The balance of power in Myanmar’s Rakhine State is undergoing a rapid transformation. Once known primarily as an ethnic armed organization, the Arakan Army (AA) has emerged as one of the most influential governing forces in the region. Beyond its military successes, the group has established administrative institutions, revenue collection mechanisms, banking services, and local governance structures, effectively evolving into a parallel governing authority. This shift is reshaping not only Myanmar’s internal political landscape but also the strategic calculations of Bangladesh, India, and China.

According to analysts, the most critical question for Rakhine’s future is the extent to which the Arakan Army can gain international legitimacy and the role it chooses to play in resolving the Rohingya crisis. China places the highest priority on safeguarding its strategic investments in Rakhine, including the Kyaukphyu deep-sea port, the China-Myanmar Economic Corridor, and other major infrastructure projects. If Beijing exerts sustained pressure on the Arakan Army to facilitate the safe return of the Rohingya and establish an inclusive system of governance, the organization may find it strategically advantageous to move in that direction. Such a development could significantly enhance its international credibility.

At the same time, new diplomatic opportunities are emerging for both Bangladesh and India. If the two countries can reach a common understanding on establishing a Special Economic Zone in Rakhine while ensuring the conditions for the safe, voluntary, and dignified repatriation of the Rohingya, the initiative could contribute not only to regional stability but also encourage the Arakan Army to pursue a political settlement. Such a framework would allow the organization to demonstrate its commitment to building an inclusive administrative system that accommodates all ethnic communities.

Nevertheless, considerable challenges remain. Intensifying geopolitical competition between China and India, or a tougher stance by Bangladesh on border security and the refugee issue, could turn Rakhine into a prolonged flashpoint of regional conflict. Under such circumstances, the Arakan Army’s vision of a confederal political arrangement would face significant obstacles.

In the short term, the Arakan Army is expected to consolidate governance in the territories under its control. By expanding its banking system, strengthening revenue collection, and promoting local economic activities, the organization aims to demonstrate its capacity for effective administration. However, if these initiatives become associated with illicit financing, cross-border smuggling, or other unlawful activities, they could attract increased scrutiny from international organizations and potentially result in sanctions.

Over the medium term, if Myanmar’s military junta continues to weaken, the Arakan Army’s participation in any future federal political dialogue is likely to become unavoidable. Its principal demands would probably include extensive autonomy for Rakhine, greater local control over natural resources, and a confederal-style political framework. Should China, India, and Bangladesh succeed in coordinating their approaches, there may be an opportunity to develop an inclusive economic and administrative model that guarantees the rights of the Rohingya while fostering long-term regional stability.

In the longer term, the most plausible scenario may be a decentralized or fragmented Myanmar, where the authority of the central government is significantly reduced and ethnic organizations exercise effective governance within their respective territories. In such a context, if the Arakan Army succeeds in establishing a stable, accountable, and inclusive administration, neighboring countries may eventually transform their existing informal contacts with the organization into formal diplomatic engagement. Such a shift would mark not only a historic turning point for Rakhine but also the beginning of a new chapter in Myanmar’s political evolution.

Author: Dr. Abul Hasnat Milton Editor-in-Chief: The Source News Bangla