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