Text: 1999 Narcotics Report on the Asia-Pacific Region

(Burma, Laos, Thailand, Vietnam singled out) (33,200)

Following is the section of the 1999 International Narcotics Control
Strategy Report that covers the Asia-Pacific region. Note the summary
section for Hong Kong has been revised:

(begin text)

Australia

I. Summary

Australia is a committed partner in international efforts to combat
illicit drugs. Australia is a consumer, rather than a producer,
nation. There is no evidence of narcotics destined for the U.S.
transiting Australia. U.S. and Australian law enforcement agencies
have excellent cooperation on narcotics matters. Drug policy is an
issue of increasing importance in domestic affairs in Australia, with
the passage of state legislation allowing for safe heroin injecting
rooms (clean needles provided, no prosecution for drug offenses) in
two Australian cities. Australia is a party to the 1988 UN Drug
Convention.

II. Status Of Country

Cannabis is the most widely used illicit drug in Australia. According
to a 1998 survey for Australian Institute of Health and Welfare
(AIHW), nearly 40 percent of Australians over the age of 14 have used
the drug at least once, with 17 percent having used it in the last 12
months. The survey revealed that 46 percent of all Australians report
having used at least one illicit drug in their lives, with 22 percent
having done so in the previous year.

Heroin use is on the rise in Australia. 2.2 percent of all Australians
reported using heroin in the 1998 AIHW survey, up from 1.4 percent in
1995. Among men aged 20-29, 6.2 percent reported heroin use in 1998,
up from 3.6 percent three years earlier. The state of New South Wales
(NSW) and the Australian Capital Territory (ACT) have passed
legislation allowing for the creation of "safe heroin injecting
rooms," and the state of Victoria is considering similar legislation.
The federal government, after receiving a letter from the UN Narcotics
Control Board, has asked the NSW and ACT governments to delay
implementation while it reviews whether the establishment of such
rooms violates Australia's obligations under the 1988 UN Drug
Convention.

Australia's large banking sector and a freely exchangeable currency
have allowed money launderers to take advantage of Australia. The
government is committed to prevention and enforcement actions against
money laundering and measures such as know-your-customer rules and a
U.S. $6500 cash transaction reporting requirement make laundering
difficult. Nevertheless, wire transfers and travelers checks have been
used to launder drug proceeds through the Australian financial system.

III. Country Action Against Drugs

Policy Initiatives. The government's comprehensive drug strategy
remains the "Tough on Drugs" program first announced by Prime Minister
John Howard in 1997. During the year, two new components of the plan
were announced. The first provided U.S. $13 million in government
grants for community organizations to provide treatment,
rehabilitation, and support to those affected by drugs. The second was
an agreement between the federal government and the governments of the
states and territories to divert many first time drug offenders into
treatment and education programs, giving an early intervention focus
to the strategy. Since its inception, nearly U.S. $190 million has
been spent on implementation of the Tough on Drugs strategy, according
to the Prime Minister's office. Drug policy remains an issue in which
both the federal and state governments have a role. This leads to
variations in laws and punishments across Australia.

Law Enforcement Efforts Australia continued aggressive anti-narcotics
law enforcement activities in 1999. Responsibility for these efforts
is divided between the federal and state governments, with the various
law enforcement agencies generally working well together. There were
two significant heroin seizures during the year. In July, the
Australian Federal Police (AFP) seized 80 kilos of heroin. In October,
the Australian customs service found over 219 kg of heroin in an ocean
container in Sydney harbor on a boat arrived from Indonesia.

In a report issued in March 1999, the Australian Bureau of Criminal
Intelligence (ABCI) reported that between July 1, 1997 and June 30,
1998, federal and state/territory enforcement authorities seized 320.9
kg of heroin and other opiates, 103.1 kg of cocaine, and 182.2 kg of
methamphetamine and other amphetamines.

The AFP has established a number of overseas liaison posts to assist
in narcotics-related investigations. These liaison officers,
particularly those in the Pacific Island nations, also assist local
law enforcement agencies in training and institution building. The
AFP, both in country and overseas, has a close working relationship
with U.S. Agencies such as DEA and FBI.

Corruption. The Australian government is vigilant in its efforts to
prevent narcotics related corruption. There is no information of any
senior official of the government facilitating the production or
distribution of illicit drugs or aiding in the laundering of proceeds
from such activities.

Agreements And Treaties. A mutual legal assistance treaty between the
U.S. and Australia entered into force on September 30, 1999. There is
also a bilateral extradition treaty, under which the U.S. requested
the extradition of two persons for narcotics offenses during 1999.
Both cases are proceeding through the courts. The Australian
government is working through the court system to extradite a
prominent Mexican money launderer back to Mexico pursuant to that
country's request.

Cultivation/Production. The only significant illicit cultivation in
Australia is cannabis, which remains at less than 5000 hectares
throughout Australia. Australia has a significant licit opium crop,
primarily on the island of Tasmania. Controls against diversion of
that crop are excellent.

Drug flow/Transit. Australia has been and continues to be a target for
Southeast Asian heroin trafficking organizations and South American
cocaine traffickers. The U.S. embassy continues to monitor the
possibility of these drugs transiting Australia to the U.S., but to
date there has been no information that this is occurring.

IV. U.S. Policy Initiatives And Programs

U.S. Policy Initiatives. The primary USG counternarcotics goals in
Australia remain looking for signs of traffic from Australia to the
U.S. and providing mutual assistance and sharing intelligence in an
effort to disrupt and dismantle international trafficking
organizations. The cooperation between U.S. and Australian authorities
in achieving these goals is excellent.

The Road Ahead. Australia shows no sign of lessening its commitment to
the international fight against drug trafficking, particularly in
Southeast Asia. The U.S. can expect to enjoy excellent bilateral
relations with Australia on the counternarcotics front and the two
countries should work well together in UNDCP and other multilateral
fora.

Brunei

I. Summary

Brunei Darussalam does not produce narcotic drugs, and does not
consume them in significant quantities. Drug-related problems are
relatively minor. There are no indications that Brunei is being used
for major transshipment of illegal drugs or for money laundering. The
Brunei government has a vital, proactive anti-drug program led by the
Narcotics Control Bureau (NCB). The Brunei government actively
participates in regional activities and multilateral anti-drug fora
and has made substantial progress in strengthening laws pertaining to
narcotics-related crime. Brunei is a party to the 1988 UN Drug
Convention. Contact and cooperation with regional U.S. Drug
Enforcement Agency (DEA) officials has been positive.

II. Status Of Country

The quantity of illegal drugs coming to or transiting Brunei is
relatively small. Brunei authorities report there is no evidence of
drug syndicates operating in the country. Drugs that enter Brunei are
smuggled in by air, at its single international airport; in vehicles,
crossing Brunei's several border checkpoints; by water, from the
nearby Malaysian states of Sabbah and Sarawak; or through illegal
jungle entry points. Most illegal narcotics shipments move through
Brunei between the Malaysian states of Sabah and Sarawak, but some of
them inevitably stay and are consumed locally.

Crystal methamphetamine, marijuana (cannabis), and heroin are the
drugs of abuse of choice in Brunei. In 1999 Brunei authorities noted
an increasing presence of methamphetamine, a slight reduction in
cannabis, and a drop in the use of heroin to almost zero. There is no
evidence of cocaine traffic or use in Brunei.

III. Country Actions Against Drugs in 1999 

Law Enforcement. Brunei's Narcotics Control Bureau (NCB), which leads
the country's counternarcotics efforts, is well-funded. Its staff is
trained and dedicated, professional and, although small, they
efficiently perform investigative and enforcement activities.
Cooperation between the NCB, police, customs, and other agencies
involved in counternarcotics is excellent.

Brunei vigorously prosecutes those arrested for narcotics offenses.
Like its neighbors, Malaysia and Singapore, Brunei has a
well-publicized death penalty for possession of heroin for the purpose
of trafficking (more than 30 grams), for marijuana (more than 600
grams), for cocaine (more than 40 grams), and most recently for
possession and trafficking in methamphetamine (more than 250 grams).
One drug dealer was convicted and put to death in 1996, and in
November 1999 another was sentenced to death. As in Malaysia and
Singapore, this tough policy on drugs appears to have a significant
deterrent effect.

Policy Initiatives. Asset forfeiture laws are used in Brunei's
drug-related cases. Money laundering legislation was still undergoing
legal review in late 1999, but the Brunei government announced that a
law would be put into place soon. Anticipating such a law, in 1999
Brunei authorities initiated a cooperative effort with regional money
laundering experts.

Brunei participates in ASEAN and other regional anti-drug fora, and
regularly cooperates with the Malaysian government in counternarcotics
operations along common borders. Brunei drug officials also maintain
regular contact with counterparts in Singapore, Thailand, and
Australia.

Agreements and Treaties. There are no bilateral law enforcement
treaties between the U.S. and Brunei. The government of Brunei has no
narcotics agreements with the U.S., but there is excellent ad hoc
cooperation with the regional DEA presence in Singapore. Brunei is a
party to the 1988 UN Drug Convention.

Drug Flow/Transit. The Brunei government appears concerned about
Brunei becoming a transit point for precursor chemicals, but has not
developed a preventive strategy yet. However, to combat drug
smuggling, the Brunei government sponsored a DEA training course for
NCB, customs, postal and local business representatives that focused
on smuggling through courier and postal services.

Demand Reduction. The Brunei government operates one drug
rehabilitation facility, which accommodates approximately 250
(voluntary and involuntary) residents. Recent government focus has
been on demand reduction activities, especially targeting the use of
crystal methamphetamine. In 1999 the Brunei government funded school
and village programs with anti-drug messages geared to 6 to
17-year-old students and their parents.

Corruption. There is no indication of drug-related corruption in
Brunei.

IV. U.S. Policy Initiatives And Programs. 

Bilateral Cooperation. During 1999 the Narcotics Control Bureau and
police have been attending training courses at the newly created
International Law Enforcement Academy (ILEA) in Bangkok. In September
1999, the DEA Singapore country office conducted the first ever
narcotics training conference in Brunei. Training focused on mail and
parcel interdiction techniques and was presented to representatives
from the NCB, Brunei customs, the Brunei post office, and various
private courier service companies, including Federal Express, DHL,
UPS, and TNT. This training was extremely well received.

Road Ahead. The NCB continues to request further training, including
technical training in a wide range of anti-narcotics law enforcement
techniques. Brunei needs to remain vigilant against the
amphetamine-type stimulant epidemic which has beset the rest of Asia.

Burma

I. Summary

Burma is the world's second largest source of illicit opium and
heroin, with Burmese production exceeded only by that of Afghanistan.
Due in large part to severe drought conditions in poppy growing areas,
production and cultivation continued to decline significantly in 1999
for the third year in a row. In 1999 there were an estimated 89,500
hectares under opium poppy cultivation, down 31 percent from 1998.
This cultivated area could yield up to a maximum of 1,090 metric tons
of opium gum. The opium production figure is 38 percent lower than in
1998 and is less than half of the average amount of production during
the last decade. The government maintained most of its opium
crop-eradication efforts, expanding some of these only slightly.
During 1999, seizures of methamphetamine continued to exceed last
year's record seizures, although opium and heroin seizures were well
below 1998 figures. Burma made its first airport seizures of narcotics
in 1999. The Government of Burma (GOB) made little, if any, effort
against money laundering during the year. While there were cases of
interdiction and arrests of members of some cease-fire groups for
narcotics trafficking, the GOB has been unwilling or unable to take on
the most powerful groups directly. Cease-fire agreements with
insurgent ethnic groups dependent on the narcotics trade involve an
implicit tolerance of continued involvement in narcotics for varying
periods of time. Burma is a party to the 1961 UN Single Convention,
the 1971 UN Convention on Psychotropic Substances, and the 1988 UN
Drug Convention.

II. Status of Country

Burma has been, and continues to be, one of the world's largest
producers of illicit opium. Burmese opium production doubled in 1989,
the year after the State Law and Order Restoration Council (SLORC-the
military junta that now rules Burma under the Name State Peace and
Development Council, or SPDC) took power. Production levels remained
high and stable for several years, but production began to decline in
1997 and dropped significantly in 1998 and 1999. The decline in
potential production in 1999 over 1998 is largely due to drought,
although the drop also reflects the GOB's effort to keep areas out of
opium cultivation as part of its eradication efforts. The U.S.
Government (USG) discontinued most U.S. direct assistance to Burma in
1988 in response to massive human rights abuses.

Burma currently accounts for approximately 80 percent of the total
production of Southeast Asian opium. Most of this supply of illicit
opiates is produced in ethnic minority areas of Burma's Shan State.
Over the past few years, the GOB has increased its presence in this
region, particularly the southern portion of it, an area formerly
under the control of Chang Qifu (Khun Sa). Since 1989, Rangoon has
negotiated cease-fire agreements with most of the drug-trafficking
groups that control these areas, offering them limited autonomy and
development assistance in exchange for ending their insurgencies. The
regime's highest priority is to end insurrection and achieve some
measure of national integration; counternarcotics interests in these
areas are a lesser priority, reflected in the fact that many of the
cease-fire agreements effectively permit the minorities to continue
their narcotics cultivation and trafficking activities. Moreover, the
cease-fire agreements have had the practical effect of condoning money
laundering, as the government encouraged these groups to invest in
"legitimate" businesses as an alternative to trafficking and some
chose this opportunity to sanitize past illicit proceeds with
investments in hotels and construction companies, for example.

The ethnic drug-trafficking armies with whom the government has
negotiated cease-fires (but not permanent peace accords), such as the
United Wa State Army (UWSA) and the Myanmar National Democratic
Alliance Army (MNDAA-Kokang Chinese), remain armed and heavily
involved in the heroin trade. Through cease-fire agreements, the GOB
appears to have given the trafficking armies varying degrees of
autonomy; for example, Burmese troops cannot even enter Wa territory
without explicit permission. Among the top leaders of those ethnic
groups believed by the USG to be involved in the heroin and/or
amphetamine trade are, Peng Jiasheng, and Liu Goushi of the MNDAA; Pao
Yuqiang, Li Zuru, and Wei Xuekang of the UWSA; Mahtu Naw of the Kachin
Defense Army (KDA); Mong Sa La and Yang Maoliang of the Mongko Defense
Army (MDA); and Yawd Serk of the Shan United Revolutionary Army
(SURA), which was formerly part of drug lord Chang Qifu's Mong Tai
Army. Chang Qifu disbanded his army in January 1996 in return for
generous terms of surrender, which allowed him to avoid criminal
prosecution. U Sai Lin (Lin Mingxian) of the Eastern Shan State Army
(ESSA) has been listed in previous years as a major narcotics
insurgent leader, but he has successfully rid his area of opium
cultivation. There are no current, confirmed reports of Sai Lin or the
ESSA still being involved in narcotics trafficking, although it is
likely that ESSA territory is a trafficking route because of its
location along the border with China.

There is reason to believe that money laundering in Burma and the
return of narcotics profits laundered elsewhere are significant
factors in the overall Burmese economy, although the extent is
impossible to measure accurately. Political and economic constraints
on legal capital inflows magnify the importance of narcotics-derived
funds in the economy. An underdeveloped banking system and lack of
enforcement against money laundering have created a business and
investment environment conducive to the use of drug-related proceeds
in legitimate commerce.

Drug abuse-in particular intravenous drug use-is on the rise in Burma
and is accompanied by an alarming spread of the HIV/AIDS virus,
especially in the ethnic minority areas that are the source of the
drugs. HIV/AIDS infection rates in gem and jade mining areas are
particularly high.

In the past four years, as overt military challenges to Rangoon's
authority from the ethnic groups have eased somewhat, the government,
while maintaining its primary focus on state security, has stepped up
its counternarcotics enforcement efforts. The GOB garrisoned troops on
a year-round basis for the first time in the Kokang region during
1997, but it still does not have troops in Wa territory. The MNDAA,
the KDA, and the MDA in Shan State have declared their intention to
establish opium-free zones in territory under their control by the
year 2000; the ESSA has already declared its territory an opium-free
zone. The Wa have announced their territory will be an opium-free zone
by the year 2005.

Ethnic groups have made "opium-free" pledges since 1989, but, with the
exception of the Kachin State and ESSA territory, results have been
limited. In view of the extensive opium cultivation in northern Shan
State, the area of greatest opium density, expanded reduction in
cultivation will require considerable eradication, much greater
law-enforcement, and alternative-development efforts by the
authorities. Such efforts necessitate vastly greater financial
resources than the government has, however. Implementation of such a
program would also require increased cooperation between the
government and the ethnic groups involved in production and
trafficking.

The GOB, for its part, stated that it would support its eradication
efforts with development assistance in the form of infrastructure
improvements and advice on crop substitution. The GOB also requested
USG assistance in verifying whether these groups fulfill their
commitments. The USG has requested additional information to pinpoint
the areas in question. The GOB has promised to provide this
information. Exchange of information on the status of opium
cultivation could then occur during the opium poppy survey carried out
jointly with the GOB on a year-by-year basis. In view of China's long
border with the Wa area, the GOB asked China for assistance in curbing
Wa trafficking. Both countries have established a regular forum for
discussing counternarcotics cooperation.

III. Country Actions Against Drugs in 1999

Policy Initiatives. Burmese counternarcotics efforts in 1999 made
progress with regard to increased methamphetamine and ephedrine
seizures and Burma's first seizures of drugs transiting the airport in
Rangoon. An improved security situation in parts of northern Shan
State permitted the Burmese anti-drug forces to conduct more vigorous
law-enforcement efforts, especially in the Kachin and Kokang regions.
The GOB has continued its cooperation with Japan to plant opium
substitute crops on 14,565 acres. Such efforts must be stepped up, if
they are to have a significant impact on the overall trafficking
problem.

With encouragement from the Drug Enforcement Administration (DEA) and
U.S. Embassies in Rangoon and Bangkok, the Burmese and Thai
governments agreed to undertake joint operations against drug
trafficking along Thailand's northern border with Burma. Operation of
a joint anti-drug task force in Tachilek, Burma and Mae Sai, Thailand,
however, has been hampered by political disharmony between the two
countries.

The Burmese continued to refuse to render drug lord Chang Qifu on
grounds that he had not violated his 1996 surrender agreement. This
agreement reportedly stipulated that if Chang Qifu ended his
insurgency and retired from the drug trade, the GOB would provide him
with security in Rangoon and allow him to conduct legitimate business.
Burmese authorities assert that he will continue to enjoy immunity
from prosecution in Burma or rendition to another country as long as
he does not violate his surrender agreement. This issue remains a
source of friction between Burma and the U.S. The 1988 UN Drug
convention obligates parties, including Burma, to prosecute such
traffickers. GOB officials have stated they would be willing to
prosecute Chang Qifu or his subordinates, if it can be proven that
they have engaged in narcotics trafficking after the surrender
agreement was signed.

The SPDC affirmed its intention to increase its efforts to implement
the ongoing "Master Plan for the Development of Border Areas and
National Races." The plan calls for a program of integrated
development combined with law enforcement aimed at improving living
standards in the ethnic areas and providing viable economic
alternatives to opium cultivation. Few GOB resources have been devoted
to such development projects, however; health, education, and
infrastructure in border areas remain poor. GOB policy is to force the
leaders in the ethnic areas to spend their own revenues, including
from the drug trade, on social and physical infrastructure. The GOB's
ability to continue or expand its opium eradication efforts is likely
to be adversely affected by the lack of such economic alternatives.

The UNDCP has begun an integrated rural development project in the
southern portion of the Wa region in furtherance of the United Wa
State Army's unilateral decision announced in 1995 to establish five
"opium-poppy-free zones" in its area of control to reduce opium
cultivation gradually. The project is part of a planned five-year, $15
million rural development project aimed at crop substitution and
alternative development. The project area has expanded to include 2
more townships for a total of five, with over 200 villages
participating. UNDCP has begun projects in agriculture, road building,
water and sanitation, and community development. The Wa project will
incorporate a monitoring and evaluation component designed to measure
progress in eliminating opium cultivation. As an integrated
development scheme, it will also focus on developing the
infrastructure as well as providing educational and health facilities
in the Ho Tao and Mong Pawk districts of the Wa region.

Accomplishments. While the extent of the drug threat from Burma
remained high, law-enforcement efforts, particularly seizures of
amphetamine, showed some improvement. Opium production during 1999
showed a significant decline; much of the decline, however, was the
result of a region-wide drought. Seizures of 28.8 million amphetamine
tablets in 1999 represented a notable increase over the previous
year's record seizures of 15 million tablets. Opium and heroin
seizures as of October 1999 declined from the 1998 seizure rate. The
decline largely resulted from changes in trafficking patterns and
refining methods adopted by traffickers in response to GOB enforcement
efforts in prior years. The combined police and military narcotics
task forces seized 273.2 kilograms of heroin in 1999 compared to 490
kilograms seized in 1998. By October, officials seized 1.44 metric
tons of opium, compared with 5.2 metric tons for all of 1998. As
indicated above, opium cultivation dropped by 31 percent and potential
opium production by 38 percent to the lowest level in ten years. GOB
law enforcement also made its first arrests of traffickers at
Mingaladon Airport in Rangoon in October and November, seizing a total
of 10.7 kilograms of heroin. To date, the GOB has also seized 6.43
metric tons of ephedrine in 1999, most of it coming from India. The
GOB destroyed 23 heroin refineries and six methamphetamine refineries
during 1999. The GOB also eradicated 9,800 additional acres of poppy
fields, according to Burmese figures. The USG is unable to verify the
accuracy of the eradication figures.

Law Enforcement Measures. The 1993 Narcotic Drugs And Psychotropic
Substances Law brought the Burmese legal code into conformity with the
1988 UN Drug Convention. As such, the 1993 law contains useful legal
tools for addressing money laundering, the seizure of drug-related
assets, and the prosecution of drug conspiracy cases. However, Burmese
policy and judicial officials have been slow to implement the law,
targeting few, if any, major traffickers and their drug-related
assets. Burmese drug officials claim they lack sufficient expertise to
deal with money laundering and financial crimes, but money laundering
is believed to be carried out on a massive scale.

Formally, the Burmese government's drug-enforcement efforts were led
by the Central Committee for Drug Abuse Control (CCDAC), which is
comprised of personnel from various security services, including the
police, customs, military intelligence, and the army. CCDAC now has 18
drug-enforcement task forces around the country, most located in major
cities and along key transit routes near Burma's borders with China,
India, and Thailand. The CCDAC, which is under the effective control
of the Directorate of Defense Services Intelligence (DDSI) and relies,
in part, on military personnel to execute law- enforcement duties,
continues to suffer from a lack of adequate resources to support its
law-enforcement mission.

Corruption. There is no evidence that the government, on an
institutional level, is involved in the drug trade. However, there are
persistent and reliable reports that officials, particularly corrupt
army personnel posted in outlying areas, are either involved in the
drug business or are paid to allow the drug business to be conducted
by others. Army personnel wield considerable political clout locally,
and their involvement in trafficking is a significant problem. The
Burmese have said that they would welcome information from others on
corruption within their ranks, and a few military personnel are known
to have been arrested for narcotics-related offenses in 1999.

The lack of an enforcement effort against money laundering encourages
the use of drug proceeds in legitimate business ventures by
traffickers or former traffickers. Businesses owned by family members
of former or present traffickers have invested heavily in
infrastructure projects, such as roads and port facilities, as well as
in hotels and other real-estate development projects during the year.
Some of these investments are intended to supplement government
expenditures on rural development projects in areas under control of
the ethnic insurgent and trafficking groups. There is solid evidence
indicating that drug profits formed the seed capital for many
otherwise legitimate enterprises in the commercial services, and
manufacturing sectors.

Agreements and Treaties. Burma is a party to the 1961 UN Single
Convention, the 1971 UN Convention on Psychotropic Substances, and the
1988 UN Drug Convention. The Rangoon regime, however, has always
refused to extradite Burmese citizens to other countries. The United
States does not have a mutual legal assistance treaty (MLAT) with
Burma. The USG believes that a U.S.-U.K. Extradition Treaty, which was
accepted by the post-independence Burmese government in 1948, remains
in force and is applicable to U.S. requests for extradition of drug
fugitives from Burma. The GOB continues to refuse to recognize the
applicability of this treaty.

The GOB is one of six nations (Burma, Cambodia, China, Laos, Thailand,
Vietnam) that, along with the UNDCP, signed a Memorandum of
Understanding (MOU) covering a sub-regional action plan aimed at
controlling precursor chemicals and reducing illicit drug use in the
highlands of Southeast Asia. In addition to periodic meetings with
counterparts from the other signatories to the MOU, Burma has held
counternarcotics discussions with Russia and India in 1999. The GOB
signed bilateral drug control agreements with India in 1993, with
Bangladesh in 1994, with Vietnam in 1995, and with the Russian
Federation, Laos, and The Philippines in 1997.

Cultivation and Production. Burma is the world's second largest
producer of opium. Potential production decreased sharply from 1998
levels, however, marking the third straight year of decline after a
decade of steady production at a high level. Opium cultivation
declined an estimated 31 percent and production declined an estimated
38 percent to 1,090 metric tons. Since the early 1990s the areas of
most intense cultivation have gradually shifted from southern to
northern Shan State. The bulk of the opium crop has been in areas
controlled by ethnic minority groups. The GOB has signed or tried to
sign cease-fire agreements with many of these groups since 1989. In
the last few years, however, the GOB has begun to increase its
presence in areas previously under ethnic control, with the notable
exception of the Wa region. The government continued its eradication
efforts during 1999 in areas previously subject to eradication, but
did not expand the program significantly. A drought that affected both
northern and southern areas of Shan State, was largely responsible for
the sharp decline in potential opium production in 1999.

The GOB conducted a baseline survey of opium cultivation for the
second year aimed at determining actual opium production (as opposed
to potential production that the USG measures) throughout the country.
According to Burmese figures, there were 102,066 acres cultivated in
1999, producing a total of 449 tons. The methodology used to arrive at
these figures is unknown, and the U.S. must rely on the higher figures
resulting from the joint U.S.-Burma opium yield survey.

Drug Flow/Transit. Most heroin in Burma is produced in small, mobile
labs located near the borders with Thailand and China in Shan State in
areas controlled by ethnic narcotics insurgencies. A growing amount of
methamphetamine is reportedly produced in labs co-located with heroin
refineries in the Wa region and the former Shan United Army territory
in southern Shan State. Seizures of amphetamine tabs as of November
had outpaced the record 15 million seized in 1998, reflecting the
growing popularity of methamphetamine production among traffickers.
Heroin and methamphetamine produced by Burma's ethnic groups are
trafficked largely through transit routes crossing the porous Chinese
and Thai borders; to a lesser extent over the Indian, Bangladeshi, and
Lao borders; and through Rangoon onward by ship to other countries in
the region. Although Thailand remains an important route for Burmese
heroin to exit Southeast Asia, trafficking through China is on the
increase.

Acetic anhydride, an essential chemical in the production of heroin,
and ephedrine, the principal chemical ingredient of methamphetamine,
are imported primarily from China and India. Traffickers continued
moving heroin through central Burma, often from Lashio through
Mandalay to Rangoon or other seaports, such as Moulmein, for shipment
to Singapore or Malaysia. Trafficking routes leading through Kachin
and Chin States and Sagaing Division in northern Burma to India
continued to operate as secondary routes.

Demand Reduction. Drug abuse is a growing problem in Burma. Official
estimates put the drug-addicted population at approximately 86,537, up
from last year's estimate of 66,463. According to UNDCP and
non-governmental organizations working in the health sector, the
actual number is significantly higher, totaling about 400-500,000.
Heroin is cheap in Burma, and intravenous use of heroin contributed to
the rapid spread of HIV/AIDS, particularly in the Kachin and Shan
States. According to the GOB's "Rapid Assessment Study Of Drug Abuse
In Myanmar" sponsored by the Ministry of Health and UNDCP in 1995,
drug treatment services are not reaching most drug users because of a
lack of facilities, lack of properly trained personnel, and inadequate
treatment methods. The Non-Governmental Organization (NGO) "World
Concern" is implementing a demand-reduction project in Kachin State.

IV. U.S. Policy Initiatives

Direct material USG counternarcotics aid to Burma has remained
suspended since 1988, when the Burmese military brutally repressed the
pro-democracy movement. In 1998, the GOB refused to renew a crop
substitution project, Project Old Soldier, by the U.S. NGO 101
Veterans, Inc., in 25 villages in the Kutkai area of northern Shan
State. Currently, the USG engages the Burmese government on
counternarcotics on a very limited level. DEA, through the U.S.
Embassy in Rangoon, shares drug-related intelligence with the GOB and
conducts joint drug-enforcement investigations with Burmese
counternarcotics authorities. Various U.S. agencies have conducted
opium yield surveys in the mountainous regions of the Shan State in
1993, 1995, 1997, 1998, and 1999, with essential assistance provided
by Burmese counterparts. In cooperation with Burmese counternarcotics
personnel, the USG plans to conduct another survey in early 2000.
Results from the surveys give both governments a much more accurate
understanding of the scope, magnitude, and changing geographic
distribution of Burma's opium crop.

The U.S. Government continues frequently to urge the Burmese
government to take serious steps to curb Burma's large-scale opium
production and heroin trafficking. Specifically, the Rangoon regime
has been encouraged to:

-- Prosecute drug-trafficking organizations and their leaders, and
deprive them of assets derived from the drug trade;

-- Take action against drug-related corruption, including prosecution
and appropriate punishment of corrupt officials and money launderers;

-- Take action against fugitive drug-traffickers and turn them over to
third countries;

-- Undertake opium poppy eradication on a wide scale in areas under
its direct control or immediate influence;

-- Press ethnic groups, such as the Wa, the Kokang, and the Kachin,
who have pledged to create opium-free zones in their regions, to make
good on their commitments;

-- Enforce existing anti-drug, conspiracy, and anti-money-laundering
legislation;

-- Provide strong support to multilateral drug-control projects in
Shan State.

Bilateral Cooperation. USG counternarcotics cooperation with the
Burmese regime is restricted to basic law-enforcement operations. The
U.S. provides no bilateral material or training assistance due to U.S.
concerns over Burma's commitment to effective counternarcotics
measures, human rights, and political reform. DEA's liaison with
Burmese policymakers and military officials-conducted mainly through
DEA's office in Rangoon-will continue and will focus on providing
intelligence on enforcement targets and coordinating investigations of
international drug-trafficking groups.

The Road Ahead. Based on experience in dealing with significant
narcotics-trafficking problems elsewhere around the world, the USG
recognizes that ultimately large-scale and long-term international
aid, including development assistance and law-enforcement aid, will be
needed to curb fundamentally and irreversibly drug production and
trafficking. The USG strongly urges the GOB to commit itself fully and
unambiguously to implementing effective counternarcotics measures,
respecting the rule of law, punishing drug traffickers and major
trafficking organizations (including asset forfeiture and seizure),
combating corruption, enforcing anti-money-laundering legislation,
continuing eradication of opium cultivation, destroying
drug-processing laboratories, and respecting human rights.

Burma Statistics
(1991-1999)
1999 1998 1997 1996 1995 1994 1993 1992 1991
Opium1
 Potential
 Harvest
(ha) 89,500 130,300 155,150 163,100 154,070 146,600 165,800 153,700
160,000

Eradication
(ha) 9,800 16,194 10,501

Cultivation
(ha) 99,300 146,494 165,651 163,100 154,070 149,945 166,404 154,915
161,012

Potential
Yield(mt) 1,090 1,750 2,365 2,560 2,340 2,030 2,575 2,280 2,350

Seizures2

Opium(mt) 1.440 5.200 7.884 1.300 1.060 2.265 2.265 2.193 1.512

Heroin(mt) 0.273 0.386 1.401 0.505 0.070 0.347 0.300 0.266 0.183

Marijuana
(mt) 0.274 0.160 0.288 0.259 0.239 0.290 0.600 0.292 0.724

Acetic Anhydride
(gal) - - 2,137 5,082 1,159 1,191 1,016 1,136 -

Other Data

Heroin Labs
Destroyed 23 32 33 11 3 4

Meth Labs
 Destroyed     6

Narcotics
Arrests 6,413 4,456 4,522 4,522 5,541 7,134 7,520 6,109 7,357

Heroin Users
(thousands) 300 300 300 150 100 30 30 30 30

Opium Users
(thousands) 120 120 120 120 120 120 120 120 120

Cambodia

I. Summary

The year 1999 saw the establishment of peace and political stability
throughout all regions of Cambodia after more than 30 years of
warfare. The coalition government established in November 1998 has
emphasized law and order and economic development. The National Drug
Policy Board was reorganized to provide more effective operational
leadership and anti-narcotics enforcement was somewhat energized.
Cambodian anti-narcotics officials have begun to establish working
contacts with their counterparts in the region. UNDCP has provided
welcome technical assistance in the areas of precursor chemical
control, demand reduction, drug control and cross border cooperation,
and has sponsored several well attended, well received training
sessions.

Cooperation with U.S. law enforcement has continued to be excellent.
Officials at the highest levels of the government have made public
statements on the importance of combating illegal narcotics. However,
there is substantial cannabis (marijuana) cultivation for export
almost exclusively to non-U.S. destinations. Cambodia remains a major
transit route for Southeast Asian heroin to overseas markets,
including the U.S.

Lack of financial resources, shortage of trained personnel, and high
levels of judicial corruption continue to hinder sustained advances in
anti-narcotics enforcement. Officials at all levels continue to plead
for U.S. assistance in training anti-narcotics police. Cambodia did
not participate in the International Law Enforcement Academy in
Bangkok.

II. Status of Country

Cambodia is not a major producer of opiates or cocoa-based drugs,
although cannabis production is significant. Cambodia is not a center
for narcotics derived money laundering. It is the only country in
Southeast Asia that does not have a significant domestic drug abuse
problem, having been saved from drug abuse by poverty, political
turmoil, and isolation.

Marijuana is cultivated in significant quantities for export, as well
as for domestic consumption. Although reliable figures about areas
under cultivation are not available, estimates are that production
could be quite high. Marijuana production in Cambodia is concentrated
in four provinces, Koh Kong, Kampong Cham, Stung Treng, and Banteay
Meanchey, and is reported to be in the control of ethnic Sino-Thai
criminal organizations. Europe is the major destination for Cambodian
cannabis. Of the approximately 70 tons of Cambodian cannabis that has
been seized outside Cambodia since 1996, the majority of seizures have
been made in European countries. Australia and the U.S. have also been
destinations for shipments of Cambodian marijuana. The Prime Minister
has announced the provincial officials who have knowledge of cannabis
production and fail to take action will be removed from their posts.

Cambodia shares borders with Thailand, Laos, and Vietnam, and lies
near the major trafficking routes for Southeast Asian heroin. Its
principal involvement in the international narcotics trade is as a
significant transit route for Southeast Asian heroin to overseas
markets, including China, Europe, Australia, and the United States.
There is little hard information available on the scale of heroin
trafficking through Cambodia, but law enforcement in Cambodia is lax,
and corruption endemic. There are clear indications of alien smuggling
and counterfeiting, and there have been reliable reports that
narcotics traffickers and other organized criminal elements use
Cambodia as a kind of refuge for their activities.

There have also been reports in the past of methamphetamine
laboratories operating in Cambodia at some points along the western
border with Thailand, and some have been raided in previous years. In
1999, the Interior Minister condemned the presence of some new
methamphetamine labs in Koh Kong province along the Thai border, which
he claimed had been established by Thai criminals to supply the Thai
market. While use of methamphetamine is still limited, Cambodian
officials have become very concerned over the past year about the
potential for rapid increase in methamphetamine abuse and are anxious
to avoid an epidemic of the proportions experienced in neighboring
countries.

Cambodia's law enforcement agencies have very few resources and
generally lack even basic training in law enforcement techniques and
drug enforcement measures. Three decades of civil warfare and
factional fighting further hampered a sustained and organized effort
against illegal drugs. In 1998, the cessation of factional fighting
and the final demise of the Khmer Rouge along with the formation of a
new coalition government have provided a measure of stability and
allowed the government to devote more attention to combating crime in
general, and illegal narcotics in particular. The new government has
given priority to the reestablishment of law and order throughout the
country and combating corruption. Both law enforcement agencies and
the judicial system remain very weak. Defendants in important
narcotics cases have had charges dropped inexplicably and been set
free after paying very small fines.

III. Country Actions Against Drugs In 1999

Law Enforcement. Law enforcement in general has been energized,
relative to 1998, and anti-narcotics efforts were noticeably more
effective than in previous year. Measures to confiscate illegal
weapons were taken throughout the year, contributing to generally
greater security. The Prime Minister announced that the cultivation of
cannabis would not be tolerated and that provincial officials who were
aware of such activities and failed to take steps to combat it would
be removed from office.

Cambodian law enforcement officials have also provided excellent
cooperation in counterfeiting cases. The U.S. dollar is widely
accepted in Cambodia and the police actively pursue counterfeiters of
it. The U.S. embassy is routinely notified when counterfeit or
suspected counterfeit currency is seized. Secret Service officers,
stationed in Bangkok, have visited regularly to work with Cambodian
authorities on counterfeit cases and to provide training to law
enforcement and bank officials in counterfeit identification.

Corruption. Corruption is an endemic problem in Cambodia, and has
adversely affected drug law enforcement. Poorly paid and ill-trained
police and judicial officials frequently look the other way in
narcotics and other criminal cases. There has been a real danger of
Cambodia becoming a refuge for criminal elements, convinced that
enforcement would either be totally ineffective, or in the unlikely
event they were apprehended, that they could buy their way out. The
combination of incompetence and venality, even at high levels in
government and the police, pose an on-going challenge to improved
narcotics law enforcement.

Policy Initiatives. The government reorganized its counternarcotics
policy body, the National Authority for Combating Drugs (NACD), in
response to complaints from a variety of sources that the existing
group was ineffective. The new members come from law enforcement and
operational backgrounds. Although the NACD secretariat members do not
have law enforcement units under their direct control, they claim to
have the ability to call on resources from all law enforcement
agencies as necessary to conduct anti-narcotics operations. The UNDCP
believes that this body has the potential to become an effective
policy and coordination unit and is proposing a four year U.S. $ 2.3
million "NACD Support Project" which would strengthen the NACD
Secretariat. This program includes supplying one senior drug control
advisor on a full time basis and other short term technical advisors.
The Cambodian authorities have enthusiastically accepted this
proposal, which unfortunately has not yet been funded.

Accomplishments. In the past year, UNDCP has sponsored a number of
seminars and training courses which were enthusiastically received and
well attended, but the desperate need for training far exceeds what is
currently available. Cambodia has also begun to cooperate with
neighboring countries in narcotics law enforcement, most notably with
Thailand and Laos. Exchanges of visits with regional narcotics
enforcement authorities, also sponsored by UNDCP, have provided
Cambodian officials with new insight into the regional nature of the
narcotics problem, opportunities for information sharing, and the
beginnings of regional cooperation to combat trafficking. Several
highly publicized methamphetamine seizures were made at Pochentong
Airport, including one involving an American citizen with 4,000
tablets heading to Japan, and several others at or near the Thai
border. [this sentence does not describe drug flow/transit. You may as
well just include it in accomplishments, above.

Cultivation/Production. Cambodian authorities had some success in
combating illicit cultivation during 1999. The provincial governors
were instructed to make sure that farmers understood that cannabis
cultivation would not be tolerated and that they would be held
accountable. A number of small scale plantations and fields were
destroyed during the year, with one 160 hectare plantation discovered
and raided in December.

Agreements and Treaties. Although Cambodia is listed as a signatory to
the 1961 UN Single Convention and its 1972 Protocol, it has not yet
ratified the convention. Cambodia has no extradition agreement with
the U.S., but the Cambodian government has cooperated with U.S. law
enforcement in the past in rendering or deporting persons wanted in
the U.S. for crimes, including narcotics, upon request and
presentation of an appropriate warrant. The U.S. embassy has been
assured that such cooperation will continue. The Cambodian government
concluded an extradition treaty with Thailand in 1998 and is in the
process of negotiating an agreement with Laos. These are both
important steps in Cambodia's fight against illegal drugs.

Demand Reduction. A three day workshop on drug abuse prevention and
drug demand reduction in September attracted an overflow audience of
120 government health, education, and law enforcement officials, NGO
representatives, children advocacy groups, and Embassy
representatives.

IV. U.S. Policy Initiatives

Bilateral Cooperation. DEA law enforcement agents from Bangkok visited
Cambodia regularly in 1999 and received excellent cooperation from
their Cambodian counterparts. U.S. officials at many levels, including
the U.S. ambassador, raised the narcotics issue with Cambodian
officials at all levels, up to and including the Prime Minister,
regularly throughout the year. The Cambodians freely admitted their
shortcomings in the area of enforcement due to lack of resources, and
regularly appealed for USG assistance, especially training. The
Cambodian government accepted a U.S. proposal to conduct quarterly
high level consultations on anti-narcotics objectives. The first such
consultation was held in July 1999.

The DEA country attach?stationed in Bangkok and the U.S. ambassador
presented a USG-funded drug testing laboratory (funded from prior
years' assistance). A series of meetings were held with the Prime
Minister, deputy Prime Minister and Interior Minister, and top law
enforcement officials, during which ways to continue and expand U.S.
Cambodian cooperation were discussed. The Deputy Prime Minister
specifically requested U.S. assistance in providing training and
equipment for anti-narcotics police, for help in expanding their
"connections" to international law enforcement, and for assistance in
drug prevention and education; especially American experts to help
with drug abuse curriculum and grass roots prevention programs.

Cambodian law enforcement authorities continued their tradition of
cooperation with U.S. law enforcement authorities, including making
arrested drug suspects available for interview by DEA. In October, at
the request of the Assistant U.S. Attorney in Seattle Washington, the
Cambodian authorities permitted two Cambodian police officers to
travel to the U.S. to testify for the prosecution in a major narcotics
case. The successful prosecution of this case was the result of more
than two years of effective cooperation between DEA and the Cambodian
government.

The Road Ahead. The U.S. will suggest continued efforts against
corruption in Cambodia, and continued vigorous enforcement of
Cambodia's anti-narcotics laws. Cambodia needs to be particularly
sensitive to the threat that a lax enforcement atmosphere encourage
criminal elements to "set-up shop" in Phnom Penh. There is also
increasing danger to Cambodia's own people from the beginnings of
methamphetamine trafficking to Cambodia. To some extent, Cambodia's
poverty protected the Kingdom's subjects from more expensive illegal
drugs.

China

I. Summary

China continued to take strong, effective steps to combat the use and
trafficking of narcotic drugs in 1999. Although preliminary figures
indicate that seizures of heroin declined significantly from 1998's
record level, possibly because of a decline in production in Burma,
China's total heroin seizures still surpassed the amount of heroin
seized in all other Asian countries. Seizures of methamphetamine and
other amphetamine-type stimulants soared, while those of precursor
chemicals and opium remained at previous years' levels. Government
officials estimate that more than 10 percent of China's 1.3 billion
citizens viewed a nationwide anti-narcotics exhibition. The U.S. Drug
Enforcement Administration (DEA) opened an office in Beijing. China
continues to cooperate actively on operational issues with U.S.
drug-enforcement officials. Although the overall relationship remained
intact, some elements of the law-enforcement relationship were
affected by NATO's accidental bombing of the Chinese Embassy in
Belgrade. A meeting of the Joint Liaison Group, Subgroup on Law
Enforcement, postponed after the bombing, is expected to convene in
the spring of 2000. The U.S. and China expect to finalize a framework
for mutual legal assistance in 2000 as well. China often did not
respond to U.S. requests for information on law-enforcement issues,
and, when it did reply, the information requested often arrived too
late to be of operational value. China is a party to the 1988 UN Drug
Convention as well as to the 1961 UN Single Convention and its 1972
Protocol, and the 1971 Convention on Psychotropic Substances.

II. Status of Country

China is now the principal route for heroin smuggled out of Burma,
with roughly 90 percent of seizures of Southeast Asian heroin
occurring within Chinese borders. There is evidence that some heroin
also enters China from Laos and Vietnam and that smaller amounts enter
from Southwest Asia. Preliminary figures suggest that heroin seizures
in China declined significantly in 1999 from 1998's record level.
Since narcotics interdiction remains one of China's primary
law-enforcement priorities, it is likely that this decline was due, at
least in part, to a decline in production in Burma. There are 596,000
registered heroin addicts in China, but the government recognizes that
the actual number of users is far higher. Chinese officials are
increasingly concerned about the abuse of methamphetamine and other
amphetamine-type stimulants (ATS). Seizures of ATS more than doubled
in 1999, with the largest seizure in excess of one metric ton.

China is a major producer of precursor chemicals. The ephedra plant,
from which the precursor of methamphetamine is made, grows wild in
northern China. China monitors all 22 of the chemicals on the 1988 UN
Drug Convention watch list. Yunnan, the province most directly
affected by China's drug problem, goes further by monitoring exports
of 28 chemicals. China cooperates with the United States and others in
providing pre-export notification of dual-use precursor chemicals.

Under Chinese law, laundering the proceeds from narcotics trafficking
is a crime, but the legal system and the banking system have not kept
pace with China's rapid internationalization. Consequently, China is
vulnerable to financial exploitation by drug traffickers. China
participated in early meetings of the Asia-Pacific Group on Money
Laundering, but, for a number of reasons, has not attended recent
meetings of that body and did not pursue membership in the Financial
Action Task Force.

III. Country Action Against Drugs in 1999

The Chinese government has pledged to put more manpower, more
material, and more financial resources into the fight against illicit
narcotics. China's counternarcotics strategy includes prevention,
education, interdiction, and rehabilitation. In 1999, the government
produced more than 6000 sets of a traveling anti-drug educational
exhibition, which counternarcotics officials estimate was viewed by
more than 160 million people. Chinese educational efforts are targeted
primarily at youth, the segment of society most likely to use illegal
drugs.

Policy Initiatives. China is committed to achieving the goals of the
1988 UN Drug Convention. China cooperates with the UNDCP and regional
states on a number of projects. One such project, scheduled to begin
in 2000, aims to reduce demand in the regions bordering Yunnan
province, where heroin enters China from Burma. China also supports
crop-substitution efforts in Burma and Laos.

Law Enforcement Efforts. Preliminary figures suggest that, while
significantly lower than last year's record level, Chinese seizures of
Burmese heroin will continue to account for the great majority of all
such seizures in Asia. On July 4, after a lengthy investigation,
Guangdong provincial authorities broke a case that resulted in twelve
arrests and the seizure of 1584 kilograms of methamphetamine, an
amount nearly equal to last year's total seizures. DEA sent a letter
of congratulation to the Minister of Public Security in recognition of
this accomplishment.

Corruption. Despite on-going efforts to combat official corruption,
the phenomenon remained widespread. The media regularly reported cases
of high-level government officials implicated in corruption. Most of
the reports involved smuggling of consumer goods, misappropriation of
funds, embezzlement, or abuse of power. There were no reports in the
state-controlled media of senior government officials engaging in
narcotics-related corruption.

Agreements and Treaties. In April, China and the United States signed
a Customs Mutual Assistance Agreement, which will speed communications
and enhance the flow of counternarcotics-related intelligence.
Problems in overall U.S.-China relations affected implementation of
several aspects of a May 1998 Memorandum of Understanding (MOU) on Law
Enforcement Cooperation. A meeting of the Joint Liaison Group was held
in Washington in March 1999, but, in the wake of the accidental
bombing of their Embassy in Belgrade, the Chinese postponed a
follow-up meeting in Beijing in the fall. The follow-up meeting is
expected to be held in spring 2000. The U.S. and China also expect to
complete a framework for mutual legal assistance in 2000. In July 1999
the DEA opened an office in Beijing, as agreed in a Memorandum of
Understanding signed in May 1998.

China is a member of the Memorandum of Understanding States (MOU
States) with the UN Drug Control Program (UNDCP) and five Southeast
Asian nations. In the MOU the members agreed to collaborate on
drug-control projects and programs. China has signed more than 30
mutual legal assistance and extradition treaties with 24 countries.

Cultivation/Production. China produces limited quantities of opium,
mostly for domestic consumption. Production of synthetic drugs is a
growing problem, particularly in Fujian and Guangdong provinces. China
is a major producer of precursor chemicals used in the manufacture of
illegal drugs, and China continued to strengthen its efforts to
control these chemicals. Chinese police monitor closely all precursor
chemicals listed in the 1988 UN Drug Convention, particularly
ephedrine and potassium permanganate. U.S.-China cooperation on
monitoring the movement of precursor chemicals into and out of China
is, in general, excellent. However, the Ministry of Public Security
rarely provides responses to routine requests from the United States
for verification of the bona fides of importers, exporters, and
agents.

Drug Flow/Transit. China shares a 2000-kilometer border with Burma.
The majority of heroin produced in Burma now travels through China en
route to the international market. Smaller quantities of heroin enter
China from Southwest Asia. China supports crop-substitution programs
in Burma, as well as in Laos, which have resulted in significant
decreases of poppy-crop production in the project areas.

Domestic Programs. There are 596,000 registered heroin addicts in
China, but government officials admit that the actual number of users
is far higher. More than 80 percent of drug abusers are under 35 years
of age, and government anti-drug education campaigns are centered on
this group. Drug treatment is compulsory for known users. Most of the
more than 600 government-run drug treatment and rehabilitation centers
rely on a "cold turkey" approach to break the drug habit. Some centers
also use traditional Chinese medicines to help users overcome their
addiction.

The government has also placed increasing importance on the
establishment of "drug free communities." The goal of these
communities is to eliminate narcotics trafficking and drug-related
crime, but also to provide an environment free of the pressures that
lead many former abusers to relapse into drug use.

IV. U.S. Policy Initiatives and Programs

Policy Initiatives. Despite setbacks in other areas of the bilateral
relationship in 1999, operational-level cooperation between Chinese
and U.S. law-enforcement officials continued. U.S. policy objectives
are to expand bilateral dialogue at both the operational and policy
level, to foster more cooperation between American and Chinese
enforcement officials, to increase Chinese counternarcotics
capability, and to encourage regional counternarcotics cooperation.

Bilateral Cooperation. In 1999 the United States worked to improve
counternarcotics cooperation at the operational level. A significant
step in that direction was the establishment of a DEA office in
Beijing. The United States regularly provided operational intelligence
to Chinese narcotics enforcement officials, but the Chinese response
to U.S. requests for similar information was uneven. In 1999 the
Department of State, DEA, and the U.S. Customs Service continued to
provide training designed to improve the enforcement ability of
Chinese counternarcotics officials. In May Chinese law-enforcement
officials participated in a two-week DEA-sponsored training course on
jetway narcotics inspections. The U.S. Customs service held a
contraband enforcement team training session in Yunnan province in
March. In August U.S. Customs conducted a "risk management" course
designed to help Chinese Customs officials identify high-risk cargoes.
The Chinese postponed or cancelled a number of other training courses
following NATO's accidental bombing of the Chinese Embassy in
Belgrade.

Throughout 1999, however, Chinese officers attended counternarcotics
and general law-enforcement training courses at the joint U.S.-Thai
International Law Enforcement Academy in Bangkok. This important
regional forum brought together police and other law-enforcement
officials from throughout the region to improve regional technical
abilities and establish ties among regional counternarcotics and
law-enforcement officials.

The Road Ahead. Improved and expanded cooperation on narcotics
enforcement is in the interest of both the United States and China.
The United States will seek to expand our fruitful operational-level
relationship with China and to encourage a resumption of our mutually
beneficial high-level dialogue on counternarcotics issues. Although
the transshipment of Burmese heroin remains the problem of most
immediate concern to the United States, we will monitor closely, and
assess the potential impact on the United States of, the alarming rise
in methamphetamine seizures in China.

Hong Kong

I. Summary.

Hong Kong's close geographical proximity to areas where drugs are
cultivated, as well as its well-developed commercial transport
infrastructure, have historically made it a natural transit point for
drugs moving from Southeast Asia to the U.S. Although the U.S.
continues to view Hong Kong as a major drug transit/staging area, it
appears that Hong Kong's role as a transit/staging area for the
shipment of heroin and methamphetamine into the U.S. has diminished
over the last three years. This change could be attributed to the
rapid development of economic and transportation infrastructure in
southern China over the past five years. Development in mainland China
includes the construction of new deep-water ports and road systems
that dramatically reduced shipment costs and risks to movers of
contraband who elect to ship from southern China rather than through
Hong Kong. In addition, the counternarcotics efforts of Hong Kong's
law-enforcement agencies have proven to be a strong deterrent to drug
trafficking through Hong Kong. In the last three years
counternarcotics officers made no seizures in Hong Kong of heroin en
route to the U.S. Hong Kong residents were deeply involved in a
significant heroin case in Australia, however, and counternarcotics
officials in neighboring countries continue to report that Hong Kong
criminal elements are involved in narcotics trafficking in the region.

Hong Kong adopted a multi-pronged strategy to combat drug trafficking
and abuse consisting of effective law enforcement, anti-drug education
and publicity programs, treatment and rehabilitation programs,
research efforts, and international cooperation. Hong Kong's role as
one of the world's major financial centers makes it an attractive
venue for laundering money. Although Hong Kong is a
source/transshipment point for precursor chemicals such as potassium
permanganate, its role has begun to diminish. The 1988 UN Drug
Convention, to which China is a party, applies to Hong Kong.

II. Status Of Country

Hong Kong is not a producer of illegal narcotics. Hong Kong's close
geographical proximity to the Golden Triangle and mainland China, as
well as its well-developed commercial transport infrastructure, have
historically made it a natural transit point for drugs moving from
Southeast Asia to the United States. Because of Hong Kong's
geographical, commercial, and economic profile, coupled with Hong
Kong's highly developed port facilities that historically have been
used by narcotics traffickers to transport illicit drugs from Asia to
the U.S., Hong Kong continues to be designated as a major drug-transit
point. Hong Kong's strong law-enforcement efforts over the past
several years on the one hand and the rapid development of an economic
and transportation infrastructure with rapid growth in direct trade in
southern China on the other indicate that Hong Kong's role as a major
drug-transit center has been diminishing. The lack of recent seizures
of drugs destined for the U.S., despite Hong Kong's stringent
enforcement regime, suggests a reduced role for Hong Kong as a transit
point for drugs. Nevertheless, drugs secreted in any of the millions
of containers transiting Hong Kong each year may escape detection,
despite Hong Kong's vigorous enforcement efforts. Moreover, organized
criminal gangs and syndicates, many involved in narcotics trafficking,
continue to operate from Hong Kong. A recent large heroin seizure in
Thailand, for example, yielded investigative leads indicating
involvement of Hong Kong criminal elements in managing and financing
the trafficking of a series of large heroin shipments to the U.S.
During 1999, Hong Kong law-enforcement officials continued to
cooperate fully with their U.S. counterparts on all investigations
related to illicit drugs and money laundering.

In the first half of 1999, a total of 9,928 drug abusers were reported
to the central registry of drug abuse, representing a decrease of 7
percent compared to the first part of last year. Authorities believe
most narcotics entering Hong Kong are destined for domestic
consumption. In the first half of 1999, the most commonly abused drugs
were heroin (87.5 percent), cannabis (7.8 percent), amphetamines (6.3
percent), and triazolam (4.4 percent). There was an increase of 1.8
percent in the abuse of crystal methamphetamine in the first half of
1999.

Hong Kong's role as a major financial center continues to make it
vulnerable to the illicit use of its financial institutions for
laundering drug-related proceeds. Money laundering in Hong Kong
involves not only drug proceeds, but also funds stemming from other
criminal activities, such as tax evasion. The level of money
laundering from tax evasion and other criminal financial activity is
believed to be significant (albeit not quantifiable). Hong Kong
continues to tighten controls to prevent money laundering.

Although Hong Kong is a source/transshipment point for precursor
chemicals, such as potassium permanganate, ephedrine and
pseudoephedrine, its role has diminished because of the recent
reclassification of potassium permanganate from Schedule 3 to Schedule
2 on the "Control of Chemicals Ordinance."

III. Actions Against Drugs in 1999

Policy Initiatives. In accordance with the resolution passed at the
Special Session of the UN General Assembly held in June 1998, Hong
Kong amended its legislation to tighten control of potassium
permanganate by upgrading it from Schedule 3 to Schedule 2 on the
"Control Of Chemicals Ordinance." The new legislation requires a
license from the Commissioner of Customs and Excise to import, export
and manufacture potassium permanganate. In addition, the
transshipment, removal, and storage of potassium permanganate are
strictly controlled.

In response to another resolution passed by the UN Commission on
Narcotic Drugs, Hong Kong plans to amend its legislation to tighten
the control of norephedrine and expects to have amended legislation
completed by mid-2000.

As of April 1, 1999, Hong Kong significantly tightened control of the
following additional substances by moving them from Schedule 4 to
Schedule 2 of the "Dangerous Drugs Ordinance": morphine,
acetyldihydrocodeine, codeine, dihydrocodeine, ethylmorphine,
nicocodine, norcodeine, pholcodine. In addition, amfepramone, cathine,
etryptamine, mesocarb, and zipeprol were added to Schedule 1 of the
Ordinance. Also in response to a recent decision passed by the UN
Commission on Narcotic Drugs, in 2000 Hong Kong will tighten control
of remifentanil and dihydroetorphine by including them in Schedule 1
of the "Dangerous Drugs Ordinance."

In April 1999 the government began to strengthen its
anti-money-laundering regime by introducing legislation to impose a
recording requirement for large cash transactions completed at
remittance centers and through exchange agents. Remittance centers and
exchange agents must record information on customers making
transactions of HK$20,000(U.S. $2740) or more. The records must be
retained for six years. The amendment is expected to go into effect in
early 2000. The government has also introduced an amendment to
strengthen the "Drug Trafficking (Recovery Of Proceeds) Ordinance" and
"the Serious Crimes Ordinance." The amendment will improve the
reporting requirement for suspected money-laundering transactions by
reducing the threshold from reasonable grounds to "believe" to
reasonable grounds to "suspect" money-laundering activities. The
proposed amendment will also increase the penalties for
money-laundering offences from a maximum of 14-years to 20-years
imprisonment and for the failure to report suspicious transactions
from 3-months to 12-months imprisonment.

During the second half of 1999, the government completed a six-month
policy review of the "Drug Addicts Treatment and Rehabilitation
Ordinance." As a result of the review, the government is drafting new
legislation to bring drug treatment and rehabilitation centers under
uniform control and to improve the quality of services.

Accomplishments. As noted above, Hong Kong tightened control over
several precursor chemicals, including the cocaine precursor potassium
permanganate, by moving them from Schedule 3 to Schedule 2 on the
"Control Of Chemicals Ordinance" and introduced legislation to
strengthen its anti-money-laundering laws. Hong Kong signed a Mutual
Legal Assistance Agreement with Switzerland, and in May 1999 Hong Kong
Customs and Excise entered into a cooperative agreement with the
European Union.

Law Enforcement Efforts. During 1999, Hong Kong's law-enforcement
community continued a focused, intelligence-based, operational
approach. Resources were allocated in accordance with trends in drug
manufacture, smuggling, trafficking, and consumption. Conforming to
the government's "Enhanced Productivity Program," the Narcotics Bureau
of the Hong Kong police force will be restructured in early 2000. The
new structure will reflect the bureau's move towards intelligence-led
investigations and will result in a greater allocation of resources to
intelligence gathering and analysis. Liaison officers will be placed
into one division, which will enhance communication with international
law enforcement agencies, and will emphasize regional drug
enforcement.

In the past two years, the Hong Kong police force has added 955 new
officers and has spent over U.S. $3.7 million on adding to and
upgrading its computer systems to improve the collation and
dissemination of criminal intelligence. At the border and airport,
additional police dogs have been deployed to assist in the detection
of smuggled drugs. The number of police dogs increased from 124 to
133. Customs procured high-tech equipment, including ion scanners,
x-ray checkers, mobile x-ray vans, and scanners, to detect microscopic
traces of drugs on packages and to facilitate the efficient and
effective inspection of baggage and cargo. High-tech equipment was
also used in the air cargo clearance system for airport inspection, in
the customs' control system for sea cargo inspection, and in the land
boundary system for border checkpoints. A total of U.S. $64.1 million
was budgeted for the procurement of high-tech equipment.

Heroin remains the drug of choice in Hong Kong. Heroin seizures
through the end of October 1999 nearly equaled the total seized in
calendar year 1998. As of October 31, a total of 205 kgs of heroin
were seized. As of January 1999, the price of street-level heroin had
risen dramatically, while the purity level had fallen, suggesting
reduced supply. From January through October, Hong Kong narcotics
officers seized 35.8 kilograms of cannabis, 16.7 kilograms of cocaine,
and 98.1 kilograms of methamphetamine and arrested a total of 7,620
individuals for drug-related offenses.

Corruption. There is no known narcotics-related corruption among
senior government or law-enforcement officials. Hong Kong has a
comprehensive anti-corruption ordinance that is effectively enforced
by an independent commission against corruption. The commission's
record of enforcement efficiency is recognized worldwide.

Agreements And Treaties. In 1999 Hong Kong signed a Mutual Legal
Assistance Agreement with Switzerland, and mutual legal assistance
agreements with New Zealand, France, and Australia also came into
force in 1999. Arrangements were completed to allow the U.S.-Hong Kong
Mutual Legal Assistance Agreement to enter into force on January 20,
2000. Hong Kong also signed a "Surrender of Fugitive Offenders
Agreement" with Sri Lanka, and transfer of sentenced persons
agreements with the U.S. and another with Sri Lanka came into force in
1999. In May 1999, the Customs and Excise Department entered into a
cooperative agreement with the European Union. The 1988 UN Drug
Convention is applicable to Hong Kong.

Cultivation/Production. Hong Kong is not a producer of illicit drugs.

Drug Flow/Transit. Hong Kong officials believe that Hong Kong's role
as a major drug flow/transit center continued to diminish in 1999.
Seizures indicate that shipments of heroin and methamphetamine
directly from Hong Kong to the international market seem to be few in
number and of relatively small quantities, usually fewer than 10
kilograms. Although illicit narcotics transit through Hong Kong, the
known volume of traffic has decreased significantly over the past few
years. In addition, no coordinated effort or systematic approach to
the shipment of drugs through Hong Kong's territory appears to be
used; many seizures involved small quantities of narcotics carried by
individual couriers. In 1999, there were no seizures in Hong Kong that
appeared destined for the U.S. Hong Kong traffickers continue to
control large portions of Southeast Asian narcotics traffic, however,
arranging both the financing and shipment of narcotics and using
various routes and methods throughout the region.

Domestic Programs. During 1999, Hong Kong's drug education and public
awareness programs continued to focus on Hong Kong's youth and their
parents. In March Hong Kong initiated a pilot program with several
non-government organizations to conduct education talks at the primary
school level. In addition, the government started the "Outstanding
Anti-Drug Workers' Award."

In March Hong Kong initiated a review of its methadone treatment
program to evaluate the program's effectiveness and to identify areas
for improvement. In August the narcotics division began preparing the
second three-year plan on drug treatment and rehabilitation services.
The review will examine major developments in drug treatment and
rehabilitation centers and will develop recommendations on improving
the quality of the programs.

In 1999 Hong Kong announced that the U.S. $40 million "Beat Drugs
Fund" set up in March 1996 awarded U.S. $2.4 million to 49 projects.
Of that total, U.S. $1.8 million was awarded to preventive education
and publicity projects and the balance was granted for treatment and
rehabilitation services.

IV. U.S. Policy Initiatives And Programs.

Policy Initiatives. U.S. law-enforcement officials continue to conduct
joint investigations with their Hong Kong counterparts to develop
cases that can be prosecuted either in Hong Kong or in the U.S.

In October 1999 Hong Kong hosted the Second International Operational
Meeting on potassium permanganate, which was co-sponsored by the U.S.
Drug Enforcement Administration (DEA) and the Hong Kong Customs and
Excise Department. Hong Kong sent a total of 12 law enforcement
officials to the International Law Enforcement Academy (ILEA) in
Bangkok to participate in two courses, one on clandestine laboratories
and the other on precursor chemicals and methamphetamine
investigations. In addition, 5 customs and excise officers attended a
six-week ILEA supervisory criminal investigator course, which included
instruction on regional drug enforcement. In December, local U.S.
drug-enforcement officials and a criminal investigator from the U.S.
Internal Revenue Service provided training to Hong Kong
law-enforcement officials on money laundering investigative
techniques. In September, one officer from the Hong Kong Customs and
Excise Department attended the DEA-sponsored "operation jetway"
training course.

Road Ahead. The U.S. Government encourages Hong Kong to continue
playing an active role consistent with its international stature in
combating narcotics and money laundering. The U.S. also encourages
Hong Kong to strengthen the enforcement and implementation of existing
laws and guidelines, especially regarding financial crimes and money
laundering; to tighten business registration procedures to discourage
"shell" companies, especially off-shore corporations; to introduce
lower threshold reporting requirements for transactions at financial
and banking institutions; to institute "structuring" provisions to
counter evasion efforts; and to establish and enforce currency
exit/entry reporting requirements.

Indonesia

I. Summary 

Indonesia is not a major drug-producing or drug-transit country. A
willing partner in counter narcotic initiatives, however, Indonesia is
becoming increasingly vulnerable to sophisticated trafficking groups.
The Indonesian National Police (INP) drug unit (Narkoba) relies
heavily on DEA expertise and training to address both purely domestic
and U.S.-related drug investigations. In 1997 the Indonesian
Parliament ratified the 1988 UN Drug Convention, and also passed new
anti-narcotics laws that conform to international norms established by
the Convention. The regional DEA office has been working in close
coordination with the INP to update their anti-drug enforcement
endeavors using the new legislation.

II. Status of Country

Ecstasy abuse is a major problem, especially in urban areas.
Methamphetamine was introduced in Jakarta in 1998. Many of the pills
are sold as ecstasy in Jakarta nightclubs, but are actually
methamphetamine. Marijuana is produced in remote areas of northern
Sumatra, primarily for domestic consumption. There has been an
increase in clandestine methamphetamine and ecstasy laboratories. DEA
has noted a drastic increase in methamphetamine use in Indonesia among
teenagers, young professionals, and prostitutes. Indonesia has proven
to be vulnerable to mail and courier shipments of drug trafficking
organizations. In recent years official anti-narcotics concern over
designer drugs, first, ecstasy, and now methamphetamine, has eclipsed
government concern with more traditional narcotics (marijuana).

Indonesia is a transshipment for heroin and cocaine, but there is no
evidence this has a significant effect on the U.S. Drug-trafficking
networks continue to exist throughout Indonesia with involvement of
Southeast Asian, South Asian and Nigerian criminals. These groups
obtain heroin in Bangkok and engage couriers to carry it via
commercial air into Soekarno Hatta Airport in Jakarta. From Jakarta,
the heroin is distributed to the United States, Australia and Western
Europe, with a smaller amount sold on the local market. Structured
drug organizations, such as the West African heroin number 4
trafficking group, are operating in Indonesia. The DEA is working with
INP Narkoba officials on enforcement efforts to counter this threat.

Cocaine has also become a problem. Drug traffickers use Indonesia as a
transit point for shipping cocaine to Europe, Asia and the U.S.
Recently, one and one half kilograms of cocaine that had transited
Indonesia was seized in Miami in a joint operation between the DEA
office Singapore, INP, and DEA office in Miami. Two West Africans were
arrested. There is also a growing domestic market in Indonesia for
heroin, cocaine, methamphetamine, cannabis, and ecstasy. Many of the
drug traffickers establish themselves in Indonesia by speaking the
local language and marrying Indonesian women.

III. Country Actions Against Drugs

Policy Initiatives. In 1997, the Indonesian Parliament approved
legislation outlawing psychotropic drugs including ecstasy, and
providing for penalties of up to seven years imprisonment for
marijuana possession and a maximum of 20 years in jail for marijuana
trafficking. An asset forfeiture law was also passed in the 1997
legislation.

Accomplishments/Law Enforcement Efforts. DEA continued its close
relationship with the INP Narkoba unit through training and by
providing operational expertise. DEA works very closely with the INP
Narkoba unit to identify drug labs and cultivation areas. This proved
very successful in 1998; INP and DEA dismantled the first known
clandestine methamphetamine and ecstasy laboratory in Jakarta. Arrests
of narcotics traffickers were reported frequently in Jakarta and in
the Kuta Beach area of Bali. Arrests of foreigners, particularly
Nigerians, in connection with narcotics use, possession and
trafficking are frequently noted in the Indonesian media.

Corruption. Corruption among police and customs personnel persists in
Indonesia, with continuing reports from street sources that police
personnel often assist drug traffickers or are themselves involved in
selling narcotics, and that persons arrested for narcotics trafficking
can easily bribe police to free them. It should be noted, however,
that none of DEA's investigations have ever been compromised by
Indonesian narcotics officers. Furthermore, convicted heroin
traffickers are receiving 8 to 17 year prison sentences from
Indonesian judges. Given the low salaries of these officers (U.S. $40
to $60 per month), they face great temptation to accept bribes from
West African heroin and Indonesian drug traffickers.

Agreements and Treaties. Indonesia is a party to the 1961 UN Single
Convention and its 1972 Protocol, the 1971 UN Convention on
Psychotropic Substances, and the 1988 UN Drug Convention. While there
is no formal extradition relationship between the United States and
Indonesia, in practice U.S. and Indonesian authorities cooperate
effectively in cases involving fugitives from U.S. justice. Indonesia
is a party to the World Customs Organization's International
Convention on Mutual Administrative Assistance for the Prevention,
Investigation, and Repression of Customs Offenses (Nairobi
Convention), Annex X on Assistance in Narcotics Cases.

Cultivation and Production. As their limited resources permit, the
INP, in particular the narcotics unit, and Indonesian customs continue
their efforts to combat narcotics smuggling. As in previous years, the
illicit cultivation of marijuana in Aceh province was the target of
periodic eradication campaigns. The INP are strongest in enforcing and
eradicating drug usage in Jakarta and other urban areas, but have more
difficulties in more rural areas.

Drug Flow/Transit. Indonesia continues to be used as a transit point
for Southeast Asian heroin and other drugs, including transshipment to
Australia, Europe and, in small quantities, to the U.S. Because of
Indonesia's porous borders, drug traffickers find Indonesia an
attractive area for their operations. Customs and immigration
officials working outside of the capitol are easier to bribe and less
motivated in their work. Drug traffickers can thus move their products
into and out of Indonesia relatively easily.

Money Laundering and Assets Seizure. Indonesia's criminal code does
not cover money laundering. This absence of a key statute, and
corruption and lack of training among police and customs officials,
continues to impede anti-narcotics law enforcement. The DEA is working
closely with the INP Narkoba unit to push laws that effectively
address money laundering issues, but rapid political change has
radically increased the work load of Indonesia's Parliament. DEA and
the U.S. Embassy in Jakarta are encouraging the passage of specific
drug money laundering legislation.

IV. Policy Initiatives

Policy Initiatives. DEA will continue to work on increasing the
ability of the INP to handle bilateral investigations against major
trafficking groups. GOI resources will have a direct impact in this
area. The INP Narkoba unit will be trained in how to effectively
exploit their new drug laws. This will enhance their counter drug
efforts and provide a more viable platform to work cases with DEA and
other U.S. law enforcement agencies. Over the last year, 67 INP
Narkoba officers have attended training at the International Law
Enforcement Academy (ILEA) in Bangkok.

Bilateral Cooperation. Training at the regional narcotics academy
(ILEA-Bangkok) will continue. U.S. Customs continues to work with
Indonesian customs to enhance and upgrade the narcotics
detection/canine interdiction program at Soekarno Hatta International
Airport. Police narcotics officers and customs officials greatly
improved their operating procedures, i.e., surveillance and contraband
search techniques, intelligence gathering, interview techniques,
report writing, arrest procedures, and execution of controlled
deliveries

The Road Ahead. Indonesia has weak chemical control laws and the
government bureaucracy prevents any major advance in this area. The
DEA will continue to provide the INP with information on precursor and
essential chemical shipments that American companies in Singapore ship
to Indonesia. The DEA will keep pressing the GOI and INP Narkoba
authorities to make chemical control issues as a priority.

Japan

I. Summary

Japanese law enforcement authorities made record seizures of
methamphetamine and cannabis in 1999. Through November 1999,
authorities seized almost 1,900 kilograms of methamphetamine,
surpassing the total seizure of methamphetamine for the previous five
years. The total seizure of cannabis for 1999 was more than double the
amount seized during any of the last five years. Record seizures
reflect increased cooperation among relevant Japanese law enforcement
agencies and greater exchange of information between Japanese and
foreign law enforcement entities. Japan has also become the target of
increased drug smuggling operations, including methamphetamine
reportedly coming from North Korea.

Methamphetamine remains by a wide margin the drug of choice in Japan.
Japan is not a major producer of drugs. Methamphetamine smuggled into
Japan is believed to have been refined largely in China, although
there have been also been large seizures linked to North Korea.

In August, the Japanese Diet enacted legislation expanding the scope
of Japan's money laundering law. Japanese law enforcement agencies
believe the new legislation will strengthen their ability to fight
money laundering. Reporting of suspicious transactions increased from
11 in 1998 to over 900 during 1999.

II. Status Of Country

Japan is not, and is unlikely to become, a significant producer of
narcotics. However, Japan is believed to have one of the largest
methamphetamine markets in Asia. A survey in 1999 indicated that there
are over 2 million methamphetamine users in Japan, consuming an
estimated 10-14 tons per year. Japan also is believed to be a
transshipment point for Southeast Asian heroin destined for the United
States. However, there is no reliable information suggesting that this
transit has a significant effect on the U.S.

There is a growing drug market in Japan and increased trafficking
activity within the illegal immigrant population. Narcotics
trafficking in Japan continues to be a source of income for Japanese
organized crime.

Japan is suspected of being a major money laundering center. Law
enforcement authorities believe organized crime is responsible for
much of the drug trafficking and money laundering in Japan. Law
enforcement agencies have welcomed the passage this year of
legislation expanding the scope of money laundering law.

III. Country Action Against Drugs

Policy Initiatives. On September 24, 1999, The National Police Agency
(NPA) issued a white paper emphasizing the need for the Japanese
police to enhance cooperation with law enforcement authorities in
other countries and with international organizations to combat
transnational crimes including narcotics trafficking. The white paper
also highlights the need for officers with better language skills to
deal with the rising number of criminal cases involving foreigners in
Japan. This directive is expected to strengthen Japanese law
enforcement efforts to combat trafficking and use.

In August 1999, the Japanese Diet passed legislation expanding the
scope of Japan's money laundering law. The new legislation identified
additional predicate offenses other than drug trafficking. These
include murder, assault causing bodily injury, theft, extortion,
fraud, and kidnapping. Previously, money laundering prosecution was
limited to drug trafficking. The Diet also approved in 1999
legislation which allows law enforcement authorities to wiretap
communications of members of the organized crime.

Accomplishments. The U.S. and Japan held two rounds of negotiation on
a mutual legal assistance treaty during 1999. The two sides hope to
conclude the treaty in 2000. The next round of talks will take place
in Washington early spring of 2000. The MLAT is expected to expedite
and strengthen law enforcement cooperation.

Overall law enforcement cooperation with other countries is expected
to improve with the publication of NPA's white paper which emphasizes
the importance of international cooperation.

Japan continued its sponsorship of many annual international drug
enforcement and prevention programs. Japan is also an active
participant in all major conferences conducted throughout the world
each year which concern narcotics trafficking and relate to crime.

Japan is an active member of the UNDCP major donors group, and
finances and participates in many UNDCP programs.

Law Enforcement Efforts. Police anti-narcotics efforts tend to focus
on Japanese organized crime groups, the main smugglers and
distributors of drugs. However, police and prosecutors have been
hesitant to pursue cases in which a conviction is uncertain. In
addition to smuggling and distribution activities, law enforcement
officials are paying increased attention to drug-related financial
crimes.

There were record seizures of methamphetamine and cannabis in 1999.
The volume of methamphetamine seized by Japanese authorities in the
first eleven months of 1999 totaled 1900 kilograms, almost triple the
previous full calendar year record of 650.8 kilograms in 1996.
Authorities also seized 669 kilograms of cannabis, more than double
the amount seized in any of the last five years.

Through 1998, NPA has seized a total of about U.S. $7.23 million (yen
723 million) in drug proceeds in 82 investigations since 1992, when
the asset seizure law took effect. The largest of the cases originated
in September 1997, when police in Osaka arrested an organized crime
gang leader who had allegedly received U.S. $1.48 million (yen 148
million) from junior gang members in exchange for offering them a
place to sell drugs. The Osaka district court imposed a penalty of yen
148 million on the gang leader in February 1998 in the first use of
Article 10 of the money laundering law which makes it unlawful to
receive money that has been illegally earned.

Following a 1998 Financial Action Task Force evaluation report which
concluded that Japan's anti-money laundering system was ineffective,
Japan has moved to improve suspicious transaction reporting by
financial institutions. The Ministry Of Finance received over 900
reports of suspicious transactions in 1999.

Corruption. Japan has no known drug-related corruption.

Agreements and Treaties. The U.S. and Japan conducted two rounds of
negotiation on a mutual legal assistance treaty during 1999. The two
sides hope to conclude the treaty in 2000. A U.S.-Japan Extradition
Treaty is currently in force. Japan is a party to the 1988 UN Drug
Convention.

Cultivation/Production. Although not a significant cultivator or
producer of controlled substances, Japan is a major producer of 60
types of precursor chemicals, which have legitimate industrial uses as
well. Japan is one of only a handful of countries that produce
ephedrine, which is used to create antihistamines, but is also an
essential ingredient in methamphetamine. Japan is a member of the
chemical action task force, and the DEA country attach?in Japan is
conscientious about monitoring end users of precursors.

Drug Flow/Transit. Almost all drugs illicitly trafficked in Japan are
smuggled from overseas. According to the NPA, China and Thailand are
the principal overseas sources. Japan is also a transshipment point
for some Southeast Asian heroin bound for the U.S. and other
destinations, but it is not believed to have a significant effect on
the U.S.

Demand Reduction/Domestic Programs. Domestic programs focus primarily
on interdiction. Drug treatment programs are small and are generally
run by private organizations.

IV. U.S. Policy initiatives and programs

Policy Initiatives. U.S. goals and objectives include. 

-- conclude a mutual legal assistance treaty;

-- strengthen enforcement cooperation, including participation in
controlled deliveries;

-- encourage more demand reduction programs;

-- encourage effective use of new anti-crime legislation.

Bilateral Cooperation. The U.S.-Japan Common Agenda For Global
Cooperation, established in 1993, includes a narcotics working group.
Under the common agenda counternarcotics initiative, the U.S. and
Japan work together to reduce the supply of and demand for narcotics.
Bilateral efforts include law enforcement cooperation, anti-money
laundering, and control of precursor chemicals. Under the common
agenda, both countries have contributed to UNDCP counternarcotics
programs, including the 1997 UNDCP Asia-Pacific Training Seminar On
Maritime Drug Enforcement in Japan. In Peru, both countries have
supported cultivation of the tropical fruit "camu camu" as a cash crop
substitute for coca.

The Road Ahead. The passage of the anti-crime bill was a welcome
development. U.S. law enforcement agencies will encourage Japanese
counterparts to make full use of the new legislation, especially
against money laundering activities.

The U.S. and Japan will work toward concluding a mutual legal
assistance treaty in 2000. The two countries also will continue to
explore cooperative counternarcotics initiatives under the common
agenda.

Laos

I. Summary 

Laos is a major drug-producing country; it remains the world's third
largest producer of illicit opium, behind Afghanistan and Burma.
Although opium cultivation fell 16 percent in 1999, the U.S. estimates
Laos' opium production for that year at 140 metric tons, identical to
the 1998 estimate. Somewhat improved weather conditions increased
estimated average yields, allowing total production to remain
unchanged. Crop substitution project areas funded by the USG continued
to show only low levels of opium cultivation, with production
sufficient only for some local addict consumption. In May 1999, the
government of Laos (GOL) agreed to a joint goal with the UNDCP to
eliminate opium cultivation in Laos within six years; the estimated
U.S. $80 million plan to achieve this goal is in preparation. In
September, a new USG-funded crop control and development project began
in Phongsali province, which ranks first among opium producing
provinces. Counternarcotics Law Enforcement Offices (CNO's) were
opened in two more provinces. Drug seizures fell, however, from
previous year's record totals. The (GOL) is not yet a party to the
1988 UN Drug Convention; its stated goal is ratification of the
Convention in the near future, as agreed by all participants in the
1998 UN General Assembly Special Session (UNGASS) on Drugs.

II. Status of Country

Laos remains the third largest producer of illicit opium in the world,
trailing only Afghanistan and Burma. Because Lao opium is grown by
small-scale subsistence farmers, without fertilizer, irrigation, or
other agricultural improvements, average yields are generally less
than half those found in neighboring Burma. The USG continues to
support crop control and development programs in Laos in order to help
the GOL change farmer practices before organization of opium
cultivation by criminal syndicates boosts yields and overall
production.

Location next to one of the world's largest producers of opium and
heroin (Burma), and land borders with countries that combine important
opium markets and ports on trade routes to Europe and America (China,
Thailand, Vietnam, and Cambodia), make Laos an important route for
drug trafficking. This importance is increasing as Laos' physical and
communications infrastructures gradually improve, and is the basis for
continued USG assistance to upgrade judicial and law enforcement
institutions before Laos is overwhelmed by regional trafficking
syndicates.

III. Country Actions Against Drugs in 1999

Policy Initiatives. In 1999, the GOL agreed to a new goal of
eliminating opium cultivation in Laos by 2006. The GOL will fund 25
percent of the U.S. $80 million estimated cost of the six-year plan
now being developed with UNDCP assistance. This ambitious plan
includes alternative development, law enforcement, and demand
reduction elements. It will largely replace, and update the previous
GOL counternarcotics master plan, which dated from 1993 and was also
developed with UNDCP assistance. The GOL and UNDCP are seeking donor
support for this new initiative. In March, the Ministry of Interior
(MOI) established a new counternarcotics department under the general
police department. The new department oversees Provincial
Counternarcotics Offices (CNO's), and has developed standards for CNO
staffing and reporting. The provincial CNO's are still weak, but
projected to eventually constitute a national network of
counternarcotics law enforcement bodies.

Accomplishments. In June, senior Lao police officials from provinces
bordering Vietnam met with their Vietnamese counterparts to discuss
measures for increasing drug interdiction cooperation. This was the
first ever meeting of its kind, and is scheduled to repeat annually.
In August, an equivalent meeting was held with Thai police
counterparts; this was the second such meeting, following an inaugural
gathering in 1998. In November 1999, the fifth and sixth U.S. State
department-supported CNO's were officially opened, in Luang Prabang
and Phongsali provinces. Opening ceremonies for CNO's in Houaphanh and
Champasak provinces are planned for early 2000. In April and November,
the first two semi-annual national conferences of provincial CNO
chiefs were held in Vientiane. UNDCP signed an agreement with the GOL
to join a multi-million dollar highland stabilization project in
Houaphanh province; principal financing for the project comes from the
Asian Development Bank. This is the first UNDCP-ADB collaboration in
Laos; such collaborations are expected to be an important part of the
six-year opium elimination strategy. The German embassy began a
counternarcotics assistance program including supply and demand
reduction activities, and stationed a full-time advisor to the Lao
National Commission for Drug Control and Supervision (LCDC) in
Vientiane. Staffing for the LCDC permanent secretariat was also
increased.

Law Enforcement Efforts. USG-funded counternarcotics units in six
provinces, along with other provincial police offices, reported 143
drug-related criminal cases in 1999, resulting in the arrests of 348
suspects, including 10 foreign nationals. Most arrests were of
small-scale traffickers. These cases involved the seizure of 14.7
kilograms of heroin, 225.8 kgs of opium, 806,700 methamphetamine
tablets, and 2.2 metric tons of marijuana. Opium and heroin seizures
fell significantly from record 1998 levels, as there was no case to
match the 1998 destruction of a heroin laboratory. Methamphetamine
seizures rose by 30 percent. Trafficker vehicles, weapons, and cash
were confiscated in a large number of cases.

Corruption. The Lao government does not encourage or facilitate the
production or distribution of illicit drugs; indeed, they try to
enforce their laws against abuse of narcotic drugs. Given Laos'
poverty and the very low salaries of Lao government employees,
however, it is assumed that there are officials and military personnel
who receive rewards from illicit drug trafficking. Past corruption
cases have included officials at relatively senior levels. The GOL has
stated that it will not tolerate narcotics-related corruption. Lao
district and provincial officials were arrested, prosecuted, and
sentenced in 1999 for involvement in drug trafficking.

Agreements and Treaties. The U.S. and Lao governments signed a
Memorandum of Understanding (MOU) on Counternarcotics Cooperation in
1989. Bilateral crop control agreements have been signed annually
since 1989, as have bilateral law enforcement project agreements since
1992. Both countries have expressed their intention to continue to
expand this cooperation. Although the GOL does not have a mutual legal
assistance or extradition treaty with the United States, it has
cooperated in deporting drug traffickers to the U.S. The GOL completed
negotiating extradition treaties with Vietnam and Thailand this year;
ratification is expected in 2000. In 1998, Laos and Germany signed an
agreement to begin a three-year project focusing on drug supply and
demand reduction. Laos is also a signatory to an MOU on regional
counternarcotics cooperation with UNDCP and the other Mekong basin
countries (China, Burma, Thailand, Cambodia, and Vietnam). Laos has
bilateral counternarcotics treaties with Vietnam, Burma, and the
Philippines, and is an active participant in regional counternarcotics
initiatives. Laos is a party to the 1971 UN Convention on Psychotropic
Substances and the 1961 UN Single Convention. Although Laos is not yet
a party to the 1988 UN Drug Convention, the GOL strives to meet the
goals and objectives of that Convention. The GOL plans to ratify the
Convention in the near future, and is working with UNDCP to pass
legislation, such as chemical control and money laundering
regulations, necessary to bring it into compliance with the
Convention.

Cultivation and Production. Opium is produced in the ten northern
provinces of Laos as a cash or barter crop and as a traditional
medicine. The extreme isolation of most opium producing communities
and the absence of economic alternatives makes opium an important crop
for the area's subsistence farmers. USG 1999 crop estimates indicate a
16 percent fall in cultivation to 21,800 hectares, although estimated
total potential production remained unchanged at 140 metric tons. More
favorable weather produced average yields estimated at 6.4 kilograms
per hectare, compared to only 5.4 kgs per hectare in 1998. Most of the
heaviest production remained in the northwest, where new USG crop
control initiatives are targeted.

Drug Flow/Transit. The GOL's ability to control the flow of narcotics
within and across its lengthy, porous borders is severely limited by
lack of personnel, resources, expertise, and ready access to many
isolated areas of the country. Effective control over borders with
Thailand, Burma, China, Vietnam, and Cambodia exists only in the
vicinity of major population areas, along principal land routes, and
at established river crossings. As Lao road infrastructure improves,
and as interdiction efforts on Burma's borders with China and Thailand
grow more efficient, Laos is apparently becoming a more popular route
for illicit drugs. Although Lao drug seizures fell in 1999, Vietnam
and Thailand reported larger drug flows entering their territories via
Laos.

Domestic (Demand Reduction) Programs. Opium addiction is still the
main drug use problem in Laos, but addiction is overwhelmingly a rural
phenomenon and concentrated in the north of the country. Many addicts
began using opium for medical reasons. In its 1998 opium survey
report, UNDCP estimates an opium addict population of around 60,000.
The GOL is putting great emphasis on detoxification programs for
addicts, although implementation details are left to provincial
administrations. The location of most addicts in remote, often
inaccessible rural areas increases the cost and difficulty of
treatment and follow up. UNDCP conducted a survey of urban student
drug use in October 1999; preliminary results reportedly show alarming
levels of methamphetamine use and the first appearance of ecstasy.
Local methamphetamine use was almost unknown as recently as three
years ago. In June and November, the USG funded the fourth and fifth
in a series of drug treatment workshops for Lao health care officials
in Vientiane, conducted by Daytop International.

IV. U.S. Policy And Initiatives 

Policy Initiatives. The USG focuses on helping the GOL achieve two
primary counternarcotics objectives: elimination of opium poppy
cultivation, and suppression of illicit drug and precursor chemical
trafficking. The USG is addressing the first goal through bilateral
crop control projects, first in Houaphanh province and now in
Phongsali province. The USG works closely with UNDCP and other donors
of development assistance to ensure that counternarcotics objectives
are included in all rural development programs in northern Laos.
Suppression of trafficking is pursued through support of special
counternarcotics police units, and through support of the Lao customs
service. Additional support has been provided to the Lao national
commission for drug control and supervision (LCDC), which has overall
policy direction for counternarcotics activities under the Office of
the Prime Minister.

Bilateral Cooperation. In 1999, the USG began funding a crop control
and development project in Phongsali, Laos' most important opium
producing province. This is modeled after the successful Lao-American
Houaphanh project. The USG also funded opium surveys in Phongsali and
Oudomxai provinces to help development of provincial drug suppression
plans. In response to a GOL request, the USG will support the
establishment of counternarcotics law enforcement units in each
province over the next few years. Lao customs officials participated
in US-sponsored narcotics and contraband smuggling programs in the
U.S. in February and November, and joined the U.S. Customs-sponsored
Pacific Basin Conference in Hawaii in August. Lao police, customs, and
justice officials have been active participants in US-funded training
sessions at the new International Law Enforcement Academy in Bangkok,
which began operations in February 1999.

The Road Ahead. The GOL has now committed to eliminate commercial
opium cultivation in advance of the UNGASS 2008 (UN General Assembly
Special Session on Drugs) target date. To do so, it must change the
practices of Lao highland farmers and upgrade its law enforcement
capacity, before modernization of the Lao society and economy
exacerbates the problems of narcotics production and trafficking. In
support of GOL efforts, the USG will continue to provide crop control
and development assistance to northern Laos, with particular emphasis
on cooperation with UNDCP and other interested donors. U.S. assistance
to a network of specialized counternarcotics law enforcement units
should increase Lao interdiction capabilities. The GOL needs to
improve coordination between these units and other law enforcement
bodies to translate capabilities into more significant drug seizures,
however. The USG is committed to supporting GOL counternarcotics
efforts, in recognition of gradual GOL progress in this area and of
the many development challenges that hamper the GOL's ability to
achieve its counternarcotics objectives alone. Future counternarcotics
achievements will depend on the GOL's effective use of both its own
resources and those of interested donors.

Laos Statistics
(1991-1999)
1999 1998 1997 1996 1995 1994 1993 1992 1991
Opium1
 Potential
 Harvest
(ha) 21,800 26,100 28,150 25,250 19,650 18,520 26,040 25,610 29,625

Eradication
(ha) - -

Cultivation
(ha) - - 28,150 25,250 19,650 18,520 26,040 25,610 29,625

Potential Yield
(mt) 140 140 210 200 180 85 180 230 265

Seizures2

Opium(mt) 0.226 0.442 0.200 0.216 0.194 0.054 0.054 0.281 0.165
 
Cannabis(mt) 2.19 0.41 4.16 1.18 0.64 6.14 0.26 0.295 0.222

Heroin (mt) 0.015 0.080 0.072 0.016 0.043 0.062 0.001 0.002 0.015


Malaysia

I. Summary

Malaysia is not a major dug producing country. Heroin transits
Malaysia, as do some other drugs, but no significant quantity reaches
the U.S. market through Malaysia. Domestic drug abuse is a problem.
Malaysia's competent counternarcotics officials and police officers
have the full support of senior government officials.
Narcotics-related arrests and seizures fell in 1999, partly because of
deep government budget cuts in the wake of the Asian financial crisis.
Cooperation with the U.S. on combating drug trafficking is excellent.
Malaysia is a party to the 1988 UN Drug Convention.

II. Status of Country

Malaysia does not produce a significant amount of illicit drugs. Some
heroin from drug producing countries in Southeast Asia transits
Malaysia, but there is no evidence that a significant amount of this
heroin reaches the U.S. market. Some other drugs, primarily
psychotropic pills, also transit Malaysia. Reliable statistics on
domestic drug abuse are sparse. Anecdotal reports indicate that
domestic drug abuse, primarily of heroin and amphetamine-type
stimulants (ATS), may be growing. Because Malaysia has not enacted a
comprehensive anti-money laundering statute, money laundering is a
potential concern, but the true extent of the problem is not known.
Precursor chemicals are a small-scale problem. Additional legislative
controls on precursor chemicals would strengthen Malaysia's
performance in this area.

III. Country Action Against Drugs in 1997

Policy Initiatives. Malaysia's overall counternarcotics framework did
not change in 1999. A senior-level national drug council coordinates
Malaysia's overall drug policy. Senior leaders often state that
counternarcotics efforts are one of Malaysia's top national
priorities. In 1999, Malaysia announced some further steps to promote
treatment and prevention of drug addiction. The government expanded a
school prevention program and announced a drug-free workplace
initiative. The government also announced plans to build another drug
treatment facility to alleviate overcrowding at existing facilities.
Law enforcement efforts, perhaps reflecting previous budget cuts
undertaken in the wake of the Asian financial crisis, resulted in
fewer arrests and seizures in 1999. Malaysia law enforcement
authorities still vigorously pursued traffickers and users of illicit
drugs, however. Malaysian law provides for mandatory death sentences
for some traffickers and detention without trial for some drug-related
offences.

Accomplishments. Malaysia has a good institutional and policy
foundation for its counternarcotics work. Law enforcement, demand
reduction, and treatment activities continued in 1999. Police
continued to disrupt distribution, sale, and financing of illicit
drugs. Cooperation with U.S. law enforcement agencies on
counternarcotics remained excellent. The lack of a comprehensive
anti-money laundering statute makes money-laundering an area of
concern.

Law Enforcement Efforts. Malaysian police continued to investigate and
prosecute narcotics crimes vigorously. Arrests and seizures were
generally below the levels of 1998. Budget cuts undertaken in the wake
of the Asian financial crisis may have partly been responsible for
this trend. In 1998 (Latest complete year data available), the
government arrested 14,970 persons on narcotics-related violations, an
increase of roughly 2% from 1997. Notably, methamphetamine seizures
increased by almost 22%. Law enforcement officers seized 290 kilograms
of heroin, an increase of 5% over seizures recorded in 1997. In 1999,
Malaysia's largest heroin seizure took place in January, when police
seized roughly 53 kilograms. With Malaysia's economy recovering,
operating funds for law enforcement, previously cut, may be restored.
As in previous years, cooperation with U.S. law enforcement agencies
was excellent.

Corruption. Malaysia has an anti-corruption agency with no power to
prosecute, but with the power to investigate independently. A few
police officers and officials were arrested and prosecuted for
drugs-related corruption. No senior police were prosecuted for
drugs-related corruption.

Agreements and Treaties. The U.S.-Malaysian Extradition Treaty came
into force in 1997, but there has yet to be a case to test its
effectiveness. The U.S. and Malaysia have made no recent progress in
concluding a mutual legal assistance treaty. Malaysia is a party to
the 1988 UN Drug Convention. Malaysia is a party to the World Customs
Organization's International Convention on Mutual Administrative
Assistance for the Prevention, Investigation, and Repression of
Customs Offenses (Nairobi Convention), Annex X on Assistance in
narcotics Cases.

Drug Flow/Transit. Malaysia's geographic position makes it a natural
nexus of smuggling routes from the heroin producing Golden Triangle
area. There was no evidence that in 1999 heroin transiting Malaysia
made a major impact on the U.S. market.

Domestic Programs (Demand Reduction). Malaysia, with the help of the
United States, finished expanding a pilot school demand reduction
program into a nationwide program. Malaysia also announced a drug-free
workplace prevention program. In 1999, Malaysia announced that it
would construct a new treatment center to alleviate overcrowding.
There were many incidents throughout the year of violence,
disturbances, and mass escapes at treatment centers. These incidents
resulted largely from overcrowding.

IV. Us Policy Initiatives and Programs

Bilateral Cooperation: The U.S. has greatly expanded counternarcotics
training via the new International Law Enforcement Academy (ILEA) in
Bangkok. ILEA Bangkok trained scores of Malaysians on chemical
precursors, financial investigations (money laundering), controlled
deliveries, and other topics. In addition, the United States has a
successful bilateral Memorandum Of Understanding On Counternarcotics
Cooperation with Malaysia. In 1999, the U.S. provided money for demand
reduction programs in Malaysia.

Road Ahead. U.S. Goals and objectives in the coming year are to:

-- continue to encourage the enactment of stronger anti-crime
legislation, including a conspiracy law and a comprehensive anti-money
laundering;

-- continue and expand successful cooperation in law enforcement;

-- encourage the government to improve controls of precursor chemicals
and to stiffen penalties for violators.

U.S. Law enforcement agencies will continue to cooperate with
Malaysian authorities to monitor and interdict drugs transiting
Malaysia. The U.S. will continue its modest assistance to Malaysia's
efforts to stem domestic consumption. Inadequate infrastructure and
overcrowding will complicate treatment of drug addicts. Effective
money-laundering legislation is needed to enhance counternarcotics
work.

Mongolia

Drug trafficking and abuse are not widespread in Mongolia, but are on
the rise. Since Mongolia opened its border to China, however, it has
become vulnerable to illegal trade of all sorts, including drug
trafficking. Reports indicate that an increasing number of illegal
migrants who transit Mongolia, usually going from China to Russia or
Europe, transport or traffic in narcotics. Police and government
observers suspect that the increase in prostitution and trafficking in
women in Mongolia means drug-related activities also will increase.

Wedged between China and Russia with borders that are loosely
protected, Mongolia could become an alternate transit route for drug
traffickers stymied by more stringent border controls and
counternarcotics efforts elsewhere. Although Mongolia is a party to
the 1961 Single Convention and its 1972 Protocol, Mongolia is not a
party to the 1988 UN Drug Convention, since many of its provisions are
not applicable to circumstances in Mongolia. The U.S. government has
concluded a Customs Mutual Legal Assistance Agreement (CMAA) with the
government of Mongolia.

In 1999 Mongolia prosecuted high-level officials, including three
Members of Parliament, involved in bribery in the tendering of a
casino operation. This case prompted legislation rescinding the Law on
Casinos, thus making them illegal. While these actions may have merely
scratched the surface, they demonstrate government concern and public
awareness about money laundering and official corruption.

Poor and underdeveloped, Mongolia is ill equipped to address the
reported increased availability and use, domestically, of marijuana,
heroin, amphetamines, and over-the-counter drugs by all generations.
Mongolia is increasing its scrutiny of chemical plants that produce
precursor chemicals, particularly those with foreign investment or
those seeking to export precursor chemicals. Mongolian internal
corruption and financial crimes appear unrelated to narcotics
activities. The weakness of the legal system and financial structure
leave Mongolia vulnerable to exploitation by drug traffickers and
international criminal organizations, particularly those operating in
China and Russia.

North Korea

There have been regular reports from many official and unofficial
sources for at least the last 20 to 30 years that the Democratic
People's Republic of Korea (DPRK-North Korea) encourages illicit opium
cultivation and engages in trafficking of opiates and other narcotic
drugs as a criminal state enterprise. Those reports continued in 1999,
with several seizures of drugs alleged to be North Korean in origin
and several arrests of North Korean officials.

Uncertainty and speculation characterize all attempts to analyze the
significance of the reported incidents. We have not been able to
confirm the extent of North Korea's opium production, though we did
receive one eye-witness report of "large fields" of opium growing in
North Korea. Even the North Koreans admit that opium is grown there,
while maintaining that it is used for medicines and painkillers. There
continues to be no evidence that any North Korean trafficking of
illicit drugs has a significant impact on the United States.

This past year's drug seizure reports seem to point to more
trafficking in amphetamine-type stimulants (ATS), and less in heroin
and opium. There were also two recent large seizures of a controlled,
but not illicit drug, rohypnol, the so called "date rape" drug. One of
these seizures occurred in Egypt in January 1998. It involved a North
Korean diplomat assigned to Syria. Another incident occurred in April
1999 in the Czech Republic. 55Kg of rohypnol was seized in this latter
incident; the drugs had been posted to the Czech Republic by a North
Korean Embassy officer in Sophia, Bulgaria. It is unclear whether the
rohypnol in both of these seizures was manufactured in North Korea.
There were other incidents reported, one in Taiwan in May of 1999 and
another in Japan in October of 1999, involving transfers of North
Korean drugs at sea, possibly from North Korean trawlers. In April of
1997, Japanese Customs officials at a small port in southern Japan
seized 130 pounds of methamphetamine, offloaded from a North Korean
freighter, and marked as honey. Defector reports also continued to
point to state complicity in drug manufacturing and trafficking.

The extent of opium cultivation in North Korea is not clear. Estimates
of the area under cultivation range from 4200 hectares (10,378 acres)
to 7000 hectares (17,300 acres) and estimates of opium production
range from 30 Metric Tons (MT) to 44 MT annually. This would yield
from about 3 to 4.5 metric tons of heroin. None of these estimates
have been confirmed, however, and the amount of opium necessary for
medicines is simply unknowable. Agricultural problems in North Korea,
including flooding and shortages of fertilizer and insecticides,
suggest that current opium production might be well below these
estimates. There has also been a very clear shift in Asian drug abuse
away from opium towards methamphetamine-type drugs. This change in the
reported illicit market for North Korean drugs would also suggest that
cultivation of opium has declined.

There have been numerous reports this year and in previous years that
opium is refined into heroin in North Korea. More recently, North
Korea is reportedly stepping up its manufacturing capacity for
methamphetamine production. The proximity of the fast-growing Japanese
market for illicit methamphetamine (more than 2 million casual users
consuming an estimated 10-14 tons per year ) and large seizures in
1998 and 1999 in Japan of methamphetamine traceable to North Korea
also suggest an increase in methamphetamine production. Large scale
imports of ephedrine (a chemical precursor of methamphetamine), such
as 2.5 MT, temporarily held by Thai authorities in January 1998 as it
transited from India on its way to North Korea, well beyond what many
observers believe would be adequate for North Korea's own needs, also
suggest increased metemphetamine production in North Korea.

The U.S. does not appear to be a market for North Korean traffickers.
Russia and China are the key markets and transit routes for North
Korean drugs. From Russia and China, opiates and increasingly
methamphetamine are trafficked to Asia and on to Europe. North Korean
methamphetamine is reported to have gained a large market share of the
sharply expanding illicit market in Japan. One of the largest
methamphetamine seizures in Japanese enforcement history, some 600Kg
in October of 1999 in Fukuoka, has a North Korean connection. Suspects
being held in Japan in connection with the case told investigators
that their vessel met a North Korean vessel, offshore, where the drugs
were transferred. An additional 100 Kg of reported North Korean
methamphetamine was seized in April 1999 by prefectural authorities
near Kobe, secreted among clams used for traditional Japanese soup.
There have also been press reports of North Korean logging firms
operating in Russia's Far Eastern provinces receiving suspicious
shipments of opium from North Korea, and there are instances in which
North Korean employees of these firms have fallen victim to sting-type
"buy/bust" operations in Russia. Two individuals prosecuted after one
of these buy/bust operations in Russia's Far Eastern provinces were
reported in July 1999 by the Russian press to have been sentenced to
eight and five years, respectively.

North Korean individuals employed as diplomats and in quasi-official
capacities at North Korean state trading companies have been regularly
apprehended by the customs and police officials of many countries
trying to smuggle narcotics produced elsewhere. For example:

-- In August of 1995, Ethiopian law enforcement officials arrested a
North Korean for smuggling cocaine;

-- In 1998, Russian officials arrested two North Korean diplomats for
smuggling from Mexico to Moscow 77 pounds of cocaine with a street
value of $4 million;

-- In January 1998, Egyptian police arrested a North Korean diplomat
who was serving in Syria as he attempted to smuggle 500,000 tablets of
rohypnol, the so-called "date-rape drug," into Egypt. This is believed
to be the largest seizure ever of the controlled substance rohypnol.

When asked to comment on instances of North Korean citizens, even
diplomats, being apprehended with narcotics, the North Korean
government attributes these criminal actions to the individuals or to
their organizations, and claims that they will be punished if returned
to North Korea. However, given North Korea's economic difficulties,
many argue that the state has become involved in criminal activity to
earn foreign exchange. This view finds support from allegations by
North Korean defectors who describe official jobs involving the
transport and trafficking of narcotics.

It remains unclear whether alleged North Korean involvement in illicit
activities results from state policy, or is simply the actions of
criminal individuals or entities. However, as the reports multiply, it
seems more likely that the state itself is involved in drug
manufacture and trafficking. For example, repeated arrests of official
North Koreans while trafficking narcotics-diplomats, employees of
state enterprises, etc.-suggest, at the least, official tolerance of
criminal activity, at the worst direct state involvement in drug
trafficking and manufacture.

As in the case of narcotics, there have been many other incidents and
arrests which suggest North Korean state involvement in other criminal
enterprises. Among the crimes most frequently mentioned are
counterfeiting, illicit trade in endangered species, fraudulent
antiques, counterfeit CDs, tapes, and cigarettes. In April 1998,
Russian police arrested a North Korean who was caught passing $30,000
in counterfeit $100 bills. There are reports in the press and from
trade sources that North Korea has a high quality press which produces
excellent, hard-to-detect counterfeit notes.

The growing evidence of state complicity by North Korea remains of
profound concern, as the U.S. seeks to determine whether the North
Korean state has chosen to sponsor illegal activities as a matter of
state policy.

Despite close and careful monitoring of North Korea by many law
enforcement and foreign affairs agencies, it has been difficult to
resolve the dilemma of the extent to which North Korea is involved in
drug manufacture and trafficking. It has also been difficult to
determine whether North Korea directs criminal activities, including
illicit drug manufacture and trafficking. There is considerable
evidence suggesting North Korean complicity in illicit activities,
indeed direction of illicit activities, but almost all of that
evidence is subject to alternative explanations, which put the blame
on the individual or on the entity where the individual works.

Over the coming year, the United States will continue to monitor North
Korean cultivation and trafficking to determine the extent of any
opium poppy cultivation, and the effect that North Korean drug
trafficking has on the United States. If we can confirm that there is
illicit opium poppy cultivation of 1000 hectares or more, or that
North Korean heroin or methamphetamine transiting North Korea
significantly affects the United States, we will add North Korea to
the list of major drug producing and drug transit countries.

The Philippines

I. Summary.

In 1999, combating narcotics trafficking has continued to be a
priority for President Estrada's administration. The Government of the
Philippines is reviewing options for restructuring its law enforcement
agencies to bolster effectiveness in combating drug trafficking.
Legislation is in the works to create a single drug enforcement agency
(loosely modeled on the U.S. Drug Enforcement Administration) and GOP
officials hope it will be enacted early in 2000. Legislation on money
laundering and asset forfeiture is still pending. The Philippines
continues to serve as a transit point and producer of crystal
methamphetamine, an exporter of marijuana and hashish, and as a
transit country for Southeast and Southwest Asian heroin. The
Philippines is a party to the 1988 UN Drug Convention.

II. Status of Country.

The Philippines is a significant producer and exporter of marijuana,
but the U.S. is not a major destination. Stemming production is
difficult owing to topography, corruption, and the lack of effective
or well-funded countermeasures. Marijuana growers generally cultivate
in areas which are inaccessible by vehicles, and controlled by rebel
groups. The Philippines is not a significant producer of other drugs,
although production of crystal methamphetamine is a growing problem.

Although law enforcement efforts continue to limit the use of
Philippine airports as transshipment points for narcotics, an increase
in seizures locally, as well as in the U.S. and Guam underscore the
ongoing problem. In 1999, a trend of heroin and cocaine trafficking by
West African nationals continued. However these groups were observed
to target primarily Japanese and European cocaine markets using Brazil
as the source country and transporting the drugs via commercial air
couriers.

Precursor chemicals for producing crystal methamphetamine are smuggled
into the Philippines with relative ease. In 1999, several clandestine
methamphetamine manufacturing or recrystalization laboratories were
seized by the Philippine authorities. The Philippine National Police
(PNP) - working with the National Bureau of Investigation (NBI), the
National Drug Law Enforcement And Prevention Coordinating Center
(NDLEPC) and The Presidential Anti- Organized Crime Task Force
(PAOCTF) - have organized specialized units to work against
clandestine laboratories. Crystal methamphetamine is the favored drug
in the Philippines. Some of it is produced domestically and some is
smuggled in from surrounding countries, primarily the People's
Republic of China. In late 1999, a significant trend emerged in which
containers are used to smuggle methamphetamine into the Philippines.
This trend appears to be an active supplement to the use of ordinary
cargo vessels to bring crystal methamphetamine and precursors to the
Philippines. The Philippines exports crystal methamphetamine to Japan,
Australia, and the U.S. including Guam and Saipan. The Philippines is
not a major money-laundering center, although stringent bank secrecy
laws make this a potential problem.

III. Country Actions Against Drugs in 1999

Policy Initiatives. The Estrada administration is seeking appropriate
legislation to meet 1988 UN Drug Convention objectives and to give a
proposed new drug enforcement agency the necessary tools to carry out
its mandate. A bill patterned after the U.S. RICO (Racketeering
Influenced and Corrupt Organizations) statute is pending in congress.
This statute would include money laundering, asset seizure, and
conspiracy provisions. Unfortunately, the anti-graft provisions of the
proposed RICO statute make its passage politically difficult. The
Philippine bankers' association's adamant opposition to any change in
current bank secrecy laws is also an impediment to enactment of asset
seizure laws. The administration is also determined to seek passage of
legislation authorizing consensual eavesdropping and non-consensual
wire-tapping. The Philippine congress passed legislation reorganizing
the PNP which will authorize increased pay and training for officers
and enable greater focus on counternarcotics efforts.

Other legislation proposed or pending in 1998 was resubmitted to the
congress in 1999 and the president has ordered the congress to
"fast-track" this legislation. Presently, there are 14 bills pending
in congress relating to drug law enforcement. In addition to the lack
of necessary legislative tools, Philippine anti-drug efforts are
hampered by weaknesses in tracking, intelligence collection, and law
enforcement techniques and standards. All of these problems are
exacerbated by the lack of resources.

The GOP has strongly advocated the establishment of an ASEAN
transnational crime center, and has offered the Philippines as the
site for the proposed center.

Accomplishments. The Dangerous Drugs Board (DDB) has plans for an
integrated rural development program to eliminate marijuana
cultivation through crop substitution. Although these crop
substitution efforts have not yet been funded, other marijuana
eradication efforts are continuing.

In October 1998, the DDB established a precursors and essential
chemicals unit to implement the provisions of Article 12 of the 1988
UN Drug Convention. Among other things, the unit is responsible for
monitoring chemical establishments (including importers,
manufacturers, and distributors), narcotics intelligence coordination
with domestic and foreign counterparts, and information dissemination.
To date, the unit has licensed approximately 130 chemical precursor
establishments in the Philippines, conducted compliance
inspections/investigations of 26 establishments and imposed
administrative sanctions on one establishment for failing to comply
with importation requirements.

Law Enforcement Efforts. President Estrada has placed a number of
well-qualified officials in key judicial and law enforcement positions
and has given them a clear mandate to act. In January 1999, President
Estrada established by executive order the National Drug Law
Enforcement And Prevention Coordinating Center (NDLEPCC) to act as the
centerpiece of the republic's counternarcotics effort for supply side
and demand reduction programs. Philippines officials requested and
received DEA and INL assistance and advice in the organization and
management of the Center and demand reduction programs. Additionally,
the President established the Philippine Center For Transnational
Crime (PCTC) to focus the country's enforcement efforts against
international and domestic crime. The Presidential Anti-Organized
Crime Task Force (PAOCTF) has also been extremely active in combating
drug trafficking. The PAOCTF recently seized 420 kilos of crystal
methamphetamine, the largest seizure in the history of the
Philippines.

The DDB, Philippine National Police (PNP) and customs narcotics groups
together organized a specialized chemical control unit in 1998. The
goals of the unit are to track precursor chemical end-users,
investigate the diversion of chemicals from the end-users, investigate
smuggling of precursor chemicals, and target clandestine laboratory
production.

Corruption. Philippine law enforcement efforts suffer from corruption
among police, customs, and military officials. Judicial corruption is
also acknowledged to be an impediment to drug prosecutions. There were
some arrests and prosecutions of law enforcement and military
officials for narcotics-related corruption in 1999, and early in 1999
the chief of the Philippine national police was suspended for
allegedly coddling drug lords. Efforts are underway to strengthen
internal controls within the PNP, and GOP officials are studying U.S.
DEA vetting procedures as a possible model for the proposed drug
enforcement agency. In November 1999, President Estrada installed a
new chief of the PNP who has set aggressive new standards for the
conduct of the police in an effort to rid the PNP of corrupt
practices.

Agreements and Treaties. Judicial assistance and extradition requests
are being processed through the U.S.-GOP extradition and mutual legal
assistance treaties. The Philippines is a party to the 1988 UN Drug
Convention.

Cultivation/Production. Marijuana is grown throughout the Philippines.
The largest areas of cultivation in the mountainous areas of northern
Luzon, central Visayas, and central, southern and western Mindano.
Eradication efforts lost ground in 1999 due to financial constraints.

Reporting indicates that crystal methamphetamine production in the
Philippines is on the rise. The lack of an effective GOP tracking
system, however, makes it hard to quantify this increased production.

Drug Flow/Transit. The use of the Philippines as a transit point for
commercial air couriers of heroin has continued at levels roughly
equivalent to 1998. There were no arrests of airport couriers. Most of
this heroin reaches the Philippines from Thailand and Pakistan and is
destined for the Canada, Europe, Africa, and other countries in
Southeast Asia. Some drugs transiting the Philippines are headed for
the U.S., but not to a major extent. In response to successful law
enforcement efforts to stem courier activities, traffickers are also
using express mail services. West African criminal gangs appear to be
the masterminds of this heroin transshipment.

In 1999, Philippine law enforcement officials continued to seize
express mail parcels containing cocaine. This cocaine originated in
Brazil and was apparently destined for the Philippines and Southeast
Asia.

Crystal methamphetamine continues to be smuggled by ship from the
People's Republic of China. In addition, criminals transship crystal
methamphetamine by Federal Express to the United States and by
commercial air couriers to Guam and the mainland United States.

Domestic Programs (Demand Reduction). In 1999, at the urging of the
DEA, the Philippine drug law enforcement community revisited the issue
of the number of drug addicts and determined that the number is
probably close to one million nationwide. However, the GOP law
enforcement agencies are still studying the issue to determine the
number of addicts or abusers involved in each drug category.

President Estrada's executive order creating the NDLEPCC gave the new
agency the lead in demand reduction. The NDLEPCC, in concert with the
Philippine information agency and the DDB, developed a new initiative
called "MAD" (which translates into "Citizens Against Drugs"). This
program, which focuses on demand reduction through community based
activism, has been extremely successful. A "MAD" rally in Manila drew
approximately 500,000 people for the day-long festivities.

IV. U.S. Policy Initiatives and Programs.

U.S. Policy Initiatives. As in 1998, the primary goals of the U.S.
counter-drug policy in the Philippines are to: 1) work with local
authorities to prevent the Philippines from being used as a transit
point by trafficking organizations; 2) assist Philippine authorities
to improve the capabilities of Philippine law enforcement entities to
act against drug trafficking organizations; 3) support legislative
processes to pass pending laws against money laundering, asset
forfeiture laws and other related anti-drug legislation to strengthen
GOP counternarcotic institutions; 4) prevent the shipment of crystal
methamphetamine to the U.S. and its territories of Guam and Saipan;
and 5) prevent the transshipment of heroin to the United States.

Bilateral Cooperation. DEA continues to work with Philippine
government agencies, especially: NDLEPCC, PNP, NBI, and Customs, among
others to reduce the flow of drugs to the U.S. from the Philippines.
Planned USG-funded training of Philippine officials will increase both
cooperative efforts and local law enforcement capabilities. USG-funded
demand reduction training aimed at preventing recidivism by drug users
who have undergone drug rehabilitation programs was completed in
September 1999. There has been no USG-funded in-country counter-drug
law enforcement training provided to the Philippines since 1995.
However, the U.S.-funded International Law Enforcement Academy in
Bangkok, Thailand, has provided training to approximately 60 law
enforcement personnel since the academy opened in 1999.

The Road Ahead. In 2000, the USG hopes to enhance the training
available to GOP counterparts through U.S.-funded programs.
Prospective 1999 in-country and regional training (at ILEA in Bangkok)
will focus on enhancing host country abilities to dismantle criminal
organizations affecting the Philippines and the U.S. The USG will also
continue to promote law enforcement institution-building, encourage
improved internal controls (to stem corruption), and encourage passage
of needed laws (e.g. through providing model legislation). The USG
also has plans to continue to participate in intelligence exchanges
with the Philippine law enforcement community. The goal of these
efforts is to help the Philippines combat its internal drug problem
and to facilitate cooperation to curb the drug flow to the U.S.

Singapore

I. Summary. 

Singapore does not produce precursor chemicals or narcotics. However,
as a major regional financial and transportation center, it is an
attractive venue for money laundering and drug transshipment. The
government of Singapore (GOS) effectively enforces its stringent
anti-drug policies through strict laws (including the death penalty),
vigorous law enforcement and active prevention programs. The Central
Narcotics Bureau (CNB) of Singapore cooperates effectively with law
enforcement agencies from the U.S. and other countries. Singapore
anti-narcotics law enforcement agencies are virtually free of
drug-related corruption and regularly attend U.S.-sponsored training
programs. Though no formal agreement exists between the U.S. and
Singapore, the GOS has cooperated extensively with U.S. law
enforcement agencies in drug money laundering and interdiction cases.
For the fifth straight year, the total number of people arrested on
charges of possession, use, or trafficking in drugs in Singapore has
dropped. Singapore is a party to the 1988 UN Drug Convention and
earlier international drug conventions.

II. Status Of Country. 

Singapore does not produce narcotics or precursor chemicals. The
Central Narcotics Bureau (CNB) works with the United States Drug
Enforcement Administration (DEA) to closely track the import of small
amounts of precursor chemicals for legitimate processing and use.
CNB's precursor unit monitors and investigates any diversion of
precursors for illicit use.

As a regional financial center, Singapore attracts investors from
around the world, including money launderers. Bank secrecy laws and
the lack of routine currency reporting requirements make Singapore
attractive to drug traffickers to launder and move their money. The
1999 amendment to the Drug (Confiscation Of Benefits) Trafficking Act
(DTA) extended the application of money laundering laws to
non-drug-related serious crimes.

Singapore has the busiest (in tonnage) sea port in the world. Due to
the sheer volume of cargo that transits the port, some of that cargo
contains illicit materials. The GOS is aware of the problem and has
taken action to stop the transshipment of illicit drugs, though there
is room for improvement. GOS officials act effectively when they
obtain information on possible transshipment of narcotics through
Singapore and share information with DEA officers on a case-by-case
basis. Absent specific information about a drug shipment, GOS
officials have been reluctant to impose tighter interdiction
requirements at the port, out of concern that this would interfere
with the free flow of goods and thus jeopardize Singapore's position
as the region's primary shipping entrepot.

III. Country Action Against Drugs in 1999. 

As a party to the 1988 UN Drug Convention, Singapore treats
narcotics-associated money laundering as a criminal offense. Under the
DTA, financial institutions must report suspicious transactions and
positively identify customers engaging in large currency transactions.
Banks maintain adequate records to respond quickly to GOS inquiries in
narcotics-related cases. However, there are no routine reporting
requirements on amounts of currency that can be brought into or out of
Singapore.

In July 1998, Singapore amended the Misuse Of Drugs Act (MDA) to crack
down harder on illicit drug use. Third-time offenders are subject to a
minimum of 5 years imprisonment and 3 strokes of the cane. Law
enforcement officers may now require urinalysis tests for every
Singapore citizen and permanent resident returning from outside the
country. Those who test positive are treated as if they consumed the
illegal drug in Singapore. About 500 arrests have been made since the
amendment took effect. Because of the increase in methamphetamine
abuse, anyone caught with more than 250 grams of crystal
methamphetamine "ice" is subject to the death penalty. Those convicted
of having more than 25 grams of methamphetamine or 10 grams of Ecstasy
will face charges of drug trafficking, which carries a minimum of five
years imprisonment and five strokes of the cane.

Law Enforcement. For the fifth straight year, the total number of
people arrested on charges of possession, use, and drug trafficking
has dropped, even though there was a rise in the number of arrests for
ecstasy and methamphetamine. The prosecution rate for 1998 was 34.5
percent, a slight rise from the year before, despite the drop in the
actual number of people arrested on drug charges. The final 1999
arrest figures for ecstasy possession are expected to rise by 10-20
percent, but the overall number of such arrests remains low
(approximately 200). Methamphetamine arrests are expected to increase
by approximately 10 percent. On the other hand, arrests for cannabis
and heroin no.3 are expected to decline. CNB efforts targeting heroin
no. 3 abusers and long term imprisonment for hard core opiate addicts
are at least partially responsible for the decline in those arrests.
The CNB reports that of the 44 major operations it mounted in 1998, 29
of them were against drug syndicates. In 1998, authorities seized
nearly 142 kg of heroin, as well as 22.8 kg of opium, 21.8 kg of
cannabis, more than 35,000 psychotropic pills and over U.S. $340,000
worth of assets, including several motor vehicles.

Domestic Programs/Demand Reduction. Singapore uses a combination of
punishment and rehabilitation against first time offenders. Many first
time offenders are given rehabilitation instead of jail time. Adopting
the theme "Prevention: The Best Remedy'" Singapore authorities
organize sporting events, concerts, plays and other activities to
reach out to all segments of Singapore society on drug prevention.
Drug treatment centers, halfway houses and job placement programs
exist to help addicts successfully readjust to society. At the same
time, the GOS has toughened anti-recidivist laws. Three-time offenders
face long mandatory sentences and caning. Convicted drug traffickers
are subject to the death penalty.

Bilateral Cooperation. Singapore and the U.S. continue to enjoy good
cooperation on a number of levels. The GOS has never refused a U.S.
Government request for extradition. In 1999, approximately two dozen
GOS law enforcement officials attended training courses at the
International Law Enforcement Academy in Bangkok on a variety of
transnational crime topics. The DEA provided training to CNB officers
on investigative techniques and technical equipment, international
controlled deliveries, mail and parcel interdiction, precursor
chemical training and airport interdiction. DEA officers can access
Singapore port-net, a computer tracking system run by the port, which
can track all ships and containers passing through the port of
Singapore.

Agreements and Treaties. Singapore is a party to the 1961 UN Single
Convention and its 1972 Protocol, the 1971 UN Convention on
Psychotropic Substances, and the 1988 UN Drug Convention. Extradition
is conducted through the 1931 U.S.-UK Extradition Treaty, which
remains in force between the U.S. and Singapore. In the absence of a
formal mutual legal assistance treaty between the U.S. and Singapore,
assistance is provided only through the use of Letters Rogatory. Due
to strict bank secrecy laws, bank records cannot be obtained through
Letters Rogatory. The U.S. and Singapore are in the process of
negotiating a drug-designation agreement, which will allow for
provision of abroad range of assistance in drug-related cases.

Corruption. Singapore's Central Narcotics Bureau (CNB) is charged with
the enforcement of Singapore's anti-drug laws. The CNB, and other
elements of the government, are effective and virtually free of
drug-related corruption.

IV. U.S. Policy Initiatives and Programs

The Road Ahead. The U.S. Government would like to complete a
drug-related financial and money laundering agreement with the
government of Singapore and would welcome new currency reporting
requirement laws and increased transshipment monitoring efforts.

South Korea

I. Summary

The Republic of Korea (ROK or South Korea) was a strong regional
player in counternarcotics efforts in 1999. In June, the ROK hosted
the Anti-Drug Liaison Officials' Meeting For International Cooperation
(ADLOMICO) conference, attended by 120 representatives from 16
different countries. Regarding enforcement, there were no
methamphetamine laboratories discovered in 1999, and availability of
illicit drugs for domestic use, primarily methamphetamine, increased
only slightly. The ROK supreme prosecutors office continued its
nationwide drug education/demand reduction program during 1999.

South Korea is not a major drug-producing or drug-transiting country,
although cocaine and heroin transiting activity increased during 1999.
Additionally, the transiting of cocaine precursor chemicals increased
significantly during the same period. For example, in May 1999, 12
tons of potassium permanganate (PP), a cocaine precursor seized in
Santa Marta, Colombia, had been sent via Korea from China. This
seizure followed an additional 10-ton load, which was also sent to
Colombia in March 1999.

II. Status of Country 

The ROK has a comparatively modest drug problem. A slight increase in
methamphetamine use surfaced in 1999. Importation of heroin and
cocaine for local consumption remained relatively stable. Overall, the
drug user population in Korea remains small. Korea reported only
8,000-9,000 drug arrests for the year for a population of
approximately 46 million. Additionally, the most dramatic development
noted during 1999 was the increasing use of the ROK as a transit
country for chemical precursors. As mentioned earlier, two sizable
shipments of potassium permanganate were sent from Korea to Colombia.
Delivery of the shipments, which were received from China, was
brokered in Hong Kong.

III. Country Actions Against Drugs in 1999 

Policy Initiatives. An extradition treaty between the U.S. and Korea
entered into force December 20, 1999. This treaty has all the
attributes of modern extradition treaty. The treaty should facilitate
apprehension and extradition of fugitives, including those charged
with drug offenses.

Agreements and Treaties. A U.S.-Korea MLAT has been in force since
1997, and an extradition treaty entered into force on December 20,
1999. Korea is a party to the 1988 UN Drug Convention, the 1961 UN
Single Convention as amended by the 1972 protocol, and the 1971 UN
Convention on Psychotropic Substances. The USG has concluded a Customs
Mutual Assistance Agreement (CMAA) with the Government o South Korea.

Illicit Cultivation and Production. Although methamphetamine had
previously been produced in the ROK, evidence in 1999 suggests that
this is no longer a problem. This is most likely due, to legislation
passed in 1989 that treats illicit traffic in ephedrine
(methamphetamine precursor) as a criminal offense. Laws prior to that
were administrative in nature and viewed such importations as
pharmaceutical violations. Since 1989, methamphetamine laboratory
discoveries have continually declined to none this year. The only
other drug produced in Korea is marijuana. The marijuana, which is
cultivated legally for hemp and is used for fabrics and fertilizer, is
grown in the northeast and southwest areas of the ROK. A portion of
the licit marijuana crop is believed to be diverted for illegal use. A
derivative of marijuana, hashish, is found only in small amounts in
the ROK, and is believed to be imported by West Africans and Middle
Eastern smugglers.

Regional Cooperation. The ROK plays a leading role in regional
anti-narcotics cooperation. Law enforcement personnel share and
develop information with the U.S. and other countries. The ROK hosts,
at ROK expense, the Anti-Drug Liaison Officials Meeting Of
International Cooperation (ADLOMICO). During the last three-day
conference, which was held in Seoul, the U.S. Ambassador to Korea made
opening remarks. One hundred twenty representatives from 16 different
countries attended the conference. ADLOMICO was co-chaired by DEA
representatives in Korea who, along with representatives from DEA
headquarters, gave presentations on international drug trafficking. An
open forum allowed each country the opportunity to make a presentation
and answer questions.

Demand Reduction. Demand reduction through drug awareness and
train-the-trainers is carried out under the auspices of the Supreme
Prosecutor's Office. Every summer, representatives from the office
travel throughout Korea and instruct teachers regarding the perils of
drug usage, drug identification, and how to recognize and counsel
students suspected of using drugs. The teachers then pass along this
information to their students. Additionally, the Pusan district
prosecutor's office is in the process of initiating a drug awareness
program. The program uses a variety of approaches to curb drug use,
including education and treatment.

Law Enforcement Efforts. Cooperative law enforcement efforts with the
USG by ROK authorities increased in 1998/9. DEA and the U.S. Customs
(USCS) have increasingly worked with the ROK supreme prosecutor's
office, district prosecutor's offices in various cities, and Korean
Customs, giving rise to the successful resolution of several drug
cases. More recently, U.S. and ROK authorities have jointly
investigated shipments of precursor chemicals used in cocaine
production in Colombia that transited the ROK. The investigation so
far has resulted in two arrests. In October 1998, Korean Customs, the
lead counternarcotics enforcement agency in the ROK, established an
airport unit in concert with DEA designed to interdict drug
traffickers and identify suspicious luggage or parcels. This
initiative proved successful in 1999, but to build on this success,
further training is needed.

Corruption. Although media reports of corruption among public
officials in the ROK surface periodically, there is no evidence public
officials were involved in narcotics trafficking in 1999, or that
corruption adversely influenced narcotics law enforcement in Korea.

Drug Flow/Transit. Methamphetamine, cocaine, and heroin transit Korea
bound for other locations. Methamphetamine is often destined for the
U.S. via Guam. In 1999, a kilogram shipment from Manila, organized by
Korean traffickers in Seoul, was seized by DEA. DEA Seoul worked
closely with Korean officials during 1999 to expand this
investigation.

Heroin for local use enters the ROK sporadically from China while
heroin, coming from Thailand, transits Korea on its way to markets
elsewhere. Additionally, West African traffickers continue to be a
heroin trafficking threat in Korea.

Money-Laundering. At this time, South Korea appears to have little to
no significant narcotics money-laundering activity. The Korean
government's financial investigations generally focus on preventing
the transfer of funds out of the country. Laws do not presently exist
which would make the transfer of funds in furtherance of other illegal
activities a crime. There is currently legislation being proposed in
the national assembly that will, if enacted, provide for criminal
prosecution of money laundering activities. This proposed legislation
is similar to U.S. law as it relates to narcotics offenses.

IV. U.S. Policy Initiatives and Programs 

Bilateral Cooperation. Both DEA and USCS work closely with Korean
enforcement authorities. They have supported Korean investigations
through exchange of information. In an effort to target trafficking
through Korea, DEA encouraged the establishment of "Operation
Airbust," an airport interdiction, drug detection program. The
program, which established a 25-person unit, has already met with
major success, and more are sure to follow.

Road Ahead. Law enforcement officials from the ROK have proven to be
strong allies in the anti-drug effort, and would greatly benefit from
additional training; such training is under consideration. Fine-tuning
their skills, would of course, also benefit the U.S. and surrounding
countries due to the volume of drugs that transit the ROK.

Taiwan

I. Summary

The United States considers Taiwan a major drug-transit point for
drugs affecting the U.S. due to its geographic location and its role
as a regional transportation/shipping hub. The UN removed Taiwan in
1996 from its list of major drug transit centers. Despite the lack of
recent seizures in the U.S. of heroin that has transited Taiwan,
Taiwan individuals with connections to organized-crime groups are
known to be involved in drug trafficking in the Southeast Asian
region. In view of Taiwan's geographic location, its role as a
regional shipping hub, and activities of organized-crime groups, it is
likely that drugs transit Taiwan to the West, including the U.S.

In 1999 Taiwan continued its aggressive domestic counternarcotics
program and its excellent effective cooperation with the U.S. The
authorities investigated 68,612 new narcotics cases through October
1999, an increase of 48.9 percent compared to the same time period in
1998. The authorities seized more narcotics, primarily of
methamphetamine-type stimulants, in the first ten months of 1999 than
all of 1998. Indictments and convictions for drug-related offenses on
Taiwan continued to fall in 1999. The decline reflects the first full
year in which a law has been in effect allowing first-time addicts to
participate in drug treatment programs in lieu of imprisonment. Taiwan
cannot be a party to the 1988 Drug Convention because it is not a UN
member. Taiwan authorities, nonetheless, have passed and implemented
laws in compliance with the goals and objectives of the Convention.
Taiwan also continued to expand counternarcotics cooperation with U.S.
law-enforcement agencies through the American Institute in Taiwan
(AIT); in some cases, however, authorities in Taiwan are not
responsive to U.S. requests for assistance in criminal investigations.

II. Status of Taiwan

Taiwan does not cultivate or produce illegal narcotics, but the
illegal consumption of both heroin and methamphetamine remains a
serious social problem.

Mainland China continues to be the primary source of drugs entering
Taiwan. Some 78 percent of methamphetamine and 17 percent of the
heroin, whose origin could be identified, came into Taiwan from
mainland China.

Despite the lack of heroin seizures in the U.S. that can be directly
linked to Taiwan, USG analysts continue to view Taiwan as a major
transit point for heroin significantly affecting the U.S. The
conclusion is based on analyses of regional trafficking patterns and
Taiwan's role as a regional transportation/shipping hub. Taiwan's
Kaohsiung harbor is the world's third busiest container port and is a
major center for shipping to and from Southeast Asian ports. Of the
nearly 6.27 million TEU (twenty-foot-equivalent unit) shipping
containers handled at Kaohsiung port last year, a significant
percentage was "in transit" and, according to standard international
practice, not subject to inspection by Taiwan Customs. Taiwan Customs
examined 3.41 percent of inbound containers and 0.73 percent of
outbound containers.

Money laundering of drug proceeds is a problem in Taiwan, but money
laundering also occurs for non-narcotics-related activities, such as
insider trading and smuggling. Through October 1999, 1,003 cases of
suspicious financial transactions were investigated, of which charges
were filed in seven cases and 116 cases were referred for further
investigation.

III. Taiwan Actions Against Drugs in 1999

Policy Initiatives. Taiwan has continued an aggressive island-wide
counternarcotics campaign that includes both harsh sentences for
narcotics trafficking and social rehabilitation programs. This year
was the first full year that Taiwan's tough Omnibus Hazardous
Narcotics Prevention Act was in force.

On May 11, 1999, the Legislative Yuan passed two key narcotics laws:
The "Law for Management of Controlled Drugs" and the "Organizational
Law for the Bureau of Controlled Substances". These laws, which AIT
and the U.S. Drug Enforcement Administration (DEA) encouraged the
Taiwan authorities to adopt, provide the legal basis to control the
manufacture and sale of phenylpropanolamine (PPA). They also allow
pre-export notification on shipments of PPA to other countries, as
well as establish a new agency to monitor the production, use, and
sale of narcotics in Taiwan. In addition, these laws authorize the use
of small amounts of seized drugs for research purposes.

The Taiwan authorities want greater cooperation with the People's
Republic of China (PRC) to combat drug trafficking, since many of the
narcotics-particularly methamphetamine-entering Taiwan come from the
PRC. Taiwan's ability to block drug smuggling has been hampered by
cross-strait tensions and the concomitant lack of cooperation from PRC
law-enforcement agencies. The Taiwan authorities have indicated that
they would like to include law-enforcement issues in the cross-strait
dialogue, when it resumes.

In order to improve Taiwan's ability to interdict cross-strait
smuggling, the Legislative Yuan in 1998 created the Maritime Police
Bureau. Approximately 20,000 officers staff this bureau, and it has a
total of 87 boats-four more boats will be added in the year 2000.
Organized into 16 squadrons, the bureau has stationed 13 boats on
Taiwan's west coast to operate in the Taiwan Straits. The Maritime
Police Bureau operates within 200 nautical miles off Taiwan's coast.
Its predecessor organization had a jurisdictional limit of only 12
miles. Under AIT auspices, DEA has met with bureau officials to
discuss intelligence sharing and pending operational matters.

The Money Laundering Prevention Center (MLPC) serves as the
enforcement and intelligence backbone of Taiwan's interagency
anti-money-laundering efforts. It continues to expand its contacts and
exchanges with the U.S. and other foreign law-enforcement officials.
The MLPC is a founding member of the Asia-Pacific Group on Money
Laundering and, in 1998, became a participant in the Egmont Group, an
informal international anti-money-laundering collective.

Through AIT, Taiwan has cooperated closely with U.S. law-enforcement
agencies in conducting investigations and joint operations involving
illegal narcotics trafficking and related crimes. Taiwan authorities
have responded positively and constructively to U.S. requests and
initiatives related to counternarcotics issues. Over the past year,
Taiwan law-enforcement officials continued to expand their exchanges
through AIT with U.S. and regional law-enforcement agencies to share
information collected in Taiwan on cases extending beyond the island
itself.

Accomplishments. The Taiwan authorities continued to investigate
vigorously all potential narcotics leads. By the end of October 1999,
Taiwan officers seized 70.62 kilograms of heroin and 1139.34 kilograms
of methamphetamine. Those seizures represent a decrease of 44 percent
for heroin and a 50 percent increase for methamphetamine compared to
the same period in 1998. The number of individuals charged with
narcotics crimes in the first ten months of 1999 decreased 37.4
percent to 8,044. The decline is due, in part, to provisions in the
Hazardous Narcotics Prevention Act, in force for its first full year
in 1999. The Act provides that first-time users who successfully
undergo treatment no longer face criminal charges. Likewise, the
number of narcotics-related convictions through October 1999 (6,511)
also decreased by 63.7 percent from the 1998 ten-month conviction
rate.

Law Enforcement Efforts/Corruption. The Ministry of Justice plays a
major role in formulating counternarcotics policies and legislation.
The Ministry of Justice Investigation Bureau (MJIB) and the National
Police Administration's Criminal Investigation Bureau (CIB) are
Taiwan's lead counternarcotics law-enforcement agencies.

Taiwan's law-enforcement personnel are fully committed to the fight
against narcotics trafficking. Through October 1999, they investigated
more than 68,612 new cases. Taiwan has continued a crackdown on
organized crime and is aggressively pursuing cases of public
corruption. To date, there have been no reported cases of official
involvement in narcotics trafficking on Taiwan. Taiwan authorities do
not tolerate the production or distribution of illegal drugs.

Taiwan law-enforcement officers have both the will and ability to
target major syndicates and individuals trafficking in drugs and have
worked with DEA on narcotics investigations. Counternarcotics
authorities are often hampered in their ability to conduct long-term
investigations, however, because of a legal requirement that
investigations be completed within a specified period of time. Laws
against entrapment are also strict, and undercover activity by
law-enforcement officials remains a legal gray area.

Agreements and Treaties. Taiwan authorities have long indicated an
interest in negotiating a mutual legal assistance agreement with the
U.S. AIT and its Taiwan counterpart, the Taipei Economic and Cultural
Representative Office in the United States (TECRO), are discussing the
possibility of negotiating a mutual legal assistance agreement and are
currently negotiating a customs mutual assistance agreement. In 1992,
AIT and TECRO signed a memorandum of understanding on counternarcotics
cooperation in criminal prosecutions. Taiwan is not now party to any
other formal bilateral counternarcotics agreements and cannot be a
party to the 1988 UN Drug Convention because it is not a UN member.
Nevertheless, the Taiwan authorities state they are committed to the
goals and objectives of the Convention and have enacted legislation to
bring Taiwan's counternarcotics laws into close conformity with its
provisions.

Despite the lack of formal agreements, Taiwan law-enforcement
officials work closely with their counterparts in the region. For
example, they have shared intelligence information with Japan, Hong
Kong, and The Philippines. This coordinated effort resulted in a
number of significant investigations, which led to the seizure of
large quantities of methamphetamine and numerous arrests. In addition,
through AIT, DEA and MJIB conducted a joint investigation over several
years that has led to the disruption of a major methamphetamine
trafficking organization. In a joint DEA-MJIB investigation, the MJIB
seized 76 kilograms of methamphetamine and 22 kilograms of heroin and
arrested four people in February 1998. MJIB developed more
information, which it shared with its Japanese counterparts. This
effort led to the October 1999 seizure of 616 kilograms of
methamphetamine in Japan and the arrest of 15 people. As a result of
another joint DEA-MJIB investigation, Japanese authorities were
provided with intelligence that resulted in the seizure of 101
kilograms of methamphetamine and the arrest of 17 people.

Cultivation/Production. Taiwan is not a producer of illicit drugs. 

Drug Flow/Transit. From January to October 1999, Taiwan authorities
seized 70.62 kilograms of heroin, of which 35.6 percent arrived from
Thailand, 14.2 percent from Hong Kong, and 10.2 percent from mainland
China. Of the 1139.34 kilograms of methamphetamine seized, 68.5
percent came from mainland China and 5.2 percent came from Thailand.
Some heroin is smuggled into Taiwan on container ships. Both heroin
and methamphetamine are smuggled into Taiwan through a variety of
methods and routes. Drugs traffickers send couriers and trawlers
carrying narcotics from numerous Asian locations to Taiwan's ports and
airport. Fishing boats continue to be the principal means of smuggling
heroin and methamphetamine from mainland China to Taiwan.

Domestic Programs. The Hazardous Narcotics Prevention Act, implemented
in 1998, recognized the importance of rehabilitation in addition to
more traditional methods of dealing with drug use. The Act requires
users to undergo observation and treatment at narcotics rehabilitation
centers. Users who succeed in kicking their habits do not face
criminal charges. If they fail to pursue treatment seriously, they may
be charged. While still in the early stages, this approach has had
some success. During the first ten months of 1999, 33,634 individuals
(including 31,396 adults and 2,238 juveniles) entered treatment
programs. Of the 32,968 individuals who completed treatment, the
authorities believe that 22,406 (68 percent) have not resumed drug
use.

Taiwan continues to employ an aggressive media campaign to educate the
public on the negative consequences of narcotics use and has expanded
school programs designed to discourage juveniles from trying drugs. In
addition, Taiwan is also encouraging private organizations to
participate in school programs and the management of rehabilitation
centers.

IV. U.S. Policy Initiatives and Programs

Policy Initiatives. The USG, through AIT, has vigorously pursued
closer working-level cooperation on counternarcotics matters,
including increased intelligence exchanges and joint operations.
During the past year, DEA has expanded its working-level contacts with
Taiwan law-enforcement agencies.

In March 1999, AIT and DEA met with various executive Yuan agencies
and Legislative Yuan members to encourage Taiwan to adopt a
comprehensive control system for the export of narcotic precursor
chemicals, including pre-export end-user checks. In May, the
Legislative Yuan approved two laws to control these items.

In April, a chemist from the DEA's special testing lab visited Taiwan
to exchange information with his counterparts at MJIB. Subsequently,
MJIB sent one of its chemists to the U.S. In June, DEA conducted
training for MJIB on undercover operations, informant handling, and
drug trafficking trends in Southeast Asia. Also in June, the Deputy
Director of DEA's Office of Diversion Control and the Chief of
Chemical Controls visited Taiwan to discuss controls on precursor
chemicals and pre-export checks.

Through AIT's voluntary and international visitor programs, the U.S.
has exposed key Taiwan prosecutors and legislators to U.S.
law-enforcement policymakers and programs.

Road Ahead. In the coming year, AIT and U.S. law-enforcement agencies
will continue to work closely with Taiwan to further promote joint
counternarcotics operations, money-laundering investigations, and
two-way exchanges of information.

Thailand

I. Summary 

At the time that the List of Major Drug Producing and Transiting
Countries was prepared at the end of last year, information available
indicated that in excess of 1000 MT of opium was cultivated in
Thailand. However, success with eradication programs during the
current crop year seems to have reduced cultivation to well under that
figure. Thailand, nevertheless, is a major drug transit country as a
significant amount of heroin transits Thailand on its way to the U.S.
Indeed, Thai authorities recently made a number of large seizures of
heroin headed for the U.S.

Throughout 1999, Thailand continued its long tradition of cooperation
with the United States and the international community in anti-drug
programs. Thailand added to its leadership role in transnational crime
issues by co-managing the International Law Enforcement Academy (ILEA)
with the U.S. in Bangkok. The U.S.-Thailand extradition relationship
continues to be highly successful, and Thailand continues to extradite
its nationals under the treaty. Indeed, Thailand is one of the top
three countries in the world in cooperating with the U.S. on
extradition requests. Extensive cooperative law enforcement programs
continued to bear fruit. According to RTG figures, 314.8 kilograms of
heroin were seized and 14 methamphetamine labs destroyed during the
first ten months of 1999.

Thailand has one of the most effective illicit narcotic crop control
programs in the world. USG analysts estimate that Thailand's opium
production in the 1999 growing season declined 62 percent from sixteen
to six metric tons. Poppy cultivation decreased by 38 percent to 835
hectares. Continuing trends established in previous years, opium
farmers continue to cultivate smaller, more isolated fields and engage
in multiple cropping to avoid eradication. In addition, activities
related to heroin production, such as the refining of raw opium into
morphine base, continued in northern border areas where drug producers
often combined heroin operations with the manufacture of
methamphetamine. Seizures and court actions under the asset seizure
law continued. With U.S. Drug Enforcement Administration (DEA)
support, the Royal Thai police (RTP) established the second in a
series of specially trained narcotics law enforcement units to target
major trafficking groups. Thailand's programs aimed at treatment,
epidemiology of substance abuse, and demand reduction continued;
nevertheless, the epidemic of methamphetamine abuse rapidly
accelerated, especially among the young, underscoring the need for
cost effective community based models of addiction treatment and
additional abuse-prevention training for both public and private
sector health professionals.

Money laundering legislation covering seven predicate offenses
including narcotics violations was passed in March 1999, and took
effect in August. A senior police official has been named to head the
64 person money laundering control office. The decision to become a
party to the 1988 UN Drug Convention is currently being cleared
through all relevant Thai Government agencies. Approval is expected
during the March 2000 parliamentary session with accession to follow
soon after.

II. Status of Country 

Thailand is no longer a major source of opiates for the international
market. Its opium poppy crop accounts for less than one percent of the
regional production of opiates. Supplies from Burma are necessary to
satisfy Thailand's own domestic demand for illicit opiates. The
growing abuse in Thailand of methamphetamine is a serious concern, as
traditional opiate traffickers in Thailand, Laos, and Burma are now
either producing and/or moving both opiates and amphetamine type
stimulants (ATS).

Traffickers have diversified drug smuggling operations to include
direct maritime transshipment from Burma to major regional container
ports. The UN Drug Control Program (UNDCP) estimates that 60 percent
of Burma's opiate production enters China. Nevertheless, good roads in
northern Thailand join refineries in Burma with the remainder of
Thailand's transport system. Thailand's advanced road network
continues to be a vital link in the supply line for commodities and
materials needed by trafficking groups in neighboring areas.
Thailand's position as a regional airline hub remains a factor in
narcotics trafficking. Thailand still produces marijuana in its
northeast region, although quantities have been reduced due to law
enforcement suppression activity in recent years, as well as by
competition from growers in Cambodia who benefit from lower production
costs and a less challenging law enforcement environment. There
continue to be reports of marijuana cultivation in Thailand's northern
and southern regions. The Office of the Narcotics Control Board (ONCB)
estimates that Thailand produced 48 MT of marijuana in 1998.
Methamphetamine is mostly produced in Burma. Some limited production
of methamphetamine does occur in Thailand. However, most of this is by
smaller scale producers using more simple production techniques that
turn out perhaps only one thousand tablets per day. These traffickers
purchase methamphetamine tablets from the larger Burmese-based
suppliers, crush the tablets, use additives (Caffeine and the like),
and re-tablet the material with new markings. The quality of these
tablets is obviously lower, so the market for these tablets are poorer
abusers who cannot afford higher quality drugs. By the end of October
1999, the RTG (Royal Thai Government) had destroyed fourteen
methamphetamine labs in Thailand. These included five labs with modern
tablet-making machinery, seven "kitchen" labs, and two labs producing
methamphetamine hydrochloride in bulk.

An extremely large and growing number of Thai youth graduated from
occasional methamphetamine use to dependency. From January through
October 1999, the RTG seized 3,248 kilos of methamphetamine and
arrested 146,317 persons involved in 135,358 ATS-related cases. The
number of drug-related indictments went from 56,954 in 1988 to 186,232
in 1998, and the percentage of methamphetamine indictments rose from
1.8 to 67.3 percent during this same period.

As a result of the increase of methamphetamine in the country,
Thailand has experienced a surge in poly-drug use among traditional
heroin users such as the hill tribes in the north and fishermen in the
south. The Thai ONCB has reported that methamphetamine generates more
profit for the traffickers than all the heroin consumed both
regionally and sent out of Southeast Asia to world markets. Money and
time are not tied up in agricultural production of poppy plants, and
nearby markets minimize the costs and "taxes" required to ensure
delivery to distant lands. A study of the drug abuse situation in
Thailand published in 1995 by the Thai Development and Research
Institute (TDRI) contributed the baseline estimate for drug abuse in
Thailand of 1.27 million persons, which includes those abusing ATS,
inhalants, heroin, opium, and marijuana.

III. Country Actions Against Drugs in 1999 

Policy Initiatives: Money laundering legislation covering seven
predicate offenses, including narcotics violations, was passed in
March 1999. With this legislation, Thailand is now in compliance with
the 1988 UN Drug Convention and expects to accede to that
international instrument during the March 2000 parliamentary session.
A senior police officer has been named to head the 64 person Money
Laundering Control Office (MLCO). ONCB and the RTP have sponsored
several training sessions on money laundering for concerned Thai
government agencies and private financial institutions. The USG also
sponsored training to improve enforcement against financial crimes.

Thailand controls precursor chemicals as required by the 1988 UN Drug
Convention. In addition, Thailand and its neighbor Laos have agreed to
cooperate in controlling precursor chemicals. The 1991 asset seizure
and conspiracy law is limited to narcotics cases. As of October 31,
1999, 910 cases opened under the statute yielded forfeitures over U.S.
$984.4 million. 786 cases were suspected of major narcotics
trafficking involvement amounting to over U.S. $756.5 million in
assets.

In late 1998, the RTG co-founded the International Law Enforcement
Academy (ILEA) in Bangkok with the U.S. In 1999, ILEA trained over 600
law enforcement and judicial officials from nine regional countries
and the Hong Kong special administrative region. While the U.S.
provides most of the funding and training expertise, the spirit of
openness and hospitality, which has much to do with establishing a
regional cooperative anti-crime network, is uniquely Thai. In
addition, Thai unique regional expertise has enriched many of the
training programs. The joint Thai/U.S. staff has created a quality
educational institution with which all participating countries
genuinely identify.

The six UN MOU on Sub-regional Narcotics Cooperation countries are
Burma, Cambodia, China, Laos, Thailand, and Vietnam. Thailand actively
participates in activities under the UNDCP-sponsored MOU. Thailand is
also a member of the UN Commission on Narcotic Drugs (CND) and is the
designated law enforcement coordinator for ASEAN's Senior Officials on
Drugs (ASOD) group.

Thailand has been extremely cooperative with the U.S. under the
bilateral extradition treaty and is one of the top three countries in
the world, along with U.S. neighbors Canada and Mexico, in cooperating
with the U.S. on extradition requests. The Foreign Ministry, the
Judiciary, the Royal Thai Police, and the Office of the Attorney
General have developed expedited extradition mechanisms and have
worked closely with U.S. Justice Department officials and courts to
facilitate extraditions. Since 1991, the Thai government has
extradited forty-four fugitives to the United States, 35 of whom were
wanted for narcotics-related offenses.

Despite the requirement for budgetary austerity in the aftermath of
the regional economic crisis, Thailand maintains support for programs
to combat the production and trafficking of illicit drugs and other
transnational crimes. National and local level action against drugs
has been improved by Prime Ministerial Order 141 issued on August 19,
1998. The order provided a needed coordination framework and
facilitated collaboration among all government agencies as well as
interested parts of civil society, such as NGOs, professional
organizations, and religious groups. It made clear that Thailand's
drug problem was the responsibility of all concerned government
agencies (36 agencies of 11 ministries) and not just the Office of
Narcotics Control Board (ONCB) and the Police Narcotics Suppression
Bureau (PNSB).

A Thai drug epidemiology working group reports on emerging drug abuse
trends and participates in regional demand reduction fora. Thai
officials also provide a supportive environment for coordination and
cooperation among the foreign anti-narcotics community (FANC) which is
composed of fifty one foreign law enforcement members of twenty-one
agencies attached to nineteen Bangkok embassies. The current FANC
chairman is U.S. DEA group supervisor.

Law Enforcement Efforts: The Office of the Narcotics Control Board
(ONCB), the Police Narcotics Suppression Bureau (PNSB) and the Royal
Thai Army Third Region Command (RTA III) covering North Thailand, are
primarily responsible for the implementation of national level drug
enforcement programs. These agencies coordinate with local police and
enforcement bodies such as the Border Patrol Police (BPP), Provincial
Police and the Royal Thai Customs on narcotics cases.

Extensive law enforcement cooperation with U.S. authorities continues.
With DEA support, the Thai police established two special enforcement
units which target major trafficking groups. In addition, the Northern
Drug Task Force targets major violators in that region. A second task
force in the Bangkok area became operational in 1996 and, after
inclusion in the DEA/Thai police special program in 1999, developed
several significant cases against major traffickers moving heroin to
the U.S. The third center in southern Thailand became operational in
1999 and is assisting with several important investigations. A
DEA/DOD/USG program to enhance maritime interdiction capabilities of
the Royal Thai Navy in the Gulf of Thailand is nearly operational. The
U.S. has continued to support these RTG initiatives through provision
of operational assistance, commodities, and training provided jointly
by DEA, the Department of Defense (DOD), and the USG. Enforcement
actions by the BPP have produced seizures of both opiates and
methamphetamine. The BPP continued to receive training from DEA and
DOD elements in 1999. It must be noted that the BPP undertakes
especially dangerous counter-drug operations which have resulted in
two dead and four wounded officers so far in 1999.

According to ONCB figures, 0.314 mt of heroin was seized during the
first ten months of 1999. Drug related arrests totaled over 205,276
individuals during the first ten months of the year, reflecting both
the growth of drug abuse and RTG efforts to counteract it.

Corruption. The Royal Thai government does not condone the
cultivation, production, trafficking, or financing of illicit
narcotics.

The Police Narcotics Suppression Bureau and the Office of the
Narcotics Control Board continue to exhibit a high degree of
professionalism and honesty derived in part from long standing
relationships and institution-building programs with international
drug control organizations, including those from the United States.
Some representatives of civil society, such as academics, the media
and various non-governmental organizations, roundly criticize examples
of corrupt practices, and involvement in gambling and smuggling by
some members of Thai law enforcement. Some Thai law enforcement
officials themselves express frustration with corruption and its
variant, political or family influence at high levels, which
negatively impact their ability to prosecute those caught in criminal
acts. For example, in discussing trafficking trends in central
Thailand, the 1998-99 ONCB narcotics annual report notes that, ".the
sophisticated and expanding trafficking network in this region
consisted of the conspiracy of power groups and some governmental
authorities." Interference of this nature often becomes known
throughout law enforcement, raising the level of cynicism and
providing excuses for weaker elements to abuse their office and accept
money or other favors.

Narcotics trafficking poses special problems in countering corruption
because of the fantastic profits generated and the resultant
availability of cash for either facilitating payoffs or completely
co-opting law enforcement personnel. The surge in methamphetamine
abuse and trafficking adds greatly to the potential for corruption.
Although the law applies to all, RTG efforts to counternarcotics
corruption have so far focused on junior level officials. In July, a
significant number of such officials, including military and police,
were either sacked, transferred, or asked to resign. On the other
hand, American law enforcement officials have noted that security of
complex operations against major traffickers intended for extradition
has been maintained. This indicates an internal sensitivity to the
issue as well as knowledge of those police officers and other
governmental officials who can or cannot be trusted with sensitive
information.

Declarations of assets, already compulsory for cabinet ministers, are
now required for over 900 senior state officials. They must also
report the assets and liabilities of their spouses and underage
children. Hopefully, as the political system matures, common corrupt
practices, especially related to voter fraud and vote buying, will be
reduced, eliminating some of the more notorious politicians from
public life.

Cultivation/Production. The northern border areas of Thailand are the
principal location for poppy cultivation in the country. Opium has a
long history in the region, and the use of the crop as a medicine and
source of cash for certain hill tribe communities has been a fact of
social and economic life. The government's control efforts have
combined eradication of the crop with development, improved
infrastructure, and economic support designed to offer growers
alternatives to narcotics production. The crop
substitution/development program began in 1969 and from the very
beginning concentrated on providing alternative medical care and cash
crops to substitute for the medicinal and economic benefits of opium.
Only after 15 years of development assistance, when the hill tribe
communities could actually support themselves without opium, did the
RTG begin to forcefully eradicate the farmers' opium crops.

Thailand has one of the most effective narcotics crop control program
in the world. The eradication campaign is one of the main reasons
heroin refineries no longer operate in Thailand, and has reduced opium
cultivation in Thailand to a point where opium must now be imported to
meet the requirements of domestic addiction. Last year, counter drug
programs and less than ideal growing conditions led to the lowest
cultivation and production estimate for Thailand since the U.S.
Government began its crop estimates in the mid-1980's. Thai
eradication forces successfully destroyed 808 hectares of the gross
1,643 hectares cultivated in 1999 which, together with the
debilitating effects of the drought on opium yields, resulted in opium
production of six metric tons. Average opium yield was estimated in
1999 at 7.18 kilograms per hectare.

The Thai government estimates that ten percent of Thai poppy growers
use opium, and many of these sell their higher quality product for
cash and consume cheaper drugs from Burma. Since brokers and middlemen
play a strong role in the production equation and influence hill tribe
growers, the propensity to plant a crop exists, even with the risk of
having it destroyed by the government. Out-of-season poppy plantations
and multiple cropping require exceedingly more effort and capital to
cultivate; and reflect the significant adjustments traditional growers
have had to make in the face of eradication efforts. A mark of the
growers' sophistication is the practice of interspersing the poppy
plants with legitimate vegetable production. The stubbornness and
greed of Thailand's residual growers and their ability to increase
cultivation in some geographically difficult to control areas argues
for continued active efforts by Thailand in its opium control program.

An important initiative in crop control supported by the U.S. and
other donors has been the establishment of Chiang Mai University's
highland agricultural training center. Opened in 1994, this center
provides hands-on training and experience to farmers in alternative
crop techniques and provides a site for training farmers from
neighboring countries.

ONCB coordinates the annual opium crop survey with the assistance of
RTA III and the police. The RTG survey and analysis methodology is
unmatched in the region. Both ground and aerial surveys are used.
Information from a computerized geographic information system is
combined with other survey and statistical data to measure opium
cultivation trends. Survey data is shared with eradication campaign
operating units. ONCB executes its survey before, during and after the
traditional opium cultivation cycle to cover early and late season
crops.

Drug Flow/Transit. Methamphetamine and opiates move into Thailand for
consumption and also for onward shipment to world markets, making
Thailand both a consuming and a transit country. Over the past several
years, and especially since notorious drug trafficker, Khun Sa's,
"retirement" and the occupation of his former territory by the Burmese
Army, there has been a steady increase in the use of alternate routes
through China, but also through Laos, Cambodia and Vietnam. Since drug
trafficking is an intrinsically illegal activity, neither Thailand nor
its regional law enforcement colleagues have a clear and complete idea
of trafficking patterns, but it is clear from recent heroin seizures
that a significant amount of heroin transits Thailand on its way to
the U.S.

Demand Reduction and Treatment Programs. Prevention and demand
reduction programs are coordinated through ONCB and managed by various
government agencies such as The Anti-Narcotics Coordinating Committee
(ANCC). The ministries of health and education have programs in place
to expand treatment and implement demand reduction in schools and in
provincial areas as well as to target specific high-risk groups
including students, fishermen, laborers, and long-haul truck drivers.
School programs have received the greatest emphasis. This emphasis is
justified, as 1997 abuse data shows more than 50 percent of the total
110,000 drug users in Thailand were youth. In late 1998, ONCB and
other agencies organized a training course on drug counseling
techniques for school teachers in 34 provinces. ONCB also organized a
"Friends For Friends Group" training program to prepare student
leaders to conduct school-based drug prevention activities. The
project will expand to cover 379 Bangkok area schools. Youth groups
also participated in the "Life Skills Education For Prevention Of
Drugs Project" designed to foster communication, and coping and
problem solving skills in school drug prevention.

The Bangkok DEA office worked with the Royal Thai Police in bringing
the "Drug Abuse Resistance Education" (DARE) program to Thailand. In
November, thirty-three police officers graduated from an intensive
two-week course conducted by DARE International. The RTG expects to
make the program available to schools nationwide within two years.

The Ministry Of Public Health (MPH) Department Of Medical Services
currently has registered 421 drug treatment centers in both government
and private hospitals. Most are attached to MPH-run provincial and
community hospitals. A longer term program within the health ministry
aims to increase the number of treatment facilities and spaces in
therapeutic communities. Thailand is in the forefront in the
utilization of the therapeutic community and Narcotics Anonymous (NA)
models in relapse prevention, although NA is still in its infancy.

Thailand's current drug treatment systems were originally developed in
response to opium and heroin addiction and are not appropriate nor
effective for ATS treatment. Few health care providers have had any
training in addiction, and there are no community based models of
addiction treatment that can address the problem. There is an urgent
need to develop addiction training and cost effective treatment
services to deal with the current methamphetamine epidemic.
Fortunately, effective treatment models exist and the Ministry Of
Public Health already has detailed plans for community prevention and
outreach through its facilities located throughout the country.
Alcoholism remains a hidden problem and thus goes largely untreated.
The potential benefits from developing a nationwide capacity to
provide effective chemical dependency treatment would go far beyond
dealing with the current ATS epidemic. The potential savings from
effectively reducing the costs of untreated alcoholism would be great
enough to justify investment in addiction training and treatment
programs.

IV. U.S. Policy Initiatives and Programs 

Policy Initiatives. Based on guidelines in the national strategy, U.S.
goals and objectives in Thailand are:

-- to reduce the amount of illicit drugs (principally heroin)
available in the United States by assisting Thailand to counter the
threat of drug trafficking. Support actions targeting drug traffickers
and their organizations.

-- Assist with programs to implement the newly enacted money
laundering legislation, and with developing other legal and
enforcement tools, such as a strengthened conspiracy law, and witness
protection and plea bargaining programs.

-- Through continued cooperative investigations, indict traffickers
and cooperate in extraditions to the United States. Work toward
broadening allowable evidence rules in the Thai legal system to enable
more prosecutions and convictions of high-level traffickers in
Thailand.

-- Continue initiatives to reduce and eliminate opium poppy
cultivation through eradication and development of viable economic
alternatives for farmers.

-- Assist Thailand in its efforts to maintain and expand its drug
abuse awareness, demand reduction, and treatment activities.

-- Continue to develop the International Law Enforcement Academy
(ILEA) to improve regional law enforcement skills and coordination on
transnational crime issues.

Bilateral Cooperation. Thailand and the United States have long been
partners in counternarcotics criminal investigations. In addition to
the mutual legal assistance treaty (MLAT) and the extradition treaty
referred to elsewhere in this report, four State Department funded
bilateral narcotics assistance project agreements continue in force:

-- Narcotics Law Enforcement-project is designed to enhance the
ability of narcotics law enforcement agencies to meet the threat posed
by sophisticated trafficking organizations. This agreement provides
commodity and training support for ONCB, PNSB and other Thai law
enforcement organizations, and supports efforts aimed at strengthening
criminal-justice system institutions and fostering judicial
cooperation.

-- Narcotics Crop Control-USG funding is provided to RTA III, ONCB,
BPP, and provincial police (PP) to assist the Royal Thai government in
surveying, locating, and eradicating the illicit opium poppy crop in
northern Thailand. In addition, U.S. funding supports outreach and
development initiatives through the Royal project, RTA III, and Chiang
Mai University.

-- Demand Reduction-the USG assists Thai authorities to improve and
expand demand reduction programs and to support increased private
sector and NGO involvement in national drug abuse awareness efforts.

-- Regional Initiatives-the USG supports the RTG leadership role in
working with regional states on narcotics control issues. This project
includes The International Law Enforcement Academy Bangkok (ILEA).

Cooperation between the U.S. and Thailand in a number of areas not
specifically covered by formal agreements also has a long history. DEA
works closely with Thai drug agencies in investigating major heroin
trafficking organizations and with training to develop Thai drug
enforcement capabilities. The U.S. Customs Service and Department of
Defense have cooperated with various agencies on anti-smuggling
projects. DOD also provides training for selected border patrol and
narcotics police units, and has supported the establishment of the
regional drug task force centers.

The embassy Public Affairs Section (PAS), formerly the United States
Information Service (USIS), arranges visitor programs for
consultations on drug control issues and is currently managing the
Professionals In Residence Program on Judicial affairs in Bangkok. PAS
also organizes video conferences allowing experts in the U.S. and
Thailand to consult on narcotics, judicial, and law enforcement
issues.

The Road Ahead. Thailand will strengthen its role as a regional leader
in drug control and in combating transnational crime. The Kingdom will
also cooperate fully with the international community in this regard.
In addition to Thailand's new money laundering laws, other useful
legislation addressing the issues of plea bargaining, co-conspirator
testimony, a witness protection program, and the broadening of
evidence rules, could strengthen law enforcement efforts. These types
of legislation could either deprive traffickers of the profits of
trafficking or facilitate the criminal justice system's prosecution of
major traffickers.

Newer areas of concern needing attention are northeastern Thailand,
the east, the south, and all maritime areas. Northeast and east
Thailand border Laos and/or Cambodia. Thailand must suppress
trafficking in these areas if it and its two neighbors are to avoid a
southern version of the Golden Triangle, not marked by opiate
production but by narcotics trafficking and other lawlessness. The
Gulf of Thailand and the Andaman Sea are currently weak in law
enforcement. Criminal activity includes narcotics trafficking, general
smuggling to avoid taxes, smuggling of illegal aliens, and illegal
trade in natural resources. USG funding alone cannot eliminate these
problems but the relatively modest USG contribution permits the RTG to
quickly address problem areas.

The U.S. and Thailand will continue to cooperate on extradition of
fugitives. The office of the Thai attorney general is drafting a new
extradition law to update the current 1929 statute. Judicial processes
will strengthen as the political system develops. The narcotic crop
control program will be maintained. Regional cooperation on crime will
greatly expand through networking facilitated by the International Law
Enforcement Academy in Bangkok. Thailand will develop systems of
internal control and legal and administrative tools to counter the
destabilizing impact of corruption and the influence of organized
crime. Current drug prevention and treatment activities will develop
into comprehensive nationwide programs. Thailand maintains its solid
reputation in anti-narcotics efforts, and neighboring countries have
been encouraged to follow aspects of the Thai model.

Thailand Statistics
   (1991-1999)
1999 1998 1997 1996 1995 1994 1993 1992 1991
Opium1
  Potential
Harvest (ha) 835 1,350 1,650 2,170 1,750 2,110 2,880 2,050 3,000

Eradication (ha) 808 715 1,050 880 580

Cultivation (ha) 1,643 2,065 2,700 3,050 2,330 2,110 2,880 3,630 4,200

  Potential Yield
(mt) 6 16 25 30 25 17 42 24 35

Cannabis
   Potential
Harvest (ha) - - - - - - - - -

Eradication (ha)

Seizures2

Opium (mt) 0.440 1.500 0.720 0.620 0.9200 0.600 2.200 0.600 1.500

Heroin (mt) 0.310 0.530 0.320 0.390 0.690 1.100 2.100 0.992 1.500


Cannabis (mt) 45.25 6.00 9.00 44.00 46.00 71.00 98.00 87.00 54.00

Other Data

   Heroin Labs
Destroyed

   Meth Labs
   Destroyed        14  13     19      1   

   Narcotics Arrests
(thousands) 205 186 158 125 120 102 85 73 75

   Opium Consumed
(mt) 60.0 60.0 60.0 60.0 60.0 53.0 53.0 53.0 53.0

  Heroin Consumed
(mt) 4.0 4.0 4.0 4.0 4.0 4.5 4.5 4.5 4.5

  Opium Users
(thousands) 111 111 111 111 111 35 35 35 35

 Heroin Users
(thousands) 220 220 220 220 220 220 220 220 220

Vietnam

I. Summary. 

Growing concern over domestic addiction rates led Prime Minister Phan
Van Khai to elevate counternarcotics to Vietnam's second highest
domestic priority, after poverty reduction. Among specific actions
taken in 1999 were the establishment of special task-force units to
combat drug trafficking along the borders, the unveiling of plans to
build two large regional treatment centers in Hanoi and Ho Chi Minh
city, and creation of a marine patrol force. Along with the stepped-up
counternarcotics effort, Vietnam pursued high-profile corruption cases
against high-ranking government and party figures to highlight an
effort to eliminate official corruption. One focus was the Customs
Service, clearly related to the counternarcotics campaign. An
intensified effort at poppy eradication, stiffened law-enforcement
campaigns against drug traffickers, and tougher prosecution led to a
record number of arrests and convictions. Still, despite the enhanced
effort, which appears to have reduced consumption somewhat among
students, drug use overall continues to rise, especially heroin and
methamphetamine abuse. Vietnam continued negotiations with the U.S. on
a bilateral counternarcotics agreement, while pursuing mutual legal
assistance and other legal agreements with other countries. In
December Vietnam's National Assembly approved legislation
criminalizing money laundering. In November 1997 Vietnam became a
party to the 1988 UN Drug Convention, the 1961 UN Single Convention
and its 1972 Protocol, and the 1971 UN Convention on Psychotropic
Substances.

II. Status Of Country

Vietnam is a major drug-producing country. Opium is grown in some of
Vietnam's northern provinces. In 1999, despite an intensified
crop-eradication effort, more than 2,100 hectares of land were devoted
to opium-poppy cultivation. Vietnam also produces cannabis.
Law-enforcement officials reported eradicating 860 of the estimated
1,000 hectares devoted to cannabis cultivation in 1999.

Vietnam is a significant drug transit country. The government of
Vietnam is also increasingly concerned about a recent rise in domestic
drug consumption, especially among urban youth. Heroin from the
"Golden Triangle" transits Vietnam on its way to industrialized
countries. Cannabis, along with some heroin and synthetic drugs,
passes into Vietnam from Cambodia. Increasing quantities of synthetic
drugs (amphetamine-type stimulants) and psychotropic drugs
manufactured in China and Burma have been entering Vietnam through its
borders with China and Laos.

The structure of Vietnamese counternarcotics efforts in 1999 continued
to be built around the Vietnam National Drug Control Committee
(VNDCC). The VNDCC was established by Prime Minister Phan Van Khai on
August 25, 1997, and in 1999 was headed by Deputy Prime Minister Pham
Gia Khiem. Its mandate is to carry out propaganda programs, to resolve
the issue of opium cultivation, to oversee treatment programs, to
fight against drug trafficking and crimes, to develop drug laws, and
to carry out cooperation with other countries. The organization
includes representatives from all major ministries and agencies
involved in counternarcotics matters and has a counterpart
organization in each province, city, district, and commune of Vietnam.

In September, Vietnamese counternarcotics police raided a heroin
refinery lab in the province of Nghe An. Despite a vigorous effort to
eradicate poppy cultivation in mountainous border regions through
joint crop-substitution and law-enforcement initiatives, some poppy
cultivation continues to occur, particularly in the provinces of Yen
Bai, Nghe An, Lai Chau and Son La. The Vietnam National Drug Control
Committee believes that rural poverty has led peasants in ten
mountainous provinces (especially Lai Chau, Yen Bai, and Son La) to
revert to opium cultivation. They also believe that Vietnamese opium
is exclusively for domestic consumption, primarily among minority
group members in the mountainous areas.

The growing availability of drugs passing through Vietnam has led to
serious growth in domestic consumption. Alarmed, the government has
responded with an augmented prevention campaign in schools,
workplaces, and the media warning of the dangers of drug abuse.

Vietnam tightened its control over precursor chemicals by assigning
responsibility for monitoring them to the Ministry of Public Security,
Ministry of Public Health, and General Department of Customs. No
precursor chemicals were detected being smuggled into Vietnam in 1999.

On December 1, 1999, Vietnam's National Assembly approved penal code
revisions that criminalize money laundering. The provisions will take
effect on July 1, 2000. The new provisions call for penalties of up to
ten years imprisonment, multiple fines, and property seizure, among
others. The World Bank is working with the government to develop a
money-laundering chapter for draft banking legislation.

III. Country Action Against Drugs in 1999 

Policy Initiatives. In December of 1998, Prime Minister Phan Van Khai
instructed all elements of the government dealing with the drug
problem to start an intensified counternarcotics campaign. To bring
this about, Khai called on relevant government ministries and agencies
to "strengthen their guidance" on drug prevention and control and to
step up interagency coordination. These national measures were to be
simultaneously adopted by provincial and municipal governments, as
well. Mass organizations were to work more closely with authorities on
drug questions. Propaganda and education campaigns were launched
against drugs, particularly to raise awareness among youth.

During a conference held in August to review the intensive
counternarcotics campaign launched in 1998, Prime Minister Phan Van
Khai set four immediate tasks to stop abuse and trafficking of illicit
drugs: (1) further enhance a sense of responsibility among the people;
(2) thorough and comprehensive assessment of what has been done so far
to stop the abuse and trafficking of illicit drugs; (3) more efficient
methods of detoxification to stop recidivism; (4) more efficient
anti-drug forces, including the expansion of international
cooperation, especially with border countries. Other targets included
stopping drug use among children and students, elimination of poppy
crops, tightening control of "pro-drug elements," and heavy penalties
for drug crimes. The Ministry of Labor, Invalids, and Social Affairs
also announced plans to build two large drug rehabilitation centers in
Hanoi and Ho Chi Minh City.

Law Enforcement Efforts. Vietnam strengthened coordination among the
police, customs, and border-guard forces. Vietnamese police and
security agencies hold regular meetings with their Lao counterparts,
including meetings between provincial authorities of border provinces.
The UNDCP, foreign governments, and non-governmental organizations
maintain four national projects and six subregional projects on drug
control cooperation.

From November 1998 to October 1999, law-enforcement forces took 19,010
drug criminals into custody, an increase of 31 percent over the same
periods in 1997/98. They seized 51.8 kilograms of heroin, 314
kilograms of opium, and 369 kilograms of cannabis. In August, the
VNDCC asked the government to set up special task-force units to
combat drug trafficking along Vietnam's borders. September marked the
anniversary of the first full year of operations of the Marine Police
Force. Since beginning operations in September 1998, the force has
conducted dozens of patrols along Vietnam's 3,200-kilometer coastline
and over one million square kilometers of claimed continental shelf.

Among the trends in drug crime of primary concern to Vietnam's police
are the increasing use of heroin, methamphetamine, and other synthetic
drugs by the young. Police first encountered the drug "ecstasy" this
year. Also for the first time this year, Vietnamese drug abusers began
to drink dangerous substances, including methamphetamine, amphetamine,
ecstasy, and methadone, in addition to smoking, inhaling and injecting
them, according to the police.

Another trend in drug crime that deeply disturbs Vietnamese
law-enforcement authorities is the increasing possession and use of
weapons by drug traffickers to resist arrest. Drug traffickers in
Vietnam have seldom before used weapons. Police report encountering
weapons in Hanoi, Haiphong, Ho Chi Minh City, Nghe An, and Lang Son
during 1999. Police say that in Nghe An, Ha Tinh, Lai Chau, and Thai
Nguyen provinces, traffickers in 1999 used their weapons against
law-enforcement agents while being chased. When captured, some now
resist, threatening suicide or retaliation, or refuse to cooperate
upon arrest, all of which are unusual reactions for Vietnamese
criminals.

The police began to exercise their authority to seize assets in
narcotics cases: in one narcotics case, police seized $400,000, 78.5
kilograms of gold, 80 million dong (USD $5,700), and 11 houses.

Accomplishments. Vietnam in 1999 took significant steps towards
achieving full compliance with the 1988 UN Drug Convention. The
government continued its efforts to reduce opium poppy cultivation. It
has intensified cross-border collaboration with neighbors on
law-enforcement issues. It is working on counternarcotics legislation
to be introduced into the national assembly next year, which will
implement all of the remaining provisions of the Convention.

Officials have brought 3,310 drug-related cases with a total of 4,952
defendants to trial. Of these cases, 35 were sentenced to death, 21 to
life imprisonment, and many more to lesser sentences. In Vietnam,
possession of 100 grams of heroin or 5 kilograms of opium warrants the
death sentence.

Corruption. 1999 saw the implementation of a high-profile
anti-corruption campaign through public trials of high- ranking
government and party figures in narcotics and smuggling cases.
Vietnamese Customs was particularly targeted. Along with the show
trials, Vietnam's print and broadcast media have focused on official
corruption. While the two most prominent trials did not deal directly
with the narcotics crimes, they dealt with the integrity of government
institutions, such as Customs and the banking system, which are
central to the counternarcotics and anti-money-laundering efforts.

In June 1999, Vietnam uncovered the Tay Trang drug trafficking case,
which could become the most important in Vietnamese history in terms
of the number of arrests. The police are still searching for the
alleged kingpin, a senior Customs official at the Tay Trang Customs
entry point. The ring he led is believed to be linked to the Vu Xuan
Truong syndicate. A prior case of syndicate members involved two
Ministry of Public Security officers, among others, both of whom
received death sentences. That case was Vietnam's biggest drug
trafficking case to date. The case involved significant heroin
trafficking from Laos, and clearly required complicity at fairly high
levels within Vietnam's Customs Service.

The Tay Trang case is not an anomaly. Corruption remains a problem
among some Vietnamese counternarcotics officials, especially within
the Department of Customs. Recently, the government replaced the
director general of the Customs Department. Although no official
reason was given, it was widely believed the change took place to
remove the vestiges of corruption at Customs. The appointment of a new
Customs director general and the government's recent aggressive
efforts against corruption show a high-level will to take action. The
record shows that officials committing drug offenses are dealt with
severely in Vietnam.

Agreements and Treaties. Vietnam has no extradition, mutual legal
assistance, precursor chemical, money laundering, or counternarcotics
agreements with the U.S. While most provisions of a bilateral
counternarcotics agreement have been agreed upon in negotiations, a
few outstanding matters remain to be decided.

Vietnam is a party to the 1988 UN Drug Convention (with reservations
to Article 6 on extradition and Article 32, paragraph 2 and 3 on
dispute settlement). Work is proceeding rapidly on the draft of a new
counternarcotics law, slated to be introduced at the April 2000
session of the National Assembly. The government intends to use the
bill as implementing legislation for the terms of the UN Drug
Convention.

In 1999, Vietnam intensified its effort to bring about greater
international cooperation through bilateral and regional
counternarcotics agreements. At present, Vietnam has counternarcotics
agreements with five countries: Burma (1995), Thailand, Russia,
Cambodia, and Laos (1999). In 1993, with UNDCP support, Vietnam signed
a regional counternarcotics Memorandum of Understanding (MOU) with
China, Laos, Myanmar, Thailand, and Cambodia. The so-called "MOU
States" agreed to cooperate on counternarcotics activities and to work
with UNDCP help at coordinating their law-enforcement efforts. Vietnam
is currently precluded by statute from extraditing Vietnamese
nationals, but it is contemplating legislative changes.

Cultivation/Production. Opium is grown in the uplands and mountainous
regions of some northern provinces of Vietnam, notably Yen Bai, Son
La, Lai Chau, and Nghe An. Despite a vigorous GVN effort to eradicate
poppy cultivation in mountainous border regions through joint
crop-substitution and law-enforcement efforts, some poppy cultivation
continues. According to government reports, 98 percent of Vietnam's
opium crop has been eliminated. Rural poverty has led those peasants
who still cultivate in the mountainous provinces to revert to opium
cultivation. The government claims that Vietnamese opium is
exclusively for domestic consumption, primarily among minority group
members in the mountainous areas. Some opium is sold to drug
organizations, which are believed to sell it within Vietnam. It is
also possible that the drug organizations transport the illicit
narcotics across Vietnam's borders.

Despite intensified eradication efforts, the prospects of good weather
led to opium poppies being cultivated over a much larger area. The
total area under cultivation in 1999 exceeded the total land used in
1998. In 1999 the total increased by 645 hectares and totaled more
than 2,100 hectares devoted to poppy crops.

Some cannabis is grown in Vietnam's southwestern provinces, notably An
Giang, Tra Vinh, Long An, and Binh Phuoc. None is believed to grow in
central and northern Vietnam. The VNDCC report that Vietnamese police
eradicated 860 of Vietnam's estimated 1,000 hectares of cannabis
cultivation in 1999. Eradication is primarily done by hand, normally
by the peasant farmers themselves, when told by police and military to
destroy their illicit crops. Estimates of all drug production in
Vietnam are only approximate, since Vietnam lacks the means to perform
a scientific survey of its illicit crops.

Drug Flow/Transit. Due, in part, to its proximity to the "Golden
Triangle," Vietnam is a major transit point for opium and heroin.
Vietnamese narcotics authorities have identified three main
trafficking routes through Vietnam. First, heroin and other drugs from
the Golden Triangle enter via mountainous border points in Lai Chau
province, from which they are transported to Hanoi. Methamphetamine,
synthetic drugs, and other illicit substances also arrive in Vietnam
at various points along the border with China, destination Hanoi. From
Hanoi, drugs are transported to the port of Haiphong for transshipment
to The Philippines, Hong Kong and Taiwan, then on to Japan or, in some
relatively few cases, the United States.

Second, drugs (especially heroin) from the Golden Triangle pass over
the border from Laos into Nghe An province and on to the port of Vinh.
Vietnam has designated Vinh as Laos's "port city," so illicit drugs
are easily hidden in legitimate merchandise being exported. From Vinh,
heroin follows similar routes through The Philippines, Hong Kong and
Taiwan, and on to the West from there. Heroin arriving from Thailand
passes through various points on the Lao- Vietnamese border, from
which it is transported to Ho Chi Minh City. At the port of Ho Chi
Minh City, these drugs are transported to Singapore and Malaysia.
Vietnam government officials believe some drugs from Ho Chi Minh City
are sent to the U.S.

Vietnam's law-enforcement authorities are increasingly concerned about
the use of commercial airplanes to transport heroin. They believe
increasing quantities of heroin arriving in Hanoi and Ho Chi Minh City
by land are then sent overseas by air, including some sent via express
mail services.

Domestic Programs (Demand Reduction). Vietnam began a major, new,
yearlong, nationwide demand-reduction campaign in November 1998. The
campaign has been carried out in 61 provinces and cities. In addition
to enhanced law-enforcement efforts, the campaign features propaganda,
education, and treatment.

Vietnam has 52 drug treatment centers nationwide, offering patients in
many cases a choice of institution-based or community-based treatment.
The rate of recidivism is high, however, considered to be 90 percent
nationwide. In 1999, Vietnam began to emphasize the importance of
family-and community-based in-treatment efforts. In 1999 Vietnam also
began to build two major treatment centers, one in the north, one in
the south. When completed, they will become the regional
drug-treatment centers for their respective regions.

There are about 97,000 registered drug addicts nationwide. While the
number of addicts is rising, addiction among students decreased
somewhat this year due to close cooperation among local police,
schools and parents. Among the registered addicts are 8,000 prisoners.
Police attribute the rise in the number of registered addicts in part
to improved detection techniques. It is estimated that only about 10
percent of registered addicts have received treatment.

IV. U.S. Policy Initiatives and Programs

U.S. Policy Initiatives. The key U.S. policy objective for Vietnam is
the negotiation of a bilateral counternarcotics agreement. Most of the
draft agreement's provisions have been finalized, and the government
frequently expresses its desire to conclude the agreement. Both sides
hope for final agreement in 2000. A permanent DEA office will open in
Hanoi in February 2000. The U.S. currently funds training for
Vietnamese law-enforcement officers to participate in courses at the
International Law Enforcement Academy (ILEA) in Bangkok as well as
bilateral training programs. The U.S. also contributes indirectly to
assistance to Vietnam through its contributions to the UNDCP.
Following signature of a bilateral counternarcotics agreement, the
U.S. hopes to provide enhanced training, some equipment, and other
forms of assistance to Vietnam. The U.S. also hopes to offer
assistance to Vietnam on drafting a new counternarcotics law and to
begin the process of negotiating a bilateral mutual legal assistance
agreement.

Bilateral Cooperation. Despite the absence of a formal
counternarcotics agreement, Vietnamese authorities cooperated fully
with U.S. Embassy and U.S. law-enforcement agencies and courts. There
is a regular exchange of criminal information. Vietnamese
law-enforcement agencies eagerly participate in U.S. training
programs, particularly in courses at ILEA. National and provincial
law-enforcement agents are relatively accessible and cooperative with
embassy officers in meetings.

The Road Ahead. With Vietnam being acutely aware of rising domestic
drug consumption and seeking higher levels of international
cooperation, Vietnam will likely significantly extend its
law-enforcement and legal cooperation with the U.S. Both the U.S. and
Vietnam look forward to completing the bilateral counternarcotics
assistance agreement, which provides the cornerstone for cooperation
on narcotics matters. The U.S. has a good deal of experience in
narcotics legislation, crop substitution, demand reduction, education,
eradication, and law-enforcement techniques, and is ready to share its
experience with Vietnam through training and other forms of
assistance.

Vietnam Statistics
   (1991-1999)
                1999   1998   1997   1996   1995
Opium1
 Potential
 Harvest (ha)  2,100  3,000  6,150   3,150     -

 Eradication
  (ha)             -      -      -        -    -

 Cultivation
  (ha)         2,100  3,000  6,150   3,150     -

 Potential
  Yield (mt)      11     24     45      25     -

Seizures2

   Opium (mt)      -      -    0.039   0.831  1.418

   Heroin (mt)     -      -    0.011   0.054  0.031

   Cannabis (mt)   -      -    7.074   0.548  0.574

   Arrests    18,000 18,000   14,000   6,615  3,649

Consumption3

   Opium (mt)        18     18       18      18     18

   Opium Users  185,000 185,000 185,000 185,000 185,000   

1 Narcotics and law enforcement statistics have not been kept in the
past by the Government of Laos. Although the Counternarcotics
Committee is now charged with the responsibility, most of the
statistics available have been gleaned from the Lao press.

1 Figure based on December 1991-February 1992 Opium Yield Study.
Average yield / hectare is 11.5 kg. Opium in Thailand is "generally
cultivated, harvested and eradicated from October to February each
year. To make the data consistent with seizure and" "processing data,
opium seasons are identified by the calendar year in which they end.
For example, the October 1996 to" "February 1997 opium season is
referred to as the 1997 calendar year season. Data on opium
cultivation, eradication, and" production are based on USG estimates.
RTG estimates are often lower on cultivation and higher on
eradication. Data on opium "cultivation, eradication, and production
are based on RTG and USG estimates. RTG estimates are lower on
cultivation. In 1995," opium yield was increased from the figure
reported in 1994.

1 Cultivation data from USG estimates based on aerial imagery.

2 Data is from UNDCP, based upon statistics from the Vietnamese
government.

3 Based upon estimates by Vietnam drug control authorities.

(end text)

(Distributed by the Office of International Information Programs, U.S.
Department of State. Web site: usinfo.state.gov)