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In two short years, a reform movement led by ex-generals has transformed a junta-run backwater into Asia’s new investment attraction. But there's a catch. Yangon is no ready-made Shanghai. Long neglected, the country's infrastructure leaves much to be desired. And many of the resources that make Myanmar so compelling in the first place lie in the jungle under the careful watch of guerrilla fighters. Still, the companies have come, and the money is flowing. Cue the gold rush. GlobalPost's Patrick Winn investigates.

Karen army myanmar
Karen women (L) dressed in traditonal clothing present garlands to Karen National Union (KNU) soldiers during the celebration of 63rd anniversary of the Karen Revolution day in Karen State, near the Thai-Myanmar border on January 31, 2012. (Pornchai Kittiwongsakul/AFP/Getty Images)

Guerrilla economics in Myanmar’s 'black zone'

In resource-rich Myanmar, militias guard the goods.

KAREN STATE, Myanmar — For a bold sort of European or American investor, Myanmar’s allure is almost overpowering. Long reclusive and tyrannical, now a broken nation on the mend, the country once titled Burma is Asia’s hottest frontier economy.

But here in the actual frontier, the mood is more forbidding.

This is Myanmar’s “black zone,” a government designation for territory controlled by indigenous guerrillas. Amid soaring hopes for change in Myanmar, a cease-fire signed in January has paused the world’s longest-running civil war. Ongoing since 1949, the conflict pits Myanmar’s army, commanded by the nation’s dominant Burmese ethnicity, against eastern mountain dwellers known as the Karen.

Karen territory is rich in fine teak, lead, tin, jade, a twinkling mineral called antimony and rivers mighty enough for hydro-power dams. One new survey led by an ethnic Burmese geologist portends a thrilling discovery: Karen State may hold the region’s largest untapped vein of gold.

With most sanctions against Myanmar suspended or erased, Westerners are now free to seek government blessings for operations in Myanmar. But any outsider tempted by this region’s bounty are warned: Even businessmen with central government approval face peril if they intrude against the wishes of the Karen National Liberation Army.

“First, we’ll warn and threaten them,” said Brigadier General Baw Kyaw Heh, 49, commander of the liberation army’s hardline fifth brigade and veteran of its special forces unit.

“If they don’t listen,” he said, “we’ll destroy their equipment.” His last strike against intruders took place in April, months into the cease-fire, when a Burmese outfit came to dig for antimony. The crew arrived one morning to find their instruments smashed. “That is our last option before fighting.”

War has sealed off Karen State’s hills from the modern world. With few exceptions — a solar panel here, a smuggled liter of Sprite there — village life plays out as it has for centuries. In lieu of tire tread, elephant tracks mark jungle paths. Many villagers have never seen a motorized vehicle. In the absence of cell towers, mobile phones are useless: The Karen National Liberation Army, or KNLA, relies on walkie-talkies and morse code.

In the worst-hit hills, it is difficult to find an adult who has never fled a village under government attack or lost a companion to violence. Even within their own villages, farmers feel pinned down by the army’s practice of gunning down or locking up people at will.

“It’s even difficult to trade with the next village over,” said Ko Hae, a 50-year-old farmer with an underfed, sinewy frame. “The lucky ones here eat once a day.”

Traveling, he said, is a good way to get caught by the army and tortured for information. “Just two years ago, they killed my friend,” Ko Hae said. “He was no insurgent. He was just out hunting wildcats.”

Villagers are further stuck in place by land mines scattered in the muck. Common is the sight of sun-darkened men ambling on imported prosthetic legs with mismatched caucasian skin tones. Medicine is scarce. Nibbles from mosquitoes, forever buzzing through the soupy air, bring the specter of untreatable malaria.

Isolation has bred fierce survivalists endowed with skills now absent in the developed world. Seemingly every young man can fashion bamboo stalks into shelters, catch a wild rat with his bare hands and scale near-vertical mountainsides — all while chain smoking leafy, hand-rolled cigars.

Even the components of homegrown guerrilla land mines reflect jungle resourcefulness. The bombs are fashioned from bamboo casings stuffed with steel chips and fistfuls of gunpowder.

It seems counterintuitive that a society so ruined by war would not rush toward the prospect of peace and modernity. But skeptics within the Karen describe development as a potentially destructive force.

Past and ongoing projects on Karen land are traditionally financed by Burmese businessmen who bring troops for protection. “Burmese business comes, Burmese soldiers come,” said Ten Der, a 52-year-old district leader with the Karen National Union, a decision-making political body aligned with the guerrillas. “That’s exactly what we’ve been fighting to stop.”

To safely extract timber or minerals from Karen State, an investor must compensate both the central government and the Karen. But even foreigner-led projects bring shivers to Ten Der.

Farming and fighting is their forte. Cutting deals with multinational firms is not. Occupied by warfare, the