Drug economics in Burma’s new political order

Friday, 06 August 2010 18:38 Mizzima News Special Report

The regime’s biggest threat for the past half-century, besides Aung San Suu Kyi, has been rebel armies from various ethnic groups. For decades the regime has worked to increase its presence in these rural areas by building paramilitary allies in hostile regions. The local militias suppress rebel activities in exchange for the freedom to produce and transport drugs with full military co-operation. As the military brokered more deals, its obsession with power quickly took precedence over its war on drugs. Now the regime is more powerful than ever, due to a survival strategy that is largely subsidised by Burma’s multi-billion-dollar drug trade. Perry Santanachote examines that trade, the people who benefit from it and cover it up, the victims and those caught in between.

Welcome to Shan State: land of the drug lords

Aung Min, like many in Rangoon, grew up poor. He enlisted in the Burmese army in 1999 at the age of 18 with ambitions that he would one day join the ranks of his commanding officers. By 2003 he was a second lieutenant stationed in Laukkaing Township in Shan State and led a group of 20 men – his pockets filled reliably with drug money.

Opium production has been an economical lynchpin in eastern Shan State since the late 1940s when military leaders refused to honour the Panglong Agreement that granted autonomy to ethnic states. Rebel armies grew as their drug trade took over the region, and then the world. Shan warlord Khun Sa dominated Southeast Asia’s infamous Golden Triangle with his heroin enterprise through the 1980s and 1990s. By 1995, the Golden Triangle, the mountainous region where Burma, Laos and Thailand meet, became the world’s leader in opium production. His 30-year revolutionary war ended in 1996 but heroin continues to flow out of the state, albeit at a lower rate, with a new breed of drug lords.

Despite acknowledgement by the US State Department that poppy cultivation in Burma today is less than 20 per cent of what it was in the mid-1990s, it’s still an annual multi-billion-dollar business. Burma remains the world’s second-largest opium producer after Afghanistan, and processed 330 metric tonnes, or 17 per cent, of last year’s world supply, according to the UN Office on Drugs and Crime (UNODC) 2010 World Drug Report. Poppy cultivation has also been on a steady incline for the past three years.

Other pages in the report show that Burma is also Asia’s largest producer of amphetamine-type stimulants (ATS), which include methamphetamine, distributed in the form of the cheap and chemically dirty pills, most commonly known in Thailand and the region as ya baa (crazy drug); and the more expensive and cleaner crystalline form known as Ice. Burmese production of methamphetamine coincided with reduced opium production, but producers did not necessarily switch over.

“There has been more production last year when it comes to stimulants because of the increased involvement by the junta-backed militia groups,” Khun Seng, an editor at the independent media and research group Shan Herald Agency for News (SHAN), said. “When the militia groups support the political aspirations of the junta they are also supported by the junta in their drug activities.”

“And if you’re the drug boss,” he added. “You’ll do anything that’ll bring in money. If I’m producing more meth it is because of the market – the buyers. Right now, for two years in a row, opium production has been down so there is less production of heroin than in other years, that’s all. They are not intentionally switching from heroin production to meth production.”

Pornthep Eamprapai, director of the Office of the Narcotics Control Board in Chiang Mai, said heroin and opium production was down because of climatic conditions and drought, not because of eradication. “Meth” quickly filled that gap in recent years, he said, because consumer demand in Thailand is high due to economic and social instability. Thais are becoming addicted to ya baa at an alarming rate, while they were never too keen on heroin.

“Making meth is so much easier too,” Pornthep said. “Cooking up meth or Ice doesn’t require any crop.”

Another big difference between today’s drug trade and that of the Khun Sa era, is that it is now increasingly controlled by the government. Former Prime Minister Khin Nyunt engineered a series of ceasefires with major drug-producing militias in 2003-2004 and incorporated them into the economy and constitutional process, creating an environment conducive to drug production and collusion between military personnel and drug traffickers. The regime has been suspected of involvement in the drug trade in the past but never at the level seen today.

In the past decade, the military regime has prioritised keeping it under wraps and making it appear as though it has waged a war on drugs. In 1999 the military inducted a 15-year drug-eradication programme, made lofty promises to the international community to crack down on trafficking, publicised some token drug busts and even opened an anti-drug museum. But these acts were all sleight of hand – an illusion to placate the international community. Although, they may have worked.

The UNODC commended the junta for its “considerable decrease in the area under cultivation and a strong decline in potential opium production” in its Opium Poppy Cultivation Report last year and budgeted US$7.7 million for the eradication programme between 2004 to 2007.

“It’s just another attempt to get the international community to pay for ordinary development programmes instead of using the state budget for that purpose,” said Chiang Mai-based author Bertil Lintner, who chronicled the history of Burma’s heroin warlords in his book, Burma In Revolt, and more recently the multi-billion-dollar methamphetamine trade in Merchants of Madness: The Methamphetamine Explosion in the Golden Triangle.

“And most of the UNODC’s programmes are just that – ordinary development programmes that have little or nothing to do with drug eradication,” Lintner said.

Pornthep says the Thai government gives Burma 20 million baht (US$625,000) annually every year for opium eradication.

“Their [Burma’s] government isn’t doing enough because they don’t have the resources,” he said. “Therefore they need co-operation and aid from other countries.”

Eleven years later, drug lords continue to operate with impunity and the Burmese Army remains closely involved in the lucrative opium economy, using it as leverage against ceasefire armies. As its deadline approaches, Burma is nowhere near being a drug-free nation. Only 13 townships of the targeted 51 can claim to be poppy-free, while the others are still growing, according to the 2009 Shan Drug Watch Report.

Drug economics in Burma’s new political order
Friday, 06 August 2010 18:44 Mizzima News Special Report
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Military culture: a paradigm shift

In 2003 Aung Min was riding high on drug “taxes” collected from traffickers that crossed into his command area, but one day he arrested and executed 15 traffickers, seized their heroin and sold it on the Chinese black market for 200 million Kyats (US $200,000), 20 times more than he would make in a year of tax collecting.

Military intelligence investigated Aung Min shortly after the incident when his foot soldiers were seen suddenly adorned in gold jewellery and he had made a considerable transaction to his mother in the middle of Burma’s banking crisis that had left several banks bankrupt and the Kyat inflated beyond repair. That red flag landed him 15 years in prison. However, the crime he committed was not really the problem; it was the spectacle that got him in trouble.

“Military officers’ involvement in drug trafficking is very common, particularly in Shan State. Even the killing,” said an ex-army captain and friend of Aung Min. “It’s rare that they are arrested. Aung Min was inexperienced so he didn’t know how to be low-profile.”

The former officer divulged Aung Min’s story on condition of anonymity. He left the army last year after 10 years of service and now lives across the border in northern Thailand. He went through three years of officer intake with Aung Min and said they were close friends. The last time they saw each other was on October 7, 2002.

“He was very honest – a simple man,” he said. “I was surprised when I found out. I think it was due to the environment because he was assigned to this area and this kind of bribing, taking money, dealing drugs – this might have changed him.”

Many Burmese soldiers survive on revenues collected from extortion fees because their salaries are meagre and the government has cut off their rations. Today, a private earns about 16,000 Kyats a month, a sergeant earns 35,000 to 40,000 Kyats, while a major general earns 800,000 Kyats.

“The army capacity is also declining: the fighting capacity, military capacity, administration capacity, organising capacity. It’s all due to mismanagement,” he said. “While at the top level they’re getting more benefits and becoming wealthier.”
The ex-army captain explained that battalions had been cut down, but they still had the same amount of work. Faced with the challenge, they had to get creative and make deals with traffickers instead of trying to fight them.

“We can’t fight Karen rebels with 120 soldiers. It’s like 120 people with the duties of 500,” he said.

In 2005, headquarters ordered him to set fire to 180 homes in a Karen village in Kanasoepin Village, Thandaung Township.

“My superiors asked the villagers to forcibly relocate to a designated area. They wanted to control them and destroy the village so they couldn’t communicate with rebels,” he said. “I had to get an agreement with the village head to set up three houses only, document and report to regional command. This way it’d be win-win.”

In this incidence, “win-win” was not bribery, it was security. He only had 18 soldiers with him that day, in an area he referred to as “the black area” where Karen rebels are active.

“If we burned down the village, the Karen rebels would have attacked us,” he said. At that point, he realised he wanted out of the army. “I didn’t want to live with that stress anymore – to deal with that anymore.”

He said there were no official orders to bribe opium farmers or traffickers, but that it had become a major component of military culture. Everyone takes bribes and the money goes all the way up the chain until it eventually reaches Senior General Than Shwe. Officers stress that discretion is key because of the military’s appearance of reform. If a soldier’s actions threaten to expose their role in the drug trade, he will suffer the same fate as Aung Min.

Aung Min’s story illustrates the military’s deep involvement in the drug trade – a complete contradiction to the image it has projected to the world.

Appearances deceptive

A favoured tactic of the regime in its delusive fight against drugs is the highly publicised heroin eradication programme, which the ex-officer explained is set up.

There would be orders from the regional command centre to cut off poppy at a plantation, he said. The authorities would call the farmers and village leader before heading out and telling them to prepare the crop. Upon arrival the farmers would show the soldiers the unusable poppy plants, made so by the plants’ inability to produce the seeds required to make heroin. The soldiers would slash these and leave the good ones intact. Then they would document the eradication with photographs and bonfires. Afterwards, the soldiers collect 10 million Kyats from the village head. This process is repeated every three months.

The Palaung Women’s Organisation (PWO), an NGO based in Mae Sot, Thailand, found in its 2009 report, Poisoned Hills, that only 11 per cent of poppy fields had been destroyed the previous season, mostly in areas visible to the UN’s satellite monitors. The police reports they obtained claimed that 25 per cent of fields were destroyed.

More “taxes” are collected in the trafficking process too. The ex-army captain explained that regional commanders communicate with ceasefire group leaders and issue passes to place on the narcotics cargo trucks so that they are exempt from searches at checkpoints. There are 13 regional commanders throughout the state. About three of them: the Eastern, the Northeastern and Triangle commanders are active in the drug trade. Prime Minister Thein Sein is a prime example of the power these regional commanders hold, as he was the Triangle Regional Commander in 2001 and dealt with Shan warlords on a regular basis before his promotion in 2007.

‘Politically correct’ drug trade

“In my 10 years in the army there’s been an increase in drugs, trafficking, bribes and this kind of involvement,” said the ex-army captain.
The escalation in drug activities is partly caused by the growing number of militia and ceasefire groups.

“Before the army got an agreement with the ceasefire groups they fought against the rebels and weren’t involved in drug trafficking because they were not friends, they were enemies,” said the former captain. “After the ceasefire they had to get money from them for sustainability.”

Today there is an estimated 17 ceasefire agreements with the country’s ethnic rebel groups. The number of active militia groups is unknown, but the SHAN received junta documents that revealed 396 in the Northeastern command alone. In the run up to this year’s election, the military has increased pressure on ceasefire groups to join its Border Guard Force. Those that concede and support the junta’s political ambitions are awarded with military support in their drug activities. SHAN editor Khun Seng said that the junta party needs canvassers that have influence in their respective communities.

“Those who are most influential are involved in the drug trade, especially the militia leaders,” he said. “These people will take advantage of the situation.”

Khun Seng said that as an extra incentive, each militia group was now assigned an operational area where they could do whatever they want without disruption.

“If you are ‘politically correct’, you can do anything in Burma,” he said.

As an example he described this year’s Armed Forces Day in Burma.

“The commander [Colonel Khin Maung Soe] in Tachilek spoke on the sidelines to the militia leaders, ‘This is your golden opportunity. My only advice is that you send your products across the border, but not on this [Burma’s] side’,” Khun Seng said.

PWO’s investigation corroborated SHAN’s accounts that more drugs were indeed coming out of militia-run areas. It reported that opium cultivation increased over 200 per cent in Mantong and Namkham townships in Shan State, both areas controlled by the government. During the 2008-2009 season, the acreage found by PWO for only these two townships, out of the total 23 townships in Northern Shan State, was nearly three times (4,545 hectares) the total recorded by UNODC for all 23 townships combined. The UNODC reported a 100 per cent increase in that same time period in all of Northern Shan State, from 800 hectares to 1,600 hectares.

Both SHAN and PWO have criticised the UNODC’s methodology, which relies on data reported by the junta’s (State Peace and Development Council, SPDC) eradication reports and satellite imagery without proper verification.

The ONCB in Thailand also acquires its Burma drug data from the SPDC.

“For the most part we exchange data with them with good communication and understanding,” Pornthep said. “There has been no lying on their part and their data can be backed up. For instance, the figures for poppy cultivation are the same as the UNODC, the US and China.

“We never meet with the NGOs in Burma,” he added. “We only communicate with the government and narcotic police.”

Seizures mean little

Khun Seng also disputed a statement in the UNODC World Drug Report that attributed the increase in methamphetimine production to ethnic insurgencies in Shan State readying to fight the SPDC by selling more drugs to purchase arms.

“The Kokang and Wa are producing at the normal rate, no more, no less. The increase is due to the involvement of the militia groups, he said. “Now with the Wa and Kokang, these people can produce but they can’t transport without the co-operation of the militia groups. If they do it by themselves they are caught.”

Which explains the number of seized drugs in Burma. UNODC Regional Representative Gary Lewis stated at the release of the 2010 World Drug Report in Bangkok, that 23 million methamphetamine pills were seized in Burma last year, from one million in 2008. Lewis said the numbers likely reflect a surge in production, rather than crime prevention.

Khun Seng agreed that more seizures meant more production, but said that was only part of the picture. The military was particular about where the seizures came from. That is, when the seizures were not fabricated. Militia-produced drugs almost always made it across the border, he said.

The Kokang, a ceasefire group well known for drug production and trafficking along the Sino-Burmese border, were recently attacked by the SPDC for their refusal to join the Border Guard Force and all their drugs were seized. The regime long turned a blind eye to the Kokang’s drug operations and even publicised the area as a “drug-free zone” after its eradication campaign, but in August last year, this all changed and the regime announced a massive seizure of drugs in the Kokang area, while driving more than 37,000 refugees into China.

Several large shipments of methamphetamine, believed to have originated from the United Wa State Army (UWSA), were also recently seized in Tachilek near the Thailand border.

“Seizures are irrelevant and are made only when the authorities want to put pressure on, for instance, the UWSA, for political and security reasons,” Lintner said.

The UWSA, armed with 30,000 soldiers, is the largest ceasefire group to reject the junta’s proposal to become part of the Border Guard Force and the military has turned up the heat as the election approaches. Much of the seized drugs last year are believed to have come from the Kokang and Wa – seizures that would never have happened in the past.

“Proceeds from the drug trade were always a major source of income for several rebel armies in Burma, before and after the ceasefires,” Lintner said. “But the Burmese government and the UNODC chose to turn a blind eye to the traffic as long as the ceasefire groups were on good terms with the government. Now, when some of the ceasefire armies are resisting the government’s demands that they transform their respective armies into Border Guard Forces, they are suddenly being accused of trading in drugs, which they have always done.”

Even with the drastic surge in methamphetamine seizures, the World Drug Report noted that seizures continued to remain very low in Burma. Despite being the second-largest producer of heroin in the world, only one per cent of worldwide heroin interception was seized in Burma in 2008. Similarly, of the 32 million tablets seized in East and Southeast Asia in 2008, only about three per cent, or 1.1 million, were seized in Burma.

The report also states that the number of tablets and the amount precursor chemicals seized in Burma jumped last year, when the SPDC entered by force parts of north and eastern Shan State not under their control.

The new political order

The new drug economy that the SPDC has built in Burma will only worsen as the regime’s crusade for power and control intensifies in the run-up to the election. Lintner anticipates the drug trade will eclipse what was seen in the 1990s.

“In 1990, only opium was produced, and the derivative heroin,” he said. “The production increased dramatically in the 1990s, and now is back to what it was 20 years ago. Plus methamphetamines, which were unknown in the Burmese sector of the Golden Triangle 20 years ago.”

In 1997, then US Secretary of State Madeleine Albright knew all too well where Burma’s drug trade would lead when she aptly stated, “Drug traffickers who once spent their days leading mule trains down jungle tracks are now leading lights in Burma’s new market economy and leading figures in its new political order.”