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The Power of Myanmar’s Jade

Having power over the jade industry has given Myanmar’s military a powerful advantage.

Words: Keel Dietz
Pictures: Steve Johnson
Date:

On February 1, 2021, viewers of Khing Hnin Wai’s online dance exercise videos witnessed history. As the fitness instructor gyrated to peppy dance beats on an empty roundabout in Naypyitaw, Myanmar’s capital, a convoy of armored vehicles drove past in the background. It soon became clear what was happening: Myanmar’s generals had ordered the military into the capital to arrest the elected lawmakers gathered there from across the country to inaugurate a new parliamentary term. Among those arrested in the coup d’état were Aung San Suu Kyi, the civilian National League for Democracy’s (NLD) leader, and President Win Myint, bringing to a screeching halt the country’s decade-long democratic transition.

The coup, and the military’s ongoing brutal crackdown against protestors that has seen over 800 civilians murdered, 6,000 arrested, and 230,000 displaced, has been a stark reminder of both the fragility of Myanmar’s democratic experiment and the brutality of the Tatmadaw, Myanmar’s military. It has also left the international community scrambling to understand the sources of the Tatmadaw’s power and looking for ways to prise open its grip on the country.

Our new Global Witness report reveals one emblematic source of the Tatmadaw’s power that has fueled a vicious circle of conflict, corruption, and exploitation for decades: Myanmar’s multibillion-dollar jade industry. The jade industry by no means caused the coup, but the relationship between Myanmar’s generals and the country’s jade industry is a paradigmatic example of how the Tatmadaw has used the country’s resources to build economic, political, and military power — a situation the coup only threatens to worsen.

JADE AND THE GENERALS

Myanmar is the source of nearly all the world’s high-quality jade, and the Tatmadaw is the largest stakeholder in the industry. It has been since the 1990s, when the military engaged in a protracted offensive to wrest physical control of Hpakant, the region of Kachin State where the most lucrative jade deposits lie, from the Kachin Independence Army. The Tatmadaw has dominated the industry ever since.

The Tatmadaw’s takeover in the 1990s was a turning point for the jade industry, and not for the better. Mining that had been relatively small-scale was supercharged as the military junta handed out licenses and private companies brought in huge machines to increase their take. Local villages saw their land turned into open pit mines. Narcotics, — first heroin and now methamphetamines — took hold among the itinerant mining laborers who came to work the machines and pick through the mining rubble. This increasingly mechanized and environmentally destructive mining leveled mountains and poisoned rivers, creating the moonscape that defines Hpakant today.

The jade industry by no means caused the coup, but the relationship between Myanmar’s generals and the country’s jade industry is a paradigmatic example of how the Tatmadaw has used the country’s resources to build economic, political, and military power — a situation the coup only threatens to worsen.

The Tatmadaw subsequently turned the industry to its own advantage. Jade became a key source of patronage as the junta handed out mining licenses to military families and their business allies to reward loyalty and ensure support. Military-owned conglomerates, particularly Myanma Economic Holdings Limited (MEHL), became major players in the industry, funneling revenue directly into the military’s coffers.

The junta also used the lure of jade mining rights (along with other resources, such as timber) to pacify armed groups and reward ethnic-minority militias willing to end their fight against the Tatmadaw. The leadership of the United Wa State Army, Myanmar’s largest ethnic armed group who agreed to a ceasefire deal with the Tatmadaw in 1989, were among the first recipients of jade mining rights after the takeover of Hpakant.

REFORM AND RESISTANCE 

After the NLD entered office in 2016, it kicked off a major reform program in an attempt to clean up the industry. By early 2021, this included requirements for beneficial ownership disclosure and contract transparency in the extractive industry, environmental management plans for jade mining areas, a near-finished national gemstone policy, a (flawed) new gemstone law, and initial steps to decentralize small-scale mining. The NLD also held firm on the gemstone licensing suspension it put in place in 2016, resisting industry pressure to begin handing out permits before completing regulatory reform.

These reforms met with opposition and indifference, and our report reveals how the military and its allies worked to undermine them, even before the NLD took power. In early 2016, just prior to the change in administration, the outgoing military government awarded over 600 mining licenses to MEHL’s jade-mining subsidiaries, a potentially massive windfall for the military conglomerate that gave the company over 1,100 of the roughly 21,000 total licenses, more than quadruple the number held by the largest non-military company.

This continued after the NLD took over, as military companies profited from rampant illegal mining while officers collected bribes and extorted miners. In 2018, the local Hpakant commander demanded a $20 million bribe to release a jade boulder to the artisanal miners who had found the stone and collected monthly “gifts” from mining companies of ~$10,000 per month. Corruption even reached the top of the military’s command structure, with Min Aung Hlaing’s son, Aung Pyae Sone, profiting from control of dynamite imports into Hpakant.

BACK TO THE FUTURE

The result of this reform and resistance dynamic was that the military, along with other armed groups, were able to entrench their control of the jade industry and continue acting with impunity in mining areas even as the NLD’s reforms moved forward haltingly in the capital. Still, while the reform program was imperfect, the bottom line is that the government was beginning to put in place guardrails that could further illuminate illicit activity and challenge entrenched interests’ control over the industry moving forward.

The coup threatens to remove even these minimal guardrails and risks returning the country to the darkest days of junta control.

For now, the combination of COVID-19 along with political uncertainty and intense fighting with the Kachin Independence Army in Hpakant following the coup have continued to disrupt jade mining. In the wake of the coup, though, there is little to stop the Tatmadaw from restarting the licensing process and once again looting Myanmar’s natural resources to retain power. Signs of this can already be seen elsewhere in Kachin State, where local reports have emerged of major increases in dangerous and environmentally destructive rare earth mining in territory controlled by a Tatmadaw-aligned militia.

BREAKING THE CIRCLE 

Cutting off the Tatmadaw’s sources of power is thus more urgent than ever. So long as the military retains power, the country’s natural resources will continue to fund conflict and fuel instability, which in turn promotes further exploitation of resources, enabling conflict to continue. The coup risks re-enforcing this vicious circle.

To support the people of Myanmar, the United States and the international community should work to usher the Tatmadaw out of power by targeting the key sources of revenue and foreign currency the Tatmadaw requires to sustain itself. Initial sanctions on the gem, timber and pearl state-owned enterprises, and against the Tatmadaw’s two main companies by the EU, United States, and United Kingdom and others were a necessary step to achieve this goal. Still, the impact of sanctions on these industries will be limited by a relative lack of connections to Western businesses and the already illicit nature of the jade industry. Sanctions on Myanmar’s gas industry, the largest direct source of foreign currency for Myanmar’s government at over $1 billion annually, would have a much larger impact. The United States and EU, especially, should heed calls from across Myanmar’s civil society and place sanctions on this industry. Countries should also ban the import of jade and gemstones from Myanmar.

These measures should be done in concert with effective diplomacy denying legitimacy to the illegal military authorities, including representatives from the National Unity Government in international and regional forums, and denying arms to the military as called for in a recent UN resolution.

The time for action is now — each day that passes gives the military another day to tighten its grip on the country, another chance to exploit Myanmar’s natural bounties for its own purposes, another turn in the cycle of violence that keeps the people of Myanmar from realizing their aspirations.

Keel Dietz is a Myanmar Policy Advisor at Global Witness and co-author of the organization’s new report, “Jade and Conflict: Myanmar’s Vicious Circle,” with Senior Campaigner Hanna Hindstrom.

Keel Dietz

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