Head Over Heels
Why Washington's love affair with Myanmar might be too much, too soon.
When he arrives in Myanmar next week, President Barack Obama will mark a historic occasion. Not only will it be the first time a sitting American president has visited the country, the trip also represents the final step in Myanmar's remarkable rehabilitation from international pariah status. Both Bill Clinton and George W. Bush made a point of ignoring the previous leaders of Myanmar (then known as Burma), almost all of whom were blacklisted from entering the United States. In 2005, the Bush administration began calling the country an "outpost of tyranny," while Bush's wife, the first lady, made change in Burma one of the highest-profile issues on her personal agenda.
When he arrives in Myanmar next week, President Barack Obama will mark a historic occasion. Not only will it be the first time a sitting American president has visited the country, the trip also represents the final step in Myanmar’s remarkable rehabilitation from international pariah status. Both Bill Clinton and George W. Bush made a point of ignoring the previous leaders of Myanmar (then known as Burma), almost all of whom were blacklisted from entering the United States. In 2005, the Bush administration began calling the country an "outpost of tyranny," while Bush’s wife, the first lady, made change in Burma one of the highest-profile issues on her personal agenda.
Since then, Myanmar has come in from the cold. During Obama’s visit, part of a longer Southeast Asia swing that kicks off in Thailand on Sunday, the president will almost certainly praise the rapid and pervasive reforms that have supposedly transformed the country in two short years. Indeed, just the fact that the president is traveling to Myanmar, administration officials say, shows how impressed Obama is with the pace of change, and particularly with the reformist instincts of Myanmar president Thein Sein, a former army general who has worked with opposition leader Aung San Suu Kyi to usher in a wave of political, economic, and social change.
And Obama is hardly Thein Sein’s only admirer. Nearly every other industrialized democracy that once imposed sanctions on Myanmar because of its harsh military rule and massive rights abuses — the European Union, Australia, Canada, and Japan, to name a few — have dropped those sanctions in the past two years. Instead, many of these countries are allocating large new aid packages to Myanmar and encouraging their companies to invest there. Earlier this month, the World Bank, which had shunned Myanmar after the country refused to pay its loans and pushed out most foreign NGOs during the 1960s and 1970s, authorized a landmark new aid package worth $245 million. In meetings with Norwegian officials in Washington, I learned that Norway, which has always had a close interest in Myanmar, plans to make the country its top priority for aid over the next five years.
Many other Western nations have opened new aid agencies in Yangon, the country’s largest city and its former capital, and NGOs have returned en masse. Some Burmese experts went as far as backing Thein Sein for the 2012 Nobel Peace Prize, likening him to a latter-day version of F.W. deKlerk, though the prize ultimately went to the European Union. Still, Kristian Berg Harpviken, director of the Peace Research Institute of Oslo, listed President Thein Sein among the five frontrunners for the Nobel in recognition of his efforts "spearheading a gradually evolving peace process in the country." Thein Sein’s prospects for claiming the prestigious prize next year look equally strong.
The entire landscape in Myanmar seems to be changing overnight — not only on the political scene. Sensing an opportunity in Yangon, companies have swamped the sprawling, low-lying city with foreign investment. Japanese manufacturer Suzuki has launched plans to build a series of large new motorcycle factories; Coca-Cola is projected to invest $100 million in Myanmar over the next three years, with rival PepsiCo looking to follow suit; and, Visa, Mastercard, and numerous other Western and Japanese financial firms have announced plans to increase their presence in the country. Meanwhile, nearly every major oil and gas company in the world descended on a petroleum trade show in Myanmar last spring, to scout out opportunities in what might well be one of the world’s biggest new oil and gas finds. Earlier this year, officials from the Myanmar Energy Ministry announced that the country has proven oil reserves of almost 140 million barrels and 11.4 trillion cubic feet of gas, potentially putting it on par with some of the largest petroleum producers in the world.
But Myanmar’s political and economic changes, though substantial, are not as secure as many Burmese reformers and outside observers think. The economic reforms that have been put in place are tenuous, and if they do not lead to broad-based growth, they could only fuel greater unrest. Civil wars still rage in parts of the country, and the end of the authoritarian era seems to have unleashed dormant ethnic tensions in places like Arakan State in the west. Meanwhile, though the former senior generals really do seem to have retired, that does not mean the army has simply vanished from power.
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Without a doubt, Myanmar has come a long way since late 2010, when the country held rigged elections that, at the time, few Burmese activists or outside observers thought would bring any real change. Suu Kyi’s party, the National League for Democracy (NLD), boycotted those polls since they were viewed as simply a way for the military to create a falsely civilianized parliament and continue to rule from behind the scenes. When the polls were announced, Suu Kyi remained under house arrest, as she had for decades. In the election, 25 percent of the seats in parliament were reserved for the uniformed armed forces, and nearly all the rest were won by army-backed parties consisting of officers who had simply shed their uniforms. Nearly every leading democracy, including several in Southeast Asia, condemned the polls as unfree and unfair. Myanmar looked like it would remain encased in amber, as it had been, with brief exceptions, since the army first took power in 1962. Things looked equally bleak for Suu Kyi, who remained locked up — a symbol on the global stage, but aging and increasingly marginalized at home.
And then a strange thing happened. The members of parliament, who at first seemed like token former Army officers, began to act like, well, parliamentarians. They opened inquiries into state budgets, military spending, and other sacred cows. They held loud debates on the parliament floor and tried to explain their positions to the local media — a first. Meanwhile, the new president, Thein Sein, who had come up in the military and, though less corrupt than some other officers, was still seen as a status quo figure, began making major changes. Burmese officials claimed that the former dictator, Senior General Than Shwe, and his longtime number two, Maung Aye, had truly retired after 2010 and were no longer providing direct input into policy-making.
In a move that seemed to confirm these claims, Thein Sein quickly sacked many hard-line ministers and opened up the media, essentially ending censorship in what had been one of the most repressive environments in the world for print and broadcast journalists. Today, Yangon, where news once consisted of the Pravda-like state paper The New Light of Myanmar, boasts at least ten new broadsheets and other publications that are springing up, as well as online outlets staffed with journalists, many of whom were trained in exile, focusing on investigative reporting and political analysis that would have incurred long jail sentences just two years ago. In recognition of the changes, monitoring organizations like Freedom House have dramatically raised Myanmar’s scores on press and social freedoms. Today, the media is freer in Myanmar than it many other parts of Southeast Asia, such as Laos or Vietnam.
Thein Sein’s government also lifted other civil society restrictions. As thousands of educated Burmese exiles returned home and set up new NGOs focusing on environmental protection, labor rights, and many other issues that it would have been unthinkable to promote in Myanmar just a few years ago, the government has tolerated their efforts, allowing protests over dams and other environmental issues, and giving interviews with exiled media organizations returning to the country.
Thein Sein also built bridges to Suu Kyi, holding regular talks with her and, over the course of the past two years, releasing nearly all political prisoners from jail, including many NLD members. Their discussions eventually paved the way for a free and fair parliamentary by-election last spring in which the NLD swept 41 of 44 seats, putting Suu Kyi in parliament for the first time in history — though in a small minority in a lower house of over 400 seats. NLD supporters thronged Suu Kyi’s house after the by-election triumph, celebrating ecstatically in scenes that reminded some observers of the end of white rule in South Africa. The NLD even took seats in constituencies around the capital of Naypyidaw, which is populated primarily by military men and their families.
Suu Kyi, who had been held under house arrest for nearly 20 years, suddenly was free to travel, and embarked upon victory tours of Europe and the United States this past fall, where she picked up award after award in Washington and New York. NLD parliamentarians began making plans for the next national election, in 2015, when all seats in parliament will be contested, and Suu Kyi’s party and its allies hope to win control of the legislature and thus, they think, the country.
Thein Sein has also made progress toward reforming Myanmar’s crippled and archaic economy. In an effort to make the country less dependent on China, which had become Myanmar’s most important donor and investor during the sanctions era, he approved the cancellation of a controversial Chinese dam project — ostensibly for environmental reasons — and rolled out the red carpet for Western investors. The president, surrounded by a group of former exiles educated in the West and knowledgeable about the development paths of neighbors like Thailand and Indonesia, pushed to reform the foreign investment law, provide greater guarantees for investors, and shore up the country’s notoriously fragile banking system.
Thein Sein has enjoyed the support of high profile economists like Nobel Prize laureate Joseph Stiglitz, who visited the country to assist with economic reforms, and international financial institutions, which barely knew who the president was two years ago. Even Suu Kyi has come to trust Thein Sein, allies of the democracy leader say in private. "The president is the key making all this change happen," said one former exile activist who now has returned to Myanmar, emboldened by the changes. Suu Kyi and Thein Sein have dined together on numerous occasions and she has told supporters she feels a rapport with the president that she never had with any previous military leader in the country.
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Why should we doubt the hype? For one, comparing Myanmar to Vietnam in the late 1980s or to another Asian tiger cub about to open up is a stretch. Myanmar does have a large market (50 million people), cheap labor, enormous natural resources, and a strategic location between two of the fastest-growing economies in the world. But unlike Malaysia, Indonesia, Thailand, or even Vietnam by the late 1980s, Myanmar remains wrecked by civil wars, some of which are still going on and show little sign of ending. Many parts of the country bear a closer resemblance to an African country like Rwanda or Angola emerging from years of severe civil strife, with low-level insurgencies still flaring in outlying regions.
In part because of the legacy of war and government mismanagement, more than 50 percent of Myanmar still lacks basic physical infrastructure — electricity, usable roads, and rails — of the kind that were taken for granted by investors coming into China and Vietnam, or other Asian tigers like Malaysia and Thailand. Worse, unlike Vietnam or China, the Myanmar government still has little control over many large areas of the country, making investment in these regions — which also happen to be the center of major oil, gas, and mining deposits — extremely risky. And neither the government nor the opposition has come up with a workable plan for creating an effective federal state system in one of the most ethnically diverse nations in the world. Without a system like Indonesia’s that devolves political power and control of resources to the sub-provincial and village level, Myanmar’s ethnic minorities are unlikely to ever see themselves as citizens of the country, said Tin Maung Than, a longtime Myanmar diplomat who is now a researcher at the Myanmar Development Resource Institute, one of the new think tanks launching in the country.
Complicating things further is the fact that Thein Sein’s government, while signing ceasefires with some ethnic armies, has also simultaneously ramped up attacks against the Kachin Independence Army (KIA), a major ethnic insurgent group in the north of the country. Both sides have been accused by Human Rights Watch of massive atrocities, including killing civilians, forcing children to fight, and using forced labor and portering. The Kachin appear to be buying up arms, and Thein Sein himself appears to have limited control of how the military and his regional commanders fight the Kachin war, a worrying sign if the country is going to be a democracy in the future. Tens of thousands of Kachin refugees have fled the fighting, with some crossing the border into China and others stranded in some of the coldest and most inhospitable parts of Myanmar.
Meanwhile, the government has done little about another powerful ethnic insurgency in the northeast of the country, the United Wa State Army (UWSA), which is believed to be among the biggest narcotrafficking organizations in the world and which has tens of thousands of men under arms. Instead, the government appears to be continuing the longstanding policy of ignoring the narcotrafficking militia, much to the dismay of neighbors like Thailand, which absorb the majority of the UWSA’s potent methamphetamines. As a result, areas controlled by the UWSA, the KIA, and some other ethnic armies, are essentially beyond the control of the central government.
Moreover, just because Than Shwe and the other top generals have formally retired does not mean they are not pulling some strings from behind the scenes. Several close observers of parliament say that Than Shwe has seeded the ruling party with hard-liners who will make sure that any reforms proposed by Thein Sein or Suu Kyi don’t get too far, too fast. If the NLD were to win the 2015 election, these hard-liners, through the military’s seats in parliament, could hinder change or squash it completely. In addition, the constitution still gives the military the right to step back into power if it feels it is necessary, in the case of a national emergency, thus essentially offering the possibility of a coup at any time in the future. While Than Shwe, Maung Aye, and other senior officers retired with considerable wealth, younger officers did not get a chance to amass significant assets before the transition. Instead, these middle-ranking officers may find themselves without a job, and without the access to government funds and natural resources deals that their superiors received before retiring. This could be yet another powder keg in the country’s fractious transition. Angry that their old guard cashed in, but they could not, these middle-ranking officers could easily see justification, like each successively younger class of army officers in Thailand, to stage a coup when there is even the pretext of mild unrest.
Such a pretext is not hard to find in an ethnically diverse country where conflict remains rife. Already, many Burmese believe that the army is meddling in events in the southwest of the country, helping to stoke anger and violence between Buddhists and Muslims in Arakan State. The violence there has lasted for months now, destroying tens of thousands of homes and leaving hundreds dead. At the same time, regional commanders have used the crisis to argue for a greater deployment of forces in Arakan State. Troops now patrol many of the larger towns in Arakan, an ominous sign in a country where, in the past, the army was accused of summary executions, forced labor, rape as a weapon of war, and other atrocities when it inserted itself into ethnic conflicts.
There are also reasons to think Thein Sein may be less of a reformer than we think. Liberal record aside, the president remains highly indebted to the army, which operates in the shadows behind him. Many Burmese officials wonder whether Thein Sein even has total control of regional military commanders operating on the ground across the country. Meanwhile, Aung San Suu Kyi has misstepped time and again, finding it difficult to make the transition from activist to politician, served by a staff with little training in the basics of policy-making. Burmese businesspeople in Yangon say that Suu Kyi and her party have little grasp of economic policy-making, and even less of a handle on how to enact policies that would ensure long-term foreign investment and protect investors from the types of nationalizations that have crippled Myanmar in the past. Suu Kyi also seems to have become far more reticent to speak out on rights issues as she has become an active politician. She has done almost nothing to try and heal the rifts in Arakan State or Kachin State, earning severe criticism from many rights activists around the world, as well as from Muslims in Arakan State itself. With Suu Kyi refusing to take a strong public stand, aggressive and xenophobic Buddhist groups across the country have taken control of the conversation about the Arakan crisis, and prevented many aid organizations from even operating in there. Hard-liners have also kept the Organization of the Islamic Conference, which wanted to play a mediating role, from even opening an office in Myanmar. Last week, Doctors without Borders reported that Buddhist radical groups were preventing many of its physicians from working in Arakan State, even though many of the fleeing refugees are suffering from acute malnutrition and malaria.
Thein Sein’s economic reforms also hardly guarantee that Myanmar will enjoy growth that actually benefits most people. The majority of investment, at least initially, is coming in the oil and gas sector, hardly known for its transparency or for broadly benefiting large numbers of locals. Though some manufacturing and textile firms, of the kind that have powered broad-based growth in countries like Bangladesh or Indonesia, might be attracted to Myanmar’s low labor costs, the poor infrastructure will most likely keep the majority of companies away. These weaknesses could put transport costs in Myanmar on the level of the most expensive places in Africa, as well as contributing to corruption: In its latest Corruption Perceptions Index, Transparency International ranked Myanmar the second most corrupt nation in the world.
Higher-tech firms will also likely shy away from investment in Myanmar because of the country’s low levels of education. For two decades the former military regime shuttered the finest secondary schools to prevent students from gathering for protests, so even though the country has a young labor force, its skill level is on par with the poorest countries in Africa. Today there are only a handful of well-educated young people skilled in information technology, communications, or management, which would make it hard for multinationals to build an office of any size in Myanmar.
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Given all these problems, it may be too soon to crown Myanmar a reform triumph. Certainly, the United States and other leading democracies should support Thein Sein and Suu Kyi’s reform efforts, help address the refugee crises in Kachin State and Arakan State, among other places. They should also slowly increase aid and investment, especially in infrastructure — many Burmese economists fear that the country cannot even absorb investment that quickly, since it has such little capacity.
But the White House is moving much faster. It is restoring military-military ties with Myanmar, despite the history of atrocities and the possibility that the army may be involved in stirring up the violence in Arakan State. It is pushing forward with closer diplomatic cooperation, and increasingly is trying to involve Myanmar in its broader Asia-Pacific strategy, known as the "pivot" to the region. For administration officials, Myanmar provides an opportunity to secure another partner in a region where many countries, worried by China’s growing maritime power and unpredictable moves in areas like the South China Sea, are already turning to the United States as a hedge against Chinese ambitions.
Of course, as sanctions have been lifted, the administration also now is coming under increasing pressure from the business community, which for more than a decade said almost nothing about Myanmar for fear of being tarred by association with one of the most brutal regimes in the world. And yet, despite the photo ops and warm welcomes that will surely greet Obama — and the fact that American engagement has helped push some reforms in Myanmar — the White House should consider waiting to see more concrete outcomes before going ahead with significant military ties, greater aid, and lifting sanctions forever.
Joshua Kurlantzick is a senior fellow for Southeast Asia at the Council on Foreign Relations. Twitter: @JoshKurlantzick
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