(Sanitized)

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP73B00296R000300060034-6
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 24
• Document Creation Date: December 9, 2016
• Document Release Date: June 29, 2001
• Sequence Number: 34
• Publication Date: January 1, 1971
• Content Type: IR

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Secret
No Foreign Disseemm~
DIRECTORATE OF
INTELLIGENCE
Intelligence Report
Opium Production and Movement in Southeast Aria
Secret
No Foreign Dissem
CIAJBGI GR 71-5
January 1971
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WARNING
This document contains information affecting the national
defense of the United States, within the meaning of Title
18, sections 793 and 794, of the US Code, as amended.
Its transmission or revelation of its contents to or re-
ceipt by an unauthorized person is prohibited by law.
j OUP ;......__.....
Excluded =?om ovtomatk
downproding and
o ._ dedcstific~~tian _^
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NO FOREIGN DISSEM
CENTRAL INTELLIGENCE AGENCY
Directorate of Intelligence
January 1971
Opium Production and Movement in Southeast Asia
Summary
Opium, a high-value and low-bulk commodity, is
produced in remote mountainous tracts in northern
and eastern Burma, northern Thailand, northern Laos,
northern North Vietnam, and -- to an unknown but
probably limited extent -- in the southwestern part
of China's Yunnan Province. It provides the sole
cash income for thousands of hill tribal people -
Meos, Yaos, Lahus, Akhas, Shans, Lisus, Kachins,
and Was -- who, for the most part, are not responsive
to the directions of their host governments.
Cultivation of the opium poppy is illegal in
Burma and Thailand, and its growth in North Vietnam
and Communist China is strictly controlled by the
governments of those countries; there is, on the
other hand, no existing legislation to prohibit
opium production and trafficking in Laos, and the
crop is an important source of income for the
Communist Pathet Lao (PL) and for some top
military and civilian officials of the Royal
Laotian Government (RLG).
Government measures to curtail the growth
of the opium poppy among the hill tribes in
Burma and Thailand have been ineffective. In
the eastern part of Burma's Shan State, in
particular, government control is nominal at
Note: This report was produced solely by CIA. It
was prepared by the Office of Basic and Geographic
Intelligence and coordinated with the Offices of
Current Intelligence and Economic Research. It
was also reviewed by the Bureau of Narcotics and
Dangerous Drugs of the Department of Justice and
the Bureau of Customs of the Department of the
Treasury.
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best, and opium production and marketing is a
flourishing business.
Although cultivators consume only a fraction
of the opium they produce,* much of the crop is
consumed elsewhere within the producing countries.
The surplus is exported along clandestine routes
through either Bangkok or Vientiane, thence by
ship or air to Hong Kong, Singapore, Saigon, or
other Asian markets. Some of the opium is con-
verted into a morphine base or into heroin at
refineries situated near the producing areas; in
this process the commodity is made more compact,
facilitating shipment. Much of the opium, however,
still arrives in Bangkok or Vientiane in its un-
refined state and is processed there for onward.
movement.
* A Thai Government survey in 1965-66 reported
that about 10 percent of the Meo adult population
of Thailand were steady smokers; others were
occasional users.
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Major Southeast Asian Producing Areas
ee Map 059 >_
1. Because the opium poppy thrives in a rel-
atively cool climate, it is usually grown in mountain
valleys or on slopes that are more then 3,000 feet
above sea level. It also requires loose alkaline
soil, and cultivated fields are commonly found in
areas of limestone bedrock. Poppyfields are usually
located some distance away from established trans-
portation routes and the prying eyes of government
officials; they may even be a 2- or 3-hour arduous
trek from the village of the cultivator. Intensive
care of the crop is required during much of the
growing season, and to save "commuting" time, some
villagers may live in temporary huts near the fields.
Because far less moisture is required for the opium
poppies than for rice, the former are grown during
the months from August or September to February or
March -- when only about 20 percent of the yearly
rainfall is received. The poppy does not deplete
soil nutrients as quickly as rice or maize; the
crop, therefore, may be grown continuously on the
same plot of ground for 10 years or more.
Figure 1. Poppyfield of Yao village in northern
Thailand. Flowers -- usually white but sometimes
reddish-purple -- blossom early in the year.
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Figure 2. Poppy pods. Pod in center has been
lanced with knife and opium resin oozes from the
openings. Harvester will return the following
day to scrape the congealed resin from the pod.
2. Burma, Thailand, and Laos together produce
an estimated 700 to 750 tons of opium annually. Of
this, Burma contributes about 400 tons, Thailand
200, and Laos 100 to 150. North Vietnam's output
is unknown, and there is no known cultivation of
the opium poppy in the other countries of South-
east Asia. Because of continuing insurgency in
Laos and the refugee status of many of the opium
growers, production there has dropped significantly
in recent years. Opium growing areas of Burma,
although serving for years as battlefields for
clashes between insurgent armies and government
forces, as well as between rival insurgent bands,
continue with relatively undiminished output.
3. Production in Burma is concentrated in
the eastern and northern parts of Shan State and
in the southeastern part of Kachin State. Poppy-
fields dot the rugged slopes in eastern Shan State
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around Keng Tung and in northern Shan State from
Lashio east and north to the China border. The
latter territory, comprised of the former Wa and
Kokang feudal states, is now a center of Chinese
Communist-backed insurgency directed against the
Burma Government; much of the area is under de
facto insurgent control, and insurgents reportedly
have destroyed a number of poppyfields in order to
deny the crop to pro-government hill tribes. The
Kachin tribal people are inveterate cultivators,
users, and traders of opium, and their poppyfields
are scattered throughout Kachin State. The Kachin
area between Bhamo and Namhkam, to the southeast
in Shan State, is known to be especially productive.
Figure 3. Meo man preparing opium for smoking.
Only a small amount of the opium produced in
northern Southeast Asia is consumed by the hill
tribe cultivators.
4. Opium-growing areas in northern Thailand
are coterminous with the upland tracts occupied by
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the tribal Meos, Yaos, Lahus, Akhas, and Lisus.
The Meos produce by far the most opium. Most of
these hill tribes live in the area north of 18?N;
some, however, have drifted southwestward as far
as the Tak area and others southeastward as far as
Phetchabun Province. The provinces of Chiang Mai,
Chiang Rai, and Nan have the largest upland pop-
ulations. The tribal people are sparsely settled
on the hillsides, however, and, although occupying
much of the land, they actually form but a small
minority of the total population of northern
Thailand. In Nan Province, for example, valley-
dwelling Thais outnumber the hill peoples 20 to 1.
The Karens, who live in the mountains along the
Thai-Burma border, generally occupy slopes that
are less than 3,000 feet in elevation, where opium
cultivation is marginal; their production is not
significant.
5. The Meos and, to a lesser extent, the
Yaos are the principal producers of opium in Laos,
and the crop may be encountered wherever they are
settled -- on upland tracts extending from the
northern border southward to 18?N. Major producing
areas include Phong Saly Province in the far north,
Houa Phan (Samneua) Province in the northeast, and
the Plaines des Jarres in Xiangkhoang Province in
the east-central part of the country. Areas of
production in Phong Saly and Houa Phan are now
entirely occupied by the PL, and in Xiangkhoang,
the opium areas are only partly under the control
of RLG forces.
6. The opium-growing areas in North Vietnam
are concentrated in the mountainous northern
provinces bordering China. Cultivation is closely
controlled by the government and none of the crop
is believed to be channeled illicitly to inter-
national markets. Much of it is probably converted
into morphine and used for medical purposes.
Collection and Local Transport
(See Map 500059)
7. The opium produced in the remote poppy-
fields in the northern part of Southeast Asia moves
in stages along a labyrinth of jungle trails, roads,
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rivers, airways, and sealanes to consumers in Hong
Kong, Singapore, and other Asian cities. A large
and disparate group of people are involved -- hill
tribesmen who grow the poppies; village traders who
collect the opium; merchants who convey it by mule
and horse caravans to assembling and distributing
centers; heavily armed forces that escort the
caravans; "chemists" who refine the raw opium into
morphine and heroin; truck drivers, bus drivers,
pilots, and seamen who smuggle the illicit cargo
to the markets; drug peddlers who make the'final
contact with the users; and a multitude of civilian
and military officials who take their "cut" to
ensure safe passage of the opium and its derivatives
to their destination.
8. After the opium crop has been harvested in
February or March, that part destined for market is
either set aside to await a lowland buyer or carried
several miles to a collection and distribution
center in a larger village. Buyers may be inde-
pendent merchants or the agents of large syndicates-
that have made prior arrangements for payment and
pickup of the crop. These merchants and agents,
along with their pack animals laden with a variety
of goods for trade -- bolts of cloth, knives, axe
heads, and other sundries -- circulate through
the area in the period following the harvest. Most
are Haw Chinese, descendents of immigrants from
Yunnan (see Figure 4). In addition to the trade
items, gold or old British India silver rupees
may be used by the merchants to procure the opium.
9. Most of the opium caravans wend southward
from the collection centers in the Burmese growing
areas toward transfer points located near the
Thai or Lao frontiers in the period March to June,
after the harvest and before the onset of the
monsoon rains. The cargo may be carried by a long
procession of hill tribe porters, each carrying more
than 50 pounds of raw opium on his back (see Figure
5). If the trek is a long one, however, the opium
is more likely to be transported by a pack train of
up to several hundred horses and mules, each loaded
with nearly 150 pounds (see Figures 6 and 7). Such
caravans may increase in size as additional cargo
is picked up at prearranged collection points along
the way. The caravans follow devious networks of
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well-scouted trails in order to avoid hijacking
by competing smugglers. Guards may carry machine
guns or even mortars to protect the caravan. Most
caravans terminate at Mong Hpayak in Burma, or at
villages farther south in the Burma-Thai.land-Laos
border area -- particularly in the vicinity of
Tachilek in Burma and Mae Sai in Thailand. Here
the cargoes are stored and/or refined prior to
eventual shipment by another pack train or motor
vehicle eastward to Laos or farther southward into
Thailand. Some of the pack trains, however, continue
past the border and well into Thailand, where they
continue their furtive tactics; they traverse a
network of trails along remote mountain ridges,
rarely follow the same route on successive trips,
and often travel at night -- not so much to avoid
hijacking by rival armies as to circumvent ambushes
by the Royal Thai Army (RTA) or the Border Patrol
Police (BPP).
the opium poppy grows abundantly in
the par the Shan State that is east of the
Salween River -- an area with numerous bands of
ethnically diverse insurgents, bandits, opium
smugglers, and gun runners -- and that much of
the opium produced there is illicitly channeled
out of the country through Thailand or Laos to
international m
k
ar
ets
reasonably certain that
some ot tau ac in
opium -- certainly that
ro
i
g
wn
n the southeast,
around Bhamo -- is trafficked across Shan State
into Thailand or Laos, where it is exchanged
for arms and ammunition destined to be used by
the Kachin Independence Army (KIA) or other
insurgent groups that have long plagued the
Burma Government. The American Consul in
Mandalay reported in 1968 that exports of
Kachin-grown opium to Thailand were increasing.
He also noted an increase in local consumption,
probably a reflection of the growing shortage
of Western medicines.
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A US
Mc aims that a small
amoun is regularly smuggled in produce trucks
from Lashio in Shan State via Mandalay and Toungoo
to Rangoon. The opium that is not consumed in
Rangoon reportedly is carried by motor vehicle or
coastal vessel to the Tenasserim coastal cities of
Moulmein, Tavoy, or Mergui, and then moved either
by human porters (mostly Karens) across the border
into Thailand or placed aboard Burmese or Thai
fishing vessels bound for Singapore or ports along
the west coast of West Malaysia.
12. Before the takeover of China by the
Communists in 1949, the tribal peoples of Yunnan's
rugged mountains were not under the effective
administrative control of the Nationalist Govern-
ment, and illicit opium traffic across China's
borders was rife. Because of the rigid control
of opium cultivation gradually imposed by the
present Communist regime, however, it is unlikely
that any significant amount of the Yunnan opium
now crosses the border into Burma or Laos and into
international traffic.
13. Increasingly, opium is being used by
hill tribe insurgents of northern and eastern
Burma and northern Thailand to procure arms and
ammunition for their activities. Most arms have
been procured from Lao military personnel; others
reportedly have been obtained from individuals in
the RTA or BPP. Representatives of the Kuomingtang
(KMT) irregular armies based in northern Thailand
sometimes act as middlemen. In Burma, weapons
reportedly have been trucked or airdropped into
Shan State, then carried to the insurgent camps
by horse and mule caravans.
Principal Organized Smuggling Groups
14. The KMT irregular armies and the so-called
Burmese Self-Defense Forces (Khakweyei) are the most
powerful opium trafficking syndicates in northern
Southeast Asia. The KMT irregulars, now largely
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locally recruited, were originally comprised of
Chinese Nationalist troops that retreated into the
Burma-Thailand-Laos triborder region after the
Communist takeover of mainland China. They orig-
inally were to serve as a stay-behind force to
open a second front in support of Chiang Kai-shek's
promised return to the mainland; although they
still operate ostensibly as an anti-Communist
force,* opium has long been their overriding
interest. The KMT irregulars have a combined
strength of between 4,000 and 6,000 well-armed
men. The largest force, with an estimated
strength of 1,400 to 1,900, is the Fifth Army,
under General Tuan Hsi-wen. The second largest,
with a troop strength of between 1,200 and 1,700,
is the Third Army, led by General Li Wen-huan.
Headquarters of both armies are located in a remote
part of northern Thailand between Fang and Mae Sai.
Their collection networks -- which utilize alliances
with an assortment of ethnically diverse agents --
have dominated the opium business in northern
Southeast Asia for years; it is estimated that
they handle more than 80 percent of the opium
grown in Shan State. The well-armed KMT operating
units positioned along the "opium trails" in the
Shan State ensure the safe passage of their caravans
to the transfer points and processing plants located
along the Burma-Thailand border. Competing traf-
fickers must either pay a heavy tax to move their
cargoes through KMT checkpoints or "buy" the pro-
tection of a KMT escort to the border.
15. The Burmese Self Defense Forces have been
the major competitors of the KMT irregulars in
recent years. They are comprised of former Shan
State insurgents and bandits who have allied
themselves with the Burma Government against both
the KMT and the Chinese Communist-backed insurgents
now active in the northern Shan State; in return,
the government did not interfere with their opium-
trafficking activities. The most notorious of
these forces has been the army led by the dissident
Sino-Shan leader Chang Chi-fu. His army, with a
reported strength of several thousand troops, has
* Ties with the Chinese Nationalist Government
have been severed for years.
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long challenged the KMT for control of the produc-
tion and movement of opium in the Keng Tung area.
The long-standing feud between Chang and the KMT
exploded into open warfare in the summer of 1967.
Chang's alliance with the Burmese Government has
disintegrated during the past year-and-a-half,
and he has been imprisoned. His army, deprived
of government sanction, has gone underground and
his opium caravans, which formerly used govern-
ment military vehicles and traversed well-traf-
ficked roads, have been forced into more clan-
destine operations.
16. The Shan States Army, the largest of
several forces that have been fighting for Shan
independence from Burma off and on for the past
2 decades, is also heavily involved in the opium
business. It maintains several camps in northern
Thailand, ostensibly to serve as rest and training
sites, but in actuality, to coordinate the sale of
opium and procurement of weapons and supplies.
17. In the insurgency areas of northern
Thailand, insurgents have taken over the sale and
movement of opium, and Meos have been encouraged
to grow more opium to provide funds for their
activities.
Local Processing Areas
18. Because of raw opium's bulk (see Figure
10) and telltale odor, smugglers are increasingly
converting the unrefined product into a morphine
base in local laboratories in the Burma-Thailand-
Laos triborder area. This morphine base, which
has only about one-tenth the weight of the unre-
fined product, is pressed into compact and easily
transportable bricks (see Figure 11). Part of
the morphine base is further processed into heroin
in these triborder labs.
19. Most of northern Thailand's opium re-
fineries are located in remote hills within the
triangle formed by the Thai towns of Fang, Chiang
Rai, and Mae Sai. They are run by KMT operatives.
In Burma, the only known laboratories are located
near Tachilek, just north of the Thai border.
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Tachilek has long been a transshipment center for
Shan State opium. Much of the Burma and Thailand
opium that moves to the international market
through Laos, as well as much of the crop grown
in RLG-controlled areas of Laos, is processed in
laboratories in Mekong River towns of Houa Khong
Province. The town of Houei Sai is the chief such
processing site and also functions as a trans-
shipment point for opium refined at other north-
western Laotian towns such as Muong Sing (which
may also be an entry point for Yunnan-grown opium).
Transport to Export and User Areas
20. The opium caravans that cross the Burma-
Thailand border terminate near the northern Thai
valley towns of Chiang Rai, Chiang Mai, Lampang,
or Tak; southward from these points the opium is
shipped by a combination of train, truck, bus,
and/or boat. Once across the border, most of
the caravans follow a network of trails along
the densely jungled and lightly peopled mountain
ridges lying west of Thailand's major north-south
highway (Route 1, which passes through Mae Sai,
Chiang Rai, and Lampang). A few caravans, however,
may travel along ridges farther west, closer to
the Burma-Thailand border, and terminate near Tak.
From Tak, the cargo is carried by motor vehicles
and boats to Bangkok. Caravans may pick up Thai-
produced opium at collection points along the way.
21. Perhaps most of the opium moving from
Burma through Thailand is transferred from Shan
State caravans to trucks, buses, or private cars
near Tachilek. Chinese merchants usually arrange
transshipment southward. If a truck is used, the
illicit cargo is packed in small containers and
cached among baskets and boxes of local native
products to avoid detection. If transported by
bus or car, a secret compartment, built into the
vehicle by the owner, conceals the drugs. Despite
such precautionary measures, however, additional
protection is necessary, and officials of the RTA,
BPP, and Customs at the several checkpoints on the
route to Bangkok are usually bribed. "Protection"
fees are either prepaid by the smuggling syndicate
or paid by the driver at the checkpoints (see
Figure 13).
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22. Opium or morphine base is delivered to
laboratories in Bangkok for further refinement
into morphine or heroin (See Figure 14.). These
labs, like most other elements of the Southeast
Asian opium business, are run by Chinese. Most
of the refined product is then smuggled aboard.
Hong Kong-bound vessels -- either Thai merchant
ships at the Chao Phraya River docks in Bangkok
or Thai deep sea trawlers at nearby fishing ports
on the Gulf of Thailand. Such craft may then.
deposit the illicit cargo on one of the several
hundred small islands ringing Hong Kong for later
retrieval by a Hong Kong junk. The narcotics may
also be packed in waterproof containers that are
connected by ropes to floats. These containers
are then jettisoned at prearranged sites in
shallow waters near Hong Kong. Later, they are
picked up by a junk equipped with a grappling
hook. The cargo is transferred from the junks
to warehouses and refineries in Kowloon or the
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New Territories to await distribution to Hong Kong
users. A recent report indicates that an increas-
ingly popular method of smuggling narcotics from
Bangkok to Hong Kong involves the insertion of the
product into cases of fruit such as pineapple, which
are commercially packed in Bangkok. Reportedly a
small amount of morphine has also been smuggled
into Hong Kong from Bangkok aboard commercial
airliners. (See Figures 15 through 21.)
23. Not all of the Bangkok supply of narcotics
is shipped to Hong Kong. Some is concealed in motor
vehicles and transported through southern Thailand
to Malaysian ports such as Penang (Pinang), Port
Swettenham, or Kota Baharu, or to Singapore, which
is both a market and a transshipment point for the
Southeast Asian opium products. The transshipments
go to other Asian cities including, apparently,
Hong Kong.* Few narcotics cargoes are currently
Singapore and Penang have been included in the
list of Asian ports considered by Hong Kong customs
agents as suspect ports of origin, and all ships
originating there are checked for illicit cargo.
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believed to be smuggled from Bangkok to Malaysia or
Singapore by ship.
24. Southeast Asian opium exiting through
Laos follows a path equally as circuitous as that
exported through Thailand. Much of the product
(opium or its derivatives) is transferred by river
craft and/or Royal Armed Forces (FAR) vehicles
from the growing and processing sites to Houei
Sai, from where it is airlifted by Royal Lao Air
Force (RLAF) craft to collection and processing
centers in Luang Prabang (Louangphrabang) or
Vientiane.* The rest of the opium grown in
RLG-controlled territory is shipped directly
from the growing areas to these centers. The
narcotics are then assembled in Vientiane for
shipment, often in RLAF aircraft, to other
cities in Laos such as Savannakhet or Pakse or
to international markets. Some is flown to
Bangkok for transshipment to Hong Kong; the
narcotics, assembled in watertight containers,
are dropped at prearranged sites in the Gulf of
Thailand, recovered by Thai fishing vessels, and
spirited up the Chao Phraya river to Bangkok.
25. A similar operation reportedly delivers
narcotics directly from Vientiane to Hong Kong,
where they are picked up in the local waters.
Much of the Lao-processed product is destined
for Saigon. Most of it is probably smuggled
aboard military or commercial air flights
(including Royal Air Laos and Air Vietnam),
often by or in collusion with the crew. Intelli-
gence reports dated 1970 indicate that narcotics
cargoes from Laos have been air dropped near Ban
Me Thuot, about 150 miles northeast of Saigon,
then smuggled to Saigon by truck, sometimes
concealed in gasoline drums. The operation is
run by a syndicate of Vietnamese. Air drops
also have been made into rubber plantations
near the South Vietnam-Cambodia border and the
--- me of'he-opium grown in insurgent-controlled
areas of northern Thailand reportedly is transferred
across the Mekong by boat to Houei Sai where it is
exchanged for weapons and ammunition.
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cargo transferred to Saigon by automobile. Air
carriers reported to be utilized in such operations
have included small planes -- such as Beavers or
Piper Cubs -- equipped with extra gas tanks to
permit round trips from Laos without refueling. A
number of DC-3s and Beechcrafts, piloted largely
by ex-French Legionnaires and known as "Air Opium,"
formerly carried much of the Laotian narcotics
cargo to Asian markets.
26. Opium grown in Pathet Lao-controlled
parts of Laos is channeled to North Vietnam for
processing and distribution. Some of the PL opium
may then be carried down the Ho Chi Minh Trail. to
be sold in South Vietnam.
27. Although most authorities have estimated
that no more than 5 percent of the illegal drugs
that enter the United States have originated in
Southeast Asia, recent intelligence indicates that
heroin traffic between Southeast Asia and the United
States has increased in the past few years and is
expected to contribute increasingly to the US drug
market. An Australian syndicate that smuggled
narcotics from Hong Kong to New York City was
smashed by narcotics agents in 1967; a Philippine-
based smuggling ring did a lucrative business along
similar channels in 1968-69. Commercial airlines
have been the principal carriers, although a US
narcotics agent in Saigon recently claimed that
US military personnel are attempting to use military
transport to smuggle narcotics to organized crime
syndicates in the United States.
Approved For Releg~p ~49 bCl RP73B00296R000300060034-6
 Approved For Release 2001108130 : CIA-RDP73B00296R000300060034-6
Approved For Release 2001108130 : CIA-RDP73B00296R000300060034-6
 Approved For Release 2001/08/30 : CIA-RDP73B00296R000300060034-6
Secret
No Foreign Dissem
Secret
Approved For Release 2001/08/30 : CIA-RDP73B00296R000300060034-6