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03RANGOON575 2003-05-13 02:11:00 CONFIDENTIAL Embassy Rangoon
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					  C O N F I D E N T I A L SECTION 01 OF 02 RANGOON 000575 



E.O. 12958: DECL: 05/05/2013

REF: 2002 UNVIE 0285

Classified By: COM Carmen Martinez. Reason: 1.5 (d).

1. (U) Summary: After a month-long assessment, a UNODC
mission told diplomats April 10 that "opium production in
Burma was plainly ending." Northern Shan State, including
areas controlled by cease-fire groups like the Kokang
Chinese, was essentially clear of opium production. However,
farmers were paying the price for eradication. Normally
subsisting on incomes of less than $200/year, farmers and
their families may starve this year. End Summary.

"The Era of Opium Cultivation in Burma is Ending"

2. (U) After a month-long assessment of the Wa Alternative
Development Project in northeast Shan State, UNODC's
assessment mission told diplomats, representatives of UN
agencies, and INGOs April 10 that "the era of opium
cultivation in Burma is plainly ending." According to the
mission, opium cultivation had largely ended in northern Shan
State. This was true even in cease-fire areas that were
previously centers of production. Shan State Special Region
1 in the Kokang, in particular, is completely clear of opium.
According to the assessment mission, cultivation continues
in the territories controlled by the United Wa State Army,
but even there cultivators are aware of the pending deadline
fixed by the Wa authorities. By the end of the 2004/05
growing season, the Wa-controlled Special Region 2 is also
scheduled to be opium-free.

People May Starve

3. (U) The downside of these developments, however, is a
potential humanitarian catastrophe among the farmers
dependent on growing opium for their income. According to
the mission, farmers in northern and eastern Shan State are
already poor. Yearly incomes run about $200/year, malaria is
endemic, and child mortality rates (i.e., the number of
children that die before the age of five) may run as high as
35 percent, according to surveys done by INGOs. Most
critically, the region is deficit in food. Farmers in the
region have annually produced food sufficient to feed their
families for only four to five months each year. For the
balance of the year, they fed their families with income from

4. (U) That income has now disappeared, and farmers have
begun to move seeking work. Wages, in turn, have collapsed.
According to the mission, the wage for day labor in the
Kokang has dropped sixty percent in recent months from
approximately 10 Chinese yuan per day to only 4 yuan now (the
equivalent of about 50 cents). Meanwhile, some families have
begun mortgaging property to meet current expenses; others
have moved to larger cities like Kutkai, Lashio, and Laukai
to beg. Still others have begun to economize on
non-essential expenditures, like education. According to the
mission, primary school attendance in the region has dropped
60 percent in 2003.

5. (U) The mission anticipates that this situation will grow
rapidly worse both this year and in years to come. Farmers
in Shan State have not yet even begun to plant the monsoon
rice crop, which will not be harvested until October. Between
now and then, families will be left to cope on the basis of
whatever resources they can find. The crisis will also
almost certainly expand as other regions go out of opium.
The population of the Kokang region is only 200,000; the
population of the Wa territories is 600,000 -- three times as
large. As those territories end opium production, the
problems now evident in the Kokang and other areas of
northern Shan State could multiply.

Recommended Response

6. (U) UNODC's assessment mission said that it is still
working out the details of a proposed response, but
anticipated that the cost of dealing with the consequences of
opium eradication would overwhelm the resources of the GOB
and of the cease-fire groups. The entire budget of the
Myanmar National Democratic Alliance Army, which ruled in the
Kokang, was only 8 million yuan (i.e.; $1 million) per year.
Similarly, while the Government of Burma claimed to have
pumped over 40 billion kyat (about USD 40 million) in to the
border regions over the past 14 years, this latest crisis was
only one of several facing it. Both might try to provide
relief, but neither would be able to provide assistance on
the scale required.

7. (U) The mission said that it would recommend basically two
programs: a 2-year program of humanitarian assistance and a
15-year program of alternative development assistance that
built on the experience gathered from the Wa Alternative
Development Program. It had not yet put a dollar value on
the required assistance for either, but had at least
developed a package of 3 proposed interventions for the
emergency program and 20 proposed interventions for the first
five years of the 15-year program. Once complete, the
15-year program would recommend a consolidation of project
activities around Mong Pawk and an extension of those
activites to areas in the Wa territories north of Pang Sang,
and to the Kokang.

Opposition Leaders Concerned

8. (C) The UNODC mission's evaluation of the situation in
northern Shan State was stark, but accurate. Recently,
opposition party members in Kutkai, Lashio, and Muse,
including members of Aung San Suu Kyi's National League for
Democracy, called Poloff's attention to the plight of farmers
who were forced out of opium this year with little support
from the government other than a sporadic distribution of
seeds for alternative crops. According to the political
parties, there is risk of starvation in this area.

9. (C) Secondly, what the team found in northern Shan State
is only part of the story. Much of the opium production in
northern Shan state has been eliminated; some, however, has
simply been pushed into other regions. NLD members in Kachin
State in particular complained of large new areas of opium
production around Bhamo, and possibly as far north as the
Tanaing Valley north of Myitkyina. Similarly, UNODC reports
that production in central Shan State from Keng Tung over to
Taunggyi and Pinlaung has also increased this year, partially
offsetting the decline in northern Shan State. Overall, it
appears that opium cultivation will be down substantially in
Burma as a whole this year; however, progress has been
uneven. In some areas, like northern Shan State, opium has
been virtually completely eradicated. In others, more
acreage is under opium cultivation than has been the case for
some years.


10. (C) The fate of former opium farmers in Burma will depend
on how well donor nations respond to UNODC's appeal for
assistance for some of the poorest people in the world. The
Japanese have indicated that they do intend to be heavily
involved in the Kokang. The European Union has also lately
decided to provide $1.8 million for two INGOs (Aide Medicale
International and Maltheser) to work closely with UNODC on
the provision of basic health services in the Wa territories.
However, more will be needed. In October 2002 (reftel),
UNODC put forward a proposed program of approximately $4
million/year for alternative development in Burma. That
program may be scaled up now on the basis of the assessment
report, but even so, the total scale of the program required
in Burma will be modest when measured against the need or
against the opportunity of shutting down one of world's
traditional centers of opium production. End Comment.