PANGHSANG, Burma - If one is to believe the ancient art of Chinese facial reading, then Bao Yu-xiang has a number of things going for him. The Chinese say Bao's thick nose represents wealth, though not necessarily greed, while the wide forehead indicates cleverness - the kind that helps one to survive in the rugged northeast of Burma, a remote region plagued for decades by opium politics and insurgencies.His pitched, warrior-like eyebrows are those of a man who possesses a great deal of confidence, while the hawkish eyes let you know that he can't be fooled or crossed.

Indeed, with a 20,000-strong army of his own, most people would think twice before crossing the chairman of the United Wa State Army - a pro-Rangoon outfit accused by Thai and foreign governments of flooding the Kingdom with hundreds of millions of methamphetamines and the world with tonnes of heroin on an annual basis.

But with or without the help of the ancient Chinese interpretations, Bao has proven to be a man the world has to take seriously. In and around the Golden Triangle, his name is definitely one of the most venerable.

Bao was born into the family of a tribal chief in Burma's northern Shan State near the Chinese border, where Wa headhunters roamed just two generations ago. Now in his late 50s, he was reared in post-colonial Burma, in an opium-rich region where ethnic warlords and Communist guerrillas fought to stake claims.

"My father didn't know how to read or write," Bao said. "There were eight boys and one girl in our family."

In spite of the hardship that comes with life in the remote Wa Hills, as the area linking southwest Yunnan to northern Burma is called, the young Bao was destined for bigger things.

During the days of insurgencies, Bao quickly climbed up the ladder within the Communist Party of Burma (CPB) to become a fierce field commander.While communist insurgents around Asia crumbled one after another, Bao and his men effectively turned their movement into a force that could not be taken lightly.

Bao says he is satisfied with the cease-fire arrangement the UWSA made with the Burmese government 13 years ago, but added that more has to be done.

In a recent interview from his headquarters in Panghsang, Bao said he would like to see the new Burma Constitution - which has been undergoing drafting since 1993 - officially recognise the role and rights of the country's minority groups under some sort of federal system.Of course, Bao concedes, not all minority groups can have their own autonomous area. The degree of autonomy, he says, would depend on size and military strength.

Since the cease-fire agreement with the Burmese junta in 1989, the UWSA has grown significantly in size and strength, expanding its turf from the Chinese border down to areas adjacent to Chiang Mai, Chiang Rai and Mae Hong Son provinces.

Bao runs his 20,000-strong army from his base in Panghsang, a town of about 10,000 residents. Situated on the bank of the Nam Kha River that separates China's Yunnan and Burma's Shan State, the town is surrounded by high mountains that form part of the Wa Hills. The range stretches from the southwest of Yunnan province to the eastern region of Burma's Shan State bordering Thailand.

While not exactly a boomtown by most standards, Panghsang is no jungle hideout either. It has electricity, running water, wide paved roads, hotels, a hospital, private clinics, karaoke bars, casinos, shop-houses, temples and a mosque for some 30 or so Muslim families. Bao even has his own private bowling alley.

On the hilltop overlooking the town are rubber plantations. The first crop yield should come in two years' time. Joint ventures on mining and gem exploration are well on the way, but they are far from reaching full potential due to the lack of technical know-how, Bao said.

The UWSA's rice wine and Golden Triangle cigarettes brand are strictly for local consumption as neither the Burmese or the Chinese allow these products in their markets.

The UN Drug Control Programme (UNDCP) has launched a number of projects to rid the area of poppy growing, but Bao said much more support is needed to ensure that the Wa- controlled area becomes opium-free.The Wa-controlled region would be drug-free by 2005, Bao said - but few are convinced that the UWSA can deliver on its promise.

The international community that despises the organisation appears to be lost as to what to do, while Burma, the country to which Bao has pledged his allegiance, has ruled out any military option to force the UWSA to get out of the drug trade.

Indeed, the security arrangements between the Burmese generals and insurgent groups may have stopped the shooting. However, it has also resulted in a very undesirable outcome - one that has placed Burma in the ranks of pariah states, in which former and current heroin dealers roam freely and opium warlords continue to operate their own armies.

Opium cultivation in Burma has shot up dramatically since the communist insurgencies ended and grade-four heroin continues to flood major cities throughout the world.

The political deadlock in Rangoon, coupled with the regime's appalling human rights record, has turned the Burmese government into an international outcast, while the freezing of the much-needed foreign aid has made this resource-rich nation an even bigger "basket case".

Generally, it's agreed that in Burma, drugs and insurgencies are two sides of the same coin. And unless a political solution acceptable to all sides can be reached, no anti-drug policy in Burma will have any chance of success.

So far, no solution is in sight. The UWSA continues to grow as Thais and Burmese watch with weary eyes, taking a wait-and- see approach. But instead of looking to Rangoon for answers to the "UWSA problem", more and more people are turning to the Chinese province of Yunnan.