This report for The Asia Foundation examines the governance dynamics in southeastern Myanmar around the 67-year-old conflict between the Karen National Union (KNU) and the Myanmar state. Ceasefires and political change over time have enabled the state to expand its presence in areas where previously only the military had operated, but at the same time, the KNU has also gained much greater freedom to interact with communities in areas of contested authority. The emergence of a quasi-civilian government in recent years has generated intense public discourse on the country’s nascent democratic transition and the need to resolve longstanding ethnic conflicts. In this evolving context, new opportunities for peacebuilding are emerging but also potentially new risks which need to be better understood given that the KNU is likely to continue to be an important governance actor for some time to come.