By Yimou Lee and Antoni Slodkowski
YANGON (Reuters) - Myanmar's strongest ethnic armed group is set for its biggest leadership shake-up in a quarter century, senior sources told Reuters, raising the prospect of a period of instability in a group that is key to Aung San Suu Kyi's signature peace process.
The United Wa State Army (UWSA) boasts some 30,000 soldiers who control a secretive, China-dominated statelet the size of Belgium in the remote hills on Myanmar's eastern border.
This year the group's political wing, the United Wa State Party (UWSP), is holding elections for the first time since 1992, with at least some of the old guard who have led the statelet since its 1989 formation set to stand down, three senior Wa officials said.
"The election will also include the chairman, but whether he will be replaced is unknown," said one of the sources. "Those who are sick or old would retire. The party is going to cultivate a new group of young talents," the person added, referring to the party's top decision-making Politburo.
A second Wa official with direct knowledge of the matter described the vote as an "earth-shattering" event within the reclusive Wa State hierarchy.
Reuters visited the self-proclaimed Wa State in October - a rare trip by a major international news organisation - where officials described for the first time its inner workings.
The reshuffle could pose a new headache for Suu Kyi's nine-month-old civilian administration, already grappling with escalating clashes between government forces and other ethnic armed groups along the mountainous border with China and a military crackdown in the Muslim-majority northwest that has sent 65,000 people fleeing to neighboring Bangladesh.
After sweeping to power following a November 2015 election, Nobel Peace Prize laureate Suu Kyi has made ending the ethnic conflicts that kept Myanmar in a state of perpetual civil war through decades of military rule a priority.
As the biggest ethnic army, the UWSA will be crucial to the success of that goal, but the group has so far declined to actively participate in the peace process launched by Suu Kyi last year.
"Suu Kyi's peace process is almost impossible without Wa's participation," said Yangon-based political analyst Soe Naing, a former member of the Central Committee of the UWSP. "Wa is a mediator between government and several ethnic armed groups who are still fighting against the Myanmar army."
The Wa State, which has not fought the Myanmar army in years but has declined to disarm, is currently led by UWSP Chairman Pao Yu Hsiang, a veteran of the Communist Party of Burma, which disintegrated and split into various ethnic factions in the late 1980s.
Pao is in poor health that prevents him from traveling, but remains the ultimate decision-maker, three sources close to the leadership said.
The UWSP operates on a rotating duty leader system. This means the four most senior leaders in the Politburo, Deputy Chairman Hsiao Ming Liang, Defence Minister Chao Chung Tan and two other top leaders, rotate on a monthly basis. Pao no longer participates due to his sickness, but makes key decisions.
The party has about 15,000 members and closely resembles China's Communist Party leadership structure.
There are nine standing members of the Politburo. Wei Hsueh Kang, who is wanted by the United States on drug trafficking charges, and his brother Wei Hseuh Yun run the southern part of the state and are counted as its eighth and ninth members, at the bottom of the hierarchy, according to the two sources close to the leadership.
The second rung of decision-making is the Central Committee with up to 30 additional members, followed by a larger body of some 700 party representatives, who would take part in the rare leadership change vote in mid-2017.
Anthony Davis, a Bangkok-based analyst for security consulting firm IHS-Jane's, said it was important to watch for potential rifts between different clans within the UWSP.
One constant is likely to remain China's heavy influence in the Chinese-speaking Wa territory.
"We should send the new generation of leaders to China for its comprehensive training of political economy," said one of the senior officials, who will stand down after the elections. "That would help them master their important job in the future."
(Reporting by Antoni Slodkowski and Yimou Lee; Additional reporting by Shwe Yee Saw Myin and Wa Lone; Editing by Alex Richardson)