Myanmar army ‘tightens grip’ on multibillion dollar jade trade: Report

Myanmar’s military has further tightened its grip on the country’s jade trade, using the industry to finance the February 1 coup that plunged the country into turmoil, a new report released on Tuesday says, naming the son of army chief Senior General Min Aung Hlaing as among those who directly profited from the enterprise.

Global Witness said corruption within the country’s jade sector “reaches into the very top ranks of the military”, and the February 1 coup had only enhanced its ties to the multibillion-dollar industry whose business mostly goes to China.

“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 adviser at the watchdog, which exposes links between human rights abuses and the environment.

The report warned that the coup could turn the jade industry into a “slush fund” for the military and source of political patronage to prop up the military regime, unless sanctions and other forms of punitive measures are taken.

With an estimated strength of more than 400,000, Myanmar’s military, also known as Tatmadaw, has been the most influential political player in the country since its independence in 1948. Except for brief periods of democratic leadership, the generals have governed the country for decades.

For years, the military has also been accused of committing atrocities against its own people, including the 2017 violence on the Rohingya that forced hundreds of thousands of the mostly Muslim minority group to flee to Bangladesh. The United Nations and rights groups have described the attack as constituting war crimes and crimes against humanity.

More recently, it resumed a separate armed conflict with ethnic rebels beginning in early 2020 displacing tens of thousands more people internally, before it snatched power from the elected National League for Democracy (NLD) government of Aung San Suu Kyi in February.

Since the coup, it has launched a crackdown against opposition politicians and activists as well as common people protesting against the power grab. According to the advocacy group Assistance Association for Political Prisoners (AAPP), state forces have already killed 883 people, while about 5,000 others have been arrested or sentenced.

The coup only aggravated the nexus of corruption and violence that marks the military’s role in the jade industry, the report said. It warned that the takeover could “further open the floodgates of military corruption” and plunge the jade mining region “further into lawlessness”, while also enriching military officials and their families.

Sons of generals

The 2021 Global Witness report further develops an earlier 2015 expose, in which it first established the links of a number of senior generals to the industry. Among the companies still active in the jade trade is Kyaing International Gems, which is partly owned by the son of General Than Shwe, the strongman who governed Myanmar for almost 20 years until 2011.

In the latest report, General Min Aung Hlaing’s son, Aung Pyae Sone, has also been found to be involved in the industry, Dietz, a co-author of the investigation, told Al Jazeera in a separate interview.

Dietz said Aung Pyae Sone plays a role in the military’s control of dynamite imports into Hpakant, the heart of the jade mining industry in Myanmar.

The use of dynamite is essential for extracting jade, as the current form of mechanised mining involves blasting open huge pit mines using the explosive before machines are sent in to pick through the rubble.

“The Tatmadaw controls the main routes into Hpakant, so dynamite traders must pay a bribe to the Northern Commander for permission” to transport the explosive shipment, Dietz said.

“The Northern Commander then pays these bribes upward to Aung Pyae Sone,” he said of the highest military commander’s son, a Myanmar business tycoon who was recently placed under US sanctions alongside his sister, Khin Thiri Thet Mon.

Locals in the jade mining town of Hpakant, Kachin, marching in protest against Myammar's military dictatorship this evening (Jun 14).

Photos: CJ pic.twitter.com/rv6bOdMxDc

— Myanmar Now (@Myanmar_Now_Eng) June 14, 2021

Dietz said the involvement of Min Aung Hlaing’s family in the jade industry may not come as a surprise “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”.

“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,” Dietz said.

Resisting reform

For years, military officials, as well as companies they controlled and their business allies, have been ignoring licensing rules in the country, continuing to operate while resisting efforts by the recently removed civilian government of Aung San Suu Kyi to implement reforms.

In 2016, the NLD suspended all new jade licensing, promising changes in the troubled sector.

At that time, the military conglomerate Myanmar Economic Holdings Limited (MEHL) was the single largest jade and gemstone mining permit-holder. The company, which controlled 1,100 active permits at that time, acquired 639 of them during the first few months of 2016 in a “frantic resource grab” just before the NLD officially took power.

But even with the suspension of new licences, abuses within the system lingered, allowing the industry to continue operating within an “ill-defined and underenforced” legal framework, the report said.

Instead of loosening the military’s grip, the rules only paved the way for the military to take control of Myanmar’s jade mines even during the five years of civilian control.

And now that the military is completely back in power, any possibility for real reform in the near-term “is now dead”, Global Witness said.

Among the companies identified as part of the MEHL conglomerate are Myanmar Ruby Enterprise, Myanmar Imperial Jade Co Ltd, and Cancri (Gems and Jewellery) Co Ltd. Shortly after the military coup, the US imposed sanctions on the three companies.

Shrouded in secrecy

Until recently, the extent of the military’s involvement in the jade mining industry was shrouded in secrecy, Myanmar activist and poet Me Me Khant told Al Jazeera.

Since the Global Witness report in 2015, there has been more awareness of the “exploitations in the jade sector”, she said.

“The human cost of the military’s profiteering in the jade sector is immense. Hundreds die each year from landslides because of corruption, lack of regulation, and simply lawless exploitation,” Me Me Khant said, citing as an example the 2020 landslide that killed about 175 miners in Hpakant.

There have also been other problems reported, including drug addiction and prevalence of HIV/AIDS among the miners, she added.

 

‘Trade in arms’

While Myanmar’s military dominates the jade industry, the Global Witness investigation also found that a growing number of ethnic armed groups and militias are also involved in the trade.

Those involved included the Kachin Independence Organization/Army (KIO/A), the United Wa State Party/Army (UWSP/A) – the ethnic groups’ political parties and their armed wings – as well as the Arakan Army (AA), it said.

“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.

“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.”

Jade money from Hpakant is then channelled into the trade in arms, heightening violent conflict in northern Myanmar, the report found.

The UWSA has been particularly identified as fulfilling part of its jade-related tax obligations to the KIA “by providing weapons produced in its own factories”, and the KIA then selling the weapons to the AA, the report said.

The AA also cooperated with the KIA to collect jade payments to support its war against the military in Rakhine and Chin states, the report said.

No clear proof has been found, however, that shows the Myanmar military is using jade money to also directly buy weapons, Dietz told Al Jazeera.

“But in the end all money is fungible.”

‘Highly illicit’

In its latest investigation, Global Witness estimated that up to 90 percent of Myanmar’s jade is smuggled out of the country, almost all into China, “underscoring the highly illicit nature of the industry”.

An estimated 50 to 80 percent of jade was smuggled before the licensing suspension, with the transactions done without ever entering the formal system in Myanmar.

“Kachin State’s resources have thus been plundered, with little of the benefit going to the Kachin people or the state, where jade revenues could be used to support critical needs like health care and education,” the report said.

As a citizen of Myanmar fighting the country’s military rulers, activist Me Me Khant urged the international community to impose sanctions on the top military leader and the companies involved in the jade and other gem mining industry.

She also urged the international community to persuade China to ditch the jade trade with Myanmar.

“There needs to be massive public awareness campaigns done around the issue to discourage consumers, especially those within China,” she said.

But as long as the military dictatorship is there, the probability of cutting the illegal jade trade would not be possible, said Dietz of Global Witness.

“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,” he said.

Global Witness is also calling on the international community to immediately ban the import of all jade and gemstones mined in Myanmar.

In the long term, the international community must support a future legitimate government in removing the military and other armed groups from the jade industry, 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 said.