Transnational Crime Durgs and Security in Eas Asia

Transnational Crime, Drugs, and Security in East AsiaAuthor(s): Alan DupontSource: Asian Survey, Vol. 39, No. 3 (May - Jun., 1999), pp. 433-455Published by: University of California PressStable URL: http://www.jstor.org/stable/3021207 .

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TRANSNATIONAL CRIME, DRUGS, AND SECURITY IN EAST ASIA

Alan Dupont

Hardly a day passes without some reference in the elec- tronic and print media to illicit drug trafficking and its nefarious consequences. Unfortunately, many of these accounts play fast and loose with the facts, relying on sensationalist or exaggerated reporting to create the impression of a looming disaster when the evidence presented is less than compelling.1 Skeptics rightly point out that crime and illicit drugs have been associated with the dark side of human nature for millennia. There are lingering suspicions that Western defense and security communities are playing up the threat of narcotics trafficking and transnational organized crime in their search for a post-cold war raison d'etre. However, despite the tendency of the popular press to exaggerate the impact and scope of drug-related crime, a number of scholarly and authoritative studies published over the past decade have argued persuasively that narcotics trafficking is a serious social, political, and security issue for the international community.2

Alan Dupont is Director of the Asia-Pacific Security Program, Strate- gic and Defence Studies Centre, Research School of Pacific and Asian Studies, Australian Na- tional University, Canberra. The author is grateful to Desmond Ball for his comments on an earlier draft and to analysts from the Australian Office of Strategic Crime Assessments for their helpful suggestions and constructive criticisms.

? 1999 by The Regents of the University of California

1. A notable example of the genre is the book written by the journalist Claire Sterling entitled Crime Without Frontiers: The Worldwide Expansion of Organised Crime and the Pax Mafiosa (New London: Little, Brown, and Company, 1994).

2. For a representative selection, see Michael Dziedzic, "The Transnational Drug Trade and Regional Security," Survival 31:6 (November-December 1989); Masayuki Tamura, "The Ya- kuza and Amphetamine Abuse in Japan," Drugs, Law and the State, eds. Harold H. Traver and Mark S. Gaylord (Hong Kong: Hong Kong University Press, 1992); Ivelaw L. Griffith, "From Cold War Geopolitics to Post-Cold War Geonarcotics," International Journal 99 (Winter 1993-94); Rensselaer W. Lee III and Scott B. MacDonald, "Drugs in the East," Foreign Policy, no. 105 (Winter 1996-97); and Peter Chalk, "Low Intensity Conflict in Southeast Asia: Piracy, Drug Trafficking and Political Terrorism," Conflict Studies 305/306 (January and February 1998).

433



434 ASIAN SURVEY, VOL. XXXIX, NO. 3, MAY/JUNE 1999

In 1997, Giorgio Giacomelli, the executive director of the U.N.'s Interna- tional Drug Control Program, issued this sober warning: "All over the world individuals and societies face an illicit drug problem whose scale was unimaginable a generation ago. [A]s drug abuse affects more and more countries, the power of international drug trafficking organizations threatens to corrupt and destabilize the institutions of government."3 Underlying Gia- comelli's concerns are U.N. estimates that between 3.3% and 4.1% of the world's six billion people are regular users of illicit drugs. The annual profits from narcotics trafficking are around US$400 billion, or 8% of international trade.4 Figures must be treated with caution given the difficulty of calculat- ing the value of an industry that is inherently nontransparent. But they do lend credence to claims that a culture of drug taking has entrenched itself globally, enriching and empowering today's drug lords to a degree that is historically unprecedented.

Latin America is the region most closely associated in the public mind with the illicit drug trade, and for good reason. But can the same be said of East Asia's drug traffickers? This is not an easy question to answer. Far less is known about the dynamics of the illicit drug trade in East Asia even though it is home to the infamous Golden Triangle area of Thailand, Burma, and Laos that is the world's largest producer of heroin. Aside from a handful of studies focusing on the narco-politics of the Golden Triangle, there has been surprisingly little analysis of the wider dimensions of the contemporary drug trade in East Asia and its impact on the security of the region.5 Yet, East Asia would appear to have many of the underlying conditions that transnational criminal groups have exploited in Latin America to reap rich financial and political rewards. The region primarily comprises populous, developing states that are prone to systemic corruption, do not give a high priority to the rule of law, and are characterized by weak prudential and banking systems.

This article explores the dynamics and security implications of narcotics trafficking in East Asia and the relationship between drugs and transnational crime. The principal conclusion reached is that the illicit drug trade is emerging as a significant long-term security issue for the region. Narcotics trafficking has grown enormously in sophistication and volume in conjunction with the spread of Asian organized crime in the decade since the end of the cold war, and it will continue to do so in the absence of effective national and regional countermeasures. While the production and consumption of narcotic substances has a long history in East Asia, there are several disturbing new

3. Giorgio Giacomelli, foreword to United Nations International Drug Control Programme, World Drug Report (Oxford: Oxford University Press, 1997), p. 7.

4. World Drug Report, p. 31. These figures are for 1996. 5. The classic account of the Golden Triangle's drug politics is Bertil Lintner, Burma in Re-

volt: Opium and Insurgency Since 1948 (Boulder, Colo.: Westview Press, 1994).



ALAN DUPONT 435

developments that have forced narcotics trafficking onto the regional security agenda for the first time.6 Once primarily a producer of heroin, East Asia has become a major heroin consumer and an emerging market for a new class of designer drugs such as ice and ecstasy. Drug dependency in states with no recent history of drug addiction such as China and Vietnam is rising at an alarming rate. Drug money is distorting regional economies and exacerbating corruption and political instability. Narcotics trafficking is now big business in East Asia. It is one enterprise that shows little sign of being adversely affected by East Asia's economic crisis.

Before proceeding, a brief explanation of the link between transnational crime and security is warranted. It is important to recognize that there is no consensus about the precise meaning of the term "transnational crime," nor is there agreement about the organizational and social dynamics that drive criminal groups and govern their activities.7 There is also considerable debate and contention about the scope and object of security. Should security continue to be defined primarily in terms of the nation state or broadened to include people as well as states, as proponents of the notion of human security maintain? And in what sense has transnational crime gravitated from being a law and order issue to one of international security? For the purposes of this study, security will be defined primarily in conventional, state centric terms.8 While transnational crime encompasses a multitude of different organizational forms and activities, the type of criminal activity most likely to pose a threat to national security is not random or transient. Invariably, it is directed by groups with a recognizable structure, leadership, and established

6. At the Sixth Steering Committee of the second-track Council for Security Cooperation in the Asia Pacific (CSCAP), a decision was taken in Canberra on December 10, 1996, to establish a Study Group on Transnational Crime to consider the security implications for the region of transnational crime, including drug trafficking. The Study Group was elevated to the status of a full Working Group in December 1997.

7. The search for definition and meaning invariably reflects the perspective and the biases of the investigator. Social scientists regard crime primarily as a social phenomenon, economists emphasize organizational imperatives and structures, while anthropologists are inclined to view crime through a cultural lens. See Jay S. Albanese, "Models of Organized Crime," in Handbook of Organized Crime in the United States, eds. R. J. Kelly, K. L. Chin, and R. Schatzberg (Westport, Conn.: Greenwood Press, 1994), p. 78.

8. This is not to argue that transnational crime only affects the security of the state. However, a full exposition of the links between transnational crime and broader notions of security is outside the scope of this article. For a more comprehensive analysis of the conceptual and defi- nitional issues, see Alan Dupont, "New Dimensions of Security," in The New Security Agenda in the Asia-Pacific Region, ed. Denny Roy (Hampshire, England: Macmillan Press, 1997), pp. 31-50; and Phil Williams, "Transnational Criminal Organizations: Strategic Alliances," Wash- ington Quarterly 18:10 (Winter 1995), pp. 57-71.




modus operandi, frequently involving transnational cooperation or collabora- tion.9

The argument that transnational crime has become a serious international security issue rests on four propositions. The first is that transnational criminal activities can pose a direct threat to the political sovereignty of the state because they have the capacity to undermine and subvert the authority and legitimacy of governments. In their search for illicit profits, criminals implic- itly and explicitly challenge the monopoly over taxation and violence traditionally enjoyed by the state10 and work at cross purposes to the aim of good government, which is to protect the rights, property, welfare, and security of its citizens. Fears about the criminal erosion of political sovereignty are echoed in a second and related concern about economic security. Developing states or so-called economies in transition are most at risk because individuals and elites become habituated to working outside the regulatory environ- ment and the rule of law, weakening state capacity.1" Third, the growth in the coercive power of organized crime, if unchecked, has international security implications because large-scale criminal enterprise can subvert the norms and institutions that underpin global order and the society of states. Fourth, transnational crime has an important military and strategic dimension, which can take a number of different forms. Revolutionary political movements and insurgent groups sometimes turn to crime to finance their operations. In the process, their original political goals and motivations become subordinated to their illicit money making activities. Crime's intrusion into the strategic do- main is blurring the distinction between military and law enforcement issues and changing the way security is conceived.12 Criminal activities, particularly those conducted on a large scale and involving significant international cooperation, have moved along the threat continuum toward the traditional concerns of the national security apparatus.13

The Global Narcotics Trade The extent to which the illicit drug trade has begun to impinge on the security concerns of East Asian states cannot be grasped without an understanding of

9. R. T. Naylor, "From Cold War to Crime War: The Search for a New 'National Security' Threat," Transnational Organized Crime 1:4 (Winter 1995), p. 43.

10. Phil Williams, "The Geopolitics of Transnational Organized Crime" (paper presented at the seminar on "Global Security Beyond 2000," University of Pittsburgh, Pennsylvania, Novem- ber 1995), p. 13.

11. Samuel D. Porteous, "The Threat from Transnational Crime: An Intelligence Perspec- tive," Commentary 70 (Winter 1996), p. 4.

12. On this point, see Graham Turbiville, "Operations Other than War: Organised Crime Di- mension," Military Review 74:1 (January 1994), p. 36.

13. John Ciccarelli, "Crime as a Security Threat in the 21st Century," Journal of the Austra- lian Naval Institute (November/December 1996), pp. 43-44.



ALAN DUPONT 437

TABLE 1 Global Illicit Production of Opiates and Cocaine

1990 1991 1992 1993 1994 1995 1996 1997

Opiates Cultivation in

hectares 267,754 286,368 265,216 289,355 283,049 266,478 271,999 265,741 Production in tons 3,830 4,314 4,140 4,693 5,519 4,486 4,389 4,861

Cocaine Cultivation in

hectares 288,400 234,700 190,600 203,900 189,600 194,000 178,300 179,200 Production in tons

(coca leaf) 363,981 386,228 377,114 368,833 315,420 322,042 311,420 302,523

SOURCE: U.N. General Assembly, Special Session on the World Drug Problem, New York, June 8-10, 1998, on the Internet at <http://www.un.org/ga/20special/presskit/pubinfo/info2. htm>. This material also includes consumption figures.

its global dynamics and characteristics. The international drug trade is cen- tered on four main types of drugs. The most widely abused and heavily traf- ficked by volume is cannabis, which is consumed by at least 140 million people worldwide. Around 500,000 tons of cannabis were produced in 1997, including cannabis produced domestically in countries such as the U.S., Can- ada, and Australia. Cannabis is far less potent than cocaine, heroin, or amphetamine-type stimulants (ATS), which if taken on a regular basis are habit forming and can have serious social and health consequences.14

The global consumption of cocaine, heroin, and ATS has grown dramati- cally over the past two decades (see Table 1 and the U.N. website in footnote 15). During the 1980s, cocaine production doubled and heroin production tripled, creating 13 million cocaine addicts and 8 million heroin addicts globally. For example, of 1,000 tons of cocaine produced in 1996, 98% came from Peru, Bolivia, and Colombia, most of it destined for the North American market. Heroin production was estimated to be 330 tons, with 90% being grown in the Golden Triangle and the Golden Crescent (Afghanistan, Iran, and Pakistan) regions and intended for a global market. Seizures by the authorities typically account for only about 10% of annual production.15

14. The trade in illicit drugs has traditionally focused on cannabis, cocaine, and heroin but is increasingly shifting to synthetic stimulants often grouped as ATS. Australian Illicit Drug Re- port 1996-97 (Canberra: Australian Bureau of Criminal Intelligence, December 1997), p. 51; and World Drug Report, p. 39.

15. These statistics are drawn from the United Nations, General Assembly, Special Session on the World Drug Problem, New York, June 8-10, 1998, on the Internet at <http://www.un.org/ ga/20special/presskit/pubinfo/info2.htm>; and World Drug Report, pp. 18, 24-28.




TABLE 2 Global Seizures of Amphetamine-Type Stimulants, 1990-1996

1990 1991 1992 1993 1994 1995 1996

In kilograms 1,380 3,457 3,383 5,124 5,517 5,474 14,566 Index 1985 = 100 39 99 96 146 157 156 415

SOURCE: Ibid. NOTE: Data exclude ecstasy. There are no official estimates of the extent of clandestine ATS manufacture. The proliferation of illicit laboratories suggests a strong increase over the past two decades. Between 1980 and 1994, the number of laboratories detected manufacturing ATS increased more than six fold. Over this period, ATS accounted on average for 38% of all detec- tions of illicit laboratories at the global level.

While opium cultivation and heroin production has stabilized during the 1990s, the use and abuse of ATS have soared, especially in North America, Europe, and East Asia. In the absence of definitive production data, one way to obtain a rough estimate of ATS production is through seizure rates. Global seizures of ATS increased slowly from 281 kilograms in 1976 to 1.4 tons in 1990. Thereafter, the annual growth rate of seizures (excluding ecstasy) av- eraged 48% (see Table 2 and U.N. website in footnote 15), which far ex- ceeded that of any other drug type. In 1996 seizures reached 14.6 tons and there were an estimated 30 million users. The abuse of ATS globally now exceeds that of heroin and cocaine combined.16

Burma: The Heart of the Golden Triangle While Colombia and other Latin American states dominate the cocaine trade, Asia is the leading producer of heroin-an analgesic, narcotic, and potentially addictive drug refined from the cultivation of the immature fruit of the opium poppy, papaver somniferum. The Golden Triangle region of Burma, Thailand, and Laos accounts for 65% of all opium produced illicitly and sus- tains a heroin industry conservatively estimated to be worth at least US$160 billion annually. To put this figure in context, US$160 billion is roughly four times the value of the international arms trade.17

Opium has a long tradition in East Asia, having been first introduced into the region by Arab traders plying their wares in the eighth century and later

16. U.N., General Assembly, Special Session. 17. In 1996, the arms trade was valued at US$39.9 billion. See International Institute for

Strategic Studies, The Military Balance (London: Oxford University Press, International Institute for Strategic Studies, 1997-98), p. 264.



ALAN DUPONT 439

spread by Portuguese merchants from India in the sixteenth century.18 Origi- nally grown in the Chinese provinces of Sichuan, Yunnan, and Guanxi, the opium poppy was carried into northern Thailand, Laos, and Burma by migrat- ing hill tribes for whom opium smoking had become an accepted part of tribal culture. Although the narcotic derivative of the opium poppy was in common use throughout East Asia as a therapeutic drug and for the treatment of a wide range of ailments, drug consumption seldom led to widespread abuse or addiction until the British actively promoted opium use in China at the end of the eighteenth century. 19 Defeated in the so-called Opium Wars of 1839 and 1856, the ruling Qing Dynasty was forced to sign a trade agreement with the British that legalized the cultivation and import of opium. A quarter of a century later, the British forerunners of today's narco traffickers had made opium the world's largest cash crop, creating in the process 15 million opium addicts in China alone.20 Pharmacological advances enhanced the po- tency of opium and aided its spread. In 1898, the German pharmaceutical company Bayer introduced a new analgesic derivative from the opium poppy that was ten times more effective than morphine. It was called heroin.21

Climate, history, and politics have conspired to make the hills of Burma's Shan State the world's preeminent opium-growing region. Isolated from the more densely populated and relatively fertile lowlands of central and southern Burma, the tribal people of the Shan State have found the opium poppy well suited to the cooler climate and poorer soils of the rugged hills that border on China's Yunnan Province and extend into Thailand and Laos. Although cultivated by the highland tribes for most of this century, opium production accelerated in the 1970s under the aegis of separatist militia who used the proceeds from heroin to fund their political and military struggles. Today, the Shan hills provide a sanctuary for a disparate collection of narco insurgent groups that cultivate the opium poppy and transform its narcotic by-product into the immensely profitable heroin. Relatively distant from the traditional locus of state power in Rangoon, and in a country beset with a myriad of insurgencies rooted in the political alienation and economic marginalization of the hill tribes, the drug lords of northeastern Burma have been able to exercise almost absolute power over their narco fiefdoms and

18. Alfred W. McCoy, "Heroin as a Global Commodity: A History of Southeast Asia's Opium Trade," in War on Drugs: Studies in the Failure of U.S. Narcotics Policy, ed. Alfred W. McCoy and Alan A. Block (Boulder, Colo.: Westview Press, 1992), p. 240.

19. Barbara Remberg, "Stimulant Abuse: From Amphetamine to Ecstasy," in World Drug Report, p. 35; Alison Jamieson, "Global Drug Trafficking," Conflict Studies 234 (September 1990), pp. 1-2; and Peter Chalk, "Low Intensity Conflict," pp. 8-9.

20. Gerald L. Posner, Warlords of Crime: Chinese Secret Societies-The New Mafia (New York: Penguin Books, 1990), pp. 62-63.

21. Jamieson, "Global Drug Trafficking," p. 2.




establish the operational security critical to the success of their illicit activities. Without this favorable confluence of climate, geography, political cir- cumstances, and extraordinary profits, it is doubtful whether drug trafficking would have been able to entrench itself in Burma to the extent that it has.

The Shan hills of northeastern Burma are the epicenter of regional opium cultivation, producing around 90% of all heroin exported from the Golden Triangle. The estimated 197 tons of heroin produced in 1997 from the Golden Triangle was enough to "satisfy the U.S. heroin market many times over."22 Opium cultivation in northeastern Burma expanded considerably in the late 1980s and early 1990s before stabilizing in the middle of the decade. In 1988-the year that the Ne Win government collapsed and was replaced by the military-dominated government named the State Law and Order Res- toration Council (SLORC, now known as the State Peace and Development Council or SPDC)-Burma produced 1,280 tons of opium.23 Eight years later, in 1996, opium production had more than doubled to 2,560 (see Table 3) out of the more than 4,000 tons produced globally-enough to make 250 tons of refined heroin.24

The narcotics trade is unusually profitable because the average markup for illicit drugs from source to market is extremely high in absolute terms and relative to most other commodities. In 1992, a single kilogram of heroin that fetched between US$1,200 and US$1,400 immediately after being processed in Burma's jungle laboratories typically would double in price by the time the narcotic reached its first transshipment point in the Thai city of Chiang Mai, triple again in Bangkok, and eventually sell for between US$20,000 to US$60,000 in New York.25 Profits can be even higher still, depending on demand, availability, purity, and exchange rate fluctuations. In 1997, a 700- gram brick of heroin cost a wholesaler in Australia around US$53,000. When adulterated with other chemicals and sold in small .02 gram bags, each bag

22. U.S. Department of State, Bureau for International Narcotics and Law Enforcement Af- fairs, International Narcotics Control Strategy Report, 1997, Washington, D.C., March 1998, on the Internet at <http:/www.state.gov/www/global/narcotics law/1997Lnarc-report/index.html>. The president is required by U.S. law to identify and notify those countries that have been deter- mined to be major illicit drug producers, transit countries, or both. Burma was one of four states denied certification in 1998.

23. "No End to Burma Heroin Flow," Australian, June 11, 1997.

24. U.S. Department of State, Bureau for International Narcotics and Law Enforcement Af- fairs, International Narcotics Control Strategy Report, 1997, Washington, D.C., March 1998, on the Internet at <http:/www.state.gov/www/global/narcotics law/1997Lnarcjreport/index.html>.

25. Edward J. Kelly, "Cooperative Efforts in Combating Drug Trafficking," in Enterprise Crime: Asian and Global Perspectives, eds. Ann Lodl and Zhang Longguan (Chicago: Office of International Criminal Justice with Shanghai Bureau of Justice and East China Institute of Poli- tics and Law, University of Illinois, 1992), p. 151.



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TABLE 3 Estimated Potential Illicit Opiate Net Production, Southeast Asia, 1987-1997 (in tons)

Country 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997

Burma 835 1,280 2,430 2,255 2,350 2,280 2,575 2,030 2,340 2,560 2,365 China - - - - - - - - 25 19 Laos 225 255 380 275 265 230 180 85 180 200 210 Thailand 24 25 50 40 35 24 42 17 25 30 25 Vietnam - - - - - ? _ _ 45

Total 1,084 1,560 2,860 2,570 2,650 2,534 2,797 2,132 2,570 2,809 2,645

SOURCE: U.S. Department of State, Bureau for International Narcotics and Law Enforcement Affairs, International Narcotics Control Strategy Report, 1997 (Washington, D.C., March 1998 and DOS website in footnote 22). NOTE: Figures for Vietnam represent production of opium gum; all other figures represent opium production. The 9% drop in production in 1997 in Burma was principally due to unfavor- able conditions during the growing season.

would retail for about US$22, which meant that one kilogram of heroin on the streets of Sydney was worth more than US$750,000.26

Opium cultivation in the Golden Triangle was first exploited for criminal purposes by remnants of the Kuomintang (KMT) forces who sought sanctuary in Burma from pursuing communist armies in January 1950.27 Many of these KMT soldiers were natives of China's Yunnan Province and ethnically related to the various tribal groups who inhabit the Shan State. These KMT irregulars turned to heroin production and smuggling, initially as a means of survival but increasingly in order to enrich themselves. During the suc- ceeding decades, they formed political and business associations with Chi- nese Triad gangs in Hong Kong, Macau, Thailand, Malaysia, Taiwan, and China itself. The Triads provided the crucial distribution and financial networks for heroin trafficking by the irregulars. The irregulars also established important links with Burma's minority tribal groups, who were engaged in a drawn out and increasingly bloody struggle for independence from the ethnically distinct lowland Burmese who held the reins of power in Rangoon. Over time the highland Shans and related ethnic Chinese tribal groups formed their own armies, funding their political activities and military operations

26. Bertil Lintner, "The Dream Merchants," Far Eastern Economic Review (FEER), April 16, 1998, p. 27.

27. Lintner, Burma in Revolt, p. 92. Opium had been cultivated in the Shan State well before the KMT arrived. In 1936, for example, the region is recorded as having produced eight tons of raw opium, while Laos and northern Vietnam produced 7.5 tons in 1940. McCoy, "Heroin as a Global Commodity," p. 255. McCoy provides one of the best historical analyses of the development of the opium trade in Southeast Asia and China.




from the heroin trade that grew steadily in profitability and sophistication as demand from the affluent West for the drug continued to rise. Opium cultivation was far more lucrative than any of the alternative cash crops and was the only way in which the hill tribes could finance their costly armed struggle against the numerically stronger Burmese Army.

Two men, both ethnic Chinese, dominated the heroin trade in the 1970s and 1980s. The first of these was Luo Xinghan (Lo Hsing Han), head of the once powerful Kokang Self-Defense Forces. He achieved considerable noto- riety in the mid-1970s as Burma's so-called "Opium King" before he was caught and jailed by the Burmese government. At the height of his influence, Luo succeeded in weaving together a complex web of informal understand- ings and tactical alliances with other local drug traffickers, international heroin distributors, foreign intelligence services, and the Burmese military. Luo's tactics were emulated by others, among them the head of the Shan United Army (SUA), Chang Qifu, better known as Khun Sa. Khun Sa as- sumed Luo's mantle as Burma's preeminent narcotics trafficker and established his suzerainty over an extensive drug empire that he protected with a formidable and well-equipped army. In an industry not noted for the longev- ity of its leadership, Khun Sa's tenure as the Golden Triangle's most powerful drug baron was due largely to the protection he received from high-level patrons in Burma's army and Thailand's political and military establishment.28 He also benefited financially and politically from his membership in the Hung Pang Triad, which has close links to a major Sino-Thai business organization, the Yunnanese Association. Khun Sa adroitly exploited kinship ties in China and with Chinese businesspersons throughout Southeast Asia to establish a heroin distribution network that spanned the globe.29

Burma's unsavory reputation as a narco state is also attributable to the internecine conflict between the Burmese government and the now defunct Burmese Communist Party (BCP), which for three decades conducted a vio- lent armed struggle against the central government from its base in the Shan State before eventually disbanding in 1989. The BCP eschewed the drug trade in its formative years but turned to trafficking in the 1970s to finance its war against Ne Win's government. At the height of its involvement in the drug trade, the BCP was a major player in Golden Triangle heroin distribution. Ironically, far from heralding a decline in Golden Triangle heroin production the demise of the BCP actually stimulated it. In 1988, Burma produced 68 tons of heroin from 103,200 hectares of opium production. In

28. Harold 'Tex' Lierly, "The Golden Triangle" (paper presented at the Multinational Asian Organised Crime Conference, sponsored by the Australian Federal Police and the National Crime Authority, November 1994, Sydney, Australia), p. 1.

29. Edward J. Kelly, Jr., "The Southeast Asian Heroin Situation 1991" (paper presented at the Multinational Asian Organised Crime Conference), p. 6.



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FIGURE 1 Burma Harvestable Opium Cultivation, 1990-1997

1 70,000-

165,000-m

160,000-eCa

= 155,000 150,000

145,000

135,000

SOURCE: Ibid from Table 3. NOTE: Serious drought was responsible for low crop yields in 1994.

1991, two years after the BCP's surrender, production had nearly tripled to 181.5 tons of heroin from 161,012 (potential) hectares (see Figure 1).30

The Growth of Burma's Heroin Trade Why has Burmese heroin production remained at such high levels throughout the 1990s? Part of the explanation can be found in the splintering of the BCP into its constituent tribal and ethnic elements after the surrender of its predominantly Burmese leadership. Fearful that these groups might form alliances with disaffected urban youth alienated by the army's crushing of the 1988 pro-democracy movement, Rangoon negotiated a series of understand- ings with the successor groups to the BCP.31 In exchange for promises not to attack government troops or move into government-controlled areas, the Bur- mese military government gave the former insurgents virtual freedom to en- gage in "private" business activities, a euphemism for narcotics trafficking.

A second reason for the rise in Burmese heroin production is that influen- tial members of the SPDC have been co-opted by the drug lords in much the

30. Bertil Lintner, "The Drug Trade in Southeast Asia," Jane's Intelligence Review, Special Report No. 5, April 1995, p. 8.

31. The BCP split into four main groups. The largest was the United Wa State Army (UWSA), which numbered about 8,000-10,000 armed men at the time of the break up. The others were the Myanmar National Democratic Alliance Army (MNDAA), more commonly known as the Eastern Shan State Army (ESSA); the National Democratic Alliance Army (NDAA); and the New Democratic Army (NDA). Ibid., pp. 6-7.




same way as the Colombian and Bolivian governments have been penetrated by the cocaine cartels. Although Ne Win often tolerated poppy cultivation and the associated drug trade in his attempts to divide and conquer the war- ring highland ethnic groups, during his long period in office periodic government military forays into the Kachin and Shan States circumscribed the activities of the drug lords. Ne Win's military successors initially continued the fight and seemed to have broken the back of Burma's narco insurgency when Khun Sa and his forces surrendered in 1996. However, there is growing evidence that Burma's military regime, far from prosecuting the war against drugs, has effectively become part of the nation's drug problem.

In 1997, a U.S. State Department report criticized the SPDC for lacking the resources, the ability, or the will to take serious action against ethnic drug trafficking groups. The same report asserted that 15% of foreign investment in Burma was directed through a company known as Asia World that was owned by relatives of Luo Xinghan. It has been alleged that this company is Burma's "fastest growing and most diversified conglomerate."32 U.S. concerns about Rangoon's tolerance of drug trafficking came to a head at the ASEAN Post Ministerial Meeting in August 1997, when Secretary of State Madeleine Albright castigated the SPDC for permitting drug traffickers to hold prominent political and business positions. Albright alleged that "drug traffickers who once spent their days leading mule trains down jungle tracks are now leading lights in Burma's new market economy and leading figures in its new political order."33

The SPDC has denied allegations of complicity in the drug trade, pointing to the 3,000 casualties the army has suffered since 1988 in the war against drug insurgents.34 Many independent observers believe that the Burmese are serious about fighting the drug trade but essentially are out-resourced by the drug lords who have formidable financial and military assets at their disposal. Others disagree, arguing that regular, organized drug movements in Burma's northern border areas would be impossible without the cooperation of the Burmese Army.35 While the jury is still out on allegations that the SPDC is directly implicated in the drug trade, there is little doubt that the government has permitted and even encouraged known drug traffickers like Khun Sa and the family of Luo Xinghan to establish themselves as leading business figures. Some Burmese Army units also appear to be involved in the heroin and am-

32. Bertil Lintner, "Safe at Home: Drug Lords Are Keeping Their Cash in The Country," FEER, August 14, 1997, p. 18; and Anthony Davis and Bruce Hawke, "Burma: The Country that Won't Kick the Habit," Jane's Intelligence Review, March 1998, p. 29.

33. "U.S. Blasts Burma on Opium Bigwigs," Australian, July 29, 1997. 34. "No End to Burma Heroin Flow," ibid., June 11, 1997. 35. Desmond Ball, "Burma and Drugs: The Regime's Complicity in the Global Drug Trade,"

Asia-Pacific, no. 14 (forthcoming in 1999).



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phetamine trades, and there are growing suspicions that the government has financed much of its arms build up over the past decade from taxes levied on heroin refineries. Economists could not explain US$400 million in foreign financial inflows in the 1995-96 fiscal year, up massively from the previous year's US$79 million. Another US$200 million in defense expenditures by Burma could not be accounted for by official trade. The US$600 million was almost certainly part of the US$700 million to US$1 billion that flows into the Burmese economy from the heroin trade, which equates to the value of all Burma's legal exports.36

Burma is clearly the most egregious example of a drug-tainted regime in East Asia. The growing evidence of collusion between the SPDC and well- known drug traffickers such as Khun Sa does not augur well for the integrity of Burma's political system or international efforts to stem the flow of drugs into the region and beyond. Burma's economic interests and security are also unlikely to be advanced by the operations of the country's drug barons. Any short-term financial benefits that may accrue from the inflow of drug money are likely to be outweighed in the longer term by structural distortions in the Burmese economy, the diversion of capital to nonproductive enterprises, and increasing levels of corruption.

A Growing Regional Security Issue But is Burma merely an isolated, albeit serious, case of an embryonic narco state largely quarantined from the economic life and the security concerns of the wider East Asian region by virtue of its geographical and political isola- tion? The evidence suggests otherwise. Not only is Burma central to a global heroin industry, but other East Asian states also are rapidly being in- corporated into a growing, region-wide market and distribution network for illegal narcotics dominated by Asian criminal organizations.

China is emblematic of this emerging East Asian drug security problem. In 1949, there were estimated to be 20 million drug addicts in China. The opium trade was ruthlessly stamped out by the communists37 to such an extent that in the mid-1960s China proudly proclaimed itself to be a country

36. Bruce Hawke, "Burma's Military Implicated," Pointer (London), October 1998, p. 10; and William Barnes, "Junta in League with Drug Barons," South China Morning Post, October 3, 1998, p. 9. The only other items that could possibly account for a discrepancy of this size would be foreign exchange generated by smuggling jade and precious stones. This is extremely unlikely, however, because most of the jade and stones produced in Burma is now sold on the domestic market, and there has been no major price rise that might account for an increase in foreign exchange of this order. This point is argued persuasively by Bertil Lintner in "Safe at Home." See also Lintner, "Narcopolitics in Burma," Current History 95:605 (December 1996), pp. 432-37.

37. Shi Huanzhang, "China's Approach to Drug Offences," in Enterprise Crime, p. 69.




without narcotics. However, drug trafficking and opium addiction has reemerged as a serious issue since the watershed 1979 modernization campaign began to transform the political and social climate in China. Initially, the drug problem was confined to the provinces adjacent to the Golden Trian- gle and China's Xinjiang Province in the far west of the country. The latter is the natural point of entry for Central Asian drugs. As China's modernization gathered steam, high-grade heroin began to make its appearance throughout the country especially in the larger cities like Beijing and Shanghai as well as Fujian Province. By the mid-1990s, the drug problem had become serious enough to attract the attention of senior Party officials in Beijing. A nation- wide, anti-drug campaign was launched in April 1997, and in May of that year, Ruan Zhengyi, the deputy director of China's Public Security Bureau, acknowledged that "the problem of drugs has returned to China with a ven- geance."38

Initially, the narcotics trade in the People's Republic was mainly the preserve of ethnic Chinese criminal organizations located outside China. They included Sino-Burman growers and refiners, Triad groups in Taiwan and Ma- cao, Sino-Thai distributors and brokers, and Chinese-American importers and wholesalers. Increasingly, however, China's drug problems are homegrown. Hong Kong Triads have extended their operations into southeastern China, while non-Triad mainland gangs are also involved in the trade, operating in- dependently or in conjunction with overseas criminal organizations and con- tributing to the regionalization of the problem. These local gangs are loosely structured and difficult to monitor and prosecute because of their transient nature and the secrecy in which they operate.39 There is evidence to suggest that mainland Chinese crime groups are internationalizing their own operations by moving into neighboring countries. In Russia, for example, ethnic Chinese gangs have established a significant presence in Vladivostok, Khaba- rovsk, and other cities in the Russian Far East.40

In the Philippines, the rising level of drug dependence and the power of local drug lords have become a major social, political, and security issue. A 1997 study conducted by the Philippine National Police Narcotics Group paint- ed a grim picture of the corrosive effects of drugs on the social and political fabric of the nation. The Philippines has 1.7 million drug users; the annual

38. Thomas Fuller and Dan Eaton, "Even the Heroin Trade Has Been Affected by Globaliza- tion," Asia Times, May 27, 1997.

39. For a revealing insight into the organizational structure and modus operandi of so-called "group crime" in China, see Xu Qing Zhang, "Enterprise Crime and Public Order," in Enterprise Crime, pp. 12-13.

40. Mark Galeotti, "Cross-Border Crime and the Former Soviet Union," Boundary and Terri- tory Briefing (Durham, U.K.: University of Durham, Department of Geography, International Boundaries Research Unit, 1995), p. 15.



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turnover of the illegal drug trade in the Philippines was estimated to be US$9.5 billion (251 billion pesos) in 1997, a figure representing more than half that year's national budget. Over 80% of this money is derived from the crystalline stimulant methamphetamine hydrochloride, known locally as sha- bu and abroad as ice. It is manufactured from stimulants brought in from China and Taiwan. The Philippines also produces a substantial quantity of cannabis and other banned drugs locally, valued at US$1.8 billion (46.5 billion pesos) in 1997, and has become a major transshipment point for heroin destined for the West Coast of the U.S. and Europe.41

The Philippines does not, as yet, have a significant domestic heroin problem. In 1997, former President Ramos declared drug addiction to be "a threat to national security," while a senior Philippine senator, Ernesto Herrera, warned that without resolute action the Philippines could be transformed into a narco state. According to Herrera, "Drug money is corrupting and co- opting elements in immigration, customs, the police, and the military. It has even penetrated the ranks of court officers and some well-placed public officials."42 Allegations of connections between drug dealers and members of the Filipino political elite have become a contentious domestic issue, which spilled over into the 1998 presidential campaign. In late 1997, the soon-to- be-elected vice-president, Gloria Macapagal-Arroyo, was forced to defend her- self against politically inspired allegations by her opponents that she had ties to local drug lords.43 Furthermore, some two-dozen Manila policemen were under surveillance in 1997 because of their close association with known drug dealers.44

In virtually every country in the region, corrupt government officials and members of the security forces have been recruited by organized crime. In some cases, corruption has reached into the heart of the state organizations responsible for countering drug trafficking. A last-minute confession by a convicted Lao drug courier in July 1996 led to the arrest and conviction of a number of senior Vietnamese police officers who were found guilty of complicity in the largest and most serious case of drug smuggling ever discovered in Vietnam. Among the 34 charged with drug-related offenses, 12 were police officers and another four were members of the border police tasked with responsibility for guarding Vietnam's northwestern border with

41. Cecilia Quiambao, "Dirty Harry vs. RP Drug Dealers," Jakarta Post, July 28, 1997. West African groups increasingly are involved in the transshipment of heroin through the Philippines to the U.S.

42. "RP Senator Warns of Narco-State," Jakarta Post, August 11, 1997.

43. The allegation was made by an admitted drug trafficker and has not been substantiated. Rigoberto Tiglao, "Explosive Mix," FEER, August 14, 1997, p. 16.

44. Cecilia Quiambao, "Dirty Harry vs. RP Drug Dealers."




Laos.45 In Indonesia a police captain admitted to being part of a local drug syndicate after having been found with 360 ecstasy tablets in his possession.46

While North Korea is not known to have a domestic drug problem, the regime of Kim Jong Ii has distinguished itself in East Asia by being the only government directly implicated in narcotics trafficking. In January 1995, two North Koreans, one of them in possession of a North Korean diplomatic pass- port, were arrested by Chinese police in Shanghai attempting to sell six kilograms of opium. In February 1998, Interpol confirmed that two diplomats from the North Korean Embassy in Mexico had been arrested at Mos- cow s international airport for trying to smuggle 35 kilograms of cocaine through Russia.47 Two months later, another North Korean apprehended by Russian authorities for trying to pass off counterfeit U.S. dollars turned out to be Kil Jae Gyong, the vice-director of the International Department of North Korea's Worker's Party and a senior aide to Kim Jong 11.48 North Koreans have also been involved in some curious criminal alliances. In June 1994, the Russian police announced its largest drug seizure to that time-$2.5 million worth of factory-produced heroin from capitalist Taiwan that was smuggled by North Koreans into Russia's Far Eastern Maritime District.49

Why Has Drug Trafficking Entrenched Itself in East Asia?

The rise in illicit drug production and trafficking in East Asia stems from a complex amalgam of domestic and international causes. In North Korea, the disintegrating economy and increasingly dysfunctional state apparatus have forced North Korean diplomats to supplement their embassy finances by en- gaging in a range of well-documented, government-sponsored criminal activities. In Burma, the diversification of heroin producers into amphetamine production can be seen as a logical extension of existing narcotics trafficking by ethnic Chinese drug lords responding to changing demand.

More generally, the spread of illicit drugs has been facilitated by East Asia's long period of sustained economic growth and the establishment of

45. Andy Soloman, "Drugs Scandal Puts Vietnam on Trial," Asia Times, April 11, 1997. 46. "Police Captain Nabbed for Involvement in Drug Syndicates," Jakarta Post, June 14,

1997. 47. "Interpol: Korean Diplomats Smuggled Cocaine," Reuters, February 18, 1998. 48. "Kim Jong Il's Slush Fund Manager Caught Using Fake Notes in Russia," Korea Times,

May 11, 1998, on the Internet at <http://www.nautilus.org/napsnet/recent-daily-reports/ 05_98_reports/mayl l.html>.

49. Kim Song-Yong, "North Korean Threats of Opium Smuggling and Terrorism Are In- creasing" (in Korean), Choson Ilbo, September 16, 1996; and Galeotti, "Cross-Border Crime," p. 15.



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world-class regional communication and transportation networks. New road, river, and air routes have benefited the drug traffickers, allowing them to move their illicit contraband to international markets with relative ease while preserving the anonymity of the transactions and the identity of the middle- men who play a vital role in laundering drug profits and linking the producers with their distributors and final markets. Regional growth triangles, or what Robert Scalapino calls "natural economic territories,"50 have helped to accel- erate cross-border trade and reduce the border restrictions and choke points that once circumscribed the free flow of drugs between East Asian states. The area encompassing the Golden Triangle has been subsumed within a wider economic development quadrangle that links Burma, Thailand, and Laos with southern China, creating new market opportunities and distribution routes for the opium warlords of Burma and their Triad associates operating out of such regional hubs as Hong Kong and Bangkok. These two cities have effectively become the corporate headquarters and key distribution centers for the traffickers who control East Asia's drug trade.51

Ironically, the economic downturn in East Asia has provided a further boost to the drug trade and organized crime. With unemployment escalating, impoverished and unemployed workers see narcotics trafficking as an economic lifeline. For heroin producers and wholesalers, profits are soaring because the narcotic is usually paid for in Thai baht and then sold overseas in U.S. dollars or other hard currencies.52 The Thai baht has almost halved in value against the U.S. dollar since the economic crisis began in mid-1997; this represents a considerable windfall profit for the narco bosses at the top of the pyramid. Conversely, the decline in the budgets of East Asian governments has reduced the amount of money available for drug interdiction, opium poppy replacement crops, and cooperative regional responses.53

The sophistication and reach of today's Asian drug traffickers are substan- tially greater than during the cold war period. Originally compartmentalized by geography and function, the trafficking of narcotics in East Asia is now more commonly distinguished by strategic alliances and integrated networks that enable organized criminal groups to span East Asia into the global market. One writer has concluded that these networks represent a kind of criminal imperium, "an underground empire as ruthlessly acquisitive and exploit-

50. Robert Scalapino, Asia: The Past Fifty Years and the Next Fifty Years (Commemorative Address on the Silver Anniversary of the Centre for Strategic and International Studies, Jakarta, September 1996), p. 7.

51. Phil Williams and C. Florez, "Transnational Criminal Organizations and Drug Traffick- ing," Bulletin on Narcotics 96:2 (1994), p. 16.

52. Bertil Lintner, "The Dream Merchants," FEER, April 16, 1998, p. 26. 53. Craig Skehan, "Drug Dealers Recruit Foreign Chemists," Sydney Morning Herald, Febru-

ary 27, 1998.




ative as any 19th century imperial kingdom." It maintains its own armies, diplomats, intelligence services, banks, merchant fleets, and airlines, and seeks "to extend its dominance by any means, from clandestine subversion to open warfare."54

Phil Williams has argued that the illicit drug trade and the relationship between drug traffickers and their criminal associates is better understood in more prosaic terms. "They are essentially alliances of convenience based on strictly economic considerations rather than [being] part of a global criminal conspiracy."55 These alliances may be tactical or strategic in nature, or between small as well as large transnational criminal organizations. This is especially the case in East Asia where drug traffickers tend to be more loosely configured and less hierarchically organized than, for example, the Colombian cartels or the Sicilian Cosa Nostra. The popular Western image of an inscrutable oriental crime mandarin orchestrating the activities of a monolithic crime cartel is at variance with the reality of the illicit drug trade in East Asia. This trade is characterized by diverse organizations ranging from highly organized transnational criminal groups to traditional tribal producers, small-scale family business operations, and ephemeral, entrepre- neurial marriages of convenience between individuals and groups. For example, opium grown by groups in Burma will be processed and refined into heroin in their well-equipped and staffed laboratories along the Chinese and Thai borders. The heroin is then passed onto Chinese and Thai ethnic criminal networks for transshipment by heroin brokers in Bangkok, Hong Kong, Ho Chi Minh City, Manila, and Taipei.56

Increasingly, growers are integrating forward into processing and distribution, extending the geographical spread of their operations by taking advan- tage of new heroin distribution routes opening up in southern China, Laos, Cambodia, and Vietnam.57 The majority of heroin produced in the Golden Triangle once was moved almost exclusively overland through Thailand to Bangkok and then by sea from Thailand to Hong Kong, or else from Burma across the southern Chinese provinces of Yunnan and Guangxi to Guang- dong, Hong Kong, and Macao.58 But there are now multiple land, sea, and

54. James Mills, The Underground Empire (New York: Doubleday, 1986), p. 3. 55. Williams, "Transnational Criminal Organizations," p. 67. 56. Richard Shaffer, "The International Characteristics of AOC Groups which Distinguish

Them from Other Criminal Groups" (paper presented at the Multinational Asian Organised Crime Conference), p. 10.

57. Zainuddin Bin Abdul Bahari, "Non-Conventional Threats to Security in the Region- Narcotics" (paper presented at the eighth Asia-Pacific Roundtable, ISIS, Malaysia, Kuala Lumpur, June 1994), p. 2.

58. David Hodson, "Drug Trafficking and Abuse in Hong Kong: A Situation Report," in Enterprise Crime, p. 90. See also Ian Dobinson, "Pinning a Tail on the Dragon: The Chinese and the International Heroin Trade," Crime and Delinquency 39:3 (July 1993), p. 375.



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air routes throughout the region. Burmese heroin is frequently moved from the Shan hills of Burma, through Mandalay, and then to Rangoon, Moulmein, or other seaports for shipment to Singapore and Malaysia.59 Some also trav- els westward across the Bangladeshi border to developing markets in India and Bangladesh. Drug running into Taiwan is more complex. Sometimes heroin is hidden inside fishing trawlers that ply between Fujian Province and ports along Taiwan' s west coast. At other times, drugs are carried in container ships sailing between Bangkok to the port of Kaohsiung and Taipei.60

Laos, which traditionally has been a major producer of opium (the third largest after Burma and Afghanistan), is rapidly becoming a major distribution route with a significant proportion of the drugs making their way across the border to the Vietnamese coastal city of Da Nang for shipment to the U.S. and Australia.61 Ho Chi Minh City has become an important new hub for heroin distribution, some of which is finding its way down the Malay Penin- sula into Malaysia and Singapore. While Singapore's tough anti-drug laws have circumscribed drug use in the city state, traffickers are exploiting Singa- pore's well-developed financial and shipping infrastructure for the transit of narcotics and the laundering of drug profits.62 From Singapore and Malaysia, drugs are moved by boat or air to Brunei, the Philippines, Indonesia, and eventually Australia and New Zealand.63

East Asia as a Major Drug Market One other notable development is the region's metamorphosis from being primarily a producer of drugs for consumers in the West to the world's big- gest market for illegal drugs. Long the primary producer of heroin, two- thirds of the world's heroin users are now in Asia.64 Until the late 1980s, virtually all the heroin from the Golden Triangle went to the U.S. or other non-Asian markets, but today much of it is destined for East Asia. In a wor- rying new trend, with potentially serious long-term security and health consequences for the region, the number of addicts is continuing to rise steeply. Thailand is estimated to have 500,000 heroin addicts, which is more on a per

59. Burma section in International Narcotics Control Strategy Report, 1997. 60. Lintner, "The Dream Merchants," p. 27. 61. The first documented case of Burmese heroin turning up in Laos occurred in August 1991.

Lintner, "The Drug Trade in Southeast Asia," pp. 17-18. See also Simpson, "Worldwide Networking," p. 11.

62. Singapore section in International Narcotics Control Strategy Report, 1997. 63. Yaman Mohamed Ismail Mohamed, "Supply and Trade in Narcotics: Checking Sources

and Distribution-The Malaysian Experience" (paper presented at the Ninth Asia Pacific Round- table, Kuala Lumpur, June 1995), pp. 4, 14.

64. This is according to the U.N. See "Ecstasy Abuse 'a Global Epidemic'," Jakarta Post, June 27, 1997.




capita basis than the U.S., while Burma has between 400,000 and 500,000.65 Narco traffickers respect neither borders nor cultural or religious divides. Relatively developed Muslim Malaysia has around 160,000 addicts, while still impoverished communist Vietnam has at least 200,000.66 Vietnamese police officials estimate that up to 15 tons of heroin are entering Vietnam every year, an increasing percentage of which is finding its way onto the domestic market. In the first quarter of 1998, 1.5 tons of heroin were seized in China, a 58.6% increase on the same period in 1997. The National Narcot- ics Control Commission (NNCC) reported that there were 540,000 registered addicts in China at the end of 1997, 65% of them under 25.67 These figures are extremely conservative and almost certainly understate the real level of dependency.

There has been an even more dramatic rise in the production and consumption of ATS, which seem likely to replace heroin as the future drugs of choice in the region. Some authorities believe that the rise in ATS production may prove to be one of the most important transformations in the history of the narcotics trade. Thailand is the nation most seriously affected by the wave of stimulants now flooding into East Asia. Known locally as ya ba ("madness medicine") and much cheaper than heroin, such stimulants have been readily available in the country for less than a decade but already Thailand has more ya ba users than heroin addicts.68 The country is estimated to have imported between 60 and 80 million amphetamine tablets in 1997, mainly from laboratories in the Golden Triangle and Cambodia.69

There are two main reasons for the popularity of ATS in East Asia. Mod- ernization and rapid economic growth have stimulated the demand for such drugs because of their performance enhancing characteristics, which tempo- rarily increase well-being and productivity. It is no coincidence that the first serious users of ATS in Thailand were long-distance truck and bus drivers. In the early 1990s, students and factory workers began to emulate the habits of these drivers, spreading the drug culture more widely into areas of the

65. These estimates are cited in the Burma and Thailand sections of the International Narcot- ics Control Strategy Report, 1997. If other drugs such as opium, marijuana, and stimulants are added, the number of Thai addicts rises to 1.27 million.

66. Thomas Fuller and Dan Eaton, "Even the Heroin Trade Has Been Affected by Globaliza- tion," Asia Times, May 27, 1997; Yaman, "Supply and Trade in Narcotics," p. 2; and Andy Soloman, "Drugs Scandal Puts Vietnam on Trial," Asia Times, April 11, 1997. These figures almost certainly understate the true dimensions of drug addiction in the region. In Malaysia, for example, some experts believe that the level of drug addiction is four to five times the official figure. See "Ten Deadly Years of Dadah: Why Kuala Lumpur Hasn't Won the War on Narcot- ics," Asiaweek, June 8, 1994, p. 29.

67. Yang Chunya, "Anti-Drug Education Called For," China Daily, June 6, 1998. 68. Lintner, "Speed Demons," FEER, May 8, 1997, p. 28. 69. "Slump Accelerates Speed Trade," Sydney Morning Herald, December 2, 1997.



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community not previously affected. Following a trend first noticed in Europe and North America, designer drugs have become an accepted part of the East Asian disco and party scene, which has contributed to their rapid spread among young, urban users. As demand for the new class of drugs grew, heroin producers in the Golden Triangle began to switch some of their production to ATS. The first ATS laboratories were established only in the early 1990s but they have since proliferated at an alarming rate, particularly along Burma's border with China. Hundreds of chemists have been recruited from Europe to staff these new laboratories and others have sprung up in Vietnam and the Philippines.70

A second reason for the spread of ATS is that they are attractive to producers as well as consumers, although for different reasons. Even though the profit margins are less than for comparable amounts of heroin, since stimulants are sold locally and in volume, they produce a quick return on investment and the manufacturing process is more flexible. The laboratories used for manufacturing ATS are smaller, more mobile, and therefore more difficult to detect than those required for refining heroin. While a major part of the heroin market is geographically distant from the Golden Triangle, necessitat- ing the maintenance of a lengthy and expensive distribution network, the ATS markets increasingly are in East Asia. Most amphetamines are destined for ASEAN countries, with Cambodia and Indonesia emerging as significant new markets for ecstasy; the drugs are also well entrenched in China, Tai- wan, Japan, and South Korea.

Drugs and Security Combating the illicit production and distribution of narcotics has been traditionally regarded as principally a matter for law enforcement agencies. This is demonstrably no longer the case. The globalization of criminal activities and the ability of narcotics trafficking to undermine the political and economic sovereignty of states have already made the illicit drug trade a significant security issue for many states and a primary strategic concern for the most seriously affected.

The indifference of East Asian governments to drug trafficking and production is beginning to change as they contemplate the security implications of their recently acquired status as consumer states. No longer can it be argued that drugs are someone else's problem or the consequence of societal failure in the West. All nations and regions are vulnerable and East Asia particularly so because it still comprises overwhelmingly developing states that have fewer resources at their disposal to fight the drug problem, espe-

70. Craig Skehan, "Drug Dealers Recruit Foreign Chemists," and Australian Illicit Drug Re- port 1996-97, p. 54.




cially during periods of political turmoil and economic recession. If a new, predominantly Asian drug aristocracy entrenches itself throughout the region, the drug problem of one state will become the problem of all. This is perhaps the central message for East Asia's governments.

It is important, however, not to overestimate the threat or misconstrue the nature of the forces that are driving the illicit drug trade in East Asia. With the possible exception of Burma, the situation in East Asia cannot yet be compared with Latin America. The deleterious effects are distributed un- evenly and not all have implications for security. Nevertheless, drug trafficking in East Asia does pose a palpable and growing threat to the political stability, social fabric, and economic well-being of the region. The security effects are felt most acutely at the national and subnational level, but the burgeoning trade in illicit drugs has the capacity to complicate relations between states. The intensive cultivation and widespread availability of traditional plant-based narcotics such as heroin, as well as synthetic ATS, are very much a global phenomenon as is the associated rise in the power, wealth, and reach of organized criminal groups.

While the symbiotic relationship between drugs and organized crime is not new, the scale and corrosive nature of the contemporary drug trade are greater than anything previously experienced by the states of East Asia. There is no one dominant criminal syndicate. If there were, the task of combating illicit drugs would be much easier than it has proved to be. Rather, regional governments are faced with a multiplicity of criminal groups. The shifting alliances between these groups are tactical rather than strategic in nature, forming and dissipating in response to changing market conditions in much the same way as legitimate business enterprises adapt to new commercial realities. In East Asia, the locus of the trade has become more diffuse. As in other afflicted areas of the world, large-scale drug trafficking is circumscrib- ing the capacity of states to govern, corrupting the political process, distorting economic and development priorities, and imposing enormous social and health costs on the region.

In the most seriously affected states such as Burma, national sovereignty is directly challenged by the activities of drug traffickers, who both operate with relative impunity in areas that are effectively outside the control of the government and may employ significant military force to protect and maintain their business interests. Burma's sovereignty arguably is as much under threat from the anti-state imperatives of criminals trafficking in heroin and ATS as it has been from ethnic separatists or insurgents. What's more, these groups are often indistinguishable from one another for all practical purposes. In other parts of the region-particularly southern China, Laos, Vietnam, and Thailand-drug traffickers pose a less severe but still significant threat to the state. Their activities and operations frequently violate the sanctity of the



ALAN DUPONT 455

region's borders and weaken the authority of national governments, especially when carried out with the connivance of officials responsible for security and customs.

For all these reasons, East Asian states need to devote greater resources and policy attention to a problem that is likely to get much worse before it gets any better. The escalation in narcotics trafficking is only one of the many criminal enterprises that are challenging East Asian states' traditional monopoly of power and taxation. It is arguably the most pressing and vexa- tious of an emerging set of transnational security issues, none of which can be adequately addressed without substantial regional cooperation. The establishment of such second-track forums as the Council for Security Coopera- tion in the Asia Pacific Working Group on Transnational Crime is a step in the right direction, but the problem of illegal drugs is of sufficient importance to warrant more direct involvement by Asian governments. While much can be achieved through unilateral action and bilateral cooperation, developing a comprehensive and effective regional response should be a priority task for East Asia's premier multilateral security organization, the ASEAN Regional Forum.



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Transnational Crime Durgs and Security in Eas Asia

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