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Smouldering debris of burned houses is seen in Warpait village, a Muslim village in Maungdaw located in Myanmar’s Rakhine State, 14 October, 2016. AFP/Ye Aung Thu
Report 283 / Asia

Myanmar: A New Muslim Insurgency in Rakhine State

Recent attacks by an émigré-led force of trained Rohingya fighters mark a dangerous turn. To remove a main root of the violence – Rohingya despair – the government must reverse longstanding discrimination against the Muslim minority, moderate its military tactics, and reach out to Myanmar’s Muslim allies.

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Executive Summary

The deadly attacks on Border Guard Police (BGP) bases in Myanmar’s northern Rakhine State on 9 October 2016 and the days following, and a serious escalation on 12 November when a senior army officer was killed, signify the emergence of a new Muslim insurgency there. The current violence is qualitatively different from anything in recent decades, seriously threatens the prospects of stability and development in the state and has serious implications for Myanmar as a whole. The government faces a huge challenge in calibrating and integrating its political, policy and security responses to ensure that violence does not escalate and intercommunal tensions are kept under control. It requires also taking due account of the grievances and fears of Rakhine Buddhists.

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Failure to get this right would carry enormous risks. While the government has a clear duty to maintain security and take action against the attackers, it needs, if its response is to be effective, to make more judicious use of force and focus on a political and policy approach that addresses the sense of hopelessness and despair underlying the anger of many Muslims in Rakhine State. Complicating this is that Aung San Suu Kyi has some influence, but under the constitution no direct control over the military.

The insurgent group, which refers to itself as Harakah al-Yaqin (Faith Movement, HaY), is led by a committee of Rohingya émigrés in Saudi Arabia and is commanded on the ground by Rohingya with international training and experience in modern guerrilla war tactics. It benefits from the legitimacy provided by local and international fatwas (religious judicial opinions) in support of its cause and enjoys considerable sympathy and backing from Muslims in northern Rakhine State, including several hundred locally trained recruits.

The emergence of this well-organised, apparently well-funded group is a game-changer in the Myanmar government’s efforts to address the complex challenges in Rakhine State, which include longstanding discrimination against its Muslim population, denial of rights and lack of citizenship. The current use of disproportionate military force in response to the attacks, which fails to adequately distinguish militants from civilians, together with denial of humanitarian assistance to an extremely vulnerable population and the lack of an overarching political strategy that would offer them some hope for the future, is unlikely to dislodge the group and risks generating a spiral of violence and potential mass displacement.

HaY would not have been able to establish itself and make detailed preparations without the buy-in of some local leaders and communities. Yet, this has never been a radicalised population, and the majority of the community, its elders and religious leaders have previously eschewed violence as counterproductive. The fact that more people are now embracing violence reflects deep policy failures over many years rather than any sort of inevitability.

A heavy-handed security response that fails to respect fundamental principles of proportionality and distinction is not only in violation of international norms; it is also deeply counterproductive.

It is important for the government’s response to start from an appreciation of why a violent reaction from some Muslims in Rakhine State has emerged. The population has seen its rights progressively eroded, its gradual marginalisation from social and political life, and rights abuses. This has become particularly acute since the 2012 anti-Muslim violence in Rakhine. Disenfranchisement prior to the 2015 elections severed the last link with politics and means of influence. At the same time, the disruption of maritime migration routes to Malaysia closed a vital escape valve, particularly for young men whose only tangible hope for the future was dashed. An increasing sense of despair has driven more people to consider a violent response, but it is not too late for the government to reverse the trend.

It requires recognising first that these people have lived in the area for generations and will continue to do so. Ways must be found to give them a place in the nation’s life. A heavy-handed security response that fails to respect fundamental principles of proportionality and distinction is not only in violation of international norms; it is also deeply counterproductive. It will likely create further despair and animosity, increasing support for HaY and further entrenching violence. International experience strongly suggests that an aggressive military response, particularly if not embedded in a broader policy framework, will be ineffective against the armed group and has the potential to considerably aggravate matters.

So far, though there are indications of some training and solidarity, HaY does not appear to have a transnational jihadist or terrorist agenda. But there are risks that if the government mishandles the situation, including by continued use of disproportionate force that has driven tens of thousands from their homes or across the border to Bangladesh, it could create conditions for further radicalising sections of the Rohingya population that transnational jihadists could exploit to pursue their own agendas in the country. To avoid that requires subordinating the security response and integrating it into a well-crafted, overarching political strategy – building stronger, more positive relations between Muslim communities and the Myanmar state and closer cooperation and intelligence sharing with regional countries.

Yangon/Brussels, 15 December 2016

I. Introduction

This report examines the emergence of a new form of organised violent resistance in the Muslim-majority northern parts of Myanmar’s Rakhine State.[fn]For recent Crisis Group reporting on Myanmar, see Asia Briefings N°s 147, The Myanmar Elections: Results and Implications, 9 December 2015; 146, Myanmar’s Peace Process: A Nationwide Ceasefire Remains Elusive, 16 September 2015; 144, Counting the Costs: Myanmar’s Problematic Census, 15 May 2014; 143, Myanmar’s Military: Back to the Barracks?, 22 April 2014; also Asia Reports N°s 282, Myanmar’s New Government: Finding Its Feet?, 29 July 2016; 266, Myanmar’s Electoral Landscape, 28 April 2015; and 261, Myanmar: The Politics of Rakhine State, 22 October 2014.Hide Footnote It follows up Crisis Group’s detailed examination in 2014 of Rakhine politics, which should be referred to for a broader analysis of the dynamics in the state as a whole. It is important to know and acknowledge the perspectives of Rakhine Buddhists and their strongly-felt grievances.[fn]Crisis Group Report, Myanmar: The Politics of Rakhine State, op. cit.Hide Footnote The current violence, however, is qualitatively different from anything in recent decades and has fundamental implications for the situation in the troubled state and potentially for Myanmar’s transition as a whole.

The report looks at the establishment of a new armed group, its objectives and international links; the response of the government and security forces; and the implications for the people of Rakhine State and the country. It is based on extensive research and interviews in Yangon; interviews with several members of the armed group in northern Rakhine State and villagers and key sources in the area; interviews with other sources connected to the group living outside Myanmar; interviews with members of the Rohingya diaspora, including in the Middle East; interviews with recent arrivals in Bangladesh who have fled Rakhine; and analysis of conversations on messaging applications such as WhatsApp over the last six months. Much research has been done by experienced personnel fluent in the local dialect spoken by Muslims in northern Rakhine State. In cases of particularly sensitive information and to protect the identities of interviewees and researchers, details of locations and dates have been withheld, replaced by a general description of the sourcing for a paragraph or section.

The term “Rohingya” is highly contested within Myanmar, because it is perceived as a claim of indigenous ethnic status by a community most Rakhine Buddhists, indeed most people in Myanmar, regard as immigrants from Bangladesh, and whom they therefore prefer to refer to as “Bengali”.[fn]Ibid, Section V.C, including for more detailed discussion of the term’s sensitivity.Hide Footnote The government has asked its officials and the international community to refrain from either term. “Rohingya” is used in this report not to imply endorsement of any particular historical narrative or political claim but because it is the term that community overwhelmingly refers to itself by, and because other terms such as “Muslims from Rakhine State” are less precise: several Muslim communities in the state do not identify as “Rohingya”, including (but not only) the Kaman, a recognised indigenous Muslim group. It is Muslims in the northern parts of Rakhine State that most strongly identify as “Rohingya”; those in the diaspora who so identify are overwhelmingly from this area, rather than central or southern parts of the state.[fn]For detailed discussion of Muslim communities in Rakhine State, see ibid.Hide Footnote

II. Previous Muslim Insurgency in Rakhine State

During the Second World War, Rakhine was the front line between the Japanese invaders and allied forces. Muslims and Rakhine Buddhists were on opposing sides; most of the former remained pro-British, while the latter supported the Japanese until a last-minute switch enabled the eventual allied reoccupation of Rakhine. Both communities formed armed units and attacked the other, with accounts of massacres on both sides in 1942-1943. Muslims fled to the north, where they were the majority, and Rakhine Buddhists moved south.[fn]Mary Callahan, Making Enemies: War and State Building in Burma (Ithaca, 2003), chapter 2; Moshe Yegar, The Muslims of Burma: A Study of a Minority Group (Wiesbaden, 1972).Hide Footnote

A mujahidin rebellion erupted in April 1948, a few months after independence. The rebels initially explored the possibility of annexing northern Rakhine State to East Pakistan (now Bangladesh), but Pakistan rejected this. They then sought the right of the population to live as full citizens in an autonomous Muslim area in the north of the state and an end to what they saw as discrimination by the Rakhine Buddhist officials who replaced the colonial administrators. The immigration authorities placed restrictions on the movement of Muslims from northern Rakhine to Sittwe, the state capital. Some 13,000 Muslims who fled during the war and were living in refugee camps in India and East Pakistan were not permitted to return; those who did were considered illegal immigrants.[fn]Yegar, op. cit. On the eve of independence some Rakhine intellectuals led by barrister Hla Tun Pru were demanding an independent “Arakanistan” for the Rakhine people. See Aye Chan, “The Development of a Muslim Enclave in Arakan State of Burma (Myanmar)”, SOAS Bulletin of Burma Research, vol. 3, no. 2 (2005), p. 410.Hide Footnote

The rebels targeted Rakhine Buddhist interests as well as the government, quickly seizing control of large parts of the north and expelling many Buddhist villagers. Law and order almost completely broke down, with two communist insurgencies (Red Flag and White Flag) in addition to the mujahidin, as well as Rakhine nationalist groups, including the (Marxist) Arakan People’s Liberation Party, in the south of the state.[fn]Martin Smith, Burma: Insurgency and the Politics of Ethnicity, 2nd ed. (London, 1999), p. 28.Hide Footnote An embattled Burmese army, facing ethnic insurgencies across the country, controlled little of Rakhine other than Sittwe. In the violence and chaos, relations between Buddhist and Muslim communities deteriorated further. Many moderate Rakhine Muslim leaders rejected the mujahidin insurgency, even vainly asking the government for arms to fight back.

It was not until 1954 that the army launched a massive offensive, Operation Monsoon, that captured most of the mujahidin mountain strongholds on the East Pakistan border. The rebellion was eventually ended through ceasefires in 1961 and defeat of remaining groups, leaving only small-scale armed resistance and banditry. Partly in response to mujahidin demands, partly for electoral reasons, in 1961 the government established a Mayu Frontier Administration in northern Rakhine, administered by army officers rather than Rakhine officials.[fn]Martin Smith, “The Muslim ‘Rohingya’ of Burma”, unpublished article, 1995. Yegar, op. cit.Hide Footnote But the 1962 military coup led to a more hardline stance toward minorities, and the Mayu Frontier Administration was dissolved. This prompted attempts to re-form the mujahidin movement that failed to gain significant local support.

In 1974, inspired by the rise of pan-Islamist movements in the world, the Rohingya Patriotic Front armed group was formed from remnants of earlier failures. It split into several factions, one of the more radical of which became the Rohingya Solidarity Organization (RSO) armed group in 1982. The RSO split in 1986, giving rise to the Arakan Rohingya Islamic Front (ARIF) splinter; in 1998, the two groups formed a loose alliance, the Arakan Rohingya National Organisation.

In the 1980s and 1990s, the RSO had small bases in remote parts of Bangladesh near the Myanmar border but was not thought to have any inside Myanmar. In its highest-profile attack, in April 1994, several dozen fighters entered Maungdaw from Bangladesh, including a group landed by boat in Myin Hlut village-tract, south Maungdaw. On 28 April, bombs they planted in Maungdaw town caused damage and several civilian injuries, and fighters followed up with attacks on the town’s outskirts. The group did not receive strong local support, and security forces, alerted by informants, quickly defeated them.[fn]Smith, “The Muslim ‘Rohingya’ of Burma”, op. cit.; Crisis Group interview, researcher, Yangon, November 2016.Hide Footnote

Regional security analysts viewed the RSO as essentially defunct as an armed group by the end of the 1990s, though it kept an organisational structure in Bangladesh and did training and occasional small attacks on Myanmar security forces into the early 2000s. A Myanmar military intelligence report, cited in a U.S. diplomatic cable in 2002, made the “generally plausible” claim that 90 RSO/ARIF members attended a guerrilla war course, and thirteen also participated in explosives and heavy weapons courses in Libya and Afghanistan in August 2001. Also in the early 2000s, the RSO had an active weapons and explosives training exchange with the militant group Jamaat-ul Mujahideen Bangladesh.[fn]Crisis Group interviews, regional security analysts, Dhaka, July-August 2014, November 2016. “Arakan Rohingya National Organization contacts with Al Qaeda and with Burmese insurgent groups on the Thai border”, U.S. embassy Rangoon cable, 10 October 2002, as made public by WikiLeaks. Crisis Group Asia Report N°187, The Threat from Jamaat-ul Mujahideen Bangladesh, 1 March 2010.Hide Footnote

More recently, the authorities have continued to blame the RSO for occasional attacks on security forces in northern Rakhine State, for example deadly attacks on Border Guard Police (BGP) patrols in northern Maungdaw in February and May 2014, including one on 17 May that killed four officers.[fn]Internal UN security management team note, Bangladesh, June 2014. See also, “All not quiet on the Burmese front”, Probe Weekly, 6 June 2014.Hide Footnote However, there is no evidence that it retained operational capability after the early-2000s, and armed criminal gangs operate on the border, smuggling drugs and other contraband. The RSO has also become something of a Rohingya militant brand that anyone can use, regardless of connections to the original organisation.

III. Deepening Despair

The anti-Muslim violence in Rakhine State in June and October 2012, though it did not primarily affect the north of the state, seriously strained intercommunal relations.[fn]For analysis, see Crisis Group Asia Reports N°s 238, Myanmar: Storm Clouds on the Horizon, 12 November 2012; and 251, The Dark Side of Transition: Violence Against Muslims in Myanmar, 1 October 2013.Hide Footnote It generated feelings of insecurity in Buddhist and Muslim communities but had the biggest impact on the latter. It also hardened anti-Muslim sentiment and led to increases in Buddhist nationalist hate speech. There were multiple cases of serious anti-Muslim violence across Myanmar the following year, as well as nationalist lobbying for a package of “protection of race and religion” laws widely seen as targeting Muslims.[fn]Crisis Group Report, The Dark Side of Transition, op. cit.Hide Footnote

These were in addition to longstanding restrictions on access to citizenship for most Muslims in Rakhine State. This has led to serious discrimination against these communities, particularly the Rohingya. Permission to marry must be obtained from the authorities, and there are also severe restrictions on freedom of movement outside the village-tract or between townships, limiting work opportunities and access to government services.[fn]Crisis Group Report, The Politics of Rakhine State, op. cit.Hide Footnote

In the lead-up to the 2015 elections, the Muslim population in Rakhine State without citizenship cards – nearly all other than some Kaman – was disenfranchised, severing its last connection to politics and peaceful influence. Even those without citizenship cards had voted in previous elections. Crisis Group warned in advance that this risked organised violence.[fn]Ibid.Hide Footnote

Compounding the sense among many Rohingya that politics had failed them was that Aung San Suu Kyi and her National League for Democracy (NLD) did not take a strong stand on minority religious rights in general or the Rohingya’s specific plight in the campaign. After coming to power, she did make it a top government priority, chairing a committee on Rakhine State and appointing former UN Secretary-General Kofi Annan to head an advisory commission, but some Rohingya had already concluded there was little hope the new administration would address their demands.[fn]Myanmar election: Aung San Suu Kyi campaigns in contentious Rakhine state”, The Guardian, 16 October 2015; “Burma elections: Aung San Suu Kyi steers clear of ‘stateless’ minority the Rohingya”, The Independent, 17 October 2015; “After Myanmar election, few signs of a better life for Muslims”, The New York Times, 18 November 2015; “Aung San Suu Kyi aide: Rohingya are not our priority”, The Telegraph, 19 November 2015. Crisis Group interviews, analysts specialising on Rakhine State, Yangon, November-December 2015.Hide Footnote

In May 2015, a maritime migration crisis escalated in the Andaman Sea, after a Thai crackdown disrupted people smuggling networks, causing smugglers and crew to abandon boats laden with migrants from Myanmar (mostly Rohingya) and Bangladesh; hundreds were feared to have died. This shut down smuggling routes to Malaysia. When these routes had not reopened by the start of the post-monsoon sailing season in September, it meant a critical escape valve for Rohingya had closed and caused despair among young men who saw migration as their only chance of a better future.[fn]“Mixed maritime movements, April-June 2015”, UN High Commissioner for Refugees Regional Office for South-East Asia. Crisis Group interviews, analysts, Yangon, Bangladesh, November 2016.Hide Footnote

IV. Emergence of a New Organised Violent Resistance

A. The 9 October Attacks

In the early hours of 9 October, several hundred local Muslim men, armed mostly with knives and slingshots and about 30 firearms, launched simultaneous attacks on three BGP posts in Maungdaw and Rathedaung townships near the north-western border with Bangladesh. According to the authorities, nine police were killed; and the attackers, eight of whom were killed and two captured, made off with 62 firearms and more than 10,000 rounds of ammunition.[fn]Government press conference, Naypyitaw, 9 October, reported in Global New Light of Myanmar (GNLM), 10 October 2016, pp. 1, 3.Hide Footnote

One of the targets was BGP headquarters, a major installation in Kyee Kan Pyin (just north of Maungdaw town) that was overrun in a multi-phase attack, and from where the majority of weapons were looted. In another indication of the preparation level, the group planted an improvised explosive device (IED) and set an ambush on the approach road to the headquarters, delaying reinforcements and damaging vehicles. The two other targets were a BGP sector headquarters at Nga Khu Ya in north Maungdaw and a BGP outpost at Koe Dan Kauk in Rathedaung, just south of Maungdaw township. The government estimated the total attackers at 400.[fn]Ibid; Crisis Group interview, individual briefed on the attacks, Yangon, October 2016. See also “Operation Backdoor”, Yehtun Blog, 20 October 2010.Hide Footnote Several further clashes occurred 10-12 October, including one on 11 October in which four soldiers were killed.[fn]Troops fight back violent armed attackers, kill four”, GNLM, 11 October 2016, p. 1; “Tatmadaw attacked by 300 armed men, four soldiers killed”, GNLM, 12 October 2016, p. 1; “Troops kill 10 violent armed attackers in area clearance operation in Maungdaw tsp” and “Armed men violently attack Kyikanpyin border outpost, set fire to 25 houses in Warpaik Village”, GNLM, 13 October 2016, p. 3.Hide Footnote Two attacks on 3 November that state media reported as linked to the attackers are more uncertain.[fn]As reported in GNLM, 5 November 2016, p. 2, the incidents occurred in south rather than north Maungdaw where the other attacks and subsequent clashes took place. One was the burning down of a disused BGP post, the other allegedly on a BGP base. There are competing narratives about the latter incident: village sources said it was a shooting between two police officers, not an attack. Crisis Group interviews, November 2016, and information from a non-government source with contacts in the area.Hide Footnote

The attacks marked a major escalation of violence in Rakhine and reflected an unprecedented level of planning in a conflict that had seen little organised violent resistance from the Muslim population. They caused widespread fear in both communities, particularly among Buddhist Rakhine villagers, who are the minority in the northern part of the state; some 3,000 of them fled to towns.[fn]Myanmar - New displacement in Rakhine State”, European Civil Protection and Humanitarian Aid Operations, Daily Flash, 21 October 2016.Hide Footnote

B. Response from Government and Security Forces

The military and BGP launched a major operation aimed at recovering the looted weapons, capturing those involved and arresting their helpers. Its intensity likely reflected both the exigencies of the security situation and that the initial attacks and subsequent deadly clashes were seen as a major affront to security forces’ dignity. The BGP commander, Police Brigadier-General Maung Maung Khaing, was removed for “poor performance”, probably due to both intelligence failures (see Section IV.C) and losing his headquarters and its armoury during the attacks; his replacement is a brigadier-general transferred from the regular police.[fn]Government press conference, 17 October, reported in GNLM, 18 October 2016, p. 2.Hide Footnote

The Myanmar authorities have consistently referred to “joint operations”, usually indicating that the military is supporting BGP operations. This language began to be used in particular following a “special meeting on national defence and security” on 14 October that brought together the president, Aung San Suu Kyi, the commander-in-chief and others. The normal constitutional mechanism for activating military involvement in such a situation would be declaration of a state of emergency by the president, with National Defence and Security Council approval, as happened three times under the Thein Sein administration. However, Aung San Suu Kyi appears to regard the Council as politically illegitimate, and it has not met under her government, so no state of emergency can be declared.[fn]Ibid; see also “Special meeting on national defence and security”, GNLM, 15 October 2016, p. 1. Under Section 413(a) of the constitution, a state of emergency in a state/region empowers local civilian authorities and civil service bodies to obtain military help in carrying out their duties. The reason for Suu Kyi’s view is that the military has the majority of the Council’s eleven seats (five uniformed officers plus the military-nominated vice president, a retired senior officer), so can outvote civilian government representatives. She may also have protocol concerns: it is chaired by the president; her membership is as foreign minister, not state counsellor.Hide Footnote In practice, though joint BGP-army patrols take place, the army has authority over the security response, under its western commander.[fn]Crisis Group interview, individual briefed on the response, Yangon, November 2016.Hide Footnote

The military has indicated it is conducting “area clearance operations” across a section of northern Maungdaw township, which it has sealed off. On the basis of reports from the authorities and non-government sources, it appears to be using something akin to its standard counter-insurgency “four cuts” strategy developed in the 1960s to cut off rebel forces from their four main support sources (food, funds, intelligence, recruits) and largely unchanged since. It involves cordoning off territory for concentrated operations, a “calculated policy of terror” to force populations to move, destruction of villages in sensitive areas and confiscation or destruction of food stocks that could support insurgents.[fn]For details, see Smith, Insurgency, op. cit. p. 288 ff.; Andrew Selth, Burma’s Armed Forces (Norwalk, 2001), pp. 91-91; and Maung Aung Myoe, “Military Doctrine and Strategy in Myanmar” Strategic and Defence Studies Centre, working paper 339, 1999, p. 10.Hide Footnote

 

Rakhine nationalists and Buddhist villagers in the north have long urged the government to arm the villagers … as they are greatly outnumbered by Muslims and fear for their security.

Operations in the sealed-off area bear many hallmarks of that strategy. After the 9 October attacks, there were multiple reports of suspects shot on sight, burning of many houses, looting of property and seizure or destruction of food stocks – as well as of women and girls raped.[fn]Crisis Group telephone interviews, villagers and community leaders in the operations area, October 2016. Also, Arakan Project, internal notes nos. 1 and 2, October and November 2016.Hide Footnote Humanitarian agencies have been denied access to some 30,000 people in the sealed-off area, displaced as a result of the attacks and their aftermath, as well as 130,000 previously receiving life-saving aid, with the exception of a one-time food delivery to four villages (6,500 people) on 6 November and the following days by the World Food Programme (WFP); and a food delivery by the government on 18 November to an IDP camp that had formed spontaneously in Thu U Lar village-tract.[fn]Situation in northern Rakhine State”, WFP, Situation Report no. 3, November 2016; “Asia and the Pacific: Weekly Regional Humanitarian Snapshot”, UN Office for the Coordination of Humanitarian Affairs (OCHA), 12 December 2016; Crisis Group interview, Arakan Project researcher, Yangon, December 2016; “Food provided to residents of Maungtaw”, GNLM, 21 November 2016, p. 3. Government permission for WFP to deliver a two-week supply of rations was granted following a government-led visit to the affected area by the UN Resident Coordinator and nine ambassadors on 2-3 November.Hide Footnote

Another common element of counter-insurgency operations in other parts of Myanmar is army establishment of local militias. Rakhine nationalists and Buddhist villagers in the north have long urged the government to arm the villagers, particularly since the 2012 violence, as they are greatly outnumbered by Muslims and fear for their security. This is particularly serious in the current context, because arming Buddhist villagers could lead the Muslim armed group, which has avoided attacking Buddhist civilians, to view them as combatant targets.

That would be a major escalation. Worryingly, the security forces have been contemplating the initiative. They have recruited some 120 local non-Muslims in what was initially presented to the Rakhine community and so likely interpreted by local Muslims as raising a BGP militia. The government has clarified that it is an accelerated BGP training program with loosened admission criteria, and trainees will be deployed as regular BGP.[fn]Militia call a shot in the arm for Rakhine armies”, Myanmar Times, 12 May 2014. “Myanmar police to arm and train non-Muslims in conflict-torn Rakhine region”, Reuters, 3 November 2016. “Myanmar's training for non-Muslim police stokes fear in Rakhine”, Reuters, 18 November 2016.Hide Footnote But a significant risk remains of blurring lines between civilian villagers and security personnel, even if only in perception. One Rakhine armed group, the Arakan Liberation Army, has been attempting to increase its armed strength in the area to counter a perceived Muslim threat.[fn]Authorities seize cache of weapons and ammunition in Hpa-an bust”, The Irrawaddy, 12 December 2016.Hide Footnote

The government denies allegations of human rights violations.[fn]See, for example, “False allegations on violating human rights exposed to the world”, GNLM, 3 November 2016, p. 1; “Local residents’ accounts differ from fabricated media stories”, GNLM, 7 November 2016, p. 1; “Military’s information team refutes fabrication about massive destruction in Rakhine”, GNLM, 15 November 2016, p. 3; “Government refutes rights group report on Rakhine”, GNLM, 17 November 2o16, p. 1; “Reports of hundreds fleeing Myanmar being pushed back by Bangladesh said to be false” and “Sender of fake news in Rakhine linked to int’l extremist groups”, GNLM, 19 November 2016, p. 1.Hide Footnote Lack of media and other independent access makes verification hard, but blanket denials, even of factual claims based on satellite imagery or international media reports from the ground of flight to Bangladesh, are not plausible and undermine the credibility of its other claims.[fn]Credible evidence that has been denied includes: “Satellite-based damage assessment of affected villages in Maungdaw District”, Human Rights Watch, 10 November 2016; an updated damage assessment, 18 November 2016; and “Hundreds of Rohingya flee Myanmar army crackdown to Bangladesh – sources”, Reuters, 18 November 2016.Hide Footnote Some counter-narratives clash with satellite data, for example that local Muslim villagers are torching their own homes to get international sympathy or that it is the armed group’s arson. Analysis of that data shows destruction of at least 1,500 buildings.[fn]Burma: Military burned villages in Rakhine State”, Human Rights Watch, 13 December 2016.Hide Footnote

Some villages were systematically destroyed over days, rather than isolated, geographically dispersed events as would be expected from individuals or small-group hit-and-run attacks. Moreover, much arson took place during military operations when many troops were present – not only at the time of attacks, but also over subsequent days. Troops also have security motivation (denial of access to villages in insecure areas is a standard counter-insurgency tactic, often achieved in the past in other parts of Myanmar by burning villages), while the armed group is reliant on at least some local civilian support.[fn]Crisis Group interview, senior Human Rights Watch staffer, November 2016. Selth, op. cit., p. 163.Hide Footnote

Journalists questioning the official narrative have been accused in the state media of working ‘hand in glove’ with the attackers.

Journalists questioning the official narrative have been accused in the state media of working “hand in glove” with the attackers. The government reportedly interceded with the Myanmar Times when one of its experienced foreign journalists reported on allegations of rapes by military personnel. She was fired shortly thereafter, and the paper’s owner put a moratorium on reporting on the Rakhine State conflict. An opinion piece in state media called the reporting “an act of gross unethical journalism” but added that “credit should be given to the media group for … immediately firing that journalist”.[fn]Fourth estate must abide by ‘code of ethics’: minister for information”, Myanmar Times, 9 November 2016. “Myanmar journalist says she was fired over story on military rape allegations”, The Guardian, 4 November 2016; “Reporter’s sacking followed MoI [Ministry of Information] phone call, sparking press freedom fears”, Frontier Myanmar, 4 November 2016. “Myanmar press under pressure as paper bans Rakhine reports”, Agence France-Presse, 8 November 2016. Khin Maung Myint, “Morality and ethics”, GNLM, 24 November 2016, p. 8.Hide Footnote Such intimidation has a chilling effect on reporting by other journalists and publications. For example, a reporter from a prominent local English-language publication interviewed a member of the BGP who admitted burning down Muslim homes in the operations area but self-censored the account.[fn]Crisis Group interview, individual with direct knowledge of the incident, October 2016.Hide Footnote

Potentially even more serious is that the repeated blanket government denials, widely disseminated via the state media in English and Burmese, reinforce a climate of impunity for troops that is particularly dangerous in a context of widespread negative sentiments toward the Muslim population at all levels of the military and in society as a whole. The state media has published disturbing opinion pieces, for example one that referred to the Rakhine State situation as caused by “detestable human fleas” that “we greatly loathe for their stench”.[fn]A flea cannot make a whirl of dust, but …”, GNLM, 27 November 2016, p. 8.Hide Footnote

C. A Spiral of Violence

A further serious escalation on 12 November made clear that the attacks on security forces were not one-off and that the armed group was still operational despite a month of intensive military operations.

Government accounts and Crisis Group interviews with villagers, other local sources and members of the armed group paint a broadly consistent picture.[fn]A government account is given in “One officer, one soldier dead, several injured [as] fighting continuously erupts in Rakhine”, GNLM, 13 November 2016, p. 1.Hide Footnote At 6:45am, an army column clashed with some 60 members of the armed group in a valley near Pwint Hpyu Chaung village; one soldier died and several were wounded; six attackers were reportedly killed. There were several other skirmishes as the attackers retreated to Gwa Son village. When troops approached the village, the armed group shot at them. Several hundred villagers, armed with whatever they had to hand (knives and farming implements), supported the attackers, seemingly spontaneously. A lieutenant-colonel was shot dead, and the troops retreated, calling in air support from two attack helicopters with mounted machine guns.[fn]Government refutes rights group report on Rakhine”, GNLM, 17 November 2016, p.1.Hide Footnote The helicopters allegedly fired indiscriminately, including at villagers fleeing across paddy fields; videos taken by villagers show several bodies in fields, including women and children.[fn]Crisis Group interview, Arakan Project researcher, Yangon, November 2016.Hide Footnote

The same day, there were at least two IED attacks on government forces in the area. A BGP convoy was struck as it crossed a bridge, then came under attack by armed combatants; the authorities report the attackers were repelled and that there were no casualties. In the second incident, an army column was struck by an IED, reportedly damaging a vehicle but without casualties.[fn]Violent armed attackers ambush convoy of border guards and government staffs, explode a bridge in Rakhine”, GNLM, 13 November 2016, p. 1. “Government troops attacked with improvised mines in Maungtaw”, GNLM, 14 November 2016, p. 3.Hide Footnote The authorities have reported several other IED incidents and said that explosives/IEDs were also used tactically in the initial attack on the BGP headquarters.[fn]Crisis Group interview, analyst specialising on Rakhine State, Yangon, November 2016; also, for example, “IED discovered on village road in Maungtaw”, GNLM, 17 November 2016, p. 1.Hide Footnote

Following the 12 November clashes, the military considerably stepped up its operations. In addition to using attack helicopters in areas with many civilian non-combatants, ground troops became much more aggressive. Troops entered Gwa Son and surrounding villages on 13 November, shooting at villagers who fled. Videos taken by villagers show several charred bodies discovered the next day in the remains of a house, in circumstances that remain unclear.[fn]Crisis Group interview, Arakan Project researcher, Yangon, November 2016.Hide Footnote Many villages were also partially or completely destroyed by arson.

The impact of a “four cuts” operation on civilians is far greater in Maungdaw than in the mountains of the eastern border, where it has been used in the past. Those areas are sparsely populated, communities often have decades of conflict experience, well-developed coping mechanisms and generally better food security. Even there, the toll is heavy. But Maungdaw is densely populated predominantly lowland, communities have almost no experience of armed conflict, and there is pre-existing malnutrition and food insecurity well above critical emergency thresholds.[fn]According to UN 2015 data, the global acute malnutrition rate (measured in children under five) in Maungdaw is 19 per cent, by far the worst in Myanmar and well above the World Health Organisation’s emergency critical threshold of 15 per cent. See also “Myanmar aid curbs hit children in Muslim-majority region: U.N.”, Reuters, 9 November 2016.Hide Footnote The population was already living on the edge; fear of conflict and abuses combined with a serious livelihoods shock – humanitarian support is almost completely blocked, and food imports from Bangladesh have been disrupted – have led many to flee across the border. At least 27,000 are known to have done so in recent weeks; it would not take much for this to become a mass exodus like 1978 (200,000) or 1991 (250,000).[fn]Asia and the Pacific: Weekly Regional Humanitarian Snapshot”, UNOCHA, 12 December 2016.Hide Footnote

Violence and abuses are likely to boost support for the armed group. People pushed to desperation and anger, with no hope for the future, are more likely to embrace extremist responses, however counterproductive. With an armed militant group in place and ready to capitalise, the current security response is likely to drive a dangerous spiral of attacks, military responses and increased popular radicalisation. This would also seriously impact the Rakhine and Burman Buddhist communities’ security and livelihoods in northern Rakhine State, where they have long felt themselves an embattled and fearful minority.

V. The Armed Group and its Motivations

A. The Group and its Objectives

Crisis Group has interviewed six persons linked to the armed group: four members in northern Maungdaw and two outside Myanmar. Separate discussions with them, as well as others involved in chat groups on secure messaging applications and analysis of videos released by the group have revealed a partial picture of its origins, structure and objectives.

The group refers to itself as Harakah al-Yaqin (HaY, “Faith Movement” in Arabic). The government calls it Aqa Mul Mujahidin, a generic Arabic phrase meaning “communities of fighters” that it gleaned from interrogations of suspects. Prior to the attacks, even members and supporters at village level were not aware of the real name and referred to it by this generic phrase (and perhaps also “RSO”, which may be why the government claimed that old group’s involvement). After the 9 October attacks, Rohingya communities in Saudi Arabia, other Middle Eastern countries and Malaysia began to ask who carried them out. According to HaY, people associated with the RSO began to falsely claim responsibility and to collect donations on this basis from the Rohingya diaspora and large private donors in Saudi Arabia and the Middle East. This, they say, was what prompted the group to reveal its name, show some of its faces on camera and prove that it was on the ground.

The first video, circulated to Rohingya networks on 11 October and leaked on YouTube the next day, has the name Harakah al-Yaqin overlaid in Arabic script. In the second, uploaded to YouTube on 14 October, the group used this name and warned donors not to trust other groups claiming to be behind the attacks, saying that “some people tried to sell our movement and our community”, a reference to the RSO. Further videos were subsequently released, showing their continued actions in north Maungdaw and stating their demands.[fn]The first video is James MMT. “Islamic terrorist asked Rohingya to join them for jihad to Myanmar Burma Rakhine Arakan”. 12 October 2016. YouTube: Harlz Erdogan. “Rohginya mujahideen call for weapons”. 14 October 2016. YouTube. There have been nine so far, the latest filmed after the 12 November escalation and uploaded to YouTube 20 November.Hide Footnote

HaY was established and is overseen by a committee of some twenty senior leaders headquartered in Mecca, with at least one member based in Medina. All are Rohingya émigrés or have Rohingya heritage. They are well connected in Bangladesh, Pakistan and possibly India. Some or all have visited Bangladesh and northern Rakhine State at different times in the last two years.

… the main fighting force is made up of Muslim villagers in northern Rakhine State who have been given basic training and organised into village-level cells to limit risks of compromise.

The main speaker in the videos is Ata Ullah (alias Ameer Abu Amar, and, within the armed group, Abu Amar Jununi, the name mentioned in a number of the videos); the government identifies him as Hafiz Tohar, presumably another alias. His father, a Muslim from northern Rakhine State, went to Karachi, where Ata Ullah was born. The family then moved to Saudi Arabia, and he grew up in Mecca, receiving a Madrassa education. This is consistent with the fact that on the videos he shows fluent command of both the Bengali dialect spoken in northern Rakhine State and Peninsular Arabic. He disappeared from Saudi Arabia in 2012 shortly after violence erupted in Rakhine State. Though not confirmed, there are indications he went to Pakistan and possibly elsewhere, and that he received practical training in modern guerrilla warfare.[fn]In Arabic, Abu Amar Jununi means “mad father of Amar”, perhaps an indication his eldest son is named Amar. The government spells Hafiz Tohar as Havistoohar. It said he attended a six-month Taliban training course in Pakistan (government press release, Naypyitaw, 14 October 2016, reproduced in GNLM, 15 October 2016, pp. 1, 3); In Crisis Group interviews, HaY members suggested he went from Saudi Arabia to Pakistan and from there to other countries (possibly including Libya) for training, but no further details or confirmation were obtained.Hide Footnote Some twenty Rohingya from Saudi Arabia (separate from the leadership committee), including Ata Ullah, are leading operations on the ground. Like him, they are thought to have experience from other conflicts, possibly Afghanistan and Pakistan. Some Rohingya returned from the camps (official and informal) in Bangladesh before 9 October to join the group. A registered refugee from Nayapara camp in Bangladesh stood beside Ata Ullah in the first video; he disappeared from the camp the night of a 13 May attack on its guard post in which a commander was killed and eleven weapons stolen.[fn]Attackers kill guard at Bangladesh Rohingya refugee camp”, Agence France-Presse, 13 May 2016.Hide Footnote Since 9 October, several hundred young Rohingya men from Bangladesh have joined the fight. However, the main fighting force is made up of Muslim villagers in northern Rakhine State who have been given basic training and organised into village-level cells to limit risks of compromise. These are mostly led by young Islamic clerics (known as “Mullahs” or “Maulvis”) or scholars (“Hafiz”) from those villages.

Though it does not appear to have religious motivations, HaY has sought religious legitimacy for its attacks. At its prompting, senior Rohingya clerics and several foreign clerics have ruled that, given the persecution Muslim communities face in Rakhine State, the campaign against the security forces is legal in Islam, and anyone opposing it is in opposition to Islam. Fatwas (religious rulings) to this effect were apparently obtained shortly after 9 October in several countries with a significant Rohingya diaspora, including Saudi Arabia, Dubai, Pakistan, India and Bangladesh. These have significantly influenced many Muslim religious leaders in northern Rakhine State to endorse HaY despite earlier feeling violence to be  counterproductive. The group also has a senior Islamic scholar with it in Maungdaw, a Rohingya from Saudi Arabia, Mufti Ziabur Rahman, who brings religious legitimacy to operations and has authority to issue fatwas.[fn]The foreign clerics are from Saudi Arabia and the United Arab Emirates, among other places. The mufti is the main speaker in the third video and identifies himself: “Islamic terrorist Rohingya act like villagers”. 12 October 2016. YouTube.Hide Footnote

Information from members and analysis of its methods indicate that its approach and objective are not transnational jihadist terrorism.[fn]This report uses “international jihadist” to refer to groups such as al-Qaeda, Islamic State (IS) and their affiliates. The Arabic root of “jihad” refers to striving in God’s service. Many Muslims find its use in the political violence context imprecise and offensive, reducing a complex religious concept, which over centuries has had many, often peaceful forms, to war-making. Even when used in the organised violence context, it can refer to insurgency and guerrilla war, not only terrorism. For the vast majority of Muslims, today’s “jihadists” pervert Islam’s tenets. But it is hard to escape the term. Groups such as al-Qaeda and IS self-identify as “jihadist”; and while jihad has long been an element of virtually all schools of Islam, a nascent “jihadist” ideology has emerged that is more than a reflection of this; ideologues borrow from other traditions and at times show frustration with Salafi doctrinal rigidity that could constrain fighting tactics. Though big differences exist, “jihadist” groups share some tenets: fighting to return society to a purer Islam; violence against rulers whose policies they deem in conflict with Islamic imperatives as they understand them; and belief in duty to use violence if Muslim rulers abandon those imperatives. This report’s use of “jihadist” is not meant to add legitimacy to this interpretation or detract from efforts to promote alternative interpretations. It uses “terrorism” and “terrorist” only to describe non-state actors’ attempt to use violence or intimidation, especially of civilians, to achieve political goals by manipulating fear. See Crisis Group Special Report N°1, Exploiting Disorder: al-Qaeda and the Islamic State, 14 March 2016.Hide Footnote It has only attacked security forces (and perceived threats in its own community), not religious targets, Buddhist villagers or civilians and family members at the BGP bases it hit on 9 October. It has called for jihad in some videos, but there are no indications this means terrorism.[fn]Crisis Group interview, individual briefed on the attacks, Yangon, October 2016.Hide Footnote Unlike all previous such insurgent groups (see above) and for unclear reasons, it does not include “Rohingya” in its name. Its stated aim is not to impose Sharia (Islamic law), but rather to stop persecution of Rohingya and secure their rights and greater autonomy as Myanmar citizens, notwithstanding that its approach is likely to harden attitudes in the country and seriously set back those goals. It is possible, however, that its objectives could evolve, given its appeals to religious legitimacy and links to international jihadist groups, so it is essential that government efforts do not focus only or primarily on military approaches, but also address underlying community grievances and suffering.

HaY’s modus operandi is similar to the now-defunct RSO as well as many ethnic armed groups in Myanmar – but it faces much greater hurdles than the latter given rejection of Rohingya identity by the government and most of the country. Though the government has claimed close links with RSO, it is a distinct group that is more a reaction to perceived RSO failures than an evolution of that group (see Section IV.C below) – hence Ata Ullah’s RSO criticism in the second video. As the RSO has become something of a brand associated with Rohingya militancy by both Muslims and the authorities, it is not surprising that the government has identified the attackers as linked to it.[fn]Government press release, Naypyitaw, 14 October 2016, reproduced in GNLM, 15 October 2016, pp. 1, 3.Hide Footnote But institutional ties do not appear to exist, though there are some efforts to recruit around 200 Rohingya in Bangladesh trained since 2012 by an ex-RSO military commander, but never deployed due to lack of an organisational structure that HaY may potentially now offer.[fn]There is also information that some former RSO members acting on their own have been providing very basic training to Rohingya refugees interested in joining HaY. This started only after the first attacks. All indications are it is not linked institutionally to either the RSO or HaY. Crisis Group interviews, Rohingya refugees, Cox’s Bazar (Bangladesh), November 2016.Hide Footnote

B. Communications and Social Media Environment

Much of HaY’s communications and planning was over encrypted messaging applications such as WhatsApp and Viber, as well as WeChat (which does not have end-to-end encryption).[fn]Crisis Group observation of Rohingya WhatsApp groups, October-November 2016. On Viber use, see “Sender of fake news in Rakhine linked to int’l extremist groups”, GNLM, 19 November 2016, pp. 1, 3. A Myanmar Muslim has been warning members of the diplomatic and aid communities about the use of WeChat to promote extremism in the country since the 9 October attacks. Crisis Group interview, diplomat, Yangon, October 2016.Hide Footnote Use of these has become widespread across Myanmar over the last few years, as mobile voice and data connectivity have been rolled out along with $20 smartphones (people close to the border have had access to these opportunities for much longer, by connecting to Bangladeshi networks). Myanmar is one of the only countries where Viber is the dominant messaging app: the company claims 25 million unique users as of October 2016, out of a 51.5 million population. Such tools have significantly lowered communication and organisation barriers for communities in northern Rakhine State, something that the draconian movement restrictions in place for decades can no longer prevent.[fn]Buddhist nationalists also use messaging applications to organise and disseminate views; Viber has long been their preferred application, but recently WhatsApp has been gaining popularity. Crisis Group interview, technology industry source, Yangon, November 2016.Hide Footnote

The preferred messaging app among Rohingya is WhatsApp. This is probably due to its much greater popularity internationally and the fact that Rohingya use these apps to keep in touch with family overseas and the diaspora more generally. Crisis Group identified more than 50 WhatsApp groups in use in northern Rakhine State, each with as many as 250 members, and including diaspora Rohingya around the world. These are mainly used for social interaction and information sharing, not nefarious purposes. Some individuals are members of ten to twenty WhatsApp groups and can also easily share information from group chats with their individual contacts. In the wake of the 9 October attacks, these have been used to quickly disseminate information about security threats and other urgent issues. They are likely also an important source of HaY operational intelligence.

Since the Rohingya dialect of Bengali does not have a written form, much of the communication over these applications uses audio files or voice messages.

C. Planning and Operational Strategy for the Attacks

Crisis Group interviews with HaY members and other well-informed sources in Myanmar, Bangladesh and the Middle East, cross-referenced with additional information, including Myanmar government reports based on interrogations of captured HaY and from regional diplomats and security analysts, have revealed a fairly detailed picture of the planning and operational strategy behind the attacks.

HaY’s formation and planning for operations were initiated in the wake of the 2012 violence. Active recruitment of local leaders began in 2013, then training of hundreds of villagers they recruited, mainly from Maungdaw township, since 2014, initially in Bangladesh and then more intensively in northern Rakhine State. Training was in small batches to avoid attention, a village at a time, so members would not know the identities of other trainees, and primarily in the hills of the Mayu range along the border of Maungdaw and Buthidaung townships, as well as possibly in the compounds of some large houses in villages. It included weapons use, guerrilla tactics and, HaY members and trainees report, a particular focus on explosives and IEDs. It was given by Rohingya veterans and Pakistanis or Afghans with experience of recent operations in those countries and possibly elsewhere and took more than two years to complete.[fn]For a map with village tracts in Maungdaw township, see “Village Tracts of Maungdaw Township, Rakhine State”, Myanmar Information Management Unit, 22 November 2011. Some RSO veterans have explosives expertise, from training by Bangladeshi militants in the early 2000s in an exchange program. Crisis Group Report, The Threat from Jamaat-ul Mujahideen Bangladesh, op. cit.Hide Footnote

During this period, the group apparently killed several informers among the Muslim villages of north and south Maungdaw and others they feared might reveal their plans. It also paid significant hush money to potential informers. Following the training, two Saudi-based senior leaders spent a month in northern Rakhine State, around August 2016, selecting targets and determining how and when the attacks would take place.[fn]A different source claims that only one of the men was a Rohingya from Saudi Arabia, and the other was a foreigner.Hide Footnote Once they left, the intention was to obtain weapons and ammunition for the hundreds of trainees. Plans were also made to deploy at least four experienced doctors with medicines and supplies and to train locals as medics to assist them. From roughly late August, there was an increase in the killing of known informers within the Rohingya community.[fn]Crisis Group interview, human rights monitor, Bangladesh, November 2016.Hide Footnote

The claimed objective of the operation was to take complete control of Maungdaw township, cut off communications with Buthidaung to the east and establish military posts on the ridges of the Mayu range between Maungdaw and Buthidaung, creating a defendable liberated area in the same manner as the larger ethnic armed groups in Myanmar’s eastern borderlands. After this, the intent was to attack the northern part of Buthidaung – a very ambitious plan that would give complete control of the Bangladesh border – as well as parts of Rathedaung.

Now that it [HaY] has established its legitimacy and capability with attacks, it is unlikely to face funding constraints.

This plan had to be changed. In early September, after the two senior leaders left, two informers in U Shey Kya village-tract, close to Nga Khu Ya where one of the 9 October attacks occurred, revealed the identities of eight local HaY members to the BGP, which arrested them on 12 September. They were interrogated and allegedly tortured (including electric shocks and denailing). HaY arranged a bribe to the BGP of 3 million kyat (about $2,300), and five were released on 16 September. The remaining three were freed on 28 September, after a bribe of more than 40 million kyat (over $30,000).[fn]This is the highest known bribe ever paid to the BGP to release a detainee. Crisis Group interviews, local researcher, well-informed locals, Maungdaw, September-November 2016.Hide Footnote On 30 September, HaY reportedly killed the two informants, leading to BGP night raids and arrests in the area that prompted several families to flee to Bangladesh. The authorities subsequently began large payments to informers in north Maungdaw to draw up lists of villagers in their area engaged in illegal activity, some of whom fled.

Additionally, local people say, an IED that accidentally exploded in Ngar Sar Kyu village-tract around 7 October while it was being prepared drew the attention of the security forces. According to members of the group, HaY saw that the net was closing and decided that though its preparations were not yet complete, it had to make an emergency plan and launch its operation on 9 October, ahead of schedule.

Though done hastily, the attacks showed some sophistication, including diversionary tactics; blocking reinforcements with a complex attack (IEDs plus armed assault) on a convoy some distance away; and felling of trees across roads to halt military vehicles. It is unclear where the explosives came from, but a foreign expert described the IEDs as crude but not completely amateurish.[fn]Crisis Group interview, individual briefed on the matter, Yangon, November 2016.Hide Footnote

The group was able to organise widely, pay numerous potential informers in northern Rakhine State prior to the attacks to keep them quiet and large bribes to the security forces to free detained militants. Now that it has established its legitimacy and capability with attacks, it is unlikely to face funding constraints. It seems to be receiving funds from the Rohingya diaspora and major private donors in Saudi Arabia and the Middle East.[fn]Crisis Group interviews, members of the group and sources in the Rohingya diaspora, October-November 2016.Hide Footnote It may also attract the attention of international groups interested in more than funding (see Section IV.E below).

D. Level of Local Support

It would not have been possible for HaY to establish itself and make detailed preparations without the buy-in of some local, particularly religious leaders and local communities in northern Rakhine State. Yet, this has never been a radicalised population; that some now embrace violence reflects deep policy failures over many years.

The community follows a conservative Islam, but not in general a radicalised one, and even as people saw their rights, livelihoods and hopes eroded, the vast majority of religious leaders and the population as a whole continued to eschew violence, which they considered likely to prompt further discrimination and undermine the objective of achieving recognition and rights within Myanmar. But in the wake of the 2012 violence, a segment of the population began more active consideration of organised violent responses. While a minority view, it was driven by influential individuals, including some of the younger generation of religious leaders in northern Rakhine State, who began to break with the views of community elders and older clerics. It was these people and their followers who started the organisational and training activities on the ground that were well under way by mid-2014.[fn]See Crisis Group report, The Politics of Rakhine State, op. cit., Section VI.A.Hide Footnote

With the 9 October attacks, views began to shift. Initially, there were intense debates within the community, which played out on WhatsApp group chats. Some felt they were “dying slowly day by day”, and that after years of desperation and hopelessness, someone was standing up for them.[fn]The group chats were monitored by Crisis Group researchers since mid-2016. Crisis Group interview, villager in Maungdaw, October 2016.Hide Footnote But there was considerable criticism of the group in WhatsApp for not consulting or warning the community before the attacks and not considering the very serious consequences. It appears to have been the issuance of fatwas shortly after the attacks that was decisive in convincing many throughout Maungdaw to support HaY’s approach.

Following the success of the attacks, some youths take the view that the group has achieved what their fathers and grandfathers could not.

HaY leaders also seem to have been effective in this regard. The local commanders, about twenty Rohingya from Saudi Arabia including Ata Ullah, had been working on the ground with the trainees and local leaders for a long time, living with local people unlike the leaders of Rohingya armed groups in the past.[fn]Crisis Group interviews, villagers in several villages in north and south Maungdaw, recent arrivals in Cox’s Bazar (Bangladesh) and observation of discussions on WhatsApp groups, October-November 2016. These are not the same twenty as the approximately twenty-member leadership committee based in Mecca, mentioned in Section IV.A above.Hide Footnote Several village leaders who have observed the activities of HaY’s leaders say they were impressed by their dedication, sincerity and strong commitment to their cause; as a result, they gained increasing trust and support from villagers. Following the success of the attacks, some youths take the view that the group has achieved what their fathers and grandfathers could not.

An important part of HaY’s success, local community members say, is that these twenty or so leaders had good, secure lives in Saudi Arabia, the dream of many Rohingya, but were seen to have sacrificed comfort and prosperity to live beside impoverished villagers, without wearing shoes or good clothes and eating the same meagre food. That persons with so many other options were willing to take such risks convinced many locals the group was sincere and committed. This overcame doubts about joining or supporting an armed insurgency. Now, after two rounds of attacks and a brutal security response, it appears that a sizeable proportion of the area’s Muslim population and the diaspora support or are sympathetic to HaY, even if the ferocity of the military’s response causes some to flee.

At the same time, HaY also relied on threats and intimidation to ensure its survival. It has killed some suspected informers and drawn up a hit list of others. In addition to the killings in the lead up to the 9 October attacks, a Muslim man who used to work as a BGP cook was abducted by fellow villagers in Laungdon village-tract and found in a paddy field on 31 October with his throat cut; on 3 November, a former U Shey Kya village administrator was similarly found dead, as was a 100-household leader in south Maungdaw on 17 November.[fn]Arakan Project, internal note no. 2, op. cit.; “54-year old man found dead in Maungtaw”, GNLM, 6 November 2016, p. 2; and “Elder village leader murdered in Maungtaw”, GNLM, 19 November 2016, p. 2.Hide Footnote These killings were done in the same gruesome way, presumably to inspire fear, while there have been no attacks on Buddhist civilians.

E. Links with International Jihadist Groups

There is some limited information on links between HaY and international jihadist groups. It is not surprising that such links exist, given the recruitment over several decades of vulnerable and marginalised Rohingya refugees and migrants by militant groups, initially mostly in Bangladesh, for deployment there and elsewhere.[fn]For example, it is known that Muslims from Myanmar were fighting with the Taliban in Afghanistan, 1999-2001, Crisis Group Report, The Politics of Rakhine State, op. cit., Section VI.A; that Rohingya fighters have been operating, and one was killed, in Indian Kashmir, “Killing of Burmese militant ups ante of intelligence agencies”, The Tribune, 13 November 2015; and that there is information ISIS has been recruiting among the Rohingya diaspora for Iraq and Syria, “ISIS look to recruit Rohingya Muslims fleeing Myanmar”, Newsweek, 6 February 2015.Hide Footnote However, HaY’s public statements and modus operandi, as well as interviews with its members, all point to this being an insurgent group targeting Myanmar security forces and aiming – albeit in a way likely to be counterproductive – to obtain rights for the Rohingya in Myanmar, along the lines of previous mujahidin groups in Myanmar (see Section II above).

With that important caveat, the information on connections with international groups is as follows. First, members of HaY say Ata Ullah and the non-local fighters with him are well trained and experienced in guerrilla warfare; their tactics and operational success appear to confirm this, particularly their use of asymmetric methods and weapons such as IEDs, albeit crude ones. Such training and experience imply at least some links with international extremist groups. HaY members confirm that their leaders are well connected in Bangladesh, Pakistan and, to a lesser extent, India; the Myanmar government says its interrogations reveal that training was provided in Bangladesh and Pakistan. HaY recruits have also been instructed in Rakhine State by both Rohingya and Pakistani or Afghan trainers, according to members of the group and local people.[fn]Crisis Group interviews and Myanmar government press release, 14 October 2016, op. cit. There are unconfirmed indications that the group may have a leader in Syria. Based on the profiles of other leaders and their connections, if this is true it might be a Rohingya fighter with a jihadist group rather than implying non-Rohingya leadership. Others have noted the raised index finger gesture, commonly associated with IS, displayed by Ata Ullah and some other fighters in several videos; however, this is a common gesture in South Asia and does not in itself imply any such links. See Jasminder Singh and Muhammad Haziq Jani, “Myanmar’s Rohingya Conflict: Foreign Jihadi Brewing”, RSIS Commentary no. 259, 18 October 2016.Hide Footnote

Secondly, the Rohingya cause has been used propagandistically by international jihadist groups for several years. Examples include threats against Myanmar by Tehreek-e-Taliban Pakistan (2012); calls by an Indonesian extremist leader for Muslims to wage jihad in Myanmar (2013); threats by the IS leader to take revenge on Myanmar and several other countries for abuses against their Muslims; promises to rescue Muslims in Myanmar and elsewhere from “injustice and oppression” in the formation announcement of “al-Qaeda in the Indian Subcontinent”; frequent citations in speeches as recently as 2015 by Hafiz Muhammad Saeed, head of Pakistan’s Lashkar-e-Taiba militants, to the “atrocities on Rohingya Muslims” and calls for revenge; offers of resources and training facilities by Tehreek-e-Taliban Pakistan in June 2015 to help Myanmar Muslims “take up the sword”; and a call in the April 2016 issue of IS’s Dabiq magazine by Bangladeshi militant Abu Ibrahim to help oppressed Muslims in Myanmar in every possible way, but stating that it was not a current operational focus.[fn]Tehreek-e-Taliban Pakistan threaten Myanmar over Rohingya”, Agence France-Presse, 26 July 2012; a 23 April 2013 call by Abu Bakar Ba’asyir from his prison cell in Indonesia, mentioned in Crisis Group interview, security analyst, Jakarta, July 2014; “ISIS leader calls on Muslims to ‘build Islamic state’”, BBC, 1 July 2014; “Pakistani terror group active on Myanmar-Bangladesh border”, Mizzima News, 28 July 2015; “Pakistani Taliban attempts to recruit Rohingyas to kill Myanmar's rulers”, Agence France-Presse, 9 June 2015; and Dabiq Magazine (English edition), issue 14, April 2016, p. 62.Hide Footnote

Beyond these statements of solidarity and calls for support, there has been little evidence that Myanmar is an operational priority for such groups. There appear to be some other forms of cooperation or assistance, including training (discussed above) and funding, as well, potentially, as provision of weapons and explosives, which HaY currently seeks in Bangladesh. According to security analysts, small arms and military-grade explosives are available there, and procuring them should not be too difficult if the group has connections with regional arms traffickers or Bangladeshi or regional militant entities.[fn]Crisis Group interviews, HaY members, November 2016; security analysts, Yangon, Dhaka, November 2016. Illegal shipments of small arms are regularly intercepted in Bangladesh; their use in domestic crimes has increased markedly in recent years. “Use of illegal firearms on rise”, Dhaka Tribune, 13 November 2016; and “New JMB planned big attack for Dhaka”, Dhaka Tribune, 15 November 2016.Hide Footnote There are no indications of any significant presence of non-Rohingya fighters.[fn]There is unconfirmed information from a credible source that about a dozen Patani Malays went to Maungdaw before 9 October to fight with HaY, apparently in solidarity and on their own initiative. Crisis Group correspondence, analyst, December 2016.Hide Footnote

Such links appear driven by umma (Islamic community) solidarity and do not imply convergence between HaY and international jihadist groups on ideology, strategy or tactics. HaY’s objectives and tactics and its focus on security targets suggest that it is Rohingya rather than transnationally focused. It is necessary to be careful not to over-interpret the significance of the international links noted above or leave unchallenged efforts by some Myanmar officials, politicians and other leaders to portray HaY as part of the global jihadist movement. Nevertheless, the longer violence continues, the greater the risks become of such links deepening and potentially becoming operational.

Recent minor explosions in Yangon do not appear directly linked to Rakhine State. Crude homemade devices were set off on 17, 20, 24 and 26 November at two shopping centres and two immigration offices, one inside the fairly secure regional government office. There were no casualties, only minor damage. The location of the devices in bins and toilets and the timing of blasts (after work hours or on public holidays) appeared designed to avoid casualties. Police arrested several suspects said to be Muslims on 26 November, but no further details have been released.[fn]Mayangone bomb intended to scare, not hurt, say police”, Frontier Myanmar, 21 November 2016; “Myanmar police arrest Muslims over Yangon bombings”, Agence France-Presse, 28 November 2016.Hide Footnote Targeting of immigration offices, which are also responsible for citizenship verification, suggests a possible link to the Rakhine situation. If so, however, it more plausibly was an unsolicited expression of solidarity or anger at the security response than a direct attack, which might be expected to have been more dramatic. However, it does perhaps indicate existence of individuals with an intent and capability to access (semi-)secure locations that potentially could be utilised by those with the technical expertise and materials for a major attack.

VI. How Should the Government Respond?

Emergence of a new Muslim armed group in Rakhine State is a serious threat to prospects for stability and development there. The government faces a big challenge in calibrating its political, policy and security responses to ensure that violence does not escalate and intercommunal tensions are not inflamed. It also requires taking due account of the grievances and fears of Rakhine Buddhists.[fn]Crisis Group Report, The Politics of Rakhine State, op. cit., Section IV. See also Aung San Suu Kyi’s comments in “Focus on resolving difficulties in Rakhine rather than exaggerating them, says Suu Kyi”, Channel NewsAsia, 2 December 2016. As regards the risk of intercommunal violence, monitors report a significant increase in hate speech posts after 9 October and their spread to pages and networks where that had not previously been observed. Crisis Group interview, Yangon, November 2016.Hide Footnote

Failure to get this right carries enormous risks, so it is important that any response starts from an appreciation of why a violent reaction from some in the Muslim population of Rakhine State has emerged now. For many years, this population has seen its rights eroded and its progressive marginalisation from social and political life. This became particularly acute at the time of the 2012 anti-Muslim violence in Rakhine. In the wake of that violence, and seeing no likelihood of improvement, some Rohingya in northern Rakhine State and the diaspora began contemplating taking up arms and made initial preparations to launch a new insurgency (see Section IV.C above). A leader of this initiative with whom Crisis Group met in Bangladesh in 2014 described the group’s plans and made clear the objective was for the community to live as Myanmar citizens with rights respected by the state, and was not separatist, anti-Buddhist or transnational jihadist.[fn]Crisis Group Report, The Politics of Rakhine State, op. cit., Section VI.A. At the time, he described the group as a “new RSO”, with a generation of younger leaders based in Rakhine State. It is now clear that he was describing HaY.Hide Footnote

Three key developments in 2015 are likely to have cemented the group’s resolve to launch an insurgency and created a much more fertile recruiting ground for it: disenfranchisement of Muslim voters, lack of hope of a political solution and the shutting down of migration routes to Malaysia (see Section III above). The authorities have a responsibility to respond to the deadly attacks on BGP bases. At the same time, an effective security response must be set within an overarching policy that addresses the sense of hopelessness of Muslims in Rakhine State. This is not yet a radicalised population; community members, elders and religious leaders have previously eschewed violence as counterproductive. While increasing despair has driven more to consider violence, it is not too late for the government to reverse this if it recognises that the population has lived in the area for generations and will continue to do so and resolves to give them a place in the nation’s life.

This is not yet a radicalised population; community members, elders and religious leaders have previously eschewed violence as counterproductive.

All indications are that HaY is preparing further attacks on security forces and retains the capability to do so. Heavy-handed security measures would directly contradict the above objectives, likely creating more despair and animosity among local Muslims, increasing support for HaY and provoking a deepening cycle of violence. There is likewise a very real prospect of even larger population displacements to Bangladesh. In this respect, it is also vital to open up the conflict-affected part of north Maungdaw for aid workers and independent media.

Experience from other countries strongly suggests an aggressive military response not embedded in a broader policy framework would also be ineffective against the armed group and risk greater attention from international jihadist groups.[fn]For experiences elsewhere, see, for example, Crisis Group Europe & Central Asia Briefing N°77, A Sisyphean Task? Resuming Turkey-PKK Peace Talks, 17 December 2015; Middle East & North Africa Report N°86, Yemen: Defusing the Saada Time Bomb, 27 May 2009; and Special Report, Exploiting Disorder, op. cit., Section V.A.Hide Footnote The presence of a well-organised, effective, internationally connected insurgency in Rakhine State could then provide channels that did not previously exist for terrorism. This does not appear to be the HaY’s objective, but the situation could give international jihadists opportunities to insert their own agendas, for example by recruiting Rohingya (particularly in Bangladesh) to carry out such actions on Myanmar soil, or attracting foreign fighters, particularly those from the Indian subcontinent who could blend in easily, to do so.

It is also possible that the spotlight on the Rohingya’s plight might prompt foreign groups unconnected with HaY to conduct a terrorist attack; there has been a foiled attempt to bomb Myanmar’s Jakarta embassy, and the individual who carried out the recent attack at Ohio State University in the U.S. claimed to have been inspired at least in part by oppression of the Rohingya.[fn]See “Indonesia foil plan to attack embassy”, Agence France-Presse, 27 November 2016; “‘I can’t take it anymore’: Ohio State attacker said abuses of Burma’s Muslims led to ‘boiling point’”, The Washington Post, 29 November 2016.Hide Footnote To mitigate these risks requires political, not military responses: building stronger, more positive ties between Muslim communities and the Myanmar state and improving cooperation and intelligence sharing with regional countries.

Such cooperation is essential to ensure security and effectively address potential transnational jihadist threats. On the western border in particular, arms, narcotics and human smuggling networks are intertwined and could be used by insurgent and jihadist groups to transport weapons, materiel and personnel. The current security operation has strained relations with countries that have large Muslim populations and with which there are practical needs for close ties. There have been big protest demonstrations in Bangladesh (including by Islamist parties) as well as in Malaysia, Indonesia and Thailand and Indonesia. Deep concerns have been expressed by the Bangladeshi and Malaysian governments. Western countries are also alarmed at the Rakhine State situation and the lacklustre government response.[fn]Malaysia to summon Burmese ambassador as protests mount over treatment of Rohingya”, Reuters, 25 November 2016; “Myanmar’s Rohingya crisis stirs regional protests”, Nikkei Asian Review, 26 November 2016; “Malaysia says Myanmar violence against Muslim Rohingya ‘ethnic cleansing’”, Reuters, 2 December 2016; “Myanmar’s Rohingya issue a ‘humanitarian crisis’: Malaysia”, Channel NewsAsia, 3 December 2016; “Malaysian PM urges intervention to stop ‘genocide’ of Myanmar's Rohingya Muslims” Reuters, 4 December 2016. Crisis Group interviews, Western diplomats, Yangon, December 2016. “Regional criticism of Myanmar's Rohingya policy risks ASEAN split”, Nikkei Asian Review, 7 December 2016.Hide Footnote

Political space has considerably narrowed for policy responses to the underlying issues of discrimination, citizenship and freedom of movement of Muslims in Rakhine State.

In the Malaysian case, this became a public spat after Prime Minister Najib Razak indicated he would join a major protest in Kuala Lumpur. Myanmar accused him of violating ASEAN non-interference principles and using the issue for domestic politics; Malaysia retorted that Myanmar was pursuing “ethnic cleansing” and destabilising South East Asia. At the 4 December demonstration, Najib called for international intervention to stop “genocide”, directly criticised Suu Kyi and said “enough is enough”.

While this was seen in many quarters as having a primarily domestic political objective for Najib, the anger against Myanmar in much of the Muslim world is real. ASEAN, in particular Indonesia, has a potentially important role in helping to de-escalate the situation. This would be of great benefit to Myanmar; it would also be in the interests of ASEAN, which has long carried the burden of large numbers of Rohingya refugees and migrants, a flow that will increase if the violence continues and lead to radicalisation risks for the region. There is also fear that the issue could be destabilising for ASEAN as a whole.[fn]Surin Pitsuwan, “Asia’s moral duty to the Rohingya”, The Wall Street Journal, 7 December 2016.Hide Footnote In response to regional concerns, Myanmar has called a special retreat for ASEAN foreign ministers in Yangon on 19 December, so Aung San Suu Kyi can brief them on the situation.[fn]Kavi Chongkittavorn, “Myanmar to brief ASEAN amid alarm over Rakhine”, Nikkei Asian Review, 12 December 2016.Hide Footnote Myanmar should use this opportunity to set out a credible political strategy for addressing the violence.

Suu Kyi’s flagship initiative for addressing the situation, the Kofi Annan-led advisory commission established in August, faces major further challenges after the 9 October attacks.[fn]Press release, Office of the State Counsellor, reproduced in GNLM, 24 August 2016, pp. 1, 3.Hide Footnote Political space has considerably narrowed for policy responses to the underlying issues of discrimination, citizenship and freedom of movement of Muslims in Rakhine State. The commission lacks the composition, expert staff and mandate to address the current crisis. On 1 December, the government announced another (national) commission to investigate the attacks and security forces’ response and consider measures to prevent new incidents. It is chaired by the military’s pick for vice president, Myint Swe, a retired army lieutenant-general and former military intelligence chief, widely regarded as a hardliner. That its membership is mainly serving or retired government officials suggests it is unlikely to challenge or contradict government and military narratives.[fn]Formation of Investigation Commission”, President’s Office, notification 89/2016, 1 December 2016. Crisis Group interviews, diplomats and observers, Yangon, December 2016.Hide Footnote How it will work or liaise with the Annan commission is unclear.

VII. Conclusion

The violent attacks on BGP bases on 9 October 2016, and further clashes in the next days and on 12 November, when a senior army officer was killed, represent the emergence of a new Muslim insurgency in northern Rakhine State. The HaY group is led by a committee of Rohingya émigrés in Saudi Arabia and commanded on the ground by other Rohingya, who have international training and experience in modern guerrilla tactics, the legitimacy of supportive local and international fatwas and considerable sympathy and backing from the local Muslim population, including several hundred locally trained recruits.

The emergence of this organised, well-funded group is a game changer in the Myanmar government’s efforts to address Rakhine State’s complex challenges, including longstanding discrimination against its Muslim population, with denial of rights and citizenship status. The government’s response to the attacks – injudicious use of military force that fails to adequately distinguish militants from civilians, denial of humanitarian aid to an extremely vulnerable population and lack of an overarching political strategy that offers it some hope – is unlikely to dislodge the group and risks generating a spiral of violence.

Though there are indications of some training and support links, HaY does not appear to have a transnational jihadist or terrorist agenda. If the government mishandles the situation, however, including by continued use of disproportionate military force that has driven thousands across the border to Bangladesh, it could create conditions for radicalising sections of the Rohingya population that jihadist groups might exploit for their own agendas. To avoid that risk requires a moderated military response, well-crafted political strategy and closer cooperation and intelligence sharing with Myanmar’s neighbours and the ASEAN bloc.

Yangon/Brussels, 15 December 2016

Appendix A: Map of Myanmar

Crisis Group. Based on UN map 4168, rev. 3, June 2012.
Myanmar law enforcement authorities seized illegal drugs worth 187 million USD marking the International Day against Drug Abuse and Illicit Trafficking during a ceremony in Yangon on June 26, 2018. YE AUNG THU/AFP
Report 299 / Asia

Fire and Ice: Conflict and Drugs in Myanmar’s Shan State

Civil strife has turned Myanmar’s Shan State into a crystal methamphetamine hub. The richer the traffickers get, the harder the underlying conflicts will be to resolve. Instead of targeting minor offenders, the military should root out corruption, including among top brass, and disarm complicit paramilitaries.

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What’s new? Shan State has long been a centre of conflict and illicit drug production – initially heroin, then methamphetamine tablets. Good infrastructure, proximity to precursor supplies from China and safe haven provided by pro-government militias and in rebel-held enclaves have also made it a major global source of high purity crystal meth.

Why does it matter? Drug production and profits are now so vast that they dwarf the formal sector of Shan State and are at the centre of its political economy. This greatly complicates efforts to resolve the area’s ethnic conflicts and undermines the prospects for better governance and inclusive economic growth in the state.

What should be done? The government should redouble its drug control and anti-corruption efforts, focusing on major players in the drug trade. Education and harm reduction should replace criminal penalties for low level offenders. The military should reform – and ultimately disband – militias and other pro-government paramilitary forces and pursue a comprehensive peace settlement for the state.

Executive Summary

Myanmar’s Shan State has emerged as one of the largest global centres for the production of crystal methamphetamine (“ice”). Large quantities of the drug, with a street value of tens of billions of dollars, are seized each year in Myanmar, neighbouring countries and across the Asia-Pacific. Production takes place in safe havens in Shan State held by militias and other paramilitary units allied with the Myanmar military, as well as in enclaves controlled by non-state armed groups. The trade in ice, along with amphetamine tablets and heroin, has become so large and profitable that it dwarfs the formal economy of Shan State, lies at the heart of its political economy, fuels criminality and corruption and hinders efforts to end the state’s long-running ethnic conflicts. Myanmar’s government should stop prosecuting users and small-scale sellers and work with its neighbours to disrupt the major networks and groups profiting from the trade. The military should better constrain pro-government militias and paramilitaries involved in the drugs trade, with an eye to their eventual demobilisation.

The growing drugs trade in Shan State is in part a legacy of the area’s ethnic conflicts. For decades, the Myanmar military has struck ceasefire deals with armed groups and established pro-government militias. Such groups act semi-autonomously and enjoy considerable leeway to pursue criminal activities. Indeed, conditions in parts of Shan State are ideal for large-scale drug production, which requires a kind of predictable insecurity: production facilities can be hidden from law enforcement and other prying eyes but insulated from disruptive violence.

Tackling the drug trade presents a complex policy challenge involving security, law enforcement, political and public health aspects.

But if the drugs trade is partly a symptom of Shan State’s conflicts, it is also an obstacle to sustainably ending them. The trade, which now dwarfs legitimate business activities, creates a political economy inimical to peace and security. It generates revenue for armed groups of all stripes. Militias and other armed actors that control areas of production and trafficking routes have a disincentive to demobilise, given that weapons, territorial control and the absence of state institutions are essential to those revenues. The trade attracts transnational criminal groups and requires bribing officials for protection, support or to turn a blind eye, which allows a culture of payoffs and graft to flourish and adds to the grievances of ethnic minority communities that underpin the seventy-year old civil war. Myanmar’s military, which has ultimate authority over militias and paramilitaries and profits from their activities, can only justify the existence of such groups in the context of the broader ethnic conflict in the state – so the military also has less incentive to end that conflict.

Tackling the drug trade presents a complex policy challenge involving security, law enforcement, political and public health aspects. An integrated approach that addresses all of these areas will be needed to effectively address it:

  • Myanmar’s government should redouble its drug control efforts, ending prosecutions of small-time dealers and users and refocusing on organised crime and corruption associated with the trade. The president should instruct and empower the Anti-Corruption Commission to prioritise this.
     
  • At the community level, the government should focus more on education and harm reduction, in line with its February 2018 National Drug Control Policy. It should work with relevant donors and international agencies to invest in education and harm reduction initiatives geared specifically toward the particular dangers of crystal meth use. Although crystal meth is currently not widely used in Myanmar, that is likely to change given the huge scale of production.
     
  • Myanmar’s military should rethink the conflict management approaches it has employed for decades. In particular, it should exert greater control over – and ultimately disarm and disband – allied militias and paramilitary forces that are among the key players in the drug business. The impunity that these groups enjoy, and the requirement that they mostly fund themselves, has pushed them to engage in lucrative illicit activities.
     
  • The military should also investigate and take concerted action to end drug-related corruption within its ranks, focusing on senior officers who facilitate or turn a blind eye to the trade.
     
  • ​​​​​​​Myanmar’s neighbours should stop illicit flows of precursors, the chemicals used to manufacture drugs, into Shan State. As the main source of such chemicals, China has a particular responsibility to end this trade taking place illegally across its south-western border. It should also use its influence over the Wa and Mongla armed groups controlling enclaves on the Chinese border to end their involvement in the drug trade and other criminal activities.

Targeting the major players in the drug trade will not be easy and comes with risks of pushback, perhaps violent, from those involved. But the alternative – allowing parts of Shan State to continue to be a safe haven for this large-scale criminal enterprise – will see closer links between local armed actors, corrupt officials in Myanmar and the region, and transnational criminal organisations. The more such a system becomes entrenched, and the greater the profits it generates, the harder it will be to dislodge and the longer conflicts in that area are likely to persist. The people of Shan State, and Myanmar as a whole, will pay the highest price.

Brussels, 8 January 2019

I. Introduction

Myanmar’s conflicted Shan State has long been a global centre of illegal drug production.[fn]For Crisis Group reporting on Myanmar since the 2015 elections, see Asia Reports N°s 296, The Long Haul Ahead for Myanmar’s Rohingya Refugee Crisis, 16 May 2018; 292, Myanmar’s Rohingya Crisis Enters a Dangerous New Phase, 7 December 2017; 290, Buddhism and State Power in Myanmar, 5 September 2017; 287, Building Critical Mass for Peace in Myanmar, 29 June 2017; 283, Myanmar: A New Muslim Insurgency in Rakhine State, 15 December 2016; and 282, Myanmar’s New Government: Finding Its Feet?, 29 July 2016; and Asia Briefings N°s 153, Bangladesh-Myanmar: The Danger of Forced Rohingya Repatriation, 12 November 2018; 151, Myanmar’s Stalled Transition, 28 August 2018; 149, Myanmar’s Peace Process: Getting to a Political Dialogue, 19 October 2016; and 147, The Myanmar Elections: Results and Implications, 9 December 2015.Hide Footnote For decades the primary global source of opium and heroin – until it was eclipsed by Afghanistan in the 1990s – it is now the centre of a massive methamphetamine manufacturing and trafficking business, linked to sophisticated transnational criminal organisations.[fn]Afghanistan overtook Myanmar as the largest opium produced in 1991, whereas Myanmar had the largest area of poppy cultivation until 2003. (The difference is due to higher yields in Afghanistan.)Hide Footnote

This business thrives on the proximity of Shan State to supplies of precursors – the chemicals needed for drug production – from across the Chinese border and huge local and regional markets for the drugs. It benefits from a combination of high-level corruption and the existence of safe havens controlled by army-backed militias or non-state armed groups, allowing industrial-scale synthesis of drugs and their trafficking in tonne quantities. Both precursors and drug products are often concealed within increasing large licit trade flows across the region, spurred by greater connectivity and improved transport infrastructure.

The drug trade and armed conflict in Shan State have been interlinked since the 1950s.

The methamphetamine business has become so large and profitable that it now dwarfs the formal economy of Shan State, and is at the centre of its political economy. This report examines the implications of this for the dynamics of the armed conflict and the prospects for resolving it, and more broadly for the political and economic stability of Shan State. It is based on Crisis Group research since May 2018, including interviews in Myanmar and Thailand with experts on drug policy and the drug trade, and research in northern Shan State, including interviews with current and former members of militias and ethnic armed groups, members of civil society and other individuals with direct knowledge of the drug trade. Research focused in particular on northern Shan State, currently the location of the most active armed conflicts – between ethnic armed groups and the Myanmar military; among ethnic armed groups or militias – and a key hub of drug production and trafficking; illicit drug production also takes place in other parts of Shan State, but there is currently less armed conflict in those areas.

Drug Terminology CRISISGROUP

II. A Long Legacy

The drug trade and armed conflict in Shan State have been interlinked since the 1950s.[fn]For detailed accounts of the events in this section, see Bertil Lintner, Burma in Revolt: Opium and Insurgency since 1948 (White Lotus, 1994); and Martin Smith, Burma: Insurgency and the Politics of Ethnicity, 2nd edition (Zed Books, 1999). For a concise overview of ethnic conflict more broadly in Myanmar, see Crisis Group Asia Report N°214, Myanmar: A New Peace Initiative, 30 November 2011, Sections I and II.Hide Footnote In 1949, remnants of the nationalist Chinese Kuomintang Army invaded northern Myanmar and formed a series of base areas in eastern Shan State along the border with Thailand. The Kuomintang soon established control over the transportation of opium to heroin processing labs in Laos and Thailand, and later processed high-grade heroin themselves. During the 1970s and 1980s, Myanmar produced the majority of the world’s processed heroin for export, trafficked through Thailand to Hong Kong and on to markets in North America and Australia. This hub of opium cultivation and drug processing that encompassed Shan State, western Laos and northern Thailand became known as the “Golden Triangle”.

During these decades, drug kingpins or organisations competed for dominance in the opium and heroin trade, including first the Kuomintang, then the ethnic Kokang warlord Lo Hsing-Han, and from the 1970s, the Sino-Shan rebel leader Khun Sa, who first operated as a local militia commander, then as the leader of rebel forces – the Shan United Revolutionary Army and subsequently the Mong Tai Army. Within this milieu proliferated a number of small and medium sized armed groups, including many rebel militias from ethnic groups such as the Wa, Palaung (Ta-ang), Kokang and Shan – often in shifting alliances over commodities and control of territory. Around the margins of large ethnic armed organisations was a plethora of smaller militias, cultivated by Myanmar’s armed forces (the Tatmadaw) and nominally controlled by them, but not provided with resources. These militias were first called Ka Kwe Ye (village defence units) and subsequently Pyithu Sit (people’s militias).

In the late 1960s, China stepped up support for the Communist Party of Burma, which had gone underground three months after Myanmar’s independence in January 1948. The Communist Party had been struggling militarily, but with new resources it launched a successful operation from Chinese territory into northern Shan State, where it soon absorbed several border-based ethnic armies, including those of the Wa and Kokang, becoming the strongest anti-government armed force in the country for two decades.

The dynamics of Shan State’s conflict changed markedly in 1989, when the Communist Party imploded in mutiny, with three major organisations forming from its rank-and-file foot soldiers: the United Wa State Army (UWSA), the Myanmar National Democratic Alliance Army (MNDAA), and the National Democratic Alliance Army (NDAA) that controlled large swathes of territory along the Chinese-Myanmar frontier. The former chief of military intelligence, Lt-Gen Khin Nyunt and warlord Lo Hsing-Han brokered a series of verbal ceasefire arrangements with national and local military commanders, and the areas of control of these groups were designated as seven “special regions”.[fn]Shan State Special Region 1-MNDAA-Kokang; Shan State Special Region 2-UWSA-Pangsang; Shan State Special Region 3-Shan State Progress Party (SSPP)-Northern Shan State; Shan State Special Region 4-NDAA-Mongla; Shan State Special Region 5-Shan State Nationalities People’s Liberation Organisation (SSNPLO)-Eastern Shan State; Shan State Special Region 6-Pao National Liberation Army (PNLA)-Southern Shan State; and Shan State Special Region 7-Palaung State Liberation Front (PSLF)-Northern Shan State. Many of these special regions, such as those of the SSNPLO and PSLF, were almost completely disarmed due to Tatmadaw pressure in the early mid-2000s, while the others were transformed into Self-Administered Areas under the 2008 constitution.Hide Footnote

The drug trade then entered a new phase of competitive violence, with the UWSA challenging Khun Sa’s monopoly on heroin exports and moving against his Mong Tai Army’s bases in eastern and southern Shan State. Pressure on Khun Sa and his army intensified with indictments in the Eastern District Court of New York of key leaders as part of “Operation Tiger Trap” in 1994, and efforts by Thailand to curtail Khun Sa’s activities. As a result of this multi-front containment, Khun Sa surrendered to the government in 1996 and, in exchange for disbanding his army and leaving the drug trade, was permitted to “retire” in Yangon.[fn]Maung Pho Shoke, “Why Did U Khun Sa’s MTA Exchange Arms for Peace”, Yangon, Meik Kaung Press, 1999.Hide Footnote Elements of the Mong Tai Army soon reorganised as the Shan State Army-South, whose political wing is known as the Restoration Council of Shan State.

To further complicate this upheaval in the drug trade, in 1999 the Wa special region declared an opium ban in parts of its territory, which destroyed the livelihoods of poor opium farmers and sparked widespread food shortages.[fn]The whole Wa region was declared opium free in June 2005.Hide Footnote In a draconian social engineering project, the Wa insurgent group, the UWSA, then forcibly relocated an estimated 100,000 ethnic Wa, Lahu and Akha civilians from the northern special region to areas in Monghsat and Mongton townships along the Thailand border across from Chiang Rai province – to populate an area called Mong Yawn, also known as the 171 military region or “southern Wa State”. This was an area previously controlled by Khun Sa’s Mong Tai Army, and which the Tatmadaw had given permission to the UWSA to occupy and settle, as a quid pro quo for their help in defeating the Mong Tai Army. Mong Yawn soon became a hub for the production of a new Golden Triangle drug, yaba.[fn]In Myanmar, many people still refer to yaba as “ya ma”, or “horse medicine” in Thai – due to the drug’s supposed ability to confer the strength of a horse.Hide Footnote

Amid decades of evolving conflict dynamics, drug production in Shan State has undergone three significant phases. From the 1950s to the 1990s, heroin production was dominant. Then from the late 1990s – around the time the UWSA established its southern area and declared an opium ban in parts of its territory – heroin production declined. Methamphetamines (yaba) production began.

More frequent seizures of yaba in Rakhine State and Cox’s Bazar in Bangladesh point to the diversification of export markets for yaba produced in Shan State.

Key to this market shift was the UWSA’s growing influence, and the involvement of a central drug trade entrepreneur, the Sino-Thai operator Wei Hsueh-Kang, who over the past three decades allegedly worked for the Kuomintang, the Mong Tai Army and the UWSA. U.S. courts indicted Wei in 1993 on drug trafficking charges, designated him a drug kingpin in 2000 and indicted him again in 2005, establishing a $2 million bounty for information leading to his capture.[fn]Tom Kramer, The United Wa State Party: Narco-Army or Ethnic Nationalist Party? (East-West Center, 2007), p. 54; and U.S. Bureau of International Narcotics and Law Enforcement Affairs, Narcotics Rewards Program, https://www.state.gov/j/inl/narc/rewards/275656.htm.Hide Footnote He was instrumental in turning Mong Yawn into a drug production hub and in flooding Thailand with cheap methamphetamines.[fn]Ibid.Hide Footnote The third phase of drug production in Shan State has been the production of crystal methamphetamine for export, since the early 2010s (see Section III below).

By 2010, drug production in Shan State had shifted sharply from heroin to meth. Heroin production has not stopped – Myanmar remains the second-largest global producer, albeit now far behind Afghanistan – but the drug is no longer the predominant or most profitable one produced.[fn]In 2017, Myanmar accounted for 5 per cent of global opium production, compared to 86 per cent for Afghanistan. World Drug Report 2018, UNODC, volume 2, p. 28.Hide Footnote The impunity of major armed groups such as the UWSA as well as numerous subcontractors, militias and ethnic armed organisation splinter groups (such as the Democratic Karen Buddhist Army) in other ceasefire areas of eastern Myanmar – allegedly with the assistance of the UWSA – fuelled the rapid expansion of meth production.[fn]See, for example, Des Ball, “Security Developments in the Thailand-Burma Borderlands”, Working Paper No. 9, Australian Mekong Resource Centre, University of Sydney, October 2003.Hide Footnote This surge led to yaba becoming a major export industry, and also increased domestic consumption of the drug throughout Myanmar. More recently, the Arakan Army – established in Kachin State in 2009 – has allegedly been involved in the transit of Shan State-produced yaba across Myanmar and into Bangladesh, where there is a rapidly growing market for the drug.[fn]See “How to Fund a War”, Global New Light of Myanmar, 28 February 2016, p. 1. The Arakan Army strongly rejected the government’s allegations (see “Condemnation Letter”, United League of Arakan/Arakan Army, 29 February 2016). See also “Bangladesh’s drug war death toll tops 200, rights group says”, Agence France-Presse, 17 July 2018.Hide Footnote

More frequent seizures of yaba in Rakhine State and Cox’s Bazar in Bangladesh point to the diversification of export markets for yaba produced in Shan State. There is also evidence that yaba production is increasingly decentralised: the pills now come in many different versions, compositions and brands, for example. As one experienced analyst of the drug trade in northern Shan State observed: “It is a cooperative system. There is no single controller. It is different from when it was under the control of Lo Hsing Han or Khun Sa”.[fn]Crisis Group interview, well-connected local source, Lashio, November 2018.Hide Footnote

III. A New Drug Dynamic

A. A Surge in Production

In January 2018, the Myanmar army and police raided an abandoned house in Kutkai township in northern Shan State, seizing 30 million yaba pills, 1,750kg of crystal meth, more than 500kg of heroin and 200kg of caffeine powder. According to the authorities, it was the country’s largest-ever drug bust, with a domestic value of some $54 million. The following month, a joint army and police team raided two major crystal meth labs in the same area, seizing some seven million dollars’ worth of advanced laboratory equipment, twelve state-of-the art generators, huge quantities of precursor chemicals, and unused branded packaging sufficient for ten tonnes of product – suggesting that the labs were gearing up for a production run of that volume.[fn]Crisis Group interviews, experts on regional narcotics issues, Yangon and Bangkok, May, August and November 2018; “Record narcotics haul in Shan State”, The Irrawaddy, 19 January 2018; “Army, police raid drug labs in northern Shan State”, The Irrawaddy, 19 February 2018.Hide Footnote

The total value of the Mekong drug trade is estimated at over $40 billion per year and rising.

While the sizes of these seizures may have been record-setting, they were not surprising. In the last few years, authorities have regularly captured huge quantities of crystal meth in Myanmar and beyond, with the bulk thought to originate from Shan State. These included 1.2 tonnes seized in Western Australia in December 2017 and 0.9 tonnes in April that year in Melbourne; almost 5 tonnes in Thailand over the course of 2017 and 15 tonnes from January-July 2018; 1.6 tonnes in Indonesia in February 2018; and 1.2 tonnes in Malaysia in May 2018.[fn]See “Australia’s biggest ever methamphetamine haul sees 1.2 tonnes of the drug seized at Geraldton”, ABC News, 22 December 2017; “Indonesia seizes record 1.6 tonnes of crystal methamphetamine”, Reuters, 20 February 2018; “Thai officials reveal largest ever crystal meth haul”, CNN, 4 April 2018; “Meth crisis spreading as supply surges, prices drop”, Straits Times, 21 May; “Malaysians make record bust of crystal meth, shipped from Myanmar”, Reuters, 28 May 2018; “Drug arrests soar but more keep coming”, Bangkok Post, 25 August 2018.Hide Footnote A summary of total seizures for the Mekong sub-region over the last ten years is given below; 2018 figures will exceed those for 2017.[fn]The Mekong sub-region is a transnational area of the Mekong River basin encompassing Cambodia, south-west China, Laos, Myanmar, Thailand and Vietnam.Hide Footnote Gram-for-gram, crystal meth is worth more than heroin, and the total value of the Mekong drug trade is estimated at over $40 billion per year and rising (see Section V below).

Meth seizures in the Mekong sub-region UNODC, 2017 figures preliminary

The Kutkai raids were revealing in a number of ways. First, the location was not a remote, rebel-controlled part of Shan State beyond the authorities’ reach. Rather, it was relatively close to Lashio, not far from the main road to the Chinese border at Muse – Myanmar’s biggest overland trade route – in an area controlled by a militia allied with the Tatmadaw. The Tatmadaw thus had access to the area, even if law enforcement personnel did not.[fn]The Myanmar drug police have expressed to interlocutors their frustration that they require military permission to access certain sensitive areas, and that the necessary permission is either not granted, or delayed such that targets have been tipped off by the time raids take place. Crisis Group interviews, drug policy experts, Yangon, November 2018.Hide Footnote Crisis Group researchers could drive to the area and talk to local people there, passing through checkpoints manned by the militia and visiting the village where the abandoned house was located.

Second, authorities described both the house and the laboratories as “abandoned”.[fn]Ibid.Hide Footnote This suggests that those responsible were tipped off and fled in advance of the raids – which were triggered by Myanmar authorities being given precise coordinates of the locations and a description of the activities taking place there, so that officials apparently felt that they had no alternative but to act.[fn]Crisis Group interviews, experts on regional narcotics issues, Yangon and Bangkok, May, August and November 2018.Hide Footnote There were apparently no consequences for the militia that controls the area, which has maintained a ceasefire with the military for nearly 28 years and has a large compound in Lashio town centre that Crisis Group researchers visited.[fn]Crisis Group research visit to Lashio, November 2018.Hide Footnote

Crystal meth production requires a kind of predictable insecurity.

This case also illustrates the type of enabling environment that crystal meth producers require. As a high-purity pharmaceutical-type product, synthesising it requires trained chemists (many of whom reportedly come from Taiwan), sophisticated laboratory equipment, and a supply of specific precursor chemicals, several of which are highly controlled substances.[fn]There are many chemical pathways for synthesizing crystal meth, but the two most popular and effective are: a) from the decongestant pseudoephedrine (or the blood-pressure medication ephedrine), a simpler and cheaper method than some others, but constrained by controls on pure ephedrine/pseudoephedrine; and b) from phenylacetone (“P2P”), which is a longer, more expensive, lower yield and more difficult process, but with the advantage that it uses different, and possibly less-controlled, precursors (this is the “Walter White method” in the popular television series Breaking Bad). Production in Myanmar appeared to have exclusively used the first method, but there is evidence of diversification to the second, likely due to current or predicted future (pseudo)ephedrine supply problems; almost three tonnes of P2P was seized in Lashio township in November 2018. Crisis Group interviews, experts on regional narcotics issues, Yangon and Bangkok, May, August and November 2018; Myanmar President Office Press Release No. 24/2018, 19 November 2018. All of these, including the chemists, must be brought into Myanmar. Given the difficulty of doing so and the high sunk costs and profit margins involved, there are significant economies of scale in meth production favouring extended, high-volume operations. By contrast, yaba production is a simpler process that does not require significant sunk costs – in some cases, just a small pill press – leading to what has been described as a “cottage industry” in the drug.[fn]International Narcotics Control Strategy Report (hereafter, “INCS Report”), Volume I: Drug and Chemical Control, U.S. Department of State, March 2018, p. 125. The composition of these tablets varies enormously; some are fake and contain only caffeine as the active ingredient.

Crystal meth production requires a kind of predictable insecurity. Industrial-scale clandestine laboratories need to remain hidden and inaccessible to law enforcement or others who may scrutinise them; areas controlled by compliant non-state armed groups are ideal. At the same time, those areas cannot be too unstable, as this would put the investment at risk. Like any manufacturing business, drug production requires good transport infrastructure for the delivery of large quantities of raw materials and onward movement of the finished product. Crossing the front lines of an active conflict is not an appealing prospect in this regard.

Some parts of Shan State perfectly meet these requirements, falling into three broad categories:

  • Areas under the control of militia forces allied with the Myanmar army. Some of these militias are large, well-resourced, well-armed and involved in a range of licit and illicit business activities. In return for carrying out security duties in their areas (essentially, preventing the emergence or incursion of anti-government armed groups), and fighting alongside the military on particular operations, they are given the authority to carry arms and permission to conduct business activities, and the military appears to turn a blind eye to their involvement in illicit activities – which they inevitably engage in, given that they receive no funding or other resources from the military.[fn]For detailed discussion and typology of these forces, see John Buchanan, “Militias in Myanmar”, The Asia Foundation, July 2016. See also fn. 27. Because they are armed and operate checkpoints to control access to their areas or businesses, requests for access by police and civilian government officials generally need to be routed via the Tatmadaw. This explains why the raids on the house and laboratories in Kutkai, a militia-controlled area, were carried out jointly by the military and the anti-narcotics police.[fn]The area in question is controlled by the Kawng Kha militia, which until 2010 was known as the Kachin Defence Army, a faction that broke away from the Kachin Independence Organisation armed group in 1990. Crisis Group visit to Kawng Kha, November 2018; and Crisis Group interviews, well-placed local sources, Lashio and Kutkai, November 2018. See also, “Army, police raid drug labs in northern Shan State”, The Irrawaddy, 19 February 2018.
     

     
  • Areas controlled by “Border Guard Forces”. These are former armed factions or militias from different ethnic groups that in 2009-2010 accepted demands from the junta that they transform into paramilitary units.[fn]For details on the Border Guard Force (BGF) scheme, see Crisis Group Asia Report N°214, Myanmar: A New Peace Initiative, 30 November 2011, Section II.B; and John Buchanan, “Militias in Myanmar”, The Asia Foundation, July 2016.
     Hide Footnote
    They include a proportion of Myanmar army officers and troops, and are partially within the Tatmadaw chain of command, but receive only limited funds and supplies from the military. In practice, however, the Border Guard Forces’ Tatmadaw personnel tend not to participate actively in their activities or travel with them; Border Guard Force commanders often also control other troops that operate independently of the formal structure or oversight. Thus, these Border Guard Forces operate much like militias – bearing arms within a specific area they control, and having wide latitude to pursue licit and illicit business activities. Key units are based in northern and eastern Shan State.[fn]For example, BGF1006 (formerly part of the Myanmar National Democratic Alliance Army) in Laukkaing in the Kokang self-administered area and a number of Lahu, Akha and Wa forces in eastern Shan State (BGFs 1007-1010). BGFs in other parts of Myanmar include the ex-New Democratic Army-Kachin (numbers 1001-1003) in Kachin State and ex-Democratic Karen Buddhist Army (numbers 1011-1022) in Kayin State.
     Hide Footnote
    A number of militias and Border Guard Forces have been implicated in the drug trade.[fn]INCS Report, 2018, p. 74; see also “Myanmar’s State-backed militias are flooding Asia with meth”, Global Post, 12 November 2015; and “Solving Myanmar’s drug trade means involving militias in the peace process”, Myanmar Times, 18 May 2016.
     Hide Footnote
That there have been almost no precursor seizures at the border indicates that traf-fickers can move them freely across national boundaries.
  • Enclaves under the full territorial control of armed groups that have durable ceasefires with Naypyitaw, such as the special regions controlled by the United Wa State Army (UWSA) and National Democratic Alliance Army (NDAA, or “Mongla”) on the Chinese border (and to some extent also the UWSA’s 171 military region on the Thai border).[fn]The UWSA special region (“Shan State Special Region No. 2”) and Mongla special region (“Shan State Special Region No. 4”) were defined at the time of the 1989 ceasefires as the areas that these armed groups had control over. The Wa Self-Administered Division defined in the 2008 constitution is based on township boundaries, and some parts of it fall outside of the UWSA enclave; Mongla is not part of any self-administered area under the constitution. The UWSA’s 171 military region was granted to them informally by the military junta at the time, in return for their military support in defeating the drug warlord Khun Sa’s Mong Tai Army; it has no special status in the constitution.Hide Footnote Both groups agreed to ceasefires in 1989 that were reaffirmed in 2011, and neither have had serious clashes with the Myanmar army over the three decades those ceasefires have been in force. At the same time, these enclaves are defended by large, well-equipped forces and the Myanmar military and civilian authorities cannot freely enter.

The map in Appendix B shows the locations of some of these militias, Border Guard Forces and armed group enclaves. These different safe havens are also well-located from a transport and logistics perspective – either adjacent to the Chinese border or near major trade routes (such as the Mandalay-Lashio-Muse road or the Tachileik-Kengtung-Mongla road). Precursor chemicals, required in massive quantities given the scale of production, can be brought in from China, where they are readily available through legitimate pharmaceutical and chemical markets and from illicit precursor-producing factories. That there have been almost no precursor seizures at the border indicates that traffickers can move them freely across national boundaries.[fn]Crisis Group interviews, experts on regional narcotics issues, Yangon and Bangkok, May, August and November 2018. See also INCS Report, 2018, p. 65; and “Myanmar hosts talks on Asia Pacific strategy to control drug making chemicals”, UNODC Press Release, 7 November 2018.Hide Footnote (India is also a major producer of precursor chemicals, but its distance from Shan State and the poorer transport infrastructure means that it is not currently a significant source. Thailand is a minor source of precursors for meth produced in eastern Shan State; it does not manufacture any such chemicals, but some imports are diverted from legitimate uses.[fn]INCS Report, 2018, p. 68-69.Hide Footnote ​​​​​)

The status of the militias and Border Guard Forces as Tatmadaw-aligned armed units gives them considerable impunity, but also gives the Tatmadaw a degree of deniability about their actions. One ethnic leader in northern Shan State told Crisis Group:

A friend of mine is a big militia leader. He drives from Lashio to Mandalay and all the way to Yangon with his militia cap on the dashboard, and no one dares to stop him, even though his vehicle is unregistered. If he can do that on the road from Mandalay to Yangon and no one stops him, can you imagine what he can do around here?[fn]Crisis Group interview, ethnic political leader, Lashio, November 2018.Hide Footnote

Another observer of the drug trade in Lashio simply stated that “after Muse, there are no serious checkpoints all the way to Yangon”.[fn]Crisis Group interview, local community worker, Lashio, November 2018.Hide Footnote

B. Tip of the Iceberg

Seizures of crystal meth, as well as yaba, have increased significantly in recent years. Each massive haul tends to be presented as an interdiction victory. However, these record seizures represent the tip of an iceberg, and are therefore evidence of the scale of the problem rather than of any genuine success in addressing it. Despite massive seizures, prices of crystal meth have remained stable, a clear indication that they are a small proportion of total volumes.[fn]Crisis Group interviews, experts on regional narcotics issues, Yangon and Bangkok, May, August and November 2018.Hide Footnote

The trade is becoming increasingly professionalised, dominated by transnational criminal syndicates operating at huge scale.

Yaba is produced both for local consumption and export – mainly to Thailand, Indochina and South Asia, particularly Bangladesh. Seizures in Myanmar range from a small number of tablets for personal use, to large wholesale shipments of tens of millions of pills.[fn]See, for example, “Additional statistical bulletin on drug seizures, acting on information”, President Office Press Release No. 24/2018, 19 November 2018; “Myanmar says record drug seizure has street value of $36 million”, Reuters, 31 May 2016; “Record narcotics haul in Shan State”, The Irrawaddy, 19 January 2018.Hide Footnote Crystal meth, on the other hand, is produced mostly for export – it is rarely used in Myanmar, though is starting to become more widely available.[fn]“Methamphetamine use in Myanmar, Thailand and southern China: assessing practices, reducing harms”, Transnational Institute, forthcoming.Hide Footnote It is typically seized in one-tonne lots or larger. Key export markets for Shan State crystal meth are Japan and Australia, which have among the highest street prices in the world for the drug; a tonne has a wholesale value in Australia of at least $180 million, and street prices several times higher. Crystal meth is also exported to China, the Philippines, Malaysia, Indonesia, South Korea and New Zealand.[fn]UNODC statistics and Data, “Retail and wholesale drug prices”, https://dataunodc.un.org/drugs/prices.Hide Footnote

The trade is becoming increasingly professionalised, dominated by transnational criminal syndicates operating at huge scale. Crystal meth is now packed in branded tea packets, both to facilitate concealment and to give it a specific product identity. Increasingly, local production in destination countries is being displaced by imports: China has been effective in cracking down on illicit meth laboratories on its territory, but in practice that has meant displacing them across the border into Shan State. Australian biker gangs have opened up chapters in South East Asia as they have shifted from cooking meth in Australia using smuggled precursors, to procuring the final product in the region and smuggling that instead.[fn]Crisis Group interviews, experts on regional narcotics issues, Yangon and Bangkok, May, August and November 2018; see also “Hells Angels: Founding member of Thai chapter bashed as Australian bikies take over ‘dark business’”, ABC News, 27 March 2017.Hide Footnote

IV. The Links Between Drugs and Conflict

A. Current Conflict Dynamics

The various ways in which the armed conflict and illegal drug production intertwine are not new. They have evolved alongside political alliances between the central government and ethnic armed groups, and with market shifts in drug production. Key to changing patterns in drug production over the last several years, however, has been the end of a period of relative stability that northern Shan State experienced between the early 1990s and 2011 and the tactics the Tatmadaw have used to quell violence.[fn]For detailed discussion of Golden Triangle drug markets and trends, and links to conflict and corruption, see “Bouncing back: Relapse in the Golden Triangle”, Transnational Institute, June 2014.Hide Footnote

Open armed conflict in northern Shan resumed partly because of the outgoing military junta’s determination to transform armed groups with which it had reached ceasefires into Border Guard Forces, nominally under the Tatmadaw chain of command, a scheme it announced in April 2009. Many ceasefire groups – especially smaller or less politically-oriented ones – agreed.[fn]John Buchanan, “Militias in Myanmar”, The Asia Foundation, July 2016.Hide Footnote The army then applied political, military and economic pressure on those who refused, ultimately leading to open warfare in some areas; for example:

  • In August 2009, the Tatmadaw attacked the Myanmar National Democratic Alliance Army (MNDAA) in Laukkaing, the capital of the Kokang self-administered zone – a city on the Chinese border notorious for hosting numerous casinos – vanquishing the group’s longstanding commander, Pheung Kya-shin, who fled into China along with his troops and over 30,000 displaced civilians. The junta installed a rival Kokang faction as a pro-government Border Guard Force to administer the casino city.[fn]That is, BGF 1006. See Tom Kramer, “Burma’s cease-fires at risk: consequences of the Kokang crisis for peace and democracy”, Transnational Institute, September 2009.Hide Footnote
Northern Shan State is experiencing intensifying armed conflict between several armed groups and the Tatmadaw, and increasingly among the armed groups themselves, particularly between Shan and Ta-ang groups.
  • Increased political pressure on the Kachin Independence Organisation (KIO) to accept the Border Guard Force proposal was part of the reason for the breakdown of its seventeen-year ceasefire and the resumption of armed conflict in Kachin State and Kachin-majority areas of northern Shan State in 2011.[fn]See Crisis Group Asia Briefing N°140, A Tentative Peace in Myanmar’s Kachin Conflict, 12 June 2013.Hide Footnote As the KIO came under increasing pressure, it supported the formation of two new armed groups – the Ta-ang National Liberation Army (TNLA) and the Arakan Army – equipping and training them at its bases in Kachin State from 2009. These groups went on to form the kernel of a loose “northern alliance” of armed groups fighting state authorities and allied militias in northern Shan.[fn]The northern alliance today comprises the KIO’s military units based in northern Shan along with the MNDAA (Kokang), the TNLA, the Arakan Army – and de facto the Shan State Army-North as well. These groups are also part of a broader political alliance with the UWSA and the NDAA (Mongla). See David Scott Mathieson, “Burma’s Northern Shan State and Prospects for Peace”, United States Institute for Peace, Peace Brief 234, September 2017.Hide Footnote

Today, northern Shan State is experiencing intensifying armed conflict between several armed groups and the Tatmadaw, and increasingly among the armed groups themselves, particularly between Shan and Ta-ang groups. Conflict zones – which are mainly around Kyaukme, Hsipaw, Namtu, Kutkai and Namkhan townships – are marked by sporadic clashes across rural areas that cause repeated temporary displacement of civilians, often affecting the same villages several times a year. While the number of people in static displacement camps in northern Shan is relatively low – only several thousand, compared to over 95,000 in Kachin State – these figures are misleading as they do not account for multiple short-duration displacements that have serious effects on livelihoods and civilian protection.[fn]United Nations Office for the Coordination of Humanitarian Affairs, “Myanmar: Civilians displaced by fighting in Kachin/Shan 2017-18”, 20 September 2018.Hide Footnote

Local civilian authorities and the Tatmadaw’s North-Eastern Command in Lashio heavily restrict humanitarian access for local aid workers and international relief agencies; accessing the Kokang and Wa areas is particularly challenging. The conflict also carries allegations of serious human rights violations, which a UN-appointed Fact Finding Mission found to be “characterised by systematic attacks directed at civilians and civilian objects, and indiscriminate attacks” amounting to crimes against humanity and war crimes. The mission found that the Tatmadaw perpetrated the majority of these attacks, but that armed groups were also responsible for serious abuses.[fn]Report of the Independent International Fact-Finding Mission on Myanmar, Human Rights Council, Thirty-ninth session, 10-28 September 2018, doc. A/HRC/39/64. See also “Human casualties will be the cost of war as RCSS moves north”, The Irrawaddy, 29 November 2018.Hide Footnote

B. The Role of the Drug Trade in the Conflict

The conflict in northern Shan includes armed groups with very different historical involvement with, and stated policies on, illegal drugs. Even within the northern alliance, there are groups such as the MNDAA that were notorious for their involvement in drug production and trafficking prior to their defeat and expulsion from the Kokang region in 2009; the Arakan Army, which is alleged to fund its operations in part through yaba trafficking; and the TNLA, which has an avowedly anti-drug policy.[fn]Bertil Lintner, Burma in Revolt: Opium and Insurgency since 1948 (White Lotus, 1994), pp. 293, 315; “Foreign nations question support for Myanmar’s opium battle”, Associated Press, 5 March 1999; “Palaung group accuses Tatmadaw of failing to control drug trade”, Myanmar Times, 10 November 2013; and “How to fund a war”, Global New Light of Myanmar, 28 February 2016, p. 1. The Arakan Army strongly rejected the government’s allegations (see “Condemnation Letter”, Arakan Army, 29 February 2016).Hide Footnote

The TNLA’s recent history demonstrates that involvement in the drug trade is never clear-cut for groups in Shan State. The TNLA is the latest incarnation of ethnic Ta-ang (Palaung) armed resistance. The Tatmadaw forcibly disarmed and disbanded an earlier group, the Palaung State Liberation Army, in 2005. Locals claim that because this group had restricted drug trafficking in its area, its disbandment led to a dramatic rise in drug production and consumption in Ta-ang areas of northern Shan (in particular, Kutkai, Namkhan and Manton), which had negative impacts on rural Ta-ang society.[fn]See “Poisoned hills: Opium cultivation surges under government control in Burma”, Palaung Women’s Organisation, 2010.Hide Footnote

The TNLA formed against this backdrop in 2009 and declared that, along with fighting the Tatmadaw, it would also combat the scourge of illegal drugs. This stance, and the group’s high-profile destruction of opium poppy fields, immediately put it on a collision course with militias involved in the heroin business that were protecting those fields, in particular the Pansay militia. Sporadic clashes have occurred between the two groups, most commonly around the opium harvesting period. At times, the Pansay militia has called on the Tatmadaw for support, including heavy artillery and air power, in its battles with the TNLA.[fn]“A Return to War: Militarized Conflicts in Northern Shan State”, Institute for Security and Development Policy Asia Paper, July 2018.Hide Footnote This is one direct way in which the drug trade and the armed conflict between ethnic groups are linked.

Yet with so much of the northern Shan economy revolving around drugs, it is virtually impossible to avoid money related to the drug trade.

Other links are indirect. Even as the TNLA pursues its anti-drug activities, it needs to raise the significant funds necessary for maintaining its insurgency. This it does at least in part through “revolutionary taxation” – in particular, extorting commercial vehicles plying the Lashio-Muse trade route, which must pay half-yearly fees to the group, and forcing Ta-ang businesses and shops to pay protection money. On occasion, the TNLA and its allies have even mounted attacks on the 105 Mile border trade zone in Muse, as they did in November 2016, shutting down much of Myanmar’s trade with China for several days – in part aimed at opening another front at a time of Tatmadaw operations in other areas, and also imposing a financial cost on Myanmar.[fn]“China strengthens border force amid clashes”, Frontier Myanmar, 27 November 2016.Hide Footnote

Yet with so much of the northern Shan economy revolving around drugs, it is virtually impossible to avoid money related to the drug trade. Precursor smuggling and drug trafficking provide some of the most lucrative opportunities for the TNLA’s taxation, with higher tax rates reportedly being levied for these activities, and seized drugs reportedly often sold by the TNLA back into the supply chain (other revenues come from the thriving illegal logging trade, extractive industries, and human trafficking). There are no indications that the TNLA has used any of its income to help promote alternative livelihoods for Ta-ang opium farmers.[fn]Crisis Group interviews, militia members and other well-informed individuals, northern Shan State, November 2018.Hide Footnote

Thus, there are direct links between conflict and drugs, specifically around occasional eradication efforts and clashes between actors in the drug trade. The illicit economy allows these armed groups to generate revenue from taxation or extortion, helping to fund and sustain Myanmar’s seventy-year-old civil war. The immense profitability of the drug trade attracts transnational criminal organisations and promotes corruption that deepens the grievances of ethnic minority communities that underpin the civil war. That civil war in turn provides a justification for the Tatmadaw’s militia strategy, creating the conditions for a corrosive political economy dominated by armed actors operating with impunity.

C. Ethno-political Clashes, Anti-drug Raids or Bank Heists?

Disentangling the motives behind armed group’s actions can be hard: operations portrayed as anti-drug efforts or ethno-nationalist clashes, and reported as such in the media, may in fact be aimed at least in part at capturing profits from the drugs trade.

In March 2017, for example, the MNDAA staged a brazen attack on several targets in Laukkaing, with its commandos dressed in police uniforms first raiding the Laukkaing police station to neutralise any response, then attacking several casinos and hotels and the home of a leader of the rival Kokang faction now in charge of the zone. The raid was presented as a fight between ethnic groups in international media outlets, but resembled an elaborate bank heist more than a rebel assault.[fn]See, for example, “30 dead as intense fighting breaks out in Myanmar-China border town”, Agence France-Presse, 6 March 2017.Hide Footnote It left behind more than 30 casualties, many of them Kokang soldiers, and major damage to casinos. The raiders made off with an estimated 500 million yuan (US$73 million) loaded into several trucks.[fn]Ann Wang, “China-linked rebels’ casino cash grab stills Myanmar border city”, South China Morning Post (Magazine), 4 June 2017; and National Reconciliation and Peace Centre, Announcement No. 1/2017, 6 March 2017.Hide Footnote Some 20,000 civilians were displaced by fighting, with many fleeing into China. The Myanmar Ministry of Defence alleged the MNDAA also seized 120 male and 150 female casino workers as hostages to cover their retreat, releasing Chinese citizens among the captives soon after.[fn]“Tatmadaw continues operations after 48 clashes with MNDAA”, Global New Light of Myanmar, 14 March 2017, pp. 1, 9.Hide Footnote

In May 2018, the TNLA attacked a casino owned and operated by the Pansay militia in the border town of Muse, leaving nineteen dead and over 27 wounded – mostly civilians caught in the crossfire. The TNLA claimed that the casino was being used to sell drugs.[fn]“Press Release on taking the military action into a casino owned by the Pansay Militia near Nam Paw Pankham Bridge of Muse-Namkham Highway at the China-Myanmar border”, Palaung State Liberation Front/TNLA News and Information Department, 13 May 2018.Hide Footnote Other sources suggest that the TNLA attacked at least in part due to deepening tensions between it and the Pansay militia, following that militia’s arrest of a large number of young Ta-ang people on charges of being TNLA informants.[fn]Crisis Group interviews, well-informed individuals, Lashio, November 2018.Hide Footnote Though there may be multiple factors behind the assault, the opportunity to seize large sums of cash from an adversary is likely to have played some part in the TNLA’s calculations and choice of target.

Given the multiplicity of armed actors involved and the massive profits at stake, violence is remarkably rare.

Indeed, while such attacks are infrequent, similar allegations of these establishments being used for illegal activities have been reported along the string of Myanmar-China “casino-capitalism” sites from Kachin State to Muse, Laukkaing, Pangsang, Mongla and Tachileik, as well as the notorious King’s Roman on the bank of the Mekong river in Laos, bordering Myanmar and Thailand. The casinos are crucial enterprises not just for gambling and money laundering, but also for racketeering, drug distribution, human trafficking, prostitution and wildlife smuggling – part of an interlinked illicit political economy in the area.[fn]See, for example, “Mong La, Myanmar’s dreary ‘sleaze capital’”, Frontier Myanmar, 12 November 2015; and “Treasury Sanctions the Zhao Wei Transnational Criminal Organization”, Press Release, U.S. Department of the Treasury, 30 January 2018.Hide Footnote

D. Why Is There Not More Violence?

While there is significant violence and armed conflict in northern Shan State, remarkably little of it appears on the surface to revolve directly around the drug economy. Thus, Lashio is the main hub of the northern trade, yet the city is not convulsed by public violence between competitive cartels or factions. Why does it not suffer the enormous bloodshed that blighted the Colombian city of Medellin during the heyday of cartel activity in the 1990s or, until recently, Ciudad Juarez, on the Mexico-U.S. border or other Mexican cities where armed groups battle for control of drug transit routes?

The answer lies in the fact that the intersection of armed conflict and the illicit economy in northern Shan has for decades operated as “an economic-commercial world of interdependent, entrepreneurial patron-client clusters”, that is geared toward avoiding fighting as much as practicable around economic ventures such as drugs.[fn]Chao-Tzang Yawnghwe, “The political economy of the opium trade: implications for Shan State”, Journal of Contemporary Asia, 23.3, 1993, pp. 308-26.
 Hide Footnote
This system, described to Crisis Group by several people involved, functions in a relatively stable and predictable way as long as the chain of actors from the Tatmadaw, to larger militia units involved in production, to smaller militias subcontracted to provide localised security, and the armed organisations that levy taxes on the trade all benefit and receive due compensation. Given the multiplicity of armed actors involved and the massive profits at stake, violence is remarkably rare.[fn]Ibid.; Crisis Group interviews, militia members and other well-informed individuals, northern Shan State, November 2018.Hide Footnote

On occasion, however, the system breaks down and violence erupts. Two cases where greed, grievance or principle trumped cooperation were discussed in Section IV.C above. In another case in 2015, fighting between two prominent militias involved in illicit activity, Kawng Kha and Manpang, resulted in over 40 deaths and scores of injuries, with many casualties arriving at Lashio hospital, until “the North-east Commander ordered them to stop” – a clear indication of who the ultimate arbiter of disputes and illicit economic rents is.[fn]Crisis Group interview, local community worker, Lashio, November 2018.Hide Footnote

V. Broader Implications

A. The Political Economy

Northern Shan State sits astride Myanmar’s primary overland trade route, the Mandalay-Lashio-Muse road, connecting the country to its largest trade partner, China (see map in Appendix B). This connectivity and geostrategic location have provided not only opportunities for legal business in northern Shan, but also for enormous profits from illicit activities. While estimating the size of the illicit trade is difficult, well-informed locals suggest that it is the major contributor to the area’s GDP, and that occasional local crackdowns on such trade immediately dampen economic activity as a whole.[fn]One example of a localised crackdown was the 2015-2016 efforts by the anti-drug vigilante group Pat Jasan in Kachin and northern Shan states; some ethnic armed organisations launched crackdowns in their areas at the same time. Crisis Group interviews, Lashio, November 2018. Shan State’s GDP was around $3.5 billion (current dollars) in 2014 (based on a per-capita rate of $600 and a population of 5.8 million). See Myanmar Economic Monitor, World Bank, October 2017, p. 49.Hide Footnote

In 2017, authorities in the region seized more than 25 tonnes of crystal meth, nearly all believed to have been produced in Myanmar. Even larger amounts have been confiscated so far in 2018. Regional narcotics experts estimate seizure rates at below 10 per cent, suggesting a total annual production significantly in excess of 250 tonnes. The regional wholesale value of this haul is in the tens of billions of dollars, and the price increases significantly with distance from Shan State, as the box below highlights. Profits in Myanmar are likely several billion dollars per year for crystal meth alone, and perhaps a similar amount for yaba, although a significant proportion of these profits may remain outside Myanmar, laundered through casinos in border zones and kept in bank accounts in regional financial centres.[fn]Crisis Group interviews, experts on regional narcotics issues, Yangon and Bangkok, May, August and November 2018; see also “Asia’s meth boom”, CNN, 2 November 2018.Hide Footnote

The Crystal Meth Value Chain (per kg, in USD) CRISISGROUP

Unlike heroin production, which employs large numbers of people – opium farmers and traders – the profits from meth production enrich a tiny few. That said, the meth trade may generate significant indirect economic activity in Shan State and beyond, with large sums thought to be laundered via the Yangon and Mandalay land and property markets, which are a major driver of growth and jobs in the Myanmar economy – although the sector has slowed in recent years.[fn]Crisis Group interviews, experts on regional narcotics issues, Yangon and Bangkok, May, August and November 2018; Crisis Group interviews, militia members and other well-informed individuals, northern Shan State, November 2018; “Growth amid uncertainty”, Myanmar Economic Monitor, World Bank, May 2018.Hide Footnote

However, much of the economic activity created by the drug trade has extremely negative consequences: the expansion of local drug markets leading to widespread addiction and associated social ills, better resourced militia forces that act with impunity and often violently, and greater illegal activity in smuggling, protection, trafficking and racketeering. The environmental impact of drug production is grave, as many of the precursors and waste products are highly toxic and disposed of improperly into waterways or the ground – in huge quantities given that each tonne of meth results in some five tonnes of chemical residue.[fn]One person cited the destruction of his family’s paddy fields due to runoff from a yaba lab. Crisis Group interview, Lashio, November 2018. See also “Environmental impacts of methamphetamine”, ABC News, 26 July 2012; “Dangers of meth labs”, U.S. Forest Service Law Enforcement and Investigations, https://www.fs.fed.us/lei/dangers-meth-labs.php.Hide Footnote

More fundamentally, a drug trade that dwarfs legitimate business activities creates a political economy inimical to peace and security. Militias and other armed actors that control areas of production and trafficking routes have a huge disincentive to ever demobilise, given that weapons, territorial control and the absence of state institutions are essential for their lucrative revenues. The trade requires bribing officials for protection, support or to turn a blind eye, which creates an environment where other illegal activities and a culture of payoffs can flourish. Even armed groups and ethnic insurgencies not directly involved in drug production and trafficking find that it is nevertheless the source of a major part of their informal tax revenues, also locking them into the drug economy. The Myanmar military, which has ultimate authority over militias and Border Guard Forces and profits from their activities can only justify the existence of such semi-autonomous armed groups in the context of the broader ethnic conflict in the state – so the Tatmadaw also therefore has no incentive to end that conflict.

Militia leaders’ influence is underscored by the fact that several have risen to elected office. The head of one of the largest such groups in Shan State implicated in the drug trade, the Pansay militia, was a Shan State parliamentary representative until 2015; the former head of the Kutkai militia is currently speaker of the lower house of the national parliament (both deny involvement in the drug trade).[fn]“The drug war in Myanmar’s mountains”, IRIN, 5 November 2015; “Dirty war, dirty tactics”, Frontier Myanmar, 22 March 2016; “NLD elects alleged drug lord as lower house speaker”, Coconuts Yangon, 22 March 2018; “T Khun Myat: Who is the new Pyithu speaker?”, Frontier Myanmar, 22 March 2018.Hide Footnote

B. Geopolitics and the China Factor

Since the collapse of the Chinese-backed communist insurgency in northern Myanmar in 1989, Shan State’s economy has become closely bound with that of south-west China. Chinese investment has surged, huge plantations – everything from watermelons to bananas to rubber – have been established to serve the Chinese market, and cross-border trade has skyrocketed. Transport infrastructure has improved to accommodate the increased flows, which also facilitates illicit trade, including drugs. Large volumes of contraband can be concealed among other commodities moving along highways and across major border crossings, rather than having to be smuggled on the back of mules over remote mountain passes. The “ants moving houses” approach – using hundreds of low-level couriers each transporting small amounts of drugs – has given way to large consignments. A record May 2018 seizure in Malaysia of 1.2 tonnes of crystal meth from Myanmar was the first discovered in a containerised shipment.[fn]Sheldon Zhang and Ko-lin Chin, “Ants Moving Houses: The Social Organization of Heroin Trafficking in the China-Burma Border Areas”, Paper presented at the annual meeting of the American Society of Criminology, December 2013; “Malaysians make record bust of crystal meth, shipped from Myanmar”, Reuters, 28 May 2018.Hide Footnote

CMEC’s scale and geostrategic importance will pull Myanmar, and Shan State in particular, even further into China’s economic and political orbit.

Economic integration is set to accelerate as a new multi-billion-dollar China-Myanmar Economic Corridor (CMEC) takes shape, the memorandum of understandings for which were signed by Chinese and Myanmar officials in September 2018.[fn]“China signs CMEC MOUs with Myanmar”, Global Times, 11 September 2018.Hide Footnote The scheme includes an upgraded road and new high-speed rail line connecting Kunming, the capital of south-western Chinese province of Yunnan, with the port of Kyaukpyu on the Rakhine seaboard, via northern Shan and Mandalay, along with a number of associated trade, infrastructure and energy projects. This project, part of China’s “Belt and Road Initiative”, will give the rapidly growing but landlocked economy of south-west China access to the Indian Ocean, and China as a whole an alternative to the congested Straits of Malacca sea route.[fn]Crisis Group Asia Report N°177, China’s Myanmar Dilemma, 14 September 2009, Section III.C. The Belt and Road Initiative is a development strategy announced by Chinese President Xi Jinping in 2013 involving massive infrastructure networks connecting China to Europe, Asia and Africa.Hide Footnote

CMEC’s scale and geostrategic importance will pull Myanmar, and Shan State in particular, even further into China’s economic and political orbit. In the long term, this could lead to a reduction in illicit economies, as lucrative opportunities emerge in the formal economy, and as the enabling environment of conflict and insecurity comes to an end, something that China has considerable leverage over and that would be in its long-term interest. In the short term, however, the opposite could be true. In the recent history of the Golden Triangle, increased trade and improved infrastructure have expanded rather than narrowed opportunities for illicit profiteering. People in northern Shan State with detailed knowledge of the drug trade suggest that is likely to be the case in that area with CMEC.[fn]Crisis Group interviews, well-connected local sources and militia members, northern Shan State, November 2018.Hide Footnote

VI. What Should Be Done?

A. A Complex Policy Challenge

The drug trade is an important source of revenue for armed groups and militias, with the huge profits fuelling greater militarisation in Shan State that, while it does not always produce immediate or intense armed clashes, greatly undermines the future prospects for peace. Illicit activity also drives a political economy dominated by armed groups, organised crime and corruption that will be more difficult to dislodge over time and as it generates greater profits. Graft and other ills associated with the drugs trade aggravate the grievances among ethnic minorities at the heart of the long-running civil war.

Illicit drug production and trafficking in Shan State is a complex policy challenge involving security, law enforcement, political and public health aspects. Myanmar’s authorities and donors need an integrated approach that addresses all of these areas. Organised crime and corruption are making greater inroads, many of its people and communities are severely affected by an epidemic of cheap and easily-available drugs, and the country’s reputation and international relations are suffering as it has become the predominant regional source of methamphetamines (both yaba and ice).

In February 2018, Myanmar released its first ever National Drug Control Policy. The policy was developed by the police drug prevention committee with support from UNODC, following an extensive consultation process.[fn]“National Drug Control Policy”, Central Committee for Drug Abuse Control, Myanmar, 20 February 2018.Hide Footnote It recognises the seriousness and scale of meth production in Myanmar, and also the importance of a harm reduction approach to drug use in the country – that is, prioritising public health approaches for users and refocusing law enforcement and criminal justice efforts toward combating organised crime and corruption.[fn]For detailed analysis of the policy, see “Will Myanmar complete its transition towards an evidence-based approach to drug control? A Myanmar Commentary”, Transnational Institute, 20 March 2018.Hide Footnote Almost simultaneously, the parliament enacted an amended drug law, which was not developed in coordination with the new policy, with which it is partly contradictory, in particular as it retains a focus on draconian criminal penalties for drug users caught with even tiny quantities of drugs.[fn]Law Amending the 1993 Narcotic Drugs and Psychotropic Substances Law, 14 February 2018.Hide Footnote

President Win Myint is also giving welcome attention to the issue through his anti-drug initiative and in particular the establishment in June 2018 of a Drug Activity Special Complaint Department to receive tips from members of the public. Such an approach, however, tends to drive arrests and prosecution of drug users and small dealers and can undermine harm reduction efforts because it further stigmatises drug users, makes it more difficult for them to access harm reduction services and deprives them of those services if they are incarcerated. It is therefore inconsistent with the objectives set out in the new national policy of prioritising public health and refocusing law enforcement and criminal justice efforts toward combating organised crime and corruption. Some Myanmar officials estimate that up to 70 per cent of the country’s prison population has been incarcerated for drug offenses, mostly possession of small quantities.[fn]INCS Report, 2018, pp. 124-125.Hide Footnote That the government has recently expressed its intention to target major players is a welcome change.[fn]“Public urged to inform on major drug dealers”, Myanmar Times, 27 November 2018.Hide Footnote

Tackling the drug trade will not be easy and comes with risks of pushback, perhaps violent, from those involved. But the alternative – allowing parts of Shan State to continue to be a safe haven for this large-scale criminal enterprise – will lead to greater insecurity and curbing it will become more difficult as organised crime and armed militias become more powerful. In order to ensure a coherent and effective strategy, the Myanmar government should reconcile the inconsistent approaches set out in the new national policy, the revised drug law, and the president’s anti-drug campaign to ensure that it stops prosecuting users and small-scale sellers and instead focuses on the upper echelons of organised crime and corruption.

B. Political and Security Aspects

The Tatmadaw should reconsider its approach to managing conflict in Myanmar’s borderlands. For decades, its strategy has relied on cutting tactical ceasefire deals with groups or establishing pro-government militias, and in return allowing them to pursue licit and illicit economic activities. This has ultimately fuelled violence and allowed criminal enterprises and a corrosive political economy to flourish. Peace, stability and development in these areas have suffered as a result.[fn]See, for example, Mary Callahan, “Political Authority in Burma’s Ethnic Minority States: Devolution, Occupation, and Coexistence”, East-West Center, 2007; Martin Smith, “State of Strife: The Dynamics of Ethnic Conflict in Burma”, East-West Center, 2007; and “Bouncing back: Relapse in the Golden Triangle”, Transnational Institute, June 2014.Hide Footnote

In particular, the Tatmadaw should review its policies around militias and Border Guard Forces, the fact that they receive limited or no resources from the military, and the freedoms and impunity they are granted in order to enable them to be self-funding. The costs of these policies are high for the military itself. They impact its ability to deliver security and stability in those areas, as well as damaging its reputation. The drug trade and other illegal activities have taken a heavy toll on communities across Myanmar. Countries in the region and beyond must deal with many of the consequences, including drug flows, insecurity and the increasing power of transnational criminal organisations.[fn]See, for example, “Treasury Sanctions the Zhao Wei Transnational Criminal Organization”, Press Release, U.S. Department of the Treasury, 30 January 2018; and Jeremy Douglas, “Parts of Asia are slipping into the hands of organized crime”, CNN, 14 November 2018.Hide Footnote

Responsibility for drug production and other illegal activities in non-state-controlled areas – that is, the Wa and Mongla enclaves – lies with their de facto authorities. Wa leaders have a stated ten-year plan to eliminate methamphetamines from its areas (including its southern area) by June 2024, though it could achieve this sooner if its leaders wanted.[fn]When asked why it would take so long, one Wa political leader suggested that the investors probably needed to make their profits first. Crisis Group interview, Wa political leaders, November 2018.Hide Footnote The reality, however, is that without a political settlement to the area’s ethnic conflicts, it will be very difficult for Shan State to move away from an economy dominated by organised crime and corruption and based on drugs and other illicit activities, including wildlife smuggling, unregulated mining, illicit casinos, money laundering and racketeering. Progress toward such a settlement would require the government and military to adopt a more proactive, flexible approach to the format and inclusivity of negotiations with ethnic armed groups and consider political concessions. Talks must include discussion of security sector reform and demobilisation of paramilitary structures such as militias and Border Guard Forces, issue that are currently not on the table.[fn]For discussion, see Crisis Group Asia Briefing N°151, Myanmar’s Stalled Transition, 28 August 2018, Section II.B; and Asia Report N°287, Building Critical Mass for Peace in Myanmar, 29 June 2017.Hide Footnote

C. Corruption

In addition to his focus on tackling the illegal drug trade, President Win Myint has also prioritised the fight against corruption. His first meeting after his inauguration was with the Anti-Corruption Commission, at which he urged the chair – a reform-minded former general – to follow evidence wherever it led and to alert him if he faced interference. The commission’s empowerment led almost immediately to charges against the director of Myanmar’s food and drug administration for allegedly demanding money in connection with a tender award. In May 2018, the finance minister resigned in the middle of a high-profile investigation, though the commission ultimately said it did not have grounds to pursue charges.[fn]For details, see Crisis Group Briefing, Myanmar’s Stalled Transition, op. cit., Section III.Hide Footnote

The president should draw a more explicit linkage between his anti-drug and anti-corruption efforts. Effectively tackling the illegal drug trade will require going after the main players who currently act with impunity, and targeting the corrupt payments to officials that facilitate their activities. The president should direct the Anti-Corruption Commission to prioritise these issues.

The commission does not have the authority to investigate the Myanmar military.[fn]Under the 2008 constitution, the military rather than any civilian court has ultimate authority over military justice and courts martial. See “Department units to ramp up president’s anti-corruption drive”, Frontier Myanmar, 7 December 2018.Hide Footnote It thus falls on Commander-in-Chief Min Aung Hlaing to take steps to investigate and take action to end drug-related corruption within the military, focusing on senior officers who facilitate or turn a blind eye to the trade.

Myanmar’s government and donors should support surveys and research to im-prove their understanding of domestic drug markets and identify emerging trends in supply and use.

Governments in neighbouring countries need to play their part too. As has been widely noted by drug control agencies and policy groups, the drugs trade would not be possible without high-level corruption in those countries – including China, Laos and Thailand, through which large consignments of drugs or their precursors are smuggled. China has a particular responsibility to prevent precursor smuggling; it is the main source of these chemicals, but has almost never intercepted shipments crossing its border with Myanmar.[fn]Crisis Group interviews, experts on regional narcotics issues, Yangon and Bangkok, May, August and November 2018; INCS Report, 2018, p. 65; “Bouncing back: Relapse in the Golden Triangle”, Transnational Institute, June 2014; and “Myanmar hosts talks on Asia Pacific strategy to control drug making chemicals”, UNODC Press Release, 7 November 2018.Hide Footnote China should also exert its considerable influence over the Wa and Mongla armed groups to press them to end their involvement in the drug trade and other criminal activities in their enclaves.

D. Harm Reduction

Since the early-2000s, yaba use has surged in Myanmar, tracking increased local manufacture of the drug – which was initially produced for export, but for which after some time a local market also developed and grew. Yaba has become steadily cheaper and more readily available, despite significant increases in large and small seizures, and arrests of users and small-time dealers. As the new National Drug Control Policy recognises, law enforcement alone will not reduce the availability of or demand for the drug.[fn]For more details, see “Amphetamine type stimulants and harm reduction”, Transnational Institute, October 2011; “‘Found in the dark’: The impact of drug law enforcement practices in Myanmar”; and “Methamphetamine use in Myanmar, Thailand and southern China: assessing practices, reducing harms”, Transnational Institute, forthcoming.Hide Footnote

Crystal meth is likely to follow the same trajectory. It is becoming increasingly popular in the region, and while retail supply and demand in Myanmar at the present time is limited, this will undoubtedly change. Such a shift will have important public health implications given the potency of crystal meth compared with yaba, and because it is suitable for injection.[fn]Ibid.; Crisis Group interviews, drug policy experts, Yangon, November 2018.Hide Footnote

Myanmar’s government and donors should support surveys and research to improve their understanding of domestic drug markets and identify emerging trends in supply and use. This will give them the evidence base to scale up harm reduction services for amphetamines, particularly crystal meth, including by disseminating accurate information on health risks, promoting safer use practices (such as preventing users switching from inhalation to injection) and providing access to evidence-based treatments.

The government should prioritise education and harm reduction responses over punitive and stigmatising criminal justice approaches. This includes improving police training on how to deal with drug-related issues (searching people who have needles, managing violent users and prioritising the referral of users to harm reduction services rather than arresting them, for example). The government should grant greater access for international agencies, including those working in health and development, to remote and conflict-affected areas, so they can implement education, health and harm reduction programs. Access to prisons and labour camps is also important given the high proportion of drug users in these populations and the lack of harm reduction services available.

VII. Conclusion

Myanmar’s Shan State has been mired in conflict for decades and has long been a centre for illicit drug production – initially opium and heroin, then from the 1990s also yaba. Good infrastructure, proximity to precursor supplies from China and reliable security and impunity provided by pro-government militias and in rebel-held enclaves mean that it has now also become one of the main global centres of crystal meth production, exporting hundreds of thousands of kilos of the high-purity drug to regional markets each year. The scale of production and profit is now so vast that it likely dwarfs the formal sector of Shan State, and is at the centre of its political economy. This greatly complicates efforts to resolve the armed conflict and build a functional, licit economy in the state.

The government should redouble its anti-narcotics efforts as set out in its new national drug policy, focusing on the key players in the trade and the corruption that they rely on and fuel. At the same time, at community level it should focus more on education and harm reduction, with support from international agencies, rather than punitive and stigmatising criminal justice approaches. The Myanmar military should rethink its conflict management approaches and exercise greater control over – and ultimately disarm and disband – militias and other pro-government paramilitary forces.

Brussels, 8 January 2019

Appendix A: Map of Shan State

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Appendix B: Key Locations and Trade Routes Mentioned in the Report

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Appendix C: Acronyms and Glossary

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