"Ethnic armed groups have pushed the military out of most of Myanmar’s borderlands, putting the country on a path toward fracturing into self-governing statelets with the regime hanging on in the centre. Outside actors wishing to help Myanmar’s people should adjust to this new reality. What’s new? The Myanmar military, which has suffered a series of battlefield defeats to opposition forces, is rapidly losing control of the country’s periphery. Elite circles are blaming Commander-in-Chief Min Aung Hlaing, whose days in charge could be numbered, but the military itself is not on the brink of collapse. Why does it matter? The Myanmar state is fragmenting as ethnic armed groups consolidate control of their homelands, while in the country’s centre a weak regime clings to power and launches revenge air attacks on territories it has lost. Further fragmentation seems inevitable but does not necessarily presage catastrophic inter-group violence. What should be done? Myanmar’s neighbours should be more flexible in engaging with bordering non-state authorities. Notwithstanding the inclination to engage with national governments, donors should explore ways to strengthen the service delivery and governance functions of existing and emerging subnational administrations, while remaining mindful of conflict risks, human rights considerations and legal constraints. I.Overview The Myanmar military has suffered a series of humiliating defeats, losing territory, bases and towns to ethnic armed groups along the country’s periphery. It no longer has control of most of Myanmar’s borders, and further territorial losses seem inevitable. Nevertheless, the military is not right now on the brink of collapse. Its main battlefield opponents are focused on consolidating their hold on their ethnic homelands, not taking the fight to central Myanmar, and the post-coup resistance forces that do aim to topple the regime do not have the firepower to defeat the military on its home turf. The current trajectory is one in which various ethnic armies will tighten their grip on autonomous statelets in the periphery, while a weak regime brutally clings to power in the centre. While concerning, this atomisation of the state only entrenches a long-existing situation and may not trigger a slide into chaotic violence. It will, however, require outside actors that wish to support Myanmar’s people to grapple with the challenge of engaging with the country as a collection of separate subnational units rather than a unified state. The military’s recent failures have been dramatic. After losing large swathes of territory in northern Shan State, near the Chinese border, to an alliance of ethnic armed groups following a joint offensive launched on 27 October 2023, it has since been routed by the Arakan Army in much of northern and central Rakhine State, losing control of all the Bangladesh border and part of the Indian Ocean seaboard. Since March 2024, it has also faced pressure from the Kachin Independence Army (KIA) in the far north, getting pushed back from strategic hilltops and losing a key trading town on the Chinese border. Its hold on lucrative jade, gold and amber mining areas is also in question. In April, the Karen National Liberation Army (KNLA) temporarily defeated regime forces at Myawaddy, a commercial hub on the Thai border, although the military subsequently retook the town with the help of a rival Karen faction. Apart from military and economic consequences, these losses are having a huge political impact in the capital Naypyitaw. Many in pro-military elite circles see Commander-in-Chief Min Aung Hlaing, the coup leader, as primarily responsible for the failures. Senior serving and retired officers are openly criticising him, while prominent monks and nationalist bloggers are publicly calling upon him to hand over his military command to someone more capable. With no institutional mechanism for removing him, however, it is hard to predict if or when other officers might move against the top general. Neither is the military likely to disintegrate after the battlefield defeats: its most powerful opponents – ethnic armed groups – have little interest in taking the fight to its strongholds in the central plains and main cities. The regime is likely to remain ensconced in Naypyitaw for now, taking vengeance from the air and prompting chaotic violence for some time to come. Armed groups in [Myanmar’s] periphery are rapidly consolidating control of ethnic homelands and expanding their governance and administrative systems. By contrast, armed groups in the periphery are rapidly consolidating control of ethnic homelands and expanding their governance and administrative systems. Many of these groups are intent on building autonomous, quasi-independent statelets that they can protect from incursions. For most of them, this objective has always seemed like a distant dream, but it now appears within reach. Already well under way, the fragmentation of the state is likely to be an impediment to, rather than a stepping stone toward, the federal union that many in the country aspire to. Yet fragmentation in Myanmar is not necessarily a prelude to the kind of catastrophic inter-group violence seen in some other countries riven by civil strife. The post-independence state has always been fractured, with many parts of the country under the control of ethnic armed groups, meaning that some of today’s protagonists have almost eight decades of experience with this reality. While the regime has launched punitive air and artillery attacks on areas it has lost – often targeting civilians – fighting among anti-regime groups has, thus far, been limited. It is quite possible that functioning ethnic minority statelets will be able to coexist amid the convulsions of a failing regime at the centre. Negotiating this landscape, however, will be a challenge for Myanmar’s neighbours as well as international donors and multilateral institutions. The international system is predicated on bilateral and multilateral relationships among nation-states and has difficulty engaging effectively with subnational entities. Yet with the regime having rapidly lost control of most of the country’s borders, the neighbours must grapple with how to respond. By all appearances, they understand that good policy requires them to step up engagement with armed group administrations, but they worry about the precedent they may be setting, given that several are contending with their own insurgent or separatist groups and may struggle with other constraints as well. Western and multilateral donors also need to explore far more flexible aid responses that are not predicated on the fiction of a central government authority. An adjusted approach along these lines would be a departure from the traditional model for governance and state-building support and would have to be developed mindful of conflict risks, human rights considerations and legal constraints. Still, there is no way for outside actors to steer around the reality that much of Myanmar is likely to be fragmented for the foreseeable future. Rather than focusing on efforts to build strong central state structures and institutions which, even if federal in intent, are unlikely to gain traction, the greatest potential for positive impact lies in working with the grain to help strengthen existing and emerging subnational administrations..."