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04RANGOON121 2004-01-28 10:34:00 CONFIDENTIAL Embassy Rangoon
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					  C O N F I D E N T I A L SECTION 01 OF 02 RANGOON 000121 


E.O. 12958: DECL: 01/28/2014


1. (C) SUMMARY: The leadership of the United Wa State Army,
while trumpeting the dramatic reduction of opium poppy
production in Wa territories, is seeking special dispensation
to openly import precursor chemicals, ostensibly for the
industrial processing of natural rubber. End Summary.

2. (C) POOR EX-POPPY FARMERS: UWSA leader Pu Yu Chen (as he
transliterates his name) told a visiting group of GOB
officials and diplomats January 24 that the sharp drop in
opium poppy cultivation has created severe hardships for
former poppy farmers and their families. Half of all people
in UWSA territory lacked food security Pu Yu Chen claimed,
calling on the GOB and the international community to provide
increased assistance. Note: The UWSA territory, known as
Special Region #2 in Rangoon, has a population of about half
a million, with 400,000 in the northern region bordering
China and 100,000 recently transplanted to the southern
region bordering Thailand. End Note.

3. (C) PRECURSORS, PLEASE: Pu Yu Chen received the visiting
delegation in the UWSA capital of Pan San, a prosperous
looking Chinese-style city of about 25,000. Discussions and
lunch took place in a modern multi-story building situated
next to a three-story massage parlor. Chen introduced much
of his cabinet, then detailed infrastructure, economic
development, and crop-substitution projects undertaken by the
UWSA. The rubber industry featured prominently in Chen's
economic plans. Indeed, the rugged hills ringing Pan San had
been terraced and planted with young rubber trees. Chen then
made a special plea. To add value to natural resources and
create jobs, the UWSA wanted to process the natural latex
into finished rubber products. To do this they needed to
import certain chemicals, some of which, he explained, were
unfortunately deemed precursor chemicals used in
methamphetamine production. Pu Yu Chen said he hoped the
UWSA would be allowed to do this, as the Wa's opium-free
economic future depended on projects such as this.

4. (C) FUNNY BUSINESS: The delegation heard the same pitch
by UWSA district leader Lu Shin Kya in Nam Teek, a new town
of maybe 10,000 people located where the borders of China, Wa
territory, and the Kokang region meet (98-50' N, 23-27' E).
Lu Shin Kya said "only 600" families still produced opium
poppies in his district, down from 2,800 previously. The
UWSA district leader asked the GOB ministers for a soft loan
of $100,000 to build a rubber-processing factory, for which
they would need to import some "chemical pharmaceuticals."
The Italian DCM told us he had visited Nam Teek last year and
had seen a rubber factory housed in a new building but with
apparently old or unused machinery inside. "There is some
funny-business going on here," concluded the Italian.

5. (SBU) TRAVEL NOTE: The DCM and DEA country attach
traveled January 23 - 26 on the Ministry of Home Affair's
"Study Visit to Border Areas and Middle Part of Myanmar."
The group, including five GOB cabinet ministers, eight
ambassadors, and two dozen other diplomats and UN reps,
undertook a tightly scripted tour that entailed eighteen
takeoffs and landings in Russian-built and Burmese Air Force
maintained MI-17 helicopters. Meanwhile, P/E Chief traveled
overland with UNODC to some of the same UWSA border areas and
will report his very different ("less scripted") experiences
and perspectives septel.


-- The UWSA enjoys the highest degree of autonomy and
self-administration of any of the 17 cease-fire groups. It
often seemed that the UWSA's Special Region #2 was not part
of Burma. Even car license plates were unique, beginning
with Latin script "SW" in the south and "NW" in the northern
zone (for Southern Wa and Northern Wa, respectively).

-- While Pan San looked prosperous, many civilians in the
southern Wa zone looked poor, bedraggled, and unhealthy.

-- The UWSA troops wore green uniforms with a red patch over
the left shirt pocket that read, in English, "UWSA Army."
Many of the AK-47 toting UWSA troops, especially in the
southern zone, were teenagers.

-- On many occasions the high-powered delegation (five senior
GOB cabinet ministers, eight ambassadors, etc.) was entirely
under the control of heavily armed UWSA troops. In
security-paranoid Burma, this demonstrates an extremely high
level of trust and confidence between the UWSA and the SPDC.

7. (C) Comment: Over lunch in Pan San some members of the
group rather ungenerously wondered aloud if our host's
blatant request to be allowed to import precursor chemicals
legally was an indication that the Wa drug producers planned
to stay in the same business, only change their product line.
End Comment.