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Mohammad Yasin Khan started to suspect there was a problem when the industrial park—on the edge of Suva, Fiji's capital—began to smell like a latrine. A warehouse had been set up there to manufacture plastic furniture. But Khan, who runs a hardware store on the same block, said the factory workers seemed paranoid, avoiding conversation and reinforcing the doors and windows with metal bars. And the smell from a nearby culvert was foul. "We thought maybe it was something from the shop," he says. "The smell of the drain, it was like urine."

Now experts from three nations are busy cleaning up the mess. Khan's neighbor was more than just a dirty factory. Police say it was one of the world's biggest drug labs, run by a criminal enterprise with tentacles stretching from China to the South Pacific. The crystal methamphetamine, or ice, being cooked inside the warehouse was destined, says Fiji police commissioner Andrew Hughes, for the U.S., Australia, New Zealand and Europe. The cops who swooped on the building June 9—finding 5 kg of the glassy drug and enough chemicals to make a ton of it—came from Fiji, Australia and New Zealand. Of the six suspects charged with drug manufacturing in Fiji, two were Chinese Fijians and four held Hong Kong passports. On the same day as the Fiji raid, a 40-year-old man accused of being the drug ring's money launderer was nabbed in a middle-class Hong Kong apartment, where police also found $3.8 million in cash. In Malaysia, the suspected source of the chemicals used to make the drug, police arrested six more alleged syndicate members. The "plastics factory" was, from start to finish, a multinational affair.

So, these days, is organized crime—and small Pacific nations are increasingly vulnerable to its embrace. Lying between Asia and the rich markets of the United States, Australia and New Zealand, the islands are perfectly placed for transpacific smuggling. They're eager to attract tourists and investors, but their undersized police forces and outdated drug laws are easy to exploit. The Philippines, Guam, Palau and the Marianas have long been pit stops for drug traffickers, and police have warned for years that South Pacific states are also at risk. Transnational crime syndicates "are highly sophisticated and mobile," says Superintendent Larry Reid, acting national crime manager for the New Zealand police. "Their ability to move around the Pacific is almost unlimited."

Solo smugglers like yachtsmen and hippie wanderers have crisscrossed the South Pacific for decades. But organized crime didn't cast much of a shadow over the region until 2000, when police in Suva seized 350 kg of heroin bound for Australia, New Zealand and Canada. Since then, the law-enforcement radar has blipped increasingly often over Fiji. In 2002, 74 kg of methamphetamine was found on a ship in Singapore headed for Fiji and Australia; in the same year, Hawaiian police busted a syndicate that smuggled cocaine and ice to the U.S. mainland, Tonga, Fiji, Australia and New Zealand; and last year, almost 2.5 kg of pseudoephedrine, a key ingredient in methamphetamine, was found in scuba tanks shipped to Brisbane from Fiji.

Easy to make and hugely profitable (a "point," or 0.1 g, sells for about $35 in Australia but costs only about 70¢ to make), ice is as toxic to societies as it is to users. Addicts are prone to reckless criminality and extreme violence as well as paranoia and convulsions. Just as worrying, says Shaun Evans, law-enforcement adviser to the Pacific Islands Forum, ice has brought other crime in its wake: "In the past, organized criminals stuck to one commodity, like heroin or LSD. Now we have polycriminals. Anything that will make money, they will do it." Evans, a former New Zealand customs agent, says that might include gun running, people smuggling and fraud. The Australian Federal Police say the syndicate behind Fiji's 2000 heroin seizure was allegedly involved in illegal immigration and credit card fraud; it's believed the gang that set up the ice lab had similar interests—and investigators are probing the possible involvement of some local officials, says Fiji police spokesman Mesake Koroi.

Australia and New Zealand now spend tens of millions of dollars a year to help small island states tackle corruption, tighten border controls and train law-enforcement officers. Police and customs agents from both countries played key roles in investigating the Fiji ice lab, and cleaning it up. Australia and New Zealand are also helping small states update their antiquated laws. Police had to wait 14 months to smash the ice gang because Fijian law does not ban methamphetamine's ingredients, only the finished product. A new drug bill—increasing the top sentence for trafficking from eight years to life—was not ready to put before Parliament until the day of the raid.

The South Pacific isn't out of danger, says police chief Hughes, but "I think we have sent a strong message that Fiji is not as vulnerable as people thought." Suva businessman Tauz Khan, whose security-equipment and taxi companies are in the same industrial park as the drug warehouse, hopes he's right. The fight against drugs must succeed, he says: "We don't want these guys to come back here and spoil our paradise."

• Elizabeth Feizkhah
• A drug syndicate stretching from Southeast Asia to Fiji puts regional law enforcement to the test