Myanmar: The United Wa State Army (UWSA), widely recognized as the world’s largest heavily armed narcotics-trafficking militia, finds itself at a strategic crossroads, with one path crucially leading in the direction of renewed conflict with the war-ravaged country’s military-led government.

The UWSA, which in 1989 signed a ceasefire with Myanmar’s ruling State Peace and Development Council (SPDC), currently controls Myanmar’s remote Special Region No 2 territory with near-total autonomy. Ever since the October 2004 internal purge of former SPDC prime minister and intelligence chief General Khin Nyunt, the army-led junta has taken an increasingly hardline approach toward integrating ethnic insurgent groups, including the UWSA, and their respective controlled territories into the national fold.
Khin Nyunt was known to be the Wa’s chief government patron, allowing the rebel group to invest its ill-gotten narcotics earnings in legitimate Yangon-based businesses, including a national airline and a bank. With his ouster, the UWSA has maintained less cordial relations with the SPDC led by General Than Shwe, and recently strongly rejected the junta’s calls to disarm and integrate its 20,000 or so foot soldiers into the SPDC’s national armed forces, known as the tatmadaw.

In retaliation, the SPDC has acted to disrupt legitimate lucrative teak and mineral exports from the UWSA-controlled territory to China’s southern province of Yunnan and, according to one in-the-know border watcher, has recently cracked down on the militia’s established drug-trafficking routes through Shan state territories contiguous with China and Thailand now controlled by the tatmadaw.

Lieutenant-General Thein Sein in July pressed the UWSA leadership to accept the establishment of nationally sponsored schools, immigration, and customs bureaus in the region as part of a proposed deal to reopen its border crossing with China – an offer the UWSA rejected out of hand.

Tit for tat, the SPDC has indirectly impeded the flow of foreign aid earmarked for Wa-controlled territories, including rice supplies from the United Nations-run World Food Program. WFP officials have reportedly expressed their growing disenchantment with the unusual bureaucratic hassles it encounters trying to obtain official permits to move supplies into Wa territory. Although the UWSA profits hugely from the drug trade, the general population still lives in abject poverty.

In a bid to win foreign aid, trade and investment opportunities and burnish their badly tainted international image, UWSA leaders in June 2005 publicly announced a ban on all opium cultivation in the remote and lawless territories it controls, historically some of the richest opium-producing areas in the world. That international overture was shot down out of hand the following month when US courts indicted eight leading UWSA officials, including militia chairman Bao You-xiang, on drug-trafficking charges.
At the same time, Yangon and Beijing are carefully squeezing the UWSA, cognizant of the militia’s proven ability to sow violence and chaos. Significantly, the ethnic-Chinese Wa are geographically positioned to disrupt growing China-Myanmar trade flows, and the group’s tendency to flood the region with cheap narcotics has long presented a security threat to some of China’s already socially volatile peripheral regions.

Moreover, if the UWSA felt overly cornered by the junta’s pressure on its legitimate and illicit commercial activities, it could switch sides and join forces with the ethnic insurgent groups, including the Shan State Army (SSA), which it now indirectly helps the SPDC in exchange for territorial concessions.

Myanmar’s already stretched armed forces are clearly reluctant to pursue an all-out military confrontation with the UWSA, which would endanger delicate ceasefire agreements with other loosely UWSA-allied armed groups that are similarly coming under central-government pressure, specifically the Kokang in Special Region No 1 and the National Democratic Army Alliance (NDAA) in Special Region No 4 (SR4) in eastern Shan state.

The 3,000-strong NDAA’s former reputed drug-dealing leader, Lin Mingxian, alias Sai Leun, was closely allied to current UWSA senior leaders when they led the Chinese-backed Communist Party of Burma.

While traditional UWSA contraband trade routes have come under pressure, including along the Salween River, Thailand-based analysts have noticed a concomitant shift of UWSA troops operating in NDAA-controlled territory, particularly along SR4′s Chinese border areas and around the region’s capital Mong La.

The same analysts say SR4 territories would hypothetically provide an unhindered outlet for UWSA-produced contraband along the Mekong River. Warming UWSA-NDAA relations also send a signal to the SPDC that increased pressure to disarm and integrate could escalate into a new broad and complex confrontation.

Chinese supplies

The UWSA’s relations with China are equally complicated. A 2005 Chinese intelligence report reviewed by Asia Times Online highlights the strategic importance China places on the autonomous armed ethnic groups, including the UWSA and NDAA, that operate along its border with Myanmar.

According to the report, those non-state actors provide China with both a buffer and a lever in managing its strategic and economic relationship with the SPDC, and hence Beijing has a strategic interest in the UWSA remaining autonomous rather than being folded into the tatmadaw.

Significantly, China remains the UWSA’s sole supplier of military equipment. More personally, UWSA chairman Bao You-xiang has since December suffered from deteriorating health, and the rebel leader has on several occasions, most recently last month, traveled to Kunming, China, for medical treatment.

Significantly, these clandestine visits have taken place while China has cooperatively maintained border closures near Wa-controlled territories, signaling Beijing’s broader strategy of counterbalancing Myanmar’s generals through the Wa and other armed militias. Although ties with the UWSA are not as strong as previously, one Pangsang-based businessman said, “China is still the UWSA’s big brother.”

China wishes to avoid a full-blown conflict, which would have the potential to spill over its borders. At the same time, the UWSA’s various illicit commercial activities have long represented a bilateral irritant and potential source of social instability in China’s comparatively poor southern provinces.

Since January 2005, Beijing has sporadically closed its Yunnan border with contiguous UWSA-controlled areas. According to sources in Wa-controlled areas, China sent a small number of troops across the border to enforce the closure of casinos catering to Chinese gamblers operating near its border in the jungle town of Mong La.

On March 26, China closed its border to timber and other mineral exports from Wa-controlled territories, in part because of pressure from international advocacy groups that have campaigned against the adverse environmental impact wrought by unregulated Chinese logging inside Myanmar’s Shan state areas. Unlike past border closures, according to local traders, the current restrictions have so far been strictly enforced.

While both Beijing and local Yunnan-based officials in Kunming wish to stem the flow of UWSA-produced narcotics into China, there is incentive for seepage as Chinese policymakers also desire to maintain legitimate trade with Myanmar as an economic outlet for its more isolated, poor peripheral southern provinces. “The Burmese and the Chinese have agreed to this move. Anything that is not signed by the Burmese will not be allowed into China,” said a Thailand-based analyst who monitors the border area.

However, a Wa official who spoke to Asia Times Online on condition of anonymity contends that the UWSA has already received assurances from Chinese authorities that the closure would be only temporary.

Wei to the rescue

Faced with such economic predicaments, the Wa have so far reacted to the pressure internally rather than externally. During a July 4 emergency council session, UWSA leaders transferred responsibility over the militia’s financial affairs to fugitive drug lord Wei Hsue- kang, the notorious commander of the UWSA’s 171 north region along the Thai border.

That’s a strong indication that the SPDC’s, and to a lesser degree Chinese, pressure is starting to hit the UWSA’s cash flows. Senior UWSA leaders had in recent years attempted to distance the militia from Wei, who in the past helped to bankroll the UWSA through heroin proceeds, but also is under a US government US$2 million bounty for his capture. Wei, who once escaped from a Thai jail, has been sentenced to death in absentia in Thailand.

A former cadre of heroin kingpin Khun Sa’s drug-dealing Mong Tai Army and associated in various ways with the Wa since 1989, Wei has proved himself to be an innovative businessman. For instance, he led the Wa’s strategic shift in the mid-1990s from sole reliance on opium and heroin production to the manufacture of methamphetamines and other illicit stimulant drugs.

He also was instrumental in diversifying the group’s assets into pig farms, cigarettes, bootleg audio and video discs, a local airline, and the Mayflower Bank in Yangon. The US Treasury on November 19, 2003, identified the Mayflower as of “primary money-laundering concern”, and the financial institution has since been shuttered.

The SPDC has consistently denied Wei’s presence inside Myanmar, but intelligence sources contend that he is now operating out of Panyang, eastern Shan state. Since taking over the UWSA’s finances in July, his 171 Military Region is now commanded by his younger brother, Wei Shiue-ying. Those 20 regiments, which operate predominantly along the Thai-Myanmar border, have long served as a proxy force in the SPDC’s campaign to crush the SSA. This is a non-ceasefire group that is known to have received military supplies and support from Thailand’s armed forces and also covert drug-interdiction training from the United States through the recently dismantled Task Force 399 based in Mae Rim, northern Thailand.

Despite UWSA claims to eradicate opium cultivation in its territories, regional intelligence officials contend that they still allow for poppy production in certain remote areas, albeit on a smaller scale than previously. In the wake of the UWSA’s declared ban, poppy farmers have relocated to nearby areas not directly administered by the UWSA, and in some cases have settled into territories directly controlled by tatmadaw forces. Intelligence and insurgent sources report bumper crops in areas southwest of Pangsang and to the east and west of the Salween River, both territories controlled by the tatmadaw.

Although the UWSA vowed to cease opium production, it gave no such assurances regarding synthetic narcotics, namely amphetamine-type stimulants (ATS), which in recent years have inundated China, Thailand and other countries in the region. For its part, the UWSA have steadfastly insisted that they lack the technical capability or precursors to produce synthetic narcotics such as methamphetamines and Ecstasy. However, last month a Thai narcotics official overseeing border areas contended that hundreds of millions of UWSA-produced methamphetamine pills have entered Thailand this year.

Until now the SPDC has demonstrated leniency when it intercepts UWSA narcotic shipments. On September 10, 2005, based on a tip-off from Chinese intelligence agents, the SPDC intercepted 496 kilograms of heroin transported by Tha Pan, a UWSA commander and adopted son of Bau Youri, the eldest brother of UWSA chief Bau Youxiang, according to various media reports. Although Ta Pan and his entourage of 17 UWSA officers were arrested, the SPDC prosecuted the case against Tha Pan as an individual rather than against the UWSA as an organization.

As tensions mount, it’s unclear now whether the junta would handle future UWSA-related busts with such kid gloves.

Michael Black is a freelance journalist based in the northern Thai city of Chiang Mai.