In The Media

Sanctions and Myanmar’s “new look” government

by Hrach Gregorian

November 9, 2012

Why, after almost 50 years of military rule, has the current Burmese (Myanmarese) strongman, Thein Sein, allowed the wedge of political and economic reform pry open his otherwise authoritarian state?

The generals who benefit from state and informal corruption, patronage, monopoly rents, and drug and human trafficking are under no immediate threat of removal. In fact, the recent end to hostilities with some of the country’s major rebel groups would appear to put the military brass even more firmly in the catbird seat.

Although western sanctions have hurt, Burma’s economic situation is by no means dire. According to a 2011 Asian Development Bank report, when compared to near neigbours, Burma actually does better across a number of basic social and economic indicators. However, its overall economic record is dismal, despite abundant natural resource wealth.

A transformation of the sort Burma has initiated springs from many sources. Prominent among these would appear to be concern about the degree of Chinese social and economic penetration. Not only China, but India and other regional powerhouses have capitalized on western sanctions to advance their economic and geostrategic interests.

For two decades, China has invested billions of dollars in infrastructure development projects while cheap Chinese consumer products have flooded Burmese markets. Wary of Chinese gains, India abandoned its western-oriented human rights stance some time ago, and with its “Look East” policy built bridges to the military government. Current bilateral trade stands at over one billion, about one fourth of the figure for trade between Burma and China.

In both cases, the balance of trade heavily favours Burma’s more powerful partners. Japan recently stepped in with the promise of loans for a floundering project initiated in 2010 by Thailand’s largest construction conglomerate, Italian-Thai Development, to build a deep-sea port and Special Economic Zone in eastern Burma that, when completed, will be Southeast Asia’s largest industrial development complex.

By no means should the Burmese be cast as passive victims in the unfolding drama. In fact, the generals have proved rather adept at manipulating outsiders. They are also keenly aware of antipathy among significant sectors of Burmese society to severe environmental and social dislocations caused by large, foreign-initiated infrastructure projects.

The most visible manifestation of local disaffection was the recent suspension by the Sein government of the $3.6 billion Chinese-led Myitsone dam project in northern Burma. Had the project gone forward, it would have resulted in the flooding of 766 kilometers of land and displaced 10,000 Kachin people in Kachin State.

Although 90 per cent of the power generated by the dam would have gone to China for a period of 50 years, the terms of the deal as a whole were not unfavorable to Burmese interests. The project simply increased popular resentment to a boiling point over perceived wanton treatment of local interests by external actors, including officials in Naypyidaw. A positive government response was unprecedented, and likely marked a critical turning point in the complex balancing act that has been the regime’s M.O.

A carefully orchestrated policy of political liberalization has led to rising economic engagement in Burma by Europe and North America. Sein has been wise to assume a low-key public posture in the process, allowing Burma’s most eloquent voice, opposition leader Aung San Suu Kyi, to carry the message of democratization to previously hostile capitals. With adoring publics now primed for change, western sanctions have been dropping like leaves in late autumn.

So barring any backsliding, Burma is well on her way to joining a much larger community of nations, a transformation that will see her enjoy both dramatic economic growth and less reliance on regional hegemons. The law of unintended consequences appears to have produced the following sequence of events, if in a less linear fashion than described here.

Roughly two decades of western sanctions failed to advance human rights and democratization in Burma while facilitating economic penetration by neigbours such as China. Growing distrust of Chinese (and to a lesser extent, Indian) designs on Myanmar led the generals some time ago to think about using the U.S. to balance a skewed power equation.

This approach required opening the political system. Perhaps sanctions initiated all that has transpired since, although one would be hard pressed to argue there was any anticipation of the chain of events that followed adoption of restrictive measures.

Hrach Gregorian is a Research Fellow with the Canadian Defence & Foreign Affairs Institute, and President of the Institute of World Affairs (IWA) a non-governmental organization specializing in international conflict management and post-conflict peacebuilding. He is Associate Professor, Graduate Program in Conflict Management, Royal Roads University; Adjunct Professor, Faculty of Social Sciences, and Co-director, Peacebuilding, Development and Security Program (PDSP), Centre for Military and Security Studies (CMSS), University of Calgary; Senior Research Fellow, Centre for Global Studies, University of Victoria, and Associate Editor, Politics & Policies.

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