This week a super tanker steamed towards Myanmar’s Kyaukpyu port to offload the first consignment into an oil supply pipeline with the capacity to supply 260,000 barrels per day from the Indian Ocean to Kunming in southwestern China. Some analysts trumpeted the port call as evidence of Myanmar’s emergence as a new key link in the quest for regional integration.
Indeed, Myanmar is in the middle of many grand connective schemes, including China’s One Belt, One Road, Japan’s East-West Economic Corridor, the Association of Southeast Asian Nations’ (ASEAN) Free Trade Area, India’s opening of its remote ‘seven sisters’ northeast region as well as the multilateral Great Asian Highway Network.
The economic imperative of these initiatives for Myanmar is that infrastructure integration will be the key that unlocks its many untapped consumer markets, abundant natural resources and underlying trade potential.
Myanmar’s potential to implement and benefit from these infrastructure initiatives, however, will require state planners to manage a host of issues, not least among them state fragility and the government’s unproven capacity to handle internal or external shocks and still function.
With several internal armed conflicts, a large illicit trade environment, chronic human rights abuses, widespread corruption perceptions and high difficulty of doing business, Myanmar is arguably more comparable to sub-Saharan Africa than its ASEAN neighbors. Myanmar’s fragility and instability may thus pose an insurmountable challenge for integration into emerging regional infrastructure.
The proposed routes that will integrate Myanmar with southwest China, Thailand and India run through Myanmar’s most fragile and conflict-prone areas. For routes into China this includes the conflict-ridden Shan State, where an alliance of ethnic armies is fighting against central government control and refusing to enter into any ceasefire initiative.
For routes into Thailand, major highways pass through territory controlled under tenuous ceasefire terms with the rebel Shan State Army South, the Karen National Liberation Army and the New Mon State Army. Insurgents active in these areas have attacked connecting infrastructure projects, including roads and pipelines, in the past.
The Kyaukphyu terminal is situated in western Rakhine state, where human rights abuses by security forces are raising new concerns that militancy will take hold among the disenfranchised ethnic Rohingya population. Routes into India’s fractious northeastern region pass through the remote, underdeveloped Chin state.
The “greed and grievance” academic theory often used to analyze factors that drive conflict is arguably relevant in Myanmar’s context. The underlying political grievances of Myanmar’s marginalized minorities have often been subordinated to the imperatives of powerful armed groups that fight to protect their economic interests, including the illicit narcotics trade and natural resource extraction.
The proposed new infrastructure running through these conflict areas will provide another rich source of rent-seeking for some of these armed groups. Government-aligned militias in conflict areas are also known to be involved in illicit trades. Given these entrenched interests in sustaining conflict there is a spectrum of scenarios that could develop, ranging from the doggedly optimistic to the cataclysmic.
Integration and Equitable Development: This is a place for optimists. Myanmar’s unique geo-strategic position as a hub for regional integration will unlock vast domestic consumer markets, resource reserves and export trade potential. Increasingly competent democratic politicians will harness this bounty for wide-based economic development. This will in turn have a normative effect on the armed groups, bringing them into peace processes and ending seemingly intractable conflicts.
Centrifugal Forces and Patchwork Development: An alternative narrative suggests that there will be pockets of development but significant challenges. Initiatives will function – oil will be pumped, highways will be built – but corruption will erode wide-based growth, development of remote areas and fuel inequality. Regional warlords will plunder rents to support their ethnic armies and pull further away from central control.
Conflict and Bypass: The most pessimistic observers see a scenario whereby everything could grind to a halt. Initiatives will falter as regional conflicts flare, as they have recently in Shan State and could erupt in western Rakhine state. The government will be unable to either implement policy or manage multiple crises. Ultimately Myanmar will be bypassed in favor of other regional contenders for connectivity and miss a big opportunity for growth and development.
Much will depend on Myanmar’s ability to manage shocks and adapt to fast-changing circumstances, both at home and abroad. The indications to date are that the state, now nominally led by the elected National League for Democracy government, but still widely steered by the autonomous military, and wider society lack this capacity. For the super tankers docking in Kyaukpyu, gathering storm clouds inland could make for choppier waters and stronger headwinds in the future. The risk for Myanmar is whether such tankers choose to brave the country’s still volatile conditions or move to calmer waters.