Burma's Dictatorship of Drugs

(This article is from ciadrugs.homestead.com the CIA and Drugs Website.)

Burma -- or Myanmar, more formally -- makes the Western news pages mostly for its repression of the struggling democracy movement led by Nobel peace laureate Daw Aung San Suu Kyi, who is continually harassed and was recently physically attacked while trying to address her followers. 

MIS exported Heroin from these poppy fields to USA.

But those who dare to take a serious approach to drug eradication are likely to end up in deadlier trouble with the ruling dictatorship, known as the State Law and Order Restoration Council, or SLORC, which has incorporated the booming heroin trade into the permanent economy of the country.

Consider the case of U Saw Lu, a revered leader in the mountainous poppy-growing region of the Wa territory, one of many ethnic regions in Burma. Lu, a Wa prince and chairman of the United Wa State Anti-Narcotics and Development Organization, has waged a risky opium eradication campaign on behalf of his people since the SLORC seized power in a 1988 coup.

In January 1992, after U Saw Lu informed the U.S. Drug Enforcement Administration about the drug trafficking activities of a regional SLORC intelligence chief and a local drug warlord, he found himself face to face with a torture squad. According to D.E.A. "Sensitive" e-mail, "he was held upside down for 56 days with 220 current attached to one of his favorite appendages." A doctor who remained present through the torture sessions revived Lu when he passed out. Urine was poured on his face and he was beaten with chains as he lay near death next to a freshly drug grave. His life was spared after Wa leaders threatened military action during a meeting with SLORC's head of military intelligence, Gen. Khin Nyunt.

"There were terrible scars all over his body after the torture," said Benjamin Min, a former SLORC official from Rangoon, who quit the dictatorship and joined Lu in his war against drugs. "He had internal injuries and he needed medical attention."

Maj. Than Aye, the intelligence officer Lu had told the D.E.A. about, supervised the torture sessions. The drug shipment Aye had been overseeing was on its way to one of the world's most notorious drug kingpins, Lo Hsing Han, destined to become a key business partner of Burma's emerging narco-dictatorship. Major Aye has since been promoted to a high-level government position by the ruling council.

According to Benjamin Min, Lu continued to work on opium eradication although he was warned during his torture to terminate any relationship with the D.E.A. In 1993, Lu gave D.E.A. special agent Richard Horn a document titled "The Bondage of Opium: The Agony of the Wa People, a Proposal and Plea."

In his plea, Lu outlined specific steps that were needed to promote opium eradication among the Wa farmers, who provide 80 percent of Burma's opium crop. The Wa, an ethnic minority of 1 million, live in a remote area of Burma's Shan State where there are no roads, no educational system, no medical clinics and electricity for less than 10 percent of families. Even though the Wa farmers grow one of the globe's most sought-after crops, they remain among the world's poorest peoples. Lu knew that any hope of change had to include a serious plan for crop substitution. "Like the heroin addicts that result from the opium, we too are in bondage. We are searching for help to break that bondage," he wrote in his proposal to the D.E.A.

Communications between the D.E.A.'s Rangoon office and higher officials in Washington reveal that agent Horn had every intention of working with the Wa people to implement Lu's proposal. But for reasons that remain unclear, the Central Intelligence Agency and the State Department had other ideas. D.E.A. Sensitive e-mails state that former C.I.A. chief of station Arthur Brown "destroyed this project in one swift move." 

According to the e-mails, Brown delivered an early version of the Wa proposal -- signed by Lu -- to SLORC military intelligence officer Col. Kyaw Thein. When Thein threatened to pick up Lu once more and teach him a lesson in respect, Horn was able to intervene temporarily. In Horn's view, the C.I.A. destroyed a unique opportunity for a dramatic drug eradication program in the poppy fields of the world's biggest heroin producer. (Horn, now a D.E.A. group supervisor in New Orleans, is suing the C.I.A., claiming it illegally surveilled his residence in Rangoon to gain information about his plans, which the C.I.A. went on to foil.)

In September 1993, Horn was forced out of the country by the State Department under pressure from the C.I.A. The plans of the Wa prince and his chief deputy, Benjamin Min, were crushed. A year later, Min risked his life to take the Wa Proposal and Plea to policy-makers in Washington. Before he left, the SLORC hatched a series of unsuccessful assassination plots. In his sworn testimony to the Immigration and Naturalization Service, which won him asylum in the United States, Min states, "Their aim was to assassinate the Wa leaders, specifically U Saw Lu and myself as his chief deputy."

Dirty Laundry

Burma has more than doubled its illicit drug exports since the SLORC takeover in 1988. The U.S. Embassy in Rangoon reports that the area used for poppy cultivation in Burma increased by two-thirds between 1987 and 1990. At a United Nations Drug Control Program (U.N.D.C.P.) regional conference in November 1993, French and U.S. satellite surveys showed an explosion of poppy growing in areas directly under SLORC control.

The U.N.D.C.P. also reported at the U.N.-sponsored Heads of Narcotics Law Enforcement Agencies international meeting this November that the Asian heroin trade reaps $63 billion in profits annually. Burma is by far the largest exporter in the region, providing more than 50 percent of the world's supply.

This booming heroin trade has sent a flood of narco-dollars into Rangoon. "All normal economic activities, if you can call anything in Burma normal, are instruments of drug money laundering," says Franois Casanier, research analyst with Geopolitical Drugwatch in Paris. "And no drug operation in Burma can be run without the SLORC." A March 1996 Narcotics Report on Burma by the State Department points out that the country's "underdeveloped banking system and lack of enforcement against money laundering have created a business and investment environment conducive to the use of drug-related proceeds in legitimate commerce." 

A study by the International Monetary Fund cites large expenditures unaccounted for by the Burmese government: Despite the fact that Burma's foreign exchange reserves for 1991 through 1993 were only approximately $300 million, the SLORC purchased arms valued at $1.2 billion during the period.

According to a 1995 report on Burma's drug trade, the Australian Parliament Committee of Foreign Affairs, Defense and Trade heard testimony that Burma's "narcotics trade was protected at the highest level of the Government" and that the SLORC's involvement occurs "on an individual basis for personal profit, covering areas of responsibility for transport, protection and patronage; and as a matter of policy, either explicit or covert, in order to raise government revenue."

The integration of narco-dollars into the national economy is further highlighted by a new economic report from the U.S. Embassy in Rangoon. Released in July, the "Country Commercial Guide" states that at least 50 percent of Burma's economy is unaccounted for and extralegal. "Exports of opiates alone appear to be worth about as much as all legal exports," the report says. The eighty-eight-page document is based on the SLORC's own economic data. It goes on to say that investments in infrastructure and hotels are coming from major opiate-growing and opiate-exporting organizations and from those with close ties to these organizations. "Barriers between the opiates sector and the legal economy appear to have weakened in recent years, a trend that may have accelerated in the last few months," it explains.

A four-year investigation conducted by intelligence analyst Casanier and a team of researchers found that Burma's national company Myanmar Oil and Gas Enterprise (MOGE) was "the main channel for laundering the revenues of heroin produced and exported under the control of the Burmese army." In a business deal signed with the French oil giant Total in 1992, and later joined by Unocal, MOGE received a payment of $15 million. "Despite the fact that MOGE has no assets besides the limited installments of its foreign partners and makes no profit, and that the Burmese state never had the capacity to allocate any currency credit to MOGE, the Singapore bank accounts of this company have seen the transfer of hundreds of millions of US dollars," reports Casanier. According to a confidential MOGE file reviewed by the investigators, funds exceeding $60 million and originating from Burma's most renowned drug lord, Khun Sa, were channeled through the company. "Drug money is irrigating every economic activity in Burma," Casanier says, "and big foreign partners are also seen by the SLORC as big shields for money laundering."

Astonishingly, drug money is actually solicited by Burma's state-controlled banks. The national bank in Rangoon openly provides money-laundering services, turning drug money into clean money for a 40 percent cut. Occasionally official announcements run in the state-controlled press promoting specials at a reduced charge of 25 percent, no questions asked. Bertil Lintner, a noted authority on Burma's drug trade, says there is a private banking boom in Rangoon based on the influx of narco-dollars.

Father and Son: A Drug Legacy

The SLORC's close relationship with Burma's most powerful drug traffickers was revealed to the world at this past spring's wedding celebration of entrepreneur Steven Law, son of legendary drug lord Lo Hsing Han, who as of 1994 controlled the most heavily armed drug-trafficking organization in Southeast Asia. It is doubtful that anyone attending this lavish affair was thinking about the torture suffered by U Saw Lu for trying to impede Han's drug trade back in 1992. The family's guest of honor was Hotels and Tourism Minister Lieut. Gen. Kyaw Ba, whose presence, along with three other SLORC ministers and four Cabinet ministers, lent strong political overtones to the celebration. Other well-known traffickers were also in attendance. The event received significant exposure in the New Light of Myanmar, the state-controlled paper.

Lo Hsing Han's drug links to top levels of the SLORC are well documented. A memo from the Thai Government's Office of Narcotics Control Board names the SLORC's military intelligence chief, Gen. Khin Nyunt, as one "supporter." It goes on to say that in February 1993, Lo Hsing Han was granted the "privilege from Brig. Gen. Khin Nyunt to smuggle heroin from the Kokang group to Tachilek [on the Thai border] without interception."

Steven Law is the managing director of Asia World Company Limited, a trading and development firm in Rangoon whose chairman is his father, Lo Hsing Han. Founded in 1992, Asia World reports its "authorized capital" to have been $40 million, and it has since invested an estimated $200 million in construction projects around Rangoon. In a joint venture with the SLORC, Law's company was given a twenty-five-year contract in April for a new wharf at Yangon Port, which handles more than 90 percent of Burma's exports. With the SLORC's blessings, one of the world's biggest heroin traffickers will thus soon own and operate a port sending ships loaded with cargo to the United States and countries around the world. (While Steven Law is being honored in Burma, he has been forbidden entrance into the United States due to "suspicion of involvement in narcotics trafficking," according to a State Department official who asked not to be named.)

Our Own Blood Brethren

The SLORC's budding relationship with the recently "surrendered" Khun Sa, the world's most wanted heroin smuggler, was by all accounts a leap forward in the junta's solidification of the narco-dictatorship. In January of this year, the SLORC ceremoniously welcomed Khun Sa and his associates into Rangoon as "our own blood brethren." Intelligence chief Khin Nyunt said in a speech that "we will look after them well on humanitarian grounds and for the sake of national spirit." Drug expert Lintner sums up the reality of the situation: "Khun Sa's 'surrender' has brought the last warlord out of the jungles and into Rangoon -- where he, like everybody else these days, can continue his business. Millions of dollars have been transferred from bank accounts abroad to Rangoon since Khun Sa settled there."

The deal for Khun Sa's new alliance with the SLORC was negotiated by the SLORC's Defense Commander Gen. Maung Aye and Khun Sa's uncle in Rangoon in December 1995. It was highly fitting that the powerful hard-liner Maung Aye should serve as negotiator. In his previous post as head of the Eastern Command, the area in which Khun Sa maintained his drug operations, numerous sources report that Maung Aye was on Khun Sa's payroll for allowing drug operations to continue unimpeded. He has since been promoted to Vice Chairman, the second most powerful position in the SLORC, and is expected to succeed the Chairman, Gen. Than Shwe, when he retires.

This past spring, Khun Sa was given a commercial bus concession from Rangoon into Shan State, the location of his drug empire along the China border. His third son, Sam Seun, is investing $20 million in the development of a forty-four-acre plot that was presented as a gift to Khun Sa by the SLORC at the time of their deal. As reported by the Bangkok Post, the tourist facility, situated along the Thai border, will include a gambling casino, large hotel and "other forms of entertainment." Thai officials are worried about an increase in drug trafficking and money laundering from Khun Sa's family enterprise.

In previous years, the SLORC had claimed it could not crack down on drugs due to Khun Sa's control of Shan State, and that his surrender would result in a substantial reduction in drug exports. "On the contrary, there will be more opium," Khun Sa mused before securing his deal, knowing that it would give the SLORC access to his refineries in Shan State. Banpot Piamdee, head of the Northern Narcotics Prevention and Suppression Centre in Thailand, and international narcotics agents confirmed that Khun Sa's surrender has done nothing to stem the flow of heroin out of Burma. In fact, the State Department's annual opium survey shows that this year's harvest was 9 percent larger than last year's. Winston Lord, Assistant Secretary of State for East Asia and the Pacific, called the SLORC's new partnership with Khun Sa a "defeat for the control of drugs in all our countries."

The Shan Herald Agency for News reported on August 2 that heroin refineries in the jungles of Khun Sa's territory, owned by two of the drug lord's followers, had stopped functioning for two months when the Burmese occupied the area at the time of Khun Sa's departure for Rangoon. However, refinery operators were given the green light by SLORC troops in mid-March and are back in full swing, "enjoying more freedom than before." The Bangkok Post reported on August 21 that "Rangoon has officially allowed former Mong Tai Army soldiers [Khun Sa's army] and Shan People at Ho Mong [Khun Sa's former headquarters] to grow opium poppies to ease poverty in the area."

Along with Lo Hsing Han and Khun Sa, other ethnic drug traffickers have also benefited from good relationships with the Rangoon junta, according to this spring's State Department Narcotics Report. Following a list of the names of eight top traffickers from the Shan, Kachin and Wa areas, the report points out that the SLORC has given these individuals "significant political legitimacy" by referring to them as "leaders of national races." Several of them have even been handpicked to help write the nation's new Constitution. It is hardly surprising that the SLORC refused a U.S. offer of $2 million to extradite Khun Sa to stand trial here. (Khun Sa was indicted in a U.S. federal court in December 1989 on charges of smuggling more than $350 million worth of heroin into the United States between 1986 and 1988.)

Heroin, Vegetables and Cigarettes

Outside of Rangoon, SLORC local commanders and their brigades carry out policies that actively promote the expansion of poppy growing. Payoffs, kickbacks and extortion by the military in connection with opium growing and drug transport are factors of daily life for most villagers. Due to cease-fire agreements signed with fifteen ethnic minorities since 1989, the SLORC army now has full access to every border in Burma and control of border checkpoints for the first time.

Geopolitical Drugwatch researcher Casanier says that SLORC army officials extort "taxes" from impoverished opium growers to supplement their meager salaries. This monthly, per-acre extortion forces villagers to continue farming opium simply to be able to meet the tax quota, thereby keeping them dependent on the cash crop. If villagers do not deliver, their livestock is confiscated, family members are held for ransom or they are taken away and used as forced labor on infrastructure projects. The less lucky ones, usually the village headmen, are arrested  and tortured.

SLORC Minister for Hotels and Tourism Lieut. Gen. Kyaw Ba, the guest of honor at Steven Law's wedding, became rich from drug payoffs, according to several sources, when he served as Northern Commander in Kachin State prior to his promotion to the SLORC. Like many military commanders, he was the beneficiary of a portion of the opium taxes and bribes that filter up from battalions and the payoffs that come down from drug lords. "Khun Sa [has] paid 500,000 kyat [$5,000] a month since 1992 to one general who was commanding this region," one officer of his army in Shan State told Reuters.

Loong Kyong, a 45-year-old Shan farmer who fled to Thailand, told human rights investigators this past May that Burmese soldiers actually encourage rice farmers to substitute opium for their rice crop. "The reason the Burmese say not to grow rice is that if you grow rice you have to give some to the rebel groups, and to others, and you have to get your rice milled," he said. "So they say just grow opium and you can easily get money and buy your rice. The military will buy the opium."

All over Burma, rural communities are succumbing to the supplies of cheap heroin distributed unchecked in their villages. "Drug users and retail drug dealers can increasingly be found everywhere," reports the Shan Herald Agency for News. "Amphetamines and heroin are being bought and sold like vegetables from roadside peddlers." Rangoon and Mandalay, Burma's second-largest city, are also facing heroin epidemics.

"Only since the 1988 SLORC takeover have chemicals needed to refine the purest grades of heroin become available in Burma's most remote areas," states a drug eradication proposal presented by the people of Wa State to the International Conference on Drugs in Portugal in March. "Local militia groups, formerly opposed to the government and long-linked to the heroin trade, now do business freely through SLORC-controlled frontier areas." The Australian Parliament Committee of Foreign Affairs was told last year that "opium is warehoused at Burmese military bases, while trucks transporting narcotics are sometimes escorted by military vehicles to avoid inspection en route."

In Burma's northernmost Kachin State, things have also taken a turn for the worse. Three years before the Kachin signed a cease-fire agreement with the SLORC in 1994, Kachin leaders had mounted an "Opium Free State" campaign that brought a drastic reduction in poppy cultivation to parts of their territory. The 1996 report "Current Status of Drug Eradication in Kachin State" by the Kachin Independence Organization claims a "dramatic... resurgence of poppy cultivation and opium production in areas that were previously considered to be 90 per cent contained."

Benjamin Min, formerly with the SLORC Ministry of Mines, and independent human rights investigators describe the devastating impact of drugs in the jade mines of the remote Kachin State. Managers of the SLORC-owned mines, some in joint ventures with Chinese businessmen, are giving their workers the option of receiving compensation in hard drugs rather than cash. Up to 200,000 miners, who travel from their villages out of desperation for work, can be found in one mine where drugs are cheap and shooting galleries service hundreds with one needle. Min reports that two-thirds of the 100,000 workers at Hpakant Jade Mine, owned entirely by the SLORC, have chosen to be paid by drugs rather than cash. And the only way large shipments of illegal substances can find their way into Kachin State is through SLORC-controlled gates. More than 90 percent of the addicts in the region are H.I.V. positive, according to a U.N. report.

Kachin leaders and independent analysts believe that drugs are used as a tacit tool of control by the military to pacify the Kachin population. "In the Kachin people's minds, the heroin tragedy is a form of cultural genocide for eliminating large portions of a volatile minority that has strong sentiments against the government," stated a U.S. human rights investigator who has managed to penetrate the restricted areas. Michael Jala Maran, executive director of the Pan Kachin Development Society, returned to Thailand in September from a distressful visit to Kachin State. "The AIDS situation is a complete disaster," he said. "I'd call it the result of the deliberate politics of heroin visited on the Kachin people since the nefarious cease-fire."

Needle sharing, a proliferation of brothels, a dearth of public education and virtually no medical care have created an explosion in the number of AIDS cases, with dangerous implications for the region. The U.N. reports that 60-70 percent of IV drug users in Burma are H.I.V. positive. (Even the SLORC acknowledges that there are more than 400,000 H.I.V.-positive people in Burma.) The World Health Organization figure for the overall number of addicts is close to 500,000, or 1 percent of the population, but other experts say that a more realistic figure is 2-4 percent. Millions of migrants are pouring out of Burma into neighboring Thailand, China and India, carrying H.I.V. with them. The Southeast Asian Information Network points to the dramatic correlation between the heroin routes out of Burma and the rise of the AIDS epidemic in the country's neighbors. The highest rates of H.I.V. infection in both China and India lie right at their border with Burma.

There is a direct correlation between the rise in heroin production in Burma and a resurgence of heroin use in the past five years in the United States. Government figures show that the volume of heroin imported into this country, and likewise heroin consumption, has doubled since the mid-eighties. The amount of Burmese heroin sold in New York City has tripled since 1989, according to Jane's Intelligence Review. The March State Department report and interviews with U.S. officials indicate that more than 60 percent of heroin seized in the United States comes from Burma.

Madeleine Albright, U.S. ambassador to the U.N., recently described Burma as closely resembling the Orwell novel 1984. "The authorities there are among the most repressive and intrusive on earth," she said. "The rule of law so ardently desired elsewhere has here been perverted, for there is no connection between justice and law." Yet this is a story that goes beyond the usual realm of human rights: Burma's ruling junta appears willing to addict an entire nation to drugs, both by setting up a long-term financial dependency on the heroin trade and by fostering a massive upsurge in drug usage. And the enormous financial payout from the SLORC's pro-drug policies helps the narco-dictatorship secure its hold on power against the struggling democracy movement.

Meanwhile, the heroin pipeline from Burma to the United States is opened up full blast, and mainlining has become trendy among U.S. youth. San Francisco Police Sergeant John Murphy said in July that buying heroin in his city is "as easy as buying a pack of cigarettes."

By Dennis Bernstein and Leslie Kean

 DECEMBER 2, 1996

Dennis Bernstein, an associate editor with Pacific News Service, is co-producer of Flashpoints at KPFA-FM in Berkeley, California. Leslie Kean, a writer based in Mill Valley, California, is co-author of Burma's Revolution of the Spirit: The Struggle for Democratic Freedom and Dignity (Aperture). This article was written with the support of the Fund for Investigative Journalism.

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