How the Vietnam war boosted the drug trade

November 29, 2013
Australia saw the start of a heroin problem when soldiers brought the habit home from Vietnam.

When Japanese forces occupied French Indochina in 1941, it was not entirely without French opposition. But for the most part it was close to business-as-usual for the French in Vietnam. Japan left the French colonial administration intact, beholden now to Tokyo rather than Paris.

It was oppression-as-usual for the Vietnamese, 2 million of whom Japanese forces starved to death in 1944.

After Japan's surrender in August 1945, the Vietminh (a coalition of Communists, Catholics, Buddhists, small-business operators and farmers who led the resistance in Vietnam) formed an administration and began to celebrate their independence.

The next month, resistance leader Ho Chi Minh proclaimed the Democratic Republic of Vietnam in Hanoi.

The French, however, had a very different view of the future shape of Vietnam after the Japanese defeat to which they had contributed so little. The legacy of Napoleon III would not be as easily surrendered to Vietnamese nationalism as it had been to Japanese imperialism.

Less than a month after the Saigon celebrations, a company of French infantry and 1400 Ghurkhas under British command were airlifted Saigon from Burma. After re-arming the surrendered Japanese soldiers they forced the Vietminh to withdraw from the city. For the French, this war lasted until 1954.

The French attempt to re-establish control of Vietnam was strong on colonial ambition, but it was weak on financial and military support. To combat these deficiencies, the French intelligence organisation, Service de Documentation Exterieure et du Contre-Espionage (SDECE) recruited mercenaries from hill tribes in the north and criminal gangs in the south financed by profits of the opium trade.

The northern force of predominantly Hmong tribes that were recruited was 40,000 strong by 1954. It was their opium that the SDECE bought and then transported in French military DC-3 planes to the airbase at Cap Saint Jaques near Saigon. From here it was processed by the Saigon mercenaries who were recruited from a criminal gang known as the Binh Xuyen.

It proved a suitable arrangement for all concerned. The Hmong had a steady market for their raw opium, the Binh Xuyen at the retail end were pleased with the profits that they shared with French intelligence.

The French, in turn, were more than pleased that they were now able to finance an operation which saw the Vietminh harassed by mercenaries in the north and suppressed by the French in Saigon and its surrounds in the south. There was even a surplus of opium available for sale to Chinese syndicates, who exported it to Hong Kong, and Corsican syndicates operating in Vietnam, who exported it to Marseilles.

Unfortunately for this cosy arrangement, there was a dispute with the Hmong in the north-west of Vietnam, who felt exploited by the French-appointed regional leader from a minority tribe who enriched himself and his supporters by securing their opium at below market price. As a result, the disaffected Hmong sided with the Vietminh and gave them significant logistical support, which helped them defeat the French in the decisive battle that ended the war for them at Dien Bien Phu in May 1954.

Under the peace negotiated in Geneva soon after, the French were to cease hostilities and withdraw to the south of the country for two years, at which time national elections would take place uniting the country under one government.

With about 80% support, Ho Chi Minh — a founding member of the French Communist Party who attended the Versailles Conference in 1919 arguing for Vietnamese independence — was destined to become the elected leader of Vietnam in the July 1956 elections.

He never did, because the elections were never held. The US created a new country called South Vietnam and stepped into the breach vacated by the French. The war against the Vietminh (who in 1960 re-formed as the Front for the Liberation of South Vietnam, or NLF) would continue for the next 20 years, until Saigon fell on April 30, 1975.

The US sent 500,000 troops to Vietnam. They also set up a series of puppet regimes led firstly by Ngo Dinh Diem, who was succeeded by Nguyen Cao Ky when Diem was murdered in a US-backed coup. After Ky fell from favour he was replaced by Nguyen Van Thieu.

What they all had in common was control of the opium trade in which the US was also complicit. The South Vietnamese air force ferried opium from Laos to Saigon and competed with the country’s army, navy, customs officials, politicians and the national police for a share of the trade. The CIA airline Air America that was also used to transport opium to the region’s heroin refineries was known as Air Opium.

From late 1969, Hong Kong chemists associated with the Chiu Chua syndicate began refining opium into No.4 heroin — up to 99% pure — in the Golden Triangle, an area encompassing the hills of eastern Burma, the mountain crests of Thailand and the high plateaus of northern Laos. Like opium, it soon found its way to US troops. Within 18 months, it was estimated that between 10% and 15% of them were using it. Later estimates went as high as 34%.

These troops took the habit back home with them, and some of them became involved in the trade.

At this point, the US addict population had risen to 500,000 and Australia was seeing the start of its own heroin problem.

By the time the war was over, Vietnam was in ruins and Golden Triangle heroin was being exported around the world.

It was from here that Australia imported its heroin. It did so with the considerable help of the Sydney-based Nugan Hand Bank, an institution established by two men who were not bankers but did employ several high ranking ex-US military personnel, and the ex-director and ex-deputy director of the CIA, whose banking experience was also non-existent.

[This is the second of a three-part series about how two wars contributed to the international drug trade and how the Sydney-based Nugan Hand Bank, staffed by the former director and deputy director of the CIA, helped finance the trade. Read part one here. Read part three here.]

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