HB
FOR &EI.EASE DATE:
rsr*
INTELLIGENCE MEMORANDUM
AN EXAMINATION OF THE CHARGES OF CHINESE COMMUNIST INVOLVEMENT IN THE ILLICIT OPIUM TRADE
CIA/RR
96
THIS DOCUMEWT CONTAINS INFORMATION AP7ECTING THE NATIONAL DBFEHSE OF THB UNITED STATES WITHIN THE KEANIHOHE ESPIONAGE LAWS,SC,, THEOR REVELATION OP WHICH IN ANY MANNER TO AN UNAUTHORIZED PERSON IS PROHIBITED BY. LAW.
CENTRAL INTELLIGENCE AGENCY Office of Research and Reports
0
$
I. Introduction .
XX. Involvement In the Illicit Opium Trade
of the
III. Oplun-Produolng Areas and Opium Markets
in the Far East
Thailand
k. Singapore and Malaya
5. Hong Kong and
of Illicit Opium and Principalthe Near East and South Asia
for Illicit Opiua in other Areas of the Conclusions
Appendixes
Appendix A. Methodology
Appendix B. Caps in Intelligence
Appendix C. Source References
3
5
6
85
1
22
es3 23
k
9 31
I
2 or
Value of Estimated Exports of Opium from Burma.
to Thailand at Various Stages of5 - -
2. Estimated Number of Opium Addicts and Consumption
of Illicit Raw Opium in5
3> Sources of Supply of Raw Opium Seized in Singapore,
by Country of
U. Sources of Supply of Raw Opium for Singapore
and Malaya, by Country of Origin, - 17
5- Estimated Value Of Imports of Opium intoMalaya, by Country of Origin or by
6. Estimated. Value of Exports of Opium to Singapore and Malaya, by Country of Origin,
1
2
(ORR Project
AK EXAMINATIONHEES OF CiltrEStt CSMMUKISI: PI THE ILLICIT OPIUM TRADE*
Summary
There is no reliable evidence to indicate that the government of Cocssunlot China either officially permits or actively engages in the illicit export of opium or its derivatives to the Free World. There is also no reliable evidence of Chinese Communist control over the lucrative opium trade of Southeast Asia and adjacent markets. There is evidence, hovever, that snail quantities of raw opium produced by minority tribes In Yunnan Province, Communist China, cove over the Burmese border. The annual earnings of the Chinese Communist tribes from auch sales probably would not exceed* per year. Currently, Communist China la attempting to win the favor of the Yunnan border tribes, and it may be that, because of,politicalCoazunlBt China permits small-scale violation of its strict antioplup. program.
* The estimates and conclusions contained in this memorandum repreeent the best Judgment of ORR as of
** Dollar values throughout this memorandum are given in terms of US dollars.
*** Tonnages throughout this memorandum are given in metric* Estimates of consumption and export figures from reportu of aeitures are given in terms of raw opium equivalents throughout this memorandum.
The principal opium-producing areas In the Par East are in Burma and Laos. The production of opium in these countries. In addition to production in Thailand, is sufficient to supply the great massf Burma, Thailand, and Indochina and tourther export potential of the equivalentetricf raw This export moves principally through Thailand andesser extent through Burma to markets ir. Malaya, Hong Kong, and Macao. Estimates of consumption and reports of aeitures indicate that exports to these markets for domestic consumption probably do not exceed the equivalent ofons of rawear. Of the remainderart ia probably hoarded;
I1 i" II k l_
part moves to other markets, principally through such transit ports as hong'kong and singapore; and approximatelyons are seized.
the governments of burma, thailand, and laos either explicitlypermit the production of opium by the minority tribes. have only nominal control over the majority ofand attempts to suppress opium production very likelyin strenuous resistance. furthermore, these tribeshave relied on the solo of their opium cropourceincome,an on its production would work an economicon these
the principal profits from opium, however, are not earned by the producers but by the opium traders, middlemen, and government officials. for example, reliable price data indicate that the burmese producers realize less5 million for theons of burmese opium which transits thailand annually. this same quantity of opium in bangkok is worth5 million, and, when delivered in foreign markets like singapore, its wholesale value is increased toillion. this large increase in value illustrates the lucrative profits earned by the traders, the middlemen, and the opium runners, as well as the bribed government officials involved in the opium trade. this trade is substantially in'the hands of private traders motivated by considerations of profit and not by ideological factors.
southeast asian opium is exported either in raw, crudely processed form orelatively highly refined form. in the estimatesabove, morphine, heroin, and other derivatives have beento raw-opium equivalents. there are several refineries located in thailand near the thai-burmese border, and it is believed that the majority of the morphine and other refined forms of narcotics which move through thailand are processed in this area. other refineries are located in the major market and transit areas. for example,5 there were four known refineries operating in macao, andclandestine facilities for refining morphine and heroin are known to have existed in hong kong.
countries of the near east and south asia also suppliedquantities of opium to the world's illicit markets, including even those in southeast asia. for example, it is estimated that5 malaya receivedons of opium from iran andons from india. the near east and south asia, however, alsoajor consuming area and consume far more than they
Minor markets exist in other areas of the world. These markets are supplied with opium produced in Southeast Asia and in theof the Near East and South Asia. The European and African opium traffic has been characterized by the UN Commission on Narcotic Drugs as not important.H The North American market appears to be supplied principally with opium from Lebanon and Mexico.
There appears, therefore, to be production in the Free World of opium which is more than adequate to meet the demands of the two great opium-consuming areasthe Near East and Southeast Asiaand in view of the extremely limited foreign exchange which Communist China might earn from the production of opium, appreciable official Chinese Communist participation in such production is unlikely. Trade and refinery processing appear to be in the hands of non-Communists, and Communist China does not appear to have any effective control over Individuals engaged in these activities.
I. Introduction.
Smuggling of goods in the Near East and the Far East is aaccepted trade channel. Border areas are in some cases poorly defined, and in extreme cases exist onlyineap. Even well-defined borders are often poorly guarded. Customs officials, military authorities, and police enforcement officers customarily supplement their low salaries by accepting bribes from smugglers or by actually engaging in smuggling themselves. Central governments hestiate to enforce laws which would change traditional tradingand provoke the hostility and resentment of 8emiautonomousethnic groups. Under these conditions, smuggling flourishes.
One of the commodities most frequently smuggled is opium. Opium in these regions is morearcotic: itedium of exchangetore of value. The governments of Asia in general do cotthe use of opium with the same abhorrence that Westerndo. One official Southeast Asian view of production and traffic in narcotics was voiced by the Burmese government to the UN Opium Conference3 vhen it commented as followsroposed protocol to limit and regulate the cultivation of the poppy plant: "In the Shan State and the Kachinhe hill tribes find it an .
economic necessity to cultivate poppy for their ownavorable balance in their barter trade in which they have been traditionally engaged from time immemorial. The prohibition of poppy cultivation in these areas has all alongifficult problem, as poppyash crop in theseecently the Chief Minister of Malaya, Tengku Abdul Rahman, calledeturn to the prewar system of registering known addicts and permitting them certain prescribed amounts of opium- One of the reasons advanced by the Chief Minister for the legalization of opium smoking was that revenues of0 yearly would accrue to the government. It should be noted, however, that the proposal of the Chief Minister was greetedtorm of criticism. 2/
Addiction to narcotics in the Near East and in parts of the Far East is extensive, and, because trade in narcotics generally is officially prohibited, therearge and lucrative illicit trade. As an illustration of the profits involved in this -trade, it is estimated that, in the Malayan area,opulation of lessillion, thereo0 opium smokers and anyearly consumption of illicit opium ofons. The wholesale price for this quantity of raw opium amounts toillion. 3/ The price paid to the producers, however, amounted to only aboutillion. (Seeor prices paid to opium producers.) The rest accrued to the opium "syndicates" and "runners" and to government officials.
Many complex motivations, therefore, encourage, condone,the production and trade of narcotics in the Near Eastthe Far East. In order to appraise the probableCommunist China in this trade, it is necessary to determineas data permit the amount of illicit narcoticsprincipal markets by the several suppliers. Thisto place in perspective the extent of the probableof Communist China5 with that of the other Accordingly, this memorandum presents available.-
on production and illicit traffic for each of the major markets.
For serially numbered source references, see* P.elow.
b
l
II. lavolvecent In the Illicit Op tin Trade of the Free World.
There are numerous reports both from intelligence sources and -from the popular press stating that Communist China is officially and substantially Involved in the international illicit opium trade. Uj From an examination and evaluation of these reports andurvey of the Southeast Asian and other world opium markets it would appear that the majority of these reports have little factual basis.
There are, indeed, indications that opiun is not being produced on an extensive scale in Communist China. These indications are as follows:
Coamunlst China has apparently waged an intensive campaign against opium production, trade, anderies of articles appearing in Chinese Communistand magazines (including those in opium-growing areas) has detailed the progress of thi* campaign.
A complete lack of reliable reports on extensive production of opium in Coenamist China.
Reports that other Bloc countries of the Soviet Bloc have been buying opium from the Free World,indicating that Communist China hue inadequate production to supply such markets. 6/
Although Communist China has apparently been successful inopium production and trade, it is reported that smallopium poppies are still being grown in Yunnan along the In these areas the Kacheo, Wa, and Lisu ethnic groupsboth sides of the rather poorly defined border. 7/ Amongseveral tribes engage In the growing of opium popples asoccupation. In suchherefore, opium poppleson the Chinese Communist as well as on the Burmese side of In Burma the authorities have either explicitly orthe growing of opium poppies by these groups on theit would work undue hardships to ban this major cash croptribes could be persuaded to grow other cash crops. 8/ over these tribes on the Burmese side, and perhaps onCoamunlst side as well, is nominal. It is reported thatCommunists attempted to ban opium production, they met with
resistance from Chinese Kachen tribes that they permitted thisto continue. 2/
There appears to bo no precise way to measure the quantities of opium which cove from Yunnan to Burma. There are, however, several indications that such amounts arc small. 0 ethnic study of the area it is known that the majority of thetribal groups mentioned above are physically located in Burma rather than in Communist Furthermore, it ia reliably reported that the bulk of opium exported from Burma is actually of Burmese
The identity of the Yunnan opium so reported becomes lostit ia intermingled with Burmese opium. The Singapore Central Barcotics Intelligence Bureau, however, reports whenever possible the suspected origin or source of supply of seized narcotics, and5 aboutercent of its total seizures of raw opium wore classified as "Yunnan" The Singapore authorities state that the classificationpium is used to designate opium received through Thailand and probably consists of opium produced in Burma, Yunnan, Thailand, and They state, however, that they have no evidence that this opium is produced incountries. Jj*/
If, however, the opium termed "Yunnan" opium by the Singapore authorities and imported at an estimated annual rate ofons was in fact produced totally in Yunnan, the Chinese tribes would receive0 for the entire exportthe price of Burmese and Yunnan opium is reported toon at the producer level. (See) In fact, the total amount received by the producers of the Burmese export crop would not exceedillion. If the extreme assumption is made thatercent of Burmesewas of Yunnan origin, possible foreign exchange earnings by the Chinese tribes from such sales of opium5 would not
The lucrative profits in the illicit traffic of opium and it* derivatives are earned not by the opium producers but by the various processors and Especially profitable is the marketing
In earlier years this opium was classified as "Thailand" opium-This classification ia, of course, us misleading as the classification
"Yunnan" opium. ** P.elow.
*** The relative earnings of producers and middlemen are given in HI, below.
of morphine andAn examination'of narcotics markets in Southeast Asia, Malaya, Kacao, and Hong Kong failed to identify any official Chinese Communist involvement. On the contrary,evidence exists that this market is dominated by nou-Communiet groups.
Some idea of the possible Involvement of Communist China both in the adjacent Southeast Asian and in other world markets can be obtained from the5 Report of the UH Commission on/ otalpium seizures is listed by suspected country of origin in thie report, and in only one case was Coemunlet China reported as the country of origin of the drug. The reporting country was the US. The seized drug, heroin, was less than 3of total US opium seliures reported, and the casehipment from Hong Kong. Hong Kong authorities, however, as recently as the springtated that they have no evidence that opium or opium derivatives of Chinese Communist origin enter Hong
The Chinese are the racial group in Southeast Asia most addicted to the use of opium and most heavily involved in the distribution of opium. It is reasonable to assume that among the Chinese involved In theumber are Communists or Communist sympathizers. Chinese Communist intelligence and political agents may also engage in andperhaps even in groupefforts in the lucrative opium trade in order to obtain funds to finance Communist activities. It la reported that Communist groups peripheral to Communist China engage in the trade, and their activity may furnish indications of the possible ways in which the Chinese Communists may be involved. For example, one of the reasons given for the recent raids by the South Vietnamese government on opium dens was that theyource of funds for agenta from North It is also reportedocal Japaneee Communist Party group sold opium derivatives in thes to finance Party However, Communist China's official participationystematic way in such activities as these, although probable, does not appear to be appreciable.
It is thus concluded that Ccenunist China la not involved in an extensive export of opium or opium derivatives to the countrlea of the Free World. Communist China, furthermore, does not engageignificant extent in the lucrative opium trade in tbe Free World. The principal source6 of opium and derivatives for Illicit Free World markets are described in the following sections.
T
III. Opium-Producing Areas and Opium Markets in the Far East.
It is believed that Communist China probably is involved onlyery minor extent in the illicit opium traffic in the Far East (see II, above). There are, on the other hand, manythat non-Communists are substantially involved in this trade Some of the major aspects of this involvement are discussed below.
urma.
the
There ore no official estimates of the annual production of opium In Burma. Although tribes of the Akha, Kachen, Lahu, Lisu, Shan, and Wa groups traditionally produce opium, the number of people involved in the production of opium and the acreage planted to opium poppies is not known. The government of Burma freely admits that substantial quantities of opium are produced in. the areas where these groups live but has oever release4_an_estimate of annual pro-
duct ion.
majority of opium exported iron bUrffia originates in tne bt an
.From available information on domestic consumption andit is possible to estimate tentatively that the annualof opium in Burma is atons.
It Is estimated0 opium addicts, concentrated principally In the producing areas and in the Bhamo and Myltkylna districts, consumeons of
Opium is exported from Burma to overseas markets by sea* from Rangoon and, after traveling through Thailand, from Bangkok. It is estimated thatons were exported from Rangoon This estimate is based on the following considerations: (a) it isthatons were exported to Singapore and Malaya5 from Burma (seend (b) Rangoonfrincipal supply ports for the Hong Kong and Macao* The opium traffic .from Burma to Thailand is much larger than the shipments from Rangoon and is estimated to amount to approximately
* This estimate is derived by assuming that tbeurmese addict is similar to thathaiear. ** See* For the derivation of this estimate, see Appendix A.
The collection of opium from the producers is in theofficials and the ruling class of the Shan State, and thethe Wa and Kengtung States particularly are Opium is then carried by caravans ofwho are called "Haws." The Haws are refugees fromwas estimated inhatfwere scattered in small groups in tribal villages Burmese army officials reportedly arethis trade both as armed escorts for the protection of theand also as independent traders. 2k/ f
It is probable that large stocks of opium are hoarded by the producers. One possible indication of such stocks is furnished by the offerhai firm toons of The source of this quantity of opium has.never been satisfactorilyby the firm. The most logical assumption, however, is that large quantities have been hoarded in the Burmese producing areas.
The value of the exports of opium from Burma togiven in Table
Table 1
Value of Estimated Exports of Opium from Burma to Thailand at Various Stages of Transport5
Value in Wholesale Prices b/
Stage ofUS $)
Kengtung,Hai,Thailand
stimated to beetric tons, b.
In addition to0 received by the producers for the opium moving to Thailand, the producers also vould0 for theons exported from Rangoon. Assumingotal0 mere is earned by supplying opium to consumers in the domestic markets (part of the domestic supply is consumed by thehe Burmese tribal groups probably vould not earn more thanillion annually from the sale of opium.
The profits to the Burmese groups involved in thetrade vould be considerably more than the amounts realized by the producers. Promt appears thatons of opium at the Thai-Burmese border is valued If It is assumed that opium at Rangoon is valued at tho same price as at Bangkok, theons reported by this route vouldaluehe middlemen, bribed government officials, and runners thus vould earn7 million for their services (this sum is the difference between8 million paid the producers andeceived by the Burmese middlemen).
2. Thailand.
Opium is smuggled from Burma to the following places inan Chieng Dao,-Chieng Ral, -Chieng Mai, Muang Fang, Ban Mae Suai, and Muang Lampang. The main collection points are Chieng Rai, Chieng Mai, and Muang Lampang, from which points it moves by rail or by road to Bangkok. Opium from Laos in Indochina moves from Luang Prabang to Han and There ismall export from other towns in tbe producing areas of Laos to Thai towns across the
Small quantities of opium are also produced in Thailand. The main regions of opium cultivation are along the side of the Tenasserlm Mountain Range on the Thai-Burmese border in the northwest, in the area west of Tok, in Mae Hong Son, and north of Chieng Mai from Chieng Rai to Kan. There are00 people of the Meo, Mussoisu, and Yao tribes who are the principal cultivators of opium It is believed that production of raw opium may amount to approximately
The annual consumption of opium in Thailand is estimated atons, of whichons are supplied by. legal channels and the re-mainingons by illicit channeia. gg/
There are approximatelyhinese "opium kings" inhese dealersonsiderable part of the trade. Some of these dealers had previously operated opium syndicates in Malaya. I1 .they-vere banished and vent to.-Thailand uhere they resumed theiroccupation.
From Tablend with an addition for the transit Laotian and Thai opium, it can he estimated that the profits to the Thaisin the wholesale opium trade would be aboutillion annually. Profits are also made from morphine -and heroin, which are produced int is believed that there are two refineries in Thailand near the Thai-Burmese border, one at Chiengnd one probably in/ Another refinery was reported under construction in6 at Chieng Dao. Ul/ The value and volume of the trade in morphine and its derivatives, however, cannot be estimated without further information. The priceound of morphine at theis approximately equal to the price of the raw opium used to manufacture itmall processing fee. Raw opium at the refinery points is thereforeound, aodound, jig/ Thisatioittle morend reflects, the re- ationship between the input of raw opium and the output of morphine. As with raw opium, the profits in the morphine trade go to therather than to the
* P. 9,
Thereew reports indicating that Comnunists orsympathizers are involved in the illicit opium trade of/ It is apparent, however, that they do not dominate the trade.; Available information indicates that Communistis relatively minor.
The Thais purchase opium at the border areas lor gold. The value of such purchases is .aboutillion annually.* Ofhai imports of goldillion, it is estimated thato1 millionillion) was illegallykh/ It is reportedonsiderable part of thereexported gold was used to pay for the import of opium. Assuming thatercent of the gold illegally reexported from Thailand was expended for this purpose, Thai gold expenditures for Imported opium5 could have amounted to5 millionillion. Thus the estimate ofillion as the value of Thai purchases of Burmese, Thai, and Laotian opium is reasonably consistent with the possible level of payments.
3- Indochina.
Laoshe producing area for opium inhe main producers are the Meo, principally in the provinces of Xieng Khouang, Houa Phan (Samnd Luang Prabang. The Xao in Ham Tha Province and the Kha of northwest Laos alsomall part of the total output. Production varies greatly with theevere rainy season will cut down the output as much asercent. Production in an average year is probablyons of raw opium.
The average rate of production in Laos apparently has been little affected by the occupation of part of the important producing area of Houa Phan by the Communist Pathet/ The Patbet Lao and their Viet Minh overlords do not attempt to control opiumin areas of Laos occupied by them but instead purchase opium from the tribes with silver at more favorable prices than the latter can obtain elsewhere. The Pathet Lao and the Viet Minh have been very careful in dealing with the Meo tribes, whose fighting qualities
* This estimate is composed of the following elements: million for the purchase ofons of opium from Burmaborder0 for the purchase ofons of opiumproducers (paid in0 for the purchase ofof Laotian
they respect. It is noteworthy that the Pathet Lao authorities share with the Thais andeluctance to interfere with the traditional opium production and traffic engaged in by these mountain tribes.
Estimates of the number of opium addicts and of theof illicit raw opium in Indochina5 are given in Table 2.
Table 2
Estimated Number of Opium Addicts and Consumption of Illicit Raw Opium
in5
IllicitofTons)
South
North
a^ 0 of these addictsopium "dis-
oses from government stocksillicit opium.
Annual consumption of opium in South Vietnam is estimated by Mr. Traneputy Director of the South Vietnamese Police and Surete, at abouto UQear, klj Total number of addicts is estimatedf whomre supplied by illicit opium. The0 are registered addicts, who receive legal "disintoxication" doses. Prom these figures it is estimated that illicit consumption of opium may amount to aboutear.
No statistics are available of annual consumption of opiua
in Worth Vietnam, Cambodia, and Laos.
]about half the opiunT produced is consumed This estimate of consumption is probably not an estimate
of personal consumption by the Lao (as they numberan estimate of the amount reUined by the Lao after the The larger part of the opium retained after thewas purchased by private opium dealers and resold inThailand, Burma, and Communist China. maller part ofopium was actually consumed in Laos. Assuming thatLaos, and Cambodiaattern of addiction andsimilar to South Vietnam, annual consumption could amount68
Thus total consumption in Indochina could amountear. Asons of opium are produced annually ir. Laos, approximatelyons of Laotian opium are available for hoarding and for export to other countries.
Opium is sold quite openly in Laos.
I recently reported: "Opi
. urn can oe purchased In village marxets in Sac Beua /Houauang Prabang, and Xleng Khouang provinces, as well as in tho northwest. It can be bought right in the town of Xiengeadily available source of supply at competitive pricoe, opium smuggling from Laoselatively large-scale operation. Airplanes and trucks, both civilian and military, are used extensively for the clandestineof opium from the Laos collection centers to the markets.
South Vietnam is currently supplied principallyLaos, by plane and truck. The center for import isLop district of Saigon. go/
* Aboveh parallel the only customs offices are along the Mokong Riverat Ban Bouol Sal, Pak Lay, Sanakham, Vientiane, and Pak Sane.
According to the South Vietnam police, opium constitutes an important source of revenue for Communist agents in South Vietnam. It. Is believedart of the illicit supply of opium may be smuggled from Haiphong and other ports in North Vietnam. Theend of the opium trade in South Vietnam is reportedly in the hands of Chinese who since the recent introduction of stricter measures against illicit opium traffic probably are susceptible to blackmail by Ccenucist agents. Although there is no evidence at hand that thie Is takingevelopment of this type is not Impossible. The determination of whether the Communist Northare involved in the South Vietnamese opium ithin the scope of this memorandum,i
/CommeritTng" on the
crema activity in late iys^ of the law enforcement authorities in raiding and closing clandestine opium dens in the Cha Ion area of Saigon, he said: "it Is believed probable that two factors contribute to this increase In anti-narcotics activity, first the strong reformist views of prime Minister Ngo Wnh Diem andesire to eliminate sources of revenue for the BInh Xuyen rebels, clandestine Vietainh agents, and other anti-governmentn the other hand, quantities of opium move from Laos across the Tonkin frontier into North This traffic Is not covert; smuggling, since the Viet Minh control the border and do notwith the traffic. The quantities involved, however, are believed to be small.
and Malaya.
of the principal markets for Southeast Asian opiumare Singapore and Malaya. The sources of supply of raw opium seized In Singapore by country of origin,^5 are given In 0 percent of the seizures of opium inby weight were produced in Iran andercent in Southeast Asia.
market in Singapore and Malaya is estimated by theCentral Narcotics Intelligence Bureau to consumeons of illicit opium/ The total number of opiua addicts in Singapore and Malaya Is estimated to. There Is no domestic production of raw opium in either Singapore or Malaya. Assuming that the data, on seizures of opium of Singapore origin are closely
* ollows on
correlated with estimates of total illicit consumption and that the data concerning Singapore may be applied as well to Malaya, the sources of supply and origin of raw opium for Singapore'and Malaya are estimated to be as given in The estimates indicated
Table 3
Sources of Supply of Raw Opium Seized in Singapore a/ by Country of
Seized (Pounds)
Total Seizures
of Origin
b/
12
6
This term is used by local traffickers to indicate opium received through Thailand and probably consists of illicit supplies originating In the adjoining areas of the Wa States and Karitung State in Burma, Laos, and North Thailand as well as in Yunnan.
inre consistent with the known export potential of the above countries. These tables Indicate that, despite the proximity of sources of supply of raw opium in the. Burma -Thailand -Yunnan-Laos region, the major part of the illicit supply of opium5 came from Iran. Singapore officials believe that thefor Iranian opium rather than for other typeshe result of the following two factors: (a) Iranian opium is easily imported
* ollows on
-
Table 4
Sources of Supply of ito,QpllIB for Singapore andCountry of
Amount (Metric Tons)
Country of 5
Yunnan
'
This tern is used by local traffickers to indicate opium received through Thailand and probably consists of illicit supplies originating In the adjoining areas of the Wa States and Kantung State in Burma, Laos, and North Thailand as veil as in Yunnan.
Iranian opium moves into the Malayan market principally by sea. The following porta on the Persian Gulf are active, outlet centers for Iranian opium: Bahrein, Dibal, and Aden. Additional Persian Gulf ports which are outlets for Illicit opium arc Hena-Al-Ahmadi (nearao (at the mouth of theas Tanurah (nearbadan, Kuwait, Basra, Khorramshahr, and Dammam (near
There are several reports which furnish details of theof illicit opium from Iran to the outlet ports on the Persian Gulf. One report statesmall syndicate ofrabs trades in opiumery large scale from Dibal to Aden, East Africa, and The opium is procured from Iran and shipped to-Aden concealed Tn cargo where it is transferred to oceangoing vessels.
Another report states that fairly large quantities of opium are being smuggled, into Basra, Iraq, from Iran via Muzaira andhe source of this report states that Iraqi police share in the profits. It is also reported that the town of Qasbat, Iran, is the center for smuggling opium into Kuwait. Small ships of Iranian or Kuwaiti ownership are used to carry the opium from Qasbat to Kuwait.
. i Opium smugglers have also used commercial aircraft to move opium from Iran to the Malayan area. )
how that, next to Iranian oplum^ the most common type Imported Into the Malayan area is "Yunnan"onsiderable information exists concerning the routes used to move this type of opium from Thailand to the Malayan area. The principal route is by sea from Bangkok. Singapore Narcotics Bulletinor the second quarter5 reports that nearly every ship arriving from Bangkok carries illicit narcotics drugs, usually opium.
It is probable that considerable quantities of opium move across the Thai-Malayan Opium is shipped by rail from Northern Thailand to Haadyai, which apparently is the smuggling center of South Thailand. From Haadyai it moves out to the ports of Songkhla, Pattanl, and Norathlwat and across the border to Malaya. The facilities of commercial airlines have also been used to smuggle opium from Bangkok to Singapore. The transport of opium by airplane, however, appears tomall-scale and intermittently used means of smuggling. Opium from Burma is transported to Malaya principally from the port of Rangoon.
The estimated value of Imports of opium into Malaya and Singapore, by country of origin or by source, is given in* The Importance to the Malayan economy of such imports con easily be seen by an examination ofnd trade returns. pium was the sixth largest Import into Singapore and
For definition of "Yunnan" opium,, above. ** ollows on
Table 5
Estimated Value of Imports of Opium into Singapore andCountry of Origin or by Source
of Origin or Source
Iran
Yunnan cj
India
Burma
Unknown
Total
Estimated Importt (Metric Tons)
O2 6
per Metric)
. b/ Value
[gjy
,0
Insurance, and freight.
the discussion of "Yunnan1
opium, see p.bove.
The values inave been expressed. basis; however, the cost of importing opium into Malaya is very high. Bribes alone are reported to account for almost half of the delivered costs.pium could be purchased in Bangkokon, or approximatelyercent of the price in Malaya. Assuming that this percentage is-representative, theulue of exports of opium to Singapore and Malaya, by country of origin, can beas given in*
Opium also moves to Singapore for transshipment to other world markets. Seizure reports indicate that opium from Singapore
Free on board.
ollows on
-
Tabic 6
Estimated". a/ Value of Exports of Opium to Singapore and Malaya, by Country of Origin b/
us $
. Value
Origin orOpium
Yunnan
Free on board. b-
c. For discussion of "Yunnun" opium, seeabove.
moved to Indonesia, to tho UK, and to The amount of opium transshipped annually from Singapore and Malaya is not known but is probably smali in comparison with theon consumption in the Malayan area.
5. Hong Kong and Macao.
Seizure reports indicate that Thailand is the principal source of opium and opium derivatlvea Imported into Bong Kong and that Burma and India are secondary Macao's sources are reported to be similar to those of Hong Kong.fio/ In both cities there are re-flnery facilities. acao"had at least four
here existed ib Hong AOng elaborate cianaeBtine MrraracTurTng activities. JO/ Unlike the rest of Southeast Asia, the Hong Kong and Macao markets are not essentially opium-smoking markets. "Smoking" heroin or heroin "red-boll pills" appear to be preferred by the native addict.
-
The annual opium consumption of Macao and Hong Kong,on the basis0 addicts, apparently vould not exceed tbe equivalent ofons of rav opiun. Probably larger thanmport for domestic consumption is the import for transshipment. Seizure reports indicate that the US and Japan Imported heroin from
Hong Kong. Jl/from Bong
Kong also reaches Other
Seizure reports probablyery rough indication of the amount of opium and opium derivatives imported into Bong Kong. Hong Kocg seizures5 amounted to aboutercent of Malayan and Singapore It vould be expected, however, that Hong Kong authorities vouldbo considerably more effective in preventing opium smuggling, since they do not have toong, thinly settled coastline, and domestic conditions are more settled. Annual Hong Kocg Imports, accordingly, might be eatimated to amount to the equivalent of fromoons of opiun.
Macao isonsiderably less important market than Hong Kong, and much of its opium export goes through Hong Kong and le included in the estimate of Hong Kong imports. Perhaps the equivalent ofoons of opium is also imported by Macao for consumption and export to markets other than Hong Kong.
The great majority of the Hong Kong seizures report that Thailand is the origin of the opium and opium derivatives. This, obviously, is not the actual origin of the opium but merely the outlet country. The Hong Kong imports probably originate mainly in Burma, with smaller amounts originating in Thailand, Laos, and Yunnan.
Total iaporte into Macao and Hong Kong are thereforeto be about the equivalent of fromo ko tons of opium and reexports to be fromoons.
IV. Production of Illicit Opium and Principal Markets in the Hear Lasl and South Asia.
Apart from the Far East there la only one other area where an extremely large market for opium exists. The problesj of opium addiction ia very serious in the Hear East and in South Asia. the worst problem exists in Iran, whereccordingress statement made by the Minister of Health, there
opium addicts. JJ/ He also stated that in the pastears total production of opium had variedons annually, of which an annual average of onlyons was legally exported. Other producing countries in this region from which opium is exported clandestinely are Turkey, Afghanistan, India, and Pakistan. Tj*/
Opium from the Par East is clearly not an Important factor in this area. Production facilities for the manufacture of morphine and heroin5 existed In practically all the countries mentioned above. In addition, refineries probably were operating in transit zones. In this connection, the exports from Lebanon to the US are of some significance.
It Is estimated that, production of opiumons, it is estimated
ons might have been clandestinely exported from the Seizureindicate that Iraniansubstantial quantity van exported to Singapore and Malaya.opium also vaa clandestinely exported to India,the UK, and the Netherlands. Reports indicate that,complete ban on production of opium in Iranproduction still
The Iranian Minister of Public Health hasaily consumption of opium in Iran ofon. This estimate would appear to be extremely low in view of his own estimateillion addicts, since it wouldaily consumption per addict less than half that of the Southeast Asian addicts. An annual opium consumption6 ofons would appear likely in view of the number of addicts and in view of what is known about production and exports.
, production of opium in Indiahis production was under relatively firm control of the Central Government. It is estimated that,, opium amounting to approximatelyons was smuggled from Madras to Singapore and Seizure data Indicate5 exports to Singapore and Kalaya were aboutons, or slightly less than
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the- Turkey.
* "UCltthis area'*g' tho Netherlanos, ^
The Central Statistical Office of Turkey hu estimated that UiOOO hectares were planted to opium poppy Production5 is estimatedons compared with the productionuons. It is estimated that fromoons escaped the governmental official buying program. ubstantial portion ofoons presumably could be illicitly exported. Seizure data indicate that Turkish opium was exported to Egypt and the
4. Pakistan.
Opium is grown in the Jadun area of the Northwest Frontier Province of Pakistan under governmental 2 the government collected approximatelyons, principally from this area. Current production and collection probably have increased2 as the government planned to increase domestic production toercent of its domestic legal requirements (legal requirements2 were estimated atons). There is reported illicitof opium and Indian hemp in the Northwest Frontier Province and tribal areas and in Baluchistan, Chitrol, and Swat. Although Pakistan is believed toet importer of illicit opium, there arethat some illicit opium Is exported from Vest Pakistan to other areas.
5. Afghanistan.
Estimates of average annual production of opium in Afghanistan cannot be made with any great degree of precision.S botanist visited the Jurim and Kishlm districts of Badakshan Province in4 and estimated total Afghan production at It is reported that production5 probably exceeded thateport of5 states that the Afghan governmentUN permission to sell on the legal world market aboutons This request suggests that production5 probably was in excess ofons. It is believed, however, that theons requested were for purposes of bargaining and probably were for double the amount of current production. It is also believed that part of Afghan production is exported
* See Tablebove.
V. Markets for Illicit Opium ia Other Areas of the World.
The markets for illicit opium in the other areas of the world are small compared with the markets of the Far East, the Near East, and South Asia. The UN Commission on Narcotic Drugs stated in its5 report that opium traffic in Europe and Africa ishe North American market apparently isprincipally with/opium from Mexico andn South America, opium traffic ia relatively unimportant.
VI. Conclusions.
The international Illicit opium trade is conducted in an atmosphere of 6ecrecy and intrigue. This secrecy, as well as the fact that the trade is carried on by many entrepreneurs, militates against the making of precise estimates. Despite theseit is possible to obtain sufficient reliable information to characterize the possible involvement of Cwnmunist China in the opium situation in Southeast Asia and in other world markets as follows:
Theremall export of raw opium produced by minority tribes in Yunnan Province, Communist China, to Burma. The earnings to the producers "from this export would not0 annually.
Communist China probably permits this export for political purposesthat is, it does not want toan open break with the unruly tribal producers by Interfering with an important traditional economic aod social' pursuit.
The major opium producers In Southeast Asia are Burma and Laos. The production of these two countries coupled with Thai production supplies the large domestic markets andizable export potential. The Burmese, Thai, and Laotian governments permit thisfor political and economic considerations similar to those attributed to Communist China-
k. Opium exported from Southeast Asia moves principally through Bangkok, Thailand, and,esser extent, through Rangoon and Burma, supplying significant quantities of opium
to Malaya, Hong Kong, Macao, and Indonesia. Singapore, Hong Kong, and Macao are important intermediate transit points for the supply of opiua to other world markets. Refinery facilities to service the markets for opium derivatives exist in Thailand, Macao, Hong Koog, and in the major consuming areas. There is no evidence indicating that Communist China exports opiua Spasmodic efforts of the affected governments to suppress this trade are nullified by the tolerant attitude of the Southeast Asian people toward opium addiction; by the venality of poorly paid government officials; snd by the realization that, if opium does not move through their country, it will move through an adjoining country.
5- The Southeast Asian producersery small return for their opium crop. Opium produced for thetrade is apparently in surplus supply. This surplus may be the result of the virtual disappearance of the former large Chinese market since the generallyopium-addletion-auppreesion campaign of the Chlnesa government on the China mainland.
6. The lucrative profits in the opium traffic are earned by many middlemen and by government officials. Available evidence suggests that these dealers andofficials are engaged in this trade for personal gain. Members of local Communi at-parties in the Far East and in Southeast Asia may be involved in the trade In order to finance Communist activities, but there la no available evidence Indicating that such involvement is substantial or that it is systematically directed by the Chinese The trade appears to be dominated by nor.-Com -eunlsts.
7- North Vietnamese and North Korean agents may be involved in the opium traffic in South Vietnam and South Korea. Because Comrounlnt China is not patently andinvolved In this trade, however, this aspect haa not been developed in this memorandum.
6. In the Near East and in South Asian countries, the production and illicit consumption of opium and opium
derivatives probably are even greater than in southeast asia. the countries in these regions are also important suppliers to the world illicit markets. it la estimated that iran, alone,ons to international markets seizure reports indicate that turkish opium is an important factor in the supply of middle east countries. morphine- and heroin-processingand trade are under the control of non-communists in this general region. there doeb not appear to be any evidence of chinese communist influence in this trade.
9- compared with the near east and southeast asia, the remaining illicit markets are relatively unimportant. opium traffic in europe and africa is not important. seizure reports indicate that the north american market is principally supplied with opium which either originated in mexico or lebanon or was transshipped from these one us seizure report indicates that communist china was the suspected originhipment ofheroin which was transshipped from bong kong. bong kong authorities and us treasury representatives in hong kong state, however, that they have no evidence thatopium or derivatives from communist china enter hong kong. with this possible exception, seizure reports indicate that the world illicit markets are supplied with contraband opium and derivatives produced in free world countries, and intelligence reports indicate that the world opium trade is in the hands of non-communists.
1
ftTHODOLOflY
The general methodology used In this memorandum is asurvey, based on intelligence and seizure reports, was Bade of the origin of opiun which moves to the principalough calculation was made of the amounts of opium required by the Illicit markets;imilar survey was made of the groups involved in the marketing of opium. esult of these throe steps, it was determined that adequate supplies of illicit opium produced in the Free World moved to the illicit markets under the direction of Free World contraband traders. Substantialby Communist China in this trade was therefore ruled out.
The secrecy of the international illicit opium trade made it impossible to reconcile all the elements of the various estimates. For example, one of the key estimates Indicates that, on the average,ons of opium are exported every year from Laos, Thailand, and Burma. abulation of imports by various markets with on addition for total seizuresons of this opium unaccounted for. This discrepancy, however, is not serious since it does not affect the mainof the memorandum. Errors could have resulted from one or more of the following factors:
heons of opium exports (opium and derivativesderivatives were converted to their raw opium equivalent) were broken downon transit movement through Thailandton export through Rangoon. The former estimate, based on an estimate that seizures probably representercent of total transit movement, could be in error. The latter estimate appears to be relatively firm.
2. The assumption was made that the origin of opium imported into Malaya le Identical with the origin of opium imported into Singapore. This assumption may be in error, however, because opium from Thailand could move more easily into the Malayan Federation than could opium from Iran, which is the principal supplier for Singapore.
The opium traffic from Burma to Thailand is estimated to amount to approximatelyons. This estimate is based on the following considerations:
transit traffic through Thailand is estimated
toons.
ons were available for export from
Thai production.
oons were available for export
through Thailand from Laotian production.
remainder of the transit opium, approximately $0
tons, entered Thailand through Burma and wasprincipally in Burma. Opium from Yunnanthe Burmese production.
Thereonsiderable number of unreliable reports alleging that Communist China is substantially Involved in the Illicitof opium and derivatives to the Free World. Each of thesehad to be evaluated. This evaluation required extensive research into the opium situation of the entire world In order to determine the actual sources of illicit narcotics.
D
appendix b
gaps ni dieelligekce
The most serious gnp in intelligence on the illicit opium trade is tho lack of an independent estimate for the production of opium in Burma. It is possible that data could be obtained from local
Burmese officials which vould allow an estimate to be made based on acreage under cultivation or number of people growing opium popples
rather than by the method used in this memorandum.
There Iseficiency of reliable information fromChina on the production of opium. It haB been assumed that this deficiency indicates that production of opium In Communist China is extremely limited, but information obtained from systematic interrogation of refugees and repatriates on this subject mighta more accurate appraisal. More reports on the extent of the production of opium by the Chinese minority ethnic groups probably could be obtained from Chinese who have fled froa Yunnan Into Burma and Thailand.
Original document.
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