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Cablegate: Burma: Counternarcotics Certification Report Card

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

UNCLAS SECTION 01 OF 06 RANGOON 000680

SIPDIS

SENSITIVE

FOR INL/AAE, EAP/BCLTV

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

REF: A. STATE 104347

B. 03 RANGOON 757
C. 03 STATE 100273

1. (SBU) This message responds to ref A request for a report
card on the Government of Burma's cooperation on
counternarcotics efforts in preparation for the annual
certification process. In the text below Embassy Rangoon has
assessed progress on existing benchmarks, in the prescribed
report card format, and also addressed the GOB's performance
on other key criteria considered in the certification
process.

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

INTRODUCTION AND SUMMARY

Burma remains the world's second largest producer of illicit
opium, although in 2003 the world's top producer,
Afghanistan, produced 83 percent more opium than Burma.
However, Burma's role in the regional production and traffic
of amphetamine-type substances (ATS) is growing.

In our view, over the past year the GOB has made substantial
gains in reducing poppy cultivation and opium production;
expanding cooperation with other countries in the region; and
establishing drug-related laws and regulations. The GOB has
made minimal progress with a law-enforcement campaign
targeting the most prominent trafficking groups and their
leaders, although ongoing cooperation with the DEA and others
may yield more positive results. The GOB recognizes the
serious problems that ATS pose to the country and to the
region, but has made minimal progress in stemming the growth
of ATS production and trafficking. The GOB has, overall,
made insignificant progress in combating corruption;
fostering counternarcotics cooperation between itself and the
ethnic groups involved in drug production and trafficking,
especially the Wa; and enforcing its narcotics and
money-laundering legislation.

(1) PERFORMANCE IN AREAS IDENTIFIED IN THE 1988 UN DRUG
CONVENTION

A. Cultivation/manufacturing
----------------------------

Specific Goal: In 2003, the USG and others in the
international community urged the GOB to establish a
mechanism for the reliable measurement of methamphetamine
production and demonstrate progress in reducing production
and increasing seizures. This was not fully accomplished in
2003 and remains a valid goal for 2004.

Performance: Burma continues to play a leading role in the
regional traffic of ATS. Drug gangs based in the Burma/China
and Burma/Thailand border areas annually produce several
hundred million methamphetamine tablets for markets in
Thailand, China, and India. In 2003 there were troubling
signs that a nascent domestic market for ATS began to emerge
in Burma, although deteriorating economic conditions could
stifle significant growth in consumption. The UNODC estimated
that in 2003 there were at least 15,000 regular ATS users in
Burma.

GOB authorities dismantled two ATS labs in early 2004. In
2003 ATS seizures totaled just over 4 million tablets and for
the first quarter of 2004 authorities seized less than a half
a million tablets. These seizures represent a steep decline
from previous modest levels of approximately 10 million
tablets seized in 2002 and over 30 million seized in 2001.
The GOB believes that its cooperation with the DEA and with
neighboring countries, as well as intense counterdrug
measures undertaken in Thailand and in China, may have
reduced the regional market for Burma-produced ATS. These
pressures may have also forced drug gangs to change their
modus operandi, including a reduction in overall production
and a shift toward more sophisticated trafficking methods and
routes that overwhelm Burma's meager detection capacity.
However, the major manufacturers and traffickers of ATS,
mostly ethnic Chinese, continue to operate in Burma's remote
border areas under the control of armed, former insurgent
groups and therefore of limited access to central government
authorities. The Burmese government has yet to put
significant pressure on the ethnic Kokang and Wa authorities
in these areas to cease ATS drug production or trafficking.

General/additional comments: Burma's performance has been
very solid in reducing the cultivation of poppy and the
production of opium. In 2003, Burma cultivated less than one
quarter of the poppy grown in Afghanistan and produced 83
percent less opium. Since 1994, Burma has reduced its
cultivation of poppy by 69 percent and, over the past ten
years, the production of opium has shrunk by 76 percent.
According to preliminary results of the latest UN survey and
the most recent U.S.-Burma joint opium yield survey, the
trend of declining cultivation and production continued in
2004. We assess that progress achieved toward eradicating
poppy and opium is due to the GOB's eradication efforts and
enforcement of poppy-free zones, cooperation with donors on
alternative development, a sharp shift towards synthetic
drugs in consumer countries, and, at times, poor weather.
B. Consumption/demand reduction
-------------------------------

General comments: The overall level of drug abuse is low in
Burma compared with neighboring countries, in part because
many Burmese cannot afford a drug habit. According to the
GOB, since 1993 there have been only about 80,000 "officially
registered" drug abusers in Burma. However, the UNODC
estimates that there may be some 300,000 people who currently
abuse drugs in Burma. Most drug users smoke opium, but use
of heroin is rising, particularly in urban and mining areas.
Synthetics are increasingly available and cheap, making these
drugs accessible to a growing segment of the population.

Burmese demand reduction programs are in part coercive and in
part voluntary. Addicts are required to register with the
GOB and can be prosecuted if they fail to register and accept
treatment. There are six major drug treatment centers under
the Ministry of Health, 49 other smaller detox centers, and
eight rehabilitation centers which, together, have reportedly
provided treatment to about 55,000 addicts over the past ten
years. The UNODC also operates a limited detox program and
there are a variety of narcotics awareness programs conducted
through the public school system. In addition, the
government has established demand reduction programs in
cooperation with NGOs, including programs with CARE, World
Concern, and Population Services International (PSI).

Burma, in cooperation with UNODC, has an effective public
relations campaign which taps celebrities and well-known
athletes to promote drug-free living. The joint GOB-UNDOC
"Civil Society Initiative" (CSI), which also partnered with
NGOs, held a successful anti-drug concert and marathon in
2002. However, the GOB failed to support a two-day music
festival in 2003, which was subsequently canceled due to
political concerns over crowd control. The GOB visibly
advertises its serious penalties for drug-related violations
of the law, including the death penalty for trafficking of
illicit substances.

C. Trafficking
--------------

Specific Goal: In 2003, the USG and others in the
international community urged to GOB to create a special task
force of police and prosecutors to target and investigate
high-level drug traffickers and drug trafficking groups.
This was partially accomplished in 2003. A more appropriate
benchmark for 2004 will be the effective use of these
existing mechanisms for the arrest and prosecution of top
drug traffickers (see section E).

Performance: 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 force units around the country, with
most located in major cities and along key transit routes
near Burma's borders with China, India, and Thailand. CCDAC
plans to open a new task force unit in Myawadi on the Thai
border in late 2004. In 2002, CCDAC established its own
Financial Investigation Unit (FIU) and, in 2003 and 2004,
this entity initiated 8 cases leading to 26 arrests and the
seizure of roughly $1.3 million in assets.

CCDAC's units are under funded and badly equipped.
Nevertheless, we assess that Burma has the capacity to move
effectively against high-level drug traffickers and drug
trafficking groups (see Section E). However, the central
government lacks the political will to move aggressively
against former insurgent groups, like the United Wa State
Army and others implicated in the drug trade, for fear of
re-igniting the insurgencies that devastated eastern Burma
for so many decades before 1989.

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 broke their pledge to end opium
production and Burmese and Chinese governments subsequently
mounted intense counter-narcotics operations. In 2003, as a
result, opium production in the Kokang Chinese capital
district of Lawkai was a fraction of its level two years
earlier. In 2005, the United Wa State Army is scheduled to
end opium production. However, opium yield surveys in recent
years indicate that poppy cultivation in northern Wa
territories is actually increasing.

D. Illicit crop eradication/substitution
----------------------------------------

Specific Goal: In 2003, the USG and the UNODC requested that
the GOB facilitate the participation of independent monitors
to verify poppy eradication and other counternarcotics
efforts. This was accomplished in 2003 and again in 2004 and
remains a valid, ongoing objective.

Performance: Burma cooperates with the United States on its
annual opium yield survey and with the UNODC on census
surveys of poppy cultivation and 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. The U.S. and Burma
conducted joint opium yield surveys in 1993, 1995, and
annually from 1997 through 2004, giving both governments an
accurate understanding of the scope, magnitude, and changing
geographic distribution of Burma's opium crop. In 2004, the
UNODC survey extended beyond Shan State to include rapid
assessments in Sagaing Division, Chin State, and Kachin
States.

General/additional comments: The government has eradicated
more than 35,000 hectares of opium poppy over the past three
crop years. Despite a recent decline in annual rates,
overall eradication accounts for nearly half of the reduction
in area under poppy cultivation since 2001.

The most significant multilateral effort in support of
substitution efforts is the UNODC's Wa Alternative
Development Project (WADP), which is financed by the United
States, Japan, and Germany. A five-year, $12.1 million
program, this supply-reduction project encourages alternative
development in a small portion of the territory controlled by
the United Wa State Army. UNODC extended the project from
2003 until 2005 and expanded the number of villages targeted
for community development work from 4 to 16. Also in 2003,
the UNODC and the Japanese government announced plans to
establish an intervention in the Wa and Kokang areas (dubbed
"KOWI"), aimed at supporting the humanitarian needs of
farmers who have abandoned poppy cultivation.

Bilateral counternarcotics projects include a small,
U.S.-financed substitution project in northern Shan State
(Project Old Soldier) and a substantial Japanese effort to
establish buckwheat as a cash crop in the Kokang and Mong Ko
regions of northeastern Shan State. The Thai government has
since 2001 extended its own alternative development projects
across the border into the Wa-controlled Southern Military
Region of Shan State.

E. Interdiction and law enforcement cooperation
--------------------------------------------- --

Specific Goal: In 2003, the USG and others in the
international community urged the GOB to arrest and prosecute
the senior leadership of heroin and methamphetamine
trafficking organizations. This was partially accomplished
in 2003 and remains a valid objective for 2004.

Performance: More than 96,000 persons have been arrested for
narcotics-related offenses in Burma over the past 16 years,
of which nearly 56,000 have been convicted and sentenced.
Burmese courts have sentenced over 14,000 of these offenders
to 10 years or more in prison and sentenced to death 58 of
the most significant traffickers and producers. Preliminary
data indicate that Burma arrested just under 1,000 suspects
in drug-related cases during the first three months of 2004,
of which 889 were prosecuted, convicted, and sentenced.

Many of these arrests and convictions involved major drug
syndicates. Many also involved close cooperation with
U.S., Australian, and other regional law enforcement
agencies, including China, India, and Thailand. Among the
most notable were the following:

-- In March 2004, a joint cross-border investigation
involving Burmese and Chinese authorities, and the DEA, led
to the arrest in Burma of one major Burmese heroin
trafficker, Yan Shuk Lon, and in China of three major Chinese
heroin traffickers. Burma is prosecuting Yan Shuk Lon for
the trafficking of over two metric tons of heroin which were
seized in China.

-- Ongoing 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.

-- Ongoing cooperation with China in a series of arrests and
seizures that have continued through 2004 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."

Despite these accomplishments, Burma has failed to bring to
justice several high-profile individuals known for their
current or past drug trafficking activities, including Khun
Sa and Wei Hsueh-kang, both of whom are under indictment in
the United States.

F. Asset Seizure
----------------

General comments: There have been no known seizures made yet
under the 2002 anti-money laundering law. However, under a
1986 law on the ownership of properties obtained by unlawful
means, the Bureau for Special Investigations (BSI) has opened
41 cases, arrested 16 individuals, and seized roughly $2.3
million in assets. Under the 1993 Narcotic Drug and
Psychotropic Law, the CCDAC's Financial Investigation Unit
has, since 2002, opened 8 cases, made 26 arrests, and seized
$1.3 million in assets. Under that same 1993 law, CCDAC's
central headquarters has over the past decade opened 1,694
cases, made over 2,000 arrests, and seized an additional $1.3
million in assets. In September 2003, the CCDAC obtained a
court order to freeze all savings and checking accounts of
all defendants and possible co-conspirators linked to a
heroin seizure in Suva, Fiji in 2000. According to GOB
authorities, Burma has seized more assets in the last two
years than over the previous ten years.

G. Extradition and mutual legal assistance
------------------------------------------

Specific Goal: In 2003, the USG and UNODC urged the GOB to
amend Burma's substantive and procedural criminal laws to
facilitate effective investigation and prosecution of major
drug traffickers. This was accomplished in early 2004,
although a new mutual assistance law has yet to be tested. A
more appropriate benchmark for 2004-2005 will be the full
implementation and application of the new law.

Performance: The GOB passed a "Mutual Assistance in Criminal
Matters Law" in April 2004. The law, written largely by
UNODC, establishes a framework for the GOB to cooperate with
law enforcement agencies from all countries, even those with
whom Burma does not have a mutual legal assistance treaty.
The new law does not cover extradition, but could facilitate
cooperation on narcotics and other cases. However, we remain
concerned with some provisions of the law that give the SPDC
veto power over cooperation decisions without requiring an
explanation. There is also some confusion over whether the
law is actually in effect pending implementing regulations.

H. Drug treatment
-----------------

See Section B above on consumption/demand reduction.

I. Control of precursor/essential chemicals
-------------------------------------------

Specific Goal: In 2003, the USG and others in the
international community urged the GOB to establish an
effective program for the control of precursor chemicals.
This was only partially addressed in 2003 and remains a valid
objective for 2004.

Performance: Burma acceded to the 1988 UN Convention on the
Control of Chemicals in 1991, but did not establish a
Precursor Control Committee until 1998. This committee
issued a notification in 2002 identifying 25 chemical
substances as precursor chemicals, including several not
prescribed by the UN Convention, and prohibiting their
import, sale, or use in Burma. In January 2003, Burma held
its first trilateral conference with India and China on
precursor chemicals and later expanded to include Laos and
Thailand. This multilateral group met in May 2004 and will
meet again in India in 2005. As a result of this
cooperation, India and China have taken steps to divert
precursor chemicals away from Burma's border areas; India has
added ephedrine to a 100-mile wide exclusion zone for acetic
anhydride along its border with Burma; and Burma is
encouraging India to add caffeine to this list. Burma also
participates in a UNODC regional project on the "Control of
Precursor Chemicals in East Asia."

General/additional comments: Precursors for refining these
narcotic drugs are primarily produced in India, China, and
Thailand. Burma does not have a chemical industry and does
not produce ephedrine, acetic anhydride, or any of the other
chemicals required for the narcotics trade. Similarly, the
major markets for all of these narcotic drugs lie in
neighboring states. However, there were signs in 2003 that
Burma's small domestic market for drug consumption grew,
especially the consumption of ATS.

Seizures of precursor chemicals declined substantially in
2003 and included 308 kilos of ephedrine (down 82 percent
from 2002), 2,562 liters of acetic anhydride (down 80 percent
from two years prior), and 37,000 liters of other precursor
chemicals (also down nearly 80 percent from two years prior).
Preliminary statistics for the first quarter of 2004
indicate a continuing decline in seizures. GOB authorities
believes that seizures of precursors have declined for the
same reasons seizures of ATS have declined, namely that
various pressures may have reduced the regional market for
Burma-produced ATS and also forced drug gangs to shift toward
more sophisticated trafficking methods and routes that
overwhelm Burma's meager detection capacity (see Section A).

J. Money Laundering
-------------------

Specific Goals: In 2003, UNODC and the Financial Action Task
Force, of which the U.S. is a member, requested that the GOB:
1) fully implement and enforce Burma's money-laundering
legislation; and 2) 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. This was only
partially accomplished in 2003 and remains a valid objective
for 2004.

Performance: In November 2003 the multilateral Financial
Action Task Force (FATF) asked its members to impose
countermeasures on Burma for failure to implement the GOB's
2002 anti-money laundering statute and to introduce a mutual
legal assistance law. In December 2003, the GOB issued the
money laundering regulations; in January 2004 it set
reporting threshold amounts for bank and real estate
transactions; and in April 2004 it passed mutual legal
assistance legislation. The money laundering regulations
established an interagency Financial Intelligence Unit (FIU)
and a mechanism for banks and realtors to report, and the
government to investigate, large or suspicious transactions.
Though the regulations as written are generally good, some
aspects are troubling, such as an unusually high threshold
amount for suspicious transactions (roughly $115,000). We
also remain concerned about the GOB's ability, and to a
lesser degree willingness, to enforce its new money
laundering regulations. Corruption, rampant tax evasion, and
ill-equipped law enforcers and banking regulators will weigh
against proper enforcement.

As of May 2004, the FIU had received 638 cash/property
transaction reports but zero suspicious transaction reports.
These reports have yet to lead to any investigations by the
FIU. Investigations launched in December 2003 into the money
laundering activities of two private banks (Asia Wealth and
Myanmar Mayflower) are moribund.
Burma's private banking system is slowly recovering from a
massive crisis in February 2003. As of May 2004, all but
three of the country's 20 private banks had resumed
operations, though under far stricter Central Bank
regulations. Three of the four largest pre-crash banks, Asia
Wealth, Myanmar Mayflower, and Yoma, remain alive but out of
action with no prospect for re-opening. Even with the slow
re-emergence of the private banking system, unregulated
financial flows remain the rule. Informal "hundi/hawallah"
financial remittance systems remain very active both for
domestic and international transactions. Though the real
estate bubble of 2001-03 has popped, immovable property (both
commercial and residential) remains a popular destination for
illicit cash. Likewise, gems smuggled to China or Thailand
continue to be a popular method for remitting dirty money
from Burma. Drug trafficking organizations have large and
lucrative business enterprises, including construction, light
manufacturing, mining, and banking.

(2) PERFORMANCE IN ACCOMPLISHING GOALS DESCRIBED IN ANY
APPLICABLE MULTILATERAL NARCOTICS AGREEMENT

Burma's official 15-year counternarcotics plan calls for the
eradication of all narcotics production and trafficking by
2014, one year ahead of an ASEAN-wide plan of action that
calls for the region to be drug-free by 2015. The plan is to
proceed by stages, with eradication efforts coupled to
alternative development programs in individual townships,
predominantly in Shan State. Altogether, the GOB identified
54 townships for the programs and targeted 25 of them during
the first five years of the program.

(3) PERFORMANCE IN PREVENTING AND PUNISHING PUBLIC CORRUPTION

Although there are many reports and much speculation, there
is no definitive evidence that senior officials in the
Burmese Government are directly involved in the drug trade.
However, lower level officials, particularly army and police
personnel posted in outlying areas, are widely believed to be
involved in facilitating the drug trade and some officials
have been prosecuted for drug abuse and/or narcotics-related
corruption. According to the Burmese government, over 200
police officials and 48 Burmese Army personnel were punished
for narcotics-related corruption or drug abuse between 1995
and 2003. Of the 200 police officers, 130 were imprisoned,
16 were dismissed from the service, 7 were forced to retire,
and 47 were demoted. No Burma Army officer over the rank of
full colonel has ever been prosecuted for drug offenses in
Burma.

The GOB does not have joint ventures with the leaders of drug
trafficking organizations. Rather, it has given corporations
like the USWA's Hong Pang Company outright concessions for
the operation of a variety of businesses which range from
farms to ruby mines and other trading and industrial
establishments. This has been controversial, both in Burma
and abroad, but the GOB has argued that such arrangements are
necessary to give known narcotics trafficking groups an
alternative source of income and to bring these groups more
closely under central government control.

End Text of Certification Report Card
Martinez

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