Cablegate: U.S. Sanctions: Directed at Burma or the Region?

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

UNCLAS SECTION 01 OF 02 RANGOON 001469

SIPDIS

STATE FOR EB, EAP AND INL
TREASURY FOR OASIA
DEA FOR OF, OFF
NSC FOR RAND BEERS
MANILA FOR USED/ADB
USCINCPAC FOR FPA

E.O. 12958: N/A
TAGS: SNAR EAID BM ADB
SUBJECT: U.S. SANCTIONS: DIRECTED AT BURMA OR THE REGION?

1. This is an action message. See paragraph 9.

2. Summary: The United States is now poised to oppose an ADB
regional grant for alternative development in the Greater
Mekong Subregion (GMS) on the grounds that Burma-specific
legislation applies to all such regional grants. That
position will have wide ramifications, potentially crippling
the ADB's ability to support GMS loans and grants. It will
also undercut regional support for U.S. sanctions policy on
Burma and damage U.S. efforts to promote donor support for
alternative development projects in Southeast Asia. That was
not the intent of the Burma legislation, but it will be the
effect, if the USG does not review and reverse the proposed
decision on the ADB grant. End Summary.

3. The ADB's Executive Board will shortly take up a proposed
$2 million technical assistance grant for cooperation on
alternative development for drug control in the Greater
Mekong Subregion. As its name implies, the grant will
promote sub-regional cooperation in major opium producing
areas. It has three basic components. The grant will help
implement the joint China/ASEAN ACCORD plan of action on drug
control, assist in monitoring opium production, and promote
alternative development activities, including food security,
health and education programs, crop diversification, and
improved land use planning. In Burma specifically, the
technical assistance would pick up activities from the Wa
Alternative Development Project that were cut when that
project was downsized in 2000.

4. This grant would directly support U.S. alternative
development initiatives in Southeast Asia. Over the past
five years, the United States has been the strongest
supporter of alternative development activities in the Golden
Triangle. In Burma alone, the United States has contributed
over three-quarters of the donor funding for the Wa
Alternative Development project, a total of over $8 million
since 1998. We have also lobbied strongly for broader donor
support for these programs, with some success. Since 2000,
Japan has scaled up its support for alternative development
programs in Burma from an original grant of $500,000 to
$700,000 in 2001 and $1.673 million in 2002, almost $1
million more than we will contribute this year. In 2002,
Germany became the third major donor to join up, putting up
$1.25 for alternative development in the Wa territories.
Meanwhile, Thailand and China have begun planning for their
own alternative development programs with Burma.

5. These projects, moreover, have been successful. The Wa
Alternative Development Project in particular has contributed
to a sharp reduction in opium cultivation in the project
area. It has also helped eliminate leprosy from the project
area, established new health and education facilities, and
helped close a food deficit which has always been a prime
motivating factor for opium production by village farmers.
In addition, it has opened a window on the Wa territories for
foreign observers, exposed the Wa to concerted international
pressure regarding drug trafficking, and directly supported
Burma's nationwide drug control program, which has reduced
opium production by more than 75 percent over the poast six
years; i.e., from an estimated 2,560 metric tons in 1996 to
only 630 metric tons last year.

6. Despite this success, the United States is now proposing
to frustrate the ADB's efforts to get involved in alternative
development in Southeast Asia by voting against the proposed
regional grant. Essentially, that decision was based on some
Burma-specific legislation that directs the Secretary of
Treasury to instruct the USEDs at all IFIs to vote against
"any loan or other utilization of funds .... to or for
Burma." In this case, however, the proposed grant is not "to
or for Burma," alone. In fact, the Government of Burma will
never see a cent of the money. Rather, the grant will be
distributed through UNDCP for use in countries throughout the
sub-region, including China, Laos, Thailand, Vietnam, and
Cambodia. As a consequence, a "no" vote in this case will
have widespread ramifications. Not only will it undercut our
efforts to promote alternative development in the Golden
Triangle, it will also effectively extend Burma-specific
sanctions to the entire Greater Mekong sub-region,
potentially outlawing any lending by the World Bank, the ADB,
or any other IFI to any type of regional project from which
Burma might benefit in any way.

7. Such a vote would also inevitably undercut regional
support for our Burma policy. Our sanctions policy, after
all, is intended to punish Burma, not its neighbors. If we
persist now in extending those sanctions to all regional
collectives in which Burma participates, we will risk
alienating the very front line states whose support we need
if sanctions are to be effective. The point is critical and
worth emphasizing. There is no better way to undercut
regional support for our Burma policy than to apply our
sanctions collectively to all regional states. That,
however, will be the effect of U.S. votes against regional
projects.

8. In short, the proposed U.S. decision to vote no on the ADB
grant can result in crippling the ability of IFIs to support
GMS loans and grants; it will undercut regional support for
U.S. sanctions policy on Burma; and it will damage U.S.
efforts to promote donor support for alternative development
projects in Southeast Asia. None of this was the intent of
the original Burma legislation; however, it will be the
effect and the USG should take time now to step back and
review its proposed decision on this ADB grant.

9. Action requested: A "yes" vote on the ADB's grant for
alternative development in the Greater Mekong Subregion.
Martinez

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