Drug Control: U.S. Heroin Program Encounters Many Obstacles in Southeast
Asia (Letter Report, 03/01/96, GAO/NSIAD-96-83).

Pursuant to a congressional request, GAO reviewed U.S. efforts to
prevent heroin trafficking, focusing on the: (1) extent to which heroin
poses a threat to the United States; (2) impediments to heroin control
efforts in Southeast Asia; and (3) United Nations Drug Control Program's
(UNDCP) effectiveness in Burma.

GAO found that: (1) Americans consume between 10 and 15 metric tons of
heroin per year, which is at least double the amount consumed annually
during the mid-1980s; (2) heroin use has increased mainly because the
price has dropped significantly and the availability, quality, and
safety of ingestion of heroin have increased; (3) there may be as many
as 600,000 hardcore heroin users in the United States, and the user
population appears to be rising; (4) the key to effective U.S. heroin
control efforts is stopping the flow of heroin from Burma, which is
responsible for about 60 percent of worldwide heroin production; (5) the
United States' continued support of counternarcotics efforts in Thailand
and effective relations with the Thai government have resulted in the
abatement of heroin production and trafficking in Thailand; (6) although
the U.S. has supported UNDCP drug control projects in Burma, projects
have been largely ineffective, since they have been too small in scope,
were inadequately planned, and have not gained support from the Burmese
government; and (7) controlling heroin trafficking from Burma is
difficult because U.S. human rights policy prohibits counternarcotics
assistance to Burma, the Burmese government is not committed to drug
control efforts, heroin-producing regions have different distribution
methods, and China has not adequately cooperated with U.S. law
enforcement in monitoring drug-trafficking routes from Burma.

--------------------------- Indexing Terms -----------------------------

     TITLE:  Drug Control: U.S. Heroin Program Encounters Many Obstacles 
             in Southeast Asia
      DATE:  03/01/96
   SUBJECT:  Drug trafficking
             Drug abuse
             Foreign governments
             International cooperation
             Foreign aid programs
             Foreign policies
             Organized crime
             Law enforcement
             Civil rights
             UN International Drug Control Program
             Hong Kong
             New York (NY)
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================================================================ COVER

Report to Congressional Requesters

March 1996



Drug Control


=============================================================== ABBREV

  CPB - Communist Party of Burma
  DEA - Drug Enforcement Administration
  ONDCP - Office of National Drug Control Policy
  SLORC - State Law and Order Restoration Council
  SUA - Shan United Army
  UNDCP - United Nations Drug Control Program
  UWSA - United Wa State Army

=============================================================== LETTER


March 1, 1996

The Honorable William F.  Clinger, Jr.
Chairman, Committee on Government
 Reform and Oversight
House of Representatives

The Honorable Benjamin A.  Gilman
Chairman, Committee on International Relations
House of Representatives

The Honorable William H.  Zeliff, Jr.
Chairman, Subcommittee on National Security,
 International Affairs, and Criminal Justice
Committee on Government Reform and Oversight
House of Representatives

In response to your requests, this report discusses (1) the extent of
the heroin threat to the United States, (2) the primary impediments
to successful heroin control efforts in Southeast Asia, and (3) the
effectiveness of the United Nations Drug Control Program (UNDCP) in
Burma.  Appendix I addresses the feasibility of stemming opium
production in Burma through direct U.S.  assistance to Burma's Wa
people, the ethnic minority group responsible for most of the opium
poppy cultivation in Southeast Asia. 

------------------------------------------------------------ Letter :1

Like cocaine, heroin is produced outside the United States and is
smuggled into the country illegally.  Trafficking in both drugs has
spawned several criminal industries, including money laundering,
organized crime syndicates, and associated smuggling operations. 
Opium poppies, from which heroin is derived, are grown primarily in
three regions of the world--Southeast Asia, Southwest Asia, and Latin
America.  Heroin is produced in a variety of geographic regions and
trafficking routes are more geographically dispersed than cocaine. 
Unlike most South American cocaine organizations, heroin trafficking
organizations are not vertically integrated\1 and heroin shipments
rarely remain under the control of a single individual or
organization as they move from the overseas refinery to the streets
of the United States.  The principal source of heroin consumed in the
United States is Southeast Asia, most of which originates in one
country--Burma.  According to the Office of National Drug Control
Policy (ONDCP), in fiscal year 1993, the United States spent an
estimated $52.3 million, or about 10 percent of the international
narcotics control budget, on international heroin control activities. 
In fiscal year 1994, ONDCP estimated the United States spent $47.6
million on international heroin control activities or about 14
percent of the international narcotics control budget. 

U.S.  heroin control programs have the following general objectives: 
(1) assisting source countries in attacking opium production and
heroin refining, trafficking, and use; (2) gaining greater access to
opium-producing regions through bilateral and multilateral
initiatives; (3) pooling U.S.  intelligence resources to assist U.S. 
and foreign law enforcement agencies in targeting and arresting key
leaders of major heroin trafficking organizations; and (4) reducing
the flow of heroin into the United States.  Current efforts focus on
Southeast Asia because it is the primary source of heroin smuggled
into the United States. 

\1 Cocaine trafficking organizations control the production,
financing, brokering, exporting, importing, and final distribution of
their product from the beginning of the process to the end.  In
heroin trafficking organizations, separate groups operating in
concert are responsible for each of these phases. 

------------------------------------------------------------ Letter :2

While heroin is not the primary illegal narcotic in use in the United
States, heroin production, trafficking, and consumption are growing
threats.  Since the late 1980s, worldwide production of opium has
nearly doubled, and U.S.  emergency room episodes resulting from
heroin overdoses have increased by 50 percent.  Although U.S.  heroin
control programs in Southeast Asian countries other than Burma have
had some limited success, U.S.  efforts have not reduced the flow of
heroin from the region because producers and traffickers shift
transportation routes and growing areas into countries with
inadequate law enforcement capability or political will.  In 1994,
Burma accounted for about 87 percent of the opium cultivated in
Southeast Asia and approximately 94 percent of the opium production
in the region.  Thus, a key to stopping the flow of heroin from
Southeast Asia is addressing opium production in Burma.  However,
there are several reasons why achieving this objective will be

  Since 1988, the U.S.  government has not provided eradication
     assistance to the Burmese government because it violently
     suppressed a pro-democracy movement, began establishing a record
     of human rights abuses, and refused to recognize the results of
     national elections in 1990 that removed the military government
     from power.  More importantly, because of the complex Burmese
     political environment, U.S.  assistance is unlikely to be
     effective until the Burmese government demonstrates improvement
     in its democracy and human rights policies and proves its
     legitimacy to ethnic minority groups in opium-producing areas. 

  The Burmese government is unable or unwilling to make a serious
     commitment to ending the lucrative drug trade and is unlikely to
     gain the required political support to control most of the opium
     cultivation and heroin-trafficking areas within Burma. 

  While heroin control efforts in Thailand and Hong Kong have
     achieved some positive results, there has been little
     counternarcotics cooperation with China, where important
     regional drug-trafficking routes have recently emerged. 

  UNDCP's crop control, alternative development, and demand reduction
     projects in Burma are too small in scale to significantly affect
     opium poppy cultivation and opium production levels. 

------------------------------------------------------------ Letter :3

ONDCP views heroin as a serious danger to the United States, a threat
second only to cocaine.  ONDCP reports that Americans consume an
estimated 10 to 15 metric tons of heroin annually, an increase from
the estimated 5 tons consumed each year in the mid-1980s.  Heroin
abuse has increased due to the wider availability of high-quality
heroin at low retail or street prices. 

From 1987 to 1994, the estimated worldwide production of opium grew
from 2,242 metric tons to 3,409 metric tons.  The two leading source
countries, Burma and Afghanistan, are responsible for much of this
increase.  For example, in 1994, Burma produced about 2,030 metric
tons of opium, or about 60 percent of worldwide production.  The
Department of State estimates that this amount of opium could be
refined into approximately 169 metric tons of heroin, enough to meet
U.S.  demand many times over.  Although Burma's 1994 production was
limited by adverse weather conditions, a recent survey in Burma
indicates a resurgence in production during the 1995 growing season
that will approach record levels.  Figure 1 shows recent worldwide
trends in opium production in the primary source countries; figure 2
shows the primary opium poppy cultivation areas in Southeast Asia. 

   Figure 1:  Worldwide Opium
   Production by Country, 1987-94
   (in metric tons)

   (See figure in printed

Source:  Department of State. 

   Figure 2:  Southeast Asian
   Opium Cultivation Areas

   (See figure in printed

   Source:  National Narcotics
   Intelligence Consumers
   Committee Report, 1994.

   (See figure in printed

Southeast Asia supplies the majority of the heroin coming into the
United States.  The Drug Enforcement Administration's (DEA) analysis
of heroin seized by law enforcement agencies in the United States
during 1994 shows that 57 percent of the heroin originated from
Southeast Asia--virtually all of which was from Burma.\2 While Latin
American heroin is produced in smaller quantities compared to
Southeast Asia, DEA reports that the availability of South American
heroin in the United States has increased in recent years.  U.S. 
counternarcotics officials are concerned that Colombian
drug-trafficking organizations are ready to further augment their
share of the U.S.  market.  While Southwest Asian countries produce
more opium than those in Latin America, the primary market for
Southwest Asian heroin is Western Europe. 

\2 The results of 1994 seizure data show that 32 percent of the
remaining heroin seized was from South America, 6 percent from
Southwest Asia, and 5 percent from Mexico. 

---------------------------------------------------------- Letter :3.1

In recent years, the purity of heroin available on U.S.  streets has
risen significantly, while prices have fallen.  This combination is a
key indicator of the increasing availability of heroin in the United
States.  In its August 1995 annual report, the National Narcotics
Intelligence Consumers Committee stated that the nationwide average
purity for retail heroin was 40 percent in 1994, a dramatic increase
from the single-digit purity levels of the mid-1980s and much higher
than the 26.6-percent purity level reported in 1991.  In New York
City, the largest importation and distribution center in the United
States for Southeast Asian heroin, average purity levels have risen
from 34 percent in 1988 to 63 percent in mid-1994.  This rise in
overall purity levels has been attributed to the increased
availability of high-quality Southeast Asian and South American
heroin.  While purity levels have risen, heroin prices have fallen to
their lowest levels ever, according to ONDCP.  For example, DEA
reports that heroin prices in New York City dropped from $1.81 per
milligram in 1988 to $0.37 by mid-1994. 

U.S.  counternarcotics officials believe heroin's greater
availability is allowing increased experimentation with a highly
addictive drug.  Moreover, the higher purity levels permit users to
ingest heroin through nasal inhalation versus injection with
hypodermic syringes.  Users find inhalation attractive because it is
easier than injection, and they can avoid contracting the diseases
associated with using needles. 

---------------------------------------------------------- Letter :3.2

The U.S.  heroin user population may be increasing in response to the
increased availability of heroin.  ONDCP estimates there are up to
600,000 hardcore heroin addicts in the United States.  While there is
no evidence suggesting there is an epidemic of new users, reports
indicate that the heroin user population may be gradually increasing. 
Much of this increase is among drug users whose prime drug of abuse
is not heroin.  ONDCP reports that this link is especially strong for
long-term users of "crack" cocaine, who use heroin to counter the
depressive effects of withdrawal from cocaine use.  Furthermore, data
on heroin-related emergency room visits show that the problems
associated with long-term heroin use are also on the rise.  For
example, the annual number of emergency room episodes involving
heroin increased from 42,000 in 1989 to almost 63,000 in 1993, a
50-percent increase.  According to the Substance Abuse and Mental
Health Services Administration, emergency room admissions for heroin
abuse in Baltimore alone increased 364 percent from 1989 to 1993. 

------------------------------------------------------------ Letter :4

The U.S.  international heroin strategy, signed by the President on
November 21, 1995, calls for a regional approach focused on Southeast
Asia and the need to reduce opium production in Burma to stop the
flow of heroin into the United States.  The objectives of the new
strategy remain similar to the earlier objectives.  The
implementation of the Burma portion of the strategy relies on the
development of counternarcotics dialogue with Burmese authorities,
exchange of counternarcotics information, in-country counternarcotics
training, and continued support for UNDCP efforts.  Implementation
guidelines for the new strategy are currently under review and it is
not clear at this point to what extent resources will be dedicated to
support the strategy. 

As noted in the strategy, Burma remains the key to successful
regional heroin control efforts, due to its status as the world's
leading heroin producer.  However, the United States does not provide
significant counternarcotics assistance to Burma because of its
record of human rights abuses and the Burmese military dictatorship
is not equipped to address ethnic disputes that impact on development
of an effective regional program.  Moreover, difficulties in tracking
and interdicting heroin-trafficking organizations have limited the
effectiveness of international law enforcement efforts against the
criminal organizations responsible for moving the drug from Southeast
Asia into the United States.  In addition, poor law enforcement
cooperation between the United States and China demonstrates the
difficulties in interdicting key heroin-trafficking routes.  Despite
these obstacles, U.S.  efforts have achieved some positive results in
countries or territories with sufficient will to implement
counternarcotics activities, such as Thailand and Hong Kong. 

---------------------------------------------------------- Letter :4.1

The key to effective U.S.  heroin control efforts in Southeast Asia
is stopping the flow of Burmese heroin into the United States.  In
1994, Burma accounted for about 87 percent of the opium cultivated in
Southeast Asia and approximately 94 percent of the opium production
in the region.  Most of the heroin smuggled into the United States
originates in Burma's eastern Shan State.  Unless the United States
addresses opium poppy cultivation and production in Burma, U.S. 
regional heroin control efforts will have only a marginal impact. 
However, several factors create substantial difficulties in
establishing effective programs in Burma.  U.S.  policy toward Burma
prohibits providing significant levels of counternarcotics assistance
until the Burmese government improves its human rights stance and
recognizes the democratic process.  In addition, the Burmese
government does not control the majority of opium cultivation areas
within its borders and has not seriously pursued opium reduction
efforts on its own.  Moreover, ethnic insurgent armies that control
most of the opium cultivation and heroin-trafficking areas are
reliant on proceeds from the drug trade and are unlikely to
relinquish this source of income under the current Burmese

      TO BURMA
---------------------------------------------------------- Letter :4.2

In response to Burmese government human rights abuses and
unwillingness to restore democratic government, the United States has
terminated almost all counternarcotics assistance.  In 1988, the
Burmese military violently suppressed antigovernment demonstrations
for economic and political reform and began establishing a record of
human rights abuses, including politically motivated arrests,
torture, and forced labor and relocations.  In 1990, the Burmese
people voted to replace the government in national elections, but the
military regime refused to recognize the results and remained in
power.  Further, for decades, the Burmese government has engaged in
fighting with insurgent armies representing ethnic minority groups
who want autonomous control of territory they occupy within Burma's
borders.  Some of these groups, particularly the Wa people of Burma's
eastern Shan State, control major opium production and heroin
trafficking areas and have fought successfully to maintain their
independence from the central government.  Over the past 8 years, the
military regime has consolidated its control and virtually eliminated
any threat to its power in Rangoon. 

In 1988, the United States discontinued foreign aid to Burma in
response to concerns over human rights abuses by the Burmese
government.  U.S.  assistance had supported the Burmese government's
opium poppy eradication program during fiscal years 1974 through
1988.  In response to the Burmese government's insufficient efforts
to address increasing opium production and heroin-trafficking within
its borders, the President has denied certification for
counternarcotics cooperation since 1989.\3

While the United States does not provide direct counternarcotics
funding support, limited U.S.  assistance has continued through
low-level counternarcotics cooperation between Burmese law
enforcement authorities and DEA.  For example, DEA shares drug
intelligence with the Burmese police on a case-by-case basis and
conducted a basic drug enforcement training seminar in December 1994. 
In August 1995, a training course was offered to Burmese law
enforcement officials on customs screening and interdiction
techniques.  These activities are closely monitored by the U.S. 
embassy in Rangoon to ensure the Burmese government does not
interpret the cooperation as a sign that the United States is
deemphasizing its policy priorities of furthering human rights and

Although law enforcement cooperation is needed to upgrade a poorly
equipped and trained Burmese police force and establish information
sharing, U.S.  counternarcotics officials believe that the key to
stopping the flow of Burmese heroin into the United States is through
crop eradication and alternative development support.  More
importantly, because of the complex Burmese political environment,
U.S.  assistance is unlikely to be effective until the Burmese
government demonstrates improvement in its democracy and human rights
policies and proves its legitimacy to ethnic minority groups in opium
producing areas.  In October 1995, the Assistant Secretary of State
for International Narcotics and Law Enforcement Affairs stated that
in the long run, an accountable Burmese government that enjoys
legitimacy in opium-growing areas will be more willing and able to
crack down on the drug trade. 

\3 Section 490 of the Foreign Assistance Act of 1961, as amended,
sets out requirements for withholding of bilateral foreign assistance
and opposition to multilateral assistance to major illicit
drug-producing countries and major drug transit countries.  These
provisions will not apply in cases in which, under section 490(b),
the President determines and certifies to Congress that either (1)
the country has cooperated fully during the previous year with the
United States or has taken adequate steps on its own to achieve
compliance with the goals and objectives established by the United
Nations Convention Against Illicit Traffic in Narcotic Drugs and
Psychotropic Substances or (2) vital national interests of the United
States require support for such assistance. 

---------------------------------------------------------- Letter :4.3

In furthering its consolidation of power, the Burmese government has
also furthered opium production and heroin-trafficking activities
through cease-fire agreements it has signed with some ethnic
insurgent armies.  According to the Department of State, in 1989, the
Burmese government reached a cease-fire agreement with the United Wa
State Army (UWSA), which controls 80 percent of the opium cultivation
areas in Burma.  In the cease-fire, UWSA agreed to stop its armed
insurgency against the government in exchange for government
acquiescence to Wa control of Wa territory.  According to the
Department of State, the agreement also stipulated that the Wa would
give up their participation in the drug trade and that the Burmese
government would provide developmental support to assist the Wa in
raising their standard of living.  Other minority groups in opium
poppy cultivation areas, such as the Kokang, have reached similar
accommodations with the Burmese government. 

The Burmese government and UWSA have done little to pursue
counternarcotics initiatives.  For example, the government
discontinued its aerial eradication program with the cutoff of U.S. 
assistance in 1988 and has only conducted limited eradication efforts
in areas under its control since that time.  In September 1994, the
government proposed an 11-year plan for developmental assistance that
also included crop eradication in cultivation areas.  However,
according to the Department of State, the plan does not provide
details on how eradication will occur, and the government lacks
adequate resources to support its proposal. 

Since 1988, opium production has nearly doubled in Burma, and UWSA
has become one of the world's leading heroin-trafficking
organizations.  With a force of 15,000 troops, it provides security
for Wa territory while controlling up to 80 percent of Burma's opium
crop.  UWSA relies on the proceeds from its extensive involvement in
the drug trade to fund procurement of munitions and equipment.  UWSA
is involved in heroin refining and maintains contact with an
extensive international drug-trafficking infrastructure to move its
heroin out of Burma and into foreign markets. 

While elements of the Wa political leadership have recently proposed
relinquishing participation in opium poppy cultivation and heroin
trafficking in exchange for direct developmental assistance from the
United States and other potential donors, it is questionable whether
UWSA leadership would seriously consider doing so.  Such a decision
would mean giving up the major funding source that allows it to
maintain its army and protect the Wa people from potential renewed
aggression from the Burmese government.  To equip and maintain its
military force, UWSA depends on funds generated from taxes on opium
that Wa farmers cultivate and produce. 

Without these tax revenues, UWSA would have serious funding problems. 
UWSA has no incentive to reduce its size or end its involvement in
opium trafficking until (1) alternative sources of income are found
to replace opium-generated revenues or (2) the threat of Burmese
government aggression is diminished or removed.  Neither of these
possibilities appears likely to happen. 

The Burmese government has been in armed conflict with another major
heroin-trafficking organization operating within its borders--the
Shan United Army (SUA) located in the Shan State on Burma's border
with Thailand.  SUA has a force of about 10,000 soldiers to defend
extensive heroin-refining facilities and drug-trafficking routes into
Thailand, Laos, and Cambodia.  While SUA claims to be fighting for
Shan State independence, until recently, the Burmese government has
chosen not to accommodate this group as it has done with other ethnic
minority groups.  Instead, the government increased military efforts
against SUA in late 1993.  The conflict has caused significant
casualties on both sides and disrupted SUA drug-trafficking and
-refining operations.  Despite these successes, the operations have
had limited impact on the flow of drugs out of Burma.  According to
Department of State officials, in January 1996, the Burmese army and
SUA ended their armed conflict in accordance with a recent cease-fire
agreement.  The cease-fire will cause temporary disruptions in SUA's
narcotics trafficking operations, but it is difficult to determine
the long-term effects of the agreement on the flow of Burmese heroin. 

---------------------------------------------------------- Letter :4.4

According to DEA, each heroin producing region has separate and
distinct distribution methods that are highly dependent on ethnic
groups, transportation modes, and surrounding transit countries. 
These factors combine to make the detection, monitoring, and
interdiction of heroin extremely difficult.  Heroin-trafficking
organizations are not vertically integrated, and heroin shipments
rarely remain under the control of a single individual or
organization as they move from the overseas refinery to the streets
of the United States.  These organizations consist of separate
producers and a number of independent intermediaries such as
financiers, brokers, exporters, importers, and distributors.  Since
responsibility and ownership of a particular drug shipment shifts
each time the product changes hands, direct evidence of the
relationship between producer, transporter, and wholesale distributor
is extremely difficult to obtain. 

From Southeast Asia, heroin is transported to the United States
primarily by ethnic Chinese and West African drug-trafficking groups. 
According to DEA, the ethnic Chinese groups are capable of moving
multi-hundred kilogram shipments, while the West African groups
usually smuggle heroin in smaller quantities.  Generally, the
shipment size determines the smuggling method.  The larger shipments,
ranging from 50 to multi-hundred kilogram quantities, are secreted in
containerized freight aboard commercial maritime vessels and air
freight cargo.  Smaller shipments are concealed in the luggage of
airline passengers, strapped to the body, or swallowed. 

The impact of U.S.  efforts to interdict regional drug-trafficking
routes has been limited by the ability of traffickers to shift their
routes into countries with inadequate law enforcement capability. 
For example, Thailand's well-developed transportation system formerly
made it the traditional transit route for about 80 percent of the
heroin moving out of Southeast Asia.  However, in response to
increased Thai counternarcotics capability and stricter border
controls, this amount has declined to 50 percent in recent years as
new drug-trafficking routes have emerged through the southern
provinces of China to Taiwan and Hong Kong or through Laos, Cambodia,
and Vietnam (see fig.  3).  Similarly, cooperation between U.S.  and
Hong Kong law enforcement authorities has helped reduce the use of
Hong Kong as a transshipment point for Southeast Asian heroin, but
law enforcement weaknesses in China and Taiwan have encouraged drug
traffickers to shift supply routes into these countries.  Until law
enforcement efforts aimed at heroin-trafficking organizations and
drug-trafficking routes can be coordinated regionally, the flow of
Southeast Asian heroin to the United States will likely continue

   Figure 3:  Primary Southeast
   Asian Heroin-Trafficking Routes

   (See figure in printed

   Source:  DEA.

   (See figure in printed

---------------------------------------------------------- Letter :4.5

Inadequate Chinese cooperation with U.S.  law enforcement also limits
the impact of regional U.S.  heroin control efforts.  DEA has
identified a substantial increase in the use of drug-trafficking
routes for Burmese heroin through China and believes that closer
interaction with Chinese law enforcement authorities is essential. 
DEA has attempted to increase drug intelligence sharing with Chinese
authorities and has conducted a number of law enforcement training
seminars to (1) develop better information about trafficking methods
and routes, (2) augment the number of arrests and seizures, and (3)
enhance Chinese police capabilities.  However, according to DEA
officials, Chinese cooperation has been reluctant and limited.  For
example, the Chinese government requires that DEA funnel all
communications through a single point of contact at the Ministry of
Public Security in Beijing before dissemination to local provincial
police units for action.  The resulting delay slows dispersal of
counternarcotics intelligence, thus making it difficult to undertake
joint investigations and make timely arrests and seizures in China. 
Further, DEA has had difficulty measuring the usefulness of the
information it provides to Chinese authorities because the Chinese do
not provide feedback on whether it has proven accurate.  This lack of
responsiveness may be attributed, at the local level, to insufficient
manpower and to the lack of sophisticated computer and communications
equipment.  Despite the lack of communication, DEA officials believe
Chinese authorities have made some arrests and seizures based on
DEA-provided information.  Finally, the Ministry of Public Security
has not shared information about its independent interdiction
efforts, arrests, and prosecutions, or any counternarcotics
intelligence it has developed that could possibly assist DEA

Furthermore, it is possible that the 1997 transition of Hong Kong
from British to Chinese control will complicate U.S. 
counternarcotics activities in the region.  The four-person DEA
office in Hong Kong is currently responsible for covering
counternarcotics activity in Hong Kong, China, Taiwan, and Macau. 
However, after the 1997 transition, DEA will be required to cover
China from an office at the U.S.  embassy in Beijing.  While the
State Department has approved the opening of a two-person DEA office
at the embassy (one special agent and one administrative assistant),
it is still unclear when the positions will be filled and the degree
of movement that will be afforded DEA personnel within China.  Also,
the Chinese government is unlikely to approve continued regional
coverage of Taiwan from Hong Kong or the office in Beijing.  As a
result, DEA's ability to assist other countries in the region in
interdicting heroin-trafficking routes opened through southern China
and Taiwan may be constrained greatly.\4

\4 According to DEA, an increasing share of Southeast Asian heroin is
imported to the United States through southern China and Taiwan. 
Large-scale heroin shipments, mostly from Burma, move across southern
Chinese provinces to ports on China's eastern and southern coasts. 
From there, the heroin is often shipped to Taiwan by Chinese fishing
trawlers and transferred to Taiwanese vessels for movement to the
United States.  Taiwan also serves as a transshipment point for
heroin brought by fishing trawlers from Thailand, usually by way of
ports in southeastern China. 

---------------------------------------------------------- Letter :4.6

While the impact of U.S.  heroin control efforts on a regional level
in Southeast Asia has been limited, some U.S.  counternarcotics
assistance programs in countries that possess the political will and
capability to engage in counternarcotics activities have achieved
positive results.  In Thailand, for example, we found that sustained
U.S.  support since the early 1970s and good relations with the Thai
government have contributed to abatement of opium production and
heroin trafficking.  Examples of effective U.S.  counternarcotics
activities in Thailand include the following: 

  Through $16.5 million in Department of State supported efforts
     since 1978, the Thai government has reduced opium production
     levels from an estimated 150 to 200 metric tons in the 1970s to
     17 metric tons in 1994.  As a result, Thai traffickers no longer
     produce significant amounts of heroin for export. 

  Successful law enforcement training programs funded by the
     Department of State, and support for Thai counternarcotics
     institutions provided primarily by DEA, have enhanced Thailand's
     drug law enforcement capability.  For example, using U.S. 
     assistance, the Thai police captured
     10 key members of Burma's SUA heroin-trafficking organization in
     November 1994.  The United States also has provided support for
     the establishment of a task force in northern Thailand that
     should foster intelligence analysis and information sharing
     among Thai counternarcotics police organizations. 

  According to U.S.  embassy officials, U.S.  assistance has helped
     Thailand assume a leadership role in regional heroin control
     efforts.  For example, in 1994, the Thai government implemented
     tighter controls at checkpoints on the Burma border.  This
     ongoing effort has restricted heroin-trafficking routes into
     northern Thailand that SUA uses.  The Thai police also have
     sponsored drug law enforcement training for other countries in
     the region. 

In Hong Kong, the professionalism of the Hong Kong police and the
absence of drug cultivation limit the need for U.S.  counternarcotics
assistance, which, to date, has focused on law enforcement support
from DEA.  The sharing of DEA intelligence with Hong Kong law
enforcement authorities has resulted in the seizure of heroin
shipments destined for the United States and the capture of major
drug traffickers.  The U.S.  and Hong Kong governments also have
worked closely to arrange extraditions of drug traffickers to the
United States for trial. 

Moreover, according to DEA, Hong Kong has enacted legislation that
has enhanced counternarcotics cooperation with the United States. 
For example, a 1989 law allows the Hong Kong police, pursuant to
confiscation orders, to seize assets of convicted drug offenders.  A
bilateral agreement also permits seized assets to be shared between
Hong Kong and the United States.  As of August 1995, Hong Kong had
frozen or confiscated approximately $54 million\5 in drug
traffickers' assets under this agreement.  Of this amount, the
seizure of at least $26 million in assets was based on information
that U.S.  law enforcement agencies provided. 

\5 Figures are in U.S.  dollars. 

------------------------------------------------------------ Letter :5

A key element of U.S.  heroin control efforts is the increasing
reliance the United States places on international organizations,
such as the United Nations, in countries where the United States
faces significant obstacles in providing traditional bilateral
counternarcotics assistance.  In Burma, the United States has been a
major donor for UNDCP drug control projects, providing about $2.5
million dollars from fiscal years 1992 through 1994.  However, we
found that the projects have not significantly reduced opium
production because (1) the scope of the projects has been too small
to have a substantive impact on opium production, (2) the Burmese
government has not provided sufficient support to ensure project
success, and (3) inadequate planning has reduced project

UNDCP's project in Burma to reduce opium production created small
"opium-free zones" in certain areas of Wa territory.  According to
U.S.  government and other officials, the opium-free zones are merely
demonstration projects; they will have no substantive impact on opium
production.  The zones are located typically along roadways where it
is easy to verify that opium is not being cultivated.  However, the
officials told us that the farmers simply move their planting sites
to other areas, usually ones that are in more remote areas.  Further,
UNDCP projects have not significantly reduced opium production
because of a lack of significant voluntary or forcible eradication. 

UNDCP has also experienced difficulties in obtaining sufficient
Burmese government support for its projects in the Wa territory,
which has reduced their effectiveness.  As part of the project
agreements, the Burmese government stated it would provide in-kind
resources to support UNDCP activities.  However, UNDCP officials told
us that the Burmese government did not furnish the necessary civil
engineering personnel or basic commodities, such as fuel, that it had
committed to supply.  As a result, UNDCP had to hire outside people
at additional cost.  In addition, the Burmese government has not
always cooperated in granting UNDCP worker access to the project

Additionally, inadequate planning has reduced project effectiveness. 
For example, according to UNDCP officials, aerial surveys of areas
designated for opium poppy crop reduction were not conducted until
March 1995,
18 months after the projects began.  As a result, it will not be
possible to evaluate accurately the effectiveness of the supply
reduction projects because UNDCP did not establish any baseline data
at the outset.  Further, the projects lacked measurable benchmarks,
such as timetables for eliminating opium poppy fields, and plans were
not developed to follow up on eradication efforts to ensure that
opium poppy cultivation had not resumed in areas where opium poppy
plants were destroyed. 

Despite these problems, U.S.  counternarcotics officials believe that
UNDCP projects offer the only alternatives to U.S.-funded opium poppy
crop eradication and alternative development programs in Burma at the
present time.  Further, the projects are allowing UNDCP access to the
Wa.  This access could prove useful if the political environment
within Burma changes and creates new opportunities for implementing
drug control efforts.  In fact, UNDCP is expanding its current
efforts, with a 5-year, $22 million project that will include a
supply reduction component.  U.S.  and UNDCP officials told us that
the supply reduction component will provide for aerial surveys to
determine cultivation levels and establish a baseline to measure
progress during the life of the project.  Further, these officials
believe that the project should include measurable benchmarks for
reduction of opium poppy cultivation in designated areas to ensure
that successful eradication is taking place as well as provisions to
ensure that UNDCP workers have easy access to project areas. 
According to a Department of State official, the United States plans
to provide additional funding over a 5-year period to increase UNDCP
efforts in the region, but the exact amount is still under
consideration.  However, it is doubtful, for reasons already stated,
that these projects will significantly reduce opium production. 

------------------------------------------------------------ Letter :6

ONDCP stated that the report provided an excellent analysis as to why
heroin control is a major foreign policy objective of the United
States and presents an accurate portrayal of the current worldwide
heroin-trafficking situation.  (See app.II for ONDCP comments.) ONDCP
stated that heroin control is a vital national security interest and
that the U.S.  government has to work with undemocratic governments
such as Burma, Afghanistan, China, and Syria in furtherance of
international narcotics control.  The Department of State stated that
ethnic insurgent armies are unlikely to relinquish drug income under
any Burmese government absent strong and effective law enforcement
efforts and these efforts may require large-scale sustained military
operations.  (See app.  III for Department of State comments.) Both
the Department of State and ONDCP noted that congressional pressure
has constrained the U.S.  counternarcotics effort and recently passed
legislation further restricts what the United States could do in
Burma.\6 ONDCP, the Department of State, and DEA (see app.  IV for
DEA comments) provided updated information on an agreement between
the SUA and the Burmese authorities that is, according to the
Department of State, likely to allow SUA to continue its
narcotics-related activities. 

We recognize that the U.S government may at times have to deal with
undemocratic governments.  However, in our review, the issue in
heroin drug trafficking is how effective alternative development, law
enforcement training, and intelligence-sharing activities can be with
the current Burmese government.  As noted in our report, the current
Burmese government does not control most of the opium poppy growing
regions, is unlikely to obtain international support for either
large-scale alternative development or sustained military campaigns
against ethnic armies, and has entered into truce agreements with
ethnic groups allowing them to continue narcotics-related activities. 

With regard to congressional pressure and recently passed
legislation, it should be noted that both the Clinton and Bush
administrations made policy decisions not to provide additional
assistance to the Burmese government in response to its
anti-democratic policies and human rights abuses.  It is unclear what
can be accomplished with assistance to a government that is either
unwilling or unable to take effective action against those ethnic
groups responsible for opium poppy cultivation and heroin production. 
We have attached more detailed comments in appendixes II through IV. 

\6 The Foreign Operations, Export Financing, and Related
Appropriations Act, as referred to in title III of P.L.  104-99 (the
appropriation act for fiscal year 1996 pertaining to a balanced
budget), contains language that would prohibit funds "from being used
for international narcotics control or crop substitution assistance
for the government of Burma."

---------------------------------------------------------- Letter :6.1

We conducted our review from February 1995 through January 1996 in
accordance with generally accepted government auditing standards. 
The scope and methodology for our review is discussed in appendix V. 

Unless you publicly announce its contents earlier, we plan no further
distribution of this report until 30 days after its issue date.  At
that time, we will send copies to the Secretaries of State and
Defense; the Administrator, Drug Enforcement Administration; the
Director, Office of National Drug Control Policy; and other
interested congressional committees.  Copies will also be made
available to other interested parties upon request. 

If you or your staff have any questions concerning this report, I can
be reached on (202) 512-4268.  The major contributors to this report
are listed in appendix VI. 

Jess T.  Ford
Associate Director,
International Relations and Trade Issues

=========================================================== Appendix I

In 1993, Burma's ethnic Wa people proposed to the international
community that the Wa people would cease opium production if they
were to receive direct assistance during a transitional period in
which they would attempt to move away from using opium production as
their primary source of income.  We examined the proposal and found
that the feasibility of providing direct assistance to the Wa people
is limited.  Numerous obstacles would hinder the implementation and
monitoring of assistance programs.  These obstacles include (1) U.S. 
legislation and policy that restrict U.S.  government involvement in
Burma; (2) opposition by the government of Burma; and (3) opposition
by the United Wa State Army (UWSA), which controls the territory
occupied by the Wa people.  Moreover, the ability to overcome these
obstacles will be limited until the government of Burma has access to
all areas, including those that ethnic insurgents control. 

In addition, the United States is currently funding counternarcotics
efforts of the United Nations International Drug Control Program
(UNDCP) in Burma.  However, according to numerous officials, UNDCP's
efforts in Burma are merely showpieces.  They have not had, and will
not have, a substantive impact on reducing opium poppy cultivation
and heroin production because (1) they are small programs relative to
the large size of the problem, (2) the government of Burma does not
have access to many areas in which opium is cultivated, and, (3) UWSA
would not allow UNDCP to reduce opium production substantially. 

--------------------------------------------------------- Appendix I:1

The Wa people are an ethnic minority group of about 1 million poor
subsistence farmers living in an isolated, mountainous area of
eastern Burma--a Southeast Asian nation of about 35 million people
that is slightly smaller than the state of Texas.  The current
regime, known as the State Law and Order Restoration Council (SLORC),
is comprised mostly of ethnic Burmans and has been largely
unsuccessful in its efforts to overcome the Wa insurgency.  SLORC has
had no control over Wa territory since 1989, when it abdicated its
governance after years of fighting and signed a cease-fire agreement
with Wa leaders.  This enabled the Wa people to openly cultivate
opium poppies with no government interference. 

Many Wa farmers cultivate opium poppies and sell their harvest to
drug traffickers.  In recent years, opium grown in Wa territory has
increased dramatically to the point that, currently, the Wa opium
crop is the largest in the world.  The Wa people have cultivated
opium poppies for generations.  Since the signing of the cease-fire
with SLORC, however, the Wa have substantially augmented opium
production.  Specifically, in 1995, over 85 percent of opium poppy
cultivation in Southeast Asia occurred in Burma, and cultivation in
Wa territory accounted for over 80 percent of Burma's cultivation. 
Despite the increase, however, Wa farmers have experienced little, if
any, change in their economic status because Wa leaders strongly
encourage them to grow opium poppies, levy taxes on their harvest,
and use the tax revenues to support UWSA.  Little, if any, tax
revenue has been used for badly needed development. 

Elements of UWSA are comprised of many of the fighting forces of the
former Communist Party of Burma (CPB).  For many years, Communist
China supported CPB, including providing (1) food, mainly rice, that
enabled the Wa people to maintain a subsistence existence with little
dependence on cash generated from opium cultivation and (2) military
equipment that had enabled the Wa people to successfully defend Wa
territory against SLORC.  However, following the collapse of
communism worldwide and the subsequent withdrawal of support for the
CPB by Communist China, UWSA was formed.  UWSA relies on funds
derived from opium trafficking to buy arms and support its forces. 
The withdrawal of support from Communist China, combined with the
SLORC's unfulfilled promises of development assistance, has resulted
in hardships for many of the Wa's subsistence farmers. 

--------------------------------------------------------- Appendix I:2

U.S.  legislation and policy restrict the level of assistance to the
government of Burma.  The restrictions are based largely on the
SLORC's (1) insufficient progress in stopping opium cultivation and
heroin trafficking within its borders, (2) record of human rights
violations, and (3) refusal to install a democratically elected
government.  Before SLORC took over the government of Burma, the
United States was supporting counternarcotics activities in Burma. 
However, we reported in September 1989 that, "eradication and
enforcement efforts are unlikely to significantly reduce Burma's
opium production unless they are combined with economic development
in the growing regions and the political settlement of Burma's ethnic
insurgencies."\1 Regardless of the U.S.  position, SLORC is
nonetheless the recognized government of Burma, and Wa territory is
considered to be part of Burma.  As such, bilateral U.S.  assistance
to the Wa people would require the SLORC's knowledge and consent. 
However, according to U.S.  government officials, SLORC would
strongly oppose direct U.S.  assistance to the Wa people.  The
officials stated that SLORC would react with anger and regard such
direct assistance as a violation of their sovereignty.  Furthermore,
because of U.S.  policy, which strongly criticizes Burma's human
rights violations and SLORC's refusal to install a democratically
elected government, U.S.  counternarcotics assistance efforts in
Burma are nearly nonexistent. 

Because of the common border between Burma and China, U.S. 
assistance to the Wa people could be provided directly into Wa
territory through a cross-border program from China's Yunnan
Province, which borders Wa territory.  The provision of assistance
through China would require the approval of the government of China. 
However, according to U.S.  government officials, the Chinese would
strongly disapprove of such involvement for several reasons.  One of
these reasons is that the United States has not returned a Chinese
drug trafficker witness to China after the Chinese government
released him to U.S.  law enforcement officials for testimony in a
U.S.  domestic drug case.  U.S.  officials want to return him but
cannot until his appeal for asylum in a U.S.  court is resolved.  In
addition, U.S.  government officials stated that it is unlikely that
China would allow the U.S.  government or nongovernmental
organizations' officials to implement programs from a base of
operations in China. 

Wa territory shares no common border with Thailand, and any attempt
to assist the Wa people through Thailand would involve operating in
the southern Shan State area of Burma, which is not under SLORC
control.  However, U.S.  government officials told us that the
government of Thailand would not be willing to risk its sensitive
relations with SLORC by permitting cross-border counternarcotics
assistance to the Wa people through Thailand. 

\1 Drug Control:  Enforcement Efforts in Burma Are Not Effective
(GAO/NSIAD-89-197, Sept.  11, 1989). 

--------------------------------------------------------- Appendix I:3

In 1993, the Wa people proposed to the international community that
they would cease opium production in exchange for receiving economic
and development assistance while the Wa people transitioned from an
opium-based economy to one based on other sources of income. 
According to U.S.  officials, however, the proposal is not a genuine
offer because UWSA, a drug-trafficking army, which has almost
complete authority and control over the people within Wa territory,
would not agree to participate in stopping opium cultivation and
production from taking place.  Without UWSA consent, the proposal
could not be implemented.  As such, the proposal has not been acted

For decades, there was considerable fighting between Burmese
government military forces and CPB, many of whose members were Wa. 
In 1989, the two parties agreed to a 10-year cease-fire.  The
autonomy provided in the agreement has had the effect of allowing the
Wa people to cultivate and process opium without SLORC interference. 
The agreement also includes a SLORC commitment to provide development
assistance in Wa territory.  In exchange, the Wa people agreed to
halt their active insurgency against SLORC.  However, because of the
long-standing dislike and distrust between SLORC and Wa, both parties
have undertaken a large-scale and costly arms buildup.  In order to
equip and maintain its military force, UWSA depends on funds
generated from taxes on opium that is produced by Wa farmers and from
taxes on heroin refining.  Without these tax revenues, UWSA would
have serious funding problems.  Since 1989, opium production in Wa
territory has more than doubled at the encouragement of UWSA in order
to support UWSA forces.  UWSA has no incentive to reduce its size or
end its involvement in heroin trafficking until alternative sources
of income are found to replace drug-generated revenues or the threat
of SLORC aggression is diminished or removed.  Neither of these
possibilities appears likely at the present time. 

(See figure in printed edition.)Appendix II
=========================================================== Appendix I

(See figure in printed edition.)

(See figure in printed edition.)

The following are GAO's comments on ONDCP's letter dated January 25,


1.  We have made appropriate technical changes and the report has
been updated to reflect recent developments in Burma. 

2.  The political realities included the Burmese government's desire
to reach accommodation with ethnic minorities.  As part of this
strategy, the Burmese government entered into a truce agreement with
the Wa and other ethnic minority groups that controlled most of the
opium poppy cultivation regions in Burma.  These factors, as well as
the limited resources of the Burmese government are fully discussed
in this report. 

3.  While the Burmese government has recently entered a cease-fire
agreement with a prominent armed drug-trafficking group, the Shan
United Army (SUA), it is still unclear whether this will
significantly affect the heroin trade in Burma or whether other
groups like the Wa will assume control of SUA production and
trafficking activities.  Moreover, the Burmese government does not
control Wa territory, the location of 80 percent of opium poppy
cultivation in Burma.  Furthermore, we agree that unless the Burmese
government has the economic capability to foster alternative means of
livelihood, it is doubtful that gaining control will, in and of
itself, significantly reduce opium poppy cultivation areas. 

4.  The Burmese government has not made a commitment to end the drug
trade and economic factors alone were not responsible for this lack
of government commitment.  Over the past 8 years, the primary
political objective of the Burmese government was to consolidate its
power in Rangoon.  To accomplish this consolidation, it entered into
truce agreements with ethnic minority groups responsible for opium
cultivation and production resulting in the doubling of opium

5.  Even though ONDCP states this, the U.S.  government continues to
support an expanded UNDCP opium drug reduction program. 

6.  This report and appendix I provides a detailed discussion on the
feasibility of providing direct U.S.  assistance to the Wa people. 

(See figure in printed edition.)Appendix III
=========================================================== Appendix I

(See figure in printed edition.)

(See figure in printed edition.)

The following are GAO's comments on the Department of State's letter
dated January 23, 1996. 


1.  We have made appropriate technical changes to the report and
updated the section discussing SUA to reflect the recent cease-fire
agreement between the SUA and Burmese authorities. 

2.  The reference to decertification has been deleted from the final
report.  We have changed the report to note that executive policy
emphasizing human rights concerns and the Burmese government's
failure to recognize the democratic process were the reasons for
eliminating direct U.S.  counternarcotics funding. 

3.  We understand that this issue is very complex and involves the
willingness of the United States to provide assistance to the Burmese
government and the reaction that various elements of the Wa
leadership would have to a central government that improved its human
rights practices.  Also, the Department of State appears to be
modifying the position it took in testimony before Congress in July
1995 when it stated that the United States will be in a stronger
position to make real gains at reducing the Southeast Asian heroin
threat if there is progress on U.S.  human rights and democracy

4.  While the Burmese government and UWSA have reached a cease-fire
agreement, the long-standing dislike and distrust between the Burmese
government and Wa has resulted in both parties undertaking a
large-scale and costly arms build-up.  It is doubtful that the
current regime will ever be able to convince ethnic minorities that
their autonomy will be secure without having their own military
capability to deter Burmese government aggression.  While a
democratically elected government also poses a potential threat to
autonomy of ethnic groups, it may stand a better chance to reach a
peaceful accommodation with the Wa military, especially if it offers
economic incentives supported by the international community. 

5.  The point of this section is not to describe Chinese
counternarcotics law enforcement efforts, but to outline how their
lack of cooperation in this area affects U.S.  heroin control
objectives in the region.  Bilateral law enforcement cooperation,
including counternarcotics intelligence information sharing, is a key
element of U.S.  efforts.  Without improvements in cooperation, DEA
will encounter significant obstacles in interdicting important
heroin-trafficking routes in southern China and assisting the Chinese
in improving their counternarcotics law enforcement capability. 

(See figure in printed edition.)Appendix IV
=========================================================== Appendix I

The following is GAO's comment on DEA's letter dated January 24,


1.  We have made appropriate technical changes to the report.  We
have also made changes regarding recent developments in Burma based
on discussions with Department of State officials. 

=========================================================== Appendix V

To obtain information for this report, we spoke with appropriate
officials and obtained documents in Washington, D.C., from ONDCP,
DEA, and the Departments of State and Defense.  We also discussed
counternarcotics issues with officials of several non-governmental
organizations and a representative of Burma's Wa people.  At the
Joint Interagency Task Force-West in Alameda, California, we
collected information on Department of Defense support for U.S. 
counternarcotics efforts in Southeast Asia. 

At the U.S.  embassy in Bangkok, Thailand, we interviewed the
Ambassador; Deputy Chief of Mission; and responsible officials from
the Narcotics Affairs, Political, Economic, and Consular Sections;
the Defense Attache Office; DEA; the Federal Bureau of Investigation;
the Immigration and Naturalization Service; the U.S.  Customs
Service; the Agency for International Development; and the United
States Information Service.  To examine and evaluate U.S.  heroin
control efforts, we reviewed documents prepared by U.S.  embassy
personnel and supplemented the information in interviews with U.S. 
officials.  We also met with the Consul General and DEA attache at
the U.S.  consulate in Chiang Mai.  To obtain the views of the Thai
government, we spoke with officials from Thai counternarcotics
agencies, including the Office of the Narcotics Control Board and the
Royal Thai Police Narcotics Suppression Bureau.  To discuss
multilateral drug control efforts in Southeast Asia, we met with
officials from the UNDCP's regional office in Bangkok.  We also
discussed these issues with officials at the Australian and British
embassies in Bangkok. 

At the U.S.  embassy in Rangoon, Burma, we interviewed the Charge
d' Affaires, the Deputy Chief of Mission, and responsible officials
from the Political Section, the Defense Attache Office, DEA, and the
United States Information Service.  To examine and evaluate U.S. 
heroin control efforts, we reviewed documents prepared by U.S. 
embassy personnel and supplemented the information in interviews with
U.S.  officials.  We also discussed the status of multilateral
projects in Burma with appropriate UNDCP officials.  Finally, we met
with officials at the Australian and Japanese embassies in Rangoon to
discuss their counternarcotics programs. 

At the U.S.  consulate in Hong Kong, we interviewed the Consul
General, the Deputy Principal Officer, and responsible officials from
the Political and Consular Affairs Sections, the Defense Liaison
Office, DEA, the Federal Bureau of Investigation, the Immigration and
Naturalization Service, and the U.S.  Customs Service.  To examine
and evaluate U.S.  heroin control efforts, we reviewed documents
prepared by U.S.  embassy personnel and supplemented the information
in interviews with U.S.  officials.  We also met with officials of
the Royal Hong Kong Police and the Hong Kong Customs and Excise
Department to discuss their heroin interdiction and anti-money
laundering activities. 

We provided a draft of this report to officials from the Departments
of State and Defense, the Drug Enforcement Administration, and the
Office of National Drug Control Policy and discussed it with them. 
The Department of State, ONDCP, and DEA provided formal written
comments.  The Department of Defense did not provide written comments
but fully concurred with our findings. 

========================================================== Appendix VI


Louis Zanardi
Allen Fleener
Dennis Richards
George A.  Taylor
Daniel J.  Tikvart
Steven K.  Westley

*** End of document. ***