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U.S. Department of State
Bureau for International Narcotics and law Enforcement affairs 
March 1997

Narcotics Control Reports-1996

Burma
I. Summary

Burma is the world's largest source of illicit opium and, potentially, heroin, as opium cultivation and production in 1996 increased to near record levels. The 1996 crop estimates indicate there were 163,000 hectares under opium poppy cultivation which could yield up to 2,560 mt of opium gum ­­ enough to produce 250 mt of heroin and to satisfy the US heroin market many times over. Although there were some limited improvements in the Burmese Government's counternarcotics performance with regard to drug and precursor chemical seizures, these efforts fell far short of what is needed to cope with Burma's burgeoning drug trade. Burma's antidrug efforts suffer from a lack of resources as well as the lack of a strong and consistent commitment.

Although the "surrender" of drug lord Khun Sa and the dismantling of his Mong Tai Army (MTA) was portrayed by the State Law and Order Restoration Council (SLORC) as a positive development, Khun Sa has not been brought to justice and has apparently been granted personal clemency from prosecution or extradition. He is said by authorities to be under a form of house confinement in Rangoon and permitted to engage in business activities, but not narcotics­related activities. Reports suggest, however, that he and his MTA colleagues continue to be involved in the narcotics trade.

The ethnic drug trafficking armies with which the government has negotiated cease­fires, such as the United Wa State Army (UWSA) and the Myanmar National Democratic Alliance Army (MNDAA­Kokang Chinese), remain armed and heavily involved in the heroin trade and have to some extent moved into territory vacated by Khun Sa's former MTA. The top leaders of these ethnic groups are: U Sai Lin (Lin Ming­Shing) of the Eastern Shan State Army (ESSA); Yang Mao­Liang, Peng Chia­Sheng and Liu Go­Shi of the MNDAA; Pao Yu­Chiang, Li Tzu­Ju and Wei Hsueh­Kang of the United Wa State Army; and U Mahtu Naw of the Kachin Defense Army (KDA). Nevertheless, the government's limited efforts to extend law enforcement into the ethnic areas during the year resulted in some seizures of narcotics and precursor chemical and the destruction of some heroin refineries. These seizures pale in comparison with overall production, however, and are less than those in neighboring, non­producing states.

Money laundering is a growing problem in Burma, and there is reason to believe that the laundering of drug profits is having a substantial 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 drug­related proceeds in legitimate commerce. Drug abuse ­­ in particular intravenous drug use ­­ is increasing, as is the incidence of HIV/AIDS infection.

II. Status of Country

Burma provides the bulk of the world's opium supply. It produces about 84 percent of the opium cultivated in Southeast Asia. Most of this supply of illicit opiates is produced in ethnic minority areas of Burma's Shan State, such as the Kokang and Wa territories over which Burmese authorities have minimal control. Since 1989, the SLORC has negotiated cease­fire agreements with the drug trafficking groups that control these areas, offering them limited autonomy and developmental assistance in exchange for ending their insurgencies. Because the SLORC's highest priority has been to end the fighting and the threat to its national security, counternarcotics efforts in these areas have been a secondary consideration, even though the groups are said to have agreed to the gradual phaseout of opium cultivation and drug trafficking within their areas. Nevertheless, we have seen no discernible effort by these groups to reduce trafficking or production. Following the surrender of Khun Sa, the Kokang, Wa and Essa areas in particular became drug trafficking havens where opium was produced and refined with relative impunity.

As part of the SLORC's efforts to bring the ethnic groups under its control, it granted leaders of these drug trafficking armies significant political legitimacy, and several participate in the government's National Constitutional Convention. These leaders have exploited their relationship with Rangoon to expand their businesses ­­ legitimate and illegitimate ­­ although their prosperity has not filtered down to the ordinary people of the ethnic areas.

III. Country Actions Against Drugs in 1996

Policy Initiatives. Burmese counternarcotics activities increased from a very low base during 1996, especially with regard to heroin, precursor chemical, and amphetamine seizures, but remained grossly inadequate compared to the magnitude of Burma's drug problem.

The "surrender" of Khun Sa allowed the Burma Army to project its authority into the former MTA area. The military disrupted, at least temporarily, trafficking routes and destroyed a number of heroin refineries in the area. There are also reports, however, of officials turning a blind eye to refining activity in return for bribes.

The SLORC did not announce any new drug control policy initiatives during 1996. It continued limited efforts to implement its "Master Plan for the Development of Border Areas and National Races." This plan calls for a program of integrated development combined with law enforcement. The stated aim is to improve the living standards in the ethnic areas and provide viable economic alternatives to opium cultivation. In 1993, the Government of Burma (GOB) and UNDCP launched the China/Myanmar project and the Thailand/Myanmar project in Mong Yang and Tachilek districts, respectively. These projects, while improving living standards and introducing alternative crops to farmers within the project areas themselves, had little, if any, impact on the enormous problem of opium cultivation even in neighboring areas, much less other areas of eastern and northern Burma. The projects drew to a close in December 1996.

The GOB and UNDCP initiated a 12­month pilot integrated rural development project in 1994 in the Wa region in an effort to take advantage of the United Wa State Army's decision to establish five "opium poppy­free zones" in its area of control. The stated goal was to bring about a gradual reduction of opium cultivation in the WA area. The pilot project was designed to test the feasibility of a planned five­year, $15 million rural development project aimed at crop substitution. Negotiations on the "Drug Control and Development in the Wa Region of Shan State" project between the GOB, the UNDCP, and the Wa leaders were concluded in November 1996. The SLORC raised a number of obstacles to implementation of the project. Protracted negotiations between UNDCP and the Burmese resolved many of these issues, but some remain, and donors are concerned about implementation. The Burmese cabinet has not yet formally approved the project. In contrast to UNDCP's previous projects in Mong Yang and Tachilek, the Wa project will incorporate a monitoring and evaluation component designed to measure progress in eliminating opium cultivation. As an integrated development scheme, it will also focus on infrastructure, as well as on the provision of educational and health facilities in the Ho Tao and Mong Pawk districts of the Wa region.

Accomplishments. The GOB negotiated the "surrender" of the notorious drug lord Khun Sa and his MTA in January 1996. According to the GOB, the terms of the surrender stipulated that in return for ending his insurgency and surrendering his weaponry, Khun Sa would be allowed to live under close government supervision in Rangoon, where he could engage indirectly, via third­party investors, in legitimate business ­­ but not drug trafficking ­­ and would not be prosecuted for his trafficking activities or extradited to the US. The MTA drug trafficking network has been disrupted, but reports suggest that Khun Sa and his MTA associates are still involved in the trade. Overall trafficking from Burma has not diminished, as other groups, particularly the Wa, took up the slack caused by the dissolution of Khun Sa's army. Moreover, Khun Sa has not been brought to justice in Burma, and the GOB has refused USG requests to turn him over for prosecution in the US. Indeed, the SLORC treats him with respect, addressing him with the traditional honorific.

Seizure of drugs and precursor chemicals, while still minimal, increased from a low base during 1996. The combined police and military narcotics task forces seized 493 kgs of heroin, as opposed to 72 kgs in 1995. In October, the authorities seized for the first time the amphetamine precursor ephedrine ­­ more than three mt ­­ which apparently originated in China for conversion at labs in Burma. They also seized 5.6 million tablets of amphetamines. Seizures of acetic anhydride more than doubled from 1995 totals to 2,668 gallons. However, opium gum seizures continued to decline from previous years, totaling 992 kgs versus 1,060 kgs in 1995. In the July­October period, the Burmese reported that they destroyed 11 heroin refineries compared to the 12 destroyed from 1988 through June 1996. The GOB conducted these counternarcotics activities in areas controlled by ethnic drug trafficking groups such as the Kachin Defense Army, the Kokang Army, the MNDAA, and the United Wa State Army. These limited inroads into the ethnic areas do not, however, constitute a serious challenge to the drug trafficking armies, which by and large continue to conduct their trade unimpeded.

Unlike previous years, when heroin seizures involved small quantities, this year the SLORC claimed some larger seizures, including the largest ever recorded in Burma ­­ 143 kgs seized near Kutkai in Northern Shan State in August. Authorities seized another 44.8 kgs in Hopong in Northern Shan State in August and 45 kgs in Tachilek in September. These seizures are small in comparison with Burma's actual production and with seizures in neighboring countries. The unprecedented precursor and amphetamine seizures have alarmed the Burmese authorities because they signal a possible future stimulants problem for the Burmese populace. Thus far, the amphetamines produced in Burma have been primarily for export to Thailand and China rather than for domestic consumption.

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 drug­related assets, and the prosecution of drug conspiracy cases. However, to date these provisions remain largely unused as Burmese police and judicial officials have been slow to implement the law, targeting few if any major traffickers and their drug­related assets. Undermining SLORC credibility, a Burmese official involved in counternarcotics declared flatly in December that money laundering did not exist in Burma because of the country's strict banking laws. In one instance, however, the authorities reportedly seized buildings belonging to the Wa of the southern military region as the result of the heroin seizure in Tachilek mentioned above, although the disposition of these assets is unknown.

Law Enforcement Efforts. The GOB's coordinated drug enforcement effort is led by the Office of 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, most located in major cities and along key transit routes near Burma's borders with China, India and Thailand. While CCDAC and its task forces are responsible for effecting the bulk of narcotics seizures and arrests, the agency suffers from a lack of adequate resources. The UNDCP and DEA in the past provided various CCDAC units with modest equipment and training, but they were unable to do so this year. CCDAC's resources are inadequate to support its law enforcement mission.

Corruption. There is no evidence that the government, on an institutional level, is involved in the drug trade. However, there are persistent reports that lower level officials, particularly in outlying areas of the border regions, take bribes in return for looking the other way and that some local officials and commanders are actively involved in the drug trade. The lack of a vigorous enforcement effort against money laundering leaves Burma vulnerable to the growing influence of traffickers through the use of drug proceeds in legitimate business ventures. Although there is no concrete proof that drug money is involved, businesses owned by family members of known traffickers invested heavily during the year in infrastructure projects, such as roads and port facilities, as well as in hotels and other real estate development projects.

Agreements and Treaties. Burma is a party to the 1971 and 1988 UN drug conventions. The SLORC deposited instruments of ratification to the 1988 Convention with the UN International Narcotics Control Board in Vienna. 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 US does not have a mutual legal assistance treaty with Burma. It is the opinion of the USG, however, that a US­UK extradition treaty, which was accepted by the post­independence Burmese Government in 1948, remains in force and is applicable to the extradition of drug fugitives from Burma to the US. The SLORC refuses to recognize the applicability of this treaty, as well as the US request to render Khun Sa to face trial in the US. In May, the GOB and the UNDCP signed a six­nation (Burma, Cambodia, China, Laos, Thailand, Vietnam) memorandum of understanding on a sub­regional action plan aimed at controlling precursor chemicals and reducing illicit drug use in the highlands of Southeast Asia.

Cultivation and Production. Burma is by far the world's largest producer of opium, as opium poppy cultivation increased six percent and production increased nine percent over 1995 levels due to good weather, growing conditions and lax enforcement. The 163,100 hectares cultivated in 1995­96 had the potential of producing up to 2,560 mt of opium. The bulk of Burma's opium poppy 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 Burmese Government control on the west bank of the Salween River.

Drug Flow/Transit. Until 1996, heroin tended to be produced in large, relatively static refineries in the Shan State, well ensconced in ethnic enclaves protected by drug trafficking armies. These labs, run by the ESSA, MNDAA (Kokang), KDA, UWSA, and MTA, were left untouched by the GOB, in keeping with the SLORC's cease­fire agreements with these drug militias. However, in 1996 the GOB made inroads into these defended areas, reportedly destroying a number of labs and forcing some traffickers to use smaller and more mobile labs to refine heroin. A growing amount of methamphetamines reportedly is produced in labs co­located with heroin refineries along the Chinese, Thai and Lao borders. Heroin produced by Burma's ethnic groups is trafficked largely through unmarked transit routes crossing the porous Chinese and Thai borders and, to a lesser extent, the Indian, Bangladeshi and Lao borders. Although Thailand was once the primary route for Burmese heroin to exit Southeast Asia, trafficking through China is now increasing.

As in 1995, traffickers moved 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. Trafficking routes leading through Kachin and Chin States and Sagaing Division in northern Burma to India also are used to a lesser extent. Traffickers import acetic anhydride, an essential chemical in the production of heroin, primarily from China, India and, to a lesser extent, from Thailand.

Demand Reduction/Domestic Programs. Drug abuse is a growing problem in Burma. Official estimates put the addict population at approximately 60,000, but UNDCP and NGO's working in the health sector estimate the actual population is at least five times that figure. Heroin is the drug of choice 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.

IV. US Policy Initiatives and Programs

Policy Initiatives. Direct USG counternarcotics aid to Burma has remained suspended since 1988, when the Burmese military brutally suppressed the popular pro­democracy movement. Initiatives such as an aerial eradication program, which had been effective in containing the expansion of Burmese opium cultivation, have not been carried out by the Burmese Government since 1988. Currently, the USG engages the Burmese Government on a very limited level. DEA shares drug­related information with the GOB and conducts joint drug enforcement investigations with Burmese police and military intelligence. Various US agencies have twice joined Burmese counterparts in conducting annual opium yield surveys in the mountainous regions of the Shan State; the Burmese Government invited USG participation in a third such joint survey in February 1997. However, the Burmese Government cancelled a planned survey in 1996 at the last minute, shortly after the "surrender" of Khun Sa. Results from the surveys gave both governments a more accurate understanding of the scope and magnitude of Burma's opium crop.

The USG 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:

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 Eastern Shan State Army and the Kokang, with which it has made political accommodations, to undertake credible measures to reduce opium cultivation and end heroin trafficking and production; actively enforce existing antidrug, conspiracy and money laundering legislation; provide strong support to multilateral drug control projects in the Shan State; hold Khun Sa accountable for his decades of drug trafficking and deprive him of assets derived from the drug trade; take action against drug­related corruption, including prosecution and appropriate punishment of corrupt officials and money launderers. 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 concerns over Burma's shallow commitment to the counternarcotics effort, disregard for the rule of law, and violation of basic standards of human decency. DEA's liaison with Burmese police and military ­­ conducted through DEA's three­person office in Rangoon ­­ will continue at its limited level. Although DEA was unable to provide training to Burmese counternarcotics personnel during the year, it did encourage cooperation by the CCDAC on two major investigations of international drug trafficking groups operating in Burma.

The Road Ahead. Based on experience in dealing with large­scale narcotics trafficking problems elsewhere around the world, the USG recognizes that ultimately large­scale international aid, including developmental assistance and law enforcement aid, will be needed to curb drug production and trafficking. The USG is prepared to consider such assistance, contingent upon the GOB's demonstration of a strong commitment to counternarcotics, the rule of law and significant movement toward political reform.