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Burma’s Drug Situation

Canada’s international reputation as a defender of human rights plummeted during the summer of 1999 when Foreign Minister Lloyd Axworthy’s remarks that he was prepared “to engage with the Burmese” on the crisis of illegal heroin exports from Burma, was widely quoted in Thai and Canadian media. It became clear he meant Canada would abandon its policy of no contact with the regime, to meet with its members on the issue of drugs.

Mr. Axworthy made his comments in Bangkok at a press conference with Thai Foreign Minister Surin, now chair of ASEAN (the Association of Southeast Asian Nations), after the post ministerial conference of the ASEAN-Asian Regional Forum July 1999.

But the foreign minister seemed to retreat from this plan soon after he returned to Canada. CFOB told the minister of wide opposition to such a weakening of Canada’s policy. The military junta has consistently used the drug issue in attempts to gain international support and approbation. However, it is the junta that it responsible for the massive increase in drug production since 1988. Not only is the junta extensively involved in supporting and protecting the drug industry, but senior members of the SPDC are direct beneficiaries. The junta is also protecting some of the worlds’ most wanted drug lords. Outside attempts, in the past, by the US and UN to reduce either failing outright or being twisted into use by the junta.

There can be no success in eliminating Burma’s criminal drug trade until there is a return to democracy. But as long as the international community, including Canada, continues to do business with Burma, thus helping to prop up the regime, so long will democracy in Burma be delayed.

Notes on the Political Economy of Burma’s Drug Trade

Prepared by Canadian Friends of Burma – August, 1999

Burma: the Economics of Drugs

  • In 1997, Burma was responsible for about 60 per cent of the word’s supply of heroin. Production of raw opium exceeded 2500 tonnes, or more than double the yield in 1988 when the State Law and Order Restoration Council (SLORC), the forerunner of the SPDC took power. Opium poppy cultivation in Burma has also increased from some 92,300 hectares to more than 200,000 under the SPDC (Dr. Desmond Ball,”Burma and Drugs: The Regime’s Complicity in the global drug trade” in Asia-Pacific Magazine, No.14, 1999).
  • The regime has created legislation which helps launder the proceeds of drugs. The Burmese regime levies a 40 % tax rate on declared assets other than real property, but as long as the tax is paid, there is no inquiry into the source of the assets (US State Department, 1998). Also banks launder dubious money in exchange for a 25 % to 40% fee. In 1996, there was US $250 million of unexplained investment attracted by the scheme (The IMF and the UN Conference on Trade and Development in the Sunday Times [London] May 10, 1998).
  • A study by the IMF cites large expenditures unaccounted for by the junta:
    • Despite the fact that Burma’s foreign exchange reserves from 1991-1993 were only approximately $300 million, the SLORC purchased arms worth $1.2 billion during the period (The Nation, Dec. 1996).
  • Analysis based on a US embassy report discovered US $600 million in unexplained foreign financial inflows during 1995-96, up from US $79 million the previous year (Bertil Lintner spoken, Aug.15, 1999).
  • “All normal economic activities are instruments of drug money laundering. And no drug operations in Burma can be run without the military regime” (Geopolitical Drugwatch in The Nation, Dec.1996).
  • “To date, there have been no arrests or prosecutions for money laundering, signifying the government collusion” (South-East Asian Information Network, 1998).
  • “Burma exports US $1 billion worth of illegal drugs annually, which is worth as much as all legal exports” (US embassy in Rangoon, Jun. 1996)
  • Burma has no more foreign reserves for the next two months and may seek help from the World Bank and the IMF. Inflation is over 40 per cent every year. Burma may face financial shortage in near future (Kyaw Kyaw Maung, chief of Burma’s central bank in the Sunday Times [London] by Win Htein, Aug.13, 1999)
  • Foreign investment in Burma has fallen from US$777.4 million to just US $29.5 million this year (The Sunday Times [London], Aug.13, 1999).
  • “The country’s economic situation is worse than in 1988. There are no exports, just imports from abroad. For example, last year’s exports were just US $968 million while imports were over US $2,300 million (Dr. Khin Maung Kyi, senior Burmese economics professor, The Sunday Times [London] Aug.13, 1999).
  • Any money going into Burma to fight drug production and outflow amounts to giving the junta hard cash/foreign currency, which is vital to the maintenance of its grip on power and the business of oppression and human rights violations (Chao-Tzang Yawnghwe, Aug. 17, 1999).
  • According to the Thai Office of the Narcotics Control Board, in Feb. 1993 Lo Hsing-han, who, for most of the 1990s was the leading drug trafficker in Burma, was given the right by Khin Nyunt (Secretary 1 and Lt. Gen. of SPDC) to “smuggle heroin from the Kokang Group to Tachilek without interception. Lo Hsing-han is friendly with several members of the SPDC (Dr. Desmond Ball,”Burma and Drugs: The Regime’s Complicity in the global drug trade” in Asia-Pacific Magazine, No.14, 1999).
  • Khun Sa, Burma’s infamous drug lord, wanted on indictment charges by the US government (but protected by the junta and living in luxury in Rangoon), has become a sort of banker for the SPDC, giving the Generals access to his ‘money laundering’ network and bringing tens of millions of dollars back into the country (Dr. Desmond Ball,”Burma and Drugs: The Regime’s Complicity in the global drug trade” in Asia-Pacific Magazine, No.14, 1999).
  • Khun Sa maintains close relations with Senior General Than Shwe, Chairman of the SPDC and Commander in Chief of the Army (Dr. Desmond Ball,”Burma and Drugs: The Regime’s Complicity in the global drug trade” in Asia-Pacific Magazine, No.14, 1999).
  • The magnitude of the drug industry in Burma’s northern border areas would be impossible to maintain without the cooperation of the region’s Army units For instance, the 52nd Infantry Battalion (IB) maintains heroin refineries iat Singkaling Hkaamti and Tamanthi, the 22nd IB has a refinery at Homalin, the 89th IB has refineries at Tiddim and Paletwa, etc. (Dr. Desmond Ball,”Burma and Drugs: The Regime’s Complicity in the global drug trade” in Asia-Pacific Magazine, No.14, 1999).
  • Thai officials concerned with narcotics activities in the Thai-Burma border area have no doubts about the complicity of the Burmese government in promoting [drug trafficking] activities. “The Burmese government says one thing but does another…” says the Director of the Narcotics Suppression Centre in Thailand’s Northern Region (Dr. Desmond Ball,”Burma and Drugs: The Regime’s Complicity in the global drug trade” in Asia-Pacific Magazine, No.14, 1999).
  • How can the [Burmese] regime be taken sincerely about combating heroin when three of the world’s top drug dealers live under direct protection of the Burmese junta? Even though the junta gained direct control over Khun Sa’s previous areas in the north, neither opium nor heroin output has been set back (Chao-Tzang Yawnghwe, Aug.17, 1999).
  • Drug Eradication Programs:

  • Although the regime has told its UN sponsors that it is moving villagers away from regions where drugs are being produced and uprooting the poppy fields left behind, “in January, 1999, 5,000 villagers from the Arakan Yoma mountain range were forced from their homes by the military for refusing orders to grow opium” (The Sunday Times [London] May 10, 1998).
  • The army ordered villagers to grow a second, smaller crop, which the military burned and used to simulate genuine drug eradication (The Sunday Times [London] May 10, 1998).
  • Refugees from Shan State, where the UN has spent several million pounds on drug control programmes over the last three years, told how they were ordered back to areas previously cleared of poppies and ordered to grow opium (The Sunday Times [London] May 10, 1998).
  • In areas where the UN is funding eradication programmes, officials of the military government are running trafficking syndicates…(The Sunday Times [London] May 10, 1998).
  • A former policeman from Tiddim [a town in Burma’s Chin State] , whose former duty was to monitor the local drug eradication programme, said opium poppies were planted in about 15 acres of land in almost every village in Tiddim and Falam [another Chin town] areas. Each opium grower paid an annual flat fee of 10,000 Kyats to the [Burmese] State Drug Control authorities and 5,000 Kyats to the local police, regardless of the acres they cultivated (Bertil Lintner spoken, Aug.15, 1999).
  • The problem with any UN agency is that it is forced to go through the host government in the country where it operates, and, as we have seen, it would be economic suicide for the Burmese government to do anything substantial about the country’s lucrative drug trade (Bertil Lintner spoken, Aug.15, 1999).
  • The UN has also been forced into a partnership with local druglords such as Lin and Pao, which both of them have used in their propaganda to who that they are “cooperating” in the war on drugs (Bertil Lintner spoken, Aug.15, 1999).
  • According to a report from a Thai intelligence unit, the Burmese military is allowing Wa soldiers to produce amphetamines. The Wa army is also receiving compensation for joining the regime’s military operation to suppress the Karen National Union. The profits derived from the drugs produced would be shared by the Burmese army, the Wa army and the Karen Buddhists (Bangkok Phuchatkan, Jul.8, 1999).
  • The cease-fire agreements of 1989, which helped save the regime when it was under pressure from both urban dissidents and ethnic insurgents, is one of the reasons why it would be extremely difficult for the junta to move against the drug trade, even if they intended to do so: Any serious attempts to curtail the involvement of the Was, the Kokang army or Lin Mingxian’s group, would threaten the military’s control of the country (Bertil Lintner spoken, Aug.15, 1999).
  • “Burma has a long been the world’s number one produce of opium and heroin and now is also making methamphetamines. The role of drugs in Burma’s economic and political life and the regime’s refusal to honor its own pledge to move to multi-party democracy are really two sides of the same coin, for both represent the absence of the rule of law (US President Clinton at Chulalongkorn University, Nov.26, 1996).
  • “We have always requested that UN agencies and international NGOs [and by analogy, foreign governments] should consult with the NLD and that their work be closely monitored to ensure that aid provides help to the right people in the right way” (Daw Aung San Suu Kyi, Forward to paper on “the Humanitarian Crisis, Aid and Governance in Burma” at John Hopkins University, 1999).
  • For more information on trade routes of Burmese heroin linked to Spread of HIV/AIDS, read “Out of Control 2” by the South East Asian Information Network


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