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SPDC AND BUSINESSES OF CEASE-FIRE GROUPS

When Lieutenant General Khin Nyunt and the intelligence wing of the Burmese Armed Forces negotiated cease-fire agreements with non-Burman armed ethnic forces, they offered business concessions, the right to continue wielding arms and administering their own regions, and other privileges in return for ending their armed struggles against the State Peace and Development Council (formerly the State Law and Order Restoration Council).

Taking advantage of the special treatment and privileges offered, some of these groups, which had, at one time or other, been accused internationally of having links to the narcotics trade took up the offer and built business conglomerates that now dominate the Burmese economy. The conglomerates well known in Burma are the Hong Pang Group of Companies owned by the United Wa State Army (UWSA), described by the U.S. Department of State as the "world's largest armed narcotics-trafficking organization"; the Asia World group of companies owned by Lo Hsing-han, whose son has been refused a visa to the United States for suspicion of narcotic trafficking; and other business concerns belonging to the notorious druglord Khun Sa.

The special privileges offered, coupled with the SPDC's revision of regulations in early 1993 to allow funds of dubious origin to be turned into "white money" so long as 40% of the deposited amount (now changed to 25%) is paid as tax helped to boost the businesses of these groups.

Disappearing Privileges

The current situation, coupled with pressure from the international community over an alleged Wa shipment of millions of methamphetamine tablets to Thailand and its business interests, in particular the Hong Pang group of companies' involvement in the drug trade, may be forcing the SPDC leaders to do some rethinking.

The first signs that the cease-fire groups may be losing some of their privileges came in April when SPDC ordered the removal of all signs belonging ethnic cease-fire forces from all regions outside their administrative jurisdiction throughout the country. The signs that were ordered taken down included anything "non-business in nature" such as personalized car registration plates issued by ethnic groups and names and signboards indicating their existence as armed militias or self-administrative regions. The order covers all cease-fire groups, including the Wa, Kokang, Palaung, and others.

UWSA, whose cars used to have registration plates NW-1, NW-2, etc., to indicate that the cars belong to the number one man or the number two man of Northern Wa region, is reported to have removed the registration plates.

The Shan Herald Agency for News (SHAN), citing an unnamed source said on 18 May that "Everything's been pulled down in front of the (Wa conglomerate) Hong Pang buildings." However, the same report stated that Hong Pang "continues business without a signboard." The Bangkok Post, meanwhile, reported that Hong Pang is now operating under a new name, Greenland Co., Ltd.

'REGULARIZING' THE 'SPECIAL' ADMINISTRATIVE ZONES

The SPDC also seems to be having second thoughts about the "Special Administrative Zones" particularly those administered by the UWSA and the Kokang group, as they are perceived to be undermining the authority of the junta. Under the cease-fire agreements, Burmese troops entering the Wa region are disarmed and the Burmese judiciary system has no say over Wa troops even if they violate laws within Burma proper. The violators must be sent back to the Wa region for action by Wa authorities.

At the meeting of the Central Committee for Development of Border Areas and National Races on 30 April, which was attended by all the top brass of the Defense Services and the SPDC, Senior General Than Shwe said, "ministries must take charge in every region and extend the scope of work. It will be necessary to set up a regular administrative system in the border areas like in the other developed regions...at present, peace and stability is prevailing in the border areas, and... arrangements should be made to set up a regular administrative system step by step which is based on adherence to law....The expression Union of Burma encompasses all regions that lie in the territory of the nation. Only when there is progress in the economic, health, education, social, judicial and administrative sectors of the regions along the nation's boundary, can the nation be called a fully developed State."

Addressing the same meeting, Secretary-1 Lieutenant General Khin Nyunt said, "Infrastructures are to be established for the development of administration, prevalence of law and order, education, health and social sectors in important regions for emergence of regular administration in accord with the guidance of the head of state."

IN THE DEFENSE OF THE WA

Despite the apparent moves being initiated to curb the power of the UWSA, SPDC remains the strongest defender of the Wa. It has organized tours for diplomats and military attaches to visit the Wa region "to witness the development tasks of the Wa people" and their "efforts to eliminate opium" and has dismissed charges that Wa people are behind the drug inflow to neighboring countries. Top level SPDC leaders have also warned Thailand not to act militarily, as the Wa are "national brethren" of Burma.

GETTING THE SIGNALS CROSSED

The signals got crossed somewhere between SPDC Vice Chairman General Maung Aye's visit to Thailand and the Thai eagerness to crush the UWSA militarily, which it claims is responsible for the methamphetamine problem that Thailand is facing. Now, the Burmese forces with their Wa allies are facing off against the Thai Army with its proxy fighting force, the Shan State Army (SSA). Unless one side backtracks and takes a look at what went wrong, at this stage while there is only an exchange of words, things are bound to get nasty.

The Background

23-26 April: When General Maung Aye visited Thailand, the Thai press was in a buoyant mood, saying, "the Burmese leaders have promised drastic action against drug trafficking gangs under the control of the UWSA, while Thailand has agreed the Shan rebels will not be allowed to launch raids on Burmese troops from this side of the border." The Bangkok Post quoted "a source at the Defense Ministry" as saying "the deal was made during talks between Burmese army chief Gen Maung Aye and Prime Minister Thaksin Shinawatra and Defense Minister Chavalit Yongchaiyudh."

Third Army Commander Udomchai Ongkhasingh was also quoted as saying that Rangoon said it would issue an order prohibiting the UWSA from making drugs..."I believe cooperation and ties between Thailand and Burma will improve, particularly after Gen Maung Aye's visit. He has decision-making power over several issues."

'Hot Pursuit'

15 May: SHAN also reported that General Maung Aye had agreed to allow Thai forces inside Burmese territory in hot pursuit of the UWSA. It quoted Burmese Army officers from Mong Ton's Infantry Battalions 65 and 225 as saying, "It was due to pressure from the international community that our powers-that-be are admitting foreign military forces in."

Thai Army chief Surayud Chulanont said Burma had banned the UWSA from making drugs and declared that it would not support Wa traffickers. The Thai Pha Muang task force has been told it can retaliate against the Wa. He was referring to a clash between Thai troops and the "drug traffickers" in Chiang Rai on 27 April which resulted in the capture of two Wa fighters. Sources said that Wa troops shelled the Thai 241st Cavalry Battalion in Chiang Rai and that the Thai military retaliated with 20 mortar shells.

'Massive' Buildups

1 May: The Thai Army then began massive preparations, code-named Surasi 143, but played down the buildup as a military exercise. The SSA led by Col Yawd Serk, was "put on highest alert for any eventuality." In response to the unprecedented Thai military buildup along the border from Tak, Mae Hong Son, and Chiang Mai to Chiang Rai, Wa units estimated at 5,000-6,000 also prepared for stiff resistance.

19 May: Bangkok Post reported under the headline, "Rangoon bids to turn screw on traffickers," that thousands of Burmese troops have been deployed along the border opposite Mae Hong Son, Chiang Mai, and Chiang Rai in the last few weeks. "The move was seen as a prelude to a possible showdown between Rangoon forces and armed militia of the UWSA and Shan State Army who were still active in trafficking from strongholds straddling the Thai-Burmese border. This massive reinforcement of troops is aimed at pressuring UWSA to stop trafficking and at the same time put military pressure on the SSA,'' said a Thai Pha Muang Task Force officer in Chiang Mai and Chiang Rai.

Quoting "veteran border watchers," the Bangkok Post said "the Burmese troop build-up was consistent with an anti-drugs declaration made by Lt-Gen Khin Nyunt, intelligence chief, in Lashio, Burma on March 22."

Then the Attack...

20 May: The Thai English language daily, The Nation, reported that Thai infantry units and armored vehicles supported by artillery have launched an all-out dawn offensive on 20 May, destroying positions manned by the UWSA along the Thai-Burmese border. UWSA positions were shelled throughout the day and could be heard well inside Thai territory. Rebel soldiers from the Shan State Army (SSA) also attacked both Wa positions and Burmese government positions.

Meanwhile, in Bangkok, Army spokesman Colonel Somkuan Saengpataranet denied that any such raids had taken place, saying troops in northern Thailand were only taking part in an exercise, "Surasi 143". But eyewitnesses and intelligence officers, speaking on condition of anonymity, said this was not the case. The Nation quoted military sources as saying "the Burmese Army would not intervene to thwart the plan to destroy the UWSA... adding that Rangoon had given the UWSA plenty of warnings to stop its illegal activities."

Response from Rangoon

20 May: But a far cry from what the Thais were expecting, the Burmese Foreign Ministry summoned the Thai ambassador and gave him a strongly worded official protest note over the incident. Burmese Deputy Foreign Minister Khin Maung Win said the note contained details of an incident in which the Thai army used heavy artillery against outposts in Mong Tong in eastern Shan State from before dawn. "We protested in the strongest possible terms that the unprovoked attack violated our sovereignty and territorial integrity." The Thai artillery attack came simultaneously as forces of Yawd Serk's Shan State Army crossed the border and attacked not only military outposts but also four other positions manned by the Wa, he said.

21 May: A VOA correspondent in Bangkok also reported that "Burma is threatening to use other means if diplomatic efforts fail to ease border tensions" and that "senior Burmese officials denied there was an agreement" during Maung Aye's visit and "warned against Thai troops encroaching on Burma's territory."

Thailand said fighters from Burma's ethnic Shan people attacked two Wa Army positions. Bangkok said the Thai military fired warning shots when shells from that fighting fell into Thai territory. Burma accused Thailand of firing in support of the Shan and providing them with arms. Burma's military government denies the Wa are involved in narcotics, and accuses the Shan army of drug trafficking.

The standoff continues.

THE RUSSIAN CONNECTION

Contracts for Nuclear Plant Delayed

The Russian Interfax news agency reported on 15 May that the Russian government has approved a draft cooperation agreement with Burma on the construction of a "Center for Nuclear Studies" and that the Atomic Energy Ministry has been given charge of implementing the agreement. Another Interfax report on 17 May, however, said the contracts for the nuclear research centre are unlikely to be signed earlier than August or September 2002.

Atomstroyeksport Managing Director Vadim Mayorov told Interfax,
"Burma currently holds the blueprints of the nuclear research centre, which is estimated at 150m dollars, and it so far has not presented them to Russia," Mayorov said. The official said that after Atomstroyeksport receives the blueprints, it will initiate talks with the client regarding commercial and technical issues, which traditionally take quite a long time. Mayorov said that this centre may be built in three or four years.

Under the agreement, the two countries "will cooperate in designing and building a nuclear center, a research nuclear reactor with a thermal capacity of 10 megawatts, two laboratories, a nuclear silicon alloying installation, as well as the support infrastructure, including an installation for the disposal of nuclear waste and a waste burial site." Russia will render technical assistance in choosing and examining the construction site, and will supply equipment and materials. Russia, which will also deliver nuclear fuel, "will assemble, install and initiate the operation of its main technical equipment."

Bangkok Post reported in January that British nuclear expert John Large said there was little evidence Burma "would be able to implement the necessary safety regime to be able to prevent the dangerous accumulation of radioactive material.'' The IAEA sent an inspection team to Burma to assess the country's preparedness to use and maintain a nuclear reactor safely and the team found that the safety standards in place were "well below the minimum the body would regard as acceptable,'' according to an IAEA official who did not want to be named.

Pilot Training

Meanwhile, the Democratic Voice of Burma reported that "four Russian fighter pilots will be arriving soon at Shande Air Force Base in Meiktila to conduct a Special Training Course for the Air Force at Shande Air Force Base" and the pilots will conduct a training course on "the handling of 12 MIG 29 jet fighters purchased from Russia." Over 20 Air Force officers not lower than the rank of captain will be attending the training course.

Going Nuclear

The "Nuclear Sub-Energy Sector" of the Burmese Ministry of Energy has identified five regions throughout the country as having Uranium Ore deposits. They are:

Magwe : A minimum percent of 0.0010, and a maximum percent of 0.5600
Taungdwingyi: A minimum percent of 0.0010, and a maximum percent of 0.1100
Kyaukphygon-Mogok: A minimum percent of 0.0015, and a maximum percent of 0.0055
Kyauksin: A minimum percent of 0.0020 and a maximum percent of 0.0052
Paonpyin (Mogok): A minimum percent of 0.0061, and a minimum percent of 0.0068

Explaining the reason for going nuclear, the Ministry said there was a need "to conduct studies for alternate energy sources" because of "the rapid growth in economic development" and "consideration is made to use nuclear power for future generation of electricity only as an option." The Ministry's statement said, "...the nuclear energy is not environmentally friendly and development of nuclear power requires high technology and also is capital intensive, it is only at the stage of initiating study on nuclear energy as an ongoing program on alternative energy sources." The ministry believes "future demands of electricity can be met with available natural gas resources and future development of hydropower resources which presently has only been utilized less than one percent of its potential."

TECHNOLOGY WITH 'INTELLIGENCE' CONNECTIONS

The Myanmar Information and Communications Technology Park (MICTP) and the Bagan Internet Data Center & Teleport (BIDCT) are the two high-tech showpieces of the SPDC. The MICTP, according to an advertisement in a local magazine, will develop software, rent out spaces to local and foreign IT companies, host conferences, and house a software and hardware mall.

It is chaired by Colonel Thein Swe, Head of Department of the Office of Military Intelligence.

The BIDCT provides internet, telephone, dedicated leased line, server co-location, domain name registration, web hosting, and other services to IT companies and also manages the "BaganNET" and "offers an internet e-mail system under four domain names. Services provided within its intranet system are web browsing of about 800 international websites and downloading from certain designated websites."

The Chief Executive Officer is Ye Naing Win, son of Intelligence Chief Lieutenant General Khin Nyunt.