report- “Current Realities and Future Possibilities in Burma/Myanmar:

8/9/2019 report- Current Realities and Future Possibilities in Burma/Myanmar:

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Current Realities and Future

Possibilities in Burma/Myanmar:

Perspectives from Asia

March 2010


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AsiaSociety.org/BurmaMyanmarReport

In the all o 2009, the Asia Society established a ask Force on U.S. Policy toward Burma/Myanmar to examine the shit in the United States approach to its relations with the countryand to ormulate a set o recommendations aimed at promoting the countrys long-term stability.

o bring a regional perspective to this eort, the Society sponsored a series o national dialoguesthat were carried out by leading institutes throughout the Asian region with the aim o reviewingcurrent approaches to Burma/Myanmar and thinking through policy options going orward.In addition to the work carried out by our partner institutes listed below, a review o Chinese

policy was conducted by leading experts and academics in China. Te resulting collection oreports, entitled Current Realities and Future Directions in Burma/Myanmar: Perspectives romAsia, provides a comprehensive overview o current regional policy toward Burma/Myanmarand oers a rich compendium o policy ideas or regional and international actors. Tese reportsand other online resources are available at: AsiaSociety.org/BurmaMyanmarReport.

PARTNERS

Macquarie University, Australia

Indian Council or Research on International Economic Relations

Centre or Strategic and International Studies, Indonesia

Japan Institute o International Aairs

Institute o Strategic and International Studies, Malaysia

Institute or Strategic and Development Studies, Philippines

Singapore Institute o International Aairs

Institute o Security and International Studies, Tailand


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Table of Contents

Foreword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Current Dimensions, Future Directions: Australian Policy toward Burma . . . . . . . . . . . . . . 9

Assessing the Current Situation in Myanmar: A Perspective rom China . . . . . . . . . . . . . . 24

From Isolation to Engagement: Reviewing Indias Policy toward Myanmar . . . . . . . . . . . . 35

Te Quest or the Middle Way: Indonesian Perspectives on CurrentDevelopments in Myanmar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

Japans Policy toward Myanmar: A Special Responsibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57

Pragmatic Diplomacy: Reviewing International and MalaysianP o l i c y t o wa r d My a nm a r . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75

Developing an International Policy toward Burma/Myanmar:Philippine Perspectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82

From Proxy to Principle: A Review o Singapores Myanmar Policy . . . . . . . . . . . . . . . . . . . 90

Tailands Burma/Myanmar Dilemma: Domestic Determinants andRegional/International Constraints . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .101

Appendix 1: Executive Summary: Report o the Asia Society ask Force on

U.S. Policy toward Burma/Myanmar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .109

Appendix 2: Map o Burma/Myanmar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119


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Foreword

Over recent years, political and socioeconomic conditions inside Burma/Myanmar have steadilydeteriorated. Military leaders continue to govern the country in a highly authoritarian manner,

suppressing domestic political opposition to its rule and committing human rights violations.oday, Burma/Myanmar stands as one o the least developed countries in the world, a result owidespread corruption and the mismanagement o the economy by the government. In short, thedaily lie o the average citizen in Burma/Myanmar is characterized by grinding poverty, declining

health standards, and abysmal humanitarian conditions.While there is widespread recognition within the international community that Burma/

Myanmar is desperately in need o political and economic reorm, a consensus has yet to emergeregarding how best to approach the country to encourage meaningul change. In act, some

observers believe that the situation has been exacerbated by conicting signals and uncoordinatedpolicy responses rom regional and international actors.

As the government o Burma/Myanmar prepares to adopt a new and disputed constitution andconvene a general election in 2010, the Asia Society thought it would be useul to partner withinstitutions rom across the Asia-Pacic region to review the current state o play rom their unique

national perspectives. o this end, the Society launched this projectCurrent Realities and FutureDirections in Burma/Myanmar: Perspectives rom Asiaand sponsored a series o national dialoguesthat were carried out by leading institutes in countries throughout the Asian region, includingMacquarie University, Australia; the Indian Council or Research on International EconomicRelations; the Centre or Strategic and International Studies, Indonesia; the Japan Institute o

International Aairs; the Institute o Strategic and International Studies, Malaysia; the Institute orStrategic and Development Studies, Philippines; the Singapore Institute o International Aairs;and the Institute o Security and International Studies, Tailand. In addition to these institutionalcontributions, a review o Chinese policy was conducted by experts and scholars in China working

in their individual capacities.Each team brought together experts to review and assess their governments current policies

toward Burma/Myanmar and to discuss uture directions and policy options. Te analyses andpolicy recommendations in each report represent the views o their participants and authors.

In connection with this regional eort, the Asia Society established a ask Force on U.S.

Policy toward Burma/Myanmar, co-chaired by General (Ret.) Wesley Clark and ormer USAID

Administrator Henrietta Fore, to assess the Obama administrations new approach to the countryand to oster an exploration o ways orward. Te Executive Summary o the ask Forces report,

which outlines the groups main conclusions and recommendations, is appended at the end o this

document.All o the reports and other related inormation are available at the projects Web page at

AsiaSociety.org/BurmaMyanmarReport.

FOREWO

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On behal o the Asia Society, I would like to express deep appreciation to our partners in

this eort: Sean urnell, Associate Proessor, Department o Economics, Macquarie University;Zhai Kun, Director, Division or Southeast Asian and Oceanian Studies, China Institute oContemporary International Relations; Rajiv Kumar, Director and Chie Executive, and SantoshKumar, Senior Consultant, Indian Council or Research on International Economic Relations;

Yoshiji Nogami, President, and Nao Shimoyachi, Fellow, Japan Institute o International Aairs;

Rizal Sukma, Executive Director, Centre or Strategic and International Studies, Indonesia; anSri Mohamed Jawhar Hassan, Chairman and Chie Executive Ocer, Institute o Strategic andInternational Studies, Malyasia; Carolina Hernandez, Founding President and Chair, and Herman

Joseph Krat, Executive Director, Institute or Strategic and Development Studies, Philippines;

Simon ay, Chairman, Singapore Institute o International Aairs; and Titinan Pongsudhirak,Director, Institute o Security and International Studies, Tailand. We are grateul to them andto all who participated or the amount o time and intellectual energy they dedicated to thiseort.

I also wish to thank my colleagues at the Asia Society who contributed to this project,

particularly Society President Vishakha Desai and Executive Vice President Jamie Metzl. Specialthanks are due to the unagging eorts o Robert W. Hsu, the Societys Senior Program Oceror Policy Studies, who ensured that the project ran smoothly and guided the reports through theirnal stages and publication. We also are indebted to Priscilla Clapp or providing indispensable

advice along the way. Tis project was made possible by the generous support o the Open SocietyInstitute and Asia Society rustee Leon Black.

We hope that the views, ideas, and policy recommendations presented in these reports will

provide valuable insights to the governments o Asia, the United States, and beyond, internationaland regional organizations, nongovernmental organizations, and all who are interested in improvingconditions in Burma/Myanmar.

Suzanne DiMaggioDirector o Policy Studies, Asia Society

FOREWO

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Introduction

In the fall of 2009, the Asia Society established a ask Force on U.S. Policy toward Burma/Myanmar to examine the shit in the United States approach to its relations with the country

and to ormulate a set o recommendations aimed at promoting the countrys long-term stability.o bring a regional perspective to this eort, the Asia Society partnered with leading policyinstitutes in countries throughout Asiaincluding Australia, China, India, Indonesia, Japan,Malaysia, Philippines, Singapore, and Tailandand each institute carried out a review o its

governments national policy toward Burma/Myanmar and prepared a report outlining its ndingsand recommendations. Te resulting collection o reports, entitled Current Realities and FutureDirections in Burma/Myanmar: Perspectives rom Asia, provides a comprehensive overview o currentregional policy toward Burma/Myanmar and comprises a rich compendium o policy ideas or

both regional and international actors.1

Similarities in the assessments o Burma/Myanmars internal situation can be ound across thereports. All note that the political and economic conditions in the country today are in a deplorablestate as a result o poor governance. Moreover, there is general agreement that Myanmar cannotmove orward without complete political reorm, economic development, and social transormation,

as conveyed by the report rom China.Most o the reports point out the negative consequences that poor governance and

mismanagement in Burma/Myanmar have had on the rest o the region. Reports rom membercountries o the Association o Southeast Asian Nations (ASEAN) lament the organizations lacko success in persuading the countrys military leaders to undertake political and economic reorm

and the damage this has done to their relations with Western partners. Some reports raise theprospect that the ruling generals cease-re agreements with ormer insurgent groups might unravelin connection with the planned 2010 elections in Burma/Myanmar, exacerbating the outow oreugees and narcotics to the rest o the region and possibly derailing the elections. For example,

the Philippine report expresses concern over the possibility that Burma/Myanmar could implodepolitically, orcing ASEAN partners to absorb the consequences. Te Tai report identies securityconcerns as the countrys top priority in its policy toward Burma/Myanmar, stating that large-scale, uncontrollable insurgent wars between the ethnic groups and the atmadaw are Tailandsnightmare scenario.2 All o the reports touch on the unsettling rumors o cooperation between

Burma/Myanmar and North Korea on military and nuclear technology, although the Chinese

report provides arguments as to why the state o Burma/Myanmars economy is not sucient tosustain a signicant nuclear technology program.

INTRODUC

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1 The military government of the state changed the countrys name from the Union of Burma to the Union of Myanmar in July 1989. The UnitedNations and most states accepted that change, but the Burmese opposition did not. Each report included in this collection uses the term designatedby its national government.2 Burma/Myanmars military force is ofcially known as Tatmadaw.


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With the exception o Australia, the reports generally regard the planned election as a

critical point in the evolution o Myanmar toward democracy (Malaysia), a critical juncturein Myanmars development (Singapore), and a necessary condition or any political transitionprocess, providing an opening in the political space or regime outsiders (Philippines). Tereport rom India asserts, Te act that an election is being held at all is enormously signicant.Te Chinese report expresses hope that the election will readjust Myanmars political structure

and lay a oundation or urther political reorms and help transorm Myanmars economy. TeAustralian report is pessimistic with respect to any imminent change in either Burmas politicalor economic circumstances. None o the reports expects the election to be ree and air, andall anticipate that the military will remain in political control by virtue o its stranglehold on key

resources and the institutions o government. Nevertheless, many o the reports share the viewthat however awed the new constitution is and the planned elections will be, both developmentsare signs that Burma/Myanmar is moving on a trajectory toward positive change. Te Tai reportadds the caveat that, in the interests o regional stability, political dialogue and democratization, asmaniested through the 2010 elections and beyond, must not lead to civil war between Naypyitaw

and ethnic minorities.Te reports note that the conditions necessary or development in Burma/Myanmar will

require undamental economic reorms, targeting:

ecentralbank,toensurethatdecisionsarebasedonscienticallyvalideconomic

principles, rather than on the whims o political leaders (China)

Auniedexchangerate(Australia,China,India,Japan)

State-ownedenterprises,whichmustevolvefrominstrumentsofpatronage,personalaggrandizement, and enrichment, into responsible and ecient government-linked

companies (Malaysia)

Marketizationandcapitalizationoftheagriculturalsector(China,India,Philippines)

Eectiveutilizationofgasrevenuestochannelthemintoimprovingthehealthandeducation sector (India)

eenvironmentforinvestment(Singapore)

Te economic problems acing Burma/Myanmar also have direct bearing on the issue ointernational humanitarian assistance. In this connection, the majority o the reports urge thatAsian and Western nations continue and even scale up humanitarian assistance, but not throughocial Burma/Myanmar government channels.

aken as a whole, the reports present a broad agenda o policy prescriptions or regionalgovernments and the international community. Te Australian report recommends that itsgovernment remain rmly wedded to its current policy o careully targeted nancial sanctions

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and avoid undertaking any new assistance programs through the Burmese government. Te other

reports are critical o economic sanctions and isolation as an eective means to inuence the militaryregime, although they also recognize that their own policies o economic and political engagementhave not been any more successul in encouraging change. Te Japanese and Indian reports arguethat Western countries can aord to occupy the moral high ground by imposing harsh sanctionsbecause they do not have the strategic and economic interests in Burma/Myanmar that Asian

countries have. Te Malaysian report suggests that, although sanctions have not substantiallymodied the behavior o the military leadership, they do serve the purpose o demonstrating thegravity with which the international community or the relevant countries view the situation. Tereport goes on to recommend that any decision to end sanctions should be tied to some movement

or change on the part o Myanmar [because] ending the sanctions in the absence o any movementwould send the wrong signal.

Notwithstanding the attention paid to sanctions, the reports are clear in emphasizing thatthe greatest obstacle to progress in Burma/Myanmar is the ruling military generals, not Westernor, more specically, U.S. sanctions. Te militarys arbitrary and oten brutal suppression o

political opposition groupsthe most symbolic o which is the continued detention o pro-democracy leader Aung San Suu Kyihas provoked condemnation and outrage rom much othe international community. Authoritarian governance in Burma/Myanmar is not only a humanrights issue, as the report rom Japan argues, it is also a key destabilizing orce in Burmese society.

By disenranchising large swaths o Burmese society rom the political process, Burma/Myanmarsleadership is deepening opposition to its rule, particularly among ethnic groups in the country,some o whom are engaged in low-intensity conicts with the military.

A common thread running through all the reports is a concern about the lack o a cohesiveinternational strategy to deal with Burma/Myanmar and to coordinate activities designed toencourage political and economic reorm. While all acknowledge that the real impetus or changemust come rom inside Burma/Myanmar, they also assert that the role o external inuenceon Myanmar is very important (Japan), and that it will be necessary to work with the militaryto achieve progress. Te Malaysian report suggests that the best organizing principle might be

a dual approach in which Western and Eastern countries agree on a division o labor, withthe United States, the European Union, and the United Nations pressing on human rights anddemocracy, while Asian players ocus on technical assistance and capacity building, as well asencouraging democratic change. Te Singapore report approaches the same idea rom another

angle, advocating that a moral but pragmatic community needs to be constructed. Even i, likean orchestra, dierent countries use dierent instruments and play dierent notes, the main thememust be consistent. Te Philippine report points out that Japan has already set up a ConsultativeGroup on Burma/Myanmar involving both civil society groups and governments and suggeststhat this group might provide a good ocus or international coordination and commitment to a

common set o actions.Chinas report notes that the coordinating group ormed to channel assistance ater Cyclone

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Nargis in 2008consisting o Burma/Myanmar, ASEAN, and the United Nationsis a useulexample o international cooperation. And it asserts that the United Nations is the most inuentialinternational organization in the world and addresses the Myanmar issue most comprehensively,

but it oers no ideas or UN involvement in international eorts to bring about change in Burma/Myanmar. Te other reports barely mention the United Nations, i at all. Malaysias report, orexample, says that the UN should continue to pressure Myanmar on the issues o human rightsand democracy. Te lack o ocus on the United Nations may stem rom a regional preoccupation

with dening and redening the role o ASEAN in this process.Most o the reports encourage active international engagement ater the 2010 elections through

humanitarian assistance to promote human security and community development, throughindustrial and agricultural development projects, through programs to encourage economic reorm(with a particular emphasis on channeling gas revenues to social programs), and through training

programs to upgrade the human capacity required or modern governance. Te Japanese reportargues that Burma/Myanmar should be integrated into the region economically and assistanceshould be provided to encourage economic reorm and the promotion o democracy and humanrights. It submits that Japan could play a pivotal role in coordinating international responses,

using an earlier Japan-Myanmar experts study on economic reorm as a starting point.Chinas report points out that responsibility also rests with the government o Burma/Myanmar

to increase its engagement with the international community by:

Workingmorediligentlyonnationalreconciliation

Placingmoreexpertsandintellectualsinhigh-rankinggovernmentpositions

Invitingforeignexpertsintoitseducationalsystemandsendingmorestudentstostudyabroad

Facilitatingtheworkofinternationalnongovernmentalorganizations

Expandingtourism

Improvingtransparencyindecisionmakingandpolicyimplementation

Playingamoreactiveroleinregionalandinternationalaairs

Most o the reports contain similar observations.

Te reports o ASEAN countries ocus on the role that ASEANboth as an organizationand through individual countries bilateral relationships with Burma/Myanmarcan play inpromoting change and reorm in Burma/Myanmar. Describing ASEAN as the chie regionalvehicle, the Tai report asserts that Tailands oreign relations will always be conducted

through ASEAN and emphasizes the importance that Tailand attaches to developing mainlandSoutheast Asia through the Greater Mekong Subregion. Te Malaysian report reects a consensusthat ASEAN should take a leading role in addressing the situation in Myanmar, with some

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arguing that China would only intervene productively in Burma/Myanmar i ASEAN took theinitiative. Te Philippine report concludes that ASEAN should serve as a mechanism or theinternational community to coordinate policies that are guided by the principles enshrined inthe ASEAN blueprints or a Political-Security Community, Economic Community and Socio-

Cultural Community in the region. It also recommends that ASEAN must ensure that theprojected election in 2010 is as air and ree o raud as possible. Te Singapore report envisions itsgovernment as spearheading ASEAN eorts to demand reorm in Burma/Myanmar, noting thatASEAN member countries, including Singapore, have a responsibility or addressing the situation

in Myanmar as neighbors. Te report urther observes that in its normal course o interaction,ASEAN hosts Burma/Myanmar delegates at some 250 to 300 meetings a year, providing a orm oaccess to this closed society that can be translated into more leverage as Myanmar opens up. Itgoes on to recommend that ASEAN should send a team to monitor the 2010 elections and sustain

its aid and technical assistance eorts, with particular reerence to the Initiative or ASEANIntegration, aimed at training civil servants to narrow the development gap within ASEAN.Te Indonesian report questions ASEANs eectiveness as a vehicle to press or change in

Burma/Myanmar and explores alternatives or a more active bilateral role on the part o Indonesia.Because ASEAN unctions according to consensus decisions, the report argues, it is unlikely to serve

as anything more than a structure or managing economic relations, and it cannot overcome thereluctance o India and China to do anything that would adversely aect their economic interestsin Burma/Myanmar. Te report concludes that bilateral approaches, rather than ASEAN-drivenapproaches, have a better chance at succeeding in persuading the junta to relax its stranglehold,especially i India and China are brought into the equation. Because the Indonesian government

is not likely to take a more active role in pressing Burma/Myanmar without a rm personalcommitment by the president, which remains elusive, the report recommends a multiple tracknongovernmental strategy or Indonesia, using a prestigious ex-government envoy, engagementthrough community-based organizations, and business initiatives to respond to the coming period

o uncertainty and change in Burma/Myanmar.

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Executive Summary

In September 2009, Macquarie University convened a series o roundtable meetings in Sydneyand Melbourne, Australia, to examine and discuss Australian policy toward Burma and potential

uture directions. Te conclusions reached during those discussionswhich included theparticipation o Burma experts and scholars o relevant backgrounds and interestsare detailedin this report, which was commissioned by the Asia Society as part o a larger review o U.S.and international policy toward Burma. Te consensus that emerged rom the meetings was that

Australias policy toward Burma is notable in that it is tightly targeted. Tis is true with respectto both sanctionsAustralia applies only nancial sanctions, and only to specic individuals

who have close connections to Burmas military leadershipand the provision o aid. Overall,Australias current relationship with Burma is neither close nor large in scale and scope. It sits inodd (i understandable) contrast to Australias relationship with other nations in Southeast Asia.

Looking to the uture, the participants were hopeul but realistic with respect to any imminentchange in Burmas political or economic circumstances. Tereore, this report concludes that currentrestrictions on broad-based government-to-government aid to Burma should remain in place inthe absence o genuine and substantial political change in the country; likewise, existing tightly

targeted sanctions should also remain in place. On the other hand, there is much opportunity or

the delivery o humanitarian aid to Burmas reugees beyond its borders, as well as aid that can bedelivered into Burma rom neighboring countries, especially Tailandnot least because o well-established nongovernment groups already in operation there. o this end, this report recommendsboosting the Australian governments unding o such aid. Finally, the report recommends that

Australia continue its diplomatic initiatives, in conjunction with other nations, to help delivermeaningul change to the people o Burma.

AUSTRALIA

Current Dimensions, Future Directions:

Australian Policy toward Burma

A report prepared by Macquarie Universityor the Asia Societys Burma/Myanmar Initiative

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In summary, the main ndings and recommendations outlined in this report include the

ollowing:

CurrentAustralianpolicytowardBurmaistightlytargetedwithrespecttobothhumanitarianaid and nancial sanctions imposed on named individuals who orm, or are connected to,its ruling military regime.

AustraliaiswellplacedtoinitiateanumberofdiplomaticactionsonBurma,includingsupporting a United Nations Security Councilimposed arms embargo.

While humanitarianassistance has value, there isno prospect thatocial developmentassistance provided to Burmas ruling regimethe State Peace and Development Council

(SPDC)would be utilized or its intended purpose. Te SPDC views Burmas economyand society exclusively through a rent-seeking lens, and so it ollows that no extension o

ocial development assistance to the regime could be expected to succeed in terms o itsstated criteria.

ecentralrequirementfortheimprovementofgovernanceandinstitutionalquality inBurma is the removal o the military rom its central position o power. Burmas new

constitution (2008) ensures that the military cannot be excised rom the legislative process,and thereore little can be expected rom the document on this ront.

ere are grounds for the extension of particular modes of targeted aid expenditures

under appropriate circumstances. Above all, cross-border aid o the type advocated bythe Australian People or Health and Development Abroad (APHEDA) and other bodies

should be actively supported and extended by the Australian government.

Intheabsenceofgenuinepoliticalandeconomicreform,Australiashouldnotrelaxitscurrent system o tightly targeted nancial sanctions.

Tis report was drated by Dr. Wylie Bradord, with assistance rom Dr. Alison Vicary and Dr.Sean urnell, all rom the Economics Department at Macquarie University. Te report benetedrom the signicant input o a number o individuals and organizations in Australia, but, above all,the participants in the roundtables. Tese participants subsequently ormed what was essentially

an advisory board:

WylieBradford,EconomicsDepartment,MacquarieUniversity(co-chair)

AlisonVicary,EconomicsDepartment,MacquarieUniversity(co-chair)

AlisonTate,InternationalDirector,AustralianPeopleforHealthEducationandDevelopment Abroad

MyintCho,MedicalPractitionerandDirector,BurmaOce,Australia

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MaungMaungMyint,CommitteeforDemocracyinBurma(Australia)

CharlotteLong,WelfareResearchOcer,StudentsRepresentativeCouncil,

University o SydneyZettyBrake,BurmaCampaignAustralia

SeanTurnell,EconomicsDepartment,MacquarieUniversity1

Te principal draters o this report also grateully acknowledge the assistance o APHEDA, theinternational aid arm o the Australian Council o rade Unions, or its recommendations regarding

Australian government support or aid to Burmas numerous reugees, and that which might be

provided to the people o Burma rom across its borders.2

Current Australian Policy toward Burma

Sanctions

Te Australian governments current policy toward the Burmese regime is best described astargeted, incorporating a combination o sanctions applied to specically named individuals andactivities, and expenditures allocated to specic purposes and projects while eschewing broad-based restrictions on trade and investment.

Since October 2007, targeted bilateral nancial sanctions against 463 members o the Burmeseregime and their associates and supporters have been implemented under the Banking (ForeignExchange) Regulations 1959. Under these sanctions, transactions involving the transer o unds or

payments to, by the order o, or on behal o specied Burmese regime gures and supporters areprohibited without the specic approval o the Reserve Bank o Australia. o keep these sanctionscurrent and ocused or maximum eect, the Australian government revised the list o sanctionedindividuals on October 22, 2008. Te list will be urther revised in 2010.3

Restrictions on visas to travel to Australia or members o the Burmese regime and theirassociates and supporters are applied according to the Migration Regulations 1994, Regulation

2.43(1)(a)(i)(A), and Public Interest Criterion 4003(a). A long-standing ban on deense exportsis maintained by Customs (Prohibited Exports) Regulation 1958, Regulation 13E. Australiamaintains no sanctions on trade with or investment in Burma.

Diplomatic InitiativesIn terms o targeted diplomatic actions relating to Burma, Australia has been active in the recentpast. Australia has consistently urged the Burmese regime to start a process o genuine political

1 Correspondence regarding this report should be sent to the participants from Macquarie University at [email protected] With particular thanks to APHEDAs Peter Jennings.3 The current list is available at http://www.rba.gov.au/MediaReleases/2008/mr_08_23_annex.html.

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reorm and national reconciliation. Australia co-sponsored a resolution on human rights in Burmaat the March 2009 session o the UN Human Rights Council in Geneva. In November 2008,

Australia co-sponsored a resolution on human rights in Burma in the Tird Committee o the UNGeneral Assembly.

Humanitarian Assistance

Te Australian government provides humanitarian assistance to the Burmese people, with a ocuson women and children, ethnic minorities, and displaced persons and reugees on the TailandBurma and BangladeshBurma borders. Tis assistance also ocuses on delivery at the communitylevel: ensuring basic health, providing people with livelihoods, and protecting the most vulnerable.

Australias program o assistance in 20092010 is estimated at AU$29 million, including assistance

or areas that were aected by Cyclone Nargis in 2008.

Current and recent assistance activities can be itemized as ollows (in Australian dollars):reeDiseases Fundresponse to counterHIV/AIDS, tuberculosis, and malaria: $15

million

UnitedNationsChildrensFund(UNICEF)AddressingvitaminB1deciencyin

Myanmar (beriberi): $1 million

UNICEFDewormingProject:$463,443

WorldHealthOrganization/FoodandAgriculturalOrganizationAvianInuenza

Project, which aims to strengthen the veterinary and health systems capacity to deal with

avian inuenza by improving surveillance, diagnostic capacity, and early warning systemsin both human and animal sectors: $1 million

CAREAustraliaHouseholdLivelihoodsProgramforRohingyaReturnees,Northern

Arakan State: $3.48 million

NationalCouncilofChurchesAustraliaReliefProgramsforBurmeseRefugees,which

provide shelter, ood, and medical services on the TailandBurma border: $703,000

UnitedNationsOceonDrugsandCrimeKokangandWaInitiative,whichprovides

ood, basic health services, and support or agricultural production, sustainable land use,and income generation: $1.9 million

UnitedNationsDevelopmentProgrammeCommunityDevelopmentforBasicNeeds

in Northern Arakan State: $1.1 million

WorldFoodProgramme(WFP)Foodassistanceandlivelihoodsupporttoreturnees

and vulnerable communities in northern Arakan State, Magwe Division (Dry Zone), andShan State: $3 million

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WFPSupportfornonfooditemssuchascapacitybuildingforlocalhealthworkers,

construction o water and sanitation acilities, training in building construction, andminor inrastructure development in Northern Arakan State: $155,000

AustcareMineRiskEducationinSchools,whichprovideslandminedangereducationon TailandBurma border: $160,000

UNICEFJuvenileJustice,whichaimsfortheimprovementofknowledgeandskillsofBurmese proessionals working with children in conict with the law: $600,000

UNHighCommissionerforRefugeesActivitiesinsoutheasternBurma(ailandBurma border): $600,000

AusAIDNGOCooperationProgram:$754,882

Critique of Expanded Ofcial Development AssistanceRecent developments in the policy discourse concerning Burma have stressed the need or greaterengagement with the Burmese regime and increased provision o aid or delivery within Burma.Despite the increasing volume o these calls, there are cogent reasons to doubt the eectiveness o

such a shit in policy. In what ollows, the case o aid extension is the ocus, but the observationsapply also, mutatis mutandis, to diplomatic and other orms o engagement.

Te case against the extension o ocial development assistance to Burma or delivery withinthe country rests on grounds that relate to both the ecacy o aid in general and the speciccharacteristics o Burma as a recipient. A primary aim o any policy approach to Burma must be

to bring about genuine and sustained economic growth, which will make possible the dramaticimprovements in material welare that are desperately needed by its people. o this end, a keyevaluative dimension or the provision o ocial development assistance is the extent to which aidprovision is likely to promote growth. Te empirical record on this question is reasonably clear:

Aid expenditure is not in itsel productive o improved growth perormance.Te standard argument or ocial development assistance in relation to growth is based on what

William Easterly labels the nancing gap assumption.4 According to this position, low nationalincome produces low national saving, and thus, on the urther assumption that savings are requiredto nance domestic investment, it constrains capital accumulation in such a way that poor income

perormance is maintained. Investment is recognized as the engine o growth, but the nancial

resources required to produce and sustain that investment are lacking. Tis gap is precisely whataid ows are intended to ll, leading to greater investment and hence economic growth.Te argument reects an excessive ocus on inputs at the expense o what are now seen to be

crucial elements in growth perormance: governance and institutional quality. As Easterly notes, a

4 William Easterly, The Ghost of Financing Gap: Testing the Growth Model Used in the International Financial Institutions, Journal ofDevelopment Economics 60 (December 1999): 42338.

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crucial element o the argument is that aid expenditure ows one to one into investment expenditure.Te obvious ailure o this to occur lies behind his empirical nding that the nancing gap modelails to hold almost universally. Historically speaking, the record o diversion and appropriation

o aid unding by authoritarian regimes is a clear signal that where power has been seized andleveraged into large-scale rent seeking, the provision o unding rom external sources is unlikelyto induce a miraculous change in behavior. Where the incentive to steal is strong, we should notexpect thet to be oregone or the national good.

In Burma, the regimes willingness to divert aid unding can be seen clearly in the case o health

expenditures. External unding earmarked or health purposes increased sevenold in the periodrom 2000 to 2006, and yet it made little impact on overall health expenditures by the regime.Instead, as the ollowing gure makes clear, internal expenditures were reduced at an equal rate,

with the result that overall health spending is virtually entirely aid driven. Given that the Burmese

regime showed no inclination to spend properly on health prior to the receipt o aid unding, itshould be no surprise that the regime maintained this scal stance aterwardespecially when theprospect o pocketing the dierence was added to the equation. For health, as or other categorieso ocial development assistance, there is no real prospect that aid unding provided to the regime

would be utilized or its intended purpose. Tereore, aid to Burma would be a waste o resources idirected through ofcial channels.

Table 1. Percent of non-Household, non-NGO Health Expenditure Accounted for

by External Financing (Net of NGO)

-20.0%

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

120.0%

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

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Te SPDC regime has provided clear evidence o its willingness to misappropriate externallysourced nancing, whether arising rom production or rom aid-like ows rom the international

community. Burmas gas reserves in the Gul o Martaban and in the Bay o Bengal have conrmed

recoverable reserves o around 540 billion cubic metersat present prices and production volumes,enough to bring in around US$2 billion annually or the next 30 to 40 years. Despite the exploitationo signicant elds in these regions since 1988, earnings ows appear to have had little impact on

Burmas scal bottom line.Te reason or this is exchange rate manipulation. For scal reporting purposes, the regime

values U.S. dollar earnings at the ocial kyat-to-dollar exchange rate, rather than in terms o thegenuine market exchange rate, which is some 150200 times greater. Te market rate providesa measure o the command o U.S. currency units over Burmese goods and services, as well as

expenditures by the regime on projects such as the new capital o Naypyidaw, nuclear reactorpurchases rom Russia, the extraordinary physic nut biouel campaign, and so on. Tese projectsare occurring while the regime is apparently mired in a perpetual scal crisis, despite the immensevalue o the gas assetsa clear indication o how much o that command is being illicitly skimmed

rom state accounts.Te use o the ocial exchange rate by the regime is not necessarily uniorm in its dealings with

the international community. In the atermath o Cyclone Nargis, the SPDC presented its assessmento damages and reconstruction costs to the Association Southeast Asian Nations (ASEAN)UNInternational Pledging Conerence in Rangoon in May 2008. Leaving aside the question o how

death tolls or pigs and ducks could be tallied down to the level o the individual animal (665,271 inthe case o ducks in private agriculture) at a time when rescue boats were running out o uel beore

reaching their intended targets, the SPDC claims were notable in at least two respects.First, the obvious distortion o the pattern o damage was intended to convey the impression

that any unds allocated by the United Nations or ASEAN would be used to rebuild the privatesector rather than appropriated by the SPDC or its own purposes. Hence, the internationalcommunity was expected to believe that although aected private actories outnumbered state-owned actories by a ratio o around 4:1, more than 50 times as many private actories weredestroyed by Cyclone Nargis compared to state-owned ones! For example, the numbers or

workshops show a ratio o around 10:1 or private versus state-owned, but the private destructionactor was a whopping 124times the size. In the case o warehousesdespite there being ewerprivate warehouses aectedthe ratio o buildings described as collapsed is still on the order

o 12:1. Further extreme non-uniormity was evident in agricultural losses, the starkest examplesbeing the 1.67 million bird discrepancy between private sector and state sector chicken losses andthe remarkable good ortune that produced the loss o only three bualo in the state sector underconditions that put losses o 117,125 animals in the private sector.

Such distortions lay behind the act that o the more than US$10 billion that the SPDCsought rom the international community or post-Nargis reconstruction, 70% was attributed to

the making good o private losses. Notwithstanding the political imperative or this representation,

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the act that the amiliar private/public distinction is without meaning in Burma makes maniestthe maleasance o the regime in its dealings with the international community. Te extent o the

regimes control over the banking system, industrial and commercial activity (through the military-run holdings corporations), and access to oreign exchange, in combination with the ubiquity ocorruption, means that productive activity completely independent o state inuence is eectivelyimpossible.5 Te minimization o the true impact o Nargis on the economic interests o the SPDC

was thus a straightorward attempt to exploit a human catastrophe or the purposes o cheating

potential donors.Te second noteworthy aspect o the SPDC claims is the extent to which exchange rate

manipulation was employed in order to inate the overall extent o the damage. A comparison othe stated kyat and U.S. dollarequivalent damages reported by the SPDC shows that not only

was the regime happy to use exchange rates close to the market rate in this instance (perhapsbecause not doing so would have meant asking or US$1.52 trillion on the basis o the kyatgures), but that no consistent exchange rate was used across the categories o damage. Te mostnotable outliers were the health and education sectors, where the implied exchange rates wereone-quarter to one-th o what was typically used elsewhere. Te eect o the discrepancy was a

drastic ination o the U.S. dollar value o alleged reconstruction requirements as valued in kyat.Te net eect o using varying exchange rates was that the regime claimed at least an extra US$152million rom the international community compared to what would have eventuated i a singlemarket-based value had been used throughout. Te primary drivers o this outcome were the

anomalies associated with health and education, which, o course, are public sector operations.6

Te implications o this analysis in the context o an extension o ocial development assistance

to Burma should be clear. Te regime has established an unenviable track record o diversion ounds, misrepresentation o needs, and dealings in bad aith. Where ocial development assistancehas been allocated or expenditures on vital public goods such as health, it has been eectively

creamed o through substitution. Where humanitarian assistance has been incontestably required,the regime has sought to gouge the international community through misrepresentation o actand sleight o hand (albeit singularly maladroit) in calculations. Tat this attitude is adoptedtoward handouts should not be a surprise given the record o the SPDC with regard to skimming

the proceeds o bona de productive activities. Te SPDC views Burmas economy and society exclusively through a rent-seeking lens, and so it

ollows that no extension o ofcial development assistance to the regime can be expected to succeed in

terms o its stated criteria.

5 Burma currently ranks above only Somalia on Transparency Internationals Corruption Perceptions Index. The House of Commons InternationalDevelopment Committee Eleventh Special Report of Session 20062007 on Department for International Development Assistance to BurmeseInternally Displaced People and Refugees on the ThailandBurma Border indicated that this is true also of aid funding, noting that [p]olitical andhumanitarian space to carry out the process of poverty reduction and humanitarian assistance is highly constrained.6 The initial ndings of the Post-Nargis Joint Assessment (PONJA) exercise highlighted the dishonesty of the regimes dealings even more emphatically.The estimates of damage were based on sampling at the village tract level and showed, inter alia, that the combined SPDC claims for damages toprivate housing and industry exceeded credible estimates by around US$5 billion.

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Te New Constitution

Te oregoing conclusion accords with research on the eectiveness o aid generally. A key themeto emerge is that aid is eective only in situations o good governance and in policy environmentsthat encourage the allocation o resources to productive activity and away rom wasteul rent

seeking and other orms o diversion.7 Clearly, the SPDCs record in terms o economic policyvandalism is an unmistakable indication that increased aid cannot possibly be expected to workin the current context. o this point, there are two common, and erroneous, responses.

Te rst erroneous response is that the current process o constitutional reorm, which willreach its next milestone in the 2010 elections, will create a space or improved policy design and

implementation. Te diculties with this position are clear. Te SPDCs record with regard tothe electoral processincluding the reerendum on the new constitution itselshows that noassurances o reedom and airness with respect to the election results can be seriously entertained.Furthermore, the constitution itsel is inherently awed in ways that can only impede the growth o

good governance in Burma. Although much attention has been paid to the eligibility o Aung SanSuu Kyi or the presidency and other oces, the general eligibility requirements or membershipin the Pyidaungsu Hluttaw appear to be designed to permanently exclude elements opposed to thecurrent regime rom the political process. As such, eligibility to stand is denied, inter alia, to a:

personhimselforisofamemberofanorganizationwhoobtainsandutilizesdirectlyor indirectly the support o money, land, housing, building, vehicle, property, so orth,

rom government or religious organization other organizations o a oreign country. Section121(g)

personhimselforisofamemberofanorganizationwhoabetstheactofinciting,giving

speech, conversing or issuing declaration to vote or not to vote based on religion or politicalpurpose. Section 121(h)

When added to the standard eligibility restrictions relating to criminal convictionthe incidenceo which can be expanded at the discretion o the regimethe criteria cited here appear toprovide maximum scope to ensure that members o the National League or Democracy and otheropposition groups will be unable to participate in the 2010 and subsequent elections even i they

wish to do so.Furthermore, 25% o seats in the Pyidaungsu Hluttaw are reserved or (unelected) nominees

rom the countrys deense orces. Proposed amendments to the constitution require the approval o

more than 75% o the Pyidaungsu Hluttaw members beore they can be submitted to a reerendum(Section 436 [a]). Tereore, the central requirement or improvement o governance and institutionalquality in Burma is the removal o the military rom its central position o power.Te current constitutionensures that the military cannot be excised rom the legislative process. Tus, there is no realistic

7 For example, see David Dollar and Lant Pritchett,Assessing Aid: What Works, What Doesnt, and Why (Washington, DC: World Bank, 1998);and Daniel Kaufman, Aid Effectiveness and Governance: The Good, the Bad and the Ugly, Development Outreach, February 2009, 2629.

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prospect o the type o institutional reorm that would render greater aid to Burma eectivelyarising rom the constitutional changes that have come into eect since 2008.

Te second erroneous response to the claim that Burmas toxic institutional environmentprecludes aid eectiveness is that aid provision on the ground enhances the process o institutional

development and the growth o good governance. Te mechanisms that are usually invoked arethe stimulation o civil society, leading to the accumulation o social capital and to some ormo social and political transormation over an unspecied time period. Tese claims are, at best,specious. Tere is simply no historical evidence to support the claim that aid improves governance.Casual inspection, or example, suggests that the correlation between ocial development

assistance provision and rankings o institutional quality (such as ransparency InternationalsCorruption Perceptions Index) is, in act, negative. In addition, the explanations proered or thecausal mechanisms involved in improved governance are universally opaque and without empiricalsubstantiation. Aid cannot render itsel eective through institutional metamorphosis.

Te preceding point leads to a neglected but vital aspect o aid provision that bears directly onthe question o increased aid to Burma. Nongovernmental organizations (NGOs) are among themost vocierous advocates o such increases and the most ardent proponents o the eectivenesso aid. As Easterly shows, the alleged eectiveness need not be realized in outcomes on theground or in terms o the intended use o donated unds. NGOs as deliverers o aid ace a basic

economic problem in terms o accountability.8 Te link between their supplied eort and theactual outcomes or those they are attempting to help can be rendered tenuous by actors beyondtheir controlprincipally, the actions o rogue regimes such as the SPDC. Such groups havean incentive to deemphasize the auditing o observable results on the ground as a benchmark to

judge success. In common with other activities or which output can be dicult to measure inimportant dimensions and only moderately correlated with supplied eort (teaching, or example),there is a tendency to measure output by counting inputs. Tereore, successul aid providers arethose that attract a greater share o unding (more inputs acting as proxies or more output). Intheir advocacy or greater unding (NGOs ater all require a constant stream o inputs i there

are to be going concerns), the meaning o success can become blurred and disassociated withoutcomes or the target populations.

Indeed, where sel-denoted successul NGOs claim a greater need or aid provision to Burma,there must be an appropriate degree o rational skepticism rather than an acceptance o the claims as

evidence o such need or the likelihood o positive outcomes arising rom it. NGOs are agents with

multiple ends, including, but not limited to, the welare o the target populations. Te potentialor conict among these ends has consequences or aid eectiveness. Te recent InternationalPolicy Network report Fake Aiddocuments cases in which NGOs in the United Kingdom were

8 See William Easterly, The White Mans Burden: Why the Wests Effort to Aid the Rest Have Done So Much Ill and So Little Good (New York:Penguin, 2006). For example, a 2005 collective NGO response to the Paris Declaration on Aid Effectiveness stresses the need for greater account-ability for donors, with only incidental recognition of the need for greater accountability on the part of recipients. There is no mention whatsoeverof accountability requirements for NGOs (available at http://www.un-ngls.org/orf/cso/cso7/NGO-Statement.pdf).

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unded by the U.K. Department or International Development to undertake activities variously,and nebulously, described as communications, awareness, advocacy, and promotion.9 Tese

cases represent a discretionary diversion o resources away rom direct service provision toward thepromulgation o political agendas in donor countries. Aid providers may argue that such activitiesultimately benet target populations in recipient countries. However, it must also be acknowledgedthat the implied relativities o eectiveness are scarcely credible, and that the decision not to allocatethe unds to direct provision involves a paternalistic judgment regarding the welare o those

populations. Clearly, assertions by NGOs regarding the need or more aid unding or Burma donot automatically imply that the unding would actually be utilized or the direct benet o theBurmese population.

Future Directions: Opportunities for Increased Australian Government Support for

Cross-Border Aid to Burma

Notwithstanding the eectiveness o aid to Burma in general, there are grounds or the extensiono particular modes o targeted aid expenditure under appropriate circumstances. Currently, thereare three areas that are largely ununded by the Australian government that would contribute

greatly to positive change in Burma: cross-border aid, unding or the National ReconciliationProgramwith Burmas ethnic minority groupsand aid to support Burmese migrant workersin Tailand and India.10

Cross-Border Aid

Cross-border aid is implemented via Tailand in the orm o training programs. Participants

are trained in Tailand to undertake education programs, media programs, environmentalmonitoring, or medical relie. Tose trained then walk the programs back into Mon, Karen,Karenni, Chin, Kachin, and Shan states in eastern Burma and implement the programs on the

ground with local participants. Equipment taken across the border includes medical equipment oraudiovisual equipment or media programs, inormation gathering, and monitoring. Some cross-border agencies also deliver ood aid.

Border-based organizationssuch as the Burma Medical Association, Back Pack Health

Worker eam, Burma Medical Association, and National Health and Education Committeehave implemented a wide network o programs that deliver preventative and curative medicinesto those in the eastern states o Burma who are unable to be reached through Rangoon-based

aid. Tese programs currently provide services to a combined population o more than 386,000internally displaced persons in eastern Burma, supporting more than 1,500 trained community

health workers and underground health centers. Continuous monitoring and evaluation has enabledborder-based health and education programs to develop according to the needs and capacities o

9 This document is available at http://www.policynetwork.net/uploaded/pdf/Fake_Aid.pdf.10 Information pertaining to these proposals is extracted from the Union-Aid AbroadAPHEDA concept paper. See APHEDA, Building the Capacityof Civil Society Groups on the Thai Burma Border, the Eastern States of Burma, and within the Burmese Migrant Worker Community, May 2009.

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the communities. Tis has included independent monitoring by donors as well as population-basedevaluation surveys. Te evolution o this monitoring has led to the development o standardizededucational curricula, medical treatment protocols, and data collection methodologies rom acrossdierent states and ethnic communities. Tese have led to improved prioritization o program

targets and goals.Border-based NGOs engaged in cross-border activities on the TailandBurma border have

developed sophisticated mechanisms or recording and monitoring cross-border aid. As someactivities are unded by a handul o international donors, international standards or transparencyare put in place. APHEDAs long-term partner, the Burma Relie Centre, has been engaged in

cross-border work or years, as has the Tailand Burma Border Consortium. Both organizationshave a high reputation and receive international unding, mostly or their work with reugees andethnic groups in Tailand. Some donors have even allowed unds to be spent across borders. Tetransparency o any cross-border activity can only be improved by an increase in donors and actors

who are engaging in the activity, as they can review and support each other. APHEDA believesthat these methods would be sound enough to withstand scrutiny, and under the circumstances,they should be tried so that the civil society actors engaging in cross-border workat a grassrootslevel in conict areas or behind conict linescan be supported and recognized as essential todemocratic change in the uture.

National Reconciliation Program

Te National Reconciliation Program (NRP), which began ater the 1994 UN Security Councilresolution, operates under the belie that tripartite dialogue would be the most eective means

o resolving the ongoing conicts in Burma. Te NRP has been enormously successul thus arin its goals. In the ew years it has been operating, it has changed the ace o ethnic minorityrepresentation rom being incongruent with civil society and democracyethnic-based militarygroups with top-down structures dominated by males and with little transparencyto beingdominated by civil society groups that are truly representative.

Te NRP acilitated this change by providing seed unding and encouraging civil society inthe orm o womens and youth organizations and organizations ocused on health, education,the environment, and other acets o a strong civil society. Tese groups are democratic in theirprocesses and have adopted international standards o transparency, which has meant that many

enjoy unding rom international agencies. However, many more are not unded internationally

despite their commitment to assist those in the most desperate situations, namely those livingin their home states (which would require cross-border aid unding). While the military-basedorganizations are still present in ethnic communities, they have eectively ossilized and are unableto exert the inuence on politics that they once had.

Currently, the NRP is unded by very ew government organizations. Its primary unders arethe Canadian government, the Euro Burma Oce (a coalition o European governments), andthe Danish Burma Committee. However, with the growth o the programwhich has occurred

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naturally through the representative and community engagement processthe NRP is in need o

urther unding. Funding can be allocated or its core program o bringing ethnic minority groupstogether or or seed unding or the activities o smaller community-based organizations.

Te NRP process is one o the most signicant civil societybuilding projects on the Tailand

Burma border, and it has already contributed greatly to democratic processes by creating an

enabling environment or community voices in ethnic areas. Tis will ensure that their issues are

not subsumed by the undemocratic military bodies o the past. Te strength o this program is so

great that it is essential or support to come rom the Australian government.

Migrant Workers

Te economic incompetence o the SPDC has pushed the people o Burma into desperatesituations. o survive, many Burmese must migrate out o the country. Migrant workers also come

to Tailand to escape orced labor, the systematic rape o ethnic women, orced relocation becauseo mega-development projects, political harassment and persecution, shortages o ood, and a lack

o employment opportunities. Te distinction between reugees and migrant workers is academic,

as Burmese migrant workers have ed Burma or the same reasons as their reugee peers but have

chosen to seek work.

While AusAID has provided unding to projects working with the 160,000 or so Burmese

reugees who are currently in camps in Tailand, minimal assistance has been provided to the

estimated 2 million Burmese migrant workers in Tailand. Reugee workers in Tailand work in

jobs that are shunned by the local workorce because o the poor pay and deplorable occupational

health and saety standards. Migrant workers in Tailand work in the construction industry in

booming areas such as Chiang Mai and in tourist resorts on the beaches o southern Tailand.Tey work in border towns such as Mae Sot in garment actories, they polish gems, and they also

work in temporary agricultural jobs such as ruit picking and seasonal planting. Some o the worst

conditions reported are in the sheries industry and seaood processing, where there are reports o

orced and child labor. Migrant workers also ace exploitation, poor living conditions, ew health

programs, job insecurity, deportation, and isolation.

Strengthening workers organizations and Burmas trade unions (operating in Tailand) is

a crucial element in building a strong civil society or a uture Burma. As a person must be

a Tai citizen to be a member o a Tai-based trade union, a Burmese migrant workers only

option is to orm or join a workers organization. Tese organizations provide health education or

migrant workers and other services such as schooling the children o migrant workers, educatingworkers about their rights, providing training in occupational health and saety, and, in some cases,

providing saety equipment or workers. It is impossible to engage with this sector inside Burma, as

unions are banned and repressed by the junta.Migrant worker organizations also provide workers with access to Tai legal and health

services. Tese organizations help those who are attempting to claim their legal entitlements rom

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an exploitative employer through legal avenues. In many cases, migrant worker organizationshave been successul in claiming unpaid entitlements or their members or winning them better

occupational health and saety conditions. Tey also provide protection or migrant workers, whoare some o the most exploited and vulnerable people in Tailand. Some organizations have evenset up sae houses or sick and injured workers.

Trough AusAID, the Australian government should provide multiyear unding to a Democracy

Fund or Burma. Tis und should be used to support and strengthen Burmese civil society operating

along the TailandBurma border and in Burmas eastern border states (ethnic minority areas).

Funding that is specically earmarked or cross-border projects is especially required. A urther

priority is to provide unding that will strengthen and support civil society building through the

National Reconciliation Program and through workers organizations. A Democracy Fund that is

designed to support the development o strong, representative, and eective civil society along the

border, both in Tailand and in eastern Burma, and with the ethnic minorities and those workingas migrant workers in Tailand and other areas, will strengthen the opportunities or a peaceul

and democratic Burma in the uture.

For the Australian government to truly support democratic change in Burma through a

negotiated solution, it is essential that AusAID genuinely commit to supporting those actors whoare, through their daily programs, committed to leading grassroots change in Burma. Indeed,

AusAID should also work with Australian-based partners such as APHEDA, Act or Peace, and

others engaged with long-standing reputable organizations such as the Burma Relie Centre,

National Reconciliation Program, Migrant Assistance Program, and the Tailand Burma Border

Consortium. Tis would be an excellent way to contribute to democratic change in Burma. All

o these organizations work with smaller indigenous grassroots organizations to strengthen theircapacity and to support them in becoming democratic, transparent, and eective civil society

representatives o their ethnic constituencies.

Sanctions

In the absence o undamental political and economic reorm in Burma, the Australian government

should maintain its existing array o nancial sanctions on individuals who constitute Burmas

ruling military apparatus and those who are connected to it. Australias sanctions are especially

well targeted and calibrated to the ollowing objectives:

Te average person in Burma has no access to a bank account, much less a need or desireto access the nancial system. Tis is not true or the members o the SPDC or the rent-

seeking elite connected to them. Tereore, the denial o access to the Australian nancial

system or this group sends the right signal to the right people.

Financial sanctions are necessary to protect Burma against the wholesale thet o its nancial

and natural resources. Burma is quickly accumulating signicant oreign exchange reserves

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rom its exports o natural gas. Such revenues are already being disposed o oshore in ways

that bring about the least advantage to the Burmese people. Australias nancial systemshould not aid or abet this activity.

Financial sanctions protect Australias own nancial system rom illicit and unlawulactivities. Burma remains a center o prime money laundering concern, according tothe Organisation or Economic Co-operation and Development and other internationalagencies. Moreover, allowing ree access to Australias nancial system by Burmese entities

exposes it to an unnecessary source o criminality. Tis point has heightened relevance nowthat the production o narcotics in Burma has resumed its large presence in the countryseconomy.

Tere will, o course, come a point when sanctions should be reconsidered. For the moment, however,

they represent a potential asset or countries such as Australia in undertaking the dicult task oencouraging something better or the people o Burma.

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Executive Summary

In 1988, the Tatmadaw governmentalso known as the State Peace and Development Councilcame to power in Myanmar. Since then, the government has implemented a series o reorms, suchas abolishing the one-party system; holding an election, which ailed, in 1990; establishing a marketeconomy; and opening up to the outside world. In addition, the government concluded cease-reagreements with ethnic armed orces and ended the large-scale civil war in the country. Generallyspeaking, the atmadaw government has achieved some progress in developing Myanmar.

However, Myanmar still aces many challenges, and it remains one o the least developedcountries in the world. Political modernization and national unication are serious challenges.Myanmars inability to establish a democratic system o governance has impeded the countryseconomic productivity. Myanmars market economy is ailing, and insucient attention has beenpaid to maintaining economic growth and improving the peoples welare. Te Myanmar governmenthas spared no eort to reconcile dierences among the countrys ethnic groups, and it considersthe creation o a harmonious society o great importance or the uture o the country. Yet armedethnic groups continue to control some o the countrys regions. In oreign relations, Myanmarhas aced Western sanctions or about 20 years, and the leaderships aversion to oreign assistancehas hampered economic and political development. Globalization has led to increased engagement

between Myanmar and the international community. Consequently, the government has had toreconsider its oreign policy strategy in order to adapt to the new international environment.

Myanmar is currently undergoing transormative changes. In May 2008, 94.8% o thepopulation approved a new constitution in a national reerendum. Tis is considered a signicantturning point or Myanmars political development. But recent conicts between the atmadawgovernment and the armed Kokang ethnic group complicate Myanmars uture. Changes areexpected in Myanmar, but they undoubtedly will be gradual.

Assessing the Current Situation

in Myanmar:

A Perspective from China

A report prepared or the Asia Societys Burma/Myanmar Initiative

March 2010

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Te ollowing report provides an assessment o the situation in Myanmar and analyzes the

many reorms that are taking place in the country. It also examines relations between Myanmarand the international community and provides insights into Chinas relationship with the country.

Drated to support a review o international policy toward Burma/Myanmar undertaken by theAsia Society, this report reects the collective thoughts expressed during a roundtable meeting o

policy experts and academics rom leading institutions and universities in China. Contributors tothis report include:

Li Shaoxian, Vice President, China Institutes o Contemporary International Relations (CICIR)

ZhaiKun,Director,InstituteofSouthAsiaandSoutheastAsiaStudies,CICIR

NiXiayun,Professor,InstituteofAmericanStudies,CICIR

SongQingrun,AssistantProfessor,InstituteofSouthAsiaandSoutheastAsiaStudies,CICIR

LuoYongkun,AssistantProfessor,InstituteofSouthAsiaandSoutheastAsiaStudies,CICIR

HeShengda,VicePresident,ChinaYunnanAcademyofSocialSciences

ZhuZhenming,ViceDirector,InstituteofSoutheastAsiaStudies,ChinaYunnan

Academy o Social Sciences

QuJianwen,ViceDirector,SchoolofInternationalStudies,YunnanUniversity

LiChenyang,DirectorofInstituteofSoutheastAsiaStudies,YunnanUniversity

ZhuXianghui,AssociateProfessor,InstituteofSoutheastAsiaStudies,YunnanUniversity

RenXiao,ViceDirector,SchoolofInternationalStudies,FudanUniversity

FanHongwei,AssociateProfessor,InstituteofSoutheastAsiaStudies,XiamenUniversity

Political Reform

Political reorm in Myanmar is o paramount importance. Although the atmadaw governmenthas made some reorms, such as implementing a seven-step road map to democracy and dratinga new constitution, many problems still exist, and progress is slow. Myanmar cannot move orward

without complete political reorm, economic development, and social transormation.

Myanmars political reorm accelerated in May 2008, when the government held a reerendum

on the new constitution. For the atmadaw government, political reorm is characterized byincluding military ocers in the political process, while at the same time promoting democraticreorm. Regardless o the structure o any uture political setup, the military will be at the center

o the countrys politics. Te politics o Myanmar are the politics o the military elite, and this willremain the case or the oreseeable uture. Te possibility o overthrowing the atmadaw regimeor the military leadership is quite slim.

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Tis is the case or two reasons. First and oremost, the atmadaws power is centralized and,according to the new constitution, opposition parties do not have the means to rebalance political

power in their avor at the expense o military. Although the government has experienced manyinternal conicts and struggles, it remains united and maintains rm control over power. In theyear to come, the governments rst priority will be to legitimize its regime by strictly adhering tothe seven-step democracy road map and by ollowing through with the general election in 2010.

Trough the house arrest o opposition leader Aung San Suu Kyi and the crackdown on armedethnic groups in the Kokang region, Myanmars government is paving the way or the election.

Moreover, the atmadaw government has taken steps to guard its interests and to secure itspower. Te government has accelerated the adjustment o personnel, and it is preparing or controlin the country ater the election. For example, a large number o retired military ocers are being

transerred to local administrative bodies where they can exert more inuence, thus enhancing the

militarys control over the elections. Te government has also expanded the number o civil servantsin grassroots units or commissions. Until now, ew orces or groups were capable o challenging thegovernments political arrangement.

Second, many actors continue to disrupt the political situation in Myanmar, and these actorswill inuence uture developments to some extent. Te rst concerns Aung San Suu Kyi and theNational League o Democracy (NLD), the leading opposition party in Myanmar. Te NLD issupported by Western nations and regarded as a big threat to the government. As the most powerulopposition party in Myanmar, the NLD has shown no hesitation in ghting against the atmadaw

government or the past 20 years. Recently, however, the atmadaw government and the NLDhave started to soten their attitudes toward each other and are engaging in a limited dialogue. One

government ocial has even raised the possibility o releasing Suu Kyi and allowing her to have arole in politics. Still, it is unclear how much reedom the government will actually give her.

Te second disrupting actor is the presence o national ethnic armed groupssuch as the Waand Kachinwhich will continue to pose a threat to the government and to national unity. Indeed,rising ethnic unrest is an urgent threat in Myanmar. Tird, exiled dissidents and the monks who

were suppressed during the 2007 Saron Revolution will continue to organize protests against theatmadaw government whenever they can. For example, monks both inside and outside Myanmar

conducted antigovernment activities during the rst and second anniversaries o the SaronRevolution.

Te ourth disrupting actor is that Myanmar has been one o the poorest countries in the

world or the past 20 years as a result o its backward economy and education system. Universitiesdo not unction properly, and they cannot produce students who are qualied to aid in nationaldevelopment. Te poor economy and lack o intellectual capital eed a vicious circle that impedesdevelopment in Myanmar. Finally, the United States and the European Unions various orms osanctions on the country have adversely aected the country, especially the common people. All othese challenges, however, are only aecting the political situation, and are not an existential threat

to the government.

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Since the constitutional reerendum in May 2008, there have been expected changes inMyanmars political development. Te constitution outlines a scheme or military ocers to play

a role in politics, allocating one-quarter o the seats in Parliament to the military. In the politicalstructure to come, military ocers will be endowed with great powers, through the ormationo a National Deense and Security Commission, through their power to designate key cabinetministers, and through the right o ocers to nominate candidates or president and vice president

together with the legislative bodies. Additionally, the commander in chie o the Deense Servicewill have the power to declare a state o emergency. All o this demonstrates that the uture oMyanmar politics will continue to be dominated by the military under a seemingly democraticconstitution.

Apart rom the constitution, next years general election is believed to be another milestone

or Myanmars political transormation. Te signicance o the 2010 election lies in the newly

elected government. Te Western world believes that the election will not be ree and air. Butwhile the government may be democratic only to some extent, the election will be benecial orMyanmars political modernization. Te act cannot be denied that the electionthe rst since

the ailed 1990 general electionwill readjust Myanmars political structure and lay a oundationor urther political reorms in the country. In addition, a new state regime will take shape thateatures a bicameral legislature and a multiparty political system. Tis separation o legislative,executive, and judicial powers will increase the eciency o governance. Finally, the election andthe constitution may acilitate the unity o the nation by replacing the special ethnic regions with

sel-administered divisions or sel-administered zones.Te election and constitution also will help to transorm Myanmars economy. Te greatest

barrier to economic reorm in Myanmar is the lack o ecient political institutions. For thatreason, the government cannot ensure a ree and air competitive environment or economic

development. Although Myanmar has proclaimed that its market economy has developed in thepast two decades, its internal political system has yet to meet the needs o a modern society,especially when compared with China and Vietnam, whose economic and political reorms havebeen acknowledged as successul.

Additionally, democratic reorms will help Myanmar engage urther with the international

community. Political reorm is conducive to exchanges between Myanmar and the rest o theworld. Ater the establishment o the new government, Myanmar should take steps to strengthenits cooperation with the world. Te Myanmar government has always been cautious about opening

its education sector to the outside world, but it should begin doing so or students in the country.Te government could begin reorms in education by expanding vocational education and technicaltraining programs. For example, the government could encourage students and ocials to studyaboard, and also invite oreign experts to provide training in Myanmar. Once mutual trust hastaken root, the Myanmar government could expand educational cooperation in schools and at theuniversity level by attracting private capital and oreign investment. Tese positive measures would

strengthen the cooperation between Myanmar and the outside world.

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Even i the election goes smoothly, the way in which the new political regime evolves into ademocratic system will depend on the decentralization o the atmadaw. In a diversied Myanmar,eective governance calls not only or the decentralization o the government, but also or the

sharing o administrative power at various levels.

Economic Reform

Myanmar is one o the least developed countries in the world, and its market economy has yet todevelop ully. According to the International Monetary Fund, in 2008, Myanmars gross domestic

product was approximately US$27 billion, and per capita gross domestic product was US$474.Although Myanmar brought in substantial revenues rom gas and oil exports, most o the moneywas used to strengthen the military orces and build a new capital at Naypyidawjust some othose revenues have been used to improve the welare o the common people.

Eorts should be made to speed up economic development and improve economic competitiveness

in Myanmar, and there are several ways to do this. First, a central bank that is independent rompolitics should be established to consolidate the nancial market. At present, the lack o a stable policyor macroeconomic control is an impediment to development. Decisions concerning Myanmarseconomy change inrequently, and when they do, they oten are not based on reasonable, scientic

research. Te establishment o a central bank would ensure that decisions are based on scienticallyvalid economic principles, rather than on the whims o political leaders. Moreover, Myanmarsexchange rate should be reormed through the central bank. Currently, dierent exchange rates inMyanmarthe ocial rate (1 USD to 6 kyats), a market rate (1 USD to 1,100 kyats), tari rate, andbank drat rateconne the entry o oreign capital into the country.

Second, reorming state-owned enterprises will promote economic growth. For years, Myanmarsstate-owned enterprises have produced low prots. As a result, those rms rely on governmentsubsidies to survive. Subsidies account or 75% o Myanmars total budget, creating large scaldecits. Although the government has privatized some poorly managed companies, progress has

been very slow. For small and medium-sized companies, the government should render moresupport and protection to create a air environment or competition, as well as grant more loans toguarantee enough capital enterprises.

Tird, Myanmars government should take ull advantage o capital to accelerate themarketization o the countrys agriculture sector. Agriculture orms the basis o Myanmars

economy, but much o the countrys cultivable land is abandoned. Agricultural reorm should be

undertaken quickly to secure the livelihood o the many armers in the country.Indeed, the essence o Myanmars economic reorm lies in the training o specialists.

Myanmars education system, however, does not nurture the development o intellectual capital.

For example, courses are condensed, and the government has built many campuses to scatterstudents or the purpose o preventing antigovernment activities. Tis abnormal education systemhardly improves the quality o education or students, nor does it promote the development ospecialists. Education reorm should concentrate on primary and higher education, as well as

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vocational education. Te people o Myanmar must possess the requisite skills and knowledgeto run their own economy.

Foreign RelationsMyanmar has aced Western isolation and sanctions or the past 20 years. In order to survive,the country has developed close relations with other Asian countries, as well as Russia. Recently,relations between Myanmar and the United States have improved greatly. On September 18, 2009,or example, Myanmars oreign minister, Nyan Win, was allowed to meet with Burmese embassy

staers in Washington, D.C. Nyan Win also met with a U.S.Asian business council and with U.S.Senator James Webb, who has advocated engagement with the Myanmar government. MyanmarsPrime Minister, Tein Sein, also met with Senator Webb on September 28 during the UN General

Assembly meeting.

In early November Kurt Campbell, the U.S. assistant secretary o state or East Asian andPacic aairs, led a high-ranking delegation to Myanmar and met with Tein Sein, Suu Kyi, andmembers o the NLD. On November 15, U.S. president Barack Obama met with Tein Seinduring the rst U.S.ASEAN Summit. Te meeting was the rst to take place between the twocountries head o government in 43 years. Tese initial steps in the warming o relations between

the United States and Myanmar are likely to improve the oreign environment as relations betweenthe two countries develop in the coming months.

Some countries, especially in Asia, believe that Myanmar does not pose any serious threatto the outside world because, or decades, it has adopted a policy o peaceul diplomacy and

nonalignment. However, some Western countries believe that Myanmars situation is not just

a domestic aair, but also has an impact on countries in the region and in the world morebroadly. Te West has cited the atmadaw governments long grip on power, the countrys drugproblems, human rights abuses, humanitarian crises, and severe poverty as evidence o Myanmarsinuence on international stability. Moreover, Myanmars arrest and detainment o Aung San

Suu Kyi challenge Western values o democracy and human rights, and Western countries cannottolerate such antidemocratic activity. Even the International Criminal Court has condemned thegovernments inringement on human rights, accusing its leaders o committing crimes againsthumanity.

Some neighboring countries, including the countries o the Association o Southeast AsianNations (ASEAN), have been aected by the situation in Myanmar. Tailand, or example, has

received the largest number o reugees rom Myanmar, and this issue has had an impact onbilateral relations. During the Kokang incident in August 2009, tens o thousands o people romMyanmar ed to China. Riots and disturbances in Myanmar could harm Chinas investments

and economic interests in the region. Additionally, the northern and eastern regions o Myanmarare major centers o drug production. As the second-largest drug-producing country in the world,drugs rom these areas in Myanmar are smuggled throughout Asian, especially to China andTailand, and beyond.

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Despite these concerns, the international community has cooperated in helping to resolvethe problems in Myanmar. Bilateral and multilateral cooperation has turned out to be a useul

platorm, and it should be enhanced. Te coordinating group that was ormed to handle the

Cyclone Nargis disaster in 2008consisting o the Myanmar government, ASEAN, and theUnited Nationsis a useul example o international cooperation. Te international communityshould also help Myanmar maintain stability and development by acilitating negotiation betweenMyanmars opposition parties and the current government.

Additionally, international nancial aid could eectively push Myanmars developmentorward. Te rst priority, however, should be to establish mutual trust. Myanmar is a sensitivecountry, oten takin

Documents

report- “Current Realities and Future Possibilities in Burma/Myanmar: