An attempt by Myanmar's ruling military junta to bring rebel ethnic fighters under its control has led to escalating tensions, reports of fighting and a looming specter of war, with thousands of refugees fleeing into southwestern Yunnan, according to a Reuters report.

China- and Thailand-based media outlets have reported that on August 8 the Myanmar army sent hundreds of troops to the region of Kokang in the country's northeastern Shan State. Kokong, which has held to a 20-year ceasefire with the Myanmar government in Yangon, is home to many ethnic Chinese as well as other ethnic groups.

According to statements released by a recently formed alliance of four area ethnic groups known as the Myanmar Peace and Democracy Front (MPDF), soldiers in Kokang are under pressure from Yangon to become part of a border security unit under the army's control in the runup to next year's national election, the first in 20 years.

Army troops have reportedly attacked a factory used by ethnic rebel soldiers to maintain and repair weapons, claiming that it was a production facility for illegal drugs. An armed standoff between army and ethnic fighters allegedly followed, sparking a flow of refugees out of Kokang into the western region of southwestern Yunnan's Lincang prefecture.

"Tensions are extremely high, with anticipation of resurgence of war, tens of thousands of ethnic people have fled," the MPDF statement said.

Next year's election in Myanmar will be the first since the 1990 election in which Aung San Suu Kyi's National League for Democracy won a clear victory, which was ruled null by the junta government. Would-be prime minister Suu Kyi was placed under house arrest shortly afterward and has spent most of the last two decades in the junta's custody.

Image: news.ifeng.com

Construction of an oil and gas pipeline between Yunnan and coastal Myanmar is scheduled to begin in the first half of next year, according to Chinese media reports citing Mi Gongsheng, director of the Yunnan Provincial Reform and Development Commission.

The US$2.5 billion pipeline project is one of several major infrastructure and energy projects planned for Yunnan in 2009. The other projects reportedly focus on large-scale industry, railway expansion, cleaning up Dianchi Lake, power and coal projects, construction, power grid improvements and rural road construction. Mi added that Yunnan will spend 72 billion yuan (US$10.5 billion) on energy projects next year.

China recently announced a massive national initiative to upgrade the country's energy, aviation, rail and internet infrastructure as part of its reaction to the current global financial crisis. This will be China's largest pipeline project since completion of a pipeline from northwestern China's Xinjiang to its energy-hungry east coast in 2004.

China National Petroleum Corp, the country's top oil producer, will control a 50.9-percent stake and will manage the project, with the remainder held by Myanmar Oil & Gas Enterprise.

China – whose energy projects in Sudan have already been a source of international criticism – is likely to get more of the same for its cooperation with Myanmar's government, which is run by a repressive military junta that is most notable for keeping the country's last democratically elected leader – Nobel laureate Aung San Suu Kyi under arrest for 13 of the last 20 years.