[ReadingRoom] News on Burma - 7/10/11
- Myanmar independence hero Aung San back in the limelight
- SSA-S accepts Burmese government’s offer to start peace talks
- Pipelines to China become new target for Burmese activists
- Burma forgotten people
- Burma’s new threat to global security
- Hope in Myanmar
- A kyat in the dark
- Burma rebuffs China
- Power struggle delays prisoner release
- Irrawaddy dam suspended, Shwe Gas Project should be next
- Naypyidaw shelves BGF to prepare for ethnic peace talks
- The Myitsone dam decision in Burma
- Burma eyes Indonesia-style reforms
- Myanmar back in the world rice trade after long hiatus
- Dammed if they don’t
- Aung San Suu Kyi cautious on Burma reform
- Legal moneychangers set up shop, but black market still rules
- Suu Kyi and gov’t minister discuss amnesty and establishing peace
- Myanmar makes exchanging money easier
- Burma’s leaders are showing signs of change, but there is a long way to go
- NLD considers registering as official political party
- Burma’s showy crony
- What Thein Sein promised Suu Kyi
- Revealing Burma’s system of impunity
- Myanmar says democratic reforms irreversible, promises prisoner amnesty
- UN Secretary-General Press Statement
Myanmar independence hero Aung San back in the limelight – Peter Janssen
Deustche Presse Agentur: Thu 6 Oct 2011
Yangon – When Myanmar President Thein Sein held conciliatory talks with opposition leader Aung San Suu Kyi in August, he made sure that Suu Kyi’s famed father, Aung San, was part of the picture. A portrait of Aung San, an independence hero and founding father of the Myanmar army, was on the wall behind Thein Sein and Suu Kyi as they shook hands for state media after a meeting that has set a new tone for national politics.
Thein Sein’s predecessor, Senior General Than Shwe, who led the junta that ruled Myanmar from 1992 to 2010, was well-known not only for his dislike of Suu Kyi but also for distain for her father, who was gunned down by political rivals in 1947.
Prior to the Thein Sein-Suu Kyi meeting, no official portraits of Aung San were hung in government offices in the capital, Naypyitaw.
‘Thein Sein sent a message to the people that he is a follower of Aung San,’ said Kwin Maung Swe, leader of the National Democratic Force, an opposition party in parliament.
‘Hanging the portrait was a message to the whole country that he will not deny the Aung San image,’ Kwin Maung Swe said.
The National Democratic Force, a breakaway faction from Suu Kyi’s National League for Democracy, plans to propose to parliament that Aung San’s portrait be reinstated on the kyat bank notes, a practice that was discontinued under Than Shwe’s rule.
‘He is a national hero,’ Kwin Maung Swe said. ‘We are trying to take things back to normal times.’
There are other signs of an Aung San revival in Myanmar.
Children openly sell small posters of Aung San and his famous Nobel Peace Prize-winning daughter to motorists in the country’s largest city and former capital, Yangon, and the state-controlled media has been full of articles about the Aung San legacy in recent weeks.
‘Aung San’s image has been brought back again,’ said Tin Oo, deputy leader of the National League for Democracy and a former general. ‘Now the younger soldiers are beginning to understand who was the hero of independence and the father of the army.’
Before the rise of Suu Kyi as the country’s champion of democracy in the aftermath of a brutal army crackdown on anti-military demonstrations in 1988, her father was revered by the military as the army’s founder and a hero of the country’s struggle for independence from Britain, its former colonial master.
Aung San portraits graced kyat notes and hung in government offices, and the anniversary of his assassination, Martyr’s Day, was a national holiday marked by solemn state commemorations.
After Than Shwe moved the capital to Naypyitaw in 2005, Martyr’s Day was presided over by the Yangon governor.
Unlike Than Shwe, Thein Sein, who took office in March, has acknowledged that he needs Suu Kyi on his side to achieve his goals: securing the position of the military establishment that still runs the country, ending Myanmar’s pariah status in the world community and easing economic sanctions, observers said.
‘If the regime thinks that Aung San Suu Kyi will now play ball, then reviving Aung San as the father of it all is fine with the army,’ said Robert Taylor, author of The State of Myanmar. ‘After all, he was their founder, so back to normality.’
Myanmar military strongman Ne Win, who overthrew the county’s fledgling post-independence democracy in 1962, did not play down the Aung San legacy because it enhanced his own.
Both Aung San and Ne Win were members of the Thirty Comrades, young revolutionaries who sided with the Japanese in ousting the British forces at the beginning of World War II, who then turned on the Japanese before the war ended.
Many have criticized Suu Kyi for agreeing to meet with Thein Sein before the new government has made substantive concessions, such as freeing about 2,000 political prisoners and opening peace talks with ethnic minority rebel groups, which have been fighting the army for decades.
‘They’ve kind of hijacked Aung San and Aung San Suu Kyi for their own purposes,’ said Bertil Lintner, a well-known Myanmar expert and author of The Land of Jade.
But for Suu Kyi and her followers, small progress is deemed better than none at all.
‘So long as we can make one inch of progress, we will work together,’ Tin Oo said.
SSA-S accepts Burmese government’s offer to start peace talks – Phanida
Mizzima News: Thu 6 Oct 2011
Chiang Mai – A spokesman for the Shan State Army-South (SSA-S) says it has accepted the Burmese government’s offer to engage in peace talks. SSA-S spokesman Major Sai Lao Hseng said the location and the time for the talks have not been set.
“At first, they sounded us out,” Major Sai Lao Hseng said. “We replied that if they officially offered to begin peace talks, we would be ready to meet with them. We have said that we are willing to use peaceful ways to solve the problems.”
In August, President Thein Sein announced that ethnic armed groups that want peace should talk with the respective state or regional governments.
On the other hand, the Shan State Army-North (SSA-N) spokesman Major Sai Hla said that the government had not offered to engage in peace talks with the SSA-N.
In July, during the fighting between Burmese government troops and SSA-N troops in the area near the SSA-N Wanhai headquarters, the government sent two Buddhist monks as representatives to discuss holding talks with the government.
The SSA-N replied that it would meet with government representatives as an initial step, but regarding talks about a cease-fire and politics, it would only meet with the central government as a member of the United Nationalities Federal Council (UNFC), which is comprised of six ethnic member-groups that have united to negotiate with the government as a single alliance.
Major Sai Hla said that SSA-N Battalion 25 under Brigade No. 1 last week helped a member of the alliance, the Kachin Independence Organization (KIO) Brigade No. 4, fight against government troops in the KIO area. Two soldiers of SSA-N were killed in the fighting in Mongton.
Both the SSA-N and KIO are members of UNFC that aims to cooperate in resisting government’s political pressure and military offensives. Major Sai Hla said that the SSA-N was ready to help the KIO if Burmese government troops had launched a military offensive against the KIO.
“If fighting occurs, we are not alone,” he said. “The UNFC, as a whole group, is likely to fight [against government troops].”
Recently, UNFC Genera-Secretary Nai Han Thar said the Burmese government was determined to drive a wedge between the ethnic armed groups by demanding that they talk to negotiating teams separately.
Nai Han Thar told Mizzima: “They may think that if the ethnic groups are united, the demands will be greater. It seems that they want to avoid holding political dialogue. They want only a cease-fire. They are trying to divide ethnic forces because they want to rule the country for the long term. In other words, they want the ethnic groups to be weak.”
On October 1, a delegation led by Thein Zaw, the chairman of National Races and Internal Peacekeeping Committee and secretary 2 of the ruling Union Solidarity and Development Party, and the leaders of United Wa State Party held a meeting, but government negotiators rejected some key Wa demands.
Meanwhile, government representatives met with the National Democratic Alliance Army (NDAA) (aka) Mong La group this week to discuss peace. The meetings are expected to continue within a few days.
Pipelines to China become new target for Burmese activists – Ba Kaung
Irrawaddy: Thu 6 Oct 2011
Chinese-backed strategic oil and natural gas pipelines under construction in Burma have become the new target for Burmese activists following President Thein Sein’s suspension last week—under heavy public pressure—of the controversial Chinese-backed Myitsone Dam hydropower project in Kachin State. Citing human rights violations, activists on Thursday called for the similar suspension of the US $ 2.5 billion oil and natural gas pipelines being constructed by state-owned China National Petroleum Corp (CNPC). The pipelines are to start at the Bay of Bengal in Arakan State on Burma’s western coast, travel through central and northeastern Burma, and end in Yunnan Province, China.
“Widespread land confiscation to make way for the pipeline corridor has already left countless people landless and jobless, while others along the pipeline are facing human rights violations and exploitation,” said a group of Burmese activists from the Shwe Gas Movement, a campaign group opposing the exploitation of Burma’s natural gas reserves, in a statement on Thursday.
The oil pipeline, which CNPC was granted exclusive rights to build and operate, is even more economically and strategically important to China than the $ 3.6 billion Myitsone Dam, which was expected to generate 6,000-megawatts of electricity that would be sent mostly to China.
The pipeline, with an estimated capacity of 20 million tons of crude oil per year that will enjoy tax concessions and customs clearance rights from the Burmese government, will enable China to bypass the Strait of Malacca when importing crude oil from the Middle East and Africa, saving an estimated 1,200 km shipping distance.
As part of the oil pipeline project, China is also constructing a deep-water crude oil unloading port and oil storage facilities on Burma’s Maday Island off the coast of Arakan State—an investment that will provide China with crucial access to the geopolitically strategic Indian Ocean, where the US is poised to increase its navy presence in the coming decade.
The gas pipeline, scheduled to be completed in 2013, will be used to transport Burmese natural gas from the Shwe Natural Gas Fields located off the Arakan coast to Yunnan Province.
The pipeline projects have angered the people and politicians in Arakan State, which is rich with Burma’s largest oil and natural gas reserves but has a poor electricity supply.
On Sept 27, Ba Shin, an opposition MP representing Kyaukphyu Island off the Arakan coast, submitted a question to the national Parliament in Naypyidaw, asking whether his constituency would receive a share of the natural gas extracted from the Shwe Natural Gas Fields for the purpose of improving the island’s electricity supply.
In response, Energy Minister Than Htay reminded Ba Shin that the previous military government awarded China the right to purchase and export the natural gas generated by the Shwe Natural Gas Fields for the next 30 years, and therefore the gas was unavailable for local use.
“People opposed the Myitsone Dam because they don’t want their natural resources being used to line the pockets of the regime and corporations with atrocious reputations, all at the expense of local people. The Shwe Gas Project must be stopped, recognizing that like the dam, it will be destructive socially and economically,” said Wong Aung, an Arakan activist with the Shwe Gas Movement.
On Monday, China’s Xinhua news agency reported that construction of the pipeline was “proceeding smoothly” and that CNPC said it gave $1.3 million to Burma this week to help build eight schools in the country, as part of an agreement signed in April to provide $6 million of aid.
“Construction of the fourth stage of the oil and gas pipeline [within Burma] commenced on October 1, which is being built by CNPC Chuanqing Drilling Engineering Co. The pipeline project will continue after the rainy season in Myanmar [Burma],” Xinhua said.
Any major obstacle to pipeline construction, such as the broad-based public movement which prompted the Burmese president to suspend the Myitsone Dam project, could be a devastating blow to China-Burma relations.
Napyidaw’s decision to suspend construction of the Myitsone Dam has already angered Beijing, which has called for the protection of the legal rights of the Chinese companies that have invested in the project. In addition, the lead Chinese investor in the dam project warned the Burmese government of possible legal action.
Jim Della-Giacoma, the South East Asia project director for the International Crisis Group, said that the Myitsone Dam crisis has the potential to weaken the Sino-Burma relationship, particularly if it comes to be seen as some sort of strategic rebalancing of Burma’s international relations.
“The relationship is deeper and wider than just one dam, but this is clearly a significant decision that probably involves environmental, political and other factors,” he said in an interview with The Irrawaddy.
But since Naypyidaw’s decision is apparently part of a more calculated effort by Thein Sein to win support from the Burmese public for his reform agenda and improve Burma’s standing in the West while still retaining close ties with China, the new president is expected to appease China by offering economic concessions and ensuring the successful continued construction of the pipelines.
However, even if the same type of public resistance that formed in the case of the Myitsone Dam project does not materialize, the oil and natural gas pipelines will still pass through conflict zones in northeastern parts of Burma, where Shan and Kachin rebels are operating. Military clashes between government troops and those ethnic armed groups have been ongoing since June and have escalated over the past few weeks.
Meanwhile, according to unconfirmed reports, Burma’s Vice-President Tin Aung Myint Oo will visit China in the next few days, leading a delegation of government ministers, including the minister of the Ministry of Electric Power No. 1, possibly in an effort to patch-up the relationship strained by Myistone Dam suspension.
Burma forgotten people – Pafinyaporn Pajee
The Nation (Thailand): Thu 6 Oct 2011
A Thai documentary maker turns her attention to the Rohingya. Like many Thais, Thananuch Sanguansak saw CNN’s report in early 2009 that the Thai military had been systematically towing boat-loads of Rohingya refugees far out to sea and setting them adrift. Her curiosity was aroused and the director and editor of the Nation Channel’s documentary section decided to explore further with a documentary of her own.
“That was really the first time I’d heard about the Rohingya. They are part of our daily lives but we don’t really notice them,” says Thananuch, who set about tracing the Rohingya in Thailand from Ranong to Samut Sakhon – the provinces that are home to the largest concentrations of Burmese immigrant labour.
“I asked Burmese labourers where I could find Rohingya people and the answer was ‘any roti vendor’. I was surprised because I’d always thought that the roti vendors came from India or Bangladesh. In fact, they are Rohingya,” says Thananuch.
After interviewing a Rohingya man in Ranong, she learned that he and his family had been evicted from their rented house and asked by government officials from not to give any more information. Thananuch was incensed and decided to develop her documentary and get to know more about the ethnic group.
Most of 50-minute documentary was researched, shot, edited and narrated by Thananuch on her own. Rather than focusing on the obvious human rights abuses, she presents the lives and an overview of these little known people in “My Roghingya” and lets the viewer draw their own conclusions.
“The documentary is from my point of view. I want to share their lives and tell their stories, not just what happened in news,” she says.
After showing on the Nation Channel and Modernine as well as at the World Film Festival of Bangkok last year, the documentary is being screened today and on Saturday at the UNHCR’s Refugee Film Festival in Tokyo.
It doesn’t try to dramatise the hardships of these stateless people or the discrimination in their homeland. In fact Thananuch tries to paint an honest picture of the people who live humbly in Thailand and as well as in the Rohingya refugee camp at Cox’s Bazar in Bangladesh.
Unlike those in Thailand, the Rohingya in Bangladesh face a real struggle to survive. They have to stay in the refugee camp and while they can go out to work, they have to return to the camp at night. Thananuch discovered that it was not easy to interview Rohingya people in Bangladesh because they were terrified of getting into trouble with the Bangladesh people and the government.
“We interviewed them in the van so they’d feel safer,” she says.
“But whether they are relatively free in Thailand or in a camp in Bangladesh, they really don’t want to live abroad. They want to live in Burma,” says Thananuch.
“They want Burmese citizenship and to be able to return home.”
Many Rohingya people have lived in Thailand for decades, can speak Thai fluently and some have married Thais and are raising families. Aside from selling roti or grilled squid, some are waiting further endorsement of their legal refugee status through UNHCR.
The Rohingya are a predominantly Muslim people from Arakan state in western Burma near the Bangladesh border. Long denied Burmese citizenship, they were chased from their homes by the junta and forced to flee to Bangladesh, Thailand, Indonesia or Malaysia, none of which wants them.
Burma is an ethnically diverse country. Not only the Rohingya, all ethnic people including the Karen or Mon have problems with the government. The Rohingya people still in Arakan State are forbidden from marrying or travelling without permission and have no legal right to own land or property.
Thananuch says she sees no way out for the Rohingya.
“When their problem started getting more public attention, they hoped that their citizenship situation would be resolved because Asean and the UN were aware of their existence. But nothing is happening: it’s not easy for any international organisations to interfere with Burma’s internal policies.”
Burma’s new threat to global security – Janet Benshoof
Democratic Voice of Burma: Thu 6 Oct 2011
For over forty years, Burma’s military rulers have ignored the rules of law that govern civilized nations. General Than Shwe and his fellow perpetrators enjoyed an unfettered rule by crime only because of the global community’s long standing “whine and wait” policy towards Burma. However, the latest power ploy by the military – establishing a “civilian” sovereign state without sovereign powers – makes such inaction untenable. Given its lack of sovereign powers, control over its people, laws, and territory, Burma’s new “civilian” government is illegitimate. The most fundamental and accepted law of nations obliges all states to treat Burma’s constitution and the elections arising from it as “null and void.”
Let me explain how this happened and why Burma’s form of government is a new threat to global peace and security.
Burma’s new constitution, implemented on 31 January 2011, establishes the sovereign state of “the Republic of the Union of Myanmar” as being composed exclusively of the executive, legislative, and judicial branches. The military (“Defense Services”) is a separate, legally autonomous entity, outside of and supreme over the sovereign state. The new government of Burma, represented by the Head of State President Thein Sein, is incapable – even if willing – to enforce any laws, civil or criminal, against the military. All military affairs, civil or criminal, are under the exclusive control of the commander-in-chief. No law applies to the commander-in-chief, not the constitution or any rules spanning from controlling finances to nuclear development.
This bold attempt to establish a permanent “law free zone” for the military has escaped the notice of the global community. In fact, the influential International Crisis Group goes even further, enthusiastically describing Burma’s constitution and elections as “improv[ing] the prospects for incremental reform.” Nothing could be further from the truth. The military’s stranglehold over Burma is impervious to political reform given its constitutional basis.
Even if Aung San Suu Kyi were President of Burma tomorrow, she would lack the legal capacity to be able to enforce compliance with Chapter VII Security Council Resolutions, the Nuclear Non-proliferation Treaty, the Genocide and Geneva Conventions, the ASEAN Charter, and international laws regulating trade when they apply to military-owned companies in Burma. Neither the executive nor judiciary can end the constitutionally-guaranteed impunity of the military for past and present war crimes and genocide, including the use of rape as a weapon of war and child soldiers.
Although the military currently lacks nuclear capability, its fixation on mimicking the “North Korea model” of using the potential of nuclear weapons as a bargaining tool on the world stage is a serious threat. The military’s access to mineable uranium and billions of dollars are strengthened by a constitutional structure that ensures their legal autonomy and control over Burma’s energy development projects, including nuclear power.
The issuance and implementation of this illegal constitution is an act of state of the utmost gravity under international law, violating the most central premise of the United Nations Charter; that all Member States are able and willing to comply with Security Council mandates necessary to secure global peace and security.
Burma now must incur the legal consequences of its “serious breach of peremptory norms.” Under international law all states are under an absolute obligation not to recognise the constitution and its subsequent elections and to take all measures possible, both collectively and individually, to ensure Burma revokes its constitution and invalidates the elections. This intransgressible legal duty of non-recognition cannot be ignored in favor a political strategy that accepts the validity of the 2010 elections. This was made plain by the Security Council in 1984 when it enforced this sanction of non-recognition mandating states treat the South African apartheid constitution and elections as null and void.
Enforcing the most fundamental law of nations is critical for the people of Burma for whom the new constitution legitimises their permanent status as prisoners of their own county. Equally important is for the world community to stop treating Burma as immune from consequences for its illegal acts. Continuing a “whine and wait” policy towards Burma, or worse, supporting the new illegal regime, should not be considered as viable political options.
* Janet Benshoof is president and founder of the New York-based Global Justice Center.
Hope in Myanmar
The Economist: Thu 6 Oct 2011
Something good could finally be happening in one of Asia’s nastiest dictatorships. The recent news from Myanmar, that beautiful, blighted land formerly known as Burma, has offered an all-too-rare cause for optimism. In the past week the president (and former general), Thein Sein, has announced that construction of the Myitsone dam across the River Irrawaddy would cease. That is probably a good thing for the environment; but it also marks a symbolic shift. It shows that for the first time for many years, Myanmar’s regime is prepared to annoy China, the dam’s main backer.
Irritating China is not necessarily a good thing. But in this case it appears to be part of a wider trend: Myanmar’s leaders seem prepared to pay more heed both to popular opinion at home and to pressure from the West. In August Aung San Suu Kyi, the winner of the 1991 Nobel peace prize who is the de facto head of Myanmar’s opposition, was invited for talks with Thein Sein himself. Miss Suu Kyi, who was previously confined for years under house arrest, has been allowed far greater freedom of movement and has even met several foreign visitors. Then in September the government passed a law to permit the formation of trade unions. These changes could just mark the start of a substantial shift in the now nominally-civilian leaders’ repressive policies.
This is not the first time that Myanmar’s leaders have eased up; and previous dawns have turned out to be false. In the mid-1990s, and then again in 2002-03, some form of reconciliation between the generals and opposition forces under Miss Suu Kyi seemed to be under way. On both occasions, the reforms led nowhere and there was ultimately a backlash by hardliners within the regime.
Yet even the regime’s opponents admit that there could be more to the relaxation this time round. For years Western sanctions seemed to produce little in the way of significant political change in Myanmar; instead they pushed the country’s leaders closer to China, which is more forgiving of dictatorships. But this greater closeness may not be entirely welcome. The people of Myanmar—and the regime—remain fiercely independent and popular resentment of China’s huge economic influence in the country has increased. With most ordinary people still poor, Myanmar’s leaders may have decided to liberalise to try to get sanctions lifted.
Take the pressure off, only slowly
How should the West react? Myanmar’s leaders, no doubt, would like to see sanctions lifted rapidly. To merit that, they need to do more. There are rumours of an imminent release of political prisoners. If it goes ahead, the leadership should get some credit. The biggest issue, however, is the 2008 constitution, which gives the armed forces the final say on everything, and which Miss Suu Kyi and her party have refused to recognise. As long as this constitution is in place, genuine political reconciliation at the centre, let alone with Myanmar’s myriad ethnic insurgent groups, is hard. This rotten document should be rewritten quickly.
Despite these caveats, the West should applaud reform and recognise Thein Sein’s efforts. Its failure to respond favourably to previous liberalisations has strengthened hardliners’ suspicions inside Myanmar. The changes this time may be limited, but they are a great deal better than no movement at all. After so many long years of hopelessness, they represent a small glimmer of light for the people of a dark land.
A kyat in the dark – Yeni
Irrawaddy: Thu 6 Oct 2011
A s Burma’s new, ostensibly civilian government finally begins to acknowledge the multiple economic challenges facing the country, one issue has come to the fore: a foreign-exchange regime that has for decades played a major role in keeping Burma in the global economic wilderness. The reason for this sudden interest in the value of the national currency, the kyat, has little to do with the supposed reformist tendencies of Thein Sein, the ex-general who now serves as Burma’s “civilian” president. Rather, the kyat has thrust itself upon the new regime’s attention because it threatens to eviscerate one of the few growth sectors of the Burmese economy: food and other commodity exports.
Since the beginning of this year, the kyat has appreciated by more than 20 percent, putting severe pressure on exports and threatening efforts to restart the economy after decades of stagnation under direct military rule.
Now sitting at around 800 kyat to the dollar, compared to more than 1,000 kyat to the US unit a year ago, the exchange rate has become such a serious concern that in August, Thein Sein was forced to acknowledge before an audience of economists, businessmen and local aid organizations that the currency’s strength was hurting the economy.
“In consequence, local demand for goods is falling, and it has affected producers, especially farmers, who depend on exporting agricultural produce. So ways and means are being sought to ease the crises those farmers are facing,” the president was quoted as saying in the state-run New Light of Myanmar newspaper.
To reduce the burden on exporters, the government has cut export revenue tax on seven items—rice, beans and pulses, sesame, rubber, corn, marine products, and animals and animal products—from 7 to 2 percent, and exempted them from commercial tax for a period of six months, from Aug 15 to Feb 14, 2012. Burma’s Central Bank has also announced that it will reduce the interest rate on loans from 17 to 15 percent, in the expectation that easier financing will help boost private sector investment.
But temporary relief measures may not be enough. The danger now, say experts, is that the exchange rate could reach a point where repatriated earnings from exports are no longer sufficient to cover the costs of production, inflicting huge losses that could bring entire industries to their knees.
The rising kyat is also affecting the economy in other ways. Already, it is taking a sizable bite out of the value of overseas remittances. Money from expatriates supports hundreds of thousands, or even millions, of poor relatives back home. According to Sean Turnell, a specialist on the Burmese economy at Macquarie University in Australia, the average worker in Thailand, where there are an estimated two million Burmese migrant workers, sends back around US $300 a year. Most of this is spent on daily living expenses, or on housing, education and health.
In the longer term, the kyat’s continuing climb could also hit locally manufactured goods, as domestic consumers turn to cheaper imports to offset declining income—something that would have highly disruptive effects on an economy that has long been geared to self-sufficiency.
“The economic, social and political consequences of this chain of events could be serious,” wrote U Myint, a leading Burmese economist and the top economic adviser to Thein Sein, in a recent paper addressing the exchange rate issue.
No Relation to Reality
With all the talk of how the kyat’s recent surge is impacting on the economy, it’s easy to forget that the currency’s current value is actually less than one percent of its official worth.
At the official exchange rate, one dollar fetches just 6 kyat—a figure that has never borne any relation to reality, and which is rarely used except when recording government revenue from the sale of offshore natural gas and other resources (thereby enabling Burma’s generals to vastly underreport the wealth the country should have accumulated under their rule).
In practice, of course, it is the market, or “black market,” that determines the real value of the kyat. Outside of Burma, it is worth nothing at all, being non-convertible. Even inside the country, it is not the only currency in circulation. The US dollar is widely used for a range of transactions, from paying for imported goods to dealing with foreign tourists. The Thai baht and Chinese yuan are also often accepted, particularly in border areas. Other convertible currencies like the euro, the Japanese yen and the Australian dollar are not as popular, but the euro has begun to gain ground as a hard currency of choice.
Despite all this competition, however, the Burmese currency has steadily increased in value since 2009. For most of 2010, one US dollar was equivalent to more than 1,000 kyat, but dropped to less than 900 kyat by the end of the year. There have been several explanations for this. Besides the declining value of the dollar worldwide, other factors include a dramatic increase in foreign investment, especially in the energy sector; high oil and gas prices (Burma’s biggest export is natural gas); and a spending spree by cronies of the military elite, who in the run-up to this year’s transition to ostensibly civilian rule used their massive dollar reserves to buy up real estate, gems and state-owned businesses.
While these factors may have driven up the value of the kyat, however, they have done little to put the country’s finances in order. In August, when budget figures were presented in Parliament for the first time since 1987, Maung Toe, the secretary of the Public Accounts Committee of the country’s Pyitthu Hluttaw, or Lower House of Parliament, said that Burma would run a deficit of about 2.2 trillion kyat (US $2.9 billion) in the 2011-2012 fiscal year.
Responding to a question by an MP, Maung Toe said the government expected to raise 5.78 trillion kyat ($7.7 billion) in revenue, while expenditures were budgeted at 7.983 trillion kyat ($10.6 billion). Although he provided no details about government expenditure, an official document released earlier this year, known as the government gazette, showed that nearly a quarter of this year’s budget would go to the military.
Although the sale of stated-owned property might have helped to reduce the country’s ballooning fiscal deficit, the lack of transparency that characterized the entire process makes it impossible to know how much of the money raised went into public coffers, and how much wound up in the generals’ private bank accounts. It is also worth noting that much of this massive debt was used to finance the construction of Naypyidaw, with its imposing public buildings, extensive road network and lavish residences for the retired generals.
Despite its efforts to make all the right noises about poverty alleviation and curbing corruption, the Thein Sein administration continues in the footsteps of its junta predecessor in spending heavily on the military, while doing little in the way of implementing policies to support households and businesses.
Meanwhile, Burma’ central bank remains reluctant to tighten policy aggressively, as it is not operationally independent from the government. Burma’s domestic inflationary pressures remain strong owing to the fact that the central bank—which is operated by the Ministry of Finance and Revenue—is always ready to finance the budget deficit by printing money, with the consequent growth in domestic credit pushing up prices. Combined with pressure from rising global consumer prices, this could send Burma’s inflation rate up to 16.2 percent in 2011, according to the Economist Intelligence Unit.
Of course, it is the very poor, who make up the bulk of Burma’s population, who bear the brunt of this erosion of purchasing power. But the country’s much smaller middle class also struggles with the distortions inherent in an economic system heavily weighted to favor a tiny handful at the top.
Ironically, despite the rising value of the kyat, most middle-class Burmese consider their national currency essentially worthless. Those who somehow manage to rise above mere subsistence aspire to send their children to school in Singapore, Malaysia or Thailand, or to move to these countries themselves, to escape being squeezed by ludicrously high duties on the sort of goods that most people of moderate means take for granted.
On the Road to Reform?
While most of Burma’s economic problems are seen as an endemic feature of life under an entrenched authoritarian regime, there appears to be at least a nascent recognition among the country’s rebranded rulers that the status quo is simply unsustainable. How far they are prepared to go in reforming a system of their own creation is, however, an open question.
If Thein Sein was hoping that a few cosmetic changes would suffice to bring Burma into the international mainstream, the renewed focus on the kyat has served to highlight just how bizarrely out of step with the rest of the world the country remains. In addition to setting an official exchange rate that would cripple the economy if it were actually enforced, the government continues to print its own US dollars, in the form of dollar-denominated Foreign Exchange Certificates (FECs).
At least on this front, the government seems to be getting a grip on reality. Government officials have reportedly told Burmese business leaders that the FEC is on its way out. There are also growing expectations that the exchange rate will be readjusted to better reflect the country’s economic needs.
Dumping an unrealistic and grossly inefficient system that has long distorted Burma’s economy is definitely a step in the right direction, but it is one that will require a degree of expertise that is completely lacking among the country’s key decision makers.
That’s why the government has turned to the International Monetary Fund (IMF) for advice. To provide this advice, the IMF will first of all ask Naypyidaw to provide key macroeconomic data, such as foreign exchange reserves, balance of payments, national budget, money supply, GDP (including its sectoral composition and growth rate), household income and expenditures surveys, foreign direct investment inflows and foreign trade statistics.
IMF spokeswoman Gita Bhatt recently confirmed that the Washington-based financial institution had received a request from the Burmese authorities to help them “prepare to modernize their exchange-rate system and lift restrictions on the making of payments and transfers for current international transactions.” She said the IMF planned to send a technical team to Burma in late October to begin the process, but other details about contemplated reforms weren’t available.
The government seems convinced that it is on the right track. The “problem of exchange rate gap, the main barrier to international trade, will be solved along with the proper evolution of market economy,” Finance Minister Hla Tun was as quoted saying in The New Light of Myanmar, which also reported that the authorities had reached out to the IMF and sent trainees overseas as part of its efforts to reform the exchange rate.
Beyond providing some much-needed advice, however, the IMF is unlikely to play a major role in bringing these plans to fruition. Because Burma hasn’t paid back its debts to multilateral financial institutions—and because the US wields effective veto power over the IMF—the country is barred from receiving any new financial aid.
That shouldn’t matter, however, because Burma is believed to have abundant foreign exchange reserves (thanks to its sales of gas, gems and other natural resources), which it would need if it decided to discard the fixed exchange rate completely and simply float the kyat.
While this might seem like a radical departure for a country that has spent nearly 50 years under a succession of authoritarian regimes notorious for maintaining a stranglehold over every major sector of the economy, floating the kyat could very well be the best way forward. Best of all, it “would require quite literally little more than the stroke of a pen,” according to Macquarie University’s Sean Turnell.
In fact, introducing a floating currency would only be a matter of making official the informal system that has long been in place in Burma, where for decades most international transactions have been based on an unofficial exchange rate determined by market forces.
Floating the kyat would reduce bureaucracy, increase economic freedom and hinder those elements that use the current exchange-rate arrangements as a vehicle for corruption, said Turnell, who added that the dual exchange rate allows government officials and state-owned enterprises to in essence maintain two sets of books, enabling them to hide revenues that could be diverted to other needs.
The only danger, however, is that bringing a degree of common sense to Burma’s exchange rate system could create the false impression that the country’s economic problems can be solved without other, more fundamental changes.
“The exchange rate issue is important, but it’s far from the most serious of Burma’s economic problems, which have their roots in the lack of property rights, reasonable policy making, a voracious state apparatus, etc,” said Turnell.
According to a 2008 paper by Dr. Tin Soe, a former professor and department head at the Rangoon Institute of Economics, Burma’s economy since the early 1960s, when the country first came under military control, has been characterized by “inconsistency, instability, interruption and discontinuation, rigidity and limited scope and vision, lack of transparency, unpredictability and uncertainty, quantitative physical targets-orientation, inefficient and ineffective implementation and use and abuse of consultancy and advisory services.”
In other words, if Thein Sein really wants to make a difference, his government will have to break half a century of bad habits. Floating the kyat would be a start, but it will take much more than this to clean out the Augean stables of Burma’s economy.
Burma rebuffs China – Bertil Lintner
Khaleej Times (UAE): Thu 6 Oct 2011
At a time when Asian countries are increasingly worried about China’s growing assertiveness, Burma’s rejection of a huge Chinese hydroelectric dam project has raised new questions: Is this a rare victory for civil society in a repressive country? Or does it indicate an internal dispute over the country’s dependence on China? Regardless, the public difference over a close ally’s project marks a new stage in the Burma-China relationship.
On September 30, Burma’s new president, Thein Sein, sent a statement to the country’s parliament announcing that a joint venture with China to build a mega-dam in the far north of the country had been suspended because “it was contrary to the will of the people.” The $3.6 billion Myitsone Dam would have been world’s 15th tallest and submerged 766 square kilometers of forestland.
It’s unclear if Chinese counterparts were consulted before the decision was made public. Burma has depended on its powerful northern neighbour for trade, political support and arms deliveries since the West shunned the Burmese regime following massacres of pro-democracy demonstrators in 1988.
Public opinion may have played its part. Under the 2006 deal, 90 per cent of power generated from Myitsone would have gone to China. Anger over environmental destruction galvanised people against the regime in a way that the country had not seen for years. The dam was a dagger in the heart of the Kachins, the predominant ethnic minority in the area. Pro-democracy leader Aung San Suu Kyi threw her support behind the anti-dam movement. Many made their voices heard over Facebook – a new tool for anti-regime activists.
People inside Burma can’t protest openly, but “Save the Irrawaddy” meetings have been held in Rangoon. Burmese exiles have staged anti-Chinese demonstrations outside Burmese and Chinese embassies abroad. Anti-Chinese sentiment is growing in Burma, especially in the north where Chinese influence is the strongest. But public opinion has never been a strong factor when it comes to influencing the Burmese regime. The regime doesn’t want to risk another outbreak of anti-government protests similar to the 2007 monks’ movement and invite international condemnation with more US and EU sanctions.
Dissatisfaction within the armed forces over China’s growing influence in Burma is a more likely reason for the move to suspend the dam project. Burma has historically had a strained relationship with its northern neighbour. From the establishment of the People’s Republic of China in 1949 until 1962, Beijing maintained a cordial relationship with the non-aligned democratic government of Prime Minister U Nu.
Burma was the first country outside the communist bloc to recognise the new regime in Beijing. After General Ne Win staged a coup d’etat in 1962, the Chinese, long wary of the ambitious, sometimes unpredictable general, prepared for all-out support for the insurgent Communist Party of Burma (CPB). Anti-Chinese riots in Rangoon in 1967 – orchestrated by military authorities to deflect public anger over a deteriorating economy – provided an excuse for Chinese to intervene. On New Year’s Day 1968, armed CPB units entered northeastern Burma from China’s Yunnan Province. Over the next decade, China poured more aid into the CPB effort than any other communist movement outside of Indochina.
Mao’s death in 1976, and the subsequent return to power of pragmatist Deng Xiaoping changed things. Supporting revolutionary movements in the region was no longer in Beijing’s interest. Still, China coveted Burma’s forests, rich deposits of minerals and natural gas, and hydroelectric power potential. Ending Chinese support to the CPB ushered in a more cordial era in Sino-Burmese relations, the relations growing by leaps and bound after the 1988 bloody suppression of pro-democracy movement in Burma. Apart from supplying Burma with vast quantities of military hardware, by 1991, Chinese experts assisted in a series of infrastructure projects. Chinese military advisers soon arrived, the first foreign military personnel stationed in Burma since the 1950s. Cross-border trade between China and Burma boomed.
More recently, China has provided Burma with low-interest loans, and Chinese investment in the sanctions-hit economy is substantial, particularly true of the energy sector.
China still has contracts to build six other mega-dams on the Irrawaddy and source rivers. That Thein Sein dared to make his public statement reveals a wrinkle in Sino-Burmese relations – and how Burma may try to balance foreign relations, perhaps returning to its former policy of strict neutrality and non-alignment.
Some academic observers assert that Beijing’s influence over the Burmese government is exaggerated. Although China provided Burma with up to US$1.6 billion worth of military hardware since 1989, the regime has recently turned to Russia, the Ukraine and North Korea to diversify its arms-procurement program.
Instead of democratising the country, Burma’s new government seems to have chosen to play “the China card,” an attempt to win support of the West. An unsigned opinion piece in The Bangkok Post, written by a Burmese government official, lays out its position: “We do not want our country to become a satellite state of the Chinese government.” From the regime’s point of view, improved relations with the West could be accomplished simply by playing up the Chinese threat, with the hope of diminishing Western criticism of the regime.
But the regime has time and again stressed that how the country is governed is an internal matter. The West must decide if it will play along.
Bertil Lintner is a Swedish journalist based in Thailand and the author of several works on Asia.
© 2011 Yale Center for the Study of Globalisation
Power struggle delays prisoner release – Larry Jagan
Radio Free Asia: Thu 6 Oct 2011
Burmese politics have always been a cat and mouse affair. Those in power seeking change have always had to tread lightly. And nothing has changed under the new political system. If anything, things have got worse, as the power is more diffuse than under the naked military rule of the past.
But the new regime must show its true colors soon. It is no use shouting to the world that things have changed if there are no concrete changes to support that call. Of course the government’s priorities will always be different—and they will never want to be seen bowing to international pressure.
But the country’s own parliament has called for the prisoners’ release, and this move has an important champion within the establishment in the speaker Thura Shwe Mann. Also, it is widely known that Aung San Suu Kyi discussed the issue with Aung Kyi during their meeting on Friday.
In fact the decision to release several hundred political prisoners, including the comedian Zaganar, has been taken in principle, according to senior government sources in Naypyidaw. They will be released in three batches of more than a hundred each time, I am told. So what’s the holdup?
One obstacle is that the shadow of the old man—former junta leader Than Shwe—continues to dog the new administration of Thein Sein. On two important occasions during the last year he adamantly opposed the release both of political prisoners and of Khin Nyunt’s jailed military intelligence people. So if there is a legacy, it is “Don’t upset the country’s stability by freeing more political activists.”
This is the position of the hardliners who hark back to the days of stable authoritarian rule and are lurking in the background ready to pounce if Thein Sein appears to go too far, too fast. Their greatest concern is that the 88 Generation student leaders, if freed, would resume their campaign against the government.
While the issue of political prisoners may seem simple, in the minds of the government it is more complicated. Everything is interlocked in their plans, and the big issue now is the forthcoming by-elections, possibly in November.
Thein Sein, according to sources in the capital, would like the National League for Democracy to contest them, and possibly have the Lady run too. This would be remotely possible only if the electoral laws were changed, according to senior members of the party.
This is yet another sticking point, for the hardliners are also adamant that there be no change.
Thura Shwe Mann, according to sources close to the speaker, is prepared to change those laws. Thein Sein is more cautious, though he’s not opposed. The other leaders of the ruling USDP would be furious if changes are made to the laws, as this would appear, at least to them, to be accommodating Aung San Suu Kyi.
The old hardliner and former Than Shwe confidant Aung Thaung has been campaigning behind the scenes to make sure there are no political changes, including the release of political prisoners. According to sources in the government, he has even tried to get Than Shwe to come out of retirement, but so far to no avail.
While Burma’s political future remains in such a precarious balance, nothing is likely to happen quickly. The worry that Than Shwe may decide to return to take over weighs heavily on the liberal-minded ministers who support Thein Sein.
Than Shwe and army chief Min Aung Hlaing have agreed that if things go awry under the new government, the military will seize power again in a coup, according to informed sources in the army. In effect, this option is written into the 2008 constitution.
The game plan then would be to abolish the parliament, ban the existing political parties, form new army-based organizations, and have fresh elections—causing a full political reversal.
Some ministers believe that Thein Sein’s government is the last chance for Burma to achieve democracy within this decade. “If we fail, we’ll end in jail,” said one minister recently. “Then there will be even more political prisoners.”
Burmese politics is like a game of chess—a game leading so far not to checkmate but to stalemate. Thein Sein needs support, and Aung San Suu Kyi and the NLD could prove to be the key to Burma’s future.
There is resistance in the party to cooperating too fully with the new regime. But it is clear that the Lady herself is willing to side with Thein Sein, provided he turns his rhetoric into concrete action.
In the short run, this can be demonstrated only by the release of political prisoners. While it is clear that any release must wait for the end of the current parliamentary session, it must happen as soon as possible after that.
* Larry Jagan is a former BBC regional correspondent who is based in Bangkok and has extensively covered Burma issues.
Irrawaddy dam suspended, Shwe Gas Project should be next
Shwe Gas Movement: Thu 6 Oct 2011
Last Friday, Burma’s President announced the suspension of the Chinese-backed Myitsone dam project on the Irrawaddy River, in response to “the desire of the people.” Following this announcement, the Shwe Gas Movement is calling for the suspension of another Chinese mega-project, the Shwe Gas transnational oil and gas pipeline. The Shwe Gas project includes a 2,800-kilometer long oil and gas pipeline that will transport natural gas from offshore gas fields on Burma’s western coast and oil from the Middle East, through central Burma to southwest China. Widespread land confiscation to make way for the pipeline corridor has already left countless people landless and jobless, while others along the pipeline are facing human rights violations and exploitation.
Like the Myitsone Dam, which was surrounded by armed conflict between Burma Army and ethnic groups in Kachin State, the Shwe Gas project is being built through conflict areas. Since March 2011, the Burma Army launched offensives to clear ethnic armed groups out of resource-rich areas in northern Kachin and Shan States. These conflicts have displaced an estimated 50,000 people to date.
Exporting the huge natural gas reserves from Shwe Gas fields off Burma’s western coast will perpetuate the chronic energy shortages domestically. The regime will earn an estimated US$29 billion from the sale of the gas, yet these revenues will not be used for social improvement. The revenues will disappear into a fiscal black hole that omits gas revenues from the national budget, clearly to the benefit of the regime and investors.
“People opposed the Myitsone dam because they don’t want their natural resources being used to line the pockets of the regime and corporations with atrocious reputations, all at the expense of local people. The Shwe Gas project must be stopped recognizing that like the dam, it will be destructive socially and economically”, said Wong Aung of the Shwe Gas Movement.
The main companies involved in the Shwe Gas project include Daewoo International, a South Korean company who has faced criminal charges for its dealings with Burma’s regime, and the China National Petroleum Corporation who previously supported the Sudanese government during the genocide in Darfur.
* To read the recent report Sold Out by the Shwe Gas Movement, visit www.shwe.org
Naypyidaw shelves BGF to prepare for ethnic peace talks – Saw Yan Naing
Irrawaddy: Wed 5 Oct 2011
The Burmese government has stopped pushing its Border Guard Force (BGF) plan to instead concentrate on peace talks with separate ethnic armed groups in a new tactic ordered directly by Naypyidaw, claim rebel sources.
The latest attempt by President Thein Sein’s administration to achieve peace talks was to approach the Shan State Army-South (SSA-South) ethnic armed group via the Thai authorities, according to local rebels.
Speaking with The Irrawaddy on Wednesday, SSA-South spokesman Sai Lao Hseng said that they told the Thai authorities that the group was willing to hold peace talks with the government if they receive an official offer.
A group-by-group approach by Naypyidaw’s delegations has been accelerated since a government announcement on Aug. 18 which encouraged ethnic rebels to contact their respective state or division authorities as a first step.
The government delegations held talks with the United Wa State Army and its ally of the Mongla Group—also known as National Democratic Alliance Army—in September and temporarily dropped its calls to adopt the BGF.
Similarly, other state-level delegations comprised of Christian and Buddhist leaders have approached Karen rebels such as Karen National Union (KNU) and Democratic Karen Buddhist Army.
An observer who recently accessed Karen rebel-controlled areas said that that Naypyidaw does not bring up the BGF plan at the moment, but let its delegations hold several general talks with Karen rebels. The delegations did not talk about the BGF but only a plan to make peace.
A different government delegation in Mon State also separately approached the New Mon State Party (NMSP) for peace talks, while other Naypyidaw representatives in Tenassarim Division told members of the local Karen community that they would be willing to hold peace talks with KNU Brigade 4 based in nearby Tavoy.
The NMSP has also formed a “peace mission” and is expected to hold ceasefire talks with the Mon State government in mid-October.
Government MP Han Bi, an ethnic Karen who represents the Union Solidarity and Development Party in Tenassarim Division, told the local Karen community in Tavoy that the plan for group-by-group peace offers came directly from Naypyidaw, according to Eh Na, the editor of Thailand-based Karen news organization Kwekalu.
But critics claim the move by Naypyidaw to enter peace talks with the NMSP while continuing to fight the Kachin Independence Army, KNU, SSA-South and SSA-North is creating misunderstanding, distrust and division among ethnic groups.
Observers said that Naypyidaw blatantly ignored calls by ethnic groups for an alliance talk involving all ethnic rebels and the government, and kept talking with certain ethnic armed groups to cause divisions by approaching each independently.
Aung Kyaw Zaw, a Burmese analyst who focuses on military affairs on the Sino-Burmese border, said attempts by Naypyidaw to hold peace talks with ethnic rebels separately is its way to divide the armed groups.
However, leaders of ethnic armed groups also said that they are cautious when dealing with the government delegations and wanted to talk directly with Naypyidaw to achieve ceasefires.
Ethnic groups claim they will only convey to the government delegation that the offer of peace talks is welcome, but the talks themselves must be held between Naypyidaw and an umbrella organization of ethnic armed groups, the United Nationalities Federal Council (UNFC).
KNU General Secretary Zipporah Sein said that group-by-group meetings with the state-level authorities could lead to divisions between ethnic armed groups. However, all the UNFC members agreed to firstly meet with the state-level authorities individually to push for direct talks between the Naypyidaw and UNFC.
“We would like to say that political conflicts should be solved with all ethnic groups,” said Zipporah Sein.
Observers, however, have said that both Naypyidaw and ethnic armed groups are merely “testing the water” at the present time.
The Myitsone dam decision in Burma – David Scott Mathieson
Huffington Post (US): Wed 5 Oct 2011
Burmese President Thein Sein burnished his perception as a reformist last week by suspending one of the country’s largest — and potentially most destructive — foreign investment projects. The Myitsone hydro-electric dam, the largest of seven dams to be constructed by the Beijing-controlled China Power Investment Corporation, would have flooded an area of more than 700 square kilometers, and displaced tens of thousands of villagers in northern Kachin State, close to the state capital of Myitkina. Several thousand have already been displaced by the first dam, built to provide the electricity for the larger ones in the series. The dam project, affecting the Irrawaddy River, Burma’s largest, was fast becoming one of the country’s most contentious national issues. Its suspension goes against decades of state-directed resource grabs for Burma’s neighbors and energy companies: logging, fisheries, oil and gas, and mining concessions sold off to China, Thailand, India, and other Asian and Western corporations.
The past few weeks did see some uncharacteristically open debate on the dam project in Burma, including public dissension from senior ministers. While some in Burma’s parliament called for the project to be reviewed, the Electric Power Minister U Zaw Win, prior to the president’s announcement, insisted: “we will not back down just because environmental groups are against it … we will not back down now in fact we are to go ahead.” Democracy leader Aung San Suu Kyi joined prominent artists and writers at an art exhibition about the Irrawaddy River, and the regulated Burmese media debated it. There has not been open discussion and high-level disagreement, at least not publicly, on an issue like this in Burma for a long time.
It’s less clear that the suspension represents Thein Sein’s newfound support for the environment or a more open society. Kachin environmental groups and community leaders in the dam areas and others have done exemplary work in documenting the project and its effects on Kachin State, which has encouraged more overt community activism in recent years. A recently leaked 900-page environmental impact survey on the dam project, produced by Burmese and Chinese government experts, was damning in saying the project was ill-advised. And it didn’t help matters that the Myitsone dam site is situated just 100 kilometers from a major earthquake fault line.
The breakdown of the 17-year ceasefire with the Kachin Independence Organization in June was another headache for the government. The dam project had become a flashpoint for the renewal of armed conflict between the Burmese army and ethnic Kachin rebels that has so far displaced more than 30,000 civilians.
Many important questions remain: Is the Myitsone project on its way to being cance
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