(Antonio Graceffo’s post from the MIZZIMA-ENGLISH on 30 July 2025.)
Trump Administration Considers Rare Earth Deal That
Could Reshape the Burma Conflict: In a groundbreaking shift, the Trump
administration is reportedly considering two proposals for securing rare earth
minerals from Myanmar, resources critical to advanced weaponry and battery
production.
The first option would involve engaging directly
with the military junta, which would carry the side effect of granting it de
facto recognition. The second, far more transformative option, would be to
bypass the junta entirely and negotiate directly with the Kachin Independence
Army (KIA), the ethnic armed organization that controls most of Myanmar’s rare
earth mining territory.
If the U.S. chooses the latter, it would mark a historic break from the longstanding convention of democratic governments only engaging with officially recognized state authorities. Such a move would not only grant legitimacy to the KIA but also offer hope to all of Burma’s ethnic armed organizations, many of which have long sought international recognition and support.
The KIA has captured and been operating key mining
zones, including Chipwi and Pangwa, disrupting traditional trade routes and
positioning itself as the gatekeeper of a critical rare earth supply corridor.
In 2024, the KIA reached a direct pricing agreement
with Chinese buyers at 35,000 yuan per ton and has maintained export volumes
close to 2023 levels, potentially generating over $200 million in annual
revenue. Burma now accounts for roughly 57% of China’s rare earth imports.
For Washington, the stakes go beyond access to
valuable resources. Partnering with the KIA could help cut China out of the
U.S. supply chain and weaken Beijing’s global dominance in the rare earth
market. This makes the decision not just a diplomatic dilemma, but a strategic
one, with far-reaching consequences for U.S. foreign policy, supply chain
security, and Burma’s future.
The KIA has emerged as the dominant military force
in Kachin State. After a sweeping two-month offensive in early 2024, it seized
over 200 junta positions and now controls the majority of the region. While the
junta retains nominal control over parts of Myitkyina, the state capital, and
Bhamo one of the largest cities, as well as scattered outposts near Hpakant,
its hold on the region is tenuous.
Even in urban areas still under junta occupation,
KIA offensives continue. Myitkyina is surrounded, and the junta’s control over
Bhamo is becoming tenuous. Most military bases are isolated and under siege.
Strategically, the KIA controls a major road leading south to the Chinese
border, further undermining the junta’s logistical capabilities while
strengthening the KIA’s ability to negotiate trade deals directly with Beijing.
In the territory it controls, the KIA, through its political wing the Kachin Independence Organization (KIO), functions as a governing body. It administers civil services, including healthcare, and has implemented a local taxation system. The KIO deploys bureaucrats to manage governance, and its health department provides maternal care, immunizations, and emergency treatment in the liberated areas. The KIA also controls key resource zones and oversees export taxation, most notably in the rare earth sector.
The KIA’s status as a quasi-state actor is most
evident in its trade relations with China. After capturing Chipwi and Pangwa,
China temporarily closed the border and halted rare earth shipments. However,
following quiet negotiations – culminating in a December 2024 meeting in
Kunming between KIA representatives and members of the Chinese People’s
Political Consultative Conference – trade resumed under new terms.
The KIA introduced a 20% export tax on rare earth
concentrates and agreed with Chinese buyers on a fixed rate of 35,000 yuan
(approximately $4,830) per metric ton. By April 2025, rare earth exports to
China were flowing again, regulated entirely by the KIA.
The Kachin Independence Army isn’t the only ethnic
armed organization in Burma functioning as a quasi-state actor. The United Wa
State Army (UWSA), based in eastern Shan State, also operates independently of
the junta and maintains its own government, armed forces, and economic
policies.
Backed by China, the UWSA oversees mining
operations, including rare earth extraction, and conducts direct trade with
Beijing, bypassing Myanmar’s central authorities entirely. This establishes a
precedent of states being able to engage with EAOs directly, particularly in a
country where the junta has been expressly rejected by the EU and
diplomatically downgraded by most other governments, many of whom have largely
ceased engagement with the military regime while holding talks with the shadow
National Unity Government (NUG).
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| KIA General Gun-Maw is rumoured to become the NUG's defence minister? |
Contrary to popular assumption, the United States does not maintain a rigid policy of only engaging with internationally recognized governments. While sovereignty and diplomatic recognition remain important, Washington has a long and well-documented history of working directly with non-state actors when doing so aligns with strategic interests.
U.S. policy on this front is pragmatic. Officials
assess potential partners based on legitimacy, governance capacity, alignment
with U.S. values, and the ability to maintain stability. This approach, often
termed “strategic empowerment,” focuses on supporting actors who can govern
effectively and contribute to U.S. objectives, regardless of their formal
statehood status.
One of the most significant examples of U.S.
engagement with a non-state actor is its long-standing relationship with
Kurdish authorities in Iraq. After the 1991 Gulf War, the U.S. helped establish
a no-fly zone over northern Iraq, effectively shielding Kurdish areas from
Saddam Hussein and allowing a de facto autonomous region to emerge.
This later became the Kurdistan Regional Government
(KRG), formally recognized in Iraq’s 2005 constitution. The U.S. has
coordinated militarily with the Kurdish Peshmerga, notably during the 2003
invasion of Iraq and the fight against ISIS. Today, the KRG functions as an
autonomous region with its own government, armed forces, and foreign economic
ties, offering a clear precedent for U.S. engagement with effective non-state
entities that control territory and provide governance.
Since the late 19th Century, the United States has
also provided direct military aid, training, equipment, intelligence, and
logistical support to non-state actors across various theaters. In many cases,
this assistance continued while the U.S. maintained formal diplomatic relations
with the governments those groups were fighting. In this context, potential
U.S. engagement with the Kachin Independence Army (KIA) would not be
unprecedented.
Alongside the proposal to engage directly with the Kachin Independence Army (KIA), experts have urged Washington to deepen cooperation with U.S. partners in the Quad, specifically India, for rare earth processing and future supply to the United States. The Quad, which includes the U.S., India, Australia, and Japan, offers a strategic framework for securing critical minerals.
Such cooperation would benefit both Washington and
New Delhi by generating revenue for India, strengthening bilateral ties, and
positioning both countries in opposition to China. However, the relationship is
complicated by India’s simultaneous membership in BRICS and the Shanghai
Cooperation Organization (SCO), where its interests sometimes conflict with
China’s. Collaborating on this rare earths deal would bring India closer to the
U.S. strategic orbit.
Some of these ideas were raised in a July 17 meeting in Vice President J.D. Vance’s office, which included Adam Castillo, former head of the American Chamber of Commerce in Myanmar. U.S. officials have also held indirect discussions with the KIA in recent months regarding rare earth trade. These talks represent a potential shift in U.S. policy toward Myanmar, driven by strategic competition with China over critical mineral access essential to defense and high-tech manufacturing.
One logistical concern is the proximity of the
KIA-controlled mines to the Chinese border, allowing Beijing to potentially
block shipments to India. Still, if the U.S. proceeds with a deal directly with
the KIA, it would set an important precedent for other ethnic armed
organizations (EAOs), such as the Karenni Nationalities Defense Force (KNDF),
which is building a civilian government in much of Karenni State, and the Karen
National Union (KNU), which controls significant areas in Karen State.
Recognition and support from Washington could not only weaken China’s influence in Burma but also encourage other Western nations to follow suit, potentially pressuring the junta to allow elections and move toward a federal democracy.
Unfortunately, the U.S. remains deeply engaged
elsewhere, with ongoing crises involving China, the trade war, Ukraine, and the
Israel-Hamas conflict. However, the goal of cutting China out of U.S. supply
chains may be enough to bring the Burma decision to President Trump’s desk.
(Antonio Graceffo is an economist and
China expert with extensive experience of reporting on Burma.)
