BTI 2008 | Myanmar Country Report Status Index 1-10 1.96 # 124 of 125 Democracy 1-10 1.70 # 124 of 125 Market Economy 1-10 2.21 # 122 of 125 Management Index 1-10 1.79 # 124 of 125 scale: 1 (lowest) to 10 (highest) score rank trend This report is part of the Bertelsmann Transformation Index (BTI) 2008. The BTI is a global ranking of transition processes in which the state of democracy and market economic systems as well as the quality of political management in 125 transformation and developing countries are evaluated. The BTI is a joint project of the Bertelsmann Stiftung and the Center for Applied Policy Research (C•A•P) at Munich University. More on the BTI at http://www.bertelsmann-transformation-index.de/ Please cite as follows: Bertelsmann Stiftung, BTI 2008 — Myanmar Country Report. Gütersloh: Bertelsmann Stiftung, 2007. © 2007 Bertelsmann Stiftung, Gütersloh BTI 2008 | Myanmar 2 Key Indicators Population mn. 50.5 HDI 0.58 GDP p.c. $ 1,027 Pop. growth1 % p.a. 1.0 HDI rank of 177 130 Gini Index - Life expectancy years 61 UN Education Index 0.76 Poverty3 % - Urban population % 30.6 Gender equality2 - Aid per capita $ 2.9 Sources: UNDP, Human Development Report 2006 | UNDP, Human Development Index 2004 | The World Bank, World Development Indicators 2007 | OECD Development Assistance Committee 2006. Footnotes: (1) Average annual growth rate 1990-2005. (2) Gender Empowerment Measure (GEM). (3) Percentage of population living on less than $2 a day. Executive Summary During the period under review, Myanmar’s political stalemate has continued. Since the purge of General Khin Nyunt and other high-ranking officials in late 2004, the general political environment has further deteriorated. Although the dismantling of General Khin Nyunts military intelligence apparatus relaxed the control mechanisms on the general population for a short time, restrictions on political activity imposed by the military regime have worsened in parallel with its continued refusal to permit meaningful opposition activity. The military still denies all basic freedoms and suppresses all avenues of dissent, including the media and public protest. Room for civil society organizations to maneuver is extremely limited and largely restricted to areas of ethnic conflict and state failure. Because of this increasingly erratic and repressive regime, the international community finds it increasingly difficult to deliver humanitarian assistance. Despite strong external pressures from Western countries to bring about political change in Myanmar, the military has remained unwilling to introduce real reforms. Two visits by UN special envoy Gambari, intended to encourage democratic change and foster the relationship between Myanmar and the international community, did not achieve the desired results. In January 2007, a U.S. attempt to enact a UN Security Council resolution, which urged the junta to release political prisoners and to hold a dialogue with democracy groups and ethnic minority groups, failed. The military continues to retreat into isolation, as illustrated in the abandonment of the ASEAN chairmanship in 2006 and the relocation of the capital to Pyinmana in 2006. The military regime still uses vast resources to restrain the actions of the opposition and to repress its citizens. Although the military released some 400 political prisoners in 2005 and 2006, the military has not relaxed its suppression of political opponents, and new arrests have been made. There are currently more than 1300 political prisoners serving BTI 2008 | Myanmar 3 long-term prison sentences. The detention of opposition party leaders Aung San Suu Kyi and Tin Oo has been extended. The military is still pursuing its roadmap to the “disciplined democracy” announced by General Khin Nyunt in September 2003. The national convention to draft a new state constitution is the first of the roadmap’s seven steps. The national convention has convened three times, in 2004, 2005 and 2006. It is widely believed that it will end its work in 2007. The military junta plans to approve the constitution through a referendum and to hold fresh elections; however, no time frame has been set for this process. The roadmap to “disciplined democracy” will merely refine the authoritarian nature of the regime. In order to ensure its dominant position in politics, the military determined the basic principles of the new constitution beforehand. According to these predetermined principles, the military will select the head of state, will be free of parliamentary control and will receive appointments to 25% of the seats in the legislature. Therefore, even if the roadmap is fully implemented, the substance of democracy will be missing. The economic transition initiated in 1988 has made little progress. Once considered the rice bowl of Asia and rich in minerals, Myanmar’s economy has languished for years due to the economic mismanagement of its generals and the West’s sanction policies. Investment is concentrated in the gas and oil sectors. The state’s dominant role in economic policy has caused the suppression of fundamental economic institutions (effective property rights, contract enforcement) and led to arbitrary macroeconomic policy making, which is driven by the personal interests of military generals. A chaotic money policy has yielded high inflation rates. Moreover, the currency and financial systems are widely distrusted by the population. Negligible spending on education and health have eroded human capital formation and reduced further economic opportunities. The rules for sound economic management can only be established after a political transition has taken place and the international community has abolished their sanctions.. History and Characteristics of Transformation Myanmar has been a military dictatorship since 1962, when General Ne Win took power in a bloodless coup and arrested Prime Minister U Nu. Since independence in 1948, Myanmar has had extensive problems in state-building, with ethnic minority groups and communist rebels that have violently revolted against the young republic. The military was only able to guarantee the unity of the country by the use of tremendous force, and at the time of this writing, the military does not seem able to find a political solution to the country’s difficult minority problems. When the military took power, it abolished democratic institutions and replaced them with the 17-member Revolutionary Council, chaired by General Ne Win. The army led BTI 2008 | Myanmar 4 the country into isolation, cutting off all contacts to the outside world, driving foreign companies out of the country and nationalizing all private enterprises. The state adopted a mixture of Marxism and Buddhism as its official ideology. In 1974, the leaders proclaimed “the Socialist Republic of the Union of Burma,” with Ne Win in the newly created office of president. Henceforth, a socialist planned economy and one- party rule by Ne Win’s Burmese Socialist Program Party (BSPP) determined the country’s economic and political development. In the course of serious economic problems, Ne Win stepped down as president, and his confidant, San Yu, succeeded him in office. However, Ne Win remained chair of the country’s only political party and continued to play a decisive role in the formulation of government policy behind the scenes. Continued economic downturns led to mass demonstrations in 1988, which the military tolerated for some months, then brutally repressed on August 8, killing several thousand people. Ne Win and San Yu were replaced by General Saw Maung. The new military junta promised to hold free elections, which took place in May 1990. The elections resulted in the overwhelming victory of the National League for Democracy (NLD), the country’s largest opposition party, led by Aung San Suu Kyi, with more than 80% of the vote. Despite this clear victory for the opposition, the army refused to recognize the election results and did not allow the newly elected parliament to convene. The opposition leader, Suu Kyi, was placed under house arrest while the electoral campaign was under way. In 1995, she was released for the first time, but the authorities repeatedly prevented her from leaving the capital to undertake political activities elsewhere in the country. The opposition leader was placed under house arrest again in the end of the year 2000 and was only released 19 months later. In May 2002, Suu Kyi was released from house arrest under conditions that allowed the NLD to resume some political party activities. Her release initially seemed to provide another opportunity for political reconciliation; however, deep-seated disagreements continued to hamper dialogue between the two sides. Escalating tensions eventually led to another clampdown on the NLD and the second arrest of Aung San Kyi in May 2003. This renewed house arrest triggered an outcry of renewed criticism from the international community. The United States and the European Union have further tightened their sanctions and demanded a release of all political prisoners. In September 2003, the military junta announced a roadmap to democracy that is supposed to lead to a “disciplined democracy” in the near future. The government has since then called for another National Convention to draft a new constitution. The body finished its latest session in December. Many observers believe that the charter will be formally drafted in the first half of 2007, and that a finished product will be put to a national referendum by the end of the year. In anticipation of these reforms, a massive shakeup of the army and government is planned to pave the way for constitutionally mandated civilian rule. Yet the guided transition will not end the military’s dominant BTI 2008 | Myanmar 5 position in politics; since the military determined the basic principles of the new constitution beforehand, it totally controls the transition process. The military will select the head of state, will be free of parliamentary control and will receive 25% of the seats in the legislature.