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THE rugged hills and the coastline of Myanmar’s Rakhine State have become the stage for a complex geopolitical play beyond the borders. At the centre of this drama is the Arakan Army, an ethnic armed organisation that has evolved from a fledgling insurgent group in 2009 into a reckonable political and military force in 2025 with the control of 85 per cent of Rakhine State. Its rise has not only shifted the balance of power in Myanmar’s long-running civil war but also drawn the attention of major external powers, each with their own strategic imperatives. The engagement between China and the Arakan Army, the potential calculus of the United States, the quiet anxieties of India and the profound dilemmas facing Bangladesh together constitute an intricate geopolitical puzzle. Understanding these interconnected relationships is crucial to deciphering the future of the Bay of Bengal region and the broader Indo-Pacific contest.

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Conditional partnership

THE relationship between China and the Arakan Army is often characterised as a straightforward patron-client dynamic. In reality, it is a conditional engagement, dictated entirely by Beijing’s core national interests, which can sometimes conflict.

The primary channel for this engagement, in the recent past, is theÌýBrotherhood Alliance, a coalition of three powerful ethnic armed organisations — the Arakan Army, the Myanmar National Democratic Alliance Army and the Ta’ang National Liberation Army. The latter two groups operate directly on the Chinese border and have deep historical, ethnic and logistical ties to Beijing. This alliance provides for a unified command structure through which China can exert influence, negotiate ceasefires and manage stability along its southern periphery. The Arakan Army benefits from this association by gaining political cover and access to China’s diplomatic weight and, perhaps, some material support funneled through its allies.

China’s paramount interest in Rakhine State is the protection of its massive infrastructure investments, which are central to itsÌýBelt and Road Initiative. The most critical of these is theÌýKyaukphyu deep-sea tank terminal on Madey Island and the accompanying dual pipelines that transport oil and natural gas across Myanmar to landlocked Yunnan province. An energy corridor involving $1.2 billion is a strategic asset for Beijing which allows it to reduce dependence on the Strait of Malacca and secure a direct route for crucial hydrocarbon imports from the Middle East and Africa.

China’s engagement with the Arakan Army is, therefore, fundamentallyÌýrisk mitigation and stability assurance. Beijing may seek an Arakan Army that can have negotiating power but not so disruptive that it jeopardises Chinese assets to keep Naypyitaw at check in the western Myanmar. When fierce fighting between the Arakan Army and the Myanmar military threatened the vicinity of Kyaukphyu and other important sites in 2019, Chinese diplomats actively brokered temporary ceasefires.

China practises a policy of ‘dual engagement’ or ‘multi-vector diplomacy’ in Myanmar. China’s engagement with the Arakan Army demonstrates that Beijing views it as a de facto governing authority in large parts of Rakhine whose cooperation is essential for project security. It maintains robust military, economic and diplomatic ties with the Tatmadaw and the central government in Naypyidaw. This approach ensures that regardless of which party holds power in Rakhine, China’s interests will be protected. It is a delicate balancing act, empowering the Arakan Army enough to keep the Tatmadaw in check while also restraining the Arakan Army to prevent it from derailing the projects that China needs the central government to legitimise.

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Beyond single patron

WHILE China is the most influential external actor the Arakan Army engages with, labelling Beijing as its ‘principal backer’ oversimplifies the group’s sources of strength. The Arakan Army’s resilience stems from a powerful domestic foundation. Its most significant asset isÌýthe popular support among the ethnic Rakhine population. The Arakan Army has skillfully propagated the narrative of defending Rakhine identity and rights against decades of neglect and oppression by the Bamar-dominated central state. This grassroot legitimacy provides for a steady stream of recruits, intelligence and a social licence to operate.

The Arakan Army is widely considered one of the financially solvent ethnic armed organisations in Myanmar. It has reportedly developed a sophisticated self-funding model that includes: Control of economic zones:ÌýIt taxes goods and movement through territories it controls. Natural resources:ÌýIt exploits local resources, including timber and possibly minerals. Business conglomerates:ÌýIt runs a network of legitimate and illicit business. Its financial solvency is a key differentiator allowing the Arakan Army to make strategic decisions without being beholden to a single foreign patron’s demands.

Other sources of support include its formal and informal alliances with other ethnic armed organisations sand financial contributions from the Rakhine diaspora. Therefore, China acts as a strategic facilitator and a necessary geopolitical interlocutor, but the Arakan Army’s principal backer is, in many ways, its own cause and its disciplined, self-sustaining organisational model, which elevated it into a formidable force in Rakhine in a short span of time.

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US strategic dilemma

OFFICIALLY and directly,Ìýthe United States seems to have no engagement with the Arakan Army.ÌýThe Burma Act is slated to support Myanmar’s democratic forces, primarily the ousted National Unity Government and its armed wing, the People’s Defence Force. Engaging with the Arakan Army, which operates independently of the National Unity Government and pursues a distinctly ethno-nationalist agenda, would undermine this central pillar of US policy. Furthermore, the Arakan Army’s tactics, including allegations of abductions, extortion and illicit businesses, place it outside the bounds of the group that Washington would traditionally partner with. This leads to a compelling strategic dilemma.ÌýWould it be wise for the United States to engage the Arakan Army to reduce China’s influence and deny its access to the Indian Ocean?

Apparently, the logic is very attractive. By cultivating a relationship with the group that controls the coastline hosting China’s geopolitical and geoeconomic assets, the United States could theoretically threaten Beijing’s strategic bypass of the Malacca Strait. It could be seen as a low-cost way to check Chinese expansion in the Indian Ocean. However, a different thought shows this to be a high-risk, low-reward strategy fraught with peril:

Moral and strategic hazard:ÌýIn the present context, aligning with an armed ethno-nationalist group would undermine the US narrative of supporting federal democracy and human rights in Myanmar. It would betray the Nationbal Unity Government and risk fracturing the broader anti-junta resistance. However, the National Unity Government and Arakan Army alignment for democratic push may change the narrative.

Unpredictable outcomes:ÌýThe Arakan Army’s primary loyalty is to the Arakan cause, not to US geopolitical interests. There is no guarantee that a stronger Arakan Army-controlled Rakhine State would not eventually cut a more favourable deal with China. In this context, the United States would be investing in a partner with potential blow back.

Blowback on regional allies:ÌýAny US support for the Arakan Army would trigger immediate concerns for other major powers in the region. China maintains an uncompromising stance in Myanmar, primarily focused on protecting its geostrategic assets, while India would view American intervention in Rakhine as potential threat to its own interests. Consequently, Bangladesh would find itself caught in a five-way struggle between China, the United States, India, the Tatmadaw and the Arakan Army.

China’s home-field advantage:ÌýMyanmar is China’s non-negotiable asset. China holds all the tactical cards: direct border access, long-standing relationships and immense economic leverage. The United States would be engaging in a proxy contest on China’s doorstep, a contest it is ill-positioned to win.

Alternatively, a US strategy could avoid direct engagement with the Arakan Army and, instead, double down on supporting an inclusive, federal democratic solution for all of Myanmar. A stable, democratic and decentralised Myanmar would naturally be less susceptible to Chinese dominance and a more reliable long-term partner for the United States and its allies.ÌýYet, this vision remains a distant possibility. The path to democracy is fraught with immense obstacles, not least the Tatmadaw’s firm grip on power and the profound challenges of achieving a nationwide political settlement.

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India’s calculations

CONFLICT in Rakhine State is a source of deep strategic anxiety for India. New Delhi’s primary interest is the security, connectivity and development of its land-locked northeastern states. To create an opening into the Bay of Bengal, it has invested heavily in theÌýKaladan Multi-Modal Transit Transport Project, a connectivity initiative that runs from the Indian port of Kolkata to Sittwe in Rakhine State to Mizoram. The success of this project, intended to be India’s answer to China’s Belt and Road Initiative in the region, is entirely dependent on stability in Rakhine.

The Arakan Army’s ascendancy directly threatens the Kaladan project. Clashes near Sittwe and along the Kaladan River have repeatedly disrupted work and highlighted the project’s vulnerability. India is caught in a bind. It maintains cordial relations with the Tatmadaw, seen as a bulwark against Chinese influence. It cannot ignore the Arakan Army’s growing power and engaged the Arakan Army to reduce risks to its projects. A direct confrontation with the Arakan Army is not feasible. So, India is forced into a cautious, reactive stance, hoping for a political settlement that secures its infrastructure investments.

Furthermore, India fears that instability in Rakhine and Chin states could spill over its border, fuelling insurgencies in its north-east. Its complex and delicate relationship with Bangladesh also means that it must carefully calibrate its response to avoid alienating Dhaka. India’s role, therefore, is that of a concerned and heavily invested neighbour, watching the crossfire with anxiety, its own strategic ambitions held hostage by a conflict it cannot control.

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Risks and Opportunities in Rohingya crisis

FOR Bangladesh, the situation in Rakhine State presents an acute and immediate national challenge centred on theÌýpresence of over a million Rohingya refugees. The geopolitical swirl surrounding Rakhine State adversely impacts the prospects for their safe and dignified repatriation.

The ongoing conflict makes repatriation a practical and political impossibility. The Tatmadaw which evicted the Rohingyas from their ancestral abode had no intention to take back refugees. The Arakan Army, while controlling the territory, is also not keen on seeing the Rohingyas return to their homeland. The group’s Rakhine nationalist ideology is historically at odds with the Rohingya community. This perpetual limbo poses severe risks for Bangladesh.

Humanitarian and economic burden:ÌýThe refugee camps place an immense strain on local resources and the national economy.

Security degradation:ÌýThe protracted crisis has led to rising crime, trafficking and the risk of radicalisation in the overcrowded camps and a demographic imbalance at Teknaf and Ramu.

Environmental disaster:ÌýThe massive, makeshift camps have caused severe deforestation and environmental damage.

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Fleeting opportunity

Paradoxically, the Arakan Army’s consolidation of power could eventually create a new, more stable political reality. If a credible political settlement, although extremely unlikely, is reached between the Arakan Army and Myanmar’s central government, granting Rakhine significant autonomy, it could create a single, accountable authority with whom Bangladesh can negotiate. The Arakan Army, as a governing force, might see the value in resolving the refugee issue to gain international legitimacy and facilitate reconstruction.

However, this opportunity is fragile. The Arakan Army might also pursue policies that further marginalise the Rohingya, making the repatriation even more dangerous and effectively cementing the refugee crisis. Bangladesh’s best hope is to engage in quiet, multilateral diplomacy, involving China and ASEAN, to push for a comprehensive political solution in Rakhine State that explicitly includes a credible road map for a refugee return. The status quo, however, remains the most likely and risky outcome.

The Arakan Army is no longer just a local insurgent group. It is an important node in the regional geopolitical system. China’s engagement is a calculated effort to secure its strategic corridors while the US abstention reflects the moral and strategic complexities of a distant power. India watches with anxiety as its regional ambitions are threatened and Bangladesh takes the direct shot of humanitarian and security consequences.

The interplay of the forces suggests that the conflict in Rakhine State is likely to be protracted and warring parties resistant to easy solutions. The great game being played out in its hills and along its coast is not one of clear alliances, but of shifting arrangements where local actors like the Arakan Army skilfully leverage their position to advance their own goals.

Lasting stability in the Myanmar or in Rakhine State will not come from picking sides in this crossfire, but from a concerted international effort to foster a political settlement that addresses the legitimate aspirations of all of Myanmar’s peoples, a goal that remains as elusive as it is essential.

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Mohammad Abdur Razzak ([email protected]), a retired commodore of the Bangladesh Navy, is a security analyst and a research director at the Osmani Centre for Peace and Security Studies.