Myanmar’s Army And The Economy

Via The Economist, a report on the army’s involvement in Myanmar’s economy:

AFTER two decades spent punishing Myanmar with economic sanctions, now Western countries cannot seem to ditch them fast enough. Since by-elections on April 1st were won almost entirely by Aung San Suu Kyi’s opposition National League for Democracy, earlier caution on this issue has been cast aside. Australia and America have lifted travel and financial restrictions on hundreds of members of Myanmar’s establishment. The Americans have also promised to ease sanctions on some business sectors, while allowing in American humanitarian groups. Britain’s prime minister, David Cameron, recently in Myanmar, says that the European Union should suspend all sanctions, while maintaining an arms embargo.

The moves reward the government for reforms made so far, and are intended to encourage more of the same. And in lockstep with political progress has come welcome economic news: the introduction of a unified exchange rate for the kyat, Myanmar’s currency, and the announcement of plans to set up a stock exchange.

Yet a sense of the challenges Myanmar faces on the way to becoming a proper market economy governed by the rule of law can be had by venturing outside the two big cities. Beyond Yangon and Mandalay, interests opposing change remain deeply entrenched. While Western diplomats worry whether Myanmar’s reforms are “irreversible” or not, in the ethnic (ie, predominantly non-Burmese) regions around the country’s periphery, it is more a question of whether reform has happened at all.

Take the northern part of Shan state, home to the Shan, Myanmar’s biggest ethnic minority. Rich in teak (at least until recently) and minerals, the region is also the main link between Myanmar and China, its biggest trading partner. Up and down the often spectacular road between Mandalay and Muse (the old “Burma Road”) passes a good proportion of the trade between the two countries. The economic corridor that has grown up along the road affords a glimpse into Myanmar’s warped and corrupt political economy, one that will be hard to unpick.

Most obvious is the dominant role of the army. Lashio, about 200km (125 miles) from Mandalay, is headquarters to the North-Eastern Regional Military Command, with about 30 infantry battalions. For decades the army, dominated by ethnic Burmese, has fought insurgencies here. In January it signed a ceasefire with the Shan State Army-North, but has already breached it.

On the back of its formal military role, the army has also built up a suffocating economic grip on the region. Across Myanmar, the national army has for years pursued a policy of “living off the land”. Battalions are obliged to become their own farmers and businessmen in order to feed themselves and pay their wages. Signs outside Lashio proudly announce the entrances to the North-Eastern command’s enormous farms. All along the road up to Muse are more of the army’s various forests and plantations.

This arrangement not only gives the army a privileged place in the local economy. Commanders can also use their troops to extract higher prices from customers. As an illustration, Ye Tun, a member of the federal parliament for the local Shan Nationalities Democratic Party, points to the army’s battery-chicken farming business at Lashio. For years soldiers manning checkpoints into Shan state turned back all vehicles carrying chickens, so as to keep the prices of the army’s birds artificially high. Mr Ye Tun claims that since he exposed this particular scam in parliament it has now come to an end.

More egregiously, the army remains heavily involved in the large-scale cultivation and sale of opium poppies in the region. After pressure from the United States, Thailand and China to eradicate poppy fields in the early 2000s, the army has since been working with gangs called People’s Militia Forces (PMFs) to grow more poppies, farther away from prying eyes.

Again, the army can use its checkpoint soldiers to wave PMF drug shipments through, while choking off supplies from competitors among the local ethnic groups. One Shan lobby group based in Thailand says that the links between army and PMF have become so close that in 2010 seven PMF barons were elected to Myanmar’s new parliaments (federal and state) under the banner of the army’s proxy party, the Union Solidarity and Development Party. Their big pitch for votes to local farmers was that they would let them grow poppies without fear of persecution.

Most devastatingly, much of the area’s teak has been cut down and smuggled over the border to China, often with the help of the army. In the hills near the Chinese border it looks as though someone has taken a giant electric shaver to the landscape, so thorough has been the deforestation. In theory, all private logging was made illegal as far back as 1993. Yet one British NGO, Global Witness, estimates that from 1990-2005 Myanmar lost 18% of its forests—and this in a country that once had four-fifths of the world’s teak. The situation has improved a bit. However, only three years ago Global Witness discovered imports of 270,000 cubic metres of logs and 170,000 cubic metres of sawn timber in China’s Yunnan province just over the border. Nine-tenths of this timber, from Myanmar, was felled illegally, and army officers presumably helped to hurry the timber over the border.

Many of Myanmar’s generals have built fortunes on this kind of ruinous exploitation. Their wealth is much in evidence in Shan state. Swish hotels, shops and even domestic airlines are owned by serving or former military officers.

One former officer who should know a lot about this kind of thing is the current president, Thein Sein. Before he donned civvies to become a reformer, Mr Thein Sein was head of the Triangle Region Military Command from 1997-2001, to the south-east of Lashio. He was rumoured to be close to the drug lords of the local United Wa State Army and is said to have let them steal land from local farmers to allow the army’s friends to cultivate poppies on it. Loosening the army’s grip on local economies is a condition of lessening its political power. It will have somehow to be done if Myanmar is truly to change.

This entry was posted on Tuesday, April 24th, 2012 at 10:11 pm and is filed under Burma.  You can follow any responses to this entry through the RSS 2.0 feed.  Both comments and pings are currently closed. 

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