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December 08, 2019

The Challenge of Change

Myanmar’s growing rapprochement with the West has significantly challenged China’s interest by changing the bilateral balance of power in the region. It has opened a window of opportunity for other countries to reach out to Myanmar which is considered as one of the virgin markets in Asia. Accelerated by loosening of sanctions and establishment of quasi-civilian regime after November 2010 elections, investments are pouring in from different directions.
After ending years of isolation, Myanmar’s new foreign policy of proximity with the West offers immense opportunities. Myanmar has developed substantially different relationship with the United States and Western Europe in recent times with the easing of sanctions and reform process which was initiated after the new regime took charge in 2011. United States have been supportive of the reform process in Myanmar and USAID has been an active agent for initiating developmental partnership with the country. Strategically, it is viewed that a stable Myanmar in the region would provide impetus to the rebalancing strategy of the United States in the Asia-Pacific.
Transition and reforms in Myanmar has also brought about increased economic engagement with the European Union. After lifting its sanctions in April 2013, except the arms embargo, the European Union has sought active collaboration with the Government of Myanmar to assist reform process and to contribute to the political, economic and social development. The European Union is committed to the reform process in Myanmar and has agreed to a Comprehensive Framework which outlines its support to political, social and economic development, fostering respect for human rights and assisting the government in re-building its place in the international community.
Given the growing rapprochement of Myanmar with the West, in the light of the complex relationship of United States with China, such heightened economic engagement may affect the Myanmar-China bilateral relationship. China was the key player in Myanmar after the economic sanctions were imposed by the United States and the European Union since 1988, but easing of Western sanctions has increased competition and challenged the monopoly and dominance of Chinese presence. Obama’s foreign policy of ‘pivot’ to Asia-Pacific has been a cause of concern for the growing Chinese presence in the region. It has prompted Chinese anxiety and heightened regional worries, which are now faced with a tough dilemma to choose between the United States and China. In this regard, Myanmar’s regular dialogue with US leadership and high level visits have raised alarm bells for China.
Transition in Myanmar has also led to the opening up and its growing importance for the existing and newer regional powers. The mounting Japanese assertiveness in Myanmar sends a warning signal for China’s growing influence in the country. Japan’s assistance in the country’s effort for democratization and building up of a future Myanmar has now deepened its partnership. Japan’s geo-political ambitions and expanding economic opportunities is posing a strong challenge to the traditional regional powers in Myanmar. It has offered economic aid to support development of country’s infrastructure in the hope of improving the investment climate for business. The coming together of Japan and Thailand in Myanmar on the much-awaited multi-billion-dollar Dawei megaproject and India’s invitation to Japan to invest in and build overland infrastructure in the Northeast is going to outplay Chinese dominance in the region. Furthermore, Japanese entry into developing the Chennai port and an attempt to link it with Dawei port in Myanmar is an indication of Japan-India and Thailand coming together and forming an axis in a bid to confront China in Myanmar.
So far as India’s interest in Myanmar is concerned, it is stepping up its development cooperation in the light of Myanmar’s continuing reform process and its historical and cultural ties. India is regarded as a land of opportunity and a benign power, given the competitions that exist from the existing players and other potential stakeholders. In this regard, focus on ‘commerce, culture and connectivity’ by the Indian Prime Minister offers tremendous opportunities for boosting up trade and strengthening bilateral ties between the two countries. He regards Myanmar as “a valued friend and priority area”. India is trying to leverage on ‘soft’ power diplomacy and fostering deeper economic and business links. As compared to Chinese loan which are more commercial in nature, India and Japan have kept their focus more on infrastructural development, capacity building and humanitarian assistance. Thus, India has been particularly instrumental in setting up of Centres for industrial training and enhancement of IT skills and other capacity building programmes.
There has been an enormous growth in China’s influence in Myanmar, significantly, after the sanctions since 1989. The armed forces of Myanmar depended largely on Chinese assistance. Furthermore, the support of China has been crucial in diplomatic forums such as the United Nations Security Council.  Increasing Chinese access to Myanmar’s energy resources has been a matter of concern for regional powers because of its strategic implications. Due to growing Sino-Myanmar energy ties, China is investing heavily in developing ports in Myanmar, gaining greater access to the Indian Ocean. In the wake of sanctions which had for long blocked Western investments, China emerged as Myanmar’s biggest ally, investing in infrastructure, mining projects, hydropower dams and twin oil-and-gas pipelines to help feed southern China’s growing energy needs. However, it is noteworthy that Myanmar occupies a vital space on China’s south-western flank. It is important as a trading outlet to the Indian Ocean for its landlocked inland provinces of Yunnan. Companies from Yunnan are big investors in mining, rubber and other industries in the bordering state of Kachin in Myanmar. Owing to its strategic location, Myanmar’s market is essential to Yunnan’s export economy. Besides, China’s strategic interest is also guided by keeping its border trade routes secured and maintaining stability in the border regions.
Myanmar is also critical to China in its recent strategy of implementing ‘Belt and Road Initiative’ to enhance regional connectivity which includes the ‘Silk Road Economic Belt’ and ‘21st Century Maritime Silk Road’. It is expected that this initiative would speed up financial integration, trade liberalization, eliminate investment barriers, facilitate investment climate and people to people connectivity. The new maritime silk road aims at enhancing maritime partnership against the backdrop that China’s geopolitical ties with its Southeast Asian neighbours brings both opportunities for cooperation and challenges from territorial disputes. It has been regarded as the central focus of China’s foreign policy in the year 2015.
The economic and strategic outcome of the political transition and changes taking place in Myanmar has generated immense attention and interest and has also initiated debates regarding China’s strategic, economic, geo-political interest in the country. Since 2011, due to space for the parliamentary debate, the unquestionable supremacy of the Chinese investments in the major three of China’s largest investment projects in the country have faced intense criticism. Two projects—the massive Myitsone dam on the Ayeyawady River and the Letpadaung copper mine—were suspended after locals protested against environmental and social impacts like flooding and pollution, though work on the Copper mine project was resumed subsequently, after the profit sharing agreement was revised. However, the pipeline to deliver oil and gas across Myanmar to China has survived, notwithstanding intense criticism. Nevertheless, its plan to build a highway and a high-speed railway line by 2015 which would allow people and cargo to travel from Kyaukpyu passing through Mandalay to Yunnan has been put on halt. Resentment against China is widespread in Myanmar, and the discontentment about the rail project was of great concern to the present regime which faces elections later in 2015.
Myanmar-China relations have also been marred by the resumption of recent conflict in the Kokang region. It has been regarded as one of the bloodiest conflict country has ever seen. Instability at the borders has been a cause of security concern for both the countries. Besides, security concern, the Kokang conflict has become a controversial issue for China.
In spite of sensitivity about China’s growing strength and influence in the region, the relationship in contemporary period between China and Myanmar is characterized by strong bilateral trade and investment—ranking at the top so far as the bilateral trade and investment is concerned. Given the long term strategic and commercial interest of China in Myanmar, it seeks to resolve the conflict peacefully without undermining its own stake and the nationalist sentiments.

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