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05RANGOON440 2005-04-12 08:42:00 CONFIDENTIAL Embassy Rangoon
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					  C O N F I D E N T I A L RANGOON 000440 



E.O. 12958: DECL: 04/11/2015

Classified By: COM Carmen Martinez for Reasons 1.4 (b,d)

1. (U) Summary: On a recent visit to Karen State, Emboffs saw
hundreds of impounded vehicles. Many people lost the savings
they invested in cars and their depression was palpable.
They fear the loss will have a negative long-term economic
and social impact on the region. Yet, some unregistered
vehicles continue to operate. It is unclear what the GOB
will do with its vast used car inventory. End Summary.

2. (C) P/E Section Chief and Poloff visited Karen State a few
days after the March 31 deadline for people to surrender
their unregistered vehicles to the GOB. According to sources
in Pa-an, most of these vehicles were stolen in Thailand and
smuggled across the border into Burma with the complicity of
the former Military Intelligence (MI). The vehicles were
"laundered" through the Mandalay Industrial Estate, which
"manufactured" vehicles and then they were released back to
the public through the Ministry of Light Industry. The MI
protected those who were involved in vehicle trafficking and
people could obtain reasonably priced automobiles.

3. (U) We observed acres and acres of vehicles parked at
police stations and on government property. A team appeared
to be recording the vehicle serial numbers as we stopped to
take photos. Most of the vehicles were pickup trucks, but
there was a smattering of vans, sedans, and light trucks.
Some appeared to have been wrecked and were likely towed to
the collection center. (Note: All vehicles, even
non-operating ones, had to be surrendered or the owners faced
prison terms of seven years. End Note.)

4. (C) We spoke to politicians, pastors, Buddhist abbots, and
local entrepreneurs who had all lost vehicles. Some seemed
resigned over their loss, while others were very unhappy with
the government. According to local sources, over 1,400
vehicles were surrendered in Pa-an town. One monastery lost
four monastery-owned vehicles, plus another 42 vehicles that
supported its community projects. Another monastery lost 49
cars, while an abbot who is closely aligned with the
Democratic Karen Buddhist Army (DKBA) reportedly lost 109
vehicles. An entrepreneur told us that he lost four vehicles
and his investment of over $6,000. A pastor also had to
surrender four vehicles.

5. (U) Most people used their vehicles for engaging in
business activity, so they feel that without their vehicles
the local economy will slump. The loss of vehicles may have
a similar impact that banning poppy production had on poor
farmers in areas of Shan State. Others feel that community
development activities will also suffer, particularly
projects that helped bus children to school.

6. (U) Although many people have had to surrender their
vehicles, and the government denied a last minute appeal by
churches and monasteries to be allowed to keep theirs, there
are still many unregistered vehicles operating in Pa-an area.
We saw several sedans and busses operated by the DKBA plying
the same roads that we traveled. Therefore, it appears that
the government has made concessions to some organizations.

7. (U) Comment: It is unclear what the GOB will do with the
thousands of used vehicles that have been confiscated around
the country. One source speculated that the GOB may
distribute them among government agencies or officials, or
perhaps dismantle them and sell the parts on the market. If
government officials keep them and drive them around, it will
likely fuel further resentment against the government among
the local populace. End Comment.