UNCERTAINTY OVER PANG SANG

The drug money is still flowing into the Wa capital, but pressure from
China to curtail the illicit trade may be making the kingpins a little nervous

"If we have any more opium here after 2005, you can come and chop my head
off." This is the most famous statement of Pau Yu Chang, chairman of the
United Wa State Army (UWSA), and the richest and most powerful Wa leader. A
former member of the Communist Party of Burma (CPB), he reigns the Wa
region with an iron fist, or more like a communist dictator.

As a consequence, he is now reportedly facing an increased challenge from
his opponents. "His wish might be fulfilled soon," one of them predicted,
"but with bullets in his head, instead of the chop."

The resentment against his rule grows steadily along with rumours of a coup
in the capital city of Pang Sang. "Not only ordinary citizens, but also
middle-ranking military officers supported by some top-ranking UWSA members
want him out. Everyone is fed up with him," said a former Wa leader who
keeps regular contacts with local sources.

Many Wa people say Pau Yu Chang is solely responsible for the drug scourge
and the bad image of the Wa. "We are described as drug dealers and even
terrorists by the international community," one of them said. "Wa is now a
dirty word. Everybody is afraid of us, and they say we are the scum of the
earth.."

"He and his brothers and their cronies are the ones responsible for the
opium growing and the production of methamphetamines. If he really wants to
halt the drug business in the Wa region, he can do it easily with his own
competence. He has the money, intelligence and ruthlessness required to
accomplish the job. But up to now, he has used all these to keep power and
make money for himself," another Wa dissident said.

A Chinese businessman who had just returned from Pang Sang recently said
the atmosphere there was very tense and anything could happen. "There are
rumours that some coup plotters were arrested last December. Pau Yu Chang
and his loyalists know that a rebellion against them is possible, so they
have already adopted some protective measures," he told Perspective.

"It is not certain whether the annual celebration of the Wa Army Day, which
includes colourful military and civilian parades to mark the victory over
the CPB in 1989, will be held on this April 17," he added.

LOSING FAVOUR WITH CHINA

The Chinese could be another reason for the sudden turn of Pau Yu Chang's
fortune, said a Wa watcher. "They supported him quietly for many years, but
lost patience and turned against him recently after he ignored their
requests to halt the flow of illicit drugs to China's southern Yunnan
province."

According to a confidential source, one such request was made to Pau Yu
Chang at the Beijing military hospital where he underwent a medical
check-up in 2002. "But he did nothing to stop it, and the drug traffic
increased."

However, the source said he did not think China would get involved in any
coup plot against Pau Yu Chang.

The economy in the northern Wa region depends heavily on China. Pang Sang's
telephone system, both on land and by satellite, is based in China. Most of
the city's industries, including cigarette, beer, and whisky production,
are equipped with Chinese-made machinery. "In fact, the town resembles
China more than anything else," he explained. "Almost every shop has its
name written in Chinese characters. The Chinese language and currency are
widely used there."

The first practical confirmation of Chinese displeasure with Pau Yu Chang's
rule could be a sudden drop in the cross-border trade.

"Normally, dozens of supply trucks cross the border from China's Mong Ah
town to Pang Sang. But this has trickled to only a few trucks recently,"
said the exiled Wa leader.

This might explain the presence of many Chinese checkpoints set up recently
on the road from Lancang to Mong Ah, and the take-over since the middle of
2003 of border guard duty by the People' Liberation Army.

As a result, the favour usually granted by Chinese border officials to Wa
traders has been revoked, said a Wa trader, who admitted that it was "hard
to talk to them now."

Sensing trouble, Pau Yu Chang might be trying to get even closer to the
Burmese government, and to mend his relationship with Thai officials, as he
has nowhere else to turn to, said a Burmese analyst.

A reliable source told Perspective that Pau Yu Chang met with Chinese
officials in Kunming in December and again in January to request that
restrictions on the delivery of consumer goods into Pang Sang be lifted.

RICH MAN'S HIDEOUT

While the majority of the Wa people are extremely poor, individuals close
to Pau Yu Chang _ including Li Zu Ru, who is the vice commander-in-chief of
the UWSA and vice chairman of the United Wa State Party _ are very wealthy.

"Li Zu Ru is the second richest man after Pau Yu Chang. They are close
friends and are often seen together inspecting different projects in the Wa
region," the dissident said, adding, "Many Wa officials and ordinary people
are unhappy with their close ties with the Burmese government and their
support for the road map (Burmese Prime Minister Khin Nyunt's plan for
national reconciliation)."

Pau Yu Chang is a highly enterprising man with investments in many
businesses in Burma, including an airline, animal farms, casinos,
factories, hotels, jewelry business, mines, real estate and restaurants. He
also holds a big equity in the Myanmar Mayflower Bank and Asia Wealth Bank.
Both were among the first foreign financial institutions to be designated
by the US treasury secretary as of "primary money laundering concern."

According to a US Treasury press release published on November 19, 2003,
the two banks have been linked to narcotic organisations in Southeast Asia.

The trouble in Pang Sang, however, proves profitable for currency traders,
who are swamped by orders for the US banknotes reportedly hoarded by
certain UWSA leaders.

An eyewitness revealed that the UWSA keeps an "incredible amount" of cash
in several foreign currencies in a heavily guarded and fortified house
inside their base. "I saw big piles of US and Singaporean dollars as well
as Japanese and other Asian currencies," he asserted.

Another major culprit responsible for drug production in the Wa region is
the infamous drug-lord Wei Hsueh-kang, who is wanted by the United States
and Thailand for drug trafficking, and who recently declared that he had
stopped all drug-related activities.

A well-informed Shan leader told Perspective that Wei presently resided in
Mongla, a town located in the eastern Shan State close to the Chinese
border, officially called Special Region 4. "The area is controlled by the
National Democratic Alliance Army, a 1,000-strong ceasefire group
consisting of Akha, Chinese, Lahu, Kokang and Shan people. They are
involved in the drug business, but otherwise very little is known about
them," he said.

Indeed, Wei has found just "the right place" to hide, with an escape route
not too faraway, he added.

"There is absolutely no difference between Pau Yu Chang and Wei Hseuh-kang.
They are both involved in the narcotics trade," confirmed the same Shan leader.

A reliable source told Perspective that the Burmese government recently
imposed restrictions on the movement of Wei Hseuh-kang. "If he shows up in
Mandalay, Lashio or in Rangoon, we will arrest him immediately," the source
said, adding that there could be "a problem" if the authorities attempt to
arrest him in his hideout. He didn't elaborate.

"But despite his rather uncomfortable position, Wei and his two brothers
manage to cover almost a half of the UWSA expenditures at this time, in an
attempt to assert their power base and influence over the Wa regions.
However, the vast majority of medium and top Wa leaders dislike them,"
concluded the Shan leader.

Another source claimed that a high-ranking Chinese law-enforcement officer
met Wei Hseuh-kang in 2002. He told Wei of Beijing's displeasure with his
drug dealings and vowed to take unspecified retaliatory action if he did
not stop.

Maybe the current blockade of the Wa region is what the Chinese had in
their minds, in line with the old Leninist slogan: "And now from theory to
practice."