It could have been a scene in a grand, highly-stylized Hollywood movie: government helicopters sweeping down over rugged hills to land at a rebel base in the jungle, where thousands of rag-tag soldiers were lined up at attention. An entire rebel army had decided not only to lay down arms, but to hand them over to the government forces in an elaborate ceremony. Assault rifles, machine guns, rocket launchers and even SAM-7 surface-to-air missiles were laid out on the ground in front of them as welcoming gifts to the arriving government officers.

But the setting was real, and it was taking place at the Homong headquarters of Khun Sa, the uncrowned king of the Golden Triangle in northeastern Burma. "From now on, there will be no more fighting," said one of Khun Sa's officers, speaking from a podium before the public meeting at the camp's central parade ground. "Khun Sa has given up and decided to surrender to the authorities in Rangoon."

Sitting behind the speaker was Sao Hpalang, the powerful Manchurian born chief of staff of Khun Sa's 15,000-strong private army. A fluent Japanese speaker who went to school during the Manchukuo protectorate, Hpalang first came to the Golden Triangle with Chinese Nationalist forces, which retreated from China following Mao Zedong's communist victory in 1949. He then worked for Taiwan intelligence in Korea during the Korean War and fought for the CIA in Laos in the early '60s before joining Khun Sa's opium army to become its most brilliant strategist.

Hpalang looked satisfied and content--as was, presumably, Khun Sa himself, though he had chosen not to take part in the actual ceremony. Indicted on heroin trafficking charges by a federal grand jury in Brooklyn, New York in late 1989, Khun Sa is supposed to be the most wanted man in the world.

Homong can by no stretch of the imagination be described as a jungle hide-out. On the contrary, it is a bustling town boasting well stocked shops, spacious marketplaces and a neatly laid-out grid of roads, including street lights. The township's 10,000 or so inhabitants live in wooden and concrete houses amid fruit trees, manicured hedges and gardens adorned with bougainvillea and marigolds. Huge sign boards indicate where travel permits are issued.

There are schools, a Buddhist monastery, a well-equipped hospital with operating theaters and X-ray facilities, video halls, karaoke bars, two hotels, brothels, a disco and even a small public park with pathways, benches and a Chinese-style pavilion. Overseas calls can be placed from two commercially-run telephone booths. Local artifacts, historical paintings and photographs are on display in a newly opened cultural museum. A hydroelectric power station is under construction, meant to replace the old diesel-powered generators currently serving the township. Other unusual projects include an 18-hole golf course intended for the many visiting Thai, Taiwanese, Japanese, Singaporean, Hong Kong, Malaysian and South Korean businessmen who usually flock here to buy precious stones and jade at the new gem center.

So why would Khun Sa give all this--and himself--up? The answer is that the drug baron, despite his claim to be a Shan nationalist, is first and foremost a businessman, and the move makes good financial sense. The most important part of the agreement between Rangoon and Khun Sa has already been made public by the ruling junta, the State Law and Order Restoration Council (SLORC): Khun Sa will not be handed over to the Americans. "They never lifted a finger to help us with Khun Sa," said a senior Burmese army officer shortly after the cease-fire had been made public. "They refused to give us weapons to fight him. We had to use our own resources and lost many lives in the process. Now they want to move in."

Behind such rhetoric however, lies a new strategy for dealing with the warlords of the Golden Triangle. Since 1989, the junta has struck similar cease-fire agreements with Khun Sa's rivals in the drug trade, mainly in Kokang and the Wa Hills. Then, a couple of years ago, the authorities turned their attention to Khun Sa. They blockaded all the crossings on the Salween river and put an effective economic stranglehold on the Homong area. At the same time, Washington was stepping up the pressure to have the charismatic warlord caught and extradited to the U.S. to stand trial.

Khun Sa must have fumed as he watched his rivals clean up. No longer pressured by the authorities, the drug lords watched their opium production increase from approximately 1000 tons seven years ago to more than 2000 today. Heroin production soared from 53 tons in 1987 to 190 tons last year. Millions of dollars were re-invested in hotels and industries in Rangoon, Mandalay and other towns. The latest directory from the Union of Myanmar Chamber of Commerce and Industry shows that among its members are more than 20 companies which are closely associated with the heroin trade.

According to sources close to Khun Sa, he sent a secret letter to his Burmese army contacts in November. (Khun Sa is considered especially close to Lt. Gen. Maung Aye, army commander in chief and number two in the junta.) His uncle, Khun Hseng, sealed the deal in Rangoon on December 22. Then came the January 7 weapons handover, conducted with so much pomp before the satisfied mug of Sao Hpalang. Though Khun Sa wasn't at the parade, he did give a lavish dinner party for the officers from Rangoon later that night--whisky and cheers all around--to celebrate the deal.

Later in the month, information leaked out about the "guarantee" for the deal. Khun Sa has made it clear that he has detailed information about the involvement of high-ranking Burmese army officers in the heroin trade: names, bank account numbers and bank statements about major transactions of money. According to sources, all this will be made public if the Burmese authorities try to extradite Khun Sa to the U.S., if an "accident" happens or if the junta in any other way breaks the agreement.

The Golden Triangle may have lost the romantic aura of the colorful characters who ran their own private armies to guard the poppy fields and mule caravans. But Khun Sa is far too clever to let his men be eclipsed by the new world order; he has always been quick to adjust to changing times. Don't look for his "surrender" to stem the flow of heroin from the hills of northeastern Burma. Look instead at the Colombia of a few years ago, when the Medellin cartel of hit squads and unpolished drug lords gave way to the more businesslike management of the Cali cartels. And don't look for spending on guns and fortified villas. Look instead for international lawyers, air-conditioned offices and massive investment in hotels, beach resorts and condos.

"Why would Khun want to be left out of this drug bonanza?" joked a Western drug enforcement official. "And why run a huge, costly army--when it's enough to have a few business executives?"