has responsibility for overall coordination of
    the nation's drug strategy, although other departments, as
    well as municipal and provincial/territorial governments are
    involved in addressing the domestic use of illicit drugs --
    particularly in the areas of treatment delivery, direct
    services and drug education and drug prevention programs.

    In 1987, the GoC launched its federal Drug Strategy that
    focused on prevention, treatment, enforcement and harm
    reduction.  The GoC renewed the Strategy in May 2003 and
    allocated approximately $355 million annually (Note:  All
    monetary figures in this report are in U.S. dollars) to
    support initiatives on leadership development, research and
    monitoring, partnerships and intervention and legislation.
    The GoC's comprehensive and central piece of drug control
    legislation is the 1996 Controlled Drugs and Substance Act.
    It came into force in 1997 and replaced the previous Narcotic
    Control Act.

    In August 2005, the GoC moved methamphetamine from Schedule
    III to Schedule I of the Controlled Drugs and Substances Act.
     Placement in this category increases maximum penalties for
    possession, trafficking, importation, exportation and
    production of methamphetamine and puts it in the same
    category as cocaine.  The maximum penalty for production and
    distribution of methamphetamine was increased from ten years
    to life in prison.

    In November, the Government implemented the Precursor Control
    Amendments, the first major amendments to augment the 2003
    Precursor Control Regulations.  These amendments strengthen
    verification of import and export licensing procedures,
    require that companies requesting those licenses provide
    additional detail in their initial requests, provide
    guidelines on the suspension and revocation of licenses for
    abusers and add controls of six chemicals that can be used to
    produce GHB and/or methamphetamine.  They are:  gamma
    butyrolactone, 1,4 butanediol, red phosphorus, white
    phosphorus, hypophosphorous acid and hydriodic acid.  Health
    Canada is currently hiring eight new regional inspectors
    whose focus will be to monitor these new regulations.  The
    new staff members will be in place in early 2006 and
    supplements current number of XXX (Health Canada has yet to
    get back to me).

    In November, the Parliament passed a Proceeds of Crime Bill,
    amending previous legislation that targets the illicit
    proceeds of organized crime, including serious drug offenses,
    and authorizes the courts to order the forfeiture of property
    of those convicted of either membership in a criminal
    organization or certain drug-related offenses.  While the
    Criminal Code has permitted the seizure, restraint and
    forfeiture of proceeds of crime since 1989, this new
    legislation makes it easier for the authorities to seize
    property from criminals and drug traffickers by placing the
    burden on them to prove that their proceeds did not derive
    from illegal activity.  This recent change also enhances
    cross-border intelligence sharing efforts that had previously
    been more limited by Canadian law.

    Due to Canada's confederation system, drug awareness
    education programs, while supported by Health Canada, are
    delegated to and implemented at the provincial level.
    Federal regulations provide guidelines to provinces that, in
    some cases, implement tighter regulations than those required
    by the federal government.

    In November, Manitoba and Saskatchewan amended their drug
    schedules regulations to require that single-source cold
    remedies containing only pseudoephedrine be sold from behind
    pharmacy counters.  Manitoba passed a regulation classifying
    pseudoephedrine as a drug under the Pharmaceutical Act and
    has mandated the change effective January 15, 2006.

    In November, Manitoba Meth Task Force, led by Manitoba Health
    and Manitoba Justice, launched a $226,000 public awareness
    campaign to counter crystal methamphetamine use, as part of
    the province's approach to restrict supply and reduce demand.

    NDMAC, a non-profit industry association whose members
    manufacture health care products, including over-the-counter
    medicines, implemented MethWatch in November 2004, with a
    launch in early 2005.   This voluntary program focuses on
    retailers -- rather than manufacturers who are the target of
    the 2003 Precursor Control Regulations -- and trains
    participants to monitor and identify irregular sales of
    various crystal methamphetamine precursors.  Developed in
    conjunction with RCMP and Health Canada as the 2003 Precursor
    Legislation was passed, MethWatch is modeled after a
    successful public-private partnership program in Kansas.
    During 2005, about 75% of the Canadian pharmacies, including
    the major drug chains, have begun to participate in the
    program that uses RCMP's Chem-Watch Hotline to compile
    intelligence and track trends.  Implementation at the
    community level is ongoing, particularly in British Columbia,
    and the program focuses on preventing the diversion of
    chemicals from pharmacies that could be used in the illicit
    production of crystal methamphetamine in home-based
    environments.

    In 2005, the Department of Justice, whose prosecutors manage
    some 80% of the federal drug prosecutions across Canada under
    the Controlled Drugs and Substances Act, designated one
    prosecutor in nine of the ten provinces (with the exception
    of Prince Edward Island) as the point of contact for
    methamphetamine prosecutions.  These individuals are charged
    with developing an expertise in managing prosecutions with
    this growing problem.

    In the absence of minimum sentences for drug offenses but in
    an effort to promote consistent sentencing standards, the
    Department of Justice has developed a prosecutorial manual to
    encourage judges to assign the maximum penalties possible
    when sentencing people convicted of managing grow-ops.
    Presented as a template, this support document reminds
    prosecutors and judges of the extenuating and aggravating
    circumstances as well as case law when arguing their cases
    and rendering their decisions.  (Note:  Canada had minimum
    sentences for drug offenses for approximately seven years
    until a 1987 Supreme Court ruling eliminated them.)
    Department of Justice officials indicate that there is
    increasing interest in instituting stricter penalties for
    those convicted of grow-op marijuana production as well as
    talk about the establishment of a Task Force to look at
    sentencing issues and standards.

    In anticipation of the future passage of pending impaired
    driving legislation that includes drugs and alcohol, the RCMP
    has instituted a three-year $10.2 M training program to train
    trainers on drug recognition evaluation (D.R.E.) and
    Standardized Field Sobriety Testing (S.F.S.T.).  By
    2007-2008, Canada plans to have more than 3,500 officers
    trained to administer the S.F.S.T., close to 400 officers
    trained as Drug Recognition Experts and 175 D.R.E.
    instructors.  Current statutes do not permit law enforcement
    officials to require roadside physical sobriety tests, D.R.E.
    at police stations or to acquire samples of body fluids. The
    new legislation, expected to be reintroduced in the
    post-election legislative push, will mandate compliance and
    provide criminal penalties for refusal.  The RCMP in British
    Columbia, inspired by access to California's similar program,
    currently uses this program on a voluntary basis and has
    received convictions.  Manitoba currently has provisions in
    its highway legislation that permits its law enforcement
    officers to require tests.

    Accomplishments:

    The United Nations Office on Drugs and Crime noted Canada's
    compliance with the 1988 Convention with regard to chemical
    importation, including, but not exclusively, ephedrine and
    pseudoephedrine.

    In response to the growing international and chemical
    diversion problem, the RCMP instituted the National Chemical
    Precursor Diversion Program in 2001 and designated five
    national coordinators in Montreal, Toronto, Edmonton,
    Vancouver and Ottawa.  These coordinators liaise with the
    chemical industry, assist drug investigators conducting
    clandestine laboratory investigations and provide training to
    the chemical industry.  A 2005 funding request that would
    have provided additional resources for the program has been
    tabled until after the January 2006 Canadian elections.

    Law Enforcement Efforts:

    During the 2004-2005 fiscal year, the RCMP conducted a total
    of 430 marijuana grow operation (MGO) investigations and 87
    investigations of clandestine laboratories (clan labs).
    During the year, a total of 570 MGOs and 36 clan labs were
    disrupted, contributing to the seizure of nearly 250,000
    plants from MGOs and 64,000 dosage units of illicit or
    harmful substances from the clan labs. MDMA/Ecstasy
    represented over one-third of the substances seized from the
    clan labs. During the same year, a total of 283 arrests
    linked to organized crime were made in relation to MGOs,
    compared to five arrests in relation to the clan labs.

    Operation Sweet Tooth, a 24-month investigation that targeted
    international MDMA/Ecstasy and marijuana trafficking rings
    whose drug smuggling and money laundering operations ranged
    from the Far East to Canada and the U.S., resulted in the
    arrest of 291 individuals and the execution of 98 search
    warrants both in the U.S. and Canada.  The seizures totaled
    931,300 MDMA tablets; 1,777 pounds of marijuana; and $7.75
    million in U.S. assets.  DEA, with assistance from the RCMP
    and the Canada Border Services Agency, dismantled two major
    drug transportation rings with ties to 61 separate domestic
    investigations.  The Operation Sweet Tooth organizations were
    responsible for distributing 1.5 million tablets of MDMA per
    month, which is equivalent to approximately 22.7% of the
    estimated 8 metric tons of MDMA imported into the U.S. in
    ¶2003.  The financial aspects of the investigation revealed
    that the drug trafficking syndicates laundered millions of
    dollars in drug proceeds through the use of bulk courier
    transport, money remitters and the Vietnamese underground
    banking system.

    In July, Canadian officials arrested three Canadians under a
    warrant issued in Seattle and in accordance with the MLAT
    agreement.  They are charged with conspiracy to distribute
    marijuana, conspiracy to distribute marijuana seeds and
    conspiracy to engage in money laundering.  The U.S. is
    seeking their extradition to stand trial in Washington State.

    In July, 1,778 kg of MDP-2-P was intercepted in the Port of
    Vancouver concealed in a container arriving from China.  This
    amount of precursors was sufficient to manufacture 1,400 kg
    of pure MDMA/Ecstasy which represents a potential of 14
    million tablets.

    In July, French police -- aided by DEA and an ongoing RCMP
    investigation -- arrested and charged two Canadians after
    stopping their boat, containing 1.5 tons of cocaine, off the
    coast of Martinique.  Police say the seizure was worth $30
    million and that there were indications of organized crime
    involvement.

    In July, as a result of a cross-border multi-month
    surveillance and intelligence-gathering operation, U.S.
    police, working with inspectors from the Canada Border
    Services Agency, arrested three Canadians, who had
    constructed a 110-meter (120-yard) underground tunnel from
    B.C. to Washington State to transport marijuana into the U.S.
     They were charged with conspiracy to distribute marijuana
    and conspiracy to import marijuana.  The tunnel was
    subsequently destroyed.
    In August, police in Alberta made the largest-ever Ecstasy
    bust in the province's history and seized some $3.7 million
    worth of street drugs including 213,000 tablets of
    MDMA/Ecstasy laced with methamphetamine.  This follows a
    seven-month RCMP drug and organized crime investigation that
    saw 35 people arrested in February in Edmonton for
    trafficking in a controlled substance, possession of a
    controlled substance, possession of the proceeds of crime and
    firearms offenses.

    In September in Richmond, B.C., the RCMP intercepted a
    shipment of 600 kilograms of sodium borohydride on its way to
    a home owned by a real-estate agent. This is enough to make
    15 million pills, estimated at $261.8 million.  During the
    seizure, they found 200 kilograms of liquid Ecstasy with a
    street value of $13 million.

    Over several days in September in rural New Brunswick, police
    uncovered a marijuana grow-operation with more than 20,000
    plants, one of the largest outdoor grow-ops in Canadian
    history.  Authorities arrested five people with Asian
    criminal organization connections, providing evidence of
    criminal organizations' west to eastward movement through
    Canada.

    An 18 month trans-border investigation by the Drug
    Enforcement Administration (D.E.A.) and the RCMP, designated
    Medicine Man and concluded in September, led to the arrests
    of 45 individuals, including Canadian nationals, and the
    seizure of over 600 pounds of Canadian-grown marijuana,
    80,000 MDMA/Ecstasy tablets, over $2.3 million in assets (of
    which $1.3 million was U.S. currency), and seven guns.

    Working collaboratively with the D.E.A. and Spanish
    authorities, the RCMP assisted in the seizure of a yacht
    containing one ton of cocaine off the coast of Spain. Four of
    Canada's largest drug kingpins were arrested during the
    operation that was related to earlier seizures during the
    summer of 1.5 tons of cocaine in various yachts in the middle
    of the Atlantic Ocean. The four men are part of a Canadian
    organized crime ring operating in Europe that ships Colombian
    cocaine through the Caribbean and on to Spain.

    Corruption:

    Canada holds its officials and law enforcement personnel to a
    high standard of conduct and has strong anticorruption
    controls in place. Pursuant to the January 2004 initiative to
    improve transparency in government that included the
    releasing on a quarterly basis the public expenditures of
    senior government officials, the Government publishes expense
    information on individual ministerial websites and at the
    following centralized website:
    http://www.tbs-sct.gc.ca/pd-dp/gr-rg/index e.asp.  In spite
    of this legislation, concern exists about lack of oversight
    and the lack of transparency in Canadian politics, as well as
    lack of enforcement of Whistleblower legislation.
    Transparency International's latest report, released in
    October, indicated that Canada has slipped for three
    consecutive years (landing in fourteenth place) in their
    annual index of ethical governments.

    Civil servants found to be engaged in malfeasance of any kind
    are removed from office and are subject to prosecution.
    Investigations into accusations of wrongdoing and corruption
    by civil servants are thorough and credible. No senior
    government officials engage in, encourage, or facilitate the
    illicit production or distribution of narcotic or
    psychotropic drugs or other controlled substances, or the
    laundering of proceeds from illegal drug transactions.  As a
    matter of government policy, Canada neither encourages nor
    facilitates illicit production or distribution of narcotic or
    psychotropic drugs or other controlled substances, or the
    laundering of proceeds from illegal drug transactions.

    Canada does not receive any INL funding for counter-narcotics
    efforts or programs.

    In September, the MESICIC (the Follow-Up Mechanism for
    Implementation of the Inter-American Convention Against
    Corruption) reported that Canada was compliant with select
    provisions of the Inter-American Convention Against
    Corruption.

    Agreements and Treaties:

    Canada is party to the 1988 UN Drug Convention, the 1971 UN
    Convention on Psychotropic Substances, and the 1961 UN Single
    Convention on Narcotic Drugs as amended by the 1972 Protocol.
    Canada is also a party to the Inter-American Convention on
    Mutual Legal Assistance in Criminal Matters and the
    Inter-American Convention Against the Illicit Manufacturing
    of and Trafficking in Firearms, Ammunition, Explosives and
    Other Related Materials. Canada has also signed the
    Inter-American Convention Against Corruption. Canada is a
    party to the UN Convention against Transitional Organized
    Crime and its protocols on migrant smuggling and trafficking
    in persons. Canada has ratified all 12 United Nations
    Security Council Resolutions pertaining to terrorist
    financing. Canada actively cooperates with international
    partners; for example, the GOC has signed 30 bilateral mutual
    legal assistance treaties and 87 extradition treaties with
    other nations. Judicial assistance and extradition matters
    between the U.S. and Canada are made through an MLAT and an
    extradition treaty and protocols. The U.S. and Canada have
    shared forfeited assets through a bilateral asset sharing
    agreement.
    Canada actively participates in numerous international
    activities aimed at reducing illicit drug use. Canada held
    the Chairmanship of the Organization of American States,
    Inter-American Drug Abuse Control Commission (CICAD) from
    November 2003 until November 2004, during which time CICAD
    expanded its work promoting active cross-border cooperation
    and combating transnational organized crime.  Canada
    currently holds the Chairmanship for two CICAD working
    groups:  1)  the Intergovernmental Working Group tasked with
    reviewing the Multilateral Evaluation Mechanism (MEM) (2005 -
    2006) and 2)  the Expert Group on Demand Reduction (2004 -
    2006).  The GOC provides $870,000 annually to CICAD for
    support of the Multilateral Evaluation Mechanism (MEM) as
    well as partnership projects between health and law
    enforcement agencies to confront drug-related problems in a
    more comprehensive manner. The GOC also participates actively
    in the Dublin Group of international program donors and the
    Commission on Narcotic Drugs (CND) of the UN Office on Drugs
    and Crime (UNODC) to which it provides $1.74 million
    annually.  In April 2005, Canada was elected as a member of
    the UN Commission on Narcotic Drugs.
    Cultivation/Production:
    Cannabis cultivation, because of its profitability and
    relatively low risk, is a thriving industry in Canada.  In
    2004, the RCMP estimated that annual Canadian marijuana
    production ranges between 960 and 2400 metric tons.  While
    viewed as a nationwide problem, marijuana is heavily
    cultivated in British Columbia, although significant
    production levels are now reported in Ontario and Quebec.  A
    September 2005 seizure of 20,000 marijuana plants in New
    Brunswick indicates that grow operations are moving into
    non-traditional areas.  Though outdoor cultivation continues,
    use of indoor grow operations is increasing because it allows
    production to continue year-round; they are also becoming
    larger and more sophisticated.  The RCMP reports the
    involvement of ethnic Chinese and Vietnamese organized crime
    organizations in technologically-advanced organic grow
    methods and that hydroponic hothouse operations in Canada
    produce marijuana with elevated THC levels.
    The demand for and production of illegal synthetic drugs also
    appears to be on the rise with the manufacture of
    methamphetamine and MDMA/Ecstasy exhibiting a dramatic rise
    over the past two years.  The clandestine laboratories where
    these drugs are manufactured, traditionally located in rural
    areas but expanding into urban, residential neighborhoods,
    are becoming increasingly larger and more sophisticated. Over
    the past five years, methamphetamine labs have represented
    approximately 60 percent of all clandestine labs seized in
    Canada.  Clandestine laboratories, particularly those
    producing methamphetamine, continue to grow rapidly and are
    being reported in British Columbia, Alberta, Saskatchewan,
    Manitoba, Ontario and Quebec.
    Reports of both voluntary and involuntary use of
    Gamma-hydroxybutyrate (GHB) are increasing, as is the illicit
    market accompanied with it.

    Drug Flow/Transit:

    Marijuana is smuggled from Canada (primarily B.C., Ontario
    and Quebec) into the U.S. by land, air and water transport.
    Organized crime groups occasionally transship marijuana
    produced in B.C. to the U.S. via Ontario. In spite of the
    domestic supply of marijuana, importation conspiracies
    continue.  Most of the seizures were made at airports, where
    the drugs were concealed on commercial flights arriving from
    Jamaica and Mexico.  While, in general, organized crime
    networks, including Hells Angels, Italian and Vietnamese
    groups, operate and co-exist, acts of violence associated to
    the marijuana trade have increased with the expansion of
    criminal activity.  For example, in Richmond, B.C., over a
    three and a half month period, members of organized crime
    groups conducted ten home invasions, believing that the
    addresses housed marijuana grow operations.  However, only
    six were actual marijuana growth operations (MGOs).  The
    cross-border movement of marijuana as well as MDMA/Ecstasy to
    the U.S. has resulted in an abundance of U.S. currency in
    Canada.  Traffickers use casinos, monetary instrument
    purchases or electronic funds transfers to launder some of
    their proceeds. Canada Border Services Agency noted that, as
    of September 30, 360.4 kilograms of marijuana were seized at
    the border.

    Significant seizures of MDMA/Ecstasy and methamphetamine
    seized from domestic clandestine laboratories indicate the
    spread of larger and more sophisticated organized crime
    operations.  Prior to 2004, MDMA arrived mainly in tablet or
    powder form from Europe.  In 2004, importation of MDMA
    decreased as traffickers began to produce the drug on a large
    scale in Canada.  Clandestine lab seizures throughout the
    country during 2004 show evidence of an Asian organized crime
    network that, among other activities, imports precursor
    chemicals directly from source countries such as China.
    Despite the surge in domestic manufacturing, shipments of
    MDMA powder and tablets continue to be intercepted at
    Canadian ports of entry, notably Montreal, Toronto and
    Vancouver. Canada Border Services Agency noted that, as of
    September 30, 54,194 doses of MDMA/Ecstasy were seized at the
    border.

    Another significant shift in illicit synthetic drug activity
    over the last year has been the continuing rise in
    methamphetamine trafficking and availability.  The bulk of
    methamphetamine available in Canada is derived from domestic
    clandestine laboratories spread Canada-wide and expanding
    eastward.  Over the last several years, Alberta has emerged
    as a methamphetamine hot spot and has experienced a surge in
    clandestine lab activity, coupled with associated rises in
    other crimes such as theft, assault, and petty larceny.
    Evidence of increased involvement by outlaw motorcycle gangs
    and independent and Asian organized crime networks exists in
    methamphetamine production, trafficking and distribution in
    Western Canada and Quebec.  Approximately 95 percent of the
    methamphetamine sold on the main-stream illicit market
    originates from multi-kilogram operations.  By contrast, most
    of the methamphetamine labs seized in Ontario over the past
    two years were small labs operated by individuals in rural
    areas in the southern part of the province.  In Quebec,
    methamphetamine traffickers manufacture and market most of
    the product in tablet form, a trend consistent with the
    growing demand by users in the rave/club scene.

    The Caribbean islands of St. Lucia, St. Martin, Trinidad,
    Haiti, Jamaica and Antigua are the most common transit points
    for cocaine en route to Canada.  The U.S. is another major
    transit point for cocaine shipment destined for Canada.  The
    amount of cocaine seized at the land border entering British
    Columbia almost doubled in 2004, although there were fewer
    actual seizures of increased quantity.  Traffickers of large
    cocaine shipments intercepted in 2004 used, for the most
    part, small, privately-owned sailboats to smuggle the drugs
    into Canada, where they unload shipments in isolated areas
    along the Canadian coast.  Traffickers transport the drugs,
    usually overland, to urban centers.  Outlaw motorcycle
    groups, Italian and Caribbean crime groups in addition to
    Canadian-based independent organized groups are the major
    smugglers of large cocaine shipments into Canada, although
    Colombian brokers serve as intermediaries between Canadian
    organizations and Colombian producers.  Canada Border
    Services Agency noted that, as of September 30, 1,165.7
    kilograms of cocaine were seized at the border.

    Opium and heroin seizures in Canada have risen steadily.
    Often, supplies of these drugs arrive concealed in luggage,
    picture frames and courier parcels at Canadian marine and air
    ports of entry.  The opium and heroin, originating in
    Afghanistan, Pakistan, Iran and India, is usually routed
    through a European country or the U.S., often by Southeast
    Asian and Southwest Asian traffickers.  Canada Border
    Services Agency noted that, as of September 30, 159.4
    kilograms of opium and heroin were seized at the border.

    As of September 30, the total number (not weight of the
    seizures) of 2005 seizures at Canada's borders is running at
    a rate consistent with 2004 end-of-year figures.  Calendar
    year 2004 seizures (including cocaine, heroin, marijuana,
    opium, MDMA/Ecstasy and steroids) were 8,711 while, as of
    September 30, authorities have made 6,333 seizures.

    Domestic Programs:

    The Government of Canada, under the Drug Strategy and through
    Health Canada, provides funds for demand reduction,
    education, treatment and rehabilitation efforts, the delivery
    of which is primarily the responsibility of the provincial
    and territorial governments.  The National Framework for
    Action to Reduce the Harms Associated with the Use of Alcohol
    and Other Drugs and Substances in Canada, developed at a
    national forum in Montreal in June and published in November,
    is the most recent mechanism to meet the societal challenges
    posed by substance abuse.  Under the Framework and through
    the Canada Drug Strategy, the Government will bring together
    all concerned parties to identify priority issues for joint
    action and program implementation.

    The Government contributes $12.2 million annually through the
    Alcohol and Drug Treatment and Rehabilitation Program (ADTR)
    for provincial and territorial drug treatment and
    rehabilitation services for women, young Canadians and other
    high-risk groups.  An additional $60.8 million for the
    National Native Alcohol and Drug Abuse Program and the
    national youth Solvent Abuse Program plus $8.7 million
    annually for community projects focusing on substance abuse
    through the Drug Strategy Community Initiatives Fund (DSCIF),
    established in April 2004.  The DSCIF was created with a
    budget of approximately $8.5 million to facilitate the
    development of national and community-based solutions to
    substance abuse problems in two main areas:  public awareness
    promotion and prevention and harm reduction. Funding is
    provided for initiatives at the national, provincial,
    territorial, regional and local levels.  Approximately 150
    projects have been funded.

    The Correctional Service of Canada (CSC) estimates that
    nearly 80% of federal offenders have a history of alcohol
    and/or other drug abuse and, 21% of offenders have at least
    one drug-related conviction.  The CSC manages substance abuse
    programs for its audience, including the male prison
    populations as well as special programs for Aboriginal and
    women offenders.  The Aboriginal Offender Substance Abuse
    Program (AOSAP) is currently being implemented as a pilot
    project, and the Women Offender Substance Abuse Program
    (WOSAP) is in the implementation phase.  Methadone
    Maintenance Treatment Programs are available for offenders
    who meet the program criteria, and Intensive Support Units
    exist for offenders who are committed to living a drug-free
    lifestyle while incarcerated.  The CSC has pioneered the use
    of a para-professional model for treatment delivery and
    correctional intervention that employs more than 200 CSC
    trained and certified staff to deliver these programs in
    institutions and in the community.  More than 5,000 offenders
    are involved in substance abuse interventions each year, with
    some 3,000 per year participating in the accredited substance
    abuse programs.

    The GoC, under the Drug Treatment Court (DTC) Funding Program
    of Canada's Drug Strategy, has expanded its Drug Treatment
    Court program from the original two -- in Toronto and in
    Vancouver -- to include courts in Ottawa, Regina, Winnipeg
    and Edmonton.  Inspired by the U.S. model but adapted to meet
    Canadian needs, the Drug Treatment Courts offer voluntary
    participants a structured, court-guided and monitored
    environment through which to overcome their addiction and
    reintegrate into society and the economy.  The programs focus
    on harm reduction and law enforcement provide an alternative
    to court-imposed jail time for offenders who often have
    extensive criminal records but, according to community-based
    standards, have not been incarcerated.  The Government plans
    to establish standardized performance measures and outcomes
    and develop a centralized system to gather and analyze
    outcome-based data within and across drug treatment courts.

    The Toronto Drug Treatment Court, opened in 1999 as the first
    such center outside the United States, provides technical
    assistance and funding to five Caribbean countries and
    Brazil, the result of which has been the establishment of
    their own drug treatment courts.

    In collaboration with its federal partners, Health Canada
    released two key products in early 2005: an information
    booklet to encourage informed dialogue between parents and
    youth about marijuana and an interactive website,
    (www.drugwise.gc.ca), aimed at discouraging harmful substance
    use among youth. While the initial focus of the website is on
    marijuana, alcohol, methamphetamine and drug-impaired
    driving, it will evolve to include information on other
    harmful substances.  The RCMP, through its Drug Awareness
    Service, continues its outreach programs to schools and
    communities to deliver information to youth on the
    consequences associated with drug use.
    As part of the National Chemical Diversion Program,
    established in 2001, the RCMP hosted a Chemical Diversion
    Awareness Conference in September in Ontario.
    Part IV -- U.S. Policy Initiatives and Programs:

    Bi-lateral Cooperation:

    Canada and the United States enjoy a close and dynamic law
    enforcement relationship. The two countries cooperate closely
    at the federal, state/provincial, and local levels, and this
    collaboration also extends into the multilateral arena. The
    annual U.S./Canada Cross-Border Crime Forum engages
    policy-makers and senior operational directors in a joint
    effort to guide the relationship strategically, to develop a
    common agenda, and to enhance operational coordination. The
    Forum,s technical working groups continue to identify
    priorities and areas for increased cooperation, such as
    intelligence sharing. For instance, at the October 2004
    Forum, the U.S. Department of Justice and the Department of
    Public Safety and Emergency Preparedness Canada (PSEPC)
    released a joint interagency threat assessment on the
    cross-border illegal drug trade. Project North Star is an
    ongoing mechanism for law enforcement operational
    coordination at the state and local level. The successful
    joint Integrated Border Enforcement Teams (IBETs) have become
    a primary tool in ensuring that criminals cannot exploit the
    international border to evade justice.  Currently, there are
    15 IBET regions supported by 25 IBET teams, in which U.S. and
    Canadian law enforcement routinely work in tandem on border
    security matters.

    The recently concluded and implemented Shiprider concept may
    provide a new tool for future joint law enforcement efforts
    by providing trans-border law enforcement authority to
    Canadian law enforcement in the border environment --
    including counter-narcotics.  During the first trial
    operation in September, the U.S. Coast Guard (USCG) and RCMP
    officers worked together on maritime law enforcement issues
    in the Great Lakes, and provided a basis for the expansion of
    similar cooperative efforts along the shared border.
    Because of the high level of mutual confidence, the RCMP and
    U.S. law enforcement agencies provide reciprocal direct
    access to each other,s criminal databases, including the
    Canadian Police Information Center (CPIC), a firearms
    identification database, and a unique automotive paint chip
    database. Canadian law enforcement benefits from access to
    the El Paso Intelligence Center (EPIC) and the National Drug
    Intelligence Center (NDIC). However, while some recent
    legislation has enhanced trans-border intelligence sharing,
    some aspects of Canada,s criminal justice system, such as
    Canada,s strict privacy laws, limit timely information
    exchange in some areas.
    The two governments have a broad array of agreements in place
    to facilitate cooperation in legal matters, such as the
    extradition and mutual legal assistance treaties, an
    information-sharing agreement, and an asset sharing
    agreement. Canada is the USG,s principal extradition
    partner.
    The United States-Canada Border Drug Threat Assessment, most
    recently published in October 2004, is being revised under
    the Security and Prosperity Partnership and is scheduled for
    release in 2006.
    Road Ahead:

    The U.S.G. has identified a series of high profile
    anti-narcotics goals that it plans to achieve with its
    Canadian counterparts:

    --  continue and expand the effectiveness of bilateral
    cooperation and operations against trafficking organizations
    involved in all illicit drug growth, production and
    distribution,
    --  monitor and track illicit pre-cursor chemical activity
    and intercept shipments identified for illegal production
    activity,
    --  target and eliminate the recent trend of ethnic Chinese
    groups' production of MDMA in Canada, in addition to efforts
    to interrupt general organized crime activity,
    --  identify and interrupt money laundering operations in
    Canada,
    --  persuade Canada to more expeditiously investigate, arrest
    and prosecute individuals and organizations suspected of
    participating in Canada's illegal drug trade and
    --  encourage Canada to continue the strengthening of its
    pharmaceutical regulations and industry compliance so
    precursor chemicals are not diverted to the U.S. for criminal
    use.

    The RCMP will host the annual DEA-sponsored International
    Drug Enforcement Conference (IDEC) in May 2006 in Montreal.
    The conference brings together high ranking law enforcement
    officials from 70 countries to share drug-related information
    and develop a coordinated approach to law enforcement
    efforts.  The conference identifies emergent global trends,
    identifies legislative needs in developing countries and
    develops strategies to better equip those countries to target
    international drug organizations.

    Major Precursor or Essential Chemical Source Countries

    Canada remains a significant producer and transit country for
    precursor chemicals and over-the-counter pharmaceuticals used
    to produce illicit synthetic drugs.  Health Canada, the RCMP
    and the Canada Border Services Agency are the agencies
    responsible for chemical control.  Health Canada, the
    competent authority for managing the export of pre-cursor
    chemicals under the 1988 UN Convention as well as for the
    2003 Precursor Control Regulations, is tasked with monitoring
    and addressing the diversion of chemicals that have
    legitimate uses but are instead used in the illegal
    production of illicit drugs.  In October, the United Nations
    Office on Drugs and Crime registered Health Canada as the
    competent authority for the U.N. Convention on Chemical
    Importation and noted the Government's compliance.

    In August 2005, the GoC moved methamphetamine from Schedule
    III to Schedule I of the Controlled Drugs and Substances Act
    to increase maximum penalties for possession, trafficking,
    importation, exportation and production of methamphetamine.
    The maximum penalty for production and distribution of
    methamphetamine was increased from ten years to life in
    prison.  The maximum penalty for simple possession increased
    from three years to seven.

    In November, amendments to the Precursor Control Regulations
    (PCR) were approved and will come into force in January 2006.
     One amendment adds six substances to Part I, Schedule VI of
    the Controlled Drugs and Substances Act and the PCR.  The
    result is that gamma butyrolactone, 1,4 butanediol, red
    phosphorus, white phosphorus, hypophosphorous acid and
    hydriodic acid will receive the strictest control.  Other
    amendments strengthen the existing regulatory framework by
    adding a requirement to hold a license to possess a precursor
    for the purpose of producing a controlled substance, which
    will allow charges to be laid when no controlled substance is
    found at the site; strengthening the authority to refuse,
    revoke or suspend a license or permit when Health Canada has
    the required information; and adding a provision to
    allow-pre-license inspections to validate a company's
    application for a license related to precursor chemicals.
    The illegal possession of these precursors is an offense
    fineable up to $4,347, three years imprisonment or both.

    Canada complies with the national and international record
    keeping and reporting requirements in the 1988 UN Drug
    Convention, as well as those required under the PCR.  Under
    the 2003 Precursor Control Regulations and the new
    amendments, Health Canada requires that the approximately 380
    licensed dealers track and record all sales and purchases of
    Class I and II chemicals, according to the law, and provide
    end use declarations. Licensed dealers are required to have
    security and record keeping systems in place as part of their
    license application.  These records must be made available to
    an inspector or, upon request, by the Minister.  It is
    mandatory under the regulations to the Controlled Drugs and
    Substances Act to report the loss or theft of a controlled
    substance or precursor.  In the event that a shipment of
    precursor chemicals is not accompanied by the appropriate
    permit, the shipment may be seized by a Canada Border
    Services Agency officer.

    Under the PCR, Canada can request and use information from
    international sources to determine administrative actions
    against offenders.  In the event of suspect criminal
    activity, RCMP is authorized to handle the case.  These same
    provisions permit Health Canada, in some cases, to provide
    information to international competent authorities, like the
    Drug Enforcement Administration, when requested.

    Canada, through Health Canada and the RCMP, participates
    actively in Project Prism and is a member of the working
    group for North America.  Although it supports Operations
    Purple and Topaz and contributes to them on an ad hoc basis,
    Canada does not engage actively in either initiative.

    Visit Canada's Classified Web Site at
    http://www.state.sgov.gov/p/wha/ottawa

    WILKINS

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