The Impact of the Conflict Economy: The Fragmented Land of Karen State

Photo – AFP

On March 14, 2026, ISP-Myanmar held its thirteenth 30 Minutes with the ISP event, titled “The Impact of the Conflict Economy: The Fragmented Land of Karen State.“ This English translation of the event’s recap memo was published on May 8, 2026. The original Burmese version was published on May 5, 2025. This publication is part of research conducted under ISP Myanmar’s Conflict Economy Studies.

▪️Concept Note

“Those who drink the water must protect the water;
Those who live on the land must protect the land.”

 – Karen traditional proverb

As armed conflict expands in Myanmar, the conflict economy is also thriving in various forms and manifestations. The conflict economy refers to a situation where lucrative businesses, economic networks, and profits are inextricably linked to Myanmar’s civil war. Natural resource extraction, mining operations, illegal trade networks, and other illicit trafficking—including weapons, narcotics, and human trafficking—are its core components. This conflict economy system provides the fuel to keep the civil war’s fires burning.

ISP-Myanmar has been researching issues related to Myanmar’s conflict economy. The previous 30 Minutes with the ISP held in February 2026 discussed how the conflict economy has significantly grown in Northern Shan State following the control of new territories by Ethnic Armed Organizations (EAOs) and their subsequent bilateral ceasefires. This episode will discuss our preliminary findings regarding the situation in Karen State.

The complex problems in Karen State stem from the proliferation of numerous organizations and the recent reputational damage suffered by all due to online scam syndicates, widely known as Kyar Phyant. Among the incentives and interests tied to the conflict economy in Karen State, the tax revenue collected from the Asian Highway and trade routes is paramount. This is why we can observe that wars have been waged to dominate these border trade highways. Furthermore, informal economies like the sale of natural resources, along with transnational crimes like KyarPhant operations, are supporting the continued survival and growth of the various fragmented armed groups within Karen State. The battles occurring in Karen State are aimed at competing for control over economically vital territories. The likelihood of resolving these issues through negotiations over power and profit-sharing is slim, and the situation is heading towards a prolonged conflict.

A similarity with northern Shan State is the impact of wars and conflict economies on local communities. Due to the war, lives and properties are destroyed, and people are forced to flee their homes, becoming internally displaced persons (IDPs). Invaluable development potential and peaceful stability have been lost. Although there is still an agreement to avoid inter-Karen conflict, the cracks between Karen armed organizations have widened due to conflicting interests, including differences over ceasefire versus non-ceasefire stances. The environment has been devastated by mining and mineral extraction. The water of the Salween River has also become toxic. Following the crackdowns on major Kyar Phyant cities, these scam syndicates have dispersed and relocated into the inner regions of Karen State in smaller groups.

Karen State’s economy and Kyar Phyant have become ecologically linked to the point of being inseparable. At this time, community-based civil society organizations themselves have very little say under the weight of security, economic, and social pressures. Their survival has also become difficult due to the decline in international development and humanitarian aid. Even the assistance provided to IDPs has become severely inadequate.

For the sake of self-determination and equality, resolutions were made, and demands were raised to survive and protect this land and water, these rivers and streams, these forests and mountains, these people, these cultural traditions, and their ethnic identity and characteristics. Now, eight decades after the revolution began, it appears they are destroying their own identity and characteristics due to the conflict economy. They are facing a massive system of plunder, destruction, and exploitation.

How are the people struggling to face this horrific social catastrophe and era of extreme exploitation? Some simply chase after money. To survive, some willingly work for scam syndicates, while others are forced into illegal smuggling and criminal enterprises. They are forced to abandon their homes and flee, enduring human rights violations. The financial revenues generated from the conflict economy have not led to better public services nor improved governance systems. The identity and characteristics valued by indigenous people are rapidly fading. Regarding how people respond to such severe decline, in Northern Shan State, we previously analyzed and highlighted the “Voice, Exit, Loyalty” framework: voicing opposition and protesting, abandoning the region and leaving, or otherwise silently enduring and adapting to fit in. What is happening in Karen State? This episode of 30 Minutes with the ISP presents and discusses the findings.

Greetings to all Gabyin members attending today’s 30 Minutes with the ISP program. I am Zaw Htet. I will be acting as the host for today’s session. Today’s program is the 13th discussion session of the 30 Minutes with the ISP series. The topic for today’s presentation is ‘The Impact of the Conflict Economy: The Fragmented Land of Karen State.’

Emerging researchers from ISP-Myanmar leading today’s discussion are Aye Chan, Ye Yint, and Su Lin Han. After the panelists’ discussion, we will address questions collected in advance from the Gabyin Community, as well as questions and comments from today’s attendees. You can also send questions and comments via Live or the Q&A Chat.

Due to time constraints, if we cannot answer all questions during the event, we will respond via email later. Please note that questions and comments must not contain hate speech or derogatory remarks regarding race, religion, gender identity, or differing political views. These guidelines have also been sent via chat. Today’s program is being broadcast live on the DVB TV news channel and on ISP-Myanmar’s website and social media platforms. We will now begin our discussion. Aye Chan, please start us off.

Greetings to all our friends attending the 30 Minutes with the ISP program. Thank you for taking the time to join us. As we mentioned in our concept note, as armed conflict spreads in Myanmar, conflict economies are also flourishing in various forms. Here, the conflict economy refers to the connection between economic profits and armed conflicts. It means looking at who controls the infrastructure, trade routes, and mines in areas where armed conflicts are taking place, who is profiting, and who is involved in criminal enterprises such as illicit drugs, human trafficking, and operations like Kyar Phyant (online scams).

We at ISP-Myanmar have been researching the conflict economy landscapes in Myanmar since 2025. In particular, we focused our studies on northern Shan State and Karen State. In our last 30 Minutes with the ISP program, we discussed the conflict economy landscapes in northern Shan State, what the locals there are going through, and how they are responding. Today, we will focus on Karen State.

Karen State also has a landscape distinct from that of northern Shan State, with unique connections and relationships among actors and organizations. I would like to divide today’s discussion into three parts. In the first part, we will first discuss the current state of the conflict economy in Karen State. For the second part, we will discuss the landscape that underpins and allows the conflict economy to operate within Karen State. Finally, we will discuss how the conflict economy impacts locals and how they respond.

So, let’s begin our discussion. First, to understand the conditions of the conflict economy in Karen State, I would like to discuss who controls what. As shown in this image, the State Security and Peace Commission (SSPC) controls the majority, 61 percent, of the infrastructure in Karen State [see ISP Data Matters (ISP-DM2026-033)]. This infrastructure includes crucial facilities for Myanmar-Thailand border trade, such as Myawaddy and Hpayarthonesu. Regarding control of mines, we see no significant difference between the SAC and the Karen National Union (KNU) [see ISP Data Matters (ISP-DM2026-034)]. These mines include those for strategic minerals like antimony. We see that the military commission and the KNU each control two antimony mines. The key difference here from northern Shan State is that Karen State does not see many conflicts around mining areas, unlike in northern Shan State.

After discussing infrastructure and mines, I would like to focus next on the trade routes. Our research findings indicate that trade routes in Karen State generate the highest economic profits within the conflict economy. As shown in this image, we have gathered data on six main trade routes in Karen State. This includes trade routes like the No. 1 Asian Highway [see ISP Mapping (ISP-M2026-010)]. To highlight trade data, the average daily trade value at the Myawaddy border trade station, which connects to most of these trade routes, exceeds USD 5 million. Looking back at the KNU’s attempts to control these trade routes and strategic locations, the importance of these routes becomes evident. What is shown here is that the battles and airstrikes that occurred during 2024 and 2025 were concentrated along the trade routes, and particularly around the Myawaddy border trade post [see ISP Mapping (ISP-M2026-011)]. Alongside mining and trade-route taxation, another prominent part of Karen State’s conflict economy is the Kyar Phyant industry.

As seen in this image, Kyar Phyant compounds are lined up along the Thaungyin (Moei) River on the Myanmar-Thailand border [see ISP Mapping (ISP-M2026-012)]. When the international community focused its attention on these scam operations in Karen State, the military commission began crackdowns on them. They staged the demolition of infamous Kyar Phyant compounds like KK Park and Shwe Kokko, arresting and deporting foreigners working there. However, the Kyar Phyant industry has not disappeared; it continues to survive. It is spreading like a cancer throughout Karen State, even reaching its inner regions. What I have just discussed are the conditions of the conflict economy in Karen State. Ye Yint will continue to discuss the landscape that supports the continued operation of these conflict economies in Karen State.

To understand the landscape that underpins the conflict economy in the Karen region, we first need to know about the groups present in the area. Looking at the Karen region, there are many armed groups, similar to those in the northern Shan State, which we discussed in the 12th episode of 30 Minutes with the ISP. However, a difference from northern Shan State is that the armed groups in the Karen region represent a single ethnic group. Furthermore, all these groups are factions that broke away, either directly or indirectly, from the KNU, the founding father of the Karen revolution [see ISP Data Matters (ISP-DM2026-035)].

If we look back at Karen history, up until the coup in 2021, there were up to five groups that had split from the KNU. Among those, another two groups split from the DKBA. Following the 2021 coup, due to differing political stances among Karen armed groups, the Kawthoolei Army (KTLA) broke away from the KNU, and there were also instances of individuals shifting between groups. Additionally, the Karen Border Guard Force (BGF), previously under the regime’s structure, broke away from the junta in 2026, adopting the name Karen National Army (KNA). Among these splinter groups, the Democratic Karen Buddhist Army (DKBA), Karen National Union/Karen National Liberation Army-Peace Council (KNU/KNLA-PC), and BGF/KNA, along with their parent organization, the KNU, remain deeply involved in Myanmar’s political and military affairs to this day. Looking back at the data Aye Chan presented earlier, these groups are the key actors currently on the stage of Karen State’s conflict economy. After the coup, the norm against intra-Karen armed conflict largely held. But while the KNU chose to fight the Military Commission, the KNU/KNLA-PC and the DKBA stayed on the Nationwide Ceasefire Agreement (NCA) track and maintained ties with the military.

Looking at the current military situation in the Karen region, clashes between the military commission and the KNU occur almost continuously, and the sound of gunfire is ever-present. In retrospect, the Karen’s war theater has seen the highest number of clashes since the coup, and battles continue uninterrupted to this day. The KNU’s armed wing, the KNLA, and the People Defence Forces (PDFs) have collaborated in launching offensives. As a result, the KNU has been able to control more territory. They have also seized control of the Asian Highway, crucial for border trade, and some other infrastructure.

On the other hand, the junta has tried to regain control of the territories and infrastructure they lost, but initially, they were unable to overcome the combined KNLA forces. However, after the ceasefire in northern Shan State, the military intensified its operations in the Karen region and managed to regain control of the Asian Highway. Currently, having regained control of the Asian Highway, it is launching offensives to secure the old Myawaddy-Kawkareik road section to fully reopen the Asian Highway with its rear secured. Furthermore, in the KNU-controlled border areas of Minletpan and Hpa Lu, which are strategically important and house Kyar Phyant compounds, fierce fighting is ongoing, and locals have been forced to flee. Additionally, in Hpapun, another KNU-controlled area, the military commission has reinforced its troops, and clashes are taking place as they attempt to regain control. Looking at Karen’s military situation, it seems we will continue to hear gunfire, and locals cannot yet envision a path home.

Moreover, the KNU attempted to seize border stations to trade directly with Thailand and enhance relations with the country, but in practice, this has not been effective [see ISP Mapping (ISP-M2026-013)]. Thailand initially prioritized the Myanmar issue. But when the border conflict with Cambodia emerges, they could no longer prioritize Myanmar’s border. Concurrently, the military commission has shifted its focus to trading mainly through routes not controlled by the KNU, such as Tachileik and Kawthoung for Myanmar-Thailand border trade. Consequently, the KNU’s attempts to control the border area and enhance relations with Thailand have not been as successful as anticipated in practice. Furthermore, as we mentioned in our concept note, the complex problems of Karen State stem from the proliferation of armed groups representing a single ethnic group, and the loss of reputation due to Kyar Phyant operations that have recently taken up space in international news headlines. These transnational criminal operations support the continued existence and growth of the fragmented armed groups in the region. Although the military commission claims to have cracked down on these operations, in reality, they have not entirely vanished from Karen. They re-emerge and operate in some form elsewhere. In the past, when Karen State was mentioned, people would picture a region inhabited by charming people with a distinct accent, a place of lush, green mountains and natural beauty. Now, when you say Karen, the first thing people think of is Kyar Phyant scams. Amidst battles between the junta and the KNU, and problems from the conflict economy, how are the people of the Karen region struggling to live, and how are they responding? Su Lin Han will continue the discussion on this.

What are the impacts caused by the conflict economy in Karen State? How do the Karen locals face and resolve these impacts? I will be discussing these issues. First, I would like to discuss the impact section. As Aye Chan mentioned earlier, armed groups engage in mining for their survival in Karen State. These mining operations cause significant environmental damage, including air and water pollution, the silting of rivers and streams, and the destruction of agricultural land. Currently, arsenic poisoning in the Salween River is quite high. This is not solely due to mining in Karen State. But because it flows through Karen State, it threatens the health of the local Karen people in one way or another.

Continuing, I would like to discuss the impact related to trade routes. At present, armed groups have opened more toll gates along the trade routes, extracting heavier taxes and leaving traders to shoulder the burden. Consequently, commodity prices have skyrocketed. On the other hand, the military commission has closed the Myawaddy border trade gate. They have banned the import of even basic foodstuffs like rice and cooking oil. Goods imported from Thailand without SSPC’s permission are also seized at various checkpoints. In this way, the flow of goods is disrupted.

Furthermore, the Internally Displaced Persons (IDPs) who have had to relocate due to the conflict receive almost no assistance. When international aid, such as from the US (USAID), is cut off, it becomes even more difficult to support the IDPs. Looking at the image shown now, there are nine refugee camps on the Myanmar-Thailand border, six of which are located along the border line adjacent to Karen State [see ISP Mapping (ISP-M2026-014)]. According to the 2024 census, the total population of Karen State is nearly 1.5 million.¹ Looking back at the image shown now, the number of IDPs living in refugee camps within Karen State is over 80,000 [see ISP Data Matters (ISP-DM2026-036)]. It means out of every 100 people, six are living in IDP camps.² Notably, these IDPs have been displaced for generations. When the Spring Revolution began, people from mainland Myanmar, especially CDMers and revolutionary youth, mostly fled to the Karen region. It was the community organizations and the Karen people there who provided them with temporary shelter. We can also see that the Karen people bore the brunt of the wounds inflicted by these political and military impacts and faced them with resilience. Therefore, the resilience of the Karen people is also incredibly commendable.

What I have discussed so far are the impacts caused by the conflict economy. How do locals respond to and resolve the human rights violations and damages caused by these impacts? I would like to continue discussing the methods. The first response method is to voice their opinions through various platforms within the system. Regarding voicing locals’ opinions, there are many civil society organizations in the KNU-controlled territories. However, when it comes to the distribution of interests in the conflict economy, civil society organizations have little say under social, security, and economic pressures. I would like to give an example here. In the case involving KNU leaders and Kyar Phyant, civil society organizations have evidently been too weak to respond effectively. When local people no longer feel able to speak out openly, many adapt in silence and comply simply to survive. This is the second method of resolution, a reason why people go to work in Kyar Phyant operations, knowing full well they are scam syndicates. They are forced to step into criminal enterprises and smuggling operations. In this way, they dance to the tune played for them, adapting for their own survival.

As mentioned earlier, when a local no longer wants to risk speaking out directly about their grievances, and also does not want to choose the second method of merely surviving by going with the flow, what do they do next? The final option they choose is to relocate to a place where they can better secure their livelihood. Thus, the majority of locals from Karen State have to go and work in the nearest country, Thailand, or another country. This is the third method of resolution. Ultimately, the situation has reached a point where one might question their original identity, leading to the Fragmented Land of the Frog Drum. With this, I would like to conclude our preliminary discussion.

Thank you to all the panelists who participated in the discussion. Our preliminary discussion session has now concluded.  I would now like to move on to the Q&A session. I will invite one question and one comment from the participants attending today’s program. You can use the raise hand button to ask a question or join the discussion. Are there any raised hands? If not, I will start with the first question submitted in advance.

If the conflicts that support the conflict economy cease, will these enterprises disappear?

As we have discussed, the armed conflicts in Karen State are the backbone of the conflict economy. According to our studies, the resilience of the conflict economy has now grown significantly. It no longer merely relies on conflict; it has reached a point where it can survive on its own, adapting to the conditions and circumstances of the region where it is based.

I would like to give an example with Kyar Phyant here. As we mentioned in our concept note, the economy of Karen State has become ecologically linked to Kyar Phyant scams to the point that they are inseparable. What I mean is this. For the Kyar Phyant operations, the required manpower, accommodation, food, and so on are all obtained from the existing economic system in the region. For this economy to function, the KyarPhant enterprises, in turn, provide backing. Given these conditions, a closer look shows the conflict economy is no longer just a side effect. In colloquial terms, the conflict economy is like raising a devil. It has reached a point where, one day, it could snap your neck. 

Thank you, Su Lin Han, for your answer. I would like to invite more questions and comments from the participants present today. You can ask by using the raise hand button. Is there anyone who has their hand raised? If not yet, we will move on to the second question submitted to the Gabyin Community.

To what extent might Thailand be involved in the conflict economies and conflict landscapes of Karen State?  

If we look at it, Karen State has the longest shared border with Thailand, so the situation there has a huge impact on Thailand. As the military commission has closed the Myawaddy gate and cannot reopen the Asian Highway, this has had a massive impact on Thailand’s economy. The Kyar Phyant issue is similar. As long as Thailand is feeling the spillover effects of these problems, Thailand’s involvement will remain. We can broadly say that. However, neighboring countries also have limits to their capabilities and other political agendas they must prioritize. As we discussed earlier, Thailand initially prioritized the Myanmar issue, but when the border conflict with Cambodia emerged, it could no longer prioritize Myanmar’s border peace. Therefore, for them, it’s fine as long as border trade resumes, which is why we see them focusing on engaging with the military commission. The same goes for the scam issue. We see Thailand taking actions aimed merely at preventing Kyar Phyant operations from entering through the borders. Ultimately, these problems will seep inward, and it is assessed that their own region and people will continue to suffer.

Thank you, Ye Yint, for answering. Now, I would like to ask a question submitted in the chat.

Nearly 50 percent of natural resource extraction in Myanmar is taken by the Myanmar military commission. Do those extracted resources belong to the State of Myanmar, or are they solely owned by top Myanmar military families and crony families?

I understand this question is based on the data regarding the lack of difference in mine control between the SSPC and the KNU, which I discussed in my section. To address the question of whether the profits from the mines mentioned go to junta family members or the junta itself, our studies indicate that most of the mines in Karen State are registered. They are mines that were registered with the government even before the military coup, and they have been producing and selling minerals since then. To answer the question of whether cronies and top leaders of the military commission receive profits, there is corruption and bribery within the military commission’s conflict economy. Therefore, we cannot specify exactly who, which companies, or which businesses are involved based on data. According to the currently operating conflict economy, the profits could indeed reach such actors and organizations, as the question asks.

Thank you, Aye Chan, for the insight. Now, I would like to invite more questions and comments from the participants present. You can ask by using the raise hand button. Is there anyone who wants to ask a question? So let’s move on to the next question.

Is the conflict economy a type of employment opportunity for the people, or has it become an exploitative economic model? 

Regarding this question, we view the answer as we discussed earlier, based on our studies: the conflict is the underlying landscape that allows the conflict economy to operate. The question here asks if it fuels the civil war. One way to think about it is by distinguishing between a disease and its symptoms. The civil war is the disease, while the conflict economy is its symptom. Other symptoms include: conscription, a rise in drug production, and so on, besides the conflict economy. Kyar Phyant is also one of these symptoms. So, yes, the conflict economy is a symptom that needs to be addressed. But it should not be mistaken for the root disease itself. Therefore, we would like to assess whether it will be manageable only if we separate them and address them individually.

Thank you, Aye Chan, for your discussion. Due to time constraints, we will conclude the Q&A session here. Regarding what was discussed today, do our panelists have any final concluding remarks?

Thank you, Zaw Htet. I would like to summarize today’s discussion into three points. The first point is that trade routes are central to the conflict-related landscape in Karen State. As the KNU and the SSPC mutually attempt to control these trade routes, the armed conflict in Karen State will continue to smolder. At the same time, the Kyar Phyant issue is also eroding the region. Why do such problems occur? As Ye Yint discussed earlier, there are many splinter groups within the Karen armed forces, and they govern their respective territories like warlords. We would analyze that these conditions are acting as fertile ground for the conflict economy to keep functioning in Karen State.

The second point of the summary concerns the impact on the locals. As Su Lin Han discussed earlier, generations of people in Karen State have to live in refugee camps, and their livelihoods are becoming increasingly difficult day by day. Furthermore, as a last resort, they themselves have to become part of the conflict economy. The impact has reached that extent. The final summary point requires special attention. It is the danger of organizations in Karen State being stigmatized and their image distorted. I would like to give the most prominent example here, the KNU. Four years after the coup, the KNU was declared an unlawful association and a terrorist organization. When the Kyar Phyant problems arose, the KNU was again stigmatized as the main culprit behind the operations. To mention the most recent example, in a speech delivered in Naypyitaw on March 10th, the SSPC’s Chair, Senior General Min Aung Hlaing, stated that Ethnic Armed Organizations (EAOs) are involved in Kyar Phyant enterprises to survive. Summarizing all this, we can assess that the opposing faction is intentionally distorting the image and stigmatizing it. As the wars prolong, we would like to conclude by assessing that the danger of the identity and characteristics valued by the Karen people gradually fading away amidst the traps of distortion and stigmatization is close at hand.

What we discussed today were the conflict economy conditions in Karen State, the landscape that supports them, the actors involved, and what locals are experiencing. As ISP-Myanmar, we are also continuing to study the landscapes in other regions, such as Anyar, Rakhine, and Kachin States, and we plan to present them. With that, I would like to conclude.

Thank you very much for the concluding remarks. You can access research data like today’s, as well as other findings, for free on ISP-Myanmar’s website, www.ispmyanmar.com, and on our social media platforms. I would like to express my special thanks to each and every member of the Gabyin Community who took the time to attend today’s 30 Minutes with the ISP program. With that, allow me to close today’s session here.

Corrections (June 2026)

1. This report previously stated that Karen State’s population was 770,000. That figure represented the enumerated population. The state’s estimated total population is nearly 1.5 million. ↩︎
2. This report previously stated that Karen State had 11 IDPs per 100 people. The correct figure is 6 IDPs per 100 people. ↩︎