How Myanmar's jade industry is helping to keep coup leaders in power

Myanmar’s junta tightened its grip on the country’s lucrative jade industry in the run up to the February 1 coup, boosting the military’s coffers and personally enriching its generals, a new investigation by Global Witness has found.

Coup leader General Min Aung Hlaing’s family has been among the alleged beneficiaries of the multi-billion-dollar trade, with the report revealing fresh accusations that his son has received bribes to facilitate jade mining.

The investigation, “Jade and Conflict: Myanmar’s Vicious Circle,” bolsters fears that the gemstone industry is not only helping to keep the military afloat after it seized power from the civilian government, but is also softening the financial blow for individuals targeted by global sanctions.

“Our revelations about the military’s increased control of the multibillion-dollar jade trade is emblematic of the Tatmadaw’s broader capture of valuable sectors of the country’s economy, which funds their abuses, fuels conflict and helped enable their recent illegal power grab,” said Keel Dietz, Myanmar Policy Advisor at Global Witness, using the official name for the country’s armed forces.

In a Telegraph interview, Mr Dietz said while the jade and gemstone industry made a “meaningful” contribution to the military’s budget, that its potential for “personal wealth and patronage opportunities” played a more important part in holding the corrupt regime together.

“The military provides access to natural resources to its political allies in exchange for loyalty and support and that is extremely meaningful as well,” he said.

Hpakant, in northern Myanmar’s Kachin State, is home to the richest jade mines in the world, but for years it has also been at the heart of a vicious circle of exploitation that has helped to arm violent internal conflict rather than benefit the local population.

The trade has helped to fund ethnic armed groups waging long-running battles for autonomy with the junta, but it is the Tatmadaw that has dominated the industry and thwarted its reform.

In 2016, Myanmar’s new National League for Democracy government, led by Aung San Suu Kyi, suspended all jade licencing, promising to reform the troubled sector.

Global Witness’ findings reveal that Tatmadaw officials, military companies, and their business allies frequently ignored the licencing suspension to continue to enrich themselves – taking advantage of the illicit nature of the industry where an estimated 90% of jade is smuggled out, mainly to China.

The NGO alleges senior officers paid large sums of money to secure top posts in Hpakant, allowing them to collect massive bribes and dole out mining authorisations to companies owned by allies.

The group says it has credible information that bribes allegedly paid to the military’s Northern Commander to allow the import of dynamite were paid up the chain to Min Aung Hlaing’s son, Aung Pyae Sone.

Rampant corruption in the jade trade makes it harder for international sanctions to dent both the financing of the junta and the personal wealth of its leaders.

The US and the UK have slapped sanctions on Myanmar’s gems trade and military-run conglomerates with significant stakes in the industry, as well as on high-ranking members of the junta.

In March, the US treasury announced sanctions against Aung Pyae Sone and his sister, Khin Thiri Thet Mon, for owning business holdings “which have directly benefitted from their father’s position and malign influence,” although it did not specifically mention the gems industry.

Global Witness has called on the international community to immediately ban the import of all jade and gemstones mined in Myanmar. It said China, as the main driver of demand for jade, also has a key role to play in addressing its role in corruption and conflict linked to the trade.

“The grip of the military on the jade sector is so strong that it would be nearly impossible to purchase jade without providing money to the generals and their allies,” said Mr Dietz.

While increased curbs on the gemstone trade could damage the junta’s interests, human rights groups and activists have demanded that oil and gas companies, which have significant investments in Myanmar, also play a bigger role in cutting off the regime’s finances.

Earlier this month, the Special Advisory Council on Myanmar (SAC-M), an independent group of international experts, urged G7 leaders to penalise the military-controlled Myanmar Oil and Gas Enterprise (MOGE) that earns the junta massive revenues.

The US and French oil giants Chevron and Total have long had ties to MOGE.

In May, they announced the suspension of some payments from a gas joint venture that would have reached Myanmar's junta, earning praise from pro-democracy activists for taking an important first step, but still facing demands to do more. Both companies were contacted for further comment.

Professor Yanghee Lee, a SAC-M founding member, said democratic governments and global companies had to step up to meet United Nations principles on business and human rights when dealing with Myanmar.

“I think this is where the test is up to the governments – how willing they are to push forward on this issue? I don’t see that happening yet,” she said.