The contemporary political history of Burma, a former British colony, can be roughly divided into two periods: a first period, which lasted approximately ten years starting from the declaration of independence in 1948, of parliamentary democracy and of democratic socialism under the government of U Nu; a second period, from 1962 to 1988, characterized by the "Burmese way to socialism", under the government of General Ne Win. This second period can be better defined as a military dictatorship, that followed the Chinese and Soviet models in its domestic policy, but was strictly neutral as far as its foreign policy was concerned. The nationalization of the economy, the cessation of the exchanges with foreign countries, and the repression of dissent imposed by the regime of Ne Win, progressively translated into a fundamental stagnation of the Burmese economy and society, which climaxed in the achievement of the official status of least developed country given by the United Nations in 1987.
On the other hand, the regions near the Eastern and North-Western borders of the country have always remained outside of the control of the central administration. These are territories effectively ruled either by ethnic minorities (the Shan, the Kachin and the Karen being the leading three), or by armed formations of the Burmese Communist Party, or by "lords of the war", heirs of the Chinese nationalist military units pushed beyond the border in 1949, or, lastly, by temporary coalitions among several of these groups (20).
This double administrative regime has ultimately brought about a double economic regime. On the one hand there is the official planned economy of the capital, Rangoon, based on inefficient public enterprises, protected by the country's isolation from international competition (the non-alignment of Ne Win's regime with its Chinese and Soviet ideological models earned the country a yearly average of about $400 million in foreign aid, under the aegis of the World Bank).
On the other hand, there is an unofficial economy, based on smuggling (import of consumer goods from China and Thailand, export of gems, timber, opium and heroin), and administered by the ethnic minorities, by the various rebel groups and by the "lords of the war". For example, according to the Karen, a minority which is largely alien to the drug traffic, but on whose territory most of the smuggling with Thailand occurs, in the mid eighties they were making about $65 million a year from a 5% tax on the value of the goods in transit - amounting therefore to about $1,250 million, the equivalent of 20% of Burma's GNP at the time (21).
At the beginning of 1988, however, the Burmese regime appeared to be in complete economic and political bankruptcy. Economically, "the reserves in foreign currency amounted to a mere $12 million; a foreign debt of $5 billion corresponded to about 70% of the GNP" (22). Politically speaking, as of March a series of demonstrations of protest in Rangoon were brutally stifled by the regime, causing thousands of victims. After the resignation of Ne Win in July, and the 17-day attempt to entrust the government to a civilian, the chief of Staff of the armed forces, General Saw Maung, came into power in the name of the State Council for the Reinstatement of Law and Order. The Council's platform included free and democratic elections - elections which actually took place on 27 May 1990, and which were won by the democratic opposition headed by a woman, Mrs Aung San Suu Kyi, with a wide margin (392 seats out of 485 at the national assembly). Immediately after the result of the election, in any case, the State Council p
roclaimed that the transfer of power to the elected representatives would have taken from two to three years. The result was that Mrs Suu Kyi, who was awarded the Nobel Prize for Peace in 1991, lives in a state of house arrest as of 20 July 1989; the opposition has been strongly weakened by mass arrests, including that of 60 elected parliamentarians, and whose leadership now has its seat in the territory controlled by the Karen; the State Council still rules the country.
With the armed rebels, on the other hand, the junta immediately tried to reach an agreement, with the purpose of limiting the alliance with the democratic opposition to the Karens. The task was made easier by internal divisions among the insurrected: the Burmese Communist Party, for example, split into a series of small independent armed groups, lacking any political objective. Both with the communists and with the bulk of the Shan and Kachin armies, the junta has made vague promises of autonomy and especially of a participation in the profits of the smuggling and drug trade. This move enabled it both to increase its financial revenues and to concentrate on enhancing its military force and on repressing the democratic opposition and the Karens.
In parallel, the regime of Rangoon has tried to improve its relations with the Chinese and Thai governments, in order to better control the border traffics and to obtain a free hand from the Thai to prosecute militarily the Karen rebels in the sanctuaries across the border. This implicit agreement with the military in power in Bangkok recently started to waver when the Thai army and air force began to oppose the trespassing of Burmese forces (23). It cannot be ruled out that this change is a result of international pressure, especially on the part of the U.S.: the U.S. administration continues to deny Rangoon the status of co-operative country in the struggle against drugs (24). In early April 1992, two democrats (Patrick Moynihan and Paul Simon) and a republican (Jesse Helms) introduced a resolution at the U.S. Senate, requesting an international weapons embargo against Burma, and the cessation of commercial relations with the U.S. (25); the Association of the South-East Nations (Brunei, Philippines, Indone
sia, Malaysia, Singapore and Thailand) has started to consider the use of sanctions against the Burmese government, while a U.N. envoy visited Rangoon at the request of Bangladesh, after this country was invaded by 210,000 Muslims who had been expelled from Burma (26).
All this pressure seems to have had some effect: Saw Maung has resigned, and has been replaced by his deputy, General Than Shwe; Aung Suu Kyi, still at house arrest, has been granted a visit from her husband for the first time since December 1989; a certain number of political prisoners have been released (27).
In the first three years in which the military junta of Rangoon has had unrestricted freedom, however, the reserves in foreign currency rose to about $900 million, according to an unofficial estimate (28). It seems fairly logical to explain this reprise not only with the revenues of the official concessions for the exploitation of timber and fish, and for the oil surveys (29), but also with the revenues linked to the agreements with the unofficial economy, based on smuggling and traffic of drugs. All this perhaps would have been enough, in the short term, to make up for the interruption of the economic aid from abroad. However, most of these resources have been used to enhance the armed forces, which increased from 180,000 to 280,000 effectives over the last three years, and have been modernized with a new order of arms to China for over $1 billion, $400,000 of which paid in cash (30).
It is hard to estimate the importance of the drug traffic in Burma's current economy, but some considerations can be made. It seems ascertained that the drug traffic played a considerable role in the fast reprise of the currency reserves, for example. On the other hand, the data supplied by the U.S. Department of State (Cf. chart No. 1) show that the production of opium in Burma has trebled in two years' time, from about 800 tons in 1987 to 2,400 tons in 1989. This increase, brought about also by particularly favourable seasons, can only be due to the extension of the crops, and to the agreements with which the junta of Rangoon left the producers-traffickers a free hand. The increase in production translated into an increase in the supply. Thus, in 1991 in the United States "the abuse and traffic of heroin have given signs of increase, due to the increase in the supply and to the purity and lower prices, a consequence of the higher levels of production in South-East Asia" (31); the same opinion has been expr
essed by the U.S. Administration, according to which "key indicators show growing quantities of heroin coming into the United States...seizures have increased, and so has the purity, while the retail price continues to decrease" (32). According to another source, "in 1984 heroin from South-East Asia represented 24% of the market of New York, rising to 35% in 1985, 70% in 1988 and 80% today [March 1991)" (33).
In parallel with the increase, there has been a diversification of the production and of the commercial routes. Until a few years ago, practically all laboratories for the refinement of opium into heroin were close to the Southern border between Burma and Thailand. Heroin then passed from Thailand to the United States and to Europe, often via Hong Kong. More recently, such laboratories proliferated in the region of Kokang, in the Northern part of the country, at the border with the Chinese province of Yunnan. So much that it is estimated that 30% of the heroin production of the golden triangle for export in the United States and in Europe will now pass through China, avoiding more and more the intermediate port of Hong Kong (34).
It is almost impossible, on the other hand, to make a fairly credible estimate of the total sales of the Burmese opium industry. To do this, the following should be ascertained: a) whether the local poppy crops really generate the 2,200-2,400 tons of opium mentioned by the U.S. Department of State, a conclusion which that same source disavows; b) how much of the opium produced is consumed locally, and how much of it is destined to exportation; c) how much of the opium produced is locally refined into heroin, and how much of it is refined elsewhere, especially in Thailand; d) the costs of the refinement process; e) the sale price of the opium and heroin leaving Burma. As far as the latter point is concerned, it should be considered that: i) there surely isn't a single price, but various prices according to the area and to the relations between the producers and the peddlers; ii) there is no way of knowing to what point of the commercial chain the Burmese operators control. Possibly it controls a large portion
in the case of the Chinese route, less in the case of the Thai route, but there are endless possibilities, including joint ventures among operators of various nationalities, with all the possible combinations as to the shares of participation in the profits. Having established all this, it would take to know how much of the capitals generated by this industry comes back into the country or is rather invested elsewhere - if the interest is in knowing its overall importance in the Burmese economy. Regarding this point, it needs to be said that this economy has a twofold nature, in the sense that the official economy no doubt encourages the escape of capitals, whereas the unofficial one offers good opportunities of employment in the neighbouring sector of the smuggling of consumer goods.
Having said this, following are the results reached by combining the hypotheses made by various sources. Such results have a purely indicative value. For example, Bertil Lintner from the Far Eastern Economic Review estimates that the retail price per kilo of heroin n. 4 (the purest one) is $1,500 in the region of Kokang, a price which is five times higher just across the border with China (35). Taking into account those that have been just called joint ventures, we can calculate an average price of $4,000-5,000 per kilo. According to a French expert, Alain Labrousse, $4,000 (23,000-27,000 french francs) a kilo is also the retail price of heroin at the Thai border (36). Lintner again estimated that of the more than 2,000 tons of opium produced in Burma in 1991, "1,300 were available for conversion and export, generating about 90-100 tons of heroin No.4" (37). 100 tons at a price of $4,000 a kilo make $400 million, an amount which is the equivalent of the foreign economic aid which was sent to Burma before 19
89.
It is necessary to repeat that in actual fact, the turnover could be half or double this amount. For example, if a deductive rather than inductive process is adopted, there ensues that the estimates of the profits of Peru (2/3 of the global production of coca leaf, just as Burma in the case of opium) start from a minimum of $750-800 million a year. To reach the perhaps not entirely implausible conclusion that the Burmese profits are similar.
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(20) According to a Burmese author, precisely the presence of a variety of ethnic minorities makes the new name of Myanmar - the name of the majority ethnic group in the local language - given to the country in September 1989, unacceptable. Cf. Mya Maung, "The Burma Road from the Union of Burma to Myanmar", Asian Survey, June 1990.
(21) Cf. David I. Steinberg, "International Rivalries in Burma", Asian Survey, June 1989.
(22) Jonathan Friedland and Bertil Lintner, "A policy of pillage", FEER, 8 August 1991.
(23) Cf. "Thailand Ready to Retaliate", IHT, 17 March 1992; "A new wolf in South-East Asia", The Economist, 21 March 1992.
(24) Without such status, a country cannot have access to almost all types of U.S. economic aid. In 1992, apart from Burma, it was denied also to Afghanistan, Iran and Syria. It has been granted instead to all other producers of drugs, including Lebanon, despite the fact that it has never co-operated with Washington, on the basis of the "vital interest of the U.S. nation". Cf. Louise Fenner, "Coca Crop Down, Opium Poppy Up, Report Says", United States Information Agency - Wireless File, 3 February 1992.
(25) Cf. "Senators Press for Action on Burmese Junta", IHT, 7 April 1992.
(26) Cf. Michael Richardson, "ASEAN Weighs Moves Against Abuses in Burma", IHT, 31 March 1992.
(27) Cf. "Confused signals from Burma", The Independent, 4 May 1992.
(28) Cf. "A policy of pillage", cit.
(29) Regarding this last point, see Jonathan Friedland and Bertil Lintner, "Licensed to drill", FEER, 8 August 1991.
(30) Cf. Bertil Lintner, "Army of occupation" and "Hidden reserves", FEER, 23 May 1991 and 6 June 1991.
(31) INCB 1991 Report, p. 35.
(32) National Drug Control Strategy, cit.
(33) Bertil Lintner, "Triangular Ties", FEER, 28 March 1991.
(34) Ibidem.
(35) Ibidem.
(36) Cf. Alaine Labrousse, La drogue, l'argent et les armes, Fayard, Paris, 1991, p. 237.
(37) "Triangular ties", cit.
