Myanmar’s rebel groups are winning the civil war

That old iPhone in your hand and the Peugeot you forgot to fill with gas might just tie you to one of the most resource-rich areas in the world: Kachin, in northeastern Myanmar.

And that might be why, when word emerged that the rebel Kachin Independence Army just seized control of the country’s rare-earth mining hub of Pangwa, the world suddenly remembered there’s a civil war happening in Myanmar.

Here’s a quick recap of how we got here —

• Myanmar’s military ruled the country for decades before allowing a tentative democratic transition from 2011
• Voters went on to elect Nobel laureate Aung San Suu Kyi and her National League for Democracy in back-to-back landslides
• But for the military, her 2020 win was the last straw – it claimed fraud then staged a coup in 2021, famously caught on video behind a Zumba class.

Locals weren’t happy, and pro-democracy protestors soon flooded the streets until the military brutally cracked down and declared a state of emergency, promising elections in a year. Those elections never came.

And as the junta stifled the protests, dozens of the country’s ethnic groups took up arms.

Arguably the junta’s biggest headache has been the Kachin Independence Army (KIA). Formed back in the 1960s, the KIA has long advocated for an autonomous state for the Kachin people, with a capital (Laiza) right on the China-Myanmar border. The Myanmar military fought skirmishes with the group over the decades, but signed a ceasefire in 1994.

There were still occasional flare-ups, but the 2021 military coup really upended the chess board. As the country spiralled into civil war, the KIA eventually joined the absolute alphabet soup of Myanmar’s other militias seeking to end military rule.

But throughout it all, the KIA has really had its eye on Kachin’s resource rich areas, seizing oil fields, gold mines, amber hubs, and now rare-earth mines. Why? Neighbouring China buys this stuff from Kachin, and controlling the supply holds the promise of both leverage and legitimacy for Kachin groups, while cutting off revenue for the heavily-sanctioned junta.

And that’s all happening against the backdrop of two broader trends:

• Nationally, Myanmar’s military has now lost control of around half the country, which explains why it’s suddenly become eager for peace talks, and
• Internationally, it all comes just as the world needs more of Kachin’s critical minerals, which play a key role in sectors like tech, EVs, and defence.

INTRIGUE’S TAKE

So what happens now? A lot depends on China. It has vast interests across Myanmar: hydro plants, oil and gas, plantations, and yes, its firms also run most of Myanmar’s rare-earth mines. To boot, you could trace part of this civil war back to an earlier Myanmar regime’s decision to sign a border treaty that ceded Kachin territory to China.

That level of history and influence has led to significant anti-China sentiment in Myanmar — someone fire-bombed one of China’s local consulates just last week.

It also partly explains China’s response to date: Beijing wants its above interests protected, and its border stabilised. So it’s brokered short-lived ceasefires, extracted militia pledges, and just hosted KIA’s political wing for talks, before closing border gates with Kachin on Saturday when those talks didn’t pan out as hoped.

But that’s all led to frustration among Myanmar’s generals who, on the back foot, are now openly calling for China’s help. And interestingly, some of the help China is offering publicly includes to “restart the process of democratic transformation” — not typically a Beijing forte, but it’s partly a move to box out China’s democratic rivals.

Either way, for China, there are no easy options here. And while it figures out its next move, keep an eye on the prices of locally-sourced metals like dysprosium and terbium.

Also worth noting:

• China’s customs authority reported ~$1.4B in rare-earth imports from Myanmar last year. Probably around $400M of that hailed from around Pangwa.
• Aung San Suu Kyi has been detained since the 2021 coup.
• US National Security Advisor Jake Sullivan says Washington is floating the idea of a critical minerals marketplace to decrease allied dependence on China.