This paper was published by The Diplomat on May 20. To see the published version, please click:

 http://thediplomat.com/2015/05/can-china-untangle-the-kokang-knot-in-myanmar/

Special Administrative Zone: a Wonder Drug for Kokang Problem

Over the past month, armed conflict broke out again in Kokang, displacing 100,000 people from their homes. While most fled to relatively safe places in Shan State, or other neighboringstates in Northern Myanmar, tens of thousands fled to China. In its hostilities with the Myanmar National Democratic Alliance Army (MNDAA), the Myanmar military has relied more on air strikes than in the past, especially in comparison with its attacks on the Ta'ang National Liberation Army (TNLA), and the Kachin Independence Army (KIA) and United Wa State Army(UWSA) Myanmar fighter planes have sometimes also crossed over into Chinese airspace. For example, a fighter plane dropped bombs inside the Chinese border on March 13, killing 5 people and wounding 8. Faced with public outrage, China resorted to strong response, the Vice Chairman of the China Central Military Commission having an emergency call with Myanmar commander-in-chief on March 14. 

With large numbers of refugees crossing the border and citizens getting injured or killed, the conflict cannot be solved through usual diplomatic means. Chinese citizens are demanding that China adopt stronger measures in response, but China has yet to resort to a military solution. To present its response has included the reinforcement of border controls, negotiations with the Myanmar government, and involvement in the 7^thround of ceasefire negotiations. What should China do next? Specifically, is it possible for China to resolve the ongoing problem in north Myanmar, and especially in Kokang? To answer this question, we need to carefully review the history and current state of affairs in Kokang.

Kokang is located near the Chinese border, and consists of a 2,000 km² territory with population of around 150,000 people, 90% of whom are ethnic Chinese. Although the Kokang account for only 7% of the ethnic Chinese population in Myanmar, they are unique among Chinese groups in the country, as they were defined as an ethnic minority – Kokang, by British India, due to their high population density. The Kokang area is known for cross-border settlements of ethnic minorities, including Kokang Chinese, Kachin, Shan, Wa and Ta'ang, among others. Expectations of a high level of autonomy on the part of these ethnic groups date back to the signing of the Panglong Agreement in February of 1947. After the July 1947 assassination of General Aung San, who signed the agreement on the behalf of the Myanmar government, it was never implemented, thus becoming the root cause of the armed conflicts we witness today.

Kokang was first ceded to British India by China in an agreement signed in 1897. After its independence in 1948, Kokang became an ethnic autonomous area of Myanmar. The China-Myanmar Border Agreement of January 1960 clarified sovereignty over several contested areas, but Kokang was not included in this agreement. Practically speaking, from 1897 until the present, Kokang has been governed by ethnic Chinese. From 1948-1989, as a result of broader Cold War politics, Northern Myanmar was plagued by a range of conflicts, including those between the central government of Myanmar and local governments, between the ruling party and the Burmese Communist Party, and between local armed groups, the Chinese Communist Party and the Chinese KMT. Following the fall of the Chinese KMT and the Burmese Communist Party, the conflict between the Central government and the local armed groups became the primary conflict in Northern Myanmar.

Kokang is slightly different, as there is conflict between different factions of ethnic Chinese groups. From1989 to 2009, a series of five conflicts emerged, primarily between Peng Jiasheng and his family and the Yang family. The last round of this conflict resulted in the withdrawal of Peng from the Kokang area for several years. After the “August 8 incident”of 2009, Bai Suocheng replaced Peng Jiasheng as the leader of the Kokang, and the Kokang started to enjoy stability and economic development. Nonetheless, the Kokang people continue to suffer from discrimination, most of them lacking an ID card, or having only a temporary ID card with many restrictions. As a result, some Kokang people have tried to obtain a Chinese ID instead. The Myanmar government has claimed that Chinese citizens have become involved in armed conflicts in Myanmar after finding Chinese ID cards on the bodies of casualties. Some Western observers point out though that due to the issue with ID cards, it is hard to conclude that Chinese citizens have joined in Peng’s army.

The “August 8 incident”, saw the vice commander of MNDAA collaborated with the Myanmar army to displaced Peng and his family. The Shan State Special Area Number One was replaced by the Kokang Temporary Executive Committee, and became one of the six autonomous areas approved by the Myanmar government in 2011. Some members of the MNDAA were dismissed, while some joined the border defense army (1006 Border Defense Battalion). Peng, who had controlled Kokang for 20 years, was easily defeated for several reasons. First, while he remained cautious early on in his rule, after his power was consolidated, he started to attack dissidents, resorted to nepotism, and encouraged drugs and gambling (Kokang is thus known as “little Macau”). Revenue from the Kokang business activities went into the pockets of members of the Peng family. Most Kokang people did not benefit from his rule, and increasingly sought his removal.

Bai on the other hand, saw some achievements. Steps to control drugs in the region had moved only slowly since 1991 under Peng. After Bai took power, he realized full control over drugs in Kokang for the first time in over 200 years at the end of 2002. Since 2009, he encouraged agriculture (mainly sugarcane), water conservancy projects, and Burmese language education. By 2012,sugarcane became the second largest industry in Kokang, next to gambling. At the present, many projects, including 125 cross border industrial parks, are under construction. These will contribute greatly to economic development in Kokang. Meanwhile, his son, Bai Yingneng has become the secretary of the Kokang Regional Committee of the Union Solidarity and Development Party (USDP). 

After leaving Kokang, Peng traveled around Thailand, Malaysia and Singapore for several years. In 2012 he reached out to the Kachin New Democracy Army (NDAK), and later also to the Kachin Independence Army. He was allowed to establish a base and train soldiers in Kachin State, and began planning to return Kokang. By the end of 2014, he had built an army of 1,000 men under the name of the MNDAA. With general elections just around the corner at the end of 2015, Peng say an opportunity, as different interests have caused conflicts between the Myanmar government and local armed groups to escalate. After several of his soldiers were killed on their way back to home base, Peng responded by launching an attack against the Myanmar army stationed in Kokang on February 9, and managed to temporarily take control of the capital of Kokang. He released “a letter to the global Chinese community” on February 13 in order to influence public opinion. As a result, many Chinese believe that this is a war between the Myanmar government and Kokang Chinese. After Chinese citizens were killed by Myanmar army bombs, public anger was further aroused in China. Many Chinese people now demand a strong response from the Chinese government.

In fact, the real conflict is between Peng and Bai, as well as between Peng and the Myanmar government. Declaring war on Myanmar government because of several dead soldiers, and using this as an excuse to regain his power, is the act of a warlord. It has no legitimacy at all. Peng’s letter to all Chinese is only a means of serving his personal interests by arousing nationalistic sentiment. Peng has been active in Kokang for decades. The secret of his success has been to change partners at the right time. He worked with the Myanmar government, the Burmese Communist Party, the Chinese Nationalist Party, the Taiwan government, and with many local armed groups. The only thing unchanged is his pursuit of his personal interests. He was willing to allow drugs and arms smuggling, which are forbidden by Chinese government. He was wanted by the Chinese police in the 1980s and 1990s. Many of his drug dealers were arrested by Chinese police. Before August 2009, he even provided weapons to separatists in Xinjiang and Tibet. This is what triggered the “August 8^thincident.”Peng was willing to do anything to survive, but his acts have nothing to do with protection of the Chinese people. Especially this time, his actions are resulting in little more than the destruction of Kokang. Large scale and long term armed conflict will only devastate livelihoods and cause large numbers of refugees. The author was told by an expert that if Kokang held elections, Peng would undoubtedly lose.

The latest developments demonstrate that the Myanmar army is winning the conflict. The Myanmar media also thinks that Peng is seeking revenge, with Myanmar believing that the KIA is behind the MNDAA and TNLA. Therefore, the government will exclude the three armed groups in the 7^th ceasefire negotiations. It is said that all parties only disagree on 4 points in the 7 chapters of the agreement. Local armed groups do not have many objections to the agreement, except that they do not want U Thein Sein to win in all aspects. It means that, whether they can reach agreement after negotiations resume following March 30 will depend on an exchange of interests. 

The Chinese government has responded so far by observing the situation, while preventing conflict from crossing over the border into China. After citizens were killed by bombs, the Chinese government took rapid actions, including diplomatic protests, strengthening border and air controls, and demanding a full investigation from Myanmar side. Vice Chairman of the China Central Military Commission, Fan Changlong demands tighter control of the situation by the Myanmar army. Otherwise China will take immediate action.

The armed conflict has jeopardized the lives and property of Chinese citizens. Bombs were dropped only 1 km from the Chinese border. Because of inertia, such bombs could cross as deeply as 2.2 km into Chinese territory. This means that Myanmar fighters cannot technically prevent such problems, unless there is a no-fly zone over the border. Nevertheless, such a no-fly zone is what Peng would want. Moreover, the conflict also influences China-Myanmar relation. Many Myanmar people and media believe that Peng was armed by the Chinese government to take back his territory.

The current response from China has many disadvantages. If there were more citizens killed, the Chinese government will find it hard provide an outlet for public anger. Moreover, the conflict jeopardizes the implementation of the “One Belt and One Road” strategy in Myanmar. In many ways, Myanmar will be a pivot country of the strategy.

The ceasefire negotiations have gone on for seven rounds, yet Peng can start a new war after disappearing for years. This indicates that ceasefire cannot solve the problem. A new way to address the root cause is needed, even if it means to revise the 2008 constitution to enforce the Panglong Agreement.

To be more specific, Chinese government needs to create more favorable environment for peace in Kokang. First of all, the Chinese government needs to demand that Peng drop his weapons and negotiate with the Myanmar government. The Myanmar government needs to provide a reasonable arrangement for Peng. Some may worry that Peng has been excluded from the ceasefire negotiations. Weapons are the only leverage that Peng has, so he will not give those up. But U Thein Sein has been implementing the reconciliation policy for the past few years. He is willing to offer a way out for local armed groups. With the support of China, Peng can find his own way out. Secondly, if Pend refuses to negotiate, China should increase military, technological and financial support to Myanmar to defeat Peng. Thirdly, China should strengthen control of ultimate users of exported arms to cut the weapons supply to Peng. One fact is that both Myanmar and local armed groups have many weapons from China. This situation contradicts with overall interest of China. Apparently China needs to better control its arms exports. Finally, China should use the advantages of the Kokang area, and make it a model for implementation of the Silk Road and the Maritime Silk Road Strategy.

A prosperous Kokang can benefit both China and Myanmar. Establishing a Kokang Special Administrative Area (a step forward from the current autonomous area), where the Myanmar government alone is responsible for defense and diplomacy, might be a viable solution. This will need a genuine implementation of the Panglong Agreement, and to go beyond the 2008 constitution, which is not recognized by local ethnic minorities.

The Special Area will have no armed groups (as does the current autonomous local government), but its administrative independence must be guaranteed by law. Since it is close to China, it could become another Muse City, which is known as the “Shenzhen of Myanmar,” or even the Hong Kong of Myanmar. The economic benefits can help resolve problems associated with drug production and manufacturing. After the Myanmar government took over drug control in 2009, the drug problems revived to some extent. It seems that Bai is doing better than Myanmar government when it comes to drug control.

For the Myanmar government, it should also prevent the revival of armed groups. The autonomy of Kokang can provide economic benefits. It can also set an example for Wa and Kachin State. For the Chinese government, a stable Kokang is beneficial to the Bangladesh-China-India-Myanmar Economic corridor, the oil and gas pipeline and other transportation infrastructure, and protection of ethnic Chinese in the area. It is necessary if China wants to move from “a regional power with global influence” to “a comprehensive global power”.  (Translated by Jason  Tower)