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### Viewing cable 03RANGOON757, BURMA'S COUNTERNARCOTICS PERFORMANCE

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
03RANGOON757 | 2003-06-25 09:50 | 2011-08-25 00:00 | UNCLASSIFIED | Embassy Rangoon

`

    This record is a partial extract of the original cable. The full text of the original cable is not available.

` `

    UNCLAS SECTION 01 OF 04 RANGOON 000757

    SIPDIS

    STATE FOR EAP AND INL
    TREASURY FOR OASIA
    DEA FOR OF,OFF
    CDR USPACOM FOR FPA

    E.O. 12958: N/A
    TAGS: SNAR KCRM BM
    SUBJECT: BURMA'S COUNTERNARCOTICS PERFORMANCE

    REF: A. STATE 100273
         ¶B. STATE 153955

    ¶1.  Summary:  The Burmese government (GOB) has reduced opium
    cultivation, cooperated with the United States, Australia,
    China, Thailand, and other states on a series of major
    narcotics cases, and continued to prosecute traffickers.  It
    has failed in regard to its new money laundering law, whose
    implementation has been delayed by the collapse of Burma's
    private banking system.  The GOB has deliberately chosen to
    give the Wa and other former insurgent groups time to exit
    the narcotics trade - the last of these grace periods expires
    in 2005.  The GOB has cracked down whenever former insurgent
    groups have broken their pledges and, after 2005, the United
    Wa State Army, like all other groups in Burma, will be fair
    game for government enforcement actions.  Burma's current
    narcotics legislation (basically the 1993 Law on Narcotic
    Drugs and Psychotropic Substances) is more than adequate for
    the investigation and prosecution of major drug offenses.  It
    has been used already to put more than 10,000 felons behind
    bars with sentences in excess of ten years each.  End
    Summary.

    ¶2. The paragraphs below are keyed to the criteria outlined in
    our counternarcotics demarche (reftel A).

    ¶3. Facilitate the participation of independent monitors to
    verify poppy eradication and other counternarcotics efforts.

    Burma cooperates with the United States on its annual opium
    yield survey and UNODC on census surveys of opium production.
     In fact, all recent estimates of opium and heroin production
    in Burma have been compiled by the United States and the
    United Nations on the basis of these surveys.  According to
    the United States, Burma reduced opium production by more
    than three-quarters between 1996 and 2002.  According the
    United Nations, Burma reduced its opium production by more
    than half over the same period.  The results of the U.S.
    survey in 2003 is not yet available.  According to the United
    Nations, Burma reduced its opium fields by a further 24
    percent in 2003, despite good weather.  By their estimate,
    the acreage under opium cultivation in Burma in 2003 declined
    to only 62,200 hectares, down more than 100,000 hectares from
    the area under cultivation in 1996.

    Burma cooperates closely with the United States' Drug
    Enforcement Administration and the Australian Federal Police
    on narcotics enforcement activities.  Both DEA and AFP
    maintain active offices in Burma.  Both offices have
    maintained detailed records of the Burmese government's
    seizures, arrests, and other law enforcement operations in
    recent years.  DEA's file, compiled and verified by agents
    who have been involved in investigations in Burma, is
    available in Washington.

    ¶4. Arrest and prosecute the senior leadership of heroin and
    methamphetamine trafficking organizations.

    Burma has arrested over 90,000 persons on drug-related
    charges over the past 15 years.  Through the end of 2002, 42
    persons were sentenced to death for drug-related offenses in
    Burma, and another 37 were imprisoned for life.  During the
    same period, more than 12,500 persons were sentenced to
    prison for ten years or more for narcotics-related offenses.
    These arrests and prosecutions continued in 2003.  While
    statistics on prosecutions are not yet available, preliminary
    data indicate that Burma arrested more than 700 suspects in
    drug-related cases during the first three months of 2003.

    Many of these arrests and convictions involved major drug
    syndicates.  Many also involved close cooperation with the
    United States, Australia, and other western law enforcement
    agencies.  Among the most notable were the following:

    -- Cooperation with the United States and China in the
    investigation of the "1-2-5" syndicate, which led to the
    arrest of 28 persons in the United States, Hong Kong, China,
    and India in May 2003.  Reportedly, this group had been
    responsible for the export of more than $100 million in
    heroin to the United States since 2000.

    -- Cooperation with China in a series of arrests and seizures
    that have continued throughout 2001 and 2002 all along the
    Chinese border following the signature of a Chinese/Burmese
    MOU on counternarcotics operations in January 2001.  Since
    then, Burma has turned over 60 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."

    -- Cooperation with Thailand in 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 Rangoon and sentenced to "indefinite"
    (i.e., unending) terms in prison.

    -- Cooperation with the United States Drug Enforcement
    Administration and the Australian Federal Police in the
    seizure of 357 kilograms of heroin in Fiji in October 2000.
    Death sentences were eventually handed down in Rangoon for
    two drug kingpins connected with this case.

    ¶5. Establish a mechanism for reliable measurement of
    methamphetamine production and demonstrate progress in
    reducing production and increasing seizures.

    There is no mechanism for reliably measuring illicit
    methamphetamine production in any country, including the US.
    The most commonly used procedure is to take seizures and
    multiply by 10.  If applied to Burma, that measure would
    suggest production of 320 million tablets in 2001, 94 million
    tablets in 2002, and 19 million tablets during the first
    three months of 2003.  However, the GOB believe that this
    reduction in seizures is due more to changing patterns of
    methamphetamine production and trafficking than it is to the
    overall reduction in production.  Since 2002, under pressure
    from the GOB, more traffickers have taken to mixing chemicals
    at sites along the Chinese/Burmese border and then shipping
    the product in powder or crystal form along the Mekong River
    to plants in Laos, Thailand, and Burma where the drug is
    flavored for local markets and stamped into tablets.  The net
    result is that the product spends far less time in Burma than
    before; hence, the lower seizures.

    ¶6. Establish an effective program for the control of
    precursor chemicals.

    Burma does not have a precursor chemical industry; nor does
    it produce any of the precursor chemicals used in the
    manufacture of heroin, amphetamine-type stimulants, or other
    synthetic drugs.  All chemicals used for the production of
    narcotics in Burma (with the exception of opium itself) are
    imported from China, India, Thailand, and other states.  None
    are produced locally.

    Burma has outlawed 25 precursor chemicals, including
    ephedrine, acetic anhydride, and even caffeine (in bulk).
    However, it has not yet been able to stem trafficking from
    neighboring countries, despite seizures in 2002 which
    amounted to 2,900 liters of acetic anhydride, 26,000 liters
    of chemical liquids, 4,800 kilograms of chemical powders, and
    1,700 kilograms of ephedrine.  On the other hand, it has
    begun to build the international cooperation that is required
    to control this trade.  In January 2003, Burma held its first
    trilateral conference with India and China on precursor
    chemicals, and in March met bilaterally with India on the
    same topic.  As a result of those meetings, India is now
    considering creating a 100-mile wide exclusion zone along its
    border with Burma within which any possession of ephedrine
    would be illegal.  A similar zone on the Indian frontier
    already exists for acetic anhydride.

    ¶7.  Create a special task force of police and prosecutors to
    target and investigate high-level drug traffickers and drug
    trafficking groups.

    Drug enforcement efforts in Burma are led by the Central
    Committee for Drug Abuse Control (CCDAC), which is comprised
    of personnel from the police, customs, military intelligence,
    and the army.  CCDAC now has 21 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.  CCDAC's units are underfunded and badly
    equipped.  Nevertheless, they are bringing narcotics
    traffickers to heel and securing convictions.  As noted
    above, more than 90,000 persons have been arrested for
    narcotics-related offenses in Burma over the past 15 years
    and more than 10,000 have sentenced to 10 years or more in
    prison.  CCDAC has also developed arrangements for
    cooperation with the United States, China, Thailand, and
    India, among others, that have allowed law enforcement agents
    around the world to move effectively against major drug
    cartels.

    Burma, in short, has an organization that has already proved
    that it can move effectively against high-level drug
    traffickers and drug trafficking groups.  What it does not
    have is a political situation that will allow it to move
    aggressively against former insurgent groups, like the United
    Wa State Army and others implicated in the drug trade, for
    fear of reigniting the insurgencies that devastated eastern
    Burma for so many decades before 1989.  Burma has
    deliberately chosen to slowly wean these former insurgent
    groups from their dependence on the narcotics trade, while
    building power at the center to use when the grace periods it
    has allowed these groups run out.  In 1997, the Eastern Shan
    State Army of Sai Lin promised to end opium production in its
    cease-fire area and did so.  In 2000, the Kokang Chinese of
    Pen Kya Shin broke their pledge to end opium production and,
    since 2001, have been raked by counter-narcotics operations
    that have been mounted by both the Burmese and Chinese
    governments.  In 2003, as a result, opium production in the
    Kokang Chinese capital district of Lawkai was a mere fraction
    (20 percent) of its level two years earlier.  In 2005, the
    United Wa State Army is scheduled to end opium production.
    If it fails, it will get the same treatment from the Chinese
    and Burmese that the Kokang Chinese have already tasted.

    ¶8.  Fully implement and enforce Burma's money-laundering
    legislation.

    The GOB enacted new and relatively powerful money laundering
    legislation in June 2002.  That legislation criminalizes
    money laundering in connection with virtually every kind of
    serious criminal activity and levies heavy responsibilities
    on banks in regard to reporting.  Penalties are also
    substantial.  Implementation of the new legislation has
    lagged, however.  While the government held training seminars
    on money laundering, started several investigations, and
    seized assets in connection with several major narcotics
    cases, it has not yet prosecuted these cases as violations of
    the money-laundering law.  Neither has it published
    regulations to guide bank reporting in regard to suspicious
    transactions.

    The net result is that the government is effectively working
    only with the asset seizure provisions of its 1993 narcotics
    law.  Perhaps deterred by a banking system crisis which
    ripped through the country in February 2003, it has not
    really yet put its money laundering legislation to work.

    ¶9.  Take effective measures to stem the flow of illicit drug
    money into the banking system and economic enterprises and to
    end joint economic ventures with the leaders of drug
    trafficking organizations.

    Money, illicit or otherwise, is not flowing into Burma's
    banking system, which collapsed in February 2003.  Since then
    deposits at Burma's banks have declined by estimated 40
    percent, with the hardest hit banks being those, like the
    Asia Wealth Bank, Myanmar Mayflower Bank, and Myanmar
    Oriental Bank, that were rumored to have connections with
    criminal elements.  The GOB has not attempted to bail the
    banks out of their current predicament; rather, it has let
    them slowly collapse as monuments to bad banking.

    A variety of factors contributed to this banking system
    crash, including a long-standing climate of financial
    repression, the collapse of Burma's informal financial
    institutions, and the introduction of Burma's new money
    laundering law, which required bank depositors to prove, if
    challenged, the legal origin of their funds.  Since accurate
    record-keeping is a rarely practiced art in Burma, many
    businessmen reacted to the new legislation, and the
    possibility that the government might seize their funds, by
    withdrawing their deposits.  This was probably not the
    primary cause of the crash, but was one of the straws that
    broke the back of Burma's banks.

    The GOB does not have joint ventures with the leaders of drug
    trafficking organizations.  Rather, it has given corporations
    like the United Wa State Party's Hong Pang Company outright
    concessions for the operation of a variety of businesses
    which range from farms to ranches to ruby mines and other
    trading and industrial establishments.  This has been
    controversial, both in Burma and abroad, but the GOB has
    argued that it is necessary, for two reason: (1) to give
    known narcotics trafficking groups an alternative source of
    income; (2) to tie these groups more closely to the Burmese
    economy.  The Burmese view is that these former insurgents
    are less likely to go back into rebellion if they have
    interests in the Burmese economy.

    ¶10.  Amend Burma's substantive and procedural criminal laws
    to facilitate effective investigation and prosecution of
    major drug traffickers.

    With UNODC's assistance, Burma has recently completed the
    draft of a new mutual legal assistance law which will
    facilitate legal and judicial cooperation with other
    countries.  Reportedly, this draft legislation will be made
    law later this year.  The legal regime will also be helped by
    the final publication of the rules and regulations for the
    2002 money laundering law.  However, with the banking system
    now imploding, that is not a critical issue.

    Otherwise, Burma's current narcotics legislation (basically
    the 1993 Law on Narcotic Drugs and Psychotropic Substances)
    is more than adequate for the investigation and prosecution
    of major drug offenses.  It is completely in compliance with
    the recommendations of the 1988 UN Drug Convention and has
    been used already to put more than 10,000 felons behind bars
    with sentences in excess of ten years each.
    Martinez

`