Coup puts Myanmar’s crippling military capitalism in the spotlight

Coup puts Myanmar’s crippling military capitalism in the spotlight
Protesters gather in Yangon, main, as security forces continue to crack down on demonstrations against the coup. (AFP)
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Updated 14 April 2021

Coup puts Myanmar’s crippling military capitalism in the spotlight

Coup puts Myanmar’s crippling military capitalism in the spotlight
  • Travel bans and asset freezes since February’s coup draw attention to the generals’ sway over lucrative segments of the economy
  • Western countries likely to impose further sanctions on Myanmar, but Asian neighbors may be reluctant to follow suit

BERNE, Switzerland: Myanmar’s economy has long been shaped by the Tatmadaw — the nation’s powerful armed forces — and by the shifting whims of geopolitics, which together fashion the country’s global trade relations, particularly those concerning its large infrastructure projects.

Since the Feb. 1 coup, which overthrew Aung San Suu Kyi’s National League for Democracy (NLD) government, and the violent suppression of protests which has left more than 600 dead, momentum has been building behind efforts to impose sanctions on the junta.

To date, the US and UK have placed sanctions upon Myanmar’s two big military-owned conglomerates. Several OECD countries have also issued travel bans and asset freezes on army officers involved in the coup.

Pressure is building on companies with investment in the country to sever ties with its military-owned entities. For example, pension funds are pushing South Korean steel giant POSCO to break with its army-owned Burmese joint venture partner.




Myanmar’s economy has long been shaped by the Tatmadaw, the nation’s powerful armed forces, and by the shifting whims of geopolitics. (AFP)

Meanwhile, Japan’s Kirin Beer, which had invested upwards of $1.7 billion in a joint venture with a military-owned holdings company, has split with its partner — although it plans to continue selling beer in the country.

Not all Western multinationals are on board. Total CEO Patrick Poyanne recently said the company must continue producing gas in order to maintain the country’s power grid and guarantee the safety of its workforce.

However, the oil giant said it would not pay its taxes to the military and instead intends to donate the equivalent sums to human rights organizations.

The Tatmadaw’s tentacles are wrapped so tightly around the levers of the economy, it is almost impossible for firms to do business in Myanmar without cooperating with at least one military entity.

Two organizations with direct links to the Tatmadaw hold immense sway over the economy. One is the Myanmar Economic Corporation (MEC), the other is Myanmar Economic Holdings Limited (MEHL).

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MEC is involved in manufacturing, infrastructure, steel, coal and gas. While its raison d’etre is supplying the armed forces with raw materials, it also holds the monopoly over Myanmar’s insurance industry.

MEHL, meanwhile, is involved in banking, mining, agriculture, tobacco, and food manufacturing. Its revenues flow directly back to the military, which shields MEHL from civilian oversight. The MEHL owns Myawaddy Bank and the military’s pension fund.

The military controls much of the country’s banking sector, which was left badly underdeveloped following years outside the international financial system under sanctions targeting the 1962-2011 military regime.

The NLD government had intended to issue banking licences to foreign banks by 2021 — an effort thwarted by the coup.

Combined, MEC and MEHL own more than 100 businesses. They benefited greatly from privatization efforts in the 1990s and 2000s by picking up entities at fire sale prices.

Business practices in Myanmar are opaque to say the least — considered the very definition of crony capitalism. In 2018, Transparency International’s Corruption Perception Index ranked it 130th out of 180 counties.




Thailand is an important source of foreign currency for Myanmar, sent in remittances by migrant workers employed there. (AFP)

The first NLD government (2015-20) tried to curb the power of the military by opening several sectors to competition, but refrained from going toe-to-toe with the all-powerful Tatmadaw.

The NLD did, however, succeed in transferring power over the General Administration Department (GAD) from the military-dominated Interior Ministry to the civilian government in 2018.

This was an important step in demilitarizing the governance of the country. Given the wide-ranging powers of the GAD, from land administration and service delivery to tax collection, it was evident that taking power away from the military would eventually have ramifications for the Tatmadaw’s stranglehold over the economy.

In the 2020 election, the NLD government ran on a ticket of increased transparency and the transfer of power away from central authorities and the military — a move that would have been felt in the generals’ wallets.

Although boosting competition and transparency would no doubt have liberalized the economy and attracted foreign investment, it would also have threatened Myanmar’s long-established power structures.




Pressure is building to sanction the junta, left, with most of the country’s industries tied to the military. (AFP)

Fortunately for the generals, the Tatmadaw has powerful external friends. Myanmar is geopolitically important to many countries, who will cooperate with whoever holds power. These countries do not care who holds power; they just want to advance their political and economic interests.

Myanmar is strategically important to China, offering the rising superpower a land-bridge to the Bay of Bengal and an anchor country for its Belt and Road Initiative.

Until 2011, the Chinese government had a good working relationship with the junta, and had also come to an arrangement of sorts with the NLD government.

During his visit to Myanmar last year, Chinese President Xi Jinping revived the China-Myanmar Economic Corridor (CMEC) with no fewer than 33 memoranda of understanding.

The oil and gas pipeline linking China with the Bay of Bengal, the development of the deep-water port of Kyaukphyu, and the railroad linking Yunnan province to the Indian Ocean are all integral facettes of CMEC.

It is said to include projects worth $21 billion, in which the MEC and MEHL will no doubt hold substantial stakes. The NLD government, however, had concerns over China’s rising influence and Myanmar’s ballooning debts related to the CMEC.




Police arrested Myanmar Now journalist Kay Zon Nwe in Yangon on Feb. 27, 2021, amid demonstrations against the military coup. (AFP)

India, meanwhile, sees Myanmar as an important bulwark against its rival, China. As such, the Indian firm Adani is involved in the construction of the port at Yangon. Delhi feels increasingly encircled by China’s Belt and Road Initiative.

The Association of Southeast Asian Nations (ASEAN) is Myanmar’s largest trading partner, accounting for 24 percent of its business, followed by China with 14 percent and the EU with 10 percent.

Fellow ASEAN member Thailand is Myanmar’s fourth-largest trading partner and an important source of foreign currency, sent in remittances by the millions of migrant workers employed there.

The excellent transportation infrastructure connecting Thailand’s northern city of Chiang Rai to the Burmese border highlights the importance of trade (both legal and illicit) between the two countries. Furthermore, both countries are now run by military regimes whose generals have social, economic, and political ties.




General Min Aung Hlaing sits at the helm of a junta whose tentacles are spread tightly around the levers of the Myanmar economy.  (AFP/ Myawaddy TV via AFPTV)

Lastly, Russia has a long-standing relationship with the Burmese military. In 2007, Moscow entered into an agreement with Naypyitaw to establish a nuclear research center and the two countries signed a defense cooperation agreement in 2016.

Russia also supplies the Tatmadaw with weapons. It was conspicuously the only country to send a ministerial-level delegate, Deputy Defence Minister Alexandr Fomin, to attend Myanmar’s armed forces’ day on March 27.

Although Western countries are likely to press ahead with sanctions on Myanmar, its Asian neighbors may be more reluctant to follow suit for myriad reasons, ranging from geopolitical considerations to neighborly and profitable business ties. Some ASEAN countries may also want to avoid being seen interfering in the internal affairs of a neighbor.

The Tatmadaw may therefore get away with overthrowing the NLD government and can go on accumulating wealth and economic clout. Likewise, many foreign entities will be willing to engage with the junta at a business level, both because it is profitable and as it is perceived to be in their own governments’ geopolitical interests.

• Cornelia Meyer is a Ph.D.-level economist with 30 years of experience in investment banking and industry. She is chairperson and CEO of business consultancy Meyer Resources.

Twitter: @MeyerResources


German report reveals how Iran uses proliferation to smuggle illegal goods

German report reveals how Iran uses proliferation to smuggle illegal goods
Updated 07 May 2021

German report reveals how Iran uses proliferation to smuggle illegal goods

German report reveals how Iran uses proliferation to smuggle illegal goods
  • The report states that Iran creates state-controlled “neutral” companies to hide the true nature of the purchase from buyers
  • Iran also uses “detour deliveries over ‘third states’ in order not to identify the final buyer”

DUBAI: An intelligence report from Germany revealed on Friday details of how the Islamic Republic uses proliferation techniques to smuggle illicit technology for deadly weapons.
“Proliferation-relevant countries such as Iran, North Korea and Syria, but also Pakistan, try to circumvent safety precautions and legal export regulations and to disguise illegal procurement activities. To do this, they turn to mostly conspiratorial means and methods,” wrote the intelligence agency in northernmost state of Schleswig-Holstein,” the report explains.
“Proliferation is still one of the central tasks of counter-espionage in Schleswig-Holstein,” the report adds.
According to the agency, proliferation is the “spread of weapons of mass destruction (ABC weapons) and the necessary know-how, as well as the products used for their manufacture and associated carrier technologies.”
ABC commonly refers to atomic, biological and chemical weapons.
The report states that Iran creates state-controlled “neutral” companies to hide the true nature of the purchase from buyers and establishes “illegal procurement networks which belong to the front companies and middlemen.”
Iran also uses “detour deliveries over ‘third states’ in order not to identify the final buyer” and “the use and misuse of inexperienced freight deliverers and transporters,” the report added.
Iran also breaks down the deliveries of illegal deliveries into several “individual non-suspicious deliveries to avoid exposing the entire business.” 
The report also said that Iran “conceals the end user” and the “individual, company or institution with which the goods ultimately remain.”
The report cited Iran 19 times in the 218-page report, covering security threats to the state’s democracy.
It also said that states such as Iran, North Korea, Pakistan, Syria and Russia strive to acquire dual-use goods, items which have both civil and military use.
“Proliferation is a serious threat to security in many regions of the world, including the Federal Republic of Germany and thus for the state of Schleswig-Holstein. The Federal Republic of Germany is one of the most important export nations in the world. The export of military as well as civilian goods are subject therefore to special control,” the report added.


China says ‘extremely low’ risk of damage on Earth from rocket re-entry

China says ‘extremely low’ risk of damage on Earth from rocket re-entry
Updated 07 May 2021

China says ‘extremely low’ risk of damage on Earth from rocket re-entry

China says ‘extremely low’ risk of damage on Earth from rocket re-entry

BEIJING: China said Friday the risk of damage on Earth from a rocket which fell out of orbit after separating from Beijing's space station was "extremely low", after the United States warned it could crash down onto an inhabited area.
Foreign ministry spokesman Wang Wenbin said "most of the components will be destroyed by ablation during the re-entry" into the atmosphere and "the probability of causing harm to aviation activities or people... on the ground is extremely low".


Australia to end ban on citizens returning from India

Australia to end ban on citizens returning from India
Updated 07 May 2021

Australia to end ban on citizens returning from India

Australia to end ban on citizens returning from India
  • Scott Morrison this week barred all travel from India, fearing a large number of COVID-positive arrivals
  • The prime minister’s move stranded an estimated 9,000 Australian citizens

SYDNEY: Australia will not extend a controversial ban on citizens returning from COVID-hit India, the prime minister said Friday following widespread public outrage.
Scott Morrison this week barred all travel from India, fearing a large number of COVID-positive arrivals would overwhelm Australia’s already strained quarantine facilities.
The move stranded an estimated 9,000 Australian citizens and threatened them with large fines and jail time if they tried to dodge the ban and return on non-direct flights.
The conservative prime minister on Friday said that the measures would remain in place until May 15 as planned, but then repatriation flights could resume.
“The determination was designed to be a temporary measure and the medical advice... is that it will be safe to allow it to expire as planned on 15 May,” he said.
Three flights are being planned to return the most vulnerable Australians still in India, bringing them to a remote Outback quarantine facility.
No decision has been taken yet on whether commercial flights will also resume.
Morrison’s ban caused widespread outrage, with even allies describing it as racist and an abandonment of vulnerable Australians overseas.
He had already walked back the threats to prosecute returning Australians, saying it was “highly unlikely” the punishment would ever be meted out.
The legality of the ban is being challenged in federal court, with a hearing set to take place on Monday.
Australia has no widespread community transmission of COVID-19, but has seen several outbreaks emerge from hotel quarantine facilities, causing disruptive city lockdowns.
Since March 2020, Australians have been barred from traveling overseas and a hard-to-get individual exemption is needed for foreign visitors to enter the country.


India’s coronavirus surge pressures Narendra Modi to impose strict lockdown

India’s coronavirus surge pressures Narendra Modi to impose strict lockdown
Updated 07 May 2021

India’s coronavirus surge pressures Narendra Modi to impose strict lockdown

India’s coronavirus surge pressures Narendra Modi to impose strict lockdown
  • Lockdown seems to be the only option with the virus raging in cities and towns
  • On Friday, India recorded a new record of 414,188 confirmed cases in the past 24 hours

NEW DELHI: With coronavirus cases still surging to record levels, Indian Prime Minister Narendra Modi is facing growing pressure to impose a harsh nationwide lockdown amid a debate whether restrictions imposed by individual states are enough.
Many medical experts, opposition leaders and some of the Supreme Court judges have suggested the lockdown seems to be the only option with the virus raging in cities and towns, where hospitals are forced to turn patients away while relatives scramble to find oxygen. Crematoriums and burial grounds are struggling to handle the dead.
On Friday, India recorded a new record of 414,188 confirmed cases in the past 24 hours. Its tally has risen to more than 21.4 million since the pandemic began with faint hopes of the curve going down quickly. The Health Ministry also reported 3,915 additional deaths, bringing the total to 234,083. Experts believe both figures are an undercount.
The official daily death count has stayed over 3,000 for the past 10 days.
Over the past month, nearly a dozen out of India’s 28 federal states have announced less stringent restrictions than the nationwide lockdown imposed for two months in March last year.
Modi, who held consultations with top elected leaders and officials of the worst-hit states on Thursday, has so far left the responsibility for fighting the virus to poorly equipped state governments.
Dr. Randeep Guleria, a government health expert, said a complete, aggressive lockdown is needed in India just like last year, especially in areas where more than 10 percent of those tested have contracted COVID-19.
Srinath Reddy, president of the Public Health Foundation of India, a public-private consultancy, acknowledged that different states were experiencing different intensities of the epidemic, but said a “coordinated countrywide strategy” was still needed.
According to Reddy, decisions need to be based on local conditions but should be closely coordinated by the center. “Like an orchestra which plays the same sheet music but with different instruments,” he said.
Anthony Fauci, President Joe Biden’s chief medical adviser, also suggested that a complete shutdown in India may be needed two to four weeks to help ease the surge of infections.
“As soon as the cases start coming down, you can vaccinate more people and get ahead of the trajectory of the outbreak of the pandemic,” Fauci said in an interview with the Indian television CNN News18 news channel on Thursday. He did not provide specifics of what a shutdown should entail.
He said it appears there are at least two types of virus variants circulating in India. He said B117, which is the UK variant, tends to be concentrated in New Delhi and that the 617 variant is concentrated in the worst-hit western Maharashtra state.
“Both of those have increasing capability of transmitting better and more efficiently than the original Wuhan strain a year ago,” Fauci said.
Modi imposed a two-month stringent lockdown last year on four hours’ notice. It stranded tens of millions of migrant workers who were left jobless and fled to villages with many dying along the way. Experts say the decision helped contain the virus and bought time for the government.
Modi’s policy of selected lockdowns is being supported by some experts, including Vineeta Bal, a scientist at the National Institute of Immunology. She said different states have different needs, and local particularities need to be taken into account for any policy to work.
In most instances, in places where health infrastructure and expertise are good, localized restrictions at the level of a state, or even a district, are a better way to curb the spread of infections, said Bal. “A centrally mandated lockdown will just be inappropriate,” she said.
Dr. Yogesh Jain Ganiyari of the Peoples Health Support Group, a low-cost public health program in the central state of Chhattisgarh, said that scientifically, lockdowns are the most effective way of curbing infections.
“But we don’t live in a lab. We need to take into account the humanitarian aspect,” said Ganiyari. “Those who look at lockdowns just as disease control mechanisms are heartless. You have to think about the people.”


4 people freed from ongoing Minnesota bank robbery standoff

4 people freed from ongoing Minnesota bank robbery standoff
Updated 07 May 2021

4 people freed from ongoing Minnesota bank robbery standoff

4 people freed from ongoing Minnesota bank robbery standoff
  • Police officials initially said an unspecified number of hostages were being held by a male suspect.

ST. CLOUD, Minnesota: A standoff between Minnesota police and an alleged hostage-taker continued into the evening Thursday despite the release of four bank employees.
Three women and a man were released from a Wells Fargo Bank branch in St. Cloud, according to authorities. The first woman ran from the bank toward members of a SWAT team with her hands up. After being searched, she was escorted to safety. Two women and a man later emerged from the bank and were led to safety.
It wasn’t immediately clear if other bank employees were being held against their will.
The incident began around 1:45 p.m. Thursday, with a report to police of a robbery in progress. Law enforcement officials initially said an unspecified number of hostages were being held by a male suspect. Police said negotiations were continuing with the suspect, and there were no reports of injuries.
St. Cloud resident Abdi Kadir told the Minneapolis Star-Tribune he was in the bank drive-through when the teller hurriedly told him to leave. As he drove off, he saw people running out the bank’s front door, he said.
“We recognize this is a traumatic moment for the community and our colleagues,” Wells Fargo said in a statement. Company spokeswoman Staci Schiller confirmed “a hostage situation” at the bank’s south branch. She said bank officials are cooperating with local law enforcement and will do whatever they can to assist the authorities.
Two armored vehicles were stationed near the bank’s front door along with several armed officers. Police moved onlookers away from the bank, but a crowd gathered across the street to watch the drama unfold.