From remarks by U.S. State Department Spokesperson John Kirby regarding the recent arrests of Patrick Khum Jaa Lee and Chaw Sandi Tun at the October 15 Daily Press Briefing in Washington, DC.
“On Myanmar, we’re disappointed to hear reports that police have arrested and charged Patrick Khum Jaa Lee, the spouse of International Women of Courage Award recipient May Sabe Phyu, under the 2013 telecommunications law, reportedly in response to a Facebook post. We understand that charges have also been filed against Chaw Sandi Tun under the electronic transactions law, also reportedly in response to a Facebook post.
The use of such laws to restrict freedom of expression directly contradicts democratic principles and the government’s own stated commitment to promote political reform and respect human rights. Freedom of speech, including speech that discusses the military and other government institutions, is integral to a democratic society. And we call on authorities to release these individuals immediately and unconditionally.”
A report just released by Global Witness illuminates the staggering theft of billions of dollars worth of jade revenue by a nexus of military and business tycoons, and drug lords, that have long dominated Burma’s legal and illegal economies. The vast majority of Burmese jade goes to China, yet around 50 to 80 percent of this is smuggled illicitly over the border. In effect then, only around a third to a half of the entire revenue from jade, or $12.3 billion, ends up in state coffers—the remaining $20 billion or so is sold off illegally. Rather than contributing to public spending, it goes straight into the pockets of dominant figures in this nexus, and helps sustain their position as key power brokers in Burma.
The jade industry is referred to Global Witness as the “big state secret” in Burma, and for good reason. Several of the biggest companies in the trade are patronized by figures right at the top of the politico-economic hierarchy—former dictator Than Shwe, current Livestock Minister Ohn Myint, and drug lord and financier of the United Wa State Army, Wei Hsueh-Kang, to name but a few. Together their companies recorded hundreds of millions in official pre-tax sales in 2014, a figure that doesn’t include the greater revenue earned from unofficial sales.
Those who profit most from jade have something of a symbiotic relationship with the trade. For people like Ohn Myint, a former military commander-cum-politician, the wealth they have accrued has helped to buy a degree of power that ensures their continued access to the industry’s profits. The wealth-power relationship that underpins the economic hierarchy in Burma means that to lose this access to jade profit, possibly as a result of a more level economic playing field, could threaten their political preeminence and, ergo, future economic wealth. It is therefore in their strongest interests to ensure the industry maintains the veil that has allowed billions to be quietly siphoned out of the state budget, and hence why efforts to open it up to scrutiny will meet with heavy resistance.
The location of the most lucrative jade mines adds another sinister dimension to the industry. Billions of dollars of jade are mined each year from a site in Kachin State that is contested by both the government/military and the Kachin Independence Army (KIA). They have been fighting one another since 2011, when a 17-year ceasefire broke. A principle reason for the resumption of fighting rested on the destructive nature of the 17 years of “peacetime” experienced in Kachin State, during which the government (and Chinese companies) took control of much of the region’s natural resources, jade included, yet distributed virtually none of the revenue gained back to Kachin civilians.
Amid a push over the past two years by the government to broker another ceasefire, extraction of jade soared, with 2014 seeing the some of the highest output on record. One explanation is that those with vested interests in the industry knew that any ceasefire would result in stronger demands for revenue sharing by the Kachin, and therefore upped their operations to extract as much as possible before the competition widened. If true, this gives weight to theories that the conflict is highly profitable for those with stakes in jade—any ceasefire backed by the Kachin would have to have enshrined fairer revenue distribution, something that would have cut heavily into the interests of those currently in control of the mines. Hence there are powerful forces in the jade industry that have vested interests in keeping the conflict going, as do the lower-rung officers stationed in Kachin State to fight the KIA who extort significant amounts of money from the jade miners that pass through military checkpoints en route to markets in China.
Global Witness has questioned whether the siphoning off of jade revenue could be the “biggest natural resource heist in modern history”. The vast polarization that results from the disenfranchisement of millions civilians to benefit a small elite network will be largely unchanged by whatever limited shift towards civilian rule results from elections next month. Whoever moves into positions of influence after the vote will know that any real attempt to upend this hierarchy of power will invite the fiercest of resistance.
As the report notes, the estimated $31 billion gained from jade sales in 2014—both officially and unofficially—equates to around 48 percent of Burma’s official GDP. But only one percent of state spending is sourced from the mining sector—more comes from oil and gas, despite revenue from these paling in comparison to Global Witness’s estimations of jade revenue. This gives some indication of the inordinate amount of wealth being mined from Burma’s north that completely bypasses the public. Viewed against the backdrop of the World Bank’s independent assessment last year that 37.5 percent of the country lives in poverty, the figures show how significant the human cost of state-sanctioned corruption in Burma can be............
Unchecked smuggling and endemic fraud gives the lie to modest official valuations of Burma’s multi-billion dollar annual jade trade, a new report by Global Witness claims.
Through information gathered over the course of a one-year investigation, the London-based resource economics watchdog has estimated 2014 trade in Burma’s most profitable natural resource to be worth US$31 billion [≈ Harvard University endowment in 2011]. That would be three times higher than the official figure of $12.3 billion [≈ cost of 1972 Hurricane Agnes] in jade sold to China, the destiny for almost all of Burma’s unearthed jade.
To put these astronomical figures into context, natural gas generated export revenues of $4.2 billion[≈ net worth of Richard Branson, business magnate, 2011] for Burma in 2014. Unlike the gas industry, which is afforded a degree of explicitness by the international gaze affixed to multinational corporations such as Shell and Total, Burma’s jade industry is unique in its opacity. And that is just how shadowy former junta profiteers, including former army chief Than Shwe, like it, Global Witness says.
Raw jade (PHOTO: Wikipedia)
The largest deposit of fine-quality jade in the world is found in a militarised dark spot in Burma’s northern Kachin State. War and peace has been dealt over the Hpakant region, where in the surrounding hills a vicious conflict between the Kachin Independence Army (KIA) and Burmese government forces continues into its fifth year. But half a decade of fighting has not seen a downturn in jade mining in the area, which sits just a stone’s throw from China, where demand for the “stone of heaven” has never been greater.
On the contrary, satellite imagery provided by Global Witness in its report titled Jade: Myanmar’s ‘Big State Secret’ details massive expansion in mining operations in the area over the past ten years. Operations have continued to intensify in the period since 2012, when vicious fighting in the Hpakant region escalated into the bloodiest chapter of an already one-year-old war between Naypyidaw and the KIA. Official jade figures detail a huge leap in profit revenues almost across the board between 2013 and 2014.
Insecurity and conflict in Burma’s north has effectively removed all scrutiny into what was an already murky industry. Naypyidaw and the Kachin rebels frequently invoke the fog of war to justify minimal oversight of resource extraction and cross-border trade into China. That makes the war in Burma’s north good for business; but who is profiting?
It has never been a secret that trade in jade is monopolised by the Burmese military.
The Tatmadaw owns and administers conglomerates Union of Myanmar Economic Holdings and Myanmar Economic Corporation. According to statistics produced by Global Witness, these two firms accounted for a joint total of more than $180 million in registered pre-tax sales in 2014. Companies owned by the families and connections of former junta strongmen Than Shwe, Ohn Myint and Maung Maung Thein tabled a combined total of more than $220 million [≈ Mitt Romney assets in 2011] in official 2014 pre-tax sales.
Throw these sales in with those registered by companies affiliated with the known regime cronies that run Burmese mega-businesses such as Asiaworld, KBZ and Htoo Group, and the valuation of$12 billion [≈ cost of 1972 Hurricane Agnes] in jade to China per year is quickly reached.
Licences to dig for Kachin jade are issued by the Ministry of Mines and the state-owned Myanmar Gems Enterprise. Global Witness argues that the state favours former junta strongmen and their princelings, notorious for hoarding resource wealth at the expense of one of the poorest populous in the Asian region.
“Previously unpublished government jade concession maps and company records shows that Than Shwe’s sons, Kyaing San Shwe and Htun Naing Shwe, control two companies called KyaingInternational and Myanmar Naing Group, which have obtained licences to six jade mines inHpakant. According to a senior Ministry of Mines official, mining concessions were handed to the Kyaing International firm “without any of the usual procedures being followed”, the report alleges.
Mandalay jade market. (PHOTO: Reuters)
But the on-the-books statistics belie the depth of the jade-rich Burmese kleptocracy. Global Witness believes that between 50-80 percent of all jade discovered by these crony-owned firms is undeclared and smuggled into China without the knowledge of the Burmese government. This is done to avoid heavy taxation at multiple stages from initial discovery to export.
Burmese government data on jade production in 2014 combined with estimates for the average price of each grade of jade based on sales at the 2014 Myanmar Gems Emporium indicates that $31 billion [≈ Harvard University endowment in 2011] worth of Burmese jade wound up in China last year, according to Global Witness.
An alternative calculation – based on the average price per kilogramme of jade imports as indicated by the Chinese government in 2014 combined with Burmese government production figures for the same year – produces a figure of $38 billion [≈ US oil/gas subsidies, 2011].
“This figure equates to nearly half of the entire country’s GDP, and over 46 times national spendingon health,” Global Witness reminds, also pointing out that the trade discrepancy wipes $6 billion [≈ Suez Canal annual receipts] from the government’s yearly tax income.
‘Hand pickers’ ferret through mounds of upturned earth for small pieces of jade overlooked by the industrial operations (From DVB documentary ‘Hpakant’s jade curse’)
Nowhere is the massive inequality wrought by the elite’s plundering of jade resources more stark then in the mining communities themselves. In Hpakant and surrounding areas, small-time miners known as ‘hand pickers’ ferret through mounds of upturned earth for small pieces of jade overlooked by the industrial operations. It is a task that often gets people killed, as the unstable piles of fresh earth often cave in on themselves.
Once a scene of thick jungle and intersecting paddy field, shantytowns have sprung up on land seized and quickly made to resemble the surface of Mars. Rampant drug addiction plagues communities completely unsupported by government services or infrastructure.
Poverty stretches out beyond the mining districts, in areas where a resource war has destroyed livelihoods and forced over 100,000 people [≈ population of Virgin Islands, nation] into displacementcamps.
“Myanmar’s jade business may be the biggest natural resource heist in modern history, said Global Witness analyst Juman Kubba.
“Many governments in countries emerging from conflict or tyranny try to defer the question of who will benefit from natural resources. This calculation is sometimes underpinned by vague notions of a grand bargain: the idea that former despots, rebels and military commanders can be sated with a super-size slice of the nation’s resources and will agree not to be ‘spoilers’.
“It rarely works out that way.”
*Editor: The Burmese government has not responded to DVB’s requests for comment on the Global Witness report.
Kachin, tribal peoples occupying parts of northeastern Myanmar (Burma) and contiguous areas ofIndia (Arunachal Pradesh and Nagaland) and China (Yunnan). The greatest number of Kachin live in Myanmar (roughly 790,000), but some 150,000 live in China and a few thousand in India. Numbering about 1012,000 in the late 20th century, they speak a variety of languages of the Tibeto-Burman group and are thereby distinguished as Jinghpaw, or Jingpo (Chingpaw [Ching-p’o], Singhpo), Atsi, Maru (Longvo), Lachid, Nung (Rawang), and Lisu .
The traditional Kachin religion is a form of animistic ancestor cult entailing animalsacrifice. As a result of the arrival of American and European missionaries in Burma beginning in the late 19th century, a majority of the Kachin are Christian, mainly Baptist and Roman Catholic. Among the Kachin in India, Buddhism predominates.