I. Summary

Australia is a committed partner in international efforts to combat illicit drugs, and gives high priority to drug-related issues, both internationally and domestically. Australia manages the diverse legal, health, social and economic consequences of drug use through comprehensive and consistent policies of demand and supply reduction and circumscribed harm reduction initiatives. Australia is party to the 1988 UN Drug Convention.

II. Status of Country

Australia is a consumer nation for illicit drugs. There is no evidence indicating that narcotics destined for the U.S. are transiting Australia. U.S. and Australian law enforcement agencies have excellent cooperation on narcotics matters. While domestically produced marijuana is the most abused drug in Australia, the use of MDMA (ecstasy) and methamphetamine has risen drastically in the past few years. The UN 2005 World Drugs Report indicated that Australia has one of the highest rates of MDMA and methamphetamine abuse in the world. There are also indications that the use of cocaine has increased throughout Australia in recent years. Although the use of heroin has declined since 2000, law enforcement and health officials continue to aggressively target heroin trafficking and abuse.

III. Country Actions Against Drugs in 2005

Policy Initiatives. The Federal Government continues to vigorously pursue polices that attempt to both prevent and treat illegal drug use. Launched in 1997, Prime Minister Howard’s National Illicit Drug Strategy outlines a program to address drug issues. Australia has committed more than US$750 million (AU$1 billion) to the Strategy. (NOTE: Throughout this report, figures are in U.S. dollars, calculated at an exchange rate of A$1 equals U.S. $0.75) Since 2002, following the Federal Government’s creation of the Australian Crime Commission, state and federal investigators have increased their cooperation, bolstered their enforcement responses to serious crimes such as drug trafficking, and improved prosecution at the appropriate state or federal level. The Federal government committed an additional $187.4 million in 2003 to its program to reduce the supply of, and demand for, illicit drugs.

In 2004, the Australian government instituted a national program to educate customs officers, container examiners and other law enforcement personnel on the inputs and precursor chemicals used in the creation of synthetic narcotics. The government is supporting private industry’s attempt to develop a pseudoephedrine product that cannot be used as a precursor chemical for methamphetamine. There is an ongoing campaign to prevent illegal sales of pseudoephedrine in Australia. On January 1, 2006 legislation tightening the access to pseudoephedrine on a national level will go into effect. In August 2005, the Australian Minister of Justice announced the implementation of the National Strategy to Prevent Diversion of Precursor Chemicals. The Australian government has committed $4.1 million to prevent the diversion of legitimate chemicals like pseudoephedrine into the manufacture of illicit drugs.

Accomplishments. The Australian government continues to implement extensive multi-faceted programs to combat drug trafficking and use in Australia. Throughout 2005, Australian law enforcement officials seized record amounts of ecstasy and crystal methamphetamine. These seizures were consistent with the reported increased use of these drugs throughout Australia. State Police agencies continue to report increases in the number of clandestine methamphetamine labs seized throughout the country, along with the seizure of several large-scale MDMA labs. The agencies believe that the level of sophistication in many of these labs has advanced. Australian efforts to control the availability of the precursor chemical pseudoephedrine have led to the increase in illegal bulk pseudoephedrine import attempts into Australia. In August 2005, Australian law-enforcement seized 400 kilograms of pseudoephedrine in a shipment of ceramic products from Vietnam. In 2005, law enforcement officials successfully completed several high profile investigations targeting Vietnamese organized crime groups operating sophisticated hydroponic marijuana growth sites. The trial for defendants arrested as a result of the April/May 2003 seizure of 125 kilograms of heroin from the North Korean cargo vessel MV Pong Su began in January 2005 and is on-going and scheduled to be completed in early 2006.

Law Enforcement Efforts. Australian law enforcement agencies continued their aggressive counternarcotics efforts in 2005. Responsibility for these activities is divided among the Federal government—primarily the Australian Federal Police (AFP), the Australian Customs Service (ACS), the Australian Crime Commission (ACC) and the Therapeutic Goods Administration (TGA)—and state/territorial police services throughout the country. In recent years, the AFP has restructured its liaison network, which has led to a slight reduction of officers and overseas posts, in order to better focus on transnational crime, including drug trafficking, terrorist activities and people smuggling. The AFP currently maintains more than 60 officers in 30 overseas liaison posts in 25 countries to assist in narcotics investigation. AFP Liaison Officers, particularly those in the Pacific Islands and throughout Asia, also assist local law enforcement agencies in training and institution building. The AFP and other Australian law enforcement agencies continue to have close working relationships with U.S. agencies including the DEA and FBI.

Corruption. The Australian Government is vigilant in its efforts to prevent narcotics-related corruption. There is no indication 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. Although some state police officers have been investigated and tried for drug-related corruption, corruption is not common or widespread.

Agreements and Treaties. The U.S. and Australia cooperate extensively in law enforcement matters, including drug prevention and prosecution, under a bilateral mutual legal assistance treaty and an extradition treaty. The USG has a Customs Mutual Assistance Agreement (CMAA) with Australia. Australia is a party to the 1988 UN Drug Convention, the 1971 UN Convention on Psychotropic Substances, and the 1961 UN Single Convention as amended by its 1972 Protocol. Australia is a party to the UN Convention against Transnational Organized Crime and its protocols against migrant smuggling and trafficking in persons. Australia also is a party to the UN Convention Against Corruption.

Cultivation/Production. Cannabis is the only significant illicit drug cultivated in Australia. The use of hydroponic growth sites has been increasing throughout the country in recent years. The cannabis grown in Australia is primarily destined for the domestic market and there is no evidence that Australian marijuana reaches the U.S. in any significant quantity. Australia has a well-established and controlled licit opium crop (13,000 hectares) on the island of Tasmania. Although recent significant seizures of foreign produced methamphetamine have revealed a change in trafficking patterns, a large amount of amphetamine and methamphetamine consumed in Australia is produced in small, often mobile, domestic clandestine laboratories.

Drug Flow/Transit. Historically, Australia has been the target for Asian-based criminal groups trafficking in heroin. This trend is continuing and many of these organizations are also involved in the trafficking of methamphetamines into Australia. The primary source for heroin in Australia continues to be the Golden Triangle area of Laos, Burma and Thailand. Ecstasy consumed in Australia is primarily imported from Europe with some shipments transiting Asia prior to arrival in Australia. South American cocaine trafficking organizations are utilizing the improved transportation/commercial links between Australia and South America to facilitate the smuggling of cocaine. Couriers from South America are intercepted at international airports on a regular basis. There has been a steady increase in couriers transiting South Africa to convey cocaine into Australia.

Domestic Programs. The Federal Government has continued to pursue an aggressive policy to prevent and treat drug use. The Prime Minister’s National Illicit Drug Campaign committed the equivalent of $4 million to drug prevention programs in schools and $40 million for compulsory education and a treatment system for drug offenders. Under Australian law, the Federal Government has responsibility for national health and crime issues, while the States and Territories have responsibility for the delivery of health and welfare services. The Ministerial Council on Drug Strategy brings together Federal, State and Territory Ministers responsible for health and law enforcement to determine national policies and programs to reduce the harm caused by drugs in Australia.

Although the Federal Government opposes supervised injecting rooms, the legal authority to provide injecting rooms rests with the health and law enforcement agencies in the States and Territories. In May 2001, the State of New South Wales passed legislation to permit the licensing and operation of an injecting center for a trial period of 18 months. This trial period has been extended to October 2007. The center, which is now in operation, provides for medically supervised heroin injections. The Australian Capital Territory has passed similar legislation but has not opened an injection center.

IV. U.S. Policy Initiatives and Programs

U.S. Policy Initiatives. U.S. counternarcotics activities in Australia feature strong ongoing U.S.-Australian collaboration in investigating, disrupting, and dismantling international illicit drug trafficking organizations. In mid-2002, the U.S. and Australia signed a Memorandum of Understanding to outline these objectives.

Bilateral Cooperation. Cooperation between U.S. and Australian authorities is excellent.

The Road Ahead. Australia shows no sign of lessening its commitment to the international fight against drug trafficking. Australian counternarcotics efforts throughout Asia and the Pacific Islands continue to be extremely robust. The U.S. can expect strong bilateral relations with Australia on counternarcotics issues. The two countries will continue to work closely in support of the UN Drug and Crime Program and other multi-lateral fora.

Burma

I. Summary

Burma is the world’s second largest producer of illicit opium, accounting for more than 90 percent of Southeast Asian heroin. Even so, Burma has just a small share of worldwide heroin, given Afghanistan’s exceptionally large opium/heroin production. Burma is also a primary source of amphetamine-type stimulants (ATS) in Asia. Annual production of opium has declined over the past ten years and is now at less than 20 percent of mid-1990 peak levels. In 2005, Burma produced an estimated 380 metric tons of opium, less than eight percent of the opium produced in Afghanistan. Burma’s opium poppy is grown predominantly in the "Golden Triangle" border region of Shan State in areas near the borders of China, Laos, and Thailand that are controlled by former insurgent groups (less than one percent of Burma’s poppy crop is grown outside of Shan State).

Cultivation by ethnic Wa hill tribesmen along the Chinese border accounts for 40 percent of Burma’s total poppy crop, down from 55 percent in 2004. The decline in that area was accompanied by a resurgence in poppy cultivation in southern and eastern Shan State. Nonetheless, major Wa traffickers continue to operate with impunity and the government has been unable or unwilling to curb drug activities conducted by the United Wa State Political Leadership (UWSP) a criminal group controlling the United Wa State Army (UWSA), which is primarily responsible for criminal activities such as heroin/ATS production in Wa territories. The UWSA announced in June 2005 a total ban on poppy cultivation and opium production and trafficking, but UWSA noncompliance with that announced ban and involvement in methamphetamine production and trafficking remain serious concerns. In January 2005, the U.S. Attorney’s Office for the Eastern District of New York unsealed federal indictments against seven UWSA leaders for conspiracy to possess, manufacture, or distribute heroin and methamphetamine.

During the 2005 drug certification process, the USG determined that Burma was one of only two countries in the world (the other was Venezuela) that had "failed demonstrably" to meet international counternarcotics obligations.

In addition to regular joint work with the Drug Enforcement Administration (DEA) and Australian Federal Police (AFP) on narcotics investigations, the Government of Burma (GOB) has increased law enforcement cooperation with Thai and Chinese authorities, particularly through renditions, deportations, and extraditions of wanted drug traffickers. Burma is a party to the 1988 UN Drug Convention.

II. Status of Country

Burma is the world’s second largest producer of illicit opium, but produces only a small fraction of the opium that is now produced in Afghanistan. Eradication efforts and enforcement of poppy-free zones combined to depress cultivation levels from 2000 to 2004, especially in the Wa territory. A resurgence of cultivation in eastern and southern Shan State in 2005, however, where improved weather conditions and new cultivation practices increased opium production, led to a slight overall increase in cultivation and production in Burma. According to the UNODC, a persistent and strong demand in Asia for opiates and a falling supply in the Golden Triangle region led to a 22 percent increase in Burmese village-level opium prices, from $153 per kilogram in 2004 to $187 in 2005. Opium price increases, however, did little to alleviate the poverty of poppy farmers, who are among the most impoverished populations in Burma.

According to an annual U.S. opium yield estimate, in 2005 the total land area under poppy cultivation was 40,000 hectares (ha), an 11 percent increase over the previous year. Estimated opium production in Burma totaled approximately 380 metric tons in 2005, a 14 percent increase over 2004. A UNODC opium yield survey, using a different methodology, concluded that cultivation had actually declined 26 percent and production had declined 19 percent. Nonetheless, both surveys estimated a yield average of 9.2 kilograms/ha, well below the peak level of 15.6 kilograms/ha recorded in 1996. Both surveys also concluded that Burma had experienced a significant downward trend over the past decade, with poppy cultivation and opium production declining by roughly 80 percent.

Declining poppy cultivation over the last ten years has been matched by a sharp increase in the production and export of synthetic drugs. Burma plays a leading role in the regional traffic of ATS. Drug gangs, many of which are ethnic Chinese, based in the Burma/China and Burma/Thailand border areas annually produce several hundred million methamphetamine tablets for markets in Thailand, China, and India using precursors imported from China and India.

According to GOB figures, during the first eleven months of 2005, ATS seizures totaled about 1.65 million tablets, a significant decrease from previous years. Authorities, however, seized over 280 kilograms of crystal methamphetamine ("Ice"). Aside from these important seizures, the government did not destroy any ATS labs in 2005 or take any other significant steps to stop ATS production and trafficking. The GOB has, however, stepped up its dialogue with law enforcement agencies and neighboring countries on the overall ATS problem.

Opium, heroin, and ATS are produced predominantly in the border regions of Shan State, areas controlled by former insurgent groups. Between 1989 and 1997, the Burmese government negotiated a series of individual cease-fire agreements, allowing each of several ethnically distinct peoples limited autonomy and continued narcotics production and trafficking activities in return for peace.

Since the mid-1990s, however, the Burmese government has elicited "opium-free" pledges from each cease-fire group. and as these pledges have come due, has stepped up law-enforcement activities against opium/heroin in the respective cease-fire territories. In June, the UWSA announced implementation of a long delayed ban on opium production and trafficking in Wa territory. The Wa tribal group, however, remain the country’s leading poppy growers and opium producers. According to many reports, the UWSP leadership facilitates the manufacture and trafficking of ATS pills in Wa territory, predominantly by ethnic Chinese criminal gangs. Although the government has not succeeded in convincing the UWSA to stop illicit drug production or trafficking, Burmese law enforcement entities stepped up pressure against Wa traffickers in 2005.

Burma has a small, but growing domestic drug abuse problem. UNODC estimated there are roughly 20,000 opium addicts in Shan State, the country’s largest poppy growing region. Surveys conducted by UNODC, among others, suggest that the overall drug addict population could be as high as 300,000, plus an additional 15,000 regular ATS users.

III. Country Actions Against Drugs in 2005

Policy Initiatives. Burma’s official 15-year counternarcotics plan, launched in 1999, calls for the eradication of all narcotics production and trafficking by 2014, one year ahead of an ASEAN-wide plan of action that calls for the region to be drug-free by 2015. The plan is to proceed in stages, with eradication efforts tied to alternative development programs in individual townships, predominantly in Shan State. The government initiated its second five-year phase in 2004. U Sai Lin’s Special Region No. 4 around Mong La has been declared opium-free since 1997; the Kokang Special Region No. 1 banned poppy cultivation in 2003 after missing a 2000 deadline; and the Wa Special Region No. 2, after several postponements, implemented a ban in June 2005. Despite substantial gains in reducing the cultivation of poppy, however, none of the regions is truly opium-free.

According to the 2005 U.S. opium yield estimate, poppy cultivation within Wa territories represents 40 percent of the total Burma crop, a decline from 55 percent in 2004, but there was a resurgence in cultivation in eastern and southern Shan State.

The most significant multilateral effort in support of Burma’s counternarcotics efforts is the modest presence of the UNODC in northern Shan State. The UNODC’s "Wa Project" was initially a five-year, $12.1 million supply-reduction program to encourage alternative development in territory controlled by the UWSA. In order to meet basic human needs and ensure the sustainability of a 2005 UWSA opium ban, the UNODC extended the project until 2007, increased the total budget to $16.8 million, and broadened the scope from 16 villages to the entire Wa Special Region No. 2. Major donors that have supported the Wa Project include the United States, Japan and Germany, while the UK and Australia have recently made additional contributions.

In 2003, the UNODC established a project in Wa and Kokang areas ("KOWI" project) aimed at supporting the humanitarian needs of farmers who have abandoned poppy cultivation and lost their primary source of income. The project’s principal objective is to prevent any return to poppy cultivation and thus to sustain drug control efforts in the long term. Altogether 18 partner organizations—including the World Food Program, the Food and Agricultural Organization, and NGOs—are coordinating activities under the KOWI umbrella to address basic human needs through the provision of food, health services, and education. The goal of these interventions, many of which commenced in 2004 and are scheduled to continue until the UN Development Program assumes oversight in 2008, is to ensure the recovery and development of communities through community-based initiatives. Japan and Italy were early donors to the UNODC’s KOWI project. Australia, Germany, the European Commission, New Zealand, Sweden, Switzerland, and the United Kingdom provided support to the project’s NGO partners. UNODC plans to phase out its participation by 2007. Japan has undertaken a substantial effort to help the GOB establish buckwheat as a cash crop for former poppy farmers in the Kokang and Mong Ko regions of northeastern Shan State.

The Government of Burma, under a 1993 Narcotic Drugs and Psychotropic Substances Law, has in the intervening years issued notifications controlling 124 narcotic drugs, 113 psychotropic substances, and 25 precursor chemicals. Burma enacted a "Mutual Assistance in Criminal Matters Law" in 2004 and, in support of a 2002 Control of Money Laundering Law, enacted in 2003 specific "Rules for Control of Money Laundering Law."

Over the past several years, the Burmese government has extended its regional counternarcotics cooperation, including the signing in 2001 of Memoranda of Understanding (MOUs) with both China and Thailand; the opening, with UNODC support, of liaison offices on the Chinese and Thai borders over the past four years to facilitate the sharing of intelligence; annual joint operations with China that have destroyed several major drug trafficking rings; and the establishment with Thailand of three joint "narcotics suppression coordination stations." According to the GOB, Thailand has contributed over $1.6 million to support an opium crop substitution and infrastructure project in southeastern Shan State. While not formally funding alternative development programs, the Chinese government has encouraged investment in many projects in the Wa area, particularly in commercial enterprises such as tea plantations and pig farms and has assisted in marketing those products in China through relaxation of duties and taxes.

GOB law enforcement cooperation with Thai and Chinese authorities is also manifested through renditions, deportations, and extraditions of wanted drug traffickers. Among several important cases, Burmese authorities in January arrested trafficker Ma Shun-su, one of China’s five most-wanted drug kingpins, and rendered him to China in connection with the seizure of 21 kilograms of heroin. Also in January, Burmese authorities took custody of Ko Naing Lin, whom Thailand had deported in connection with a 2004 seizure in Burma of 581 kilograms of heroin. In March, Burma took custody of two individuals from China who had been deported in connection with the same 2004 heroin seizure. In July, Burma and Thailand signed an MOU to address such issues as the sharing of seized financial proceeds from transnational organized crime. In October, Burma and India, during a joint meeting of senior Home Ministry officials, agreed to increase cooperation against drug trafficking.

Law Enforcement Measures. The Central Committee for Drug Abuse Control (CCDAC)—which is comprised of personnel from the police, customs, military intelligence, and army—leads drug-enforcement efforts in Burma. The CCDAC, effectively under the control of the Ministry of Home Affairs, now coordinates 25 drug-enforcement task forces around the country, with most located in major cities and along key transit routes near Burma’s borders with China, India, and Thailand. As is the case with most Burmese government entities, the CCDAC suffers badly from a lack of adequate resources to support its law-enforcement mission. In 2005, CCDAC established two new counternarcotics task forces in Rangoon and Mandalay, complementing existing task forces in those two cities. The GOB also established an additional Financial Investigation Team (FIT), located in Mandalay, to serve as a clearinghouse for northern Burma. This new team, established with DEA and Australian Federal Police (AFP) assistance, complements an existing FIT in Rangoon.

In January, the U.S. Attorney’s Office for the Eastern District of New York unsealed federal indictments against seven UWSA leaders for conspiracy to possess, manufacture, or distribute heroin and methamphetamine. Among those indicted was Wei Hseuh-kang, whom the United States had previously indicted in 1993 and designated a Kingpin trafficker in 2000. The GOB has to date taken no direct action against any of the seven indicted UWSA leaders, although authorities have taken law enforcement action against other, lower ranking, members of the UWSA syndicate.

Narcotics Seizures. Summary statistics provided by Burmese drug officials indicate that during the first eleven months of 2005, Burmese police, army, and the Customs Service together seized approximately 1,000 kilograms of raw opium, 776 kilograms of heroin, 119 kilograms of marijuana, and just over 1.6 million methamphetamine tablets. Heroin seizures have more than doubled over the past three years. Opium, heroin and morphine seizures, however, account for just a fraction of Burma’s yearly potential opium production.

For the second year in a row, Burmese authorities made a massive heroin bust that disrupted international trafficking syndicates. In September, officials seized a major shipment of 496 kilograms of heroin in eastern Shan State and arrested 49 UWSA soldiers, including a brigade commander. The law enforcement operation, the first of its kind against UWSA assets, was the result of close cooperation with Chinese counternarcotics officials. Related investigations that led to additional seizures and arrests came about as a result of GOB cooperation with Laos and Thailand, as well as with the U.S. DEA.

In May, a joint operation among the GOB, DEA, and the Australian Federal Police (AFP) led to the seizure in Rangoon of 102 kilograms of ICE (crystal methamphetamine), disrupting a syndicate that had smuggled over 800 kilograms of ICE from Burma to markets in China, Malaysia, the Philippines, and the United States. Through November 2005, according to official statistics, Burma arrested 4,398 suspects on drug-related charges. The government’s counternarcotics task force in Lashio, northern Shan State dismantled two heroin refineries in 2005. The GOB eradicated 3,907 ha of opium poppy in 2005, a 28 percent increase from the previous year, but less than 10 percent of the entire poppy crop. Nonetheless, overall eradication accounts for over half of the reduction in areas under poppy cultivation since 2001.

Corruption. Burma signed the 2003 UN Convention Against Corruption on December 2, 2005. At year’s end, a government panel was reviewing domestic legislation and will recommend whether existing legislation can be amended to meet the Convention’s obligations, or if new legislation is required.

There is no reliable evidence that senior officials in the Burmese Government are directly involved in the drug trade. However, lower-level officials, particularly army and police personnel posted in border areas, are widely believed to be involved in facilitating the drug trade; and some officials have been prosecuted for drug abuse and/or narcotics-related corruption. According to the Burmese government, over 200 police officials and 48 Burmese Army personnel were punished for narcotics-related corruption or drug abuse between 1995 and 2003. Of the 200 police officers, 130 were imprisoned, 16 were dismissed from the service, 7 were forced to retire, and 47 were demoted. In 2004, the military junta ousted Prime Minister General Khin Nyunt, accusing him and hundreds of his military intelligence subordinates of corruption, including illegal activities conducted in northern Shan State. Authorities have not, however, charged any of these officials with drug-related offenses, and no Burma Army officer over the rank of full colonel has ever been prosecuted for drug offenses.

Government authorities, acting on the results on a joint investigation with DEA and AFP, closed the Myanmar Universal Bank (MUB) in 2005, including 38 branch offices throughout the country, and seized MUB assets of over $18 million. Police arrested the bank Chairman, Tin Sein, and several of his associates and charged them for money laundering and drug trafficking offenses. The GOB, also acting on results of DEA and AFP information, revoked operating licenses for the Asia Wealth Bank and Mayflower Bank due to irregularities associated with money laundering.

Agreements and Treaties. Burma is a party to the 1961 UN Single Convention as amended by the 1972 Protocol, the 1971 UN Convention on Psychotropic Substances, and the 1988 UN Drug Convention. In addition, Burma is also one of six nations (Burma, Cambodia, China, Laos, Thailand, Vietnam) that are parties to UNODC’s sub-regional action plan for controlling precursor chemicals and reducing illicit narcotics production and trafficking in the highlands of Southeast Asia. Burma is a party to the UN Convention Against Transnational Organized Crime and its protocols against migrant smuggling and trafficking in persons.

Cultivation and Production. According to the annual U.S. opium yield estimate, in 2005 the total land area under poppy cultivation was 40,000 hectares, an 11 percent increase from the previous year. Estimated opium production in Burma totaled approximately 380 metric tons in 2005, a 14 percent increase from 2004. A UNODC opium yield survey concluded that cultivation in 2005 had declined 26 percent from the previous year, and by over 70 percent since 1996. UNODC also determined that production had declined 16 percent, from 370 metric tons in 2004 to 312 metric tons in 2005. Despite a variance in 2005 results, both the U.S. estimate and the UNODC survey estimated a yield average of 9.2. kilograms/ha, well below the peak level of 15.6 kilograms/ha recorded in 1996. Both surveys also concluded that Burma had experienced a significant downward trend in poppy cultivation/opium production over the past decade, with both declining by roughly 80 percent.

Drug Flow/Transit. Most ATS and heroin in Burma are produced in small, mobile labs located in the Burma/China and Burma/Thailand border areas, primarily in territories controlled by active or former insurgent groups. A growing amount of methamphetamine is reportedly produced in labs co-located with heroin refineries in areas controlled by the UWSA, the ethnic Chinese Kokang, and the Shan State Army-South (SSA-S). Ethnic Chinese criminal gangs dominate the drug syndicates operating in these areas.

Heroin and methamphetamine produced by these groups are trafficked overland (or via the Mekong River) primarily through China, Thailand, India, and, to a lesser extent, Laos, Bangladesh, and Burma itself. Heroin seizures in 2004 and 2005, and subsequent investigations, revealed the increased use by international syndicates of the Rangoon international airport and port for trafficking of drugs to the global narcotics market.

Demand Reduction. The overall level of drug abuse is low in Burma compared with neighboring countries, in part because many Burmese are too poor to afford a drug habit. Traditionally, some farmers use opium as a painkiller and an antidepressant because they lack access to adequate health facilities. There has been a growing shift away from opium smoking toward injecting heroin, a habit that is more addictive and that poses a greater public health risk. Deteriorating economic conditions will likely stifle substantial growth in overall drug consumption, but the trend toward injecting narcotics is a significant concern. The government maintains that there are only about 70,000 registered addicts in Burma, but surveys conducted by UNODC, among others, suggest that the addict population could be as high as 300,000. NGOs and community leaders report increasing use of heroin and synthetic drugs, particularly among disaffected youth in urban areas and workers in ethnic minority mining communities. The UNODC estimated that in 2003 there were at least 15,000 regular ATS users in Burma and a joint UNODC/UNAIDS/WHO study estimated that there are between 30,000 and 130,000 injecting drug users These two baseline studies are the most recent reliable data available on the nexus between drug abuse and HIV/AIDS in Burma. There is also a growing HIV/AIDS epidemic, linked in part to intravenous drug use. According to a UNODC regional center, an estimated 26 to 30 percent of officially reported HIV cases are attributed to intravenous drug use, one of the highest rates in the world. Infection rates are highest in Burma’s ethnic regions, and specifically among mining communities in those areas, where opium, heroin, and ATS are readily available, i.e., along Burma’s northern and eastern borders.

Burmese demand reduction programs are in part coercive and in part voluntary. Addicts are required to register with the GOB and can be prosecuted if they fail to register and accept treatment. Altogether, more than 21,000 addicts were prosecuted for failing to register between 1994 and 2002. The GOB has not provided data since 2002. Demand reduction programs and facilities are strictly limited, however. There are six major drug treatment centers under the Ministry of Health, 49 other smaller detox centers, and eight rehabilitation centers which, together, have reportedly provided treatment to about 55,000 addicts over the past decade. As a pilot model, in 2003 UNODC established community-based treatment in Northern Shan State as an alternative to official treatment centers. About 1,600 addicts have participated in this treatment over the past three years. Since 2004, an additional 6,900 addicts have sought medical treatment and support from UNODC-sponsored drop-in centers and outreach workers active throughout northeastern Shan State. There are also a variety of narcotics awareness programs conducted through the public school system. In addition, the government has established demand reduction programs in cooperation with NGOs. These include programs with CARE Myanmar, World Concern, and Population Services International (PSI), all of which focus on injecting drug use as a factor in the spread of HIV/AIDS.

IV. U.S. Policy Initiatives and Programs

Policy and Programs. As a result of the 1988 suspension of direct USG counternarcotics assistance to Burma, the USG engages the Burmese government in regard to narcotics control only 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. In 2005, these joint investigations led to significant seizures, arrests, and convictions of drug traffickers and producers. The GOB regrettably did not provide sufficient cooperation for a 2005 joint opium yield survey. The U.S., therefore, conducted a unilateral yield estimate, primarily on the basis of comprehensive satellite imagery. The U.S. also supported an annual crop survey carried out by the UNODC that, using a different methodology to determine yields, corroborates U.S. conclusions that poppy cultivation and opium production in Burma have been declining for nearly a decade. The United States supported the UNODC’s Wa project for several years as the largest international donor, contributing a total over $8 million. In January 2005, following the unsealing of indictments against seven UWSA leaders, the United States reallocated unspent funds from the Wa project to UNODC projects outside of Wa territory. Bilateral counternarcotics projects are limited to a small, U.S.-financed crop substitution project in northern Shan State (Project Old Soldier). No U.S. counternarcotics funding directly benefits or passes through the GOB.

The Road Ahead. The Burmese government has in recent years made significant gains in reducing opium poppy cultivation and opium production and has cooperated with the UNODC and major regional allies (particularly China and Thailand) in this fight. Although large-scale and long-term international aid—including development assistance and law-enforcement aid—is necessary to help curb drug production and trafficking in Burma, the military regime’s ongoing political repression has limited international support of all kinds, including support for Burma’s law enforcement efforts. Furthermore, a true opium replacement strategy must undertake an extensive range of counternarcotics actions, including crop eradication, effective law enforcement, alternative development, and support for former poppy farmers to ensure sustainability. The Burmese government must foster cooperation between itself and the ethnic groups involved in drug production and trafficking, especially the Wa, and enforce counternarcotics laws to eliminate poppy cultivation and opium production.

The USG believes that the Government of Burma must eliminate poppy cultivation and opium production; prosecute drug-related corruption, especially corrupt government and military officials who facilitate or condone drug trafficking and money laundering; take action against high-level drug traffickers and their organizations; enforce its money-laundering legislation; and expand demand-reduction, prevention, and drug-treatment programs to reduce drug use and control the spread of HIV/AIDS. The GOB must also address the explosion of ATS that has flooded the region by gaining support and cooperation from the ethnic groups, especially the Wa, who facilitate the manufacture and distribution of ATS, primarily by ethnic Chinese drug gangs. The GOB must also close production labs and prevent the illicit import of precursor chemicals needed to produce synthetic drugs. The USG also urges the GOB to stem the troubling growth of a domestic market for the consumption of ATS.

Cambodia

I. Summary

The number of drug-related investigations, arrests and seizures in Cambodia continued to increase in 2005. This reflects a significant escalation in drug activity and perhaps some increase in law enforcement capacity. The government is concerned at the increasing use of amphetamine-type stimulants (ATS) among all socio-economic levels. The government’s principal counternarcotics policymaking and law enforcement bodies, the National Authority for Combating Drugs (NACD) and the Anti-Drug Department of the National Police, cooperate closely with DEA, regional counterparts, and the United Nations Office on Drugs and Crime (UNODC). Cambodia is a party to the 1988 UN Drug Convention.

II. Status of Country

Cambodia has experienced a significant increase in recent years in the amount of ATS transiting from the Golden Triangle. The UNODC estimates that as many as 100,000 methamphetamine tablets enter Cambodia each day. Many of these are consumed domestically, though some are also thought to be re-exported to Thailand and Vietnam. In addition, Cambodian authorities believe that foreign crime syndicates, working in concert with Cambodian nationals, have set up mobile laboratories within Cambodia that produce ATS for local distribution and export to Thailand. Cocaine use by wealthy Cambodians and foreigners in Cambodia is a relatively small, but worrisome new phenomenon.

Cambodia is not a producer of opiates; however, it serves as a transit route for heroin from Burma and Laos to international drug markets such as Vietnam, mainland China, Taiwan, and Australia. Heroin and methamphetamine enter Cambodia primarily through Stung Treng, a northern province of Cambodia bordering Laos. Larger shipments of heroin, methamphetamine and marijuana exit Cambodia concealed in shipping containers, speedboats and ocean-going vessels. Smaller quantities are also smuggled through Phnom Penh International Airport concealed in small briefcases, shoes, and on the bodies of individual travelers. Cannabis cultivation continues despite a government campaign to eradicate it. There have been reports of continued military and/or police involvement in large-scale cultivations in remote areas. However, only small amounts of Cambodian cannabis reach the United States.

III. Country Actions Against Drugs in 2005

Policy Initiatives. Cambodian law enforcement agencies suffer from limited resources, lack of training, and poor coordination. The NACD, which was reorganized in 1999, has the potential to become an effective policy and coordination unit. With the backing of the Cambodian government, the UNODC launched in April 2001 a four-year project entitled "Strengthening the Secretariat of the National Authority for Combating Drugs (NACD) and the National Drug Control Program for Cambodia". This project seeks, inter alia, to establish the NACD as a functional government body able to undertake drug control planning, coordination, and operations. Although the project is currently slated to expire at the end of 2005, it is likely to be extended through August 2006. A successor project has been proposed to target drug-related crime, including transnational organized crime.

Accomplishments. During 2005, the NACD began to implement Cambodia’s first 5-year national plan on narcotics control (2005-2010), which focused on demand reduction, supply reduction, drug law enforcement, and expansion of international cooperation. The NACD trained 814 policemen, gendarmes, customs officials, seaport officials, and border liaison officials in drug identification and law enforcement. This training complements donor-provided training to increase local law enforcement capacity to test seized substances for use as evidence in criminal trials. In February 2005, the National Assembly ratified the 1961, 1971 and 1988 UN Drug Conventions. In 2005, the Cambodian government took decisive action to strengthen previously weak legal penalties for drug-related offenses. The new law drafted with help from the Anti-Drug Department of the National Police provides for a maximum penalty of $1 million fine and life imprisonment for drug traffickers, and would allow proceeds from the sale of seized assets to be used towards law enforcement and drug awareness and prevention efforts. However, some observers worry that the law is too complex for the relatively weak Cambodian judiciary to use effectively.

Law Enforcement Efforts. In the first 11 months of 2005, 705 people (mostly Cambodians) were arrested for various drug-related offenses. This is an increase over arrests during this same period in 2004, which numbered 474. Total seizures of heroin in 2005 were 11.06 kilograms and 9 small dose packets, a five-fold increase over 2004 seizures, which totaled 2.15 kilograms. Police arrested 10 people in heroin-related cases in 2005, including a Singaporean man with 3 kilograms of heroin strapped to his legs at Phnom Penh International Airport.

While methamphetamine trafficking is believed to have increased in 2005, the number of methamphetamine pills confiscated was just one-third of 2004 levels. Police arrested 670 people in methamphetamine-related cases in 2005 and seized 293,245 methamphetamine pills. In May, police in Kampot province arrested two Stung Treng-based traffickers intending to smuggle over 100,000 amphetamine pills into Vietnam. In December, police arrested four men carrying 46,000 methamphetamine pills in Banteay Meanchey province as part of a Thai-based trafficking ring.

Corruption. Corruption remains pervasive in Cambodia, making Cambodia highly vulnerable to penetration by drug traffickers and foreign crime syndicates. Senior Cambodian government officials assert that they want to combat trafficking and production; however, corruption, abysmally low salaries for civil servants, and an acute shortage of trained personnel severely limit sustained advances in effective law enforcement. The judicial system is weak, and there have been numerous cases of defendants in important criminal cases having charges against them dropped after paying relatively small fines.

An informal donor working group, including the US, is working closely with the government to produce a revised draft anticorruption law that meets international best practices. Observers expect that the National Assembly will pass this law in 2006. Cambodia is not a party to the UN Convention Against Corruption.

Agreements and Treaties. Cambodia is a party to the 1988 UN Drug Convention and the 1971 UN Convention on Psychotropic Substances, and has signed, but has not yet ratified the 1961 UN Single Convention and its 1972 Protocol, but is expected to do so in 2006. Cambodia is a party to the UN Convention Against Transnational Organized Crime and its protocols against migrant smuggling and illegal manufacturing and trafficking in firearms.

Cultivation/Production. During 2005, 218 square meters of cannabis plantations were destroyed; 102.5 kilograms of dry cannabis were seized; and 13 people were arrested.

Drug Flow/Transit. Cambodia shares porous borders with Thailand, Laos, and Vietnam and lies near the major trafficking routes for Southeast Asian heroin. The UNODC has reported that drugs enter Cambodia via the northern border. Enforcement of the border region with Laos on the Mekong River, which is permeated with islands and mangroves, is nearly impossible due to lack of boats and fuel among law enforcement forces. Some heroin and marijuana are believed to enter and exit Cambodia via locations along the Gulf-including the deep water port of Sihanoukville-as well as the river port of Phnom Penh. Airports in Phnom Penh and Siem Reap suffer from lax customs and immigration controls. Some illegal narcotics are believed to transit these airports en route to foreign destinations. Cambodia has several high-quality, improved-surface roads originating in Phenom Phen which have a limited reach toward remote interior regions of the country. The People’s Republic of China has demonstrated its interest in increasing political influence and trade opportunities in Cambodia and all of South East Asia. To that end, the Chinese have spent millions of dollars towards this commitment and are currently constructing excellent new roads and bridges connecting the border regions with the main cities and rural areas in Cambodia. Once these roads are completed, high-speed transportation routes will facilitate even greater movement of drugs and supplies across the country.

Domestic Programs (Demand Reduction). With the assistance of the UNODC, UNICEF, the World Health Organization (WHO), CDC, the Japanese International Cooperation Agency (JICA) and NGOs, the NACD is attempting to boost awareness about drug abuse among Cambodians—especially Cambodian youth—through the use of pamphlets, posters, and public service announcements. A UNODC treatment and rehabilitation project is expected to start providing services to addicts and increasing the capacity of health and human services to deal effectively with drug treatment issues in early 2006. This project will work with centers in Phnom Penh and in the provinces of Battambang, Koh Kong and Banteay Meanchey. Several local NGOs, including Friends, Punloeu Komar Kampuchea, Cambodian Children and Handicap Development (CCHDO), Goutte d’ Eau, Cambodian Children Against Starvation Association (CCASVA) and Street Children Assistance for Development Program (SCADP), have taken active roles in helping to rehabilitate drug victims across the country.

IV. U.S. Policy Initiatives and Programs

Policy Initiatives. For the first time in Cambodia in over three decades, there has been relative political stability since the formation of coalition governments following national elections in 1998 and 2003. However, freedom of expression declined notably during 2005. An opposition party parliamentarian was sentenced to seven years in prison on questionable charges of fraud and forming an illegal army. A journalist and a trade union leader were arrested on charges of defamation and incitement for criticizing a controversial border treaty with Vietnam. Several other political activists fled the country after warrants were issued for their arrest.

Cambodia is also plagued by many of the institutional weaknesses common to the world’s most vulnerable developing countries. The challenges for Cambodia include: nurturing the growth of democratic institutions and the protection of human rights; providing humanitarian assistance and promoting sound economic growth policies to alleviate the debilitating poverty that engenders corruption; and building human and institutional capacity in law enforcement sectors to enable the government to deal more effectively with narcotics traffickers. One unique challenge which Cambodia faces is the loss of many of its best trained professionals in the Khmer Rouge Killing Fields incidents during, and after the Second Indo-China War. Performance in the area of law enforcement and administration of justice must be viewed in the context of Cambodia’s profound underdevelopment. Even with the active support of the international community there will be continuing gaps in performance for the foreseeable future.

Bilateral Cooperation. U.S.-Cambodia bilateral counternarcotics cooperation is hampered by restrictions on U.S. assistance to the central government of Cambodia that have remained in place since the political disturbances of 1997. Cambodia regularly hosts visits from Bangkok-based DEA personnel, and Cambodian authorities cooperate actively with DEA, including the areas of joint operations and operational intelligence sharing. In September 2005, Bangkok-based DEA personnel conducted basic intelligence analysis training for law enforcement officials. DOD conducted Joint Interagency Task Force-West (JIATF-West) training missions in Battambang in August and October and in Stung Treng province in September. The three-week programs increased the ability of Cambodian police, military, and immigration officials to interdict transnational threats, including narcotics.

The Road Ahead. Cambodia is making progress toward more effective institutional law enforcement against illegal narcotics trafficking; however, its capacity to implement an effective, systematic approach to counternarcotics operations remains low. Instruction for mid-level Cambodia law enforcement officers at the International Law Enforcement Academy in Bangkok (ILEA) and for military, police, and immigration officers by JIATF-West has partially addressed Cambodia’s dire training needs. However, after training these officers return to an environment of scarce resources and pervasive corruption.

As part of the JIATF-West program, Cambodian officials can be trained in land and maritime navigation and boat maintenance, but equipment to perform these tasks is often shoddy or completely lacking. The U.S. is unable to help provide this important equipment due to restrictions on U.S. military assistance related to Cambodia’s trafficking in persons rating. However, 2006 will see an expansion in DEA training activities, as, for the first time in more than a decade, State Department counternarcotics funding will be available for training run via DEA headquarters. Training in basic investigation techniques is scheduled for January 2006 and a course on airport interdiction is planned for March 2006. The United States will try to assist Cambodia as Cambodia strives for better law enforcement performance and administration of justice.

China

I. Summary

The People’s Republic of China (PRC) continues to have a significant domestic drug abuse problem. China is also an important transit route for opiates and ATS (Amphetamine Type Stimulants) moving through Asia. China was removed from the list of Major Drug Transit Countries in 2005 because there was no evidence drugs transiting China affected the U.S. to a significant extent. Heroin use persists, particularly in southwest China. There continues to be an upsurge in the consumption of synthetic drugs such as ecstasy (MDMA) and crystal methamphetamine, otherwise known as "ice". Chinese authorities view drug trafficking and abuse as a major threat to national security, the economy and national and regional stability, but corruption in far-flung drug producing and drug transit regions of the PRC limit the accomplishments of dedicated enforcement officials. China has made great strides to integrate regional and global counternarcotics efforts. China is a party to the 1988 UN Drug Convention.

Cooperation with U.S. counternarcotics officials continued to improve over the past year. The signing of a Memorandum of Intent in February 2005 between DEA and the MPS (Ministry of Public Security) Bureau of Narcotics Control yielded a higher level of cooperation. In 2005, the Chinese Government also continued to provide U.S. counternarcotics officials with samples of drugs seized, on a case-by-case basis.

II. Status of Country

The major narcotics producing areas in Asia, Southeast Asia’s "Golden Triangle" and Southwest Asia’s "Golden Crescent", both border China. The "Golden Triangle" on China’s southwestern border is a longstanding problem; Chinese officials now believe that the "Golden Crescent" is an increasing source of illicit drugs trafficked into western China, particularly Xinjiang Province. According to the Chinese Government, drug abuse in China continues to rise and there were, as of 2004, 1.6 million registered drug addicts, double the number in 1995. Youths made up 74 percent of the registered drug addicts. The majority of registered drug addicts are heroin users. Illegal drug use was recorded in 2,148 cities, counties, and districts across China. The Chinese Government reports about 34,000 recent deaths from drug overdose, a significant increase from about 25,000 deaths as of the end of 2003.

China’s well-documented economic growth and increasing societal openness over the last decade has dramatically increased the disposable income and leisure time of millions of young urban residents. This phenomenon has led to a rapid increase in drug abuse among the country’s youth in large and mid-sized cities. Like large cities of relative affluence all over the world, Chinese cities have seen a significant rise in the urban culture of nightclubs and raves, and their attendant problems of drug abuse. These changes in China have increased abuse of recreational drugs, such as ecstasy and ATS. Officials have responded with several public awareness campaigns and increased enforcement, but abuse of synthetic drugs continues on an up-tick, as in the United States and Europe.

China has one of the largest chemical industries in the world. China is the world’s largest producer of certain precursor chemicals, including acetic anhydride, potassium permanganate, piperonylmethylketone (PMK) and ephedra. China monitors all 22 of the chemicals listed in the 1988 UN Drug Convention. Chinese authorities report they seized over 160 tons of precursor chemicals and prevented a further 3,514 tons from leaving the country in 2004. China continues to be a strong partner of the United States and other concerned countries in implementing a system of pre-export notification of dual-use precursor chemicals.

III. Country Actions Against Drugs in 2005

Policy Initiatives. In June 2000, the PRC issued a "White Paper" on drugs that articulated China’s strategy for combating drug abuse and trafficking. The document covers all the major goals of the UN Convention, emphasizing education, rehabilitation, eradication, precursor chemical control and interdiction. It continues as the basic strategy for the PRC’s approach to drugs. In November 2005 China passed its first administrative law on precursor chemicals aimed at preventing the illicit use of precursor chemicals. This law represents the first action by the PRC to control domestic sale of precursor chemicals; previous laws and regulations focused solely on imports and exports. In June 2004, the PRC published an authoritative five-year plan to tackle the drug problem, which provided the Ministry of Public Security (MPS) with a mandate to step up counternarcotics efforts. The national budget for counternarcotics efforts has seen regular increases. While the MPS’s National Narcotics Control Commission (NNCC), China’s counternarcotics coordinating body, received an annual budget of less than $1 million in the mid-1990’s, by 1998 this amount had increased to approximately $4.5 million and to about $17.5 million in 2003. The total narcotics budget, however, is significantly higher, because each province administers its own counternarcotics budget.

Accomplishments. China continued to cooperate with regional and international partners, including the U.S., to stem the flow of drugs. China has completely eradicated opium poppy cultivation and PRC authorities have increased efforts to destroy illicit drug laboratories within China’s borders.

Law Enforcement Efforts. The Chinese Government has increased its counternarcotics efforts through several highly publicized campaigns, including a nationwide "People’s War" on Narcotics campaign. The counternarcotics efforts at the national level and those at the provincial level have grown substantially, with increased training and exchange programs with other Asian law enforcement agencies. Some of their successes include: the April 2005 seizure of 26 kilograms of heroin in Xinjiang, the May 2005 seizure of 102 kilograms of methamphetamine in Yunnan, the June 2005 seizure of 41 kilograms of ketamine (a veterinary pain killer widely abused in Asia), in Sichuan, the September 2005, seizure of 1,010 kilograms of ketamine in Shandong and Guangdong and the November 2005 seizure of 110 kilograms of methamphetamine in Yunnan. Additionally, in September 2005, a joint investigation conducted by China, Laos, Thailand and Burma resulted in a combined seizure of 426 kilograms of heroin in Burma. The ringleader of this shipment was a Chinese national who was arrested in Laos and eventually deported to China. The case is an indication of China’s increased law enforcement co-operation with its neighbors.

In order to increase its effectiveness in law enforcement, the NNCC reorganized its enforcement operations, establishing separate heroin and amphetamine-type stimulants (ATS) enforcement groups at both the ministerial and provincial levels. Prior to 2003, enforcement was handled by one organization and focused primarily on heroin. With this reorganization, the NNCC can better address ATS enforcement.

U.S.-Chinese law enforcement cooperation continued to improve throughout 2005. The MPS continues to provide strategic and concrete information to its DEA counterparts to actively target drug rings. In addition, the MPS routinely facilitates travel of U.S. law enforcement personnel based at the U.S. Embassy in Beijing. In part due to international cooperation with its neighbors in the Golden Triangle, the MPS reports that poppy cultivation in Laos and Burma has been reduced by 44,000 hectares in recent years, which amounts to a 27 percent decrease in the total area of production since 1995.

Corruption. Official corruption in China is a serious problem. Anticorruption campaigns have led to arrests of many lower-level government personnel and some more senior-level officials. However, most corruption activities in the PRC involve abuse of power, embezzlement and misappropriation of funds, but payoffs to "look the other way" when questionable/illegal commercial activities occur, including drug smuggling, are clearly another major source of official corruption in China. Chinese officials reported that in 2005 there were more than 32,000 people investigated for alleged corruption and that over half were found to be guilty.

While narcotics-related official corruption exists in China, it is seldom reported in the press. The MPS takes allegations of drug-related corruption seriously, launching investigations as appropriate. Most cases appear to have involved lower-level district and county officials. Although there is no substantive evidence indicating senior-level corruption in drug trafficking, the quantity of drugs trafficked within the PRC raises suspicions that official corruption is a factor in trafficking in certain provinces bordering drug-producing regions, such as Yunnan, and in Guangdong and Fujian, where narcotics trafficking and other forms of transnational crimes are prevalent. Official corruption cannot be discounted among the factors enabling organized criminal networks to operate in certain regions of China, despite the best efforts of authorities at the central government level. Narcotics-related corruption does not appear to have adversely affected on-going law enforcement cases in which the U.S. is interested. China is engaged in an anticorruption dialogue with the United States through the Joint Liaison Working Group process. China ratified the UN Convention Against Corruption on January 13, 2006.

Agreements and Treaties. China actively cooperates with other countries to fight drug trafficking. In 2000, China and the United States signed a Mutual Legal Assistance Agreement (MLAA), which entered into force March 8, 2001. In February 2005 DEA and MPS Bureau of Narcotics Control signed a Memorandum of Intent on counternarcotics cooperation. China is a party to the 1988 UN Drug Convention, as well as to the 1961 UN Single Convention as amended by its 1972 Protocol and the 1971 Convention on Psychotropic Substances. In January 2003, the United States and China reached agreement on the Customs Mutual Assistance Agreement (CMAA.) The PRC continues to cooperate with DEA’s chemical control initiatives, "Operation Purple," "Operation Topaz," and "Operation Icebreaker." China strictly regulates the import and export of precursor chemicals, but chemical diversion from China has been a major problem, despite these efforts.

In October 2005 China hosted the Second International Congress of the "ASEAN and China Cooperative Operations in Response to Dangerous Drugs (ACCORD)." More than 200 delegates from ASEAN law enforcement agencies and the UN Office of Drugs and Crime (UNODC) attended. China, along with its ASEAN partners, held meetings in order to map out a regional counternarcotics cooperative mechanism in pursuit of making the region drug-free by 2015. In June, Burma, China, India, Laos and Thailand signed the Chiang Rai Declaration pledging to implement cooperative counternarcotics programs and exchange counternarcotics information. The PRC also continues to participate in UN Office for Drugs and Crime (UNODC) demand reduction and crop substitution efforts in areas along China’s southern borders. China regularly participates in counternarcotics education programs sponsored by the International Law Enforcement Academy (ILEA) in Bangkok, Thailand. The PRC actively participates in the annual International Drug Enforcement Conference (IDEC) and Regional Targeting Meetings, which boost regional law enforcement cooperation against drug trafficking. China has signed over 30 mutual legal assistance agreements with 24 countries, but the U.S. and China have been unable to agree on a narcotics cooperation agreement.

Cultivation/Production. The PRC has effectively eradicated the production of drug-related crops within China. Opium, coca and other drug crops are not produced in China in significant quantities. The PRC is a main cultivator of natural ephedra, which is used in the production of amphetamine. China is also one of the world’s largest producers of synthetic ephedra, which is used for medicinal purposes but can be diverted for the production of methamphetamine. The Chinese Government tightly controls exports of this key input for ATS, but like other dual-use chemicals, China remains a significant source of chemicals diverted to illicit uses, some diversions to countries as far away from China as Europe.

The Chinese Government continues to make shutting down illicit drug laboratories a top priority. The MPS seized 198 drug processing laboratories between July and August 2004 (seeking update for 2005).

Drug Flow/Transit. China continues to be used as a transshipment route for drugs produced in the "Golden Triangle" to the international market, despite counternarcotics cooperation with neighbors such as Vietnam, Thailand and Burma. Drug transportation and infiltration in Yunnan and Guangdong Provinces has been especially pervasive; drugs also move along and back and forth between China’s border with the Democratic People’s Republic of (North) Korea. While China’s southern and southwestern provinces constitute the PRC’s primary drug flow and transit areas, Chinese authorities acknowledge that western China is experiencing significant problems as well. Drugs such as heroin, methamphetamine and ketamine are being smuggled into Xinjiang Province and then distributed throughout China.

Domestic Programs (Demand Reduction). According to the MPS, China had 1.6 million illegal drug users registered by law enforcement departments. The majority of registered drug users are addicted to heroin. The Ministry of Education (MOE) and the NNCC have expanded drug education and prevention programs, aimed at preventing children from ages 12 to 18 from getting involved in drugs. Chinese officials report the distribution of 25,000 counternarcotics posters in 2004. In 2004, 100,000 drug awareness pamphlets were distributed and 100,000 special action committees were formed to carry out drug control publicity and education activities. The NNCC, Ministry of Health and the State Food and Drug Administration jointly established 34 clinics in 10 provinces to provide treatment to heroin addicts.

IV. U.S. Policy Initiatives and Programs

Bilateral Cooperation. Counternarcotics cooperation between China and the United States continues to develop in a positive way. The information shared by China is leading to progress in attacking drug-smuggling rings that have an impact on the U.S. and is yielding significant operational results.

Road Ahead. The most significant problem in bilateral counternarcotics cooperation remains the lack of progress toward concluding a bilateral Letter of Agreement (LOA) enabling the U.S. Government to extend counternarcotics assistance to China. Reaching agreement on the LOA is a major U.S. goal that, if achieved, would greatly increase counternarcotics cooperation between the two countries. While China has provided the DEA on a case-by-case basis with some samples of drugs seized in the PRC intended for U.S. markets, the U.S. Government would welcome routinely receiving samples of all drugs seized by Chinese authorities. Despite these issues, bilateral enforcement cooperation remains on track and is expected to continue to improve over the coming year.

Hong Kong

I. Summary

Hong Kong is not a major transit/transshipment point for illicit drugs destined for the international market because of its efficient law enforcement efforts, the availability of alternate transport routes, and the development of port facilities elsewhere in southern China. Some traffickers continue to operate out of Hong Kong to arrange shipments from nearby drug-producing countries via Hong Kong to the international market, including to the United States. The Government of the Hong Kong Special Administrative Region (HKSAR) actively combats drug trafficking and abuse through legislation and law enforcement, preventive education and publicity, treatment and rehabilitation, as well as research and external cooperation. The 1988 UN Drug Convention, to which the People’s Republic of China (PRC) is a party, also applies to Hong Kong.

II. Status of Hong Kong

Hong Kong’s position as a key port city in close proximity to the Golden Triangle and mainland China historically made it a natural transit/transshipment point for drugs moving from Southeast Asia to the international market, including to the United States. In recent years, Hong Kong’s role as a major transit/transshipment point has diminished due to law enforcement efforts and the availability of alternate routes in southern China. Despite the diminished role, some drugs continue to transit Hong Kong to the United States and the international market. Some drug-traffickers continue to use Hong Kong as their financial base of operations, including investors involved in international drug trafficking activity who reside in Hong Kong.

Hong Kong law enforcement officials maintain very cooperative liaison relationships with their U.S. counterparts in the fight against drugs. According to HKSAR authorities, drugs seized in Hong Kong are smuggled mostly for local consumption and to a lesser extent for further distribution in the international market, including the United States. Hong Kong experienced an overall decrease in drug abuse in 2005. According to the Hong Kong Central Registry of Drug Abuse (CRDA), in the first six months of 2005 the total number of drug abusers continued to fall to 8,833, a drop of 5.1 percent from 9,303 during the same period in 2004. Heroin was the most commonly abused drug, though the number of heroin abusers also dropped slightly from 2004. Also noted was a significant drop of 30 percent in ketamine abusers over the same period in 2004. However, the CRDA noted that both the number and proportion of drug abusers taking more than one drug was on the rise, as was the number of female drug abusers.

In 2005, the Hong Kong Government again gave a high priority to tackling psychotropic substance abuse. The Hong Kong Government has identified the continuing prevalence of psychotropic substance abuse and the growing trend of young people experimenting with drugs as their major area of concern in the battle against drug abuse and trafficking.

III. Actions Against Drugs in 2005

Policy Initiatives. Although there were no major policy changes in 2004 and 2005, the Hong Kong Government continued to work with existing counternarcotics policies and strategies in drug-prevention efforts. Minor policy changes included updating lists of prescription medicines allowed for storage in local hospitals and nurseries as well as an expansion of the reporting network of the Central Registry of Drug Abuse to enable better monitoring of drug abuse in Hong Kong.

Law Enforcement Efforts. Hong Kong’s law enforcement agencies, including the Hong Kong police and Hong Kong Customs and Excise Department (HKCED) place high priority on meeting the objectives of the 1988 UN Drug Convention. Their counternarcotics efforts focus on the suppression of drug trafficking and the control of precursor chemicals. The Hong Kong Police have adopted a three-level approach to combat narcotics distribution: at the headquarters level, the focus is on high-level traffickers and international trafficking; the regional police force focuses on trafficking across police district boundaries; and the district level police force has responsibility for eradicating street-level distribution. HKCED’s Chemical Control Group, in cooperation with the U.S. DEA office in Hong Kong, closely monitors the usage of precursor chemicals and tracks the export of suspicious precursor chemical shipments to worldwide destinations with significant results impacting on several regions including the United States. HKCED continued to aggressively combat drug trafficking in 2005 and carried out numerous significant drug seizures, including a record seizure of 87.5 kilograms of ketamine in March 2005.

Corruption. As a matter of government policy, the HKSAR does not encourage or facilitate illicit production or distribution of narcotic or psychotropic drugs or other controlled substances, or the laundering of proceeds from illegal drug transactions. Similarly, no senior government official is alleged to have participated in such activities.

Hong Kong has a comprehensive anticorruption ordinance that is effectively enforced by the Independent Commission Against Corruption (ICAC), which reports directly to the Chief Executive. In addition, the UN Convention Against Corruption, which the PRC ratified on January 13, 2006, is applicable to Hong Kong.

Drug Flow/Transit. Some drugs continue to flow through Hong Kong for the overseas market, including the United States. Traffickers use land routes through mainland China to smuggle heroin into Hong Kong. The heavy volume of vehicle and passenger traffic at the land boundary between PRC and Hong Kong continues to pose difficulties in the fight against the trafficking of drugs into Hong Kong. In an effort to eradicate Hong Kong’s role as a transit/transshipment point for illicit drugs, the HKSAR maintains a database of information on all cargoes, cross-border vehicles, and shipping. The air cargo clearance system, the land border system and the customs control system are all capable of quickly processing information on all import and export cargoes, cross-border vehicles and vessels. The Hong Kong drug trade is primarily dominated by the local Chinese population. Contrary to common belief, there is not a significant and direct connection between Hong Kong narcotics activity and Hong Kong triads at the wholesale level. Therefore, drug investigations are not focused on known triad societies, but rather on the particular trafficking syndicates or individuals involved. In 2005, the trafficking destined for mainland China by Southeast Asians became more prominent. As a result, seizures of ketamine have spiraled upwards; shipments of multi-kilo loads of ketamine have been intercepted.

Agreements and Treaties/International Cooperation. Hong Kong has "mutual legal assistance in criminal matters agreements" with the United States and many other countries. Hong Kong has also signed surrender of fugitive offenders agreements with 14 countries, including the U.S. Hong Kong also signed transfer of sentenced persons agreements with seven countries, including the U.S. Hong Kong law enforcement agencies enjoy a close and cooperative working relationship with their mainland counterparts and counterparts in many countries. Hong Kong’s reversion to China in 1997, and particularly adjustment to the unique "one country, two systems" environment in which Hong Kong currently operates, caused Hong Kong’s law enforcement and customs operations around the time of reversion (July 1997) to operate less efficiently with their mainland counterparts than they do now. In the last few years, liaison information sharing and data-networking functions, such as customs information, have been formalized and have been successful in increasing the levels of inter-system cooperation and efficiency. Because intermittent drug trafficking through Hong Kong often involves mainland China aspects, foreign law enforcement agencies in Hong Kong such as the U.S. DEA have benefited from the increased level of PRC-Hong Kong cooperation. The 1988 UN Drug Convention, 1961 UN Single Convention as amended by the 1972 Protocol, and the 1971 UN Convention Against Psychotropic Substances are all applicable to Hong Kong.

Domestic Programs. The Hong Kong Government uses a "five-pronged" approach to confront domestic drug problems, covering legislation and law enforcement; preventive education and publicity; treatment and rehabilitation; research; and external co-operation. In 2005, the Hong Kong Government’s preventative education policy efforts continued to focus on youth and parents. The Hong Kong Government has provided a comprehensive drug prevention program throughout Hong Kong’s education system. A counternarcotics publicity program, in collaboration with local radio, kicked off in April 2005. The program was designed to allow Hong Kong youth to share their experiences and knowledge publicly through the radio and internet. Additionally, a series of television programs focusing on drug abuse issues will be produced jointly with local Hong Kong T.V. for broadcast in 2006. The Hong Kong Government’s Narcotics Bureau also partners with youth organizations and groups such as Junior Police Call, the Hong Kong Red Cross, and the Scout Association of Hong Kong to promote the counternarcotics message to youths. In June 2004, the Hong Kong Government formally opened the Drug Info Centre (DIC), funded by the Hong Kong Jockey Club. The DIC is the first exhibition center in Hong Kong dedicated to counternarcotics education. Since the DIC’s opening, it has received more than 45,000 visitors for various drug-prevention education activities. The Government also continued to commission nongovernment organizations to assist in educating primary and secondary school children. Since the opening in June 2004, a total of 127,300 students from 530 schools attended drug education programs sponsored by the Government.

The Hong Kong Government also continued to implement a comprehensive drug treatment and rehabilitation program in 2005. The Department of Health and the Social Welfare Department continued to operate seven residential drug treatment centers and five counseling centers for psychotropic substance abusers and the Department of Health continued its operation of a methadone treatment program. The Correctional Services Department continued to provide compulsory treatment for convicted persons with drug abuse problems.

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

IV. U.S. Policy Initiatives and Programs

Policy Initiatives. The U.S. Government and the HKSAR continue to promote sharing of proceeds from joint counternarcotics investigations. In May 2003, Hong Kong began participating in the U.S. Container Security Initiative (CSI), which U.S. law enforcement believes will increase the potential for identifying shipments of narcotics, even though its focus is on terrorism and weapons of mass destruction. Hong Kong is also an active participant in The International Law Enforcement Academy (ILEA) in Bangkok, Thailand. From 2003 to October 2005, Hong Kong Customs, Hong Kong Department of Health and the United States Drug Enforcement Administration launched a joint operation codenamed "Cold Remedy" to monitor the movement of precursor chemicals which are used in the production of methamphetamine and other drugs from Hong Kong to high-risk countries. The operation effectively decreased the frequency of these shipments and, through the high level of information exchange and timely international tracking, indicated strong cooperation between Hong Kong Government officials and their U.S. counterparts. To further strengthen international cooperation against trafficking of precursors used in the production of pseudoephedrine, Hong Kong secured an agreement with the U.S., Mexico and Panama to impose stringent controls on such shipments. Since the agreement’s implementation in April 2005, no shipment of such products to Mexico or any other high-risk countries has been detected.

The Road Ahead. The Hong Kong Government has proven to be a valuable partner in the fight against drug trafficking and abuse. Hong Kong law enforcement agencies, among the most effective in the region, continue to cooperate closely with U.S. counterparts. The U.S. Government will continue to encourage Hong Kong to maintain its active role in counternarcotics efforts.

Indonesia

I. Summary

Although Indonesia is not a major drug producing, consuming, or drug transit country, Indonesia continues to have a growing problem in all three areas. Marijuana production for the domestic market is large, because marijuana is widely abused among Indonesia’s large population. In addition, recent large seizures point to ecstasy production in Indonesia, as well. The Indonesian National Police (INP) has participated in several international donor-initiated training programs and continues to commit increased resources to counternarcotics efforts. The INP has received U.S. assistance, including vehicles, software, safety and tactical equipment to support its efforts against crime and drugs. INP efforts are firmly based on counternarcotics legislation and international agreements. The INP relies heavily on assistance from major international donors for training and equipment, including the U.S. Indonesia is a party to the 1988 UN Drug Convention.

II. Status of Country

All major groups of illegal drugs are readily available in Indonesia: methamphetamine, in its crystalline and tablet forms, MDMA (ecstasy), heroin, cocaine, and marijuana. The INP reports that the majority of heroin seized in Indonesia originates in Afghanistan. Indonesian authorities report that much of the heroin trade in Indonesia is controlled and directed by West African and Nepalese traffickers, often utilizing Thailand and Singapore as transit points for their couriers. In recent years, there has been a significant increase in the domestic large scale (multi hundred kilogram quantities) production of methamphetamine and MDMA in Indonesia. Indonesian authorities report that the domestic production of methamphetamine and MDMA in Indonesia is controlled by Indonesian and Chinese syndicates, utilizing precursor chemical sources of supply in the PRC. However, the majority of MDMA is reported to be imported from the Netherlands. INP reports that marijuana is cultivated throughout Indonesia, especially the Aceh Province of Northern Sumatra, where large scale cultivation occurs. During 2005, INP identified 66 marijuana fields, destroying 160,211 marijuana plants, comprising a total of approximately 86.5 hectares, and seizing 20.9 tons of marijuana. The peace treaty signed in 2005 between GOI forces and Free Aceh Movement (GAM) rebels, has led to increased access and presence of INP throughout Northern Sumatra. Although cocaine seizures continue to occur in major Indonesian airports, the market for cocaine in Indonesia is very small. Cocaine seizures made by INP are believed to be associated with the transshipment of the drug to more lucrative markets, specifically Australia.

III. Country Actions Against Drugs in 2005

Policy Initiatives. The Indonesian counternarcotics code is sufficiently inclusive to enable police, prosecutors, and the judiciary to arrest, prosecute, and adjudicate narcotics cases; however, the continued lack of modern detection, enforcement and investigative methodologies and technology, as well as the presence of pervasive corruption, are the greatest obstacles to advancing counternarcotics efforts.

Law Enforcement Efforts. The National Narcotics Board (BNN) continues to strive to improve interagency cooperation in drug enforcement, interdiction, and precursor control. In 2005, under the auspices of BNN, the USG sponsored Joint Interagency Counterdrug Operations Center (JIACDOC), supported by the Joint Interagency Task Force West, was opened in Jakarta, Indonesia. The JIACDOC is supported by an extensive IT infrastructure connecting the center to key provinces throughout Indonesia. The mission of the JIACDOC is to improve coordination and information exchange between various Indonesian law enforcement agencies related to drug enforcement.

The INP Narcotics and Organized Crime Directorate continues to improve its ability to investigate and dismantle international drug trafficking syndicates, for example, in November INP conducted a raid , dismantling the largest amphetamine type substance (ATS) manufacturing plaint in Indonesian history, producing both crystal methamphetamine and MDMA at the time of the raid. The Narcotics Directorate has become increasingly active in regional targeting conferences designed to coordinate efforts against transnational drug and crime organizations. The maritime counternarcotics effort depends on a myriad of Indonesian law enforcement agencies. Work in the Indonesian Government to define the roles of these agencies, including the Navy and the INP Air and Sea police, continue so as to avoid duplication. For the moment however, no effective campaign can be mounted against possible trafficking by sea. Any attempt to check trafficking by sea will be very challenging, given the many islands that make up the Indonesian Archipelago. The Indonesian courts have sentenced approximately 21 drug traffickers to death since January 2000. In 2004, the Indonesian government began to carry out these sentences, executing three individuals.

Agreements and Treaties. Indonesia is a party to the 1988 UN Drug Convention, the 1971 UN Convention on Psychotropic Substances, and the 1961 UN Single Convention, as amended by the 1972 Protocol. Indonesia has signed, but has not yet ratified, the UN Convention on Transnational Organized Crime and the UN Convention Against Corruption.

Cultivation/Production. Indonesia produces enough marijuana for domestic consumption. This is no small amount, given that Indonesia’s population is in excess of 220 million, and cannabis is the most widely abused drug. In recent years, Indonesia has experienced a significant increase in domestic production of MDMA and methamphetamine, but most of these two drugs available in Indonesia’s larger cities are still imported.

Corruption. As a matter of government policy and practice, the GOI does not encourage or facilitate the illicit production or distribution of drugs or the laundering of proceeds from illegal transactions. Corruption in Indonesia, however, is endemic, despite laws against it, and seriously limits the effectiveness of all law enforcement, including narcotics law enforcement. The recently elected administration has made anticorruption efforts a major policy initiative, but as long as official salaries remain very low, some officials will be tempted to accept bribes.

IV. U.S. Policy Initiatives and Programs

Bilateral Cooperation. Indonesia and the United States maintain excellent law enforcement cooperation on narcotics cases. In 2005, DEA provided training in the areas of airport interdiction, mail/parcel interdiction and maritime/cross border counternarcotics operations. Indonesia continues to work closely with the DEA regional office in Singapore on narcotics investigations.

The Road Ahead. In 2006, the U.S. will assist the BNN and other counternarcotics agencies in further developing the Joint Interagency Counterdrug Operations Center and Network. The goals of the project are to standardize and computerize the reporting methods related to narcotics investigations and seizures, to develop a drug intelligence database, and to build an information network designed to connect all of the provinces of Indonesia.

Japan

I. Summary

Japan is not a significant producer of narcotics, but it is target country for traffickers in a wide variety of narcotics. Methamphetamine ("meth") is Japan’s most widely abused drug. MDMA (ecstasy) is of growing concern in Japan; several large seizures occurred in 2004 and ecstasy is now readily available in Tokyo nightclubs. Heroin and cocaine are also available in Japan, but they are relatively unpopular. The Japanese legal system discourages proactive investigative techniques for pursuing drug traffickers; consequently, Japanese law enforcement is forced to be primarily reactive in their investigations. Despite legal and bureaucratic restrictions, Japanese law enforcement is emerging as a prominent partner with United States and international law enforcement agencies in pursuit of large-scale international drug trafficking organizations (DTOs). Furthermore, Japan has taken a leadership role within the Asia-Pacific region by hosting training and seminars. DEA Tokyo acts as an advisory, support and training resource to Japanese law enforcement agencies, and conducts joint multinational investigations with its Japanese partners. Japan is a party to the 1988 U N Drug Convention.

II. Status of Country

Japan is not a significant producer of narcotics. Licit cultivation of opium poppies, coca plants, and cannabis for research is done on a modest scale and is strictly monitored and controlled by the Ministry of Health, Labor and Welfare. Methamphetamine is Japan’s most widely abused drug, but there is no evidence of domestic clandestine manufacturing. GOJ authorities believe the majority of methamphetamine smuggled into Japan is refined and/or produced in the People’s Republic of China (PRC), North Korea, Taiwan, Indonesia and the Philippines. Recently, seizures of methamphetamine coming from the U.S. have been made at Japan’s international airports. Canada emerged as a significant source of methamphetamine and marijuana in 2004. Methamphetamine trafficking remains a significant source of income for Japanese organized crime. Approximately 80 percent of all drug arrests in Japan involve methamphetamine. The National Police Agency (NPA) estimates there are 600,000 methamphetamine addicts, and between one and three million casual users nationwide. Although not a producer of methamphetamine, Japan is one of the largest markets for methamphetamine in Asia. Government of Japan (GOJ) authorities unofficially estimate that between ten and twenty metric tons of this substance is trafficked annually into Japan.

III. Country Actions Against Drugs in 2005

Policy Initiatives. DEA Tokyo has worked closely with the GOJ to add synthetic drugs of abuse to Japan’s list of prohibited drugs. In 2005, the GOJ banned 5- MeO-DIPT ("foxy methoxy") and Alpha-methyltryptamine ("AMT"). Since 2002, legislation has made illegal the possession, sale, and/or use of Benzylpiperazine ("BZP"), trifluoromethylphenylpiperazine ("TFMPP"), Psilocybin ("magic mushrooms"), Gamma Hydroxybutyrate ("GHB"), and 4- Methylthioamphetamine ("4-MTA"). Japanese officials are currently in the process of adding ketamine to the list of prohibited drugs.

Compared to past years, Japanese law enforcement has made greater attempts to be proactive in its approach to drug law enforcement.

Law Enforcement Efforts. Police counternarcotics efforts tend to focus on Japanese organized crime and foreigner operated DTOs, the main smugglers and distributors of drugs. In August 2004, DEA Tokyo initiated a joint investigation with NPA’s Drugs & Firearms Control Division, the Kanagawa Prefecture Police, and U.S. Naval Criminal Investigative Service (NCIS) to intercept multiple packages containing MDMA ecstasy tablets mailed from Seattle to a U.S. military base in Japan. This resulted in the arrests of two U.S. nationals and the seizure of 50,000 tablets of MDMA, which was sourced to violators in Vancouver, Canada.

Despite restrictive and cumbersome laws against the proactive use of informants, undercover operations, and telephone intercepts, Japan’s Ministry of Health, Labor and Welfare’s Narcotics Control Department conducted an extensive undercover operation between January and July 2005 that resulted in the arrests of 60 local drug peddlers. Overall, drug-related arrests (January-June, 2005) increased 6.9 percent over the same time frame last year. Through September 2005, Japanese authorities have seized approximately 126 kilograms of methamphetamine, compared to the 612 kilograms seized in 2004.

The popularity of ecstasy continued to grow. It is readily available in Tokyo’s nightclubs. Through September 2005, approximately 350,000 MDMA tablets were seized. MDMA seizures this year are on pace to exceed the 414,768 seized in 2004. Heroin imports from Southeast Asia remain low; only 32 grams of heroin and 1,579 grams of opium were seized through September 2005. Heroin, opium, and cannabis use continues to be significantly lower than that of other illegal drugs in the country. However, the growing number of arrests involving marijuana and hashish indicates the increasing popularity of these substances. Through September 2005, approximately 253 kilograms of marijuana and approximately 158 kilograms of hashish have been seized in Japan. Cocaine seizures remain low, with approximately 2.7 kilograms seized through September 2005. This amount is much lower than the anomalous 86 kilograms seized in 2004, and slightly higher than the 2.3 kilograms seized in 2003.

Corruption. As a matter of government policy, the GOJ does not encourage or facilitate the illicit production or distribution of narcotics, psychotropic drugs, controlled substances, or the laundering of proceeds from illegal drug transactions.

Agreements and Treaties. Japan is a party to the 1988 UN Drug Convention, the 1961 UN Single Convention as amended by its 1972 Protocol, and the 1971 UN Convention on Psychotropic Substances. An extradition treaty and a customs mutual assistance agreement are in force between the United States and Japan. Japan has signed but has not yet ratified the UN Convention on Transnational Organized Crime and the UN Convention Against Corruption.

The U.S.-Japan Mutual Legal Assistance Treaty (MLAT) was signed in 2003 but is not yet in force. The MLAT will allow Japan’s Ministry of Justice to share information and cooperate with the U.S. Department of Justice in connection with investigations, prosecutions and other proceedings in criminal matters.

Cultivation/Production. Although Japan is not a significant cultivator or manufacturer of controlled substances, it is a major producer of 60 types of dual-use precursor chemicals. For example, Japan is one of only a handful of countries that refine ephedrine, a chemical used to treat nasal/breathing problems. Ephedrine is also an essential ingredient in methamphetamine. DEA Tokyo works closely with its Japanese counterparts to monitor end users of dual use precursors.

Drug Flow/Transit. With few exceptions, all drugs illicitly trafficked into Japan are smuggled from overseas. According to the NPA Taiwan, China, the Philippines, Canada, the U.S. and North Korea are principal sources.

Domestic Programs (Demand Reduction). Drug treatment programs are small and generally run by private organizations. GOJ provides narcotics-related counseling focused on drug prevention and supports the rehabilitation of addicts at prefectural (regional) centers. The Japanese Government continues to support a number of drug awareness campaigns designed to inform the public about the growing use of stimulants in the country, especially among junior and senior high school students. The Ministry of Health and Welfare, along with prefectural governments and private organizations, continues to run national publicity campaigns and to promote drug education programs at the community level.

IV. U.S. Policy Initiatives and Programs

Policy Initiatives. U.S. goals and objectives include strengthening law enforcement cooperation related to controlled deliveries and drug-related money-laundering investigations, encouraging more demand reduction programs, encouraging effective use of existing anticrime legislation and available investigative tools against drug traffickers, and encouraging the effective use of government agencies responsible for financial transaction oversight.

The Road Ahead. DEA Tokyo will work closely with its Japanese counterparts to offer support in conducting investigations on international drug trafficking, money laundering, and other crimes. DEA will continue to pursue an aggressive education and information-sharing program with Japanese law enforcement agencies to foster knowledge of money laundering investigations, and their relationship to narcotics trafficking and terrorist financing.

Laos

I. Summary

In 2005, Laos enjoyed unprecedented success in its battle against opium, in no small part due to the determined efforts of the Government of Laos (GOL) supported by U.S. State Department counternarcotics funding. Crop control programs reduced poppy cultivation and production by an estimated 45 percent in just one year. Demand reduction programs reduced addiction by a claimed 30 percent of the known addict population. If successful alternative development is able to secure this victory, Laos could cease to be a major producer of opium in the near future. However, opium addiction is a persistent problem, decades in the making; claims of rapid success in treating addicts could prove to be short-lived. A 30 percent reduction in addict populations in a single year would be almost without precedent worldwide.

Unfortunately, just as Laos appears to be on the verge of a major triumph against opium, a new threat has appeared in the form of amphetamine type stimulants (ATS). The scourge of methamphetamine, locally known as "ya ba" (crazy medicine), is exploding among the nation’s youth, truck drivers, and commercial sex workers. A paucity of law enforcement resources, vulnerability to corruption, and the difficulty of controlling the nation’s long and remote borders will make it difficult for Laos to easily overcome this challenge. Focused demand reduction programs, more robust law enforcement, and better international cooperation will be necessary if Laos is not to become both a major ATS consumer and transit country. Laos is a party to the 1988 UN Drug Convention.

II. Status of Country

Laos was, until this year, the world’s third largest producer of illicit opium, but production has decreased to the point that it may no longer meet domestic demand (largely from traditional abusers among Laos’ Hill Tribes), and the nation’s days as a commercially significant producer of opium appear numbered. In contrast, Laos may be on the verge of becoming a major transit country for ATS and associated precursors.

Increasing prices may be discouraging some opium use even as it serves as a stimulus to production. According to the UNODC, opium prices rose 139 percent in 2005, to a new high of $521 per kilogram, more than three times the 2002 price. USG survey results indicate that in some remote locations, prices may have been even higher during the year, based on the local specifics of supply and demand. According to the UNODC, the result of these higher prices was that overall opium production revenues declined by only 21 percent, to $7.4 million, despite the precipitous drop in production.

III. Country Actions Against Drugs in 2005

Policy Initiatives. Central to the GOL’s success in reducing poppy cultivation in 2005 was its determination to achieve the counternarcotics policy goal set forward in the Seventh Party Congress (2001), to free Laos of opium cultivation before the Eighth Party Congress convenes in early 2006. While this policy was not new, the GOL pursued it vigorously during the past year and this helped to bring Laos closer to its stated objective.

In late November 2005, Minister to the President’s Office and Chairman of the Lao National Commission for Drug Control and Supervision (LCDC) Soubanh Srithirath, pressed the provinces to renew their commitment to making Laos opium free before February of 2006. He reminded provincial leaders that they were accountable for the success or failure of the policy and that the central government would monitor their performance. The GOL sought to implement this policy in several ways:

First, Laos undertook a nationwide program to promote "opium awareness," focused on sixty-two districts where poppy cultivation has been or continues to be a serious problem. The campaign utilized local, law enforcement, and public health officials to educate suspected opium producing villages on Lao narcotics law, the hazards of addiction, and alternative development opportunities for those who stop producing. One of the key objectives of the campaign was to garner voluntary compliance and a written commitment from each of the target villages and cultivators that they would no longer plant poppy. The campaign also sought to assure that villagers understood the law and the potential legal consequences if they chose to violate it. As part of this campaign, officials attempted to confiscate poppy seed before cultivators could sow it, though the effectiveness of that effort was questionable.

Second, the GOL, with support from the US, UN and other international partners, continued to pursue a variety of alternative development programs. These included crop substitution, rice cultivation, road construction, building community infrastructure, installing clean water systems, opening livestock banks, establishing ecotourism venues, developing village health care, providing vocational training, and promoting literacy education, particularly among women. The bulk of the counternarcotics funds provided by donors to the GOL were committed to alternative development, as these initiatives provide the best long-term solution to the poverty that is the root cause of opium production.

Third, the GOL, again with substantial support from international donors including the USG, sought to bring about an end to opium addiction throughout the country. With the knowledge that it will be next to impossible to eliminate all poppy cultivation as long as there is a substantial domestic demand, LCDC conducted a conference in late November to identify those provinces that had achieved their addict detoxification targets, and to urge those which were lagging behind to redouble their efforts. Laos is in the process of implementing a pilot program that holds the promise of more cost effective detoxification, based in part on lessons learned from regional partners. Opium addiction is a persistent problem; however, and claims of rapid success could prove to be short-lived.

The GOL also sought to bring the growing scourge of ATS to the forefront of the public agenda. In a public speech in June 2005, Minister Soubanh openly addressed the problem of growing ATS abuse among the nation’s youth, citing statistics that showed methamphetamine use as high as 27 percent among students in some locations. Laos is considering revising its penal code and criminal procedures to meet the challenge of growing ATS abuse, with the assistance of several European partners.

The MOJ, in cooperation with UNODC and international partners, is drafting a new comprehensive drug control law to supplement the provisions of Article 135 (1990). The article is incomplete and does not provide a coherent legal framework for the control of narcotics and other substances listed in relevant UN conventions, to which it is a party, such as the 1961 Single Convention. A consequence of this is that Lao law does not always distinguish between illicit and licit medical use of some controlled drugs. The new draft legislation provides a more complete and methodical legal framework for drug enforcement, and includes provisions for enhanced cooperation against illicit transit. In addition, the GOL amended Article 135 in 2005 to include key provisions of the TOC agreement. Unfortunately, changes in the legal code are not always published in the press, and can remain unknown to government officials and the public alike.

Accomplishments. Poppy cultivation in Laos declined dramatically in 2005, and this success stands as an unqualified victory for Laos and its international partners, especially the U.S., in the battle against illicit narcotics, especially the U.S. According to USG figures, the area under cultivation declined from 10,000 hectares in 2004 to 5,500 hectares in 2005. This was a 45 percent reduction in cultivation in just one year. The UNODC survey conducted in 2005 indicated an even steeper decline, from 6,600 hectares in 2004 to approximately 1,800 in 2005, a 74 percent drop. The decline in opium production paralleled that in opium cultivation. The 2005 USG survey projected production of approximately 28 metric tons, a 46 percent decline from last year’s estimate of 49 tons. UNODC survey results showed a more rapid reduction, from 43 tons in 2004 to 14 tons in 2005, a 67 percent decline.

Law Enforcement Efforts. Despite some successes, Laos’ law enforcement resources remain inadequate to meet the full range of challenges posed by illicit drugs. Thanks to international assistance, Laos can accurately estimate opium cultivation, production, and addiction, but currently does not possess the means to accurately assess the extent of production, transit, and distribution of ATS and its precursors. Production and transit costs for opium and ATS are low. Anecdotal evidence suggests that some traffickers formerly involved in opium may now be shifting to ATS because it i