The focal point of recent fighting in Myanmar’s ethnic minority-dominated Kachin state between government forces and militant separatists is a pair of hydroelectric plants on the Taiping River, close to the Chinese border in northern Kachin. Ninety percent of the electricity produced by the plants, which are owned and operated by China’s state-owned China Datang Corporation, goes to China. Such lucrative joint ventures by China and Myanmar have become another cause for resistance by the Kachin Independence Army (KIA), the armed wing of the Kachin Independence Organization (KIO). The KIA is convinced that it is defending against a concerted government offensive into KIO-controlled territories and claims to have destroyed more than 10 bridges in the Mohnyin area of the state, in southern Kachin. Because of the recent skirmishes, somewhere between 2,000 and 10,000 Kachin refugees reportedly have fled across the Chinese border, along with a number of Chinese who were working at the hydroelectric plants, which are still under construction, though producing electricity. Because of the fighting, the plants were offline for a few days but are now operating again. Since April 2009, the central government in Naypyidaw has been trying to amalgamate all of the ethnic militant groups throughout Myanmar into its Border Guard Force (BGF). This controversial proposal requires all of the so-called “cease-fire groups,” which have signed a cease-fire agreement with the government but not a formal peace treaty, to form a united force under the direct control of Myanmar military commanders. Groups that agree to join the BGF receive financial backing from the Myanmar military (known as the Tatmadaw). The KIA has expressed a willingness to join the BGF, but only if certain of its demands are met. These demands include KIA autonomy within the BGF and government and assurance that Kachin state will eventually become an autonomous region within Myanmar. Many other larger ethnic insurgent groups also have refused to participate in the BGF, including the Karen National Union (KNU), which operates out of eastern Myanmar on the Thai border. Other larger players such as the United Wa State Army, the KIA/KIO’s neighbor to the west, have accepted the BGF proposal in principle but have opposed control by the Tatmadaw. Most of the smaller groups have accepted the proposal with varying levels of discomfort. Essentially, if the Tatmadaw can wear most of these groups down, either militarily or financially (there are more than 50), a viable BGF is feasible. These KIO demands have been unacceptable to Naypyidaw, which led to the government’s labeling of the KIA/KIO as an insurgent group in October 2010, when the group officially refused to enter the BGF. Naypyidaw knew it could not conduct a major military offensive into KIA-held territory without huge losses — thus the new label, which represented a major shift in how the government wanted the public to view the entire Kachin separatist movement, both the political and the militant wings. An offensive was still an option, but now Naypyidaw had a rationale for “attacking” the movement economically. This came in the form of reducing the cross-border trade between the Chinese in Yunnan province and the KIA/KIO in Kachin state. To appease Myanmar, where China is building not only hydroelectric plants but also oil and gas pipelines that run from Kunming in China’s Yunnan province all the way to the Myanmar port of Kyaukphyu, Beijing is reducing the amount of legal trade coming out of Yunnan as well as cracking down on black-market activities. (click here to enlarge image) It is important to note that clashes in Myanmar’s border areas are common. The most recent fighting, which began at the hydroelectric plants, is only a continuation of intermittent attempts by the government to weaken the KIA/KIO, which controls a little less than half of the territory in Kachin. These areas are officially known as Kachin State Special Region Number 1, which is not a contiguous piece of land, only an erratic assortment of rural enclaves throughout the state. The Tatmadaw controls more than half of Kachin, including the capital Myitkyina and most of the other major towns. This standoff would be problematic even without another non-BGF player in the mix, the New Democratic Army Kachin, an ethnic militant group also active in Kachin and one that has mounted offensives into KIA-KIO areas. The environment in Kachin is rife with authorities, motives, loyalties and tensions, and small-scale skirmishes erupt on a daily basis, most too insignificant to make the news.

Recent Clashes

But the most recent clashes are different. The fighting that erupted on June 14 at the hydroelectric plants began when members of the KIA stormed the facilities and took up defensive positions. A responding army unit ordered them to leave, they refused and a firefight ensued. This was the first incident that occurred after Naypyidaw branded the KIA/KIO an insurgent group. This particular firefight was larger than normal, leaving six people dead and four wounded, according to KIA officers. There was even a brief hostage situation, in which the KIA held six government soldiers and several Chinese workers for a few hours. Area residents displaced by the fighting (the BBC said there were some 2,000 refugees) traveled to camps on the porous border, and many crossed into China to nearby villages to live with relatives. The refugees caused a stir in China, much as the Kokang displacement did in 2009, when 30,000 people were displaced due to fighting between rebels from northern Shan state and government forces. Even more important, the fighting impacted Chinese economic interests when the hydroelectric plants were forced to shut down, cutting off the electricity that flows from Myanmar into China. This is not the first time Chinese interests have been affected by the fighting in the border areas, but it is one of the first incidents in years in which the KIO was involved. Perhaps the most important effect of the recent fighting is the increasing perception of instability in the area. It is unclear if this was the intention of the KIA, but it certainly did attract China’s attention. And it is significant because it demonstrates KIA leverage over infrastructure in the region, which gives the KIO a new avenue to explore regarding its relations with both Naypyidaw and Beijing. Feeling the economic burden of the diminished cross-border trade with China, the KIO is considering the option of negotiating with the central government in Myanmar and the central government in China. This would allow the KIO to discuss KIA/KIO autonomy in the BGF as well as perceived Chinese exploitation in Kachin. One option is to join the BGF, but it is not likely to do that without fundamental revisions in the BGF proposal, including the creation of a federal union granting Kachin state autonomy and increasing ethnic rights in line with the country’s 1947 constitution. Another is to form alliances with other ethnic groups in Myanmar such as the KNU, the New Mon State Party or a coalition of smaller ethnic insurgent groups called the United Nationalities Federal Council. But any kind of functional alliance with these groups is unlikely. A long history of mutual distrust and lack of cooperation would cause any alliance to break down in short order. The KIA/KIO could also prepare for war, which is what it currently appears to be doing, recruiting more fighters and strengthening its strongholds in Kachin. But an all-out war is unlikely, since both sides realize that the costs would be too high. One final option is to allow China, pressured by the energy and economic problems caused by the fighting in Kachin, to mediate negotiations between the KIO and Naypyidaw on the KIO’s behalf. Talks with the Chinese would provide an arena in which the KIO could address issues related not only to Naypyidaw and the Tatmadaw but also to environmental and social problems that the Kachins believe the Chinese hydroelectric projects are bringing to the state. Although the KIO would be in a weaker position in such talks, it really has no other option. So far, there has been no public response to a request by the KIA/KIO after the firefight at the hydroelectric plants that China serve as a mediator, but China is likely to assume that role in order to bring stability to the region. The question is, what offer or demand will China make? Since economic isolation by Naypyidaw has made the KIA/KIO more reliant on China, some kind of economic offer could be made by China that would involve the KIA/KIO in the energy infrastructure projects in the state. It is certainly in China's interest to promote stability along its volatile border with Myanmar, mainly to prevent any refugee influx and to keep the electricity flowing. The easiest way to do this could be to promote the KIA’s inclusion in the BGF while also lobbying for enough KIO autonomy to administer its own enclaves in Kachin. China could also use a mediator role to enhance its Asia-Pacific image. But its real incentive is economic and strategic. For China, the worst-case scenario would be its failure to appease both Naypyidaw and the ethnic insurgents along the border.