How Heroin Sales in US Help Burma

Drug money, much of it from heroin trade on American streets, is invested in big projects

Near the central market in Rangoon stands the Traders Hotel, the latest and tallest addition to the Burmese capital's skyline.

To some, the building is a good example of the new vibrancy unleashed by economic reforms, which have transformed this capital from a sleepy ex-colonial backwater to a modestly booming city. For others however, the edifice is also a dark reminder of the power and influence exercised by the country's drug lords.

The Traders project is backed by one of the country's most important businessmen, who is the son of the former "king" of Southeast Asia's opium-producing region known as the Golden Triangle. Investment in the Traders project is alleged to be financed by the family drug business, a charge that carries enough weight that it was reportedly used by the State Department as the reason for denying him a US visa.

Burma's most infamous drug kingpin, Khun Sa, surrendered to Burmese authorities nearly a year ago, along with his rebel Mong Tai Army (MTA). The hope was that his withdrawal would be followed by the capture of additional kingpins and a crackdown on the drug trade in Burma, the world's largest producer of opium and the source for two-thirds of the heroin seized on US streets.

The evidence to date suggests no such development. According to the United Nations International Drug Control Program (UNDCP), a substantial reduction has taken place in the amount of heroin trafficked to and through northern Thailand over the first half of this year from former MTA-held areas. However, a concurrent increase has been registered in the amount of Burmese-produced heroin trafficked into China, reflected in the increasing number of seizures by Chinese authorities along the Burmese border. "As far as trafficking is concerned, nothing is ever static," argues Vincent McClean, head of UNDCP's office in Bangkok.

Burma's market reforms have also allowed money earned from the drug trade to be poured into legitimate businesses. A report issued by the US Embassy in Rangoon last July noted that the value of potential opium exports from Burma may be equal to the country's entire earnings from legally exported goods and services. Repatriation of drug earnings has been facilitated by Burma's policy of welcoming investment without scrutiny of the original source of the funds.

The booming hotel sector may be the most visible example of "narcofinancing" in action in Burma, now called Myanmar. Despite predictions of a short-term glut in Rangoon, new accommodations in the capital continue to be built. Some hotels "are being built with funds from individuals and organizations that have had close ties to opiate-growing or opiate-exporting organizations," the report continues.

Meanwhile, what of Khun Sa, who was indicted in December 1989 by a federal grand jury in New York on 10 drug trafficking counts? The man once described by former US Attorney-General Dick Thornburgh as the "prince of death" appears to be enjoying a comfortable retirement under the care of Burma's military government in a villa in Rangoon.

Whatever deal the generals may have struck with him to secure his surrender remains a mystery, but it appears to rule out extradition to the US.

"If he's being treated like a prisoner, it seems to be first-class treatment," says a diplomat here. "He's not being kept in an unlit, concrete cell."

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