U.S., Peru Agree on Cocaine Battle Plan : War on drugs: Lima agrees to step up military operations against traffickers in return for $100 million in aid.

Peru, the world’s leading producer of coca, has bowed to Bush Administration pressure by agreeing to bolster military operations against drug traffickers as a condition for receiving $100 million in U.S. economic aid, officials said Wednesday.

Under an agreement signed Tuesday night at the presidential palace in Lima, the United States will provide Peru with $39.5 million to train and equip army units operating in the jungles where the coca crop is produced, to purchase river patrol boats and to renovate fighter aircraft.

The remaining $60 million will be used to induce farmers to substitute other crops for their profitable coca leaf and to help compensate Peru for the loss of foreign exchange from the cocaine trade, U.S. officials said.

The agreement, sought for months by the Administration, was hailed by Washington as a significant step in shoring up support by Andean nations for the war against drug smuggling. The State Department said the accord “lays the foundation for continued cooperation in the war on drugs.”

In March, the Administration held up more than $90 million in aid to Peru until it got a pledge from President Alberto Fujimori to use military force to fight drug traffickers based in the jungles of the coca-rich Upper Huallaga Valley. Leftist politicians in Peru contended that such an accord would lead to American military intervention there, a possibility the United States strongly denied.

In an address to his Congress on Tuesday night, Fujimori said the agreement is as important for Peru as for the United States.

Cocaine trafficking is “a cancer . . . endangering our national security,” he declared.

Without stating that the accord was being signed, Fujimori said that both nations are “working as equals” to eradicate his nation’s leading export, cocaine, which is estimated to generate more than $1 billion in annual revenue for Peruvians. Most of the cocaine winds up in the United States.

Fujimori had wanted to allocate a greater share of any U.S. money to crop substitution programs, maintaining that they represent the best method of eliminating the flow of cocaine. But the Administration insisted that Fujimori intensify his military effort against drug traffickers, and he finally agreed.

The State Department’s brief announcement was upbeat, giving no hint of any dispute with Fujimori. It called the agreement “another sign of President Fujimori’s strong determination to fight narcotics trafficking.” The department noted that in the past, he has sent the Peruvian air force “into major cocaine-growing regions to interdict drug shipments and increased anti-narcotics cooperation between the Peruvian police and military.”

Two months ago, the State Department painted a bleaker picture of Peru’s war on drugs in an annual report mandated by Congress. It said that in 1990, “the Peruvian military did not generally support Peruvian law enforcement units in counter-narcotics activities,” adding that “as in 1989, serious military and police corruption impeded efforts to expand counter-narcotics missions.”

A congressional source, speaking on condition of anonymity, said that Fujimori “was in no position to turn down economic aid. He is fighting runaway inflation, anti-government leftist guerrillas and . . . a cholera epidemic.”

Most of Peru’s coca crop, which supports hundreds of thousands of peasants, is shipped to Colombia, where it is converted into cocaine.

Bob Martinez, the Administration’s new drug policy coordinator, was in Lima on Wednesday on a 10-nation tour of drug-producing nations. But his aides said that the signing of the aid agreement was coincidental to his visit.