FROM THE MOMENT of its birth in 1948 Myanmar has been riven by civil conflict, mainly between the majority Burmans that occupy the country's central low-lying plain and the hill peoples on its periphery. Myanmar is an artificial product of colonial rule, its borders drawn largely for the convenience of British administrators. The Kachin, Chin, Shan and many other ethnic groups never wanted to share a country with the Burmans; within the newly independent Myanmar, they agreed to do so only on the basis of the Panglong Agreement between them and General Aung San in 1947. This promised "full autonomy in internal administration for the frontier areas," envisaged the creation of a separate Kachin state and guaranteed that "citizens of the frontier areas shall enjoy rights and privileges which are regarded as fundamental in democratic countries." The Panglong Agreement was meant to be the glue to hold together one of Asia's most ethnically diverse countries. But the ethnic minorities say that from the moment the majority-Burman government took over in 1948 it began to chip away at the accord. After 1962 Ne Win's military regime abandoned it altogether, trampling on ethnic and religious minorities. In response the ethnic groups all formed armed wings to fight for greater autonomy or even outright independence. The old military regimes made sporadic attempts to arrange ceasefires with the armed groups, most notably in the 1990s and again in the late 2000s, but none of these ceasefires proved permanent, nor did any of them lead to proper political talks. The reformers in Thein Sein's government know that ethnic violence could undermine everything they want to achieve. Continuing civil conflict makes the country an unstable and dangerous place, deterring the international investors that the government needs to help rebuild the economy. Moreover, opium-poppy production has flourished in the areas of ethnic conflict. The army is often in cahoots with the drug-producers, and armed militias recruited to protect the poppy fields make peace even harder to achieve. The government is trying its best to end the conflicts. It has already done better than its predecessors, having signed 13 ceasefire agreements since the end of 2011. Some of these are merely rehashes of older ones from the 1990s, but negotiators say the new ones are better because they have been formally endorsed. On the government's side much of the credit for this goes to Aung Min, a former railways minister, who is now leading negotiations with the ethnic groups from within the president's office. Like Shwe Mann in the parliament, he commands respect even from erstwhile opponents. Ngun Cung Lian, who negotiated a tricky ceasefire agreement with the government on behalf of the Chin, like many others was surprised and impressed by "the openness, honesty and willingness to change" of Aung Min and his team. The European Union and others have funded a new organisation, the Myanmar Peace Centre in Yangon, that is providing Aung Min with a secretariat. Give peace a chance However, the intense fighting in Kachin state earlier this year was a reminder of the immense difficulties that lie ahead. The Kachin Independence Army (KIA) signed a ceasefire agreement with the government in 1994, but 17 years later it resumed hostilities, having achieved no progress on becoming semi-autonomous or independent. Since 2011 hundreds of people on both sides have died and over 100,000 have become refugees. For the first time Myanmar's army has been using jet aeroplanes in this sort of action. These tactics have raised doubt over how much control the civilian authority exerts over field commanders on the country's periphery. Thein Sein called for ceasefires that appeared to be largely ignored on the ground; it was only the intervention of an angry Chinese government, alarmed at the prospect of thousands of refugees pouring over the border, that brought the Myanmar government and the KIA back to the negotiating table. For the Kachin and other ethnic groups the Panglong Agreement still inspires the search for a federal solution to the country's ethnic problems, the only path to an inclusive Myanmar that can live peacefully with itself. The army, for its part, has been stubbornly insisting on the unitary nature of the state for decades. The question now is whether Thein Sein's government is willing to go further, build on the current ceasefires and hold talks on political devolution and wealth-sharing. The fighting in Kachin state suggests that it is not, but people close to Aung Min insist that they are now nearing full political negotiation with the ceasefire groups and that everything is on the table. They say that he and other ministers have even started talking about federalism, breaking an old taboo in government circles. This reflects a genuine evolution of thinking on the government's part. Ministers started off believing that the grievances of the Chin, Kachin and others arose from economic underdevelopment and could easily be overcome by more infrastructure spending. Only recently have they understood that to win peace they will have to acknowledge and respect the religious and social differences between themselves and the ethnic groups. Whereas the Burmans are Buddhists, for instance, most of the Kachin are Christians, mainly Baptists. The reformers, and perhaps even a future president Aung San Suu Kyi after 2015, will have to grapple with other such religious and racial divisions. Just as the Kachin, Karen and others have suffered decades of discrimination at the hands of the Burman state, so too have hundreds of thousands of Muslims. The murderous attacks by Buddhists on Muslims in Rakhine state in June and October last year, which spread to central Myanmar this year, reflect a hatred of non-Burman incomers of a different faith dating back to early colonial times. If these outbursts of racially and religiously motivated killing are not dealt with they could spiral out of control. An archaic law passed in 1982 denies any form of citizenship to the Muslim Rohingya, the victims in Rakhine state, on the ground that they are not an "indigenous race" like the Kachin, Karen and others. The other ethnic minorities have suffered the same sort of discrimination at the hands of Buddhist Burmans for being Christians as the Rohingya have for being Muslims, but in practice the Rohingyas are in the worst plight because as non-citizens they have no rights at all. The staff at the Myanmar Peace Centre who are supporting Aung Min in his peacemaking efforts are so dedicated to their work that sometimes they do not even go home to sleep. They reckon that the tumultuous events of the past two years have given them a unique opportunity to change Myanmar for good, and they are determined to make the most of it. They have a point. This special report has argued that the country's military rulers seem to have been sincere in their reform efforts, and have already gone further than they had intended to. There is more to do: for example, about 200 political prisoners are still behind bars. But by now reform has generated its own momentum, opening up possibilities that two short years ago seemed totally out of reach. Everything is now in flux and change is accelerating. Even the constitution, supposedly the basis of the army's continuing grip on the country, is up for official review by a parliamentary commission, initiated by the army itself through its parliamentary proxy, the USDP. Encouraged by the apparent willingness of reforming ministers like Shwe Mann and Aung Min to re-examine every aspect of life in Myanmar, exiles have been returning to provide much-needed technical expertise. So there will never be a better time to draw up a proper federal constitution for the country, based on the principles of power- and resource-sharing between the Burman centre and the ethnic groups. Some at the Peace Centre argue that this is also an opportunity to set up a mechanism for redistributing wealth, based on each state's income and population. This would help the federal idea along, especially as at the moment almost all the new foreign investment is going to the Burman heartlands, making existing inequalities worse. Seize the moment The army could probably be persuaded to exchange economic and political power for professionalisation. The aim would be to turn it from the rambling, low-wage, chicken-farming organisation that it has become, frequently implicated in torture and other gross human-rights violations, into a slim, modern, properly funded institution. Some officers are known to be in favour of this sort of transformation. But the new army would also have to be truly national, incorporating the Kachin, Karen and others, just as General Aung San originally envisaged. And the wilful discrimination against the Rohingya Muslims and others would have to end. All this will take courage - and considerable help from abroad. But as this special report has argued, the risks of not undertaking such fundamental reforms are far greater than the risks of trying. All the economic and political progress so far could still founder on Myanmar's old, deep divisions. That would be a tragic waste of a golden opportunity.