Myanmar: Multilaterals Warned Not to Go Too Far, Too Fast in Myanmar

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Multilaterals Warned Not to Go Too Far, Too Fast in Myanmar

By Carey L. Biron

WASHINGTON, Apr 18, 2012 (IPS) - As multilateral lending agencies prepare to seriously re- engage with Myanmar for the first time in decades, observers at the spring meetings of the World Bank and International Monetary Fund (IMF) are warning that a poor understanding of ground conditions in the country could jeopardise many of the early opportunities created by government-initiated reforms.

While international economic sanctions, particularly those put in place by the United States and European Union, have significantly limited the ability of multilateral agencies to operate in Myanmar, recent weeks have seen several governments move to ease these measures. This week the U.S. announced a second round of loosening, while officials in both Australia and the EU are currently engaged in similar discussions.

The decisions follow a year of controversial reforms in Myanmar, where a new quasi-civilian parliament in early 2011. Since then, led by President Thein Sein, the government has allowed for an unprecedented series of openings, including the release of hundreds of political prisoners, a relaxation of media censorship, and a strengthening of opposition political parties.

This culminated in highly anticipated parliamentary by-elections on Apr. 1, in which the long-jailed opposition leader Aung San Suu Kyi won a seat.

Although Myanmar has been a member of the International Monetary Fund (IMF) since 1955, until last year the Fund engaged in nothing more than routine annual meetings with the government. The last major World Bank project, meanwhile, ended two decades ago.

Currently, however, both the Bank and Fund, as well as the Asian Development Bank, are laying the foundation for re-engagement. Indeed, the IMF has been ramping up preliminary technical assistance since February, when the U.S. began to relax its sanctions regime.

Since then, the IMF has been invited by the Myanmar government to advise on changes in laws regarding the country's monetary and foreign exchange transactions.

While the details of any new multilateral engagement with this resource-rich country remain to be decided upon, observers are clear on what should not take place. According to Sean Turnell, a long-time Burma observer, financial assistance itself should not be considered at this time.

"Burma and its government do not lack money," Turnell told a forum on the sidelines of the World Bank-IMF spring meetings on Wednesday. "It's currently pulling in about three billion dollars from its gas reserves, which has allowed foreign reserves to be close to eight billion dollars. That's going to increase dramatically next year, once a new gas pipeline comes onboard."

Burma does not need technical solutions, Turnell, an economics professor, said. "What it does need is an attack on the fundamental problems that are really holding the country back – not a lack of financial resources but a lack of will."

The issue of will goes to the heart of the highly debated reforms process. For the moment, Turnell and many others have noted, those reforms have not only been relatively meagre but, more importantly, have been confined mostly to the realm of economics.

"The current reforms have not addressed security and justice issues, and I think that's going to cause a major challenge for all of the international community," notes Khin Ohmar, the coordinator of Burma Partnership, an umbrella of civil society organisations, based along the Thai-Burmese border.

"We are very concerned with the prospect of foreign direct investment, (international financial institution) re-engagement, peace-building, etc., going forward without a real understanding of the deep-rooted problems of our country," she said.

While Ohmar concedes that local-level consultations have begun as the IMF and others have re-entered Myanmar, she warns that a "pattern of selectiveness" has appeared, in which foreign missions are relying only on government-registered NGOs for views on ground realities.

Particularly notable has been an absence of representation from within Myanmar's conflict areas, where most of the country's ethnic minorities live.

In Karen state and other such areas, "People are still living in fear," says Paul Sein Twa, executive director of the Karen Environmental and Social Action Network. "Withdrawing troops from these areas would immediately help people to go back and farm – without waiting for any money from the international community or the government."

Instead, Sein Twa contends, the government's focus in dealing with armed ethnic groups has been simply to "secure" the areas for large- scale economic projects, including the creation of special economic zones, several of which are currently in the works.

"The government gives allowances to companies to own large areas of land, which leads to conflict between the local people and the government," he says.

Similar outbreaks of violence have erupted when foreign companies, acting with the government's permission, have moved construction materials into or through areas claimed by armed ethnic groups.

Assuming that Myanmar's economy and broader society continue to open for the first time in more than a half-century, the worry for many is that a rushed focus on macroeconomics over – or instead of – issues of more relevance to local communities could lead to a continuation or even exacerbation of conflicts that have lasted for decades.

For any new multilateral programmes, however, the critical process of prioritisation will depend on the Myanmar government's own priorities – and few claim to know where exactly those lay.