Global Independent Analytics
Eric Draitser
Eric Draitser

Location: USA

Myanmar: Strategic Crossroads in Asia

This month’s elections in Myanmar have been hailed by many as an historic achievement for a country ruled by a military junta for decades.

The Western media has lauded the results which have handed a resounding victory to the National League for Democracy, the party headed by longtime dissident and Nobel Prize winner Aung San Suu Kyi. 

However, despite the triumphant cheers of ‘democracy’ and ‘freedom’ from the media, echoing the message from the halls of power in the West, there are issues of much greater significance than slogans and abstractions; geopolitics and strategic alignment are the real interests of Washington, London, and Brussels.  But of course, the Western powers are not the only interested parties in Myanmar; India and China each have major investments and future plans for the country.  In this way, rather than simply a country “transitioning to democracy,” Myanmar should be understood as a strategic focal point of Asia. 

Myanmar as Chinese Economic Hub

It is investment, and the political and geopolitical influence that comes with it, that is the overriding interest of China, India, and the West in Myanmar.  With the shifting strategic landscape in Asia, Myanmar’s political evolution has taken on an added significance wherein the once isolated Southeast Asian nation is today quickly becoming a major continental hub. 

For China, Myanmar represents access to the Indian Ocean basin, as well as a major infrastructure transit point for energy imports (among others) flowing to China’s Southwest.  In January 2015, a new Chinese oil pipeline through Myanmar was opened, and with it China’s influence in the country, as well as Myanmar’s significance to China, grew immeasurably.  Not only does the pipeline physically connect China’s southwestern Yunnan province to the Bay of Bengal, and consequently to the Indian Ocean, but it highlights the interconnected nature of China’s investment in both pipelines and ports.  For the pipeline is not operable without the Chinese-constructed deep water port on Maday Island which, along with the nearby Chinese-funded port of Kyaukphyu, is envisioned by the government of Myanmar as a future trade hub for the region.

It is critical to note that, along with the oil pipeline beginning at Maday Island, there is a gas line from Kyaukphyu that is also bringing energy to Kunming, capital of China’s Yunnan province.  The dual oil-gas nature of these pipelines indicates that Beijing views this energy infrastructure as the principal artery for energy imports into the underdeveloped southwest of China – it is Yunnan’s economic development as a gateway to Southeast Asia that is of central importance to Chinese economic and strategic planners.  Additionally, there are plans for a Chinese-funded railway corridor to closely parallel the new pipelines, thereby expanding the potential of Myanmar as a gateway for China’s imports.

From the Chinese perspective, such development is essential for guaranteeing China’s continued economic growth, as well as it expanding influence in the region.  Economic power projection in Southeast Asia is a cornerstone of China’s strategy for creating a sphere of influence, even if it is predominantly economic influence.  But there are obstacles specific to Myanmar that Beijing must reckon with if the country is to be a linchpin of this strategy.

First and foremost are the ongoing ethnic conflicts in remote regions of Myanmar, especially in the Kachin and Shan states, both of which border China’s Yunnan province.  While there was a tentative ceasefire agreement drafted by Myanmar’s government and a number of rebel groups earlier this year, it was only signed just weeks ago, ahead of the elections.  Historic though the inking of the agreement was, it was perhaps most notable for the groups absent from it, namely the Kachin Independence Army, Shan State Army, and the United Wa State Army: three of the most powerful and influential of the armed groups.  The lack of peace is critical to China as the pipelines run right through Kachin State and could very easily be threatened by sabotage or continued fighting in the region.  Moreover, the conflicts present instability on China’s southwestern border, increasing the risk to any further economic development.

Secondly, China faces internal pressures inside Myanmar for a host of reasons.  As evidenced by the currently scrapped Myitsone Dam project , a massive hydroelectric dam which would have generated 100 billion KW/h per year, protests from affected citizens in the country can have a major impact on the Chinese projects.  Because Myitsone raised some significant social and environmental concerns, the project has not been allowed to go forward.  The danger for Beijing is that this fate could await future Chinese projects should the new NLD government in Myanmar become more hostile to Beijing.  There are indications that that indeed may be the case.

Myanmar’s Place in a Counter-China Agenda

As China has greatly expanded its influence in Myanmar, so too have India and other Asian nations made the country a focal point of their economic strategies.  Despite being nominal partners in the context of the BRICS (Brazil-Russia-India-China-South Africa) grouping, the rivalry and mutual distrust between India and China still looms over the region.  And although India will likely be joining the China- and Russia-led Shanghai Cooperation Organization, New Delhi and Beijing are still far from true allies.  Nowhere is the competition between the two more apparent than in the investment sphere in Myanmar.

While China has developed its ports at Kyaukphyu and Manday Island, India has been diligently working to develop the port at Sittwe, which is expected to be completed late 2015-early 2016. While the port is significant in and of itself, its true importance lies in the fact that it is a key node of the grand-scale Indian infrastructure project known as the Kaladan Multi-Modal Transport Transit Project (KMMTTP), a far reaching and highly ambitious project undertaken by New Delhi to both improve shipping to India’s Seven Sisters states in the extreme northeast of the country, and to entrench India as a key economic and political partner for Myanmar and Southeast Asia more broadly.  The KMMTTP will include a combination of highways, river ports, and the Sittwe deep-water port, thereby allowing the smooth and economical shipping of goods through the country. 

In broader geopolitical terms, Sittwe and KMMTTP represent one element of India’s so-called ‘Act East’ policy initiative which aims at increasing New Delhi’s economic and political influence through engagement and investment in Southeast Asia, and indeed the non-Western world generally.  Although PM Modi has stressed that India does not view itself as in competition with China in Myanmar, it is difficult to overlook the fact that the two Asian giants are constructing competing ports and competing infrastructure in the country.

It should be noted though that India is not the only player looking to expand its influence through investment in Myanmar’s infrastructure.  Both Thailand and Japan are major players in the development of the Dawei port, the center of the larger Dawei Special Economic Zone Development project which, in addition to the port, will include a 138 km road from Dawei in Myanmar to Kanchanaburi in Thailand, thereby allowing cargo to bypass the Malacca Straits, one of the most heavily congested commercial shipping lanes in the world as it links the Indian and Pacific Oceans. 

This author wrote in 2013 that the Dawei project was in jeopardy while still mostly on the drawing board as Japan was seen as being unsure whether to commit to the massively expensive project.  However, recent developments indicate that Japan is now firmly committed to the project, as Thailand’s official government website announced in July 2015 that “Another important milestone was the signing of MOC between Thailand, Japan, and Myanmar on Dawei Special Economic Zone Development which would be a new economic gateway linking the Indian and the Pacific Oceans.”  With a strong commitment from both Bangkok and Tokyo, Dawei is poised to become yet another significant hub of global trade located in Myanmar.

It should be added that, in addition to energy and transportation for international trade, significant investments in the hotel/tourism, telecommunications, and other sectors have added to the now impossible to ignore investment boom in Myanmar.  With Norway’s Telenor and Qatar’s Ooredoo having rolled out their telecommunications networks in the country in 2014, many multinational corporations, including those from the US, UK, and Europe have been seen rushing into Myanmar’s nearly virgin market.  This has added to the obvious competition over the country’s economic future.

Aung San Suu Kyi and the Future of Myanmar’s Economic Development

Considering the investment boom in the country, it is critical to consider how the new dispensation in Naypyitaw (Myanmar’s administrative capital) will impact economic development.  Indeed, there is a very real question as to whether Aung San Suu Kyi will be friendly or hostile to Chinese interests as her lifelong allegiances have been with the West. 

In 2013 Suu Kyi publicly admonished China and its state-owned national oil firm for what she described as a “lack of transparency” while lauding western oil giants Chevron and Total for their “responsible investment practices.” Such obvious favoritism has led many to suspect that Suu Kyi, long seen as a darling of the West, would turn Myanmar westward were she and her party to gain power.  Now that they have, there is a real potential for China to come out the loser. 

This is of course not lost on the Chinese leadership who view Suu Kyi with tremendous suspicion.  As Lin Xixing, a professor at China’s Jinan University told the New York Times, “China does not like her, and there are reasons.  Her father helped the Japanese fight the Chinese military in World War II. She has been close to the West, grew up in India and married a foreigner in Europe.”  Such a pedigree certainly casts doubt on whether a NLD government would be able or willing to forge the sort of ties with China that will be necessary for Myanmar’s economic future. 

For a country as poor and underdeveloped as Myanmar, the improvement of the economic fortunes of the country is of central importance.  And while US and Western corporations seek to make billions in profits from energy, tourism, and telecommunications, it is China and other Asian countries which have poured the tens of billions of dollars in large scale infrastructure investment.  Considering the mandate to improve the lives of the poor, Suu Kyi and the new government, which she will not lead formally but will dominate nonetheless, will certainly need to maintain warm relations with Beijing if they hope to survive. 

And this is the geopolitical tug-of-war in the country.  While the US and its allies should feel confident now that ‘their woman in Burma’ is in charge, they would do well to be cautious about their triumphalism.  Ideologically Suu Kyi may be westernized, but practical economic concerns could force her to continue to forge closer ties with China and the other regional players.  Indeed, Myanmar’s future depends on it.

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