Cash for Conflict: The Relationship Between Myanmar's Illegal Economy and Civil War

Key Chapter Title List

1. Summary
2. Key Points
3. Background: "The Crisis of Rampant Illegal Trade"
4. The Illegal Economy Since the February 2021 Coup
5. Plant and Non-Renewable Resource Crimes
6. Human Trafficking and Cyber Scams
7. Weapons and Ammunition Smuggling
8. Heroin and Synthetic Drug Trade
9. The Crime-Conflict Nexus in Myanmar
10. Crime, Conflict, and Ceasefire Agreements
11. Resilience Status
12. Conclusions and Recommendations

Document Introduction

This report, released by the Global Initiative Against Transnational Organized Crime, provides an in-depth analysis of the deeply entrenched symbiotic relationship between the illegal economy and the ongoing armed conflict in Myanmar. The report points out that for over six decades, the illegal economy has fueled various insurgencies and ethnic conflicts in Myanmar, shaping the country's political and conflict trajectory and impacting regional geopolitics. Following the military coup in February 2021, this "crime-conflict nexus" has become more complex and prominent, with illegal economic activities playing a central role in fundraising, power maintenance, and territorial control for various factions.

The report systematically outlines the dynamic changes in Myanmar's major illegal economic sectors post-coup, including plant and non-renewable resource crimes (such as timber and jade), human trafficking and cyber scams based in "scam compounds," weapons and ammunition smuggling, as well as the heroin and synthetic drug trade. Citing data from the Global Organized Crime Index, the analysis shows that Myanmar's criminality score has risen to the top globally, reaching or approaching the highest risk levels in key markets such as synthetic drug trade, heroin trade, and weapons trafficking. These markets are not only highly profitable and cause severe social and environmental damage but also directly provide crucial financial flows for the Myanmar military (Tatmadaw), various Ethnic Armed Organizations, and criminal networks.

The core chapters of the report delve into the specific manifestations of the "crime-conflict nexus" in Myanmar. Historically, the ceasefire agreements of the 1990s gave rise to so-called "ceasefire capitalism," where the military tacitly allowed ethnic armed groups to engage in drug and resource trade in exchange for temporary peace, deeply embedding the illegal economy into local political structures. Currently, with the weakening of the central authority of the State Administration Council, the strength of various Ethnic Armed Organizations has increased, and the illegal economy has become the financial foundation for these groups to consolidate territory, provide social services, and even exercise quasi-state functions. The report warns that any future political solution must confront this reality and make dismantling illegal economic markets one of its core objectives, although this will be a highly politicized and risky process.

The report further analyzes how Myanmar's national and societal "resilience" against transnational organized crime has sharply deteriorated. Since 2021, due to the collapse of state governance structures, loss of territorial control, and the instrumentalization of the judicial and law enforcement systems, Myanmar's resilience score has plummeted, resulting in the largest gap between criminality and resilience globally. This institutional collapse means any future government will face immense challenges in addressing the illegal economy. In its conclusion, the report emphasizes that the international community, when supporting Myanmar's peace process, must incorporate addressing the illegal economy into ceasefire negotiations and peacebuilding plans, avoiding the repetition of using the illegal economy as a bargaining chip for peace. Simultaneously, it should support active civil society organizations within Myanmar and ensure that the expertise and perspectives of regional actors are included in discussions from the local to the multilateral level.