Report: Corrupt Myanmar Jade Industry Causes Armed Conflict and Enabled Coup

Global Witness NGO investigates how military leaders enriched themselves through jade mining, and how the industry is intertwined with ethnic conflict.
2021-07-01
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Report: Corrupt Myanmar Jade Industry Causes Armed Conflict and Enabled Coup Buyers look at pieces of jade at the jade market in Mandalay, Myanmar, March 29, 2019.
Reuters

Corruption in Myanmar’s lucrative jade sector has been an engine of armed conflict, with the country’s military increasing its control over the industry even as Aung San Suu Kyi’s democratically elected government tried to enact reforms in years leading up to the Feb. 1 coup, a corruption watchdog group said Tuesday.

Myanmar’s military, called the Tatmadaw in Burmese, and those in its highest ranks were able to enrich themselves via the jade industry, and the Tatmadaw is now post-coup threatening to “further open the floodgates of military corruption in the jade industry,” according to a report published by International NGO Global Witness.

The coup followed military claims that a landslide victory by Aung San Suu Kyi’s National League for Democracy (NLD) in the country’s November 2020 elections was the result of widespread voter fraud. Aung San Suu Kyi and other NLD leaders have been held in detention since the takeover.

 The junta has yet to provide evidence for its claims, though, and has violently suppressed mass demonstrations against the takeover, killing at least 883 people and arresting 5,224, according to the Bangkok-based Assistance Association for Political Prisoners (AAPP).

Now with the Tatmadaw in charge of the government, the junta is poised to further exploit corruption in the jade trade and to fight with armed groups for control of more of the country’s deposits.

Control over jade was a major cause of conflict in Myanmar between the Tatmadaw and rebel armed ethnic groups, and in the years leading up to the coup the military increased its stake in the jade trade at a time when the civilian-led government was trying to impose reforms on it, Global Witness said.

“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 in a statement.

The research reveals that the family of coup leader Min Aung Hlaing profited from bribes from actors hoping to gain permission to mine jade.

“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 said.

The Global Witness study also shows that armed ethnic groups, specifically the Kachin Independence Amy (KIA), the United Wa State Army (UWSA), and the Arakan Army (AA) have all also increased their involvement in the jade trade, with the AA having become a major player in recent years.

When the NLD-led government suspended jade licenses, military-controlled companies and others were able to increase illegal mining due to a lack of oversight and enforcement. At times, traditional enemies of the Tatmadaw worked alongside it to mine as much jade together as they could before their licenses expired, or to mine together in plots of expired land.

“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.

With the spoils of the mines, the various actors were then able to purchase arms in great number, which encouraged more violent conflict to gain control of more areas to mine in what the research described as a “vicious cycle of jade and conflict.”

Sometimes the deals between the separate armed groups would involve exchanges of jade or jade rights for arms.

For example, the UWSA, engaged in mining in Hpakant in northern Kachin state, owed taxes for the activity to the KIA, which it paid for by manufacturing weapons. The KIA then sold the weapons to the AA, which in turn would work alongside the KIA to collect jade payments, which funded conflict against the Tatmadaw in Rakhine and Chin states, according to the study.

The study also found that 90 percent of the jade mined in Myanmar is smuggled out of the country to China, underscoring “the highly illicit nature of the industry.”

Nearly all regulation of the jade industry set up under the ousted democratically elected NLD government is not being enforced now. And Global Witness estimates that instability in the post-coup environment will allow for even more corruption, with the military likely restarting its suspended mining and issuing permits to raise funds to support what the NGO called its “illegitimate administration.”

In Hpakant, where the world’s richest jade deposits are located, fighting between the Tatmadaw and KIA has exploded since the coup, the report said.

But prior to the coup, Hpakant had been the scene of rare cooperation between the Tatmadaw and its enemies, as they worked together to collect formal and informal taxes and ignored safety to extract jade as quickly as possible in the face of quickly expiring mining licenses.

Tragedy struck in Hpakant on July 2, 2020 when heavy rains caused piles of loose dirt and rubble to collapse, burying more than 200 scavengers looking for discarded pieces of jade left behind by miners, and creating a “lake of mud” filled with bodies.

At least 174 people died, with 100 left missing and 54 injured in the mudslide.

“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,” Dietz said, adding, “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.”

The report, much of which had been compiled before the coup, identified four barriers to what it called “breaking the jade-conflict nexus.”

First, the government of Myanmar needed to reprioritize reform, Global Witness said. And though the ousted government had made efforts to reform, those profiting from mining undermined these whenever they could.

Second, Myanmar’s peace process should have included discussions over natural resource management. Third, the Tatmadaw and other armed groups should have been made to exit the jade industry. And finally, constitutional reform was needed to decrease the power and influence of the military.

“All four of these structural barriers remain relevant today,” the report said, adding, “Unfortunately, the coup makes it highly unlikely that any of these issues will be addressed, at least as long as the Tatmadaw maintains its control over Myanmar’s government.”

Global Witness now recommends that the international community avoid legitimizing the present military government and deny it representation in international settings in favor of Myanmar’s shadow National Unity Government (NUG).

It should also prohibit companies from doing business with military-owned companies and support initiatives that include ethnic minority groups in resource management decisions, Global Witness said.

The NUG should also develop an inclusive natural resource management plan that acknowledges the relationship between jade and conflict, warn companies engaging in business with the military that they could face censure by a future government or the international community, and make reform proposals that showcase how the NUG’s policy on jade would differ not only from the junta, but also from the government that preceded it.

The KIA, meanwhile should demonstrate responsible management of the jade industry by engaging with civil society organizations, local communities, and political organizations including the NUG.

It should also investigate jade-related corruption within its ranks, and offer more transparency in jade-related dealings, with a commitment to eventually exit the sector completely.

Global Witness also called on domestic and international companies to review current operations and stop engaging in any that enrich the junta. It also urged consumers to boycott any jade or gems sourced from Myanmar in order to help end the jade-conflict nexus.

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