(Reuters) -Armed soldiers loyal to a turncoat warlord patrol the streets of southeastern Myanmar's frontier town of Myawaddy, as troops of the ruling junta and rebels jostle for control of the outpost that handles more than $1 billion in border trade every year.
The struggle for Myawaddy has highlighted the role played by Colonel Saw Chit Thu, his militia and sprawling business enterprise, underlining his outsized influence in the strategically vital territory.
The Karen National Army (KNA) he leads has long had a presence in the region lying across from Thailand, which has become a key battleground in recent weeks as an anti-junta resistance gains momentum against the powerful military.
Saw Chit Thu's ties to Myanmar's military rulers, evidenced by an honorary title for "outstanding performance" conferred on him by junta chief General Min Aung Hlaing in November 2022, have helped him build his position.
But Britain has imposed sanctions on him for serious human rights violations such as people-trafficking, and analysts have flagged his ties to border scam centres run by Chinese-led crime networks.
Saw Chit Thu and a junta spokesman did not respond to telephone calls from Reuters seeking comment.
China, a junta ally, has been riled by Myanmar's inability to shut down online scam centres along the border in eastern Shan State, following a successful rebel offensive last year.
Myanmar's home minister, Lieutenant General Yar Pyae, is now in Beijing for talks with Chinese officials on law enforcement and security co-operation, state media have said.
Early in April, Myawaddy was the frontline as resistance fighters led by the Karen National Union (KNU), one of Myanmar's oldest ethnic armies, pushed into the area and dislodged hundreds of junta troops from their bases.
But the KNA, once entirely loyal to the junta, stood aside after Saw Chit Thu declared that the militia, previously known as the Border Guard Force, would stop accepting salaries and rations from the military.
"We do not want to fight among our Karen people," he told media in January.
Lack of logistical and tactical support from the KNA stymied the junta's ability to fight back in Myawaddy, the United States Institute of Peace (USIP) think-tank said in a report this week, estimating the strength of the militia at about 8,000 soldiers.
At the time, the loss of Myawaddy was yet another battlefield defeat for the junta, which is locked in a widening civil war with established ethnic minority armies and a grassroots resistance movement that emerged after its 2021 coup.
But the KNA's status as being neither entirely loyal to the junta nor pledging alliance with the rebels has thrust it into the spotlight.
The military, which retains significant firepower, has mounted a counteroffensive for the town, forcing a temporary withdrawal from Myawaddy by KNU resistance forces, some moving about 12 km (8 miles) away to control key routes, the group's spokesman, Saw Taw Nee, told Reuters.
It was the support of Saw Chit Thu's KNA militia that enabled the return of some junta troops to Myawaddy, Saw Taw Nee added.
On Thursday, small groups of KNA soldiers drove through the town of about 200,000 people that remains peaceful, two Myawaddy residents told Reuters, speaking on condition of anonymity.
"The town is normal," a 42-year-old resident said. "The government offices are open."
SANCTIONS BY BRITAIN
Saw Chit Thu's militia emerged out a faction of the Karen National Liberation Army (KNLA), the armed wing of the KNU, around 2010, and sided with Myanmar's military to take on junta opponents in parts of the southeastern highlands mainly home to the Karen ethnic group.
By 2017, the warlord become involved in the construction of Shwe Kokko, a so-called "Special Economic Zone" along the Thai-Myanmar border.
The project has become a centre for transnational crime and gambling backed by Chinese-origin gangs, earning the KNA around $190 million a year, analysts say.
Gambling is illegal in mainland China and online gaming operators, mostly targeting Chinese gamblers, have flourished in parts of Southeast Asia, including Myanmar, in recent years.
Shwe Kokko expanded rapidly, satellite images show, transforming within decades from a largely barren tract of riverside land into a sprawling settlement of low-rise and multi-storied buildings.
Britain sanctioned Saw Chit Thu late last year for serious violations of human rights, accusing him of involvement in "trafficking of individuals".
Taken to Shwe Kokko, they were forced to work as scammers and subject to cruel, inhuman and degrading treatment or punishment, the sanctions notice issued in December said.
In recent months, as authorities in China have cracked down on scam compounds along the border with Myanmar, some criminal syndicates have relocated to Thai-Myanmar border, including areas controlled by Saw Chit Thu, according to USIP.
"The dozens of scam centres established in Karen State by Chinese-led crime networks have grown visibly along the Thai border since the compounds on the Chinese frontier shut down," the think-tank said in its April report.
"...Chit Thu has remained focused on reinforcing his crime empire and ensuring that it retains access to key support services, such as security, communications connectivity and electricity."
(Reporting by Reuters staff; Writing by Devjyot Ghoshal; Editing by Clarence Fernandez)
