Power Sharing Must Precede Lifting of Sanctions

By YENI

Calls by Burma’s opposition National League for Democracy and its leader Aung San Suu Kyi for continued sanctions have met with increasing criticism recently, with charges that they are systematically weakening the country's economy.

It is theoretically true that limitations on trade, investment and foreign aid have led to macroeconomic instability and even deterioration. But the question remains: could Burma's economy boom if Western sanctions were lifted?

Burma observers, including critics from the anti-sanctions camp, would surely reply in the negative. They must agree that the suffering of the Burmese people has been almost exclusively caused by decades of economic mismanagement and lack of vision.

Policy decisions are determined according to the whims of junta leader Snr-Gen Than Shwe and his number 2, Vice Snr-Gen Maung Aye, who has assumed a prominent role in economic matters. Economic decisions are often based on strategic, military factors, and the state bureaucracy have to enact them whether they like it or not.

While monopolizing the country's economy, the ruling generals have rewarded personal friends and family members with preferential treatment. Certain companies close to the junta's top leaders have been given special import permits and preferential lending.

Special favors include preferential tariff rates and customs duties; preferred access to natural resources; monopoly privileges in certain lucrative areas of commerce and industry; special considerations in the issuance of licenses and permits; subsidized prices for land, buildings, petrol and diesel, gas, electricity and water; preferential exchange rates; and preferential treatment on government contracts.

The country’s military—the tatmadaw—is involved in many commercial activities via the Union of Myanmar Economic Holdings Ltd (UMEHL) and the Myanmar Economic Corporation (MEC). Foreign firms seeking to set up joint ventures have reported that affiliation with UMEHL or MEC proves useful in helping them receive the proper business permits.

"Nonetheless, entering into business with UMEHL or MEC does not guarantee success for foreign partners,” said a US State Department report. “Some investors report that their Burmese military partners are parasitic, make unreasonable demands, provide no cost-sharing, and sometimes muscle out the foreign investor after an investment becomes profitable."

Many investors have already withdrawn from Burma because of a hostile investment climate and disappointing returns.

Meanwhile, the tatmadaw and their cronies, in seeking to avoid Western sanctions, have turned to involvement in the informal economy, including private banking networks, smuggling, barter trade, unrecorded agriculture production, corruption, and illicit activities, such as narcotics production.

If Burma’s military rulers had any vision and the will to develop the country’s economy, they could follow the lead of Vietnam and China, which have instituted economic and political reforms and begun a path towards international reintegration.

At the same time, in response to a junta statement that “confrontation, utter devastation, economic sanctions and total isolation do not benefit the country or the people,” Suu Kyi informed the authorities through official mediator Aung Kyi that she "was ready to cooperate and issue a joint communiqué to prevent these problems [misunderstandings] from happening.”

Sanctions should indeed be lifted, but the Burmese regime must first agree to share power with the democratic leaders.

So far, there is no sign that the Burmese regime wants to change its current policy by releasing Suu Kyi and other political prisoners and starting dialogue with the opposition.
Without tangible political improvements, Burma cannot hope to reduce the pressure exerted by the international community.