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posted 24-Feb-99 6:00am
Part 3 of 3.

State Dept. Homepage)


CULTIVATION AND PRODUCTION. Burma remains by far the world's largest
producer of opium. Potential production decreased slightly from 1996
level; opium cultivation declined an estimated 5 percent and production
declined an estimated 8 percent. After cultivation increased by 40
percent and potential production doubled in 1989 following the SLORC
coup, cultivation and production have remained at this high level over
the ensuing eight years. Since the early 1990's the areas of most
intense cultivation have gradually shifted from southern to northern
Shan State. Although cultivation has expanded in areas under government
control, the bulk of the opium crop has been in areas controlled by
ethic minority groups such as the United Wa State Army, the Myanmar
National Democratic Alliance Army (Kokang Chinese), the Mongko Defense
Army (Kachin), the Kachin Defense Army, and the Palaung National
Organization, with which the Burmese military junta has sought
cease-fires since 1989. In the last two years, however, the GOB has
begun to increase its presence in areas previously under ethnic control.
Government eradication efforts increased at the end of 1997 with the
launching of a campaign in Northern Shan State.In addition, the GOB
announced plans to conduct a baseline survey of opium cultivation from
January to March 1998, aimed at determining actual opium production( as
opposed to potential production the USG measures) throughout the

DRUG FLOW/TRANSIT. Most heroin in Burma is produced in small, mobile
labs located near the borders with thailand and China in Shan State in
areas controlled by ethnic narco-insurgencies. As a result of increased
deployment of troops in northern Shan state and more aggressive law
enforcement efforts, the GOB destroyed a record, but still small, number
of labs. A growing amount of methamephetamines is reportedly produced in

labs co-located with heroin refineries in the Wa region and the former
Shan United Army territory in southern Shan State. Heroin and
methamphetamines produced by Burma;s ethnic groups are trafficked
largely through unmarked transit routes crossing the porous Chinese and
Thai borders, and to a lesser extent the Indian, Bangladesh and Lao
borders, as well as through Rangoon onward by ship to other countries in
the region. although Thailand remains an important route for Burmese
heroin to exit Southeast Asia, trafficking though China and other
countries is on the increase.

Traffickers continued a trend noted last year of moving a growing amount
of heroin though central Burma, often from Lashio, through Mandalay to
Rangoon or other seaports such as Moulmein, for seaborne export to
Singapore or Malaysia. Trafficking routes leading though Kachin and Chin
states and Sagaing Division in northern Burma to India continued to
grow, but were used to a lesser extent. Acetic anhydride, an essential
chemical in the production of heroin, is imported primarily from China,
as is ephedrine, the principal chemical ingredient of methamphetamines.,

DEMAND REDUCTION. Drug abuse is a growing problem in Burma. Official
estimates put the drug addicted population at approximately 60,000, but
UNDCP and NGOs working in the health sector estimate the actual
population at 400,000-500,000. The GOB announced plans to undertake a
nationwide baseline survey of drug abuse in early 1998, which is
designed to provide a more accurate census of the addict population.
Heroin is cheap in Burma, and its intravenous use is contributing to the
rapid spread of HIV/AIDS, particularly in the Kachin and Shan states.
According to the GOB;'s "Rapid Assessment Study of Drug Abuse in
Myanmar" sponsored by the Ministry of Health and UNDCP in 1995, drug
treatment services are not reaching most drug users because of a lack of
facilities, lack of properly trained personnel, and inadequate treatment
methods. IN November, the GOB gave Cabinet approval to a $300,000
UNDCP-funded demand reduction project to be implemented by the NGO,
"World Concern", in Kachin State.


Direct material USG counternarcotics aid to Burma has remained suspended
since 1988, when the Burmese military brutally repressed the
pro-democracy movement. USG-supported initiatives such as an aerial
eradication program have not been carried out since 1988. However, the
USG funds, under congressional authority, a two-year, $500,000 crop
substitution project being carried out by the NGO "Committee of 101
Veterans Inc." in the Kutkai area of northern Shan State. The aim of the
project is to increase farm incomes by improving yields of corn and
other crops so that farmers have economic alternatives to opium
cultivation. Preliminary results of the project's first harvest indicate
the feasibility of increasing corn yields by 3-5 times.

Currently, the USG engages the Burmese government on counternarcotics on
a limited level. DEA, through the US Embassy in Rangoon, shares
drug-related intelligence with the GOB and conducts joint drug
enforcement investigations with Burmese counternarcotics authorities.

Various US agencies have joined Burmese counterparts in conducting opium
yield surveys in the mountainous regions of the Shan State in 1993,
1995, and 1997. Results from the surveys give both governments a more
accurate understanding of the scope and magnitude of Burma's opium crop.

The US government continues to urge the Burmese government to take
serious steps to curb Burma's runaway opium production and heroin
trafficking. Specifically, the Rangoon regime has been encouraged to:

-- prosecute drug trafficking organizations and their leaders, such as
Chang Qifu, and deprive them of assets derived from the drug trade;

-- take action against drug-related corruption, including prosecution
and appropriate punishment of corrupt officials and money launderers;

--take action against fugitive drug traffickers and render them through
third countries, as was done in the Li Yunchung case;

-- undertake opium poppy eradication on a wide scale in areas under its
direct control or immediate influence;

-- press ethnic groups such as the Wa, the Kokang, and the Kachin who
have pledged to create opium-free zones in their regions, to make good
on their commitments;

-- enforce existing anti-drug, conspiracy and money laundering

-- provide strong support to multialteral drug control projects in the
Shan State.

BILATERAL COOPERATION. USG counternarcotics cooperation with the Burmese
regime is restricted to basic law enforcement operations and involves no
bilateral material or training assistance from the US due to US concerns
over Burma's commitment to effective counternarcotics measures, human
rights and political reform. DEA's liaison with Burmese police and
military-- conducted mainly through DEA's office in rangoon-- will
continue with a focus on providing intelligence on enforcement targets
and coordinating investigations of international drug trafficking
groups. During the year, the USG encouraged contacts between Burmese and
Thai law enforcement agencies and facilitated joint anti-drug

THE ROAD AHEAD. Based on experience in dealing with large-scale
narcotics trafficking problems elsewhere around the world, the USG
recognizes that ultimately large scale and long term international aid,
including development assistance and law enforcement aid, will be needed
to curb significantly drug production and trafficking. The USG is
prepared to consider resuming appropriate assistance contingent upon the
GOB's unambiguous demonstration of a strong commitment to
counternarcotics, rule of law, punishment of traffickers and major
trafficking organizations (including asset forfeiture and seizure),
countercorruption, eradiciation of opium cultivation, destruction of
drug processing laboratories, enforcement of money laundering
legislation, and respect for human rights.

/* endreport */

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POSTMAIL: Dr U Ne Oo, 18 Shannon Place, Adelaide SA 5000, AUSTRALIA

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