Myanmar’s military tightened its grip on the country’s corrupt jade trade under the NLD

Myanmar’s military increased its control of the country’s lucrative jade trade in the years leading up to the coup, even as the new civilian-led National League for Democracy (NLD) government worked to reform the industry, our new investigation reveals. Our findings show that the jade sector has become more corrupt than ever, stoked violent conflict throughout the country and helped fill the military’s coffers, including the family of the Commander-in-Chief and coup leader Min Aung Hlaing. The 1 February coup has aggravated these dynamics, triggering a wave of renewed violence in Myanmar’s jade mining regions and potentially thrusting the industry further into lawlessness.

In 2016, Myanmar’s new NLD government suspended all jade licencing, promising to reform the troubled sector. Today’s ground-breaking report, Jade and Conflict: Myanmar’s Vicious Circle, shows how Tatmadaw officials, military companies, and their business allies frequently ignored the licencing suspension and resisted reform at every turn in order to further expand their already dominant role in the industry.

The military conglomerate Myanma Economic Holdings Limited (MEHL) was the single largest jade and gemstone mining permit-holder at the time of the licencing suspension, according to our investigation. The company, which controlled 1,100 active permits at that time, acquired 639 (58%) of them during the first few months of 2016 in a frantic resource grab just before the NLD officially took power. The largest licence holder that was not an MEHL subsidiary controlled only 285 licences at the beginning of 2016, showing the extent of the military’s dominance of the sector.

“Our revelations about the military’s increased control of the multibillion-dollar jade trade is emblematic of the Tatmadaw’s broader capture of valuable sectors of the country’s economy, which funds their abuses, fuels conflict and helped enable their recent illegal power grab,” said Keel Dietz, Myanmar Policy Advisor at Global Witness.

We reveal that those profiting from the endemic corruption in the jade trade include the family of Min Aung Hlaing, Myanmar’s de facto leader after the military took power in a coup d'état on 1 February, with his son accused of receiving bribes to facilitate jade mining. Min Aung Hlaing was already sanctioned by the US and UK for his role in egregious human rights abuses against the Rohingya population and other ethnic minorities.

“Min Aung Hlaing is a man who has presided over some of the worst crimes against humanity the world has seen in recent years, and now he has led a coup that has plunged Myanmar into a crisis that risks returning the country to the darkest days of military rule,” said Dietz. “The involvement of his family in jade sector corruption may not come as a surprise to many but it speaks to the way in which this lucrative industry has helped sustain the power and influence of military elites and perpetuated conflict across the country, even as the NLD attempted to reform the industry,” he continued.

While military interests dominate the jade sector more than ever, our findings also reveal the growing number of ethnic armed groups and militias involved in the trade. The report looks specifically at the role played by the Kachin Independence Organization/Army (KIO/A), the United Wa State Party/Army (UWSP/A), and the Arakan Army (AA). The latter has emerged as a significant new player in the jade sector in recent years, according to our research.

In the absence of proper oversight and enforcement, the NLD’s 2016 jade licencing suspension led companies affiliated with the military and other armed actors to further increase illegal and ruinous mining practices while reinforcing some of the most perverse dynamics of the vicious cycle of jade and conflict. Bitter foes stepped up their cooperation with Myanmar’s military to extract as much jade as they could before licences expired, at times teaming up to mine together illegally in expired plots.

“The Tatmadaw, armed militias, and ethnic armed groups such as the KIA, UWSA and AA literally found common ground to dig up jade ever faster and more destructively, even as they were in conflict elsewhere in the country,” said Dietz.

Our investigation also reveals that jade money from Hpakant was being directly channelled into the trade in arms, fuelling violent conflict in northern Myanmar, with the UWSA fulfilling part of its jade-related tax obligations to the KIA by providing weapons produced in its own factories and the KIA then selling these weapons, sometimes at a discount, to the AA. The AA also cooperated with the KIA to collect jade payments to support its war against the Tatmadaw in Rakhine and Chin states, according to our findings.

Our estimates reveal that up to ninety percent of Myanmar’s jade is smuggled out of the country, almost all into China, underscoring the highly illicit nature of the industry.

Myanmar’s coup has now plunged the jade industry into uncertainty. Cooperation between the military and ethnic armed groups has given way to renewed fighting in the jade mining areas, highlighting the enduring nature of the relationship between jade and conflict.  Post-coup instability has also opened new pathways for jade corruption as the rule of law deteriorates further, with the military poised to restart suspended mining permitting in order to generate quick cash to help prop up its illegitimate administration.

“Kachin State’s natural resources continue to be ruthlessly plundered by the military and armed groups, while the local population in Hpakant suffer the consequences of violent conflict, post-coup repression, deadly landslides and a narcotics epidemic,” said Dietz.

“As the people of Myanmar risk their lives to stand up to the military regime, the priority for the international community right now should be bringing an end to the coup and helping ensure a democratic and legitimate government is returned to power. A crucial part of this is cutting off the financial flows to the military through targeted sanctions on their economic interests, including the jade sector,” said Dietz.

We are calling on the international community to immediately ban the import of all jade and gemstones mined in Myanmar. China, as the main driver of demand for jade, also has a key role to play in addressing its role in corruption and conflict linked to the trade.

“The grip of the military on the jade sector is so strong that it would be nearly impossible to purchase jade without providing money to the generals and their allies,” said Dietz.

In the long-term, the international community must support a future legitimate government in removing the Tatmadaw and other armed groups from the jade industry and placing natural resource governance at the heart of peace talks.

“There will be no peace or democracy as long as men with guns control the vast wealth generated by one of Myanmar’s greatest natural treasures,” Dietz concluded.