Burma/Myanmar: What Everyone Needs to Know (26 page)

Over the next decade or so, it is most likely that the military will play a leading role in the distribution of power in that state. This is a provision of the new constitution, but it would have been likely under any government, even a civilian one. Should some civilian administration take over the state and the military step back from the obvious exercise of power, military influence would still be substantial. It would likely still retain its control of coercive forces, the personal influence of its
leaders would be highly important, and there would remain substantial economic institutions under its auspices. The military controls the Myanmar Economic Holdings Corporation (MEHC) and the Myanmar Economic Corporation (MEC) that are, in effect, conglomerates that have been incorporated outside the public sector and employ hundreds of thousands of workers with extensive joint venture and contract operations with foreign firms.

Founded in 1990 under a Special Companies Act, the MEHC, between 1990 and 2007, wholly owns seventy-seven firms with thirty-five firms started since 2007. It has nine subsidiary firms and seven affiliated companies. Its shares are available to military units, active duty and retired military, and veterans’ groups, and it has returned a 30 percent profit since 1995 to 1996. The MEC is the “most secretive” business group. Founded in 1997, it has twenty-one factories, including four steel plants, a bank, a cement plant, and an insurance monopoly.

The Ministry of Defense also runs factories that produce matériel outside of military supplies. Acting autonomously of any civilian government, the
tatmadaw
could control the markets on various commodities and goods and have monopolistic potential in industries of their choosing. Both as producers (of goods) and consumers (of a large percentage of the state’s budget), their influence under any administration would be extensive.

The military offers a critical avenue of social mobility; even if it were to relinquish other aspects of its command of educational and economic institutions, its influence would still be important. Although strictly controlled, it is likely that the extensive military educational facilities are probably the best in the country. It seems evident that the
tatmadaw
has consciously developed a cadre of trained doctors, engineers, technicians, and administrators who will play pivotal administrative roles in any new administration for a substantial period. The
tatmadaw
in effect has reversed a Western concept. Instead of the military as a source of support for the civilian population,
in Myanmar the civilians are seen as a source of support for the military.

Many military officials will be required to retire before the 2010 elections and run for public office both at the national and regional Hluttaw levels. In addition, many retired military officers will likely gain election because they are prominent people in their own districts. A free election in 2010 would probably produce a significant number of military alumni allies of the administration, in addition to the one-quarter of active-duty officers who will be placed in the national Hluttaws by the Ministry of Defense and at state and division level legislatures and one-quarter in the self-administered zones and division.

For the military to retire from effective political control would probably require a long gestation period. That will only occur if two factors are in play. First, the
tatmadaw
must be convinced that there is no possibility of any of the minority areas seceding from the Union (a provision of the 2008 constitution). Second, there must be alternative and desirable avenues of social mobility that will attract youth, who currently still opt for a military career because in fact it is the only avenue to success. This especially means the development of the private sector that can absorb ambitious young people but also autonomous educational and nonprofit institutions. Such changes are likely to take a generation. It has happened in South Korea, Thailand, and Indonesia, but only over extended periods.

Following the institution of a new government after the 2010 elections, the Myanmar administration is likely to counter external criticisms and claim, with a certain degree of justification, that the minorities have more autonomy than they have had in fifty years. This is unlikely to be sufficient from the minorities’ vantage points, however. The six minority areas that have local and limited self-government at the township level may be more pleased than heretofore (the Kokang, Wa,
Naga, Padaung, PaO, and Danu ethnic groups), but the major minority groups are unlikely to be satisfied. Since 1962, they have been directly controlled by the center, so some local legislative authority, even with military dominance, might be a respite from rigid command. But many in the major minorities that now have states (Chin, Kachin, Shan, Karen, Kayah, Mon, Rakhine) have wanted some form of federal structure and in some cases virtual autonomy from central control. There will probably be continued dissatisfaction with what some regard as a Burman occupation. For example, the
tatmadaw
has increased its battalion strength in the Chin State from two to fourteen battalions since 1998, and from twenty-four to forty-one battalions in the Kachin State since 1994. (The Kachin Independence Organization has also increased its recruitment.) The
tatmadaw
, through its own regional command structure, will still have ultimate power over these peripheral regions.

Under the new constitution, there will be elected councils at the state/region and township levels. Any real authority at any administrative level thus will require military approval, and it would be exceedingly unrealistic to expect local
tatmadaw
officials to disregard central commands.

Although local elections at the state/region level will be hotly contested, the choice of the chair of that assembly rests with the president of the Union. There are likely to be former military Burmans whom the government would like to see in some of those positions, but whether such choices would be acceptable to cease-fire or other minority groups is unclear.

The macroeconomic crises that plagued the state over the past half-century are no longer operative. Myanmar’s international reserves were US$3.187 billion in 2008, increased from US$562 million in 2003. The present income from the sale of natural gas from the Yadana and Yetagun fields to Thailand (43 percent of foreign exchange earnings in 2006) and the projected income
from the off-shore gas fields in Rakhine, plus that from two Chinese pipelines and perhaps one from India, as well as a variety of exports, will increase these reserves (even at lower energy prices) and with prudent management should resolve any of the regime’s immediate economic concerns. The SLORC came to power in 1988 with reserves of some US$30 million. If some call Myanmar a “failed state,” it is not failed in its economic present or likely future.

The economic crises that the country faces must be disaggregated. There is now no crisis in macroeconomic terms: the state has a favorable balance of trade (US$2.89 billion in 2008) and international reserves in 2009 of US$3.361 billion. The crisis is thus not with funding but with the knowledge of economic affairs, priorities, and the distribution of the state’s considerable present and future resources, even with falling world prices in 2009.

Although many Western states struggle to fund social entitlements as well as other requirements, the Burmese regime has not had that concern. Instead, their priority has been military expenditures. The increases in the size of the military from about 199,861 in 1988 to somewhere in the neighborhood of 400,000 today (with a previous target of half a million, although some say the real total is about 350,000 excluding riot and other police units—desertions and overreporting are said to be high), together with increasingly sophisticated military equipment, spare parts, and more training, will all mean that the already sizable expenditures on the military—officially varying from 25–37 percent of state administrative expenses (2.46 to 3.94 percent of GDP) but more likely to be far in excess of either figure—will continue and perhaps rise. The amounts available for social services will remain limited, even though the United Nations had indicated that there was a humanitarian crisis in the state that predated the Cyclone Nargis tragedy. Already, the official expenditures on education and health are minuscule—1 to 2 percent of the budget. The burden of education and health expenditures has thus quietly been shifted onto the backs of a population already among the poorest in the world, and one
suffering from inflationary pressures that go underreported in official circles, even though they were officially calculated at 35 percent in 2007 and at 26.9 percent in 2008.

Various international private institutions have uniformly rated Myanmar low on their international scales. The Fund for Peace considers Myanmar the fourteenth among the twenty most unstable states. The Brookings Institution noted that Myanmar was the seventeenth weakest of 141 countries. The World Press Freedom Index listed Myanmar as 163 of 164 countries in terms of press freedom. The Economist Intelligence Unit rates Myanmar as 163 out of 167 countries in its 2008 Democracy Index.

The present military mistrust of the notable but now aging corps of civilian Burmese economists, some of whom achieved international recognition and have worked for international agencies, has limited the junta’s economic policy options. This has been compounded by the great mistrust of foreign advisors. This latter problem is not new; the government in the past has accepted foreigners who would deal with specific technical issues and projects, but since the 1950s the government have felt that policy advisors, at least those publicly recognized, were an infringement of national sovereignty (unless they worked directly under and were paid for by the Union government, as in the civilian period). The military has felt that it had the capacity to plan and execute economic policies and programs, but the reality is that it lacks the basic sophisticated understanding of monetary policy, such as money supply (it no longer makes those figures public, and the central bank is not independent). One foreign economist commented that “monetary policy is incoherent.” Economic decisions seem arbitrary: overnight increases in government salaries or the elimination of energy subsidies without careful consideration of their effects. The banking system is in disarray, and other financial institutions are of questionable capability. In 2003, a crisis occurred that was, in effect, a type of pyramid scheme to pay higher interest rates, because official bank interest rates are
below inflation levels. The state closed many institutions. Only 3 percent of GDP is raised through taxation.

In November 1988, I listed for the World Bank a series of economic reform measures necessary for improvement in the society. Among them were exchange rate reform, public sector salary reform, financial institutional reform, reform of the private sector and state economic enterprises, regional industrial and economic development diversification, economic planning and technical improvements, establishment of an independent board of audit, enhanced revenue collection, and training in statistical methods. Twenty years later, these needs have not been met.

The restructuring of economic and social policies are necessary for the well-being of the people and even for the military’s hold on authority. As other states in the region progress while Myanmar stagnates, invidious comparisons will become more widespread. This could endanger regime survival, and the exodus for better (or indeed any) jobs would likely increase even if fighting ceased. This could cause further regional problems.

It is unclear how much foreign exchange overseas Burmese remit to Myanmar. Whatever official figures that might exist are undoubtedly underestimated, as there are various informal and safe means to transfer funds into the country. Although Myanmar will not be like the Philippines, where such remittances total some US$15 billion annually, such a social safety net could be important for some hundreds of thousands of families remaining in the country. Some estimates indicate that they may amount to more than US$200 million, although other figures range from US$3–4 billion. The world economic crisis of 2008–2009 may cause remittances to drop, thereby further lowering internal income. The government taxes overseas incomes at 10 percent, but anecdotal evidence is that such incomes are normally underreported.

The economic potential and importance of Myanmar should not be overlooked. It is the world’s tenth largest exporter of natural gas. Its off-shore and on-shore reserves are
estimated as 2.46 trillion cubic meters and off-shore crude oil at 3.2 billion barrels. The Shwe gas field reserves should yield US$37–52 billion over twenty years, of which Myanmar will get US$12–17 billion.

The political crisis is well known even if a solution acceptable to the international community is distant. But the crisis of youth, the frustration of a lack of a future in the society, the belief that emigration is the only possibility, and the second-class status of civilians, even those with full citizenship, all have resulted in a malaise so deep (yet seemingly unrecognized by the junta) that deliverance from this morass will be exceedingly difficult.

All avenues are under military authority or surveillance. Access to higher education is militarily controlled. All mass interest groups are under state authority. Registration in the
sangha
is required. Private sector mobility is severely limited because of a lack of capital. The most extensive mass organization, the Union Solidarity and Development Association (USDA), is a civilianized military voice. Futures in opposition politics are hazardous to one’s health. Despair is evident.

Health and nutritional standards are appalling even by regional criteria. Infant mortality is said to be 79 (per 1,000 births), life expectancy is about sixty years at birth, and Myanmar rates 125 of 174 countries on the UN Human Development Report of 2000. Even where doctors practice in rural areas, medicines often have to be purchased privately at unaffordable prices.