VZCZCXRO2095
RR RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHGO #1127/01 3250956
ZNR UUUUU ZZH
R 210956Z NOV 07
FM AMEMBASSY RANGOON
TO RUEHC/SECSTATE WASHDC 6862
RUEHBJ/AMEMBASSY BEIJING 1607
RUEHNE/AMEMBASSY NEW DELHI 4259
RUEHVI/AMEMBASSY VIENNA 0090
RUCNASE/ASEAN MEMBER COLLECTIVE
RUEHCHI/AMCONSUL CHIANG MAI 1237
RUEABND/DEA HQS WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHDC
RUEAWJA/DEPT OF JUSTICE WASHDC
RUCNDT/USMISSION USUN NEW YORK 1161
RHEHNSC/NSC WASHDC
RUEKJCS/SECDEF WASHDC
RUEKJCS/JOINT STAFF WASHDC

UNCLAS SECTION 01 OF 07 RANGOON 001127 
 
SIPDIS 
 
SIPDIS 
 
DEPT FOR EAP/MLS, INL, SCT 
DEPT OF JUSTICE FOR AFMLS, OIA, OPDAT 
VIENNA FOR UNODC OFFICE 
 
E.O. 12958:N/A 
TAGS: SNAR PGOV PREL BM
SUBJECT: BURMA: INCSR I DRUGS AND CHEMICAL CONTROL 
 
REF:  STATE 136782 
 
RANGOON 00001127  001.2 OF 007 
 
 
This report responds to reftel request for the INCSR I Drugs and 
Chemical Control Report update. 
¶I. Summary 
Burma took many wrong turns in 2007, including in the war on drugs. 
Both UNODC and U.S. surveys of opium poppy cultivation indicated a 
significant increase in cultivation and potential production in 
2007, while production and export of synthetic drugs 
(amphetamine-type stimulants, crystal methamphetamine and ketamine) 
from Burma continued unabated.  The significant downward trend in 
poppy cultivation observed in Burma since 1998 halted in 2007, with 
increased cultivation reported in Eastern, Northern and Southern 
Shan State and Kachin State.  Whether this represents a sustained 
reversal in poppy cultivation in Burma, which remains far below 
levels of 10 years earlier, remains to be seen.  It does indicate, 
however, that increases in the value of opium are driving poppy 
cultivation into new regions.  An increased number of households in 
Burma were involved in opium cultivation in 2007. While Burma 
remains the second largest opium poppy grower in the world after 
Afghanistan, its share of world opium poppy cultivation fell from 55 
percent in 1998 to 11 percent in 2006, and rose slightly to 12 
percent in 2007.  This large proportional decrease is due to both 
decreased opium poppy cultivation in Burma and increased cultivation 
in Afghanistan.  The Golden Triangle region in Southeast Asia no 
longer reigns as the world's largest opium poppy cultivating region, 
now producing 5 percent of the world's opium. 
Despite increased cultivation in 2007, Burma's opium cultivation 
declined dramatically between 1998 and 2006. The UN Office on Drugs 
and Crime (UNODC) estimates a decrease from 130,300 hectares in 1998 
to 21,500 hectares in 2006, an 83 percent decrease.  Cultivation in 
2007 increased 29 percent, from 21,500 hectares in 2006 to 27,700 
hectares.  The most significant decline over the past decade was 
observed in the Wa region, following the United Wa State Army's 
(UWSA) pledge to end opium poppy cultivation in its primary 
territory, UWSA Region 2. UWSA controlled territory accounted for 
over 30 percent of the acreage of national opium poppy cultivation 
in 2005, but almost no poppy cultivation was reported in the Wa 
region in 2006 and 2007.  However, there are indications that 
cultivation has increased in regions closely bordering UWSA Region 
¶2. 
Burma has not provided most opium farmers with access to alternative 
development opportunities. Recent trends indicate that some opium 
farmers were tempted to increase production to take advantage of 
higher prices generated by opium's relative scarcity and continuing 
strong demand. Increased yields in new and remaining poppy fields 
(particularly in Southern Shan State), spurred by favorable weather 
conditions in 2007 and improved cultivation practices, have 
partially offset the affects of decreased cultivation. Higher yields 
in some areas may also signal more sophisticated criminal activity, 
greater cross border networking, and the transfer of new and 
improved cultivation technologies. 
Burma's overall decline in poppy cultivation since 1998 has been 
accompanied by a sharp increase in the production and export of 
synthetic drugs, turning the Golden Triangle into a new "Ice 
Triangle."  Burma is a significant player in the manufacture and 
regional trafficking of amphetamine-type stimulants (ATS).  Drug 
gangs based in the Burma-China and Burma-Thailand border areas, many 
of whose members are ethnic Chinese, produce several hundred million 
methamphetamine tablets annually for markets in Thailand, China, and 
India, as well as for onward distribution beyond the region.  There 
are also indications that groups in Burma have increased the 
production and trafficking of crystal methamphetamine or "Ice" - a 
much higher purity and more potent form of methamphetamine than the 
tablets. 
Through its Central Committee for Drug Abuse Control (CCDAC), the 
Government of Burma (GOB) cooperates regularly and shares 
information with the U.S. Drug Enforcement Administration (DEA) and 
Australian Federal Police (AFP) on narcotics investigations.  In 
recent years, the GOB has also increased its law enforcement 
cooperation with Thai, Chinese and Indian counter-narcotics 
authorities, especially through renditions, deportations, and 
extraditions of suspected drug traffickers. 
During the 2007 drug certification process, the U.S. determined that 
Burma was one of only two countries in the world that had "failed 
demonstrably" to meet its international counter-narcotics 
obligations.  Major concerns remain: unsatisfactory efforts by Burma 
 
RANGOON 00001127  002.2 OF 007 
 
 
to deal with the burgeoning ATS production and trafficking problem; 
failure to take concerted action to bring members of the United Wa 
State Army (UWSA) to justice following the unsealing of a U.S. 
indictment against them in January 2005; failure to investigate and 
prosecute military officials for drug-related corruption; and 
failure to expand demand-reduction, prevention and drug-treatment 
programs to reduce drug-use and control the spread of HIV/AIDS. 
Burma is a party to 1988 UN Drug Convention. 
II. Status of Country 
Burma is the world's second largest producer of illicit opium. 
Eradication efforts and enforcement of poppy-free zones combined to 
reduce cultivation levels between1998 and 2006, especially in Wa 
territory.  However, in 2007, a significant resurgence of 
cultivation occurred, particularly in eastern and southern Shan 
State and Kachin State, where increased cultivation, favorable 
weather conditions, and new cultivation practices increased opium 
production levels, led to an estimated 29 percent increase in 
overall opium poppy cultivation and a 46 percent increase in 
potential production of dry opium. 
According to the UNODC, opium prices in the Golden Triangle have 
increased in recent years, although prices in Burma remain much 
lower than the rest of the region due to easier supply.  Burmese 
village-level opium prices or farm-gate prices increased from $153 
per kg in 2004 to $187 in 2005, to $230 in 2006 and to $265/kg in 
¶2007. Burmese opium sales contribute about half of the annual 
household cash income of farmers who cultivate opium, which they use 
to pay for food between harvests.  Forty-five percent of the average 
yearly income ($501) of opium cultivating households in Shan State 
was derived from opium sales in 2007. 
In 2007, the UNODC opium yield survey estimated there were 
approximately 27,700 hectares planted with opium poppies, with an 
average yield of 16.6 kg per hectare (significantly higher than the 
2006 average yield of 14.6 kg per hectare). [Independent U.S. opium 
poppy cultivation surveys also indicated increased poppy cultivation 
and estimated opium production to approximately 27, 700 hectares 
cultivated and 270 metric tons produced].  The UNODC's opium yield 
survey concluded that cultivation had increased 29 percent in Burma 
from 2006 levels, with a 46 percent increase in potential production 
to 460 metric tons.  This represented a 67 percent increase in the 
total potential value of opium production in Burma, from $72 million 
in 2006 to $120 million in 2007.  Nonetheless, both surveys 
indicated that opium production is still down 90 percent from its 
peak production in 1996. 
The general decline in poppy cultivation in Burma since 1996 has 
been accompanied by a sharp increase in the local production and 
export of synthetic drugs.  According to GOB figures for 2007, the 
GOB seized approximately 1.5 million methamphetamine tablets, 
compared to 19.5 million seized in 2006.  Opium, heroin, and ATS are 
produced predominantly in the border regions of Shan State and in 
areas controlled by ethnic minority groups.  Between 1989 and 1997, 
the Burmese government negotiated a series of cease-fire agreements 
with several armed ethnic minorities, offering them limited autonomy 
and continued tolerance of their narcotics production and 
trafficking activities in return for peace.  In June 2005, the 
United Wa State Army (UWSA) announced implementation in Wa territory 
of a long-delayed ban on opium production and trafficking.  While 
the cultivation of opium poppies decreased in the Wa territory 
during 2006 and 2007, according to UNODC and U.S. surveys, there are 
indications from many sources that Wa leaders replaced opium 
cultivation with the manufacture and trafficking of ATS pills and 
"Ice" in their territory, working in close collaboration with ethnic 
Chinese drug gangs. 
Although the government has not succeeded in persuading the UWSA to 
stop its illicit drug production and trafficking, the GOB's 
Anti-Narcotic Task Forces continued to pressure Wa traffickers in 
¶2007.  UWSA also undertook limited enforcement actions against 
rivals in Shan State in 2006 and 2007.  In May 2006, UWSA units 
found and dismantled two clandestine laboratories operating in 
territory occupied and controlled by the UWSA-South in Eastern Shan 
State.   When the UWSA units entered the lab sites, a firefight 
ensued, with eight people fatally wounded, four arrested, and 25 kg 
of heroin and 500,000 methamphetamine tablets seized by the raiding 
UWSA units.  In June 2006, the UWSA passed custody of the contraband 
substances to Government of Burma (GOB) officials.  The prisoners 
remained in the custody of the UWSA.  These UWSA actions likely were 
motivated more towards eliminating the competition in their area 
than by a desire to stop drug trafficking.  In Burma, opium 
 
RANGOON 00001127  003.2 OF 007 
 
 
addiction remains high in places of historic or current opium 
production, ranging from 1.27 percent of the total adult population 
in Eastern Shan State to 0.97 percent in Kachin State and an 
estimated 0.83 percent in the Wa region, the main area of opium 
production until 2006. 
III. Country Actions Against Drugs in 2007 
--Policy Initiatives. Burma's official 15-year counter-narcotics 
plan, launched in 1999, calls for the eradication of all narcotics 
production and trafficking by the year 2014, one year ahead of an 
ASEAN-wide plan of action that calls for the entire region to be 
drug-free by 2015.  To meet this goal, the GOB initiated its plan in 
stages, using eradication efforts combined with planned alternative 
development programs in individual townships, predominantly in Shan 
State.  The government initiated its second five-year phase in 2004. 
Ground surveys by the Joint GOB-UNODC Illicit Crop Monitoring 
Program indicate a steady decline in poppy cultivation and opium 
production in areas receiving focused attention, due to the 
availability of some alternative livelihood measures (including crop 
substitution), the discovery and closure of clandestine refineries, 
stronger interdiction of illicit traffic, and annual poppy 
eradication programs.  The UNODC estimates that the GOB eradicated 
3,598 hectares of opium poppy during the 2007 opium poppy cropping 
season (ranging between July-March is most regions), compared to 
3,970 hectares in 2006. 
The most significant multilateral effort in support of Burma's 
counter-narcotics efforts is the UNODC presence in Shan State.  The 
UNODC's "Wa Project" was initially a five-year, $12.1 million 
supply-reduction program designed to encourage alternative 
development in territory controlled by the UWSA.  In order to meet 
basic human needs and ensure the sustainability of the UWSA opium 
ban announced in 2005, the UNODC extended the project through 2007, 
increased the total budget to $16.8 million, and broadened the scope 
from 16 villages to the entire Wa Special Region No. 2.  Major 
donors that have supported the Wa Project include Japan and Germany, 
with additional contributions from the UK and Australia.  The United 
States previously funded the UNODC Wa project, but halted funding 
over issued by UWSA leadership against U.S. DEA agents following the 
January 2005 indictment of seven UWSA leaders in a U.S. district 
court for their role in producing and smuggling heroin to the United 
States. 
As part of its 15-year counter-narcotics plan, in 2002 the Burmese 
Central Committee for Drug Abuse Control (CCDAC) initiated the "New 
Destiny" project, which calls for the complete eradication of poppy 
cultivation nationwide and its replacement with substitute crops. 
The GOB, under its 1993 Narcotics Drugs and Psychotropic Substances 
Law, issued notifications controlling 124 narcotic drugs, 113 
psychotropic substances, and 25 precursor chemicals.  Burma enacted 
a "Mutual Assistance in Criminal Matters Law" in 2004. 
--Law Enforcement Measures. The CCDAC, which leads all 
drug-enforcement efforts in Burma, is comprised of personnel from 
the national police, customs, military intelligence, and army.  The 
CCDAC, under the control of the Ministry of Home Affairs, 
coordinates 27 anti-narcotics task forces throughout Burma.  Most 
are located in major cities and along key transit routes near 
Burma's borders with China, India, and Thailand.  As is the case 
with most Burmese government entities, the CCDAC suffers from a 
severe lack of adequate funding, equipment, and training to support 
its law-enforcement mission.  The Burmese Army and Customs 
Department support the Police in this role.  In 2005, CCDAC 
established two new anti-narcotic task forces in Rangoon and 
Mandalay, supplementing existing task forces in both cities. 
Burma is actively engaged in drug-abuse control with its neighbors 
China, India, and Thailand.  Since 1997, Burma and Thailand have had 
11 cross-border law enforcement cooperation meetings.  The most 
significant result of this cooperation has been the repatriation by 
Burmese police of drug suspects wanted by Thai authorities: two in 
2004, one in 2005 and one in 2006.  According to the GOB, Thailand 
has contributed over $1.6 million to support an opium crop 
substitution and infrastructure project in southeastern Shan State. 
In 2007, Thailand assigned an officer from the Office of Narcotics 
Control Board (ONCB) to its mission in Rangoon.   Burma-China cross 
border law enforcement cooperation has increased significantly, 
resulting in several successful operations and the handover of 
several Chinese fugitives who had fled to Burma.  While not formally 
funding alternative development programs, the Chinese government has 
actively encouraged investment in many projects in the Wa area and 
other border regions, particularly in commercial enterprises such as 
 
RANGOON 00001127  004.2 OF 007 
 
 
tea plantations, rubber plantations, and pig farms.  China has 
assisted in marketing those products in China through lower duties 
and taxes.  There are also indications that China conducted its own 
opium cultivation and production surveys in 2007 in regions of Burma 
bordering the PRC, although they have not shared data resulting from 
those surveys with other parties. 
After Burma and India signed an agreement on drug control 
cooperation in 1993, the two countries have held cross border Law 
Enforcement meetings on a biannual basis, the last being held 
September 11, 2004, in Calcutta. 
The GOB has to date taken no direct action against any of the seven 
UWSA leaders indicted by U.S. federal court in January 2005, 
although authorities have taken action against other, lower ranking 
members of the UWSA syndicate.   In 2007, one of the indicted 
leaders, Pao Yu-hua,  died of natural causes and another indicted 
leader, Ho Chun-t'ing, was captured by Hong Kong Police.  He is 
currently imprisoned in Hong Kong while U.S. and Hong Kong officials 
discuss his extradition to stand trial in the U.S.  Another 
notorious Burmese drug lord, Khun Sa, who was held under house 
arrest in Rangoon following his surrender to the GOB in December 
1996, died from natural causes in October 2007. 
--Narcotics Seizures. Summary statistics provided by Burmese drug 
officials indicate that through September 2007, Burmese police, 
army, and the Customs Service together seized 1154 kgs of raw opium, 
354 kgs of low quality opium, 73 kgs of heroin, 91 kgs of marijuana, 
approximately 1.5 million methamphetamine tablets, 455 kgs of 
methamphetamine powder, 395 kgs of methamphetamine ICE, 238 kgs of 
ephedrine, 3,116 kgs of powdered precursor chemicals, and 8,723 
liters of precursor chemicals. 
On January 19, 2007, based on DEA and AFP information, the Lashio 
CCDAC ANTF dismantled a heroin refinery in the Man Lin Hills near 
Lashio, Shan State.  This operation resulted in the arrest of two 
defendants and the seizure of approximately 20.3 kgs of heroin, 20.3 
kgs of brown opium, 1.02 kgs of opium residue, 1,100 kgs of ammonium 
chloride, 770 kgs of sodium chloride, 1,470 liters of ether, 438 
liters of hydrochloric acid, 183 liters of chloroform, and various 
equipment used in the refining of heroin. 
On February 14, 2007, based on DEA and AFP information, the Muse 
CCDAC ANTF dismantled a heroin refinery near Khar Li Khu Village, 
Mong Ko Township, Burma.  This operation resulted in the arrest of 7 
individuals, and the seizure of 7 kgs of brown opium, 89 kgs of 
ephedrine, 22.75 liters of mineral spirit, 3 kgs of sodium 
hydroxide, 2 liters of hydrochloric acid, 183 liters of chloroform, 
and various equipment used in the refining of heroin. 
On April 21, 2007, the Tachilek ANTF seized a total of approximately 
264,000 methamphetamine tablets. 
On April 23, 2007, based on DEA and AFP information, CCDAC ANTF 
seized 224.3 kgs of opium, 300 grams of heroin, opium seeds, 7.1 
million kyat (approximately $6,000), and 50,000 Chinese Yuan 
(approximately $6,250) in Pan Se, Nam Kham Township, Burma. 
During a May 26, 2007 raid on a heroin refinery in Kokang region, 
the Muse ANTF captured a Kachin Defense Army (KDA) major.  Returning 
from the refinery, ANTF was ambushed by approximately 60 armed 
individuals.  In the ensuing firefight, the KDA major was rescued 
and the opposing force escaped with the drugs and money seized at 
the refinery.  Four ANTF officers were killed and two were wounded. 
The attackers were identified as KDA and were believed to be 
primarily interested in recovering the KDA major. 
On June 7, 2007, based on DEA information, the Taunggyi ANTF seized 
195.2 kgs of opium from three locations and dismantled a heroin 
refinery. 
--Corruption. Burma signed but has not ratified the UN Corruption 
Convention.  Burma does not have a legislature or effective 
constitution; and has no laws on record specifically related to 
corruption. While there is little evidence that senior officials in 
the Burmese Government are directly involved in the drug trade, 
there are credible indications that mid-and-lower level military 
leaders and government officials, particularly those posted in 
border and drug producing areas, are closely involved in 
facilitating the drug trade.   The Burmese regime closely monitors 
travel, communications and activities of its citizens to maintain 
its pervasive control of the population, so it strains credibility 
to believe that government officials are not aware of the 
cultivation, production and trafficking of illegal narcotics in 
areas it tightly controls.   A few officials have been prosecuted 
for drug abuse and/or narcotics-related corruption.   However, Burma 
has failed to indict any military official above the rank of colonel 
 
RANGOON 00001127  005.2 OF 007 
 
 
for drug-related corruption. 
--Agreements and Treaties. Burma is a party to the 1961 UN Single 
Convention on Narcotic Drugs (and became a member of the 1972 
Protocol to the Single Convention in 2003), the 1971 UN Convention 
on Psychotropic Substances, and the 1988 UN Drug Convention. 
--Cultivation and Production. According to the UNODC opium yield 
estimate, in 2007 the total land area under poppy cultivation was 
27,700 hectares, a 29 percent increase from the previous year.  The 
UNODC also estimated that the potential production of opium 
increased by 46 percent, from 315 metric tons in 2006 to 460 metric 
tons in 2007.  The significant increase in potential opium 
production in 2007 indicated in the UNODC estimates reflect improved 
agricultural methods and an end to several years of drought, 
resulting in more favorable growing weather in major opium poppy 
growing areas, such as Shan State and Kachin State. 
Burma as yet has failed to establish any reliable mechanism for the 
measurement of ATS production.  Moreover, while the UNODC undertakes 
annual estimates of poppy cultivation and production, the U.S. has 
been unable to conduct its annual joint crop survey with Burma since 
2004 due to the GOB's refusal to cooperate in this important area. 
--Drug Flow/Transit. Most ATS and heroin in Burma is produced in 
small, mobile labs located near Burma's borders with China and 
Thailand, primarily in territories controlled by active or former 
insurgent groups.  A growing amount of methamphetamine is reportedly 
produced in labs co-located with heroin refineries in areas 
controlled by the United Wa State Army (UWSA), the Shan State 
Army-South (SSA-S), and groups inside the ethnic Chinese Kokang 
autonomous region.  Ethnic Chinese criminal gangs dominate the drug 
syndicates operating in all three of these areas.  Heroin and 
methamphetamine produced by these groups is trafficked overland and 
via the Mekong River, primarily through China, Thailand, India and 
Laos and, to a lesser extent, via Bangladesh, and within Burma. 
There are credible indications that drug traffickers are 
increasingly using maritime routes from ports in southern Burma to 
reach trans-shipment points and markets in southern Thailand, 
Malaysia, Indonesia, and beyond.  Heroin seizures in 2005, 2006 and 
2007 and subsequent investigations also revealed the increased use 
by international syndicates of the Rangoon International Airport and 
Rangoon port for trafficking of drugs to the global narcotics 
market. 
--Domestic Programs/Demand Reduction. The overall level of drug 
abuse is low in Burma compared with neighboring countries, in part 
because most Burmese are too poor to be able to support a drug 
habit.  Traditionally, some farmers used opium as a painkiller and 
an anti-depressant, in part because they lack access to other 
medicine or adequate healthcare.  There has been a growing shift in 
Burma away from opium smoking toward injecting heroin, a habit that 
creates more addicts and poses greater public health risks. 
Deteriorating economic conditions will likely stifle substantial 
growth in overall drug consumption, but the trend toward injecting 
narcotics is of significant concern.  The GOB maintains that there 
are only about 65,000 registered addicts in Burma.  According to 
several HIV Estimation Workshops conducted in 2007 by the National 
AIDS Program and the World Health Organization, there are an 
estimated 60,000 to 90,000 injecting drug users in Burma.  Surveys 
conducted by UNODC and other organizations  suggest that the addict 
population could be as high as 300,000.  According to the UNODC, 
Burma's opium addiction rate is high, at 0.75 percent.  NGOs and 
community leaders report increasing use of heroin and synthetic 
drugs, particularly among disaffected youth in urban areas and by 
workers in mining communities in ethnic minority regions.  The UNODC 
estimated that in 2004 there were at least 15,000 regular ATS users 
in Burma. 
The growing HIV/AIDS epidemic has been tied to intravenous drug use. 
 According to the National AIDS Program, one third of officially 
reported HIV/AIDS cases are attributable to intravenous drug use, 
one of the highest rates in the world.  Information gathered by the 
National AIDS Program showed that HIV prevalence among injecting 
drug users was 46.2 percent in 2006 - a figure that remained stable 
in 2007.   Infection rates are highest in Burma's ethnic regions, 
and specifically among mining communities in those areas where 
opium, heroin, and ATS are more readily available. 
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. 
Altogether, more than 21,000 addicts were prosecuted between 1994 
and 2002 for failing to register. (The GOB has not provided any data 
 
RANGOON 00001127  006.2 OF 007 
 
 
since 2002.)  Demand reduction programs and facilities are limited, 
however.  There are six major drug treatment centers under the 
Ministry of Health, 49 other smaller detoxification centers, and 
eight rehabilitation centers, which, together, have provided 
treatment to about 70,000 addicts over the past decade.  Prior to 
2006, the Ministry of Health treated heroin addicts with tincture of 
opium.  However, based on high levels of relapse, the Ministry of 
Health in 2006 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.  By August 2007, the 
Ministry of Health had treated more than 370 patients using MMT. 
As a pilot model, in 2003 UNODC established community-based 
treatment programs in Northern Shan State as an alternative to 
official GOB treatment centers.  UNODC expanded this program, 
opening centers in Kachin State.  In 2007, UNODC operated 16 drop-in 
centers.  Since 2004, more 2,000 addicts received treatment at UNODC 
centers.  In 2006 and 2007, an additional 8,028 addicts have sought 
medical treatment and support from UNODC-sponsored drop-in centers 
and outreach workers who are active throughout northeastern Shan 
State.  The GOB also conducts a variety of narcotics awareness 
programs through the public school system.  In addition, the 
government has established several demand reduction programs in 
cooperation with NGOs.  These include programs coordinated with CARE 
Myanmar, World Concern, and Population Services International (PSI), 
focus on addressing injected drug use as a key factor in halting the 
spread of HIV/AIDS. 
However, while maintaining these programs at pre-existing levels, 
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 AIDS, TB, and Malaria in Burma, withdrew in 2005. In 2006, 
foreign donors established the 3 Diseases Fund (3DF) to provide 
humanitarian assistance for 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 antiretroviral therapy and the MMT program. 
IV. U.S. Policy Initiatives and Programs 
--Policy and Programs. As a result of the 1988 suspension of direct 
USG counter-narcotics assistance to Burma, the USG has limited 
engagement with the Burmese government in regard to narcotics 
control.  US DEA, through the U.S. Embassy in Rangoon, shares 
drug-related intelligence with the GOB and conducts joint 
drug-enforcement investigations with Burmese counter-narcotics 
authorities. In 2006 and 2007, these joint investigations led to 
several  seizures, arrests, and convictions of drug traffickers and 
producers.  The U.S. conducted opium yield surveys in the 
mountainous regions of Shan State from 1993 until 2004, with 
assistance provided by Burmese counterparts.  These surveys gave 
both governments a more accurate understanding of the scope, 
magnitude, and changing geographic distribution of Burma's opium 
crop.  In 2005, 2006 and again in 2007, the GOB refused to allow 
another joint opium yield survey.  A USG remote sensing estimate 
conducted indicated a slight increase in opium cultivation in 2007 
and a significant increase in potential opium production, mirroring 
UNODC survey results.  Bilateral counter-narcotics projects are 
limited to one small U.S.-supported crop substitution project in 
Shan State. No U.S. counter-narcotics funding directly benefits or 
passes through the GOB. 
--The Road Ahead. The Burmese government must reverse the negative 
direction of narcotics production in 2007 to restore the significant 
gains it made over the past decade in reducing opium poppy 
cultivation and opium production.  This will require greater 
cooperation with UNODC and major regional partners, particularly 
China and Thailand.   Large-scale and long-term international aid - 
including increased development assistance and law-enforcement aid - 
could play a major role in reducing drug production and trafficking 
in Burma.  However, the ruling military regime remains reluctant to 
engage in political dialogue within Burma and with the international 
community.  Its barriers to those offering outside assistance have 
limited the potential for international support of all kinds, 
including support for Burma's counter-narcotics law enforcement 
efforts.  Furthermore, in order to be sustainable, a true opium 
replacement strategy must combine an extensive range of 
 
RANGOON 00001127  007.2 OF 007 
 
 
counter-narcotics actions, including crop eradication and effective 
law enforcement, with alternative development options, support for 
former poppy farmers and openness to outside assistance.  The GOB 
must foster closer cooperation with the ethnic groups involved in 
drug production and trafficking, especially the Wa, refuse to 
condone continued involvement by ceasefire groups in the narcotics 
trade, tackle corruption effectively, and enforce its 
counter-narcotics laws more consistently to reach its goals of 
eradicating all narcotics production and trafficking by 2014. 
The USG believes that the GOB must further eliminate poppy 
cultivation and opium production; prosecute drug-related corruption, 
especially by corrupt government and military officials; take action 
against high-level drug traffickers and their organizations; 
strictly enforce its money-laundering legislation; and expand 
prevention and drug-treatment programs to reduce drug use and 
control the rapid spread of HIV/AIDS.  The GOB must take effective 
new steps to address the explosion of ATS that has flooded the 
region by gaining closer support and cooperation from ethnic groups, 
especially the Wa, who facilitate the manufacture and distribution 
of ATS.  The GOB must close production labs and prevent the illicit 
import of precursor chemicals needed to produce synthetic drugs. 
Finally, the GOB must stem the troubling growth of domestic demand 
for heroin and ATS. 
 
VILLAROSA