Myanmar: Roadmap To Where?

Southeast Asian Affairs 2004

MYANMAR Roadmap to Where?

Robert H. Taylor

Since the military took power in September 1988, Myanmar has been under sustained domestic and international pressure to carry out sweeping political changes which would result in the establishment of an elected civilian government. This has been the price for any substantial foreign economic co-operation and assistance. As no substantial moves have been made in that direction by the ruling State Peace and Development Council (SPDC) government, known previously as the State Law and Order Restoration Council (SLORC), Western governments, led by the United States, have seen fit progressively to increase the levels of economic sanctions applied to the country in the apparent belief that this will result in international isolation, economic collapse, and eventual fall of the regime. This strategy for creating political change in Myanmar has been strongly encouraged by the Myanmar exile community which fled the country in the late 1980s and early 1990s following the bankruptcy of the previous Burma Socialist Programme Party (BSPP) regime. Now largely residing in the United States, Europe, and Australia, this small but vocal band of advocates for change, along with their supporters in the media of their new lands of residence, have often argued that just one more turn of the sanctions screw and the military regime in Yangon would collapse and then power and authority would quickly flow to National League for Democracy (NLD) under its secretary general, Daw Aung San Suu Kyi, and perhaps some of them. This strategy, now pursued for more than a decade and a half, failed once more in 2003. Given the level of U.S. sanctions now applied, with a complete ban on trade, new investments, and all commercial transactions since the end of July 2003, and similar though slightly less draconian sanctions brought forward by the member states of the European Union, as well as a longstanding ban on assistance to Myanmar from the World Bank, International Monetary Fund (IMF), and Asian Development Bank (ADB), there seems little more the Western governments can do to force political change in Myanmar short of violating the civil liberties of their own citizens by barring travel by individual tourists to Myanmar.

ROBERT H. TAYLOR was a Visiting Senior Research Fellow, Institute of Southeast Asian Studies, and is a consultant on Southeast Asian affairs in London.

Reproduced from Southeast Asian Affairs 2004 (Singapore: Institute of Southeast Asian Studies, 2004). This version was obtained electronically direct from the publisher on condition that copyright is not infringed. No part of this publication may be reproduced without the prior permission of the Institute of Southeast Asian Studies. Individual articles are available at < http:// bookshop.iseas.edu.sg >

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Opposition Confrontation Persists This so far unsuccessful approach to encouraging political change in Myanmar is consonant with the strategy that Daw Aung San Suu Kyi and the NLD have pursued within Myanmar in their efforts to persuade the army to implement the results of the 1990 national elections in which the NLD gained over 60 per cent of the vote and 80 per cent of the seats. It is their advocacy of this strategy which gives it legitimacy and validity in the minds of Western governments when they manage to think of Myanmar at all. Daw Aung San Suu Kyi reiterated her uncompromising position once more as 2003 dawned in Myanmar, when giving her second press conference since her release from house arrest the previous May. Her comments were very critical of the government of the SPDC under its chairman, Senior General Than Shwe. Though the government had said that it was willing to enter into talks with Aung San Suu Kyi and the other leaders of the NLD, she described these as being “in limbo”. According to reports, she was chagrined at the fact that the meetings arranged for her were with members of the cabinet and not with the ruling triumvirate of the Senior General, Deputy Senior General Maung Aye, and then Secretary 1 of the SPDC, General Khin Nyunt. Spokespersons for the government made it clear that, for their part, they found the meetings they had with Aung San Suu Kyi and the other NLD leaders equally frustrating for they felt that she came to the meetings unprepared to present ideas and suggestions which would provide a way forward in terms of how to reach a modus vivendi with the NLD short of handing over state power to them. Rather, she had merely demanded that “democracy” first be established so that the fruits of good government would then naturally flow forth. The NLD reiterated its position in an Independence Day (4 January 2003) statement to the effect that until a meaningful dialogue leading to a political transition had taken place, it would not abandon its existing strategy. The statement once more called for the government to ratify and implement the results of the 1990 elections before any new elections could take place, called for tourists and foreign investors to eschew Myanmar, and insisted that the party have an independent supervisory role in any foreign humanitarian assistance provided to the country. The presumption of equal moral stature between the NLD and the SPDC implied by this position clearly rankled the military, especially as they apparently felt that there was an implicit, if not explicit, understanding reached with Daw Aung San Suu Kyi at the time of her release in May 2002 that she would be willing to change tack. Indeed, initially this had seemed to be the case as she softened her stance on tourism and foreign investment. But as time proceeded, her posture became increasingly strident and uncompromising with eventually critical consequences. Since her release, Daw Aung San Suu Kyi made a series of trips outside Yangon to open NLD offices in various states and divisions of Myanmar. These were initially co-ordinated with the government which not only provided security for her and her entourage, but also arranged for them to visit various

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development projects that the government had undertaken since taking power as part of its efforts to unify and modernize the country. These tutorials in SPDC-style nation-building were apparently intended to convince Aung San Suu Kyi of the SPDC’s sincerity as well as to demonstrate to her the difficulties involved in governing Myanmar under current conditions. But as time passed, she became increasingly critical of the government and accused some members of the SPDC of attempting to interfere with her political work by harassing her entourage and disrupting her rallies. Exile groups also claimed that the government-organized Union Solidarity and Development Association (USDA) was distributing leaflets attacking Aung San Suu Kyi for her criticism of the regime as well obstructing her progress. During the course of a major month-long trip to Mandalay, Sagaing division, and the Kachin state, relations between the NLD and the government further deteriorated, resulting in a violent clash at the town of Dipaiyin, a small town on the road between Monywa and Mandalay, on the night of 30 May. Prior to then, it was apparent that the government was growing increasingly concerned about the behaviour of its opponents. In particular, the SPDC was worried by the organizational activities of the Committee Representing the People’s Parliament (CRPP), an umbrella grouping which was slowly expanding in late 2002 and early 2003 as more and more political parties and independent members of Parliament-elect joined. Though formally declared an illegal organization when it was formed in 1997 after the collapse of the first constitutional convention the previous year, the activities of the CRPP were tolerated as “normal politics” in 2002 but began to cause concern by February 2003, as perhaps an attempt to convene once more an alternative authority to the government. The activities of exile political groups, especially in Thailand, which allegedly infiltrated protesters into Yangon on several occasions, were linked in the minds of the army leadership with the domestic opposition. Included in their activities was the setting off of two bombs in Yangon which killed or injured three persons on Armed Forces Day, 27 March, as well as the organizing of minor protests outside the British embassy in Yangon in early April. The benign attitude of the government towards the work of the NLD and its leader had clearly dissipated as her criticism of it became more strident and she ceased to inform the authorities in advance of her travel plans. She underlined her own frustration with the government in a press conference in late April which called on the West to maintain its sanctions and criticized the regime for harassing her and her supporters. Accounts of what happened at Dipaiyin, and why, varied widely. As seemingly always with news from Myanmar, there were vastly disparate accounts of what took place. The government version was that four individuals were killed as the result of an automobile accident that occurred in the midst of a mêlée between enraged villagers protesting at the behaviour and attitudes of Aung San Suu Kyi’s boisterous motorcade of cars, pickup trucks and motorcycles, and her supporters. More than fifty people required hospital treatment after

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the event. As a consequence, she and seventeen other members of the NLD were taken into “protective custody”. The most lurid accounts, some by alleged “eye witnesses”, which tended to be accepted by Western institutions and media as more accurate, was that the clash was effectively organized by senior members of the SPDC which encouraged hooligans, criminals, or even convicts with drugs and alcohol to attack the peaceful political procession resulting in perhaps a hundred deaths and many arrests. Less lurid accounts suggested that members of the USDA were the culprits. Initially it was reported from the Thai border that Aung San Suu Kyi was herself injured, perhaps in the head or suffered a broken arm, while the vice-chairman of the NLD, former General Tin U, was dead as a result of the attack. Some hysterical Western diplomats initially argued that the attack was an attempt to murder Daw Aung San Suu Kyi. Consequences of the Dipaiyin Clash Whatever the precise details of the events of 30 May, in the words of Foreign Minister U Win Aung at a meeting of Association of South East Asian Nations (ASEAN) foreign ministers in Phnom Penh shortly after, it was a “set-back” for the process of national reconciliation that had begun the previous year. Indeed, the political future looked extremely bleak as even normally reticent ASEAN member governments called for the release of Aung San Suu Kyi and the renewal of political talks. Condemnation from the West was even stronger, with the U.S. Congress rushing through legislation imposing a complete ban on trade with Myanmar and the European Union adding further restrictions on Myanmar officials and their families visiting Europe as well as freezing Myanmar assets, as the United States had also done. For once, it appeared possible that Western and Asian policies towards Myanmar would become co-ordinated and coherent. That prospect clearly caused concern within the government. The political firestorm that the events at Dipaiyin generated led to both the Foreign Minister and the Deputy Foreign Minister U Khin Maung Win travelling as envoys of the Senior General to give the SPDC’s version of events to leaders of the governments of Bangladesh, India, Pakistan, Indonesia, Japan, Thailand, and Malaysia. While the United States and Great Britain encouraged Myanmar’s neighbours to join them in applying ever tighter sanctions on Myanmar, China, however, made it clear that it would not interfere in the internal affairs of its neighbour, stating that the Myanmar authorities had matters well in hand. Japan and Australia, which had pursued policies of partial engagement with the regime, immediately expressed their outrage at the events at Dipaiyin and cancelled all new or renewed non-humanitarian assistance including Australia’s human rights training programme. Another immediate victim of the consequences of the events of 30 May was the refusal by the International Labour Organization (ILO) to accept a Joint Action Plan for the Elimination of Forced Labour Practices in Myanmar which had been agreed in Yangon on 27 May, thus continuing the threat of ILO mandated sanctions sometime in the future.

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The events at Dipaiyin, and those leading up to it, had far-reaching and doubtless unforeseen consequences which had a role in shaping subsequent events. The authorities followed the clash with orders to close all offices of the NLD and placed the senior members of the party not already incarcerated under house arrest once more. Soon, soldiers and police were again sitting outside the Yangon residences of the ageing and incommunicado NLD leaders. But the Dipaiyin incident also posed a serious set of problems for the government. Creditable reports from Yangon suggested that if any senior members of the SPDC were involved in organizing or facilitating the Dipaiyin incident, certainly Vice-Senior General Maung Aye and Secretary 1 General Khin Nyunt were not involved. But they were left to deal with the consequence of the firestorm that had arisen. The role of the Senior General, if any, remains in the realm of speculation. Some claimed he had inadvertently encouraged the attack by his allegedly strong aversion to Aung San Suu Kyi. Leading the international criticism was the Secretary General of the United Nations, Kofi Annan, who publicly expressed his concern at the events at Dipaiyin and its consequences and encouraged the government of Myanmar to receive his special envoy, Malaysian former ambassador Tan Sri Razali Ismail, on another visit to Yangon. Razali arrived in Yangon on 6 June and on the final day of his five-day visit was taken to a house in the grounds of Insein Prison where Daw Aung San Suu Kyi was being held. After their meeting, the first to confirm the government’s version of her condition, he reported her as being uninjured and in a characteristic feisty mood. Prior to his meeting with Aung San Suu Kyi, Razali had also met with Generals Maung Aye and Khin Nyunt together, the Senior General being on tour outside Yangon. Now, from the perspective of the advocates of ever tighter sanctions towards Myanmar, surely the military regime would fall with just a few more turns of the screw. Not only were the nations of the West, Japan and Australia, even those who sometimes argued in private for engagement with Myanmar, united in their condemnation but also Myanmar’s fellow ASEAN states were also expressing strong concern. The international condemnation was seemingly irresistible, led as it was by the Secretary General of the United Nations, an institution that had long been a rhetorical pillar of Myanmar government’s foreign policy and, some would argue, even domestic legitimacy. The Government Seizes the Initiative But between the aftermath of 30 May and the end of 2003, the expected results of the advocates of sanctions to force political change were once more thwarted. By the beginning of 2004, the initiative seemed to again lie with the government with its opponents seemingly caught off balance. Even the leadership of the Kayin National Union, Myanmar’s oldest insurgent force, was led to agree to halt their fighting with the government, but not to yet enter into a formal ceasefire agreement by the end of the year. Why had the pattern of the previous decade and a half been allowed not only to repeat itself but

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indeed to suggest an actual strengthening of the position of the government? The short answer would seem that the military government of Myanmar has learned how to manage crises effectively during its fifteen years of power. While Myanmar’s critics in the past often pointed to what they described as the ineptitude of the regime, in this instance their opponents were caught off guard and placed on the defensive by two unexpected announcements made three months after the Dipaiyin incident. On 25 August, the government announced the most significant reshuffle of government responsibilities since the formation of the SPDC in 1997. Five new cabinet ministers and eight new deputy ministers were appointed, as well as a new Yangon city mayor. In addition, Lt.-Gen. Soe Win, having been appointed to the vacant Secretary 2 position in February, was appointed to replace General Khin Nyunt as Secretary 1 of the SPDC while Lt.-Gen. Thein Sein, the Adjutant General, was appointed Secretary 2. The most unexpected feature of the reshuffle was the transfer of the prime minister’s role to General Khin Nyunt from the Senior General who had previously held that title along with that of Minister of Defence. General Khin Nyunt had been referred to as prime minister by Than Shwe in a meeting with Japanese Prime Minister Koizumi at the ASEAN summit in Phnom Penh in November 2002, but this apparent Freudian slip now became reality. While diplomats and Burmese exiles argued that the move was a “demotion” for General Khin Nyunt, his behaviour and role subsequently suggested a man with a renewed mandate with the seal of approval of the SPDC and its chairman. Five days after his appointment as prime minister, General Khin Nyunt addressed a meeting of top government leaders, officials, and invited guests at the Pyithu Hluttaw (Parliament) building in Yangon. After describing at some length the work of the government since taking power to establish peace and development in the country, he then turned to assess the prevailing political situation. Blaming the NLD and Daw Aung San Suu Kyi, but not by name, for blocking progress towards the establishment of a constitutional regime by their opposition to the 1993–96 constitutional convention, he went on to explain that the government had tried unsuccessfully to find a way since to work with her and her party. To quote from his speech: However, it did not develop as we have hoped for. Due to pressure and embargos placed by some big nations as well as due to continuous political manipulations in order to bring down the present government, the transformation process was again retarded. As long as a political force in the country is acting in harmony with the efforts of the collaborators of neo-colonialism from abroad who are trying to find ways to bring down the existing government and as long as this political force continues to maintain a negative attitude or refuses to change its methods, it will result in a situation where the golden land we all hope for will remain in the distance.

The speech concluded with the Prime Minister spelling out a seven-step

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Myanmar “road-map” resulting in an eventual elected constitutional government. While some of the steps were nominal, the essence of the road-map was, first, the reconvening of the constitutional convention which was adjourned in 1996. Then a new constitution would be written based on the principles agreed in the convention. This in turn would be put to a national referendum, and if accepted, elections would then be held for legislative bodies at various levels as determined by the constitution. As a result of that process, democratic governments would be established at the national and lower levels of government across the country. No further details were announced about the road-map and the absence of a timetable for implementation was a source of much criticism of the speech from the exile community and Western governments. The absence of any specific role for the NLD and its secretary general in the process, as well as the continued detention of most of the NLD leadership, the closure of NLD offices, and the incarceration of perhaps 1,500 persons referred to as political prisoners by Amnesty International, were also pointed to as obstacles to the road-map process being free and fair. The day after the Prime Minister’s speech, the U.S. State Department issued a statement that it had “creditable reporting” that Daw Aung San Suu Kyi was on hunger strike and that her life was therefore imperilled. This was immediately denied by the government but the State Department insisted on the accuracy of its claim. The issue then escalated and soon other Western foreign ministries as well as the Japanese government were issuing calls for her release from detention in the most strident of tones. The furore only ended on the 6 September when Aung San Suu Kyi was visited by representatives of the International Committee of the Red Cross (ICRC), which confirmed that she was well and not on hunger strike. Thus twice in the space of three months “creditable reporting” and “eyewitness accounts” of events in Myanmar surrounding the health and well-being of the secretary general of the NLD proved to be untrue. Expectedly, however, Aung San Suu Kyi was forced into a private clinic in the later part of September for major gynaecological surgery which required convalescence for several months. A month after her surgery, Ambassador Razali again visited her in October and subsequently said that she was in good spirits and recovering well. While rumours and reports about Aung San Suu Kyi were bandied about, the government continued to proceed with its own plans and soon announced the reformation of the National Convention Convening Committee under the chairmanship of the Secretary 2 of the SPDC, Lt.-Gen. Thein Sein. The National Convention Convening Work Committee was also reformed under its previous chairman, Supreme Court Chief Justice U Aung Toe. Also formed was a National Convention Convening Management Committee to handle the logistical issues involved in transporting, housing, and feeding potentially several hundred convention delegates. The absence of representatives

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of political parties in the formation of these bodies, which were composed largely of deputy ministers, directors-general of government departments, and military personnel, indicated that the government was managing alone the constitutional convention forming process. As the year ended, no date had yet been set for the convening of the convention, but it appeared that it would meet in the first half of 2004. By the end of December, the Prime Minister had met with a number of ethnic minority leaders of the former insurgent groups who indicated their willingness to join with the government in the convention. Invitations were also sent to the political parties which had participated in the first convention and, in a number of statements, the government made it clear that the NLD would be free to join the convention. However, as most of the party’s leadership remained incommunicado and its offices remained closed, there could be no official indication of the NLD’s position other than a statement by five of the senior members through their acting spokesman, which struck a negative stance. There were indications that before the NLD would agree to participate in the convention, it would insist on the formation of an independent investigation of the events at Dipaiyin as well as the release of all of the party’s members from detention. According to the opposition Democratic Voice of Burma radio station from Norway, Daw Aung San Suu Kyi had insisted on this when she met with Ambassador Razali for the third time in the year in October. The government indicated that there was no need for a further investigation into the Dipaiyin incident other than that already conducted by the police. Regardless of the role of the NLD and the other political parties in the constitutional drafting process, the involvement of the minority leaders, particularly those which had previously been at arms with the government, but now are known as peace groups, was crucial. The enthusiasm they showed for the convention suggested that all the groups involved were seeking to find a way to maintain their status and authority while coming to some kind of agreement with the government. The military and the minority groups had been accused by Western governments and exile spokespersons of cynically doing deals in the early 1990s at the expense of the democracy movement and similar rumblings emerged as a consequence of the co-operation of the peace groups with the constitutional convention process at the end of 2003. As the army looked likely to insist on maintaining a superintending, if not dominant role, in any future constitutional order, it is would appear unlikely that some of the civilian political leaders will find the eventual results of the constitutional convention to their liking. This is unlikely to be the case for the peace groups, however. Active Myanmar Diplomacy The confidence with which the government proceeded in unveiling its constitutional process was bolstered by its belief in its success in forging positive ties

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with its neighbours in South Asia and Southeast Asia as well as with China. Diplomatically, 2003 was a very active year for Myanmar. Not only did Senior General Than Shwe make state visits to China, Vietnam, and Laos and a oneday working visit to Thailand for a regional summit on SARS, but he also received Chinese Vice-Premier Li Lonqing, Thailand’s Crown Princess Maha Chakri Sirindhorn, and Prime Minister Thaksin Shinawatra twice, Bangladesh’s Prime Minister Begum Khaleda Zia, India’s Vice-President Bhairon Singh Shekawat, Cambodian Prime Minister Hun Sen, and Lao Prime Minister Boungnang Vorachith in Yangon. The visits by the two South Asian leaders were the first visits by senior figures in their government to Myanmar since before the military took power in 1988. Indeed, within the past fifteen years, India had been one of the most severe critics of the regime while Bangladesh and Myanmar had traded strong words as a result of the alleged persecution of more than one hundred thousand Muslims who had sought refugee status in Bangladesh from Myanmar’s Rakhine state in the early 1990s. As if to seal its “Look East Policy”, which seeks increased trade with Myanmar as well as China and Thailand, the Indian Vice-President also announced a US$57 million credit to Myanmar for the upgrading of the Yangon-Mandalay railway link. Military co-operation was also stepped up along their common border to attack Naga insurgents and the Indian navy not only called in Yangon during the visit of the Indian naval chief in September but had undertaken the training of Myanmar naval officers. Myanmar also participated in joint naval exercises with the Indian navy. While the West continued to deny Myanmar economic assistance or normal trade ties, Myanmar’s neighbours pursued a contrary policy. Not only did India offer Myanmar financial assistance, but China gave the country a US$200 million loan during the year as well as wrote off US$73 million of previously incurred debt. Thailand provided assistance in building roads and bridge links with Myanmar as well as assistance in the country’s anti-drugs programmes in the Shan state. Though relations between Thailand and Myanmar were far better in 2003 than during the previous year which saw the closure of their joint border, in April there was a strong exchange of words after military activities along the border as the Myanmar army pursued troops of the rebel Shan United Revolutionary Army. Bangladesh agreed to establish a joint trade commission, and expand counter-trade between the two countries as well as other forms of trade co-operation including both a road link between Dhaka and Yangon and a shipping link between Chittagong and Yangon. Myanmar’s bilateral and multilateral regional diplomacy meant that the government had numerous opportunities to explain its position to its neighbours. This was particularly the case with Thailand. Prime Minister Thaksin Shinawatra visited Myanmar in February and again in November, and met with the Senior General, General Khin Nyunt, or Foreign Minister Win Aung in Bangkok on several occasions. Khin Nyunt also attended the ASEAN Bali summit in October where he explained the Myanmar road-map. It was endorsed

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by the other ASEAN leaders and at an ASEAN-Japan summit in Tokyo in December. Other notable events in Myanmar’s diplomatic year were the visit of Foreign Minister Win Aung to India, the first by a Myanmar minister of his rank in sixteen years though Vice-Senior General Maung Aye had visited India previously. India remained mute over the events at Dipaiyin. Vice-Senior General Maung Aye also visited China in July 2003. Myanmar hosted at Bagan an Economic Cooperation Strategy Summit with Thailand, Cambodia, and Laos in November, the culmination of a series of meetings in Bangkok at various levels during the course of the year. Thus, while Myanmar was very active in maintaining and strengthening its ties with its Asian neighbours, the absence of the involvement of Western nations from its diplomacy was apparent. The only venture towards possible diplomatic co-operation with the West came at the end of January when Deputy Foreign Minister Khin Maung Win was permitted to attend the ASEAN-EU Foreign Ministers Meeting in Brussels. There the most the Europeans felt they could do by way of a concession to Myanmar sensitivities was to refer to the country as “Burma/Myanmar” rather than “Burma”, as had previously been the case. Thailand, which had announced that it had now shelved its own unclear road-map for Myanmar, attempted to assist Myanmar’s multilateral diplomacy and its efforts to find acceptance for the Myanmar plan by hosting a one-day meeting of senior officials from twelve governments in Bangkok. There Foreign Minister Win Aung explained the government’s intentions to representatives of Thailand, Singapore, Indonesia, Austria, Germany, Italy, France, China, India, and Japan and the U.N. Special Envoy, Tan Sri Razali Ismail. The absence of invitations to the United States and Great Britain was noticeable. The Bangkok meeting highlighted the depth to which relations between the world’s hegemon and Myanmar’s former colonial rulers had fallen. Their continual strident criticism of Myanmar and the sanctions that they had encouraged and imposed, in the words of one government minister, “had made them irrelevant to Myanmar’s future”. The United Nations was also a focus of Myanmar’s foreign relations in 2004. In February, the United Nations organized an informal meeting in Tokyo to which a number of Asian and Western governments were invited. Much to the chagrin of the government, which argued that they should not attend, several ASEAN governments were present. Notably absent was China which made it clear that it would not attend any meeting which excluded the government of Myanmar. The purpose of the meeting was apparently to assist the Secretary General’s Special Envoy, Ambassador Razali, in developing a way forward which would result in the SPDC and the NLD working together to administer humanitarian assistance. This was resisted by a number of governments which also argued that sanctions were ineffective in encouraging change, as well as the U.N. agencies responsible for administering assistance programmes because of their concerns that humanitarian aid was being used, and perhaps delayed and denied, for political purposes. Word of the inability to reach an

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agreed position at the allegedly confidential meeting soon became available from a number of sources. An unsuccessful attempt was made in November to take the issue of human rights and the absence of political change in Myanmar to the U.N. Security Council in the autumn through the mechanism of the General Assembly’s third committee’s annual resolution after considering the report of the U.N. Human Rights Commission’s Special Rapporteur, Professor Paulo Sergio Pinheiro. Professor Pinheiro argued that the human rights situation in the country had deteriorated since the incident of Dipaiyin and he cast doubt on the willingness of the government to implicate its road-map. This conclusion was echoed by an Amnesty International team after its second trip to the country in December; Amnesty’s first ever official mission to Myanmar having been received in February. The European Union, which drafted the annual U.N. resolution criticizing Myanmar’s government for is violation of human rights, attempted to include wording that would have allowed the issue to have been taken by the secretary general to the Security Council for the first time. This was stoutly resisted by the Myanmar delegation with the assistance of other countries in the Non-Aligned Group including China and the offensive language was eventually deleted before the resolution was passed without a vote. The Economy There can be no doubt that the Western-imposed sanctions have had severely negative consequences for Myanmar’s economic growth and development during the previous decade-and-a-half. The absence of assistance and advice from the major international financial institutions has forced the government to rely on its own limited resources and inhibited its willingness to address major economic reform issues such as exchange rate rectification. As a result, there was a huge disparity between the official rate for the kyat to the U.S. dollar (5.5 or 6.0 kyat to the dollar) and the parallel market rate (over 900 kyat to the dollar at the end of 2003). The many arbitrarily established rates in between which government institutions often dictated, made sensible business planning almost impossible and contributed to the suppression of trade and investment. Similarly, the government’s reliance on seemingly ad hoc and random measures to cope with short-term economic crises made doing business in and with Myanmar extremely difficult. One such crisis struck early in the year when a run on privately owned banks led to the government not only loaning them sizeable amounts of money in order to maintain their solvency but also to impose very tight limits on depositors seeking to withdraw their funds and closing down all domestic credit card schemes. Banks were also ordered to call in loans early, thus radically stretching the capacity of a number of businesses who were forced to repay loans and could not pay their employees or purchase raw materials. The banking crisis was the result of a run on separately managed pyramid funds

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which had collapsed earlier as well as a general lack of faith in the financial acumen of the government. One casualty of the affair was the Minister for Finance and Revenue, Maj.-Gen. Khin Maung, who lost his job in a minor cabinet shuffle in February to be replaced by Maj.-Gen. Hla Tun. The absence of significant financial assistance for the development of the nation’s infrastructure has also encouraged the government to pursue means of development that led to it being condemned in international fora. The issue of forced labour, which has been pursued in the ILO for over a decade is a prime example. With limited resources and in its haste to develop improved transport and irrigation facilities in the country, the military authorities in various regions have resorted to the use of local villagers to work on infrastructure development projects. Though this is illegal under Myanmar law unless the individuals concerned are able to undertake the work and are appropriately compensated, reports that the law was being ignored have been raised repeatedly by a Myanmar exile group, the Free Trade Unions Congress (Burma), or FTUC(B), which is based in the United States and linked with the “exile government of Burma”, the National Coalition Government of the Union of Burma (NCGUB), led by parliamentarian-elect and cousin of Daw Aung San Suu Kyi, Dr Sein Win. The leader of the FTUC(B), U Maung Maung, has gained the support of the Brussels-based International Confederation of Free Trade Unions (ICFTU), and along with Washington–based exile groups, has managed to use the issue of forced labour not only as an argument for sanctions to be applied against Myanmar, but also for locally led but internationally co-ordinated consumer boycotts of Myanmar-made goods as well as share-holder and public awareness campaigns against companies that invest or do business with Myanmar. Thus, even before the total U.S. ban on the import of Myanmar-made products at the end of July 2003, it was estimated that as many as a hundred thousand persons had lost their jobs in the garment industry in Myanmar since the year 2000 as a result of the consumer boycott. Within two months of the application of the sanctions, according to a survey by the American non-governmental organization (NGO) World Vision, sixty-two garment factories had closed and a further 50,000 to 60,000 persons lost their jobs in August alone. Reliable reports indicated that the overwhelmingly female work-force of the garment factories, who were often the main income earners in their families, were prone to people traffickers and offers to work in the “sex industry” as a result. Thus, a policy avowedly intended to improve the condition of workers in Myanmar merely resulted in people losing their jobs, further impoverishing themselves and the country, thus encouraging the kinds of bad labour practices that allegedly sparked the initial raising of the forced labour issue in international fora. Similarly, the unwillingness of the United States to “certify” under U.S. government procedures that Myanmar was working with the international community to end the production of opium and other illegal drugs and thus

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make economic assistance available to the remote border lands of the country which had previously been the host to a variety of insurgent forces, meant that the work of the United Nations Office on Drugs and Crime (UNODC) in Myanmar, together with the Myanmar government and the authorities of the relevant ceasefire groups to end production, was in danger of generating a humanitarian crisis. Surveys by the UNODC and the United States Drug Enforcement Agency had shown that drug production had declined by as much as two-thirds in recent years, and as a result perhaps as many as 2 million people from the Wa and other communities in the Kachin and Shan states were in danger of losing their incomes. The consequences would be a humanitarian disaster or the possible return to drug production if assistance were not made available to assist the farmers in the region to develop alternative crops and markets. Although Thailand, Japan, Italy, and Germany and a number of U.S. government-funded NGOs had made some assistance available, the UNODC said that at least 150,000 persons in northern Myanmar were facing a humanitarian crisis at the end of the year as a result of lost income from drug production. While the economy of Myanmar continued to be racked by a number of problems that had their roots in the domestic and international politics of the country since 1988, at one level, because of the essentially agrarian basis of the country, the larger economy remained isolated from consequences of the sanctions and the denial of aid. While potential development was retarded by the absence of foreign assistance and investment during the year, the Prime Minister claimed in August that GDP growth was as high as 11 per cent and that per capita income had reached US$110 per year (100,000 kyat). Most foreign observers argued that a more realistic estimate of GDP growth was the 5 per cent figure advanced by the IMF. Potentially the most far-reaching economic decision announced by the government in 2004 was a reform of the rice procurement scheme which had been a basis of government revenue for many years. This was to be abandoned to allow market forces to prevail. The old system of forced sales of 10 per cent of each farmer’s crop at arbitrarily established below-cost price to the government had served as a disincentive to farmers. Moreover, rice exports remained a government monopoly. Whereas exports of beans and pulses had grown exponentially since they had been deregulated more than a decade ago, incomes from paddy production had remained depressed. At year end, however, the full implications of the change were not yet apparent. Conclusion Dramatic as the events of 2003 proved to be, their implications were still unclear as 2004 commenced. The government’s constitutional road-map encouraged many, including the ethnic minority leaders and some exile groups, to believe that Myanmar’s long constitutional stasis was about to be broken. But the absence of the involvement of the NLD in the process, at least up to

© 2004 Institute of Southeast Asian Studies, Singapore

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Robert H. Taylor

the end of the year, allowed sceptics to maintain their critical posture. A roadmap had been advanced but it remained unclear where it led and how swift a journey was possible. In the mean time, Myanmar’s isolation remained the goal of Western governments while the country’s neighbours, for their own reasons, continued to assist the government and its home-grown development plans.

© 2004 Institute of Southeast Asian Studies, Singapore