Tension between Muslims and Buddhists reportedly was high in October 2001. Local residents say violence erupted after a quarrel broke out between some monks and a Muslim drug store owner. Several Muslim shops were reportedly ransacked, though Islamic leaders have played down the violence. There were some scuffles, with monks and Muslim youths shouting insults at each other, but the confrontations reportedly were quickly stopped by local authorities before they got out of hand.

Although the violence in Pegu was far more limited than in Prome, at least one mosque in the city was badly damaged. Although the mosque is now open for worship, the damage done to it is still very noticeable. For months after the violence, Muslim congregations, particularly after Friday prayers, continued to disperse quickly for fear of attracting the wrath of local military authorities. "The military are watching us very closely all the time," a local Muslim leader told Human Rights Watch. Tension in Pegu was still evident in early 2002. The fear is palpable. "There is no freedom for anyone here," said another Muslim worshipper, "but for Muslims it's even worse."

Muslims in Pegu are at great pains to insist that the situation in the town is now back to normal and that there are no problems with the local Buddhist community. But curfews, travel restrictions, and tighter police and military surveillance remain in effect, suggesting that tensions remain high.