Source: 2006
Released by the Bureau for International Narcotics and Law Enforcement Affairs
I. Summary
In 2005, Laos enjoyed unprecedented success in its battle against opium, in no small part due to the determined efforts of the Government of Laos (GOL) supported by U.S. State Department counternarcotics funding. Crop control programs reduced poppy cultivation and production by an estimated 45 percent in just one year. Demand reduction programs reduced addiction by a claimed 30 percent of the known addict population. If successful alternative development is able to secure this victory, Laos could cease to be a major producer of opium in the near future. However, opium addiction is a persistent problem, decades in the making; claims of rapid success in treating addicts could prove to be short-lived. A 30 percent reduction in addict populations in a single year would be almost without precedent worldwide.
Unfortunately, just as Laos appears to be on the verge of a major triumph against opium, a new threat has appeared in the form of amphetamine type stimulants (ATS). The scourge of methamphetamine, locally known as "ya ba" (crazy medicine), is exploding among the nation's youth, truck drivers, and commercial sex workers. A paucity of law enforcement resources, vulnerability to corruption, and the difficulty of controlling the nation's long and remote borders will make it difficult for Laos to easily overcome this challenge. Focused demand reduction programs, more robust law enforcement, and better international cooperation will be necessary if Laos is not to become both a major ATS consumer and transit country. Laos is a party to the 1988 UN Drug Convention.
II. Status of Country
Laos was, until this year, the world's third largest producer of illicit opium, but production has decreased to the point that it may no longer meet domestic demand (largely from traditional abusers among Laos' Hill Tribes), and the nation's days as a commercially significant producer of opium appear numbered. In contrast, Laos may be on the verge of becoming a major transit country for ATS and associated precursors.
Increasing prices may be discouraging some opium use even as it serves as a stimulus to production. According to the UNODC, opium prices rose 139 percent in 2005, to a new high of $521 per kilogram, more than three times the 2002 price. USG survey results indicate that in some remote locations, prices may have been even higher during the year, based on the local specifics of supply and demand. According to the UNODC, the result of these higher prices was that overall opium production revenues declined by only 21 percent, to $7.4 million, despite the precipitous drop in production.
III. Country Actions Against Drugs in 2005
Policy Initiatives. Central to the GOL's success in reducing poppy cultivation in 2005 was its determination to achieve the counternarcotics policy goal set forward in the Seventh Party Congress (2001), to free Laos of opium cultivation before the Eighth Party Congress convenes in early 2006. While this policy was not new, the GOL pursued it vigorously during the past year and this helped to bring Laos closer to its stated objective.
In late November 2005, Minister to the President's Office and Chairman of the Lao National Commission for Drug Control and Supervision (LCDC) Soubanh Srithirath, pressed the provinces to renew their commitment to making Laos opium free before February of 2006. He reminded provincial leaders that they were accountable for the success or failure of the policy and that the central government would monitor their performance. The GOL sought to implement this policy in several ways:
First, Laos undertook a nationwide program to promote "opium awareness," focused on sixty-two districts where poppy cultivation has been or continues to be a serious problem. The campaign utilized local, law enforcement, and public health officials to educate suspected opium producing villages on Lao narcotics law, the hazards of addiction, and alternative development opportunities for those who stop producing. One of the key objectives of the campaign was to garner voluntary compliance and a written commitment from each of the target villages and cultivators that they would no longer plant poppy. The campaign also sought to assure that villagers understood the law and the potential legal consequences if they chose to violate it. As part of this campaign, officials attempted to confiscate poppy seed before cultivators could sow it, though the effectiveness of that effort was questionable.
Second, the GOL, with support from the US, UN and other international partners, continued to pursue a variety of alternative development programs. These included crop substitution, rice cultivation, road construction, building community infrastructure, installing clean water systems, opening livestock banks, establishing ecotourism venues, developing village health care, providing vocational training, and promoting literacy education, particularly among women. The bulk of the counternarcotics funds provided by donors to the GOL were committed to alternative development, as these initiatives provide the best long-term solution to the poverty that is the root cause of opium production.
Third, the GOL, again with substantial support from international donors including the USG, sought to bring about an end to opium addiction throughout the country. With the knowledge that it will be next to impossible to eliminate all poppy cultivation as long as there is a substantial domestic demand, LCDC conducted a conference in late November to identify those provinces that had achieved their addict detoxification targets, and to urge those which were lagging behind to redouble their efforts. Laos is in the process of implementing a pilot program that holds the promise of more cost effective detoxification, based in part on lessons learned from regional partners. Opium addiction is a persistent problem; however, and claims of rapid success could prove to be short-lived.
The GOL also sought to bring the growing scourge of ATS to the forefront of the public agenda. In a public speech in June 2005, Minister Soubanh openly addressed the problem of growing ATS abuse among the nation's youth, citing statistics that showed methamphetamine use as high as 27 percent among students in some locations. Laos is considering revising its penal code and criminal procedures to meet the challenge of growing ATS abuse, with the assistance of several European partners.
The MOJ, in cooperation with UNODC and international partners, is drafting a new comprehensive drug control law to supplement the provisions of Article 135 (1990). The article is incomplete and does not provide a coherent legal framework for the control of narcotics and other substances listed in relevant UN conventions, to which it is a party, such as the 1961 Single Convention. A consequence of this is that Lao law does not always distinguish between illicit and licit medical use of some controlled drugs. The new draft legislation provides a more complete and methodical legal framework for drug enforcement, and includes provisions for enhanced cooperation against illicit transit. In addition, the GOL amended Article 135 in 2005 to include key provisions of the TOC agreement. Unfortunately, changes in the legal code are not always published in the press, and can remain unknown to government officials and the public alike.
Accomplishments. Poppy cultivation in Laos declined dramatically in 2005, and this success stands as an unqualified victory for Laos and its international partners, especially the U.S., in the battle against illicit narcotics, especially the U.S. According to USG figures, the area under cultivation declined from 10,000 hectares in 2004 to 5,500 hectares in 2005. This was a 45 percent reduction in cultivation in just one year. The UNODC survey conducted in 2005 indicated an even steeper decline, from 6,600 hectares in 2004 to approximately 1,800 in 2005, a 74 percent drop. The decline in opium production paralleled that in opium cultivation. The 2005 USG survey projected production of approximately 28 metric tons, a 46 percent decline from last year's estimate of 49 tons. UNODC survey results showed a more rapid reduction, from 43 tons in 2004 to 14 tons in 2005, a 67 percent decline.
Law Enforcement Efforts. Despite some successes, Laos' law enforcement resources remain inadequate to meet the full range of challenges posed by illicit drugs. Thanks to international assistance, Laos can accurately estimate opium cultivation, production, and addiction, but currently does not possess the means to accurately assess the extent of production, transit, and distribution of ATS and its precursors. Production and transit costs for opium and ATS are low. Anecdotal evidence suggests that some traffickers formerly involved in opium may now be shifting to ATS because it is more mobile, a safer investment, the returns are faster, and the market is growing. There are reports that former heroin traffickers are moving into the hospitality industry, commercial forestry, other legitimate businesses, and money laundering.
Counter Narcotics Units (CNU), Laos' principle counternarcotics law enforcement assets, remain understaffed, insufficiently trained and poorly equipped to deal with the growing ATS challenge. USG and UNODC programs have mitigated training and equipment problems to some extent.
The increase in seizures of ATS near its borders and data indicating rapid growth in use provide what little insight there is into the ATS problem in Laos. Opium seizures during the first nine months of 2005 totaled 31.2 kilograms -- roughly on pace with 2004's total of 43 kilograms and somewhat surprising considering the overall reduction in cultivation. Heroin seizures thru September stood at 22.76 kilograms, off pace from 2004, when 55 kilograms were interdicted. ATS seizures were also slightly slower, at 1,870,305 pills in nine months, compared to the first half 3,020,000 of 2004. Cannabis seizures, however, appeared to speed up, with 1.6 metric tons through September 2005 versus 1.8 metric tons for all of the last year. Lao authorities opened 130 drug related cases in 2005, resulting in several hundred arrests. These prosecutions were almost entirely of street pushers, and Laos has demonstrated a serious inability to investigate or develop cases against major traffickers without external assistance and in some cases significant international pressure. Laos relies primarily upon the regulatory agencies of producing states, such as China, to prevent illicit shipments of precursor chemicals into Laos, which currently does not have any domestic production capacity. The GOL did not report any precursor chemical seizures in 2005.
While UNODC noted that Lao law enforcement cooperation with neighboring countries was generally good in 2005, the USG found that bilateral cooperation with Laos had improved only slightly, and remained unsatisfactory. With the exception of the Customs Department, the GOL failed to make use of the opportunities for cooperation afforded by the DEA, which continued to provide law enforcement support to Lao agencies, but received very little feedback in return.
International Organizations (IOs) with experience in Laos have reported that the GOL does seize assets such as homes, plots of land, automobiles and jewelry for a variety of criminal offences including but not exclusively related to narcotics violations. The legal framework for and ultimate disposition of asset seizures is not clear, transparent, or public, and the proceeds from seizures may be used to supplement the budgets of state agencies.
Corruption. Corruption in the Lao PDR, long present in petty forms, may be rising among higher-ranking officials as the potential for graft income grows. Civil servants receive very little pay, and those able to use their positions to advantage, such as police and customs officials, can augment their salary through corruption, particularly in areas distant from central government oversight. Lao law explicitly prohibits corruption, and some officials have been removed and prosecuted for corrupt acts, including at least one senior official in 2005. The GOL has made fighting corruption a priority, and to demonstrate its commitment, participated along with the UNDP, the UNODC, and international donors in "International Anti-Corruption Day" on December 9, 2005. At this event, Deputy Prime Minister Mr. Asang Laoly said that in ratifying the United Nations Convention against Corruption (UNCAC), the Lao government would join the global partnership to fight corruption. Unfortunately, the same weaknesses that undermine counternarcotics law enforcement and facilitate corruption make fighting the latter a daunting challenge. Laos has signed, but has not yet ratified, the UN Convention Against Corruption.
Agreements and Treaties.The USG supports Crop Control, Demand Reduction, and Law Enforcement programs under three annual Letters of Agreement (LOA) with the GOL. Laos is achieving or making an earnest effort to achieve the performance goals listed in the Crop Control and Demand Reduction LOAs, but is far from doing so with regard to the goals enumerated in the Law Enforcement LOA. Laos is a party to the 1988 UN Drug Convention, the 1962 UN Single Convention and the 1971 UN Convention on Psychotropic Substances. Laos is a party to the UN Convention against Transnational Organized Crime, and its three protocols. Laos has legal assistance agreements with China, Thailand, Vietnam, Cambodia, and Burma, and it signed an agreement for legal cooperation on drug trafficking with Indonesia in 2005. Laos provided the U.S. with some limited mutual legal assistance, in the form of drug samples and a small amount of data on arrests and seizures. Laos has extradition treaties with China, Thailand, Vietnam, and Cambodia (August 2005). The GOL has assisted in the arrest and extradition of individuals to some of those nations, and recently extradited a major trafficker to Burma.
Cultivation/Production. The USG 2005 estimate for poppy cultivation is 5,500 hectares, and about 69 percent of the crop is concentrated in Phongsaly, Houaphan, and Luang Namtha provinces in northern Laos. Though cultivation declined in the majority of districts in Phongsaly, the province, Laos' northernmost, still had the greatest concentration with an estimated 2,750 hectares. Oudomxai Province had the greatest decline in production, down 75 percent from 2004. USG methodology included imagery samples from satellites. With USG support, UNODC and the GOL conducted an opium yield survey in 2005. According to the survey report published in June 2005, poppy cultivation is in a range from 2,900 to 900 hectares, with a mean value of 1,800. The UNODC utilized a helicopter survey of 30 segments approximately 6 km. in diameter and the air corridor connecting them. Digital cameras recorded opium fields for later analysis. In addition, 21 teams conducted surveys with the headmen of 189 villages in eight provinces. According to the USG estimate, 2005 potential production is about 28 metric tons, while the UNODC/GOL figure is 14. Drought significantly affected production in 2005, with USG estimated yields ranging from 3 to 7 kilograms per hectare, and UNODC estimates at an average of 8 kilograms per hectare.
This reduction in cultivation and production is a significant milestone in the nation's opium elimination efforts. From a high of 42,130 hectares when U.S. funded crop control programs began in 1989, the current estimate is an 87 percent reduction, and for the UNODC survey, a 93 percent reduction from a high of 26,800 hectares in 1998. According to the USG survey, cultivation declined in all provinces where opium production has historically been a problem, and the fields that remain are becoming smaller, more remote, and better concealed.
The decrease in production is another significant milestone for Laos, a 93 percent reduction from the estimated 380 tons produced in 1989. UNODC survey results indicated that production has fallen to the point that most of the opium produced in Laos is for domestic consumption by the nation's addicts, rather than export, and that this would remain true even at the higher production levels given in the USG estimates. This conclusion is supported by the sharp increase between 2004 and 2005 in the price paid per kilograms to local opium producers, the consequence of reduced supply.
The USG has not received any verifiable reports on the production of ATS in Laos, but the paucity of law enforcement resources in remote regions makes it highly vulnerable to regional traffickers seeking new locations for clandestine labs. For example, in one province, 14 officers must police more than 16,000 square kilometers of rugged and inaccessible terrain. Based on seizures of illegal cannabis during 2005 in northeast Thai provinces, there may be significant and expanding "contract" cannabis production, possibly financed by Thai traffickers in southern Laos. Complicating this problem is the continuing use of cannabis as a traditional food seasoning in some locations.
USG-supported crop control programs do not employ herbicides or any other form of forced eradication. Where crops are cut down, the cultivators themselves do the eradication as a condition of a written agreement between villages and the GOL not to produce opium.
Drug Flow/Transit. While it is not possible currently to get an accurate assessment of illicit drug distribution in Laos, addiction and use rates for opium and ATS respectively suggest that while distribution of the former may be in decline, the latter is increasing exponentially. Individuals or small-scale merchants perform the majority of street-level distribution, rather than large organized criminal gangs. There have been reports of some schoolteachers distributing ATS.
Opium distribution is limited, as users are generally addicts within a producing household or village. There is some opium distribution between villages, especially as remaining opium plots move into more remote and distant terrain less accessible to law enforcement agencies. Laos, despite the progress that it has made in reducing its addict population, continues to suffer from one of the highest opium addiction rates in the world. Laos's highly porous borders, dominated by the Mekong River and remote mountainous regions, are notoriously difficult to control and readily facilitate the trafficking of illicit drugs, although there are no reliable estimates of the volume of this flow. According to the UNODC, the growth in drug seizures near Laos' borders in neighboring countries may be evidence of an increasing transit problem. The flow includes methamphetamine, heroin, and precursor chemicals bound for other nations in the region, and ironically, the problem is likely to worsen as the transportation infrastructure in Laos improves. Illicit transit to the U.S. includes unrefined opium and local formulations of ATS, but not in sufficient quantities to have a significant effect.
Domestic Programs/Demand Reduction. The GOL has continued to build its drug treatment and counseling capacity, albeit with very limited resources. Opium education and detoxification is an integral part of the overall opium elimination campaign, and despite resource constraints, appears appropriately sized if austere for the addict population. Significant impediments to full treatment of all opium addicts include the ill health of many elderly users, the remote location of some addict populations, and the lack of sufficient rural health care infrastructure to displace the traditional medicinal use of opium, which often serves as the initial entree into addiction. In addition, the initial apparent success of detoxification often induces additional "hidden" addicts to come forward for treatment. Senior GOL leaders have expressed concern about growing ATS use among the nation's youth, and the GOL has initiated drug education and treatment programs to slow the growth in demand. With the assistance of the USG and Thailand, Laos currently has two major ATS treatment centers under construction, both of which will open before March of 2006. Others are being planned.
Demand reduction is Laos' best defense against ATS, and the GOL has instituted a number of programs to stem the demand, including drug awareness education and media campaigns. Unfortunately, the explosive growth in ATS is overwhelming the resources that the GOL and international donors have available to fight it. The GOL reported that ATS testing in some secondary schools showed an increase in use from 4 percent in 2003 to 27 percent in 2005, and anecdotal evidence suggests that many addicts are turning to crime as a means of supporting their addiction.
Laos' demand reduction efforts in 2005 produced mixed results, with significant reported gains against opium, but a worrying trend in the growth of ATS use. The GOL hopes to treat all opium addicts before the end of 2006, as significantly reducing opium addiction is critical to full elimination of cultivation. Laos had approximately 20,160 opium addicts as of May 2005, based on voluntary reports from villages, and set as an objective the treatment of 9,160 before year's end, 8,885 of whom were in the northernmost 11 provinces. As of November 2005, 6,112 of the addicts in the north had undergone treatment, approximately 69 percent of the target, and the GOL pressed provincial leaders to treat the remaining 31 percent as quickly as possible. This approach to stemming addiction is highly questionable over the long term: the incentives to report someone treated and "cured" are simply too high. Worldwide, recidivism rates from "treated" opium/heroin addicts are on the order of 80 percent/90 percent.
IV. U.S. Policy Initiatives and Programs
Bilateral Cooperation. The U.S. is Laos' strategic partner in the battle against illegal drugs. Since 1989, the USG, through the State Department Narcotics Program (INL), has provided more than $41 million to support GOL crop control, demand reduction, and law enforcement programs. Crop control funds support opium awareness campaigns, opium detoxification clinics, and the Lao-American Projects (LAP) in Phongsaly and Luang Prahbang Provinces. The LAPs utilize the alternative development programs described above in the Policy Initiatives section. The U.S.-Lao PDR Crop Control LOA prohibits the use of USG funds to support involuntary resettlement. Demand reduction funds provide support for ATS treatment centers, drug awareness programs, and data collection. Law enforcement funds support training and equipment purchases for CNUs and Customs. The USG also supports an array of counternarcotics programs through the UNODC.
The Road Ahead. Laos' struggle against opium is in its endgame, but its fight against ATS is just beginning. To secure the victory over opium, robust alternative development must be sustained for the next 3 to 5 years. In many districts, villages have stopped cultivation or self eradicated with the promise of government support. If assistance is not soon forthcoming, these villages may revert to opium cultivation, and it will be much more difficult to persuade them to stop a second time. Detoxifying the remaining opium addicts, and offering them the best treatment possible is also essential, but claims of rapid success should be discounted given the very real problem of securing long-term success in defeating opiate addiction.
Laos does not have the law enforcement resources it needs to battle ATS, and it will have to rely on effective demand reduction to stem the tide of "Ya ba" sweeping the country. Programs that educate youth on the dangers of addiction, and treat those who succumb to addiction, should become the new focus for GOL counternarcotics efforts. Programs that train and equip law enforcement officers more effectively and improve the efficiency of the criminal justice system could help Laos to fight corruption, arrest major traffickers, secure its borders, interdict the flow of illicit drugs transiting the nation, and cooperate more effectively with international partners.
Laos is on the fringe of the region's banking network. Its banking sector is dominated by state-owned commercial banks in need of extensive reform. The small scale and poor financial condition of Lao banks may make them more likely to be venues for certain kinds of illicit transactions. Lao banks are not optimal for moving large amounts of money in any single transaction, due to the visibility of such movements in a small, low-tech environment. What money laundering does take place through Lao banks is likely to have been from illegal timber sales or domestic criminal activity, including drug trafficking. In a recent high-profile case involving a foreign-owned company accused of securities fraud, Lao customs authorities seized $300,000 in cash a businessman was transporting to Thailand, in contravention of Lao law. Subsequent investigation indicated that this business had transferred several million dollars from abroad through the Lao banking system in the past year, much of which was reportedly withdrawn in cash. The case revealed the weakness of the Lao banking system in monitoring suspicious transactions.
Laos has drafted a money laundering law with antiterrorism finance components, based upon a model law provided by the Asian Development Bank. The legislation was proposed during the second half of 2004 and has passed through the Ministry of Justice. It awaits prime ministerial approval and is expected to be passed by the National Assembly in April 2005, possibly with changes. The law will criminalize money laundering and terrorist financing. A Financial Intelligence Unit (FIU) will also be established, to supplant the small and informal one currently in place. Reportedly, a provision will be made for the freezing of suspect transactions and forfeiture of laundering proceeds. The Bank of Laos currently has a very small Banking Supervision Department, and it is believed the Department will be augmented and used to help implement the new legislation. Provision will be made for mutual assistance in criminal matters between Laos and other countries.
Lao law prohibits the export of the national currency, the Kip. It is likely that the currency restrictions and undeveloped banking sector encourage the use of alternative remittance systems.
The GOL is a party to the 1971 UN Convention on Psychotropic Substances and has become a party to the 1988 UN Drug Convention. The GOL participates in Association of Southeast Asian Nations (ASEAN) regional conferences on money laundering. Laos also has observer status in the Asia Pacific Anti-Money Laundering Group, and plans to join fully once its anti-money laundering law is enacted.
Laos should pass anti-money laundering and antiterrorism financing legislation. Laos should also become a party to the UN International Convention for the Suppression of Financing of Terrorism and the UN Convention against Transnational Organized Crime.