US embassy cable - 02RANGOON1609

UNCLAS SECTION 01 OF 09 RANGOON 001609 
 
SIPDIS 
 
STATE FOR EAP AND INL 
TREASURY FOR OASIA AND FINCEN 
JUSTICE FOR MARY LEE WARREN 
DEA FOR OF AND OFF 
USCINCPAC FOR FPA 
MANILA ALSO FOR USED/ADB 
 
E.O. 12958: N/A 
TAGS: SNAR, KCRM, BM 
SUBJECT: 2002 INTERNATIONAL NARCOTICS CONTROL STRATEGY 
REPORT -- BURMA 
 
REF: A. (A) RANGOON 1355 
 
     B. (B) RANGOON 1415 
     C. (C) RANGOON 1544 
     D. (D) RANGOON 1561 
 
I. Summary 
 
While Burma is the world's second largest producer of illicit 
opium, its overall production in 2002 was actually only a 
fraction of its production in the mid-1990s.  According to 
the joint U.S./Burma opium yield survey, opium production in 
Burma totaled no more than 630 metric tons in 2001, down more 
than 26 percent from a year earlier, and less than 
one-quarter of the 2,560 metric tons produced in Burma in 
1996. 
 
Over the past several years, the Burmese government has 
significantly extended its counternarcotics cooperation with 
other states.  In 2001, it signed counternarcotics MOUs with 
both China and Thailand, and, in both 2001 and 2002, joined 
with China in joint operations in northern and eastern Shan 
State which resulted in the destruction of several major drug 
trafficking rings, including one group which the Chinese 
called one of the largest "armed drug smuggling groups in the 
Golden Triangle area."  Cooperation with Thailand was 
interrupted by tensions on the border during the summer of 
2002, but has been revived as tensions have eased. 
 
In 2002, Burma also responded to rising international 
concerns regarding the quality of its anti-money laundering 
regime by enacting a powerful new money-laundering law that 
criminalizes money laundering in connection with virtually 
every type of major criminal activity.  The first 
investigations under this law began in July, resulting in the 
seizure of several hundred thousand dollars in assets. 
 
Burma is a party to the 1961 UN Single Convention, the 1971 
UN Convention on Psychotropic Substances, and the 1988 UN 
Drug Convention.  It has also announced that it will shortly 
adhere to the 1972 Protocol to the 1961 Single Convention. 
 
II. Status of Country 
 
Burma is the world's second largest producer of illicit 
opium.  However, its overall production in 2001 was actually 
only a fraction of its production in the mid-1990s. 
According to the joint U.S./Burma opium yield survey, opium 
production in Burma totaled no more than 630 metric tons in 
2002, down 26 percent from a year earlier, and less than 
one-quarter of the 2,560 metric tons produced in Burma in 
1996. Approximately half of this decline reflects a decline 
in acreage under cultivation (which dropped by more than half 
to only 78,000 hectares in 2002).  The remainder was due to 
lower yields (now only about 8 kilograms/hectare) throughout 
Burma. 
 
Burma also plays a role in the regional traffic in 
amphetamine-type stimulants (ATS).  Drug gangs based in the 
Burma/China and Burma/Thailand border areas annually produce 
several hundred million methamphetamine tablets for markets 
in Thailand, China, and other Southeast Asian states on the 
basis of precursors imported from neighboring states.  Burma 
itself does not have a chemical industry and does not produce 
any of the precursors for methamphetamine or other artificial 
drugs.  Neither is there any significant market in Burma for 
ATS. 
 
Burma has a small, but growing drug abuse problem.  While the 
government maintains that there are only about 70,000 
registered addicts in Burma, surveys conducted by UNDCP, 
among others, suggest that the addict population could be as 
high as 300,000 (i.e., still less than 1 percent of the 
population), with opium the major source of addiction.  There 
is also a growing HIV/AIDS epidemic, linked in part to 
intravenous drug use.  According to surveys, 57 percent of 
all intravenous drug users in Burma have tested positive for 
the HIV/AIDS virus. 
 
Money-laundering is also an area of concern.  While 
international money flows through Burma are small, given the 
undeveloped state of its banking system and tight government 
controls on all funds transfers, the Financial Action Task 
Force in June 2001 placed Burma on its list of 
non-cooperating territories, because of concerns regarding 
weaknesses in Burma's anti-money laundering regime.  Burma 
has since responded by enacting a powerful new money 
laundering law, seizing assets, and preparing prosecutions in 
several major cases. 
 
III. Country Actions Against Drugs 
 
A. Policy Initiatives 
 
Burma's official counternarcotics plan calls for the 
eradication of all narcotics production and trafficking over 
a fifteen year period, starting in 1999.  The plan is to 
proceed by stages, with eradication efforts coupled to 
alternative development programs in individual townships, 
predominantly in Shan State.  Altogether, 54 townships have 
been targeted, 25 of which are to be taken on during the 
first five years of the program. 
 
The government has received very limited international 
assistance in support of these efforts.  The most significant 
is UNDCP's Wa Alternative Development Project (WADP) which is 
financed by the United States, Japan and, since 2002, 
Germany.  A five-year, $12.1 million program, this project 
encourages alternative development in a small portion of the 
territory controlled by the United Wa State Army.  There is 
also a small, U.S.-financed project in Northern Shan State 
(Project Old Soldier) and a Japanese effort to establish 
buckwheat as a cash crop in the Kokang and Mong Ko regions of 
northeastern Shan State.  In addition, the Thai government 
agreed in 2001 to extend its own alternative development 
projects across the border into the Wa-controlled Southern 
Military Region of Shan State. 
 
B. Accomplishments 
 
Narcotics Seizures: Summary statistics provided by the 
Burmese police indicate that the Burmese police, army, and 
the Customs Service together seized approximately 1,631 
kilograms of raw opium, 285 kilograms of heroin, and 8.8 
million methamphetamine pills during the first ten months of 
2002.  This compares with seizures of 1,629 kilograms of raw 
opium, 97 kilograms of heroin, and 32 million methamphetamine 
pills during all of 2000.  Major cases included the following: 
 
--    In cooperation with the United States Drug Enforcement 
Administration and the Australian Federal Police, Burmese 
police contributed to the seizure of 357 kilograms of heroin 
in Fiji in October 2000.  Death sentences were eventually 
handed down in Yangon for two drug kingpins connected with 
this case. 
 
--    In cooperation with Thailand, Burmese police 
contributed to the seizure of 116 kilograms of heroin and 7.8 
million methamphetamine tablets in February 2002.  Two of the 
principals behind this shipment were also eventually 
convicted in Yangon and sentenced to "indefinite" (i.e., 
unending) terms in prison. 
 
--    In cooperation with China, Burmese police have 
contributed to a series of arrests and seizures throughout 
2001 and 2002 all along the Chinese border.  Altogether, 
Burma has turned over 22 fugitives to China, including 
members of one group (Tan Xiao Lin and company) which China 
described as the "largest armed drug-trafficking gang in the 
Golden Triangle." 
--    In cooperation with the United States Drug Enforcement 
Administration and China, Burmese police contributed to the 
seizure of 12.5 kilograms of heroin in Hong Kong on July 11, 
2002.   Evidence collected in that case will provide the 
basis for one of the first prosecutions in Burma under the 
GOB's new money laundering law. 
 
--    In cooperation with Thailand and the U.S. Drug 
Enforcement Administration, Burmese police arrested Yang 
Chia-ho, a Kokang Chinese who is reportedly a confederate of 
the notorious Wa captain, Wei Hsueh Kang.  Yang Chia-ho was 
taken into custody together with more than 5 million 
methamphetamine tablets and 41 kilos of heroin in Tachileik, 
Burma on October 4, 2002. 
 
Arrests and Prosecutions: Over the past fourteen years, the 
Burmese government has made almost 90,000 arrests on 
drug-related charges.  Of those arrested, 42 were eventually 
sentenced to death, 37 were given life imprisonment, and an 
additional 12,500 were given prison terms of more than 10 
years.  During the first eight months of 2002, Burma has 
arrested another 4,148 suspects.  It has also continued with 
prosecutions.  Altogether, the Burmese government has brought 
more than 4,000 separate cases against narcotics traffickers 
over the past two years; 2,592 of these cases were prosecuted 
in 2001; 1,475 during the first seven months of 2002.  Of 
these cases, 172 were dismissed for lack of sufficient 
evidence and 259 defendants were acquitted.  The remainder (a 
total of 3,853 over the full nineteen months) were convicted. 
 Six were given the death penalty; 137 were given "unlimited" 
sentences; 10 were given life sentences; and 1,927 were given 
sentences in excess of 10 years.  The remainder were given 
sentences of less than 10 years. 
 
Refineries:  The GOB destroyed 14 heroin labs in 2001 and 7 
through the first nine months of 2002.  It has also destroyed 
6 meth labs during the first nine months of 2002. 
 
Precursor Chemicals:  In 2002, the Ministry of Health issued 
notification No. 1/2002 identifying 25 substances as 
precursor chemicals and prohibiting their import, sale, or 
use in Burma.  Seizures of precursor chemicals during the 
first nine months of 2002 included 1,220 kilos of ephedrine, 
2,908 kilos of acetic anhydride, and 21,552 kilos of other 
chemicals.  In 2001, the totals were 3,922 kilos of 
ephedrine, 12,318 liters of acetic anhydride, and 174,191 
liters of other chemicals. 
 
Eradication: The GOB eradicated more than 50,000 acres of 
opium poppy over the past two crop years.  Of this, 26,113 
acres were destroyed during the 2000/01 crop year; 25,862 
acres during 2001/02.  In addition, the GOB burned 164,000 
kilos of poppy seeds capable of seeding more than 40,000 
hectares during the six month period between April and 
October 2002.  According to the Burmese government, the 
destruction of those seeds, together with law enforcement 
actions is expected to reduce the acreage under opium 
cultivation by about half in 2003. 
 
C. Law Enforcement Measures 
 
Drug-enforcement efforts in Burma are led by the Central 
Committee for Drug Abuse Control (CCDAC), which is comprised 
of personnel from various security services, including the 
police, customs, military intelligence, and the army.  CCDAC 
now has 18 drug-enforcement task forces around the country, 
with most located in major cities and along key transit 
routes near Burma's borders with China, India, and Thailand. 
As is the case with most Burmese government entities, CCDAC 
suffers badly from a lack of adequate resources to support 
its law-enforcement mission. 
 
The legal framework for Burma's law enforcement efforts is 
provided by its 1993 Narcotic Drugs and Psychotropic 
Substances Law.  As demanded by the 1988 UN Drug Convention, 
that law contains legal tools for addressing money 
laundering, the seizure of drug-related assets, and the 
prosecution of drug conspiracy cases. 
 
Burma was placed on the Financial Action Task Force's list of 
non-cooperating territories in June 2001 because of 
continuing deficiencies in its anti-money laundering regime. 
In response, the GOB enacted a powerful new money laundering 
law in 2002 which criminalized money laundering in connection 
with most major offenses.  A Central Control Board chaired by 
the Minister of Home Affairs was established in July; 
training for financial investigators was conducted in Rangoon 
and Mandalay in August and September; the initial 
investigations were begun in July; and, using the provisions 
of the law, assets have been frozen and/or seized in several 
major narcotics-related cases.  The first prosecutions under 
the new law should take place within the next several months. 
 With assistance from UNDCP, the Burmese government is also 
in the process of drafting a new mutual legal assistance law, 
which should lay the groundwork for judicial and law 
enforcement cooperation across borders in the prosecution of 
money laundering and other cases. 
 
In 2000 and 2001, the Burmese government also launched its 
first major campaigns against trafficking by former insurgent 
groups.  In November 2000, the GOB took advantage of a mutiny 
within the Mong Ko Defense Army to seize Mong Ko and put that 
band and its leader, Mong Sa La, out of the narcotics 
business.  It also sharply stepped up its pressure on the 
Kokang Chinese, who missed their year 2000 target for 
establishing an "opium free" zone throughout their 
self-administered territories.  Starting in September 2001, 
the Burmese joined with the Chinese government in a series of 
joint operations which resulted in the destruction of heroin 
factories and meth labs throughout the Kokang Chinese Special 
Region No. 1 and the arrest of major traffickers. 
 
In 2001, for the first time, the government also established 
a police and military intelligence presence in the Wa 
territories. In March, 2002, it demanded that new 
counternarcotics decrees be issued by the Wa, the Kokang 
Chinese, and other cease-fire groups.  Those decrees outlawed 
participation in any aspect of the narcotics trade.  In April 
and May 2002, the GOB also demanded and received cooperation 
from the United Wa State Army in bringing to heel several 
major fugitives wanted by China.  In addition, it has closed 
down the liaison offices of armed groups like the United Wa 
State Army, and of companies associated with those groups in 
Tachileik, Myawaddy, and other towns on the Thai/Burmese 
border.  Finally, the GOB continued efforts to hold 
cease-fire groups to their pledges to end opium production in 
their territories.  U Sai Lin's Special Region No. 4 around 
Mong La has been opium-free since 1997 and the Wa are, thus 
far, on track to eliminate opium by 2005.  The Kokang Chinese 
missed their opium-free target (scheduled for the year 2000), 
but have paid a heavy price for that failure in terms of 
increased attention from both the Burmese and the Chinese 
police. 
In 2001, the GOB also began a crackdown on the array of 
militias (some government-sponsored Ka Kwe Ye; i.e., village 
defense forces, and others the remnants of former insurgent 
bands) that the GOB had previously allowed to cultivate opium 
in the Kutkai-Lashio region of northern Shan State. 
According to military intelligence officials, with peace now 
prevailing in most of the countryside and the government no 
longer in need of the local security services these groups 
provided, steps are now being taken to slowly claw back their 
privileges, including the right to grow and traffic opium. 
 
D. Corruption 
 
There is no evidence that the Burmese Government is directly 
involved in the drug trade.  However, officials, particularly 
army and police personnel posted in outlying areas, have been 
prosecuted for drug abuse and/or narcotics-related 
corruption.  According to the Burmese government, over 200 
police officials and 48 Burmese Army personnel have been 
punished for narcotics-related corruption or drug abuse 
between 1995 and May 2002.  Of the 200 police officers, 130 
were imprisoned, 16 were dismissed from the service, 7 were 
forced to retire, and 47 were demoted. 
 
E. Agreements and Treaties 
 
Burma is a party to the 1961 UN Single Convention, the 1971 
UN Convention on Psychotropic Substances, and the 1988 UN 
Drug Convention.  It has also announced that it will shortly 
adhere to the 1972 Protocol to the 1961 Single Convention. 
In addition, is also one of six nations (Burma, Cambodia, 
China, Laos, Thailand, Vietnam) that are parties to UNDCP's 
sub-regional action plan for controlling precursor chemicals 
and reducing illicit narcotics production and trafficking in 
the highlands of Southeast Asia. The GOB has signed bilateral 
drug control agreements with India in 1993, with Bangladesh 
in 1994, with Vietnam in 1995, and with the Russian 
Federation, Laos, and the Philippines in 1997. 
 
Burma is part of every major multilateral narcotics control 
program in the region.  In November 2001, Burma agreed to 
contribute to the ACCORD plan of action, which serves as an 
umbrella for a variety of global programs aimed at 
strengthening the rule of law, promoting alternative 
development, and increasing civic awareness of the dangers of 
drugs.  It has also supported the 1993 Memorandum of 
Understanding that was signed among the six regional states 
-- Burma, China, Thailand, Laos, Vietnam, and Cambodia -- to 
control narcotics production in Southeast Asia. 
 
In 2001, Burma signed additional counternarcotics MOUs with 
China (in January) and Thailand (in June).  The MOU with 
China, in particular, laid down the ground rules for joint 
operations, which in turn led to a series of arrests and 
renditions of major traffickers during the spring and summer 
of 2001 (see below). 
 
Burma's MOU with Thailand commits both countries to closer 
police cooperation in narcotics control.  In August 2001, 
both countries also agreed to establish joint "narcotics 
suppression coordination stations" in the Chiang 
Rai/Tachileik, Mae Sot/Myawaddy, and Ranong/Kawthoung border 
areas.  In addition, during Secretary 1 Khin Nyunt's 
September visit to Thailand, Thailand also offered 20 million 
baht (about $440,000) for the establishment of a new 
alternative development program in the Southern Military 
Region of Shan State, which is now occupied by the United Wa 
State Army. 
 
This nascent counter-narcotics cooperation between Thailand 
and Burma was interrupted by tensions on the border during 
the summer of 2002.  However, as tensions have eased, 
cooperation has resumed. 
 
Finally, Burma has continued its operational cooperation with 
DEA, the Australian Federal Police, and other western and 
regional police agencies.  In April, that cooperation 
resulted in the arrest of two Burmese citizens who were 
accused of exporting 357 kilograms of heroin to Fiji (see 
above).  Both have since been tried, convicted, and sentenced 
to death. 
 
F. Cultivation and Production 
 
According to the US/Burma Joint Opium Yield Survey, opium 
production declined in Burma for the sixth straight year in 
2002. The survey found that the maximum potential yield for 
opium in Burma in 2002 totaled only 630 metric tons, down 235 
metric tons (or approximately 26 percent) from 2001. Over the 
past six years, opium production in Burma has declined by 
more than 75 percent, from an estimated 2,560 metric tons in 
1996 to only 630 metric tons in 2002.  The area under 
cultivation has dropped by more than half, from 163,100 
hectares in 1996 to approximately 78,000 acres in 2002. 
Yields have similarly been cut by more than half, from an 
estimated 17 kilograms per hectare in 1996 to levels (about 
8.0 kilograms per hectare in 2001) that are now comparable to 
those in neighboring states such as Laos. 
 
Results from a UNDCP-sponsored census survey throughout Shan 
State in 2002 largely corroborated these results. According 
to UNDCP, Burma produced approximately 828 metric tons of 
opium on 81,000 hectares of land in 2002. 
 
G. Drug Flow/Transit 
 
Most ATS and heroin in Burma is produced in small, mobile 
labs located in the Burma/China and Burma/Thailand border 
areas, primarily in territories controlled by active or 
former insurgent groups.  A growing amount of methamphetamine 
is reportedly produced in labs co-located with heroin 
refineries in areas controlled by the United Wa State Army, 
the Kokang Chinese, and the Shan State Army - South.  Heroin 
and methamphetamine produced by these groups are trafficked 
primarily through China, Thailand and, to a lesser extent, 
Laos, India, Bangladesh, and Burma itself. 
 
Precursors for the trade are primarily produced in India, 
China, Thailand, and other regional states.  Burma does not 
have a chemical industry and does not produce ephedrine, 
acetic anhydride, or any of the other chemicals required for 
the narcotics trade.  Similarly, the major markets for all of 
these narcotic drugs lie in neighboring states.  Relatively 
little is sold in Burma itself. 
H. Demand reduction 
 
The overall level of drug abuse is low in Burma compared with 
neighboring countries.  According to the GOB, there are only 
about 70,000 "officially registered" drug abusers in Burma. 
While this is undoubtedly an underestimate, even UNDCP 
estimates that there may be no more than 300,000 people 
(still less than 1 percent of the population) who abuse drugs 
in Burma.  Most, particularly among the older generation, use 
opium, but use of heroin and synthetic drugs is rising, 
particularly in urban and mining areas. 
 
Burmese demand reduction programs are in part coercive and in 
part voluntary.  Addicts are required to register and can be 
prosecuted if they fail to register and accept treatment. 
Altogether, more 21,000 addicts were prosecuted for failing 
to register between 1994 and April 2002. 
 
Demand reduction programs and facilities are strictly 
limited, however.  There are six major drug treatment centers 
under the Ministry of Health, 49 other smaller detox centers, 
and 8 rehabilitation centers which, together, have reportedly 
provided treatment to about 55,000 addicts over the past 9 
years.  There are also a variety of narcotics awareness 
programs conducted through the public school system. 
According to UNDCP, approximately 1,200 high school teachers 
participated in seminars, training programs, and workshops 
connected with these programs in 2001.  In addition, the 
government has established demand reduction programs in 
cooperation with INGOs.  These include programs with CARE 
Myanmar, World Concern, and Population Services 
International, all of which focus on injecting drug use as a 
factor in the spread of HIV/AIDS. 
 
IV.  U.S. Policy Initiatives 
 
A.    Policy and Programs 
 
Direct USG counternarcotics assistance to Burma has been 
suspended since 1988, when the Burmese military suppressed 
the pro-democracy movement.  The USG now engages the Burmese 
government in regard to narcotics control only on a very 
limited level.  DEA, through the U.S. Embassy in Rangoon, 
shares drug-related intelligence with the GOB and conducts 
joint drug-enforcement investigations with Burmese 
counternarcotics authorities.  Other U.S. agencies have 
conducted opium yield surveys in the mountainous regions of 
the Shan State in 1993, 1995, 1997, 1998, 1999, 2000, 2001, 
and 2002 with essential assistance provided by Burmese 
counterparts.  These surveys give both governments an 
accurate understanding of the scope, magnitude, and changing 
geographic distribution of Burma's opium crop. 
 
The U.S. Government regularly urges the Burmese government to 
continue to take steps to curb narcotics production and 
trafficking.  Specifically, we have encouraged the Burmese 
government to: 
 
--    Comply with the provisions of UN Drug Conventions by 
taking demonstrable and verifiable actions against high level 
drug traffickers and their organizations; 
 
--    Increase opium eradication and significantly increase 
seizure rates for opium, heroin, and methamphetamines; 
control the diversion of precursor chemicals; and destroy 
significantly more heroin and methamphetamine laboratories; 
--    Continue cooperation with China and Thailand and expand 
cooperation to other neighboring countries such as India; 
 
--    Enforce existing money laundering laws, including asset 
forfeiture provisions, and fully implement and enforce 
Burma's new money laundering legislation; 
 
--    Prosecute drug-related corruption, especially corrupt 
government and military officials who facilitate drug 
trafficking and money laundering; and 
 
--    Expand demand reduction, prevention and drug treatment 
programs to reduce drug use and control the spread of 
HIV/AIDS. 
 
B. Bilateral Cooperation 
 
USG counternarcotics cooperation with the Burmese regime is 
restricted to basic law-enforcement operations.  The U.S. 
provides no bilateral material or training assistance.  DEA's 
liaison with Burmese policy makers and military officials -- 
conducted mainly through DEA's office in Rangoon -- focuses 
on providing intelligence on enforcement targets and 
coordinating investigations of international drug-trafficking 
groups. 
 
C. The Road Ahead 
 
The Burmese government has committed itself in recent years 
to effective counternarcotics measures, has found major 
regional allies (particularly China) in this fight, and has 
built up the capacity to identify and punish drug traffickers 
and major trafficking organizations, even within the context 
of very limited resources.  Based on experience in dealing 
with significant narcotics-trafficking problems elsewhere in 
the world, the USG recognizes that large-scale and long-term 
international aid -- including development assistance and 
law-enforcement aid -- would help curb drug production and 
trafficking in Burma.  However, recurring human rights 
problems have limited international support of all kinds, 
including support for Burma's law enforcement efforts.  The 
USG believes that the Government of Burma should continue to 
combat corruption, enforce its narcotics and money-laundering 
legislation, and deal with drug abuse.  Its efforts have 
produced measurable results.  Continued, they could lead to a 
sustained reduction in all forms of narcotics production and 
trafficking from an area that has been one of the world's 
major drug trafficking centers. 
 
STATISTICAL TABLES                        2002        2001 
2000 
 
OPIUM - MAXIMUM HARVESTABLE         77,700      105,150 
108,700 
CULTIVATION (HECTARES) 
 
ERADICATION (ACRES)                 25,862      26,113 
N/A 
 
POTENTIAL OPIUM GUM                       630         865 
1,085 
(METRIC TONS) 
 
SEIZURES 
OPIUM (METRIC TONS)                       1.631*      1.629 
1.528 
HEROIN (METRIC TONS)                .285* .097        .171 
 
STIMULANT DRUGS                     8.8*        32.0 
26.7 
(MILLION TABLETS) 
CANNABIS    (Metric Tons)           N/A         .284  .602 
 
 
HEROIN LABS DESTROYED               7**         14 
23 
METH LABS DESTROYED                 6**         N/A         6 
 
ARRESTS                                   4,148***    N/A 
4,881 
HEROIN USERS (Thousands)            N/A         N/A 
N/A 
OPIUM USERS (Thousands)             N/A         N/A 
N/A 
 
* - during first 10 months of 2002 
** - during first 9 months of 2002 
*** - during first 8 months of 2002 
Martinez