While Bolivia is well known as a cocaine producer -- the world's third largest, according to the United Nations (UN) -- the country is also a significant transit zone for drugs produced outside its borders. According to the nation's top anti-drug official Felipe Caceres, 52 percent of the cocaine seized so far this year in Bolivia, some six tons, originated in Peru.

This echoes 2010 statistics from Bolivia's Special Counter-Narcotics Police Force (Fuerza Especial de Lucha Contra el Narcotrafico - FELCN), who said last year that up to 45 percent of the cocaine seized on Bolivian soil between January and September was produced in Peru.

Determining the geographic origin of cocaine requires complicated lab testing; presumably, this is how the FELCN collected its data. Still, it's worth considering that the country may have political reasons for inflating the numbers on Peruvian-origin cocaine. Bolivia follows an official policy of "Coca Yes, Cocaine No," which allows for the cultivation of up to 12,000 hectares of legal coca. Bolivia has said that as little as 10 percent of this crop is diverted to make cocaine. However, both the UN and the U.S. State Department argue that the government-sanctioned coca is feeding an increase of cocaine production in the country. Bolivia's claim that most of the cocaine seized within its borders originates abroad could be a way to detract from critics who say that the country cannot control its licit coca economy.

But there is also evidence pointing to Bolivia's increased importance as a transit country for Peruvian or Colombian-origin cocaine. This is a trend that could be happening alongside increased potential cocaine production inside Bolivia; the U.S. State Department says that this may have grown as much as 70 percent between 2006 and 2009. (In releasing such estimates, however, the U.S. State Department may have its own political agenda, concerning Bolivia's status as an "uncooperative" partner in the "war on drugs.")

Bolivia will be an important transit country for cocaine so long as domestic demand from Southern Cone nations remains high. Especially with the apparent decline of the North American market, intra-regional cocaine exports could be gaining importance.

Bolivia is a key transit hub for moving cocaine within the continent, thanks to its geography. The country is the heartland of South America, bordering five nations, including Argentina, which has the highest number of cocaine users in South America. Rural border cities like Cobija, in the Amazon Basin, connect easily with Peru and Brazil via road and river trafficking routes. Bolivian police have said there are numerous cocaine laboratories in this region, which process Peruvian coca base before exporting it to Brazil. Other little-known towns like Bolpebra, Peru (which sits on three international borders) and Pando, Bolivia, also serve as key transit hubs for cocaine transiting through the country.

Cocaine that passes through Bolivia is often headed for Europe, where the UN says that demand for the drug remains high. Traffickers use Bolivia as a transit point when transporting their wares to Brazil and then onwards to countries like Spain or the United Kingdom. According to the United Nations Office on Drugs and Crime (UNODC), five percent of the cocaine seized in Europe in 2009 was traced back to Bolivia. The report also notes that Peruvian-origin cocaine is increasingly supplying the European market, which could explain why more of it is transiting through Bolivia.

Not only are there signs that significant quantities of Peruvian cocaine travel through Bolivia, there is also evidence that Bolivians are adopting more sophisticated Colombian cocaine production methods. Since 2007, cocaine laboratories in Bolivia have increasingly followed the Colombian model. Instead of using large, open-air maceration pits to produce coca paste, more Colombian-style HCl labs have been found on Bolivian soil. These use more precursor chemicals, and are more efficient at extracting the cocaine alkaloid from coca leaves. Colombian drug kingpins have also been arrested in Bolivia, in a sign of that Colombians may wield increasing influence over Bolivia's drug trade.

U.S. and UN concerns about Bolivia are primarily related to the country's domestic cocaine production, especially in light of the country's decision to withdraw from the UN's signature anti-narcotics treaty. Bolivia is already striking a tricky balance with its "Coca Yes, Cocaine No" policy. If the drug market in the Southern Cone continues to grow, Bolivia may become even more of an important transit country for intra-continental cocaine trafficking. The country may need to change its unofficial policy slogan to "Coca Yes, Cocaine No, And That Goes for Peruvian Cocaine Too."