The Politics of Heroin in Southeast Asia

Secret War in Burma: The KMT


While the work of French clandestine services in Indochina enabled the opium trade to survive a government repression campaign, some CIA activities in Burma helped transform the Shan States from a relatively minor poppycultivating area into the largest opium-growing region in the world. The precipitous collapse of the Nationalist Chinese (Kuomintang, or KMT) government in 1949 convinced the Truman administration that it had to stem "the southward flow of communism" into Southeast Asia. In 1950 the Defense Department extended military aid to the French in Indochina. In that same year, the CIA began regrouping those remnants of the defeated Kuomintang army in the Burmese Shan States for a projected invasion of southern China. Although the KMT army was to fail in its military operations, it succeeded in monopolizing and expanding the Shan States' opium trade.

The KMT shipped bountiful harvests to northern Thailand, where they were sold to General Phao Sriyanonda of the Thai police, a CIA client. The CIA had promoted the Phao-KMT partnership in order to provide a secure rear area for the KMT, but this alliance soon became a critical factor in the growth of Southeast Asia's narcotics traffic.

With CIA support, the KMT remained in Burma until 1961, when a Burmese army offensive drove them into Laos and Thailand. By this time, however, the Kuomintang had already used their control over the tribal populations to expand Shan State opium production by almost 1,000 percent-from less than 40 tons after World War 11 to an estimated three hundred to four hundred tons by 1962. (130) From bases in northern Thailand the KMT have continued to send huge mule caravans into the Shan States to bring out the opium harvest. Today, over twenty years after the CIA first began supporting KMT troops in the Golden Triangle region, these KMT caravans control almost a third of the world's total illicit opium supply and have a growing share of Southeast Asia's thriving heroin business.(131)

As Mao's revolutionary army pushed into South China in late 1949, Generalissimo Chiang Kai-shek and his Kuomintang regime planned to make craggy Yunnan Province their last bastion. However, the warlord of Yunnan Province, Gen. Lu Han, harbored bitter grievances against Chiang. At the end of World War 11 Lu Han had been ordered to occupy northern Indochina for the Allies while British forces moved into the southern sector. Eager for plunder, Lu Han sent his ragged divisions into Tonkin, where they ravaged the countryside like a plague of locusts. To satiate Lu Han's greed and win his tolerance for the Nationalist movement, Premier Ho Chi Minh organized a "Gold Week" from September 16 to 23, 1945. Viet Minh cadres scoured every village, collecting rings, earrings, and coins from patriotic peasants. When Lu Han stepped off the plane at Hanoi airport on September 18, Ho Chi Minh presented him with a solid gold opium pipe.(132) During Lu Han's absence, Chiang sent two of his divisions to occupy Yunnan. When the Chinese withdrew from Indochina in early June 1946, Chiang ordered Lu Han's best troops to their death on the northern front against the Chinese Communists, reducing the warlord to the status of guarded puppet inside his own fiefdom.(133) (Incidentally, not all of the KMT troops withdrew in early June. The Ninety-third Independent Division delayed its departure from Laos for several weeks to finish collecting the Meo opium harvest. (134))

And so, when the People's Liberation Army entered Yunnan in December 1949, Lu Han armed the population, who drove Chiang's troops out of the cities, and threw the province open to the advancing revolutionary armies.(135) Nationalist Chinese stragglers began crossing into Burma in late 1949, and in January 1950 remnants of the Ninetythird Division, Twenty-sixth Army, and Gen. Li Mi's Eighth Army arrived in Burma. Five thousand of Gen. Li Mi's troops who crossed into Indochina instead of Burma were quickly disarmed by the French and interned on Phu Quoc Island in the Gulf of Thailand until they were repatriated to Taiwan in June 1953.(136)

However, the Burmese army was less successful than the French in dealing with the Chinese. By March 1950 some fifteen hundred KMT troops had crossed the border and were occupying territory between Kengtung City and Tachilek. In June the Burmese army commander for Kengtung State demanded that the KMT either surrender or leave Burma immediately. When Gen. Li Mi refused, the Burmese army launched a drive from Kengtung City, and captured Tachilek in a matter of weeks. Two hundred of Li Mi's troops fled to Laos and were interned, but the remainder retreated to Mong Hsat, about forty miles west of Tachilek and fifteen miles from the Thai border. (137)Since the Burmese army had been tied down for three years in central Burma battling four major rebellions, its Kengtung contingent was too weak to pursue the KMT through the mountains to Mong Hsat But it seemed only a matter of months until the Burmese troops would become available for the final assault on the weakened KMT forces.

At this point the CIA entered the lists on the side of the KMT, drastically altering the balance of power. The Truman administration, ambivalent toward the conflict in Southeast Asia since it took office in 1945, was shocked into action by the sudden collapse of Chiang Kai-shek's Kuomintang regime. All the government agencies scrambled to devise policies "to block further Communist expansion in Asia, (138)and in April 1950 the Joint Chiefs of Staff (JCS) advised the Secretary of Defense that,

"Resolution of the situation facing Southeast Asia would ... be facilitatedif prompt and continuing measures were undertaken to reduce the pressure from Communist China. in this connection, the Joint Chiefs of Staff have noted the evidences of renewed vitality and apparent in creased effectiveness of the Chinese Nationalist forces."(139)

They went on to suggest the implementation of "a program of special covert operations designed to interfere with Communist activities in Southeast Asia..."(140) The exact details of the "special covert operations" planned for Burma were not spelled out in the JCS memo or any of the other Pentagon Papers because it was one of the most heavily classified operations ever undertaken by the CIA: the U.S. ambassador to Burma was not told; top ranking officials in the State Department were kept in the dark; and it was even hidden from the CIA's own deputy director for intelligence. (141)

From what can be gleaned from available documents and the events themselves, it seems that the Truman administration feared that Mao was bent on the conquest of Southeast Asia, and would continually probe at China's southern frontier for an opening for his "invading hordes." Although the Truman administration was confident that Indochina could be held against a frontal assault, there was concern that Burma might be the hole in the antiCommunist dike. Couldn't Mao make an end run through Burma, sweep across Thailand, and attack Indochina from the rear?(142) The apparent solution was to arm the KMT remnants in Burma and use them to make the Burma-China borderlands-from Tibet to Thailand-an impenetrable barrier.

The first signs of direct CIA aid to 'the KMT appeared in early 1951, when Burmese intelligence officers reported that unmarked C-46 and C-47 transport aircraft were making at least five parachute drops a week to KMT forces in Mong Hsat.(143) With its new supplies the KMT underwent a period of vigorous expansion and reorganization. Training bases staffed with instructors flown in from Taiwan were constructed near Mong Hsat, KMT agents scoured the Kokang and Wa states along the Burma-China border for scattered KMT survivors, and Gen. Li Mi's force burgeoned to four thousand men. (144)In April 1950 Li Mi led the bulk of his force up the Salween River to Mong Mao in the Wa States, where they established a base camp near the China border. As more stragglers were rounded up, a new base camp was opened at Mong Yang; soon unmarked C-47s were seen making air drops in the area. When Li Mi recruited three hundred troops from Kokang State under the command of the sawbwa's younger sister, Olive Yang, more arms were again dropped to the KMT camp. (145)

In April 1951 the attempted reconquest of Yunnan began when the 2,000 KMT soldiers of the Yunnan Province Anti-Communist National Salvation Army based at Mong Mao crossed the border into China. Accompanied by CIA advisers and supplied by regular airdrops from unmarked C-47s, KMT troops moved northward in two columns, capturing Kengma without resistance. However, as they advanced north of Kengma, the People's Liberation Army (PLA) counterattacked. The KMT suffered huge casualties, and several of their CIA advisers were killed. (146) Li Mi and his Salvation Army fled back to Burma, after less than a week in China. Undeterred by this crushing defeat, however, the General dispatched his two thousandman contingent at Mong Yang into southern Yunnan; they too were quickly overwhelmed and driven back into Burma. (147)

Rather than abandoning this doomed adventure, the CIA redoubled its efforts. Late in 1951 the KMT reopened the old World War II landing strip at Mong Hsat so that it could handle the large two- and fourengine aircraft flying in directly from Taiwan or Bangkok. (148)In November Li Mi flew off to Taiwan for an extended vacation and returned three months later at the head of a CAT (Civil Air Transport, later Air America) airlift, which flew seven hundred regular KMT soldiers from Taiwan to Mong Hsat. (149)Burmese intelligence reported that the unmarked C-47s began a regular shuttle service, with two flights a week direct from Taiwan. A mysterious Bangkok-based American company named Sea Supply Corporation began forwarding enormous quantities of U.S. arms to Mong Hsat.(150) Burmese Military Intelligence observed that the KMT began sporting brand-new American M- 1 s, .50 caliber machine guns, bazookas, mortars, and antiaircraft artillery. (151)With these lavish supplies the KMT press-ganged eight thousand soldiers from the hardy local hill tribes and soon tripled their forces to twelve thousand men. (152)

While preparing for the Yunnan invasion, the KMT had concentrated their forces in a long, narrow strip of territory parallel to the China border. Since Yunnan's illicit opium production continued until about 1955, the KMT were in a position to monopolize almost all of the province's smuggled exports. The Burmese government reported that, "off and on these KMT guerrillas attacked petty traders plying across the border routes . . . . (153)

After a year-long buildup, Gen. Li Mi launched his final bid to reconquer Yunnan Province. In August 1952, 2,100 KMT troops from Mong Yang invaded China and penetrated about sixty miles before the Chinese army drove them back into Burma.(154) There would be no more invasions. While Gen. Li Mi and his American advisers had not really expected to overrun the vast stretches of Yunnan Province with an army of twelve thousand men, they had been confident that once the KMTset foot in China, the "enslaved masses" would rise up againstMao and flock to Chiang Kai-shek's banner. After three attempts had conspicuously failed to arouse the populace, Gen. Li Mi abandoned the idea of conquering China and resigned himself to holding the line in Burma. The KNIT stopped concentrating their forces in a few bases on the China border and troops spread out to occupy as much territory as possible. With the Burmese army still preoccupied with insurgency in other parts of Burma, the KMT soon became the only effective government in all the Shan States' territories between the Salween River and the China border (Kokang, Wa, and Kengtung states). These territories were also Burma's major opium-producing region, and the shift in KMT tactics allowed them to increase their control over the region's opium traffic. The Burmese government reported:

The KMTs took over the control and administration of circles (districts) and village tracts. They started opening up revenue collection centers, and local people were being subjected to pay gate-fees and ferry fees, in entering their occupied area. Customs duties were also levied on all commodities brought into their territories for trade. The taxes were collected in kind as well as money. . . . By means of threat and coercion, these KMT aggressors forced the local inhabitants to comply with their demands.(155)

The KNIT occupation centralized the marketing structure, using hundreds of petty opium traders, who combed the Shan highlands. The KMT also required that every hill tribe farmer pay an annual opium tax. One American missionary to the Lahu tribesmen of Kengtung State, Rev. Paul Lewis, recalls that the KNIT tax produced a dramatic rise in the amount of opium grown in the highland villages he visited. Tribes had very little choice in the matter, and he can still remember, only too vividly, the agony of the Lahu who were tortured by the KMT for failing to comply with their regulations. (156)Moreover, many Chinese soldiers married Lahu tribeswomen; these marriages reinforced KMT control over the highlands and made it easier for them to secure opium and recruits. Through their personal contact in mountain villages, their powerful army, and their control over the opium-growing regions, the KMT were in an ideal position to force an expansion of the Shan States' opium production when Yunnan's illicit production began to disappear in the early 1950s.

Almost all the KMT opium was sent south to Thailand, either by mule train or aircraft. Soon after their arrival in Burma, the KMT formed a mountain transport unit, recruiting local mule drivers and their animals. (157)Since most of their munitions and supplies were hauled overland from Thailand, the KMT mule caravans found it convenient to haul opium on the outgoing trip from Mong Hsat and soon developed a regular caravan trade with Thailand. Burmese military sources claimed that much of the KMT opium was flown from Mong Hsat in "unmarked" C-47s flying to Thailand and Taiwan. (158) In any case, once the KMT opium left Mong Hsat it was usually shipped to Chiangmai, where a KMT colonel maintained a liaison office with the Nationalist Chinese consulate and with local Thai authorities. Posing as ordinary Chinese merchants, the colonel and his staff used raw opium to pay for the munitions, food, and clothing that arrived from Bangkok at the Chiangmai railhead. Once the materiel was paid for, it was this colonel's responsibility to forward it to Mong Hsat. (159)Usually the KMT dealt with the commander of the Thai police, General Phao, who shipped the opium from Chiangmai to Bangkok for both local consumption and export. (160)

While the three CIA-sponsored invasions of Yunnan at least represented a feebly conceived anti-Communist policy, the next move defied all logic. With what appeared to be CIA support, the KMT began a full-scale invasion of eastern Burma. In late 1952, thousands of KMT mercenaries forded the Salween River and began a well-orchestrated advance. The Burmese government claimed that this was the beginning of an attempt to conquer the entire country. But in March 1953 the Burmese fielded three crack brigades and quickly drove them back across the Salween. (Interestingly, after a skirmish with the KMT at the Wan Hsa La ferry, Burmese soldiers discovered the bodies of three white men who bore no identification other than some personal letters with Washington and New York addresses.) 161

As a result of the invasion, Burma charged the Chinese Nationalist government with unprovoked aggression before the United Nations in March 1953. While the KMT troops had previously been only a bother -a minor distraction in the distant hills-they now posed a serious threat to the survival of the Union of Burma. Despite the United States' best efforts to sidetrack the issue and Taiwan's denial of any responsibility for Gen. Li Mi, the Burmese produced reams of photos, captured documents, and testimony convincing enough to win a vote of censure for Taiwan. By now the issue had become such a source of international embarrassment for the United States that she used her influence to convene a Four-Nation Military Commission (Burma, the United States, Taiwan, and Thailand) on the problem in Bangkok on May 22. Although all four powers agreed to complete KMT withdrawal from Burma after only a month of negotiations, the KMT guerrillas refused to cooperate and talks dragged on through the summer. Only after Burma again took the issue to the United Nations in September did the Taiwan negotiators in Bangkok stop quibbling and agree to the withdrawal of two thousand KMT troops: the evacuees would march to the BurmaThailand border, be trucked to Chiangrai, Thailand, and flown to Taiwan by General Chennault's CAT.

However, the Burmese were suspicious of the arrangements from the very beginning, and when representatives of the Four-Nation Military Commission arrived in northern Thailand to observe the withdrawal, Thai police commander Phao refused to allow the Burmese delegation to accompany the others to the staging areas. (162) The next problem arose when the first batch of fifty soldiers emerged from the jungle carrying a 9' X 15' portrait of Chiang Kai-shek instead of their guns, thus completely discrediting the withdrawal. U.S. Ambassador to Thailand Gen. William Donovan cabled the U.S. Embassy in Taiwan, demanding that the KMT be ordered to bring out their weapons. On November 9 the U.S. ambassador to Taiwan, Karl L. Rankin, replied that if the United States did not ease its pressure Chiang threatened to expose CIA support of the KMT in Burma. Donovan cabled back that the "Chicoms" and Soviets already knew about the CIA operations and kept up his pressure. When the KMT withdrawal was later resumed, the soldiers carried rusting museum pieces as their arms.(163)

The Burmese observers, now allowed into the staging areas, frequently protested that many of the supposed Chinese looked more like Lahus or Shans. Although other observers ridiculed these accusations, the Burmese were correct, Among the 1,925 "soldiers" evacuated in November-December 1953, there were large numbers of boys, Shans, and Lahus. (164) Today there are an estimated three hundred Lahu tribesmen still living on Taiwan who were evacuated during this period. Although some were recruited by the promise of jobs as generals or jet pilots, most were simply press-ganged from their villages on a quota basis, given Chinese names, dressed in KMT uniforms, and shipped off to Taiwan. Many husbands and wives have been separated for seventeen years, and some of the families have moved to Thailand to await the return of their sons or husbands. So far only two men have come back." (165)

Frustrated with their attempts to remove the KMT through international negotiations, in March 1954 Burma launched its largest military operation against the KMT. After the Burmese air force bombarded Mong Hsat for two days, (166) the army captured the KMT headquarters and drove its two thousand defenders south toward the Thai border.(167) Negotiations were reopened in Bangkok, and during the next two months CAT flew another forty-five hundred KMT troops to Taiwan. On May 30, 1954, Gen. Li Mi announced the dissolution of the Yunnan Province AntiCommunist National Salvation Army.(168) However, there were still six thousand KMT troops left in Burma. Fighting began again a month later, and continued sporadically for the next seven years.

While the continuing struggle faded from American headlines, in June 1955 the Rangoon reported that six hundred KMT troops had been smuggled into the Shan States from Taiwan.(169) A new commander was appointed, and a headquarters complex was opened up at Mong Pa Liao near the Mekong River.170 The KMT continued to rule the hill tribes with an iron hand. In 1957 an American missionary reported:

"For many years there have been large numbers of Chinese Nationalist troops in the area demanding food and money from the people. The areas in which these troops operate are getting poorer and poorer and some villages are finding it necessary to flee." (171)

Not only did the KMT continue to demand opium from the tribes, but they upgraded their role in the narcotics trade as well. When the Burmese army captured their camp at Wanton in May 1959, they discovered three morphine base refineries operating near a usable airstrip. (172)

Although forgotten by the international press, the KMT guerrilla operations continued to create problems for both the Burmese and Chinese governments. When delegations from the Union of Burma and the People's Republic of China met to resolve a border dispute in the summer of 1960, they also concluded a secret agreement for combined operations against the KMT base at Mong Pa Liao.(173) This base, with a runway capable of handling the largest transport aircraft, was defended by some ten thousand KMT troops entrenched in an elaborate fortifications complex. After weeks of heavy fighting, five thousand Burmese troops and three full People's Liberation Army divisions, totaling 20,000 men, (174) finally overwhelmed the fortress on January 26, 1961. (175) While many of their hill tribe recruits fled into the mountains, the crack KMT units retreated across the Mekong River into northwestern Laos. Burmese officers were outraged to discover American arms of recent manufacture and five tons of ammunition bearing distinctive red, white, and blue labels. (176) In Rangoon 10,000 angry demonstrators marched in front of the U.S. Embassy, and Burma sent a note of protest to the United Nations saying that "large quantities of modern military equipment, mainly of American origin, have been captured by Burmese forces." (177)

State Department officials in Washington disclaimed any responsibility for the arms and promised appropriate action against Taiwan if investigation showed that its military aid shipments had been diverted to Burma. (178) Another round of airlifts to Taiwan began. On April 5 Taiwan announced the end of the flights, declaring that forty-two hundred soldiers had been repatriated. (179) Six days later Taiwan joined the State Department in disavowing any responsibility for the six thousand remaining troops. (180) However, within months the CIA began hiring these disowned KMT remnants as mercenaries for its secret operations in northwestern Laos. (181)

At first glance the history of the KMT's involvement in the Burmese opium trade seems to be just another case of a CIA client taking advantage of the agency's political protection to enrich itself from the narcotics trade. But upon closer examination, the CIA appears to be much more seriously compromised in this affair. The CIA fostered the growth of the Yunnan Province AntiCommunist National Salvation Army in the borderlands of northeastern Burmaa potentially rich opium-growing region. There is no question of CIA ignorance or naivete, for as early as 1952 The New York Times and other major American newspapers published detailed accounts of the KMT's role in the narcotics trade. (182) But most disturbing of all is the coincidence that the KMT's Bangkok connection, the commander of the Thai police, General Phao, was the CIA's man in Thailand.