FEARS OF GROWING DRUG FLOW THROUGH THAILAND

Australian drug enforcement agencies are closely monitoring the growing
conflict in the Golden Triangle, amid fears drug barons will emerge with
expanded power and territory.

The recent fighting in the remote region along the Thai-Burmese border has
embroiled two warring ethnic insurgencies as well as regular Thai and
Burmese troops.

While the violence is likely to restrict supplies of chemicals used to
produce heroin and methamphetamines and limit drug trafficking in the short
term, Western intelligence agencies fear the outcome will result in a
victory for the forces most closely linked to drug production.

A senior Western intelligence official in Bangkok said the flow of drugs
through Thailand will increase if the forces of the ethnic Wa, who have
strong links to Chinese drug lords, strengthen their control of the region.

Australian authorities fear that, as well as being able to protect their
heroin business, the ethnic Wa will target Australia for the sale of
new-generation synthetic drugs. More than 90 per cent of the heroin sold in
Australia comes from Burma's sprawling Shan State, which borders Thailand,
Laos and China.

The secessionist Shan State Army (SSA) is now engaged in battles with both
Burmese troops and the allied ethnic Wa drug trafficking militias.

The battles follow increasing ethnic Wa infiltration of the region. Recent
US spy satellite photographs of the region indicate the Wa have planted
substantial new areas of opium poppies. Western officials in Bangkok
monitoring drug production in the Golden Triangle also believe the drug
lords are improving their ability to produce synthetic drugs.

The border conflict flared earlier this month when Burmese soldiers
fighting the Shan took control of a strategic hill in territory in disputed
territory claimed by Thailand.

When the Thais shelled the position, Burmese forces retaliated with an
artillery barrage of the northern-most town in Thailand, Mae Sai, killing
three civilians.

Thailand is a major market for amphetamines, with up to 800 million
methamphetamine tablets expected to be smuggled into Thailand this year.

It has also continued to be a conduit for the movement of heroin to
Australia and other foreign markets.

"Considering how easy it has been to bribe people in Thailand and how good
the transport system is, that is hardly surprising," said Bangkok-based
Burma analyst Bruce Hawke.

Corruption among Thai border police was a major factor facilitating
cross-border smuggling, he said.

For the past couple of years, Thailand has been stationing soldiers in
border areas to interdict drugs and block the movement of so-called
precursor, or base chemicals, into Shan State.

"It is very likely that there is now going to be tighter enforcement along
the border which is going to squeeze the flow of heroin," Mr Hawke said.

He said the biggest heroin refining centre was in the Ho Tao area of the Wa
Hills, near China, under the control of a Wa drug baron who uses several
names, including Ta Tang.

Sources within the Thai military privately concede that in a bid to counter
methamphetamine and heroin smuggling from Burma, covert assistance has been
given to the Shan State Army since the latter part of last year.

At first there was financial help and medicine, then a more tolerant
attitude to the use of Thai soil by Shan militiamen and the provision of
sorely needed ammunition. The Shan State Army in turn announced publicly
that it was attacking heroin and methamphetamine laboratories.

In some cases seized contraband has been handed over to Thai police, but
there are suspicions that elements of the Shan State Army are still
directly or indirectly engaged in the drug trade.

It was reported yesterday that 12 battalions of Burmese and United Wa State
Army troops had laid siege to Shan forces and launched artillery barrages.

The new Thai Government of Prime Minister Taksin Shinawatra is trying to
avoid unbridled cross-border hostilities and is seeking political talks.

Thai Defence Minister Chavalit Yongchaiyudh, though, has a reputation for
cosy business and personal links with Burma's military rulers.