BURMA TRIBE TAKES OVER BANK

The ethnic Wa hill tribe in Burma - once dubbed "the world's biggest gang
of armed drug traffickers" - have taken over a bank and a domestic airline,
underlining the importance of drug money in a troubled economy.

The United Wa State Army has taken control of the ailing Myanmar Mayflower
Bank in Rangoon and its 21 nationwide branches. The group's other interests
include a third of the country's only GSM phone project, lucrative gem
mining concessions and, reputedly, nightclubs in the capital. The Wa chief,
Pao Yu Chang, has also recently taken direct personal control of the
unprofitable Yangon Airways. "Drug traffickers have taken over more and
more of the legitimate economy, and are getting more brazen about it, over
the last couple of years," said a drug analyst.

The Wa were the footsoldiers for the Communist party of Burma until they
overthrew their ethnic Chinese Communist masters in 1989. Fearing that the
thousands of tough fighters - headhunters a couple of generations ago -
would link up with rebel groups on the Thai border, the military government
quickly agreed a dozen ceasefire deals, with the Wa and others, that
allowed them a free hand to do business - which in the Shan state often
means drugs.

The regime also permitted "retired" former drug warlords, such as Lo
Hsing-han and Khun Sa, to, at the very least, plough their drug profits
into a variety of businesses. The Burmese military claims that alone it
does not have the strength to suppress big traffickers such as the Wa, who
will "voluntarily" stop within a few years anyway.

The US State Department's latest narcotics review says that "drug profits
formed the seed capital for many otherwise legitimate enterprises"
especially in transport, banking, hotels, real estate and airlines.

The US senators who sent President George W. Bush a strong letter warning
not to ease sanctions said "strong evidence" linked the regime to
trafficking. Some observers are less sure about whether significant drug
money ends up in generals' pockets, although even spokesmen for the regime
admit that soldiers in the field often "tax" traffickers.

The government claims that militarily its hands are tied yet it has been
able since the mid-1990s to clear more than 300,000 villagers off a great
swathe of land in the middle of the state to try to suppress a small
rebellion by "unapproved" ethnic Shan.

Worryingly for Thailand, it has permitted, perhaps encouraged, the Wa and
their Chinese business associates to move many thousands of hill tribe
families down from their headquarters base area to the Thai border. This is
ostensibly to make it easier to grow non-opium crops but Thai intelligence
agents claim it supports a build-up of Wa drug factories close to the Thai
border.