(For a Q+A about the conflict click [ID:nBKK462807] and about China's relationship with Myanmar, [ID:nPEK70568])
BANGKOK, Sept 1 (Reuters) - An incursion by Myanmar's army into northeastern Shan State has raised fears of more clashes with ethnic minority rebels that could exacerbate a refugee crisis at its border with economic and political ally China.
Some analysts are predicting a protracted conflict will be ignited in the region, which could anger Beijing and derail plans for army-ruled Myanmar's first election in nearly two decades.
WHY HAVE MYANMAR TROOPS BEEN DEPLOYED IN SHAN STATE?
The Myanmar regime wants ethnic minorities to take part in the election and wants to recruit their fighters for an army-run border patrol force. The offensive could be an effort by Yangon to force the groups into submission.
The aim, analysts say, is to disarm and neutralise the insurgents, allowing the army to establish control over the rebellious region for the first time in its nearly five-decade rule.
However, the real target of the military is likely to be the United Wa State Army, a powerful force involved in the illicit drugs trade.
WHAT HAS HAPPENED AND WHO IS INVOLVED?
Myanmar's armed forces entered the Kokang area and last week broke a 20-year ceasefire with rebels in the region when it overwhelmed the Myanmar National Democratic Alliance Army (MNDAA), widely seen as the weakest of the area's factions.
The junta kept silent about the incursion for several days and announced via state media that the clashes occurred after troops were attacked by rebels holding 39 policemen hostage.
A recently formed ethnic minority alliance known as the Myanmar Peace and Democracy Front (MPDF) has called for dialogue and has issued statements to the regime, and to Beijing, urging an end to hostilities.
The alliance groups the MNDAA, the Kachin Independence Organisation and the United Wa State Party, the ethnic Wa armed faction's political wing. The groups are aware that a joint effort is necessary to counter the army.
IS THE SITUATION LIKELY TO ESCALATE?
There are concerns that if the fighting intensifies, other members of the alliance could enter the fray and provide a serious challenge to the Myanmar army, resulting in fighting and heightening the risk of a refugee crisis for China.
The Wa group is a formidable fighting force, with at least 15,000 members, and analysts say any clashes between the Wa and the army would be bloody.
A lot is at stake for all involved, China included, and neither side will want to engage in any kind of protracted conflict. However, any wrong moves by forces on the ground could trigger all-out war.
HOW HAS CHINA REACTED?
Beijing, one of Myanmar's few diplomatic backers, has called on Yangon to maintain stability at the border. It is likely much more is being said behind the scenes. China has long chosen not to comment on Myanmar's internal affairs.
China beefed up its border security and provided support for 37,000 refugees, most of whom are returning to Kokang.
HOW WILL THIS AFFECT THE JUNTA AND ITS ELECTIONS?
The junta wants full control over the region before the elections, even if it has to upset China to achieve this, analysts say.
It wants to bring the groups into the political fold to neutralise them and give the polls legitimacy, but its breach of the ceasefire will complicate matters.
Yangon has yet to announce a date for the election, or say who can take part. The delay is largely a result of its inability to convince, or force, ethnic minority groups to enter into the political process. (For an analysis on Myanmar's elections: [ID:nBKK533340] for scenarios [ID:nBKK400681] and a Q+A: [ID:nBKK532864])
WHAT IS AT STAKE FOR CHINA AND MYANMAR?
Energy-hungry China is building oil and gas pipelines through Myanmar that will supply Yunnan province, relieving pressure on its own oil industry to supply its southwest.
China's overriding concern is a stable Myanmar, and the Yangon regime would be loathe to upset its powerful neighbour because of the economic and diplomatic assistance it provides.
Floods of refugees entering China, shelling over the border and injuries to Chinese civilians are likely to anger Beijing, although not enough for a rare intervention or any move that would damage their close, if increasingly awkward, relationship.
Several Western academics say China will try to use its influence to halt the conflict, but Chinese-based analysts have played down that influence and say Yangon will do what it wants. (Additional reporting by Ben Blanchard in Beijing; Compiled by Bangkok Newsroom; Editing by Alan Raybould and Robert Birsel)
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