The result has almost inevitably been conflict. Following the Second World War and the departure of the colonial powers, the Burmese and Thai states have sought to create national identities within their respective territories, but these "imagined communities" have been based on the preeminence of the cultures of the Burmese and Thai peoples. Confronted with this process, the Karen sought refuge in their own state of Kawthoolei, a remote territory on the Thai-Burmese border traditionally not subject to either Thai or Burmese control.

Since 1949 the Thai and Burmese states have exerted greater control over their respective territories, progressively eliminating Karen territory. The Thais have accomplished this process more rapidly than the Burmese. There are various reasons for this difference. First the Thai State enjoys relatively easy access to the border from central areas, and this has facilitated the imposition of central authority. In contrast, the Burmese have had to impose control over a larger and more inaccessible territory. Second, whereas colonial rule in Burma encouraged the development of a Karen identity, a comparable process was lacking in Thailand. As the Thais asserted control over Karen areas, they encountered fragmented rather than coordinated resistance from local Karen villagers. Such resistance was relatively easy to overcome. In contrast, the more organized resistance of the Burmese Karen to the Burmese State formed the basis of the world's longest running insurgency. Finally, the vast majority of the Karen originates in Burma — there are only about 300,000 Karen in Thailand compared with up to four million Karen in Burma. Once again, this makes the task of assimilating Karen in Burma more difficult than in Thailand.

Karen identity has been forged in the context of the development of the Burmese and Thai political economies, but it has also been based on a close affiliation with the forests that once covered most of Kawthoolei. Forest use and management has long been an important part of Karen livelihoods. As most Karen were traditionally rural dwellers, forest use and management was inevitably an important part of their life and identity. Since the Karen are an ethnic group of great internal heterogeneity, their use of the forests varied from place to place depending on local social and ecological conditions. In areas where shifting cultivation was practised, forest was burned to provide fertilizer for agricultural crops, and then allowed to grow back for 10 or more years until conditions were again right for agricultural production. The forests were also managed so as to provide timber, fuelwood, fruit, nuts, medicinal products and game.

Such forest management was oriented largely, but not exclusively, towards subsistence. Yet as the British discovered upon the conquest of Tenassarim in 1826, Karen were important in the teak trade, especially in the teak forests of the Salween watershed. [See Map: The Karen homeland of Kawthoolei.] During much of the 19th century, these forests were a major source of teak (used primarily in the construction of naval ships), and the timber was sent to India and Europe from the lumber town of Moulmein. Although various ethnic groups participated in this trade, the Karen were especially prominent. In some cases, Karen were in charge of teak extraction and marketing. The success in Tenassarim of the Karen merchants Saw Po Nyein and Saw Tba Dwe around the turn of the century is but one example of the Karen presence in this sector of the economy. However, Karen were primarily involved in teak extraction as elephant riders (mahouts).