Kokang: The Backstory

People displaced from Laukkai, the capital of Kokang Special Region in Shan State. (Photo: JPaing / The Irrawaddy)

People displaced from Laukkai, the capital of Kokang Special Region in Shan State. (Photo: JPaing / The Irrawaddy)

The sudden outbreak of hostilities in northern Shan State’s remote Kokang region has taken many by surprise. Some have posted messages on social media sites saying that “those people” are not Myanmar citizens, and a government official even branded the hostilities a “Chinese invasion.”

While it is true that 90 percent of Kokang’s inhabitants are ethnic Chinese and few can speak the Myanmar language, reality is not quite that simple. The area is definitively on Myanmar’s side of the border with China, and the ethnic Kokang are one of the “135 national races” officially recognized by the government. But how did they end up in Myanmar and who are they?

The Kokang region was ceded to the British under the 1897 Beijing Convention, which may seem odd given its ethnic composition. But at that time, Yunnan was not fully controlled by the emperor in Beijing, and because of Kokang’s proximity to Hsenwi in Shan State, trade often traveled westwards rather than to the east.

But British colonial rule hardly extended east of the Salween River. The British could, at best, be described as exercising indirect rule through the British-advised saohpa, or prince, of Hsenwi—west of the river—to whom the lesser ruler of Kokang—east of the river—paid tribute.

Independent Myanmar’s government was even less successful than the British in bringing Kokang under centralized control. Almost the entire territory was taken over by Kuomintang (KMT) forces in the early 1950s, when the Chinese communists forced the nationalists to flee across the border.

A lone woman carries her possessions through the deserted streets of Laukkai in mid-February after clashed broke out in the area between the MNDAA and the Myanmar Army.

A lone woman carries her possessions through the deserted streets of Laukkai in mid-February after clashed broke out in the area between the MNDAA and the Myanmar Army.

Speaking the same Chinese dialect as the retreating KMT forces from Yunnan and, at least insofar as the local elite were concerned, sharing similar politics, many Kokang chieftains allied themselves with the Chinese nationalists.

Economically, the area was extremely poor. High mountains and a scarcity of water made rice cultivation almost impossible, so the people had to depend on two cash crops, which were sold or exchanged for food: tea and opium.

While tea had to be brought down to markets in Hsenwi and Lashio, opium could be sold locally. When war broke out in Shan State in the 1950s, opium became Kokang’s only viable cash crop. With its high morphine content, opium from Kokang was considered the best in the region.

Warlords and Opium

The de facto ruler of Kokang in the 1950s was Olive Yang, or Yang Jinxiu, a woman who had her own army of nearly 1,000 men. With the backing of the KMT, her influence increased and she became the first warlord—or, should one say, warlady—to send convoys of trucks loaded with opium down to the Thai border.

Olive Yang was arrested in 1961, but the Kokang warlord tradition lived on. Her elder brother Jimmy Yang, or Yang Zhensheng, continued to cooperate with the KMT in politics as well as in business. Jimmy Yang was well-educated, having attended the Shan Chiefs’ School in Taunggyi, Rangoon University and, during World War II, Chongqing University in China. He was elected MP for Kokang in 1950 and founded the East Burma Bank a few years later.

Lo Hsing-han, the former Kokang chief who became a notorious drug lord. (Photo: Reuters)

Lo Hsing-han, the former Kokang chief who became a notorious drug lord. (Photo: Reuters)

Jimmy Yang was eventually ousted by one of his local commanders, the infamous Luo Xinghan, or Lo Hsing-han, the father of Steven Law, or Tun Myint Naing—today the managing director of Asia World, one of Myanmar’s most powerful conglomerates. A native of Ta Tsu Chin village near Kokang’s border with China, Lo Hsing-han became internationally known in 1972 when US senior narcotics adviser Nelson Gross dubbed him “kingpin of the heroin traffic in Southeast Asia.”

He achieved that notoriety due to an unorthodox agreement with the then-military government in Yangon. He was given the right to use all government-controlled roads in Shan State for drug trafficking in return for fighting rebel groups in the area. Lo Hsing-han’s elder brother, Luo Xingguo (Lo Hsing-ko), was chief inspector of police in Kokang and ensured there was no local interference.

While the government had a Kokang warlord on their side in Lo Hsing-han, the communists had theirs: Peng Jiasheng and his younger brother Peng Jiafu. They had once served with Jimmy Yang’s own army, the Kokang Revolutionary Force, but were contacted by Communist Party of Burma (CPB) cadres in China in July 1967 and promised arms and ammunition.

The rebels were no longer Olive Yang’s brigands. As part of the CPB and with support from China, the heavily armed troops took over Kokang from the KMT and its allies in 1968. But Kokang was actually of little interest to the mainstream CPB except as a base from which its forces could push down to the Myanmar lowlands.

A crucial 45-day battle between CPB forces and the Myanmar Army was fought from December 1971 to January 1972 for control of the Kunlong bridge, connecting Kokang with the land west of the Salween. The government army successfully halted the CPB’s westward advance, partly due to Lo Hsing-han’s knowledge of the local terrain.

Grateful Myanmar Army troops later helped him send opium to laboratories on the Thai border, where it was refined into heroin. It was not until 1973, when Lo Hsing-han turned against the government, that he was arrested. He was later released during a general amnesty in 1980, when Jimmy Yang was also pardoned and returned from exile in France.

The communist takeover in 1968 transformed Kokang socially and politically. The old warlords fled and the land they left behind was distributed to landless peasants. Law and order was restored after years of anarchy, but there was one major problem the CPB could not solve: Opium.

 At a meeting in the early 1990s, Peng Jiasheng is seen third from left. His son-in-law Sai Leun is fifth from left. Gen. Than Shwe and Gen. Khin Nyunt are on the right.

At a meeting in the early 1990s, Peng Jiasheng is seen third from left. His son-in-law Sai Leun is fifth from left. Gen. Than Shwe and Gen. Khin Nyunt are on the right.

The CPB’s inability to offer local poppy farmers a viable alternative during the first years of communist rule was due in part to the difficulty of finding suitable cash crops. But following the cut-back of Chinese aid in the late 1970s, it is also plausible to assume that the communists became less interested in finding an effective substitute. Even if local farmers, at the bottom of the socio-economic ladder, could not make their fortunes from opium, the CPB’s commanders could.

One of them was Peng Jiasheng. Although he never became a party member, he commanded the CPB’s forces in Kokang and soon turned his attention to the local drug trade. According to a cable from the US embassy in Yangon, dated Sept. 1, 2009, and made public by WikiLeaks, “Peng Jiasheng has been identified by the US Drug Enforcement Agency as a major trafficker since approximately 1975.”

At about that time, independent sources say, Peng established the first heroin refinery in the area controlled by the CPB along the Chinese border. The party taxed the cultivation of poppies and the trade in raw opium in and out of its territory. But making heroin was a step too far and Peng was transferred from Kokang to party headquarters in Panghsang in the Wa area. However, he soon set up a new refinery at Wan Ho-tao in the hills east of Panghsang.

The CPB Mutiny

Ethnic tensions between the ideologically motivated, ageing Burman leadership of the CPB and the hill tribe rank-and-file of the party’s army led to an all-out mutiny. It began in Kokang in March 1989, and soon spread to other CPB areas.

By April, the entire leadership had fled to China and the CPB’s army broke up into four regional armies based along ethnic lines: The most powerful among them, the United Wa State Army (UWSA); a force in Kokang, to where Peng had returned; a force in eastern Shan State led by Peng’s son-in-law Sai Leün (or U Sai Lin, or Lin Mingxian), and the former CPB forces at Kambaiti and Pangwa in Kachin State. The Kokang unit became known as the Myanmar National Democratic Alliance Army (MNDAA).

Shortly after the mutiny, Myanmar’s then intelligence chief Gen. Khin Nyunt sent Olive Yang, Lo Hsing-han and Aung Gyi (a Sino-Burman former officer in the Myanmar Army and one of the founders of the National League for Democracy, who later left) to Kokang to negotiate with the CPB mutineers.

Ceasefire deals were struck under which the former CPB forces were allowed to retain control over their respective areas, and maintain their own armies, in exchange for not attacking government forces. They were also permitted to engage in any kind of business which accounted, in part, for Myanmar’s annual opium production increasing from 836 tons before the mutiny to 2,340 tons in 1995.

The 1989 mutiny saw yet another economic and social transformation of the areas along the Chinese border. Despite the CPB’s efforts at land reform, the region remained desperately poor, and Kokang was no exception. In November and December 1986, I trekked through the entire length of Kokang, crossing the Salween at the Takyiang ferry in the north and continuing on foot over the mountains down to Chinsweho on the Namting River in the south, where the Wa Hills begin.

I spent many nights in drafty mud-straw huts and also visited the small town of Tashwehtang, the hill “capital” of Kokang, which resembled rural Yunnan in pre-revolutionary days: cobbled streets lined with merchants’ houses, arch-shaped stone bridges and, outside the market area, walled-in stone mansions with wooden verandas. The market town of Laukkai in the valley below consisted of little more than a collection of ramshackle structures made from wood and bamboo.

A general view of Laukkai, the once-booming capital of Myanmar’s Kokang region, in 2009. In mid-February, the town was deserted as fierce clashes took place between the Myanmar Army and the Myanmar National Democratic Alliance Army. (Photo: Reuters)

A general view of Laukkai, the once-booming capital of Myanmar’s Kokang region, in 2009. In mid-February, the town was deserted as fierce clashes took place between the Myanmar Army and the Myanmar National Democratic Alliance Army. (Photo: Reuters)

Today, it’s a different world in Kokang. According to a recent visitor: “Laukkai is remarkable. Construction of wide new boulevards and high-rise buildings—mostly hotels and entertainment complexes—is underway everywhere. The center of town is dominated by a new, neon-lit 10-storey hotel, the Huangding Guoji Binguan, or the Royal Splendor International Hotel, with streets around it lined with smaller hotels, mobile phone shops, brand-name fashion outlets and, not least, casinos.

“New SUVs and cars with ‘KK’ (Kokang) plates are in the majority but there’s also a good sprinkling of vehicles from across southwestern and central Chinese provinces. Locals and visitors are almost entirely Han Chinese, but virtually all the construction work is being undertaken by thousands of Burman laborers.”

So where did all the money come from? Drugs, of course, are one major source of income—opium, its derivative heroin and also synthetically produced methamphetamines. But also guns from China, smuggled across northern Myanmar to northeastern India, a hotbed of local, ethnic insurgencies where there is a huge demand for any kind of military hardware. The income from these pursuits financed development projects in Kokang and investment in the hotel business, retail trade, real estate and construction in other parts of the country.

Shifting Allegiances

But it was not all smooth sailing for the post-mutiny rulers of Kokang. When Gen. Khin Nyunt struck a deal with the former CPB forces, he had favored the Peng clan over the traditional rulers of the area, the Yangs. This turned out to be a serious tactical error and the Yangs eventually rebelled against Peng Jiasheng.

A brief war was fought in Kokang in 1992, which forced Peng into temporary exile in China. But things didn’t go well for the Yangs either. In October 1994, Yang Muxian, the younger brother of the new Kokang overlord Yang Molian, was executed in Kunming for trafficking heroin to China.

Soon afterwards, Gen. Khin Nyunt and Lo Hsing-han helped broker a deal between the Pengs and the Yangs. Peng Jiasheng returned, and soon regained his position as Kokang’s strongman.

That lasted until August 2009, when the Myanmar Army moved into Kokang in an operation masterminded by Snr.-Gen. Min Aung Hlaing, then head of the military’s Bureau of Special Operations 2—and now commander-in-chief of the armed forces. More than 30,000 people were forced to flee to China, prompting protests from Chinese authorities.

The fall from grace of Peng’s mentor, Gen. Khin Nyunt, in October 2004 had no doubt made the offensive possible. Peng was deposed, fled to China, and was replaced by a local Kokang officer, Bai Suoqian, handpicked by the Myanmar military. The MNDAA faction loyal to Bai also became a government-recognized Border Guard Force.

But Peng was plotting his comeback. It came just before Union Day this year, when fighting broke out. Bai had to be flown out of Kokang by helicopter to safety in Naypyitaw. His future remains uncertain. It also remains to be seen if the conflict in Kokang will spread to other areas in the north.

Several hundred soldiers from the Ta’ang National Liberation Army (TNLA) are reportedly fighting alongside Peng’s MNDAA in Kokang, along with a smaller contingent of troops from the Arakan Army. And it is hardly any secret that the powerful UWSA has been supplying the MNDAA with arms and ammunition.

The role of the UWSA begs the question of where China’s security services stand in this new imbroglio. The UWSA has close connections with those services and is equipped almost entirely with weapons—including surface-to-air missiles and other sophisticated hardware—obtained from China. It is hard to imagine the UWSA would have been able to supply the MNDAA with munitions without getting the green light from its Chinese mentors.

It is also obvious that a new generation of officers has taken over the MNDAA. Peng, now in his mid-80s, remains the official figurehead, while his eldest son Peng Daxun (Peng Ta-shun) heads the army.

Another important figure is MNDAA secretary-general Htun Myat Lin, who is married to Peng’s youngest daughter. A graduate of Mandalay’s Arts and Science University, Htun Myat Lin prefers to use his Myanmar name rather than his Chinese one and is described by close associates as “well-versed in politics.”

A wider alliance of rebel forces in the north cannot, therefore, be ruled out. But whatever the outcome of the present conflict, it will not be an easy task for anyone in power in Naypyitaw to establish some semblance of authority over Kokang. Like the Wa Hills, it is a part of the country that has never been under any central governmental control.

This article initially appeared in the Mar. 2015 issue of The Irrawaddy Magazine.

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