Cash for Conflict: The Relationship Between Myanmar's Illegal Economy and Civil War

Key Chapter Title List

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

Document Introduction

This report, released by the Global Initiative Against Transnational Organized Crime, provides an in-depth analysis of the deeply entrenched symbiotic relationship between the illicit economy and the ongoing armed conflicts within Myanmar. The report indicates that for over six decades, the illicit economy has fueled various insurgencies and ethnic conflicts in Myanmar, shaping the country's political and conflict trajectory and impacting regional geopolitics. Following the military coup in February 2021, this crime-conflict nexus has become more complex and prominent, with illicit economic activities playing a central role in fundraising, power maintenance, and territorial control for various factions.

The report systematically outlines the dynamic changes in Myanmar's major illicit economic sectors post-coup, including crimes related to flora and non-renewable resources (such as timber and jade), human trafficking and cyber scams operating from scam compounds, weapons and ammunition smuggling, as well as the heroin and synthetic drug trade. Citing data from the Global Organized Crime Index, the analysis shows that Myanmar's criminality score has risen to the highest globally, reaching or approaching peak risk levels in key markets such as synthetic drug trade, heroin trade, and weapons trafficking. These markets are not only highly profitable and cause severe social and environmental damage but also directly provide crucial financial flows for the Myanmar Armed Forces, various Ethnic Armed Organizations, and criminal networks.

The core chapters of the report delve into the specific manifestations of the crime-conflict nexus in Myanmar. Historically, the ceasefire agreements of the 1990s gave rise to so-called ceasefire capitalism, where the military tacitly allowed ethnic armed groups to engage in drug and resource trade in exchange for temporary peace, deeply embedding the illicit economy into local political structures. Currently, with the weakening central authority of the State Administration Council and the rising strength of ethnic armed organizations, the illicit economy has become the financial foundation for these groups to consolidate territories, provide social services, and even exercise quasi-state functions. The report warns that any future political solution must confront this reality, making the dismantling of illicit economic markets a core objective, although this will be a highly politicized process accompanied by significant risks.

The report further analyzes how Myanmar's national and societal resilience against transnational organized crime has sharply deteriorated. Since 2021, due to the collapse of governance structures, loss of territorial control, and the instrumentalization of the judicial and law enforcement systems, Myanmar's resilience score has plummeted, resulting in the largest gap between criminality and resilience globally. This institutional collapse presents enormous challenges for any future government attempting to address the illicit economy. In its conclusion, the report emphasizes that the international community, when supporting Myanmar's peace process, must integrate addressing the illicit economy into ceasefire negotiations and peacebuilding frameworks, avoiding the repetition of using the illicit economy as a bargaining chip for peace. Simultaneously, support should be provided to active civil society organizations within Myanmar, and the expertise and perspectives of regional actors should be incorporated into discussions from local to multilateral levels.