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2 Europe
undams Myanmar sanctions By
Chris Stewart
China's President Hu Jintao
and Premier Wen Jiabao will be well satisfied with
an easing of European Union and United States
sanctions on Myanmar, even as Western companies
anticipate the gains to be made from the poor but
resource-rich country.
The EU on Monday
suspended its sanctions against Myanmar for a
year. Foreign policy chief Catherine Ashton said
the EU wants to support progress made in the
country "so it becomes irreversible". She is due
to visit Myanmar this week. The US has previously
eased some sanctions and is considering lifting
some trade and financial restrictions.
The
decision removes sanctions targeting more than 800
companies and nearly 500 people. Reforms in the
past year
include the release of some political
prisoners, more freedom for opposition parties,
and the election to parliament of Aung San Suu
Kyi, whose arrest originally led to the imposition
of the penalties. Economic reforms include uniting
widely divergent currency rates and relaxing
land-lease regulations.
If Myanmar
President Thein Sein continues to pursue reforms,
wider benefits for all include a more stable
country with less risk of it being run by a
corrupt and nuclear-armed military dictatorship;
and friction between the China and the US may
lessen if some form of democracy evolves beyond
Myanmar's recent by-elections. Other geopolitical
tensions will always be there. [1]
For
Myanmar, the presence of Western and other
non-Chinese companies will reduce the impression
inside the country of increasing Chinese business
domination, while Beijing should benefit from
Myanmar's rehabilitation in the international
community, notably when Myanmar chairs the
10-member Association of Southeast Asian Nations
(ASEAN) in 2014 and China's claims to the South
China Sea are at risk of coming up for discussion.
[2]
More particularly, the political and
economic structure of a reforming Myanmar will
become more aligned with the long-term goals of
China's present leadership for their own country -
a growing economy (a point underlined by Premier
Wen in Germany with Chancellor Angela Merkel on
Monday), increasingly affluent civilians, but with
a government that still restricts their effective
access to power. Western doubts over Thein Sein's
"sincerity" hinge on whether a restriction on
power is his real goal for Myanmar, rather than
Western-style democracy.
Premier Wen, who
with Hu leaves office later this year, has with
increasing vehemence set out a stiff reform agenda
that they intend their successors to follow - more
freedom for the private sector in borrowing and
investing money, increased facility for sending
funds overseas, an end to the monopoly state-owned
banks. A poverty-stricken Myanmar in their
backyard is a dead weight on those ambitions.
As things stand, Myanmar's spoils go
mostly to China's large state-owned miners and
power companies, while refugees and
society-destroying heroin and amphetamines enter
China's Yunnan province along with jade and timber
from military and rebel-held areas of northern
Myanmar. Cross-border trading is mostly in low
value-added goods. Li Jiheng, who took over as
Yunnan governor last year, and equally new Yunnan
Party Secretary Qin Guangrong will be wanting to
see that change.
Real economic growth in
Myanmar will lure poor rural workers (farmers
comprise around 70% of the population) to new
factories, drive up urban spending, and create
more opportunities for hundreds of private Chinese
companies, from large industrial plant makers to
unsung entrepreneurial manufacturers in places
like Wenzhou, the focus of recent economic reforms
announced by Beijing. (See Western firms face catch-up race
.)
A healthier
dialogue between non-government organizations and
government, of the sort that earned praise for
rising Chinese politburo member Li Yuanchao when
he was Communist Party boss in Jiangsu province,
would also help ease civil tensions in Myanmar.
Li, promoted in 2007 from Jiangsu province
to head the Organization Department of the Chinese
Communist Party Central Committee, appears to have
been the last senior Chinese official to meet
Thein Sein in Myanmar before the president pulled
the plug on the US$3.6 billion Chinese-financed
Myitsone Dam project last September 30 - an
"audacious" move (The Economist) that indicated
Thein Sein could break with both his country's
military and its crony capitalists and with
Myanmar's biggest benefactor, China.
Despite the mutual interest of China and
the United States, Beijing has had practically no
role in pursuing an end to sanctions on Myanmar,
judging by media coverage. The comings and goings
of US officials attract greater publicity, such as
US Senator John McCain's three-day visit to
Myanmar last June. Local media devoted multi-page
spreads to the senator's discussions, including
his meeting with parliamentary speaker Shwe Man.
Li Yuanchao's presence in Myanmar at the
same time as McCain attracted less attention - the
country's state-run mouthpiece, the New Light of
Myanmar, referred only to an exchange with the
speaker Shwe Man and the signing of a civil
aviation agreement. It made no mention of a June 2
meeting Li had with President Thein Sein. [3]
There is no public indication that McCain
met either Thein Sein or Li while all three were
in the Myanmar capital. The senator (and US
President Barack Obama) would, however, have been
well aware of the high-ranking Chinese official's
presence.
Just short of four months after
Li's visit, Thein Sein's announcement to suspend
Myitsone Dam's construction shocked the company in
charge of the project, China Power Investment
Corporation (CPI). CPI president Lu Qizhou said he
had been given no fore-warning and the decision
was "very bewildering". He warned of reparations
for the financial damage the suspension would
cause.
The Chinese government's response
was less vehement, the Foreign Ministry merely
urging Myanmar to protect the legal and legitimate
rights and interests of Chinese companies.
Communism equals
Soviet power plus electrification -Vladimir
Lenin
(1920).
Yet Thein Sein could not have
picked a bigger target among the numerous
environment-damaging Chinese projects in Myanmar.
In one swoop, he bloodied the nose of one
of China's six big state-owned power generating
companies - it supplies 10% of China's electricity
and at the end of 2010 had US$68 billion in
assets; he set back CPI's (and the Chinese
government's) long-term plans to boost much-needed
electricity supplies to eastern China, where
industry suffers regular power outages; and he
severely politically embarrassed CPI boss Li
Xiaolin.
Li Xiaolin, CPI's vice president
and chairman and chief executive officer of its
Hong Kong-listed unit, China Power International
Development, is reckoned by Fortune magazine to be
one of the world's 50 most powerful women and is a
leading light of the Copenhagen Climate Council,
an important voice in global climate change talks.
Yet while setting back CPI and its boss,
Thein Sein's dam announcement coincided with the
long-stated goals of Hu and Wen's government; that
is, to reduce the influence of "princeling"
offspring of the party's revolutionary elders - Li
Xiaolin is the daughter of former premier Li Peng
- and pare back the role of state-owned
enterprises (SOEs).
The easy access of
SOEs to low-interest lending threatens to bring
China's economy to a crisis point, according to
some economists such as Michael Pettis, professor
of finance with Peking University's Guanghua
School of Management. The United States (whose own
economy could be badly damaged by a crisis in
China) and organizations such as the International
Monetary Fund are forceful advocates of the
"rebalancing" - reducing SOE investment and
increasing domestic consumption - many say is
required (but see note 4).
At the same
time, it has long been recognized that large power
companies in particular can have a corrupting
political and economic influence, at times
pursuing projects merely for self-serving profit.
Emily Yeh, writing of China's reformed power
industry comments:
While the politics of economic
reform affect the specific trajectory of the
[2002] electricity reform process, the power
sector is also important enough - as a key input
into the growing economy, and as a subject in
which the technocratic elite leaders have
personal interests - to influence the larger
course of China's future.
Or as Eelke
Kraak puts it:
The logic behind big dams is often
outside the realm of simple economic
cost-benefit analysis and the greater good of
the population, but may be shaped by the
interaction between a wider geopolitics and the
business interests of local elites. [5]
Thein Sein would have been
fully aware that Li Xiaolin's position as head of
CPI was due to her father Li Peng's influence over
power industry restructuring that by 2002 led to
the present set-up (Li as premier in 1994
initiated the Three Gorges Dam, one of the world's
largest, across the Yangtze); and that when alive
premier Li was one of the most bitter opponents of
reforms now being pushed by Hu and Wen and
previously by their reform-minded predecessors, in
particular the late Zhao Ziyang. (A central
dilemma is how to open the economy without
"liberalizing" the people and permitting
"Westernization", seen as threats to the Communist
Party's control and China's sense of self.)
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