The Karen National Union (KNU) made a "temporary retreat" from the town of Myawaddy, a spokesperson said, after the return of junta soldiers to the vital strategic area that is a conduit for annual foreign trade of more than $1 billion.
"KNLA troops will ... destroy the junta troops and their back-up troops who marched to Myawaddy," said Saw Taw Nee, referring to the group's armed wing, the Karen National Liberation Army, one of Myanmar's oldest ethnic fighting forces.
He did not say what its next move would be, however.
Fighting had flared as recently as Saturday in Myawaddy, forcing 3,000 civilians to flee in a single day as rebels fought to flush out stranded Myanmar government troops holed up at a border bridge crossing.
On Wednesday, Thailand said the fighting had eased and it hoped to re-open its border crossing as trade had been hit. It said most civilians had returned and 650 remained.
"The situation has improved significantly," spokesperson Nikorndej Balankura told a briefing. "Nevertheless, we are closely monitoring the situation, which is highly uncertain and can change."
Thailand has received reports that negotiations may be starting between rival groups on the Myanmar side, Nikorndej said, without elaborating.
He added that Thailand had proposed to Laos, the chair of the Association of Southeast Asian Nations, that it could host a meeting seeking to end the Myanmar crisis.
JUNTA RULE CHALLENGED
The military faces its biggest challenge since first taking control of Myanmar in 1962, caught up in low-intensity conflicts and grappling to stabilise an economy that has crumbled since a 2021 coup ended a decade of tentative democracy and reform.
The country is locked in a civil war between the military on one side and, on the other, a loose alliance of established ethnic minority armies and a resistance movement born out of the junta's bloody crackdown on anti-coup dissent.
The junta has lost control of a string of key frontier areas to rebel groups.
Photographs posted on some pro-junta social media groups showed a handful of soldiers raising the Myanmar flag at a military base the KNU had controlled just days before, and where the rebel group had raised its own banner.
The junta, which has mounted a counteroffensive to retake Myawaddy, entered the area with the help of a regional militia that had stood aside when the KNU laid siege to the town early in April, according to the KNU's spokesperson.
The junta and the militia group, the Karen National Army (KNA), did not immediately respond to telephone calls to seek comment.
Previously aligned with the junta, the KNA asserted its independence from the weakening Myanmar military this year, but has not publicly pledged allegiance to the anti-junta resistance.
The former Border Guard Force under the command of Karen warlord Saw Chit Thu was carved out of a faction of the KNLA around 2010.
Sanctioned by Britain for human trafficking, Saw Chit Thu has significant commercial interests in Myawaddy and the surrounding area, including gambling and scam centres.
