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Cablegate: Poppies, Ak-47s, and Wolframite: A Trip to Wa And

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

UNCLAS SECTION 01 OF 03 RANGOON 001339

SIPDIS

SENSITIVE

STATE FOR EAP/BCLTV, EAP/CM, EB, INL
COMMERCE FOR ITA JEAN KELLY
TREASURY FOR OASIA JEFF NEIL
USPACOM FOR FPA

E.O. 12958: N/A
TAGS: SNAR PREL PINS PGOV ECON BM
SUBJECT: POPPIES, AK-47S, AND WOLFRAMITE: A TRIP TO WA AND
KOKANG

1. (SBU) Summary: A brief visit to a major opium production
region in eastern Burma, some of it well outside the writ of
the Rangoon generals, presented some clear themes. The
non-Burman militias and governments that hold sway in the
eastern border zones govern a region that is far more reliant
on China than Rangoon for its economic well-being. Poppies,
opium, and heroin are on the decline, while amphetamines are
gaining strength. The reduction of poppy production is in
part due to some economic development and crop substitution
programs. However, all admitted much more needed to be done
-- and the international community should help. The question
that stuck in our mind, though, is whether the obviously
wealthy ethnic leaders were doing enough on their own to give
their people a better, drug-free, life. End summary.

Where in the World?

2. (U) To publicize its efforts to fight narcotics
production, and to make the case for more international aid,
the Burmese counter-narcotics police and military
intelligence organized a trip for ASEAN, EU, Japanese, and
U.S. diplomats and police officials into northern Shan State,
and the otherwise off-limits Special Regions One (Kokang) and
Two (northern Wa). Shan State is the largest of Burma's 14
states and divisions, and forms a large "bubble" on the
eastern portion of the country, bordering China, Laos, and
Thailand. This particular trip focused on the primary border
crossing at Muse, along the northern border of Shan State and
China, before swinging east into the semi-autonomous Special
Regions on the northeastern Shan-China border. This rather
inaccessible area is notorious for insurgent groups, and the
production of poppies, opium and heroin, and now amphetamines.

3. (U) The Wa and Kokang zones are visitable now because of
cease-fire agreements the government negotiated in the late
1980s and 1990s. In exchange for significant political and
economic autonomy, the regions were opened up to "outsiders"
-- both Burmans and international organizations -- to assess
the narcotics situation and try to reduce production and
trafficking. Although the Burmese national police and
military maintain large presences in the two Special Regions,
both the Wa and Kokang ethnic groups maintain their own
leadership structure and well-armed militias, and seem to run
their own local government with minimal interference from the
central government.

Drugs: Beating Poppies Into Rubber Trees

4. (SBU) Poppy growing and the production and trafficking of
opium and heroin seem to be on the decline. A senior Kokang
leader said his region has been poppy and opium free since
2002. Police sources reported that local seizures of heroin
have been rising steadily since 2001, but that seizures of
raw opium are down significantly since 2002. One of the
most serious challenges now, the police reported, is stopping
the production and export of amphetamine type substances
(ATS) and the import of ATS precursor chemicals. These
trends track with our own findings, and the findings of the
joint U.S.-Burma annual opium survey.

5. (U) There was much talk from all sides of the importance
of crop substitution and other economic development programs
as antidotes to poppy and ATS production. The GOB officials
(police and military) along with the Wa and Kokang ethnic
representatives all complained that without more
international support, though, these efforts were doomed to
failure. Besides a lack of international aid, local
officials pointed out other constraints to the success of
crop substitution: the lack of secure and accessible markets
for the new cash crops (China has agreed to accept a lot duty
free, but infrastructure remains a problem); the difficulty
of finding suitable crops for the local soil and climate for
which there is also a demand in China; and, the lack of
adequate motorized transport and good roads to take the new
crops to market.

6. (SBU) Despite these constraints, in this corner of Shan
State there were a number of examples of substitution efforts
underway. However, our brief visits to these sites and the
one-sided presentations we heard made it difficult to assess
these projects' significance or success. Throughout the
region we saw hillsides once dominated by poppies, but now
covered in rubber trees, sugar cane, and other cash crops.
We also saw efforts in the Kokang, Wa, and Burmese zones to
develop some economic alternatives for farmers; whether it be
a rubber plantation and factory in Wa, a Japanese
government-sponsored buckwheat growing program in Kokang, or
a 1000-acre "model" training farm near Lashio, in
Burmese-controlled northern Shan State.
7. (SBU) One controversial aspect of the substitution
programs is the forced relocation of poppy farmers to new
terrain. In both Namtik (Wa region) and Laukaing (Kokang
region), local leaders were proud of recent efforts to move
600 and 200 households respectively from hillside farming
areas to lowland areas. In both cases the leaders said they
had given housing and farming assistance to the transplants,
but they gave no details and we had no chance to talk
directly with the farmers.

Politics: China's Burmese Protectorate

8. (U) The dominance, vice influence, of China in the whole
area was startling. Particularly in the Wa and Kokang ethnic
zones, there was very little economic or cultural Burmese
influence. Because of difficult terrain and road conditions,
these areas were far more accessible to China's Yunnan
Province than to the main trade routes inside Burma. In
Laukaing (still well inside the Burmese border), kyat was not
accepted (only PRC yuan), Burmese was not widely spoken, and
there were no Burmese products in sight.

9. (U) The economic reliance of the region on China is
pervasive, and indicative of the importance of China to
Burmese consumers around the country. As mentioned, the
success of the crop substitution programs in Wa and Kokang
rests, in part, on the ability to establish reliable,
accessible, and untaxed markets on the Chinese side of the
border. Even in other regions of Burma, though, the
consumption of cheap Chinese consumer goods is a way of life
from Rangoon to the remotest outpost. An Embassy official
recently visiting Tamu on the Indian border noted the
prevalence of Chinese products versus Indian products,
despite relative proximity of the area to India.

10. (U) The importance of China is not limited to economics
and trade, though. During our Shan trip, there was much
focus on cross-border cooperation for narcotics control.
Burmese police and military officials credited improved drug
interdiction cooperation, and some prisoner exchanges, to
regular consultations with their Chinese counterparts.

Economics: One Word for You...Wolframite

11. (SBU) The level of development in the towns of the Wa and
Kokang regions, the quality of the ethnic militias' weapons
and uniforms, and the newness and quality of the ethnic
leadership's vehicles, indicated diverse and significant
sources of income that cannot be explained solely by the
success of the new cash crops. Much of this is assumed to
come from narcotics trafficking. On the legitimate side, the
Wa leaders mentioned they had local mining concessions
(producing wolframite and some coal, which was bought by
China) and some jade claims to the northwest in Kachin State.
Wa and Kokang businesspeople are also involved in various
manufacturing ventures as well as large construction and
public works projects across the country . Popular locally
owned and operated brothels and casinos were widely available
in the larger towns of the Wa and Kokang regions.

12. (SBU) The main crossing for border trade was in Muse,
which is connected to Mandalay via Lashio along a very good
tollway built and operated by Asia World (a company founded
in the 1990s by a former Kokang leader, and suspected
narcotrafficker, Lo Hsing-han). There are at least four
checkpoints along this route where trucks must stop and be
searched by Customs officials. At the checkpoint closest to
the border, Customs officials say that they check 30-40
outgoing trucks per day and 35-50 incoming. Though the
inspections appeared diligent while the delegation was there,
Rangoon-based border traders report that the inspection
process primarily involves paying a pre-arranged fee to the
chief inspector. These traders complain that without some
"facilitation" each of the checkpoints can hold up a shipment
anywhere from one day to one week.

Comment: Meet You Halfway

13. (SBU) It is clear that without more and better economic
development programs, including crop substitution, it will be
difficult for dirt poor locals to be enticed away from drug
production and trafficking. Although our visit was very
short, it appears that the local ethnic officials -- who seem
to be able to spend significant funds on luxury items and the
development of very modern entertainment facilities -- may
not be contributing all they should to improving the
standards of living of their people. This phenomenon is not
limited to the Wa and Kokang. In other areas, such as
eastern Kachin State, where ethnic cease-fire groups have
been given lucrative economic autonomy by the government,
little seems to trickle down to the average person. This is
something that should be pondered when considering additional
international assistance for these regions.
McMullen

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