Political Risk Analysis - Achieving Peace Still An Uphill Process Following Kokang Clashes - MAY 2017

BMI View: The continued clashes in the border region of Kokang underscore the difficulties in achieving peace in Myanmar and demonstrate that deep divisions still exist between the civilian NLD government and the military. While China has agreed to mediate in the peace process, it appears that Beijing's influence over the various armed rebel groups is not as pervasive as it once was, posing further difficulties to the peace process.

Armed clashes in Myanmar's border region of Kokang highlight the difficulties the country faces in its efforts to obtain peace between the various rebel groups and the military, with clashes persisting despite the government's best efforts to obtain a peace deal with the various groups. In addition, the violence indicates that deep divisions continue to exist between Myanmar's civilian National League for Democracy (NLD) government and the military (Tatmadaw). Although the NLD is making efforts to convince the various armed groups to sign a ceasefire, the fighting between the military and the various groups in Kokang suggests that the NLD is unable to control the Tatmadaw. While China has agreed to mediate in the peace process, it appears that Beijing's influence over the various armed groups with close ties to China is not as pervasive as it once was, with certain groups now wary of the amount of influence China has over Myanmar's domestic affairs. This poses further difficulties to the peace process, and could further delay the second meeting of the Panglong Peace Conference (which has been postponed from early March).

Continued Clashes In Kokang Highlight Difficulties To Obtaining Peace

Tensions have been simmering in the border region of Kokang since late 2016, and fresh violence erupted following a surprise raid launched by the rebel Myanmar National Democratic Alliance Army (MNDAA) on the police and military targets in the town of Laukkai on March 6. The attack resulted in the deaths of 30 people, and led to reprisals by the Tatmadaw. In response, the military launched '56 waves of small and large clashes' using cannons, armoured vehicles and heavy weapons.

The MNDAA has said that it launched the March 6 attack in retaliation for the government army's offensives in Kokang-controlled territory. Since September 2016, the military has launched heavy attacks, including countless airstrikes, on the Kachin Independence Army (KIA) and ethnic Ta'ang, Kokang and Rakhine rebel groups in northern Myanmar. In response, the four groups formed the Northern Alliance-Burma in late November and launched retaliatory attacks on Muse, a Myanmar-China border crossing. Rebels held the border town of Mong Ko for weeks and hit roads and bridges. A key demand of the groups was Chinese mediation in the peace process.

The clashes compelled the Myanmar government to impose a 9 pm to 6 am curfew in Laukkai and Gongyang townships in northeastern Shan state effective as of March 10, and led to a steady flow of refugees to relief camps across the border in China. It was estimated that approximately 20,000-50,000 thousand people have left their homes to escape the violence.

Violence Demonstrates NLD ' s Inability To Control Military

In our view, the fact that clashes continue despite the Northern Alliance having expressed an interest in participating in peace talks with the government suggest that deep divisions persist between the Aung San Suu Kyi-led civilian government and the military (see ' Violence Exposes Fault Lines Between Military And Government ' , November 15, 2016). In a bid to maintain harmony, the NLD government has pledged to abide by the mantra of 'civilian-military cooperation'. As such, we do not believe that the government has the necessary power to pursue national reconciliation as it lacks the ability to rein in the powerful Tatmadaw, which appears to be pursuing its own agenda. This is despite announcements from the military that it too desires peace.

These tensions are likely to further complicate the peace process, and could undermine the NLD's credibility among the various groups that have not signed the ceasefire agreement. While Suu Kyi held the first high-level meeting since mid-October with the seven-member United Nationalities Federal Council (UNFC), including the KIA in early 2017, the fighting has continued and even intensified. This has led to considerable anger on the part of rebel groups towards the NLD, which could dissuade groups from signing the ceasefire agreement.

Extent Of Chinese Influence Remains Uncertain

While Suu Kyi has noted that Beijing's participation in the peace process is crucial for the success of the 21st Century Panglong Conference, we note that it is difficult to accurately ascertain the extent of China's influence, and that this would pose further difficulties to the peace process. Although China remains a key funder of the rebel United Wa State Army (UWSA), calls by Beijing for an immediate ceasefire and the restoration of order along the border have been ignored.

On the other hand, the UWSA hosted six rebel groups, including the KIA, for a meeting on the peace process and, the Wa-led gathering rejected the National Ceasefire Agreement (NCA) and called for a completely new peace process arbitrated by China. China has been known to provide military supplies to the UWSA, seen by many as the most powerful ethnic armed organisation in Burma, with estimates of 30,000 well-equipped troops. The organisation is thought to be closely monitored by Beijing senior officials and diplomats.

China has also stated that it will be willing to mediate in negotiations between the various groups and the government. While Beijing has occasionally supported the peace process since conflict erupted in northern Myanmar in 2011, the Chinese state media is encouraging greater involvement and China has begun hosting multiple meetings. These conflicting messages are likely to present further complications to the peace process, and could undermine the government's efforts to persuade the various northern armed groups to sign the ceasefire agreement.

Postponed Second Meeting Underscores Difficulties In Peace Process

The postponing of the second 21st Century Panglong peace conference further underscores the difficulties face in the peace process. The Union Peace Dialogue Joint Committee (UPDJC) announced that the second meeting would be postponed as national level political talks had not been completed. National level talks have been planned for ethnics, regions/states, and for respective topics prior to the conference, but some talks have yet to be held. In addition, it was stated that the government's ongoing negotiations with the non-signatories in an attempt to persuade them to sign the agreement could have led to the postponing of the conference.