Roads to riches
15 November 2017
With natural resources at the country’s hilly edges and infrastructure spreading from the central plains, Myanmar eyes a federal bargain.
(This article is part of our special package on Myanmar. Read more articles here.)
Myanmar’s leader, State Counsellor Aung San Suu Kyi, has extended an invitation to ethnic armed groups for a “21st Century Panglong Conference”. The proposal evokes her father Aung San’s 1947 Panglong Conference, in which separate ethnic armed groups agreed to form the Union of Burma. Many ethnic minority leaders see the 1947 event as a precedent for a federal governance mechanism. As the country considers a ‘new bargain’, the focus is on two interlinked debates: whether and how to split benefits from resource extraction, and who would control the reach of new infrastructure development and service delivery.
The map of Myanmar looks like a diamond-shaped kite – with the northern point formed by the Kachin State in the eastern-most Himalaya, and Tanintharyi Region, next to Thailand in the south-east, making up the tail. The two bars of the kite are nascent “development corridors.” The east-west trade route is part of a planned land-and-sea Bangladesh-China-India-Myanmar economic corridor, while the north-south line connects Myanmar’s two largest cities, Mandalay and Yangon. On that north-south route, the country’s only high-speed expressway is expanding, with the electric grid and the best telecoms coverage spreading along with it.
As Myanmar expands its infrastructure and strengthens its links with neighbouring countries, several facts should be taken into account. First, resources such as gold, jade, coal, timber, and hydropower are concentrated mainly in the mountainous states of the ethnic Shan, Kachin and Karen, while oil and gas extraction off Rakhine State’s shores is paying for a large portion of the Myanmar government’s bills. Second, for the most part, infrastructure and accompanying growth are headed for the country’s central regions, which are populated by the ethnic Burman and Buddhist majority. But when these routes do extend into ethnic borderlands, they inevitably change the political landscape as well as the physical one.
In its five decades of rule, the military junta-run state was never really interested in delivering services. Surveillance information and rents from extractive resources fed the centre, and, like a black hole, little came out. Local social services in government areas were run via the military-controlled General Administration Department (GAD), which remains in charge of local governance. Some ethnic armed groups made a point of setting up systems of health services or local-language schools. These provided the means of establishing legitimacy for the largely unelected leadership of the armed groups, and perhaps a mandate for their collection of taxes and resource rents.
As Myanmar’s central government seeks buy-in from groups that have not agreed to a ceasefire and as it aims to move forward in negotiations with those that have, ethnic armed groups and political parties are demanding greater control over the revenues coming from their states and over the services delivered there. All parties use the term ‘federal’ to describe Myanmar’s future system, though they do not agree on what such a federal system would entail. For instance, while the governing National League for Democracy (NLD) supports reform for “a federal democratic union,” the former ruling party Union Solidarity and Development Party (USDP) has stated that the current 2008 Constitution already embodies “federal principles”. While ethnic armed groups want a “federal army” the national armed forces (Tatmadaw) unsurprisingly does not.
Ethnic parties and armed groups posit a federal system as the most just way to win support and representation for some of Myanmar’s ethnic people long left out of power. Others argue that such a compromise is essentially no more than a bribe – or, citing examples from Indonesia and elsewhere, that federal decentralisation can result in an expensive and inefficient form of government.
The NLD government will need to decide how to address this big picture. Whether it can or even wants to assemble a different bargain, moving away from the policies of the previous regime under Thein Sein; one built around resource extraction from the periphery and “development corridors” reaching outwards from the plains along with state power.
Does it matter if ‘development’ arrives first in the heavily-populated, majority Burman and Buddhist regions of the country, and not the ethnic minority-dominated states on the geographical periphery?
In a country where bridges collapse every flood season and power cuts to hospitals mean doctors in major cities sometimes perform surgery in the dark, urgent infrastructure improvements are needed across the country. These welfare improvements would be the fruits of reform in Myanmar, and can do a great deal of good. But the continuation of the cross-shaped ‘development corridors’ plan, initiated by the Thein Sein government, could reinforce the existing geographic distribution of wealth and power in Myanmar. If growth follows the expressway, as it is expected to, the dynamic effects will be significant. Myanmar hasn’t experienced the mass urbanisation and internal migration that its neighbours Thailand, India and China have. Both those touting and those resisting the march of development, may not be prepared for its full effects.
During World War II, US troops, most of them black, built the Stilwell (or Ledo) Road from India to China over Burma’s northern mountains as an alternative to the Burma Road, which had come under Japanese control. That route has fallen into disrepair, and its remote and circuitous path makes little sense as a transit route in peacetime. Today, the only expressway in Myanmar is the north-south road from Yangon via Naypyidaw to Mandalay, sometimes called the ‘Death Highway’ for the number of accidents on it. Despite the bad press, the road is already reducing transit costs to bring produce to market, and new villages are growing along the highway route, their residents walking or herding livestock in the side-lanes of the expressway. It is roads like these that are helping to drive the structural transformation of Myanmar’s primarily rural, agrarian economy.
These are the gains the Japan International Cooperation Agency and the Asian Development Bank (ADB), which lead donor work on electrification and transit, choose to highlight. Yet it’s impossible not to notice that the capillary-like expansions of the roads and electric grid are almost precisely an inverse of maps showing areas populated by Myanmar’s ethnic minorities, a fact people in those regions are painfully aware of.
In most cases, being off the central grid means little access power – in more sense than one. According to ADB data from 2014, electrification rates range from 67 percent in Yangon to as little as 16 percent in rural areas, where around 40 million people, most of Myanmar’s population, live. However, these statistics don’t tell the whole story, of power supply in Myanmar. In Kachin State, Bu Kha Power Co, a hydroelectric power company owned by the Kachin Independence Organisation, supplies the state capital Myitkyina. Even the electricity to the state parliamentary buildings is linked up to the opposition’s power supply.
These off-grid borderlands are the archetype for The Art of Not Being Governed, anthropologist James C Scott’s study of upland peoples in Southeast Asia whose “livelihoods, social organization, ideologies, and even… cultures can be read as strategic positionings designed to keep the state at arm’s length.” Though scholars debate whether that reading goes too far in ascribing resistance to every act, there is no doubt the “arm’s length” distance from the state is now becoming shorter.
The ADB itself is well aware of these tensions, with its 2013 report on Myanmar’s ‘New Energy Architecture’ noting: “Bringing peace to the ethnic regions and managing social tensions… will be a formidable challenge to expanding energy access. This is especially true… since the site of many resources – hydropower dams, coal reserves and pipeline developments – lie close to or on the route to ethnic borderlands.”
“Close to or on the route to” is an understatement; many resources are inside ‘ethnic borderlands,’ including areas that armed groups emphasise have never been under Burmese central control. Those groups therefore argue that any peace agreement ought to permit a share of resource revenue to stay in the source state, on grounds of heritage and ownership. A federal union allowing states to retain some of that revenue, or revenue from border trade and other forms of taxation, would give them a self-reliant source budget to spend on services at the state level. None of this is possible, however, unless the country’s current Constitution, promulgated by the military government in 2008, is changed.
Who pays and who delivers?
In anticipation of ceasefires and a further peace process, ‘convergence’ is the word of the day. That means merging, or at least acknowledging and planning around, existing forms of rebel governance including separate electric grids, and the accompanying networks of health and education services provided, to varying degrees, by ethnic armed groups. The extension of central services also means that leaders of armed opposition groups will have to take a stance on the costs and benefits of binding themselves more closely with the Myanmar state – whether with the ink of a new Panglong Agreement or the asphalt of a new road.
An early test is in the southeast; where the ‘Greater Mekong Subregion East-West Economic Corridor’ meets the territory where Karen armed groups, including the Karen National Union (KNU) and the Democratic Karen Benevolent Army (DKBA) operate. Investors’ hopes are high, with a March 2016 article in Nikkei Asian Review promising “Roads can convert Myanmar from economic void to hub.” Now, the road from the Thai border town of Myawaddy to the port of Mawlamyine cuts travel time between Bangkok and Yangon to three days, “compared with the two to three weeks needed for conventional marine transportation via the Straits of Malacca.” However, such plans divided the Karen armed groups and Karen civil society, and were furiously opposed by environmental groups. DKBA soldiers maintain checkpoints on the road, but generally let traffic pass.
The central government has also expanded the presence of government schools and teachers in Karen State, often alongside existing Karen-language schools supported by the KNU and its affiliates. According to a recent paper by Kim Jolliffe, the government schools therefore often inspire suspicion, with a Karen teacher saying: “Everyone wants to lead their own development. People… are scared of outside development coming too fast. Now that we have a ceasefire we can do this ourselves; that’s what we want to be allowed to do.”
In contrast, on Myanmar’s western border with Northeast India, talk of cross-border links is outstripping actual road construction. The Indian government “hopes the international road will spur delayed economic development in its seven Northeastern states.” There are already other links across the western border; it is not uncommon for ethnic Chin, a group who live on both sides of the border, to cross back and forth. The Indian government is more concerned about Naga militants in the region. Though Indian policymakers talk up mutually beneficial links of a new road, there are clear parallels to road construction projects driven by counter-insurgency in Jharkand and elsewhere, which have become flashpoints for conflict.
On the Myanmar side of the border, though, Chin State leaders are pushing hard for greater connection to the rest of the country. Chin is Myanmar’s poorest state, without the mineral wealth of other ethnic minority states, and is the only state without an airport or a university. Chin officials have now attempted to raise funds and begin construction of an airport, with or without central approval.
Across the country’s myriad ethnic armed groups, these competing pressures to draw closer to the Centre or step back are difficult to balance. There is a risk that negotiators at the promised new Panglong Conference will short change the process: bartering away resources in the ground that may be depleted in a matter of generations, instead of focusing on a stable national system that can stand up to shocks. If ethnic minorities could trust that they would be represented fairly in a national parliament, a decentralised state would be less appealing. On the other hand, some civil-society activists and ethnic parties argue that there is little choice but to push for the greatest degree of local control; given the central government’s track record of corruption, they ask, “how can we believe” that resource revenues will be managed well?
There is some recognition of this history, even within the former regime’s USDP. In 2014, U Thein Lwin, then-chairman of the parliament’s Natural Resources and Environmental Conservation Committee, said “the offshore rig is very brightly lit, but [the Rakhine towns] on shore are in the dark – and so they want resource sharing.” The NLD MPs who replaced him on the committee have called for “fair distribution” of natural resource revenues across a Federal Union.
There are some early signs that the NLD will focus on geographic redistribution. In May 2016, the NLD government announced tax breaks for foreign investors in the “less-developed” Chin, Kayah and Rakhine states in Myanmar. A newly-announced donor coordination mechanism aims to get foreign aid to where it’s needed most. The union allocation to states and regions, as a percentage of the national budget, has also risen from 3.1 percent in fiscal year 2013-14 to 8.7 percent in 2015-16. An amendment to the mining law, passed in the waning days of the last government, transfers some control of small-scale mining to the sub-national level, though it does not address what happens to the mining revenue. These steps are relatively small measures – and despite donors’ emphasis on economic development as a peace dividend, many ethnic armed group leaders view stepped up central provision of social services with trepidation, as an arm of state power that could threaten their own control in their region.
Many hard bargains
A federal bargain with ethnic armed groups may be in the foreground, but a fundamental background bargain with the Tatmadaw would be a precondition to any constitutional reform. The military retains a right to direct rule, enshrined in the constitution they themselves wrote. Twenty-five percent of seats in parliament remain reserved for the military, while amending the constitution requires more than a three-quarters majority. They also control three key ministries within the cabinet: Home Affairs, Defence, and Border Affairs. Members of the military and the former government continue to be key players in the Myanmar businesses. In fact, these business opportunities have allowed many close to the former regime to transition smoothly out of the politics.
Along with greater interconnectedness among different ethnic stakeholders, and bargaining with the Tatmadaw, there is also the pressure to stamp out corruption and bring dark deals to the light of day. Myanmar became a candidate for the Extractive Industries Transparency Initiative, an international mechanism for disclosing natural resource revenues, in 2014. At a grassroots level, environmental movements and farmers’ unions were some of the first political groups to form in Myanmar, and they remain very active. There is much talk of anti-corruption, with the NLD calling clean governance the “life blood” of the party. Perhaps a formal agreement to tax and share the revenues could at least partially replace the informal free-for-alls that have been the norm in Myanmar to date. At the same time, there’s a risk that a crackdown on illicit revenue streams, tied to the Tatmadaw and ethnic armed groups, could break down the unspoken bargains that may be holding the country together.
The decisions Myanmar makes now – where the road goes, who builds it, and who gets dispossessed – will directly shape the country’s future, whether federal or not. People will move, live, and vote in the patterns that are being set now.
In 1996, Suu Kyi wrote in the Mainichi Shimbun newspaper: “To observe businessmen who come to Burma with the intention of enriching themselves is somewhat like watching passers-by in an orchard brutally stripping off blossoms to appreciate their fragile beauty, blind to the ugliness of the despoiled branches, oblivious to the fact that by their action they are imperilling future fruitfulness and committing an injustice against the rightful owners of the trees.”
Now that Suu Kyi is in charge of that orchard, what will she do? The task is a difficult one.
~ Mari Michener Oye is a Yangon-based researcher. Her academic interests include conflict, collective action, and migration.
~This article is part of our special package on Myanmar. Read more articles here.
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