The Politics of Heroin in Southeast Asia

Gen. Phourni Nosavan: "Feudalism Is Still with US"

According to Gen. Ouane Rattikone, the man who issued the "requisition militaire" and controlled much of the opium traffic was Gen. Phoumi Nosavan, CIA protege and political leader of the Laotian right wing. (50) Phoumi Nosavan was just another ambitious young colonel in 1958 when an unexpected electoral victory by the leftist Pathet Lao movement brought a neutralist government to power and panicked the U.S. mission. Horrified at the thought that Laos might eventually go left, the U.S. mission decided that special measures were called for. Almost immediately the CIA financed the formation of a right-wing coalition, and several weeks later the State Department plunged the neutralist government into a fiscal crisis by cutting off all aid. Little more than three months after the elections Prime Minister Souvanna Phourna and his neutralist government resigned. When a right-wing government took office the new prime minister, Phoui Sananikone, declared, "We are anticommunists." (51)

Col. Phoumi Nosavan was one of the bright young men the CIA picked to organize the right wing. Backed by the CIA, Phourni became a cabinet minister in February 1959 and a general several months later. (52) With his personal CIA agent always by his side, General Phoumi went on to plot coups, rig elections, and help the CIA build up its Secret Army; in short, he became the major pawn in the CIA's determined effort to keep Laos's government militantly antiCommunist. However, in 1961 the Kennedy administration opted for a neutralist coalition rather than risk an armed confrontation with the Soviet Union over Laos, and General Phoumi was ordered to merge his right-wing government into a tripartite coalition. When General Phoumi refused despite personal appeals from President Kennedy and the assistant secretary of state, the State Department had his personal CIA agent transferred out of the country and in February 1962 cut off the $3 million a month aid it had been supplying his government. (53)

Desperate for funds but determined not to resign, Pboumi turned to the opium traffic as an alternate source of funds for his army and government. Although he had controlled the traffic for several years and collected a payoff from both Corsican and Chinese smugglers, he was not actively involved, and his percentage represented only a small share of the total profits. Furthermore, Laotian opium merchants were still preoccupied with marketing locally grown opium, and very little Burmese opium was entering international markets through Laos. The obvious solution to General Phoumi's fiscal crisis was for his government to become directly involved in the import and export of Burmese opium. This decision ultimately led to the growth of northwest Laos as one of the largest heroin-producing centers in the world.

Adhering to his nation's feudal traditions, General Phoumi delegated responsibility for the task to Gen. Ouane Rattikone, commander of Military Region I and warlord of northwestern Laos. General Ouane recalls that he was appointed chairman of the semiofficial Laotian Opium Administration in early 1962 and charged with the responsibility of arranging Burmese opium imports. (54) Working through a commander in the Secret Army in Ban Houei Sai, he contacted a Shan rebel leader employed by the Agency in the Golden Triangle region who arranged the first deliveries of Burmese opium several months later. (55) General Ouane is proud of this historic achievement, for these were the first major opium caravans to cross the Mekong River into Laos.

When asked whether he exported the Burmese opium by dropping it in the Central Highlands of South Vietnam, General Ouane responded:

No, that is stupid and done only by small merchants and not great merchants. . . . We rented Dakotas [C-47s] from the civil aviation companies and then dropped the opium into the Gulf of Siam. The opium was wrapped in four or five layers of plastic and then attached to floats. It was dropped to small fishing boats, taken to fishing ports in South Vietnam, and then it disappeared. We are not stupid; we are serious merchants. (56)

General Ouane says these early shipments were quite profitable, and claims that they provided General Phourni with an average income of about $35,000 a month during 1962.

But despite General Ouane's best efforts, a series of military and financial reverses soon forced General Phourni to merge his right-wing government into the tripartite coalition. Phoumi's government had simply ordered the National Bank to print more money when American aid was cut off in February; the foreign exchange backing for Laotian currency declined by 30 percent in six Months and consumer prices in Vientiane jumped by 20 percent. General Phoumi had gone on a whirlwind tour of Asia's anti-Communist nations to appeal for aid, but only South Korea was willing to help. (57) When his rightist troops suffered a disastrous defeat at Nam Tha, northwestern Laos, in May 1962, General Phourni acknowledged his failure and in June merged his government into a neutralist coalition headed by Prime Minister Souvanna Phourna.

But the price of General Phourni's compliance came high. Although he yielded some of his political power, he demanded compensatory economic concessions from the neutralist government. Bartering away several powerful ministries, Phourni retained control over the Finance Ministry and won the right to monopolize much of Vientiane's thriving consumer economy. With the prime minister's tacit consent, he established a variety of lucrative monopolies over the capital's vice trades and legitimate commercial activities. (58)

One of his enterprises was an offensive but profitable gambling casino in downtown Vientiane that one journalist described as "an ugly, fivestory building that stank like an Indonesian urinal." When he announced plans to erect similar monstrosities in every major Laotian city, the king categorically refused to allow one in Luang Prabang, the royal capital, and local authorities in Thakhek raised equally vehement objections. But Phourni was not daunted by these minor reverses in the establishment of his financial empire. Gold trafficking was even more lucrative than gambling, and the Ministry of Finance granted General Phourni's Bank of Laos a monopoly on the import of gold, which netted him from $300,000 to $500,000 a year. (59)

The opium trade, however, was the most profitable of all ventures. General Phoumi opened a seedy, ramshackle opium den in Vientiane that could accommodate 150 smokers. To ward off any possible criticism from his free world allies, Phourni had a sign hung over the entrance to his palace of dreams "Detoxification Clinic." When a French journalist asked Prime Minister Souvanna Phourna why this eyesore was allowed to remain open, he replied, "Feudalism is still with US." (60)

Although Phoumi had abandoned his plans for fiscal independence from the United States, Gen. Ouane Rattikone continued to manage the Laotian Opium Administration with considerable success. Larger Shan caravans were entering northwestern Laos every year, and from 1962 to 1964 profits on exports to South Vietnam tripled. According to the Laotian Opium Administration's ledger, which General Ouane now stores in an upstairs closet of his Vientiane villa, November 1963 was a typical month: 1,146 kilos of raw opium were shipped to South Vietnam, netting $97,410. (61)

But Phourni's parsimonious management of his monopolies produced serious tensions in the right-wing camp, and were a major cause of the April 19, 1964, coup that toppled him from power. Not only did he monopolize the most lucrative portions of Vientiane's economy, but he refused to share his profits with the other right-wing generals.

The commander of the Vientiane Military Region, Gen. Kouprasith Abbay, considered the capital his rightful economic preserve, and was bitterly resentful toward Phourni. Gen. Ouane Rattikone harbored somewhat similar feelings: more than seven years after the coup, the genial, rotund General Ouane still knits his brow in anger when he recalls that Phourni paid him a monthly salary of two hundred dollars to manage an opium administration making more than a million dollars a year. (62) Moreover, Phourni's "understanding" with Prime Minister Souvanna Phourna had softened his hostility toward the neutralist government; and this cost him a great deal of political influence among the extreme right wing, which included both Kouprasith and Ouane.

Although the ostensible motivation for the right-wing coup of April 19, 1964, was to eliminate the neutralist army and make the prime minister more responsive to the right wing, the generals seem to have devoted most of their energy to breaking up Phourni's financial empire. (63) The coup began at 4:00 A.m. as General Kouprasith's troops seized the city, captured most of the neutralist army officers, and placed the prime minister under house arrest. There was no resistance and virtually no bloodshed. While the threat of a U.S. aid cutoff convinced Kouprasith and Ouane to release the prime minister from house arrest, nothing could deter them from stripping Phourni of his power. (64) On May 2 General Phourni resigned his portfolio as minister of defense. That same day, the Ministry of Finance cancelled the import license for Sogimex Company, one of Phourni's businesses, which had enjoyed a monopoly on the import of all alcoholic beverages. The Revolutionary Committee closed his gambling casino, and the Ministry of Finance broke the Bank of Laos's monopoly on gold imports. (65)

But in the best comic opera tradition, General Phoumi tried to recoup his lost empire by launching a countercoup on February 2, 1965. After four separate groups of soldiers wearing three different color-coded scarves charged about Vientiane firing off heavy artillery and machine guns for four or five days, Phourni finally gave up and fled to Thailand. (66) The situation was so confusing that General Ouane and General Kouprasith held a press conference on February 8 to proclaim their victory and to explain that there had most definitely been a coup-their coup. (67)

As the victors, Kouprasith and Ouane divided up what remained of General Phourni's financial empire. While Kouprasith inherited most of the fallen general's real estate holdings, brothels, and opium dens in the Vientiane region, General Ouane assumed full control over the opium trade in northwestern Laos.

Ouane's accession to Phourni's former position in the drug trade brought an end to the activities of the Corsican "Air Opium" charter airlines. Unwilling to tolerate any competition, General Ouane refused to issue them requisitions militaires, thereby denying them access to Laotian airports. This made it impossible for the Corsican airlines to continue operating and forced them out of the opium transport business. (68) However, General Ouane had seriously overestimated his air logistic capabilities, and the move produced a major crisis for Laos's opium trade.

As it turned out, Ouane probably could not have picked a worse time to force the Corsicans out of business. Laotian military airpower was at a premium in 1964 and 1965: bombing operations along the Ho Chi Minh Trail were just getting underway; Lao T-28 fighters were being used in clandestine reprisal raids against North Vietnam; and renewed fighting on the Plain of Jars required lavish air support. (69) The commander of the Laotian air force was determined to give these military operations top priority, and refused to allocate air transports for General Ouane's opium runs to Ban Houei Sai.

In the Meo highlands of northeastern Laos the situation was even more critical. Capture of the Plain of Jars by Pathet Lao rebels in 1964 restricted government aircraft to temporary dirt landing strips on the surrounding mountain ridges. Heavy C-47 transports were almost useless for this kind of flying, and the Laotian air force had almost no light observation planes. Wartime conditions had increased Meo dependence on poppy cultivation, and the lack of air transport created serious economic problems for hill tribe opium farmers. Since the CIA was using the Meo population to combat Pathet Lao forces in the mountains of northeastern Laos, the prosperity and well being of this tribe was of paramount importance to the agency's success. By 1965 the CIA had created a Meo army of thirty thousand men that guarded radar installations vital to bombing North Vietnam, rescued downed American pilots, and battled Pathet Lao guerrillas.

Without air transport for their opium, the Meo faced economic ruin. There was simply no form of air transport available in northern Laos except the CIA's charter airline, Air America And according to several sources, Air America began flying opium from mountain villages north and east of the Plain of Jars to Gen. Vang Pao's headquarters at Long Tieng. (70)

Air America was known to be flying Meo opium as late as 1971. Meo village leaders in the area west of the Plain of Jars, for example, claim that their 1970 and 1971 opium harvests were bought up by Vang Pao's officers and flown to Long Tieng on Air America UH-lH helicopters. This opium was probably destined for heroin laboratories in Long Tieng or Vientiane, and ultimately, for GI addicts in Vietnam. (71)

The U.S. Embassy in Vientiane adopted an attitude of benign neglect toward the opium traffic. When one American journalist wrote the Embassy complaining that Laotian officials were involved in the drug trade, U.S. Ambassador G. McMurtrie Godley responded in a letter dated December 2, 1970:

"Regarding your information about opium traffic between Laos and the United States, the purchase of opium in Southeast Asia is certainly less difficult than in other parts of the world, but I believe the Royal Laotian Government takes its responsibility seriously to prohibit international opium traffic. . . . However, latest information available to me indicated that all of Southeast Asia produces only 5% of narcotics which are, unfortunately, illegally imported to Great Britain and the US. As you undoubtedly are already aware, our government is making every effort to contain this traffic and I believe the Narcotics Bureau in Washington D.C. can give you additional information if you have some other inquiries." (72)

But the latest information available to Ambassador Godley should have indicated that most of the heroin being used by American GIs in Vietnam was coming from Laotian laboratories. The exact location of Laos's flourishing laboratories was common knowledge among even the most junior U.S. bureaucrats.

To Americans living in cities and suburbs cursed with the heroin plague, it may seem controversial, even shocking, that any U.S. government agency would condone any facet of the international drug traffic. But when viewed from the perspective of historical precedent and the demands of mountain warfare in northern Laos, Air America's involvement and the U.S. Embassy's tolerant attitude seem almost inevitable. Rather than sending U.S. combat troops into Laos, four successive American Presidents and their foreign policy advisers worked through the CIA to build the Meo into the only effective army in Laos. The fundamental reason for American complicity in the Laotian opium traffic lies in these policy decisions, and they can only be understood in the context of the secret war in Laos.