June Choi is an MA student concentrating in Energy, Resources, and Environment, with a minor in International Development. She was previously at the Hopkins-Nanjing Center, where she began research on China’s Belt and Road Initiative, climate and energy finance, and disaster risk mitigation. She holds a B.A. in Sociology and Asian Civilizations and Languages from Amherst College. 

This is the first in a two-part piece analyzing Myanmar's punctuated path to development. Read Part II of this article here.

Following Myanmar’s series of democratic reforms in 2011, and especially since the landslide victory of Aung San Suu Kyi’s National League for Democracy (NLD) in 2015, the international community had been cautiously optimistic about the prospects of development in Myanmar. The most recent mass expulsion of Rohingya starting in August 2017, however, has dispelled any remaining trace of optimism. More than 700,000 Rohingya have escaped from Myanmar to date, fleeing rape, murder, arbitrary detention, and arson. They are the victims of a brutal military campaign that is the culmination of decades of institutionalized discrimination.

The Rohingya refugee crisis is indicative of several long-standing barriers to inclusive development within Myanmar. While acknowledging that the country is still in the process of emerging from five decades of oppressive military rule (Tatmadaw), it is critical to understand how entrenched military interests continue to operate within the country. Without this deep historical perspective, current efforts focused on citizenship rights and immediate repatriation of Rohingya refugees are bound to result in further persecution, ultimately hindering long-term prospects for Myanmar’s development.

Barriers to Inclusive Development:

A closer look at the quasi-civilian Constitution shows how the military has guaranteed the continuation of its interests under a power-sharing arrangement with the NLD. For instance, the military’s commander-in-chief has the ability to nominate candidates in both houses of parliament as well as in key leadership positions and holds the “right to take over and exercise State sovereign power” in the event of a state of emergency. Moreover, 25% of seats in the Parliament are reserved for the military, giving them effective veto power, as amending the Constitution requires a vote of more than 75%. Underlying the written language of the Constitution are three inter-related factors that lie at the source of military power: crony capitalism, ethnic conflict, and imbalanced foreign relations with neighboring countries such as China.

Crony Capitalism:

When the Burmese Socialist Programme Party (BSPP) began its totalitarian program of nationalization in 1962, much of the economy fell into the hands of military officials, in the form of numerous state-owned enterprises. By the time General Saw Maung’s State Law and Order Restoration Council (SLORC) took power in 1988, its program of market liberalization was coopted in two ways: first, liberalization was used by the military to increase its own state business holdings, and second, only “national entrepreneurs” aligned with the military’s interests were able to receive support.

A state-mediated bourgeoisie was thus born, marked by close ties to corrupt military officials and exclusive access to trade licenses and other lucrative opportunities created by Myanmar’s gradual market liberalization. In turn, the state became increasingly dependent on the services provided by these crony capitalists—the ironic and expected result of international sanctions placed on Myanmar. Crony capitalists were frequently tasked with large infrastructure projects that the state could not pay for, compensated instead with generous import licenses. They also became the major funders of the Union Solidarity and Development Party, a political party founded by SLORC in 1993.

In addition, the state became reliant on crony businessmen to promote Myanmar’s goods abroad, broker ceasefires with insurgent groups, and perform high profit-generating activities such as extracting timber or oil. In northern Shan state, more than 5.3 million acres of land was leased to agricultural investors by 2013, more than quarter of which is now covered by rubber plantations. Much of the rubber plantation now belongs to Sein Wut Hmon, a rubber company friendly with the former military junta.

Despite expectations that sanctions would bring about the regime’s collapse, the junta managed to not only remain in power, but also further consolidate its power over time, doubling in size to 400,000 from 1988 to 2007 (latest estimates range around 500,000). The military’s expenditure has burgeoned nearly 7.5 times from around 500 USD Million in 1989 to 3750 USD Million in 2015. The military currently accounts for 14% of the government’s total budget, more than the health and education budget combined. Although there is no clear documentation on the actual scale of crony wealth accumulation, research suggests that crony elites control a majority of the country’s wealth despite representing only 5% of businesses, while the remaining 95% are predominantly small scale.

Ethnic Conflict:

Ethnic conflict, particularly along the border states of Kachin, Shan, and Rakhine States, have been taken advantage of by military officials and crony capitalists for decades. Of the 135 ethnic groups officially recognized by the state, the Bamar ethnic group represents 68% of the population. Since the Panglong Agreement in 1947, and especially following the military coup in 1962, minority groups have resisted the Bamar-majority military’s efforts to unify the state.

However, by the time SLORC took power in 1988, the resource-starved minority insurgent groups were forced to sign a series of unfair ceasefire agreements[DR4] . The most noticeable shortcoming of these agreements was the lack of a follow-up peace process and provisions for self-determination and autonomy that guaranteed equal political recognition of groups such as the New Mon State Party (NMSP), Kachin Independence Organization (KIO), and the United Wa State Party (UWSP), some of the first groups to agree to cease-fire. Instead, the military has used the cease-fire peace to further consolidate their power along the borders. In Kachin state, there are now more military bases than before the cease-fire agreement was drawn, and stringent travel restrictions affect the mobility of more than 900,000 ethnic Wa residing in northern Shan state. While the process for a Nationwide Ceasefire Agreement (NCA) began in 2015, many issues remain over the inclusivity of the document, as six ethnic organizations are excluded from negotiations, and a further three smaller groups are not allowed to become signatories.

These ceasefire agreements, while allowing insurgent groups to maintain control over the territory, coopted insurgent minority leaders into the network of state-patronage and crony capitalism. Dubbed “emerging political complexes,” or “ceasefire capitalism in the borderlands,” these networks serve to channel wealth into the coffers of regional army commanders, ethnic minority elites, and foreign investors from neighboring states. Mining and logging has increased dramatically in northern Shan and Kachin states after the cease-fire agreements, and while the military and rebel group leaders mention that these activities are for Myanmar’s development, profits are hardly shared among the rest of the minority village population.

Moreover, military leaders take advantage of the fact that minorities typically do not have the concept of enforceable land rights to orchestrate hostile takeovers without fair compensation. Among those involved in the hostile land takeovers in northern Shan state is U Myint Hlaing, formerly the military’s northeast regional commander, and currently the Minister of Agriculture and Irrigation. While a few activists have begun organizing farmers to demand fair compensation for their land, they have sparked violent tensions among local residents, leading to numerous arrests, enforced disappearances and even murder. Labor laws promulgated in 2011 and 2012 remain uncommunicated and unenforced at the local level. Registered unions are predominantly small-scale, formed not just by workers, but also by employers and authorities as well. As a result, thousands of displaced minority workers have been crossing the border into neighboring countries to work as illegal migrants.

These emerging dynamics have important implications for minority representation in state politics. In place of the indigenous population, military commanders-turned-businessmen are elected to represent the region’s interest through the Union Solidarity and Development Party. For instance, not a single running Parliament member during the 2015 elections was Muslim. As long as ethnic minority leaders continue to benefit economically from the ceasefire agreements designed by the military, it is unlikely that minorities will be able to successfully lobby for their own interests.

Imbalanced Foreign Relations:

When the international community was imposing heavy sanctions on Myanmar, China remained a staunch ally of the Burmese military. However, China’s relations with Myanmar has been one strictly guided by self-interest. Prior to 1988, China was the main financier for insurgent groups allied under the Communist Party in Burma. When the Communist Party collapsed, however, China began funding the Burmese military in its crackdown against insurgent ethnic minority groups. As a result, many regional army commanders along Myanmar’s borders today, especially those located near the Yunnan border, are beholden to China’s interests, and are locked into joint business deals with Chinese investors.

China’s upper hand in foreign relations with Myanmar is evident in the series of large-scale infrastructure projects undertaken in Myanmar. For instance, the controversial Myitsone Dam in Kachin state was originally slated to export 90% of its electricity to China. Signed as a joint venture under the military’s leadership in 2009, the flooding of the dam site has resulted in the displacement of more than 12,000 Kachin locals. Construction on the dam was suspended following mass protests in 2011 during President Thein Sein’s democratic reforms. If completed as scheduled, it would have become the fifteenth largest hydropower dam in the world. Similarly in Sagaing in 2012, another wave of mass demonstrations were launched against a Sino-Burmese copper mine, owned by Myanmar Wanabo Copper Mining and China North Industries Corp., jointly operated with Myanmar’s Ministry for Mines and Industry.

Other examples of large-scale infrastructure projects that come at little perceived benefit to Myanmar include the oil and gas pipelines linking Sittwe, capital of Rakhine State, to Kunming, China. According to Suresh Sivanandam, senior research manager for Asia at Wood Mackenzie, Myanmar stands to gain a small amount of revenue from storage and transit fees, as well as benefit in the future through the experience of building energy infrastructure for China. The gas pipeline began operating in 2013, and the oil pipeline began operating April 2017, after three years of negotiations to get Myanmar to agree to lower transit fees.

Not just China, but many foreign investors are attracted to the opportunities presented by Myanmar’s resource-rich borderlands. According to Transnational Institute, two-thirds of Myanmar’s total foreign investment is concentrated in these areas. In Kyaukphyu, Rakhine State, where the above-mentioned oil and gas pipeline projects begin, 4,000 acres have been designated as a special economic zone for Chinese and Thai firms to develop. This was just one among several contracts awarded in the final weeks before the military’s transition of power, without consultation of Aung San Suu Kyi’s National League for Democracy nor requiring legislative approval.

The following part looks at possible development strategies that would help address these three issues.

PHOTO CREDIT: "Myanmar" by Jose Javier Martin Espartosa, from Flickr Creative Commons licensed under CC-BY-SA 2.0.