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Cablegate: Burma: 2007 Counternarcotics Report Card

VZCZCXRO4060
PP RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHGO #0501/01 1720933
ZNR UUUUU ZZH
P 200933Z JUN 08
FM AMEMBASSY RANGOON
TO RUEHC/SECSTATE WASHDC PRIORITY 7806
INFO RUCNASE/ASEAN MEMBER COLLECTIVE PRIORITY
RUEHBJ/AMEMBASSY BEIJING PRIORITY 1908
RUEHBY/AMEMBASSY CANBERRA PRIORITY 1296
RUEHKA/AMEMBASSY DHAKA PRIORITY 4905
RUEHLO/AMEMBASSY LONDON PRIORITY 2031
RUEHNE/AMEMBASSY NEW DELHI PRIORITY 4832
RUEHUL/AMEMBASSY SEOUL PRIORITY 8384
RUEHKO/AMEMBASSY TOKYO PRIORITY 5946
RUEHCN/AMCONSUL CHENGDU PRIORITY 1499
RUEHCHI/AMCONSUL CHIANG MAI PRIORITY 1666
RUEHGV/USMISSION GENEVA PRIORITY 3839
RUEHUNV/USMISSION UNVIE VIENNA PRIORITY 0087
RUCNDT/USMISSION USUN NEW YORK PRIORITY 1780
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RUEAWJA/DEPT OF JUSTICE WASHDC PRIORITY
RUEABND/DEA HQS WASHINGTON DC PRIORITY
RHHMUNA/CDR USPACOM HONOLULU HI PRIORITY

UNCLAS SECTION 01 OF 07 RANGOON 000501

SENSITIVE
SIPDIS

DEPT FOR INL/PC, INL/AAE; INFO EAP/MLS; DEA FOR OF, OFF,
TREASURY FOR FINCEN; JUSTICE FOR OIA, AFMLS, NDDS; USPACOM
FOR FPA

E.O. 12958: N/A
TAGS: SNAR KCRM BM
SUBJECT: BURMA: 2007 COUNTERNARCOTICS REPORT CARD

REF: A. A) STATE 29120
B. B) 07 RANGOON 0555
C. C) 07 RANGOON 1109
D. D) 07 RANGOON 1130

RANGOON 00000501 001.2 OF 007


1. (U) This message responds to ref A request for a report
on the Government of Burma's cooperation on
counter-narcotics efforts, based on benchmarks established
in the prior year, in preparation for the FY 2008
certification process.

2. (SBU) Begin Text of 2007 Certification Report Card:

A. The USG requested that the GOB take demonstrable and
verifiable actions against high-level drug traffickers and
their organizations, such as investigating, arresting, and
convicting leading drug producers and traffickers.

Embassy Rangoon Assessment: Limited cooperation.

The GOB has to date taken no direct action against the
eight leaders of the notorious United Wa State Army (UWSA),
indicted in January 2005 in a U.S. federal court, although
authorities have taken action against other, lower-ranking
members of the UWSA syndicate. Two members of UWSA
Chairman Bao Yu Xiang's family were sentenced to death and
remain in detention after their arrest and conviction in
connection with the September 2005 GOB seizure of a
UWSA-related shipment of approximately 496 kgs of heroin
bound for China via Thailand.

The GOB has not succeeded in convincing the UWSA to stop
its illicit drug production or trafficking, although
Burmese anti-narcotic task forces maintained pressure
against other drug producers and traffickers in 2007. The
GOB continued to cooperate with DEA and the Australian
Federal Police (AFP) to monitor and disrupt the flow of
illegal narcotics by the UWSA and associated international
trafficking syndicates that have ties throughout Asia, the
Pacific region, and North America.

During 2007, the following significant enforcement activity
was noted:

During April 2007, the Tachilek CCDAC ANTF raided a house
located in Taw Kaw Ah Twin Village, Hao Lek Village Track,
Tachilek, Burma. A search led to the discovery of 10,000
methamphetamine tablets and the arrest of two defendants.
Information from the defendants resulted in the search of a
second location, the seizure of 264,000 methamphetamine
tablets, and the arrest of two defendants.

--During April 2007, based upon information from DEA
Rangoon and the AFP, CCDAC Muse ANTF officers raided four
houses in the village of Pan Se, Nam Kham Township, Burma
that were believed to be maintained by member of the Pan Se
Militia, who are aligned with the Myanmar National Defense
Alliance Army (MNDAA). The raid resulted in the seizure of
224.3 kilograms of opium, 300 grams of heroin, an
undisclosed amount of opium seeds, 7.1 million kyat
($7,100.00 USD), and 50,000 Chinese Yuan ($6,250.00 USD)
and the arrest of two defendants.

--During June 2007, based upon informant information and
information provided by DEA Rangoon, the Taunggyi CCDAC
ANTF, assisted by the Burmese Army, searched several houses
located in Loi Hsaung Village, His Hsai Township. The
search resulted in a total seizure of 189.2 kilograms of
opium and the arrest of three defendants. Information from
the defendants resulted in the discovery and destruction of

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a heroin refinery and the seizure of 80 kgs of Ammonium
Chloride.

--During October 2007, the Lashio CCDAC ANTF seized 275
kilograms of ephedrine at a vehicle checkpoint near Thein
Ni, Burma. It is suspected that this ephedrine was
smuggled across the Indian border near Kalay/Tamu,
transited Mandalay, and was en route to a methamphetamine
laboratory in or near the Kokang region.

--During November 2007, the Taunggyi ANTF raided two large
heroin refineries southeast of Taunggyi. The refineries
were located in caves within the Pa-O National Organization
(PNO) area of the Mae Nae Mountain Range at an altitude of
over 6000 feet. The raids resulted in the seizure of
approximately 470 kgs of morphine base, over 60 kgs of raw
opium, and 70 kgs of ephedrine.

--During December 2007, the Tachilek CCDAC ANTF stopped and
searched two suspects at a vehicle checkpoint on the
outskirts of Tachilek, Burma. The search and subsequent
follow-on investigation resulted in the seizure of 2690
tablets of Rabbit brand-logo Ecstasy, 1400 tablets of WY
brand methamphetamine, and 2.5 kilograms of methamphetamine
ICE. The Tachilek CCDAC ANTF arrested six defendants.
According to CCDAC, the ecstasy was manufactured in China
and smuggled into Burma through Pang Hsang, Special Region
Number Two (UWSA).

In 2007, according to official statistics, the GOB arrested
3635 suspects on drug related charges. Burma continued its
cooperation with law enforcement agencies in neighboring
countries in 2007, in several cases leading to the
interdiction of cross-border drug transfers and the
extradition of traffickers to and from Burma.

B. The USG asked the GOB to continue good efforts on opium
poppy eradication and provide location data to the U.S. for
verification purposes; increase seizures of opium, heroin,
and methamphetamine and destroy production facilities;
adopt meaningful procedures to control the diversion of
precursor chemicals.

Embassy Rangoon Assessment: Limited cooperation.

For the fourth consecutive year, the GOB failed to provide
sufficient cooperation to support the U.S.-Burma joint
opium yield survey, previously an annual exercise.

There was a last minute effort during January/ February
2008 to revive the US-Burma Opium Yield Survey by the GOB
Central Committee for Drug Abuse Control (CCDAC). However,
this effort was unsuccessful. UNODC continues to conduct
an annual survey.

According to the UNODC opium yield survey, in 2007 the
total land area under poppy cultivation in Burma was 27,700
hectares, a 29 percent increase from the previous year.
The UNODC estimated that the potential production of opium
increased by 46 percent, from 315 metric tons in 2006 to
460 metric tons in 2007. The largest areas under
cultivation were located in the Southern Shan State, where
65 percent of cultivation in Burma occurred. UNODC
determined that 25 percent of cultivation in Burma occurred
in the Eastern Shan State. In the Northern Shan State,
poppy cultivation was one percent of the total cultivation
in Burma. In the Kayah State, which was first surveyed in
2006, UNODC noted that poppy cultivation is increasing.
The same trend was observed in the Kachin State. According
to UNODC, the Kachin State accounted for 5 percent of the

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total poppy cultivation in Burma. A UNODC survey of
Special Region Number 2 (UWSA) revealed that there is no
appreciable poppy cultivation. The same was found in th
e Special Region Number One (Kokang) and Special Region
Number Four (ESSA).

The increase in potential opium production in the 2007
UNODC estimate reflects an increase in hectares under
cultivation, improved agricultural methods, and an end to
several years of drought. These factors resulted in
favorable growing conditions in the major opium poppy
growing areas.

GOB seizures of illicit drugs increased considerably in
2006 and early 2007, due to closer cooperation with
neighboring countries and stepped-up law enforcement
investigations. During CY 2007, the GOB seized
approximately 1.6 million methamphetamine tablets, compared
with 19 million methamphetamine tablets seized in calendar
year (CY) 2006, equating to 1.9 metric tons.

During CY 2007, the GOB seized approximately 5.2 metric
tons of methamphetamine powder, approximately 398 kgs of
methamphetamine "ICE," 1.2 metric tons of opium, 10.9
metric tons of low quality opium, approximately 75 kgs of
heroin, and 521 kgs of ephedrine.

Burma does not have a domestic chemical industry, but its
porous borders and endemic corruption facilitate the
diversion and trafficking of precursor chemicals, primarily
from China and India, to drug labs in country. The GOB
recognizes the threat, but has been unable to establish
effective countermeasures to date. The GOB's Precursor
Chemical Control Board has identified twenty-five chemical
substances (including caffeine and thionyl chloride) and
prohibited their import, sale, or use.

During CY 2007, the GOB seized approximately 3.6 metric
tons of precursor chemical powder, 10736.14 liters of
precursor chemicals, and approximately 102 kgs of caffeine.

C. The USG urged the GOB to establish a mechanism for the
reliable measurement of methamphetamine production and
demonstrate progress in reducing production (e.g.,
destruction of labs) and increasing seizures, particularly
focusing increased illicit drug seizures from gangs on the
border with China, India, and Thailand.

Embassy Rangoon Assessment: Limited cooperation.

Declining poppy cultivation has been matched by a sharp
increase in the production and export of synthetic drugs.

Burma remains a primary source of amphetamine-type
substances (ATS) produced in Asia. While the GOB has
significantly increased the quantity of methamphetamines
seized, trafficking efforts disrupted, and narcotics labs
destroyed in 2007, international drug enforcement agencies
see indications that ATS production levels continue to
soar.

Traffickers continue to use clandestine labs inside Burma
to make ATS, using chemical precursors smuggled from India
and China, and to smuggle narcotics across the Thai and
Chinese borders for distribution within Thailand and China,
and for transshipment, primarily to other Asian countries
and Australia.

The GOB does not have a mechanism for the measurement of
ATS production.

RANGOON 00000501 004.2 OF 007

D. The USG asked the GOB to continue cooperation with China
and Thailand and expand cooperation to other neighboring
countries, such as India, Laos, and Vietnam, to control the
production and trafficking of illicit narcotics and the
diversion of precursor chemicals.

Embassy Rangoon Assessment: Adequate cooperation.

The GOB maintains a regular dialogue on precursor chemicals
with India, China, Thailand, and Laos. As a result, India
and China have taken steps, including the creation of
exclusion zones, to divert precursors away from Burma's
border areas. The GOB has also cooperated with these
countries on a variety of counter-drug law enforcement
issues.

GOB cooperation with China and Thailand has been the most
productive, yielding arrests, seizures, and extraditions.
The law enforcement relationship with India has been less
productive. Nonetheless, GOB counter-drug officials meet
on a monthly basis with Indian counterparts at the field
level at various border towns.

Burma and Thailand jointly operate border liaison offices.
In 2007, Thailand added a drug enforcement liaison officer
to its embassy staff in Rangoon. Burma and Laos, with the
assistance of the UNODC, conduct joint anti-drug patrols on
the Mekong River.

Burma became a member of the Asia/Pacific Group on Money
Laundering in January 2006, and is a party to the 1988 UN
Drug Convention. Over the past several years, the
Government of Burma has expanded its counter-narcotics
cooperation with other states. The GOB has bilateral drug
control agreements with India, Bangladesh, Vietnam, Russia,
Laos, the Philippines, China, Indonesia, and Thailand.
These agreements include cooperation on drug-related money
laundering issues.

E. The USG requested that the GOB enforce existing
money-laundering laws, including asset forfeiture
provisions, and fully implement and enforce Burma's
money-laundering legislation passed in June 2002.

Assessment: Adequate cooperation.

In October 2006, the Financial Action Task Force (FATF)
removed Burma from the FATF list of Non-Cooperative
Countries and Territories (NCCT), but advised the Burmese
Government to enhance regulation of the financial sector.
The Government of Burma continues to submit progress
reports to FATF on its anti-money laundering program. In
October 2007, due to progress on anti-money laundering
measures, FATF ended formal monitoring of Burma. FATF
continues to monitor Burma on an informal basis.

The U.S. maintains the separate countermeasures issued by
the Financial Crimes Enforcement Network of the Treasury
Department, adopted in 2004 under Section 311 of the 2001
USA Patriot Act, which found the jurisdiction of Burma and
two private Burmese banks, Myanmar Mayflower Bank and Asia
Wealth Bank, to be "of primary money laundering concern,"
and requiring U.S. banks to take special measures with
respect to all Burmese banks, with particular attention to
Myanmar Mayflower and Asia Wealth Bank.

Burma is a party to the UN Convention against Transnational
Organized Crime and ratified the UN Convention on
Corruption in December 2005 and the UN International

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Convention for the Suppression of the Financing Terrorism
in September 2006. The GOB now has in place a framework to
allow mutual legal assistance and cooperation with overseas
jurisdictions in the investigation and prosecution of
serious crimes.

In 2005, the GOB instituted an on-site examination program
for financial institutions and closed three major banking
institutions (Asia Wealth Bank, Myanmar Mayflower Bank, and
the Myanmar Universal Bank) for violations of banking
regulations. The banks were allegedly involved in
laundering money linked to the illicit narcotic trade. In
August 2005, the GOB, with the assistance of DEA, seized
assets of the Myanmar Universal Bank and arrested its
Chairman, Tin Sein, and sentenced him to death for
laundering UWSA drug proceeds. The total value of seized
bank accounts, property, and personal assets exceeded $25
million.

As a result of the promulgation in 2004 of the Mutual
Assistance in Criminal Matters Law (MACML) and subsequent
measures to address money laundering and terrorism
financing, Burma gained membership in the Asia Pacific
Group on Money Laundering in March 2006. In July 2005,
Burma and Thailand signed an MOU on the exchange of
information relating to money-laundering.

With the exception of the Myanmar Universal Bank case, the
GOB has not made public the results of its investigations
into private banks, nor made explicit connections between
the banks and money laundering. In 2006-2007, the Burmese
Government amended its "Control of Money Laundering Law" to
expand the list of predicate offenses. In July 2007, the
Central Control Board issued five directives to bring more
non-bank financial institutions under the AML/CFT
compliance regime. As of August 2007, 823 suspicious
transaction reports had been received. One case related to
trafficking in persons was filed for prosecution, resulting
in convictions of 20 individuals under the "Control of
Money Laundering Law" and the Trafficking in Persons Law.
In the first eight months of 2007, seven cases had been
identified as potential money laundering cases.

Since August 2005, there have been no significant
prosecutions of banking or government officials in cases
related to laundering of drug money, and administrative and
judicial authorities lack resources to investigate and
enforce the anti-money laundering regulations at all
levels. The government continues to award contracts for
construction and other major infrastructure projects to
corporations established by or linked to suspected major
drug traffickers.

F. The USG urged the GOB to prosecute drug-related
corruption, especially corrupt government and military
officials who facilitate drug trafficking and money
laundering.

Embassy Rangoon Assessment: Inadequate cooperation.

Burma is tied with Somalia for the lowest rank of all
countries in the 2007 Transparency International corruption
index. Government officials, particularly those posted in
border areas, are widely believed to be involved in
facilitating the drug trade.

According to the GOB, between 1995 and 2003, officials
prosecuted and punished over 200 police officials and 48
Burmese Army personnel for narcotics-related corruption or
drug abuse. There is no evidence that the GOB took any

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similar actions over the past four years. The GOB has
never prosecuted a Burmese Army officer over the rank of
full colonel.

G. The USG asked the GOB to expand demand-reduction,
prevention, and drug treatment programs to reduce drug use
and control the spread of HIV/AIDS.

Embassy Rangoon Assessment: Limited cooperation

Although drug abuse levels remain low in Burma compared to
neighboring countries, the addict population could be as
high as 300,000 abusers, including a growing number of
injecting drug users (IDU) and regular consumers of ATS.
The World Health Organization estimates there are between
60,000 and 90,000 IDUs in Burma.

The HIV epidemic in Burma, one of the most serious in Asia,
continues to expand rapidly. UNAIDS estimates that 34
percent of officially reported HIV cases are attributable
to intravenous drug use, one of the highest rates in the
world. HIV prevalence among injecting drug users was 46.2
percent in 2007.

The GOB's prevention and drug treatment programs suffer
from inadequate resources and a lack of high-level
government support. Demand reduction programs are in part
coercive and in part voluntary. There are six major drug
treatment centers under the Ministry of Health, 49 other
smaller detox centers, and eight rehabilitation centers
which, together, have provided treatment to about 70,000
addicts over the past decade. Burmese authorities have
also collaborated with UNODC in expanding anti-drug
campaigns as well as establishing treatment and
rehabilitation programs. The GOB's Myanmar Anti-Narcotic
Association, for example, has supported UNODC drop-in
centers in Northern Shan State and Kachin State, which
treated more than 8,000 addicts in 2006-2007. The GOB also
conducted several outreach projects through the public
school system.

In 2006, the Ministry of Health began to treat heroin
addicts with Methadone Maintenance Therapy (MMT) in four
drug treatment centers found in Rangoon, Mandalay, Lashio,
and Myitkyina. The Ministry of Health also began
dispensing methadone treatment in three additional sites,
two in Kachin State and one in Rangoon Division. By August
2007, the Ministry of Health had treated more than 370
patients using MMT. Several international NGOs have
effective demand reduction programs, including Care
International, World Concern, and Population Services
International (PSI).

Although the GOB, working with partners, has maintained the
above-mentioned programs, Burma has failed to expand
demand-reduction, prevention, and drug treatment programs
to reduce drug use and control the spread of HIV/AIDS. The
Global Fund, which had a budget of $98.5 million to fight
HIV/AIDS, TB, and Malaria in Burma, withdrew in 2005. In
2006, foreign donors established the Three Diseases Fund
(3DF) to provide humanitarian assistance for HIV/AIDS, TB,
and Malaria. The 3DF, with its budget of $100 million over
five years, supports the work of local and international
NGOs, the United Nations, and the Ministry of Health. In
2007, the 3DF supported HIV/AIDS programs such as HIV
surveillance and training on blood safety. The 3DF also
provided funds for anti-retroviral therapy and the MMT
program.

End Text of 2007 Certification Report Card.

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VILLAROSA

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