an excerpt from:
Drugs, the U.S., and Khun Sa
Francis W. Belanger © 1989
Editions Duang Kamol
Siam Square, Bangkok, Thailand
THE ROLE OF THE CIA
THE CIA AND THE DRUG INDUSTRY
The mid-1960s marked the peak of the European heroin industry, and shortly thereafter it went into a sudden decline. In the early 1960s the Italian government launched a crackdown on the Sicilian Mafia, and in 1967 the Turkish government announced that it would begin phasing out cultivation of opium poppies on the Anatolian plateau in order to deprive Marseille’s heroin laboratories of their most important source of raw material. But, unwilling to abandon their lucrative narcotics racket the Corsican syndicates—and the American Mafia—shifted their sources of supply to Southeast Asia, where surplus opium production and systematic government corruption created an ideal climate for large scale heroin production.
And once again American foreign policy played a role in creating these favorable conditions. During the early 1950s the CIA had backed the formation of a Nationalist Chinese guerilla army in Burma, a group which still controls as much as half of the world's opium supply, and in Laos the CIA created a M eo mercenary army whose commander manufactured heroin for sale to, among others, American GIs in South Vietnam. The State Department provided unconditional support for corrupt governments known to be engaged in the international drug traffic. In late 1969 new heroin laboratories sprang up in the tri-border and where Burma, Thailand, and Laos converge, and unprecedented quantities of heroin started flooding into the United States. Nurtured by a seemingly limitless flow of heroin, America's total number of addicts skyrocketed.
The bloody Saigon street fighting of April-May 1955 marked the end of French colonial rule and the beginning of direct American intervention in Vietnam. When the First Indochina war came to an end, the French government had planned to withdraw its forces gradually over a two- or three-year period in order to protect its substantial political and economic interests in southern Vietnam. The armistice concluded at Geneva, Switzerland, in July 1954 called for the French Expeditionary Corps to withdraw into the southern half of Vietnam for two years, until an all-Vietnam referendum determined the nation's political future. Convinced that Ho Chi Minh and the Communist Viet Minh were going to score an overwhelming electoral victory, the French began negotiating a diplomatic understanding with the government in Hanoi.
But America's moralistic cold warriors were not quite so flexible. Speaking before the American Legion Convention several weeks after the signing of the Geneva Accords, New York's influential Catholic prelate, Cardinal Spellman, warned that:
"If Geneva and what was agreed upon there means anything at all, it means ... taps for the buried hopes of freedom in Southeast Asia! Taps for the newly betrayed millions of Indochinese who must now learn the awful facts of slavery from their eager Communist masters!"
Rather than surrendering southern Vietnam to the "Red rulers' godless goons," the Eisenhower administration decided to create a new nation where none had existed before. Looking back on America's post-Geneva policies from the vantage point of the mid 1960s, the Pentagon Papers concluded that South Vietnam" was essentially the creation of the United States.
The French had little enthusiasm for this emerging nation and its premier, and so the French had to go. Pressured by American military aid cutbacks and prodded by the Diem regime, the French stepped up their troop withdrawal. By April 1956 the once mighty French Expeditionary Corps had been reduced to less than 5,000 men, and American officers had taken over their jobs as advisers to the Vietnamese army. The Americans criticized the French as hopelessly "colonialist" in their attitudes, and the French officials retorted that the Americans were naive. During this difficult transition period one French official denounced "the meddling Americans who, in their incorrigible guilelessness believed that once the French Army leaves, Vietnamese independence will burst forth for all to see."
But America's fall from innocence was not long in coming. Only seven years later, the U.S. Embassy and the CIA engineered a coup that toppled Diem and left him murdered in the back of an armored personnel carrier. And by 1965 the United States found itself fighting a war that was almost a carbon copy of France’s colonial war. The U.S. Embassy was wearisomely trying, but effectually unable, to manipulate the same clique of corrupt Saigon politicos that had confounded the French in their day. The U.S. Army looked just like the French Expeditionary Corps to most Vietnamese, only instead of Senegalese and Moroccan colonial levies, the U.S. Army was assisted by Thai and South Korean troops. The CIA and the U.S. special forces (the "Green Berets") were assigned to train the very same hilltribe mercenaries that the French MACG (the "Red Berets") had recruited ten years earlier.
Given the striking similarities between the French and American war machines, it is hardly surprising that the broad outlines of "operation X" (Although the French colonial government initiated a program to eliminate opium addiction, the French intelligence and paramilitary agencies took over the opium traffic in order to finance their covert operations during the First Indochina War of 1946-1954.) reemerged after U.S. intervention. As the CIA became involved in Laos in the early 1960s it became aware of the truth of Colonial Trinquier's axiom, "To have the Meo, one must buy their opium." At a time when there was no ground or air transport to and from the mountains of Laos except CIA aircraft, opium continued to flow out of the villages of Laos to transit points such as Long Tieng. There, government forces, this time Vietnamese and Lao instead of French, transportcd narcotics to Saigon, where parties associated with the Vietnamese political leaders were involved in the domestic distribution and arranged for export to Europe through Corsican and CIA syndicates. And just as the French high commissioner had found it politically expedient to overlook the Binh Xuyen's involvement in Saigon's opium trade, the U.S. Embassy, as part of its unqualified support of the Thieu Ky regime, looked the other way when presented with evidence that members of the regime were involved in the GI heroin traffic.
In Laos, CIA clandestine intervention produced changes and upheavals in the narcotics traffic. When political infighting among the Lao elite, coupled with the escalating war in Vietnam, forced the small charter airlines owned by the Corsican syndicates out of the opium business in 1965, the CIA's airline, Air America, began flying Meo opium out of the hills to Long Tieng and Vientiane. CIA cross-border intelligence missions launched Into China from Laos reaped an unexpected dividend in 1962 when the Shan rebel leader who had organized the forays for the agency began financing the Shan nationalist cause; he did so by selling Burmese opium to another CIA protege, Laotian General Phoumi Nosavan. The business alliance between General Phoumi and the Shans opened up a new trading pattern that diverted increasingly significant quantities of Burmese opium from their normal marketplace in Bangkok. By the late 1960s U.S Air Force bombing had further disrupted opium production in Laos by forcing the majority of the Meo opium farmers to become refugees. In response, flourishing Laotian heroin laboratories—which were the major suppliers for the GI users in Vietnam—simply increased their imports of Burmese opium through pre-existing trade relationships.
The importance of these CIA clients in the subsequent growth of the Golden Triangle's heroin trade was revealed inadvertently, by the Agency itself when it leaked a classified report on the Southeast Asian opium traffic to the New York Times. The CIA analysis identified twenty-one opium refineries in the tri-border area where Burma, Thailand, and Laos converge and reported that seven were capable of producing 90 to 99 percent pure No. 4 heroin. Of these seven heroin refineries, "The most important are located in the areas around Tachilek, Burma; Ban Houei Sai and Nam Keung in Laos; and Mae Salong in Thailand."
Although the CIA did not see fit to mention it, many of those refineries were located in areas totally controlled by paramilitary groups closely identified with American military operations in the Golden Triangle. Mae Salong was headquarters of the Nationalist Chinese Fifth Army, which had been continuously involved in CIA intelligence and counterinsurgency operations since 1950. According to a former CIA operative who worked in the area for a number of years, the heroin laboratory at Na Kueng was protected by Major Chao La, commander of Yao mercenary troops for the CIA in northwestern Laos. One of the heroin laboratories near Ban Huay Sai reportedly belonged to General Ouane Rattikone, former commander in chief of the Royal Laotian Army—the only army in the world, except for the U.S. army itself, to be entirely financed by the U.S. government. The heroin factories near Tachilek were operated by rebel units from Burma and Shan rebel armies who even now control a large percentage of the narcotics traffic out of Burma. Although few of these Shan groups still have any relation with the CIA, one of the most important chapters in the history of the Shan States' opium trade involves a Shan rebel army under Khun Sa, who is still receiving CIA support, either directly or indirectly.
Other sources have revealed the existence of an important heroin laboratory that operated near Vientiane under the protection of General Ouane Rattikone. And finally, the U.S. Bureau of Narcotics had reports that General Vang Pao, commander of the CIA's 'secret army', had been operating a heroin factory at Long Tieng, headquarters for CIA sponsored operations in northern Laos.
In the fertile minds of the geopolitical strategists in the CIA's Special Operations division, potential infiltration routes stretched from the Shan hills of north-eastern Burma, through the rugged Laotian mountains, and then southward into the Central Highlands of South Vietnam. According to one retired CIA operative, Lt. Col. Lucien Conein, Agency personnel were sent to Laos in 1959 to supervise eight Green Beret teams who were then training Meo guerrillas on the Plain of Jars. In 1960 and 1961 the CIA recruited elements of Nationalist Chinese Paramilitary units based in northern Thailand to inf[i]ltrate into China-Burma border areas; they also sent Green Berets into South Vietnam's Central Highlands to organize hilltribe commando units for intelligence and sabotage patrols along the Ho Chi Minh Trail. Finally, in 1962 one CIA operative based in northwestern Laos began sending trained Yao and Lahu tribesmen into the heart of China's Yunnan Province to monitor road traffic and tap telephones.
While the U.S. military required half a million troops to fight a conventional war in South Vietnam, the mountain war had needed only a handful of Americans. American paramilitary personnel in Laos tended to serve long tours of duty, some for a decade or more, and had been given an enormous amount of personal power. If the nature of the conventional war in South Vietnam is best analyzed in terms of the faceless bureaucracies that spewed out jargonized policies, the secret war in Laos is most readily understood through the men who fought it.
Three men, perhaps more than any of the others, have left their personal imprint on the conduct of the secret war: Edgar Buell, Anthony Poe, and William Young. And each in his own way illustrates a different aspect of America's conscious and unconscious complicity in the Laotian opium traffic.
William Young, perhaps one of the most effective agents ever, was born in the Burmese Shan States, where his grandfather had been a missionary to the hill tribes. A gifted linguist, Young spoke five of the local languages and probably knew more about mountain minorities than any other American in Laos; the ClA rightly regarded him as its "tribal expert." Because of his deep and sophisticated understanding of the hill tribes, he viewed the opium problem from the perspective of a hilltribe farmer. He felt nothing should be done to obstruct the opium traffic. Young explained his views: "As long as there is opium in Burma, somebody will market it."
Anthony Poe was indifferent to the problem. A marine in the Pacific during World War II, Poe joined the CIA's Special Operations division sometime after the war and quickly earned a reputation as one of its crack clandestine warfare operatives in Asia, playing an important role in the CIA's Tibetan operations. Poe's first assignment in Indochina was with anti-Sihanouk mercenaries along the Cambodian border in South Vietnam, and in 1963 he was sent to Laos as chief advisor to General Vang Pao. Several years later he was transferred to northwestern Laos to supervise Secret Army operations in the tri-border area and to work with Yao tribesmen. The Yao remember "Mr. Tony" as a drinker and as an authoritarian commander who bribed and threatened to reach his goals, as a mercurial leader who rewarded his soldiers 500 kip (one dollar) for an ear and 5,000 kip for a severed head—when accompanied by a Pathet Lao army cap. He was indifferent toward the opium traffic and ignored the prospering heroin factories along the Mekong River, not once stopping any of Ouane Rattikone's officers from using U.S. supplied facilities to administer the drug traffic.
The most curious of this triumvirate is Edgar "Pop" Buell, originally a farmer from Steuben County, Indiana. Buell first came to Laos in 1960 as an agricultural volunteer for International Voluntary Services (IVS), a Bible Belt counterpart of the Peace Corps. He was assigned to the Plain of Jars, where the CIA was building up its secret Meo army, and became involved in the Agency's activities largely through circumstance and his own God-given anti-Communism. As CIA influence spread through the Meo villages ringing the Plain of Jars, Buell became a one-man supply corps, dispatching Air America planes to drop rice, meat, and other necessities the CIA had promised to deliver. Buell feigned being the innocent country boy, claiming his work was humanitarian aid for Meo refugees. Nevertheless, his operations were clearly an integral part of the CIA program. In his efforts to bolster the Meo economy and to increase the tribe' military effectiveness, Buell utilized his agricultural skills to improve Meo techniques for planting and cultivating opium. "If you're gonna grow it, grow it good," Buell told the Meo.
THE EMERGENCE OF THE KMT
Just as the work of French clandestine services in Indochina had enabled the opium trade to survive a government repression campaign, so some CIA 'actives' in Burma helped transform the poppy-growing Shan States from a relatively backwater into the largest opium-growing center in the world. The precipitous collapse of the Nationalist Chinese or Kuomintang (KMT) government in 1949 convinced the Truman administration that it had to stem "the southward flow of communism" into Southeast Asia. In 1950 the Defense Department proffered military aid to the remnants of the defeated Kuomintang army in the Burmese Shan States for a projected invasion of southern China. Although the KMT army was to fail in its military objectives, it did succeed in monopolizing and expanding the Shan States' opium trade.
When the People's Liberation Army entered Yunnan in it December 1949, Lu Han armed the populace, who then drove Chiang's troops out of the cities. Nationalist Chinese stragglers began crossing into Burma in late 1949, and in January of 1950 remnants of the Ninety-third Division, Twenty-sixth Army, and General Li Mi's Eighth Army arrived in Burma. Five thousand of General Li Mi's troops who had crossed into Laos instead of Burma were quickly disarmed by the French and interned on Phu Quoc Island in the Gulf of Thailand, from where they were repatriated to Taiwan in June 1953.
The Burmese army was, however, less successful than the French in dealing with the KMT. By March 1950 some fifteen hundred of the displaced troops had crossed the border and were occupying territory between the city of Kengtung and Tachilek. In June, the Burmese army commander for Kengtung State demanded that the KMT either surrender or leave Burma immediately. When Li Mi refused, the Burmese launched an attack from Kengtung and captured Tachilek in a matter of weeks. Two hundred of Li Mi's troops fled into Laos where they were interned, but the remainder retreated to Mong Hsat, about forty miles west of Tachilek and fifteen miles from the Thai border. Because the Burmese army had been weakened by three years in central Burma battling four major rebellions, its Kengtung contingent was inadequate to pursue the KMT through the mountains to Mong Hsat. But, at the time, it seemed only a matter of months until the Burmese troops would become available for the final assault on the weakened KMT forces.
At this point the CIA entered the list of combatants on the side of the KMT, drastically altering the balance of power. The Truman administration, ambivalent toward the conflict in Southeast Asia since taking office in 1945, was shocked into action by the sudden collapse of Chiang Kai-shek's Kuomintang regime. Government agencies scrambled to devise policies "to block further Communist expansion in Asia," and in April 1950 the Joint Chief of Staff (JCS) advised the Secretary of Defense to implement "a program of special covert operations designed to interfere with Communist activities in Southeast Asia..." The exact details of such "special covert operations" plan ned for Burma were not spelled out in the JCS memo or any of the other Pentagon Papers because it was one of the most heavily classified operations ever undertaken by the CIA: the U.S. ambassador to Burma was not told; top ranking officials in the State Department were kept in the dark; and it was even hidden from the CIA's own deputy director for intelligence.
The first signs of direct CIA aid to the KMT appeared in early 1951, when Burmese intelligence agents reported that unmarked C46 and C-47 transport aircraft were making at least five parachute drops a week to KMT forces in Mong Hsat. With its new supplies, the KMT underwent a period of vigorous expansion and reorganization. Training bases were constructed near Mong Hsat and staffed with instructors flown in from Taiwan.
KMT agents scoured the Kokang and Wa States along those Burma-China border for scattered KMT survivors, and General Li Mi's force burgeoned to four thousand men. In April 1950, Li Mi led the bulk of this force up the Salween River to Mong Mao in the Wa States, where they established a base camp near the China border. As more stragglers were rounded up, a new base camp was opened at Mong Yang; soon unmarked C-47s were seen making air drops in the area. After Li Mi recruited three hundred troops from Kokang State under the command of the headman's younger sister, Olive Yang, more arms were dropped to the KMT camp.
In April 1951, the attempted reconquest of Yunnan began when 2,000 soldiers of the Yunnan Province Anti-Communist National Salvation Army based at Mong Mao crossed the border into China. Accompanied by CIA advisors and supplied by regular airdrops from unmarked C-47s, KMT troops moved northward in two columns, capturing Kengma without resistance. However, as they advanced north of Kengma, the People's Liberation Army (PLA) counterattacked. The KMT suffered massive casualties, and several of their CIA advisors were killed. Li Mi and his Salvation Army fled back to Burma after less than a week in China. Undeterred by this crushing defeat, however, the General dispatched his two thousand-man contingent at Mong Yang into southern Yunnan; they too were quickly overwhelmed and driven back into Burma.
Rather than abandoning this doomed adventure, the CIA redoubled its efforts. Late in 1951, the KMT reopened the old World War It landing strip at Mong Hsat so that it could handle the large two- and four-engine aircraft flying in directly from Taiwan or Bangkok. In November, Li Mi flew to Taiwan for a vacation and returned three months later, to be soon followed by a CAT (Civil Air Transport, later known as Air America) airlift, which flew seven hundred regular KMT soldiers from Taiwan to Mong Hsat. Burmese intelligence reported that the unmarked C-47s began a regular shuttle service with two flights a week direct from Taiwan. A mysterious Bangkok-based American company named Sea Supply Corporation began forwarding enormous quantities of U.S. arms to Mong Hsat. Burmese Military Intelligence observed that the KMT began sporting brand- new American M-1s, .50 caliber machine guns, bazookas, mortars, and anti-aircraft artillery. With these lavish supplies, the KMT press-ganged eight thousand soldiers from the hardy local hill tribes and soon tripled their forces to twelve thousand.
After a year-long buildup, General Li Mi launched his final bid to reconquer Yuman Province. In August 1952, 2,100 KMT troops from Mong Yang invaded China and penetrated about sixty miles before the Chinese army drove them back into Burma. There would be no more invasions. Although General Li Mi and his American advisors had not really expected to conquer the vast stretches of Yunnan Province with an army of twelve thousand men, they had been confident that once the KMT set foot in China, the "enslaved masses" would rise up against Mao and flock to Chiang Kai-shek's banner. After the three abortive forrays had conspicuously failed to arouse the populace, General Li Mi quietly abandoned the idea of conquering China and resigned himself to holding the line in Burma.
The KMT ceased concentrating their forces in a few bases on the China border and spread their troops out to control as much territory as possible. Since the Burmese army was still preoccupied with insurgency in other parts of Burma, the KMT soon became the only effective government in all the Shan States territories between the Salween River and the China border (Kokang, Wa, and Kengtung states). These territories were also Burma's major opium-producing region, and the shift in KMT tactics allowed them to increase their control over the region's opium traffic.
The KMT occupation centralized the marketing structure by using hundreds of petty opium traders to comb the Shan highlands. The KMT also required that every hilltribe farmer pay an annual tax in the form of opium. One American missionary to the Lahu tribesmen of Kengtung State, the Reverend Paul Lewis, recalls that the KMT tax stimulated a dramatic rise in the amount of opium grown in the highland villages he visited. Tribes had very little choice in the matter, and Lewis can still remember the agony of the Lahu who were tortured by the KMT for failing to comply with their demands.
Many Chinese soldiers inevitably married Lahu tribeswomen, and such marriages reinforced KMT control over the highlands and made it easier for them to secure opium and recruits. Given their personal contacts in mountain villages, their powerful army, and their control over the opium-growing regions, the KMT were in an ideal position to force an expansion of the Shan States' opium production when Yunnan's illicit production began to disappear in the early 1950s.
Soon after their arrival in Burma, the KMT had formed a mountain transport unit, recruiting local mule drivers and their animals. Almost all the KMT opium was sent south to Thailand, either by mule train or aircraft. Since most of their munitions and supplies were carried overland from Thailand, the KMT mule caravans found it convenient to haul opium on the outgoing trip from Mong Hsat and soon developed a regular caravan trade across the Thai border. Burmese military sources claimed that much of the KMT opium was flown from Mong Hsat in unmarked C-47s flying to Thailand and Taiwan. However it was carried, once the KMT opium left Mong Hsat it was usually shipped to Chiang Mai, where a KMT colonel maintained a liaison office with the Nationalist Chinese consulate and with local Thai authorities. Posing as ordinary Chinese merchants, the colonel and his staff used raw opium to pay for the munitions, food, and clothing that arrived from Bangkok at the Chiang Mai railhead. Once the material was paid for, it was the colonel's responsibility to to forward it to Mong Hsat. Usually the KMT dealt with the commander of the Thai police, General Phao, who shipped the opium from Chiang Mai to Bangkok for local consumption and export.
While the three CIA-sponsored invasions of Yunnan, however feebly conceived they may have been, at least represented a bona fide anti-Communist policy, the next move defied all logic. With what appeared to be CIA support, the KMT began a full-scale invasion of eastern Burma. In late 1952, thousands of KMT mercenaries forded the Salween River and began a well-orchestrated advance. The Burmese government claimed that this was the beginning of an attempt to conquer the entire country. But in March 1953, the Burmese fielded three crack brigades and quickly drove the KMT back across the Salween River. Intriguingly, after a skirmish with the KMT at Wan Hsa La ferry, Burmese soldiers discovered the bodies of three caucasians who bore no identification other than some personal letters Washington and New York addresses.)
By now the issue had become such a source of international embarrassment for the United States that Washington used its influence to convene, in May of 1953, a Four-Nation Militiary Commission (the United States, Burma, Taiwan, and Thailand) to deal with the problem. At the meeting (which was held in Bangkok), Only after Burma took the, issue to the United Nations in September did the Taiwan negotiators in Bangkok stop quibbling and agree to the withdrawal of two thousand KMT troops; the evacuees would march to the Burma-Thailand border, be trucked back to Chiang Rai, Thailand, and flown to Taiwan General Chennault's CAT.
The Burmese, however, were suspicious of the arrangements from the very beginning, and when representatives of the Four-Nation Military Commission arrived in northern Thailand to observe the withdrawal, Thai police commander Phao, refused to allow the Burmese delegation to accompany the others to the staging areas. On the ninth of November, the U.S. ambassador to Taiwan, Charlie L. Rankin, stated that if the the[sic] United States did not ease its pressure, Chiang threatened to make public the CIA support of the KMT in Burma. The American ambassador to Thailand, General William Donovan, cabled back that the "Chicoms" and Soviets already knew about the CIA operations and so he kept pressuring for withdrawl.
Although the continuing struggle faded from American headlines, in June 1955 the Rangoon Nation reported that six hundred KMT troops had been smuggled into the Shan States from Taiwan. A new KMT commander was appointed, and a headquarters complex was established at Mong Pa Liao near the Mekong River. The KMT continued to rule the hilltribes with an iron hand. In 1957, an American missionary reported:
"For many years there have been large numbers of Chinese Nationalist troops in the area demanding food and money from the people. The areas in which these troops operate are getting poorer and poorer and some villages are finding it necessary to flee."
Not only did the KMT continue to demand opium from the tribes, but they increased their activities in the narcotics trade as well. When the Burmese army captured the KMT camp at Wanton in 1959, they discovered three refineries of morphine base operating near a usable airstrip.
Although forgotten by the international press, the KMT guerrilla operations continued to create problems for both the Burmese and Chinese governments. When delegations from the Union of Burma and People's Republic of China met to resolve a border dispute in the summer of 1960, they also concluded a secret agreement for combined operations against the KMT at Mong Pa Liao. This base, with a runway capable of handling even the largest transport aircraft, was defended by some ten thousand KMT troops entrenched in an elaborate fortified complex. After weeks of heavy fighting, five thousand Burmese troops and three full People's Liberation Army divisions (totaling 20,000 men), finally overwhelmed the fortress on January 26, 1961. While many of their hilltribe recruits fled into the nearby mountains, the crack KMT retreated across the Mekong River into northwestern Laos. Burmese officers were outraged to discover American weapons of recent manufacture and five tons of ammunition bearing distinctive American labels. In Rangoon, 10,000 angry demonstrators marched in front of the U.S. Embassy, and Burma sent a note of protest to the United Nations saying that "large quantities of modem military equipment, mainly of Americans origin, have been captured by Burmese forces."
The KMT shipped bountiful harvests to northern Thailand, where they were sold to a CIA client, General Phao Sriyanonda of the Thai police. The CIA promoted the Phao-KMT partnership in order to provide a secure rear area for the KMT, but this strategic alliance soon became a pivotal factor in the growth of Southeast Asia's narcotics traffic.
With CIA support, the KMT remained in Burma until 1961, when the Burmese army drove them into Laos and Thailand. Bythis time the Kuomintang had already used their control over the tribal populations to expand Shan State opium production nearly tenfold—from less than 40 tons at the end of World War II to estimated three hundred to four hundred tons by 1962. From bases in northern Thailand, the KMT continues to this very day to dispatch mule caravans into the Shan States to carry out the opium harvest. Today, nearly thirty years after the CIA began supporting the KMT in the Golden Triangle region, KMT 'soldiers' control almost half of the world's total illicit opium supply and share about half of Southeast Asia's thriving heroin business.
At first glance the history of the KMT's involvement in the Burmese opium trade seems to be just another case of a CIA client unilaterally taking advantage of the agency's political protection to enrich itself from the narcotics trade. But upon closer examination, the CIA appears to be much more seriously compromised in the affair. The CIA fostered the growth of the Yunnan Province Anti-Communist National Salvation Army in the borderlands of northeastern Burma—a potentially rich opium-growing region. There can be no question of CIA ignorance or naivete since as early as 1952 The New York Times and other major American newspapers published detailed accounts of the KMT's role in the narcotics trade. But most disturbing of all is the coincidence that the KMT's Bangkok connection was the commander of the Thai Police—and General Phao was the CIA's man in Thailand.
THE THAI ELITE
Government corruption is not just a problem in Thailand, it is a way of life. Like every bureaucracy, the Thai government has elaborate organizational charts marking out neatly delineated areas of authority. To the uninformed observer it seems to function much like any other meritocracy, with university graduates occupying government posts, careers advancing step by step, and proposals moving up and down the hierarchy in a more or less orderly fashion. But all of these these charts and procedures were (and are) a facade, behind which operate powerful military cliques whose driving ambition is to expropriate enough money, power, and patronage to become a government within the government. These cliques are not ideological factions, coteries of plotters united by greed and ambition.
A clique usually has its beginning in some branch of the military service, where a hardcore of friends and relatives begin to recruit supporters from the ranks of their brother officers. Since official salaries have always been notoriously inadequate for the basic needs—not to mention the dreams—of many officers, each rising faction must find itself a source of supplementary income. While graft within the military itself provides a certain amount of money, all cliques are eventually forced to extend their tentacles into the civilian sector. A clique usually concentrates on taking over a single government ministry or monopolizing a certain realm of business, such as the rice trade or the lumber industry. By the time a clique matures it has a highly disciplined pyramid of corruption. At the bottom, minor functionaries engage in extortion or graft, passing the money up the ladder, where leaders skim off vast sums for themselves divide the remainder among their loyal followers. Clique members may steal from the official government, but they usually do not dare steal from the clique itself; and the amount of money they receive from the clique is rigidly controlled.
When such a clique grows strong enough to make a bid for national power, it is inevitably forced to confront another in military faction. Such confrontations account for nearly all the coups and counter-coups that have determined the course of Thai politics ever since senior civil servants and army officers ended the absolute monarchy in 1932.
From 1947 to 1957, Thai politics was dominated by an intense rivalry between two powerful cliques: one led by General Phao Sriyanonda and the other by Marshal Sarit Thanarat. Both men were catapulted upward by the November 1947 coup which restored to power Thailand's wartime leader, Marshal Phibun Songkhram. Too weak to execute the coup himself, Marshal Phibun had recruited these two powerful army cliques. The clique led by Sarit was composed mainly of ambitious young army officers; the other was led by the commander in chief of the army, General Phin, and sparked by his aggressive son-in-law, Colonel Phao Sriyanonda.
Soon after the triumvirate took power, the two army cliques began to squabble over the division of the spoils. Military power was divided without too much rancor when Phao became deputy director-general of the National Police. (When Phao took over in 1951, his forty thousand police officers were an adequate counterbalance to Sarit's forty-five thousand-man army.) And many of the bureaucratic and commercial spoils were divided with equal harmony. An exceptionally bitter struggle developed, however, over control of the opium traffic.
The illicit opium trade had only recently emerged as one of the country's richest economic assets. Its sudden, massive economic significance may have served to upset the delicate balance of power between the Phao and Sarit cliques. Although the official government Opium Monopoly had thrived for almost a hundred years, by the time of the 1947 coup the high cost of imported opium and the reasonably strict government controls made it an unexceptional source of graft. However, the rapid decline in imports of foreign opium and the growth of local production in the late 1940s and the 1950s suddenly made the opium trade worth fighting over.
At the first United Nations narcotics conference in 1946. Thailand was criticized for being the only country in Southeast Asia still operating a legal government monopoly. Far more, threatening than the criticism, however, was the general agreement that all non-medical opium exports should be ended as soon as possible. Iran had already imposed a temporary ban on opium production in April 1946, and smuggled supplies from China were trickling to an end as the People's Republic initiated its successful opium eradication campaign. Although the Thai monopoly was still able to import sufficient quantities, the future of foreign imports was not too promising. To meet their projected needs for raw opium, in in[sic] 1947 the Thai government authorized poppy cultivation in the northern hills for the first time. The edict attracted an increasing number of Meo tribespeople into Thailand opium-growing regions, stimulating a dramatic increase in opium production.
But these gains in local production were soon dwarfed by the even more substantial increases in the Burmese Shan States. As Iranian and Chinese opium gradually disappeared in the early 1950s, the KMT filled the void by forcing an expansion of production in the Shan States, which they occupied. The KMTwere at war with the Burmese and since their U.S. supplies were sent through Thailand, Bangkok became a natural entrepot for KMT opium. By 1949 most of the Thai monopoly's opium was from Southeast Asia, and in 1954 British customs in Singapore stated that Bangkok had become the major center for international opium trafficking in the region. The traffic had become so lucrative that Thailand quietly abandoned the anti-opium campaign announced in 1948 (all opium smoking was to have ended by 1953).
The 'opium war' between Phao and Sarit was a hidden one, with almost all the battles concealed by a clock of official secrecy. The most comical exception occurred in 1950 as one of General Sarit's army convoys approached the railhead at Lampang in northern Thailand with a shipment of opium. Phao's police surrounded the convoy and demanded that the soldiers surrender the opium since anti-narcotics work was the exclusive responsibility of the police. When the army men, threatening to shoot its way through to the railway, the police brought up heavy machine guns and dug in for a fire-fight. A nervous standoff continued for two days until Phao and Sarit themselves arrived in Lampang, took possession of the opium, and jointly escorted it to Bangkok, where it quietly disappeared.
In the underground struggle for the opium trade, General Phao slowly gained the upper hand. While the clandestine nature of this 'opium war' makes it difficult to reconstruct the precise ingredients in Phao's victory, the critical importance of CIA support cannot be underestimated. In 1951, a CIA front organization, the Sea Supply Corporation, began delivering lavish quantities of naval vessels, arms, armored vehicles, and aircraft to General Phao's police force. With this materiel, Phao was able to establish a police air force, a maritime police, a police armored division, and a police paratroop unit. General Sarit's American military advisors repeatedly refused to grant to his army the large amounts of modem equipment that Sea Supply Corporation gave Phao's police.
Since Sea Supply shipments to KMT troops in Burma were protected by the Thai police, Phao's alliance with the CIA also gave him extensive KMT contacts, through which he was able to build a virtual monopoly on Burmese opium exports. Phao's new financial and military power quickly tipped the balance of political power in his favor and in a December 1951 cabinet reshuffle his clique captured five cabinet slots, while Sarit's fraction got only one. Within a year, Sarit's rival had taken control of the, government and Phao was widely recognized as the most powerful man in Thailand.
Phao used his new political power to further strengthen his financial base. He took over the vice rackets, expropriated the profitable Bangkok slaughterhouse, rigged the gold exchange, collected protection money from Bangkok's wealthiest Chinese businessmen, and forced them to appoint him to the boards of over twenty corporations.
The man who C. L. Sulzberger of the The New York Times called a "superlative crook" (and whom a respected Thai diplomat hailed as the "worst man in the whole history of Thailand') became the CIA's most important Thai client. Phao became Thailand's most ardent anti-Communist, and it appears that his, major obligation was to further KMT political aims in Thailand and to support its guerrilla units in Burma. Phao protected supply, shipments to the KMT, marketed their opium, and performed such miscellaneous services as preventing Burmese observers from going to the staging areas during the November-December, 1953 airlifts of supposed KMT soldiers to Taiwan.
By 1955, Phao's National Police Force had become the largest opium-trafficking syndicate in Thailand and was ultimately involved in every phase of the narcotics traffic; the level' of corruption was remarkable even by Thai standards. If the smuggled opium was destined for export, police border guards escorted the KMT caravans from the Thailand-Burma border to police warehouses in Chiang Mai. From there police guards brought it to Bangkok by train or police aircraft. It was then loaded onto civilian coastal vessels and straightforwardly escorted by maritime police to a mid-ocean rendezvous with freighters bound for Singapore or Hong Kong.
However, if the opium was needed for the government Opium Monopoly, political considerations necessitated bizarre theatrics, with police border guards staging elaborate shoot-outs with the KMT smugglers near the Thai-Burma frontier. Invariably, the KMT guerrillas would drop the opium and flee, while the police heroes brought the 'captured' opium to Bangkok and collected a reward worth one-eighth of the retail value. The opium would subsequently disappear. Phao himself delighted in posing as the leader in the crusade against opium smuggling, and he often made hurried, dramatic departures to the northern frontier, where he personally led his men in these desperate gun battles with the ruthless smugglers of slow death.
There can be little doubt that CIA support was an invaluable asset to General Phao in managing the opium traffic. The agency supplied the aircraft, motor vehicles, and naval vessels that gave Phao the logistic capability to move opium from the poppy fields to the sea lanes. And his role in protecting Sea Supply's shipments to the KMT no doubt gave Phao a considerable advantage in establishing himself as the exclusive exporter of KMT opium.
Given its even greater involvement in the KMT's Shan States opium commerce, how do we evaluate the CIA's role in the evolution of large-scale opium trafficking in the Burma-Thailand region? Under the Kennedy administration, Presidential adviser Walt W. Rostow popularized a doctrine of economic development which preached that a stagnant, underdeveloped economy could be jolted into a period of rapid growth, an economic "takeoff," by a massive injection of foreign aid and capital, capital which could subsequently be withdrawn as the economy coasted into a period of self-sustaining growth. CIA support for Phao and the KMT seems to have sparked such a "takeoff' in the Burma-Thailand opium trade during the 1950s: modem aircraft replaced mules, naval vessels replaced sampans, and well-trained military organizations expropriated the traffic from bands of illiterate mountain traders.
Never before had the Shan States encountered smugglers with the discipline, technology, and ruthlessness of the KMT. Under General Phao's leadership, Thailand had changed from an opium-consuming nation to emerge as the world's most important opium distribution center. The Golden Triangle's opium output approached its present level; Burma's total harvest had increased from less than forty tons just before World War II to reach three hundred to four hundred tons in 1962—and then to nearly 2,000 tons today. Thailand's growth was even more remarkable, from seven tons to over 100 tons.
But was this increase in opium production the result of a conscious decision by the CIA to support its allies, Phao and the KMT, through the narcotics traffic? Of one thing there can be no doubt: the CIA knew its allies were heavily involved in the traffic. Headlines made it known to the whole world. Phao, clearly a protege of the CIA, was obviously responsible for the censure that Thailand received from the United Nations Commission on Narcotic Drugs. And certainly the CIA did nothing to halt the trade or to prevent its aid from being abused. But whether the CIA actively organized the traffic is something that only the Agency itself can answer. In any case, by the early 1960s the Golden Triangle had become the largest single opium-growing region in the world—a vast reservoir able to supply America's lucrative markets. Today, the Golden Triangle has surplus opium; it still has well-protected, disciplined syndicates; and it has become America's major heroin supplier.
In Thailand, a hundred years of foreign advisers and twenty-five years of American advisers have given the government a certain veneer of technical sophistication but have also inhibited the growth of any internal revolutions that might have broken with the traditional patterns of corrupted, autocratic government.
At the base of Thailand's contemporary pyramids of corruption, legions of functionaries systematically plunder the nation and pass money up the chain of command to the top, where authoritarian leaders enjoy an opulent lifestyle reminiscent of the old god-kings. Marshal Sarit, for example, had over a hundred mistresses, arbitrarily executed criminals at public spectacles, and died with an estate of over $150 million. Such potentates, able to control every corrupt functionary in the most remote province, are rarely betrayed during struggles with other factions. As a result, a single political faction has usually been able to centralize and monopolize all of Thailand's narcotics traffic. In contrast, the opium trade in Laos and the Shan States of Burma reflects a more fragmented and feudal political tradition: each regional warlord controls the traffic in his own territory.
pps. 70-95 --[cont]--