Methamphetamines trade and production in Shan state:a “political economy inimical to peace”

Introduction:

            The Golden Triangle, the uplands region where the borders between China, Laos, Thailand and Myanmar meet at the confluence of the Ruak and Mekong rivers (Peaceforasia.org, 2021) is infamously known as a “wild” (Pinkaew, 2015, p. 15), lawless place. The region has commonly been depicted as a space of exception (Amporn, 2021) where a myriad of criminal groups engage in cross-border illicit activities. Such enterprises include, inter alia, human trafficking (Kamler, 2021) as well as drugs trade and production. The Golden Triangle represents “the world’s premier source of illicit drugs” (Peace for Asia, 2021). Narcotic substances are usually produced in Myanmar or Laos before being shipped to Thailand along the Mekong River (Chouvy, 2013, p. 14). Thailand not only represents a big market for drugs, but it is also an important transit point for further shipment into Australia, Malaysia or Japan. Among the Golden Triangle, another country particularly stands out: Myanmar was the second largest exporters of opiates in the 1990s after Afghanistan (UNODC, 2011, p. 60) and seems to be the “largest producer of amphetamine type stimulants” nowadays (The New Humanitarian, 2010). Most of the drugs are produced in the country’s easternmost Shan state, at the border with China (Council on Foreign Relations, 2021). The latter region has emerged as “one of the largest global centres” for the production of methamphetamines in the last three decades (International Crisis Group, 2019, p. 4).

Furthermore, Shan state has been plagued by more than seven decades of armed conflicts, despite a period of relative, negative peace (Galtung, 1996) that lasted from 1989 to 2008. At the heart of armed violence opposing the Burmese armed forces (Tatmadaw) to a wide array of armed groups, lie ethnic grievances and a desire for greater autonomy from Myanmar’s central government. Competition over the exploitation and trade of natural resources (United States Institute of Peace, 2018, p. 94) such as timber and minerals is also fueling tensions. Conflict in Shan state is characterized by great complexity due to the number of actors involved and their interrelations. Such players include – but are not limited to – the Tatmadaw and its affiliated militias as well as ethnic armed organizations (EAOs) such as the Kachin Independence Army (KIA) or the Ta’ang National Liberation Army (TNLA) (Council on Foreign Relations, 2021). Adding a layer of intricacy, there has also been fighting between non-state armed groups, notably between the State Army South (SSA-S) and the TNLA (Rulac, 2021). Moreover, grassroots militias, the Peoples Defence Forces (PDFs) have also emerged all across Myanmar, in opposition to the coup d’etat staged by the military junta last February. The Tatmadaw is seeking to seize back power, putting an end to Myanmar’s transition to democracy that began in the late 2000s.

Many of the armed groups rely heavily on the production and trade of drugs for their survival (Kun Moe Htun, 2018, p. 2). Drugs’ trafficking indeed often represents the main source of funding for ethnic opposition groups (SIPRI, 2009, p. 2) and contributes substantially to the Tatmadaw’s revenues (Marrero, 2021). While actors were actively involved in production of opium from the 1970s to the 1990s, they have gradually shifted to the methamphetamines industry (International Crisis Group, 2019, p. 10). While much has been written about the relations between opium, violence and development in Shan state, very little literature explores the relationship between methamphetamines and conflict, despite the latter drugs having gradually replaced opium in the region. In addition, media reports have shown that the covid19 pandemic as well as political turmoil has led to a surge in methamphetamines trafficking across Shan state (CNN, 2021). Therefore, one may wonder how methamphetamines and violence interplay. What are the connections between amphetamine type stimulants (ATS) and conflict in Shan state? How is the drugs economy fueling violence in this case?  In order to address such questions, we will first look at the shift from opium to methamphetamines in Shan state, before briefly examining the reasons that make the region a hotspot for methamphetamines production and trade. Finally, we will delve into the connection between the drugs and conflict in Shan state, highlighting how the drugs’ political economy is providing disincentives for conflict resolution.

From poppy to “ice”

            The late 1990s have witnessed a diversification in drugs production. The period indeed saw an opening of borders, a shift towards market economy as well as an improvement of infrastructures (TNI, 2009, p. 12). Such changes opened new drugs markets and trading routes, leading the regional drugs trade to flourish. After 2009, increasing tensions between the junta and armed groups fostered a surge in drugs trafficking, as groups were “selling the stocks to buy weapons and resources” to resist against the state (Chouvy, 2014, p. 23). While methamphetamines, in the broader sense, started appearing on the market from the 1990s, the production and consumption of ice is a much more recent phenomenon, dating back to the early 2010s (International Crisis Group, 2018, p. 5). The stark increase in methamphetamine seizure recently suggests a drastic surge in drugs production, all the more so as seizures only represent “the tip of the iceberg” (International Crisis Group, 2018).

Methamphetamines are drugs belonging to the broader category of amphetamine-type-stimulants (ATS): synthetic substances that stimulate the central nervous system (TNI, 2009, p.2), temporarily increasing the consumer’s well-being and productivity (Dupont, 1999, p. 21). “Meths” are produced at industrial scale in Shan state (International Crisis Group, 2020, p. 25). According to Prasad Routray (2018), the drugs business is worth billion dollars. International Crisis Group (2018, p. 16) explains that Shan state has become, to some extent, a delocalized lab for Australian meth cookers (International Crisis Group, 2018, p. 16). Two types of methamphetamines are being primarily produced in the region: yaba as well as crystal meth (also known as “ice”). The former, meaning “crazy medicine” in Thai can be found in the form of pills that combine low-purity methamphetamine with caffeine (UNODC, 2011, p. 61). As UNODC (2011, p. 61) describes, yaba has traditionally been a “working-man’s drug”, used to “enhance physical performance”. Crystal meth, for its part, is mostly taken for recreative use in party settings (Allerton & Blake, 2008, p. 2).

The political economy of ATS differs from that of opium. Methamphetamines trafficking and production has seen a disruption of the “the established farmer-traffickers-cartel links” (Prasad Routray, 2018) with farmers being “taken off the scene”. At the same time, new international actors as well as smaller local players have entered the drug’s trade. Yaba production has been described as a “cooperative system” not controlled by a single entity (International Crisis Group, 2018, p. 10). While ice requires specific equipment, personnel, chemicals and thus large-scale investment (International Crisis Group, 2018, p. 12), yaba has been described as a “cottage industry” (INSCR, 2018, p. 131). Moreover, crystal meth is mostly destined for the export market, whereas yaba is also locally consumed. As International Crisis Group (2018, p. 11) reveals, the trade of ice is “becoming increasingly professionalized, dominated by transnational criminal syndicates operating at huge scale”. A myriad of diverse actors is involved in methamphetamines trade and production: predominantly, cease-fire groups, but also local government-backed militia as well as some local Burmese army units (TNI, 2009, p. 10). According to International Crisis Group (2018, p. 21), the Tatmadaw remains the “ultimate arbiter of disputes” (International Crisis Group, 2018, p. 21) and recipient of illicit rents. Thus, methamphetamine labs are not necessarily found in remote, rebel-controlled areas. In 2018, for instance, the Myanmar central security forces seized 30 million yaba pills and 1,750kg of crystal in Kutkhai, an area “controlled by a militia allied with the Tatmadaw” (International Crisis Group, 2018, p. 11).

The amphetamines market rose as opium production declined (TNI, 2009, p. 1). The phenomenon can partly be explained by bans on opium production imposed in 2003 in the Kokang region and 2 years later in areas controlled by the United Wa State Army (TNI, 2021). As TNI (2009, p. 1) affirms, the shift in drugs production can be described as ‘displacement’. As opium and its derivatives (including heroin)’ availability was reduced, consumers shifted to other kinds of substances (TNI, 2002, p. 2). “A campaign against one drug can lead to the rise of an equally or more dangerous substitute” (TNI, 2009, p. 1). Such bans can also be regarded as part of the broader “global efforts to eradicate opium” (Cohen, 2009, p. 1). From the l990s, different actors at various levels indeed sought to substitute opium cultivation with other cash crops, as poppy cultivation was associated with “primitiveness, backwardness and poverty” (Cohen, 2009, p. 2). As Cohen and Lyttleton (2008, p. 22) sum it up, “in an environment where opium has been increasingly demonized, many addicts have turned to ATS”.

Moreover, in some cases, alternative development projects, often sponsored by the United Nations Office on Drugs and Crime (UNODC), involved resettlement of poppy growers or led them to migrate to other areas. This has caused, in certain cases, “social suffering” (Cohen & Lyttleton, 2008, p. 1), including the drastic reduction of livelihoods as well as a loss of traditional culture and identity. Faced with such changes, individuals may turn to drugs as a coping strategy. In addition, such projects could also be part of nation-building projects seeking to “heighten the state’s governmentality” over ethnic highlanders (Lyttleton, 2004, p. 23).  As Lyttleton (2004, p. 23) writes it, surging ATS use in Southeast Asia is “closely embedded in the social production of a modern subject”. In keeping with that idea, it can be said that methamphetamines are a set of drugs that fulfil capitalist ideals of performance and productivity (Dupont, 1999, p. 21). Increase in the use of ATS is also the reflection of the broader socioeconomic changes taking place in the countries affected, “which have moved from rural agricultural based economies to urban, industrial and market based societies” (TNI, 2009, p. 7). According to Lyttleton (2004, p. 24), ATS use mirrors “new forms of subjectivity that accompany the shift from primarily subsistent swidden agriculturalists to active players in a capitalist modernity relations”.

The very lucrative nature of methamphetamine trafficking also explains its attractiveness. The synthetic drugs are easier to produce than other narcotics and provide “quick returns to investment” (Dupont, 1999, p. 22). International Crisis Group (2018, p. 4) stresses that the trade in yaba and ice “has become so large and profitable that it dwarfs the formal economy of Shan state”. In addition, meth labs are more mobile and harder to detect (Dupont, 1999, p. 22) than poppy fields, which reduce producers’ risks of raids.

Moreover, the two decades of relative calm in Shan state also helped drugs trafficking flourish. Woods (2017, p. 95) goes as far as stating that “large-scale drugs production was born with peace”. As he explains, “ceasefires were paramount in their influence in shaping the drugs trade” (Woods, 2017, p. 95) because, among other explanations, rebels did not have to engage in revolutionary activities anymore and could fully focus on their illicit businesses.

Shan state, drugs, security and violence

            As discussed earlier, most of the world’s methamphetamines production comes from Shan state (UNODC, 2011, p. 61). The drug’s trade and armed conflict “have been interlinked since the 1950s” in the region (International Crisis Group, 2019, p. 3). Shan state’s geostrategic location, at the crossroads between several major trade routes and adjacent to the Chinese and Thai borders partly explain its centrality in both licit and illicit cross-border trade (International Crisis Group, 2019, p. 14). This integration in regional trade guarantees a certain facility to access precursors (chemicals needed to synthetize methamphetamines) (International Crisis Group, 2019, p. 6). Moreover, local and regional markets to export narcotics have been depicted as “huge” (International Crisis Group, p. 6). Infrastructure and connectivity have also substantially improved in Myanmar over the last decades, greatly facilitating drugs transport and logistics (International Crisis Group, 2019, p. 14).

Moreover, Shan highlands are home to “safe havens controlled by army-backed militias or non-state armed groups” (International Crisis Group, p. 6). They have further been referred to as areas plagued by “endemic corruption” (Prasad Routray, 2018). Drugs’ economies “usually thrive” in such “states of lawlessness” (Meehan, 2011, p. 3), that is, in spaces beyond strong state control. Armed conflict also nurtures a culture of impunity, which means that drug traffickers are unlikely to be held accountable for their illicit activities (International Crisis Group, 2019, p. 15).  The very status of Tatmadaw-aligned militias and BGFs grants them “considerable impunity” (International Crisis Group, 2019, p. 15) while the junta enjoys a certain “degree of deniability about their actions”.

What is more, fighting in Shan state has been of relative low-intensity, at least until the mid-2010s (USIP, 2021). This is highly beneficial to meths’ production and trade, as the industry requires certain levels of stability. International Crisis Group (2019, p. 13) employs the expression “predictable insecurity” in explaining how labs need to “remain hidden and inaccessible to law enforcement” and other preying eyes (International Crisis Group, 2019, p. 13). Nevertheless, such facilities must be preserved from “disruptive violence” (International Crisis Group, 2019, p. 13).  The research organization therefore explains that actors involved in the drugs business, an “economic-commercial world of interdependent, entrepreneurial patron-client clusters” (International Crisis Group, p. 21), actually seek to avoid fighting, “as much as practicable”.

Drugs “perform multiple functions in conflict areas (SIPRI, 2009, p. 2). They can, inter alia, act as a coping mechanism for populations, finance armed actors and provide revenues for illegal entrepreneurs. As International Crisis Group (2019, p. 25) reports: drugs trafficking in Shan state, “while it does not necessarily produce immediate or intense armed clashes, greatly undermines future peace prospects”, (International Crisis Group, 2018, p. 25). The drugs’ trade, creates “a political economy inimical to peace and security” (International Crisis Group, 2019, p. 4). In certain cases, a direct connection can be drawn between conflict and drugs. Violence in Shan state can partly be explained by “turf wars” (SIPRI, 2009, p. 1) and clashes between actors in the methamphetamines trade (International Crisis Group, 2018, p. 19). Militias and armed groups may indeed be competing for control over the trade (International Crisis Group, 2018, p. 13). Moreover, different players might have conflicting agendas. The TNLA, for instance launched an offensive against the “scourge of illegal drugs” (International Crisis Group, 2018, p. 19). Its new anti-drugs policy was therefore directly conflicting with the agenda of other groups involved in the meths business.

However, it seems that the bulk of tensions has more to do with the political economy that revolves around drugs trade. As SIPRI (2009, p. 1) explains: “in the context of a socio-political conflict, drug-businesses become a ‘conflict-resource’”. Armed group have no incentives to disarm and demobilize as weapons and territorial are “essential for their lucrative revenues” (International Crisis Group, 2018, p. 23). Even for actors not directly involved in drugs production and trafficking, the latter’s economy makes up an important a substantial part of their revenues, thus “also locking them into the drug economy” (International Crisis Group, 2018, p. 23). The meths business in Shan state has become so profitable that it “hinders efforts to end the state’s long-running ethnic conflicts” (International Crisis Group, 2018, p. 4).

Furthermore, drugs trafficking nurtures a “culture of bribery” (International Crisis Group, 2019, p. 4) from which the military profits. This, in turn “adds to the grievances” that ethnic communities are holding against the central government (International Crisis Group, 2019, p. 4). The trade indeed requires “bribing officials for protection, support or to turn a blind eye” (International Crisis Group, 2019, p. 23). As Meehan (2011, p. 14) argues, the Tatmadaw has indeed created a “system of rents within the drugs economy”. The military junta retains ultimate authority over the so-called “Border Guard Forces” (BGFs) as well as other militias and benefits from their activities through taxation, corruption and protection money (International Crisis Group, 2019, p. 23). However, the existence of such non-state armed groups “can only be justified in the context of the broader ethnic conflict in the state” (International Crisis Group, 2019, p. 23).

On the other side, the possibility to “engage freely in resource rent-seeking”, (Woods, 2017, p. 82) is “a carrot for strongmen to be called upon as counter-insurgency agents together with the Tatmadaw”. The Burmese state indeed tries to coopt militias into becoming BGFs under the commandment the central government by offering them “a free hand in the drugs trade” (Meehan, 2011, p. 22). As Meehan (2011, p. 389) shows, the state “has offered legal impunity to groups involved in the drugs trade following their signing of ceasefire agreements”. Furthermore, the scholar (2011, p. 377) explains that the literature has often connected the political economy of drugs with state failure. However, in the case of Myanmar, state’s involvement in the drugs trade can be analyzed as an arena through which it “constructs” or “consolidates” of its power and authority (Meehan, 2011, p. 376). Ceasefires play a key role in that endeavor and drugs trade can, to some extent, be described as an element of what Woods (2011, p. 3) calls “ceasefire capitalism”. The scholar coined the later term to describe how the Burmese government was using ceasefires as a postwar strategy to increase its control over territories, resources and populations (Woods, 2011, p. 7)

Finally, the immensely profitable drugs-business attracts transnational criminal organizations, which leads to increased criminal violence and militarization in the concerned areas (International Crisis Group, 2009, p. 25). The drugs business is tied to the China-Myanmar casino-economy and, it is more broadly part of an interlinked illicit economy in the area. As Crisis Group (2019, p. 6) describes: “the civil war has created the conditions for a corrosive political economy dominated by armed actors operating with impunity”. To put in a nutshell, “if the drugs trade party is a symptom of Shan state’s conflicts”, it is also an obstacle to sustainably transform them (International Crisis Group, 2019, p. 4). Drugs’ trafficking belongs to a shadow economy that sustains low intensity violence.

Conclusion:

            Myanmar’s Shan state – a hotspot for global drugs production since at least half century – is currently one the largest exporter of methamphetamines in the world. The latter have gradually replaced opium production as a result of socio-economic and political changes, including the integration of Myanmar into a globalized capitalist economy and the associated ideas of modernity. Attempts to eradicate poppy cultivation – perceived as backward and going against development efforts – by various actors at different levels also helps explain the shift to methamphetamines consumption and production in Shan state. Easier to produce than other narcotics and extremely lucrative, meths represent an attractive business for transnational criminal organizations as well as armed groups seeking solid sources of revenue. Drugs production in Shan state can indeed not be read separately from the more than seven decades of armed conflict going on in the region.

Drugs trafficking and armed violence maintain a very close relationship. However, in the case of Shan state, conflict seems not to be a direct consequence of methamphetamines production. The violence rather stems from the political economy in which drug production and trade is embedded. The methamphetamines business, characterized by a culture of bribery and impunity is indeed carried out by a network of interdependent militias and other armed groups with different allegiances and agendas. The Myanmar military junta, as it benefits from the involvement of its affiliated militias in the drugs trade, has no incentive to seek sustainable peacebuilding in Shan state. Moreover, it has used the meths industry in attempts to expand its control and governmentality, particularly during ceasefires. While drugs industries flourish in troubled areas, they still require certain levels of stability. Shan state’s “predictable insecurity” seemed to fulfil such exigencies until the late 2010s. With the covid19 pandemic overwhelming state services, political turmoil in the aftermath of the February coup and the associated formation of new armed groups, methamphetamine production and trade may well have a bright future ahead in Shan state.

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