Published daily by the Lowy Institute

The three issues impeding Myanmar’s transition

Three ongoing troubles threaten to erode the prospects of progress in Myanmar.

Photo: Flickr/Undeklinable
Photo: Flickr/Undeklinable
Published 28 Jul 2017   Follow @elliotbrennan

More than a year since Aung San Suu Kyi’s National League for Democracy came to power after a landslide election and six years since the transition began, Myanmar has come a long way on the road to reform.

There are many successes. The health system has significantly improved – basic essential packages of health services have been rolled out as has greater access to health care. Access to other services has also improved across the country. 

Improvements in mobile penetration, providing new opportunities to many, such as through this DFAT-funded initiative, have been phenomenal. In the past year alone the number of internet users in Myanmar increased by 10 million. In 2010 a negligible proportion of the population was online, compared with 89% of the population today. 

Other reforms wait in the wings. The NLD’s attempt to reform the civil service (a vast, outdated, military-era apparatus) is a clear sign of the intent of the government.

Over the longer term, institutional improvement, as argued here, must be the country’s yardstick. By and large this has improved under the current government, as it did under the previous Thein Sein government. Yet these improvements are now being overshadowed by a triad of trouble that is eroding prospects of further progress.

As the illicit economy grows, the licit economy stumbles

The soaring expectations of the Myanmar economic miracle have now been deflated. While there is still huge potential for growth, the government hasn’t been able to make the necessary enabling reforms such as market liberalisation and open financing for the rural economy. As a result, under both governments GDP growth has steadily declined from 8.4% in 2013 to 6.4% in 2016. Meanwhile the illicit economy (for example, in jade and narcotics) is booming. 

Heroin and ya ba (methamphetamine) are widespread. It has fuelled conflict by providing money for several ethnic armed groups (EAGs) to continue their fight against the government, while also strengthening militia groups. The proceeds of drugs are also supporting growing criminality on the Bangladesh-Myanmar border, where vulnerable displaced Rohingya search for new meaning, many of them young, jobless men. 

The jade trade continues to be a disturbing illustration of the continuing lack of sufficient legislation or law enforcement to protect the country’s natural resources. It continues despite a 2015 report which exposed the US$31 billion dollar ‘heist’ of jade, the vast majority of which has been illegally exported to China.

The illicit economy boom continues to erode the rule of law, discourage foreign direct investment and hamper efforts in the peace process.

An unfinished and divided peace process

In May, there was a symbolic step forward in Myanmar’s peace process when ceasefire signatories and an alliance of northeast-based non-signatory EAGs attended the opening address of the peace conference. This was significant as in April, the United Wa State Party (UWSP) and seven ethnic armed groups (most located along the border with China) issued a statement rejecting the nationwide ceasefire agreement. It followed heavy and sustained clashes with the Tatmadaw by some of these groups.

This Northern Alliance has rejected the current peace process. It wants the process to start again, from scratch, with China as peace negotiator. This would be disastrous – for all its teething problems, EAGs are better off inside the current process than outside it. If the process were to collapse, bilateral ceasefire agreements would likely take the place of the National Ceasefire Agreement. This would be a poor and less durable outcome for all that would likely cement a divide-and-rule military campaign and beggar-thy-neighbour approach to negotiations among EAGs. In effect, history would repeat

What the UWSP-led alliance represents is China stamping its mark on Myanmar’s peace process. Beijing went so far as to shuttle the alliance on a Chinese plane to Naypyidaw for the opening address (though the groups did not participate in serious discussion, and left the conference early).

In the meantime, other partners (the EU, Australia, and the US) are increasingly finding themselves at odds with the Suu Kyi government’s unwillingness to allow UN investigators into troubled Rakhine state. This plays to Beijing’s favour and is doing little to improve the situation in Rakhine state. As Thaung Tun, the new National Security Adviser, noted in June, ‘Myanmar has always had cooperation with China, and we are now working closely together’. That would appear to be more through necessity than preference.

The Rohingya

As I wrote on The Interpreter last month, the failure of the Duterte government to enable moderates in the southern Philippines was a catalyst for the rise of Islamic State-backed fighters in Marawi. As argued here and here, Myanmar is quickly falling into the same trap. Naypyidaw has failed to enable moderates in Rakhine state and an emergent yet hitherto weak Muslim insurgency has emerged. The situation must urgently be addressed.

In recent years, popular media and the UN have both made hard work of negotiations with government on the Rohingya issue. What most commentators choose to ignore is that the NLD government has limited control in Rakhine state. Instead, Rakhine is largely the domain of the military and the ministries under their control. The present situation exposes the depth of the difficulties in the power sharing agreement between the NLD and the military. Regardless, as has been well argued, the NLD must take leadership in resolving the situation. While not faultless, the NLD can still play the role of a more neutral actor – as has been seen in recent negotiations with the UWSP-led alliance. 

Some hope for a reset of potential discussions may now be on the cards. The UN’s ham-fisted handling of the crisis in Rakhine state created a divided and dysfunctional response, as admitted in a leaked UN memo. For years it pitted the UN humanitarian and development agencies against each other, only serving to deepen divisions in Rakhine communities. Dialogue to resolve the situation became impossible, while also weakening the important development and humanitarian work done by the UN agencies themselves across the country.

The announced shake up of the Myanmar country team is a welcome change that may serve to be a circuit breaker in how the UN engages with Myanmar. That could lead to better engagements with the government, a smarter on-the-ground response to the crisis and in the long term a lasting resolution in Rakhine state (call me an optimist).

For now, though, religious tensions remain high. According to the Yangon-based Center for Diversity and National Harmony, in the first six months of the year there were over 500 incidents of intercommunal violence. The majority of these incidents occurred in Rakhine state, but Yangon and Mandalay regions have also seen their share.

Ultimately, Myanmar’s transition is still embryonic. But institutions are improving and important reforms are, albeit, slowly being implemented. But all of that will be for nought if the government can’t address this triad of trouble eroding the achievements already made.

You may also be interested in