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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. That would be three times higher than the official figure of $12.3 billion 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 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.
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 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 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 Kyaing International and Myanmar Naing Group, which have obtained licences to six jade mines in Hpakant. 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.
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 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.
“This figure equates to nearly half of the entire country’s GDP, and over 46 times national spending on health,” Global Witness reminds, also pointing out that the trade discrepancy wipes $6 billion from the government’s yearly tax income.
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 into displacement camps.
“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.
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