Fortifying or fragmenting the state? The political economy of the drug trade in Shan State, Myanmar, 1988-2012

Over the past twenty-five years, the government of Myanmar (Burma) has consolidated control over large parts of Shan State, neutralizing much of the threat posed by armed groups and strengthening its hold over revenue extraction. During this period Myanmar has retained its position as the world's second largest producer of illicit opium, much of which is converted into heroin within the country's borders. This article explores the relationship between state-building processes and the illicit opium/heroin economy in Shan State since 1988. The author has four aims. First, to reassess the theoretical assumptions that equate illicit economies with state fragility and demonstrate instead why illicit drug economies can become embedded in processes of conflict reduction and state consolidation. Second, to explain why establishing control over Shan State has become so important to the Myanmar government's state-building ambitions. Third, to analyze how the state's engagement with the drug trade has become a vital part of its attempts to consolidate control, in terms of financing military expansion and brokering deals with strongmen who are able to govern local populations. Finally, to assess how these strategies embody a form of “negotiated statehood” in which the state's growing control has been defined by attempts to manage, rather than monopolize, the means of coercion and extraction