Burma: Risk in The Golden Land
Successful political and economic reform mean great opportunities — can the risks be averted?

City of Bagan


Cyclone Nargis in 2008 seemed to offer the closing chapter in the book on Burma’s economic ruin, devastating millions of acres of the country’s most fertile farmland. Nargis had claimed 135,000 lives when Than Shwe ordered the government to stop keeping statistics.

The military junta’s stranglehold on political and economic power might have continued indefinitely but for the confluence of the economic issues described above, followed by global condemnation over the 2007 Saffron Revolution. Combined, they brought sufficient pressure to change Burma’s path.

Today, President Thein Sein and his political opponents in the NLD recognize that Burma is well positioned between China and India, the world’s largest emerging markets, and within ASEAN, the world’s fastest-growing economic community. Resource wealth and eager, cheap labor, as well as the prospect of large-scale development loans, position Burma at the bottom of an impressively large arc. It is partly because the floor is so low that the potential for growth seems so high.

But its abject position means that responsible engagement by both the business and development communities is necessary. Aid and advocacy groups, along with development banks, can and will provide critical relief and advice at a time when the country is still among the world’s poorest. The first wave of funding for infrastructure projects can create conditions that are conducive to private investment. Burma’s civil-society leaders and government officials — some of whom recently admitted to educating themselves about the democratic process by watching The West Wing — will need training programs to ready them to be responsible stewards of Burma’s immense wealth.

International and domestic business investment, for its part, can provide job opportunities, generate revenue for local and national economies, and deliver desperately needed capital to Burmese entrepreneurs who understand where market opportunities exist.

The events of the past two decades have opened Burma to such opportunities, but maintaining access and progress will depend on Thein Sein’s navigation of three risks: a resurgent military, continuing ethnic conflicts, and the country’s role on the front line in the regional contest among global powers.

Military intervention in the reform process presents the most dangerous of the three issues Burma faces. In the past two years, Thein Sein has advanced the reform agenda while largely avoiding confrontation with the military, which, by law, continues to control the majority of seats in parliament. As the public’s demand for reforms accelerates, however, it is unclear just how far the generals will allow Thein Sein, Aung San Suu Kyi, and their democracy partners to go.

There are some good indications that President Thein Sein is consolidating the civilian government’s control. He has freed hundreds of political prisoners and facilitated free and fair elections in 43 districts, even going so far as to allow several former political prisoners to represent the NLD in competing for office. He has allowed free media to gain a foothold and relaxed many restrictions on civil liberties. Cabinet member Aung Min has brokered nearly a dozen ceasefires between the central government and embattled ethnic governments. Some say it wasn’t fast enough, but in less than two years the president has pushed a relatively business-friendly foreign-investment framework through parliament, and replaced cabinet members who had been stubborn opponents of reform with thoughtful policymakers deferential to the rule of law.

However, it is far less clear that Thein Sein can or will be able to assert control in areas where the military has vested security and economic interests.

The surge in the bloody campaign being waged against ethnic rebels in Kachin State has continued in spite of two orders from Thein Sein and a legislative motion to suspend offensive maneuvers. The Tatmadaw appears unwilling to suspend operations until it has crushed the Kachin Independence Army and terrorized its civilian sympathizers — and regained control of the region’s large mining sites.

In addition to pursuing military campaigns to gain access to mineral wealth, the Tatmadaw’s pension funds are tied up in large military holding corporations, with investments across the national economy. These inefficient military corporations won’t be eager to compete with outsiders.

Thein Sein has steered his policies clear of these interests (though he’s believed not to have reaped their rewards, either — even in his former military career), but the civilians in parliament have started to believe in their own power as legislators, and have formed investigative committees and passed motions critical of the Tatmadaw’s investments. As these confrontations escalate, depending on the perceived stakes, the military may comply, it may simply ignore the parliament (which has limited enforcement capabilities), or it may eventually feel sufficiently threatened and push back, perhaps by exercising authority through the existing National Defense and Security Council (NDSC). The NDSC is a secretive council of senior cabinet ministers, the president, and military leaders that offers the military policy influence over civilian leaders behind closed doors, as an alternative and complement to the 25 percent of seats apportioned to the military in the parliament.

Consistent growth may prove to military leaders that rising tides will lift all boats, allowing Thein Sein to mitigate these issues.

That growth depends on development dollars and investment, which will both require continued political reform. But the reforms the donors see as a prerequisite to their engagement, the generals view with misgivings.