KHIN NYUNT'S OUSTER: ONE WEEK LATER

C O N F I D E N T I A L SECTION 01 OF 02 RANGOON 001401 SIPDIS STATE FOR EAP/BCLTV COMMERCE FOR ITA JEAN KELLY USPACOM FOR FPA E.O. 12958: DECL: 10/25/2014 TAGS: PINS PGOV ECON MOPS BM SUBJECT: KHIN NYUNT'S OUSTER: ONE WEEK LATER REF: A. IIR 6 812 0015 05 ¶B. RANGOON 1372 AND PREVIOUS ¶C. RANGOON 1345 ¶D. RANGOON 967 Classified By: COM Carmen Martinez for Reasons 1.4 (B,D) ¶1. (C) Summary: A week after Khin Nyunt's ouster there is calm in the streets, Than Shwe seems comfortably in power, and MI's political and probably economic power is being eroded. However, there remain many variables -- especially relations with ethnic cease-fire groups post-Khin Nyunt -- that could shake things up. End summary. Khin Nyunt: Corrupt, Not Unhealthy ¶2. (C) After allowing former Prime Minister General Khin Nyunt to "retire for health reasons" on October 19th, SPDC Chairman, Senior General Than Shwe changed his tune. On October 24th, new PM Lt. General Soe Win and Than Shwe's right-hand man General Thura Shwe Mann addressed a large group of "entrepreneurs" (as business cronies are generously called) explaining that Khin Nyunt had been sacked because of "insubordination...bribery and corrupt practices, and for failure to carry out duties properly." Specifically the two noted a September incident in Muse on the Chinese border where regular army troops moved against a notoriously corrupt MI-affiliated border unit (ref C). Dubious official justifications aside, we continue to believe the real reasons for Khin Nyunt's removal stemmed from long-standing personal and economic conflicts between MI and the regular military (ref D). ¶3. (U) Soe Win and Shwe Mann used their remarks (heavily publicized on local television and in the GOB's mouthpiece newspaper "The New Light of Myanmar") to proclaim repeatedly that "no one is above the law" and that the regime will move decisively against anyone -- either in the military or private sector -- who "adversely affects the national polices." Than Shwe: A Comfort Zone ¶4. (C) Despite rumors that there are ongoing tensions within the SPDC, Than Shwe departed as scheduled on October 24th for a long-planned state visit to India. This shows supreme confidence that his deputy, Vice Senior General Maung Aye, has no scheme in place to move against the Senior General and lends credence to the notion that the two connived to rid the SPDC leadership of Khin Nyunt and the hated MI. ¶5. (C) Indeed in the last week there have been several overt moves to eliminate the political and economic powers of MI, while preserving the institution -- essential to the maintenance of the SPDC's power. As reported in ref B, following Khin Nyunt's removal, the SPDC named former Rangoon Division Regional Commander Major General Myint Swe as the new head of MI. On October 22nd, the SPDC abolished the 30-year old National Intelligence Bureau (NIB),the committee that oversaw all intelligence and state-security operations carried out by, among others, MI and the Ministry of Home Affairs' Special Branch, Bureau of Special Investigations, and Criminal Investigation Department police agencies (ref A). The Bureau was chaired by ex-PM Khin Nyunt, giving him tremendous power over his fellow citizens and fellow SPDC members. ¶6. (C) It is unclear what will replace the NIB, but we are confident a new coordinating body will be formed under firm control of the regular military. One unverified report we've heard is that the SPDC will establish a new "Inland Security" Ministry that will take over the NIB's role but which will be controlled by someone personally loyal to the Senior General. Economic Conditions: Waiting for New Palms to Grease ¶7. (C) On the economic front there is uncertainty. Traders report authorities have tightened border controls, making it more difficult to smuggle in goods from Thailand and China. One eyewitness in Taunggyi, an entrepot in southern Shan State near the Thai border, indicated that black market gasoline and diesel have disappeared from the streets as have the dozens of illegally imported and unlicensed vehicles. She said it was difficult to import these things as normal since the shake-up because MI's role in facilitating illegal border trade had been supplanted, but the new "regime" had not yet settled into place. One gem smuggler told us the usual route between Mogok (Burma's ruby and sapphire capital in Mandalay Division) and Thailand was closed for now, but should be back to normal "in a month or two." ¶8. (C) The crackdown on those close to Khin Nyunt and MI has been inconsistent. Reliable sources report a large MI front trading company has been closed and Bagan CyberTech, run by Khin Nyunt's son, has been taken over by the army's signal corps. However, Khin Nyunt cronies involved in projects deemed "state priorities," such as edible oil production, or who have family or other ties to Than Shwe or Maung Aye have escaped the axe so far. Newspaper photos of the October 24th lecture on corruption and rule of law included a few of those cronies closest to the ex-PM, apparently still in the legal fold. Comment: Wait and See ¶9. (C) Despite the seamless ousting of Khin Nyunt and the apparent return to business as usual in Rangoon, there is still angst in the air. The business community is wary of what a new order will bring in terms of vital smuggling operations and economic policy. Though there has not yet been a complete purge of business people with previous MI ties, they worry about their economic and personal futures. Politically there is also much insecurity with rumors rampant of more changes to come, and the uncertainty of whether SPDC relations with the various cease-fire groups can continue placidly without Khin Nyunt -- the author of the cease-fire "agreements." End comment. Martinez