Statement of Justification: Burma

Burma failed demonstrably to make sufficient efforts during the last 12 months to meet its obligations under international counternarcotics agreements and the counternarcotics requirements set forth in section 489(a)(1) of the Foreign Assistance Act of 1961, as amended.

Burma remains the world’s second largest producer of illicit opium and is among the world’s largest producers and traffickers of amphetamine-type stimulants (ATS). Production and trafficking of methamphetamine from Burma continues to be one of the most serious problems facing Southeast Asia. Drug gangs operate freely along its borders with China and Thailand, producing several hundred million methamphetamine tablets by using precursors imported from countries in the region.

Although Burma banned the import, sale, and use of 25 precursor chemicals and related substances used in the production of methamphetamine, the efforts of the Government of Burma to combat the production and trafficking of methamphetamine have been unsatisfactory. Even as methamphetamine production and trafficking have exploded in recent years, seizures continue to be disappointing, and the Government of Burma destroyed only one methamphetamine lab in 2004.

Burma also failed to restrict involvement in illicit narcotics by the principal drug-producing and drug-trafficking organization in Burma, the United Wa State Army (UWSA). In particular, Burma has taken no action in response to the indictments this year by the U.S. Justice Department against eight leaders of the UWSA on narcotics trafficking charges. Major UWSA traffickers continue to operate with apparent impunity in areas outside government control, and UWSA involvement in methamphetamine production and trafficking remains a serious concern.

Implementation of money laundering legislation, enacted in 2002, remained weak. Proceeds from narcotics trafficking are easily integrated into the financial system. Burma is still on the Financial Action Task Force’s (FATF) list of "Non-cooperative Countries" for, among other concerns, links of private banks to narcotics traffickers. Finally, Burma has taken no significant steps to address the problem of corruption among its law enforcement, military and other public officials.

The factors cited above preclude Burma’s certification. Burma’s counternarcotics performance over the past 12 months, however, reflects some positive steps. Poppy cultivation declined 34 percent and opium production dropped 40 percent. The Government closed two banks, Asia Wealth Bank and Mayflower Bank, and took over a third, Myanmar Universal Bank – all identified with money laundering activities. Additionally, the Government of Burma did show a willingness to cooperate internationally on certain narcotics trafficking issues, such as information-sharing and joint investigations.