Myanmar: Make Us An Offer


August 20, 2016: Aung San Suu Kyi, the most powerful Burmese politician, has been in China for several days for meetings with her Chinese counterpart to work out terms for China to restart work on the $3.6 billion Myitsone hydroelectric dam complex in northern Burma. The dam project has been largely shut down since 2011 because of corruption charges (largely true) and armed resistance from local tribal rebels. China said it was willing to make concessions to save the dam project and Burma is seeking the best acceptable (to Burmese) deal it can get. China needs the 6,000 MW of electrical power generated and 90 percent of it will go to China. There are many similar Chinese hydroelectric dam projects in the north as well as new mines and lots of road and bridge building to support it all. Burma is willing to let it all happen as long as there is minimal corruption and misbehavior. That means compensating the local landowners (mainly tribes that have been in the area for centuries) fairly. China, however, wants more than just the electrical power and profits from these investments. China also wants some diplomatic assistance. Details on those negotiations are less likely to be publicized.

Burma is once again a minor theatre in a larger Pacific war involving China, Japan and most everyone else. This war is largely about economics and territorial conquest, not blowing things up. The Japanese are back in Burma again, as can be seen by the new 18 story (75 meter) tower Japanese money and engineers built in Yangon, the largest city in Burma. The tower is one of the ten tallest structures in the city and is mainly there for the weather radar on the top floor. Burma has been without such radars for over a decade and the new one will save lives and property in the most densely populated part of the country.

Japan built the tower to counter Chinese investment activity in Burma. Japan has quietly stepped up and replaced China as Burma’s largest foreign investor. This has made it practical for the new (elected) Burmese government to oppose China regarding the South China Sea dispute. Burma, much to the dismay of China, did not denounce the recent international court ruling that China was acting illegally. China saw this coming and was trying to avoid it. Since early 2016 China has been conducting a “charm offensive” with the new, non-military government of Burma. Currently China is eager to buy some regional allies (especially Thailand, Burma and Malaysia) to get some support for Chinese expansion efforts in the South China Sea. China is willing to pay a lot for such support. But Burmese officials knew that most Burmese feared China and backed cracking down on illegal economic activity on the Chinese border and punishing Chinese firms that behave badly while building large new mines and power plants in thinly populated rural areas up north. Japan also noted that the Chinese threat to all its neighbors had turned Japan into an acceptable ally. Since World War II Japan has been hated through the region for Japanese atrocities during that war. The Japanese had driven out European colonial governments and called it liberation. But the reality was worse than the Europeans and Japan long refused to recognize that misbehavior. That has changed and, along with the Chinese threat, Japan has gone from old enemy to new friend. China has now resumed its traditional role of regional superpower.

China is willing to negotiate with Burma and compromise on its unpopular economic activities, mainly in the north. Some concessions are easy to make. For example a major government anti-corruption effort has been going on in China since 2012 and shows no sign of ending soon. This anti-corruption campaign looks for obvious signs of illegal wealth and that would often be jade jewelry or rare and expensive imported lumber used for new homes. Both the jade and the illegal lumber comes from Burma, usually illegally. The smuggling operation is dominated by Chinese because most of the demand is in China. Jade and rare timber no longer have much of a market in China and the collapse in demand is being felt in northern Burma. This comes at the same time as a number of well publicized fatal accidents at illegal jade mines forced the Burmese the government to do something about what had long been going on illegally in the north. That led to some enforcement of existing laws banning such activities and more forceful efforts to curb illegal jade mining. More forceful than what happened in early 2016 when two government officials were fired after being accused of illegally allowing heavy earth moving equipment to be sold and delivered to jade mining operations up there. At the time that was seen as a token move by the government because jade mining continued. While all the government threats have caused unease among those running the illegal jade industry it has not slowed down production much. If anything jade mining has increased with some 300,000 workers, mostly manual laborers (and often illegal migrants) working in a 700 square kilometer area that, from the air, looks like a wasteland with dozens of hills leveled and the debris left in unstable heaps that cause most of the landslides. The problem is that demand and prices are way down in China and the jade producers have to increase production to make any money at all.

The jade mining activity is 650 kilometers north of the Burmese capital. The recent fatal landslides occurred because the jade mining often involves removing most of the vegetation on a hillside. With the trees and shrubs gone there is nothing to hold soil together when there are heavy rains. All this has brought a lot of unwanted publicity to the jade trade. Burma is the main source of jade on the planet and is a $30 billion a year operation in Burma. Yet only about one percent of that is taxed and half of the jade is found by illegal mining operations and is quietly sold to Chinese traders. Most of the illegal jade trade is controlled by Burmese military officers who have connections inside China. The rest is controlled by tribal rebels, mainly the Wa of the UWSA (United Wa State Army). Most of the jade is in the northern tribal territories and the army is constantly fighting with tribal rebels who are seeking to make some money in the jade producing areas. The corrupt Burmese generals and businessmen and their Chinese counterparts are not eager to give up the jade profits. A lot of the current fighting in Kachin State is a continuation of this decades old “Jade War.” Local tribes have long complained that all the illegal jade and gold mining ruins many water supplies (streams and lakes) but since outsiders (military and tribal warlords) dominate and protect the illegal mining, no one cares about some bad water except a few locals. But that has changed since 2011 because all the publicity has forced the Chinese government to at least recognize that the problem exists, mainly because of Chinese demand for jade and Chinese providing the cash and access to Chinese made earth moving equipment and corrupt border guards who let the illegal cash and equipment into Burma and the valuable (and untaxed on either side of the border) jade out. The Chinese are now willing to help crack down on the jade and other smuggling because it involves items popular with many corrupt Chinese officials.

China is also offering to cooperate with the Burmese government and the many tribal rebel groups who are meeting in late August to try and work out a peace deal. This is very important because most tribal rebels depend on Chinese suppliers for weapons and much else. Several of the most powerful tribal rebel groups are composed of ethnic Chinese Burmese. For example Kachin State is thinly populated (1.2 million people in 89,000 square kilometers of hills and forests) place and most of the locals are ethnic Chinese. In addition more than a 100,000 of these ethnic Chinese Kachins live across the border in China. Most of the people in Shan state are also ethnic Chinese tribes. These tribes have never gotten along with the ethnic Burmese to the south and left China to get away from the empire. The Burmese are more distantly related to the Han Chinese (20 percent of the world population), but consider themselves quite distinct. The Chinese border area is, for China, a very distant and isolated part of China. For a long time, the Chinese government paid little attention to the Kachin situation. Now, however, Burma is a growing trading partner, and China has economic interests (roads and hydroelectric dams) in Kachin State. Everyone is willing to deal and offers are being solicited.

The Drug Connection

Burma and Thailand recently agreed to cooperate and coordinate increased efforts to block drug smuggling coming out of the “Golden Triangle.” This is the ancient poppy growing area where the borders of China, Burma, Laos and Thailand meet. This area still produces most of the illegal drugs in East Asia. Northern Burma (Kachin province) is where most of the illegal drug production takes place. The drug production requires access to large quantities of industrial chemicals. The source is usually China or India and the pressure is on both countries to halt these questionable exports. Heroin production requires locally grown poppy plants treated with special chemicals. The local raw material has grown in northern Burma for thousands of years. Burma is currently the most prolific portion of the Golden Triangle and that keeps all manner of gangster, rebel and ethnic warlords in business. In 2015 over 800 tons of opium (the raw material for heroin) were produced in the triangle, over 90 percent of it in Burma, which is also where most of the opium is processed into heroin (ten tons of opium yields one ton of heroin). Global production of opium is currently about 7,000 tons. Back in the early 1980s 2,000 tons of opium were produced a year, nearly all of it for legitimate medicinal products. There was some illegal production in the Golden Triangle but only a fraction of what it is now. Chinese communists shut down opium production in China during the late 1940s. Some Chinese producers moved to Burma, Laos and Thailand. The Thais soon shut it down and Laos was never a big producer. Burma, run by a military dictatorship, needed the money, and didn't crack down until the 1990s, in large part to destroy the military power of ethnic Chinese Burmese drug warlords who grew strong off their heroin profits. Heroin production then picked up in Pakistan, where it was soon driven across the border to Afghanistan. The Afghan Taliban heavily taxed drug production in the late 1990s and even halted production for one year (2000) because of oversupply and falling prices. Opium has always been all about money. Afghanistan is still the leader, but Burma has over ten percent of the market and is gaining as is Colombia (with a much lower share). But everyone in the Golden Triangle knows that the opium industry has been suppressed many times in the past and it just takes the cooperation of the major governments up there to make it happen again. For decades Burma usually did not cooperate but the new Burmese government says it will. That might also mean a shutdown of methamphetamine production as well. Called "yaba" ("crazy drug") locally, most of it is smuggled out via Thailand. Since 2010 production of yaba tablets has soared. The meth labs are easier to conceal than poppy fields and the meth labs are believed to produce several hundred million tablets a year. But only as long as they can get the industrial chemicals required to make meth. The tribal rebels, especially ethnic Chinese tribes (like the Wa) use the profits to buy more weapons for their fighters, and run their rebel organizations. India has agreed to shut down the illegal chemical smuggling. China is also trying to shut down the corruption that enables drug gangs to bribe chemical shipments past border security. Burma know it is the center of all this illicit drug activity and has been more willing to cooperate with neighbors to curb the problem. So far the drugs are still being produced and shipped.

August 19, 2016: In the north, on the Indian border, another battle between Indian commandoes and Indian tribal rebels took place at about 3 AM. The shooting lasted several hours and it was unclear to locals exactly where the fighting was. The Indian rebels claim that the clash took place on the Burmese side of the border and led to the deaths of at least five Indian commandos. The Indian Army insists that none of its troops were in Burma today but the rebel claims are being investigate by Indian and Burmese officials.

This comes a month after India and Burma pledged to increase cooperation in maintaining security along their mutual border and undertake more joint economic development projects there as well. This announcement came in the wake of another Indian commando raid (the second in a year) into northern Burma. That raid took place on May 27th, in response to a May 22nd ambush on the Indian side of the border that killed six Indian soldiers. The attackers, who admitted responsibility and posted pictures on the Internet, were tracked back to a base across the border in Burma. The Indian commandos killed eight of the tribal separatists and turned over another 18 to Burmese police. It appears this Indian raid was not considered illegal by the Burmese. All this began with a June 4th 2015 ambush inside India where Indian rebels operating from Burmese bases inflicted heavy casualties on Indian troops. This led to an Indian cross-border commando raid on June 8th that destroyed the rebel camp Burma insisted did not exist. This was clear evidence that despite Burmese promises in 2014 to shut down such camps the rebels were still there. In mid-2015 India believed there were at least 25 such camps in northern Burma, with precise locations given for 17 camps. Some were as close as six kilometers from the border while others were up to 40 kilometers away. The rebels got the message and most packed up and moved back to the Indian side of the border. But India warned that the rebels would try to move back into Burma and some did. India and Burma has since worked out arrangements to share information of military and rebel activities on their respective sides of the border. Details of this coordination are kept secret so as not to alert rebels of upcoming operations. What happened this time is still unclear.

August 7, 2016: The government backed off and allowed three rebel groups to keep their weapons and still attend a major peace conference that is to start in late August. Up north (Kachin, Arakan and Shan States) the MNDAA. (Myanmar National Democratic Alliance Army), TNLA (Tang National Liberation Army) and AA (Arakan Army) were among several other tribal rebel groups that have been violently resisting advancing soldiers since early May. In Shan state, for example, the soldiers are apparently punishing locals for trying to curb or shut down lucrative coal mining in the area. In Kachin state the army violence is connected with the illegal gold mining. The army keeps the media out so news of what is actually going on there takes weeks to get out. The troops are using their usual tactics of attacking (with gunfire, air strikes and artillery) villages believed to be pro-rebel (or at least anti-army). Troops are apparently under orders to burn the bodies of any civilians found in the villages (along with burning everything down). The fighting in the north is often with tribal rebels that the military won’t negotiate with for various reasons. One of those reasons was the demand that rebels disarm before starting negotiations. The level of distrust is very high in some parts of the north and rebels have refused without some real guarantees and that requires negotiation. So the military backed down under pressure from a new Burmese president, backed by the new parliament. The MNDAA, TNLA and AA can keep their weapons and join the negotiations. One reason for the new attitudes by the military is that more rebels are resisting. That, in part, is because the new government has also passed laws allowing northerners to legally start and operate their own radio stations and this has brought more people up there together in opposition to the various outlaw operations they must deal with daily. Most of those illegal operations are made possible by corrupt politicians and illegal foreign investments (mainly from China) and Burmese generals paid off to keep the angry tribal rebels from interfering.

July 26, 2016: Up north (Kachin state) 17 tribal rebel groups held a four day conference to work out some common goals to strive for during the peace talks in August with the government and the military.

July 25, 2016: Parliament approved stronger laws against drug gangs in the north who have become rich and powerful making and distributing methamphetamine pills. The new laws were proposed by members from the north where many people are becoming methamphetamine addicts even though most of the pills are exported to China or Thailand.


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