All's not fair in trade and war in Burma

The collapse of a ceasefire agreement between Slorc and the Karenni shows that control over natural resources is emerging as a major source of conflict in Burma, James Fahn writes.

The Burmese military junta calling itself the State Law and Order Restoration Council (Slorc), and the Karenni National Progressive Party (KNPP) don't agree on much, including what they are fighting over. .

The two groups verbally agreed to a cease-fire in a ceremony held on March 21. Kayah State -- a small state of 200,000300,000 people bordering on Thailand to the east, Shan State to the north and Kawthoolei (Karen state) to the south- was divided into separate zones of control. Roughly speaking, Slorc controls the western part of Kayah, and the KNPP the eastern part bordering Mae Hong Son province.

But the agreement ran into trouble after only three months, and control of the local timber trade seems to have been a major cause of the conflict.

On June 17, the KNPP says, two battalions of Burmese troops crossed into KNPP-designated territory. From there the conflict gradually escalated. Negotiations between the two sides failed, and Slorc kept sending in more troops.

Finally, on June 30, while Thailand was focused on its upcoming national election, open warfare broke out in Kayah State as Slorc troops marched toward KNPP camps located near the Thai border.

Slorc officials claim the action was taken to ''implement security measures" in the run-up to the Thai election, and to prevent Thai loggers from "stealing" timber from Kayah state.

The Karenni, having fought for independence from Burma for 47 years believe Slorc's motives run much deeper.

"Slorc is launching an all-out military I offensive against Karenni ... to neutralize

I Karenni forces and to subjugate the Karenni people," says a statement issued by the KNPP.

"Disputes over the timber trade can be solved if negotiations are held in good faith," adds a Karenni source, "but they are being used as an excuse to conquer Kayah State."

The Karenni timber trade with Thailand certainly does exist. For the last 2-3 months, logs and sawn lumber have been flowing through Karenni checkpoints into Mae Hong Son province. Local villagers quite openly corroborate this.

It remains unclear just how legal these imports are under Thai regulations. Some have been documented by officials from the Royal Forestry Department, because they come from concessions approved by Rangoon; others have not.

Thai officials are generally reluctant even to talk about the issue. Some are no doubt profiting from the "extra-legal " Imports. Some simply don't care about them. And others hesitate to blow the whistle because the business is run by highly influential figures.

Inevitably, however, Slorc has found out about the timber trade, souring relations between Rangoon and Bangkok. Slorc has reportedly accused Thailand of capturing two of its ''spies'', showing just how low relations have sunk.

The Karenni have also kept quiet about the timber trade, largely at the request of the Thais. But in an interview held just prior to the outbreak of hostilities, KNPP Prime Minister Aung Than Lay agreed to talk about the issue.

"The Thais have not come and stole our wood, " he said. " They came and officially bought timber from us.
"It is our right to sell our resources abroad, not just timber but also minerals When we negotiated the cease-fire agreement with Slorc, they said we can deaf with foreigners and do business.

"But now they show us their rules and regulations, saying there is a policy that only the government in Rangoon has the right to sell teak and padaung [another type of hardwood].

"We want to sell our teak to anybody. We have the right to sell our property."

A source at the UN Food and Agriculture Organization-which recently held a

teak conference in Rangoon-explains that after 90 years of state control Burma's government recently privatized the timber trade, except for teak.

"The government still controls the teak trade through its state enterprise, the Myanmar Timber Enterprise," explained the FAO source. "Since sales from other countries including Thailand are now almost non-existent, Rangoon has a virtual monopoly on the export of teak, except for what comes over the border."

As a result, he said, teak concessions fetch a very high price in US$2,000?3,000 (Bt50,000?70,000) per cubic metre, depending on the grade.

Meanwhile, Aung Than Lay said the KNPP is selling teak to the Thais at the price of Bt7,000 per tonne, or about Bt4, 100 per cubic metre (according to the FAO sources a Burmese, or hope, tonne is equivalent to roughly 1.7 cubic metros of teak).

Complicating the issue is the fact that the Karenni accepted money in the form of a "development fund'' from the Slorc at the time the ceasefire agreement was made.

''Before the agreement, Slorc said they would lend us money," Aung Than Lay explained. ' They said we could give it back without profit.

'Now they don't mention the money. They just say they want us to give them 10,000 tonnes of teak logs and 2.000 tonnes of lumber.''

Aung Than Lay wouldn't say how much money Slorc gave the KNPP, but he did say it is far less than this amount of timber is worth. It has since been reported that the money totaled 10 million kyat,

receive teak from the Karenni at the price of about Bt100/cubic metre, using black market exchange rates.

"It was a mistake to take the money. We would like to give it back. Before the ceasefire, we always said we could stand on our own two feet... "

The KNPP prime minister said his group has actually sold less timber since the ceasefire began. Previously, Slorc would award concessions for Thais to log in Karenni territory, and the Karenni would get a cut of the profits.

Now, Slorc reportedly wants to award a concession to a Singaporean company known as the Billion Group to log in Karenni territory and send the wood to Rangoon, without either Thais or Karenni benefiting.

''At the root of the problem," says a Thai intelligence of officer, "is that the Slorc believes the Karenni have surrendered while the Karenni believe they have merely signed an agreement to stop fighting.''

Disputes over control of resources are also likely to crop up between Slorc and other resistance groups, which agree to a ceasefire.

There have been reports of covert logging activities by Thais in areas controlled by the Mon and the Karen, as well as the Karenni, although it is not necessarily clear who in those areas is behind these activities.

On Tuesday, the Burmese military intelligence chief Lieutenant?General Khin Nyunt traveled to Kayah state in a reported bid to end the hostilities there, but the fighting is said to be continuing.

If he and other Slorc officials are serious about wanting peace, then they will have to respect the rights of ethnic groups and all local people to control the use of their own resources.

At the same time, these groups must wield their power over resources responsibly in order to minimize the social and environmental impacts on villagers, the ultimate victims of logging activities.

When asked about the effects of logging, Aung Than Lay agreed it was damaging, although he added that it was still necessary in order to ensure the

"We [the leaders of the KNPP] don't keep the money for ourselves," he. insisted. ''Our people know where the money goes.

' I know about the damage to the environment," he added, ''I used to have a farm and when we cut down all the trees; the local water supply dried up.

"We are very interested in reforestation, but we need help. We have tried several times to re?plant teak, but the saplings have died."

Environmentalists would of course prefer not to see any logging done at all. But whoever is in control in Burma, it is going to happen.

The Karenni point out that while they have been logging in eastern Kayah state, the Slorc has been just as busy cutting down trees in western Kayah, with the profits going to ethnic Burmese and Chinese businessmen.

Reliable statistics are hard to come by. but throughout Burma the amount of trees being cut by Slorc dwarfs the amount cut by minority groups. According to figures voluntarily supplied by the Burmese government to the international Tropical Timber Organization, Burma ''produced" 1.5 million cubic metres of raw logs in I 994, and consumed and exported 290,000 cubic metres of sawn wood. (A hardwood log is typically considered equal to about 5 cubic metros).

So for the sake of its own people, Slorc too must use its power over resources wisely. This means controlling its own logging activities so that it is done more sustainably, and allowing groups like the Karenni to trade openly in timber so they can receive a better price and also implement some controls.

As a local group, the Karenni simply have more incentive than officials in Rangoon to ensure that forests are still around for the benefit of future generations.

It has become increasingly clear that Burma's problems cannot be solved through armed struggle. But real peace can never be achieved so long as economic warfare is being waged.