PART TWO... NEW OPIUM WAR

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP73B00296R000300060020-1
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 2
• Document Creation Date: December 9, 2016
• Document Release Date: August 24, 2001
• Sequence Number: 20
• Publication Date: April 29, 1971
• Content Type: NSPR

Tim Ui I ERS=Z T L",:S
ApproveYli" e'L elOh ClA- B 68000300060020-1
April J- iI J
The KMT are tolerated by the Thais for several refineries-called "cookers"--which manufacture crude
reasons: they have helped in the counterinsurgency morphine (which is refined into heroin at a later
efforts of the Thai and U.S. governments against the transport point) under the supervision of professional
hill tribespeople in Thailand; they have aided the pharmacists imported from Bangkok. Rathikoune
training and recruiting of Burmese guerrilla armies for also has "cookers" in the nearby villages of Ban
the CIA; and they offer a payoff to the Border Patrol Khwan, Phan Phung, and Ban Khueng (the latter for,
Police (BPP), and through them to the second most opium grown by the Yao.tribe,) Most of the_opium'
powerful man in Thailand, Minister of the interior he procures comes from Burma in the caravans such
Gen. Prapasx Charusasthira. The BPP were trained in Chan Chi-loo's; the rest comes from Thailand or from
the '50's by the CIA are now are financed and advised the hill tribespeople (Meo and Yao) in the area near
by AID and are flown from border vil!age to border Ban Houei Sai. Rathikoune flies the dope from the
village by Air America. The BPP act as middlemen in Ben,Houei Sai area to Luang Prabang, the Royalist
the opium trade between the KMT in the remote capital, in helicopters given tliti United States military
regions of Thailand and the Chinese merchants in aid program.
Bangkok. These relationships, of course, are flexible
and changing, with each group wanting to maximize
profits and minimize antagonisms and dangers. But
the established routes vary, and sometimes
doublecrosses are intentional.
In the hummer of 1967 Chan Chi-loo set out from
Burma through the KMT's territory with 300 men
and 200 packhorses carrying nine tons of opium, with
no intention of paying the usual fee of 580,000
protection money. But troops cut off the group near
the Laotian village of Ban Houei Sai m an ambush
that turned into a pitched battle. Neither group,
however, had counted on the involvement of the
kingpin. of the area's opium trade: the CIA-backed
Royal Li. Government Army and Air Force, under
the command of General Ouane Rathikoune. Ilearing
of the skirmish, the general pulled his armed forces
out of the Plain of Jars in northeastern Laos where lower levels of the political, military and civil service
they were supposed to be fighting the Pathet Lao structure. And the Sananikones' airline, Veha Akhat,
guerrillas, and engaged two companies and his entire leases with opium-growing tribespeople. But the
air force in a battle of extermination against both opium trade is polular with the rest of the elite, who
sides. The result was nearly 30 KMT and Burmese rest RLG aircraft or create fly-by-night airlines (such
dead and a half-ton windfall of opium for the Royal as Laos Air Charter to Lao United Airlines) to do
Lao Government. their own direct dealing.
In a moment of revealing frankness shortly after CIA Protects opium Traders
the battle, General Rathikoune, far from denying the Control of the opium trade has not always been in
role that opium had played, told several reporters the hands of the Lao elite, although the U.S. has been
that the opium trade was "not bad for Laos." The at least peripherally involved in who the beneficiaries
trade provides cash income for the Meo hill tribes, he were since John Foster Dulles's famous 1954
argued, who would otherwise be penniless and commitment to maintain an anti-communist Laos.
therefore a threat to Laos' political stability. He also The major source of opium in Laos has always been
argued hat the trade gives the Lao elite (which the Meo growers, who were selected by theClA as its
includes government officials) a chance to accumulate counterinsurgency bulwark against the Pathet Lao
.capital to ultimately invest in legitimate enterprises, guerillas. The Meos' mountain bastion is Long Cheng,
thus building up Laos' economy. But if these a secret base 80 miles northeast of Vientiane, built by
rationalizations seemed weak, far less convincing was the CIA during the 1962 Geneva Accords period. By
the general's assertion that, since he is in total control 1964 Long Cheng's population was nearly 50,000,
of the trade now, when the time comes to'put an end comprised largely of refugees who had come to
to it'he will simply put an end to it. escape the war and who were kept busy growing
Morphine Refineries poppies in the hills surrounding the base..
It is unlikely that Rathkoune, one of the chief The secrecy surrounding Long Cheng has hidden
the trade from reporters. But security has not been
warlords of the opium dynasty, will decide to end the com lete: Carl Strock reported in the January 30 Far
trade soon. Right oya-1 fe$s'Oz0bl 4 OEcC4Ari'cOPeTQO`n6fZWOr3@AOE{1
. Me
Sai, hidden in the jungle, are several o his
refineries. There are cookers for heroin in Vientiane,
two blocks from the King's residence; near Luang
Prabang; on Khong Island in the Mekong River on the
Lao-Cambodian border; and one recently built by
Kouprasith Abhay (head of the military region
around Vientiane, but also from the powerful Abhay
family of Khong Island) at Phou Khao Khouai, just
north of Vientiane. Other lords of .the trade are
Prince Boun Oum of Southern Laos, and the
Sananikone family, called the "Rockefellers of Laos."
Phoui Sananikone, the clan patriarch, headed a
U.S.-bac'.ced coup in 1959 and is presently President
of the National Assembly. Two other Sananikones are
deputies iii the As3em.5ly, two are generals (one is
Chief of Staff for Rathikoune), one is Minister of
Public Works, and a host of others are to be found at
 T-2S bombers while armed CIA agents chatted with
uniformed Thai soldiers and ptl?g f a14 opium sty c111 /~~?: lt.9A2
:... , ,. p.pl'i~,l t'OK P.,ASIE~ 1AJ
3 E 1 6 0 2 1 4 6 1 4 1 ) (TA `3 OdO 6M 1
director of USAID's training center was denied hi-dam Nhu and Premier Ky: Pushers
clearance to visit the mountain redoubt." The CIA Both the complexity and the finality of the opium
not only protects the opium in Long Chen., and