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Mon. December 17, 2018
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Myanmar Booms – In Ways Good and Bad
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By Jeroen Gelsing

Booming Burma

The economy of Myanmar, formerly known as Burma, will grow a projected 7.8% this year. The United States, Japan, Thailand, Singapore, India and especially China all court the Myanmar government in Naypyidaw, offering tantalizing investment dollars required to help the country fulfill its long-term economic potential. FDI flows are up tenfold compared to five years ago. The telecoms, tourism and resource sectors are burgeoning, a middle class is emerging, and new high-rises even begin to obscure sweeping views of Yangon’s Shwedagon Pagoda, the country’s most sacred Buddhist site.

Despite the wealth of business opportunities that Asia’s largest untapped consumer market offers, Western nations are but small players in these developments. Washington’s restrictions on investment in Myanmar linger while Naypyidaw struggles to rein in its military shadow economy and curb human rights violations (Tweed and Thu, 2014). Japan, by contrast, is an increasingly strong player in Myanmar and fuels Naypyidaw’s logistical vision for the future. Tokyo has an active hand in the development of two deep water ports, the first at Thilawa, south of Yangon, which supplies the erstwhile capital, and the second at Dawei, on the narrow strip of Burmese land on the Andaman Sea that abuts Thailand. The former is already Myanmar’s largest container port; the latter is an ambitious project to construct from scratch an SEZ with port facilities that would connect Myanmar directly with its Thai hinterland.

Further, proposed railway upgrades are creeping down from China through Laos and Thailand to Myanmar’s borders. In January 2015, Japan and Thailand made public tentative plans to jointly construct the link’s western extension to Kanchanaburi, a Thai town some 150km east of Dawei (Promchertchoo, 2015). China has vowed to connect Yunnan Province with Bangkok via Lao capital Vientiane. Out west, India, as part of its ‘Look East’ policy, aims to improve cross-border infrastructural links with its eastern neighbor of Myanmar (Maini 2014). These combined upgrades bring tantalizingly close, should they materialize as projected, the idea of Myanmar as a Southeast Asian Netherlands; a major goods and energy throughput hub for wares flowing to and from China’s western provinces, fanning out to upper Indochina, and critically, connecting the two giants of China and India via a long-elusive land route.

Still, of all these foreign players, only China has a real foothold in Myanmar, and its investment record busts that of all competitors. Unencumbered by ethical restrictions, and buoyed by a 2000km shared border, China seeks not just markets but geostrategic advantage and energy security. Exemplary of these objectives are the deep-water port and energy facilities that have risen up on tiny Ramree Island, near Kyaukpyu, on Burma’s Bay of Bengal coastline. The complex sports two pipelines – oil and gas – that wind their way through Myanmar’s plains and unstable north-eastern borderlands to ultimately reach Kunming, an energy-hungry city of 6.5 million central to China’s ‘rejuvenate the Southwest’ development strategy (“Stretching the Threads", 2014). Plans exist to supplement these hard infrastructural links with a railway connection running parallel to the pipelines.

Already, over 6% of China’s gas needs are filled by the Kyaukpyu-Kunming pipeline (Watts, 2013). For China, the pipeline means sending fewer Middle Eastern oil tankers round the Malayan peninsula, cutting several weeks – and thus expenses – off transit time. It also provides an alternate energy terminal in case the Malacca Straits are ever inaccessible in time of conflict, denying ships access to the Guangdong-Shanghai-Beijing seaboards. For Naypyidaw, oil and gas transit fees provide a handsome revenue stream, complemented by joint foreign-domestic exploration of the enormous offshore Shwe and Yadana gas fields.

Myanmar’s resource bounty and untapped consumer market are increasingly pushing towards the background – at least for Asian investors – the fundamental problems in Burma’s evolving political system. The first of these, the harrowing tale of Burmese democratization and Aung San Suu Kyi’s audacious struggle to make it happen, is well-known in the West. The second, involving a very different kind of conflict, is only just beginning to make limited headlines.

Growing Lowland Liberty…

The origins of renewed Western investment interest in Myanmar lie in the country’s political liberalization that commenced in 2011. The junta policy reversal initiated by general-cum-president Thein Sein and the West’s subsequent laudatory response and rapid engagement hardly require introduction. In the space of a year, Burma released hundreds of political prisoners, relaxed press censorship and permitted free by-elections. The Obama administration trumpets Myanmar’s commitment to self-transform from human rights-abusing pariah state to aspiring member of the democratic club as a prime foreign policy success (Bandow, 2014).

Of course, fundamental obstacles to full Burmese democracy remain. Opposition icon Aung San Suu Kyi is barred from taking up the presidency under a law that forbids those with a foreign spouse or children to hold the country’s highest office. Further, the military continues to reserve a quarter of parliamentary seats for itself, barring constitutional change – which requires a 76% majority vote. There is no such thing as an impartial judiciary, and the military, which runs a shadow economy that extends its tentacles into the country’s most profitable industries, constitutes a formidable special interest group that requires on-going accommodation in the political process, not to mention ultimate dismantling if Myanmar is ever to rise on global corruption rankings.

Such entrenched interests are risky to take on, but Naypyidaw continues to make the right noises. Responding to foreign and National League for Democracy (NLD) pressure, the military-dominated government signed off a law in mid-February that allows for a referendum on constitutional amendment. This creates a helpful official pathway to political change, even if none is expected under the status quo. The military has emphasized continued support for the reform process, stating a military coup is ‘not possible’ (Wong, 2015). The critical test of these resolutions will come in late 2015, when general elections are planned in which Aung San Suu Kyi’s NLD is expected to win a landslide victory. Subsequent politicking may be make-or-break for Myanmar’s reforms.

But while the world concentrates on Myanmar’s development and Naypyidaw’s progress in accommodating Burmese opposition demands, the country remains home to devastating civil strife in its northern provinces that threatens to derail and discredit the Burmese transformation as a whole. One could say two Myanmars currently exist side-by-side. One is the burgeoning Burma fuelled by foreign direct investment. The other is the Burma of same-as-ever center-periphery dynamics, characterized by inter-ethnic distrust coupled with armed conflict that boils over intermittently. Indeed, the Burmese military – known as the Tatmadaw – their handling of renewed large-scale unrest in Myanmar’s borderlands calls to mind the familiar adage that despite all of Naypyidaw’s positive signaling, perhaps the Tatmadaw leopard cannot change its spots after all.

…and Upland Plight

At least since British colonial times, Myanmar has been a story of center and periphery. Ethnic Burmese, who populate Myanmar’s central lowlands, have controlled the reins of national government since independence in 1948. The rugged, mountainous areas along the country’s circumference are home to ethnic tribes historically but loosely affiliated with Yangon. Together, these ethnically Burmese ‘divisions’ and minority ‘states’ make up the Burmese Union. Propelling over half a century of modern-era strained relations between center and periphery is controversy over the 1947 Panglong Agreement, which granted minority groups regional autonomy as well as stipulating the right to secede from the Burmese Union. Neither, for a complex host of reasons, has ever materialized, sparking 60 years of armed rebellion that peaked in the late 1980s and early 1990s and displaced and destroyed entire communities.

By the start of the new millennium, however, the worst of the fighting seemed to be in the past. Bilateral ceasefires had been concluded with the dozen or so periphery-dotting insurgent groups. To be sure, these agreements did not equate to lasting peace – little to no disarmament took place and both sides maintained garrisons in conflict regions – but they created sufficient stability for Chinese wealth to flow into the north-eastern borderlands and begin to bring prosperity to historically impoverished areas. Rebel demands, too, have largely shifted towards greater autonomy from Naypyidaw, better regional administration, and more economic opportunities rather than outright independence.

Moving forward from this steady trickle of bilateral ceasefires, the military-dominated government had hoped to sign a national ceasefire on Union Day, February 12, this year. It was to be the culmination of two decades of gradual trust-building between Tatmadaw and ethnic rebels that have markedly reduced conflict levels and combat deaths on both sides.

However, in early February renewed fighting broke out between the Tatmadaw and the ethnic rebel groups Shan State’s Ta'ang National Liberation Army (TNLA) and Myanmar National Democratic Alliance Army (MNDAA), which has escalated dramatically in recent weeks. As twenty-five years before, civilians swarmed the roads, crossing the nearby Chinese border en masse to seek refuge. As a consequence of this significant borderland instability, only four out of Myanmar’s 16 major armed ethnic groups signed a hastily negotiated, comparatively insignificant February 12 commitment to work towards national pacification. Conflict spoiled the ceasefire party.

Prospects for a peaceful resolution thus appear to be fading. Yet, it is far from clear that the military approach which has replaced rapprochement can accomplish for Naypyidaw what diplomacy failed to do – provide the lasting national peace the country so desperately needs if it wishes to profit economically from its adjacency to China and India. Pacification through the barrel of a gun has been the Tatmadaw’s approach of choice, yet after 60 years of trying has remained inconclusive. To harvest insights on why this is so, we can consider the tale of the Kachin and their ethnic rebel forces, the Kachin Independence Army (KIA).

The KIA is one of the largest, best-organized, and best-equipped of Burma’s ethnic armies and militias. Though the territory under its control has shrunk over the decades, the group shows no signs of breaking. They survive for a multitude of reasons, several of which are worth highlighting here. First, the KIA is a strong organization, hardened by decades of combat, a legacy of Japanese wartime resistance, and erstwhile CIA training. Second, their resilience is aided by the inhospitable, mountainous jungle terrain that favors the rebel guerrilla tactics. Despite the asymmetric nature of the conflict – the Tatmadaw boast helicopters and jet fighters armed with missiles whilst the insurgents rely on rusty AK-47’s – Naypyidaw seems incapable of definitively subduing the insurgents. The terrain, which is reminiscent of Cold War conflicts in Vietnam and Malaya, cancels out the Tatmadaw’s technological edge. And sure enough, raw firepower alone is poor at ending jungle and mountain-based guerrilla warfare, the history of Asia warfare teaches.

Thirdly, the KIA is backed by tacit support from the wider Kachin population group, or at least a sizeable segment of it, providing it with a stream of fresh recruits, means of statewide infiltration, and additional revenue streams. Much popular support for insurgency is of the Tatmadaw’s own making, stemming from reprehensible action that inflames anti-regime sentiment. For instance, some bloodshed is driven by greed, such as the 2011 Burmese army offensive aimed at seizing Hpakant Township, locus of Myanmar’s highly profitable and poorly regulated jade mining industry. Other bloodshed rests on opportunism: in November 2014 the Tatmadaw shelled a KIA military academy without provocation, killing two dozen cadets.

In the absence of total rebel defeat, what such military action accomplishes is the creation of more Kachin mistrust of government, complicating any peace negotiations. Couple this with the maladministration of Kachin areas currently under central control (corruption and self-enrichment are endemic, while ordinary Kachin suffer from economic deprivation, military rapaciousness, and an out-of-control heroin scourge) and it is little wonder many Kachin are weary of Naypyidaw and its military arm. Motivated by these unaddressed grievances, the Kachin feed their sons to the KIA insurgency machine, which may in turn, financially and logistically support other rebel armies in the northern borderlands and perpetuate the conflict. Locked in this cycle of conflict and mistrust, where can Myanmar go?

From Guns to Governance

If Naypyidaw is serious about national pacification, it must find an alternative to military offensives spurred by officials hungry for land grabs and resource riches and perhaps a desire to achieve a ‘quick fix’ to insurgency. Instead, it must consider providing good governance in the Shan and Kachin territories it rules directly. The pacifying power of competent administration enjoys clear historical precedent across Asia; for example, in the case of late colonial Malaya. There, improved civil administration and public service provision – policies collectively known as “Operation Service” – were instrumental in building a modicum of trust between disaffected groups and the central government that, in combination with clever use of coercive measures, drained popular support for Communist guerrillas.

Of course, very different objectives underpin ethnic resistance to Naypyidaw than motivated Communist insurgency in Malaya. Yet, the principle of crucial tacit communal support for armed resistance may hold up across a wide variety of contexts. Should Naypyidaw indeed succeed in “winning hearts and minds”, then it can force ethnic armies (back) to the negotiating table and seek a collective peaceful solution.

Signs of Change?

To those who believe that the junta may indeed be capable of changing course, subtle signs of policy deliberation are detectable. News agencies reported in early February on a meeting between Tatmadaw commander-in-chief Min Aung Hlaing and Singaporean ex-PM Goh Chok-Tong, in which Hlaing solicited Singaporean nation-building advice. Over the years Singapore has been integral to the junta’s survival by providing much-needed banking services whilst global sanctions over its human rights record crippled its finances. That the junta is now drawing on another of Singapore’s points of expertise – its historical success at crafting a unitary state out of conflict – is perhaps an indicator that alternative, non-military strategies are considered in Naypyidaw’s halls. As it is, ex-PM Goh knows from experience how government performance – and economic growth in particular – can legitimize a quasi-democratic system and appease its citizenry.

Internally, too, cautious adjustments to the administration of Kachin State in particular are evident. In the economic sphere, The Economist reported in January 2015 on the novel phenomenon of Kachin-Naypyidaw private-public partnerships in developing Kachin State’s decrepit infrastructure (“Eager Mindsets”, 2015). It appears some space is opening up for greater Kachin input in regional economic affairs. In further positive developments, a new education law may be on the cards (though police are cracking down on protesters) that locks in the Kachin right to educate children in their native language – long since a bone of contention. National education spending is increasing marginally.

However, it is difficult to rhyme these initiatives with present aggressive Burmese military action. On the one hand, Naypyidaw is reaching out to the Kachin through tentative attempts at cooperation, perhaps encouraged by a China weary of destitute refugees crowding into Yunnan province. But simultaneously, the Tatmadaw’s time-worn tradition of armed suppression of minority interests continues uninterrupted in a neighboring province; a development that will not go unnoticed in Kachin areas, and will to underscore existing suspicions that the Kachin, as well as the country’s other ethnic groups, harbor of the government.

These seemingly contradictory policy signals lead one to wonder whether the Tatmadaw tail is wagging the Naypyidaw dog. The Burmese government’s internal dynamics are as opaque as those of any authoritarian state, and one must exercise caution in drawing conclusions from limited observations. Still, it is possible that regional elements of the administration and the military in particular, are not subscribing to national-level attempts at reconciliation. Losing the grip on a disgruntled military establishment, still the most powerful unified force in the country, is undoubtedly the nightmare scenario for Thein Sein and his civilian(ized) allies. Perhaps because of this, military expenditure remains high (12% of the national budget; Lwin, 2014) and barely shrinks in real terms, gobbling up ‘good governance’ resources.

The Road Ahead

Optimists hope that solving one problem – that of political transition to democracy – holds the key to ending Myanmar’s 60-year civil strife. Surely, it is hard to imagine an NLD government led by Aung San Suu Kyi carrying out airstrikes against ethnic minorities. However, even if Suu Kyi truly were to assume the presidency in late 2015, formidable obstacles to political stability remain. Much will depend on civil-military relations, or the degree of control the NLD exercises over the military, and whether the NLD can induce the Tatmadaw to reform from a self-serving armed oppressor to protectors of the public good. Additionally, the sprawling military underground economy, which extends to virtually every profitable industry in the country, will require dismantling without invoking backlash, or even a coup. Hopefully, learning effects from neighboring Thailand, which has experienced a dozen military coups since 1932 – the latest in 2014 – do not occur. Either way, political reform may in fact be the easy part. Much harder will be the breaking of established patterns of institutional behavior, and the military may continue to jealously guard its economic interests, with force if necessary.

Whatever the remainder of 2015 may bring, the pursuit of armed solution is not beneficial to Myanmar’s international image nor its development ambitions. Wedged in between China and India, Burma’s borderlands hold the key to its national development, as infrastructurally linking Asia’s giants would undoubtedly bring prosperity to the middleman. Unstable borderlands deter Chinese investors in the northeast; borderlands that over the past decade have profited considerably from billions of investment dollars flowing in through Yunnan and constitute territory that any infrastructural links must traverse. And if Myanmar is serious about balancing PRC influence in the country with investments from India and the developed world, it must prevent further mass displacements of people and the repeated violations of human rights that sustain Western sanctions.

Jeroen Gelsing is a doctoral student in War Studies at King’s College London. His research interests converge on the Asia Pacific and include the region’s international security dynamics, geopolitics, and modern history. He is an avid learner of Mandarin Chinese. His work has appeared in Asian Affairs and the Daily Telegraph, among others.

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