Wealth Accumulation in Conflict: The Illegal Economy and the Civil War in Myanmar

Key Chapter Title List

1. Abstract
2. Background: The Crisis of Rampant Illicit Trade
3. The Illicit Economy Since the February 2021 Coup
4. Flora, Fauna, and Non-Renewable Resource Crimes
5. Human Trafficking and Online Scams
6. Weapons and Ammunition Smuggling
7. Heroin and Synthetic Drug Trade
8. The Crime-Conflict Nexus in Myanmar
9. Crime, Conflict, and Ceasefire Agreements
10. Current State of Resilience
11. Conclusions and Recommendations

Document Introduction

This report is published by the Global Initiative Against Transnational Organized Crime (GI-TOC) as part of the United Nations Security Council's Illicit Economy Observatory series. Based on research from its Asia-Pacific Illicit Economy Observatory and citing data from the 2021 and 2023 Global Organized Crime Index, it aims to provide an in-depth analysis of the evolution of Myanmar's illicit economy and its intricate interplay with the country's protracted armed conflicts—the so-called crime-conflict nexus—following the military coup in February 2021. The report indicates that the illicit economy has not only fueled decades of insurgency and ethnic conflict in Myanmar, shaping its domestic politics and conflict trajectory, but also profoundly influences regional geopolitics. Currently, understanding the role of the illicit economy in the regional economic and power dynamics puzzle is crucial for any effort seeking a political solution.

The report first outlines the current state of Myanmar's major illicit markets and their connections to armed conflict post-coup. It focuses on analyzing six key criminal markets: weapons trafficking, human trafficking, flora/fauna and non-renewable resource crimes, and the heroin and synthetic drug trade. According to the Global Organized Crime Index, Myanmar's criminality score has risen from the world's third highest in 2021 to the highest in 2023 (8.15 points), with the largest score increases seen in non-renewable resource crimes, human trafficking, and flora/fauna crimes. The report details the operational models of each market, the involved criminal and conflict actors, and their changes since the coup. Special attention is given to the proliferation of online scam centers, the predatory extraction of natural resources (such as jade and timber), the evolution of weapons supply chains, and how the drug trade finances various conflict parties.

The core section of the report delves into Myanmar's crime-conflict nexus. The study points out that proceeds from the illicit economy not only fund the war efforts of both state and non-state armed actors (such as the Myanmar Armed Forces and various Ethnic Armed Organizations) but also support bargaining and backroom deals over power, sovereignty, and security in border areas. Historically, ceasefire agreements in the 1990s directly supported and deepened the embeddedness of the illicit economy within regional political structures, forming "ceasefire capitalism." Today, criminal actors are no longer seen merely as spoilers of peace but can also become partners for peace. The report warns that any future political solution must confront the issue of the illicit economy, but attempts to combat illicit economic interests will be a highly politically risky endeavor.

Finally, the report assesses that Myanmar's resilience to organized crime (i.e., the capacity of state and non-state actors to resist and disrupt organized criminal activities) has deteriorated sharply. Between 2021 and 2023, its resilience score plummeted from 3.42 to 1.63, resulting in the largest gap between criminality and resilience scores globally. This is primarily attributed to the weakening governance structure of the State Administration Council, loss of territorial control, and the collapse of the criminal justice system. In the conclusions and recommendations section, the report emphasizes that any effort to resolve Myanmar's conflict, whether through a federal or regional solution, must make dismantling illicit economic markets one of the core objectives of any future political settlement and peacebuilding plan. This requires rebuilding institutional and societal resilience and ensuring support from the international community and the UN system in this area. Simultaneously, the report acknowledges the indispensable role of civil society organizations within Myanmar and in exile in exposing the harms of the illicit economy and informing international intervention, calling on the international community to recognize and fund their work.