ASIA
HAND Myanmar shakes Western
noose By Shawn W Crispin
BANGKOK - It wasn't that long ago that
military-run Myanmar periodically wobbled on the
brink of economic and financial collapse. The many
detractors of the ruling State Peace and
Development Council (SPDC) had long hoped that
Western-led economic sanctions would eventually
squeeze the rights-abusing regime out of power.
A massive inflow of Asian capital has
recently wholly undermined the near-decade-old
sanctions regime led by the United States
and
the European Union and greatly strengthened the
once-isolated military junta's political staying
power. Significantly, the failure of the US-led
policy is also symptomatic of China's and India's
ever increasing economic clout across the region.
Foreign investment into Myanmar surged to
a record high US$6 billion in the fiscal 2005-06
year that ended in March, up from the paltry
$158.3 million recorded the previous year,
according to recently released official
statistics. Myanmar's total trade also hit a
record high of $5.5 billion over the same period,
surging 27% year on year and handing the junta a
rare trade surplus of $1.6 billion. Bilateral
trade is on pace to expand even faster this year
to more than $7 billion as the junta cashes in on
high global energy prices.
Those rising
figures will no doubt irk the administration of US
President George W Bush, which has in recent years
referred to the hardline regime as an "outpost of
tyranny". China, India and to a lesser degree
Thailand have all overlooked Myanmar's abysmal
rights record to gain access to the country's
largely underdeveloped energy resources, including
big new capital outlays for joint-venture
hydropower dams, oil and gas exploration and
production, and assorted mining activities. The
three Asian countries are also among Myanmar's top
five trading partners.
Myanmar's reclusive
ruling generals have awoken belatedly to the
notion that opening to select foreign investors is
more likely to maintain their long-term hold on
power than economic isolationism. The junta
recently opened six previously off-limits
terrestrial-based oil and gas blocks to foreign
exploration and development, mainly from India and
China, and has also promised to open the country's
largest gold mine and other key mineral deposits
to foreign investment.
SPDC leader General
Than Shwe is reportedly reviewing a larger-scale
privatization plan, which would involve the
selling of private stakes across a wide array of
state-owned enterprises, some of which were
nationalized in the wake of the military first
seizing power in 1962. If that plan were even
partially implemented, the sales would
substantially fill the junta's long-depleted
national coffers and provide the financial cushion
necessary to stabilize inflation and exchange-rate
volatility - the key on-the-ground targets of any
economic-sanctions regime.
Declining
influence When the US first imposed its
economic sanctions in 1997, and the EU later
followed suit, Myanmar's isolated economy was
highly vulnerable to outside pressure. China had
not yet fully emerged economically and Washington
was able to keep enterprising Japanese investors
from shoring up Myanmar's decrepit economy and
depleted finances.
When the 1997-98 Asian
financial crisis hit, the local currency, the
kyat, went into free fall, and the country was
only rescued by China's friendly extension of
emergency short-term interest-free loans. A
banking crisis in 2003 and the government's inept
policy response threatened to undermine completely
Myanmar's already precarious financial balance.
Without China's behind-the-scenes financial
assistance, on several occasions Myanmar's economy
could have succumbed to the combination of Western
sanctions and its own economic mismanagement.
The sanctions have long been cheered by
the hardline regime's many detractors, including
detained opposition leader Aung San Suu Kyi, who
has said from house arrest that foreigners should
refrain from investing in Myanmar until democracy
is restored. Yet when the US imposed sanctions
against Myanmar in 1997, the punitive policy had
achieved its objectives in fewer than 24% of cases
since 1973, according to research compiled by the
Heritage Foundation, a US-based conservative
think-tank.
Meanwhile, the Association of
Southeast Asian Nations (ASEAN) member states were
initially peeved when the US first imposed its
sanctions, which ran counter to their 1997
initiative to engage rather than isolate the junta
through membership in their regional grouping -
which was at least partially initiated to
counterbalance fears of China's growing economic
and strategic influence in Myanmar.
Still,
investment from financial-crisis-strapped ASEAN
countries has only gradually trickled into
Myanmar, and was further restrained by
behind-the-scenes US and EU diplomatic pressure on
certain regional countries. Yet China, India and
Thailand have all willingly risked Western
philippics to gain access to Myanmar's oil and gas
sources, which some industry analysts estimate are
second in volume only to Indonesia in the region.
Myanmar has significantly managed to
bypass the Western-controlled multilateral lending
agencies, including the World Bank, which has in
the main observed the US and EU sanctions, and
accessed capital investment directly from
private-sector Asian sources. While various US and
European companies closed down their Myanmar-based
investments because of the sanctions, Chinese and
Indian - mainly energy - companies have rapidly
filled the gap.
India's Essar Oil Ltd,
Focus Energy Ltd, MPRL Exploration and Production
Private Ltd and Goldpetrol and China's CNOOC
(China National Offshore Oil Corp), Sinopec (China
Petrochemical Corp) and China National Petroleum
subsidiary Chinerry Assets have all recently
established substantial operations in the country.
And there are reportedly many more joint-venture
energy deals in Myanmar's pipeline.
Western sanctions' failure to achieve
economic collapse and political change in Myanmar
significantly underscores both the United States'
and Europe's waning and China's and India's
growing economic influence in the region. As
Asia's economies become more integrated,
particularly through greater Chinese- and
Indian-inspired trade and investment links,
Western-led economic threats clearly no longer
strike fear into the region's roguish regimes.
If US and EU sanctions fail to have the
desired effect against a country as backward,
mismanaged and until now isolated as Myanmar, then
the policy tool is unlikely to work anywhere else
in Asia, including against nuclear North Korea.
That's a potentially disturbing economic truth
considering that current US administration's
penchant for using preemptive force against
regimes it considers "evil" or, in Myanmar's case,
"tyrannous".
Some Western diplomats
believe that fear of a possible US invasion was
one big reason Myanmar's ruling junta last year
abruptly moved the national capital from the
coastal city of Yangon to the inland, mountainous
redoubt of Naypyidaw. Ironically, perhaps, the
junta is now pumping profits earned from China and
India into building up a new military-industrial
complex, where the ruling generals are living
comfortably and hunkering down against a possible
US military rather than economic threat.
Meanwhile, the junta continues to round up and
jail its political opponents, and crack down on
even the mildest forms of dissent.
Shawn W Crispin is Asia Times
Online's Southeast Asia editor.
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