CIAO DATE: 07/2010
May 2010
United States Institute of Peace
The government of Burma is undergoing a critical transition: Before the end of 2010, the military regime that has ruled the country since a palace coup in 1998 will hold an election based on a constitution drafted in a nondemocratic process and approved by a referendum in 2008. The referendum fell far short of global standards of credibility and the election is likely to yield a government that neither the antimilitary movement nor the international community view as legitimate. However, the constitution and election also may offer opportunities for further international involvement that began in the wake of Cyclone Nargis in 2008. Burma’s lagging economic performance—socioeconomic indicators placed it among the world’s most impoverished in 2000—is due to a simmering internal conflict based on ethnic and religious differences. Successive military regimes after the failure of Burma’s parliamentary government in 1962 have managed to further alienate the population and monopolize the benefits of Burma’s abundant natural resources. Growth-disabling economic policies and brutal suppression of dissent since 1988 have caused an exodus of political and economic refugees estimated to be in excess of 3 million. However, Burma occupies a strategic space in the Southeast Asian region. It is a major supplier of natural gas to Thailand and could be a major agricultural exporter, as it was before World War II. Also, Burma is arguably the greatest obstacle to the 2015 integration objectives of the Association of Southeast Asian Nations (ASEAN), and its internal conflict contributes to tension between China and India. There is a glimmer of hope that the next government will consider economic policies conducive to sustainable economic growth, thereby improving the environment for political reconciliation. If so, the challenge for the international community will be to find ways to support economic policy changes in this direction that do not trigger a backlash from the country’s military rulers. Though difficult, it may be possible to accomplish this through a patient economic strategy that involves more nuanced use of sanctions and effective collaboration with other actors in the region, particularly ASEAN. The experience of several Asian countries—Korea, Taiwan, Indonesia—shows that rapid economic growth under relatively authoritarian regimes can lead to homegrown democratic transitions that bolster political stability without sacrificing economic prosperity. The case of Burma, however, runs against the grain. A government-in-exile, dissidents inside the country, and democracy advocates around the world are marshaled behind the proposition that economic progress can occur in Burma only if a civilian-led government emerges from an election that is free and fair by global standards. Given the much greater likelihood that Burma’s new government will still be tightly controlled by the military, the international community should be looking for more effective ways to encourage better governance than the sanctions and engagement of the past twenty years. This challenge extends beyond the specific case of Burma to the art of peacebuilding itself, which has focused in recent decades on the security and political dimensions of the work. Where progress has been made in these areas, sustainability has been elusive because of shortcomings in the economic dimension, including but not limited to insufficient private sector job creation, depressed household incomes that preclude the savings required for investment, dysfunctional financial systems, and misallocation of public sector resources. An approach by the international community that could be more successful in the case of Burma would ensure that capacity building precedes financial assistance, provides strong rewards for effective Burmese-initiated polices and programs, and relies primarily on regional institutions such as the UN Economic and Social Commission for Asia and the Pacific (ESCAP), ASEAN, and the Asian Development Bank (ADB).
Resource link: The Economy of Burma/Myanmar on the Eve of the 2010 Elections [PDF] - 453K