In its annual survey of global counternarcotics efforts, the State Department painted a grim picture of the situation in Mexico, where government attempts to fight traffickers are hindered by rampant corruption. The battle between authorities and drug cartels killed more than 6,000 people last year and more than 1,000 so far in 2009.

Mexico is a main source for many illegal drugs entering the United States, including as much as 90 percent of the cocaine and most of the heroin, marijuana and methamphetamine consumed in America. The report praised Mexican President Felipe Calderon for "courageous" and "unprecedented" steps to combat drug trade, but noted corruption still plagues the effort.

At the same time, the report said Mr. Calderon's successes may be responsible for fueling the surge in violence as drug lords battle each other for control and take on Mexican security forces.

"They are confronting each other, and the result is unfortunately a significant increase in violence," said David Johnson, the assistant secretary of state for international narcotics and law enforcement. "This is a serious challenge for both the government of Mexico and the United States."

The report offered the chilling assessment that Mexican drug-trafficking organizations have been effective at "utilizing violence as a psychological weapon, intimidating political leaders, rival groups and the general public."

The violence has spilled over across the border into the United States, and the report noted an increase in contract killings and kidnappings on U.S. soil carried out by Mexican drug cartels - sometimes using weapons purchased or stolen in America.

It said that firearms obtained in the U.S. account for an estimated 95 percent of the country's drug-related killings.

In addition to the dire situation in Mexico, the report detailed a spike in narcotics trafficking through Bolivia and Venezuela, particularly as the government of neighboring Colombia continues to crack down on the trade.

And it found that despite ongoing eradication and crop-substitution efforts, Afghanistan remains the world's largest producer of opium poppy, the source of heroin, although the report noted that several factors, including weather, led to a slight decline in cultivation and production last year.

The report criticized Bolivia and Venezuela, both of which are led by leftist presidents with anti-U.S. sentiment, for failing to cooperate in the war on drugs.

Bolivia, it said, remained the world's third-largest producer of cocaine in 2008 and is a significant transit zone for Peruvian-origin cocaine. But its counternarcotics cooperation with the U.S. declined significantly last year as President Evo Morales expelled the Drug Enforcement Administration and the American ambassador from the country amid "increasingly hostile rhetoric," the report said.

In Venezuela, President Hugo Chavez's government "refused to cooperate on almost all bilateral counternarcotics issues, rejecting U.S. criticism and accusing the U.S. government of complicity with drug trafficking organizations," the report said.

The report, which covers anti-drug developments in 2008, was compiled while President George W. Bush was in office but was accepted by the Obama administration, which has pledged to follow through with Mr. Bush's plans to boost counternarcotics assistance to Latin America, particularly Mexico, and also Afghanistan, which is mired in the opium trade.