Jade and Conflict: Myanmar’s Vicious Circle

Kachin State in northern Myanmar is home to the richest jade mines in the world. These mines, and the billions of dollars of jade they produce annually, lie at the heart of a vicious circle of exploitation and conflict that has wracked northern Myanmar for decades and helped poison the pathways to peace.

The influence of jade increasingly permeates the politics and economy of the whole country as money from the industry makes its way to conflicts outside of jade mining regions and helps fill the coffers of the military (known as the Tatmadaw), who are once again ruling the country in the wake of the February coup.

Our new report examines this vicious circle in depth, revealing how the National League for Democracy (NLD) government’s efforts to reform a broken industry were resisted by Myanmar’s military and other armed actors involved in the sector. The trade saw a huge rise in corruption and smuggling, and a wave of rapacious, illegal and increasingly dangerous mining.

Myanmar’s military and military-linked companies have tightened their grip on the industry and mined with impunity, with jade money helping fund their ongoing abuses.

While military interests dominate the jade sector more than ever, our findings also show the growing number of ethnic armed groups and militias involved in the trade, including the Kachin Independence Organisation/Army (KIO/A), United Wa State Army/Party (UWSA/P) and Arakan Army (AA), who rely on jade money to help fund their cause.

Our report also assesses the impacts of Myanmar’s recent military coup on the jade industry. The coup has already triggered a wave of renewed violence in Myanmar’s jade mining regions,  highlighting the enduring nature of relationship between jade and conflict. The jade trade also risks becoming an even more important source of funding for the Tatmadaw, which now controls governance of the sector.

Key findings

• In 2016 the incoming civilian government suspended all jade mining licensing. Intended to clean up the sector, the licensing suspension instead allowed corruption to flourish and encouraged opposing armed groups to collaborate to mine jade faster and more dangerously than before.
• This led armed groups, and in particular Myanmar’s military, to increase their control of Myanmar’s jade mines during the NLD’s term in office. Military conglomerate Myanma Economic Holdings Public Company Limited (MEHL) was the single largest jade and gemstone licence-holder at the time of the suspension, and it acquired over half of its licences in a frantic resource grab during the last few months before the NLD officially took power.
• Myanmar’s military and its leaders, their families and their business allies were among the biggest beneficiaries of this resource grab. Even as the NLD attempted to reform the sector, endemic corruption extended to the top of the Tatmadaw’s chain of command, with the family of coup-leader Senior General Min Aung Hlaing – sanctioned by the US and UK for his role in egregious human rights abuses against the Rohingya people – implicated in jade-related bribery schemes.
• Smuggling increased, with up to 90% of all jade mined in Hpakant now smuggled out of the country and into China without ever entering the formal system in Myanmar. This means little of Kachin State’s vast mineral wealth is used for the benefit of Myanmar or the Kachin people.
• Numerous ethnic armed groups are also involved in the jade trade. The UWSA became a key powerbroker in Hpakant, jade remained the largest single source of income for the KIO, and money from the industry helped support the rise of the emergent AA. The industry also helped facilitate the arms trade, with the UWSA using weapons to pay taxes to the KIO, who then sold them onward to the AA.
• Myanmar’s jade mining regions have seen a dramatic increase in fighting between the Tatmadaw and KIO following the 1 February coup, highlighting the dangers of allowing such a lucrative industry to be controlled by armed groups. The coup will also open new possibilities for military bribery and graft, as the Tatmadaw now has direct control over the granting of mining licences and could gain a huge windfall and cement political support by handing out licences to allies.

This investigation builds on the findings of Global Witness’s 2015 reports Jade: Myanmar’s ‘Big State Secret’ and Lords of Jade, which revealed how the military elites, US-sanctioned drug lords, armed groups and crony companies that benefited from decades of military rule secretly controlled Myanmar’s jade industry.

Recommendations

Myanmar’s recent military coup has made reform of the industry more difficult. The military is already one of the main beneficiaries of Myanmar’s jade wealth, so it has little incentive to continue the NLD’s reform program.

Still, the international community and domestic anti-coup resistance movement, led by the National Unity Government (NUG), can take actions to limit the extent to which Myanmar’s military is able to profit from the jade industry and put in place a vision for the future of the industry that will extract the country’s armed forces from the jade business and forge peace deals that will share the country’s mineral wealth fairly.

• The international community should avoid legitimising the military’s illegal coup and should refuse to recognise the military’s State Adminsitration Council as a legal or legitimate representative of the government of Myanmar. The international community should also engage directly with the NUG, whose representatives should be invited to any regional and international forum to which Myanmar is a party.
• The international community should also be laser-focused on ensuring the military does not retain power, and should continue to place targeted sanctions on the Tatmadaw’s economic interests. In the jade and gemstone industry, this means placing sanctions on the Myanma Gems Enterprise and military conglomerates Myanma Economic Corporation Limited (MEC) and MEHL, as well as restricting the import of Myanmar jade and gemstones.
• The NUG should develop an inclusive vision for the future of the jade industry within a federal framework through consultations with Kachin and Shan stakeholders. The NUG should also make proactively develop its response to further military action in the jade sector such as a potential re-start of licensing or future jade emporiums. Finally, the NUG should make concrete policy reform proposals to demonstrate how the NUG’s differ from the military, including announcing reforms to the licensing process and the role of MGE.
• The KIO/A should work with Kachin civil society, local communities and political parties to develop a blueprint for natural resource federalism that benefits the people of Kachin State and protects the environment, as well as a jade mining policy outlining the group’s vision for sustainable resource management in the future.
• Ultimately the leaders of a future, legitimate Myanmar government must recognise the fundamental role that natural resources play in Myanmar’s ongoing conflicts and commit to resolving disputes around natural resource governance in a way that respects the rights of local people. Crucially, armed actors must exit, or be removed from, the jade industry and Myanmar’s economy as a whole.