US embassy cable - 02RANGOON1469

UNCLAS SECTION 01 OF 02 RANGOON 001469 
 
SIPDIS 
 
STATE FOR EB, EAP AND INL 
TREASURY FOR OASIA 
DEA FOR OF, OFF 
NSC FOR RAND BEERS 
MANILA FOR USED/ADB 
USCINCPAC FOR FPA 
 
E.O. 12958: N/A 
TAGS: SNAR, EAID, BM, ADB 
SUBJECT: U.S. SANCTIONS: DIRECTED AT BURMA OR THE REGION? 
 
 
1. This is an action message.  See paragraph 9. 
 
2. Summary: The United States is now poised to oppose an ADB 
regional grant for alternative development in the Greater 
Mekong Subregion (GMS) on the grounds that Burma-specific 
legislation applies to all such regional grants.  That 
position will have wide ramifications, potentially crippling 
the ADB's ability to support GMS loans and grants. It will 
also undercut regional support for U.S. sanctions policy on 
Burma and damage U.S. efforts to promote donor support for 
alternative development projects in Southeast Asia.  That was 
not the intent of the Burma legislation, but it will be the 
effect, if the USG does not review and reverse the proposed 
decision on the ADB grant.  End Summary. 
 
3. The ADB's Executive Board will shortly take up a proposed 
$2 million technical assistance grant for cooperation on 
alternative development for drug control in the Greater 
Mekong Subregion.  As its name implies, the grant will 
promote sub-regional cooperation in major opium producing 
areas.  It has three basic components.  The grant will help 
implement the joint China/ASEAN ACCORD plan of action on drug 
control, assist in monitoring opium production, and promote 
alternative development activities, including food security, 
health and education programs, crop diversification, and 
improved land use planning.  In Burma specifically, the 
technical assistance would pick up activities from the Wa 
Alternative Development Project that were cut when that 
project was downsized in 2000. 
 
4. This grant would directly support U.S. alternative 
development initiatives in Southeast Asia.  Over the past 
five years, the United States has been the strongest 
supporter of alternative development activities in the Golden 
Triangle.  In Burma alone, the United States has contributed 
over three-quarters of the donor funding for the Wa 
Alternative Development project, a total of over $8 million 
since 1998.  We have also lobbied strongly for broader donor 
support for these programs, with some success.  Since 2000, 
Japan has scaled up its support for alternative development 
programs in Burma from an original grant of $500,000 to 
$700,000 in 2001 and $1.673 million in 2002, almost $1 
million more than we will contribute this year.  In 2002, 
Germany became the third major donor to join up, putting up 
$1.25 for alternative development in the Wa territories. 
Meanwhile, Thailand and China have begun planning for their 
own alternative development programs with Burma. 
 
5. These projects, moreover, have been successful.  The Wa 
Alternative Development Project in particular has contributed 
to a sharp reduction in opium cultivation in the project 
area.  It has also helped eliminate leprosy from the project 
area, established new health and education facilities, and 
helped close a food deficit which has always been a prime 
motivating factor for opium production by village farmers. 
In addition, it has opened a window on the Wa territories for 
foreign observers, exposed the Wa to concerted international 
pressure regarding drug trafficking, and directly supported 
Burma's nationwide drug control program, which has reduced 
opium production by more than 75 percent over the poast six 
years; i.e., from an estimated 2,560 metric tons in 1996 to 
only 630 metric tons last year. 
 
6. Despite this success, the United States is now proposing 
to frustrate the ADB's efforts to get involved in alternative 
development in Southeast Asia by voting against the proposed 
regional grant.  Essentially, that decision was based on some 
Burma-specific legislation that directs the Secretary of 
Treasury to instruct the USEDs at all IFIs to vote against 
"any loan or other utilization of funds .... to or for 
Burma."  In this case, however, the proposed grant is not "to 
or for Burma," alone.  In fact, the Government of Burma will 
never see a cent of the money.  Rather, the grant will be 
distributed through UNDCP for use in countries throughout the 
sub-region, including China, Laos, Thailand, Vietnam, and 
Cambodia.  As a consequence, a "no" vote in this case will 
have widespread ramifications.  Not only will it undercut our 
efforts to promote alternative development in the Golden 
Triangle, it will also effectively extend Burma-specific 
sanctions to the entire Greater Mekong sub-region, 
potentially outlawing any lending by the World Bank, the ADB, 
or any other IFI to any type of regional project from which 
Burma might benefit in any way. 
 
7. Such a vote would also inevitably undercut regional 
support for our Burma policy.  Our sanctions policy, after 
all, is intended to punish Burma, not its neighbors.  If we 
persist now in extending those sanctions to all regional 
collectives in which Burma participates, we will risk 
alienating the very front line states whose support we need 
if sanctions are to be effective.  The point is critical and 
worth emphasizing.  There is no better way to undercut 
regional support for our Burma policy than to apply our 
sanctions collectively to all regional states.  That, 
however, will be the effect of U.S. votes against regional 
projects. 
 
8. In short, the proposed U.S. decision to vote no on the ADB 
grant can result in crippling the ability of IFIs to support 
GMS loans and grants; it will undercut regional support for 
U.S. sanctions policy on Burma; and it will damage U.S. 
efforts to promote donor support for alternative development 
projects in Southeast Asia. None of this was the intent of 
the original Burma legislation; however, it will be the 
effect and the USG should take time now to step back and 
review its proposed decision on this ADB grant. 
 
9. Action requested: A "yes" vote on the ADB's grant for 
alternative development in the Greater Mekong Subregion. 
Martinez