Executive Summary: Community assessments by the Palaung Women's Organisation during the past two years reveal that the amount of opium being cultivated in Burma's northern Shan State has been increasing dramatically. The amounts are far higher than reported in the annual opium surveys of the United Nations Office on Drugs and Crime (UNODC), and are flourishing not in "insurgent and ceasefire areas," as claimed by the UN, but in areas controlled by Burma's military government, the State Peace and Development Council (SPDC). Between 2007-2009, PWO conducted field surveys in Namkham and Mantong townships, and found that the total area of opium cultivated increased almost fivefold over three years from 964 hectares in the 2006-7 season to 4,545 hectares in the 2008-9 season. Namkham and Mantong are both fully under the control of the SPDC. The areas have an extensive security infrastructure including Burma Army battalions, police, and pro-government village militia. These militia are allowed to engage in illicit income-generating activities in exchange for policing against resistance activity, and are being expanded in the lead up to the regime's planned 2010 elections. Local authorities, in "anti-drug teams" formed by the police in each township, have been systematically extorting fees from villagers in exchange for allowing them to grow opium. During the 2007-8 season in Mantong township, at least 37 million kyat (US$37,000) in bribes in total were collected from 28 villages. PWO data shows that the "anti-drug teams" are leaving the majority of opium fields intact, and are filing false eradication data to the police headquarters. PWO found that only 11% of the poppy fields during the 2008-9 season had been destroyed, mostly only in easily visible places. The fact that authorities are profiting from drug production is enabling drug abuse to flourish. In one village surveyed in Mantong, it was found that that the percentage of men aged 15 and over addicted to opium increased from 57% in 2007 to 85% in 2009. Around the town of Namkham, heroin addicts flock openly to "drug camps," and dealers sell heroin and amphetamines from their houses. PWO's findings thus highlight the structural issues underlying the drug problem in Burma. The regime is pursuing a strategy of increased militarization in the ethnic states to crush ethnic resistance movements, instead of entering into political negotiations with them. For this, it needs an ever growing security apparatus, which in turn is subsidized by the drug trade. The regime's desire to maintain power at all costs is thus taking precedence over its stated aims of drug eradication. Unless the regime's militarization strategies are challenged, international funding will make little difference to the drug problem in Burma. A negotiated resolution of the political issues at the root of Burma's civil war is urgently needed to seriously address the drug scourge which is impacting the region..."