Bring Burma's Economy In From the Cold


11 April 2012


Yangon -- U.S. Secretary of State Hillary Clinton last week eased some sanctions against Burma, allowing non-profit groups access and relaxing visa bans for some officials. But this is merely a quarter measure, when it's time for both the U.S. and the EU to fully do away with sanctions.

EU members have an opportunity to show more conviction when they review their sanctions later this month, and they should realize that the main reason for dropping sanctions isn't to reward Burmese President Thein Sein for taking steps toward reform. Rather it's in the interest of the Burmese people.

Foreign investors can help restore Burma's long-decayed infrastructure and build factories to create jobs. Free trade and access to fertilizers will enable the country to again become a leading exporter of rice and other crops. Foreign investment will also help revive an educational system once the best and now the worst in Southeast Asia.

Ending sanctions will not itself sort out Burma's current economic mess, but it can create the right constituencies for reform. Progress for the Sein government's efforts is slow, partly because of the lack of well-trained people, and partly because of entrenched bureaucratic and crony networks who may not like reform. As one foreign economist put it, "The head is moving fast, but the legs cannot keep up."

This will take time to rectify, but ending sanctions will encourage talented Burmese emigres to return to their homeland and set up companies or work for the government. It will also give some Burmese access to Western goods and Western-capital-created jobs, helping give birth to a commercial middle class, like in neighboring Thailand. As of now, sanctions are blocking the revival of the garment trade, which once employed tens of thousands of women and buoyed farmers' incomes.

And the quicker the opening to Western investment and legitimate foreign trade, the less likely that well-connected groups will grab a bigger share of the economy. Without a much bigger foreign presence, cronyism will flourish once state and military-linked enterprises are privatized. The current status quo has, by contrast, not done anything to prevent the emergence of a rich and corrupt elite. It may have even facilitated cronyism.

Burma's people know that only the absence of sanctions will allow such a revival. They admire opposition leader Aung San Suu Kyi, though she has said that sanctions are helping Burma. Their vote for her party in the recent by-elections is a vote for change on many fronts, not just for a modicum of political freedom. Until now her party has focused almost exclusively on political and constitutional issues, but it badly needs an economic agenda.

Ms. Suu Kyi may favor sanctions to keep a bargaining chip in dealings with the president. She may also be reluctant to see the Sein regime gain political kudos for the benefits the end of sanctions will rapidly bring. But she is now no longer just the heroine bravely standing her ground against the cruel military. She has decided to play within the system, however flawed it remains, and hence will be judged not only by her fight for democracy, but by her contributions to improving social and economic conditions. Removal of sanctions is crucial to the pace and quality of reform, and she must then get behind that.

Ms. Suu Kyi must know how high expectations are running in Burma right now, and how destabilizing government failure to keep up with those expectation could be. Change on the ground is inevitably much slower than the policy steps that have been taken toward freeing the economy. If sanctions continue to stall economic growth, the likely result would be a military backlash, not further democratization.

Many have argued that sanctions must remain in place until Burma reaches settlements with ethnic Karen and Kachin rebels. But is the same standard applied to Thailand and the Philippines, with their equally bloody and long-lived conflicts? Further, it seems to go unnoticed in Washington and Brussels that in the Kachin case, China is also to blame for perpetuating the conflict, as it offers these rebels sanctuary.

Burma's people may neither forgive nor forget the past, but they are also forward looking. They are now desperate to normalize, to join the wider community of nations. Those foreign countries which most fervently opposed the brutality and incompetence of Burma's military rulers now have a duty to the nation's people, as well as to their own self interests, to do all they can to help that normalization.


China's Invented History

By Philip Bowring

The conflict between the Philippines and China over the Scarborough Shoal may seem to be a minor dispute over an uninhabitable rock and the surrounding waters. But it is hugely important for future relations in the region because it showcases China's stubborn view that the histories of the non-Han peoples whose lands border two-thirds of the South China Sea are irrelevant. The only history that matters is that written by the Chinese and interpreted by Beijing.

The Philippine case for Scarborough is mostly presented as one of geography. The feature, known in Filipino as the Panatag Shoal and in Chinese as Huangyan Island, is some 130 nautical miles off the coast of Luzon, the largest island in the Philippine archipelago. It's well within the Philippines' Exclusive Economic Zone, which, as per the U.N. Law of the Sea Convention, extends 200 nautical miles off the coast. On the other hand, the shoal is roughly 350 miles from the mainland of China and 300 miles from the tip of Taiwan.

China avoids these inconvenient geographical facts and relies on historical half-truths that it applies to every feature it claims in the South China Sea. That's why it's now feuding with not just the Philippines, but other nations too. Beijing's famous U-shaped dotted line on its maps of the South China Sea defines territorial claims within the 200-mile limits of Malaysia, Vietnam, the Philippines and Brunei, and close to Indonesia's gas-rich Natuna Islands.

In the case of the Scarborough Shoal, China's Ministry of Foreign Affairs gives the historical justification that the feature is mentioned in a Chinese map from the 13th century -- when China itself was under alien Mongol rule -- resulting from the visit of a vessel from China. This "we were there first" argument is nonsense. Chinese sailors were latecomers to the South China Sea, to say nothing of onward trade to the Indian Ocean. The seafaring history of the region at least for the first millennium of the current era was dominated by the ancestors of today's Indonesians, Malaysians, Filipinos and (less directly) Vietnamese.

As China's own records reveal, when Chinese traveled from China to Sumatra and then on to Sri Lanka, they did so in Malay ships. This was not the least surprising given that during this era, Malay people from what is now Indonesia were the first colonizers of the world's third largest island, Madagascar, some 4,000 miles away. (The Madagascan language and 50% of its human gene pool are of Malay origin). They were crossing the Indian Ocean 1,000 years before the much-vaunted voyages of Chinese admiral Zheng He in the 15th century.

Malay seafaring prowess was later overtaken by south Indians and Arabs, but they remained the premier seafarers in Southeast Asia until the Europeans dominated the region. The Malay-speaking, Hindu-ized Cham seagoing empire of central Vietnam dominated South China Sea trade until it was conquered by the Vietnamese about the time the European traders began to arrive in Asia, while trade between Champa (present-day central Vietnam) and Luzon was well established long before the Chinese drew their 13th century map.

The Scarborough Shoal, which lies not only close to the Luzon coast but on the direct route from Manila Bay to the ancient Cham ports of Hoi An and Qui Nhon, had to be known to Malay sailors. The Chinese claim to have "been there first" is then like arguing that Europeans got to Australia before its aboriginal inhabitants.

Another unsteady pillar in China's claim to the Scarborough Shoal is its reliance on the Treaty of Paris of 1898. This yielded Spanish sovereignty over the Philippine archipelago to the U.S. and drew straight lines on the map which left the shoal a few miles outside the longitudinal line defined by the treaty. China now conveniently uses this accord, which these two foreign powers arrived at without any input from the Philippine people, to argue that Manila has no claim.

The irony is that the Communist Party otherwise rejects "unequal treaties" imposed by Western imperialists, such as the McMahon line dividing India and Tibet. Does this mean Vietnam can claim all the Spratly Islands, because the French claimed them all and Hanoi has arguably inherited this claim?

China also asserts that because its case for ownership dates back to 1932, subsequent Philippine claims are invalid. In other words, it uses the fact that the Philippines was under foreign rule as a basis for its own claims.

Manila wants to resolve the matter under the U.N. Law of the Sea Convention, but Beijing argues that its 1932 claim isn't bound by the Convention, which came into effect in 1994 since it preceded it. That's a handy evasion, most probably because China knows its case for ownership is weak by the Convention's yardsticks.

China is making brazen assertions that rewrite history and take no account of geography. Today's naval arguments won't come to an end until the region's largest disputant stops rewriting the past.




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