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- page three ¬

to an official poliey of pushing rapidly ahead the opium produc=
t4on. This policy is carried out with the grpabest energy, despite
the pious declaration of the Paiping R gime fesued on Mare re
1951, in which the Regime, in answer t8 international criticism,
deelared that 16 nad achieved " huge success" in the fight on Opium,
naturally without giving any sort of facts. The reason for this in=
erease in production - an inerenase which’, arcording to our obser=
vers, will be even, barring a bad harvest, much more spsctasniar in
1953 - is two fold t first, that this production ia giving the Red
regimes a very large sum in hard cyrrency in order to make illegal
purchases of strategic materials ; second, beceuss in the opinion
of the top men in the Red regimes, 4% is a good way by the same
token to demoralize the free regimes. This latter point seems far
fetehed, but our observers insist on 4% very strobaly.

But production is not all. The main Gifficulty of the mat¬
ter is the marketing and selling of the gods. Ané. here, the organi¬
gation of the China Russia Opium Pool is becoming outstanding. The
main outlet 18 today Burma. Since the Burmese Governement has be¬
come tolerant of Red Chinese operations, a large number of Export=
Import and other similar ergonizeations have been ergenized in Akyab,
Rangoon; Movimein and Tevoy, There are sone rfiner one's tn other
tows, but they are without 4mportance, These offices, corporat ions
or counters are in many instances headed by Chinese Nationealiats,
ox people posing at that. They official iy trade very broadly with
Tndonesia and Indias They really trade, Bul the bulk of their bussi¬
ness is to 8811 to Red China the essontial stretegic materials
which then reach them via tho Burma road, from the proseedse of the
Opium, which from these places goes ite way. Cut of Burma, the Opoum
or ite derivates goes mostiy to India, indonssta but also in minor
gtentities to Indchina, Siam and even Hong-Kong. From there
gtill through the same organizations, 4% 19 shipped in large quan=
¢4ties to Gentral and Cpribbean America, anc. hence, mostly illegally
via Mexico or ¢land estinely via the Geribbean, to the United
Stetses, the main goai of these axporta. The tnberesting part of the
whole machinery is, that all the way the organization for the distr&
bution of Opium is alco used for the purchase of rare atrategic
materiel, which in almost atl instances is the raturn freichtd sp
to speak. And that furthermore, from the Burma counters dom to
the distributors, the whole organization is financed and its opera¬
ting capital provided by the Red Governements. The Capital is very
great part in these operations, and has been sometimes 2 weakness
when the Narcotics trade was stiil in the hends of private people.
The fact that the present Narcotics ring has no problems on that
account, gives the machine added strength end operating facilities.

Our observers make two points of importance 3: While the
Red Narcotics Ring 18 already by far the strongest in the World
today, it is still expanding, especiakity with the expanding of

AS.