The Dire Political, Social, and Economic Situations
By Jack Myint, Senior Manager for Mainland Southeast Asia, US-ASEAN Business Council
A year since the military coup in Myanmar, the economic outlook remains bleak, and the on-ground political, security, and humanitarian crisis creates an inhospitable environment for foreign direct investments. Unless there is a drastic change to the status quo, of which there are currently no indications, Myanmar’s economy will further deteriorate, the shadow economy that centers around drugs, smuggling, and arms trading will thrive, and Myanmar will be further isolated from the rest of the international community, including from its regional partners in ASEAN.
Dependence on China for an economic lifeline and on Russia for defense ties will increase. The average citizen will suffer as a result, unemployment will rise along with daily costs of living, and the quality of life will reduce significantly across the board. The growing exodus of political refugees will have the largest impact on Myanmar’s border countries, and the international community will grapple with how to properly address this humanitarian disaster. The young, educated class—which really are the country’s future and the key to Myanmar’s digital economy ascendence—will, in large part, migrate to more developed nations for education and employment.
Of the many factors influencing this bleak outlook, the biggest would be the security situation on the ground. With the nationwide peace process completely in shatters, conflict between the Tatmadaw and EAOs will increase and the citizens in ethnic states and regions will suffer the most as a result. What has never been the case before is this conflict reaching major mainland cities in the form of “urban guerilla warfare” between the Tatmadaw and people’s defense forces (PDFs). Out of a norm from the Tatmadaw’s playbook, its response in dealing with this development was to double down on the violence with no regard for rule of law or any code of conduct and most recently, even arming and allowing its civilian supporters to operate with impunity. On the other end of the spectrum, the PDFs, while ideologically pro-democracy and aligned with the parallel National Unity Government (NUG) for the most part, still lack the ability to establish a command, control, and coordination structure within themselves or with the NUG. Furthermore, there is no proper governance or accountability and enforcement mechanisms established to oversee their actions. This lack of structure on both sides of the civilian divide translates to acts of vigilante killings, arson and robberies occurring on a daily basis in parts of the country that have never seen conflict at this scale. Unfortunately, there is no end in sight at this time to this anarchic scenario, which can only be expected to get worse before it gets better.
The Tatmadaw’s continued hold on the private sector includes the appointment of a three-star general to head up its Investment Commission and recent moves to push through draconian legislation in the form of a cybersecurity law that will ban the use of VPNs, as well as policy changes that increase the cost of telecommunication services. With it, the Tatmadaw is attempting to limit public internet usage (a key forum for dissent) but is also, in turn, deeply hurting the economy in the process. The junta’s handling of Telenor’s exit from Myanmar also serves as another cautionary tale for foreign investors. Electricity outages—which we are now seeing on a regular basis—will continue to increase and so will limitations on and the cost of internet usage.
U.S. policy towards Myanmar, looking ahead, is going to be centered around economic sanctions, with OFAC’s Specially Designated Nationals (SDN) list growing to include more junta-affiliated cronies and businesses. So far, “targeted sanctions” towards “actors responsible for the coup and its aftermath” (i.e. Tatmadaw and affiliates) has been the name of the game, but as the line between state-owned and military-owned blurs more and as government spending becomes equivalent to military spending, it will become harder to avoid sanctions’ unintended repercussive consequences towards the larger economy and Myanmar’s people.
This text has been updated as of 02/17/2022
The Variables to Tip the Balance of Power
By Hunter Marston, Ph.D. Candidate, Australian National University
Among the variables to watch for in Myanmar in 2022 are:
- Whether the junta allows the ASEAN Special Envoy to meet with representatives of the NUG. The State Administration Council (SAC) prevented the previous special envoy from Brunei from meeting with representatives of the NUG, an essential condition for ASEAN’s Five-Point Consensus. If it allows the Cambodian successor to do so, it may signal an opening for dialogue. Refusal to do so, however, leaves no hope for progress.
- Whether defections from the Tatmadaw continue at the current pace, slow, or accelerate. The NUG claims more than 3,000 soldiers and police have defected from the Myanmar military. If that number grows in the coming months, it could reach a tipping point and undermine regime stability, but it would have to rise by at least tenfold to do so with any certainty.
- Any moves by the SAC to dissolve the National League for Democracy (NLD). So far, the SAC has refrained from banning the NLD outright, perhaps due to a carefully placed word from Beijing. If the junta bars the NLD altogether, the resistance will see no political alternative to their struggle.
- Whether the Arakan Army (AA) or another major ethnic armed group puts its hat in the ring. The military has courted the AA by lifting the “terrorist organization” designation on the group in March 2021 and releasing its fighters from detention. But there are signs of dissatisfaction, and the AA could tilt the balance of power on the battlefield against the Tatmadaw.
China’s Strategic View of Post-Coup Myanmar
By Ying Yao, Consultant, Centre for Humanitarian Dialogue
Over the past year, the Tatmadawhas met nationwide resistance. Anti-regime protestors have demonstrated strong opposition against the SAC with acts of civil disobedience, boycotts, and strikes. However, this mostly peaceful “spring revolution” does not seem to have borne fruit in toppling the regime. As a result, many young people have turned to armed struggle. Indeed, some have traveled to areas controlled by ethnic armed organizations (EAOs) to receive military training.
In May 2021, Myanmar’s parallel government, the NUG, called for the formation of the PDF to resist the SAC regime. Fierce armed resistance from local PDF militias has challenged the SAC’s ability to govern, even in Myanmar’s heartland. Many analysts warn of the disintegration of the country.
China’s stance on the Myanmar crisis is based on the logic of protecting its perceived national interests and within the context of increasing U.S.-China strategic competition. Officially, China has never used the term “coup” to refer to Tatmadaw’s declaration of a state of emergency and seizure of power on February 1, 2021. Initially, China remained cautious and took an ambiguous attitude towards the military takeover. However, after the burning of Chinese factories in Hlaing Tharyar on March 14, 2021, China changed its stance and established diplomatic ties with the SAC regime. Though it is still not clear who pulled the strings, the Hlaing Tharyar incident convinced China that Chinese businesses lack alternative choices to the Tatmadaw for guaranteeing the security of their investments.
Initially, China remained cautious and took an ambiguous attitude towards the military takeover. However, after the burning of Chinese factories in Hlaing Tharyar on March 14, 2021, China changed its stance and established diplomatic ties with the SAC regime.
China still sees the NLD as an old friend and intends to present itself as a moral and responsible great power. Thus, it has pressured the SAC not to dissolve the NLD. However, China has not yet recognized the legitimacy of the NUG or the PDF. Many in China are concerned about the growing instability and violence in Myanmar, which threatens to spill over into its Yunnan Province.
The Political Economy Supporting the SAC
By Anekchai Rueangrattanakorn, Ph.D., Chulalongkorn University, Thailand
Amidst the resistance campaigns against the Myanmar military government, the boycott of military business is thrown into the limelight as one of the most interesting and never-seen-before campaigns since the coup.
The Myanmar Armed Forces have always been the main actor dominating the dynamics both in terms of politics and economics. The “political influences” and “economic power” of the Myanmar military are conditions that suitably support each other. The military employs political influences to facilitate the development and management of their businesses. As a result, these lay the foundation for the military to take control of a considerable number of businesses that engage with many partners both domestically and internationally. Various conglomerate structures can be found including ownership by the Ministry of Defence, operations by its directorates, and management by the regional military units. Interchangeably, the military uses its economic power to support and strengthen its political supremacy, such as increasing military capabilities, improving the welfare of both active-duty soldiers and retired soldiers to gain loyalty, organizing its own masses, and encouraging the pro-military nationalist movement.
People in Myanmar are calling for foreign companies, especially in the oil and arm sales sectors, to break their relationships with the military.
In realizing these problems, people in Myanmar are calling for foreign companies, especially in the oil and arm sales sectors, to break their relationships with the military. They also wish to stop the transfer of assets and funds to the military and terminate any engagement that will consequently strengthen the military’s power. Therefore, how the international community should respond to the Myanmar people’s call and whether to continue doing business or impose sanctions will be in the spotlight this year.
Myanmar’s Prospects One Year after the Coup
By Jason Li
In China
One year has passed since the Myanmar military abruptly seized power with the February 1 coup, and the situation in the country remains dangerously undetermined as all sides vie for a leg up and external observers weigh policy options. Fighting and targeted killings have spread from ethnic regions to previously peaceful inland cities. The dozens of the country’s ethnic armed groups are caught in the military and National Unity Government’s struggle for legitimacy and power. And external powers like the United States, Canada, and United Kingdom have doubled down on targeted sanctions to increase pressure on the military and its violent tactics.
Here, emerging experts on Myanmar reflect on the situation on the ground, what 2022 may bring for the country, and what factors outside observers and policymakers should watch for as potential turning points at this tumultuous time for the Southeast Asian state.
The Dire Political, Social, and Economic Situations
By Jack Myint, Senior Manager for Mainland Southeast Asia, US-ASEAN Business Council
A year since the military coup in Myanmar, the economic outlook remains bleak, and the on-ground political, security, and humanitarian crisis creates an inhospitable environment for foreign direct investments. Unless there is a drastic change to the status quo, of which there are currently no indications, Myanmar’s economy will further deteriorate, the shadow economy that centers around drugs, smuggling, and arms trading will thrive, and Myanmar will be further isolated from the rest of the international community, including from its regional partners in ASEAN.
Dependence on China for an economic lifeline and on Russia for defense ties will increase. The average citizen will suffer as a result, unemployment will rise along with daily costs of living, and the quality of life will reduce significantly across the board. The growing exodus of political refugees will have the largest impact on Myanmar’s border countries, and the international community will grapple with how to properly address this humanitarian disaster. The young, educated class—which really are the country’s future and the key to Myanmar’s digital economy ascendence—will, in large part, migrate to more developed nations for education and employment.
Of the many factors influencing this bleak outlook, the biggest would be the security situation on the ground. With the nationwide peace process completely in shatters, conflict between the Tatmadaw and EAOs will increase and the citizens in ethnic states and regions will suffer the most as a result. What has never been the case before is this conflict reaching major mainland cities in the form of “urban guerilla warfare” between the Tatmadaw and people’s defense forces (PDFs). Out of a norm from the Tatmadaw’s playbook, its response in dealing with this development was to double down on the violence with no regard for rule of law or any code of conduct and most recently, even arming and allowing its civilian supporters to operate with impunity. On the other end of the spectrum, the PDFs, while ideologically pro-democracy and aligned with the parallel National Unity Government (NUG) for the most part, still lack the ability to establish a command, control, and coordination structure within themselves or with the NUG. Furthermore, there is no proper governance or accountability and enforcement mechanisms established to oversee their actions. This lack of structure on both sides of the civilian divide translates to acts of vigilante killings, arson and robberies occurring on a daily basis in parts of the country that have never seen conflict at this scale. Unfortunately, there is no end in sight at this time to this anarchic scenario, which can only be expected to get worse before it gets better.
The Tatmadaw’s continued hold on the private sector includes the appointment of a three-star general to head up its Investment Commission and recent moves to push through draconian legislation in the form of a cybersecurity law that will ban the use of VPNs, as well as policy changes that increase the cost of telecommunication services. With it, the Tatmadaw is attempting to limit public internet usage (a key forum for dissent) but is also, in turn, deeply hurting the economy in the process. The junta’s handling of Telenor’s exit from Myanmar also serves as another cautionary tale for foreign investors. Electricity outages—which we are now seeing on a regular basis—will continue to increase and so will limitations on and the cost of internet usage.
U.S. policy towards Myanmar, looking ahead, is going to be centered around economic sanctions, with OFAC’s Specially Designated Nationals (SDN) list growing to include more junta-affiliated cronies and businesses. So far, “targeted sanctions” towards “actors responsible for the coup and its aftermath” (i.e. Tatmadaw and affiliates) has been the name of the game, but as the line between state-owned and military-owned blurs more and as government spending becomes equivalent to military spending, it will become harder to avoid sanctions’ unintended repercussive consequences towards the larger economy and Myanmar’s people.
This text has been updated as of 02/17/2022
The Variables to Tip the Balance of Power
By Hunter Marston, Ph.D. Candidate, Australian National University
Among the variables to watch for in Myanmar in 2022 are:
China’s Strategic View of Post-Coup Myanmar
By Ying Yao, Consultant, Centre for Humanitarian Dialogue
Over the past year, the Tatmadawhas met nationwide resistance. Anti-regime protestors have demonstrated strong opposition against the SAC with acts of civil disobedience, boycotts, and strikes. However, this mostly peaceful “spring revolution” does not seem to have borne fruit in toppling the regime. As a result, many young people have turned to armed struggle. Indeed, some have traveled to areas controlled by ethnic armed organizations (EAOs) to receive military training.
In May 2021, Myanmar’s parallel government, the NUG, called for the formation of the PDF to resist the SAC regime. Fierce armed resistance from local PDF militias has challenged the SAC’s ability to govern, even in Myanmar’s heartland. Many analysts warn of the disintegration of the country.
China’s stance on the Myanmar crisis is based on the logic of protecting its perceived national interests and within the context of increasing U.S.-China strategic competition. Officially, China has never used the term “coup” to refer to Tatmadaw’s declaration of a state of emergency and seizure of power on February 1, 2021. Initially, China remained cautious and took an ambiguous attitude towards the military takeover. However, after the burning of Chinese factories in Hlaing Tharyar on March 14, 2021, China changed its stance and established diplomatic ties with the SAC regime. Though it is still not clear who pulled the strings, the Hlaing Tharyar incident convinced China that Chinese businesses lack alternative choices to the Tatmadaw for guaranteeing the security of their investments.
China still sees the NLD as an old friend and intends to present itself as a moral and responsible great power. Thus, it has pressured the SAC not to dissolve the NLD. However, China has not yet recognized the legitimacy of the NUG or the PDF. Many in China are concerned about the growing instability and violence in Myanmar, which threatens to spill over into its Yunnan Province.
The Political Economy Supporting the SAC
By Anekchai Rueangrattanakorn, Ph.D., Chulalongkorn University, Thailand
Amidst the resistance campaigns against the Myanmar military government, the boycott of military business is thrown into the limelight as one of the most interesting and never-seen-before campaigns since the coup.
The Myanmar Armed Forces have always been the main actor dominating the dynamics both in terms of politics and economics. The “political influences” and “economic power” of the Myanmar military are conditions that suitably support each other. The military employs political influences to facilitate the development and management of their businesses. As a result, these lay the foundation for the military to take control of a considerable number of businesses that engage with many partners both domestically and internationally. Various conglomerate structures can be found including ownership by the Ministry of Defence, operations by its directorates, and management by the regional military units. Interchangeably, the military uses its economic power to support and strengthen its political supremacy, such as increasing military capabilities, improving the welfare of both active-duty soldiers and retired soldiers to gain loyalty, organizing its own masses, and encouraging the pro-military nationalist movement.
In realizing these problems, people in Myanmar are calling for foreign companies, especially in the oil and arm sales sectors, to break their relationships with the military. They also wish to stop the transfer of assets and funds to the military and terminate any engagement that will consequently strengthen the military’s power. Therefore, how the international community should respond to the Myanmar people’s call and whether to continue doing business or impose sanctions will be in the spotlight this year.
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