The great jade heist and the quiet theft of Burma’s billions

Source asiancorrespondent, 23 Oct

 

Freelance jade miners collect jade stones near a mine in Kachin State, Burma. Pic: AP.

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 by 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, which is also known as Myanmar, 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.

A woman checks the quality of jade stones in Burma's Kachin state. Pic: AP.

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.