Myanmar: Sliding Over To The Dark Side

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March 4, 2016: While the military has not tried to halt the momentous and unexpected (to them) power shift the new government was elected to do things that could hurt the military. The incoming parliament contains a majority of members elected to do something about the rampant and decades old corruption in the tribal north. That would upset some decades old scams that directly benefit many active and retired military leaders.

At the moment the corrupt businesses in the north that operate freely with (well paid) army protection don’t seem alarmed. Chinese firms are proceeding to restore businesses in the north that had been shut down by rebel activity. There is an attitude of impunity in the north which means someone is going to be very disappointed and angry by the end of 2016. The attitude seems to be that the Chinese will be able to offer effective economic inducements to get their way with the new reform government. This has worked elsewhere in the region and since the Chinese have long experience with Burma even many Burmese are inclined to regard the restoration of corrupt Chinese influence as inevitable. Several neighboring countries are trying to avoid this, especially India. But so far the smart money is on the Chinese.

This attitude is encouraged by the recent (2015) completion of a new oil pipeline to China. Terminating on the northwest coast (Rakhine State) the 770 kilometer pipeline can move about 4.5 million barrels of oil a day. Back in 2013 a 2,500 kilometer natural gas pipeline from Burmese gas fields into China was completed and began operation. About a third of the pipeline is in Burma, the rest is in China. This pipeline delivers 10 billion cubic meters of natural gas a year. This is equivalent (in terms of energy) to 15 million barrels of oil. The Burmese gas replaces the more expensive liquefied natural gas in three provinces of southwest China as well as eliminates the need for 30 million tons of coal a year (a major source of air pollution). The success of the pipeline deal led to a January 2016 agreement that has Chinese firms investing over $9 billion to develop a SEZ (Special Economic Zone) around the pipeline terminal that will include a deep water port and a huge (1,000 hectare/2,500 acre) industrial park.

Not all the illegal operators up north seem so sure that they, along with their Chinese allies, will be able to bribe and bully their way out of any restrictions the newly elected reform government might apply. For example the outgoing government, for whatever reason, is now more active enforcing existing laws regarding the north. Thus two government officials were recently fired after being accused of illegally allowing heavy earth moving equipment to be sold and delivered to illegal jade mining operations in the north. There is panic in the illegal jade industry just now. Kachin State has been the site of three major jade mining accidents (all landslides) since November 2015. Over 150 died 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. 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 generals 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 military leaders 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 also point out 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.

Kachin is also where most of the illegal drug production takes place. Again the army and tribal warlords profit most from this. 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 (the ancient poppy growing area where the borders of China, Burma, Laos and Thailand meet) 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 Chinese 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. By 2010 military pressure on the Afghan drug gangs allowed the Golden Triangle, especially Burma, to regain more of the world heroin market. 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, 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 and MNDAA) use the profits to buy more weapons for their fighters, and run their rebel organizations. Recently 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.

All this actual and predicted changes in the tribal north stem from the November 2015 national election where veteran reform advocate Aung San Suu Kyi’s party won 80 percent of the available seats in parliament. These were the first nationwide elections in 25 years and the first to actually take power since the 1960s. The new government is expected to take action on two issues (ethnic unrest and Chinese encroachment) the military was reluctant to tackle, as was the current elected (but still military dominated) government. The military was always in favor of getting the economy growing rapidly, something decades of military rule had prevented. But many military leaders had prospered during the dictatorship because they could be corrupt (to get rich) without fear of prosecution. The new government is under a lot of pressure to crack down hard on corruption in order to increase economic growth and reduce the widespread poverty. Such a crackdown would also cause tensions with China, which has, for over a decade, invested heavily in the tribal north via corrupt deals with the military. Unwinding all these unfair (especially to local tribes) deals will be painful for the Chinese as well as prominent Burmese military leaders and businessmen.

While the army is seen as the most dangerous armed group up north some of the tribal rebel militias turn against the people they were founded to protect. While most tribal armies seek to maintain themselves without becoming what they are supposed to be protecting their people from a growing number of these tribal rebel armies (with uniforms, officers, flags and so on) are sliding over to the dark side.

An example of this is the growing number of tribal refugees fleeing rebels who are more aggressively recruiting new fighters. In some cases the tribal militia recruiters are “conscripting” (kidnapping) young men and when word of that gets around many potential victims flee, often with their young wives and children. Sometimes the conscription rumors are government propaganda but all too often the rumors are true.

The main reason so many more tribal rebels have gone bad (been corrupted) up north can be tracked back to the growing (since the 1990s) Chinese influence. China has always (for thousands of years) been a major economic presence in the north but mainly as a source of goods the local tribes could not make for themselves. The tribes had little to trade so the trade was low level. In the 18th century that began to change when a booming economy in China created enough wealth for the many wealthy Chinese to buy opium from northern Burma. The sap of the poppy plant was long used as a traditional pain killer but was too expensive to produce to be a widespread recreational drug like alcohol or cannabis. The Chinese government suppressed the opium trade but then China went into two centuries of economic (and political) decline. This was reversed in the 1980s when the communist rulers of China made some extreme (for communists) reforms that caused an economic boom that is still underway. The new market economy created demands for raw materials that, it turned out, were present in northern Burma. The Chinese often found it easier to deal with corrupt generals than work out legitimate deals and that led to the many harmful (to the locals) mining and lumbering deals in the north. Many of these illegal operations were created and sustained by trial warlords. The army was bribed but the tribal warlords made most of the money. One recent example was the sudden (since 2009) appearance of a huge tin mining operation in northern Shan state that has made Burma the third largest tin producer in the world. All the ore mined is trucked across the border to China. The UWSA runs the tin operation, as well as a large chunk of the nearby illegal Jade mining operations. Unlike the jade mines, the tin operation was apparently based on rich tin deposits that have now been depleted. That and the economic slowdown in China is making the tribal tin operation a short-term thing.

Despite their involvement in many of the corrupt industries up north nearly all the tribal rebel groups agree that an end to the government corruption and constant army interference in the north would be a good thing. The tribal rebels, in anticipation of the post (since 2011) military government, have formed new coalitions to negotiate a peace deal. This was never possible with the army because the military was responsible for a lot of the corruption and illegal dealings up north. It was the generals, for example, that aided the Chinese in carrying out many large scale economic deals in the north that are now stalled by widespread tribal opposition.

February 23, 2016: In the north (Shan State) the army sent in over 2,000 troops to help out one of its tribal allies. All this began in mid-January when fighting broke out between TNLA (Taang National Liberation Army) tribal rebels and the pro-government SSA-S (Shan State Army-South). These two groups have long been at odds over a number of issues. The army is always trying to bribe tribal warlords to help protect, rather than hinder, the lucrative scams the military has long operated in the north. This usually works when it exploits existing tensions (and sometimes ancient feuds) between two tribes. This sort of thing is seen as another form of corruption up north and most of the tribal rebels openly condemn it. To make these unpopular deals work the army has to help the bought and paid for tribal allies when necessary. This is one of those situations.

February 18, 2016: The government signed an agreement with India to continue joint naval patrols along the maritime boundary in the Andaman Sea and Bay of Bengal. This reduces smuggling because it is much more difficult to bribe patrol ships from two different countries simultaneously. The joint patrols also make it less likely that there be any international incidents over different interpretations of incidents.

 

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