On August 15th the Burmese government raised the price of fuel 500%. This sparked a series of peaceful demonstrations all over the country, beginning with demonstrations in Rangoon, now called Yangon, the former capital of the country. They have since spread to Pakokku and Mandalay in Northern Burma. In Pakokku, Budhhist monks took some army officers hostage for a few hours, and in Mandalay, where traditionally monks have been highly politicized and aware, it is reported that the army has units surrounding the city in readiness for an inevitable clampdown.
Dr. Alfred Oehlers, now a security analyst based in Hawaii, points out that Burma is a diesel-dependent country that lacks refining capacity. He says that fuel is heavily subsidized, and the government has probably signed away natural gas and raw petroleum exports in barter agreements for refined fuel that don't bring in cash. It has to import fuel at high spot prices, Oehlers says.
So it is in a bind -- finding new gas reserves, some reportedly huge, but still unable to import fuel from earnings from the energy sector. The fuel price hike will put the Burmese people under even greater strain. They have spent decades adjusting to whatever policies the junta decrees off the top of its head. When things come to the unbearable crisis level people have taken to the streets, most notably in 1988, and as they already have this time. In response to this exorbitant price hike, smugglers immediately attempted to smuggle in diesel from Malaysia, but the Malaysian authorities intercepted a reported $147,000 worth of diesel oil, hidden in a Burmese ship.
In 1988, the general consensus among Burmese citizens and Burma watchers alike was that the military government came within a hair's breadth of losing power. But it managed to regain its control by the use of massive force and by an increasingly ratcheted up control, which remains in force to this day.
The difference between 1988 and now is that now, due to the internet and citizen journalism, it is much more difficult for the junta to hide its human rights abuses. The outside world is much more aware of the Burmese situation, the National League for Democracy is still an important force for change in Burma, exile groups are much more galvanized, and the gap between the power holders and everyone else is much wider than it ever was before.
News reports generally ignore or gloss over structurally-ingrained problems in the Burmese political economy. The truth of the matter is that Burma has been a command economy and a military dictatorship since General Ne Win's coup in 1962. In 1974 it had its first sham constitution. The economy is still largely state-controlled, despite a much touted "opening up" after the government clamped down on the mass pro-democracy demonstrations of 1988.
To placate the population, the junta privatized somewhat, without giving up its major monopolies.
The main effect of this so-called opening up was to raise the stakes higher in governmental and military corruption. What can be called pariah capitalists or oligarchs have appeared in the Burmese economy, such as the businessman Tay Za, whom Oehlers suggests might be one the chief beneficiaries of the privatization of the fuel sector. A few years ago there was a run on the banks, which were mainly money laundering facilities for the drug lords, or Ponzi schemes in which many honest people lost their life savings.
The pervasiveness of official corruption -- as we say in Burmese, the house leaks starting from the roof -- became apparent in late 2004, when Lt. Col. Khin Nyunt was deposed and placed under house arrest, allegedly for deals with the Wa drug cartels in Northern Burma. This is not to say that those who won in the internal power struggle or purge are not corrupt. They may be more so, since they are still in power.
On May 30th 2003, Aung San Suu Kyi's entourage was attacked by government-sponsored thugs near Depayin and she has been under house arrest since, following the previous periods of house arrest which, cumulatively, amounts to thirteen years of official captivity. Khin Nyunt was supposed to be "the moderate" according to some pundits, but since he himself is under arrest too, there is no real likelihood that the on-going stalemate will be resolved through dialogue.
It's very sad that the brave amazing people of Burma have to take their lives in their hands to go out on the streets to protest peacefully. Among the arrested now are the famous 1988 leader, Min Ko Naing (Conquerer of Kings). Other notable leaders who are in hiding include Su Su Nway, who has reportedly run out of medication for the heart ailment from which she suffers, and a husband and wife team who had been free only for one year before they re-started their activism. Their infant daughter is now being looked after by her grandmother.
For the last 14 years the junta has been dotting the i's and crossing the t's on a document it calls a constitution, in a process it calls the "National Convention." Now it has ratified its statement and there are no surprises for anyone. The ugly new flag shows one big star, clearly symbolizing the military's intention to remain dominant.
A boot crushing everyone underneath it would be a more apt symbol.
Sham effort to place blame for the price hike on concerned citizens
In a disturbing new development, a report supposedly written by an advisory group of Rangoon-based economists and scientists recommended the price hike to cover higher budget expenditures by the military government. It was leaked to exile groups and the Burmese media outside the country. However, Dr. Maung Myint, a prominent Burmese economist and a member of the group, denied the authenticity of the report in a letter to The Irrawaddy, a Thailand based dissident magazine.
I believe the report was a fake and an attempt to make scapegoats of the academics. It betrayed a poor and mechanistic "understanding" of "bringing prices in line with the world market." It did some rudimentary arithmetic and said the budget deficit, caused by the government's raising salaries of civil servants, could be covered by raising fuel prices. It did not go into the inflationary affects of this increase in money supply at all. The Burmese government has been continuously printing money to cover its expenditures since 1962.
It was a sort of watered down version of the IMF/World Bank 4 step program of privatization, market based pricing, free trade and capital market liberalization that has been criticized by Nobel Laureate Joseph Stiglitz, formerly chief economist at the World Bank. Allowing prices to float to market levels as per IMF/World Bank recommendations also caused demonstrations in Indonesia in 1998.
Prospects for outside pressure on the regime
A recent Washington Post editorial criticized Secretary General Ban Ki- moon and the U.N. for lack of action; U.N. Special Envoy Mr. Gambari wrote a rather unconvincing reply. At the White House, Mrs. Laura Bush condemned the Burmese junta for its latest abuses. At the APEC Summit in Sydney, President Bush urged leaders of other nations to join him in pressuring China and India to press the Burmese junta for political and economic reform.
The Chinese foreign ministry spokesman said China did not interfere in the affairs of other nations. The Indian representative did not comment.
On the whole, the current Bush administration, including Secretary of State Condoleeza Rice, has paid scant attention to Asia. But now it is clear that the United States and China are linked together inextricably by enormously large trade ties. China's huge trade surplus is invested in U.S. treasury bills, and it could crash the U.S. government if it were to withdraw its investment. Moreover, its balance of payments surplus in its trade account is growing daily.
The United States is a consumer economy, and the U.S. consumer drives China's exports to the USA. There is concern in Asia that the downturn in the U.S. economy will affect Asia. Since 1988, overland trade between Burma and China has been booming. Not all of it appears in the official trade figures. Burma is a virtual economic colony of China, and also of Thailand. Overland trade with India is also substantial. A major highway connecting Burma with India is under construction. At the same time, India has toned down its rhetoric with regard to Burma and is on friendlier terms with China.
It could not be a better time for all these countries to step up the pressure on the Burmese junta. .
They could take their lead from the Canadian Friends of Burma, which last month sponsored a conference in Ottawa on how to exert influence on China. Several groups have started to demonstrate in front of Chinese embassies.
The Burmese case is a no-brainer. If things are to change meaningfully, these and other forms of pressure will need to mount.
Kyi May Kaung is a University of Pennsylvania-trained Burma specialist who taught at the Institute for Economics in Rangoon for 20 years. She is an analyst for Foreign Policy In Focus.
