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US State Drug-Burma


                               U.S. Department of State


I. Summary

Burma remains the world's largest producer of opium and heroin. Burma lacks
both the resources and commitment to undertake effective drug control and
is likely to remain one of the world's major sources of drugs for many
years to come. In 1995 opium cultivation and production rebounded after a
slight decline due to poor weather in 1994. Opium poppy cultivation covered
154,000 hectares and yielded 2,340 metric tons of opium gum -- enough opium
to produce 230 tons of heroin and satisfy the U.S. heroin market many times
over. There were few signs of improvement in the government's
counternarcotics performance during 1995. In early 1996 a two year
offensive against the Mong Tai Army (MTA, also know as the Shan United
Army) of Khun Sa ended with the Burmese Army occupation of the MTA
headquarters. The Burmese, however, have shown no willingness to use the
opportunity brought about by their cease-fire with the MTA to bring Khun Sa
to justice or to take effective action to suppress the heroin trade in the
Shan state.

The drug trade in the Shan State continues virtually unchecked. Burmese
authorities lack the resources, the ability or the will to take action
against ethnic drug trafficking groups with whom they have negotiated
cease-fires. Groups known to be involved in the heroin trade, such as the
United Wa State Army and the Kokang militia, remain heavily armed and enjoy
complete autonomy in their base areas. Although the Burmese Government
claims that these groups have committed themselves to drug control as part
of their cease-fire agreements, the Burmese Government has been either
unwilling or unable to get these groups to reduce heroin trafficking or
opium cultivation.

Money laundering in Burma is also a growing problem and the laundering of
drug profits is thought by some analysts to have a wide-spread impact on
the Burmese economy. An underdeveloped banking system and lack of
enforcement against money laundering have created a business and investment
environment conducive to the use of drug-related proceeds in legitimate

II. Status of Country

Burma continues to provide the bulk of the world's opium supply and is the
source of over 60 percent of the heroin seized on US streets. The ethnic
areas of Burma's Shan State, such as the Kokang and Wa territories, produce
most of Burma's opium. The State Law and Order Restoration Council's
(SLORC) cease-fire agreements with these drug- trafficking armies have
prevented the implementation of any meaningful drug enforcement operations
in areas under the control of ethnic armies. As a result, these regions
have become drug trafficking havens where heroin is produced and trafficked
without any risk. Leaders of these drug-trafficking armies have benefited
immensely from their good relationships with the Rangoon regime; their
businesses--legitimate and illegitimate--have prospered. The top
traffickers of these ethnic groups are: U Sai Lin AKA Lin Ming-shing of the
Eastern Shan State Army (ESSA); Yang Mao-liang, Peng Chia-sheng, and Liu
Go-shi of the Myanmar National Democratic Alliance Army (MNDAA-Kokang
Chinese); Pao Yu-chiang, Li Tzu-ju, and Wei Hsueh-kang of the United Wa
State Army (UWSA); and U Mahtu Naw of the Kachin Defense Army (KDA). The
SLORC has given these ethnic traffickers significant political legitimacy
and now refers to them as "leaders of national races." Several major
traffickers now participate in the government's national constitutional
convention in the guise of ethnic leaders.

III. Country Actions Against Drugs in 1995

Burmese counternarcotics efforts remained woefully inadequate in 1995, a
situation that has not changed fundamentally since 1989. The SLORC
steadfastly maintains that only peaceful economic development will bring
about a reduction in drug production and trafficking. Many of the major
drug trafficking insurgent groups have been at peace with the SLORC since
1989 and the surrender of the Mong Tai Army in early 1996 brought an end to
the last major insurgency by an army involved in drug trafficking. During
the past six years there has been no progress in reducing opium cultivation
or in stopping the heroin-trafficking activities of ethnic armies now
considered part of the "legal fold." The SLORC's development program seems
more intent on expanding and strengthening its political position in the
border areas than in countering the narcotics trade.

The Burmese Government continues to look to United Nations International
Drug Control Program (UNDCP) and the United Nations Development Program
(UNDP) assistance to bolster its own development programs in ethnic Wa,
Kokang, and Shan areas of the Shan State. Nevertheless, Burmese Government
cooperation in implementing UNDCP projects declined in 1995. The government
also appeared intent on exerting greater control over UN programs operating
in the ethnic border areas. In the case of UNDCP, the GOB has sought a say
in UNDCP personnel assignments and has restricted access by UNDCP personnel
to project areas and leaders of ethnic militias. The government has largely
barred NGO involvement in aid projects in these ethnic drug areas.

Policy Initiatives. The SLORC did not announce any new drug-control policy
initiatives during 1995. However, the Government continued to implement its
"northern border development program" which in part aims to reduce and
ultimately eliminate opium cultivation in the ethnic border areas. This
program was started in 1990 and refined in the September 1994 unveiling of
an eleven-year "Master Plan for the Development of Border Areas and
National Races." While large sums of Burmese money reportedly have been
allocated for development work in the opium-producing areas of the Shan
state, none of this aid has been closely tied to reductions in poppy
cultivation. In 1995, the UWSA announced a unilateral plan to establish
five "opium poppy-free zones" in its area of control in order to bring
about a gradual reduction of opium cultivation. Though there is skepticism
about the drug- trafficking group's sincerity, the UNDCP hopes to test this
purported UWSA drug-control commitment through a planned five-year crop
substitution project due to start in mid-1996 in the Wa region.
Accomplishments. The government appeared to take fewer steps to counter
Burma's drug trade in 1995 than in other recent years. A counter-
insurgency campaign seen in the late dry season of February-April 1995
against Khun Sa's Mong Tai Army (MTA) ended in a brokered peace in January
1996. Although the details of the peace arrangement are not yet clear, it
seems the MTA will be allowed to operate as an ethnic militia in the same
manner that the UWSA and MNDAA continue to operate in other parts of the
Shan state. It is unknown what, if any, impact the end of the fight against
Khun Sa will have on the heroin trade.

The Burmese effort to seize drugs and arrest traffickers remains
disappointing: less than 100 kilograms of heroin and less than 1.1 metric
tons of opium gum were seized by Burmese authorities in 1995. This
represents more than an 80 percent and 53 percent decline, respectively,
from 1994 seizures. Seizures of acetic anhydride increased by 6 percent to
1,261 gallons. In one particularly large seizure, Burmese military
intelligence and police on May 24 seized 721.5 gallons of acetic anhydride
entering Burma from China's Yunnan province and bound for the MTA.

Burmese police, who account for the bulk of Burma's drug seizures, appear
to be targeting low-level drug violators -- seldom seizing more than one
kilogram of heroin at a time -- while avoiding major traffickers who are
responsible for much larger heroin shipments.

The 1993 Narcotic Drugs and Psychotropic Substances law brought the Burmese
legal code into conformity with the 1988 UN Convention. As such, the 1993
law contains useful legal tools for addressing money laundering, the
seizure of drug-related assets, and the prosecution of drug conspiracy
cases. However, these provisions remain largely unused by Burmese police
and judicial officials. Burmese authorities have been slow to implement the
law, and have targeted few, if any, major traffickers. There have been few
cases involving money laundering or seizure of major assets acquired
through drug crime. The Burmese Government, however, continues to express
its desire to give its personnel better training and to make better use of
its drug laws. In November 1995, a UNDCP contractor visited Rangoon to
conduct a legal workshop for Burmese enforcement and judicial personnel.

Law Enforcement. The Burmese Government's coordinated drug enforcement
effort is led by the office of the Central Committee for Drug Abuse Control
(CCDAC), which includes the police, customs, military intelligence, and the
army. CCDAC now has 17 drug enforcement task forces around the country,
most located in major cities and along key transit routes near Burma's
borders with China, India and Thailand. Though CCDAC and its task forces
are responsible for the bulk of narcotics seizures and arrests, the agency
continues to suffer from a lack of adequate resources. The UNDCP has
provided various CCDAC units with modest equipment and some training. DEA
has also provided basic drug enforcement training to CCDAC personnel.
However, the SLORC's very small budget allocations for narcotics
enforcement do not give the agency the resources needed to make a credible
effort to combat Burma's massive drug cultivation and trafficking problem.
Corruption. The SLORC's business relationships with some of Burma's top
narco-trafficking minority groups raise suspicion in the minds of some
observers that senior Burmese officials are profiting from narcotics
revenues. There is, however, no evidence that the Government, on an
institutional level or as a matter of policy, is involved in the drug
trade. But there are persistent reports that lower level officials,
particularly in the border regions, are involved in taking bribes in return
for ignoring drug smuggling. The lack of a vigorous enforcement effort
against money laundering leaves Burma vulnerable to the growing influence
of traffickers who will use drug proceeds in legitimate business ventures,
thereby gaining influence over investment and commercial activities.

Agreements and Treaties. Burma is a party to the 1961, 1971 and 1988 UN
Drug Conventions. However, the Rangoon regime maintains its reservations on
two of the Convention's articles -- one on extradition of Burmese citizens
to third countries and one on the use of the International Court of Justice
to resolve disputes relating to the Convention (articles 6 and 32,
respectively). The United States does not have a mutual legal assistance
treaty (MLAT) with Burma. The Burmese Government has disputed the
continuing applicability of the US- UK Extradition Treaty, which was
accepted by the provisional Burmese Government in 1947.

Cultivation and Production. Burmese opium production doubled with the opium
crop harvested in early 1989 -- the first crop harvested after the SLORC's
seizure of power. Since then Burma's output of opium has remained at high
levels -- near 2,300 metric tons per year. This is by far the largest
amount of opium produced in the world. The 1994 crop saw a 21 percent
decline in production due to poor weather during the crop's growing season.
In 1995, however, the crop rebounded, rising 18 percent to 2,340 metric
tons. The bulk of Burma's opium cultivation traditionally has been in the
mountainous regions of the Shan plateau, which extends the length of the
Shan state, from the Chinese border to the Thai border. Since 1989,
however, cultivation has been expanding into areas under at least nominal
Burmese Government control on the west bank of the Salween river. New
cultivation has also been noted in the Chin state, along Burma's border
with India.

Drug Flow/Transit. Heroin is produced in large, relatively static
refineries well ensconced in ethnic enclaves protected by drug trafficking
armies in the Shan state. These labs, run by the ESSA, MNDAA (Kokang), KDA,
UWSA, and MTA, are out-of-bounds to Burmese law enforcement and
paramilitary efforts, under the terms of the SLORC's cease-fire agreements
with these drug militias. A growing amount of methamphetamine is reportedly
produced in labs co-located with heroin refineries along the China and
Thailand borders. Heroin produced by Burma's ethnic groups is trafficked
largely through the porous Chinese and Thai borders, and to a lesser extent
the Indian border. Though the use of trafficking routes through China to
move heroin to the international market continues at a high level, Thailand
remains the primary route for Burmese heroin to exit Southeast Asia.
Traffickers continued a trend noted last year of moving a growing amount of
heroin through central Burma, often from Lashio, through Mandalay to
Rangoon or other seaports such as Moulmein, for seaborne export to
Singapore or Malaysia. Though some Burmese customs personnel in August
participated in a two-week U.S. Customs training course to help better
identify seaborne and airborne drug shipments, Burmese customs registered
no seizures of narcotics for all of 1995. Trafficking routes leading
through Kachin and Chin states and Sagaing division in northern Burma to
India continue to be used to a limited extent, but largely to supply
regional addict populations in India and Bangladesh. Acetic anhydride, an
essential chemical in the production of heroin, is imported primarily from
China and India and to a lesser extent from Thailand.

US Policy Initiatives. Direct USG counternarcotics aid to Burma has
remained suspended since 1988, when the Burmese military brutally
suppressed the popular pro-democracy movement. Joint initiatives such as an
aerial eradication program, which had been effective in containing the
expansion of Burmese opium cultivation ended in 1988. Currently, the USG
engages the Burmese Government on a very limited level. DEA shares
drug-related information with the GOB and conducts joint drug enforcement
investigations with Burmese police and military personnel. Various US
agencies have twice joined Burmese counterparts in conducting annual opium
yield surveys in the mountainous regions of the Shan state. Results from
the surveys give both Governments a more accurate understanding of the
scope and magnitude of Burma's opium crop, which in recent years has been
the single largest component of the world's illicit crop.

The U.S. Government continues to urge the SLORC to take serious steps to
curb Burma's runaway opium production and heroin trafficking. Specifically,
the Rangoon regime has been encouraged to:

--utilize more fully the money laundering and drug conspiracy tools of
Burma's new 1993 drug law in targeting major traffickers;

--target and destroy or confiscate heroin refineries in areas accessible to
Burmese security personnel;

--implement the counternarcotics components of its cease-fire agreements
with ethnic groups in drug producing areas, specifically pushing the ethnic
traffickers to reduce opium poppy cultivation;

--cooperate more fully with UNDCP and international NGOs in implementing
crop substitution and counternarcotics-related health projects.

Bilateral Cooperation. USG counternarcotics cooperation with the Burmese
regime will remain at a restricted level until there is progress in the
areas of human rights and political reform. DEA's liaison with Burmese
police and military -- conducted through DEA's three-man office in Rangoon
-- will continue at its limited level. In 1995, DEA conducted one two-week
training course on basic drug enforcement techniques, and US Customs
conducted a similar course on identifying and seizing drug shipments. The
Road Ahead. The USG recognizes that no Burmese Government is capable of
effectively dealing with the country's huge drug trade alone. Large-scale
international aid, including developmental assistance and law enforcement
aid, will be needed to curb drug production and trafficking. The SLORC will
need to demonstrate a real commitment to drug control before any meaningful
progress in counternarcotics is possible.



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