BURMA: 2007 COUNTERNARCOTICS REPORT CARD

UNCLAS SECTION 01 OF 05 RANGOON 000555 SIPDIS SENSITIVE SIPDIS DEPT FOR INL/PC, INL/AAE; INFO EAP/MLS; DEA FOR OF, OFF; TREASURY FOR FINCEN; JUSTICE FOR OIA, AFMLS, NDDS; USPACOM FOR FPA E.O. 12958: N/A TAGS: SNAR KCRM BM SUBJECT: BURMA: 2007 COUNTERNARCOTICS REPORT CARD REF: A. STATE 72494 ¶B. 06 RANGOON 00728 RANGOON 00000555 001.2 OF 005 ¶1. (U) This message responds to ref A request for a report on the Government of Burma's cooperation on counternarcotics efforts, based on benchmarks established in the prior year, in preparation for the FY 2008 certification process. ¶2. (SBU) Begin Text of 2007 Certification Report Card: ¶A. The USG requested that the GOB take demonstrable and verifiable actions against high-level drug traffickers and their organizations, such as investigating, arresting, and convicting leading drug producers and traffickers. Embassy Rangoon Assessment: Limited cooperation. The GOB has to date taken no direct action against the eight leaders of the notorious United Wa State Army (UWSA) indicted in January 2005 in a U.S. federal court, although authorities have taken action against other, lower-ranking members of the UWSA syndicate. Two members of UWSA Chairman Bao Yu Xiang's family were sentenced to death and remain in detention after their arrest and conviction in connection with the September 2005 GOB seizure of a UWSA-related shipment of approximately 496 kgs of heroin bound for China via Thailand. The GOB has not succeeded in convincing the UWSA to stop its illicit drug production or trafficking, although Burmese anti-narcotic task forces stepped up pressure against drug producers and traffickers in 2006 and 2007. The GOB continued to cooperate with DEA and the Australian Federal Police (AFP) to monitor and disrupt the flow of illegal narcotics by the UWSA and associated international trafficking syndicates that have ties throughout Asia, the Pacific region, and North America. In May 2006, a raid coordinated with DEA Rangoon, the Thai Office of Narcotics Control Board (ONCB),and Burma's anti-narcotics task force in eastern Shan State resulted in the dismantling of two active heroin refineries, the arrest of 16 suspects, and the seizure of 340 kilos of heroin, 140 gallons of opium in solution, and 1.08 kilos of opium gum. Also in May 2006, UWSA armed units cooperated with the GOB to dismantle two heroin refineries operated by a rival drug gang in the Eastern Shan state, resulting in a firefight that left eight dead. The UWSA turned over the 25 kgs of heroin and 500,000 methamphetamine tablets seized to the GOB, but retained custody of four prisoners taken alive. A second, and related, investigation from December 2005 to April 2006 culminated in the arrest of 30 subjects and the seizure of $2.2 million in assets and significant quantities of morphine base, heroin, opium, weapons, methamphetamine tablets and powder, crystal methamphetamine (ice),pill presses, and precursor chemicals. In another related operation, ongoing since October 2006, a series of raids directed against heroin refineries in Burma's northern Shan State resulted in the seizure of a number of labs and opium caches. This operation created a rise in the use of violence against narcotics police by drug traffickers, including a May 27, 2007, ambush of a combined Muse ANTF and Burmese Army patrol bringing a large quantity of seized chemicals, drugs and a high-ranking prisoner back from a successful raid on a heroin refinery located in northern Shan State. The subsequent ambush left four ANTF police officers dead and two severely wounded. In 2006, according to official statistics, Burma arrested 4,360 suspects on drug related charges. Burma enhanced its RANGOON 00000555 002.2 OF 005 cooperation with law enforcement agencies in neighboring countries in 2006 and 2007, in several cases leading to the interdiction of cross-border drug transfers and the extradition of traffickers to and from Burma. ¶B. The USG asked the GOB to continue good efforts on opium poppy eradication and provide location data to the U.S. for verification purposes; increase seizures of opium, heroin, and methamphetamine and destroy production facilities; adopt meaningful procedures to control the diversion of precursor chemicals. Embassy Rangoon Assessment: Limited cooperation. For the third consecutive year, the GOB failed to provide sufficient cooperation to support the U.S.-Burma joint opium yield survey, previously an annual exercise. UNODC surveys and imagery assessments showed a significant reduction of poppy cultivation in Burma, particularly in Wa Special Region 2 as a result of an opium ban implemented in June 2005 by local authorities. The long-term sustainability of the ban is questionable in the absence of alternative income sources. The 2006 UNODC survey shows a modest increase in opium poppy cultivation outside of Special Region 2, particularly in eastern and southern Shan State State. The UNODC estimates that 3,970 hectares of opium poppy were eradicated by the Government of Burma in 2006, and that 21,000 hectares remain under opium poppy cultivation, a 36% decline from the 2005 opium survey estimate of 32,800 hectares. Both UNODC surveys and U.S. imagery indicate that poppy cultivation in Burma has declined by over 80 percent in the past decade. The UNODC estimated opium production in Burma to be 315 metric tons in 2006 and the yield average to be 14.7 kg/ha. GOB seizures of illicit drugs increased considerably in 2006 and early 2007, due to closer cooperation with neighboring countries and stepped-up law enforcement investigations. During 2006, Burmese police, Army, and the Customs Service seized approximately 9,864.73 kilograms of raw opium, 192.3 kilograms of heroin, 72.73 kilograms of marijuana, and just over 19.065 million methamphetamine tablets. During the same period, the GOB dismantled seven clandestine heroin laboratories. Burma does not have a domestic chemical industry, but its porous borders and endemic corruption facilitate the diversion and trafficking of precursor chemicals, primarily from China and India, to drug labs in country. The GOB recognizes the threat but has been unable to establish effective countermeasures to date. The GOB's Precursor Chemical Control Board has identified twenty-five chemical substances (including caffeine and thionyl chloride) and prohibited their import, sale, or use, but border controls are regularly evaded. ¶C. The USG urged the GOB to establish a mechanism for the reliable measurement of methamphetamine production and demonstrate progress in reducing production (e.g., destruction of labs) and increasing seizures, particularly focusing increased illicit drug seizures from gangs on the border with China, India, and Thailand. Embassy Rangoon Assessment: Limited cooperation. Declining poppy cultivation has been matched by a sharp increase in the production and export of synthetic drugs. Burma remains a primary source of amphetamine-type substances RANGOON 00000555 003.2 OF 005 (ATS) produced in Asia. While the GOB has significantly increased the quantity of methamphetamine seized, trafficking efforts disrupted, and narcotics labs destroyed in 2006 and 2007, international drug enforcement agencies see indications that ATS production levels continue to rise. The GOB does not have a mechanism for the measurement of ATS production. Traffickers continue to use clandestine labs inside Burma to make ATS, using chemical precursors smuggled from India and China, and to smuggle narcotics across the Thai and Chinese borders for distribution within Thailand and China, and for transshipment, primarily to other Asian countries and Australia. Seizures increased in 2006 and 2007; law enforcement officials netted in excess of 19 million methamphetamine tablets. The GOB destroyed 3 ATS labs in 2006. ¶D. The USG asked the GOB to continue cooperation with China and Thailand and expand cooperation to other neighboring countries, such as India, Laos, and Vietnam, to control the production and trafficking of illicit narcotics and the diversion of precursor chemicals. Embassy Rangoon Assessment: Adequate cooperation. The GOB maintains a regular dialogue on precursor chemicals with India, China, Thailand, and Laos. As a result, India and China have taken steps, including the creation of exclusion zones, to divert precursors away from Burma's border areas. The GOB has also cooperated with these countries on a variety of counterdrug law enforcement issues. GOB cooperation with China and Thailand has been the most productive, yielding arrests, seizures, and extraditions. The law enforcement relationship with India has been less productive. Nonetheless, GOB counterdrug officials meet on a monthly basis with Indian counterparts at the field level at various border towns. Burma and Thailand jointly operate border liaison offices, and in 2007, Thailand added a drug enforcement liaison officer to its embassy staff in Rangoon. Burma and Laos, with the assistance of the UNODC, conduct joint anti-drug patrols on the Mekong River. Burma became a member of the Asia/Pacific Group on Money Laundering in January 2006, and is a party to the 1988 UN Drug Convention. Over the past several years, the Government of Burma has expanded its counter-narcotics cooperation with other states. The GOB has bilateral drug control agreements with India, Bangladesh, Vietnam, Russia, Laos, the Philippines, China, Indonesia, and Thailand. These agreements include cooperation on drug-related money laundering issues. ¶E. The USG requested that the GOB enforce existing money-laundering laws, including asset forfeiture provisions, and fully implement and enforce Burma's money-laundering legislation passed in June 2002. Assessment: Adequate cooperation. In October 2006, the Financial Action Task Force (FATF) removed Burma from the FATF list of Non-Cooperative Countries and Territories (NCCT),although the U.S. maintains the separate countermeasures issued by the Financial Crimes Enforcement Network of the Treasury Department, adopted in 2004 under Section 311 of the 2001 USA Patriot Act, which found the jurisdiction of Burma and two private Burmese banks, Myanmar Mayflower Bank and Asia Wealth Bank, to be "of RANGOON 00000555 004.2 OF 005 primary money laundering concern," and requiring U.S. banks to take special measures with respect to all Burmese banks, with particular attention to Myanmar Mayflower and Asia Wealth Bank. Burma is a party to the UN Convention against Transnational Organized Crime and ratified the UN Convention on Corruption in December 2005 and the UN International Convention for the Suppression of the Financing Terrorism in September 2006. The GOB now has in place a framework to allow mutual legal assistance and cooperation with overseas jurisdictions in the investigation and prosecution of serious crimes. In 2005, the GOB instituted an on-site examination program for financial institutions and closed three major banking institutions (Asia Wealth Bank, Myanmar Mayflower Bank, and the Myanmar Universal Bank) for violations of banking regulations. The banks were allegedly involved in laundering money linked to the illicit narcotic trade. In August 2005, the GOB, with the assistance of DEA, seized assets of the Myanmar Universal Bank and arrested its Chairman, Tin Sein, and sentenced him to death for laundering UWSA drug proceeds. The total value of seized bank accounts, property, and personal assets exceeded $25 million. As a result of the promulgation in 2004 of the Mutual Assistance in Criminal Matters Law (MACML) and subsequent measures to address money laundering and terrorism financing, Burma gained membership in the Asia Pacific Group on Money Laundering in March 2006. In July 2005, Burma and Thailand signed an MOU on the exchange of information relating to money-laundering. With the exception of the Myanmar Universal Bank case, the GOB did not make public the results of its investigations into private banks, nor make explicit connections between the banks and money laundering. Since August 2005, there have been no significant prosecutions of banking or government officials in cases related to laundering of drug money, and administrative and judicial authorities lack resources to investigate and enforce the anti-money laundering regulations at all levels. The government continues to award contracts for construction and other major infrastructure projects to corporations linked to suspected drug traffickers. ¶F. The USG urged the GOB to prosecute drug-related corruption, especially corrupt government and military officials who facilitate drug trafficking and money laundering. Embassy Rangoon Assessment: Inadequate cooperation. Burma ranks next to the bottom of the 2006 Transparency International index of perceived corruption, ahead of only Haiti. Many army and police personnel posted on the border are believed to be involved in facilitating the drug trade. According to the GOB, between 1995 and 2003, officials prosecuted and punished over 200 police officials and 48 Burmese Army personnel for narcotics-related corruption or drug abuse. There is no evidence that the GOB took any similar actions over the past four years. The GOB has never prosecuted a Burmese Army officer over the rank of full colonel. ¶G. The USG asked the GOB to expand demand-reduction, prevention and drug treatment programs to reduce drug use and control the spread of HIV/AIDS. Embassy Rangoon Assessment: Limited cooperation RANGOON 00000555 005.2 OF 005 Although drug abuse levels remain low in Burma compared to neighboring countries, the addict population could be as high as 300,000 abusers, including a growing number of injecting drug users (IDU) and regular consumers of ATS. The HIV epidemic in Burma, one of the most serious in Asia, continues to expand rapidly. UNAIDS estimates that 34 percent of officially reported HIV cases are intravenous drug users, one of the highest rates in the world. The GOB's prevention and drug treatment programs suffer from inadequate resources and a lack of high-level government support. Demand reduction programs are in part coercive and in part voluntary. There are six major drug treatment centers under the Ministry of Health, 49 other smaller detox centers, and eight rehabilitation centers which, together, have provided treatment to about 60,000 addicts over the past decade. Burmese authorities have also collaborated with UNODC in expanding anti-drug campaigns as well as establishing treatment and rehabilitation programs. The GOB's Myanmar Anti-Narcotic Association, for example, has supported the activities of several outreach projects in northern Shan State that treat thousands of addicts annually. Several international NGOs have effective demand reduction programs, including Care International, World Concern, and Population Services International (PSI),but the GOB's promulgation of new guidelines on the activities of international NGOs and UN agencies, first announced in February 2006, created a more uncertain operating environment. Funding limitations mean that many addicts cannot be reached. End Text of 2007 Certification Report Card. VILLAROSA