[Senate Hearing 109-942]
[From the U.S. Government Publishing Office]
S. Hrg. 109-942
U.S-BURMA RELATIONS
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON EAST ASIAN
AND PACIFIC AFFAIRS
OF THE
COMMITTEE ON FOREIGN RELATIONS
UNITED STATES SENATE
ONE HUNDRED NINTH CONGRESS
SECOND SESSION
__________
MARCH 29, 2006
__________
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COMMITTEE ON FOREIGN RELATIONS
RICHARD G. LUGAR, Indiana, Chairman
CHUCK HAGEL, Nebraska JOSEPH R. BIDEN, Jr., Delaware
LINCOLN CHAFEE, Rhode Island PAUL S. SARBANES, Maryland
GEORGE ALLEN, Virginia CHRISTOPHER J. DODD, Connecticut
NORM COLEMAN, Minnesota JOHN F. KERRY, Massachusetts
GEORGE V. VOINOVICH, Ohio RUSSELL D. FEINGOLD, Wisconsin
LAMAR ALEXANDER, Tennessee BARBARA BOXER, California
JOHN E. SUNUNU, New Hampshire BILL NELSON, Florida
LISA MURKOWSKI, Alaska BARACK OBAMA, Illinois
MEL MARTINEZ, Florida
Kenneth A. Myers, Jr., Staff Director
Antony J. Blinken, Democratic Staff Director
------
SUBCOMMITTEE ON EAST ASIAN
AND PACIFIC AFFAIRS
LISA MURKOWSKI, Alaska, Chairman
LAMAR ALEXANDER, Tennessee JOHN F. KERRY, Massachusetts
CHUCK HAGEL, Nebraska JOSEPH R. BIDEN, Jr., Delaware
LINCOLN CHAFEE, Rhode Island RUSSELL D. FEINGOLD, Wisconsin
GEORGE ALLEN, Virginia BARACK OBAMA, Illinois
(ii)
C O N T E N T S
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Page
Aung, Thin Thin, joint general secretary, Women's Rights and
Welfare Association of Burma, New Delhi, India................. 32
Prepared statement........................................... 36
Green, Dr. Michael J., senior advisor and Japan chair, Center for
Strategic and International Studies............................ 8
Prepared statement........................................... 11
John, Eric G., Deputy Assistant Secretary, Bureau of East Asian
and Pacific Affairs, Department of State....................... 44
Prepared statement........................................... 47
McConnell, Hon. Mitch, a United States Senator from Kentucky,
opening statement.............................................. 3
Prepared statement........................................... 6
Murkowski, Hon. Lisa, a United States Senator from Alaska,
opening
statement...................................................... 1
Turnell, Dr. Sean, Burma Economic Watch, Economics Department,
Macquarie University, Sydney, Australia; Visiting Fellow,
Southeast Asia Program, Cornell University..................... 16
Prepared statement........................................... 19
Additional Material Submitted for the Record
Responses of Eric G. John to written questions submitted by the
following
Senators:
Lisa Murkowski............................................... 55
Lincoln Chaffee.............................................. 56
Responses of Dr. Sean Turnell to written questions submitted by
Senator Murkowski.............................................. 56
(iii)
U.S.-BURMA RELATIONS
----------
WEDNESDAY, MARCH 29, 2006,
U.S. Senate,
Subcommittee on East Asian and Pacific Affairs,
Committee on Foreign Relations,
Washington, DC.
The subcommittee met, pursuant to notice, at 2:33 p.m. in
room SD-419, Dirksen Senate Office Building, Hon. Lisa
Murkowski (chair of the subcommittee) presiding.
Present: Senators Murkowski and McConnell.
OPENING STATEMENT OF HON. LISA MURKOWSKI,
U.S. SENATOR FROM ALASKA
Senator Murkowski. Good afternoon and welcome to the Senate
Foreign Relations Subcommittee on East Asian and Pacific
Affairs. Today, we are going to look at the situation in Burma,
what impacts U.S. sanctions have had in affecting change in the
country, and how we should move forward to further our policy
goals.
We have a different order in the testimony today than we
normally would have. Eric John, the Deputy Assistant Secretary
of State, is currently testifying on the House side this
afternoon and will not be able to join us until later. So in a
bit of a switch, we will hear from the nongovernmental panel
prior to hearing from the administration's witness.
When the subject of Burma comes up, we often think of Aung
San Suu Kyi and her National League of Democracy party. She is
the primary voice for political reform in a nation run by a
repressive military junta. Yet for all the support, the
international community has demonstrated for Suu Kyi and her
party and the pressure applied in one form or another on the
Burmese government, Suu Kyi remains under house arrest and the
National League of Democracy's election victory in 1990 remains
unhonored.
With the purging of Khin Nyunt and hundreds of his
followers from the government in 2004, the State Peace and
Development Council has limited the Burmese government's
contact with foreign officials and international sentiment. The
sudden announcement of the capital move to Pyinmana has further
limited the international contact, as embassies in Rangoon were
told to communicate with officials in Pyinmana via fax even
though there is inadequate power in the new capital to operate
fax machines or any other machines.
Since the student demonstrations in 1988, our policy toward
Burma has been to sanction and isolate, with increasing
limitations on assistance and trade. Yet the SPDC has
effectively minimized the effect of these sanctions by playing
interested investors off one another as it offers access to
Burma's considerable natural resources, and nations compete to
see who has greater influence in the region.
The SPDC continues to have access to financial assistance
and the means to continue its authoritative rule despite
Burma's ranking among the poorest of the poor. Outside
investment and assistance is moving forward in areas that are
cause for great concern. In 2001, Russia announced its intent
to build a 10-megawatt nuclear reactor, research reactor, in
central Burma. An agreement was signed in 2002, but information
on further activity has not been readily available or
transparent. Instead, reports suggest it is North Korea who is
now providing assistance to Burma's nuclear program.
A November 2003 article in the Far Eastern Economic Review
notes that North Korean technicians were seen unloading large
crates and heavy construction equipment from trains in central
Burma and aircraft from North Korea's national airline, Air
Karyo, were landing at military airfields also in central
Burma. While this information does not directly link North
Korea to a nuclear project in Burma, it is an issue that we
need to be paying attention to.
The limited contacts that western governments have with
Burma also impact other arenas. Burma's recent revelation that
the H5N1 strain of the bird flu was found within its borders is
surprising only in that it has taken so long for an official
announcement. The inability of international responders to
access Burma's bird population and provide assistance should be
a concern to all nations. As the spring migratory path of wild
birds from Asia will soon reach Alaska and move on to the rest
of the United States, our lack of knowledge of the true impact
of the bird flu in Burma makes our job in preventing its
outbreak here in the United States that much more difficult.
With the reality of the current situation in Burma and the
ineffectiveness of the current sanctions, there has been some
discussion by Burma watchers of finding another way to move
toward openness and political and economic reform in Burma, and
that is one of the topics that I would like to explore with our
witnesses today. Some have suggested the possibility of
establishing a Burma version of the Six Party Talks, bringing
India and China as Burma's prime investors and large neighbors
to the table with representatives from ASEAN, the EU, and the
United States to provide a united front.
Setting aside the pressure that it would place on Burma's
military junta, I believe that one of the benefits of such a
forum is a cohesive regional approach. This past January, I
traveled to Seoul, Tokyo, and Beijing and the overarching
message that I heard from each of the governments was that the
North Korea Six Party Talks had created an atmosphere of
cooperation and common ground among the parties at a time when
there was clearly growing tension in the region. A Six Party
Talk forum on Burma has the potential to minimize Burma's
ability to play its suitors off against each other. It would
also pressure the ASEAN nations to come up with a single policy
to be represented at the forum.
Looking at other possibilities, many are interested to
learn more about the December 2005 U.N. Security Council
meeting that the United States was able to achieve and whether
the Security Council might be an appropriate forum to address
Burma. Both scenarios are worth discussion on their merits to
determine their potential effectiveness and pitfalls.
A second issue I believe needs to be kept in mind as we are
looking to make progress in Burma is the role of Burma's ethnic
minorities. Aung San Suu Kyi tends to get the majority of media
and political attention, but even if the results of the 1988
election are recognized or new legitimate elections are held,
that does not solve the armed resistance offered by groups like
the Shan State and the Karen National Union.
Both China and India are looking to sustain their domestic
economic growth. Likewise, one third of Thailand's natural gas
supply comes from Burma. These nations are eager to avoid
turmoil on their borders. It is simply not in their interests.
So for that to happen a resolution must be reached with the
ethnic minority groups.
So, with these thoughts in mind, I look forward to hearing
from our witnesses this afternoon and gaining their insights
into the issue. I welcome to the subcommittee this afternoon
the Senator from Kentucky. Senator McConnell has been a leader
on the issue of Burma, and I am quite pleased that he is able
to join us this afternoon. With that, Senator, if you would
care to address the committee.
STATEMENT OF HON. MITCH McCONNELL,
U.S. SENATOR FROM KENTUCKY
Senator McConnell. Thank you, Madam Chairman. I thank you
also for your interest in this important subject and for having
these hearings today.
Let me say that I first became interested in this issue in
the early 1990s about the time that Aung San Suu Kyi was
awarded the Nobel Peace Prize. I remember reading an article
about her in one of the weekly magazines that we have here in
the United States and began to learn more about the situation
in Burma. Regretfully, after some 16 years it is hard to
quantify any significant progress at all, as you were referring
to the election in the late 1980s. Shortly after that, of
course, she was put under house arrest. Except for about a 1\1/
2\-year period in 2003, during which her motorcade was attacked
and she was injured and put in a real prison for a period of
time now she is back in her home detention arrangement, this is
a woman who has been largely sequestered from the Burmese
people themselves, as well as the rest of the world.
We all know during this period her husband, who was living
in England, became ill and passed away without her presence. It
is a truly tragic story.
As we all know, Burma is run by a pariah regime. If they
had nuclear weapons or the prospect of getting nuclear weapons,
we would be paying a lot of attention to this regime because it
would be in the category of North Korea and Iran in terms of
international interest and concern.
So the question arises, what can you do? In 2003 I
introduced, with lots of support on a bipartisan basis, a bill
that provided for unilateral sanctions against the regime,
knowing full well at the time that unilateral sanctions are
rarely good enough, that you have to have the cooperation of a
lot of others. You were mentioning the multilateral approach to
North Korea as a potential framework for addressing the Burma
situation. You clearly have to have broader cooperation.
The good news is the Europeans, I think, are beginning to
kind of wake up to the inappropriateness of interacting with
this regime. I was in India about a year ago and raised the
issue with them. I gather from listening to you, you raised the
issue with others in the region in your own travels. I think it
is becoming increasingly embarrassing to the neighborhood,
which is a positive step.
But beyond just being embarrassed, I think there needs to
be some motivation for serious action. I think multilateral
sanctions are the only way you can really squeeze this regime.
Unfortunately, the Thais and the Indians and the Chinese are
all basically doing business there and are not terribly
concerned, frankly, with what internal conditions are in terms
of human rights and abuses of other kinds. So that's the
situation that we confront at the moment.
With that, let me turn to my prepared text. I want to, as I
said, thank you for having this hearing. Certainly your
interest and support for the struggle for freedom in that
country has ensured that no one forgets the litany of abuses
that have been committed by this incredibly repressive and
illegitimate regime, which has all kinds of oddball names. It
is currently calling itself the State Peace and Development
Council (SPDC).
I will not recount all the horrors of General Than Shwe's
misrule. They are well documented by the State Department, the
U.N., and other organizations. I do want to highlight the
tragic fact that Burmese leader Aung San Suu Kyi and over 1,000
other prisoners of conscience are imprisoned in Burma today.
Suu Kyi and her compatriots should be immediately and
unconditionally released.
This was originally to be the year that Burma was going to
host the ASEAN meeting. At least ASEAN was too embarrassed to
go forward with that meeting, which will not occur in Rangoon
in 2006, and I think this shows that this regime is an absolute
embarrassment to the neighborhood.
The SPDC has engaged in arrests, torture, harassment, and
intimidation of the National League for Democracy (NLD), which
got 80 percent of the vote when the regime mistakenly allowed a
vote to occur. I bet they regret that because it has certainly
demonstrated where the support is.
While the situation inside Burma remains both dire and
opaque, analysts continue to ponder the SPDC's recent bizarre
relocation of the capital, moving the capital to a jungle site,
further indicating how inward-looking they are and how consumed
they are with just maintaining power.
Under President Bush's leadership, the State Department has
imposed a full court press in foreign capitals across the
globe, seeking both dialogue and action. I can tell you, Madam
Chair, that Secretary Powell always had this on his agenda when
he was at ASEAN meetings in the neighborhood, and Secretary
Rice was before my Subcommittee on Foreign Operations
yesterday, during which we also had an opportunity to discuss
this issue. She is intensely interested in it as well. I think
the United States is certainly doing its part here in leading.
What we need are a few more followers.
It is no understatement that Burma remains a priority
talking point and the President, as I indicated, brings it up
whenever he is in that part of the world, as does the Secretary
of State.
In addition to diplomacy, Secretary Rice and her team are
keenly attuned to the humanitarian needs of the Burmese people.
I was impressed with the State Department's rapid response to
the outbreak of Avian influenza inside Burma, which until
recently, represented Southeast Asia's bird flu black hole.
Secretary Rice understands, as we do, that the root cause of
Burma's myriad health, economic, and social problems is
essentially political in nature. The SPDC has done little to
invest in its own health infrastructure or to combat deadly
diseases, including HIV-AIDS, and recently issued draconian
guidelines that restrict the ability of the international NGOs
to conduct programs inside the program.
While we may all want to do more to help the people of
Burma, our efforts essentially are stymied by the junta.
Governments in the region, as I suggested earlier, are tiring
of the Burma problem. Last year, Burma actually was prevented
from becoming chairman, as I indicated, of the ASEAN
organization, in large part because of the loss of prestige
that grouping would have endured with the SPDC as its head.
Frustration with the junta is palpable in some capitals,
whether due to disbelief at the wholesale move of the capital
out into the jungle, or because last year's sacking and
sentencing of a Than Shwe rival, General Khin Nyunt. It is
becoming clear to many in Southeast Asia that Burma's problems
are becoming the region's problems, whether it is illicit drug
manufacturing and trafficking or diseases such as HIV-AIDS,
refugees, sexual violence against women, internally displaced
peoples, or even Avian flu.
So let me suggest three necessary steps to sustain support
for the struggle for freedom in Burma over the next year.
First, Congress ought to renew existing import sanctions
against the SPDC. We have done that every year since 2003 and
we will do it again. We appreciate the State Department's
strong support for renewing sanctions and I hope we can count
on our colleagues' support as we have every year.
I want to be as clear today, as I have been in the past,
that sanctions ought to remain in place until Suu Kyi and other
Burmese champions of freedom, themselves, call for the
sanctions to be lifted. We must take our cues from those who
suffer for justice. Former political prisoner Min Ko Naing, who
served 16 years in Burma's notorious prisons, recently said,
and this is a quote: ``We categorically state today that we
will never, never bow to injustice.''
Second, the President and the administration must continue
to aggressively engage foreign governments. I believe they have
been doing that and will continue to do it. Secretary Rice is
extremely passionate on this issue. All of our officials in the
administration, National Security Adviser Hadley and U.N.
Ambassador Bolton, are extremely interested in pursuing this
issue.
Finally, the United States needs to continue to push the
United Nations Security Council to again discuss and debate
myriad security threats Burma poses to that whole region. While
last year's unprecedented briefing is a good first step, an
important step includes formal discussion, debate, and passage
at the U.N. of a Burma resolution. Last year, former Czech
President Vaclav Havel and South African Archbishop Tutu
commissioned a report entitled ``Threat to Peace: A Call for
the U.N. Security Council To Act in Burma.'' This report serves
as ample justification for Security Council action.
Let me close on a somber note. The murder of former
political prisoner Thet Naing Oo by Burmese police and fire
officials earlier this month is absolutely despicable. In many
respects, this murder demonstrates the SPDC's total disregard
for the human rights and dignity of the people in Burma. If it
can happen to him, it can happen to anybody in that country.
The United States and all the world's democracies must make
clear to General Than Shwe that he, he, is responsible for the
security and welfare of all Burmese prisoners of conscience,
particularly Suu Kyi.
Again, Madam Chair, I want to thank you for having this
hearing and giving me an opportunity to express myself on this
important issue.
[The prepared statement of Senator McConnell follows:]
Prepared Statement of Mitch McConnell, U.S. Senator From Kentucky
It is only appropriate that I begin my remarks with a word of
thanks to Senators Murkowski and Kerry for holding this hearing on
Burma. Your interest and support for the struggle for freedom in that
country has ensured that no one forgets the litany of abuses committed
by the repressive and illegitimate State Peace and Development Council
(SPDC) against the people of Burma.
I will not recount today the horrors of Burmese General Than Shwe's
misrule as they are well-documented by the State Department, the United
Nations and other organizations. However, I do want to highlight the
tragic fact that Burmese democracy leader Daw Aung San Suu Kyi and over
1,000 other prisoners of conscience remain imprisoned in Burma. Suu Kyi
and her compatriots should be immediately and unconditionally released,
and SPDC arrest, torture, harassment and intimidation of National
League for Democracy activists and ethnic minorities should cease. Only
then can a meaningful process of national reconciliation move forward.
Together we must seek permanent irreversible steps to freedom.
While the situation inside Burma remains both dire and opaque--
analysts continue to ponder the SPDC's bizarre relocation of the
capital to the jungle site of Pyinmana--the march for freedom in Burma
progresses. Under President Bush's leadership, the State Department has
imposed a full court press in foreign capitals across the globe seeking
dialog and action on Burma. It is no understatement that Burma remains
a priority talking point on the President's agenda, whether he is in
Tokyo, New Delhi or Washington, D.C.
Secretary of State Rice has equally championed this cause. She,
along with Assistant Secretary of State for East Asia and Pacific
Affairs Christopher Hill and Assistant Secretary for Democracy, Human
Rights and Labor Barry Lowenkron, have aggressively lobbied the
Philippines, Indonesia, China, Vietnam, Thailand and Cambodia to play a
more constructive role in support of democracy and justice in Burma.
In addition to diplomacy, Secretary Rice and her team are keenly
attuned to the humanitarian needs of the Burmese people. I commend the
State Department's rapid response to the outbreak of avian influenza
inside Burma, which, until recently, represented Southeast Asia's bird
flu black hole. Secretary Rice understands, as do we, that the root
causes of Burma's myriad health, economic and social problems are
political in nature. The SPDC has done little to invest in its own
health infrastructure or to combat deadly diseases, including HIV/AIDS,
and recently issued draconian guidelines that restrict the ability of
international NGO's to conduct programs inside Burma. While we may all
want to do more to help the people of Burma, our efforts are stymied by
the junta.
Governments in the region are tiring of the Burma problem. Last
year, Burma sidestepped its chairmanship of the Association of
Southeast Asian Nations (ASEAN) in large part because of the loss of
prestige that grouping would have endured with the SPDC at its head.
Frustration with the junta is palpable in some capitals, whether due to
disbelief with the wholesale move of the capital to the jungle, or
because of last year's sacking and sentencing of Than Shwe rival
General Khin Nyunt. It is becoming clear to many in Southeast Asia that
Burma's problems are the region's problems--whether illicit drug
manufacturing and trafficking, diseases such as HIV/AIDS, refugees,
sexual violence against women, internally displaced peoples, or even
avian influenza.
Let me briefly outline three necessary steps to sustain support for
the struggle for freedom in Burma over the next year.
First, Congress must renew existing import sanctions against the
SPDC. I appreciate the State Department's strong support for renewing
sanctions, and I hope I can count on my colleagues' support when
Senator Feinstein and I offer legislation in the weeks ahead to do so.
I want to be as clear today as I have been in the past: sanctions must
remain in place until Suu Kyi and other Burmese champions of freedom
call for them to be lifted. We must take our cues from those who suffer
for justice. Former political prisoner Min Ko Naing, who served 16
years in Burma's notorious prisons, recently said: ``We categorically
state today that we will never bow to injustice.''
Second, the President and the administration must continue to
aggressively engage foreign governments on supporting democracy in
Burma. I suspect Secretary Rice will be as aggressive as she has been
in the past, and I encourage all our officials--from National Security
Advisor Stephen Hadley to our Ambassador to the United Nations John
Bolton--to keep pace with the Secretary and the President on this
issue.
Finally, the United States must continue to push the United Nations
Security Council to again discuss and debate the myriad security
threats Burma poses to the region. While last year's unprecedented
briefing is a good first step, a better second step includes formal
discussion, debate and passage of a Burma resolution. Last year, former
Czech President Vaclav Havel and South African Archbishop Emeritus
Desmond Tutu commissioned a report entitled ``Threat to Peace: A Call
for the U.N. Security Council to Act in Burma'' that serves as ample
justification for Security Council action. I ask that the Executive
Summary of that report appear in the record following my remarks.
Let me close on a somber note. The murder of former political
prisoner Thet Naing Oo by Burmese police and fire officials earlier
this month is despicable. In many respects, this murder demonstrates
the SPDC's total disregard for the human rights and dignity of the
people of the Burma. If it can happen to Thet Naing Oo, it can happen
to anybody. The United States and all the world's democracies must make
clear to General Than Shwe that he is responsible for the security and
welfare of all Burmese prisoners of conscience, particularly Suu Kyi.
Senator Murkowski. Thank you. I appreciate your comments
and again truly your leadership on this issue. I think if you
think of one Senator out there who has really taken the lead as
it relates to Burma and raising the discussion, it is you, and
we appreciate that and are very thankful for your leadership on
it. So thank you for the opportunity to be here with us today.
Senator McConnell. Thank you, Madam Chair.
Senator Murkowski. With that, let us move to our second
panel. This is: Dr. Michael Green, who is the senior adviser
and Japan Chair, the Center for Strategic and International
Studies here in Washington, DC. We also have Dr. Sean Turnell,
who is the co-founder and editorial board member of the Burma
Economic Watch at Macquarie University in Sydney, Australia,
and Ms. Thin Thin Aung, Joint General Secretary of the Women's
Rights and Welfare Association of Burma, located in New Delhi,
India.
Welcome to all of you this afternoon. Thank you for taking
the time to join us and to provide us with your insights and
perspective on the issue of Burma. What we will do is just
begin here with you, Dr. Green, if you can provide your
testimony. We would ask that you try to keep it within the time
limits and we will move in order to Dr. Turnell and Ms. Aung
after that.
With that, Dr. Green.
STATEMENT OF MICHAEL J. GREEN, PH.D., SENIOR ADVISER AND JAPAN
CHAIR, CENTER FOR STRATEGIC AND INTERNATIONAL STUDIES
Dr. Green. Thank you, Madam Chair. It is a privilege to be
able to speak to this subcommittee, a privilege I did not have,
of course, when I was on the staff of the National Security
Council working these problems as the senior director for Asia
until December. Now that I am in the academic world, I can
speak my mind, and I appreciate the chance to do so.
You and Senator McConnell and the members of this
subcommittee are to be commended for keeping this issue on the
front burner. I think--I know that it gives encouragement to
the many in Burma who look for the day when their nation of 50
million people will join the community of nations free and at
peace with their neighbors and taking full advantage of their
beautiful country.
The demise of Burma under the junta and Than Shwe has been
well chronicled by the State Department, by this subcommittee,
by Senator McConnell. The ideals of the American people will
not allow us to turn away from this. What one often hears on
the other side of the argument is that our national interests,
our security interests, our realist interests, would point to a
different path, that if we were, quote unquote, ``realists''
about this, we would take an approach of loosening sanctions,
of engaging the regime, of trying to keep up with China's
influence.
The main point I want to make today is that I think this
argument is wrong, that when it comes to Burma our ideals and
our national security interests are in complete harmony. I say
this for two reasons. First, Burma is a trans-national security
threat. The details are well documented in the pamphlet
mentioned by Senator McConnell. From HIV/AIDS to drugs to
trafficking in persons, internally and externally displaced
persons, Burma is a source of instability for its neighbors.
Now, I cannot prove this, but I suspect that, to some
degree, this is a deliberate element of the regime's national
security strategy, that by destabilizing its neighbors, it
creates a situation where the neighbors are more inclined to,
in effect, bribe the regime to try to keep these problems under
control. It is a tactic that one sees often with North Korea,
as well.
The regime has spent almost no effort for resources to deal
with the problems of Avian influenza, of HIV/AIDS, of
internally displaced persons, which is why I think that this is
not only a crime of omission, but may actually be part of a
deliberate strategy. It therefore fits all of the
characteristics one would expect for attention from the
Security Council, and I agree completely with the testimony of
Senator McConnell. This is under chapter 7 of the Security
Council's responsibilities an item that should be pushed
towards a resolution.
I believe that it will be a move that helps us on the Burma
issue no matter how it comes out. There are obviously tradeoffs
in the Security Council. You have to spend efforts on issues
like Iran. But I think this one should be right at the front of
our agenda.
The second reason I would argue that Burma is fundamentally
a national security interest for us draws on the logic of the
national security strategy that the White House just produced.
That document makes a point that Secretary Rice and the
President and others have made in the past, that in Asia, the
future of stability and peace will not just be a matter of how
we manage rivalry among great powers like Japan or China or
India. It is going to be a matter of how ideas are formed and
how countries define their purpose in this volatile and
unpredictable region.
I think when it comes to the world of ideas, the United
States can be very proud and take great satisfaction in the
kind of debates we are hearing in India or in Japan or in
Indonesia. In my testimony, which I have submitted for the
record, I chronicled how Prime Minister Koizumi or Prime
Minister Monmahon Singh, or President Yudhoyono talk more about
their country's purpose and interests in terms of democracy and
values than ever before. This is a trend that we want to
support and we want to push. This is a trend that we want to
have define the agenda for Asia in the 21st century, because if
it does, it is going to set the right kind of context for
China's own involvement in Asia and in the international
community and for other states in transition.
In Jakarta and in Delhi and in Tokyo, the state of
democracy and the state of internal affairs in Burma are in
many ways the cutting edge issues or the proxy debate about how
much democracy and how much these values should characterize
the strategy and the agenda for our democratic friends and
allies. So I believe it is in our interests to be pushing this
further with all of our friends and allies. Secretary Rice and
the President, as Senator McConnell has said, have raised this
with every one of their leaders and counterparts in the region.
It is a mixed picture. Japan is talking democracy, but just
announced $42 million in aid to teach Japanese in Burma. My
understanding is the Japanese government is undertaking a major
review of its Burma policy to try to reconcile its new
articulation of democracy as a foreign policy priority and its
somewhat legacy approach of mercantilism with Burma.
In India, of course, the Indian president was in Burma
March 12, the week after President Bush was in Delhi, a week
after President Bush and Prime Minister Singh agreed to a
democracy-building agenda for our relationship. To his credit,
the Indian president raised the status of Daw Aung Sann Suu
Kyi, raised democracy. But the main theme that came through was
about energy cooperation, $40 million in proposed packages for
LNG development, and the Burma Road. These are real national
interests for India and they are legitimate. We should respect
them, but we need to engage India and push the Indian
government to live up to its ideals, because I think their
debate is in play and their strategic culture is evolving.
In Southeast Asia, President Yudhoyono's trip, Malaysian
Foreign Minister Hamid's recent trip, demonstrated that our
Southeast Asian friends and especially the democracies are
willing to push Burma, not only privately, but publicly, to
release Daw Aung San Suu Kyi, to push for a return to
democracy. But there again, it is a mixed signal. Foreign
Minister Hamid came out without being able to see Aung San Suu
Kyi, clearly a frustrated mission, but he declared it a
success, as our ASEAN friends are wont to do. He will have to
be honest with his colleagues. They meet on April 17th to
review progress in Burma, and I think we should be pushing our
ASEAN friends to be realistic about the state of play in Burma.
In all of these countries, the Burma issue is at the
tipping point, as Senator McConnell suggested, as you suggested
in your opening. I would argue, even in China, the state of
play is changing. The Chinese worry about the destabilizing
effects of Than Shwe's behavior. I think they worry about, in a
strategic sense, countries in the region coming together on
this issue of democracy, and in a healthy way, we should make
the Chinese worry. We should be pushing this agenda to get
China to sign on as much as possible with its long-term
interests in stability in the region, which means returning
Burma to the path of democracy. Even if China is not going to
be an open advocate of democracy-building in Asia, they can be
an advocate of stability, and their interests would suggest
they participate and cooperate.
You mentioned, Madam Chair, the idea of a Six Party Talks
format or a multilateral format. I was involved in the Six
Party Talks, both the formulation and the implementation, and
there are aspects of that that I would draw on in dealing with
this. There are other aspects which I would try to avoid. I
think in the case of Burma, what we want is to work assertively
with other parties that we know share our basic values--Japan,
the EU, I would argue many of the ASEAN nations, India--and
break out from there, include the Chinese as we can, include
others as we can, but push for a common set of talking points
and a common roadmap. The word ``roadmap'' has certain
connotations in the Burma context, but essentially a roadmap
with concrete benchmarks.
We ought to try to get a common picture. We've not done
that yet. We've pushed at high levels for attention to this. I
think it is time now to push for a common set of benchmarks
that we expect from the regime. It obviously would include the
release permanent and irreversible of Aung San Suu Kyi, the NLD
leadership, ethnic leaders. It would include a sustained
process of reconciliation leading to restoration of democracy.
I think we should push others. I do not think we will get
Japan or India to agree to sanctions per se, but we ought to
push them to put sticks on the table, which would include
controlling and limiting further investment or aid in the
future. I think we should be prepared to put certain carrots on
the table--incremental lifting of sanctions as progress is made
on these benchmarks.
The mechanics can be debated and worked out. Our colleagues
in the State Department will know on the ground how to work
this. It will not be exactly like the Six Party Talks, but I
think the time is ripe to start multilateralizing this problem,
not only in the U.N., but in the region as well.
Thank you.
[The prepared statement of Dr. Green follows:]
Prepared Statement of Michael Jonathan Green, Ph.D., Senior Adviser and
Japan Chair, Center for Strategic and International Studies
Madame Chair, I appreciate the opportunity to address this
committee on the situation in Burma from the perspective of
international security. The members of this committee are to be
commended for their consistent support for Daw Aung San Suu Kyi and the
legitimate winners of the 1990 election in Burma. Your bipartisan stand
for democracy and human rights in Burma is a source of inspiration for
those who quietly prepare for the day when this nation of fifty million
citizens can rejoin the international community as a free people in a
beautiful and well-endowed land at peace with its neighbors.
Today I want to call the committee's attention to the international
security implications of the demise of Burma under General Than Shwe.
Than Shwe and the military junta are responsible not only for the
reversal of a democratic election result, but also for abuses ranging
from persecution of ethnic minorities to systematic rape and the
recruitment of child soldiers. Our ideals will not allow us to turn our
attention from the fate of the people in Burma or to relent in applying
pressure on the regime to return to the path of democracy.
Some argue that these ideals are blinding us to larger strategic
interests in Burma. They maintain that a pragmatic and ``realist''
national security strategy would point to a different course--one of
increased engagement with the regime and a relaxation of pressure. They
assert that by isolating the military junta in Burma, we are weakening
our own strategic position in Asia.
This argument could not be more wrong. I stepped down as Special
Assistant to the President and Senior Director for Asian Affairs on the
National Security Council staff in December and I come away from that
experience firmly convinced that on the question of Burma, our ideals
and our national security interests coincide. In short, a strong and
unrelenting stand for democracy in Burma is an indispensable element in
our overall strategy for maintaining peace and stability in the Asia
Pacific region.
I say this for two reasons. First, the tragic mismanagement of
Burma's internal affairs by Than Shwe and his government has created an
arsenal of transnational security problems that threaten to undermine
stability in the entire region. Since 1996 the Burmese Army's ``Four
Cuts'' strategy has led to the destruction of over 2500 villages and
the internal displacement of about one million people, mostly from the
Karen, Shan and other ethnic minorities. Millions also live in hiding
or as open exiles in Thailand, China, Bangladesh, India and Malaysia.
These refugee flows are a social and security burden on the neighboring
states that are further complicated by the attendant problems of
trafficking in persons, drugs and transmission of HIV/AIDS. The most
chilling example of how these problems build on each other is the
practice of drug traffickers to distribute heroin with HIV-tainted
needles to villagers as they ply their illegal trade across the borders
into India, China and Thailand. Avian influenza now also joins the list
of transnational threats emanating from Burma.
The regime in Burma has done almost nothing to address the health
and social disasters their Four Cuts strategy has caused. I suspect
that this is not just a crime of omission, but part of a deliberate
strategy that parallels North Korea's own approach to China and the
Republic of Korea. These regimes use their status as a source of
transnational instability as tools of blackmail to deter their larger
neighbors from stepping up pressure for reform. They are behaving like
criminal gangs extorting money from shopkeepers in the neighborhood in
exchange for keeping other criminal elements ``under control.'' They
can do this because they do not care about the vast majority of people
under their care and find that leaving potentially disloyal segments of
the population in a state of constant fear and near-starvation is a
useful tool for maintaining control. The neighboring states make these
bargains with the regime out of fear of what might come next and with
the hope that they are contributing to stability, when in fact the
problems are just being allowed to fester and grow and will inevitably
reach beyond the borders with tremendous security and social
implications.
The transnational problems caused by the regime's behavior
represent a threat--perhaps a deliberate threat--to the peace and
security of South and Southeast Asia. It is for this reason that the
United Nations Security Council should take up Burma with its authority
under Chapter VII (Article 41) of the United Nations Charter. The votes
are there and I hope that the administration pushes with other like-
minded nations for a resolution on Burma in the current session. Even
if the resolution fails or the Security Council does not take immediate
action, there is merit in sharpening our friends and allies' focus on
the state of democracy and human rights in Burma. And this is because
the debate over Burma in these countries has significance in the
context of the broader national security strategy of the United States
in the Asia Pacific region.
Let me turn to this second reason why the Burma question bears on
our national security interests. The future of Asia is being debated in
terms of relative power and rivalry among China, Japan, India and other
rising states. What is often overlooked, and what will ultimately be
just as important for peace and security in the region, will be the
competition of ideas. China's rise thus far has been marked by a
mercantilist approach coupled with an outmoded policy of ``non-
interference in internal affairs'' of other states. Japan and India
once held similar views in many respects, despite their democratic
roots. However, increasingly these two nations are defining their
national interests in terms of the democratic ideals that distinguish
them from China and that they recognize are critical to their own
stakes in the international system. Even in Southeast Asia where the
Association of South East Asian Nations (ASEAN) was created on the
premise of ``non-interference in internal affairs''--governments and
parliaments are debating whether they can sustain peace and stability
in their neighborhood without pressing members to clean up their
domestic problems and adhere to norms and rules that are fundamental to
the region's continued economic success.
It is a critical U.S. interest that democracies in Asia continue
moving toward national strategies based on shared values and shared
rules. The debate over Burma in these capitals is the cutting edge
issue. How Tokyo or Delhi or Jakarta decides to manage the Burma
problem--whether they stick to non-interference or step up pressure on
Burma to adhere to international norms--will prove the major proxy
battle of how they approach the region's broader agenda in the future.
If Japan, India, Indonesia and other nations with influence on Burma
choose to take a stronger stand in support of the norms that underpin
their own democracies, this will not only accelerate the day when the
citizens of Burma return their nation to the international community,
it will also shape the choices of other nations in transition--
particularly China.
Realists who argue for more ``engagement'' on Burma are right, but
the target of that engagement strategy should be the democratic nations
that surround Burma and not yet the junta itself. I would therefore
like to briefly review where the debate on Burma is in each of these
neighboring states and then suggest steps we can take to mobilize them
into a more effective coalition.
Japan is the most promising example of the positive evolution of
interests and strategies that I am describing. Japan originally
supported Burma's entry into ASEAN. Tokyo was motivated by a
sentimental attachment to Burma dating back to the Second World War and
by a desire to distinguish itself from Washington in the region,
particularly in the context of U.S.-Japan trade friction and
disagreements over how to respond to the 1997 financial crisis in the
region. In those days Japanese strategic thinkers took pains to
distinguished ``Asian values'' from the so-called ``global values''
espoused by Washington. Japan also began worrying about China's growing
strategic influence in Burma as Sino-Japanese competition heated up and
the Japanese government matched Chinese aid hundreds of millions of
dollars at a time in order to keep up its own influence and not lose
out to Beijing.
Things have changed, however. Prime Minister Koizumi himself has
acknowledged that the Japanese government's policy of engagement has
not led to greater democratization. Just as important, Japanese
political leaders have stopped alluding to distinct ``Asian values''
and have increasingly been pointing to Japan's own democratic values as
critical to its national identity and international role. I would
particularly recommend to the members of the committee Foreign Minister
Taro Aso's December 7, 2005 speech on ``Japan as the Thought Leader of
Asia'' in which he argued that Japan stands as a model for the rest of
Asia based on its success through adherence to the principals of market
economics and democracy.\1\ Political scientists can debate the causes
of this change. It may result from a distinctly realist assessment of
the competition with a non-democratic China or from fundamental changes
in Japan's own domestic politics and economy. The result, however, is a
new ferment in Tokyo and a new articulation of Japan's purpose based on
values that should have a bearing on Japan's approach toward Burma.
Recognizing just how important these values are, the Japanese
government is undertaking a top-to-bottom review of its Burma policy.
The outcome is not certain and we should be fully engaged with Tokyo on
that process.
---------------------------------------------------------------------------
\1\ Foreign Minister Taro Aso, ``Asian Strategy as I See it: Japan
as the Thought Leader of Asia,'' December 7, 2005. The text is
available on http://www.mofa.jo.ip/announc/fm/aso/speech05l2. Foreign
Minister Aso echoes this them with respect to Sino-Japanese relations
in a March 13, 2006 op/ed in the Wall Street Journal titled ``Japan
Awaits a Democratic China.''
---------------------------------------------------------------------------
The Association of South East Asian Nations (ASEAN) is undergoing a
similar shift in thinking. Originally, ASEAN opted for a policy of
``constructive engagement'' based on the assumption that inclusion in
the regional grouping would incentivize the junta in Burma to make the
right choices. For years our Thai counterparts argued that the so-
called Bangkok Process of international meetings with Burma would lead
to concrete results, including a detailed roadmap for returning to
democratization, the release of Aung San Suu Kyi, and inclusion of the
NLD in the constitutional convention. It is now obvious that these
results have not happened as Than Shwe has purged Kin Nyunt and others
involved in the Bangkok Process.
As a result, ASEAN and its member governments have begun recasting
their approach to Burma, calling on the regime to release Aung San Suu
Kyi and convincing Than Shwe last year to pass on chairing ASEAN when
his turn came up in 2006. ASEAN leaders' embarrassment at Burma's non-
response to constructive engagement has led to even tougher words from
the governments in the region both privately and publicly since then.
With the first direct Presidential elections in Indonesia 2004 and
increasing pluralism and parliamentary activism in Thailand, Malaysia
and Singapore, the character of other ASEAN member states is itself
changing and many within are taking their nation. These changes have
been pushed by transnational groups within ASEAN such as the Inter-
Parliamentary Myanmar Caucus. Indonesia's new activism is most
encouraging, with President Yudyuhono's early March visit to Burma to
establish a joint commission between Rangoon and Jakarta with the
primary focus of monitoring the junta's progress toward democratic
reform. And just this week Malaysian Foreign Minister Hamid went last
week to Burma on behalf of ASEAN to press for democracy, but left in
frustration after being blocked from seeing Aung Suu Kyi or Than Shwe .
He is set to report on his visit to the rest of ASEAN on April 17th and
although he called his visit a success publicly, I expect the private
discussion among ministers will be about how to deal with the further
retrenchment and backsliding of the regime.
The picture is still decidedly mixed in ASEAN, however. The
bureaucracies and foreign ministries worry about the transnational
problems presented by the junta's mismanagement of the Nation and
continue to resort to the default position of paying them off with aid
in order to avoid further troubles. The strategic mentality in these
foreign ministries also remains mired in the non-aligned tolerance for
bad internal governance and ideological resistance to interference in
internal affairs from the developed world. New leaders like Susilo
Bambang Yudyuhono in Indonesia, Lee Hsien Loong in Singapore, and
Abdullah Badawi of Malaysia, are often more enlightened than their
bureaucracies and recognize the need to push Burma on democracy.
However, these ASEAN leaders are also competing among themselves for
the spotlight and the regime is using the competition for regional
leadership within ASEAN to divide ASEAN leaders against themselves and
to weaken the message many are clearly carrying on the need for change.
The growing democratic instincts of ASEAN leaders are right, but are
still not being met with results in implementation.
India is also embracing democracy as a central tenet of its
international role and is moving away from older, mercantilist and non-
aligned ways of thinking about international security. Like Japan,
India's strategic culture may be shifting because of a combination of
internal political and economic change and the implications of China's
rise. Prime Minister Monmahon Singh has clearly articulated this aspect
of India's identity in speeches, declaring in 2005, for example that:
If there is an ``idea of India'' that the world should
remember us by and regard us for, it is the idea of an
inclusive and open society, a multi-cultural, multi-ethnic,
multi-lingual society. All countries of the world will evolve
in this direction as we move forward into the 21st Century.\2\
---------------------------------------------------------------------------
\2\ The transcript of Prime Minister Singh's remarks at the India
Today Conclave, New Delhi, February 25, 2005 is available on http//
www.pmindia.nic.in/speeches.htm (cited in C. Raja Mohan, Impossible
Allies: Nuclear India United States and the Global Order. Delhi: India
Research Press, 2006, p. 93).
This shared value with the United States has become one of the
pillars of the United States transformed strategic relationship with
India under President Bush. In their March 2 joint statement in New
Delhi, for example, Prime Minister Singh and President Bush agreed to
work together on the promotion of democracy through the U.N. Democracy
Fund, and cooperation in international forums such as the International
Centre for Democratic Transition (ICDT).\3\ Rhetorically, the Indian
government has said that it wishes to see a strong, prosperous and
democratic Burma and Prime Minister Singh has said that he would like
to see the release of Aung San Suu Kyi.
---------------------------------------------------------------------------
\3\ U.S.-India Joint Statement, March 2, 2006. Available at http://
www.whitehouse.gov/news/releases/2006/03.
---------------------------------------------------------------------------
However, where the rubber meets the road the Indian government has
been sending mixed signals to the regime. The lure of enhanced economic
interaction with ASEAN through the Burma road and fears that Burma
might allow cross-border destabilization of the Assam region in India
have both led Delhi to opt for aid over pressure for real change.
Indian President Abdul Kalam's March 12 visit to Burma with a new $40
million aid package and a deal on natural gas was dissonant with the
Bush-Singh joint statement on democracy, to say the least. President
Kalam did call on his counterparts to release Aung San Suu Kyi and to
keep on the path to democracy, but the theme he emphasized much more
was the importance of Burma as India's ``gateway'' to Southeast Asia.
There are also contradictory signals being sent by the Indian
military's ongoing engagement with the Burmese Army.
Nevertheless, I believe that India's new focus on democracy
promotion is real and that there is an intense debate about overall
strategic purpose and direction in Delhi. For now, the many actors in
India's national security bureaucracy, the hard-edged realist mentality
they bring to regional problems and the lingering NAM mentality, have
all conspired to prevent the new strategic should therefore be a major
topic for U.S.-India dialog at all levels. It is critical that we keep
Burma front and center as a point for U.S.-India cooperation,
respecting India's interests but pushing Delhi to live up to its
ideals.
That brings us to China. China is Burma's strongest supporter.
China-Burma trade was $1.2 billion in 2005 (of $5 billion total trade
for Burma) and Beijing is negotiating new investments in economic
``free trade zones'' in Syriam and in the construction of a pipeline to
ship Burma's untapped offshore natural gas reserves to Yunnan Province.
In February this year Premier Wen Jiabao visited Burma and told Soe Win
that China opposes the imposition of economic sanctions. Fears that
Beijing might ``Finlandize'' the regime or develop military facilities
in the Andaman Sea and Bay of Bengal have in turn been major motivating
factors for Tokyo, Delhi and ASEAN's own counterbalancing policy of
engagement with the regime. (I am once again reminded of North Korea,
where fear of China's unchecked influence has propelled the Republic of
Korea to take a more accommodating stance toward Pyongyang.) While it
is unlikely that Beijing will adopt democracy promotion as part of its
foreign policy toolkit anytime in the near future, I do think it is
possible to have an influence on China's approach to Burma which is
ultimately going to be indispensable if we are going to change the
regime's behavior.
First, there is growing evidence to suggest that China is unhappy
about the self-defeating behavior of the Than Shwe regime and that
Beijing is beginning to push quietly for internal reforms. In part this
is because of the export of drug and HIV/AIDS problems from Burma into
neighboring province of Yunnan. I suspect that Beijing also worries
about the possible implosion of Burma under Than Shwe. Chinese leaders
clearly fear the domino of ``colored revolutions'' that began spreading
from Eastern Europe through Central Asia and would probably not like to
see collapse of an authoritarian regime right in their own
neighborhood. In short, Beijing has real self-interest in stopping the
leadership in Burma from taking further steps that lead to instability
internally and in the region.
Second, we must make it clear to Beijing that China will be held
accountable in Washington for the ``company it keeps.'' Deputy
Secretary of State Robert Zoellick's Senior Dialogue with Chinese
Executive Vice Foreign Minister Dai Bingquo on China's role as a
``stakeholder'' in international society has been effective in this
regard. Hu Jintao has espoused a policy of ``peaceful development'' to
emphasize that China's concerns are internal and China seeks to be a
benign force in international relations. Through the Zoellick-Dai
dialog, I believe the Chinese are learning that on questions like
Burma, a policy of commercial engagement unencumbered by expectations
of adherence to international norms is mercantilist and therefore
anything but benign. I also think we can convince Beijing to appreciate
that short term accommodation of the regime may only prolong and
complicate longer-term problems of instability emanating from Burma.
Taking this argument directly to China is necessary but not
sufficient. Beijing must also see that democracy and the rule of law
are the region's agenda as well. A successful strategy to mobilize the
regional actors that increasingly care about the internal state of
affairs in Burma will create a coalition that Beijing cannot ignore.
China will not want to be the anti-status quo outlier in Asia. I
believe China will move pre-emptively for change in Burma rather than
see the change dictated by democratic powers aligned with the United
States. And this need not be seen in zero-sum terms in the U.S.-China
relationship. Ultimately, action by Beijing to change the behavior of
regimes like Burma and North Korea will provide the substance for a
more strategic and mutual beneficial U.S. China partnership.
Given that the Burma question is one that touches not only on
American values, but also on our national security interests, how
should we organize ourselves? I have three specific recommendations.
First, the United States should press for the U.N. Security Council
for a resolution on Burma based on Chapter VII of the U.N. Charter.
This will take diplomatic energy and will rile some members whose votes
we need for other Security Council debates over Iran. However, as I
have argued here, the issue is larger and more strategic than Burma
itself. And, frankly, it is the right thing to do.
Second, the United States should take the lead on organizing the
international community to provide humanitarian assistance to the
people of Burma to contain and reverse the transnational threats of
HIV/AIDS and Avian Influenza. In fact, the United States, recognizing
the serious threat that HIV/AIDS poses not just to Burma but to the
region, led the effort to get the Global Fund involved in Burma and it
was decisions by the junta that ultimately led to the unfortunate but
unavoidable decision to pull back. The U.S. Government has also
provided the initial equipment necessary to help detect and contain
Avian Influenza outbreaks and should continue to do so as necessary.
Burma's neighbors and traditional advocates of ``constructive
engagement'' have been far less willing to provide humanitarian
assistance to the people of Burma to respond to these health threats.
We should press them to do so, for example, as part of a coordinated
international approach to meet the World Health Organization's call for
$4 million in assistance for fighting avian influenza in Burma.
Third, we should organize an international coalition for change in
Burma to replace the now moribund Bangkok Process. The President has
raised Burma with every regional leader he has met and senior officials
like Undersecretary of State for Political Affairs Nicholas Burns and
Undersecretary for Global Affairs Paula Dobriansky have carried on the
message at their level. It is time to push for a common roadmap that
can succeed through strength of numbers. I would organize this effort
with Japan, India, Australia ASEAN and the European Union. The United
Nations should also be involved, of course. And I would avail China of
the opportunity to join other regional players to enhance stability by
pushing collectively for changed behavior by Burma, but China's
participation would have to be premised on recognizing the need to
press for change.
In fact, my colleagues and I began some of this process informally
while I was at the National Security Council and found that
counterparts in key ASEAN states were eager for more. They know that
``constructive engagement'' and the Bangkok process have not led to
results. They know that the status quo is fundamentally unstable and
that they will only face more cross-border problems from Burma in the
future. They see Than Shwe's decision to move the capital to Pyinmana
as evidence of an increasingly delusional leadership driven by the
recommendations of soothsayers and astrologers. They recognize that
ASEAN's clout vis-a-vis other international actors is being weakened.
They worry about China's growing influence, but they say that they can
build consensus for a new approach if we can bring on board Japan and
India. They are not yet ready to abandon engagement, but they are ready
to look at adding more sticks to their menu of carrots.
If we are to organize for a deliberate multilateral approach to the
Burma problem, the goal should not be immediate ``engagement'' of Burma
per se. Instead, we should focus our energy on the production of a
common roadmap that outlines concrete goalposts we need to see as
evidence of a return to democracy. These goalposts must include the
immediate and irreversible release of Aung San Suu Kyi and the
leadership of the NLD and ethnic leaders and their full participation
in a transparent and sustained process of national reconciliation aimed
at the restoration of democracy. In order to build a multilateral
consensus even among our closest allies, we will have to include both
carrots and sticks. The carrots can easily include reassurances about
the territorial integrity of Burma, but will also have to involve
incremental sanction lifting at some stage in the process. From
regional actors we should insist on more sticks if the regime does not
take the right steps. These sticks might include freezing further
investment in commercial projects. We should also push for coordination
on humanitarian relief.
The specific mechanics of this multilateral effort should be left
to the administration, but I think the time is ripe to put forward a
consensus message to the regime that its neighbors are willing to
assist with the transition to democracy, but prepared to impose
consequences on Burma collectively for non-action.
The Burma problem has reached the tipping point in the view of many
of the regime's neighbors. If we work with like-minded states on an
approach that pools our collective sticks and carrots in a systematic
way, the regime will not be able to ignore its neighbors' collective
will. Moreover, we will help move our friends and allies to a values-
based strategy that strengthens the prospect for continued
democratization and adoption of the rule of law across the entire
region.
Thank you.
Senator Murkowski. Thank you, Dr. Green.
Dr. Turnell.
STATEMENT OF Dr. SEAN TURNELL, BURMA ECONOMIC WATCH, ECONOMICS
DEPARTMENT, MACQUARIE UNIVERSITY, SYDNEY, AUSTRALIA; VISITING
FELLOW, SOUTHEAST ASIA PROGRAM, CORNELL UNIVERSITY
Dr. Turnell. First, I would just like to say, as well, how
honored I am to give this testimony here today and also express
my appreciation for the role that this subcommittee has played
on Burma and its individual members.
Today, I am going to be talking about Burma and its
economy, and it is a topic that one would think an economist
could bring quite a light heart to. According to the official
figures released by the Burmese regime, in 2005 Burma grew by
12.2 percent, on top of 12 percent in 2004, and pretty much a
decade of double digit growth. Now, if that is the case, of
course, then Burma is the fastest growing economy in the world.
Not only that, over this period it used less energy, it used
less natural resources, and it negotiated a banking crisis that
was at least as serious as the one that brought so many of its
neighbors down in 1997.
So in a sense we are dealing with a miracle economy.
Unfortunately, we are not dealing with Burma. We are dealing
with something else that I guess escapes me.
The real Burma, of course, is mired in poverty and despair
and it is a poverty and despair that is the deliberate
consequence of the policies of the regime that has been in
place for four decades. Reconstructing some of the economic
numbers, the group that I am a member of, Burma Economic Watch
from Macquarie University in Sydney, we actually think that
Burma's economy went backwards in 2003 and 2004. We think there
is some growth in 2005 and 2006, but in a sense it is really
technical only. It is coming from increasing exports of gas,
which has meant that the trade balance has turned positive, but
part of that positive turn has also come from a dramatic
decline in imports, which tells us something about economic
circumstances in the country. So the recent positive growth we
do not think is necessarily suggestive of anything good going
on in the country.
Fifty years ago Burma was the wealthiest country in
Southeast Asia and at the time of independence, in 1948, it was
the country that everyone thought would make it. All of the
trends in a sense suggested that wealth and so on would
continue. But it has not, and that it has not is really the
direct result of the regime, which took place in 1962.
To give some of the broad issues about the economy in
Burma, one of the things we can say is that the country lacks
the institutions, such as private property rights, such as
freedom of contract, that we know--that history tells us are at
the heart of economic development.
It is also the case, over the last four decades, that
policymaking in Burma has been erratic, contradictory, and,
frankly, irrational. It is the case that the state takes, by
far, the lion's share of the resources in the country, but it
does not have any legitimacy to tax and so what it resorts to
is, in the time-honored fashion, to the printing press and the
central bank and floods the economy with money, essentially. As
a consequence of this, of course, Burma has a distrusted
currency, a dysfunctional financial system, and rampant
inflation.
The path to wealth in Burma is not through enterprise or
innovation. If one were to go down that route, I think you
would find that your enterprise would be seized by the junta
anyway. But rather, it is to use the state apparatus in various
ways. Apart from corruption, there are many aspects of Burma's
economy that are, in fact, just straight-out criminal, and in
that, of course, I am alluding to the narcotics trade and
money-laundering and so on, which I will refer to in a little
bit more detail later.
What I might do now is just move to some specific issues
and specific sectors. The data for this is all in my written
testimony. Turning first to policy, I mentioned that it was
quite erratic and so on. In some ways it is almost a misnomer
to talk about economic policy in Burma. There really is only
one policy in Burma and that is to garner as much resources as
possible for the regime. So fiscal policy and monetary policy
are both bent to this task. Fiscal policy is just simply
raising enough funds for the military, it plays in a sense no
real counter-cyclical or developmental role. Monetary policy is
in a sense rendered ineffective by the fact that the regime
just borrows from the central bank and floods the country with
money. But not only that, in order to keep its funding costs
down on the bonds that it issues to the central bank, the
Burmese regime has various interest rate caps and so on which
are well below the inflation rate, which again just counts out
monetary policy as being a viable tool of economic policy.
Policymaking is, as I have mentioned a couple of times now,
irrational, erratic, and sudden, and so on. We see lots of
examples of this. We saw it 2 days ago with the decision to
increase the salaries of senior civil servants by up to 1,200
percent. That is fairly typical of decisionmaking in Burma in
the sense everything is left to the last minute, at which there
will be sudden and dramatic changes. Last year it was
increasing fuel prices eightfold. At other times in the past it
has been demonetizing whole currencies, etcetera.
In some ways it is exemplified, I think, by exchange rate
policy in Burma. Burma formally has a fixed exchange rate
system which sets its currency, the kyat, at 6 kyat to 1 U.S.
dollar, but in a sense no one really pays much attention to
that. The focus instead is on the informal market or black
market and the current exchange rate, as of today, is 1250 kyat
to the U.S. dollar. So in other words, the official exchange
rate is over 200 times overvalued.
That is very much a moving feast, I might add, because my
written testimony has 1100 kyat to the U.S. dollar, but after
the announcement of the wage increases the other day that has
blown out, as I say, to about 1250 today.
If we look at trade and foreign direct investment, if this
were a normal country, we would think that this would be quite
positive. Burma is selling increased quantities of natural gas
through its two pipelines to Thailand and there are other
schemes about to come on line off Arakain. Unfortunately, we
are not dealing with a normal country and, in the past, these
windfall gains that have come from higher energy prices and so
on have been used by the regime in all sorts of ways that are
inimical to the country's development. Last time it was to buy
a fleet of Mig-29s, which no longer fly, and who knows what
might come from this particular one.
Turning to the monetary and financial sector, this was a
sector that until fairly recently might have been a sector that
suggested the economy was actually making some gains. Burma's
financial sector was ``liberalized,'' quote unquote, in 1990
and by 2002 some 20 private banks had emerged and the numbers
seemingly looked quite positive. Later that year, though, Burma
underwent a substantial banking collapse which, as I mentioned,
was as serious as we have ever seen in history, quite frankly,
and since that time the system is essentially moribund.
The authorities' response to that banking crisis is almost
a checklist of what not to do in response to a banking crisis.
Economists do not know many things about many things, but we do
know something about how to respond to a banking system, and
Burma seemed to go about everything to exacerbate the crisis.
So Burma's financial system does not provide the country
with the financial assets it needs. Trust, which is never a
commodity that is particularly abundant in Burma, is now almost
irredeemably lost, I suggest, when it comes to the financial
sector.
The financial sector is affected by something else, of
course, and that is the shadow of money-laundering. Burma is
one of only two jurisdictions to be named by the Financial
Action Task Force of the OECD as a primary money-laundering
jurisdiction. The other, incidentally, is Nigeria. Burma is
also subject to section 311 of the USA Patriot Act, which quite
rightly identifies Burma also as a money-laundering
jurisdiction, and for the first time ever, actually named
specific institutions in Burma as being money launderers. They
were the largest and third largest of Burma's banks,
respectively. Since then, another of the largest banks has come
into focus as well.
This aspect is an interesting one because it sort of
slipped below the radar screen, I suspect. It has had a big
impact on other countries, including China. The Bank of China,
for example, will not handle U.S.-dollar transactions for
Burmese firms. Again it is not something I think that has been
widely reported.
I will end just briefly talking about the sanctions issue.
I would like to echo the comments of previous speakers and to
say that I think the sanctions currently imposed by the United
States and the European Union and some other countries are
having an effect. I think that they are extraordinarily well
targeted when it comes to Burma. The great majority of the
Burmese citizens have no contact whatsoever with the traded
goods sector or the external economy. The one group that does
are the elite of that society. So in a sense, if sanctions are
all about putting the appropriate incentives in place for the
people that matter, I think we can say that that is the case in
Burma.
Some people have criticized sanctions because of job losses
in the garment industry and so on. I think, if you look at the
issue, you will see actually that most of those job losses have
everything to do with the ending of the Multi-Fiber Agreement,
which has seen China increase its exports in any case.
Finally, to end, I am from Australia, but I spend a lot of
time traveling around Southeast Asia and I can say that the
sanctions imposed by the United States and European Union,
things like this USA Patriot Act, catching the money launderers
and so on, has had a big effect in the region. Countries like
Singapore are very frightened of getting caught up in money
laundering and other things to do with the sanctions.
So thanks again for this opportunity to speak to you today.
[The prepared statement of Dr. Turnell follows:]
Prepared Statement of Dr. Sean Turnell, Burma Economic Watch, Economics
Department, Macquarie University, Sydney, Australia; Visiting Fellow,
Southeast Asia Program, Cornell University
overview
According to official statistics released by Burma's ruling
military regime, the self-styled ``State Peace and Development
Council'' (SPDC), Burma's economy grew by an astonishing 12.2 per cent
in 2005. Beating even the previous year's stellar performance of 12.0
per cent, and coupled with double-digit growth all the way back to
1999, by these measures Burma is the fastest-growing economy in the
world. What's more, Burma achieved this astonishing growth using less
energy, less material resources and, in the middle of it all, while
negotiating a banking and financial crisis that was as serious as any
in history. Truly, a miracle economy indeed.
It is, alas, also a fantasy economy. Under the SPDC, the real Burma
is a wasteland of missed opportunity, exploitation and direst poverty.
More realistic numbers of Burma's economic performance calculated by
Burma Economic Watch show that far from stellar growth, Burma's economy
actually shrank in 2003 and 2004. In 2005 Burma will likely have
returned to growth, but at a rather more modest 2 to 3 per cent.
Similar growth can be expected for the coming year. None of this
growth, however, has anything to do with improved economic
fundamentals, but with the windfall gains accruing to the state from
the rising demand for Burma's exports of natural gas.
The real Burma is one of the poorest countries in Southeast Asia.
Only 50 years ago, it was one of the wealthiest. The dramatic
turnaround of Burma's fortunes is the product of a state apparatus that
for decades has claimed the largest portion of the country's output,
while simultaneously and deliberately dismantling, blocking and
undermining basic market institutions. The excessive hand of the state,
which for many years was wedded to a peculiar form of socialism, has
manifested itself in a number of maladies that are the direct cause of
Burma's current disarray. These include:
The suppression of the fundamental economic institutions--
effective property rights, contract enforcement, the measures
that define the ``rules of the game'' for efficient economic
transactions--that history tells us are necessary for
sustainable long-term growth.
Macroeconomic policymaking that is arbitrary, often
contradictory and ill-informed.
A regime claim to Burma's real resources that greatly
exceeds its ability to raise revenue through taxation. As a
consequence, like many such regimes around the world and
throughout history, it resorts to the printing press to
``finance'' its expenditure. Inflation and monetary chaos have
been the predictable consequences.
A currency, and a financial system, that is widely
distrusted. People in Burma store their ``wealth'' in devices
designed as a hedge against inflation and uncertainty. As a
result, financial intermediation is underdeveloped and the
allocation of capital is distorted.
Rent-seeking through state apparatus that offers the surest
route to prosperity, at the expense of enterprise. Burma's
leading corporations are mostly owned and operated by serving
and retired military officers. Corruption is endemic.
Important sectors of Burma's economy that are starved of
resources. Negligible spending on education and health have
eroded human capital formation, and reduced economic
opportunities. Agriculture, which provides the livelihood for
the overwhelming majority of the Burmese people, is chronically
(and, often deliberately) starved of critical inputs.
Economic mismanagement by the regime that means that Burma
attracts little in the way of foreign investment. What does
arrive is strongly concentrated in the gas and oil sectors, and
other extractive industries. Little employment is generated
from such investments, and there is little in the way of
technology or skill transfer. All of the revenues from Burma's
exports of gas and oil are accrued by the regime.
At a micro-level, the almost complete stifling of economic
innovation by the military regime. Whenever there has occurred
enterprise development in particular sectors, these are
``shaken-down'' for kickbacks of various kinds--usually they
are threatened with expropriation and even nationalisation.
Such then are some of the broad factors that inform Burma's current
economic circumstances. Below we will detail more closely specific
sectors of Burma's economy, their current condition, and immediate
prospects.
economic growth
In February 2006, Burma's Minister of National Planning and
Economic Development, Soe Tha, announced that his country's growth rate
for 2005 would be 12.2 per cent.\1\ This topped even 2004's strong
growth of 12.0 per cent, and made Burma (certain small oil producing
countries excepted), the fastest growing economy in the world.
---------------------------------------------------------------------------
\1\ Minister quoted in The Myanmar Times, vol.16, no.305, 20-26
February 2006.
Table 1.--Claimed Annual GDP Growth Rates, Burma 1999-2004
[ % p.a.]
------------------------------------------------------------------------
1999 2000 2001 2002 2003 2004 2005
------------------------------------------------------------------------
10.9 13.7 11.3 10.0 10.6 12.0 12.2
------------------------------------------------------------------------
Source: ADB (2004 and 2005).
If only it were true . . .
Stating anything definitive with respect to economic growth in
Burma is fraught with the difficulties pertaining to a country in which
the official statistics are notoriously unreliable (even deliberately
mis-stated), and collecting data otherwise is difficult. Burma does not
publish national accounts statistics, and the only growth data that is
made available is that which accompanies ministerial statements such as
the one above. Nevertheless, we can be sure that economic growth in
Burma is well below the Minister's claims. His boast is greatly at odds
with even the most cursory glance at the economic circumstances on the
ground in Burma, circumstances which point to ever deeper levels of
poverty for the average citizen, and of an economy that at worst is on
the verge of collapse, and at best cycles through bare subsistence.
More substantially, however, we can dispute the Minister's claims
through various proxy measures and indicators of economic growth. For
instance, if Burma was truly growing along the lines claimed by the
SPDC, one would expect to see it using more productive resources--
energy, land, labour, capital, and so on. We do not see this. Indeed,
as the Asian Development Bank (2005:30) notes, electricity usage in
Burma actually fell by 32.4 per cent across 2004-05. Amongst other
indicators--in the same period cement output fell 8.5 per cent, sugar
production fell by 2 per cent, and credit extended to the private
sector (Table 3 below) was only fitfully recovering from its collapse
the year before. In 2005 it is likely that manufacturing as a whole
contracted--not a result one would expect to see (the sector
contributes just over 10 per cent of GDP) for an economy growing in
double-digits (EIU 2006:18). In addition to these ``internal'' proxies,
however, if Burma was actually growing at the rates claimed by the
SPDC, we would also presume to see certain patterns in its economy that
history tells us to expect of rapidly growing economies (Bradford
2004). We should see less reliance on agriculture, greater reliance on
industry, and even the emergence of services. Of course, these are
long-term patterns, but shorter-term trends are generally at least
consistent with them in countries that truly have enjoyed high growth
(and for which the Asian ``tiger'' economies and China are exemplary).
Burma displays none of these structural dynamics. Indeed, as
demonstrated by Bradford (2004), agriculture has assumed a greater role
in Burma's economy in recent years. In short, either the military
regime's claimed economic growth numbers are greatly at odds with
reality, or the country has truly found a unique path to economic
prosperity.
An alternative set of growth numbers (Table 2 below), more
consistent with our critique here (and with Burma's recent economic
history), have been estimated by the Economist Intelligence Unit (EIU
2006):
Table 2.--Economic Growth Estimates (EIU)
[% p.a.]
------------------------------------------------------------------------
2001 2002 2003 2004 2005 2006
------------------------------------------------------------------------
5.3 5.3 -2.0 -2.7 2.9 1.9
------------------------------------------------------------------------
As can be seen from the estimates above, moderate economic growth
returned to Burma in 2005 and this will likely continue through 2006.
Such growth is in no way reflective of any bout of economic reform in
the country, but instead is driven by the increasing global demand for
energy which has pushed up the price of natural gas. Burma currently
exports natural gas only to Thailand in sizable quantities, but new
projects are currently being brought on stream via a series of deals
with Chinese, Indian and South Korean investors. Increasing gas prices
and export volumes caused Burma's trade balance to turn positive in
2005 (EIU estimate: 4.4 percent of GDP), and it was this contribution
that was responsible for the country's estimated positive rate of
economic growth overall. Contributions from agriculture remain flat
(despite relatively good harvests), whilst other sectors of the
economy--manufacturing, transport, services, tourism--are likely to
detract from economic growth. These sectors face particular downside
risks in 2006, ranging from further disastrous policy choices by the
military regime, high oil prices, potential avian influenza outbreaks,
political unrest at home and abroad (especially Thailand), capricious
policy changes, consumer boycotts, and so on.
macroeconomic policy
Fiscal Policy
Macroeconomic policymaking in Burma is coloured by one overwhelming
fact--the irresistible demand of the state upon the country's real
output. This demand far exceeds the state's ability to raise taxation
revenue, and accordingly has led to a situation in which the state
``finances'' its spending by the simple expedient of selling its bonds
to the central bank. This policy (in economics parlance, ``printing
money') distorts every other aspect of policymaking in Burma. Fiscal
policy is simply concerned with the raising and spending of funds,
monetary policy likewise with keeping interest rates sufficiently low
(as shall be examined, negative in real terms) to minimise financing
costs. Neither plays a counter-cyclical or developmental role, and both
seriously blunt the functioning of the market economy.
Table 3 below illustrates the financial demands of the state in
Burma on the country's financial system.
Table 3.--State Share of Burma's Financial Resources: Selected Indicators
[Kyat millions]
----------------------------------------------------------------------------------------------------------------
Commercial Public
Central bank Commercial bank bank lending holdings of
Year lending to lending to to private Government
Government Government sector bonds
----------------------------------------------------------------------------------------------------------------
1999........................................... 331,425 12,460 188,149 378
2000........................................... 447,581 36,159 266,466 463
2001........................................... 675,040 40,985 416,176 504
2002........................................... 892,581 43,248 608,401 563
2003........................................... 1,262,588 35,546 341,547 544
2004........................................... 1,686,341 89,217 428,391 505
2005*.......................................... 2,065,038 74,693 559,555 **457
----------------------------------------------------------------------------------------------------------------
*As at end--October.
**As at end--January.
Sources: IMF (2006), Myanmar Central Statistical Office (MCSO 2006)
As can be seen from Table 3, the demands of the state upon Burma's
financial resources swamps all others. Central bank lending to the
government is the favoured device for financing government expenditure.
Yet, as can also be seen from the data above, the state is also a
borrower from Burma's (nominally) commercial banks. The latter provides
the private sector with little more than a quarter of the funds that
Burma's financial system provides to the central government. The small
amount of government bonds held by the general public, an infinitesimal
proportion (substantially less than one percent) of the bonds sold to
the central bank, is indicative of the lack of confidence the citizens
have in such state-created financial assets.
In recent years the SPDC has introduced dramatic increases in the
taxes it levies. Customs duties alone rose by over 400 percent in 2004/
05 (due to a mix of increases in tax rates, and exchange rate
formulae--more on which below). Notwithstanding this, total central
government tax revenue in fiscal year 2004/05 came to just K278,024
million (EIU 2006:17). The SPDC does not publish data on its spending,
but given that new advances to the regime from the central bank came to
K378,697 million in roughly the same period, it is reasonable to assume
that taxes account for little more than 40 percent of government
spending.
Monetary Policy
Monetary policy in Burma is formally the responsibility of the
Central Bank of Myanmar (CBM). However, a number of factors determine
that it is incapable of yielding any influence over monetary conditions
in Burma.\2\ The first and most simple of these factors is that Burma
has in place interest rate controls that cap lending rates at 15
percent per annum, and do not allow deposit rates to fall below 9.5
percent per annum. These rates, and the rate at which the CBM will
provide funds to the commercial banks (the so-called ``CBM rate',
currently at 10 percent), have not changed for a number of years
(Turnell 2006). Given that Burma's inflation rate was (conservatively)
put at just over 20 percent in 2005, this implies that ``real''
interest rates in Burma have been substantially negative (EIU 2006:5).
The motivation of the regime for locking in such rates (which result in
substantial distortions in capital allocation), is to minimise the
interest rates paid on government debt. Currently, 3 and 5-year Burmese
government bonds have fixed-yields of 8.5 and 9.0 percent respectively
(MCSO 2006). In common with other countries with an underdeveloped
financial system (on which, more below), the CBM is likewise unable to
employ devices (open market operations, rediscount facilities,
repurchase agreements) that are part of the standard tool box of
central banks. The distrust of Burma's currency, the Kyat, has created
parallel (black-market) foreign currency spheres in Burma, and these
are also beyond the influence of the CBM. Finally, it perhaps goes
without saying that the CBM does not enjoy operational independence
from the state, and accordingly has no credibility beyond it.
---------------------------------------------------------------------------
\2\ Not that, under the present regime, the CBM would be allowed
any real power anyway. This fact was dramatically revealed during the
2002/03 banking crisis, when the CBM was sidelined in favour of an
obscure brigade commander in the (unsuccessful) attempts to manage
matters (Turnell 2003).
---------------------------------------------------------------------------
Exchange Rate
Burma has a fixed-exchange rate policy that officially links the
Kyat to the US Dollar at the grossly inappropriate rate of K6:$US1.\3\
This official rate, however, is just one of a number of exchange rates
applicable to Burma's currency. The most important of these rates, and
the only one relevant to the people ``on the street'' in Burma, is the
``black market'' or ``unofficial'' rate. Currently this rate stands at
around K1,160:$US1, nearly two hundred times below the official
standard promulgated by the regime. This rate is, of course, subject to
daily, even hourly, fluctuation according to the perceptions of the
country's prospects. Wild swings in the unofficial rate are reasonably
frequent, to which the SPDC's counter, instead of engaging in
meaningful currency reform, is invariably to order the rounding up of a
cohort of ``usual suspect'' foreign exchange dealers. As a consequence
of the United States highly effective sanctions imposed on Burma, the
SPDC has employed various coercive measures to try to discourage the
use of the US dollar, and in favour of the Euro, the Singapore dollar,
the Thai Baht and the Yen. These measures have had only limited
success, and the US dollar remains a highly prized store of value
(especially, in this context, ``new'' $US 100 bills).\4\
---------------------------------------------------------------------------
\3\ Technically, the Kyat is fixed to the IMF's ``Special Drawing
Rights'' at a rate of K1:SDR8.5085--which yields are more or less
constant K6:$US1.
\4\ The author can confirm that the $US also remains the favoured
medium through which larger Burmese businesses continue to conduct
their activities.
---------------------------------------------------------------------------
In addition to its sometimes wild fluctuations, the unofficial
value of the Kyat has been in secular decline for some time, and in
this it acts as something of a barometer of Burma's macroeconomy under
the military regime. Table 4 below records its declining value vis-a-
vis the US dollar over the last decade:
Table 4.--Indicative (Unofficial) Exchange Rates
[Kyat/$US1]
----------------------------------------------------------------------------------------------------------------
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
----------------------------------------------------------------------------------------------------------------
240 340 350 500 650 960 900 1,000 1,300 *1,160
----------------------------------------------------------------------------------------------------------------
*As at March
Source: Burma Economic Watch.
In addition to the ``official'' and ``unofficial'' exchange rates
there are other, ``semi-official', rates that apply depending on the
counterparties and circumstances. For instance, a rate of K450:$US1
currently applies for all funds brought into Burma by U.N. agencies and
international NGO's.\5\ This rate, when enforced, means that such
organisations provide the SPDC with foreign exchange effectively at
less than ``half-price'' (the organisations are likewise compelled to
conduct their foreign exchange operations via the state-owned Myanmar
Foreign Trade Bank). This same exchange rate applies, for the purposes
of excise calculation, to many exporters and importers in Burma
(regardless of the rate they actually conduct their business in).
---------------------------------------------------------------------------
\5\ Information provided to the author by an official, but
confidential, source. This matter has been subsequently reported in the
press (Parker and Yeni 2006).
---------------------------------------------------------------------------
The regime's multiple and divergent exchange rates are the public
face of Burma's macroeconomic malaise. They also provide for
extraordinary opportunities for corruption. It is clear, for instance,
that having access to foreign currency at anything close to the
official exchange rate presents the recipient with the potential of
immediate windfall gains. Reforming and unifying Burma's exchange rate
regimes, which almost certainly should mean allowing the Kyat to
``float', should be a first-order priority in any future reform
program. Unfortunately, such a reform program is unlikely from a regime
that is clearly the existing system's leading beneficiary.
``Capricious'' Policy Making
One of the most damaging features of macroeconomic policymaking in
Burma (of all types), is that it is often made in ways that to
observers appears highly capricious, arbitrary, selective and even
simply irrational. Examples of such decisionmaking are legion, of which
the following are but a small but indicative recent sample:
In October 2005, the SPDC suddenly announces an eightfold
increase in the retail price of gasoline.
In 2004, in order to stem rising domestic prices, the SPDC
announces a ban on rice exports. Just a year earlier the SPDC
had brought in measures designed to substantially liberalise
the avenues through which rice producers could export.
Various announcements through 2005 that exporters/importers
in Burma were to henceforth use the Euro rather than the $US in
their transactions.
The (numerous) changes to tax and duty levies on
commodities.
Reflexive cycles of relaxation/restriction on border trade.
Sudden arrests and purges of regime insiders when,
occasionally, they call attention to the regime's follies and
incompetence. Legal procedure scarcely matters in Burma, but
``economic crime'' is the usual charge.
The sudden announcement in 2005 that Burma's administrative
capital would relocate from Rangoon to Pyinmana. Not strictly
an economic decision, but there is little to suggest that the
economic dislocation costs of the move were seriously
entertained.
external sector
Trade
As noted in the overview, it is only from the external sector that
any growth in Burma's economy is apparent, or likely. Driven by rising
gas export prices and volumes, and augmented by a precipitous decline
in imports (more on which below), Burma recorded a trade surplus in
2004 of over $US900 million. For the first 3 months of 2005, the latest
data publicly available, the surplus in this item stood at nearly
$US470 million (IMF 2006). With gas prices rising across 2005 and
greater volumes likely to have been shipped, a large trade surplus just
in excess of $US 1 billion for the year as a whole is expected. For
2006 this trend will almost certainly continue, with the EIU (2006:5)
predicting an annual trade surplus of $US 1.2 billion. It will be noted
from Table 5 below, however, that imports in Burma have been falling in
recent years. This seems unlikely to continue for much longer,
especially as Burma imports required infrastructure to develop the new
gas fields that have been the subject of recent deals. Table 5 also
reveals that, to a considerable extent, Burma's trade surpluses are
offset by deficits in services and in income payments--all of which
diminish the overall surplus on current account. This trend likewise
will continue into the future--driven by the repatriation of profits by
the (largely foreign) firms investing in Burma's energy sector.
Table 5.--Burma's External Sector: Selected Indicators
[$US millions]
------------------------------------------------------------------------
Current
Year Goods Goods account
exports imports balance
------------------------------------------------------------------------
1999............................. 1,293.9 2,181.3 -284.7
2000............................. 1,661.6 2,165.4 -211.7
2001............................. 2,521.8 2,443.7 -153.5
2002............................. 2,421.1 2,022.1 96.6
2003............................. 2,709.7 1,911.6 -19.3
2004............................. 2,926.6 1,998.7 111.5
2005*............................ 836.6 364.5 296.6
------------------------------------------------------------------------
*As at end--1st Quarter, Source: IMF (2006)
Table 6 below reveals the source of Burma's exports, and
illustrates the dominance of gas exports over other items. The growth
of gas exports is also dramatically revealed--their value exceeding
that of the whole of 2004 by the end of the first quarter 2005. So far
most of this gas is sourced from the existing Yadana and Yetagun fields
(the product of which is exported to Thailand), but this will shortly
be joined by gas piped from sites soon to come on stream, including
that of the (offshore) Korean/Indian/Burmese ventures in Rakhine State.
From Table 6 we can also see that the vast bulk of Burma's exports are
from extractive industries of various types. Worryingly, as the EIU
(2006:24) notes, exports of Burmese teak are likely to be substantially
understated when one considers the pervasiveness of ``illegal'' logging
in the country. Burma's exports of garments and textiles have
substantially contracted over the last 2 years, overwhelmingly a
function of the ending of the Multi-Fibre Agreement that has seen China
increase its share of the global garment industry, at the expense of
smaller-scale players such as Burma (Turnell 2006).
Table 6.--Composition of Exports
[Kyat millions]
----------------------------------------------------------------------------------------------------------------
Export type 2002 2003 2004 2005*
----------------------------------------------------------------------------------------------------------------
Gas......................................................... 4,247 5,919 \6\3,334 3,461
Teak and other Woods........................................ 1,880 1,874 2,149 810
Pulses...................................................... 1,898 1,744 1,407 503
Garments and Textiles....................................... 2,985 2,973 1,298 368
Shrimp and Fish Products.................................... 829 829 1,003 230
Metal and Ore............................................... 288 288 503 220
Rice........................................................ 754 754 112 90
Rubber...................................................... 76 89 81 61
----------------------------------------------------------------------------------------------------------------
*At end--April.
Source: EIU (2004, 2005, 2006), MCSO (2006)
Investment
Burma\6\ is not a large recipient of foreign direct investment
(FDI). The country is regarded as a highly risky destination for
foreign investment, and a difficult location to do business. In a
recent report on economic freedom, the Washington-based Heritage
Foundation ranked Burma third from the bottom (in front of only Iran
and North Korea) with regard to restrictions on business activity.
According to the Foundation, ``pervasive corruption, non-existent rule
of law, arbitrary policymaking, and tight restrictions on imports and
exports all make Burma an unattractive investment destination and have
severely restrained economic growth'' (Miles, O'Grady and Holmes
2006:125).
---------------------------------------------------------------------------
\6\ This figure, based on Burmese official data, is lower than that
suggested by Thai import data. Accordingly, it probably understates
Burma's gas exports in 2004.
---------------------------------------------------------------------------
As can be seen from Table 7, FDI in Burma is overwhelmingly
directed to the gas and oil sectors. Very little FDI makes its way to
industry, and even less to agriculture (which has received FDI of a
mere $US34.4 million since the ``opening'' of Burma 17 years ago).\7\
In terms of source country, the traditional largest investors,
Singapore and Thailand, have in recent times been overshadowed by
China. This trend is likely to continue, albeit with China joined by
greater investment in Burma's gas sector by Indian and Korean
investors.
---------------------------------------------------------------------------
\7\ This figure for agricultural investment, which is consistent
with other sources, was rather surprisingly reported in the Rangoon-
based Weekly Eleven News in December 2005. The report was reproduced
the same month in the online edition of The Irrawaddy, http://
www.irrawaddy.org.
---------------------------------------------------------------------------
Thailand's role as an investor in Burma has eroded in relative
terms as noted, but it remains a pervasive influence on Burma's economy
nonetheless. One recent investment project with far-reaching
implications is a joint venture agreement with Burma (signed in 2005)
to construct four large dams on the Salween River. The dams are
designed to provide hydro-electricity for Thailand, and foreign income
for Burma. Unfortunately, however, the externalities of the project are
far from benign. The dams are located in a region of Burma populated by
Karen, Karenni and Shan--three of the largest of Burma's ethnic groups,
and amongst the most economically marginalised. Such groups have
greatly suffered in the past during the construction of various
infrastructure projects in Burma, and one can only fear that they are
likely to do so again. The United States Congress has itself found that
the military regime's actions against these ethnic groups constitutes a
form of ``ethnic cleaning'. Like so many of the regime's ``big ticket''
development projects, this one shows all the signs of being a disaster
in the making (Akimoto 2004).
Table 7.--Foreign Direct Investment Flows: Sector and Source
[$US millions]
------------------------------------------------------------------------
2003 2004 *2005
------------------------------------------------------------------------
Sector:
Gas and Oil.................... 44.0 54.3 142.6
Real Estate.................... ........... ........... 31.3
Mining......................... 3.4 1.5 6.0
Manufacturing.................. 13.2 2.8 3.5
Transport...................... ........... 30.0 ...........
Agriculture & Fisheries........ 26.4 2.6 ...........
Source Country:
China (incl. Hong Kong)........ 12.9 2.8 126.6
Thailand....................... ........... 22.0 29.0
Japan.......................... ........... ........... 2.7
Malaysia....................... 62.2 ........... ...........
South Korea.................... 0.3 34.9 ...........
United Kingdom................. ........... 27.0 ...........
------------------------------------------------------------------------
*As at end--April.
Source: EIU (2004, 2005, 2006)
Foreign Exchange Reserves
Table 8.--Foreign Exchange Reserves: Selected Countries
[$US millions]
----------------------------------------------------------------------------------------------------------------
South
Year Burma Thailand Cambodia Korea Vietnam
----------------------------------------------------------------------------------------------------------------
1999..................................................... 265 34,063 393 73,987 3,326
2000..................................................... 223 32,016 502 96,131 3,417
2001..................................................... 400 32,355 587 102,753 3,675
2002..................................................... 470 38,046 776 121,345 4,121
2003..................................................... 550 41,077 815 155,284 6,224
2004..................................................... 672 48,664 943 198,997 7,042
2005*.................................................... 774 50,728 939 210,317 8,602
----------------------------------------------------------------------------------------------------------------
* End 1st Quarter, Source: IMF (2006)
Burma's trade surpluses and (to a lesser degree) the flows of FDI,
have swelled the country's official foreign exchange reserves--from $US
265 million in 1999, to over $US 774 million today (Table 8 above). The
latter number, however, is still very low by global or even regional
standards. Table 8 contains a sample of countries that, for a variety
of reasons, Burma might be compared to. It can be seen that Burma has,
by some margin, the lowest level of reserves ``comfort', even when
compared to tiny and poor Cambodia. Of course, Burma's foreign assets
must also be set against its foreign liabilities. These currently stand
at around $US 7 billion (or around 14 times the size of the country's
reserves), and consist for the most part of defaulted loans to the
World Bank and other multilateral lenders (IMF 2006).
monetary and financial sector
Burma's financial system, a mix of state-owned institutions, 17
surviving ``privately owned'' banks of varying degrees of health, and a
dominant informal sector, is failing to meet the country's need for
capital.\8\ As noted in Table 3 earlier, the largest claimant on credit
creation in Burma is the state. Private sector trade and industry in
Burma can access some credit from the private banks, but the
macroeconomic instability of the country means much of this is of a
short-term nature only, and concentrated in such inflation-hedging
sectors as real estate and precious metal and stone trading. Long-term
credit for industrial development is almost completely non-existent.
Personal credit in Burma is available from formal financial
institutions for a handful of well-connected cronies of the regime, but
for the average person in Burma ``credit'' is supplied by friends,
relatives or, less agreeably, the local moneylender--for time
immemorial a ubiquitous presence in the country (Turnell 2006). For
agriculturalists in Burma the availability of credit is especially
dire. According to a recent U.N. agency survey, 80 percent of Burma's
agriculturalists are without access to formal credit of any kind.\9\
---------------------------------------------------------------------------
\8\ Determining what is ``private'' or not is difficult in Burma--a
country where business can scarcely escape the clutches of the regime.
\9\ Information confidentially supplied to the author by the agency
concerned. Of course, even if more credit was available it would make
little difference to the circumstances of Burma's farmers in the
absence of other reforms--notably the exit of the regime from its
incessant meddling and demands on the rural sector. Making credit alone
more accessible raises the risk of simply making Burma's farmers more
indebted.
---------------------------------------------------------------------------
To an uninformed observer, it must have seemed possible at the dawn
of 2002 to entertain some optimism with regard to the financial system
in Burma, particularly with respect to the private banks. These had
emerged only since 1990, and the implementation of certain financial-
sector reforms (principally the ``Financial Institutions of Myanmar
Law'' and the ``Central Bank of Myanmar Law'). By 2002 the private
banks appeared to be growing strongly and, amongst the largest of them,
the creation of a degree of trust and even ``brand recognition'' seemed
apparent. Beneath the surface, however, all was not well. Burma's
interest rate restrictions imposed by the regime (noted above) greatly
hampered the private banks in traditional intermediation (taking in
deposits and making loans), forcing them into activities of high risk
and questionable legitimacy. That said, some of the private banks had
been established in the first instance precisely to conduct and
disguise unorthodox and criminal activity (regarding the latter, the
laundering of narcotics money especially), while others were little
more than corporate ``cash boxes'' for various entities connected with
the regime. In 2002, however, all of this bubbled to the surface as a
financial crisis engulfed Burma.
At the centre of Burma's 2002/03 financial crisis was a banking
collapse that was almost archetypal of such phenomena. However, the
crisis did not begin in the banks. Rather, it began, in late 2002, with
a series of failures amongst what were known in Burma as ``private
finance companies'--in effect, ``institutions'' that were for the most
part little more than gambling syndicates and ``ponzi'' schemes.\10\
Though these firms were not legally authorised deposit-taking
institutions, they presented a tempting investment opportunity for
Burmese seeking a non-negative return on their funds.\11\ Such
temptation had an irrational side in promised rates of returns typical
of ponzi schemes, but there was a rational aspect to it as well since,
as noted, the rates the banks could pay on deposits was effectively
``capped'' at 9.5 percent. In 2002 inflation was estimated to be in
excess of 55 percent per annum, meaning that putting money in the bank
was a (certain) losing proposition in real terms (IMF 2006).
---------------------------------------------------------------------------
\10\ For a detailed account of Burma's 2003 banking crisis, see
Trnell (2003). Ponzi schemes pay extremely high returns to their
members out of the capital of new members. They must ultimately fail
when the supply of new members dries up.
\11\ That is, these schemes were not authorised under The Financial
Institutions of Myanmar Law (1990).
---------------------------------------------------------------------------
The crisis in Burma's private finance companies quickly spread to
the private banks--a contagion perhaps unremarkable given the country's
history of periodic monetary and financial crises under military rule.
Long lines of anxious depositors formed outside the banks, a phenomenon
that rapidly swelled into a classic ``bank run'. From this moment on,
the response of the relevant monetary authorities in Burma (principally
the CBM) was almost wholly destructive. Late and inadequate liquidity
support to the banks by the CBM was overwhelmingly negated by the
imposition of ``withdrawal limits'' on depositors that escalated into
an outright denial of depositors of access to their money. Even worse,
loans were ``recalled'' with little consideration given to capacity to
repay. More potent breaches of ``trust'' in banking would be difficult
to imagine. With a full-scale banking crisis now in play, there
followed the usual symptoms of such events--bank closures and
insolvencies, a flight to ``cash', the creation of a ``secondary
market'' in frozen deposits, the cessation of lending, the stopping of
remittances and transfers, and other maladies destructive of monetary
institutions. By mid-2003 the private banks had essentially ceased to
function. In 2004 selected banks reopened, some of the largest closed
completely (including the Asia Wealth Bank and the Myanmar Mayflower
Bank, then the largest and third largest respectively of Burma's
private banks), and a weak recovery began.
Table 9.--Selected Financial Indicators
[Kyat millions]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Time, savings and foreign
Year Demand deposits currency deposits Money + Quasi money (M2)
--------------------------------------------------------------------------------------------------------------------------------------------------------
1999 72,707 216,549 562,224
2000 119,746 335,574 800,542
2001 206,349 450,560 1,151,713
2002 290,520 541,307 1,550,778
2003 82,948 386,298 1,572,402
2004 139,880 594,169 2,081,824
2005* 164,855 693,465 2,536,861
--------------------------------------------------------------------------------------------------------------------------------------------------------
*As at end 1st Quarter.
Source: IMF (2006) and MCSO (2006).
Table 9 above reveals the progress thus far of this anaemic
recovery. As can be seen, both demand as well as less-liquid deposits
have bounced back, though the former are still below the levels of late
2002. Taken together, in 2005 total bank deposits of K858,320 million
were a mere 33.8 percent of the total money supply (M2)--indicating, as
of course did the data on lending in Table 3 earlier, that the state
remains by far the dominant actor in Burma's financial sector.
Of course, the data in Table 9 can also be profitably employed to
once more critique the SPDC's growth claims in recent years. For
instance, the regime boasted that Burma's economy grew a vigorous 10.2
percent in 2003--a year in which new lending to the private sector
ceased, loans financing existing activities were recalled and all the
measures of private monetary assets declined dramatically. If matters
were not serious they could be laughable. According to the SPDC, Burma
can not only grow strongly without the increased use of energy and
other ``real'' factors of production--it can also do it seemingly
without money.
agriculture
Burma remains an overwhelmingly agricultural country. Agriculture
accounts for around 57 percent of Burma's GDP and engages over 70
percent of its labour force (UNDP 2003). Nevertheless, for many years
it has been a sector of profound neglect and routine exploitation by
the Burmese government. Critical inputs such as fertiliser are
unavailable to most farmers at prices they can afford, and over 80
percent of Burma's land under cultivation lacks irrigation of any form
(Dapice 2003, EIU 2006:22). As noted earlier, credit from formal
institutions is unavailable to most farmers in Burma, and at present
less than 3 percent of bank lending in Burma is extended to
agriculture. Inexplicably, the private banks are forbidden to lend for
farming. Meanwhile, recent experiments in microfinance under the
auspices of the UNDP are moving toward failure in ways sadly familiar
to such interventions (Turnel12005).
In 2003, Burma's military regime made great noises about
liberalising the trade in rice, internally and externally. In practice,
however, great interference by the state in the basic decisions taken
by farmers--what, how and how much to produce--has continued unabated.
Of course, in many areas of Burma a final blow is the exactions of
Burma's military forces, the Tatmadaw, forced by the country's strained
finances to ``live off the land'' (Vicary 2003, 2004).
In recent years the SPDC has adopted a number of programs designed
to increase the amount of land under cultivation in Burma. Such
efforts, which include the so-called ``summer paddy program', and
various schemes designed to reclaim land in the Irrawaddy Delta, have
invariably failed to achieve their desired outcomes because of the lack
of critical inputs noted above. Farmers without sufficient fertiliser
to prepare new fields, or without credit to allow the construction of
dykes, fences and other land improvements, have been unable to make
effective the exhortations for more ``extensive'' production (Okamoto
et.al., 2003, Thawnghmung 2004).
The end result of these ``supply side'' problems, caused by the
regime's inability to avoid interfering in the basic decisions taken by
farmers, is that Burma's agricultural sector, once the jewel of its
economy (the famed ``rice bowl'' of the British Empire) is operating
well-below potential. Indeed, it is likely that the production of
Burma's great staple, rice, is lagging behind even the country's
population growth rate--bringing with it then the likelihood that in
recent years hunger has been increasing (Dapice 2003, Aung Din Taylor
2002, Vicary 2004).\12\
---------------------------------------------------------------------------
\12\ Also, information privately supplied to the author.
---------------------------------------------------------------------------
money laundering
The shadow of money laundering continues to linger over Burma's
financial sector, and Burma remains one of only two countries (the
other is Nigeria) to be deemed a ``non-cooperative'' jurisdiction with
respect to money-laundering by the Financial Action Task Force
(FATF).\13\ FATF, an associate body of the Organisation for Economic
Cooperation and Development (OECD), is the world's premier agency for
dealing with money-laundering globally. Burma has been named as a non-
cooperating country in each of FATF's annual reports since the
organisation's inception in 1998. Some progress has been made on the
surface--Burma now has legislation designed to counter money-laundering
for instance--but the problem, as is so often the case with respect to
laws in Burma, is enforcement.\14\ As yet it is simply not credible
that Burma's military rulers are serious about eliminating a problem
that they themselves are implicated in.
---------------------------------------------------------------------------
\13\ This finding, re-stated in FATF's annual report for 2005, was
confirmed most recently at a plenary meeting of FATF held in Cape Town
in February 2006 (FATF 2006).
\14\ The legislation concerned is the ``Law to Control Money and
Property Obtained by Illegal Means', promulgated on 17 June 2002. For a
review of the Law and its deficiencies, see Turnell (2004).
---------------------------------------------------------------------------
The acute concern with respect to money-laundering in Burma is that
the country remains one of the world's largest producers of illicit
drugs. Burma is, indeed, the second largest producer in the world of
illegal opium, and it is the single largest producer in Southeast Asia
of methamphetamines (Department of State 2005). Down the years a number
of financial institutions in Burma have been identified as money
launderers, and in 2003 two of the countries largest banks, the Asia
Wealth Bank and the Myanmar Mayflower Bank, were publicly identified as
such by the United States Treasury (an unprecedented move). According
to the Treasury, the banks were:
. . . controlled by and used to facilitate money lending for
such groups as the United Wa State Army--among the most
notorious drug trafficking organizations in Southeast Asia. The
Burmese government has failed to take any regulatory or
enforcement action against these financial institutions,
despite their well-known criminal links.\15\
---------------------------------------------------------------------------
\15\ This ruling is set out in the Federal Register, vol.68,
no.227, Tuesday, November 25, 2003, pp.66305-66311.
In addition to the specific naming of these two specific banks,
however, and consistent with the FATF declarations on Burma, the US
Treasury also announced that Burma as a jurisdiction was of `primary
money laundering concern'. As such, the Treasury Secretary was
authorised (under Section 311 of the USA Patriot Act),\16\ in
collaboration with the US State Department, Department of Justice and
various financial regulators, to direct financial institutions in the
US to take ``special measures'' against Burma's banks.\17\ Such
measures ``range from enhanced recordkeeping or reporting requirements
to a requirement to terminate correspondent banking relationships with
the designated entit[ies]'. In the case of the Burma ruling
specifically:
---------------------------------------------------------------------------
\16\ ``Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism'' (PATRIOT) Act, 2003.
\17\ The Federal Register, op. cit.
The designation of Burma is intended to deny Burmese
financial institutions access to the U.S. financial system
through correspondent accounts. Thus, the proposed rule would
prohibit U.S. financial institutions from establishing or
maintaining any correspondent account for, or on behalf of, a
Burmese financial institution. This prohibition would extend to
any correspondent account maintained by a U.S. financial
institution for any foreign bank if the account is used by the
foreign bank to provide a Burmese financial institution
indirect access to the U.S. financial system. In such a case,
the U.S. financial system would be required to ensure that the
account no longer is used to provide such access, including, if
necessary, terminating the correspondent relationship.\18\
---------------------------------------------------------------------------
\18\ Ibid.
In addition to the United States, many other countries (and
individual financial institutions) have placed limitations on financial
sector linkages with Burma out of money laundering concerns. A
particularly notable example of which was the decision taken by the
Bank of China, in January 2006, to terminate all $US business with both
the state-owned Myanmar Foreign Trade Bank and Myanmar Investment and
Commercial Bank (Ye Lwin 2006).
economic sanctions
Broadly speaking, there is no a priori case, either for or against,
the efficacy of economic sanctions in delivering desired objectives.
History yields instances where economic sanctions have failed to
deliver all the changes desired, but it is also replete with examples
where they have proved decisive. Whether or not economic sanctions will
be useful depend on circumstances and context--of the target country,
and of the countries imposing sanctions.
Of course, in Burma's case the most important ``context'' to be
considered is that the country's democracy movement, the
representatives who won 82 percent of the seats in the country's last
parliamentary election in 1990, continue to call for them. Gainsaying
such a call might rightly be considered as somewhat presumptuous.
Nevertheless, of concern in these pages are the economics of the
matter. Here too, however, the answer is, in the view of the present
writer, unequivocal. As shall be examined below, economic sanctions are
necessary in Burma to help dislodge the real obstacle to the country's
economic development. This obstacle, the regime that has been
oppressing the country for four decades, has never given any hint that
it can engage in meaningful economic reform.
Burma is presently subject to economic sanctions from a number of
countries. The most rigorous economic sanctions on Burma, however, are
imposed by the European Union and the United States. Under the so-
called ``Common Position'' of European Union Foreign Ministers, member
countries ban EU investment in state-owned enterprises (broadly
defined), effectively veto lending to Burma by agencies such as the
World Bank and IMF, preclude travel to the EU by SPDC officials and
their families, and freeze European assets held by the same officials
and family members.\19\ The United States sanctions are authorised
under the ``Burmese Freedom and Democracy Act'' of 2003, and indirectly
via measures to control money laundering (noted above, and captured
under Section 311 of the Patriot Act). The United States goes one step
further than the EU, by imposing a ban on imports from Burma. Other
countries, including New Zealand, Canada and others, impose various
restrictions on their activities in and/or with Burma, most concerned
with aid allocation, the activities of Burmese financial institutions,
and travel by members of the regime.
---------------------------------------------------------------------------
\19\ As an example of the ``broad'' definition of ``state-owned
enterprise', is the EU ban on dealings with companies associated with
Burmese-military controlled entities such as Union of Myanmar Economic
Holdings. Two of Burma's banks, Innwa Bank and Myawaddy Bank, have been
caught in this particular net. It should be noted that material support
to Burma from both the World Bank and IMF would be on hold for reasons
unconnected to sanctions--given that the country is currently in
default on its loans from these institutions.
---------------------------------------------------------------------------
Unlike some other sanctions regimes, EU and United States sanctions
on Burma are carefully calibrated so as not to block critical exports
to the country of food, medicine and similar essential supplies.
All of the above said, sanctions alone are not going to bring about
the change required in Burma, but in the view of this author they are a
critically important component of a multi-faceted strategy that must
contain ``sticks'' as well as ``carrots'. This support for sanctions is
based on the following propositions:
The existing sanctions on Burma are well-targeted.
Certainly, it is true that a small number of Burmese workers
have lost their jobs because of sanctions, mostly in the
garments industry. Such numbers affected, however, are an
infinitesimal proportion of Burma's population, the vast bulk
of whom have no contact whatsoever with the traded goods
sector. Moreover, an important simultaneous development to the
levying of sanctions--to wit, the ending, on 1 January 2005, of
the Multi-Fibre Agreement on Textiles (MFAT)--would have meant
that the few jobs that were lost from sanctions would almost
certainly have been lost anyway. The MFAT had previously
limited the exports of various textile categories by assigning
countries ``quotas'' of the principal textile consuming
markets. The effect of the MFAT above all was to thus
artificially limit the exports of China (by a large margin the
cheapest producer) in all sorts of textile categories. The
lifting of these quotas caused the long-expected surge in
China's exports, and a whole host of ``marginal'' exporters
such as Burma, who were previously viable principally because
of the quota system, to lose market share. In short--even
without sanctions, Burma's garment-exporting industry would
have greatly contracted. Of course, the proof of this can be
seen in the dramatic fall in Burma's garment exports beyond the
United States--a consequence not of sanctions, but the
``squeeze'' imposed by China (Turnell 2006).
It is the elite of Burma's economy, instead, who are most
affected by the sanctions thus far imposed on the country. A
sizable number of this elite are ``connected'' with the ruling
regime in Burma, and a high proportion are personally related
to the members of the SPDC itself. Sanctions are likely to
contribute to a successful policy when the relevant incentives
of important groups are consistent with the change desired. The
sanctions currently imposed upon Burma, by the EU but most
effectively by the United States, seem to meet this
requirement.
Burma's poverty is solely a consequence of the policies of
the military regime that has ruled the country for four
decades. Poverty in Burma (in a nation unusually blessed with
natural resources) is the result of a political-economy that
has been consciously shaped by a regime in ways that are not
conducive to growth. Stated simply, the military regime has
actively undermined and prevented the development of the
institutions that history tells us are necessary for growth.
Such institutions include:
-- secure property rights (including of the person) which
encourages saving, investment, innovation, entrepreneurship;
-- a stable and responsive government--not necessarily
democratic, but a government that acts according to rules
rather than individual caprice, and which will address at least
the primary concerns of the populace;
-- relatively honest government--the market is the venue for
trading, rather than the state;
-- limited government--keeping the state's claim on the
nation's surplus to merely that required to fulfil a consensus
of ``reasonable'' functions;
-- a primacy, of rationality and reason in national
decisionmaking.\20\
---------------------------------------------------------------------------
\20\ A similar list, to which the author is indebted, is provided
by the eminent economic historian David Landes in his 1998 book, The
Wealth and Poverty of Nations (1998:217-218)
It takes but a moment's reflection to conclude that Burma enjoys
scarcely any of these attributes. Burma's problems manifestly did not
and do not come from the sanctions that countries impose upon it.
Overwhelmingly, Burma's economic problems are home-grown, but they
require fundamental political reform to solve. The efficacy of
particular measures in bringing about such fundamental reform--whether
sanctions or any other device--should be the criteria against which
judgments are made.
It is the case, at the time of writing, that sanctions combined
with increased diplomatic activity under Secretary Rice at the U.N.
Security Council, are having an impact. Equally important, the Burmese
Freedom and Democracy Act of 2003, as well as the subsequent efforts to
refer Burma to the U.N. Security Council, have stirred Burma's
neighbours into doing something about a country that imposes all sorts
of problems on them (from narcotics and people trafficking, to the
flows of refugees across their borders). In 2005 the countries of the
Association for South East Asian Nations (ASEAN), undertook a number of
measures designed to bring about change in Burma--including; pressuring
Burma to relinquish its ``turn'' to chair ASEAN, appointing a number of
special ASEAN delegates to meet with Burma's leaders and promote
dialog, calls for political reform and the release of political
prisoners by the highest ASEAN bodies, and so on. Beyond ASEAN, at the
United Nations and in approaches to Burma even from countries such as
China and India, change does seem to be ``in the air'. Rewarding Burma
through the removal of sanctions, despite its leaders' recalcitrance
yet at the moment that pressures upon them seem to be building, is
surely ill-advised.
references
Akimoto, Y. 2004, ``Hydro-powering the regime,'' The Irrawaddy, vol.12,
no.6, June, available online at: http://www.irrawaddy.org/
aviewer.asp?a=3757&z=102.
Asian Development Bank (ADB) 2004, Asian Development Outlook 2004,
Manila, ADB.
Asian Development Bank 2005, Asian Development Outlook 2005, Manila,
ADB.
Aung Din Taylor, D. 2002, ``Signs of distress: Observations on
agriculture, poverty, and the environment in Myanmar,'' paper
delivered to the Conference on Burma: Reconciliation in Myanmar and
the Crises of Change, School of Advanced International Affairs,
Johns Hopkins University, Washington D.C., 22 November 2002.
Bradford, W. 2004, ``Fiant fruges? Burma's sui generis growth
experience,'' Burma Economic Watch, no.2 2004, pp.6-14.
Dapice, D. 2003, ``Current economic conditions in Myanmar and options
for sustainable growth,'' Global Development and Environment
Institute Working Paper no. 03-04, Tufts University.
Economist Intelligence Unit (EIU) 2004, Burma (Myanmar): Country
Report, London: EIU.
Economist Intelligence Unit 2005, Burma (Myanmar): Country Report,
London: EIU.
Economist Intelligence Unit 2006, Burma (Myanmar): Country Report,
London: EIU.
Financial Action Task Force 2005, Annual Report 2004-05, available
online at: http://www.fatf-gafi.org/dataoecd/41/25/34988062.pdf.
Financial Action Task Force 2006, Chairman's Summary, Cape Town
Plenary, 15-17 February 2006, available online at http://www.fatf-
gafi.org/dataoecd/16/23/36174130.pdf.
Fullbrook, D. 2006, ``Resource-hungry China to devour more of Burma's
gas and oil industry,'' The Irrawaddy, 1 February, online edition
at: http://www.irrawaddy.org.
International Monetary Fund (IMF) 2006, International Financial
Statistics, February, Washington D.C.: IMF.
Landes, D.S. 1998, The Wealth and Poverty of Nations, New York: W.W.
Norton.
Miles, M.A., O'Grady, M.A., and Holmes, K.R. 2006, 2006 Index of
Economic Freedom: The Link Between Economic Opportunity and
Prosperity, Washington D.C.: Heritage Foundation.
Myanmar Central Statistical Office (MCSO) 2006, Selected Monthly
Indicators, Rangoon, MCSO, available online at http://
www.csostat.gov.mm/
Okamoto, I., Kurita, K., Kurosaki, T. and Fujita, K. 2003, ``Rich
Periphery, Poor Center: Myanmar's Rural Economy under Partial
Transition to Market Economy,'' mimeo, Institute of Economic
Research, Hitotsubashi University, October.
Parker, C. and Yeni 2006, ``Rangoon agencies await their fate,'' The
Irrawaddy, 8 February 2006, available online at http://
www.irrawaddy.org
Thawnghmung, Ardeth Maung 2004, Behind the Teak Curtain:
Authoritarianism, Agricultural Policies and Political Legitimacy in
Rural Burma, London: Kegan Paul.
Turnell, S.R. 2002, ``Reforming the banking system in Burma: A survey
of the problems and possibilities,'' Technical Advisory Network of
Burma, Working Papers 7, Washington D.C.: The Burma Fund.
Turnell, S.R. 2003, ``Myanmar's banking crisis,'' ASEAN Economic
Bulletin, vol.20, no.3, December, pp.272-282.
Turnell, S.R. 2004, ``Burma bank update,'' Burma Economic Watch, No.1
2004.
Turnell, S.R. 2005, ``A Survey of Microfinance Institutions in Burma,''
Burma Economic Watch, no.1/2005.
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Vicary, A.M. 2001, ``Foreign direct investment and the garments
industry in Burma,'' Burma Economic Watch, no.1 2001.
Vicary, A.M. 2003, ``Economic non-viability, hunger and migration: The
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Senator Murkowski. Thank you, doctor.
Now let us at least go to Ms. Thin Thin Aung. Welcome.
STATEMENT OF THIN THIN AUNG, MEMBER OF THE PRESIDIUM, WOMEN'S
lEAGUE OF BURMA
Ms. Aung. Thank you, Madam Chair, for inviting me here
today to discuss the situation in Burma and Burma-India
relations and how Burma represents a new and nontraditional
security threat to the region. I also want to express my
gratitude to Senators Mitch McConnell and Dianne Feinstein. All
freedom-loving Burmese welcome and honor their efforts and
actions to promote democracy in Burma. Their work is widely
known and deeply appreciated.
By way of background, I am Burmese. I participated in the
nationwide pro-democracy uprising in Burma in 1988. After the
military coup and the crackdown on the peaceful demonstrators
by the military regime, I had to flee my country for India,
where I have been living for nearly 18 years. I belong to an
organization called Women's Rights and Welfare Association of
Burma, based in New Delhi, and currently I am a member of the
presiding board of the Women's League of Burma, which is an
umbrella group of exiled women's organizations from Burma.
I came to India not only to flee from the arrest of the
military regime, but also to get help from the Indian
government for the restoration of democracy in Burma. The
Indian government was extremely supportive of Burma's democracy
movement. India was the first neighboring country to extend
active support to the pro-democracy movement in Burma and the
Indian government provided refuge to Burmese students who came
to India after the wake of the 1988 uprising that was brutally
crushed by the military.
India internationally also condemned Burma's authoritarian
military regime when it refused to hand over power to Aung San
Suu Kyi and her party, the National League for Democracy,
following the 1990 general elections. The NLD won those
elections with over 80 percent of the vote.
Because India and Burma have centuries-old historical
connections, the two nations have enjoyed mutual contact and
ties in the realm of religion, culture, trade, law, political
philosophy, and togetherness in their struggle for independence
from colonial rule. In 1993 the Indian government honored Aung
San Suu Kyi with their highest civilian award, the Jawaharlal
Nehru Award for International Understanding.
Madam Chair, what was once a noble policy towards Burma
based on democratic values has been replaced during the last
decade by one that marginalized aspirations for freedom of the
Burmese people and our ethnic nationalities. Since the mid-
1990s the Indian government has sought to develop its
relationship with Burma's military generals. Successive Indian
governments have refused to acknowledge or speak out against
the horrors that Burma's military regime is inflicting on my
country.
Due to a perception within Indian national security circles
that better relations with Burma's military regime is needed to
check its own insurgency and Chinese influence, India's
relationship with Burma has considerably warmed. For example,
India is now providing military training and reportedly selling
arms and military hardware to the ruling junta. This apparently
is to check the Chinese push to acquire more Burmese bases so
it can project power into the Indian Ocean.
It is unbelievable that the relationship between India, the
largest democracy in the world, and the ruling junta in Burma
lacks any discussion of democracy, political pluralism, or even
the simple fact that murdering political prisoners is wrong.
Earlier this month when former political prisoner Thet Naing Oo
was bludgeoned to death in a political killing by the regime
militias, international condemnation was swift, but India's
silence was deafening.
Today Burma is ruled by a group of thugs who lack any
political legitimacy and use liberal doses of terror and
intimidation to maintain their grip on power. The state they
have created is what I call a nontraditional threat to our
region. For example, Burma's SPDC spends billions of dollars on
arms that are used to oppress the people and outfit the second
largest military in Southeast Asia.
Madam Chair, the budget for HIV/AIDS in Burma is reported
by head experts as less than $25,000 per year. Burma is the
epicenter of new streams of drug-assisted HIV/AIDS that are
transferred to China, India, and throughout the region through
illicit narcotics smuggling routes. The same routes that bring
Burmese opium and methamphetamines, often grown and
manufactured in junta-controlled regions, to flood the region
are also bringing these new strains of HIV/AIDS.
The recent announcement of bird flu is another example of
the danger the regime poses to the region. On March 17, 2006,
Burmese authorities announced that they found the H5N1 strain
and were culling chicken and duck flocks. However, it was
already happened 5 days before they made official announcement
to the Burmese people. This delay could have, and we are still
not sure if it has not, opened the door to the spreading of the
disease throughout the country and made the jump into
Bangladesh, India, China, and other neighboring states. There
is no doubt about that that we need to convince the Indian
government that its own national interests are best met, not by
coddling a murderous regime, but using its resources to help
realize the aspirations of the Burmese people for a state based
on democracy, individual liberties, and human rights.
A Burma under a democratic government can address the
social ills within the country and create dynamic economic
conditions that can provide new markets for Indian and regional
products while providing energy and materials that both India
and China need to fuel their growing economies.
The formation of the Indian Parliamentarians for Democracy
in Burma, IPFDB, last December was an important step in this
direction. This group of Indian members of parliament is
dedicated to raising the issues of Burma in the parliament and
questioning the government for its policy towards Burma. I hope
that the forum will be able to increase the amount of pressure
on the government of India to review its policy towards Burma,
especially as more and more members of parliament join the
effort. I hope that the U.S. Congress can strongly encourage
the Indian parliamentarians to continue their great work.
I want to congratulate President Bush on raising Burma
during his trip this month to India. It is encouraging to learn
that President Bush and Prime Minister Monmahon Singh agreed to
call for the regime to release our leader, Aung San Suu Kyi. I
want to ask the United States to use its close relationship to
convey to India the threat posed by the regime and encourage
the country to play a meaningful and responsible role in the
restoration of democracy in Burma.
I want to spend a moment discussing the horrible human
rights situation in Burma. The military regime, SPDC's,
violations of human rights include the destruction of villages,
massive forced relocation, rape of ethnic women and girls by
the SPDC soldiers, and widespread forced labor. There are more
than 1,100 political prisoners, including 13 members of
parliament elect, languishing in various jails inside Burma.
Harassment of political activists, torture and murder continue
unabated.
Almost 700,000 refugees have poured out of Burma in recent
years as a result of the military's attacks against ethnic
groups and political oppression. As reported by Thailand-Burma
Border Consortium, TBBC, between 600,000 and 1 million ethnic
peoples are hiding in the jungles and mountains in the eastern
part of Burma to avoid the killings of the Burmese army.
Recently, the Burmese military attacked villages in Karen
State and caused more than 1,000 villagers to flee their homes
to become internally displaced persons. According to Human
Rights Watch, more than 70,000 children are forcibly recruited
into the Burmese army.
The report ``License to Rape,'' produced by the Shan
Women's Action Network, SWAN, and the Shan Human Rights
Foundation, SHRF, in 2002 documents 173 incidents of rape and
other forms of sexual violence involving 635 girls and women
committed by the SPDC troops in Shan State, mostly from 1996 to
2001. The majority of rape incidents were committed in the
areas of central Shan State, where over 300,000 villagers have
been forcibly relocated from their homes since 1996 as part of
an anti-insurgency campaign.
The report ``Shattering Silences'' by the Karen Women's
Organization, published in April 2004, documents 125 cases of
sexual violence committed by the SPDC military troops and Karen
State from 1998 until 2004.
Other sexual violence by the Burmese military and
trafficking of women and girls are also documented in ``Driven
Away,'' produced by the Kachin Women's Association, Thailand;
``Catwalk to the Barracks'' by the Human Rights Foundation of
Monland, Burma, and the Women and Children's Rights Project,
Southern Burma.
These reports expose how the military regime is allowing
its troops systematically and on a widespread scale to commit
rape with impunity in order to terrorize and subjugate the
ethnic peoples of Shan, Mon, Kachin, and Karen States. All
reports conclude that the restoration of genuine peace,
democracy, and the rule of law in Burma are necessary to end
the systematic sexual violence.
Here I would like to offer several policy options. First
and foremost, continue the economic sanctions against Burma,
and I urge bringing Burma up for a resolution within the United
Nations Security Council. Please continue regional efforts to
hold ASEAN accountable for the actions of the regime. ASEAN
accepted Burma into its ranks 10 years ago with the belief that
constructive engagement would bring political change.
Finally, use U.S. diplomatic weight to engage the Indian
government at all levels to convince India that a democratic
Burma is in India's long-term strategic interest.
In closing, I here would like to express gratitude to the
U.S. Congress and government for their efforts to help restore
the democracy stolen from us by the military junta. Today, a
sit here proudly on behalf of the millions of Burmese to say
thank you for the U.S. Congress and U.S. administration for
your words, your deeds, and steadfast determination to stand
with us during our hours of darkness.
Thank you very much.
[The prepared statement of Ms. Aung follows:]
Prepared Statement of Thin Thin Aung, Member of the Presidium, Women's
League of Burma
I want to thank you, Madame Chairwoman, for inviting me here today
to discuss the situation in Burma, Burma-India relations, and how Burma
represents a new, non-traditional security threat to the region. I also
want to express my gratitude to Senators Mitch McConnell and Dianne
Feinstein. All freedom loving Burmese welcome and honor their efforts
and actions to promote democracy in Burma. Their work is widely known
and deeply appreciated.
By way of background, I am a Burmese. I participated in the
nationwide pro-democracy uprising in Burma in 1988. After the military
coup and brutal crack-down on the peaceful demonstrators by the
military regime, I had to flee my country for India where I have been
living for nearly 18 years.
I belong to the organization called Women Rights and Welfare
Association of Burma based in New Delhi. I am a member of the Presidium
Board of the Women's League of Burma which is an umbrella group of
exiled women organizations from Burma.
I came to India not only to flee from the arrest of the military
regime but also to get help from the Indian government for the
restoration of democracy in Burma. The Indian government was extremely
supportive of Burma's democracy movement. India was the first
neighboring country to extend active support to the pro-democracy
movement in Burma. The Indian government provided refuge to Burmese
students who came to India after in the wake of the 1988 uprising that
was brutally crushed by the military. India internationally also
condemned Burma's authoritarian military regime when it refused to hand
over power to Aung San Suu Kyi and her party National League for
Democracy following the 1990 general elections. The NLD won those
elections with over 80 percent of the vote.
Because India and Burma have a centuries-old historical connection,
the two nations have enjoyed mutual contacts and ties in the realm of
religion, culture, trade, law, political philosophy and togetherness in
their struggle for Independence from colonial rule.
In 1993, the Indian government honored Aung San Suu Kyi with their
highest civilian award, the Jawaharlal Nehru Award for International
Understanding.
Madam Chairwoman, what was once a noble policy toward Burma based
on democratic values has been replaced during the last decade by one
that marginalizes aspirations for freedom of the Burmese people and our
ethnic Nationalities.
Since the mid 1990s, the Indian government has sought to develop
its relationship with Burma's military generals. Successive Indian
government has refused to acknowledge or speak out against the horrors
that Burma's military regime is inflicting on my country.
Due to a perception within Indian national security circles that
better relations with Burma's military regime is needed to check its
own insurgency and Chinese influence, India's relationship with Burma
has considerably warmed. For example, India is now providing military
training and reportedly selling arm and military hardware to the ruling
junta. This apparently is to check the Chinese push to acquire more
Burmese bases so it can project power into the Indian Ocean.
It is unbelievable that the relationship between India, the largest
democracy in the world, and the ruling junta in Burma lacks any
discussion of democracy, political pluralism, or even the simple fact
that murdering political prisoners is wrong. Earlier this month, when
former political prisoner Thet Naing Oo was bludgeoned to death in a
political killing by the regime militias, international condemnation
was swift, but India's silence was deafening.
Today, Burma is ruled by a group of thugs who lack any political
legitimacy and use liberal doses of terror and intimidation to maintain
their grip on power. The state they have created is what I call a non-
traditional threat to our region.
For example, Burma's SPDC spends billions of dollars on arms that
are used to oppress the people and outfit the second largest military
in South East Asia. Madam Chairwoman, the budget for HIV/AIDS in Burma
is reported by health experts at less than $25,000/year. Burma is the
epicenter of new strains of drug resistant HIV/AIDS that are
transferred to China, India and throughout the region through illicit
narcotics smuggling routes. The same routes that bring Burmese opium
and methamphetamines (often grown and manufactured in junta controlled
regions) to flood the region are also bringing these new strains of
HIV/AIDS.
The recent announcement of Bird Flu is another example of the
danger the regime poses to the region. On March 17, 2006, Burmese
authorities announced that they found the H5N1 strain and were culling
chicken and duck flocks--however, it was already happened 5 days before
they made official announcement to the Burmese people. This delay could
have--and we are still not sure if it has not--opened the door to the
spreading of the disease throughout the country and made the jump into
Bangladesh, India, China and other neighboring states.
There is no doubt about that we need to convince the Indian
government that its own national interests are best met not by coddling
a murderous regime, but using its resources to help realize the
aspirations of the Burmese people for a state based on democracy,
individual liberties and human rights. A Burma under a democratic
government can address the social ills within the country and create
the dynamic economic conditions that can provide new markets for Indian
(and regional) products while providing energy and materials that both
India and China need to fuel their growing economies.
The formation of the Indian Parliamentarian's Forum for Democracy
in Burma (IPFDB) last December was an important step in this direction.
This group of Indian members of parliament is dedicated raising the
issues of Burma in the parliament, and questioning the government for
its policy toward Burma. I hope that the Forum will be able to increase
the amount of pressure on the government of India to review its policy
toward Burma, especially as more and more members of parliament join
the effort. I hope that the US Congress can strongly encourage the
Indian parliamentarians to continue their great work.
I want to congratulate President Bush on raising Burma during his
trip this month to India. It is encouraging to learn that President
Bush and Prime Minister Manmohan Singh agreed to call for the regime to
release our leader Aung San Suu Kyi. I want to urge the US to use its
close relationship to convey to India the threat posed by the regime
and encourage the country to play a meaningful and responsible role in
the restoration of democracy in Burma.
I want to spend a moment discussing the horrible human rights
situation in Burma. The military regime, SPDC's violation of human
rights include the destruction of villages, massive forced relocation,
rape of ethnic women and girls by the SPDC soldiers and widespread
forced labor.
There are more than 1100 political prisoners, including 13 Members
of Parliament elect, languishing in various jails inside Burma.
Harassment of political activists, torture and murder continue
unabated. Almost 700,000 refugees have poured out of Burma in recent
years as a result of the military attacks against ethnic groups and
political oppression. As reported by Thailand-Burma Border Consortium
(TBBC), between 600,000 and one million ethnic peoples are hiding in
the jungle and mountains in Eastern part of Burma to avoid the killing
of the Burmese army. Recently, Burmese military attacked villages in
Karen State and caused more than one thousand villagers to flee their
home to become Internally Displaced Persons. According to Human Rights
Watch, more than 70,000 children are forcibly recruited into Burmese
military.
The report ,``License to Rape'' produced by the Shan Women's Action
Network (SWAN) and Shan Human Rights Foundation (SHRF) in 2002
documents 173 incidents of rape and other forms of sexual violence
involving 625 girls and women, committed by the SPDC troops in Shan
State, mostly from 1996-2001. The majority of rape incidents were
committed in the areas of Central Shan State where over 300,000
villagers have been forcibly relocated from their homes since 1996 as
part of an anti-insurgency campaign.
The report ``Shattering Silences'' by the Karen Women's
Organization published in April 2004 documents 125 cases of sexual
violence committed by the SPDC's military troops in Karen State from
1988 until 2004. Other sexual violence by the Burmese military and
trafficking of women and girls are also documented in ``Driven Away''
produced by the Kachin Women's Association Thailand (KWAT), ``Catwalk
to the Barracks'' by Human Rights Foundation of Monland (Burma) and
Women and Child Rights Project (Southern Burma). I would like to submit
these reports for the record.
These reports expose how the military regime is allowing its troops
systematically and on a widespread scale to commit rape with impunity
in order to terrorize and subjugate the ethnic peoples of Shan, Mon,
Kachin and Karen States. All reports conclude that restoration of
genuine peace, democracy and the rule of law in Burma are necessary to
end the systematic sexual violence.
I would like to offer several policy options:
First and foremost, continue the economic sanctions against
Burma;
I urge bringing Burma up for a resolution within the United
Nations Security Council.
Please continue regional efforts to hold ASEAN accountable
for the actions of the regime. ASEAN accepted Burma into its
ranks 10 years ago with the belief that constructive engagement
would bring political change.
Finally, use US diplomatic weight to engage the Indian
government at all levels to convince India that a democratic
Burma is in India's long-term, strategic interest; and
In closing, I here would like to express gratitude to the U.S.
Congress and Government for their efforts to help restore the democracy
stolen from us by the military junta. Today, I sit here, proudly, on
behalf of millions of Burmese to say ``Thank You'' for the U.S.
Congress and U.S. administration for your words, your deeds and
steadfast determination to stand with us during our hours of darkness.
Thank You.
Senator Murkowski. Thank you. I appreciate your comments,
certainly your very specific suggestions.
Dr. Green, a couple of questions for you. There has been a
fair amount of discussion about the ASEAN nations and the
various relationships with Burma. Is there a divide within the
ASEAN members on how to approach Burma, and if that is the
case, what does this mean in the long run for ASEAN as a
regional forum to deal with the Burma issue?
Dr. Green. I think there is a division not only within
ASEAN, but within each ASEAN state, on how to handle Burma
because it touches on how these states characterize their own
values, their own roles, their own institutions. ASEAN itself
was created on a principle of noninterference in internal
affairs. It was an organization created so that these countries
with multi-ethnic, multi-religion populations within in many
cases colonial borders, so that they would not interfere in
each other's affairs, and it succeeded in making war among
Southeast Asian nations very unlikely. They got that part.
The strategy was to bring in Burma and through cooperative,
constructive engagement to socialize Burma to this same
concept. I think what many in ASEAN now are realizing is that
this principle of noninterference in internal affairs just is
not good enough, that they are going to be as governments less
effective, that ASEAN itself will have less clout vis-a-vis the
United States or the EU. You also have new parliamentary
leagues growing across the borders of these states.
So, in many ways, the debate is within many of these ASEAN
capitals. My experience in the White House suggests to me that
many of the leaders of ASEAN are among the more enlightened
thinkers on this in their countries. President Yudhoyono, for
example, is, I think, quite forward thinking and his trip, I
think, was probably on balance a good thing in having
Indonesia, a successful democracy, pushing harder for
democracy.
But this is an area of ferment and debate and I do not
think that ASEAN as a whole has figured out how to organize
themselves for it. That is why the United States can, I think,
helpfully play a role in helping ASEAN come to the right
approach and the right conclusions and organize themselves to
push more deliberately for democracy.
There are some divisions among the leaders, I think, that
the junta is exploiting. Traditionally Indonesia was the heart
and soul and leader in ASEAN. There was a period where that was
not the case and I think Prime Minister Yudhoyono is coming
back and trying to put Indonesia at the center. Prime Minister
Takshin would like for Thailand to play a leading role.
Abdullah Bedali, in Malaysia, would like to play that role.
There is a certain amount of competition for the spotlight
among these ASEAN leaders and I think the regime is exploiting
that to some extent, trying to play them against each other.
But on the whole, I think the debate is moving in a
direction that we should encourage through very active
engagement with ASEAN as a whole and with individual member
states to get more concrete about what we expect from Burma. I
think that's one of the main points or recommendations I would
like to leave.
We need to start putting on paper with like-minded states
what we expect, what we are willing to do if they do not
perform, what we are collectively willing to do if they do
perform, begin putting that together. The Six Party Talks
analogy that does not work. In the Six Party Talks we brought
North Korea in from the beginning and North Korea caused the
rest of us to use a lot of our diplomatic leverage to pay them
just to show up, and we had to pull our punches to get them to
show up. I would not worry about whether Burma participates in
this process. In fact, I expect they will not want to
participate at all. The important thing is to start working
with ASEAN and India and others to start setting in concrete a
roadmap we can all live with and work on together. Then we will
worry about how to structure the engagement with the junta.
Senator Murkowski. Well, recognizing just the competition
that does go on for the resources, for the natural resources
that exist within Burma, and recognizing that everybody is
coming into it with a different need does make it a much more
complicated relationship there. Now, a fair amount has been
discussed today, certainly the India relationship, a fair
amount about China's relationship with Burma. How much
attention should we be giving to other geopolitical relations
within the area, other countries that may be perhaps selling
military equipment to Burma or constructing military
capabilities within Burma? Are we forgetting about those or are
they in the midst of the discussions as well?
Dr. Green. That is an excellent point. I want to ask for my
testimony back so I can pay more attention to it. I think you
are absolutely right. Senator McConnell briefly touched on the
North Korea connection. That is very worrisome. The regime,
both regimes, are clearly beginning to mirror each other in
terms of criminal activities, misuse of their own people to
create instability for their neighbors for negotiating
purposes. The autarchy that the junta seeks in Burma I think
would lead them in directions where they will seek weapons of
mass destruction or nuclear weapons. They are not interested in
opening and engaging. They are interested in not changing and
in deterring and defying the world, and I think this is a junta
that is extremely paranoid, that is worried that we or others
will attack them, and one that is interested in weapons.
They are not, as Professor Turnell said, they are not a
resource-rich country in terms of cash, but they do have
resources. They have food, they have things that North Korea
wants. It's a connection that I think we should be watching
very, very carefully.
Senator Murkowski. Do we really know that much about the
relationship between the two or is a lot of what we are saying
assumptions, supposition?
Dr. Green. You know, I think both North Korea and Burma are
hard intelligence targets in the traditional sense. On the
other hand, they both have policies that create refugees, that
create dissatisfied people. I think information is starting to
come out about both places. There is some evidence, as Senator
McConnell suggested, that there are North Koreans active in
Burma. I do not think we know a lot about what they are doing,
but I think we should be trying to learn more.
We also need to put a little bit of pressure on our Indian
friends and on our Thai friends, who are developing
relationships with the Burmese military for the purpose of
dealing with these transnational or transborder problems, but I
think they are sending the wrong signals and enabling the
military. They are not, obviously, doing the kind of thing
North Korea would do, but it is another area that bears careful
watching.
Senator Murkowski. We have not had an ambassador there in
Burma since 1991. How has this affected the formulation, the
implementation of any U.S. policy towards Burma?
Dr. Green. I think what is far more important is how we
interact with the Japanese or the Indians or others on the
ground and also in those capitals. Our charge, as I understand
it, is doing an excellent job, and it is a traditionally
important part of the role of the mission in Rangoon to start
comparing notes. If we are going to multilateralize this
problem and build a coalition, I do not think you have to have
an ambassador. You have to have a very good charge, a very
effective team that can work with other capitals.
The engagement we should be worrying about at this point is
not with the regime; it is with the other players who have
influence on the regime, and I think we are configured to do
that.
Senator Murkowski. Thank you.
Dr. Turnell, I appreciated your comments and the
description of the miracle economy, when actually, looking at
it, that they have actually gone backwards rather than this
incredible forecast that they have presented. It causes one to
wonder what kind of training in economics the Burmese have and
what they teach in terms of economic factors in their schools.
But we appreciate your review of it.
When you speak of the level of corruption, the criminal
activity, the extent of money laundering, and just the effect
that this has on a society, on an economy, when you look to
those western companies, for instance, that go in to operate,
go in to do business into a country, into Burma, I have to
assume that they do have a positive impact on the society
there. That is the assumption that I have been making. But when
you have the level of corruption and criminal activity that you
have, what kind of--what kind of an effect, what kind of an
impact do you have when you have these western companies coming
in to do business into an economy like you have in Burma now?
Dr. Turnell. A very good question because we normally do
have that presumption, of course. I think the first thing to
say about that is that there is not that many western companies
involved in Burma anyway.
Of the small number that are, most are involved in
extractive industries of various kinds, whether it be mining or
logging and so on. So those good things of corporate governance
and so on which we might think might be shared by western
companies being involved in Burma essentially don't happen just
because of the nature of those industries. Those industries are
not about trying to secure customers or develop new products or
ideas or anything like that. It really is just about extracting
resources in some way.
So unfortunately some of those, the good aspects of
business involvement in a particular country, I think are just
not there in the case of Burma because of the nature of the
activities that they are engaged in.
Senator Murkowski. If western companies should decide to
divest their operations in Burma, what happens? Who comes in?
Dr. Turnell. A mixture of things happen. Sometimes
companies from other countries come in and take over. Sometimes
the economic activity, whatever it is, just ceases. That very
often happened around a decade ago when many of the western
companies were leaving Burma, simply because those activities
were fairly marginal in any case. So sometimes some of the
companies were in there for various legacy reasons and that is
particularly relevant in the case of the U.K. There were lots
of--the U.K. still to this day appears quite high up on the
list of countries involved in Burma, but it really goes back to
that colonial period and so on. So for various historical
reasons there were British companies involved.
A lot of those left around a decade ago and essentially
whatever it was they were doing just ceased to function.
Senator Murkowski. You mentioned that there is just not
that many western companies that are operating there, and when
you recognize just the financial uncertainty of any investment
in Burma, what percentage or what is the ratio of the private-
owned enterprises versus state enterprises?
Dr. Turnell. I think one thing I should say is that data on
Burma of course is almost completely unavailable. So what you
have to do is use various proxies to try and work out what is
going on. So in answer to your question, I think we can say
that around two-thirds of the economy is owned by the state. We
can do that just simply by looking at the amount of financial
assets created in the country--borrowing, lending, deposits,
etcetera. Roughly two-thirds of that is commanded by the state,
leaving a third for the private sector.
So we are dealing with a country, in other words, that
notwithstanding so-called reforms begun in the 1990s, is still
very much a state-controlled economy.
Senator Murkowski. There has been a couple mentions of the
fact that this radical suggestion to move the capital--what is
that going to do to the economy? Any ideas?
Dr. Turnell. I think that is a wonderful example of the
arbitrary and irrational policymaking that goes on in the
country. My understanding is that there was, for instance, not
one single economic assessment of that move, not a single
thing.
Senator Murkowski. Is there anything out there? I looked on
the map and it looks like an area that is not around what are
identified as the larger cities. Does this build up an area
that needs to be built up? Is there anything economically to be
gained from this?
Dr. Turnell. I have heard some stories from time to time
that it is somehow on various trade routes from China and so
on, but my understanding is in fact that that is not the case.
It is roughly halfway between Rangoon and Mandalay. There is an
age-old historical episode to do with Aung San during the
Second World War and it was where his troops turned against the
Japanese and so on. But apart from that, it certainly has no
economic importance at all, and the move just from an economic
point of view makes no sense whatsoever.
Senator Murkowski. One last question for you. You had
mentioned in your comments that Singapore has shown great
concern over the money laundering issue. Is Singapore the
biggest player, if you will, in Burma? Do you see them
continuing in that role or do China and India overshadow what
is happening with Singapore and Burma relationships?
Dr. Turnell. I think the whole issue of Singapore really
nicely illustrates what we are saying, actually. Singapore used
to be the biggest player in Burma, but it has withdrawn at a
rapid rate. If we look at new investments in Burma, we find
that Singapore has been completely pushed aside in favor of
China, to some extent India and South Korea, but in those
countries it is very, very limited and just relates to a couple
of projects.
So it is really interesting, I think, the Singapore
withdrawal from the country, which is directly as a
consequence, I think, of the pariah status and in particular
the problems with money laundering and so on. Singapore is very
anxious to set itself up as a clean and honest financial hub in
Southeast Asia and I think, to be honest, it largely is. So the
movement of Singapore out of the country over the last years I
think is really indicative of some of the things going on there
and some of the reactions of Burma's neighbors to Burma.
Senator McConnell mentioned at the start that Burma is
increasingly becoming an embarrassment to its neighbors and I
think the situation with Singapore is perhaps the best example
of that.
Senator Murkowski. Thank you. I appreciate your response.
Ms. Aung, you commented about the change in India's
behavior toward Burma, in part because of China's influence
within the region. As we look to ways to, whether it is Six
Party Talk type of a format or whatever the negotiation might
be, is it possible for change to occur in Burma without
including both India and China at the negotiating table? Do
they both have to be there?
Ms. Aung. India and China are very important, as was said,
and if you can bring Indian government into that it is very
important, because India is a democracy, but at the moment they
are using the policy, on the one hand they are allowing us to
live there and we have freedom of movement there, but on the
other hand they are dealing with the military regime for
business and other security measures. But India has sympathy
for Aung San Suu Kyi and also for democracy movement also. I
think it is possible that if you can use your close
relationship with the Indian government, because the prime
minister also said that they are working for the release of
Aung San Suu Kyi.
Senator Murkowski. A great deal has been spoken and, Dr.
Turnell, you certainly indicated that there is no fiscal policy
in Burma; basically the policy is get as much money to the
regime as possible. Recognizing this, that the vast majority of
the resources have gone to the military, has there been any
effort by the military junta to provide for the health, the
well-being of the citizens in your opinion?
Ms. Aung. The several reports, we can clearly see that the
military regime of Burma uses most of its GDP. In Burma, 40-
plus percent of the budget is for the military, compared to
health and education which is less than 1 percent.
Senator Murkowski. Less than 1 percent?
Ms. Aung. Yes. So in 2001, they said that they have
increased, but 0.3, 0.5 percent is for the social sector. But
still it is very much behind the minimum standards.
Senator Murkowski. One last question. In terms of the
ethnic minority groups, is there much contact at all with the
National League of Democracy with the ethnic minority groups at
all? Are the ethnic minorities part of the leadership in any
way? Is there any relationship there where they are included?
Ms. Aung. Aung San Suu Kyi had the CRBB be formed, the
committee representing the parliament people and the
parliament, where she was able to bring all the ethnic
nationality political bodies and won in the 1990 elections in
Burma. So they are all discussing for a common strategy against
military rule in Burma. It is very much collected.
Senator Murkowski. I am told that we have about 5 minutes
left on a vote, so we are going to take a brief recess here.
This concludes the questions that I have for this panel. I
thank all of you for your testimony, for your time, and for all
your work in this area.
I am told that we will have Mr. John with us when we come
back. So if we can just take about a 5-minute break here and we
will resume. Thank you.
[Recess from 3:47 p.m. to 4:01 p.m.]
Senator Murkowski. Good afternoon again. Sorry for the
short delay. I would like to welcome to the committee Eric
John, the Deputy Assistant Secretary for the Bureau of East
Asian and Pacific Affairs for the Department of State. I am
going to apologize ahead of time, Mr. John. I am told that we
are going to have another vote here shortly, but we do not know
when ``shortly'' is. So until that time, you certainly have an
opportunity to present your testimony, and hopefully, I will
have a chance to get some of my questions in before we have to
go.
But I appreciate your flexibility with the schedule this
afternoon. We heard some good testimony from our panelists.
Senator McConnell was with us. And I understand that you have
been over on the House side keeping busy, so we appreciate your
taking the time to join us this afternoon.
STATEMENT OF ERIC G. JOHN, DEPUTY ASSISTANT SECRETARY, BUREAU
OF EAST ASIAN AND PACIFIC AFFAIRS, DEPARTMENT OF STATE
Mr. John. Thank you very much, Madam Chairman. I thank you
for the invitation to update you and the committee on the
situation in Burma and the administration's strategy for
effecting meaningful change in that tragic country. I would ask
that my entire testimony be submitted for the official record.
Senator Murkowski. We will include it as part of the
record.
Mr. John. Thank you.
Before I delve into the substance of our policy, I would
first like to relate a recent event that highlights the
violence the people of Burma face on a daily basis. Less than 2
weeks ago, Burmese security officials accosted a former
political prisoner, Thet Naing Oo, accusing him of public
indecency. They provoked a confrontation with him in full view
of numerous horrified onlookers and in the end beat him to
death.
Incidents such as this weigh the Burmese people down with a
palpable sense of fear and oppression, reminding us of the
regime's brutality and the need for the international community
to do all it can to bring about change there. Burma remains a
high priority for the President and Secretary Rice. We are
working intensively and closely with partners and others in
Asia and with the U.N. to maximize diplomatic pressure on the
junta to initiate genuine political reform. While there have
been signs of some progress, the road to bringing freedom,
peace, and democracy to Burma remains uncertain.
To fully understand the tragedy that Burma has become, we
should look back 60 years to a time when Burma enjoyed some of
the highest rates of scholastic enrollment in Asia and boasted
a well educated, highly regarded civil service. It was rich
with natural resources and was one of the world's leading rice
exporters. Sadly, Burma's leaders did not capitalize on these
assets and the country's potential. Instead, a series of
generals have for over 40 years implemented irrational and
repressive policies that have caused the Burmese people to
suffer needlessly.
As Secretary Rice recently said in Jakarta: ``A country
that was once the jewel of Southeast Asia is now out of step
with the entire modern experience of its region. A once
thriving economy has collapsed. Universities that once
attracted the best Asian minds are locked shut. The Burmese
regime is now literally retreating into the depth of the
country, closing its people off from the world and robbing them
of their future.''
The latest chapter in Burma's increasingly depressing story
is the advent of Avian influenza. Although the regime cannot be
blamed for the Avian influenza outbreak, its failure to devote
adequate resources to the health sector, its repressive
policies and restrictions on the delivery of humanitarian
assistance greatly increase the risk of this and other
outbreaks spreading.
On a much broader scale, the junta's policies and corrupt
practices have severely hurt the economy, exacerbated the
deterioration of social conditions, led to a steady outflow of
refugees and illicit narcotics, thwarted peace among ethnic
minority populations, and forced the Burmese people to live in
a state of perpetual fear. On the political front, the regime
continues to promote a sham political process.
So how do we bring about a transition from the repressive
isolationist Burma of today to a free and democratic country
integrated into the global community? Although there are no
easy solutions, we have developed a bilateral and multilateral
strategy predicated on maximizing the international pressure on
the regime to reform. This approach includes sanctions,
diplomatic pressure, and statements of public support.
Perhaps the most important component of our strategy is our
intensified diplomatic efforts. We continue actively to engage
with partners and key players to develop support for a common
message to the regime on the need for an inclusive and credible
peace process--political process. We have stressed that the
first steps would have to be the release of political prisoners
and the regime's engagement in a genuine political dialogue
with the opposition and ethnic minorities.
At the Trilateral Strategic Dialogue on March 18, Secretary
Rice, Japanese Foreign Minister Aso, and Australian Foreign
Minister Downer underscored the need for progress in
democratization in Burma. Following Indonesian President
Yudhoyono's visit to Rangoon, senior Indonesian officials
confirmed that he intends to use his influence to press the
Burmese regime to release Aung San Suu Kyi and pursue a
democratic transition. We will continue to work with New Delhi
at the highest levels on this issue. We believe India should
press the regime to take meaningful steps rather than appearing
publicly to accept the status quo.
Multilaterally, we continue to work for ways to keep Burma
on the United Nations agenda, actively exploring ways to build
U.N. Security Council consensus on the need for further
discussions and possible Council action in follow-up to the
December 16 landmark Council briefing. As we do so, we have
been considering factors such as the results of the just-
completed visit to Burma of Foreign Minister Hamid and other
events. We also continue to advocate discussion of Burma in
other U.N. bodies and to encourage U.N. Secretary General Kofi
Anan to remain engaged.
We continue working with the U.N. Secretariat to identify a
successor for the Secretary General's former special envoy and
to strengthen the special envoy's mandate.
Another component of our strategy is sanctions. Let me
state clearly for the record that the administration fully
supports the renewal of the import ban contained in the Burmese
Freedom and Democracy Act. Failure to renew it absent
meaningful reforms by the regime would send the wrong political
message. Our sanctions continue to play a critical role,
reminding the regime that its behavior is unacceptable and that
its leaders will remain isolated as long as they continue this
behavior. They also provide important moral support for the
democratic opposition in Burma and ensure that American
companies will not help fund the luxurious lifestyles of a
select few.
Our strategy also includes public support for Burma's
democratic opposition. The United States has spoken out for
years against the regime's repression of the Burmese people and
its imprisonment of Aung San Suu Kyi and other courageous
advocates for democracy. Just last week, we highlighted the
horrific March 17 fatal public beating of Thet Naing Oo,
calling on the regime to renounce the use of violence and
engage all elements of Burmese political life in a meaningful
dialogue that empowers the people to determine their own
future.
Partners and other key players also are speaking out. After
his recent visit to Burma, Malaysian Foreign Minister Hamid
expressed public concern about the pace of reform and the
regime's failure to allow him to meet Aung San Suu Kyi. Just
last month at the time of the Burmese prime minister's visit to
China, Beijing for the first time publicly called for national
reconciliation in Burma.
Madam Chair, because of the regime's self-imposed isolation
and apparent imperviousness to outside pressure, it will take
an extraordinary effort by the international community to
persuade Burma's rulers to begin and sustain a process of
credible and full national reconciliation. While we still are
not all on the same page, we are much closer than we were. The
administration is engaged at the highest levels. Key countries
in the region have begun to speak out and international
pressure on the regime to change its misguided policies is
slowly mounting.
Burma's road to democracy is neither short nor straight,
but by pressing on with our intense efforts we believe we can
effectively shorten the time it will take to achieve the
freedom, prosperity, and security for which Burma and its
people so desperately yearn and richly deserve. The brutal
killing just days ago of Thet Naing Oo reminds all of us how
high the stakes are there.
Thank you.
[The prepared statement of Mr. John follows:]
Prepared Statement of Eric G. John, Deputy Assistant Secretary, Bureau
of East Asian and Pacific Affairs, Department of State
Madam Chairman, members of the subcommittee,
Thank you for the invitation to come before the subcommittee today
to update you on the situation in Burma and the administration's
strategy for effecting meaningful change in that tragic country.
Before I delve into the substance of our policy toward Burma, I
would like to take a moment to relate a recent event that highlights,
in a very human and tragic way, the oppression and violence that the
people of Burma face on a daily basis. Less than 2 weeks ago, several
security officials accosted a former political prisoner named Thet
Naing Oo, accusing him of public indecency for relieving himself near a
Rangoon teahouse. In most countries, urinating in public might warrant
a citation or a warning. Not in Burma. The security officials provoked
a confrontation with Thet Naing Oo, and in the end, beat him to death,
in full view of numerous horrified onlookers.
Incidents such as this hang over the heads of all Burmese people,
weighing them down with a palpable sense of fear and oppression. They
remind us of the brutality of the regime, and of the need for the
international community to do all it can to bring about change.
Burma remains a high priority for the President and Secretary Rice,
and, as I know, for many Members of Congress as well. We are working
intensively and closely with like-minded partners and others in Asia,
and with the U.N. in New York, to coordinate and maximize diplomatic
pressure on the Burmese regime to initiate genuine political reforms.
While there have been signs of some progress in recent months among our
international partners--and I will cover that later in my testimony--
the road to ultimately bringing to Burma and its people the freedom,
peace and democracy they so richly deserve remains long and uncertain.
However, it is a path the United States and others will continue to
traverse no matter what the obstacles.
To fully understand and appreciate the tragedy that Burma has
become, we should look back 50 or 60 years, when that country seemed
poised to play a significant and positive role in the region and the
world. Burma enjoyed some of the highest rates of enrollment in primary
and secondary schools in Asia, and boasted a well educated, highly
regarded civil service. It was rich with natural resources, and was one
of the world's leading rice exporters.
Sadly, Burma's leaders did not capitalize on these assets and the
country's potential to be a regional leader. Instead, a series of
generals have, for over 40 years, implemented irrational and repressive
policies that have caused the needless suffering of Burma's more than
50 million people. As Secretary Rice recently said in Jakarta, ``A
country that was once the jewel of Southeast Asia is now out of step
with the entire modern experience of its region. A once thriving
economy has collapsed. Universities that once attracted the best Asian
minds are locked shut. The Burmese regime is now literally retreating
into the depths of the country, closing its people off from the world
and robbing them of their future.''
The latest chapter in Burma's increasingly depressing story is the
advent of Avian Influenza. On March 12, Burma reported an AI outbreak
in poultry near Mandalay. to the World Organization for Animal Health
(OIE), and requested assistance from the international community. In
response to its ``immediate need'' request, we made available to the
UN's Food and Agricultural Organization (FAO) up to 2,000 units of
protective clothing and disinfectant with sprayers for use in Mandalay
to contain the outbreak. Others in the international community are
responding as well, albeit not as rapidly. A WHO/FAO team was sent in
to investigate. Sadly, more than 56 commercial farms have since been
infected, and the regime has had to suspend the sale of ducks, chickens
and quails in affected areas.
Although the regime cannot be blamed for the AI outbreak itself,
its failure to devote an adequate share of budget resources to the
health sector, along with its repressive policies--including
unnecessary restrictions on U.N. agencies, NGO's and other health-
related organizations within the country--greatly increase the risk of
this and other outbreaks spreading, both within Burma and to
neighboring countries.
On a much broader scale, the regime's policies and corrupt
practices have contributed to a host of other ills, severely hurting
the economy and exacerbating the deterioration of social conditions.
They have led to a steady outflow of refugees and illicit narcotics,
thwarted peace among Burma's ethnic minority populations, and forced
the Burmese people to live in a state of perpetual fear. This downward
spiral is increasingly worrying not only to Burma's people, but to the
region and the world.
On the political front, the regime continues to promote a sham
political process from which the opposition is barred--one that
prohibits free and open debate and includes only delegates hand-picked
by the military. Over 1,100 Burmese are still detained for peacefully
expressing their political views. Freedom of press, assembly, religion
and movement continue to be greatly restricted. Forced labor, rape,
torture, and conscription of child soldiers remain prevalent as tools
of the regime, particularly in ethnic minority areas.
Ironically, as the suffering of the Burmese people worsens, the
regime continues to insulate and isolate itself from the harsh
realities of life in Burma--for which it is responsible--and from the
international community as well. There is no example more indicative of
this trend than the regime's bizarre decision last year, without notice
to its people or the world, to move the capital to a heretofore
undeveloped town in the hinterland some 200 miles north of Rangoon. Of
course, governments have the right to move their capitals, but the way
in which the regime made the move is both troubling and emblematic of
the character of the quixotic regime. It did not notify the Burmese
people, let alone its ASEAN partners or other foreign governments or
embassies, and it forced civil servants to leave their families behind
indefinitely to make the move.
Madam Chairman, in such a dynamic region as Southeast Asia, which
is enjoying strong economic growth, increased freedom and democracy,
and an enhanced role in global affairs--Burma stands out as a glaring
exception. The international community has reached out repeatedly to
help Burma get back on its feet, but the regime has rejected all of
these efforts.
So how do we bring about a transition from the repressive,
isolationist Burma of today to a free and democratic country--one that
is integrated into the global community and poses no risk to the
stability of the Southeast Asia region? Although there are no easy
solutions here, we have developed a bilateral and multilateral strategy
predicated on maximizing international pressure on the regime to
initiate credible reforms. This multi-pronged approach includes
diplomatic pressure, sanctions, and statements of public support for
those struggling for freedom and democracy in Burma. We also continue
to use funds appropriated by Congress to support democratic ideals
through programs that promote democratic values, human rights, the rule
of law, and good governance.
Perhaps the most important component of our strategy is our
intensified diplomatic efforts focused on building international
pressure on the junta to reform. Over the past several months, we have
actively engaged with like-minded partners in Europe and key countries
in the Asia region, including Japan, ASEAN members, China, India and
Australia, to develop support for a common message to the regime on the
need for launching a truly inclusive and credible political process
leading to a democratic transition. We have stressed that the first
steps would have to be the release of political prisoners, including
Nobel Laureate Aung San Suu Kyi, and the regime's engagement in a
genuine political dialog with the opposition and representatives of
Burma's ethnic minorities.
It is our sense that elements of our message are getting through to
the regime. We strongly supported the firm public stance taken by ASEAN
back in December, and welcomed Malaysian Foreign Minister Hamid's visit
to Rangoon last week. At their Trilateral Strategic Dialogue on March
18, Secretary Rice, along with Japanese Foreign Minister Aso and
Australian Foreign Minister Downer, underscored the need for genuine
progress in democratization in Burma, including the release of
political prisoners. Indonesian President Yudhoyono's visit to Burma in
March provided another opportunity to press the regime. Following the
visit, senior Indonesian officials confirmed that President Yudhoyono
intends to use his influence--and Indonesia's example--to press the
Burmese regime to release Aung San Suu Kyi and pursue a democratic
transition. We will continue to work with New Delhi, at the highest
levels, on promoting a democratic transition in Burma. We believe India
should press the regime to take meaningful steps such as releasing Aung
San Suu Kyi, rather than appearing publicly to accept the status quo.
Multilaterally, we continue to look for ways to keep Burma on the
U.N. agenda. We believe the Security Council has a critical role to
play in promoting positive change there, and we have been actively
exploring ways to build UNSC consensus on the need for further
discussions and possible Council action in follow-up to the December 16
landmark Council briefing on Burma. In our internal discussions on next
steps, we have been considering factors such as the results of the
just-completed visit to Burma of FM Hamid and other events.
We also continue to advocate discussion of Burma in other U.N.
bodies, such as the Economic and Social Council (ECOSOC) and the Third
Committee. Last year, the United States co-sponsored the European
Union's annual Burma human rights resolution at the United Nations
General Assembly, which called for ``a genuinely inclusive'' political
process through the ``unhindered participation of all political parties
and representatives of ethnic nationalities,'' as well as the immediate
and unconditional release of political prisoners. Separately, we are
supporting the International Labor Organization's request to place
Burma on the 2006 ECOSOC agenda.
We will continue to encourage U.N. Secretary General Kofi Annan to
remain engaged in Burma, and to work with the U.N. Secretariat to
identify a successor for the Secretary General's former Special Envoy
to Burma, Razali Ismail, who, along with the U.N. Special Rapporteur
for Human Rights, has not been permitted by the regime to visit Burma
for the past 2 years. We will also strive to strengthen the Special
Envoy's mandate to include coordination with other governments.
Another component of our strategy is sanctions. Let me state
clearly for the record, Madam Chairman, that the administration fully
supports the renewal of the import ban contained in the Burmese Freedom
and Democracy Act. Failure to renew it, absent meaningful refoims by
the regime, would send the wrong political message. Our sanctions
continue to play a critically important role, reminding the regime--and
everyone else concerned with Burma--that the junta's behavior is
unacceptable, and that its leaders will remain isolated as long as they
continue this behavior. These measures also provide important moral
support for the democratic opposition, the vast majority of whom favor
tough international sanctions; and they ensure that American companies
will not help fund the luxurious lifestyles of a select few.
Our strategy also provides public support to Burma's democratic
opposition. The United States has spoken out for years against the
regime's repression of the Burmese people and its imprisonment of Nobel
Laureate Aung San Suu Kyi, U Tin Oo, Hkun Htun Oo and other courageous
advocates for democracy. We have encouraged others to do so as well.
Just last week, we highlighted the horrific March 17 fatal public
beating of Thet Naing Oo, calling on the regime to renounce the use of
violence and engage ``all elements of Burmese political life in a
meaningful dialog that empowers the [Burmese] people to determine their
own future.''
Partners and other key players have also been speaking out. On
February 28, the European Union issued a statement calling for the
immediate release of Aung San Suu Kyi and all political prisoners and
for a genuine dialog between the regime, the National League for
Democracy, and ethnic minority representatives. The statement also
expresses the EU's support for national reconciliation and respect for
human rights. Just last month, at the time of the Burmese Prime
Minister's visit to China, the Chinese government, for the first time,
publicly called for national reconciliation in Burma.
Madam Chairman, because of the regime's self-imposed isolation and
apparent imperviousness to outside pressure, it will take an
extraordinary concerted and coordinated effort by the international
community--the U.S., the countries of Southeast Asia, China, Japan,
India, South Korea, the European Union, the United Nations, and many
others--to persuade Burma's rulers to begin and sustain a process of
credible and full national reconciliation that the country so
desperately needs. While we still are not all on the same page, we are
much closer than we were: the administration is engaged at the highest
levels; key countries in the region have begun to speak out about the
need for reform; and international pressure on the regime to change its
misguided policies is slowly mounting. Burma's road to democracy is
neither short nor straight, but by pressing on with our intense
efforts, we believe we can effectively shorten the time it will take to
achieve the freedom, prosperity, and security for which Burma and its
people so desperately yearn and richly deserve. The brutal killing just
days ago of Thet Naing Oo reminds us all of how high the stakes are.
Thank you.
Senator Murkowski. Thank you, Mr. John. We appreciate those
comments and the reminder of the kind of regime that we are
dealing with at this time.
You have made several comments about the efforts by the
international community, the need for intensified diplomatic
pressure by those within the neighborhood. What are your
thoughts--you were not here when I gave my opening statement
where I said that there are those that are considering a Six
Party forum type of approach to dealing with Burma, somewhat
along the lines of the North Korea Six Party Talks. What are
your thoughts about that type of a forum?
Mr. John. I would be concerned that the efforts, the
diplomatic efforts that would go into setting up just the
mechanics of a multiparty forum, no matter how many parties it
would be, would detract significantly from the time we need to
spend on the diplomatic efforts to pressure Burma to reform the
regime. Obviously, the issues in North Korea and Burma are
quite different. In Burma it is a fairly black and white issue
about what needs to be done. There needs to be national
reconciliation, in Burma. The Burmese do need to give greater
access to NGOs. They need to allow the U.N. into Burma.
There is a variety of steps that need to be taken. I would
not like to detract from the bilateral and multilateral efforts
that we have. I think the UN, however, does provide an existing
mechanism for bringing that multilateral dialogue to the
Burmese about what needs to be done.
Senator Murkowski. Well, what do you think the odds are of
achieving any kind of action by the Security Council, then?
Mr. John. Well, I think it is a step by step process.
First, the December 16th briefing was action in and of itself.
It is the first time ever that the United Nations Security
Council has taken up the issue of Burma. Just by receiving a
briefing on what is occurring in Burma is significant, because
heretofore one of the problems that we have had with getting
international pressure on Burma is that you have a lot of
nations who have been willing to effectively turn a blind eye
to what is happening in Burma and stating that it is just
really an internal matter for the Burmese to deal with and it
is not our responsibility.
The fact that at the United Nations Security Council is
hearing an authoritative briefing on what is happening on the
ground in Burma, how the regime's policies are hurting the
Burmese people, and how in the end it is destabilizing for the
region, makes the case that there is an obligation for other
nations to be interested and be involved in finding a solution
for Burma.
Moving on from there, I think we need to go back and
redouble both bilateral efforts with members of the Security
Council, and with other nations who are not members of the
Security Council, to develop a consensus approach in the
Security Council about a solution in Burma.
I think one of the important things in the UNSC is to work
on consensus, to make sure that we do not have any efforts that
we bring to the UNSC blocked by lack of it. Therefore, in sort
of a long way to get back to the original question, it is hard
to predict an exact timeline, diplomatic timeline, when we
would get these actions at the United Nations. But we are
looking at the UNSC, other U.N. bodies, and we want to keep up
that pressure as long as it takes.
Senator Murkowski. Can you speak publicly about any of the
conclusions that were reached at that December U.N. Security
Council meeting?
Mr. John. Let us see. The briefing--I would rather take
that question and just give you a more thorough answer about
what the results of the briefing were, if I may. One of the
conclusions was that ASEAN should take a leading role in
resolving, helping to resolve the situation in Burma.
Since that briefing, we have had a couple of remarkable
developments regarding ASEAN's attitude toward Burma. Again, up
until our concerted diplomatic efforts on Burma the ASEAN
nations adhered to the principle of noninterference in member
nations' affairs. Starting with late last year at an ASEAN
foreign ministerial meeting, the foreign ministers did express
concern about what was going on in Burma and did express the
need for the Burmese to develop a real democratic roadmap. They
also expressed the need for the release of Aung San Suu Kyi and
other political prisoners.
The visit of Foreign Minister Hamid to Burma is important
because he went in his capacity as representing the ASEAN
foreign ministers, the first time that the ASEAN nations have
directly confronted the Burmese regime on what is going on
inside Burma. ASEAN is beginning to recognize that what is
going on in Burma is no longer simply the internal affairs of
the regime, but a matter of concern to the region.
Senator Murkowski. With the second panel that we had, one
of the comments--this was from Dr. Green--was that he believed
that there was a divide or a split within ASEAN members as to
really how to approach Burma on the issue. Do you sense that
they are coming closer to a consensus as to how to approach
Burma or is that still an issue for us to deal with,
recognizing that you have different nations certainly with very
different interests as they relate to Burma?
Mr. John. I think that remains an issue, about how ASEAN is
going to approach the Burmese problem. I would say that there
are two things that ASEAN needs to wrestle with. One is
recognizing that there is a problem in Burma and the second is
therefore developing an approach to resolving that problem.
I would say up until recently ASEAN members were not united
in thinking--as to the question of whether there is a problem
indeed in Burma. Now I would say there is. There might be
differences in how they would grade the degree of the problem.
I cannot speak for ASEAN, but I would say that there is
consensus among the members, based on my conversations, that
there is a problem there in Burma, that the political
opposition should not be in jail, that the regime should begin
a political dialogue for national reconciliation, and that what
is happening in Burma does have the potential for destabilizing
the region.
To get to the next level of what ASEAN is going to do about
it, what type of approach they are going to take, there is a
difference still, I think. There is no consensus on that.
Senator Murkowski. You mentioned the reported outbreak of
bird flu in Burma. Have we, has the United States, had any
contact with Burma directly or through any international
organizations to talk about what the situation is there in
Burma? Do we have any idea how widespread the outbreak may be?
Mr. John. The U.N. FAO and WHO have, first of all, made an
appeal for resolving the Avian influenza issue. We in response
to that, immediately provided 2,000 protective suits that the
Burmese could use in culling the chickens from the farms. We
have had a USAID Avian influenza expert and a USDA employee
travel to Rangoon and Mandalay earlier this month with FAO and
WHO personnel to assess the situation on the ground.
That said, the real problem I believe still remains with
the regime. They reported it a month ago. You do not know how
long it had been between the outbreak, detection, and the time
they decided to report it. It is a problem of their isolation
and their lack of willingness to have international
organizations, NGOs, go out into the countryside and do the
work they need to do.
Hopefully, on Avian influenza that would be different, and
we are working with FAO, WHO, and other donors on what, if
necessary, we would need to do. But I believe that other U.N.
agencies should take the lead in addressing Burma's needs here
and other donor nations as well.
Senator Murkowski. Discussion about the moving of the
capital and the difficulty in communication, moving from
Rangoon to this location. I asked a little bit earlier, is
there an economic benefit to this? Is this something that needs
to happen? Dr. Turnell indicated from his perspective there was
certainly no economic advantage to doing it; it was just yet
another example of the regime's volatility.
What kind of difficulties have our officials in the U.S.
embassy in Rangoon encountered in communicating with the
Burmese government officials in the new location? I understand
they do not have--they are saying communication by fax, but we
do not have the ability to even do that.
Mr. John. That is correct, because they will not give us
the fax number. They moved last November. They moved from
Rangoon to Pyinmana. I think last week they changed the name of
the capital from ``Pyinmana'' to ``Naypyidaw.'' So I am not
really sure what it will be called next month.
Senator Murkowski. Is it still in the same spot, so far as
we know?
Mr. John. It is in the same spot, but it is kind of growing
in a mushroom-like fashion in there, and it is done under the
cloak of darkness. It is a very unfortunate situation.
No, it does not make any economic sense. You are moving
from what was once, decades ago, a thriving city and one that
had international connections throughout Southeast Asia and the
world, to one that is 240 miles inland in the middle of a
jungle, that is mosquito-infested and ridden with malaria. It
is separating government workers from their families. It is a
forced relocation of those who work for the regime.
There is really no political rationale, no economic
rationale that we can ascertain. One theory is that throughout
history in Burma the old rulers--as you would have a new
dynasty come into place in Burma, the ruler would move the
capital to assert his new regime in Burma. And unfortunately,
in a way the SPDC, led by Than Shwe, by moving the capital is
almost acting like a monarchy in moving the capital to the
jungle and establishing a new regime. I think it is largely a
political step driven by a backwards-looking mentality. It is
terrible.
Senator Murkowski. I am told that we just had our vote
start, so I have got one last question for you before I have to
excuse myself. It has recently been reported that Burmese
refugees who were to be resettled here in the United States
have hit a snag because of their material support for
opposition groups within Burma. Of course, the Patriot Act
denies entry to those who provide material support to a
terrorist or to an armed rebel group, so those groups that were
resisting the Burmese military junta end up now being included.
I do not think that this was the intent of the Patriot Act.
So my question to you, Mr. John, is whether or not the State
Department is doing anything to address this scenario?
Mr. John. We are. The administration as a team is
addressing this issue. You are correct, that was not the intent
of the Patriot Act at all and everybody realizes that, and we
are trying to find a way to best resolve it. The Department of
State is led by the Bureau of Population Refugees and Migration
(PRM), and working very closely with the Department of Homeland
Security because DHS has the lead on this.
It is a cooperative effort, though, and I am quite
confident that we are going to find a way to resolve this that
is equitable.
Senator Murkowski. Do we have a handle on how many refugees
we are talking about?
Mr. John. I cannot state with clarity. I think the number
we are looking at right now is about 9,000 or so--9,800.
Senator Murkowski. So it is a fair number.
Mr. John. It is, it is. It is a large number, but obviously
even if it were just one, it would not be right and we would
still be working on it.
Senator Murkowski. Good. Well, I am glad to hear that that
effort is under way.
I appreciate your time here this afternoon and all that you
have given us. I appreciate the good work that you are doing as
it relates to Burma and the situation on the ground there.
With that, the subcommittee is adjourned. Thank you.
[Whereupon, at 4:26 p.m., the subcommittee was adjourned.]
A P P E N D I X
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Additional Material Submitted for the Record
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Response by Eric John to Question from Senator Murkowski
Question. In December 2005 the United Nations Security Council took
an important step forward by considering the situation in Burma for the
first time. The Security Council action came soon after a
groundbreaking report by Archbishop Desmond Tutu and former Czech
President Vaclav Havel which made a compelling case that Burma presents
a transnational threat to regional security in Southeast Asia. The
report called for a binding Security Council resolution on Burma in
2006. The State Department was instrumental in getting the Council to
even consider Burma, which was a useful first step, but I hope we can
go further this year. Will the U.S. support efforts to pass a binding
Security Council resolution calling for constructive action on Burma?
Answer. We are continuing to work with partners and key players in
the region to raise Burma again in the U.N. Security Council, and to
discuss what Council action would be appropriate. At this time, despite
growing concern among Council members about the situation in Burma,
there would not be sufficient support in the Council for a resolution
to pass. Some Council members clearly stated they viewed the December
Security Council briefing as a ``one-time'' exercise and would not
support efforts to bring Burma before the Council again.
We worked hard last year to gain consensus for the Council
briefing, and that discussion had a significant impact in terms of
intensifying international pressure on the regime. Now, with several
new members on the Council, we are working to maintain consensus in
that body for continued Council engagement on Burma. At the same time,
we also continue to coordinate our bilateral diplomatic efforts with
partners and key players in the region, and seek to shine a spotlight
on Burma in other U.N. organizations; for example, the appalling
situation of forced labor in Burma is on the Economic and Social
Council's agenda for its meeting this July.
__________
Response by Eric John to Question from Senator Chaffee
Question. Two weeks ago, a leading Burmese human rights activist,
Bo Kyi, who spent over 7 years in prison, traveled to Rhode Island.
While there, he shared his powerful story with many of my constituents.
It is a tragedy that Nobel Laureate Daw Aung San Suu Kyi and more than
1,000 other prisoners of conscience remain imprisoned in Burma. They
should be immediately released and the human rights abuses should stop.
While in Rhode Island, Bo Kyi asked that the United States lead an
effort to press for a U.N. Security Council resolution on Burma. What
are the administration's plans for pursuing U.N. Security Council
action?
Answer. As we have said consistently, we believe the U.N. Security
Council has a critical role to play in pursuing a resolution to the
deteriorating situation in Burma and the problems the country poses for
its neighbors and the region. That said, some Council members clearly
stated they viewed the December 16 Security Council briefing as a
``one-time'' exercise and will not support our efforts to bring Burma
before the Council again.
We worked hard last year to gain consensus for the Council
briefing, and that discussion had a significant impact in terms of
intensifying international pressure on the regime. Now, with several
new members on the Council, we are working to maintain consensus in
that body for continued Council engagement on Burma. At the same time,
we also continue to coordinate our bilateral diplomatic efforts with
partners and key players in the region, and seek to shine a spotlight
on Burma in other U.N. organizations; for example, the appalling
situation of forced labor in Burma is on the Economic and Social
Council's agenda for its meeting this July.
__________
Responses by Dr. Sean Turnell to Questions from Senator Murkowski
Question. Can you describe the social and environmental problems
that could result from these dams being built?
Answer. Burma's ruling military regime, the ``State Peace and
Development Council'' (SPDC), has been waging war for decades against
ethnic peoples (including the Karen, Karenni and Shan) living in
eastern Burma. All of the projects (including dams) that are currently
located in these areas are associated with ongoing patterns of human
rights abuses such as rape, forced labor, forced ``portering'' (for
Burmese army operations), extrajudicial executions, and torture. When
the new dam projects on the Salween proceed, additional Burmese troops
inevitably will be brought in to ``secure'' the areas. In Burma, such
an increase in military deployment invariably leads directly to an
increase in human rights violations. The construction of the dams will
permanently displace tens of thousands of people, causing yet another
influx of refugees into Thailand as well as a sharp increase in the
number of internally displaced persons within Burma.
By damming the Salween--the longest free-flowing river in Southeast
Asia--much of eastern Burma will be inundated or otherwise impacted by
the dams themselves, and related construction. The dams will have
irreversible impacts on the environment such as a loss of wildlife
habitats, diminished biodiversity, and harm to fisheries. These impacts
will destroy local people's means of living, such as fishing, farming,
and transportation. Burma's regime has a poor record of infrastructure
maintenance, and in the past excessive ``siltification'' of rivers has
been a reliable aftermath of dam construction.
The SPDC is most likely to spend income generated from the dams to
finance expansion and modernization of its military. Since 2002, when
it began receiving revenue from the export of natural gas to Thailand,
Burma's generals have purchased hundreds of millions of dollars on
weapons and arms. By comparison, in 2004, the HIV/AIDS budget in Burma
was $22,000, one of the lowest levels of national spending on HIV/AIDS
in the world.
As these answers were being compiled a U.N. report\1\ has just been
released that has found a link between hydropower projects and the
spread of bird flu. The postulated connection is that the destruction
of habitat for wild birds for hydroelectric projects forces wild birds
on to alternative sites, such as farm ponds and paddy fields, bringing
them into direct contact with (infected) domestic poultry. Burma's
irresponsible ``policies'' with respect to bird flu are, of course, the
subject of much concern in the region.
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\1\ The Report, by the United Nations Environment Programme, was
released on 11 April. It can be found at: http://www.unep.org/
Documents.Multilingual/Default.asp?DocumentID=475&
ArticleID=5255&1=en
Question. What are the mechanisms by which local residents and
stakeholders living in potentially impacted areas, have opportunity to
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provide input into the decisionmaking process for these dams?
Answer. No such mechanism have been established. No consultations
have been held with local stakeholders in Thailand (much less Burma)
during the decisionmaking process over the Salween dams. Thai
authorities so far have proceeded with the dam projects in a secretive
and non-transparent manner, withholding vital information on
construction plans such as feasibility studies, environmental and
social impact assessments, and co-financing agreements.
In Burma, of course, there has not only been no consultation, but
any questioning of the project places the ``questioners'' in the
gravest danger. All of the information we have on the Burmese-side of
the Salween dams project has come to us via clandestine sources.