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

C O N F I D E N T I A L SECTION 01 OF 04 RANGOON 001444 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR EAP/MLS AND INL; PACOM FOR FPA; DEA FOR OF, OFF 
 
E.O. 12958: DECL: 12/26/2015 
TAGS: EAID KCRM PGOV PHUM PINS PREL SNAR BM NGO
SUBJECT: THE SLIPPERY SLOPE TO A DRUG-FREE WA REGION 
 
REF: A. RANGOON 605 
     ¶B. RANGOON 148 
     ¶C. RANGOON 138 AND PREVIOUS 
     ¶D. 04 RANGOON 1605 
     ¶E. 04 RANGOON 221 
     ¶F. RANGOON 1234 
 
Classified By: Poloff Dean Tidwell for Reasons 1.4 (b, d) 
 
¶1. (U) SUMMARY: United Wa State Army (UWSA) leaders told 
visiting diplomats that drugs have turned the ethnic Wa into 
"pariahs."  The Wa leaders claimed, however, that they have 
turned a new page and "put narcotics behind us," appealing 
for increased international assistance and a reversal of U.S. 
federal indictments against UWSA officials.  Wa-initiated 
development projects, lacking market research, have failed to 
replace lost income for former poppy farmers, among Burma's 
poorest populations.  Modest WFP food-for-work and UNODC 
alternative crop projects have had more success. 
Notwithstanding the genuine humanitarian needs in Wa 
territory, the UWSA leadership's appeal for help ignores the 
fact that their ill-gotten gains have been invested in major 
commercial enterprises in Rangoon and elsewhere outside of 
Burma, rather than assist their own farmers.  END SUMMARY. 
 
¶2. (U) The World Food Program (WFP) organized a December 9-12 
visit to Wa Special Region 2 in northeastern Shan State for 
approximately 15 diplomats, including Emboff, from donor 
countries.  After flying to Kengtung in eastern Shan State, 
headquarters for the Burmese military's Triangle Command, the 
group traveled in a vehicle convoy along the Chinese border 
to remote Pang Kham (formerly known as Pang Hsang), the 
capital of Wa territory.  The was the first trip of an 
Embassy officer since the U.S. Attorney's office for the 
Eastern District of New York unsealed federal indictments 
last January against the UWSA's top seven leaders on 
drug-related charges (ref C). 
 
¶3. (SBU) UWSA troops turned out in force all along the rough 
mountain route to provide security for the VIP group, which 
included several senior GOB police and border affairs 
officials.  In Pang Kham, the delegation met with UWSA 
leaders, including Deputy Chairman Xiao Ming Liang; Chief of 
General Staff Ai Lun; and Minister for External Relations 
Zhao Ai Nap.  A UNODC employee told the delegation that UWSA 
General Secretary Bao Yu Xiang (aka Pao Yu Hsiang), the most 
senior of the indicted Wa leaders, was seriously ill and had 
returned to his native village in October (ref D). 
 
DECREEING A DRUG-FREE WA REGION 
 
¶4. (U) At a briefing in Pang Kham, UWSA Deputy Chairman Xiao 
Ming Liang told the diplomats that on June 26 Wa leaders had 
finally implemented a long delayed ban on poppy cultivation 
throughout Special Region 2.  The UWSA, he claimed, had sent 
messengers to all parts of the Wa region instructing farmers 
to cease cultivating opium poppy.  Xiao said that "some" 
poppy farmers were displeased with the ban, but he said that 
the UWSA had decided to forgo tax collection for the next 
three years in order to mitigate the farmers' short-term 
income loss.  (Note: Wa authorities previously collected 
opium as payment for taxes.  End Note.) 
 
¶5. (U) Deputy Chairman Xiao allowed that "a few" Wa farmers 
may not know about the ban and will likely continue to 
cultivate poppies at remote sites, although he insisted that 
the UWSA would not tolerate further cultivation.  Other UWSA 
officials claimed that Wa authorities had destroyed some 
newly planted poppy fields in November, at the beginning of 
the 2005-2006 poppy season.  Wa representatives also claimed 
that the UWSA had recently arrested 19 ethnic Wa who were 
involved in the production of methamphetamines, confiscating 
150 kg of pills that officials allegedly destroyed in 
September. 
 
¶6. (U) The UWSA deputy chairman urged the diplomats to 
convince the New York federal court to rescind indictments 
against the Wa leadership.  "We don't understand U.S. 
pressure," he said, lamenting that the withdrawal of USG 
support to UNODC for Wa farmers "comes at a time when we are 
facing the greatest difficulty."  He appealed for the USG, as 
"the largest donor," to resume counter-drug assistance in 
order to help farmers in growing alternative crops following 
the ban on poppy cultivation. 
 
PLAYING TO THE AUDIENCE 
 
¶7. (C) Xiao Ming Liang fielded questions from the diplomats, 
but clearly formed his responses for the benefit of the GOB 
minders who accompanied the group.  When asked if UWSA 
loyalties are with Rangoon or Beijing, for example, he said 
the Wa have no plans to secede.  "We will always be part of 
Burma," Xiao insisted.  He acknowledged, however, that the Wa 
leadership uses the Chinese language for its communications, 
noting his region's geographical proximity to China and 
distance from Rangoon.  None of the Wa leaders we met spoke 
Burmese; they all communicated with us in Chinese through 
interpreters.  Xiao also recalled the 30-year war the Wa 
fought against the GOB under the flag of the Burma Communist 
Party.  "We still feel distant (from Rangoon) in our hearts," 
he admitted. 
 
¶8. (SBU) Xiao had little to say about the regime's National 
Convention process, simply acknowledging that a delegate from 
the United Wa State Party (UWSP, the Wa political arm) 
attends the current session.  As for the GOB's relocation of 
the Burmese capital to Pyinmana, Xiao said the Wa had only 
learned about the development through media reports.  He 
complained that the Burmese regime had reduced contact with 
the UWSA over the past year, suggesting that U.S. indictments 
against the Wa leadership had discouraged closer dialogue. 
"Only two ministers have visited us this year," he said, 
stating that the UWSA hoped SPDC Chairman Than Shwe would 
come to Pang Kham to meet with Wa leaders. 
 
¶9. (SBU) In response to a question by the U.K. ambassador on 
the HIV/AIDS epidemic, Xiao noted that the AIDS mortality 
rate in the Wa region is now around 20 percent, down from 80 
percent in previous years, and he expressed gratitude for 
U.K. assistance to UNODC projects in Wa territory. 
"Remember, however," chided Xiao, "who it was that brought 
poppies to our region," invoking a familiar GOB and Wa 
argument that colonial Britain and Western drug markets are 
the source of the region's current drug woes.  "Due to drugs, 
we are pariahs," Xiao added, but insisted that the UWSA had 
"put narcotics behind us."  He appealed for international 
support and proclaimed, "Drugs are our common enemy." 
 
ALTERNATIVE CROPS AND ILLICIT ENTERPRISES 
 
¶10. (SBU) The diplomats observed UWSA alternate crop 
projects, including rubber plantations and fruit orchards. 
However, they saw little evidence that the state-run projects 
had replaced lost income for former poppy farmers.  The 
Singaporean ambassador observed that he had never seen rubber 
trees so densely planted and doubted they would be 
productive.  Rubber cultivation already abounds in nearby 
China, the only viable export market for Wa rubber, thus 
casting doubt about the profitability of Wa-grown rubber.  UN 
officials also told us that Wa farmers have stopped 
harvesting their orchards, because their produce cannot 
compete with the huge influx of cheap fruit from China.  Now 
some villagers have cut down their fruit trees for firewood. 
 
¶11. (SBU) Development workers have long joked about the "GDP" 
industries (gambling, drugs, and prostitution) in eastern 
Shan State.  Although the Wa claim they have banned poppy 
cultivation and cracked down on other drugs, gambling and 
prostitution are much in evidence in Pang Kham.  During our 
visit, we saw one gambling casino in the capital active with 
local weekend patrons.  This establishment and others like 
it, however, could follow the fate of casinos in Mongla, Pang 
Kham's sister city to the south in Special Region 4.  Chinese 
authorities recently took action to prevent PRC officials 
from gambling away state assets, effectively driving Mongla's 
casinos out of business (ref F).  The "oldest profession" 
appeared to be thriving in Pang Kham with ubiquitous, 
pink-lit lounges, staffed mostly by Chinese girls, scattered 
over several blocks. 
 
A ZERO-SUM GAME? 
 
¶12. (U) According to UNODC officials, Wa poppy farmers are 
among the poorest populations in Burma.  Average household 
income among poppy farmers in Shan State, for example, is 
roughly $292 per year, twenty percent less than non-poppy 
households in the same region.  Opium sales account for more 
than half of the income in those households that, before the 
ban, cultivated poppy and produced opium. 
 
¶13. (U) The diplomatic delegation visited ethnic Lahu 
villages in southern Wa territory, where UNODC has 
established rice banks, schools, tea cultivation, and other 
income generation activities for former poppy farmers. 
During a WFP rice distribution in one village, we spoke with 
local Wa leaders and farmers and learned that an estimated 75 
percent of the Wa population lacks income to buy rice for 
four months or more per annum. 
 
¶14. (U) The WFP and the UNODC both report significant 
improvement in development indicators among the Wa population 
as a result of UN projects to help Wa households switch from 
a poppy-based economy to other livelihoods.  UN agencies and 
INGOs working in the region appealed for increased funding, 
warning that improved socio-economic conditions could quickly 
be wiped out as the poppy cultivation ban takes effect, 
reducing farmers' income. 
 
COMMENT: PASSING THE BUCK 
 
¶15. (C) Indicted by the United States, ignored by Rangoon, 
beholden to China, and seeing international assistance 
decline, the Wa leadership clearly feels shunned by the world 
and understands that drugs are a primary cause of their 
international isolation.  As finances grow more difficult in 
coming months for leaders and farmers alike, their resolve to 
make Wa territory a poppy-free, if not a drug-free, zone will 
be severely tested.  While Wa leaders, during their 
discussions with visiting diplomats, focused on their efforts 
to get out of the opium business, they ignored abundant 
evidence that massive production and trafficking of 
amphetamine-type stimulants in Wa territory have quickly 
filled the void. 
 
¶16. (C) The UWSA leadership's appeal for international 
assistance to bail out their poor farmers ignores the huge 
profits Wa leaders have reaped over the years from drug 
trafficking.  They invested their ill-gotten gains in Burma's 
airline, banking, and construction industries and have major 
holdings in Thailand and Hong Kong.  Their appeal for aid 
also conveniently ignores the fact that the poorest of the 
farmers are the tens of thousands of ethnic Wa that the UWSA 
forcibly relocated from the highlands to southern valleys, 
anticipating that the international community would assist 
those displaced.  The Wa leadership could easily subsidize 
the 63,000 households in their territory and significantly 
alleviate the dire poverty of their own poor farmers.  End 
Comment. 
VILLAROSA