Thailand's Opium: The Fruits of Victory

Government corruption is not just a problem in Thailand, it is a way of life. Like every bureaucracy, the Thai government has elaborate organizational charts marking out neatly delineated areas of authority. To the uninformed observer it seems to function as any other meritocracy, with university graduates occupying government posts, careers advancing step by step, and proposals moving up and down the hierarchy in a more or less orderly fashion. But all of these charts and procedures are a facade, behind which operate powerful military cliques whose driving ambition is to expropriate enough money, power, and patronage to become a government within the government. These cliques are not ideological factions, but groups of plotters united by greed and ambition.

A clique usually has its beginnings in some branch of the military service, where a hard core of friends and relatives begin to recruit supporters from the ranks of their brother officers. Since official salaries have always been notoriously inadequate for the basic needs, not to mention the delusions, of the average officer, each rising faction must find itself a supplementary source of income. (183) While graft within the military itself provides a certain amount of money, all cliques are eventually forced to extend their tentacles into the civilian sector. A clique usually concentrates on taking over a single government ministry or monopolizing one kind of business, such as the rice trade or the lumber industry. By the time a clique matures it has a disciplined pyramid of corruption. At the bottom, minor functionaries engage in extortion or graft, passing the money up the ladder, where leaders skim off vast sums for themselves and divide the remainder among the loyal membership. Clique members may steal from the official government, but they usually do not dare steal from the clique itself; the amount of clique money they receive is rigidly controlled. When a clique grows strong enough to make a bid for national power, it is inevitably forced to confront another military faction. Such confrontations account for nearly all the coups and countercoups that have determined the course of Thai politics ever since the military reduced the king to figurehead status in 1932.

From 1947 to 1957 Thai politics was dominated by an intense rivalry between two powerful cliques: one led by Gen. Phao Sriyanonda, who resembled a cherub with a Cheshire cat smile, and the other by Marshal Sarit Thanarat. Both were catapulted upward by the November 1947 coup, which restored Thailand's wartime leader, Marshal Phibun Songkhram, to power. Too weak to execute the coup himself, Marshal Phibun had recruited two powerful army cliques. One of these was composed mainly of ambitious young army officers led by Sarit; the other was led by the commander in chief of the army, General Phin, and sparked by his aggressive son-in-law, Col. Phao Sriyanonda. (184) Soon after the triumvirate took power, the two army cliciues began to argue over division of the spoils. Military power was divided without too much rancor when Phao became deputy director-general of the National Police. (Phao became director-general in 1951, and his forty thousand police officers were adequate insurance against Sarit's control over the forty-five thousand-man army. (185) And many of the bureaucratic and commercial spoils were divided with equal harmony. However, an exceptionally bitter struggle developed over control of the opium traffic.

The illicit opium trade had only recently emerged as one of the country's most important economic assets. Its sudden economic significance may have served to upset the delicate balance of power between the Phao and Sarit cliques. Although the Opium Monopoly had thrived for almost a hundred years, by the time of the 1947 coup the high cost of imported opium and reasonably strict government controls made it an unexceptional source of graft. However, the rapid decline in foreign opium imports and the growth of local production in the late 1940s and early 1950s suddenly made the opium trade worth fighting over.

At the first United Nations narcotics conference in 1946, Thailand was criticized for being the only country in Southeast Asia still operating a legal government monopoly. (186) Far more threatening than the criticism, however, was the general agreement that all nonmedical opium exports should be ended as soon as-possible. Iran had already passed a temporary ban on opium production in April 1946, (187) and although the Thai royal monopoly was able to import sufficient quantities for its customers in 1947, the future of foreign imports was not too promising. (188) Also, smuggled supplies from China were trickling to an end as the People's Republic proceeded in its successful opium eradication campaign. To meet their projected needs for raw opium, the Thai government authorized poppy cultivation in the northern hills for the first time in 1947. The edict attracted a growing number of Meo into Thailand's opium-growing regions and promoted a dramatic increase in Thai opium production. (189) But these gains in local production were soon dwarfed by the much more substantial increases in the Burmese Shan States. As Iranian and Chinese opium gradually disappeared in the early 1950s, the KMT filled the void by forcing an expansion of production in the Shan States they occupied. Since the KMT were at war with the Burmese and received their U.S. supplies from Thailand, Bangkok became a natural entrepot for their opium. By 1949 most of the Thai monopoly's opium was from Southeast Asia. (190) and in 1954 British customs in Singapore stated that Bangkok had become the major center for international opium trafficking in Southeast Asia. (191) The traffic became so lucrative that Thailand quietly abandoned the antiopium campaign announced in 1948 (all opium smoking was to have ended by 1953). (192)

The "opium war" between Phao and Sarit was a hidden one, with almost all the battles concealed by a cloak of official secrecy. The most comical exception occurred in 1950 as one of General Sarit's army convoys approached the railhead at Lampang is northern Thailand with a load of opium. Phao's police surrounded the convoy and demanded that the army surrender the opium since antinarcotics work was the exclusive responsibility of the police. When the army refused and threatened to shoot its way through to the railway, the police brought up heavy machine guns and dug in for a fire-fight. A nervous standoff continued for two days until Phao and Sarit themselves arrived in Lampang, took possession of the opium, and escorted it jointly to Bangkok, where it quietly disappeared. (193)

In the underground struggle for the opium trade, General Phao slowly gained the upper hand. While the clandestine nature of this "opium war" makes it difficult to reconstruct the precise ingredients in Phao's victory, the critical importance of CIA support cannot be underestimated. In 1951 a CIA front organization, Sea Supply Corporation, began delivering lavish quantities of naval vessels, arms, armored vehicles, and aircraft to General Phao's police force. (194) With these supplies Phao was able to establish a police air force, a maritime police, a police armored division, and a police paratroop unit. General Sarit's American military advisers repeatedly refused to grant his army the large amounts of modem equipment that Sea Supply Corporation gave Phao's police. (195) Since Sea Supply shipments to KMT troops in Burma were protected by the Thai police, Phao's alliance with the CIA also gave him extensive KNIT contacts, through which he was able to build a virtual monopoly on Burmese opium exports. Phao's new economic and military strength quickly tipped the balance of political power in his favor; in a December 1951 cabinet shuffle his clique captured five cabinet slots, while Sarit's faction got only one. (196) Within a year Sarit's rival had taken control of the government and Phao was recognized as the most powerful man in Thailand.

Phao used his new political power to further strengthen his financial base. He took over the vice rackets, expropriated the profitable Bangkok slaughterhouse, rigged the gold exchange, collected protection money from Bangkok's wealthiest Chinese businessmen, and forced them to appoint him to the boards of over twenty corporations. The man whom C. L. Sulzberger of The New York Times called "a superlative crook (197) and whom a respected Thai diplomat hailed as the "worst man in the whole history of modem Thailand" (198) became the CIA's most important Thai client. Phao became Thailand's most ardent anti-Communist, and it appears that his major task was to support KMT political aims in Thailand and its guerrilla units in Burma. Phao protected KMT supply shipments, marketed their opium, and provided such miscellaneous services as preventing Burmese observers from going to the staging areas during the November-December 1953 airlifts of supposed KMT soldiers to Taiwan.

In political terms, however, Phao's attempts to generate support for the Kuomintang among Thailand's overseas Chinese community, the richest in Asia, was probably more important. Until 1948 the KMT had been more popular than Mao's Communists among Thailand's Chinese, and had received liberal financial contributions. As Mao's revolution moved toward victory during 1948-1949, Chinese sentiment shifted decisively in favor of the Communists. (200)

But after the Phibun government allied itself with the United States in 1950, it took a harder line, generally urging the Chinese to remain neutral about politics in their mother country. In contrast, General Phao began a campaign to steer the Chinese community back to an active pro-KMT position. Phao's efforts were a part of a larger CIA effort to combat the growing popularity of the People's Republic among the wealthy, influential overseas Chinese community throughout Southeast Asia. The details of this program were spelled out in a 1954 U.S. National Security Council position paper, which suggested:

"Continue activities and operations designed to encourage the overseas Chinese communities in Southeast Asia: 
(a) to organize and activate anti-communist groups and activities within their own communities; 
(b) to resist the effects of parallel pro-communist groups and activities; 
(c) generally, to increase their orientation toward the free world; and, 
(d) consistent with their obligations and primary allegiance to their local governments, to extend sympathy and support to the Chinese Nationalist Government as the symbol of Chinese political resistance and as a link in the defense against communist expansion in Asia." (101)

These pressures resulted in a superficial shift to the right among Thailand's Chinese. However, since their support for the KMT was totally dependent on police intimidation, when Phao was weakened by political difficulties in 1955 proKMT activity began to collapse. (202)

By 1955 Phao's National Police Force had become the largest opiumtrafficking syndicate in Thailand, and was intimately involved in every phase of the narcotics traffic; the level of corruption was remarkable even by Thai standards. If the smuggled opium was destined for export, police border guards escorted the KNIT caravans from the ThailandBurma border to police warehouses in Chiangmai. From there police guards brought it to Bangkok by train or police aircraft. Then it was loaded onto civilian coastal vessels and escorted by the maritime police to a mid-ocean rendezvous with freighters bound for Singapore or Hong Kong, (203) However, if the opium was needed for the government Opium Monopoly, theatrical considerations came to the fore, with police border patrols staging elaborate shoot-outs with the KNIT smugglers near the Burma-Thailand frontier. Invariably the KMT guerrillas would drop the opium and flee, while the police heroes brought the opium to Bangkok and collected a reward worth oneeighth the retail value. (204) The opium subsequently disappeared. Phao himself delighted in posing as the leader in the crusade against opium smuggling, (205) and often made hurried, dramatic departures to the northern frontier, where he personally led his men in these desperate gun battles with the ruthless smugglers of slow death. (206)

Opium profits may have helped build General Phao's political empire, but an opium scandal contributed to its downfall. It began as another f Phao's carefully staged opium seizures. During the night of July 9, 1955, a squad of border police crouched in the underbrush at the Mesai River, watching KMT soldiers ferrying twenty tons of opium from Burma into Thailand. (207) When the last bundles were unloaded early the next morning the Thai police burst from the jungle and rushed the smugglers. Miraculously, the KMT soldiers again escaped unharmed. The triumphant police escorted the opium to Bangkok, where General Phao congratulated them for their good work. But for some reason, perhaps it was the huge size of the haul, Phao became overanxious. He immediately signed a request for a reward of $1,200,000 and forwarded it to the Ministry of Finance. Then he rushed across town to the Finance Ministry and, as deputy minister of finance, signed the check. Next, or so he claimed, Phao visited the mysterious "informer" and delivered the money personally. (208) On July 14 General Phao told the press that the unnamed informant had fled the country with his money in fear of his life, and therefore was not available for comment, He also said that most of the twenty tons would be thrown into the sea, though some would be sold to pharmaceutical companies to pay for the reward. (209) Even to the corruptionhardened Thai newsmen, the story seemed too specious to withstand any scrutiny.

Prime Minister Phibun was the first to attack Phao, commenting to the press that the high opium rewards seemed to be encouraging the smuggling traffic. More pointedly he asked why the final reward was so much higher than the one first announced.(210)The police explained that, since they had not had a chance to weigh the opium, they just estimated the reward, and their estimate was too low. Since it was common knowledge that the law prescribed no payments until after weighing, the press jumped on this hapless explanation and proceeded to crucify Phao with it. (211) In August Phao was relieved of his position in the Finance Ministry (212) and left on a tour of Japan and the United States. During his absence, Prime Minister Phibun released the press from police censorship, assumed veto power over all police paramilitary activities, and ordered the police to give up their business positions or quit the force. (213)

Phao returned in late September and delivered a public apology before the National Assembly, swearing that the police were in no way implicated in the twenty-ton opium scandal. (214) But public opinion was decidedly skeptical, and the unleashed press began a long series of exposes on police corruption. General Sarit was particularly bitter toward Phao, and newspapers friendly to his clique began attacking Phao's relationship with the CIA, accusing him of being an American puppet. In November 1956 Phibun made Thailand's break with Phao's pro-KMT police official when he said at a press conference, "The Kuomintang causes too much trouble; they trade in opium and cause Thailand to be blamed in the United Nations." (215) Some of the press were even bold enough to accuse the CIA's Sea Supply Corporation of being involved in Phao's opium trafficking. (216)As Sarit's fortunes rose, Phao's influence deteriorated so seriously that he felt compelled to try to use the February 1957 elections for a popular comeback. With his profits from the opium trade and other rackets, he organized a political party and began a public speaking campaign. His police issued immunity cards to Bangkok gangsters, and paid them to break up opposition rallies and to beat up unfriendly candidates. In the 1957 balloting Phao's thugs perpetrated an enormous amount of electoral fraud; both during and after the campaign the Bangkok press attacked the police for "hooliganism," opium smuggling, and extortion. (217) Phao did well enough in the elections to be appointed minister of the interior in the succeeding cabinet. But this did him little good, for Sarit was preparing a coup.

On September 16, 1957, tanks and infantry from Sarit's old First Division moved into Bangkok's traditional coup positions. Phao flew off to his numbered bank accounts in Switzerland and Prime Minister Phibun fled to Japan. Sarit moved cautiously to reinforce his position. He allowed a divisive cabinet composed of competing military factions and anti-American liberals to take office, maintaining his control over the military by appointing a loyal follower, Gen. Thanom Kitikhachorn, as minister of defense. Next, Sarit broke the power of the police force. Police armored and paratroop units were disbanded and their equipment turned over to the army, (218) and all of the CIA agents attached to Phao's police force were thrown out of the country. (219) Sarit's long-time follower, Gen. Praphas Charusathien, was made minister of the interior. Loyal army officers were assigned key police positions, where they used an investigation of the opium trade to purge Phao's clique. For example, when police and military units seized six tons of raw opium on the northern frontier in November, they captured five Thai policemen as well. In Bangkok, the new director-general of police, Gen. S. Swai Saenyakorn, explained that five or six gangs that controlled smuggling in the north operated "with police influence behind their backs," and that these arrests were part of a larger campaign to fire or transfer all those involved. (220) General Swai's words took on added meaning when Police Brigadier Gen. Thom Chitvimol was removed from the force and indicted for his involvement in the six-ton opium case. (221)

New elections in December legitimized the anti-Phao coup, and on January 1, 1958, Thanom became prime minister. However, liberals in the cabinet were chafing under Sarit's tight reign, and they began organizing several hundred dissatisfied younger military officers for another coup. But Sarit reorganized his clique into an association known as the Revolutionary Group, and on October 20, 1958, seized power with a bloodless coup. (222) The Revolutionary Group proceeded to rule openly. Now that the police had been rendered inffectual as a power base, Sarit's only major worry was the possibility of a countercoup by the younger colonels and lieutenant colonels whose loyalty to the regime was in doubt. These fears dominated the endless postcoup sessions of the Revolutionary Group, and discussions continued for hours as Sarit and his fellow generals grappled for a solution. They agreed that a coup could be prevented if they recruited the majority of the colonels into their faction by paying them large initial bonuses and regular supplemental salaries. But the Revolutionary Group faced the immediate problem of rapidly assembling millions of baht for the large initial bonuses. Obviously, the fastest way to amass this amount of money was to reorganize General Phao's opium trade.

The Revolutionary Group dispatched army and air force officers to Hong Kong and Singapore to arrange large opium deals; police and military officers were sent into northern Thailand to alert mountain traders that there would be a market for all they could buy. As the 1959 spring opium harvest came to an end, the army staged its annual dry-season war games in the north to maximize opium collection. Every available aircraft, truck, and automobile was pressed into service, and the hills of northern Thailand and Burma were picked clean. Soon after the opium had been shipped from Bangkok to prearranged foreign buyers and the flickering flames of the countercoup doused with the opium money, the Revolutionary Group met to discuss whether they should continue to finance their political work with opium profits. Sarit was in favor of the idea, and was not particularly concerned about international opinion. General Praphas, who helped manage the trade for Sarit, agreed with his leader. While most of the group was indifferent, Generals Thanom and Swai were concerned about possible severe international repercussions, General Swai was particularly persuasive, since he was respected by Sarit, who addressed him with the Thai honorific "elder brother." (In contrast, Sarit called the sycophantic Praphas "Porky.") Finally Sarit was persuaded by Swai, and he decreed that the police and military would no longer function as a link between Burma's poppy fields and the ocean-going smugglers on Thailand's southern coast. However, no attempt would be made to stop the enormous transit traffic or punish those who discreetly accepted bribes from Chinese syndicates who inherited the traffic. Although the traffic continued, it was much less profitable for the authorities. In 1959 Sarit's government passed the Harmful Habit-Forming Drugs Act, which read:

While the laws signaled a crackdown on opium smoking and served to drive the addict population to heroin, it has in no way affected the other aspects of the drug trade; Bangkok remains a major Asian opium capital. Little has changed since General Phao's heyday: today, rather than being directly involved, highranking government leaders are content to accept generous retainers from powerful Bangkok-based Chinese syndicates that have taken full responsibility for managing the traffic.

There can be little doubt that CIA support was an invaluable asset to General Phao in managing the opium traffic. The agency supplied the aircraft, motor vehicles, and naval vessels that gave Phao the logistic capability to move opium from the poppy fields to the sea-lanes. And his role in protecting Sea Supply's shipments to the KMT no doubt gave Phao a considerable advantage in establishing himself as the exclusive exporter of KMT opium.

Given its even greater involvement in the KMT's Shan States opium commerce, how do we evaluate the CIA's role in the evolution of large-scale opium trafficking in the Burma-Thailand region? Under the Kennedy administration presidential adviser Wait W. Rostow popularized a doctrine of economic development that preached that a stagnant, underdeveloped economy could be jarred into a period of rapid growth, an economic "takeoff," by a massive injection of foreign aid and capital, which could then be withdrawn as the economy coasted into a period of self-sustained growth. (224) CIA support for Phao and the KMT seems to have sparked such a "takeoff" in the BurmaThailand opium trade during the 1950s: modern aircraft replaced mules, naval vessels replaced sampans, and well-trained military organizations expropriated the traffic from. bands of illiterate mountain traders.

Never before had the Shan States encountered smugglers with the discipline, technology, and ruthlessness of the KMT. Under General Phao's leadership Thailand had changed from an opium-consuming nation to the world's most important opium distribution center. The Golden Triangle's opium production approached its present scale; Burma's total harvest had increased from less than forty tons (225) just before World War 11 to three hundred to four hundred tons in 1962 (226), while Thailand's expanded at an even greater rate, from 7 tons (227) to over one hundred tons. (228) In a 1970 report the U.S. Bureau of Narcotics concluded:

By the end of the 1950s, Burma, Laos, and Thailand together had become a massive producer, and the source of more than half the world's present illicit supply of 1,250 to 1,400 tons annually. Moreover, with this increase in output the region of the Far East and Southeast Asia quickly became self-sufficient in opium. (229)

But was this increase in opium production the result of a conscious decision by the CIA to support its allies, Phao and the KMT, through the narcotics traffic? Was this the CIA's "Operation X"? There can be no doubt that the CIA knew its allies were heavily involved in the traffic; headlines made it known to the whole world, and Phao was responsible for Thailand's censure by the U.N.'s Commission on Narcotic Drugs. Certainly the CIA did nothing to halt the trade or to prevent its aid from being abused. But whether the CIA actively organized the traffic is something only the Agency itself can answer. In any case, by the early 1960s the Golden Triangle had become the largest single opium-growing region in the world-a vast reservoir able to supply America's lucrative markets should any difficulties arise in the Mediterranean heroin complex. The Golden Triangle had surplus opium; it had well-protected, disciplined syndicates; with the right set of circumstances it could easily become America's major heroin supplier. And those circumstances were soon to develop.