Cablegate: Burma: Incsr I Drugs and Chemical Control

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RR RUEHCHI RUEHDT RUEHHM RUEHNH

DE RUEHGO #1130/01 3251031

ZNR UUUUU ZZH

R 211031Z NOV 07

FM AMEMBASSY RANGOON

TO RUEHC/SECSTATE WASHDC 6872

RUEHBJ/AMEMBASSY BEIJING 1614

RUEHNE/AMEMBASSY NEW DELHI 4268

RUEHVI/AMEMBASSY VIENNA 0097

RUCNASE/ASEAN MEMBER COLLECTIVE

RUEHCHI/AMCONSUL CHIANG MAI 1244

RUEABND/DEA HQS WASHINGTON DC

RUEATRS/DEPT OF TREASURY WASHDC

RUEAWJA/DEPT OF JUSTICE WASHDC

RUCNDT/USMISSION USUN NEW YORK 1170

RHEHNSC/NSC WASHDC

RUEKJCS/SECDEF WASHDC

RUEKJCS/JOINT STAFF WASHDC

UNCLAS SECTION 01 OF 08 RANGOON 001130

SIPDIS

DEPT FOR EAP/MLS, INL, SCT

DEPT OF JUSTICE FOR AFMLS, OIA, OPDAT

VIENNA FOR UNODC OFFICE

E.O. 12958:N/A

TAGS: SNAR PGOV PREL BM

SUBJECT: BURMA: INCSR I DRUGS AND CHEMICAL CONTROL

REF: STATE 136782

RANGOON 00001130 001.2 OF 008

This report responds to reftel request for the INCSR I

Drugs and Chemical Control Report update.

I. Summary

Burma took many wrong turns in 2007, including in the war

on drugs. Both UNODC and U.S. surveys of opium poppy

cultivation indicated a significant increase in cultivation

and potential production in 2007, while production and

export of synthetic drugs (amphetamine-type stimulants,

crystal methamphetamine and ketamine) from Burma continued

unabated. The significant downward trend in poppy

cultivation observed in Burma since 1998 halted in 2007,

with increased cultivation reported in Eastern, Northern

and Southern Shan State and Kachin State. Whether this

represents a sustained reversal in poppy cultivation in

Burma, which remains far below levels of 10 years earlier,

remains to be seen. It does indicate, however, that

increases in the value of opium are driving poppy

cultivation into new regions. An increased number of

households in Burma were involved in opium cultivation in

2007. While Burma remains the second largest opium poppy

grower in the world after Afghanistan, its share of world

opium poppy cultivation fell from 55 percent in 1998 to 11

percent in 2006, and rose slightly to 12 percent in 2007.

This large proportional decrease is due to both decreased

opium poppy cultivation in Burma and increased cultivation

in Afghanistan. The Golden Triangle region in Southeast

Asia no longer reigns as the world's largest opium poppy

cultivating region, now producing 5 percent of the world's

opium.

Despite increased cultivation in 2007, Burma's opium

cultivation declined dramatically between 1998 and 2006.

The UN Office on Drugs and Crime (UNODC) estimates a

decrease from 130,300 hectares in 1998 to 21,500 hectares

in 2006, an 83 percent decrease. Cultivation in 2007

increased 29 percent, from 21,500 hectares in 2006 to

27,700 hectares. The most significant decline over the

past decade was observed in the Wa region, following the

United Wa State Army's (UWSA) pledge to end opium poppy

cultivation in its primary territory, UWSA Region 2. UWSA

controlled territory accounted for over 30 percent of the

acreage of national opium poppy cultivation in 2005, but

almost no poppy cultivation was reported in the Wa region

in 2006 and 2007. However, there are indications that

cultivation has increased in regions closely bordering UWSA

Region 2.

Burma has not provided most opium farmers with access to

alternative development opportunities. Recent trends

indicate that some opium farmers were tempted to increase

production to take advantage of higher prices generated by

opium's relative scarcity and continuing strong demand.

Increased yields in new and remaining poppy fields

(particularly in Southern Shan State), spurred by favorable

weather conditions in 2007 and improved cultivation

practices, have partially offset the affects of decreased

cultivation. Higher yields in some areas may also signal

more sophisticated criminal activity, greater cross border

networking, and the transfer of new and improved

cultivation technologies.

Burma's overall decline in poppy cultivation since 1998 has

been accompanied by a sharp increase in the production and

export of synthetic drugs, turning the Golden Triangle into

a new "Ice Triangle." Burma is a significant player in the

manufacture and regional trafficking of amphetamine-type

stimulants (ATS). Drug gangs based in the Burma-China and

Burma-Thailand border areas, many of whose members are

ethnic Chinese, produce several hundred million

methamphetamine tablets annually for markets in Thailand,

China, and India, as well as for onward distribution beyond

the region. There are also indications that groups in

Burma have increased the production and trafficking of

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crystal methamphetamine or "Ice" - a much higher purity and

more potent form of methamphetamine than the tablets.

Through its Central Committee for Drug Abuse Control

(CCDAC), the Government of Burma (GOB) cooperates regularly

and shares information with the U.S. Drug Enforcement

Administration (DEA) and Australian Federal Police (AFP) on

narcotics investigations. In recent years, the GOB has

also increased its law enforcement cooperation with Thai,

Chinese and Indian counter-narcotics authorities,

especially through renditions, deportations, and

extraditions of suspected drug traffickers.

During the 2007 drug certification process, the U.S.

determined that Burma was one of only two countries in the

world that had "failed demonstrably" to meet its

international counter-narcotics obligations. Major

concerns remain: unsatisfactory efforts by Burma to deal

with the burgeoning ATS production and trafficking problem;

failure to take concerted action to bring members of the

United Wa State Army (UWSA) to justice following the

unsealing of a U.S. indictment against them in January

2005; failure to investigate and prosecute military

officials for drug-related corruption; and failure to

expand demand-reduction, prevention and drug-treatment

programs to reduce drug-use and control the spread of

HIV/AIDS. Burma is a party to 1988 UN Drug Convention.

II. Status of Country

Burma is the world's second largest producer of illicit

opium. Eradication efforts and enforcement of poppy-free

zones combined to reduce cultivation levels between1998 and

2006, especially in Wa territory. However, in 2007, a

significant resurgence of cultivation occurred,

particularly in eastern and southern Shan State and Kachin

State, where increased cultivation, favorable weather

conditions, and new cultivation practices increased opium

production levels, led to an estimated 29 percent increase

in overall opium poppy cultivation and a 46 percent

increase in potential production of dry opium.

According to the UNODC, opium prices in the Golden Triangle

have increased in recent years, although prices in Burma

remain much lower than the rest of the region due to easier

supply. Burmese village-level opium prices or farm-gate

prices increased from $153 per kg in 2004 to $187 in 2005,

to $230 in 2006 and to $265/kg in 2007. Burmese opium sales

contribute about half of the annual household cash income

of farmers who cultivate opium, which they use to pay for

food between harvests. Forty-five percent of the average

yearly income ($501) of opium cultivating households in

Shan State was derived from opium sales in 2007.

In 2007, the UNODC opium yield survey estimated there were

approximately 27,700 hectares planted with opium poppies,

with an average yield of 16.6 kg per hectare (significantly

higher than the 2006 average yield of 14.6 kg per hectare).

[Independent U.S. opium poppy cultivation surveys also

indicated increased poppy cultivation and estimated opium

production to approximately 27, 700 hectares cultivated and

270 metric tons produced]. The UNODC's opium yield survey

concluded that cultivation had increased 29 percent in

Burma from 2006 levels, with a 46 percent increase in

potential production to 460 metric tons. This represented

a 67 percent increase in the total potential value of opium

production in Burma, from $72 million in 2006 to $120

million in 2007. Nonetheless, both surveys indicated that

opium production is still down 90 percent from its peak

production in 1996.

The general decline in poppy cultivation in Burma since

1996 has been accompanied by a sharp increase in the local

production and export of synthetic drugs. According to GOB

figures for 2007, the GOB seized approximately 1.5 million

methamphetamine tablets, compared to 19.5 million seized in

2006. Opium, heroin, and ATS are produced predominantly in

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the border regions of Shan State and in areas controlled by

ethnic minority groups. Between 1989 and 1997, the Burmese

government negotiated a series of cease-fire agreements

with several armed ethnic minorities, offering them limited

autonomy and continued tolerance of their narcotics

production and trafficking activities in return for peace.

In June 2005, the United Wa State Army (UWSA) announced

implementation in Wa territory of a long-delayed ban on

opium production and trafficking. While the cultivation of

opium poppies decreased in the Wa territory during 2006 and

2007, according to UNODC and U.S. surveys, there are

indications from many sources that Wa leaders replaced

opium cultivation with the manufacture and trafficking of

ATS pills and "Ice" in their territory, working in close

collaboration with ethnic Chinese drug gangs.

Although the government has not succeeded in persuading the

UWSA to stop its illicit drug production and trafficking,

the GOBQs Anti-Narcotic Task Forces continued to pressure

Wa traffickers in 2007. UWSA also undertook limited

enforcement actions against rivals in Shan State in 2006

and 2007. In May 2006, UWSA units found and dismantled two

clandestine laboratories operating in territory occupied

and controlled by the UWSA-South in Eastern Shan State.

When the UWSA units entered the lab sites, a firefight

ensued, with eight people fatally wounded, four arrested,

and 25 kg of heroin and 500,000 methamphetamine tablets

seized by the raiding UWSA units. In June 2006, the UWSA

passed custody of the contraband substances to Government

of Burma (GOB) officials. The prisoners remained in the

custody of the UWSA. These UWSA actions likely were

motivated more towards eliminating the competition in their

area than by a desire to stop drug trafficking. In Burma,

opium addiction remains high in places of historic or

current opium production, ranging from 1.27 percent of the

total adult population in Eastern Shan State to 0.97

percent in Kachin State and an estimated 0.83 percent in

the Wa region, the main area of opium production until

2006.

III. Country Actions Against Drugs in 2007

--Policy Initiatives. Burma's official 15-year counter-

narcotics plan, launched in 1999, calls for the eradication

of all narcotics production and trafficking by the year

2014, one year ahead of an ASEAN-wide plan of action that

calls for the entire region to be drug-free by 2015. To

meet this goal, the GOB initiated its plan in stages, using

eradication efforts combined with planned alternative

development programs in individual townships, predominantly

in Shan State. The government initiated its second five-

year phase in 2004. Ground surveys by the Joint GOB-UNODC

Illicit Crop Monitoring Program indicate a steady decline

in poppy cultivation and opium production in areas

receiving focused attention, due to the availability of

some alternative livelihood measures (including crop

substitution), the discovery and closure of clandestine

refineries, stronger interdiction of illicit traffic, and

annual poppy eradication programs. The UNODC estimates

that the GOB eradicated 3,598 hectares of opium poppy

during the 2007 opium poppy cropping season (ranging

between July-March is most regions), compared to 3,970

hectares in 2006.

The most significant multilateral effort in support of

Burma's counter-narcotics efforts is the UNODC presence in

Shan State. The UNODC's "Wa Project" was initially a five-

year, $12.1 million supply-reduction program designed to

encourage alternative development in territory controlled

by the UWSA. In order to meet basic human needs and ensure

the sustainability of the UWSA opium ban announced in 2005,

the UNODC extended the project through 2007, increased the

total budget to $16.8 million, and broadened the scope from

16 villages to the entire Wa Special Region No. 2. Major

donors that have supported the Wa Project include Japan and

Germany, with additional contributions from the UK and

Australia. The United States previously funded the UNODC

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Wa project, but halted funding over issued by UWSA

leadership against U.S. DEA agents following the January

2005 indictment of seven UWSA leaders in a U.S. district

court for their role in producing and smuggling heroin to

the United States.

As part of its 15-year counter-narcotics plan, in 2002 the

Burmese Central Committee for Drug Abuse Control (CCDAC)

initiated the "New Destiny" project, which calls for the

complete eradication of poppy cultivation nationwide and

its replacement with substitute crops. The GOB, under its

1993 Narcotics Drugs and Psychotropic Substances Law,

issued notifications controlling 124 narcotic drugs, 113

psychotropic substances, and 25 precursor chemicals. Burma

enacted a "Mutual Assistance in Criminal Matters Law" in

2004.

--Law Enforcement Measures. The CCDAC, which leads all

drug-enforcement efforts in Burma, is comprised of

personnel from the national police, customs, military

intelligence, and army. The CCDAC, under the control of

the Ministry of Home Affairs, coordinates 27 anti-narcotics

task forces throughout Burma. Most are 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, the CCDAC suffers from a

severe lack of adequate funding, equipment, and training to

support its law-enforcement mission. The Burmese Army and

Customs Department support the Police in this role. In

2005, CCDAC established two new anti-narcotic task forces

in Rangoon and Mandalay, supplementing existing task forces

in both cities.

Burma is actively engaged in drug-abuse control with its

neighbors China, India, and Thailand. Since 1997, Burma

and Thailand have had 11 cross-border law enforcement

cooperation meetings. The most significant result of this

cooperation has been the repatriation by Burmese police of

drug suspects wanted by Thai authorities: two in 2004, one

in 2005 and one in 2006. According to the GOB, Thailand

has contributed over $1.6 million to support an opium crop

substitution and infrastructure project in southeastern

Shan State. In 2007, Thailand assigned an officer from the

Office of Narcotics Control Board (ONCB) to its mission in

Rangoon. Burma-China cross border law enforcement

cooperation has increased significantly, resulting in

several successful operations and the handover of several

Chinese fugitives who had fled to Burma. While not

formally funding alternative development programs, the

Chinese government has actively encouraged investment in

many projects in the Wa area and other border regions,

particularly in commercial enterprises such as tea

plantations, rubber plantations, and pig farms. China has

assisted in marketing those products in China through lower

duties and taxes. There are also indications that China

conducted its own opium cultivation and production surveys

in 2007 in regions of Burma bordering the PRC, although

they have not shared data resulting from those surveys with

other parties.

After Burma and India signed an agreement on drug control

cooperation in 1993, the two countries have held cross

border Law Enforcement meetings on a biannual basis, the

last being held September 11, 2004, in Calcutta.

The GOB has to date taken no direct action against any of

the seven UWSA leaders indicted by U.S. federal court in

January 2005, although authorities have taken action

against other, lower ranking members of the UWSA syndicate.

In 2007, one of the indicted leaders, Pao Yu-hua, died of

natural causes and another indicted leader, Ho Chun-t'ing,

was captured by Hong Kong Police. He is currently

imprisoned in Hong Kong while U.S. and Hong Kong officials

discuss his extradition to stand trial in the U.S. Another

notorious Burmese drug lord, Khun Sa, who was held under

house arrest in Rangoon following his surrender to the GOB

in December 1996, died from natural causes in October 2007.

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--Narcotics Seizures. Summary statistics provided by

Burmese drug officials indicate that through September

2007, Burmese police, army, and the Customs Service

together seized 1154 kgs of raw opium, 354 kgs of low

quality opium, 73 kgs of heroin, 91 kgs of marijuana,

approximately 1.5 million methamphetamine tablets, 455 kgs

of methamphetamine powder, 395 kgs of methamphetamine ICE,

238 kgs of ephedrine, 3,116 kgs of powdered precursor

chemicals, and 8,723 liters of precursor chemicals.

On January 19, 2007, based on DEA and AFP information, the

Lashio CCDAC ANTF dismantled a heroin refinery in the Man

Lin Hills near Lashio, Shan State. This operation resulted

in the arrest of two defendants and the seizure of

approximately 20.3 kgs of heroin, 20.3 kgs of brown opium,

1.02 kgs of opium residue, 1,100 kgs of ammonium chloride,

770 kgs of sodium chloride, 1,470 liters of ether, 438

liters of hydrochloric acid, 183 liters of chloroform, and various

equipment used in the refining of heroin.

On February 14, 2007, based on DEA and AFP information, the

Muse CCDAC ANTF dismantled a heroin refinery near Khar Li

Khu Village, Mong Ko Township, Burma. This operation

resulted in the arrest of 7 individuals, and the seizure of

7 kgs of brown opium, 89 kgs of ephedrine, 22.75 liters of

mineral spirit, 3 kgs of sodium hydroxide, 2 liters of

hydrochloric acid, 183 liters of chloroform, and various

equipment used in the refining of heroin.

On April 21, 2007, the Tachilek ANTF seized a total of

approximately 264,000 methamphetamine tablets.

On April 23, 2007, based on DEA and AFP information, CCDAC

ANTF seized 224.3 kgs of opium, 300 grams of heroin, opium

seeds, 7.1 million kyat (approximately $6,000), and 50,000

Chinese Yuan (approximately $6,250) in Pan Se, Nam Kham

Township, Burma.

During a May 26, 2007 raid on a heroin refinery in Kokang

region, the Muse ANTF captured a Kachin Defense Army (KDA)

major. Returning from the refinery, ANTF was ambushed by

approximately 60 armed individuals. In the ensuing

firefight, the KDA major was rescued and the opposing force

escaped with the drugs and money seized at the refinery.

Four ANTF officers were killed and two were wounded. The

attackers were identified as KDA and were believed to be

primarily interested in recovering the KDA major.

On June 7, 2007, based on DEA information, the Taunggyi

ANTF seized 195.2 kgs of opium from three locations and

dismantled a heroin refinery.

--Corruption. Burma signed but has not ratified the UN

Corruption Convention. Burma does not have a legislature

or effective constitution; and has no laws on record

specifically related to corruption. While there is little

evidence that senior officials in the Burmese Government

are directly involved in the drug trade, there are credible

indications that mid-and-lower level military leaders and

government officials, particularly those posted in border

and drug producing areas, are closely involved in

facilitating the drug trade. The Burmese regime closely

monitors travel, communications and activities of its

citizens to maintain its pervasive control of the

population, so it strains credibility to believe that

government officials are not aware of the cultivation,

production and trafficking of illegal narcotics in areas it

tightly controls. A few officials have been prosecuted

for drug abuse and/or narcotics-related corruption.

However, Burma has failed to indict any military official

above the rank of colonel for drug-related corruption.

--Agreements and Treaties. Burma is a party to the 1961 UN

Single Convention on Narcotic Drugs (and became a member of

the 1972 Protocol to the Single Convention in 2003), the

1971 UN Convention on Psychotropic Substances, and the 1988

UN Drug Convention.

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--Cultivation and Production. According to the UNODC opium

yield estimate, in 2007 the total land area under poppy

cultivation was 27,700 hectares, a 29 percent increase from

the previous year. The UNODC also estimated that the

potential production of opium increased by 46 percent, from

315 metric tons in 2006 to 460 metric tons in 2007. The

significant increase in potential opium production in 2007

indicated in the UNODC estimates reflect improved

agricultural methods and an end to several years of

drought, resulting in more favorable growing weather in

major opium poppy growing areas, such as Shan State and

Kachin State.

Burma as yet has failed to establish any reliable mechanism

for the measurement of ATS production. Moreover, while the

UNODC undertakes annual estimates of poppy cultivation and

production, the U.S. has been unable to conduct its annual

joint crop survey with Burma since 2004 due to the GOB's

refusal to cooperate in this important area.

--Drug Flow/Transit. Most ATS and heroin in Burma is

produced in small, mobile labs located near Burma's borders

with China and Thailand, 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 (UWSA), the Shan State Army-South

(SSA-S), and groups inside the ethnic Chinese Kokang

autonomous region. Ethnic Chinese criminal gangs dominate

the drug syndicates operating in all three of these areas.

Heroin and methamphetamine produced by these groups is

trafficked overland and via the Mekong River, primarily

through China, Thailand, India and Laos and, to a lesser

extent, via Bangladesh, and within Burma. There are

credible indications that drug traffickers are increasingly

using maritime routes from ports in southern Burma to reach

trans-shipment points and markets in southern Thailand,

Malaysia, Indonesia, and beyond. Heroin seizures in 2005,

2006 and 2007 and subsequent investigations also revealed

the increased use by international syndicates of the

Rangoon International Airport and Rangoon port for

trafficking of drugs to the global narcotics market.

--Domestic Programs/Demand Reduction. The overall level of

drug abuse is low in Burma compared with neighboring

countries, in part because most Burmese are too poor to be

able to support a drug habit. Traditionally, some farmers

used opium as a painkiller and an anti-depressant, in part

because they lack access to other medicine or adequate

healthcare. There has been a growing shift in Burma away

from opium smoking toward injecting heroin, a habit that

creates more addicts and poses greater public health risks.

Deteriorating economic conditions will likely stifle

substantial growth in overall drug consumption, but the

trend toward injecting narcotics is of significant concern.

The GOB maintains that there are only about 65,000

registered addicts in Burma. According to several HIV

Estimation Workshops conducted in 2007 by the National AIDS

Program and the World Health Organization, there are an

estimated 60,000 to 90,000 injecting drug users in Burma.

Surveys conducted by UNODC and other organizations suggest

that the addict population could be as high as 300,000.

According to the UNODC, BurmaQs opium addiction rate is

high, at 0.75 percent. NGOs and community leaders report

increasing use of heroin and synthetic drugs, particularly

among disaffected youth in urban areas and by workers in

mining communities in ethnic minority regions. The UNODC

estimated that in 2004 there were at least 15,000 regular

ATS users in Burma.

The growing HIV/AIDS epidemic has been tied to intravenous

drug use. According to the National AIDS Program, one

third of officially reported HIV/AIDS cases are

attributable to intravenous drug use, one of the highest

rates in the world. Information gathered by the National

AIDS Program showed that HIV prevalence among injecting

RANGOON 00001130 007.2 OF 008

drug users was 46.2 percent in 2006 ? a figure that

remained stable in 2007. Infection rates are highest in

Burma's ethnic regions, and specifically among mining

communities in those areas where opium, heroin, and ATS are