CASE STUDY : Choosing Sides Megha bahree

AYPYIDAW—In September 2007, and , Myan- Nmar’s two principal neighbors, stood by valiantly as the ruling junta bru- tally suppressed protests over increased fuel prices, led by pro-democracy groups and Buddhist monks. At least 13 were killed and thousands arrested. The na- myanmar scent democratic transition that began in March 2011 has now placed Myanmar at the center of Southeast ’s strategic landscape. Not surprisingly, India and China are stepping up their efforts to win deals—and influence—in the new capital, Naypyidaw, even as they face new compe- tition from the Western world. But nei- ther of the two Asian neighbors is particu- larly welcome here. India and Myanmar have deep historical ties. Myanmar was a part of Britain’s Indian empire until 1937, and the two countries share a thousand mile land border, as well as a maritime boundary in the Bay of Bengal Helen Jairag Richardson, who became a cel- along India’s eastern coast. The land border ebrated Bollywood dancer in the 1960s and includes four of India’s unstable and politi- 1970s. After gaining independence from the cally sensitive states in the northeast, and the British in 1948, many Burmese elite, in- influx of drugs, arms, immigrants, and mili- cluding the Nobel Prize-winning dissident tants from Myanmar has long been a cause of , continued their educa- concern for the Indian government. tion in India. Today, by some estimates, In the early 1940s, large numbers of about a million people of Indian origin live Burmese fled to India to escape the Japanese in Myanmar, and India is home to thousands occupation of their country—among them, of refugees who escaped the rule of the junta

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Downloaded from wpj.sagepub.com at COLUMBIA UNIV on December 16, 2014 MYANMAR within the past decade. Though many live Chinese influence in the region, nor to gain in squalid conditions in the Indian capital, access to its natural resources, but because it both the Indian and Myanmarese govern- provides a conduit for India to access the rest ments are quite apathetic about their plight. of . Tata Motors, for instance, views Myanmar as a valuable link to lucra- China Undeterred tive Southeast Asian markets and hopes to Military rule and sanctions didn’t deter sell its Nano car in , , China. was quick to embrace the and , as well as Myanmar—once military junta, and consequently China is its roads are upgraded. Still, India has been now Myanmar’s biggest trading partner. “unable to step up Of Myanmar’s $18 billion of trade in the its act,” says Arvind fiscal year ending last March, $5 billion was Ramakrishnan, Asia india is with China, while India’s share was barely head for Maplecroft, currently $1.3 billion. Today, ’s markets are a London-based risk stocked with Haier home appliances, Lenovo analysis group. myanmar’s computers, Chinese pharmaceuticals, and In an attempt fourth- cheap cellphones. Over the years, China to level the playing largest source has simultaneously dipped into Myanmar’s field, India has signed natural resources and strengthened its own with the Association of foreign strategic position as its neighbor. Today, of Southeast Asian investment, China has access to natural gas through Nations to build a well behind a Myanmar-China pipeline. It also has a rail corridor con- substantial naval presence in Myanmar’s necting eastern India china. ports, says Gareth Price, senior research with Myanmar. But if fellow in the Asia Program at Chatham India’s past record of completing projects is House, a London think tank. any indication, this effort will be many years It was that kind of access, along with off. In a more diplomatically significant China’s growing influence on Myanmar, that move, Indian Prime Minister Manmohan led India, in the mid-1990s, to shift policy Singh visited Myanmar in 2012—the first course and engage directly with the junta. visit by an Indian prime minister since the India opposed American and EU trade and late Prime Minister Rajiv Gandhi 25 years investment sanctions on Myanmar during earlier—and used the visit to signal a signifi- the junta period. And even though it af- cant deepening of relations, says Chatham firmed its support for Myanmar’s transition House’s Price. The two countries signed a to democracy, the damage was done—Myan- dozen agreements that are “likely to form the mar’s pro-democracy groups viewed New cornerstone of tangible interaction between Delhi with a strong degree of suspicion. India and Burma over the next few years,” But Myanmar remains of immense stra- observes Price. India’s foreign secretary, Ran- tegic importance to India—not just as a part jan Mathai, described the measures as “a of ’s constant effort to ward off whole series of small but significant steps to

Megha Bahree, a former Forbes and Wall Street Journal correspondent, writes about South Asia from New Delhi.

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ensure that our relationship with Myanmar of shared border areas, while turning a blind had substance and left them with no doubt eye to smuggling, says Maplecroft’s Ramak- that we regarded them as a key neighbor.” rishnan. But in a sign that Myanmar’s new The agreements cover a range of initia- government might want to bolster its im- tives including extending a line of credit age in the West, and among its own people, to Myanmar, setting up a joint trade and President ’s government, in the investment forum, the creation of a Myan- face of local protests, suspended a major plan mar Institute of Information Technology, as by China to build the $3.6 billion Myitsone well as initiating air services between the dam on the Irawaddy River in Kachin state two, amongst others. The most far-reach- in northern Myanmar. ing agreement covers the India-Myanmar The dam, the largest of several that Chi- Border Area Development. It is intended na was planning along the Irawaddy, would to connect, or reconnect, border areas that displace 10,000 people and submerge 47 since 1962 have been largely cut off. While villages in a 300 square mile area. Several this is one of the most fundamental issues, villages had been forcibly relocated, lead- much is contingent on successfully upgrad- ing to local anguish and resistance. It didn’t ing a variety of road connections. Under help that under that agreement 90 percent this agreement, India has also offered $5 of the electricity was meant for China, and million per year for five years to undertake not energy-starved Myanmar. With the po- the construction of small roads and bridges, tential loss of land and livelihood to produce as well as schools, health centers, agricul- power for another country, locals have been ture, and training programs. protesting the project since its proposal in 2001, and activists in exile have carried out The Big Gulp protests in other countries. The U.K.-based The big projects from foreign investors Kachin National Organization protested the in the sectors of power, petroleum, and construction of the dam, in February 2010, infrastructure are crucial to maintaining in front of Myanmarese embassies in Britain, Myanmar’s economic growth. Its nominal , , and the United States. In GDP has risen from $20.2 billion in 2007 to April 2010, three bombs exploded near the an estimated $51.9 billion in 2011. India is site of the dam, killing three and wounding currently its fourth-largest source of foreign more than 20, local media reported. While investment, well behind China, which no group took responsibility for the attacks, invested some $13 billion in 2011. Kachins were suspected. The British news- In September 2012, China and Myan- paper, The Guardian, citing cables obtained mar signed nine bilateral economic and trade by Wikileaks, reported that the American cooperation pacts and two financial transac- embassy in Yangon funded some of the civil tion agreements, according to Maplecroft. society groups in the Kachin region that The two countries are also cooperating on forced the Myanmarese government to sus- constructing large-scale projects, including pend the construction of the dam. oil and gas pipelines and railway links to “To postpone the dam is a really, really connect them. Over the years, China has also big deal,” says Ramakrishnan. “China is a been a supplier of arms and ammunition, very important economic partner.” Price and in a bid to keep the Myanmar military adds that Chinese leaders suddenly have to at bay, it allowed rebels to slip in and out deal with a new uncertainty when it comes

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Downloaded from wpj.sagepub.com at COLUMBIA UNIV on December 16, 2014 MYANMAR to Myanmar. “Until a couple of years ago, last few untapped markets for cellular ser- it was clear. It was a military regime, vices and Internet providers. Some pay up to and Chinese investors knew exactly what $200 to purchase SIM cards that are awarded to expect from them,” says Price. “Now through lotteries. In June, Myanmar award- there’s a level of uncertainty.” That has not ed 15-year mobile telephony licenses to Qa- deterred China, which remains actively tar’s Ooredoo and Norway’s Telenor, choos- engaged in other infrastructure projects, ing those two after a round of bids, with 90 and, in June 2013, pledged a $100 million companies expressing interest. soft loan to help support Myanmar’s key “In the past, China was the dominant agricultural sector. Beijing also mediated partner, but now there’s an attempt to the peace talks between Kachin rebels and balance the various the Myanmar government, which eventu- countries trying to ally resulted in a seven-point preliminary influence it,” says china still has ceasefire agreement on May 30, 2013. Price. That could an upper hand By comparison, India’s investments change once again in that country are still tiny, with the ex- if opposition leader in myanmar ception of a $1.3 billion pledge to a gas Aung San Suu Kyi over other pipeline. To be sure, Indian companies are comes to power in countries, actively assessing future opportunities in the 2015 elections. Myanmar. Seven Indian companies have While addressing especially been shortlisted for 18 onshore gas blocks hundreds of poten- india. that are being offered for bidding. Engi- tial investors and neering and construction company Punj corporate partners at an ASEAN gathering Loyd Corp. has won the bid to construct in in September, Suu Kyi urged two parallel pipelines for oil and gas—an businesses to push for transparency in their investment worth $475 million—and oil dealings with enterprises in Myanmar. and gas exploration and production compa- “I am asking for caring, intelligent in- ny Jubiliant Energy NV has won a govern- vestment,” she said. “We’ve got to look to ment contract for $73 million to explore an rural development, to small and medium onshore block in central Myanmar. enterprises,” to ensure equitable growth and development in Myanmar. No Holds Barred That would be yet another hoop to With the removal of most economic and jump through for foreign investors who investment sanctions, global corporations currently work mostly with Myanmar’s are waking up to the potential of Myanmar biggest companies. Despite the recent as a new market for everything from changes, China still has an upper hand in airplane engines to hotels to packaged Myanmar over other countries, especially food. Naypyidaw, too, has realized that it India. But with new potential investors— no longer has to tie itself down to its old including foreign, state-owned compa- companions—Beijing and New Delhi. nies—lining up, Beijing could see its hold With fewer than 1.5 million mobile on Naypyidaw begin to slip, bringing a connections and barely 110,000 individuals new balance of economic and political with Internet access, Myanmar is one of the power to this corner of Asia. l

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