US embassy cable - 04RANGOON1401

C O N F I D E N T I A L SECTION 01 OF 02 RANGOON 001401 
 
SIPDIS 
 
STATE FOR EAP/BCLTV 
COMMERCE FOR ITA JEAN KELLY 
USPACOM FOR FPA 
 
E.O. 12958: DECL: 10/25/2014 
TAGS: PINS, PGOV, ECON, MOPS, BM 
SUBJECT: KHIN NYUNT'S OUSTER: ONE WEEK LATER 
 
REF: A. IIR 6 812 0015 05 
     B. RANGOON 1372 AND PREVIOUS 
     C. RANGOON 1345 
     D. RANGOON 967 
 
Classified By: COM Carmen Martinez for Reasons 1.4 (B,D) 
 
1. (C) Summary: A week after Khin Nyunt's ouster there is 
calm in the streets, Than Shwe seems comfortably in power, 
and MI's political and probably economic power is being 
eroded.  However, there remain many variables -- especially 
relations with ethnic cease-fire groups post-Khin Nyunt -- 
that could shake things up.  End summary. 
 
Khin Nyunt: Corrupt, Not Unhealthy 
 
2. (C) After allowing former Prime Minister General Khin 
Nyunt to "retire for health reasons" on October 19th, SPDC 
Chairman, Senior General Than Shwe changed his tune.  On 
October 24th, new PM Lt. General Soe Win and Than Shwe's 
right-hand man General Thura Shwe Mann addressed a large 
group of "entrepreneurs" (as business cronies are generously 
called) explaining that Khin Nyunt had been sacked because of 
"insubordination...bribery and corrupt practices, and for 
failure to carry out duties properly."  Specifically the two 
noted a September incident in Muse on the Chinese border 
where regular army troops moved against a notoriously corrupt 
MI-affiliated border unit (ref C).  Dubious official 
justifications aside, we continue to believe the real reasons 
for Khin Nyunt's removal stemmed from long-standing personal 
and economic conflicts between MI and the regular military 
(ref D). 
 
3. (U) Soe Win and Shwe Mann used their remarks (heavily 
publicized on local television and in the GOB's mouthpiece 
newspaper "The New Light of Myanmar") to proclaim repeatedly 
that "no one is above the law" and that the regime will move 
decisively against anyone -- either in the military or 
private sector -- who "adversely affects the national 
polices." 
 
Than Shwe: A Comfort Zone 
 
4. (C) Despite rumors that there are ongoing tensions within 
the SPDC, Than Shwe departed as scheduled on October 24th for 
a long-planned state visit to India.  This shows supreme 
confidence that his deputy, Vice Senior General Maung Aye, 
has no scheme in place to move against the Senior General and 
lends credence to the notion that the two connived to rid the 
SPDC leadership of Khin Nyunt and the hated MI. 
 
5. (C) Indeed in the last week there have been several overt 
moves to eliminate the political and economic powers of MI, 
while preserving the institution -- essential to the 
maintenance of the SPDC's power.  As reported in ref B, 
following Khin Nyunt's removal, the SPDC named former Rangoon 
Division Regional Commander Major General Myint Swe as the 
new head of MI.  On October 22nd, the SPDC abolished the 
30-year old National Intelligence Bureau (NIB), the committee 
that oversaw all intelligence and state-security operations 
carried out by, among others, MI and the Ministry of Home 
Affairs' Special Branch, Bureau of Special Investigations, 
and Criminal Investigation Department police agencies (ref 
A).  The Bureau was chaired by ex-PM Khin Nyunt, giving him 
tremendous power over his fellow citizens and fellow SPDC 
members. 
 
6. (C) It is unclear what will replace the NIB, but we are 
confident a new coordinating body will be formed under firm 
control of the regular military.  One unverified report we've 
heard is that the SPDC will establish a new "Inland Security" 
Ministry that will take over the NIB's role but which will be 
controlled by someone personally loyal to the Senior General. 
 
Economic Conditions: Waiting for New Palms to Grease 
 
7. (C) On the economic front there is uncertainty.  Traders 
report authorities have tightened border controls, making it 
more difficult to smuggle in goods from Thailand and China. 
One eyewitness in Taunggyi, an entrepot in southern Shan 
State near the Thai border, indicated that black market 
gasoline and diesel have disappeared from the streets as have 
the dozens of illegally imported and unlicensed vehicles. 
She said it was difficult to import these things as normal 
since the shake-up because MI's role in facilitating illegal 
border trade had been supplanted, but the new "regime" had 
not yet settled into place.  One gem smuggler told us the 
usual route between Mogok (Burma's ruby and sapphire capital 
in Mandalay Division) and Thailand was closed for now, but 
should be back to normal "in a month or two." 
 
8. (C) The crackdown on those close to Khin Nyunt and MI has 
been inconsistent.  Reliable sources report a large MI front 
trading company has been closed and Bagan CyberTech, run by 
Khin Nyunt's son, has been taken over by the army's signal 
corps.  However, Khin Nyunt cronies involved in projects 
deemed "state priorities," such as edible oil production, or 
who have family or other ties to Than Shwe or Maung Aye have 
escaped the axe so far.  Newspaper photos of the October 24th 
lecture on corruption and rule of law included a few of those 
cronies closest to the ex-PM, apparently still in the legal 
fold. 
 
Comment: Wait and See 
 
9. (C) Despite the seamless ousting of Khin Nyunt and the 
apparent return to business as usual in Rangoon, there is 
still angst in the air.  The business community is wary of 
what a new order will bring in terms of vital smuggling 
operations and economic policy.  Though there has not yet 
been a complete purge of business people with previous MI 
ties, they worry about their economic and personal futures. 
Politically there is also much insecurity with rumors rampant 
of more changes to come, and the uncertainty of whether SPDC 
relations with the various cease-fire groups can continue 
placidly without Khin Nyunt -- the author of the cease-fire 
"agreements."  End comment. 
Martinez