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

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
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

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.

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.

See the full report.

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