As an increasingly violent and costly drugs war clogs up prisons with small-time users, some Latin American countries are abandoning hardline U.S. policies on consumption to intensify the fight against major traffickers.

BUENOS AIRES (Reuters) - As an increasingly violent and costly drugs war clogs up prisons with small-time users, some Latin American countries are abandoning hardline U.S. policies on consumption to intensify the fight against major traffickers.

Convinced that the four-decade-old, U.S.-led war on drugs has failed, Argentina, Brazil, Chile, Ecuador, Mexico and other countries are relaxing penalties for possession and personal use of small amounts of narcotics.

Critics warn drug abuse and violence will rise if the small-scale consumption of cocaine, marijuana and other drugs is tolerated, but policy makers in much of Latin America argue the new laws will free up resources to go after big traffickers and treat addicts.

The shift away from zero-tolerance policies has picked up pace in the past year and U.S. President Barack Obama's administration has voiced little opposition to the changes. That is a dramatic switch after decades of Washington's resolute opposition to any easing of laws against consumption.

Even in countries such as Argentina, where drug violence is still unusual, judges are backing decriminalization because the justice system is congested with small-time busts, leaving prosecutors unable to go after bigger fish.

"The courts were overwhelmed with cases of small consumers. We have a real drug consumption problem in Argentina and we cannot fix it just by punishing," said Horacio Cattani, a federal judge who is on a high-level commission that drafted new drug laws for Argentina.

Most of the world's cocaine still comes out of the Andean countries of Colombia, Peru and Bolivia, even after billions of dollars spent eradicating crops.

In Mexico, the drug war has killed more than 16,000 people since late 2006 when President Felipe Calderon took office and deployed tens of thousands of soldiers to combat ruthless cartels that behead and dismember rivals, and bribe or intimidate police and judges.

Drug violence has also soared in Central America, where street gangs have taken over the trade and in some cases infiltrated political parties.

Mexico is the world's biggest producer of marijuana and Paraguay, in the heart of South America, has taken the No. 2 position as demand grows in neighbouring Argentina and Brazil.

RETHINKING THE PROBLEM

Brazil and Mexico, the two largest economies in Latin America, are taking the lead in a new approach to individual drug consumers. Brazil has partially decriminalized drug use and in Mexico, carrying small amounts of any drug is no longer a criminal offense.

In Argentina, President Cristina Fernandez is expected to soon send a drug reform bill to Congress that proposes sending users to treatment instead of jail, following on a Supreme Court ruling that made it illegal to prosecute drug consumers.

In Ecuador, the leftist government has freed 2,000 traffickers in a pardon for small-time traffickers known as "drug mules", and other users hope they will soon be freed under penal code reforms.

Jessica Trujillo has been in an Ecuadorean prison for a year awaiting sentencing for possession of 1.5 grams of a cocaine derivative.

"A lot of people here get the same sentence for carrying a few grams or a few tonnes," said Trujillo, who acknowledged her drug addiction in a telephone interview from Quito's El Inca prison. "I don't think consumers should go to jail because drug addiction is not a crime -- it's an illness."

U.S. TURNS A BLIND EYE

Since the Nixon administration declared a war on drugs four decades ago, the United States had resisted Latin American moves to relax drug policy. Mexico was close to decriminalizing some drug possession in 2006 but turned back under U.S. pressure.

But President Barack Obama's administration was silent last year when Mexico and Argentina moved towards decriminalization.

"The U.S. is retreating from imposing a model," said John Walsh, head of drug policy for the Washington Office on Latin America think tank. "The White House... is going to be taking a more measured approach to talking about drug policy."

Even some areas of the United States, the top global drug consumer, are rethinking their approach, with more than a dozen states now allowing marijuana use for medical purposes.

Former presidents of Brazil, Colombia and Mexico issued a report last year saying U.S. coca crop eradication efforts in Latin America have merely pushed cultivation areas from one region to the other.

"The dominant strategy has been the so-called 'war on drugs.'... This strategy has clearly failed. It must therefore be changed," former Brazilian president Fernando Henrique Cardoso said during a recent conference in Washington.

The trend in Latin America is not uniform, however. Conservative leaders continue to support harsh punishment for drug users in top cocaine producers Colombia and Peru, where heavily armed guerrillas or former rebels control drug production in lawless jungle areas.

Colombia was out of step with the rest of the region when it decriminalized personal drug use in 1994 but now, just when other countries are heading in that direction, its Congress last month amended the constitution to again make possession illegal.

Colombia is the world's No. 1 cocaine producer and has received more than $5 billion (3 billion pounds) in mostly military aid from Washington to fight drug traffickers and leftist FARC rebels.

No. 2 cocaine producer, Peru, is not moving to reform drug laws, which include harsh sentences for small distribution.

DANGERS OF LEGALIZATION

Argentina is Latin America's biggest per capita market for cocaine, and marijuana use is on the rise along with paco, a crack-like drug made from cocaine lab leftovers.

But critics of current laws say expensive federal raids on drug houses -- about one a day -- have limited effect.

During one recent raid in a Buenos Aires slum, dozens of agents backed up by a helicopter broke open seven houses with battering rams. The six-hour operation netted just 300 small pellets of paco and two kilos of cocaine.

However, President Fernandez has met opposition to drug law reform from the head of a inter-ministerial drug agency, the Catholic Church and even some non-profit groups that work with abusers.

"We have a government that has turned apathetic towards drug trafficking. It hurts me because I see people dying," said Leticia del Valle, a lawyer and former paco addict.

Claudio Izaguirre, president of the Argentine Anti-drug Association, says drug use will rise if it is decriminalized and that the health system cannot cope with more addicts.

"Argentina has 2,500 beds in private rehab centres and the treatment costs almost $800 per month. There is no free treatment, except for one centre with 70 beds for the whole country."

(Reporting by Luis Andres Henao; Editing by Fiona Ortiz and Kieran Murray)

FACTBOX | Drug policy reforms in Latin America

Jan 29 (Reuters) - After four decades of zero-tolerance drug policies promoted by the United States, many Latin American countries say the war on drugs has failed and are adopting more permissive drug laws, including the decriminalization of personal use. [ID:nN29105342]

The so-called harm reduction approach is meant to decongest overwhelmed courts and prisons, emphasize treatment for drug users, and use law enforcement resources to chase major traffickers instead of small-time dealers.

Here is an outline of the drugs war and policy reforms in key Latin American countries:

ARGENTINA

* Argentina is one of Latin America's biggest drug-consuming countries, with 2.6 percent of the population using cocaine each year, approaching the 3 percent level in the United States.

* In August, the Supreme Court ruled it unconstitutional to prosecute anyone for possessing drugs for personal use.

* A high-level commission has drafted new drug laws legalizing possession of small quantities of drugs and mandating treatment for users. The president is expected to present the reform bill to Congress in 2010.

BOLIVIA

* Bolivia is the No. 3 global cocaine producer after Peru and Colombia. Chewing and other traditional uses of coca leaf, a mild stimulant, are legal.

* President Evo Morales has asked the United Nations to abolish the narcotics label for coca, which is also the active ingredient of cocaine. However, Bolivia has harsh sentences for other drug use as well as small-scale distribution.

BRAZIL

* Partial decriminalization after reforms in 2002 and 2006.

* Personal use remains punishable but prison sentences are replaced by educational measures and community service.

COLOMBIA

* Colombia is the world's No. 1 cocaine producer.

* In 1994, the Constitutional Court declared punishment for personal drug use unconstitutional, but in December 2009, Congress amended the law to again make consumption illegal.