Following the chaos of the Panthay Rebellion, Panthays (Yunnanese Muslims) began to flood into the Shan states and reestablished ties with the local communities. They were primarily muleteers: long distance caravan traders who had traditionally linked the economies of Burma, Thailand, and northern Laos with that of Yunnan. Opium production in northern Burma boomed. By the early 1880s, when Burmese monarchical power was at its nadir, Shan financial power was on the rise, and the first of the rebellions began. Shan armies in the 1960s, under leaders Gnar Kham and U Ba Thein, became organized and well armed, primarily because of opium-for-arms deals. Armies began to compete with each other for opium; to obtain cheap opium, they often underpaid Shan growers, thus alienating their own constituency. More than ever, the armies" fates became dependent more on opium and less on local interests.
In 1996 the Burmese scored a major victory against the Shan armies after the arranged "surrender" of Khun Sa, heroin druglord and leader of the Shan Mong Tai Army (MTA). Khun Sa, ethnically Chinese, had been involved in the opium trade and Shan independence movement since the 1960s. The MTA had co-opted with several other Shan armies during the 1980s and 1990s, and was by far the largest, most powerful Shan force. Though the terms of the surrender remain unclear, what we know is that the army disbanded, Khun Sa and his family moved to a wealthy neighborhood in Bangkok, and the Burmese army took over the MTA's heroin processing facilities. With one stroke, the Shan armies had lost their largest force and a large proportion of their financial base. A major threat to SLORC control was gone. Immediately, SLORC began a massive program of forced relocations of Shan to SLORC-controlled villages; an estimated 50,000 people were moved in 1996 alone. An estimated 250,000 Shan have fled or been relocated since.
